In the

United States Court of Appeals

For the Seventh Circuit

No. 11-2790

TRAVELERS PROPERTY CASUALTY and

TRAVELERS INDEMNITY COMPANY,

Plaintiffs-Appellants,

v.

ROSS GOOD, individually and on behalf of a class,

Defendant-Appellee.

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 1:11-cv-00694—Joan Humphrey Lefkow, Judge.

ARGUED JANUARY 17, 2012—DECIDED JULY 27, 2012

Before EASTERBROOK, Chief Judge, and CUDAHY and

HAMILTON, Circuit Judges.

HAMILTON, Circuit Judge. This case is an appeal from

the district court’s discretionary decision not to exercise

jurisdiction over a declaratory judgment action because

parallel state court proceedings were pending. We affirm

the dismissal, but on a different ground. After exploring
2 No. 11-2790

some of the more arcane borders of federal jurisdiction

based on diversity of citizenship, we conclude that the

district court lacked subject matter jurisdiction. The plaintiffs’ small disputes with many claimants cannot be

aggregated to satisfy the amount-in-controversy requirement of 28 U.S.C. § 1332(a).

I. Facts and Procedural Background

The plaintiffs-appellants are two affiliated insurance

companies we will simply call “Travelers.” They filed

this federal action seeking a declaratory judgment that

they had no duty to defend their insured, Rogan Shoes,

Inc., in a class action suit brought against it in Illinois

state court for violations of the federal Fair and Accurate

Credit Transactions Act of 2003, 15 U.S.C. § 1681c(g). That

act prohibits businesses from including on sales receipts

the expiration date or more than the last five digits of the

purchaser’s credit or debit card, authorizing damages of

up to $1,000 per unlawful receipt. § 1681n(a). On behalf

of a class, customer Ross Good sued Rogan Shoes in state

court for violating the act by printing 387,291 receipts

displaying the expiration dates of his and other class

members’ charge cards in 2008 and 2009. Good sought

statutory damages for class members in the staggering

amount of $387 million. Rogan Shoes tendered Good’s

suit to Travelers for defense pursuant to its liability

insurance policies. Travelers denied coverage, leaving

Rogan Shoes to its own devices.

Rogan Shoes eventually settled with Good and the

class for $16 million, but not in cash, or at least not Rogan
No. 11-2790 3

Shoes’ cash. The settlement agreement specified that the

judgment would be satisfied only through proceeds

from Rogan Shoes’ insurance policies with Travelers,

with the exception of an up-front cash payment by Rogan

Shoes of $50,000 to cover Good’s legal costs. As part of the

settlement agreement, Rogan Shoes assigned to the plaintiffs all of its “claims against and rights to payments

from Travelers” under the policies, excepting the store’s

claim for attorney fees in defending the suit and its

claim for reimbursement of its $50,000 out-of-pocket

payment. The state trial court approved the settlement

on July 1, 2010.

On January 4, 2011, Good filed a supplementary action

in the state court to discover Travelers’ assets for the

satisfaction of his judgment against Rogan Shoes. In

Illinois, such actions are called “citation” proceedings.

See 735 ILCS 5/2-1402. The state court citation was

served on Travelers’ agent two days later. The citation

summoned Travelers to court to appear in court on February 1 to produce several categories of documents relevant to the insurance policies Travelers had issued

to Rogan Shoes. On January 31, Travelers filed this

action in federal district court seeking a declaratory

judgment that insurance policies it had issued to Rogan

Shoes did not cover Good’s statutory claims based on

the credit card receipts. The district court dismissed

Travelers’ complaint on the basis of Wilton/Brillhart abstention, under which a federal district court has

discretion to dismiss a declaratory judgment action

when parallel proceedings are pending in state court. See

Wilton v. Seven Falls Co., 515 U.S. 277 (1995); Brillhart v.
4 No. 11-2790

Excess Ins. Co. of America, 316 U.S. 491 (1942). Travelers

has appealed, arguing that the district court abused its

discretion by dismissing its action. During oral argument we ordered supplemental briefing on the issue of

subject matter jurisdiction. We directed the parties to

address whether the case satisfies the amount-in-controversy requirement for diversity jurisdiction, 28 U.S.C.

§ 1332(a), in light of the fact that Rogan Shoes had

assigned its interests in its Travelers policies to Good

and his fellow class members, none of whom individually

claim a share of more than $75,000.

II. Discussion

To invoke the diversity jurisdiction of the federal

courts, a party must establish both that diversity of citizenship is complete and that “the matter in controversy

exceeds the sum or value of $75,000, exclusive of

interest and costs.” 28 U.S.C. § 1332(a). Complete

diversity is present in this case. Both Travelers companies are Connecticut corporations that also have their

principal places of business in that state. Good is

a citizen of Illinois, and Rogan Shoes is a Wisconsin

corporation with its principal place of business in Wisconsin. The amount-in-controversy requirement, however, bars the exercise of federal jurisdiction here.

We address first the general rule against aggregating

different parties’ claims to meet the amount in controversy and some of its exceptions. We then turn to

issues that arise from the fact that Rogan Shoes assigned

its claims against Travelers to the plaintiff class, and
No. 11-2790 5

address how an insurer in Travelers’ position could

obtain a federal forum for such disputes.

A. The Rule Against Aggregation and its Exceptions

No individual defendant, including Rogan Shoes, has

a claim for more than $75,000 against Travelers. The

general rule is that the claims of multiple litigants

cannot be aggregated to reach the jurisdictional amount

in controversy. See Snyder v. Harris, 394 U.S. 332, 335

(1969). The anti-aggregation rule applies both to cases in

which multiple plaintiffs seek to combine their claims

against a single defendant, see Thomson v. Gaskill, 315

U.S. 442 (1942), and to those brought by a single

plaintiff against multiple defendants, see Middle

Tennessee News Co. v. Charnel of Cincinnati, Inc., 250 F.3d

1077, 1081 (7th Cir. 2001); see also 14AA Charles Alan

Wright, Arthur R. Miller & Edward H. Cooper, Federal

Practice and Procedure, § 3704, at 566-95 (2011) (hereinafter

“Wright & Miller”) (collecting cases).

Travelers contends that there is no need for aggregation in this case because “from Travelers’ perspective,

there is only one claim, by its insured, for the $16 million

judgment entered against it.” In support of this theory,

Travelers cites Meridian Security Insurance Co. v. Sadowski,

441 F.3d 536 (7th Cir. 2006), in which an insurer sought

a declaratory judgment that its liability policy did not

cover a suit under the Telephone Consumer Protection

Act then pending in state court against its insured. We

held that the case satisfied the amount-in-controversy
6 No. 11-2790

requirement. The anti-aggregation rule “does not apply

to a federal declaratory-judgment action between a

single plaintiff and a single defendant, just because the

unitary controversy between these parties reflects the

sum of many smaller controversies.” Id. at 539, citing

Hunt v. Washington State Apple Advertising Comm’n, 432

U.S. 333, 347-48 (1977).

The decisive difference between this case and Meridian

Security is that at the time the insurer filed the declaratory judgment action in that case, the insured’s arguable

right to recover under its policy was still completely

its own. No assignment had been made. By the time

Travelers filed this action, however, Rogan Shoes had

already assigned its claims to the members of the Good

class, and no individual class member had a claim for

more than $75,000.

According to Travelers, the fact of an assignment in

this case is immaterial because the assignment “does not

change whose claim it is.” But that is precisely what an

assignment does. It transfers one person’s property,

interest, or rights to another. Once Rogan Shoes made

the assignment of rights, this was no longer a “unitary

controversy” between the insurer and its insured. It had

become a multi-party dispute between Travelers and

thousands of class claimants. Meridian Security is

inapposite.

For purposes of this case, the most relevant exception

to the general rule against aggregation is that the claims

of co-parties may be added together when they have a

“common and undivided interest” in a “single title or
No. 11-2790 7

right.” Snyder v. Harris, 394 U.S. 332, 335 (1969). Can the

relatively small claims of these class members be aggregated as “common and undivided” interests in a

“single title or right”? Travelers declined to address this

question in its supplemental memorandum, and it took

that course at its peril. Jurisdictional objections cannot

be forfeited or waived, of course, for this court has an

“independent obligation to satisfy itself that federal

subject matter jurisdiction exists.” Smith v. American

General Life & Accident Ins. Co., 337 F.3d 888, 892 (7th

Cir. 2003). The court need not bend over backwards to

construct alternative theories to persuade itself that

subject matter jurisdiction exists, see Travelers Indem. Co.

v. Dingwell, 884 F.2d 629, 637 (1st Cir. 1989), but since

the district court considered the case and we raised

this issue, we address it here.

The anti-aggregation rule had its origin in a case involving the appellate jurisdiction of the Supreme Court

rather than the original subject matter jurisdiction of the

district courts. See Oliver v. Alexander, 31 U.S. (6 Pet.) 143

(1832). Much later, in 1893, “the original Alexander construction of [the Court’s] appellate jurisdiction was

applied to the jurisdictional-amount requirement for

federal trial courts.” Zahn v. International Paper Co., 414

U.S. 291, 294 n.3 (1973), citing Walter v. Northeastern R.R.

Co., 147 U.S. 370, 373 (1893). Apparently, little thought

was given to whether “different aggregation policies

might be of greater importance for original federal

court jurisdiction than for appellate jurisdiction.” 14AA

Wright & Miller § 3704, at 596. By 1916, however, the

Court was able to describe the anti-aggregation principle
8 No. 11-2790

The general rule in Zahn has been modified in respects not

1

material here. For example, under the supplemental jurisdiction statute, 28 U.S.C. § 1367, if one plaintiff’s claim satisfies

the amount-in-controversy requirement, the smaller claims of

other plaintiffs can be joined as long as diversity of citizenship

remains complete and all claims are part of the same case

or controversy. Exxon Mobil Corp. v. Allapattah Services, Inc.,

545 U.S. 546, 549 (2005); Stromberg Metal Works, Inc. v. Press

Mechanical, Inc., 77 F.3d 928, 930-32 (7th Cir. 1996).

as a “settled rule” of diversity jurisdiction, Pinel v. Pinel,

240 U.S. 594, 596 (1916), and it certainly is so now. The

rule is:

When two or more plaintiffs, having separate and

distinct demands, unite for convenience and economy

in a single suit, it is essential that the demand of each

be of the requisite jurisdictional amount; but when

several plaintiffs unite to enforce a single title or

right, in which they have a common and undivided

interest, it is enough if their interests collectively

equal the jurisdictional amount. 

Zahn, 414 U.S. at 294 (emphases added), quoting Troy

Bank v. G. A. Whitehead & Co., 222 U.S. 39, 40-41 (1911).1

The anti-aggregation rule thus distinguishes between

“separate and distinct interests,” which cannot be aggregated to reach the jurisdictional minimum, and “common

and undivided interests,” which can be aggregated.

The Supreme Court has opined that the “lower courts

have developed largely workable standards for determining when claims are joint and common, and

therefore entitled to be aggregated, and when they are
No. 11-2790 9

separate and distinct and therefore not aggregable.”

Snyder, 394 U.S. at 341. Other courts and commentators

have taken a less sanguine view. See, e.g., Morrison v.

Allstate Indem. Co., 228 F.3d 1255, 1262 (11th Cir. 2000)

(noting “pervasive criticism of the ‘separate and distinct’

versus ‘common and undivided’ distinction as arcane

and confusing”); Eagle v. American Tel. and Tel. Co., 769

F.2d 541, 546 (9th Cir. 1985) (“The dividing line is not

clear.”); Local Div. No. 714, Amalgamated Transit Union, v.

Greater Portland Transit Dist., 589 F.2d 1, 10 (1st Cir. 1978)

(“The distinction between ‘a common and undivided

interest’ and ‘separate and distinct’ claims is not entirely

clear.”), overruled on other grounds by Jackson Transit

Auth. v. Local Div. 1285, Amalgamated Transit Union,

457 U.S. 15 (1982); Aetna Cas. & Sur. Co. v. Graves,

381 F. Supp. 1159, 1162-63 (W.D. La. 1974) (“We also

realize that the rules on aggregation of claims to satisfy

the requirements of minimum amount in controversy ‘. . .

turn on a mystifying conceptual test.’ ”) (ellipsis in original), quoting Wright, Law of Federal Courts § 36, at 121;

14AA Wright & Miller § 3704, at 600-01 (“terms such

as ‘common’ and ‘several’ are poor words for a

subject matter jurisdiction test — or anything else for

that matter — since they have little or no clear and ascertainable meaning.”) (some internal quotations omitted).

The dichotomy between common and undivided interests and separate and distinct interests is workable in

the easy, paradigm cases. For example, where there is a

“single indivisible res, such as an estate” or “a piece

of property (the classic example),” it makes sense to

think of co-parties’ claims to the res as “common and
10 No. 11-2790

undivided.” Gilman v. BHC Sec., Inc., 104 F.3d 1418, 1423

(2d Cir. 1997), quoting Bishop v. General Motors Corp., 925

F. Supp. 294, 298 (D.N.J. 1996). Conversely, where the

plaintiffs’ claims are “cognizable, calculable, and correctable individually,” Gibson v. Chrysler Corp., 261 F.3d 927,

945 (9th Cir. 2001), — say, personal injuries arising from

mass torts — they are clearly “separate and distinct”

and may not be aggregated to meet the amount in controversy. Thus in the foundational Troy Bank case, the

two plaintiffs could not aggregate their claims under

separate promissory notes made payable by the defendant, but they could aggregate their claims based on

a vendor’s lien that they owned jointly. 222 U.S. at 41.

In closer cases, the distinction between common and

undivided interests and separate and distinct interests

is less useful. It has proven particularly slippery in cases

involving insurance claims. For example, in Motorists

Mutual Ins. Co. v. Simpson, 404 F.2d 511 (7th Cir. 1968), an

insured had caused an accident that resulted in damage

to a rental vehicle and the death of its driver. The

insured had been found liable to both the deceased

driver’s widow and the owner of the rented vehicle. The

insurer then sought a declaratory judgment that it was

not required to cover liability to the widow for the

death or to the owner for the property damage. Under

the policy, neither type of liability was sufficient alone

to meet the amount-in-controversy requirement, but if

they were combined, they would exceed the minimum.

The district court found that aggregation of the relief

sought against two claimants was appropriate because both claims arose under the same instrument. We
No. 11-2790 11

reversed, reasoning that the claims of the widow and

the vehicle owner were separate and distinct, so that

the insurer’s potential liability to them would have been

several rather than joint. Id. at 513, quoting Thomson v.

Gaskill, 315 U.S. 442, 447 (1942) (“Aggregation of plaintiffs’

claim cannot be made merely because the claims are

derived from a single instrument.”); accord, e.g., Crenshaw

v. Great Central Ins. Co., 482 F.2d 1255, 1259-60 (8th Cir.

1973) (denying aggregation of claims against insurance

company on uninsured motorist policy by parents of

deceased for wrongful death and by their daughter for

her own personal injuries); Eagle Star Ins. Co. v. Maltes,

313 F.2d 778, 781-82 (5th Cir. 1963) (denying aggregation

to three plaintiffs who sued insurer after obtaining separate judgments against insured); Jeffrey L. Rensberger,

The Amount in Controversy: Understanding the Rules of

Aggregation, 26 Ariz. St. L.J. 925, 945 & n.134 (1994)

(“Courts also will not aggregate claims when an insured sues for coverage on a loss or an insurer sues for a

declaration of non-coverage.”) (collecting cases).

Other courts have taken different approaches. In

Phoenix Ins. Co. v. Woolsey, 287 F.2d 531, 532 (10th Cir.

1961), for example, the court allowed aggregation of

claims of nine creditors to whom an insured had

separately assigned proceeds of a fire insurance policy,

presumably because the creditors cross-assigned to one

another their interests in the proceeds “so that each

might share pro rata in the recovery against the defendants and . . . agreed to waive against each other any

priorities which might exist between them.” See also

Manufacturers Casualty Ins. Co. v. Coker, 219 F.2d 631, 633
12 No. 11-2790

(4th Cir. 1955) (in declaratory judgment action brought

by auto insurer for declaration of non-liability, allowing

aggregation of claims of 23 children injured in school

bus accident on ground that all claims “arise out of a

single instrument”).

Confronting the aggregation question in the insurance

context, several circuits have attempted to distill some

consistent meaning from the confusion. In a class action

brought by automobile insureds against their insurers

to recover the diminished value of their vehicles after

they were repaired, the Eleventh Circuit held that the

plaintiffs’ claims could not be aggregated because they

were “asserting rights arising from their individual

insurance policies, and if successful, they [would] recover

the amount of excessive premiums each paid under

his own policy.” Morrison v. Allstate Indem. Co., 228 F.3d

1255, 1264 (11th Cir. 2000). The court adopted a formulation of the distinction between “separate and distinct”

interests and “common and undivided” interests first

articulated in Eagle Star by Judge Tuttle for the Fifth

Circuit. Under this test, aggregation is permitted “only

in those situations where there is not only a common

fund from which the plaintiffs seek relief, but where

the plaintiffs also have a joint interest in that fund,

such that if plaintiffs’ rights are not affected by the

rights of co-plaintiffs, then there can be no aggregation.” Id.

at 1262-63, quoting Eagle Star, 313 F.2d at 781. In other

words, the Eagle Star rule is that the claims of co-parties

are “common and undivided” — and thus can be aggregated — only where each claim (1) is part of a “common

fund” and (2) could not be adjudicated on an individual

basis without affecting the interests of the other claimants.
No. 11-2790 13

At least five other circuits have endorsed the Eagle Star

formulation or its functional equivalent. See Everett v.

Verizon Wireless, Inc., 460 F.3d 818, 824 (6th Cir. 2006)

(“Aggregation is permitted ‘where there is not only a

common fund from which the plaintiffs seek relief, but

where the plaintiffs also have a joint interest in that fund,

such that if plaintiffs’ rights are not affected by the

rights of co-plaintiffs then there can be no aggregation.

In other words, the obligation to the plaintiffs must be

a joint one.’ ”) (emphasis in original), quoting Eagle

Star, 313 F.2d at 781; In re Ford Motor Co./Citibank (South

Dakota), N.A., 264 F.3d 952, 959 (9th Cir. 2001) (claims

of cardholder plaintiffs against credit card companies

arising out of the termination of a purchase rebate

program could not be aggregated as common and undivided interests because they “do not implicate a

‘single indivisible res,’ and could be adjudicated on an

individual basis because the consolidated plaintiffs

(and putative class members) have no common and

undivided interest in accruing rebates under the program.”); Martin v. Franklin Capital Corp., 251 F.3d 1284,

1292 (10th Cir. 2001) (“[A] common interest in a pool of

funds is not the type of interest that permits aggregation

of claims under the ‘common fund’ doctrine. Each class

member could sue separately for punitive damages

and have his right to recovery determined without implicating the rights of every other person claiming

such damages.”) (citation and some quotation marks omitted); Gilman, 104 F.3d at 1423 (holding that claims of

plaintiff-investors against defendant-brokerage for

illegally charging “order flow payments” on securities
14 No. 11-2790

transactions could not be aggregated because they “do not

implicate a ‘single indivisible res,’ and could be adjudicated on an individual basis”); Dierks v. Thompson,

414 F.2d 453, 456 (1st Cir. 1969) (approving aggregation

of multiple plaintiffs’ claims to reach jurisdictional

amount because they “are seeking to establish a trust

fund as distinguished from individual cash claims

against the defendants” and the “fact that the individual

plaintiffs’ beneficial interests may be of fixed proportion

does not vary the fact that the existence of a single trust

res is of common importance”).

In accord with our colleagues in these other circuits,

we adopt the Eagle Star rule: we “allow aggregation only

in those situations where there is not only a common

fund from which the plaintiffs seek relief, but where the

plaintiffs also have a joint interest in that fund, such

that . . . plaintiffs’ rights are . . . affected by the rights

of co-plaintiffs.” 313 F.2d at 781. Unlike the more

abstract terminology from Troy Bank and Zahn, it has

the virtue of making this case fairly easy to resolve.

First, the potential proceeds from the Travelers policies

do not qualify as a “common fund.” The existence of a

“common fund” depends on the “nature of the right

asserted, not whether successful vindication of the

right will lead to a single pool of money that will be

allocated among the plaintiffs.” Gilman, 104 F.3d at 1427.

Thus, a common fund exists when “plaintiffs share[ ] a preexisting (pre-litigation) interest in the subject of the

litigation.” Id. In this case, the Good class members did

not share a pre-existing interest in recovery against

Rogan Shoes or its insurers. The class members’ claims
No. 11-2790 15

all arose from separate transactions. As the Second

Circuit said in Gilman: “There is no fund. The claim

remains one on behalf of separate individuals for the

damage suffered by each due to the alleged conduct of the

defendant.” Id. (ellipses omitted), quoting Rock Drilling

Local Union No. 17 v. Mason & Hanger Co., 217 F.2d 687,

695 (2d Cir. 1954).

Even if Travelers could meet the common fund element

of the Eagle Star formulation, the claims of the Good

class members also fail the second element because

each claimant’s “rights are not affected by the rights

of co-plaintiffs.” 313 F.2d at 781.

Under the terms of the settlement agreement between

Good and Rogan Shoes, each class member would

receive a pro rata (per receipt) share of the $16 million

recovery that is sought, with a maximum award of

$1,000 regardless of the number of unlawful receipts

that Rogan Shoes issued any individual. After attorney

fees are deducted, roughly $10.67 million would remain

in the pot. Because of the $1,000 cap on individual

awards, in order for any one class member’s claim to

be affected by the claims of other class members, at least

10,667 claimants would have to submit viable claims.

Is that likely? We do not know.

In all cases, the party asserting federal jurisdiction has

the burden of proof to show that jurisdiction is proper.

E.g., McNutt v. General Motors Acceptance Corp., 298 U.S.

178, 189 (1936). The “proponent of jurisdiction may be

called on to prove facts that determine the amount in

controversy,” and must do so by a preponderance of the
16 No. 11-2790

evidence. Meridian Security, 441 F.3d at 541. Here, Travelers

has not done so. On the basis of the settlement agreement alone, we cannot conclude that it is more likely

than not that the class will produce more than 10,667

claimants and, if so, that “if one plaintiff cannot or does

not collect his share, the shares of the remaining

plaintiffs [would be] increased.” See Sellers v. O’Connell,

701 F.2d 575, 579 (6th Cir. 1983) (“Where a group of

plaintiffs litigate individual cash claims the amount of

which remain unaffected by the results obtained by

fellow plaintiffs, the litigants may not aggregate their

claims when alleging jurisdiction.”) (citations omitted);

Kopff v. World Research Group, LLC, 298 F. Supp. 2d 50, 56

(D.D.C. 2003) (“plaintiffs’ claims can be aggregated

when they make an integrated claim — in other words,

if the right is a collective right pursuant to which one

plaintiff’s failure to collect his or her share increases the

remaining plaintiffs’ damages”) (internal quotation

marks omitted). The claims of the Good class to Rogan

Shoes’ potential insurance proceeds are not “common

and undivided” and therefore cannot be aggregated

to reach the jurisdictional minimum.

B. Assignment Affecting Jurisdiction

When assignments of rights seem to have the effect

of creating diversity jurisdiction, federal courts give them

close scrutiny for signs of attempts to manipulate the

choice of forum. Congress has provided: “A district court

shall not have jurisdiction of a civil action in which any

party, by assignment or otherwise, has been improperly
No. 11-2790 17

or collusively made or joined to invoke the jurisdiction

of such court.” 28 U.S.C. § 1359; see also Kramer v.

Caribbean Mills, Inc., 394 U.S. 823, 828-29 (1969) (affirming

dismissal for lack of jurisdiction: “If federal jurisdiction

could be created by assignments of this kind, which are

easy to arrange and involve few disadvantages for the

assignor, then a vast quantity of ordinary contract and

tort litigation could be channeled into the federal courts

at the will of one of the parties. Such ‘manufacture of

Federal jurisdiction’ was the very thing which Congress

intended to prevent when it enacted § 1359 and its predecessors.”); Airlines Reporting Corp. v. S and N Travel, Inc.,

58 F.3d 857, 862 (2d Cir. 1995) (“We give careful scrutiny

to assignments which might operate to manufacture

diversity jurisdiction . . . .”).

It is less clear how closely federal courts should scrutinize assignments that have the effect of defeating

federal diversity jurisdiction. Compare Miller v. Perry,

456 F.2d 63, 67, 66 (4th Cir. 1972) (reading Kramer as

“injecting a new note of realism into the determination

of diversity jurisdiction” and carefully scrutinizing attempts to defeat diversity jurisdiction, as well), with

Messer v. American Gems, Inc., 612 F.2d 1367, 1375 (4th Cir.

1980) (“28 U.S.C. § 1359 attaches no consequences to

steps taken to defeat diversity jurisdiction.”). In any

event, we do not see in this case any indication that

Rogan Shoes and Good negotiated the assignment of

the former’s insurance proceeds for the purposes of

thwarting Travelers’ right to a federal forum.

We reach this conclusion in part because the assignment did not have the effect of preventing Travelers from
18 No. 11-2790

securing a federal forum to resolve this controversy. First,

it could have sought a declaratory judgment of noncoverage immediately after Rogan Shoes tendered Good’s

claims to it. Before the assignment, the amount-in-controversy requirement would have been met. See Meridian

Security, 441 F.3d at 539.

Second, even after the assignment, Travelers could

have removed the state court proceeding to federal court once Good filed that action seeking to

discover Travelers’ assets. The state court citation proceeding on behalf of the Good class would have

been subject to the Class Action Fairness Act, so that

removal would not have been barred by the oneyear limit on removal in diversity cases. See 28 U.S.C.

§ 1453(b). (The Class Action Fairness Act does not apply

in this declaratory judgment action, however, because

the act applies only where there is a plaintiff class, not

a defendant class. See 28 U.S.C. § 1332(d)(2).)

To counter that argument, Travelers argues that the

removal option was foreclosed by another decision

from the district where this case was filed. The facts and

posture of that case, Eclipse Manufacturing Co. v. United

States Compliance Co., No. 05 C 5406, 2006 WL 42395

(N.D. Ill. Jan. 4, 2006), were strikingly similar to this one.

Although the case is not binding precedent, one could

expect the decision to influence practice in the district,

and it deserves our close attention. The plaintiff in

Eclipse Manufacturing had filed a putative class action

against a company for allegedly sending unsolicited

advertisements by facsimile in violation of the Telephone
No. 11-2790 19

Consumer Protection Act, 47 U.S.C. § 227, and state

law. The parties agreed to a $4 million judgment that,

as here, could be executed only on money received from

the defendant’s liability insurer. The state trial court

entered a judgment approving the settlement, after

which the class members filed a citation to discover

assets under 735 ILCS 5/2-1402, naming the liability

insurer as a “third-party respondent.” Instead of seeking

a federal declaratory judgment of non-liability, as

Travelers did here, the Eclipse Manufacturing insurer

removed the citation action to the federal district court.

The district court ordered remand, finding for the

plaintiff class on two separate grounds: First, it held

that the Illinois citation proceeding was not removable

under 28 U.S.C. § 1441(a) because it was not a “separate

and independent action” from the underlying suit itself. Eclipse Mfg., 2006 WL 42395, at *3. Second, the

court held that even if the citation proceeding were

separately removable, “removal would still be improper

because the jurisdictional amount requirement for

diversity is not satisfied.” Id. at *4. The court explained

that each class member’s pro rata share of the settlement was less than $300, and aggregation was not permitted because the judgment “cannot be viewed as

an undivided lump sum.” Id.

We disagree with the Eclipse Manufacturing court’s

first conclusion that the citation proceeding was not a

removable action. Section 1441 permits removal of “civil

action[s] brought in a State court” over which federal

district courts “have original jurisdiction.” 28 U.S.C.
20 No. 11-2790

§1441(a). The statute has long been interpreted to allow

removal only of “independent suits” but not ancillary

or “supplementary” proceedings. See Federal Sav. & Loan

Ins. Corp. v. Quinn, 419 F.2d 1014, 1018 (7th Cir. 1969);

see also Barrow v. Hunton, 99 U.S. 80, 83 (1878) (explaining

that a supplementary action so connected with an

original action as to form a mere incident or continuation of it is not removable as a separate suit). This prudential doctrine seeks to avoid the waste of having federal

courts “entertain[ ] ‘satellite elements’ of pending state

suits and judgments.” Armistead v. C & M Transp., Inc.,

49 F.3d 43, 46 (1st Cir. 1995), quoting 14A Wright &

Miller § 3721.

Whether a particular state judicial procedure qualifies

as a separate action is not an all-or-nothing proposition.

It depends on the context of each case in which it

arises. See Quinn, 419 F.2d at 1018-19. Removability is

a question of federal law, so the state’s own characterizations of the proceeding are not decisive. See Chicago, Rock

Island & Pac. R.R. Co. v. Stude, 346 U.S. 574, 580 (1954);

Quinn, 419 F.2d at 1018.

No bright-line formula exists for separating the independent and removable sheep from the ancillary and nonremovable goats. But one nineteenth century judge

offered this helpful distinction: “where the supplemental proceeding is not merely a mode of execution

or relief, but where it, in fact, involves an independent

controversy with some new and different party, it may

be removed into the federal court.” Buford v. Strother,

10 F. 406, 407 (C.C.D. Iowa 1881) (Love, J.). A citation pro-
No. 11-2790 21

ceeding (or a garnishment proceeding, as it is called in

most jurisdictions) may often be “merely a mode of

execution of relief.” Id.; see, e.g., Vukadinovich v. McCarthy,

59 F.3d 58, 62 (7th Cir. 1995) (“Garnishment is a

standard, often essential, step in the collection of a judgment, and the party holding the judgment . . . ought to

be able to take this step without having to start a

new lawsuit in a different court system.”).

Consistent with Judge Love’s distinction, however,

when garnishment proceedings present genuine disputes with new parties and raise new issues of fact

and law, courts overwhelmingly treat them as independent and removable actions. See 14B Wright &

Miller § 3721, at 28-30 & n.58 (“For example, proceedings

for garnishment . . . are considered civil actions within

the meaning of the federal removal statute.”) (collecting

cases); see, e.g., Butler v. Polk, 592 F.2d 1293, 1295-96

(5th Cir. 1979) (garnishment action against third-party

insurer was removable); Swanson v. Liberty Nat’l Ins. Co.,

353 F.2d 12, 13 (9th Cir. 1965) (same); Randolph v.

Employers Mut. Liab. Ins. Co. of Wis., 260 F.2d 461, 464-65

(8th Cir. 1958) (same); Adriaenssens v. Allstate Ins. Co., 258

F.2d 888, 890 (10th Cir. 1958) (same).

The reason is clear: when the garnishment action

brings in a new party and raises new and distinct

disputed issues, the proceeding is not “substantially a

continuation of a prior suit.” See Quinn, 419 F.2d at 1018.

Judicial economy concerns about “satellite” issues no

longer apply. This is not to say that any garnishment action that involves a third party is a separate and removable action. But “[w]here the garnishment procedures
22 No. 11-2790

allow for adversarial litigation of disputed issues, and

where the garnishment action involves a new party and

disputed rights and issues not decided by the state

court, removal should be permitted.” Harding Hosp. v.

Sovchen, 868 F. Supp. 1074, 1078 (S.D. Ind. 1994) (denying

remand after Travelers removed garnishment action that

sought to resolve insurance coverage issue); accord,

Johnson v. Wilson, 185 F. Supp. 2d 960, 964-65 (S.D. Ind.

2002) (denying remand where garnishment proceeding

involved new parties and raised legal and factual issues

not decided in the state court litigation); see also Stewart v.

EGNEP (Pty) Ltd., 581 F. Supp. 788, 790 (C.D. Ill. 1983)

(denying remand of garnishment proceedings raising

interests and defenses separate from those of judgment

creditors).

In light of these principles, the citation proceeding

against Travelers was separate from the underlying suit

between Rogan Shoes and Good. It could have been

removed if the requirements of diversity jurisdiction

were satisfied. Travelers was brought into state court

under a law allowing the court to “[a]uthorize the judgment creditor to maintain an action against any person or

corporation that, it appears upon proof satisfactory to the

court, is indebted to the judgment debtor, for the recovery

of the debt.” 735 ILCS 5/2-1402(c)(6) (emphases added).

We need not specify here the precise time that the citation proceeding might have been removable (apart

from amount-in-controversy issues), and the removal

statute allows a little play in the joints when it may not

be apparent at the outset that a proceeding can be removed. See 28 U.S.C. § 1446(b)(3). If not with the
No. 11-2790 23

initial citation, which on its face demanded only

discovery of documents, then later as the dispute over

insurance coverage crystallized in the state court, the

citation proceeding became an “action . . . for the recovery of the debt.”

This new action was an “independent controversy

with some new and different party” and was quite

distinct from the underlying case between Rogan

Shoes and Good. See Buford, 10 F. at 407. In that initial

litigation, the issues were whether Rogan Shoes violated

the federal statute on credit card receipts, and if so,

how many times, and what damages should be

awarded. The opposing parties were Rogan Shoes

against Good on behalf of a class. In the citation proceeding, the principal issue is whether Rogan Shoes’

liability insurance policies with Travelers covered the

claims for its alleged violations of the federal law, with

Rogan Shoes and the Good class members allied together

against a new party, Travelers. The citation proceeding

thus features a new party, a new and distinct legal claim,

new issues of fact and law, and even a realignment of

the original litigants. Aside from the citation action’s

origination in the underlying suit, it became for all

intents and purposes a separate case. We believe the

Eclipse Manufacturing court erred in concluding otherwise on nearly identical facts. 

We take no issue, however, with the Eclipse Manufacturing court’s remand in that case based on the alternative

holding that aggregation was not permitted to satisfy the

amount-in-controversy requirement. The court’s holding
24 No. 11-2790

on that point is consistent with our analysis of anti-aggregation principles above. But that holding would have

posed no obstacle to Travelers’ ability to remove the

citation action against it to federal court, thanks to the

Class Action Fairness Act of 2005. That act modified

diversity jurisdiction rules so as to permit federal

diversity jurisdiction where diversity is only minimal

but the matter in controversy exceeds $5,000,000. 28

U.S.C. § 1332(d). Section 1332(d)(6) relaxes the general diversity rule against aggregation and “explicitly

provides for aggregation of each class member’s claims

in determining whether the amount of controversy is

at least $5,000,000.” Blockbuster, Inc. v. Galeno, 472 F.3d 53,

59 (2d Cir. 2006). The $16 million settlement that the

Good class sought to collect exceeded the aggregate

amount-in-controversy threshold, so the federal district court could have had subject matter jurisdiction.

The deadline for removal, however, was 30 days after

Travelers’ receipt of the citation or such other documents

that would have made it ascertainable that the case was

removable. See 28 U.S.C. § 1446(b). That deadline has

passed.

The district court’s judgment of dismissal is AFFIRMED

AS MODIFIED to reflect that the dismissal is for lack of

jurisdiction.

7-27-12