Ninth Circuit Discusses Split Re Whether Violation of Forum Defendant Rule is a Jurisdictional or Procedural Defect

Per Lively v. Wild Oats Markets, Inc., 456 F.3d 933 (9th Cir. Jul 27, 2006):

We must decide whether the forum defendant rule contained in § 1441(b) is jurisdictional or procedural, and thus whether a violation of this rule constitutes a jurisdictional or procedural defect. This issue has been addressed by nine of our sister circuits. It is, however, an issue of first impression in this circuit. We join eight of the nine circuits that have decided this issue and hold that the forum defendant rule is procedural, and therefore a violation of this rule is a waivable defect in the removal process that cannot form the basis for a district court's sua sponte remand order. . . Our holding is compelled by a close analysis of the legislative history of § 1447(c), the policy rationale of § 1441(b), the prevailing law of our sister circuits, and Supreme Court precedent.

We agree with the Eleventh Circuit's historical analysis of § 1447(c), which concludes that, by substituting "defect other than lack of subject matter jurisdiction" for "defect in removal procedure," Congress sought to ensure that even the "more substantive" removal defects, such as § 1441(b) violations, were subject to the 30-day time limit. Snapper, 171 F.3d at 1257-58. Therefore, although the forum defendant rule is not a traditional rule of removal procedure, as articulated in § 1446, we agree that the 1996 amendments to § 1447(c) subject § 1441(b) violations to the 30-day time limit. Id.; see also Siegel, Commentary on 1996 Revision ("[I]t's awkward to describe as a defect of 'procedure' something that has to do not with mechanics, but with the citizenship of a party. The defect ... is nevertheless subject to the 30-day limit.").

In contrast to the "overwhelming weight of authority ... on the 'nonjurisdictional' side of the debate," Hurley, 222 F.3d at 379, the Eighth Circuit is the sole circuit on the jurisdictional side. See Hurt, 963 F.2d at 1146 n. 1. In Hurt, the Eighth Circuit reasoned that because removal jurisdiction is a "creature of statute," a violation of one of its statutory requirements, e.g. the forum defendant rule, prevents the district court from exercising jurisdiction over the matter. Id. at 1145. Thus, although the remand motion in Hurt was untimely, the court held that remand was proper because "subject-matter jurisdiction is not a mere procedural irregularity capable of being waived." Id. at 1146. Like the courts that have considered Hurt, we reject the Eighth Circuit's approach. In light of § 1447(c)'s legislative history, the purpose of § 1441(b), and the approach used by the majority of the other circuits, we are not persuaded that the forum defendant rule is a statutory requirement, which, if not met, deprives the district court of original jurisdiction.