Seventh Circuit Court of Appeals Commentary : In Their Opinion : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

POWERS v. USF HOLLAND, INC. (December 15, 2011)

USF Holland is a large regional trucking company. Drivers at its South Bend, Indiana, terminal are classified as either city or road drivers. City drivers have local routes and frequently assist in dock work, i.e., loading and unloading. Road drivers, on the other hand, drive much longer distances and engage in much less dock work. Keith Powers was a Holland road driver in 2004 when his wife became pregnant. He asked Holland to switch him to city driver status in order to be home more often. Holland granted the request. Within a month, Powers regretted the move. He started experiencing discomfort and lack of mobility as a result of the additional dock work he was required to do is a city driver. Holland rejected his request to return to his prior assignment, citing a restriction in the collective bargaining agreement. Powers' condition worsened and he went on unpaid medical leave in August 2004. In December 2005, he asked to return to work. His physician imposed medical restrictions, including "limited hours of dock work" and "road driver work only." Two Holland supervisors told Powers that he could not return to work until he could work without restrictions. A Human Resources manager told Powers said that she needed clarification regarding the restrictions and also asked him to have his physician fill out a "Request for Accommodation" form. Powers never completed the form. Instead, he brought suit against Holland under the Americans with Disabilities Act. He alleged that Holland violated the ADA by enforcing a "100% healed policy" and thatt Holland discriminated against him and retaliated against him. Judge Van Bokkelen (N.D. Ind.) granted summary judgment to Holland. Powers appeals.

In their opinion, Seventh Circuit Judges Cudahy, Posner, and Manion affirmed. The Court noted that, although Powers brought several distinct claims, each claim required proof that Powers was disabled under the ADA. To be ADA-disabled, a person must have an impairment that "substantially limits one or more of the major life activities," or must have a record of such an impairment, or must be regarded as having such an impairment. The only major life activity at issue in the appeal was working. Powers made claims under both the “having an impairment” and “regarded as having an impairment” prongs. The Court first addressed whether Powers had an impairment. In order to meet that condition, Powers had to show that he was significantly restricted in his ability to work compared to others. The Court concluded that the evidence did not support that conclusion. Powers line of work is truck driving. The only restrictions noted by his physician related to the dock work associated with the truck driving. In fact, Powers testified that he was physically capable of driving. The fact that he is unable to perform a job where the driving is accompanied by significant dock work does not make him significantly restricted in truck driving. The Court turned to the "regarded as" prong. Under that prong, a person can be ADA-disabled if his employer believes that he has a substantial impairment in a major life activity. The Court found no such evidence in the record. In so concluding, the Court rejected Powers' contention that the company's "100% healed policy" supported that position. That policy does not violate the ADA (at least the pre-2008 ADA that applies in this case) unless the person is actually disabled.

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ADVENTIST GLENOAKS HOSPITAL v. SEBELIUS (December 15, 2011)

The federal Medicare program reimburses hospitals for the care they provide to eligible patients. The reimbursement amount is calculated through the application of a rather complicated formula. One element of the formula is a hospital’s "wage index," which, in turn, depends on the average hourly wage in the hospital's Metropolitan Statistical Area. The average hourly wage is computed using actual hospital wage and hour data. Most hospital employees are not paid for lunchtime. Some hospitals, however, pay their employees for a half-hour lunch. All other things being equal, including a half-hour paid lunchtime in the data results in a lower average hourly wage and less Medicare reimbursement. A number of hospitals asked the Secretary of the Department of Health and Human Services to exclude paid lunchtime hours from the formula. When she refused, the hospitals appealed to the Provider Reimbursement Review Board. The Board upheld the Secretary's decision. The hospitals sought review in the district court. Judge Guzman (N.D. Ill.) concluded that the Secretary's decision was not arbitrary or capricious or otherwise unlawful and granted summary judgment in her favor. The hospitals appeal.

In their opinion, Seventh Circuit Judges Cudahy, Manion, and Sykes affirmed. The Court first noted that its review was quite limited. The Secretary's decision will stand unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The Court conceded that there was some logic in the hospitals’ position -- as did the Secretary. Indeed, the Secretary supported her decision principally on administrative convenience grounds. She decided to include not only paid lunchtime, but also other paid leave time such as military leave, jury duty, sick leave, etc. The last time the Secretary solicited public comment, there was significant disagreement among the commentators over how to treat things like paid lunchtime. Given that the Secretary has considered her alternatives and adequately explained her decision, the approach is reasonable and legal and will stand.

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BROWN v. COLUMBIA SUSSEX CORP. (December 15, 2011) 

James Piggee runs the organization Giving Education Meaningful Substance. For two decades, he has organized an annual trip that exposes African-American high school students to predominately black universities. The destination for the Spring 2008 trip was Louisiana and Texas. The group reserved 41 rooms at the Marriott Hotel in Baton Rouge Louisiana. Within a few days, the hotel canceled the reservation. Piggee, the students, and the chaperones (268 in all) filed suit against Marriott, alleging that the cancellation was racially motivated. In the district court, Marriott served discovery requests on the plaintiffs in December of 2009. Several deadlines came and went. A motion to compel was granted and ignored. The district court sanctioned the plaintiffs for their delay. Finally, almost a year after the discovery was served, Chief Judge Simon (N.D. Ind.) dismissed the case pursuant to Rule 37(b) with respect to the 200 or so plaintiffs that had not responded to discovery. Plaintiffs appealed.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Sykes affirmed. The Court first addressed its jurisdiction. After the original appeal, the Court ordered briefing on jurisdiction since it appeared that the district court had not entered a final judgment. During the time for briefing, the appellant's returned to the district court and obtained a Rule 54(b) final judgment -- but did not file a new notice of appeal. In FirsTier, the Supreme Court concluded that a notice of appeal was timely when it followed a district court's decision but preceded its entry of judgment. In that case, however, the only thing that followed the notice was the actual entry of the judgment. Here, the plaintiffs had to move for and support a Rule 54 judgment. The Court identified two alternate readings of FirsTier. Under one reading, a premature notice of appeal is allowed if it is followed only by the ministerial task of entering judgment. Under another reading, a premature notice of appeal is allowed if, with respect to the claim being appealed, the only thing remaining is the entry of the judgment. The Court concluded that the latter interpretation was the correct one and held the notice timely. On the merits, the Court seemed to have little difficulty in finding the dismissal sanction, although serious, not inappropriate. Plaintiffs’ counsel missed numerous discovery deadlines, violated court orders, did not have the resources to handle the case, had not even spoken with many of the plaintiffs, and was warned that the court had given its "final extension." No more is necessary.

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RODRIGUEZ v. COOK COUNTY (December 15, 2011)

More than a decade ago, Angel Rodriguez was convicted of murder by a state court jury. An appellate court concluded that the evidence presented was insufficient to sustain the verdict and reversed. Rodriguez filed a federal civil rights suit against two officers involved in his arrest. He lost at the trial court level and the Seventh Circuit affirmed in 2006. Rodriguez obtained a "certificate of innocence" under Illinois state law in 2009. On the grounds that the certificate created a new cause of action, Rodriguez again filed suit in 2010 against the original defendants and three prosecutors. Judge Conlon (N.D. Ill.) dismissed the case against the original defendants on res judicata grounds and dismissed the case against the new defendants on statute of limitations grounds. She also dismissed the state law claims against the prosecutors on subject matter jurisdiction grounds, concluding that they were entitled to state immunity. Rodriguez appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Cudahy and Tinder affirmed. The Court addressed the Illinois law at issue. The statute, enacted in 2008, allows a person who has had a conviction set aside after serving prison time to obtain a certificate of innocence and file a petition in the Illinois Court of Claims for compensation. It does not, and could not, alter the effect of a federal court judgment nor does it, although it could, toll or extend the limitations period for a § 1983 suit. Rodriguez' claim accrued in 2000, when the Illinois appellate court reversed his conviction. His certificate of innocence does nothing to change that. The federal claims are time-barred. The Court did disagree with the district court's treatment of the state law claims against the prosecutors. It is not clear whether Rodriguez asserts his claim against the prosecutors in their official or personal capacities. But, if the former, the suit is really against the State and the prosecutors should be dismissed. If the latter (which the district court assumed), there is no jurisdictional barrier to the suit proceeding in federal court. The prosecutors could simply assert state law immunity as an affirmative defense. Nevertheless, since it was clear that the district court would have declined to exercise its supplemental jurisdiction over the state law claims, its error had no effect. The Court affirmed the dismissal without prejudice, as modified.

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KELLAR v. SUMMIT SEATING INC. (December 14, 2011)

Susan Kellar was promoted to a sewing manager at Summit Seating, a small vehicle-seat manufacturer, in 2004. She remained an hourly employee. Keller managed about eight employees and was responsible for making sure they had their equipment and instructions and that their work was completed on time. Shortly after she voluntarily resigned in 2009, she brought a Fair Labor Standards Act claim. She alleged that she regularly arrived at work 15-45 minutes early and that she used much of the time working (checking schedules, handing out materials, checking patterns, etc.). Her sister, another Summit employee who was frequently with her during those times, claims that Kellar did not work before her shift began. Keller admits that she never told Summit's owners that she was working prior to the beginning of her shift and that Summit had a written policy requiring preapproval for overtime. Magistrate Judge Nuechterlein (N.D. Ind.) granted summary judgment to Summit. Keller appeals.

In their opinion, Seventh Circuit Judges Evans (who, as a result of his death, took no part in the decision) and Williams and District Judge Conley affirmed, although on different grounds. Although the FLSA requires an employer to pay overtime when an employee works over 40 hours, the Portal-To-Portal Act exempts certain preliminary activities. The magistrate judge concluded that the exemption applied, but in doing so ignored Kellar’s own affidavit. He erred in doing so. Although she offered no additional evidence, her affidavit was sufficient to create an issue of fact with respect to the preliminary activities exemption. The Court also concluded that Kellar's work did not fit within the de minimis doctrine, which allows an employer to ignore otherwise compensable work if it only amounts to a few minutes. Keller asserts that she worked anywhere from 10-40 minutes a day before her actual shift began. That does not qualify as to minimus. In order to qualify for overtime, however, Keller must demonstrate that her employer had actual or constructive knowledge of her effort. The FLSA does require an employer to be reasonably diligent and oversee the work of its employees. Here, Summit had no reason to believe that Kellar was working overtime and is not liable for overtime payments under the FLSA.

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ABUELYAMAN v. ILLINOIS STATE UNIVERSITY (December 13, 2011)

Illinois State University classifies its professors in two ways. First, a professor is ranked either as an assistant professor, an associate professor, or a full professor. The University's expectations of a professor depend on his or her ranking. Professors are also classified as tenured, probationary tenure-track, or nontenure-track. The University conducts fairly rigorous annual evaluations to assess its faculty members’ performance. The University hired Eltayeb Abuelyaman, an Arab Muslim, as a probationary tenure-track associate professor in 2001. The University's evaluation committee gave Abuelyaman low performance scores for several years and elected not to reappoint him in March 2006. Abuelyaman filed a complaint with the EEOC alleging race, religion, and national origin discrimination. He cited several bases for his allegation. First, he complained several times to Dr. Dennis that Dennis' decision to give greater weight to student evaluations disadvantaged foreign born professors. Second, Abuelyaman supported another professor’s complaint that the professor had been discriminated against with respect to his non-renewal. Third, Abuelyaman was involved in the investigation of another professor’s complaint that Dr. Dennis improperly used his authority on a Search Committee to steer the committee to a candidate that Dennis preferred. Abuelyaman filed suit pursuant to Title VII for 1) discrimination, 2) retaliation for backing his fellow professor’s discrimination claims, and 3) retaliation for participating in the Dr. Dennis complaint. Judge Mihm (C.D. Ill.) granted summary judgment to the University on the discrimination claim and the first retaliation claim. He granted a motion for judgment as a matter of law at the close of plaintiff’s case on the second retaliation claim. Abuelyaman appeals.

In their opinion, Seventh Circuit Judges Ripple, Manion, and Sykes affirmed. The Court first addressed and rejected the University's argument that the district court abused its discretion in granting Abuelyaman an extension of time to file the notice of appeal. Abuelyaman’s attorney attempted to file the notice of appeal electronically before the filing deadline and thought she had done so. When she realized, six days later, that her filing had not been successful, she promptly filed a motion for an extension. The district court did not abuse its discretion in finding excusable neglect under Rule 4(a)(5). On the merits, Abuelyaman proceeded under the direct method of proof. His principle argument was that he was treated differently from other, similarly situated faculty members. The Court agreed with the district court that Abuelyaman fell far short of meeting his burden. First, his comparisons to tenured faculty members did not meet the "similarly situated" test. Second, the Court found that the University’s treatment of underperforming non-tenured faculty members was very similar to their treatment of Abuelyaman. With respect to his retaliation claims, Abuelyaman had to show that he was engaged in protected activity and that there was a causal relationship between the activity and his non-renewal. His first claim, that the University retaliated against him for his complaints about discrimination directed at a fellow faculty member, fails both because he did not raise it in time in the district court and because there is no evidence in the record that the decision-makers knew of his involvement in that matter when they decided not to renew his contract. The second claim, that the University retaliated against him for his involvement in the Dennis investigation, fails because Abuelyaman was not engaged in protected activity. The Dennis investigation did not involve any allegations of discriminatory conduct. Abuelyaman’s involvement was therefore not protected under Title VII.

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WISCONSIN RIGHT TO LIFE STATE POLITICAL ACTION COMMITTEE v. BARLAND (December 12, 2011)

The Wisconsin Right to Life's State Political Action Committee is an independent political committee that does not make contributions to candidates nor does it coordinate with any candidate or party. Wisconsin law places a $10,000 cap on an individual' s political contributions, whether they be to candidates, parties, or independent political committees. Two Wisconsin residents wished to make a $5,000 contribution to the PAC in 2010 but could not do so legally because of other contributions they had already made or planned to make. The PAC filed suit, alleging that the Wisconsin statute was unconstitutional to the extent it limited contributions to independent political committees. The PAC moved for a preliminary injunction, anticipating the fall 2010 elections. Instead, Chief Judge Clevert (E.D. Wis.), at defendants request, granted a Pullman abstention motion. The court based its ruling on the pendency of a case before the Wisconsin Supreme Court challenging an amended campaign finance rule. The PAC returned to the District Court in 2011, in anticipation of an unprecedented six state senator recall elections. The district court denied the motion. The PAC appealed and moved for an injunction pending appeal. A Seventh Circuit motions panel granted the motion and the Court expedited the appeal.

In their opinion, Seventh Circuit judges Posner, Flaum, and Sykes vacated the district court's abstention order and remanded with instructions to enter a permanent injunction. Before reaching the merits of the request for injunctive relief, the Court considered several preliminary challenges raised by the defendants. First, the Court concluded that the PAC had standing. The complaint alleged a proper pre-enforcement challenge. The PAC identified actual contributors who attested to their desire to make contributions in excess of the statutory limit. Second, the Court rejected the defendants' ripeness argument. The fact that the injunction pending appeal allowed the contributors freedom during the 2011 elections and their generalized desire to do so "in the future" does not establish a lack of ripeness. Future elections are only months away and the Court understood the contributors' "in the future" attestation to include those elections. Third, the Court rejected the contention that the conclusion of the 2011 recall elections made the claim moot. The Court noted that the claim probably could fit within the "capable of repetition yet evades review" exception but concluded that it need not decide that. The contributors’ claims were not limited to the 2011 recall elections. Fourth, the Court concluded that Pullman abstention was not appropriate. Although several aspects of the PAC’s case and the case pending before the Wisconsin Supreme Court overlap, the $10,000 contribution limit is not one of them. The state court's decision will therefore have no impact on the constitutional challenge to the $10,000 cap. The Court turned to the merits. It noted that laws limiting political speech are subject to strict review. The Supreme Court has drawn a distinction between limits on political campaign contributions, which are frequently upheld when the limitation is narrowly drawn to serve a important government interest, and limits on political expenditures, which are subject to strict scrutiny and are usually not upheld. Citizens United held that the only government interest at play is political corruption or the appearance of corruption. Since the kind of quid pro quo political corruption that the government is concerned about does not exist in the context of a independent political organization, a limitation on its expenditures cannot survive constitutional scrutiny. Even though the Wisconsin statute at issue addresses contributions, and not expenditures, the result is the same.

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BPI ENERGY HOLDINGS v. IEC (MONTGOMERY), LLC (December 8, 2011)

BPI is in the business of producing natural gas from coal. Drummond Company is a large coal mining company. Because companies like BPI need access to coal from which to extract natural gas and companies like Drummond need someone like BPI to extract the gas before it can be safely mine the coal, alliances between companies like these are common. BPI and Drummond entered into a memorandum of understanding pursuant to which the parties agreed that BPI would sell its coal rights to Drummond and Drummond would lease to BPI the extraction rights in its coal holdings. The MOA stated that it was not a binding agreement and merely was intended to form the basis of an agreement. The parties soon entered into a letter of intent that was more specific. It identified BPI's coal interests and Drummond's gas extraction opportunities and further described the alliance expectations of the parties. It also provided, however, that it was not binding upon the parties and it did not provide the terms for the gas extraction leases. Notwithstanding the nonbinding nature of the agreement, BPI began transferring some of its coal rights to Drummond. Drummond did not return the favor and eventually terminated the alliance. BPI brought suit against Drummond for promissory fraud. Chief Judge Herndon (S.D. Ill.) granted summary judgment to Drummond. BPI appeals.

In their opinion, Seventh Circuit Judges Posner, Sykes, and Hamilton affirmed. Because there was no contract between the parties, BPI brought its action based on promissory fraud. Although promissory fraud is recognized in Illinois, it is recognized only if it is part of a scheme to defraud. Illinois’ "scheme" requires either a pattern of fraudulent statements or a particularly egregious one. The Court first addressed and rejected Drummond's statute of frauds defense. Although it characterized Illinois' position as "murky," it concluded that Illinois has adopted the majority rule that promissory fraud is a tort and not subject to the Statute of Frauds. Turning to the merits of the fraud claim, the court simply concluded that BPI's evidence was insufficient. The Court also noted that the case would fail for lack of reliance. Both the memorandum and the letter of intent with were nonbinding. Both anticipated that a final, binding agreement would be negotiated. They had not yet even agreed on the terms for the gas extraction leases. Drummond's reliance on these nonbinding agreements was reckless and does not satisfy the justifiable reliance element of fraud.

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SWEARINGEN v. MOMENTIVE SPECIALTY CHEMICALS (December 7, 2011)

Paul Swearingen delivered a tank of chemicals to the Momentive Specialty Chemical facility in Carpentersville, Illinois in March of 2010. At the request of Momentive’s personnel, he climbed on top of the truck to open the dome lid. Although he noticed low-hanging fire extinguishing system piping, he nevertheless began to stand on top of the truck. He hit his head and fell to the ground, suffering injuries. Swearingen filed suit against Momentive, alleging that it failed to warn him of the risk from the piping and failed to provide him with a harness. Judge St. Eve (N.D. Ill.) granted summary judgment to Momentive, concluding that it owed no duty of care because the hazard was open and obvious and the deliberate encounter exception did not apply. Swearingen appeals.

In their opinion, Seventh Circuit Judges Flaum and Manion and District Judge Magnus-Stinson affirmed. Under Illinois law, a negligence plaintiff must plead and prove the existence of a duty of care. Without a duty, there is no liability. The Illinois Supreme Court has identified four factors in the duty inquiry: the injury's reasonable foreseeability, its likelihood, the extent of the burden of guarding against it, and the consequences of placing the burden on the defendant. Although the Court noted that Illinois law requires the four-factor inquiry even in an open and obvious or deliberate encounter exception situation, it addressed the appeal from both perspectives. First, on the open and obvious inquiry, the Court noted that Swearingen did not dispute that the hazard was open and obvious. The Court rejected his deliberate encounter exception, which requires evidence that the defendant had reason to believe that Swearingen would nevertheless deliberately encounter the known hazard. Swearingen presented no such evidence. In fact, the evidence was that Swearingen ignored his own training and the company's safety protocols when he failed to maintain three points of contact with the ladder. Second, with respect to the four-factor test, the Court concluded that the injury was not reasonably foreseeable or likely and the burden and consequences of requiring Momentive to guard against the injury were significant. Therefore, there was no duty under the four-factors analysis, either. Finally, the Court rejected Swearingen's argument that he created material issues of genuine fact. Even if he did, the facts at issue were unrelated to duty. Without a duty, there is no liability. 

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