City of Albuquerque v. Soto Enterprises, Inc.
2017 U.S. App. LEXIS 13395
| 10th Cir. | 2017Background
- The City of Albuquerque sued Soto Enterprises (a Texas corp.) in New Mexico state court for alleged shortages in bus-fare deposits, seeking ~$246,000.
- Before service, Soto filed three state-court filings on the same day: a partial motion to dismiss (2:18 p.m.), an answer (2:23 p.m.), and, ~1 hour 20 minutes later, a notice of removal to federal court under diversity jurisdiction (3:38 p.m.).
- The City moved in federal court to remand, arguing Soto waived removal by participating in state-court proceedings (filing the motion to dismiss).
- The district court granted remand, concluding Soto waived removal by filing the motion to dismiss; Soto appealed.
- The Tenth Circuit first addressed whether it had appellate jurisdiction over the remand order given 28 U.S.C. § 1447(d) and (c), then reached the merits and affirmed the remand.
Issues
| Issue | Plaintiff's Argument (City) | Defendant's Argument (Soto) | Held |
|---|---|---|---|
| 1. Do we have appellate jurisdiction to review the remand under 28 U.S.C. § 1447(d)? | Remand is review-barred by § 1447(d). | § 1447(d) does not bar review because remand was not based on § 1447(c) grounds. | Court has jurisdiction: remand was based on waiver-by-participation, outside § 1447(c) statutory grounds. |
| 2. Is waiver by participation a challenge to subject-matter jurisdiction? | Waiver shows removal was improper, so it colorably indicates lack of jurisdiction. | Waiver is a procedural/common-law rule, not jurisdictional. | Waiver by participation is non-jurisdictional; it does not implicate subject-matter jurisdiction. |
| 3. Does the phrase “any defect” in § 1447(c) include common-law waiver by participation? | "Any defect" should encompass waiver because both prevent improper removal. | "Any defect" is limited to statutory failures to comply with removal requirements; waiver is a judge-made doctrine outside that scope. | "Any defect" is limited to failures to comply with statutory removal requirements; waiver by participation falls outside § 1447(c). |
| 4. Did Soto waive its removal right by filing a motion to dismiss in state court before removing? | The City: filing the motion to dismiss amounted to clear and unequivocal participation, waiving removal. | Soto: its filings were timely and allowed by procedure (Fed. R. Civ. P. 81(c); N.M. rule), and it removed quickly—no waiver. | Court: filing a motion to dismiss seeking disposition on the merits before removal manifests clear and unequivocal waiver; Soto waived removal. Exception: no waiver if state procedural rules compelled participation. |
Key Cases Cited
- Kontrick v. Ryan, 540 U.S. 443 (procedural rules do not create or withdraw federal jurisdiction)
- Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635 (district court may decline to exercise supplemental jurisdiction while still having jurisdiction)
- Rothner v. City of Chicago, 879 F.2d 1402 (7th Cir.) (waiver-by-participation is a common-law, nonjurisdictional doctrine)
- Snapper, Inc. v. Redan, 171 F.3d 1249 (11th Cir.) (statutory history supports limiting "any defect" to statutory removal requirements)
- Cogdell v. Wyeth, 366 F.3d 1245 (11th Cir.) (removal-compliance issues distinct from subject-matter jurisdiction)
- In re Weaver, 610 F.2d 335 (5th Cir.) (contrasting view treating waiver-by-participation as showing lack of jurisdiction)
- Tedford v. Warner-Lambert Co., 327 F.3d 423 (5th Cir.) (standard that waiver must be clear and unequivocal)
- Yusefzadeh v. Nelson, Mullins, Riley & Scarborough, LLP, 365 F.3d 1244 (11th Cir.) (state procedural deadlines can create a "quandary" driving the waiver inquiry)