Blake Farenthold: “Since this bill was marked up in the last Congress, the very same plausibility standard used in this bill was adopted by…”

“Since this bill was marked up in the last Congress, the very same plausibility standard used in this bill was adopted by the Federal Circuit Court of Appeals in which fraudulent joinder cases arise with the greatest frequency. Last Congress, Ranking Member Conyers said of the bill, it should simply pick one of the existing articulations in the fraudulent joinder standard and codify that into law. At the time, the plausibility approach was applied by some district courts, but just last year, the Fifth Circuit Court of Appeals adopted the same plausibility standard this bill contains in a case called International Energy. The Fifth Circuit stated: We must consider whether the plaintiff pleaded ``enough facts to state a claim to relieve that is plausible on its face.'' The plaintiff in that case petitioned for rehearing en banc, but the rehearing was denied, with not a single judge on the Fifth Circuit requesting a vote. In just the last year, district courts in the Fifth Circuit have issued more than 40 fraudulent joinder decisions without much difficulty and with the results that indicate just the sort of reasonable reform that would occur nationwide when we get this bill passed into law. So this is about making the system work and opening the door to the Federal courts so companies from foreign states are not unfairly, potentially disadvantaged. The other piece of this that is easy to neglect is the local defendant.…”