Salmonson v. Euromarket Designs, Inc., No. CV 11-2446 PSG (PLAx), 2011 WL 2292234 (C.D. Cal. June 9, 2011).

Miss Manners would say that it is not polite to arrive to a party too early and it is not polite to arrive too late. In this case, a District Court in California would say the same thing.

The court held that although filing of notice of removal before service of pleadings is permitted under 28 U.S.C. § 1446(b)’s first thirty-day removal window, such early filing is not permitted under second thirty-day removal window, which requires that a defendant file a notice of removal after receiving an amended pleading, motion, order or other paper.

The plaintiff filed a class action lawsuit against the defendant, Euromarket Designs, Inc. d/b/a Crate & Barrel, alleging that Euromarket requests its customers “to provide personal identifying information,” including their zip codes, as a “condition of using their credit card to receive merchandise,” in violation of the Song-Beverly Credit Card Act.

On February 14, 2011, the plaintiff filed the case in California state court, and served Euromarket with the Complaint and Summons on February 16, 2011. 

Euromarket removed the case to the federal court on March 23, 2011, more than thirty days after receiving notice of the lawsuit arguing that it was not clear from the face of the Complaint that the case could be removed and that it was not until it examined its own records on March 22, 2011 that it realized the case was removable. The plaintiff filed a motion for remand on April 1, 2011 contending that removal was untimely; however, admitting that if the removal was procedurally proper, there was jurisdiction under CAFA. 

The District Court granted the motion.

The Court noted that under 28 U.S.C. § 1446(b), there are two “thirty-day windows” during which a case may be removed — during the first thirty days after the defendant receives the initial pleading, through service or otherwise, or during the first thirty days after the defendant receives a paper from which it may first be ascertained that the case is one which is or has become removable if the case stated by the initial pleading is not removable.

The plaintiff contended that Euromarket’s notice of Removal was untimely as both too late and too early; too late because it was beyond the thirty-day window following service, and too early because the second thirty-day window that opened upon receipt of a “paper” establishing the requisite jurisdictional facts never opened before Euromarket filed the Notice of Removal. 

The plaintiff first claimed that the Complaint clearly sought up to $1,000.00 per class member in damages and that although the Complaint only vaguely identified that the number of class members could be in the “thousands,” Euromarket could have discovered the actual amount in controversy by examining its records to determine if it engaged in more than 5,000 credit card transactions in the applicable time frame. 

The Court, however, noted that in Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005), the Ninth Circuit held that the first thirty days window applies “if the case started by the initial pleading is removable on its face.” And that removability is determined based on an examination of the “four corners of the applicable pleadings, not through subjective knowledge or a duty to make further inquiry.” Contrary to the plaintiff’s position, Euromarket had no affirmative obligation to investigate the potential class size to determine the amount in controversy. Thus, that $5 million was in controversy could not be ascertained from the Complaint’s request for $1,000.00 per class member, of which there were potentially “thousands.” Because the Complaint lacked the necessary amount-in-controversy information, the Court concluded that the Complaint did not trigger the first thirty-day removal period and the case was “not removable.”

Second, the plaintiff argued that the second thirty-day window was never triggered because the defendant never received anything of consequence from the plaintiff other than the initial service documents before removing the case. In part, Euromarket conceded that it determined the case’s removability by examining its own records, not by receiving anything at all from the plaintiff. Nevertheless, Euromarket claimed that removal was within the second thirty-day window because it received the pending motion to remand containing the plaintiff’s concession that “removal in this case is proper if timely made.” Following Euromarket’s logic, it received a “motion” or “other paper” as those terms are used in § 1446(b) on April 1, 2011, meaning the time to remove the case would have expired on May 1, 2011, but because it filed the Notice of Removal on March 23, 2011, Euromarket’s removal of the case occurred “before the removal deadline” and removal was proper. 

The Court found that Euromarket’s position was contrary to the Ninth Circuit law. Relying on Harris, the Court observed that Euromarket’s argument that it can base its Notice of Removal on the plaintiff’s motion to remand was without merit, because, under § 1446(b), a notice of removal filed within the second removal-window must be filed after receipt of “an amended pleading, motion, order or other paper,” not before it

Despite this, Euromarket contended that removal that was “too early” was okay, and that it was only removal that was “too late” that warranted remand as untimely. Not so, the Court said.  Section 1446(b) clearly states that if a case cannot be removed after examining the four corners of the initial pleadings, a defendant can only remove a case “after the defendant receives ‘an amended pleading, motion, order or other paper.’” A case that is initially “not removable” is not “rendered removable” until such a “newly-filed paper places the second thirty-day window in play.” Contrary to Euromarket’s position, it is, therefore, possible for a Notice of Removal to be filed too early to comply with § 1446(b), the Court observed.

Removal of a case by the defendant to federal court prior to being served with the complaint is proper based on the plain language of § 1446(b) — “through service or otherwise”–, which permits a defendant to remove prior to formal service.  Although the Supreme Court in Murphy Bros., Inc. v. Michael Pipe Stringing, Inc., 526 U.S. 344, 350 (1999) has held that the thirty-day period does not start to run until a defendant is properly served, the statute still permits removal based on receipt of the Complaint via methods other than service of process. However, early filing is not permitted under § 1446(b)’s second thirty-day removal window, which requires that a defendant file a Notice of Removal after receiving an amended pleading, motion, order or other paper.

Finally, the Court noted that this case was not akin to the cases when a defendant is permitted to supplement his evidence in support of removal after the case has already been removed.  In those cases, the window in which to timely remove was presumably already open, and a defendant is merely supplementing its basis for asserting that federal subject matter jurisdiction is proper.  That was not the case here.  Here, Euromarket could not use the plaintiff’s April 1, 2011 motion to remand to “supplement” its own March 23, 2011 notice of removal.  Such a practice would not merely provide further explanation for removal, but would open a removal window that § 1446(b) explicitly kept shut.

Accordingly, the Court remanded the action to state court.