Eastern District of Louisiana Weighs In On “The Forum Defendant Rule”

The Eastern District of Louisiana recently weighed in on “the forum defendant rule,” an issue that arose in a recent case, Texas Brine Co., LLC v. Am. Arbitration Ass’n, Inc., No. CV 18-6610, 2018 WL 4927640 (E.D. La. Oct. 11, 2018).

Texas Brine Co., LLC v. Am. Arbitration Ass’n, Inc. – Background

Consider the following: There is complete diversity among all parties in a suit and the amount in controversy requirement is satisfied. However, one of the defendants is citizen of the forum state.  Pursuant to 28 U.S.C. § 1441(b)(2), if the forum defendant is “properly joined and served,” the case is not removable. This rule is commonly known as “the forum defendant rule.” However, if the forum defendant has not yet been served, can one of the non-forum defendants remove the case to federal court? According to cases in the Eastern District of Louisiana, the answer is yes.

This was exactly the issue before the Honorable Judge Sarah Vance in Texas Brine Co., LLC v. Am. Arbitration Ass’n, Inc. In Texas Brine, the plaintiff filed suit in Louisiana state court against the American Arbitration Association (AAA) and two of its arbitrators, Anthony DiLeo and Charles Minyard. The plaintiff alleged that the arbitrators failed to disclose conflicts prior to an arbitration, and that the AAA failed to enforce its ethics policies when it reaffirmed Dileo has an arbitrator. The parties were completely diverse and the amount in controversy had been met. However, both Dileo and Minyard were Louisiana residents, and when the AAA removed the case, Dileo and Minyard had not yet been served. The plaintiff argued, however, that Dileo and Minyard were properly joined and that their presence in the suit precluded removal under 28 U.S.C. § 1441(b)(2).

Eastern District of Louisiana Weighs in on “The Forum Defendant Rule”

In denying the plaintiff’s motion to remand, the Court acknowledged that “courts in [the Eastern District] have uniformly held that resident defendants who are unserved at the time of removal do not trigger the forum defendant rule.” See Leech v. 3M Co., 278 F. Supp. 3d 933, 943 (E.D. La. Sept. 30, 2017) (“[C]ourts in the Eastern District of Louisiana have roundly rejected [the] argument that under the current text of the removal statute, the mere presence of a forum state defendant in a lawsuit, whether served or unserved, bars removal by a non-forum defendant.”); see also Groves v. Farthing, No. CIV.A. 15-722, 2015 WL 3646724, at *4 (E.D. La. June 10, 2015) (“So long as removal is effected before service, the forum defendant rule will not preclude removal.”); see also Stewart v. Auguillard Constr. Co., Inc., No. 09-6455, 2009 WL 5175217, at *4 (E.D. La. Dec. 18, 2009) (holding that removal was proper when complete diversity existed between parties and the resident defendant had not yet been served).