Section 1447(e) Grants the District Court Discretion for Joinder of Non-Diverse Parties
(December 2009) By Lydia S. Hu, Esquire
For more information, contact Paul Farquharson.
Achumba v. American Honda Motor Company,
2009 WL 4730506 (D. Md. December 1, 2009) (Slip Op.)
The Honorable Judge Titus for the United States District
Court for the District of Maryland held that joinder of a non-diverse Defendant
after a successful removal based on diversity jurisdiction was not supported by
equitable considerations and denied Plaintiffs' Motion to Amend the Complaint.
An action filed in state court can be removed to federal
court when no parties share the same state citizenship and the amount in
controversy is greater than $75,000.00. Sometimes during the course of
litigation, a non-diverse defendant will be added to the federal action. When
this happens, 28 U.S.C. § 1447(e) allows the district court to either (1) allow
the joinder of the non-diverse party and remand the action the state court, or
(2) deny the joinder and keep the action in federal court.
Title 28 U.S.C. § 1447(e) provides:
If after removal the plaintiff seeks to join additional
defendants whose joinder would destroy subject matter jurisdiction, the court
may deny joinder, or permit joinder and remand the action to the State court.
In exercising its discretionary powers, the district court
must consider equitable factors. These factors include: the extent to which the
purpose of the joinder is to defeat federal jurisdiction, whether the Plaintiff
has been dilatory in asking for amendment, whether the Plaintiff will be
significantly injured if amendment is not allowed, and any other factors bearing
on the equities.
In this case, the facts suggested that the predominant
purpose behind Plaintiffs' request to join the non-diverse Defendant was to
destroy diversity. This case originated in the Circuit Court for Prince George's
County and the Defendants removed on diversity grounds. Plaintiffs filed a
motion to remand, and Defendants opposed and requested discovery concerning
jurisdictional issues. The Court granted Defendants' motion on October 16, 2009
and permitted discovery. On November 12, 2009, Plaintiffs moved to amend their
Complaint to add non-diverse Defendants and stay jurisdictional discovery.
"Plaintiffs filed their motion less than one month after the Court's Order
granting Defendants jurisdictional discovery, and less than one month before
scheduled depositions." Moreover, Plaintiffs failed to articulate reasons as to
why the additional non-diverse Defendants were important or necessary.
Second, the Plaintiffs delayed in requesting to amend their
Complaint. The Plaintiffs stated that they discovered the non-diverse defendants
during their ongoing investigation. However, they failed to explain why the
non-diverse Defendants were not named in the original Complaint.
Third, Plaintiffs would not be prejudiced by denying the
amendment. Plaintiffs admitted they are not introducing any new legal theories;
rather, they are merely adding a non-diverse party who may be additionally
liable under already alleged claims. Plaintiffs can still obtain complete relief
from the real parties in interest who are already named in the suit.
Lastly, Defendants will be prejudiced by amending the
Complaint to allow the joinder of a non-diverse Defendant. Defendants had
already expended time and resources on removal and jurisdictional discovery,
including filing numerous motions and briefs and subpoenaing witnesses for
depositions scheduled for December 4, 2009. Also, the federal court had invested
significant time and resources.
Accordingly, the District Court denied Plaintiffs' Motion to
Amend the Complaint and join non-diverse Defendants.
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