Monday, August 18, 2008

Consenting to Removal

Mighty weird stuff turns us on.

(No, no! We're talking about the law here.)

Just last week, we clued you in to our longstanding interest in whether the last defendant served with a complaint has thirty days from service on it to remove, or whether the removal clock runs from the date of service on the first-served defendant.

Then we saw City of Cleveland v. Deutsche Bank Trust Co., No. 1:08 cv 0139, slip op. (N.D. Ohio Aug. 8, 2008) (link here). The decision involves the "public nuisance" lawsuit the City of Cleveland brought against 21 financial institutions to recover damages arising out of the City's mortgage foreclosure problems. The defendants had removed the case to federal court, and the City moved to remand. The court's 25-page decision took a romp through all of the obscurities of the removal process that procedural jocks love.

As we noted in last week's post, the usual rule is that all defendants named in a complaint must consent to removal. That rule can pose logistical problems when complaints name multiple defendants. (We've lived through situations where a complaint named 100 or more defendants, and we had just thirty days to figure out whether all of the defendants existed, locate them, and find human beings with authority to execute consents for them. The defendants in City of Cleveland had it comparatively easy -- only 21 defendants and, for the most part, you could figure out who the heck they were and contact them.)

In its motion to remand, the City raised a host of procedural objections to how the defendants had gone about removing the case. The court rejected each of those arguments in turn.

First, must all of the defendants have consented to removal as of the time the notice of removal is filed? City of Cleveland says no; all defendants must consent only "within thirty days of being served with the summons." Id. at 4.

If all defendants have not consented as of the time the notice of removal is filed, must the removing defendant explain the absence of the missing consents? City of Cleveland says no; "[N]o case decided by any court within the Sixth Circuit since Klein has been remanded based on a removing defendant's failure to state in the removal notice its reasons for failing to obtain unanimous consent to removal, where all codefendants ultimately expressed written consent to removal within thirty days of service." Id. at 6.

Can a plaintiff raise procedural objections to removal more than thirty days after the action is removed? This one's easy -- City of Cleveland follows the statutory language saying that motions to remand based on alleged defects in the removal procdure must be made within thirty days after the filing of the notice of removal. Id. at 7.

Must a defendant consent to removal in writing within thirty days of service of the complaint, or will a statement in the notice of removal that all defendants have consented suffice? City of Cleveland follows Sixth Circuit law on this subject, holding that a statement in the notice of removal that consent has been obtained, coupled with later joinder in the opposition to the motion to remand, suffices. Id. at 9. But be careful here! That is not the law in all circuits, so don't assume that you can get by without written consents in all courts.

Finally, were the various written consents submitted by the co-defendants effective? (This is really squirrelly stuff; you almost never see these issues litigated.)

City of Cleveland holds that consents to removal signed by in-house counsel are effective, despite the cases saying that corporations cannot appear in federal court pro se. Id. at 11.

What about where the plaintiff names a non-existent entity, and the defendant consents to removal in the name of an entity that actually exists? "Bear Stearns made a reasonable guess as to the entity the City was attempting to sue, and rather than ignore the suit on the basis that it was not named properly, removed the action based upon that guess." Id. at 16. That's good enough. Id. at 17.

And what about where "an employee of a Citigroup subsidiary, not of the parent company," (id. at 18) executes the consent? "The undisputed evidence establishes that Turan, although holding a title with a non-party subsidiary, was authorized by the party defendant, Citigroup, Inc., to remove the case." Id. at 20. "Accordingly, Citigroup's consent to removal was valid and effective." Id.

The court also denied the City of Cleveland's motion to amend the complaint to join a non-diverse defendant, in large part because the City "candidly admits that the motion's aim is to defeat diversity jurisdiction." Id. at 24. The court thus denied the city's motion to remand.

For procedural jocks, life don't get much better than this!

For the rest of you, don't worry. We'll be back to substantive drug and device law before you can say, "Man, that post was boring."

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