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The fraudulent joinder concept arises when a plaintiff has included a non-diverse defendant in the case — thus defeating diversity jurisdiction — when there is no basis for that non-diverse defendant to have been named. This doctrine comes into play when a state-court action is removed to federal court and the plaintiff seeks remand asserting no diversity. Occasionally — though not often — a defendant defeats remand based on fraudulent joinder.
In Tole v. Sanchez, 2026 WL 2096541 (S.D. Ind. July 21, 2026), Judge Tanya Walton Pratt issued a lengthy opinion invoking this doctrine, dismissing a non-diverse defendant from the case and retaining diversity jurisdiction. The opinion contains a thorough analysis of this concept, applying it in a unique setting.
The case was filed in state court by Mr. Tole against former NFL player and later commentator Mark Sanchez and his employer, alleging various torts. After defense discovery request inquired if plaintiff sought more than $75,000 in damages, plaintiff amended and added a new defendant, Huse, a restaurant in Indiana. The theory against the restaurant was negligence and Dram Shop Act violations in provision of alcohol.
Defendants timely removed, asserting diversity of citizenship asserting that the Indiana restaurant — the sole Indiana citizen for diversity purposes — was fraudulently joined. Plaintiff moved to remand. Judge Pratt denied remand and dismissed the restaurant.
Her opinion set forth the legal standard: “The fraudulent joinder doctrine arises out of Federal Rule of Civil Procedure 21, which provides in relevant part: ‘[o]n motion or on its own, the court may at any time, on just terms, add or drop a party.’” Perry v. Higgins-Ballas, 2018 WL 3158510, at *2 (N.D. Ind. June 27, 2018). Thus, if the Court concludes that Huse was fraudulently joined, then the proper remedy is to dismiss it from this suit. Id.; see also Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832 (1989) (“[I]t is well settled that Rule 21 invests district courts with authority to allow a dispensable nondiverse party to be dropped at any time, even after judgment has been rendered.”).
She rejected plaintiff’s argument that that “the Court must limit the scope of its analysis only to his Amended Complaint because it supersedes his original Complaint.” She wrote: “Tole is mistaken. The fraudulent joinder analysis ‘requires the Court to look beyond the pleadings when testing for fraudulent joinder.’ In re Bridgestone/Firestone, Inc. Prods. Liab. Litig., 204 F. Supp. 2d at 1152 (emphasis added); Conk v. Richards & O’Neil, LLP, 77 F. Supp. 2d 956 (S.D. Ind. 1999) (collecting cases where courts considered affidavits, deposition testimony, and “summary judgment-type” evidence). Accordingly, the Court may consider Tole’s statement to Detective Stayton and his original Complaint in its fraudulent joinder analysis.”
Judge Pratt further explained: “‘Fraudulent joinder’ is a term of art; it does not require actual fraud. Walton v. Bayer Corp., 643 F.3d 994, 999 (7th Cir. 2011). Rather, a party or claim is fraudulently joined if there is ‘no reasonable possibility that the plaintiff could prevail.’ Schur, 577 F.3d at 764; see also Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992) (‘[I]n most cases fraudulent joinder involves a claim against an in-state defendant that simply has no chance of success, whatever the plaintiff’s motives.’)”
She continued: “To determine whether a defendant has been fraudulently joined, the Court ‘must engage in an act of prediction: is there any reasonable possibility that a state court would rule against the non-diverse defendant?’ Poulos, 959 F.2d at 73. This analysis, contrary to Tole’s assertions, ‘requires the Court to look beyond the pleadings when testing for fraudulent joinder.’ In re Bridgestone/Firestone Inc., 204 F. Supp. 2d at 1153. The removing defendant bears ‘a heavy burden’ and ‘must show that, after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a cause of action against the in-state defendant.’ Poulos, 959 F.2d at 73 (emphasis in original).”
Ultimately and after a fulsome discussion of Indiana tort law, Judge Pratt concluded: “Indiana courts hold that an intentional criminal act breaks the causal chain between the alleged negligence of overserving a patron and the resulting harm. Thus, Indiana law precludes liability against Huse for Sanchez’s intentional assault of Tole, and further discovery will not change that. Accordingly, Tole’s claims against Huse are dismissed without prejudice.”
New magistrate judge: With Magistrate Judge Mark Dinsmore’s retirement approaching, the district judges have selected Libby Roberts to serve as the next magistrate Judge in the Southern District of Indiana. A 2001 graduate of Indiana University McKinney School of Law, Ms. Roberts has an extensive and impressive history in federal litigation, appearing in over 450 cases in the Southern District alone. A partner and chair of the litigation group at Church Church Hittle & Antrim, she has diverse experience in a wide array of matters including civil rights, education, employment, contract disputes, business disputes and tort liability. She has extensive mediation training and experience and has provided significant pro bono litigation services. She has been extremely active in bar association and community service and leadership.
Save the date/register Now: I’ll be leading the annual federal civil practice seminar on Dec. 18, 1:30 p.m.-4:45 p.m., featuring federal judges and practitioners. Register at www.josephmaley.org at Events.•
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Maley is a partner with Barnes & Thornburg LLP. You can contact him at [email protected].
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