Miller v. Hypoguard USA, Inc., No. 05-cv-0186, 2006 WL 1285343 (S.D. Ill. May 08, 2006).

On January 31, 2005, disgruntled consumers of diabetes testing equipment filed a class action complaint against the manufacturers of the testing equipment in Illinois state court, asserting a myriad of claims, including breach of implied warranty, common law fraud, and claims under the Magnuson/Moss Act. Despite Wilford’s promises (hey – who wouldn’t trust the Quaker Oats guy?), apparently the plaintiffs thought Liberty Mutual had not helped them have a better life.

In April of 2005, the defendants removed the action to the U. S. District Court for the Southern District of Illinois, asserting diversity jurisdiction under 28 U.S.C. § 1332. After several motions to dismiss were countered with several amended complaints and a motion to remand, U. S. District Judge David R. Herndon ruled on the flurry of activity in December 20, 2005, dismissing a defendant, dismissing several claims without prejudice, and dismissing the federal Magnuson/Moss claim with prejudice. In the same order, Judge Herndon ordered the parties to brief whether the court had subject matter jurisdiction over the remaining state law claims, and allowed the plaintiffs until January 16, 2006 to file yet another amended complaint. 


After first concluding that an in-state defendant had not been fraudulently joined, Judge Herndon turned his pen to Liberty Mutual and the other defendants’ assertion that since the plaintiffs added a new defendant in their May 27, 2005, amended complaint, the Class Action Fairness Act applied, and conveyed federal jurisdiction over the case. Judge Herndon began his analysis of the commencement issue by recognizing CAFA’s inability to retroactively apply to cases filed before its effective date. He then took heed of the Seventh Circuit’s opinions in Knudsen II and Schorsch, holding that a case "commences" when the plaintiff’s complaint is initially filed in state court, and that “routine amendments to the complaint relate back to the date of original filing and do not commence new suits.” Based on the plaintiffs’ addition of a defendant on May 27, 2005, the court framed the issue as “whether the amendment of the complaint to add Fox Med-Equip related back to the original complaint or is considered ‘commencing’ a new action in order to trigger the applicability of CAFA.” Judge Herndon set the parameters of his analysis by stating that if the amendment of the complaint relates back to the original pre-CAFA complaint, then CAFA will not provide jurisdiction over the action.

Judge Herndon first took instruction from the Seven Circuit’s opinion in Knudsen II, wherein the court concluded the plaintiffs commenced a new action by the expansion of the class definition in its action against the defendant, Liberty Mutual. (It seems Liberty Mutual and the Seventh Circuit have already had a few conversations about CAFA commencement issues). Although Liberty Mutual was the exclusive defendant in Knudsen II, the amendment of the complaint after CAFA became law did not relate back to the original complaint since the broadened class definition allowed new claims not asserted in the first complaint of which Liberty Mutual had no notice. After also reviewing the binding precedent of Phillips v. Ford Motor Company, another Seventh Circuit commencement case, Judge Herndon distilled the Seventh Circuit’s instruction down to simply, “a court must focus on the substance of the suit.” If the amendment does not arise from the same transaction or occurrence, or if the defendant’s scope of liability has been broadened, regardless of whether new parties have been added to the suit, the amendment likely does not relate back.

Applying these lessons to the case at hand, the court concluded pursuant to Federal Rule of Civil Procedure 15(c)(3), the plaintiffs’ amendment adding Fox Med-Equip related back to the original pre-CAFA complaint. Since the allegations against the new defendant arose out of the same conduct complained of against Fox Medical and Martin, (other pre-CAFA defendants); Martin is the owner of the new defendant; and all share the same counsel, the court concluded Fox Med-Equip was provided sufficient notice by the original complaint. Therefore, the amendment of the original complaint related back to the original complaint, thereby erasing any hope for federal jurisdiction under CAFA. After declining to extend supplemental jurisdiction over the matter, Judge Herndon sent Liberty Mutual and its fellow defendants back to Madison County, Illinois Circuit Court – admonishing them to eat their oatmeal, and watch their insulin levels.

 Editor’s Note:  This post is dedicated to the artistic genius that is — Wilford Brimley.