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As we recently noted when discussing snap removals, corporate defendants sued by individuals are generally at a disadvantage when forced to litigate in state rather than federal court. We know this and plaintiffs know this. It is why plaintiffs commonly file suit in state court, why corporate defendants typically remove cases to federal court when possible, and why plaintiffs often move to remand cases that have been removed.

In today’s case, In re: Stryker Rejuvenate and ABG II Hip Implant Prods. Liab. Litig., 2023 WL 6514996 (D. Minn. 2023), a medical-device manufacturer removed a case from state to federal court and the court denied the plaintiff’s motion to remand. The decision is noteworthy because, in denying remand, the court relied on the “fraudulent misjoinder” doctrine, which various courts accept but the Eighth Circuit has yet to endorse.

A defendant may remove a case to federal court if the federal court would have had subject-matter jurisdiction had the case been filed in federal court at the outset. 28 U.S.C. § 1441(a). A frequent basis for federal subject-matter jurisdiction­—and, thus, removal—is diversity of citizenship. Assuming other conditions are satisfied, federal courts have jurisdiction to hear cases between citizens of different states. U.S. Const. art. III, § 2, cl. 1. But for diversity jurisdiction to exist there must be “complete” diversity between the parties; there is no federal jurisdiction if any plaintiff is the citizen of the same state as any defendant. This means that absent some other source of federal subject-matter jurisdiction (such as substantial-federal-question jurisdiction), plaintiffs are able to prevent the removal of cases by naming citizens of their own states as defendants.

To give concrete examples:  If a plaintiff who is a citizen of Pennsylvania sues a manufacturer who is a citizen of Minnesota in the Philadelphia Court of Common Pleas, the manufacturer could remove the case to the United States District Court for the Eastern District of Pennsylvania. If, however, the plaintiff instead sues not only the manufacturer but also their doctor, then the manufacturer will not be able to remove the case if the doctor is (as will often be true) a citizen of the same state as the plaintiff.

Recognizing this, plaintiffs asserting product-liability claims against out-of-state manufacturers often will simultaneously assert medical-malpractice claims against in-state medical providers to ensure that their cases stay in state court and that they reap the associated tactical advantages.

But defendants are not defenseless.

Any complaint heard in federal court must comply with the Federal Rules of Civil Procedure. This includes complaints in cases removed from state court. This means that complaints in removed cases are subject to FRCP 20, which governs who may be joined as parties in a single action. The rules allows plaintiffs to bring a single action against multiple defendants when the plaintiff’s claims against the respective defendants “aris[e] out of the same transaction, occurrence, or series of transactions or occurrences” and a “question of law or fact common to all defendants will arise in the action.” Fed. R. Civ. P. 20(a)(2).

Understanding plaintiffs’ incentive to game the system, Courts rightly recognize limits to what Rule 20(a)(2) allows. Indeed, there are two distinct doctrines that cabin plaintiffs’ ability to destroy diversity jurisdiction.

First, there is the universally accepted “fraudulent joinder” doctrine. Fraudulent joinder occurs when a plaintiff  “attempt[s] to join a non-diverse defendant against whom the plaintiff has no real claim solely to defeat federal jurisdiction.” Aparicio v. Uber Techs., Inc., 2023 WL 5287065, at *8 (E.D.N.Y. 2023). Different courts articulate the standard somewhat differently, but generally speaking “[t]o prove fraudulent joinder”—and prevent remand based on lack of complete diversity—“the removing party must present sufficient evidence that [the] plaintiff could not have established a cause of action against non-diverse defendants under state law.” Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999). If a defendant has been fraudulently joined, the court disregards that defendant’s citizenship when evaluating whether there is diversity jurisdiction. Thus, the mere fact that a plaintiff names an in-state medical provider as a defendant does not defeat removal if the claims asserted against the medical provider are, for example, time-barred.

Second, there is the “fraudulent misjoinder” or “procedural misjoinder” doctrine, which many but not all courts have endorsed. Where recognized, “fraudulent misjoinder” or “procedural misjoinder” refers to a situation “where a plaintiff attempts to frustrate a defendant’s right to remove by joining a non-diverse party in violation of the applicable joinder rule.” Breitner v. Merck & Co., 2019 WL 316026, at *2 (D.N.J. 2019). Thus, while fraudulent joinder involves the assertion of non-colorable claims against a non-diverse defendant, fraudulent or procedural misjoinder involves the assertion of claims against a non-diverse defendant that are colorable not properly joined with the plaintiff’s claims against a diverse defendant.

That brings us back to today’s case, in which the plaintiff asserted product-liability claims against an out-of-state medical-device manufacturer and medical-malpractice claims against an in-state healthcare provider. Moving to remand the case to state court, the plaintiff argued that the presence of the in-state defendant meant that there was not diversity of citizenship for purposes of 28 U.S.C. § 1332, that the federal court therefore lacked subject-matter jurisdiction, and that remand was thus required.

Analyzing the plaintiff’s product-liability and medical-malpractice claims under Rule 20(a)(2), the court held that the manufacturer and healthcare provider had been “improperly joined” because “the claims do not both involve common questions of law or fact and assert joint, several, or alternative liability ‘arising out of the same transaction, occurrence, or series of transactions or occurrences.’” In re: Stryker Rejuvenate and ABG II Hip Implant Prods. Liab. Litig., 2023 WL 6514996, at *3 (D. Minn. 2023). As the court explained:

Any medical negligence claims that Plaintiff asserts against the Healthcare Defendants will require evidence regarding Plaintiff’s care, treatment, and services provided by the Healthcare Defendants and their staff. Plaintiff’s claims against [the manufacturer], on the other hand, are based on alleged manufacturing and design defects associated with the … medical device. Claims against the [manufacturer] will require evidence as to the development, manufacture, and testing of such devices as well as the [manufacturer’s] knowledge, warnings, and disclosures regarding risks associated with its purportedly defective hip replacement product. Any liability that may be found against either [the manufacturer] or the Healthcare Defendants would not be a basis for liability as to the other.

Id. Having found fraudulent or procedural misjoinder, the court “sever[ed] the action” against the healthcare provider “so as to preserve [the manufacturer’s] right to removal in the remaining action.” Id.

Medical-device and pharmaceutical defendants should take note of this decision. Not only is the “fraudulent misjoinder” or “procedural misjoinder” doctrine applied, but it is applied by a court within the Eighth Circuit, which is one of the circuits yet to address the issue.