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

EGAN v. FREEDOM BANK (October 6, 2011)

Freedom Bank president Greg Dempsey hired Belinda Egan as a vice president in July 2007. According to her complaint, Egan met with Don Burton, a bank director, at his request several times over the next few months. At one of those meetings in September, Burton told Egan that he thought she should be the next bank president and that the directors had the power to fire anyone on the management team. He then made a sexual advance. Egan left but later discussed the conversation with Dempsey and Human Resources. Burton resigned shortly thereafter. The bank hired Dave Barajas to replace Greg Dempsey as president. According to Dempsey, Barajas told him that he had heard that Egan had done something for which she should have been fired. Barajas took over in December and hired four new employees over the next several months. Then, in February of 2008, Barajas told Egan that he had eliminated her position. Egan brought suit for retaliation, hostile work environment, and gender discrimination. Judge Reinhard (N.D. Ill.) granted summary judgment to the Bank. Egan appeals.

In their opinion, Seventh Circuit Judges Manion, Williams, and Hamilton reversed and remanded. The Court first addressed the retaliation claim, which Egan prosecuted under the direct method of proof. The parties agreed that she engaged in statutorily protected activity and suffered an adverse action. The only issue was whether she introduced sufficient evidence of a causal connection between her report of Burton's sexual advances and her termination. Although the Court found the Bank's explanation plausible, it concluded that it was not the only plausible explanation. Several things supported Egan's contention: Barajas' remark to Dempsey, the fact that Egan’s was the only position eliminated while four other positions were filled, and the fact that there were no complaints about her performance. Since a reasonable jury could conclude that the Bank fired her in retaliation for her complaint, the summary judgment was reversed. The Court affirmed summary judgment on both the hostile work environment (a single sexual overture does not establish hostile work environment)and gender discrimination claims (Egan failed to develop this claim below). Finally, the Court concluded that it lacked jurisdiction over a magistrate judge's sanctions order that Egan challenges. The magistrate judge has only the power to recommend a sanction (since there was no consent to proceed before the magistrate judge). Since the district court judge never addressed the recommended sanction, it is not reviewable on appeal.

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MARCAVAGE v. CITY OF CHICAGO (October 4, 2011)

In July of 2006, Chicago played host to the seventh annual Gay Games, which consisted of a number of athletic and cultural events over several days. A number of volunteers from Repent America, a Christian ministry, appeared at various Gay Game venues to share their particular message about homosexuality. On July 15, the volunteers demonstrated around Soldier Field, where the opening ceremonies were taking place. A Chicago police officer directed the group off a public sidewalk and onto an adjacent gravel field. On July 16, volunteers arrived at Navy Pier for a similar demonstration. Again, Chicago police officers directed the group away from Navy Pier and the adjacent Gateway Park because they did not have a permit. A few volunteers were ultimately arrested. On July 22, one of the volunteers paced back and forth on the sidewalk outside of Wrigley Field, where the closing ceremonies were taking place. A Chicago police officer arrested him when he refused to stop his demonstration and "keep walking." The Repent America volunteers filed suit against the City of Chicago, several police officers, and the Metropolitan Pier and Exposition Authority (which owns Navy Pier and Gateway Park). They alleged violations of the First Amendment, the Fourteenth Amendment’s equal protection clause, the Fourth Amendment, the Illinois Religious Freedom Restoration Act, and state law. Judge Shadur (N.D. Ill.) granted summary judgment to the defendants. Plaintiffs appeal.

In their opinion, Seventh Circuit Judges Bauer, Manion, and Hamilton affirmed in part and reversed in part. The Court first addressed the First Amendment and equal protection claims related to the activities at Soldier Field and Wrigley Field. The Court conceded that the public sidewalks outside these two venues are traditional public forums and that access could not be broadly denied. But the time, place, and manner of activities at those locations can be regulated if the regulation: a) is content neutral, b) is narrowly tailored in support of a significant government interest, and c) allows for alternatives. The Court found that the police conduct at Soldier Field and Wrigley Field met those requirements. Plaintiffs presented no evidence of any police hostility to their message and, at both venues, they were simply directed away from busy pedestrian sidewalks and into locations where they could, and did, deliver their message. There was no First Amendment violation. The Court also concluded that there was no equal protection violation, in that plaintiffs were unable to identify similarly situated individuals that received preferential treatment. The Court also concluded that the arrest at Wrigley Field was not a Fourth Amendment violation. There was probable cause to believe that the volunteer was committing the offense of disorderly conduct. The Court turned to the allegations concerning the demonstration at Navy Pier and Gateway Park. The MPEA has a written policy for public expression at those venues. The policy requires a permit. The Court upheld the policy with respect to Navy Pier. Navy Pier is principally a private enterprise with some public benefits. The Policy for permits is first-come, first-served and viewpoint neutral. The volunteers never applied for a permit and there is no evidence in the record that the MPEA was hostile toward their views. Unlike Navy Pier, Gateway Park is a traditional public forum. The policy must be considered under the content neutral, narrowly tailored, ample alternative test. The Court was particularly troubled by the requirement that a group as small as five had to apply for a permit and give seven days notice and that a group smaller than five (including, apparently, an individual) also had to apply for a permit but without any notice requirement. The Court noted that five of its sister circuits have found permit requirements for groups as small as 10 constitutionally suspect. Ultimately, the Court concluded that the constitutionality of the Gateway Park permit requirement had to be considered in light of all the facts and circumstances, which were not addressed below. It remanded the claim for further proceedings. For much the same reasons as applied to the Soldier Field and Wrigley Field claims, the equal protection and Fourth Amendment summary judgment orders relating to Navy Pier and Gateway Park were affirmed.

Judge Hamilton concurred with the parts of the opinion relating to Soldier Field, Wrigley Field, and Navy Peer. He dissented from that portion of the opinion remanding the Gateway Park claims to the district court. He posited that plaintiffs waived the argument by not presenting it in a timely manner in the district court.

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AFFYMAX v. ORTHO-MCNEIL-JANSSEN PHARMACEUTICALS (October 3, 2011)

Affymax and Ortho-McNeil-Janssen Pharmaceuticals created a joint venture in 1992 to develop peptide compounds. Their agreement assigned ownership based on development efforts. If a compound was jointly developed, it was jointly owned. If a compound was solely developed by either company, that company owned it. The parties also agreed to arbitrate all ownership disputes. Affymax brought suit in 2004 with respect to the ownership of the so-called '940 family and '078 family. After arbitration, a panel concluded that Ortho owned the ‘078 family and that the parties jointly owned the ‘940 family. Judge Kennelly (N.D. Ill.) confirmed most of the arbitration ruling but vacated the award with respect to its conclusion that Ortho owned the foreign patents in the ‘078 family. Ortho appeals (Affymax also appealed, but to the Federal Circuit).

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Wood and Tinder reversed. The Court first addressed appellate jurisdiction. Patent controversies that arise over a contractual dispute, as this one does, arise under the contract, not the patent. Therefore, the Federal Circuit's jurisdiction over patent disputes has not been triggered. The Court concluded that it was the proper forum, with jurisdiction over the district court's order vacating a part of the panel's award. On the merits, the Court noted that the Federal Arbitration Act gives four reasons a district court may rely on in vacating an arbitration award. The reason given by the district court here – the panel’s disregard of law -- is not one of those four reasons. The court's order was therefore error, if in fact that was the only basis for its conclusion. Before finding error, the Court considered whether the panel exceeded its powers, which is one of the four reasons permitting the vacation of an award, and is somewhat related to the district court's rationale. The Court concluded that the panel resolved the dispute pursuant to the 1992 contract’s directions and did not exceed its powers in doing so.

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PURCELL v. BANK OF AMERICA (October 3, 2011)

Kristine Purcell brought suit in state court against Bank of America under the Fair Credit Reporting Act and state law. She alleged that the bank reported to credit agencies that she was delinquent in her loan payments, when it knew she was not. The Bank removed the case to federal court and sought judgment as a matter of law on the FCRA claim. It argued that the Act did not provide a private damages claim for their alleged conduct. It also moved to dismiss the state claims with prejudice on preemption grounds. Judge Moody (N.D. Ind.) agreed with the Bank and dismissed the FCRA claim but concluded that the state law claims were not preempted. He dismissed them without prejudice. The Bank appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Bauer and Sykes reversed and remanded. Section 1681t(a) of the Act provides that state law claims are not preempted except as provided in subsection (b). Subsection (b) states that no requirement or prohibition relating to furnishing information to credit agencies may be imposed "under the laws of any State." The district court concluded that "laws" means only statutes, not common law. The Court disagreed. As long ago as 1938, in Erie R. R. v. Tompkins, the Supreme Court held that the word "laws" in the Rules of Decision Act included all sources of law, including the common law. The Court also found support in the Dictionary Act and in Congressional drafting manuals. The Court rejected the district court's reliance on a perceived inconsistency within the Act if "laws" included all common law. In the Court's view, the subject sections were compatible and did not support the district court's conclusion. Therefore, the “laws” reference in FCRA includes the common law and the state law claims are preempted.

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CEDAR FARM v. LOUISVILLE GAS AND ELECTRIC COMPANY (September 29, 2011)

Cedar Farm owns almost 2500 acres of property bordering the Ohio River in southern Indiana. The property is unusual. It contains, among other things, an antebellum mansion listed on the National Register of Historic Places and a habitat for a number of rare and endangered species. Almost 90% of the property is encumbered by an oil and gas lease with Louisville Gas and Electric Company. Under the express terms of the Lease, it terminates if: a) Louisville stops using it for gas production or storage, b) Louisville surrenders it (for $1.00), or c) Louisville fails to make required payments after a demand and 30 days to cure. The Lease also requires Louisville to pay for any damages it causes the property. Cedar Farm brought suit against Louisville, alleging that Louisville removed trees unnecessarily, installed unsightly pump jacks, and dumped construction debris, among other things. Although its original complaint sought both damages and ejectment, Cedar Farm ultimately dismissed its damages count with prejudice and proceeded solely on its ejectment claim. Judge Hamilton (S.D. Ind.) granted summary judgment to Louisville, concluding that the only remedy in the Lease for Louisville's alleged conduct is damages. Cedar Farm appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Wood and Williams affirmed. Under Indiana law, a lessee under an oil and gas lease acquires a property interest once it begins production. After that point, courts are reluctant to terminate leases if the lessor can be adequately compensated by damages. Cedar Farm contends that this is such a case, given the property's historical and environmental significance and Louisville's egregious treatment of the land. The Court conceded that such could be the case but concluded that Cedar Farm could not simply rely on its allegations at summary judgment stage. Since there is no evidence in the record supporting the complaint's allegations, and no claim that Cedar Farm was prevented from presenting such evidence, summary judgment for Louisville was appropriate. The Court also declined Cedar Farm's request for certification to the Indiana Supreme Court.

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GRACZYK v. WEST PUBLISHING COMPANY (September 28, 2011)

Congress passed the Driver's Privacy Protection Act in 1993 to limit the dissemination of sensitive information acquired by state departments of motor vehicles. In general, the Act prohibits the disclosure of personal information obtained in connection with a motor vehicle record, although it contains several exceptions. A class of Illinois licensed drivers brought suit against West Publishing Company, alleging that West acquires sensitive personal information from motor vehicle departments for the purpose of reselling it, all in violation of the Act. Judge Gettleman (N.D. Ill.) dismissed the complaint, concluding both of that the plaintiff class lacked standing and that the complaint failed to state a claim. The class appeals.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Williams affirmed. The Court first addressed and rejected the district court's conclusion with respect to standing. The Act creates a private right of action for the improper disclosure of personal information. The plaintiffs have alleged that West's acquisition and use of the information violates the Act. If plaintiffs prevail, West could no longer obtain and sell that information. The plaintiffs have alleged injury in fact that would be redressed by a ruling in their favor. They therefore have standing. With respect to the merits, however, the Court agreed with the district court that the complaint failed to state a claim. Here, the class does not dispute that the ultimate recipients of the sensitive information (i.e., West's customers) have a permissible use under the Act. Furthermore, the class concedes that West can lawfully obtain sensitive information from motor vehicle departments, if that information is first requested by a West customer. The class' contention is that West cannot obtain the sensitive information in bulk, without a specific request, and later sell it for an authorized purpose. Although "authorized recipient," is not defined in the Act, the Court concluded that the class' interpretation was not consistent with Congressional intent. There is no meaningful distinction between obtaining information to respond to a specific request or storing information in bulk in order to respond more efficiently to later requests. The Court also noted that the Fifth Circuit agrees and that the Department of Justice has issued an unpublished letter approving the practice. The complaint does not state a cause of action and was properly dismissed.

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WILDER CORPORATION OF DELAWARE v. THOMPSON DRAINAGE AND LEVEE DISTRICT (September 27, 2011)

Wilder Corporation owned several thousand acres of farmland on the Illinois River in Fulton County, Illinois. It sold the land in 2002 to The Nature Conservancy, which intended to restore it to an ecologically functional floodplain. Wilder warranted that the land was not contaminated by petroleum. Unfortunately, Wilder was wrong and the property was contaminated, apparently as a result of the local drainage district’s use and storage of petroleum on the property. The Conservancy sued Wilder for breach of contract and obtained a judgment for several hundred thousand dollars. Wilder brought suit against the drainage district, seeking indemnification for the damages it was ordered to pay the Conservancy. Judge Mihm (C.D. Ill.) granted summary judgment to the Conservancy. Wilder appeals.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Hamilton affirmed. The Court briefly explored the common law of indemnity. It noted that the most common form of indemnity is contractual, as in an insurance policy. There is also non-contractual indemnity, as in where tort liability is shifted from a blameless person to a blameworthy one. Here, however, Wilder wants to shift its contractual liability on the theory that it was blameless and that the drainage district was blameworthy for the petroleum contamination. But the doctrine of indemnity simply does not apply in a situation like this. The district had no control over what warranties Wilder gave to the Conservancy. Furthermore, Wilder could have insisted on a subrogation clause, in which case he could have stepped into the Conservancy's shoes in a nuisance claim against the district. Having failed to do so, it cannot shift the liability to the district. The Court noted that the suit was also barred by the economic-loss doctrine.

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I wish to thank all of my readers and  express my hope that each of you have many things for which you are truly thankful this year. Be safe and enjoy.

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KEELING v. ESURANCE INSURANCE COMPANY (September 26, 2011)

Esurance Insurance Company has issued over 50,000 automobile insurance policies with uninsured/underinsured motorist coverage. It has collected more than $600,000 in premiums and paid no claims. A class of policyholders brought suit for fraud against Esurance, alleging that the uninsured/underinsured coverage was worthless given the policy language. Esurance removed the action to federal court pursuant to the Class Action Fairness Act. Chief Judge Herndon (S.D. Ill.) concluded that the amount in controversy included the $600,000 in premiums, what little amount it would cost to amend the policy form as requested by the class, and punitive damages. Concluding that a $4.4 million punitive damage award was "legally impossible," he remanded the class action to state court on the ground that it did not meet the $5 million amount in controversy threshold. Plaintiffs appeal.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Cudahy and Kanne reversed and remanded. The Court noted that the district court stated the correct "legally impossible" standard but applied it improperly. First, the value of the injunctive relief is not simply the cost of changing a form. Esurance currently reports a $125,000 annual profit on the challenged coverage. Eliminating the coverage (and the profit) would cost Esurance $1.5 million (the present value of $125,000 for 20 years). Therefore, the question becomes whether it is "legally impossible" for the plaintiffs to be awarded $3 million in punitive damages. A $3 million punitive damage award, compared to the $600,000 in actual class injury, would only be a multiplier of five. Illinois courts have affirmed punitive damage awards with higher multipliers. The Supreme Court has suggested that such a multiplier would not be unconstitutional. Although such an award might be improbable, the Court concluded that it was not "legally impossible" and that the amount in controversy requirement was met.

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WILLIAMS v. ADAMS (September 23, 2011,)

Bruce Williams brought a § 1983 lawsuit against several police officers, claiming he was arrested without probable cause and assaulted. Williams brought the suit pro se and proceeded in forma pauperis. After he received a draft pretrial order from the defendants, Williams hired an attorney. For months, however, the attorney failed to respond to the defendants’ draft order. The defendants moved for dismissal and sanctions. After Williams' attorney responded to the order, the defendants withdrew their dismissal request but continued to press for sanctions. A magistrate judge, after two hearings, concluded that Williams and his attorney (who, by that time, had withdrawn from the case) were jointly liable for sanctions in excess of $9,000. Defendants rejected Williams' proposed payment plan and, after five months had passed, moved for dismissal. Judge Andersen (N.D. Ill.) granted the motion and dismissed the case. Williams appeals.

In their opinion, Seventh Circuit Judges Posner, Rovner, and Wood reversed and remanded. Sanctions imposed by a district court must be proportionate to the wrong. Here, Williams had little ability to pay but did have a lawsuit with enough merit that he was about to proceed to trial against the police officer defendants. He also complained to the Illinois Attorney Registration and Disciplinary Commission about his attorney's conduct. As a result, his attorney was suspended from practicing law for a short time and ordered to pay the sanctions, which he did. Under these circumstances, the dismissal of the complaint was an unreasonable sanction.

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MINN-CHEM, INC. v. AGRIUM INC. (September 23, 2011)

The plaintiff and other direct and indirect United States potash purchasers brought a class action against potash producers. The defendants' mining operations are located in Canada, Russia, and Belarus. The defendants responded that: a) the court lacked jurisdiction under the Foreign Trade Antitrust Improvements Act, or, alternatively, b) that the complaint failed to state a claim. Judge Castillo (N.D. Ill.) denied defendants' motion but certified the order for immediate review.

In their opinion, Seventh Circuit Judges Manion, Evans (who, as a result of his death, took no part in the decision), and Sykes vacated and remanded with instructions to dismiss the complaint. The Court addressed only one of the defendants' arguments – that the FTAIA requires dismissal of the complaint. Under the FTAIA, the Sherman Act does not apply to foreign trade or commerce unless the alleged anticompetitive conduct involves U.S. imports or has a "direct, substantial, and reasonably foreseeable effect" on U.S. commerce. The Court noted the tension between its earlier United Phosphorus decision, which held that the FTAIA's requirements were jurisdictional, and the Supreme Court’s decisions in Arbaugh and Morrison, which held that similar requirements in other statutes were not jurisdictional. The Court concluded that it need not address that tension, since dismissal was required in either case. The Court cautioned that the two FTAIA exceptions -- involved U.S. import commerce or had a direct effect on U.S. commerce -- must be treated separately and distinctly. The district court erred when it concluded that the complaint was sufficient because it alleged both that the defendants were potash importers and that they conspired to fix potash prices outside the U.S. The relevant inquiry under the import exception is whether the defendants' alleged illegal behavior was directed at the import market. The complaint contains no such allegations. It contains only allegations of anticompetitive conduct directed at non-U.S. markets. With respect to the direct effect exception, the effect must be an immediate consequence of defendants’ behavior. The Court concluded that the complaint said very little about the relationship between defendants' conduct and the U.S. potash market. The allegations it does contain are too indirect to support a direct effects exception.

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CLARETT v. ROBERTS (September 23, 2011)

On in early October morning in 2005, police officers from Lynwood and Lansing arrived at the home of Patricia Clarett. The officers suspected that Clarett and her sons were involved in a burglary. Although Clarett and the officers had very different recollections of what happened after they arrived at her home, they do agree that Lansing police officer Steven Roberts used his Taser on Clarett three times. Clarett brought an action against a number of police officers, alleging excessive force and false arrest, as well as state law, claims. After a jury found for the defendants, Judge Grady (N.D. Ill.) denied Clarett's post-trial motions. Claret appeals.

In their opinion, Seventh Circuit Judges Manion, Rovner, and Sykes affirmed. The Court first addressed the evidentiary challenges. Clarett challenged the district court's ruling in limine that two criminal convictions, misdemeanor retail theft and obstruction of a police officer, were admissible. The Court concluded that neither conviction was admissible under Rule 609, in that neither had an element of dishonesty. Furthermore, under Rule 608 (b), defendants could not prove the convictions with extrinsic evidence or make affirmative use of them. However, probably in response to the pretrial ruling, Clarett's own counsel introduced the convictions during her case-in-chief. In Ohler, the Supreme Court held that a criminal defendant waived his right to challenge the admission of convictions if he introduced evidence of it first. The Court noted that it had never applied Ohler in a civil context, although other circuits had. It concluded that the principle should apply in civil cases. Clarett cannot challenge the admission of the convictions. Next, Clarett challenged Officer Roberts' testimony about his use of the Taser as impermissible expert testimony. The Court disagreed. The testimony was not of a technical nature but was limited to Roberts' own experience. Alternatively, since all parties agreed that he used the Taser three times, any error was harmless. Finally, Claret challenged the district court's exclusion of evidence that there was no warrant. The Court concluded that no only was the evidence of no warrant irrelevant to the excessive force or false arrest claims, but also that Clarett in fact testified on two occasions that there was no warrant. The district court did not abuse its discretion. Clarett also challenged the jury instructions. The Court found no merit in her challenges. Finally, Claret challenges the jury's verdict, asserting that three Taser deployments constitutes excessive force. The Court noted the conflicting versions of the events of that morning in October. It concluded that there was sufficient evidence in the record to support the jury's verdict.

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HUON v. JOHNSON & BELL (September 21, 2011)

The law firm of Johnson & Bell fired associate Meanith Huon in early 2008. Huon filed charges with the EEOC and the Illinois Department of Human Rights. He also filed suit in state court against several attorneys and the firm, alleging defamation and intentional infliction of emotional distress. The state court dismissed the complaint on the ground that the allegedly defamatory statements were protected by either the qualified or absolute privilege. Huon appealed that decision. Meanwhile, Huon asserted race and national origin discrimination claims, and a state claim for tortious interference with prospective business relationship, in federal court, again naming the firm and several of its attorneys. The defendants moved to dismiss or, in the alternative, to stay under the Colorado River abstention doctrine. Judge Manning (N.D. Ill.) concluded that both suits arose out of the same core facts but that the lack of a final judgment in the state court case did not yet bar the federal case. She therefore decided to stay the federal case pending the resolution of the state appeal. Huon appeals.

In their opinion, Seventh Circuit Judges Posner, Rovner, and Wood vacated the stay and remanded for further proceedings. The Court noted that the Colorado River doctrine is a very narrow exception to a court's "virtually unflagging obligation" to exercise its jurisdiction. It is appropriate only in the most exceptional circumstances. The principal question is whether the cases are parallel and would be resolved by examining the same evidence. The Court concluded that much of the evidence Huon would need to prove discrimination would be irrelevant to his state court defamation and emotional distress claims. Even if the cases were parallel, the Court emphasized the exceptional circumstances required to justify a stay. The Court identified 10 factors in Adkins, many of which were not considered by the district court and those that were considered were considered rather perfunctorily. In any event, the Court concluded that the district court focused on the potential future res judicata effect of the state court appeal. That is not enough to justify the stay. The Court remanded the case to the district court "for another look."

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O'LEARY v. ACCRETIVE HEALTH, INC. (September 21, 2011)

Accretive Health is a Chicago-based firm that provides consulting services to hospitals. It hired Joseph O'Leary in early 2005. Although the firm was initially satisfied with O'Leary's performance, it started having reservations in mid-to-late 2006. It even replaced him at one of the hospitals for which he was responsible at the request of the hospital's CFO. In late 2006, O'Leary learned that one of his female reports had made sexually charged remarks at a company dinner. O'Leary reported the incident to his superiors. At the same time, O’Leary expressed his belief that the same female was treating an African-American subordinate in a harsh manner. A company investigation into the sexual remarks concluded that the employee exercised poor judgment but did not violate any company policy. She was reprimanded. In December of 2006, Accretive terminated O'Leary’s employment. O'Leary brought suit under Title VII and § 1981, alleging that his termination was in retaliation for his actions opposing sexual and racial discrimination. Judge Conlon (N.D. Ill.) granted summary judgment to Accretive. O'Leary appeals.

In their opinion, Seventh Circuit Judges Cudahy and Rovner and District Judge Adelman affirmed. Both Title VII and § 1981 prohibit retaliation against those who oppose the discriminatory practices made illegal by those statutes. The Court first addressed whether O'Leary established that he engaged in protected activity -- that is, that he took some action in opposition to prohibited discrimination. The Court concluded that he did not with respect to the sexual remarks. Given the relatively tame nature of those remarks and the facts that there was only one incident and that no one present felt harassed, O'Leary could not have reasonably believed that they constituted prohibited sexual harassment. The Court concluded that O'Leary did establish that he engaged in protected activity with respect to the employee’s treatment of her African American subordinate. Although the record is not very clear, the Court concluded that a fair reading supports that conclusion. O'Leary testified that he discussed his concern about race discrimination with his superiors, that his concern was based on more than one incident, and that the conduct resulted in the employee’s resignation. Satisfied that O'Leary met the protected activity requirement, the Court considered his claim under both the direct and indirect methods of proof. It easily rejected his claim under the direct method. O'Leary relied almost exclusively on the temporal proximity between his complaint and his discharge. But temporal proximity is rarely enough, by itself, and the timing in this case does not suggest retaliation. With respect to the indirect method, the Court concluded that O'Leary could neither show that he was meeting his employer’s expectations nor that Accretive's stated reasons for firing him were perpetual. Although there are issues of fact with respect to O'Leary's performance, the record contains sufficient undisputed facts to support the conclusion that he was discharged because of his performance.

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WEITZENKAMP v. UNUM LIFE INSURANCE COMPANY (September 20, 2011)

Time Warner Cable employed Susie Weitzenkamp as a sales representative. Weitzenkamp participated in the company's employee benefits Plan, which included long-term disability benefits. The disability Plan provided for 24 months of benefits if a participant could not perform the duties of her regular position. Benefits could continue after 24 months if a participant could not perform the duties of any occupation. The Plan excluded benefits after 24 months if the participant's disability was based on self-reported symptoms. The self-reported symptom exclusion was not mentioned in the Plan’s summary plan description, however. After Weitzenkamp came down with a viral illness, she received 24 months of disability benefits. The Plan invoked the self-reported symptoms exclusion and terminated her benefits after 24 months. Weitzenkamp applied for and received Social Security benefits, as well. The Plan requested reimbursement of approximately $9,000 in overpayments as a result of the retroactive Social Security benefits. Weitzenkamp filed suit. The Plan counterclaimed for the overpayments. Judge Griesbach (E.D. Wis.) granted summary judgment to the Plan, approving its reliance on the self-reported symptoms exclusion. The district court also awarded the Plan the overpayments. On appeal, the Seventh Circuit reversed (opinion and intheiropinion) the benefits denial, holding that the Plan's failure to include the exclusion in the summary plan description estopped it from relying on it as a defense. The Court affirmed the recovery of the overpayments. The Court later granted a petition for rehearing and withdrew its opinion.

In their opinion after rehearing, Seventh Circuit Judges Rovner and Hamilton and District Judge Lefkow again reversed in part and affirmed in part, although its reversal rested on different grounds. The Court conceded that its review was under the arbitrary and capricious standard, which gives great deference to the Plan. Here, the district court concluded that the benefits denial was not arbitrary and capricious because of the self-reported symptoms exclusion. The Court looked to the Plan's language to decide whether it applied to all illnesses where symptoms are self-reported (as the Plan contends) or only to illnesses where the diagnosis is based primarily on self-reported symptoms (as Weitzenkamp contends). The Court conceded that a literal interpretation supported the Plan’s view – but it rejected that interpretation. Since most illnesses and diseases manifest themselves through pain or weakness or fatigue (i.e., symptoms are self-reported), they would be included within the exclusion under the Plan's view. That result would not be reasonable and therefore makes the Plan's interpretation arbitrary and capricious. Instead, the Court concluded that the exclusion applies only to illnesses that are diagnosed primarily on the basis of self-reported symptoms. Here, Weitzenkamp's fibromyalgia was diagnosed with the "trigger test," an accepted clinical test for the illness. The self-reported symptoms exclusion therefore does not apply and Weitzenkamp was improperly denied benefits. Because the record supports a disability finding, the Court ordered reinstatement of benefits rather than a remand. With respect to the request for benefits reimbursement, the Court agreed that the Plan could not levy or garnish Weitzenkamp’s Social Security benefits under the statute but that also concluded that the statute does not preclude a claim for reimbursement. The Plan was entitled to reimbursement.

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DAKOTA, MINNESOTA & EASTERN RAILROAD CORP. v. WISCONSIN & SOUTHERN RAILROAD CORP. (September 20, 2011)

Dakota, Minnesota & Eastern Railroad and Wisconsin & Southern Railroad both operated freight lines in southern Wisconsin. Wisconsin approached Dakota in an effort to purchase some rail line near Janesville, Wisconsin. The line included a 200-foot spur connecting the line with a plant owned by Freedom Plastics. Freedom’s facility was the only plant on the spur. It shipped several carloads a week and was Dakota's largest customer in the area. So Dakota did sell the line to Wisconsin but retained the right to use the line and retained an exclusive easement to serve Freedom over the spur. Years later, Freedom entered receivership. The receiver eventually sold the Janesville plant to North American Pipe Corporation. Wisconsin started shipping for North American, contending that Dakota’s exclusive easement terminated when the plant was sold. Dakota brought suit against Wisconsin, alleging two theories of recovery: 1) breach of contract, on the theory that the exclusive easement was not personal to Freedom but rather referred to the plant itself, and 2) trespass, on the theory that Dakota never sold the tracks, only the land under the tracks. Chief Judge Conley (W.D. Wis.) granted summary judgment to Wisconsin on both claims. Dakota appeals.

In their opinion, Seventh Circuit Judges Bauer, Posner, and Manion affirmed. With respect to the breach of contract claim, the Court sided with Wisconsin. It rejected Dakota's claim that "trade usage" converted its right to serve Freedom to a right to serve the facility, no matter who owned it. Dakota’s only evidence (a railroad worker’s affidavit) was insufficient to establish trade usage, said the Court. Trade usage requires at least management-level, if not expert, opinion testimony. Then, although it found the contract unambiguous, it considered extrinsic evidence because the parties both relied on it. But the evidence of negotiations did not support Dakota's position. With respect to the trespass claim, the Court noted that the contract of sale excluded the spur tracks but the quitclaim deed did not. Given that inconsistency, the Court stated that the deed controls. Furthermore, the rails are fixtures and sold with the real property to which they are attached. In any event, the Court concluded that the trespass claim was unnecessary. If Dakota had the contract right it claimed, it would prevail on the contract claim without the trespass claim. If it did not have those rights, it could prevail on neither

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SHOW v. FORD MOTOR CO. (September 19, 2011)

David Show and his passenger were both injured when Show's Ford Explorer rolled over after being struck by another car. They brought suit against Ford, alleging that the vehicle had an unstable design and was therefore defective. Plaintiffs never designated a design expert witness. Magistrate Judge Denlow (N.D. Ill.) concluded that plaintiffs could not prevail without expert testimony and therefore granted summary judgment to Ford. Plaintiffs appeal.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Manion and Williams affirmed. The Court noted that Illinois law applied and that Illinois law recognized two approaches to a design defect case. The consumer-expectation test requires proof that the vehicle did not perform up to the safety standards that an ordinary consumer would expect. The risk-benefit test, on the other hand, looks instead to the balance between the benefits of the challenged design and the dangers inherent in the challenged design. The plaintiffs concede that expert testimony is required in a risk-benefit case but claim that is not required in a consumer-expectation case, since jurors know what an ordinary consumer would expect. As an aside, the Court questioned whether the need for expert testimony was a question of Illinois or federal law. If the two tests are merely methods of proof rather than theories of liability, federal law may apply as the law of the forum. Since the parties and the magistrate judge assumed that Illinois law controlled, the Court did not resolve the question. Even under Illinois law, the Court concluded that expert testimony is necessary. Under the consumer-expectation test, consumer expectations alone cannot resolve liability. There are questions of causation and physics and engineering that jurors are simply unable to resolve without expert testimony. The magistrate judge properly granted summary judgment in the absence of such testimony.

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QUALITY OIL, INC. v. KELLEY PARTNERS (September 19, 2011)

Kelley Partners operates a number of quick-lube facilities in Illinois. In 2003, it entered into an agreement with lubricants distributor Quality Oil which provided: a) Quality “loaned” $150,000 to Kelley without cost, b) Kelley agreed to purchase 85% of its motor oil requirement from Quality and agreed to purchase at least 225,000 gallons of oil and 225,000 oil filters over five years, c) the agreement terminated when Kelley either met the purchase requirements or 60 months, whichever came first, d) Kelley agreed to pay a penalty if it terminated the agreement early, and e) Kelley agreed that it could be liable for the termination penalty if it transferred any of its locations without obligating the purchaser to the contract terms. Two years into the agreement, and before it met its purchase requirements, Kelley sold its business without obligating its purchaser to the contract. Kelly refused to pay an early termination penalty. Quality brought a breach of contract claim against Kelley. Magistrate Judge Cox (N.D. Ill.) granted summary judgment to Quality for the termination penalty and prejudgment interest. Kelley appeals.

In their opinion, Seventh Circuit Judges Ripple, Evans (who, as a result of his death, took no part in the decision), and Sykes affirmed. Kelley's principal argument was that the five-year/225,000 gallon contract termination clause was handwritten, that it should therefore take priority over other contract terms, and that it should be interpreted to relieve Kelley of any obligation after five years, even if it did not meet the purchase requirements. The Court rejected that argument on several grounds. One, handwritten terms are not given priority if they alter the fundamental contractual bargain. Two, a contract must be ready in its entirety. And three, a contract should be interpreted so as not to produce absurd results. Here, although the Court conceded that a literal interpretation of the handwritten term could support Kelley's argument, it made no commercial sense to read it that way, taking the agreement as a whole. Kelley stopped purchasing motor oil from Quality after two years without having met its contractual obligation and then sold its business. It therefore breached the agreement and was liable to Quality for the early termination penalty.

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STANARD v. NYGREN (September 19, 2011)

H. Michael Stanard and his wife built an outdoor amphitheater on property they owned in rural McHenry County, Illinois. For years, they hosted public events there, including a 40th anniversery tribute to Woodstock  in 2009. They brought suit against the Sheriff of McHenry County and 22 of his deputies, as well as the County itself, alleging that Sheriff Nygren forced them to use County deputies for security at these events at inflated rates. The original complaint contained 28 counts, asserting, among others, §§ 1983 and 1985 claims, RICO claims, and state law claims. The complaint made no effort to identify which defendants were guilty of what conduct. The defendants moved to dismiss the complaint pursuant to Rule 12(b)(6). After missing numerous deadlines to respond, the plaintiffs finally responded almost six months late. Judge Kapala (N.D. Ill.) granted the motion. He dismissed several frivolous counts with prejudice and dismissed others without prejudice, giving plaintiffs' attorney an opportunity to be plead more concisely. Again, plaintiffs missed deadlines before filing a motion for leave to file an amended complaint. Very few of the original complaint's deficiencies were corrected. Even some specific concerns addressed by the district court in its original ruling were ignored. The court denied the motion but gave plaintiffs yet another chance. Again, plaintiffs filed an amended complaint without correcting the complaint’s fundamental deficiencies. The district court dismissed the federal claims with prejudice. Plaintiffs appeal.

In their opinion, Seventh Circuit Judges Manion, Rovner, and Sykes affirmed. The Court first noted that plaintiffs' counsel's inability to meet deadlines spilled over into the Seventh Circuit. Notwithstanding three extensions, the brief was filed late and without a proper jurisdictional statement. The Court turned to the merits. It noted that the Rules 8 and 10 pleading requirements are meant to ensure that a complaint puts the defendant on notice of the claims against him. When a complaint is unintelligible and lacks the coherence and organization to put a defendant on notice, dismissal is an appropriate remedy. The Court concluded that the Stanard’s complaint was just that. It cited the numerous sentences in excess of 100 words, the lack of any cohesive core allegation against the defendants, the numerous conclusory allegations, and the grammatical errors, just to name a few. Plaintiffs were given two opportunities, with specific instructions, to correct these deficiencies and failed to do so. Although leave to amend a complaint is normally allowed, the district court did not abuse its discretion in dismissing the complaint under these circumstances. In addition to affirming the dismissal, the Court ordered plaintiffs' counsel to show cause why he should not be disciplined and ordered the clerk to forward a copy of its opinion to the Attorney Registration and Disciplinary Commission of Illinois.

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DICKERSON v. BOARD OF TRUSTEES (September 16, 2011)

The Belleville Area Community College District 522 has employed Robert Dickerson, who suffers from a mild mental impairment, as a part-time janitor since 1999. He unsuccessfully applied for full-time positions in 2005, 2006, and 2007. In October of 2007, he complained, both at a Board meeting and to the District's attorney, that he was the victim of discrimination. Less than two months later, the District conducted its first formal evaluation of Dickerson's work performance and gave him an overall Unsatisfactory rating. Dickerson disagreed with the evaluation and filed a union grievance and an EEOC charge. The District conducted a second review six months later and found his performance still Unsatisfactory. Although the District fired Dickerson in September of 2008, it later reinstated him. A union arbitrator ruled that the termination violated the collective bargaining agreement. Dickerson brought suit alleging that the District's failure to promote him, its negative evaluations, and its termination all violated the Americans with Disabilities Act. Judge Murphy (S.D. Ill.) granted summary judgment to the District. Dickerson appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Bauer and Williams affirmed. The ADA makes it illegal to discriminate against a disabled employee because of his disability. The Court addressed Dickerson's discrimination and retaliation claims together. It first concluded that neither claim could survive summary judgment under the direct method of proof. The Court concluded that the record established that it was Dickerson's work performance that was connected to his termination, not any discriminatory or retaliatory intent on the District’s part. The Court also addressed the claims under the indirect method of proof. Under that method, Dickerson had the burden to show that he was meeting the District's legitimate employment expectations. The Court noted that the record was replete with evidence of Dickerson's unsatisfactory work performance. Dickerson failed to create an issue fact with respect to satisfactory performance. Summary judgment was proper.

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NELSON v. NAPOLITANO (September 15, 2011)

Herman Nelson and two other federal air marshals brought suit against the Department of Homeland Security, alleging age and race discrimination and retaliation. While the suit was pending, but before the DHS had answered the complaint, one of the plaintiffs was arrested and charged with sexual assault. Fearing that that fact might negatively affect their lawsuit, the plaintiffs voluntary dismissed their complaint under Rule 41(a)(1)(A). Nine months later, after the statute of limitations had run, the plaintiffs moved under Rule 60(b) to “reinstate the complaint.” Judge Dow (N.D. Ill.) denied the motion. Plaintiffs appeal.

In their opinion, Seventh Circuit Judges Kanne, Rovner, and Sykes affirmed. Although a voluntary dismissal under Rule 41 is generally treated as if the underlying case were never filed, the district court retains jurisdiction to consider a Rule 60(b) motion. So the district court did have jurisdiction to consider the motion. The Court concluded, however, that the district court did not abuse its discretion in denying it. Rule 60(b) allows the court to provide relief for several stated reasons. The plaintiffs never identified which basis it relied on – nor did it make any argument in support of any particular basis. In fact, plaintiffs' counsel mistakenly thought that federal practice mirrored Illinois practice. Under Illinois practice, he would have had a one-year safe harbor within which to refile his complaint. The district court was well within its discretion to determine that counsel's misunderstanding of federal practice did not justify Rule 60 relief.

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BURNS v. ORTHOTEK, INC. EMPLOYEES' PENSION PLAN AND TRUST (September 15, 2011)

Dr. Richard Burns conducted his northern Indiana orthodontics practice as Orthotek, Inc. Burns was the Plan administrator, the fiduciary, and the principal participant in the company’s pension plan. In early 2003, Burns signed a Plan document that named his sons as beneficiaries. His wife Cheryl signed a document consenting to that designation. Her signatures are dated the day after those of her husband's, however. When Dr. Burns died in mid-2004, Cheryl Burns filed a benefits claim. She claimed that she did not remember signing the form, that she did not understand the form, and that her signature was not witnessed. The Plan denied her claim. Cheryl Burns brought suit against the Plan pursuant to ERISA. Chief Judge Simon (N.D. Ind.) granted summary judgment to the Plan. Burns appeals.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Sykes affirmed. Under ERISA, a plan participant may designate a beneficiary other than a surviving spouse but only if the spouse consents in writing and the consent is witnessed by a plan representative. The only issue on this appeal is whether Dr. Burns witnessed his wife's signature. The Court rejected the district court's conclusion that the consent was in "substantial compliance" with ERISA. The doctrine of substantial compliance comes into play only when ERISA is silent on a subject. Here, the statute explicitly requires a witnessed consent. But the statute does not necessarily require that the witness be physically present at the time of the spouse’s signature. Furthermore, the Court stated that the statute should not be interpreted to produce absurd results. Here, a) Dr. Burns was the only Plan representative, b) he signed the required forms, c) he must have given the forms to his wife, d) his wife signed the forms, and e) she must have given the forms back to him. Under these admittedly unusual circumstances, the Court concluded that the Plan was within its discretion to find that Dr. Burns witnessed his wife's signature.

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LINDQUIST FORD v. MIDDLETON MOTORS (September 13, 2011)

Middleton Motors, a Ford dealership near Madison, Wisconsin, was experiencing financial difficulties in 2002. It began discussing arrangements with Lindquist Ford, an Iowa dealership. Middleton wanted both daily management help and an infusion of cash. Discussions continued into 2003, when the dealerships signed a confidentiality agreement and also agreed not to hold the other liable in the absence of a written agreement. The parties never consummated a written agreement and Lindquist never invested any funds. Nevertheless, Craig Miller, Lindquist's general manager, took over Middleton's management in April of 2003. He remained in that capacity until Middleton terminated the relationship in March of 2004. When Middleton refused to compensate Lindquist, Lindquist brought suit for breach of contract, promissory estoppel, quantum meruit, and unjust enrichment. The district court granted summary judgment to Middleton on the contract and promissory estoppel claims but, after a bench trial, awarded $160,000 to Lindquist on the unjust enrichment and quantum meruit claims. The Seventh Circuit reversed and remanded (opinion here and intheiropinion here) for a new trial. On remand, Judge Crabb (W.D. Wis.) again found for Lindquist and awarded approximately the same amount. Middleton appeals.

In their opinion, Chief Judge Easterbrook and Judges Sykes and Tinder remanded with instructions to enter judgment for Middleton. The Court noted that both unjust enrichment and quantum meruit under Wisconsin law contain an equitable element. When it remanded the first appeal, it identified as the only remaining issue whether Lindquist's compensation expectation was equitably reasonable, considering the parties' course of conduct. If Lindquist expected to be paid only if Miller was successful and he was not, but was given a chance to be, then Lindquist should not be compensated. The negotiation record between the parties clearly establishes that Lindquist did not expect to be paid unless the Middleton dealership became profitable. Although the district court found that Lindquist did make the dealership profitable, the Court concluded that it erred in doing so. That conclusion is simply unsupported by the evidence. Therefore, Lindquist can only recover if Miller was not given a chance to make the dealership profitable. The district court concluded that he was not. Again, however, the Court concluded that the district court's findings were clearly erroneous and that Middleton did not prevent Miller from making the dealership profitable. Judgment should have been entered for Middleton.

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