Knudsen v. Liberty Mut. Ins. Co.
| Decision Date | 27 January 2006 |
| Docket Number | No. 05-8037.,05-8037. |
| Parties | Kirsten KNUDSEN, Chris Baker, and Vikki Baker, Plaintiffs-Respondents, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant-Petitioner. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Stephen M. Shapiro, John R. Schmidt, Howard J. Roin, Joel D. Bertocchi, Stephen J. Kane, Mayer, Brown, Rowe & Maw, Chicago, IL, Russell Yager, Jennifer B. Poppe, Jane Ann R. Neiswender, Gabriela A. Gallegos, Vinson & Elkins L.L.P., Dallas, TX, for Defendant-Petitioner.
Robert A. Holstein, Holstein Law Offices, Paul M. Weiss, Freed & Weiss, Chicago, IL, for Plaintiffs-Respondents.
Before COFFEY, EASTERBROOK, and MANION, Circuit Judges.
Liberty Mutual Insurance Company has removed this litigation to federal court a second time, again invoking the Class Action Fairness Act of 2005, 119 Stat. 4 (2005). Last year we held that the initial removal was unavailing, because the suit had been "commenced" in state court before February 18, 2005, the new Act's effective date. 411 F.3d 805 (7th Cir.2005). Liberty Mutual contended that the only appropriate defendant is Liberty Mutual Fire Insurance Company, which had issued the policies on which plaintiffs sought to collect. It argued that a mention of Liberty Fire in a proposed amendment to the class definition effectively began a new suit. We thought otherwise, observing that Liberty Mutual remained the only defendant and that the state judge had not acted on the plaintiffs' proposal by adding either new claims or new parties. But we added: Id. at 807-08 (emphasis in original). Liberty Mutual contends that this has come to pass.
Plaintiffs allege that Liberty Mutual pays unjustifiably little on claims for medical services under workers' compensation and casualty (accident) policies. All three plaintiffs are covered by or have claims derived from policies issued by Liberty Mutual Fire Insurance Company. The suit they commenced in Illinois, however, named as a defendant only its corporate parent, Liberty Mutual Insurance Company.
The complaint did not allege that Liberty Mutual and Liberty Fire are so lax about corporate formalities that their separate existence may be disregarded under veilpiercing principles (those of Massachusetts, where they are incorporated), or that Liberty Fire deceived its insureds into thinking that the policies were backed by a firm with deeper pockets. See United States v. Bestfoods, 524 U.S. 51, 118 S.Ct. 1876, 141 L.Ed.2d 43 (1998) (). Instead the plaintiffs have argued—and the state judge has held—that Liberty Mutual is liable because it did not do enough in discovery to alert plaintiffs' counsel to the need to substitute Liberty Fire as a defendant. Indeed, the state court thought that Liberty Mutual's "concealment" of Liberty Fire's role (despite the fact that only Liberty Fire's name is on the policies) is so egregious that it has entered a default in plaintiffs' favor on the merits, leaving only damages for consideration.
After our first decision plaintiffs sought more relief—much more relief. They asked the state court to hold Liberty Mutual responsible for all policies issued by any subsidiary or affiliate, about 35 firms in all. Plaintiffs asked, moreover, that all claims for payment by all insureds on all of these policies everywhere in the nation be covered by the default, so that Liberty Mutual would be compelled to pay without proof that an affiliate had failed to honor any policy. It should be enough, plaintiffs contended, that an insurer disbursed less than the medical bill, regardless of any policy's actual terms. This would override co-payment requirements, caps on total indemnity, schedules of allowable fees, and many other common clauses. Finally, plaintiffs proposed that they be certified to represent a nationwide class, and that the court disregard any difference in insurance and workers' compensation laws across the 50 states. Despite decisions by both the Supreme Court of Illinois and this court describing the grave problems with class actions for damages under multiple states' laws, see Avery v. State Farm Mutual Automobile Insurance Co., 216 Ill.2d 100, 296 Ill.Dec. 448, 835 N.E.2d 801 (2005); In re Bridgestone/Firestone, Inc., Tires Products Liability Litigation, 288 F.3d 1012 (7th Cir.2002), the state judge approved plaintiffs' proposal with immaterial changes. The class as certified is: "All insureds of Liberty Mutual Insurance Company, its affiliates and subsidiaries (collectively `Liberty Mutual'), their third party beneficiaries and their assignees who submitted medical bills covered by a Liberty Mutual insurance policy, and whose claims were paid for less than the medical charge, based upon the application of a medical cost and utilization database."
The order certifying this class was entered on September 29, 2005, well after the Class Action Fairness Act's effective date, and Liberty Mutual immediately filed a notice of removal. A second removal is proper when based on a new development. See 28 U.S.C. § 1446(b) ¶ 2: "If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant ... of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable". But the district court remanded the proceeding. It held that, because Liberty Mutual remains the one and only defendant, the "commencement" date is still the time of the suit's filing in state court, just as we held on the prior appeal. 405 F.Supp.2d 915 (N.D.Ill.2005). The district judge relied not only on Knudsen I but also on two later decisions holding that routine changes in class definitions—the sort that relate back to the original pleading for limitations purposes—do not "commence" new actions. See Schorsch v. Hewlett-Packard Co., 417 F.3d 748 (7th Cir.2005); Schillinger v. Union Pacific R.R., 425 F.3d 330 (7th Cir.2005).
Liberty Mutual is the original defendant, but it is faced with...
To continue reading
Request your trial
-
Gavin v. At&T Corp.
...following the effective date of CAFA provided a basis for Defendants to remove under the statute. See Knudsen v. Liberty Mutual Ins. Co., 435 F.3d 755, 757-58 (7th Cir.2006). 8. Judge Grady denied Defendants' motion to have the case assigned to him as related to Gavin I, stating: "The case ......
-
Steingerg v. Nationwide Mut. Ins. Co.
...determined that certain amendments to complaints could cause a pre-CAFA case to fall within CAFA's sphere. See Knudsen v. Liberty Mutual Ins. Co., 435 F.3d 755 (7th Cir. 2006). But see Plubell v. Merck & Co., 434 F.3d 1070 (8th Cir.2006) (holding that amended pleading did not "commence" a n......
-
MG Bldg. Materials, Ltd. v. Paychex, Inc.
...affected parties”). 3. I also note that the Seventh Circuit has itself limited the holding of Schorsch, holding in Knudsen v. Liberty Mut. Ins. Co., 435 F.3d 755 (7th Cir.), cert. denied,549 U.S. 816, 127 S.Ct. 79, 166 L.Ed.2d 28 (2006), that an amendment adding new claims against an existi......
-
Chochorowski v. Home Depot Usa, No. 4:08-CV-849 CAS.
...to commence a new suit. See, e.g., Braud v. Transport Serv. Co. of Ill., 445 F.3d 801, 806-08 (5th Cir.2006); Knudsen v. Liberty Mut. Ins. Co., 435 F.3d 755, 757-58 (7th Cir.), cert. denied, 549 U.S. 816, 127 S.Ct. 79, 166 L.Ed.2d 28 This case is distinguishable from both the situation of a......