The First Circuit adopted the so-called voluntary-involuntary rule challenged in a Law 75 removed case

In Caribe Chem Distributors, Corp. v. Southern Agricultural Insecticides, Inc., ---F. 4th ---, 2024 WL 1089653 (1st Cir. Mar. 13, 2024), the First Circuit adopted the voluntary-involuntary rule to remand an alleged Law 75 case back to Puerto Rico’s local court. The defendant removed the case to federal court for complete diversity after the state court partially granted a motion to dismiss all the diversity defeating co-defendants. The voluntary-involuntary rule is a judicially created doctrine that forbids removal to federal court of diversity cases when the order or judgment creating removal jurisdiction is involuntary in the sense that plaintiff did not consent to it (such as an order granting a dispositive motion) but permits removal when the order or judgment is voluntary, such as a plaintiff’s voluntary dismissal of diversity defeating defendants. The reason behind it is that the plaintiff may appeal from an order granting a dispositive motion dismissing a party and if the case is removed and the state appellate court later reverses there is a “yo-yo” effect where diversity jurisdiction would be destroyed after removal. In other words, the case should not have been removed because the order creating diversity was found to be erroneous. But that yo-yo effect never happens if the dismissal is voluntary because plaintiff cannot appeal or the order is unreviewable, and no state appellate court can reverse to destroy federal jurisdiction. This rule has a long history in federal common law established from court decisions since the 1900’s. In 1949, Congress amended the removal statute, 28 USC 1446(b), clarifying that a defendant may remove a case that was not originally removable within 30 days from notice of the initial pleading, but becomes removable at a late stage of the proceedings. In any event, the statute says that the case cannot be removed after more than a year from the commencement of the state court action unless the plaintiff acted in bad faith. The statute provides that the defendant may remove the case within 30 days from an order from which it may first be ascertained that the case becomes removable. The defendant argued that the statute’s plain text did not define or distinguish the type of order for removal or account for a plaintiff’s consent or lack thereof. In Caribe Chem, the First Circuit conceded that the statute on its face may be read “broadly” to permit removal at a late stage of the case from an order first creating removal jurisdiction, such as the order granting the motion to dismiss. But, without finding any ambiguity in the text of the law, the court delved into passages of legislative history in a House Report that Congress was clarifying existing law when it amended the removal statute in 1949. From this proof, the court held it was bound to presume that Congress would not have repealed decades of the common law’s voluntary-involuntary rule unless there was a clear directive to the contrary, and it found none. Finding support in all the other sister circuits that had decided the issue, it held that the case was not removable. In the context of a post-judgment Rule 60(b) motion in the district court, the First Circuit declined to accept the defendant’s argument that the plaintiff’s decision not to timely appeal the dismissal order was the functional equivalent of a voluntary dismissal. Finally, I should note that the First Circuit recognized the fraudulent joinder exception to the voluntary-involuntary rule but did not apply in this case. The larger question, at least to me, remains: when is it proper to resort to interpretive aids or apply a presumption that the law is not intended to change federal common law, when concededly, as in Caribe Chem, the law that Congress enacted is not ambiguous and can be read broadly to reach a different result? Caribe Chem may have created a slippery slope that the clear and unambiguous text of a law is not enough to understand what Congress intended and opens the door to searching for common law doctrines. Caribe Chem's holding is hard to reconcile with the Supreme Court’s originalism or textualism. Note, I argued the appeal for the defendant.