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United States District Court, Southern District of New York

June 4, 2003


The opinion of the court was delivered by: Lewis A. Kaplan, District Judge.

PRETRIAL ORDER NO. 154) (Corrected)
(Motion for Extension of Time to File Objections — Garza)

Plaintiffs move for an extension of time, apparently nunc pro tunc, in which to file written objections to the Report and Recommendation of Magistrate Judge Katz, which this Court adopted on May 12, 2003. Pretrial Order No. 147. Subsequent to that order, this Court received objections on behalf of the plaintiffs, which were overruled on the ground of untimeliness. Pretrial Order No. 148 (dated May 16, 2003).*fn1

As an initial matter, plaintiffs correctly note in the instant submission that the Court mistakenly calculated the time within which objections were due from the date of Magistrate Katz's signing of the Report and Recommendation (April 18, 2003), rather than the date of its service, or mailing (April 21, 2003) as Fed.R.Civ.P. 72(b) and 5(b) provide. This does not render plaintiffs' submission timely, however. Taking into account this later service date, under the calculation method most favorable to plaintiffs, they had, by virtue of the combined operation of Rules 72(b), 6(a) and 6(e), until May 8, 2003 to file objections. Thus, the objections were untimely as of the date on which the cover letter indicates they were mailed, let alone filed.

In any event, plaintiffs' objections lack merit. As this Court previously has held, "where the propriety of considering the citizenship of a non-diverse party turns on the sufficiency of the claim against it as a matter of state law, that citizenship will be considered unless there is no reasonable possibility that the state court would uphold the sufficiency of the complaint." Pretrial Order No. 121 (denying plaintiffs' motion to remand where non-diverse physician defendants fraudulently joined). Plaintiffs' suggestion that a non-diverse party's citizenship should matter unless there is "absolutely no possibility" of recovery against that party was rejected in Rezulin I for reasons that do not require elaboration.*fn2

As to plaintiffs' claims of strict liability and breach of implied warranties against the non-diverse pharmacy defendant, this Court previously has held, for reasons that remain fully applicable here, that there is no reasonable possibility that the Texas Supreme Court would rule in favor of plaintiffs on these claims.*fn3

Plaintiffs object also to Magistrate Katz's recommendation that defendants be granted an equitable extension to the one year removal period specified in 28 U.S.C. § 1446(b) for diversity actions. (Obj. ¶ 9). In brief, the chronology of events leading to this application is as follows: Plaintiffs commenced this action in state court on February 9, 2001 against Warner-Lambert, Pfizer, a non-diverse pharmacy defendant, and a non-diverse physician defendant. On February 14, 2002, one year and five days later, plaintiffs non-suited the non-diverse physician defendant. Defendants removed the action on Monday, March 18, 2002, alleging that the non-suiting of the physician defendant created complete diversity in the action, based on defendants' assertion that the pharmacy defendant was fraudulently joined.

The statute governing the timing of removal provides in relevant part:

"If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title [diversity] more than 1 year after commencement of the action."*fn4
Section 1446(b) requires also that, when an action is removable based on the initial pleadings, a defendant must file a notice of removal within thirty days of receipt of these initial papers. Thus, the first inquiry is whether this action was removable when it was commenced.

The Court agrees with the defendants that the action was not removable on the basis of the initial pleadings because of the presence of the non-diverse physician defendant, Dr. Francisco Rugama. The initial pleading does not suggest that Dr. Rugama was fraudulently joined and plaintiffs' failure to file a malpractice expert report under the Texas Malpractice Act does not support removal absent a physician's motion to dismiss prior to removal.*fn5 It was only when Dr. Rugama was non-suited that complete diversity of proper parties existed.

It is undisputed that the defendants removed this action outside the one year time period specified in 28 U.S.C. § 1446(b). Thus, as Magistrate Katz indicated, "unless there is a basis to excuse its lateness, the removal is untimely." (R&R 5-6). Although the Second Circuit has not addressed this question, other courts have recognized equitable exceptions to the one-year limitations period where it appears that a plaintiff engaged in strategic behavior to defeat diversity.*fn6 Furthermore, the legislative history of the statute reflects Congress' intention that the one-year limit effect only a "modest curtailment in access to diversity jurisdiction" to promote comity and conservation of judicial resources, not to permit wholesale circumvention of diversity jurisdiction by strategic pleading.*fn7 Indeed, a proposal by the Federal Judicial Code Revision Project eliminates the one-year period of limitation for removal of initially nonremovable diversity cases.*fn8 Thus, in all the circumstances, the Court is inclined to the view that an equitable exception to the one-year time limit imposed by Section 1446(b) is warranted where, as here, the circumstances suggest that the 5 plaintiff acted tactically to avoid removal and the interests of justice favor removal.

Specifically, the Court finds that the timing of plaintiffs' non-suiting of Dr. Rugama, five days following the one year anniversary of the action's commencement, suggests strategic behavior was at play, notwithstanding plaintiffs' contention that they non-suited the physician to avoid application of a six-month stay that would result because of the impaired status of Dr. Rugama's insurer.*fn9 After all, prior to learning of the insured's impaired status, plaintiffs took no discovery from the physician. (Defs. Mem. at 33). Furthermore, plaintiffs' counsel has named non-diverse physician defendants in other Rezulin cases. (Id.). Finally, the interests of justice are promoted in this case by applying an equitable exception to the one-year time limit of Section 1446(b) to permit defendants to participate in the consolidated multi-district litigation underway in this Court.

In sum, the motion for an extension is denied, as no sufficient excuse has been offered for the failure to file objections on time. The point in any case is unimportant, as the Court would override them even if they were timely.


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