Norton Rose Fulbright: 9th Circuit Eases Limits On Removals To Federal Court

By Joshua D. Lichtman

The Ninth Circuit has held that, because a complaint was “indeterminate” with respect to allegations of the parties’ citizenship and the amount in controversy, a defendant who “conducted its own investigation . . . and discovered that the case was removable,” was not barred from removing the action more than thirty days after service of the complaint.

A defendant that “has not lost the right to remove because of a failure to timely file a notice of removal under § 1446(b)(1) or (b)(3) may remove [an action] to federal court when it discovers, based on its own investigation, that a case is removable,” the U.S. Ninth Circuit Court of Appeals held on June 27, 2013, in Roth v. CHA Hollywood Medical Center, L.P., Case No. 13-55771 [enhanced opinion available to subscribers].  In Roth, the plaintiff filed a state law wage and hour class action, and on May 24, 2012, filed a first amended complaint naming CHA Hollywood Medical Center (“CHA”) as a defendant.  Neither the complaint, nor any other “document” or “paper” provided by the plaintiff to CHA, set forth the amount in controversy or the citizenship of the putative class members.  On August 15, 2012, CHA obtained a declaration from one of the putative class members - - one of its current employees -- that she satisfied the requirements for citizenship in the State of Nevada.  On September 4, 2012, CHA filed a notice of removal on the basis that the declaration established the minimal diversity of citizenship between at least one plaintiff and one defendant required under the Class Action Fairness Act (“CAFA”).  The Ninth Circuit held that such removal, filed within thirty days after CHA obtained the declaration, was timely.

The Ninth Circuit explained that the authorization for a defendant to remove an action to Federal Court derives from 28 U.S.C. § 1441, and that, while 28 U.S.C. § 1446 sets forth the “procedures” for, and “restrictions on” removal (namely, that under §§ 1446(b)(1) and (3), the notice of removal must be filed within thirty days of service of “an initial pleading or other document from which it is ascertainable that the case is removable”), the provisions of §§ 1446(b)(1) and (3) are not the “exclusive authorizations” for removals.  Rather, they are “merely periods during which a defendant must remove if one of the thirty-day time limits is triggered.”

The Ninth Circuit then reaffirmed its prior decision in Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 693-94 (9th Cir. 2005) [enhanced version], that a defendant has no duty of inquiry with respect to removability where (as was the case here) the complaint is “indeterminate” as to the parties’ citizenship or the amount in controversy.  Accordingly, the Ninth Circuit held, where “a defendant conduct[s] its own investigation, even though not required to do so, and discover[s] that a case [is] removable,” it may remove more than thirty days after service of the complaint “provided that it has not [otherwise] run afoul of either of the thirty day deadlines” in §§ 1446(b)(1) and (3).  

As a result of this ruling, defendants who need more than thirty days after service of an initial pleading to obtain evidence to support assertions of diversity of citizenship or the requisite amount in controversy, either under CAFA or the standard diversity jurisdiction provisions in 28 U.S.C. § 1332, should not be deterred from removing, provided that they have otherwise complied with §§ 1446(b)(1) and (3).  

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