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

HERNANDEZ v. FOSTER (August 26, 2011)

Fifteen-month-old Jaymz Hernandez’ parents brought him to the hospital where x-rays established that he had a broken arm. The Hernandezes reported that they thought he had fallen out of his crib. Although the fracture was common in children, a hospital nurse was suspicious. The parents had slightly inconsistent stories about the circumstances of the injury and about whether Jaymz could walk. Jaymz also had unexplained, old bruises. The nurse reported her suspicions to the Department of Children and Family Services. Although the DCFS instructed the hospital to release Jaymz to his parents, it also began an investigation, which it assigned to Pamela Foster-Stith. Foster-Stith interviewed the nurse and doctor and prepared an action plan for a home visit and risk assessment. After receiving the approval of her supervisor, she sent investigator Lakesha Foster to the home. Foster found nothing particular suspicious in her visit. Nevertheless, given the injury and the inconsistent stories, Foster and Foster-Stith wanted a home safety plan. The family resisted. Foster-Stith, in consultation with her supervisor, decided that the Department had to take Jaymz into protective custody. She communicated that decision to Foster, who was still at the family's home. Foster explained the decision to the family, including the fact that they could not have contact with Jaymz during the custody period, and took Jaymz in the custody. Jaymz was placed with his great-grandparents. The next day, two different doctors examined Jaymz. Both concluded that the injury was not suggestive of abuse. Foster also spoke with an assistant state's attorney, who advised her that there was not enough evidence to seek protective custody. Although the Department decided to terminate its protective custody, Foster would still not let the family visit Jaymz. The next day, Foster presented a safety plan to the Hernandezes which would require Jaymz to remain with his great-grandparents with supervised visitation by his parents. After being told that they could not see Jaymz without agreeing to the safety plan, the Hernandezes agreed. The Hernandezes signed another safety plan the following week, which the Department later agreed to terminate. The Hernandezes brought suit pursuant to § 1983 for violations of the Fourth and Fourteenth Amendments, naming Foster, Foster-Stith, and the supervisor. Judge Conlon (N.D. Ill.) granted summary judgment to the defendants on qualified immunity grounds. The Hernandezes appeal.

In their opinion, Seventh Circuit Judges Sykes, Tinder, and Hamilton affirmed in part and vacated and remanded in part. The question for a qualified immunity defense is whether the defendants violated a clearly established constitutional right. The Court considered each plaintiff’s claims separately. First, all three plaintiffs asserted substantive due process claims with respect to the initial seizure. The Court noted that since Jaymz had a Fourth Amendment claim, he could not assert a substantive due process claim. With respect to Jaymz’ Fourth Amendment claim, the Court concluded that the removal was supported by probable cause. It relied on the unexplained injury, the older injury, and the inconsistent and contradictory statements of the parents. Therefore, the defendants were entitled to qualified immunity on that claim. The parents’ substantive due process claims fail for the same reason. Second, the Court addressed the plaintiffs' substantive due process claims relating to the continued withholding. This claim arises from a right to familial relations. The defendants needed reasonable suspicion of abuse to override that right. Again, however, the court concluded that Jaymz’ claim was properly analyzed under the Fourth Amendment while his parents' claims should be analyzed under substantive due process. Here, the Court found genuine issues of material fact with respect to defendants' knowledge that the continued withholding violated constitutional rights. The Court relied heavily on the normal physical exams and the assistant state's attorney's response. Summary judgment was improper. Third, the Court addressed the substantive due process claims regarding the allegedly coerced safety plan. The Court concluded that the defendants had no reasonable suspicion that Jaymz was in danger of abuse when they presented the safety plan. The alleged threats were extremely coercive. The Court concluded that the district court erred in granting summary judgment on those claims. Next, the Court considered the plaintiffs' procedural due process claims. The basis of these claims was that the defendants took Jaymz into custody without any pre-deprivation hearing. Here, the Court concluded that the case law at the time of the removal would not have put a reasonable Department investigator on notice that a pre-deprivation hearing was required. The defendants were therefore entitled to qualified immunity on the due process claim relating to the removal. Again, however, the Court found genuine issues of fact on the due process claim with respect to the safety plan. With the allegations of misrepresentations and coercion, qualified immunity would be appropriate.

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ORTIZ v. CITY OF CHICAGO (August 25, 2011)

Acting pursuant to a confidential tip, the Chicago Police raided May Molina's apartment. They placed Molina under arrest. Molina happens to be a local civil rights activist and a harsh critic of police practices. Molina also suffers from diabetes, hypertension, and a thyroid condition. She takes medications for those conditions. Pursuant to department policy, she was not allowed to take her medication into the lockup. Molina died after approximately 27 hours of confinement. Her estate brought suit against a number of police officers involved in her detention pursuant to § 1983, alleging constitutionally inadequate medical care and an unreasonable delay in providing her a probable cause hearing. Judge Grady (N.D. Ill.) excluded the estate's expert witness and granted summary judgment to the defendants on both claims. The estate appeals.

In their opinion, Seventh Circuit Judges Rovner, Wood, and Evans (who, as a result of his death, took no part in the decision) affirmed in part and reversed and remanded in part. The Court first addressed the inadequate medical care count. It pointed out that, since Molina had not yet had a probable cause hearing, her estate’s claim was governed by the Fourth Amendment reasonableness standard and not the Eight Amendment deliberate indifference standard. Since the defendants did not argue burdensomeness or police interest, the only reasonableness factors at issue are whether each individual defendant was on notice of a serious medical condition and causation. With respect to notice, the Court identified the allegations with respect to each individual defendant and concluded, in each case, that the allegations created genuine issues of fact. Considering the evidence in the light most favorable to Molina, each individual defendants either heard her ask for medical attention, heard her cry for help, were told by her lawyer that she needed to be hospitalized, or received numerous telephone calls from friends and relatives advising that she needed her medication. Therefore, the Court concluded that each was on notice of her serious medical condition. With respect to causation, the question is whether, had the defendants responded and taken her to the hospital, she would not have died or suffered pain and suffering. The district court applied too narrow a test when it required the estate to prove that it was the failure to provide her medication that caused her death. Because the defendants' expert testified that she died from an overdose of drugs she ingested at the time of the police raid, and because the district court excluded the estate’s expert testimony that she died because she was not giving her medication, the district court concluded that the estate failed to prove causation. But the estate did not need to prove that it was the lack of medication -- it only needed to prove that it was the failure to take her to the hospital. The Court therefore concluded that the expert testimony was not even required on that point. There was enough lay testimony in the record to establish causation. The Court also found the district court improperly excluded the expert testimony because of its misunderstanding of the factual record. With respect to the defendants' qualified immunity claim, the Court had no difficulty concluding that failing to provide medical care to a prisoner with a serious health risk satisfied the estate’s burden (without deciding whether it should apply the deliberate indifference or objectively unreasonable standard). On the unreasonable delay count, the Court agreed with the district court. The Supreme Court adopted a 48-hour burden shifting rule in Gerstein. Therefore, this 27-hour detention is presumptively reasonable. The estate failed to overcome the presumption.

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HAURY v. LEMMON (August 25, 2011)

Michael Haury, an Indiana prison inmate, filed a pro se lawsuit alleging that prison personnel interfered with the delivery of his legal mail and also failed to provide a sufficient law library. Judge Miller (N.D. Ind.) denied his request to proceed in forma pauperis. He concluded that Haury had "three strikes" under the Prison Litigation Reform Act of 1995. Haury appeals.

In their opinion, Seventh Circuit Judges Coffey, Rovner, and Hamilton reversed and remanded. The Prison Litigation Reform Act does bar an inmate from filing a civil suit and proceeding in forma pauperis if he has three "strikes" -- that is, if three prior lawsuits were dismissed as frivolous, malicious, or for failing to state a claim. Here, Haury's third strike is a 1991 case that the court below described as being dismissed as "frivolous for want of jurisdiction." The Court noted that that was not entirely accurate. In fact, although a portion of the 1991 complaint was dismissed for failure to state a claim, two claims were dismissed for lack of jurisdiction. The judge who dismissed the case did not characterize the case is frivolous. The PLRA does not list lack of jurisdiction as a basis on which to impose a strike. The Court noted that the D.C., Ninth, and Second Circuits have all concluded that dismissal for lack of jurisdiction does not amount to a strike (unless, of course, the assertion of jurisdiction as frivolous). The Court was persuaded by its sister circuits’ reasoning and concluded that the district court erred in denying in forma pauperis status.

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TENNY v. BLAGOJEVICH (August 25, 2011)

An Illinois statute regulates prison commissaries’ sale of goods to inmates. Except for tobacco products, it prohibits any markup over cost in excess of 25%. A 2006 Illinois Inspector General audit concluded that the Illinois Department of Corrections was violating the statute and recommended corrective action. The Department rejected the recommendations and maintained its pricing. Several inmates at the Stateville Correctional Center in Joliet filed grievances. The grievances were denied. The inmates filed two separate lawsuits in federal district court pursuant to § 1983, alleging violations of their Fourteenth Amendment procedural due process rights and violations of the Illinois Constitution. Judges Norgle and Pallmeyer (N.D. Ill.) dismissed the complaints for failure to state a claim. Plaintiffs appeal.

In their opinion, Seventh Circuit Judges Manion, Wood, and Hamilton affirmed and remanded. A procedural due process claim requires that the plaintiff allege a protected property interest, or legitimate claim of entitlement, under state law. Here, the Court assumed, without deciding, that the Illinois statutory cap created such a property interest. Even if there is a property interest, the inmates are not entitled to pre-deprivation review if it would be ineffectual. The Court concluded that no "process" would have prevented the Department from imposing its allegedly unlawful pricing policy. In this situation, an adequate post-deprivation remedy may satisfy due process. The inmates have not even alleged the inadequacy of a post-deprivation remedy. In fact, the Court concluded that the prison grievance procedures, a possible Court of Claims claim, and the availability of a state court claim were adequate post-deprivation remedies. Because both district courts dismissed the complaints with prejudice but neither district court addressed the state constitutional claim, the Court remanded the cases for dismissals of the state claims without prejudice.

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CLEARY v. PHILIP MORRIS INC. (August 25, 2011)

A class-action complaint brought against Philip Morris in 1998, and later amended, sought disgorgement of profits under an unjust enrichment theory, alleging that Philip Morris concealed facts about the dangers of cigarettes in its marketing and advertising. The complaint alleged three classes: an "addiction" class consisting of Illinois residents who purchased cigarettes between 1953 in 1965, a "youth marketing" class consisting of Illinois residents who first purchased cigarettes as minors, and a "lights" class consisting of Illinois residents who purchased Marlboro Lights. The class plaintiffs withdrew the "lights" class allegations because of another similar pending case. That "lights" case was ultimately unsuccessful in Illinois state court but a 2008 United States Supreme Court case breathed new life into the theory. The class plaintiffs therefore amended their complaint again, reinserting a "lights" class claim. The amended complaint added as defendants other companies who manufactured light cigarettes, including Lorillard Tobacco Company, and also added allegations regarding other brands of light cigarettes manufactured by Philip Morris. Lorillard removed the case to federal court under the Class Action Fairness Act. The district court rejected plaintiffs request to remand on the grounds that the new "lights" claim did not relate back to the original complaint, then dismissed Lorillard on statute of limitations grounds, and then again rejected a request to remand on the ground that Lorillard, the reason for the removal, was no longer a defendant. Later, the district court dismissed as time-barred all claims against the other non-Philip Morris defendants and limited the claims against Phillip Morris to the original Marlboro Lights claims. Ultimately, Judge Kennelly (N.D. Ill.) dismissed the unjust enrichment claims as a matter of law. The class appeals.

In their opinion, Seventh Circuit Judges Cudahy, Manion, and Hamilton affirmed. Before turning to the merits of the unjust enrichment claim, the Court briefly addressed the district court's refusal to remand after the Lorillard dismissal and its limitation of the "lights" claim to Marlboro Lights. With respect to the former, the Court stated that jurisdiction under CAFA is determined at the time of removal. Therefore, Lorillard's dismissal after removal did not affect the court's jurisdiction. With respect to the latter, the Court noted that an amendment relates back to an earlier complaint only when it arises out of the same occurrence. Here, the expansion of the allegations to include other Phillip Morris light cigarette brands would add additional class members and encompass numerous additional transactions. The additional allegations, therefore, do not arise out of the same occurrence and do not relate back. Turning to the unjust enrichment allegations, the Court recognized some tension in Illinois law as to whether unjust enrichment is an independent cause of action or must be tied to a separate claim. It ultimately decided that it did not have to resolve the tension, given its conclusion that the class allegations did not state a cause of action. An unjust enrichment claim must allege defendant's unjust retention of a benefit to the plaintiffs detriment and that the retention was unjust. The only detriment plaintiffs allege, however, is a violation of their right to be informed of the actual dangers and risks inherent in cigarettes. Under plaintiffs' theory, the class would include consumers for whom that alleged violation was not a detriment -- the consumers who would have acted no differently had they known the truth. Without any allegations of harm or that they would have acted differently, the class allegations cannot support a claim of unjust enrichment.

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PEARSON v. VOITH PAPER ROLLS, INC. (August 25, 2011)

Voith Paper Rolls terminated Kenneth Pearson's employment after 14 years on the job. Because Pearson had a potential age discrimination claim against the company, Voith offered to negotiate a severance package with a release. Joseph Booth, Voith's Human Resources Manager and the administrator of the its Pension Plan, conducted the negotiations. At the negotiations, Booth provided Pearson with his benefit calculations and gave him a benefit election form with five options. One option was a lump-sum payment -- the other four options were different variations of payments over time. Unfortunately, the calculations were not entirely accurate. The lump-sum option was stated correctly but the other four options overstated Pearson's pension benefits. Pearson negotiated his severance package with the understanding, based on the inaccurate calculations, that he would receive a monthly pension benefit in excess of $1150. Pearson signed a severance agreement and made his pension benefit election. When the company re-checked the calculations, it caught the error and sent Pearson a new election form with the corrected numbers. The numbers on his option of choice declined from $1150 to approximately $700. Pearson brought suit against the Plan for promissory estoppel. Judge Griesbach (E.D. Wis.) granted summary judgment to the plan, concluding that the Seventh Circuit had never recognized a promissory estoppel claim against a single employer pension plan and that, even if it did, Pearson could not show a knowing misrepresentation, detrimental reliance, or economic harm. The court also concluded that any misrepresentation was made by the company, not the Plan. Pearson appeals.

In their opinion, Seventh Circuit Judges Rovner, Evans (who, due to his death, did not participate in the decision), and Williams affirmed. The Court decided not to resolve whether a promissory estoppel claim can lie against a defined benefit, funded pension plan. Instead, it resolved the appeal assuming that such a claim is viable. Estoppel will only lie in extreme circumstances, which are shown by a knowing misrepresentation in writing that the plaintiff reasonably relied on to his detriment. Here, Pearson fails to make that case. First, the record shows no evidence of the Plan’s intentional misrepresentation. Although Voith may have had an incentive to overstate the pension in order to negotiate a better severance package, the Plan had no such incentive. The Court refused to attribute the employer’s motivation to the Plan. Furthermore, if there was an incentive to overstate the numbers, there was an incentive to overstate all the numbers. The Court found it unbelievable that Booth would overstate four of the five options but communicate the fifth one accurately when he had no idea which option Pearson would elect. The best the evidence supports is negligence, which is not enough for a knowing misrepresentation. The Court also found no evidence of detrimental reliance. Detrimental reliance requires an economic harm. Pearson's contention that he would have achieved a better package had he known the real number is entirely speculative. Furthermore, he testified that he does not want to rescind his severance package and renegotiate it, further supporting the speculative nature of any economic harm.

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STATE OF MICHIGAN v. UNITED STATES ARMY CORPS OF ENGINEERS (August 24, 2011)

The Chicago Area Waterway System is a system of canals and channels with locks and dams in northeastern Illinois. The System links Lake Michigan with the Mississippi River. Although it has been a boon to commerce, tourism, transportation, and public health, it has created some problems. Two particular species of carp that could wreak monumental ecological damage to the Great Lakes have migrated up the Mississippi River and have entered the System. The Army Corps of Engineers and the Metropolitan Water Reclamation District of Greater Chicago have taken and are taking many steps to prevent the carp from reaching the Great Lakes. But the States of Michigan, Minnesota, Ohio, Pennsylvania, and Wisconsin filed suit under the federal common law of nuisance and § 702 of the Administrative Procedure Act, alleging that the Corps and the District are not taking sufficient steps to avert the potential crisis. Judge Dow (N.D. Ill.) denied the plaintiffs' motion for a preliminary injunction. The States appeal.

In their opinion, Seventh Circuit Judges Manion, Wood, and Williams affirmed. The Court first stated the familiar elements needed for a preliminary injunction: likely to succeed on the merits, likely to suffer irreparable harm, the harm without an injunction is greater than the harm an injunction would impose on the defendants, and the injunction is in the public interest. The Court first addressed likelihood of success and expressed its disagreement with the district court's assessment of that as "modest." The Court concluded that the federal common law of nuisance applied to the State's allegations, rejecting defendants' arguments that it did not apply because either the defendants were not physically moving the fish themselves or that the allegations did not involve a traditional pollutant. The Court briefly addressed, without deciding, the underdeveloped argument that a federal common law of nuisance claim it does not stand against the United States. Although it found that excluding such claims would be consistent with the origins of the tort, it also questioned why the claim could not lie against the United States as an owner of a dam or other facility that might create a nuisance. In any event, given its ultimate conclusion, the Court proceeded on the assumption that the claim was appropriate. Next, the Court addressed the Corps' claim of sovereign immunity and concluded that APA § 702 waives sovereign immunity for these declaratory and injunctive claims. The Court moved to the defendants’ displacement doctrine argument. That doctrine addresses the relationship between the courts and Congress and provides that the exercise of federal common law by the courts in an area is no longer necessary once Congress addresses the question. The question presented here is whether Congress has done enough to displace the common law. In Milwaukee I, Supreme Court said that Congress had not displace the federal common law even though it had enacted several laws touching upon the subject matter. In Milwaukee II and American Electric Power, however, the Supreme Court held that more comprehensive legislation in the areas did displace the federal common law. Here, although the Court recognized some Congressional activity (for example, the National Invasive Species Act) in the area, it concluded that it fell far short of the comprehensive schemes in Milwaukee II and American Electric Power and did not displace the federal common law. The Court turned to the actual evidence presented by the plaintiffs on their claim and considered whether the identified activity was a nuisance and whether it was sufficiently threatening to require equitable relief. Although the Court found little error in the district court's factual findings that the potential for harm was significant, it disagreed with its conclusion that the risk of that harm occurring was not sufficient to warrant injunctive relief. The Court noted that the magnitude of the potential harm was tremendous, that it was increasing, and that it probably could not be undone if once it occurred. It therefore gave the benefit of the doubt to the plaintiffs that the risk was imminent and concluded that they satisfied the likelihood of success element needed for a preliminary injunction. With respect to plaintiffs' likelihood of success on its APA claim, the Court concluded that that claim was co-extensive with the federal common law claim and need not be addressed separately. The second element required for a preliminary injunction is irreparable harm. The Court concluded that plaintiffs met their burden of showing irreparable harm, relying on much the same evidence relevant to the likelihood of success element. Again, it concluded (as, apparently, did the parties) that the harm, if it occurred, would be genuinely irreparable. And again, given the severity of that harm, it gave the States the benefit of the doubt on the degree of risk that the harm would actually occur. The Court turned to the balancing of harms -- comparing the harm that would occur in the absence of an injunction with the harm an injunction would impose on the defendants. It concluded that the harm to the defendants in the event the injunction issued substantially outweighed any benefit to the plaintiffs for two reasons. First, it evaluated the specific requests for relief individually and found substantial problems inherent in the requests. Some of the requests provided little benefit at significant cost. At least one of the request was already under study by the Corps. Simply put, the record did not establish that the requested relief would do much to address the problem and, to the extent it would, it created other risks. It compared that "benefit" with the harm an injunction would impose on the defendants. It concluded that it would impose significant cost, it would increase the risk of flooding, it would negatively impact commercial and recreational boating, and it would interfere with police and fire protection services on the Chicago River. Second, the Court concluded that an injunction would interfere with the ongoing efforts of the federal and local agencies already addressing the problem. Federal courts, it said, should tread carefully when federal and state agencies, expert in the area, are already addressing a problem. In concluding that the district court did not abuse its discretion in denying injunctive relief, the Court emphasized that the landscape could change at any time. New evidence is being developed on an almost daily basis and the agency response is subject to political pressures and budgets. Any significant change in that landscape could be grounds for the district court's re-examination of the issue.

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MICROMETL CORP. v. TRANZACT TECHNOLOGIES (August 24, 2011)

Micrometl and Tranzact were parties to a services agreement that went sour. Micrometl brought suit in state court, alleging that Tranzact had over-billed it by more than $100,000. Tranzact removed the case to federal court. In discovery, Tranzact learned that Micrometl had received funds from third parties that reduced Tranzact's liability to less than $40,000. It also learned that Micrometl received those funds prior to the time it filed suit. Although Tranzact knew that this information brought diversity jurisdiction into question because of the amount in controversy requirement, it did nothing. Discovery closed five months later and the parties participated in a settlement conference five months after that. It was only after the unsuccessful settlement conference that Tranzact moved to remand the case to state court. Magistrate Judge Nolan (N.D. Ill.) concluded that the plaintiff could not meet the amount in controversy requirement and remanded the case to state court. She denied, however, Tranzact's motions for fees and costs. Transact appeals from the order denying fees.

In their opinion, Seventh Circuit Judges Flaum, Wood, and Tinder affirmed. The Court noted that the removal statute allows a district court to award fees and costs when a case is improperly removed. Usually, it is a plaintiff who seeks a fee award against a defend who improperly removed. Here, it is the defendant seeking fees. Although the Court noted the unusual situation, it concluded that there is no barrier to awarding fees to a defendant under the statute. The Court also concluded, however, that the district court did not err in refusing to award fees. The district court correctly concluded that Micrometl knew or should have known that it could not satisfy the amount in controversy requirement and should have alerted the court at the time of the removal petition. Equally troubling to the district court, however, was Tranzact's conduct. It waited 10 months after it discovered the truth to alert the district court to the situation. The Court rejected Tranzact’s nonsensical argument that it could not alert the court because of an order to participate in mediation. It also rejected the argument that the fact that a case can be remanded "any time" means that its delay in informing the court should not be considered. Tranzact's conduct wasted judicial resources and imposed costs on both parties. The district court did not abuse its discretion in refusing to award fees under § 1447(c). Tranzact also sought fees under § 1927. But § 1927 is a sanctions statute that requires a finding of bad faith. The Court deferred to the magistrate judge's finding of no bad-faith. It pointed out, for example, that Micrometl did not exaggerate its damages in order to get into federal court. It originally filed in state court and had no jurisdictional reason to overstate its damages.

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WISCONSIN INTERSCHOLASTIC ATHLETIC ASSOCIATION v. GANNETT CO. (August 24, 2011)

The Wisconsin Interscholastic Athletic Association is a non-profit organization comprised of all (with a few exceptions) Wisconsin public high schools as well as many private high schools and public and private junior high and middle schools. Its purpose is to regulate interscholastic sports and promote good sportsmanship. The Association sponsors post-season tournaments. Pursuant to its media policy, the Association retains the exclusive right to transmit or stream live content during those games and further reserves the right to grant those rights to others. The policy prohibits any other live coverage of a game but allows the use of up to two minutes to be used in a regularly scheduled sports or news program or Internet story. The Association has had exclusive broadcast agreements for a number of decades. In 2005, however, the Association entered into a ten-year agreement with American-HiFi, pursuant to which American obtained exclusive rights to stream events online. The Association's policy and the American contract provided that a newspaper could stream a game live for a fee if American chose not to do so. Some local newspapers were unhappy with the Association’s stance. When a local Gannett newspaper streamed four football games online without permission, the Association filed an action for declaratory judgment. Gannett removed the case to federal court and filed counterclaims challenging several aspects of the Association's policies. It asserted violations of the First and Fourteenth amendments under § 1983. Chief Judge Conley (W.D. Wis.) granted summary judgment to the Association. He found that: neither the American contract nor the fee the Association charged a newspaper to stream a game violated the First Amendment, the Association did not have too much discretion to refuse streaming licenses, and the newspapers had no copyright in the games they streamed. Gannett appeals.

In their opinion, Seventh Circuit Judges Bauer, Wood, and Hamilton affirmed. The Court first addressed its jurisdiction, since there is no diversity and the Court concluded that there was no federal Copyright Act issue in the case. Since the case was one for declaratory judgment, the Court looked to the hypothetical well-pleaded complaint had the defendant brought suit. In that hypothetical complaint, Gannett alleges that the Association (a state actor) is violating its First Amendment rights. That claim clearly arises under federal law. Turning to the merits, the Court emphasized that the state actor, the Association, was acting in a proprietary rather than regulatory capacity. When acting in a regulatory capacity, a state's actions must merely be reasonable under the First Amendment. The Court rejected Gannett's viewpoint bias argument, both on the ground that there was no such bias and on the ground that the viewpoint neutrality rule was simply not applicable in this context. The Association is free to promote values of its own choosing, either directly or through contractual relationships. The Supreme Court, in its Zacchini decision, distinguished between a newspaper's right to report on an event and its right (or absence thereof) to broadcast the entire event. The case also makes it clear that an entertainment producer can charge a fee in exchange for the right to broadcast an event. Although Zacchini concerned private actors, Forbes applied the same principles to state actors. Applying those principles to the facts, the Court concluded that the Association's contract with American did not run afoul of the First Amendment. The Court turned to the question of the Association's raising revenue through its contract. It found Gannett's argument "radical and unsupported" and foreclosed by Supreme Court precedent.

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MARCATANTE v. CITY OF CHICAGO (August 24, 2011)

The City of Chicago had Collective Bargaining Agreements between 1999 and 2003 with a coalition of trade unions representing certain City employees. When the parties were unable to agree on 2003-2007 CBAs by the then-current CBAs’ expiration date, they entered into a letter agreement. The agreement extended the terms of the then-current agreements. The City also agreed that any wage increase it ultimately agreed to would be retroactive to July 1, 2003, unless otherwise agreed. Months later, while negotiations were still ongoing, the City offered certain employees an incentive to retire early. Some City employees took advantage of the offer and retired in early 2004. The City and the unions reached agreement on the 2003-2007 CBAs in July of 2005. Although the City agreed to a pay raise, it made the increase retroactive to 2003 only for certain employees. The early retirees were not included. A class of retired employees brought suit alleging due process and equal protection violations as well as state law claims for breach of implied contract and breach of express contract. On cross motions for summary judgment, Judge Kocoras (N.D. Ill.) found for the City on the due process, equal protection, and express contract claims but found for the plaintiffs on the implied contract claim and awarded over $1.7 million in damages. The City appeals on the implied contract claim. The plaintiffs cross-appeal on the due process and express contract claim.

In their opinion, Seventh Circuit Judges Posner, Kanne, and Tinder affirmed in part and reversed in part. The Court first struck plaintiffs' cross-appeal as improper. A cross-appeal is appropriate only when a party wants to alter the district court's judgment. The plaintiffs are not seeking any modified relief on the breach of contract appeal. Although they did seek modified relief under the due process claim, they did not do so until their reply brief -- and so waived that claim. As an aside, the Court noted its agreement with the district court's dismissal of those claims on the merits. The Court turned to the implied contract claim, on which the plaintiffs prevailed. An implied-in-fact contract is created by law and is based on the parties' conduct. The contract is inferred from the surrounding facts and circumstances and gives effect to an unstated promise. However, an implied contract cannot exist where an express contract already governs the same subject. Here, the Court found that the subject matter -- plaintiffs' pay rate -- was governed by the Collective Bargaining Agreements. The fact that retroactive increases were given in similar situations in the past is irrelevant, as is plaintiffs' hope for such an increase. Given the existence of the express contract, there can be no implied contract. Furthermore, the letter agreement is unambiguous and only provided that agreed pay raises would be retroactive. Since the parties did not agree on a pay raise for the retirees, there was nothing to make retroactive. An implied-in-law contract is not really a contract but an equitable claim for unjust enrichment. But, just like an implied-in-fact contract, an implied-in-law contract cannot coexist with an express contract on the same subject matter.

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BOYD v. TORNIER, INC. (August 24, 2011)

Tornier, Inc. is a national medical goods manufacturer, particularly in the joint replacement field. In 2003, it entered into exclusive distribution agreements with Boyd Medical in Missouri and Addison Medical in Iowa. The agreements provided that Boyd and Addison had exclusive distribution rights in their respective areas, that they could not sell products that competed with Tornier products, that Tornier could set sales quotas, and that the failure to meet a sales quota was grounds for termination. Even when it entered into these agreements, however, Tornier was developing a plan to convert these distributorships into dedicated Tornier outlets. Tornier told both Boyd and Addison of its plan and represented to both that they would be exclusive distributors of its new and expanded product line. Boyd and Addison began preparing for that opportunity by dropping other product lines. The truth, however, was that Tornier was not satisfied with Boyd and Addison and had already found replacement distributors. When the time came, it increased the sales quotas for both distributors and terminated them when they failed to meet the new quotas. Both Boyd and Addison went out of business and sued Tornier for breach of contract, intentional misrepresentation, and negligent misrepresentation. Magistrate Judge Wilkerson (S.D. Ill.) dismissed the negligent misrepresentation count as to Addison pursuant to Iowa law limitations on such a claim and sent the other claims to the jury. The jury found against Tornier on all claims and awarded $1.4 million in compensatory damages to Boyd, $1.1 million in compensatory damages to Addison, and $2 million in punitive damages for each. The district court set aside the punitive damages but otherwise upheld the verdict. Both parties appealed.

In their opinion, Seventh Circuit Judges Bauer, Wood, and Sykes affirmed in part, vacated in part, and remanded. The Court first addressed the breach of contract claim, which was governed by Texas law under a choice of law clause. It found that the contract specifically excluded lost profits relief after termination. Texas law, however, provides that contractual limitations on damages are not enforced when there is a bargaining disparity between the parties. The district court allowed the jury to decide whether there was a disparity as a matter of fact. The Court disagreed and vacated the compensatory damage awards. Although Boyd and Addison were dependent on Tornier, they were so by choice. They were both sophisticated businesses and could have rejected Tornier's contract demands. The Court turned to the intentional misrepresentation claims, the elements of which are: a) a false, material representation, b) that the speaker knew was false, c) spoken with the intent to deceive, d) which was justifiably relied on, and e) causing damages. Tornier challenged both the justifiable reliance and the knowledge of falsity elements. The Court affirmed the district court, finding sufficient evidence of those two elements in the record to support the jury's verdict. On Boyd's negligent misrepresentation claim, Tornier argued that the same limitation that Iowa law imposed on Addison's claim (limiting it to professionals whose business is to give advice) should be imposed on Boyd's (which was governed by Missouri law). The Court found no Missouri case that imposed such a limitation and declined the invitation to expand state law. The Court turned to tort damages. The jury's actual damage award was based on six years of lost profits assuming a 20% annual growth rate. The Court had no difficulty with the six years of lost profits, even though the distributorship contracts were of a one-year duration. Both Missouri and Iowa allow tort damages beyond a contract term if there is an ongoing relationship. There was sufficient evidence of that relationship in the record for the jury's finding. On the other hand, the assumed 20% growth rate was not supported by anything other than conjecture and hope. The Court remanded for further damage calculation. Finally, the Court addressed the punitive damage award. An award of punitive damages requires a showing of actual or legal malice. It found that Tornier's behavior, although tortious, was not vindictive or so outrageous as to meet the punitive damages standard.

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ORTIZ v. WEBSTER (August 24, 2011)

Shortly after Arboleda Ortiz was incarcerated in the Terre Haute federal prison, an ophthalmologist diagnosed him with a pterygium, a thin film covering the eye, and recommended surgery. The prison denied the request. Someone wrote on the request "NO TOWN TRIPS." Over the next few years, two other doctors concurred with the surgery recommendation while a fourth doctor concluded that the condition was not serious enough for surgery. Dr. Thomas Webster, the prison medical director, reviewed Ortiz’ file and concluded that surgery was not medically necessary, but that it might be required within two years after further evaluation. Ortiz filed suit in 2005 under Bivens, alleging that Dr. Webster was deliberately indifferent to his medical needs. Ortiz eventually got the surgery while his lawsuit progressed. The district court originally granted summary judgment to Webster. On appeal, the Seventh Circuit reversed and remanded, identifying several fact disputes: a) the seriousness of Ortiz’ condition, given the several surgery recommendations, b) Dr. Webster's motivation, given that his stated reason for denying surgery was contrary to the medical record, and c) whether the "NO TOWN TRIP" reflected a prison policy against off-site trips for death row inmates. On remand, the author of the "NO TOWN TRIP" explained it away and Dr. Webster presented evidence that there was no prison policy against off-site medical treatment. Dr. Webster also presented expert testimony that his treatment was within the standard of care because surgical removal of the film is not necessary until there is corneal distortion. Judge McKinney (S.D. Ind.) granted summary judgment to Dr. Webster. Ortiz appeals.

In their opinion, Seventh Circuit Judges Bauer, Manion, and Kanne (dissenting) vacated and remanded. In order to prevail on summary judgment, Ortiz had to show both that his condition was objectively serious and that Dr. Webster knowingly disregarded it. The Court had no difficulty concluding that, at a minimum, there was a fact dispute as to whether the condition was objectively serious. The Court also concluded that Ortiz presented sufficient evidence to get to a jury on the deliberate indifference element. First, construing the evidence in Ortiz' favor, the conditions identified by the expert as requiring surgery actually existed when Dr. Webster refused surgery. Second, even when Dr. Webster refused surgery, he indicated the need for further evaluation and the possibility of the need for surgery within two years. But no further evaluation took place within the next two years. A jury could conclude that Dr. Webster's inaction unreasonably delayed the necessary surgery. Finally, the Court noted that the expert opinion that surgery was not necessary did not resolve the fact dispute -- it merely added one more opinion on the no-surgery side of the debate.

Judge Kanne dissented, taking issue with the majority’s treatment of the deliberate indifference prong. He pointed out that deliberate indifference in a medical context is especially hard to prove. A difference of opinion about a condition’s proper treatment is not enough. Judge Kanne saw nothing either in Dr. Webster's initial review of the file or his later treatment, even taking the facts in a light most favorable to Ortiz, that rose to the level of deliberate indifference.

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EVERETT v. COOK COUNTY (August 24, 2011)

Cook County, Illinois faced a severe budget crisis in 2006. The County President instructed the Chief of the Bureau of Health to submit budget cut recommendations. One of the Bureau of Health functions was the Cermak Health Services, which provided medical and dental services to Cook County Jail inmates. The budget team identified Cermak’s dental program as a good source of some budget cuts. The Bureau Chief agreed to a recommendation that reduced the number of dentists from five to one. In deciding whom to keep among the five, the County looked for management experience, flexibility, productivity, and skills. The County ultimately chose Dr. Ronald Townsend as the dentist who best met those criteria. One of the five dentists who was not chosen was Dr. Carol Everett, a Caucasian woman who had been with Cermak for almost 25 years. Dr. Everett filed an appeal, which was denied. Everett filed suit under Title VII, alleging ethnicity discrimination, and under § 1983 and the Shakman decree, alleging political discrimination. Judge Kendall (N.D. Ill.) granted summary judgment to the County. Everett appeals.

In their opinion, Seventh Circuit Judges Kanne, Evans (who, due to his death, did not participate in the decision), and Sykes affirmed. The Court first addressed and rejected Everett's spoliation argument that the County destroyed certain documents containing notes concerning the layoffs. First, she did not identify any evidence of bad faith, a requirement before a negative inference is imposed. Second, the record does not support a conclusion that the documents were destroyed to eliminate adverse evidence. On the merits, the Court first addressed her political activity discrimination claim, in which she alleges that the decision to retain Everett was due to his political donations. The Shakman decree and the First Amendment prohibit firing an employee for political reasons. Under both theories, however, the plaintiff must show a causal relationship between the employment decision and the political considerations. Everett relied on procedural irregularities in the process to establish that causal relationship. The Court concluded, however, that her evidence was insufficient to establish such a relationship. Even if such a relationship had been established, however, Everett would still fall short because there is no evidence in the record that the decision-makers were aware of the political activity -- or lack thereof -- of either Everett or Townsend. The Court turned to the ethnicity discrimination claim. It concluded that Everett failed to show pretext. Although she provided some evidence of her possible superiority to Townsend in some areas, it was insufficient to show that the reasons the County gave for selecting Townsend were suspect. At most, they could show that the County made a hurried, poorly researched, and possibly poor decision. That is not enough to show pretext.

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MADDOX v. LOVE (August 24, 2011)

The Illinois Lawrence Correctional Center is a medium-security adult prison facility in Sumner, Illinois with approximately 2,000 inmates. Those inmates proclaim numerous different religious affiliations (46 as of May 2009). When Mannie Maddox arrived as an inmate in early 2004, he was a member of the African Hebrew Israelite (AHI) faith. AHI was one of the 17 religious affiliations for which Lawrence offered regularly scheduled services. Maddox attended services for about six months, until they were terminated. Maddox filed a grievance, asserting a denial of his right to exercise his religion. The prison denied the grievance on the grounds that Lawrence canceled the services for budgetary reasons. Maddox appealed the decision through two more stages of review without success. The prison chaplain also denied Maddox’ request to allow the AHI inmates to meet without a formal service. The prison requires that such meetings be supervised and the chaplain's schedule could not accommodate another religious gathering. Maddox filed a § 1983 complaint against the chaplain and the prison wardens alleging violations of his First and Fourteenth Amendment rights. Judge Gilbert (S.D. Ill.) restructured the pro se complaint into four counts. He dismissed for failure to state a claim the counts relating to discrimination in the allocation of the prison budget. He granted summary judgment on the two counts alleging failure to provide reasonable access to religious materials and failure to provide worship services, concluding that Maddox failed to exhaust his administrative remedies. Maddox appeals.

In their opinion, Seventh Circuit Judges Sykes, Tinder, and Hamilton affirmed in part and reversed and vacated in part. The Court first addressed its jurisdiction, since the district court dismissed the two counts on exhaustion grounds without prejudice. Normally a dismissal without prejudice would preclude appellate jurisdiction. Here, however, Maddox cannot cure the complaint’s defects. That makes the decision a final judgment for appellate jurisdiction purposes. On the merits, the Court first addressed the free exercise and religious discrimination counts. The Court understood the district court's dismissal of these counts, as they were restructured, given the principle that prisons need not provide identical resources to every faith within the prison population. An allegation of a disproportionate allocation of resources does not state a claim. The Court did find fault, however, with the district court's restructuring of Maddox' allegations and explored the substance of those allegations. Maddox alleged a disproportionate allocation of resources to other religions, a singling out of AHI for budget cuts, and refusal to pursue alternatives for AHI members. The Court found that those allegations did, in fact, state a claim for relief. Prisons cannot discriminate against particular religions. Although it is premature to conclude that they did here, Maddox is allowed to make his case. The Court turned to the access to religious materials claim. Since Maddox concedes that he did not grieve that complaint, the Court concluded that the district court properly dismissed that count. Finally, on the group worship claim, the district court dismissed because Maddox failed to exhaust administrative remedies. He did not name the individuals he complained of, as required by the then-current Illinois Administrative Code. The Court disagreed. First, prison officials never raised this procedural infirmity during any of the three grievance stages. Instead, they rejected the grievance on the merits at each stage. When the prison addresses a grievance on the merits without addressing any procedural defect, the grievance has obviously served its purpose in notifying prison officials of the prisoner's complaint. They cannot later rely on that procedural defect to make out an exhaustion defense. Second, the procedural infirmity here was caused by prison's own error. Maddox was given a form that complied with a prior version of the administrative code. It did not require the same degree of factual particularly as did the code in effect at the time of the grievance. Maddox provided all the information that was requested on the grievance form.

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SIERRA CLUB v. KHANJEE HOLDING (US) (August 24, 2011)

Franklin County Power wanted to build a coal power plant in southern Illinois. It applied to the Illinois Environmental Protection Agency for a permit in 2000. The EPA issued the permit. By its terms, the permit would become invalid if construction was not commenced within 18 months. Khanjee Holding became lead developer for the project in 2002. The project was delayed due to collateral disputes. In late 2004, the EPA determined, at least on a preliminary basis, that the permit had expired. Sierra Club filed suit to prevent construction of the power plant. The district court granted the motion for summary judgment and enjoined construction. The Seventh Circuit affirmed (opinion and intheiropinion), concluding that Sierra Club had standing to sue, that the defendants failed to commence construction within the required 18 months, and that the permit had expired. Sierra Club sought penalties and fees in the district court. Judge Gilbert (S.D. Ill.) imposed a $100,000 statutory penalty and awarded attorneys fees and costs. Khanjee appeals.

In their opinion, Seventh Circuit Judges Bauer, Ripple, and Williams affirmed. The Court first addressed Khanjee's challenge to subject matter jurisdiction under the Clean Air Act. It noted that it had decided the jurisdictional issue in the first appeal and that it had become the law of the case. It rejected Khanjee's argument that the doctrine did not appy to subject matter jurisdiction, although it recognized some earlier precedents that suggested as much. On the merits, the Court concluded that Khanjee had waived its constitutional violation claims and was left only with its claim that its relationship with the other original defendants was insufficient to support a penalty. The Court rejected that argument both on the law of the case doctrine and, alternatively, on the merits. Even if, as Khanjee argues, the Claim Air Act citizen suit provision allows an action only against an owner or operator, Khanjee exercised enough control over the project that it can be considered an owner or operator. With respect to the size of the penalty, the Court concluded that the district court considered all the appropriate factors and imposed a reasonable penalty. Finally, the Court found that the district court did not abuse its discretion in awarding fees and costs. It rejected Khanjee’s argument that a court should not award fees to "well-funded" parties.

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PURCELL v. UNITED STATES OF AMERICA (August 23, 2011)

In January of 2008, Christopher Purcell was serving as a hospital corpsmen in the United States Navy stationed at the Brunswick Naval Air Station. Purcell had experienced social and emotional problems since his enlistment a few years earlier. Base personnel received a notification on January 27 that he had a gun and was suicidal. Government law enforcement officers responded and arrived at his on-base residents. He was alive. Although the officers found a gun case and ammunition, they did not locate a weapon. They handcuff Purcell but removed the handcuffs to allow him to use the bathroom. While in the bathroom, Purcell shot and killed himself with a gun that he had hidden in his waistband. Michael Purcell, Christopher's father, brought a wrongful death action against the United States under the Federal Tort Claims Act. Judge Lefkow (N.D. Ill.) dismissed the complaint pursuant to Feres, which shields the government from FTCA liability when the injuries complained of "arise out of or are in the course of activity incident to service." Purcell appeals.

In their opinion, Seventh Circuit Judges Bauer, Flaum, and Evans (who, as a result of his death, did not participate in the decision) affirmed. The Court began by noting the controversy and dissension surrounding the Feres doctrine but also noting that a Supreme Court majority reaffirmed the doctrine the last time it addressed it. At that time, the Supreme Court identified three rationales for the doctrine: a) to need to protect the government-Armed Forces relationship, b) the availability of a statutory compensation scheme, and c) the need to avoid interference with internal military affairs. The fundamental question under Feres is whether the injury at issue "arose out of activity incident to military service." Applying that test, the Court concluded that the district court correctly dismissed the complaint. Citing the doctrine's "enormous breadth," the Court relied on the facts that: a) Purcell was on active duty, b) Purcell lived in on-base housing, c) Purcell was suffering from emotional problems that began after his enlistment, and d) Purcell was avoiding the military law enforcement personnel that were sent to assist him.

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INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE & AGRICULTURAL IMPLEMENT WORKERS OF AMERICA v. ZF BOGE ELASTMETALL LLC (August 19, 2011)

Prior to 2007, ZF Boge operated two manufacturing facilities in the United States. The one in Paris, Illinois was unionized. The workers were represented by the UAW. The company's second facility was in Hebron, Kentucky and was non-union. In early 2007, ZF Boge began to consider closing one facility and consolidating its operations in the other. The Paris plant manager approached the UAW and requested renegotiation of several provisions of the Collective Bargaining Agreement then in effect. The request was couched in terms of maximizing the long-term viability of the Paris facility. The company and the Union reached an agreement in mid-2007. The agreement took the form of a chart, with the CBA provisions in one column and the negotiated amendments in another. The agreement provided that the changes would not take effect unless Paris became the surviving facility and that, if it did not, it would continue to operate under the original CBA. ZF Boge announced its decision to close the Hebron facility and to consolidate its operations at the Paris facility. Before the consolidation was complete, ZF Boge and the UAW began to negotiate a new CBA, since the then-current one was due to expire in April 2008. The parties were unable to agree on a new CBA. The UAW members went on strike. ZF Boge reversed its decision and closed the Paris facility, consolidating its operations in Kentucky. The Union filed an action pursuant to § 301 of the Labor Management Relations Act, alleging that ZF Boge breached the midterm agreement. It sought damages and specific performance. Chief Judge McCuskey (C.D. Ill.) granted summary judgment to ZF Boge, concluding that the midterm agreement was a CBA modification that expired with the CBA in April 2008. The UAW appeals.

In their opinion, Seventh Circuit Judges Ripple, Kanne, and Sykes affirmed. The Court recited several familiar rules of contract construction: contract interpretation is normally a matter of law, CBAs are interpreted like other contracts, the starting point is the contract's language, and a document should be read as a whole with consideration to its structure. The Court found the contract's structure very significant in interpreting its meaning, particularly given that it had no independent expiration date. It was clear to the Court that the chart simply listed those CBA terms that were modified, identifying the original and amended approaches. It clearly was not meant to modify any unidentified terms, including an expiration date. The fact that the contract precluded any renegotiation of the amended terms in a future CBA is not inconsistent with that conclusion. The Court therefore concluded, as did the district court, that the midterm agreement was a CBA modification that did not change the expiration date. The Court also rejected the UAW's view that, even if the amendment expired, it created some vested rights. Although the Court acknowledged that a contract can create obligations that survive its expiration, it noted that courts are reluctant to interpret contracts that way without clear language illustrating the intent of the parties. It found no such clear language in the midterm agreement. Finally, the UAW presented extrinsic evidence in an effort to show that there was a latent ambiguity in the contract. The Court found the proffered evidence insufficient to create such an ambiguity.

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ANCHORBANK v. HOFER (August 18, 2011)

Clark Hofer was an AnchorBank employee. Through his employer, he had an individual 401(k) account. One of the investment options in the account was the AnchorBank Unitized Fund, which consisted of cash and AnchorBank stock. In late 2008 and early 2009, Hofer and two colleagues, also bank employees, engaged in trades in the Fund. AnchorBank and the Trustee of the Fund brought suit against Hofer, alleging violations of Sections 9(a) and 10(b) of the Securities Exchange Act of 1934, Wisconsin securities law, and common law claims for breach of fiduciary duty and unjust enrichment. Magistrate Judge Crocker (W.D. Wis.) dismissed the complaint with prejudice. He concluded that plaintiffs failed to meet the loss causation pleading requirements. Plaintiffs appeal.

In their opinion, Seventh Circuit Judges Manion, Wood, and Williams reversed and remanded. The only issue on appeal was the sufficiency of the complaint. The Court noted that plaintiffs had to satisfy the Federal Rules of Civil Procedure 8(a) and 9(b) general pleading requirements, the Securities Exchange Act of 1934 sections 9(a) and 10(b) pleading requirements, and the Private Securities Litigation Reform Act pleading requirements. The Court concluded that plaintiffs satisfied the Rule 8(a) short and plain statement requirement and the Rule 9(b) fraud with particularity requirement. With respect to the latter, the Court noted that the complaint described the setup of the Fund, how it bought and sold stock on the open market, how it maintained its cash-to-stock ratio, how Hofer and his colleagues used their knowledge of Fund practices to buy and sell in ways that affected the price of the underlying stock, and how Hofer and his colleagues enjoyed extraordinary gains in doing so. The Court turned to the pleading requirements of the Securities Exchange Act and the PSLRA. On appeal, Hofer asserts that the complaint failed to adequately allege scienter, reliance, economic loss, and loss causation. The Court disagreed. It summarized the particular allegations of the complaint and found each of the elements adequately alleged. It noted that Hofer had competing explanations for his conduct that could affect scienter and reliance -- but rejected the assertion that they justified dismissal of the complaint. The Court also conceded that general economic conditions could have contributed to the dramatic decline in the value of AnchorBank stock. A plaintiff need not allege or prove that its entire loss is the result of the defendant's conduct -- only that it is a plausible cause of some of the loss.

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SROGA v. WEIGLEN (August 18, 2011)

Chicago Police officers arrested Kevin Sroga 13 times between November 2003 and January 2008. Three are at issue on this appeal. First, he tried to stop a City employee from towing his car. A crowd gathered and a police officer instructed him to stand down. Instead, he jumped on the car as it was being towed away and was arrested for disorderly conduct. Second, only months later, he found himself in another confrontation with a City employee ready to tow one of his cars. This time, he got into the car and ignored repeated police requests to get out. One of the officers on the scene noticed a Chicago Police Department ticket book in yet another Sroga vehicle. He was arrested on suspicion of theft. Third, a year or so later, he was arrested for criminal trespass to "state-supported" land. He was taking a shortcut through a police station parking lot that was marked with signs that said "Parking Police Personnel Only." He brought suit against the City pursuant to § 1983, asserting that each of these three arrests was an unreasonable seizure. Judge Guzmán (N.D. Ill.) granted summary judgment to the defendants. Sroga appeals.

In their opinion, Seventh Circuit Judges Posner, Kanne, and Hamilton affirmed. The Court addressed each of the three arrests in turn. With respect to the first arrest, the Court noted that disorderly conduct is not particularly well-defined. One of its definitions is to provoke a "breach of the peace." The Restatement (Second) of Torts defines breach of the peace as an offense "likely to cause an immediate disturbance of public order." The Court concluded that jumping on a moving car being towed away fit that description. The Court rejected Sroga's argument that a police bulletin warning officers that courts typically throw out disorderly conduct cases when the complaining witness is a police officer amounted to some limitation on this arrest. With respect to the second arrest, the Court found probable cause that Sroga exercised control over the ticket book knowing that it was not his and without any effort to return it to its rightful owner. The fact that Sroga may have had an explanation for the ticket book’ presence (which the Court doubted) did not negate probable cause. As an aside, the Court added that Sroga could have been charged at either of the first arrests with resisting or obstructing the performance of a police officer in that he disobeyed lawful orders in both cases. Even though the charge was not identified by the officers at the time, it would have defeated his claims of unreasonable seizure. The Court turned to the third arrest for criminal trespass. Here, the Court concluded that the police did not have probable cause to arrest Sroga merely for crossing the parking lot. In order to make out a charge of trespass on state-supported land, there must be some indicia (a fence or signs) that put the public on notice that their entry is forbidden. The only signs here referred to the parking of cars. But the Court did find that Sroga's conduct in the parking lot, where he looked into several police cars and struck up a conversation with an officer, did give police probable cause to believe that Sroga was interfering with the lawful use of the land. The Court added that Sroga could not have been convicted of the offense since notice is a requirement -- and the notice was insufficient. Two officers stated that they thought the signs provided adequate notice and the Court found those understandings, although incorrect, not so unreasonable as to defeat probable cause.

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IN RE: AQUA DOTS PRODUCTS LIABILITY LITIGATION (August 17, 2011)

Aqua Dots are small, colored beads that can be fused into different shapes when sprayed with water. Moose Enterprises contracted with a Chinese company to produce the beads. The Chinese company substituted a toxic chemical for a specified one. As a result, some children became sick. Spin Master, Aqua Dots’ distributor, recalled the product once it learned of the problem. The recall notice advised parents to keep the toy away from children and to contact either Spin Master or the retailer (stores like Wal-Mart and Target) for a replacement or exchange. Although the notice did not mention a refund, both Spin Master and the retailers generally honored refund requests. Over 3 million of the toys were removed from the distribution channel before sale and approximately 600,000 of the 1 million or so that were sold were returned. Notwithstanding the recall notice and the returns, a group of plaintiffs whose children were not harmed and who did not ask for a refund brought suits. The suit sought full refunds and punitive damages and were based on the Consumer Products Safety Act as well as express and implied warranties and state consumer protection statutes. The Judicial Panel on Multidistrict Litigation transferred a number of suits to the Northern District of Illinois for consolidated pre-trial proceedings. Judge Coar (N.D. Ill.) denied class certification. He concluded that the plaintiffs would be better off following the recall procedure than pursuing litigation. Therefore, the class action was not a superior method of "adjudicating the controversy" as required by Rule 23(b)(3). Plaintiffs appeal.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Rovner and Sykes affirmed. The Court first rejected the defendants' argument that plaintiffs lacked standing because there were no injuries. Conceding that there were no physical injuries, the Court nonetheless pointed out that the plaintiffs suffered a financial injury because they paid more for the beads than they should have. On the merits, the Court did not take issue with the district court's conclusion that a class action would be an ineffective way to resolve this dispute. It did take issue, however, with the district court's flagrant departure from Rule 23 in order to achieve its desired result. Rule 23 requires that a class action be a superior method of "adjudication." The Advisory Committee's notes to the rule illustrate that the drafters used adjudication in the legal sense. A recall is not an adjudication and the district court was wrong in considering it so. The Court reached the same result as the district court, however, by relying on Rule 23(a)(4) and Rule 23(b)(3)(D). The former requires a class representative that will "fairly and adequately" look after the class' interests. The Court concluded that a class representative who is willing to incur significant legal fees and notice fees in order to obtain a result already available to the class is not an adequate representative. The latter requires a district court to consider the difficulties in managing the class action. Here, the punitive damages claim rests on state law, which may differ from state to state. In addition, with no purchaser records, notice costs might exceed the price of the beads. The district court did not err in denying class certification.

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HICKS v. AVERY DREI, LLC (August 17, 2011)

Chance Felling owned and operated Avery Drei, LLC, a hotel management company. In 2006, Avery Drei was constructing a hotel near Indianapolis, Indiana. Lisa Hicks began working as a security guard at the hotel construction site in July of 2006. The hotel opened in October and she became a front desk clerk. During her stint as a security guard, Felling paid her in cash. Once she became a desk clerk, she received her regular wages by check. After Hicks' employment was terminated, she brought suit against Avery and Felling. She sought overtime wages and accrued vacation pay. The case languished for several years until February of 2010, when the district court set a June 2010 trial date. In February, Hicks asked Felling and Avery to supplement certain discovery responses. The defendants failed to respond until ordered to do so by the court in May. Then, they supplemented their answers to the requests identified by Hicks and also supplemented their response to an interrogatory that asked them to identify all cash payments to Hicks. Their original response identified seven cash payments, all while Hicks was working as a security guard. Their supplemental response added six additional payments, all while Hicks was working as a desk clerk. Hicks moved to bar any evidence of the additional payments, claiming the late notice was “trial by ambush.” The district court denied the request. At trial, Judge Magnus-Stinson (S.D. Ind.) granted a directed verdict on the vacation pay claims and on the security guard part of her overtime claim. The jury returned a verdict against Hicks on the desk clerk part of her overtime claim. At Hicks' request, the court waived transcription fees relating to the overtime claim but refused to waive with respect to that portion of the record relating to the vacation pay claim. Hicks appeals.

In their opinion, Seventh Circuit Judges Cudahy (concurring in part and concurring in the judgment), Flaum, and Kanne affirmed. On appeal, Hicks challenges the directed verdict on the vacation pay claim, challenges the partial directed verdict on the security guard overtime claim, and challenges the district court's refusal to exclude the evidence of additional cash payments. The Court concluded that the vacation pay claim was frivolous. Hicks admitted that she and Felling had an agreement that she would earn vacation time only after she had worked for a year. Her contention that Indiana law requires pro-rata vacation pay from day one in the absence of a written company policy to the contrary is simply wrong. Any agreement to the contrary, which is admittedly present here, is sufficient. The Court turned to the cash payment evidence. It noted that it would normally review such a ruling for abuse of discretion. Here, however, Hicks did not provide transcripts of the argument or ruling on the motion in limine. Without a meaningful basis on which to review the ruling, the Court concluded that Hicks forfeited her challenge. It also chose not to conduct a full plain error review, since it could identify no prejudice -- no extraordinary circumstances -- no miscarriage of justice. The Court turned to the security guard overtime claim. In order to prevail, Hicks had to prove that her employer was covered by the Fair Labor Standards Act. The district court concluded that she was "engaged in commerce" while a desk clerk, and therefore covered by the Act, but was not while working as a security guard. Hicks argued that she was covered because Felling's operation of several businesses made him an "enterprise engaged in commerce" under the Act. The test for enterprise coverage is that the businesses must be engaged in related activities, under a unified operation, have a common business purpose, and engage in $500,000 of business annually. The district court found that Hicks’ proffered common business purpose -- a profit motive -- did not satisfy the Act's requirements. The Court noted that Hicks advanced a different theory on appeal. It found that argument forfeited. With respect to the profit motive argument, the Court agreed with the district court that it was not enough to amount to enterprise coverage. Finally, the Court rejected the argument that the jury should have been allowed to decide whether Felling Hotels had earnings above the $500,000 threshold because Felling testified that it was possible. Felling Hotels was not a defendant, Felling Hotels was not her employer, and Hicks presented no affirmative evidence of its gross revenue.

Judge Cudahy thought that Felling’s admission against interest that Felling Hotel could have had revenue exceeding $500,000 should have been enough to avoid the directed verdict. But since Hicks never explained how Felling Hotels being subject to the FLSA related to the defendants’ liability, he concurred in the result.

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FLOREK v. VILLAGE OF MUNDELEIN, ILLINOIS (August 16, 2011)

After successfully completing a controlled marijuana buy at a Mundelein, Illinois apartment, the police obtained a search warrant. They executed the warrant late in the evening of December 7, 2004. Linda Florek and her son lived in the apartment (apparently, the son’s friend was the marijuana seller). Florek arrived home from work at approximately 10:00 p.m., at which point she enjoyed a marijuana cigarette. The police arrived at approximately 10:20 p.m. According to the police, they knocked and announced their presence and broke down the door after about 15 seconds without a response. The apartment still smelled of marijuana. Florek admitted to the police that she had hidden some marijuana upon their arrival. Florek and her son were handcuffed and kept in the living room during the one-hour search. The parties disagree about what happened next. According to Florek, she asked if she could take some baby aspirin because she was experiencing chest pains and thought she might be experiencing a heart attack. After the police rejected her request, she asked for an ambulance. The police told her to wait until they got to the police station. Florek also claims she told police she was having a heart attack before being placed in the van for transportation to the police station. According to the police, Florek did ask for a baby aspirin and they denied the request because of police policy that only physicians administer medication. Instead, they offered to summon paramedics if she needed help. She refused. The police concede that Florek complained about the choice of transportation to the police station but assert that she did not tell them of any chest pains until they were on their way. They immediately radioed for assistance and met an ambulance when they arrived at the police station, minutes later. Florek was taken to the hospital, where physicians confirmed that she had suffered a heart attack. Florek filed suit against the Village and individual police officer Hansen, alleging that: a) the denial of her request for baby aspirin was an unreasonable seizure, b) that the refusal to call an ambulance was an unreasonable seizure, and c) that the police's failure to wait a reasonable time after the knock and announce amounted to an unreasonable search. Magistrate Judge Valdez (N.D. Ill.) denied summary judgment on the knock and announce and ambulance claims and granted summary judgment to the defendants on the aspirin claim on qualified immunity grounds. At trial, after the close of plaintiff's case, the court directed a verdict for the Village. After trial, the jury found against Florek on the remaining claims. Florek appeals.

In their opinion, Seventh Circuit Judges Flaum and Sykes and District Judge Conley affirmed. The appeal raised three challenges: the summary judgment on the aspirin claim, the directed verdict for the Village, and the exclusion of an expert on the knock and announce claim. The Court rejected each. It first addressed the qualified immunity on the aspirin claim. The qualified immunity analysis involves two questions: whether there is a constitutional deprivation and whether the right at issue was clearly established at the time. If either question is answered no, the defendant is entitled to qualified immunity. Although the magistrate judge found qualified immunity by answering the clearly established prong in the negative, the Court affirmed by answering the deprivation prong in the negative. In the medical needs context, a seizure is unconstitutional if an arresting officer does not respond reasonably considering the totality of the circumstances. Here, the Court criticized the way the case was litigated in the district court. Since the aspirin claim and the ambulance claim were, in fact, both part of the same arrest and both were included in the totality of circumstances, they should have been presented as one claim. Nevertheless, the Court addressed the aspirin claim as a distinct claim. The Court considered the four Williams factors: the officer's notice of a medical need, the seriousness of the need, the requested treatment, and any police interests. Here, the officers were not on notice of a serious medical condition, the requested treatment was minor, the police were conducting a search for illegal drugs, and the officers summoned an ambulance when they were on notice of a serious medical condition. Therefore, the Court concluded that the officer was entitled to summary judgment on the aspirin claim. Florek’s only argument with respect to the directed verdict for the Village also related to the aspirin claim. Given the court's resolution of the individual claim, the directed verdict was appropriate. On the knock and announce claim, Florek presented expert testimony to the effect that no reasonable officer would expect a response from an apartment’s resident within 15 seconds at that time of night. The magistrate judge excluded the evidence on the grounds that the subject matter was within a layperson’s normal comprehension. Evidence Rule 702 requires that expert testimony "assist the trier of fact" in determining a fact issue. That generally means that the expert must have some specialized knowledge or experience that will help the trier of fact understand the testimony’s subject matter. Here, the Court concluded that the magistrate judge did not abuse her discretion in excluding the testimony. In some circumstances, expert testimony might be helpful in determining whether officers waited a reasonable time before forcefully entering a residence. A witness with expertise in law enforcement might offer testimony about how drugs are disposed of or what dangers await police officers in such a situation. But testimony about how long it would take a person to answer the door late at night is within the everyday experience of a layperson.

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LADY DI’S, INC. v. ENHANCED SERVICES BILLING, INC. (August 16, 2011)

Enhanced Services Billing and ILD Telecommunications are what are known as "billing aggregators." They are, in essence, the middleman between telephone companies and service providers. Service providers are vendors that provide services, sometimes related to telecommunications and sometimes not, to individuals and businesses. They use billing aggregators to process and transmit the costs of the services to their customers on the customer’s telephone bill. Lady Di's is a small Indiana business run by Dianne Markin-Venn. AT&T is its telephone company. In 2008, both ESBI and ILD placed charges on Lady Di’s AT&T bill. Lady Di’s filed suit, alleging unjust enrichment and a violation of Indiana's Deceptive Commercial Solicitation Act. It alleged that the charges were all unauthorized. Judge Barker (S.D. Ind.) granted summary judgment to the defendants. Lady Di’s appeals.

In their opinion, Seventh Circuit Judges Rovner and Hamilton and District Judge Lefkow affirmed. Lady Di’s case arises out of Indiana's attempts to control cramming, which is the practice of charging telephone customers for unauthorized services. The Indiana General Assembly passed a statute the provided that a customer could not be billed for unauthorized services. The Indiana Utility Regulatory Commission promulgated a rule that required certain telecommunications providers to maintain several kinds of documentation before charging a customer for a service. The regulation only applies to primary inter-exchange carriers, local exchange carriers, and their billing agents and does not provide a private cause of action. Although the plaintiff originally alleged that the charges were actually unauthorized, defendants brought forth evidence that the services were authorized. Notwithstanding the facts that Lady Di’s authorized the services and that the regulation provided no private cause of action, Lady Di’s asserts its claims for unjust enrichment and Deceptive Commercial Solicitation Act. The Court rejected the arguments. First, the Court concluded that ESBI and ILD were not subject to the regulation because they were not billing agents for a primary inter-exchange carrier or a local exchange carrier. The undisputed facts show that they were neither authorized nor retained to act on these carriers’ behalf. In fact, the local carrier charged these defendants a fee for using its monthly billing system to collect on behalf of itself and its service providers. Second, even if ESBI and ILD were subject to the regulation, they would still be entitled to summary judgment on the unjust enrichment claim. Unjust enrichment requires that the defendant’s retention of a benefit be unjust. Here, Lady Di’s ordered the services for which it was charged. The Court concluded that an Indiana court would not extend the theory of unjust enrichment to such a case. Third, even if ESBI and ILD were subject to the regulations, they would be entitled to summary judgment on the Deceptive Commercial Solicitation Act claim. The statute, on its face, applies to the act of billing for services not yet ordered. Lady Di’s ordered the services in question -- the statute simply does not apply.

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CARTER v. PENSION PLAN OF A. FINKL & SONS COMPANY FOR ELIGIBLE OFFICE EMPLOYEES (August 15, 2011)

A. Finkl & Sons is a large, Chicago-based steel company. Until 2006, it offered its employees a defined benefit pension plan. It was then that it decided to terminate the Plan. Because the plan was an ERISA-qualified plan, the termination process was rather complicated and involved many steps. Finkl began the involved process, after receiving permission to do so from the Pension Benefit Guarantee Corporation. The Plan notified the employees of the termination and adopted Amendment 1, which provided that all Plan participants, even current employees, could elect to receive their pension benefits as an immediate annuity upon Plan termination. The Plan even distributed election forms for employees to indicate whether they wanted an immediate annuity or wait for retirement. Ultimately, Finkl decided not to terminate the Plan. It advised its employees and the PBGC of that decision. The PBGC approved the company's actions and the Plan adopted Amendment 2, which deleted Amendment 1. A group of employees demanded that the Plan go ahead with the termination and distribution and also demanded that the Plan revise the way benefits were calculated as it related to bonuses. The plaintiffs claimed that they were unaware of the distinction between regular bonuses (which were credited to an employee’s retirement calculation) and special bonuses (which were not credited to an employee’s retirement calculation). The Plan denied both claims and plaintiffs filed suit under ERISA. Judge Pallmeyer (N.D. Ill.) granted summary judgment to the Plan. She concluded that Amendment 2 violated neither ERISA’s anti-cutback provision or the Plan’s anti-cutback clause. She also concluded that plaintiffs could not prevail on their benefit recalculation argument. Plaintiffs appeal.

In their opinion, Seventh Circuit Judges Manion, Wood, and Williams affirmed. The Court agreed with plaintiffs that ERISA prohibits a plan from decreasing beneficiaries' protected benefits. Likewise, a Plan can include a clause that protects beneficiaries' benefits. It is these "anti-cutback" provisions the plaintiffs claim were violated in this case. The Court first addressed the statutory claim. The ERISA anti-cutback clause applies only to benefits tied to a participant’s actual retirement. The Amendment 1 benefit is not tied to retirement and is therefore not protected. The Court turned to the Plan language. That language protects "pension benefits already accrued." When the Plan denied plaintiffs' claim, it concluded that Amendment 1 conferred a protected benefit only upon the Plan's termination and thus was not subject to the anti-cutback clause. The Court concluded that the Plan’s interpretation was reasonable. It also rejected plaintiffs' argument that the benefit was protected because the plan had, in fact, terminated. The Court reiterated the number of required steps in the approval process before statutory termination. The record does not support plaintiffs' conclusion. With respect to the second claim, regarding the inclusion of bonuses in the benefit calculation, the Court concluded that there was no evidence in the record creating a material issue of fact. Even if plaintiffs were unaware of the distinction used by the company, summary judgment was still appropriate.

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GOMEZ v. ST. VINCENT HEALTH (August 15, 2011)

St. Vincent Health operates a number of hospitals and health care facilities in central Indiana and employs thousands of people. Federal law obligates it to give timely notice to any qualified person who leaves it employ of his or her right to extended health insurance coverage under COBRA. St. Vincent uses a third-party administrator to manage the process of sending out these COBRA notices. To monitor and ensure its compliance with this requirement, St. Vincent also established an oversight system, pursuant to which an outside accounting firm audited its program, and a call center, where current and former employees can get benefits questions answered. Notwithstanding these safeguards, three former employees filed a class-action against St. Vincent in February of 2006 alleging that many employees received their COBRA notices late or not at all. St. Vincent conducted an internal investigation and concluded that over 200 individuals in the preceding 21 months failed to receive timely notices. It provided notices to each of those individuals, allowed a retroactive benefits selection, and even offered a payment plan if the individual had trouble becoming current with premium payments. Meanwhile, the district court declined to certify the class for several reasons, including inadequate class counsel, and granted summary judgment to St. Vincent on the individual claims. The plaintiffs filed an appeal, but later withdrew it. Undaunted, plaintiffs' counsel solicited new class representatives from information it acquired in the first case and filed a new, almost identical, class action. The two named plaintiffs are Blanca Gomez and Joan Wagner-Barnett. Gomez received her COBRA notice 17 months late but she testified that she would not have elected to extend her benefits. Wagner-Barnett also received notice 17 months late, testified that she would have extended coverage, and contends that she incurred almost $1000 in out-of-pocket expenses that she would not have otherwise incurred. Judge Barker (S.D. Ind.) denied class certification on inadequacy of counsel grounds. On the individual claims, the district court concluded that the circumstances did not warrant a statutory penalty, that Gomez suffered no damage since she would not have elected extended coverage anyway, and awarded Wagner-Barnett $396 in damages, the difference between her out-of-pocket prescription costs and the premium she would have paid. Gomez and Wagner-Barnett appeal.

In their opinion, Seventh Circuit Judges Cudahy, Kanne, and Tinder affirmed. The appeal raises three issues: the amount of Wagner-Barnett’s damages, the propriety of a statutory penalty, and class certification. The Court first questioned the propriety of any damages. ERISA’s enforcement provision does not authorize compensatory damages -- only equitable relief and "such other relief" as is proper. Here, the district court followed a practice used by other district courts (and at least condoned by Courts of Appeals) to include, as "such other relief," a party's medical expenses less the premiums that would have been paid. Although "reticent" to condone such an approach, the Court found no error. The amount was small, it did not contradict ERISA’s plain language, and St. Vincent did not appeal on that ground. With respect to Wagner-Barnett’s request for additional medical expenses, the Court concluded that the district court did not abuse its discretion in denying those expenses. The Court turned to statutory penalties. Under the statute, the district court could have imposed as much as $110 a day in statutory penalties. The Court found no error in the district court's approach. It considered the right factors, including any prejudice to the former employee and the nature of the company’s conduct. There is no evidence of bad faith or gross negligence on the part of St. Vincent. Furthermore, there is no evidence of any prejudice to the plaintiffs. When same Vincent discovered its noncompliance, it contacted the former employees, provided notice, allowed for a retroactive election, and even offered a payment plan to catch up on the unpaid premiums. Finally, the Court turned to the class certification issue. Again, it found no error. It noted that counsel did not even address much of the district court's rationale with respect to his diligence, respect for judicial resources, and promptness. 

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CITY OF YORKVILLE v. AMERICAN SOUTHERN INSURANCE COMPANY (August 12, 2011)

Ocean Atlantic Services was the real estate developer for the Westbury East Village subdivision in Yorkville, Illinois. Yorkville required Ocean to include certain public improvement projects in its plan, which would eventually be turned over to Yorkville. It also required Ocean to post a bond to ensure completion of the improvements. Ocean obtained a number of bonds from American Southern Insurance Company. Ocean ran into financial difficulties and was unable to complete the project. Several subcontractors, including Aurora Blacktop Incorporated, went unpaid. The City of Yorkville made a demand on American Southern. American Southern refused the demand but Yorkville did not pursue the matter further. Aurora filed suit against American Southern in the name of the City of Yorkville but for its own benefit. Judge Darrah (N.D. Ill.) concluded that Aurora had no standing to assert a claim on the bonds and dismissed the complaint. Aurora appeals.

In their opinion, Seventh Circuit Judges Rovner, Williams, and Hamilton affirmed. Aurora concedes it is not a party to the bonds but nevertheless asserts that is a third party beneficiary with standing to bring a claim. Relying on Illinois law and the Restatement (Third) of Suretyship and Guaranty, the Court distinguished between payment bonds and performance bonds. Illinois courts generally recognize third-party beneficiaries in the context of a payment bond, in which the surety is liable for the contractor’s promise to pay for all labor and materials. Illinois courts are less likely to find third-party beneficiary status in the context of a performance bond, where there is no promise to pay for labor and materials. The bonds at issue here contain no language suggesting that American Southern was liable to anyone other than the City of Yorkville. The district court did not err.

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JACKSON v. INDIAN PRAIRIE SCHOOL DISTRICT 204 (August 11, 2011)

Paula Jackson is a special education support teacher for Indian Prairie School District 204. Her role was to assist the classroom teachers by providing individual support for special needs students. Beginning with the 2005-2006 school year, she was assigned to the White Eagle Elementary School. For the following three school years, she had responsibility for W. K., a troubled boy prone to violence. Over those three years, she witnessed episode after episode of erratic and violent behavior. The district held Individual Education Plan meetings in April 2006, June of 2006 , September of 2006, May of 2007, June 2007, October 2007, and March 2008. By the early 2007 meetings, Jackson recommended that the W.K. be transferred. Jackson also requested that he be reassigned to a different support teacher. Before either of those things happened, W.K. had another outburst. The school principal calmed him down and instructed Jackson to meet with him. When she arrived at his room, he swung a chair at her. In the ensuing struggle, she fell and was injured. W.K. was suspended and never returned to White Eagle. Jackson brought suit against the school district and several administrators pursuant to § 1983, alleging a substantive due process violation. Judge St. Eve (N.D. Ill.) granted summary judgment to the defendants. Jackson appeals.

In their opinion, Seventh Circuit Judges Bauer, Posner, and Williams affirmed. The Court noted the two exceptions to the general rule that the due process clause does not impose a duty on a state to protect individuals from harm by private actors. One is when the state has custody over a person, which is not applicable here. The other, on which Jackson bases her claim, is when the state affirmatively places a person in danger. Under that exception, a plaintiff must establish that the defendant affirmatively created or increased the danger, that her injuries were the proximate result of the defendant's failure to protect her, and the failure to protect her "shocks the conscience." The Court resolved the case on that third prong. Although the "shocks the conscience" standard is not precisely defined, the Court noted that it requires conduct on the "more culpable end of the tort law spectrum of liability." The Court recited the facts that supported a finding of such conduct and those that supported the opposite conclusion. Although admitting that it was a close call, the Court concluded that they did not satisfy the due process standard.

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SULLIVAN v. CUNA MUTUAL INSURANCE SOCIETY (August 10, 2011)

CUNA Mutual Insurance Society maintains a retiree health care plan. CUNA contributed half the annual premium, the retirees contributed the other half. Beginning in 1982, CUNA calculated the value of each retiree's unused sick-leave and allowed retirees to use that to "pay" their share of the annual premiums. Although management employees had no other options, retirees who had been covered by collective bargaining agreements could choose to take the sick-leave value in cash. In 2008, CUNA amended its plan. It stopped its own contributions to the annual premiums. The retirees were liable for 100% of the premiums. It also discontinued its unused sick-leave credit program for management. For those retirees who could have taken their sick-leave credit in cash were treated as having done so and invested that value in an account administered by the health care plan. Four retired management employees and one retired non-management employee filed a class action pursuant to ERISA. Judge Crabb (W.D. Wis.) entered judgment on the pleadings to CUNA and the Plan. The class appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Manion and Hamilton (dissenting in part) affirmed. The Court noted that welfare benefit plans such as the one at issue differ from pension plans in two fundamental ways. One, they need not be funded. Two, employers can reduce or even eliminate welfare benefits altogether. In fact, CUNA inserted a clause in every version of its health care plan stating that it reserved its rights to amend or terminate the plan. The retiree class principally argued that CUNA violated ERISA by transferring assets of the plan to itself. They cite to the $120 million gain on CUNA's balance sheet when it terminated the plan. The Court disagreed. The $120 million entry did not reflect a company asset. The company carried that figure on its books to reflect its projected cost of contributions to the plan. The balance sheet merely reflected the company's removal of that liability. Alternatively, the retirees argue that the sick-leave balances, if not governed by ERISA, are governed by state law. The Court identified the same flaw with this argument -- the sick-leave balances are not assets at all. Finally, the retirees argue that the plan created vested rights, notwithstanding its reservation of rights language. They point to many documents created by the Plan that do not contain a reservation of rights. The Court was unpersuaded. The absence of a reservation of a right to amend in any particular document does not create a vested right.

Judge Hamilton dissented. He noted that, without ERISA, the retirees would have a straightforward promissory estoppel claim. CUNA made a promise. It intended its employees to reply upon that promise. The employees did rely. CUNA broke its promise and the employees were harmed. Judge Hamilton conceded, however, that ERISA preempts that result. Addressing the issue under ERISA, he concluded that the majority's test result was not mandated by ERISA’s language or Supreme Court or Seventh Circuit precedent. To the extent that courts have honored a reservation of rights clauses, he suggested they reconsider. A better approach might be a middle ground where a court could fashion an appropriate remedy under principles of promissory estoppel.

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DURAN v. TOWN OF CICERO (August 9, 2011)

Alejandro and Maria Duran threw a party at their Cicero, Illinois home to celebrate their daughter’s baptism. Close to 100 people attended. The Cicero police received two telephone complaints from neighbors. Shortly after the Cicero police responded to the second complaint, the party guests and the police exchanged heated words. Once the police actually entered the property, ostensibly to make an arrest, the verbal melee became a physical one. Seventy-eight guests claim they were physically injured and several police officers required medical treatment. The police made seven arrests but there were no convictions. The 78 injured guests brought suit against 17 police officers and the Town of Cicero pursuant to § 1983 and Illinois law. They also asserted a spoliation of evidence claim based on the police's confiscation of two video cameras, one that was returned but that did not contain any footage of the physical confrontation and one that was not returned that did contain footage of the confrontation. Before trial, Cicero stipulated to his liability under § 1983 and to its vicarious liability on the state law claims. The jury returned verdicts in favor of 23 plaintiffs, on which the court entered judgment. The court then tried to spoliation case. It excluded from that case the issue of the returned video camera, rejecting plaintiffs' theory that preventing the creation of evidence amounts to spoliation. Cicero filed a Rule 59 motion to amend the judgments pursuant because they appeared to list separate awards against both the individual defendants and Cicero for the same injuries. Judge Grady (N.D. Ill.) denied the motion. Cicero appeals the denial of the Rule 59 motion. The plaintiffs cross-appeal.

In their opinion, Seventh Circuit Judges Ripple, Manion, and Sykes vacated and remanded in part and affirmed in part. The Court first addressed Cicero's appeal. It noted the fundamental principle that a plaintiff is only entitled to one recovery for his injuries. Here, Cicero had stipulated to its liability and that issue should not have been submitted to the jury. It was -- and they were obviously confused. In addition, instructions and special verdict forms asked damages to be assessed by defendant or by claim and not for a particular injury to a particular plaintiff. A Rule 59(e) motion is a proper way to correct a manifest error of law such as this. The Court concluded that it was reasonably clear what the jury was trying to do and remanded for an amended judgment to eliminate any possibility of double recovery. The plaintiffs raise three issues on appeal: the exclusion of the videotape, the exclusion of misconduct complaints against one defendant, and the exclusion of a civil rights conviction against another defendant. First, the Court agreed with the district court that the evidence regarding the returned video camera was properly excluded. Spoliation occurs only when one fails to preserve existing evidence. Here, plaintiffs argue that the videographer would have continued recording the physical melee, creating valuable evidence for trial. That does not amount to actionable spoliation in Illinois. Second, the Court concluded that the district court did not abuse its discretion in excluding four misconduct complaints accusing one of the defendants of verbally abusing minorities. The Court noted the substantial leeway a district court has in ruling on an issue like this that requires a balancing of the evidence’s probative value with its prejudicial effect. Third, the plaintiffs sought to introduce a criminal conviction on a civil rights charge against another officer. They argued admissibility under either Rule 609(a)(1) or 609(a)(2). The Court concluded that plaintiffs forfeited their (a)(1) argument because they did not renew it at trial after the court's conditional pretrial ruling excluding it. With respect to (a)(2), the Court concluded that, although there was some evidence of an attempted cover-up, the crime with which the officer was charged and convicted did not involve dishonesty.

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DIAZ v. KRAFT FOODS GLOBAL (August 8, 2011)

Jose Diaz, Ramon Peña, and Alberto Robles were all Kraft Foods employees in 2008. Diaz and Peña were hourly employees in the shipping department. Robles was a salaried senior technician in the support services department. They all reported to the same supervisor -- Peter Michalec. Diaz and Peña complained that Michalec discriminated against Hispanics. He assigned them the hardest tasks under the most difficult conditions and scrutinized their work much more closely than non-Hispanics. They also identified a number of discriminatory remarks he allegedly made. In late 2008, Kraft announced plans to outsource its shipping department. Diaz and Peña would lose their jobs. At about the same time, Kraft posted openings for two technician and five sanitation positions. Plaintiffs never made it on the list of interested candidates for the technician position. They claim they were not allowed to apply -- Michalec asserts they the simply failed to apply. Kraft hired two non-Hispanics for those positions. Diaz and Peña were on the list for the sanitation positions. Kraft decided to fill those positions based on seniority and neither Diaz nor Peña were selected. Robles has a different complaint. He received the salary of grade 2 employee but asserts that his position is a grade 3 position. Kraft responds that his position is a grade 2 position. Kraft concedes that two other employees in the same position are paid at a higher rate but only because they were transferred from a higher paying position and the company's policy is to allow them to retain their salaries for two years. Plaintiffs brought suit against Kraft under Title VII of the Civil Rights Act of 1964. Judge Guzman (N.D. Ill.) granted summary judgment to the defendants. Plaintiffs appeal.

In their opinion, Seventh Circuit Judges Kanne, Wood, and Sykes affirmed with respect to Robles but reversed and remanded with respect to Diaz and Peña. The Court first addressed the Diaz and Peña claims. Those plaintiffs presented their case under the direct method of proof. The Court disagreed with the district court's application of an inverted “similarly situated employee" approach. The district court had allowed the employer to satisfy its burden by identifying a person within the protected class who was not discriminated against. The fact that Michalec treated another Hispanic well might tend to negate discrimination, but is not enough to meet the employer's burden. The Court noted Michalec's treatment of Diaz and Peña by assigning disfavored tasks, Michalec's role in the hiring processes, and evidence that Michalec told another employee that he chose one candidate because he was white. The Court concluded that there was enough evidence to submit the question of ethnic bias to a jury. The Court turned to the Robles claim. It first noted that the evidence relied on by Diaz and Peña had no bearing on the claim since Robles’ claim arose months earlier. Although the record contained evidence of some insensitive remarks made by Michalec, the Court concluded that there was insufficient evidence to create a triable issue of ethnic bias under the direct method. Under the indirect method, the Court concluded that the higher paid colleagues were not similarly situated because of the company's policy to allow employees to retain a higher salary after a transfer to a lower-paying job.

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