Reece v. Wal-Mart Stores, Inc.

1 IN THE UNITED STATES COURT OF APPEALS

2 FOR THE FIFTH CIRCUIT

3 _______________

4

5 No. 95-20680

6 _______________

7 LIZZIE REECE,

8 Plaintiff-Appellant,

9 VERSUS

10 WAL-MART STORES, INC.,

11 and

12 DENNIE ASHLEY,

13 Defendants-Appellees.

14 _________________________

15

16 Appeal from the United States District Court

17 for the Southern District of Texas

18 _________________________

19 October 21, 1996

20 Before JONES, SMITH, and STEWART, Circuit Judges.

21 JERRY E. SMITH, Circuit Judge:

22 Plaintiff Lizzie Reece appeals the denial of her motion to

23 remand to state court. We reverse and remand.

24 I.

25 Reece filed this state law tort suit against Wal-Mart Stores,

26 Inc. ("Wal-Mart"), and one of its employees, Dennie Ashley, in

27 state court. Reece’s attorney promptly mailed a file-stamped copy

28 of her original petition, along with a cover letter suggesting that

29 the parties negotiate a settlement, to Wal-Mart’s chief executive

30 officer ("CEO"), David Glass. Reece did not obtain service of

31 process on Wal-Mart until approximately two months later.

32 Wal-Mart filed a notice of removal, alleging that Reece had

33 fraudulently joined Ashley for the sole purpose of defeating

34 diversity jurisdiction. Wal-Mart filed the notice seventy-seven

35 days after receiving a copy of Reece’s petition but only seventeen

36 days after service of process.

37 Reece moved to remand, contending that the notice of removal

38 was untimely and that Ashley was a proper defendant. The district

39 court denied Reece’s motion and dismissed the action against Ashley

40 for failure to state a claim. At the conclusion of a trial on the

41 merits, the court entered judgment as a matter of law in favor of

42 Wal-Mart. On appeal, Reece contests only the denial of her motion

43 to remand.

44 II.

45 Reece contends that the district court erred in concluding

46 that the period for removal began when Wal-Mart received formal

47 service of process rather than when it received a copy of the

48 original petition by mail. We agree.1

49 A.

50 As the motion to remand presents a question of law, our review

1

Accordingly, we do not reach Reece’s contention that she did not join

Ashley fraudulently.

2

51 is de novo. Burden v. General Dynamics Corp., 60 F.3d 213, 216

52 (5th Cir. 1995). “The notice of removal of a civil action or

53 proceeding shall be filed within thirty days after the receipt by

54 the defendant, through service or otherwise, of a copy of the

55 initial pleading setting forth the claim for relief . . . .”

56 28 U.S.C. § 1446(b) (1994) (emphasis added). Thus, according to

57 the statute, the thirty-day period begins when the defendant

58 receives a copy of the initial pleading through any means, not just

59 service of process.2 As Wal-Mart filed its notice of removal more

60 than thirty days after receiving a copy of Reece’s original

61 petition, removal was untimely.

62 B.

63 Wal-Mart contends that we should disregard the plain language

64 of § 1446(b) and hold that the period for removal begins only upon

65 formal service of process. Wal-Mart explains that a “service

66 rule,” unlike the “receipt rule," is consistent with congressional

67 intent, as expressed in § 1446's legislative history, to protect,

68 rather than limit, the right to remove.

69 “[T]he statute is the sole repository of congressional intent

70 where the statute is clear and does not demand an absurd result.”

71 Free v. Abbott Lab. (In re Abbott Lab.), 51 F.3d 524, 529 (5th Cir.

72 1995). Beyond a deferential review for absurdity, “the wisdom of

73 the statute is not our affair.” Id. Moreover, “restricting

2

Roe v. O’Donohue, 38 F.3d 298, 302-03 (7th Cir. 1994); Tech Hills II

Assocs. v. Phoenix Home Life Mut. Ins. Co., 5 F.3d 963, 968 (6th Cir. 1993).

3

74 removal to instances in which the statute clearly permits it . . .

75 is consistent with the trend to limit removal jurisdiction and with

76 the axiom that the removal statutes are to be strictly construed

77 against removal.” Brown v. Demco, Inc., 792 F.2d 478, 482 (5th

78 Cir. 1986) (footnotes omitted).

79 The plain language of § 1446 does not produce an absurd

80 result. First, “[t]he purpose of [§ 1446(b)] . . . was to make

81 uniform the time for filing petitions for removal.” Weeks v.

82 Fidelity & Cas. Co., 218 F.2d 503, 504 (5th Cir. 1955). Naturally,

83 the uniform federal standard both protects defendants against harms

84 they would suffer and deprives them of benefits they would receive

85 under the vagaries of state service-of-process laws.

86 Second, the receipt rule is consistent with “Congress’ intent

87 to resolve swiftly removal issues, as reflected in the removal and

88 remand statutes.” Cavallini v. State Farm Mut. Auto Ins. Co.,

89 44 F.3d 256, 264 n.16 (5th Cir. 1995). The first sentence of

90 § 1446(b) states that the time to remove begins upon receipt “of a

91 copy of the initial pleading setting forth the claim for relief”;

92 the second sentence provides that if the case is not initially

93 removable, the time to remove begins upon receipt of any “paper

94 from which it may first be ascertained that the case is one which

95 is or has become removable . . . .” Thus, read as a whole, the

96 statute expresses a policy preference that removal occur as soon as

97 possible, i.e., within thirty days after the defendant receives a

98 pleading or other paper confirming that a removable case has been

99 filed against it.

4

100 If a defendant already possessed a copy of the initial

101 pleading, formal service of process would not provide it with any

102 additional information relevant to its decision on whether to

103 remove. Thus, the “receipt rule" is faithful to Congress’s express

104 intent to resolve the threshold question of forum as early as

105 possible.

106 Wal-Mart observes that the receipt rule would require it to

107 risk waiving any objections to service, jurisdiction, or venue in

108 order to remove timely. Even if we assume, arguendo, that a

109 defendant might waive state service-of-process requirements or

110 other protections by removing, the plain language of § 1446(b) does

111 not produce thereby an absurd result; instead, it reflects a

112 legislative policy judgment that the receipt rule’s benefits

113 outweigh its detriments.3

114 We recognize that the receipt rule is subject to abuse. See,

115 e.g., Tech Hills II, 5 F.3d at 966 (delivery to security guard at

116 closed building). This case does not present such a scenario,

117 however. Reece’s attorney mailed Wal-Mart (1) a copy of her

118 initial petition that had been file-stamped by the clerk of the

3

Wal-Mart asserts that as a defendant becomes a party to a lawsuit only

upon receiving service of process, the receipt rule is inconsistent with our

observation that “no non-party to a state court proceeding has a mature right to

remove that proceeding to federal court.” F.D.I.C. v. Loyd, 955 F.2d 316, 326

(5th Cir. 1992). We have limited Loyd to the unusual factual situation presented

in that case: A litigant that was not named as a party when the suit was filed

later was substituted as a defendant. See T.H. Inc. v. 6218 Investors, 41 F.3d

235, 237 (5th Cir. 1995).

As § 1446(b) states that the time to remove begins upon receipt of a copy

of the initial pleading through any means, it plainly contemplates that the time

to remove might begin prior to service. Thus, assuming arguendo that Texas law

does not consider a defendant to be a party until it has been served, that state

law characterization is irrelevant.

5

119 state court and (2) a letter stating: “I have attached a copy of

120 the petition filed in State District Court against Wal-Mart Stores,

121 Inc. and the store manager, Dennie Ashley” (emphasis added). As

122 Reece’s mailing put Wal-Mart on notice that a removable suit

123 already had been filed against it, Wal-Mart could not reasonably

124 have been misled by Reece’s communication.4

125 Wal-Mart contends that the need to police potential abuses

126 will make the receipt rule unworkable. Accordingly, it proposes

127 that the time to remove should begin upon either (1) formal service

128 of process or (2) receipt of a copy of the initial pleading through

129 another means while the plaintiff was making a good-faith attempt

130 at service.

131 A judicially-imposed “attempt” requirement would be inconsis-

132 tent with Congress’s express intent, for it would delay needlessly

133 the resolution of the threshold issue of forum without providing

134 any additional notice to the defendant. Moreover, we have declined

135 twice before to eschew the plain language of § 1446 for fear of

136 future abuse. See Doe v. Kerwood, 969 F.2d 165, 169 (5th Cir.

137 1992); Brown, 792 F.2d at 482. We hold, once again, that while “it

138 is within the equitable power of the court to consider . . .

139 exceptional circumstances on a case-by-case basis,” Doe, 969 F.2d

140 at 169, the potential for abuse does not justify abandonment of the

141 statute’s plain language in an unexceptional case.

4

We limit our holding to these facts and leave for another day the proper

result when a defendant has no adequate notice of filing.

6

142 C.

143 Alternatively, Wal-Mart contends that Reece’s mailing did not

144 trigger the thirty-day period for removal because (1) the copy of

145 the initial pleading was unsigned and therefore was not a proper

146 initial pleading under state law; and (2) Reece sent it to a

147 corporate officer who was not authorized to receive service of

148 process. As Congress intended the removal statutes to have uniform

149 nationwide application, the effect of these alleged state law

150 violations on the removal period is a question of federal law,

151 unaffected by state law definitions or characterizations. Brown,

152 792 F.2d at 480.

153 1.

154 While Wal-Mart is correct that Reece’s attorney failed to sign

155 his initial pleading, in violation of TEX. R. CIV. P. 45(d), we

156 conclude that this technical defect did not prevent his notice from

157 triggering the removal period. First, § 1446(b) states that the

158 removal period begins when the defendant receives an initial

159 pleading, not a proper initial pleading. The unsigned petition is

160 indisputably a pleading that states the plaintiff’s claims.5

161 Second, Texas law treats an attorney’s failure to sign a

162 pleading as a technical defect, not a jurisdictional one. W.C.

163 Turnbow Petroleum Corp. v. Fulton, 194 S.W.2d 256, 257 (Tex. 1946).

5

Cf. Wilson v. Belin, 20 F.3d 644, 651 n.8 (5th Cir.) (holding that bill

of discovery was not “initial pleading” because it did not state plaintiff’s

claim), cert. denied, 115 S. Ct. 322 (1994).

7

164 Thus, “failure to comply with the requirement is not fatal to the

165 pleading.” Id.

166 Finally, the lack of a signature could not reasonably have

167 caused Wal-Mart to believe that the petition had not been filed,

168 for the petition itself bore a state court file stamp, and Reece’s

169 cover letter stated that it had been filed.6 Because the technical

170 state law violation did not affect the efficacy of notice, it did

171 not permit Wal-Mart to delay.

172 2.

173 We are tempted to incorporate state service of process laws in

174 determining the appropriate method of providing notice to a

175 corporation, but state standards vary far too widely to provide a

176 useful benchmark for a uniform federal standard.7 In addition, the

177 vagaries of state law regarding which corporate officers are

178 subject to service bear no relation to the notice concerns

179 underlying § 1446(b).

180 The Sixth Circuit has held that “delivery at defendant’s place

181 of business on a Saturday, when the offices are closed, to a

182 security guard, who is not authorized to receive service on behalf

6

Wal-Mart contends that in light of rule 45, a defendant reasonably could

conclude that an unsigned petition lacks legal effect and therefore could decline

to remove. Ignorance of the law does not excuse failure to comply with it,

however. See Johnson v. Helmerich & Payne, Inc., 892 F.2d 422, 423-24 n.2 (5th

Cir. 1990).

7

Compare MISS. R. CIV. P. 4(d)(4) (permitting service upon any officer)

with LA. CODE CIV. P. art. 1261 (1984) (permitting service upon the corporation’s

designated agent or, if there is not one, upon any officer) with TEX. BUS. CORP.

ACT art. 2.11 (permitting service upon selected officers). Cf. FED. R.

CIV. P. 4(h) (permitting service upon any officer).

8

183 of the corporation, is not receipt under the removal statute.”

184 Tech Hills II, F.3d at 968. The court found that the corporation

185 received the complaint on the following Monday, when it was

186 delivered to an authorized representative. Id.

187 We agree that a corporation is not deemed to have received a

188 petition just because any one of its employees has received it. We

189 decline to establish a bright-line rule regarding the meaning of

190 “receipt” by a corporation, however, in part because the present

191 case does not present a good vehicle for doing so.

192 Reece’s attorney sent the pleading to Wal-Mart’s CEOSSa person

193 whom she reasonably could assume to be responsible and sufficiently

194 familiar with legal matters to forward the pleading to the proper

195 individual or department within the companySSand received a return

196 receipt. As this method of delivery is a perfectly sensible way to

197 notify a responsible individual within the corporation, we conclude

198 that Wal-Mart "received" a copy of Reece’s initial pleading on the

199 date that its representative signed for the letter.

200 Accordingly, we REVERSE the order denying remand, VACATE the

201 judgment, and REMAND with instruction to remand to state court.

9