DNJ Analyzes Service via Agent and the Forum Defendant Rule in Context of a Snap Removal

Faegre Drinker Biddle & Reath LLP

Faegre Drinker Biddle & Reath LLP

A magistrate judge in the District of New Jersey recommended remand of more than one dozen lawsuits concerning allegedly defective hip implants in a June 15, 2020, decision analyzing Third Circuit precedent regarding the forum defendant rule in the context of snap removals.

Jackson v. Howmedica Osteonics Corp., et al., Civil Action No. 19-18667, is one of several cases filed by plaintiffs in New Jersey state court against the defendant Howmedica, which is incorporated and has its principal place of business in New Jersey. Pre-service, the defendant removed to federal court on the basis of diversity pursuant to Encompass Insurance Co. v. Stone Mansion Restaurant, Inc., 2018 WL 3999885 (3d Cir. Aug. 22, 2018), in which the Third Circuit held that a forum defendant may remove a case to federal court prior to being served.

In support of their motion for remand, plaintiffs alleged that certain plaintiffs served the defendant via its registered agent, in addition to attempting to serve the defendant directly at its New Jersey corporate headquarters, but the defendant “deliberately delayed accepting [this latter form of] service until the process of removal had been completed.” Plaintiffs argued that because the defendant was properly served via its registered agent prior to removal, the removal was barred by the forum defendant rule. See 28 U.S.C. 1441(b) (allowing removal regardless of in-state citizenship where the in-state defendant has not yet been properly joined and served in a case).

Relying on Tucci v. Hartford Fin. Servs. Grp., 600 F. Supp. 2d 630, 631 (D.N.J. 2009), the defendant argued that the service via its registered agent did not prevent removal because the defendant was not properly joined and served until it actually received a copy of the summons and complaint. The Tucci court found service was completed only after the defendant actually received notice of it.

U.S. Magistrate Judge James Clark’s report and recommendation analyzed “whether Defendant’s removal of this matter was improper under the forum defendant rule.” The court held that the defendant’s position that “service was not complete for the purposes of the forum defendant rule until Defendant actually received notice of such service from its registered agent” lacked support in the law. Judge Clark held that the “exception to the applicability of the forum defendant rule exists, or should exist, where process is served only via service on a defendant’s agent.” Because the plaintiffs also sought to directly serve the defendant here, the exception did not apply.

Finding that no exception applied, the court next analyzed whether the defendant’s removal was prohibited by the forum defendant rule. The defendant argued that New Jersey law recognizes a “legal ‘separation’ between defendants and agents” in support of its position that removal was proper. Although the court agreed that such a distinction exists, it declined to extend Tucci, holding that “New Jersey law is clear that a corporation is properly served with process via service on its appointed agent.” Accordingly, the court held that the defendant’s removal was precluded by the forum defendant rule, and granted the plaintiff’s motion for remand.

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.

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