Time Marches On, but the commencement cases keep coming: The Southern District of Illinois considers whether the addition of defendants commenced a new suit allowing removal under the Class Action Fairness Act.

By McGlinchey Stafford on June 21, 2006

Cima v. Wellpoint Healthcare Networks, Inc., No. 05-cv-4127 (S.D. Ill. Feb. 3, 2006).

In Cima, District Judge J. Phil Gilbert provides a thorough analysis of the relation back doctrine, specifically the relation back of parties to the original complaint, in discerning whether the addition of defendants post-CAFA allowed removal under CAFA. The newly added defendants were invited to the party by way of an amended complaint filed by the plaintiffs June 3, 2005, in Illinois state court. This amended complaint was filed after the state court dismissed or struck all the claims in the plaintiff’s original complaint filed in 2003. The defendants claimed that removal was proper under CAFA since the newly amended complaint added parties post-CAFA. In their motion to remand, the plaintiffs argued that the defendants failed to properly plead diversity jurisdiction in their notice of appeal and that several of CAFA’s exceptions applied precluding federal jurisdiction under the statute.

Judge Gilbert distilled the parties’ arguments to one clearly defined determination, stating: “[w]hether this case commenced for CAFA purposes by the addition of these defendants is the key question in determining the propriety of remand here.” First, the court denied the defendants’ motion to strike the plaintiffs’ relation back argument due to the limited mention made of the issue in the plaintiffs’ brief. Then, the court briefly addressed whether CAFA shifted the burden of proof for establishing federal jurisdiction to the plaintiff to prove remand is appropriate. Citing the 7th Circuit’s decision in Brill (Editors’ Note: See the CAFA Law Blog case summary posted on November 2, 2005), the court decided this issue in one sentence, “[a]fter the parties submitted their briefs on plaintiffs’ motion to remand, the Seventh Circuit held that CAFA does not alter the normal burdens in removal practice.” Thus, Judge Gilbert proceeded with his analysis, placing the burden of proof on Wellpoint and its co-defendants.

In order to make the correct determination, Judge Gilbert divided the inquiry into two issues: one, whether defendants named for the first time in an amended complaint filed post-CAFA could remove the action despite the original complaint being filed pre-CAFA; and second, whether this analysis is affected if the supplemental defendants are corporate subsidiaries of the defendants named in the original complaint. The defendants argued, and the court agreed, that adding a defendant post-CAFA presents the opportunity for removal despite a pre-CAFA original complaint as this is a logical extension of CAFA. Relying on Adams v. Federal Materials Co. (Editors’ Note: See the CAFA Law Blog case summary posted on September 28, 2005), and the Seventh Circuit’s opinion in Knudsen (Editors’ Note: See the CAFA Law Blog case summary posted on September 3, 2005), Judge Gilbert agreed with the “general notion that a defendant named after February 18, 2005 has a right to remove an action to federal court.” However, he concluded that this tenet was affected by the substantial amount of litigation these parties already engaged in at the state court level, including litigating a motion to dismiss to its conclusion. Therefore, determining whether the parties related back to the filing of the original complaint was warranted.

Although the burden of proving relation back is generally on the plaintiff under Illinois law, Judge Gilbert decided to place the burden on the defendants “given the normal stance in removal cases.” Shouldering this burden, the defendants demonstrated that the plaintiffs’ claim of mistake should not allow the parties to relate back to the original complaint. The record showed that the plaintiffs had knowledge of the later added defendants in 2003, but took no action against them. Therefore, the court, circling back to its original reasoning, concluded that the addition of the defendants did not relate back to the pre-CAFA complaint. Thus, the plaintiffs’ conscious decision to add defendants commenced a new action for CAFA purposes.

Picking themselves up from the mat for one last effort, the plaintiffs attempted to invoke CAFA’s local controversy exception or home state exception. However, Judge Gilbert found their arguments inconsistent with the definition of the class in their complaint. He declined to accept the plaintiffs’ argument that this class was a local dispute under either exception. Concluding that the defendants had satisfied their burden of establishing federal jurisdiction under CAFA, the court denied the plaintiffs’ motion for remand.