(The Return of) Ignatz, by Sam Heldman

Tuesday, July 08, 2003

This here post is for the law nerds mostly.
One of the things that really gets me grumpy is when defendants, in lawsuits filed in state court, wrongly "remove" the cases to federal court in order to (a) get a friendlier forum or (b) at least slow down the lawsuit by trying. We had a good example, recently, of how ridiculous this can get. Here's the deal.

One of the bases for federal court jurisdiction -- and therefore one of the bases for removal of a case from state to federal court -- is "diversity of citizenship", which exists (under currently-governing statutes) when all the plaintiffs live in different states from all the defendants, and the amount of money at stake exceeds a certain statutorily-set minimum. So, a case where the plaintiffs are from Alabama, and some (but not all) of the defendants are from Alabama, is NOT removable on the basis of "diversity". Got it?

Ok, there's one tiny exception, which is when the "non-diverse defendants" (the Alabama-based defendants, in our example) are listed in the Complaint BUT THERE'S NOT EVEN A CONCEIVABLY, NOT EVEN ARGUABLY, LEGITIMATE CLAIM against them. This is called "fraudulent joinder". Naturally -- being self-interested like just about everybody else -- companies that are sued in state courts try to stretch this tiny little exception into a humongous exception. Natural. The problem is that some federal district courts let the companies get away with this grotesque expansion of "fraudulent joinder", and let cases into federal court that should have stayed in state court.

Take, for instance, Tillman v. R.J. Reynolds. There, an Alabama smoker had filed suit in 1998, against R.J. Reynolds and some Alabama defendants who had sold some of the cigarettes. No diversity, right? Shouldn't be removable to federal court, right? But R.J. Reynolds argued, and the district court agreed, that the retailers were "fraudulently joined" because there was no possible arguable conceivable claim against them -- that any argument for such a claim was completely baseless. Three years later, the Eleventh Circuit wasn't sure that this was right, so -- in the opinion I just linked -- the Circuit asked the Alabama Supreme Court whether there was any claim against the retailers. And last month, the Alabama Supreme Court said "yes, there's a potentially valid claim against the retailers." So all that time -- for about 5 years -- the federal courts delayed the case, when they should have just refused to hear it and let the state courts decide it. The federal courts countenanced that delay, by giving credence to Reynolds's argument that there was OBVIOUSLY no claim against the retailers; but in fact (as the Ala. S.Ct. recognized), not only was that NON-OBVIOUS, it was just WRONG.

Like I said, this sort of thing gets me grumpy.

posted by sam 9:06 PM 0 comments


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