Snap Back ' Snap Removals Must Have Complete Diversity Or Face Remand

• Published date: 14 December 2022
• Subject Matter: Corporate/Commercial Law, Litigation, Mediation & Arbitration, Corporate and Company Law, Arbitration & Dispute Resolution, Diversity, Equity & Inclusion
• Law Firm: Butler Snow LLP
• Author: Mr E. Barney Robinson III

The Fifth Circuit Court of Appeals recently addressed so-called "Snap Removals" in the case of In re Levy, 52 F.4th 244, 245 (5th Cir. 2022). In Levy, the plaintiff, Calvin Levy, petitioned the Fifth Circuit for a writ of mandamus directing the district court to remand the suit to state court for want of jurisdiction.

The suit arose from a traffic collision. Levy is a citizen of Louisiana, as is the driver of the other vehicle, defendant Emile Dumesnil. At the time of removal by diverse defendant Zurich American Insurance Company, neither Dumesnil nor defendant Dynamic Energy Services International, LLC, had been served with process.

Levy initiated the suit in Louisiana state court against the three defendants. Zurich-the only defendant that had received service of process-promptly removed to federal court, asserting that removal was proper under28 U.S.C. ' 1441(b)(2), otherwise known as the "forum-defendant rule." That statute provides that an "action otherwise removable solely on the basis of [diversity] jurisdiction under [28 U.S.C. ' 1332(a)] "may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." (Emphasis added.)

According to Zurich, it could remove to federal court because Dumesnil-a citizen of the forum state-had not yet been served. The problem for defendants, however, was the passage insection 1441(b)(2) that limits it to "action[s] otherwise removable" on no basis other thansection 1332(a), the statute that confers diversity jurisdiction. By readingsections 1441(b)(2) and1332(a) together, removal undersection 1441(b)(2) is permissible only if complete diversity exists among allnamedparties: Each plaintiff must be diverse from each defendant,i.e., there must be what is known as "complete diversity."

The Fifth Circuit ordered the district court to remand the suit to state court, holding:

The defendants mainly rely onTexas Brine Co., LLC v. American Arbitration Association, Inc., 955 F.3d 482 (5th Cir. 2020), where we authorized the use ofsnapremovals in this circuit. The parties inTexas Brinewere completely diverse; indeed, we began our analysis by confirming as much.Id.at 485 ("Here, the district court had subject-matter jurisdiction because each defendant was diverse from the plaintiff."). Furthermore, the...