Background
The parents of several premature infants sued infant-formula makers Mead Johnson and Abbott, along with Pennsylvania Hospital, in state court. They alleged their children developed necrotizing enterocolitis (NEC), a serious intestinal disease, after being fed the companies’ cow’s-milk-based formulas at the hospital. Because some plaintiffs and the hospital were all citizens of Pennsylvania, the case lacked the “complete diversity” of citizenship required for federal jurisdiction.
The manufacturers removed the case to federal court, claiming the hospital was a “fraudulently joined” defendant named only to keep the case in state court. The federal district court initially disagreed and sent the case back to state court. After the state court dismissed the hospital from the case on the merits, the manufacturers removed it to federal court a second time. This time, the district court agreed with them, denying remand. However, it did so on a novel ground: not that the claim against the hospital was impossible to win, but that the plaintiffs’ litigation conduct (such as taking only a “perfunctory deposition”) showed they had “no real intention in good faith to prosecute the action” against the hospital. Recognizing this was an unusual basis for the ruling, the district court certified its order for an immediate appeal.
The Court’s Holding
The U.S. Court of Appeals for 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 remanded the cases with instructions for them to be returned to Pennsylvania state court.
Writing for the panel, Judge Ripple explained that the fraudulent joinder doctrine is narrow and limited to only two situations: (1) when a plaintiff lies about jurisdictional facts, or (2) when there is “no chance of success” for the claim against the non-diverse defendant, with all facts and law viewed in the plaintiff’s favor. The district court’s inquiry into the plaintiffs’ subjective intent and litigation strategy went far beyond these established bounds. The appellate court stressed that this novel approach would require federal courts to intrude into state court matters, evaluate state court customs, and create uncertainty for litigants.
The court reiterated that a plaintiff’s motive for joining a defendant is irrelevant as long as the claim asserted is legally colorable. “If there is a joint liability,” the court quoted from a Supreme Court case, the plaintiff “has an absolute right to enforce it, whatever the reason that makes him wish to assert the right.” The court concluded that any expansion of the fraudulent joinder doctrine is a job for Congress, not the judiciary.
Key Takeaways
- A defendant cannot establish fraudulent joinder by arguing that a plaintiff lacks a “real intent” to pursue a claim against a non-diverse defendant, as evidenced by their litigation conduct.
- The doctrine of fraudulent joinder is limited to two long-standing tests: (1) misrepresentation of jurisdictional facts, or (2) a showing that the plaintiff has “no chance of success” against the non-diverse party under state law.
- A plaintiff’s motive for joining a non-diverse defendant is immaterial to the jurisdictional analysis so long as the claim is colorable under state law.
- Federal courts should not delve into a plaintiff’s litigation strategy in state court to determine their subjective intent for jurisdictional purposes, as this creates uncertainty and infringes on state court prerogatives.
Why It Matters
This opinion strongly reinforces the traditional, narrow understanding of the fraudulent joinder doctrine, protecting a plaintiff’s right to structure their case and select a state court forum. By rejecting a subjective “intent to prosecute” test, the Seventh Circuit prevents defendants from removing cases to federal court by second-guessing a plaintiff’s litigation strategy against non-diverse parties.
For legal practitioners, the ruling provides important clarity and certainty. It shuts down a creative but ultimately unsupported argument for removal that could have led to extensive and costly “satellite litigation” over the vigor of a plaintiff’s discovery efforts. The decision maintains a bright line, ensuring that the question of federal jurisdiction hinges on the objective legal viability of the claims pleaded, not on a federal judge’s post-hoc evaluation of a party’s litigation strategy.