[Congressional Record Volume 163, Number 42 (Friday, March 10, 2017)]
[Extensions of Remarks]
[Page E313]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]





                     INNOCENT PARTY PROTECTION ACT

                                 ______
                                 

                               speech of

                        HON. SHEILA JACKSON LEE

                                of texas

                    in the house of representatives

                        Thursday, March 9, 2017

       The House in Committee of the Whole House on the state of 
     the Union had under consideration the bill (H.R. 725) to 
     amend title 28, United States Code, to prevent fraudulent 
     joinder:

  Ms. JACKSON LEE. Mr. chair, I rise in strong opposition to H.R. 725, 
the Innocent Party Protection Act of 2017.
  H.R. 725 is the latest Republican effort to deny plaintiffs access to 
the forum of their choice and, possibly, to their day in court.
  H.R. 725 seeks to overturn longstanding precedent in favor of a vague 
and unnecessary test that forces state cases into federal court when 
they do not belong there, and gives large corporate defendants an 
unfair advantage to cherry-pick their forum without the normal burden 
of proving proper jurisdiction.
  This bill would upend long established law in the area of federal 
court jurisicliction, specifically addressing the supposed overuse of 
fraudulent joinder to defeat complete diversity jurisdiction in a case.
  It was previously known as the Fraudulent Joinder Prevention Act; 
however, this bill is not about fraud.
  It is a corporate forum-shopping bill that would allow corporations 
to move cases properly brought in state courts into federal courts.
  If enacted this bill would tip the scales of justice in favor of 
corporate defendants and make it more difficult for injured plaintiffs 
to bring their state claims in state court.
  Corporate defendants support this bill because they prefer to 
litigate in federal court, which usually results in less diverse 
jurors, more expensive proceedings, longer wait times for trials, and 
stricter limits on discovery.
  For plaintiffs, who are supposed to be able to choose their forums, 
this legislation would result in additional time, expense, and 
inconvenience for the plaintiff and witnesses.
  H.R. 725 would effectively eliminate the local defendant exception to 
diversity jurisdiction under 28 U.S.C. 1441(b)(2), which currently 
prohibits removal to federal court even when there is complete 
diversity when a defendant is a citizen of the state in which the 
action is brought.
  The current standard used by courts to determine whether the joinder 
of a non-diverse defendant is improper, however, has been in place for 
a century, and no evidence has been put forth demonstrating that this 
standard is not working.
  Rather, the Fraudulent Joinder Doctrine, is a well-established legal 
doctrine providing that: fraudulent joinder will only be found if the 
defendant establishes that the joinder of the diversity-destroying 
party in the state court action was made without a reasonable basis of 
proving any liability against that party.
  There is no evidence that federal courts are not already properly 
handling allegations of so-called fraudulent joinder after removal 
under current laws.
  H.R. 725 reverses this longstanding policy by imposing new 
requirements on federal courts considering remand motions where a case 
is before the court solely on diversity grounds.
  Specifically, it changes the test for showing improper joinder from a 
one-part test, (no possibility of a claim against a nondiverse 
defendant) to a complicated four-part test, requiring the court to find 
fraudulent joinder if:
  1) There is not a plausible claim for relief against each nondiverse 
defendant;
  2) There is objective evidence that clearly demonstrates no good 
faith intention to prosecute the action against each defendant or 
intention to seek a joint judgment;
  3) There is federal or state law that clearly bars claims against the 
nondiverse defendants; or
  4) There is actual fraud in the pleading of jurisdictional facts.
  What should be a simple procedural question for the courts, now 
becomes a protracted mini-trial, giving an unfair advantage to the 
defendants (not available under current law) by allowing defendants to 
engage the court on the merits of their position.
  By requiring litigation on the merits at a nascent jurisdictional 
stage of litigation based on vague, undefined, and subjective standards 
like plausibility and good faith intention, and by potentially placing 
the burden of proof on the plaintiff, this bill will increase the 
complexity and costs surrounding litigation of state law claims in 
federal court and potentially dissuade plaintiffs from pursuing 
otherwise meritorious claims.
  Further, taking away a defendant's responsibility to prove that 
federal jurisdiction over a state case is indeed proper alters the 
fundamental precept that a party seeking removal should bear the heavy 
burden of establishing federal court jurisdiction.
  The bill is a win-win for corporate defendants.
  At its most harmful, it will cause non diverse defendants to be 
improperly dismissed from the lawsuit.
  At its least harmful, it will cause an expensive, time-consuming 
detour through federal courts for plaintiffs.
  Wrongdoers would not be held accountable for the harm they cause, 
while the taxpayers ultimately foot the bill.
  For example: large corporate defendants (i.e. typically the diverse 
defendants) would be favored by the bill because, if the nondiverse 
defendant is dismissed from the case, they can blame the now-absent in-
state defendant for the plaintiff's injuries.
  Smaller nondiverse defendants would also be favored because the 
diverse defendant does all the work for them.
  The diverse defendant removes the case to federal court and then 
argues that the nondiverse defendant is improperly joined.
  If the federal court retains jurisdiction, the nondiverse defendant 
must be dismissed from the case.
  If one or more defendants are dismissed from the case, it is easy for 
the remaining defendant to finger point and blame the absent defendant 
for the plaintiff's injuries.
  Even if a federal court remands the case to state court under the 
bill, the defendants have successfully forced the plaintiff to expend 
their limited resources on a baseless, time-consuming motion on a 
preliminary matter.
  While large corporate defendants can easily accommodate such costs, 
plaintiffs (i.e. injured consumers, patients and workers) cannot.
  Regardless of whether the case is remanded to state court or stays in 
federal court, this new, mandated inquiry will be a drain on the 
limited resources of federal courts.
  By mandating a full merits-inquiry on a procedural motion, H.R. 725 
is expensive, time-consuming, and wasteful use of judicial resources.
  The bill would result in needless micromanagement of federal courts 
and a waste of judicial resources.
  Lastly, by seeking to favor federal courts over state courts as 
forums for deciding state law claims, this bill offends the principles 
of federalism.
  While it purports to fix a non-existent problem, it creates problems 
itself.
  The ability of state courts to function independently of federal 
courts' procedural analysis is a necessary function of the success of 
the American judiciary branch.
  For these reasons, I urge my colleagues to join me in opposing the 
underlying legislation, H.R. 725, the dubiously named, Innocent Party 
Protection Act of 2017.

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