Document Type

Response or Comment

Publication Date

9-29-2015

Publication Title

Hearing Before the House Committee on the Judiciary - Subcommittee on the Constitution and Civil Justice

Abstract

Almost half a century ago, the American Law Institute observed, “The most marked abuse has been joinder of a party of the same citizenship as plaintiff in order to defeat removal on the basis of diversity jurisdiction. Such tactics have led to much litigation, largely futile, on the question of fraudulent joinder.” Over the last half century, the volume of litigation on this question has only increased. In response, Congress is now actively considering legislation to address the problem of fraudulent joinder.

The bill is H.R. 3624, the “Fraudulent Joinder Prevention Act of 2015” (FJPA). The FJPA seeks to prevent fraudulent joinder by requiring the district court to deny a motion to remand a removed case under two circumstances: first, “if the complaint does not state a plausible claim for relief against a nondiverse defendant under applicable state law,” and second, if “there is no good faith intention to prosecute the action against a nondiverse defendant or to seek a joint judgment.” The bill also makes clear that in considering a motion to remand, the district court may consider affidavits and other evidence in addition to the pleadings.

On September 29, 2015, a subcommittee of the House Judiciary Committee held a hearing on the FJPA. This statement was submitted for the record of that hearing. The statement is in five parts. Part I sketches the background: the rule of “complete diversity” and the current operation of the fraudulent joinder doctrine. Part II offers some suggestions for how the bill might be redrafted to accomplish its purposes more effectively. Part III discusses the criteria for remand proposed in the FJPA. I conclude that the “plausible claim” prong holds promise, but the “good faith intention” prong is problematic and should be dropped. Part IV suggests an alternative approach to the problem of fraudulent joinder – an approach that utilizes minimal diversity and the concept of the “primary defendant,” already part of the law in the Class Action Fairness Act. Part V is a brief conclusion.

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