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

PATTERSON v. INDIANA NEWSPAPERS, INC. (December 8, 2009)

Lisa Coffey and James Patterson were both employees in the editorial department of The Indianapolis Star in 2003 when Dennis Ryerson was named editor. Both describe themselves as "traditional Christians" opposed to homosexuality on religious grounds. Both believe that Ryerson's opposing view was somehow responsible for their employment troubles. Neither, however, had particularly stellar employment records. Coffey regularly violated the newspaper's overtime rule. She ultimately left the newspaper when a restructuring left her with the choice of a part-time editorial job or a full-time copy-desk job -- when what she wanted was a full-time editorial job. Patterson's issues were more substantive. His writing was weak and he made frequent, serious mistakes. After many warnings, Patterson was fired. Coffey and Patterson brought suit. They both alleged violations of Title VII for discrimination on the basis of religion. Patterson also alleges age and race discrimination, in violation of Title VII and the Age Discrimination and Employment Act (ADEA), and retaliation for filing an EEOC complaint. Finally both plaintiffs include a claim for negligent infliction of emotional distress. The court granted summary judgment against both plaintiffs. Coffey and Patterson appeal.

In their opinion, Judges Cudahy, Flaum and Sykes affirmed. Although the Court noted the parties' sharply diverging views of the facts in some respects, it ultimately found no reason to resolve them. Both plaintiffs were required to establish that they met their employer's legitimate performance expectations and that they were treated less favorably than a similarly situated employee. With respect to Coffey, the Court concluded that she failed to establish her prima facie case. First, the evidence of her regular violation of the overtime policy was undisputed. Second, she failed to identify any similarly situated employee, much less one who was treated more favorably. Patterson suffered the same fate. All of his discrimination claims (religion, race, and age) and his retaliation claim require that he prove that he was meeting the newspaper's expectations. To the contrary, the record contains his long history of performance problems. Finally, the Court rejected the state law negligent infliction of emotional distress claims. Indiana law requires a "direct physical impact" to recover for emotional distress -- losing a job does not qualify.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

MILAM v. DOMINICK'S FINER FOODS (December 7, 2009)

Ahmad Milam is one of several African-American produce clerks at a Chicago Dominick's grocery store. Each week, Dominick's posts the produce clerks’ schedule of hours for the upcoming week. A more-senior produce clerk is allowed to "claim" the hours of a less-senior clerk. Milam and five other African-American produce clerks filed suit against Dominick's, claiming that it was guilty of race discrimination when it classified two more junior white women as produce clerks but did not include them on the schedule. The court granted summary judgment to Dominick's on the ground that plaintiffs had no evidence of damages. Plaintiffs appeal.

In their opinion, Judges Posner, Kanne and Rovner affirmed. The Court was quite critical of the district court's handling of the case. It noted that one of the women at issue was actually never a produce clerk. Although she had been offered and accepted a promotion to produce clerk, she changed her mind and never was scheduled to work as one. Dominick's presented evidence years ago that the failure to list the second woman on the produce clerk schedule was an innocent mistake. Plaintiffs never challenged the evidence as pretextual. The court should have granted summary judgment to Dominick's. With respect to the eventual order of the district court, the Court agreed that the plaintiffs presented insufficient evidence of either actual or probabilistic injury. The Court conceded that the plaintiffs' probabilistic injury theory was a proper damages theory. It requires, however, evidence of the expected benefit – which was never presented. In the end, the Court termed the case frivolous.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

MANN v. CALUMET CITY (December 7, 2009)

Calumet City passed an ordinance that requires a homeowner to conduct an inspection prior to the sale of the house to ensure its compliance with the building code. Several residents of the city brought an action challenging the constitutionality of the ordinance. The court dismissed the complaint for failure to state a claim. The residents appeal.

In their opinion, Judges Bauer, Posner and Sykes affirmed. The Court first noted that the residents challenged the ordinance as written, not relying on any particular facts regarding its application to them. The Court then reviewed the "reasonable" procedural provisions of the ordinance, concluding that the residents' challenges were frivolous.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

SRAIL v. VILLAGE OF LISLE (December 7, 2009)

The Oak View subdivision was built in the 1950s. Since its earliest days, a private utility company has provided its residents with water. The Village of Lisle developed its municipal water system in 1967. The municipal system has grown as developers have donated water mains serving new projects. Lisle also purchased a private water utility in 1980. Although both the municipal system and the Oak View system receive their water from the DuPage Water Commission, the Oak View system has insufficient pressure for firefighting. Residents of Oak View sued the Village, alleging that the Village violated the Equal Protection Clause by providing municipal water to some residents and not others. The court granted summary judgment to the Village. The residents appeal.

In their opinion, Judges Ripple, Kanne and Sykes affirmed. The Court first noted that the residents are not members of a suspect class and they do not allege an infringement of a fundamental right. Therefore, the Court's review is on the rational basis test. Although the Court identified issues with the plaintiffs' status as a "class of one" and with an illegitimate animus requirement, it found it unnecessary to reach either issue. Citing the Supreme Court's decision in Engquist, the Court stated that government activity which involves discretionary decision-making based on a number of objective criteria need not treat all persons equally. The Village's decisions over the years to build and extend its system were based on individual assessments made at those times. There is no clear standard that the Village used and that the Court could use to judge any departures therefrom. The Court concluded that it was doubtful that the residents' claim would survive the Engquist test. The Court went on, however, and concluded that the residents failed to establish an equal protection violation. First, they were unable to establish the existence of an appropriate comparator. Second, the cost of extending the system, the apparent lack of interest on the part of most residents, and the Village's desire to avoid competition with the private utility amounted to a rational basis for its conduct.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

MILWAUKEE DEPUTY SHERIFFS' ASSOCIATION v. CLARKE (December 4, 2009)

The Milwaukee County Sheriff, David Clarke, invited a religious group, the Fellowship of the Christian Centurions, to attend and speak at a department leadership conference. All deputies above the rank of sergeant were required to attend. At the conference, Clarke announced some upcoming promotions, distributed written material with quotations from the Bible, and described "people of faith" as one of the qualities he was looking for in a leader. One of the Centurions then spoke and distributed additional material. After the conference, representatives of the Centurions also made presentations and distributed flyers at a number of mandatory roll calls. Two deputies, and their union, brought suit under § 1983. They alleged a violation of the Establishment Clause and the Free Exercise Clause of the First Amendment. The court granted summary judgment to the plaintiffs on the Establishment Clause claim. The defendants appeal.

In their opinion, Judges Bauer, Cudahy and Williams affirmed. Under the Establishment Clause, government action may not: a) have a non-secular purpose, b) have the principal effect of advancing or inhibiting religion, or c) foster an excessive government entanglement with religion. Although the first prong requires an analysis of the government's actual purpose, the second does not. A violation can be established if a reasonable person would conclude that the government action amounted to an endorsement of religion. Here, very few outside organizations have the kind of access given to the Centurions -- and those that were were organizations that partnered with the department in some fashion. The Court concluded that a reasonable observer would interpret the Sheriff's actions as an endorsement, although it was careful to limit its conclusion to the facts presented. In its analysis, the Court also rejected the Sheriff's argument that the First Amendment compelled him to grant access to the Centurions. The Court reasoned that the Sheriff did not create a forum of any kind by having a department meeting or a roll call. The Centurions were not looking for a place to speak -- they were looking for a specific audience to speak to. The Sheriff was not required to give that access.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

SENSKE v. SYBASE, INC. (December 3, 2009)

Robert Senske joined Sybase as a Strategic Account Manager in 2002. He was 55 years old at the time. For two years, Senske's performance was marginal at best in most areas. He did outperform his financial goal in 2004, but only because he got partial credit for two large deals on which he had little input or contribution. He was particularly criticized for excessive tardiness and incomplete paperwork completion. In early 2005, he was put on a performance improvement plan. He was told to improve his business skills, to be more responsive, and to complete his paperwork in a timely manner. Instead of showing improvement, Senske's performance deteriorated during the performance improvement period -- and he was fired. Senske sued Sybase under the Age Discrimination in Employment Act, alleging that he was fired as a result of his age. The district court granted summary judgment to Sybase. Senske appeals.

In their opinion, Judges Bauer, Kanne and Evans affirmed. Instead of enumerating the elements of a prima facie case under the indirect method, the Court proceeded directly to address the question of pretext. If Senske is unable to show that Sybase's stated reasons for his termination are pretextual, he also would not be able to establish that he was meeting his employer's legitimate expectations. The Court reviewed, in some detail, the evidence in the record of Senske's history of performance and Sybase's stated reasons for his termination. The Court concluded that Senske failed to present any evidence that the reasons given by Sybase for his termination were not sincere.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

JOHNSON v. WAL-MART STORES (December 1, 2009)

Candace Johnson visited her local Wal-Mart store in January 2008. Although she did not possess a Firearm Owners Identification Card, a salesclerk nevertheless sold her some bullets. Tragically, Candace Johnson then shot and killed herself. Her husband and the administrator of her estate, Mark Johnson, sued Wal-Mart for negligence and wrongful death. The district court dismissed the claims on the ground that suicide is an independent intervening event, negating proximate cause. Johnson appeals.

In their opinion, Judges Cudahy, Flaum and Evans affirmed. The Court recited the traditional elements of a negligence claim: a duty, a breach, and proximate cause. Historically, Illinois courts have found that suicide is unforeseeable and its presence breaks the chain of causation that is necessary for probable cause. The Court agreed that the sale of the bullets violated federal law and amounted to prima facie evidence of negligence, since the federal law is a public safety statute. The Court concluded, however, that Illinois courts continue to find that suicide breaks the chain of causation.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

THOMAS v. COOK COUNTY SHERIFF'S DEPARTMENT (December 1, 2009)

Norman Smith was arrested by the Chicago police on April 23, 2004. He was delivered to the Cook County Jail on April 24, where he was scheduled to remain until his trial date. An intake medical examination showed elevated blood pressure but no other medical problems. Smith showed symptoms of something more serious, however, from that first day. He was dizzy and vomiting. His symptoms became more serious over the next several days. Despite repeated requests by Smith and by other detainees on his behalf for medical assistance, he received none. On April 30, his cellmate discovered Smith convulsing on the floor. The cellmate reported it immediately to the officer on duty. There was a significant delay before Smith received any treatment. He died that morning of pneumococcal meningitis. His mother, Marlita Thomas, brought a § 1983 case against a number of individual correctional officers, the Cook County Sheriff and Cook County. A jury awarded Thomas $4,450,000 against the County, the Sheriff and three correctional officers. The jury then allocated the damages amongst the defendants. The court denied the defendants' motions for judgment as a matter of law or for a new trial. The defendants appeal.

In their opinion, Judges Flaum, Wood and Williams affirmed in part and reversed and remanded in part. The Court first addressed the verdict against the individual officers. In order to prevail, the Court stated that a plaintiff must demonstrate that a medical condition is objectively serious, that the defendant has subjective knowledge of the health risk and the defendant disregarded the risk. The Court concluded that there was sufficient evidence in the record to allow a jury to conclude that the individual officers knew about Smith's health risk and ignored it. Thus, the verdict is affirmed. The Court next addressed the verdict against the County. The County can be liable only if the unconstitutional act is the result of an official policy or a widespread practice or custom or is caused by an official with policy-making authority. The Court refused to adopt a bright-line test on how widespread a policy need be, but noted that it must be more than a random event. The Court concluded that there was sufficient evidence of a widespread policy: a failure to review medical requests, a failure to collect medical requests, keeping request forms in a locked box, etc. Thus, the verdict against the County was affirmed. The Court next addressed the verdict against the Sheriff. The basis for imposing liability under Monell against the Sheriff was his policy of severely understaffing the jail. In order to sustain the verdict, there must be a causal link between the policy and the unconstitutional act. Here, the individual officers were found liable based on their deliberate indifference to Smith's medical needs. The Court found no relationship between the officers' conduct and the understaffing. The Court concluded that the understaffing theory was too remote to support the verdict. Thus, the Court reversed for entry of judgment in the Sheriff's favor. After rejecting several evidentiary arguments of the defendants, the Court addressed the verdict. On the verdict form, the jury entered $150,000 against the officers, $3 million against the County, and $1 million against the Sheriff. This allocation was improper, in that the defendants were jointly and severally liable for one indivisible injury. It raised the question of whether the total damages is the sum of all of the damage awards, or the highest single assessment. The Court presumed that the jury followed instructions to not award duplicate damages and concluded that adding the damage awards would be proper. Under that analysis, the award against the Sheriff ($1 million) remains as part of the verdict against the County and individual officers, notwithstanding the reversal of the verdict against the Sheriff. Finally, the Court rejected the defendants' argument that the award was excessive.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

MUSCH v. DOMTAR INDUSTRIES (November 25, 2009)

Alan Musch is an hourly maintenance employee at one of Domtar's paper mills in Wisconsin. Because he is regularly exposed to hazardous chemicals during a shift, he must shower and change his clothes before leaving the mill. He is not compensated for that time. He brings an action on behalf of himself and the other maintenance employees under the Fair Labor Standards Act and Wisconsin state law for overtime compensation. The court entered summary judgment for Domtar. The class appeals.

In their opinion, Judges Bauer, Kanne and Evans affirmed. The FLSA does require an employer to pay its employees for all their work. Although an employer is generally not required to compensate an employee for activities (such as cleaning up) at the end of the workday, compensation may be required if the activity is an integral part of the employment. The Court agreed with the district court's findings that the class failed to establish that chemical exposure was so pervasive that cleanup was required at the end of each day. The Court also noted that Domtar had a policy requiring maintenance employees to shower and change clothes whenever they were exposed to hazardous chemicals, even if not at the end of their shift. The Court concluded that the activities were non-compensable.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

FORD v. MINTEQ SHAPES AND SERVICES (November 24, 2009)

Dennis Ford has been employed as a forklift operator for Minteq for many years. Throughout those years, he has been the only African-American employee at his facility. In 2007, Ford brought a race discrimination claim against Minteq. He complained that a coworker referred to him as "black man," that a supervisor called him a guerrilla, that he was not allowed to bring his grandchildren to a holiday party and that he was retaliated against for seeking outside medical attention for an on-the-job injury. The district court granted summary judgment to Minteq. Ford appeals.

In their opinion, Judges Bauer and Wood affirmed. The Court noted that Ford's racial harassment claim required proof of an abusive work environment. The factors to be considered in determining whether the employer's conduct is severe and pervasive are the frequency and severity of the conduct, whether it is physically threatening and whether it interferes with the complainant's job. The Court concluded that Ford's complaints, individually and in the aggregate, did not rise to that level. Specifically with respect to the "black man" comments, the fact that Ford complained only once and never followed up with his employer on that complaint would not allow a reasonable juror to find that it rose to the level of harassment. The Court also concluded that Ford failed to present sufficient evidence on his disparate pay and retaliation claims to reach a jury.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

LITTLE COMPANY OF MARY HOSPITAL v. SEBELIUS (November 24, 2009)

Little Company of Mary Hospital (the "Hospital") participates in the federal Medicare program. Because it serves a disproportionate number of low-income patients, it is entitled to an adjustment to its payments based on a formula that takes into account both Medicaid patient-days and Supplemental Security Income patient-days. Under the reimbursement scheme, the hospital submits its reports and its assigned Intermediary reviews and issues a Notice of Program Reimbursement (NPR). The NPR is final if not appealed within 180 days. Beyond the direct appeal process, however, an Intermediary can reopen a specific issue within three years, on its own or at a provider's request. The Intermediary then issues a revised NPR. The revised NPR is subject to the same appeal rights, but only with respect to those issues actually reopened. The Hospital did not appeal the NPR issued in September 2000, covering the period ending June 1998. It did, however, request a reopening within three years. It requested a recalculation of both its Medicaid and SSI patient-days. The Intermediary granted the reopening with respect to Medicaid patient-days but did not mention SSI patient-days. When the Intermediary issued its revised NPR with adjusted Medicaid days, the Hospital appealed with respect to both the revised Medicaid days and the refusal to adjust SSI days. After it exhausted its administrative remedies without success, the Hospital filed suit. The court denied the Hospital's requested discovery and granted summary judgment against it. The Hospital appeals.

In their opinion, Judges Posner, Flaum and Rovner affirmed. The Court identified the issue as whether the intermediary reopened the SSI calculation when it reopened the Medicaid calculation. If the SSI calculation was never reopened, it is not subject to appeal. The Hospital argues that the SSI calculation was reopened -- but that the Intermediary simply denied relief. The Court relied on the Intermediary's notice of reopening. The notice of reopening is required by the regulations and here gave the Hospital notice that the Intermediary was reopening the Medicaid calculation. It did not provide notice of a reopening of the SSI calculation. The Court concluded that the silence with respect to the SSI calculation indicated that it was not reopened. With respect to the discovery requests, the Court concluded that the district court did not abuse its discretion. The general rule is that administrative review is confined to the administrative record. The Hospital failed to make its case for an exception.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

SHERWOOD v. MARQUETTE TRANSPORTATION CO. (November 23, 2009)

Bluegrass Marine employs Michael Sherwood as a deckhand on one of its Mississippi River vessels. Sherwood alleged that he was injured during his employment. He brought suit under the Jones Act. Bluegrass sought a stay in favor of arbitration, invoking a clause in Sherwood's employment contract that required all disputes to be arbitrated under the Illinois Uniform Arbitration Act. The court denied the stay, concluding that the Federal Arbitration Act (which does not apply to seamen) preempted the Illinois Act. Bluegrass appealed.

In their opinion, Chief Judge Easterbrook and Judges Evans and Williams dismissed for want of jurisdiction. The Court noted that Bluegrass relied on § 16 of the FAA, which authorizes interlocutory review of a refusal to stay an action under § 3 of the FAA. The Court concluded that § 16 could not provide a basis for jurisdiction since the FAA does not apply to seamen and because Bluegrass never sought or was denied a stay under § 3 of the Act. The Court also rejected Bluegrass' reliance on both the collateral order doctrine and § 1292 (as the denial of an injunction) as bases for an appeal. Although the Court denied the appeal, it did express its doubt regarding the correctness of the district court's preemption conclusion.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

HUKIC v. AURORA LOAN SERVICES (November 20, 2009)

Avdo Hukic took out a mortgage in 1997. The monthly obligation was $1335. The agreement allowed him to pay taxes and insurance directly -- as long as he provided proof of payment to the lender. Through no fault of his own, his April 1998 payment was processed for $200 less than the required amount. Although the lender notified Hukic of the error, he took no steps to rectify it. Instead. Hukic continued to pay the correct amount each month, but the lender always considered him one month in arrears because of the continuing shortage. At about the same time, the lender advised Hukic that it would start to pay the taxes and insurance unless Hukic provided proof of payment. Hukic did not respond. The lender set up an escrow for the payments and advised Hukic of a new monthly payment amount. Hukic continued to pay the original $1335 each month. The lender, now Aurora Loan Services, reported the mortgage to credit agencies as delinquent in November of 1999. In early 2000, Aurora assigned the loan to Ocwen. Ocwen notified Hukic of his default but continued to pay the taxes and insurance. In January of 2001, Hukic's lawyer advised Aurora that he was paying his taxes directly and complained about negative information on credit reports. Hukic filed a multiple-count suit against Aurora and Ocwen. The court dismissed seven counts and granted summary judgment to the defendants on the Fair Credit Reporting Act, breach of contract and tortious interference with prospective economic advantage counts. Hukic appeals.

In their opinion, Judges Bauer, Evans and Williams affirmed. The Court first considered its jurisdiction-and first considered diversity jurisdiction, the basis of the original removal to federal court. The Court pointed out several problems: Aurora was a limited liability company, the citizenship of an L.L.C. is the citizenship of its members, its only member was a federally chartered savings association, the citizenship of a federally chartered savings association was in doubt under the law, a federal statute that clarified an association's citizenship was not enacted until after the date of removal, and the statute clarifying the citizenship question only applied if the association was a party in a lawsuit (instead of, as here, the member of a party). Luckily, the Court was able to bypass those issues because it concluded that the presence of the FCRA claim provided federal question jurisdiction. Since the state law claims arose out of the same nucleus of fact, they were covered by supplemental federal jurisdiction. After rejecting several procedural arguments, the Court addressed the merits. The Court affirmed the summary judgment on the breach of contract, tortious interference and FCRA claims. It concluded that Hukic was in default and that Aurora and Ocwen thus never provided false information to credit agencies. The Court then addressed the dismissal of the defamation claim on statute of limitations grounds. Like the jurisdictional analysis, the Court's analytic path was tortured. It included discussion of the defamation limitations period, the discovery rule, the continuing violation rule and the single publication rule. Concluding that the Illinois Supreme Court would apply neither the single publication rule nor the continuing violation rule to the facts and therefore that Hukic could maintain a claim for defamation for statements made by Aurora within a year of the filing of the suit, the Court nevertheless affirmed the dismissal. Illinois requires that special damages be pled in a defamation per quod case, which this is. Hukic alleged no harm from the reports that are actionable. Finally, the Court affirmed the dismissal of the intentional infliction of emotional distress claim because it did not allege conduct so extreme or outrageous to state a claim under Illinois law.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

CURIA v. NELSON (November 20, 2009)

Kenneth Nelson owned two car dealerships -- Auto Plaza and Auto Mall. In 1989, he and Richard Curia entered into an agreement whereby Curia agreed to pay $100,000 for 1000 (of 8180) shares in Auto Plaza and 144 (of 1200) shares in Auto Mall. The agreement also gave Curia three separate options to buy additional stock in both dealerships, up to 100% of each. Curia exercised the first of the options in 1990. A few years later, in 1993, Nelson and Curia modified the agreement, apparently because the total number of shares in the two companies had increased. The 1993 agreement also provided that Curia could purchase additional shares "upon those terms and conditions subsequently agreed upon." A later agreement terminated Curia's rights to acquire any additional Auto Mall stock. In 2005, however, Curia attempted to exercise his options to acquire all of the stock in Auto Plaza. Nelson filed a declaratory judgment action contesting Curia's right. Curia counterclaimed for breach of contract. The court granted summary judgment to Curia. Nelson appeals.

In their opinion, Judges Kanne, Williams and Sykes reversed and remanded. The issue identified by the Court was whether Curia's 1989 options survived the 1993 modification. The Court noted that both Nelson and Curia argued that the 1993 agreement was unambiguous and supported his own interpretation. The parties, however, do not control whether a contract term is ambiguous. It is a question of law for the court. Here, the Court found the 1993 language reasonably susceptible to more than one meaning -- and therefore ambiguous. Both of the interpretations are reasonable readings of the contract language. The ambiguity must be resolved with reference to extrinsic evidence -- not on summary judgment.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

SCRUGGS v. GARST SEED CO. (November 20, 2009)

Dayna Scruggs worked for Garst Seed Company as a Research Technician. Curtis Beazer became her supervisor in 1995. Scruggs and Beazer did not get along. In fact, Beazer did not get along with a number of people. He made many derogatory remarks directed at Scruggs, several of them with a gender bias. In 2004, company management decided to demote or sever Beazer. Before they could do so, however, Garst was purchased by a competitor. New management decided to eliminate Scruggs' position. Scruggs filed an EEOC charge in December 2004 in response. In 2005, Scruggs applied for a Research Assistant position as part of the restructuring. New management did not hire Scruggs -- instead selecting the incumbent (a man) in the Research Assistant position with Garst. Scruggs filed a lawsuit, alleging retaliation and hostile work environment. The district court granted summary judgment against Scruggs. Scruggs appeals.

In their opinion, Judges Bauer, Wood and Williams affirmed. Scruggs' retaliation claim had two prongs -- that her technician position was eliminated and that the company failed to hire her for the Research Assistant position. Instead of addressing the elements of her retaliation claim, the Court went directly to the company's reasons for its actions. If Scruggs cannot create a material issue of fact with respect to whether the reasons were pretextual, she loses. The Court concluded the Scruggs failed to raise an issue of fact with respect to either the elimination of her technician position or her failure to be hired for the assistant position. Her technician position was eliminated as part of a restructuring and the company's decision to hire someone else for the assistant position was based on their evaluation of qualifications. Summary judgment was appropriate. With respect to the hostile work environment claim, the Court considered that the occasional inappropriate comments, which were not physically threatening, by someone who made such comments to males and females alike did not rise to the level of comments that alter the terms and conditions of employment.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

BOYER v. CROWN STOCK DISTRIBUTION, INC. (November 18, 2009)

Crown Unlimited Machine, Inc. ("Crown"), which designed and built custom machinery, was owned by the Stroup family. In 1999, the Stroups sold the company to Kevin Smith for $6 million. The $6 million consisted of $3.1 million that Smith borrowed, a $2.9 million note and only $500 directly from Smith. The Stroups split almost $600,000 in cash withdrawn from the company pre-closing as well as the $3.1 million in cash received at closing. Within about three years, the new Crown declared bankruptcy. The assets brought out $3.7 million. Most of the money was used to pay off the secured debt -- little was left to address over $1.5 million in unsecured debt. The Trustee in bankruptcy brought an action against the Stroups and the company, alleging a fraudulent conveyance. The bankruptcy court awarded over $3 million to the trustee. The district court affirmed. The Stroups appeal -- the Trustee cross-appeals, seeking the $600,000 pre-closing distribution.

In their opinion, Judges Posner, Rovner and Williams affirmed in part and reversed in part. Under the Uniform Fraudulent Transfer Act, a transfer is fraudulent if the corporation did not receive "reasonably equivalent value" and was therefore left with insufficient funds to be able to survive. Fraudulent conveyance law looks to substance rather than form -- the Court concluded that the form of the transaction was not important. Here, new Crown made payments and incurred obligations that threatened its ability to survive. It failed to receive "reasonably equivalent value" -- the bankruptcy court did not err in so finding. The Court disagreed with the bankruptcy court, however, with respect to the almost $600,000 dividend pre-closing. The evidence supported the conclusion that the dividend was part of the fraudulent conveyance rather than a normal distribution of profits. The Court reversed the bankruptcy court to the extent it denied recovery to the Trustee of the dividend.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

BANDAK v. ELI LILLY AND COMPANY RETIREMENT PLAN (November 18, 2009)

Stephen Bandak was employed by an Eli Lilly company in England, his native country, from 1978 to 1995. He participated in the company's retirement plan. He was transferred to the United States in 1995. The company told him, upon his enrollment in the U. S. company's plan, that his benefits in that plan would be based on years of employment retroactive to 1978. The plan also provided that benefits would be reduced by the actuarial equivalence of any other benefits under a “qualified defined benefit plan” maintained by an Eli Lilly company. When Bandak retired in 2004, the company took the position that his benefits under the English company's plan were benefits under a qualified defined benefit plan and were thus properly deducted from his U.S. pension benefits. Bandak sued the company under ERISA. Judgment was entered in his favor for both damages and an injunction relating to future benefit payments. The court also concluded that Lilly's position was not substantially justified and awarded attorneys’ fees. Eli Lilly appeals.

In their opinion, Judges Posner, Rovner and Williams affirmed. The Court focused on the language "qualified defined benefit plan" in the plan document. The term is a technical term and it refers to a plan that has been afforded favorable tax treatment by the Internal Revenue Service. The Court concluded that it had no meaning outside that context. The Court applied the presumption that, when a technical legal term is used in the contract, it is given its technical legal meaning. If it had no meaning outside the United States, the English plan was not such a plan and it should not have reduced his benefits. Substantial evidence in the record supported the Court's conclusion. The Court also concurred in the district court's conclusion that the company's position was not justified.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

O'NEAL v. CITY OF CHICAGO (November 17, 2009)

Brenda O'Neal was a Chicago police officer. After ten years on the force, she was promoted to sergeant in 2001. In 2002, Neil sued the Chicago Police Department (CPD), alleging that a then-recent transfer violated Title VII. The district court granted summary judgment against her -- the Seventh Circuit affirmed. Since that lawsuit, the CPD has transferred her ten times into a total of seven different units of the department. O'Neal filed another lawsuit in 2007, alleging that the transfers amounted to discrimination and retaliation. The district court again granted summary judgment against her. O'Neal appeals.

In their opinion, Judges Bauer, Wood and Williams affirmed. The Court first emphasized that it would consider only the last two transfers because of the timing of O'Neal's EEOC complaint and that it would not consider the transfers as a whole because O'Neal failed to make the argument. One of the elements of O'Neal's retaliation claim is that the adverse action taken by the department must be causally connected to her protected activity. Here, her protected activity includes her 2002 lawsuit and a 2006 grievance. The Court concluded that there was insufficient evidence of a causal connection under either the direct or indirect methods of proof. Specifically, with respect to the indirect method, O'Neal failed to rebut the department's evidence that she was not meeting its legitimate expectations. The Court stated that her gender discrimination claim failed for the same reasons.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

BLOCH v. FRISCHHOLZ (November 13, 2009)

The Blochs have owned and occupied several units in the Shoreline Towers condominium building in Chicago for years. The Blochs are Jewish – each of them has, for years, displayed a mezuzah on the doorpost of his or her unit. In 2001, the Board of Managers of the Condo Association enacted a new rule that prohibited the placement of "objects of any sort" outside any unit in the building. For several years, enforcement of the rule was generally limited to the removal of clutter. In 2004, however, the Association begin to interpret the rule to include a mezuzah (as well as wreaths, crucifixes, political posters, etc.). Despite repeated appeals and attempts to educate the Board on the religious significance of a mezuzah, the practice continued. The Blochs filed suit, seeking relief under the Fair Housing Act (FHA) and 42 U.S.C . § 1982. The district court granted summary judgment to the defendants. A panel of the Seventh Circuit affirmed, with one dissent. The Blochs sought rehearing en banc.

In their opinion, Chief Judge Easterbrook and Judges Bauer, Posner, Kanne, Wood, Evans, Sykes and Tinder affirmed in part and reversed and remanded in part. The Blochs asserted three separate FHA theories -- the Court addressed each in turn. Under § 3604(a), it is unlawful to "refuse to sell or rent" or to "refuse to negotiate for the sale or rental" or to "otherwise make unavailable" a dwelling to a person because of religion. Referring to its decision in Halprin, the Court stated that the FHA is generally concerned with access to housing and does not support a claim of discrimination arising after a purchase. Although the Court thought the section might support a constructive eviction claim, it concluded that the Blochs could not maintain such a claim since they never vacated the premises. The Court affirmed with respect to § 3604(a). Section 3604(b) prohibits discrimination based on religion against any person in the terms or conditions of the sale or rental of a dwelling. The Court concluded that one of the terms and conditions of the Blochs' purchase of a condominium unit was their agreement to be governed by the Condo Association and its Board of Managers. Although § 3604(b) does not address isolated discriminatory conduct of neighbors, the Court concluded that it did prohibit the Association from discriminating against the Blochs in its enforcement of its rules. The Blocks could rely on § 3604(b) if they produced sufficient evidence of discrimination. Thirdly, the Court considered § 3617 of the FHA. That section makes it unlawful to "coerce, intimidate, threaten, or interfere" with any person's exercise or enjoyment of any right granted by other sections of the FHA. The Court concluded, effectively overruling part of Halprin, that the interference could occur post-purchase. Like their claim under § 3604(b), the Court concluded that the Blochs could pursue a claim under § 3617 if there were sufficient evidence of discriminatory intent. On the issue of discriminatory intent, the Court concluded that the combination of facts and inferences on the record was sufficient to allow a jury to conclude that the conduct of the Association was intentionally discriminatory toward the Blochs because of their religion.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

WETZLER v. ILLINOIS CPA SOCIETY & FOUNDATION RETIREMENT INCOME PLAN (November 10, 2009)

Thomas Wetzler worked for the Illinois CPA Society for twenty-two years. Throughout his employment, he participated in the Society's Retirement Income Plan (the "Plan"). When he retired, he qualified as a highly-compensated employee ("HCE") under the plan. Wetzler was only the second HCE to retire under the Plan. Although the first was allowed to take a lump-sum payout of Plan benefits, the Plan later determined that the distribution was in error and violated federal regulations. The Plan was amended to require security when an HCE elects a lump-some distribution. When the Plan refused to allow Wetzler to take a lump-sum distribution, he filed suit under ERISA. He alleged that the amendment violated the Act by eliminating a benefit which had been previously available. The district court granted summary judgment to the Plan. Wetzler appeals.

In their opinion, Circuit Judges Manion and Kanne and District Judge Kendall affirmed. The Court first concluded that the lower court applied the correct standard of review. Because the Plan gives its administrator discretion to construe its terms, the court's review of the administrator's decision is under an arbitrary and capricious standard. Next, the Court addressed the merits of the argument that the Plan amendment violated ERISA. The Court concluded that HCEs never had the option of a lump-sum payment. The amendment was simply the Plan's way of correcting the earlier, erroneous distribution. The amendment, therefore, did not violate ERISA. Finally, the Court upheld the administrator's decision to deny the distribution to Wetzler. The fact that the distribution would have been in violation of the Internal Revenue Code gave the administrator a reasonable basis for denial.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

BOND v. UTRERAS (November 10, 2009)

Diane Bond filed a § 1983 action against the City of Chicago and several police officers in 2004. The parties settled. The court entered an agreed order of dismissal on March 23, 2007. About a week earlier, however, journalist Jamie Kalven filed a petition to intervene. Kalven sought to modify a protective order in the case and to obtain access to documents produced during discovery. The City opposed access -- Bond did not substantively respond to the petition. The court granted the motion to intervene and rescinded the protective order. The City appeals.

In their opinion, Judges Kanne, Sykes and Tinder (concurring) vacated and remanded. Although the Court recognized its earlier decisions allowing permissive intervention to challenge a protective order, it emphasized that those cases involved ongoing litigation or access to records in the court file. Here, neither of those conditions is present. The case was over and none of the records sought were ever filed with the court. Therefore, stated the Court, the lower court should have addressed Kalven’s standing. Standing requires that an actual controversy exist at all stages of the proceeding. The Court noted that the circuit had never addressed the relationship between Article III standing and the rule for permissive intervention. This is not a typical permissive intervention case -- where the party seeks to come into an ongoing case on the side of one of the parties. Specifically not addressing whether standing is required for permissive intervention in an ongoing case, the Court concluded that independent standing was required to intervene in a case to challenge a protective order after the case was dismissed. The Court then rejected Kalven's standing on both right to discovery and First Amendment grounds. The Court based the former on the fact that none of the discovery sought had been filed with the court. The general right of public access to court documents is not implicated. The latter was based on the fact that the parties in the litigation stipulated to the protective order. No one placed any limitation on another's speech. Finally, the Court rejected any notion that the revocation of the protective order was within the lower court's inherent power.

Judge Tinder concurred in the result. He got there differently, however. Judge Tinder believed that Kalven had standing based on the public's general right of access to judicial proceedings. He concluded, however, given the timing of the request and the lack of a sufficient showing of abuse with respect to the protective order, that the district court erred on the merits.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

LAKE v. NEAL (November 6, 2009)

Joseph Lake applied for a drivers license with the Illinois Department of Motor Vehicles (“DMV”). The National Voter Registration Act permits a citizen to register to vote at the same time he or she applies for a driver’s license -- so Lake filled out a voter registration form. After he allegedly learned that someone acquired his personal information from the Chicago Board of Election Commissioners, Lake filed suit. He alleges that the Board violated the Driver's Privacy Protection Act (“DPPA”) when it disclosed his personal information. The district court granted a motion to dismiss. Lake appeals.

In their opinion, Chief Judge Easterbrook and Judges Bauer and Evans affirmed. The DPPA does provide a private cause of action against one who discloses information "from a motor vehicle record." The statute defines "motor vehicle record" as any record that pertains to any one of several documents issued by the DMV. The Court concluded that the voter registration form does not pertain, in the common sense of that word, to any document issued by the DMV. Although it can be filled out as part of the same process, it is not a part of and has nothing to do with any DMV documents. Since it is not a “motor vehicle record,” there is no cause of action for the wrongful disclosure of information contained therein.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

SCHROCK v. LEARNING CURVE INTERNATIONAL (November 5, 2009)

Learning Curve International ("LCI"), a producer and distributor of toys, has a license to market toys based on the "Thomas & Friends" properties. It hired Daniel Schrock to take photographs of those toys for use in promotional materials. LCI paid Schrock more than $400,000 for his effort. Although LCI stopped using Schrock's services in 2003, it continued to use some of his photos. Schrock registered the photos for copyright protection in 2004 and brought an infringement action against LCI and LCI’s licensor. The district court granted summary judgment to the defendants. It ruled that Schrock needed LCI's permission to copyright the photos, which he did not have. Schrock appeals.

In their opinion, Judges Flaum, Williams and Sykes reversed and remanded. The Court first noted that the copying element of an infringement action was not disputed – only whether Schrock had a valid copyright. Then, the Court briefly discussed the subject of derivative works but ended up assuming without deciding that each photo qualified as a derivative work. Next, the Court concluded that the photos met the requisite threshold of originality for copyright protection. That threshold is rather low – and the Court specifically rejected LCI’s argument that the threshold is higher for derivative works. If photographs are distinguishable from the underlying works, they qualify for derivative-work copyright. Schrock’s are and therefore do. In order to be copyrightable, a derivative work must itself not be infringing – that is, the owner of the copyright in the underlying work must have given permission to make the derivative work. The owner need not, however, have given actual permission to copyright the derivative work. The Court specifically rejected dicta in Gracen that suggested otherwise. Although Schrock’s right to copyright his work therefore arises by operation of law without the need for permission, Schrock is entitled to contract away his rights. The Court concluded that the record was insufficient to determine the merits of defendants’ arguments that he did just that. It remanded for further development of the record.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

SCHERING-PLOUGH HEALTHCARE PRODUCTS v. SCHWARZ PHARMA (October 29, 2009)

Schering-Plough makes an over-the-counter oral laxative which it sells under the trade name "MiraLAX." Its chemical name is polyethylene glycol 3350. Four other companies sell polyethylene glycol 3350 as a generic, prescription medication. The FDA requires a warning on the over-the-counter version that it should not be used for more than seven days. The FDA also requires that a generic drug be labeled the same as the original drug and be bioequivalent to the original drug. Schering-Plough brought a Lanham Act action against the defendants. It alleges that the defendants' labels stating that the drug is sold by prescription only are false, in violation of the Act. Meanwhile, the FDA is conducting proceedings to determine whether the defendants' products are mislabeled. The district court dismissed Schering-Plough's suit without prejudice, noting that it could be refiled, if appropriate, after the conclusion of the FDA proceedings. Schering-Plough appeals. The defendants cross appeal, seeking a dismissal with prejudice.

In their opinion, Judges Posner, Flaum and Rovner affirmed. The Court first addressed its jurisdiction, given that the suit was dismissed without prejudice below. The Court recognized some decisions in the past that have suggested that a dismissal without prejudice is not appealable unless the plaintiff is unable to bring a later suit. Focusing on the actual holdings in those cases as well as other authority, the Court concluded that a dismissal without prejudice is appealable unless the defect is immediately curable. On the merits, the Court looked to the provisions of the Lanham Act and the Food, Drug, and Cosmetic Act. It noted that the statutes should be read so as not to conflict with each other and to be given as much effect as possible. For example, the FD&C Act should not be read to prohibit a disclaimer that would correct a misinterpretation on which a Lanham Act claim is based. The record in the case did not make it clear, however, what the Lanham Act remedy should be. Schering-Plough was not very helpful in its suggestions. In addition, the Court believed that any change in labeling adopted by the defendants would have to be approved by the FDA. The Court therefore agreed with the district court that the FDA should be allowed to consider the misbranding issue before the Lanham Act suit is allowed to proceed. Although the Court affirmed the lower court's dismissal without prejudice, it also commented briefly on the viability of the Lanham Act claim. It questioned whether Schering-Plough's reliance on the "literal falsity" doctrine was proper in the context of the case.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

LEWITTON v. ITA SOFTWARE (October 28, 2009)

ITA Software offers information technology and services to online travel agents. ITA began the development of a new product that would allow the agents to make reservations and purchase airline tickets online. Derrick Lewitton joined the organization in 2005 to supervise the development and marketing of the new product. In his employment contract, ITA granted Lewitton options to purchase up to 200,000 shares of ITA stock. Up to 150,000 of the options could be forfeited, however, based on a formula that was to be applied during an assessment period after product rollout. The assessment period was scheduled to run from mid-2006 through May 2007, but was to be deferred if the rollout of the new product was delayed. The product development turned into a failure and was scaled back considerably. In fact, it was never rolled out. Lewitton left ITA in mid-2007. Shortly thereafter, he sought to exercise the full amount of his vested options. ITA took the position that most of the options were forfeited as a result of the product failure. Lewitton brought an action for the options. The court granted summary judgment to Lewitton. ITA appeals.

In their opinion, Judges Bauer, Kanne and Evans affirmed. The Court stated that its primary goal was to give effect to the terms of the agreement. If it is unambiguous, the Court noted that it would enforce it as written. The Court agreed with the district court that the "deferred" term in the contract was unambiguous. Since it is not a technical term, it should be given its ordinary meaning -- significantly delayed. The Court found no dispute that the program had been delayed. In fact, the rollout of the new product had never occurred. Under the unambiguous terms of the contract, the assessment period never occurred and the forfeiture provision was never triggered. The Court rejected ITA's position that such a conclusion ignored the principal objective of the contract -- that Lewitton would be rewarded with options if he generated significant revenue. ITA's position relied on extrinsic evidence, which the Court would not allow given the unambiguous nature of the contract.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

JAMES RIVER INSURANCE CO. v. KEMPER CASUALTY INSURANCE CO. (October 28, 2009)

James River and Kemper both issued malpractice insurance policies to a law firm. The Kemper policy covered claims made between September of 2000 and September of 2007, for acts committed between 1937 and 2002. The James River policy covered claims made between November 2004 and November 2005, for acts committed after November 2002. The malpractice suit giving rise to the dispute between the insurance companies alleged that two lawyers represented a wife in a divorce case. In December of 1999, they entered into a property settlement wherein their client was to receive a significant amount of her husband's stock options. Their attempt to document the settlement failed to accomplish the transfer of the options. A lawsuit against the husband was still pending when, in July 2001, the husband's employer declared bankruptcy, rendering the options worthless. The suit against the husband was finally dismissed in 2003. Thus, the acts complained of in the malpractice action occurred during both policies' claim periods. The James River policy contained a provision that excluded from coverage any claim that arose from the same set of circumstances as a claim under a "prior policy." James River brought a declaratory judgment action against Kemper seeking a declaration that it had no duty to defend or indemnify. The court granted summary judgment to Kemper. James River appeals.

In their opinion, Judges Posner, Manion and Tinder reversed. First, the Court concluded that the wrongful acts that occurred during the James River policy period arose from and were a continuation of the wrongful acts and decisions committed during the prior period. This was just the situation the James River exclusion addressed. Next, The Court considered the district court's ruling that the Kemper policy was not a “prior policy.” The district court had relied on the fact that the firm had purchased a five-year reporting extension on the Kemper policy. Although the policy period ended in 2002, the reporting extension allowed for a claim to be made through 2007. The Court noted, however, that the reporting extension did not extend the policy period. The Court concluded, therefore, that the Kemper policy was a "prior policy" and the James River exclusion applied. The Court remanded for the entry of the declaratory judgment requested by James River.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

SUNSTAR v. ALBERTO-CULVER CO. (October 28, 2009)

Alberto-Culver is a significant domestic producer of hair and skin-care products. In 1980, it transferred Japanese trademark registrations to Sunstar, a Japanese manufacturer of similar products. The deal required Sunstar to transfer the trademarks to Bank One Corporation in trust for 99 years. Bank One, in turn, licensed them back to Sunstar and was obligated to return the marks to Sunstar after the term of years. As trustee, Bank One could stop the use of the mark if it had reasonable grounds to think that Sunstar committed an act that created a danger to the value or validity of the marks. Alberto-Culver and Sunstar referred to the rights granted as a senyoshiyoken, the Japanese legal term describing a license under which the licensee has the exclusive right to use the marks in its geographic area and can sue infringers in its own name. Sunstar paid $10 million for the license. In 1989, Sunstar asked for permission to use a variant of one of the marks. Alberto-Culver refused. Sunstar ended up paying another $10 million for the rights to use the variant. In 1999, Sunstar again asked for permission to use a variation of one of the marks. This time, when Alberto-Culver refused, Sunstar filed suit. The suit sought a declaration that the requested variation was permitted by the license agreement. At trial, the district court refused to instruct the jury on the legal meaning of the term senyoshiyoken, concluding that it was irrelevant. The jury returned a verdict for Alberto-Culver but awarded no damages. The judge enjoined Sunstar from using the variation of the mark, terminated the agreement as a result of Sunstar's breach and ordered the marks returned to Alberto-Culver. Sunstar appeals.

In their opinion, Judges Posner, Manion and Evans vacated and remanded. The Court first disagreed with the lower court's conclusion that Japanese law was irrelevant. The Court stated that if sophisticated contracting parties use a foreign technical legal term in their contract, the presumption is that it is used in its technical legal sense. The issue for the Court, therefore, was whether the holder of the Japanese senyoshiyoken is permitted to use variants of licensed marks. The Court then criticized the general use of expert testimony to prove the content and meaning of foreign law. Noting that such testimony is not permitted when a federal court applies the law of a state or when the court of one state applies the law of another state, the Court expressed a strong preference for secondary materials over the testimony of expert witnesses. On the merits, the Court noted that American law does not consider a change in a mark's typeface or a modest change in the appearance or wording of a mark a material alteration. Japanese law is the same. Particularly here, where the license was for a period of 99 years, it may have even required modest changes in the mark over time to ensure its continued value and validity. The Court concluded that the holder of a Japanese senyoshiyoken is entitled to make minor changes in the mark. Although the Court expressed its temptation to order Alberto-Culver’s claims dismissed with prejudice, it declined to do so. Sunstar had not requested that relief and Alberto-Culver was not afforded an opportunity to respond. It did, however, vacate the judgments and remand the case.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

BUTLER v. ROUND LAKE POLICE DEPARTMENT (October 27, 2009)

Patrick Butler was a sergeant on the police force of a small community north of Chicago. Beginning in 2003, Butler's health began to deteriorate rapidly. He experienced fatigue, night blindness and trouble breathing. In May of 2004, he was diagnosed with chronic obstructive pulmonary disease. After a short time off, his physician permitted him to return to the force on "light duty." Because of the size of the force and the number of sergeants, no light duty assignment was available. The village advised Butler that he could return to work only when he had clearance to work any possible assignment. Shortly thereafter, Butler applied for a disability pension. He testified at his pension hearing that his physical condition prevented him from performing the required duties of his job. Three physicians also completed certificates of disability for Butler. The pension board found him disabled and awarded him disability benefits. He then brought suit against the village under the Americans with Disabilities Act. The district court granted summary judgment to Round Lake.

In their opinion, Judges Posner, Manion and Evans affirmed. In order to succeed on an ADA claim, the Court stated that one must show that he can "perform the essential functions" of his job. Under the doctrine of judicial estoppel, a party cannot prevail in one proceeding and then deny the very ground on which he prevailed in a subsequent proceeding. Here, Butler's sworn testimony that his physical condition prevented him from performing his job would appear to negate an element of his ADA claim. Although the Court noted that a disability pension claim (based on one's inability to perform one's job) and an ADA claim (based on one's ability, at least with accommodation, to perform one's job) are not necessarily mutually exclusive, they do require a satisfactory explanation of their consistency. For example, the passage of time or a change in one's disability can render seemingly inconsistent positions consistent. Here, however, Butler offered no explanation -- his ADA claim must fail.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

RIVER OF LIFE KINGDOM MINISTRIES v. HAZEL CREST (October 27, 2009)

River of Life Kingdom Ministries ("Ministries") is a small religious organization that does not occupy its own facility. Instead, it shares space with two other religious organizations in a dirty warehouse. The Ministries decided to purchase a new facility where it could better promote its community goals. It purchased property in Hazel Crest, even though the village had zoned the area for economic redevelopment. The ordinances allowed general commercial and retail uses but did not allow religious services. After its application for a special-use exception was denied, the Ministries filed a complaint and motions for a temporary restraining order and preliminary injunction. The complaint alleged that the ordinance violated the Equal Terms provision of the Religious Land Use and Institutionalized Persons Act ("RLUIPA"). While the motion for a preliminary injunction was pending, the village amended the ordinance to exclude meeting halls, public schools, community centers and other uses in an effort to ensure the ordinance's compliance with RLUIPA. The court denied the preliminary injunction. The Ministries appeal.

In their opinion, Judges Cudahy, Manion and Williams affirmed. The Court first stated the burden for obtaining a preliminary injunction: a reasonable likelihood of success on the merits, irreparable harm and a balancing of the harms based on the likelihood of success. With respect to its likelihood of success on the merits, the Court concluded that the Ministries was unlikely to succeed. The Equal Terms provision of the Act prohibits land-use regulations that treat religious assemblies on "less than equal terms" with non-religious assemblies. The Court discussed and critiqued the approaches of the Eleventh and Third Circuits. The Court preferred the Third Circuit approach, which allows a court to compare the effects of the allowed and disallowed uses on the local government's goals. Here, Hazel Crest's goal was to create a tax-generating commercial district. All of the "assemblies" that were allowed by the ordinance were commercial ventures. The Court concluded that the village's exclusion of non-commercial uses, including religious assemblies, was not likely to violate the RLUIPA. Although the Court then concluded that the relocation was instrumental to the Ministries' mission and could be considered irreparable harm, it did not believe that that harm significantly outweighed the harm to Hazel Crest.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

PERRY v. SHEET METAL WORKERS' LOCAL NO. 73 PENSION FUND (October 27, 2009)

Donald Perry and William Wilk both participated in their union's Pension Fund. Neither was awarded pension credit for the eight years they each worked in a training program at Washburne Trade School (now demolished). When they sought an adjustment, the Pension Fund explained that the school had been their actual employer during the period in question and was not a "contributing employer" under the terms of the Plan. The Fund further explained that the reason another union member who taught at the school at the same time did receive credit was because he was an employee of a "contributing employer" that made contributions in his name. Perry and Wilk filed suit under ERISA, alleging a denial of benefits. The district court granted summary judgment to the Pension Fund in a memorandum opinion dated March 24, 2008. Perry and Wilk appeal (on April 24).

In their opinion, Chief Judge Easterbrook and Judges Williams and Sykes affirmed. The Court first addressed the timeliness of the appeal, given that more than 30 days had passed between the time of the memorandum opinion and the notice of appeal. An appeal must be filed, however, within 30 days after the judgment is entered. Rule 58(a) requires a separate document for the entry of the judgment upon the granting of a motion for summary judgment. Pursuant to Appellate Rule 4, judgment is thus entered upon the earlier of the date on which the separate document is issued or 150 days have run from the entry of the order. Here, there was no separate order. The judgment is therefore not considered entered until 150 days have run. The appeal is timely, since an appeal filed after a decision but before the entry of a judgment is considered to be filed on the date of the entry of the judgment. On the merits, the Court's inquiry was limited to whether the Fund complied with the Plan's provisions in determining the members' pension credits. The Plan specifically provides that members receive pension credits for hours of work for which contributions are required to be paid by an employer. Since it is undisputed that no employer made or was required to make such contributions on behalf of Perry or Wilk, the Court concluded that the Fund acted in accordance with the Plan.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

KAMELGARD v. MACURA (October 23, 2009)

Kamelgard and Macura are both bariatric surgeons. Kamelgard practices in New Jersey and Macura practices in New York. After Kamelgard testified against Macura in a malpractice action in New York, Macura allegedly sent similar letters of complaint to the American Society of Bariatric Surgeons in Florida and the American College of Surgeons in Chicago. The American College took no disciplinary action on the complaint. Kamelgard claims not to have known the source of the American College complaint until he learned about Macura's letter to the American Society at a convention in mid-2007. Kamelgard brought a defamation action in Chicago within a year of the convention but two years after the publication of the letter. The district court concluded that the Chicago venue was improper and dismissed the suit without prejudice. Kamelgard appeals -- Macura cross-appeals seeking a dismissal with prejudice.

In their opinion, Judges Posner, Flaum and Rovner modified the judgment of the lower court to a dismissal with prejudice. The Court expressed some confusion over the intent of the lower court's ruling. It concluded, however, that the court dismissed the claim based upon the Illinois (American College) letter for failure to state a claim because of the absence of the letter and Kamelgard’s inability to obtain it. It then dismissed without prejudice the claim based on the Florida (American Society) letter because venue was not proper in Illinois. Nevertheless, given the uncertainty of the lower court's ruling, the Court went on to address the choice of law issue presented in the appeal. Although both Illinois law (favored by the plaintiff) and New Jersey law (favored by the defendant) have a one year statute of limitations for defamation, Illinois has a discovery rule -- New Jersey does not. The Court opined that the general "most significant relation" test that looks to the place of the injury does not always fit defamation cases, particularly were a defamatory statement is communicated in many different locations. In that situation, Court concluded that the application of the law of the plaintiff's domicile makes the most sense. Even though there was no publication of the letter in New Jersey, it is the location where the plaintiff is likely to be harmed and it is the state with a substantial interest in protecting his reputation. New Jersey law should therefore apply and both defamation claims are barred by the statute of limitations. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

LONG v. TEACHERS’ RETIREMENT SYSTEM (October 23, 2009)

The Illinois Teachers’ Retirement System (“TRS”) manages the pension benefits of Illinois’ retired teachers. For almost two decades, Julie Long received favorable performance reviews at her job there. During the mid-2000s, however, her performance deteriorated. She missed a lot of work, made a number of errors in processing data, and failed to conduct required training. TRS’ personnel manager, Gina Larkin, met with Long and her immediate supervisors in late 2005. Larkin learned of Long’s performance problems and her absences. She suggested that Long might be eligible for FMLA leave. Long applied for and took intermittent FMLA leave from October – January 2006. Larkin met with Long’s supervisors again and learned that Long’s performance and attendance issues remained uncorrected. Larkin recommended to Jon Bauman, the Executive Director, that Long be fired. Bauman, after reviewing Long’s evaluations and speaking with her supervisor, decided to fire her. Long brought suit, alleging that her termination was in retaliation for taking FMLA leave. The district court granted summary judgment to TRS. Long appeals.

In their opinion, Chief Judge Easterbrook, Judge Sykes and District Judge Kendall affirmed. The FMLA does not allow an employer to discriminate against an employee for taking FMLA leave. Here, two of the three elements of a claim of discrimination – protected activity and adverse employment action --- are not disputed. The issue on appeal is whether there is a causal connection between the two. In order to do that, stated the Court, Long had to produce evidence that the decisionmaker acted with an unlawful purpose. Bauman had the only authority to fire a TRS employee. The record shows that Bauman not only did not act discriminatorily – he did not even know about Long’s FMLA leave. While the “cat’s paw” doctrine sometimes imputes a subordinate’s intent to a supervisor, the “singular influence” requirement of that doctrine does not exist here. The Court also rejected Long’s arguments that discriminatory intent could be inferred from TRS’ failure to follow its own disciplinary policy (the Court concluded that it did follow it) and from the sudden decline in her performance evaluations (the Court noted that the decline in evaluations prior to the protected activity does not support the inference.)  

• Email This
• Print
• Comments
• Trackbacks
• Share Link

IN RE: SAFECO INSURANCE CO. (October 22, 2009)

Safeco Insurance Co. of America ("SICA") and Safeco Insurance Co. Of Illinois ("SICI") are subsidiaries of Safeco Corp. and provide automobile insurance. Although SICI adjusts its own claims only, SICA adjusts its claims and the claims of several other companies owned by Safeco. In 2005, Dr. F. Ryan Bemis, a chiropractor, filed a class action in Illinois state court against SICI and SICA. The complaint included causes of action based on breach of contract, consumer fraud statutes and unjust enrichment. It alleged a scheme by SICA and SICI to reduce medical payments coverage through its use of particular audit software. The Class Action Fairness Act of 2005 (“CAFA”) became effective seven days after the complaint was filed. Bemis later dismissed the statutory and unjust enrichment counts and amended the breach of contract count. In 2009, the state court granted class certification to a class consisting of all persons insured by Safeco insurance companies in 14 different states who had their claims adjusted by the specific software in question. Safeco removed the case to federal court, asserting that the class definition amounted to the commencement of a new action for CAFA purposes. The district court remanded, concluding that the class definition related back to the original complaint. Safeco sought leave to appeal.

In their opinion, Judges Ripple, Manion and Kanne granted leave to appeal and affirmed the judgment. The Court agreed with the district court that federal jurisdiction would have existed under CAFA. The Act is not retroactive, however, and the action was filed before its effective date. Therefore, stated the Court, removal under CAFA is proper only if the class certification amounted to the commencement of a new action. The central question in a relation-back analysis is whether the original pleading provided adequate notice of the class' claims. Although SICA continued to add affiliates to its roster of those for whom it processed claims after the complaint was filed, the Court concluded that the class definition related back to the filing of the complaint. The gravamen of the complaint was the use of the particular claims-processing software by SICA. The original complaint put the defendants on notice that any claim adjusted with that software was within the scope of the complaint. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

BRUNKER v. SCHWAN'S HOME SERVICE (October 22, 2009)

Frank Brunker was employed as a Route Manager for Schwan's Home Service, a home-delivery food service company. Brunker sold and delivered the company's products to its customers. Beginning in early 2003, Brunker began experiencing shaking, dizziness, headaches, etc. -- later to be diagnosed as multiple sclerosis. On his doctor's advice, he took two months disability leave, returned to light duty for one month, and then returned to unrestricted work. Several months later, he decided to take some time off for additional tests and evaluation. Around that time, he was disciplined on several occasions for failure to run a route, failure to adhere to a dress code, and writing a check with insufficient funds. When Brunker returned with his diagnosis of multiple sclerosis, the company fired him for unsatisfactory performance, but backdated his termination to the day before he left. Brunker brought suit under the Americans with Disabilities Act. The court granted summary judgment to Schwan's. Brunker appeals.

In their opinion, Judges Cudahy, Flaum and Rovner affirmed in part, vacated and reversed in part and remanded. On the merits, the Court first addressed the issue of whether Brunker created a genuine issue of fact as to whether he was "disabled." Under the ADA, one is "disabled" if one has an impairment which substantially limits a major life activity -- or if one is regarded as having such an impairment. The Court agreed with the district court that Brunker failed to show a substantial limitation on a major life activity -- the evidence showed only an intermittent or occasional impairment. However, the Court concluded that the evidence, including the discipline and the backdating of his termination, was sufficient to show that Schwan's regarded Brunker as disabled. Thus, the Court remanded the discrimination claim for additional proceedings. The dismissal of the failure to accommodate claim, however, was affirmed by the Court. The Court found no issue of fact with respect to Schwan's offering of an accommodation. The Court also resolved numerous discovery and sanction disputes.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

FANNON v. GUIDANT CORP. (October 21, 2009)

Guidant Corporation is a worldwide manufacturer of medical devices, including pacemakers and implantable cardioverter defibrillators ("ICDs"). In the 1990s, Guidant released a new ICD model. Within a few years, it discovered a design flaw. Although it corrected the flaw in new production runs, it never recalled the flawed units nor did it advise doctors or the public of the flaw. In 2004 and 2005, Guidant and J&J were involved in merger negotiations. Guidant issued several press statements and filed several SEC forms without mentioning its potential liability arising from the flawed devices. After a young man died and the New York Times prepared to report on the flaws, Guidant disclosed the problems in a letter to physicians. Shortly thereafter, the FDA issued a national recall. Guidant's stock price fell and J&J reconsidered its merger intentions. Eventually, Boston Scientific agreed to buy Guidant. Guidant's share price fluctuated between $63 and $80 during this time period. A number of class-action suits were filed, beginning in 2005. Some were voluntarily dismissed -- a second set was consolidated in the district court. Almost a year after the first complaints were filed, plaintiffs in the consolidated cases filed a consolidated complaint. A few days later, plaintiffs filed an amended consolidated complaint. Almost two years later, the court dismissed the complaint on the ground that it failed to meet the stringent scienter pleading requirements of the Private Securities Litigation Reform Act. The court also denied plaintiffs leave to amend and denied a rule 59(e) motion to set aside the judgment and allow for an amended complaint. Plaintiffs appeal.

In their opinion, Judges Bauer, Flaum and Wood affirmed. The Court first noted that the plaintiffs, in their appeal, do not challenge the district court's evaluation of the merits of the complaint. They only challenge the court's decisions to dismiss the complaint with prejudice and to not allow an amendment. The Court recognized the jurisprudence which advises that a better course in PSLRA cases is to dismiss without prejudice. The Court also recognized the specific factual backdrop of the case -- that numerous individual cases had been filed, that a consolidated complaint was filed a year later, that the consolidated complaint was amended and that the dismissal came two years after that. Given the amount of time and number of opportunities, the Court concluded that the district court did not abuse its discretion in dismissing with prejudice. With respect to the court's denial of the Rule 59(e) motion, the Court also concluded that it was not an abuse of discretion. The Court relied on the facts that plaintiffs made a strategic decision not to insert new evidence prior to the original ruling on the motion to dismiss and also that the court below was of the opinion that the amended complaint did not adequately address the deficiencies of the original complaint.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

WALSH v. CHEZ (October 21, 2009)

Jason Walsh was diagnosed with autism early in his life. His parents took him to Dr. Michael Chez for treatment. Chez prescribed a daily dosage of 50 mg of prednisone. One side-effect of prednisone is its negative impact on the body's ability to fight infection. A short time after the beginning of his prednisone treatment, Jason developed pneumonia. Dr. Chez reduced the prednisone treatment from 50 mg per day to 50 mg twice a week. A few months later, Jason died. Jason's parents brought a medical malpractice case against Dr. Chez. The Walshes submitted expert reports supporting their theory that the abrupt dosage reduction was the cause of their son's death. The district court excluded the reports on the ground that they failed to articulate a standard of care. The court dismissed the case. The Walshes appeal.

In their opinion, Judges Cudahy, Flaum and Wood reversed and remanded. The Court focused on the Rule 26 duty to disclose information regarding an expert's testimony. The purpose of the rule is to allow an opposing party a reasonable opportunity to address the expert's opinion. Examining the reports of the two experts, the Court concluded that each expressed an opinion that the conduct of Dr. Chez was not consistent with the standard of care. Dr. Chez was on notice of the Walshes' theory of malpractice. The fact that there may have been numerous ways of properly weaning Jason from the prednisone does not affect the experts' opinions that Dr. Chez' approach fell below the standard of care.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

KISWANI v. PHOENIX SECURITY AGENCY (October 16, 2009)

Ibrihim Kiswani was arrested for, and later acquitted of, an unlawful use of weapon charge. He filed an action against several police officers and the Phoenix Security Agency, alleging unlawful arrest and malicious prosecution, as well as other counts. Most of the counts were resolved prior to trial. Two counts against one individual officer were resolved at trial -- one on a motion for judgment as a matter of law and one by the jury. Judgment was entered on June 16, 2008. On June 24, Kiswani filed a renewed motion for judgment as a matter of law and a Rule 59 motion for a new trial. The magistrate judge denied the motions on August 20. On September 12, Kiswani moved for reconsideration of those motions. That motion was denied on September 24. Kiswani appeals (on September 29).

In their opinion, Judges Bauer, Rovner and Williams affirmed. First, in an order prior to argument, the Court limited the appeal only to a review of the September 12 motion for reconsideration. The August 20 order triggered the time for appeal of the merits judgment. The September 12 motion did not toll that time in that it was not filed within ten days of the judgment. On its review of Kiswani's September 12 motion for reconsideration, the Court stated that it should be considered a motion to alter or amend the judgment. That motion, under Rule 59(e), must be filed no later than 10 days after entry of judgment. Here, since the judgment was entered on June 16, the motion was not timely. The Court then turned to Rule 60(b), since an untimely Rule 59 motion automatically becomes a Rule 60(b) motion. The Court noted, however, that a Rule 60(b) motion must raise a new ground for collateral attack. Here, the motion raises the same argument as the earlier motions and is therefore inappropriate as a Rule 60(b) attack. Untimely under one rule and inappropriate under another – the Court affirmed.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

ILLINOIS DUNESLAND PRESERVATION SOCIETY v. ILLINOIS DEPARTMENT OF NATURAL RESOURCES (October 14, 2009)

Illinois Beach State Park is located in northeastern Illinois on the shores of Lake Michigan. Various buildings in the park have display racks containing pamphlets on various topics. The Illinois Dunesland Preservation Society is a nonprofit corporation that supports the park. The Society created a pamphlet warning of the risk of asbestos at the park's beaches. When the park refused to display the pamphlet, the Society brought suit under § 1983 against the state officials involved in operating the park. The district court granted summary judgment to the officials. The Society appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Wood affirmed. The Court first recited some of the "forum analysis" of Supreme Court decisions but then questioned the value of that analysis to the question. Every public site, stated the Court, can be regulated to some extent depending on the circumstances and as long as the regulation is not used to stifle speech. Here, the materials displayed in the park's racks are meant to promote the park and state tourist facilities generally. The dire warning contained in the Society's pamphlet is hardly consistent with that purpose. The Court concluded that the park was not required to display, and thus tacitly endorse, the pamphlet containing the warnings. The Court added that there were other means, such as personal distribution, available to the Society to convey its message. The park's position was not an unreasonable barrier to speech.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

GUNVILLE v. WALKER (October 9, 2009)

Robert Gunville and Richard Oakley had both worked for the Illinois Department of Corrections for over twenty years, all during Republican administrations, when a Democratic governor was elected in 2003. Both were laid off within months of the new administration’s inauguration. Gunville was an active member of the Republican Party while Oakley had a record of voting in Republican primaries. Gunville and Oakley brought suit, alleging a violation of their First Amendment rights. They also allege a violation of their Fourteenth Amendment rights as a result of their placement on a reemployment list for only their last county of employment. The district court granted summary judgment to the defendants. Gunville and Oakley appeal.

In their opinion, Judges Manion, Rovner and Sykes affirmed. In first addressing their First Amendment claim, the Court noted that there was no dispute that their speech was constitutionally protected and that they suffered a deprivation. The issue on appeal was whether the layoff came as a result of their political affiliation. In order to establish the unlawful motivation, the plaintiffs must first establish that the defendants knew of their political affiliation. After concurring with the district court's hearsay ruling on one particular statement, the Court concluded that there was a complete absence of evidence that the persons deciding which jobs to eliminate knew of plaintiffs' political affiliations. The Court came to the same conclusion with respect to the Fourteenth Amendment claims. The due process clause does not provide an opportunity to challenge the meaning of a regulation, the relief plaintiffs sought. To the extent that plaintiffs assert political retaliation, the due process argument suffers from the same complete absence of evidence as the First Amendment claim.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

IN RE: ROSE (October 7, 2009)

Mercantile National Bank of Indiana sued Jasper- Newton Utility in state court for breach of contract and specific performance. Judgment was entered in Mercantile's favor for approximately $160,000. James Rose was a 50% shareholder in Jasper- Newton. A few weeks later, Rose and the other shareholder sold Jasper-Newton to WSCI. The shareholders indemnified WSCI for the liability to Mercantile. In proceedings to collect on the judgment, Mercantile sought leave to amend its complaint to add a claim under the Indiana Crime Victim Compensation Act. The court entered judgment in Mercantile's favor of almost $600,000. The state appellate court affirmed on the merits. The state Supreme Court reversed, holding that Mercantile could not assert a new CVCA claim in supplemental proceedings to collect the judgment. Rose filed a petition for bankruptcy in the meantime. Mercantile filed an adversary proceeding in the bankruptcy court challenging the dischargeability of its CVCA claim. The bankruptcy court granted Rose's motion to dismiss Mercantile's complaint, concluding that the CVCA claim was barred by the statute of limitations. The district court affirmed the bankruptcy court. Mercantile appeals. During the appeal, the state appellate court ruled that the CVCA claim was commenced within the appropriate limitations period.

In their opinion, Judges Flaum and Williams and District Judge Kapala reversed. The Court looked to the various opinions of the state courts to decide whether Mercantile filed within the statutory period. Although the state Supreme Court reversed the trial court's order granting Mercantile leave to amend, it did so because it was improper to file the claim in supplemental proceedings. The court, in its opinion, specifically stated that Mercantile could pursue the claim in some other manner. After remand, the state Court of Appeals concluded that the claim was commenced when Mercantile moved to amend its complaint and was therefore filed within the limitations period. The Court concurred with the reasoning of the state appellate court in concluding that the claim was properly commenced within the limitations period.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

EKSTRAND v. SCHOOL DISTRICT OF SOMERSET (October 6, 2009)

Renae Ekstrand had been teaching successfully at Somerset Elementary School for several years when the school reassigned her to an interior classroom without natural light. Ekstrand had a disorder which limited her ability to function in an artificial light environment. She told the principal of her condition. She repeatedly requested a transfer to a room with natural light, two of which were available. The school addressed some of her concerns but refused to change her room assignment. Her condition deteriorated to the point where she had to seek medical attention and took a medical leave of absence. She continued to request a room reassignment during her leave. Ultimately, she left the school and brought an action pursuant to the Americans with Disabilities Act. The district court granted summary judgment to Somerset. Ekstrand appeals.

In their opinion, Chief Judge Easterbrook and Judges Bauer and Evans (concurring) reversed in part and affirmed in part. On the failure to accommodate claim, the Court stated that Ekstrand had to provide evidence that she had a disability, that the school was aware of the disability and that the school failed to reasonably accommodate her. The Court found evidence in the record that she was disabled and that the school was aware of her disability. The principal issue on appeal was whether the school accommodated her disability. The Court noted that a request for accommodation requires significant communication between the parties, particularly when the disability is a mental one. The Court found that the school did reasonably accommodate Ekstrand's disability in the early stages of their communication. During that time, Ekstrand identified a number of conditions in her classroom that exacerbated her depression but never provided direct evidence of the necessity of natural light. However, the court did find a time in November when Ekstrand's psychologist identified natural light as a key to her improvement. Once it was so advised, the Court concluded that the school could have given Ekstrand a room with natural light at a reasonable cost. The Court therefore disagreed with the lower court's finding that no reasonable jury could find in Ekstrand's favor. On the constructive discharge claim, the Court agreed with the district court that Ekstrand failed to show that her working conditions were so intolerable that her resignation was an appropriate response.

Judge Evans concurred in the judgment but wrote separately. He expressed his doubt whether Ekstrand could demonstrate that she was a "qualified individual" under the ADA given her condition and the fact that she was a first grade teacher. He suggested that the district court address that issue on remand.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

HUNTER v. AMIN (October 1, 2009)

Stanley Bell was sent to the St. Clair County Jail as a pretrial detainee. At the time, he was taking several medications, including an antidepressant and a sleep aid. The prison psychiatrist, Dr. Amin, met with Bell about a week later. Bell refused to speak with Amin with a jail officer present. Amin refused to meet with Bell without a jail officer present, a practice that was also required by state regulations. Bell became agitated -- Amin told him his medication would be discontinued without the examination -- Bell became more agitated and belligerent. Amin discontinued all of Bell's medications and planned to meet with him the following week. Bell committed suicide two days later. Bell's sister, Elisha Hunter, brought a claim pursuant to § 1983 against Amin, the County, and others. She also bought medical malpractice claims. The district court entered summary judgment in favor of all the defendants. Hunter appeals.

In their opinion, Judges Ripple and Sykes (dissenting) and District Judge Lawrence affirmed in part, reversed in part and remanded. The Court first considered the argument that the policy requiring the presence of a corrections officer was a violation of Dell's right to mental health treatment. In order for a municipality to be liable under these circumstances, its policy must violate constitutional rights. Here, the Court stated that the policy did not violate Bell's rights. Bell had a constitutional right to adequate mental health treatment but nothing in the County's policy affected that right. In fact, the Court noted that the fact that the communications would be privileged from disclosure supported their conclusion. With respect to the medical malpractice claim, however, the Court reversed. Although it is true that no physician duty arises if a patient refuses treatment, Bell did not refuse treatment -- he only refused to be examined. The Court found no evidence in the record supporting Amin's position that the examination was necessary in order for him to continue the prescription medications. The Court medical remanded the malpractice claim for further proceedings. Finally, given the affirmance on the only federal claim in the case, the Court instructed the district court to determine whether it should continue to exercise jurisdiction.

Judge Sykes dissented from the majority's reversal of the medical malpractice claim. Judge Sykes concluded that Bell's refusal to consent to the examination meant that Amin had no right to render any treatment. Amin testified that he needed the examination before any treatment. Judge Sykes noted the lack of support in the record for the majority's conclusion that the examination was required.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

AMERICAN BOAT COMPANY v. UNITED STATES OF AMERICA (October 1, 2009)

David Jump is a wealthy, St. Louis businessman with a variety of business interests. In 1996, he consulted with a Chicago attorney to develop an estate plan. The attorney created a family trust and reorganized many of Jump's businesses into limited partnerships. He also recommended a tax shelter, and provided the firm's opinion of its validity. A few years later, one of Jump’s towboats caused an accident that almost resulted in damages that could have exceeded his insurance coverage. He again sought advice from his Chicago lawyer, this time on how to limit his liability. The lawyer again designed and executed a restructuring of his companies. He again also recommended a series of tax shelter transactions. Beginning in 1999, Jump claimed substantial tax benefits. Over time, other lawyers and accountants became familiar with these transactions and raised no objections. The IRS eventually caught wind of these shelters and determined them to be illegal. It discovered the involvement of one of Jump's partnerships during its investigation and determined that the shelter was invalid. It issued a Notice of Final Partnership Administrative Adjustment, adjusting the partnership's basis of its towboats, and imposed an accuracy-related penalty of forty percent. On judicial review, the court agreed with the IRS that the transactions were invalid but held that the penalty should not have been imposed. The penalty can only be imposed if the partnership had no reasonable cause for its underpayment. The court found reasonable cause. The United States appeals the latter ruling.

In their opinion, Judges Bauer, Flaum and Kanne affirmed. The Court first addressed the issue of the district court's jurisdiction, because of a recent decision in the Court of Federal Claims holding that the reasonable cause exception relied on by the district court cannot be considered during a partnership-level proceeding, which that was. Although agreeing with the fundamental premise that a partner may not raise a partner-level defense at a partnership-level proceeding, the Court concluded that a partnership can raise reasonable cause on behalf of the partnership. Thus, the Court found that the district court had jurisdiction to consider the partnership's claims that it had reasonable cause for its position. On the merits, the Court stated that reasonable cause depends on all the facts and circumstances, including the taxpayer's efforts to properly assess its liability. The Court first rejected the government's position that it is always unreasonable to rely exclusively on a financial advisor who incorporates a tax shelter into a plan for restructuring. Considering the facts and circumstances, the Court concluded that the district court did not clearly err in finding reasonable cause: Jump sought advice from a reputable (at the time) attorney, he had no reason to believe the advice was wrong, the tax shelters were component parts of larger corporate restructurings, two reputable accounting firms raised no objections, and he had engaged in a similar transaction a few years earlier without IRS objection. Calling it a "close case," the Court found no clear error.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

COONEY v. ROSSITER (September 30, 2009)

Deborah Cooney and her husband were divorced in 1998. The court granted her custody of their two sons. Her ex-husband later petitioned for a transfer of custody. The court appointed a lawyer to act as the children's representative. Cooney alleges that the representative arranged to have a psychiatrist appointed and then suggested to the psychiatrist that she suffered a particular mental illness. The psychiatrist's report did conclude that she suffered from the mental illness. Cooney alleges that her ex-husband received a copy of that report but that she did not. Based on the report, the court granted temporary custody to the ex-husband. She brought suit against the judge, the representative, the psychiatrist, the children's therapist and the ex-husband's lawyer. The court dismissed her complaint. Cooney appeals.

In their opinion, Judges Bauer, Posner and Wood affirmed. The Court first found the state court judge absolutely immune since he was acting in his judicial capacity. Next, the Court found that the psychiatrist and representative were also entitled to absolute immunity, since the acts complained of all occurred within their official duties. Finally, the Court concluded that the factual allegations against the two private persons failed to meet federal pleading standards. Although citing Bell Atlantic and Iqbal and the heightened pleading standard established therein, the Court found that Cooney's allegations were too vague to meet even the pre-existing heightened pleading requirement for conspiracy allegations.

• Email This
• Print
• Comments
• Trackbacks
• Share Link