Background
Parents of premature infants sued infant formula manufacturers Mead Johnson and Abbott Laboratories in Pennsylvania state court, alleging that the companies’ cow’s milk-based products caused their children to develop necrotizing enterocolitis (NEC), a serious gastrointestinal disease. The plaintiffs, who are citizens of Pennsylvania and New Jersey, also sued the Pennsylvania Hospital where the infants were treated, making it a non-diverse defendant and thus preventing the case from being moved to federal court on the basis of diversity jurisdiction.
The manufacturers removed the case to federal court, arguing the hospital was “fraudulently joined” solely to defeat federal jurisdiction. After an initial remand to state court, the case returned to federal court when the state court dismissed the claims against the hospital. The federal district court then denied a second motion to remand, endorsing a novel theory of fraudulent joinder: that the plaintiffs had demonstrated “no real intention in good faith to prosecute the action” against the hospital, as evidenced by their litigation conduct. Recognizing the novelty of its ruling, the district court certified the question for immediate appeal.
The Court’s Holding
The Seventh Circuit reversed the district court, holding that a plaintiff’s supposed lack of a “real intent” to pursue a claim is not a valid basis for finding fraudulent joinder. The court reaffirmed that the fraudulent joinder doctrine is narrowly limited to two circumstances: first, when a plaintiff makes false allegations of jurisdictional facts, and second, when there is “no chance of success” for the claim against the non-diverse defendant, with all facts and law resolved in the plaintiff’s favor.
The court explicitly rejected the district court’s attempt to create a third category based on the plaintiff’s subjective intent or litigation strategy. Such an inquiry, the panel concluded, would improperly require federal courts to delve into state court litigation practices and a plaintiff’s motives, which Supreme Court precedent has held to be irrelevant. As long as a plaintiff has a colorable claim against a non-diverse defendant, their motive for joining that defendant does not matter. The court determined that expanding fraudulent joinder in this way would be an improper judicial amendment to the diversity jurisdiction statutes, a task reserved for Congress.
Key Takeaways
- A defendant cannot establish fraudulent joinder by arguing that a plaintiff lacks a “real intent” or “good faith” to pursue a judgment against a non-diverse defendant.
- The fraudulent joinder analysis is confined to two established tests: (1) outright fraud in pleading jurisdictional facts, or (2) the complete lack of any possibility that the plaintiff can establish a cause of action against the in-state defendant.
- A plaintiff’s motive for joining a non-diverse defendant—even if it is to defeat federal jurisdiction—is irrelevant to the jurisdictional analysis, provided the claim is legally colorable under state law.
Why It Matters
This decision reinforces the high bar for defendants seeking to remove cases to federal court by claiming fraudulent joinder. It shuts down a creative but unfounded argument that could have significantly broadened the doctrine, making it easier for defendants to escape state courts by challenging a plaintiff’s litigation tactics and subjective intent. The ruling protects the plaintiff’s traditional right to choose their forum and prevents federal courts from engaging in intrusive, speculative inquiries into state court proceedings.
By maintaining a clear, objective, and narrow standard for fraudulent joinder, the Seventh Circuit promotes jurisdictional certainty and respects the division of authority between federal and state courts. The decision confirms that the focus of the removal inquiry must remain on the objective legal viability of the plaintiff’s claims as pleaded, not on a defendant’s speculation about the plaintiff’s underlying strategy.