Opinion
Civil No. EP-03-CA-279(KC)
February 23, 2004
ORDER
On February 3, 2004, this Court granted plaintiff's motion to remand (Doc. No. 94). The case file was not transferred to State Court at defendants' request to permit the filing of a motion to reconsider the Order. After consideration of the motion, reconsideration is granted but the prior ruling is adhered to.
I. DISCUSSION
Defendants argue that actions taken by the Fifth Circuit Court of Appeals subsequent to their decisions in Smallwood v. Illinois Central Railroad Company, 342 F.3d 400 (5th Cir. 2003), vacated by Smallwood v. Illinois Central Railroad Company, 355 F.3d 357 (5th Cir. 2003), and Collins v. American Home Products Corporation, 343 F.3d 765 (5th Cir. 2003) (appellate mandate stayed pending rehearing on Smallwood by order of October 9, 2003), justify vacatur of the order remanding this case to state court. Defendants cite to a number of unpublished decisions as well as Boyd v. American Heritage Insurance Company, 282 F. Supp.2d 502 (S.D. Miss. 2003), in support of their argument. The concerns articulated in Boyd and others in delaying final decision awaiting resolution of the perceived flux created by Smallwood and Collins is a defendant's loss of the "right to litigate the case in federal court" and the waste of plaintiff's "valuable time and resources litigating a case that will ultimately require remand to state court." Id. at 503. While those concerns are significant, they do not justify vacatur of the remand order.
While this Court did indeed discuss Smallwood and Collins in its original Order, the bedrock standards discussed therein are not necessarily subject to modification on rehearing. In fact, the term "common defense," apparently coined in Smallwood, is derived from Chesapeake Ohio Railway v. Cockrell, 232 U.S. 146 (1914), cited in this Court's original order, and constitutes a standard not subject to modification by the Court of Appeals on rehearing. The bedrock standard set forth in a decision almost a century old, and of no less force today, provides that
when . . . a resident defendant is joined with the nonresident, the joinder, even although fair upon its face, may be shown by a petition for removal to be only a fraudulent device to prevent a removal; but the showing must consist of a statement of facts rightly engendering that conclusion. Merely to traverse the allegations upon which the liability of the resident defendant is rested, or to apply the epithet `fraudulent' to the joinder, will not suffice: the showing must be such as compels the conclusion that the joinder is without right and made in bad faith.Id. at 152 (emphasis added).
In light of this standard, the very essence of a claim of fraudulent joinder is fraud, which is generally defined as a "knowing misrepresentation of the truth or concealment of a material fact." BLACK'S LAW DICTIONARY 670 (7th ed. 1999). As the scienter element of fraud is typically established through circumstantial evidence, see, e.g., Herman MacLean v. Huddleston, 459 U.S. 375, 390 n. 30 (1983), defendants must come forward with circumstances indicating that the non-diverse defendants were added to defeat this Court's jurisdiction. The common defense rule thus stands for no more than the proposition that a meritless claim asserted as to all defendants does not constitute potent circumstantial evidence of fraud. While the merits of such claims considered along other circumstances, such as representations made by a plaintiff in joining non-diverse defendants or the timing of joinder of non-diverse defendants, may carry the day, the mere fact that some bar may exist to a claim against non-diverse defendants that is asserted against some or all diverse defendants will not in and of itself suffice.
Furthermore, additional concerns involving this Court's duties and the purpose of the removal statute counsel against any attempt to maintain jurisdiction. At present, this Court would order the case remanded for lack of jurisdiction. Defendants request for vacatur equates to a wait and see approach as to the outcome of a pending appeal that may change the law of fraudulent joinder in this Circuit. This Court has a duty to apply the law as it presently exists and may not deal in possibilities of change. See Samuels v. District of Columbia, 669 F. Supp. 1133, 1144 n. 22 (D.D.C. 1987) (citing Bradley v. Richmond School Bd., 416 U.S. 696, 711 (1974)). Assuming arguendo this Court could permissibly hang on a potential for change, the odds simply are not in defendants' favor. The Fifth Circuit has been prolific in its substantive commentary on the law of fraudulent joinder over the last five years, publishing far more on the subject than all other Circuits combined. If anything maybe gleaned empirically from this wealth of jurisprudence, it is the Circuit's unrelenting position on the removing party's burden of proof in establishing fraudulent joinder. As such, the prospects of the Fifth Circuit executing an about face and requiring a lesser showing in fraudulent joinder is dubious at best.
See McKee v. Kansas City Southern Ry. Co., — F.3d —, No. 03-60259, 2004 W L 1034 39 (5th Cir. Jan. 23, 2004); Victor v. Grand Casino-Coushatta, — F.3d-, No. 03-30703, 2004 WL 212836 (5th Cir. Feb. 19, 2004); Hall v. GE Plastic Pacific PTE Ltd., 327 F.3d 391 (5th Cir. 2003); Lake Charles Diesel, Inc. v. General Motors Corp., 328 F.3d 192 (5th Cir. 2003); Ross v. Citifinancial, Inc., 344 F.3d 458 (5th Cir. 2003); Sherwin-Williams Co. v. Holmes County, 343 F.3d 383 (5th Cir. 2003); Travis v. Irby, 326 F.3d 644 (5th Cir. 2003); Great Plains Trust Co. v. Morgan Stanley Dean Witter Co., 313 F.3d 305 (5th Cir. 2002); In re Benjamin Moore Co., 318 F.3d 626 (5th Cir. 2002); Heritage Bank v. Redcom Laboratories, Inc., 250 F.3d 319 (5th Cir. 2001); Ahrens v. Perot Systems Corp., 205 F.3d 831 (5th Cir. 2000); Badon v. RJR Nabisco. Inc., 236 F.3d 282 (5th Cir. 2000); Badon v. R JR Nabisco. Inc., 224 F.3d 382 (5th Cir. 2000); Delgado v. Shell Oil Co., 231 F.3d 165 (5th Cir. 2000); Hart v. BayerCorp., 199 F.3d 239 (5th Cir. 2000); Johnson v. Heublein Inc., 227 F.3d 236 (5th Cir. 2000); Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290 (5th Cir. 2000); Cobb v. Delta Exports, Inc., 186 F.3d 675 (5th Cir. 1999); Griggs v. State Farm Lloyds, 181 F.3d 694 (5th Cir. 1999).
A final concern counsels against maintaining the case in this Court and ordering a stay pending the outcome of the Smallwood rehearing. On December 19, 2003, the Fifth Circuit tentatively calendared the rehearing for the week of May 24, 2004. As such, if the rehearing were to take place that week, a decision might issue in November or December of 2004. That would translate into a delay of almost one year from this Court's Order awaiting the outcome of an appeal. Such a delay would be inconsistent with the purposes of the removal statute, specifically "certainty, avoidance of delay, and finality in resolving jurisdiction," Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 264 n. 16 (5th Cir. 1995), were this Court somehow able to account for ongoing jurisdictional dilemmas inherent in maintaining a case on this docket over which jurisdiction is presently deemed lacking.
II. CONCLUSION
Defendants' motion for reconsideration is (Doc. No. 95) is granted but the prior ruling is adhered to. The Clerk shall close the file.
SO ORDERED.