Featured Article 
June, 2007

FEDERAL REMOVAL – THE NEW YORK STATE OF MIND
(with apologies to Billy Joel)

Our clients, especially out-of-state trucking companies and product manufacturers, routinely prefer to have New York and New Jersey lawsuits removed to federal court. In most cases we agree completely with that point of view. In some cases, however, we counsel against removal. The advantages of removal, the requirements which must be met, and the occasional case in which state court is the better defense venue, warrant a review of this important topic. The decision can affect the outcome of the case. Remember that a defendant has only thirty days from service of the complaint to remove to federal court.

Why Remove a Case to Federal Court?

Removal jurisdiction dates back to the Judiciary Act of 1789 and has been modified over the years. It is not mentioned in the Constitution. The current statute is “closely derived” from the 1887 Judiciary Act, which limited the right of removal to defendants, according to Professor Wright, the guru of the federal courts. The Congressional interest was to give an out-of-state defendant a possibly more friendly venue to blunt home-town prejudices against the intruding party. That benefit is real, as vital today as it was then.
Other pragmatic advantages exist in federal court to one degree or another:

• A higher quality judiciary;
• A more conservative, often better-educated jury pool;
• The protections of the Federal Rules of Civil Procedure (including broad discovery rules) and the Federal Rules of Evidence (including discerning rulings on expert testimony);
• Nationwide subpoena power;
• A more favorable reception toward motions for summary judgment;
• Case management by a federal magistrate;
• Elimination of “cronyism” often seen in some state courts; and
• Plaintiffs’ attorneys’ unfamiliarity with federal court

For these very reasons, plaintiffs’ attorneys oppose federal removal.
Let’s take a brief look at each of these potential advantages. We start with a discussion of the judiciary.

When Can a Defendant Remove a State Court Action to Federal Court?

Federal Courts are courts of limited jurisdiction, as set down by the Constitution. That jurisdiction is further refined by Congress, starting with the Judiciary Act of 1789, signed into law by George Washington. If one’s case does not meet the criteria – all of them – the federal court will not have jurisdiction. Federal removal jurisdiction is particularly thorny, purely a creature of statute. Meet the requirements, or else!

There are five requirements to a federal removal:

1. The removing defendant and all co-defendants must be from outside the forum state (if one co-defendant is a domiciliary of the forum, there can be no removal);

2. All co-defendants must consent to the removal (if one co-defendant prefers to remain in state court, there can be no removal);

3. There must be complete diversity of jurisdiction between every plaintiff and every defendant (if a Delaware plaintiff sues a Delaware defendant in a New Jersey court, there can be no removal) (Note: two or more defendants may be from the same state, as long as it is not the plaintiff’s state or the forum state.);

4. The amount in controversy must exceed $75,000, exclusive of interest and costs; and

5. The notice of removal must be served and filed within 30 days of service of the state court complaint (the plaintiff’s attorney cannot extend this time by stipulation).

Thus, if a product manufacturer based in Colorado is sued in New York state court for serious personal injuries, that defendant can remove the case to federal court, provided the time limit is met. If plaintiff also sues the vendor, a New York company, removal jurisdiction does not exist. If instead, the plaintiff sues a component part manufacturer from Tennessee along with the Colorado company, federal removal is available, if all defendants agree, if the amount in controversy exceeds $75,000, and if the notice of removal is timely filed. And, of course, so long as the plaintiff is not from Colorado or Tennessee.

All of these “ifs” demonstrate the trickiness of federal removal. One of our trucking clients was sued for personal injuries in a northern New York county. The company is not from New York, and its driver is a Maryland resident. Plaintiff also sued Ford Motor Company, alleging that its pick-up truck should not have rolled over (after it cut off and hit our truck). Ford preferred to remain in state court. Thus, we could not remove the case to federal court.

Federal Versus State Judiciaries

Federal judges are called upon to decide issues involving complex matters under federal statutes and regulations on myriad topics (transportation, ERISA, antitrust, and tax law, for example), as well as state law issues arising in diversity cases. The judges are nominated by the President and approved by the Senate. By custom, their records and background are reviewed in a non-political process by the American Bar Association to assist the President and the Senators. Intellectually, the federal judges are the top of the bunch. They do not have the familiarity, however, that state judges have with personal injury and wrongful death lawsuits. In truth, they prefer contract disputes.

New Jersey judges face a similar nomination and approval process. Like federal judges, they remove themselves from party politics when they take office. Though they might not deal with all the complex issues facing federal judges, we find the New Jersey judiciary to be very good.

New York still elects trial-level judges, with politics in control of the selections. In our view, this has led, in some instances, to judicial selections that have not been at all favorable to defendants. The New York judges understand personal injury issues, but generally do not “sit” on a par with federal judges on many legal issues.

The Federal Jury Pool

Urban areas tend to be unfriendly to lawsuit defendants. In New York the particular problem venues are Bronx and Brooklyn (Kings County). A removal to federal court brings a jury pool from a larger geographical area, that will include more conservative suburban and even rural areas. Bronx County is in the Southern District, which runs up to several upstate counties. A removal from Brooklyn is to the Eastern District, affording a jury pool that includes not only Brooklyn, but also more conservative areas of Staten Island and Long Island.

In New Jersey, a federal removal yields a statewide jury pool, which can include jurors from urban areas such as Newark, Jersey City, Trenton and Camden, but also conservative suburban counties of Bergen and Morris, and rural Warren and Sussex Counties (yes, rural in New Jersey!).

In the main, a federal jury will be better educated and more favorable to a defendant with a reasonable defense as to liability or damages, or both.

Federal Procedure and Federal Rules of Evidence

Pre-trial discovery is broad and intensive under the Federal Rules of Civil Procedure.

These rules also provide for nationwide service of discovery subpoenas for documents and depositions. And, the federal rules provide for expert discovery depositions, a tool regularly employed by defense counsel.

The Federal Rules of Evidence provide a predictable body of strictures on what evidence is admissible and under what circumstances. This is particularly true in matters involving expert testimony (the so-called Daubert analysis, for example).

These sets of rules provide a national uniformity. Issues of significant importance are resolved by the Supreme Court.

New Jersey’s rules of procedure are substantively identical to the federal rules, and the Garden State has adopted the Federal Rules of Evidence with some local modifications. Trial and appellate court opinions on procedural or evidentiary issues are often guided by federal precedent. New York’s procedural rules are still antiquated. A defendant can ask for a bill of particulars, which particularizes the details of the complaint, but cannot serve interrogatories (which can be much broader and more helpful) without waiving the right to take a deposition. Expert disclosure is limited to the expert’s qualifications, a summary of the expert’s opinion and a listing of the materials considered by the expert. No expert report is required. Furthermore, there is no provision in New York for an expert deposition.

Neither New York nor New Jersey has adopted the Supreme Court’s Daubert decision on “novel” expert testimony. New York adheres to the old Fyre v. United States, a more stringent test. New York’s evidence rules derive from a body of case law, rather than code of evidence. The case law is well-developed and is demonstrably similar to the common law of other states. Not surprising for a nation that inherited the English common law.

Nationwide Subpoena Power

An attorney in a federal case in New Jersey has the statutory power to serve a discovery subpoena for testimony or documents anywhere in the United States. State-court procedures for obtaining out-of-state evidence can be cumbersome (the “Commission to take testimony”) and often involve court filings in both states. In a case likely to have witnesses in far-flung locations whose depositions must be taken (always in the home state of the witness), this aspect of federal procedure by itself can be an impetus for choosing the federal court.

A Favorable Reception for Motions for Summary Judgment

Simply put, federal courts favor summary judgment, as do New Jersey courts. New York courts abhor summary judgment as Nature abhors a vacuum (almost). A New York case having important legal issues, especially involving federal law, will be a good case for federal removal.

Case Management by a Federal Magistrate – A Mixed Bag

Having a federal magistrate or a federal judge closely manage the progress of the case can be very helpful to either party. Many discovery motions are eliminated by case management conferences or even by telephone conference calls. Setting overall discovery schedules and deadlines for discovery completion, expert inspections and reports, can all be accomplished more quickly and at less cost than in state court without case management. The disadvantage is that many magistrates and federal judges hold numerous conferences, increasing the litigation expense.

Most federal judges require formal (to one degree or another) pre-trial orders. These often include such details as the pages and lines of deposition transcripts which counsel intend to utilize at trial. This detail is very time-consuming for the attorneys and translates into higher costs for the litigants.

New Jersey and New York courts have their own versions of case managements (less so in New York than in New Jersey). In New Jersey complex cases will automatically be referred to a single judge for case management in a manner that is quite similar to federal court. The state courts, however, generally do not require federal-type pre-trial orders.

Elimination of “Cronyism”

Federal judges see many cases of a wide variety, with many different attorneys. They do not have the same personal injury lawyers appearing before them day after day. They are not in the same clubs (political or otherwise) as most of the attorneys who appear before them. One does not see in federal court the type of eyebrow-raising friendliness that appears to exist sometimes, especially in certain of the counties of New York. In recent years, we have been horrified to see state judges in Brooklyn indicted for bribe-taking from plaintiffs’ attorneys and attorneys in matrimonial actions. These “bad apples” have contributed to a lowered view of the judiciary in New York. There are certainly some very fine jurists in that state. In New Jersey, we have always found the state court judges to be very much like the judges on the federal bench in their demeanor and fair-mindedness.

Plaintiffs’ Attorneys’ Unfamiliarity with Federal Court

Plaintiffs’ attorneys, especially in New York, believe that they are in complete control of their cases and that they can prevail upon a friendly judge to make rulings in their favor, and even to move their cases to the top of the trial list. They rely upon the limited discovery under the Civil Practice Law & Rules (“CPLR”) that govern procedure in the New York courts, and generally feel at-home in state courts. They do not have many cases in federal court, are not familiar with the Federal Rules of Civil Procedure or the Federal Rules of Evidence, and do not know the federal judges and magistrates. Some even show, in their demeanor, a lack of respect for the federal court. When you remove a case to federal court, you are taking the fish out of water, all to the advantage of the defendant.

This fact, alone, can weigh in favor of removal to federal court.

Some Additional Observations

For those clients who insist upon removing a case to federal court in all permissible instances, we certainly do so. There are instances, however, in which we would counsel against that removal. Some counties in New Jersey and in New York are so conservative that we would recommend remaining in state court unless other issues discussed above tilt the scale in favor of removal. Some of these state courts are so conservative that the jury values of cases are lower in the state court than in federal court. These qualities are always in flux. New York County (Manhattan) was once a feared county. With the change in its citizenry to urban professionals, New York County can now be pro-defendant.

We also look to the court decisions on legal issues expected to arise in the case under consideration. Which courts – federal or state – have yielded more favorable decisions on interpretation of important federal regulations pertaining to equipment requirements? Or, which courts have shown greater flexibility on the applicability of OSHA regulations? The analysis of substantive law comparisons can be important factor in deciding whether to remove to federal court.

When you refer your case to defense counsel, you should have the opportunity to discuss these issues and to reach a reasoned decision. And . . .

Remember, the most important requirement is to file the notice of removal within thirty days of service of process. Get the case into the hands of your defense attorney quickly, and then discuss the pros and cons of the federal removal.

 

For comments on this article, or questions to John C. Lane: