Pennsylvania Manufacturers' Association Insurance Company v. Fidelitone, Inc.
Not yet reported; Docket No. 23 C 16940 (2024)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An in-state defendant may not remove a case to federal court on the basis of diversity jurisdiction before being served with process, as this practice of "snap removal" constitutes manipulation of removal statutes and leads to an absurd result contrary to the purpose of the forum-defendant rule.
Facts:
- Fidelitone, Inc. is a supply chain management firm with its principal place of business in Illinois, making it an Illinois citizen for diversity jurisdiction purposes.
- Employees of Fidelitone filed a putative class action lawsuit against the company under the Illinois Biometric Information Privacy Act (BIPA), alleging it mishandled their fingerprints used for timekeeping.
- Pennsylvania Manufacturers’ Association Insurance Company (PMAIC), a citizen of Pennsylvania, was Fidelitone's insurer.
- PMAIC filed a lawsuit against Fidelitone in the Circuit Court of Cook County, Illinois, a state court.
- In its lawsuit, PMAIC sought a declaratory judgment that it had no duty to defend or indemnify Fidelitone in the underlying BIPA class action.
Procedural Posture:
- Pennsylvania Manufacturers’ Association Insurance Company filed a declaratory judgment action against Fidelitone, Inc. in the Circuit Court of Cook County, Illinois (a state trial court).
- Before Fidelitone was served with process, it filed a notice of removal to the U.S. District Court for the Northern District of Illinois, asserting federal jurisdiction based on diversity of citizenship.
- Pennsylvania Manufacturers’ Association Insurance Company then filed a motion to remand the case back to the state court.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does the forum-defendant rule, under 28 U.S.C. § 1441(b)(2), permit an in-state defendant to remove a case to federal court based on diversity jurisdiction by filing a notice of removal before it has been formally served with process?
Opinions:
Majority - Judge Joan H. Lefkow
No. An in-state defendant may not remove a case to federal court based on diversity jurisdiction by filing a notice of removal before it has been formally served with process. Reaffirming its prior holding in Vivas v. Boeing Co., the court held that interpreting § 1441(b)(2) to allow snap removal would frustrate the purpose of diversity jurisdiction, which is to protect out-of-state litigants from local bias, not to provide a forum-shopping tool for in-state defendants. Such a reading leads to an absurd result by allowing well-resourced defendants to use technology to monitor dockets and circumvent the forum-defendant rule, a cornerstone of removal procedure. The court found the statutory language "properly joined and served" to be ambiguous, and therefore construed the removal statute narrowly, resolving doubt in favor of remand. The original purpose of this language was to prevent plaintiffs from fraudulently joining sham in-state defendants to defeat removal, not to create a loophole for defendants to exploit.
Analysis:
This decision contributes to a significant and persistent split among federal district courts regarding the permissibility of "snap removal." It exemplifies the purposivist approach to statutory interpretation, where a court rejects a literal reading of a statute that leads to results contrary to clear legislative intent. Because orders granting remand are generally not appealable, this circuit-by-circuit and district-by-district disagreement is likely to continue until the Supreme Court or Congress resolves the issue. The case also highlights how modern technology, such as automated docket monitoring, can create novel legal challenges by exploiting statutory language drafted in a pre-digital era.
