Third-Party Counterclaim Defendants’ Removal Bid Foiled

“Perhaps some might think removal is not the most riveting topic,” begins Judge Robin Rosenbaum’s opinion for the court in Bowling v. U.S. Bank National Association, 2020 WL 3424928 (11th Cir. June 23, 2020). (Not so with our readers, most of whom relish a good removal.) The removal issue in Bowling stemmed from the Supreme Court’s decision in Home Depot U.S.A., Inc. v. Jackson, 139 S. Ct. 1743 (2019), which held that third-party counterclaim defendants, i.e., defendants joined as additional parties to a counterclaim filed by the original defendant, were not “defendants” who could exercise removal rights under 28 U.S.C. § 1441(a). In Bowling, the court concluded that Home Depot had the effect of abrogating a long-standing precedent within the Eleventh Circuit, Carl Heck Engineers, Inc. v. Lafourche Parish Police Jury, 622 F.2d 133 (5th Cir. 1980). That case permitted a true third-party defendant to remove a case under a different subsection statute, section 1441(c), so long as the third-party claim would be removable had it been brought separately. The Eleventh Circuit concluded that it was impossible to read the statute as a whole and conclude that the same term—“defendants”—had different meanings in the two subsections, (a) and (c). The court pointed out that this interpretation was reinforced by changes in the text of subsection (c) made after Carl Heck was decided, specifically a change authorizing a “civil action” to be removed in certain federal question cases instead of “claims or causes of action.”

The result was a victory for the plaintiffs, whose remand motion had not only been denied but who also had suffered summary judgment in the district court.

Posted by Tom Byrne.

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