Bauscher v. Brookstone Securities, Inc.

Filing 12

MEMORANDUM DECISION AND ORDER denying 4 Motion to Remand to State Court. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
RANDY A. BAUSCHER
Plaintiff,

Case No. 4:12-cv-00028-BLW

v.

MEMORANDUM DECISION
AND ORDER

BROOKSTONE SECURITIES, INC., a
Florida corporation, JESSE KRAPF, an
individual, and DOES 1-10,
Defendants.

INTRODUCTION

Pending before the Court is plaintiff Bauscher’s motion to remand. For the
reasons explained below, the Court will deny the motion.
BACKGROUND
Bauscher filed this case against Jesse Krapf and Brookstone Securities, Inc.
(“Brookstone”) in Idaho State Court on December 6, 2011. Brookstone was served on
December 9, 2011, and Krapf’s counsel accepted service on his behalf on December 22,
2011.
On January 20, 2012, Krapf removed the case to this Court, and Brookstone
joined in the notice of removal. On January 27, 2012, Bauscher filed his motion to
remand, arguing that the notice of removal was untimely, and that the thirty-day period
Memorandum Decision & Order – page 1

for removing a case began to run from the date that Brookstone was served, not the date
that counsel accepted service on behalf of Krapf.
ANALYSIS
Under 28 U.S.C. § 1446(b), the time period for removal of a case from state court
to federal court is 30 days from the date of service of process. The current version of
§ 1446(b) states that the 30-day period begins to run from the date the last defendant is
served.
In this case, the last defendant was served on December 22, 2011, and the case was
removed 29 days later on January 20, 2012. Thus, the removal was clearly timely under
the 30-day deadline set by the current version of § 1446(b). However, that version of the
statute was just recently passed and does not apply to cases that were commenced in state
court prior to the effective date of the Act, which was January 7, 2012. See Pub.L. No.
112–63 (H.R. 394) § 104.
This case was filed about a month prior to that effective date, and so the Court
must apply the old version of § 1446(b). The result is the same, however, because the
Ninth Circuit has interpreted that version of the statute to adopt the last-served defendant
rule. Destfino v. Reiswig, 630 F.3d 952 (9th Cir. 2011) (holding that “[w]e adopt the laterserved rule as the wiser and more equitable approach”).
Bauscher argues that even if the last-served defendant rule applies, Krapf’s
removal was still untimely because he had notice of the case prior to December 22, 2011.
Memorandum Decision & Order – page 2

Bauscher points to Krapf’s financial disclosures filed with the Financial Industry
Regulatory Authority (FINRA), in which Krapf disclosed that he had been sued by
Bauscher. See Attachment 1, Exhibit A (docket no. 8). On pages 17-18 of this form,
Krapf indicates that December 12, 2011 was the “date notice/process was served.” Id.
While the meaning of this designation on the FINRA disclosure is unclear, at most
it can only mean that Krapf had notice of Bauscher’s lawsuit on December 12, 2011 –
even Bauscher does not argue that he formally served Krapf at any time prior to
December 22, 2011. Mere notice of the lawsuit – prior to formal service – is clearly not
enough to trigger the start of the 30-day removal period under § 1446(b). Murphy Bros.,
Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999). In that case, the Supreme
Court held that receipt of a “courtesy copy” of the complaint did not start the running of
the 30-day removal period because“[s]ervice of process, under longstanding tradition in
our system of justice, is fundamental to any procedural imposition on a named
defendant.” Because Krapf was not formally served until December 22, 2011, the 30-day
removal period did not begin to run until that date.
Bauscher also argues that the later service on Krapf did not extend the 30-day
removal period because Brookstone and Krapf are represented by the same law firm and
therefore have an identity of interests that renders reliance on separate removal deadlines
inappropriate. While Destfino holds that a defendant in Brookstone’s position is not
entitled – by virtue of the later service on a co-defendant – to a new 30-day period in

Memorandum Decision & Order – page 3

which to file its own notice of removal, Brookstone did not initiate the removal in this
case; it simply joined in Krapf’s notice of removal. Destfino recognized this as proper
when it stated that “[t]here is no reason to lock an earlier-served defendant out of the
federal forum, if he later chooses to consent [to a co-defendant’s later-filed removal
notice].” Destfino, 630 F.3d at 956.
Moreover, courts following the last-served defendant rule do not make an
exception in cases of joint representation. See, Bailey v. Janssen Pharmaceutica, Inc.,
536 F.3d 1202, 1204 (11th Cir. 2008) (holding that removal was timely under last-served
defendant rule in a case where all defendants were represented by the same attorney);
Orlick v. J.D. Carton & Son, Inc., 144 F.Supp.2d 337, 343, n.6 (D.N.J. 2001) (holding
that fact of joint representation by first and last served defendants does not affect the
timeliness analysis). Nor is this Court willing to presume that jointly- represented parties
will always have identical preferences about every procedural issue that might arise
during the course of litigation. Finally, the Court notes that because no action was taken
by Brookstone in Idaho state court, this case does not present a situation where a party
attempted to join in the removal of a later-served defendant after actively participating in
litigation in state court for an extended period of time. See, e.g. Cantrell v. Great
Republic Ins. Co., 873 F.2d 1249 (9th Cir. 1989). The Court therefore sees no reason to
deviate from the general rule articulated in Destfino that the removal period begins to run
only when the last defendant is served.

Memorandum Decision & Order – page 4

ORDER
In accordance with the Memorandum Decision set forth above,
NOW THEREFORE IT IS HEREBY ORDERED, that the motion to remand
(docket no. 4) be DENIED.

DATED: April 26, 2012

Honorable B. Lynn Winmill
Chief U. S. District Judge

Memorandum Decision & Order – page 5