We're taking a timeout from our summer reading parade of baggy 19th Century novels. After gorging ourselves on Dickens, Dostoyevsky, Thackeray, Trollope, and Tolstoy, it was time for a palate cleanser. We kept Anna Karenina on the sideboard and picked up a slim volume of Bertrand Russell's essays.
Analytic philosophy always left us cold. Perhaps we were simply too stupid and impatient in our college days. Perhaps that "perhaps" was misplaced. Now we opened Russell's essays with guarded expectations. To our pleasant surprise, Russell was warm and witty. There was a lot more than icy theory in these pages. Russell occupied the public arena as well as the ivory tower. The British government jailed Russell during World War I for his pacifism. Interestingly, Russell looked back on his incarceration as a period of great productivity. He also stuck to his non-guns, arguing that if Great Britain had stayed out of the war and permitted a quick Kaiser victory, the 20th Century might have been spared the scourges of Lenin, Stalin, and Hitler.
Many of Russell's essays are "portraits from memory" of some of his era's great figures: G.B. Shaw, H.G. Wells, D.H. Lawrence, Joseph Conrad, George Santayana, Ludwig Wittgenstein, etc. Russell's era was long, indeed. He was born in 1872 and died in 1970. Russell's parents perished when he was young, so he was raised by his grandparents. His grandfather had been Prime Minister twice and had met Napoleon. (It is hard to think of an American equivalent. As a lawyer, we naturally think of Oliver Wendell Holmes, who shook hands with both John Quincy Adams and John F. Kennedy.)
We enjoyed our visit with Russell and recommend his company to any of you. Russell was a man of extraordinary talents and virtues. He was intelligent. He was honest. He was self-critical. Most refreshing of all to us, he was concise and clear.
Accordingly, it was our hope today to turn to a concise and clear case. Would you accept one out of two? Kline v. Mentor Worldwide LLC et al., 2019 WL 3245102 (July 19, 2019), is a short case (the very name of the plaintiff would seem to promise that) but hardly clear. Four plaintiffs sued three companies for injuries allegedly caused by breast implants. The lawsuit was filed in state court in Sacramento, though only one of the plaintiffs was a citizen of California. We'd call the other three plaintiffs litigation tourists, but we've never considered Sacramento to be a tourist destination. Whether one wants amusing diversions or generous juries, Los Angeles or the Bay Area are more inviting places for plaintiffs. (Plus, after watching “I'll Be Gone in the Dark,” the HBO series about the Golden State Killer, who did much of his killing in the Sacramento area, does Sacramento really seem very appealing? Then again, San Francisco had Zodiac, and LA had Manson, the Hillside Strangler, and the Night Stalker … and now we are walking down a dark True Crime alley.)
Whatever the reason for the plaintiffs' decision to file the case in Sacramento, the defendants removed the case to federal court. But there was a problem. Actually, there were two problems. First, one of the defendants shared citizenship with the sole California plaintiff, thereby destroying diversity. Second, another of the defendants shared Pennsylvania citizenship with one of the plaintiffs. Was the Kline case headed for swift remand?
In the end, the answer is Yes.
The defendants argued that the California defendant was fraudulently joined. It was a mere holding company and had nothing to do with the manufacture or sale of the breast implants at issue. Further, the defendants argued that the plaintiffs' cases – certainly the California and Pennsylvania plaintiffs' cases – should be severed. In a sense, what we have in Kline is a case with both plaintiffs and defendants who have been improperly joined. The Kline court addressed the fraudulently joined defendant, but decided not to address the severance issue. Before we talk about what that means, let's talk about how the Kline court got to that result.
It is hard for a defendant to win a fraudulent joinder argument. The Kline court recognized a "general presumption against a finding of fraudulent joinder." It also held that "a removing party must prove by clear and convincing evidence that joinder was fraudulent" and that the district court must remand if there is a “non-fanciful possibility” of stating a claim against the non-diverse defendant. (Compare that to the Seventh Circuit's “any reasonable probability of success” standard about which we wrote last week and which seems more forgiving in theory, if not in practice.)
As if that isn't hard enough, a C.D. Cal. judge in a similar case had held that the selfsame alleged holding company had not been fraudulently joined. That is what we in the biz call a bad precedent. Nevertheless, the defendant prevailed on its fraudulent joinder argument in Kline because it presented a strong evidentiary record, consisting of affidavits and deposition testimony to the effect that the California company had ownership interests but no business activity. The earlier court did not have such an evidentiary feast placed before it. The most awkward fact for the holding company defendant was its filing with the California Secretary of State that it was engaged in the "Manufacture of Silicon Products." Oops. But the sworn statements submitted by the defendant established that the filing was a mere clerical error. The plaintiffs offered skepticism, but no contrary evidence. The one-sided presentation meant that the defendants had met their heavy burden for fraudulent joinder. The plaintiffs could not muster any "non-fanciful possibility" claim against the non-manufacturing/non-selling defendant, so that defendant had to be dropped from the case. Kudos to the defense side for learning from the earlier case and improving the state of the evidence. Facts might be stubborn things, but factual records need not be.
We still did not have federal diversity jurisdiction in Kline, because Pennsylvania citizens sat on both sides of the v. The defendants, quite rightly in our view, contended that the various plaintiffs should be severed because they were improperly joined under Federal Rule of Civil Procedure 20 and no plaintiff was necessary and indispensable under Rule 19. It is not as if the plaintiffs had anything to do with each other. They weren't involved in the same transaction, event, or occurrence. It is not as if they were all victims of the same bus crash. This analysis seems perfectly obvious to us. The logic is clear. If Bertrand Russell had extended his lifespan a mere 50 years, we feel sure he'd be with us on this point. But alas, Russell is dead and so is logic in California. Several federal courts in California had decided that California state courts were competent to decide the severance issue on remand. That is what happened in Kline. The court in Kline remanded the case, muttering (at least, that is how we read it) that "[i]t does not appear that doing so will frustrate defendant's statutory right if removal in the event that the state should subsequently sever [our copy said "severe," which is almost a Freudian slip] plaintiffs' claims." Really? Why is fraudulent joinder of defendants a federal issue, but misjoinder of plaintiffs is a state issue? How can it serve judicial economy to remand a case that must come back to federal court if the state judge is sentient and/or fair?
And just like that, we have been ousted from Russell's analytic philosophy and hurled back into Dickens, where the law is — well, you know.
Originally published by Reed Smith, August 2020
This article is presented for informational purposes only and is not intended to constitute legal advice.