Erroneous Removal as a Tool for Silent Tort Reform: An Empirical Analysis of Fee Awards and Fraudulent Joinder
39 Pages Posted: 16 Dec 2007 Last revised: 10 Feb 2009
By erroneously removing cases to federal court, defendants impose a cost (in time and money) on plaintiffs and the court system. If borderline cases are removed by defendants for precisely this purpose, defendants would be able to effect tort reform without needing new Congressional legislation. Using remand rates to measure erroneous removal, this paper finds that the remand rate for diversity cases has significantly changed over time: doubling between the years 1988 and 2000, but sharply declining to the historical level thereafter.
Two hypotheses are studied to explain the fluctuation in the remand rate. First, were the changes to the removal statute in 1988 -- authority to impose higher fee awards and elimination of the bond posting requirement -- responsible for the uptick in the likelihood of remand during the 1990s and the sharp decline after 2000? Second, could doctrinal differences between circuit courts -- in how they awarded fees and analyzed fraudulent joinder arguments -- explain both the differences between the circuits and the fluctuation in the remand rate?
Two empirical findings stand out. First, diversity cases removed on the basis of fraudulent joinder arguments are much more likely to be remanded than other similar cases. This provides an opportunity for defendants to abuse the doctrine, if not constrained by courts. Second, the identity of the removing defendant -- individual, corporation, or other -- does not matter as much as the identity of the plaintiff. All types of defendants are more likely to erroneously remove a case against an individual plaintiff, perhaps because such plaintiffs suffer more from delay and added cost than would the average corporate plaintiff.
Keywords: civil procedure, jurisdiction, removal, remand, fraudulent joinder, federal courts, torts, empirical analysis, regression
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