No Equitable Tolling of 30-Day or One-Year Limits on Removal — Circuit Split

From Staggs v. Union Pacific R.R., 2011 U.S. Dist. LEXIS 13022 (E.D. Ark. Jan. 28, 2011):

Section 1446 of Title 28 establishes the procedure for removal from state court. Relevant to the instant case is § 1446(b), which provides:

The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

28 U.S.C. § 1446(b) (2006). Ultimately, the burden is on a defendant who removes a state court action to federal court to prove that federal jurisdiction exists over the state court suit. Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994) ("[W]here plaintiff and defendant clash about jurisdiction, uncertainties are resolved in favor of remand.").

This action was brought in state court on January 5, 2009, by Kenny and Shelia Staggs against Union Pacific and Heartland Exploration. *** On July 23, 2010, the plaintiffs amended their complaint to add XTO Energy, Inc., as a defendant. On October 19, 2010, the plaintiffs filed a second amended complaint, adding Kendell Lee Staggs as a plaintiff to the lawsuit. On November 4, 2010, Heartland Exploration filed a motion to dismiss, alleging that it did not have an interest in the lawsuit because it had assigned all of its rights in the property at issue to another company, Crestar, before the original complaint was filed. On November 18, 2010, Union Pacific filed a notice of removal pursuant to 28 U.S.C. § 1447. The plaintiffs subsequently filed a motion for remand. In response to the motion to remand, Union Pacific contended that it had no reason to know that Heartland Exploration was not a proper party to the action prior to the time the motion to dismiss was filed; that it filed a notice of removal within thirty days of receipt of the motion to dismiss; and that, under the second paragraph of § 1446(b), its notice of removal was timely filed. Union Pacific later supplemented that response by withdrawing its allegation that it did not or could not have known that Heartland was not a proper party and by arguing that removal was still timely under the first paragraph of § 1446(b) because the notice of removal was filed within thirty days of the second amended complaint. The plaintiffs argue that, regardless which paragraph applies, Union Pacific did not file its notice of removal within thirty days of receiving the initial pleading, as required by the first paragraph of § 1446(b), or within one year of commencement of the action, as required by the second paragraph of § 1446(b), and Union Pacific is barred from doing so now.

Footnote 1 "[T]he one-year limitation period modifies only the second paragraph of § 1446(b), and therefore only applies to cases that were not removable to federal court when originally filed." Brown v. Tokio Marine & Fire Ins. Co., 284 F.3d 871, 873 (8th Cir. 2002).

Union Pacific contends that the Staggs's second amended complaint constitutes an "initial pleading" because it added a new plaintiff, and an action "commences" for the purposes of § 1446(b) whenever a new plaintiff is added to the lawsuit. This Court disagrees. See Ardoin v. Stine Lumber Co., 298 F. Supp. 2d 422, 425 (W.D. La. 2003) (finding that "the addition of new plaintiffs did not commence the action" based on the language of the statute). But see Hill v. Ascent Assurance, Inc., 205 F. Supp. 2d 606, 615 (N.D. Miss. 2002). "Commencement" in the context of § 1446(b) refers to "when the action was initiated in state court, according to state procedures." Bush v. Cheaptickets, Inc., 425 F.3d 683, 688 (9th Cir. 2005). "It is clear that a federal court must honor state court rules governing commencement of civil actions when an action is first brought in state court and then removed to federal court . . . ." Cannon v. Kroger Co., 837 F.2d 660, 664 (4th Cir. 1988); see also Weekley v. Guidant Corp., 392 F. Supp. 2d 1066, 1067 n.1 (E.D. Ark. 2005) ("State law governs when a civil action is commenced for purposes of removal.") (citing Winkels v. George A. Hormel & Co., 874 F.2d 567, 570 (8th Cir. 1989)). In Arkansas, a civil action is commenced by filing a complaint. Ark. R. Civ. P. 3. This Court has interpreted that to mean

[a] civil action, viewed as the whole case, the whole proceeding, can only be commenced once. Pleadings may be amended, but amending pleadings does not commence a civil action. . . . [A] civil action, viewed as the entirety of the case or the entirety of the proceeding, commence[s] when the initial complaint [i]s filed.

Weekley, 392 F. Supp. 2d at 1067-68 (internal citation omitted)***.

In response to the motion to remand, Union Pacific argued that, even if it did not meet the requirements of § 1446(b), the deadlines should be equitably tolled in this instance. The United States District Court for the Eastern District of Missouri recently addressed whether the one-year deadline included in § 1446(b) may be equitably tolled:

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."***

Cole v. Amerigon Inc., No. 1:10CV00172, 2010 WL 5392752, at *2-4 (E.D. Mo. Dec. 21, 2010) (footnotes omitted). Like the district court in Cole v. Amerigon Inc., other "district courts in the Eighth Circuit have held that even where there is 'strong evidence' of forum manipulation, the 'one-year limitation is absolute' and cannot be equitably tolled." Schafer v. Bayer Cropscience LP, No. 4:10CV00167, 2010 WL 1038518 BSM, at *2 (E.D. Ark. Mar. 19, 2010) (quoting Advanta Tech., 2008 WL 4619700, at *3; Thelen v. Wakonda Club, No. 4:04CV40035, 2004 WL 1737382, at *3 (S.D. Iowa Jul. 23, 2004)). These courts have reasoned that "if Congress had wanted § 1446(b) to be claim or party specific, it could have worded the provision to make it so. . . . Because Congress did not do this, the court should not reword the statute to make it read this way." Manske v. Rocky Mountain Holding Co., LLC, No. 4:06CV3198, 2007 WL 570327, at *1 (D. Neb. Feb. 14, 2007).

As to the thirty-day time limit proscribed under the first paragraph of § 1446(b), "[a] defendant who fails to remove within the thirty-day period waives the right to remove at a later time . . . ." Williams v. Safeco Ins. Co. of Am., 74 F. Supp. 2d 925, 928 (W.D. Mo. 1999). Union Pacific fails to cite any case by a court in the Eighth Circuit--and the Court can find none--in which the thirty-day limit was tolled because a non-diverse defendant had been fraudulently joined. See Bearup v. Milacron, No. 01-CV-74455-DT, 2002 WL 482548, at *4 (E.D. Mich. Feb. 28, 2002) (finding that because the defendant had not shown that equitable tolling was applicable in the circuit, remand was appropriate). In fact, it would make little sense to allow Union Pacific to circumvent the one-year time limit in the second paragraph of § 1446(b), which serves as an absolute bar to removal, by tolling the thirty-day time limit in the first paragraph.

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