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Addison Automatics, Inc. v. Hartford Cas. Ins. Co.

United States Court of Appeals, Seventh Circuit

October 2, 2013


Argued Sept. 10, 2013.

David M. Oppenheim, Anderson & Wanca, Rolling Meadows, IL, for Plaintiff-Appellee.

James K. Borcia, Ashley L. Conaghan, Michael J. Duffy, Tressler LLP, Steven M. Levy, Dentons U.S. LLP, Chicago, IL, for Defendant-Appellant.

Page 741

Before EASTERBROOK, ROVNER, and HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge.

This is an appeal from a district court's decision remanding a case to state court. See 28 U.S.C. § 1453(c) (court of appeals may accept appeal from order remanding class action). Plaintiff Addison Automatics, Inc. filed a complaint in state court seeking a declaratory judgment that defendant Hartford Casualty Insurance Company owed a duty to defend and indemnify a third party against whom Addison had earlier brought and settled a class action on terms that included an assignment to the class of the third party's rights against its insurers. Addison's complaint stated that it intended to proceed solely in its individual capacity rather than on behalf of the previously certified class.

The question before us is whether Addison's follow-on suit is a class action removable under the Class Action Fairness Act, 28 U.S.C. §§ 1332(d) and 1453. The district court thought not, concluding that it should not look past Addison's assertion that it was suing only as an individual. We accepted the appeal, see § 1453(c), and we reverse the remand to state court. Despite Addison's disclaimer of its status and duties as class representative, it has standing to pursue relief against Hartford only as class representative. The declaratory judgment action is in substance a class action that was properly removed to federal court.

I. Procedural Background

The case now before us has its origins in state court, where Addison filed a class action against Domino Plastics Company. The complaint alleged that Domino had sent thousands of " junk faxes" in violation of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227, and the Illinois Consumer Fraud Act, 815 ILCS 505/2, and had committed the tort of conversion. Domino's liability insurers refused to defend the suit. Left to its own devices and checkbook, Domino negotiated a settlement that would protect its own interests and leave its insurers to face the plaintiff class. Addison and Domino agreed that the state court should certify a class and then enter a nominal judgment against Domino for nearly $18 million. We say " nominal" because Addison agreed that the class would not recover a single dollar of that amount from Domino itself.

Instead, Domino assigned to Addison— as class representative— whatever claims Domino might have against its absent liability insurers. The settlement made clear that Addison's status as assignee depended on its continuing role as class representative. Domino assigned its claims against its insurers " to the Class (as represented by Plaintiff and its attorneys)." After notice and a fairness hearing, the state court certified a class of all recipients of Domino's faxed advertisements between January 2007 and October 2008 and approved the settlement in an order that also recognized that Domino's assignment was " to the Class" and not to Addison individually.

Addison then filed a new state court action against Hartford seeking a declaratory judgment holding Hartford liable for the $18 million judgment against Domino. In the new complaint, Addison alleged that it was suing both " individually and as the representative of a certified class." Hartford removed the case to federal court under 28 U.S.C. § 1453. Addison responded by immediately dismissing the case voluntarily, notwithstanding Federal Rule of Civil Procedure 23(e), which requires court approval to dismiss a claim by a certified class.

The new twist in this case comes from Addison's and class counsel's next move.

Page 742

Addison quickly filed yet another state court lawsuit against Hartford. That complaint, which is now before us in this appeal, names Addison as the only plaintiff, describes the suit as " an individual declaratory judgment action," and insists that it is " not a class ...

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