Legal Memorandum: Fraudulent Joinder

Issue: How does a defendant in federal court in Mississippi prove that parties were joined fraudulently to create diversity?

Area of Law: Litigation & Procedure
Keywords: Fraudulent joinder; To create diversity; Evidence
Jurisdiction: Mississippi
Cited Cases: 878 F. Supp. 902; 792 F. Supp. 1022
Cited Statutes: None
Date: 05/01/2000

A defendant must prove with clear and convincing evidence and with particularity that one of the defendants was fraudulently joined by demonstrating "that there is no arguably reasonable basis for predicting that state law might impose liability on the defendant[]."  Horton v. Scripto-Tokai Corp., 878 F. Supp. 902, 906 (S.D. Miss. 1995).  "If there is any doubt as to whether a plaintiff has stated a claim against the non-diverse defendant, the joinder is not fraudulent.  All doubts are to be resolved in favor of the non-removing party . . . If there is any ‘reasonable basis for predicting that the state law might impose liability,’ then the plaintiff must receive the benefit of the doubt and the cause must be remanded."  Id. at 906 (citations omitted).  In Newsome v. Shelter Gen. Ins. Co., 792 F. Supp. 1022, 1026 (S.D. Miss. 1991), the court applied these rules and found that because Mississippi law "did not foreclose the possibility that [the] plaintiffs[‘] allegations state a claim against [the defendants] . . . it is impossible for the court to conclude that [the] plaintiffs have ‘no possibility’ of recovery against [the defendants] under state law."  Therefore, the court was "compelled to remand this action to state court."  Id. at 1026. 


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