Opinion

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES – GENERAL

Case No. 8:24-cv-01135-DOC-BFMx

8:24-cv-01137-DOC-DFMx

8:24-cv-01140-DOC-RAOx

8:24-cv-01142-DOC-BFMx

Title: ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY ET AL V.

HYUNDAI MOTOR AMERICA ET AL;

ALLIANCE UNITED INSURANCE COMPANY ET AL V. HYUNDAI MOTOR

AMERICA ET AL;

ERIE INSURANCE COMPANY ET AL V. HYUNDAI MOTOR AMERICA ET AL;

COUNTRY CASUALTY INSURANCE COMPANY ET AL V. HYUNDAI MOTOR

AMERICA ET AL

PRESENT: THE HONORABLE DAVID O. CARTER, U.S. DISTRICT JUDGE

Karlen Dubon Not Present

Courtroom Clerk Court Reporter

ATTORNEYS PRESENT ATTORNEYS PRESENT

FOR PLAINTIFF: FOR DEFENDANT:

None Present None Present

PROCEEDINGS (IN CHAMBERS): ORDER GRANTING PLAINTIFFS’

MOTIONS TO REMAND

Before the Court are four motions to remand from four different cases: Dkt. 19-1

from Case No. 8:24-cv-01135-DOC-BFMx (“Case No. 01135”), Dkt. 19-1 from Case

No. 8:24-cv-01137-DOC-DFMx (“Case No. 01137”), Dkt. 19-1 from Case No. 8:24-cv-

01140-DOC-RAOx (“Case No. 01140”), and Dkt. 17-1 from Case No. 8:24-cv-01142-

DOC-BFMx (“Case No. 01142”). Because all four motions raise the same issue—

whether a defendant may effectuate “snap removal” of a case—the Court consolidates the

four motions (collectively referred to as “the Motion”) for decision. The Court finds the

Motion suitable for resolution without oral argument. See Fed. R. Civ. P. 78; L.R. 7-15.

For the reasons explained below, the Court GRANTS the Motion and REMANDS these

cases to Orange County Superior Court.

I. Background

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Plaintiffs filed their Complaints against Defendants Hyundai Motor America and

Kia America, Inc., who are citizens of California, and Defendants Hyundai Motor

Company and Kia Corporation, who are citizens of South Korea, on May 22 and 23,

2024, in the Orange County Superior Court. Notices of Removal (collectively referred to

as “the Notice” or “Not.”) (Dkt. 1). A few days later on May 29, before Defendants had

been served, Defendants removed the case to federal court on the basis of diversity

jurisdiction. See generally Notice. In their Notice, Defendants state that removal is proper

under 28 U.S.C. § 1441(b) because neither of the forum defendants (i.e., Hyundai Motor

America and Kia America, Inc.) had been served with the complaint prior to removal. See

generally id. A few weeks later, Plaintiffs filed the instant Motion for remand.

Defendants timely filed their Opposition to Motion to Remand (“Opp.”). Plaintiffs filed

their late Reply in Case Nos. 01135 and 01137.

II. Legal Standard

Federal diversity jurisdiction requires that the parties be citizens of different states

and that the amount in controversy exceed $75,000. 28 U.S.C. § 1332(a). For diversity

jurisdiction purposes, a corporation is “deemed to be a citizen of every State and foreign

state by which it has been incorporated and of the State or foreign state where it has its

principal place of business.” 28 U.S.C. § 1332(c)(1). The presence of any single plaintiff

from the same state as any single defendant destroys “complete diversity” and strips the

federal courts of original jurisdiction over the matter. Exxon Mobil Corp. v. Allapattah

Servs., Inc., 545 U.S. 546, 553 (2005).

Removal of a case from state court to federal court is governed by 28 U.S.C. §

1441, which provides in relevant part that “any civil action brought in a State court of

which the district courts of the United States have original jurisdiction, may be removed

. . . to the district court of the United States for the district and division embracing the

place where such action is pending.” 28 U.S.C. § 1441. Removal of state actions is

allowed only if the plaintiff could have originally filed the action in federal court. See 28

U.S.C. § 1441. The forum defendant rule provides that a diversity case cannot be

removed “if any of the parties in interest properly joined and served as defendants is a

citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2).

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Ninth Circuit precedent has long recognized the strong presumption against

removal and that statutory removal procedures are to be strictly construed against

removal. See Prize Frize, Inc. v. Matrix (U.S.), Inc., 167 F.3d 1261, 1265 (9th Cir. 1999),

superseded by statute on other grounds as stated in City of Oakland v. BP PLC, 969 F.3d

895 (9th Cir. 2020); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992); Ethridge v.

Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988); Boggs v. Lewis, 863 F.2d 662,

663 (9th Cir. 1988); Takeda v. Nw. Nat’l Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985);

see also Fifty Assocs. v. Prudential Ins. Co. of Am., 446 F.2d 1187, 1190 (9th Cir. 1970)

(finding a presumption that federal courts “are without jurisdiction unless the contrary

affirmatively appears”).

Remand may be ordered for lack of subject matter jurisdiction or any defect in the

removal procedure. 28 U.S.C. § 1447(c). Section 1447(c) states that “[i]f at any time

before final judgment it appears that the district court lacks subject matter jurisdiction,

the case shall be remanded.” Id. If there are any doubts as to the right of removal, this

Court is bound to resolve them in favor of remanding to state court in order to protect the

jurisdiction of state courts. Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 698 (9th

Cir. 2005) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941));

see also Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006); Moore-

Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009).

III. Discussion

The forum defendant rule in Section 1441(b)(2) states, in pertinent part, that a

defendant who has been “properly joined and served” cannot remove the case solely on

the basis of diversity jurisdiction, if the defendant is a citizen of the state in which the

action was originally brought. in 28 U.S.C. § 1441(b)(2). “Snap removal” defendants

argue that so long as removal is achieved before the in-forum defendant is served, the

forum defendant rule does not apply. Cadena v. Polaris Indus., No. 3:23-cv-00443-YY,

2023 WL 6004228, at *2 (D. Or. Aug. 15, 2023). The three categories of snap removal

cases are: 1) when an out-of-forum defendant attempts to remove to federal court before

any defendant is served; 2) when an in-forum defendant attempts to remove before they

themselves or another in-forum defendant are served; and 3) when an out-of-forum

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defendant attempts to remove before the in-forum defendant is served. See id. at *3. This

case falls into the first category.

There is no Ninth Circuit authority directly on the issue of snap removal. District

courts within the Ninth Circuit are split as to whether snap removal is authorized by the

statute. See Cadena, 2023 WL 6004228, at *3. Other district courts in circuits that have

not ruled on the issue have generally taken four varying approaches to snap removal.

Talbot v. Tokarski, No. CV–14–117–BLG–SPW–CSO, 2014 WL 5437035, at *2 (D.

Mont. Oct. 24, 2014) (listing cases). Courts have generally: 1) denied remand after an

analysis of the statute’s plain language; 2) granted remand after finding that a literal

interpretation of the statute would lead to an absurd result; 3) granted remand as long one

defendant had been served; or 4) granted remand after an analysis of the statute’s plain

language and legislative history. See id; McAboy v. Intel Corp., No. 3:21-cv-01773-IM,

2022 WL 1519081, at *3-6 (D. Or. May 13, 2022); Gentile v. Biogen Idec, Inc., 934 F.

Supp. 2d 313, 318-22 (D. Mass. 2013).

Here, the parties dispute whether removal was proper under Section 1441(b) when

Plaintiffs had not effectuated service of any Defendants. Plaintiffs contend that this Court

should still find that the forum defendant rule prohibits removal under these

circumstances, whereas Defendants contend that a literal application of Section 1441(b)

allows for such removal. In Case Nos. 01135 and 01142, neither party contests that this

action could have originally been filed in federal court pursuant to 28 U.S.C. § 1332, as

the amount in controversy exceeds $75,000, and the action is between citizens of

different states. In Case Nos. 01137 and 01140, there is a lack of diversity jurisdiction as

there are non-diverse plaintiffs or defendants. However, Defendants contend that those

parties are joined fraudulently.

Plaintiffs bring their Motion based on the “and served” language in 28 U.S.C. §

1441(b), claiming that the forum defendant rule should still apply to prohibit removal

even where removal occurs before service. It is undisputed that Defendants removed the

action prior to any defendant receiving service of process. Defendants removed the case

to this Court a few days after Plaintiffs filed the Complaint. Plaintiffs later effectuated

service of process through Defendants’ counsel.

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A. Defendants Bear the Burden to Overcome the Presumption Against

Removal

Defendant cites Breuer to argue that the Supreme Court has overruled the

longstanding principle that statutes are to be strictly construed against removal. Case Nos.

01135, 01142, Opp. at 6-7 They also generally cite Breuer’s ruling that “whenever the

subject matter of an action qualifies it for removal, the burden is on a plaintiff to find an

express exception.” Id. (citing Breuer v. Jim's Concrete of Brevard, Inc., 538 U.S. 691

(2003)). Defendants misinterpret Breuer’s ruling. As the Ninth Circuit held, courts are

still meant to uphold the historical rule that it is defendant’s burden to establish the prima

facie case for removal, and Breuer simply added that it is plaintiff’s burden to establish

exceptions to removal. Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1021-22 (9th Cir.

2007) (citing Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 684-85 (9th Cir.

2006)).

Indeed, the burden is on Defendants to establish that removal is proper under the

removal statute. The forum defendant rule, Section 1441(b)(2), is a part of the Section

1441 removal statute. Defendants have to first establish that this action qualifies for

removal, even with the application of the forum defendant rule, in order for the burden to

then shift to Plaintiffs to establish an exception to removal. Defendants have not

completed the first step of meeting their burden here. The “longstanding, near-canonical

rule that the burden on removal rests with the removing defendant” remains in effect.

Abrego Abrego, 443 F.3d at 684; see also Serrano, 478 F.3d at 684-85.

B. 28 U.S.C. § 1441 Does Not Allow Defendants to Avoid the Forum

Defendant Rule Through Removal Before Service

1. The Plain Text of the Statute Requires Service Before Removal

In interpreting a statute, courts should examine the statute “as a whole, giving

effect to each word and making every effort not to interpret a provision in a manner that

renders other provisions of the same statute inconsistent, meaningless or superfluous.”

Talbot v. Tokarski, No. CV-14-1170BLG0SPW-CSO, 2014 WL 5437035, at *1 (D.

Mont. Oct. 24, 2014) (citing Boise Cascade Corp. v. U.S. E.P.A., 942 F.2d 1427, 1432

(9th Cir. 1991)). While “the authoritative statement is the statutory text, not the

legislative history,” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568

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(2005), the court may look beyond the plain statutory meaning if the language is

ambiguous, or would lead to an absurd result. Talbot, 2014 WL 5437035, at *2 (citing

Safe Air for Everyone v. U.S. E.P.A., 488 F.3d 1088, 1099 (9th Cir. 2007)).

Defendants argue that construing the forum defendant rule to only apply to

defendants who have been served does not constitute an absurdity, so as to justify looking

beyond the plain statutory meaning. Case Nos. 01135, 1142, Opp. To be sure, if Plaintiffs

seek to invoke the “absurdity canon” to override a statute’s apparently plain language,

they face “an extremely high bar.” See Cadena, No. 3:23-cv-00443-YY, 2023 WL

6004228, at *5 (D. Or. Aug. 15, 2023) (citing United States v. Torres, 995 F.3d 695, 705

(9th Cir. 2021)). However, this Court finds the Gentile court’s analysis of the plain

statutory meaning persuasive and declines to engage in an inquiry into absurdity. See

Gentile v. Biogen Idec, Inc., 934 F. Supp. 2d 313 (D. Mass. 2013). Under the Gentile

court’s reading of the statute, the plain language dictates that service is required before

removal, and this Court does not reach the question of whether allowing removal before

service rises to the level of absurdity.

The current forum defendant rule (post-2011 amendment) prohibits removal “if

any of the parties in interest properly joined and served as defendants” were forum

defendants. Gentile, 934 F. Supp. 2d at 317 (citing 28 U.S.C. § 1441(b)(2)) (emphasis

added). If the statute does not assume that at least one party has been served, then the

word “any” becomes superfluous, contravening a fundamental principle of statutory

interpretation. Id. As the Gentile court explains:

“[T]he statute assumes at least one party has been served;

ignoring that assumption would render a court's analysis under

the exception nonsensical and the statute's use of ‘any’

superfluous. This would be contrary to the cardinal rule of

statutory construction that ‘[a]ll words and provisions of

statutes are intended to have meaning and are to be given

effect, and no construction should be adopted which would

render statutory words or phrases meaningless, redundant or

superfluous.’ United States v. Ven–Fuel, Inc., 758 F.2d 741,

751–52 (1st Cir.1985). Thus the lack of a party properly joined

and served does not mean an ‘exception’ to removal is

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inapplicable, but rather means that an even more basic

assumption embedded in the statute—that a party in interest

had been served prior to removal—has not been met.”

Id. at 318; see also Pratt v. Alaska Airlines, Inc., No. 2:21-CV-84-DWC, 2021 WL

1910885, at *3-4 (W.D. Wash. May 12, 2021) (finding that Section 1441(b)(2)’s use of

“any” “clear[ly] and unambiguous[ly]” requires one defendant to have been served before

a non-forum defendant can remove an action on the basis of diversity jurisdiction). This

Court declines to ignore the clear statutory language that requires at least one defendant

be served before defendants can remove to federal court.

2. The Context, History, and Purpose of the Statute Evince

Congress’s Intent to Require Service Before Removal

Reasonable minds have disagreed as to the meaning of Section 1441’s language. If

a possibility exists that the meaning of the statute’s text is ambiguous, then courts may

look beyond plain statutory meaning. Talbot, 2014 WL 5437035, at *2 (citing Rowland v.

California Men's Colony, Unit II Men's Advisory Council, 506 U.S. 194, 200 (1993)).

While the authoritative statement is unquestionably the statutory text, the Supreme Court

cautions against “constru[ing] words ‘in a vacuum.’” Gundy v. United States, 588 U.S.

128, 141 (2019) (citing Davis v. Michigan Dep’t of Treasury, 489 U.S. 803, 809 (1989)).

A fundamental canon of statutory interpretation is that the words of a statute must be read

holistically, with an eye to their context, history, and purpose to divine the meaning of the

language. Id. If an interpretation of the statutory text produces not an absurd result, but a

“merely an unreasonable one ‘plainly at variance with the policy of the legislation as a

whole,’” courts must follow the interpretation of the text that is in harmony with its

purpose. United States v. Am. Trucking Ass’ns, 310 U.S. 534, 543 (1940) (citations

omitted).

Courts have engaged in extensive historical analyses of Section 1441(b)(2) in

order to unearth Congress’s intent behind enacting the statute. As other courts have

found, the original purpose of diversity jurisdiction was “based on the desire of the

Framers to assure out-of-state litigants courts free from susceptibility to potential local

bias.” Hawkins v. Cottrell, Inc., 785 F. Supp. 2d 1361 (N.D. Ga. 2011) (citing

Lumbermen’s Mut. Cas. Co. v. Elbert, 348 U.S. 48 (1954) (Frankfurter, J., concurring));

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see also Gentile, 934 F. Supp. 2d at 319-20 (citing the Federalist Papers’ description of

the roots of diversity jurisdiction, and tracing the origins of the Section 1441(b) “properly

joined and served” limitation to an overarching Supreme Court desire at the time of the

revision in preventing plaintiffs from defeating removal by fraudulently joining a forum

defendant). An interpretation of the forum defendant rule that would allow a forum

defendant to remove an action to federal court would clash with the policy behind the

statute. The risk of a defendant suffering local bias does not apply when the defendant

seeking removal is a citizen of the forum state. As the Ninth Circuit has stated, “Removal

based on diversity jurisdiction is intended to protect out-of-state defendants from possible

prejudices in state court . . . The need for such protection is absent, however, in cases

where the defendant is a citizen of the state in which the case is brought.” Lively v. Wild

Oats Mkts., 456 F.3d 933, 939 (9th Cir. 2006).

The Court agrees with Plaintiffs that if the purpose behind the statute is to prevent

procedural gamesmanship by plaintiffs through improper joinder, an interpretation of the

“joined and served” provision that promotes such gamesmanship by defendants through

allowing removal before plaintiffs serve any defendant both undermines the general

purpose of the forum defendant rule (i.e., to keep certain cases in state court) and

inappropriately prevents plaintiffs from litigating in the forum of their choice. See

Oxendine v. Merck and Co., Inc., 236 F. Supp. 2d 517, 524 (D. Md. 2002)

(“[R]emovability can not rationally turn on the timing or sequence of service of

process.”); Vivas v. Boeing Co., 486 F. Supp. 2d 726, 734 (N.D. Ill. 2007) (“[T]o allow a

resident defendant to remove a case before a plaintiff even has a chance to serve him

would provide a vehicle for defendants to manipulate the operation of the removal

statutes. Allowing either party to do that would be against what the courts have long

understood to be Congress’s intent.”); Brown v. Organon Int’l Inc., et al., Nos. 07-3092

(HAA), 07-3456(HAA), 08-2021(HAA), 2008 WL 2833294, at *4 (D.N.J. July 21, 2008)

(holding that a literal interpretation of Section 1441(b) promotes defendant

gamesmanship by “allow[ing] defendants to avoid the imposition of the forum defendant

rule as long as they are monitoring state dockets and avoiding service”); Sullivan v.

Novartis Pharms. Corp., 575 F. Supp. 2d 640, 647 (D.N.J. 2008) (“[G]iven that the

purpose of the ‘properly joined and served’ language is to prevent one form of

gamesmanship – improper joinder – the court finds that allowing defendant to engage

another type of gamesmanship – a hasty filing of a notice of removal – is demonstrably at

odds with Congressional intent.”) (referring to H.R. Rep. No. 3214)).

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Further supporting that Congress could not have intended to permit snap removal

is the recent advent of the Internet and electronic case dockets. As the Sullivan court

astutely points out, a Congress sitting in the 1940s could not have adequately had these

concerns in mind:

Congress could not have anticipated the tremendous loophole

that would one day manifest from technology enabling forum

defendants to circumvent the forum defendant rule by, inter

alia, electronically monitoring the state court dockets. Thus,

Congress would have had no thought to wording the statute

with this modern problem in mind.

Sullivan, 575 F. Supp. 2d at 645. Following this logic, the Court agrees that a literal

interpretation of Section 1441(b) disrupts the policy behind the forum defendant rule.

That interpretation also unfairly advantages defendants with the resources to continuously

monitor dockets nationwide, who can obtain notice of litigation before they are served.

Gentile, 934 F. Supp. 2d at 321.

By understanding the statute to require service on any defendant before removal,

plaintiffs have only the “modest burden” of ensuring that they effect service on a forum

defendant before any non-forum defendants. Id. at 322. This interpretation aligns with the

plain language of the statute, as well as its context, history, and purpose. Here, both

Defendants are forum defendants, neither which were served before they filed for

removal, thus violating the forum defendant rule.

IV. Disposition

For the reasons set forth above, the Court hereby REMANDS these cases to the

Superior Court of Orange, California.

The Clerk shall serve this minute order on the parties.

Initials of Deputy Clerk: kdu