Removing Party's Request To Realign Co-Defendant As Plaintiff To Allow Removal Was Improper Under The Circuit's "Clearly Established" Law - Remand Order Should Have Considered A Fee Award
WOLF v. KENNELLY (July 23, 2009)
Ford Kennelly, an Indiana citizen, received a $1.3 million arbitration award, jointly and severally, against commodities brokers Rosenthal Collins Group ("RCG") and Ken Wolf. Wolf filed a petition to vacate in state court. He included a request for declaratory relief against RCG, alleging that RCG had made a demand for indemnity against him. Kennelly removed the petition to federal court and asked that RCG be realigned as a petitioner. RCG was an Illinois citizen. Its presence as a defendant prevented removal. Wolf moved to remand, opposing the realignment of RCG. Several months later, the parties discovered that one of RCG's limited partners was an Indiana citizen. Since Kennelly was also an Indiana citizen, diversity would be destroyed if RCG was realigned as a petitioner. The district court granted the motion to remand. The court then denied Wolf's request for attorneys' fees, concluding that the case was an exceptional one not warranting a fee award. Wolf appeals.
In their opinion, Judges Bauer, Flaum and Kanne reversed and remanded. The Court first rejected Wolf's argument that the court's brief minute order, without much discussion or analysis, was an abuse of discretion. The Court noted that the issue had been fully briefed and the judge explained his rationale on the record, although not repeating it in the minute order. On the merits, the Court concluded that Wolf did not have an objectively reasonable basis for seeking removal. The "objectively reasonable basis" standard is similar to the qualified immunity doctrine. A district court may award fees if "clearly established" law prevents removal. At the time Kennelly sought removal, the long-standing precedent in the circuit was that realignment of a party was improper if an actual and substantial controversy existed between the plaintiff and that party. The fact that Wolf and RCG shared an interest in escaping liability altogether did not justify the realignment. The Court remanded for consideration of the fee petition.
Nancy Love had worked at National City for over twenty years when she was diagnosed with multiple sclerosis. After almost 3 years of receiving long-term disability benefits, the Plan told her she no longer fit their definition of "disabled." The controlling definition, after two years of long-term disability, is that a claimant must not be able to perform any job for which she is or could be qualified. The Plan's assessment concluded that, although she probably suffered from multiple sclerosis, she had never suffered an attack nor exhibited clinical signs. Love appealed the determination. She supported her appeal with several medical reports concluding that she had limited functional ability. The Plan denied her appeal, citing its doctor's conclusion that Love was able to do certain simple jobs. Love sued the Plan under ERISA. The district court granted summary judgment to the Plan. Love appeals..jpg)
In mid-2005, possibly in response to public criticism of his use of police officers as escorts, Milwaukee County Sheriff Clarke posted a message on the department bulletin board: "If you are afraid or have lost your courage, you may go home, otherwise you will ruin the morale of others." Michael Schuh, a veteran police officer, was offended. He submitted a statement to the union newsletter: "If you are afraid or you have lost your courage and need two deputies and a sergeant to escort you every time you fly in and out of the airport and patrol deputies to drive by your house when you're out of town you should resign and go home! Then you would lift the morale of this whole department (a.k.a. office)." A few days later, Sheriff Clarke assigned Schuh to a newly-created patrol in the most dangerous part of the town -- in full uniform, without a partner, and without a car. At about the same time, Sheriff Clarke issued a revised departmental confidentiality policy. The policy required employees to keep "official agency business" confidential and not to speak on behalf of the department. Officer Schuh and the union brought suit, alleging violations of state law as well as First Amendment retaliation under § 1983. The suit also challenged the confidentiality policy as an unlawful prior restraint. The district court granted summary judgment to Sheriff Clarke on the federal claims. Schuh and the union appeal.
Police officers from the City of Wheaton and several neighboring jurisdictions conducted a major law enforcement operation targeting a drug conspiracy in August of 2003. Several Wheaton police officers were given the task of arresting Robert Ptak. Ptak was considered armed and dangerous and had a history of resisting arrest. The officers were dispatched to a local motel where Ptak was believed to be staying. They had a photograph and a physical description and had been told that he was seen riding a yellow sport motorcycle. The officers located an individual that met Ptak’s physical description on a yellow sport motorcycle in the vicinity of the motel. Unbeknownst to the officers, however, the individual was not Ptak. It was Jonathan Catlin. According to Catlin, the officers jumped out of their vehicle while they were stopped at a traffic light and ran toward him. They grabbed him, threw him down, and eventually handcuffed him. They did not identify themselves as police officers until after the arrest. They soon realized their mistake and released Catlin within 20 minutes. Catlin brought an action for false arrest and excessive force under § 1983. The district court found that the defendants were entitled to qualified immunity and granted summary judgment. Catlin appeals.
Kelly Hobbs was an African-American woman employed by the City of Chicago's Department of Transportation since 1989. She began her employment as a truck driver and was promoted to Lot Supervisor in 2000. She applied for a Foreman position in both 1997 and 2000and was rejected both times in favor of white males. She filed a charge of gender and race discrimination in January of 2005, shortly after she found out that another white male had been promoted to Acting Foreman. She complains that, after her discrimination charges were filed, she was disciplined on several occasions, her car was vandalized and her job duties were changed. In 2006, she brought suit against the City, alleging race and gender discrimination and retaliation claims against the City under Title VII, race discrimination and retaliation claims against the individual defendants under § 1981, and a hostile work environment claim against the City. The district court granted summary judgment to the defendants on all claims. Hobbs appeals.
Joel Turner had monthly mortgage payments of $1500 when he filed a Chapter 13 petition for bankruptcy. In computing his "projected disposable income" under the bankruptcy law, he deducted the mortgage payments. He stated in his plan, however, that he intended to stop making his mortgage payments and turn his home over to the mortgagee. The trustee objected. The $1500 monthly deduction from Turner’s disposable income would make that much unavailable to the unsecured creditors. The bankruptcy court rejected the trustee’s objection. The trustee appealed under a since superseded process for direct appeal to the court of appeals. The process required: a) the trustee to file a notice of appeal in the bankruptcy court within 30 days, b) the bankruptcy court to certify that the ruling satisfied certain statutory criteria, and c) the trustee had to petition the court of appeals for leave to appeal within 10 days of the certification. The trustee filed his notice of appeal and the court certified. The trustee never filed a petition -- but the clerk of the court transmitted the request for certification and the certification order. The Court docketed the appeal.
In 2004, a state court entered a dissolution order in the divorce proceedings of Frank Gallo and Gillian Emery. Gallo had a bankruptcy proceeding pending at the time. The divorce court awarded a Sanibel Island, Florida property to Emery but required her to pay $125,000 to the bankruptcy trustee. Gallo transferred his interest in the Sanibel Island property to Emery but Emery made no payments to the trustee. Gallo filed a lis pendens against the Sanibel Island property. Several months later, Emery obtained an order quieting title and sold the property for $490,000. In a subsequent Gallo bankruptcy proceeding, Emery filed a proof of claim for slander of title, alleging that she lost an opportunity to sell the Sanibel Island property because of the lis pendens notice. The bankruptcy court denied Emery's proof of claim and issued an order directing her to pay the amount of the state court dissolution order. Emery appeals.
When MarchFIRST filed for Chapter 7 bankruptcy, it sent a notice to its creditors. The notice stated that the original of a proof of claim had to be received by 4 p.m. on October 11. It also provided that the proof of claim could be submitted by hand or by mail. Avnet, a MarchFIRST creditor, faxed its proof of claim. The claims agent received the fax at 4:43 p.m. on October 11. The original of the claim was delivered the following morning. The trustee treated the original as the claim and objected to it on the grounds that it was not received until October 12. The bankruptcy court sustained the trustee's objection -- the district court affirmed. Avnet appeals.
Trade Finance Partners ("TFP") is, in essence, a broker that arranges business relationships for its clients. It charges a fee on any business it secures. AAR, an aviation support company, was a TFP client. The companies began working together in late 2004, and entered into a contract in January 2005. The contract allowed TFP to secure business from any "target accounts" which were identified by AAR in a written Request for Information ("RFI"). Just prior to and separate from its relationship with TFP, AAR responded to a Northwest Airlines Request for Proposal for an aircraft maintenance and repair contract. TFP alleges that AAR identified Northwest as a target account, even though they did not complete an RFI. Northwest and TFP did communicate in early 2005. In February, Northwest reissued its Request for Proposal and AAR updated its submission, all without the knowledge or involvement of TFP. Northwest selected AAR for the maintenance contract. TFP filed suit, alleging that its efforts caused Northwest to award the contract to AAR. The district court granted summary judgment to AAR. TFP appeals.
Consumer Products Research & Design ("CPRD") holds a patent for a wireless smoke detector. CPRD entered into contracts with two companies owned, respectively, by a father and his son. One company, owned by the father, agreed to develop and market the product. The other, owned by the son, was responsible for its manufacturing. Unhappy with of the relationship, CPRD filed a complaint alleging fraudulent inducement and breach of contract. A jury awarded over $700,000 in damages. Defendants appeal.
Apex brought a breach of contract claim against Sears, alleging Sears owed it in excess of $80 million. Sears moved to dismiss for a lack of subject matter jurisdiction. It asserted that Apex lacked standing because it had assigned away its rights in the Sears receivables. Sears attached to its motion a letter from Apex attesting to that fact. When Apex offered no response, the district court granted Sears' motion. Apex appeals.
David Gicla fractured his right ankle in a motorcycle accident when he was 20. Twenty years later, experiencing pain and swelling, he went to the Westside VA Medical Center in Chicago for treatment. He had ankle implant surgery. Unfortunately, the surgery was not successful. More unfortunately, additional treatment and surgeries were also unsuccessful and doctors had to amputate Gicla's right leg below the knee. Gicla brought this malpractice action under the Federal Tort Claims Act. After a bench trial, the court found in favor of the United States. Gicla appeals.
A lawsuit was filed in 1984 challenging an Illinois statute requiring parental notice of an abortion of a minor. The Court affirmed a district court order that held the act unconstitutional because it failed to provide for anonymity and an expedited appeal. The district court later concluded that an Illinois Supreme Court Rule did not cure the defect and continued an injunction in force. In 1995, the Illinois General Assembly repealed the act and replaced it with the Illinois Parental Notice of Abortion Act of 1995 (the "Act"). The Act requires a doctor to provide 48 hours notice to an adult family member of his or her intention to perform an abortion on a minor or incompetent person. In a judicial bypass procedure, a court can order notice waived if it determines by a preponderance of the evidence that a) the petitioner is sufficiently mature to intelligently decide whether to have an abortion, or b) that notification would not be in the best interest of the petitioner. The parties agreed to continue the injunction until the Supreme Court promulgated rules relating to the Act’s bypass procedure. The Supreme Court did so -- 10 years later, in 2006. On the defendants’ motion to dissolve the injunction, the district court concluded that the Act was unconstitutional because the bypass procedure failed to provide a mechanism for consent for a petitioner who failed to establish the requisite maturity level but who successfully established that it was in her best interest to waive notice. The defendants appeal.
Quality Dining, Inc. has several subsidiaries (the "Borrowers") that own franchise restaurants, including .jpg)
The State of Wisconsin hosts two law schools, at 
Gary Mister, an employee of Northeast Illinois Commuter Railroad Corp. ("Metra"), was returning to his parked car on a January day in 2005 when he slipped on the ice and fell. Kirk Kroner, Metra's Safety Officer, investigated the accident. At the hospital, he discussed it with two of Mister's supervisors. According to his written report, a similar incident had occurred at the same location a week prior. At trial, the court excluded the report and all related testimony. After a jury found for Metra, Mister appealed.
The City of Chicago entered into a contract with Global Health Systems, Inc. ("Global"), the predecessor to U. S. Neurosurgical, Inc. Global agreed to design, install and manage a computer information system. The purpose of the system was to implement case management and billing for the City’s Department of Health. At the time of the contract, the system only processed hand-entered data. Global represented, however, that its system was capable of processing scanned data. The contract provided that Global would assist the City in assessing the scanning function and modify the hardware and software if the City so desired. The City did decide to include a scanning function. The implementation turned out to be much more difficult and costly than anticipated. Global billed the City for the extra work, even though it did not follow the correct contract procedures. When the City refused to pay, U.S. Neurosurgical sued. After a bench trial, the court concluded that the work was required by the contract and denied relief. Alternatively, the court concluded that the extra work was not properly authorized, was not in writing, and did not comply with the contract procedures. U.S. Neurosurgical appeals.
Many years ago, the Bellwood, Illinois comptroller became concerned that some finance department employees were making personal phone calls on village time and also were subjected to harassing phone calls from irate village residents. The village approved a proposal to begin recording department phone calls. Nicholas Narducci took over as controller several years later. When he learned about the recording, he advised village trustees that it was illegal, he alerted the FBI and he directed the Chief of Police to discontinue the activity. In 2001, he brought an action against the village, the mayor, and the police chief on behalf of a class of finance department employees whose calls were recorded. He brought a Fourth Amendment claim under § 1983 and an illegal wiretapping claim under Title III of the Omnibus Crime Control and Safe Streets Act of 1968, as well as state law claims. The mayor and the police chief moved for summary judgment on qualified immunity grounds. The district court denied the motion with respect to the § 1983 claims and some of the Title III claims. The mayor and the police chief appeal.
A number of investors sold 10-year U.S. Treasury notes short and, between May 9 and June 30, 2005, bought futures contracts in settlement of their obligations. These investors brought a class action against Pacific Investment Management Co. (PIMCO), alleging that PIMCO violated the Commodity Exchange Act by cornering the market in certain Treasury notes. The class alleges that PIMCO increased its ownership of the notes to the point where it created a monopoly price, resulting in losses to the class of more than $600 million. PIMCO challenged the class definition. It pointed out that many class members did not lose money because of the net effects of multiple trades. The district court certified the class. PIMCO appeals..jpg)
Sandra Castronovo died the day after her car was struck by a truck driven by Kenneth Lively. At the time of the accident, Lively was employed by and driving a truck owned by Doug Lavery, Ltd. He was hauling a trailer owned by GE Capital Corp. and leased to Greif Brothers Corp., who loaned it to Lavery. Lavery and Lively were named insureds under a $1 million policy issued by Owners Insurance. Travelers Property Casualty Company issued a $2 million policy to Greif. National Union issued a $25 million umbrella policy to Grief which covered permissive users of vehicles owned by Grief. The National Union policy provided excess coverage to the Travelers policy and provided primary coverage for covered risks that were not covered at all by any other insurance. Sandra’s husband John sued Lively, Lavery, GE and Greif. Owners provided a defense to Lively and Lavery but eventually tendered its $1 million policy limit to the court. Travelers defended GE and Greif under the Greif policy. Travelers refused to defend Lavery and made no decision with respect to Lively. In early 2005, Greif and Travelers both spoke with National Union about the case. And National Union continued to follow the developments. In September the court approved a consent judgment against Lively and Lavery in the amount of $6 million. They assigned their rights of coverage to Castronovo in return for a covenant not to execute on their personal assets. National Union learned of the consent judgment only after it was entered. In October, Travelers determined that Lively and Lavery were both insureds and paid their $2 million policy limit to Castronovo. Castronovo sued National Union to recover the approximate $3 million balance. The court granted summary judgment to National Union, holding that Lively and Lavery breached the policy by not notifying National Union of the consent judgment. Castronovo appeals..jpg)
Pablo Hernandez-Arenado (Hernandez) was awarded immigration parole when he came to the United States from Cuba as part of the Mariel Boatlift. Four years later, Hernandez pled guilty to the sexual assault of a young boy and was sentenced to five years in state prison. He admitted to several hundred similar episodes. The Immigration and Naturalization Service (“INS”) revoked his parole and placed him in a Bureau of Prisons (“BOP”) facility after his release from state prison, pending deportation. Hernandez filed a petition for a writ of habeas corpus after 20 years in custody, after the Supreme Court ruled that the statute under which Hernandez was being held only allowed a reasonable period of custody pending removal. The petition was granted and his release was ordered. Before Hernandez was released, the government sought to civilly commit him as a sexually dangerous person pursuant to the Adam Walsh Act. The district court denied the petition, holding that the Adam Walsh Act applied only to individuals "in the custody of" the BOP and that Hernandez was in fact in the custody of Immigration and Customs Enforcement (“ICE”), the successor agency to INS. The government appeals..jpg)
Carol Glaser is a Medicaid recipient with some serious medical problems. She started receiving care at Wound Care Consultants, Inc. in 2002. At some point, an attorney contacted her and advised her that Wound Care may have submitted improper billing to Medicaid. Glaser filed a qui tam action under the False Claims Act in April of 2005. However, several months before she filed, a routine audit led the Centers for Medicare & Medicaid Services ("CMS") to begin an investigation of Wound Care. Glaser and her attorney stated that they were unaware of the CMS investigation. Nevertheless, the district court dismissed the action on the ground that it was based upon a public disclosure and that Glaser was not an “original source.” Glaser appeals.
Exelon Corporation created a defined-benefit pension plan in 2002. In order to be able to distribute the balance of employee's account as if the Plan were a defined-contribution plan, Exelon defined "normal retirement age" to be five years after commencement of employment. Exelon was thus able to avoid what it considered to be a problem with ERISA's treatment of defined-benefit plans (Congress fixed the problem in ERISA in 2006). Thomas Fry retired from Exelon in 2003 at age 55. Fry sued the Plan when it turned over only his account balance rather than his balance plus investment credits through age 65. The lower court held that the Plan satisfied ERISA. Fry appeals.
G&J Plastering Company is a plastering contractor in the Greater Chicago area. Between 1993 and 2002, three different labor unions represented the plastering employees of G&J, including Local 5 of the Journeymen Plasterers' Protective and Benevolent Society of Chicago. The collective bargaining agreements of each union required G&J to make contributions to various union trust funds. Local 5 required the company to contribute based on an employee’s union, regardless of where the work was performed. One of the other unions required the company to make contributions based on work location, not the employee’s union. A union election conducted in 2002 resulted in the termination of Local 5’s representation of the company. In an exit audit, the company disclosed that it had been making contributions based on union membership rather than work location and had no records showing where work was performed. Given this absence of data, Local 5 instructed its auditors to compute the amount owed based on a set of assumptions and a review of the company’s payroll records. The auditors concluded that the company owed in excess of $800,000. Local 5 filed suit. After a three-day bench trial, the court awarded $1.1 million for unpaid contributions plus interest but disallowed the union's request to recover $45,000 in audit costs. Both sides appeal.
Curtis Lusby was an engineer at Rolls-Royce Corp. He became suspicious that the company was falsely certifying that one of its aircraft engines met government specifications so he informed his superiors. He claims that the company fired him for doing so. He brought suit under the False Claims Act, alleging that the company punished him for preparing to bring an action under the statute. The parties jointly dismissed the suit in 2003. However, two months earlier, Lusby had filed a qui tam action under seal. The court dismissed the action for failure to plead fraud with particularity and because of the claim preclusion effect of the earlier lawsuit. Lusby appeals.
Several police officers, after a report of his involvement in a minor disturbance, arrested Charles Stainback. They asked Stainback to put his hands behind his back. Instead of doing so, he asked that he not be handcuffed. All he said was that he thought it would hurt. The officers handcuffed him anyway. Stainback was handcuffed in a police vehicle for approximately 20 minutes. During that time, he complained that the handcuffs were hurting him and asked for them to be removed. Stainback alleges that he required medical treatment as a result of the episode. He sued the officers, alleging the use of excessive force. The lower court concluded that the officers were entitled to qualified immunity because the amount of force was reasonable under the circumstances. The court granted summary judgment to the police officers. Stainback appeals.
Gerhard Von der Ruhr founded Immtech and Septech, both medical technology companies. Immtech patented a human protein product. Septech claims it has a worldwide license and a right to purchase the product from Immtech. Septech claims that Immtech breached the agreement, resulting in lost profits. Septech offered the lay opinion testimony of Von der Ruhr that, had Immtech not breached: a) Septech would have partnered with a major, undetermined pharmaceutical company, b) the pharmaceutical company would have developed and received FDA clearance of the product at its cost, c) the product would have immediately captured half of the target market, and d) Septech would have received 5% of sales proceeds. He would have testified that Septech’s lost sales amount to $42 million. The district court did not allow the testimony and precluded the lost profits claim. Septech appeals.
Lesley Stephens, an African American, has worked for the City of Chicago since 1979, except for a disability leave from 1988-1993. He has been a truck driver, an acting foreman, and an accident adjuster, all within the Department of Fleet Management. He filed a lawsuit against the City in 1997, alleging that it engaged in racially discriminatory hiring and promotion practices. Shortly after he settled the lawsuit in 2004, Stephens applied for four promotions. He was passed over each time. He again brought suit, alleging violations of § 1981 and Title VII. He claims that the City retaliated against him for his earlier lawsuit and his complaints of discrimination. The district court granted summary judgment to the City. Stephens appeals..jpg)
Kerr-McGee received a $4.8 million judgment in 1996 against Lefton Iron & Metal Company for its costs in cleaning up contaminated property. Kerr-McGee continued to expend funds on the cleanup post-judgment. The district court increased the judgment to $9.5 million in 2003. In response to Lefton’s argument that it should receive credit for Kerr-McGee's receipt of insurance proceeds, the court invited Lefton to address the issue in a separate motion Instead, Lefton appealed..jpg)
Angela Enoch committed suicide while a prisoner in a Wisconsin state prison. Her estate brought a lawsuit alleging violations of her rights. The plaintiffs accepted the defendants' $635,000 offer of judgment. The offer of judgment did not include attorneys’ fees. On the plaintiffs' request for fees in excess of $300,000, the court awarded only $100,000. The court's rationale was that the plaintiffs recovered only a small fraction of the $10 million sought in their complaint. The Estate appeals.
Sidney Gray, a mentally ill man, was well known to the Milwaukee Police Department. In the 10 years preceding July of 2006, he was arrested at least 35 times. Many of those arrests stemmed from violent episodes. He was also committed to the county's mental-health facilities on several occasions. County doctors understood that certain medications reduced Gray's violent episodes. In a five-week episode in June and July of 2006, Gray was arrested, committed, released from commitment, arrested for home invasion, held without medication, released by mistake, arrested again for home invasion, held again without his medication, and again released without charges being filed. Shortly thereafter, Gray shot and killed Frank Moore after breaking into the house next door to Moore's. Moore's survivors brought a section 1983 suit against the County, alleging that Gray’s release after a 72- hour confinement in a county facility without his medication was a violation of Moore’s civil rights. The court entered judgment for the County. The survivors appeal.
David Farr was a respiratory therapist at St. Francis Hospital. In 2000, he was the only male among the seven respiratory therapists in his department. There was a single computer in the department for the use of all the therapists. Although the hospital policy was for each therapist to log on with a unique password before each use, the practice was quite different. Typically, the first user of the day logged on with his or her password and all later users piggybacked on that login. When one of the therapists discovered inappropriate material on the computer, the hospital conducted an investigation. It found that: a) pornographic and hacking sites were accessed at the computer, b) Farr was logged on to the computer at the time the sites were accessed, and c) that Farr was the only one working on one particular day when a substantial amount of the activity took place. Farr eventually admitted that he was responsible for visiting some of the sites and that the others may have been generated by a computer virus during his use of the computer. The hospital terminated Farr's employment. Farr sued the hospital, alleging gender discrimination and a breach of implied covenant of fair dealing based on the employee handbook. The court granted summary judgment to the hospital. Farr appeals..jpg)
Kevin Kasten worked at one of Saint-Gobain's facilities in Wisconsin. In 2006, Kasten received three warnings regarding his use of the on-site time clock. The third warning included a statement that it was the last step of the disciplinary process and that another violation could result in further discipline, up to termination. Kasten alleges, and Saint-Gobain denies, that he verbally complained about the legality of the time clock’s location about the same time he received the third warning. He alleges that his complaints consisted of a) telling his supervisor, b) telling a human resources representative, c) telling a lead operator and d) telling the lead operator he was considering a lawsuit. Saint-Gobain suspended Kasten after his fourth violation and later terminated his employment. Kasten alleges, and Saint-Gobain denies, that he also complained about the legality of the clock’s placement at a meeting regarding his suspension. Kasten brought an action under the Fair Labor Standards Act, alleging that he was terminated in retaliation for his complaints. The court granted summary judgment to Saint-Gobain. Kasten appeals.