Here, we look at the question of whether an out-of-state defendant can remove a state court action to federal court when an in-state party is also named as a defendant.
Assume this scenario: Plaintiff Johnson sues Defendant Smith and Defendant Williams in Mississippi state court. The parties are residents of these states:
So, there is complete diversity of citizenship between the parties. Also, assume the amount in controversy exceeds $75,000.
As a result, the federal district court in Mississippi would have had original diversity jurisdiction over the case pursuant to 28 U.S.C. Section 1332 if Johnson had decided to file in federal court.
Under Section 28 U.S.C. Section 1441 on removal, when a district court would have had jurisdiction over the suit if it had been filed in federal court, a defendant may remove the state court case to federal court.
Thus, at first glance, Smith and Williams should be able to remove Johnson’s lawsuit to federal court.
This is where the forum defendant rule comes into play.
As noted, the federal court would have had original diversity jurisdiction over Johnson’s suit had he decided to file in federal court.
But, Johnson filed in state court, and Section 1441 says the suit cannot be removed “if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.”
Here, Williams is a resident of Mississippi, so it appears the suit cannot be removed to federal court after all.
Here’s one more twist.
Assume one last fact – – that Johnson served Smith with the summons and complaint before he serves Williams. Does that matter? “Yes”.
Section 1441 states that the suit cannot be removed “if any of the parties in interest properly joined and served as a defendant is a citizen of the State in which such action is brought.”
Courts have held, virtually uniformly, that where diversity does exist between the parties, an unserved resident defendant may be ignored in determining removal under Section 1441. Ott v. Consolidated Freightways Corporation of Delaware, 213 F.Supp. 2d 662 (S.D. Miss. 2002).
Thus, under our scenario, the fact that Williams is a Mississippi resident (i.e., a forum defendant) will not preclude Smith from removing the case if Smith does so before Williams is served.
In addition, it would seem that Smith could remove the action before he is served, as long as he does it before Williams is served.
If you represent the plaintiff in a similar scenario and want to stay in state court, get the in-state defendant served right away and before you serve the out-of-state defendant.
Panter Law Firm, PLLC, 7736 Old Canton Road, Suite B, Madison, MS 39110