United States Court of Appeals

Fifth Circuit

FILED

November 9, 2004

Charles R. Fulbruge III

Clerk

In the

United States Court of Appeals

for the Fifth Circuit

_______________

m 03-60528

_______________

LETHA M. GRAY,

BY AND THROUGH ELLA RUDD,

AS NEXT FRIEND FOR THE USE AND BENEFIT OF

LETHA M. GRAY, ALSO KNOWN AS LETHA M. GARY,

Plaintiff-Appellant,

VERSUS

BEVERLY ENTERPRISES-MISSISSIPPI, INC., ET AL.

Defendants,

BEVERLY ENTERPRISES-MISSISSIPPI, INC.;

BEVERLY HEALTH AND REHABILITATION SERVICES, INC.; JAMES C. LANDERS; DAVID

DEVEREAUX; DAVID R. BANKS; LEWIS SEWELL; CHARLES R. SINCLAIR; BOBBIE

LUCILLE BLACKARD; ALICHA D. LINDSAY,

Defendants-Appellees.

* * * * * * * * * * * * * * *
2

_______________

m 03-60712

_______________

MARY BODDIE,

INDIVIDUALLY AND ON BEHALF OF

THE ESTATE AND WRONGFUL DEATH BENEFICIARIES OF DAVID GREEN,

Plaintiff-Appellant,

VERSUS

BEVERLY ENTERPRISES-MISSISSIPPI, INC.;

BEVERLY HEALTH AND REHABILITATION SERVICES, INC.; JAMES C. LANDERS; DAVID

R. DEVEREAUX; DAVID R. BANKS; LEWIS G. SEWELL;

CHARLIE R. SINCLAIR, JR.,

ALSO KNOWN AS CHUCK SINCLAIR;JOHN DOES 1-10,

Defendants-Appellees,

UNIDENTIFIED ENTITIES 1-10,

 Appellee.

* * * * * * * * * * * * * * *
3

_______________

m 03-60768

____________

GENEVA G. RUSHING,

BY AND THROUGH DOROTHY SHERIFF, HER CONSERVATOR,

FOR THE USE AND BENEFIT OF GENEVA G. RUSHING,

Plaintiff-Appellant,

VERSUS

BEVERLY ENTERPRISES-MISSISSIPPI, INC.;

BEVERLY HEALTH AND REHABILITATION SERVICES, INC.; JAMES C. LANDERS; DAVID

R. DEVEREAUX; DAVID R. BANKS; LEWIS SEWELL;

CHARLIE R. SINCLAIR, JR.,

ALSO KNOWN AS CHUCK SINCLAIR;

ALICHA LINDSAY; JOHN DOES 1-10; UNIDENTIFIED ENTITIES 1-10,

Defendants-Appellees.

_________________________

Appeals from the United States District Court

for the Southern District of Mississippi

_________________________
4

Before SMITH and GARZA, Circuit Judges,

and VANCE,

*

 District Judge.

JERRY E. SMITH, Circuit Judge:

The plaintiffs bring this consolidated interlocutory appeal challenging orders denying

their motions for remand to state court after

the defendants removed these actions to federal district court. Because the relevant Mississippilaw is, at a minimum, ambiguous, there

is “arguably a reasonable basis for predicting

that the state law might impose liability on the

facts involved . . . . ” Travis v. Irby, 326 F.3d

644, 648 (5th Cir. 2003). Under such

circumstances, there is no fraudulent joinder,

and removal isinappropriate, because the lack

of complete diversity divests the district court

of subject matter jurisdiction. We therefore

reverse and remand.

I.

The plaintiffs filed their respective suits in

Mississippi state court alleging that residents

of Beverly Healthcare-Northwest nursing

home were injured as a result of the conduct of

all the defendants. The named defendants

include the corporate owners of the nursing

home, Beverly Enterprises-Mississippi, Inc.,

and Beverly Health and Rehabilitation Services, Inc. These defendants are California

corporations with their principal place of business in Arkansas and are therefore diverse

from the plaintiffs, all of whom are residents

and citizens of Mississippi. Also named as defendants are numerousindividuallicensees and

administrators of the facility, some of whom

are diverse from the plaintiffs and others of

whom are non-diverse (i.e., also citizens of

Mississippi). 

In each of the suits (consolidated for purposes of appeal), defendants removed to federal district court, arguing that the in-state defendants were fraudulently joined, and therefore there is complete diversity. On each of

the plaintiffs’ motions to remand to state

court, the district court ruled the in-state defendants were fraudulently joined, denied the

motions to remand, and dismissed the claims

against the in-state defendants. 

The court held that the complaint did not

state a viable claim against the in-state defendants under Mississippi law, specifically finding that Mississippi law does not provide a

cause of action for any of the counts alleged

against the in-state defendants: (1) simple

negligence,(2)malice and/or gross negligence,

(3) medical malpractice, (4) fraud, and (5)

breach of fiduciary duty.

The court reasoned that the plaintiffs could

not state a claim under state law for simple

negligence against the in-state defendants because, “[u]nder Mississippi law, an agent of a

disclosed principal can incur ‘independent liabilitywhen his conduct constitutes gross negligence, malice, or reckless disregard for the

rights’ of another. [But,] Mississippi does not

recognize a cause of action against an agent

for simple negligence” (quoting Bass v. Cal.

Life Ins. Co., 581 So. 2d 1087, 1090 (Miss.

1991) (emphasis added by district court)).

The court further held that the in-state administrator and licensee defendants did not owe

plaintiffs a duty under state law, so the claims

against those defendantsfor malice/gross negligence also fail to state a viable cause of

action. The court additionally dismissed the

medical malpractice, fraud, and breach of fiduciary duty claims.

Significantly, as we will explain, the plain- * District Judge of the Eastern District of Louisiana, sitting by designation.
5

tiffs’ briefs challenge only the ruling with respect to negligence and gross negligence.

Specifically, the plaintiffs’ reply brief notes

that the remaining claims “are not before this

court,” nor were they discussed in their opening brief.

The district court recognized that “[n]o

Mississippi case law directly relates” to the

issues at hand and that the “casesleave a great

deal to interpretation.” The court, therefore,

attempted to certifythe casesfor appealpursuant to rule 54(b) of the Federal Rules of Civil

Procedure. Because of the peculiar language

used in the district court’s orders, however,

we requested supplemental briefing on whether the order in one of these consolidated

appealsSSNo. 03-60712 (“Boddie”), was

properly certified so as to confer appellate

jurisdiction.

Plaintiffs have moved this court to take

judicial notice of unreported decisions from

federal district courts in Mississippi and unreported state court judicial decisions and records. That motion was carried with the case.

II.

On the jurisdictional question, there is no

discernible difference between the wording of

the order purporting to render Boddie fit for

appeal (under either rule 54(b) or 28 U.S.C.

§ 1292(b)) and the corresponding ordersin the

other two cases. Nevertheless, even the defendants concede that we have jurisdiction over

the other two cases under § 1292(b), despite

the fact that there is no indication that the

plaintiffs received the requisite permission

from this court as required by the statute.

The relevant order in Boddie (as well asthe

orders in the other two cases) reads in pertinent part: 

. . . Plaintiff seeks to certify the findings in

the August 11 Opinion for interlocutory

appeal. Plaintiff invokes the provisions of

Rule 54(b) of the Federal Rules of Civil

Procedure. . . . In the subject case, the

Court finds 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 . . . .

 Plaintiff also invokes the provisions of 28

U.S.C. § 1292(b) . . . . Under § 1292(b),

an issue is appropriate for interlocutory

appeal if it “present[s] a controlling

question of law as to which there is

substantial ground for difference of opinion.” As analyzed above, the fraudulent

joinder of a business manager does present

such a question, and interlocutory appeal is

appropriate for that issue. . . .

 . . . For these final reasons, the Court

finds that the subject issue should be decided on interlocutory appeal . . . .

(Brackets in original, citations omitted.)

The defendants urge that the above-quoted

order renders neither an appealable final order

nor a case certified for interlocutory appeal.

They rely on the proposition that an order that

dismisses fewer than all defendants is not appealable unless the court makes an “express

determination that there is no just reason for

delay.” FED. R. CIV. P. 54(b). Because the

order in Boddie does not contain this particular phrasing, the defendants conclude rule

54(b) cannot provide the basisfor our jurisdiction. Further, defendants contend that the order cannot be appealable under § 1292(b), because this court has not granted leave to take
6

an interlocutory appeal.

Plaintiffs, for their part, remind us that our

existing jurisprudence explains that a rule

54(b) interlocutory appeal is appropriate

where the language of the order appealed, independently or read together with other portions of the record, reflects the court’s unmistakable intent to render the issue appealable

under rule 54(b), and “nothing else is required

to make the order appealable . . . .” Ford v.

Elsbury, 32 F.3d 931, 934-35 (5th Cir. 1994).

According to plaintiffs, the order reflects just

this sort of unmistakable intent. The defendants completely fail to address the “unmistakable intent” argument and rely solely on the

lack of the phrase “no just reason for delay.”

To hold that this order is not appropriate

for review under rule 54(b) because it lacks

the talismanic words for which the defendants

search would be directly contrary to this circuit’s precedent. In Kelly v. Lee’s Old Fashioned Hamburgers, Inc., 908 F.2d 1218, 1220

(5th Cir. 1990) (en banc), we held that a district court maymake the requisite “express determination” without mechanically reciting the

words “no just reason for delay.”1

Such an “unmistakable intent” is readily

apparent from the face of the district court’s

order. The court found “that there exists a

danger of hardship or injustice through delay

whichwould be alleviated byimmediate appeal

. . . . As such, the Court finds that justice will

be served by the immediate appeal of this

issue. . . .” This explanation is a mere paraphrase of the seven words “[t]here is not just

reason for delay”2SSa paraphrase (stating that

a delaywould yield injustice, and an immediate

appeal would serve justice) that presents an

even stronger justification for appeal than

existed in Kelly, where the district court did

not expressly consider the justice of a delay,

but rather impliedly did so by ordering a final

judgment “pursuant to [rule] 54(b).” 

The district court expressed its finding

merely using a phraseology different from the

seven words of the rule. Therefore, we have

jurisdiction to hear the appeal of all three

cases, including Boddie, under rule 54(b).

III.

The plaintiffs’main contention on appeal is

that the district court erred in holding that

Mississippi law does not recognize a cause of

action for negligence or gross negligence

against the in-state defendants. From that,

plaintiffs reason that removal was improper.

A.

Plaintiffsfirst suggest that the court applied

an incorrect standard in considering their motionsto remand. Such a motion will be denied

on grounds of fraudulent joinder only if based

on “(1) actualfraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to

establish a cause of action against the nondiverse party in state court.” Travis v. Irby,

326 F.3d 644, 647 (5th Cir. 2003). Because

neither the parties nor the district court contends there was actual fraud, we look only to

the second test.

1

See also Askanase v. Livingwell, Inc., 981

F.2d 807, 810 (5th Cir. 1993) (“[I]t is not necessary for the Trial Court to recite the magic words

of ‘no just reason for delay.’”). 

2

See Kelly, 908 F.2d at 1222 (Smith, J., dissenting) (“[S]ince the rule does not specifically

require incantation of the seven very words, they

could be paraphrased, provided that the court actually states that it had made the required determination.”).
7

Though our earlier fraudulent joinder cases

had been uncertain as to whether a removing

defendant must demonstrate an absence of any

possibility of recovery in state court, we clarified in Travis that the defendant must demonstrate only that there is no reasonable basisfor

predicting that the plaintiffwillrecover in state

court. Id. Thus, the Travis court noted the

similarity of the standard to that used with

respect to a Federal Rule of Civil Procedure

12(b)(6) motion, in that the crucial question is

whether the plaintiff has set out a valid claim

under applicable state law. Id. 

Critically, all disputed questions of fact and

all ambiguities in state law must be resolved in

favor of the plaintiff. Id. (citing Great Plains

Trust Co. v. Morgan Stanley Dean Witter &

Co., 313 F.3d 305, 312 (5th Cir. 2002)).

Further, the plaintiffmay not rely solely on the

allegations in his complaint; the court may

“pierce the pleadings” and consider summary

judgment-type evidence to determine whether

the plaintifftrulyhas a reasonable possibilityof

recovery in state court. Id. at 648-49. 

The district court correctlyrecited thisstandard fromTravis. Nevertheless, plaintiffs contend that the court “improperly expanded its

review” beyond whether there is a reasonable

possibility that a Mississippi court might impose liability. . . .” In making that argument,

the plaintiffs repeatedly emphasize the

“possibilityofrecovery” language while giving

only lip service to the “reasonable” modifier.

To that extent, the district court correctly

evaluated the fraudulent joinder claim. Although recognizing that Mississippi law on the

subject is cloudy, the court disregarded the

theoretical possibility of recovery and consideredwhetherthere was a reasonable possibility

under state law. 

For example, plaintiffs devote considerable

energy to the contention that the very fact that

Mississippi state courts have entered judgments against administrators and licensees of

nursing homes in similar cases is conclusive

evidence of the district court’s error. But, after analyzing the relevant Mississippi caselaw,

the district court concluded that plaintiffs

lacked a reasonable possibility of recovery.

This analysis, notwithstanding the fact that we

may find it flawed under de novo review, nevertheless reflected the proper approach under

applicable precedent. See, e.g., id. at 647. 

B.

We review the district court’s analysis of

state law (i.e., its determination that the plaintiffs lack a reasonable possibility of recovery)

de novo. See McKee v. Kansas City S. Ry.,

358 F.3d 329, 333 (5th Cir. 2004). The district court initially concluded, in a cursory analysis, that Mississippi state law precludes recovery for simple negligence against an agent

of a disclosed principal. For this the court relied solely on Bass v. Cal. Life Ins. Co., 581

So. 2d 1087, 1090 (Miss. 1991), holding that

a health insurance plan administrator could not

be held liable in a bad faith denial of coverage

suit based on mere negligent conduct. The

Bass court noted that such agents owe no duty

of good faith or other fiduciary duties to

insured parties. Id. From this proposition, the

district court extrapolated that no negligence

claims can be brought successfully against

agents of disclosed principals. 

This conclusion was likely erroneous, and

certainlyinaccurate enough to warrant remand

under the above-described standard, which resolves all ambiguities in favor of the party

seeking remand. As plaintiffs point out, the

cases relying on Bass are almost all in the

context of insurance agents and adjusters.
8

Further, there have been several casesin which

agents of disclosed principals were in fact held

liable for negligence.3 

The defendants counter that the complaints

in the instant cases allege a similar sort of tortcontract hybrid cause of action, and thus, Bass

is controlling. Nevertheless, defendants point

to no additional cases in which the Bass limitation has been applied outside the context of

bad-faith denial of claims. Consequently, the

court incorrectly held that there is no reasonable basis for predicting that a cause of action

for simple negligence will lie under the circumstances alleged.

That error, however, is not dispositive.

The district court went on to find that the

plaintiffs additionally cannot state a cause of

action for malice or gross negligence; the court

based its conclusion onthe in-state defendants’

lack of duty to the plaintiffs. These same

arguments apply with equalforce to claimsfor

simple negligence. Thus, if the court was correct in its reason for finding that the plaintiffs

cannot state a claim for gross negligence, then

its erroneous refusal to recognize a simple

negligence cause of actionwould be irrelevant,

for that claim would be barred on the other

grounds.4

C.

In addition to asserting that the in-state defendants were guilty of simple negligence, the

complaints allege severalbreaches of supposed

duties under the rubric of “inadequate

management” constituting gross negligence.

The district court stated, 

 The particular issue in this case is whether the duty to adequately manage Beverly

Healthcare was owed by the non-diverse

Defendantsto Plaintiff, or whether the duty

was owed to the two corporate Defendants

that owned Beverly Healthcare. If the duty

was owed to Plaintiff, then Plaintiff has

asserted a viable state law cause of action

and the case must be remanded.

Conversely, if the duty was owed to the

corporate Defendants, then Plaintiff has no

valid cause of action against the

non-diverseDefendants, requiring dismissal

ofthe non-diverse Defendants and denial of

Plaintiff's Motion to Remand. 

(Footnote omitted.) The court went on to

conclude that as a general matter, any duty

that the licensees and administrators had to

manage the nursing home adequately was

owed not to the plaintiffs, but to the business

itself. The plaintiffs contend this finding is in

error in that both Mississippi common law and

statutory regulations establish a duty to

plaintiffs.

The complaints allege that the administrator

and licensee defendants committed gross

negligence in that they failed to comply with

the regulations promulgated by the Mississippi

Department of Health governing nursing

homes.5 The district court gave cursory atten

3

See, e.g., Wood v. Allstate Ins. Co., 1997 WL

570848, at *2 (N.D. Miss. 1997) (“The Bass decision is limited to the tort-contract hybrid cause of

action for bad faith denial of insurance claims.”).

4 Cf. LLEH, Inc. v. Wichita County, Tex., 289

F.3d 358, 364 (5th Cir. 2002) (“Wemay affirmfor

any reason supported by the record, even if not

relied upon by the district court.”).

5

See MississippiRules,Regulations, and Mini-

(continued...)
9

tion to this argument, noting that there was no

legislative intent to create a private cause of

action. 

1.

Both sides devote considerable energy to

negligence per se and whether these regulations allow recovery under that theory. That

debate is beside the point. The district court

held that the plaintiffs did not have a reasonable expectation of recovery against the instate defendants under Mississippi law because, inter alia, those defendants did not owe

a duty to plaintiffs. Negligence per se, on the

other hand, is a theory by which statutes are

used to establish the appropriate standard of

care. In absence of a duty to the plaintiff, the

relevant standard of care is moot. As even the

plaintiffs note, 

The statute’s provisions are deemed conclusive expressions of the applicable standard of care and reasonable conduct. Indeed, the Mississippi Supreme Court has

stated that a violation of an internal regulation “may serve as evidence of negligence,” even if it does not give rise to a

private right of action.

(Quoting Moore v. Mem’l Hosp., 825 So. 2d

658, 665 (Miss. 2002); other citations omitted.) Thus, the theory of negligence per se

does not speak to the relevant question of

whether the in-state defendants owed any duty

of care to the plaintiffs.

2.

Plaintiffs further argue, citing Minimum

Standards § 408.2(e),6that the regulations

provide an “explicit right of action” that establishes a duty. Indeed, the applicable regulation

does appear to grant such a right. Unfortunately, it does not appear that any Mississippi court has determined whether those particular regulations confer a cause of action.

Plaintiffs point to several recent unreported

federal district court opinions concluding that

such a cause of action is afforded.7 On the

5

(...continued)

mum Standards for Institutions for the Aged and

Infirm(“MinimumStandards”), as promulgated by

MISS. CODE ANN. § 43-11-13(1).

6

 Minimum Standards § 408.2(e) provides: 

[The resident] has a right of action for damages or other relief for deprivations or infringements of his right to adequate and

proper treatment and care established by an

applicable statute, rule, regulation or

contract . . . .

7

See, e.g., Hill v. Beverly Enters.-Mississippi,

Inc., No. 3:03CV301LN (S.D. Miss. Oct. 31,

2003), slip op. at 14 (holding, in case involving

these defendants, that although “no Mississippi

state court has passed on the question,” it was reasonable to conclude that a possibility of recovery in

state court existed). As we have said, plaintiffs

have moved for us to take judicial notice of numerous unreported Mississippi state court records

and decisions and unpublished authority from federal district courts in Mississippi. 

We may take judicial notice of another court’s

judicial action. See Karaha Bodas Co. v. Perusahaan Perambangan Minyak Dan Gas Bumi Negara, No.02-20042, 2003 WL 21027134, at *4 (5th

Cir. 2003). Although we cannot take judicial notice of findings of fact of other courts, the fact that

a judicial action was taken is indisputable and is

therefore amenable to judicial notice. See Taylor

v. Charter Med. Corp., 162 F.3d 827, 831 (5th

Cir. 1998).

(continued...)
10

other hand, defendants counter that in an analogous situation, in Moore v. Mem. Hosp.,

825 So. 2d 658 (Miss. 2002), involving state

pharmacy board regulations, the court found

no cause of action. But, as noted in Hill, slip

op. at 13, Moore did not hold that regulations

can never establish a legal duty or cause of action, but rather that the particular regulations

considered did not do so.

In summary, Mississippi caselaw on this

point is non-existent. The Minimum Standards

may or may not provide a private cause of

action that would be applicable here.

Defendantsfurther counter by arguing that,

even assuming the regulations are meant to

grant such a cause of action, such a grant

would “greatly overstep [the Department of

Health’s] legislative grant of authority.” The

relevant statutory grant authorizes the department to 

adopt, amend, promulgate and enforce such

rules, regulations and standards, including

classifications, with respect to all institutions for the aged or infirm to be licensed

under this chapter as may be designed to

further the accomplishment of the purpose

of this chapter in promoting adequate care

of individuals in those institutions in the

interest of public health, safety and welfare.

MISS. CODE ANN. § 43-11-13(1). This statutory grant of authority may be susceptible to

interpretation both for and against the ability

to grant a private right of action. But, as the

plaintiffs correctly note, that is more appropriately an argument for the Mississippi courts.

The dearth of applicable caselaw interpreting the Minimum Standards, coupled with the

unreported district court decisions concluding

that a cause of action was intended, weighs

heavily in plaintiffs’ favor. As we said above,

when considering a fraudulent joinder argument, the court must resolve all ambiguities in

state law in favor ofremand. Thus, defendants

are not able to meet their heavy burden of

showing that there is no reasonable possibility

that plaintiffs can recover in state court.8

3.

The district court also concluded that the

licensee and administrator defendants did not

owe a duty of care to the nursing home residents under Mississippi common law, and

therefore plaintiffs have no reasonable possibility of recovering under Mississippi law.

The district court analytically divided the allegations of gross negligence into two categoriesSSthose relating to “either (1) the daily

hands-on care of Plaintiff[s]; or (2) the typical

functions of a manager.”

With respect to the latter category, the

court found that “absent extenuating circumstances well beyond those pled in the Complaint,” the in-state defendants owed to the

corporate owners, rather than the residents,

the duty to manage the nursing home

adequately. Although the court purportedly

7

(...continued)

The defendants point out that the motion effectively seeks to avoid this circuit’s rule against

giving precedential value to unpublished opinions.

That would be true if the purpose for which plaintiffs seek to have the cases noticed were to establish them as precedent. It is perfectly permissible, however, for us to take judicial notice of the

very fact of the judicial act that these decisions

represent. We therefore grant the motion.

8

See Jernigan v. Ashland Oil, Inc., 989 F.2d

812, 815 (5th Cir.1993) (stating that the burden in

such cases is on defendant). 
11

relied on several cases for this proposition,

those decisions are not necessarily on point,

because theymore accuratelyreflect the law as

it relates to allegations of negligence with

respect to direct care rather than to inadequate

management. The district court points to no

casesspecifically addressing whether a duty of

an agent adequately to manage a facility is

owed to the principal, to third parties, or to

both. 

Plaintiffs aver that such duties need not be

mutually exclusive. Despite the accuracy of

this contention, plaintiffs can point to no authority establishing that such duality of allegiances exists with respect to a duty to manage

adequately. The defendants, for their part, can

do no better. They cite to no case establishing

that a duty to manage a facility adequately

cannot be owed to a third party in addition to

the entity itself. Although ambiguous

questions of law must be resolved in favor of

the plaintiffs, they, in the absence of any

authority, cannot reasonably expect to recover

under state law. These allegations alone,

therefore, are insufficient to defeat complete

diversity.

Notwithstanding the absence of authority

with respect to the in-state defendants’ alleged

failure adequately to manage the facility, the

plaintiffsadditionallyallege direct participation

on behalf ofthe licensees and administratorsin

the supposed grossly negligent care of

residents. The district court found that the

plaintiffs cannot adequately show that the instate defendants were sufficiently directly involved in the “hands-on care of the plaintiff”

to saddle independent tort liability on an agent

of a disclosed principal. Both sides concede

that such an agent may be liable under Mississippi law where he was directly involved in the

commission of a tortSSin this case, if the instate defendants were directly involved in

resident care. 

The issue, therefore, is what constitutes

“direct.” The defendants and the district court

apparently equated the term with hands-on

care. Plaintiffs, on the other hand, argue for a

more expansive definition. 

As we have said, in the context of fraudulent joinder analysis a party may not rely on

the allegations in his pleadings on their face,

but must show that there is, at minimum,some

reasonable dispute of a fact that, if established,

would demonstrate a reasonable possibility of

recovery. The district court considered

affidavitsfromthe in-state defendants claiming

that “they were not involved in the hands-on

care of Plaintiff[s],” determined that this

evidence was unrebutted, and therefore found

that plaintiffs’ claims must fail. 

The defendants echo this argument on appeal, contending that there is no evidence offered that demonstrates hands-on care or participation in the medical injuries alleged. Plaintiffs claim, however, that liability will lie even

in the absence ofsuch evidence, and they contend that their complaints allege sufficientlydirect participationSSand that such participation

need not be “hands-on,” as defendants

maintain. 

Defendants point to Mozingo v. Correct

Mfg. Corp., 752 F.2d 168, 173 (5th Cir.

1985), for the proposition that to face tort liability, an agent such as the in-state defendants

must be the “guiding spirit” or “centralfigure.”

Defendantsfurther reason that the affidavits of

the in-state defendants, which deny any direct

participation in the care of the plaintiffs,stand

un-rebutted and therefore demonstrate the existence of fraudulent joinder.
12

In contrast, plaintiffsrely on cases purporting to establish liabilityfor a widerspectrumof

acts and omissions. For example, in Turner v.

Wilson, 620 So. 2d 545, 548-49 (Miss. 1983),

the court stated that directors, officers, and

agents may be liable for torts where they either

participated in the act, authorized it or directed

it, gave consent to an act, or even acquiesced

in a tortious act that they knew of or “should

have known of” in the exercise of reasonable

care. 

Plaintiffsalso point to numerous unreported

district court decisionsin Mississippi in which,

under very similar circumstances (some

involving the same defendants as in this case),

the courts, in plaintiffs’ words, “rejected the

defendants’ ‘myopic view of direct participation’ as requiring personal contact . . .”

(quoting Hill). In those unreported cases, the

district court held that a nursing home administrator, like the in-state defendants, may be

held liable for their personal tortious conduct

without personal, hands-on contact with the

plaintiff. See, e.g., Hill. Rather, allegations of

failure to perform managerial duties, such as

maintaining adequate records and supervising

those members of the staff who handled the

residents’ day-to-day care, were held sufficient

to “afford a reasonable basis for imposing

personal liability under Mississippi law.”

Bradley v. Grancare,Inc.,No.4:03CV93-P-B,

at *5-6 (N.D. Miss. Aug. 18, 2003). 

Lastly, plaintiffsrely on Rein v. Benchmark

Constr. Co., 2003 WL 21356013 (Miss. June

12, 2003), for the proposition that the question

whether these defendants owe a duty to plaintiffs is one of fact. In Rein, a nursing home

resident sued a pest control company for injuries inflicted by ants. The court found that it

was possible that the pest control company

was an independent contractor with no independent duty to the plaintiff. Nevertheless, it

held that the question was one for the trier of

fact. Id. at *12. Thus, plaintiffs assume that

there is at least a reasonable possibility that the

non-diverse defendantsin this case owe a duty

to them. 

On balance, plaintiffs have the better of the

argumentSSat least strong enough to demonstrate a reasonable possibility of recovery under Mississippi law. Plaintiffs cannot demonstrate hands-on contact by the defendants, but

such activity does not seemrequired to impose

personal liability under Mississippi law. One

may easily be a direct participant in tortious

conduct by merely authorizing or negligently

failing to remedy misconduct by one’s subordinates. 

It is uncertain, at thisstage of the litigation,

whether plaintiffswill be able to prove their allegations of direct participation to the satisfaction of the trier of fact. Nevertheless, it is

at least reasonable to expect that a Mississippi

court might find that the allegations of the instate defendants’misfeasance and nonfeasance

are sufficient to state a claim under state law.

The district court therefore erred in not recognizing the reasonable possibility of plaintiffs’

recovery against the in-state defendants under

Mississippi lawSSespecially in light of the

recognized ambiguity in the caselaw that must

be resolved in favor of remand. 

IV.

At oral argument, we raised, and the parties

have subsequently addressed in supplemental

briefs, the specter of a jurisdictional defect in

these cases arising from the plaintiffs’ election

to appeal only the district court’s decisions on

the negligence and gross negligence causes of

action. The plaintiffs, at argument and in their

supplementalbrief, attempt to sidestep this po-
13

tential pitfall by arguing that, although their

brief discusses the negligence and gross negligence causes of action, theydid not necessarily

fail to appeal the decisions regarding the other

causes of action. 

We disagree. As we have noted, plaintiffs’

reply brief specifically contends that the defendants err in focusing on the other causes of

action in that those causes of action “are not

before this Court.” 

A.

The failure to appeal those decisions, defendants contend, forecloses any possibility of

success on plaintiffs’ appeal. Defendants reason as follows: By failing to appeal the dismissal of the medical malpractice, breach of

fiduciary duty, and fraud claims, plaintiffs concede that theyhave no reasonable possibilityof

success on the merits ofthose claims. Further,

by not appealing those decisions, plaintiffs

allow the dismissals to stand and therefore

tacitly agree that the court had jurisdiction

over those claims in order to dismiss them.

Therefore, if we rule that the district court

erred in finding the in-state defendants

fraudulently joined in the negligence and gross

negligence claims (and we have so ruled), the

district court will be caught between a veritable Scylla and Charybdis. 

That is, although we will have commanded

the court to remand, because the two claims

we addressed here have a reasonable possibility of success on the merits, the district court

will not be able concomitantly to remand the

dismissed claims, the result being that the entire actionwillnot be remanded, but only some

claims, a course of action that is contrary to 28

U.S.C. § 1441. Under the removal statute, in

a diversity action where all claims relate to the

same constitutional case, individual claims

cannot be removed, but only entire actions.9

Consequently, goes defendants’ argument,

plaintiffs, by failing to challenge the district

court’sjurisdiction over the other claims, have

forgone the abilityto have their negligence and

gross negligence claims remanded to state

court. 

This argument is interesting and might be

persuasive, but for one fatal flaw. Underlying

the entire argument is the notion that by not

appealing the decisions on some counts, the

plaintiffs have “waived” the issue of subject

matter jurisdiction over those counts. Subject

matter jurisdiction, however, cannot be

waived.10

That being so, plaintiffs’ failure to appeal

the other causes of action is not dispositive.

We have said, above, that the district court’s

refusal to recognize a reasonable possibility of

recovery understate law on the negligence and

gross negligence claims was error. Consequently, on remand fromthis court, the district

court must remand the entire case to state

court. 

The fact that the plaintiffs did not appeal

9

See Arango v. Guzman Travel Advisors

Corp., 621 F.2d 1371, 1376 (5th Cir. 1980) (stating that on removal, cases are considered in their

entirety); cf. United Mine Workers v. Gibbs, 383

U.S. 715, 725 (1966) (defining an entire Article III

“case” as claims deriving from a “common nucleus

of operative fact”).

10 See, e.g., Clinton v. NewYork, 524 U.S. 417,

428 (1998) (stating that jurisdictional questions,

even of statutory, not constitutional, magnitude,

may not be waived); Bridgmon v. Array Sys.

Corp., 325 F.3d 572, 575 (5thCir. 2003) (explaining that courts have duty to raise question of subject matter jurisdiction sua sponte).
14

the dismissalofthe other claims does not make

it impossible for the district court to remand

those claims as well. Because we hold that the

plaintiffs have a reasonable possibility of

recovering in state court on at least two causes

of action, removal was improper, complete

diversity does not exist, and the district court

never properly had jurisdiction over this

action. 

The consequence ofthe district court’slack

of jurisdiction is that the dismissal of those

claims must be also be reversed. Although our

fraudulent joinder decisions have never made

the issue entirely pellucid, § 1441’s holistic

approach to removal mandates that the existence of even a single valid cause of action

against in-state defendants (despite the

pleading ofseveral unavailing claims) requires

remand of the entire case to state court.11

B.

Defendants suggest that if plaintiffs had effectively waived the jurisdictional question

with respect to the fraud, breach of fiduciary

duty, and medical malpractice claims, the district court could retain jurisdiction over the

dismissed claims and assume jurisdiction over

the appealed claims through the supplemental

jurisdiction statute, despite the lack of complete diversity. This approach is a non-starter.

As both parties agree in their supplemental

briefs, 28 U.S.C. § 1367, which authorizes

district courts to exercise supplemental jurisdiction, cannot apply in this instance. 

Specifically, § 1367(b) “has limits . . . on

the use ofsupplementaljurisdiction in diversity

cases so that it will not defeat the established

rule of complete diversity.”12 As we noted in

McLaughlin v. Miss. Power Co., 376 F.3d

344, 354 (5th Cir. 2004), “§ 1367(b) provides

that there must be complete diversity where

parties are joined in a diversity suit under

[Federal Rule of Civil Procedure 19 or] 20 . .

. .”13 Because multiple defendants, like those

in this case, are allowed under Federal Rule of

Civil Procedure 20, complete diversity must

exist, and § 1367(b) does not authorize the exercise of supplemental jurisdiction. 

11 See Green v. Amerada Hess Corp., 707 F.2d

201, 208 (5th Cir. 1983) (“If even one of [the

plaintiff’s] many claims might be successful, a remand to state court is necessary.”); Moody Nat’l

Bank v. St. Paul Mercury Ins. Co., 193 F. Supp.

2d 995, 1000 (S.D. Tex. 2002) (remanding because plaintiff could recover under one of his many

theories); Blanchard v. State Farm Lloyds, 206 F.

Supp. 2d 840, 845 (S.D. Tex. 2001) (requiring

only one valid cause of action for remand); accord

Cabalceta v. Standard Fruit Co., 883 F.2d 1553,

1561 (11th Cir. 1989) (explaining that a court

looks “to see whether there is no possibility the

plaintiff can establish any cause of action against

the resident defendant . . .”). This line of reasoning

is consistent with our continued instruction that

“diversity removal, powerful asit is, [must] remain

within its congressionally marked traces [as]

demanded by principles of comity and federalism .

. . .” Smallwood v. Ill. Cent. R.R., 385 F.3d 568,

576 (5th Cir. 2004) (en banc).

12 13B CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE 2D § 3567.3,

2004 Supp. at 96. See also id. at § 3567.2 (stating

that because of rule 20, “if a . . . diversity of citizenship case is brought against multiple defendants, § 1367(b) precludes supplemental jurisdiction.” Id. § 3567.2, 2004 Supp. at 83.

13 See also, e.g., Taylor v. Am. Tobacco Co.,

983 F. Supp. 686, 691 (E.D. Mich. 1997) (stating

that court cannot exercise original jurisdiction over

claims against diverse parties and supplemental

jurisdiction over claims against in-state defendants).
15

The dismissal of the negligence and gross

negligence claims, and the dismissal of the additional claims, are REVERSED, and thismatter is remanded to the district court with

instruction to remand to state court.