Court Opinion

ID: 768232
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:58:37+00
Date Added: 2024-06-11T17:55:34.064043
License: Public Domain

208 F.3d 579 (7th Cir. 2000)
Health Care Service Corp., et al.,   Plaintiffs-Appellants,v.Brown & Williamson Tobacco Corp., et al.,   Defendants-Appellees.
No. 00-1468
The  United States Court of Appeals  For the Seventh Circuit
Submitted March 17, 2000Decided March 28, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.   No. 98 C 2612--Elaine E. Bucklo, Judge.
Before Easterbrook, Kanne, and Evans, Circuit Judges.
Easterbrook, Circuit Judge.

1
We held last year,  addressing suits filed by two ERISA welfare funds,   plus the Blue Cross and Blue Shield associations   of six states, that health insurers may not  pursue direct litigation against tobacco   producers. Teamsters Health and Welfare Trust   Fund v. Philip Morris Inc., 196 F.3d 818 (7th   Cir. 1999). Insurers may recover only to the   extent that they are subrogated to the rights of   their insureds, we concluded.

2
The final line of our opinion reads: "In the  Blues' case the order is reversed, and the case   is remanded with instructions to dismiss the   complaint." Two of the six groups of Blue Cross   and Blue Shield associations attempted to avoid   that outcome by amending their complaint in the   district court. They proposed to file a new   complaint, identical in all material respects to   the old, except that every time the Blues   mentioned themselves, they added "as subrogees"   or an equivalent phrase. Judge Bucklo declined to   allow the amendment and dismissed the action.   Plaintiffs have appealed, and the defendants seek   summary affirmance on the basis of our prior   decision. See Mather v. Village of Mundelein, 864 F.2d 1291 (7th Cir. 1989). (Defendants also seek   permission to cite and rely on an unpublished   decision of this court. That motion is denied.   See Circuit Rule 53(e).) A district court has substantial discretion to  disallow belated amendment of a complaint. To the   extent Judge Bucklo believed that she lacked   discretion because we had forbidden amendment,   her decision could not be sustained on that   ground--but if this is what the district judge   believed, she was entirely correct. During the   prior appeal both the ERISA funds and the Blues   disclaimed any reliance on subrogation. The   fundamental strategy of the suit was to pursue   direct claims and thus avoid the drawbacks of   subrogation actions--principally, that the   insurer demonstrate the existence of a tort and   the lack of any defenses to liability. Plaintiffs   contended that they could recover directly, even   if none of their insureds had a viable claim.

3
That strategy was unsuccessful, and it is too  late to turn the suit 90p and try again. "An   argument bypassed by the litigants, and therefore   not presented in the court of appeals, may not be   resurrected on remand and used as a reason to   disregard the court of appeals' decision." Barrow   v. Falck, 11 F.3d 729, 730 (7th Cir. 1993). If   plaintiffs wanted to pursue both direct and   subrogation actions, they should have told us so   the first time. We resolved every contention that   the parties presented and held that the complaint   must be dismissed. The district court did not err   in implementing our mandate.

4
If the Blues want to proceed as subrogees, they  must file a new suit satisfying the usual   conditions of a subrogation action. Plaintiffs   must identify the persons to whose claims the   insurers are subrogated and show that the   insureds are entitled to recover, that the   plaintiffs have a contractual right to proceed on   each insured's behalf with respect to each claim,   and that the suits fall within federal   jurisdiction. Doubtless the Blues are subrogated   to their insureds' tort claims. Yet this   complaint is dominated by claims under the   antitrust laws, RICO, and state consumer-fraud   statutes. It is unclear why health insurers are   entitled to pursue these claims, when (for   example) the complaint does not give any reason   to believe that the insurers have compensated the   insureds for antitrust injury or purchased the   right to pursue smokers' antitrust claims. But we   need not pursue these issues, for the amended   complaint that the Blues sought leave to file did   none of these things.

Affirmed