favor of remand. Shalabi v. Huntington Nat’! Bank, No. 01 C 2959, 2001 WL 777055, at *1
(N.D. UL. July 11, 2001) (citing Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993)).
Thus, the party seeking removal bears the burden of establishing jurisdiction. Jd. (citing McNutt
v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Doe, 985 F.2d at 911). Removal
on the basis of diversity jurisdiction is proper when the suit satisfies the amount in controversy
requirement and there is complete diversity among parties properly joined pursuant to 28 U.S.C.
§ 1332(a). Id. (citing 28 U.S.C. § 1332(a)). A case with a non-diverse defendant becomes
removable on dismissal of that defendant only if the plaintiff voluntarily dismisses the defendant
or if the defendant is dismissed as fraudulently joined. Jd. (citing 28 U.S.C. § 1446(b); Poulos
y. Naas Foods, Inc., 959 F.2d 69, 72-73 (7th Cir. 1992)).
B. Fraudulent Joinder

The parties do not dispute whether the amount in controversy is satisfied. The issue is
whether complete diversity exists, which depends on whether CHC was fraudulently joined.
“Diversity jurisdiction cannot be destroyed by joinder of nondiverse parties if such joinder is
fraudulent.” Gottlieb v. Westin Hotel Co., 990 F.2d 323, 337 (7th Cir. 1993). Fraudulent joinder
occurs where: (1) there is no possibility that a plaintiff can state a cause of action against a non-
diverse defendant in state court or (2) there has been outright fraud in the plaintiff's pleadings
of jurisdictional facts. /d. In this case, defendants do not allege outright fraud in plaintiff's
pleadings. Instead, defendants argue that plaintiff cannot state a cause of action against CHC.

Thus, to establish fraudulent joinder defendants must show, after resolving all issues of fact and



WW. CONCLUSION
For the foregoing reasons, the court grants plaintiff’s motion to remand. The court

remands this matter to the Circuit Court of Cook County (County Department, Law Division).

Date: JUN 19 2003 LL
Jenes H. Alesia
United States District Judge



affidavit to establish CGLIC performed the administrative services that allegedly caused
plaintiffs injuries.

To state a claim for negligent misrepresentation under Illinois law, a plaintiff must plead:

(1) a false statement of material fact, (2) carelessness or negligence in ascertaining

the truth of the statement by defendant, (3) an intention to induce the other party

to act, (4) action by the other party in reliance on the truth of the statements, (5)

damage to the other party resulting from such reliance, and (6) a duty owed by

defendant to plaintiff to communicate accurate information.
Menard v. U.S. Equities Dev., Inc., No. 01 C 7142, 2002 WL 314571, at *4 (N.D. Il. Feb. 28,
2002) (quoting Quinn v. McGraw-Hill Cos. Inc., 168 F.3d 331, 335 (7th Cir. 1999) (citing
Rosenstein v. Standard & Poor's Corp., 636 N.E.2d 665, 667 (Ill. App. Ct. 1993)). Additionally,
a plaintiff must establish that the defendant “is in the business of supplying information for the
guidance of others in their business transactions.”” Orix Credit Alliance, Inc. v. Taylor Mach.
Works, Inc., 125 F.3d 468, 475 (7th Cir. 1997) (quoting Rankow v. First Chi. Corp., 870 F.2d
356, 362 (7th Cir. 1989) (quoting Moorman Mfg. Co. v. Nat'l Tank Co., 435 N.E.2d 443, 452
(Ill. 1982)). Ilinois law does not require contractual privity for negligent misrepresentation
where the “‘defendant knew the information would be used and relied upon’ and ‘the potential
liability was restricted to a comparatively small group.”” Quinn, 168 F.3d at 335 (quoting
Rosenstein, 636 N.E.2d at 668).

Defendants challenge only the first element of plaintiffs claim of negligent
misrepresentation — the communication of inaccurate information. However, the parties’

arguments constitute only a factual dispute as to whether CHC or CGLIC provided the

information at issue.

6



law in favor of plaintiff, plaintiff cannot establish a cause of action against CHC in state court.
See Poulos, 959 F.2d at 73-74.
In determining whether fraudulent joinder has occurred, courts are not limited to the

ee

allegations of the pleadings but may “pierce the pleadings’ and consider ‘summary judgment-

>

type evidence such as affidavits and deposition testimony.” Veugeler v. Gen. Motors Corp., No.
96 C7278, 1997 WL 160749, at *2 (N.D. Ill. Apr. 2, 1997) (quoting Peters v. AMR Corp., Nos.
95 C588, 95 C 678, 95 C 923, 95 C 922, 95 C 1417, 95 C 1418, 1995 WL 358843, at *3 (N.D.
Ill. June 13, 1995) (quoting Carriere v. Sears Roebuck & Co., 893 F.2d 98, 100 (Sth Cir. 1990)).
The “‘limited use of affidavits and other evidence is permissible so long as the evidence is not
used to ‘pre-try’ the case.’” Id. (quoting Peters, 1995 WL 358843, at *3) (citations omitted).
Thus, with these considerations in mind, the court may consider the affidavits submitted by the
parties.

Plaintiff asserts two claims against CHC — breach of contract and negligent
misrepresentation. First, the court will review whether plaintiff's negligent misrepresentation

claim against CHC has any chance of success.

Cc. Plaintiff’s Case Against CHC

Plaintiff argues it has alleged sufficiently a negligent misrepresentation claim against
CHC despite any lack of contractual privity between the two parties. Defendants argue that
plaintiff's allegations are deficient because it failed to plead the essential element of
communicating inaccurate information because CHC did not provide the information at issue.

In support of their argument, defendants submit the ASO agreement, 1998 amendment, and an



has no legal relationship with CCI.” (/d.) Plaintiff challenges Hough’s statements as improper
legal conclusions,

In evaluating fraudulent joinder, the court is to resolve al! issues of fact in favor of the
plaintiff. Poulos, 959 F.2d at 73. In addition, the court must be cautious not to evaluate the
merits of plaintiff's claims. Peters, 1995 WL 358843, at *3 (quoting Boyer v. Snap-on Tools
Corp., 913 F.2d 108, 113 (3d Cir. 1990)) (stating that, in determining fraudulent joinder, the
court is limited to evaluating whether colorable claims exist against the non-diverse defendant,
leaving the determination of the merits of those claims to the state court).

Thus, the court resolves the factual dispute regarding who supplied the inaccurate
information in favor of plaintiff and finds it is possible plaintiff may be able to establish CHC
supplied the information and state a claim of negligent misrepresentation against CHC. See
County of Cook v. Mellon Stuart Co., 812 F. Supp. 793, 797-98 (N.D. Ill. 1992) (remanding case
where affidavits created factual dispute). Therefore, defendants failed to establish that plaintiff
has no chance of success against CHC and did not meet their burden of showing fraudulent
joinder. Because this issue is dispositive, the court need not address the viability of plaintiff's
claim for breach of contract.

Because CHC remains a proper party, complete diversity of citizenship does not exist and
this court lacks subject matter jurisdiction. Therefore, the court grants plaintiff's motion to
remand the case to the Circuit Court of Cook County pursuant to 28 U.S.C. § 1447(c). The court

strikes as moot defendant CHC’s motion to dismiss.


Minute Order Form (06/97)

United States District Court, Northern District of [inois

WV
athe Af Assigned Judge i Sitting Judge if Other
} scene Judge James H. Alesia than Assigned Judge
T
CASE NUMBER 03 C 2075 DATE June 10, 2003
CASE CC Industries, Inc. vs. ING/ReliaStar Life Ins. Co., et al.
TITLE
[in the following box (a) indicate the party filing the motion, e-g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
dd) a Filed motion of [ use listing in “Motion” box above.]
(2) Oo Brief in support of motion due
(3) a Answer brief to motion due . Reply to answer brief due.
(4) o Ruling/Hearing on set for at
(5) a Status hearing[held/continued to] [set for/re-set for] on set for at
(6) Oo Pretrial conference[held/continued to] [set for/re-set for] on set for at
7) o Trial[set for/re-set for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) OLocal Rule 41.1 OFRCP41(a)(1) 1 FRCP41(a)(2).
ao) of {Other docket entry] | Enter Memorandum Opinion and Order. The court grants plaintiff's
motion to remand the case to state court [9-1]. Defendant Cigna Healthcare’s motion to dismiss
Counts II and III is stricken as moot [5-1]. This matter is remanded to the Circuit Court of Cook
County, Illinois (County Department, Law Division).
(11) a [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notic ired.
lo notices required. number of notices

v7 | Notices mailed by judge’s staff.
Y_ | Notified counsel by telephone. d

Docketing to mail notices.

Mail AO 450 form.

Lynas

Copy to judge/magistrate judge

JOlwisia “Sn
Yuga

rehab

6/10/03

wv fier pea ote ow

OT ORG a tere

rang deputy initials



In support ofits motion to remand, plaintiff has submitted the affidavit of Leonard Canino
(“Canino”), vice-president of human resources for CCI. His affidavit states:

CCT has dealt exclusively with Cigna in regards to its performance of the ASO

Agreement. It has had no contact with ... (““CGLIC”) and/or ... (“Healthsource”)

with respect to performance of the ASO Agreement; and, to the best of my

knowledge, CGLIC and Healthsource have not performed any services under the

ASO Agreement.

(P1.’s Mot. to Remand Ex. B at 1-2.) Defendants argue Canino’s affidavit is deficient because
it states “Cigna” performed services and does not distinguish between CHC, CGLIC, or CIGNA
Corporation. Further, defendants argue that to the extent the affidavit reflects Canino’s belief
that CHC performed services under the ASO agreement, he is mistaken and the affidavit is
erroneous.

Defendants argue the ASO agreement and 1998 amendment show that CHC did not
provide the inaccurate information because it is not a named party. Further, defendants have
submitted the affidavit of Carol L. Hough (“Hough”), CGLIC’s regional director for
underwriting. This affidavit states: “Since at least February 8, 1998, CGLIC has provided all
administrative services under the ASO Agreement and the 1998 amendment.” (Def.’s Resp. to
Pl.’s Mot. to Remand Ex. A at 2.) The involvement of CHC, according to Hough, was due to
a contract between CGLIC and CHC for “the use of [CHC’s] network of contracted healthcare
providers as preferred providers for, among others, the CC] plan.” (/d.) She further states,

“{CHC] did not perform services on behalf of CCI under the ASO Agreement or the 1998

amendment. CGLIC has not delegated its duties under the ASO Agreement to [CHC] and [CHC]


covered by plaintiff’s primary insurance. CHC allegedly failed to identify these beneficiaries
as serious to plaintiff, thus plaintiff did not include them in the disclosure statement to ReliaStar.
Plaintiff submitted the claims of these beneficiaries to ReliaStar for payment and ReliaStar
denied the claims because plaintiff failed to disclose them as serious in the disclosure statement.

On February 13, 2003, plaintiff filed suit in the Circuit Court of Cook County, Illinois
against defendants ReliaStar and CHC (collectively “defendants”) seeking to recover expenses
for the denied claims. Count I of plaintiffs complaint alleges breach of contract against
ReliaStar. Count II alleges breach of contract against CHC. Count III alleges negligent
misrepresentation against CHC. On March 21, 2003, defendants removed the case to this court,
invoking diversity jurisdiction on the grounds that CHC, the non-diverse defendant, was
fraudulently joined. On March 28, 2003, CHC filed a motion to dismiss plaintiffs claims against
it. On April 29, 2003, plaintiff filed a motion to remand the case to state court?

I. DISCUSSION

A. Standard for Deciding a Motion to Remand

Under 28 U.S.C. § 1441, removal is proper over any action that could have been filed
originally in federal court. However, if the district court lacks subject matter jurisdiction, the
action must be remanded to state court pursuant to 28 U.S.C. § 1447(c). Courts presume that a

plaintiff's choice of forum is proper and valid and resolve all doubts regarding jurisdiction in

7On April 8, 2003, the court continued generally defendant CHC’s motion to dismiss
pending the resolution of plaintiff's motion to remand.

°On May 20, 2003, the court granted ReliaStar leave to join in CHC’s response to
plaintiff's motion to remand.


Plaintiff CCI is a Delaware corporation with its principal place of business in Chicago,
Illinois. Plaintiff claims to have entered into an administrative services agreement (“ASO
agreement”), effective January 1, 1997, with defendant CHC, a Delaware corporation with its
principal place of business in Chicago, Illinois. A copy of the ASO agreement, attached to
plaintiffs complaint, names plaintiff and Healthsource Provident Administrators, Inc.
(‘“Healthsource”), a Tennessee corporation with its principal place of business in Tennessee, as
the parties to the ASO agreement. In 1998, an amendment (“1998 amendment”) to the ASO
agreement was executed replacing Healthsource with Connecticut General Life Insurance
Company (“CGLIC”), a Connecticut corporation with its principal place of business in
Connecticut. Plaintiff alleges CHC performed the obligations under the ASO agreement and
1998 amendment to administer claims made under plaintiff's medical and dental employee
benefits plan. As part of this administration, plaintiff alleges CHC agreed to develop and
produce reports requested by plaintiff regarding the administration of plaintiffs benefit plan and
other case management responsibilities.

Plaintiff applied for individual excess medical insurance coverage with defendant
ReliaStar, a Minnesota corporation with its principal place of business in Minneapolis,
Minnesota. As part of the application, plaintiff prepared a disclosure statement identifying plan
beneficiaries with serious claims based upon information CHC allegedly provided. ReliaStar
issued plaintiff an individual excess medical insurance policy effective on January 1, 2000.

Prior to plaintiffs preparation of the disclosure statement, CHC allegedly provided claims

administration to two plan beneficiaries who incurred medical bills in excess of the amount


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
CC INDUSTRIES, INC., )
)
Plaintiff, )
)
v. ) Case No: 03 C 2075
)
ING/RELIASTAR LIFE INSURANCE ) Judge James H. Alesia
COMPANY’! and CIGNA HEALTHCARE )
OF ILLINOIS, INC., ) 20,
) y Chey,
Defendants. ) ‘Oy ED

Ll
Jl ey) Ny
MEMORANDUM OPINION AND ORDER

Currently before the court is plaintiffs motion to remand the case to the Circuit Court of
Cook County, Illinois pursuant to 28 U.S.C. § 1447(c). For the following reasons, the court
grants plaintiff's motion to remand.

J. BACKGROUND

Plaintiff CC Industries, Inc. (“CCI”) originally filed this action against defendants
ReliaStar Life Insurance Company. (“ReliaStar”) and CIGNA Healthcare of Illinois, Inc.
(“CHC”) in the Circuit Court of Cook County, Illinois claiming breach of contract and negligent
misrepresentation. Defendants removed the action to this court on the basis of diversity
jurisdiction claiming CHC, the non-diverse party, was fraudulently joined. Plaintiff moves to

remand the case to state court for lack of subject matter jurisdiction.

‘In the notice of removal defendants state the proper name of defendant is ReliaStar Life
Insurance Company.