Federal Jurisdiction “Clarification” Act signed by Obama

Pundit News
On December 7, 2011, President Obama signed into law the Federal Jurisdiction and Venue Clarification Act. One of the provisions requires that federal courts, in removed cases based on federal question jurisdiction, sever and remand to state court any non-removable claims that are not covered by the court’s supplemental jurisdiction. In addition, consent to remove is not required from the defendants to non-removable state law claims.

The ERISA Pundit initially refused to return calls from Pundit News, but finally offered this comment: “The Pundit always questioned the sense of requiring consent of all defendants to remove an action to federal court. A defendant to a state law claim should not have the power to prevent removal of federal claims. The Clarification Act ensures that federal claims such as ERISA claims can be removed to federal court without giving veto power to defendants to purely state law claims. The Pundit is aware of cases in which plaintiffs have asserted state law claims against nominal defendants, “friendlies” to the plaintiff such as insurance brokers, specifically to withhold consent to removal of federally governed ERISA claims.”

Here is a summary of the law’s provisions, courtesy of the Congressional Research Center:
Title I – Jurisdictional Improvements
Section 101 –
Amends the federal judicial code to declare that, with respect to diversity of citizenship, the U.S. district courts shall not have original jurisdiction of any civil action between citizens of a state and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same state.

Section 102 –
Modifies the citizenship rules to treat corporations as citizens of any foreign state: (1) by which it has been incorporated, and (2) where it has its principal place of business. Treats insurers as citizens of any foreign state: (1) of which the insured is a citizen, (2) by which the insurer has been incorporated, and (3) where the insurer has its principal place of business.

Section 103 –
Separates the removal requirements governing civil cases and those governing criminal cases into two separate categories. Declares that, upon removal of any civil action with both removable and nonremovable claims, the district court shall sever from the action all nonremovable claims and remand them to the state court from which the action was removed. Requires only defendants against whom a removable claim has been asserted to join in or consent to removal of the action. Prescribes requirements for filing notices of removal, including assertion in the notice of the amount in controversy, when it exceeds the necessary amount, if the initial pleading seeks: (1) nonmonetary relief; or (2) a money judgment, but the state practice either does not permit demand for a specific sum or permits recovery of damages in excess of the amount demanded. Allows removal of a case based on diversity of citizenship more than one year after commencement of the action if the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.

Title II – Venue and Transfer Improvements
Section 202 –
Revises general requirements for the scope of venue of civil actions. Requires the proper venue of any civil action brought in a U.S. district court to be determined without regard to whether the action is local or transitory in nature.

Section 203 –
Repeals the “local action” rule that any civil action, of a local nature, involving property located in different districts in the same state, may be brought in any of such districts.

Section 204 –
Allows a district court to transfer a civil action to any district or division to which all parties have consented. Prohibits transfers from a U.S. district court to the District Court of Guam, the District Court for the Northern Mariana Islands, or the District Court of the Virgin Islands.

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