Gray Ex Rel. Rudd v. Beverly Enterprises-Mississippi, Inc.

United States Court of Appeals
Fifth Circuit
F I L E D
In the November 9, 2004
United States Court of Appeals Charles R. Fulbruge III
for the Fifth Circuit Clerk

_______________

m 03-60528
_______________

LETHA M. GRAY,
BY AND THROUGH ELLA RUDD,
AS NEXT FRIEND FOR THE USE AND BENEFIT OF
LETHA M. GRAY, ALSO KNOWN AS LETHA M. GARY,

Plaintiff-Appellant,

VERSUS

BEVERLY ENTERPRISES-MISSISSIPPI, INC., ET AL.

Defendants,

BEVERLY ENTERPRISES-MISSISSIPPI, INC.;
BEVERLY HEALTH AND REHABILITATION SERVICES, INC.; JAMES C. LANDERS; DAVID
DEVEREAUX; DAVID R. BANKS; LEWIS SEWELL; CHARLES R. SINCLAIR; BOBBIE
LUCILLE BLACKARD; ALICHA D. LINDSAY,

Defendants-Appellees.

***************
 _______________

m 03-60712
_______________

MARY BODDIE,
INDIVIDUALLY AND ON BEHALF OF
THE ESTATE AND WRONGFUL DEATH BENEFICIARIES OF DAVID GREEN,

Plaintiff-Appellant,

VERSUS

BEVERLY ENTERPRISES-MISSISSIPPI, INC.;
BEVERLY HEALTH AND REHABILITATION SERVICES, INC.; JAMES C. LANDERS; DAVID
R. DEVEREAUX; DAVID R. BANKS; LEWIS G. SEWELL;
CHARLIE R. SINCLAIR, JR.,
ALSO KNOWN AS CHUCK SINCLAIR; JOHN DOES 1-10,

Defendants-Appellees,

UNIDENTIFIED ENTITIES 1-10,

Appellee.

***************

2
 _______________

m 03-60768
____________

GENEVA G. RUSHING,
BY AND THROUGH DOROTHY SHERIFF, HER CONSERVATOR,
FOR THE USE AND BENEFIT OF GENEVA G. RUSHING,

Plaintiff-Appellant,

VERSUS

BEVERLY ENTERPRISES-MISSISSIPPI, INC.;
BEVERLY HEALTH AND REHABILITATION SERVICES, INC.; JAMES C. LANDERS; DAVID
R. DEVEREAUX; DAVID R. BANKS; LEWIS SEWELL;
CHARLIE R. SINCLAIR, JR.,
ALSO KNOWN AS CHUCK SINCLAIR;
ALICHA LINDSAY; JOHN DOES 1-10; UNIDENTIFIED ENTITIES 1-10,

Defendants-Appellees.

_________________________

Appeals from the United States District Court
for the Southern District of Mississippi
_________________________

3
Before SMITH and GARZA, Circuit Judges, In each of the suits (consolidated for pur-
and VANCE,* District Judge. poses of appeal), defendants removed to fed-
eral district court, arguing that the in-state de-
JERRY E. SMITH, Circuit Judge: fendants were fraudulently joined, and there-
fore t here is complete diversity. On each of
The plaintiffs bring this consolidated inter- the plaintiffs’ motions to remand to state
locutory appeal challenging orders denying court, the district court ruled the in-state de-
their motions for remand to state court after fendants were fraudulently joined, denied the
the defendants removed these actions to fed- motions to remand, and dismissed the claims
eral district court. Because the relevant Mis- against the in-state defendants.
sissippi law is, at a minimum, ambiguous, there
is “arguably a reasonable basis for predicting The court held that the complaint did not
that the state law might impose liability on the state a viable claim against the in-state defen-
facts involved . . . . ” Travis v. Irby, 326 F.3d dants under Mississippi law, specifically find-
644, 648 (5th Cir. 2003). Under such ing that Mississippi law does not provide a
circumstances, there is no fraudulent joinder, cause of action for any of the counts alleged
and removal is inappropriate, because the lack against the in-state defendants: (1) simple
of complete diversity divests the district court negligence, (2) malice and/or gross negligence,
of subject matter jurisdiction. We therefore (3) medical malpractice, (4) fraud, and (5)
reverse and remand. breach of fiduciary duty.

I. The court reasoned that the plaintiffs could
The plaintiffs filed their respective suits in not state a claim under state law for simple
Mississippi state court alleging that residents negligence against the in-state defendants be-
of Beverly Healthcare-Northwest nursing cause, “[u]nder Mississippi law, an agent of a
home were injured as a result of the conduct of disclosed principal can incur ‘independent lia-
all the defendants. The named defendants bility when his conduct constitutes gross negli-
include t he corporate owners of the nursing gence, malice, or reckless disregard for the
home, Beverly Enterprises-Mississippi, Inc., rights’ of another. [But,] Mississippi does not
and Beverly Health and Rehabilitation Ser- recognize a cause of action against an agent
vices, Inc. These defendants are California for simple negligence” (quoting Bass v. Cal.
corporations with their principal place of busi- Life Ins. Co., 581 So. 2d 1087, 1090 (Miss.
ness in Arkansas and are therefore diverse 1991) (emphasis added by district court)).
from the plaintiffs, all of whom are residents The court further held that the in-state admin-
and citizens of Mississippi. Also named as de- istrator and licensee defendants did not owe
fendants are numerous individual licensees and plaintiffs a duty under state law, so the claims
administrators of the facility, some of whom against those defendants for malice/gross neg-
are diverse from the plaintiffs and others of ligence also fail to state a viable cause of
whom are non-diverse (i.e., also citizens of action. The court additionally dismissed the
Mississippi). medical malpractice, fraud, and breach of fi-
duciary duty claims.

*
District Judge of the Eastern District of Loui- Significantly, as we will explain, the plain-
siana, sitting by designation.

4
tiffs’ briefs challenge only the ruling with re- . . . Plaintiff seeks to certify the findings in
spect to negligence and gross negligence. the August 11 Opinion for interlocutory
Specifically, the plaintiffs’ reply brief notes appeal. Plaintiff invokes the provisions of
that the remaining claims “are not before this Rule 54(b) of the Federal Rules of Civil
court,” nor were they discussed in their open- Procedure. . . . In the subject case, the
ing brief. Court finds that there exists a danger of
hardship or injustice through delay which
The district court recognized that “[n]o would be alleviated by immediate appeal
Mississippi case law directly relates” to the . . . . As such, the Court finds that justice
issues at hand and that the “cases leave a great will be served by the immediate appeal of
deal to interpretation.” The court, therefore, this issue . . . .
attempted to certify the cases for appeal pursu-
ant to rule 54(b) of the Federal Rules of Civil Plaintiff also invokes the provisions of 28
Procedure. Because of the peculiar language U.S.C. § 1292(b) . . . . Under § 1292(b),
used in the district court’s orders, however, an issue is appropriate for interlocutory
we requested supplemental briefing on wheth- appeal if it “present[s] a controlling
er the order in one of these consolidated question of law as to which there is
appealsSSNo. 03-60712 (“Boddie”), was substantial ground for difference of opin-
properly certified so as to confer appellate ion.” As analyzed above, the fraudulent
jurisdiction. joinder of a business manager does present
such a question, and interlocutory appeal is
Plaintiffs have moved this court to take appropriate for that issue. . . .
judicial notice of unreported decisions from
federal district courts in Mississippi and un- . . . For these final reasons, the Court
reported state court judicial decisions and rec- finds that the subject issue should be de-
ords. That motion was carried with the case. cided on interlocutory appeal . . . .

II. (Brackets in original, citations omitted.)
On the jurisdictional question, there is no
discernible difference between the wording of The defendants urge that the above-quoted
the order purporting to render Boddie fit for order renders neither an appealable final order
appeal (under either rule 54(b) or 28 U.S.C. nor a case certified for interlocutory appeal.
§ 1292(b)) and the corresponding orders in the They rely on the proposition that an order that
other two cases. Nevertheless, even the defen- dismisses fewer than all defendants is not ap-
dants concede that we have jurisdiction over pealable unless the court makes an “express
the other two cases under § 1292(b), despite determination that there is no just reason for
the fact that there is no indication that the delay.” FED. R. CIV. P. 54(b). Because the
plaintiffs received the requisite permission order in Boddie does not contain this particu-
from this court as required by the statute. lar phrasing, the defendants conclude rule
54(b) cannot provide the basis for our jurisdic-
The relevant order in Boddie (as well as the tion. Further, defendants contend that the or-
orders in the other two cases) reads in perti- der cannot be appealable under § 1292(b), be-
nent part: cause this court has not granted leave to take

5
an interlocutory appeal. reason for delay”2SSa paraphrase (stating that
a delay would yield injustice, and an immediate
Plaintiffs, for their part, remind us that our appeal would serve justice) that presents an
existing jurisprudence explains that a rule even stronger justification for appeal than
54(b) interlocutory appeal is appropriate existed in Kelly, where the district court did
where the language of the order appealed, in- not expressly consider the justice of a delay,
dependently or read together with other por- but rather impliedly did so by ordering a final
tions of the record, reflects the court’s unmis- judgment “pursuant to [rule] 54(b).”
takable intent to render the issue appealable
under rule 54(b), and “nothing else is required The district court expressed its finding
to make the order appealable . . . .” Ford v. merely using a phraseology different from the
Elsbury, 32 F.3d 931, 934-35 (5th Cir. 1994). seven words of the rule. Therefore, we have
According to plaintiffs, the order reflects just jurisdiction to hear the appeal of all three
this sort of unmistakable intent. The defen- cases, including Boddie, under rule 54(b).
dants completely fail to address the “unmis-
takable intent” argument and rely solely on the III.
lack of the phrase “no just reason for delay.” The plaintiffs’ main contention on appeal is
that the district court erred in holding that
To hold that this order is not appropriate Mississippi law does not recognize a cause of
for review under rule 54(b) because it lacks action for negligence or gross negligence
the talismanic words for which the defendants against the in-state defendants. From that,
search would be directly contrary to this cir- plaintiffs reason that removal was improper.
cuit’s precedent. In Kelly v. Lee’s Old Fash-
ioned Hamburgers, Inc., 908 F.2d 1218, 1220 A.
(5th Cir. 1990) (en banc), we held that a dis- Plaintiffs first suggest that the court applied
trict court may make the requisite “express de- an incorrect standard in considering their mo-
termination” without mechanically reciting the tions to remand. Such a motion will be denied
words “no just reason for delay.”1 on grounds of fraudulent joinder only if based
on “(1) actual fraud in the pleading of jurisdic-
Such an “unmistakable intent” is readily tional facts, or (2) inability of the plaintiff to
apparent from the face of the district court’s establish a cause of action against the non-
order. The court found “that there exists a diverse party in state court.” Travis v. Irby,
danger of hardship or injustice through delay 326 F.3d 644, 647 (5th Cir. 2003). Because
which would be alleviated by immediate appeal neither the parties nor the district court con-
. . . . As such, the Court finds that justice will tends there was actual fraud, we look only to
be served by the immediate appeal of this the second test.
issue. . . .” This explanation is a mere para-
phrase of the seven words “[t]here is not just
2
See Kelly, 908 F.2d at 1222 (Smith, J., dis-
senting) (“[S]ince the rule does not specifically
1
See also Askanase v. Livingwell, Inc., 981 require incantation of the seven very words, they
F.2d 807, 810 (5th Cir. 1993) (“[I]t is not neces- could be paraphrased, provided that the court ac-
sary for the Trial Court to recite the magic words tually states that it had made the required de-
of ‘no just reason for delay.’”). termination.”).

6
 Though our earlier fraudulent joinder cases For example, plaintiffs devote considerable
had been uncertain as t o whether a removing energy to the contention that the very fact that
defendant must demonstrate an absence of any Mississippi state courts have entered judg-
possibility of recovery in state court, we clari- ments against administrators and licensees of
fied in Travis that the defendant must demon- nursing homes in similar cases is conclusive
strate only that there is no reasonable basis for evidence of the district court’s error. But, af-
predicting that the plaintiff will recover in state ter analyzing the relevant Mississippi caselaw,
court. Id. Thus, the Travis court noted the the district court concluded that plaintiffs
similarity of the standard to that used with lacked a reasonable possibility of recovery.
respect to a Federal Rule of Civil Procedure This analysis, notwithstanding the fact that we
12(b)(6) motion, in that the crucial question is may find it flawed under de novo review, nev-
whether the plaintiff has set out a valid claim ertheless reflected the proper approach under
under applicable state law. Id. applicable precedent. See, e.g., id. at 647.

Critically, all disputed questions of fact and B.
all ambiguities in state law must be resolved in We review the district court’s analysis of
favor of the plaintiff. Id. (citing Great Plains state law (i.e., its determination that the plain-
Trust Co. v. Morgan Stanley Dean Witter & tiffs lack a reasonable possibility of recovery)
Co., 313 F.3d 305, 312 (5th Cir. 2002)). de novo. See McKee v. Kansas City S. Ry.,
Further, the plaintiff may not rely solely on the 358 F.3d 329, 333 (5th Cir. 2004). The dis-
allegations in his complaint; the court may trict court initially concluded, in a cursory an-
“pierce the pleadings” and consider summary alysis, that Mississippi state law precludes re-
judgment-type evidence to determine whether covery for simple negligence against an agent
the plaintiff truly has a reasonable possibility of of a disclosed principal. For this the court re-
recovery in state court. Id. at 648-49. lied solely on Bass v. Cal. Life Ins. Co., 581
So. 2d 1087, 1090 (Miss. 1991), holding that
The district court correctly recited this stan- a health insurance plan administrator could not
dard from Travis. Nevertheless, plaintiffs con- be held liable in a bad faith denial of coverage
tend that the court “improperly expanded its suit based on mere negligent conduct. The
review” beyond whether there is a reasonable Bass court noted that such agents owe no duty
possibility that a Mississippi court might im- of good faith or other fiduciary duties to
pose liability. . . .” In making that argument, insured parties. Id. From this proposition, the
the plaintiffs repeatedly emphasize the district court extrapolated that no negligence
“possibility of recovery” language while giving claims can be brought successfully against
only lip service to the “reasonable” modifier. agents of disclosed principals.

To that extent, the district court correctly This conclusion was likely erroneous, and
evaluated the fraudulent joinder claim. Al- certainly inaccurate enough to warrant remand
though recognizing that Mississippi law on the under the above-described standard, which re-
subject is cloudy, the court disregarded the solves all ambiguities in favor of the party
theoretical possibility of recovery and consid- seeking remand. As plaintiffs point out, the
ered whether there was a reasonable possibility cases relying on Bass are almost all in the
under state law. context of insurance agents and adjusters.

7
Further, there have been several cases in which C.
agents of disclosed principals were in fact held In addition to asserting that the in-state de-
liable for negligence.3 fendants were guilty of simple negligence, the
complaints allege several breaches of supposed
The defendants counter that the complaints duties under the rubric of “inadequate
in the instant cases allege a similar sort of tort- management” constituting gross negligence.
contract hybrid cause of action, and thus, Bass The district court stated,
is controlling. Nevertheless, defendants point
to no additional cases in which the Bass limi- The particular issue in this case is wheth-
tation has been applied outside the context of er the duty to adequately manage Beverly
bad-faith denial of claims. Consequently, the Healthcare was owed by the non-diverse
court incorrectly held that there is no reason- Defendants to Plaintiff, or whether the duty
able basis for predicting that a cause of action was owed to the two corporate Defendants
for simple negligence will lie under the cir- that owned Beverly Healthcare. If the duty
cumstances alleged. was owed to Plaintiff, then Plaintiff has
asserted a viable state law cause of action
That error, however, is not dispositive. and the case must be remanded.
The district court went on to find that the Conversely, if the duty was owed to the
plaintiffs additionally cannot state a cause of corporate Defendants, then Plaintiff has no
action for malice or gross negligence; the court valid cause of action against the
based its conclusion on the in-state defendants’ non-diverse Defendants, requiring dismissal
lack of duty to the plaintiffs. These same of the non-diverse Defendants and denial of
arguments apply with equal force to claims for Plaintiff's Motion to Remand.
simple negligence. Thus, if the court was cor-
rect in its reason for finding that the plaintiffs (Footnote omitted.) The court went on to
cannot state a claim for gross negligence, then conclude that as a general matter, any duty
its erroneous refusal to recognize a simple that the licensees and administrators had to
negligence cause of action would be irrelevant, manage the nursing home adequately was
for that claim would be barred on the other owed not to the plaintiffs, but to the business
grounds.4 itself. The plaintiffs contend this finding is in
error in that both Mississippi common law and
statutory regulations establish a duty to
plaintiffs.

The complaints allege that the administrator
3
and licensee defendants committed gross
See, e.g., Wood v. Allstate Ins. Co., 1997 WL negligence in that they failed to comply with
570848, at *2 (N.D. Miss. 1997) (“The Bass deci-
the regulations promulgated by the Mississippi
sion is limited to the tort-contract hybrid cause of
Department of Health governing nursing
action for bad faith denial of insurance claims.”).
homes.5 The district court gave cursory atten
4
Cf. LLEH, Inc. v. Wichita County, Tex., 289
F.3d 358, 364 (5th Cir. 2002) (“We may affirm for
5
any reason supported by the record, even if not See Mississippi Rules, Regulations, and Mini-
relied upon by the district court.”). (continued...)

8
tion to this argument, noting that there was no 2.
legislative intent to create a private cause of Plaintiffs further argue, citing Minimum
action. Standards § 408.2(e),6 that the regulations
provide an “explicit right of action” that estab-
1. lishes a duty. Indeed, the applicable regulation
Both sides devote considerable energy to does appear to grant such a right. Unfor-
negligence per se and whether these regula- tunately, it does not appear t hat any Missis-
tions allow recovery under that theory. That sippi court has determined whether those par-
debate is beside the point. The district court ticular regulations confer a cause of action.
held that the plaintiffs did not have a reason- Plaintiffs point to several recent unreported
able expectation of recovery against the in- federal district court opinions concluding that
state defendants under Mississippi law be- such a cause of action is afforded.7 On the
cause, inter alia, those defendants did not owe
a duty to plaintiffs. Negligence per se, on the
other hand, is a theory by which statutes are 6
Minimum Standards § 408.2(e) provides:
used to establish the appropriate standard of
care. In absence of a duty to the plaintiff, the [The resident] has a right of action for dam-
relevant standard of care is moot. As even the ages or other relief for deprivations or in-
plaintiffs note, fringements of his right to adequate and
proper treatment and care established by an
The statute’s provisions are deemed con- applicable statute, rule, regulation or
clusive expressions of the applicable stan- contract . . . .
dard of care and reasonable conduct. In- 7
See, e.g., Hill v. Beverly Enters.-Mississippi,
deed, the Mississippi Supreme Court has Inc., No. 3:03CV301LN (S.D. Miss. Oct. 31,
stated that a violation of an internal regula- 2003), slip op. at 14 (holding, in case involving
tion “may serve as evidence of negli- these defendants, that although “no Mississippi
gence,” even if it does not give rise to a state court has passed on the question,” it was rea-
private right of action. sonable to conclude that a possibility of recovery in
state court existed). As we have said, plaintiffs
(Quoting Moore v. Mem’l Hosp., 825 So. 2d have moved for us to take judicial notice of num-
658, 665 (Miss. 2002); other citations omit- erous unreported Mississippi state court records
ted.) Thus, the theory of negligence per se and decisions and unpublished authority from fed-
does not speak to the relevant question of eral district courts in Mississippi.
whether the in-state defendants owed any duty
of care to the plaintiffs. We may take judicial notice of another court’s
judicial action. See Karaha Bodas Co. v. Perusa-
haan Perambangan Minyak Dan Gas Bumi Nega-
ra, No.02-20042, 2003 WL 21027134, at *4 (5th
Cir. 2003). Although we cannot take judicial no-
tice of findings of fact of other courts, the fact that
a judicial action was taken is indisputable and is
5
(...continued) therefore amenable to judicial notice. See Taylor
mum Standards for Institutions for the Aged and v. Charter Med. Corp., 162 F.3d 827, 831 (5th
Infirm (“Minimum Standards”), as promulgated by Cir. 1998).
MISS. CODE ANN. § 43-11-13(1). (continued...)

9
other hand, defendants counter that in an an- MISS. CODE ANN. § 43-11-13(1). This statu-
alogous situation, in Moore v. Mem. Hosp., tory grant of authority may be susceptible to
825 So. 2d 658 (Miss. 2002), involving state interpretation both for and against the ability
pharmacy board regulations, the court found to grant a private right of action. But, as the
no cause of action. But, as noted in Hill, slip plaintiffs correctly note, that is more appropri-
op. at 13, Moore did not hold that regulations ately an argument for the Mississippi courts.
can never establish a legal duty or cause of ac-
tion, but rather that the particular regulations The dearth of applicable caselaw interpret-
considered did not do so. ing the Minimum Standards, coupled with the
unreported district court decisions concluding
In summary, Mississippi caselaw on this that a cause of action was intended, weighs
point is non-existent. The Minimum Standards heavily in plaintiffs’ favor. As we said above,
may or may not provide a private cause of when considering a fraudulent joinder argu-
action that would be applicable here. ment, the court must resolve all ambiguities in
state law in favor of remand. Thus, defendants
Defendants further counter by arguing that, are not able to meet their heavy burden of
even assuming the regulations are meant to showing that there is no reasonable possibility
grant such a cause of action, such a grant that plaintiffs can recover in state court.8
would “greatly overstep [the Department of
Health’s] legislative grant of authority.” The 3.
relevant statutory grant authorizes the depart- The district court also concluded that the
ment to licensee and administrator defendants did not
owe a duty of care to the nursing home resi-
adopt, amend, promulgate and enforce such dents under Mississippi common law, and
rules, regulations and standards, including therefore plaintiffs have no reasonable pos-
classifications, with respect to all institu- sibility of recovering under Mississippi law.
tions for the aged or infirm to be licensed The district court analytically divided the al-
under this chapter as may be designed to legations of gross negligence into two cate-
further the accomplishment of the purpose goriesSSthose relating to “either (1) the daily
of this chapter in promoting adequate care hands-on care of Plaintiff[s]; or (2) the typical
of individuals in those institutions in the functions of a manager.”
interest of public health, safety and welfare.
With respect to the latter category, the
court found that “absent extenuating circum-
7
stances well beyond those pled in the Com-
(...continued) plaint,” the in-state defendants owed to the
The defendants point out that the motion ef-
corporate owners, rather than the residents,
fectively seeks to avoid this circuit’s rule against
giving precedential value to unpublished opinions.
the duty to manage the nursing home
That would be true if the purpose for which plain- adequately. Although the court purportedly
tiffs seek to have the cases noticed were to es-
tablish them as precedent. It is perfectly permis-
8
sible, however, for us to take judicial notice of the See Jernigan v. Ashland Oil, Inc., 989 F.2d
very fact of the judicial act that these decisions 812, 815 (5th Cir.1993) (stating that the burden in
represent. We therefore grant the motion. such cases is on defendant).

10
relied on several cases for this proposition, state defendants were directly involved in
those decisions are not necessarily on point, resident care.
because they more accurately reflect the law as
it relates to allegations of negligence with The issue, therefore, is what constitutes
respect to direct care rather than to inadequate “direct.” The defendants and the district court
management. The district court points to no apparently equated the term with hands-on
cases specifically addressing whether a duty of care. Plaintiffs, on the other hand, argue for a
an agent adequately to manage a facility is more expansive definition.
owed to the principal, to third parties, or to
both. As we have said, in the context of fraudu-
lent joinder analysis a party may not rely on
Plaintiffs aver that such duties need not be the allegations in his pleadings on their face,
mutually exclusive. Despite the accuracy of but must show that there is, at minimum, some
this contention, plaintiffs can point to no au- reasonable dispute of a fact that, if established,
thority establishing that such duality of alle- would demonstrate a reasonable possibility of
giances exists with respect to a duty to manage recovery. The district court considered
adequately. The defendants, for their part, can affidavits from the in-state defendants claiming
do no better. They cite to no case establishing that “they were not involved in the hands-on
that a duty to manage a facility adequately care of Plaintiff[s],” determined that this
cannot be owed to a third party in addition to evidence was unrebutted, and therefore found
the entity itself. Although ambiguous that plaintiffs’ claims must fail.
questions of law must be resolved in favor of
the plaintiffs, they, in the absence of any The defendants echo this argument on ap-
authority, cannot reasonably expect to recover peal, contending that there is no evidence of-
under state law. These allegations alone, fered that demonstrates hands-on care or parti-
therefore, are insufficient to defeat complete cipation in the medical injuries alleged. Plain-
diversity. tiffs claim, however, that liability will lie even
in the absence of such evidence, and they con-
Notwithstanding the absence of authority tend that their complaints allege sufficiently di-
with respect to the in-state defendants’ alleged rect participationSSand that such participation
failure adequately to manage t he facility, the need not be “hands-on,” as defendants
plaintiffs additionally allege direct participation maintain.
on behalf of the licensees and administrators in
the supposed grossly negligent care of Defendants point to Mozingo v. Correct
residents. The district court found that the Mfg. Corp., 752 F.2d 168, 173 (5th Cir.
plaintiffs cannot adequately show that the in- 1985), for the proposition that to face tort lia-
state defendants were sufficiently directly in- bility, an agent such as the in-state defendants
volved in the “hands-on care of the plaintiff” must be the “guiding spirit” or “central figure.”
to saddle independent tort liability on an agent Defendants further reason that the affidavits of
of a disclosed principal. Both sides concede the in-state defendants, which deny any direct
that such an agent may be liable under Missis- participation in the care of the plaintiffs, stand
sippi law where he was directly involved in the un-rebutted and therefore demonstrate the ex-
commission of a tortSSin this case, if the in- istence of fraudulent joinder.

11
 In contrast, plaintiffs rely on cases purport- pendent duty to the plaintiff. Nevertheless, it
ing to establish liability for a wider spectrum of held that the question was one for the trier of
acts and omissions. For example, in Turner v. fact. Id. at *12. Thus, plaintiffs assume that
Wilson, 620 So. 2d 545, 548-49 (Miss. 1983), there is at least a reasonable possibility that the
the court stated that directors, officers, and non-diverse defendants in this case owe a duty
agents may be liable for torts where they either to them.
participated in the act, authorized it or directed
it, gave consent to an act, or even acquiesced On balance, plaintiffs have the better of the
in a tortious act that they knew of or “should argumentSSat least strong enough to demon-
have known of” in the exercise of reasonable strate a reasonable possibility of recovery un-
care. der Mississippi law. Plaintiffs cannot demon-
strate hands-on contact by the defendants, but
Plaintiffs also point to numerous unreported such activity does not seem required to impose
district court decisions in Mississippi in which, personal liability under Mississippi law. One
under very similar circumstances (some may easily be a direct participant in tortious
involving the same defendants as in this case), conduct by merely authorizing or negligently
the courts, in plaintiffs’ words, “rejected the failing to remedy misconduct by one’s subor-
defendants’ ‘myopic view of direct partici- dinates.
pation’ as requiring personal contact . . .”
(quoting Hill). In those unreported cases, the It is uncertain, at this stage of the litigation,
district court held that a nursing home admin- whether plaintiffs will be able to prove their al-
istrator, like the in-state defendants, may be legations of direct participation to the satis-
held liable for their personal tortious conduct faction of the trier of fact. Nevertheless, it is
without personal, hands-on contact with the at least reasonable to expect that a Mississippi
plaintiff. See, e.g., Hill. Rather, allegations of court might find that the allegations of the in-
failure to perform managerial duties, such as state defendants’ misfeasance and nonfeasance
maintaining adequate records and supervising are sufficient to state a claim under state law.
those members of the staff who handled the The district court therefore erred in not rec-
residents’ day-to-day care, were held sufficient ognizing the reasonable possibility of plaintiffs’
to “afford a reasonable basis for imposing recovery against the in-state defendants under
personal liability under Mississippi law.” Mississippi lawSSespecially in light of the
Bradley v. Grancare, Inc., No.4:03CV93-P-B, recognized ambiguity in the caselaw that must
at *5-6 (N.D. Miss. Aug. 18, 2003). be resolved in favor of remand.

Lastly, plaintiffs rely on Rein v. Benchmark IV.
Constr. Co., 2003 WL 21356013 (Miss. June At oral argument, we raised, and the parties
12, 2003), for the proposition that the question have subsequently addressed in supplemental
whether these defendants owe a duty to plain- briefs, the specter of a jurisdictional defect in
tiffs is one of fact. In Rein, a nursing home these cases arising from the plaintiffs’ election
resident sued a pest control company for in- to appeal only the district court’s decisions on
juries inflicted by ants. The court found that it the negligence and gross negligence causes of
was possible that the pest control company action. The plaintiffs, at argument and in their
was an independent contractor with no inde- supplemental brief, attempt to sidestep this po-

12
tential pitfall by arguing that, although their cannot be removed, but only entire actions.9
brief discusses the negligence and gross negli- Consequently, goes defendants’ argument,
gence causes of action, they did not necessarily plaintiffs, by failing to challenge the district
fail to appeal the decisions regarding the other court’s jurisdiction over the other claims, have
causes of action. forgone the ability to have their negligence and
gross negligence claims remanded to state
We disagree. As we have noted, plaintiffs’ court.
reply brief specifically contends that the de-
fendants err in focusing on the other causes of This argument is interesting and might be
action in that those causes of action “are not persuasive, but for one fatal flaw. Underlying
before this Court.” the entire argument is the notion that by not
appealing the decisions on some counts, the
A. plaintiffs have “waived” the issue of subject
The failure to appeal those decisions, de- matter jurisdiction over those counts. Subject
fendants contend, forecloses any possibility of matter jurisdiction, however, cannot be
success on plaintiffs’ appeal. Defendants rea- waived.10
son as follows: By failing to appeal the dis-
missal of the medical malpractice, breach of That being so, plaintiffs’ failure to appeal
fiduciary duty, and fraud claims, plaintiffs con- the other causes of action is not dispositive.
cede that they have no reasonable possibility of We have said, above, that the district court’s
success on the merits of those claims. Further, refusal to recognize a reasonable possibility of
by not appealing those decisions, plaintiffs recovery under state law on the negligence and
allow the dismissals to stand and therefore gross negligence claims was error. Conse-
tacitly agree that the court had jurisdiction quently, on remand from this court, the district
over those claims in order to dismiss them. court must remand the entire case to state
Therefore, if we rule that the district court court.
erred in finding the in-state defendants
fraudulently joined in the negligence and gross The fact that the plaintiffs did not appeal
negligence claims (and we have so ruled), the
district court will be caught between a verita-
9
ble Scylla and Charybdis. See Arango v. Guzman Travel Advisors
Corp., 621 F.2d 1371, 1376 (5th Cir. 1980) (stat-
That is, although we will have commanded ing that on removal, cases are considered in their
the court to remand, because the two claims entirety); cf. United Mine Workers v. Gibbs, 383
we addressed here have a reasonable possibil- U.S. 715, 725 (1966) (defining an entire Article III
ity of success on the merits, the district court “case” as claims deriving from a “common nucleus
will not be able concomitantly to remand the of operative fact”).
dismissed claims, the result being that the en- 10
See, e.g., Clinton v. New York, 524 U.S. 417,
tire action will not be remanded, but only some 428 (1998) (stating that jurisdictional questions,
claims, a course of action that is contrary to 28 even of statutory, not constitutional, magnitude,
U.S.C. § 1441. Under the removal statute, in may not be waived); Bridgmon v. Array Sys.
a diversity action where all claims relate to the Corp., 325 F.3d 572, 575 (5th Cir. 2003) (explain-
same constitutional case, individual claims ing that courts have duty to raise question of sub-
ject matter jurisdiction sua sponte).

13
the dismissal of the other claims does not make B.
it impossible for the district court to remand Defendants suggest that if plaintiffs had ef-
those claims as well. Because we hold that the fectively waived the jurisdictional question
plaintiffs have a reasonable possibility of with respect to the fraud, breach of fiduciary
recovering in state court on at least two causes duty, and medical malpractice claims, the dis-
of action, removal was improper, complete trict court could retain jurisdiction over the
diversity does not exist, and the district court dismissed claims and assume jurisdiction over
never properly had jurisdiction over this the appealed claims through the supplemental
action. jurisdiction statute, despite the lack of com-
plete diversity. This approach is a non-starter.
The consequence of the district court’s lack As both part ies agree in their supplemental
of jurisdiction is that the dismissal of those briefs, 28 U.S.C. § 1367, which authorizes
claims must be also be reversed. Although our district courts to exercise supplemental juris-
fraudulent joinder decisions have never made diction, cannot apply in this instance.
the issue entirely pellucid, § 1441’s holistic
approach to removal mandates that the ex- Specifically, § 1367(b) “has limits . . . on
istence of even a single valid cause of action the use of supplemental jurisdiction in diversity
against in-state defendants (despite the cases so that it will not defeat the established
pleading of several unavailing claims) requires rule of complete diversity.”12 As we noted in
remand of the entire case to state court.11 McLaughlin v. Miss. Power Co., 376 F.3d
344, 354 (5th Cir. 2004), Ҥ 1367(b) provides
that there must be complete diversity where
parties are joined in a diversity suit under
[Federal Rule of Civil Procedure 19 or] 20 . .
11
See Green v. Amerada Hess Corp., 707 F.2d . .”13 Because multiple defendants, like those
201, 208 (5th Cir. 1983) (“If even one of [the in this case, are allowed under Federal Rule of
plaintiff’s] many claims might be successful, a re- Civil Procedure 20, complete diversity must
mand to state court is necessary.”); Moody Nat’l exist, and § 1367(b) does not authorize the ex-
Bank v. St. Paul Mercury Ins. Co., 193 F. Supp. ercise of supplemental jurisdiction.
2d 995, 1000 (S.D. Tex. 2002) (remanding be-
cause plaintiff could recover under one of his many
theories); Blanchard v. State Farm Lloyds, 206 F. 12
13B CHARLES ALAN WRIGHT ET AL., FED-
Supp. 2d 840, 845 (S.D. Tex. 2001) (requiring ERAL PRACTICE AND PROCEDURE 2D § 3567.3,
only one valid cause of action for remand); accord 2004 Supp. at 96. See also id. at § 3567.2 (stating
Cabalceta v. Standard Fruit Co., 883 F.2d 1553, that because of rule 20, “if a . . . diversity of cit-
1561 (11th Cir. 1989) (explaining that a court izenship case is brought against multiple defen-
looks “to see whether there is no possibility the dants, § 1367(b) precludes supplemental jurisdic-
plaintiff can establish any cause of action against tion.” Id. § 3567.2, 2004 Supp. at 83.
the resident defendant . . .”). This line of reasoning
13
is consistent with our continued instruction that See also, e.g., Taylor v. Am. Tobacco Co.,
“diversity removal, powerful as it is, [must] remain 983 F. Supp. 686, 691 (E.D. Mich. 1997) (stating
within its congressionally marked traces [as] that court cannot exercise original jurisdiction over
demanded by principles of comity and federalism . claims against diverse parties and supplemental
. . .” Smallwood v. Ill. Cent. R.R., 385 F.3d 568, jurisdiction over claims against in-state de-
576 (5th Cir. 2004) (en banc). fendants).

14
 The dismissal of the negligence and gross
negligence claims, and the dismissal of the ad-
ditional claims, are REVERSED, and this mat-
ter is remanded to the district court with
instruction to remand to state court.

15