Opinion
No. 05 Civ. 2217 (JSR)(KNF).
July 27, 2005
REPORT AND RECOMMENDATION
TO THE HONORABLE JED S. RAKOFF, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION
Plaintiff Eric Rainer Bashford ("Bashford"), proceeding pro se, brings this action, pursuant to New York common law and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961, et seq., ("RICO" or Act"), against defendants Crown Financial Group, Inc. ("Crown"), Legg Mason Wood Walker, Inc. ("Legg"), M/A-Com, Inc. ("M/A-Com") and Michael Drennan ("Drennan"). Before the Court is Bashford's application, made pursuant to 28 U.S.C. § 1447, to remand the action to state court, on the grounds that its removal therefrom was untimely and procedurally defective ("remand application"). The defendants oppose the remand application.
In addition to the remand application, Bashford also made an application, pursuant to Fed.R.Civ.P. 15(a), for leave to file a second amended complaint. In a letter to the Court, dated May 12, 2005, Bashford withdrew his application for leave to amend. Accordingly, that application should be dismissed.
II. BACKGROUND
Bashford commenced this action on or about November 29, 2004, by filing a complaint ("original complaint") in the New York State Supreme Court, Westchester County ("state court"). The original complaint named only Crown, Legg and M/A-Com as defendants, and asserted claims made under state law. According to the original complaint, Bashford is a citizen of New York, and Crown, Legg and M/A-Com are New Jersey, Maryland and Florida corporations, respectively. Bashford contends — and the defendants do not dispute — that the original complaint and summons were served upon M/A-Com, Legg and Crown on December 7, 2004, December 8, 2004, and December 14, 2004, respectively.
On or about January 18, 2005, Bashford filed an amended complaint in state court. The amended complaint included claims made under the RICO Act, and named Drennan as a defendant, along with Crown, Legg and M/A-Com. Stephen J. Donohue, counsel to Drennan, Legg and M/A-Com, states, in an affirmation submitted in opposition to the remand application ("Donohue affirmation"), that service of the amended complaint and supplemental summons upon M/A-Com was effected on February 2, 2005. Bashford contends — and the defendants do not dispute — that the amended complaint and a supplemental summons were served upon Crown on February 14, 2005. Bashford contends that service was effected upon Drennan on February 23, 2005. In a letter to Bashford, submitted by Bashford in support of the remand application, Drennan indicates that he discovered the amended complaint and supplemental summons at his residence on February 24, 2005. Service upon Legg was effected on or about February 2, 2005, according to the notice of removal filed by Legg and M/A-Com.
On February 17, 2005, Legg and M/A-Com filed a notice of removal in this court, pursuant to 28 U.S.C. § 1441(a) ("§ 1441(a)"), on the ground that this court has original jurisdiction over the amended complaint, due to its inclusion of the RICO Act claim. Drennan, who was proceeding pro se at the time the notice of removal was filed, and Crown did not join in the notice of removal.
Bashford filed the instant remand application on March 21, 2005. Bashford contends that the original complaint was within the diversity jurisdiction of this court, and so the thirty-day period within which Legg and M/A-Com could file a notice of removal, see 28 U.S.C. § 1446(b) ("§ 1446(b)"), commenced when those defendants were served in December 2004. Therefore, Bashford contends, the time for Legg and M/A-Com to file a notice of removal ended in January 2005, and the instant notice of removal, filed on February 17, 2005, is untimely. Bashford also contends that Drennan and M/A-Com did not consent timely to the removal. In addition, Bashford maintains that the removal was procedurally defective, since Legg and M/A-Com did not serve notice of the removal upon the other defendants or upon the state court timely, in violation of 28 U.S.C. § 1446(d) ("§ 1446(d)").
A remand application must be filed within 30 days of the filing of the notice of removal. See 28 U.S.C § 1447(c). Because the thirtieth day after February 17, 2005, was Saturday, March 19, 2005, the period provided by § 1447(c) ended on Monday, March 21, 2005. See Fed.R.Civ.P. 6(a) ("In computing any period of time prescribed or allowed . . . by any applicable statute, [t]he last day of the period so computed shall be included, unless it is a Saturday, a Sunday, or a legal holiday.") Bashford attempted to file the instant application in paper form on March 21, 2005. However, as this case is assigned to the Electronic Case Filing system, Bashford's attempted filing on March 21, 2005, was unsuccessful. In an order dated April 4, 2005, the Court directed that if the remand application was re-submitted in electronic form on or before April 14, 2005, the application would be deemed to have been filed on March 21, 2005. The application was re-submitted in electronic form on April 14, 2005. Therefore, the Court deems it to have been filed on March 21, 2005, within the period prescribed by 28 U.S.C § 1447(c).
According to the Donohue affirmation, filed on April 26, 2005, Drennan, now represented by Donohue, joins Legg and M/A-Com in opposing the remand application. In his affirmation, Donohue also states that on or about March 21, 2005, "a good faith effort was made to file the Notice of Removal with the Clerk of the Supreme Court, Bronx [sic] County." According to Donohue, the clerk of the state court rejected erroneously the filing of the notice of removal in that court for failure to comply with certain procedural requirements that Donohue says were not applicable. Donohue states further that "another Notice of Removal was submitted to the Bronx [sic] County Clerk's Office for filing after receipt of Plaintiff's motion." The notices that the defendants attempted to file in state court are attached to the Donohue affirmation and are captioned "Supreme Court of the State of New York[,] County of Westchester."
Drennan, Legg and M/A-Com also submitted a memorandum of law in connection with Bashford's applications, but it addressed only the now-withdrawn application to file a second amended complaint.
Joel E. Davidson, counsel to Crown, filed an affirmation in opposition to the remand application ("Davidson affirmation") on April 19, 2005. In it, he states, inter alia, that Crown "has no objection" to the removal petition filed by Legg and M/A-Com.
III. DISCUSSION
Section 1441(a) provides, in pertinent part: "Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant, or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." Federal courts construe this removal statute narrowly, "resolving any doubts against removability."Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1045-46 (2d Cir. 1991). Where "jurisdiction is asserted by a defendant in a removal petition, . . . the defendant has the burden of establishing that removal is proper." United Food Commercial Workers Union, Local 919, AFL-CIO v. Centermark Properties Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994).
In order for removal under § 1441(a) to be effective, all of the defendants must join in seeking removal or consent timely thereto ("unanimity rule"). See Chicago, Rock Island Pacific Railway Co. v. Martin, 178 U.S. 245, 20 S. Ct. 854 (1900);Bradford v. Harding, 284 F.2d 307, 309 (2d Cir. 1960); Tate v. Mercedes-Benz USA, Inc., 151 F. Supp. 2d 222, 223 (N.D.N.Y. 2001) (citing Chicago, Rock Island Pacific Railway andBradford for the proposition that "[w]hen a case has multiple defendants it is generally accepted that timely consent of each defendant is required as a precondition for removal"). Although "it is not required that all defendants sign the removal petition itself, . . . courts typically require that each defendants timely submit some form of 'unambiguous written evidence of consent.'" Tate, 151 F. Supp. 2d at 224 (quoting Town of Moreau v. State Department of Environmental Conservation, No. 96-CV-983, 1997 WL 243258, *4, 6 [N.D.N.Y. May 5, 1997] [collecting cases]).
Section 1447(c) of Title 28 of the United States Code authorizes the remand of an action to state court on the basis of, inter alia, "any defect in removal procedure." See LaFarge Coppee v. Venezolana De Cementos, S.A.C.A., 31 F.3d 70, 72 (2d Cir. 1994) (internal quotation marks omitted).
Timeliness
In order to remove an action from a state court, a defendant must file a notice of removal with the federal court within thirty days of the defendant's receipt, through service or otherwise, of the complaint. See 28 U.S.C. § 1446(b). Although this time limit is not jurisdictional, it is rigorously enforced, absent a finding of waiver or estoppel. Somlyo, 932 F.2d at 1046.
There is considerable disagreement among lower federal courts about how to apply § 1446(b), in light of the unanimity rule, in actions in which there is more than one defendant and service of the complaint is not effected upon all defendants simultaneously. Some courts have applied a "first-served defendant" rule, under which a notice of removal is timely only if, within 30 days of the date on which the first defendant was served: (a) the notice is filed; and (b) all defendants either join in the notice of removal or otherwise consent to removal. See, e.g., Getty Oil Corp. v. Insurance Company of North America, 841 F.2d 1254, 1262-63 (5th Cir. 1988) ("all served defendants must join in the petition no later than thirty days from the day on which the first defendant was served"); see also Varela v. Flintlock Constr., Inc., 148 F. Supp. 2d 297, 299 (S.D.N.Y. 2001) (describing first-served defendant rule and collecting cases). The Fourth Circuit has adopted a modified version of the first-served defendant rule, under which a notice of removal must be filed within 30 days of service upon the first defendant, but defendants who did not join in the filing of the notice "have thirty days from the time they are served with process or with a complaint to join in an otherwise valid removal petition."McKinney v. Board of Trustees of Mayland Community College, 955 F.2d 924, 928 (4th Cir. 1992).
The Sixth and Eighth Circuits have adopted a "removing defendant" rule, under which each "defendant has 30 days from the date of service [of the complaint upon that defendant] to remove a case to federal district court." Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 533-534 (6th Cir. 1999); see also Marano Enterprises of Kansas v. Z-Teca Restaurants, L.P., 254 F.3d 753, 757 (8th Cir. 2001). Under the removing defendant rule, as announced by the Sixth and Eighth Circuits, a defendant who was served earlier than the removing defendant may consent to a later-served defendant's notice of removal, even though the earlier-served defendant's own thirty-day period in which to file a notice of removal might have expired. See Brierly, 184 F.3d at 533-34 n. 3; Marano, 254 F.3d at 757.
The United States Supreme Court and the Second Circuit have not decided how to apply § 1446(b) in this context, although some courts have found that the removing defendant rule is preferable, in light of the analysis of § 1446(b) conducted in Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 352-54, 119 S. Ct. 1322, 1328-29 (1999) (holding that mere receipt of complaint does not trigger running of thirty-day period under § 1446[b]). See, e.g., Varella, 148 F. Supp. 2d at 300.
A. Timeliness of Notice of Removal
An action over which a district court has original jurisdiction by virtue of the parties' diversity is removable "only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b) ("§ 1441(b)"). In the case at bar, Bashford contends that the parties to the original complaint — Bashford, Crown, Legg and M/A-Com — are diverse. Therefore, Bashford maintains, the original complaint was removable. If so, then, under any of the three rules of construction described above, the thirty-day period(s) provided by § 1446(b) for Crown, Legg and M/A-Com to either initiate or consent to the removal of the action began no later than December 14, 2004, the date upon which the last of those defendants was served with the original complaint.
As noted above, in order for removal to be proper, § 1441(b) requires not only that the parties to the action be diverse, but also that none of the defendants be citizens of the state in which the action is brought. In this action, since Bashford is a citizen of New York, the contention that the parties to the original complaint were diverse, if true, necessarily implies that Crown, Legg and M/A-Com are not citizens of New York.
The original complaint and the rest of the record before the Court do not identify the respective principal places of business of Crown, Legg and M/A-Com. Accordingly, it cannot be determined, based upon the record before the Court, whether Crown, Legg and M/A-Com are citizens of New York. See 28 U.S.C. § 1332(c) ("[A] corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business."). However, as noted above, it is the defendants' burden to establish that their notice of removal is proper. Under the circumstances, therefore, it is the defendants' burden to demonstrate that the original complaint was not within the diversity jurisdiction of this court. The defendants do not contend — and have not submitted any evidence to suggest — that any of the defendants named in the original complaint is a citizen of New York, within the meaning of 28 U.S.C. § 1332(c). Accordingly, the defendants have not demonstrated that the original complaint was not removable, and the thirty-day period(s) provided by § 1446(b) for Crown, Legg and M/A-Com to file a notice of removal for this action should be deemed to have begun no later than December 14, 2004.
The notice of removal was filed on February 17, 2005, which is 65 days after December 14, 2004. Accordingly, the defendants have not demonstrated that their notice of removal was filed within the period provided by § 1446(b). Therefore, the notice should be found to be untimely.
B. Timeliness of Consent by Crown and Drennan
Even if the original complaint were not found to be removable and the notice of removal timely, the defendants would still have the burden of demonstrating that Crown and Drennan consented timely to the removal.
The amended complaint was first served upon Legg and M/A-Com on or about February 2, 2005. Crown received the amended complaint on February 14, 2005. The only statement on behalf of Crown that it consented to the removal of this action was contained in the Davidson affirmation, which was filed on April 19, 2005, 64 days after the amended complaint was served upon Crown and 76 days after service upon the first-served defendants. Drennan received the amended complaint on February 24, 2005. The only statement on behalf of Drennan that he consented to the removal was contained in the Donohue affirmation, which was filed on April 26, 2005, 61 days after Drennan's receipt of the amended complaint and 83 days after service upon the first-served defendants.
Under any of the three rules of construction described above, Crown and Drennan did not consent to the notice of removal within the thirty-day period provided by § 1446(b). Therefore, their consents are untimely.
Notice to State Court, Drennan and Crown
"Promptly after the filing of [a] notice of removal of a civil action the defendant or defendants shall give written notice thereof to all adverse parties and shall file a copy of the notice with the clerk of such State court. . . ." 28 U.S.C. § 1446(d).
Section 1446(d) does not require, as part of the removal procedure, that a defendant filing a notice of removal give written notice to non-adverse parties. Crown and Drennan are not adverse to Legg and M/A-Com. Therefore, Bashford's contention, that the removal is procedurally defective under § 1446(d) because Legg and M/A-Com did not provide written notice of the removal to Drennan and Crown, is without merit.
Based upon the information in the Donohue affirmation, it appears that Legg and M/A-Com made a reasonable, good-faith attempt to file timely a notice of removal with the state court, although it is not clear whether the notice was filed in the appropriate state court. Since the removal is untimely and otherwise defective for lack of timely consent by Drennan and Crown, however, it is not necessary to determine whether the attempt by Legg and M/A-Com to file a notice of removal in the state court satisfies § 1446(d).
IV. RECOMMENDATION
For the reasons set forth above, I recommend that the application to remand the action to the state court be granted.
V. FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Jed S. Rakoff, 500 Pearl Street, Room 1340, New York, New York, 10007. Any requests for an extension of time for filing objections must be directed to Judge Rakoff, and to the chambers of the undersigned, 40 Centre Street, Room 540, New York, New York, 10007. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir. 1983).