Schillinger, George v. Union Pacific

In the

United States Court of Appeals

For the Seventh Circuit

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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.

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SUBMITTED AUGUST 11, 2005—DECIDED OCTOBER 5, 2005Œ

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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