The English novelist George Eliot wrote that "it's but little good you'll do watering last year's crops." And, by reason of 28 U.S.C. § 1446(c)(1), which establishes a one-year outer time limit on removal of diversity cases, it's but little good you'll do removing last year's cases. Unless ... .

Historically, most courts have been astonishingly single-minded in enforcing the statutory one-year limitation. This, in turn, has encouraged creative subterfuges by plaintiffs' counsel who are determined to keep their cases in state courts. First and foremost among these is to sue a non-target defendant who shares the plaintiff's citizenship, only to nonsuit or settle cheaply with that defendant after a year has gone by. The truck driver, the innocent retailer, the local affiliate of a national company or organization – all have been potential candidates for this approach. Only where the defendant can meet the exacting standards for showing fraudulent joinder – no possibility of recovery against the non-diverse defendant as a matter of law – has this strategy been overcome.

Manipulation of jurisdictional amounts has been another favored approach. In Texas, for example, where pleadings can be freely amended, it has been easy to plead a low ad damnum, or none at all, and then to amend after the one-year deadline. This, in turn, has led to gamesmanship, as defendants try to determine the real damage claims through discovery before the year runs, and plaintiffs try to stall that effort. And there has been no need to put any lipstick on this particular pig: the author has unsuccessfully tried to defend removal in a Tennessee case where, after a pleading alleging damages of only $10,000 [then, the applicable federal jurisdictional amount] had been on file for ten years, the plaintiff filed an amended pleading saying, in effect, "Did we say ten thousand? We meant to say five million!" A few courts have recognized a "manipulation exception" to the one-year limit, but precious few.

As of January 6, 2012, however, all that has changed. Effective for cases filed in state court on or after that date, there is now an exception to the one-year rule where the district court finds that the plaintiff "has acted in bad faith in order to prevent a defendant from removing the action." A deliberate failure to disclose the actual amount in controversy to prevent removal is deemed to have been in bad faith. Thus the manipulation exception has to some degree been codified.

The statute is silent on what constitutes bad faith (except for the deliberate non-disclosure provision) and on how it can be discovered or proven. The most direct evidence of bad faith would necessarily come in most cases from plaintiff's counsel. In these circumstances, can a defendant meet the standard for discovery of work product under Fed. R. Civ. P. 26(b)(3)(A)? Can a lawyer-expert opine that cases such as the one at hand typically involve amounts in controversy far in excess of the limit, or that the timing of the dropping of the non-diverse defendant indicates bad faith? Are there cases (the 500-fold damage increase after ten years comes to mind) where the circumstances themselves support a finding of bad faith? Lawyers should turn on their word processors and polish their oratorical skills as these questions begin to be posed to and answered by the courts.

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