Federal Rule of Civil Procedure 19(a)(2) permits courts to join necessary parties as involuntary plaintiffs “in a proper case.” Whatever a “proper case” might look like for purposes of Rule 19(a) joinder, Judge James P. Jones of the Western District of Virginia recently found that the case before him– Childress v. UBS Financial Services–did not qualify.
Gary Childress established an IRA, naming Terry Lee Dodson, his wife, as the account’s beneficiary. UBS Financial Services managed the account. The couple divorced and when Childress died six years later, Dodson sued UBS in state court seeking to be declared the beneficiary. Edward Childress, the estate administrator, then sued UBS in federal court based on diversity jurisdiction. Childress argued the divorce revoked, as a matter of law, the original beneficiary designation of Dodson. UBS moved to join Dodson as a necessary party plaintiff.
The Federal Rules require a court to join as a “necessary party” anyone who claims an interest in the action’s subject matter and whose absence from the suit could hurt that person’s ability to protect the interest or potentially result in another party being subjected to multiple or inconsistent obligations. The person has to be “subject to service of process” and the joinder cannot destroy the court’s subject matter jurisdiction.
Judge Jones found Dodson was a necessary party, as failing to join her to the case could hurt her interests or expose UBS to inconsistent rulings in different courts regarding the IRA. Joining her as a defendant, however, would destroy diversity because she, like Childress, is a Virginia citizen. Casting about for a solution, Judge Jones considered whether joining her as an involuntary plaintiff under Rule 19(a)(2) might be feasible.
The court found this was not a proper case under Rule 19(a)(2) because Dodson was subject to personal jurisdiction and had the power to sue UBS. The court relied on Third Circuit precedent holding that one may only be made an involuntary plaintiff where “(1) the party to be joined has an obligation to permit its name or title to be used to protect rights asserted in the action; (2) is beyond the jurisdiction of the court; and (3) has refused to voluntarily join in the action following notification thereof.”
Thus, the court found it could not join Dodson even though she was a necessary party. It offered two possible solutions to this predicament: UBS could join the estate administrator as an additional defendant in the state court action, or UBS could file an interpleader action in federal court, inviting Dodson and the administrator to assert any counterclaims they might wish to make against UBS.