Charlotte Phillips v. Wellpoint Incorporated
764 F.3d 662
7th Cir.
2014
Check Treatment
Docket

Bob MYRICK and Charlotte Phillips, Plaintiffs-Appellants, v. WELLPOINT, INC., et al., Defendants-Appellees.

Nos. 12-3882, 13-2230

United States Court of Appeals, Seventh Circuit.

Decided Aug. 19, 2014.

762 F.3d 662

Argued Jan. 24, 2014.

08-5720, slip op. at 3 (holding that “the district court did not err by applying a four-level enhancement pursuant to USSG § 2K2.1(b)(6)” and that the “two-level increase for obstruction of justice under USSG § 3C1.1” was proper). Clark points to no intervening change in controlling law. Accordingly, Clark cannot succeed in a motion to alter or amend a judgment on the basis of these claims.

Next, Clark presents a new selective-prosecution claim and a new judicial-misconduct claim. The gravamen of Clark‘s selеctive-prosecution claim is that Clark was convicted and sentenced, while another woman, Paulette Denise Bowling, who Clark alleges was involved in the underlying criminal conspiracy, was not indicted. And the basis of Clark‘s judicial-misconduct claim is the bare allegation that Judge Reeves “attacked Mrs. Clark‘s character and stated several unjust, disparaging and vicious idealisms.” Neither of these claims establishes a basis for a successful Rule 59(e) motion. See . Clark neither adduces newly discovered evidence nor points to any error of law or intervening change in controlling law. And given that Clark entered a nolo contendere plea to the false-statement charge and a guilty plea to the possession charge, these claims first presented in her postjudgment second motion to amend do not demonstrate that her conviction or indictment constituted “mаnifest injustice.” See

Because Clark cannot meet the requirements for post-judgment relief under Rule 59, she cannot amend her original § 2255 motion after the district court denied that motion with prejudice and dismissed her application for § 2255 relief. Accordingly, the district court did not err in denying Clark‘s second motion to amend.

IV.

Fоr the foregoing reasons, the district court‘s denial of Clark‘s second motion to amend her original § 2255 motion is affirmed.

Kenneth T. Goldstein, Attorney, Clinton A. Krislov, Attorney, Krislov & Associates, Chicago, IL, for Plaintiffs-Appellants.

Jerome McDonald, Attorney, Black, Hedin, Ballard, McDonald, P.C., ‍​​‌​​‌‌​​​​‌​​​​‌​‌‌‌‌​​​‌​‌‌​​​‌‌​‌‌‌‌​​‌​‌‌​‌​‍Mt. Vernon, IL, Margo Weinstein, Attorney, Miller, Shakman & Beem LLP, Chicago, IL, for Defendants-Appellees.

Before BAUER, EASTERBROOK, and WILLIAMS, Circuit Judges.

EASTERBROOK, Circuit Judge.

During 2001 the insurance regulators of Illinois permitted WellPoint (through a subsidiary) to acquire RightCHOICE Managed Care, Inc., which offered health insurance through its subsidiary RightCHOICE Insurance Company. WellPoint caused RightCHOICE Insurance to withdraw from the Illinois market in 2002; this cancelled all RightCHOICE policies. WellPoint offered the policyholders costlier UniCare policies as substitutes. Persons who elected not to pay the higher premiums had to shop for policies from different insurers, which usually declined to cover pre-existing conditions. Contending that the cancellation of RightCHOICE policies violated Illinois law, Greg Cima and several others filed suit and asked the district court to certify a class of all former RightCHOICE policyholders. The district court declined, , and later entered judgment against plaintiffs on the merits, . No one appealed.

Because Cima had not been certified as a class action, the judgment bound only the named plaintiffs. The law firm behind Cima found another set of former policyholders and filed a new suit, this time in state court, making the same substantive contentions and again proposing certification as a class action. The federal decision not to certify a class did not prevent state courts from reaching а contrary decision, see , but the federal decision on the merits remained. Defendants removed the suit under 28 U.S.C. § 1453, part of the Class Action Fairness Act. Section 1453 incorporates the requirements of 28 U.S.C. § 1332(d), which makes this suit removable because the proposed class has at least 100 members, the amount in controversy exceeds $5 million, and at least one class member has a citizenship different from at least one defendant.

Plaintiffs asked the district judge to remand the suit under § 1332(d)(4), which says that the court shall “decline to exercise” the jurisdiction created under § 1332(d)(2) if at least two-thirds of the class‘s members are citizens of the state in which the suit began and at least one defendant from which “significant relief” is sought is a citizen of the same state. It is agreed that the complaint seeks “significant relief” from an Illinois defendant. Plaintiffs observed that the RightCHOICE policy was offered only to persons who represented that they live in Illinois (or, for group policies, to employers who represented that most beneficiaries live in Illinois). The policies were cancelled in 2002, and plaintiffs maintained that, if their former holders left Illinois at the normal rate (the Census Bureau estimates that roughly 2% of the nation‘s population changes states each year), about 87% of the class would have been Illinois residents when the suit was removed. But the district judge denied the motion to remand. . It then again declined to certify a class, , and again ruled in defendants’ favor on the merits, . This time appeаls have been taken: by plaintiff Bob Myrick concerning all issues and by plaintiff Charlotte Phillips concerning the district court‘s award of costs.

When deciding that the suit belongs in federal court, the district judge noted that the policies were issued to persons who represented that they “reside” in Illinois, while § 1332(d)(4) deals with the class members’ “citizenship“. For purposes of the diversity jurisdiction, citizenship differs from residence. Citizenship means domicile (the person‘s long-term plan for a state of habitation) rather than just current residence. See (distinguishing residence from citizenship fоr the purpose of § 1332(d)(4)). What‘s more, people who said they resided in Illinois might have meant something else; perhaps some who lived in Indiana but worked in Illinois bought RightCHOICE policies. And for the purpose of § 1332(d)(4) employers that purchased group plans have their own citizenships, which mаy be distinct from the residence of the policies’ beneficiaries. Group policies also covered persons who lived outside of Illinois, if employers represented that most workers lived inside. The district judge thought that plaintiffs had failed to establish the exception tо federal jurisdiction under § 1332(d)(2).

It is not clear from the statute which side has the burden of persuasion under § 1332(d)(4), but , holds that it belongs to the party relying on the home-state exception. It follows that the party proposing that the district court “decline to exercise” jurisdiction that was proрerly invoked at the time of removal also has the burden of production. The jurisdictional rules are those in § 1332(d)(2); the “decline to exercise” clause of § 1332(d)(4), like the local-law-remand provision in 28 U.S.C. § 1367(c), concerns whether the court exercises jurisdiction to the full, not whether jurisdiction exists. See . This makes it a party-driven rather than a court-driven rule. Judges must enforce limits on subject-matter jurisdiction no matter what the litigants ‍​​‌​​‌‌​​​​‌​​​​‌​‌‌‌‌​​​‌​‌‌​​​‌‌​‌‌‌‌​​‌​‌‌​‌​‍do or concede, but other case-processing rules may be waived or forfeited, and judges may wait for issues to be properly presented. See, e.g., ; . So plaintiffs needed to produce some evidence that would allow the court to determine the class members’ citizenships on the date the case was removed. Yet they produced none.

Instead plaintiffs pointed to the policies’ language and asked the court to infer that (a) because coverage under individual policies was supposed to be restricted to residents of Illinois, it was so restricted in fact; (b) all residents of Illinois also are citizens of Illinois; (c) holders of RightCHOICE policies were no more likely to move than average citizens of every state; and (d) employers purchasing grоup policies all are citizens of Illinois, even though the policies do not restrict the location of employers (that is, California or Wisconsin firms could purchase RightCHOICE policies for workers at their facilities in Illinois). These propositions may or may not be right, but plaintiffs did not offer any evidence to support them.

In a supplemental memorandum filed after oral argument, plaintiffs contended that proving the citizenship of all class members is simply too expensive, so proof should be excused. Lawyers who launch class actions arе not in a good position to complain about the expenses they entail; plaintiffs and their counsel must be prepared to meet them or be deemed inadequate representatives. Cf. (the cost of notifying all class members does not justify foregoing notice or shifting thе expense to the defendants).

Not that it would have been prohibitively costly to offer evidence. Counsel for the proposed class assumed that there were only two options: determine the citizenship of every policyholder (expensive) or rely on assumptions (cheap). But there‘s at least one more option: take a random sample of policyholders (100, say), ascertain the citizenship of each of these on the date the case was removed, and extrapolate to the class as a whole. If the sample yields a lopsided result (say, 90% Illinois citizens or only 50% Illinois citizens) then the outcome is clear without the need for more evidence. (The more lopsided the result, the smaller the sample needed to achieve statistical significance.) If the result is close to the statutory two-thirds line, then do more sampling and hire a statistician to ensure that the larger sample produces a reliable result. Nothing of the kind was done, however, and on an empty record the district court was entitled to conclude that § 1332(d)(4) has not been satisfied.

We skip over the question whether thе plaintiffs could have met the requirements for class certification under Fed.R.Civ.P. 23, because counsel‘s insouciance toward the need for proof of the class members’ citizenship is only one illustration of plaintiffs’ (and counsel‘s) inadequacy as representatives. The vеry fact that counsel have asked us to direct the district court to certify this suit as a class action is another. Plaintiffs have already lost on the merits; that counsel want to take the rest of the putative class down in flames with them shows what a slapdash approach they have adopted to this litigation.

We could understand a contention that, if we first reverse on the merits (or at least remand for a trial), then we should direct the district judge to certify a class. But class counsel‘s brief maintains that a class should be certified no matter what happens оn the merits. (Counsel receded from this position at oral argument, but only after initially defending it.) When writing the brief, counsel seems to have forgotten that, had a class been certified in Cima, this suit could never have been filed. Now that the district court has (again) ruled for WellPoint on the merits, we would hаve expected defendants to become the proponents of class certification, which would make a third suit impossible. Defendants appear to be content with the precedential effect of an appellate decision, however, and it is unсlear why that wouldn‘t do nicely for the putative class as well if plaintiffs prevail in this court. No more need be said about Rule 23.

As for the merits: the district court has covered them in detail, more than twice. (Both Cima and this suit produced multiple opinions on different substantive issues, each time follоwed by opinions dealing with requests for reconsideration.) We have nothing to add to what the district judge has written and affirm substantially for the reasons he gave.

In brief: (1) A claim that WellPoint misrepresented its plans to state insurance regulators when acquiring RightCHOICE may entitle the regulators to seek redress, but they have not expressed any dissatisfaction; private litigants cannot enforce state regulators’ entitlements. (2) Because RightCHOICE was losing money in 2001, it is unlikely that ‍​​‌​​‌‌​​​​‌​​​​‌​‌‌‌‌​​​‌​‌‌​​​‌‌​‌‌‌‌​​‌​‌‌​‌​‍the acquisition (or a statement made to an agency) was the cause of the policy‘s discontinuation or its replacement by a different policy with a higher premium. (3) The Illinois Health Insurance Portability and Accountability Act (HIPAA) cannot be enforced by a private suit when there are other public or private means to implement its terms. ; . Since the RightCHOICE policies contained HIPAA‘s substаntive terms almost verbatim, enforcing the contract suffices. (4) Plaintiffs now concede that as a matter of contract RightCHOICE Insurance was entitled to withdraw from the Illinois market and cancel existing policies. HIPAA‘s language about withdrawal and cancellation, 215 ILCS 97/50(B)(3), (C), is materially identical to the policies in this respect, so HIPAA has not been violated.

The only remaining question concerns costs. Defendants submitted a bill of costs running to about $96,000; the district court awarded about $39,000. . Appellants do not contend that any of the awarded costs was impropеr under 28 U.S.C. § 1920 or that defendants needlessly ran up the costs in this suit. Instead they maintain that, because defendants’ conduct in replacing the RightCHOICE policy with the more expensive UniCare policy was “reprehensible“, the losing side should not have to pay costs. Yet Fed.R.Civ.P. 54(d)(1) creates a рresumption in favor of awarding costs to the prevailing party. The district court did not abuse its discretion in implementing that presumption.

Plaintiffs demanded many million dollars; a high-stakes suit does not come cheap to either side. Despite losing Cima, the law firm tried again in the hope that a different forum would produce a different answer. After finding itself back in the original forum and before the judge who had decided Cima, the law firm did not economize. It could have asked the district court to enter the same opinion as in Cima in order to set up an appeal; instead it launсhed a new round of discovery and proceeded to litigate as if Cima did not exist. No wonder the defendants incurred substantial costs.

Law firms representing would-be class representatives have portfolios of suits. Some will be settled for ‍​​‌​​‌‌​​​​‌​​​​‌​‌‌‌‌​​​‌​‌‌​​​‌‌​‌‌‌‌​​‌​‌‌​‌​‍considerable sums; others will fail. Paying the costs of failure is part of being in this business. See (observing that class counsel properly agree to bear the costs of suit, rather than leaving them with the figurehead representatives); see also . Counsel should thank their lucky stars that the district court did not sanction them under 28 U.S.C. § 1927 for filing a second suit rather than pursuing the first through appeal.

AFFIRMED.

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