Federal Rule of Civil Procedure 12(b) is mostly intuitive. It provides for the early dismissal of cases that lack a baseline level of factual or legal support, that are filed in the wrong court or venue, or that fail to give the defendant proper notice of the nature of the suit that has been filed against it. But Rule 12(b)(7) provides a basis for dismissal with different stripes. That rule requires dismissal of a case for failure to join a party as required by Federal Rule of Civil Procedure 19—the so-called “necessary” or “indispensable” party rule.
Rule 12(b)(7) is unique in at least two respects. First, it is the only Rule 12(b) provision that expressly incorporates another procedural rule to guide its operation. This means that the jurisprudence for dismissal based on failure to join a necessary party has evolved under two separate, if overlapping, procedural rules. Second, while all the other Rule 12(b) provisions are concerned about the parties in the case, Rule 12(b)(7) and Rule 19 are more worried about persons who are not involved in the case. Indeed, the core purpose of Rule 19 is to protect the legitimate interests of absent parties and to discourage duplicate litigation.
Rule 19 provides that a person must be joined as a party if: “(A) in that person’s absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject to the action and is so situated that disposing of the action in that person’s absence may: (i) as a practical matter impair or impede that person’s ability to protect that interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.” Predicate to all of this, however, Rule 19 says never mind if it is not “feasible” to join the missing party—that is, if the person is not subject to service of process (i.e., beyond the personal jurisdiction of the court), would deprive the court of subject matter jurisdiction, or has a valid objection to venue. If a plaintiff fails to include a party to a case that Rule 19 would require, then the defendant can seek dismissal of the case under Rule 12(b)(7).
But failure to join a necessary party is not the end of the story. Rule 19 further provides that if a party who is required to be joined if feasible cannot be joined, the court then must determine “in equity and good conscience” whether the case should nevertheless proceed without that party. Rule 19 provides several factors for the court to consider in making this determination, focusing on the risk of prejudice to the missing party if the case proceeds, the adequacy of a judgment entered without the missing party, and whether the plaintiff would have an adequate remedy if the case were dismissed.
For most plaintiffs and their lawyers, the typical path is to include every possible defendant in a case. But there are strategic reasons why a plaintiff might instead decide to omit a seemingly necessary party. For example, the plaintiff might exclude a defendant that is not completely diverse, thereby preserving the right to federal court jurisdiction. Or the omitted defendant might by hyper-litigious, with deep pockets, and known for scorched-earth litigation tactics—an adversary the plaintiff might prefer to avoid. In some instances, a plaintiff might leave a party out of the lawsuit in hopes of creating or keeping an ally against the parties who are sued. But motivations aside, when a plaintiff fails to include a necessary party, Rule 12(b)(7) becomes a defendant’s weapon.
Unfortunately (or not), Rule 19 does not lend itself to uniform application across diverse types of cases. In Provident Bank v. Patterson, the U.S. Supreme Court reminded that “whether a person is ‘indispensable,’ that is, whether a particular lawsuit must be dismissed in the absence of that person, can only be determined in the context of particular litigation.” Thus, practitioners looking for hard and fast rules about who are and are not necessary parties will be frustrated. But examples may shed some light.
Circumstances found to warrant Rule 12(b)(7) and Rule 19 dismissal for failing to join a necessary party include:
Other courts, by contrast, have refused to dismiss cases, even when persons who could have an interest in the outcome of the litigation were omitted:
If a plaintiff fails to include all necessary parties to a suit, Rule 12(b)(7) provides a mechanism to dismiss it. This first question to ask is, broadly speaking, whether there are persons or entities who should be party to this case but are not. And does the absence of those parties create or exacerbate any potential risk to the parties who are in the case? If yes, or even if maybe, a careful study of Rule 19 is warranted.
