The Federal Courts Jurisdiction and Venue Clarification Act of 2011, which significantly amends the federal statutes governing removal, jurisdiction, and venue, takes effect today, January 6, 2012.1 Among the changes2 are the:

      • Resolution of a longstanding circuit split regarding the period during which defendants in multiple-defendant cases may remove the action from state to federal court.

      • Amendment of the rules and procedures surrounding the amount in controversy requirement to alleviate several problems faced by defendants seeking to remove when the amount in controversy is uncertain.

      • Amendment of the removal statute to prohibit federal district courts from hearing unrelated state law claims joined with removable federal claims.
Summary of Several Notable Changes

Title I of the Act amends the federal removal3 and diversity jurisdiction4 statutes. Of the numerous substantive changes it contains, three are particularly important. First, the Act resolves a longstanding circuit split regarding the period during which defendants in multiple-defendant cases may remove the action from state to federal court. Previously, the removal statute gave “the defendant” 30 days from receipt of the complaint to remove, but did not address cases with multiple defendants served at different times. Courts disagreed on how to interpret the statute in these cases. For example, some held that the first-served defendant and all then-served defendants must join in the notice of removal within 30 days after service upon the first-served defendant.5 Others concluded that the 30-day period runs from the date of service on the last-served defendant and permitted earlier-served defendants who failed to act during their own 30-day period to join in the last-served defendant’s timely removal.6 The Act settles this issue by amending the removal statute to explicitly grant each defendant 30 days from the time they are served to initiate removal and to permit earlier-served defendants to consent to and join in removal by later-served defendants.7

Second, the Act amends the rules and procedures surrounding the amount in controversy requirement to alleviate several problems faced by defendants seeking to remove when the amount in controversy is uncertain. For example, a defendant may now assert the amount in controversy in the notice of removal in three instances: (i) where the plaintiff seeks nonmonetary relief, (ii) where state practice prohibits demands for a specific sum, or (iii) where state practice permits recovery of damages in excess of the amount demanded.8 The Act also clarifies that the defendant’s discovery in state court may be used to help determine the amount in controversy — and, where such discovery reveals that the amount in controversy is sufficient, it now triggers another 30-day period in which the defendant may remove the action.9

Third, the Act amends the removal statute to prohibit federal district courts from hearing unrelated state law claims joined with removable federal claims. Previously, when a defendant removed a case involving a “separate and independent” federal question claim joined with a non-removable state law claim, the statute authorized the federal district court to either retain the whole case or remand all matters in which state law claims “predominated.” In response to constitutional concerns raised by this provision10, the Act now mandates that the district court sever all claims not within its original or supplemental jurisdiction and remand them to state court.11

Title II of the Act amends the federal venue statutes.12 Among several significant changes, the Act removes a restriction on change of venue. Previously, a district court could only transfer an action to a venue “where it might have been brought,” which the Supreme Court interpreted to mean where venue would have originally been proper.13 Now, a district court may transfer an action “to any district or division to which all parties have consented.”14

The Act also resolves a circuit split regarding the interpretation of the rule that, in a suit against a natural person, venue may lie where the defendant “resides.”15 A minority of circuit courts interpreted “resides” for the purposes of venue as potentially broader than the concept of domicile. For example, these circuits suggested that the term “resides” might include a jurisdiction in which a party has a summer home, while the concept of domicile is generally defined as a person has his “true, fixed and permanent home.”16 The Act rejects this interpretation and clarifies that a person “shall be deemed to reside in the judicial district in which that person is domiciled,” thereby narrowing the scope of venue under 28 U.S.C. Sec. 1391(b)(1) in some jurisdictions.17

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1 H.R. 394, P.L. 112-63, available at http://www.gpo.gov/fdsys/pkg/BILLS-112hr394enr/pdf/BILLS-112hr394enr.pdf.
2 For a comprehensive review and explanation of the amendments contained in the Act, see House of Representatives Report of the Committee on the Judiciary, No. 112-10, available at http://www.gpo.gov/fdsys/pkg/CRPT-112hrpt10/pdf/CRPT-112hrpt10.pdf.
3 See generally 28 U.S.C. Sec. 1441, 1446, 1454
4 See generally 28 U.S.C. Sec. 1332
5 See, e.g., Getty Oil Corp. v. Ins. Co. of North America, 841 F.2d 1254 (5th Cir. 1988).
6 See, e.g., Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202 (11th Cir. 2008).
7 The removal statute now provides, in pertinent part: “Each defendant shall have 30 days after receipt by or service on that defendant of the initial pleading or summons . . . to file the notice of removal. If defendants are served at different times, and a later-served defendant files a notice of removal, any earlier-served defendant may consent to the removal even though that earlier-served defendant did not initiate or consent to removal.” 28 U.S.C. Sec. 1446(b)(2)(B)-(C). Note that the Act also codified the well-settled “rule of unanimity” requiring all defendants to consent to removal. See 28 U.S.C. Sec. 1446(b)(2)(A).
8 This provision of the removal statute now reads, in pertinent part: “the notice of removal may assert the amount in controversy if the initial p leading seeks (i) nonmonetary relief; or (ii) a money judgment, but the State practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded.” 28 U.S.C. Sec. 1446(c)(2)(A).
9 See 28 U.S.C. Sec. 1446(c)(3)(A). Note that the Act also codifies the rule (already adopted by a majority of courts) that the amount be shown by a preponderance of the evidence. 28 U.S.C. Sec. 1446(c)(3)(B).
10 For a review of the constitutional issues, see House of Representatives Report of the Committee on the Judiciary, No. 112-10 at p.12.
11 See 28 U.S.C. Sec. 1441(c)(2).
12 See generally 28 U.S.C. Sec. 1390-92, 1404
13 See Hoffman v. Blaski, 363 U.S. 335 (1960)
14 28 U.S.C. Sec. Sec. 1404(a).
15 For the underlying rule, see 28 U.S.C. Sec. 1391(b)(1).
16 See Black’s Law Dictionary (8th ed. 2004).
17 28 U.S.C. Sec. 1391(c)(1). Specifically, the Second, Ninth and Tenth Circuits had adopted the now-rejected minority view. See House of Representatives Report of the Committee on the Judiciary, No. 112-10 at p. 21.