Sua sponte remand barred for unraised removal defect

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A U.S. District Court lacks authority to sua sponte remand a removed case based on a non-jurisdictional procedural defect that no party timely raised, the 4th U.S. Circuit Court of Appeals has ruled.

The plaintiff filed two nearly identical breach-of-contract actions in Virginia state court against the defendant involving separate refrigeration equipment contracts. After apparent clerical confusion, the defendant received what looked like duplicate complaints and filed a single notice of removal to federal court while asking that the matters be consolidated.

The U.S. District Court clerk opened one case, effectively consolidating the state actions. The plaintiff moved to remand based only on a forum-selection clause. But the court, acting on its own, questioned whether consolidation had been proper and remanded the case to state court without resolving the parties’ arguments. The court acknowledged that diversity jurisdiction existed but concluded that consolidation was improper.

The 4th Circuit reversed. Although many remand orders are insulated from appellate review, that bar applies only when remand is based on lack of subject matter jurisdiction or a defect raised in a timely motion. Here, the court said, the U.S. District Court relied on a perceived procedural defect that no party invoked within the 30-day period required by 28 U.S.C. § 1447(c).

Because non-jurisdictional removal defects must be timely raised by a party, and because federal courts generally follow the principle of party presentation, the U.S. District Court exceeded its authority by remanding the case sua sponte.

The 14 page opinion is ColonialWebb Contractors Company v. Hill Phoenix Inc., Lawyers Weekly No. 001-157-26.