UPDATED: Jurisdiction and Venue Clarification Act

Update: Here is the enrolled bill that was sent to the President.

One More Update: President Obama signed the bill into law on Wednesday.

 

After the jump is a post from Arthur Hellman at Pittsburgh, discussion the Jurisdiction and Venue Clarification Act, which just passed Congress and is on its way to the President. The law makes significant changes in a number of confusing areas of jurisdiction and venue, including diversity cases involving resident aliens, the 30-day removal clock in cases involving multiple defendants, and all of venue.

My civ pro class is going to change once again. But, as I said in a comment on the earlier post, for once I am glad civ pro is a spring course here.

Shortly after 7:30 p.m. yesterday (Nov. 30), the Senate gave final passage to H.R. 394, the Federal Courts Jurisdiction and Venue Clarification Act of 2011 (JVCA). The bill, which President Obama is expected to sign, embodies the most far-reaching package of revisions to the Judicial Code since the Judicial Improvements Act of 1990. The amendments deal primarily with removal and venue. Here are some highlights:

-- The Act revises the notoriously troublesome “separate and independent” claim provision of § 1441(c), dealing with the removal of civil actions that include both federal and unrelated state claims.  To protect the defendant’s right to remove the federal claims – and to avoid constitutional problems that some courts have perceived – the new provision requires severance and remand of claims not within the original or supplemental jurisdiction of the district court.

-- The Act codifies the judicially created “rule of unanimity” for removal in cases involving multiple defendants; it then gives each defendant 30 days in which to initiate removal, thus resolving a longstanding conflict in the lower courts over the deadline for removal when different defendants are served at different times.

-- It resolves several issues relating to the determination of the amount in controversy when the defendant removes a civil action based on diversity.

-- It adopts a carefully crafted “bad faith” exception to the statutory provision prohibiting removal of a diversity case more than one year after filing.

-- It completely rewrites Chapter 87 on venue, finally abolishing the hairsplitting distinction between backup venue in diversity and federal-question cases and also doing away with § 1392’s separate provision dealing with “local” as opposed to “transitory” actions.  The JVCA further abrogates the Supreme Court decision in Hoffman v. Blaski, 363 U.S. 335 (1960), by authorizing transfer of venue to a district where the action could not have been brought initially, as long as all parties consent.

-- In the single provision affecting original jurisdiction, the Act narrows the resident-alien proviso now located at the end of § 1332(a). The purpose is to avoid the interpretative and even constitutional problems generated by the current language, which was added by a 1988 amendment to the Judicial Code.

The Act’s provisions will apply to newly filed actions starting 30 days after enactment.

The JVCA has a long and somewhat convoluted history. Fortunately, I need not recount that history here, because it is nicely summarized on pp. 2-3 of the House Judiciary Committee Report (linked below).

With unusual candor, the Report acknowledges that the purpose of the vetting process in the latter stages of the bill’s evolution was “to identify and delete those provisions that were considered controversial by prominent legal experts and advocacy groups.” I particularly regret the deletion of two provisions that would have allowed a plaintiff to avoid removal based on diversity by filing a “declaration” (i.e. stipulation) reducing the amount in controversy below the minimum specified in § 1332(a). One of the provisions would have applied in state courts to forestall removal; the other would have operated in federal courts to encourage remand. The latter would have abrogated decisions like Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868 (6th Cir. 2000). Perhaps these provisions will resurface in future jurisdictional legislation.

Final passage of H.R. 394 was delayed by the need to resolve a conflict with the “Holmes Group fix” enacted as part of the Leahy-Smith America Invents Act (AIA) that President Obama signed in September. The AIA added a new section 1454 to Chapter 89 authorizing removal of state-court actions involving patent and copyright claims. H.R. 394 also added a new section 1454, this one specifying the procedure for removing criminal cases. (The contents of the new section are currently included in section 1446.) A Senate amendment to H.R. 394 changed the number of the criminal removal section to 1455.

The JVCA also intersects with another piece of jurisdictional legislation passed by Congress this fall. That is H.R. 368, the Removal Clarification Act of 2011, which was signed into law on Nov. 9 and became Pub. L. No. 112-51. The Act’s title is somewhat misleading; it deals only with removal of actions against federal officers. A final amendment to H.R. 394 corrected a cross-reference in a new subsection of section 1446 added by Pub. L. 112-51.

I wish to thank Professor Tom Rowe for help in preparing this summary of this extremely important legislation. Tom (and, of course, others) may have more to say about the changes in jurisdiction and venue law that will take effect just as we’ll be starting to teach our second-semester courses in Federal Courts and Civil Procedure.

 House Report on H.R. 394 can be found here.