Court Opinion

ID: 4375381
Source: CourtListenerOpinion
Date Created: 2019-03-08 18:01:25.969238+00
Date Added: 2024-06-11T13:31:08.614380
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 PATRICIA ANDERSON; THOMAS                     No. 15-35981
 ANDERSON,
           Plaintiffs-Appellants,               D.C. No.
                                           3:15-cv-05159-RBL
                  v.

 STATE FARM MUTUAL                               OPINION
 AUTOMOBILE INSURANCE
 COMPANY,
           Defendant-Appellee.

        Appeal from the United States District Court
          for the Western District of Washington
        Ronald B. Leighton, District Judge, Presiding

          Argued and Submitted November 7, 2018
                   Seattle, Washington

                       Filed March 8, 2019

Before: M. Margaret McKeown and Michelle T. Friedland,
   Circuit Judges, and Susan R. Bolton, * District Judge.

                 Opinion by Judge McKeown

    *
      The Honorable Susan R. Bolton, United States District Judge for
the District of Arizona, sitting by designation.
2                  ANDERSON V. STATE FARM

                          SUMMARY **

                             Removal

    The panel affirmed the district court’s denial of
plaintiffs’ motion to remand to state court, and held that the
defendant insurer timely removed an insurance coverage
case to federal court.

    The panel held that receipt of an initial pleading by a
statutorily designated agent did not begin the thirty-day
removal clock under 28 U.S.C. § 1446(b)(1), and it was
actual receipt by the insurer that started the removal clock.
Applying this rule, the panel concluded that the insurer
timely removed the case.

    In a contemporaneously filed memorandum disposition,
the panel affirmed in part and vacated in part the remainder
of the judgment, and remanded for further proceedings.

                            COUNSEL

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.

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                  ANDERSON V. STATE FARM                        3

                          OPINION

McKEOWN, Circuit Judge:

    Patricia Anderson and Thomas Anderson’s single-car
accident in 1998 began a saga of litigation culminating in
this appeal. Little of the tragic history involving nine
different trial and appellate proceedings is relevant to this
opinion, in which we determine only whether State Farm
timely removed the case to federal court. 1 Addressing an
issue of first impression in this circuit, we join the Fourth
Circuit in holding that receipt of an initial pleading by a
statutorily designated agent does not begin the thirty-day
removal clock under 28 U.S.C. § 1446(b)(1), and that it was
instead actual receipt by State Farm that started the removal
clock. See Elliott v. Am. States Ins. Co., 883 F.3d 384, 394
(4th Cir. 2018). Applying this rule, we conclude that State
Farm timely removed the case.

    The Andersons sued State Farm in Washington state
court. Because State Farm is an out-of-state (or “foreign”)
insurer, state law designates Washington’s Insurance
Commissioner as State Farm’s statutory agent.
RCW 48.05.200(1). To serve legal process on State Farm,
the Andersons served the Commissioner, who forwarded the
complaint to State Farm’s designated recipient.
RCW 4.28.080(7)(a), 48.05.200(1)–(2). The Andersons
served the Commissioner on February 9, 2015, and State
Farm received the forwarded complaint four days later, on
February 13. On March 16, State Farm removed the case to
federal court.

     1
       We address the remaining issues in a memorandum disposition
filed contemporaneously with this opinion.
4                 ANDERSON V. STATE FARM

    The parties agree on how to count to thirty, but they
disagree over when to begin counting. According to the
Andersons, removal was untimely because the thirty-day
removal clock began on February 9, when the Commissioner
received the complaint. State Farm contends removal was
timely as calculated from February 13, when the forwarded
copy of the complaint reached State Farm’s designated
recipient. 2 The district court agreed with State Farm and
denied the Andersons’ motion to remand. We have
jurisdiction under 28 U.S.C. § 1291 and review de novo the
district court’s ruling. Patterson v. Int’l Bhd. of Teamsters,
Local 959, 121 F.3d 1345, 1348 (9th Cir. 1997).

    We begin our analysis with the statutory text, but it does
not take us far. 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). One reading suggests removal was timely
because the actual defendant—State Farm—did not receive
notice until receiving the mailing from the Commissioner.
That reading, however, does not account for the effect of
service on a statutory agent. “[T]he statute itself says
nothing about service on a statutory agent,” Elliott, 883 F.3d
at 392, and an agent designated by the state legislature to
receive service fundamentally differs from a defendant’s
agent-in-fact, because the defendant has no meaningful say
in or control over the former. See 14C Charles Alan Wright,
et al., Federal Practice & Procedure § 3731 (Rev. 4th ed.
2018) (“Realistically speaking, of course, statutory agents

    2
      Thirty days from February 13, 2015, was Sunday, March 15, 2015,
so the notice of removal would have been timely filed on Monday,
March 16, 2015. See Fed. R. Civ. P. 6(a)(1)(C).
                   ANDERSON V. STATE FARM                             5

are not true agents but merely are a medium for transmitting
the relevant papers.”).

      Washington law, however, lends some force to the
position that service on a statutorily designated agent should
qualify as “receipt by the defendant” for purposes of
28 U.S.C. § 1446(b)(1). As a practical matter, a company
cannot receive anything except through its agents, and
Washington equates service upon the Commissioner with
service upon the insurer. RCW 48.05.200(1). 3 Indeed,
plaintiffs must serve foreign insurers via the Commissioner.
Id.; RCW 4.28.080(7)(a). But the Supreme Court has
cautioned against interpreting the federal removal statute
with reference to state law. See Chi., R.I. & P.R. Co. v.
Stude, 346 U.S. 574, 580 (1954) (“For the purpose of
removal, the federal law determines who is plaintiff and who
is defendant. It is a question of the construction of the
federal statute on removal, and not the state statute.”). So
we decline to place much weight on Washington law and
conclude that the federal removal statute is, at most,
ambiguous on this point. Cf. Elliott, 883 F.3d at 392 (“[A]
straightforward reading . . . supports holding that the 30-day
period . . . is not triggered by service on a statutory agent
. . . .”).

     3
       RCW 48.05.200(1) provides: “Each authorized foreign or alien
insurer must appoint the commissioner as its attorney to receive service
of, and upon whom must be served, all legal process issued against it in
this state upon causes of action arising within this state. Service upon
the commissioner as attorney constitutes service upon the insurer.
Service of legal process against the insurer can be had only by service
upon the commissioner, except actions upon contractor bonds pursuant
to RCW 18.27.040, where service may be upon the department of labor
and industries.”
6                ANDERSON V. STATE FARM

      The legislative history, on the other hand, is
unambiguous—it clearly demonstrates Congress’ intent to
avoid disparate application of the removal statute due to
differences in state law. See Murphy Bros., Inc. v. Michetti
Pipe Stringing, Inc., 526 U.S. 344, 351–53 (1999)
(discussing congressional intent at length). Before Congress
enacted § 1446(b), a defendant could remove at “any time
before the defendant [wa]s required by the laws of the State
. . . to answer or plead to the declaration or complaint.”
28 U.S.C. § 72 (1940). The practical effects of this regime
varied widely among the states. Seeking a replacement that
would “give adequate time and operate uniformly
throughout the Federal jurisdiction,” Congress enacted
§ 1446(b). H.R. Rep. No. 80-308, at A135 (1947).

    As initially enacted, however, § 1446(b) suffered the
same infirmity:      the removal deadline depended on
procedural rules that varied by state. See Murphy Bros.,
526 U.S. at 351. In other words, the removal clock began
“after commencement of the action or service of process,
whichever [wa]s later.” Act of June 25, 1948, Pub. L. No.
80-773, § 1446(b), 62 Stat. 869, 939. In states like New
York, which allowed a plaintiff to commence an action by
serving the summons without the complaint, the removal
deadline could expire before the defendant could access the
complaint. H.R. Rep. No. 81-352, at 14 (1949); Murphy
Bros., 526 U.S. at 351.

    Recognizing this disparity, the next Congress amended
the statute to provide each defendant with “20 days after he
has received (or it has been made available to him) a copy of
the initial pleading.” S. Rep. No. 81-303, at 6 (1949). In all
relevant respects, the 1949 version of § 1446 mirrors today’s
version: “The petition for removal of a civil action or
proceeding shall be filed within twenty days after the receipt
                    ANDERSON V. STATE FARM                              7

by the defendant, through service or otherwise, of a copy of
the initial pleading . . . .” 4 Act of May 24, 1949, Pub. L. No.
81-72, § 83, 63 Stat. 89, 101. In both versions of the statute,
the key point was to peg the time calculation to receipt by
the defendant.

    Intertwining the removal statute with state-specific
idiosyncrasies would thwart Congress’ twin aims of
adequate time to respond and uniform application of the rule.
Murphy Bros., 526 U.S. at 351. Indeed, if delivery to a
statutorily designated agent began the removal clock, the
effective time a defendant had to remove would depend not
only on differences in state law, but also on the efficiency of
state agencies in each instance. The interpretation the
Andersons advance would compound disfavored interstate
differences by adding case-by-case, intrastate discrepancies.
That arrangement cannot be reconciled with Congress’
unambiguous intent to provide each defendant with a fixed
and adequate amount of time, after obtaining access to the
complaint, to decide whether to remove. See Elliott,
883 F.3d at 393 (“Serving a statutory agent does not
guarantee that the defendant is provided with actual notice
of the complaint or adequate time to decide whether to
remove a case.”).

    As the Andersons point out, the Court held in Murphy
Brothers that “a named defendant’s time to remove is
triggered by simultaneous service of the summons and
complaint.” 526 U.S. at 347–48. But this holding addressed
what must be received, not who must receive it. Id. The
Court did not consider the implications of serving a statutory

    4
       Congress later extended the removal window from twenty days to
thirty days. Act of Sept. 29, 1965, Pub. L. No. 89-215, 79 Stat. 887, 887;
28 U.S.C. § 1446(b)(1).
8                ANDERSON V. STATE FARM

agent before actual receipt by the defendant. And although
it addressed a different question, the Court announced a
principle of fairness that is pertinent here:

       We read Congress’ provisions for removal in
       light of a bedrock principle: 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.

Id. at 347. That “bedrock principle” regarding the
importance of actual notice confirms that serving the
Commissioner did not provide the necessary notice to State
Farm of the suit—that occurred only when State Farm’s
designated recipient received the complaint.

    We are also unconvinced by the Andersons’ invocation
of the interpretive canon counseling strict construction of
removal statutes. See Gaus v. Miles, Inc., 980 F.2d 564, 566
(9th Cir. 1992). The canon is instructive, but it is not
absolute and cannot overcome a “clear [contrary] command
from both Congress and the Supreme Court.” Durham v.
Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir.
2006). The legislative history and Murphy Brothers provide
just such a clear command.

    Nor are we persuaded by the Andersons’ suggestion that
our ruling invites collateral litigation over “who qualifies” as
a recipient. Our decision cleaves to “settled [district court]
law,” 14C Charles Alan Wright, et al., Federal Practice &
Procedure § 3731 & n.20 (4th ed.), and the current regime
has hardly spawned uncertainty on this point.

   We join the Fourth Circuit and hold that the thirty-day
removal clock under 28 U.S.C. § 1446(b)(1) does not begin
                    ANDERSON V. STATE FARM                               9

upon service on and receipt by a statutorily designated agent,
and began in this case only when State Farm actually
received the Andersons’ complaint. 5 Elliott, 883 F.3d
at 391–94. State Farm’s removal was timely, and we affirm
the district court’s denial of the Andersons’ motion to
remand. For reasons explained in our contemporaneously
filed memorandum disposition, we affirm in part and vacate
in part the remainder of the judgment and remand for further
proceedings.

  AFFIRMED WITH RESPECT TO THE DENIAL
OF THE MOTION TO REMAND.

    Each party shall bear its own costs on appeal.

    5
       The Washington law at issue here, RCW 48.05.200(1), and the
North Carolina statute at issue in Elliott, 883 F.3d at 390–91 (addressing
N.C. Gen. Stat. § 58-16-5), designate a statutory agent that foreign
insurers must authorize to accept for service of process. Other states,
such as California, require foreign insurers to designate an agent, but do
not designate who that agent is. See Cal. Ins. Code § 1600 (“[E]very
foreign insurer [must designate] an agent for service of process. The
agent designated may be any person residing in this state, including, but
not limited to, any corporate officer of the insurer.”). Such a requirement
is not before us, and we take no position regarding its interplay with the
federal removal statute.