Commercial Litigation and Arbitration

Removal & Federal Jurisdiction — Effect of State Court Consolidation

Removal. Wife and Husband sue defendant in state court for injuries to wife and loss of consortium by husband. Time for removal expires. Husband then sues defendant in state court for injuries to himself arising out of the same events. State court consolidates the two actions. Defendant removes the consolidated action in a timely manner as to the second action. Does that effectively remove the first action, too? It depends, according to District judge Lance M. Africk in Lerille v. Monsanto Corp., 2007 U.S. Dist. LEXIS 57403 (E.D. La. Aug. 6, 2007): ‛Federal courts look to state substantive law to determine the precise effect of the state court consolidation, namely whether ‘the state consolidation destroyed the identity of each suit and merged them into one,’ thereby enabling the 30-day period under Section 1446(b) to be determined based on service of the consolidated lawsuit“ (quoting the decision of District Judge Shira A. Scheindlin in In re MTBE Prods. Liab. Litig., 399 F. Supp. 2d 340, 353 (S.D.N.Y. 2005)). Because the two lawsuits were not merged into one as a matter of Louisiana law, the notice of removal was effective only as to the second action, not the first.

Supplemental or Federal Question Jurisdiction. Nor was either supplemental or federal question jurisdiction available. Supplemental jurisdiction was unavailable because the two lawsuits remained separate, and a defendant may not use supplemental jurisdiction to remove a separate lawsuit: "The phrases ‘in any civil action’ and ‘in the action’ in [the] supplemental jurisdiction statute require that supplemental jurisdiction be exercised in the same case, not a separate or subsequent case“ (internal quotation marks and brackets, and citation, omitted). As for federal jurisdiction: "Pursuant to Section 1446(b), defendant had his opportunity to remove [the first] lawsuit within 30 days of [the date] when he was served with that lawsuit. He failed to do so." Held, first action severed and remanded.

It is difficult to conceive a more expensive way to litigate these cases, but this result does have potential benefits for the defendant.

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