[House Report 112-10]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-10
======================================================================
FEDERAL COURTS JURISDICTION AND VENUE CLARIFICATION ACT OF 2011
_______
February 11, 2011.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Smith of Texas, from the Committee on the Judiciary,
submitted the following
R E P O R T
[To accompany H.R. 394]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 394) to amend title 28, United States Code, to
clarify the jurisdiction of the Federal courts, and for other
purposes, having considered the same, reports favorably thereon
without amendment and recommends that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 3
Committee Consideration.......................................... 3
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 4
New Budget Authority and Tax Expenditures........................ 4
Congressional Budget Office Cost Estimate........................ 4
Performance Goals and Objectives................................. 5
Constitutional Authority Statement............................... 5
Advisory on Earmarks............................................. 5
Section-by-Section Analysis...................................... 5
Changes in Existing Law Made by the Bill, as Reported............ 24
Purpose and Summary
The ``Federal Courts Jurisdiction and Venue Clarification
Act of 2011'' brings more clarity to the operation of Federal
jurisdictional statutes and facilitates the identification of
the appropriate State or Federal court where actions should be
brought. Judges believe the current rules force them to waste
time determining jurisdictional issues at the expense of
adjudicating underlying litigation. The contents of the bill
are based on recommendations developed and approved by the
United States Judicial Conference.
Background and Need for the Legislation
LEGISLATIVE HISTORY
H.R. 394 incorporates the text of H.R. 4113 from the 111th
Congress in addition to four minor changes developed by the
Department of Justice and the Senate Judiciary Committee in
December 2010.
Title I of H.R. 4113 is based on another bill, H.R. 5440,
authored by Judiciary Committee Chairman Lamar Smith in the
109th Congress. The Courts and Intellectual Property
Subcommittee marked-up H.R. 5440 on May 24, 2006, but the
legislation was never considered by the full Committee. In
addition to the contents of H.R. 5440, H.R. 4113 as introduced
includes a Title II that addresses Federal venue and transfer.
The House passed H.R. 4113 on September 28, 2010, by voice
vote under suspension of the Rules. The Senate adjourned before
it could take up an amended version of the bill that now
comprises the text of H.R. 394.
PROCESS FOR VETTING THE BILL IN THE 111TH CONGRESS
Given the press of other agenda items in 2010, the
Judiciary Committee could not devote ``formal'' process to the
evaluation of H.R. 4113 during the 111th Congress. In other
words, while the bill was considered important, the Committee
did not have time to conduct a hearing on H.R. 4113, followed
by a markup. Instead, the Administrative Office of the US
Courts (``AO'') functioned as a clearinghouse to vet the bill
and newly-developed revisions to it with the Judicial
Conference's Federal-State Jurisdiction Committee, academics,
and interested stakeholders. The main stakeholder groups
include the American Bar Association (``ABA''), Lawyers for
Civil Justice (``LCJ''), the Federal Bar Association (``FBA''),
the American Association for Justice (``AAJ''), and the U.S.
Chamber of Commerce.
Legal scholars from the law schools of the University of
Houston, Chicago-Kent, Loyola, and Duke endorsed changes to the
original text of H.R. 4113, which were developed by Professor
Arthur Hellman of the University of Pittsburgh School of Law,
who testified at the 2005 Subcommittee hearing and contributed
to the project in the 111th Congress. (Two of these scholars
are the authors of removal chapters in, respectively, Moore's
Federal Practice and Wright and Miller's Federal Practice and
Procedure--the leading treatises on Federal civil procedure and
practice.) Professor Hellman's recommendations are confined to
the removal provisions of Title I. In addition, the AO received
feedback from the ABA and AAJ on the amount in controversy,
declarations regarding relief, removal, and transfer. LCJ and
FBA comments reflected general support for the bill.
The point of this exercise was to identify and delete those
provisions that were considered controversial by prominent
legal experts and advocacy groups. This informal vetting
process served the functional equivalent of a hearing or markup
and increased the likelihood that H.R. 4113 could be passed by
both houses of Congress prior to adjournment sine die.
As noted, the House passed the bill by voice vote under
suspension of the Rules on September 28, 2010. The Senate
Judiciary Committee insisted on minor amendments that were
agreed to by the House principals. These amendments include the
following:
LMaintaining the status quo treatment of
derivative jurisdiction. H.R. 4113 as passed by the
House made technical changes to Sec. 1441(f) to clarify
that the derivative jurisdiction doctrine has no
application to other sections within title 28. Prior to
1986, the derivative jurisdiction doctrine meant that
if a state court lacked jurisdiction over an
exclusively Federal matter, removal to Federal court
under Sec. 1441(f) was nonetheless barred because the
US district court's jurisdiction was not ``derivative''
of the jurisdiction that attached in state court.
Justice Department attorneys said that although it is
infrequently used, the doctrine of derivative
jurisdiction is indeed sometimes invoked by them when
suits involving Federal officers and agencies are
removed to Federal court. To illustrate, a defendant
seeking to escape a state court forum brings a third-
party action against a Federal employee. If the Federal
employee was acting within the scope of the employee's
employment, the United States can remove the case to
Federal court under 28 USC Sec. 1442 & Sec. 2679. The
Federal court then applies the derivative jurisdiction
doctrine and dismisses the third-party claim against
the Federal employee, remanding the underlying action
to state court. DOJ says that in such instances the
third-party claim against a Federal employee is often
brought merely to obtain a Federal forum, thereby
frustrating the plaintiff's choice of forum.
LA clarification that a district court, and
not state court, can make findings regarding the
appropriateness of certain removals. This is a non-
substantive change.
LSubstitution of the generic word ``entity''
for ``party'' in one instance, consistent with the
context of its usage.
LDeletion of an extra comma in one provision.
H.R. 394 includes the base text as approved by the House in
the 111th Congress along with the Senate changes.
Hearings
The Committee on the Judiciary held no hearings on H.R.
394.
Committee Consideration
On January 26, 2011, the Committee met in open session and
ordered the bill H.R. 394 favorably reported without amendment,
by voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that there
were no recorded votes during the Committee's consideration of
H.R. 394.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 394, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, February 3, 2011.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 394, the ``Federal
Courts Jurisdiction and Venue Clarification Act of 2011.''
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Martin von
Gnechten, who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 394--Federal Courts Jurisdiction and Venue Clarification Act of
2011.
H.R. 394 would make several changes to judicial procedures,
including the determination of original jurisdiction and court
venue for certain types of cases. H.R. 394 would specify the
court of original jurisdiction for certain cases involving
resident aliens and corporations. In addition, H.R. 394 would
change how the venues for Federal court cases are determined,
particularly when the cases involve multiple districts.
Based on information from the Administrative Office of the
U.S. Courts, CBO estimates that implementing H.R. 394 would
have no significant budgetary impact. Enacting H.R. 394 would
not affect direct spending or revenues; therefore, pay-as-you-
go procedures do not apply.
H.R. 394 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of State, local, or tribal
governments.
The CBO staff contact for this estimate is Martin von
Gnechten. The estimate was approved by Theresa Gullo, Deputy
Assistant Director for Budget Analysis.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
394 clarifies the operation of Federal jurisdictional statutes
and assists Federal judges in identifying the appropriate State
or Federal court where actions should be brought.
Constitutional Authority Statement
The Committee finds the authority for this legislation in
article I, section 8, clause 9 and clause 18; and article III,
section 1, of the Constitution.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 394 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Short title; table of contents. Section 1(a) sets
forth the short title of the bill as the ``Federal Courts
Jurisdiction and Venue Clarification Act of 2011.'' Subsection
(b) provides a table of contents and the remaining text:
TITLE I--JURISDICTIONAL IMPROVEMENTS
Sec. 101. Treatment of resident aliens.
Sec. 102. Citizenship of corporations and insurance
companies with foreign contacts.
Sec. 103. Removal and remand procedures.
Sec. 104. Effective date.
TITLE II--VENUE AND TRANSFER IMPROVEMENTS
Sec. 201. Scope and definitions.
Sec. 202. Venue generally.
Sec. 203. Repeal of section 392.
Sec. 204. Change of venue.
Sec. 205. Effective date.
TITLE I--JURISDICTIONAL IMPROVEMENTS
SEC. 101. TREATMENT OF RESIDENT ALIENS.
The Constitution provides the basis for Federal court
jurisdiction over disputes between citizens of different states
(``diversity jurisdiction'') and over disputes involving
citizens of the United States and citizens or subjects of
foreign states (``alienage jurisdiction''). Currently,
diversity jurisdiction is available when the matter in
controversy exceeds $75,000 and is between citizens of
different states. See 28 U.S.C. Sec. 1332(a)(1). Under the
long-standing complete diversity requirement, for diversity
jurisdiction to be available, no plaintiff and defendant can be
from the same state. See Strawbridge v. Curtiss, 7 U.S. (3
Cranch) 267 (1806). The traditional reason given for providing
for diversity jurisdiction is ``a fear that state courts would
be prejudiced against those litigants from out of state.''
Charles Alan Wright & Mary Kay Kane, Law of Federal Courts
Sec. 23, at 144 (6th ed. 2002).
Although the Constitution permits the assertion of Federal
jurisdiction over disputes involving aliens, established law
bars the assertion of jurisdiction over a dispute that involves
only aliens. Alienage jurisdiction exceeds the limits of
Article III unless a citizen of the United States also appears
as a party. See Hodgson v. Bowerbank, 9 U.S. (5 Cranch) 303
(1809). Cognizant of this long-standing constitutional
limitation, section 1332 allows for jurisdiction over aliens in
two situations, both of which involve U.S. citizens. First,
paragraph 1332(a)(2) applies to disputes between citizens of a
state and citizens or subjects of a foreign state. Second,
paragraph 1332(a)(3) applies to disputes between citizens of
different states in which citizens or subjects of a foreign
state are additional parties. Jurisdiction based on paragraphs
1332(a)(2) or (3) is still subject to the minimum amount in
controversy requirement.
In general, the Federal courts have taken a fairly narrow
view of the scope of paragraph 1332(a)(2) jurisdiction,
declining on statutory grounds to assert jurisdiction over
disputes in which aliens appear on both sides of the
litigation. See, e.g., Ed & Fred, Inc. v. Puritan Marine Ins.
Underwriters Corp., 506 F.2d 757 (5th Cir. 1975). Even though
U.S. citizens may appear on one side of the litigation, the
presence of aliens as opposing parties(even aliens from
different foreign countries) has proven fatal to the assertion
of jurisdiction. See generally Allendale Mutual Ins. Co. v.
Bull Data Systems, Inc., 10 F.3d 425, 428 (7th Cir. 1993); 15
Moore's Federal Practice, Sec. 102.77 (3d ed. 2001). In actions
proceeding under paragraph 1332(a)(3), this rule has not been
applied with the same rigor. More specifically, when a claim
between diverse U.S. citizens grounds the jurisdiction and
aliens appear as additional parties on both sides of the
litigation, jurisdiction has been upheld. See Transure, Inc. v.
Marsh & McLennan, Inc., 766 F.2d 1297, 1298-99 (9th Cir. 1985)
(upholding jurisdiction under section 1332(a)(3)); Dresser
Industries, Inc. v. Underwriters at Lloyd's of London, 106 F.3d
494, 500 (3d Cir. 1997) (same).
In 1988, Congress added the ``resident alien proviso'' to
subsection 1332(a) through enactment of the Judicial
Improvements and Access to Justice Act (Pub. L. No. 100-702).
The proviso states that ``an alien admitted to the United
States for permanent residence shall be deemed a citizen of the
State in which such alien is domiciled.'' 28 U.S.C.
Sec. 1332(a). The purpose of that change was to preclude
Federal alienage jurisdiction under paragraph 1332(a)(2) in
suits between a citizen of a state and an alien permanently
residing in the same state, thereby also reducing the caseload
of the Federal courts. See, e.g., China Nuclear Energy Industry
Corp. v. Andersen, LLP, 11 F. Supp. 2d 1256, 1258-59 (D. Colo.
1998). In such situations, the permanent resident alien has
appreciable connections to the state, and there was perceived
to be no need to provide for a Federal forum to protect the
alien against possible bias in state court. Courts have
interpreted the reference to permanent aliens to mean only
those aliens who have been given ``green cards.'' See Foy v.
Schantz, Schatzman & Aaronson, P.A., 108 F.3d 1347, 1349 (11th
Cir. 1997) (holding that the ``permanent resident alien
provision of Sec. 1332(a) applies only to aliens who have
received permission from the INS to remain permanently in this
country'').
Although the 1988 amendment curtailed alienage jurisdiction
in one setting, the ``deeming'' feature created an arguable
basis for expansion of alienage jurisdiction in other
settings--a problem with which the courts have struggled. See,
e.g., Arai v. Tachibana, 778 F. Supp. 1535 (D. Haw. 1991), and
Saadeh v. Farouki, 107 F.3d 52 (D.C. Cir. 1997). Under
paragraph 1332(a)(1), two resident aliens from different states
might each be deemed to be a citizen of his or her respective
state of domicile and claim access to Federal diversity
jurisdiction in circumstances that would appear to violate the
venerable rule of Hodgson v. Bowerbank (supra). Under
paragraphs 1332(a)(2)-(3), additional possibilities emerge for
litigants involved in litigation with resident aliens to seek
to expand their access to Federal court beyond what was
available before the deeming proviso took effect in 1988. For
example, in Singh v. Daimler-Benz AG, 9 F.3d 303 (3d Cir.
1993), the court allowed a permanent resident alien in one
state to proceed against a U.S. corporation resident in another
state and a non-resident foreign corporation, even though the
configuration of parties would have apparently failed to
support a finding of jurisdiction under either paragraphs
1332(a)(2) or (a)(3) in the absence of the deeming provision.
To correct the problem, section 101 eliminates the resident
alien proviso and its deeming feature altogether, along with
its potential for jurisdictional expansion. By eliminating the
proviso, resident aliens would no longer be deemed to be U.S.
citizens for purposes of diversity jurisdiction, thereby
avoiding the possibly anomalous results under paragraphs
1332(a)(1)-(3). In place of the proviso, section 101 would
provide that the district courts shall not have diversity of
citizenship jurisdiction under paragraph 1332(a)(2) of a claim
between a citizen of a state and a citizen or subject of a
foreign state admitted to the United States for permanent
residence and domiciled in the same state. Section 101 of the
bill would thus achieve the goal of modestly restricting
jurisdiction, which Congress sought to accomplish when it first
enacted the resident alien proviso, and would avoid the threat
of the expansion of jurisdiction now posed by the proviso.
State court forums would remain available to aliens if Federal
court forums were foreclosed.
By attaching this modest restriction only to paragraph
1332(a)(2), the amendment would permit resident aliens to
appear as additional parties to disputes under paragraph
1332(a)(3), without their status as deemed U.S. citizens of
their state of residence being treated as a basis for either
establishing or defeating the diversity of U.S. citizenship
that grounds jurisdiction under this provision. (References to
sections 1335 (interpleader) and 1441 (removal) are no longer
necessary in the replacement sentence because 1335 is dependent
upon diversity jurisdiction under section 1332, and similarly,
section 1441 applies only when district courts have original
jurisdiction--which here would be through diversity.)
SEC. 102. CITIZENSHIP OF CORPORATIONS AND INSURANCE COMPANIES WITH
FOREIGN CONTACTS.
Section 102 amends paragraph 1332(c)(1) of title 28, United
States Code, to specify the treatment of citizenship in
diversity actions involving corporations, as well as insurance
companies involved in direct actions. The purpose is to clarify
how foreign contacts should affect the determination of whether
diversity of citizenship exists when a case involving these
entities is filed in or removed to Federal court.
Actions involving corporations
When one of the parties to a civil action is a corporation,
subsection 1332(c) deems that corporation to be a citizen of
any ``State'' in which it has been incorporated ``and of the
State where it has its principal place of business.'' The
quoted phrase was added to paragraph 1332(c)(1) in 1958 to
expand the concept of corporate citizenship. The intent was to
preclude diversity jurisdiction over a dispute between an in-
state citizen and a corporation incorporated or primarily doing
business in the same state. In these situations, neither party
faces a threat of bias if the action were to be resolved in
state court.
For example, today under subsection 1332(c), if a
corporation incorporated in Delaware has its principal place of
business in Florida, it is deemed to be a citizen of both
Delaware and Florida. If a Florida citizen or a Delaware
citizen sues that corporation, diversity jurisdiction would be
defeated because both the plaintiff and defendant would be
treated as citizens from the same state (Florida or Delaware).
When an action involves a U.S. corporation with foreign
contacts or foreign corporations that operate in the United
States, Federal courts have struggled to apply this statute.
See C. Wright & M. Kane, supra, Sec. 27, at 170. The difficulty
occurs primarily because paragraph 1332(c)(1) refers to a
``State'' and does not specify whether the term includes
contacts with a foreign state (country of incorporation or
principal place of doing business). Subsection (e) of section
1332 defines ``States'' as including the Territories, the
District of Columbia, and the Commonwealth of Puerto Rico. Some
courts have noted that because the word ``States'' in the
subsection begins with a capital ``S,'' it applies only to the
fifty states and the other places specified in the definition
and therefore does not apply to corporate citizens of foreign
states. See, e.g., Torres v. Southern Peru Copper Corp., 113
F.3d 540, 543 (11th Cir. 1997); Cabalceta v. Standard Fruit
Co., 883 F.2d 1553, 1559 (5th Cir. 1989). Other courts applying
paragraph 1332(c)(1) have concluded that the word ``States''
should mean foreign states, as well as states of the Union.
See, e.g., Nike, Inc. v. Comercial Iberica de Exclusivas
Deportivas, S.A., 20 F.3d 987 (9th Cir. 1994).
The following are examples of how the courts have reached
different conclusions in trying to apply the provision in the
absence of specific references to ``foreign states.'' Some
circuits have treated a U.S. corporation with its principal
place of business abroad as a citizen only of its place of
incorporation. See, e.g., Cabalceta, supra (plaintiffs from
Costa Rico (aliens) brought suit against Standard Fruit
Company, a Delaware corporation with its principal place of
business in Latin America); Torres, supra (alien plaintiffs
brought suit against Delaware corporation with principal place
of business in Peru). Such treatment of the corporations as
citizens of Delaware while ignoring their foreign contacts
resulted in decisions upholding the availability of Federal
alienage jurisdiction and allowing the actions to proceed in
Federal court.
The Ninth Circuit, in contrast, has rejected any
distinction between foreign and domestic corporations; each
would be deemed a citizen of both its place of incorporation
and its principal place of business. See Nike, Inc., supra, at
990. Although technically dicta as applied to U.S. corporations
with business centers abroad, the Ninth Circuit's approach has
been applied to U.S. corporations in a number of district court
decisions. See Note, David A. Greher, The Application of 28
U.S.C. Sec. 1332(c)(1) to Alien Corporations: A Dual
Citizenship Analysis, 36 Va. J. Int'l L. 233, 251 n.92 (1995)
(collecting cases). Such an approach would result in a denial
of alienage jurisdiction over suits brought by aliens against
U.S. corporations that have business centers abroad.
The amendment in section 102 would resolve this division of
authority by implementing the diversity-curtailing intent of
this provision with regard to corporations with foreign
activities. It would insert the words ``foreign state'' in two
places in paragraph 1332(c)(1) to make it clear that all
corporations, foreign and domestic, would be regarded as
citizens of both their place of incorporation and their
principal place of business. The amendment would result in a
denial of diversity jurisdiction in two situations: (1) where a
foreign corporation with its principal place of business in a
state sues or is sued by a citizen of that same state, and (2)
where a citizen of a foreign country (alien) sues a U.S.
corporation with its principal place of business abroad. Such a
change would bring a degree of clarity to an area of
jurisdictional law now characterized by conflicting approaches
in the Federal courts. State courts of general jurisdiction
would remain available to the parties.
By more clearly defining citizenship of corporations with
foreign ties, the legislation would deny access to a Federal
court in a small range of cases for which a Federal forum might
be available today. For example, a company might have its
principal place of business in a foreign state and nonetheless
choose to incorporate in the United States. Such incorporation
would make the corporation a citizen of its state of
incorporation and, according to some courts, enable the
corporation to claim access to a Federal court in a dispute
with another foreign national. (When such disputes arise from
allegedly tortious conduct overseas, the Federal courts will
often assert jurisdiction only to dismiss under the doctrine of
forum non conveniens.) Section 102 would alter the
jurisdictional analysis by deeming the corporation to be a
citizen of its state of incorporation and of the foreign state
where it has its business center, blocking jurisdiction on the
well-established ground that disputes between two aliens do not
satisfy the jurisdictional requirements of subsection 1332(a).
The statute would have no impact on the freedom of corporations
to incorporate where they see fit, or to do business in
accordance with their own business plan. It would simply treat
them as citizens of their place of incorporation and principal
place of business on a basis consistent with the treatment of
domestic corporations.
The change made by this amendment follows the definition
Congress used for corporate citizenship in the Multiparty,
Multiforum Trial Jurisdiction Act of 2002 (Pub. L. No. 107-
273). More specifically, that law provides that ``a corporation
is deemed to be a citizen of any State, and a citizen or
subject of any foreign state, in which it is incorporated or
has its principal place of business. . . .'' This definition is
now codified as 28 U.S.C. Sec. 1369(c)(2).
Section 102 also revises the wording of paragraph
1332(c)(1) so that a corporation shall be deemed a citizen of
``every State and foreign state by which it has been
incorporated,'' instead of ``any State . . .'' (Emphasis
added.) Although corporations can incorporate in more than one
state, the practice is rare. In applying the present wording of
the subsection, most courts have treated such multi-state
corporations as citizens of every state by which they have been
incorporated. This section would codify the leading view as to
congressional intent and treat corporations as citizens of
every state of incorporation for diversity purposes. See C.
Wright & M. Kane, supra, Sec. 27, at 167-68.
Direct actions against insurance companies
Section 102 amends paragraph 1332(c)(1) to provide the same
definition of citizenship for an insurance company engaged in
direct action litigation as that proposed above for
corporations with foreign contacts. Paragraph 1332(c)(1)
presently includes ``deeming'' language for determining the
citizenship of an insurance company involved in direct action
litigation, which was added by Congress in 1964 (Pub. L. No.
88-439, 78 Stat. 445). The provision now reads as follows:
in any direct action against the insurer of a policy or
contract of liability insurance, whether incorporated
or unincorporated, to which action the insured is not
joined as a party-defendant, such insurer shall be
deemed a citizen of the State of which the insured is a
citizen, as well as of any State by which the insurer
has been incorporated and of the State where it has its
principal place of business.
28 U.S.C. Sec. 1332(c)(1).
In a direct action case, the plaintiff sues the liability
insurance company directly without naming as a defendant the
insured party whose negligence or other wrongdoing gave rise to
the claim. Subsection 1332(c) seeks to prevent such direct
actions from qualifying for diversity jurisdiction by deeming
the insurance company to be a citizen of the state of which the
insured is a citizen, as well as of every state by which the
insurer has been incorporated and of the state where it has its
principal place of business.
The provision was enacted primarily in response to a surge
in diversity case filings against insurance companies in
Federal courts in Louisiana. Sen. Rep. No. 1308, 88th Cong., 2d
Sess. (1964), reprinted in 1964 U.S. Code Cong. & Admin. News,
p. 2778. That increase followed adoption of a state statute
there in 1959 allowing direct actions against insurance
companies.
Because of the broad review of jury verdicts that the
Louisiana practice permits, lawyers for plaintiffs in
that state greatly preferred to be in Federal court
rather than in state court. They were able to convert
what otherwise would have been a routine automobile-
accident case between two Louisiana citizens into a
diversity action by taking advantage of the state
statute permitting suit directly against the insurer
without joinder of the insured.
C. Wright & M. Kane, supra, Sec. 27, at 171. Wisconsin also had
enacted a state statute permitting direct actions. Id.; see
also Inman v. MFA Mutual Ins. Co., 264 F. Supp. 727 (E.D. Ark.
1967); Carvin v. Standard Accident Ins. Co., 253 F. Supp. 232
(E.D. Tenn. 1966). The 1964 amendment was successful at
preventing such direct actions from proceeding in Federal court
under diversity jurisdiction. Northbrook National Ins. Co. v.
Brewer, 493 U.S. 6 (1989) (in applying the provision, the
Supreme Court set forth the legislative history).
Today, direct actions continue to exist in some states
through specific statutes (e.g., Louisiana, Wisconsin,
Arkansas, and Connecticut) and in other states through
examination of the nature of certain causes of action
authorized in that state (e.g., North Carolina). Yet, for
diversity purposes, the citizenship of the insurer in such
actions should be no different from that provided for
corporations and should recognize the insurer's foreign
contacts. At least one court has held that the 1964 amendment
should be applied to insurance companies incorporated abroad so
as to carry out the intent of the statute and deny diversity
jurisdiction. See Newsom v. Zurich Ins. Co., 397 F.2d 280, 282
(5th Cir. 1968).
Section 102 inserts references to ``foreign states'' to
address situations where insurance companies are incorporated
abroad or have their principal place of business See generally
American 1 Law Institute, Federal Judicial Code Revision
Project, Part III, Removal, pp. 325-332 (2004) (ALI Project).
abroad. (As a practical matter, this amendment would only
affect the limited number of states where direct actions are
permitted under state law or such actions are determined to
exist.)
SEC. 103. REMOVAL AND REMAND PROCEDURES.
Section 103 amends sections 1441 and 1446 of title 28 to
make improvements in the removal statutes. Some of these
proposed statutory changes in this section are similar to those
included in the ALI Project.\1\
---------------------------------------------------------------------------
\1\See generally American Law Institute, Federal Judicial Code
Revision Project, Part III, Removal, pp. 325-332 (2004) (ALI Project)
---------------------------------------------------------------------------
Proposed Amendments to Section 1441
Section 103(a)(1) of the bill revises the heading for 28
U.S.C. Sec. 1441 to reflect that its application is limited to
civil cases. Section 103(a)(2) inserts a heading for subsection
(a) of section 1441 and deletes the last sentence in that
subsection (the substance of which is moved to new proposed
paragraph 1441(b)(1), see below). Section 103(a)(3) places the
provisions that apply to diversity actions under one
subsection. This change is intended to make it easier for
litigants to locate the provisions that apply uniquely to
diversity removal.
Proposed paragraph 1441(b)(1) takes the substance of the
last sentence in current subsection 1441(a) and places it
within the diversity subsection, as the sentence moved pertains
only to diversity cases. Proposed paragraph 1441(b)(2) restates
the substance of the last sentence of current subsection
1441(b), which relates only to diversity. (The first sentence
currently in subsection 1441(b) is deleted because its
reference to Federal question jurisdiction is addressed in the
first sentence of subsection 1441(a).)
Joinder of Federal law claims and state law claims\2\
---------------------------------------------------------------------------
\2\See also id. at 372-374.
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Section 103(a)(4) of the bill would amend subsection
1441(c) to clarify the right of access to Federal court upon
removal for the adjudication of separate Federal law claims
that are joined with unrelated state law claims. Subsection
1441(c) presently authorizes a defendant to remove the entire
case whenever a ``separate and independent'' Federal question
claim is joined with one or more non-removable claims. That
subsection also states that, following removal, the district
court may either retain the whole case or remand all matters in
which state law predominates.
Some Federal district courts have declared the provision
unconstitutional or raised constitutional concerns because, on
its face, subsection 1441(c) purports to give courts authority
to decide state law claims for which the Federal courts do not
have original jurisdiction (e.g., Salei v. Boardwalk Regency
Corp., 913 F. Supp. 993, 1007 (E.D. Mich. 1996)). Other courts
have chosen simply to remand the entire case to state court,
thereby defeating access to Federal court (e.g., Moralez v.
Meat Cutters Local 539, 778 F. Supp. 368 (E.D. Mich. 1991)).
Many commentators have recognized the problem, and a leading
treatise on the subject declares that ``the present statute is
useless and ought to have been repealed.'' See C. Wright & M.
Kane, supra, Sec. 39, at 235.
This section of the bill is intended to make changes to
better serve the purpose for which the statute was originally
designed, namely to provide a Federal forum for the resolution
of Federal claims that fall within the original jurisdiction of
the Federal courts. The amendment to subsection 1441(c) would
permit the removal of the case but require that a district
court remand unrelated state law matters. This sever-and-remand
approach is intended to cure any constitutional problems while
preserving the defendant's right to remove claims arising under
Federal law.
Sections 103(a)(5), (6), and (7)(A) of the bill insert
appropriate headings for subsections 1441(d), (e), and (f) for
ease of reference.
Proposed Amendments to Section 1446 and
Addition of New Section 1454
Separating the removal statute (Sec. 1446) into civil and criminal
statutes\3\
---------------------------------------------------------------------------
\3\See generally ALI Project at 328-329.
---------------------------------------------------------------------------
Sections 103(b)(1) and (b)(2)(B) of the bill amend section
1446 to change the section title and strike certain references
to ``criminal prosecution'' so as to separate the removal
provisions relating to civil and criminal proceedings into two
statutes. Section 1446 presently contains several subsections,
some of which are applicable to removal of both civil and
criminal cases, some applicable only to civil cases, and some
applicable only to criminal cases. Separating the civil and
criminal provisions into two statutes would assist litigants in
knowing which provisions were applicable to their type of case.
To effectuate this change, section 103 of the bill codifies
the new statute for criminal proceedings as new section 1454.
The statute for civil proceedings would continue to be section
1446. To make conforming changes for this amendment, current
paragraphs (c)(1)-(5) and subsection (e) of section 1446 would
be deleted and re-codified in the new section 1454.
Section 103(b)(2)(A) of the bill inserts a heading for
subsection 1446(a). Section 103(b)(3)(A) inserts a heading for
subsection 1446(b), while designating the current first
paragraph as ``(1).''
Removal in multiple-defendant cases
Section 103(b)(3) amends subsection 1446(b) by numbering
the paragraphs, striking the second unnumbered paragraph of
existing subsection 1446(b), which is restated in new paragraph
(3), and adding a new second paragraph.
New subparagraph (b)(2)(A) codifies the well-established
``rule of unanimity'' for cases involving multiple defendants.
Under that rule, which is generally traced to the Supreme Court
decision in Chicago, Rock Island & Pac. Ry. v. Martin, 178 U.S.
245, 251 (1900), all defendants who have been properly joined
and served must join in or consent to removal. Like current
law, the new provision is limited to cases removed solely under
section 1441(a); it has no application to other statutes under
which removal is authorized. See C. Wright & M. Kane, supra,
Sec. 40, at 244; see also ALI Project at 441-442, 530-532. The
other provisions of paragraph (b)(2) address the main objective
of this part of the statute, namely to eliminate confusion
surrounding the timing of removal when defendants are served at
different times.
The statute currently specifies a 30-day period for ``the
defendant'' to remove the action, but it does not address
situations with multiple defendants, particularly where they
are served over an extended period of time during and after the
expiration of the first served defendant's 30-day period for
removal. In those situations, Federal courts have differed in
determining the date on which the 30-day period begins to run.
Compare Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202
(11th Cir. 2008) (concluding that the 30-day period runs from
the date of service on the last-served defendant and permitting
earlier-served defendants who failed to act during their own
30-day period to join in, or consent to, the last-served
defendant's timely removal); Marano Enterprises v. Z-Teca
Restaurants, LP, 254 F.3d 753 (8th Cir. 2001) (holding that
each defendant has 30 days to effect removal, regardless of
when or if other defendants had sought to remove); and Brierly
v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527 (6th Cir.
1999) (holding that time for removal in a case involving
multiple defendants runs from the date of service on the last-
served defendant, and permitting defendants who failed to
remove within their own 30-day period to join the timely
removal petition of a later-served defendant), with Getty Oil
Corp. v. Ins. Co. of North America, 841 F.2d 1254 (5th Cir.
1988) (holding that the first-served defendant and all then-
served defendants must join in the notice of removal within 30
days after service upon the first-served defendant); but cf.
McKinney v. Board of Trustees of Mayland Community College, 955
F.2d 924 (4th Cir. 1992) (holding that each defendant may have
30 days to file notice of removal, and rejecting the Getty Oil
argument that served defendants must join a petition for
removal within the time specified for the first-served
defendant).
New subparagraph 1446(b)(2)(B) provides that each defendant
will have 30 days from his or her own date of service (or
receipt of initial pleading) to seek removal. Subparagraph
(b)(2)(C) would also allow earlier-served defendants to join in
or consent to removal by a later-served defendant. Fairness to
later-served defendants, whether they are brought in by the
initial complaint or an amended complaint, necessitates that
they be given their own opportunity to remove, even if the
earlier-served defendants chose not to remove initially. Such
an approach does not allow an indefinite period for removal;
plaintiffs could still choose to serve all defendants at the
outset of the case, thereby requiring all defendants to act
within the initial 30-day period.
This new paragraph clarifies the rule of timeliness and
provides for equal treatment of all defendants in their ability
to obtain Federal jurisdiction over the case against them
without undermining the Federal interest in ensuring that
defendants act with reasonable promptness in invoking Federal
jurisdiction. The approach follows what one court described as
the trend in recent cases. See Bailey, supra, at 1205.
New paragraph 1446(b)(3) is essentially the same as the
text of the second paragraph of current subsection 1446(b),
except that the 1-year limit on removal in diversity cases is
made part of a new subsection that gathers all provisions
uniquely applicable to removal based on diversity of
citizenship.
Creating a separate subsection for removal in diversity cases
Section 103(b)(3)(C) of the bill replaces subsection
1446(c) (a criminal removal provision, which would now be
codified in new section 1454) with the removal provisions
relating solely to diversity, also adding an appropriate
heading. This will assist lawyers in finding the statutory
rules that uniquely apply to removal based on diversity of
citizenship jurisdiction.
Authorizing removal after one year\4\
---------------------------------------------------------------------------
\4\An alternative approach was proposed by the ALI, see ALI Project
at 463, 466-469.
---------------------------------------------------------------------------
New paragraph 1446(c)(1) adds to the current 1-year
limitation on removal of diversity actions a limited exception,
authorizing district courts to permit removal after the 1-year
period if the district court finds that the plaintiff has acted
in bad faith in order to prevent a defendant from removing the
action.
In 1988, Congress amended this statute to prohibit the
removal of diversity cases more than one year after their
commencement. This change was intended to encourage prompt
determination of issues of removal in diversity proceedings,
and it sought to avoid the disruption of state court
proceedings that might occur when changes in the case made it
subject to removal. The change, however, led some plaintiffs to
adopt removal-defeating strategies designed to keep the case in
state court until after the 1-year deadline passed. In those
situations, some courts have viewed the 1-year time limit as
``jurisdictional'' and therefore an absolute limit on the
district court's jurisdiction. Other courts have viewed the
period as ``procedural'' and therefore subject to equitable
tolling (e.g., Tedford v. Warner-Lambert Co., 327 F.3d 423 (5th
Cir. 2003)). In light of some ambiguity in the case law
(compare Bowles v. Russell, 551 U.S. 205 (2007) (rejecting
equitable tolling) with Holland v. Florida, 130 S. Ct. 2549
(2010) (accepting such tolling)), inclusion of statutory
language to resolve the conflict is appropriate.
Proposed paragraph 1446(c)(1) grants district court judges
discretion to allow removal after the 1-year limit if they find
that the plaintiff has acted in bad faith in order to prevent a
defendant from removing the action. The inclusion in the new
standard of the phrase ``in order to prevent a defendant from
removing the action'' makes clear that the exception to the bar
of removal after one year is limited in scope.
Amount in controversy and removal timing
Section 103(b)(3)(C) of the bill further amends subsection
1446(c) by inserting two new paragraphs, (2) and (3), to
address issues relating to uncertainty of the amount in
controversy when removal is sought, e.g., when state practice
either does not require or permit the plaintiff to assert a sum
claimed or allows the plaintiff to recover more than an amount
asserted. Although current practice allows defendants to claim
that the jurisdictional amount is satisfied and remove, several
issues complicate this practice.
First, circuits have adopted differing standards governing
the burden of showing that the amount in controversy is
satisfied. The ``sum claimed'' and ``legal certainty''
standards that govern the amount in controversy requirement
when a plaintiff originally files in Federal court have not
translated well to removal, where the plaintiff often may not
have been permitted to assert in state court a sum claimed or,
if asserted, may not be bound by it. Second, many defendants
faced with uncertainty regarding the amount in controversy
remove immediately--rather than waiting until future
developments provide needed clarification--out of a concern
that waiting and removing later will result in the removal's
being deemed untimely. In these cases, Federal judges often
have difficulty ascertaining the true amount in controversy,
particularly when removal is sought before discovery occurs. As
a result, judicial resources may be wasted and the proceedings
delayed when little or no objective information accompanies the
notice to remove.
Proposed new paragraph 1446(c)(2) allows a defendant to
assert an amount in controversy in the notice of removal if the
initial pleading seeks non-monetary relief or a money judgment,
in instances where the state practice either does not permit
demand for a specific sum or permits recovery of damages in
excess of the amount demanded. The removal will succeed if the
district court finds by a preponderance of the evidence that
the amount in controversy exceeds the amount specified in 28
U.S.C. Sec. 1332(a), presently $75,000.
If the defendant lacks information with which to remove
within the 30 days after the commencement of the action, the
bill adds a new subparagraph 1446(c)(3)(A) to clarify that the
defendant's right to take discovery in the state court can be
used to help determine the amount in controversy. If a
statement appears in response to discovery or information
appears in the record of the state proceedings indicating that
the amount in controversy exceeds the threshold amount, then
proposed subparagraph 1446(c)(3)(A) deems it to be an ``other
paper'' within the meaning of paragraph 1446(b)(3), thereby
triggering a 30-day period in which to remove the action. The
district court must still find by a preponderance of the
evidence that the jurisdictional threshold has been met.
In adopting the preponderance standard, new paragraph
1446(c)(2) would follow the lead of recent cases. See McPhail
v. Deere & Co., 529 F.3d 947 (10th Cir. 2008); Meridian
Security Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006). As
those cases recognize, defendants do not need to prove to a
legal certainty that the amount in controversy requirement has
been met. Rather, defendants may simply allege or assert that
the jurisdictional threshold has been met. Discovery may be
taken with regard to that question. In case of a dispute, the
district court must make findings of jurisdictional fact to
which the preponderance standard applies. If the defendant
establishes by a preponderance of the evidence that the amount
exceeds $75,000, the defendant, as proponent of Federal
jurisdiction, will have met the burden of establishing
jurisdictional facts.
Under proposed subparagraph 1446(c)(3)(B), if the notice of
removal is filed more than one year after the commencement of
the action, and a finding is made that the plaintiff
deliberately failed to disclose the actual amount in
controversy to prevent removal, that finding would be deemed
bad faith under paragraph (1).
Section 103(b)(4)(A) of the bill inserts a heading for
subsection 1446(d). Section 103(b)(4)(B) makes a technical
amendment replacing ``thirty'' with ``30'' each place it
appears in section 1446. Section 103(b)(4)(C) strikes current
subsection (e) (a criminal removal provision, which is now
codified as part of new section 1454). Section 103(b)(4)(D)
redesignates current subsection (f) as new subsection (e), and
inserts a new heading.
SEC. 104. EFFECTIVE DATE.
Section 104 provides that the amendments made by Title I
shall take effect upon the expiration of the 30-day period
beginning on the date of the enactment of this Act and shall
apply to any action or prosecution commenced on or after such
effective date. Section 104 also provides that an action or
prosecution commenced in state court and removed to Federal
court shall be deemed to commence on the date the action or
prosecution was commenced, within the meaning of state law, in
state court.
TITLE II--VENUE AND TRANSFER IMPROVEMENTS
SEC. 201. SCOPE AND DEFINITIONS.
Section 201 adds a new section 1390 to chapter 87 of title
28, United States Code, to define the term ``venue'' and to
specify two areas where the venue chapter would be
inapplicable.
When venue is defined in terms of the geographical location
where a civil action may appropriately be brought, venue is a
relatively easy matter for a defendant to waive--either
purposefully (by contract) or by inaction through the failure
to raise the defense at the first available opportunity (see
Fed. R. Civ. P. 12(b)(3) and 12(h)(1), making clear that
defendants must raise the issue of venue in either the first
motion or answer presented to the court in response to the
complaint). If a defendant preserves the issue through a timely
objection, district courts lack power to enter judgments
against a defendant as to whom venue is improper. If the
defendant fails to raise a venue defense and the court issues a
judgment, the venue defense is waived.
Proposed subsection 1390(a) (``Venue Defined'') would
provide a general definition that distinguishes venue (a
geographic specification of the appropriate forum for
litigation) from other provisions of Federal law that operate
as restrictions on subject-matter jurisdiction. Although such
subject-matter restrictions may also include geographic terms,
they differ from venue rules in that they may not be waived by
the parties and will not be affected by changes in Chapter 87's
general venue rules. Chapter 87's general rules also leave
intact a variety of special provisions in various statutes that
identify the proper forum for litigation of proceedings under
specific acts of Congress. Some of these statutes have been
interpreted as venue rules that may be waived by the parties,
while others have been interpreted as restrictions on subject
matter jurisdiction, which could not be waived.
Proposed subsection 1390(b) (``Exclusion of Certain
Cases'') would make clear that the general venue provisions do
not apply to proceedings in admiralty. Presently, the only
express provision that excludes admiralty cases from the
general venue statutes that otherwise govern ``any civil
action'' is included in Fed. R. Civ. P. 82, which specifies
that an admiralty or maritime claim shall not be treated as a
civil action for purposes of 28 U.S.C. Sec. Sec. 1391-1392. In
addition, subsection (b) would codify current case law (see
Continental Grain Co. v. Barge FBL-585, 364 U.S. 19 (1960)) to
make clear that admiralty disputes would be subject to the
general transfer provisions in 28 U.S.C. Sec. Sec. 1404-
1407.\5\
---------------------------------------------------------------------------
\5\See generally ALI Project at 154-157.
---------------------------------------------------------------------------
Proposed subsection 1390(c) (``Clarification Regarding
Cases Removed from State Courts''), in keeping with current
case law, would provide that the venue statutes do not
determine the proper venue for a case removed from state court
to a Federal district court.\6\ (The removal statute, 28 U.S.C.
Sec. 1441(a), makes venue proper in the Federal district court
for the district in which the state court action was pending.)
In addition, this subsection would maintain current practice by
expressly providing that the transfer provisions of Chapter 87
would govern the transfer of a removed action as between
districts and divisions of the Federal district courts once a
case has been removed.\7\
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\6\See, e.g., Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 665-
66 (1953) (venue removed in cases is controlled by the removal statute,
rather than the general venue statute); Kerobo v. Southwestern Clean
Fuels Corp., 285 F.3d 531 (6th Circ. 2002) (applying the Polizzi
principle). See also ALI Project at 157-158.
\7\See Hollis v. Florida State University, 259 F.3d 1295, 1300
(11th Cir. 2001) (noting the availability of transfer following removal
of a case to Federal court); Bentz v. Recile, 778 F.2d 1026, 1027-1028
(5th Cir. 1985) (permitting removal and transfer for convenience of the
parties even where action was removed from a state court that may have
lacked jurisdiction over the defendant).
---------------------------------------------------------------------------
Section 201(b) makes a conforming amendment in the table of
sections for Chapter 87.
SEC. 202. VENUE GENERALLY.
Section 202 of the bill replaces the text of the first four
subsections of present section 1391, which govern venue
generally.
Application of Venue Requirements Generally (Proposed Sec. 1391(a)(1))
New paragraph 1391(a)(1) would follow current law in
providing the general requirements for venue choices, but would
not displace the special venue rules that govern under
particular Federal statutes.\8\ A general venue statute may
provide greater uniformity and lessen the need for special
venue provisions in titles other than title 28.
---------------------------------------------------------------------------
\8\The ALI notes that there are over 200 specialized venue statutes
in the United States Code. These specialized statutes would continue to
govern within their respective fields, and the general venue statute
would govern diversity and Federal question litigation outside these
special areas. See ALI Project at 253-290.
---------------------------------------------------------------------------
Abrogation of the ``local action'' rule (Proposed Sec. 1391(a)(2), see
also proposed section 203 of the bill)
New paragraph 1391(a)(2) would end the use of the ``local
action'' rule, which provides that certain kinds of actions
pertaining to real property may be brought only in the district
in which the property is located. Such actions, deemed
``local,'' differ from the transitory actions that may be
brought in any court with jurisdiction over the dispute and
parties. The rule has primarily caused problems in disputes
over suits for damages due to a trespass, because the district
court may not be able to exercise personal jurisdiction over
the defendant in the place where the property is located. Thus,
in such situations, a plaintiff would not be able to pursue his
or her case.
As noted in the ALI Project, ``[t]he virtually unanimous
view of modern opinion is that the local-action rule serves no
useful function as a device for allocating venue among the
Federal courts. It is largely a creature of decisional law. . .
.'' ALI Project at 169. See e.g., Bigio v. Coca-Cola, 239 F.3d
440, 449-450 (2d Cir. 2000) (tracing local action rule to
Livingston v. Jefferson, 15 Fed. Cas. 660 (C.C.D.Va. 1811)).
In light of the definition in subsection 1390(a), the
phrasing of paragraph (a)(2), with its specific reference to
``venue,'' makes it clear that statutory restrictions based on
subject-matter jurisdiction would continue to apply.\9\
---------------------------------------------------------------------------
\9\As noted in the ALI Project, new section 1391(a)(2)'s abrogation
of the local-action rule would be subject to the qualification at the
beginning of subsection (a) ``[e]xcept as otherwise provided by law.''
ALI Project at 170-171.
---------------------------------------------------------------------------
Establishing a unitary approach to venue; limiting venue in multiple-
defendant cases to a district of the state in which all
defendants reside; and clarifying the definition of
``fallback'' venue (Proposed Sec. 1391(b)(1)-(3))
Presently, subsection 1391(a) sets forth the venue
requirements for actions brought in the Federal courts pursuant
to diversity jurisdiction (28 U.S.C. Sec. 1332). Subsection
1391(b) sets forth the venue requirements for actions brought
in Federal court based on Federal question jurisdiction (28
U.S.C. Sec. 1331). The provisions of subsections (a) and (b) in
current law are identical, except with respect to the
``fallback'' provisions found in paragraphs 1391(a)(3) and
(b)(3), which are used if ``there is no other district in which
the action may otherwise be brought.''\10\ (As a practical
matter, ``fallback'' venue applies primarily to claims that
arise from conduct overseas.)
---------------------------------------------------------------------------
\10\See generally ALI Project at 172-173 & nn.25, 27.
---------------------------------------------------------------------------
Many academics, as well as the ALI, have called for the
elimination of the venue distinction between diversity and
Federal question actions. New subsection 1391(b) responds to
this call by establishing a single, unitary approach to venue
rules that would govern actions brought in Federal court based
on diversity or Federal question jurisdiction. It would
preserve section 1391 as a general venue statute with
provisions for venue based on the residence of the defendants,
venue based on where the events giving rise to the action took
place, and fallback venue.
New paragraph 1391(b)(1) would address a potential problem
with the current statute. This subsection is intended to limit
venue in multiple-defendant cases to a district of the state in
which all defendants reside, and to address situations where
one of the defendants in a multiple-defendant case is a
corporation, which can be a resident for venue purposes in more
than one state.
Presently, the language of paragraphs 1391(a)(1) and (b)(1)
makes venue proper in ``a judicial district where any defendant
resides, if all defendants reside in the same State.''
Literally applied, this language could have unintended
consequences. For example, consider a suit brought against both
a resident (natural person) in Illinois and a corporation that
does substantial business in every state, including Illinois,
and the litigation arose from events that occurred in Illinois.
Under current subsection 1391(c), the corporation could be
considered a resident of Illinois and every other state, by
virtue of its being subject to personal jurisdiction in all
those states. A plaintiff might sue both defendants in any
other district where the corporation happens to reside, such as
the Southern District of New York, on the theory that, because
all defendants reside in the same state (Illinois) as provided
in 28 U.S.C. Sec. 1391(a) and (b), venue is proper in any other
district where ``any defendant resides.'' Proposed paragraph
1391(b)(1) would alter the statutory language to preclude such
a result, while achieving the intended goal of the original
statute.
New paragraph 1391(b)(2) repeats without change the
language now found in paragraphs 1391(a)(2) and 1391(b)(2).
New paragraph 1391(b)(3) would eliminate the differences in
fallback venue currently found in paragraphs 1391(a)(3) and
(b)(3). Paragraph 1391(a)(3) of title 28 provides that venue is
proper in ``a judicial district in which any defendant is
subject to personal jurisdiction (emphasis added) at the time
the action is commenced, if there is no district in which the
action may otherwise be brought.'' Paragraph 1391(b)(3)
provides that venue is proper in ``a judicial district in which
any defendant may be found (emphasis added), if there is no
district in which the action may otherwise be brought.''
Paragraph 1391(a)(3) appears to refer to situations in which
the district court may exercise long-arm jurisdiction over any
defendant in the case. Although paragraph 1391(b)(3) appears to
have been intended to reach the same result, the ``may be
found'' language in that provision could be interpreted to
refer to situations in which any defendant may be served with
process in the district.\11\ Traditionally, the ``may be
found'' formulation carried this service-of-process
connotation, and some courts have interpreted ``may be found''
venue provisions from elsewhere in Federal law as meaning
something other than service achieved through a long-arm
statute. See C. Wright & M. Kane, supra, Sec. 42, at 264 n.36.
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\11\See John B. Oakley, Prospectus for the American Law Institute's
Federal Judicial Code Revision Project, 31 U. C. Davis L. Rev. 855, 948
& n.404 (1998) (noting that the legislative history of the Judicial
Improvements Act of 1990, Pub. L. No. 101-650, suggests that Congress
intended no difference in the two formulations).
---------------------------------------------------------------------------
Although no cases have been identified that have adopted
the narrower interpretation of paragraph (b)(3), there is
little substantive justification for the present disparity in
language between 1391(a)(3) and (b)(3), which could disrupt the
intended operation of the venue statutes. Proposed paragraph
1391(b)(3) would eliminate this disparity and provide that an
action may be brought in a judicial district in which any
defendant is subject to the court's personal jurisdiction as to
the action in question. The addition of the language ``with
respect to such action'' is intended to avoid the possibility
of an overly broad assertion of venue.
Venue Rules Applicable Universally (Proposed Sec. 1391(c))
Under section 202 of the bill, proposed subsection 1391(c)
would apply to all venuestatutes, including venue provisions
that appear elsewhere in the United States Code. It defines
residency for natural persons, incorporated and unincorporated
entities, and also provides a rule for nonresident defendants.
This would replace current subsection 1391(c), which applies
only to corporations as defendants, and only for purposes of
venue under Chapter 87.
Clarifying ``residence'' of natural persons for venue purposes
(Proposed Sec. 1391(c)(1))
Under current paragraphs 1391(a)(1) and (b)(1), venue in a
suit against a natural person may lie in a district where the
defendant ``resides.'' Most courts have interpreted the term
``resides'' as a reference to the party's domicile,\12\
borrowing the approach that governs the determination of
citizenship for purposes of diversity of citizenship
jurisdiction.\13\ However, a minority of appellate courts (the
Second, Ninth, and Tenth Circuits) have interpreted residence
as a possibly broader concept than citizenship and have
permitted a defendant to be considered a resident in a state
and district other than that person's state of domicile.\14\
Such a reading might permit a court to find venue to be proper
in a place where a party has a summer home.
---------------------------------------------------------------------------
\12\Domicile is defined as the place where a person has his or her
true, fixed, and permanent home and principal establishment. See
Black's Law Dictionary (8th ed. 2004).
\13\See 15 Wright & Miller, Federal Practice and Procedure:
Jurisdiction and Related Matters at 33-37 (2d. ed. 1986).
\14\See, e.g., Arley v. United Pac. Ins. Co., 379 F.2d 183, 185,
n.1 (9th Cir. 1967); cf. Townsend v. Bucyrus-Erie Co., 144 F.2d 106,
108 (10th Cir. 1944) (noting that residence for venue purposes does not
necessarily conform to citizenship for diversity purposes). See
generally ALI Project at 178-182.
---------------------------------------------------------------------------
Paragraph 1391(c)(1) would provide that, for venue
purposes, a natural person would be deemed to reside in the
judicial district in which that person is domiciled, thereby
resolving the division of authority regarding the residence of
parties by adopting the majority rule. As noted in the ALI
Project, proposed new paragraph 1391(c)(1)--
conforms . . . to the great bulk of precedent, by
expressly limiting party-based venue in suits against
individuals to the district or (in a multi-defendant
case) the state in which the defendant is domiciled.
This strict definition of residence for venue purposes
in suits against individuals means that any plaintiff
desiring to sue multiple individuals not domiciled in
the same state will have to bring suit in a claim-based
venue [where the events or omissions giving rise to the
claim occurred] . . . rather than in a party-based
venue. . . .\15\
---------------------------------------------------------------------------
\15\See ALI Project at 182.
Venue for unincorporated associations (Proposed Sec. 1391(c)(2))
The Supreme Court's decision in Denver & Rio Grande W. R.
Co. v. Brotherhood of Railroad Trainmen, 387 U.S. 556 (1967),
has produced a division in authority as to the venue treatment
of unincorporated associations. There, the Court ruled that
unions were to be treated like corporations for Federal venue
purposes, and thus subject to venue where they were licensed to
do business or where they were doing business. The venue
treatment of corporations changed in 1988 with the adoption of
28 U.S.C. Sec. 1391(c), which provides that corporations will
be regarded as residents of any district in which they are
subject to personal jurisdiction. Some courts apply this newer
rule to unions; others continue to apply the Denver & Rio
Grande venue rule to unincorporated associations. These courts
take the position that the 1988 modification of the statutory
rule for corporate venue did not change the treatment of venue
for unincorporated associations that had been applied
previously in Denver & Rio Grande.
New paragraph 1391(c)(2) in section 202 of the bill would
restore the parity of treatment contemplated in Denver & Rio
Grande. The provision would deem a corporation, an
unincorporated association, and any other entity that has the
right to sue and be sued in its common name, if a defendant, to
be a resident in any judicial district in which the defendant
is subject to the court's personal jurisdiction as to the civil
action in question, and, if a plaintiff, only in the judicial
district in which it maintains its principal place of business.
As a general matter, the same rule would apply to limited
partnerships and corporations (LLPs and LLCs), entities that
normally have the capacity to sue in their common name under
the law governing their organization.
This clarifies current law by expressly making the deeming
provision applicable to unincorporated associations, such as
partnerships and labor unions, and other entities with capacity
to sue in their common name under applicable law. Under Fed. R.
Civ. P. 17(b), corporate capacity to sue depends on the law
governing the corporation's organization. With respect to
entities other than corporations, capacity to sue in a common
name depends on the law of the state in which the district
court is located, except that partnerships and unincorporated
associations that lack capacity under state law may sue or be
sued in their common name for the purposes of enforcing
substantive Federal rights.
For the cases in which other laws provide that venue may be
based on the residence of the plaintiff, this proposed
amendment to the venue statute would treat a plaintiff capable
of suing in its common name as a resident only of the district
in which it has its principal place of business. This section
would follow the ALI Project in slightly narrowing venue
options for plaintiffs suing in a common name, in keeping with
the trend to move away from plaintiff-based venue and focus on
the convenience of defendants.
Clarifying venue for those residing outside the U.S.; granting venue
defense to permanent resident aliens with a domicile in the
U.S. (Proposed Sec. 1391(c)(3))
Subsection 1391(d) of title 28 currently provides that an
alien may be sued in any district, thus denying an alien the
ability to raise venue as a defense to the location of
litigation. As noted in the ALI Project, the current statute
means that the ``presence of an alien defendant is disregarded
in the application of the venue statutes to any co-defendants
who are not aliens.'' ALI Project at 199.
As provided in section 202, the first clause of proposed
paragraph 1391(c)(3) would change venue law by shifting the
focus from ``alienage'' of a defendant to whether the defendant
has his or her ``residence'' outside the United States. It
means that for a party resident abroad, whether a natural
person or a corporation, any venue privilege against suit in a
particular Federal district court would be eliminated, and the
protection of the defendant from being sued in an inappropriate
forum would be dependent upon whether the defendant was subject
to personal jurisdiction in that district and to potential
transfer under subsection 1404(a) of title 28.
This would mean that aliens and United States citizens
domiciled abroad could not claim a venue defense to the
location of litigation. Prohibiting United States citizens
domiciled abroad from raising a venue defense would be a change
in current law. They could, however, continue to object to
personal jurisdiction in the courts of the United States, as
could aliens. (A natural person is deemed by paragraph
1391(c)(1) to reside where domiciled, and thus such a defendant
could be a nonresident for venue purposes and still be subject
to personal jurisdiction as a defendant in a Federal district
court.) This approach is consistent with that suggested by the
ALI as far back as 1969 when it proposed dropping the emphasis
on alienage and applying the same rule to all natural persons
with a domicile abroad.
The second clause of proposed paragraph 1391(c)(3) would
make it clear that defendants that reside outside the United
States shall be disregarded for purposes of determining the
appropriate place for bringing an action as to other resident
defendants. (This continues the present practice of
disregarding aliens and extends that practice to other
defendants who reside outside the United States.) The
requirement that courts disregard non-resident defendants in
determining venue should alleviate the possibility that
district courts will view the presence of such parties as a bar
to the transfer of actions to a more convenient forum.
In keeping with the consistent focus of determining venue
by reference to the domicile of natural persons, the deletion
of the current language of 28 U.S.C. Sec. 1391(d), combined
with the proposed amendment to paragraph 1391(c)(1), would also
permit permanent resident aliens domiciled in the United States
to raise a venue defense.\16\ As noted above, aliens may not
claim a venue defense under current law. This is true even if
the alien has been admitted for immigration purposes as a
permanent resident of the United States and has established a
domicile here. The proposed statute would grant a venue defense
to permanent resident aliens who are domiciled in the United
States. (At present, 28 U.S.C. Sec. 1332(a) recognizes that
permanent resident aliens may be viewed as citizens of their
state of domicile for certain jurisdictional purposes, although
section 101 of the bill would modify the terms of that
provision to better achieve its intended purpose.) As noted in
the ALI Project, ``it makes little sense to assimilate
permanent resident aliens domiciled in a state to United States
citizens domiciled in a state for purposes of subject matter
jurisdiction but not for purposes of venue.'' ALI Project at
201. New paragraph 1391(c)(3) would address this problem.
---------------------------------------------------------------------------
\16\An alien can obtain a ``lawful domicile'' in the United States
only if he or she has the ability under the immigration laws to form
the intent to remain in this country indefinitely. See Castellon-
Contreras v. INS, 45 F.3d 149 (7th Cir. 1995); Madrid-Tavarez v. INS,
999 F.2d 111 (5th Cir. 1993). Such an interpretation of domicile under
the venue statute as including lawful intent to remain would foreclose
the possibility that an undocumented alien would be regarded as a
domiciliary of the United States for venue purposes.
---------------------------------------------------------------------------
Retaining district-specific venue (Proposed Sec. 1391(d))
The language of proposed subsection 1391(d) is identical to
that currently included in the second sentence of subsection
1391(c), with the addition of the language ``for purposes of
venue under this chapter'' from the first sentence of the
current subsection. Lastly, section 202 of the bill inserts
subsection headings for subsections 1391(e), (f), and (g).
SEC. 203. REPEAL OF SECTION 1392.
28 U.S.C. Sec. 1392 provides that ``[a]ny civil action, of
a local nature, involving property located in different
districts in the same State, may be brought in any of such
districts.'' Because proposed paragraph 1391(a)(2) would
abolish the local-action rule, section 1392 is repealed as
unnecessary.
SEC. 204. CHANGE OF VENUE.
Subsection 1404(a) of title 28 authorizes the transfer of
civil actions for the convenience of the parties and witnesses
and in the interest of justice, but it limits the transfer of
an action to those districts ``where [the action] might have
been brought.'' The Supreme Court has interpreted this language
to require that the transferee district be one in which both
venue and personal jurisdiction are proper.\17\ This
interpretation, however, narrows the range of possible
transferee districts and precludes a transfer of the case to a
district where it might be more convenient to the litigants.
---------------------------------------------------------------------------
\17\See Hoffman v. Blaski, 363 U.S. 335 (1960).
---------------------------------------------------------------------------
In addition to the existing authority to transfer a civil
action to a district or division where it might have been
brought,'' the proposed amendment to subsection 1404(a) would
permit an action to be transferred to any district or division
to which all parties have consented, even if the action could
not have been brought in that district or division originally.
Under the proposed amendment, such transfers would only be
possible where all parties agreed and only if the court found
it to be for the convenience of the parties and witnesses and
in the interest of justice. Such mutually agreed upon and
judicially approved transfers would be proper in any action,
including actions that have been centralized for pre-trial
proceedings by the Judicial Panel on Multidistrict Litigation
under 28 U.S.C. Sec. 1407.
In authorizing such transfers upon the parties' consent,
this proposed change to subsection 1404(a) would also require a
corresponding change in existing subsection 1404(d) to clarify
that the amendment to subsection 1404(a) is not intended to
allow the transfer of an action from an Article III district
court to a territorial district court that lacks Article III
status. The proposed change would preclude a transfer from an
Article III district court to the district courts of Guam, the
Northern Mariana Islands, and the Virgin Islands. The specific
bar of such transfers will prevent possible constitutional
issues from arising.
SEC. 205. EFFECTIVE DATE.
This section provides that the amendments made by Title II
would take effect upon the expiration of the 30-day period
beginning on the date of enactment and would apply to any
action commenced on or after such date. In addition, it
clarifies the treatment of cases commenced in state court and
removed to Federal court.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
TITLE 28, UNITED STATES CODE
* * * * * * *
PART IV--JURISDICTION AND VENUE
* * * * * * *
CHAPTER 85--DISTRICT COURTS; JURISDICTION
* * * * * * *
Sec. 1332. Diversity of citizenship; amount in controversy; costs
(a) The district courts shall have original jurisdiction of
all civil actions where the matter in controversy exceeds the
sum or value of $75,000, exclusive of interest and costs, and
is between--
(1) * * *
(2) citizens of a State and citizens or subjects of
a foreign state, except that the district courts shall
not have original jurisdiction under this subsection of
an action between citizens of a State and citizens or
subjects of a foreign state who are lawfully admitted
for permanent residence in the United States and are
domiciled in the same State;
* * * * * * *
[For the purposes of this section, section 1335, and section
1441, an alien admitted to the United States for permanent
residence shall be deemed a citizen of the State in which such
alien is domiciled.]
* * * * * * *
(c) For the purposes of this section and section 1441 of
this title--
(1) a corporation shall be deemed to be a citizen
of [any State] every State and foreign state by which
it has been incorporated and of [the State] the State
or foreign state where it has its principal place of
business, except that in any direct action against the
insurer of a policy or contract of liability insurance,
whether incorporated or unincorporated, to which action
the insured is not joined as a party-defendant, [such
insurer shall be deemed a citizen of the State of which
the insured is a citizen, as well as of any State by
which the insurer has been incorporated and of the
State where it has its principal place of business;
and] such insurer shall be deemed a citizen of--
(A) every State and foreign state of which
the insured is a citizen;
(B) every State and foreign state by which
the insurer has been incorporated; and
(C) the State or foreign state where the
insurer has its principal place of business;
and
* * * * * * *
CHAPTER 87--DISTRICT COURTS; VENUE
Sec.
1390. Scope.
1391. Venue generally.
[1392. Defendants or property in different districts in same State.]
* * * * * * *
Sec. 1390. Scope
(a) Venue Defined.--As used in this chapter, the term
``venue'' refers to the geographic specification of the proper
court or courts for the litigation of a civil action that is
within the subject-matter jurisdiction of the district courts
in general, and does not refer to any grant or restriction of
subject-matter jurisdiction providing for a civil action to be
adjudicated only by the district court for a particular
district or districts.
(b) Exclusion of Certain Cases.--Except as otherwise
provided by law, this chapter shall not govern the venue of a
civil action in which the district court exercises the
jurisdiction conferred by section 1333, except that such civil
actions may be transferred between district courts as provided
in this chapter.
(c) Clarification Regarding Cases Removed From State
Courts.--This chapter shall not determine the district court to
which a civil action pending in a State court may be removed,
but shall govern the transfer of an action so removed as
between districts and divisions of the United States district
courts.
Sec. 1391. Venue generally
[(a) A civil action wherein jurisdiction is founded only on
diversity of citizenship may, except as otherwise provided by
law, be brought only in (1) a judicial district where any
defendant resides, if all defendants reside in the same
State,(2) a judicial district in which a substantial part of
the events or omissions giving rise to the claim occurred, or a
substantial part of property that is the subject of the action
is situated, or (3) a judicial district in which any defendant
is subject to personal jurisdiction at the time the action is
commenced, if there is no district in which the action may
otherwise be brought.
[(b) A civil action wherein jurisdiction is not founded
solely on diversity of citizenship may, except as otherwise
provided by law, be brought only in (1) a judicial district
where any defendant resides, if all defendants reside in the
same State, (2) a judicial district in which a substantial part
of the events or omissions giving rise to the claim occurred,
or a substantial part of property that is the subject of the
action is situated, or (3) a judicial district in which any
defendant may be found, if there is no district in which the
action may otherwise be brought.
[(c) For purposes of venue under this chapter, a defendant
that is a corporation shall be deemed to reside in any judicial
district in which it is subject to personal jurisdiction at the
time the action is commenced. In a State which has more than
one judicial district and in which a defendant that is a
corporation is subject to personal jurisdiction at the time an
action is commenced, such corporation shall be deemed to reside
in any district in that State within which its contacts would
be sufficient to subject it to personal jurisdiction if that
district were a separate State, and,if there is no such
district, the corporation shall be deemed to reside in the
district within which it has the most significant contacts.
[(d) An alien may be sued in any district.]
(a) Applicability of Section.--Except as otherwise provided
by law--
(1) this section shall govern the venue of all
civil actions brought in district courts of the United
States; and
(2) the proper venue for a civil action shall be
determined without regard to whether the action is
local or transitory in nature.
(b) Venue in General.--A civil action may be brought in--
(1) a judicial district in which any defendant
resides, if all defendants are residents of the State
in which the district is located;
(2) a judicial district in which a substantial part
of the events or omissions giving rise to the claim
occurred, or a substantial part of property that is the
subject of the action is situated; or
(3) if there is no district in which an action may
otherwise be brought as provided in this section, any
judicial district in which any defendant is subject to
the court's personal jurisdiction with respect to such
action.
(c) Residency.--For all venue purposes--
(1) a natural person, including an alien lawfully
admitted for permanent residence in the United States,
shall be deemed to reside in the judicial district in
which that person is domiciled;
(2) an entity with the capacity to sue and be sued
in its common name under applicable law, whether or not
incorporated, shall be deemed to reside, if a
defendant, in any judicial district in which such
defendant is subject to the court's personal
jurisdiction with respect to the civil action in
question and, if a plaintiff, only in the judicial
district in which it maintains its principal place of
business; and
(3) a defendant not resident in the United States
may be sued in any judicial district, and the joinder
of such a defendant shall be disregarded in determining
where the action may be brought with respect to other
defendants.
(d) Residency of Corporations in States With Multiple
Districts.--For purposes of venue under this chapter, in a
State which has more than one judicial district and in which a
defendant that is a corporation is subject to personal
jurisdiction at the time an action is commenced, such
corporation shall be deemed to reside in any district in that
State within which its contacts would be sufficient to subject
it to personal jurisdiction if that district were a separate
State, and, if there is no such district, the corporation shall
be deemed to reside in the district within which it has the
most significant contacts.
[(e) A civil action] (e) Actions Where Defendant is Officer
or Employee of the United States._
(1) In general.--A civil action in which a
defendant is an officer or employee of the United
States or any agency thereof acting in his official
capacity or under color of legal authority, or an
agency of the United States, or the United States, may,
except as otherwise provided by law, be brought in any
judicial district in which [(1)] (A) a defendant in the
action resides, [(2)] (B) a substantial part of the
events or omissions giving rise to the claim occurred,
or a substantial part of property that is the subject
of the action is situated, or [(3)] (C) the plaintiff
resides if no real property is involved in the action.
Additional persons may be joined as parties to any such
action in accordance with the Federal Rules of Civil
Procedure and with such other venue requirements as
would be applicable if the United States or one of its
officers, employees,or agencies were not a party.
[The summons and complaint] (2) Service._The
summons and complaint in such an action shall be served
as provided by the Federal Rules of Civil Procedure
except that the delivery of the summons and complaint
to the officer or agency as required by the rules may
be made by certified mail beyond the territorial limits
of the district in which the action is brought.
* * * * * * *
[(f) A civil action] (f) Civil Actions Against a Foreign
State.--A civil action against a foreign state as defined in
section 1603(a) of this title may be brought--
(1) * * *
* * * * * * *
[(g) A civil action] (g) Multiparty, Multiforum
Litigation.--A civil action in which jurisdiction of the
district court is based upon section 1369 of this title may be
brought in any district in which any defendant resides or in
which a substantial part of the accident giving rise to the
action took place.
[Sec. 1392. Defendants or property in different districts in same State
[Any civil action, of a local nature, involving property
located in different districts in the same State, may be
brought in any of such districts.]
* * * * * * *
Sec. 1404. Change of venue
(a) For the convenience of parties and witnesses, in the
interest of justice, a district court may transfer any civil
action to any other district or division where it might have
been brought or to any district or division to which all
parties have consented.
* * * * * * *
(d) [As used in this section,] Transfers from a district
court of the United States to the District Court of Guam, the
District Court for the Northern Mariana Islands, or the
District Court of the Virgin Islands shall not be permitted
under this section. As otherwise used in this section, the term
``district court'' includes the District Court of Guam, the
District Court for the Northern Mariana Islands, and the
District Court of the Virgin Islands, and the term ``district''
includes the territorial jurisdiction of each such court.
* * * * * * *
CHAPTER 89--DISTRICT COURTS; REMOVAL OF CASES FROM STATE COURTS
Sec.
1441. [Actions removable generally] Removal of civil actions.
* * * * * * *
1446. Procedure for removal of civil actions.
* * * * * * *
1454. Procedure for removal of criminal prosecutions.
* * * * * * *
Sec. 1441. [Actions removable generally] Removal of civil actions
[(a) Except] (a) Generally.--Except as otherwise expressly
provided by Act of Congress, any civil action brought in a
State court of which the district courts of the United States
have original jurisdiction, may be removed by the defendant or
the defendants, to the district court of the United States for
the district and division embracing the place where such action
is pending. [For purposes of removal under this chapter, the
citizenship of defendants sued under fictitious names shall be
disregarded.]
[(b) Any civil action of which the district courts have
original jurisdiction founded on a claim or right arising under
the Constitution, treaties or laws of the United States shall
be removable without regard to the citizenship or residence of
the parties. Any other such action shall be removable only if
none of the parties in interest properly joined and served as
defendants is a citizen of the State in which such action is
brought.
[(c) Whenever a separate and independent claim or cause of
action within the jurisdiction conferred by section 1331 of
this title is joined with one or more otherwise non-removable
claims or causes of action, the entire case may be removed and
the district court may determine all issues therein, or, in its
discretion, may remand all matters in which State law
predominates.]
(b) Removal Based on Diversity of Citizenship.--(1) In
determining whether a civil action is removable on the basis of
the jurisdiction under section 1332(a) of this title, the
citizenship of defendants sued under fictitious names shall be
disregarded.
(2) A civil action otherwise removable solely on the basis
of the jurisdiction under section 1332(a) of this title 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.
(c) Joinder of Federal Law Claims and State Law Claims.--
(1) If a civil action includes--
(A) a claim arising under the Constitution, laws,
or treaties of the United States (within the meaning of
section 1331 of this title), and
(B) a claim not within the original or supplemental
jurisdiction of the district court or a claim that has
been made nonremovable by statute,
the entire action may be removed if the action would be
removable without the inclusion of the claim described in
subparagraph (B).
(2) Upon removal of an action described in paragraph (1),
the district court shall sever from the action all claims
described in paragraph (1)(B) and shall remand the severed
claims to the State court from which the action was removed.
Only defendants against whom a claim described in paragraph
(1)(A) has been asserted are required to join in or consent to
the removal under paragraph (1).
[(d) Any] (d) Actions Against Foreign States.--Any civil
action brought in a State court against a foreign state as
defined in section 1603(a) of this title may be removed by the
foreign state to the district court of the United States for
the district and division embracing the place where such action
is pending. Upon removal the action shall be tried by the court
without jury. Where removal is based upon this subsection, the
time limitations of section 1446(b) of this chapter may be
enlarged at any time for cause shown.
[(e)(1) Notwithstanding] (e) Multiparty, Multiforum
Jurisdiction.--(1) Notwithstanding the provisions of subsection
(b) of this section, a defendant in a civil action in a State
court may remove the action to the district court of the United
States for the district and division embracing the place where
the action is pending if--
(A) * * *
[(f) The court] (f) Derivative Removal Jurisdiction.--The
court to which a civil action is removed under this section is
not precluded from hearing and determining any claim in such
civil action because the State court from which such civil
action is removed did not have jurisdiction over that claim.
* * * * * * *
[Sec. 1446. Procedure for removal]
Sec. 1446. Procedure for removal of civil actions
[(a) A defendant] (a) Generally.--A defendant or defendants
desiring to remove any civil action [or criminal prosecution]
from a State court shall file in the district court of the
United States for the district and division within which such
action is pending a notice of removal signed pursuant to Rule
11 of the Federal Rules of Civil Procedure and containing a
short and plain statement of the grounds for removal, together
with a copy of all process, pleadings, and orders served upon
such defendant or defendants in such action.
[(b) The notice] (b) Requirements; Generally.--(1) The
notice of removal of a civil action or proceeding shall be
filed within [thirty] 30 days after the receipt by the
defendant, through service or otherwise, of a copy of the
initial pleading setting forth the claim for relief upon which
such action or proceeding is based, or within [thirty] 30 days
after the service of summons upon the defendant if such initial
pleading has then been filed in court and is not required to be
served on the defendant, whichever period is shorter.
[If the case stated by the initial pleading is not
removable, a notice of removal may be filed within thirty days
after receipt by the defendant, through service or otherwise,
of a copy of an amended pleading, motion, order or other paper
from which it may first be ascertained that the case is one
which is or has become removable, except that a case may not be
removed on the basis of jurisdiction conferred by section 1332
of this title more than 1 year after commencement of the
action.]
(2)(A) When a civil action is removed solely under section
1441(a), all defendants who have been properly joined and
served must join in or consent to the removal of the action.
(B) Each defendant shall have 30 days after receipt by or
service on that defendant of the initial pleading or summons
described in paragraph (1) to file the notice of removal.
(C) If defendants are served at different times, and a
later-served defendant files a notice of removal, any earlier-
served defendant may consent to the removal even though that
earlier-served defendant did not previously initiate or consent
to removal.
(3) Except as provided in subsection (c), if the case
stated by the initial pleading is not removable, a notice of
removal may be filed within thirty days after receipt by the
defendant, through service or otherwise, of a copy of an
amended pleading, motion, order or other paper from which it
may first be ascertained that the case is one which is or has
become removable.
[(c)(1) A notice of removal of a criminal prosecution shall
be filed not later than thirty days after the arraignment in
the State court, or at any time before trial, whichever is
earlier, except that for good cause shown the United States
district court may enter an order granting the defendant or
defendants leave to file the notice at a later time.
[(2) A notice of removal of a criminal prosecution shall
include all grounds for such removal. A failure to state
grounds which exist at the time of the filing of the notice
shall constitute a waiver of such grounds, and a second notice
may be filed only on grounds not existing at the time of the
original notice. For good cause shown, the United States
district court may grant relief from the limitations of this
paragraph.
[(3) The filing of a notice of removal of a criminal
prosecution shall not prevent the State court in which such
prosecution is pending from proceeding further, except that a
judgment of conviction shall not be entered unless the
prosecution is first remanded.
[(4) The United States district court in which such notice
is filed shall examine the notice promptly. If it clearly
appears on the face of the notice and any exhibits annexed
thereto that removal should not be permitted, the court shall
make an order for summary remand.
[(5) If the United States district court does not order the
summary remand of such prosecution, it shall order an
evidentiary hearing to be held promptly and after such hearing
shall make such disposition of the prosecution as justice shall
require. If the United States district court determines that
removal shall be permitted, it shall so notify the State court
in which prosecution is pending, which shall proceed no
further.]
(c) Requirements; Removal Based on Diversity of
Citizenship.--(1) A case may not be removed under subsection
(b)(3) on the basis of jurisdiction conferred by section 1332
more than 1 year after commencement of the action, unless the
district court finds that the plaintiff has acted in bad faith
in order to prevent a defendant from removing the action.
(2) If removal of a civil action is sought on the basis of
the jurisdiction conferred by section 1332(a), the sum demanded
in good faith in the initial pleading shall be deemed to be the
amount in controversy, except that--
(A) the notice of removal may assert the amount in
controversy if the initial pleading seeks--
(i) nonmonetary relief; or
(ii) a money judgment, but the State
practice either does not permit demand for a
specific sum or permits recovery of damages in
excess of the amount demanded; and
(B) removal of the action is proper on the basis of
an amount in controversy asserted under subparagraph
(A) if the district court finds, by the preponderance
of the evidence, that the amount in controversy exceeds
the amount specified in section 1332(a).
(3)(A) If the case stated by the initial pleading is not
removable solely because the amount in controversy does not
exceed the amount specified in section 1332(a), information
relating to the amount in controversy in the record of the
State proceeding, or in responses to discovery, shall be
treated as an ``other paper'' under subsection (b)(3).
(B) If the notice of removal is filed more than 1 year
after commencement of the action and the district court finds
that the plaintiff deliberately failed to disclose the actual
amount in controversy to prevent removal, that finding shall be
deemed bad faith under paragraph (1).
[(d) Promptly] (d) Notice to Adverse Parties and State
Court.--Promptly after the filing of such notice of removal of
a civil action the defendant or defendants shall give written
notice thereof to all adverse parties and shall file a copy of
the notice with the clerk of such State court, which shall
effect the removal and the State court shall proceed no further
unless and until the case is remanded.
[(e) If the defendant or defendants are in actual custody
on process issued by the State court, the district court shall
issue its writ of habeas corpus, and the marshal shall
thereupon take such defendant or defendants into his custody
and deliver a copy of the writ to the clerk of such State
court.]
[(f) With respect] (e) Counterclaim in 337 Proceeding.--
With respect to any counterclaim removed to a district court
pursuant to section 337(c) of the Tariff Act of 1930, the
district court shall resolve such counterclaim in the same
manner as an original complaint under the Federal Rules of
Civil Procedure, except that the payment of a filing fee shall
not be required in such cases and the counterclaim shall relate
back to the date of the original complaint in the proceeding
before the International Trade Commission under section 337 of
that Act.
* * * * * * *
Sec. 1453. Removal of class actions
(a) * * *
(b) In General.--A class action may be removed to a
district court of the United States in accordance with section
1446 (except that the 1-year limitation under section [1446(b)]
1446(c)(1) shall not apply), without regard to whether any
defendant is a citizen of the State in which the action is
brought, except that such action may be removed by any
defendant without the consent of all defendants.
* * * * * * *
Sec. 1454. Procedure for removal of criminal prosecutions
(a) Notice of Removal.--A defendant or defendants desiring
to remove any criminal prosecution from a State court shall
file in the district court of the United States for the
district and division within which such prosecution is pending
a notice of removal signed pursuant to Rule 11 of the Federal
Rules of Civil Procedure and containing a short and plain
statement of the grounds for removal, together with a copy of
all process, pleadings, and orders served upon such defendant
or defendants in such action.
(b) Requirements.--(1) A notice of removal of a criminal
prosecution shall be filed not later than 30 days after the
arraignment in the State court, or at any time before trial,
whichever is earlier, except that for good cause shown the
United States district court may enter an order granting the
defendant or defendants leave to file the notice at a later
time.
(2) A notice of removal of a criminal prosecution shall
include all grounds for such removal. A failure to state
grounds that exist at the time of the filing of the notice
shall constitute a waiver of such grounds, and a second notice
may be filed only on grounds not existing at the time of the
original notice. For good cause shown, the United States
district court may grant relief from the limitations of this
paragraph.
(3) The filing of a notice of removal of a criminal
prosecution shall not prevent the State court in which such
prosecution is pending from proceeding further, except that a
judgment of conviction shall not be entered unless the
prosecution is first remanded.
(4) The United States district court in which such notice
is filed shall examine the notice promptly. If it clearly
appears on the face of the notice and any exhibits annexed
thereto that removal should not be permitted, the court shall
make an order for summary remand.
(5) If the United States district court does not order the
summary remand of such prosecution, it shall order an
evidentiary hearing to be held promptly and, after such
hearing, shall make such disposition of the prosecution as
justice shall require. If the United States district court
determines that removal shall be permitted, it shall so notify
the State court in which prosecution is pending, which shall
proceed no further.
(c) Writ of Habeas Corpus.--If the defendant or defendants
are in actual custody on process issued by the State court, the
district court shall issue its writ of habeas corpus, and the
marshal shall thereupon take such defendant or defendants into
the marshal's custody and deliver a copy of the writ to the
clerk of such State court.
* * * * * * *