Orlofsky ADR Services

Can a Mediation Trigger the Time Limit for Removal to Federal Court?

In Friedlander v. Fifth Third Bank, Inc., 2014 WL 5313946 (E.D.Ky. 2014), the plaintiff brought a state court action against three defendants, only one of which was a citizen of the same state as the plaintiff. In a May 14 mediation, the plaintiff settled with two of the three defendants, including the one non-diverse defendant. This created the potential for a removal petition based on diversity of citizenship. On July 16 a Stipulation of Dismissal was filed that included the non-diverse defendant, and on July 23 the remaining defendant filed a removal petition in federal court based on diversity. Since removal petitions must be filed within 30 days after a defendant learns that there is a basis for federal jurisdiction, the question arose as to whether the time limit for removal was triggered by the May 14 mediation – in which case the removal petition was untimely – or the July 16 filing of the stipulation of dismissal — in which case the removal petition was timely.

The court ruled the removal petition timely, noting that a defendant must receive “solid and unambiguous” information that a case is removable. The agreement to settle reached at the May 14 mediation was, in the court’s view, “fraught with uncertainty [and could be] thwarted by a last minute change of heart.” While the court’s opinion is not completely clear, it appears that the settlement agreement reached at the mediation was oral; the court noted that “any oral representations between May 14 (the date of the mediation) and July 16 (the date the stipulation of dismissal was filed) would have been insufficient to start the thirty-day clock.” It is not clear, therefore, whether a complete written settlement agreement, executed at the mediation, would have triggered the running of the removal time period.  What is clear is that the oral agreement reached at the mediation with the sole non-diverse defendant did not constitute clear and unambiguous evidence that diversity existed, and therefore the removal time period was not triggered by the mediated settlement.