Tuesday, October 29, 2019

Texas Decision Highlights “Fraudulent Joinder” and the Need for an Independent Claim

Texas Decision Highlights “Fraudulent Joinder” and the Need for an Independent Claim

A recent (and short) decision from Texas illustrates the rules with respect to “fraudulent joinder” and diversity jurisdiction. In doing so, it makes clear that a plaintiff must have an independent cause of action against each defendant. Hopkins v. Family Dollar Stores of Texas, L.L.C., Civ. Act. No. 2:19-CV-243, 2019 WL 5293488 (S.D. Tx Oct. 18, 2019).

One basis on which a suit may proceed in federal court is that there is “diversity jurisdiction” under 28 U.S.C. 1332. In order for diversity to exist, not only must the suit seek damages exceeding $75,000, but as well no defendant may have the same citizenship as does any plaintiff. In this decision, the court found that it could ignore the citizenship of one of the defendants because she had been “fraudulently joined.”

The plaintiff, Hopkins, alleged a suit based upon a slip and fall in a Family Dollar Store. She named not only the LLC that owned and operated the store, but also Linda Wright, a Texas citizen who was the store manager. After Hopkins filed her suit in state court, Family Dollar removed it to federal court. The subject of this opinion was Hopkin’s effort to have this suit returned (“remanded’) to the state court in which she had filed it, apparently believing that to be a court system that would be more favorable to her claim.

She alleged that as she is a Texas citizen, and so is Wright, diversity jurisdiction did not exist. That determination would be rejected by the court, and remand was denied. One basis by which a person can be found to be fraudulently joined to a suit is where the plaintiff has no cause of action against them. In this instance, while Hopkins named Wright as a defendant, she failed to identify any basis for a claim against her. Rather, the court wrote that Wright had no duty to Hopkins “separate and apart from her employment and role as manager in control of the store at the time of the events of the lawsuit.” Applying the law to these facts:

In Texas, individual liability against an employee arises only when the employee owes an independent duty of reasonable care to the injured party apart from the employer’s duty of care. …. Because Plaintiff has not alleged facts to implicate a breach of duty by the store employees separate and apart from the duty owed by the store, Linda Wright was improperly joined. Her non-diverse Texas citizenship does not destroy diversity.

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