Michael Avenatti v. Fox News Network LLC

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 21-2702
____________
MICHAEL AVENATTI,
Appellant
v.
FOX NEWS NETWORK LLC,
a Delaware Limited Liability Company;
SEAN HANNITY; LAURA INGRAHAM;
MARIA BARTIROMO;HOWARD KURTZ;
SHANNON BREAM; BRET BAIER;
TRISH REGAN; RAYMOND ARROYO; JON SCOTT;
LELAND VITTERT; JONATHAN HUNT
_________________
On Appeal from the United States District Court
for the District of Delaware
(District Court No. 1:20-cv-01541)
District Judge: Honorable Stephanos Bibas, Circuit Judge
_________________
Argued June 7, 2022
(Filed: July 21, 2022)
Before: AMBRO, RENDELL, and FUENTES, Circuit
Judges.
Shawn R. Perez [ARGUED]
Suite 113-38
7121 West Craig Road
Las Vegas, NV 89129
Counsel for Appellant
Eric M. George [ARGUED]
ELLIS GEORGE CIPOLLONE O'BRIEN & ANNAGUEY
2121 Avenue of the Stars
Suite 2800
Los Angeles, CA 90067
David E. Ross, Esq.
ROSS ARONSTAM & MORITZ
1313 North Market Street
Suite 1001
Wilmington, DE 19801
Counsel for Appellees
Eugene Volokh
UCLA SCHOOL OF LAW
385 Charles E. Young Drive
Los Angeles, CA 90095
Counsel for Amicus
2
__________
OPINION OF THE COURT
_________
RENDELL, Circuit Judge.
The plaintiff is master of his complaint, but his power is
not absolute. District courts have authority of their own to
structure the litigation before them and, in doing so, prevent
manipulation by the parties. This includes policing the
addition of new parties whose presence would unravel vested
jurisdiction.
Michael Avenatti, surprised to find his case removed
from the Delaware Superior Court on diversity grounds,
amended his complaint to add a new, nondiverse defendant as
of right, see Fed. R. Civ. P. 15(a)(1)(A), and then moved for
remand. But the District Court rejected Avenatti’s motion,
invoking its discretionary authority under Federal Rule of Civil
Procedure 21 to drop the interloper from the case and restore
complete diversity. We conclude this approach was proper,
even though the jurisdictional ‘spoiler’ was added by an
amendment as of right. Accordingly, we will affirm.
I. BACKGROUND
Plaintiff-Appellant Michael Avenatti is a celebrity
lawyer who rose to public prominence in early 2018 by
representing Stephanie Clifford (a/k/a Stormy Daniels), a
woman with whom then-President Trump had allegedly had an
extra-marital affair. But Avenatti’s freshly minted fame soon
took on a different hue when, in November 2018, he was
arrested by officers of the Los Angeles Police Department.
3
Given his public profile, his arrest was covered extensively in
the media, including by Defendant-Appellee Fox News
Network (“Fox News”) and the individual Defendant-
Appellees, all of whom were on-air personalities for Fox News.
Avenatti claims that the Defendants engaged in a “purposeful
and malicious” campaign of defamation and slander against
him by lying, on air and in print, about the details of his arrest.
On November 12, 2020, Avenatti sued in Delaware
Superior Court. In his initial complaint, he described allegedly
defamatory statements made by all the Defendants, including
Fox News employee Jonathan Hunt, but Avenatti chose not to
name Hunt as a Defendant. Four days later, Fox News
removed the case to the U.S. District Court for the District of
Delaware, asserting that there was complete diversity among
the parties: Avenatti was a California resident, while none of
the named Defendants were. 1
Avenatti did not accept this sudden removal to federal
court lying down. Instead, on November 19—three days after
the case was removed and seven days after it was initiated—
Avenatti filed an amended complaint in the District Court.
Because the amended complaint was entered within twenty-
1
As a Delaware citizen, Fox News would not ordinarily have
been permitted to remove to federal court in Delaware. See 28
U.S.C. § 1441(b)(2). Here, however, removal was proper
because Fox News had not been properly served at the time.
See Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d
147, 152–54 (3d Cir. 2018). It was not necessary for any of the
named Fox News employees to join in the removal because
they had not yet been served at all. See Lewis v. Rego Co., 757
F.2d 66, 68 (3d Cir. 1985).
4
one days of the initial complaint, Avenatti did not require leave
of court or the opposing parties. See Fed. R. Civ. P.
15(a)(1)(A). The amended complaint differed in two respects:
first, it named Hunt—a California resident—as a Defendant;
and second, it alleged that Hunt had published an article online
about Avenatti’s arrest which included the same defamatory
accusations previously attributed to the other Defendants. Five
days after filing the amended complaint, Avenatti moved to
remand the case back to state court, arguing that his addition
of Hunt—who shared Avenatti’s California citizenship—had
destroyed diversity, thus depriving the Court of subject matter
jurisdiction. 2
The District Court denied remand. Avenatti v. Fox
News Network, LLC, No. 20-CV-01541-SB, 2021 WL
2143037, at *1 (D. Del. May 26, 2021). In a thorough and
well-reasoned opinion, the Court concluded that it had
discretionary authority under Rule 21 to drop Hunt from the
litigation and thereby restore complete diversity. Id. at *2
(citing Fed. R. Civ. P. 21 (“On motion or on its own, the court
may at any time, on just terms, add or drop a party.”)). In doing
so, the Court considered the four-factor test of Hensgens v.
Deere & Co., 833 F.2d 1179 (5th Cir. 1987), to guide its
discretion. In Hensgens, the Fifth Circuit laid out an open-
ended balancing test for considering post-removal
amendments that add nondiverse parties, asking:
• “the extent to which the purpose of the
amendment is to defeat federal jurisdiction,”
2
In his motion for remand Avenatti informed the District Court
that, prior to filing the motion, he had unsuccessfully asked
counsel for Fox News to consent to remand.
5
• “whether plaintiff has been dilatory in
asking for [the] amendment,”
• “whether plaintiff will be significantly
injured if [the] amendment is not allowed,”
and
• “any other factors bearing on the equities.”
Id. at 1182. As we explain below, considering this test as a
guide to Rule 21’s “just terms” condition was permissible.
Here, the District Court applied the Hensgens factors
and found: Hunt had been joined to defeat diversity; Avenatti
would not be prejudiced by Hunt’s excision because he was
dispensable; and, although Avenatti had not been dilatory,
federal jurisdiction should be retained by dropping Hunt.
Accordingly, it dismissed Hunt and retained jurisdiction.
On August 13, 2021, upon Defendants’ motion, the
District Court dismissed the amended complaint without
prejudice, finding that Avenatti had not pled plausible
defamation claims against any Defendant. Avenatti did not
contest the motion, and, after dismissal, he informed the
District Court that he intended to stand on his amended
complaint. The Court then dismissed his complaint with
prejudice.
This appeal followed. Before us, Avenatti trains his fire
on the District Court’s denial of remand. He argues that the
case should have been returned to state court, and so the
District Court was without jurisdiction to dismiss his amended
complaint.
6
II. JURISDICTION AND STANDARD OF REVIEW
We have jurisdiction to review the District Court’s
orders under 28 U.S.C. § 1291. The District Court’s disputed
jurisdiction was premised on 28 U.S.C. §§ 1332(a) and 1441.
“[A] federal court always has jurisdiction to determine its own
jurisdiction.” United States v. Ruiz, 536 U.S. 622, 628 (2002).
We exercise de novo review over the District Court’s
denial of the motion to remand, as the underlying basis for the
denial implicates a question of law. Ario v. Underwriting
Members of Syndicate 53 at Lloyds for 1998 Year of Account,
618 F.3d 277, 287 (3d Cir. 2010). If the District Court’s
invocation of Rule 21 to resolve the remand motion was legally
proper, then we review its application of the Rule for abuse of
discretion. See DirecTV, Inc. v. Leto, 467 F.3d 842, 844 n.1
(3d Cir. 2006) (“We review the District Court’s decision to
drop parties under Rule 21 for an abuse of discretion.”); see
also Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 762
(7th Cir. 2009). The determination of a party’s dispensability
is also reviewed for abuse of discretion. Steel Valley Auth. v.
Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir.
1987). Finally, we review the District Court’s resolution of the
motion to dismiss de novo, Doe v. Princeton Univ., 30 F.4th
335, 341 (3d Cir. 2022), and its factual findings for clear error,
FTC v. AbbVie Inc., 976 F.3d 327, 368 (3d Cir. 2020).
III. THE DISTRICT COURT DID NOT ERR BY DROPPING
HUNT AND RETAINING JURISDICTION
When a plaintiff files suit in state court but could have
invoked the original jurisdiction of the federal courts, the
defendant may remove the action to federal court. 28 U.S.C. §
1441(a). The party seeking removal has the burden of
7
establishing federal jurisdiction and we interpret the removal
statute narrowly, resolving any doubt in favor of the plaintiff’s
choice of forum in state court. Brown v. Jevic, 575 F.3d 322,
326 (3d Cir. 2009). Fox News properly removed this action to
the U.S. District Court for the District of Delaware based on
diversity jurisdiction.
Just after removal, Avenatti amended his complaint as
of right to add Hunt as a defendant, seeming to undo the
complete diversity upon which jurisdiction was premised. Had
Avenatti sought leave of court for this addition, then 28 U.S.C.
§ 1447(e) would have governed the situation. Under § 1447(e),
“[i]f after removal the plaintiff seeks to join additional
defendants whose joinder would destroy subject matter
jurisdiction, the court may deny joinder, or permit joinder and
remand the action to the State court.” As Avenatti points out,
because the text of § 1447(e) by its terms applies where a
plaintiff “seeks to join” a nondiverse defendant, it is not
obvious that it covers party additions effected by way of Rule
15(a)(1)(A) amendments. Those amendments do not normally
require any seeking; they are simply accomplished. Avenatti
thus contends that, without recourse to § 1447(e), the District
Court was left with only two options: (1) remand to state court;
or (2) inquire whether Hunt could be dropped under the
doctrine of fraudulent joinder.
The District Court rejected these proposed alternatives,
calling instead on its discretionary authority under Rule 21 to
drop Hunt and restore complete diversity. In doing so, the
Court invoked the four-factor test of Hensgens v. Deere & Co.,
833 F.2d 1179 (5th Cir. 1987), to guide its discretion. Avenatti
insists that the Court should have used fraudulent joinder rather
8
than the Hensgens factors—and that the Court misapplied the
factors in any event.
We think the District Court chose the correct path.
Where, as here, a nondiverse defendant has been added post-
removal by amendment as of right, courts may sua sponte
consider dropping the spoiler under Rule 21. If the new
defendant is dispensable and can be dropped without
prejudicing any party, then courts may go on to consider the
Hensgens factors to guide their discretion “on just terms.”
A. Rule 21 gave the District Court discretion to drop
Hunt
Remand is not automatic whenever a nondiverse party
is present in the case: Rule 21 empowers courts to police the
litigation’s cast of characters. See, e.g., 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.”). This authority can
be exercised to preserve subject matter jurisdiction. See, e.g.,
id.; Occupational Therapy, Inc. v. RHA Health Servs. Inc., 357
F.3d 375, 381 n.6 (3d Cir. 2004) (“[I]t is well established that
courts . . . have the power under Fed. R. Civ. P. 21 to dismiss
dispensable parties to the suit in order to preserve diversity.”);
Publicker Indus., Inc. v. Roman Ceramics Corp., 603 F.2d
1065, 1069 (3d Cir. 1979) (“The [district] court may dismiss a
nondiverse party in order to achieve diversity even after
judgment has been entered.”); Call Ctr. Techs., Inc. v. Grand
Adventures Tour & Travel Pub. Corp., 635 F.3d 48, 51 (2d Cir.
2011) (explaining that nondiverse, dispensable parties may be
dismissed under Rule 21 at any time, so long as doing so does
not cause prejudice); see also 7 C. Wright, H. Miller, & E.
9
Copper, Federal Practice and Procedure § 1685 (3d ed. 2016)
(“[C]ourts frequently employ [Rule] 21 to preserve diversity
jurisdiction over a case by dropping a nondiverse party if the
party’s presence in the action is not required under [Rule]
19.”).
A district court’s Rule 21 authority is discretionary but
not unlimited. See DirecTV, Inc., 467 F.3d at 845 (“[T]he
discretion delegated to the trial judge to dismiss under Rule 21
is restricted to what is ‘just.’”). The court cannot drop
indispensable parties, Newman Green, Inc., 490 U.S. at 832;
Fed. R. Civ. P. 19(b), and it must assure itself that its actions
will not prejudice any party, DirecTV, Inc., 467 F.3d at 846.
Significantly, because Rule 21 does not contain explicit
standards governing the propriety of joinder or severance—
that is, what constitutes “just terms”—courts sometimes “must
incorporate standards to be found elsewhere” in exercising
their Rule 21 discretion. See, e.g., Pan Am. World Airways,
Inc. v. U.S. Dist. Ct. for Cent. Dist. of California, 523 F.2d
1073, 1079 (9th Cir. 1975); Acevedo v. Allsup’s Convenience
Stores, Inc., 600 F.3d 516, 521 (5th Cir. 2010); see also Halo
Elecs., Inc. v. Pulse Elecs., Inc., 579 U.S. 93, 103 (2016) (“[A]
motion to a court’s discretion is a motion, not to its inclination,
but to its judgment; and its judgment is to be guided by sound
legal principles.”).
Here, the District Court hit all the key notes in the Rule
21 analysis. It confirmed the applicability of the Rule by
deciding: (1) Hunt was a dispensable party under Rule 19; and
(2) that dropping him would not be prejudicial. For reasons we
discuss below, the Court’s conclusions on these questions were
reasonable.
10
To further inform its analysis of what constituted “just
terms” here, the District Court also considered the Hensgens
factors. Again, this was appropriate. See, e.g., Bailey v. Bayer
CropScience L.P., 563 F.3d 302, 308–09 (8th Cir. 2009)
(holding Rule 21 empowered the district court to drop a
nondiverse party based on application of the Hensgens factors,
where party was added after removal); Schur, 577 F.3d at 759(stating that courts should apply the Hensgens factors to
“determine[e] whether post-removal joinder of a nondiverse
party is appropriate”). The factors hardly limited the scope of
considerations that the Court could examine. See Hensgens,
833 F.2d at 1182 (courts should consider “any other factors
bearing on the equities”). Instead, Hensgens provided some
helpful guideposts that focused the District Court’s attention
on the most important questions relevant to the issue presented,
allowing it to make an informed, rational judgment about
whether to retain jurisdiction by dropping Hunt. As § 1447(e)
and Rule 21 both give district courts the same broad discretion
in making the same underlying decision—whether to retain
jurisdiction—we see no reason why courts should be forbidden
to consider the same factors in exercising power pursuant to
either provision.
One of our sister circuits has considered this issue in a
similar situation, and its conclusions accord with our decision.
See Mayes v. Rapoport, 198 F.3d 457, 462 n.11 (4th Cir. 1999).
In Mayes, the defendants removed a contract case to federal
court based on complete diversity. Id. at 459–60. Immediately
thereafter, the plaintiff added an additional nondiverse
defendant without leave of court via a Rule 15(a) amendment.
Id. at 462 n.11. The district court nonetheless retained
jurisdiction on a fraudulent joinder analysis. Id. at 460. On
appeal, the Fourth Circuit discussed the complications
11
presented by this posture in a lengthy footnote, observing that
Rule 15(a) amendments have the latent potential to force
remand without judicial scrutiny. Id. at 462 n.11. Ultimately,
however, the Circuit found those amendments should be
analyzed as though § 1447(e) applied:
Reading Rule 15(a) in connection with Fed. R.
Civ. P. 19 and 21, and 28 U.S.C. § 1447(e),
resolves any doubts over whether the district
court has authority to pass upon any attempts—
even those for which the plaintiff needs no leave
of court—to join a nondiverse defendant. . . . [A]
district court has the authority to reject a post-
removal joinder that implicates 28 U.S.C.
§ 1447(e), even if the joinder was without leave
of court.
Id. Significantly, the Fourth Circuit cited Hensgens to support
its conclusion:
Since no party raised the fact that [the added
defendant] was not diverse, and since the district
court had no prior opportunity to pass upon the
propriety of [his] joinder, the district court
properly could have invoked its authority, under
§ 1447(e) and related authority, to determine
whether [he] was an appropriate party. See
Hensgens v. Deere & Co., 833 F.2d 1179, 1182
(5th Cir. 1987) (vacating joinder order because
district court permitted post-removal joinder of
nondiverse party “as a routine matter,” without
actually exercising discretion over the joinder).
12
Id. (emphasis added). Our discussion above clarifies the
relationship—left vague by the Fourth Circuit—between Rule
21, Hensgens, and § 1447(e) in these circumstances.
Other Circuits have reached similar results in analogous
circumstances. In Bailey v. Bayer CropScience L.P., for
instance, the Eighth Circuit inquired whether a district court
could reconsider its earlier decision to permit the addition of
two nondiverse parties (by permissive amendment), where the
court had previously failed to grasp the jurisdictional
consequences. 563 F.3d at 302. The Circuit found that the
district court could do so and had permissibly dropped the
spoilers under Rule 21. Id. at 308–09. The Circuit even
approved the district court’s use of the Hensgens factors to
guide its decision. Id. (“[T]he district court accurately
considered the relevant [Hensgens] factors and held the
balancing test weighed against the addition of the nondiverse
defendant.”).
Likewise, in Schur v. L.A. Weight Loss Centers, Inc., the
Seventh Circuit decided that district courts may drop a
nondiverse party whose addition (by permissive amendment)
was previously approved by a magistrate judge. 577 F.3d at
762. The Circuit cited Mayes and Bailey for support and
adopted the Hensgens factors as the appropriate “framework
for determining whether post-removal joinder of a nondiverse
party is appropriate.” Id. at 759. It emphasized that neither the
magistrate judge nor the district court had previously analyzed
the propriety of the joinder; yet the latter had to have at least
one chance to exercise discretion over whether the spoiler’s
presence should be permitted to defeat jurisdiction. Id. at 761.
13
Mayes, Bailey, and Schur all support our conclusion that
district courts may exercise their discretionary authority to
drop nondiverse parties added without leave of court after
removal—and that they may consider the Hensgens factors
when doing so. Litigants may not employ procedural tactics to
deny the district court’s ability to reject new parties whose
presence would defeat diversity. Once jurisdiction has vested
in a federal court—which it did here upon removal from state
court—careful scrutiny should be applied to any post-removal
events threatening to wrench that jurisdiction away. See, e.g.,
Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d
1006, 1012 n.6 (3d Cir. 1987) (referring to the “long-settled
(and salutary) policy that a plaintiff cannot artificially force a
retreat to the first (state) forum by embarking purposefully on
post-removal steps designed exclusively to foster remand”
(citations omitted)).
B. Avenatti’s counterarguments fail to convince
Avenatti nonetheless insists that the District Court erred
in several respects.
First, he argues that the District Court could only have
dismissed Hunt upon a finding that he had been fraudulently
joined. “The doctrine of fraudulent joinder represents an
exception to the requirement that removal be predicated solely
upon complete diversity.” In re Briscoe, 448 F.3d 201, 215–
16 (3d Cir. 2006). It permits district courts to assume
jurisdiction over cases containing nondiverse defendants
where it can be shown that they were joined “solely to defeat
diversity jurisdiction.” Id. at 216. The district court may then
dismiss the nondiverse parties. Id. (citing Mayes, 198 F.3d at
461). But this doctrine has a very high bar for showing ‘fraud’:
14
Joinder is fraudulent where there is no
reasonable basis in fact or colorable ground
supporting the claim against the joined
defendant, or no real intention in good faith to
prosecute the action against the defendants or
seek a joint judgment. But, if there is even a
possibility that a state court would find that the
complaint states a cause of action against any one
of the resident defendants, the federal court must
find that joinder was proper and remand the case
to state court.
Batoff v. State Farm Ins. Co., 977 F.2d 848, 851–52 (3d Cir.
1992) (punctuation and citations omitted). Avenatti argues that
the record does not support such a finding, and thus application
of the fraudulent joinder test permits him to join Hunt, forcing
remand.
We disagree. Fraudulent joinder doctrine does not
apply to party additions that occur after a valid removal, as the
District Court correctly found. See, e.g., Steel Valley, 809 F.2d
at 1010 (fraudulent joinder analysis is “focus[ed] on the
plaintiff’s complaint at the time the petition for removal was
filed”); id. at 1012 n.6 (“Fraudulent joinder analysis . . . is only
appropriate in determining the propriety of removal.”); Mayes,
198 F.3d at 461 (“Since the fraudulent joinder doctrine justifies
a federal court’s initial assumption of diversity jurisdiction, it
has no effect once the district court actually possesses
jurisdiction—including after the case has been removed.”).
The doctrine thus has no direct application where the
nondiverse party was added after the case had already arrived
in federal court.
15
Nor do we think that district courts should look to the
fraudulent joinder doctrine as the exclusive means to guide
their Rule 21 discretion. To be sure, consideration of
fraudulent joinder principles might help inform the court’s
remand decision. See Mayes, 198 F.3d at 463 (“[I]f the
defendants can carry the heavy burden of proving fraudulent
joinder, that fact should be a factor—and perhaps the
dispositive factor—that the court considers in deciding
whether a plaintiff may join a nondiverse defendant.”). After
all, it is difficult to imagine why a jurisdiction-defeating
defendant should be retained if there is not even a colorable
claim against him. Yet we think the fraudulent joinder doctrine
is too rigid to serve as the sole lens for analysis—it imposes
too high a bar for the district court to meet before it may defend
its vested jurisdiction. This is a substantial concern because
we must be on guard against forum manipulation in removal
cases. See, e.g., Rockwell Int’l Corp. v. United States, 549 U.S.
457, 474 n.6 (2007) (removal cases raise unique “forum-
manipulation concerns”; in such cases “an amendment
eliminating the original basis for federal jurisdiction generally
does not defeat jurisdiction”); Steel Valley Auth., 809 F.2d at1012 n.6; In Touch Concepts, Inc. v. Cellco P’ship, 788 F.3d
98, 101 (2d Cir. 2015) (“[F]or the purpose of analyzing
statutory subject-matter jurisdiction, the Supreme Court has
treated amended complaints in removal cases with flexibility,”
to ensure federal jurisdiction can be maintained.). District
courts should have pragmatic, flexible tools to face down these
problems; the Hensgens factors fit that need far better than
fraudulent joinder does. It would make little sense to grant
district courts discretion under Rule 21, only to channel that
discretion into a rigid formula.
16
Accordingly, we reject Avenatti’s contention that the
District Court erred by not conducting a fraudulent joinder
analysis.
Next, Avenatti urges that the District Court should not
have used Rule 21 to drop Hunt because the Rule permits party
severance only late in the litigation—whereas here the case had
barely begun—and its use is implicitly constrained by Rule 82.
See Fed. R. Civ. P. 82 (“These rules do not extend or limit the
jurisdiction of the district courts[.]”). These contentions are
without merit. There is no time limitation on the use of Rule
21. Fed. R. Civ. P. 21 (“On motion or on its own, the court
may at any time, on just terms, add or drop a party.” (emphasis
added)); Newman-Green, Inc., 490 U.S. at 832 (“[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.”). Nor does Rule 82
militate against using Rule 21 to preserve complete diversity
where jurisdiction has already vested; the Newman-Green, Inc.
Court held that Rule 21 could be so used. Here, the District
Court used Rule 21 to protect vested jurisdiction, not to expand
it.
Finally, Avenatti contends that a plaintiff is the
proverbial ‘master’ of his complaint, his choice of forum ought
to be respected, and the ‘spirit’ of Rule 15 recognizes this
special deference. He insists that district court discretion to
reject joinder as of right and retain jurisdiction is inconsistent
with these venerable principles. But Avenatti’s generalities
run up against an insurmountable wall of caselaw already
discussed. See, e.g., Newman-Green, Inc., 490 U.S. at 832; see
also Horn v. Lockhart, 84 U.S. 570, 579 (1873) (recognizing
judicial authority to dismiss nondiverse parties and retain
17
jurisdiction). Far from granting plaintiffs unlimited rights, the
Federal Rules of Civil Procedure and the removal statutes
recognize the interests of defendants too.
In sum, we hold that district courts are empowered to
police the joinder of parties whose presence would defeat
subject matter jurisdiction. In removal actions predicated on
complete diversity, plaintiffs cannot nullify a court’s
gatekeeping function by adding jurisdictional spoilers as of
right under Rule 15(a). Although § 1447(e) may not directly
empower district courts to reject those amendments, Rule 21
gives courts discretion, save what is noted below, to drop
parties at any time, including when facing a motion to remand.
A court’s Rule 21 discretion is bounded by: (1) Rule 19, such
that indispensable parties may not be dropped; and (2) Rule
21’s own requirement that no party be prejudiced. If these
prerequisites are satisfied, then district courts may guide their
“on just terms” discretion by looking to the factors delineated
in Hensgens, just as they would in cases where § 1447(e)
applied on its face.
C. The District Court did not abuse its discretion
Avenatti contends that the District Court misapplied the
Hensgens factors and had no factual basis to support its
conclusions. Reviewing the Court’s findings for abuse of
discretion, DirecTV, Inc., 467 F.3d at 844 n.1, we discern no
error.
The District Court began by examining Avenatti’s
intent in joining Hunt, finding that “Avenatti’s evident purpose
was to destroy diversity jurisdiction.” Avenatti, 2021 WL
2143037, at *3. This conclusion was amply supported by the
record. Avenatti amended to add Hunt a mere three days after
18
removal—seven days after initial filing and before any
discovery had taken place—and he moved to remand just five
days later. He sought consensual remand before the motion
was even filed. It was reasonable for the District Court to
suspect an illicit motive based on this sequence of events. See
Mayes, 198 F.3d at 463 (“Especially where, as here, a plaintiff
seeks to add a nondiverse defendant immediately after removal
but before any additional discovery has taken place, district
courts should be wary that the amendment sought is for the
specific purpose of avoiding federal jurisdiction.”). The minor
substantive differences between the two complaints could only
have bolstered this suspicion: beyond labeling Hunt as a
defendant, the amended complaint added just one allegation,
that Hunt and Fox News had published an article containing
defamatory statements. Avenatti, 2021 WL 2143037, at *3.
But Avenatti had already accused Fox News and its other hosts
of repeating substantively identical statements elsewhere. Id.Finally, the fact that Avenatti discussed Hunt in the initial
complaint without naming him as a defendant also supported a
finding of improper purpose. 3
The District Court thus had good reason to conclude that
Hunt was added to force remand, a fact the Court rightly
weighed in favor of dropping him. It did not abuse its
discretion by disbelieving Avenatti’s claim that Hunt was
added because counsel just happened to discover the relevant
article immediately following removal.
3
At Oral Argument, Avenatti’s counsel was unable to
adequately explain why Hunt was not named before the case
was removed.
19
Next, the District Court considered whether dropping
Hunt would prejudice Avenatti. It found no prejudice would
flow because Hunt was a dispensable party. Again, this
conclusion was reasonable. Hunt was charged with making
just two defamatory statements, which the amended complaint
attributed equally to his employer, Fox News. Because Fox
News was already in the case and could provide complete
recovery under joint-and-several liability, there was no need to
retain Hunt. See Appellant’s Br. 33 (asserting joint-and-
several liability will apply); Newman-Green, 490 U.S. at 838(holding that, where multiple defendants “are jointly and
severally liable, it cannot be argued that [one is]
indispensable”); Bailey, 563 F.3d at 309. Moreover, nothing
was alleged about Hunt’s role or relationship to Fox News that
would make recovery against him alone plausible.
As the District Court observed, its findings here ensured
that dropping Hunt would not run afoul of Rule 19. Although
Rule 21 severance must avoid prejudicing parties beyond the
plaintiff, there has been no claim here that anyone besides
Avenatti was prejudiced by Hunt’s removal. Nor does such a
person appear to us. Accordingly, the District Court did not
err by restricting its focus to potential prejudice to Avenatti,
although clarity would have been better served by conducting
the Rule 19 analysis before moving on to the Hensgens factors.
Lastly, the District Court found the absence of delay in
amending weighed in favor of retaining Hunt, but that this fact
did not overcome the “conclusion that [Avenatti] added Hunt
to defeat diversity jurisdiction and will not suffer” should he
be dropped. Avenatti, 2021 WL 2143037, at *3. The Court
accordingly proceeded to dismiss Hunt under Rule 21 and,
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with complete diversity restored, deny Avenatti’s motion to
remand. 4
Far from an abuse of discretion, the District Court’s
Hensgens analysis was persuasive and well-supported. The
Court had solid grounds to thwart the transparent threat to its
jurisdiction that Hunt’s addition represented.
*****
In sum, the District Court did not abuse its discretion in
its jurisdictional analysis. As Avenatti raised no challenge to
the Court’s disposition apart from the jurisdictional objection,
this conclusion resolves the case. Thus, we will affirm the
District Court’s orders.
4
Although the District Court did not identify any “other factors
bearing on the equities,” Hensgens, 833 F.2d at 1182, the
Court’s analysis was nonetheless sound. Avenatti argues that
the “equities weigh decidedly against the Defendants,” because
removal here represented “blatant forum shopping . . . based
on a technicality,” while his initial choice of forum should have
received more respect. Appellant’s Br. at 42–43. Coming
from Avenatti, the accusation of exploiting technicalities to
obtain one’s preferred forum rings hollow. In any event, there
is nothing inequitable about asserting one’s legal rights, see,
e.g., Louis Vuitton S.A. v. Lee, 875 F.2d 584, 589 (7th Cir.
1989) (Posner, J.), as Fox News did, and Defendants’ interest
in maintaining the federal forum was no less significant than
Avenatti’s desire to depart, see, e.g., Hensgens, 833 F.2d at
1182. Accordingly, the District Court did not abuse its
discretion by omitting these considerations.
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