The First Circuit Clarifies That A Defendant’s Deadline to Remove is Principally Influenced by the Actions of the Plaintiff

Introduction

The first questions any defendant served with a complaint filed in state court should consider are whether removal of the action to federal court is preferable and, assuming the action is removable, when must a notice of removal be filed.The “when” question continues to be a source of debate as federal courts across the country grapple with issues pertaining to (1) the triggering of the removal clocks under federal law and (2) the duty of a defendant to investigate the removability of an action. Joining other federal circuit courts of appeal to have addressed these issues, [1] on October 24, 2014, the First Circuit Court of Appeals provided its answers in Romulus v. CVS Pharmacy, Inc. [2]And, it may come as a surprise to some, the answers are largely dependent on the actions taken by the plaintiff.

The Removal Deadlines

In general, 28 U.S.C. § 1446(b) sets forth two time periods from which a defendant may remove an action to federal court, each of which is subject to a 30-day deadline from the triggering event. [3]

First, a case can be removed if grounds exist in the original complaint to remove the matter from state court to federal court. If the case is removable on the face of the initial complaint, a defendant must file a notice of removal within 30 days of service of the complaint under Section 1446(b)(1). [4]

Second, “if the case stated by the initial pleading is not removable,” Section 1446(b)(3) permits a defendant to file a notice of removal “within 30 days after receipt... 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.” [5]

Section 1446(b), however, is silent regarding the specifics of how and when the 30-day removal clocks are triggered, whether those clocks are triggered by a defendant’s discovery of information in its internal records, whether a defendant has an independent duty to investigate removability and to affirmatively provide facts outside of the plaintiff’s complaint or other document in removing the matter, and what documents or materials constitute “other paper” that may trigger the removal deadline of Section 1446(b)(3).

Background and the District Court’s Decision in Romulus

The Romulus decision arose from a complaint filed in Massachusetts Superior Court against the defendant CVS Pharmacy, Inc. [6]The defendant first filed a notice of removal within 30 days of service of the plaintiffs’ original complaint. [7]The District Court, however, rejected the defendant’s calculation of the amount-in-controversy for purposes of removal under the Class Action Fairness Act (“CAFA”) and granted the plaintiffs’ motion to remand to state court. [8]

After remand and preliminary discovery, counsel for the plaintiffs sent an e-mail to counsel for the defendant setting forth the plaintiffs’ contention as to the number of alleged statutory violations at issue for the putative class for a portion of the class period. [9] The conclusions in the plaintiffs’ e-mail were based entirely on information provided by the defendant in discovery. [10] On the basis of the plaintiffs’ e-mail, the defendant filed a second notice of removal. [11]

The District Court again granted the plaintiffs’ motion to remand, finding that the defendant’s second notice of removal was untimely and that the defendant failed to demonstrate that the amount in controversy exceeded CAFA’s $5 million threshold. [12]The District Court held that more than 30 days had elapsed since the filing of the plaintiffs’ complaint and that the plaintiffs’ e-mail did not constitute “other paper” under Section 1446(b)(3) because it did not provide “new” information regarding removability that the defendant could not have previously discovered, the defendant had possession of the underlying information from the beginning of the litigation, and the defendant “violated a duty to make a reasonable inquiry into its own records at the time of the [filing of the] complaint.” [13]

The First Circuit’s Decision on Appeal

In considering the Romulus appeal, the First Circuit reversed the District Court’s decision and ordered that the “case is now in federal court to stay.” [14]In doing so, the First Circuit adopted a bright-line rule for litigants and district courts to follow in evaluating the timeliness of removal.

First, the Romulus Court held that the 30-day removal clocks under Section 1446(b) are triggered “only when the plaintiffs’ complaint or plaintiffs’ subsequent paper provides the defendant with sufficient information to easily determine that the matter is removable.” [15]Under this standard, the time for removal begins to run only when a plaintiff’s complaint or other paper either “includes a clear statement of the damages sought” or “sets forth sufficient facts from which the amount in controversy can easily be ascertained by the defendant by simple calculation.” [16] In adopting this bright-line rule, the First Circuit followed the lead of other circuit courts of appeal, including the Second Circuit and the Seventh Circuit. [17]

Second, the Romulus Court made clear that in assessing removability, “[t]he defendant has no duty... to investigate or to supply facts outside of those provided by the plaintiff.” [18]Instead, the removability of any putative class or individual action is dependent solely upon the pleadings and “other papers” filed or provided by the plaintiff. [19]Accordingly, even where, as in Romulus, the defendant has information in its possession to support removal at the time the original complaint is served, the 30-day removal clocks are not triggered and do not begin to run until removability can first be “easily ascertained” from pleadings or papers provided by the plaintiff. [20]

Third, the Romulus Court clarified what documents may constitute “other paper” for purposes of triggering the removal clock under Section 1446(b)(3). [21]Adopting a broad definition of the term, the Court found that correspondence from a plaintiff to a defendant concerning the potential amount in controversy – here an e-mail communication between counsel – satisfied the statutory definition of “other paper.” [22]If such an e-mail communication or other correspondence “is the first document in which the plaintiff puts the defendant on notice that the criteria for removal are met,” it will trigger the 30-day removal clock under Section 1446(b)(3). [23]

Fourth, the Romulus Court rejected as irrelevant the fact that the information in the plaintiffs’ “other paper” that supported removal was provided to the plaintiffs by the defendant.That is because “[t]he timeliness inquiry is limited to the information in the plaintiffs’ papers, regardless of whether its original source is the defendant,” “[t]he defendant has no duty to perform significant investigation of its own data to ascertain removability,” and “[t]he test is not whether the information is ‘new,’ but when the plaintiffs’ papers ‘first’ enable the defendant to make the requisite merits showing to the district court.” [24]

Conclusion

The First Circuit’s decision provides needed clarification governing the timeliness of removal and a defendant’s role in assessing and investigating the removability of an action. And, just as important, the Romulus Court’s bright-line rules and guidance should be viewed positively by defendants seeking to remove in the First Circuit, especially in putative class actions where initial complaints may lack specificity regarding the amount of damages or the value of other relief sought by the proposed class.The Romulus decision further makes clear that, even if the initial pleading does not provide a basis for removal on its face, opportunities may arise later to remove the matter from state court to federal court based on the plaintiff’s subsequent actions.

Notes:

[1]See, e.g., Cutrone v. Mortgage Electronic Registration Sys., Inc., 749 F.3d 137 (2d Cir. 2014). For a discussion of the decision of the United States Court of Appeals for the Second Circuit in Cutrone, see K&L Gates LLP June 2014 Alert, Winding the Removal Clock: The Second Circuit Clarifies the Deadline for Removal Under the Class Action Fairness Act, by Robert W. Sparkes, III and Brian M. Forbes.

[2] --- F.3d ---, 2014 WL 5422160 (1st Cir. Oct. 24, 2014).

[3] Notably, the First Circuit did not address whether a defendant may remove based on its own investigation before the 30-day removal time periods of Section 1446(b) have begun. Seeid. at *11 n.12. At least three other circuit courts of appeal, namely, the Second, Seventh, and Ninth Circuits, have answered the question in the affirmative and found that the 30-day periods are not the exclusive time periods in which a defendant may remove a case. Id. (“Three circuits have agreed that a defendant can remove on the basis of its own investigation if neither of the statutory grants for removal in Section 1446(b) have been triggered and transgressed.”).

[4] 28 U.S.C. § 1446(b)(1) (“[t]he notice of removal of a civil action... shall be filed within 30 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”).

[5] 28 U.S.C. §1446(b)(3).

[6] Romulus, 2014 WL 5422160, at *1.

[7] Seeid. at *2.

[8] Seeid.

[9] Seeid.

[10] Seeid.

[11] Seeid.

[12] Seeid. at *3.

[13] Id.

[14] Id. at *13.

[15] Id. at *4 (emphasis in original).

[16] Id. at *7 (emphasis added).

[17] Seeid. at *6-7; seealsoCutrone, 749 F.3d at 143-45; Walker v. Trailer Transit, Inc., 727 F.3d 819, 824 (7th Cir. 2013).

[18] Romulus, 2014 WL 5422160, at *7, *11.As noted above, the First Circuit did not decide the issue of whether a defendant may remove based on information discovered in its own investigation where the 30-day removal time periods of Section 1446(b) have not yet begun to run. Seeid. at *11 n.12.

[19] Seeid. at *8 (“To determine whether the Section 1446(b) clocks have begun to run,... we focus exclusively on the pleadings and other papers provided by the plaintiffs.”).

[20] Seeid. at *6 (“Even if the case was previously removable, Section 1446(b)(3) does not apply until removability can first be ascertained from the plaintiffs’ own papers.” (emphasis in original)); seealsoid. at *8 (finding that although defendant had information in its possession to support removability at the time the original complaint was filed, the fact that the complaint was missing essential facts necessary to “easily ascertain[ ]” the amount in controversy supported a finding that the removal clock did not begin to run when the defendant was served with the original complaint).

[21] Id. at *8-11 (“Given the ambiguity present in the text [of Section 1446(b)(3)], we rely on the clear congressional intent to interpret ‘other paper’ broadly.”).

[22] Id. at *10.

[23]Id.

[24] Id. at *11 (emphasis in original).