[author: Marc Brainich]
In a decision issued earlier this year, the U.S. District Court, Northern District of California, held that oral statements made off the record do not trigger removal. (MacKinnon v. IMVU, Inc., No. C 11-4840 PJH (2012 WL95379) (N.D.Cal., January 11, 2012).) The decision is non-binding on other U.S. district courts, but nonetheless highlights the differing results in district courts in California and across the country that have considered whether oral statements provide a basis for removal to federal court.
The Class Action Fairness Act provides that the federal courts have original jurisdiction where, among other things, “the claims of the original class members . . . exceed the sum . . . of $5,000,000.” (28 U.S.C. § 1332(d).) When removing a case to federal court, the defendant must file the notice of removal within 30 days of receipt of the complaint or of an “other paper” from which it may be ascertained that the case is removable. (28 U.S. C. § 1446(b).) In MacKinnon, the removing defendant relied upon the plaintiff counsel’s statement of the amount of damages at a discovery conference as the basis for its removal.
The MacKinnon court granted the plaintiff’s motion to remand. The court observed that the removal statute explicitly referred only to a “paper,” but noted that a number of courts had held that, in the proper circumstances, an oral statement may be enough to make a case removable. Although the court expressed some skepticism as to whether those cases were correctly decided, it did not hold that removal may never be triggered by an oral statement. Here, however, the plaintiff’s counsel denied that he had stated what defense counsel had reported he had said at the settlement conference about the amount of damages in dispute. Based on the factual dispute as to what had been said, the court held that “off-the-record and unrecorded statements” are not “objectively verifiable” and thus could not form the basis for removal jurisdiction.
Despite holding that such statements will not trigger removal, the court held out the possibility that some oral statements, if “objectively verifiable” (such as deposition testimony or a statement made in open court), may do so. The MacKinnon case highlights the difficulty a defendant may have in determining whether removal has been triggered, despite the fairly detailed guidance given by some circuit courts regarding when removal has been triggered by a “paper.” (See, e.g., Harris v. Bankers Life & Casualty Co., 425 F.3d 689 (9th Cir. 1995)). If a defendant fails to remove where it is unclear whether removal has been triggered by an oral statement, a court might later find that the 30-day window for removal had passed. If the defendant does remove, it may potentially be sanctioned for premature removal (although most courts, like MacKinnon, will probably find that that removal under such circumstances was not “objectively unreasonable” and will therefore refuse to grant sanctions).