United States District Court, S.D. New York
MEMORANDUM AND ORDER
P. KEVIN CASTEL, District Judge.
Court-initiated sanctions are expressly contemplated by Rule 11(c)(3) yet, except in an unusual case such as this that is premised upon an admission, the subjective bad faith standard requires a district judge with a full calendar of cases to delve into an attorney's state of mind, drawing inferences from circumstantial evidence, without the tools customarily available in the adversary system. On this record, the Court imposes sanctions under Rule 11, Fed. R. Civ. P., because the defendant improperly removed a Connecticut state case to this court. The removal was improper because the statute permits removal only to the district embracing the place where the removed state court action is pending. 28 U.S.C. 1441(a). The lawyer's own statements concede that, at the time of filing of the notice of removal, he knew he was removing the case to the wrong district. He states that he did so because he lacked time to secure a pro hac vice admission to the proper district, the District of Connecticut, and did not want his client to lose the benefit of having the case heard in federal court. For reasons that will be explained, the Court concludes that the notice of removal was filed in subjective bad faith.
Although the plaintiff has filed a voluntary dismissal pursuant to Rule 41(a)(1)(A)(i), Fed. R. Civ. P., this Court's order to show cause on sanctions was filed prior to the dismissal and this Court retains jurisdiction over the issue of sanctions. Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 394-95 (1990); see Advisory Committee Notes to 1993 Amendments to Rule 11 (a court-initiated sanction may be imposed "only if the show cause order is issued before any voluntary dismissal...").
The Connecticut State Court Action and its Removal to this Court
Linda Cardona brought an action in Superior Court of the State of Connecticut on behalf of her infant child alleging that the child suffered injuries as a result of exposure to lead paint in a building located on New Britain Avenue in Hartford, Connecticut. Defendant Julian Mohabir is alleged to be the landlord of the building. Mr. Mohabir is a citizen of the state of New York and resides in Queens County, which is in the Eastern District of New York. There is no indication that Ms. Cardona or her child has any ties to New York, the claim has any nexus to New York, or she or the child has ever consented to have any claim adjudicated in New York.
Dwight A. Kern and his law firm, Segal McCambridge, Singer & Mahoney, with an office in Jersey City, New Jersey, were retained by an insurance carrier to represent Mr. Mohair in the Connecticut state court action on March 7, 2014. Mr. Kern is admitted to practice in this district but not in the District of Connecticut. On the day he was retained, Mr. Kern contacted Mr. Mohabir and learned that he was served with process on either February 5 or 6, 2014. Mr. Kern "began to conduct legal research regarding the federal rules on removal and diversity jurisdiction and discovered that the proper venue would be the United States District Court for the District of Connecticut, " a district in which he is not admitted to practice. (Kern First Affirm'n ¶ 9.) He unsuccessfully tried to contact a former colleague admitted in the District of Connecticut.
Mr. Kern filed a Notice of Removal in this Court on March 7, 2014 at 4:09 p.m. He signed the Notice, which recited the basis for diversity jurisdiction, the timeliness of removal, the filing of the Notice in the state court and concludes as follows: "Accordingly, Defendant has satisfied all requirements to remove this action to the United States District Court for the Southern District of New York." (Notice of Removal ¶ 14.)
Removal to this Court Was Improper
By statute, where a ground for removal exists, the removal may be properly made "to the district of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Thus, it is only to the district where the state action is pending, i.e. the District of Connecticut, to which the action may be properly removed.
As this Court wrote in its prior Memorandum and Order in this case, "The procedural limitation on removal to districts other than the district embracing the place where the state court action is pending was not slipped into the law books while otherwise attentive counsel was nodding. The requirement was set forth in the Judiciary Act of 1789 (at section 12), which on September 24, 2014 will celebrate its 225th anniversary." Cardona v. Mohabir, No. 14 Civ. 1596(PKC), 2014 WL 1088103, at *1 (S.D.N.Y. Mar. 18, 2014).
Rule 11 Sanctions Initiated Sua Sponte
By statute, a removal petition is subject to the strictures of Rule 11, Fed.R.Civ.P. 28 U.S.C. § 1446(a). Rule 11(c) permits a Court on its own initiative to require an attorney or party to show cause why its conduct specifically described in the order has not violated Rule 11(b). Here, the Court's Memorandum and Order of March 17 noted that, though the defect in removal may be capable of being waived, it did not mean that the improperly removing party's conduct was beyond the possibility of a sanction. "While the non-removing party may forfeit the right to obtain remand, the conduct of an attorney intentionally violating the removal statute is not beyond redress." Cardona, 2014 WL 1088103, at *1. The March 17 Memorandum and Order also noted another instance in which Mr. Kern had improperly removed a case in violation of the statutory bar on removal of diversity actions by in-state defendants; the Court also noted that the plaintiff had not raised the defect and so the case remained in federal court. Id .; see Szwewczuk v. Stellar 117 Garth LLC, 09 Civ. 01570(PAC) (S.D.N.Y. Feb. 19, 2009) (Dkt 1.) On March 19, the Court issued a separate Order stating, in relevant part, that "[d]efendant should set forth any additional information on the propriety of the removal so that the Court may consider... whether Rule 11 or other sanction should be imposed.... Defendant's submission is due April 9, 2014."
The defendant's responsive submission noted that this Court had not issued a document denominated as an "order... to show cause..., " the words used in Rule 11(c)(3). To avoid doubt, this Court issued an order to show cause invoking Rule 11(c)(3) and describing with particularity the conduct which is alleged to have violated Rule 11(b)(1) and (2). Defendant has filed a further response to the order to show cause. Plaintiff seeks no sanction for itself and, indeed, urges this ...