Sabrina Roppo v. Travelers Commercial Insurance
2017 U.S. App. LEXIS 16407
| 7th Cir. | 2017Background
- In July 2011 Roppo was injured in an accident with Jeffrey Block, who had a $500,000 auto policy and a $1,000,000 umbrella policy issued by Travelers; Travelers and Block’s defense counsel initially disclosed only the $500,000 limit. Roppo settled in May 2014 for $750,000 after learning of the umbrella policy.
- Roppo filed a putative Illinois class action (initially in state court) alleging Travelers’ practice of concealing umbrella/excess limits from third‑party claimants; she sought to represent ~500 class members and pleaded a range of state claims (fraudulent concealment, negligent misrepresentation, negligence, ICFA, Illinois Insurance Code claims) and later added a RICO claim.
- Travelers removed under CAFA, asserting (1) at least 100 class members, (2) minimal diversity, and (3) > $5 million aggregate amount in controversy, supported by Travelers’ affidavit showing minimum $1,000,000 umbrella limits and conservative damage estimates.
- The district court denied remand, allowed amendment to add Block’s defense counsel and firm, then dismissed the third amended complaint with prejudice for failure to state claims; Roppo appealed arguing lack of CAFA jurisdiction and that her amended pleading stated viable claims.
- The Seventh Circuit affirmed: it held CAFA jurisdiction existed (plaintiff’s class‑size estimate and defendant’s amount‑in‑controversy showing were adequate), the local‑controversy exceptions did not apply, RICO provided an independent but ultimately insufficiently pleaded federal claim for relief on the merits, and the state‑law counts were properly dismissed for pleading defects (notably lack of reliance, no duty from defense counsel to adversary, ICFA consumer nexus failure, statutory limits on §155 relief, and §143.24b disclosure scope).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal jurisdiction under CAFA existed (class size and amount in controversy) | Roppo argued Travelers failed to prove at least 100 class members and did not meet the $5M amount‑in‑controversy requirement. | Travelers relied on Roppo’s own ~500 class‑member allegation and its affidavit showing at least $1M umbrella limits (and conservative per‑member damages) to show aggregate controversy > $5M. | CAFA jurisdiction satisfied: court may rely on plaintiff’s counsel’s class‑size representation and defendant’s plausible, supported amount‑in‑controversy showing. |
| Whether CAFA local‑controversy exceptions required remand | Roppo argued added Illinois defendants (defense counsel/firm) made the case a local controversy mandating remand or discretionary declination. | Travelers argued it is the primary defendant (citizen of Connecticut) and the local defendants are not primary nor from whom significant relief is sought for the class as a whole. | Exceptions do not apply: local defendants are not primary and the gravamen targets Travelers, so remand not required. |
| Whether RICO claim was so insubstantial to defeat federal jurisdiction | Roppo argued her RICO claim was not intended to be a jurisdictional basis and that Travelers previously urged CAFA only. | Travelers contended RICO was inadequately pleaded on the merits, but the court examined whether the RICO allegation was "wholly insubstantial". | RICO allegations were not "wholly insubstantial"; they sufficed to supply an independent basis for federal jurisdiction even though the claim failed on heightened pleading merits. |
| Whether fraud / negligent misrepresentation claims were plausibly pleaded (reliance) | Roppo contended Travelers and defense counsel misrepresented limits and she relied, sustaining fraud and negligent misrepresentation counts. | Travelers pointed to allegations showing Roppo’s counsel doubted the representations and pressed for umbrella disclosure, negating reasonable reliance. | Dismissed: Roppo pleaded herself out of court—allegations show she (and counsel) did not rely on defendants’ statements, an essential element. |
| Whether defense counsel and firm owed a duty to Roppo (negligence) | Roppo argued a defense attorney’s duties (and employer’s supervisory duties) extend to injured third parties as direct beneficiaries. | Travelers argued attorneys owe duties to clients only; third‑party duty arises only if attorney was hired specifically to benefit the third party, which did not occur. | Dismissed: no duty to adversary; Roppo was not an intended direct third‑party beneficiary, so negligence and supervisory claims fail. |
| Whether §215 ILCS 5/143.24b required disclosure of umbrella limits | Roppo argued Travelers failed to disclose umbrella limits in response to a certified request. | Travelers argued the statute requires disclosure only of automobile liability policy limits (which it provided) and Roppo failed to supply required medical records to trigger full statutory disclosure. | Dismissed: Plaintiff did not satisfy statutory prerequisites and §143.24b requires disclosure of automobile policy limits only; Travelers complied. |
| Whether ICFA and Illinois Insurance Code §155 claims were viable | Roppo argued Travelers’ conduct fell within consumer protection and §155 remedies for vexatious delay. | Travelers argued no consumer nexus for ICFA and §155 relief is available only to insureds (not third parties). | Dismissed: ICFA lacked consumer nexus and plaintiff alleged no reliance/deception; §155 is limited to insureds (and assignees), so Roppo cannot recover under §155. |
Key Cases Cited
- Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547 (2014) (CAFA removal pleading standard—defendant’s amount‑in‑controversy allegation accepted unless contested)
- Bell v. Hood, 327 U.S. 678 (1946) (substantiality doctrine for federal jurisdiction over federal claims)
- Hagans v. Lavine, 415 U.S. 528 (1974) (claims so "attenuated and unsubstantial" may deprive federal courts of jurisdiction)
- Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (1985) (elements and standing for civil RICO)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility pleading standard)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (facial plausibility standard for complaints)
- Spivey v. Vertrue, Inc., 528 F.3d 982 (7th Cir. 2008) (amount‑in‑controversy may be established by showing classwide exposure)
- Hart v. FedEx Ground Package Sys., 457 F.3d 675 (7th Cir. 2006) (CAFA jurisdiction principles and burdens)
- Goren v. New Vision Int’l, Inc., 156 F.3d 721 (7th Cir. 1998) (Rule 9(b) particularity in RICO fraud predicates)
- Yassin v. Certified Grocers of Ill., Inc., 551 N.E.2d 1319 (Ill. 1990) (Illinois Supreme Court: §155 remedies under Insurance Code extend only to insureds)