Recent legal developments underscore the challenges defendants face in combating plaintiffs’ use of fraudulent misjoinder to manipulate jurisdictional outcomes. This tactical maneuvering involves plaintiffs filing lawsuits against diverse defendants in state courts while joining unrelated claims against nondiverse parties, thus undermining diversity jurisdiction. Unlike fraudulent joinder, which pertains to meritless claims against nondiverse defendants, fraudulent misjoinder generates significant legal debate across jurisdictions.
The federal removal statute allows defendants to elevate state cases to federal court, provided complete diversity of citizenship exists. Both the Second and Fifth Circuit Courts have addressed the necessity of this principle to prevent plaintiff gamesmanship and shield foreign defendants from potential prejudices in local courts.
Courts have applied the fraudulent misjoinder doctrine to dismiss or sever non-compliant claims, as initially endorsed by the Eleventh Circuit in Tapscott v. MS Dealer Service Corp.. The Eleventh Circuit articulated that removal is justified when nondiverse parties are fraudulently joined, lacking meaningful connection to principal claims per Federal Rule of Civil Procedure 20.
Despite Tapscott‘s precedent, the adoption of the doctrine across circuits remains inconsistent. The Eighth Circuit, in Graham v. Mentor Worldwide LLC, acknowledged the doctrine’s utility, emphasizing the importance of severing jurisdictional spoilers prior to judgment. The Tenth Circuit, however, refrained from adopting the doctrine in Lafalier v. State Farm Fire & Cas. Co., citing insufficient impact based on the case’s facts.
Defendants are encouraged to actively pursue appropriate measures to resist fraudulent misjoinder. Legally strategic actions include highlighting misjoinder in removal papers, aggressively engaging in motions practice, and seeking subsequent removals if initial attempts are thwarted. For example, elucidating the lack of commonality and leveraging relevant case law can strengthen removal notices. Concurrent answers or dispositive motions may prevent unilateral plaintiff actions from obfuscating federal jurisdiction.
Continued diligence in addressing fraudulent misjoinder helps preserve defendants’ rights to federal court protections. Strategic preparedness and timely procedural actions form the backbone of defending against plaintiff attempts to avoid federal oversight through jurisdictional gamesmanship.
For more comprehensive explorations of these tactics and legal analyses, visit the original article by Varun K. Aery on Bloomberg Law.