3.28.2007

M.D. North Carolina Notes Split Re: Whether Forum Defendant Rule is Merely Procedural

Per Ada Liss Group v. Sara Lee Branded Apparel, 2007 WL 634083 (M.D. N.C. Feb. 26, 2007):
[U]nder 28 U.S.C. § 1441(b), actions removed on the basis of diversity jurisdiction “shall be 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.” This is referred to as the “forum defendant rule,” and reflects the belief that federal diversity jurisdiction is unnecessary because there is less reason to fear state court prejudice against the defendants if one or more of them is from the forum state. See Erwin Chemerinsky, Federal Jurisdiction, § 5.5, at 345 (4th ed.2003). . . .

A majority of circuit courts have held that the forum defendant rule is merely procedural, as opposed to jurisdictional, and is therefore waived under 28 U.S.C. § 1447(c) if no objection is made within 30 days of removal. See Lively v. Wild Oats Mkts., Inc., 456 F.3d 933, 942 (9th Cir.2006); Handelsman v. Bedford Vill. Assocs. Ltd. P'ship, 213 F.3d 48, 50 n. 2 (2d Cir.2000); Hurley v. Motor Coach Indus., Inc., 222 F .3d 377, 379-80 (7th Cir.2000); Blackburn v. United Parcel Serv., Inc., 179 F.3d 81, 90 n. 3 (3d Cir.1999); Pacheco de Perez v. AT & T Co., 139 F.3d 1368, 1372 n. 4 (11th Cir.1998); In re Shell Oil Co., 932 F.2d 1518, 1523 (5 th Cir.1991); Farm Constr. Servs., Inc. v. Fudge, 831 F.2d 18, 21-22 (1st Cir.1987); Am. Oil Co. v. McMullin, 433 F.2d 1091, 1094-95 (10th Cir.1970); Handley-Mack Co. v. Godchaux Sugar Co., 2 F.2d 435, 437 (6th Cir.1924). As Defendant notes, the Ninth Circuit's recent opinion on the issue in Lively v. Wild Oats Markets, Inc. is instructive. In that case, the court conducted 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,” all of which weighed in favor of finding that the forum defendant rule is procedural. Id. at 939. . . . The court concluded that “the forum defendant rule embodied in § 1441(b) is a procedural requirement, and thus a violation of this rule constitutes a waivable non-jurisdictional defect subject to the 30-day time limit imposed by § 1447(c).” Id. at 942. The Fourth Circuit has not yet ruled as to whether the forum defendant rule under § 1441(b) is procedural and may therefore be waivedFN1

FN1. The court notes that, on October 12, 2006, the United States Supreme Court denied a petition for certiorari in a case out of the Eighth Circuit that raised the precise question that is before this court-i.e., whether the forum defendant rule is merely procedural and may, therefore, be waived if a timely motion for remand is not made. See Horton v. Conklin, 431 F.3d 602 (8th Cir.2005) (adhering to the minority view that a violation of the forum defendant rule is a jurisdictional defect and is therefore incapable of being waived), cert. denied, Waugh v. Horton, 127 S.Ct. 60 (2006). With the refusal of the Supreme Court to take up the issue, it appears that the circuit split will continue to remain unresolved for now.

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