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McCoy v. Iberdrola Renewables, Inc.

United States Court of Appeals, Seventh Circuit

July 28, 2014

AARON MCCOY, Plaintiff,
v.
IBERDROLA RENEWABLES, INC., and STREATOR-CAYUGA RIDGE WIND POWER, LLC, Defendants, Third-Party Plaintiffs, And GAMESA TECHNOLOGY CORPORATION, INC., and GAMESA WIND US, LLC, Defendants, Third-Party Plaintiffs, Counter Defendants-Appellees,
v.
OUTLAND RENEWABLE ENERGY, LLC, n/k/a RENOVO RENEWABLE ENERGY, LLC, and OUTLAND ENERGY SERVICES, LLC, n/k/a NORTHWIND HOLDINGS, LLC, f/k/a OUTLAND RENEWABLE ENERGY FIELD SERVICES, LLC, Third-Party Defendants, Counter Plaintiffs-Appellants

Argued May 21, 2014

Page 675

[Copyrighted Material Omitted]

Page 676

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 11-CV-00592 -- Charles P. Kocoras, Judge.

For AARON MCCOY, Plaintiff: Dominic R. Fichera, Attorney, FICHERA & MILLER PC, Chicago, IL.

For GAMESA TECHNOLOGY CORPORATION, INC., a Delaware corporation, GAMESA WIND US, LLC, Defendants - Appellees: Julie Negovan, Attorney, KUTAK ROCK LLP, Philadelphia, PA; Matthew M. Enenbach, Attorney, KUTAK ROCK LLP, Omaha, NE.

For STREATOR-CAYUGA RIDGE WIND POWER, LLC, Defendant: Kurt E. Olsen, Attorney, LAW OFFICES OF KURT E. OLSEN, Chicago, IL.

For OUTLAND RENEWABLE ENERGY, LLC, now known as RENOVO RENEWABLE ENERGY, LLC, OUTLAND ENERGY SERVICES, LLC, now known as NORTHWIND HOLDINGS, LLC, formerly known as OUTLAND RENEWABLE ENERGY FIELD SERVICES, LLC, Defendants - Appellants: Thomas Melone, Attorney, ALLCO RENEWABLE ENERGY LIMITED, New York, NY; Jack Everett Pierce, Attorney, BENICK LIFSON, P.A., Minneapolis, MN.

For IBERDROLA RENEWABLES, INC., an Oregon corporation, Defendant: Howard J. Roin, Attorney, MAYER BROWN LLP, Chicago, IL.

Before BAUER, ROVNER, and HAMILTON, Circuit Judges.

OPINION

Page 677

Hamilton, Circuit Judge.

This lawsuit began as a personal injury case. It expanded to encompass disputes over the entire business relationship between the appellants (collectively " Outland" ) and appellees (collectively " Gamesa" ). Only Outland's numerous third-party counterclaims against Gamesa are at issue in this appeal. Gamesa prevailed

Page 678

on a motion to dismiss, and the district court denied Outland's motion for leave to amend.

Outland's third-party counterclaims are not part of the original case or controversy, so Outland needed an independent basis for federal subject matter jurisdiction to assert them as part of this lawsuit. In an effort to salvage part of its case, therefore, Outland now makes the desperate argument that its own federal antitrust counterclaims were so feeble that they could not support federal question jurisdiction under 28 U.S.C. § 1331 and that its original third-party counterclaims based on state law fell outside the scope of supplemental jurisdiction under 28 U.S.C. § 1367 that Outland itself invoked. In the alternative, Outland argues that the district court erred in applying Illinois substantive law and should have granted leave to amend. We affirm across the board.

I. Factual and Procedural Background

The procedural history on the defense side of this case is complex. We provide a simplified summary, and we accept as true all factual allegations from Outland's counterclaims and proposed amended counterclaims. See Hayes v. City of Chicago, 670 F.3d 810, 813 (7th Cir. 2012); Gillman v. Burlington Northern R.R. Co., 878 F.2d 1020, 1022 (7th Cir. 1989).

A. The Parties and the McCoy Accident

Appellees Gamesa Wind U.S. and Gamesa Technology Corp. (collectively " Gamesa" ) are wholly-owned domestic subsidiaries of a non-party Spanish manufacturer of wind turbines. They contracted with Minnesota-based appellants Outland Renewable Energy and Outland Energy Services (collectively " Outland," though their names have since changed) to provide maintenance services for Gamesa wind turbines. Utility company Iberdrola Renewables (" Iberdrola" ) operated Gamesa-made wind turbines at the Cayuga Ridge Wind Farm in Illinois.

While servicing a wind turbine at Cayuga Ridge, Outland employee Aaron McCoy was electrocuted when the turbine unexpectedly re-energized. McCoy began this case by filing a personal injury case in state court against Iberdrola and Gamesa Technology Corp. The case was removed to federal court on the basis of diversity of citizenship. Iberdrola then impleaded Gamesa Wind U.S. and Outland to seek indemnification for the McCoy accident based on contract and the Illinois Joint Tortfeasor Contribution Act (" JTCA" ). The various defendants then filed numerous cross-claims and counterclaims related to the personal injury dispute.

B. Outland's Original Counterclaims and the Settlement

This appeal concerns only Outland's third-party counterclaims against Gamesa. Gamesa asserted third-party claims against Outland for contribution for the McCoy accident based on contractual indemnification and the Illinois JTCA. Outland responded with 22 counterclaims, raising a host of new issues and greatly widening the scope of the case. These included indemnification for the McCoy accident; federal antitrust claims under the Sherman and Clayton Acts; state antitrust claims under Illinois, Minnesota, and Texas law; and numerous other state law claims. Outland makes only jurisdictional arguments regarding these claims on appeal.

In response to Outland's third-party counterclaims, Gamesa attempted to enforce a contractual provision providing for venue exclusively in Pennsylvania, but the district court found the provision invalid under Illinois law. Outland then moved for a preliminary injunction against Gamesa's allegedly unfair competitive practices.

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After a five-day hearing, Outland's request for a preliminary injunction was denied based on Illinois substantive law.

Gamesa then moved for judgment on the pleadings under Rule 12(c). The district court dismissed all but one of Outland's counterclaims for failure to state claims for relief. Only the claim for indemnification related to the McCoy accident survived. McCoy, Gamesa, and Outland then settled. The district court accepted the settlement with a finding of good faith, protecting Outland and Gamesa from further claims for contribution under the Illinois JTCA, see 740 Ill. Comp. Stat. 100/2, and all claims arising from the accident among those parties were ...


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