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Diversity Jurisdiction and Overcoming Defense Claims of ‘Fraudulent Joinder’ in Your New Jersey Discrimination Case

There might be various reasons why you’d prefer to litigate your New Jersey discrimination case in a state Superior Court as opposed to a federal District Court. (You may have considered issues of speed, cost, the kind of jury that’ll hear your case, or other factors.) Whatever the reason, you and your knowledgeable New Jersey employment discrimination lawyer undoubtedly contemplated the issue at great length, so you want to do everything possible to ensure that your case eventually proceeds in the court you prefer.

There may be various ways you can shield your state court case from potential removal to federal court. An experienced attorney can help you with pleading your discrimination case in a way that avoids unnecessary exposure to removal.

One of those potential exposures is something the law calls “diversity jurisdiction,” as a recent disability discrimination case from Somerset County illustrates.

The employee, J.V., worked as a manager with a New Jersey jeweler when he took a month of Family and Medical Leave Act (FMLA) leave to attend an outpatient addiction treatment facility. Soon after the manager returned to work, he received his first disciplinary “write-up.” Upper managers with the employer also allegedly made comments that caused J.V. to believe knowledge of his addiction disability had leaked.

The company furloughed all its sales employees, including J.V., at the start of the COVID-19 pandemic in March 2020. The jeweler began bringing people back in May, but J.V. was not one of them. By September, J.V.’s district manager allegedly called him and told him he was terminated.

On those bases, the manager launched a civil lawsuit for disability discrimination and retaliation in violation of the New Jersey Law Against Discrimination (NJLAD). The manager filed his complaint in state court.

The employer, an Ohio-based entity, asked the court to move the case to federal court based on diversity jurisdiction. (Diversity jurisdiction refers to a case where the opposing parties are residents of different states.)

Complete Diversity Versus Incomplete Diversity

One way you can avoid a diversity-based removal to federal court is by pleading a case that short-circuits a defense argument of diversity. The law requires complete diversity to move a case from state court to federal court. For example, if you’re a New Jersey resident and you sue a New York resident and a Delaware corporation in your discrimination case, that’s complete diversity, and the defense can typically remove the case to federal court. By contrast, if you sue the same Delaware corporation and New York resident, but also name a New Jersey resident, that’s incomplete diversity, and that generally would prevent removal to federal court.

Because of the stakes, a defendant employer who wants to proceed in federal court may challenge the inclusion of the one New Jersey defendant you named in your complaint. In J.V.’s case, he included the district manager who told him he was terminated. That woman was a Bergen County resident, which made diversity incomplete instead of complete. The employer argued that the inclusion of the district manager, who was the only New Jersey defendant, was a fraudulent action (“fraudulent joinder”) and that the claims J.V. asserted against her were bogus.

If you’re the worker seeking to proceed in state court, the burden on your employer when it asserts fraudulent joinder is a heavy one. Basically, your employer has to show that “there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant” or, in other words, demonstrate the “impossibility” of the claims against that defendant.

J.V.’s case alleged that the district manager either participated in, or had knowledge of, the alleged disability discrimination, and therefore qualified as liable as an “aider and abettor” under the NJLAD. That argument, the court said, was not impossible, which meant the inclusion of the district manager was not fraudulent and J.V. was entitled to have his case returned to state court.

Deciding where to advance your workplace discrimination case is one of the many critical decisions you must make as part of pursuing your claim for compensation. Each of these decisions carries with it consequences — some of them dire — if you choose unwisely. To avoid those traps and pitfalls, make sure you have the knowledgeable legal representation you need. The experienced New Jersey disability discrimination attorneys at Phillips & Associates are here to help. We’ve helped countless New Jersey workers harmed by disability discrimination and retaliation, so we’re equipped to provide you the effective representation you deserve. Contact us online or at (609) 436-9087 today to set up a free and confidential consultation.

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