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Rabu, 21 Agustus 2013

New Stuff #2

Our continuing interest in removal/remand strategies for extricating our clients from state-court hellholes comes as no surprise to anyone who’s been following our blog for any length of time.  In particular, we’ve advocated and (we flatter ourselves) helped to popularize the technique of pre-service removal – see our most recent prior post here.


Basically, pre-service removal eliminates a loophole in the federal removal statute that allows plaintiffs to keep cases in which diversity of citizenship indisputably exists in state court through the device of suing an in-state defendant - if that defendant has been "properly joined and served."  Pre-service removal eliminates this “forum defendant” loophole by removing the action to federal court before the plaintiff has sued the in-state defendant (or, indeed, has served anybody at all).

We’re pleased to pass along a new win on this issue in New Jersey, which is pretty much the pre-service removal “ground zero,” given the number of pharmaceutical manufacturers with the misfortune of being headquartered in this notoriously pro-plaintiff jurisdiction.  The case is Poznanovich v. AstraZeneca Pharmaceuticals LP, No. 3:11-cv-04001-JAP-TJB, slip op. (D.N.J. Dec. 12, 2011).

Poznanovich is a Nexium case where the plaintiff – an Illinois resident attracted by New Jersey’s pro-plaintiff reputation – chose to sue in New Jersey state court.  Two named defendants, AstraZeneca LP and KBI Sub Inc., were allegedly New Jersey citizens, but the other defendants managed to remove the case before either of those defendants was served with process.

The recurring question on remand (before the Honorable Joel Pisano) was the usual – does the court follow the express language of the removal statute, 28 U.S.C. §1441(b), which predicates the forum defendant loophole on that defendant being “properly joined and served”?  Go with the plain meaning of the statutory text and the removal is proper.  Make up some speculation that the plain text leads to some “absurd” result (why isn’t the forum defendant rule itself “absurd” in the 21st Century?) and a court can find a way to remand.

Poznanovich fortunately was willing to give Congress credit for meaning what it said.  Finding (quite properly) that precedent on this issue was “split” (without any binding appellate authority), slip op. at 3, the court chose to adopt the majority view of the New Jersey federal courts and denied remand.

[T]he Court concludes that the weight of the authority and better reasoning supports denial of Plaintiff’s motion to remand.  The Court finds that the language of the statute is plain, and, thus, adherence to the plain language is required. . . .  Here, Congress expressly used the phrase “properly joined and served,” and this Court should not adopt an interpretation of the statute which renders the “and served” language superfluous.  Under the unambiguous language of the statute, the presence of an unserved forum defendant does not prohibit removal by a non-forum defendant in cases where complete diversity exists.
Slip op. at 8.

The court also disposed of some subsidiary red herring arguments.  The first – whether the forum defendant itself could remove before service – went by the boards because the moving party wasn’t, in fact, a forum defendant.  A partnership’s citizenship is determined solely by the citizenship of that partnership’s members, and is not affected by anyone with whom the partnership may later decide to form other partnerships.  Poznanovich, slip op. at 3-4.  Here, the plaintiff’s overpleading, suing a bunch of unnecessary peripheral entities, came back to bite him, since one of those peripheral entities was able to remove as a non-forum defendant.

Second, the plaintiff argued that removal simply could not occur in the absence of formal service.  The court correctly perceived that argument as garbage.  Need not does not equal must not.  Supreme Court precedent (Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999)), that defendants need not respond to unserved complaints, does not disable defendants from responding if they so choose:

That decision [Murphy], however, did not hold that formal service is a prerequisite for removal.  Indeed, a party is free to waive service of process. . . .  [C]ourts appear to routinely hold that formal service is not a prerequisite to removal.
Poznanovich, slip op. at 9-10 (citations omitted).

Third, plaintiff’s invoking the unanimity requirement was a smoke screen, because unserved defendants need not consent to removal.  Id. at 10.

Last and least, the subject matter jurisdiction of the court was not dependent upon prior service of process.  Since the state court had jurisdiction over the action from its inception, removal conferred the same jurisdiction on the federal court.  Id. at 10-11.

Anyway, Poznanovich confirms what we already thought – that the “plain meaning” approach has by far the better side of the argument.  The “absurdity” approach is just judicial nullification, pure and simple.  There’s no constitutional issue here, so if Congress thinks the law is being misapplied, it can always change the statute.  As Poznanovich points out, the majority rule commands majority support for good reason.

Congrats to Amy Fisher at Ice Miller for emerging victorious, and further thanks for passing the decision along to us.

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