Leal v. Government Employees Ins. Co., No. CIV. A. M-09-228, Slip Copy, 2009 WL 4852670 (S.D. Tex. Dec 14, 2009).
In this case a District Court in Texas found that when an amended petition adds a plaintiff and proposed class members, whose claims the defendants were not aware of, then the addition is equivalent to commencement of a new civil action under CAFA.
The plaintiffs in this case – Jon Patterson (a chiropractor) – brought a state court action alleging that one of the defendants’ agents sent a letter to his patient – Lisa Olson – that Patterson had charged an unreasonable amount for the medical treatment that she had received from him and from his chiropractic clinic (“Clinic”). The same letter also allegedly inferred that the defendants would help Olson avoid having to pay Patterson in full for the medical treatment received. Patterson and the Clinic sought to represent a class of chiropractors and providers of chiropractic treatment in bringing claims against the defendants for libel, defamation, and tortuous interference with the plaintiffs’ contracts with their patients for medical services.
Over the course of a decade, Patterson amended the original petition nine times, and added Juan Leal, as the only other named plaintiff as another patient to whom the defendants had allegedly directed a defamatory letter that induced him to breach his contract for medical services by not paying for the treatment received. Patterson sought to represent patient as well as physician classes asserting claims for libel and tortuous interference with contract arising from the letter communications between GEICO and patients of the proposed class members.
On appeal of the trial court’s orders certifying the patient and physician classes, the Court of Appeals for the Thirteenth District of Texas found that Patterson did not have standing to bring a claim for breach of the duty of confidentiality on behalf of the patient class.
The plaintiffs then amended the petition for the ninth time – in 2009 – seeking to represent a class that included all covered Texas residents and their third party beneficiaries and assignees, who among other things submitted first-party claims to GEICO pursuant to automobile policy’s medical payment/personal injury protection coverage claims for payment of medical expenses. The ninth amended petition abandoned all previously asserted tort claims against GEICO.
The defendants removed the case pursuant to CAFA to the federal District Court in Texas. The plaintiffs did not dispute that the defendants fulfilled the procedural requirements for removal, however, they contended the ninth amended petition did not ‘commence’ suit for the purposes of removal under CAFA, and therefore, they were entitled to remand.
The District Court noted that although the plaintiffs brought this suit in 1999 – many years before CAFA was enacted – the Fifth Circuit had recognized special circumstances in which a suit may be commenced more than once for the purposes of determining whether removal under CAFA was appropriate. In Braud v. Transp. Serv. Co. of Ill., 445 F.3d 801, 803 (5th Cir. 2006), the Fifth Circuit held that the post CAFA amendment of a complaint through the addition of a new defendant commenced a new civil action as to that defendant, and therefore permitted removal under CAFA. The Braud decision highlighted two considerations underlying its holding – (1) CAFA does not define when an action commences and, therefore, was not intended to replace case law germane to this question; and (2) the language of the removal statute itself – which allows for removal within 30 days after the receipt by the defendant a copy of an amended pleading from which it may first be ascertained that the case has become removable. (Editors’ Note: See the CAFA Law Blog analysis of Braud posted on May 24, 2006).
The court also looked at the Fifth Circuit’s decision in Abshire. In Admiral Ins. Co. v. Abshire, 574 F.3d 267, 273 (5th Cir. 2009), the Fifth Circuit determined whether a ninth amended pleading in a consolidated action that for the first time sought class action treatment of previously asserted claims “commenced” an action for purposes of removal under CAFA. (Editors’ Note: See the CAFA Law Blog analysis of Abshire posted on February 8, 2010).
The Abshire court held that the mere addition of class allegations did not commence new action under CAFA, especially when the proposed class comprised only of individuals or successors of individuals who were previously parties to the suit. The Abshire court applied the ‘relation back’ test and determined that the addition of new plaintiffs and claims in the ninth amended pleading related back to the original complaint, or at the least, to one or more pre-CAFA complaints, such as the eighth amended version. Therefore, the Abshire court concluded that the ninth amended pleading did not commence a new action under CAFA so as to permit removal.
In this case, the District Court noted that almost after a decade of pursuing this case, Patterson abandoned all previously asserted tort theories of recovery, added a plaintiff, proposed a new and expanded class, and asserted a new claim against the defendants for breach of contract. The District Court remarked that this was a case where the amended pleading added a plaintiff and proposed class members of whose breach of contract claim defendants were not aware, thus presented the kinds of notice and due process concerns that the Fifth Circuit had found relevant to the issue of whether an amended pleading commenced a new civil action under CAFA.
The District Court found that unlike in Abshire, the ninth amended petition did not relate back to the filing of any prior pleading; and also that the addition of Leal as a plaintiff did not relate back to any prior petition.
Accordingly, the District Court concluded that the Ninth Amended Petition commenced a new civil action after the effective date of CAFA, and denied the motion to remand.