OH SNAP! – Snap Removal Now Permitted in Third Circuit

The United States Court of Appeals for the Third Circuit has issued a precedential opinion approving snap removal and resolving the district split regarding its propriety.

Snap removal occurs when an action is removed from state court to federal court before a forum defendant is served. This is premised on a plain reading of the removal statute, 28 USC § 1441(b)(2), which prohibits removal when a forum defendant has been “properly joined and served.” Snap removal proponents argue that if a forum defendant has not been served, then it does not meet the criteria of Section 1441(b)(2) and therefore may remove to federal court. Critics of snap removal argue that the tactic encourages a race between a plaintiff attempting service and a defendant filing removal papers. Further, critics argue, snap removal contradicts the policy reason for diversity jurisdiction because there can be no concern or fear of local bias against a forum defendant.

In Encompass Insurance Co. v. Stone Mansion Rest. Inc., ___ F.3d ___ , 2018 WL 3999885 (3d Cir. Aug. 22, 2018), the Third Circuit rejected snap-removal criticisms and endorsed the practice. In Encompass, counsel for the defendant initially agreed to accept service on his client’s behalf, but later refused to return a completed acceptance of service form. Defendant snap-removed the action to the United States District Court for the Western District of Pennsylvania. The district court denied a motion to remand and granted defendant’s motion to dismiss under F.R.Civ.P. 12(b)(6). Plaintiff appealed.

The Third Circuit first found that the language of Section 1441(b)(2) is unambiguous and plainly precludes removal by a forum defendant only when that defendant has been properly joined and served. The court next considered whether snap removal would lead to an absurd or bizarre result. The court noted that while Section 1441 is intended to prevent favoritism for in-state litigants, “courts and commentators have determined that Congress enacted the rule to prevent a plaintiff from blocking removal by joining as a defendant a resident party against whom it does not intend to proceed and whom it does not even serve.” Id. at *4 (citations omitted). In other words, Section 1441 discourages fraudulent joinder of a forum defendant.  Snap removal does not contravene that policy. The court explained,

Our interpretation does not defy rationality or render the statute nonsensical or superfluous, because: (1) it abides by the plain meaning of the text; (2) it envisions a broader right of removal only in the narrow circumstances where a defendant is aware of an action prior to service of process with sufficient time to initiate removal; and (3) it protects the statute’s goal without rendering any of the language unnecessary.

Id. The court also noted that appellant Encompass had not provided any contrary legislative intent, and that “we do not perceive that the result in this case rises to the level of the absurd or bizarre.  … Reasonable minds might conclude that the procedural result demonstrates a need for a change in the law; however, if such change is required, it is Congress – not the Judiciary – that must act.” Id. at 5.

In a footnote, the court acknowledged that “technological advances since enactment of the forum defendant rule now permit litigants to monitor dockets electronically, potentially giving defendants an advantage in a race-to-the-courthouse removal scenario.” Id. at *4. In light of this ruling, parties anticipating litigation against them in state court should consider regular monitoring of state court dockets within the Third Circuit. Further, parties should be aware that plaintiffs may be less likely to wait to serve process of a state court complaint or seek acceptance of service.