Small Business Cheers Bill to Prevent Court Shopping

Date: February 25, 2016

Related Content: Press Release Legal National

Contact: Kelly Klass, 609-713-4243

NFIB supports the Fraudulent Joinder
Prevention Act that the U.S. House of Representatives will vote on this
afternoon

Washington, DC
(February 25, 2016)
The National
Federation of Independent Business (NFIB)
is urging bipartisan support today
as the U.S. House of Representatives votes on H.R. 3624, the “Fraudulent
Joinder Prevention Act of 2015.” This legislation would prevent plaintiff’s
attorneys from dragging innocent small businesses into costly legal battles
simply for the purpose of avoiding federal courts where defendants might get a
more fair hearing.

“In these cases small business owners are essentially
treated as hostages for plaintiffs seeking to avoid removal to federal court,”
said NFIB Senior Counsel Elizabeth
Milito.
  “Fraudulent joinder causes
small business victims to incur exorbitant legal bills. It is essential that
judges should be able to reject attempts to include defendants that have
nothing to do with the proceedings.”

When a lawsuit is filed in state court against an
out-of-state business, the defendant has a constitutional right to remove the
case to federal court to ensure a neutral and fair venue. But in an effort to block
removal, plaintiff’s attorneys often seek to join an in-state defendant with no
real connection to the complaint.  These
“in-state defendants” are often small business owners. For instance, a plaintiff’s
attorney might target a local hardware store or pharmacy just to have a hook to
remain in state courts, while its ultimate objective is to obtain a judgment
against an out-of-state manufacturer or pharmaceutical company. Regardless of
whether the small business defendant has anything to do with the case, they are
dragged in to the proceedings by plaintiff’s counsel in a blatant effort to
avoid review in federal court.

The Fraudulent Joinder Prevention Act would provide a
uniform standard by which a federal judge would evaluate whether a defendant is
joined into litigation solely to cherry pick a favorable jurisdiction.  The federal court would determine whether the
plaintiff’s allegation against the defendant is legitimate and consider if he
or she has a good-faith intention for prosecuting the action or seeking
judgement against the defendant.    

“This bill is straightforward and offers a simple and
commonsense fix for a problem that has generated much confusion and unnecessary
litigation in federal courts at the expense of small business,” Milito
continued. “We believe that The Fraudulent Joinder Prevention Act strikes the
appropriate balance to protect those who are truly harmed and the many
unreported victims of our nation’s civil justice system – America’s small
businesses.”

Elizabeth Milito previously testified in front of the House
Judiciary Committee on this bill.  To see
Milito’s testimony, please click here.  

###

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