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Ninth Circuit Holds Removal Deadline Runs from Receipt of Complaint by Insurer Rather Than Insurer’s “Statutorily Designated” Agent

The Holding

In Anderson v. State Farm Mutual Automobile Insurance Co., 917 F.3d 1126 (9th Cir. 2019) (Wash.), the Ninth Circuit Court of Appeals held that the thirty-day removal deadline under 28 U.S.C. § 1446(b)(1) does not commence upon service of a complaint on an insurer’s “statutorily designated agent”; rather, it commences when an insurer receives a complaint.

The Takeaway

In Arizona, if a plaintiff serves an insurer through the Arizona Department of Insurance, then an insurer has thirty days from the date it receives a complaint from the ADOI to remove to federal court.

The Facts

The Ninth Circuit provided few facts.  Instead, Anderson simply stated the appeal arose from Plaintiffs’ single-car accident in 1998.  Similar to Arizona law, Washington law designates the Washington Insurance Commissioner as insurers’ statutory agent and Washington plaintiffs “must” serve foreign insurers via the Commissioner. See A.R.S. § 20-221.  Plaintiffs served the Insurer via the Commissioner on February 9, 2015, the Insurer received the Complaint on February 13, and the Insurer filed a Notice of Removal on March 16.  Plaintiffs asserted the removal was untimely, but the Washington District Court denied Plaintiffs’ Motion to Remand. 

The Rationale

The Ninth Circuit held that the thirty-day removal deadline commenced upon receipt of the Complaint by the Insurer rather than the Insurer’s statutorily designated agent for four primary reasons:

  • First, the text of 28 U.S.C. 1446(b)(1) (the “Removal Statute”) does not advance the analysis very far, but does indicate that the “actual defendant” must receive the complaint.  The Removal Statute states a notice of removal must be filed “within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading.” (emphasis added).
  • Second, an “agent designated by the state legislature to receive service fundamentally differs from a defendant’s agent-in-fact, because the defendant has no meaningful say in or control over the former.”
  • Third, the legislative history of the Removal Statute “clearly demonstrates” “the key point was to peg the time calculation to receipt by the defendant” and “Congress’ intent to avoid disparate application of the removal statute due to differences in state law.”  “If delivery to a statutorily designated agent began the removal clock, the effective time a defendant had to remove would depend not only on differences in state law, but also on the efficiency of state agencies in each instance.”  This “cannot be reconciled with Congress’ unambiguous intent to provide each defendant with a fixed and adequate amount of time, after obtaining access to [receipt of] the complaint, to decide whether to remove.”
  • Fourth, a “bedrock principle”—“an individual or entity named as a defendant is not obliged to engage in litigation unless notified of the action, and brought under a court’s authority, by formal process”—“confirms that serving the Commissioner did not provide the necessary notice to [the Insurer] of the suit—that occurred only when [the Insurer’s] designated recipient received the complaint.” 

This and other posts can be found at our blawg: Arizona Bad Faith Blawg 

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