Deadline for Removal to Federal Court Changed!

New legislation signed on December 7, 2011 changing the law regarding the removal of cases to federal court.  The newly enacted legislation took effect on January 6, 2012 and alters the existing removal statute surrounding (1) the timing of removal, (2) the amount in controversy, and (3) severing unrelated state claims.  Each of these areas is addressed below.

1. The Timing of Removal to Federal Court.

The most significant change involves the timing of removal by a single defendant in a multiple defendant lawsuit.  Under the old law, a defendant must file his removal within thirty (30) days of being served.  This requirement stood regardless of whether there are multiple named defendants who were served earlier or later than the removing defendant—this rule is known as the “First-Served” rule.  The revised statute now invokes the “Later-Served” rule which retains the requirement that a single defendant remove a case within 30 days of being served. However, under the new “Later-Served” rule, a defendant outside the 30 day removal deadline may join in the removal with another later-served defendant who is still within its own 30 day deadline to remove the case to federal court.

The revised statute also adds a “Bad Faith” exception to the general rule that a case cannot be removed to federal court more than 1-year after the plaintiff filed the complaint in state court. Under the new law, if a court finds that a plaintiff added a non-diverse defendant in bad faith solely in order to defeat diversity and avoid having the case removed to federal court, the federal court may disregard the 1 year limitation and allow the remaining diverse defendant to remove the case more than 1 year after the complaint was filed in state court. 

2. The Amount in Controversy

 The current removal statute requires that the plaintiff’s claim be worth at least $75,000.00 for it to be removed on the basis of diversity of citizenship.   While the $75,000.00 jurisdictional minimum has not changed, the new legislation addresses the situation where a plaintiff does not state in the petition the amount being claimed.  If a plaintiff does not disclose the amount of the claim in the petition but during the course of discovery is it learned that the plaintiff is actually claiming more than $75,000.00, the defendant will then have thirty (30) days from this time to remove the case to federal court.  However, absent a finding of bad faith, if this is discovered more than one year after the plaintiff’s petition is filed, the defendant will not be able to remove the case to federal court.

Please note that in LOUISIANA (and more broadly the 5^thCircuit Court of Appeal), we have been allowed to Petition Removal to federal court within 30 days of DISCOVERING that amount in controversy exceeds $75,000. Typically, our firm has used the procedure of submitting Requests for Admissions to force the plaintiff’s attorney to disclose that the amount in controversy exceeds $75,000; however, with these new changes, we probably will not have to do that. We may continue the procedure to because it hastens the removal to federal court.

 3. Severing Unrelated State Claims

When a defendant removes a case based on federal question jurisdiction, rather than diversity, the new legislation changes how the federal court addresses unrelated claims based on state law mixed with claims based on federal law.  Under the old rule, the federal judge had discretion as to whether the unrelated state claims should be severed from the federal claims and remanded back to state court.  Under the new rule, the federal judges do not have discretion but are required to sever and remand all unrelated state claims that fall outside the federal court’s supplemental jurisdiction.

Lastly, prior to the new legislation, there was a long-standing judicial rule that required all defendants to consent to removal.  The revised statute codifies this judicial rule and requires all defendants in a multiple-defendant suit to consent to removal.