Roth v. CHA Hollywood Medical Center, L.P., No. 13—55771, 2013 WL 3214941 (9th Cir. June 27, 2013)
The United States Court of Appeals for the Ninth Circuit held that the two thirty-day removal time limits set forth in 28 U.S.C. § 1446(b)(1) and (b)(3) are merely procedural limitations that would be triggered only in cases where the defendant receives an “initial pleading” or “amended pleading” (or “motion or order or other paper”) from which it was ascertainable that the case was removable. The thirty-day time limits are not triggered and do not restrict a defendant’s right to remove a civil action to federal court in cases where no such pleading or “paper” is received by the defendant and the defendant discovers, based on its own investigation, that the case is removable.
A class-action lawsuit was filed in California state court on April 27, 2011, by Amy Roth on behalf of a group of employees of CHS Healthcare Management, L.L.C. More than one year after the initial complaint was filed, Roth (along with an added plaintiff) filed a first amended complaint, naming for the first time CHA Hollywood Medical Center (“CHA”) as a defendant. The amended complaint did not reveal on its face that there was the diversity of citizenship or that there was a sufficient amount in controversy to support jurisdiction under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1453(c)(1). More than three months later, after conducting its own investigation into the citizenship of the would-be class members and the amount in controversy, CHA (joined by the other defendants) filed a notice of removal to federal court. Defendants alleged diversity jurisdiction under the CAFA, based on the diverse citizenship of one would-be class member. Additionally, defendants alleged an amount in controversy in excess of the CAFA minimum jurisdictional requirement ($5 million).
Plaintiffs moved to remand. In opposing the motion to remand, defendants submitted the declaration of an individual who had been employed in California by CHA during the class period in a position that qualified her as a member of the would-be plaintiff class. In her declaration, the employee stated that she had moved to Nevada in late 2011 and that she intended to live in Nevada for the foreseeable future.
The district court granted the motion to remand. It found that the defendants had not received from the plaintiffs (in the amended complaint or other documents) sufficient indication that the case was removable under either CAFA diversity jurisdiction or federal question jurisdiction. It held that the defendants could not remove based on information discovered by CHA, as opposed to the information contained in the amended complaint or some other document received from the plaintiffs. The district court ruled that removal was improper, even if the jurisdictional requirements of the CAFA or federal question had been satisfied because neither of the thirty-day periods specified in § 1446(b)(1) or (b)(3) had been triggered by documents received from plaintiffs.
On appeal, defendants asserted the position that the case is removable based on diversity jurisdiction under CAFA. The defendants argued that the two thirty-day periods specified in section 1446(b)(1) and (b)(3) are merely procedural limitations on removal that would apply only if triggered by the plaintiff sending the defendant a pleading or other document from which it could be ascertained that the case is removable. The defendants argued that in this case the procedural time limits were not triggered because the defendants never received from the plaintiff a pleading or other document from which it was ascertainable that the case was removable.
The court addressed the issue of whether the two thirty-day time limits for removal set forth in § 1446(b)(1) and (b)(3) are merely procedural limitations that would apply only if triggered by the defendant’s receipt of an “initial pleading” or “amended pleading” (or “motion or order or other paper”) from which it may be ascertained that the case is removable, or whether these time periods are the only periods during which the defendant may file a notice of removal.
The court held that the two thirty-day removal time limits set forth in § 1446(b)(1) and (b)(3) are merely procedural limitations on removal that are triggered only in cases where the defendant has received an “initial pleading” or “amended pleading” (or “motion or order or other paper”) from which it may be ascertained that the case is removable.
The court noted that the procedures for removal are set forth in 28 U.S.C. § 1446. Section 1446(a) provides generally that a defendant seeking to remove a civil action shall file a notice of removal in the district court. The section further sets forth restrictions on removal, including a requirement that the notice of removal be filed within thirty days of receipt from the plaintiff of an initial pleading or other documents from which it is ascertainable that the case is removable. Specifically, § 1446(b)(1) states, “The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading….” Additionally, section 1446(b)(3) states that if the case stated by the initial pleading is not removable, “a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion or order or other paper from which it may first be ascertained that the case is one which is or has become removable.”
The court concluded that the foregoing provisions permit a defendant to remove outside the two thirty-day periods on the basis of its own information, provided that it “does not run afoul of either of the thirty-day deadlines.” The court explained that the provisions of § 1446(b)(1) and (b)(3) place strict limits on a defendant who is put on notice of removability by a plaintiff. The court stated:
“A defendant should not be able to ignore pleadings or other documents from which removability may be ascertained and seek removal only when it becomes strategically advantageous for it to do so. But neither should a plaintiff be able to prevent or delay removal by failing to reveal information showing removability and then objecting to removal when the defendant has discovered that information on its own. Similarly, a plaintiff’s ignorance of the citizenship of would-be class members should not defeat removal if defendant independently knows or learns that information.”
The court stated that if a plaintiff believes an action may be removable and that there is a danger the defendant may delay filing a notice of removal until a strategically advantageous moment, then the plaintiff need only provide to the defendant a document from which removability may be ascertained. Such a document would then trigger the thirty-day removal period, during which the defendant must either file a notice of removal or lose the right to remove. The court indicated that this strategy may be particularly useful in a CAFA case because CAFA cases may be removed at any time, provided that neither of the two thirty-day periods under Section 1446(b)(1) and (b)(3) has been triggered. By comparison, in non-CAFA diversity cases, the notice of removal must be filed within one year of the commencement of the action. See 28 U.S.C. § 1446(c)(1).