United States Court of Appeals For the First Circuit

No. 21-1918

CARIBE CHEM DISTRIBUTORS, CORP.,

Plaintiff, Appellee,

v.

SOUTHERN AGRICULTURAL INSECTICIDES, INC.,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

[Hon. Aida M. Delgado-Colón, U.S. District Judge]

Before

Barron, Chief Judge, Kayatta and Montecalvo, Circuit Judges.

Ricardo F. Casellas Sánchez, with whom Carla S. Loubriel Carrión and Casellas Alcover & Burgos, PSC were on brief, for appellant. Edgardo Santiago-Torres, with whom Santiago-Torres Law Offices, LLC was on brief, for appellee.

March 13, 2024 KAYATTA, Circuit Judge. In this opinion we adopt the

so-called "voluntary/involuntary" rule to determine that the

removal of this lawsuit from Commonwealth to federal court was

improper. A Puerto Rican company, Caribe Chem ("Caribe"), filed

a complaint in a Puerto Rico court against a Florida company,

Southern Agricultural Insecticides ("Southern"), and another

Puerto Rico company and its principal, a citizen of Puerto Rico.

As filed the lawsuit was not initially removable to federal court,

because there was no complete diversity, no federal question, and

no other basis for asserting federal-court jurisdiction. In due

course, the two Puerto Rican defendants successfully procured an

order dismissing them from the lawsuit on statute-of-limitations

grounds over Caribe's objection. About thirteen days later

Southern removed the case to federal court, citing the now-complete

diversity of the remaining parties. The district court rejected

the removal, and granted Caribe Chem's motion to remand to

Commonwealth court. Southern thereupon appealed the remand order.

I.

Before proceeding to the merits, we note that Caribe

questions whether the district court's remand order is appealable

under

(d), given that the district court

characterized its order as relying on a defect in removal

procedure. See

(d) ("An order remanding a case to

the State court from which it was removed is not reviewable on

- 2 - appeal or otherwise . . . ."); BP P.L.C. v. Mayor of Balt.,

(2021) (explaining that

(d) bars

appellate review of "remand orders premised on a lack of subject

matter jurisdiction or a defect in removal procedure").

Neither party's brief treats this issue in a manner that

facilitates its resolution. And because "[t]his case poses a

question of statutory, not Article III, jurisdiction," and

therefore "the question of jurisdiction 'need not be resolved if

a decision on the merits will favor the party challenging the

court's jurisdiction,'" we will assume that we have appellate

jurisdiction for the purposes of resolving Southern's appeal.1 Doe

v. Town of Lisbon,

(1st Cir. 2023) (quoting Akebia

Therapeutics, Inc. v. Azar,

(1st Cir. 2020)).

II.

Sometimes, as here, a lawsuit that initially lacks

complete diversity of citizenship between the plaintiff and the

1 Caribe also states without elaboration that we should abstain from exercising jurisdiction over this appeal under so- called Younger abstention. The Supreme Court has made clear that "[c]ircumstances fitting within the Younger doctrine . . . are 'exceptional'" and include "state criminal prosecutions, civil enforcement proceedings, and civil proceedings involving certain orders that are uniquely in furtherance of the state courts' ability to perform their judicial functions." Sprint Commc'ns, Inc. v. Jacobs,

(2013) (internal quotations omitted) (citing New Orleans Pub. Serv., Inc. v. Council of New Orleans,

(1989)). As Southern offers no reason why this private action would fall into any of these "exceptional" categories, we decline to apply Younger abstention.

- 3 - defendants can acquire complete diversity when all nondiverse

parties are dismissed from the action. The so-called

voluntary/involuntary rule governs whether such a change in the

make-up of the parties allows the remaining defendants to remove

the case to federal court under

. For example,

when a plaintiff amends a complaint to drop the only nondiverse

defendant, the voluntary/involuntary rule treats the lawsuit as

removable (assuming the amount in controversy requirement is

satisfied). Advanced Indicator & Mfg., Inc. v. Acadia Ins. Co.,

(5th Cir. 2022). But if the nondiverse

defendants are dismissed from the action without plaintiff's

acquiescence, the rule generally treats the lawsuit as not

removable.

The origins of the rule lie in the Supreme Court's

decision in Powers v. Chesapeake & Ohio Railway Co.,

(1898). Powers was a tort action in which, after the deadline for

removal had passed, the plaintiff "discontinued his action

against" the nondiverse individual defendants, "leaving it an

action between citizens of different states."

. The

defendants then attempted to remove the case to federal court, and

the question became whether the removal was untimely. The Court

reasoned that "to warrant a removal from a court of a state into

a circuit court of the United States, . . . the necessary diverse

citizenship . . . must exist."

. It noted that "so

- 4 - long as there does not appear of record to be any removable

controversy, no party can be entitled to remove it."

.

But, it cautioned, "it by no mea[ns] follows, when the case does

not become in its nature a removable one until after the time

mentioned in the act has expired, that it cannot be removed at

all."

. That would "utterly defeat all right of

removal in many cases."

. Instead, the clock on

removability starts ticking "as soon as the action assumes the

shape of a removable case," which in Powers occurred when the

plaintiff voluntarily terminated all the nondiverse defendants

from the suit.

.

Two years later in Whitcomb v. Smithson, the Supreme

Court clarified that where the nondiverse defendant was dismissed

by the state court in an order "adverse to plaintiff, and without

his assent," the dismissal "did not operate to make the cause then

removable."

(1900). Taken together, these cases

articulate the rule that while "a case may become removable . . .

upon the subsequent discontinuance of the action by the plaintiff

against the defendants, citizens of the same state with the

plaintiff . . . [] a different effect [is] ascribed to a ruling of

the court dismissing the action as to one of the defendants than

to a discontinuance by the voluntary act of the plaintiff."

Lathrop, Shea & Henwood Co. v. Interior Constr. & Improvement Co.,

(1909); see also Self v. Gen. Motors Corp., 588

- 5 - F.2d 655, 657-59 (9th Cir. 1978) (tracing the history of the

voluntary/involuntary rule).

The rule has been adopted in some form by the Second,

Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh

Circuits -- which by our count is every circuit to have considered

the issue. See Quinn v. Aetna Life & Cas. Co.,

, 40

n.2 (2d Cir. 1980) (noting the "line of cases holding that . . .

the involuntary dismissal of non-diverse parties does not make an

action removable"); Higgins v. E.I. DuPont de Nemours & Co.,

(4th Cir. 1988) ("[A] case may . . . not be

removable depending on whether the non-diverse party is eliminated

from the state action by voluntary or involuntary dismissal.");

Weems v. Louis Dreyfus Corp.,

(5th Cir. 1967)

(adopting the rule); Davis v. McCourt,

, 510 n.3 (6th

Cir. 2000) (same); Poulos v. Naas Foods, Inc.,

(7th Cir. 1992) (concluding that the voluntary/involuntary rule

survived Congress's 1949 enactment of

(b)); In re

Iowa Mfg. Co.,

(8th Cir. 1984) (same); California

ex rel. Lungren v. Keating,

(9th Cir. 1993)

("[W]hen an event occurring after the filing of a complaint gives

rise to federal jurisdiction, the ability of a defendant to remove

is not automatic; instead, removability is governed by the

'voluntary/involuntary rule.'" (citation omitted)); DeBry v.

Transamerica Corp.,

, 486–88 (10th Cir. 1979) (applying

- 6 - the voluntary/involuntary rule); Insinga v. LaBella,

(11th Cir. 1988) (adopting the voluntary/involuntary rule).

District courts in Massachusetts, New Hampshire, and

Maine have similarly applied the voluntary/involuntary rule. See

Irabor v. Lufthansa Airlines,

, 229 (D. Mass.

2019) (applying the voluntary/involuntary rule); Me. Emps. Mut.

Ins. Co. v. Yates Ins. Agency,

(D. Me.

1999) (same); Longden v. Philip Morris, Inc., No. Civ. 03-353-M,

, at *2 (D.N.H. Aug. 19, 2003) (same).

Courts typically identify two reasons for the rule. The

first is avoidance of a yo-yo effect, whereby "[r]emoval following

an involuntary dismissal may be only temporary: the plaintiff may

appeal the dismissal in state court, and success on appeal would

lead to the reinstatement of the non-diverse party, destroying

federal jurisdiction and compelling remand to the state court."

Poulos,

; see also E.I. DuPont de Nemours,

(same). By finding removal proper only where the plaintiff

has unilaterally -- and thereby irreversibly -- dismissed all

nondiverse defendants, courts can ensure that subsequent decisions

on appeal will not destroy the basis for federal jurisdiction,

thus requiring remand to the state court.

The second reason sounds in "a general principle of

deference to the plaintiff's choice of forum." Poulos,

. By "[a]llowing removal only when the plaintiff voluntarily

- 7 - dismisses a defendant," a court can ensure that "the plaintiff

will not be forced out of state court without his consent."

As the Supreme Court explained, the "obvious principle" of the

line of cases setting forth the voluntary/involuntary rule "is

that . . . the plaintiff may by the allegations of his complaint

determine the status with respect to removability of a case . . .

and that this power to determine the removability of his case

continues with the plaintiff throughout the litigation." Great N.

Ry. Co. v. Alexander,

(1918).2

This broad and long-standing precedential authority --

as well as the confounding procedural complexities the rule

eliminates -- weighs heavily in favor of adopting the

voluntary/involuntary rule in this case. Southern disagrees.

First, it argues that Congress abrogated the

voluntary/involuntary rule in 1949 when it codified

(b)(3). Section 1446(b)(3) states that "if the case stated

by the initial pleading is not removable, a notice of removal may

be filed within 30 days after receipt by the defendant, through

service or otherwise, of a copy of an . . . order or other paper

from which it may first be ascertained that the case is one which

2 Of course, this power does not include the ability to defeat removal by fraudulently joining nondiverse defendants. Hoyt v. Lane Constr. Corp.,

(5th Cir. 2019) ("The judicially created voluntary-involuntary rule is itself subject to a judicially created exception for improper joinder." (citing Great N. Ry. Co.,

)).

- 8 - is or has become removable." Southern contends that the word

"order" means only "a command or direction authoritatively given,"

Order, Black's Law Dictionary (3d ed. 1933), or "an act of a

court," Bolger v. Utermohlen,

, 592 (E.D. Pa.

2020), and makes no distinction between orders to which the

plaintiff objects and those to which the plaintiff acquiesces.

But the text of the statute refers not just to an

"order," but to an "order . . . from which it may first be

ascertained that the case is one which is or has become removable."

(b)(3). So the question remains -- has an action

become removable if the order was entered over the plaintiff's

objections? And as we have described, the common law in 1949 was

that an action did not become removable upon the entry of such an

order. See, e.g., Great N. Ry. Co.,

(holding in

1918 that "[i]t is also settled that a case . . . cannot be

converted into a removable one . . . by an order of the court upon

any issue tried upon the merits, but that such conversion can only

be accomplished by the voluntary amendment of his pleadings by the

plaintiff").

This is not to say that section 1446(b)(3) cannot be

read more broadly to encompass any order that turns an action into

one that satisfies the statutory requirements for subject matter

jurisdiction in a federal court. But "when a statute addresses

issues previously governed by common law, an inquiring court should

- 9 - presume that -- except where explicit changes are made -- the

legislature intended to retain the substance of preexisting law."

In re PHC, Inc. S'holder Litig.,

(1st Cir. 2018)

(citing Kirtsaeng v. John Wiley & Sons, Inc.,

(2013)). Indeed, we have proof that this was the case with

section 1446(b). When the bill was introduced in the House, it

was explained that it would effect "not a single substantive change

in the law. This is purely corrective." 95 Cong. Rec. 6249 (1949)

(statement of Rep. Joseph Bryson).

The notes of revision that accompanied the statutory

change further support this view. They state:

The second paragraph of the amendment to subsection (b) is intended to make clear that the right of removal may be exercised at a later stage of the case if the initial pleading does not state a removable case but its removability is subsequently disclosed. This is declaratory of the existing rule laid down by the decisions. (See for example, Powers v. Chesapeake etc., Ry. Co.,

).

(Historical and Revision Notes, 1949 Act). As we

have explained, the origins of the voluntary/involuntary rule can

be traced back to the decision in Powers, suggesting that Congress

was aware of, had no intention of abrogating -- and perhaps even

implicitly codified -- the voluntary/involuntary rule when it

passed section 1446 into law.

- 10 - Southern responds that Congress cited to Powers only for

the proposition that a case not removable on the initial pleadings

may become removable at a later stage of the litigation. But

Congress "legislate[s] against a background of common-law

adjudicatory principles." Minerva Surgical, Inc. v. Hologic, Inc.,

(2021) (quoting Astoria Fed. Sav. & Loan

Ass'n v. Solimino,

(1991)). We can surely

presume it to have been aware of the line of cases starting with

Powers that developed the voluntary/involuntary rule when it

drafted section 1446(b). Indeed the notes of revision refer to

"decisions," in the plural, and reference Powers as an example of

the cases codified by the law. This suggests that Congress was

gesturing towards the line of cases created by Powers rather than

Powers in isolation. Construing Congress to have silently adopted

only half of the rule articulated in a line of Supreme Court cases

contravenes our commonsense rules of interpretation.

We therefore follow the lead of the other circuits, as

well as the common practice of district courts in this circuit, in

holding that the voluntary/involuntary rule precludes removal

where the nondiverse defendants are dismissed in the absence of

plaintiff's voluntary action.

III.

Southern next switches tacks. It argues that by

declining to appeal the trial court's dismissal order Caribe

- 11 - rendered the dismissal voluntary. Thus, Southern posits, the

voluntary/involuntary rule does not preclude removal in this case.

See Aetna Life & Cas. Co.,

n.2 ("[P]laintiffs'

failure to take an appeal constituted the functional equivalent of

a 'voluntary' dismissal.").

But as our fellow circuits have observed, "[i]n most of

the instances in which the Supreme Court has employed the

voluntary-involuntary rule [to preclude removal], . . . the

elimination of the resident defendants was not final at the time

the issue of the propriety of removal was considered because the

state appellate process as to those defendants was not complete."

Insinga,

(discussing cases); see also Self, 588

F.2d at 658 (noting that the Supreme Court "apparently does not

rely" on the finality of state court proceedings as a basis for

the voluntary/involuntary rule).

Conditioning the "voluntariness" of a partial dismissal

on a plaintiff's subsequent appeal would also make the removability

of a case dependent on the intricacies of state appellate

procedure. Sometimes a partial dismissal is not appealable when

entered. See, e.g., Ramos v. Colón,

(2001) (a

partial judgment "do[es] not become final sua sponte," and is not

appealable unless final). Other times, it is. See, e.g., P.R.

Laws Ann. tit. 32A, app. V, § 42.3 ("[T]he court may direct the

entry of a final judgment as to one or more but fewer than all of

- 12 - the claims or parties only upon an express determination that there

is no just reason for delaying judgment on such claims until final

adjudication of the case and upon an express direction for the

entry of judgment."). And sometimes, appealing right away may be

optional. See, e.g., Sanford v. CenturyTel of Mo., LLC,

(Mo. 2016) (en banc) ("[A] failure to appeal from any

action or decision of the court before final judgment shall not

prejudice the right of the party so failing to have the action of

the trial court reviewed on an appeal taken from the final judgment

in this case." (citation omitted)). So a rule that conditions

removability on the plaintiff forgoing an appeal would require a

case-by-case parsing of state procedural intricacies, and hardly

lend clarity to parties seeking to determine whether and when a

case has become removable.

Moreover, even in a case in which it is clear that any

appeal must be made within thirty days or be deemed waived, the

waiver would not occur until thirty days after entry of the order

said to make the case removable. By that time it would be too

late to remove under the thirty-day clock set by

(b). One would instead have to argue that the waiver itself

made the case removable, which would pile thirty days on top of

thirty days.

Nor does Southern's argument have a logical endpoint.

Suppose a plaintiff appeals the dismissal of nondiverse

- 13 - defendants, and the appellate court affirms the dismissal. Is the

plaintiff now required to move for reconsideration, or petition

the forum's highest court, to preserve the involuntary nature of

the dismissal? Any such requirement would extend the uncertainty

about the action's final venue. We therefore decline to adopt

Southern's proposed variation of the voluntary/involuntary rule,

which is unsupported by either Supreme Court precedent or

practicality.

IV.

Finally, Southern asks us to find that the district court

abused its discretion in denying the Rule 60(b) motion for relief

from judgment. As Southern points out, the district court based

its remand order in part on Caribe's insistence that it intended

to appeal the Commonwealth court's dismissal. See Caribe Chem

Distrib., Corp. v. S. Agric. Insecticides, Inc., Civ. No. 20-1547

(ADC),

, at *2 & n.4 (D.P.R. Sept. 30, 2021). Yet

Caribe never did appeal. But as we have just explained, our

treatment of the dismissal of the nondiverse defendants as

involuntary does not hinge on Caribe's appealing the order of

dismissal entered over its objection.

V.

We therefore affirm the district court's order remanding

the case and further affirm its denial of Southern's motion to set

aside the judgment under Rule 60.

- 14 -