Coy v. Country Mutual Ins. Co., No. 06-620-MJR, 2006 WL 3487653 (S.D. Ill. December 4, 2006).
The Southern District of Illinois denied a motion to remand a class action because a post-CAFA amendment of the Complaint “commenced” a new action. Dr. Richard Coy initially filed his nationwide class action against Country Mutual Insurance Company the week before CAFA was enacted. He claimed that Country Mutual wrongfully reduced payments to him and other similarly-situated health care providers through the use of a “silent PPO,” in which Country Mutual would pay reduced rates similar to those negotiated with other providers under preferred provider organization agreements, despite the fact that no such agreements existed between Country Mutual and the class claimants. He alleged that Country Mutual did not “prefer” the class claimants to its insureds. The claims included breach of contract, based on the contracts between Country Mutual and its insureds, and the theory that Country Mutual was not entitled to retain the amounts taken as discounts from the providers’ fees.
Country Mutual filed a motion to dismiss on a number of grounds. Rather than dismiss the case, the court granted Coy the right to amend. So, on July 10, 2006, Coy filed an amended complaint. Country Mutual removed the case, alleging diversity jurisdiction under CAFA. A motion to remand followed shortly thereafter.
The court’s analysis of the motion to remand focused on whether the amended complaint related back to the filing date of the original complaint or commenced a new action. Citing Schillinger v. 360 Networks USA (Editors’ Note: See the CAFA Law Blog analysis of Schillinger posted on August 24, 2006), Knudsen v. Liberty Mutual Insurance Co. (Knudsen I) (Editors’ Note: See the CAFA Law Blog analysis of Knudsen I posted on September 3, 2005), and Santamarina v. Sears, Roebuck & Co. (Editors’ Note: See the CAFA Law Blog analysis of Santamarina posted on November 6, 2006), the court discussed relation back under CAFA.
Following the Seventh Circuit precedent and Illinois law, the Coy Court stated the amended complaint would relate back if it arose out of the same transaction or occurrence that gave rise to the original pleading, when the original pleading gave the defendant all the information it needed to be able to defend against the allegations in the amended pleading, regardless of the theory of recovery upon which it is predicated.
The amended complaint added a new named plaintiff. It also added new factual allegations. However, it retained the identical causes of action as the original complaint. At first blush, it might appear that the amendment should relate back. But, the breach of contract claim in the amended complaint was based on two wholly different contracts than the contract referenced in the original complaint.
Because the alleged contractual duty that was breached, the defenses, and the relevant evidence on the breach of contract claim in the amended complaint would be different from those applicable to the contract claim in the original complaint, the court concluded the original complaint did not provide Country Mutual with all the information necessary to prepare its defense to the claim asserted in the amended complaint. As a result, the amended complaint did not relate back and commenced a new action. Accordingly, the court denied the motion to remand and kept Dr. Coy’s class action in federal court.