Remand: One Constitution, One Standard

Abstract

Smith, a resident of California, sues Jones and White in state court, alleging causes of action based solely on state law. Jones removes the case to federal court, claiming the parties to be diverse. Smith moves to have the case remanded to state court on the grounds that White is also a resident of California, therefore the parties are not diverse and the federal court is without jurisdiction to hear the case. Jones, on the other hand, claims that White was fraudulently joined and that the claim against him is a sham; therefore his citizenship should be ignored for purposes of diversity jurisdiction.

How will a court rule on the "fraudulent joinder" claim in the context of Smith's remand motion? Should it evaluate the merits of Smith's claim against White to determine if it was fraudulent? Can it retain jurisdiction until the issue is clearly resolved?

For the vast majority of federal courts, Smith's remand motion, based on the absence of diversity, will be evaluated under a standard militating against federal jurisdiction except under quite narrow constitutional grounds. The court will look at the complaint to determine if it presents a colorable claim under state law

A few courts, however, have suggested that the standard for evaluating a remand motion should vary depending on the nature of the claim. For these courts, the presumption that a case should be litigated in state court is subsumed by a presumption favoring a federal court's presence when the suit touches upon important issues of federal concern.

Should there be two standards? Can there be two standards? Should the deference ordinarily accorded to plaintiffs and their complaints yield in degrees varying with the type of claim?

Sources of federal diversity jurisdiction as well as opinions from various courts support a single unified approach to remand motions, one in which there is a presumption that unless the basis for federal jurisdiction can be adequately established, a case must be returned to the state from which it was removed. The basis for federal diversity jurisdiction is not so uncertain as to require exceptions under which that jurisdiction will be evaluated. Furthermore, to set aside presumptions created in the context of fundamental constitutional principles in favor of a doctrine of hypothetical jurisdiction would risk grievous injury to the balance between state and federal interests.

Only a single, unified approach provides certainty to the bar and judiciary, and could likely survive constitutional scrutiny. The unified perspective on review of remand motions focuses on whether a complaint can state a claim for which the plaintiff would be entitled to relief. Should this inquiry be answered in the affirmative, a court engages in no further review of a suit's merits. This standard faithfully adheres to federalism principles that make removal and concomitant imposition of federal court and law upon state claims the exception rather than the rule.

Under this unified theory, a "fraudulent joinder" claim is not a free pass to removal but, instead, an invitation to be accepted only where there is no possibility that any claim can be established. So long as Smith's complaint sets forth a claim cognizable under state law, regardless of the federal interests, the case should be returned to the state court from which it came.