Petition for Writ of Certiorari — Soto Enterprises, Inc., dba Miracle Delivery Armored Services, Petitioner v. City of Albuquerque, New Mexico

APPENDIX TABLE OF CONTENTS

Opinion of the Tenth Circuit

(July 25, 2017) .................................................... 1a

Memorandum Opinion and Order and Order of

Remand (April 11, 2016) .................................. 22a

Order of the Tenth Circuit Denying Petition for

Rehearing (August 22, 2017) ........................... 32a

App.1a

OPINION OF THE TENTH CIRCUIT

(JULY 25, 2017)

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

________________________

CITY OF ALBUQUERQUE,

Plaintiff-Appellee,

v.

SOTO ENTERPRISES, INC., d/b/a

MIRACLE DELIVERY ARMORED SERVICES,

Defendant-Appellant.

________________________

No. 16-2065

Appeal from the United States District Court

for the District of New Mexico

(D.C. No. 1:16-CV-00099-JAP-WPL)

Before: MATHESON, PHILLIPS, and

MCHUGH, Circuit Judges.

PHILLIPS, Circuit Judge.

The district court remanded this case after

concluding that the defendant had waived its right to

remove by filing a motion to dismiss in state court.

App.2a

We hold that we have appellate jurisdiction over this

appeal, and affirm.1

Background

The City of Albuquerque (“the City”) provides

public-bus services to Albuquerque residents. As part

of those services, the City charges a fare payable by

cash or coin. The City hired Soto Enterprises, Inc.,

d/b/a Miracle Delivery Armored Services (“Soto”) to

count the fare money, transport it by armored car to

the City’s bank for deposit, and verify the daily

deposit amount with the City.

In the second half of 2014, the City noticed

irregularities between the amount of fare money that

it internally recorded and the amount Soto deposited.

After investigating these irregularities, on October

30, 2015, the City sued Soto in New Mexico state court,

alleging contract and tort claims. In its complaint,

the City pleaded that it was a New Mexico municipal

corporation and that Soto was a Texas corporation

transacting business in New Mexico. The City claimed

damages of $246,057.54.

On February 9, 2016, though the City had not yet

served process on Soto, Soto filed three documents in

state court in response to the complaint. At 2:18 p.m.,

Soto filed a partial motion to dismiss (the “motion to

dismiss”), asserting that the City had failed to state a

claim on its tort claims. At 2:23 p.m., Soto filed an

1 An order remanding a case to state court is a final or

collateral order because it “puts the litigants ‘effectively out of

court.’” First Union Mortg. Corp. v. Smith, 229 F.3d 992, 994

(10th Cir. 2000) (quoting Quackenbush v. Allstate Ins. Co., 517

U.S. 706, 714 (1996)).

App.3a

answer. And at 3:38 p.m., Soto filed a notice of removal

under 28 U.S.C. §§ 1441 and 1446, alleging diversity

jurisdiction under 28 U.S.C. § 1332. So an hour and

twenty minutes passed between Soto’s motion to

dismiss and its notice of removal.

In federal court, the City moved for a remand to

state court, arguing that Soto had waived its right to

remove the case to federal court after participating in

the state court by filing the motion to dismiss. The

district court agreed with the City’s position and

remanded the case. Soto now appeals.

Discussion

Recognizing that Congress has limited our

appellate jurisdiction to review remand orders, the

City filed a motion to dismiss Soto’s appeal, arguing

that we lack jurisdiction. So, before we can address

whether the district court erred in its waiver ruling,

we must determine whether we have appellate jurisdiction to do so. W. Ins. Co. v. A & H Ins., Inc., 784 F.3d

725, 727-28 (10th Cir. 2015). We review questions of

our appellate jurisdiction de novo. Montez v. Hickenlooper, 640 F.3d 1126, 1130 (10th Cir. 2011).

I.

Appellate Jurisdiction

To decide whether we have appellate jurisdiction

to review the district court’s waiver ruling, we are

guided by two statutory subsections. The first is 28

U.S.C. § 1447(d), which provides as follows:

An order remanding a case to the State court

from which it was removed is not reviewable

on appeal or otherwise, except that an order

remanding a case to the State court from

App.4a

which it was removed pursuant to section

1442 or 1443 of this title shall be reviewable

by appeal or otherwise.

Because Soto removed the case under § 1441, neither

28 U.S.C. § 1442 (which governs federal-officer removal)

nor 28 U.S.C. § 1443 (which governs removal of civilrights cases) applies here. On its face, § 1447(d) would

lead us to believe that we lack appellate jurisdiction to

review the district court’s remand order, but we don’t

read that subsection in isolation. Instead, we read

§ 1447(d) in pari materia with its close neighbor,

§ 1447(c), and confine the reach of § 1447(d) to the

two remands mentioned in § 1447(c). In re Stone

Container Corp., 360 F.3d 1216, 1218 (10th Cir. 2004).

Thus, the second guiding statutory subsection is

28 U.S.C. § 1447(c), which provides in part as follows:

A motion to remand the case on the basis of

any defect other than lack of subject matter

jurisdiction must be made within 30 days

after the filing of the notice of removal

under section 1446(a). If at any time before

final judgment it appears that the district

court lacks subject matter jurisdiction, the

case shall be remanded.

So § 1447(c) speaks to two bases of remand: (1) those

based on a lack of subject-matter jurisdiction, which

have no time limit, and (2) those based on “any defect

other than lack of subject matter jurisdiction,” which

must be filed within 30 days of removal. This means

that under the governing interpretation, § 1447(d)

limits our jurisdiction “only when the district court

remands on grounds permitted by § 1447(c).” In re

Stone, 360 F.3d at 1218 (quoting Dalrymple v. Grand

App.5a

River Dam Auth., 145 F.3d 1180, 1184 (10th Cir. 1998)).

When a district court remands on other bases, we

have appellate jurisdiction to review those remand

orders. Am. Soda, LLP v. U.S. Filter Wastewater Grp.,

Inc., 428 F.3d 921, 924 (10th Cir. 2005).

Here, the district court remanded the case to state

court on a ground not expressly specified in § 1447(c),

namely, that Soto waived its removal right by filing a

motion to dismiss in state court (which we will refer

to as “waiver by participation”).2 Our sister circuits

disagree about whether waiver by participation falls

within either of § 1447(c)’s two bases, and, until now,

this court has not “wade[d] into” that conflict. Harvey

v. Ute Indian Tribe of the Uintah & Ouray Reservation, 797 F.3d 800, 804 (10th Cir. 2015) (noting circuit

split). To determine whether § 1447(d) limits our jurisdiction, we must determine whether waiver by participation falls within either of the § 1447(c) bases—(1)

lack of subject-matter jurisdiction, or (2) any defect.

A. Subject-Matter Jurisdiction

“Subject matter jurisdiction defines the court’s

authority to hear a given type of case.” Carlsbad

Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009)

(quoting United States v. Morton, 467 U.S. 822, 828

(1984)). “[I]t represents ‘the extent to which a court

can rule on the conduct of persons or the status of

things.’” Id. (quoting Black’s Law Dictionary 870 (8th

2 The waiver in this case differs from other types of waiver,

such as waiver by a forum-selection clause in which a party

contractually agrees to waive the federal forum. Here, the

district court found that Soto waived removal by filing a motion

to dismiss in state court, a form of waiver by participation

during the state-court proceedings rather than by agreement.

App.6a

ed. 2004)). And because parties cannot waive subjectmatter jurisdiction, they can challenge it “at any

time prior to final judgment.” Grupo Dataflux v. Atlas

Global Grp., L.P., 541 U.S. 567, 571 (2004). Moreover,

the district courts have an independent obligation to

address their own subject-matter jurisdiction and can

dismiss actions sua sponte for a lack of subject-matter

jurisdiction. United States v. Lugo, 170 F.3d 996, 1002

(10th Cir. 1999).

But procedural rules set by the Supreme Court

and by common law “do not create or withdraw federal

jurisdiction,” Kontrick v. Ryan, 540 U.S. 443, 453 (2004)

(quoting Owen Equip. & Erection Co. v. Kroger, 437

U.S. 365, 370 (1978)), and “a court’s subject-matter

jurisdiction cannot be expanded to account for the

parties’ litigation conduct,” id. at 456. This stems from

a fundamental principle that “[o]nly Congress may

determine a lower federal court’s subject-matter jurisdiction.” Id. at 452 (citing U.S. Const. art. III, § 1).

Waiver by participation is a common-law creation.

Rothner v. City of Chicago, 879 F.2d 1402, 1408 (7th

Cir. 1989). It concerns the situation where a defendant

has participated in the state court before seeking

removal. See 14B Charles Alan Wright et al., Federal

Practice and Procedure § 3721 (4th ed. 2017) (“A state

court defendant also may lose or waive the right to

remove a case to a federal court by taking some substantial offensive or defensive action in the state

court action . . . .”). For instance, the defendant may

have engaged in discovery, moved for summary judgment, or argued at a hearing. See id. (collecting

cases). As such, waiver by participation functions as

a procedural limitation. Harvey, 797 F.3d at 809 (Hartz,

J., concurring) (stating that waiver by participation

App.7a

is a “defect in removal procedure”). And as a procedural,

common-law limitation, waiver by participation doesn’t

implicate subject-matter jurisdiction. See Kontrick,

540 U.S. at 453 (explaining that procedural rules

established by courts don’t create or withdraw federal

jurisdiction).

Indeed, a court could not say otherwise without

contradicting two of subject-matter jurisdiction’s core

characteristics—(1) that only Congress can create or

destroy subject-matter jurisdiction, U.S. Const. art.

III, § 1, and (2) that a party’s litigation conduct can’t

affect subject-matter jurisdiction, Kontrick, 540 U.S.

at 453. Also, unlike jurisdictional defects (which cannot

be waived and can be raised sua sponte by the court),

courts lack authority to remand sua sponte for

procedural defects, and the parties can waive such

defects by failing to raise them in a timely manner.

See, e.g., Smith v. Mylan Inc., 761 F.3d 1042, 1044

(9th Cir. 2014) (holding that a district court “cannot

remand sua sponte based on a nonjurisdictional defect

because procedural deficiencies are waivable”). So we

cannot characterize a procedural defect such as waiver

by participation as jurisdictional.3

3 The City argues that “waiver of the removal right can be

colorably characterized as evidencing a lack of federal jurisdiction.”

Appellee Response Br. at 8-9. This misapplies the colorablecharacterization standard, which applies when the district court

explicitly states one of the § 1447(c) bases. In that instance, we

merely peek behind the district court’s label to ensure that the

district court did not “dress[] in jurisdictional clothing a patently

nonjurisdictional ground” or similarly dress a non-defect ground

in defect clothing. Hill v. Vanderbilt Capital Advisors, LLC, 702

F.3d 1220, 1224 (10th Cir. 2012) (quoting Powerex Corp. v.

Reliant Energy Servs., 551 U.S. 224, 234 (2007)); see Harvey,

797 F.3d at 804, 807 (reviewing whether the district court’s

App.8a

The Eleventh Circuit also treats waiver by participation as nonjurisdictional. Cogdell v. Wyeth, 366

F.3d 1245, 1248-49 (11th Cir. 2004). In Cogdell, the

court declared that “[w]aiver may be a proper basis

upon which to find lack of removal jurisdiction;

however, waiver does not divest the court of subject

matter jurisdiction.” Id. at 1249. The court noted that

removal jurisdiction not only requires subject-matter

jurisdiction over the removed case, but it also requires

compliance with statutory procedural requirements,

e.g., timeliness in removal and consent of all defendants.

Id. at 1248; see 28 U.S.C. § 1446. So when a court

finds that it lacks removal jurisdiction, that finding

hardly means it lacks subject-matter jurisdiction—it

may or may not. See Cogdell, 366 F.3d at 1248.4

We acknowledge that the Fifth Circuit has also

examined this issue and reached a different outcome.

In re Weaver, 610 F.2d 335 (5th Cir. 1980). In Weaver,

the district court remanded a case to state court after

determining that “removal was no longer available”

because of the defendants’ waiver by participation.

characterization of its remand as based on a defect was

colorable).

4 Though Cogdell preceded the Supreme Court’s Carlsbad

decision by five years, it applied consistent logic. In Carlsbad,

the Court analyzed supplemental jurisdiction and subjectmatter jurisdiction. 556 U.S. at 640. It determined that a district

court could decline to exercise supplemental jurisdiction over

state-law claims, yet still have had subject-matter jurisdiction over

them. Id. This shows that supplemental jurisdiction, like removal

jurisdiction, requires more than subject-matter jurisdiction. To

exercise supplemental jurisdiction, a district court must have

subject-matter jurisdiction over the claims, and then choose to

exercise that jurisdiction. Id.

App.9a

Id. at 336.5 On appeal, the Fifth Circuit concluded that

a district court’s belief that removal was no longer

available led “to the logical inference that [the district

court] felt jurisdiction was lacking.” Id. at 337. The

court never explained what made this inference

“logical,” and we can fathom no explanation. To us,

the inference relies on a mistaken premise—that a

remand based on a defendant’s participation in state

court necessarily shows that the federal court had no

subject-matter jurisdiction over the state claims.6 In

fact, the federal court could have kept and resolved

the removed case, except for the waiver of removal.

Because waiver by participation is independent

from subject-matter jurisdiction, it falls outside § 1447

(c)’s subject-matter-jurisdiction basis. But before we

can address the case’s merits, we must also examine

the second § 1447(c) basis for remand, the “any defect”

basis.

5 In Weaver, the defendants participated in the state-court

proceedings by seeking and obtaining dissolution of a temporary

injunction. 610 F.2d at 336.

6 In Rothner, the Seventh Circuit also exercised appellate

jurisdiction to review a remand order based on waiver by

participation. 879 F.2d at 1416. It too considered and rejected

Weaver’s reasoning, finding it “illogical,” “unpersuasive,” and

“unsound.” Id. at 1417. Weaver’s reasoning is questionable even

within the Fifth Circuit. In Baris v. Sulpicio Lines, Inc., 932

F.2d 1540, 1543-44 (5th Cir. 1991), the court admonished the

plaintiffs for confusing improper removal with a lack of subjectmatter jurisdiction and stated that “this court has had little

difficulty in distinguishing between removal jurisdiction, on the

one hand, and original or subject matter jurisdiction, on the

other hand.”

App.10a

B. “Any Defect”

1. Meaning of “Any Defect”

Based on our circuit’s case law, we know that

three grounds for remand qualify within the meaning

of “any defects” under § 1447(c): (1) noncompliance with

the time limits provided in § 1446(b); (2) noncompliance with the unanimity requirements in § 1446(b)

(2)(A); and (3) noncompliance with the forum-defendant

rule in § 1441(b), which forbids removal when a defendant is a citizen of the forum state. Huffman v. Saul

Holdings Ltd. P’ship, 194 F.3d 1072, 1077 (10th Cir.

1999) (timing requirements); Harvey, 797 F.3d at 805

(unanimity requirements); Am. Oil Co. v. McMullin,

433 F.2d 1091, 1095 (10th Cir. 1970) (forum-defendant

rule).7 Because these three grounds are “defects” under

§ 1447(c), § 1447(d) limits our jurisdiction to review

remands based on them.8

By contrast, the following grounds fall outside the

“any defect” group: (1) the district court’s discretion7 In addition to these grounds, the Fourth, Fifth, and Ninth

Circuits have held that violations of § 1445, which prohibits

removing workers’ compensation claims, are also defects under

§ 1447(c). In re Norfolk S. Ry. Co., 756 F.3d 282, 292 (4th Cir.

2014); Kamm v. ITEX Corp., 568 F.3d 752, 756 (9th Cir. 2009);

Albarado v. S. Pac. Transp. Co., 199 F.3d 762, 766 (5th Cir.

1999).

8 When a district court bases its remand order on one of these

statutory defects, § 1447(d) limits our jurisdiction to reviewing

“only whether the remand order is colorably characterized as

based on” the statutory defect, e.g., a lack of unanimity. Harvey,

797 F.3d at 807. But § 1447(d) prohibits us from reviewing

whether the district court correctly determined that a statutory

defect existed. Id.

App.11a

ary decision not to exercise supplemental jurisdiction; (2) the district court’s discretionary remand of

pendent claims; (3) abstention; (4) waiver of the

federal forum in a forum-selection clause; and (5) the

district court’s crowded docket. Carlsbad, 556 U.S.

at 640-41 (supplemental jurisdiction); Westinghouse

Credit Corp. v. Thompson, 987 F.2d 682, 684 (10th

Cir. 1993) (pendent claims); Quackenbush v. Allstate

Ins. Co., 517 U.S. 706, 712 (1996) (abstention); Am.

Soda, LLP, 428 F.3d at 924; Thermtron Prods., Inc. v.

Hermansdorfer, 423 U.S. 336, 352 (1976), abrogated

in part by Quackenbush, 517 U.S. 706 (crowded

docket). Because these grounds fall outside § 1447(c),

they are free from § 1447(d)’s limitation on our jurisdiction.

Knowing which grounds fall within or outside of

the “any defect” group helps us define their characteristics. As seen above, all members of the defect

group share a defining characteristic—they involve

remands based on the failure to comply with the

“legal requisites” of the removal statutes. Snapper, Inc.

v. Redan, 171 F.3d 1249, 1253 (11th Cir. 1999). The

same cannot be said of the non-defect grounds. When

a district court remands based on supplemental jurisdiction or abstention, it exercises its discretionary

authority. Carlsbad, 556 U.S. at 640-41; Quackenbush,

517 U.S. at 712. When a district court remands because

the defendant waived removal in a forum-selection

clause, it makes a decision based on the substantive

merits. SBKC Serv. Corp. v. 1111 Prospect Partners,

L.P., 105 F.3d 578, 581 (10th Cir. 1997). But see

Harvey, 797 F.3d at 806 (doubting whether § 1447(d)

allows review of “merits determinations that precede

the remand” (quoting Powerex, 551 U.S. at 235)). And

App.12a

when a district court remands because its docket is

too crowded, it exceeds its authority and the remand is

ultra vires. Thermtron, 423 U.S. at 351.

Thus, we hold that “any defect” applies solely to

failures to comply with the statutory requirements

for removal. We agree with the Seventh Circuit’s

sensible conclusion:

It would be unreasonable to assume that

Congress would create a statutory right of

removal, and in so doing go to the trouble of

laying out specific and detailed requirements

for exercising that right, and then—by means

of the single word “improvidently”—extend

carte blanche authority to the district courts

to revise the congressional scheme by remanding cases on any grounds that seem

justifiable to them.

Rothner, 879 F.2d at 1410.9

The historical interpretation of § 1447(c) supports

this view.10 See Snapper, 171 F.3d at 1254 (analyzing

the statutory revisions’ effect). In 1996, Congress

amended § 1447(c). That section now states that “[a]

motion to remand the case on the basis of any defect

other than lack of subject matter jurisdiction must be

9 When the Seventh Circuit decided Rothner, the court interpreted

an older version of 28 U.S.C. § 1447(c) that used the term

“improvidently” rather than “defects.” 879 F.2d at 1411. As the

discussion illustrates, this change doesn’t affect our analysis.

10 Within this circuit, until now, it was unnecessary to analyze

the statutory changes that § 1447(c) has undergone. See Harvey,

797 F.3d at 808-09 (Hartz, J., concurring) (assuming that the

1996 amendment was immaterial for that case’s purpose).

App.13a

made within 30 days after the filing of the notice of

removal under section 1446(a).” § 1447(c). In Snapper,

the Eleventh Circuit analyzed this subsection’s amended language. 171 F.3d at 1254. As the court explained,

an early version of the statute (referred to here as

the “1948 version”) directed district courts to remand

“[i]f at any time before final judgment it appears that

the case was removed improvidently and without

jurisdiction.” Id. (quoting 28 U.S.C. § 1447(c) (1946)).

Under this 1948 version, courts found that parties

had improvidently removed cases when “one of the

statutory, non-jurisdictional requirements for removal

ha[d] not been satisfied.” In re Merrimack Mut. Fire

Ins. Co., 587 F.2d 642, 647 n.8 (5th Cir. 1978); see

also Rothner, 879 F.2d at 1411 (stating “it is logical

and reasonable to interpret [improvidently] to mean

noncompliance with Congress’ specific and detailed

statutory provisions”).

Though most courts interpreted the 1948 version

narrowly, the term “‘improvident[ly]’ . . . was obviously

vulnerable to a much broader interpretation,” causing

some uncertainty to develop. Snapper, 171 F.3d at

1255. Because of this uncertainty, and “specifically

endorsing the narrow interpretation” of improvidence,

Congress amended the statute in 1988 by removing

“improvidently” and replacing it with “any defect in

removal procedure.” Id. at 1256 (quoting 28 U.S.C.

§ 1447(c) (1994)). After this amendment, courts continued to interpret the subsection narrowly. Id. at

1256-57. But eventually a circuit split developed

when it came to classifying remands based on § 1441(b),

the forum-defendant rule.11 Id. at 1257-58. The Fifth

11 The forum-defendant rule prohibits removal when a case is

removed for diversity jurisdiction and the defendant “is a citizen

App.14a

Circuit characterized this rule as a procedural defect,

and thus a defect within § 1447(c), while the Eighth

Circuit characterized it as jurisdictional, and thus

not a defect within § 1447(c). LaMotte v. Roundy’s,

Inc., 27 F.3d 314, 316 n.3 (7th Cir. 1994) (describing

the circuit split).

To resolve this confusion, in 1996, Congress amended the statute to its current version by eliminating

the words “in removal procedure.” 28 U.S.C. § 1447

(c) (1998). Based on this background, it appears that

Congress intended to broaden the meaning of “any

defect” to include all statutory-based defects but

never intended to broaden the meaning beyond this.

See Snapper, 171 F.3d at 1258. Instead, Congress

amended the language to resolve inconsistent interpretations. Id. We agree with Snapper and other

circuits that this statutory history shows that “any

defect” is limited to a failure to comply with the

statutory requirements for removal. See, e.g., In re

Norfolk S. Ry. Co., 756 F.3d 282, 292 (4th Cir. 2014)

(“‘[D]efect’ refers to a failure to comply with the

statutory requirements for removal . . . .”); Kamm v.

ITEX Corp., 568 F.3d 752, 755 (9th Cir. 2009) (same);

Holmstrom v. Peterson, 492 F.3d 833, 837 (7th Cir.

2007) (explaining that the legislative history “reflects

a congressional fine-tuning of § 1447(c) in an attempt

to identify motions to remand that are grounded in

the precise directions that Congress has placed in the

Judicial Code to govern removal”); Autoridad de Energía

Eléctrica de Puerto Rico v. Ericsson Inc., 201 F.3d 15,

17 (1st Cir. 2000) (defining defect as “the failure to

comply with the various requirements for a successof the State in which such action is brought.” 28 U.S.C. § 1441

(b)(2).

App.15a

ful removal, as set forth in § 1446(a) and (b)”); see also

Graphic Commc’ns Local 1 B Health & Welfare Fund

“A” v. CVS Caremark Corp., 636 F.3d 971, 974-76

(8th Cir. 2011) (declining to broaden defect’s meaning).

2. Waiver

Now that we’ve concluded that “any defect” means

a failure to comply with the statutory requirements

for removal, we must determine whether waiver by

participation fits within this definition. We conclude

that, because waiver is a common-law creation not

included in the removal statutes, it does not qualify

as “any defect” under § 1447(c). Rothner, 879 F.2d at

1407-08.

We acknowledge that some others judges would

rule otherwise, relying on the similarities between

waiver by participation and the statutory-timing requirements found in § 1446(b)(1). Under § 1446(b)(1), a

removing party must file a notice of removal “within

30 days” of receiving “service or . . . a copy of the

initial pleading.” In his Rothner dissent, Judge Easterbrook asserted that a waiver by participation is a

finding that “the defendant waited too long in light of

events taking place in state court,” even though “the

defendant’s time ran out in advance of the limit in

the statute.” 879 F.2d at 1422 (emphasis in original).

And, as Judge Hartz explained in his Harvey concurrence, § 1446(b)(1)’s 30-day-timing requirement and

waiver by participation both aim to prevent similar

behavior: defendants delaying removal. 797 F.3d at

809 (Hartz, J., concurring). In Judge Hartz’s words

“the remover lingers too long in state court” by removing beyond § 1446(b)(1)’s 30-day requirement; and by

App.16a

participating in the state-court proceedings, the remover “lingers too lovingly.” Id.

Though we agree that waiver of removal by

participation and untimely removal under § 1446(b)(1)

have some similarities, their application differs. The

timing requirements of § 1446(b)(1) are certain and

easily calculated. But issues about whether a defendant

has sufficiently participated in a state court before

removal are subject to differences of opinion and

inconsistent application. Cf. Rothner, 879 F.2d at 1404

(noting that because the district court believed that

the removing party had an improper motive for

removing the case, it decided not to follow a “longsettled common law rule that opposing a motion for a

temporary restraining order does not waive the right

to remove”). And perhaps the most difficult aspect of

the waiver doctrine is that it depends on state

procedural rules. See, e.g., Yusefzadeh v. Nelson,

Mullins, Riley & Scarborough, LLP, 365 F.3d 1244,

1246 (11th Cir. 2004) (finding that Florida’s 20-day

requirement for filing motions to dismiss resulted in

a “quandary” for defendants who filed for removal in

a timely manner but found themselves back in state

court with no time left to file a motion to dismiss).

In addition, we note that Congress could have

broadened § 1447(c)’s language to capture concepts such

as waiver by participation but chose to use narrower

language. For instance, in the bankruptcy-removal

statute, 28 U.S.C. § 1452, Congress authorized district

courts to remand on “any equitable ground.” Had

Congress included “any equitable ground” in § 1447(d),

it might well have reached all delays instead of

just the timing delay identified in § 1446. Things

Remembered, Inc. v. Petrarca, 516 U.S. 124, 134 (1995)

App.17a

(Ginsburg, J., concurring). And the City could perhaps

have fit waiver by participation within the equitable

doctrine of laches, which “stems from the principle

that ‘equity aids the vigilant and not those who slumber

on their rights.’” Biodiversity Conservation All. v.

Jiron, 762 F.3d 1036, 1090-91 (10th Cir. 2014) (quoting

Kansas v. Colorado, 514 U.S. 673, 687 (1995)). Thus,

because waiver by participation lies outside of § 1447

(c)’s “any defect” and subject-matter-jurisdiction bases,

§ 1447(d) doesn’t limit our jurisdiction to review the

case’s merits.12

II.

Merits

The issue here is whether Soto waived its removal

right by filing a motion to dismiss in state court. In

holding that Soto waived removal, the district court

made a legal determination that motions to dismiss

alone are sufficient to constitute waiver; and thus, we

review that determination de novo. O’Toole v. Northrop

Grumman Corp., 499 F.3d 1218, 1221 (10th Cir. 2007).

But see Grubb v. Donegal Mut. Ins. Co., 935 F.2d 57,

59 (4th Cir. 1991) (reviewing the factual findings underlying waiver of removal rights for clear error).

Generally, a defendant waives removal “by taking

some substantial offensive or defensive action in the

state court action indicating a willingness to litigate

in that tribunal before filing a notice of removal with

the federal court.” PR Grp., LLC v. Windmill Int’l,

Ltd., 792 F.3d 1025, 1026-27 (8th Cir. 2015) (quoting

12 Similar to remands based on waiver by forum-selection clauses,

remands based on waiver by participation don’t fall within

either § 1447(c) ground; but these remands based on waiver by

participation still remain lawful through a district court’s inherent

power to remand. Snapper, 171 F.3d at 1263 n.26.

App.18a

Yusefzadeh, 365 F.3d at 1246). This waiver must be

clear and unequivocal, meaning that “short of [the

defendant] seeking an adjudication on the merits,”

the “right to removal is not lost . . . .” Windmill, 792

F.3d at 1026 (quoting Tedford v. Warner-Lambert Co.,

327 F.3d 423, 428 (5th Cir. 2003)); Am. Soda, LLP,

428 F.3d at 927.

Here, though Soto could file an answer in state

court without waiving removal, see Fed. R. Civ. P. 81

(c)(2), we conclude that Soto waived removal by also

filing a motion to dismiss in state court. We acknowledge that a mere hour and twenty minutes passed

between Soto’s filing the motion to dismiss and its

answer, and that Soto never requested a hearing on its

motion to dismiss. These actions may show Soto’s

subjective intent to remove; but Soto showed its

objective intent to remain in state court by filing a

motion to dismiss, which submitted the case’s merits

to the state court for adjudication. See Alwert v. Cox

Commc’ns, Inc. (In re Cox Enters., Inc. Set-top Cable

Television Box Antitrust Litig.), 835 F.3d 1195, 1205

(10th Cir. 2016) (distinguishing subjective and objective

waiver of arbitration rights). And “regardless of its

intent,” Soto’s conduct in state court foreclosed its

removal right. Id. This is because the waiver rules

aim to prevent defendants from “seeking an adjudication on the merits,” which means that a state defendant can waive removal even before the state court

actually adjudicates the merits. Windmill, 792 F.3d

at 1026 (emphasis added) (quoting Tedford, 327 F.3d

at 428). Soto sought the state court’s adjudication by

addressing the substantive merits of the City’s tort

claims. See Styskal v. Weld Cty. Bd. of Cty. Comm’rs,

365 F.3d 855, 858 (10th Cir. 2004) (explaining that an

App.19a

“on the merits” adjudication means one that passes

directly on the substance of a particular claim).

We hold that when a defendant files a motion to

dismiss seeking disposition, in whole or in part, on

the merits in state court before removing the case to

federal court, it manifests a “clear and unequivocal”

intent to submit the case to the state court’s jurisdiction,

and thus waives removal. We favor a bright-line rule

to avoid piecemeal litigation that would distinguish

cases based on the length of delay between motions

to dismiss and motions to remove and based on any

number of like considerations.13 Yet we also recognize

that in limited circumstances, this bright-line rule

can lead to unfair results, so we fashion an exception

as well.

We will not find waiver of the right to remove

when a state’s procedural rules compel a defendant’s

state-court participation. For this exception to apply,

we look for potential harm to defendants.14 For

13 Unlike motions to dismiss for failure to state a claim, motions

to dismiss for defenses such as lack of jurisdiction, improper

venue, or insufficient process make it unnecessary for a court to

adjudicate the case’s merits. Styskal, 365 F.3d at 858. Because

of this, such motions don’t implicate waiver’s goal of promoting

judicial economy and preventing piecemeal and duplicative

litigation.

14 Soto argues that this standard is inflexible and creates

inconsistencies within this circuit. Yet, Soto failed to present

cases from this court to show what inconsistencies this rule

creates. To the flexibility issue, an inflexible standard brings

certainty to litigants, which outweighs our concern with the

potential for harsh results. We note that the district court case

cited by Soto, May v. Board of County Commissioners, 945

F.Supp.2d 1277 (D.N.M. 2013), aligns with today’s opinion.

Because the defendant in that case filed a motion to dismiss in

App.20a

instance, upon remand, would a defendant lose its

opportunity to file a motion to dismiss because it

failed to comply with a state’s procedural rule?

In Yusefzadeh, the Eleventh Circuit faced such a

state procedural rule. The Florida rule required defendants to file motions to dismiss within 20 days of

service. Yusefzadeh, 365 F.3d at 1246. When combined

with the federal 30-day removal period, this 20-day

time limit created a “quandary” for state defendants.

Id. (citing 28 U.S.C. § 1446(b)). A defendant in Florida

might have filed for timely removal only to find itself

back in state court where the time to file a motion to

dismiss had run. See id. But unlike the 20-day filing

requirement in Yusefzadeh, New Mexico’s procedural

rules didn’t compel Soto to file a state motion to

dismiss before its 30-day removal period had expired.

Further, when Soto filed its state motion to dismiss,

the City had not served process, meaning that the

clock had not started running on either removal or

filing a motion to dismiss. So, absent Soto’s participating in the state case by filing a motion to dismiss,

on remand, it would have had 30 days in which to file

its state motion to dismiss.15 Soto jumped the gun,

unlike the defendants in Yusefzadeh.

Still, Soto argues that state and federal rules of

civil procedure allowed it to file the motion to

dismiss. In support, Soto cites Federal Rule of Civil

Procedure 81(c) to show that defendants can file an

state court based on improper venue, it did not seek a “final

determination on the merits of the case before removal,” and

thus retained its right to remove. Id. at 1297-98.

15 This hypothetical assumes that Soto removed on Day 1 of the

removal period.

App.21a

answer in state court before removing a case to federal

court. Soto then combines this with New Mexico Rule

of Civil Procedure 1-012(B), which requires parties to

file their motions to dismiss “before pleading,” to show

that, upon remand, it would have lost its opportunity

to file a motion to dismiss had it answered the complaint first before removing to federal court. From

this, Soto deduces that it could file the motion to

dismiss without waiving its right to remove. But Soto

misses the point. For the exception to apply, we don’t

examine whether procedural rules allowed the participation, we examine whether the procedural rules

compelled the participation. New Mexico’s rule didn’t

compel Soto to answer the City’s complaint and, consequently, didn’t compel Soto to file its motion to

dismiss for two reasons: (1) the City never served Soto;

and (2) Soto could have removed the case to federal

court before filing an answer.

Because Soto participated in the state case by

filing a motion to dismiss without needing to do so,

we conclude that Soto waived its right to remove.

Conclusion

For the reasons stated above, we DENY the City’s

motion to dismiss this appeal and AFFIRM the district

court’s order of remand.

App.22a

MEMORANDUM OPINION AND ORDER

AND ORDER OF REMAND

(APRIL 11, 2016)

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW MEXICO

________________________

CITY OF ALBUQUERQUE,

Plaintiff,

v.

SOTO ENTERPRISES, INC., d/b/a

MIRACLE DELIVERY ARMORED SERVICES,

Defendant.

________________________

No. CIV 16-99 JAP/WPL

Before: James A. PARKER,

Senior United States District Judge.

In PLAINTIFF’S MOTION FOR REMAND AND

SUPPORTING MEMORANDUM OF LAW (Doc. No.

20) (“Remand Motion”), Plaintiff City of Albuquerque

argues that Defendant Soto Enterprises, Inc. waived

its right to remove this lawsuit by filing a Rule

12(b)(6) motion to dismiss prior to the notice of removal.

Defendant disagrees. See DEFENDANT’S RESPONSE

TO PLAINTIFF’S MOTION FOR REMAND (Doc. No.

24) (“Response”). In the REPLY IN SUPPORT OF

PLAINTIFF’S MOTION FOR REMAND (Doc. No. 27),

Plaintiff disputes Defendant’s claim that the majority

App.23a

of cases support Defendant’s position. This is a close

question; courts have split over what conduct waives

the right to remove. For the reasons discussed below,

the Court finds that the filing of a 12(b)(6) motion to

dismiss generally waives the right to remove. The

Court, therefore, will grant Plaintiff’s motion and

will remand this case to state court.

I.

Background

On October 30, 2015, Plaintiff City of Albuquerque

filed this breach of contract and negligence lawsuit in

state court against Defendant Soto Enterprises, Inc.,

a company it hired to secure and transport bus fares.

See COMPLAINT (Doc. No. 1-1). On February 9, 2016,

before service was effected, Defendant entered its

appearance in the state lawsuit and filed a motion to

dismiss Plaintiff’s tort claims as legally deficient

under New Mexico Rule of Civil Procedure 1-12(b)(6).

See DEFENDANT’S MOTION TO DISMISS IN PART

PLAINTIFF’S COMPLAINT (Doc. No. 1-1 at 34).

This motion cites exclusively to state case law. Id.

Nevertheless, later that same day, Defendant removed

the case to federal court. See NOTICE OF REMOVAL

(Doc. No. 1). On March 1, 2016, Defendant filed an

amended motion to dismiss raising the same arguments

that were presented in the first motion to dismiss,

but citing to Federal Rule of Civil Procedure 12(b)(6).

See DEFENDANT’S AMENDED MOTION TO DISMISS IN PART PLAINTIFF’S COMPLAINT (Doc. No.

18). Plaintiff filed timely a motion to remand on

March 8, 2016. See Remand Motion. Plaintiff admits

that the case falls within this Court’s diversity jurisdiction, but argues that Defendant waived the right

to remove by filing a motion to dismiss prior to filing

the notice of removal. See generally id.

App.24a

II.

Legal Standard

As a general matter, “any civil action brought in

a State court of which the district courts of the

United States have original jurisdiction, may be

removed [to federal court] by the defendant.” 28 U.S.C.

§ 1441(a). However, courts have recognized that a

defendant may waive its statutory right to removal

by “demonstrating a clear and unequivocal intent to

remain in state court.” Mach v. Triple D Supply, LLC,

773 F.Supp.2d 1018, 1033-34 (D.N.M. 2011). For

instance, federal district courts within the Tenth

Circuit have found waiver to exist where a defendant

filed a third-party complaint before seeking removal,

see Knudsen v. Samuels, 715 F.Supp. 1505 (D. Kan.

1989), and where a defendant served the plaintiff with

discovery requests, filed a motion to dismiss, and

scheduled a hearing on the motion to dismiss prior to

removal, see Chavez v. Kincaid, 15 F.Supp.2d 1118,

1125 (D.N.M. 1998).

Knudsen and Chavez are examples of the following

rule-of-thumb: a defendant manifests a clear intent

to remain in state court, thereby waiving the right to

remove, if the defendant takes substantial offensive

or defensive action in state court, for example by

actively seeking a determination on the merits prior

to removal. See, e.g., Knudsen, 715 F.Supp. At 1506

(“[A] defendant who asserts a permissive pleading

seeking affirmative relief in state court invokes and

submits to the jurisdiction of the state court.”); see

also Johnson v. Heublein Inc., 227 F.3d 236, 244 (5th

Cir. 2000) (defendants waived right to remove by filing

motions to dismiss and a motion for summary judgment); Wolfe v. Wal-Mart Corp., 133 F.Supp.2d 889,

893 (N.D.W. Va. 2001) (filing a motion for summary

App.25a

judgment in state court constitutes waiver); Heafitz

v. Interfirst Bank of Dallas, 711 F.Supp. 92, 96

(S.D.N.Y. 1989) (remanding because defendant “was

actively seeking a decision on the merits” prior to

removal); Mach, 773 F.Supp.2d at 1034 (recognizing

that courts have found waiver where defendant was

seeking ruling on merits of case prior to removal).

Ultimately, the focus is whether the defendant’s actions

are “inconsistent with an intent to apply for removal.”

State v. Missouri Public Service Corp., 25 F.Supp. 690,

691 (W.D. Mo. 1938). “[A]n act to maintain the state

court status quo does not constitute waiver.” Chavez,

15 F.Supp.2d at 1125.

In applying these principles, courts have split

over whether the mere filing of a motion to dismiss

(unaccompanied by the scheduling of a hearing or some

other action) constitutes a waiver. Some courts reason

that filing a motion seeking a disposition, in whole or

in part, on the merits demonstrates a waiver of the

right to remove. See Heafitz, 711 F.Supp. at 96; Wolfe,

133 F.Supp.2d at 893. Many of these cases cite to

Scholz v. RDV Sports, Inc., 821 F.Supp. 1469, 1470

(M.D. Fla. 1993) a Florida case where the court determined that the defendant manifested an intent to

litigate in state court by filing a motion to dismiss. As

Defendant points out, however, the Eleventh Circuit

overruled Scholz in 2004. See Yusefzadeh v. Nelson,

Mullins, Riley & Scarborough, LLP, 365 F.3d 1244,

1246-1247 (11th Cir. 2004). There, the Eleventh Circuit

found that merely filing a motion to dismiss, without

taking any other steps to secure a ruling on the motion,

such as scheduling a hearing, did not evince a clear

intent to invoke the state court’s jurisdiction and

forgo the right to remove. Id. at 1247. In reaching this

App.26a

conclusion, the Eleventh Circuit was strongly swayed

by the argument that treating a motion to dismiss as

a waiver would unfairly shorten the time limit for

removal. As the Court explained:

Florida requires a state court defendant to

file responsive pleadings within 20 days after

receipt of the complaint. Fla. R. Civ. P. 1.140

(a)(1). Concurrently, a state court defendant

has 30 days to seek removal of a state court

action. 28 U.S.C. § 1446(b). This discrepancy

in the time periods places a state court

defendant in a quandary of either (1) removing the action and filing the motion to

dismiss in federal court within 20 days, (2)

filing a motion to dismiss in state court and

then immediately seeking removal or (3)

requesting an extension to file responsive

pleadings in state court prior to removing.

Somoana, 985 F.Supp. at 1478. This quandary

should not be used to forestall a state court

defendant who chooses to pursue the second

option from swiftly seeking to remove his

case to the federal court. Therefore, “the

filing of a motion to dismiss in and of itself

does not necessarily constitute a waiver of

the defendant’s right to proceed in the federal

forum.” Hill, 72 F.Supp.2d at 1354.

Id. at 1246.

This reasoning, however, is inapposite here where

there is no discrepancy between the removal and

answer deadlines.1 Moreover, read broadly, Yusefzadeh

1 Unlike Florida, New Mexico gives a defendant 30 days to

answer or otherwise respond to a complaint. NMRA, Rule 1-

App.27a

is arguably inconsistent with the weight of authority,

which generally treats the filing of a permissive substantive defense as a waiver of the right to remove. See

Tedford v. Warner-Lambert Co., 327 F.3d 423, 428 (5th

Cir. 2003) (“[T]he right to removal is not lost by participating in state court proceedings short of seeking

an adjudication on the merits.”); Aqualon Co. v. Mac

Equip., 149 F.3d 262, 264 (4th Cir. 1998) (acknowledging that filling permissive defenses may waive right

to remove); Sayre Enters. v. Allstate Ins. Co., 448

F.Supp.2d 733, 735 (W.D. Va. 2006) (“a defendant seeking a final determination on the merits of the case in

state court would waive the right to remove”).

Despite these statements, Defendant maintains

that “virtually every court that has considered the

issue has found that filing a motion to dismiss in

state court does not waive the right of removal.”

Response at 4. While some courts have reached this

conclusion, see, e.g., Cogdell v. Wyeth, 366 F.3d 1245,

1249 (11th Cir. 2004), Defendant overstates the

strength of the case law. In actuality, many of the

cases Defendant cites lend support to the general

rule that filing a motion to dismiss on the merits is a

waiver of the right to remove. For example, in PR

Grp., LLC v. Windmill Int’l, Ltd., 792 F.3d 1025,

1026 (8th Cir. 2015), the Eighth Circuit recognized a

critical distinction between substantive and procedural

dismissal motions: it held that the defendant’s filing

of a motion to dismiss for lack of prosecution did not

clearly and unequivocally demonstrate intent to remain

in state court because the motion “neither addressed

012(A). Consequently, there is not a deadline gap that would

potentially force a New Mexico defendant to forgo filing a

motion to dismiss or shorten the time for removal.

App.28a

the merits of [plaintiff’s] complaint nor sought an

adjudication on the merits.” Id. The Fifth Circuit

employed similar reasoning in Tedford, 327 F.3d at

428 (distinguishing motions to transfer venue from

motions to dismiss). These cases suggest that the

filing of a Rule 12(b)(6) motion to dismiss claims with

prejudice on their merits would constitute a waiver.

The only Tenth Circuit case the parties identified

or the Court could find touching on this issue is Akin

v. Ashland Chem. Co., 156 F.3d 1030, 1036 (10th Cir.

1998). In Akin, the plaintiff argued that a defendant

waived its right to consent to a removal because it

had filed a summary judgment motion that was pending

in state court at the time of the removal. The Tenth

Circuit rejected this argument on the basis that “a

defendant who actively invokes the jurisdiction of the

state court and interposes a defense in that forum is

not barred from the right to removal in the absence

of adequate notice of the right to remove.” Id. Because

the defendant in Akin filed the motion for summary

judgment before it was clear the case was removable,

this conduct could not be construed as a waiver. Id.

To the extent Akin sheds any light on whether a motion

to dismiss waives the right to remove, it slightly

supports a finding that the filing of a dispositive

motion waives the right to removal.

App.29a

III. Analysis2

Having reviewed the above case law, the Court

is persuaded that filing a substantive motion to dismiss

(a motion seeking dismissal on the merits) generally

waives the right to remove, unless filing the motion

was necessary to preserve the defendant’s rights.

This rule best aligns with the weight of authority.

See supra pp. 3-5. Additionally, it provides clear

guidance to litigants. Moreover, it promotes judicial

economy because it prevents the potential waste of

state court resources spent reviewing dispositive

motions that are filed prior to a notice of removal.

Here, Defendant voluntarily invoked the state

court’s jurisdiction by filing a motion to dismiss

Plaintiff’s tort claims on the merits. Unlike in Yusefzadeh, New Mexico’s rules did not create a situation

where it was necessary to file this motion prior to the

end of the removal period. Furthermore, under the

facts of this case, Defendant was facing no time

pressure whatsoever. As of the filing of Defendant’s

notice of removal, Plaintiff had not yet served

Defendant and had not, therefore, triggered the

2 In its Response, Defendant included a footnote opining that

Plaintiff “may have waived its right to remand this case to state

court” by engaging in discovery. Response at 24 n. 2. Flagging a

potential issue in a footnote, however, is not sufficient to raise

the issue for review. See Utahns for Better Transp. v. U.S. Dep’t

of Transp., 305 F.3d 1152, 1169 (10th Cir. 2002) (one-sentence

argument waived because not adequately briefed); United

States v. Hardman, 297 F.3d 1116, 1131 (10th Cir. 2002)

(“Arguments raised in a perfunctory manner, such as in a

footnote, are waived.”). It is simply not this Court’s job to

construct or select Defendant’s arguments for it. Thus, the

Court does not consider waiver as a basis for the denial of

Plaintiff’s Remand Motion.

App.30a

deadline for filing an answer or motion to dismiss.

Consequently, Defendant did not need to file a

motion to dismiss in order to preserve its rights and

defenses. To the contrary, Defendant could have

safely delayed filing the motion to dismiss while it

contemplated whether it desired to remove the case

to federal court. Instead of doing so, Defendant filed

a motion under New Mexico Rule 1-012 seeking

partial dismissal of the case. It is clear that this decision was not a mere filing error. Defendant specifically cited to the appropriate state rule of civil

procedure, indicating its willingness to submit the

state law issue to state court. While Defendant next

quickly filed a notice of removal, this does not effectively erase its earlier decision to invoke the state

court’s jurisdiction. Nor is the Court convinced that

the short time between the filing of the motion to

dismiss and the notice of removal warrant deviating

from the firm rule announced above. The Court finds

that a firm rule—treating substantive motions to

dismiss as waivers of the right to remove—is more

workable, better preserves state court resources,3

and offers the clearest guidance to defendants contemplating a potential removal.

3 For example, in this case, given the short time between the

filing of the motion to dismiss and the removal, it is highly

unlikely that the state court wasted any time reviewing the

motion prior to removal. However, this is not absolutely certain.

A firm rule obviates the need for guesswork about such matters.

App.31a

IT IS THEREFORE ORDERED THAT:

1.

PLAINTIFF’S MOTION FOR REMAND AND

SUPPORTING MEMORANDUM OF LAW

(Doc. No. 20) is GRANTED.

2.

The Court remands this case to the Second

Judicial District for the State of New

Mexico.

/s/ James A. Parker

Senior United States District Judge

App.32a

ORDER OF THE TENTH CIRCUIT

DENYING PETITION FOR REHEARING

(AUGUST 22, 2017)

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

________________________

CITY OF ALBUQUERQUE,

Plaintiff-Appellee,

v.

SOTO ENTERPRISES, INC., d/b/a

MIRACLE DELIVERY ARMORED SERVICES,

Defendant-Appellant.

________________________

No. 16-2065

Before: MATHESON, PHILLIPS, and

MCHUGH, Circuit Judges.

Appellant’s petition for rehearing is denied.

The petition for rehearing en banc was transmitted

to all of the judges of the court who are in regular

active service. As no member of the panel and no

judge in regular active service on the court requested

that the court be polled, that petition is also denied.

App.33a

Entered for the Court

/s/ Elisabeth A. Shumaker

Clerk