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Smith v. Mylan Inc., No. 12—-56028, 2014 WL 3805443 (9th Cir. Aug. 4, 2014)
In Smith v. Mylan Inc., the Ninth Circuit held that the one-year deadline for removal of diversity cases is a procedural, non-jurisdictional requirement that may be waived. In this wrongful death case, the defendants sought removal more than one year after the case was filed, but the plaintiffs never filed a timely motion to remand based on defendants’ violation of the one-year time limitation. The court found that the plaintiffs’ failure to object constituted a waiver of their right to contest removal and that the court lacked authority to remand sua sponte. The decision is consistent with other circuit courts that have addressed the issue.
Plaintiffs filed a wrongful death action in state court on December 22, 2010. Approximately ten months later, plaintiffs served an amended complaint naming three corporate defendants. Initially, the defendants could not remove the case because there was no federal question jurisdiction and the parties were not completely diverse. However, on January 30, 2012, more than one year after the filing of the case, the state court dismissed the last remaining non-diverse defendant. Two weeks later, the defendants removed the matter to federal court, invoking diversity jurisdiction. Plaintiffs did not file a motion to remand or otherwise object to the removal. Rather, shortly after removal, the parties filed a joint report, pursuant to Rule 26(f) of the Federal Rules of Civil Procedure, in preparation for a scheduling conference with the court. Later, on May 3, 2012, the district court sua sponte remanded the case pursuant to 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction, finding that the case was improperly removed more than one year after it commenced in state court. Defendants timely appealed.
The court addressed the issue of whether § 1446(b)’s one-year time limitation for removal of diversity cases is jurisdictional, rather than procedural.
The court held that the one-year time limitation for removal of diversity cases is a procedural, non-jurisdictional requirement that is waiveable and, thus, the district court lacks authority to remand based on the defendants’ violation of § 1446(b)’s one-year time limitation absent a timely filed motion to remand. Although the district court may remand at any time prior to final judgment for lack of subject matter jurisdiction, it cannot remand sua sponte based on a procedural and non-jurisdictional defect, because procedural defects are waiveable. In this case, the plaintiffs’ failure to object constituted a waiver of any right to contest the removal.
The court based its decision on the language of § 1446(b), its legislative history, and noted its conclusion is consistent with those of other circuits that have addressed the one-year time limit in § 1446(b).
Under § 1447(c), the district court must remand “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction[.]”
However, the court may remand for defects other than lack of subject matter jurisdiction only upon a timely motion to remand. Kelton Arms Condo. Owners Ass’n v. Homestead Ins. Co., 346 F.3d 1190, 1193 (9th Cir. 2003) (holding that “the district court cannot remand sua sponte for defects in removal procedure”).
Section 1446(b) provides, in pertinent part:
The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant … of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based….
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant … of a copy of the amended pleading … from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action. (emphasis added by court).
In reaching its decision, the court noted that it has never specifically considered whether the one-year time limitation is procedural or jurisdictional, but that it has examined § 1446(b)’s 30-day time limit within which the defendant must file a notice of removal and the court has found it to be merely procedural. In Fristoe v. Reynolds Metals Co., 615 F.2d 1209, 1212 (9th Cir. 1980), the court held that the 30-day statutory time limit for removal petitions was not jurisdictional and that, although the time limit is mandatory and a timely objection to a late petition will defeat removal, a party “may waive the defect or be estopped from objecting to the untimeliness by sitting on his rights.” The court stated that there was no reason to construe § 1446(b)’s one-year time limitation any differently from its 30-day requirement.
The court stated that its conclusion is consistent with other circuit courts that have addressed the one-year time limit in § 1446(b) and have held that it is merely procedural, not jurisdictional, including Music v. Arrowood Indem. Co., 632 F.3d 284, 288 (6th Cir. 2011); Ariel Land Owners, Inc. v. Dring, 351 F.3d 611, 616 (3d Cir. 2003); In Re Uniroyal Goodrich Tire Co., 104 F.3d 322, 324 (11th Cir. 1997); Barnes v. Westinghouse Electric Corp., 962 F.2d 513, 516 (5th Cir. 1992).
The court further noted that a finding that the time-limit requirements of § 1446(b) are procedural is supported by both the language of the statute and its legislative history. The court indicated there was nothing in the text of the statute suggests that the one-year limit operates differently from the 30-day limit, and neither provision expressly purports to limit federal jurisdiction. Additionally, as the Third Circuit observed, the legislative history indicates that Congress passed the one-year time limit “simply to close a procedural gap that had arisen in the application of the 30-day time limit[.]” Ariel, 351 F.3d at 615.