Fischer v. Continental Loss Adjusting Services, Inc., Case No. 08-00416 (Dec. 24, 2008)

Amazingly, commencement cases are still out there! Three days before CAFA was enacted, Dale Fischer, a chiropractor, filed a class action complaint against certain insurers alleging improper preferred provider practices. Years later, on May 7, 2008, Fischer was granted leave to add his closely held corporation, Lebanon Chiropractic Clinic (“LCC”), as a plaintiff. 

On June 6, 2008, defendants removed the case to the United States District Court for the Southern District of Illinois, under CAFA. Since CAFA only applies to class actions commenced on or after its effective date of February 18, 2005, the issue was whether a separate action was commenced when LCC was added as a plaintiff. 

Normally, a lawsuit is “commenced” for purposes of removal under CAFA when the suit is originally filed in state court. Defendants in Fischer argued, however, that the addition of LCC constituted a new action because Fischer lacked standing to sue in his personal capacity in the original action because his dealings with defendants were all conducted through LCC. 

The District Court for the Southern District of Illinois found that, under Illinois state law, where the suit was originally filed, standing is not an element of subject matter jurisdiction. It is an affirmative defense.  

The District Court also found it significant that, prior to the amendment, the state court had denied defendants’ motion to dismiss on the standing issue. Thus, the District Court held that the action was commenced before CAFA became effective because the addition of LCC relates back to the original complaint, and it remanded the case to state court.