By Paul T. Moura, Hunton & Williams LLP
For new attorneys, the idea of litigating in the federal court system can be intimidating. The rules are different, the standards can be tougher and the stakes can be higher. A plaintiff gets first dibs on where to file a lawsuit, but defendants who prefer to litigate in federal court have various tools at their disposal to remove a case to federal court if certain requirements are met. As an attorney, your job is to advise your client as to which forum provides the most upside: state or federal? To remove, or not to remove?
This is an introductory guide to some of the basic strategy considerations for practicing in federal court.
A. STRATEGY CONSIDERATIONS FOR LITIGATING IN FEDERAL COURT
- Pleading Standard: Federal courts follow the Twombly/Iqbal “plausibility” pleading standard, whereas many state courts apply a less stringent standard. Given this higher standard, plaintiffs may have a tougher time stating their claims, and defendants in federal court may achieve more success on motions to dismiss.
- Discovery: In federal court, discovery cannot commence until after the parties conduct their mandatory Rule 26(f) conference. And, there may be an even longer discovery hold depending on the particular district or the individual judge’s rules. For defense counsel, this provides more time to investigate and prepare your defense. For plaintiff’s counsel, this may mean advising your client that it may take some time to gather information through discovery. In addition, the Federal Rules of Civil Procedure have very specific limits on the amount and type of discovery that can be conducted. For example, the number of depositions and special interrogatories are limited. Fed. Rule Civ. P. Rule 30(a)(2)(A)(i) [10 depositions]; Fed. Rule Civ. P. Rule 33(a)(1) [25 special interrogatories].
- Expert Discovery: Federal courts require written reports from testifying experts. In addition, federal courts generally afford greater work product protection to draft expert reports, while some states allow discovery of every draft report or communication with an expert.
- Jury Considerations: Federal courts require unanimous verdicts, whereas many state courts require less. This can be advantageous for defendants because one dissenting voice could allow the defendant to escape liability. Additionally, depending on what district you are in, the jury pool may be different—either more or less favorable—in federal court.
- Expertise in Federal Law: Federal judges will likely have more experience with the nuances of federal statutes and case law. Federal judges may also have the assistance of law clerks to conduct legal research and brief the issues, and can refer discovery disputes to magistrate judges with particular expertise in discovery matters.
B. STRATEGY CONSIDERATIONS FOR REMOVAL FROM STATE COURT
Not everyone can remove to federal court. There are certain rules and principles that must be considered, and not all of them are black and white. For both plaintiff and defense lawyers, it is critical to understand each party’s removal rights at all stages of litigation.
- Early Removal: A state court action is removable if it might originally have been brought in federal court. 28 U.S.C. § 1441(a). This means that an action is removable if “diversity” or “federal question” jurisdiction exists. “Diversity” jurisdiction exists where all plaintiffs are diverse from all defendants, and the amount in controversy exceeds $75,000. “Federal question” jurisdiction exists where the plaintiff’s claims arise under federal constitutional, statutory or common law.
- Late Removal: If a case is not removable when the initial complaint is served, it can later become removable by amendments to the complaint or other “voluntary” actions by the plaintiff which create grounds for removal. For example, a plaintiff may take actions that bring the amount in controversy over $75,000, or a plaintiff may dismiss a non-diverse defendant. In those situations, defendant’s right to remove arises when it is first put on notice that the case can be removed: i.e., upon receipt of “an amended pleading, motion, order or other paper from which it may first be ascertained that the case is … removable.” 28 U.S.C. § 1446(b). This is why it is crucial to ask yourself throughout litigation whether either “diversity” or “federal question” jurisdiction can be established. Once a defendant is on notice, the clock starts ticking, and the defendant has only 30 days to file a notice of removal. In addition, under no circumstance can a lawsuit be removed based on diversity more than one year after the case is filed.
- Class Action Removal: Even without complete diversity, removal of a class action is possible where: (1) there are at least 100 class members in all proposed plaintiff classes; (2) the combined claims of all class members exceed $5 million exclusive of interest and costs; and (3) any class member is a citizen of a different state than any defendant. 28 U.S.C. § 1332(d).
- It’s The Defendant’s Call: Only a defendant can remove to federal court. If multiple defendants are class=”anchor” named, all must consent to removal. 28 U.S.C. § 1446(b)(2)(A). A narrow exception to this rule is when you remove on the grounds that the federal claims against your client are “separate and independent” from the claims against the other class=”anchor” named defendants. 28 U.S.C. § 1441(c). In addition, a “local” or “resident” defendant that has been sued and served in its home state court may not thereafter remove to federal court. 28 U.S.C. § 1441(b).
- Don’t Waive It!: A defendant may waive its right to remove if it undertakes substantial offensive or defensive action in the state court. For example, filing a motion or counterclaim may result in a waiver.