By Allison Vogel, Esq., April 20, 2021
It is well-settled that a defendant may not remove a case to federal court based upon diversity jurisdiction under 28 U.S.C. § 1332 if the action includes a non-diverse defendant or the defendant is a resident of the state where the action was filed. In Encompass Ins. Co. v. Stone Mansion Rest., Inc., 902 F.3d 147, 153 (3d Cir. 2018), however, the Third Circuit blessed the concept of “snap removal,” holding that a forum defendant who had not yet been properly joined and served may remove a state court action provided diversity jurisdiction exists. We have since blogged about the District Court of New Jersey’s July 2020 decision in Dillard v. TD Bank, NA, which broadly applied the concept of “snap removal” in Encompass by permitting a non-forum defendant to remove to federal court before the plaintiff served the diversity-defeating forum defendant. (You can find NFC’s initial blog on this decision here).
Recently, on March 22, 2021, the same District Court in Dillard granted the plaintiff’s motion for reconsideration and remanded the case to state court. See Dillard v. TD Bank, NA, No. 1:20-CV-07886-NLH-JS, 2021 WL 1085461 (D.N.J. Mar. 22, 2021). In doing so, the Court relied on several recent District of New Jersey decisions remanding for lack of subject matter jurisdiction where plaintiff and an individual defendant were citizens of the same state. See Burga v. UniFirst Corp., No. 20-10849, 2020 WL 8452558, at *3 (D.N.J. Dec. 3, 2020), report & recommendation adopted, 2021 WL 395897 (D.N.J. Feb. 4, 2021) and Stanley v. Lowe’s Companies, Inc., No. 19-15436 (MAS), 2020 WL 1531387, at *4-5 (D.N.J. Mar. 31, 2020). The Court explained that before snap removal can be effective, “the citizenship of all named defendants must be considered in determining whether diversity jurisdiction has been established, regardless of whether they have yet been served.” Unlike Encompass, the Court held that the parties were not completely diverse under § 1332(a), which divested the Court of subject matter jurisdiction.
In light of recent case law, employers will face an uphill battle to prevail in snap removing cases where a plaintiff brings an action in New Jersey state court and names at least one non-diverse defendant. Employers should therefore be mindful of the citizenship of all named defendants, regardless of whether they have been served, when deciding whether to remove based on diversity jurisdiction.
