We promised in the February issue to give a more detailed report on the Federal Courts Jurisdiction and Venue Clarification Act of 2011. President Obama signed this legislation into law on December 7, 2011. The Act, which went into effect on January 6, 2012, codifies a number of common law rules dealing with the removal of civil cases from State Court to Federal Court. Chad Stewart, a lawyer in our firm, who formerly worked with the federal courts, has looked carefully at this Act. Here are some of the changes that will be of most interest to practitioners:
• Each Defendant has 30 days from the date that particular Defendant received service of the complaint in which to file its notice of removal. If the case is not initially removable, but later becomes removable, the Defendant(s) must file its notice of removal within 30 days after it receives a copy of an amended pleading or other paper demonstrating that the case has become removable. After one year from the date the case was filed, the case cannot be removed based on diversity jurisdiction unless the Federal Court “finds that the Plaintiff has acted in bad faith in order to prevent a Defendant from removing the action.” 28 USC § 1446(b)-(c). This new bad faith exception will likely give rise to heated litigation in the future.
• Every Defendant must consent to removal before a case can be properly removed from State Court. 28 USC § 1446(b)(2)(A). This codifies the general rule previously applied by most Courts.
• The Act also codifies a number of common law rules regarding the “amount in controversy” requirement and provides that a Defendant must establish that the amount in controversy exceeds $75,000.00 by a “preponderance of the evidence.” 28 USC § 1446(c). This marks a change from the general rule requiring Defendants to prove the amount in controversy to a “legal certainty.”
• The Act makes numerous revisions to the federal venue statute, 28 USC § 1390 et seq., including a provision that Federal Courts may transfer cases to “any district or division to which all parties have consented.” 28 USC § 1404(a). This is a substantial change from the old law which restricted transfers to Courts where the case could have been originally commenced.
• When a State Court case is removed to Federal Court on federal question grounds, the Federal Court must now sever all claims not within its jurisdiction and remand such claims to the State Court from which it was removed. Prior to the Act, Federal Courts could choose to keep the entire case.
• Federal Court decisions to remand cases to State Courts remain largely un-appealable. 28 USC § 1447(d).
In sum, the Act brings about significant changes with which lawyers should become familiar because every case filed after January 6, 2012, could be affected. Lawyers should also get a complete copy of the Act (112 P.L. 63; 125 STAT. 758). If you would like more information on this Act, contact Chad Stewart, a lawyer in our firm, at 800-898-2034 or by email at Chad.Stewart@beasleyallen.com.
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