Photo of Stephen McConnell

Some plaintiff lawyers seem horrified at the prospect of showing up in federal court.  How else to explain the machinations to prevent diversity jurisdiction?  What is it about federal courts that they dislike so much?  The assignment of one judge who will stick with the case and thereby come to learn its frailties?  The proclivity of federal judges to correct counsel who call the lectern a podium?  The Article III freedom from elections and political contributions?  Don’t ask us.  Log onto one of those plaintiff lawyer websites, and when a little bubble pops up where a sunny-faced minion volunteers to help you, ask said minion.

Meanwhile, we keep seeing cases where plaintiff lawyers sue local defendants to keep the case against the out-of-state company out of federal court.  Such cases do not come as solitary spies, but in battalions.  To keep a local defendant in the case, and the case out of federal court, the plaintiff needs to allege that the local defendant is culpable of something.  When there is fraudulent joinder, that something turns out to be nothing, or something dopey this way comes.  Nothing can come of nothing.  Take Martin v. DePuy Orthopaedics, Inc., 2014 U.S. Dist. LEXIS 130143 (D. Nevada September 16, 2014), for example.  The plaintiff, a Nevada citizen, sued several defendants, including Nevada corporation Precision Instruments in Nevada state court for products liability.  The plaintiff alleged that each of the defendants were involved in the stream of commerce as to the plaintiff’s allegedly defective artificial hip.  He lumped them together.  He did not bother to allege which defendants manufactured versus distributed or retailed the product at issue.  The defendants removed the case to federal court, and the plaintiff moved to remand for lack of complete diversity.  The defendants argued that the diversity-destroying defendant,  Precision, had been fraudulently joined and therefore should not count in the diversity analysis.

The plaintiff proudly pointed to his amended complaint, which alleged that Precision was engaged in the business of selling artificial hip/stems, including the one that was sold to the plaintiff.  But the same exact allegation was made against the eight other defendants, and the court could not see how it could be the case that all nine defendants sold the same hip/stem to the plaintiff.  Good point.  Moreover, the defendants tendered the declaration of the principal of Precision, who searched through a database and found no evidence that the company had supplied a product for the plaintiff’s surgery.  The best that the plaintiff could come up with in reply was a copy of a surgery record in which a nurse appears to have noted that the guy from Precision took extracted hardware.  But that document was hearsay; it was not made by the plaintiff for the purpose of medical treatment, nor was it established to be a business record.  Thus, there was no admissible evidence that the non-diverse defendant played any role in the surgery.  Rather, the plaintiff merely offered a boilerplate complaint that defied the rules of physics, commerce, and logic.  The court concluded that Precision had been fraudulently joined and kept the case on the federal side of the street.

The allegations in Sazy v. DePuy Spine, LLC, 2014 U.S. Dist. LEXIS 130789 (N.D. Texas September 18, 2014), aren’t much better, as fraudulent joinder cases go.  In fact, they are much worse.  The plaintiff brought suit in Texas state court against three out-of-state companies and one solitary individual, named Brownell, who had the good fortune of being a resident of Texas.  The defendants removed the case to federal court on the ground that Brownell’s joinder was fraudulent.  This argument was bolstered by the fact that the complaint’s reference to Brownell was brief and mysterious.  In fact, Brownell was mentioned by name in only two places in the complaint:

  1. “The Defendants and Defendant Brownell aided and abetted one another in committing torts against the Plaintiff.  The Defendants had specific intent and knowledge that their conduct constituted torts.”
  2. “Clearly, the Defendants and Defendant Brownell had the intent to assist one another in the torts.  The Defendants and Defendant Brownell gave one another assistance or encouragement and the Defendants’ assistance or encouragement was a substantial factor in causing the torts.”

Brevity is not always the soul of wit.  Sazy is hazy.  That “Clearly” is precious.  What’s that line about protesting too much?  And who tells the tale full of sound and fury?

As our eyes drifted across the pages of the Sazy case for the first time, we grew worried about the result when the federal court decided to apply the liberal Texas pleading standard in assessing whether Brownell had been fraudulently joined. We do not agree with applying state local rules to test fraudulent joinder.  It seems to reward mischief.  But we stopped worrying when we remembered how bare-bones the complaint was.  The court also remembered, deeming the complaint “devoid of any allegations as to how Brownell aided and abetted, assisted, encouraged, or participated in acts allegedly committed by the DePuy Defendants.”  The court confessed that it had “no inkling” of what Brownell allegedly did to injure the plaintiff.   The complaint contained “no allegations of specific acts committed by Brownell, no allegations that Brownell was a party to any agreement or contract with” the plaintiff, and no allegations that Brownell negotiated or administered any contact or agreement with the plaintiff.  In short, the complaint was awesome in its reticence, and not in a good way.  Aided and abetted by a complaint that signified nothing, the federal court had little difficulty retaining jurisdiction.  All’s well that ends well.