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Thursday, December 06, 2012

Four Big Changes to Removal Under the Federal Courts Jurisdiction and Venue Clarification Act

The Federal Courts Jurisdiction and Venue Clarification Act went into effect on January 6, 2012 and alters removal of cases from state to federal court in four fundamental ways.

First, it now allows each defendant in a multiple defendant case a full thirty days following service on that defendant to file a removal notice.  Previously, there was a split of authority on whether the 30 days ran from the date the first defendant was served.

Second, the Act adopts new procedures for establishing the amount in controversy necessary to sustain diversity jurisdiction, with the default being “the sum demanded in good faith in the initial pleading" or Complaint.  There are several important exceptions, however, including discovery conducted in the state court proceeding after the case is no longer removable being a basis for later removal.

Third, while the one year absolute bar to removal remains, the Act provides that even after one year a case can become removable if “plaintiff has acted in bad faith in order to prevent a defendant from removing the action.”

Finally, the Act eliminates a federal court’s discretion to hear state-law claims asserted in a case removed to federal court on the basis of federal question jurisdiction and requires the district court to "sever from the action all [state-law] claims . . . and . . . remand the severed claims to the State court from which the action was removed.”

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