Source: http://caselaw.findlaw.com/us-7th-circuit/1674053.html
Timestamp: 2017-10-17 11:29:19
Document Index: 610462999

Matched Legal Cases: ['§ 1332', '§ 1367', '§ 1367', '§ 1367', '§ 1331', '§ 1367', '§ 1367', '§ 1367', '§ 1367']

McCOY v. IBERDROLA RENEWABLES INC LLC | FindLaw
McCOY v. IBERDROLA RENEWABLES INC LLC
Aaron McCOY, Plaintiff, v. IBERDROLA RENEWABLES, INC., and Streator–Cayuga Ridge Wind Power, LLC, Defendants, Third–Party Plaintiffs,
Gamesa Technology Corporation, Inc., and Gamesa Wind US, LLC, Defendants, Third–Party Plaintiffs, Counter Defendants–Appellees, v. Outland Renewable Energy, LLC, n/k/a Renovo Renewable Energy, LLC, and Outland Energy Services, LLC, n/k/a Northwind Holdings, LLC, f/k/a Outland Renewable Energy Field Services, LLC, Third–Party Defendants, Counter Plaintiffs–Appellants.
Before BAUER, ROVNER, and HAMILTON, Circuit Judges.Dominic R. Fichera, Fichera & Miller PC, Chicago, IL, for Plaintiff. Howard J. Roin, Mayer Brown LLP, Kurt E. Olsen, Law Offices of Kurt E. Olsen, Chicago, IL, for Defendants, Third–Party Plaintiffs. Julie Negovan, Kutak Rock LLP, Philadelphia, PA, Matthew M. Enenbach, Kutak Rock LLP, Omaha, NE, for Defendants, Third–Party Plaintiffs, Counter Defendants–Appellees. Thomas Melone, Allco RenewableEnergy Limited, New York, NY, Jack Everett Pierce, Benick Lifson, P.A., Minneapolis, MN, for Third–Party Defendants, Counter Plaintiffs–Appellants.
This lawsuit began as a personal injury case. It expanded to encompass disputes over the entire business relationship between the appellants (collectively “Outland”) and appellees (collectively “Gamesa”). Only Outland's numerous third-party counterclaims against Gamesa are at issue in this appeal. Gamesa prevailed on a motion to dismiss, and the district court denied Outland's motion for leave to amend.
The procedural history on the defense side of this case is complex. We provide a simplified summary, and we accept as true all factual allegations from Outland's counterclaims and proposed amended counterclaims. See Hayes v. City of Chicago, 670 F.3d 810, 813 (7th Cir.2012); Gillman v. Burlington Northern R.R. Co., 878 F.2d 1020, 1022 (7th Cir.1989).
While servicing a wind turbine at Cayuga Ridge, Outland employee Aaron McCoy was electrocuted when the turbine unexpectedly re-energized. McCoy began this case by filing a personal injury case in state court against Iberdrola and Gamesa Technology Corp. The case was removed to federal court on the basis of diversity of citizenship. Iberdrola then impleaded Gamesa Wind U.S. and Outland to seek indemnification for the McCoy accident based on contract and the Illinois Joint Tortfeasor Contribution Act (“JTCA”). The various defendants then filed numerous cross-claims and counterclaims related to the personal injury dispute.
Whether there is an independent basis for federal jurisdiction over Outland's counterclaims would not matter if they arose from the allegations supporting McCoy's original personal injury claims, which provided the court with diversity jurisdiction under § 1332. But Outland's antitrust and commercial tort third-party counterclaims arose from a different set of facts and were not part of the same case or controversy, as required for supplemental jurisdiction under § 1367(a). The federal antitrust claims are the only jurisdictional anchors for those third-party counterclaims. In the alternative, Outland argues that its state law claims did not “form part of the same case or controversy under Article III” as the federal antitrust claims, as required by § 1367(a), and that the district court should have exercised its discretion to decline jurisdiction under § 1367(c). We address these arguments in turn.
When it comes to invoking federal question jurisdiction, the bar is low. The district court generally has jurisdiction over a claim “arising under” federal law. 28 U.S.C. § 1331; International College of Surgeons, 522 U.S. at 163. Even if the federal claim fails to state a cause of action, the district court retains jurisdiction to say so. See Bell v. Hood, 327 U.S. 678, 682, 66 S.Ct. 773, 90 L.Ed. 939 (1946). “[T]he district court has jurisdiction if ‘the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another,’ unless the claim ‘clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous.’ “ Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998), quoting Bell v. Hood, 327 U.S. at 685, 682–83.
The second claim alleged that Gamesa unlawfully tied maintenance services to the sales of its wind turbines and had disproportionate market power in the late 2000s in a market for maintenance services for Gamesa turbines. The district court dismissed the claim because of the insufficiency of Gamesa's alleged market power. Gamesa supposedly had a ten percent share of the wind turbine market, which is just not enough by itself, if that's the relevant market and there were no extraordinary circumstances. However, Outland opposed dismissal by arguing that Gamesa did have market power at the relevant time because of serious shortages in the wind turbine market, giving it the power to tie the sale of maintenance services to the sale of the turbines themselves. That may be a tough theory to prove. How long might the shortage have lasted? See Sheridan v. Marathon Petroleum Co., 530 F.3d 590, 594 (7th Cir.2008) (market power is ability to charge a price persistently above competitive level despite existence of competitors). We need not wrestle these nuances to the ground, however, because Outland does not attack the dismissal or try to defend its theory. It argues instead that its theory was so vacuous as to fail to invoke federal question jurisdiction. Suffice it to say there was at least some room for argument about market power, so the alleged claim was not “utterly frivolous,” nor was the theory of a combination between Gamesa and Iberdrola. Outland also has not admitted to pleading the federal antitrust claims as a mere pretext for bringing its other claims into federal court using supplemental jurisdiction. Cf. Steel Co., 523 U.S. at 89.
The discretionary power to decline jurisdiction under § 1367(c) does not present a limit on subject matter jurisdiction that a district court must raise and decide on its own: “This division between the requisites of jurisdictional competence in § 1367(a) and the criteria for the exercise of discretion in § 1367(c) also marks, we believe, the division between matters the court must examine on its own and those that depend on an assertion of error by the litigants.” Myers v. County of Lake, 30 F.3d 847, 850 (7th Cir.1994); see also International College of Surgeons, 522 U.S. at 172 (reaffirming the proposition that pendent or supplemental jurisdiction “is a doctrine of discretion, not of plaintiff's right”); Mayor of Philadelphia v. Educational Equality League, 415 U.S. 605, 627, 94 S.Ct. 1323, 39 L.Ed.2d 630 (1974) (discretionary doctrine of pendent jurisdiction, the forerunner of § 1367(c), was not “something akin to subject matter jurisdiction that may be raised sua sponte at any stage”). We therefore address only whether the other state law claims formed part of the “same case or controversy” as the anchoring federal antitrust claims.
Section 1367(a) “authorizes the district courts to exercise jurisdiction to the full extent of Article III's ‘case or controversy’ requirement.” Baer v. First Options of Chicago, Inc. ., 72 F.3d 1294, 1299 (7th Cir.1995). Claims form part of the same case or controversy when they “derive from a common nucleus of operative fact.” United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). To satisfy this requirement, “ ‘[a] loose factual connection between the claims is generally sufficient.’ “ Baer, 72 F.3d at 1299, quoting Ammerman v. Sween, 54 F.3d 423, 424 (7th Cir.1995). In Ammerman, the plaintiff brought a Title VII claim against her employer for sexual harassment by a co-worker and a state tort claim against her co-worker for assault and battery. The district court had supplemental jurisdiction over the state claim because the assault facts relevant to the tort claim formed a subset of the facts supporting the Title VII claim. Ammerman, 54 F.3d at 424.
The federal antitrust claims had a large “nucleus of operative facts,” and the other original state law claims all had a basis in at least a portion of those facts. Accordingly, the district court could exercise supplemental jurisdiction over all of the original counterclaims.
“District courts may refuse to entertain a proposed amendment on futility grounds when the new pleading would not survive a motion to dismiss.” Gandhi v. Sitara Capital Mgmt., LLC, 721 F.3d 865, 869 (7th Cir.2013). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ “ Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
An action for tortious interference with contract requires the plaintiff to prove that the defendant induced a third party to breach a contract. See HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 131 Ill.2d 145, 137 Ill.Dec. 19, 545 N.E.2d 672, 676 (Ill.1989); Philip I. Mappa Interest, Ltd. v. Kendle, 196 Ill.App.3d 703, 143 Ill.Dec. 936, 554 N.E.2d 1008, 1011 (Ill.App.1990). Outland has not alleged any breach, either of the original or the amended agreement with Duke. It complains only that Gamesa's alleged interference lowered the value of the complete acquisition agreement, which was still being negotiated at the time Gamesa sent its letter. Because Outland did not allege a breach by Duke, amendment of this claim would have been futile.1
The elements of a claim for intentional interference with prospective economic advantage are different. A plaintiff must allege “(1) a reasonable expectancy of entering into a valid business relationship, (2) the defendant's knowledge of the expectancy, (3) an intentional and unjustified interference by the defendant that induced or caused a breach or termination of the expectancy, and (4) damage to the plaintiff resulting from the defendant's interference.' “ Voyles v. Sandia Mortg. Corp., 196 Ill.2d 288, 256 Ill.Dec. 289, 751 N.E.2d 1126, 1133–34 (Ill.2001), quoting Anderson v. Vanden Dorpel, 172 Ill.2d 399, 217 Ill.Dec. 720, 667 N.E.2d 1296, 1299 (Ill.1996). The district court determined this claim was not viable because (1) Outland alleged only a temporal connection between Gamesa's letter and the negotiations rather than knowledge, (2) Gamesa's alleged interference did not result in a complete termination of Outland's relationship with Duke, and (3) Gamesa's activity was protected because it was acting as a commercial competitor. We find each of these reasons problematic, but we affirm on another ground.
The second ground—that the relationship between Outland and Duke was merely impaired but not terminated—presents a close question of state law. It is possible that Illinois courts would require a complete termination of the prospective relationship as the district court did in this case, but most Illinois cases on the subject involve an employee's suit against an employer for a rejection from another job, which is necessarily an all-or-nothing proposition. See, e.g., Anderson, 217 Ill.Dec. 720, 667 N.E.2d at 1300 (stating that firm job offer can be basis for prospective economic advantage claim, but “leading candidate” after first interview does not have a reasonable expectancy). Here, Outland's expectancy did ripen into an acquisition by Duke, but only after it allegedly suffered a significant drop in value for which Outland blames Gamesa. And Outland might have benefitted even more from the never-consummated fleet services agreement; that potential relationship with Duke was entirely terminated.2
Nevertheless, Outland's claim still would have failed under Illinois law because it did not allege that Gamesa interfered improperly by communicating with Duke. “Actions that form the basis of a tortious interference claim must be directed at third-party business prospects.” F:A J Kikson v. Underwriters Laboratories, Inc., 492 F.3d 794, 800 (7th Cir.2007), citing Galinski v. Kessler, 134 Ill.App.3d 602, 89 Ill.Dec. 433, 480 N.E.2d 1176, 1180 (Ill.App.1985). Gamesa did not send the letter to Duke, and Outland alleged only that Gamesa made a competing offer during its prior communications with Duke. Assuming, as we must, that Gamesa's breach letter was directed at lowering the value of Outland in bad faith, the proper cause of action would be different. (Outland opted to bring claims for promissory estoppel and breach of fiduciary duty, but a bad-faith claim of breach would often itself be a breach of contract.) Without any allegedly improper action directed to the relevant third party, this claim must fail. Cf. F:A J Kikson, 492 F.3d at 800–01 (analyzing four communications between defendant and third parties); Voyles, 256 Ill.Dec. 289, 751 N.E.2d at 1134 (considering reports made by defendant to credit agencies). Thus, amendment would have been futile.
Despite Outland's perverse contention that its own federal claims were too feeble to invoke jurisdiction, the district court properly exercised federal question and supplemental jurisdiction over the original third-party counterclaims. It also properly applied Illinois substantive law and denied leave to amend Outland's counterclaims based on futility and undue delay. The judgment is AFFIRMED.
1. Two additional points warrant brief attention. First, the district court based its futility determination in part on Outland's allegation that Gamesa had knowledge of negotiations but not the exact terms of the final amended agreement. We doubt that complete knowledge of details is necessary, but we need not consider the exact level of knowledge required because Outland did not allege a breach. Second, Outland describes its understanding with Duke regarding the fleet services agreement as a “commitment” but not a contract. The district court correctly noted that a vague “commitment” is not a sufficient stand-in for a valid contract. See, e.g., HPI Health Care Servs., 137 Ill.Dec. 19, 545 N.E.2d at 676–77 (tortious interference with contract protects plaintiff's contractual rights).
2. While a “commitment” is not a contract, see n. 1 supra, it can be a reasonable expectancy for purposes of tortious interference with prospective economic advantage.
Copyright © Tue Oct 17 04:29:18 PDT 2017 FindLaw, a Thomson Reuters business. All rights reserved.