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noting that the Ninth Circuit has yet to address the issue of fraudulent misjoinder, but "assum[ed] without deciding, that this circuit would accept the doctrines of fraudulent and egregious joinder as applied to plaintiffs"
Summary of this case from Mohansingh v. Crop Prod. Servs., Inc.Opinion
Argued and Submitted September 12, 2001.
As Amended on Denial of Rehearing Feb. 12, 2002.
NOT FOR PUBLICATION. (See Federal Rule of Appellate Procedure Rule 36-3)
Trucking companies brought action in state court against engine manufacturers, and manufacturers removed, alleging fraudulent or egregious joinder of a trucking company. Trucking companies moved to remand and manufacturers moved for judgment on the pleadings. The United States District Court for the Central District of California, J. Spencer Letts, J., denied remand and granted judgment to manufacturers. Trucking companies appealed. The Court of Appeals held that: (1) trucking company could have stated a claim against manufacturers in California state court, and (2) joinder of the trucking company was not so improper as to be considered egregious.
Reversed and remanded. Appeal from the United States District Court for the Central District of California J. Spencer Letts, District Judge, Presiding.
Before B.FLETCHER, T.G. NELSON and BERZON, Circuit Judges.
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as may be provided by Ninth Circuit Rule 36-3.
Appellants, a number of trucking companies, appeal the district court's order granting judgment on the pleadings. Included in their appeal is a challenge to the district court's denial of plaintiffs' motion to remand the case to state court on the ground that the federal court lacked jurisdiction. This court has jurisdiction pursuant to 28 U.S.C. § 1291. We review a district court's denial of a motion to remand de novo. We reverse and remand with instructions.
As to Appellant's first argument that complete diversity existed on the face of the original complaint, we find that argument unpersuasive. While the non-diverse party was not listed in the caption or in the summons, as it technically should have been, it was clearly listed as a plaintiff in the body of the complaint, thereby providing notice to the defendants. The presence or absence of federal jurisdiction should not hinge on a technicality such as failing to include a party in the caption when that party is named within the complaint. Therefore, the original complaint did not allege complete diversity.
We refuse to hold that, because the party's name was misspelled by one letter, the party was not named in the body of the complaint.
As the parties point out, this circuit has not addressed the issue of "fraudulent" or "egregious" joinder of plaintiffs for the purpose of defeating diversity jurisdiction in the federal courts. Other courts have held that plaintiffs may be fraudulently joined if "there is no possibility that [plaintiff] would be able to establish a cause of action against defendant[s] in state court." The Eleventh Circuit has recognized the additional theory of egregious misjoinder, where the claims of non-diverse plaintiffs have no real connection or nexus to the claims of the diverse plaintiffs. For purposes of discussion we will assume, without deciding, that this circuit would accept the doctrines of fraudulent and egregious joinder as applied to plaintiffs.
Foslip Pharmaceuticals, Inc. v. Metabolife Int'l, Inc., 92 F.Supp.2d 891, 903 (N.D.Iowa 2000) (citing Burden v. General Dynamics Corp., 60 F.3d 213, 217 (5th Cir.1995)) (emphasis added). These courts recognize that fraudulent joinder can also be established by proving outright fraud. There was no claim of outright fraud in this case.
See Tapscott v. MS Dealer Service Corp., 77 F.3d 1353 (11th Cir.1996) (abrogated on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069, 1072-73 (11th Cir.2000)).
The trucking companies' complaint in this case lacked complete diversity because one of the plaintiff trucking companies was a citizen of the same state as one of the defendant engine manufacturers. The manufacturers tried to remove the case to federal court by claiming that the court should ignore the citizenship of the non-diverse trucking company because the company was fraudulently joined. The burden is on the manufacturers, as the parties asserting federal jurisdiction, to establish the fraudulent nature of the joinder of the non-diverse plaintiff, Reliable Carriers Inc. (RCI). Because the manufacturers did not meet their burden, we reverse.
See Kohler v. Inter-Tel Technologies, 244 F.3d 1167, 1170 n. 3 (9th Cir.2001); see also Sid Richardson Carbon and Gasoline Co. v. Interenergy Resources Ltd., 99 F.3d 746, 751 (5th Cir.1996) (requiring removing party to prove fraudulent joinder).
We cannot say, on this record, that there is no possibility that RCI could state a claim in California state court. The complaint alleged that RCI purchased the diesel engines that are the subject of this suit. Defendants introduced nothing to refute that claim or to establish that RCI had no connection to California. The fact that plaintiff trucking companies have not provided evidence of any connection between RCI and the State of California is not enough to prove that none exists--defendants bear the burden of proving fraudulent joinder. Given California's liberal rules on amendment of pleadings, it is very possible that the state court would
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have granted plaintiffs leave to amend their complaint, allowing them to address the deficiencies the defendant manufacturers assert. Accordingly, the district court erred by denying plaintiffs' motion to remand because defendants failed to meet their burden of proving fraudulent joinder.
The engine manufacturers also asserted egregious misjoinder as a basis for finding federal diversity jurisdiction. However, the joinder of RCI was not so improper as to be considered egregious, thereby justifying ignoring RCI's presence in the case. The claims of all plaintiffs, including RCI, involved the purchase of allegedly faulty diesel engines from one of the defendant manufacturers. Therefore, there seems to be some connection or nexus between the claims of the non-diverse plaintiff and the claims of the diverse plaintiffs.
See In re Diet Drugs Products Liability Litigation, No. Civ.A.98-20478, 1999 WL 554584, at *4 (E.D.Pa. July 16, 1999) (holding that court would ignore citizenship of non-diverse plaintiffs because their claims were so unconnected to claims of other plaintiffs that it was egregious misjoinder).
Especially considering that 28 U.S.C. § 1441 is "strictly construed against removal," the state court, not the federal court, should decide whether there is a sufficient nexus between RCI and California to support a state court claim. Defendants failed to meet their burden of proving fraudulent or egregious misjoinder before the district court and that court erred by denying plaintiffs' motion for remand. The district court lacked jurisdiction to hear this case because there was no federal question involved nor complete diversity. Therefore, we remand to the district court with instructions for it to remand the case to the state court.
O'Halloran v. University of Washington, 856 F.2d 1375, 1380 (9th Cir.1988).
REVERSED and REMANDED with instructions to remand the case to state court.