Decided: March 21, 2016
The Fourth Circuit reversed the district court’s ruling and remanded the case for further proceedings.
In March 2014, Jane Doe #1, through her next friends and guardians Ben and Kelly Houndersheldt, filed a complaint against Matt Blair (“Blair”) and Res-Care, Inc. (“Res-Care”). In July 2014, Res-Care removed the case to federal court, asserting subject matter jurisdiction based on diversity of citizenship. In the removal notice, Res-Care asserted that Jane Doe #1 was a Virginia resident, Blair was a West Virginia resident and that it was incorporated in Kentucky. The notice did not allege, however, the state in which Res-Care had its principal place of business. In January 2015, the district court sua sponte remanded the case to state court on the basis that diversity jurisdiction was lacking due to the absence of some assertion as to Res-Care’s principal place of business. Blair then, joined with Res-Care, filed a motion under Federal Rules of Civil Procedure 59(e) and 60 to alter or amend and for reconsideration. Blair noted that no party challenged the court’s jurisdiction and that the parties determined that Res-Care’s principal place of business was Louisville, Kentucky. Plaintiffs did not oppose this motion. The district court denied the motion and Res-Care and Blair timely appealed to the Fourth Circuit.
The Fourth Circuit began by determining whether it has jurisdiction to review the district court’s remand order. The Court determined that a sua sponte remand order for lack of subject matter jurisdiction may be issued at any time and is not reviewable under Title 28 U.S.C. §1447(d). The Court also determined that a remand order based on a defect other than lack of subject matter jurisdiction must be effected by granting a timely filed motion. Furthermore, the Court determined if such an order is entered without a motion, it does not bar review. Therefore, the Court determined that its jurisdiction to review the remand order depended on whether the order was based on lack of subject matter jurisdiction or a procedural defect. The court then reasoned, based on decisions from three other circuits, that failure to establish a party’s citizenship at the time of removal was a procedural defect, not a jurisdictional defect. By examining the substantive reasoning behind the order, the Court determined that the district court’s order was based on a procedural defect. Therefore, the Court reasoned that the district court’s order fell outside the scope of Title 28 U.S.C. §1447(c) and thus could be reviewed. Furthermore, the Court reasoned that because the district court’s order fell outside the scope of §1447(c), the district court lacked the authority to order remand. Due to the district court’s lack of statutory authority, the Fourth Circuit reversed the district court’s remand order and remanded this case to district court for further proceedings. Additionally, the Court granted Res-Care’s motion to amend its removal notice pursuant to 28 U.S.C §1653.
Accordingly, the Court reversed the judgment of the district court and remanded the case for further proceedings.
Michael W. Rabb