Opinion
3:01-CV-1579-M.
October 10, 2001.
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiffs' Motion to Remand, filed on August 15, 2001. With their Motion to Remand, Plaintiffs simultaneously filed their First Amended Complaint, without seeking leave of the Court to do so. For the reasons stated herein, the First Amended Complaint is STRICKEN and Plaintiffs' Motion to Remand is hereby DENIED.
Introduction of Issues
On August 19, 2000, a Buick Century driven by John Dorsey ("Dorsey"), with passenger Eric Sanders, Jr. ("Sanders"), collided with a car driven by William Untiedt ("Untiedt"). Plaintiffs allege the airbag deployment forced the restrained Sanders to the back seat, crushing his skull. The a accident report reflects Dorsey's failure to yield the right of way as the cause of the accident.On December 28, 2000, Plaintiffs filed suit against General Motors Corporation ("GM") and Dorsey, asserting negligence and strict liability claims. Plaintiffs never served Dorsey. During the deposition of Eric Sanders, Sr., on July 12, 2001, GM first discovered that Dorsey, who the Complaint alleged to be a Texas resident, had moved to Alabama. On August 13, 2001, GM removed the action to federal court on the basis of diversity jurisdiction. Only two days later, Plaintiffs filed their Motion to Remand and First Amended Complaint, naming Texas resident Untiedt as a defendant. This Opinion addresses whether joinder of Untiedt should be permitted. If so, remand is appropriate. If not, remand is inappropriate.
Analysis
Plaintiffs filed their First Amended Complaint, joining Untiedt without seeking leave of the Court to do so. Leave is required under Fed.R.Civ.P. 15(a). However, the Court will assume for the sake of this analysis that leave was sought.
Joinder of Untiedt would satisfy the permissive joinder test under Fed.R.Civ.P. 20. Though the accident report names Dorsey as the party at fault, a witness claims Untiedt ran a red light. See Henry Brown Aff. at 3. Plaintiffs thus have a potential claim for relief against Untiedt, arising out of the same transaction and occurrence as do the claims against GM and Dorsey.
However, this conclusion does not end the Court's analysis. If leave were given to join Untiedt, then the Court would have to remand the case for lack of diversity jurisdiction. When a plaintiff seeks to join additional defendants whose joinder would destroy diversity, 28 U.S.C. § 1447(e) gives the Court discretion to deny joinder and retain the case, or allow joinder and remand it to state court.
Section 1447(e) does not explicitly provide standards to guide the Court in its joinder analysis. Several cases outside of this Circuit have discussed factors that courts should consider in weighing the competing interests of efficient adjudication against the need to protect diversity jurisdiction from manipulation: (1) any delay, and the reasons for the delay, in seeking leave to amend; (2) any resulting prejudice to the defendant; (3) the likelihood of multiple litigation; and (4) the plaintiffs' motivation in moving to amend. Wyant v. Nat'l R.R. Passenger Corp., 881 F. Supp. 919, 922 (S.D.N.Y. 1995). See also Briarpatch Ltd. L.P. v. Geisler Roberdeau, Inc., 148 F. Supp.2d 321, 330 (S.D.N.Y. 2001); Jones v. Woodmen Accident Life Co., 112 F. Supp.2d 676, 680 (N.D. Ohio 2000); Wright v. Metropolitan Life Ins. Co., 74 F. Supp.2d 1150 (N.D. Ala. 1999). While the Court finds this four factor test persuasive, it notes that none of these § 1447(e) cases or those cited by GM are from this Circuit.
28 U.S.C. § 1447(e) reads:
If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to State court.
Many "fraudulent joinder" cases have emanated from this Circuit. See, e.g., Griggs v. State Farm Lloyds, 181 F.3d 694 (5th Cir. 1999); Marathon Oil Co. v. A.G. Ruhrgas, 145 F.3d 211 (5th Cir. 1998) (en banc), rev'd on other grounds, 526 U.S. 574 (1999); Rodriguez v. Sabatino, 120 F.3d 589 (5th Cir. 1997), cert. denied, 523 U.S. 1072 (1998); Madison v. Vintage Petroleum, Inc., 114 F.3d 514 (5th Cir. 1997). Under the fraudulent joinder doctrine, a federal court may assert diversity jurisdiction when a non-diverse defendant has been fraudulently joined in state court simply to disable removal. However, the fraudulent joinder doctrine does not apply to joinders that occur after an action is removed from state court. Cobb v. Delta Exports, Inc., 186 F.3d 675, 678 (5th Cir. 1999). In Cobb, the district court used the fraudulent joinder test, rather than § 1447(e), in evaluating an after-removal joinder situation. The Fifth Circuit distinguished the after-removal joinder situation from cases where a party is joined in state court:
The distinction is important because the applicable tests are different. Under the fraudulent joinder doctrine, diversity jurisdiction can be asserted if the removing party can show that: (1) the plaintiff would not be able to assert a legitimate cause of action against the nondiverse defendant in state court; or (2) there has been outright fraud in the plaintiff's pleading of jurisdictional facts. Id.
The district court's confusion likely resulted from the fact that the term fraudulent joinder is a bit of a misnomer; in a typical case, the fraudulently "joined" party is not joined later, but instead is named as a defendant in the original state court complaint to avoid removal. The doctrine simply does not apply to defendants who are joined after an action is removed, for in such cases, the defendants have a chance to argue against joinder before the court grants leave to amend.Id. at 678.
The only case within this Circuit to address the § 1447(e) joinder situation is quite recent. In Doleac v. Michalson, ___ F.3d ___, 2001 WL 984674 (5th Cir. August 27, 2001), the district court allowed the plaintiff in a medical malpractice case to add a non-diverse medical clinic as co-defendant, after removal to federal court. In considering whether to allow the amendment, the district court analyzed four factors it gleaned from Hensgens v. Deere Co., 833 F.2d 1179 (5th Cir. 1987), cert. denied, 493 U.S. 851 (1989), a § 1447(c) case decided before the addition of the current Section 1447(e):
(1) the extent to which the purpose of the amendment is to defeat federal jurisdiction;
(2) whether plaintiff has been dilatory in asking for the amendment;
(3) whether plaintiff will be significantly injured if the amendment is not allowed; and
Section 1447(e) was enacted as part of the Judicial Improvements and Access to Justice Act of 1988.
(4) any other factors bearing on the equities.
Doleac, 2001 WL at *2. Although the Fifth Circuit in Doleac held that the district court's decision to allow the joinder and then to remand was not reviewable, because it did not come within the exception to the statute precluding appellate review of remand orders, the case suggests that the four factors are appropriately applied in § 1447(e) joinder cases. The substantive four factor test is almost identical to the four part test used in other Circuits. Indeed, the Fifth Circuit's Hensgens case is credited as the source for the four part test used elsewhere. See Wyant, 881 F. Supp. at 923, n. 6.
Under either the Hensgens test or the four part variant used in other Circuits, leave to amend here should not be granted. This suit has been pending for nine months, yet Plaintiffs did not join Untiedt as a defendant until the day after they were served with GM's Notice of Removal. Plaintiffs filed their Motion to Remand simultaneously with their First Amended Complaint. They claim a witness statement implicating Untiedt as a partial cause of the accident prompted the amendment, but the statement was provided to Plaintiffs by their own investigator on August 27, 2000 — four months before Plaintiffs instituted the suit and almost one year prior to the proposed amendment at issue. There was no apparent effort by Plaintiffs to sue Untiedt earlier. Finally, Plaintiffs' motive to manipulate the alignment of parties so as to keep this case in state court is clear. Plaintiffs' Motion to Remand confesses that Untiedt "was not named sooner for strategic reasons." Pls.'s Mot. at 1. The strategy appears simple. Plaintiffs named Dorsey, an individual state resident as an apparent strawman to keep the large corporate defendant, GM, in state court. Plaintiffs never served Dorsey. Once GM discovered that Dorsey had moved to Alabama (a fact Plaintiffs did not divulge to GM prior to the deposition of Eric Sanders, Sr.), Plaintiffs attempted to add a new individual Texas resident, Untiedt, who they could have sued in state court almost a year ago and who they can presumably pursue in state court even now.
Jurisdiction is not so malleable that Plaintiffs can creatively forum shop through manipulation of the rules. This kind of strained approach to the federal rules is unacceptable. Plaintiffs were required to seek leave to amend. They did not. Though the Court will assume a Motion for Leave was filed, fundamental fairness dictates that such a Motion should be DENIED. Thus, there is no basis to remand so the Motion to Remand is likewise DENIED.