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.