Law Center Professor Lonny Hoffman speaks against the Fraudulent Joinder Prevention Act of 2015.
Sept. 30, 2015 – University of Houston Law Center Professor Lonny Hoffman testified Tuesday by invitation before the U.S. House of Representatives Judiciary Committee regarding a new bill called the Fraudulent Joinder Prevention Act of 2015.
Federal jurisdiction exists when a dispute involves a controversy between citizens of different states. This is known as diversity jurisdiction, Hoffman explained. While the Constitution does not require that there be complete diversity of citizenship (which is to say, for everyone on the plaintiff’s side to be from a different place from everyone on the defense side), in an early case the U.S. Supreme Court confined the federal judiciary’s jurisdiction to cases in which there is “complete diversity.”
If a plaintiff names a non-diverse defendant, the defendant may argue that the joinder of the non-diverse defendant was improper—that the reason the non-diverse defendant was joined was to keep the case out of federal court. Under the current law, the defendant bears a pretty heavy burden of proving that the joinder was improper.
The proposed bill, the Fraudulent Joinder Protection Act, would replace the existing common law fraudulent joinder test with a statutory test. The new test would shift the burden from the defendant to the plaintiff to prove that her claims against the non-diverse defendant are legitimate enough to justify considering the defendant properly joined. The bill would also change the current test, so that under the proposed new test, the plaintiff would have to show that her claims are "plausible" and that they were brought in "good faith." Overall, the bill would make proving fraudulent joinder much easier than it is under current law.
Professor Hoffman testified against the bill. A video link to the entire hearing can be found here: http://judiciary.house.gov/index.cfm/hearings?ID=8AA79FD0-EA3E-4146-B9AD-8A2E940F48A9
Witnesses who testified on behalf of the bill were Elizabeth Milito Senior Executive Counsel NFIB Small Business Legal Center, and Cary Silverman Partner, Shook, Hardy & Bacon LLP.
Tuesday’s appearance was Hoffman’s third before the House Judiciary Committee.