De-Frauding the System: Sham Plaintiffs and the Fraudulent Joinder Doctrine
Playing off the strict requirements of federal diversity jurisdiction, plaintiffs can structure their suits to prevent removal to federal court. A common way to preclude removability is to join a nondiverse party. Although plaintiffs have a great deal of flexibility, they may include only those parties that have a stake in the lawsuit. Put another way, a court will not permit a plaintiff to join a party to a lawsuit when that party is being joined solely to prevent removal. The most useful tool federal courts employ to prevent this form of jurisdictional manipulation is Federal Rule of Civil Procedure 21. Rule 21 permits a federal court to drop a joined party if that party fails the permissive joinder rules of Federal Rule of Civil Procedure 20. Federal courts have an additional tool to scrutinize joined defendants: the fraudulent joinder doctrine. The doctrine permits a federal court to look beyond the face of the complaint to determine whether the plaintiff has a colorable claim against the nondiverse defendant. If not, the court ignores this diversity-destroying defendant and the suit remains in federal court. Ultimately, federal courts use this robust tool only to scrutinize the joinder of defendants, leaving some plaintiff-based manipulation unchecked. This Note argues that federal courts should correct this deficiency and extend the fraudulent joinder doctrine to police sham plaintiffs. Extending the doctrine in this manner would prevent jurisdictional gamesmanship, provide defendants with a fair opportunity to remove to a neutral forum, and supply clear standards for courts to deploy in scrutinizing the joinder of sham plaintiffs.