Russell v. South Shore Industries Ltd.

Background

Plaintiffs filed the action in the Supreme Court of New York, New York County, on August 13, 2019, and filed an amended summons and amended verified complaint the same day. The amended complaint named ten corporate defendants: South Shore Industries Ltd.; South Shore USA, Inc.; South Shore Furniture; Walmart, Inc.; Wal-Mart Stores, Inc.; Wal-Mart Stores East, L.P.; Wal-Mart Stores East, Inc.; Wal-Mart Associates, Inc.; Wal-Mart TRS, LLC; and Wal-Mart.com USA, LLC.

The Wal-Mart defendants were served on August 28, 2019, except that Wal-Mart.com USA, LLC was served on September 9 and again on September 10. The South Shore defendants were served on August 29. The South Shore defendants removed the case to the U.S. District Court for the Southern District of New York on September 12, 2019, asserting diversity of citizenship as the basis for federal jurisdiction.

The removal notice did not state that the Wal-Mart defendants consented to removal. Plaintiffs moved to remand under 28 U.S.C. § 1447(c). On October 14, 2019, counsel for the defendants stated in a letter that the Wal-Mart defendants consented to removal and asked the court to treat the notice as amended. The defendants also argued that a scheduling stipulation filed on behalf of all defendants showed consent and that service on the Wal-Mart defendants was not complete until ten days after the affidavits of service were filed.

Legal standard

Federal law requires all defendants who were properly joined and served to join in or independently consent in writing to removal within the applicable thirty-day period. This requirement is commonly called the rule of unanimity. A failure to obtain timely written consent from any properly joined and served defendant is a procedural defect that can require remand to state court.

There are exceptions when a co-defendant was not served when removal was filed, is only a nominal or formal party, or is not subject to the separate and independent removal claim. The court also explained that federal courts construe removal rules narrowly and resolve doubts against removal.

Court’s analysis

The court rejected the defendants’ argument that the October 14 letter could cure the defect. Because the Wal-Mart defendants had been served in August and September, their consent was required before the applicable thirty-day periods expired. The court held that an untimely amendment could not cure the failure to include their timely consent in the removal notice.

The court also rejected the argument that the September 22 scheduling stipulation showed consent. The stipulation did not contain written consent unambiguously agreeing to removal, and filing a federal docket document that did not address consent was insufficient.

The court concluded that the exception for a defendant not served when removal was filed did not apply. The Wal-Mart defendants were business entities registered to conduct business in New York, and plaintiffs personally served their authorized agents under provisions governing service on those entities. The ten-day delay in New York’s substituted-service provision did not apply to this service. The court therefore found that service was complete on August 28 for most of the Wal-Mart defendants and on September 9 for Wal-Mart.com USA, LLC, making the October 14 consent untimely.

Ruling and disposition

Judge Vernon S. Broderick granted plaintiffs’ motion to remand. The court remanded the case to the Supreme Court of the State of New York, New York County, directed the clerk to close the motion and terminate the federal case, and directed that a certified copy of the remand order be sent to the state court clerk. The opinion addressed the removal procedure and did not decide the underlying claims.