This bill would change the process federal courts use to determine whether a case should be removed from a state court to a federal court because the parties to the suit are citizens of different states. It aims to make it easier for federal judges to release local defendants from a lawsuit that they’ve been added to through “fraudulent joinder” if it’s not plausible to conclude that state law would’ve held them liable or if the plaintiff doesn’t have a good-faith intention to seek a judgement against the defendant. Fraudulent joinder refers to the improper addition of defendants to a lawsuit in order to keep the case in state courts that may be more friendly to the plaintiffs claims.
The addition of a defendant would be classified as fraudulent joinder if the court finds that:
Actual fraud in the pleading of jurisdictional facts with respect to the defendant;
State law wouldn’t plausibly hold the defendant liable;
State or federal law bars all claims in the complaint against that defendant;
No good faith intention to prosecute the action against that defendant or to seek a joint judgment which includes that defendant.
In determining whether to grant or deny the motion to remand the case back to state court, the federal court may allow pleadings to be amended and must consider the pleadings, affidavits, and other evidence submitted by the parties to the case. A federal court finding that defendants have been fraudulently joined to the case must dismiss without prejudice claims against those defendants and deny the motion to remand.