The U.S. Court of Appeals for the Ninth Circuit, addressing an issue of first impression in the circuit, has ruled in an insurance coverage case that receipt of an initial pleading by a statutorily designated agent for an out-of-state insurance company did not begin the 30-day removal clock under 28 U.S.C. § 1446(b)(1) but, instead, that it was the actual receipt by the insurer that started the removal clock.
The Case
After Patricia and Thomas Anderson were involved in a single-car accident, they sued State Farm Mutual Automobile Insurance Company in a Washington state court. Because State Farm was an out-of-state (or “foreign”) insurer, state law designated Washington's insurance commissioner as State Farm's statutory agent.
To serve legal process on State Farm, the Andersons served the commissioner on February 9, 2015. The commissioner forwarded the complaint to State Farm's designated recipient, and State Farm received the forwarded complaint four days later, on February 13.
On March 16, State Farm removed the case to federal court.
The parties agreed on how to count to 30 but they disagreed over when to begin counting. According to the Andersons, removal was untimely because the 30-day removal clock began on February 9, when the commissioner received the complaint.
State Farm contended that removal was timely as calculated from February 13, when the forwarded copy of the complaint reached State Farm's designated recipient.
The U.S. District Court for the Western District of Washington agreed with State Farm and denied the Andersons' motion to remand.
The dispute reached the Ninth Circuit.
The Law
Federal law provides that a 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.
28 U.S.C. § 1446(b)(1).
The Ninth Circuit's Decision
The circuit court affirmed.
In its decision, the Ninth Circuit cited the “bedrock principle” of law that an individual or entity named as a defendant is not obliged to engage in litigation unless notified of the action and brought under a court's authority by formal process.
In the circuit's court's opinion, that “bedrock principle” regarding the importance of actual notice confirmed that serving the commissioner did not provide the necessary notice to State Farm of the suit, which occurred “only when State Farm's designated recipient received the complaint.”
Accordingly, the Ninth Circuit held that the 30-day removal clock under 28 U.S.C. § 1446(b)(1) did not begin upon service on and receipt by a statutorily designated agent, and began in this case only when State Farm actually received the Andersons' complaint. State Farm's removal, therefore, was timely, the circuit court concluded.
The case is Anderson v. State Farm Mutual Auto. Ins. Co., No. 15-35981 (9th Cir. March 8, 2019). Attorneys involved include: Mark D. Herman (argued), Covington & Burling LLP, Washington, D.C., for Plaintiffs-Appellants. Gregory Scott Worden (argued) and Donna M. Chamberlin, Lewis Brisbois Bisgaard & Smith LLP, Seattle, Washington, for Defendant-Appellee.
Insurance Coverage Law Center Comment
The U.S. Court of Appeals for the Fourth Circuit has reached the same conclusion, holding that receipt of an initial pleading by a statutorily designated agent does not begin the 30-day removal clock under 28 U.S.C. § 1446(b)(1). See Elliott v. American States Ins. Co., 883 F.3d 384, 394 (4th Cir. 2018).
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].