Despite the evidence, I swear that the facts I allege are true: confronting a plaintiff's uncorroborated testimony on a factual issue when removing a case based on fraudulent joinder.

• Author: Davis, Todd P.

THE PLAINTIFF'S Complaint is the starting point for a defendant to remove a case to federal court, particularly when an out-of-state defendant seeks to remove a case to federal court on diversity jurisdiction grounds. Removal becomes more difficult when the plaintiff's Complaint also names an in-state, non-diverse defendant. In such a situation, the out-of-state defendant can still try to remove the case by arguing that the non-diverse co-defendant has been "fraudulently joined" to defeat diversity jurisdiction, i.e., that the Complaint makes allegations insufficient to state a viable or colorable claim against the in-state defendant.

To establish fraudulent joinder, the out-of-state defendant often must present evidence upon removal to show that the plaintiff, based on the factual allegations, cannot recover against the non-diverse defendant, thereby rendering the claims not colorable. The plaintiff may, in turn, argue that the federal court cannot resolve such "disputed factual" issues at the removal stage, and that the court must take the factual allegations in the Complaint as true--even when they defy practical realities or are refuted by the defendant's evidence--and remand the case to state court. To provide further "evidence" in support of the Complaint's allegations, the plaintiff seeking to defeat removal may even offer a self-serving and uncorroborated affidavit, "swearing" to the truth of the facts alleged in the Complaint.

Fortunately for corporate defendants facing the prospect of remand under these circumstances, a number of cases have concluded that a federal court has the authority to weigh the available evidence and determine whether the Complaint's factual allegations against the in-state defendant are true, and, if not, accept jurisdiction and deny remand. These cases reflect that a federal court is not bound to accept a plaintiff's own testimony purportedly supporting the Complaint's allegations when other available evidence shows that they are either not true or cannot be true.

This article discusses the case law addressing this issue and provides guidance to defendants seeking to make a substantial record to show why a nondiverse defendant had been fraudulently joined.

1. The Fraudulent Joinder Doctrine

   To prevent a plaintiff from joining to her lawsuit an in-state defendant against whom she has no viable claim simply to defeat diversity jurisdiction, the United States Supreme Court at the beginning of the twentieth century adopted what has become known as the "fraudulent joinder doctrine." (1) In Wecker v. National Enameling & Stamping, the first case in which the Supreme Court affirmed a finding of fraudulent joinder, the plaintiff alleged that his employer (an out-of-state defendant), as well as two co-employees (one of whom was an in-state defendant), were liable for personal injuries sustained from an oil vat accident. (2) The plaintiff alleged that the in-state defendant was liable as a result of being charged "with the superintendence and oversight of the plaintiff in his performance of his duty and [was] employed and charged by the corporation with the duty of superintending and properly planning the construction of a furnace, and with the duty of providing for said pots reasonably safe and suitable covering, railing or other device...." (3) After reviewing the record upon which removal was based, the Court found that a plaintiff may not defeat a diverse defendant's right of removal by joining a non-diverse defendant for the sole purpose of destroying diversity. The Court noted that "[w]hile the plaintiff, in good faith, may proceed in the state courts upon a cause of action which he alleges to be joint, it is equally true that the Federal courts should not sanction devices intended to prevent a removal to a Federal court where one has that right, and should be equally vigilant to protect that right to proceed in the Federal court as to permit the state courts, in proper cases, to retain their own jurisdiction." (4)

   As personal injury litigation became more prevalent over the course of the last century, courts further defined and refined the fraudulent joinder doctrine. Ultimately, federal courts clarified that a plaintiff's "motive in joining [an in-state defendant] is immaterial to our determination regarding fraudulent joinder." (5) Rather, the pertinent inquiry for the federal court in assessing the issue of fraudulent joinder is whether there is a "reasonable" or "colorable" basis for predicting that the in-state defendant could be held liable. (6) It there is no possibility of the in-state defendant being held liable, the in-state defendant's citizenship is ignored for purposes of assessing diversity jurisdiction and the case can remain in federal court.

2. Is the Plaintiff's Word Enough To Prevent Removal Based on Fraudulent Joinder?

   The fraudulent joinder doctrine necessitates an inquiry into whether the plaintiff's claim against the in-state defendant is "colorable." An important question for the federal court becomes: what facts or evidence can the federal court evaluate in assessing whether a claim is "colorable"? When removal occurs within thirty days of the service of the complaint and no additional evidence is submitted in support or in opposition to removal, this inquiry may be fairly simple: assuming the facts in the plaintiff's complaint are true, does the plaintiff, under the applicable state's law, have a viable claim against the in-state defendant? But when additional evidence is submitted to the court in connection with removal (e.g., affidavits, deposition testimony, and documentary evidence), and when removal occurs within thirty days of the receipt of some "other paper from which it may first be ascertained that the case is one which is or has become removable," (7) answering this question becomes far more difficult.

   As an initial matter, it is fairly well-accepted that a federal court is free to "pierce the pleadings" and consider evidence offered on the fraudulent joinder question; the court is not confined to the allegations...