Served With a Class Action in Illinois? The First Moves That Decide the Case

By Peter S. Lubin and James V. DiTommaso

A process server hands your company a class action complaint late on a Friday. By Monday you are reading a theory that turns one disputed
charge or one form document into a claim brought on behalf of thousands of people. The instinct is to wait, to answer the complaint, and to see how bad it gets. That instinct is a mistake. What a defendant does in the first thirty days often decides the case, because the early choices
about where the lawsuit is heard and whether the plaintiff can clear the threshold hurdles shape everything that follows.

This is a plain guide to the opening moves that protect a business sued in a putative class action, from removal to federal court through
the standing defenses that can end the case before a class is ever certified.

Should I move the case
to federal court?

Often, yes. The Class Action Fairness Act, 28 U.S.C. 1332(d), gives federal courts jurisdiction over most sizable class actions. It applies
where the amount in controversy exceeds five million dollars, counting the whole class together, where at least one class member is a citizen
of a different state from one defendant, and where the proposed class has at least one hundred members. A companion statute, 28 U.S.C. 1453, lets a defendant remove such a case without regard to whether any defendant is a citizen of the state where the suit was filed, and it
lifts the usual one-year limit on removal. Defendants frequently prefer federal court because federal judges apply Rule 23 rigorously, demand a workable way to identify class members, and allow immediate appellate review of a certification decision. The Supreme Court made removal easier in Dart Cherokee Basin Operating Co. v. Owens, holding that a notice of removal needs only a plausible allegation that the amount in controversy is met, not evidence at the outset.

What is the deadline to remove, and what starts the clock?

The clock is short and unforgiving. Under 28 U.S.C. 1446(b), a defendant generally must file the notice of removal within thirty days after receiving the complaint through service. Missing that window can strand the company in state court for the life of the case. The removal analysis, including the amount in controversy and the diversity of the parties, should begin the day the complaint arrives, not after the answer is due.

Can I get the case dismissed if no one was actually harmed?

Sometimes the strongest defense is that the plaintiff was never injured. Article III of the Constitution lets a federal court hear a case only for a plaintiff with a concrete and particularized injury. In
Spokeo, Inc. v. Robins, the Supreme Court held that a plaintiff cannot satisfy that requirement “by alleging a bare procedural violation.” The Court sharpened the point in TransUnion LLC v. Ramirez, where it reduced the rule to a phrase: “No concrete harm, no standing.” A class built on a technical violation that hurt no one is vulnerable from the start.

Does every class member need an injury, or just the named plaintiff?

Every member, at least to recover damages. TransUnion held that “[e]very class member must have Article III standing in order to recover individual damages.” That holding is a powerful certification defense. When a proposed class sweeps in thousands of people who suffered no actual harm, the defendant can argue that individual standing questions overwhelm the case and that the class cannot be certified or paid as pleaded.

Can I end the case by paying off the named plaintiff?

Rarely, and not the way defendants once hoped. In Campbell-Ewald Co. v. Gomez, the Supreme Court held that an unaccepted offer of full relief does not moot the named plaintiff’s claim, reasoning that “an unaccepted settlement offer has no force.” A defendant cannot simply tender the named plaintiff’s damages and walk away. Ending a class case takes a real strategy, not a check to one person.

Can the plaintiff dodge federal court by capping the damages?

No. Plaintiffs sometimes try to defeat removal by stipulating that the class seeks less than five million dollars. The Supreme Court closed that door in Standard Fire Insurance Co. v. Knowles, holding that a named plaintiff “cannot legally bind members of the proposed class before the class is certified,” so a pre-certification damages stipulation does not keep the case out of federal court.

Will the plaintiff have to identify the class members?

In Illinois federal court, the answer is more favorable to plaintiffs than in some circuits. In Mullins v. Direct Digital, LLC, the Seventh Circuit rejected a heightened “ascertainability” requirement for damages classes, so a defendant here cannot defeat certification merely by arguing that class members are hard to identify. Knowing that going in matters, because it tells the defense to invest in the predominance and standing arguments that do carry weight in this circuit rather than one that does not.

The first thirty days

Treat the opening month as the most important phase of the case. Preserve documents and put a litigation hold in place the moment litigation is anticipated, because spoliation turns a winnable case into a losing one. Calendar the removal deadline immediately and decide whether to move the case to federal court. Check for an arbitration agreement with a class waiver that could route the dispute to individual arbitration. Test standing under Spokeo and TransUnion and assess whether the class can satisfy Rule 23. Above all, do not file a merits answer that gives away a stronger threshold defense. Bring in counsel who tries class actions, because the opening moves, made correctly and on time, are what shrink a thousand-plaintiff lawsuit back to the size
of a single claim.

Big-firm firepower, with the partners on your case

Peter S. Lubin and James V. DiTommaso are Chicago business litigation lawyers who try cases throughout Illinois. Peter is a University of Chicago Law School graduate who has taught trial practice there for decades and is an Illinois Super Lawyer. He has served as lead counsel in more than one hundred class actions and has handled more than one humdred shareholder, LLC, derivative, breach of fiduciary duty, or fraud matters on both the plaintiff and the defense side. Crain’s Chicago Business credited him with the largest class action settlement of the year, a forty million dollar recovery. The firm has been named DuPage County Law Firm of the Year, and its lawyers have represented companies including McDonald’s, Motorola, and Experian and have
litigated against adversaries including AT&T and General Motors. James DiTommaso is a Chicago-Kent College of Law graduate with a certificate in business law who served with the Illinois Appellate Court and argued a case before the Illinois Supreme Court. When you hire this firm, the lawyers whose names are on the door handle your case.

If your business has been served with a class action, the first thirty days can decide the case. Call DiTommaso Lubin, P.C. at 630-333-0333 for a free consultation, or contact us
online.