E-Alert Case Updates
Fourth Circuit Affirms Maryland District Court’s Decision to Remand Case to State Court Where Defendant Did Not Raise Timely Federal Defense Under 28 U.S.C. § 1446(b)
Kathleen Wood v. Crane Co.
In Catlin Specialty Insurance Co. v. Barry I. Aron, M.D., the Court of Appeals for the Fourth Circuit was asked to decide a medical malpractice insurance coverage dispute involving Defendant, Crane Company (“Crane”), one of many defendants in an asbestos litigation, which removed the case to federal court asserting a federal defense to Plaintiff James Joyner’s state tort claims. When Joyner amended his complaint, eliminating the claims underlying that federal defense, the district court remanded the case to state court. Defendant Crane contended that it should have been given the opportunity to assert a new basis for federal jurisdiction. Finding that Crane’s challenge would have been untimely, the Fourth Circuit affirmed the district court’s decision to remand the case to state court.
The facts of this case are as follows: James Joyner was diagnosed with mesothelioma in March 2012, which he alleged was caused by exposure to asbestos while working as an electrician for the Coast Guard and then in the private sector. Joyner subsequently filed suit in Maryland state court, alleging (1) strict liability for defective design and failure to warn; (2) breach of implied warranty; (3) negligence products liability claims; and (4) aiding and abetting and conspiracy to conceal information about the dangers of asbestos. Joyner named as defendants a number of manufacturers who allegedly supplied asbestos-containing materials with which he came into contact at various points in his career. One (1) of those defendants, Crane, allegedly manufactured and supplied asbestos-containing valves and gaskets to the Navy, on whose ships Joyner worked while employed by the Coast Guard. Crane removed the case to federal court under the federal officer removal statute. See 28 U.S.C. § 1442(a)(1). That provision allows for removal of suits against “[t]he United States or . . . any officer . . . in an official or individual capacity, for or relating to any act under color of such office.” Id. In support of its position, Crane averred that it would assert the federal contractor defense, as it had supplied the valves in conformance with military specifications. Notably, Crane’s notice of removal mentioned that the valves included gaskets as internal component parts, but Crane did not explicitly assert the defense as related to gaskets.
Joyner moved to remand the case to state court, arguing that Crane’s evidence was insufficient to support its jurisdictional allegations. In the alternative, Joyner moved to sever the valve claims against Crane and to remand the claims against the other defendants—as well as Joyner’s gasket claims against Crane—to State court. At oral argument before the district court, Crane expressly refused to take a position as to whether the federal contractor defense applied to any gaskets Crane might have supplied; rather, Crane sought to preserve its contention that the gaskets did not belong to its company. Crane also declined to make an argument in the alternative that the gaskets “would have been supplied pursuant to detailed government specifications”—until much later in the litigation.
In a memorandum opinion and order issued on March 7, 2013, the Maryland district court found that Crane had sufficiently supported removal pursuant to § 1442(a)(1), focusing on the valve claims. See Joyner v. A.C. & R. Insulation Co., No. CCB-12-2294, 2013 WL 877125 (D. Md. Mar. 7, 2013). It did, however, grant in part Joyner’s motion to sever the valve claims from all the others. The court noted that it could exercise supplemental jurisdiction over the other claims, but largely declined to do so. The court found that state law claims predominated over the claims implicating the federal defense and that Maryland had a strong interest in adjudicating its own state law claims, leading the court to sever the claims against the other defendants. But the court also noted its interest in economy, which weighed against forcing Crane to litigate claims regarding valves in one court and gaskets in another. Thus, the court remanded the claims against the other defendants back to Maryland state court, but retained both claims against Crane.
Shortly thereafter, Joyner filed a “notice of abandonment of claims regarding Crane Co. valves only and request for remand . . .,” which explained that Joyner was abandoning his claims against Crane with respect to its valves, retaining only his claims involving injuries caused by Crane’s gaskets. Joyner argued that because Crane’s removal to federal court relied on the government contractor defense as to the valves alone, the district court had no subject matter jurisdiction without those claims. The Maryland district court addressed these concerns in a memorandum opinion and order on June 6, 2013. See Joyner v. A.C. & R. Insulation Co., No. CCB-12-2294, 2013 WL 2460537 (D. Md. June 6, 2013). The court chose to construe Joyner’s notice of abandonment as a motion to amend his complaint under Rule 15(a) and, finding that such an amendment would not prejudice Crane, the district court granted leave to amend. The court found that Crane had not asserted a federal defense with respect to gaskets and that 28 U.S.C. § 1446(b) prevented Crane from asserting it now, well beyond the thirty (30) days that provision grants for notice of removal. Accordingly, the district court remanded Joyner’s remaining claims to Maryland State court. Crane appealed both the March 7 and June 6 orders, contending that all claims should have remained in federal court.
As an initial matter, the court disagreed with Joyner’s assertion that the Fourth Circuit had no jurisdiction to review the appeal. Rather, in agreement with Crane, the Fourth Circuit observed that “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1442 or 1443 of this title shall be reviewable by appeal or otherwise.” 28 U.S.C. § 1447(d). Because the case was originally removed pursuant to § 1442(a)(1), it was reviewable. Second, the appellate court refuted Crane’s citation to the unreported opinion of Brantley v. Borg-Warner Morse Tec, Inc., No. 3:12cv540 AJB (JMA), 2012 WL 1571129, at *2 (S.D. Cal. May 3, 2012), which held that “[b]ecause removals pursuant to the federal officer removal statute are premised on the existence of a federal defense, rather than a plaintiff’s artfully constructed complaint, neither Plaintiff’s disclaimer nor [his] characterizations of [his] claims are determinative.” Rather, here the Fourth Circuit determined that Joyner expressly disclaimed any damages—giving his disclaimer real effect, unlike Brantley’s. As the appellate court found no reason to believe that the State court would fail to hold Joyner to this disclaimer, it effectively precluded any defense based on the valves alone. The Fourth Circuit also dismissed Crane’s argument that Joyner’s amendment should be disallowed as a “manipulative tactic” meant to evade federal jurisdiction. See Carnegie-Mellon, 484 U.S. at 357, stating instead that there is no “categorical prohibition” on such manipulation.
Accepting the disclaimer’s effect, the appellate court next considered whether Crane may properly assert any other grounds of subject matter jurisdiction. As the district court noted, defendants have thirty (30) days to file a “short and plain statement of the grounds for removal”—a window that had closed by the time Joyner amended his complaint. 28 U.S.C. § 1446(a). The court reasoned that Crane should have asserted any and all federal defenses within those thirty (30) days, wherein Crane, instead, refused to take a position as to whether the federal officer defense applied to the gasket claims. The Fourth Circuit noted that after thirty (30) days, district courts have discretion to permit amendments that correct allegations already present in the notice of removal; however, courts have no discretion to permit amendments furnishing new allegations of a jurisdictional basis. See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 831 (1989). Finding, however, that Crane’s decision not to include gaskets as a ground for removal was no “mere inadvertence,” nor a clerical error, but instead a strategic choice, the appellate court held that the district court correctly denied as untimely Crane’s attempt to amend its notice of removal to include the gasket claims.
Importantly, the Fourth Circuit “hasten[ed] to underscore the narrowness of [its] holding.” The court conceded that it “may seem unjust, at first glance, that Joyner was allowed to amend his complaint to withdraw the relevant claims, but that Crane may not respond by restructuring its defense. . .,” but the appellate court continued to state that “there is already a remedy in place for such a scenario: had the district court thought that Joyner’s manipulative tactics were too sharp, it had every opportunity to retain the case in federal court as a matter of discretion.” For these reasons, the Fourth Circuit affirmed the judgment of the district court to remand the case.
|©2008 Maryland Defense Counsel, Inc. All Rights Reserved.|