Armstrong v. Lasalle Bank Nat. Ass'n

• Decision Date: 13 January 2009
• Docket Number: No. 07-2280.,07-2280.
• Citation: 552 F.3d 613
• Parties: Juan ARMSTRONG, James E. Duckett, Roderick Gillespie, et al., Plaintiffs-Appellees, v. LASALLE BANK NATIONAL ASSOCIATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

552 F.3d 613

Juan ARMSTRONG, James E. Duckett, Roderick Gillespie, et al., Plaintiffs-Appellees, v. LASALLE BANK NATIONAL ASSOCIATION, Defendant-Appellant.

No. 07-2280.

United States Court of Appeals, Seventh Circuit.

Argued January 17, 2008.

Decided January 13, 2009.

Pamela B. Slate, Slate Kennedy, Montgomery, AL, Gary D. McCallister (argued), McCallister & Associates, Chicago, IL, for Plaintiffs-Appellees.

Theodore M. Becker, James E. Bayles, Jr. (argued), Morgan, Lewis & Bockius, Chicago, IL, for Defendant-Appellant.

Before RIPPLE, ROVNER, and TINDER, Circuit Judges.

ROVNER, Circuit Judge.

This appeal originated as a number of lawsuits against Amsted Industries, Inc., its Employee Stock Ownership Plan (ESOP), and Amsted officers, by participants in Amsted's ESOP, charging violations of ERISA, breaches of fiduciary duty, breach of contract and conversion. Those cases were initiated in district courts in Alabama, Illinois, and Florida, but on August 22, 2001, the Judicial Panel on Multidistrict Litigation (the Panel) granted the defendant's motion to transfer the cases under 28 U.S.C. § 1407 to the Northern District of Illinois for consolidated pretrial proceedings. The Panel is authorized to transfer to one district civil actions involving common questions of fact that were pending in multiple districts. The Panel must first determine that the transfer will further "the convenience of the parties and witnesses and will promote the just and efficient conduct of such actions." 28 U.S.C. § 1407. With one exception not applicable here, the transfer and consolidation is only for pretrial proceedings, and the cases are remanded to the original courts at the conclusion of those proceedings. 28 U.S.C. § 1407, 1407(h).

Upon the transfer, the district court ordered the parties to file two consolidated cases—one consisting of Amsted retirees and one of non-retirees. The non-retirees' consolidated complaint added LaSalle Bank, as for Amsted's ESOP, as a defendant. Through settlement or dispositive motions, all retiree claims, and all non-retiree claims against Amsted and its affiliated defendants, were dismissed, and only the non-retiree claims against LaSalle remain alleging that LaSalle made an imprudent valuation of the company's stock, causing heavy losses.

In the consolidated complaint, the non-retiree plaintiffs (hereinafter simply the "plaintiffs") included a statement that "venue is proper in this court." In addition, they repeatedly acquiesced in the district court's setting of a timeline for discovery and trial, including the setting of trial dates. At the close of pretrial proceedings and approximately two weeks before the pretrial order was due, however, the plaintiffs moved for a remand of their claims pursuant to 28 U.S.C. § 1407. LaSalle objected, arguing that the plaintiffs by their conduct had waived the right to a remand and had consented to venue in the Northern District of Illinois.

The district court rather reluctantly granted the remand request, holding that the plaintiffs had not consciously waived their right to object to venue. In so holding, the district court stated that a waiver entails the deliberate relinquishment of a known right, and that waivers generally must be clear and unambiguous. Although the dilatory behavior of the plaintiffs in failing to make clear at an earlier time their intent to seek remand caused the court consternation, the court believed that the conduct was not enough to constitute waiver of that remand right. The court further noted that it would be a "nightmare scenario" for it to retain jurisdiction and try the case only to have that initial decision overturned on appeal. Although the court granted the remand request, it ultimately certified two questions to this court under 28 U.S.C. § 1292(b): (1) "[w]hether the filing of an amended complaint agreeing to venue and jurisdiction in the transferee court, and which adds a defendant that may only fairly be sued in the transferee court, constitutes consent to trial in the transferee court sufficient to overcome the right to seek remand under 28 U.S.C. § 1407(a) and the Supreme Court's decision in Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 118 S.Ct. 956, 140 L.Ed.2d 62 (1998)"; and (2) "[w]hether a waiver of the right to remand under Section 1407(a) requires evidence of a `deliberate relinquishment of a known right' or may be shown implicitly by conduct inconsistent with an intent to seek remand."

The defendant argues on appeal that the district court erred in determining that the plaintiffs had not waived their right to a remand under § 1407(a). In evaluating this claim, we are guided in the first instance by the words of the statute itself. Section 1407(a) provides for the transfer and consolidation of civil actions involving common questions of fact pending in different districts. The transfers are made by the Panel upon its determination that the transfers would further the convenience of parties and witnesses and promote the just and efficient conduct of such actions. Id. Section 1407(a), however, also provides that "[e]ach action so transferred shall be remanded by the panel at or before the conclusion of such pretrial proceedings to the district from which it was transferred unless it shall be previously terminated." (emphasis added) Id. The Supreme Court in Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach et al., 523 U.S. 26, 118 S.Ct. 956, 140 L.Ed.2d 62 (1998), was emphatic that the remand language should be given its plain meaning, stating that "[t]he Panel's instruction comes in terms of the mandatory `shall,' which normally creates an obligation impervious to judicial discretion." Id. at 35, 118 S.Ct. 956. In Lexecon, the Court struck down a long-standing practice whereby a district court would transfer a case to itself where retaining the case would promote efficient resolution of the claims. The Panel itself had sanctioned such assignments in a rule issued in reliance on its rulemaking authority under 28 U.S.C. § 1407(f). Id. at 32, 118 S.Ct. 956. The Court held that regardless of whether permitting transferee courts to make self-assignments would be more desirable than preserving a plaintiff's choice of venue, § 1407(a) categorically limits the authority of courts to override the plaintiff's choice and establishes a right to remand once the pretrial stage has been completed. Id. at 41-42, 118 S.Ct. 956.

We begin, then, with the proposition that the case shall be remanded by the district court at the conclusion of the pretrial proceedings, unless it is otherwise terminated as by the granting of a dispositive motion. Although the defendant at times suggests otherwise, there is no need for plaintiffs to assert their intention to seek such remand in order for the right to exist. Instead, the presumption is that the case will be remanded at the close of pretrial proceedings. Because § 1407(a) is a venue statute, however, plaintiffs may waive their right to the remand and consent to venue in the transferee court, here the Northern District of Illinois. The district court held that such a waiver may be found only if the plaintiffs deliberately relinquished a known right and that the waiver must be clear and unambiguous. The court held that the plaintiffs had failed to cross that threshold. The proper standard to apply in demonstrating waiver is the subject of much debate by the parties in this case. The defendant asserts that the requirement that a waiver be clear and unambiguous is applicable only for the waiver of constitutional rights, and that any conduct inconsistent with an intent to seek remand will suffice to demonstrate waiver of the § 1407(a) remand right. Neither party has been able to point us to any cases discussing this issue in the context of § 1407—a reflection, undoubtedly, of the relatively minimal caselaw on the subject. We have addressed waiver in an analogous context, however, involving the waiver of the right to arbitration, and find that approach persuasive here.

As we noted in Automobile Mechanics Local 701 Welfare and Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740 (7th Cir.2007), an arbitration clause is a species of forum selection clause, reflecting an ex ante determination by the parties of the most convenient forum to resolve disputes. Id. at 746, citing Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 533-34, 115 S.Ct. 2322, 132 L.Ed.2d 462 (1995). Such determinations are subject to waiver or forfeiture, and as a general rule a district court should not dismiss sua sponte either for improper venue or for failure to follow a forum selection clause. In determining whether a party has waived the right to enforce that arbitration clause, we held that "[c]ourts must `determine whether based on all the circumstances, the party against whom the waiver is to be enforced has acted inconsistently with the right to arbitrate.'" Halim v. Great Gatsby's Auction Gallery, Inc., 516 F.3d 557, 562 (7th Cir.2008). That analysis of whether a party implicitly waived the right to arbitrate should encompass a variety of factors, providing significant weight to the diligence or lack thereof. Id. We made clear in Halim that it was not enough—as the defendant asserts in this case—to merely demonstrate any conduct inconsistent with an intent to seek arbitration. Accordingly, we held that "[a] party does not waive its right to arbitrate a dispute by filing a motion to dismiss or a motion to transfer venue," although those actions in isolation are consistent with an intent to litigate in the courts rather than to arbitrate. Id. Instead, the focus is properly on the actions taken as a whole, and whether they are inconsistent with an intent to arbitrate.

The standard for waiver under § 1407(a) must be at least as strong as that employed in those arbitration cases. In both circumstances, we are presented with a vehicle for forum...