Snap Removal After Texas Brine: Considerations for Forum Defendants in the Fifth Circuit
In Short
The Situation: Defendants sued in state court are making use of a procedural technique known as "snap removal" to get otherwise non‑removable cases into federal court. Snap removal takes advantage of the plain language of the "forum defendant rule" in the removal statute and allows a fast‑acting defendant to remove an action to federal court on diversity grounds, so long as no forum defendant has been served. Some plaintiffs have cried foul that forum defendants are pursuing snap removal.
The Result: The Second and Third Circuits have concluded that snap removal by a forum defendant is permissible based on the plain language of the removal statute. In both cases, the courts rejected the plaintiffs' arguments that a forum defendant's quick action to remove a case before being served was procedural gamesmanship, violated Congressional intent, or produced an absurd result.
Looking Ahead: Most recently, the Fifth Circuit addressed snap removal for the first time in Texas Brine Co. v. American Arbitration Ass'n, 955 F.3d 482 (5th Cir. 2020). That decision approved removal by a non‑forum defendant, and it is unclear whether the court's reasoning will extend as far as the Second and Third Circuits.
The Forum Defendant Rule and Snap Removal
A defendant's ability to remove an action from state to federal court is limited in cases involving diversity of citizenship. 28 U.S.C. § 1441(b). Under the forum defendant rule, a suit that is "otherwise removable solely on the basis of [diversity of citizenship] 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." Id. § 1441(b)(2). "In the usual case, application of the forum defendant rule is straightforward: a defendant is sued in a diversity action in the state courts of its home state, is served in accordance with state law, attempts to remove the case, and is rebuffed by a district court applying Section 1441(b)(2)." Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699, 705 (2d Cir. 2019).
Defendants have been overcoming the forum defendant rule by employing snap removal. That technique allows a defendant—including a forum defendant—to remove a case to federal court on diversity grounds after the suit is filed in state court, but before the forum defendant is served.
The Third Circuit became the first federal appellate court to address the practice, in Encompass Insurance Co. v. Stone Mansion Restaurant Inc., 902 F.3d 147 (3d Cir. 2018). There, the court reviewed whether § 1441(b)(2) permits snap removal by a forum defendant. Id. at 151‑54. "Starting with the [statutory] text," it "conclude[d] that the language of the forum defendant rule in section 1441(b)(2) is unambiguous. Its plain meaning precludes removal on the basis of in‑state citizenship only when the defendant has been properly joined and served." Id. at 152. The court acknowledged that "[r]easonable minds might" question the policy of that result, but did not consider that question relevant to its statutory interpretation. Id. at 154.
In Gibbons, the following year, the Second Circuit also reviewed the permissibility of snap removal by a forum defendant. That court concluded that "[t]he statute plainly provides that an action may not be removed to federal court on the basis of diversity of citizenship once a home‑state defendant has been 'properly joined and served.'" Gibbons, 919 F.3d at 705 (quoting 28 U.S.C. § 1441(b)(2)). "By its text, then, Section 1441(b)(2) is inapplicable until a home‑state defendant has been served in accordance with state law[.]" Id. The Court added that "while it might seem anomalous to permit a defendant sued in its home state to remove a diversity action," that practice "'does not contravene' Congress's intent to combat fraudulent joinder." Id. at 706 (citation omitted).
Texas Brine and What it Means for Forum Defendants
Most recently, in Texas Brine, the Fifth Circuit held that the forum defendant rule does not prohibit snap removal by a non‑forum defendant. 955 F.3d at 485. Looking to the statutory text, the court found that the plain language allows snap removal, and it rejected the plaintiff's assertion that snap removal produces an absurd result. Id. at 486‑87. Agreeing with the Second Circuit in Gibbons, the Fifth Circuit emphasized that § 1441(b)(2) only applies when a home-state defendant has been served in accordance with state law. Id. at 486. Consequently, "[a] non‑forum defendant may remove an otherwise removable case even when a named defendant who has yet to be 'properly joined and served' is a citizen of the forum state." Id. at 487.
The Fifth Circuit did not limit its holding to non‑forum defendants, but noted that it was "[o]f some importance" that "the removing party" was "not a forum defendant." Id. Several district courts in the Fifth Circuit previously rejected the use of snap removal by a forum defendant. E.g., Smethers v. Bell Helicopter Textron Inc., No. 16‑cv‑58, 2017 WL 1277512, at *1‑3 (S.D. Tex. Apr. 3, 2017). Those decisions, however, predated Encompass and Gibbons. Following Texas Brine, at least one district court has concluded that § 1441(b)(2) permits a forum defendant "to snap remove a case before that defendant has been served with process," even if that defendant is the only named defendant. Latex Constr. Co. v. Nexus Gas Transmission, LLC, No. 20-cv‑1788, 2020 WL 3962247, at *6 (S.D. Tex. July 13, 2020).
It seems likely that the Fifth Circuit will eventually weigh in on the subject. Until then, the issue remains unsettled there.
THREE KEY TAKEAWAYS
- Fast-acting defendants—including forum defendants—have been employing a technique known as "snap removal" to remove a suit to federal court on diversity grounds after the suit is filed in state court, but before any forum defendant is served.
- The Second and Third Circuits, focusing on the plain text of 28 U.S.C. § 1441(b)(2), have concluded that snap removal by a forum defendant is permissible.
- The Fifth Circuit recently concluded in Texas Brine that the plain language of § 1441(b)(2) permits snap removal by a non‑forum defendant. While it seems likely that the Fifth Circuit will eventually review the use of the technique by forum defendants, for now, the issue remains unsettled there.
