Snap Removal Split Can Fly Under Radar Due to Procedural Quirk

An April decision from the US Court of Appeals for the Ninth Circuit highlights a procedural quirk that may make it harder for the Supreme Court to resolve a conflict over the propriety of snap removals—an increasingly common tactic for avoiding a federal statute meant to keep lawsuits in state court.

In Casola v. Dexcom, Inc., the plaintiffs submitted their complaints against glucose monitor maker Dexcom Inc. electronically in San Diego Superior Court. Before the cases were even deemed filed, however, a docket monitoring service picked up the complaints and alerted Dexcom. The defendant then asked the federal district court for the Southern District of California to hear the cases instead.

Dexcom invoked the district court’s diversity jurisdiction. The diversity statute gives federal courts jurisdiction over any lawsuit where the stakes exceed $75,000 and no plaintiff is a citizen of the same state as any defendant. That includes suits initially filed in state courts. A defendant sued in state court can file a notice of removal to request the case be heard in a federal court instead.

The parties in Dexcom agreed that the cases satisfied the requirements of the diversity statute. The amount in controversy exceeded the statutory minimum, and none of the plaintiffs shared Dexcom’s California and Delaware citizenship. But they disagreed over whether the cases were removable.

The plaintiffs argued that Dexcom’s rush to federal court violated a 140-year-old provision of the removal statute known as the “forum-defendant rule.” In its current form, the rule bars removal of cases “otherwise removable” on diversity grounds if any defendant is a citizen of the state where the action was brought.

Dexcom argued that the rule didn’t apply. By its terms, the forum-defendant rule only kicks in once an in-state defendant has been “properly joined and served.”

That proviso was originally meant to keep plaintiffs from locking otherwise removable suits in state court by naming a forum defendant they had no intention of pursuing or even serving. But advances in technology have turned the service requirement into something of an escape hatch for defendants looking to avoid the rule altogether.

Docket trackers and other tools can monitor court records in real time, offering savvy defendants such as Dexcom an opportunity to remove before service is effected. This tactic—commonly known as snap removal—has only become more prevalent as state court systems have moved court records online.

Yet federal courts remain deeply divided over whether snap removals are consistent with the statute.

Some courts hold that the removal statute means just what it says—removal is fair game until an in-forum defendant has been served. Other courts reject such a literal reading. The service requirement, they reason, is supposed to prevent manipulation of the rule—not facilitate its circumvention. Still other courts have staked positions somewhere in between, permitting snap removal only under certain circumstances.

Such an important issue might be expected to make its way quickly to the US Supreme Court. After all, the lower courts’ divergent views mean that whether a defendant can avail themselves of snap removal depends on where they were sued.

That kind of inconsistent application of federal law is ordinarily a prime candidate for Supreme Court review. But the growing conflict over snap removal risks flying under the radar.

The problem is that the Supreme Court focuses on resolving divisions among federal appellate courts, and appellate decisions addressing snap removal are few and far between. A clause in the removal statute that bars appeals from most orders that grant motions to remand, including orders remanding a case based on the forum-defendant rule.

The only way to get the snap-removal issue before an appellate court is by appealing a final judgment in a case where remand was denied. That may not come—if it comes at all—until years after removal.

The result of this procedural limit on appeals from remand orders is a sort of stealth split. The lower courts are divided on an important question of federal law. But the kind of circuit court conflict that would normally attract the Supreme Court’s attention has yet to emerge.

Just three appellate courts have squarely addressed the issue so far. All three—the Second, Third, and Fifth Circuits—have come out the same way. A contrary decision from another circuit may be a long time coming; the Dexcom decision is a case in point.

The district court eventually rejected Dexcom’s snap-removal argument and remanded the case to state court. The Ninth Circuit dismissed Dexcom’s appeal for lack of jurisdiction. The court of appeals acknowledged that courts in the Ninth Circuit and elsewhere are divided on the propriety of snap removals. Given the removal statute’s appeal bar, however, the court concluded that the “final chapter” on that question “remains to be written.”

The case is Casola v. Dexcom, Inc., 9th Cir., 98 F.4th 947, opinion 4/10/24.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Eugene A. Sokoloff is partner at MoloLamken. His practice focuses on appellate, white collar, and complex civil litigation.

Lauren F. Dayton is partner at MoloLamken. She litigates business and antitrust disputes in state and federal courts.

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