2 A Note from the Insurance Team As we reflect at year-end, we note how many areas of law now affect the insurance industry. Insurance company general counsel are called upon to navigate AI and tech issues, data privacy law, litigation strategy, and ever-more-complex financial structures. We strive to bring you insights that help connect dots across these diverse and evolving areas. We wish you and your families a wonderful holiday season. - Alston & Bird Insurance Team The Supreme Court’s 2025–26 term is underway with 39 cases on the docket, many drawing national attention. Though none directly involve insurance disputes, three civil procedure cases could quietly impact insurers’ decisions about removing cases to federal court. Here’s what we’re watching: Jurisdictional Jenga – Can Improper Removal Bring It All Down? Hain Celestial Group v. Palmquist, No. 24-724 (U.S.). A Texas mother sued Whole Foods and Hain Celestial Group, claiming high levels of metals in a baby food product harmed her child. If the case were only against manufacturer Hain Celestial, complete diversity would exist. Hain Celestial removed the case to federal court, where it successfully argued that Whole Foods had been fraudulently joined to defeat diversity. The district court dismissed Whole Foods and retained jurisdiction. After two years of litigation and a two-week trial, the district court granted judgment as a matter of law to Hain Celestial. But the Fifth Circuit reversed, finding that Whole Foods had been erroneously dismissed and that the case must go back to state court to start from scratch. Defendants that remove to federal court face risk when jurisdiction is unclear. If the federal court is ultimately found to lack jurisdiction, years of effort and a favorable result can be undone, giving the plaintiff a do-over. The Supreme Court’s upcoming decision promises to shape how big a gamble it is to argue for removal to federal court using the “fraudulent joinder” doctrine. Two questions are before the Court: 1. Whether a district court’s final judgment as to completely diverse parties must be vacated when an appellate court later determines that it erred by dismissing a non-diverse party at the time of removal. 2. Whether a plaintiff may defeat diversity jurisdiction after removal by amending the complaint to add factual allegations that state a colorable claim against a nondiverse party when the complaint at the time of removal did not state such a claim. The answers to these questions could impact cases when, for example, an insured sues her insurer and also names her local agent or broker to destroy diversity jurisdiction. At a November 4 oral argument, the Justices sounded poised to rule that the reversal of dismissal of a party for fraudulent joinder destroys the federal court’s diversity, and that Hain Celestial’s win must be vacated. As Justice Sotomayor said: The rule is very simply this plaintiff filed in the forum it wanted and it filed appropriately. It filed against a nondiverse defendant. It was entitled to stay in state court. And it wasn’t required to drop a … defendant that it didn’t want to drop. n 3 Removal Deadline on the Line – Can Courts Bend the 30-Day Rule? Enbridge Energy LP v. Nessel, No. 24-783 (U.S.). Defendants have 30 days to remove a case to federal court after receiving the complaint (or other paper from which it may first be ascertained that the case is removable). For non-jurisdictional deadlines, courts typically maintain equitable power to excuse noncompliance in exceptional circumstances. But many courts have found that the statutory 30-day removal deadline is mandatory. This question reaches the Supreme Court after Michigan’s attorney general litigated for two years in state court seeking to shut down an underwater pipeline for environmental reasons before removing the case to federal court. The district court excused the delay, finding that parallel federal litigation and the federal nature of the matter were “exceptional circumstances.” The Sixth Circuit reversed, finding that the statutory deadline does not permit equitable exceptions. The Court’s ruling could cement a uniformly strict 30day deadline or could reshape the procedural limits governing removal. n In Federal Court, Whose Rule Is It Anyway? Berk v. Choy, No. 24-440 (U.S.). Shaking up the long-standing Erie framework for applying federal procedural rules and state substantive law in diversity actions, in 2010 the Supreme Court decided in Shady Grove that the Federal Rules of Civil Procedure apply in federal court whenever they answer “the same question” as a state statute or rule. The Court sought a clear rule, but whether a conflict exists between the federal rules and state law has not always been clear. The Court may provide more clarity this term in a medical malpractice action. Under Delaware law, medical malpractice complaints are dismissed unless accompanied by an expert affidavit attesting to the defendant’s negligence. Federal courts have split in their treatment of similar state-law requirements. The Justices’ comments at an October 6 oral argument were mixed. For example, Justice Kagan said: [T]he entire thrust of the federal rules, most particularly in Rule 8 and 9, … was meant to establish a notice/pleading system where all you had to do was to say: “Here I am, here’s my claim, I’m going to be seeking damages, the end,” and everything else was supposed to happen later in the normal course of things. And then a defendant had a bunch of different opportunities, starting with Rule 12 and then continuing on with Rule 56 summary judgment, or using summary judgment even pre-discovery in various circumstances, to get rid of the suit. And that’s basically the structure of the federal rules. But Justice Jackson responded: Can I just go back for a second to Justice Kagan’s point about notice/pleading? Because as I understood it, this affidavit of merit is not discoverable, it’s not evidentiary, it can’t be admitted, it’s sort of a black-box thing. So why isn’t that consistent still with a notice/pleading kind of scenario? The Court’s ruling could have broader implications for insurers, including where they provide coverage of statelaw claims that carry similar affidavit requirements, which state laws regulate actions against insurers (such as direct action statutes allowing parties injured by an insured to sue the insurer directly), and the analysis of what law will apply after lawsuits are removed to federal court. n Supreme Court Watch: Shaping Removal to Federal Court
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