[House Report 112-10]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     112-10

======================================================================



 
    FEDERAL COURTS JURISDICTION AND VENUE CLARIFICATION ACT OF 2011

                                _______
                                

 February 11, 2011.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

       Mr. Smith of Texas, from the Committee on the Judiciary, 
                        submitted the following
                              R E P O R T

                        [To accompany H.R. 394]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 394) to amend title 28, United States Code, to 
clarify the jurisdiction of the Federal courts, and for other 
purposes, having considered the same, reports favorably thereon 
without amendment and recommends that the bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     4
New Budget Authority and Tax Expenditures........................     4
Congressional Budget Office Cost Estimate........................     4
Performance Goals and Objectives.................................     5
Constitutional Authority Statement...............................     5
Advisory on Earmarks.............................................     5
Section-by-Section Analysis......................................     5
Changes in Existing Law Made by the Bill, as Reported............    24

                          Purpose and Summary

    The ``Federal Courts Jurisdiction and Venue Clarification 
Act of 2011'' brings more clarity to the operation of Federal 
jurisdictional statutes and facilitates the identification of 
the appropriate State or Federal court where actions should be 
brought. Judges believe the current rules force them to waste 
time determining jurisdictional issues at the expense of 
adjudicating underlying litigation. The contents of the bill 
are based on recommendations developed and approved by the 
United States Judicial Conference.

                Background and Need for the Legislation

                          LEGISLATIVE HISTORY

    H.R. 394 incorporates the text of H.R. 4113 from the 111th 
Congress in addition to four minor changes developed by the 
Department of Justice and the Senate Judiciary Committee in 
December 2010.
    Title I of H.R. 4113 is based on another bill, H.R. 5440, 
authored by Judiciary Committee Chairman Lamar Smith in the 
109th Congress. The Courts and Intellectual Property 
Subcommittee marked-up H.R. 5440 on May 24, 2006, but the 
legislation was never considered by the full Committee. In 
addition to the contents of H.R. 5440, H.R. 4113 as introduced 
includes a Title II that addresses Federal venue and transfer.
    The House passed H.R. 4113 on September 28, 2010, by voice 
vote under suspension of the Rules. The Senate adjourned before 
it could take up an amended version of the bill that now 
comprises the text of H.R. 394.

           PROCESS FOR VETTING THE BILL IN THE 111TH CONGRESS

    Given the press of other agenda items in 2010, the 
Judiciary Committee could not devote ``formal'' process to the 
evaluation of H.R. 4113 during the 111th Congress. In other 
words, while the bill was considered important, the Committee 
did not have time to conduct a hearing on H.R. 4113, followed 
by a markup. Instead, the Administrative Office of the US 
Courts (``AO'') functioned as a clearinghouse to vet the bill 
and newly-developed revisions to it with the Judicial 
Conference's Federal-State Jurisdiction Committee, academics, 
and interested stakeholders. The main stakeholder groups 
include the American Bar Association (``ABA''), Lawyers for 
Civil Justice (``LCJ''), the Federal Bar Association (``FBA''), 
the American Association for Justice (``AAJ''), and the U.S. 
Chamber of Commerce.
    Legal scholars from the law schools of the University of 
Houston, Chicago-Kent, Loyola, and Duke endorsed changes to the 
original text of H.R. 4113, which were developed by Professor 
Arthur Hellman of the University of Pittsburgh School of Law, 
who testified at the 2005 Subcommittee hearing and contributed 
to the project in the 111th Congress. (Two of these scholars 
are the authors of removal chapters in, respectively, Moore's 
Federal Practice and Wright and Miller's Federal Practice and 
Procedure--the leading treatises on Federal civil procedure and 
practice.) Professor Hellman's recommendations are confined to 
the removal provisions of Title I. In addition, the AO received 
feedback from the ABA and AAJ on the amount in controversy, 
declarations regarding relief, removal, and transfer. LCJ and 
FBA comments reflected general support for the bill.
    The point of this exercise was to identify and delete those 
provisions that were considered controversial by prominent 
legal experts and advocacy groups. This informal vetting 
process served the functional equivalent of a hearing or markup 
and increased the likelihood that H.R. 4113 could be passed by 
both houses of Congress prior to adjournment sine die.
    As noted, the House passed the bill by voice vote under 
suspension of the Rules on September 28, 2010. The Senate 
Judiciary Committee insisted on minor amendments that were 
agreed to by the House principals. These amendments include the 
following:

         LMaintaining the status quo treatment of 
        derivative jurisdiction. H.R. 4113 as passed by the 
        House made technical changes to Sec. 1441(f) to clarify 
        that the derivative jurisdiction doctrine has no 
        application to other sections within title 28. Prior to 
        1986, the derivative jurisdiction doctrine meant that 
        if a state court lacked jurisdiction over an 
        exclusively Federal matter, removal to Federal court 
        under Sec. 1441(f) was nonetheless barred because the 
        US district court's jurisdiction was not ``derivative'' 
        of the jurisdiction that attached in state court. 
        Justice Department attorneys said that although it is 
        infrequently used, the doctrine of derivative 
        jurisdiction is indeed sometimes invoked by them when 
        suits involving Federal officers and agencies are 
        removed to Federal court. To illustrate, a defendant 
        seeking to escape a state court forum brings a third-
        party action against a Federal employee. If the Federal 
        employee was acting within the scope of the employee's 
        employment, the United States can remove the case to 
        Federal court under 28 USC Sec. 1442 & Sec. 2679. The 
        Federal court then applies the derivative jurisdiction 
        doctrine and dismisses the third-party claim against 
        the Federal employee, remanding the underlying action 
        to state court. DOJ says that in such instances the 
        third-party claim against a Federal employee is often 
        brought merely to obtain a Federal forum, thereby 
        frustrating the plaintiff's choice of forum.

         LA clarification that a district court, and 
        not state court, can make findings regarding the 
        appropriateness of certain removals. This is a non-
        substantive change.

         LSubstitution of the generic word ``entity'' 
        for ``party'' in one instance, consistent with the 
        context of its usage.

         LDeletion of an extra comma in one provision.

    H.R. 394 includes the base text as approved by the House in 
the 111th Congress along with the Senate changes.

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
394.

                        Committee Consideration

    On January 26, 2011, the Committee met in open session and 
ordered the bill H.R. 394 favorably reported without amendment, 
by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 394.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 394, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, February 3, 2011.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 394, the ``Federal 
Courts Jurisdiction and Venue Clarification Act of 2011.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Martin von 
Gnechten, who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 394--Federal Courts Jurisdiction and Venue Clarification Act of 
        2011.
    H.R. 394 would make several changes to judicial procedures, 
including the determination of original jurisdiction and court 
venue for certain types of cases. H.R. 394 would specify the 
court of original jurisdiction for certain cases involving 
resident aliens and corporations. In addition, H.R. 394 would 
change how the venues for Federal court cases are determined, 
particularly when the cases involve multiple districts.
    Based on information from the Administrative Office of the 
U.S. Courts, CBO estimates that implementing H.R. 394 would 
have no significant budgetary impact. Enacting H.R. 394 would 
not affect direct spending or revenues; therefore, pay-as-you-
go procedures do not apply.
    H.R. 394 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of State, local, or tribal 
governments.
    The CBO staff contact for this estimate is Martin von 
Gnechten. The estimate was approved by Theresa Gullo, Deputy 
Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
394 clarifies the operation of Federal jurisdictional statutes 
and assists Federal judges in identifying the appropriate State 
or Federal court where actions should be brought.

                   Constitutional Authority Statement

    The Committee finds the authority for this legislation in 
article I, section 8, clause 9 and clause 18; and article III, 
section 1, of the Constitution.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 394 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Sec. 1. Short title; table of contents. Section 1(a) sets 
forth the short title of the bill as the ``Federal Courts 
Jurisdiction and Venue Clarification Act of 2011.'' Subsection 
(b) provides a table of contents and the remaining text:

                  TITLE I--JURISDICTIONAL IMPROVEMENTS

    Sec. 101. Treatment of resident aliens.
    Sec. 102. Citizenship of corporations and insurance 
companies with foreign contacts.
    Sec. 103. Removal and remand procedures.
    Sec. 104. Effective date.

               TITLE II--VENUE AND TRANSFER IMPROVEMENTS

    Sec. 201. Scope and definitions.
    Sec. 202. Venue generally.
    Sec. 203. Repeal of section 392.
    Sec. 204. Change of venue.
    Sec. 205. Effective date.

                  TITLE I--JURISDICTIONAL IMPROVEMENTS

SEC. 101. TREATMENT OF RESIDENT ALIENS.

    The Constitution provides the basis for Federal court 
jurisdiction over disputes between citizens of different states 
(``diversity jurisdiction'') and over disputes involving 
citizens of the United States and citizens or subjects of 
foreign states (``alienage jurisdiction''). Currently, 
diversity jurisdiction is available when the matter in 
controversy exceeds $75,000 and is between citizens of 
different states. See 28 U.S.C. Sec. 1332(a)(1). Under the 
long-standing complete diversity requirement, for diversity 
jurisdiction to be available, no plaintiff and defendant can be 
from the same state. See Strawbridge v. Curtiss, 7 U.S. (3 
Cranch) 267 (1806). The traditional reason given for providing 
for diversity jurisdiction is ``a fear that state courts would 
be prejudiced against those litigants from out of state.'' 
Charles Alan Wright & Mary Kay Kane, Law of Federal Courts 
Sec. 23, at 144 (6th ed. 2002).
    Although the Constitution permits the assertion of Federal 
jurisdiction over disputes involving aliens, established law 
bars the assertion of jurisdiction over a dispute that involves 
only aliens. Alienage jurisdiction exceeds the limits of 
Article III unless a citizen of the United States also appears 
as a party. See Hodgson v. Bowerbank, 9 U.S. (5 Cranch) 303 
(1809). Cognizant of this long-standing constitutional 
limitation, section 1332 allows for jurisdiction over aliens in 
two situations, both of which involve U.S. citizens. First, 
paragraph 1332(a)(2) applies to disputes between citizens of a 
state and citizens or subjects of a foreign state. Second, 
paragraph 1332(a)(3) applies to disputes between citizens of 
different states in which citizens or subjects of a foreign 
state are additional parties. Jurisdiction based on paragraphs 
1332(a)(2) or (3) is still subject to the minimum amount in 
controversy requirement.
    In general, the Federal courts have taken a fairly narrow 
view of the scope of paragraph 1332(a)(2) jurisdiction, 
declining on statutory grounds to assert jurisdiction over 
disputes in which aliens appear on both sides of the 
litigation. See, e.g., Ed & Fred, Inc. v. Puritan Marine Ins. 
Underwriters Corp., 506 F.2d 757 (5th Cir. 1975). Even though 
U.S. citizens may appear on one side of the litigation, the 
presence of aliens as opposing parties(even aliens from 
different foreign countries) has proven fatal to the assertion 
of jurisdiction. See generally Allendale Mutual Ins. Co. v. 
Bull Data Systems, Inc., 10 F.3d 425, 428 (7th Cir. 1993); 15 
Moore's Federal Practice, Sec. 102.77 (3d ed. 2001). In actions 
proceeding under paragraph 1332(a)(3), this rule has not been 
applied with the same rigor. More specifically, when a claim 
between diverse U.S. citizens grounds the jurisdiction and 
aliens appear as additional parties on both sides of the 
litigation, jurisdiction has been upheld. See Transure, Inc. v. 
Marsh & McLennan, Inc., 766 F.2d 1297, 1298-99 (9th Cir. 1985) 
(upholding jurisdiction under section 1332(a)(3)); Dresser 
Industries, Inc. v. Underwriters at Lloyd's of London, 106 F.3d 
494, 500 (3d Cir. 1997) (same).
    In 1988, Congress added the ``resident alien proviso'' to 
subsection 1332(a) through enactment of the Judicial 
Improvements and Access to Justice Act (Pub. L. No. 100-702). 
The proviso states that ``an alien admitted to the United 
States for permanent residence shall be deemed a citizen of the 
State in which such alien is domiciled.'' 28 U.S.C. 
Sec. 1332(a). The purpose of that change was to preclude 
Federal alienage jurisdiction under paragraph 1332(a)(2) in 
suits between a citizen of a state and an alien permanently 
residing in the same state, thereby also reducing the caseload 
of the Federal courts. See, e.g., China Nuclear Energy Industry 
Corp. v. Andersen, LLP, 11 F. Supp. 2d 1256, 1258-59 (D. Colo. 
1998). In such situations, the permanent resident alien has 
appreciable connections to the state, and there was perceived 
to be no need to provide for a Federal forum to protect the 
alien against possible bias in state court. Courts have 
interpreted the reference to permanent aliens to mean only 
those aliens who have been given ``green cards.'' See Foy v. 
Schantz, Schatzman & Aaronson, P.A., 108 F.3d 1347, 1349 (11th 
Cir. 1997) (holding that the ``permanent resident alien 
provision of Sec. 1332(a) applies only to aliens who have 
received permission from the INS to remain permanently in this 
country'').
    Although the 1988 amendment curtailed alienage jurisdiction 
in one setting, the ``deeming'' feature created an arguable 
basis for expansion of alienage jurisdiction in other 
settings--a problem with which the courts have struggled. See, 
e.g., Arai v. Tachibana, 778 F. Supp. 1535 (D. Haw. 1991), and 
Saadeh v. Farouki, 107 F.3d 52 (D.C. Cir. 1997). Under 
paragraph 1332(a)(1), two resident aliens from different states 
might each be deemed to be a citizen of his or her respective 
state of domicile and claim access to Federal diversity 
jurisdiction in circumstances that would appear to violate the 
venerable rule of Hodgson v. Bowerbank (supra). Under 
paragraphs 1332(a)(2)-(3), additional possibilities emerge for 
litigants involved in litigation with resident aliens to seek 
to expand their access to Federal court beyond what was 
available before the deeming proviso took effect in 1988. For 
example, in Singh v. Daimler-Benz AG, 9 F.3d 303 (3d Cir. 
1993), the court allowed a permanent resident alien in one 
state to proceed against a U.S. corporation resident in another 
state and a non-resident foreign corporation, even though the 
configuration of parties would have apparently failed to 
support a finding of jurisdiction under either paragraphs 
1332(a)(2) or (a)(3) in the absence of the deeming provision.
    To correct the problem, section 101 eliminates the resident 
alien proviso and its deeming feature altogether, along with 
its potential for jurisdictional expansion. By eliminating the 
proviso, resident aliens would no longer be deemed to be U.S. 
citizens for purposes of diversity jurisdiction, thereby 
avoiding the possibly anomalous results under paragraphs 
1332(a)(1)-(3). In place of the proviso, section 101 would 
provide that the district courts shall not have diversity of 
citizenship jurisdiction under paragraph 1332(a)(2) of a claim 
between a citizen of a state and a citizen or subject of a 
foreign state admitted to the United States for permanent 
residence and domiciled in the same state. Section 101 of the 
bill would thus achieve the goal of modestly restricting 
jurisdiction, which Congress sought to accomplish when it first 
enacted the resident alien proviso, and would avoid the threat 
of the expansion of jurisdiction now posed by the proviso. 
State court forums would remain available to aliens if Federal 
court forums were foreclosed.
    By attaching this modest restriction only to paragraph 
1332(a)(2), the amendment would permit resident aliens to 
appear as additional parties to disputes under paragraph 
1332(a)(3), without their status as deemed U.S. citizens of 
their state of residence being treated as a basis for either 
establishing or defeating the diversity of U.S. citizenship 
that grounds jurisdiction under this provision. (References to 
sections 1335 (interpleader) and 1441 (removal) are no longer 
necessary in the replacement sentence because 1335 is dependent 
upon diversity jurisdiction under section 1332, and similarly, 
section 1441 applies only when district courts have original 
jurisdiction--which here would be through diversity.)

SEC. 102. CITIZENSHIP OF CORPORATIONS AND INSURANCE COMPANIES WITH 
                    FOREIGN CONTACTS.

Section 102 amends paragraph 1332(c)(1) of title 28, United 
States Code, to specify the treatment of citizenship in 
diversity actions involving corporations, as well as insurance 
companies involved in direct actions. The purpose is to clarify 
how foreign contacts should affect the determination of whether 
diversity of citizenship exists when a case involving these 
entities is filed in or removed to Federal court.
Actions involving corporations
    When one of the parties to a civil action is a corporation, 
subsection 1332(c) deems that corporation to be a citizen of 
any ``State'' in which it has been incorporated ``and of the 
State where it has its principal place of business.'' The 
quoted phrase was added to paragraph 1332(c)(1) in 1958 to 
expand the concept of corporate citizenship. The intent was to 
preclude diversity jurisdiction over a dispute between an in-
state citizen and a corporation incorporated or primarily doing 
business in the same state. In these situations, neither party 
faces a threat of bias if the action were to be resolved in 
state court.
    For example, today under subsection 1332(c), if a 
corporation incorporated in Delaware has its principal place of 
business in Florida, it is deemed to be a citizen of both 
Delaware and Florida. If a Florida citizen or a Delaware 
citizen sues that corporation, diversity jurisdiction would be 
defeated because both the plaintiff and defendant would be 
treated as citizens from the same state (Florida or Delaware).
    When an action involves a U.S. corporation with foreign 
contacts or foreign corporations that operate in the United 
States, Federal courts have struggled to apply this statute. 
See C. Wright & M. Kane, supra, Sec. 27, at 170. The difficulty 
occurs primarily because paragraph 1332(c)(1) refers to a 
``State'' and does not specify whether the term includes 
contacts with a foreign state (country of incorporation or 
principal place of doing business). Subsection (e) of section 
1332 defines ``States'' as including the Territories, the 
District of Columbia, and the Commonwealth of Puerto Rico. Some 
courts have noted that because the word ``States'' in the 
subsection begins with a capital ``S,'' it applies only to the 
fifty states and the other places specified in the definition 
and therefore does not apply to corporate citizens of foreign 
states. See, e.g., Torres v. Southern Peru Copper Corp., 113 
F.3d 540, 543 (11th Cir. 1997); Cabalceta v. Standard Fruit 
Co., 883 F.2d 1553, 1559 (5th Cir. 1989). Other courts applying 
paragraph 1332(c)(1) have concluded that the word ``States'' 
should mean foreign states, as well as states of the Union. 
See, e.g., Nike, Inc. v. Comercial Iberica de Exclusivas 
Deportivas, S.A., 20 F.3d 987 (9th Cir. 1994).
    The following are examples of how the courts have reached 
different conclusions in trying to apply the provision in the 
absence of specific references to ``foreign states.'' Some 
circuits have treated a U.S. corporation with its principal 
place of business abroad as a citizen only of its place of 
incorporation. See, e.g., Cabalceta, supra (plaintiffs from 
Costa Rico (aliens) brought suit against Standard Fruit 
Company, a Delaware corporation with its principal place of 
business in Latin America); Torres, supra (alien plaintiffs 
brought suit against Delaware corporation with principal place 
of business in Peru). Such treatment of the corporations as 
citizens of Delaware while ignoring their foreign contacts 
resulted in decisions upholding the availability of Federal 
alienage jurisdiction and allowing the actions to proceed in 
Federal court.
    The Ninth Circuit, in contrast, has rejected any 
distinction between foreign and domestic corporations; each 
would be deemed a citizen of both its place of incorporation 
and its principal place of business. See Nike, Inc., supra, at 
990. Although technically dicta as applied to U.S. corporations 
with business centers abroad, the Ninth Circuit's approach has 
been applied to U.S. corporations in a number of district court 
decisions. See Note, David A. Greher, The Application of 28 
U.S.C. Sec. 1332(c)(1) to Alien Corporations: A Dual 
Citizenship Analysis, 36 Va. J. Int'l L. 233, 251 n.92 (1995) 
(collecting cases). Such an approach would result in a denial 
of alienage jurisdiction over suits brought by aliens against 
U.S. corporations that have business centers abroad.
    The amendment in section 102 would resolve this division of 
authority by implementing the diversity-curtailing intent of 
this provision with regard to corporations with foreign 
activities. It would insert the words ``foreign state'' in two 
places in paragraph 1332(c)(1) to make it clear that all 
corporations, foreign and domestic, would be regarded as 
citizens of both their place of incorporation and their 
principal place of business. The amendment would result in a 
denial of diversity jurisdiction in two situations: (1) where a 
foreign corporation with its principal place of business in a 
state sues or is sued by a citizen of that same state, and (2) 
where a citizen of a foreign country (alien) sues a U.S. 
corporation with its principal place of business abroad. Such a 
change would bring a degree of clarity to an area of 
jurisdictional law now characterized by conflicting approaches 
in the Federal courts. State courts of general jurisdiction 
would remain available to the parties.
    By more clearly defining citizenship of corporations with 
foreign ties, the legislation would deny access to a Federal 
court in a small range of cases for which a Federal forum might 
be available today. For example, a company might have its 
principal place of business in a foreign state and nonetheless 
choose to incorporate in the United States. Such incorporation 
would make the corporation a citizen of its state of 
incorporation and, according to some courts, enable the 
corporation to claim access to a Federal court in a dispute 
with another foreign national. (When such disputes arise from 
allegedly tortious conduct overseas, the Federal courts will 
often assert jurisdiction only to dismiss under the doctrine of 
forum non conveniens.) Section 102 would alter the 
jurisdictional analysis by deeming the corporation to be a 
citizen of its state of incorporation and of the foreign state 
where it has its business center, blocking jurisdiction on the 
well-established ground that disputes between two aliens do not 
satisfy the jurisdictional requirements of subsection 1332(a). 
The statute would have no impact on the freedom of corporations 
to incorporate where they see fit, or to do business in 
accordance with their own business plan. It would simply treat 
them as citizens of their place of incorporation and principal 
place of business on a basis consistent with the treatment of 
domestic corporations.
    The change made by this amendment follows the definition 
Congress used for corporate citizenship in the Multiparty, 
Multiforum Trial Jurisdiction Act of 2002 (Pub. L. No. 107-
273). More specifically, that law provides that ``a corporation 
is deemed to be a citizen of any State, and a citizen or 
subject of any foreign state, in which it is incorporated or 
has its principal place of business. . . .'' This definition is 
now codified as 28 U.S.C. Sec. 1369(c)(2).
    Section 102 also revises the wording of paragraph 
1332(c)(1) so that a corporation shall be deemed a citizen of 
``every State and foreign state by which it has been 
incorporated,'' instead of ``any State . . .'' (Emphasis 
added.) Although corporations can incorporate in more than one 
state, the practice is rare. In applying the present wording of 
the subsection, most courts have treated such multi-state 
corporations as citizens of every state by which they have been 
incorporated. This section would codify the leading view as to 
congressional intent and treat corporations as citizens of 
every state of incorporation for diversity purposes. See C. 
Wright & M. Kane, supra, Sec. 27, at 167-68.
Direct actions against insurance companies
    Section 102 amends paragraph 1332(c)(1) to provide the same 
definition of citizenship for an insurance company engaged in 
direct action litigation as that proposed above for 
corporations with foreign contacts. Paragraph 1332(c)(1) 
presently includes ``deeming'' language for determining the 
citizenship of an insurance company involved in direct action 
litigation, which was added by Congress in 1964 (Pub. L. No. 
88-439, 78 Stat. 445). The provision now reads as follows:

        in any direct action against the insurer of a policy or 
        contract of liability insurance, whether incorporated 
        or unincorporated, to which action the insured is not 
        joined as a party-defendant, such insurer shall be 
        deemed a citizen of the State of which the insured is a 
        citizen, as well as of any State by which the insurer 
        has been incorporated and of the State where it has its 
        principal place of business.

28 U.S.C. Sec. 1332(c)(1).
    In a direct action case, the plaintiff sues the liability 
insurance company directly without naming as a defendant the 
insured party whose negligence or other wrongdoing gave rise to 
the claim. Subsection 1332(c) seeks to prevent such direct 
actions from qualifying for diversity jurisdiction by deeming 
the insurance company to be a citizen of the state of which the 
insured is a citizen, as well as of every state by which the 
insurer has been incorporated and of the state where it has its 
principal place of business.
    The provision was enacted primarily in response to a surge 
in diversity case filings against insurance companies in 
Federal courts in Louisiana. Sen. Rep. No. 1308, 88th Cong., 2d 
Sess. (1964), reprinted in 1964 U.S. Code Cong. & Admin. News, 
p. 2778. That increase followed adoption of a state statute 
there in 1959 allowing direct actions against insurance 
companies.

        Because of the broad review of jury verdicts that the 
        Louisiana practice permits, lawyers for plaintiffs in 
        that state greatly preferred to be in Federal court 
        rather than in state court. They were able to convert 
        what otherwise would have been a routine automobile-
        accident case between two Louisiana citizens into a 
        diversity action by taking advantage of the state 
        statute permitting suit directly against the insurer 
        without joinder of the insured.

C. Wright & M. Kane, supra, Sec. 27, at 171. Wisconsin also had 
enacted a state statute permitting direct actions. Id.; see 
also Inman v. MFA Mutual Ins. Co., 264 F. Supp. 727 (E.D. Ark. 
1967); Carvin v. Standard Accident Ins. Co., 253 F. Supp. 232 
(E.D. Tenn. 1966). The 1964 amendment was successful at 
preventing such direct actions from proceeding in Federal court 
under diversity jurisdiction. Northbrook National Ins. Co. v. 
Brewer, 493 U.S. 6 (1989) (in applying the provision, the 
Supreme Court set forth the legislative history).
    Today, direct actions continue to exist in some states 
through specific statutes (e.g., Louisiana, Wisconsin, 
Arkansas, and Connecticut) and in other states through 
examination of the nature of certain causes of action 
authorized in that state (e.g., North Carolina). Yet, for 
diversity purposes, the citizenship of the insurer in such 
actions should be no different from that provided for 
corporations and should recognize the insurer's foreign 
contacts. At least one court has held that the 1964 amendment 
should be applied to insurance companies incorporated abroad so 
as to carry out the intent of the statute and deny diversity 
jurisdiction. See Newsom v. Zurich Ins. Co., 397 F.2d 280, 282 
(5th Cir. 1968).
    Section 102 inserts references to ``foreign states'' to 
address situations where insurance companies are incorporated 
abroad or have their principal place of business See generally 
American 1 Law Institute, Federal Judicial Code Revision 
Project, Part III, Removal, pp. 325-332 (2004) (ALI Project). 
abroad. (As a practical matter, this amendment would only 
affect the limited number of states where direct actions are 
permitted under state law or such actions are determined to 
exist.)

SEC. 103. REMOVAL AND REMAND PROCEDURES.

    Section 103 amends sections 1441 and 1446 of title 28 to 
make improvements in the removal statutes. Some of these 
proposed statutory changes in this section are similar to those 
included in the ALI Project.\1\
---------------------------------------------------------------------------
    \1\See generally American Law Institute, Federal Judicial Code 
Revision Project, Part III, Removal, pp. 325-332 (2004) (ALI Project)
---------------------------------------------------------------------------

                  Proposed Amendments to Section 1441

    Section 103(a)(1) of the bill revises the heading for 28 
U.S.C. Sec. 1441 to reflect that its application is limited to 
civil cases. Section 103(a)(2) inserts a heading for subsection 
(a) of section 1441 and deletes the last sentence in that 
subsection (the substance of which is moved to new proposed 
paragraph 1441(b)(1), see below). Section 103(a)(3) places the 
provisions that apply to diversity actions under one 
subsection. This change is intended to make it easier for 
litigants to locate the provisions that apply uniquely to 
diversity removal.
    Proposed paragraph 1441(b)(1) takes the substance of the 
last sentence in current subsection 1441(a) and places it 
within the diversity subsection, as the sentence moved pertains 
only to diversity cases. Proposed paragraph 1441(b)(2) restates 
the substance of the last sentence of current subsection 
1441(b), which relates only to diversity. (The first sentence 
currently in subsection 1441(b) is deleted because its 
reference to Federal question jurisdiction is addressed in the 
first sentence of subsection 1441(a).)
Joinder of Federal law claims and state law claims\2\
---------------------------------------------------------------------------
    \2\See also id. at 372-374.
---------------------------------------------------------------------------
    Section 103(a)(4) of the bill would amend subsection 
1441(c) to clarify the right of access to Federal court upon 
removal for the adjudication of separate Federal law claims 
that are joined with unrelated state law claims. Subsection 
1441(c) presently authorizes a defendant to remove the entire 
case whenever a ``separate and independent'' Federal question 
claim is joined with one or more non-removable claims. That 
subsection also states that, following removal, the district 
court may either retain the whole case or remand all matters in 
which state law predominates.
    Some Federal district courts have declared the provision 
unconstitutional or raised constitutional concerns because, on 
its face, subsection 1441(c) purports to give courts authority 
to decide state law claims for which the Federal courts do not 
have original jurisdiction (e.g., Salei v. Boardwalk Regency 
Corp., 913 F. Supp. 993, 1007 (E.D. Mich. 1996)). Other courts 
have chosen simply to remand the entire case to state court, 
thereby defeating access to Federal court (e.g., Moralez v. 
Meat Cutters Local 539, 778 F. Supp. 368 (E.D. Mich. 1991)). 
Many commentators have recognized the problem, and a leading 
treatise on the subject declares that ``the present statute is 
useless and ought to have been repealed.'' See C. Wright & M. 
Kane, supra, Sec. 39, at 235.
    This section of the bill is intended to make changes to 
better serve the purpose for which the statute was originally 
designed, namely to provide a Federal forum for the resolution 
of Federal claims that fall within the original jurisdiction of 
the Federal courts. The amendment to subsection 1441(c) would 
permit the removal of the case but require that a district 
court remand unrelated state law matters. This sever-and-remand 
approach is intended to cure any constitutional problems while 
preserving the defendant's right to remove claims arising under 
Federal law.
    Sections 103(a)(5), (6), and (7)(A) of the bill insert 
appropriate headings for subsections 1441(d), (e), and (f) for 
ease of reference.

                Proposed Amendments to Section 1446 and 
                      Addition of New Section 1454

Separating the removal statute (Sec. 1446) into civil and criminal 
        statutes\3\
---------------------------------------------------------------------------
    \3\See generally ALI Project at 328-329.
---------------------------------------------------------------------------
    Sections 103(b)(1) and (b)(2)(B) of the bill amend section 
1446 to change the section title and strike certain references 
to ``criminal prosecution'' so as to separate the removal 
provisions relating to civil and criminal proceedings into two 
statutes. Section 1446 presently contains several subsections, 
some of which are applicable to removal of both civil and 
criminal cases, some applicable only to civil cases, and some 
applicable only to criminal cases. Separating the civil and 
criminal provisions into two statutes would assist litigants in 
knowing which provisions were applicable to their type of case.
    To effectuate this change, section 103 of the bill codifies 
the new statute for criminal proceedings as new section 1454. 
The statute for civil proceedings would continue to be section 
1446. To make conforming changes for this amendment, current 
paragraphs (c)(1)-(5) and subsection (e) of section 1446 would 
be deleted and re-codified in the new section 1454.
    Section 103(b)(2)(A) of the bill inserts a heading for 
subsection 1446(a). Section 103(b)(3)(A) inserts a heading for 
subsection 1446(b), while designating the current first 
paragraph as ``(1).''
Removal in multiple-defendant cases
    Section 103(b)(3) amends subsection 1446(b) by numbering 
the paragraphs, striking the second unnumbered paragraph of 
existing subsection 1446(b), which is restated in new paragraph 
(3), and adding a new second paragraph.
    New subparagraph (b)(2)(A) codifies the well-established 
``rule of unanimity'' for cases involving multiple defendants. 
Under that rule, which is generally traced to the Supreme Court 
decision in Chicago, Rock Island & Pac. Ry. v. Martin, 178 U.S. 
245, 251 (1900), all defendants who have been properly joined 
and served must join in or consent to removal. Like current 
law, the new provision is limited to cases removed solely under 
section 1441(a); it has no application to other statutes under 
which removal is authorized. See C. Wright & M. Kane, supra, 
Sec. 40, at 244; see also ALI Project at 441-442, 530-532. The 
other provisions of paragraph (b)(2) address the main objective 
of this part of the statute, namely to eliminate confusion 
surrounding the timing of removal when defendants are served at 
different times.
    The statute currently specifies a 30-day period for ``the 
defendant'' to remove the action, but it does not address 
situations with multiple defendants, particularly where they 
are served over an extended period of time during and after the 
expiration of the first served defendant's 30-day period for 
removal. In those situations, Federal courts have differed in 
determining the date on which the 30-day period begins to run. 
Compare Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202 
(11th Cir. 2008) (concluding that the 30-day period runs from 
the date of service on the last-served defendant and permitting 
earlier-served defendants who failed to act during their own 
30-day period to join in, or consent to, the last-served 
defendant's timely removal); Marano Enterprises v. Z-Teca 
Restaurants, LP, 254 F.3d 753 (8th Cir. 2001) (holding that 
each defendant has 30 days to effect removal, regardless of 
when or if other defendants had sought to remove); and Brierly 
v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527 (6th Cir. 
1999) (holding that time for removal in a case involving 
multiple defendants runs from the date of service on the last-
served defendant, and permitting defendants who failed to 
remove within their own 30-day period to join the timely 
removal petition of a later-served defendant), with Getty Oil 
Corp. v. Ins. Co. of North America, 841 F.2d 1254 (5th Cir. 
1988) (holding that the first-served defendant and all then-
served defendants must join in the notice of removal within 30 
days after service upon the first-served defendant); but cf. 
McKinney v. Board of Trustees of Mayland Community College, 955 
F.2d 924 (4th Cir. 1992) (holding that each defendant may have 
30 days to file notice of removal, and rejecting the Getty Oil 
argument that served defendants must join a petition for 
removal within the time specified for the first-served 
defendant).
    New subparagraph 1446(b)(2)(B) provides that each defendant 
will have 30 days from his or her own date of service (or 
receipt of initial pleading) to seek removal. Subparagraph 
(b)(2)(C) would also allow earlier-served defendants to join in 
or consent to removal by a later-served defendant. Fairness to 
later-served defendants, whether they are brought in by the 
initial complaint or an amended complaint, necessitates that 
they be given their own opportunity to remove, even if the 
earlier-served defendants chose not to remove initially. Such 
an approach does not allow an indefinite period for removal; 
plaintiffs could still choose to serve all defendants at the 
outset of the case, thereby requiring all defendants to act 
within the initial 30-day period.
    This new paragraph clarifies the rule of timeliness and 
provides for equal treatment of all defendants in their ability 
to obtain Federal jurisdiction over the case against them 
without undermining the Federal interest in ensuring that 
defendants act with reasonable promptness in invoking Federal 
jurisdiction. The approach follows what one court described as 
the trend in recent cases. See Bailey, supra, at 1205.
    New paragraph 1446(b)(3) is essentially the same as the 
text of the second paragraph of current subsection 1446(b), 
except that the 1-year limit on removal in diversity cases is 
made part of a new subsection that gathers all provisions 
uniquely applicable to removal based on diversity of 
citizenship.
Creating a separate subsection for removal in diversity cases
    Section 103(b)(3)(C) of the bill replaces subsection 
1446(c) (a criminal removal provision, which would now be 
codified in new section 1454) with the removal provisions 
relating solely to diversity, also adding an appropriate 
heading. This will assist lawyers in finding the statutory 
rules that uniquely apply to removal based on diversity of 
citizenship jurisdiction.
Authorizing removal after one year\4\
---------------------------------------------------------------------------
    \4\An alternative approach was proposed by the ALI, see ALI Project 
at 463, 466-469.
---------------------------------------------------------------------------
    New paragraph 1446(c)(1) adds to the current 1-year 
limitation on removal of diversity actions a limited exception, 
authorizing district courts to permit removal after the 1-year 
period if the district court finds that the plaintiff has acted 
in bad faith in order to prevent a defendant from removing the 
action.
    In 1988, Congress amended this statute to prohibit the 
removal of diversity cases more than one year after their 
commencement. This change was intended to encourage prompt 
determination of issues of removal in diversity proceedings, 
and it sought to avoid the disruption of state court 
proceedings that might occur when changes in the case made it 
subject to removal. The change, however, led some plaintiffs to 
adopt removal-defeating strategies designed to keep the case in 
state court until after the 1-year deadline passed. In those 
situations, some courts have viewed the 1-year time limit as 
``jurisdictional'' and therefore an absolute limit on the 
district court's jurisdiction. Other courts have viewed the 
period as ``procedural'' and therefore subject to equitable 
tolling (e.g., Tedford v. Warner-Lambert Co., 327 F.3d 423 (5th 
Cir. 2003)). In light of some ambiguity in the case law 
(compare Bowles v. Russell, 551 U.S. 205 (2007) (rejecting 
equitable tolling) with Holland v. Florida, 130 S. Ct. 2549 
(2010) (accepting such tolling)), inclusion of statutory 
language to resolve the conflict is appropriate.
    Proposed paragraph 1446(c)(1) grants district court judges 
discretion to allow removal after the 1-year limit if they find 
that the plaintiff has acted in bad faith in order to prevent a 
defendant from removing the action. The inclusion in the new 
standard of the phrase ``in order to prevent a defendant from 
removing the action'' makes clear that the exception to the bar 
of removal after one year is limited in scope.
Amount in controversy and removal timing
    Section 103(b)(3)(C) of the bill further amends subsection 
1446(c) by inserting two new paragraphs, (2) and (3), to 
address issues relating to uncertainty of the amount in 
controversy when removal is sought, e.g., when state practice 
either does not require or permit the plaintiff to assert a sum 
claimed or allows the plaintiff to recover more than an amount 
asserted. Although current practice allows defendants to claim 
that the jurisdictional amount is satisfied and remove, several 
issues complicate this practice.
    First, circuits have adopted differing standards governing 
the burden of showing that the amount in controversy is 
satisfied. The ``sum claimed'' and ``legal certainty'' 
standards that govern the amount in controversy requirement 
when a plaintiff originally files in Federal court have not 
translated well to removal, where the plaintiff often may not 
have been permitted to assert in state court a sum claimed or, 
if asserted, may not be bound by it. Second, many defendants 
faced with uncertainty regarding the amount in controversy 
remove immediately--rather than waiting until future 
developments provide needed clarification--out of a concern 
that waiting and removing later will result in the removal's 
being deemed untimely. In these cases, Federal judges often 
have difficulty ascertaining the true amount in controversy, 
particularly when removal is sought before discovery occurs. As 
a result, judicial resources may be wasted and the proceedings 
delayed when little or no objective information accompanies the 
notice to remove.
    Proposed new paragraph 1446(c)(2) allows a defendant to 
assert an amount in controversy in the notice of removal if the 
initial pleading seeks non-monetary relief or a money judgment, 
in instances where the state practice either does not permit 
demand for a specific sum or permits recovery of damages in 
excess of the amount demanded. The removal will succeed if the 
district court finds by a preponderance of the evidence that 
the amount in controversy exceeds the amount specified in 28 
U.S.C. Sec. 1332(a), presently $75,000.
    If the defendant lacks information with which to remove 
within the 30 days after the commencement of the action, the 
bill adds a new subparagraph 1446(c)(3)(A) to clarify that the 
defendant's right to take discovery in the state court can be 
used to help determine the amount in controversy. If a 
statement appears in response to discovery or information 
appears in the record of the state proceedings indicating that 
the amount in controversy exceeds the threshold amount, then 
proposed subparagraph 1446(c)(3)(A) deems it to be an ``other 
paper'' within the meaning of paragraph 1446(b)(3), thereby 
triggering a 30-day period in which to remove the action. The 
district court must still find by a preponderance of the 
evidence that the jurisdictional threshold has been met.
    In adopting the preponderance standard, new paragraph 
1446(c)(2) would follow the lead of recent cases. See McPhail 
v. Deere & Co., 529 F.3d 947 (10th Cir. 2008); Meridian 
Security Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006). As 
those cases recognize, defendants do not need to prove to a 
legal certainty that the amount in controversy requirement has 
been met. Rather, defendants may simply allege or assert that 
the jurisdictional threshold has been met. Discovery may be 
taken with regard to that question. In case of a dispute, the 
district court must make findings of jurisdictional fact to 
which the preponderance standard applies. If the defendant 
establishes by a preponderance of the evidence that the amount 
exceeds $75,000, the defendant, as proponent of Federal 
jurisdiction, will have met the burden of establishing 
jurisdictional facts.
    Under proposed subparagraph 1446(c)(3)(B), if the notice of 
removal is filed more than one year after the commencement of 
the action, and a finding is made that the plaintiff 
deliberately failed to disclose the actual amount in 
controversy to prevent removal, that finding would be deemed 
bad faith under paragraph (1).
    Section 103(b)(4)(A) of the bill inserts a heading for 
subsection 1446(d). Section 103(b)(4)(B) makes a technical 
amendment replacing ``thirty'' with ``30'' each place it 
appears in section 1446. Section 103(b)(4)(C) strikes current 
subsection (e) (a criminal removal provision, which is now 
codified as part of new section 1454). Section 103(b)(4)(D) 
redesignates current subsection (f) as new subsection (e), and 
inserts a new heading.

SEC. 104. EFFECTIVE DATE.

    Section 104 provides that the amendments made by Title I 
shall take effect upon the expiration of the 30-day period 
beginning on the date of the enactment of this Act and shall 
apply to any action or prosecution commenced on or after such 
effective date. Section 104 also provides that an action or 
prosecution commenced in state court and removed to Federal 
court shall be deemed to commence on the date the action or 
prosecution was commenced, within the meaning of state law, in 
state court.

               TITLE II--VENUE AND TRANSFER IMPROVEMENTS

SEC. 201. SCOPE AND DEFINITIONS.

    Section 201 adds a new section 1390 to chapter 87 of title 
28, United States Code, to define the term ``venue'' and to 
specify two areas where the venue chapter would be 
inapplicable.
    When venue is defined in terms of the geographical location 
where a civil action may appropriately be brought, venue is a 
relatively easy matter for a defendant to waive--either 
purposefully (by contract) or by inaction through the failure 
to raise the defense at the first available opportunity (see 
Fed. R. Civ. P. 12(b)(3) and 12(h)(1), making clear that 
defendants must raise the issue of venue in either the first 
motion or answer presented to the court in response to the 
complaint). If a defendant preserves the issue through a timely 
objection, district courts lack power to enter judgments 
against a defendant as to whom venue is improper. If the 
defendant fails to raise a venue defense and the court issues a 
judgment, the venue defense is waived.
    Proposed subsection 1390(a) (``Venue Defined'') would 
provide a general definition that distinguishes venue (a 
geographic specification of the appropriate forum for 
litigation) from other provisions of Federal law that operate 
as restrictions on subject-matter jurisdiction. Although such 
subject-matter restrictions may also include geographic terms, 
they differ from venue rules in that they may not be waived by 
the parties and will not be affected by changes in Chapter 87's 
general venue rules. Chapter 87's general rules also leave 
intact a variety of special provisions in various statutes that 
identify the proper forum for litigation of proceedings under 
specific acts of Congress. Some of these statutes have been 
interpreted as venue rules that may be waived by the parties, 
while others have been interpreted as restrictions on subject 
matter jurisdiction, which could not be waived.
    Proposed subsection 1390(b) (``Exclusion of Certain 
Cases'') would make clear that the general venue provisions do 
not apply to proceedings in admiralty. Presently, the only 
express provision that excludes admiralty cases from the 
general venue statutes that otherwise govern ``any civil 
action'' is included in Fed. R. Civ. P. 82, which specifies 
that an admiralty or maritime claim shall not be treated as a 
civil action for purposes of 28 U.S.C. Sec. Sec. 1391-1392. In 
addition, subsection (b) would codify current case law (see 
Continental Grain Co. v. Barge FBL-585, 364 U.S. 19 (1960)) to 
make clear that admiralty disputes would be subject to the 
general transfer provisions in 28 U.S.C. Sec. Sec. 1404-
1407.\5\
---------------------------------------------------------------------------
    \5\See generally ALI Project at 154-157.
---------------------------------------------------------------------------
    Proposed subsection 1390(c) (``Clarification Regarding 
Cases Removed from State Courts''), in keeping with current 
case law, would provide that the venue statutes do not 
determine the proper venue for a case removed from state court 
to a Federal district court.\6\ (The removal statute, 28 U.S.C. 
Sec. 1441(a), makes venue proper in the Federal district court 
for the district in which the state court action was pending.) 
In addition, this subsection would maintain current practice by 
expressly providing that the transfer provisions of Chapter 87 
would govern the transfer of a removed action as between 
districts and divisions of the Federal district courts once a 
case has been removed.\7\
---------------------------------------------------------------------------
    \6\See, e.g., Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 665-
66 (1953) (venue removed in cases is controlled by the removal statute, 
rather than the general venue statute); Kerobo v. Southwestern Clean 
Fuels Corp., 285 F.3d 531 (6th Circ. 2002) (applying the Polizzi 
principle). See also ALI Project at 157-158.
    \7\See Hollis v. Florida State University, 259 F.3d 1295, 1300 
(11th Cir. 2001) (noting the availability of transfer following removal 
of a case to Federal court); Bentz v. Recile, 778 F.2d 1026, 1027-1028 
(5th Cir. 1985) (permitting removal and transfer for convenience of the 
parties even where action was removed from a state court that may have 
lacked jurisdiction over the defendant).
---------------------------------------------------------------------------
    Section 201(b) makes a conforming amendment in the table of 
sections for Chapter 87.

SEC. 202. VENUE GENERALLY.

    Section 202 of the bill replaces the text of the first four 
subsections of present section 1391, which govern venue 
generally.
Application of Venue Requirements Generally (Proposed Sec. 1391(a)(1))
    New paragraph 1391(a)(1) would follow current law in 
providing the general requirements for venue choices, but would 
not displace the special venue rules that govern under 
particular Federal statutes.\8\ A general venue statute may 
provide greater uniformity and lessen the need for special 
venue provisions in titles other than title 28.
---------------------------------------------------------------------------
    \8\The ALI notes that there are over 200 specialized venue statutes 
in the United States Code. These specialized statutes would continue to 
govern within their respective fields, and the general venue statute 
would govern diversity and Federal question litigation outside these 
special areas. See ALI Project at 253-290.
---------------------------------------------------------------------------
Abrogation of the ``local action'' rule (Proposed Sec. 1391(a)(2), see 
        also proposed section 203 of the bill)
    New paragraph 1391(a)(2) would end the use of the ``local 
action'' rule, which provides that certain kinds of actions 
pertaining to real property may be brought only in the district 
in which the property is located. Such actions, deemed 
``local,'' differ from the transitory actions that may be 
brought in any court with jurisdiction over the dispute and 
parties. The rule has primarily caused problems in disputes 
over suits for damages due to a trespass, because the district 
court may not be able to exercise personal jurisdiction over 
the defendant in the place where the property is located. Thus, 
in such situations, a plaintiff would not be able to pursue his 
or her case.
    As noted in the ALI Project, ``[t]he virtually unanimous 
view of modern opinion is that the local-action rule serves no 
useful function as a device for allocating venue among the 
Federal courts. It is largely a creature of decisional law. . . 
.'' ALI Project at 169. See e.g., Bigio v. Coca-Cola, 239 F.3d 
440, 449-450 (2d Cir. 2000) (tracing local action rule to 
Livingston v. Jefferson, 15 Fed. Cas. 660 (C.C.D.Va. 1811)).
    In light of the definition in subsection 1390(a), the 
phrasing of paragraph (a)(2), with its specific reference to 
``venue,'' makes it clear that statutory restrictions based on 
subject-matter jurisdiction would continue to apply.\9\
---------------------------------------------------------------------------
    \9\As noted in the ALI Project, new section 1391(a)(2)'s abrogation 
of the local-action rule would be subject to the qualification at the 
beginning of subsection (a) ``[e]xcept as otherwise provided by law.'' 
ALI Project at 170-171.
---------------------------------------------------------------------------
Establishing a unitary approach to venue; limiting venue in multiple-
        defendant cases to a district of the state in which all 
        defendants reside; and clarifying the definition of 
        ``fallback'' venue (Proposed Sec. 1391(b)(1)-(3))
    Presently, subsection 1391(a) sets forth the venue 
requirements for actions brought in the Federal courts pursuant 
to diversity jurisdiction (28 U.S.C. Sec. 1332). Subsection 
1391(b) sets forth the venue requirements for actions brought 
in Federal court based on Federal question jurisdiction (28 
U.S.C. Sec. 1331). The provisions of subsections (a) and (b) in 
current law are identical, except with respect to the 
``fallback'' provisions found in paragraphs 1391(a)(3) and 
(b)(3), which are used if ``there is no other district in which 
the action may otherwise be brought.''\10\ (As a practical 
matter, ``fallback'' venue applies primarily to claims that 
arise from conduct overseas.)
---------------------------------------------------------------------------
    \10\See generally ALI Project at 172-173 & nn.25, 27.
---------------------------------------------------------------------------
    Many academics, as well as the ALI, have called for the 
elimination of the venue distinction between diversity and 
Federal question actions. New subsection 1391(b) responds to 
this call by establishing a single, unitary approach to venue 
rules that would govern actions brought in Federal court based 
on diversity or Federal question jurisdiction. It would 
preserve section 1391 as a general venue statute with 
provisions for venue based on the residence of the defendants, 
venue based on where the events giving rise to the action took 
place, and fallback venue.
    New paragraph 1391(b)(1) would address a potential problem 
with the current statute. This subsection is intended to limit 
venue in multiple-defendant cases to a district of the state in 
which all defendants reside, and to address situations where 
one of the defendants in a multiple-defendant case is a 
corporation, which can be a resident for venue purposes in more 
than one state.
    Presently, the language of paragraphs 1391(a)(1) and (b)(1) 
makes venue proper in ``a judicial district where any defendant 
resides, if all defendants reside in the same State.'' 
Literally applied, this language could have unintended 
consequences. For example, consider a suit brought against both 
a resident (natural person) in Illinois and a corporation that 
does substantial business in every state, including Illinois, 
and the litigation arose from events that occurred in Illinois. 
Under current subsection 1391(c), the corporation could be 
considered a resident of Illinois and every other state, by 
virtue of its being subject to personal jurisdiction in all 
those states. A plaintiff might sue both defendants in any 
other district where the corporation happens to reside, such as 
the Southern District of New York, on the theory that, because 
all defendants reside in the same state (Illinois) as provided 
in 28 U.S.C. Sec. 1391(a) and (b), venue is proper in any other 
district where ``any defendant resides.'' Proposed paragraph 
1391(b)(1) would alter the statutory language to preclude such 
a result, while achieving the intended goal of the original 
statute.
    New paragraph 1391(b)(2) repeats without change the 
language now found in paragraphs 1391(a)(2) and 1391(b)(2).
    New paragraph 1391(b)(3) would eliminate the differences in 
fallback venue currently found in paragraphs 1391(a)(3) and 
(b)(3). Paragraph 1391(a)(3) of title 28 provides that venue is 
proper in ``a judicial district in which any defendant is 
subject to personal jurisdiction (emphasis added) at the time 
the action is commenced, if there is no district in which the 
action may otherwise be brought.'' Paragraph 1391(b)(3) 
provides that venue is proper in ``a judicial district in which 
any defendant may be found (emphasis added), if there is no 
district in which the action may otherwise be brought.'' 
Paragraph 1391(a)(3) appears to refer to situations in which 
the district court may exercise long-arm jurisdiction over any 
defendant in the case. Although paragraph 1391(b)(3) appears to 
have been intended to reach the same result, the ``may be 
found'' language in that provision could be interpreted to 
refer to situations in which any defendant may be served with 
process in the district.\11\ Traditionally, the ``may be 
found'' formulation carried this service-of-process 
connotation, and some courts have interpreted ``may be found'' 
venue provisions from elsewhere in Federal law as meaning 
something other than service achieved through a long-arm 
statute. See C. Wright & M. Kane, supra, Sec. 42, at 264 n.36.
---------------------------------------------------------------------------
    \11\See John B. Oakley, Prospectus for the American Law Institute's 
Federal Judicial Code Revision Project, 31 U. C. Davis L. Rev. 855, 948 
& n.404 (1998) (noting that the legislative history of the Judicial 
Improvements Act of 1990, Pub. L. No. 101-650, suggests that Congress 
intended no difference in the two formulations).
---------------------------------------------------------------------------
    Although no cases have been identified that have adopted 
the narrower interpretation of paragraph (b)(3), there is 
little substantive justification for the present disparity in 
language between 1391(a)(3) and (b)(3), which could disrupt the 
intended operation of the venue statutes. Proposed paragraph 
1391(b)(3) would eliminate this disparity and provide that an 
action may be brought in a judicial district in which any 
defendant is subject to the court's personal jurisdiction as to 
the action in question. The addition of the language ``with 
respect to such action'' is intended to avoid the possibility 
of an overly broad assertion of venue.
Venue Rules Applicable Universally (Proposed Sec. 1391(c))
    Under section 202 of the bill, proposed subsection 1391(c) 
would apply to all venuestatutes, including venue provisions 
that appear elsewhere in the United States Code. It defines 
residency for natural persons, incorporated and unincorporated 
entities, and also provides a rule for nonresident defendants. 
This would replace current subsection 1391(c), which applies 
only to corporations as defendants, and only for purposes of 
venue under Chapter 87.
Clarifying ``residence'' of natural persons for venue purposes 
        (Proposed Sec. 1391(c)(1))
    Under current paragraphs 1391(a)(1) and (b)(1), venue in a 
suit against a natural person may lie in a district where the 
defendant ``resides.'' Most courts have interpreted the term 
``resides'' as a reference to the party's domicile,\12\ 
borrowing the approach that governs the determination of 
citizenship for purposes of diversity of citizenship 
jurisdiction.\13\ However, a minority of appellate courts (the 
Second, Ninth, and Tenth Circuits) have interpreted residence 
as a possibly broader concept than citizenship and have 
permitted a defendant to be considered a resident in a state 
and district other than that person's state of domicile.\14\ 
Such a reading might permit a court to find venue to be proper 
in a place where a party has a summer home.
---------------------------------------------------------------------------
    \12\Domicile is defined as the place where a person has his or her 
true, fixed, and permanent home and principal establishment. See 
Black's Law Dictionary (8th ed. 2004).
    \13\See 15 Wright & Miller, Federal Practice and Procedure: 
Jurisdiction and Related Matters at 33-37 (2d. ed. 1986).
    \14\See, e.g., Arley v. United Pac. Ins. Co., 379 F.2d 183, 185, 
n.1 (9th Cir. 1967); cf. Townsend v. Bucyrus-Erie Co., 144 F.2d 106, 
108 (10th Cir. 1944) (noting that residence for venue purposes does not 
necessarily conform to citizenship for diversity purposes). See 
generally ALI Project at 178-182.
---------------------------------------------------------------------------
    Paragraph 1391(c)(1) would provide that, for venue 
purposes, a natural person would be deemed to reside in the 
judicial district in which that person is domiciled, thereby 
resolving the division of authority regarding the residence of 
parties by adopting the majority rule. As noted in the ALI 
Project, proposed new paragraph 1391(c)(1)--

        conforms . . . to the great bulk of precedent, by 
        expressly limiting party-based venue in suits against 
        individuals to the district or (in a multi-defendant 
        case) the state in which the defendant is domiciled. 
        This strict definition of residence for venue purposes 
        in suits against individuals means that any plaintiff 
        desiring to sue multiple individuals not domiciled in 
        the same state will have to bring suit in a claim-based 
        venue [where the events or omissions giving rise to the 
        claim occurred] . . . rather than in a party-based 
        venue. . . .\15\
---------------------------------------------------------------------------
    \15\See ALI Project at 182.

Venue for unincorporated associations (Proposed Sec. 1391(c)(2))
    The Supreme Court's decision in Denver & Rio Grande W. R. 
Co. v. Brotherhood of Railroad Trainmen, 387 U.S. 556 (1967), 
has produced a division in authority as to the venue treatment 
of unincorporated associations. There, the Court ruled that 
unions were to be treated like corporations for Federal venue 
purposes, and thus subject to venue where they were licensed to 
do business or where they were doing business. The venue 
treatment of corporations changed in 1988 with the adoption of 
28 U.S.C. Sec. 1391(c), which provides that corporations will 
be regarded as residents of any district in which they are 
subject to personal jurisdiction. Some courts apply this newer 
rule to unions; others continue to apply the Denver & Rio 
Grande venue rule to unincorporated associations. These courts 
take the position that the 1988 modification of the statutory 
rule for corporate venue did not change the treatment of venue 
for unincorporated associations that had been applied 
previously in Denver & Rio Grande.
    New paragraph 1391(c)(2) in section 202 of the bill would 
restore the parity of treatment contemplated in Denver & Rio 
Grande. The provision would deem a corporation, an 
unincorporated association, and any other entity that has the 
right to sue and be sued in its common name, if a defendant, to 
be a resident in any judicial district in which the defendant 
is subject to the court's personal jurisdiction as to the civil 
action in question, and, if a plaintiff, only in the judicial 
district in which it maintains its principal place of business. 
As a general matter, the same rule would apply to limited 
partnerships and corporations (LLPs and LLCs), entities that 
normally have the capacity to sue in their common name under 
the law governing their organization.
    This clarifies current law by expressly making the deeming 
provision applicable to unincorporated associations, such as 
partnerships and labor unions, and other entities with capacity 
to sue in their common name under applicable law. Under Fed. R. 
Civ. P. 17(b), corporate capacity to sue depends on the law 
governing the corporation's organization. With respect to 
entities other than corporations, capacity to sue in a common 
name depends on the law of the state in which the district 
court is located, except that partnerships and unincorporated 
associations that lack capacity under state law may sue or be 
sued in their common name for the purposes of enforcing 
substantive Federal rights.
    For the cases in which other laws provide that venue may be 
based on the residence of the plaintiff, this proposed 
amendment to the venue statute would treat a plaintiff capable 
of suing in its common name as a resident only of the district 
in which it has its principal place of business. This section 
would follow the ALI Project in slightly narrowing venue 
options for plaintiffs suing in a common name, in keeping with 
the trend to move away from plaintiff-based venue and focus on 
the convenience of defendants.
Clarifying venue for those residing outside the U.S.; granting venue 
        defense to permanent resident aliens with a domicile in the 
        U.S. (Proposed Sec. 1391(c)(3))
    Subsection 1391(d) of title 28 currently provides that an 
alien may be sued in any district, thus denying an alien the 
ability to raise venue as a defense to the location of 
litigation. As noted in the ALI Project, the current statute 
means that the ``presence of an alien defendant is disregarded 
in the application of the venue statutes to any co-defendants 
who are not aliens.'' ALI Project at 199.
    As provided in section 202, the first clause of proposed 
paragraph 1391(c)(3) would change venue law by shifting the 
focus from ``alienage'' of a defendant to whether the defendant 
has his or her ``residence'' outside the United States. It 
means that for a party resident abroad, whether a natural 
person or a corporation, any venue privilege against suit in a 
particular Federal district court would be eliminated, and the 
protection of the defendant from being sued in an inappropriate 
forum would be dependent upon whether the defendant was subject 
to personal jurisdiction in that district and to potential 
transfer under subsection 1404(a) of title 28.
    This would mean that aliens and United States citizens 
domiciled abroad could not claim a venue defense to the 
location of litigation. Prohibiting United States citizens 
domiciled abroad from raising a venue defense would be a change 
in current law. They could, however, continue to object to 
personal jurisdiction in the courts of the United States, as 
could aliens. (A natural person is deemed by paragraph 
1391(c)(1) to reside where domiciled, and thus such a defendant 
could be a nonresident for venue purposes and still be subject 
to personal jurisdiction as a defendant in a Federal district 
court.) This approach is consistent with that suggested by the 
ALI as far back as 1969 when it proposed dropping the emphasis 
on alienage and applying the same rule to all natural persons 
with a domicile abroad.
    The second clause of proposed paragraph 1391(c)(3) would 
make it clear that defendants that reside outside the United 
States shall be disregarded for purposes of determining the 
appropriate place for bringing an action as to other resident 
defendants. (This continues the present practice of 
disregarding aliens and extends that practice to other 
defendants who reside outside the United States.) The 
requirement that courts disregard non-resident defendants in 
determining venue should alleviate the possibility that 
district courts will view the presence of such parties as a bar 
to the transfer of actions to a more convenient forum.
    In keeping with the consistent focus of determining venue 
by reference to the domicile of natural persons, the deletion 
of the current language of 28 U.S.C. Sec. 1391(d), combined 
with the proposed amendment to paragraph 1391(c)(1), would also 
permit permanent resident aliens domiciled in the United States 
to raise a venue defense.\16\ As noted above, aliens may not 
claim a venue defense under current law. This is true even if 
the alien has been admitted for immigration purposes as a 
permanent resident of the United States and has established a 
domicile here. The proposed statute would grant a venue defense 
to permanent resident aliens who are domiciled in the United 
States. (At present, 28 U.S.C. Sec. 1332(a) recognizes that 
permanent resident aliens may be viewed as citizens of their 
state of domicile for certain jurisdictional purposes, although 
section 101 of the bill would modify the terms of that 
provision to better achieve its intended purpose.) As noted in 
the ALI Project, ``it makes little sense to assimilate 
permanent resident aliens domiciled in a state to United States 
citizens domiciled in a state for purposes of subject matter 
jurisdiction but not for purposes of venue.'' ALI Project at 
201. New paragraph 1391(c)(3) would address this problem.
---------------------------------------------------------------------------
    \16\An alien can obtain a ``lawful domicile'' in the United States 
only if he or she has the ability under the immigration laws to form 
the intent to remain in this country indefinitely. See Castellon-
Contreras v. INS, 45 F.3d 149 (7th Cir. 1995); Madrid-Tavarez v. INS, 
999 F.2d 111 (5th Cir. 1993). Such an interpretation of domicile under 
the venue statute as including lawful intent to remain would foreclose 
the possibility that an undocumented alien would be regarded as a 
domiciliary of the United States for venue purposes.
---------------------------------------------------------------------------
Retaining district-specific venue (Proposed Sec. 1391(d))
    The language of proposed subsection 1391(d) is identical to 
that currently included in the second sentence of subsection 
1391(c), with the addition of the language ``for purposes of 
venue under this chapter'' from the first sentence of the 
current subsection. Lastly, section 202 of the bill inserts 
subsection headings for subsections 1391(e), (f), and (g).

SEC. 203. REPEAL OF SECTION 1392.

    28 U.S.C. Sec. 1392 provides that ``[a]ny civil action, of 
a local nature, involving property located in different 
districts in the same State, may be brought in any of such 
districts.'' Because proposed paragraph 1391(a)(2) would 
abolish the local-action rule, section 1392 is repealed as 
unnecessary.

SEC. 204. CHANGE OF VENUE.

    Subsection 1404(a) of title 28 authorizes the transfer of 
civil actions for the convenience of the parties and witnesses 
and in the interest of justice, but it limits the transfer of 
an action to those districts ``where [the action] might have 
been brought.'' The Supreme Court has interpreted this language 
to require that the transferee district be one in which both 
venue and personal jurisdiction are proper.\17\ This 
interpretation, however, narrows the range of possible 
transferee districts and precludes a transfer of the case to a 
district where it might be more convenient to the litigants.
---------------------------------------------------------------------------
    \17\See Hoffman v. Blaski, 363 U.S. 335 (1960).
---------------------------------------------------------------------------
    In addition to the existing authority to transfer a civil 
action to a district or division where it might have been 
brought,'' the proposed amendment to subsection 1404(a) would 
permit an action to be transferred to any district or division 
to which all parties have consented, even if the action could 
not have been brought in that district or division originally. 
Under the proposed amendment, such transfers would only be 
possible where all parties agreed and only if the court found 
it to be for the convenience of the parties and witnesses and 
in the interest of justice. Such mutually agreed upon and 
judicially approved transfers would be proper in any action, 
including actions that have been centralized for pre-trial 
proceedings by the Judicial Panel on Multidistrict Litigation 
under 28 U.S.C. Sec. 1407.
    In authorizing such transfers upon the parties' consent, 
this proposed change to subsection 1404(a) would also require a 
corresponding change in existing subsection 1404(d) to clarify 
that the amendment to subsection 1404(a) is not intended to 
allow the transfer of an action from an Article III district 
court to a territorial district court that lacks Article III 
status. The proposed change would preclude a transfer from an 
Article III district court to the district courts of Guam, the 
Northern Mariana Islands, and the Virgin Islands. The specific 
bar of such transfers will prevent possible constitutional 
issues from arising.

SEC. 205. EFFECTIVE DATE.

    This section provides that the amendments made by Title II 
would take effect upon the expiration of the 30-day period 
beginning on the date of enactment and would apply to any 
action commenced on or after such date. In addition, it 
clarifies the treatment of cases commenced in state court and 
removed to Federal court.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 28, UNITED STATES CODE

           *       *       *       *       *       *       *


PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *


CHAPTER 85--DISTRICT COURTS; JURISDICTION

           *       *       *       *       *       *       *


Sec. 1332. Diversity of citizenship; amount in controversy; costs

    (a) The district courts shall have original jurisdiction of 
all civil actions where the matter in controversy exceeds the 
sum or value of $75,000, exclusive of interest and costs, and 
is between--
            (1) * * *
            (2) citizens of a State and citizens or subjects of 
        a foreign state, except that the district courts shall 
        not have original jurisdiction under this subsection of 
        an 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;

           *       *       *       *       *       *       *

[For the purposes of this section, section 1335, and section 
1441, an alien admitted to the United States for permanent 
residence shall be deemed a citizen of the State in which such 
alien is domiciled.]

           *       *       *       *       *       *       *

    (c) For the purposes of this section and section 1441 of 
this title--
            (1) a corporation shall be deemed to be a citizen 
        of [any State] every State and foreign state by which 
        it has been incorporated and of [the State] the State 
        or foreign state where it has its principal place of 
        business, except that in any direct action against the 
        insurer of a policy or contract of liability insurance, 
        whether incorporated or unincorporated, to which action 
        the insured is not joined as a party-defendant, [such 
        insurer shall be deemed a citizen of the State of which 
        the insured is a citizen, as well as of any State by 
        which the insurer has been incorporated and of the 
        State where it has its principal place of business; 
        and] such insurer shall be deemed a citizen of--
                    (A) every State and foreign state of which 
                the insured is a citizen;
                    (B) every State and foreign state by which 
                the insurer has been incorporated; and
                    (C) the State or foreign state where the 
                insurer has its principal place of business; 
                and

           *       *       *       *       *       *       *


                   CHAPTER 87--DISTRICT COURTS; VENUE

Sec.
1390. Scope.
1391. Venue generally.
[1392. Defendants or property in different districts in same State.]

           *       *       *       *       *       *       *


Sec. 1390. Scope

    (a) Venue Defined.--As used in this chapter, the term 
``venue'' refers to the geographic specification of the proper 
court or courts for the litigation of a civil action that is 
within the subject-matter jurisdiction of the district courts 
in general, and does not refer to any grant or restriction of 
subject-matter jurisdiction providing for a civil action to be 
adjudicated only by the district court for a particular 
district or districts.
    (b) Exclusion of Certain Cases.--Except as otherwise 
provided by law, this chapter shall not govern the venue of a 
civil action in which the district court exercises the 
jurisdiction conferred by section 1333, except that such civil 
actions may be transferred between district courts as provided 
in this chapter.
    (c) Clarification Regarding Cases Removed From State 
Courts.--This chapter shall not determine the district court to 
which a civil action pending in a State court may be removed, 
but shall govern the transfer of an action so removed as 
between districts and divisions of the United States district 
courts.

Sec. 1391. Venue generally

    [(a) A civil action wherein jurisdiction is founded only on 
diversity of citizenship may, except as otherwise provided by 
law, be brought only in (1) a judicial district where any 
defendant resides, if all defendants reside in the same 
State,(2) a judicial district in which a substantial part of 
the events or omissions giving rise to the claim occurred, or a 
substantial part of property that is the subject of the action 
is situated, or (3) a judicial district in which any defendant 
is subject to personal jurisdiction at the time the action is 
commenced, if there is no district in which the action may 
otherwise be brought.
    [(b) A civil action wherein jurisdiction is not founded 
solely on diversity of citizenship may, except as otherwise 
provided by law, be brought only in (1) a judicial district 
where any defendant resides, if all defendants reside in the 
same State, (2) a judicial district in which a substantial part 
of the events or omissions giving rise to the claim occurred, 
or a substantial part of property that is the subject of the 
action is situated, or (3) a judicial district in which any 
defendant may be found, if there is no district in which the 
action may otherwise be brought.
    [(c) For purposes of venue under this chapter, a defendant 
that is a corporation shall be deemed to reside in any judicial 
district in which it is subject to personal jurisdiction at the 
time the action is commenced. In a State which has more than 
one judicial district and in which a defendant that is a 
corporation is subject to personal jurisdiction at the time an 
action is commenced, such corporation shall be deemed to reside 
in any district in that State within which its contacts would 
be sufficient to subject it to personal jurisdiction if that 
district were a separate State, and,if there is no such 
district, the corporation shall be deemed to reside in the 
district within which it has the most significant contacts.
    [(d) An alien may be sued in any district.]
    (a) Applicability of Section.--Except as otherwise provided 
by law--
            (1) this section shall govern the venue of all 
        civil actions brought in district courts of the United 
        States; and
            (2) the proper venue for a civil action shall be 
        determined without regard to whether the action is 
        local or transitory in nature.
    (b) Venue in General.--A civil action may be brought in--
            (1) a judicial district in which any defendant 
        resides, if all defendants are residents of the State 
        in which the district is located;
            (2) a judicial district in which a substantial part 
        of the events or omissions giving rise to the claim 
        occurred, or a substantial part of property that is the 
        subject of the action is situated; or
            (3) if there is no district in which an action may 
        otherwise be brought as provided in this section, any 
        judicial district in which any defendant is subject to 
        the court's personal jurisdiction with respect to such 
        action.
    (c) Residency.--For all venue purposes--
            (1) a natural person, including an alien lawfully 
        admitted for permanent residence in the United States, 
        shall be deemed to reside in the judicial district in 
        which that person is domiciled;
            (2) an entity with the capacity to sue and be sued 
        in its common name under applicable law, whether or not 
        incorporated, shall be deemed to reside, if a 
        defendant, in any judicial district in which such 
        defendant is subject to the court's personal 
        jurisdiction with respect to the civil action in 
        question and, if a plaintiff, only in the judicial 
        district in which it maintains its principal place of 
        business; and
            (3) a defendant not resident in the United States 
        may be sued in any judicial district, and the joinder 
        of such a defendant shall be disregarded in determining 
        where the action may be brought with respect to other 
        defendants.
    (d) Residency of Corporations in States With Multiple 
Districts.--For purposes of venue under this chapter, in a 
State which has more than one judicial district and in which a 
defendant that is a corporation is subject to personal 
jurisdiction at the time an action is commenced, such 
corporation shall be deemed to reside in any district in that 
State within which its contacts would be sufficient to subject 
it to personal jurisdiction if that district were a separate 
State, and, if there is no such district, the corporation shall 
be deemed to reside in the district within which it has the 
most significant contacts.
    [(e) A civil action] (e) Actions Where Defendant is Officer 
or Employee of the United States._
            (1) In general.--A civil action in which a 
        defendant is an officer or employee of the United 
        States or any agency thereof acting in his official 
        capacity or under color of legal authority, or an 
        agency of the United States, or the United States, may, 
        except as otherwise provided by law, be brought in any 
        judicial district in which [(1)] (A) a defendant in the 
        action resides, [(2)] (B) a substantial part of the 
        events or omissions giving rise to the claim occurred, 
        or a substantial part of property that is the subject 
        of the action is situated, or [(3)] (C) the plaintiff 
        resides if no real property is involved in the action. 
        Additional persons may be joined as parties to any such 
        action in accordance with the Federal Rules of Civil 
        Procedure and with such other venue requirements as 
        would be applicable if the United States or one of its 
        officers, employees,or agencies were not a party.
            [The summons and complaint] (2) Service._The 
        summons and complaint in such an action shall be served 
        as provided by the Federal Rules of Civil Procedure 
        except that the delivery of the summons and complaint 
        to the officer or agency as required by the rules may 
        be made by certified mail beyond the territorial limits 
        of the district in which the action is brought.

           *       *       *       *       *       *       *

    [(f) A civil action] (f) Civil Actions Against a Foreign 
State.--A civil action against a foreign state as defined in 
section 1603(a) of this title may be brought--
            (1) * * *

           *       *       *       *       *       *       *

    [(g) A civil action] (g) Multiparty, Multiforum 
Litigation.--A civil action in which jurisdiction of the 
district court is based upon section 1369 of this title may be 
brought in any district in which any defendant resides or in 
which a substantial part of the accident giving rise to the 
action took place.

[Sec. 1392. Defendants or property in different districts in same State

    [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.]

           *       *       *       *       *       *       *


Sec. 1404. Change of venue

    (a) For the convenience of parties and witnesses, in the 
interest of justice, a district court may transfer any civil 
action to any other district or division where it might have 
been brought or to any district or division to which all 
parties have consented.

           *       *       *       *       *       *       *

    (d) [As used in this section,] Transfers from a district 
court of the United States to the District Court of Guam, the 
District Court for the Northern Mariana Islands, or the 
District Court of the Virgin Islands shall not be permitted 
under this section. As otherwise used in this section, the term 
``district court'' includes the District Court of Guam, the 
District Court for the Northern Mariana Islands, and the 
District Court of the Virgin Islands, and the term ``district'' 
includes the territorial jurisdiction of each such court.

           *       *       *       *       *       *       *


    CHAPTER 89--DISTRICT COURTS; REMOVAL OF CASES FROM STATE COURTS

Sec.
1441. [Actions removable generally] Removal of civil actions.
     * * * * * * *
1446. Procedure for removal of civil actions.
     * * * * * * *
1454. Procedure for removal of criminal prosecutions.

           *       *       *       *       *       *       *


Sec. 1441. [Actions removable generally] Removal of civil actions

    [(a) Except] (a) Generally.--Except as otherwise expressly 
provided by Act of Congress, any civil action brought in a 
State court of which the district courts of the United States 
have original jurisdiction, may be removed by the defendant or 
the defendants, to the district court of the United States for 
the district and division embracing the place where such action 
is pending. [For purposes of removal under this chapter, the 
citizenship of defendants sued under fictitious names shall be 
disregarded.]
    [(b) Any civil action of which the district courts have 
original jurisdiction founded on a claim or right arising under 
the Constitution, treaties or laws of the United States shall 
be removable without regard to the citizenship or residence of 
the parties. Any other such action shall be removable only if 
none of the parties in interest properly joined and served as 
defendants is a citizen of the State in which such action is 
brought.
    [(c) Whenever a separate and independent claim or cause of 
action within the jurisdiction conferred by section 1331 of 
this title is joined with one or more otherwise non-removable 
claims or causes of action, the entire case may be removed and 
the district court may determine all issues therein, or, in its 
discretion, may remand all matters in which State law 
predominates.]
    (b) Removal Based on Diversity of Citizenship.--(1) In 
determining whether a civil action is removable on the basis of 
the jurisdiction under section 1332(a) of this title, the 
citizenship of defendants sued under fictitious names shall be 
disregarded.
    (2) A civil action otherwise removable solely on the basis 
of the jurisdiction under section 1332(a) of this title may not 
be removed if any of the parties in interest properly joined 
and served as defendants is a citizen of the State in which 
such action is brought.
    (c) Joinder of Federal Law Claims and State Law Claims.--
(1) If a civil action includes--
            (A) a claim arising under the Constitution, laws, 
        or treaties of the United States (within the meaning of 
        section 1331 of this title), and
            (B) a claim not within the original or supplemental 
        jurisdiction of the district court or a claim that has 
        been made nonremovable by statute,
the entire action may be removed if the action would be 
removable without the inclusion of the claim described in 
subparagraph (B).
    (2) Upon removal of an action described in paragraph (1), 
the district court shall sever from the action all claims 
described in paragraph (1)(B) and shall remand the severed 
claims to the State court from which the action was removed. 
Only defendants against whom a claim described in paragraph 
(1)(A) has been asserted are required to join in or consent to 
the removal under paragraph (1).
    [(d) Any] (d) Actions Against Foreign States.--Any civil 
action brought in a State court against a foreign state as 
defined in section 1603(a) of this title may be removed by the 
foreign state to the district court of the United States for 
the district and division embracing the place where such action 
is pending. Upon removal the action shall be tried by the court 
without jury. Where removal is based upon this subsection, the 
time limitations of section 1446(b) of this chapter may be 
enlarged at any time for cause shown.
    [(e)(1) Notwithstanding] (e) Multiparty, Multiforum 
Jurisdiction.--(1) Notwithstanding the provisions of subsection 
(b) of this section, a defendant in a civil action in a State 
court may remove the action to the district court of the United 
States for the district and division embracing the place where 
the action is pending if--
            (A) * * *
    [(f) The court] (f) Derivative Removal Jurisdiction.--The 
court to which a civil action is removed under this section is 
not precluded from hearing and determining any claim in such 
civil action because the State court from which such civil 
action is removed did not have jurisdiction over that claim.

           *       *       *       *       *       *       *


[Sec. 1446. Procedure for removal]

Sec. 1446. Procedure for removal of civil actions

    [(a) A defendant] (a) Generally.--A defendant or defendants 
desiring to remove any civil action [or criminal prosecution] 
from a State court shall file in the district court of the 
United States for the district and division within which such 
action is pending a notice of removal signed pursuant to Rule 
11 of the Federal Rules of Civil Procedure and containing a 
short and plain statement of the grounds for removal, together 
with a copy of all process, pleadings, and orders served upon 
such defendant or defendants in such action.
    [(b) The notice] (b) Requirements; Generally.--(1) The 
notice of removal of a civil action or proceeding shall be 
filed within [thirty] 30 days after the receipt by the 
defendant, through service or otherwise, of a copy of the 
initial pleading setting forth the claim for relief upon which 
such action or proceeding is based, or within [thirty] 30 days 
after the service of summons upon the defendant if such initial 
pleading has then been filed in court and is not required to be 
served on the defendant, whichever period is shorter.
    [If the case stated by the initial pleading is not 
removable, a notice of removal may be filed within thirty days 
after receipt by the defendant, through service or otherwise, 
of a copy of an amended pleading, motion, order or other paper 
from which it may first be ascertained that the case is one 
which is or has become removable, except that a case may not be 
removed on the basis of jurisdiction conferred by section 1332 
of this title more than 1 year after commencement of the 
action.]
    (2)(A) When a civil action is removed solely under section 
1441(a), all defendants who have been properly joined and 
served must join in or consent to the removal of the action.
    (B) Each defendant shall have 30 days after receipt by or 
service on that defendant of the initial pleading or summons 
described in paragraph (1) to file the notice of removal.
    (C)   If defendants are served at different times, and a 
later-served defendant files a notice of removal, any earlier-
served defendant may consent to the removal even though that 
earlier-served defendant did not previously initiate or consent 
to removal.
    (3) Except as provided in subsection (c), if the case 
stated by the initial pleading is not removable, a notice of 
removal may be filed within thirty days after receipt by the 
defendant, through service or otherwise, of a copy of an 
amended pleading, motion, order or other paper from which it 
may first be ascertained that the case is one which is or has 
become removable.
    [(c)(1) A notice of removal of a criminal prosecution shall 
be filed not later than thirty days after the arraignment in 
the State court, or at any time before trial, whichever is 
earlier, except that for good cause shown the United States 
district court may enter an order granting the defendant or 
defendants leave to file the notice at a later time.
    [(2) A notice of removal of a criminal prosecution shall 
include all grounds for such removal. A failure to state 
grounds which exist at the time of the filing of the notice 
shall constitute a waiver of such grounds, and a second notice 
may be filed only on grounds not existing at the time of the 
original notice. For good cause shown, the United States 
district court may grant relief from the limitations of this 
paragraph.
    [(3) The filing of a notice of removal of a criminal 
prosecution shall not prevent the State court in which such 
prosecution is pending from proceeding further, except that a 
judgment of conviction shall not be entered unless the 
prosecution is first remanded.
    [(4) The United States district court in which such notice 
is filed shall examine the notice promptly. If it clearly 
appears on the face of the notice and any exhibits annexed 
thereto that removal should not be permitted, the court shall 
make an order for summary remand.
    [(5) If the United States district court does not order the 
summary remand of such prosecution, it shall order an 
evidentiary hearing to be held promptly and after such hearing 
shall make such disposition of the prosecution as justice shall 
require. If the United States district court determines that 
removal shall be permitted, it shall so notify the State court 
in which prosecution is pending, which shall proceed no 
further.]
    (c) Requirements; Removal Based on Diversity of 
Citizenship.--(1) A case may not be removed under subsection 
(b)(3) on the basis of jurisdiction conferred by section 1332 
more than 1 year after commencement of the action, unless the 
district court finds that the plaintiff has acted in bad faith 
in order to prevent a defendant from removing the action.
    (2) If removal of a civil action is sought on the basis of 
the jurisdiction conferred by section 1332(a), the sum demanded 
in good faith in the initial pleading shall be deemed to be the 
amount in controversy, except that--
            (A) the notice of removal may assert the amount in 
        controversy if the initial pleading seeks--
                    (i) nonmonetary relief; or
                    (ii) 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; and
            (B) removal of the action is proper on the basis of 
        an amount in controversy asserted under subparagraph 
        (A) if the district court finds, by the preponderance 
        of the evidence, that the amount in controversy exceeds 
        the amount specified in section 1332(a).
    (3)(A) If the case stated by the initial pleading is not 
removable solely because the amount in controversy does not 
exceed the amount specified in section 1332(a), information 
relating to the amount in controversy in the record of the 
State proceeding, or in responses to discovery, shall be 
treated as an ``other paper'' under subsection (b)(3).
    (B) If the notice of removal is filed more than 1 year 
after commencement of the action and the district court finds 
that the plaintiff deliberately failed to disclose the actual 
amount in controversy to prevent removal, that finding shall be 
deemed bad faith under paragraph (1).
    [(d) Promptly] (d) Notice to Adverse Parties and State 
Court.--Promptly after the filing of such notice of removal of 
a civil action the defendant or defendants shall give written 
notice thereof to all adverse parties and shall file a copy of 
the notice with the clerk of such State court, which shall 
effect the removal and the State court shall proceed no further 
unless and until the case is remanded.
    [(e) If the defendant or defendants are in actual custody 
on process issued by the State court, the district court shall 
issue its writ of habeas corpus, and the marshal shall 
thereupon take such defendant or defendants into his custody 
and deliver a copy of the writ to the clerk of such State 
court.]
    [(f) With respect] (e) Counterclaim in 337 Proceeding.--
With respect to any counterclaim removed to a district court 
pursuant to section 337(c) of the Tariff Act of 1930, the 
district court shall resolve such counterclaim in the same 
manner as an original complaint under the Federal Rules of 
Civil Procedure, except that the payment of a filing fee shall 
not be required in such cases and the counterclaim shall relate 
back to the date of the original complaint in the proceeding 
before the International Trade Commission under section 337 of 
that Act.

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Sec. 1453. Removal of class actions

    (a) * * *
    (b) In General.--A class action may be removed to a 
district court of the United States in accordance with section 
1446 (except that the 1-year limitation under section [1446(b)] 
1446(c)(1) shall not apply), without regard to whether any 
defendant is a citizen of the State in which the action is 
brought, except that such action may be removed by any 
defendant without the consent of all defendants.

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Sec. 1454. Procedure for removal of criminal prosecutions

    (a) Notice of Removal.--A defendant or defendants desiring 
to remove any criminal prosecution from a State court shall 
file in the district court of the United States for the 
district and division within which such prosecution is pending 
a notice of removal signed pursuant to Rule 11 of the Federal 
Rules of Civil Procedure and containing a short and plain 
statement of the grounds for removal, together with a copy of 
all process, pleadings, and orders served upon such defendant 
or defendants in such action.
    (b) Requirements.--(1) A notice of removal of a criminal 
prosecution shall be filed not later than 30 days after the 
arraignment in the State court, or at any time before trial, 
whichever is earlier, except that for good cause shown the 
United States district court may enter an order granting the 
defendant or defendants leave to file the notice at a later 
time.
    (2) A notice of removal of a criminal prosecution shall 
include all grounds for such removal. A failure to state 
grounds that exist at the time of the filing of the notice 
shall constitute a waiver of such grounds, and a second notice 
may be filed only on grounds not existing at the time of the 
original notice. For good cause shown, the United States 
district court may grant relief from the limitations of this 
paragraph.
    (3) The filing of a notice of removal of a criminal 
prosecution shall not prevent the State court in which such 
prosecution is pending from proceeding further, except that a 
judgment of conviction shall not be entered unless the 
prosecution is first remanded.
    (4) The United States district court in which such notice 
is filed shall examine the notice promptly. If it clearly 
appears on the face of the notice and any exhibits annexed 
thereto that removal should not be permitted, the court shall 
make an order for summary remand.
    (5) If the United States district court does not order the 
summary remand of such prosecution, it shall order an 
evidentiary hearing to be held promptly and, after such 
hearing, shall make such disposition of the prosecution as 
justice shall require. If the United States district court 
determines that removal shall be permitted, it shall so notify 
the State court in which prosecution is pending, which shall 
proceed no further.
    (c) Writ of Habeas Corpus.--If the defendant or defendants 
are in actual custody on process issued by the State court, the 
district court shall issue its writ of habeas corpus, and the 
marshal shall thereupon take such defendant or defendants into 
the marshal's custody and deliver a copy of the writ to the 
clerk of such State court.

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