Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:The appellees, Illinois Central and Mississippi Department of Transportation, moved for rehearing following this court’s decision ordering remand of this case to state court. HOLDING:Denied. The U.S. Supreme Court made clear that the burden on the removing party is to prove that the joinder of the local parties was fraudulent; a showing that the plaintiff’s case is barred as to all defendants is not sufficient. Chesapeake & O. R. Co. v. Cockrell, 232 U.S. 146 (1914). When the only proffered justification for fraudulent joinder is that there is no reasonable basis for predicting recovery against the local defendant and that showing is a fortiori applicable to all defendants, rather than to the local defendants alone, the requisite showing has not been made. The proper focus of a fraudulent joinder claim is whether the joinder of the local parties was fraudulent, a simple concept that is too easily obscured. The fraudulent joinder doctrine is a narrow exception to the rule that diversity jurisdiction requires complete diversity. As such, the burden of demonstrating fraudulent joinder is a heavy one. To establish fraudulent joinder, the party seeking removal to the federal forum must either show “(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” Smallwood v. Ill. Cent. R.R. Co., 342 F.3d 400 (5th Cir. 2003). Under this second prong, when on a motion to remand a defendant’s showing that there is no possibility of recovery against the local defendant equally discharges the non-resident defendant, there is no fraudulent joinder, only a lawsuit lacking in merit. In such cases, it makes little sense to single out the local defendants as “sham” defendants and call their joinder fraudulent. In such circumstances, the allegation of fraudulent joinder is more properly an attack on the plaintiff’s case as such � an allegation that the plaintiff’s case is ill founded as to all the defendants. Despite the appellees’ contention to the contrary, the common defense rule does not impair a foreign defendant’s right to remove. In every case where a diverse defendant proves that the plaintiff’s decision to join a local party is fraudulent, the diverse defendant gains access to the federal courts. If the foreign defendant fails to prove the joinder fraudulent, then diversity is incomplete and the diverse defendant is not entitled to remove. In Cockrell, the Supreme Court rejected a defendant’s effort to prove that a non-diverse defendant was fraudulently joined when the only grounds proffered applied equally to all defendants. Nothing in Cockrell limits the application of this rule to factual defenses or to defenses exogenous to the plaintiff’s cause of action. The appellees in this case brought no evidence that the joinder of the non-diverse defendant was fraudulent, only an allegation that the case, as to all defendants, was ill-founded. Such a showing cannot support an inference that the joinder of the local defendants was fraudulent. This circuit has never before addressed the common defense rule. The mere fact that prior cases failed to discuss the issue does not grant license to continue to ignore Supreme Court precedent. Since Cockrell is applicable to this case, the court cannot fail to apply the common defense rule simply because it has not been urged in the past. The appellees removed on the basis of their federal conflict pre-emption defense, but attempted to portray it as an issue of fraudulent joinder. This use of fraudulent joinder would only undermine the well-pleaded complaint rule. The court emphasizes, however, that the common defense rule is not limited to cases that seek to avoid the well-pleaded complaint rule. OPINION:Higginbotham, J.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.