Aaron McCoy v. Iberdrola Renewables, Inc.

760 F.3d 674, 2014 WL 3703945, 2014 U.S. App. LEXIS 14380
CourtCourt of Appeals for the Seventh Circuit
DecidedJuly 28, 2014
Docket13-3350
StatusPublished
Cited by322 cases

This text of 760 F.3d 674 (Aaron McCoy v. Iberdrola Renewables, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Aaron McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 2014 WL 3703945, 2014 U.S. App. LEXIS 14380 (7th Cir. 2014).

Opinion

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 pre *678 vailed 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 Game-sa Technology Corp. (collectively “Game-sa”) 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 Renewa-bles (“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. Out-land 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 Game-sa’s allegedly unfair competitive practices. *679 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 dismissed. At that point, only the original personal injury dispute between McCoy and Iberdrola remained, but the court had not issued a final judgment.

C. Outland’s Proposed Amended Counterclaims

About six months after the district court dismissed Outland’s third-party counterclaims, Outland moved for leave to amend its counterclaims against Gamesa. Out-land presented seven proposed amended counterclaims and argued for the first time that the substantive law of Minnesota, not Illinois, should apply. The district court determined that Outland had waived the choice of law issue. It then denied leave to amend based on futility and undue delay. Outland focuses its appeal on the merits of the proposed amended counterclaims, so we follow suit.

The proposed amended counterclaims arose from the following alleged events from early 2011. Gamesa attempted to acquire Outland but was rebuffed. Duke Energy, a utility company and Gamesa customer, then entered an agreement to purchase a twenty-five percent stake in Outland. Duke and Outland also began negotiating a possible fleet services agreement, which would have been very lucrative for Outland by making it the main provider of maintenance services for Duke-operated wind turbines. They also discussed a possible agreement for Duke to purchase all of Outland, which would be funded in part by an institutional investor.

During these negotiations, the federal Occupational Safety and Health Administration (“OSHA”) issued six citations to Outland based on the McCoy accident. Shortly thereafter, Duke informed Gamesa of its ongoing negotiations with Outland. Gamesa made its own offer to provide maintenance services for Duke-operated wind turbines, but Duke declined. Game-sa then sent a letter to Outland saying that the OSHA citations resulting from the McCoy accident showed a breach of their maintenance contract. Gamesa stopped issuing new purchase orders to Outland as a result of the alleged breach, which significantly reduced the value of Outland. (For reference, Outland’s revenue from Gamesa purchase orders was over $6 million in 2010.) Duke and Outland eventually closed the complete acquisition agreement, but only after Duke lowered its offer by $15 million after Gamesa stopped issuing purchase orders to Outland.

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Bluebook (online)
760 F.3d 674, 2014 WL 3703945, 2014 U.S. App. LEXIS 14380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/aaron-mccoy-v-iberdrola-renewables-inc-ca7-2014.