*Two Federal Court Removal Points

An attorney recently consulted with me concerning a removal issue. i.e. What could be done to have his case remanded to state court. After reviewing the case, I concluded that there was nothing that could be done, short of saying that the demand in the case was less than $75,000. I did note however, that because of the date of filing of the petition for removal (it should have been a notice of removal as petitions are no longer needed) by the corporate defendant, there was something that could have been done to prevent the removal in the first place.

CPLR §3017(c) provides in part that:

“…In an action to recover damages for personal injuries or wrongful death, the complaint, … shall contain a prayer for general relief but shall not state the amount of damages to which the pleader deems himself entitled. If the action is brought in the Supreme Court, the pleading shall also state whether or not the amount of damages sought exceeds the jurisdictional limits of all lower courts, which would otherwise have jurisdiction. …”

When this statute became effective, it had the unintended effect of extending, in many if not most instances, the time within which defendants are required to file a notice of removal with the Federal Court, as the language suggested by the statute does not put the defendant on notice that the action seeks damages sufficient to meet the statutory minimum of $75,000 for Federal Court diversity jurisdiction. This discussion assumes proper diversity and no in-state defendant.

28 U.S.C. § 1446(b) provides in part that:

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 … 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 [diversity] of this title more than 1 year after commencement of the action.

Thus in most cases were there has been compliance with CPLR §3017(c), the time to remove won’t begin to run until the defendant’s attorney receives “a supplemental demand setting forth the total damages to which the pleader deems himself entitled,” (which a defendant is entitled to request under CPLR §3017(c).)

I therefore propose that plaintiffs, who wish to impede removal, set forth in their complaint that “damages sought exceed the jurisdictional limits of all lower courts and exceed the minimum necessary for diversity jurisdiction in all federal district courts which would otherwise have jurisdiction” This should start the time within which defendant has to remove, when received by defendant and thus require remand when the defendant does not file within 30 days of receipt of such a complaint.

It should be noted that any written or oral demand for settlement of $75,000 or more, that reaches the defendant or the defendant’s attorney after service of the complaint, can satisfied the requirement of letting the defendant know that the action meets the statutory limit for removal.

In the case I was consulted on, the defendant would not have filed timely if the demand was as I have suggested.

28 U.S.C. § 1446(b) provides in part that:

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, …

When does receipt occurred, when not personally served upon the defendant? In the case of corporations, service is most often made upon statutory agents and designated agents. The former does not start the 30-day period for removal but the latter does.

In Recyclers Consulting Group v. IBM-Japan, Ltd., 1997 U.S. Dist. LEXIS 15356 (S.D.N.Y. Oct. 3, 1997) The Court concludes that “proper service of the summons and complaint on Defendant’s designee for service, …, triggered the 30-day removal limitations period”

In Cygielman v. Cunard Line Ltd., 890 F. Supp. 305 (S.D.N.Y. 1995) at 307 the court said that “[t]he heavy weight of authority is to the effect that the time for removal, in cases in which service is made on a statutory agent, runs from receipt of the pleading by the defendant rather than the statutory agent … . This makes abundant sense, as the defendant’s right to a federal forum ought not to depend upon the rapidity and accuracy with which statutory agents inform their principals of the commencement of litigation against them.”

And in the case I was consulted on, the designated agent was served, but the filing of removal papers was done based upon the assumption that receipt occurred when the papers were received by the defendant from their designated agent.

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