“Snap removal”: An aggressive new way to get into federal court

In Texas Brine Co., LLC v. Am. Arbitration Ass’n, Inc. et al., No. 18-31184, 2020 WL 1682777 (5th Cir. Apr. 7, 2020), the United States Fifth Circuit Court of Appeals joined the federal Second, Third, and Sixth Circuit Courts of Appeal in permitting a new and little-known procedural maneuver called “snap removal.” The Fifth Circuit’s opinion—as well as the related decisions from its sister circuits—adds a crucial gloss to 28 U.S.C. § 1441(b)(2), the provision of the U.S. Code that contains the “forum-defendant rule.”  

The forum-defendant rule provides that, in civil cases otherwise removable on the basis of diversity jurisdiction, a lawsuit may not 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.” Prior to the advent of snap removal, and upon receipt of a state-court lawsuit from their client, defense counsel could be counted on to analyze the citizenship of the parties to determine if removal was an option. If the parties were diverse but one (or more) of the defendants was a resident of the forum state, defense counsel would have had no choice but to dutifully inform their client that removal was not a viable option. Given the new snap removal procedure, however, that is no longer necessarily the case.

In Texas Brine Co., the Fifth Circuit held that a non-forum defendant, in a case where a federal court’s exercise of diversity jurisdiction is otherwise proper, may remove the lawsuit to federal court despite the presence of forum-defendants as long as the non-forum defendant removes the case before the forum-defendants have been “properly joined and served.” There, Texas Brine Co. filed suit against the American Arbitration Association (the “AAA”) and two individuals in Louisiana state court. Although AAA was a New York citizen for diversity purposes, the two individuals were citizens of Louisiana and, therefore, the forum-defendant rule appeared to prohibit removal. Regardless, AAA removed the case to the United States District Court for the Eastern District of Louisiana prior to the two Louisiana residents being served. In federal court, Texas Brine Co. moved for remand, arguing that the forum-defendant rule defeated federal jurisdiction. The federal district court held that the plain language of 28 U.S.C. § 1441(b)(2) permitted removal as long as the forum-defendants had not yet been “properly joined and served” and, as a result, the court denied Texas Brine Co.’s motion for remand. As the federal district court also granted the defendants’ separately-pending motions to dismiss, final judgment was granted against Texas Brine Co. On appeal, Texas Brine Co. challenged the district court’s denial of its motion for remand and granting of final judgment. On appeal, the Fifth Circuit affirmed the denial of Texas Brine Co.’s motion for remand and, in so doing, approved the “snap removal” procedure for use by litigants within the Fifth Circuit.

The snap removal procedure is not limited to use by only non-resident defendants. In both the Second and Third Circuit Court of Appeals’ decisions approving the procedure (both of which were cited with approval by the Fifth Circuit in Texas Brine Co.)—Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699 (2d Cir. 2019) and Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. 2018)—the defendant that removed the case to federal court was itself the forum defendant. In those cases, the forum defendant discovered the existence of the plaintiff’s lawsuit before it (the forum defendant) had been served and, without waiting to be served, preemptively filed a notice of removal. Because the forum-defendant rule is only triggered once a party-in-interest has been “properly joined and served,” the Second and Third Circuits held that removal was appropriate in both instances (despite loud cries of “absurdity” and “gamesmanship” by plaintiffs’ counsel).

For defendants sued in state court that perceive an increased chance of success in federal court, Texas Brine Co. (and the similar decisions from the Second, Third, and Sixth Circuit Courts of Appeal) mandates that defense counsel perform the removal analysis immediately upon receipt of the case, with particular attention paid not just to who the other parties are but when those other parties had been served. Even if defense counsel represents a forum defendant, removal may still be proper if defense counsel can file the notice of removal before its client is served with process (of course, the decision to do so requires weighing of other jurisdictional factors). If able to employ the new snap removal procedure in time, aggressive and quick-footed defense counsel may be able to not only remove the case to federal court but also move to dismiss the claims against their client under more robust federal standards—as the defense counsel for the AAA did in Texas Brine Co. It cannot be over-emphasized that, as far as snap removal is concerned, time is of the essence.

For plaintiffs who wish to keep their lawsuit in state court, Texas Brine Co. (and the similar decisions from the Second, Third, and Sixth Circuit Courts of Appeal) advocates secrecy and speed. In the jurisdictions in which the snap removal procedure is permitted, plaintiffs should think twice before previewing their lawsuit to defense counsel before it is served. Once the decision to proceed with the lawsuit has been made, plaintiffs should serve their defendants as quickly as possible and, in so doing, endeavor to serve the forum-defendants first.

For reference, the decisions adopting the “snap removal” procedure are:

• Texas Brine Co., LLC v. Am. Arbitration Ass’n, Inc. et al., No. 18-31184, 2020 WL 1682777 (5th Cir. Apr. 7, 2020)
• Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699 (2d Cir. 2019)
• Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. 2018)
• McCall v. Scott, 239 F.3d 808, 813 n.2 (6th Cir. 2001)