Hunton Retail Law Resource

Retailers sued in state court might be pleasantly surprised to learn that the presence of a forum defendant may not always prevent removal to federal court based on diversity of citizenship. A procedural maneuver known as “snap removal” can allow a defendant to remove such a case in certain situations. Although federal district court rulings on the procedure’s validity are divergent, snap removal could gain traction from a recent thumbs up by the Third Circuit. Regardless of the governing precedent, successful snap removal requires constant vigilance, quick action and even a little luck.

The forum defendant rule

Removal to federal court based on diversity of citizenship jurisdiction (when no plaintiff is from the same state as any defendant) is constrained by the “forum defendant rule,” which bars removal where “any 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)(2). Retailers often face this scenario when sued in their home state or in another state court along with a local subsidiary or contractor, seemingly preventing removal even where complete diversity exists. Snap removal offers a potential way to federal court in spite of the forum defendant rule.

What is a snap removal?

The “properly joined and served” language of the forum defendant rule is the analytical underpinning for snap removal. The numerous courts endorsing the maneuver interpret that language literally, allowing removal so long as no forum defendant named in a state court action has been served with process, and the requirements for diversity jurisdiction are met. The term “snap removal” thus refers to the speedy removal notice a state court defendant must file before any forum defendant is served with process.

A sizeable number of courts, however, take a different view, disapprovingly calling the procedure a “jack rabbit” removal that creates absurd results or procedural gamesmanship by docket-hawk defendants, which Congress presumably did not intend.

The Third Circuit OKs snap removal

Until this year, federal appellate courts had done little to clarify the issue, and district court decisions varied widely, even between judges within the same district court. Only the Sixth Circuit had weighed in with any arguably-definitive guidance, affirming a snap removal in a 2001 decision. See McCall v. Scott, 239 F.3d 808, 813 n. 2 (6th Cir. 2001). But many district courts, even within the Sixth Circuit, held that ruling to be mere dicta and declined to follow it. More recently, an Eleventh Circuit panel seemed to side with the decisions rejecting snap removal, but that, too, was dicta, as the issue was not before the court. See Goodwin v. Reynolds, 757 F.3d 1216, 1221-22 (11th Cir. 2014).

Finally, in August 2018, the Third Circuit ruled squarely in favor of snap removal, holding the maneuver to be consistent with the plain language of the forum defendant rule, and “not so outlandish as to constitute an absurd or bizarre result” that would justify a departure from the statute’s text. Encompass Ins. Co. v. Stone Mansion Rest., Inc., 902 F.3d 147, 153 (3d Cir. 2018). Although it is still too early to tell, given this clear appellate guidance, it’s possible that the tide of district court decisions may turn in favor of allowing snap removal.

Practice implications

While by no means a sure bet, snap removal offers retailers the possibility to remove a state court lawsuit despite the presence of a forum defendant – provided that they are prepared in advance. It’s entirely possible that the district court judge assigned by chance to your removal petition may be dead set against snap removal (that’s where the luck comes in), but you can’t get to that point without having a system in place for monitoring state court filings against your company, and making quick removal evaluations and filings before service of process is completed. Developing and implementing a system for snap removal will help ensure that your company can take full advantage of its right to be in federal court, if applicable, when the next lawsuit rolls in.