Triggs v. John Crump Toyota, Inc.

Citations: 154 F.3d 1284; 1998 WL 633673Docket: 97-6584

Court: Court of Appeals for the Eleventh Circuit; September 16, 1998; Federal Appellate Court

Original Court Document: View Document

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The case involves an appeal by David L. Triggs against John Crump Toyota, Inc. and World Omni Financial Corporation concerning a class action fraud suit filed in Alabama state court. Triggs, an Alabama resident, alleges that Crump and other dealerships engaged in a fraudulent scheme by selling cars to Omni at inflated prices, which were then leased to the plaintiff class, thereby passing excess costs onto them. The defendants removed the case to federal court, citing diversity jurisdiction, despite Triggs being a citizen of Alabama like Crump, which normally would negate complete diversity necessary for federal jurisdiction.

The district court found that Crump had been fraudulently joined, asserting that only 371 out of over 17,000 potential class members had dealt with Crump, allowing the court to maintain jurisdiction because complete diversity existed between Triggs and Omni. The court denied Triggs' motion to remand and asserted supplemental jurisdiction over the remaining plaintiffs. This ruling was certified for immediate appeal. The central question on appeal is whether Crump's joinder was fraudulent given that 98% of the class members had no claims against him, despite Triggs potentially holding a claim that could impose joint liability on both defendants. The appeal will review the district court's legal conclusion regarding subject matter jurisdiction and fraudulent joinder, which is subject to de novo review.

Fraudulent joinder is a judicial doctrine that creates an exception to the complete diversity requirement in jurisdiction. It can occur in two primary scenarios: (1) when there is no possibility for the plaintiff to prove a cause of action against a non-diverse (resident) defendant, and (2) when there is outright fraud in the plaintiff's jurisdictional pleadings. A third scenario identified in Tapscott involves joining a diverse defendant with a non-diverse defendant without joint liability or a real connection between their claims. 

In the current case, the focus is on the first and third types of fraudulent joinder, as there is no allegation of outright fraud in the jurisdictional facts. If there is any possibility that a state court might find a cause of action against a resident defendant, the federal court must deem the joinder proper and remand the case to state court. The plaintiff does not need a winning case; merely a potential cause of action suffices. Triggs has presented facts indicating a possible cause of action against Crump, alleging that Crump and Omni defrauded him regarding automobile leases, thus not constituting fraudulent joinder.

Additionally, the joinder of Crump meets the criteria for permissive joinder under Rule 20 of the Federal Rules of Civil Procedure, which allows for the joining of parties if they assert a claim arising from the same transaction and share common questions of law or fact. This principle applies to both the named plaintiff and the putative class members, who claim relief against Omni, Crump, and other unnamed dealers related to the automobile lease transactions, fulfilling the conditions for both defendants and plaintiffs under Rule 20. Notably, Rule 20 allows for parties to be joined without needing to be interested in all relief demanded.

Judgment can be awarded to one or more plaintiffs based on their rights to relief and against one or more defendants based on their liabilities, as per Fed. R. Civ. P. 20. The presence of many members of a putative plaintiff class with no claims against defendant Crump does not prevent his permissive joinder. Defendants argue that Crump's joinder is fraudulent since 98% of the class lacks claims against him, but this argument contradicts established class action rules, which focus on the citizenship of named parties to assess diversity jurisdiction. According to Supreme Tribe of Ben-Hur v. Cauble, diversity jurisdiction can be established if at least one class member is of diverse citizenship from the opposing party, regardless of the citizenship of other unnamed class members. The amended complaint asserts that the named defendants are Texas citizens, establishing necessary diversity. The court emphasizes that considering the citizenship of all class members would undermine the functionality of Rule 23 in diversity cases. The analysis reveals there is not complete diversity, as named plaintiff Triggs is diverse with defendant Omni but not with properly-joined defendant Crump. The court rejects the defendants' argument to look beyond the named plaintiff to bifurcate claims based on potential claims against all defendants. Although precedent exists for bifurcating claims with no logical connection, it does not support the defendants' position regarding fraudulent joinder. The Tapscott case illustrates the separation of claims involving different classes of plaintiffs and defendants, further affirming the court's stance against the defendants' arguments.

The district court severed two classes, remanding the automobile class claims, which lacked diversity, back to state court while retaining the merchant class claims due to complete diversity. The appellate court affirmed this decision, identifying a fraudulent misjoinder because Lowe’s was improperly associated with non-diverse defendants in the automobile class, lacking joint liability and a connection between the controversies. In contrast to Tapscott, the current case involves a single class and a single named plaintiff, Triggs, whose claims against Omni and the Crump dealership involve joint liability. Claims from other putative class members, who dealt with Omni through different dealerships, also arise from similar transactions, establishing a connection among the claims. Thus, there is no justification for bifurcation, as the parties have been properly joined per Rule 20. The court found no persuasive support for bifurcating the plaintiff class, rejecting the precedent set in Arnold v. Ford Motor Co., which involved claims against a non-diverse dealership with no connection to most class members. The court emphasized that under Rule 20, not all plaintiffs need to seek relief from all defendants, and it upheld the principle that only named parties are considered for evaluating complete diversity in class actions. Lastly, the defendants' claim of bad faith against Crump was deemed insufficient to establish fraudulent joinder.

Plaintiff's joinder of defendant Crump is alleged by defendants to be a fraudulent attempt to defeat diversity jurisdiction. They argue that the inclusion of only one dealership, among many, indicates bad faith. However, this assertion is rejected, as the district court determined that Crump was not fraudulently joined when considering the named plaintiff alone. Defendants' argument lacks logical support, given that the plaintiff might have valid reasons for not joining other dealerships, such as needing further discovery or the fact that other dealerships are likely also citizens of Alabama. Consequently, the absence of complete diversity means federal courts lack jurisdiction in this case. The court reverses the district court's judgment and remands the case to Alabama state court. Additionally, defendants' claims regarding procedural defects in the removal process and the timeliness of the plaintiff's appeal are dismissed as meritless; the motion to remand was timely filed based on the lack of subject matter jurisdiction, and the appeal was properly perfected after the district court’s reconsideration.