Silverman Testifies Before Congress on Fraudulent Joinder

Shook, Hardy & Bacon Washington, D.C. Partner Cary Silverman testified before the Subcommittee on the Constitution and Civil Justice in support of the Fraudulent Joinder Prevention Act. Invited by the House Judiciary Committee, Silverman testified on behalf of the U.S. Chamber Institute for Legal Reform.

Silverman discussed the common practice of plaintiffs’ lawyers including a local person or business as a defendant in a lawsuit for the sole purpose of avoiding federal court jurisdiction. He argued that this practice destroys federal diversity jurisdiction, which requires all defendants to reside in a different state than all plaintiffs, and requires remand to a state court where the plaintiff may have a home-field advantage. The law of fraudulent joinder allows a federal court to disregard the local defendant if no viable claim or good faith intent to purse a judgment against that party exists. While fraudulent joinder is intended to secure the U.S. Constitution’s promise of a neutral federal forum in lawsuits involving citizens of different states, Silverman explained, current law routinely allows manipulation.

The Fraudulent Joinder Prevention Act would adopt a uniform approach to fraudulent joinder, allowing a federal court to retain jurisdiction over a case without a plausible claim against the local defendant. It would also clarify that, in evaluating fraudulent joinder, federal judges may consider extrinsic evidence, such as affidavits submitted by the parties, and whether the plaintiff has a good-faith intent to pursue a judgment against the local defendant. Silverman testified that the bill would help bring clarity to the law, reduce gamesmanship in litigation, and preserve access to a neutral federal forum in cases involving citizens of different states.