One of the issues raised by some legal commentators after the U.S. Supreme Court decided Standard Fire Insurance Company v. Knowles, 133 S. Ct. 1345 (2013) (blog post), was whether the Supreme Court’s opinion invalidating named plaintiffs’ stipulations regarding the amount in controversy would allow cases to be removed again, or removed after the 30-day period had expired. This issue arose principally in two scenarios. First, a defendant had previously removed a case to federal court, but the case was remanded based on a stipulation by the named plaintiff that he or she was not seeking more than $5 million. The defendant may have concluded that seeking permission to appeal was fruitless because established circuit law upheld these stipulations (which the Supreme Court unanimously invalidated in Knowles). Or in some cases an appeal was taken, and appellate review was denied or the decision was affirmed. A second scenario in which this issue arose is where a defendant had not removed the case initially because it concluded that such a removal would be fruitless, due to established circuit law upholding the use of these stipulations. Given that the Supreme Court had now overruled that circuit law, could a defendant remove late, or remove a second time?
The first decision I’ve seen on this issue is Henry v. Michaels Stores, Inc., Case No. 1:13-CV-831, 2013 U.S. Dist. LEXIS 71046 (N.D. Ohio May 20, 2013), which concluded that the Knowles opinion did not create grounds for a new removal. This case was not removed within 30 days after it was served. According to the defendant, it did not remove the case because it concluded that the plaintiff’s disclaimer of damages over $5 million in his complaint was enforceable under established Sixth Circuit law. The defendant removed the case, however, within 30 days after the Supreme Court issued the Knowles opinion. The court first addressed the question of whether the case was removable when it was initially filed (and thus the 2013 removal was too late). It found Sixth Circuit law unclear on the relevant point, and thus did not find the removal to be untimely, on the basis that the right to removal must be “unequivocal” in order for the defendant to lose that right due to its failure to remove within 30 days of service.
The court then focused on 28 U.S.C. § 1446(b)(3), which provides that, if the case is not removable based on the initial pleading, a removal beyond the initial 30-day period is authorized “within 30 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.” (Emphasis added.) The defendant argued that the Knowles decision was an “order” or an “other paper,” but the Northern District of Ohio rejected that position. Relying on precedent construing § 1446(b)(3) and its legislative history, the court held that the words “order” or “other paper” are limited to an order or other document that is received in the case that is being removed, which would not include a new Supreme Court opinion.
So what is the lesson here? Lots of lawyers tend to assume that binding circuit authority is impenetrable and the possibility of Supreme Court review can be ignored because it is highly unlikely that the Court will take a case involving the issue you are dealing with. But that is not always true, as I found out when I got the call from the Supreme Court Clerk’s office when certiorari was granted in Knowles. When the issue is important you may have to go all the way to keep it alive in your case. If someone else has a case involving your issue and gets the Supreme Court to take it, it may be that the only way you can preserve that issue in your case is by taking a dead-on-arrival, waste-of-time appeal to the court of appeals that has already decided the issue, and then, if necessary, filing your own petition for certiorari. It doesn’t really cost that much to keep the issue alive in your case, and it is surprising sometimes what the Supreme Court takes. If the issue is still alive in your case, you can seek a stay in the court of appeals pending the Supreme Court decision, or, if your case is in the Supreme Court when cert is granted in another case, they will likely hold it and then grant, vacate and remand when they decide the issue in the other case.