Saskatchewan Mutual Insurance Co. v. CE Design, Ltd.
865 F.3d 537
7th Cir.2017Background
- CE Design (Illinois) sued Homegrown (Canadian) in Illinois state court under Illinois law and the TCPA; parties settled in 2007 for $5 million, structured to be enforceable against Homegrown’s SMI insurance policy.
- Homegrown did not notify insurer SMI of the suit; Homegrown assigned its rights to CE Design, which obtained an Illinois judgment on a citation to discover assets.
- CE Design attempted to enforce the Illinois judgment in Saskatchewan; the Queen’s Bench (Saskatchewan) held on January 8, 2008 that SMI lacked sufficient notice and refused enforcement, awarding SMI CAD $1,000 in costs.
- In 2015 SMI filed in federal district court to enforce the Saskatchewan judgment; issue presented was whether federal courts have subject-matter jurisdiction over SMI’s suit.
- District court dismissed for lack of jurisdiction. SMI invoked CAFA and alienage diversity; the court and the Seventh Circuit rejected both bases, emphasizing statutory text, aggregation limits, and comity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CAFA jurisdiction over a suit where the class is named as defendant | CAFA applies because the class is the de facto defendant and SMI (plaintiff) seeks enforcement of a foreign judgment tied to a class settlement exceeding $5M | CAFA applies only to plaintiff classes; statute’s text and precedent limit CAFA to actions brought by a plaintiff class | CAFA does not apply; Good controls—CAFA covers plaintiff classes only, not defendant classes |
| Whether SMI’s role as plaintiff can preserve the original plaintiff/defendant alignment for CAFA | The Saskatchewan judgment preserved the original party alignment (class as defendant), so CAFA should attach | The court that SMI invoked federal jurisdiction is the relevant actor; registration/enforcement is often an independent action and alignment can change | Court rejects SMI’s de facto-defendant theory; invoking federal court as plaintiff defeats CAFA claim |
| Alienage (§1332(a)(2)) jurisdiction via aggregating class members to meet $75,000 threshold | Class members’ claims can be aggregated as a common and undivided interest in insurance proceeds (single source) | Claims arise from separate transactions (individual faxes); aggregation not permitted absent a preexisting common fund | No diversity jurisdiction: aggregation disallowed because no pre-litigation common fund; individual claims cannot be aggregated to reach $75,000 |
| Comity and recognition/enforcement of foreign judgments in federal diversity actions | SMI argues federal courts may give full faith and credit to Canadian judgments and enforce accordingly | Federal courts applying state law on foreign-judgment recognition should proceed cautiously; comity counsels restraint after long multi-jurisdictional litigation | Comity favors federal abstention here; federal courts should not substitute for state appellate process and must apply state recognition rules |
Key Cases Cited
- Travelers Prop. Cas. Co. v. Good, 689 F.3d 714 (7th Cir. 2012) (CAFA and aggregation limits where class seeks to enforce settlement against insurer)
- Standard Fire Ins. Co. v. Knowles, 568 U.S. 588 (U.S. 2013) (CAFA amount-in-controversy statutory standard)
- Snyder v. Harris, 394 U.S. 332 (U.S. 1969) (general rule prohibiting aggregation of multiple plaintiffs’ claims for diversity jurisdiction)
- Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (U.S. 2001) (federal courts borrow state law for the preclusive effect of federal diversity judgments)
- Levin v. Commerce Energy, Inc., 560 U.S. 413 (U.S. 2010) (federal jurisdictional statutes interpreted with sensitivity to federal-state relations and comity)
- Evans Cabinet Corp. v. Kitchen Int’l, Inc., 593 F.3d 135 (1st Cir. 2010) (listing approach to recognition/enforcement of foreign judgments in federal court)
- Gilman v. BHC Securities, Inc., 104 F.3d 1418 (2d Cir. 1997) (analysis distinguishing a single recoverable fund from preexisting common interests)
- Hilton v. Guyot, 159 U.S. 113 (U.S. 1895) (foundational decision on recognition and enforcement of foreign-country judgments)