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Coy Chiropractic Health Center, Inc. v. Travelers Casualty & Surety Co.

July 20, 2007


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


This matter is before the Court on the motion for remand to state court brought by Plaintiffs Coy Chiropractic Health Center, Inc., Richard Coy, and Frank C. Bemis & Associates (Doc. 9). For the following reasons, the motion is GRANTED.


Plaintiffs filed this action originally in the Circuit Court of the Third Judicial Circuit, Madison County, Illinois, on February 11, 2005. They are parties to preferred provider organization ("PPO") agreements with First Health Network ("First Health").*fn1 Plaintiffs allege that bills submitted by them to Defendants Travelers Casualty & Surety Company and Travelers Indemnity Company for chiropractic care furnished to Defendants' insureds have been discounted according to the terms of the PPO agreements. Plaintiffs allege that these discounts are unlawful because Defendants have no PPO agreements with them, and fail to furnish an increased volume of patient referrals to Plaintiffs in return for such discounts. Plaintiffs seek to represent a nationwide class of health care providers injured by Defendants' so-called "silent PPO" practices.

Defendants have removed the case from state court to this Court, asserting federal subject matter jurisdiction on the basis of 28 U.S.C. § 1332, as amended by the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.). Plaintiffs have moved for remand of the case to state court. Defendants have responded to the motion for remand and have requested oral argument on the motion. Having reviewed carefully the submissions of the parties concerning remand, the Court concludes that oral argument on the motion for remand will not be helpful in this case. The motion for remand is ripe for decision and the Court now is prepared to rule.


Under 28 U.S.C. § 1441, "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). Under CAFA, federal courts have jurisdiction in diversity over class actions and putative class actions involving one hundred or more class members in which any member of the plaintiff class is a citizen of a state different from that of any defendant, and in which, after aggregating all claims of class members, an amount in excess of $5 million, exclusive of interest and costs, is in controversy. See 28 U.S.C. § 1332(d)(1)(B), (d)(2)(A), (d)(5)(B), (d)(6), (d)(8); Hart v. FedEx Ground Package Sys. Inc., 457 F.3d 675, 676-77 (7th Cir. 2006); Knudsen v. Liberty Mut. Ins. Co., 435 F.3d 755, 758 (7th Cir. 2006); Kitson v. Bank of Edwardsville, Civil No. 06-528-GPM, 2006 WL 3392752, at *2 (S.D. Ill. Nov. 22, 2006).*fn2

Class actions filed in state court in which the statutory prerequisites for federal subject matter jurisdiction under CAFA are met may be removed to federal court. See 28 U.S.C. § 1453(b); Santamarina v. Sears, Roebuck & Co., 466 F.3d 570, 571 (7th Cir. 2006); Bemis v. Allied Prop. & Cas. Ins. Co., No. 05-CV-751-DRH, 2006 WL 1064067, at *2 (S.D. Ill. Apr. 20, 2006). A removing defendant has the burden of establishing that the prerequisites for the exercise of federal jurisdiction on removal under CAFA are satisfied and doubts as to the propriety of such removal must be resolved in favor of remand to state court. See Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir. 2005); In re Audi, No. 05-CV-4698, 2006 WL 1543752, at *1 & n.3 (N.D. Ill. June 1, 2006); Orbitz, LLC v. Worldspan, L.P., 425 F. Supp. 2d 929, 931 (N.D. Ill. 2006); Fiore v. First Am. Title Ins. Co., No. 05-CV-474-DRH, 2005 WL 3434074, at *2 (S.D. Ill. Dec. 13, 2005).

In this instance, it is undisputed that this is a class action involving one hundred or more class members in which the requisite minimal diversity of citizenship exists. Defendants are Connecticut citizens and Plaintiffs are Illinois citizens. See Doc. 2 ¶ 10. Similarly, the record shows that an amount in excess of $5 million, exclusive of interest and costs, is in dispute. See id., Ex. A pt. 1 (Affidavit of Lisa M. Lilly) ¶ 6. The principal issue in contention here is whether this action was commenced on or after CAFA's effective date. 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." Schillinger v. 360Networks USA, Inc., Civil No. 06-CV-138-GPM, 2006 WL 1388876, at *2 (S.D. Ill. May 18, 2006) (quoting Pub. L. 109-2, § 9, 119 Stat. 4). See also Miller v. Hypoguard USA, Inc., No. 05-CV-186-DRH, 2006 WL 1285343, at *1 n.2 (S.D. Ill. May 8, 2006). The question of when a lawsuit is initially commenced for purposes of removal under CAFA is determined by the law of the state where a class action initially was filed. See Pfizer, Inc. v. Lott, 417 F.3d 725, 726 (7th Cir. 2005); In re General Motors Corp. Dex-Cool, No. Civ. MDL-03-1562-GPM, Civ. 05-10008-GPM, 2006 WL 2818773, at *2 (S.D. Ill. Sept. 27, 2006). Under the law of Illinois, where this action initially was filed, "[e]very action, unless otherwise expressly provided by statute, shall be commenced by the filing of a complaint." 735 ILCS 5/2-201(a). See also Del Raine v. Carlson, 826 F.2d 698, 707 (7th Cir. 1987) (citing Lawrence v. Williamson Ford, Inc., 300 N.E.2d 636, 640 (Ill. App. Ct. 1973)) (under Illinois law, "suit is commenced by filing the complaint[.]"). Accordingly, this action was commenced for CAFA purposes on February 11, 2005, when, as noted, it was filed originally in the Madison County circuit court. See Doc. 2, Ex. B pt. 1 (Class Action Complaint).

Defendants contend that this action in fact was commenced after the effective date of CAFA because on August 28, 2006, Plaintiffs served on them a proposed amended complaint. See Doc. 2, Ex. A pt. 1 (First Amended Class Action Complaint). In some instances an amendment of a class-action complaint in state court after the effective date of CAFA may operate to commence (or perhaps more properly, recommence) a class action for purposes of removal to federal court, even though the action originally was filed before the effective date of CAFA.

The United States Court of Appeals for the Seventh Circuit has held that for purposes of removal under CAFA, "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." Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805, 807 (7th Cir. 2005). See also Schillinger v. Union Pac. R.R. Co., 425 F.3d 330, 333 (7th Cir. 2005) (noting that "a defendant added after February 18 [2005] could remove because suit against it would have been commenced after the effective date" of CAFA) (emphasis omitted).

The accepted test of whether an amendment of a class-action complaint after the effective date of CAFA "commences" an action so as to permit removal under the statute is whether the amendment "relates back" to the filing date of the original complaint: if it does, then the case is not removable, but if it does not, the case is subject to removal under CAFA. See Knudsen, 411 F.3d at 807; Schillinger, 2006 WL 1388876, at *3; 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). In general, courts apply the law of the state where a class action was filed to determine whether an amendment of a class-action complaint after the effective date of CAFA has commenced an action for purposes of removal under the statute. See Santamarina, 466 F.3d at 573-74; Phillips v. Ford Motor Co., 435 F.3d 785, 787-88 (7th Cir. 2006). See also Plubell v. Merck & Co., 434 F.3d 1070, 1071-74 (8th Cir. 2006); Cuesta v. Ford Motor Co., No. CIV-06-61-S, 2006 WL 1207608, at **3-4 (E.D. Okla. May 1, 2006); Whitehead v. Nautilus Group, Inc., 428 F. Supp. 2d 923, 926-28 (W.D. Ark. 2006); Adams v. Insurance Co. of N. Am., 426 F. Supp. 2d 356, 372-77 (S.D.W.Va. 2006). As the Seventh Circuit Court of Appeals explained recently, "[a]n amended complaint kicks off a new action [for CAFA purposes] only if, under the procedural law of the state in which the suit was filed, it does not 'relate back' to the original complaint." Santamarina, 466 F.3d at 573. See also Prime Care of N.E. Kan., LLC v. Humana Ins. Co., 447 F.3d 1284, 1286 (10th Cir. 2006) (noting that courts "generally agree that whether an amendment is distinct enough to give rise to a new commencement date [under CAFA] is properly gauged by the forum state's law governing the relation-back of pleading amendments.") (collecting cases).

Relation back of amendments under Illinois law is governed by 735 ILCS 5/2-616, which provides, in pertinent part, The cause of action, cross claim or defense set up in any amended pleading shall not be barred by lapse of time under any statute or contract prescribing or limiting the time within which an action may be brought or right asserted, if the time prescribed or limited had not expired when the original pleading was filed, and if it shall appear from the original and amended pleadings that the cause of action asserted, or the defense or cross claim interposed in the amended pleading grew out of the same transaction or occurrence set up in the original pleading, even though the original pleading was defective in that it failed to allege the performance of some act or the existence of some fact or some other matter which is a necessary condition precedent to the right of recovery or defense asserted, if the condition precedent has in fact been performed, and for the purpose of preserving the cause of action, cross claim or defense set up in the amended pleading, and for that purpose only, an amendment to any pleading shall be held to relate back to the date of the filing of the original pleading so amended. 735 ILCS 5/2-616(b). The usual test of relation back is the so-called "same transaction or occurrence" rule, whereby an amendment to a pleading relates back to the filing date of the original pleading if "the matter introduced by the amended pleading . . . grew out of the same transaction or occurrence set up in the original pleading" so that there is an "identity of transaction or occurrence" as between the two pleadings. Zeh v. Wheeler, 489 N.E.2d 1342, 1345 (Ill. 1986). See also Onsite Eng'g & Mgmt., Inc. v. Illinois Tool Works, Inc., 744 N.E.2d 928, 933-34 (Ill. App. Ct. 2001) ("In determining whether the relation back doctrine should be applied, we focus on the identity of the transaction or occurrence on which the causes of action asserted in the original and amended pleading are based.").

The rationale underlying the same transaction or occurrence rule is that "a defendant will not be prejudiced" by an amended pleading "so long as his attention has been directed to the facts which form the basis of the claim lodged against him" in the amended pleading by the initial pleading in a case. Bailey v. Petroff, 525 N.E.2d 278, 282 (Ill. App. Ct. 1988). As the Supreme Court of Illinois explained in Zeh, the same transaction or occurrence rule "is bottomed on the belief that if the defendant has been made aware of the occurrence or transaction which is the basis for the claim, he can prepare to meet the plaintiff's claim, whatever theory it may be based on." 489 N.E.2d at 1348. See also Flynn v. Szwed, 586 N.E.2d 539, 543 (Ill. App. Ct. 1991) (quoting Seibert v. Cahill, 527 N.E.2d 1042, 1044 (Ill. App. Ct. 1988)) ("[A]n amended complaint relates back . . . when the original complaint supplies defendant with 'all the information necessary to prepare the defense to the subsequently asserted claim.'"). Thus, the same transaction or occurrence rule does not require identity of legal theories as between an original pleading and an amended pleading, nor does it require that the evidence necessary to prove the claims contained in each pleading be exactly the same. Instead, whether the claim for relief set up in an amended pleading relates back to that asserted in an original pleading must be "viewed in . . . factual terms . . . and considered . . . coterminous with the transaction, regardless of the number of substantive theories, or variant forms of relief flowing from those theories, that may be available to the ...

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