Written by Henry U. Moore, Esq.
Edited by Bill Pfund, Esq.
Removal of a lawsuit from state court to federal court can often be an advantageous strategy move by a defendant in Virginia. This is primarily because federal courts are far more willing than Virginia state courts to grant summary judgment to a defendant when a plaintiff has failed to present a viable case for trial. Federal courts also move cases along more quickly than state courts, as exemplified by the nickname of the U.S. District Court for the Eastern District of Virginia, often referred to as the “Rocket Docket.”
But there are limits to how, and when, a defendant may remove a case to federal court. A case is removable to federal court only if (1) it presents a question of federal statutory or constitutional law (“federal question jurisdiction”) or (2) it involves adverse parties which are citizens of different states and an amount in controversy over $75,000 (“diversity jurisdiction”). If the initial complaint filed by the plaintiff in state court presents one of the above grounds for removal, a defendant has 30 days from receipt of the complaint (by service or otherwise) to remove the case to federal court. 28 U.S. Code § 1446(b)(1).
But what if the plaintiff’s initial complaint does not provide a basis for removal – can the case ever be removed to federal court? 28 USCS § 1446(b)(3) specifies that “if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant…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).
This “other paper” is a very vague, but very important, reference in the statute. It means that documents other than the complaint or other subsequent pleadings can be a basis for removal. For example, in construing this “other paper” provision, federal courts have not limited the amount in controversy (which, again, must exceed $75,000 to establish diversity jurisdiction) to the amount the plaintiff seeks in the ad damnum clause of the complaint. “The amount in controversy for purposes of removing a case to federal court can be determined from the totality of the circumstances, including answers to interrogatories.” Whitaker v. Heinrich Schepers GMBH & Co. KG, 276 Va. 332 (2010).
However, the vagueness of the statute also means that different federal courts interpret “other paper” differently. Importantly for defendants in Virginia, documents received by the defendant even before the filing of a complaint can be the basis for removal. This means the 30-day removal clock can start ticking upon receipt of the complaint – even if that complaint does not on its face present grounds for removal.
The U.S. District Court for the Eastern District of Virginia applied this principle in Dugdale v. Nationwide Mut. Fire Ins. Co., No. 4:05cv138, 2006 U.S. Dist. LEXIS 17471, at *2 (E.D. Va. February 14, 2006). This case involved a claim by an insured against Nationwide for mishandling of her claim for hurricane damage to her home under a standard flood insurance policy issued pursuant to the National Flood Insurance Program. The court determined that an informal demand letter received before the complaint was filed constituted an “other paper” under § 1446(b)(3) which put Nationwide on notice that the plaintiff was asserting claims under federal law. Therefore, the court concluded that the information in the demand letter was sufficient to indicate that the case was removable as a federal question, and the defendant had thirty days from receipt of the plaintiff’s initial pleading in the case to file a notice of removal, even though the plaintiff’s complaint did not present the federal question or other grounds for removal.
This principle applies equally to state law claims which may be removable. Therefore, pre-suit settlement demand letters or other papers received by a defendant which indicate that the amount in controversy may be more than $75,000 start the removal clock ticking as soon as the complaint is received, even if the ad damnum in the complaint is under $75,000. See Dugdale, 2006 U.S. Dist. LEXIS 17471, at *22 (citing Williams v. Safeco Ins. Co. of America, 74 F. Supp. 2d 925, 929 (W.D. Mo. 1999)).
This obviously has big implications for general liability matters, most of which arise under state law, including most negligence, premises liability, and product liability cases. It is therefore important to know what information a defendant has and when they received it, even before a suit is filed, as this information can determine whether a defendant may avail themselves of the powerful tool of removal to federal court, or whether they have missed their window of time to do so.
The attorneys at KPM LAW understand the legal intricacies, and importance, of removal as a tool in litigation and are ready to assist with any such issues or questions you may have.