As it may happen, a colleague calls and explains that she recently received a notice of removal on a suit she filed within her local circuit court. She explains that she has little or no experience in Federal court and her client is distressed at the prospect of having to hire Federal trial counsel and perceives the value of the claim to be diminished by the new venue. If retained, your first order of business will be to ascertain whether or not remand is available pursuant to 28 U.S.C. §1447(c). The Process and Law of Removal / Remand. For those trying to avoid Federal jurisdiction, the law is on your side. The removing party has the burden to establish all jurisdictional requirements with "competent proof."1 The removal statute is narrowly construed and any doubt concerning removal is resolved in favor of remand.2 There is a strong presumption in favor of remand.3
Notice of removal must be filed within thirty days after service of the complaint.4 If there is no basis for removal at the outset of the state court litigation, the notice of removal must be filed within thirty days after the defendant receives "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." 5 On the outside, no case can be removed on the basis of diversity jurisdiction more than one year after the action has commenced.6
Cases can be remanded because of defects in the removal process even if the District Court might otherwise have jurisdiction. For example, defendant’s failure to specify the parties’ citizenship at the time of the filing of the complaint was fatal to removal even though defendant generally alleged the diverse citizenship of the parties.7 In determining whether the removal petition is incurably defective, the court not only examines specific allegations of the removal petition itself, but also scrutinizes the state court record.8 If you are objecting to removal based upon a procedural defect, be advised that the Federal courts strictly observe the thirty-day deadline of 28 U.S.C. §1447(c).9 However, defects based upon lack of subject matter jurisdiction may be raised by a motion for remand at any time.10 The Seventh Circuit has espoused a narrow definition of "procedural defect."11 For example, the Seventh Circuit has aligned itself with those jurisdictions which have held that the narrow concept of procedural defect does not apply to remands based on the abstention doctrine.12 An issue can also arise as to whether or not the thirty days to remove begins to run with service of process upon the "first-served defendant" or the "last-served defendant."13 The Seventh Circuit leans toward the "last-served defendant" rule which provides that in cases involving multiple defendants, each later-served defendant has thirty days from date of service to remove a case to Federal court with the consent of the other defendants.14 Diversity of Citizenship. There must be complete diversity of citizenship between all parties to the litigation and when the parties allege "residence" but not citizenship, the court must dismiss or remand.15 An averment of "residence" in another state is not an averment of citizenship for purposes of diversity jurisdiction.16
Unincorporated enterprises are similar to partnerships and the court must take cognizance of the citizenship of every general and limited partner.17 For example, a limited partnership like a limited liability company is a citizen of every state of which any member is a citizen.18 In the case of Hart v. Terminex International, the Seventh Circuit vacated a judgment and remanded the action for dismissal for want of jurisdiction even though the parties had been in Federal court litigation for in excess of eight years because Terminex was a partnership which had two Illinois partners.19
Ownership of such an entity must be traced through each and every level of partnership when an owner is another partnership.20 The citizenship of unincorporated associations "must be traced through however many layers of partners or members there may be."21 Amount in Controversy. In Illinois state courts, a personal injury plaintiff cannot specify the total amount sought for damages beyond the amount set by local circuit court rule.22 For example, a typical personal injury complaint will allege damages "in an amount in excess of $50,000.00." Such an allegation on its face does not establish the requisite the $75,000.00 amount in controversy requirement for diversity jurisdiction.23
Defendants are therefore challenged to make an early determination as to whether or not the amount in controversy exists. On the one hand, if a defendant waits for more clarity regarding the amount claimed by plaintiff, defendant is at risk of violating the thirty-day time limit for removal. For example, in Campbell v. Bayou Steel Corp., the District Court held that because plaintiff alleged that his leg was "deformed" the defendants should have ascertained both from the face of the complaint and from defendants’ own knowledge of plaintiff’s injury that plaintiff would incur at least $75,000.00 in medical bills from such "severe and permanent injuries" to his leg, and plaintiff’s motion for remand was granted because defendants’ removal was untimely, also resulting in an award of attorney’s fees.24 It is the responsibility for the defendant to ascertain "from a reasonable and common sense reading of the complaint whether the action is removable."25 On the other hand, if the defendant removes too early when the $75,000.00 amount in controversy is only suspected, the case will pointlessly travel to Federal court only to be remanded once plaintiff’s intentions are clarified.26 Previously in the Northern District of Illinois, N.D.Ill. LR 81.2 required the defendant to obtain a response to an interrogatory or an admission from plaintiff pursuant to SCR 216 that the amount in controversy exceeds $75,000.00.
However, the rule has been withdrawn. The Seventh Circuit Court of Appeals indicated in dicta that because local rules must be consistent with Federal statutes, a rule such as LR 81.2 impeding defendants from making its own independent determination of the amount in controversy cannot be enforced. A local rule which conditions removal on plaintiff’s explicit acknowledgment that the amount in controversy exceeds $75,000.00 called the rule’s validity "into serious question."27 Another dilemma which resulted in the withdrawal of LR 81.2 was the fact that a defendant seeking to clarify plaintiff’s claim for damages through an interrogatory or request to admit pursuant to SCR 216, must first file a general appearance and acknowledge that the state court has in personam jurisdiction.28
Whether removal is appropriate must be determined as of the date the notice of removal is filed.29 Additionally, complaints which include a request for equitable relief must be analyzed to assess the costs of compliance with the requested injunctive relief.30 As it now stands, the prudent defense lawyer may have to conclude that the safest course is to file for removal within the thirty-day deadline, and if the plaintiff seeks and obtains a remand, the defendant may have capped damages through plaintiff’s admission and in the event plaintiff later seeks an amount in excess of $75,000.00, defendant may then again file a subsequent petition for removal.31 In Thornton v. Signature Flight Support Corp., Judge Hart determined that defendant’s removal was untimely because the defendant was "well aware that the allegations supported an amount in controversy was likely, if not definitely, in excess of $75,000.00" but waited almost eight months before serving a request to admit and since the defendant acted in a dilatory manner in serving a request to admit, the notice of removal was untimely and plaintiff was awarded costs and attorney’s fees related to the removal and remand pursuant to 28 U.S.C. §1447(c).32
The starting point in determining the amount in controversy typically is the face of the complaint.33 Once the amount in controversy is challenged by plaintiff, defendant then has the burden of supporting the jurisdictional amount in controversy by "competent proof."34 Defendant must submit evidence establishing the jurisdictional facts,35 and a "reasonable probability that more than (the required amount) is in controversy."36 Once plaintiff itemizes damages, defendant’s reference to unknown, incidental or consequential damages is sheer speculation and should not be considered.37 If defendant attempts to include plaintiff’s claim for attorney’s fees, only those fees incurred as of the date plaintiff’s complaint was filed should be considered.38 The amount in controversy is whatever is required to satisfy plaintiff’s demand in full as of the date the suit began.39 Defendant must place a "realistic value" on any claim by plaintiff for equitable relief.40 Speculative harm is insufficient to establish the requisite jurisdictional amount.41 Be aware that settlement offers and demands are often attached as exhibits to notices of removal, motions for remand and responses thereto, which can be considered by the court in its determination of the value the parties place on the controversy.42 Fees for a Failed Removal. An order remanding a removed case "may require payment of just costs and any actual expenses, including attorney’s fees, incurred as a result of the removal."43 Although the statute does not set forth the criteria for the court’s exercise of authority to award fees, "the plaintiff must show that the remand order was correct (that is, that removal was improper), but need not show the removal was in bad faith, and . . . the district court has broad discretion in deciding whether to award fees."44 There is a presumption that plaintiff is entitled to an award of fees as under a standard fee-shifting statute such as 42 U.S.C. §1988.45 However, the courts in the Northern District of Illinois have routinely declined to exercise their discretion to award attorney’s fees where the removal raised a "substantial jurisdictional question."46
Conclusion. Since L.R. 81.2 no longer exists, it is now more than ever incumbent upon defendant pursuant to 28 U.S.C. §1446(b) to make a rational determination whether or not the initial pleading is removable within the thirty days after service of summons and complaint. If the defendant waits for clarity and plaintiff’s further representation regarding the amount in controversy, the defendant may have thirty days after receipt of any amended pleading, motion, order or other "paper (i.e. discovery response)" from which it may first be ascertained that the case is one which is or has become removable. However, if the District Court determines that defendant should have known that the case was removable when first served with process, the defendant risks remand plus an award of attorney’s fees. On the other hand, if defendant removes and plaintiff establishes that there is either no diversity jurisdiction or the amount in controversy does not meet the $75,000.00 jurisdictional amount, remand will be ordered and potentially with fees. The defendant may then have to try again later should plaintiff’s admissions subsequently create all the requisite elements of diversity jurisdiction.HaH
1 28 U.S.C. §1441; Chase v. Shop’n Save Foods Warehouse, Inc., 110 F.3d 424, 427 (7th Cir. 1997); Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993).
2 Doe, 985 F.2d at 911.
3 Jones v. General Tire & Rubber Co., 541 F.2d 660, 664 (7th Cir. 1976).
4 28 U.S.C. §1446(b); Poulos v. Naas Foods, Inc., 959 F.2d 69, 71 (7th Cir. 1992).
5 28 U.S.C. §1446(b); Rothner v. City of Chicago, 879 F.2d 1402, 1418 (7th Cir. 1989).
6 28 U.S.C. Sec. §1446(b); Rothner, 879 F.2d at 1418.
7 Hubbard v. Tripp, 611 F.Supp.895 (E.D.Va. 1985).
8 Northern Illinois Gas Co. v. Airco Indus. Gases, a Division of Airco, Inc., 676 F.2d 270, 273 (7th Cir. 1982).
9 Wisconsin Dept. of Corrections v. Schacht, 118 S.Ct.2047, 524 U.S. 381 (1998).
10 Schacht, 524 U.S. at 392.
11 Rothner v. City of Chicago, 879 F.2d 1402, 1411 (7th Cir. 1989).
12 Stevo v. CSX Transp., Inc., 940 F.Supp.1222, 1225 (N.D.Ill. 1996).
13 See, Bova v. U.S. Bank, NA, 446 F.Supp.2d 926, 932 (S.D.Ill. 2006).
14 Midlock v. Apple Vacations W., Inc., 406 F.3d 453, 455 (7th Cir. 2005); Boyd v. Phoenix Funding Corp., 366 F.3d 524, 530 (7th Cir. 2004).
15 Guarantee Nat’l. Title Co., Inc. v. J.E.G. Assocs., 101 F.3d 57, 59 (7th Cir. 1996); Tylka v. Gerber Products Co., 211 F.3d 445, 448 (7th Cir. 2000).
16 McMahon v. Bunn-O-Matic Corp., 150 F.3d 651, 653 (7th Cir. 1998).
17 Bellville Catering Co. v. Champaign Marketplace, LLC, 350 F.3d 691, 693 (7th Cir. 2003).
18 Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998).
19 336 F.3d 541 (7th Cir. 2003),
20 Terminex, 336 F.3d at 543.
21 Meyerson v. Harra’s East Chicago Casino (Myerson I), 299 F.3d 616, 617 (7th Cir. 2002).
22 735 ILCS 5/2-604.
23 28 U.S.C. §1332(a).
24 338 F.Supp.2d at 903-904.
25 McCoy v. General Motors Corp., 226 F.Supp.2d 939, 943 (N.D.Ill. 2002).
26 See, Turner v. Goodyear, 252 F.Supp.2d 677, 680 (N.D.Ill. 2003).
27 Rubel v. Pfizer Inc., 361 F.3d 1016, 1020 (7th Cir. 2004).
28 See, Haubner v. Abercrombie & Kent Intern., Inc., 351 Ill.App.3d 112, 118, 812 N.E.2d 704, 710 (1st Dist. 2004).
29 Chase v. Shop’n Save Warehouse Foods, 110 F.3d 424 (7th Cir. 1997).
30 Rubel v. Pfizer Inc., 361 F.3d 1016, 1017-20 (7th Cir. 2004).
31 Benson v. S.I. Handling Systems, Inc., 188 F.3d 780, 782 (7th Cir. 1999).
32 2004 W.L. 2608291 (N.D.Ill. 2004),
33 Chase v. Shop’n Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997).
34 NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995).
35 McNutt v. General Motors Acceptance Corp., 298 U.S.178, 189 (1936),
36 Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993).
37 Gabriel v. Mitsubishi Motor Sales of America,Inc., 976 F.Supp. 1154, 1156 (N.D.Ill. 1997).
38 Hart v. Schering-Plough Corporation, 253 F.3d 272, 274 (7th Cir. 2001).
39 Gardynski-Leschuck v. Ford Motor Co., 142 F.3d 955, 958-59 (7th Cir. 1998).
40 Macken v. Jensen, 333 F.3d 797, 800 (7th Cir. 2003).
41 Opentext, Inc.v. Ackerman, 2002 W.L. 31748839 at 3 (N.D.Ill. 2002).
42 Rising-Moore v. Red Roof Inns, 435 F.3d 813, 816 (7th. Cir. 2006).
43 28 U.S.C. §1447(c).
44 Sirotzky v. New York Stock Exchange, 347 F.3d 985, 987 (7th Cir. 2003).
45 Sirotzky, 347 F.3d at 987.
46 See, Campbell v. Bayou Steel Corp., 338 F.Supp.2d 896, 904 (N.D.Ill. 2004).
Glenn R. Gaffney is a partner in the law firm of Gaffney & Gaffney in Bloomingdale, concen-trating his practice in Labor and Employment law. He received his Bachelor of Science in Marketing from the University of Illinois at Champaign/Urbana and received his J.D. from Southern Illinois University, College of Law.