Getting Improper Joinder Right

The United States Supreme Court on February 24, 2026, issued an important decision on diversity jurisdiction in Hain Celestial Group, Inc. v. Palmquist, 607 U.S. ___ (2026). At issue in Hain Celestial Group was whether the District Court made a correct determination early in the case that a non-diverse defendant was improperly joined. Concluding that the District Court's decision was wrong, the Supreme Court vacated a take-nothing judgment in favor of the remaining defendant—entered after granting a motion for judgment as a matter of law after the plaintiffs rested.

The plaintiffs brought a claim in Texas state court for products liability, contending that their child was injured by the ingestion of baby food manufactured by Hain Celestial Group and sold by Whole Foods Market, Inc. Hain Celestial Group filed a notice of removal based on diversity jurisdiction, stating it and the plaintiffs were completely diverse and that the citizenship of Whole Foods, which was a Texas citizen just like the plaintiffs, could be ignored because it was allegedly improperly joined. In making its argument for improper joinder, Hain Celestial Group argued, using a Rule 12(b)(6) analysis, that Whole Foods was an innocent retailer as a matter of law and therefore the plaintiffs did not state a claim against it.

The District Court agreed, denied the motion to remand, and dismissed Whole Foods from the case.

The Fifth Circuit reversed. It found that that the plaintiffs plausibly stated a claim for breach of warranty against Whole Foods because they alleged that Whole Foods made representations to the public that products made by Hain Celestial Group were "safe and of the highest quality". These allegations, held the Court, were sufficient to state a claim against Whole Foods and, therefore, the District Court's improper-joinder analysis was incorrect.

The Supreme Court in an opinion written by Justice Sotomayor unanimously affirmed. First, Justice Sotomayor noted that the parties were not challenging the Fifth Circuit's holdings that (a) Rule 12(b)(6) is the correct standard by which to evaluate improper joinder and (b) that the plaintiffs had plausibly stated a claim for breach of warranty against Whole Foods. The question the Court decided was whether a District Court's dismissal of a non-diverse defendant, even if improper, can nevertheless result in proper diversity jurisdiction because the lack of complete jurisdiction is thereby "cured" through the dismissal.

The Supreme Court held that an erroneous ruling on improper joinder cannot fix the lack of complete diversity, as doing so would defeat a plaintiff's right to pursue its claims either in federal or state court. Further, Federal Rule of Civil Procedure 21, which gives the District Court the authority to add or dismiss parties to address problems with the misjoinder or nonjoinder of parties may not be used to manufacture diversity jurisdiction where it does not otherwise exist.

Writing separately in a concurrence, Justice Thomas criticized the use of the Rule 12(b)(6) standard to determine improper joinder. Notably, no other justices joined him in that concurrence.

Takeaway

The result of the decision is to invalidate several years of litigation after the District Court's denial of the plaintiffs' motion to remand and to send the case back to state court for the litigation to start anew. The lesson: make sure you're right in your improper-joinder analysis. Getting past the motion to remand may be a short-lived victory if your win on the merits in the federal district court is taken away on appeal when the Circuit Court of Appeals decides that the non-diverse defendant was properly in the case. As Justice Thomas notes, Rule 12(b)(6) can be a thin reed to rest an improper-joinder decision on. To avoid wasting time and your client's resources, you need a strong determination that a viable claim has not been made against the non-diverse defendant.

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