It’s no secret that companies sued as defendants generally prefer to litigate in federal court, not state court. Federal courts are presumed to be more predictable, more transparent and less subject to local biases than state courts. So companies haled into state court ordinarily resort to their options to remove the case to federal court, including examining whether the parties are “diverse”—that is, whether all the plaintiffs are citizens of different states than the defendants. The problem with removal based on the parties’ diversity is that it’s typically unavailable for defendants sued in their “home” state by virtue of a federal statute, 28 U.S.C. Section 1441(b)(2), which provides that a civil action cannot be removed on the basis of diversity “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.”
Or so it was thought. But over the past decade or so, corporate defendants have seized upon a little-noticed clause in Section 1441(b)(2)’s so-called “forum defendant rule”—the requirement that a defendant be “properly joined and served.” Using this clause, defendants began to argue that so long as they had not yet been “served” with a state-court pleading, they could remove on diversity grounds even if a home-state defendant had been sued. Courts increasingly warmed to the argument, many finding that they were bound by the plain text of the clause. But others refused to go along, viewing the tactic as nothing but procedural gamesmanship that Congress could not have intended.
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