The oral argument in State of Nevada v. KalshiEX, LLC (Case No. 26-1304) exposed a sharp doctrinal split regarding the threshold requirements for federal officer removal. The central tension emerged when a judge pressed Kalshi's counsel on the necessity of amending its notice of appeal to explicitly cite 28 U.S.C. § 1442. Kalshi argued the amendment was merely cosmetic, but the court remained skeptical of the original filing's legal sufficiency. "Can you tell me what you're meant to, because then you went back and amended, helped me understand the amendment," the judge asked. Kalshi's counsel responded, "We did not think the amendment was necessary... But if you think there is a first line rule, we will just take advantage of the fact that every court has recognized you have 30 days to amend your notice of appeal."
Kalshi's counsel defended the strategy by invoking the Supreme Court's decision in BP PLC v. Mayor and City Council of Baltimore, arguing that jurisdiction exists so long as the defendant cited § 1442 and explained the basis for removal. "That is all that is required under Friedenberg, Blumberger, and BP itself," the attorney argued, asserting that the district court had already addressed the merits of the removal argument. However, Nevada's Solicitor General countered that Kalshi's original notice failed to meet the factual pleading standards set by the Ninth Circuit in Friedenberg. The State argued that Kalshi used the "conditional tense and the subjunctive mood to express a hypothetical scenario," stating that the CFTC would have been a proper party had it been named, rather than affirmatively asserting federal officer status at the time of removal.
The debate intensified around the "artful pleading" doctrine and the risk of inconsistent judgments. Kalshi urged the court to grant a stay pending appeal, warning of an "intolerable risk of inconsistent state and federal judgments." The attorney highlighted that Nevada was poised to issue a preliminary injunction while the Ninth Circuit considered whether federal law preempted state gambling regulations. "Without a stay pending appeal here... the state court is going to issue a preliminary injunction against Kalshi tomorrow," the counsel warned, emphasizing that parallel proceedings could lead to conflicting rulings on the enforceability of Nevada's laws against a federally regulated entity.
Nevada's counsel pushed back, arguing that the Ninth Circuit lacked subject matter jurisdiction to even consider the stay motion because the removal notice was fatally defective. "Cal Shee is not likely to succeed on overturning the district court's remand decision because there's no appellate jurisdiction that is vested in this court," the State's attorney asserted. The argument hinged on the distinction between a frivolous removal claim and one that merely invokes the statute. Nevada pointed to competitor Polymarket, which successfully removed a similar case by explicitly claiming federal officer status, suggesting Kalshi's approach was legally insufficient to trigger the narrow exception to the general bar on appealing remand orders under 28 U.S.C. § 1447(d).
The court also probed the procedural history, noting that the district court had struck Kalshi's amended notice because it had not formally recalled the remand order to allow for amendment. This procedural misstep left the Ninth Circuit to decide whether to look past the defect. The judges seemed particularly interested in whether the "artful pleading" doctrine could salvage jurisdiction when the original notice relied on hypotheticals about necessary parties rather than direct assertions of federal officer immunity. The outcome will clarify whether a defendant can bootstrap appellate jurisdiction through a combination of § 1442 citations and artful pleading arguments, even when the initial notice is ambiguous or conditional.