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In re Audi Litigation

June 1, 2006


The opinion of the court was delivered by: Judge Joan B. Gottschall

Magistrate Judge Cole


In 1987,*fn1 several groups of plaintiffs filed class action complaints in Cook County Circuit Court against Volkswagen of America, Inc., Volkswagen AG, and Audi AG (collectively, "the defendants"). Each of the complaints asserted a variety of state law claims stemming from the alleged "unintended acceleration" of certain Audi 5000 automobiles. The complaints eventually were consolidated, and in subsequent years, many of the claims were dropped or dismissed. Although it has been wending its way through the legal system for 17 years, the case remains at the pleading stage. See Notice of Removal ¶ 9; Pl.'s Reply in Supp. Mot. Remand, at 6. Apparently, the putative class has yet to be formally certified. Id.

The current complaint -- the Sixth Amended Complaint ("complaint") -- alleges a single cause of action under the Illinois Consumer Fraud and Deceptive Practices Act ("ICFDA"), 815 ILCS 505/1 et seq. On July 20, 2005, the plaintiffs moved to "supplement" the complaint by adding a strict liability claim. On August 16, 2005, the defendants attempted to remove the action to this court, arguing that jurisdiction was proper under: (1) the Class Action Fairness Act of 2005, Pub.

L. 109-2, 119 Stat. 4 (2005), ("CAFA" or "the Act"); and (2) the diversity and supplemental jurisdiction statutes, 28 U.S.C. § 1332 and 28 U.S.C. § 1367, respectively. The plaintiffs have moved to remand the case to state court. For the reasons that follow, the motion to remand is granted.*fn2


A. Legal Standard

Removal of actions to federal court is governed by 28 U.S.C. § 1441, which provides that 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 Mkt., Inc., 419 F.3d 649, 653 (7th Cir. 2005). The removal statute is to be interpreted narrowly and courts should presume that the plaintiff may choose his or her forum. Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993). Any doubt regarding jurisdiction should be resolved in favor of the states.*fn3 Id. The burden of establishing federal jurisdiction falls on the party seeking removal. Id; see also Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005) (holding that the burden of establishing jurisdiction remains on the defendant after passage of CAFA).

B. The Class Action Fairness Act

CAFA amended 28 U.S.C. § 1332(d) to confer federal jurisdiction over class actions where there is minimal diversity (i.e., where there is diversity between any defendant and any plaintiff class member), where the class consists of at least 100 members, and where the amount in controversy exceeds $5 million. See, e.g., Prime Care of Northeast KS, LLC v. Humana Ins. Co., No. 06-3024, 2006 WL 1305229, at *1 (10th Cir. May 12, 2006). In addition, CAFA contains a removal provision that permits any defendant to remove a qualifying action without regard to the residence or consent of other defendants. The Act is not retroactive, however, and thus applies only to class actions that are commenced on or after the date of CAFA's enactment: February 18, 2005. See, e.g., Bemis v. Allied Property & Cas. Ins. Co., No. 05-CV-751-DRH, 2006 WL 1064067, at *2 (S.D. Ill. Apr. 20, 2006).

Although the instant suit was filed well before CAFA's enactment, the defendants claim that the Act is applicable. Specifically, defendants argue that by supplementing the complaint in July 2005, the plaintiffs commenced a new action for purposes of CAFA. In the past year, the Seventh Circuit has addressed on a number of occasions the question of when a new action can be said to have commenced under CAFA. In these cases, the Seventh Circuit has held that "routine" amendments to complaints are not sufficient to commence new suits under CAFA. Rather, a new action is triggered only by a step "sufficiently distinct that courts would treat it as independent for statute of limitations purposes." Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805, 807 (7th Cir. 2005) ("Knudson I"). The paradigmatic case in which an amendment does not commence a new suit is where the amendment relates back to the original complaint. See, e.g., Phillips v. Ford Motor Co., 435 F.3d 785, 787-88 (7th Cir. 2006). Thus, courts look to relation-back law to determine whether an amendment commences a new action for CAFA purposes. Id. ("The clearest case in which an amended complaint does not kick off a new suit is where the amendment 'relates back' to the original complaint. For then the fact that the statute of limitations has run ... is not a bar, as it would be if the amended complaint did not relate back-that is, if it stated a new claim and thus kicked off a new suit."). Moreover, since the question for CAFA's purposes is whether a new action has been commenced in state court, state relation-back law, rather than federal practice, supplies the rule of decision. See, e.g., Schorsch v. Hewlett-Packard Co., 417 F.3d 748, 750 (7th Cir. 2005); see also Phillips, 435 F.3d at 787 ("Since the question ... is whether adding named plaintiffs commences a new suit in state court, the answer should depend on state procedural law.").

Applying these considerations, the Seventh Circuit has held that amending a complaint to add or substitute named plaintiffs or class representatives does not commence a new suit under CAFA. Phillips, 435 F.3d at 786. The Seventh Circuit also has held that changing a class's definition or membership does not commence new suit under CAFA. See, e.g., Schorsch, 417 F.3d at 750; Knudsen I, 411 F.3d at 807; Schillinger v. Union Pacific R. Co., 425 F.3d 330, 334 (7th Cir. 2005).

More relevant to the instant case, however, is Knudsen v. Liberty Mut. Ins. Co., 435 F.3d 755 (7th Cir. 2006) ("Knudson II"), which involved the addition of new claims to a suit after CAFA's enactment. The plaintiffs in Knudson II alleged that defendant, Liberty Mutual, systematically underpaid claims for medical services. Although the complaint had been filed long before CAFA's enactment, the plaintiffs later amended the class definition to include individuals insured not only by Liberty Mutual, but also by one of Liberty Mutual's subsidiaries. Knudsen I, 411 F.3d at 807. Liberty Mutual attempted to remove the suit pursuant to CAFA, and the Seventh Circuit held that the change in the class definition did not commence a new suit under CAFA. Id. at 808. After the court's decision, the plaintiffs amended their complaint once more, seeking to hold Liberty Mutual liable for all policies issued by any of its subsidiaries or affiliates. Knudson II, 435 F.3d at 755. The plaintiffs also requested that all claims for payment by all insureds on all of these policies everywhere in the nation be covered. Id. Finally, plaintiffs sought certification of a nationwide class, asking the court to disregard any difference in insurance and workers' compensation laws across the 50 states. Id.

The defendants once again attempted to remove the case to federal court. On appeal, the Seventh Circuit held that the changes presented new claims for relief. The court noted that in order for a new claim to relate back to an original pleading, the original pleading must furnish the defendant with notice of the events underlying the new claim. Id. at 757. Since Liberty Mutual was not responsible for adjusting demands for payment of all of its subsidiaries' and affiliates' policies, the court held that the original complaint afforded Liberty Mutual no notice that the plaintiff would seek to hold it responsible for underpayment by its subsidiaries. Id. Hence, the court concluded: "as we ...

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