Opinion
No. 05 C 2069.
June 6, 2005
MEMORANDUM OPINION AND ORDER
Plaintiffs already had a case pending in the Chancery Division of the Circuit Court of Cook County, Illinois (the "Chancery Case"), in which they alleged violations of the Illinois Trade Secrets Act ( 765 ILCS 1065) and related common law counts, when they filed a parallel federal case (the "First Federal Case") based on essentially the same facts and conduct but alleging a violation of the federal Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030. On defendants' motion, this court applied theColorado River doctrine, effectively staying the First Federal Case by dismissing it without prejudice to reinstate after the completion of the Chancery Case in the event anything remained to be litigated regarding the CFAA claim. See Liebert Corp. v. Mazur, 2004 WL 2095666 (N.D. Ill. Sept. 17, 2004) ("Liebert I"). As was noted in the decision, it was unlikely that the CFAA claim would be reinstated after completion of the Chancery Case because, at such a point, principles of res judicata and claim splitting would likely preclude further pursuit of the CFAA claim. See id. at *2. The expectation was that plaintiffs would either amend the Chancery Case to add the CFAA claim or decide not to raise the CFAA claim in the state case. However, no order was entered requiring that plaintiffs take either action and any such order would have been inappropriate.
Approximately six months after the First Federal Case was dismissed, plaintiffs filed a separate action in state court again raising the CFAA claim (the "Law Case"). This case was also filed in the Circuit Court of Cook County, Illinois, but in the Law Division. Plaintiffs contend they could not file the second case in the Chancery Division because they were not seeking injunctive relief, only damages. Plaintiffs, though, do not dispute that, assuming a motion to amend would be granted, they could have raised the CFAA claim in the Chancery Division simply by moving to amend the Chancery Case to add the CFAA claim. The parties also apparently agree that a motion to consolidate the Law Case with the Chancery Case would likely be granted.
Although the body of the Law Case complaint contains allegations referencing injunctive relief, the request for relief does not request any such relief. Plaintiffs represent that the injunctive allegations in the body of the complaint were a scrivener's error. Defendants speculate that the scrivener's error was in the request for relief. Since plaintiffs are the masters of their complaint, their representation will be accepted. The Law Case complaint is construed as not requesting equitable relief.
Plaintiffs could have simplified matters by amending the Chancery Case to add the CFAA claims, but instead chose to file a separate case in the Law Division. Defendants still could have moved to consolidate the two cases, but instead chose to compound matters by removing the Law Case to federal court. It is this "Second Federal Case" (the removed Law Case) that is presently pending in this court. Before this court are defendants' motion to dismiss the case with prejudice and plaintiffs' motion for remand.
At the time the present motions were presented, the court suggested that the parties attempt to resolve this matter by agreement. The parties, however, could not reach agreement. Plaintiffs proposed agreeing to remand the case so that defendants could move to consolidate. Defendants proposed agreeing to stay further litigation of the CFAA claim. No agreement was reached.
Relying on Fed.R.Civ.P. 41(b), which permits dismissals for failure to comply with an order of court, defendants contend the Second Federal Case should be dismissed because plaintiffs violated Liebert I when they filed the Law Case as a separate case in the Law Division. As previously stated, though, Liebert I did not prohibit plaintiffs from filing a separate CFAA case. Liebert I assumed that any CFAA claim brought in state court would be as part of the Chancery Case, but no order required that to be done. Defendants' motion will be denied.
Plaintiffs contend the case should be remanded because it has already been held in Liebert I that, to avoid duplicative proceedings, the CFAA claims should not proceed in federal court. The remand of removed cases is governed by statute. The removal statutes presently include the following provision:
A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.28 U.S.C. § 1447(c).
At one point, the Supreme Court had held that remands are limited to grounds authorized by § 1447(c), which were defects in removal procedure and lack of subject matter jurisdiction. See Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976). In a subsequent case, however, the Supreme Court held that a ground not falling under § 1447(c) could be a basis for a remand, in that case, remanding the case when only pendent state law claims remained. See Carnegie-Mellon University v. Cohill, 484 U.S. 343 (1988). See also Rothner v. City of Chicago, 879 F.2d 1402, 1405-07 (7th Cir. 1989). It is now clear that grounds other than ones referenced in § 1447(c) may be a basis for remand. Rothner, supra.
Following Thermtron, but before Carnegie-Mellon, the Seventh Circuit had held that abstention is not an appropriate ground for remand because it is not a ground included under § 1447(c). Ryan v. State Board of Elections, 661 F.2d 1130, 1133 (7th Cir. 1981). In Rothner, however, the Seventh Circuit recognized that, subsequent to Ryan, Carnegie-Mellon had broadened the possible grounds for a remand. Rothner, 879 F.2d at 1406, 1410. See also id. at 1421 n. 1 (Easterbrook, J., dissenting). Rothner itself did not involve abstention andRothner did not directly state that the abstention holding ofRyan was no longer controlling law in light ofCarnegie-Mellon. However Rothner does favorably discuss the holding in Corcoran v. Ardra Insurance Co., 842 F.2d 31 (2d Cir. 1988), that abstention may be an appropriate non-1447(c) ground for a remand.
As we know from Carnegie-Mellon, § 1447(c) does not contain all of the permissible grounds for remand. Courts often supplement statutory rules with judge-made rules. For example, courts have applied the doctrines of laches and estoppel to shorten or enlarge statutory limitation periods. Courts have applied contract principles to enforce private agreements that bypass a statutory rule. In the context of removal, courts have applied contract principles to enforce forum-selection clauses and thus remand on non-statutory grounds, Clorox Co. v. United States District Court, 779 F.2d 517 (9th Cir. 1985); Pelleport Investors v. Budco Quality Theatres, Inc., 741 F.2d 273 (9th Cir. 1984); and have applied the doctrines of pendent jurisdiction and abstention to allow remands where all of the statutory requirements for removal have been satisfied, Carnegie-Mellon; Corcoran v. Ardra Insurance Co., 842 F.2d 31 (2d Cir. 1988). The authority for such remands derives not from the removal statutes but from the common law. As indicated by Carnegie-Mellon and Corcoran, the values of judicial economy, fairness, convenience and comity justify supplementation of statutory rules with common law doctrines. Carnegie-Mellon, 108 S. Ct. at 619-20 and n. 7; Corcoran, 842 F.2d at 36.Rothner, 879 F.2d at 1416. But see id. at 1421 n. 1 (Easterbrook, J., dissenting) ("The district judge in Ryan had remanded a case on the ground of abstention. It didn't take much effort to jettison that, and the holding (as opposed to the rationale) that you can't `abstain' by remanding a case doubtless survives Carnegie-Mellon.").
Subsequent to Corcoran and Rothner, both before and after the 1996 amendment to § 1447(c), cases have generally held that abstention may be an appropriate basis for remanding a case.See Charles Alan Wright, Arthur R. Miller, Edward H. Cooper,Federal Practice Procedure § 3739 at 505-08 n. 99 (3d ed. 1998); id. 2005 Supp. at 163 nn. 98.1, 99, 99.1. Also, the language of § 1447(c) that has been in effect since 1996 may itself encompass abstention in that it refers to "any defect other than lack of subject matter jurisdiction." Previously the language was "any defect in removal procedure" and before that, "removed improvidently." The current "any defect" language is broad enough to include remands based on abstention doctrines.See Cook v. Wikler, 320 F.3d 431, 434-35 (3d Cir. 2003); Levin v. Tiber Holding Co., 1999 WL 649002 *3-4 (S.D.N.Y. Aug. 25, 1999); David D. Siegel, Commentary on 1996 Revision of Section 1447(c), 28 U.S.C.A. § 1447(c) (West. Supp. 2004). But see Snapper, Inc. v. Redan, 171 F.3d 1249, 1252-60 (11th Cir. 1999). In light of Carnegie-Mellon and the 1996 amendment to § 1447(c), it is held that Ryan is no longer controlling in this Circuit. The majority view will be followed that when adequate grounds for abstention exist, including Colorado River abstention, the remand of a removed case is appropriate.
To the extent abstention falls under the definition of any defect, arguably a remand motion based on abstention must be brought within 30 days after removal. See Levin, supra; Siegel, supra. Such an interpretation would not be a problem in the present case because plaintiffs' motion for a remand was brought within 30 days of removal.
In Liebert I, it was already held that it is appropriate to apply Colorado River and defer to the state court proceedings regarding the CFAA claim. Since Liebert I already provides a basis for reinstating the CFAA claim in the event that further federal proceedings are appropriate, there is certainly no need to stay the present case or dismiss it with leave to reinstate. Instead, the present case will be remanded to the Circuit Court of Cook County, Illinois, Law Division. It will be left to the parties to move for consolidation if they so desire and the state court to rule on any such motion that may be brought.
Defendants could have avoided this improvident removal by examining the case law regarding abstention and remands. They also could have avoided it by simply moving for consolidation in the state court. However, plaintiffs also could have avoided the possibility of again having parallel proceedings by the expedient of moving to amend their Chancery Case complaint instead of filing a separate state court action. Since both parties are at fault, plaintiffs will not be awarded their costs of removal.
It is noted that, although there is a substantial body of case law addressing the issue of remands based on abstention, neither plaintiffs nor defendants cited a single case on the issue.
IT IS THEREFORE ORDERED that defendants' motion to dismiss [6] is denied. Plaintiffs' motion for remand [8] is granted. Each party shall bear its own costs of removal. The Clerk of the Court is directed to remand this case to the Circuit Court of Cook County, Illinois, Law Division.