Making up for Lost Time: Ninth Circuit Says Defendants May Remove to Federal Court After Traditional CAFA Removal Deadlines Have Passed

by Orrick - Global Employment Law Group
Contact

Imagine for a second that you’re watching your favorite sports team: They’re losing, time is winding down, and you’re left watching the other team run down the clock. That frustration you’re feeling is something similar to what defendants in a state court case might feel as they watch the days pass by, one by one, until they’re out of time, and it’s too late to remove their case to federal court.

Defendants seeking to remove a state court case to federal district court in the Ninth Circuit just got a little more wiggle room, thanks to the Ninth Circuit’s decision in Roth v. CHA Hollywood Medical Center, L.P., 2013 WL 3214941 (9th Cir. June 27, 2013). Prior to the Roth decision, removal appeared to be governed by two fairly ironclad deadlines: either (1) within 30 days of service of the complaint; or (2) within 30 days of defendant’s receipt “of an amended pleading, motion, order or other paper” from which removability may be first ascertained. Unlike a lot of other deadlines that can modified by agreement or by the court, these deadlines, which are specified in the Class Action Fairness Act (“CAFA”) Section 1446(b)(1) and (b)(3), are set in stone. The Roth decision creates a sort of “self-help” exception to those deadlines that allows defendants to remove a case once those deadlines have passed based on their own investigation or informal discovery, so long as removability was not discoverable earlier.

Roth originated as a putative wage-and-hour class action, filed in California state court. The plaintiffs’ first amended complaint did not indicate on its face whether the diversity or amount in controversy requirements were present such that it was removable under CAFA. More than 100 days after the filing of the amended complaint and 75 days after service, the defendant (who had been added in the amended complaint) removed to federal court. The defendant had conducted its own investigation into the citizenship of putative class members, which revealed that at least one of the putative class members was a citizen of Nevada. Armed with a declaration from the employee to that effect (as well as declarations prepared in-house as to the amount in controversy requirement), defendant removed on the basis of diversity.

The Roth court framed the question as “whether the two thirty-day periods described in § 1446(b)(1) and (b)(3) are the only periods during which the defendant may remove, or if they are merely periods during which a defendant must remove if one of the thirty-day time limits is triggered” and noted that they had not found any cases in the Ninth Circuit that answered that question. The Roth court held that a defendant who has not lost the right to remove because of a failure to timely file a notice of removal under 28 U.S.C. §§ 1446(b)(1) or (b)(3) may remove to federal court when it discovers, based on its own investigation, that a case is removable, noting that the two periods specified in § 1446(b)(1) and (b)(3) operate as limitations on the right to removal rather than as authorizations to remove.

Put differently, the two 30-day time periods listed in Section 1446 are not the only times that a defendant may remove a case under CAFA. A defendant may properly remove at a later point, outside these 30-day periods, so long as the defendant has not previously waived the right to remove by failing to remove despite plaintiff’s initial pleading or other documents indicating that the case was removable.

The court’s rationale demonstrates a balancing of interests. On the one hand, the court noted, defendants “should not be able to ignore pleadings or other documents from which removability may be ascertained and seek removal only when it becomes strategically advantageous for it to do so.” But, on the other hand, plaintiffs should not be able to “prevent or delay removal by failing to reveal information showing removability and then objecting to removal when the defendant has discovered that information on its own.” The court also acknowledged potential concerns that a defendant might strategically wait to remove until an advantageous time (especially in class actions, where removal under CAFA is not subject to the general one-year limitation on diversity-based removal) but ultimately placed the onus on the plaintiff to mitigate this risk by disclosing bases for removal earlier on, thus starting the 30-day clock.

The takeaway for defendants is clear: removal to federal court should always be an issue on the radar. Even after the traditional 30-day windows have elapsed, savvy defendants can engage in their own investigations to discover grounds for removal.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Orrick - Global Employment Law Group | Attorney Advertising

Written by:

Orrick - Global Employment Law Group
Contact
more
less

Orrick - Global Employment Law Group on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.