Reid et al v. Neighborhood Assistance Corporation of America

Filing 19

MEMORANDUM Opinion and Order Written by the Honorable Gary Feinerman on 4/11/2012.Mailed notice.(jlj)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
KENDALL REID, BRADLEY SEARS, and ANDRELL
THOMAS, on behalf of themselves and all other persons
similarly situated,

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Plaintiffs,
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vs.
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NEIGHBORHOOD ASSISTANCE CORPORATION OF )
AMERICA,
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Defendant.
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11 C 8690
Judge Feinerman

MEMORANDUM OPINION AND ORDER
Plaintiffs Kendall Reid, Bradley Sears, and Andrell Thomas brought this putative class
action in the Circuit Court of Cook County, Illinois, against Defendant Neighborhood Assistance
Corporation of America (“NACA”), alleging violations of the Illinois Wage Payment and
Collection Act (“IWPCA”), 820 ILCS 115/1 et seq., the Secure and Fair Enforcement for
Mortgage Licensing Act (“SAFE Act”), 12 U.S.C. § 5101 et seq., and the Illinois Residential
Mortgage License Act (“IRMLA”), 205 ILCS 635/1-1 et seq. Doc. 1-1. NACA removed the
case pursuant to 28 U.S.C. § 1441. The notice of removal contends that “[b]ecause Plaintiffs
seek relief under the SAFE Act, a federal statute …, this Court has original jurisdiction over this
civil action pursuant to 28 U.S.C. § 1331.” Doc. 1 at ¶ 7.
Before the court is NACA’s motion to dismiss the complaint under Federal Rule of Civil
Procedure 12(b)(6) for failure to state a claim. Doc. 7. For the following reasons, the motion is
granted in part and denied as moot in part. The SAFE Act and IRMLA claims are dismissed
without prejudice, while the IWPCA claims are remanded to state court.
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NACA’s notice of removal plausibly interprets the complaint as bringing independent
claims for relief under the IWPCA, the SAFE Act, and the IRMLA. Plaintiffs, however, aver
that their only claims for relief are brought under the IWPCA; the alleged violations of the SAFE
Act and the IRMLA, Plaintiffs explain, are simply predicates for the IWPCA claims. Doc. 15 at
7 (“The wrongful activities which violated the SAFE Act and IRMLA resulted in the IWPCA
violations, but the claim and the relief sought is based on violation of IWPCA.”). Accordingly,
the SAFE Act and IRMLA claims, to the extent they exist at all, are dismissed without prejudice.
That leaves the IWPCA claims. NACA’s notice of removal does not contend that the
court has original jurisdiction over the IWPCA claims. The only stated basis for jurisdiction
over those claims is 28 U.S.C. § 1367(a), the supplemental jurisdiction statute. Doc. 1 at ¶ 9
(“This Court has federal question jurisdiction over Plaintiffs’ federal claim, and can assert
jurisdiction over Plaintiffs’ state law claims pursuant to 28 U.S.C. § 1367(a) because Plaintiffs’
Illinois state law claims arise out of the same “case or controversy” as their federal claim.”). The
question then becomes whether the court should exercise its discretion under 28 U.S.C.
§ 1367(c) to relinquish jurisdiction over the IWPCA claims and remand them to state court.
Section 1367(c)(3) provides that a district court “may decline to exercise supplemental
jurisdiction over a claim” if “the district court has dismissed all claims over which it has original
jurisdiction.” 28 U.S.C. § 1367(c)(3). The SAFE Act claims are the only claims over which the
court had original jurisdiction, and those claims have been dismissed. “As a general matter,
when all federal claims have been dismissed prior to trial, the federal court should relinquish
jurisdiction over the remaining pendant state claims.” Williams v. Rodriguez, 509 F.3d 392, 404
(7th Cir. 2007). This rule has three exceptions: “when the [refiling] of the state claims is barred
by the statute of limitations; where substantial judicial resources have already been expended on
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the state claims; and when it is clearly apparent how the state claim is to be decided.” Ibid.
None of the exceptions apply here. The IWPCA claims are being remanded to state court, not
dismissed, so there will be no statute of limitations problem. Substantial federal judicial
resources have not yet been committed to the IWPCA claims; in fact, no resources have been
committed to those claims. And it is not clearly apparent how the IWPCA claims should be
decided. It follows that relinquishing jurisdiction over the IWPCA claims is appropriate under
§ 1367(c)(3). See Wright v. Associated Ins. Cos., 29 F.3d 1244, 1251-53 (7th Cir. 1994).
During a hearing on January 4, 2012, NACA alluded to the possibility that the court
might have original federal question jurisdiction over the IWPCA claims pursuant to the doctrine
set forth in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545
U.S. 308 (2005). Without mentioning Grable, NACA suggested that resolving the IWPCA
claims will require the court to interpret and apply the SAFE Act, whose alleged violation is
among the predicates of the IWPCA claims. Grable does not apply here. Grable jurisdiction
exists only in a “special and small category” of cases, and “it takes more than a federal element
to open [§ 1331’s] … ‘arising under’ door.” Empire Healthchoice Assurance, Inc. v. McVeigh,
547 U.S. 677, 699, 701 (2006) (quoting Grable, 545 U.S. at 313) (internal quotation marks
omitted); see also Bennett v. Sw. Airlines Co., 484 F.3d 907, 910 (7th Cir. 2007) (“the influence
of federal law on the outcome of a contract (or tort) suit is not enough to support the arisingunder jurisdiction”). The asserted necessity of interpreting the SAFE Act in adjudicating the
IWPCA claims, standing alone, is an insufficient basis for original federal jurisdiction under
Grable. See, e.g., Navistar Int’l Corp. v. Deloitte & Touche LLP, __ F. Supp. 2d. __, 2011 WL
5131178 (N.D. Ill. Oct. 28, 2011)

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Accordingly, as the notice of removal correctly reflects, supplemental jurisdiction under
§ 1367(a) is the only basis for bringing the IWPCA claims in federal court, and for the abovestated reasons, such jurisdiction is relinquished. Both parties should take note that if Plaintiffs
ultimately bring in state court an affirmative claim for relief under the SAFE Act or any other
federal law, NACA may again try to remove the case to federal court.

April 11, 2012
United States District Judge

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