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Fourth Circuit Defines “Nominal Party” in Cases Removed from State Court to Federal Court

February 24, 2014 By Jennifer L. Rowlett

The federal courts have the power to decide cases originally filed in State court in limited circumstances.  Federal courts have what is termed “diversity jurisdiction” over a case if, among other things, the parties bringing the claims are from different states than the parties against whom the claims have been brought.  If an action has been filed in State court and the rules for diversity jurisdiction have been met, any defendant has the right and opportunity to remove the action to Federal court.  In such removal circumstances, the Supreme Court has established a “Rule of Unanimity,” which requires that all Defendants join in or consent to removal.  The exception to the Rule is that those parties that are deemed “nominal” are not required to join, thus ensuring that only those parties with a real interest in the litigation determine whether federal diversity jurisdiction should be exercised.

Despite the courts of other federal jurisdictions having addressed the definition of a “nominal party,” the U.S. Court of Appeals for the Fourth Circuit recently did so for the first time in Hartford Fire Ins. Co. v. Harleysville Mut. Ins. Co.  The Court reviewed other jurisdictions’ definitions of the term and rejected them.  Rather, the Fourth Circuit Court of Appeals held:

Nominal means simply a party having no immediately apparent stake in the litigation either prior or subsequent to the act of removal. In other words, the key inquiry is whether the suit can be resolved without affecting the non-consenting nominal defendant in any reasonably foreseeable way.

As a result, the Court adopted Black’s Law Dictionary’s definition of “nominal,” which is “a party who has some immaterial interest in the subject matter of a lawsuit and who will not be affected by any judgment.” Black’s, 1148, 1232 (9th ed. 2009).

While the determination as to whether a party fits within Black’s Law Dictionary’s definition of nominal is still left to the court’s interpretation, this opinion from the Fourth Circuit is welcomed guidance in this area.