Travis v. Irby, 02-60005.

• Decision Date: 28 March 2003
• Docket Number: No. 02-60005.,02-60005.
• Parties: Mary TRAVIS, Individually, as Administratrix of the Estate of Michael Travis, Deceased, Plaintiff-Appellant, v. Arthur IRBY, Illinois Central Railroad Company, and John Does, 1-10, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

326 F.3d 644

Mary TRAVIS, Individually, as Administratrix of the Estate of Michael Travis, Deceased, Plaintiff-Appellant, v. Arthur IRBY, Illinois Central Railroad Company, and John Does, 1-10, Defendants-Appellees.

No. 02-60005.

United States Court of Appeals, Fifth Circuit.

March 28, 2003.

Anita K. Modak-Truran (argued), John C. Henegan, Sr., Fred Exzell Bourn, III, Butler, Snow, O'Mara, Stevens & Cannada, Jackson, MS, for Plaintiff-Appellant.

Glenn Firld Beckham (argued), Upshaw, Williams, Biggers, Beckham & Riddick, Greenwood, MS, for Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Mississippi.

ON PETITION FOR REHEARING

(Opinion 2003 WL 23102 (Jan. 17, 2003, 5th Cir.2003))

Before DAVIS and BARKSDALE, Circuit Judges, and AFRICK,¹ District Judge.

W. EUGENE DAVIS, Circuit Judge:

We deny the Defendants' motion for rehearing.

In response to their petition for panel rehearing, we substitute the following opinion in place of the opinion as originally issued:

Plaintiff Mary Travis appeals the district court's denial of her Motion to Remand after the defendants removed this case from the Circuit Court of Holmes County, Mississippi, and the district court's dismissal of her claims on summary judgment. Based on our finding that the non-diverse defendant, Arthur Irby, was not fraudulently joined, we vacate and remand.

I.

Michael Travis was killed on May 16, 1997, when his car was struck by a train at the Mileston railroad crossing on Epps Road in Holmes County, Mississippi. Illinois Central Railroad Company ("Illinois Central") owned the train and engineer Arthur Irby operated the train at the time of the fatal accident.

Plaintiff originally filed this action in the Circuit Court of Holmes County against Illinois Central, Irby and John Does 1 through 10, identified only as agents, servants, employees or representatives of Illinois Central. Plaintiff Mary Travis is an adult resident of Madison County, Mississippi, and is the natural mother of Michael Travis, deceased. Defendant Illinois Central is an Illinois corporation registered to do business in the State of Mississippi. Defendant Irby is an adult resident of Leake County, Mississippi.

In her First Amended Complaint filed on December 9, 1997, plaintiff alleged that the defendants, collectively, were negligent for

failing to make a proper and timely application of the brakes of the train, failing to keep a proper and reasonable lookout, failing to properly train the crew of the train, failing to adopt and enforce adequate policies and procedures relating to train operating under similar circumstances, failing to take proper precautions under the circumstances existing, failing to properly mark, warn of, and restrict access to its crossing under dangerous circumstances, and under circumstances where Defendants knew or should have known that such crossing was unreasonably dangerous, and any such other acts or omissions of negligence which will be shown at a trial of this matter.

Discovery did not proceed smoothly in state court. After considerable procedural wrangling and a Motion to Compel, on September 25, 1998, the plaintiff supplemented answers to certain interrogatories. The defendants, contending that those responses established that Defendant Irby was fraudulently joined, removed the action to federal court on October 2, 1998. The district court agreed, dismissed Defendant Irby and the John Doe defendants, and denied a Motion to Remand.

After additional discovery, the defendants filed a Motion for Summary Judgment seeking dismissal of plaintiff's remaining claims against Illinois Central. The district court granted this motion on March 16, 2001, dismissing the case. Plaintiff timely appealed.

II.

The decisive issue in this case is whether the district court erred in denying plaintiff's Motion to Remand based on fraudulent joinder of Defendant Irby.² Fraudulent joinder can be established in two ways: (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Griggs v. State Farm Lloyds, 181 F.3d 694, 698 (5th Cir.1999). The defendants do not dispute that Irby is a Mississippi resident. Accordingly, we focus on the second test.

Neither our circuit nor other circuits have been clear in describing the fraudulent joinder standard. The test has been stated by this court in various terms, even within the same opinion. For example, the Griggs opinion states,

To establish that a non-diverse defendant has been fraudulently joined to defeat diversity, the removing party must prove ... that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the non-diverse defendant in state court.

181 F.3d at 699 (emphasis added; citing Burden v. General Dynamics Corp., 60 F.3d 213, 217 (5th Cir.1995) and Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 259 (5th Cir.1995)). The Griggs opinion later restates that test as follows —

Stated differently, we must determine whether there is any reasonable basis for predicting that [the plaintiff] might be able to establish [the non-diverse defendant's] liability on the pleaded claims in state court.

181 F.3d at 699 (emphasis added; again citing Burden, and Cavallini.) Similarly, in summing up federal law, Moore's Federal Practice states at one point: "To establish fraudulent joinder, a party must demonstrate... the absence of any possibility that the opposing party has stated a claim under state law". 16 Moore's Federal Practice § 107.14[2][c][iv][A] (emphasis added). It then comments: "[T]he ultimate question is whether there is arguably a reasonable basis for predicting that state law might impose liability on the facts involved." Id. (emphasis added.) Although these tests appear dissimilar, "absolutely no possibility" vs. "reasonable basis," we must assume that they are meant to be equivalent because each is presented as a restatement of the other.

Older cases have also used other phrases, but appear to apply the same analysis. E.g., Bobby Jones Garden Apartments, Inc. v. Suleski, 391 F.2d 172, 176 (5th Cir.1968)("no fraudulent joinder unless it be clear that there can be no recovery under the law of the state"); Parks v. New York Times Co., 308 F.2d 474, 476 (5th Cir.1962) (no fraudulent joinder if "probable case in law" (citing Dudley v. Community Public Service Co., 108 F.2d 119, 123 (5th Cir.1939))). An examination of earlier cases reveals that the insertion of "absolutely no" into the possibility test is fairly recent. It was first used in Green v. Amerada Hess with no indication that any change in the law was indicated. 707 F.2d 201, 205 (5th Cir.1983). Cases prior to that time stated the test using "reasonable basis" language without requiring a showing of "absolutely no possibility" of recovery.

[T]he question is whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved. If that possibility exists, a good faith assertion of such an expectancy in a state court is not a sham, is not colorable and is not fraudulent in fact or in law.

Bobby Jones Garden Apartments, 391 F.2d at 176-177 (5th Cir.1968). Before Green, our court had phrased the standard in terms of "no possibility". E.g., B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981) ("the removing party must show ... there is no possibility that the plaintiff would be able to establish a cause of action"(emphasis added)); Parks, 308 F.2d at 477 ("there must be some reasonable basis for believing that there is joint liability. The joinder is fraudulent if its clear that ... the facts asserted ... could not possibly create ... liability ..." (emphasis added)).

Any argument that a gap exists between the "no possibility" and "reasonable basis" of recovery language was recently narrowed, if not closed. Badon v. RJR Nabisco, Inc. held:

Plaintiffs appear to argue that any mere theoretical possibility of recovery under local law — no matter how remote or fanciful — suffices to preclude removal. We reject this contention. As cited authorities reflect, there must at least be arguably a reasonable basis for predicting that state law would allow recovery in order to preclude a finding of fraudulent joinder.

236 F.3d 282, 286 n. 4 (5th Cir.2000) (first emphasis in original). Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co. confirmed this point:

[T]he court determines whether that party has any possibility of recovery against the party whose joinder is questioned. If there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved, then there is no fraudulent joinder. This possibility, however, must be reasonable, not merely theoretical.

313 F.3d 305, 312 (5th Cir.2002)(emphasis added; internal citation and quotations omitted; citing Badon).

Our cases have also noted the similarity of the test for fraudulent joinder and the test for a Rule 12(b)(6) motion alleging failure to state a claim. For instance, Great Plains Trust states that the Rule 12(b)(6) standard is: "[T]he court should not dismiss the claim unless the plaintiff would not be entitled to relief under any set of facts or any possible theory that he could prove consistent with the allegations in the complaint". Id. at 313 (emphasis added; citing Jones v. Greninger, 188 F.3d 322, 324 (5th Cir.1999)). It states the fraudulent joinder standard as: "After all disputed questions of fact and all ambiguities in the controlling state law are resolved in favor of the nonremoving party, the court determines whether that party has any possibility of recovery against the party whose joinder is questioned." Id. at 312. (emphasis added; citing Carriere v. Sears, Roebuck & Co., 893 F.2d 98, 100 (5th Cir.1990)). The above-stated fraudulent joinder standard is, of...