February 12, 2020 / 10:17 PM / 16 days ago

House Dems introduce bill to combat defense tactic of ‘snap removals’

(Reuters) - Representatives Jerrold Nadler (Democrat, N.Y.) and Hank Johnson (Democrat, Georgia) of the House Judiciary Committee introduced a bill last week to counter what Nadler has called the “important and growing problem” of jurisdictional gamesmanship by defendants using so-called “snap removal” to evade state court. Ten other House Democrats have signed onto the bill. And though the proposed legislation seems unlikely to become law in this Congress – given how few House bills have received Senate approval – it’s notable that what had been an obscure quirk of the Federal Rules of Civil Procedure has become an issue that congressional Democrats now deem worthy of legislative attention.

Snap removals, as I’ve reported, are rooted in a 1948 revision of the Forum Defendant Rule that was intended to block plaintiffs from improperly naming local defendants solely to defeat federal court diversity jurisdiction. Under the 1948 rule change, if plaintiffs fail to serve their complaints on in-state defendants, the other named defendants can remove the case to federal court. That’s straightforward enough. But when state court dockets began to go online, savvy defendants realized that complaints often showed up on dockets before plaintiffs could serve their suits. So as soon as a suit hit state-court dockets, defendants would file “snap removals” based on the failure to effect instantaneous service on the local defendant.

Trial lawyers have been complaining about snap removals for at least five years, but the tactic has recently been blessed by two federal circuits: the 3rd U.S. Circuit Court of Appeals in 2018’s Encompass Insurance v. Stone Mansion (902 F.3d 147) and the 2nd Circuit in 2018’s Gibbons v. Bristol-Myers (919 F.3d 699).

The new bill, which followed a House Judiciary hearing last November on snap removals, adopts a “snap back” fix: Federal courts would be required to remand cases that were removed for failure to serve the forum defendant if plaintiffs properly served that defendant within 30 days or within the time specified in state service process rules. The snap back solution has been advocated by University of Pittsburgh law professor Arthur Hellman, who was among the first scholars to identify the snap removal maneuver. The congressional proposal stopped short of a rule change suggested by Northwestern law professor James Pfander, who urged the Judiciary Committee to eliminate the requirement in the 1948 rule that in-forum defendants be served to defeat federal court jurisdiction.

I talked about the new bill to the two practitioners who testified at the hearing in November, Ellen Relkin of Weitz & Luxenberg and Kaspar Stoffelmayr of Bartlit Beck. As they did at the hearing, Relkin and Stoffelmayr offered sharply contrasting views on the frequency of snap removals and the need for congressional reform.

“The bill seems to be a solution in search of a problem and would, more than anything, just assist the litigation strategy of a few plaintiffs’ lawyers in a handful of cases,” Stoffelmayr said in an email. He pointed to the only empirical study of snap removals, the 2018 paper Closing the Snap Removal Loophole (86 U. Cin. L. Rev. 541), by then-Supreme Court fellow Valerie Nannery. By Stoffelmayr’s calculation, Nannery’s data on pre-service removals to federal court between 2012 and 2014 suggest that defendants used the snap removal tactic in only about 150 cases a year – a tiny fraction of the federal civil docket. “In my experience and the experience of everyone I’ve talked to, pre-service removal remains uncommon and very much the exception rather than the rule,” Stoffelmayr said by email.

And the bill’s proposed solution, he said, would create problems of its own, injecting uncertainty and complexity into the removal process. Because the House Judiciary’s proposal would give plaintiffs up to 30 days to serve in-forum defendants, other defendants would not know, when they file removal motions, if cases will actually be removable. Their motions could turn out just to be costly alarm clocks, reminding plaintiffs to serve other defendants. “There’s no justification for introducing this additional uncertainty and inefficiency into an already complex area of the law,” Stoffelmayr said.

But plaintiffs’ lawyer Relkin – who specializes in products liability suits against drug and medical device makers - told me defendants have become increasingly creative about exploiting the snap removal loophole to keep suits out of state court. Companies aren’t simply patrolling electronic state court dockets, she said. They’re evading service to give their lawyers time to file snap removal motions. Weitz & Luxenberg argued in a brief in consolidated remand litigation before U.S. Magistrate Judge James Clark of Newark, N.J. that defendants in hip implant suits filed in state court refused to accept service via their registered agent, CT Corporation, and, when plaintiffs attempted service at their corporate headquarters, “purposely (made) agents unavailable.”

Relkin said that her firm has actually stationed process servers in corporate parking lots with mobile printers so they can attempt to serve lawsuits as soon as complaints hit electronic dockets, but that process servers are increasingly likely to face stall tactics. “It’s preposterous,” said Relkin, who argues that the data underlying the 2018 snap removal study is now obsolete. “Snap removal has become ubiquitous in the 3rd Circuit,” she said.

Relkin said the House Judiciary Committee was smart to tailor its bill to solve the discrete problem. “We’re optimistic,” she said. “This is really a states’ rights issue. If snap removals aren’t stopped, there’s not going to be state-made law anymore.”

Editor's note: This post has been corrected. A previous version incorrectly reported that Weitz & Luxenberg's brief alleging defense tactics to evade service was in hernia mesh litigation.

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