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Strict Construction and the Right of Removal

In Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941), the Supreme Court ruled that the federal removal statute then in effect did not permit a plaintiff, whose original complaint the federal court was without jurisdiction to hear, to remove a counterclaim that the federal court would have otherwise been entitled to hear if the defendant had filed suit in the first instance.  In reaching this conclusion, the Supreme Court surveyed the history of the removal statute. It explained that the original removal statute of 1789 did not permit such removals; that they were allowed between 1875 and 1887; but that the statute in its then current form no longer expressly allowed a “plaintiff” to remove.  313 U.S. at 105-07.

The Court could have based its ruling on the plain language of the removal statute which permitted a defendant but not a plaintiff to remove a suit to federal court.  Instead, the Court went on to write that the changes made to the removal statute in 1887, which took away a plaintiff’s right of removal, evidenced Congress’ intent to “narrow the federal jurisdiction on removal by reviving in substance the provisions of § 12 of the Judiciary Act of 1789 . . . .”  313 U.S. at 107.  But the Court did not end there. The Court noted that “not only does the language of the Act of 1887 evidence the Congressional purpose to restrict the jurisdiction of the federal courts on removal, but the policy of the successive acts of Congress regulating the jurisdiction of federal courts is one calling for the strict construction of such legislation.”  313 U.S. at 108.

Although this last statement about “strict construction” of the removal statutes was not necessary to the Supreme Court’s ruling, the lower federal courts have since used it repeatedly as a lever, indeed as a blunt instrument, “to tilt the litigation playing field in favor of plaintiffs,” citing “Shamrock Oil for the proposition that a plaintiff’s right to select a forum is more important than a defendant’s right to removal [and] that all doubts must be resolved in favor of remand.”[1]  The foregoing statement was written in 2004, and the practice of “strict” construction of the removal statutes by federal appellate and trial courts continues virtually unabated [2] with its application having an outcome determinative affect that virtually always results in remand.[3]

The doctrine of fraudulent joinder is a judicial exception to the requirement of complete diversity that the Supreme Court developed to protect a non-resident defendant’s federal constitutional right of removal.[4]  Unfortunately Shamrock Oil’s strict construction principle, which applied to the removal statute rather than the diversity statute, has been extended and even used as a basis for precluding what otherwise admittedly constitutes the fraudulent joinder of a party. See Morris v. Nuzzo, 718 F.3d 660, 670 (7th Cir. 2013) (“Despite the logical inconsistency, we are reluctant to expand the fraudulent joinder doctrine absent a better understanding of the need to do so. Such a move would be in tension with long-established precedent that the removal statutes are to be strictly construed to preserve the limited jurisdiction of federal courts.”).  With respect, the application of Shamrock Oil’s strict construction principle in this latter context is not only logically but analytically inappropriate.

Strict construction has been superseded by statute.  

Shamrock Oil’s strict construction principle – a rule of statutory interpretation – has since been superseded by Congressional changes to the federal removal statute made in 1948,[5] and it no longer applies to the removal statutes.  In Breuer v. Jim’s Concrete of Brevard, Inc., 538 U.S. 691 (2003), the plaintiff argued that the defendant’s removal was improper because only the state court had jurisdiction over the subject matter of the lawsuit and, applying Shamrock Oil’s strict construction principle to the defendant’s removal, the district court was required to remand the suit to state court.  In  rejecting the plaintiff’s argument, the Supreme Court wrote:

Breuer relies heavily on our statement in Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 85 L. Ed. 1214, 61 S. Ct. 868 (1941), that “the policy of the successive acts of Congress regulating the jurisdiction of federal courts is one calling for the strict construction of [removal legislation] . . . .” Id., at 108-109 . . . . But whatever apparent force this argument might have claimed when Shamrock was handed down has been qualified by later statutory development. At the time that case was decided, § 1441 provided simply that any action within original federal subject-matter jurisdiction could be removed. Fourteen years later, however, it was amended into its present form, requiring any exception to the general removability rule to be express. See Act of June 25, 1948, § 1441(a), 62 Stat. 937 (authorizing removal over civil suits within the district courts’ original jurisdiction “[e]xcept as otherwise expressly provided by Act of Congress”); see also 28 U.S.C. § 1441 (historical and revision notes).  Since 1948, therefore, there has been no question that whenever the subject matter of an action qualifies it for removal, the burden is on a plaintiff to find an express exception. As Shamrock itself said, “the language of the Act . . . evidence[s] the Congressional purpose,” 313 U.S. at 108, . . . and congressional insistence on express exception is hardly satisfied by the malleability of the term “maintain” in the text Breuer relies upon.

Breuer v. Jim’s Concrete of Brevard, Inc., 538 U.S. 691, 697-98 (2003).  Since Breuer, the strict construction principle of Shamrock Oil & Gas has not been cited in any Supreme Court removal decision,[6] although, as shown above, Shamrock Oil & Gas has repeatedly been cited by federal circuit and district courts.

Strict construction begs the question and is of little help.

Even before Breuer, Shamrock Oil & Gas’s principle of strict construction had fallen in disfavor with the Supreme Court with it being cited as frequently in dissents as the Court’s majority opinions.[7]  Pronouncements that statutes are to be strictly construed (or for that matter liberally construed) rarely further or contribute to the textual analysis of a statute.   Some commentators and jurists go so far as to argue that the principle of strict construction is based on a “false notion:” a fair and reasonable construction of the language of the statue is the proper judicial canon of construction to apply.[8]   But as we have already seen, the federal appellate courts and even some of the federal court treatises have yet to catch up with the Supreme Court’s pronouncement in Breuer that Shamrock Oil’s principle of strict construction has been superseded by subsequent changes to the removal statute.  Whatever affect Breuer may have on which party has the burden of proof when a case is removed to federal court, it is plain that post-Breuer, Shamrock Oil’s strict construction principle does not apply to cases involving fraudulent joinder of non-diverse plaintiffs or non-diverse defendants.

John C. Henegan


[1] Scott R. Haiber, Removing the Bias Against Removal, 53 Cath. U.L. Rev. 609, 631-32 (2004) (Footnotes omitted.).

[2] See Hartford Fire Ins. Co. v. Harleyville Mut. Ins. Co., 736 F.3d 255, 259 (4th Cir. 2013) (federal court has an obligation “to construe removal jurisdiction strictly because of the significant federalism concerns implicated”); Morris v. Nuzzo, 718 F.3d 660, 670 (7th Cir. 2013) (“Despite the logical inconsistency, we are reluctant to expand the fraudulent joinder doctrine absent a better understanding of the need to do so. Such a move would be in tension with long-established precedent that the removal statutes are to be strictly construed to preserve the limited jurisdiction of federal courts.”); In re Crystal Power Co., 641 F.3d 78, 80 & n.6 (5th Cir. 2011) (“We strictly construe removal statutes because removing an action    that was duly filed in state court raises significant federalism concerns.”); Geographic Expeditions, Inc.  v. Estate of Lhotka, 599 F.3d 1102, 1107 (9th Cir. 2010) (“For these reasons, ‘[w]e strictly construe the removal statute against removal jurisdiction.’”); Miedema v. Maytag Corp., 450 F.3d 1322, 1328-29   (11th Cir. 2006) (“The rule of construing removal statutes strictly and resolving doubts in favor of  remand, however, is well-established.”); Palkow v. CSX Transp., Inc., 431 F.3d 543, 555 (6th Cir. 2005) (“the removal statutes are to be narrowly construed”); cf. Conrad v. Phone Directories Co., 585 F.3d 1376, 1382 (10th Cir. 2009) (applying Shamrock Oil’s strict construction principle to federal jurisdiction statute).  Federal district court decisions that apply Shamrock Oil for this proposition to the current removal statutes are far greater in number.

[3] But see Delalla v. Hanover Ins., 660 F.3d 180, 188-89 (3d Cir. 2011) (refusing to follow those circuits that applied Shamrock Oil strict construction principle when adopting the first-served defendant rule, explaining  that “[w]hile it is certainly true that removal statutes generally should be construed strictly, the Supreme Court has declined to adopt the strictest construction of a removal statute where the language of the statute and congressional intent point toward a more lenient interpretation. Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 347, 119 S. Ct. 1322, 143 L. Ed. 2d 448 (1999).”)

[4] See James M. Underwood, From Proxy to Principle:  Fraudulent Joinder Reconsidered, 69 Albany L. Rev. 1013 (2006).

[5] See Act of June 25, 1948, § 1441(a), 62 Stat. 937.

[6] See Lincoln Prop. Co. v. Roche, 546 U.S. 81 (2005); Standard Fire Ins. Co. v. Knowles, 133 S. Ct. 1345 (2013); Mississippi ex rel. Hood v. Au Optronics Corp., 134 S. Ct. 736 (2014).

[7] See Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 18 (2003) (Scalia, J., dissenting); Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 357 (1999) (Rehnquist, C.J., dissenting).

[8] See Antonin Scalia and Bryan A. Garner, Reading Law:  The Interpretation of Legal Texts, § 62 (2012).