Phillips v. Ford Motor Company, __ F.3d ___, No. 05-8031, (7th Cir. Jan. 30, 2006).
Boxdorfer v. DaimlerChrysler Corporation, 396_ F.3d ____, No. 05-8032, 2006 WL ________ (7th Cir. Jan. 30, 2006).
Courts have wrangled for awhile over whether adding a new defendant to a suit filed before the effective date of the Class Action Fairness Act of 2005 “commences” a new action, but these two cases break new ground by deciding what happens when new plaintiffs come on board post-CAFA. In this two-case opinion authored by Judge Posner, the U.S. Court of Appeals for the Seventh Circuit declared that the recent addition of plaintiffs related back to the original pre-CAFA filing, and therefore these amendments did not commence new actions under the Class Action Fairness Act.
Judge Posner began his analysis by concisely framing the issue in both cases as whether amending a complaint to add or substitute named plaintiffs commences a new suit. If so, these amendments would effectively commence new suits post-CAFA, and could therefore be removed to federal court under CAFA’s expanded federal jurisdiction. Relying heavily on Schorsch v. Hewlett-Packard Co., 417 F.3d 748, 749 (7th Cir. 2005) (Editor’s Note: See CAFA Law Blog summary posted on September 4, 2005), Judge Posner established that “a routine amendment to the complaint does not commence a new suit.” However, he questioned whether adding a plaintiff to a class action should be considered “routine.” Considering that the substitution of unnamed class plaintiffs for named class plaintiffs that are no longer members of the litigation was rather routine, Judge Posner was likely tempted to label the amendments commonplace and move on. However, as Judge Easterbrook analogized in Schorsch, “tacking a wholly distinct claim onto an old suit . . . might commence a new proceeding,” just as adding a defendant post-CAFA commences a new suit and allows for removal since suit against it would not have commenced until after CAFA’s effective date. Thus, Judge Posner took note of his esteemed colleague’s observation and dug a little deeper.
After ironing out a “jurisdictional wrinkle”(see Editor’s Note below), Judge Posner turned to Illinois state law, since the relation-back issue depended on state procedural law and both suits originated in Illinois state court. After recognizing, as in virtually all commencement cases, that “an amendment relates back when it arises out of the same transaction or occurrence set up in the original pleading,” the court considered the facts and procedural history of each case.
The changes to the class complaining of the paint jobs on their Ford automobiles were basically “routine,” Judge Posner believed, since the plaintiffs who owned 1996 model Fords added in the amendment were actually included in the original pre-CAFA complaint but subsequently amended out of the class. The additions to the class complaining of the DaimlerChrysler paint jobs were previously unnamed class members who were named due to a potential bar of the originally named plaintiffs’ claims by the statute of limitations. Thus, these plaintiffs were also members of the class at the pre-CAFA filing of the original complaint.
Judge Posner was sensitive to the importance of the relation back determination to the unnamed class members, especially regarding the statute of limitations implications. If the statute of limitations on the named plaintiff’s claims had run, and the amendments to the original complaint did not relate back, the class would be barred from relief. However, due to Illinois’ liberal relation-back doctrine generously tolling the statute of limitations for class members, and the satisfaction of the relation-back test, Judge Posner concluded that both set of amendments related back to their original pre-CAFA complaints. Therefore, adding these new named plaintiffs to each class failed to commence new actions under CAFA. Affirming the district court in each case, the Seventh Circuit concluded both actions must be remanded.
Editor’s Note: The “jurisdictional wrinkle” referred to by Judge Posner is notable in that the class against DaimlerChrysler had not been certified as of the time of the drafting of his opinion; thus, Judge Posner reasoned that a class action did not exist, so a dismissal of the named plaintiffs would, in effect, terminate the suit. “If the case is later restarted with a new plaintiff, it is a new commencement, a new suit,” and would be removable under CAFA. However, Judge Posner observed that the courts shouldn’t be so strict, and ignored this “jurisdictional void” by allowing new class members to step in after the previously named plaintiffs were dismissed pre- class certification.