Litigation Law Roundup

Sharp  Thinking

No. 120    Perspectives on Developments in the Law from The  Sharp Law Firm, P.C.     August 2014

Minimizing “Minimum Contacts,” At Least For Those That Are “Closely Related”

            By Darren M. Taylor, dtaylor@lotsharp.com, 618-242-0246

            Courts in Illinois may exercise personal jurisdiction over a plaintiff or defendant by enforcing a forum selection clause against them, even though they were not a signatory to the contract containing the clause, where it was closely related to the dispute such that it became foreseeable that the non-signatory would be bound, the Appellate Court’s First District has held.      

            In Solargenix Energy, LLC v. Acciona, S.A., 2014 IL App (1st) 123403, the issue before the court was whether defendants who were not signatories to contracts containing a forum selection clause were in fact bound by it compelling specific jurisdiction.  The court held that “where there is a sufficiently close relationship between the non-signatory and the dispute and the parties, it does not defy the non-signatory’s reasonable expectations that it would be bound by the clause, just as the signatory parties are.”  Subsequently, a “non-signatory impliedly consents to the forum selection clause via its connections with [the] dispute, the parties, and the contract or contracts at issue” (emphasis added).  

Seventh Circuit Holds Order Amending Pleadings Is Not Appealable,  Even When Amendments Extinguish Subject-Matter Jurisdiction

             “Orders remanding a case to state court based on a lack of subject-matter jurisdiction are not reviewable on appeal or otherwise,” the court held in Lindner v. Union Pacific Railroad Company, __ F.3d __, 2014 WL 3892539 (7th Cir. 2014), relying on 28 U.S.C. § 1447(d).         

            Plaintiff filed suit in Illinois state court and the defendant removed to federal court based on diversity jurisdiction.  Once in federal court, plaintiff moved to amend his complaint to add claims against two key employees of the defendant that resided in Illinois.  After the court allowed the amendment the plaintiff requested that the case be remanded back to state court, which the court ultimately permitted.                      

            Defendant opposed the proposed amendment on two grounds: (1) the amendment was futile because any state-law claims against the individuals would be preempted by federal law; and (2) even if the claims would not be preempted, the court should exercise its discretionary authority to deny any joinder that would destroy subject-matter jurisdiction.           

            Defendant accepted that § 1447(d) bars the review of remand orders, but relied on City of Waco, Tex. v. U.S. Fidelity & Guar. Co., 293 U.S. 140, 143 (1934), and Good v. Voest-Alpine Indus., 398 F.3d 918, 921-23 (7th Cir. 2005), when it argued that the court should review the court’s contemporaneous decision to allow the amendments to the complaint, because the bar on reviewing remand orders does not prevent review from separate, appealable rulings that happened to be contained in the same document as the remand order.            

            The court acknowledged the defendant’s argument, but recognized its misplacement.  Defendant was not helped by the doctrine established in Good and Waco, for the reason that the order allowing the amendment to the complaint was not a “final order.”  See Wingerter v. Chester Quarry Co., 185 F.3d 657, 662 (7th Cir. 1998).  Therefore, the decision to allow the amendment was not reviewable and the case had been properly remanded back to state court.

Opinion Limits Lay Representation In Most Administrative Proceedings 

            Except in matters that would be small claims if brought in a circuit court, laypersons may not represent corporations in either state or municipal administrative proceedings, according to the majority of a panel in the Appellate Court’s First District.

            Writing in Stone St. Partners, LLC v. City of Chicago Dep’t of Administrative Hearings, 2014 IL App (1st) 123654, the majority said it would not deem the plaintiff limited liability company to have waived improper service upon it through the participation in the administrative hearing of a layperson.  It declined to follow two opinions of other Appellate Court panels holding that laypersons could represent corporations in unemployment benefit hearings.

       In a partial dissent, the third member of the panel pointed out that the layperson involved was not a member or employee of the LLC and hence was not authorized to represent the LLC in any event.

       Noting the significant penalties and other effects that can result from such administrative proceedings, the majority said that “[a]dministrative hearings, whether held by a municipality or a state agency, necessarily implicate the full range of the powers of sovereign governments over individuals and other entities.  Their decisions can implicate the ability to practice a chosen profession or engage in a business, and can result in the imposition of crushing financial sanctions.  . . . The similarity between modern administrative proceedings and traditional judicial ones compels us to reject the City’s contention that the proceedings are so manifestly different that corporations can appear at them through non-lawyers.”

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