Court Opinion

ID: 2998345
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:43:06.764105+00
Date Added: 2024-06-11T12:52:59.563498
License: Public Domain

In the
    United States Court of Appeals
                 For the Seventh Circuit
                           ____________

No. 05-8019
GEORGE and RUTH SCHILLINGER,
                                                     Respondents,
                                 v.

UNION PACIFIC RAILROAD COMPANY
and UNION PACIFIC CORPORATION,
                                                        Petitioners.
                           ____________
             Appeal from the United States District Court
                  for the Southern District of Illinois.
             No. 05-cv-0437—Michael J. Reagan, Judge.
                           ____________
    SUBMITTED AUGUST 11, 2005—DECIDED OCTOBER 5, 2005Œ
                       ____________

    Before POSNER, KANNE, and WOOD, Circuit Judges.
  WOOD, Circuit Judge. Union Pacific Railroad Company
and Union Pacific Corporation removed this suit to fed-
eral court, invoking the Class Action Fairness Act of
2005, Pub. L. No. 109-2, 119 Stat. 4 (2005) (CAFA). The
district court remanded after determining that the case
formally began before CAFA’s effective date of February 18,
2005, and thus was not subject to the Act. The companies
acknowledge that the suit predates CAFA, but they argue
that two developments that post-date CAFA have changed

Œ
    This Opinion was originally released in typescript form.
2                                                No. 05-8019

the case so profoundly that they may now remove it: the
addition of a new defendant, and the expansion of the class
definition. Because we agree with the district court’s
conclusions that the apparent naming of a new defendant
in plaintiff’s amended complaint was a scrivener’s error and
that the expansion of the class was not significant enough
to create a new claim or new action, we deny the petition for
permission to appeal.

                              I
  This case began on June 7, 2002, when George and Ruth
Schillinger sued Union Pacific Corporation (UPC) and
Union Pacific Railroad Company (UPRR) in state court. The
Schillingers contended that the companies, which allegedly
had a right-of-way on plaintiffs’ land, committed trespass
and were unjustly enriched when they leased space on the
land to telecommunications providers. The complaint
proposed a class of Illinois landowners who also allegedly
had been harmed by the companies’ use of rights-of-way
belonging to the class members.
  Both companies, represented by the same lawyer, re-
moved the case to the District Court for the Southern
District of Illinois, invoking the general removal author-
ity of 28 U.S.C. § 1441. Although the parties were diverse
(the Schillingers are citizens of Illinois, UPC is incorporated
in Utah and has its principal place of business in Nebraska,
and UPRR is incorporated in Delaware and has its principal
place of business in Nebraska), the district court concluded
that the amount in controversy did not exceed $75,000. See
28 U.S.C. § 1332. It also rejected the defendants’ argument
that federal question jurisdiction existed because the
putative class members’ rights could be determined only by
reference to the federal rights-of-way. The district court
accordingly remanded the case to state court based on the
lack of federal jurisdiction. See 28 U.S.C. § 1447(c). Back in
No. 05-8019                                              3

state court, plaintiffs realized that UPC did not operate a
railroad or own any rights-of-way and voluntarily dismissed
UPC from the case.
   In May 2003 the Schillingers moved to amend their
complaint, attaching a copy of the proposed amended
complaint to the motion. The amended complaint expanded
the proposed class of plaintiffs to include property owners
nationwide who owned land over which UPRR had a right-
of-way. Although UPC had already been dismissed, the
motion to amend and the proposed amended complaint
listed both UPRR and UPC as defendants. Plaintiffs and
UPRR briefed the motion, arguing only the merits of
expanding the class definition. Neither party addressed the
fact that UPC shows up in the amended complaint’s caption
and was mentioned in the allegations. In fact, it appears
that UPC was never served with a copy of the amended
complaint, though it probably had actual notice of the
complaint through its common lawyer with UPRR.
  Before the state court ruled on the motion to amend the
complaint, it stayed proceedings pending resolution of
another case. When the litigation resumed in 2005, the
parties continued to debate the merits of the motion to
amend, filing supplemental briefs and orally arguing.
Again, neither party commented on the inclusion of UPC in
the proposed amended complaint.
  In May 2005 the state court granted the motion to amend
and the clerk of court filed the amended complaint that was
attached to the 2003 motion. The clerk stamped the
amended complaint with a May 2005 filing date. Plaintiffs
mailed a copy of the filed amended complaint to counsel for
UPRR. UPRR and UPC together then removed the case
again to the federal district court.
4                                                No. 05-8019

                             II
  We address first the companies’ contention that the
addition of a new defendant—in this case the apparent
reinstatement of UPC as a defendant—must be treated as
the commencement of a new action for purposes of CAFA.
The companies correctly observe that in general, “a defen-
dant added after February 18 [2005] could remove because
suit against it would have been commenced after the
effective date[.]” Schorsch v. Hewlett-Packard Co., 417 F.3d
748, 749 (7th Cir. 2005). See also Knudsen v. Liberty
Mutual Ins. Co., 411 F.3d 805, 807 (7th Cir. 2005).
  The problem for the companies here is that the district
court found, in effect, that UPC was never really brought
back into the case, when it concluded that the inclusion
of UPC as a defendant in the amended complaint was a
scrivener’s error. We review the district court’s finding with
deference, see Sparrow v. Heller, 116 F.3d 204, 206 (7th Cir.
1997), and there is ample support in the record for the
district court’s determination. The Schillingers did not
discuss the addition of UPC in their motion to amend or
supporting memorandum, nor did they serve UPC with a
copy of either the motion to amend or the filed amended
complaint. Most importantly, plaintiffs’ counsel filed an
affidavit in which he explained that his staff used the
original complaint as a word processing template in draft-
ing the amended complaint and failed to notice that this
resulted in the incorporation of the old caption and intro-
ductory allegations into the amended complaint. The
district court acted within its discretion in finding that
UPC’s inclusion in the amended complaint was a clerical
error, that plaintiffs had no intention of bringing UPC back
into the litigation, and that UPC was in fact not a new
party to the suit.
  This case should not come to federal court if the only
ground for jurisdiction is a clerical error, however careless.
No. 05-8019                                                   5

Consider if the district court had allowed plaintiffs to
amend their complaint to correct the error by removing
UPC from the allegations, as it surely could have done. See
FED. R. CIV. P. 15(a), 60(a). In all likelihood, the court would
have been required to remand at that point. When a
plaintiff amends his complaint after removal in a way that
destroys diversity, a district court must consider the
reasons behind the amendment in determining whether
remand is proper. If the plaintiff amended simply to destroy
diversity, the district court should not remand. See
CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H.
COOPER, FEDERAL PRACTICE AND PROCEDURE § 3723, at
591 (1998 and Supp.) (citing district court cases). But an
amendment that is made for legitimate purposes may be a
proper ground for a remand to state court. See id. at
592 (“[T]he court will take account of whether the plain-
tiff has been dilatory or is trying to destroy diversity,
whether the plaintiff will be significantly disadvantaged
if the amendment is not allowed, and whether remanding
the action to state court will prejudice the defendant.”); see
also Costain Coal Holdings, Inc. v. Resource Inv. Corp., 15
F.3d 733, 734-35 (7th Cir. 1994) (directing district court
to remand case to state court after indispensable party
intervened destroying diversity). The correction of a clerical
mistake falls into the latter category, and the district court
would properly have granted a motion to remand if plain-
tiffs had amended their complaint to correct the mistake. It
is a short step from that to the conclusion that the district
court correctly held that jurisdiction is defeated if one of the
pleading elements necessary to establish jurisdiction is a
scrivener’s error. Cf. Selim v. Pan American Airways Corp.,
254 F. Supp.2d 1316, 1319 (S.D. Fla. 2003) (refusing to
exercise diversity jurisdiction over a matter “where such
jurisdiction clearly does not exist, merely due to an error by
Plaintiff.”).
  Even if the inadvertent inclusion of UPC does not support
6                                                  No. 05-8019

CAFA removal here, the companies argue that the expan-
sion of the proposed class does so. After the amendments to
the complaint, however, this suit is still between the
Schillingers and others similarly situated (whomever that
may turn out to include) and UPRR, and it concerns the
same claim alleged in the original complaint. As Schorsch
explains, the expansion of a proposed class does not change
the parties to the litigation nor does it add new claims. 417
F.3d at 750.
  Recognizing that plaintiffs’ amendment did not add
any parties or add a new claim, the companies contend
instead that the expansion was a “step sufficiently distinct
that courts would treat it as independent for limitations
purposes” and accordingly it commenced a new piece
of litigation under CAFA. See Knudsen, 411 F.3d at 807.
This is the same argument that Hewlett-Packard ad-
vanced and this court rejected in Schorsch. In that case,
plaintiff expanded the proposed class from consumers of one
computer-printer product that contained an allegedly faulty
chip to consumers of two other computer-printer products
that contained the same allegedly faulty chip. The original
complaint furnished Hewlett-Packard with the information
necessary to defend against the amended complaint, this
court held, and as a result the amendment would relate
back to the original complaint for Illinois statute-of-limita-
tion purposes. This also implies that the amendment did
not commence a new action under CAFA. Schorsch, 417
F.3d at 750-51.
   We acknowledge that the Schillingers’ expansion of the
class (if successful) may have greater repercussions for
UPRR than Hewlett-Packard potentially faced in its
litigation. If plaintiffs’ nationwide class is eventually
certified, UPRR will have more rights-of-way to research
and more state laws under which to analyze various
claims than if it was facing only a class of Illinois plaintiffs.
But, as we explained in Schorsch and Knudsen, the poten-
No. 05-8019                                                  7

tial for a larger amount of legal research and discovery in
and of itself is not a significant enough step to create new
litigation.
   There is another potential reason why the changes here
may not have been enough to qualify as the “commence-
ment” of a new action for CAFA. Illinois law governs the
statute of limitations in the trespass action. In determining
whether an amended complaint meets the statute-of-
limitations deadline, Illinois courts look to the date plain-
tiffs filed their motion to amend the complaint rather than
the date the trial court grants the motion and files in the
pleading. See, e.g., Enzenbacher v. Browning-Ferris Ind. of
Ill., Inc., 774 N.E.2d 858, 864 (Ill. App. Ct. 2002); Onsite
Engineering & Management, Inc. v. Illinois Tool Works,
Inc., 744 N.E.2d 928, 933 (Ill. App. Ct. 2001). The logic
underlying this practice is that defendants are on notice
of the amendment when the motion is filed and it would
be unfair to plaintiffs if a trial court waited months or years
to rule. See generally Moore v. State of Ind., 999 F.2d 1125,
1131 (7th Cir. 1993) (“As a party has no control over when
a court renders its decision regarding the proposed
amended complaint, the submission of a motion for leave to
amend, properly accompanied by the proposed amended
complaint that provides notice of the substance of those
amendments, tolls the statute of limitations, even though
technically the amended complaint will not be filed until
the court rules on the motion.”).
  It is not clear whether this state practice would govern
federal procedure in the circumstances presented here. On
the one hand, in cases for which state law provides the rule
of decision, federal courts apply state statutes of limita-
tions, including qualifications on those statutes. See, e.g.,
Walker v. Armco Steel Corp., 446 U.S. 740, 751 (1980). On
the other hand, federal courts have their own rules govern-
ing when an action is “commenced” for federal procedural
purposes. See FED. R. CIV. P. 3. If Illinois regarded the new
8                                                No. 05-8019

claims as “commenced” against UPRR back in 2003, then
UPRR had notice of their existence at that time for pur-
poses of the ongoing state court action. The district court’s
earlier decision that there was no jurisdiction had nothing
to do with the existence (or nonexistence) of UPC as a party,
and thus the amendment would not have prompted a new
removal effort under the normal rules of 28 U.S.C. § 1446.
There is a reasonable argument for saying that the opera-
tive events here all occurred before CAFA’s effective date,
regardless of the fact that the formal acceptance of the
amended pleading took place after CAFA was available. If
so, then this is an independent reason why UPRR’s current
effort to remove cannot succeed.
   We recognize, however, that this is a complex question.
CAFA may make state rules about statutes of limita-
tions irrelevant to the type of commencement that is
necessary for federal removal. CAFA permits a class ac-
tion to be removed “in accordance with [28 U.S.C.] section
1446 . . . .” It defines a “class action” as “any civil action
filed under rule 23 of the Federal Rules of Civil Proce-
dure or similar State statute or rule of judicial proce-
dure . . . .” 28 U.S.C. § 1332(d)(1)(B). The date of filing, in
the context of an amended pleading, may refer to the date
when the court accepts a proposed amendment, not the date
when the amendment is proffered. If, therefore, contrary to
our finding above, the amendment here was enough to
make this a new case for CAFA purposes, then UPRR may
have been entitled to rely on the date when the amendment
was finally accepted by the state court. We prefer to save
this complex issue for another day, when the choice of law
and interpretation of federal law will govern the outcome.
No. 05-8019                                                9

                            III
  The district court correctly held that this case was
commenced before CAFA’s enactment. Neither the scriv-
ener’s error that purported to add UPC as a “new” party nor
the expanded class definition changed the case sufficiently
to change that fact. Accordingly, the petition for permission
to appeal is DENIED.

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit

                   USCA-02-C-0072—10-17-05