Destiny Health Inc. v. Conn. Gen. Life Ins. Co., Case No. 10–CV–889.

• Decision Date: 22 September 2010
• Docket Number: Case No. 10–CV–889.
• Citation: 741 F.Supp.2d 901
• Parties: DESTINY HEALTH, INC., Plaintiff,v.CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Illinois

741 F.Supp.2d 901

DESTINY HEALTH, INC., Plaintiff,

v.CONNECTICUT GENERAL LIFE INSURANCE COMPANY, Defendant.

Case No. 10–CV–889.

United States District Court, N.D. Illinois, Eastern Division.

Sept. 22, 2010.

Paul K. Vickrey, Arthur Anthony Gasey, Laura Anne Kenneally, Paul Christopher Gibbons, Niro, Scavone, Haller & Niro, Ltd., Chicago, IL, for Plaintiff.Brett Ingerman, Michael Paul O'Day, DLA Piper, Baltimore, MD, Raja S. Gaddipati, DLA Piper US LLP, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

ROBERT M. DOW, JR., District Judge.

Plaintiff Destiny Health Inc. (“Destiny”) moves this Court for leave to file a first amended complaint [8] adding CIGNA Corporation as a defendant and for an order remanding the above-captioned matter to the Circuit Court of Cook County, Illinois, based on lack of diversity jurisdiction. Defendant Connecticut General Life Insurance Company (“CGLIC”) opposes the motion. For the following reasons, the Court grants Destiny's motion for leave to file an amended complaint [8]. The Court gives Destiny fourteen days from the date of this order to file an amended complaint that incorporates the additional allegations set forth in its briefs. Defendant's motion for leave to file a surreply [17] is denied, as Defendant's sixteen-page response brief thoroughly addresses all of the issues that the Court considered in ruling on this motion and the Court has sufficient facts and authority to render a decision on this issue.

I. Background

On April 7, 2009, Destiny filed the instant lawsuit in the Circuit Court of Cook County against Defendant Connecticut General Life Insurance Company, alleging misappropriation of trade secrets. In its original complaint, Destiny named only CGLIC, although it referred to CGLIC as “CIGNA” throughout the complaint. Destiny now requests leave to file an amended complaint, which essentially states the same allegations but now states them against both CGLIC and CIGNA Corporation.

In its original complaint, Destiny alleged that, in 2007, CGLIC and Destiny discussed the possibility of entering into a business relationship to enable CGLIC to implement a wellness-based incentive program for its customers. Compl. at ¶ 5. As the business discussions progressed, CGLIC acquired Destiny's proprietary trade secret information concerning aspects of Destiny's wellness-based healthcare program, pursuant to the terms of a Confidentiality Agreement. Id. at ¶ 6, 7, 12, 13. After detailed evaluation of Destiny's propriety information, CGLIC told Destiny that CGLIC could not move forward on the project due to “system challenges.” Id. at ¶ 9. Then, on January 8, 2009, CGLIC announced the launch of a wellness-based incentive health insurance program, known as the “CIGNA Incentive Points Program,” allegedly incorporating many of Destiny's proprietary trade secrets, without Destiny's consent. Id. at ¶ 9, 10, 13.

On August 20, 2009, Destiny served its first set of requests for the production of documents and things to CGLIC, specifically requesting “[d]ocuments and things sufficient to show CIGNA's past and present organizational structure for the past five years.” ¹ CGLIC initially objected and refused to produce documents responsive to this request.² On November 6, 2009, CGLIC filed its answer to Destiny's complaint. On February 9, 2010, CGLIC filed a Notice of Removal pursuant to 1441(a) asserting that this Court has subject matter jurisdiction over the lawsuit because Destiny alleged damages in excess of $75,000 and there is complete diversity between Destiny and CGLIC.

After receipt of the Notice of Removal, counsel for Destiny continued to request information from CGLIC in an effort to determine whether removal was proper as well as whether the correct CIGNA entities were parties to this litigation. On February 10, 18, 24, and March 1, 2010, counsel for Destiny corresponded with counsel for CGLIC seeking information regarding whether the proposed new defendant CIGNA Corporation was responsible for any acts alleged to constitute misappropriation of Destiny's trade secrets. Specifically, Destiny requested: (1) identification of which corporate entity employed the individuals identified in CGLIC's response to Interrogatory No. 1 in September of 2007; (2) identification of which corporate entity actually launched CIGNA's Incentive Points Program in January 2009; and (3) production of documents related to CIGNA's corporate structure.

Based on the information provided by CGLIC in response to Destiny's inquiries as well as the documents produced to date by CGLIC, Destiny contends that another CIGNA entity—CIGNA Corporation—also was intimately and directly involved in the misappropriation of Destiny's trade secrets. In particular, CIGNA Corporation allegedly employed two individuals who were integrally involved in engineering the business discussions with Destiny, namely Richard Gray and Thomas McCarthy. According to Destiny, these two individuals were Destiny's principal contacts at CIGNA for the business relationship; they traveled to Chicago and interacted closely with Destiny's employees regarding the evaluation of Destiny's proprietary trade secret information; and they led Destiny to believe that CIGNA intended to go forward with a business relationship with Destiny. Destiny contends that CIGNA employees Gray and McCarthy held themselves out as the decision-makers or “deal team” with respect to the business relationship between CGLIC and Destiny.

Defendant CGLIC contends that it, not CIGNA, developed, launched, and administers the incentive points program and was the entity that entered into the confidentiality agreement with Destiny. CGLIC further maintains that CIGNA Corp. is a holding company that exists to own stock in other companies, that issues its own stock to the public, and that indirectly owns the stock of CGLIC, a “third-tier” subsidiary. According to Defendant's response, CIGNA is not an insurance company and does not promote, offer, sell, or administer any products or services, including insurance. Defendant concedes that CIGNA's officers and employees provide services for its various subsidiaries; however, Defendant maintains that the expenses of any services that CIGNA provides for its indirect subsidiaries are charged back to the subsidiaries. CGLIC confirms that Gray and McCarthy are employees of CIGNA and that each provided services in connection with the incentive points program, but maintains that their services were solely on behalf of CGLIC and the costs associated with their time were charged back to CGLIC.

II. Analysis

When a plaintiff files suit in state court but could have invoked the original jurisdiction of the federal courts, the defendant may remove the action to federal court. See 28 U.S.C. § 1441(a). The party seeking removal has the burden of establishing federal jurisdiction, and federal courts should interpret the removal statute narrowly, resolving any doubt in favor of the plaintiff's choice of forum in state court. Doe v. Allied–Signal, Inc., 985 F.2d 908, 911 (7th Cir.1993). CGLIC properly removed this action to the Northern District of Illinois based on diversity jurisdiction on February 9, 2010, because CGLIC is a citizen of Connecticut. Approximately one month after CGLIC removed, Destiny filed the instant motion to amend, seeking to join CIGNA, CGLIC's parent company and a citizen (for diversity purposes) of Delaware. Plaintiff also is a citizen of Delaware.

When joinder of a nondiverse party would destroy subject matter jurisdiction, 28 U.S.C. § 1447(e) applies ³: “[i]f after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court.” 28 U.S.C. § 1447(e). Thus, the Court has two options: (1) deny joinder, or (2) permit joinder and remand the action to state court. See Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 759 (7th Cir.2009); see also Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1486 (7th Cir.1996). These are the only options; a court may not permit joinder of a nondiverse defendant and retain jurisdiction. See Schur, 577 F.3d at 759.

In evaluating the propriety of the joinder of a non-diverse party after removal, the United States Court of Appeals for the Seventh Circuit has instructed courts to consider: (1) the plaintiff's motive for seeking joinder, particularly whether the purpose is to defeat federal jurisdiction; (2) the timeliness of the request to amend; (3) whether the plaintiff will be significantly injured if joinder is not allowed; and (4) any other relevant equitable considerations. See Schur, 577 F.3d at 759; Perez v. Arcobaleno Pasta Machs., Inc., 261 F.Supp.2d 997, 1001 (N.D.Ill.2003); In re Bridgestone/Firestone, Inc., ATX, ATX II, & Wilderness Tires Prods. Liab. Litig., 199 F.R.D. 304, 307 n. 2 (S.D.Ind.2001). “The decision to permit joinder of diversity-defeating parties is discretionary and guided essentially by equitable considerations.” Brown v. Alter Barge Line, Inc., 461 F.Supp.2d 781, 784 (S.D.Ill.2006).

In order to permit joinder of a diversity-defeating party after removal, it is not necessary that the non-diverse party be one that is indispensable to just adjudication of a lawsuit within the meaning of Rule 19 of the Federal Rules of Civil Procedure. See Goutanis v. Mutual Group (US), 1995 WL 86588, at *6 (N.D.Ill. Feb. 24, 1995); Vasilakos v. Corometrics Med. Sys., Inc., 1993 WL 390283, at *2 (N.D.Ill. Sept. 30, 1993). In evaluating fraudulent joinder to defeat diversity, a court does not inquire into a plaintiff's motive for joining a diversity-defeating party. See Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir.1992). Conversely, one of the factors in evaluating a post-removal attempt to join a non-diverse party—the scenario present in this case—is whether a plaintiff's motive for joining such a party...