Case Remanded to State Court Despite Defendant’s Claim Plaintiffs Acted in Bad Faith with Claims Against Non-Diverse Defendant

In this case, Asbestos Corporation, Ltd. (ACL) removed the action to federal court on the ground of diversity. The plaintiffs moved to remand, arguing that ACL removed the action past the one year deadline to do so. ACL responded that the missing of the deadline to remove is excused since the plaintiffs acted in bad faith by maintaining a claim against a non-diverse defendant, J.T. Thrope & Sons, Inc. (JTTS), to prevent removal. The plaintiffs responded that they were active in prosecuting those claims in good faith.

The court remanded the action, and held: “The Court finds that ACL has not met its burden of showing that Plaintiffs acted with bad faith such that the untimely exercise of federal diversity jurisdiction is warranted. It is undisputed that Plaintiffs sued JTTS in good faith based on previous discovery in other litigation, as counsel for ACL agreed during oral argument. The issue is whether there is any evidence that Plaintiffs, at some point after suing JTTS but before the end of the removal period, decided to maintain their action against JTTS solely to destroy complete diversity. The only evidence of bad faith that ACL proffers is that Plaintiffs (1) failed to take meaningful formal discovery from JTTS and (2) agreed to voluntarily dismiss JTTS from the action after the passage of the removal deadline. Unrebutted, this evidence might be sufficient to show bad faith. But the Court need not reach that question because Plaintiffs have submitted a declaration from counsel and from their private investigator averring that they continued to search for an eyewitness that could save their case against JTTS. Under the circumstances, these affirmations by counsel and the investigator regarding their efforts to obtain the key evidence they lacked suffice to defeat Defendant’s bad faith claim.”

Read the full decision here.