Once a litigation strategy is underway, changing course is not always easy. A debt collection firm recently learned this lesson the hard way when its timely attempt to transfer a case out of state court and into federal court was denied. According to the Fourth Circuit Court of Appeal, by initially participating in the state court action, a law firm waived its ability to remove its case to federal court.
In Redman v. Javitch Block, LLC (Case No. 21-2236), after successfully moving to vacate a default judgment, a consumer filed a state law class action suit against the collection law firm, Javitch Block, LLC (Javitch). The suit was subsequently amended to include allegations under the Fair Debt Collection Practices Act (FDCPA). Fourteen days after the consumer brought the FDCPA claims, Javitch filed a motion to dismiss the lawsuit. A few days later, the state court judge recused himself, and the judge who vacated the default judgment was assigned to the case. Hours later, Javitch filed a timely notice to transfer the case to federal court.
In federal court, the consumer argued that the case should be transferred back to state court because Javitch continued to litigate in state court after the FDCPA claims were filed and thus could no longer remove the action. The district court agreed, holding that by filing that and other motions, Javitch waived its right to transfer the case to federal court.
Javitch appealed, arguing that the motion to dismiss it filed in the state court did not prevent it from transferring the action. The Fourth Circuit disagreed, reasoning that engaging in defensive litigation, such as filing a motion to dismiss, indicates an intent to waive the right to remove and stay in state court. The Fourth Circuit also noted that by litigating in state court and only filing their notice of removal when the case was transferred to a particular judge, was essentially forum shopping.
You can read the opinion here.
This case is a good reminder that in litigation, it is always essential to consider your next steps thoughtfully. As the law firm found out in this case, everything filed can have an effect on the potential next steps. Extenuating circumstances (like the appointment of a new judge) may not be enough to allow a deviation from a previously chosen path. It is wise to evaluate all options with counsel at the outset to ensure you don’t give a future court any reason to believe you have waived any of your legal rights.