United States District Court, N.D. Illinois, Eastern Division
June 6, 2005.
LIEBERT CORPORATION, an Ohio corporation and ZONATHERM PRODUCTS, INC., an Illinois corporation, Plaintiffs,
JOHN MAZUR and AERICO, INC., an Illinois corporation, Defendants.
The opinion of the court was delivered by: WILLIAM HART, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiffs already had a case pending in the Chancery Division
of the Circuit Court of Cook County, Illinois (the "Chancery
Case"), in which they alleged violations of the Illinois Trade
Secrets Act (765 ILCS 1065) and related common law counts, when
they filed a parallel federal case (the "First Federal Case")
based on essentially the same facts and conduct but alleging a
violation of the federal Computer Fraud and Abuse Act ("CFAA"),
18 U.S.C. § 1030. On defendants' motion, this court applied the
Colorado River doctrine, effectively staying the First Federal
Case by dismissing it without prejudice to reinstate after the
completion of the Chancery Case in the event anything remained to be litigated regarding the CFAA claim. See
Liebert Corp. v. Mazur, 2004 WL 2095666 (N.D. Ill. Sept. 17,
2004) ("Liebert I"). As was noted in the decision, it was
unlikely that the CFAA claim would be reinstated after completion
of the Chancery Case because, at such a point, principles of res
judicata and claim splitting would likely preclude further
pursuit of the CFAA claim. See id. at *2. The expectation was
that plaintiffs would either amend the Chancery Case to add the
CFAA claim or decide not to raise the CFAA claim in the state
case. However, no order was entered requiring that plaintiffs
take either action and any such order would have been inappropriate.
Approximately six months after the First Federal Case was
dismissed, plaintiffs filed a separate action in state court
again raising the CFAA claim (the "Law Case"). This case was also
filed in the Circuit Court of Cook County, Illinois, but in the
Law Division. Plaintiffs contend they could not file the second
case in the Chancery Division because they were not seeking
injunctive relief, only damages.*fn1 Plaintiffs, though, do
not dispute that, assuming a motion to amend would be granted, they could have raised the CFAA claim in the Chancery Division simply by
moving to amend the Chancery Case to add the CFAA claim. The parties also
apparently agree that a motion to consolidate the Law Case with the Chancery
Case would likely be granted.
Plaintiffs could have simplified matters by amending the Chancery Case to
add the CFAA claims, but instead chose to file a separate case in the Law
Division. Defendants still could have moved to consolidate the two cases,
but instead chose to compound matters by removing the Law Case to federal
court. It is this "Second Federal Case" (the removed Law Case) that is
presently pending in this court. Before this court are defendants' motion
to dismiss the case with prejudice and plaintiffs' motion for remand.
At the time the present motions were presented, the court
suggested that the parties attempt to resolve this matter by
agreement. The parties, however, could not reach agreement.
Plaintiffs proposed agreeing to remand the case so that
defendants could move to consolidate. Defendants proposed
agreeing to stay further litigation of the CFAA claim. No
agreement was reached.
Relying on Fed.R.Civ.P. 41(b), which permits dismissals for
failure to comply with an order of court, defendants contend the
Second Federal Case should be dismissed because plaintiffs
violated Liebert I when they filed the Law Case as a separate
case in the Law Division. As previously stated, though, Liebert I did not prohibit plaintiffs from filing a separate
CFAA case. Liebert I assumed that any CFAA claim brought in state court
would be as part of the Chancery Case, but no order required that to be
done. Defendants' motion will be denied.
Plaintiffs contend the case should be remanded because it has
already been held in Liebert I that, to avoid duplicative
proceedings, the CFAA claims should not proceed in federal court.
The remand of removed cases is governed by statute. The removal
statutes presently include the following provision:
A motion to remand the case on the basis of any
defect other than lack of subject matter jurisdiction
must be made within 30 days after the filing of the
notice of removal under section 1446(a). If at any
time before final judgment it appears that the
district court lacks subject matter jurisdiction, the
case shall be remanded.
28 U.S.C. § 1447(c).
At one point, the Supreme Court had held that remands are
limited to grounds authorized by § 1447(c), which were defects in
removal procedure and lack of subject matter jurisdiction. See
Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976).
In a subsequent case, however, the Supreme Court held that a
ground not falling under § 1447(c) could be a basis for a remand,
in that case, remanding the case when only pendent state law
claims remained. See Carnegie-Mellon University v. Cohill,
484 U.S. 343 (1988). See also Rothner v. City of Chicago,
879 F.2d 1402, 1405-07 (7th Cir. 1989). It is now clear that grounds other than ones referenced in § 1447(c) may be a basis for
remand. Rothner, supra.
Following Thermtron, but before Carnegie-Mellon, the
Seventh Circuit had held that abstention is not an appropriate
ground for remand because it is not a ground included under §
1447(c). Ryan v. State Board of Elections, 661 F.2d 1130, 1133
(7th Cir. 1981). In Rothner, however, the Seventh Circuit
recognized that, subsequent to Ryan, Carnegie-Mellon had
broadened the possible grounds for a remand. Rothner,
879 F.2d at 1406, 1410. See also id. at 1421 n. 1 (Easterbrook, J.,
dissenting). Rothner itself did not involve abstention and
Rothner did not directly state that the abstention holding of
Ryan was no longer controlling law in light of
Carnegie-Mellon. However Rothner does favorably discuss the
holding in Corcoran v. Ardra Insurance Co., 842 F.2d 31 (2d
Cir. 1988), that abstention may be an appropriate non-1447(c)
ground for a remand.
As we know from Carnegie-Mellon, § 1447(c) does not
contain all of the permissible grounds for remand.
Courts often supplement statutory rules with
judge-made rules. For example, courts have applied
the doctrines of laches and estoppel to shorten or
enlarge statutory limitation periods. Courts have
applied contract principles to enforce private
agreements that bypass a statutory rule. In the
context of removal, courts have applied contract
principles to enforce forum-selection clauses and
thus remand on non-statutory grounds, Clorox Co. v.
United States District Court, 779 F.2d 517 (9th Cir.
1985); Pelleport Investors v. Budco Quality
Theatres, Inc., 741 F.2d 273 (9th Cir. 1984); and
have applied the doctrines of pendent jurisdiction
and abstention to allow remands where all of the
statutory requirements for removal have been
satisfied, Carnegie-Mellon; Corcoran v. Ardra Insurance Co., 842 F.2d 31 (2d
Cir. 1988). The authority for such remands derives
not from the removal statutes but from the common
law. As indicated by Carnegie-Mellon and
Corcoran, the values of judicial economy, fairness,
convenience and comity justify supplementation of
statutory rules with common law doctrines.
Carnegie-Mellon, 108 S. Ct. at 619-20 and n. 7;
Corcoran, 842 F.2d at 36.
Rothner, 879 F.2d at 1416. But see id. at 1421 n. 1
(Easterbrook, J., dissenting) ("The district judge in Ryan had
remanded a case on the ground of abstention. It didn't take much
effort to jettison that, and the holding (as opposed to the
rationale) that you can't `abstain' by remanding a case doubtless
Subsequent to Corcoran and Rothner, both before and after
the 1996 amendment to § 1447(c), cases have generally held that
abstention may be an appropriate basis for remanding a case.
See Charles Alan Wright, Arthur R. Miller, Edward H. Cooper,
Federal Practice & Procedure § 3739 at 505-08 & n. 99 (3d ed.
1998); id. 2005 Supp. at 163 & nn. 98.1, 99, & 99.1. Also, the
language of § 1447(c) that has been in effect since 1996 may
itself encompass abstention in that it refers to "any defect
other than lack of subject matter jurisdiction." Previously the
language was "any defect in removal procedure" and before that,
"removed improvidently." The current "any defect" language is
broad enough to include remands based on abstention doctrines.
See Cook v. Wikler, 320 F.3d 431, 434-35 (3d Cir. 2003); Levin
v. Tiber Holding Co., 1999 WL 649002 *3-4 (S.D.N.Y. Aug. 25, 1999); David D. Siegel, Commentary on 1996 Revision of Section
1447(c), 28 U.S.C.A. § 1447(c) (West. Supp. 2004).*fn2 But
see Snapper, Inc. v. Redan, 171 F.3d 1249, 1252-60 (11th Cir.
1999). In light of Carnegie-Mellon and the 1996 amendment to §
1447(c), it is held that Ryan is no longer controlling in this
Circuit. The majority view will be followed that when adequate
grounds for abstention exist, including Colorado River
abstention, the remand of a removed case is appropriate.
In Liebert I, it was already held that it is appropriate to
apply Colorado River and defer to the state court proceedings
regarding the CFAA claim. Since Liebert I already provides a
basis for reinstating the CFAA claim in the event that further
federal proceedings are appropriate, there is certainly no need
to stay the present case or dismiss it with leave to reinstate.
Instead, the present case will be remanded to the Circuit Court
of Cook County, Illinois, Law Division. It will be left to the
parties to move for consolidation if they so desire and the state
court to rule on any such motion that may be brought.
Defendants could have avoided this improvident removal by examining the
case law regarding abstention and remands.*fn3 They also could have avoided it by simply moving for consolidation in
the state court. However, plaintiffs also could have avoided the
possibility of again having parallel proceedings by the expedient
of moving to amend their Chancery Case complaint instead of
filing a separate state court action. Since both parties are at
fault, plaintiffs will not be awarded their costs of removal.
IT IS THEREFORE ORDERED that defendants' motion to dismiss 
is denied. Plaintiffs' motion for remand  is granted. Each
party shall bear its own costs of removal. The Clerk of the Court
is directed to remand this case to the Circuit Court of Cook
County, Illinois, Law Division.