United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS January 23, 2004
For the Fifth Circuit
Charles R. Fulbruge III
Clerk
No. 03-60259
PHYLLIS BODY MCKEE
Plaintiff-Appellant,
VERSUS
KANSAS CITY SOUTHERN RAILWAY CO.; ET AL,
Defendants,
KANSAS CITY SOUTHERN RAILWAY CO.; ERIC W. ROBINSON; ROBERT E.
EVERETT; C. L. DUETT
Defendants-Appellees.
Appeal from the United States District Court
For the Southern District of Mississippi
Before DeMOSS, DENNIS, and PRADO Circuit Judges.
DeMOSS, Circuit Judge:
Plaintiff/Appellant sued diverse and non-diverse
Defendants/Appellees in Mississippi state court. Defendants
removed the case to federal district court based on purported
diversity jurisdiction. Plaintiff made a motion to remand the case
to state court, claiming there was not complete diversity and
therefore the federal district court lacked subject matter
jurisdiction. Defendants responded with purported evidence of
fraudulent joinder. The district found there was fraudulent
joinder, determining that Plaintiff’s claims against the non-
diverse Defendants were not viable and therefore the court denied
the motion to remand and dismissed the non-diverse Defendants, and
only the diverse Defendant remained in the case. Discovery was
conducted, and after the diverse Defendant’s summary judgment
motion, only a few of Plaintiff’s claims against the diverse
Defendant survived and the case proceeded to a jury trial in the
federal district court. The jury found that Defendant was not at
fault and denied all relief requested by Plaintiff. Plaintiff now
appeals, claiming the district court erred in not remanding the
case and in its supplemental instruction to the jury. We agree and
reverse the decision of the district court in refusing to remand
the case, vacate the jury verdict and final judgment, and remand
the case to the district court with instructions to remand the case
to the state court due to lack of subject matter jurisdiction.
BACKGROUND
The Plaintiff-Appellant, Phyllis Body McKee (“McKee”), filed
this action against Defendants-Appellees Kansas City Southern
Railway Company ("KCS"), Eric W. Robinson ("Robinson"), Robert E.
Everett ("Everett"), C.L. Duett ("Duett"), the City of Forest,
Mississippi ("City of Forest"), and the Mississippi Department of
Transportation ("MDOT") in the Circuit Court of Scott County,
Mississippi. In her Complaint, McKee asserted claims of negligence
arising out of a railroad grade crossing accident which occurred on
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July 10, 1998, at the Cedar Street railroad crossing in Forest,
Mississippi. This appeal only concerns issues relating to
Defendants KCS, Robinson, Everett, and Duett. Another panel of
this Court addressed the issues relating to Defendants City of
Forest and MDOT.
McKee was a passenger in a van driven by Lucy R. Shepard
(“Shepard”), now deceased. As Shepard drove her vehicle north
across the Cedar Street crossing, her vehicle was struck by a
westbound freight train owned by Defendant KCS. Defendants
Robinson and Duett were the engineers of the KCS train that struck
Shepard's vehicle. Defendant Everett was the conductor of the KCS
train.1
McKee is a resident of Scott County, Mississippi. KCS is a
foreign corporation organized and existing under the laws of the
State of Missouri, with its home office and principal place of
business located in Kansas City. Robinson is a resident of
Lauderdale County, Mississippi. Everett is a resident of Toomsuba,
Mississippi. Duett is a resident of Little Rock, Mississippi.
MDOT is a governmental entity of the State of Mississippi. City of
Forest is a municipal corporation and code charter organized under
the laws of the state of Mississippi.
KCS, Robinson, Everett, Duett, and MDOT filed a Notice of
Removal on June 8, 1999. City of Forest filed a Joinder of
1
Robinson, Everett, and Duett will sometimes be referred to
as the train crew.
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Removal, dated June 10, 1999. In both the Notice of Removal and
Joinder of Removal, Defendants claimed that the federal district
court for the Southern District of Mississippi, Jackson Division,
had subject matter jurisdiction over McKee's lawsuit, because McKee
could not state a viable claim against any of the non-diverse
defendants (Robinson, Everett, Duett, MDOT, and the City of
Forest).
McKee responded to Defendants' Notice and Joinder of Removal
with a Motion to Remand based upon two contentions. The first
contention, that Defendants’ removal of the case was untimely, is
irrelevant for purposes of this appeal and has already been
addressed and rejected by a prior panel of this Circuit in an
unpublished per curiam opinion. McKee v. Kan. City S. Ry., 281
F.3d 1279 (5th Cir. 2001) (Table). McKee’s second contention was
that she could state a viable claim against the non-diverse
Defendants, this contention is relevant for this appeal as it
relates to McKee’s claims against the train crew.
In Count I of her Complaint, McKee alleged that Defendants
Robinson, Everett, and Duett were "careless, reckless, and
negligent" in the following respects: 1) Defendants operated the
train at an excessive rate of speed; 2) Defendants failed to keep
a reasonable and proper lookout for approaching motorists at the
crossing; 3) Defendants failed to have the train under reasonable
and proper control; and 4) Defendants failed to blow the train's
whistle or horn, or ring the bell within 300 yards of the crossing,
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and failed to blow the train's horn continuously in order to warn
Shepard and McKee of the train's crossing.
In response to McKee’s Motion to Remand, KCS submitted
evidence purporting to negate the viability of each of the
allegations in McKee’s Complaint. KCS submitted evidence that the
train was operated within the federally determined speed limit,
that according to the train crew they maintained a proper lookout,
did everything required by law to avoid the collision, and properly
sounded the horn. McKee did not respond to KCS’s evidence with any
evidence to support her allegations but only argued that Defendants
did not carry their burden of proving fraudulent joinder because
her claims against the train crew were properly alleged and
dependent on factual determinations to be made by a jury.
The district court disagreed with McKee and found that all of
McKee’s causes of action against the non-diverse Defendants were
either not viable or preempted. Therefore, the district court
found that the non-diverse Defendants were fraudulently joined and
denied the Motion to Remand and subsequently dismissed the non-
diverse Defendants.
On April 7, 2000, McKee filed a Motion to Correct Filings,
Amend, for Reconsideration, and for Relief From, and Supplemental
Motion to Remand (hereinafter called "Motion to Reconsider"). In
support of her Motion to Reconsider, McKee submitted her own
affidavit claiming that she did not hear the train's horn
immediately prior to the train's collision with Shepard's van.
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After considering McKee’s Motion to Reconsider, the district court
denied the motion.
On March 29, 2001, McKee moved the district court to certify
for interlocutory appeal to this Court the issue of remand pursuant
to 28 U.S.C. § 1292(b). On May 14, 2001, MDOT and the City of
Forest moved the district court to enter final judgment on their
behalf pursuant to Federal Rule of Civil Procedure 54(b). On
May 31, 2001, the district court granted MDOT’s and the City of
Forest's Motion for Entry of Rule 54(b) Judgment. Before the
district court could rule on McKee's Motion to Certify the issue of
remand for interlocutory appeal as to Defendants Robinson, Everett,
and Duett, McKee filed her Notice of Appeal to this Court on June
5, 2001.
On McKee’s first appeal, a panel of this Court upheld the
district court’s rulings and dismissal of the City of Forest and
MDOT. Because McKee had failed to obtain a Rule 54(b)
certification or a 28 U.S.C. § 1292(b) certification from the
district court with respect to Defendants Robinson, Everett, and
Duett, the panel held that it did not have jurisdiction to hear the
appeal of the dismissal of these defendants.
Following the decision on McKee’s first appeal and after
discovery, KCS filed a Motion for Summary Judgment addressing
McKee’s remaining claims against KCS. McKee responded to KCS’s
motion, claiming jury issues existed as to several of her claims.
After considering the evidence and arguments, the district court
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entered an Order addressing KCS’s motion and dismissing several of
McKee’s claims. The district court did not dismiss all of McKee’s
claims but rather found that she had put forth enough evidence to
indicate there were genuine issues of material fact as to the
following claims: 1) McKee’s claim against KCS for failing to keep
a reasonable and proper lookout for motorists approaching the Cedar
Street crossing (this claim included McKee’s claim for failure to
maintain control); 2) McKee’s claim against KCS for failing to
sound the train’s horn; 3) McKee’s claim against KCS for failing to
keep vegetation clear in the right-of-way near the crossing.
A trial was held February 10 to February 14, 2003. After
hearing all of the evidence, the district court instructed the
jury, the parties made their closing arguments, and the jury
deliberated. During deliberations, the jury sent a note to the
court inquiring as to an issue concerning the train’s horn. After
receiving the note and hearing and considering the parties’
arguments concerning the court’s proposed response to the jury’s
inquiry, the court instructed the jury that they were to rely on
their memory of the testimony presented at trial in answering their
inquiry. McKee’s counsel initially agreed with the district
court’s proposed instruction but later objected and contended that
the jury should also be instructed to refer to the exhibits
admitted at trial in addressing their question. After
deliberating, the jury returned a verdict in favor of KCS.
McKee then filed this appeal claiming two errors. First,
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McKee claims the district court erred in failing to remand the case
to state court because the federal court lacked subject matter
jurisdiction due to the fact that she alleged non-fraudulent claims
against non-diverse defendants. Second, McKee claims the district
court erred in failing to instruct the jury that they should
consider the exhibits when attempting to resolve their inquiry to
the judge concerning the train’s horn.
DISCUSSION
I. Whether the district court erred in finding that the non-
diverse Defendants were fraudulently joined and in denying
McKee’s motion to remand.
A determination of federal diversity jurisdiction involves a
question of law subject to de novo review. Hart v. Bayer Corp.,
199 F.3d 239, 243 (5th Cir. 2000). Diversity jurisdiction requires
complete diversity between the parties, however, such diversity
cannot be destroyed by a plaintiff fraudulently joining a non-
diverse defendant. Id. at 243-46.
“Fraudulent joinder can be established in two ways: (1) actual
fraud in the pleading of jurisdictional facts, or (2) inability of
the plaintiff to establish a cause of action against the non-
diverse party in state court.” Travis v. Irby, 326 F.3d 644, 647
(5th Cir. 2003). A panel of this Circuit recently stated in Travis
that courts have not been clear in describing the standard for
evaluating if a party has been fraudulently joined, often making
the analysis of whether the district court erred in finding
8
fraudulent joinder more complicated than necessary. Id. The
Travis panel then outlined the case law of this Circuit concerning
the standard for determining if a party has been fraudulently
joined and the scope of inquiry into the evidence the district
court is allowed to make when resolving the issue. Id. at 647-49.
In the present case, there is no issue of fraud as to the
jurisdictional facts so here the question, according to the
Travis standard, is whether there is a "possibility that [McKee]
has set forth a valid cause of action" against the train crew. Id.
at 648. Further, the burden is on KCS to establish fraudulent
joinder and in order to do this, KCS must “put forward evidence
that would negate a possibility of liability on the part” of the
train crew. Id. at 650.
According to Travis, for fraudulent joinder, the district
court may "pierce the pleadings" and consider summary judgment-type
evidence in the record, but must also take into account all
unchallenged factual allegations, including those alleged in the
complaint, in the light most favorable to the plaintiff. Id. at
649. Therefore, although the type of inquiry into the evidence is
similar to the summary judgment inquiry, the district court is not
to apply a summary judgment standard but rather a standard closer
to the Rule 12(b)(6) standard. Id. at 648-49. Any contested
issues of fact and any ambiguities of state law must be resolved in
the plaintiff’s favor. Id. at 649. The burden of persuasion on
those who claim fraudulent joinder is a heavy one. Id. The
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district court must also take into account the “status of
discovery” and consider what opportunity the plaintiff has had to
develop its claims against the non-diverse defendant. Id.
In Travis, a case with some similarities to the present case,
the plaintiff, a mother of a driver who was struck and killed by a
train at a railroad crossing, sued the defendants, a railroad
company and the train’s engineer in Mississippi state court. Id.
at 646. After some discovery in state court the case was removed
to federal court and when the plaintiff filed a motion to have the
case remanded to state court, the railroad responded by arguing
that the engineer had been fraudulently joined. Id. In support of
its argument, the railroad submitted the plaintiff’s response to
the railroad’s interrogatories which indicated the plaintiff had
not fully developed facts supporting its claims against the
engineer. Id. at 649. The railroad, however, did not show that
Mississippi or federal law precluded recovery from the engineer,
but only that the plaintiff had not yet developed her claims
against the engineer. Id. The Travis court held that the
railroad’s showing of the lack of development of the plaintiff’s
case is not the same thing as the railroad showing that the
plaintiff could not recover against the engineer and therefore any
claims against the engineer were not fraudulent. Id. at 649-50.
According to the court, the plaintiff could possibly develop a
claim against the engineer. Id. at 650. The court also noted that
little discovery had been conducted. Id. Therefore, the Travis
10
court held, under the circumstance of that case, that the refusal
to remand based on fraudulent joinder was erroneous. Id. at 651.
Likewise, the Supreme Court case, Chesapeake & Oh. Ry. Co. v.
Cockrell, 232 U.S. 146 (1914), is strikingly similar to the present
case.2 In Cockrell, the plaintiff, the administrator of the
intestate’s estate, brought an action in state court against the
defendants, the railway and the engineer and fireman of one of the
railway’s trains which struck and fatally injured the intestate at
a public crossing. Id. at 149-50. The plaintiff, the engineer,
and the fireman were all citizens of Kentucky and the railway was
a citizen of Virginia. Id. at 150. The plaintiff alleged that the
defendants were negligent in failing to maintain an adequate
lookout, in failing to give any warning of the approaching train,
and in continuing to run the train forward after it struck the
intestate. Id. The defendants petitioned the state court to
remove the case to federal court based on diversity jurisdiction,
claiming that although the engineer and fireman were employees of
2
We realize that Cockrell was decided in 1914, however, we
note that a panel of this Circuit recently relied on the rationale
in Cockrell in deciding another fraudulent joinder case. See
Smallwood v. Il. Cent. R.R. Co., 342 F.3d 400 (5th Cir. 2003), pet.
for panel reh’g denied, 352 F.3d 220 (5th Cir. 2003), pet. for en
banc reh’g granted, -- F.3d –-, 2003 WL 22995174, (5th Cir. 2003).
The Smallwood case is now set for en banc review, however, the
present case presents a different issue than the issue presented in
Smallwood. In fact, in the present case unlike in Smallwood, there
is no “common defense” issue because the district court only
dismissed the non-diverse defendants and the diverse defendant
remained in the case. Unlike Smallwood, the present case involves
a straightforward fraudulent joinder issue.
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the railway, the claims made by the plaintiff were:
[F]alse and untrue, and were known by the plaintiff, or
could have been known by the exercise of ordinary
diligence, to be false and untrue, and were made for the
sole and fraudulent purpose of affording a basis, if
possible, for the fraudulent joinder of the engineer and
fireman with the railway company, and of thereby
fraudulently depriving the latter of its right to have
the action removed into the Federal court; and that none
of the charges of negligence on the part of the engineer
or fireman could be sustained on the trial.
Id. at 151 (internal quotation marks omitted).
The state court refused to allow the case to be removed and
there was a trial in which the plaintiff prevailed. Id. at 150.
The defendants appealed but the removal ruling and judgment were
affirmed by the state appellate court. Id. The defendants then
appealed to the United States Supreme Court. Id. The Supreme
Court, in outlining the law concerning fraudulent joinder stated:
[W]hen in such a case a resident defendant is joined with
the nonresident, the joinder, even although fair upon its
face, may be shown by a petition for removal to be only
a fraudulent device to prevent a removal; but the showing
must consist of a statement of facts rightly engendering
that conclusion. Merely to traverse the allegations upon
which the liability of the resident defendant is rested,
or to apply the epithet “fraudulent” to the joinder, will
not suffice: the showing must be such as compels the
conclusion that the joinder is without right and made in
bad faith . . . .
Id. at 152 (citations omitted). According to the Court, the
railway’s petition for removal went to the merits of the action
itself and not the joinder of the non-diverse defendants, the
engineer and fireman. Id. Therefore the Supreme Court held that
there was no fraudulent joinder and the case was properly before
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the state court.3 Id. at 153-54.
The present case is similar to both Cockrell and Travis. Like
the railway in Cockrell, KCS in its response to McKee’s Motion to
Remand the case essentially attacked McKee’s case in general not
the joinder of the train crew. Also like the railroad in Travis,
KCS has not shown that Mississippi or federal law precluded all of
McKee’s claims against the train crew but rather only that McKee
had yet to develop her claims to the extent that, according to KCS,
she would be able to prevail against the train crew. In fact, the
district court allowed several identical claims to proceed to trial
against KCS, namely the lookout and horn claims. This apparent
logical inconsistency in the district court’s refusal to remand the
case because it found that McKee had no viable claims against the
train crew, and yet later refusing to grant KCS’s motion for
summary judgment and allowing some similar claims go to trial,
illustrates that McKee’s joinder of the crew was not “fraudulent.”
KCS argues that this inconsistency was created by McKee because
3
The Supreme Court did note, however, that the state court
erred by not surrendering jurisdiction when the petition for
removal was filed as required by case law at that time and in not
allowing the federal court to sort out any factual questions
concerning the propriety of federal jurisdiction. Cockrell, 232
U.S. at 154. We also note that now the federal statutory scheme
requires that defendants who want to remove a case to federal court
file notice of removal in the appropriate federal district court
and that if the plaintiff wants the case remanded he or she can
file a motion with the federal district court. See 28 U.S.C. §§
1446(a) and 1447(c). Therefore, fraudulent joinder issues now
arise when the defendants oppose, based on fraudulent joinder,
plaintiff’s motion to remand.
13
when the district court was considering McKee’s Motion to Remand,
KCS’s affidavit testimony was the only evidence before the district
court and this testimony purportedly negated the possibility that
McKee could recover on her claims.4 This argument misses the
point. The district court was not to conduct a mini-trial of
McKee’s claims but rather determine if there was any reason for the
train crew to be defendants in the case, or as stated in Travis, to
determine if there was a "possibility that [McKee] ha[d] set forth
a valid cause of action" against the train crew. See Travis, 326
F.3d at 648. As evidenced by the fact that the district court
allowed claims which potentially depended on the negligence of the
train crew go to trial against KCS, McKee had potentially viable
claims against the train crew and therefore there was a reason for
the crew to be defendants in the case. Further, McKee did not have
the burden of proving her claims, rather KCS had the burden to
4
KCS also argues that McKee never submitted any evidence to
the district court concerning her claims against the train crew
until she submitted her Motion to Reconsider and that Federal Rule
of Civil Procedure 60(b) requires any newly discovered evidence in
support of a motion to reconsider can only be submitted if it was
previously undiscoverable. We recognize McKee may not have been
helpful in assisting the district court in its evaluation of the
case, however, at the stage of the litigation where McKee’s joinder
of the non-diverse defendants was tested it was not necessary that
McKee prove her claims against the non-diverse defendants but
rather only that she have claims to be proven against these
defendants. Further, this appeal concerns the possibility that
there were viable claims against non-diverse defendants and
therefore there was not complete diversity and the court lacked
subject matter jurisdiction. Because subject matter jurisdiction
can be raised at any time and the case must be remanded if the
federal court lacks jurisdiction, we reject KCS’s timing arguments.
See 28 U.S.C. § 1447(c).
14
prove the non-diverse defendants were fraudulently joined.
KCS also argues that McKee never did submit evidence, even at
trial, sufficient to sustain her claims against the train crew.
KCS’s argument is that the train crew, as a matter of Mississippi
law, could not be negligent unless in the face of KCS’s evidence
purporting to show that the crew was not negligent, McKee could
offer something more than the statements of individuals who did not
hear the horn and could contradict the evidence offered concerning
the improper lookout and failure to maintain control claims. This
argument, however, goes to merits of McKee’s case and not the
joinder of the train crew. As McKee notes, the fact that the trial
court let several of these issues go to trial against KCS indicates
McKee’s claims had enough viability to overcome summary judgment,
which we know from Travis is certainly enough to withstand the
charge of fraudulent joinder. Id. at 648-49. Therefore, there was
no fraudulent joinder and the case should have been remanded to the
state court because the federal district court lacked diversity
jurisdiction because the non-diverse defendants, Robinson, Duett,
and Everett, were properly joined. We realize this case has
already proceeded through a related appeal concerning MDOT and the
City of Forest, and a full trial against KCS; however, because the
federal courts are courts of limited jurisdiction and because
without complete diversity the federal courts do not have subject
matter jurisdiction over a case that does not concern a federal
question, and because the presence of the train crew destroyed
15
diversity, the district court should have remanded the case. We
again take note that the burden of proving fraudulent joinder is a
heavy one and unless it is clear that the non-diverse defendants
have been fraudulently joined the case should be remanded to the
state court from which it was removed.
Finally, because we have determined the district court erred
in not remanding the case to the state court we do not address
whether the district court erred in its supplemental instruction to
the jury after the jury submitted a question to the court.
CONCLUSION
Having carefully reviewed the record of this case, the
parties’ respective briefing and arguments, for the reasons set
forth above, we reverse the decision of the district court denying
McKee’s Motion to Remand, vacate the jury verdict and final
judgment of the district court and remand the case with
instructions for the district court to remand the case to the state
court from which it was removed.
VACATED, REVERSED AND REMANDED.
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