Seventh Circuit Requires a Defendant Seeking Removal To Establish the Plaintiffs’ Article III Standing

Collier v. SP Plus Corp., a recent decision from the U.S. Court of Appeals for the Seventh Circuit, presented the “unusual circumstance” where both the plaintiffs and the defendant argued that the plaintiffs lacked standing to sue under Article III. No. 17-2431 (7th Cir. May 14, 2018). The court issued its opinion per curiam; Judges Daniel Manion, David Hamilton, and Amy Barrett were on the panel.

This unusual alignment arose because the defendant, SP Plus, had removed the case from Cook County Circuit Court in Illinois, where it was filed, and then argued in federal court that the plaintiffs’ case should be dismissed for lack of standing. The U.S. District Court for the Northern District of Illinois agreed and dismissed the case with prejudice, but the plaintiffs maintained that, without standing to sue under Article III, their case should not have been removed in the first place.

The plaintiffs’ claims were brought under the federal Fair and Accurate Credit Transaction Act, 15 U.S.C. § 1681c(g)(1). SP Plus, which ran a parking facility at the Dayton airport, allegedly violated that law by printing the expiration date of a credit or debit card on its transaction receipts. Plaintiffs sought to represent a class, but, although they alleged statutory and actual damages “exceed[ing] Twenty-Five Thousand Dollars,” they did not identify any concrete harm from having those expiration dates appear on the SP Plus’s receipts. SP Plus removed the case on the basis of federal-question jurisdiction, since the plaintiffs’ suit arose under a federal statute. The plaintiffs filed a motion to remand, which the district court denied before dismissing the case with prejudice.

The Seventh Circuit reversed, however, and held that the district court erred twice: first, by denying the motion to remand and, second, by dismissing the claims with prejudice.

As to the former, the Seventh Circuit held that “[a]s the party invoking federal jurisdiction, SP Plus had to establish that all elements of jurisdiction—including Article III standing—existed at the time of removal.” Slip op. 3. The court of appeals specifically disagreed with SP Plus’s contention that “removal based on a federal question gets a defendant’s foot in the door of a federal court,” which then allows the “slate” to be “wiped clean” for the defendant to challenge jurisdiction. Id. at 4. In fact, it described SP Plus’s strategy as a “dubious” one that “resulted in a significant waste of federal judicial resources.” Id. at 7.

As to the latter, namely the district court’s dismissal of the case with prejudice, the Seventh Circuit explained that “‘[a] suit dismissed for lack of jurisdiction cannot also be dismissed “with prejudice”; that’s a disposition on the merits, which only a court with jurisdiction may render.’” Id. at 6 (quoting Frederiksen v. City of Lockport, 384 F.3d 437, 438 (7th Cir. 2004)). 

The Seventh Circuit vacated the district court’s judgment and remanded with instructions for the district court to return the case to state court.