Fraudulent joinder is a legal argument a defendant uses to try to move a lawsuit from state court to federal court, claiming that a co-defendant was added only to keep the case out of federal court. Despite the name, it has nothing to do with actual dishonesty. It’s shorthand for the idea that one defendant in the case has no real business being there, and their presence is a jurisdictional maneuver rather than a genuine claim.
Why the Argument Exists at All
Fraudulent joinder only makes sense against the backdrop of how federal courts take civil cases from state courts. Under federal law, a case originally filed in state court can be moved to federal court when every plaintiff is from a different state than every defendant, and the amount at stake exceeds $75,000.1Office of the Law Revision Counsel. 28 U.S. Code 1332 – Diversity of Citizenship; Amount in Controversy; Costs That’s called complete diversity, and both conditions have to be met.
When they are, a defendant can file a notice of removal and shift the case into federal court. Out-of-state defendants, particularly larger companies, often prefer it there. Federal procedural rules can be more predictable, jury pools draw from a wider geographic area, and some defendants believe federal judges are less inclined toward local plaintiffs. That preference is what makes the choice of courthouse worth fighting over.
One important limit: even when diversity exists, a defendant sued in their own home state cannot remove the case. This is the forum defendant rule.2Office of the Law Revision Counsel. 28 U.S. Code 1441 – Removal of Civil Actions If you’re already at home, the concern about hometown bias against an outsider doesn’t apply.
How Plaintiffs Break Diversity
Because complete diversity is required for removal, a plaintiff who wants to stay in state court has a straightforward move: add a defendant from the same state as the plaintiff. One shared-state defendant is enough to destroy diversity and shut the federal-court door.
Picture an injury from a defective product made by an out-of-state manufacturer. Sue the manufacturer alone, and diversity is complete; the manufacturer can remove. Add the local store that sold the product, and the plaintiff and store share citizenship. The manufacturer is stuck in state court.
Sometimes the claim against that local defendant is genuine. The store may really have contributed to the injury. In other cases, the local party is there almost entirely for jurisdictional reasons, with a claim against them that the plaintiff has little intention of actually pursuing. That kind of defendant is sometimes called a sham defendant. Fraudulent joinder is the argument the out-of-state defendant raises to strip them out and get the case removed anyway.
What the Defendant Has to Prove
The defendant raising fraudulent joinder carries the entire burden, and courts describe it as a heavy one. In one of the most cited decisions on the topic, the Fifth Circuit said the removing party must show “there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the non-diverse defendant in state court.”3Justia Law. Smallwood v. Illinois Central Railroad Company, 342 F.3d 400 Some courts require the showing to be made by clear and convincing evidence.
The word “possibility” carries the weight. The question is not whether the claim against the local defendant is strong or likely to win. It’s whether the claim is impossible. A weak claim with any theoretical footing under state law is enough to defeat the argument.
Two paths lead to a successful fraudulent joinder finding. One is actual fraud in the way the plaintiff pleaded the facts that establish jurisdiction. The other, far more common, is showing that no viable legal theory can support the claim against the local defendant under state law.3Justia Law. Smallwood v. Illinois Central Railroad Company, 342 F.3d 400 That usually means the claim is barred by something clean and definite: an expired statute of limitations, a release the plaintiff already signed, or a legal immunity that shields the local party.
How the Judge Evaluates It
The court starts with the complaint but doesn’t have to stop there. Judges can “pierce the pleadings” and look at outside evidence, such as affidavits and deposition transcripts. This tends to matter when a single, easily proven fact undercuts the plaintiff’s claim against the local party. A defendant might submit an affidavit showing that the doctor never treated the plaintiff or the pharmacist never filled the prescription.3Justia Law. Smallwood v. Illinois Central Railroad Company, 342 F.3d 400
That authority has limits. The court isn’t holding a mini-trial on the merits. It’s making a quick call about whether the local defendant’s role in the case is real or manufactured. Circuits differ on exactly how far a judge can go with outside evidence, but the inquiry stays narrow.
The most consequential feature of the review is the tilt built into it. Disputed facts are read in the plaintiff’s favor. Ambiguities in state law are read in the plaintiff’s favor. If any reasonable interpretation supports the claim against the local defendant, the joinder holds.3Justia Law. Smallwood v. Illinois Central Railroad Company, 342 F.3d 400 The one-sided framework reflects a wider principle: federal courts don’t take cases from state courts unless jurisdiction is unmistakable.
What Happens After the Ruling
Two outcomes are possible, and they lead in opposite directions.
If the court finds the local defendant was fraudulently joined, that defendant is dismissed. Diversity is restored, and the case stays in federal court. The removing defendants get the forum they wanted.
If the court finds the joinder was proper, it grants the plaintiff’s motion to remand. A remand order sends the entire case back to state court.4Office of the Law Revision Counsel. 28 U.S. Code 1447 – Procedure After Removal Generally All defendants go back together, including the out-of-state party that tried to leave.
For plaintiffs, a remand is more than a venue win. The local defendant stays in the case, the plaintiff keeps control over the claims, and the removal effort has consumed the other side’s time and money. For defendants, losing the argument can carry direct financial consequences.
Deadlines That Shape the Fight
The whole exchange runs on a short clock. A defendant who wants to remove must file a notice of removal within 30 days of receiving the complaint.5Office of the Law Revision Counsel. 28 U.S. Code 1446 – Procedure for Removal of Civil Actions Miss the window and the right to remove is generally lost.
There’s also a hard outer limit. In diversity cases, removal is generally prohibited more than one year after the original complaint was filed.5Office of the Law Revision Counsel. 28 U.S. Code 1446 – Procedure for Removal of Civil Actions The rule keeps defendants from removing a case that has already made real progress in state court.
The one-year cap has an exception. If a court finds that the plaintiff deliberately concealed information to prevent removal, the deadline can be extended. This bad-faith exception was codified in 2011 and targets plaintiffs who, for example, hide the true amount in dispute until the year has passed. Ordinary litigation choices, like voluntarily dismissing a party after discovery, don’t count as bad faith.
Timing shapes the joinder strategy directly. A local defendant added at the start forces the out-of-state defendant to challenge the joinder within 30 days or accept state court. A local defendant added later may open a new 30-day removal window for the original defendants, but nothing pushes past the one-year outer boundary except a bad-faith finding.
What It Costs to Lose
Removing a case and losing on fraudulent joinder isn’t just a tactical setback. It can be expensive. When a federal court remands, it has authority to order the removing party to pay the plaintiff’s costs and actual expenses, including attorney fees, that resulted from the removal.4Office of the Law Revision Counsel. 28 U.S. Code 1447 – Procedure After Removal Generally The award is discretionary rather than automatic, but judges use it regularly when the removal lacked a reasonable basis.
Federal Rule of Civil Procedure 11 adds another layer. An attorney signing a removal notice certifies that the filing is supported by existing law and has evidentiary backing. If a court concludes the fraudulent joinder argument was frivolous or filed for an improper purpose, it can sanction the attorney, the firm, or the party responsible, and the sanctions can include the other side’s attorney fees and litigation costs.6Legal Information Institute. Federal Rules of Civil Procedure Rule 11 – Signing Pleadings, Motions, and Other Papers; Representations to the Court; Sanctions
Rule 11 does provide a 21-day window to withdraw a challenged filing before a sanctions motion goes to the judge.6Legal Information Institute. Federal Rules of Civil Procedure Rule 11 – Signing Pleadings, Motions, and Other Papers; Representations to the Court; Sanctions A defendant who recognizes partway through that the fraudulent joinder position won’t hold can consent to remand and step out of the sanctions risk. Push a weak argument to a ruling, and the exposure is real.