Wednesday, April 22, 2020

Fifth Circuit Shows Support for “Snap Removals”

By Chris Littell

On April 7, 2020, the Fifth Circuit issued its first-impression opinion on snap removals in Texas Brine Co. L.L.C. v. American Arbitration Ass’n, No. 18-31184, 2020 WL 1682777 (5th Cir. Apr. 7, 2020).  “Snap removal” occurs when a defendant removes a case to federal court after the petition is filed in state court, but prior to the plaintiff serving the petition on a forum-defendant. For decades, the circuit courts remained silent on whether “snap removals” were proper, likely because prior technological restraints and low statistics prevented the issue from coming before them.  However, in the last two years the Second, Third, and Sixth Circuits have recognized snap removals to some degree, while district courts around the country reached conflicting results.


Although the opinion primarily reaffirmed the exclusive remedy of the Federal Arbitration Act over the challenge to an arbitration award, Texas Brine also gave us the first impression from the Fifth Circuit in regard to snap removals. 28 U.S.C. §§ 1441 (b)(2) contains the forum-defendant rule that provides:


a civil action otherwise removable solely on the basis of the 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).  Texas Brine filed its suit in Louisiana state court against the American Arbitration Association and two of its arbitrators over disputes stemming from an arbitration.  Five days later, before the two in-state arbitrators had been served, the AAA performed a “snap removal” of the case to the United States District Court for the Eastern District of Louisiana. Texas Brine moved to remand, challenging the removal as improper.


The Fifth Circuit, citing the Second and Third Circuits, looked to the statute, noting that “[W]hen the plain language of a statute is unambiguous and does not lead to an absurd result, our inquiry begins and ends with the plain meaning of that language.”  Because the statute only bars removal when a forum defendant is “properly joined and served,” the court found snap removal to follow the plain language of the statute.


Texas Brine further argued that this reading would produce an absurd result that contradicted the forum defendant rule when two parties were in-state defendants.  The Fifth Circuit rejected this argument, stating that “[i]n statutory interpretation, an absurdity is not mere oddity. The absurdity bar is high, as it should be. The result must be preposterous, one that ‘no reasonable person could intend.’” (citing ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 237).  Continuing, the court quoted the Second Circuit’s analysis:


Congress may well have adopted the “properly joined and served” requirement in an attempt to both limit gamesmanship and provide a bright-line rule keyed on service, which is clearly more easily administered than a fact-specific inquiry into a plaintiff’s intent or opportunity to actually serve a home-state defendant.

 

Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699, 706 (2d Cir. 2019). The Fifth Circuit did note, however, that in its case the removing party was not a forum defendant, factoring against any forum-defendant absurdity arguments. Holding that “A non-forum defendant may remove an otherwise removable case even when a named defendant who has yet to be ‘properly joined and served’ is a citizen of the forum state,” the Fifth Circuit has opened the door to some forms of snap removals. The question not directly answered in Texas Brine is whether the Fifth Circuit will allow snap removal when the removing party is itself a forum defendant.
 

Return to list.