Kelli SMALLWOOD, Plaintiff-Appellant, v. ILLINOIS CENTRAL RAILROAD COMPANY; Mississippi Department of Transportation, Defendants-Appellees.
No. 02-60782.
United States Court of Appeals, Fifth Circuit.
Sept. 10, 2004.
385 F.3d 568
B. Ineffective Assistance of Counsel
Finally, Partida argues that his trial counsel was constitutionally deficient, contending that his counsel failed to raise at trial essentially all the issues currently before this panel. We have previously held that “Sixth Amendment claims of ineffective assistance of counsel should not be litigated on direct appeal, unless they were previously presented to the trial court.” United States v. Valuck, 286 F.3d 221, 229 (5th Cir.2002). While this Court will consider such claims on direct appeal in “rare cases,” the record must allow a reviewing court to “fairly evaluate the merits of the claim.” United States v. Delagarza-Villarreal, 141 F.3d 133, 141 (5th Cir.1997). Here, the district court did not hold a hearing or rule on Partida‘s claim, nor does the record contains sufficient detail about trial counsel‘s conduct to permit this court to make a fair determination of the merits of Partida‘s claim. As such, we reject Partida‘s ineffective assistance of counsel claim as without merit.
CONCLUSION
For the foregoing reasons, we affirm both Partida‘s and Vigil‘s convictions and sentences. The judgment of the district court is AFFIRMED.
Charles T. Ozier, George Howard Ritter, William B. Lovett, Jr., Wise, Carter, Child & Caraway, Susan L. Runnels, Kelly Dunleath Simpkins, Wells, Marble & Hurst, Jackson, MS, for Defendant-Appellee.
Emerson Barney Robinson, III, Butler, Snow, O‘Mara, Stevens & Cannada, Charles Clark, Watkins & Eager, Jackson, MS, Dan K Webb, Winston & Strawn, Chicago, IL, Charles E. Griffin, Griffin & Associates, James William Craig, Phelps Dunbar, David W. Clark, Billy Berryhill, Bradley, Arant, Rose & White, William C. Brabec, Adams & Reese, Walter D Willson, Wells, Marble & Hurst, Jackson, MS, for Amicus Curiae.
Before KING, Chief Judge, and JOLLY, HIGGINBOTHAM, DAVIS, JONES, SMITH, WIENER, BARKSDALE, EMILIO M. GARZA, DEMOSS, BENAVIDES, STEWART, DENNIS, CLEMENT, PRADO and PICKERING, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Today we decide a narrow but not unimportant question regarding diversity jurisdiction in federal courts and the application of the doctrine of “improper joinder.”1 This is the first time this Court en banc has addressed the issue of improper joinder, although a number of panels of this Court have previously addressed it. We hold that, when a nonresident defendant‘s showing that there is no reasonable basis for predicting that state law would allow recovery against an in-state defendant equally disposes of all defendants, there is no improper joinder of the in-state defendant. In such a situation, the entire suit must be remanded to state court. In this case, it is undisputed that the district court‘s decision that Smallwood‘s claims against the in-state defendant were preempted effectively decided the entire case. On these facts, we conclude that the district court erred in deciding the merits of the proffered defense of preemption and in not remanding the case to the state court from which it was removed.
I
Kelli Smallwood is a Mississippi resident who was injured when a train struck her car at a railroad crossing in Florence, Mississippi. The train was operated by Illinois Central, an Illinois corporation, and the railroad crossing was controlled by an agency of the Mississippi state government, the Mississippi Department of Transportation (“MDOT“). At the time of the accident, the crossing did not have automatic gates; it was equipped only with warning lights, which had been installed using federal funds. After the accident, Smallwood filed suit in Mississippi state
Illinois Central removed the case to federal court. Illinois Central maintained that Smallwood‘s claims against MDOT were preempted by the Federal Railroad Safety Act (“FRSA“).2 Reasoning that the preemption defense barred Smallwood‘s claims against MDOT, Illinois Central argued that Smallwood had improperly joined MDOT because, under the FRSA, there was no reasonable possibility of recovery against MDOT.
The district court accepted Illinois Central‘s argument, dismissed MDOT from the case, and denied Smallwood‘s motion to remand. Applying the “law of the case,” the district court then granted summary judgment for Illinois Central on the basis that Smallwood‘s claim against the railroad was equally preempted. The railroad won its case when it persuaded the district court that the claims against the in-state defendant, MDOT, were preempted.3
A panel of this court concluded that Illinois Central had not carried its burden of demonstrating that the joinder of MDOT was fraudulent, reversed the district court‘s dismissal of the case on its merits, and ordered the case remanded to state court. We voted to rehear the case en banc.
II
The starting point for analyzing claims of improper joinder must be the statutes authorizing removal to federal court of cases filed in state court. The federal removal statute,
“[T]he Federal courts should not sanction devices intended to prevent the removal to a Federal court where one has that right, and should be equally vigilant to protect the right to proceed in the Federal court as to permit the state courts, in proper cases, to retain their own jurisdiction.”6
The doctrine of improper joinder rests on these statutory underpinnings, which entitle a defendant to remove to a federal forum unless an in-state defendant has been “properly joined.” Since the purpose of the improper joinder inquiry is to determine whether or not the in-state defendant was properly joined, the focus of the inquiry must be on the joinder, not the merits of the plaintiff‘s case.
Given this focus, we have recognized two ways to establish improper joinder: “(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.”7 Only the second way is before us today, and we explained in Travis v. Irby8 that the test for fraudulent joinder is whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant. To reduce possible confusion, we adopt this phrasing of the required proof and reject all others, whether the others appear to describe the same standard or not.9
There has also been some uncertainty over the proper means for predicting whether a plaintiff has a reasonable basis of recovery under state law. A court may resolve the issue in one of two ways. The court may conduct a
While the decision regarding the procedure necessary in a given case must lie within the discretion of the trial court, we caution that a summary inquiry is appropriate only to identify the presence of discrete and undisputed facts that would preclude plaintiff‘s recovery against the in-
III
Illinois Central argues that the district court‘s finding of improper joinder was appropriate because Smallwood‘s claims against MDOT were preempted by federal law. Illinois Central urges, moreover, that it is irrelevant that the FRSA equally bars claims against it.
Facing the question for the first time in an en banc proceeding, we reject the railroad‘s contention. To justify removal on improper joinder grounds, Illinois Central was required to prove that the joinder of MDOT was improper. Illinois Central, however, brought no contention going to the propriety of the joinder. Rather, the basis of its contention that Smallwood could not recover went, in fact, to the entire case, although it was first directed to Smallwood‘s claims against MDOT. Then, with jurisdiction secured, and with all the force of the “law of the case,” this same preemption was directed to the merits of Smallwood‘s claims against the railroad.
A claim of improper joinder by definition is directed toward the joinder of the in-state party, a simple but easily obscured concept. The party seeking removal bears a heavy burden of proving that the joinder of the in-state party was improper.13 Nevertheless, when, on a motion to remand, a showing that compels a holding that there is no reasonable basis for predicting that state law would allow the plaintiff to recover against the in-state defendant necessarily compels the same result for the nonresident defendant, there is no improper joinder; there is only a lawsuit lacking in merit. In such cases, it makes little sense to single out the in-state defendants as “sham” defendants and call their joinder improper. In such circumstances, the allegation of improper joinder is actually an attack on the merits of plaintiff‘s case as such—an allegation that, as phrased by the Supreme Court in Chesapeake & O.R. Co. v. Cockrell, “the plaintiff‘s case [is] ill founded as to all the defendants.”14 In reaching this conclusion, we are applying our traditional improper joinder analysis.
In Cockrell, the Supreme Court reviewed an effort by a railroad to remove a case to federal court on improper joinder grounds. The railroad argued that the plaintiff‘s negligence charges against the
The Supreme Court thus made clear that the burden on the removing party is to prove that the joinder of the in-state parties was improper—that is, to show that sham defendants were added to defeat jurisdiction. A showing that the plaintiff‘s case is barred as to all defendants is not sufficient. When the only proffered justification for improper joinder is that there is no reasonable basis for predicting recovery against the in-state defendant, and that showing is equally dispositive of all defendants rather than to the in-state defendants alone, the requisite showing has not been made.
Our insistence that a removing defendant demonstrate that the joinder was improper does not impair a foreign defendant‘s right to remove. “[T]he Federal courts may and should take such action as will defeat attempts to wrongfully deprive parties entitled to sue in the Federal courts of the protection of their rights in those tribunals.”19 In every case where a diverse defendant proves that the plaintiff‘s decision to join an in-state party is improper, the diverse defendant gains access to the federal courts. If, however, the foreign defendant fails to prove the joinder improper, then diversity is not complete, the diverse defendant is not entitled to remove, and remand is mandated.
Illinois Central contends, nonetheless, that our decision contradicts prior holdings of this circuit which have allowed a finding of improper joinder based on defenses going to the merits of the plaintiff‘s case, rather than to the joinder.20 Yet we are not pointed to any decision of this Court where the assertion was made and rejected. It was asserted here, and our decision today fits squarely within our improper joinder doctrine and finds strong support in the Supreme Court‘s decision in Cockrell and the decision of the Third Circuit in Boyer v. Snap-On Tools Corp.21
While we need not deploy the well-pleaded complaint rule, it is not unimportant that our application of the improper joinder doctrine here disallows circumvention of the well-pleaded complaint rule. The railroad could not remove on the basis
IV
It is urged that this application of the improper joinder doctrine undermines the purpose of diversity jurisdiction, which is to protect out-of-state defendants from local bias, the proverbial “home cooking.” But our holding today is narrow. It applies only in that limited range of cases where the allegation of improper joinder rests only on a showing that there is no reasonable basis for predicting that state law would allow recovery against the in-state defendant and that showing is equally dispositive of all defendants.
The doctrine of improper joinder implements our duty to not allow manipulation of our jurisdiction. We are not persuaded that we can or should—as we are now urged to do—hold that Strawbridge v. Curtiss22 does not apply to suits wholly lacking “merit,” at least as seen by a federal court. That is not a rule of joinder, but a recrafting of Strawbridge. Until Congress changes our jurisdiction and allows us to hear cases based on something less than complete diversity, we cannot act. And make no mistake, whether to confer diversity jurisdiction in the absence of complete diversity is a quintessential political decision belonging to Congress, as congressional efforts to respond to abuses in state court class action litigation by allowing their removal on minimal diversity have so recently reminded us.
It is no accident that the first Congress conferred removal jurisdiction, accommodating competing political interests. Removal remains a centerpiece of our federalism. The cry of out-of-state interests seeking to escape local courts and local plaintiffs seeking to avoid more distant justice is in fact an old and recurring song. It is a living dynamic, not an historic relic. To the point, our insistence that diversity removal, powerful as it is, remain within its congressionally marked traces is demanded by principles of comity and federalism—that a state court is to be trusted to handle the suit unless the suit satisfies the removal requirements.
It is argued that our holding undermines judicial economy by forcing a federal district court to remand a meritless case to state court rather than dismiss it outright. This argument, however, misconstrues the inquiry on removal. When a defendant removes a case to federal court on a claim of improper joinder, the district court‘s first inquiry is whether the removing party has carried its heavy burden of proving that the joinder was improper. Indeed, until the removing party does so, the court does not have the authority to do more; it lacks the jurisdiction to dismiss the case on its merits. It must remand to the state court.
Illinois Central seeks broader license to escape from state court, but we are not authorized to grant such a request, as compelling as it may be. It is the province of Congress to modify diversity jurisdiction.
V
The judgment of the district court is VACATED and the case is REMANDED to the district court with instructions to remand for want of jurisdiction to the state court from which it was removed.
I respectfully dissent from the majority‘s strange compulsion to amend the traditional rules of fraudulent joinder based on a seldom cited 1914 fact-specific case.1 This is all the more strange in the light of the admonition we sounded recently: “[F]or the simple truth that we stand on the shoulders of those before us, if for no other reason, we must be hesitant when we act on recent flashes of ‘new’ insight to the fundamentals of governance“. Marathon Oil Co. v. Ruhrgas, 145 F.3d 211, 227 (5th Cir.1998) (en banc), rev‘d, 526 U.S. 574, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) (Higginbotham, J., dissenting). In my view, the majority, in accepting the plaintiff‘s briefing and “new insights“, misreads the Supreme Court decision, disregards established precedent, designs a troublesome and unnecessary “common-defense” rule to amend a long established and fairer rule, offers meaningless reasoning to support its decision and creates confusion for the district courts—all for no other reason, as far as I can determine, than the satisfaction in finding a “buried treasure” obscured from our judicial predecessors for almost a century.2
I
Up until today, our precedent has been rooted, established and clear, having evolved through the writings of solid and respected judges over many years. It asks a simple question and, eschewing personal motives of the plaintiff, applies an objective test to produce a fair answer: When a diverse defendant removes to federal court on grounds of fraudulent joinder we only ask, as the majority opinion acknowledges:
[W]hether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant.
Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573, Maj. Op. at 573 (5th Cir.2004) (en banc) (Smallwood III). Our inquiry is designed to determine the single overarching question of whether the in-state defendant was joined “solely to deprive the federal courts of jurisdiction“; if our objective test determines that the plaintiff cannot recover, then the in-state defendant is
The subjective intent of the plaintiff is irrelevant; instead, our precedent, unequivocally and without exception, has evaluated claims of fraudulent joinder with a simple, well-understood, objective two-prong test3—that is, until today. See Travis v. Irby, 326 F.3d 644, 647 (5th Cir.2003); Ross v. Citifinancial, Inc., 344 F.3d 458, 461 (5th Cir.2003); Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 311–12 (5th Cir.2002); Heritage Bank v. Redcom Lab., Inc., 250 F.3d 319, 323 (5th Cir.2001); Griggs v. State Farm Lloyds, 181 F.3d 694, 698-99 (5th Cir.1999); Rodriguez v. Sabatino, 120 F.3d 589, 591 (5th Cir.1997); Burden v. Gen. Dynamics Corp., 60 F.3d 213, 217 (5th Cir.1995); Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 259 (5th Cir.1995); Laughlin v. Prudential Ins. Co., 882 F.2d 187, 190 (5th Cir.1989); Tedder v. F.M.C. Corp., 590 F.2d 115, 117 (5th Cir.1979); Parks v. New York Times Co., 308 F.2d 474, 478 (5th Cir.1962).
Because we eschew a subjective test, our test does not seek to determine the “truth” of exactly why the nondiverse defendant was joined as a defendant in the lawsuit.4 Instead, the many judges who have preceded us on this court have determined that this test produces a practical “truth“: that is, it is reasonable and fair to assume that a lawyer, acting in accordance with the code of professional responsibility, will not sue someone against whom he has no reasonable basis of recovery, unless it is for an improper reason; on the other hand, when a lawyer sues someone against whom he has a reasonable basis of recovery, it is unlikely that the joinder was for an improper reason.5 In short, it is always “improper“—professionally and ethically—to join any party to a suit if there is no basis of recovery, a point that apparently has no place in the reasoning of the majority.
Moreover, our established test is an efficient test because it focuses only on the joinder of the nondiverse defendant and does not require us to examine the case against the diverse defendant. The majority‘s “common-defense” rule, on the other hand, requires the district court to go one step further and examine the entirety of the case.
A
According to the majority, however, this traditional analysis is infected with error, long overlooked by scores of preceding judges but now revealed: The majority has declared that a New Legal Truth has been uncovered—The Common-Defense Theory. Although the panel‘s bold proclamation of the new discovery has been modulated by the en banc majority, and although the majority has narrowed the open-ended sweep of the panel, the unfortunate amendment to our traditional rule remains:
When the nonresident defendant‘s showing that there is no reasonable basis for predicting that state law would allow recovery against the in-state defendant equally disposes of all defendants, there is no improper joinder of the in-state defendant.
Smallwood III, 385 F.3d at 571, Maj. Op. at 571.6 Under this rule, even if the diverse defendant completely satisfies our traditional test and demonstrates that the plaintiff has no reasonable possibility of establishing a cause of action against the in-state defendant, the traditional rule is abrogated, and the case is remanded, irre-
spective of the plaintiff‘s inability to recover in state court, if the diverse and nondiverse defendants happen to possess the same defense.
B
The majority‘s support for its creation of the common defense rule is the turn of the century fact-specific Supreme Court case, Chesapeake & Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 34 S.Ct. 278, 58 L.Ed. 544 (1914). The pertinent language—cherry-picked and shorn of context—upon which the majority relies as compelling a common-defense rule, states:
As no negligent act or omission personal to the railway company was charged, and its liability, like that of the two employees, was, in effect, predicated upon the alleged negligence of the latter, the showing manifestly went to the merits of the action as an entirety, and not to the joinder; that is to say, it indicated that the plaintiff‘s case was ill founded as to all the defendants. Plainly, this was not such a showing as to engender or compel the conclusion that the two employees were wrongfully brought into a controversy which did not concern them. As they admittedly were in charge of the movement of the train, and
their negligence was apparently the principal matter in dispute, the plaintiff had the same right, under the laws of Kentucky, to insist upon their presence as real defendants as upon that of the railway company.
Cockrell, 232 U.S. at 153, 34 S.Ct. 278. As discussed below, however, the correct reading of Cockrell does not justify, much less compel the creation of the “common-defense” rule.
Since Cockrell was decided in 1914, the only circuit court decision that, previous to today, has interpreted it as proclaiming a “common-defense” exception to the fraudulent joinder rule is the Third Circuit‘s opinion in Boyer v. Snap-On Tools Corp., 913 F.2d 108 (3d Cir.1990).7 Equally revealing of the novelty of the majority‘s position is that neither WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE nor MOORE‘S FEDERAL PRACTICE—the two most authoritative treatises on federal practice—cites Cockrell as relating to such a theory as “common-defense” or, for that matter, even intimates that such a rule exists.8
C
I turn now to address the majority‘s reliance on Cockrell. In Cockrell the plaintiff sued the Railroad and the in-state engineer and fireman who operated the
train that caused the death of the intestate. The plaintiff alleged that, although the negligence was that of the in-state engineer and fireman in the manner that they operated the train, the railroad—which committed no independent act of negligence—was nevertheless liable for the negligent conduct of its employees. In short, the entire suit was solely founded (or “ill-founded“) on the conduct of the in-state defendants; no argument could be made, as the Court put it, that the two in-state defendants were joined to a suit in which they did not belong. Indeed, but for their conduct the railroad would not have been in the suit; the in-state defendants could not possibly have been fraudulently joined because their conduct was the only actionable conduct in the case; there was in essence but one case and it was against the joined defendants themselves.
With respect to the grounds of fraudulent joinder of the two employees, the Railroad‘s only basis was that the plaintiff‘s allegations against these two in-state defendants were “false and untrue“. See Cockrell, 232 U.S. at 153, 34 S.Ct. 278. To be sure, the Railroad‘s claim of fraudulent joinder would have required that a trial on the merits be conducted in a removal proceeding.
That the majority misreads Cockrell as calling for modification of our traditional
Still further, however, in virtually all respects the instant case is distinguishable from Cockrell. First, there is no issue of vicarious liability here and consequently the “entirety” of the case against Illinois Central is not premised on the liability of MDOT. Unlike Cockrell, Smallwood seeks to hold Illinois Central liable for its own act of negligence—its negligent delay in installing safety devices. Compare with Cockrell, 232 U.S. at 153, 34 S.Ct. 278 (stating that “no negligent act or omission personal to the railway company was charged“). Consequently, unlike the Railroad in Cockrell whose liability was totally dependent upon the liability of the joined defendants (its employees), Illinois Central‘s liability was not predicated on the negligence of MDOT; instead, its liability was independent of MDOT‘s liability. Compare with Cockrell (stating that the railroad‘s liability “was, in effect, predicated upon the negligence of the [employees]“). Id. Therefore, the showing of conflict preemption in this case, unlike Cockrell, does not go the merits of the action in its entirety, that is, the defense is not a traverse of the allegations of the entire complaint, as in Cockrell, but only indicates that, as to MDOT, Smallwood‘s claims are procedurally barred; stated differently MDOT‘s defense does not attack the facts upon which the plaintiff‘s case against Illinois Central is founded nor automatically absolve Illinois Central of its own alleged negligence. Compare with Cockrell, 232 U.S. at 153, 34 S.Ct. 278 (stating that “the showing manifestly went to the merits of the action as an entirety, and not to the joinder, that is to say, it indicated that the plaintiff‘s case was ill founded as to all defendants” (emphasis added)).
In sum, it is only through a strained application based on a serious misreading that the majority inflates the significance and relevance of Cockrell, a case that has lain basically dormant for all of its 90-year life.
III
Not only does the majority‘s misreading and misapplication of Cockrell betray the weakness of its position, the majority fails to come up with any compelling reasons that might otherwise support its misadventure.
It argues that its theory is justified, because the focus in fraudulent joinder cases should be on the joinder of the nondiverse defendant—not on the merits of the case. This “focus” argument is a strawman. Of course the focus should be on the joinder, but on the joinder as a whole. Beyond uttering the platitudinous axiom that the focus should be on the joinder, the majority fails to offer any explanation of why the viability of the cause of action against the joined defendant is not part of that focus; indeed, only
The majority may be unwilling to face it, but the plain and undeniable fact is that only the traditional test focuses exclusively on the joinder; the common-defense theory requires that the court look beyond the joinder of the nondiverse defendant to the entirety of the case and determine the defenses of the diverse defendant as well. If the majority were serious in trumpeting a test that focuses on the joinder, and not the entire case, it would adhere to the traditional test.
The majority seems to forget that the overarching purpose of improper joinder inquiry is to determine if the defendant has been joined solely to defeat diversity. See JAMES WM. MOORE ET AL., MOORE‘S FEDERAL PRACTICE § 107.14[2][c][iv][A] (3d ed.2004).9 The weakness of the majority‘s argument is that it fails to demonstrate how the common-defense rule serves the purpose of the improper joinder inquiry—that is, to determine whether the defendant has been joined solely to defeat diversity—any better than, or as well as, the traditional test does. Indeed, as we have demonstrated earlier, the traditional test produces a “practical truth“, where the common defense theory does not even purport to do so.
The majority argues that even though Illinois Central showed there could be no
recovery against the joined defendant, it failed to prove that the joinder of MDOT was improper and that Illinois Central “brought no contention going to the propriety of the joinder.” Smallwood III, 385 F.3d at 574, Maj. Op. at 574 (emphasis added). It is difficult to understand how the majority can make such a serious misstatement, unless it is somehow contending that Illinois Central had no right to rely upon 40 years of consistent precedent. Illinois Central relied upon our well-established precedent and demonstrated to the satisfaction of the district court—a result which the majority does not challenge—that the plaintiff had no reasonable possibility of recovering against MDOT; it was clearly improper to sue (and thus “join“) MDOT when the plaintiff had no hope of recovery against MDOT. Furthermore, even in the light of Cockrell, the defense of MDOT did not go to the merits of the entire case that the plaintiff had alleged against Illinois Central; only a procedural defense was raised to bar Smallwood‘s claims against MDOT. Thus, it is a serious misstatement to suggest that Illinois Central “brought no contention going to the propriety of the joinder” when Illinois Central demonstrated that the plaintiff‘s claims against MDOT were barred; this showing meant, under the law existing until today, that MDOT was joined solely to defeat diversity jurisdiction. This argument goes directly to the propriety of the joinder by any standard and it is incorrect for the majority to assert otherwise.
In an attempt to provide some logic to its argument, the majority argues that because MDOT‘s successful defense also requires the dismissal of the entire case, the
The most baseless argument of the majority is that it is only “applying our traditional improper joinder analysis.” Smallwood III, 385 F.3d at 574, Maj. Op. at 574. This statement represents a retreat into major denial of what it has so plainly done. Indeed, it is incomprehensible how the majority would expect this statement to be taken seriously. We have previously string-cited the numerous cases applying our traditional fraudulent joinder analysis, none of which—I repeat, none of which—has any element of the common-defense rule that the majority tattoos on our traditional analysis. Even the majority acknowledges that under our traditional analysis:
the test for fraudulent joinder is whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant.
Smallwood III, 385 F.3d at 573, Maj. Op. at 573. Thus, there is no question but that, under the majority‘s own test, MDOT was fraudulently joined since the majority does not deny that there is no possibility of recovering against MDOT. Because it asserts that it is only following our traditional test, one would expect the majority to follow its own pronouncement of the traditional analysis. But no; notwithstanding the unequivocal words the majority expresses in one part of the opinion, the majority then contradicts itself and shapes a new rule: even though there is no reasonable basis for predicting that state law would allow recovery against MDOT, it is nevertheless properly joined and the case is not removable, because its defense disposes of the entire case and renders it a “meritless” case, not a “fraudulently joined” case. This clearly is a departure from the traditional test for fraudulent joinder and the majority‘s denial of what it has done demonstrates its ultimate lack of confidence in its novel theory.
In sum, the arguments that the majority makes to shore up its misreading of Cockrell deflate under any careful examination and make unavoidable the conclusion that the majority has been beguiled by Smallwood‘s dare to this court to be modern—1914 style.10
IV
With fullest respect, I dissent because the majority, for no sound legal reason that I can determine, has taken upon itself to amend our established rules for determining diversity jurisdiction, while admonishing that such amendments should be left to Congress. It has done so in strange ways. It has relied on a Supreme Court case that has been dormant to the world for close to a century and has no relation to the facts here. The majority acknowledges our traditional rule as controlling. It then amends the rule by adding a “but if” clause. It then denies that it has done what it has just done. It offers meaningless ad hoc arguments that skirmish with its earlier pronouncements. It then sounds alarms that Strawbridge v. Curtiss is under attack—a gratuitous and phantom irrelevancy to the matter before us. It decries a closet attack on the well-pleaded complaint rule that seems to be a decoy. All of this, and yet there is no explanation why our traditional rule does not work better to serve the purpose of the fraudulent joinder inquiry: To determine whether the in-state defendant was joined “solely to deprive the federal courts of jurisdiction.”
Even though I am baffled why the majority would produce this aberrant writing, it is nevertheless with collegial respect that I dissent.11
“Courts must be particularly circumspect in reconsidering decisions interpreting statutes.” Bhandari v. First Nat‘l Bank of Commerce, 829 F.2d 1343, 1353 (5th Cir.1987) (en banc) (Higginbotham, J., concurring), vacated, 492 U.S. 901, 109 S.Ct. 3207, 106 L.Ed.2d 558 (1989). “As an inferior court we must not allow our version of a ‘correct’ result to deceive us into semantic games of reformulation and hair splitting in order to escape the force of a fairly resolved issue.” Id. at 1352 (Higginbotham, J., concurring). Contrary to this well-established tenet of stare decisis, however, the majority, in an opinion by Judge Higginbotham that reflects lowest-common-denominator reasoning, has unnecessarily created a mess in this circuit‘s removal jurisprudence. Most significantly, in an offering worthy of the Oracle at Delphi, the majority, in an exercise of judicial activism, has made a quagmire out of what had been an orderly and fair process for determining fraudulent joinder.
In so doing, and by dusting off a forgotten decision of the Supreme Court, the majority has introduced needless friction and conflict into the federal-state rubric for determining the proper forum for civil diversity actions. And finally, in a remarkable showing of euphemistic chutzpah, the majority has renamed “fraudulent joinder” as “improper joinder,” upsetting decades of nomenclature without apparent reason. Agreeing with every word of Judge Jolly‘s compelling dissent, I add a few comments.
I.
A.
The majority insists that “the focus of the inquiry must be on the joinder, not the merits of the plaintiff‘s case.” As Judge Jolly cogently shows, however, it is the majority‘s new-fangled common-defense theory that expands inquiry into the merits by, as Judge Jolly puts it, “requir[ing] that the court look beyond the joinder of the nondiverse defendant to the entirety of the case and determine the defenses of the diverse defendant as well.”
The majority pretends that it avoids inquiry into the merits when making the determination of fraudulent-joinder-now-to-be-called-improper-joinder. The fatal flaw in this exercise is that under the majority‘s construction, it is impossible to decide fraudulent-joinder-now-to-be-called-improper-joinder without making decisions on the merits.
Because the district court has jurisdiction to decide its own jurisdiction, that court has not only the capacity but the duty, in deciding the issue of fraudulent-joinder-now-to-be-called-improper-joinder, to address any merits questions that are made necessary by the majority‘s scheme. The decision on any such merits issue then logically becomes a holding, because it is necessary to the result (i.e., remand) and therefore (again, logically) should be binding on the state court to which the action is returned.
If the majority were to respond (which it will not, see infra), it undoubtedly would counter that it is not deciding the merits at all—indeed, that it is prohibited from doing so, because, given that the ultimate result is that it is without jurisdiction over the merits, its power to decide is limited to
Overlooked in this reasoning is that it is at times not only desirable but necessary for a court to examine at least a portion of the merits as a precursor to deciding jurisdiction. “[A] federal court always has jurisdiction to determine its own jurisdiction. In order to make that determination, it was necessary for the [court of appeals] to address the merits.” United States v. Ruiz, 536 U.S. 622, 628, 122 S.Ct. 2450, 153 L.Ed.2d 586 (2002).
B.
The problem with imposing a rule by which the district court must “address the merits” is that the state court that receives the remand will need to decide what to do with that decision. In the instant case, the majority blesses “a summary inquiry ... to identify the presence of discrete and undisputed facts that would preclude plaintiff‘s recovery against the in-state defendant.” Where such preclusion is found, it “necessarily compels the same result for the nonresident defendant, [so] there is no improper joinder; there is only a lawsuit lacking in merit.” In other words, as the majority further explains, “the allegation of improper joinder is actually an attack on the merits of plaintiff‘s case. . . .”
The majority makes no effort to examine the consequences of its own explanation. The majority imposes a process whereby the federal district court is required to decide merits issues, even to the point of declaring that the lawsuit is entirely “lacking in merit.” One would think that once a court of competent jurisdiction has made such a “decision” that a case is wholly without merit, that case is at an end, and no other court—state or federal—may reexamine it.
What, then, under the majority‘s formulation, is the state court supposed to do on remand? One option would be for the state court to dismiss the case ministerially and without making further inquiry into the correctness of the federal district court‘s decision.1 But that would be a process of unnecessary formalism and, in any event, is not what the majority apparently contemplates.
The majority gives no hint that the state court will be in any way bound by the federal district court‘s pronouncement that, as a matter of merits and substance, the lawsuit is wholly lacking in merit. Very much to the contrary, under today‘s logic the state court will be free to disagree, to resurrect the case, and ultimately to award the plaintiff relief against the in-state and out-of-state defendants as well. In other words, the state court will be free to ignore whatever merits conclusions the federal court has reached.
II.
The majority thus unnecessarily and unwittingly creates friction between state and federal jurisdictions. The majority‘s new paradigm eviscerates what the majority venerates as the “principles of comity and federalism.” By thinly-veiled implication, the majority declares that the federal court is incompetent to make a binding pronouncement on the merits issues as to which the majority insists that same federal court is obliged to reach non-binding conclusions.
III.
By redesignating “fraudulent joinder” as “improper joinder,” the majority has shown its agility in innovative nomenclature. What should the majority call its new breed of merits decisions that are not binding holdings? Perhaps they are “musings,” or “asides” or “ruminations,” or “advisory opinions” or dicta, or even “preliminary predictions“—something less than a holding but more than an idle thought. They are, in any event, a breed apart. They are rulings the majority says are necessary to the decision on fraudulent-joinder-now-to-be-called-improper-joinder, but, once these rulings or ruminations are issued, they disappear into the ether, after remand, as if they had never even been expressed. They are simultaneously indispensable and expendable, at once both necessary and superfluous.
IV.
The majority‘s newly-concocted “common-defense” rule, raised by plaintiff for the first time on appeal, will cause resourceful defense counsel, in the vigorous defense of their clients’ interests, to alter the way in which they plead defenses. The filing of defenses will be timed not in a way designed to ensure “the just, speedy, and inexpensive determination of [removed] action[s],”
V.
Entirely overlooked in the majority‘s analysis is any concern for “the traditional values of stare decisis.” Bhandari, 829 F.2d at 1352 (Higginbotham, J., concurring). This principle is especially important where, as here, we are interpreting statutes instead of the Constitution. “Courts must be particularly circumspect in reconsidering decisions interpreting statutes.” Id. at 1353 (Higginbotham, J., concurring). “[I]f only a question of statutory construction were involved, we would not be prepared to abandon a doctrine so widely applied throughout nearly a century.” Erie R.R. v. Tompkins, 304 U.S. 64, 77-78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) (Brandeis, J.).
“[A]ny detours from the straight path of stare decisis in our past have occurred for articulable reasons, and only when the Court has felt obliged to bring its opinions into agreement with experience and with facts newly ascertained.” Vasquez v. Hillery, 474 U.S. 254, 266, 106 S.Ct. 617, 88 L.Ed.2d 598 (1986) (internal quotation and citation omitted). Here, the majority offers absolutely no reason why there is a problem, much less one that so badly needs to be fixed that it can trample stare decisis to achieve a questionable and bizarre result.
It would be bad enough that the majority effects a sea change in the heretofore orderly world of removal jurisprudence. It is worse still that the majority makes no attempt to offer compelling reason for its revolution. It appears, in fact, that the majority can identify no reason, for it provides no answer—not even a word—in response to the cogent points made by Judge Jolly in dissent, to Judge Clement‘s resourceful concurrence, or to the issues I have raised. The majority‘s silence harms the collegial judicial process by leaving the reader to wonder whether the majority has even examined the objections that have been raised or, instead, is intransigent because of fear of losing its majority status. It would be far better for the two sides to join issue, despite their differences, in the interest of frankly fleshing out these important questions. Perhaps the majority merely has no answer to the deficiencies in its reasoning that the dissents have identified.
VI.
In sum, the majority is wrong for many reasons, not the least of which is that its pronouncement that a “defense [that] disposes of the entire case and renders it a ‘meritless case‘” logically should, if true, completely end the litigation, not prolong it in another forum. The proper answer, instead, is that we can easily avoid the potential state-federal conflict, not to mention the inefficiency imposed by the majority‘s new scheme, which, as Judge Jolly notes, will require mini-trials that turn simple proceedings into ordeals.
As Judge Jolly lucidly explains, “the [majority‘s] common-defense theory requires that the court look beyond the joinder of the nondiverse defendant to the entirely of the case and determine the defenses of the diverse defendant as well. If the majority were serious in trumpeting a test that focuses on the joinder, and not the entire case, it would adhere to the traditional test.” That traditional test avoids all the pitfalls I have explained, and we are left with no explanation of why the majority is so determined to abandon it. Because our settled jurisprudence on fraudulent joinder should be left alone, I respectfully dissent.
EDITH BROWN CLEMENT, Circuit Judge, dissenting, concurring in judgment only:
For the reasons cited in Judge Jolly‘s dissent, I respectfully dissent from Part III of the majority opinion. Cockrell does not intimate the common-defense rule that the majority sets forth. Nevertheless, despite the majority‘s faulty common-defense rationale, the majority is correct in concluding that ICR does not prevail on its fraudulent-joinder claim. ICR fails to show that it is unreasonable to construe FRSA as not applying to Smallwood‘s state-law claim of negligence against MDOT. ICR attempts to prove fraudulent joinder by showing an “inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” See Travis v. Irby, 326 F.3d 644, 647 (5th Cir.2003). ICR argues that Smallwood is unable to establish a cause of
Smallwood argues that FRSA does not preempt her negligence claim against MDOT. She first points out that this Circuit has not yet ruled on whether FRSA preempts claims of negligence in the delay of installation. Smallwood next points out that in applying the preemption doctrine under FRSA, this Court has stated that it “follow[s] the Supreme Court in eschewing broad categories such as ‘railroad safety,’ focusing instead on the specific subject matter contained in the federal regulation.” See Frank v. Delta Airlines Inc., 314 F.3d 195, 200 (5th Cir.2002) (internal quotations omitted). This Court has further stated that “FRSA preemption is even more disfavored than preemption generally.” United Transp. Union v. Foster, 205 F.3d 851, 860 (5th Cir.2000) (quoting Rushing v. Kansas City S. Ry. Co., 185 F.3d 496, 515 (5th Cir.1999)). Against this backdrop of Fifth Circuit precedent, Smallwood observes that the portion of FRSA that ICR cites as preemptive does not actually set forth guidelines regarding the time within which warning devices must be installed.1 Lastly, Smallwood directs this Court to a federal district court decision that completely supports her position, Powers v. CSX Transportation Inc., 97 F.Supp.2d 1297 (S.D.Ala.2000). There, the federal district court held that FRSA does not preempt state-law claims of negligence in the delay of installing warning devices. Id. at 1305-09. The court opined that preemption of the state-law claim would be contrary to the purpose of FRSA, reasoning:
[I]f [FRSA] were construed to preempt negligent delay claims, railroads could indefinitely delay installation of additional warning devices approved by [a federal agency] with—as in this case—catastrophic effects on the very people Congress intended to protect.... [T]he Court cannot fathom any set of circumstances under which such a result could be consonant with Congress’ purpose to “promote safety ... and to reduce railroad-related accidents.”
Id. at 1305-06 (quoting
In the context of fraudulent joinder, this Court has not opined how courts should construe a federal affirmative defense to a state-law claim where the federal law is not clearly defined. This Court has, however, addressed the standard for construing unclear state law. Beginning with Bobby Jones Garden Apartments, Inc. v. Suleski, 391 F.2d 172, 176 (5th Cir.1968), this Court stated the standard as follows: “The question is whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved. If that possibility
Recently, in Travis v. Irby, this Court thoroughly discussed the issue and concluded that a defendant must demonstrate the absence of a “reasonable basis for predicting that the state law might impose liability on the facts involved....” 326 F.3d 644, 647-48 (5th Cir.2003) (quoting Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir.2002)); accord Griggs v. State Farm Lloyds, 181 F.3d 694, 699 (5th Cir.1999) (“[W]e must determine whether there is any reasonable basis for predicting that [the plaintiff] might be able to establish [the defendant‘s] liability on the pleaded claims in state court.“). The principle underlying this Court‘s construction of uncertain state law is, in the words of the majority, to discover “whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant....” Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573, Maj. Op. at 573 (5th Cir.2004).
This principle—that a defendant must demonstrate that there is no possibility of recovery by the plaintiff—suggests that courts should construe an unclear federal affirmative defense to a state-law claim in the plaintiff‘s favor, just as the principle requires courts to construe state law in favor of the plaintiff. To prevail on a fraudulent-joinder claim, then, a defendant must show that no reasonable basis exists for construing a federal affirmative defense as not applying. By showing that the affirmative defense must apply, a defendant will have shown that the “joinder is without right and made in bad faith.” See Cockrell, 232 U.S. at 152, 34 S.Ct. 278. In contrast, where the affirmative defense can reasonably be interpreted as not applying, the defendant has not shown that the joinder was made in bad faith. Thus, a joinder does not appear to be “made in bad faith” if there is at least a non-frivolous, reasonable basis for construing the federal affirmative defense so that it does not apply to the state-law cause of action.
This rule implies that where an issue of whether a federal affirmative defense applies is res nova, and there is a non-frivolous, reasonable basis for construing the federal affirmative defense as not applying, a defendant cannot show fraudulent joinder. Under those circumstances, the resolution of that res nova issue is improper. Although a federal court can decide such a res nova federal question when it is properly before the court, the court should refrain from deciding it in the fraudulent-joinder context if a reasonable, non-frivolous basis exists for interpreting the issue in favor of the plaintiff: the reasonable basis is sufficient to determine the ultimate jurisdictional question of fraudulent joinder.
Applying this principle to the instant case reveals that ICR must show that a non-frivolous, reasonable basis does not exist for construing FRSA as not preempting Smallwood‘s state-law claim of negligence in the delay of installation. As stated above, ICR attempts to satisfy this burden by citing persuasive authority from the Eighth and Tenth Circuits, Bock and Armijo, which hold that FRSA preempts that claim. In the face of this authority, it is unquestionable that ICR has raised a strong argument for construing FRSA as applying. But the strength of ICR‘s argument falls short of showing that it is unreasonable to construe FRSA as not applying. Given that (1) this Court construes narrowly the doctrine of federal preemption (especially with respect to FRSA), (2) FRSA does not specify a time period for installing warning devices, and most im-
It should be emphasized that this conclusion does not imply that FRSA does not preempt Smallwood‘s negligence claim. The fraudulent-joinder context of the preemption issue before this Court only requires that this Court determine whether Smallwood argued in bad faith that FRSA does not apply. Because a non-frivolous, reasonable basis exists supporting Smallwood‘s argument, the district court should not have reached that preemption issue to determine jurisdiction. ICR has not shown fraudulent joinder. Remand is appropriate.
No. 03-30866.
United States Court of Appeals, Fifth Circuit.
Sept. 28, 2004.