Pic-Mount Corp. v. Stoffel Seals Corp., CV-N-88-541-ECR.

• Decision Date: 02 March 1989
• Docket Number: No. CV-N-88-541-ECR.,CV-N-88-541-ECR.
• Citation: 708 F. Supp. 1113
• Parties: PIC-MOUNT CORP., a Delaware corporation, Plaintiff, v. STOFFEL SEALS CORPORATION, a New York corporation; K-Seal, Inc., a Georgia corporation; Henry Katz; and Does I-XX, Defendants.
• Court: U.S. District Court — District of Nevada

708 F. Supp. 1113

PIC-MOUNT CORP., a Delaware corporation, Plaintiff, v. STOFFEL SEALS CORPORATION, a New York corporation; K-Seal, Inc., a Georgia corporation; Henry Katz; and Does I-XX, Defendants.

No. CV-N-88-541-ECR.

United States District Court, D. Nevada.

March 2, 1989.

Lawrence J. Semenza Law Firm by J. William Ebert, Reno, Nev., for plaintiff.

Laura W. FitzSimmons, Carson City, Nev. and Michael S. Press, New York City, for defendants.

ORDER

EDWARD C. REED, Jr., Chief Judge.

Before this Court is a motion to remand filed in response to defendants' petition for removal. The issue before us is whether defendants' petition for removal was timely filed.

PROCEDURAL AND FACTUAL BACKGROUND

On September 6, 1988, plaintiff filed its complaint in the First Judicial District Court in the State of Nevada in and for Carson City, alleging unfair competition and violations of the Lanham Act, 15 U.S. C. §§ 1051 et seq., § 1125(a), and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1964. Plaintiff manufactures, distributes, markets, and sells cardboard and plastic slide mounts, slide boxes, and film processors; through its Seary Manufacturing Division, plaintiff manufactures, markets, distributes, and sells slide mounters. Plaintiff alleges that defendants engaged in a scheme of deceptive marketing and utilization of trade secrets which was designed to put plaintiff out of business.

On September 10, 1988, Richard B. Foley, Vice President of plaintiff, personally furnished defendant Henry Katz with a copy of the complaint that had been filed in state court. "The copy of the complaint which I furnished to Mr. Katz indicated on its face that it had been filed in Carson City, Nevada, on September 6, 1988, and had the case number filled in." Affidavit of Richard B. Foley (Exhibit A, document # 7). By affidavit, Mr. Katz acknowledges that he received a copy of the complaint on September 10, 1988. Katz Affidavit filed in Support of Defendants' Memorandum in Opposition to Plaintiff's Motion to Remand (document # 14). Formal service of the summons and complaint was made on defendants Stoffel and K-Seal on September 21, 1988; defendant Katz was formally served with summons and complaint on September 23, 1988.

Defendants joined in a Petition for Removal, which was filed in this Court on October 18, 1988. The case is properly within the subject matter jurisdiction of this Court.¹ The issue presented is whether defendants' petition for removal was filed on time.

28 U.S.C. § 1446(b) provides:

The petition for removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter. (emphasis added)

Plaintiff argues that because the petition for removal was filed more than thirty days after defendant Katz received a file stamped copy of the complaint, the petition is untimely. Defendant Katz received a copy of the complaint on September 10; therefore, plaintiff contends that the period within which to remove ended on October 10. Since the petition for removal was not filed until October 18, the petition is untimely. Plaintiff requests that the case be remanded to the appropriate state court.

Defendants argue that the thirty-day time period for removal does not start to run until after they have been formally served and received a copy of the complaint. They maintain that because formal service was not made on any defendant until September 21, the removal petition was timely because it was filed before October 21.

DISCUSSION

In cases where there is more than one defendant, the time for removal begins to run after the first defendant receives, through service or otherwise, a copy of the initial pleading. All properly joined defendants must join in the petition for removal. Therefore, if the defendants receive their pleadings at different times, and the first defendant to receive a pleading fails to remove within 30 days, those defendants who receive pleadings later are foreclosed from removing. Varney v. Johns-Manville, 653 F.Supp. 839, 840 (N.D.Cal.1987); Ortiz v. Gen. Motors Acceptance Corp., 583 F.Supp. 526, 529 (N.D.Ill.1984); Balestrieri v. Bell Asbestos Mines, Ltd., 544 F.Supp. 528, 530 (E.D.Pa.1982); Quick Erectors, Inc. v. Seattle Bronze Corp., 524 F.Supp. 351, 354 (E.D.Mo.1981); Transport Indemnity Co. v. Financial Trust Co., 339 F.Supp. 405, 409 (C.D.Cal.1972). See also 1A J. Moore & B. Ringle, Moore's Federal Practice ¶ 0.168 3.-5-5 (2nd ed. 1987) ("We believe that when the action as pleaded would be removable by all the joined defendants, the thirty-day period starts to run from the time of service on the first defendant who would have to be joined in the removal petition. (footnote: We use the shorthand term `service' here to mean the happening of the event, such as receipt by defendant of the initial pleading, which starts the removal time running under § 1446(b).)")

If, as plaintiff argues, the thirty days began running when defendant Katz received a copy of the complaint, it is immaterial that "later-served" defendants Stoffel and K-Seal attempted removal within thirty days of their service. Because all defendants must join in the petition for removal, removal is precluded as to all defendants if the "first-served" defendant, Katz, did not remove in time.

There are two lines of cases that define the event necessary to trigger the thirty-day removal period. The split of authority reflects two interpretations of the "through service or otherwise" language of section 1446(b). One approach, set forth in Love v. State Farm Mutual Auto. Ins. Co., 542 F.Supp. 65 (N.D.Ga.1982), requires service which conforms to state law and receipt of a copy of the complaint "through service or otherwise" before the removal period is commenced. The other line of cases follows Tyler v. Prudential Ins. Co., 524 F.Supp. 1211 (W.D.Pa.1981), which interprets the language in section 1446(b) to mean that receipt of the initial pleading alone will trigger the removal period. Although the Ninth Circuit has recognized these two divergent interpretations, it has not adopted one over the other. See Garibaldi v. Lucky Food Stores, Inc., 726 F.2d 1367, 1368-69 n. 1 (9th Cir.1984). Therefore, our decision will be based upon our analysis of the two approaches.

THE LOVE APPROACH

The position articulated in Love, which the defendant encourages us to follow, is based upon a reading of the legislative history of section 1446(b). While followed by a good many courts, this position is neither the majority view, nor does it underlie a trend in recent case law.² Cases espousing the Love position include Goodyear Tire & Rubber Co. v. Fuji Photo Film Co., 645 F.Supp. 37 (S.D.Fla.1986) (removal period did not begin after receipt of complaint through "medium other than through legal process"); Hunter v. Am. Express Travel Related Servs., 643 F.Supp. 168 (S.D.Miss.1986) (service attempted but defective); Thomason v. Republic Ins. Co., 630 F.Supp. 331 (E.D.Cal.1986) (defective service); Quick Erectors 524 F.Supp. at 354 (receipt of complaint other than through process); Skinner v. Old S. Life Ins. Co., 572 F.Supp. 811 (W.D.La.1983); Gibbs v. Paley, 354 F.Supp. 270 (D.P.R. 1973) (defective service); Moore v. Firedoor Corp. of America, 250 F.Supp. 683 (D.Md.1966) (defective service); Potter v. McCauley, 186 F.Supp. 146 (D.Md.1960) (receipt of filed complaint other than by service); Rodriguez v. Hearty, 121 F.Supp. 125 (S.D.Texas 1954) (defective service).

These cases generally stand for the proposition that the removal period begins only after the defendant receives a copy of the initial complaint "through service or otherwise," and is properly served according to state law. This proposition is founded on two arguments, both of which are set out in the Love opinion, but neither of which is persuasive to this Court.

In Love, plaintiffs filed their complaint in state court on March 19, 1982. That same day, plaintiffs' attorney sent defendant a copy of the complaint; the copy, however, contained no docket number and no indication of when, if at all, it had been filed in the state court. This letter was received on March 22, 1982. Defendant filed its petition for removal on May 17, 1982. The court found that formal service of process was not obtained as of thirty days before defendant removed its action.

In holding that defendants removal was timely,³ the Love court first examined the 1939 amendment to section 1446. As explained in Thomason,

The "or otherwise" language was added to the statute in 1949. Before the relevant amendment, the statute read, "within 20 days after commencement of the action or service of process, whichever is later." Pursuant to case law interpretation, the removal period could not begin until service of process was properly obtained. A problem arose in those states which allowed a plaintiff to commence a suit without filing a complaint. New York was such a State. In such cases the removal period could expire before the defendant received a copy of the complaint. Defendant would have to decide whether to petition for removal before knowing what the suit was all about.

Thus, Congress revised § 1446(b) to permit removal "within 30 days after the receipt by defendant, through service or otherwise, of a copy of the initial pleadings." This change was intended to expand the removal period in states which allowed plaintiff to commence a suit without filing a complaint. Plaintiff is still required to properly serve defendant. The "or otherwise" language pertains only to those states where plaintiff can commence a suit without filing

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