Post-Removal Complaint Amendments Can Divest Federal Court Jurisdiction

 
January 16, 2025

Key Takeaways

  • The U.S. Supreme Court unanimously upheld plaintiffs’ ability to divest federal courts of jurisdiction through post-removal amendments to their complaints, overturning the prevailing appellate consensus.
  • The decision in Royal Canin U.S.A., Inc. v. Wullschleger establishes that an amended complaint controls for jurisdictional purposes, requiring remand to state court if federal claims are removed.
  • The bright-line ruling may invite plaintiffs to manufacture a basis for remand retroactively by manipulating their claims even months or years into a litigation, increasing the cost of litigation and draining judicial resources.
  • Defendants should be prepared to police against these tactics and mitigate against disguised forum shopping by creating a sound record and opposing leave to amend the complaint on the grounds of undue delay, bad faith, dilatory intent, and/or prejudice to defendants.

In a decision yesterday, the U.S. Supreme Court unanimously upheld plaintiffs’ ability to divest federal courts of jurisdiction through post-removal amendments to their complaints. While the Supreme Court’s decision affirmed the Eighth Circuit’s ruling below, it effectively overturns the prevailing appellate consensus. Previously, every other circuit court to rule on this issue held that district courts may retain jurisdiction over cases removed on the basis of federal question jurisdiction, even if the complaint is subsequently amended to remove the federal claims or the federal claims are otherwise dismissed.1

Yesterday’s decision in Royal Canin U.S.A., Inc. v. Wullschleger involved a dispute over prescription pet food products which was removed to federal court on the basis of federal question jurisdiction due to references to the federal Food, Drug and Cosmetic Act (“FDCA”). Plaintiffs subsequently amended the complaint to remove references to the FDCA and requested remand. Justice Kagan, writing for a unanimous court, affirmed the Eighth Circuit’s ruling, holding that an amended complaint controls for jurisdictional purposes, regardless of how the case arrived in federal court. Thus, “a post-removal amendment excising all federal claims destroys federal jurisdiction.” Royal Canin U.S.A., Inc. v. Wullschleger, No. 23-677, 604 U.S. __, slip op. at *15 (Jan. 15, 2025). In other words, if the basis for federal jurisdiction is excised by an amendment to the complaint following removal, the case must be remanded to state court because the federal court lacks jurisdiction over the remaining state-law claims.

The decision focuses on the statutory language of 28 U.S.C. § 1367(a), which permits federal courts with original jurisdiction over at least one claim (i.e., a federal-law claim) to exercise supplemental jurisdiction over related state-law claims. Under § 1367(c), the decision to exercise supplemental jurisdiction is in the discretion of the district court, and it “may decline to exercise supplemental jurisdiction” in certain enumerated circumstances. 28 U.S.C. § 1367(c). And while § 1367(c)’s enumerated circumstances includes when “the district court has dismissed” the federal claims, it does not reference plaintiffs’ unilateral dismissal of those claims through amendment or otherwise. Reading the provisions together, the Court in Royal Canin reasoned that, “[i]f § 1367(a)’s grant included the leftover state claims in an amended complaint, they too would have appeared on § 1367(c)’s list[.]” Id. at *9.

As previewed in Dechert’s Re:Torts following the oral arguments in Royal Canin, in addition to this statutory language, the parties focused on the import of a footnote in the Supreme Court’s decision in Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007). In Rockwell, the Court held that jurisdiction is divested when a case is originally filed in federal court, but the complaint is subsequently amended to remove federal claims because “courts look to the amended complaint to determine jurisdiction.” Id. at 473–474. However, a footnote in Rockwell’s majority opinion (drafted by Justice Scalia) commented that plaintiffs could not similarly “defeat jurisdiction” in removed cases because of the “forum-manipulation concerns” raised by such post-removal amendments. Id. at 474, n.6.

Defendants in Royal Canin sought to capitalize on the distinction raised in Justice Scalia’s footnote to avoid remand. The Court found this argument unpersuasive:

"Nothing in §1367’s text ... distinguishes between cases removed to federal court and cases originally filed there. Whatever that text says about removed cases, it also says about original ones, and vice versa. That means if (as Royal Canin urges) § 1367(a)’s language prevents an amendment from ousting supplemental jurisdiction in removed cases, then so too it does in original ones. But here is the rub: In original cases, this Court has already reached the opposite conclusion [in Rockwell]."

Royal Canin U.S.A., Inc. v. Wullschleger, No. 23-677, 604 U.S. __, slip op. at *8 (Jan. 15, 2025) (internal citations omitted). The Court went on to describe the relevant Rockwell footnote as “dictum,” “outside the issue being decided” in Rockwell, and “besides the point.” Id. at *18. Further, the Court dismissed as “marginal” the “forum-manipulation concerns” raised in the Rockwell footnote, noting that “plaintiffs can usually forum shop without any resort to amendments.” Id. at *18, n.9. Thus, as predicted, the Court’s decision in Royal Canin turned on their determination that the Rockwell footnote was not precedential, and ultimately unpersuasive.

At bottom, the Royal Canin decision invites plaintiffs to manufacture a basis for remand retroactively by manipulating their claims. Because the Court’s holding establishes a bright line rule, regardless of when a complaint is amended, it is possible that a plaintiff could amend their pleadings months or even years into a litigation. Critically, this would enable plaintiffs to avoid courts or judges by amending and seeking remand after they issue unfavorable rulings. As a result, cases could essentially be forced to start from square one in state court, increasing both the length and cost of litigation, wasting federal courts’ resources, and worsening the strain on state courts. Defendants should be prepared to police against these tactics and mitigate against disguised forum shopping by creating a sound record and opposing leave to amend the complaint on the grounds of undue delay, bad faith, dilatory intent, and/or prejudice to defendants.

To see previous articles on this topic see here and here.

 


Footnotes

[1] See, e.g.Collura v. City of Philadelphia, 590 F. App’x 180, 184 (3d Cir. 2014); Smith v. Wynfield Dev. Co., 238 F. App’x 451, 455 (11th Cir. 2007); Sparta Surgical Corp. v. Nat’l Ass’n of Sec. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998); Savage v. W. Va. Dep’t of Health & Human Res., 523 F. App’x 249, 250 (4th Cir. 2013); Grispino v. New Eng. Mut. Life Ins. Co., 358 F.3d 16, 19 (1st Cir. 2004); Harper v. AutoAlliance Int’l, Inc., 392 F.3d 195, 210–11 (6th Cir. 2004).

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