Commercial Litigation and Arbitration

The One-Year Limit on Removal in 28 U.S.C. § 1446(b) Is Not Subject to an Equitable Exception — Case Law Split

From Cole v. Amerigon Inc., 2010 U.S. Dist. LEXIS 134745 (E.D. Mo. Dec. 21, 2010):

If a case is not removable as initially pled, "a notice of removal may be filed within thirty days after the receipt...of a copy of an amended pleading, motion, order or other paper" that alerts the defendant that the action is removable. [28 U.S.C. § 1446(b).] The statute then limits a defendant's ability to remove an action by stating that "a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after the commencement of the action." Id.

Removal statutes are strictly construed. *** Any doubts about the propriety of removal are resolved in favor of remand. ***

B. Equitable Exception

***The circuits disagree as to whether the one-year limit is subject to equitable tolling. See Tedford v. Warner-Lambert Co., 327 F.3d 423, 425-26 (5th Cir. 2003) (discussing disagreement). Although the Eighth Circuit has not discussed this precise issue, it has stated that "[f]ailure of a party to remove within the one year limit precludes any further removal based on diversity." Lindsey v. Dillard's, Inc., 306 F.3d 596, 600 (8th Cir. 2002).

The legislative history of Section 1446(b) provides as follows:

Subsection (b)(2) amends 28 U.S.C. § 1446(b) to establish a one-year limit on removal based on diversity jurisdiction as a means of reducing the opportunity for removal after substantial progress has been made in state court. The result is a modest curtailment in access to diversity jurisdiction. The amendment addresses problems that arise from a change of parties as an action progresses toward trial in state court. The elimination of parties may create for the first time a party alignment that supports diversity jurisdiction. Under section 1446(b), removal is possible whenever this event occurs, so long as the change of parties was voluntary as to the plaintiff. Settlement with a diversity-destroying defendant on the eve of trial, for example, may permit the remaining defendants to remove. Removal late in the proceedings may result in substantial delay and disruption.

H.R. Rep. No. 100-889, at 72 (1988), reprinted in 1988 U.S.C.C.A.N. 5982, 6032-33.

Defendant relies primarily upon case law from the Fifth Circuit to argue that the one-year limit is subject to an equitable exception. Courts within this district, however, have found based on the plain language of the statute as well as its legislative history that the one-year limitation is absolute. ***

The undersigned finds that the one-year limit is absolute and cannot be equitably tolled. The plain language of the statute, legislative history of the statute, and precedent in this district compel this result. It is true, as defendant notes, that this finding may permit forum manipulation by plaintiffs. Nevertheless, creating an equitable exception for § 1446(b) would "[contravene] the Court's role of interpreting and applying a statute as written by Congress." Harris, 2007 WL 1701868, at * 3 (citing United States v. White Plume, 447 F.3d 1067, 1076 (8th Cir. 2006) (acknowledging that Congress, not the courts, write statutes)).

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