Judge Philip Kardis
Another Madison County lawsuit has bounced to federal court under the Class Action Fairness Act that Congress passed in February.
Trilegiant, a credit card services company, filed notice July 27 that it would remove to U.S. district court a suit that Carlene Pederson of Edwardsville filed in 2001.
Pederson claims that Trilegiant posted charges for unsolicited services on credit cards and other accounts.
It is the second class action removed from Madison County under the new national law, and the first in which a judge had already certified a class action.
According to Trilegiant, formerly known as Cendant Membership Services, the filing of an amended complaint brought the suit within the scope of the national law.
The law applies to suits filed after its enactment. Trilegiant’s attorney, Kenneth Kliebard of Chicago, argued in his removal notice that a new plaintiff and new claims turned the old case into a new one.
Earlier in July, Option One Mortgage applied a similar argument to remove a suit. In that case, the original plaintiffs withdrew and new plaintiffs filed an amended complaint.
Pederson originally sued Fleet Boston Financial Corporation and Cendant Membership Services. She claimed they conspired to charge for services, such as Privacy Guard and Credit Alert, which customers did not order or did not understand they ordered.
Her attorney, Thomas Maag of the Lakin Law Firm in Wood River, claimed that the conspiracy damaged thousands. He moved to certify Pederson as their representative.
Circuit Judge Phillip Kardis set a hearing on certification of a plaintiff class in 2002, but on the hearing date Maag asked leave to amend the complaint. Kardis granted it.
Maag filed an amended complaint that dropped Fleet as a defendant and substituted a fraud claim for the conspiracy claim.
Trilegiant moved to dismiss, arguing that Pederson alleged no deception. Kardis agreed but granted leave to amend the complaint.
Maag filed an amended complaint in 2003. Kardis again set a certification hearing, but Maag again asked leave to amend the complaint. Kardis granted it.
Maag filed an amended complaint that accused Trilegiant of marketing fraud. Kardis held a certification hearing in 2004 and certified the suit for class action.
Kardis defined the class as those who had unsolicited charges posted on their accounts. This fit Pederson, who claimed she never agreed to enroll in Privacy Guard. She claimed someone forged her signature on an application.
The definition did not fit those who claimed Trilegiant tricked them into ordering services. Kardis told Maag he could add a plaintiff to assert that claim.
This June 8, Maag moved to amend the complaint. Kardis granted the motion June 28, and Maag filed the amended complaint.
The complaint added Thomas Stackhouse of West Covina, Calif., as a plaintiff.
It claimed that Trilegiant advertised membership services as free or nominal while burying in fine print charges from $49 to $89 a year and that Trilegiant did not cancel memberships when customers asked to cancel.
In Trilegiant’s removal notice, Kliebard wrote that Stackhouse brought his claim under a different theory from Pederson. He wrote that Stackhouse did not seek to represent a subclass of the certified class, but sought to represent a different class.
Kliebard relied on a June 7 decision of the U.S. Court of Appeals, Seventh Circuit, in Knudsen vs. Liberty Mutual Insurance.
In that case, Liberty Mutual removed a suit after Knudsen changed the definition of the proposed class. A federal judge remanded the suit. Liberty Mutual appealed.
Seventh Circuit judges upheld the decision to remand, ruling that a new definition did not create a new case. They left an opening for defendants, however, by declaring that a “distinct step” such as a new claim or a new defendant could start new litigation.
And, the 7th U.S. Circuit Court of Appeals recently held that the Class Action Fairness Act applies only to suits that "commence on or after" the day the statute was enacted, according to a report in the Chicago Law Bulletin.
On Aug. 5 a three-judge panel rejected arguments by Pfizer Inc. that a suit filed in an Illinois state court a day before the law was enacted in February should be tried in federal court.
Option One Mortgage's removal notice had also relied on the Knudsen decision.
Removal does not always stick. A federal judge can remand a case to state court.