Hewlett Packard v. Schorsch, William ( 2005 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-8017
WILLIAM SCHORSCH, individually and
on behalf of others similarly situated,
Plaintiff-Respondent,
v.
HEWLETT-PACKARD COMPANY,
Defendant-Petitioner.
____________
Petition for Leave to Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 3397—Ruben Castillo, Judge.
____________
SUBMITTED JULY 20, 2005—DECIDED AUGUST 8, 2005
____________
Before EASTERBROOK, WILLIAMS, and SYKES, Circuit
Judges.
EASTERBROOK, Circuit Judge. Ever since Congress en-
acted the Class Action Fairness Act of 2005, Pub. L. 109-2,
119 Stat. 4 (2005), defendants have been trying to remove
suits that were pending in state court on February 18, 2005,
although the statute applies only to suits “commenced”
after that date. We have rejected two of these attempts in
published opinions. See Knudsen v. Liberty Mutual Insur-
2 No. 05-8017
ance Co., No. 05-8010 (7th Cir. June 7, 2005); Pfizer, Inc. v.
Lott, No. 05-8013 (7th Cir. August 4, 2005) (in circulation).
Today’s opinion makes a third.
Knudsen holds that a case is “commenced” when it begins,
and that a routine amendment to the complaint does not
commence a new suit. Amendments could in principle
initiate litigation, however: a defendant added after
February 18 could remove because suit against it would
have been commenced after the effective date, and tacking
a wholly distinct claim for relief onto an old suit likewise
might commence a new proceeding. Hewlett-Packard (HP)
seeks to take advantage of these provisos.
Schorsch filed suit in Illinois in 2003, proposing to
represent a class of persons who purchased from HP drum
kits for use in its printers. A “drum kit” contains some of
the drums and rollers that fuse the toner to the paper.
Components wear out, and HP includes sensors that detect
when this process has gone far enough that quality of the
printer’s output (or the integrity of the printer’s other com-
ponents) may be jeopardized. First the printer warns the
customer that the drum kit needs replacing. After a given
number of additional pages have been printed, an EEPROM
chip tells the printer to stop working until a new drum kit
has been installed. (EEPROM stands for “electrically
erasable programmable read only memory.”) Schorsch con-
tends that this cutoff injures consumers who want to press
their luck or accept lower-quality output at the end of a
drum kit’s life cycle. The total asserted damages exceed
$5 million, the class size exceeds the statutory threshold,
and HP is not a citizen of Illinois, so but for its filing date
this suit could have been removed under the 2005 Act.
In May 2005 Schorsch tendered a proposed second
amended complaint that would expand the class from pur-
chasers of drum kits to purchasers of all printer consum-
ables that contain EEPROM chips. Schorsch believes that
No. 05-8017 3
HP’s toner cartridges (for laser printers) and ink cartridges
(for ink-jet printers) also contain EEPROMs. HP then re-
moved the proceeding to federal court, contending that this
expansion of the class commenced a new suit. The district
judge thought otherwise and remanded; HP asks us for in-
terlocutory review under 28 U.S.C. §1453(c)(1), as amended
by the 2005 Act. See also Fed. R. App. P. 5. HP contends
that the new class definition adds both parties (those class
members who purchased cartridges but not drum kits) and
claims (for HP sells many more ink or toner cartridges than
drum kits). The proposed amendment certainly does not add
parties to the suit: there were and are only two, Schorsch
and HP. Class members are represented vicariously but are
not litigants themselves. Compare Amchem Products, Inc.
v. Windsor, 521 U.S. 591 (1997), with Devlin v. Scardelletti,
536 U.S. 1 (2001). And it is hard to see the change in class
definition as the addition of a new claim either.
From its outset, this suit has been about HP’s use of
EEPROM chips to shut down its printers until a component
has been replaced. Identity of the consumable is a detail.
HP tells us that its toner cartridges and ink cartridges do
not contain EEPROM chips, and if so then the change in
the proposed definition has no effect beyond making notice
to the class a little more costly. But let us assume that
Schorsch is right. This is still just one suit, between the
original litigants. Litigants and judges regularly modify
class definitions; Knudsen holds that such changes do not
“commence” new suits.
HP insists that this change does, because litigation based
on EEPROM chips in toner or ink cartridges is so different
from litigation based on EEPROM chips in drum kits that
the second amended complaint does not relate back to the
first. On that view two periods of limitation apply: one (for
drum kits) measured from the original complaint in October
2003, and the other (for cartridges) measured from the
proposed amendment in May 2005. That would be the sort
4 No. 05-8017
of addition that, we conjectured in Knudsen, might “com-
mence” a new action. But HP does not really believe this. It
removed the whole suit, not just the claim based on
cartridges—though its theory of removal supposes that
Schorsch commenced a piece of litigation distinct from the
drum-kit claim. Likely the reason HP tried to remove the
whole shebang is that drum kits and cartridges are con-
sumables for printers made by one firm and subject to one
set of legal rules; it would be silly to handle drum kits in
state court and toner or ink cartridges in federal. Yet to say
this is effectively to say that there is only one “claim” to
begin with.
Although we used Fed. R. Civ. P. 15(c) in Knudsen to
illustrate the difference between claims that relate back and
those that do not (and so may be treated as commenced
when added to the suit), state rather than federal practice
must supply the rule of decision. Federal law makes the
date of “commencement” important, but different legal sys-
tems understand that term differently. Federal practice
deems a suit “commenced” when the complaint is filed, see
Fed. R. Civ. P. 3, but some states may deem it commenced
when the filing fee is paid, or when the clerk finds the
complaint procedurally sufficient (states may allow clerks
to reject papers that are not in proper form, as the Clerk of
the Supreme Court does), or when the first (or last) defen-
dant is served with process. Cf. Pace v. DiGuglielmo, 125 S.
Ct. 1807 (2005) (looking to state law to determine when a
pleading has been “properly filed” for purposes of a federal
time limit). Illinois has a relation-back rule that is function-
ally identical to Rule 15(c), however, so we need not fret
over fine points. See 735 ILCS 5/2-616(b); see also Zeb v.
Wheeler, 111 Ill. 2d 266, 279-80, 489 N.E.2d 1342, 1348-49
(1986) (relying on cases under Rule 15(c) to elucidate the
meaning of the state relation-back statute).
In Illinois, a claim relates back when it arises out of the
same transaction or occurrence as the one identified in the
No. 05-8017 5
original complaint. Cf. Mayle v. Felix, 125 S. Ct. 2562 (2005)
(discussing Rule 15(c), which covers the same “conduct” as
well as the same “transaction or occurrence”). It is apt to
describe the challenged “transaction” as HP’s inclusion in
consumables of chips that cause printers to stop working
before the consumer has wrung the last iota of use from the
product. HP has not cited any case, in either Illinois or
federal court, treating a similar amendment to the class
definition as commencing a new proceeding.
An amendment relates back in Illinois when the original
complaint “furnished to the defendant all the information
necessary . . . to prepare a defense to the claim subse-
quently asserted in the amended complaint.” Boatmen’s
National Bank of Belleville v. Direct Lines, Inc., 167 Ill. 2d
88, 102, 656 N.E.2d 1101, 1107 (1995) (internal quotation
marks omitted). The October 2003 complaint did this. The
propriety of using EEPROM chips is an all-or-none affair;
HP has not suggested any way in which it might be entitled
to implement end-of-life rules for drum kits but not car-
tridges, or the reverse. It does not contend, for example,
that it informed consumers of one but not the other, or that
it solicited purchasers’ consent with respect to one but not
the other.
This may mean that plaintiffs lose (and quickly) across
the board: no rule of law requires drum kits or toner
cartridges or any other consumer product to last for any
prescribed period. If it would be lawful in Illinois for HP to
fill cartridges with enough toner to last (on average) 3,000
pages, why would it not be lawful to include more toner
(enough to ensure 3,000 pages of use) and then require
replacement at that point, before the streaking and spotty
output that marks the end of a cartridge’s supply of toner?
Consumers are better off with the second kind of cartridge
than with the first. Much the same may be said for ink
cartridges and drum kits. If HP had promised that its toner
cartridges would last for 3,500 pages, then used an
6 No. 05-8017
EEPROM to shut them down after 3,000, Schorsch would
have a better claim, but this does not appear to be the
class’s theory. Yet it is not our job to resolve the case on the
merits; all we need do is observe that the second amended
complaint concerns the same “transaction” as a matter of
Illinois law.
Knudsen and Pfizer hold, and we reiterate, that creative
lawyering will not be allowed to smudge the line drawn
by the 2005 Act: class actions “commenced” in state court on
or before February 18, 2005, remain in state court. Amend-
ments to class definitions do not commence new suits. We
can imagine amendments that kick off wholly distinct
claims, but the workaday changes routine in class suits do
not. Defendants should recognize that 28 U.S.C. §1447(c)
makes an award of attorneys’ fees the norm for improper
removal. See Garbie v. DaimlerChrysler Corp., 211 F.3d 407(7th Cir. 2000). So although we deny the petition for an
interlocutory appeal in this case, we also invite the plain-
tiffs to file (in the district court) an appropriate request for
reimbursement of the additional legal expenses to which
they have been put by HP’s efforts to move this litigation
from state to federal court.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—8-8-05