Here’s some more inside baseball on grounds for removing cases from state to federal court. In brief, the issue is this: does the “bad faith” standard added to the removal statute (28 U.S.C. §1446(c)(1)) in 2011 approximate the fraudulent joinder standard so that fraudulent joinder becomes a form of “bad faith” not subject to the one-year limit otherwise imposed on removals by reason of diversity of citizenship? Fraudulent joinder is also an exception the “voluntary/involuntary” rule. E.g., Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir. 2006); Mayes v. Rapoport, 198 F.3d 457, 461 n.8 (4th Cir. 1999); Insinga v. LaBella, 845 F.2d 249, 254 (11th Cir. 1988).
We wish to acknowledge the assistance of Emily Kimmelman, a Reed Smith 2016 summer associate, in compiling the research for this post.
In 2011 (effective January 6, 2012), Congress passed the Federal Courts Jurisdiction & Venue Clarification Act (the “JVCA”). The JVCA did a number of things, which we discussed here (back then (in 2011), we were most interested in Congress having left intact the statutory language that allows removal before service). What we’re discussing today is the JVCA’s creation of a “bad faith” exception in 28 U.S.C. §1446(c)(1). Specifically, §1446(c)(1) provides for diversity jurisdiction removal, even after one year if “the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.”
Nothing is certain, except the controversy over how the bad faith exception interacts with the fraudulent joinder exception to the voluntary-involuntary rule. Everybody knows the standard for fraudulent joinder. It exists where “there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or no real intention in good faith to prosecute the action against the defendants or seek a joint judgment.” In re Briscoe, 448 F.3d 201, 217 (3d Cir. 2006).Continue Reading Fraudulent Joinder & Bad Faith – Explaining Another Removal Muddle