Improper Removal to Federal Court Results in Sanctions

By Brian A. Cafritz

Removing a case to Federal Court is often one of the first important strategic moves a defendant can make in litigating a lawsuit. Knowing the inherent advantages that typically come with Federal Court, Plaintiffs will often plead the case in a way that precludes Federal Removal. Sometimes, the rush to Federal Court can backfire, and in the recent case of Scott Carmine v. Glen Poffenbarger, et al., Civil Action No. 1:18-cv-1288, Judge Anthony Trenga in Alexandria Division of the Eastern District of Virginia sanctioned the defendant for attempting to remove the lawsuit when such a move was not proper.

Carmine was a medical products liability case where the Plaintiff alleged permanent and disabling injuries from a bone graft procedure. Plaintiff sued his doctor (Dr. Poffenbarger), 5 product manufacturers whose components were involved in the surgery (the Medtronic Defendants), and the Hospital and physicians group. Of the defendants, only the hospital and physicians group were Virginia citizens. On the day before the deposition of Plaintiff’s expert, the expert reconsidered, and he testified that Dr. Poffenbarger did not breach the applicable standard of care. Dr. Poffenbarger was scheduled to be deposed one week after the expert, but just days before that deposition, the Medtronic Defendants removed the case to Federal Court. The removal created extreme disruption to the state court’s scheduling and docket. Specifically, the removal caused Dr. Poffenbarger’s deposition to be canceled, the defendant’s expert designation to pass, and the trial date scheduled for the next month to be missed.

The Medtronic Defendants contended that the collapse of Plaintiff’s experts would require the dismissal of Dr. Poffenbarger, the physicians group, and the hospital, leaving only the Medtronic Defendants in the case. They further argued that Plaintiff acted in bad faith to prevent removal by bringing a meritless case against the doctors and hospitals, because they knew they had no means of proving the case.

Judge Trenga disagreed and remanded the case to state court. The Judge noted first that the Medtronic Defendants failed to get the consent of all defendants as required by court rules. Then, the Judge looked to 28 U.S.C. § 1446(c), which states that when diversity is not present when a suit is initiated, “removal may occur when it is established that the case ‘has become removable’ through receipt by the defendant seeking removal of ‘a copy of an amended pleading, motion, order or other paper’ from which the removability of the action may be ascertained. Carmine p. 7. He emphasized that the acts of amending the complaint or filing of some paper must indicate that the dismissal of the non-diverse party was a voluntary act of the plaintiff, and not an involuntary dismissal by the state court. Id. Even though the rule requires a filing, some courts have ruled that the voluntary act can even be made by informal communications. Heniford v. Am. Motors Sales Corp., 471 F. Supp 328 (D.S.C. 1979). Regardless of the form of communication, the key is that the dismissal must be voluntary, because a voluntary removal that avoids the possibility of the claim being refiled, which could later destroy diversity. Considering these rules, Judge Trenga noted that under the most liberal interpretations, a filing of a voluntary dismissal could never be the same as the defendant simply believing there is a “strong possibility that [the case] will become removable in the future.” Id. There was no question that at the time of removal, Dr. Poffenbarger, the hospital and physician’s group were all still defendants in the case. No motion to dismiss had been filed and no order to such effect had been entered.

To the contrary, nowhere in the expert’s deposition transcript did Plaintiff indicate that he intended to abandon his claims against Dr. Poffenbarger. Moreover, the plaintiff’s attorney noted that while he no longer had an expert to support his case, he still intended to depose Dr. Poffenbarger to consider how to proceed. Even Dr. Poffenbarger’s counsel did not believe claims against his client were abandoned after the deposition, because he served Requests for Admissions against Plaintiff after the deposition ended. Based on the above, Judge Trenga could not conclude that Plaintiff decided at any point to voluntarily dismiss or otherwise abandon his claim against Dr. Poffenbarger, even though dismissal may have ultimately been likely.

Judge Trenga continued his analysis by noting that since the removal occurred more than one year after filing, the defendant need to show bad faith on the Plaintiff to avoid removal. Up to the point of the expert deposition, there was no reason to believe that Plaintiff did not have a viable claim. In fact, the Physicians group had even admitted the employment relationship to establish vicarious liability if Dr. Poffenbarger was negligent. Finding no objectively reasonable basis for removal or that Plaintiff acted in bad faith to prevent removal, Judge Trenga, awarded costs and expenses, including attorneys’ fees because of the improper removal.

The takeaways from this ruling a clear and unmistakable. While removal is usually a preferred strategy, improper removal can be costly and damage the court’s perception of the attorney and client. Defendants have one year to remove a case after filing, but before a case is removable, there must be a clear, unambiguous communication by plaintiff that they intend to voluntarily dismiss the non-diverse defendant. If the dismissal is not with prejudice, or if there is any potential that the case could be refiled against the defendant to defeat diversity, removal is not proper. Moreover, while some courts can read the intent to dismiss liberally, it is always best to secure the communication in writing to avoid any doubts. Finally, if the removal is to come after one year from filing, the defendant will bear the burden of proving bad faith on the plaintiff.

Understanding the interplay between Federal and state courts is critical to successfully navigating the litigation minefield. Lawyers are KPM LAW are familiar with those rules and ready to assist you when you find yourself in a lawsuit.

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