[Congressional Record Volume 163, Number 41 (Thursday, March 9, 2017)]
[House]
[Pages H1968-H1974]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     INNOCENT PARTY PROTECTION ACT


                             general leave

  Mr. GOODLATTE. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous materials on H.R. 725.
  The SPEAKER pro tempore (Mr. Emmer). Is there objection to the 
request of the gentleman from Virginia?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to House Resolution 175 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the state of the Union for the consideration of the bill, H.R. 725.
  The Chair appoints the gentleman from Georgia (Mr. Jody B. Hice) to 
preside over the Committee of the Whole.

                              {time}  1455


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 725) to amend title 28, United States Code, to prevent fraudulent 
joinder, with Mr. Jody B. Hice of Georgia in the chair.
  The Clerk read the title of the bill.
  The CHAIR. Pursuant to the rule, the bill is considered read the 
first time.
  The gentleman from Virginia (Mr. Goodlatte) and the gentleman from 
Maryland (Mr. Raskin) each will control 30 minutes.
  The Chair recognizes the gentleman from Virginia.
  Mr. GOODLATTE. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, hardworking Americans are some of the leading victims of 
frivolous lawsuits and the extraordinary costs that our legal system 
imposes.
  Every day, local businessowners routinely have lawsuits filed against 
them based on claims that have no substantive connection to them as a 
means of forum shopping on the part of the lawyers filing the case. 
These lawsuits present a tremendous burden on small businesses and 
their employees.
  The Innocent Party Protection Act, introduced by Judiciary Committee 
member Mr. Buck of Colorado, will help reduce the litigation abuse that 
regularly drags small businesses into court for no other reason than as 
part of a lawyer's forum shopping strategy.
  In order to avoid the jurisdiction of the Federal courts, plaintiffs' 
attorneys regularly join instate defendants to the lawsuits they file 
in State court even if the instate defendants' connections to the 
controversy are minimal or nonexistent.
  Typically the innocent but fraudulently joined instate defendant is a 
small business or the owner or employee of a small business. Even 
though these innocent instate defendants ultimately don't face any 
liability as a result of being named as a defendant, they, 
nevertheless, have to spend money to hire a lawyer and take valuable 
time away from running their businesses or spending time with their 
families to deal with matters related to a lawsuit to which they have 
no real connection.
  To take just a few examples, in Bendy v. C.B. Fleet Company, the 
plaintiff brought a product liability claim against a national company 
for its allegedly defective medicinal drink. The plaintiff also joined 
a resident local defendant health clinic alleging it negligently 
instructed the plaintiff to ingest the drink.
  The national company removed the case to Federal court and argued 
that

[[Page H1969]]

the small, local defendant was fraudulently joined because the 
plaintiff's claims against the clinic were time barred by the statute 
of limitations, showing no possibility of recovery.
  Despite finding the possibility of relief against the local defendant 
``remote,'' the court remanded the case after emphasizing the draconian 
burden on the national company to show fraudulent joinder under the 
current rules.
  The court practically apologized publicly to the joined party 
stating: ``The fact that Maryland courts are likely to dismiss Bendy's 
claims against the local defendant is not sufficient for jurisdiction, 
given the Fourth Circuit's strict standard for fraudulent joinder.''
  Shortly after remand, all claims against the local defendant were 
dismissed, of course, after its presence in the lawsuit served the 
trial lawyers' tactical purpose of forum shopping. When courts 
themselves complain about the unfairness of current court rules, 
Congress should take notice.
  In Baumeister v. Home Depot, Home Depot removed a slip-and-fall case 
to Federal court. The day after removal and before conducting any 
discovery, the plaintiff amended the complaint to name a local 
business, which it alleged failed to maintain the store's parking lot.
  The court found the timing of the amended complaint was ``suspect,'' 
noting the possibility that the sole reason for amending the complaint 
to add the local defendant as a defendant could have been to defeat 
diversity jurisdiction.

                              {time}  1500

  Nevertheless, the court held Home Depot had not met its ``heavy 
burden'' of showing fraudulent joinder under current law because the 
court found it was possible, even if it were just a tenth of a percent 
possible, that the newly added defendant could potentially be held 
liable and remanded the case back to State court. Once back in State 
court, the plaintiff stipulated to dismiss the innocent local defendant 
from the lawsuit, but only after it had been used successfully as a 
forum-shopping pawn.
  Trial lawyers join these unconnected instate defendants to their 
lawsuits because today a case can be kept in State court by simply 
joining as a defendant a local party that shares the same local 
residence as the person bringing the lawsuit. When the primary 
defendant moves to remove the case to Federal court, the addition of 
that local defendant will generally defeat removal under a variety of 
approaches judges currently take to determine whether the joined 
defendant prevents removal to Federal court.
  One approach judges take is to require a showing that there is ``no 
possibility of recovery'' against the local defendant before a case can 
be removed to Federal court or some practically equivalent standard. 
Others require the judge to resolve any doubts regarding removal in 
favor of the person bringing the lawsuit. Still others require the 
judge to find that the local defendant was added in bad faith before 
they allow the case to be removed to Federal court.
  The current law is so unfairly heavy-handed against innocent local 
parties joined to lawsuits that Federal Appeals Court Judge J. Harvie 
Wilkinson of the Fourth Circuit Court of Appeals has publicly supported 
congressional action to change the standards for joinder, saying: 
``That's exactly the kind of approach to Federal jurisdiction reform I 
like because it's targeted. And there is a problem with fraudulent 
jurisdiction law as it exists today, I think, and that is that you have 
to establish that the joinder of a nondiverse defendant is totally 
ridiculous and that there is no possibility of ever recovering . . . 
that's very hard to do,'' he says. ``So I think making the fraudulent 
joinder law a little bit more realistic . . . appeals to me because it 
seems to me the kind of intermediate step that addresses real 
problems.''
  The bill before us today addresses those real problems in two main 
ways:
  First, the bill allows judges greater discretion to free an innocent 
local party from a case where the judge finds there is no plausible 
case against that party. That plausibility standard is the same 
standard the Supreme Court has said should be used to dismiss pleadings 
for failing to state a valid legal claim, and the same standard should 
apply to release innocent parties from lawsuits.
  Second, the bill allows judges to look at evidence that the trial 
lawyers aren't acting in good faith in adding local defendants. This is 
a standard some lower courts already use to determine whether a trial 
lawyer really intends to pursue claims against the local defendant or 
is just using them as part of their forum-shopping strategy.
  This bill is strongly supported by the National Federation of 
Independent Business and the U.S. Chamber of Commerce, among other 
legal reform advocates. Please join me in supporting this vital 
legislation to reduce litigation abuse and forum shopping and to 
protect innocent parties from costly, extended, and unnecessary 
litigation.
  I reserve the balance of my time.
  Mr. RASKIN. Mr. Chairman, I yield myself as much time as I may 
consume.
  Mr. Chairman, we have seen a number of bills this session which are 
designed to shut the door on victims of corporate misfeasance and 
negligence and to nail the door shut. H.R. 725 is part of this wave of 
legislation.
  Like most other bills we have seen this session with brazenly 
Orwellian titles, the so-called Innocent Party Protection Act of 2017 
has nothing to do with protecting innocent parties. Rather, it is just 
the latest attempt to tilt the civil justice system dramatically in 
favor of big corporate defendants by making it much more difficult for 
plaintiffs to pursue State law claims in State courts under the system 
of federalism designed by our Founders.
  Again, this is a familiar experience because the bill addresses a 
completely nonexistent problem. If there had been a real problem, the 
Judiciary Committee might have held a hearing in which we could have 
invited groups to come forward who support tort victims. They could 
have come and testified about why it was so important for the interests 
of civil justice for us to pass this legislation.
  But there was no hearing at all. We didn't hear any witnesses, much 
less the testimony of those groups that represent victims of mass toxic 
torts, asbestos poisoning, lead poisoning, sex discrimination 
lawsuits--none of it.
  In fact, the groups that we would have called, if we were interested 
in the testimony of victims and people seeking civil justice, oppose 
this legislation overwhelmingly: the Alliance for Justice opposes it; 
the Center for Justice and Democracy opposes it; the Consumer 
Federation of America opposes it; the National Association of Consumer 
Advocates opposes it; the National Consumer Law Center opposes it; the 
Natural Resources Defense Council opposes it; Public Citizen opposes 
it; the Sierra Club opposes it.
  Under current law, a defendant may remove a case, alleging State law 
claims, to a Federal court only if there is complete diversity of 
citizenship between all plaintiffs and all defendants. If the plaintiff 
adds an instate defendant to the case solely for the purpose of 
defeating jurisdiction, this constitutes fraudulent joinder today; and 
in such circumstances, the case may be removed directly to Federal 
court.
  In determining whether a joinder was fraudulent, the court considers 
only whether there was any basis for a claim against the nondiverse 
defendant. The defendant must show that there was no possibility of 
recovery or no reasonable basis for adding the nondiverse defendant 
to the suit.

  This very high standard has guided our Federal courts for more than a 
century and it has functioned well, and the bill's proponents offer no 
objective evidence to the contrary. And again, we have had no hearing. 
For a new Member of Congress like me, who comes from the Maryland State 
Senate, I am absolutely astonished and amazed that we would think of 
overturning a standard fixture in our civil justice system without so 
much as a hearing as to what the problem is.
  H.R. 725 would replace a time-honored standard with an ambiguous one 
that would dramatically increase the costs and burdens of litigation on 
plaintiffs in Federal courts. It would try to strip our State courts of 
their basic powers to hear cases relating to their citizens. This is an 
assault on federalism.
  The measure would require a court to deny a motion remanding to the 
State

[[Page H1970]]

courts unless the court finds, one, that it is ``plausible to conclude 
that applicable State law would impose liability'' on an instate 
defendant; two, that the plaintiff had a ``good faith intention to 
prosecute the action against each'' instate defendant or to seek a 
joint judgment; and three, that there was no ``actual fraud in the 
pleading of jurisdictional facts.''
  This gauntlet of hurdles suddenly shifts the burden and creates a 
presumption that a Federal court should hear the case, making it far 
more expensive and difficult for plaintiffs to have their cases heard 
in State court.
  H.R. 725 would effectively overturn the local defendant exception, 
which prohibits removal to Federal court even if complete diversity of 
citizenship exists when the defendant is a citizen of the State where 
the suit was filed.
  The bill's radical changes to longstanding jurisdictional practice 
reveal the authentic purpose behind the measure. It is simply intended 
to stifle the ability of plaintiffs to have their choice of forum and, 
possibly, even their day in court.
  In addition, H.R. 725 would sharply increase the cost of litigation 
for plaintiffs and further burden the Federal court system. For 
example, the meanings of terms like ``plausible'' and ``good faith 
intention'' are ambiguous and will spawn substantial litigation over 
their proper interpretation and application, further postponing 
decisions and justice.
  Additionally, these standards would require a court to engage in a 
mini-trial during the early procedural stages of the case without any 
opportunity for the full development of evidence. Again, this would 
sharply increase the burdens and costs of litigation for ordinary 
citizens, for plaintiffs, which appears to be, to my mind, the only 
possible contemplated result of this legislation.
  Finally, we need to focus on the fact that this bill offered by the 
majority raises profound federalism concerns, which I would have hoped 
they would be attentive to. Matters of State law should be decided by 
State courts, subject to certain exceptions as set forth in the 
Constitution.
  It was our constitutional design that matters of civil dispute and 
conflict go to State courts, State judges, and State juries, all of 
them closer to the people themselves, unless you have a Federal 
question, a matter of Federal statutory law, a matter of Federal 
constitutional law, or you have got diversity jurisdiction.
  H.R. 725 bulldozes this key federalism constraint and casts a shadow, 
unnecessarily and improperly, over State courts, the courts of the 
people. By applying sweeping and vaguely worded new standards to the 
determination of when a State case must be remanded to State court, the 
bill denies State courts the ability to decide and, ultimately, to 
shape the unfolding of State law. This is completely contrary to the 
design of the Founders, many of them Virginians, like Thomas Jefferson 
and James Madison and George Mason, who wanted the State courts to be 
the central arena for the resolution of civil conflicts and tort 
disputes.
  Simply put, H.R. 725 tramples State sovereignty and our basic 
constitutional structure. For these reasons and for the fact that 
nobody has demonstrated there is a real problem, I urge the House to 
resist this unnecessary and flawed legislation, and I reserve the 
balance of my time.
  Mr. FARENTHOLD. Mr. Chairman, I yield myself such time as I may 
consume.
  Since this bill was marked up in the last Congress, the very same 
plausibility standard used in this bill was adopted by the Federal 
Circuit Court of Appeals in which fraudulent joinder cases arise with 
the greatest frequency.
  Last Congress, Ranking Member Conyers said of the bill, it should 
simply pick one of the existing articulations in the fraudulent joinder 
standard and codify that into law. At the time, the plausibility 
approach was applied by some district courts, but just last year, the 
Fifth Circuit Court of Appeals adopted the same plausibility standard 
this bill contains in a case called International Energy.
  The Fifth Circuit stated: We must consider whether the plaintiff 
pleaded ``enough facts to state a claim to relieve that is plausible on 
its face.'' The plaintiff in that case petitioned for rehearing en 
banc, but the rehearing was denied, with not a single judge on the 
Fifth Circuit requesting a vote.
  In just the last year, district courts in the Fifth Circuit have 
issued more than 40 fraudulent joinder decisions without much 
difficulty and with the results that indicate just the sort of 
reasonable reform that would occur nationwide when we get this bill 
passed into law.
  So this is about making the system work and opening the door to the 
Federal courts so companies from foreign states are not unfairly, 
potentially disadvantaged.
  The other piece of this that is easy to neglect is the local 
defendant. I don't know if the gentleman across the aisle has ever been 
sued. I have friends who have been sued. It is an emotionally and 
financially devastating procedure. You have got to take time off from 
your life and business to defend it. You have got to hire a lawyer, 
which is incredibly expensive. This is to protect the innocent third 
parties and open the doors to the Federal courts and just make it 
fairer and easier.

  Mr. Chairman, I reserve the balance of my time.
  Mr. RASKIN. Mr. Chairman, I yield myself such time as I may consume.
  I very much appreciate my colleague's remarks there. I want to make 
one point before I yield to my distinguished colleague from New York.
  Mr. Chairman, my colleague asked us to reckon with the fact that it 
is emotionally devastating for people to be sued, and, undoubtedly, it 
is in certain cases. But compare whatever it might feel like to be sued 
in whatever case he might have in mind with the outrageous emotional 
devastation caused by asbestos poisoning, by lead poisoning, by mass 
sexual harassment, sex discrimination, race discrimination, all of the 
torts that come to dominate what takes place in our courts. So if we 
are going to have a new emotional devastation standard, I would put the 
plaintiffs up against the large corporate defendants any day.
  Mr. Chairman, I yield 3 minutes to my distinguished colleague from 
New York (Mr. Nadler).
  Mr. NADLER. Mr. Chairman, I rise in opposition to H.R. 725, the 
misnamed Innocent Party Protection Act. The main purpose of this bill 
is to make it easier to remove State cases to Federal courts, where 
large corporate defendants have numerous advantages over consumers and 
injured workers.

                              {time}  1515

  Let's not talk about the emotional devastation. We are talking about 
large, corporate defendants. We are not worried about their emotions. 
Their litigation departments are quite capable of handling the 
emotions.
  This bill will clog the Federal courts, drain judicial resources, 
upset well-established law, and delay justice for plaintiffs seeking to 
hold businesses accountable for the injuries they cause. It is yet 
another attempt by the Republican majority to stack the deck in favor 
of large corporations.
  This bill is the opening salvo of this week's series of bills by the 
Republicans to close off access to the courts to ordinary Americans. 
With every step they take, whether it be to remove more State cases to 
Federal courts, to make class action suits more difficult to bring, or 
to reclassify more lawsuits as frivolous and subject to mandatory 
sanctions, they are limiting access to court help for ordinary 
Americans.
  The so-called Innocent Party Protection Act would upend the century-
old doctrine of fraudulent joinder, in which a defendant from the same 
State as the plaintiff is improperly added to a case in order to defeat 
diversity jurisdiction in Federal court, and, therefore, keep the case 
in a State court. Under current law, a defendant claiming fraudulent 
rejoinder has the burden of showing that there is ``no reasonable 
basis'' for a claim against the instate defendant, and, therefore, the 
case should remain in Federal court.
  This bill would turn that process on its head by placing the burden 
on the plaintiff to show that there is a ``plausible'' claim against 
the instate defendant and that the plaintiff has a ``good faith 
intention'' to pursue a claim against that defendant. Both standards 
are undefined in the bill, but it is likely that many plaintiffs would 
find these hurdles impossible to overcome at the initial stages of 
litigation before discovery.

[[Page H1971]]

  Furthermore, defendants will use this forum shopping bill to delay 
justice by routinely challenging jurisdiction. It will drain court time 
and allow corporate defendants to force plaintiffs to expend their 
limited resources on what should be a simple procedural matter. Under 
this bill, the preliminary determination of jurisdiction would become a 
baseless, time-consuming mini-trial before a second time-consuming 
trial on the merits. While large corporations could easily accommodate 
such costs, injured workers, consumers, and patients cannot.
  The practical effect of this bill is to force cases based on State 
law, which should properly be heard in State courts, to be considered 
in our overburdened Federal courts instead. Large corporations 
generally believe that Federal courts are a friendlier forum, 
especially since they are overburdened and they can afford to wait 
whereas the plaintiffs cannot, and they believe that they have a better 
chance of escaping liability for their actions in the Federal court.
  There is no evidence of a systemic crisis of fraudulent joinder, nor 
is there evidence that the courts cannot properly handle whatever 
issues may arise under current law. There is certainly no evidence that 
what wealthy corporations need are greater advantages in the courts. 
Yet, this bill hands them yet another gift from the Republican 
majority, and it is ordinary consumers and injured workers who will 
suffer.
  Mr. Chairman, I urge a ``no'' vote on this legislation.
  Mr. FARENTHOLD. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, this bill is not about protecting big corporations. 
This bill is about protecting the small-business owner or the employee 
who is fraudulently joined into a case who has to go out and hire his 
or her own lawyer.
  I remember something my law school professor once told me back in the 
day at St. Mary's University School of Law in San Antonio, Texas, and 
it stuck in my mind ever since: When you get sued, you may be able to 
beat the rap, but you can't beat the ride.
  It is expensive, it is emotionally draining, and it is time 
consuming.
  I have no problem at all, and this bill is not designed to protect 
corporations. It is designed to protect, just as its name states, 
innocent parties. These are people who are joined solely to defeat 
diversity jurisdiction. We are just changing the standard slightly to 
one adopted by the Fifth Circuit Court of Appeals to make it much more 
fair to these innocent parties.
  Mr. Chairman, I reserve the balance of my time.
  Mr. RASKIN. Mr. Chairman, I yield 3 minutes to the distinguished 
gentleman from Georgia (Mr. Johnson).
  Mr. JOHNSON of Georgia. Mr. Chairman, I thank the gentleman from 
Maryland for yielding me the time.
  Mr. Chairman, I rise in opposition to H.R. 725, the so-called 
Innocent Party Protection Act of 2017. This cynically misnamed bill is 
a Republican Party effort to coddle and protect their corporate 
wrongdoing supporters by making it harder for injured victims to sue 
the corporation in State court. A more accurate name for the Innocent 
Party Protection Act actually would be the Corporate Wrongdoer 
Protection Act.
  Make no mistake about it, Mr. Chairman, this bill is my Republican 
friends' attempt to--it is clear whom they are working for. They refer 
to corporate wrongdoers as innocent parties. If some day you or your 
loved one are injured or harmed due to the negligence or intentional 
act of others, you have the option to sue in State or Federal court 
based on the residence of the wrongdoers. However, if your case should 
be removed to Federal court upon a motion by one of the defendants, as 
a plaintiff, there are grounds upon which you could have the case 
remanded back to the State court.
  Republicans want to call this fraudulent joinder. However, a decision 
to sue all of the wrongdoers in your State court is not fraud. Instead, 
it is a legal practice dating back over 100 years which provides 
balance and prevents more powerful interests from choosing which court 
the case can be heard. They want to stack the deck.

  For example, if it was your grandmother who was physically neglected 
or sexually assaulted at a nursing home, you would not only seek 
criminal charges against the wrongdoer, but you would want to file a 
lawsuit against both the individual attacker and the company that 
negligently hired, trained, or failed to adequately supervise the 
perpetrator under their employ.
  By the way, it is becoming increasingly common for nursing homes to 
be owned by large conglomerates or out-of-State hedge funds. Under 
current law, you have the right to sue in State court, but rather than 
going all the way to Federal court in the State the corporation is 
based, you have the option to stay near your home in State court. H.R. 
725 would do away with that option by giving the corporate wrongdoer 
the ability to keep the case in Federal court, thus unfairly increasing 
the burden on innocent victims and making it less likely for the 
smaller party to sue in the first place.
  Mr. Chairman, I ask my colleagues to oppose this bill.
  Mr. FARENTHOLD. Mr. Chairman, in the gentleman from Georgia's 
example, this bill wouldn't apply at all. If my grandmother were 
assaulted in a nursing home, I would certainly sue the nursing home 
company. I would also join the person who actually did it who most 
likely definitely will be a resident of the State that the lawsuit was 
going in. There would clearly be a plausible cause of action against 
that tortfeasor.
  Mr. Chairman, I didn't practice personal injury law. I was an 
agriculture lawyer. But this would be an easy case for me to prove in 
his example. We are not trying to protect anybody who has done 
something wrong. We are trying to protect people who are joined into a 
lawsuit solely for the purpose of forum shopping.
  Mr. Chairman, I reserve the balance of my time.
  Mr. RASKIN. Mr. Chairman, I yield myself such time as I may consume.
  Mr. Chairman, I think that we are actually progressing in our 
discussion of the issue because we presently have a law against 
fraudulent joinder. They simply want to make it far more difficult for 
plaintiffs to get justice in State courts. The law already makes it 
impossible to fraudulently join someone.
  So in the case offered by the distinguished gentleman from Georgia, I 
could very much see an out-of-State corporate behemoth that owns 
nursing homes across the country saying that all of this should be in 
Federal court because the person who actually committed the sexual 
assault instate is judgment-proof because they don't have any money and 
that is not really a plausible opportunity to recover, and, therefore, 
it should stay in Federal court.
  The grand irony here, Mr. Chairman, is that the party which sings 
lullabies about federalism and states' rights is in the business of 
stripping our State courts and our people of the opportunity to get 
into State court. All of this is about forcing everybody into Federal 
court. I remember a President who recently said in his inaugural 
address that the whole sum and substance of his administration is to 
give power back to the States and back to the people, but this 
legislation is designed to wreck federalism and to force everybody into 
Federal court where the big corporate defendants and the fancy lawyers 
have every conceivable advantage over people who are just trying to get 
justice when they have been injured in their State.
  Mr. Chairman, the substantive issues at stake here are obviously 
complex, and I would invite all Americans to try to research what is 
going on. But if you don't have the time to actually study the more 
than a century in which we have had current fraudulent joinder rules 
and you don't have time to go and examine the bill as submitted by the 
majority, then just consider the procedure that has gotten us to this 
point.
  There has been no hearing on this bill, there has been no call for 
this bill by anybody who has been injured in a civil tort case, and all 
of the groups that try to stand up for citizens against the largest 
corporations who are bankrolled by billions of dollars and are trying 
to force everybody these days into arbitration and to shut the 
courthouse door, all of those groups are opposed to the legislation 
because they understand what it is going to do.
  It is going to make it far more difficult for people to prosecute 
civil

[[Page H1972]]

claims when they have been injured in something like a sexual 
harassment case, a sexual violence case, a discrimination case, an 
asbestos poisoning case, or a mass toxic tort. It is going to be far 
more difficult for people to get justice in their State courts.
  Apparently, the interests of the large corporate polluters and 
inflictors of injuries--tortfeasors--are so important that we are 
willing to trample the basic principles of our constitutional design 
which is that these kinds of cases go into State court for State 
resolution, we reserve the Federal courts for complicated questions of 
Federal law and real cases of diversity jurisdiction, not phony cases 
of diversity jurisdiction where they try to eliminate the instate 
defendant, but real cases of diversity jurisdiction where nobody else 
is involved.
  Mr. Chairman, I yield back the balance of my time.
  Mr. FARENTHOLD. Mr. Chairman, I yield myself the balance of my time.
  Mr. Chairman, this really is about trying to stop bringing phony 
cases in. You are bringing phony defendants in, and that is what we are 
trying to stop. We have got to be fair about this.
  It is not often that we have the opportunity to protect innocent 
local folks and businesses from costly and meritless lawsuits. This is 
an opportunity to rein in forum shopping and abuses by trial lawyers 
and hold them to a good faith standard in litigation. We can do that by 
passing a bill that is just a few pages long. That is the opportunity 
we have today.
  All this bill does--all this bill does--is say that innocent, local 
parties--mostly small businesses--can't be added to a lawsuit for forum 
shopping purposes, and it only prohibits this when there is no 
plausible case against these small businesses or the case against them 
isn't brought in good faith.
  Who could argue with that?
  Mr. Chairman, for that reason, I urge all my colleagues to support 
this legislation, and I yield back the balance of my time.
  The Acting CHAIR (Mr. Simpson). All time for general debate has 
expired.
  Pursuant to the rule, the bill shall be considered for amendment 
under the 5-minute rule, and shall be considered as read.
  The text of the bill is as follow:

                                H.R. 725

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Innocent Party Protection 
     Act''.

     SEC. 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).''.

  The Acting CHAIR. No amendment to the bill shall be in order except 
those printed in House Report 115-27. Each such amendment may be 
offered only in the order printed in the report, by a Member designated 
in the report, shall be considered read, shall be debatable for the 
time specified in the report, equally divided and controlled by the 
proponent and an opponent, shall not be subject to amendment, and shall 
not be subject to a demand for division of the question.


                  Amendment No. 1 Offered by Mr. Soto

  The Acting CHAIR. It is now in order to consider amendment No. 1 
printed in House Report 115-27.
  Mr. SOTO. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 3, line 10, strike ``This'' and insert ``Except as 
     otherwise provided in this subsection, this''.
       Page 5, line 4, strike the close quotation mark and the 
     period which follows.
       Page 5, after line 4, insert the following:
       ``(5) This subsection does not apply with respect to a case 
     in which the plaintiff seeks compensation for public health 
     risks, including byproducts of hydraulic fracturing, well 
     stimulation, or any water contamination.''.

  The Acting CHAIR. Pursuant to House Resolution 175, the gentleman 
from Florida (Mr. Soto) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentleman from Florida.
  Mr. SOTO. Mr. Chairman, my amendment would create an exception to 
this bill for instances of public health risks, including byproducts of 
hydraulic fracturing, well stimulation, or any water contamination. 
Fracking, especially in my home State of Florida, is dangerous, and its 
effects can be far-reaching. Just last week, a State senate committee 
voted unanimously to ban the practice in our State, and the bill 
continues to move through.
  Pollution can reach our aquifers that provide drinking water to 
millions. Sometimes concerned citizens must go to court to stop this. 
Access to justice is a fundamental American right, and we must protect 
it. Sometimes in Washington, up is down and right is wrong. This, 
unfortunately, is the case with the so-called Innocent Party Protection 
Act.

                              {time}  1530

  This bill is incredibly harmful to those injured by corporate 
wrongdoers. If someone drinks poisoned water as a result of fracking, 
well stimulation, or general water contamination, this bill will make 
it harder for them to get justice for their injuries. By restricting 
access to State courts, the courts that are closest to the people, this 
bill would deny justice.
  The bill will deny plaintiffs their right to choose a State court 
forum for their claims and will instead allow defendant companies that 
negligently pollute water to drag a case out, which will drive up costs 
and increase burdens for plaintiffs by removing it to Federal court.
  Then, once a case is in Federal court, instead of litigating over the 
merits of the case, the courts will argue over the various requirements 
that this bill establishes. Placing a higher threshold that a plaintiff 
must satisfy to get the case sent back to State court is unnecessary 
and unduly burdensome.
  The amendment I am offering would restore access to justice. It would 
allow people whose water has been contaminated by fracking and related 
activities to seek damages from corporate wrongdoers.
  This amendment isn't just a hypothetical exercise. Here in my hand I 
hold 18 cases involving fracking. They are 18 cases where fracking led 
to injury. In 10 of these cases, plaintiffs sued in State court, 
raising State claims, yet defendants removed the case to Federal court, 
only to have the Federal court remand the cases back to the State due 
to lack of diversity jurisdiction.
  Thus, I hold here 10 cases where a remand back to State court would 
be denied under this bill. If this bill had been enacted, I hold here 
10 cases that would have been denied justice. Four of these 18 
hydraulic fracturing cases are still pending. Will we deny justice for 
these four cases?
  For these plaintiffs and for future plaintiffs, I ask my colleagues 
to vote in favor of this amendment and safeguard justice to all who 
drink water.
  Mr. Chair, I urge support of my amendment, and I reserve the balance 
of my time.

[[Page H1973]]

  

  Mr. FARENTHOLD. Mr. Chairman, I claim the time in opposition.
  The Acting CHAIR. The gentleman from Texas is recognized for 5 
minutes.
  Mr. FARENTHOLD. Mr. Chairman, this amendment should be roundly 
opposed for the simple reason it doesn't protect any victims, but it 
also victimizes local parties in the types of cases covered by the 
amendment.
  The purpose of the underlying bill is to allow judges greater 
discretion to free innocent local parties--that is, innocent people and 
innocent small businesses--from lawsuits when those innocent local 
parties are dragged into a case solely because a plaintiff's attorney 
wants to do some forum shopping.
  These innocent local parties have, at most, an attenuated connection 
to the claims made by the trial lawyer against some national company a 
thousand miles away. These innocent local parties shouldn't have to 
suffer the time, expense, and emotional drain of a lawsuit when the 
plaintiff can't even come up with a plausible claim. The base bill 
protects these innocent local parties from being dragged into a lawsuit 
as a party just to keep the case in State court.
  Now, let's bring in this amendment, which denies the bill's 
protection to innocent local parties adjoined to a lawsuit simply 
because the legal allegations in the case fall into one arbitrary 
category and that one is in another. It is terribly unfair.
  This amendment would allow these things to happen to innocent people 
in the name of allowing trial lawyers to scuttle the hydraulic fracking 
industry through lawsuits. Innocent people are innocent people, and 
they should be protected against being dragged into lawsuits regardless 
of the nature of the case.
  This doesn't deny anybody access to the courts. It protects innocent 
parties from being dragged into a case for forum shopping.
  Every single one of the gentleman's cases will be heard in court. 
They will have their day in court and they will have justice based on 
the facts.
  This bill does not protect wrongdoing corporations. This bill 
protects people who are dragged into a lawsuit strictly for procedural 
purposes.
  Mr. Chairman, I reserve the balance of my time.
  Mr. SOTO. Mr. Chairman, water is not arbitrary. The right to clean 
water is not arbitrary. It is essential. Just ask the plaintiffs in 
these cases. Just ask the people of Flint. Just ask victims of fracking 
across our Nation, which is why we in Florida are looking to ban the 
practice.
  So this isn't just some arbitrary area. This is an essential area 
that is affecting issues right now throughout the Nation.
  Mr. Chairman, I yield to the gentleman from Maryland (Mr. Raskin).
  Mr. RASKIN. Mr. Chairman, the Soto amendment is an excellent 
amendment and I can't see why anybody would oppose it. I can't see, in 
the first instance, why anyone would want to keep the people's cases 
out of the people's courts in their own States.
  It seems as if there is a move somewhere in this Congress that is so 
intent on protecting polluters and the manufacturers of auto defects 
that they are willing to trample our basic principles of federalism and 
invade the proper province of the courts.
  The Soto amendment would exempt from this bill all cases in which the 
plaintiff seeks compensation for public health risks like fracking or 
any other kind of water contamination. Water contamination is 
devastating to our communities regardless of the source, as 
demonstrated by the ongoing Flint water crisis in Michigan.
  This bill makes it easier for large corporations to remove State law 
claims to Federal court, where they think they have got a better chance 
of beating the claims of the small guy. The Soto amendment at least 
would carve out cases where there are public health risks at stake, 
such as those caused by fracking, which has been proven to generate 
earthquakes, well contamination, and the poisoning of local water 
supplies.

  Mr. SOTO. Mr. Chairman, I yield back the balance of my time.
  Mr. FARENTHOLD. Mr. Chairman, I am not going to get sucked into a 
debate of hydraulic fracking. Being from Texas, we might have a whole 
difference of opinion on that.
  But I do want to point out, with respect to this bill, it doesn't 
deny anyone access to courts, it doesn't deny anyone access to justice 
regardless of what claim. I don't think it is fair we take out one 
particular claim or not one particular claim. That seems to go against 
fundamental fairness as well.
  This bill is all about fairness. It is about fairness to keep people 
from being dragged into court solely because a plaintiff's attorney 
needs a local defendant to avoid diversity jurisdiction.
  I oppose this amendment. I urge my colleagues to support this 
amendment and support the underlying bill.
  Mr. Chairman, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Florida (Mr. Soto).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. RASKIN. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Florida will 
be postponed.


               Amendment No. 2 Offered by Mr. Cartwright

  The Acting CHAIR. It is now in order to consider amendment No. 2 
printed in House Report 115-27.
  Mr. CARTWRIGHT. Mr. Chairman, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 5, line 4, strike the close quotation mark and the 
     period which follows.
       Page 5, after line 4, insert the following:
       ``(5) This subsection shall not apply to a case in which 
     the plaintiff seeks compensation resulting from the bad faith 
     of an insurer.''.

  The Acting CHAIR. Pursuant to House Resolution 175, the gentleman 
from Pennsylvania (Mr. Cartwright) and a Member opposed each will 
control 5 minutes.
  The Chair recognizes the gentleman from Pennsylvania.
  Mr. CARTWRIGHT. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, I also oppose this underlying bill, which is why I call 
it, as others have, the wrongdoer protection act for multistate and 
multinational corporations, and for that purpose, I add this amendment.
  It is no coincidence that these corporate wrongdoers want to force 
consumers to fight them in Federal court. That is the effect of this 
bill, to enlarge Federal court diversity jurisdiction.
  It is no coincidence that the corporate wrongdoers want to fight in 
Federal court. It is not because they think the Federal judges are 
better looking or the Federal judges are more polite or the decor in 
the Federal courtrooms is nicer to look at. That is not it all. They 
want to go there because they are more likely to prevail and to beat 
consumers in Federal court. They know that.
  They know that, after a generation of regrettable decisions across 
the street by the Supreme Court of the United States, Federal court has 
become very favorable turf for corporate wrongdoers--generations of bad 
decisions that invite and exhort Federal judges to forget about the 
Seventh Amendment in our Bill of Rights.
  You remember the Seventh Amendment. It was written by James Madison. 
It was announced as approved by Secretary of State Thomas Jefferson, 
whose statue stands right outside this Chamber. It was an amendment 
that says very simply: `` . . . in suits at common law, where the value 
in controversy shall exceed $20, the right of trial by jury shall be 
preserved. . . . `'
  There is nothing ambiguous about that statement. It is not hard to 
understand. It is about how important the right to trial by jury is to 
us here in these United States.
  But since the 1980s, there has been this steady drumbeat of decisions 
from the United States Supreme Court encouraging and emboldening 
Federal court judges to decide and dismiss cases without the trouble of 
a jury trial. Their toolkit is enormous for doing that: motions to 
dismiss, motions for judgment on the pleadings, motions for summary 
judgment, motions for directed verdict, motions for judgment as a 
matter of law.

[[Page H1974]]

  Cases do get thrown out every day in this country without the trouble 
of a jury trial, and the Seventh Amendment right to a jury trial is not 
preserved. That is why wrongdoer corporations prefer to be in the 
Federal court.
  Federal court has become candy land for corporate wrongdoers in this 
country, and this bill helps them stay there and fight consumers in 
Federal court. It changes the law to allow corporate wrongdoers to do 
that.
  I want to give you some very strong reasons, Mr. Chairman, why this 
bill is so bad.
  Number one, it is discriminatory. Unless you are a multistate or 
multinational corporation, this bill doesn't help you. If you are an 
individual sued in State court, this bill does not help you. If you are 
a small-business owner only doing work in your State, this bill does 
not help you. Only multistate, multinational corporations get help from 
this bill, and that is why I call it the wrongdoers protection act for 
multistate and multinational corporations.
  Number two, it is burdensome. The Federal courts are already 
overworked and understaffed. The civil caseload is growing at 12 
percent a year. There are currently 123 vacancies in our Federal 
judiciary. There is no reason to add to this burden by changing the 
law.
  Number three, this bill forces State court cases into Federal court. 
We have a crowd in this House that consistently preaches about states' 
rights and the need to cut back on the Federal Government's reach, but 
a bill like this comes along and they drop that state's rights banner 
like it is a hot potato and pick up the coat of arms of the multistate, 
multinational corporations.
  If you really do care about states' rights, you should be voting 
``no'' on this bill.
  You see, these cases called diversity cases are filed in State court 
under State law. Ever since the 1930s, in the Erie Railroad case, if 
you take these cases and handle them in Federal court, the Federal 
judges are bound by law to follow State law, not Federal law.
  Mr. Chairman, there is nobody better at interpreting and following 
State law than State court judges. It stands to reason.
  I offer this amendment that is at the desk to exempt consumer cases 
against insurance companies for bad faith in insurance practices. If 
the majority is going to persist and present this gift to multistate 
and multinational corporations, at least include this amendment and 
protect consumers trying to fight insurance companies.
  Mr. Chairman, I yield back the balance of my time.
  Mr. FARENTHOLD. Mr. Chair, I claim the time in opposition.
  The Acting CHAIR. The gentleman from Texas is recognized for 5 
minutes.
  Mr. FARENTHOLD. Mr. Chairman, this amendment continues to victimize 
innocent local parties just because they happen to be in an insurance 
case.
  The underlying bill is designed to protect folks from being dragged 
into a lawsuit just to facilitate forum shopping by plaintiffs' 
attorneys.
  The purpose of this bill is to allow judges greater discretion to 
free these innocent local parties. They are the ones that are suffering 
as a result of this.
  This amendment denies the bill's protection to innocent local parties 
joined to a lawsuit simply because the legal allegations in the case 
fall into one arbitrary category rather than another, just like the 
previous amendment. It is terribly unfair. Innocent people are innocent 
people, and they should be protected from being dragged into a lawsuit 
regardless of the nature of the case.
  The rules we have developed in this great country to protect the 
innocent are rules of general application, such as the rules protecting 
people's rights to have their side of the story told and the rules 
protecting people from biased or inaccurate testimony.
  We should all be appalled by the suggestion that these general 
protections designed to protect innocent people from criminal liability 
should be suspended because the case is one of assault and battery or 
murder or somehow relates to insurance. It is the same kind of logic.

                              {time}  1545

  Our country is rightfully proud of its principles providing due 
process and equal protection, but these concepts are meaningless if 
they are only selectively applied to some type of cases and not others. 
And for the same reason, we should all be outraged at the suggestion 
that the rules of fairness, designed to protect the innocent, should be 
suspended in civil law cases because a case involves one particular 
subject matter or another. But that is exactly what this misguided 
amendment does.
  This amendment would allow a plaintiff's lawyer to drag an individual 
insurance adjuster into a lawsuit even when the applicable State law 
makes it absolutely clear that only insurers, not individual people, 
are subject to bad faith claims. How does the sponsor explain this to a 
person like Jack Stout, why a lawyer pulled him into a bad faith 
lawsuit targeting State Farm? Mr. Stout was a local insurance agent who 
merely sold a policy to the plaintiff, met and spoke with the plaintiff 
once, and had nothing to do with processing the plaintiff's homeowner's 
insurance claim. A Federal District Court in Oklahoma found he was 
fraudulently joined and dismissed the claim against him, but under this 
amendment, the innocent person would have been stuck back in the 
lawsuit.
  What about a person like Douglas Bradley, where the plaintiff's 
lawyer named him as a defendant in a bad faith lawsuit against an 
insurer? In that case, the complaint included Mr. Bradley, an insurance 
agent, as a defendant in the caption of the case. It referred to 
defendant, singular, not defendants. Throughout the entire pleadings, 
it didn't even mention his name. A Federal District Court in Indiana 
dismissed this claim against him as fraudulently joined, but under this 
amendment, this innocent person would have been stuck back in the 
lawsuit. It is not fair, it is expensive, and it is emotionally 
draining to these innocent parties.
  For that reason, I urge opposition to the amendment and support of 
the underlying bill.
  Mr. Chairman, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Pennsylvania (Mr. Cartwright).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. CARTWRIGHT. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Pennsylvania 
will be postponed.
  Mr. FARENTHOLD. Mr. Chairman, I move that the Committee do now rise.
  The motion was agreed to.
  Accordingly, the Committee rose; and the Speaker pro tempore (Mr. 
Nunes) having assumed the chair, Mr. Simpson, Acting Chair of the 
Committee of the Whole House on the state of the Union, reported that 
that Committee, having had under consideration the bill (H.R. 725) to 
amend title 28, United States Code, to prevent fraudulent joinder, had 
come to no resolution thereon.

                          ____________________