Removal, LLC Citizenship, and the Fraudulent-Joinder Escape Hatch
Marisa, a Maryland citizen, is injured when a display shelf collapses at a trade show in Baltimore. She sues in the Circuit Court for Baltimore City, naming Cascade Displays, LLC - a Delaware LLC whose sole member is a Virginia citizen and whose principal place of business is Ohio - and Devin, the Maryland-based sales representative who assembled the shelf and who is a Maryland citizen. She pleads negligence and seeks $150,000. On March 3 she serves Devin. She never serves Cascade. On March 20, Cascade files a notice of removal to the U.S. District Court for the District of Maryland asserting diversity jurisdiction; Cascade is registered to do business in Maryland and maintains a registered agent there. On April 2, Marisa moves to remand. Cascade responds that Devin's joinder was fraudulent because Devin was merely 'following Cascade's written assembly instructions,' and that removal was timely because Cascade itself has never been served.
1. At the moment of removal, did the federal court have subject-matter jurisdiction? Explain how each party's citizenship is determined and evaluate the fraudulent-joinder argument.
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No. Diversity jurisdiction requires complete diversity between all plaintiffs and all defendants, and an LLC takes the citizenship of every member - not its state of organization and not its state of registration. Cascade is therefore a citizen of Virginia (its member) and Ohio (its principal place of business); Marisa and Devin are both Maryland citizens, so the parties are not completely diverse on the face of the pleadings.
Cascade's fallback is fraudulent joinder, but the standard is demanding: the removing defendant must show there is no possibility of recovery against the in-state defendant under state law, not merely that the claim is weak, unlikely, or ultimately unsuccessful. Devin physically assembled the shelf that injured Marisa, which supports a colorable negligence claim against him personally, so his citizenship counts and diversity fails. Because the defect is jurisdictional, the court must remand under 28 U.S.C. §1447(c), and the thirty-day removal clock is irrelevant to that analysis - a challenge to subject-matter jurisdiction is never waived by the plaintiff's delay.
2. Assume the court instead concluded that Devin's citizenship must be disregarded. Evaluate removal on procedural grounds: the thirty-day clock, the forum-defendant rule, and the effect of Cascade's never having been served.
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Removal would likely be timely. Under 28 U.S.C. §1446(b), the thirty-day clock runs from service on the removing defendant, not from service on a co-defendant. Because Cascade was never served, its clock had not started, so a notice filed before service - the so-called snap removal - is proper in courts that follow the statutory text.
The forum-defendant rule, §1441(b)(2), bars diversity removal by 'a defendant who is a citizen of the forum state.' Cascade is a citizen of Virginia and Ohio. Registering to do business in Maryland and appointing a registered agent do not make an LLC a Maryland citizen for diversity purposes. Devin is a Maryland citizen, but the text of §1441(b)(2) speaks of the removing defendant, and the majority view looks only to that defendant, although some courts remand whenever any properly joined and served forum defendant is present. If the court remands for a procedural defect, that order is likewise unreviewable under §1447(d). The practical lesson is that the fatal flaw here is Devin's citizenship, not the mechanics of removal.