In many non-compete and trade secret cases, a defendant may, for a variety of reasons, prefer to be in federal court over state court. For example, the former employer may bring suit in the state court within its home state, notwithstanding that the employee-defendant resides in a different state. The employee-defendant may in that situation prefer to remove the case to federal court, to avoid the risk of getting “home-cooked” in state court.
One consideration is when the notice of removal must be filed. 28 U.S.C. section 1446(b)(1) provides that notice of removal must be filed within “30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading . . .” In today’s electronic world, where pleadings are often sent before service by e-mail, it is necessary to understand exactly when the 30 day period begins to run.
Given the language of 30 days after “receipt . . . through service or otherwise”, the federal circuit courts were split on whether the 30 day removal period started upon the receipt of a copy of a complaint before formal service. The U.S. Supreme Court resolved the circuit split in Murphy Bros. v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999).
In Murphy Bros., a Canadian company, was sued in Alabama state court by an Illinois corporation, for breach of contract and fraud. The Illinois corporation filed suit and sent a courtesy copy of the complaint to the defendant without serving it. Service was subsequently perfected and the defendant removed the action based on diversity jurisdiction on the 30th day after service, but 44 days after receipt of the courtesy copy. The Eleventh Circuit held that removal was untimely, relying on the “plain meaning” of the removal statute to mean “putting the defendant in possession of the complaint.” Michetti Pipe Stringing, Inc. v. Murphy Bros., 125 F.3d 1396, 1398 (11th Cir. 1997).
The U.S. Supreme Court reversed the Eleventh Circuit’s decision, holding that regardless of any other issue, the 30 day removal period cannot be triggered for a complaint removable on its face until the defendant has been served with legal process. Murphy Bros., 526 U.S. at 347 (1999). The Supreme Court reasoned that service of process “is fundamental to any procedural imposition on a named defendant.” Further, the Supreme Court noted that Congress intended the removal provision to give “adequate time” to decide whether to remove after receipt of plaintiff’s complaint.
The Supreme Court summarized the possibilities as follows:
- If the summons and complaint are served together, the 30 day period for removal runs at once.
- If the defendant is served with the summons but the complaint is provided sometime after, the removal period runs from the defendant’s receipt of the complaint.
- If the defendant is served with the summons and the complaint is filed in court, but under local rules, service of the complaint is not required, the removal period runs from the date the complaint is made available through filing.
- If the complaint is filed in court prior to service, the removal period runs from the service of the summons.
Georgia federal courts have since applied the holding in Murphy Bros. in various circumstances. See, e.g., Haynes v. BAC Home Loan Servicing, LP, No. 116CV00428TWTAJB, 2016 WL 4231707, at *8 (N.D. Ga. July 14, 2016) (finding that a mailed copy of an order for service by publication on a quiet title action did not trigger 30 day removal period until the date of actual receipt of the order by the defendant); Hunt v. Nationstar Mortg. LLC, No. 1:14-CV-3649-RWS, 2016 WL 1567193, at *3 (N.D. Ga. Apr. 19, 2016) (holding that the 30 day removal period never began where the plaintiff failed to properly serve the defendants at all); Nichols v. Nationstar Mortg., No. 4:14-CV-0240-HLM-WEJ, 2014 WL 12481344, at *3 (N.D. Ga. Dec. 1, 2014) (finding that defendants are entitled to remove a case at any time before formal service); Brown v. Macon-Bibb Cty. Planning & Zoning Comm’n, No. CIVA 507-CV-00161-HL, 2007 WL 2212659, at *1 (M.D. Ga. July 30, 2007) (finding 30 day period began to run upon the defendant’s execution of a waiver of service, not upon receipt of the request for waiver of service).
It is important that non-compete and trade secret practitioners be familiar with the rules governing removal. The threshold question when a case is removable is when the notice of removal must be filed. Murphy Bros. should be the starting point for this analysis.