Removal to the Wrong Federal District Court Is A Procedural, Not Jurisdictional, Defect According to the Fifth Circuit

In Hinkley v. Envoy Air, Inc., No. 19-10848 (5th Cir. Aug. 4, 2020), the panel is presented with a convoluted problem of removal from state court under 28 U.S.C. § 1441(a) that was filed in the wrong federal district. The panel holds that such a defect is only procedural rather than jurisdictional and was thus waived when the plaintiffs failed to file a timely motion for remand.

Plaintiffs raised claims against their former employer that arose both under federal law (the Age Discrimination in Employment Act, or ADEA) and Texas state law. They filed jointly in state court in Boerne, Texas. While there was a lack of diversity between the parties, there was federal-question jurisdiction under the ADEA and supplemental jurisdiction over the related state law claims.

When defendant removed, though, it did not file the petition not in the U.S. District Court for the Western District of Texas, where Boerne was located, as required by the statute (removal is taken “to the district court of the United States for the district and division embracing the place where such action is pending”). Instead, it filed in the Northern District of Texas, based on a forum-selection clause in the plaintiffs’ employment contracts that venued all disputes there.

Plaintiffs did not file a timely motion to remand, although the district court on its own motion transferred the case to the Western District under 28 U.S.C. § 1631 “in the interest of justice.” The Western District court, in turn, transferred the case back to the Northern District based on the forum-selection clause.

Eventually, the district court dismissed the case for failure to state a claim (in particular, plaintiffs failed to complete the administrative requisites for filing an action in the state civil-rights agency).

On appeal, the “unusual procedural posture” of the case presented interlocking questions potentially going to the federal court’s subject-matter jurisdiction. The first question was whether the plaintiffs on appeal could challenge the sua sponte transfer to the Western District. While neither party raised the issue, the panel notes that the transfer back to the Northern District prospectively mooted any dispute that the plaintiffs might have had.

Nevertheless, the panel further observes, the issue would not be moot if the “the now-claimed improper removal … divested the district court for the northern district of jurisdiction, requiring remand to state court.” Here, the court notes that “[r]emoval may be improper … for jurisdictional or procedural reasons,” with the former requiring remand to state court, and the latter waivable if not presented in a motion to remand “within 30 days after the filing of the notice of removal under section 1446(a).” 28 U.S.C. § 1447(c).

The panel holds that removal was improper because it was filed in the wrong district. In the situation of a forum-selection clause, the correct procedure is to remove to the correct geographic federal district, then move to transfer under 28 U.S.C. § 1404(a). But the error was a procedural one, and thus waived by plaintiffs. (Although the Fifth Circuit had previously so held for the filing of a case in the wrong division of a federal district court, it had not previously decided whether filing in the wrong district was procedural.) The panel finds persuasive an Eleventh Circuit decision, Peterson v. BMI Refractories, 124 F.3d 1386 (11th Cir. 1997), likening the error to venue rather than jurisdiction.

Finally, the panel affirms the judgment on the merits, holding that the plaintiffs failed to satisfy the claims-processing prerequisites of the ADEA and Texas state law.

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