## Facts

- James and Mary Boyer (Pennsylvania citizens) sued Snap-On Tools Corporation (Delaware/Wisconsin) and two Snap-On managers, Kenneth Baldwin and Keith Kaiser (both Pennsylvania citizens), alleging fraud and related torts.
- James Boyer became a Snap-On dealer under a written dealership agreement and invested substantial personal funds, including mortgaging his home.
- After the dealership became unprofitable, Snap-On personnel informed Boyer he would be terminated.
- The agreement allowed Boyer, with Snap-On’s consent, to sell back unsold tools in new, saleable condition at the price paid.
- During a two-day inventory and “turn-in,” Boyer was presented with a termination agreement containing a broad mutual release of claims arising out of the dealership.
- Boyer asserted he signed the release under economic duress after being told Snap-On would not pay amounts owed unless he signed.
- The complaint alleged Baldwin and Kaiser personally participated in misrepresentations both in inducing the dealership and in obtaining the termination agreement.

## Issues

1. Whether the non-diverse individual defendants (Baldwin and Kaiser) were fraudulently joined so their citizenship could be disregarded to support removal based on diversity.
2. Whether a federal court may resolve merits defenses (including the effect/validity of a release) in deciding fraudulent joinder, rather than limiting the inquiry to whether a colorable state-law claim exists.

## Decision

- The court held the removing defendant failed to carry the heavy burden of proving fraudulent joinder.
- Because the claims against Baldwin and Kaiser were at least colorable under Pennsylvania law, complete diversity was lacking and the district court had no subject-matter jurisdiction.
- The court vacated the federal judgment (including summary judgment entered on the release) and directed remand to Pennsylvania state court.
- The court rejected using the release as a jurisdictional tool where it was a merits defense applicable to both diverse and non-diverse defendants.

## Legal Principles

- Fraudulent joinder exists only if there is no reasonable basis in fact or colorable ground for the claim against the joined defendant, or no good-faith intent to pursue judgment against that defendant.
- The removing party bears a heavy burden; all factual and legal uncertainties are resolved in the plaintiff’s favor, and doubts favor remand.
- In assessing fraudulent joinder, the federal court’s role is limited to determining whether there is a possibility of state-law liability; it may not decide contested merits questions.
- A merits defense that applies equally to diverse and non-diverse defendants (such as a release) cannot be used to create federal jurisdiction.
- Under Pennsylvania law, corporate employees may be personally liable for their own tortious acts, including participation in misrepresentation or fraud.

## Conclusion

The Third Circuit ruled that removal was improper because the plaintiffs stated at least a colorable Pennsylvania-law tort claim against the non-diverse managers, and the district court erred by treating a disputed release defense as a basis to find fraudulent joinder; the case was ordered remanded to state court for resolution on the merits.


Boyer v. Snap-On Tools Corp., 913 F.2d 108 (3d Cir. 1990)