Michael Avenatti v. Fox News Network LLC
41 F.4th 125
3rd Cir.2022Background
- Fox News removed Avenatti’s Delaware defamation suit to federal court based on complete diversity.
- Three days after removal (and within the 21‑day Rule 15 window), Avenatti amended as of right to add Jonathan Hunt, a California resident, then moved to remand on grounds that diversity was destroyed.
- The District Court invoked Federal Rule of Civil Procedure 21 to drop Hunt (finding him dispensable under Rule 19 and not prejudicing parties) and applied the Hensgens balancing factors to guide its “on just terms” discretion, thereby retaining federal jurisdiction.
- The District Court later dismissed Avenatti’s amended complaint on the merits; Avenatti appealed only the remand ruling.
- The Third Circuit affirmed, holding Rule 21 permits a court to drop a post‑removal, as‑of‑right nondiverse “spoiler” if the party is dispensable, no prejudice results, and the court reasonably exercises its discretion (Hensgens factors).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a district court may drop a nondiverse defendant added by amendment as of right after removal | Avenatti: Addition via Rule 15(a)(1)(A) is automatic; §1447(e) does not apply, so remand was required unless fraudulent joinder shown | Defendants: Rule 21 empowers the court to drop dispensable nondiverse parties post‑removal to preserve jurisdiction; Hensgens factors guide discretion | Court: Rule 21 authorizes dropping such a party if dispensable and no prejudice; Hensgens factors may guide “just terms” analysis |
| Whether the court was required to apply the fraudulent‑joinder doctrine before dropping Hunt | Avenatti: Court should have used fraudulent joinder standard to deny remand | Defendants: Fraudulent joinder applies to initial removal analysis only and is too rigid; Rule 21 and Hensgens are appropriate | Court: Fraudulent‑joinder is inapplicable post‑removal; Rule 21/Hensgens are proper tools |
| Whether Rule 21 use is limited by timing or Rule 82/master‑of‑complaint principles | Avenatti: Plaintiff’s right to amend and choice of forum should preclude dismissal of an as‑of‑right joinder | Defendants: No temporal limit in Rule 21; courts may protect vested jurisdiction despite plaintiff’s forum choice | Court: Rule 21 expressly allows action “at any time” and does not conflict with Rule 82; plaintiff’s rights are not absolute |
| Whether the District Court abused its discretion applying Hensgens and finding Hunt dispensable/no prejudice | Avenatti: Record didn’t support findings; fraudulent joinder should have been used; dropping Hunt prejudiced him | Defendants: Timing and facts show motive to defeat jurisdiction; Hunt’s alleged role duplicated Fox News (joint liability), so no prejudice | Court: No abuse of discretion — evidence supported finding of improper motive, Hunt was dispensable, and dropping him caused no prejudice |
Key Cases Cited
- Newman‑Green, Inc. v. Alfonzo‑Larrain, 490 U.S. 826 (1989) (Rule 21 permits dismissal of dispensable nondiverse parties to preserve diversity)
- Hensgens v. Deere & Co., 833 F.2d 1179 (5th Cir. 1987) (balancing factors for post‑removal joinder destroying diversity)
- Mayes v. Rapoport, 198 F.3d 457 (4th Cir. 1999) (post‑removal Rule 15 additions may be evaluated as though §1447(e) applied)
- Bailey v. Bayer CropScience L.P., 563 F.3d 302 (8th Cir. 2009) (approving use of Hensgens to guide Rule 21 dismissal of nondiverse party)
- Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752 (7th Cir. 2009) (district courts may drop nondiverse parties added post‑removal and apply Hensgens)
- Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006 (3d Cir. 1987) (fraudulent joinder focuses on complaint at time of removal; policy against plaintiff forum manipulation)
- Batoff v. State Farm Ins. Co., 977 F.2d 848 (3d Cir. 1992) (fraudulent joinder standard: no colorable claim supports joinder)
- DirecTV, Inc. v. Leto, 467 F.3d 842 (3d Cir. 2006) (Rule 21 dismissal reviewed for abuse of discretion)
- Publicker Indus., Inc. v. Roman Ceramics Corp., 603 F.2d 1065 (3d Cir. 1979) (district courts may dismiss nondiverse party to achieve diversity)
- Rockwell Int’l Corp. v. United States, 549 U.S. 457 (2007) (amendments eliminating the basis for federal jurisdiction generally do not defeat jurisdiction; forum‑manipulation concerns)