Simms v. Balboa Capital Corporation

Background

The plaintiffs’ underlying case alleged that Experian Information Solutions, Inc. and Balboa Capital Corporation violated the Fair Credit Reporting Act. Experian removed the case from the Superior Court of California for Marin County to the federal district court, asserting federal-question jurisdiction under 28 U.S.C. § 1331.

Balboa moved to remand, meaning it asked the federal court to return the case to state court. Balboa argued that it had not consented to Experian’s removal.

Court’s reasoning

Under 28 U.S.C. § 1446(b), all defendants who have been properly joined and served must join in or consent to removal in an action removed on the basis of federal-question jurisdiction. Experian argued that it was excused from this requirement because it reasonably believed Balboa had not been served. Experian pointed to the absence of an attorney’s appearance for Balboa, the lack of a proof of service on the state-court docket, and its efforts to contact Balboa’s counsel shortly before the removal deadline.

The court rejected that argument. It stated that a removing defendant must use due diligence to determine whether other defendants have been served. Experian’s counsel had checked the state-court docket twice and emailed Balboa’s counsel once during the two days before the removal deadline, but Experian had not contacted the plaintiffs’ counsel. The court concluded that these efforts did not amount to due diligence and noted the strong presumption against removal jurisdiction.

Disposition

The court granted Balboa’s motion to remand and remanded the case to the Superior Court of California for Marin County. It vacated the motion hearing scheduled for February 2, 2023. The opinion addressed the removal procedure and did not decide the underlying Fair Credit Reporting Act claims.