The opinion of the court was delivered by: David Herndon Chief Judge United States District Court
Before the Court is a Motion to Stay (Doc. 76) filed by Defendants I.F.D.A. Services, Inc. ("IFDA Services"), Illinois Funeral Directors Association (IFDA), Linda Allan, James D. Bosma, Kevin Burke, Charles S. Childs, Jr., Brent M. Davis, Dennis R. Davison, Steven Dawson, Vickie Deidrick, Paul G. Dixon, Randall L. Earl, Michelle Harrison, Donald Henderson, Geoffrey W. Hurd, Derek S. Johnson, Robert Konzelmann, Jack R. Kynion, David M. McReynolds, Robert W. Ninker, Michael Sayles, King Sutton, Eric R. Trimble, Chris Wolldridge, Richard D. Yurs (collectively, "Defendants"). Specifically, Defendants ask that the Court stay this matter pending resolution of state court proceedings pending in Cook County Circuit Court captioned Illinois Funeral Directors Association, et al. v. Daniel Hynes, No. 09 CH 19274. Plaintiff has not filed a response to Defendants' motion to stay and as such, this Court finds that his failure to respond is an admission of the merits of Defendants' motion. Local Rule 7.1(g).*fn1
Plaintiff David Tipsword acting as Trustee of the Mildred E. Tipsword Trust, brought this Complaint against the various Defendants for violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Funeral or Burial Funds Act. Plaintiff alleges that the Defendants paid I.F.D.A. member funeral homes an inflated rate of return on trust fund investments, invested a portion of the trust funds in corporate owned life insurance policies without notifying consumers, and acted as a trustee without proper authorization from the State of Illinois (Doc. ¶¶ 79, 87, 99). Plaintiff seeks damages for a class including "all Purchasers who contracted with Illinois Funeral Director's Association and/or
I.F.D.A. Services, Inc. for trust funded pre-need funeral or burial services whose Purchaser's account was open on or after October 1, 2008" (Id. at ¶ 63).
The state court complaint was filed by Defendants IFDA and IFDA Services against the Illinois Office of the Comptroller seeking a declaratory judgment that the Comptroller exceeded its authority by ordering IFDA and IFDA Services to replenish the trust fund for allegedly charging excessive fees (Doc. 77 p.4). The Comptroller in turn moved to join the People of the State of Illinois as a counter-plaintiff on their counterclaim against Defendant IFDA and IFDA Services charging that IFDA and IFDA Services had violated both the Illinois Consumer Fraud and Deceptive Practices Act and Illinois Funeral or Burial Act for operating as a trust company without authorization from the State of Illinois, collecting fees for the administration of the fund in excess of 25% of earnings, and failing to notify consumers that life insurance policies were used to fund the trust (Doc. 77 Ex. B ¶¶ 55 & 58, Ex. C).
The Colorado River doctrine allows "a federal court [to] stay a suit in exceptional circumstances when there is a concurrent state proceeding and the stay would promote 'wise judicial administration.'" Clark v. Lacy, 376 F.3d 682 (7th Cir. 2004) (citing Colorado River Water Conservation Dist. v. United States, 424 U.S. 800,96 S.Ct. 1236,47 L.Ed2d 483 (1976)). Mainly, the purpose of the Colorado River doctrine is to "avoid duplicative litigation." Colorado river, 424 U.S. at 817 (citation omitted). However, "abstention is the exception," as a federal court can not simply surrender its jurisdiction absent the "clearest of justifications." Clark, 376 F.3d at 685 (citations omitted). Simply because an action is pending in state court is "ordinarily no bar to parallel federal proceedings." Id. (citing LaDuke v. Burlington N.R.R. Co., 879 F.2d 1556, 1558 (7th Cir. 1989)).
Determining whether a stay is warranted in a federal proceeding pursuant to the Colorado River abstention doctrine involves a two-part analysis. First, the court should determine whether the state and federal actions are parallel. Id. (citing LaDuke, 879 F.2d at 1559). Once the federal court determines the actions to be parallel, it must next consider a variety of non-exclusive factors that might show the requisite "exceptional circumstances." Id. Therefore, the Court must first determine whether Plaintiff's federal suit and the pending state suit are actually "parallel."
An action is deemed "parallel" when "substantially the same parties are contemporaneously litigating substantially the same issues in another forum." Clark, 376 F.3d at 686 (citations omitted). However, the two suits need not be identical. Id. (Noting that "formal symmetry" is not required). Instead, the Court should look to whether there exists a "substantial likelihood that the state litigation will dispose of all claims presented in the federal case." Id. (quoting Lumen Constr., Inc. v. Brant Constr. Co., 780 F.2d 691, 694-96 (7th Cir. 1985)).
Defendants argue, and Plaintiff does not deny, that the actions are parallel. The issues in the two cases are "sufficiently similar." See Clark, 376 F.2d at 686. The issues in the Counterclaim and Complaint both allege violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Funeral or Burial Funds Act. Both the federal action and the counterclaim in the state action allege that Defendants violated the Acts by acting as trustee although they did not have proper authorization to do so, paying an inflated rate of return on trust fund investments to association members, and funding the pre-need trust fund with insurance policies without informing consumers. The issues in the state counterclaim are substantially similar, if not identical, to the issues raised in Plaintiff's federal suit.
Further, the two suits have substantially similar parties. The Complaint and Counterclaim are brought against both the IFDA and IFDA Services. While the Complaint also names several parties that are not named as defendants in the Counterclaim, "the addition of a party or parties to a proceeding, by itself, does not destroy the parallel nature of state and federal proceedings." Clark, 376 F.3d at 686 (citing Schneider Nat'l Carriers, Inc. v. Carr, 903 F.3d 1154, 1156 (7th Cir. 1990)). Further, as Defendants point out, the other individual defendants named in the federal suit Complaint were all present or former directors of IFDA and IFDA Services. While Defendants Merrill Lynch Pierce Fenner & Smith, Inc., U.S. Bank ...