Removal After the Clock Has Run: Ad Damnum, 'Other Paper,' and Fraudulent Joinder
Rosa, a citizen of Arizona, was injured when a delivery truck struck her car in Phoenix. On February 20 she sued in Arizona Superior Court naming two defendants: Delta Delivery, Inc., incorporated and headquartered in Nevada, which owned and operated the truck; and Local Leasing LLC, an Arizona company that financed the truck under a bare lease and had no role in hiring, training, or supervising the driver. The complaint demanded "damages in excess of $75,000, plus punitive damages." Delta was served on March 3. On April 2, Rosa served her Rule 26(a)(1) initial disclosures, which for the first time estimated her total damages at $310,000. On April 20, Delta filed a notice of removal in the U.S. District Court for the District of Arizona, asserting diversity and arguing that Local Leasing was fraudulently joined to defeat federal jurisdiction. Arizona law presumes that a finance lessor is not vicariously liable for a lessee's negligence absent negligent entrustment, and Rosa pleaded no facts about the driver's record. Rosa has moved to remand and, in the alternative, for leave to amend to add a negligent-entrustment count against Local Leasing.
1. Assume Local Leasing's presence does not defeat diversity. Is Delta's April 20 removal timely under 28 U.S.C. § 1446(b)? Explain how the March 3 service, the April 2 disclosures, and the April 20 filing interact.
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No. The removal is untimely.
Section 1446(b)(1) gives a defendant 30 days after receipt of the initial pleading to remove. Section 1446(b)(3) restarts that clock only when "the case stated by the initial pleading is not removable" and a later paper (an amended pleading, order, or "other paper") first reveals removability.
The critical question is when removability first became ascertainable. A complaint that demands a sum "in excess of $75,000" affirmatively pleads an amount above the jurisdictional threshold; a removing defendant cannot claim the amount was indeterminate. And the supposedly fraudulent joinder of Local Leasing is assessed from the face of the pleadings as they stood when the complaint was filed. If the joinder was indeed a sham, the case was removable on March 3, not April 2.
That makes the April 2 disclosures a red herring. The "other paper" trigger in § 1446(b)(3) does not apply when the initial pleading already disclosed a removable case; a later document that merely confirms or quantifies what the complaint already alleged does not start a fresh 30 days. Delta's clock expired on April 2 (30 days after March 3 service). The April 20 notice came 48 days after service.
The § 1446(c)(1) one-year limit is irrelevant because it caps, and does not extend, the 30-day window. Although the 30-day deadline is a statutory timing rule rather than a jurisdictional defect, a plaintiff who objects within 30 days of removal - as Rosa did - is entitled to remand under § 1447(c). Note also that Delta cannot cure the problem by re-removing; a second removal on the same ground is barred.
2. Assume for this question only that the removal was timely. Should the court find that Local Leasing was fraudulently joined, and what standard governs?
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Likely yes - the joinder is fraudulent - but the burden is a heavy one and the court must resolve all disputed fact questions in Rosa's favor.
Fraudulent joinder is not about the plaintiff's motive. It exists only when, on the facts pleaded and the law of the forum, there is no possibility that the plaintiff can establish a cause of action against the in-state defendant. The removing defendant bears the burden of proving that impossibility by clear and convincing evidence, and any doubt is resolved in favor of remand.
Here the only theory connecting Local Leasing to the accident is vicarious liability as the titled owner of the truck. Arizona law starts from a presumption that a finance lessor in the business of leasing vehicles is not liable for the lessee's negligent operation, and imposes liability only where the lessor negligently entrusted the vehicle - which requires facts about the driver's incompetence or record that the lessor knew or should have known. The complaint pleads none.
That said, the analysis is fact-sensitive. If the lease gave Local Leasing any right to select, train, or supervise the driver, or if the complaint had alleged a single fact suggesting a known risk, the "no possibility" standard would not be met and remand would follow. Because the pleadings contain nothing but the ownership relationship and the presumption is rebuttable only by entrustment facts, the court is likely to find the joinder a sham, sustain diversity, and deny remand on that ground.
3. If the court remands, may Delta appeal the remand order? And how should the court handle Rosa's motion to amend to add a negligent-entrustment count against Local Leasing?
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No appeal. Section 1447(d) bars appellate review of a remand order, and it applies even if the district court's remand was legally erroneous. The single statutory exception is a case removed under 28 U.S.C. § 1443 (civil rights removal), which is not this case. Delta's only route would be a petition for a writ of mandamus, which is granted only for a clear abuse of discretion and is practically unavailable here.
The amendment motion is governed by 28 U.S.C. § 1447(e), which addresses precisely this situation: after removal, a plaintiff seeks to join a party whose presence would destroy diversity. The court has discretion either to deny joinder and retain jurisdiction or to permit joinder and remand. Courts weigh the plaintiff's motive and the amendment's timing, whether the plaintiff was dilatory, whether the amendment is a transparent attempt to defeat federal jurisdiction, whether the new party is truly necessary, and prejudice to the defendant.
Two facts cut against Rosa. She waited until after removal to seek the amendment, and she had the entrustment theory available from the outset. Two facts cut for her. The amendment is not futile, since the entrustment count is the very theory that would have made Local Leasing a proper party, and she seeks it early in the litigation.
In practice, the untimeliness of the removal is the decisive point: because the case must be remanded anyway, the § 1447(e) question is largely academic, and the court should simply remand.