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Schillinger v. 360 Networks USA

May 18, 2006


The opinion of the court was delivered by: Murphy, Chief District Judge


This action is before the Court on the Motion to Remand brought by Plaintiffs George Schillinger and Ruth Schillinger on behalf of themselves and all others similarly situated (Doc. 24). For the following reasons, the motion is DENIED.


Plaintiffs, who reside in Madison County, Illinois, originally filed this case in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois, on February 17, 2005. As originally filed in state court, this case is a putative nationwide class action against 360Networks, Inc., claiming the company installed fiber optic telecommunications cable on Plaintiffs' land without permission as part of a telecommunications network.*fn1 More specifically, Plaintiffs allege that 360Networks, Inc., installed the cable on or next to railroad, pipeline, energy, or other utility companies' rights-of-way which run through their property and that the installation, maintenance, and operation by 360Networks, Inc., of its telecommunications network without Plaintiffs' consent constitute a trespass. Plaintiffs seek a declaratory judgment that 360Networks, Inc., did not obtain from the railroad, pipeline, energy, or other utility companies any title, interest, or right to occupy or use the rights-of-way, that the agreements between 360Networks, Inc., and the railroad, pipeline, energy, or other utility companies create no lawful encumbrance on the rights-of-way, and that 360Networks, Inc., has no valid easement, license, or other right of occupancy in the rights-of-way. Additionally, Plaintiffs assert claims for trespass and unjust enrichment, and seek compensatory damages and punitive damages, together with pre-judgment and post-judgment interest and attorneys' fees and costs.*fn2

Since its initial filing, this case has followed a rather tortuous procedural path on its journey to this Court. Plaintiffs served 360Networks, Inc., with their complaint through the registered agent for 360Networks (USA), Inc., an American subsidiary of 360Networks, Inc. On May 13, 2005, 360Networks, Inc., advised the state court that it was involved in bankruptcy proceedings in Canada, the company's place of incorporation. On December 19, 2005, Plaintiffs moved in state court for voluntary dismissal of 360Networks, Inc., from the action pursuant to 735 ILCS 5/2-1009. At the same time, Plaintiffs filed a motion requesting that the state court enter a proposed scheduling order identifying both 360Networks, Inc., and its American subsidiary, 360Networks (USA), Inc., as parties to the case and directing 360Networks (USA), Inc., to file an answer to Plaintiffs' state-court complaint by a specified date. On January 3, 2006, the state court entered an order dismissing 360Networks, Inc., from the case; however, the state court did not enter Plaintiffs' proposed scheduling order. The clerk of the state court then listed this case as dismissed or terminated and closed the court's file on the case.

On February 9, 2006, counsel for the parties appeared in the state court for a case management conference at which Plaintiffs' counsel again moved for entry of the proposed scheduling order identifying 360Networks (USA), Inc., as a party to the case and directing the company to file an answer to Plaintiffs' state-court complaint by a specified date. The state court did not enter a scheduling order as requested; rather, it entered a default judgment against 360Networks (USA), Inc., pursuant to 735 ILCS 5/2-1301 (see Doc. 28, Ex. K). Having entered a default judgment against it, the state court necessarily granted Plaintiffs' request that 360Networks (USA), Inc., be identified as a party to the case. On February 15, 2006, the case was removed to this Court. Counsel for 360Networks, Inc., contend that the case is subject to removal pursuant to the Class Action Fairness Act of 2005, Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.) ("CAFA"), because Plaintiffs commenced the case after the effective date of the CAFA by joining a new party Defendant, 360Networks (USA), Inc. Plaintiffs have moved for remand of this action to state court for lack of federal diversity jurisdiction.


A. Legal Standard

Removal of actions from state court to federal court is governed by 28 U.S.C. § 1441, which provides that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). In other words, "[a] defendant may remove a case to federal court only if the federal district court would have original subject matter jurisdiction over the action." Disher v. Citigroup Global Mkts., Inc., 419 F.3d 649, 653 (7th Cir. 2005). The defendant has the burden of establishing that an action is removable, and doubts concerning removal must be resolved in favor of remand to the state court. See Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005); Boyd v. Phoenix Funding Corp., 366 F.3d 524, 529 (7th Cir. 2004); Bemis v. Allied Property & Cas. Ins. Co., No. 05-CV-751-DRH, 2006 WL 1064067, at *6 (S.D. Ill. Apr. 20, 2006); Fiore v. First Am. Title Ins. Co., No. 05-CV-474-DRH, 2005 WL 3434074, at *2 (S.D. Ill. Dec. 13, 2005).

B. Requirements of the CAFA

Under the CAFA, federal courts now have jurisdiction, with exceptions not relevant here, over class actions with one hundred or more class members, see 28 U.S.C. § 1332(d)(5)(B), in which, after aggregating class members' claims, more than $5 million, exclusive of interest and costs, is in controversy, see id. § 1332(d)(2), (d)(6), and in which any member of the plaintiff class is a citizen of a state different from that of any defendant, or any member of a plaintiff class, or any defendant, is a foreign state or a citizen or subject of a foreign state. See id. § 1332(d)(2). In this case it is not disputed that all of these prerequisites are met. Class actions fitting within the scope of the CAFA are removable in accordance with 28 U.S.C. § 1446. See 28 U.S.C. § 1453(b). That is, to remove an eligible class action, a notice of removal must be filed within thirty days "after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." Id. § 1446(b).

The CAFA is not retroactive and therefore only applies to class actions which are "commenced on or after the date of enactment" of the statute, February 18, 2005. See Pub. L. 109-2, § 9, 119 Stat. 4. It is now well settled in this Circuit that an action is "commenced" for purposes of removal under the CAFA when it is filed in state court. See Phillips v. Ford Motor Co., 435 F.3d 785, 786 (7th Cir. 2006); Pfizer, Inc. v. Lott, 417 F.3d 725, 726 (7th Cir. 2005); Bemis, 2006 WL 1064067, at *2; Komeshak v. Concentra, Inc., No. 05-CV-261-DRH, 05-CV-349-DRH, 2005 WL 2488431, at **2-3 (S.D. Ill. Oct. 7, 2005); Alsup v. 3-Day Blinds, No. Civ. 05-287-GPM, 2005 WL 2094745, at *2 (S.D. Ill. Aug. 25, 2005). This action, as noted, was filed in state court on February 17, 2005, one day before the effective date of the CAFA.

It is equally well settled that an amendment of a class action complaint in state court to join a new defendant will commence (or, perhaps more properly, recommence) the action for purposes of removal under the CAFA. In Knudsen v. Liberty Mutual Insurance Co., 411 F.3d 805 (7th Cir. 2005) ("Knudsen I"), the court addressed the amendment of class action complaints in state court after the effective date of the CAFA. The court said that "a new claim for relief (a new 'cause of action' in state practice), the addition of a new defendant, or any other step sufficiently distinct that courts would treat it as independent for limitations purposes, could well commence a new piece of litigation for federal purposes even if it bears an old docket number for state purposes." Id. at 807. See also Schillinger v. Union Pac. R.R. Co., 425 F.3d 330, 333 (7th Cir. 2005) (quoting Schorsch v. Hewlett-Packard Co., 417 F.3d 748, 749 (7th Cir. 2005)) ("[A] defendant added after February 18[, 2005] could remove because suit against it would have been commenced after the effective date[.]") (emphasis in original). Cf. Dinkel v. General Motors Corp., 400 F. Supp. 2d 289, 293 (D. Me. 2005) (denying remand when the plaintiffs "commenced" an action against additional defendants after the enactment of the CAFA); Adams v. Federal Materials Co., No. Civ.A. 5:05CV-90-R, 2005 WL 1862378, at *4 (W.D. Ky. July 28, 2005) (holding that a defendant added after the effective date of the CAFA had a right to remove the case to federal court because the action is "commenced" for purposes of the CAFA from the perspective of the newly-added defendant). In Knudsen I the court noted that the answer to an inquiry as to whether an amendment has commenced an action so as to make it removable under the CAFA may be "modeled on [Rule] 15(c) [of the Federal Rules of Civil Procedure], which specifies when a claim relates back to the original complaint (and hence is treated as part of the original suit) and when it is sufficiently independent of the original contentions that it must be treated as fresh litigation." 411 F.3d at 807. However, the weight of authority appears to apply the law of the state where a class action was filed in determining whether an amendment relates back so as to commence the action for purposes of removal under the CAFA.

For example, in Schorsch the court, applying state law, concluded that an amendment of a class action complaint after the effective date of the CAFA did not commence a suit so as to make it removable. After the CAFA was enacted, the plaintiff in the Schorsch case, a class action against a manufacturer of drum kits for printers, amended his complaint in Illinois state court to allege that a defective part existed in two additional products manufactured by the defendant, prompting the defendant to remove the case on the grounds that the amendment of the complaint had commenced the case anew for CAFA purposes. See 417 F.3d at 749-50. The court noted that "[a]n amendment relates back in Illinois when the original complaint 'furnished to the defendant all the information necessary . . . to prepare a defense to the claim subsequently asserted in the amended complaint.'" Id. at 751 (quoting Boatmen's Nat'l Bank of Belleville v. Direct Lines, Inc., 656 N.E.2d 1101, 1107 (Ill. 1995)). The court held that because the same defective part remained at the heart of the proceeding, this was no more than a "workaday change[ ] routine in class suits" and was insufficient to constitute commencement of the action for purposes of the CAFA. Id. See also Phillips, 435 F.3d at 787-88 (testing whether an amendment of a class action complaint related back to the date of filing of the complaint under the procedural rules of the state where the class action was commenced); Knudsen v. Liberty Mut. Ins. Co., 435 F.3d 755, 757 (7th Cir. 2006) (Knudsen II) (same); Bemis, 2006 WL 1064067, at *4 (same); In re General Motors Corp. Dex-Cool Prods. Liab. Litig., No. CIVMDL-03-1562GPM, Civ. 05-10007-GPM, 2006 WL 644793, at *2 (S.D. Ill. Mar. 9, 2006) (same); Boxdorfer v. Daimlerchrysler Corp., 396 F. Supp. 2d 946, 951-52 (C.D. Ill. ...

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