This Week At The Ninth: Disagreements On Display

• Published date: 28 January 2022
• Subject Matter: Litigation, Mediation & Arbitration, Trials & Appeals & Compensation
• Law Firm: Morrison & Foerster LLP
• Author: Ms Lena H. Hughes and Zachary Fuchs

This week, the Ninth Circuit parts ways with the Second Circuit on whether unnamed real defendants in interest can remove state cases to federal court and issues a split decision on Title IX liability.

SHARMA V. HIS ASSET LOAN OBLIGATION TRUST 2007-1

The Court holds that only a named defendant may remove a case to federal court under 28 U.S.C. ' 1441(a).

Panel: Judges Lucero (10th Cir.), Ikuta, and VanDyke, with Judge VanDyke writing the opinion

Key Highlight: "As a federal court, we must enforce congressionally enacted limits on our jurisdiction. Constrained by the text of 28 U.S.C. ' 1441(a), we . . . hold that only the actual named 'defendant or the defendants' may remove a case under that removal provision."

Background: American Brokers Conduit foreclosed on plaintiffs Vinod and Vijay Sharma's ("Sharmas") home when they defaulted on a loan. The property was ultimately sold to Deutsche Bank National Trust Company ("DBNTC") as Trustee for HIS Asset Loan Obligation Trust 2007-1. The Sharmas filed suit in California state court against HIS Asset Loan Obligation Trust and HIS Asset Securitization Corporation for wrongful foreclosure. DBNTC, a party not named in the Sharmas' lawsuit, removed the lawsuit to federal court. The district court denied the Sharmas' request to remand the lawsuit to state court, concluding that, despite not being named as a defendant in the lawsuit, DBNTC was a proper party to remove the action to federal court because as trustee for HIS it was the "real party defendant in interest."

Result: The Ninth Circuit reversed. The Court concluded that the district court erred when it denied remand because the text of 28 U.S.C. ' 1441(a), the removal statute, authorizes only a "defendant or the defendants" to remove an action to federal court. Because an unnamed party removed this case, the district court should have remanded it instead of retaining jurisdiction. The Court rejected the Second Circuit's decision La Russo v. St. George's University School of Medicine, 747 F.3d 90 (2d Cir. 2014), which reached the contrary conclusion. The Court concluded that the Second Circuit's rule allowing unnamed "real defendants in interest" to remove is contrary to the text of ' 1441(a). La Russo is also contrary to the Supreme Court's decision in Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999), which held that 28 US.C. ' 1446(b), which sets out a 30-day deadline for removal, requires more than receipt of a complaint to start...