United States District Court, N.D. Illinois, Eastern Division
August 11, 2005.
GLEN HOLMSTROM, Derivatively On Behalf of OFFICEMAX INC., Plaintiff,
GEORGE J. HARAD, et al., Defendants.
The opinion of the court was delivered by: MARVIN ASPEN, Chief Judge, District
MEMORANDUM ORDER AND OPINION
Presently before us is Plaintiff Glen Holmstrom's motion to
remand. For the reasons set forth below, we grant the motion.
On April 25, 2005, Plaintiff filed a shareholder derivative
action under Illinois law in the Circuit Court of Cook County,
Illinois against twenty-eight officers and directors of
OfficeMax, Inc., a Delaware corporation. The complaint alleged,
among other things, that the Defendants breached their fiduciary
duties and wasted OfficeMax's corporate assets. Two of the
individual Defendants are Illinois residents.
On May 5, 2005, Plaintiff's attorney asked counsel for
Defendant Gary Peterson whether Peterson would be willing to
waive service of process. On May 6, 2005, without further
discussion regarding a waiver of service, Peterson, an Ohio
citizen, removed the case to the United States District Court for
the Northern District of Illinois pursuant to 28 U.S.C. § 1441
and 28 U.S.C. § 1332. At the time of removal, Holmstrom had not
served any of the twenty-eight Defendants, nor had any Defendant
made an appearance in the Cook County Circuit Court. On June 6,
2005, Holmstrom filed this motion to remand. ANALYSIS
A case that begins in state court is removable to federal court
only if it could have originally been brought in federal court.
28 U.S.C. § 1441(a); Caterpillar, Inc. v. Williams,
482 U.S. 386, 392 (1987). Pursuant to 28 U.S.C. § 1332, federal diversity
jurisdiction exists over this case because the parties are
completely diverse and the amount in controversy exceeds $75,000.
Therefore, the jurisdictional requirement of § 1441(a) is
A removing defendant in a diversity case must also satisfy the
requirements of 28 U.S.C. § 1441(b). Section 1441(b) provides
that a diversity case "shall be removable only if none of the
parties in interest properly joined and served as defendants is a
citizen of the State in which such action is brought." Often
called the "forum defendant" rule, this provision would normally
allow a plaintiff to keep a case in state court if any defendant
is a citizen of the State in which the action is filed. Hurley
v. Motor Coach Indus., Inc., 222 F.3d 377, 378 (7th Cir. 2000).
This is not always the case, though, because under § 1441(b) only
the presence of a forum defendant who has been "properly joined
and served" would defeat removal. 28 U.S.C. § 1441(b). As many
courts have recognized, therefore, an unserved forum defendant
will generally not defeat removal. McCall v. Scott,
239 F.3d 808, 813 n. 2 (6th Cir. 2001); Stan Winston Creatures, Inc. v.
Toys "R" Us, Inc., 314 F. Supp. 2d 177, 180-81 (S.D.N.Y. 2003);
Ott v. Consol. Freightways Corp., 213 F. Supp. 2d 662, 665
(S.D. Miss. 2002); Maple Leaf Bakery v. Raychem Corp., No. 99 C
6948, 1999 WL 1101326, at *1 (N.D. Ill. Nov. 29, 1999).
Unlike the case before us, however, the cases cited above all
addressed a situation in which the removing defendant had either
been served or had voluntarily appeared. Here, the removing
Defendant, Peterson, was obviously aware of the complaint, but he
was never served nor did he make an appearance in state court. In
fact, not one of the twenty-eight individual Defendants in this
case received service or appeared. Therefore, we are presented with a
question that has received little treatment in the federal
courts: whether, under § 1441(b), the citizenship of a forum
defendant defeats removal when, prior to removal, no defendant
has been served or otherwise appeared.
To our knowledge, only one federal court has addressed this
factual scenario. In Recognition Communications, Inc. v.
American Automobile Association, No. Civ. A. 3:97-CV-0945-P,
1998 WL 119528 (N.D. Tex. March 5, 1998), non-forum defendants
removed the case to federal court before any defendant was served
or appeared. Id. at *1. Another defendant who did not join the
notice of removal was a citizen of Texas, the forum state. See
id. at *1 n. 1. On plaintiff's motion to remand, the court found
that removal was improper because the removing defendants could
not ignore the forum defendant's presence. While observing that
the citizenship of an unserved forum defendant should generally
be disregarded for removal purposes under § 1441(b), the court
crafted a limited exception to this rule in cases where no
defendant had been served prior to removal. Id. at *3, n. 3.
We agree with the result reached in Recognition
Communications. Initially, we recognize the tension between this
result and the literal language of § 1441(b). The forum defendant
rule expressed in § 1441(b) precludes removal only when a forum
defendant has been "joined and served." 28 U.S.C. § 1441(b).
Peterson's straightforward argument, therefore, is that the
presence of two unserved Illinois defendants should not bar
removal. Peterson further contends that nothing in the removal
statute explicitly limits the "joined and served" requirement to
cases in which at least one defendant has been served prior to
removal. Peterson's contention notwithstanding, we find that
remand is proper. Simply put, the policy of the "joined and
served" requirement is not implicated in this situation. As one
court has noted:
The purpose of the `joined and served' requirement is
to prevent a plaintiff from blocking removal by
joining as a defendant a resident party against whom
it does not intend to proceed, and whom it does not
even serve. Defendants are entitled to act to remove
a case based on circumstances at the time they are
sued, and are not required to guess whether a named resident defendant will ever
Stan Winston Creatures, 314 F. Supp. 2d at 181. The "joined and
served" requirement makes sense, then, when one defendant has
been served but the named forum defendant has not. After all, a
plaintiff should not be able to prevent a served defendant from
removing simply by naming, but not serving, a forum citizen as a
defendant. When no defendant has been served, however, the
non-forum defendant stands on equal footing as the forum
defendant. Neither defendant in that scenario is obligated to
appear in court. See Murphy Bros., Inc. v. Michetti Pipe
Stringing, Inc., 526 U.S. 344
, 350-51 (1999). Nor has the
thirty-day period for removal started to run for the unserved
non-forum defendant. Id. at 354 (holding that a defendant's
thirty-day period for removal as set forth in 28 U.S.C. § 1446(b)
cannot begin to run until that defendant has been served). Once
served, a defendant may immediately remove an otherwise removable
case without regard to the unserved forum defendant, but the
protection afforded by the "joined and served" requirement is
wholly unnecessary for an unserved non-forum defendant. Given
this, we will not apply the "joined and served" requirement here
because no Defendant has been served. The citizenship of the
unserved Illinois Defendants (i.e., the forum Defendants)
therefore defeats removal at this stage. Plaintiff's motion to
remand is granted.
Plaintiff has also requested costs and attorneys' fees. An
order to remand may require payment of costs and expenses,
including attorneys' fees, incurred as a result of the removal.
28 U.S.C. § 1447(c). Although Plaintiff need not show that the
removal was in bad faith in order to recover such costs, we have
broad discretion in deciding whether to award fees. Sirotzky v.
New York Stock Exch., 347 F.3d 985, 987 (7th Cir. 2003).
Accordingly, since Peterson presented a reasonable argument in
favor of removal in this unique situation, we will deny
Plaintiff's requests for costs. See Hahn v. PepsiCo, Inc.,
950 F. Supp. 2d 758, 765 (N.D. Ill. 2004) (denying plaintiff's motion
for fees pursuant to § 1447(c) because defendant had provided a reasonable
argument for removal).
We grant Plaintiff's motion to remand this case but deny his
request for costs and attorneys' fees. It is so ordered.
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