The Federal Courts Jurisdiction And Venue Clarification Act Of 2011: New Legislation Expands Removal Jurisdiction In Federal Court

The Federal Courts Jurisdiction and Venue Clarification Act of 2011, H.R. 394, quietly went into effect this month. This Act may be titled a "clarification" of federal jurisdiction and venue provisions, but it deserves attention because it will significantly increase the number of cases that a defendant may remove from state court to federal court by eliminating procedural roadblocks to federal jurisdiction.

The previous jurisdiction and removal statutes, 28 U.S.C. §§ 1332, 1441, and 1446 et. seq., left unanswered several procedural questions that affect a defendant's ability to remove a case to federal court. The United States Supreme Court had resolved only a few of these important issues, leaving many differences among the United States Courts of Appeals on important questions such as the standard of proof, the relevant evidence, and whether a plaintiff may prevent a defendant from removing a case by delay tactics. This Act resolves many of these differences in favor of removal:

Timing of Removal. In a multi-defendant case, the new statute allows any defendant to file a notice of removal within 30 days of service. Earlier-served defendants still must join in the removal, but the later-served defendant's deadline to remove is not tied to service on other defendants. This rule prevents a plaintiff from serving an individual defendant that is unlikely to remove the case and then waiting 30 days to serve a larger defendant, potentially giving that defendant no opportunity to file removal papers. This resolves a split between the Courts of Appeals for the Fourth and Fifth Circuits — which began the 30-day time period upon service of the first defendant — and other Courts of Appeals that adopted rules similar to the one in the new Act.1 Bad-faith Litigation. The new statute relaxes the one-year deadline to remove a case upon a finding of bad-faith concealment of federal jurisdiction by the plaintiff, codifying some decisions finding an equitable exception to the one-year bar.2 Deliberate concealment of the amount in controversy now constitutes bad faith and an exception to the one-year bar. Amount in Controversy. Under the new statute, the amount in controversy is established by the amount demanded in the complaint, unless (a) the plaintiff seeks non-monetary relief, or (b) the defendant can prove by a preponderance of evidence that the plaintiff seeks — and that state law permits — the recovery of more damages. The Courts of Appeals...