A federal trial court in Illinois remanded to Cook County, Illinois State court a $1 billion breach of contract action arising from sales of 737MAX8 aircraft brought by Norwegian Airlines against Boeing Co. and a foreign Boeing entity.
Two weeks after Norwegian Airlines filed its suit in state court and before it had served any defendant, Boeing removed the case to federal court based on diversity jurisdiction. Norwegian Airlines moved to remand arguing that 28 U.S.C. § 1441(b)(2), which is known as the “forum defendant rule,” prohibited Boeing, an Illinois citizen, from removing the case: “A civil action otherwise removable solely on the basis of the jurisdiction under 1332(a) of this title [diversity jurisdiction] may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” (emphasis added). Boeing contended that the forum defendant rule did not apply because it removed the case before it was served.
Departing from the conclusion previously reached by the Second, Third and Fifth Circuit Courts of Appeals, the trial court found that the forum defendant rule is ambiguous because one interpretation would permit snap removal and one would not. The Court's reasoning included the following: “The rule is silent as to when a forum defendant must be properly joined and served to defeat removal. It does not plainly state that a forum defendant may remove a case before any parties are served, although that is one plausible reading of the text. Further, it is plausible to read the forum-defendant rule's clause regarding ‘any defendant' as requiring that at least one defendant be properly joined and served prior to removal on diversity grounds . . . .”
After finding the statute ambiguous, the Court chose the interpretation that it found to be more consistent with the intent of Congress to “abridge the right of removal.” The Court reasoned that the forum defendant rule acts as a limit on federal diversity jurisdiction, and that the “justification for diversity jurisdiction—protecting out-of-state defendants against local prejudices—is not at issue when the defendant is a citizen of the forum state.”
In addition, the trial court stated that it found the decisions of the Second, Third and Fifth Circuits unpersuasive primarily because they narrowly focus on a short clause within the forum defendant rule—“properly joined and served”—without fully considering the rule's purpose.
Watch for more developments in this area. Courts around the country continue to disagree on the application of the forum defendant rule under procedural circumstances such as those presented here. It remains to be seen whether any federal court of appeal will follow the reasoning of the trial court in this case, or whether Congress will act to address application of the “properly joined and served” language, as Congress has been invited to do on multiple occasions in other recent court opinions. Norwegian Air Shuttle ASA v. Boeing Co., No. 20-cv-04108, 2021 U.S. Dist. LEXIS 60043 (N.D. Ill. Mar. 30, 2021).
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