Should the Eighth Circuit recognize procedural misjoinder?

South Dakota Law Review, Spring, 2008 by Ronald A. Parsons, Jr.

As a necessary element of diversity jurisdiction, the citizenship of each plaintiff must be diverse from the citizenship of each defendant. (20) In addition, Congress has chosen to make a district court's diversity jurisdiction on removal narrower than it is with cases originally filed in district court. (21) For cases originally filed in federal court, the citizenship element of diversity jurisdiction simply requires that the parties be citizens of different states, regardless of their relation to the forum state. (22) Pursuant to section 1441(b), however, an action filed in state court may only be removed on the basis of diversity jurisdiction if "none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." (23) As Chief Judge Arnold succinctly explained in a case in which a defendant from Missouri attempted to remove an action filed in Missouri state court to federal court on the basis of diversity jurisdiction,

   Title 28 U.S.C. [section] 1441(b) makes diversity jurisdiction in
   removal cases narrower than if the case were originally filed in
   federal court by the plaintiff. A defendant may not remove to
   federal court on the basis of diversity if any of the defendants is
   a citizen of the state where the action was filed. As we have
   stated, defendant Rose is a citizen of Missouri. The fact that
   [plaintiff) Irene Hurt could have invoked the original jurisdiction
   of the federal court initially is irrelevant. She did not. The
   jurisdiction of the lower federal courts, both original and
   removal, is entirely a creature of statute. If one of the statutory
   requirements is not met, the district court has no jurisdiction.
   (24)

Thus, a defendant may not remove a state court action to federal court on the basis of diversity jurisdiction unless there is: (1) complete diversity between the parties and (2) no defendant is a resident of the forum state.

III. THE TRADITIONAL DOCTRINE OF FRAUDULENT JOINDER

As the Eighth Circuit has explained, where the plaintiff has joined a forum resident or otherwise nondiverse party as a defendant in a state action, a removing party may avoid a remand "only by demonstrating that the additional party was fraudulently joined." (25) As it has been traditionally understood, fraudulent joinder is "the filing of a frivolous or otherwise illegitimate claim against a non-diverse defendant solely to prevent removal[.]" (26) The term "fraudulent joinder" is somewhat deceptive because, as the courts have explained, "[a] party does not need to demonstrate fraudulent intent on the part of the plaintiff in order to prove fraudulent joinder." (27) Rather, to establish fraudulent joinder a party must demonstrate "the absence of any possibility that the opposing party has stated a claim under state law." (28)

The Eighth Circuit recently clarified the governing standard for determining fraudulent joinder. (29) In Filla v. Norfolk Southern Railway Co., (30) the Eighth Circuit held that "despite the semantical differences" between various articulations of the standard among the courts, the "common thread" between them was "reason." (31) In order to determine whether a defendant has been fraudulently joined, the district court must simply determine "whether there is arguably a reasonable basis for predicting that the state law might impose liability" against the nondiverse defendant. (32) In other words, "if there is a 'colorable' cause of action--that is, if the state law might impose liability on the resident defendant under the facts alleged-then there is no fraudulent joinder." (33) In contrast, "[w]here applicable state precedent precludes the existence of a cause of action against a defendant, joinder is fraudulent.'" (34) Put yet another way, "joinder is fraudulent ... when there exists no reasonable basis in fact and law supporting a claim against the resident defendants." (35) However, "if there is a reasonable basis in fact and law supporting the claim, the joinder is not fraudulent." (36)