Innocent Party Protection Act

To amend title 28, United States Code, to prevent fraudulent joinder. 1. Short title This Act may be cited as the Innocent Party Protection Act 2. Prevention of fraudulent joinder Section 1447 of title 28, United States Code, is amended by adding at the end the following: (f) Fraudulent joinder (1) This subsection shall apply to any case in which— (A) a civil action is removed solely on the basis of the jurisdiction conferred by section 1332(a); (B) a motion to remand is made on the ground that— (i) one or more defendants are citizens of the same State as one or more plaintiffs; or (ii) one or more defendants properly joined and served are citizens of the State in which the action was brought; and (C) the motion is opposed on the ground that the joinder of the defendant or defendants described in subparagraph (B) is fraudulent. (2) The joinder of a defendant described in paragraph (1)(B) is fraudulent if the court finds that— (A) there is actual fraud in the pleading of jurisdictional facts with respect to that defendant; (B) based on the complaint and the materials submitted under paragraph (3), it is not plausible to conclude that applicable State law would impose liability on that defendant; (C) State or Federal law clearly bars all claims in the complaint against that defendant; or (D) objective evidence clearly demonstrates that there is no good faith intention to prosecute the action against that defendant or to seek a joint judgment including that defendant. (3) In determining whether to grant or deny a motion under paragraph (1)(B), the court may permit the pleadings to be amended, and shall consider the pleadings, affidavits, and other evidence submitted by the parties. (4) If the court finds that all defendants described in paragraph (1)(B) have been fraudulently joined under paragraph (2), it shall dismiss without prejudice the claims against those defendants and shall deny the motion described in paragraph (1)(B). . February 24, 2017 Committed to the Committee of the Whole House on the State of the Union and ordered to be printed

Summary: Innocent Party Protection Act (Sec. 2) This bill amends procedures under which federal courts determine whether a case that was removed from a state court to a federal court on the basis of a diversity of citizenship among the parties may be remanded back to state court upon a motion opposed on fraudulent joinder grounds that: (1) one or more defendants are citizens of the same state as one or more plaintiffs, or (2) one or more defendants properly joined and served are citizens of the state in which the action was brought. Joinder of such a defendant is fraudulent if the court finds: actual fraud in the pleading of jurisdictional facts with respect to that defendant, state law would not plausibly impose liability on that defendant, state or federal law bars all claims in the complaint against that defendant, or no good faith intention to prosecute the action against that defendant or to seek a joint judgment including that defendant. In determining whether to grant or deny such a motion for remand, the court: (1) may permit pleadings to be amended; and (2) must consider the pleadings, affidavits, and other evidence submitted by the parties. A federal court finding that all such defendants have been fraudulently joined must: (1) dismiss without prejudice the claims against those defendants, and (2) deny the motion for remand.