OH SNAP! The District Court of New Jersey Determines Post Removal Service of Non-Diverse Defendant Does Not Divest Subject Matter Jurisdiction

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Oh Snap! The District Court of New Jersey Determines Post Removal Service of Non-Diverse Defendant Does Not Divest Subject Matter Jurisdiction

By Kristine Ryan, Esq., on August 18, 2020

In the usual course, a defendant may not remove a case to federal court based upon diversity jurisdiction pursuant to 28 U.S.C. § 1332 if the action includes a non-diverse defendant or the defendant is a resident of the state in which the action was filed.  However, under the concept of “snap removal”, some circuits, including the Second and Third Circuits, have held that removal is proper if the action is removed before the non-diverse or forum defendant is served.  See Encompass Ins. Co. v. Stone Mansion Rest., Inc., 902 F.3d 147, 153 (3d Cir. 2018) (citing 28 U.S.C. § 1441(b)(2) (“A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.”); Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699, 705 (2d Cir. 2019); Texas Brine Co. v. Am. Arbitration Assoc., 955 F.3d 482, 487 (5th Cir. 2020).

Recently, the District of New Jersey held that post-removal service on the non-diverse defendant “did not extinguish [the] Court’s subject matter jurisdiction once attached”, and does not provide a basis for remand. See Dillard v. TD Bank, NA, No. 1:20-CV-07886-NLH-JS, 2020 WL 4339347, at *1 (D.N.J. July 28, 2020).

In Dillard, the plaintiff was a citizen of New Jersey, and defendant TD Bank a citizen of Delaware. The plaintiff’s complaint also individually named a citizen of New Jersey as a defendant.  TD Bank removed the case to federal court on the basis of diversity jurisdiction before the individually named defendant was served.  After removal, the non-diverse individual defendant accepted service.

Acknowledging the absence of diversity, the parties filed a “consent” motion to remand.  The Court rejected the motion.  It held that where subject matter jurisdiction under § 1332(a) is properly established at the time of removal, subject matter jurisdiction cannot be undone through the unilateral agreement of the parties to remand.  In other words, the post-removal agreement to remand the case to state court was without force, and the Court retained jurisdiction.  Id., at *2.

Interestingly, a court in the Southern District of Florida held differently the very next day.  See Roberts v. Clifford, No. 20-80771-CIV, 2020 WL 4350727, at *2 (S.D. Fla. July 29, 2020).  In that case, the Court granted remand.  It held that a court cannot ignore the complete-diversity requirement of § 1441(b)(2) even where the non-diverse defendant has not been served at the time of removal.

When it comes to propriety of removal, it is not only all about the timing, but location, location, location.

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