Opinion ID: 206451
Heading Depth: 4
Heading Rank: 1

Heading: Determining the Proper Fraudulent-Joinder Standard

Text: The first issue we must consider is what standard we should apply to determine whether Knudson fraudulently joined Long. Ordinarily, to prove that a plaintiff fraudulently joined a diversity-destroying defendant, we have required a defendant seeking removal to prove that the plaintiff's claim against the diversity-destroying defendant has no reasonable basis in fact and law. Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 810 (8th Cir.2003) (internal quotation marks omitted). [7] In spite of this rule, Systems Painters argues that because the Missouri district court dismissed Long for lack of subject matter jurisdiction, we should automatically find that Knudson fraudulently joined Long. Alternatively, Systems Painters cites Simpson v. Thomure, 484 F.3d 1081 (8th Cir.2007) and argues that we should apply a Rule 12(b)(6) standardrather than Filla 's standardto determine whether Knudson fraudulently joined Long. [8] We first reject Systems Painters's argument that the Missouri state court's dismissal of Long requires us to find that Knudson fraudulently joined him. In the Eleventh Circuit case of Insinga v. LaBella , a plaintiff sued a non-diverse defendant and a diverse defendant in state court. 845 F.2d at 250. The state court dismissed the non-diverse defendant based on sovereign immunity, and pursuant to state law, such determinations were jurisdictional. Id. at 254. In deciding whether the defendant's removal was proper, the court stated, For all intents and purposes, a trial court's finding that it lacks jurisdiction over a resident defendant is akin to a finding of fraudulent joinder of that defendant in that it involves a determination by the court that the resident defendant was never properly before the court, rather than a determination that the court had jurisdiction of that defendant but that the case against him, although not frivolous, was not meritorious. Id. (footnote omitted). Systems Painters argues that, under Insinga, a state court's dismissal of a non-diverse defendant for lack of jurisdiction requires a federal court to find that the plaintiff fraudulently joined that defendant. Since the Missouri district court dismissed Long for lack of subject matter jurisdiction, Systems Painters argues that we should apply this per se rule and find that Knudson fraudulently joined Long. We decline to apply a per se rule based upon Insinga for at least three reasons. First, the court in Insinga seemed to incorrectly suggest that whether a plaintiff has fraudulently joined a defendant is a question of state law. See id. (In order to sustain a fraudulent joinder, a state court must find either that there was no possibility that the plaintiff could prove a cause of action against the resident defendant or that the plaintiff fraudulently pled jurisdictional facts . . . . (emphasis added)). Although the question of whether a plaintiff has fraudulently joined a defendant requires a close analysis of state law, this question is ultimately one of federal law. See Poulos, 959 F.2d at 73 n. 4 (noting that federal courts are not bound by a state-court judgment when deciding whether a plaintiff fraudulently joined a defendant). Second, the Insinga court's suggestion that a per se rule would be appropriate was merely dictum. See Insinga, 845 F.2d at 254 n. 4 (We do not mean to imply that the [diversity-destroying defendant] was fraudulently joined in this case, nor do we need to make that determination in light of our disposition of the case.). Finally, since Long's dismissal, the Missouri Supreme Court has clarified that a dismissal due to a defendant's immunity under the state's workers' compensation laws is not a dismissal for lack of jurisdiction. [9] See McCracken v. Wal-Mart Stores E., LP, 298 S.W.3d 473, 477 (Mo.2009) (en banc). Thus, the rationale for Insinga 's per se rule (to the extent Insinga, in fact, created one) is not present here. For these reasons, we decline Systems Painters's request to find that Knudson fraudulently joined Long solely because the Missouri district court dismissed him due to immunity provided by the state's workers' compensation laws. We also reject Systems Painters's argument that Simpson requires us to apply a Rule 12(b)(6) standardrather than the Filla standardto determine whether Knudson's fraudulently joined Long. In Simpson, a Missouri plaintiff was injured in the course of her employment while operating a power press. 484 F.3d at 1083. She brought an action in Missouri state court against the diverse power-press manufacturer and her non-diverse workplace supervisor. The manufacturer removed the case to federal court. The plaintiff sought remand on the basis of her supervisor's citizenship. Although the plaintiff was aware that Missouri's workers' compensation laws normally immunize co-workers for workplace negligence, the plaintiff argued that her claim met the same exception to this rule that Knudson argues applies in this case. The district court, however, ruled that the exception was not met, denied remand, and held that the plaintiff fraudulently joined her supervisor. Moreover, since the plaintiff could not state a claim against her supervisor, the court dismissed the supervisor pursuant to Rule 12(b)(6). Four months later, the remaining parties settled, so the court entered final judgment in the case. Id. at 1084. On appeal, rather than applying the Filla standard to consider whether the plaintiff had fraudulently joined her supervisor, we considered whether the federal district court had properly ruled on the supervisor's Rule 12(b)(6) motion. This analysis was warranted, we explained, because of the present procedural posture of the case. Id. We stated, At this time, final judgment has been entered, so there is nothing to remand to state court unless the district court's Rule 12(b)(6) dismissal of [plaintiff's] claim against [the supervisor] is reversed. If that claim is revived, remand will follow automatically because [plaintiff and her supervisor], the only remaining defendant, are citizens of the same state. Thus, the significant issue on appeal is whether the district court erred in dismissing the claim against [the supervisor] on the merits. Id. We then held that the district court did not err in dismissing plaintiff's claim against her supervisor pursuant to Rule 12(b)(6). Id. at 1086. Thus, in Simpson, we reviewed the district court's ruling on the supervisor's Rule 12(b)(6) claim, not the district court's ruling on the diverse power-press manufacturer's claim that the plaintiff fraudulently joined the supervisor. The procedural posture of the casenot the fact that the plaintiff may have fraudulently joined a party who enjoyed immunity under the state's workers' compensation lawsjustified the analysis in Simpson. See Council Tower Assoc. v. Axis Specialty Ins. Co., 630 F.3d 725, 730-31 (8th Cir.2011) (applying the Simpson analysis for the same procedural-posture reasons even though the allegedly fraudulently joined, diversity-destroying defendant did not claim to be protected by a form of immunity); but see Junk, 628 F.3d at 445 (suggesting that the allegedly fraudulently joined, diversity-destroying defendant's claim to statutory immunity justified the court's analysis in Simpson ). In this case, the procedural posture that existed in Simpson is not present because the federal district court never entered a final judgment in the case. Instead, after ruling that Knudson fraudulently joined Long, the court proceeded no further in resolving the merits of Knudson's claims against Systems Painters and certified its order denying remand for appeal pursuant to 28 U.S.C. § 1292(b). Thus, the Simpson analysis is inapplicable here. As a result, Filla and its progeny provide the appropriate standard for determining whether Knudson fraudulently joined Long. [10]