983 F.3d 1049
8th Cir.2020Background
- Holbein, an at-will general manager at TAW Enterprises in Nebraska, alleges he was demoted (and later constructively discharged) after internally reporting theft of customers’ financial data and noncompliance with provisions of the Gramm‑Leach‑Bliley Act.
- Holbein sued in Nebraska state court (2018) asserting a claim under the Act (retaliation/constructive discharge) and breach of contract; TAW removed to federal court asserting federal‑question jurisdiction and moved to dismiss.
- The district court dismissed Holbein’s federal‑law claim with prejudice for failure to state a claim; Holbein appealed only the dismissal of that claim and later questioned jurisdiction at oral argument.
- A panel vacated and remanded, holding the removal violated the forum‑defendant rule (28 U.S.C. § 1441(b)(2)) which the Eighth Circuit had treated as a nonwaivable jurisdictional defect, so the district court lacked subject‑matter jurisdiction.
- On rehearing en banc the court overruled Hurt and Horton to hold the forum‑defendant rule is a nonjurisdictional, waivable removal defect under 28 U.S.C. § 1447(c); Holbein waived the defect by not timely moving to remand, so the en banc court reached the merits.
- Applying Nebraska law, the court affirmed dismissal: Holbein’s internal reporting was “praiseworthy” but did not implicate a "very clear mandate of public policy" that would protect him from demotion/discharge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether violation of the forum‑defendant rule (28 U.S.C. § 1441(b)(2)) is a jurisdictional, nonwaivable defect | Holbein: The forum‑defendant rule is jurisdictional; removal in violation means no subject‑matter jurisdiction and remand can be raised at any time | TAW: The rule is a nonjurisdictional, statutory limitation on the right to remove and is waivable if not raised within § 1447(c)’s 30‑day period | The en banc court held the forum‑defendant rule is nonjurisdictional and was waived because Holbein did not timely move to remand under § 1447(c) |
| Whether Grubbs/Baggs line requires trial or final judgment before waiver applies | Holbein: Waiver of nonjurisdictional removal defects occurs only after the case is "tried on the merits"; no trial here so no waiver | TAW: § 1447(c) requires the plaintiff to move to remand within 30 days, waiver does not require a trial or final judgment | Held: Waiver is governed by § 1447(c)’s 30‑day rule; a trial is not required for waiver to occur |
| Whether Holbein stated a claim under Nebraska public‑policy wrongful demotion/discharge doctrine | Holbein: Internal reporting of GLBA noncompliance and a colleague’s criminal conduct embodies a public policy and protected whistleblowing | TAW: Nebraska law limits the public‑policy exception to "very clear" mandates (often statutory or externally reported obligations); internal, voluntary reporting is not protected | Held: Under Nebraska law (and its precedents), internal voluntary reporting here is "merely praiseworthy conduct" and not a basis to extend the public‑policy exception; dismissal affirmed |
Key Cases Cited
- Hurt v. Dow Chem. Co., 963 F.2d 1142 (8th Cir. 1992) (prior Eighth Circuit treating forum‑defendant rule as jurisdictional; overruled in part)
- Horton v. Conklin, 431 F.3d 602 (8th Cir. 2005) (reaffirming Hurt; overruled in part)
- Baggs v. Martin, 179 U.S. 206 (1900) (Supreme Court holding unauthorized removal does not defeat district court subject‑matter jurisdiction when the court would have had original jurisdiction)
- Grubbs v. Gen. Elec. Credit Corp., 405 U.S. 699 (1972) (failing to timely object to nonjurisdictional removal defects waives the objection; focus on whether district court would have had original jurisdiction)
- Am. Fire & Cas. Co. v. Finn, 341 U.S. 6 (1951) (discussing removal and holding absence of a removal right does not necessarily deprive the district court of jurisdiction)
- Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428 (2011) (statutory text and context control whether a rule is jurisdictional)
- Arbaugh v. Y & H Corp., 546 U.S. 500 (2006) (distinguishing jurisdictional rules from elements of a claim and cautioning against offhand jurisdictional rulings)
- Lively v. Wild Oats Mkts., Inc., 456 F.3d 933 (9th Cir. 2006) (forum‑defendant rule is nonjurisdictional)
- In re Shell Oil Co., 932 F.2d 1518 (5th Cir. 1991) (characterizing § 1441(b) violations as nonjurisdictional)
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996) (unauthorized removal does not automatically require vacatur/remand if district court had jurisdiction)