I n c o r p o r e a l s  C h e a p  S i n c e  2 0 0 2
N A K E D Louisiana O W N E R S H I P 
All Things Legal in Louisiana


November 13, 2004

Removal; fraudulent joinder

In Gray v. Beverly Enterprises-Mississippi, Inc., decided November 9, the Fifth Circuit ordered a case to be remanded to state court, reversing a district-court judgment holding that the non-diverse had been fraudulently joined. To get there, the Fifth Circuit made these interesting points:

1. The court held that the "talismanic words" ("no just reason for delay") are not necessary to certify an interlocutory judgment as appealable under FRCP 54(b). Rather, what is required is the district court's "unmistakable intent to render the issue appealable under rule 54(b) ...." In Beverly, the district court found "that there exists a danger of hardship or injustice through delay which would be alleviated by immediate appeal .... As such, the Court finds that justice will be served by the immediate appeal of this issue ...." The Fifth Circuit found that these words satisfied Rule 54(b). "The district court expressed its finding merely using a phraseology different" from the magic words "no just reason for delay."

2. If state law is ambiguous on whether the plaintiff has a cause of action against the non-diverse defendant, then that defendant has not been fraudulently joined. To prove fraudulent joinder, a defendant must prove that the plaintiff has no reasonable basis for recovering againt the non-diverse defendant in state court. In deciding whether the plaintiff has a reasonable basis for recovering, "all disputed questions of fact and all ambiguities in state law must be resolved in favor of the plaintiff." In Beverly, the plaintiffs relied on statutes that had not yet been interpreted by Mississippi state courts. Thus, state law was unclear on whether the statutes gave plaintiffs a cause of action against the non-diverse defendants. For removal / remand purposes, that hiatus in Mississippi law had to be resolved in plaintiffs' favor.

3. On the other hand, where a plaintiff has no law authorizing recovery against the non-diverse defendant, then that defendant has been fraudulently joined. The court explained that, although ambiguous state-law questions must be resolved in plaintiffs' favor, a plaintiff cannot reasonably expect to recover in the absence of any legal authority supporting recovery.

4. The plaintiffs had brought five claims against the non-diverse defendants (simple negligence, gross negligence, medical malpractice, fraud, and breach of fiduciary duty), but appealed only with respect to two (simple negligence and gross negligence). On remand, was the district court's finding of no claim under the other three theories conclusive? The defendants argued that because those three claims had not been appealed, they could not be included in the remand. The Fifth Circuit found the defendants' argument "interesting" and possibly "persuasive," but rejected it. "Underlying the entire argument is the notion that by not appealing the decision on some counts, the plaintiffs have 'waived' the issue of subject matter jurisdiciton over htose counts. Subject matter jurisdiction, however, cannot be waived.... That being so, plaintiffs' failure to appeal the other causes of action is not dispositive."

Posted by RPW at November 13, 2004 04:14 PM
Naked Ownership Resources
Codes and Statutes
News Links
Parish Data

Other Resources
Judicial Interest Rate
Prescription [pdf]

Naked Ownership Maps
Judicial Districts
Appeal Courts
Federal Courts

Court Rules
State District
LA Uniform Appeal
LA First Circuit
LA Second Circuit
LA Third Circuit
LA Fourth Circuit
LA Fifth Circuit
State Supreme
Federal District (La.)
US Bankruptcy (ED)
US Bankruptcy (MD)
US Bankruptcy (WD) [pdf]
US Fifth Circuit
US Supreme

State Court Sites
First Circuit
Second Circuit
Third Circuit
Fourth Circuit
Fifth Circuit

Federal Court Sites
Eastern District
Middle District
Western District
Fifth Circuit

Bankruptcy Court Sites
Eastern District
Middle District
Western District

Louisiana Blawgers
AJ Levy
Steve Covell
Bradley Parker
Ernest Svenson
Ray Ward
Gideon's Promise
Kitty Says

Baton Rouge
New Orleans


Syndicate / RSS

The Name

Al J. Robert, Jr.
Raymond P. Ward
Ernest E. Svenson

Browse by Month:

Browse by Category:

AG Opinions (2)
Alexandria (35)
Attorneys (14)
Baton Rouge (198)
Blawgistan (1)
Blawgs (10)
Civil Law (1)
Community (23)
Dicta (21)
District Courts (4)
Ethics (15)
Federal courts (1)
Judges (18)
LA 1st Circuit (17)
LA 2nd Circuit (10)
LA 3rd Circuit (3)
LA 4th Circuit (4)
LA 5th Circuit (1)
LA Case Opinions (1)
LA Register (1)
LA Supreme Court (46)
Lafayette (49)
Lake Charles (27)
Law Enforcement (2)
Law School (1)
Legislation (37)
Making A Differnce (6)
Meta (4)
Monroe (46)
National (6)
New Orleans (213)
Politics (9)
Practice (16)
Reference (2)
Shreveport (87)
Site of the Day (9)
State (8)
Technology (3)
US 5th Circuit (36)
US District Courts (8)

Site Meter