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

LG DISPLAY CO. v. MADIGAN (November 18, 2011)

The Illinois Attorney General filed suit in state court against LG Display and other LCD panel manufacturers, alleging violations of the Illinois Antitrust Act. The complaint sought damages for the state itself, as purchaser, and also sought damages for the state's residents, under parens patriae. The defendants removed the complaint to federal court under the Class Action Fairness Act. Judge Dow (N.D. Ill.), on plaintiff’s motion, remanded the case to state court. Defendants petition for permission to appeal.

In their opinion, Seventh Circuit Judges Flaum, Williams, and Tinder denied the petition. A remand order is generally not reviewable on appeal. Here, however, the defendants argue that the Attorney General's claim is really a disguised class action or mass action under CAFA. Under CAFA, a class action is a civil action brought under Rule 23 (or similar state statute or rule) as a class action by a class representative. The Attorney General's case was not brought under Rule 23 or a state counterpart, was not brought by a class representative, and was not brought as a class action. It was brought as a parens patriae case, authorized by the Illinois Antitrust Act. Therefore, the case is not a class action. Under CAFA, a mass action is an action brought by 100 or more persons proposed to be tried jointly because of common questions of law or fact. But here, there is only the claim of the Attorney General. Also, CAFA expressly excludes from the mass action definition actions asserted on behalf of the general public pursuant to a state statute. Therefore, the case is not a mass action. The district court was correct in remanding the case to the state court.

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DAMASCO v. CLEARWIRE CORPORATION (November 18, 2011)

Jerome Damasco brought a class action suit in state court against Clearwire Corporation. He alleged that Clearwire sent unsolicited text messages in violation of the Telephone Consumer Protection Act. He sought both injunctive relief and damages for the more than 1,000 people he estimated received the text messages. Clearwire offered to settle the case by paying Damasco (and up to 10 additional people) the maximum statutory penalty ($1,500) and agreed to stop sending the unsolicited messages. Damasco never responded. A few days later, Clearwire removed the case to federal court. Damasco moved for class certification almost immediately. Within a day, Clearwire moved to dismiss on the grounds that its settlement offer rendered the case moot. Judge Zagel (N.D. Ill.) agreed with Clearwire and dismissed, concluding that the Seventh Circuit's Holstein decision controlled. A complete settlement offer before a class certification filing moots the named plaintiff’s claim. Damasco appeals.

In their opinion, Seventh Circuit Judges Manion, Rovner, and Tinder affirmed. Article III of the Constitution requires federal courts to hear only live cases and controversies. As such, a party must maintain a personal stake in the litigation. Here, once Clearwire expressed its willingness to give Damasco everything to which he may have been entitled under the law, there is no more controversy. The Court has held in the past that a plaintiff cannot avoid mootness simply by moving to certify the class after the offer. Although the Court recognized that several other circuits have allowed plaintiffs to seek class certification after such a full offer, the Court reiterated its belief that such a rule violated Article III and declined to adopt it. A simple solution exists to any concern that defendants could frustrate class actions by simply offering each named plaintiff a full settlement. That solution is to move for class certification at the time the complaint is filed. The filing of the motion protects the plaintiffs and the class. The Court also noted that a plaintiff, to the extent he believes he is not ready to place the class certification issue to the court, can seek additional time for further investigation or discovery.

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BIELSKIS v. LOUISVILLE LADDER (November 18, 2011)

Raymond Bielskis was an acoustical ceiling carpenter employed by International Decorators. Although International Decorators usually supplied Bielskis with scaffolding necessary for his projects, he did own a mini-scaffold manufactured by Louisville Ladder that he used occasionally. One of those occasions was in March 2005. He was in the middle of a project when one of his co-workers borrowed the scaffold he was using. He brought in his mini-scaffold from his car, inspected it, and began to use it. He used it for several hours without incident. Then, without warning, it collapsed and he fell to the floor, sustaining injuries. He inspected the scaffold and noticed that one of the wheel stems had broken. Bielskis brought suit against Louisville Ladder, alleging counts based on strict liability and negligence. Louisville Ladder filed a third-party complaint against International Decorators for contribution. Bielskis retained Neil Mizen as his expert. In his report, Mizen concluded that the wheel stem failed because of a "brittle fracture" caused by excess tensile stress due to over tightening the stem. He further opined that the fracture could have been avoided with an alternative mechanism or by simply not tightening it as much. Louisville's expert examined the fracture surface carefully and did extensive testing and reconstruction. He also concluded that the stem failed because of a brittle fracture. He concluded, however, that the wheel was too loose, not too tight. Louisville moved to exclude Mizen's testimony. Judge Leinenweber (N.D. Ill.) agreed, concluding that Mizen's testimony failed under the Daubert factors. He excluded the testimony and granted summary judgment to Louisville. Bielskis appeals.

In their opinion, Seventh Circuit Judges Cudahy, Rovner, and Evans (who, as a result of his death, took no part in the decision) affirmed. The Court first addressed and resolved a jurisdictional matter. The district court’s order did not resolve the third party complaint brought against International Decorators and thus was technically not a final judgment. The Court concluded, however, that the summary judgment order in Louisville's favor resolved Louisville's third-party claim for all practical purposes and concluded the district court litigation. The Court turned to the merits. Under Federal Rule of Evidence 702, the district court must ensure that an expert's methodology is scientifically reliable. Daubert set out a number of factors addressed to an expert’s theory: has it been tested, has it been subjected to peer review, what is its rate of error, and what is its level of acceptance. The district court's evaluation is reviewed under an abuse of discretion standard. The Court conceded that it was a close question, but ultimately found no abuse of discretion. It relied on several facts: plaintiff’s expert made no attempt to test his theory (Louisville's expert tested extensively), Mizen presented no evidence of the level of acceptance or rate of error of his conclusion, and his proposed alternatives were not supported by any engineering principles. In short, Mizen's opinion was long on speculation and short on fact. The Court went on to conclude that the district court did not err in denying Bielskis’ motion for continuance to obtain a new expert. Again, the Court considered it a close call but concluded that the district court did not abuse of discretion in managing its docket that way. Finally, the Court affirmed the grant of summary judgment to Louisville. Although acknowledging that expert testimony may not be necessary in all product liability cases, it was required here. The scaffold had been in Bielskis’ control for years and there was no evidence regarding its condition when it left Louisville. There was also little evidence of its use while under Bielskis’ control. Bielskis could not prevail without expert testimony on those issues.

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FEDEX GROUND PACKAGE SYSTEM v. UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION (November 17, 2011)

FedEx truck drivers filed a number of class actions around the country against the company alleging that the company misclassified them as independent contractors rather than employees. Because the cases presented many common fact issues, the Judicial Panel on Multidistrict Litigation consolidated a number of them and transferred them to the Northern District of Indiana for consolidated pretrial proceedings. In 2010, Judge Miller (N.D. Ind.) granted summary judgment to FedEx in most of the cases and granted summary judgment to the plaintiffs on some claims in a few cases. His orders resolved all of the claims in 22 of the then-pending cases, which are now on appeal to the Seventh Circuit. In the then-pending 12 cases in which all claims were not resolved, Judge Miller recommended to the JPML that they be transferred back to their originating courts. The JPML concurred. FedEx seeks a writ of mandamus.

In their opinion, Seventh Circuit Judges Manion, Sykes, and Hamilton denied the petition. At the stage of the proceedings that Judge Miller found himself in, he had basically two options for the unresolved cases. He could have issued partial final judgments under Rule 54(b). Had he done so, plaintiffs would have had to appeal immediately to the Seventh Circuit. FedEx preferred that approach. Another option, the one that he took, was to transfer the partially resolved cases back to their originating courts for further proceedings. Under that option, any appeal after a final judgment would be taken in the originating court. The Court noted that each option has advantages and disadvantages. To qualify for the extraordinary writ of mandamus, however, FedEx needs to show that it has no other avenue for relief and its right to the writ is "clear and indisputable." Although FedEx clearly satisfied the first requirement, it failed to satisfy the second. The Court noted the strong arguments in favor of either approach and stated that the selection of the correct approach under the circumstances should be within the discretion of the transferee court and the JPML. The JPML did not abuse its discretion.

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STEVO v. FRASOR (November 17, 2011)

Allan Stevo lives in Blue Island, Illinois and has been active in local politics for years. When the City passed an ordinance requiring outside water meters in 2001, Stevo defied it -- and continued to defy it for years. Finally, four years later, and after seven weeks without water, Stevo installed a water meter. But he then sued the City and various officials, alleging a due process violation and a "class of one" equal protection claim. With consent, the case was originally assigned to Magistrate Judge Keys. It was later reassigned to Magistrate Judge Finnegan. The discovery cutoff was extended seven times over the course of a number of months. Eventually, Stevo's request for additional discovery time was denied and defendants moved for summary judgment. Stevo did not respond to the merits of the summary judgment motion. Instead, he opposed it on grounds that it violated Local Rule 56.1. Magistrate Judge Finnegan (N.D. Ill.) denied the motion but allowed Stevo more time to respond to the merits. He declined to do so. She granted summary judgment to the defendants. Stevo appeals.

In their opinion, Seventh Circuit Judges Posner, Sykes, and Hamilton affirmed. On appeal, Stevo challenges both the denial of additional time for discovery and the denial of his opposition to summary judgment on Local Rule 56.1 grounds. But the Court first considered an argument he raised for the first time in his reply brief -- that he did not consent to the entry of judgment by the magistrate judge. Normally, an argument raised for the first time in a reply brief is waived. Here, however, the Court treats the absence of a valid consent to proceed before a magistrate judge as an impediment to its appellate jurisdiction. So it addressed the issue and found no defect. Both parties expressly consented, in writing, to the assignment to Magistrate Judge Keys. Although the written consent form is somewhat ambiguous regarding the parties' consent to further reassignment to Magistrate Judge Finnegan, the Court found it unnecessary to resolve the ambiguity. It found that all the parties impliedly consented by continuing to litigate in front of Magistrate Judge Finnegan through discovery and summary judgment. Furthermore, although the signed consent form does not appear in the district court docket or the record on appeal, the defense counsel provided a copy to the court and the Court supplemented the record pursuant to Federal Rule of Appellate Procedure 10(e)(2). On the merits, Stevo challenges only the magistrate judge's decision to deny further discovery and to not strictly enforce a local rule. Appellate review of both those decisions is by the abuse of discretion standard. With respect to the discovery cutoff, the Court stated that it would not reverse without a showing of "actual and substantial prejudice." It found none. With respect to the enforcement of a local rule, the Court noted that it has frequently held that district courts are entitled to strictly enforce the local rules. Here, it held the converse -- that a district court is entitled to forgo strict enforcement of the local rules.

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BROWN v. CALAMOS (November 10, 2011)

The Calamos Convertible Opportunities and Income Fund is a closed-end investment fund. It issues common stock, which is not redeemable, and preferred stock, which is similar to a bond and can be traded at auction. Since the Fund's investments generally earned more than the interest paid to the holders of preferred stock, the fund's owners (holders of the common stock) benefit. During the 2008 financial crisis, the auction market for the preferred stock collapsed. The holders of the preferred stock could have been stock with their then-low interest rate and the holders of common stock would not have been affected. But the Fund redeemed the preferred stock -- at a premium. A class of common stock owners brought suit in state court against the Fund, alleging that it and its parent breached their fiduciary obligation to the shareholders in order to placate the banks and brokers that they did business with. The Securities Litigation Uniform Standards Act of 1998 prohibits state law class actions with more than 50 class members if the suit is not exclusively derivative and it alleges a misrepresentation or omission of a material fact in connection with the purchase or sale of a security. If such a case is brought, a defendant may remove the case to federal court and the court should dismiss the case. That is exactly what Judge Bucklo (N.D. Ill.) did here, with prejudice, and without addressing class certification. The class appeals.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Sykes affirmed. The Court first recognized that the complaint contained a specific disclaimer that it was not a claim based on a misstatement or omission. Notwithstanding the disclaimer, however, the Court stated that the complaint does allege, either explicitly or implicitly, both misrepresentations and omissions. Before affirming on that rather simple ground, the Court addressed various approaches taken by the Circuits. The Sixth Circuit takes a literal approach and would dismiss if the complaint can be interpreted to allege a misrepresentation or omission. On the other end of the spectrum, the Third Circuit would not bar the suit if the misrepresentation or omission alleged is not essential to the suit's success. In the middle is the Ninth Circuit, which would follow the Sixth Circuit and dismiss the case but dismiss it without prejudice, in order to allow the plaintiff to remove the offending allegation. After some discussion and criticism of each of the various approaches, the Court concluded that the suit would be barred under any reasonable standard because the fraud allegations were central to the case. Furthermore, an amendment to the complaint would not be appropriate. Given the significance of the fraud allegations, the plaintiffs would certainly try to get them back into the case if it were to be remanded to state court.

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BACKES v. VILLAGE OF PEORIA HEIGHTS (November 10, 2011)

David Backes is a veteran of the Persian Gulf War and suffers from post-traumatic stress disorder. In late 2006, he lived with his wife in East Peoria, Illinois. At the time, he was taking a number of medications. He also kept two shotguns at home. On the night of October 17, he and his wife argued. He left home and drove aimlessly. He called his wife on a number of occasions and at least one of them suggested that he might commit suicide. Eventually, he decided against it, parked his car in a park, took a sleeping pill, and fell asleep in the car. In the meantime, his wife had notified the police of the situation. The police dispatcher reported that Backes was suicidal, medicated, and had access to weapons. The Peoria Heights Police Department located his vehicle about 2:00 a.m.. Various officers kept surveillance over the vehicle for several hours at a safe distance. They saw that the drivers window was down and that Backes was mostly motionless in the driver’s seat. Fearing for his safety as well as that of others, the Peoria Heights Police Chief contacted the Central Illinois Emergency Response Team. Members of the team arrived at the site and formulated a plan to bring an end to the situation. They shot pepper balls into the car and immediately removed Backes and took him to a nearby hospital. Backes and his wife brought an excessive force complaint pursuant to § 1983, as well as state law claims for battery, against the Police Chief and the Village. Magistrate Judge Gorman (C.D. Ill.) granted summary judgment to the defendants. The Backes appeal.

In their opinion, Seventh Circuit Judges Bauer, Manion, and Kanne affirmed. In order to be liable for a § 1983 suit, a defendant must have been personally responsible for the allegedly unconstitutional behavior. A supervisor's direct participation is not required if he approves of the unconstitutional conduct. The conduct the Backes complain of, however, was carried out by the members of the emergency response team. The Police Chief was not involved in any way. The fact that he may have been consulted, and may have agreed with the proposed course of action, does not change the outcome. The Court turned to the state law battery claims asserted against both the Police Chief and the Village. Again, the Court concluded that the Police Chief's involvement in the operation was not enough to make him, or, in turn, the Village, liable for any battery.

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OVERLY v. KEYBANK NATIONAL ASSOCIATION (November 10, 2011)

Krysten Overly was a financial advisor at KeyBank in central Indiana. Rick Bielecki became her immediate supervisor in early 2007 but their interaction was limited because of his broad regional supervisory obligations. One day, while he was working with her, he observed that she was using procedures that were not in compliance with the Bank's policies. After an investigation, the compliance office recommended her termination. With Bielecki’s and his supervisor’s support, Overly escaped with a warning and a small fine. Overly complained to the Human Resources Department about the disciplinary action as well as some sexist remarks she alleged were made by Bielecki. The Bank reorganized beginning in 2007 and almost tripled the number of financial advisors nationwide. Bielecki added one advisor to Overly's region and realigned branch bank assignments. Overly registered a complaint with KeyBank's CEO. She cited the disciplinary action and the sexist remarks, as well as the loss of territory. The Bank conduct an investigation and concluded that there was no evidence of discrimination or retaliation. Overly submitted her resignation to Bielecki on October 1, 2007. Upon receipt of the resignation, Bielecki applauded, pushed her toward the door, and yelled "Good Riddance Bitch." Overly filed suit alleging hostile work environment, constructive discharge, and gender discrimination. Judge Barker (S.D. Ind.) granted summary judgment in KeyBank's favor. Overly appeals.

In their opinion, Seventh Circuit Judges Evans (who, as a result of his death, took no part in the decision) and Williams and District Judge Conley affirmed. The Court first addressed the hostile work environment claim and concluded that Overly's work conditions did not meet the "severe or pervasive" requirement. Bielecki called her "cutie" five or 10 times, referred to her "pretty face," and made her leave her purse outside of a meeting room. None of this was threatening, it did not occur very frequently, and it did not unreasonably interfere with her work. The Court conceded that adding the disciplinary incidents to the mix might approach the actionable level, but declined to do so because there was no evidence that the discipline was related to her gender. Furthermore, she admitted the noncompliant activities. Likewise, the territory realignment was not shown to be related to gender. The Court acknowledged that there was evidence of gender bias after her resignation. But Bielecki's conduct and remarks after receiving her resignation cannot support a hostile work environment claim. The Court quickly dispensed with her constructive discharge claim since it imposes a higher standard than the hostile work environment claim - which it had just rejected. The Court also rejected the gender discrimination claim, again refusing to consider the resignation remarks as direct or circumstantial evidence of discrimination because of the timing of those remarks. Finally, the Court rejected her Title VII retaliation claim. Her complaint to the Bank does constitute protected activity but there is no evidence in the record of a causal link between the activity and Bielecki's conduct.

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MAKOWSKI v. SMITHAMUNDSEN LLC (November 9, 2011)

Lisa Makowski had been the Marketing Director for the SmithAmundsen law firm for over two years when she discovered she was pregnant. She notified firm management and was given FMLA leave beginning in November of 2007. She gave birth on December 2. The next month, the firm’s all-male Executive Committee conducted its yearly meeting. At that meeting the Executive Committee decided to eliminate Makowski's position. The firm's Chief Operating Officer, Michael DeLargy, delegated to Molly O'Gara, the Director of Human Resources, the task of consulting with outside labor counsel before firing Makowski. DeLargy also commented that Makowski "doesn't fit into our culture." When Makowski returned to the office to collect her belongings, O'Gara told her that she was fired because of her pregnancy and leave and that she was not the only one. Makowski brought suit under the Pregnancy Discrimination Act and for both interference and retaliation under the FMLA. Judge Darrah (N.D. Ill.) ruled that O'Gara's statement was inadmissible and granted summary judgment to the defendants. Makowski appeals.

In their opinion, Seventh Circuit Judges Rovner and Williams and District Judge Young reversed and remanded. The Court first considered the evidentiary ruling with respect to the O'Gara statements. The statements are hearsay, unless they fit within an exception, and are not admissible. One exception, under Federal Rules of Evidence 801(d)(2)(D) , applies to the statement of a party’s agent made during the course of her employment, and offered against the party. The O'Gara statements are the statements of a party's agent and are offered against the party. The firm contends that they were not made within the scope of her employment. The district court agreed, because O'Gara was not involved in the termination decision. The Court disagreed with that analysis. The agent need not be personally involved in the employment action at issue if her duties relate to that decision-making process. Here, O'Gara was not involved in the decision to fire Makowski. But her job duties did include ensuring that the firm complies with antidiscrimination laws and she was even involved in the Makowski termination to the extent that she was the one designated to consult with outside labor counsel before her termination. She was acting within the scope of her employment and the statements are admissible. Having ruled on the admissibility of statements, the Court found no difficulty in finding jury questions on the Pregnancy Discrimination Act claim and the FMLA interference and retaliation claims. It reversed the summary judgment rulings.

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SAMBRANO v. MABUS (November 8, 2011)

Cathleen Sambrano filed an EEOC charge alleging that the Department of the Navy, her employer, discriminated against her on account of her race, gender, national origin, age, and disability. Because she was a federal employee, the EEOC decided her claim on the merits and ruled against her. Sambrano filed a federal complaint repeating her allegations. Although the district court set a discovery schedule, Sambrano conducted no discovery and instead filed a motion for judgment on the pleadings. The court denied the motion. Sambrano still took no discovery. More than a year passed. Judge Norgle (N.D. Ill.) dismissed the case for want of prosecution pursuant to Local Rule 41.1. That prompted Sambrano's lawyer to file an ex-parte motion to vacate the dismissal. The court denied the motion (under Local Rule 5.3) for failure to serve the defendant. Sambrano appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Manion and Rovner affirmed -- and also issued a show cause order to Sambrano's counsel for filing a frivolous appeal and violating Circuit Rule 30. The Court noted that Sambrano could have argued that the district court erred in dismissing the case without any notice to the litigants. Instead, her brief contends that Local Rule 41.1 violates due process. In addition to making this frivolous argument, Sambrano violated Circuit Rule 30's requirement that an appellant include the order under review in an appendix. Counsel also submitted a false certification under Rule 30. The Court concluded that counsel's conduct implied that he is not competent to litigate in federal courts. Thus, it issued the show cause order why he should not be sanctioned, censured, suspended, or disbarred.

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ANDERSON v. GULF STREAM COACH (November 3, 2011)

Jeff and Liz Anderson had a 2008 Crescendo RV manufactured by Gulf Stream. They liked the vehicle but wanted to upgrade to a more powerful version for their tour of the Western United States. They contacted Mike Apple at Royal Gorge, a Gulf Stream dealer. He suggested a 2009 Tourmaster. The Anderson's, with Apple, examined the vehicle and consulted Gulf Stream's website. The website indicated that the vehicle came with a standard 425-hp engine. In fact, the vehicle at issue had only a 360-hp engine. Assuming the RV had the larger engine, the Anderson's purchased it "as is" and accepted delivery in September 2008. After only a few uses, they discovered numerous significant problems. They returned the RV to Royal Gorge. During the repair process, Apple discovered the presence of the smaller engine, although the original paperwork had correctly identified the engine’s horsepower. The Anderson's went back and forth with Apple and Gulf Stream. Finally, in April 2009, the Anderson's brought suit for breach of express warranty, breach of the implied warranty of merchantability, Magnuson-Moss Warranty Act violations, Indiana’s Deceptive Consumer Sales Act violations, and fraud. Magistrate Judge Nuechterlein (N.D. Ind.) granted summary judgment to the defendants on all counts. The Anderson's appeal.

In their opinion, Circuit Judges Bauer, Flaum, and Williams affirmed in part and reversed in part. The Court first addressed the Magnuson-Moss Warranty Act claim, which was based on the state law warranty claims. The statute provides a federal cause of action for failure to comply with a warranty. The statute requires, however, notice and a reasonable opportunity to cure. Although the district court concluded that the Anderson's did not give a reasonable opportunity to cure, the Court disagreed, when the record was viewed in the light most favorable to the Anderson's. Thus, summary judgment on the state law expressed warranty claim and related MMWA claim was improper. The Court reached the same conclusion with respect to the Anderson's state law implied warranty claim and its related MMWA claim. Again, the district court relied on its conclusion that the Anderson's failed to provide an opportunity to cure, with which the Court disagreed. The Court turned to the Indiana Deceptive Consumer Sales Act claim. That claim was based on the fact that the Tourmaster was designated a 2009 model but was manufactured to fulfill an order for 2008 model. The FTC is responsible for enforcing model year designation requirements. Under those requirements, although an RV manufacturer may use an older chassis on a newer model, or even the same chassis on different model years, it cannot do as it did here – use a 2007 chassis on a vehicle that is completed during the 2008 model year and call it a 2009. The district court erred in concluding that it could. But the Court also concluded that there were issues of material fact with respect to this claim because the Anderson's allegedly received documents with the RV that accurately identified the 360-hp engine. Summary judgment is therefore not appropriate for either party. Finally, the Court concluded that there was no evidence in the record of intent to deceive and affirmed summary judgment on the fraud claim.

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ROSE ACRE FARMS v. COLUMBIA CASUALTY CO. (November 1, 2011)

Rose Acre Farms is one of the largest egg producers in the country. It belongs to the United Egg Producers, a trade association. Rose Acre advertises that it complies with the UEP animal husbandry guidelines. Its website makes the same point. The website also states that it sells eggs from both caged and roaming chickens and that its eggs from roaming chickens cost more than regular eggs. A number of class-action suits were filed against Rose Acre, alleging it violated Section 1 of the Sherman Act and conspired to fix the price of eggs. Rose Acre tendered its defense to its insurance company under its "personal and advertising injury" coverage. The insurers declined to defend the company. Rose Acre brought suit for a declaration of coverage. Judge Barker (S.D. Ind.) granted summary judgment to the insurance companies. Rose Acre appeals.

In their opinion, Seventh Circuit Judges Cudahy, Posner, and Wood affirmed. Under the policy language, Rose Acre is covered for the offense of "the use of another's advertising idea in your ‘advertisement.’" the Court rejected Rose Acre’s contention that it was entitled to coverage because of its advertisements mentioning the high cost of egg production. First, the antitrust complaints do not mention the company's website and complain only about fixing the price of eggs from caged chickens. Second, the coverage extends only to using "another's" advertising idea. There is no "another" alleged here. Third, the history of this standard policy provision makes clear that it was intended to apply to cases of misappropriation. Finally, the policy contains an exclusion for an advertising injury that is caused by the insured with the knowledge that it would violate another's rights. The complaint’s deliberate participation in a conspiracy allegations fall within that exclusion.

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RAY v. MAHER (November 1, 2011)

Robert Ray was arrested in late 2007. Before he was taken to jail, he was treated at a local hospital for alcohol withdrawal. He became ill while in jail. Jail authorities administered some medication but never took him to a hospital. Ray died within days. Almost 3 years later, his ex-wife was appointed administrator of his estate. She brought § 1983 claims for denial of basic medical services against the jail doctor and a number of other Sangamon County employees. Ray’s daughter, the sole beneficiary of the estate, recently turned 18 and replaced her mother as administrator. Judge Mihm (C.D. Ill.) dismissed the claim on statute of limitations grounds. The administrator appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Wood and Tinder affirmed. The limitations period for a § 1983 claim is governed by state law. In Illinois, one has two years within which to file such a claim. The estate's administrator did not meet that 2009 deadline. Its only argument is that the beneficiary of the estate was under the age of 18 at the time the claim accrued and she brought the claim within two years of her reaching majority. Unfortunately, that argument is misplaced. The claim belongs to the estate. It must be brought by its administrator on a timely basis in order to survive. A beneficiary does not have a personal claim. His or her age at the time the claim accrues is irrelevant.

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IN RE: RESOURCE TECHNOLOGY CORP. (OCTOBER 31, 2011)

Samuel Roti owned a Holiday Inn just outside Chicago, adjacent to a landfill operated by Congress Development Company. Resource Technology Corporation was under contract with Congress to build and operate a system for collecting gases generated by the landfill. As of September, 2005, Resource was in Chapter 7 bankruptcy and a trustee was appointed to operate the business until liquidation. Days after the trustee was appointed, the landfill gas collection system failed, causing foul odors to be released into the Holiday Inn. Roti filed an administrative claim in the Resource bankruptcy for the damages to his business. The bankruptcy court rejected the claim. Judge Kennelly (N.D. Ill.) agreed. Roti appeals.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Hamilton affirmed. The Court acknowledged that the foul odors that emanated from the property as a result of the failure of the gas collection system could constitute a nuisance -- and a nuisance for which Resource was responsible. That fact makes Roti a creditor of Resource's Chapter 7 estate. But Roti never asked to be a general creditor of the estate. Instead, he sought administrative claim priority status. Generally, administrative claims get priority because they either enhance or preserve the value of the estate and thereby benefit the other creditors. Paying off a tort claim, at least under these circumstances, would not seem to benefit the other creditors. In Reading, the Supreme Court held that tort claims arising from the operation of a Chapter 11 bankruptcy estate should be treated as administrative claims. The Court distinguished Reading, but not on the obvious Chapter 11 versus Chapter 7 basis. Instead, it concluded that the important factor was whether the firm was operating. Here, the trustee was not operating Resource's gas collection system. The bankruptcy estate had no money to repair the system an had minimal revenues there from. The trustee’s mandate was to liquidate the operations as quickly as possible. Under those circumstances, tort liability should not be considered an administrative expense.

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BROWN v. COUNTY OF COOK (or 25, 2011)

Between 2003 and 2005 (when he retired), Thomas Brown was a sergeant in the Cook County Sheriff’s Office. He was on a list of 16 officers eligible for promotion. Brown never contributed to then-Sheriff Michael Sheahan's campaign, was a Republican (Sheahan was a Democrat), and several years earlier had donated a small amount to Sheahan’s challenger. Brown was never promoted -- only 5 of the 16 were. But Brown filed suit pursuant to § 1983 alleging that he was passed over because of his political affiliation. Judge Coleman (N.D. Ill.) granted summary judgment to the County. Brown appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Posner and Williams affirmed. The Court first noted that the Mount Healthy "motivating factor" analysis remains the appropriate analysis in a First Amendment violation case (citing its Greene decision, released shortly after oral argument). Under that test, Brown had to present evidence that his political affiliation was a motivating factor in not being promoted. The burden would then shift to the County to convince a jury that it was not a "but for" factor. Brown's evidence falls far short of the motivating factor threshold. First, two of the five officers who were promoted had not contributed to Sheahan's campaign. Second, Brown has not controverted the testimony of Sheahan and his deputies that they either did not know Brown or did not know his political affiliation. Third, the fact that Sheahan promoted a female officer who was the subject of a serious misconduct allegation is not relevant to Brown's First Amendment claim. It may have been relevant to a gender discrimination claim, but the district court refused to allow Brown to amend his complaint.

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ECHO, INC. v. TIMBERLAND MACHINES & IRRIGATION (October 25, 2011)

Between 2004 and 2008, Timberland Machines & Irrigation distributed assorted outdoor power equipment for Echo in New England. On October 21 of 2008, Echo gave Timberland a sixty-day termination notice. Echo alleges that it actually made the decision to terminate Timberland in August of that year, for financial reasons. In September, Echo met with Lawn Equipment Parts Company to discuss giving it the New England region. Lawn Equipment was already a Echo distributor in another region. Echo eventually awarded the New England region to Lawn Equipment. Depending on the calculation, Echo accounted for between 30% and just over 50% of Timberland’s total sales. Echo brought suit against Timberland for breach of contract and for unpaid sums owed. A few weeks later, Timberland filed a separate suit in the same federal district against Echo and Lawn Equipment. It asserted Connecticut Franchise Act claims against Echo and claims for tortious interference, unjust enrichment and violation of the Connecticut Unfair Trade Practices Act against Lawn Equipment. The cases were consolidated before Judge Kocoras (N.D. Ill.), who granted summary judgment against Timberland on all counts after striking portions of the affidavit of Timberland’s president. Timberland appeals.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Hamilton affirmed. The Court first addressed the affidavit, which the district court struck on the grounds that it constituted undisclosed expert testimony. The purpose of the affidavit was to establish that Timberland met the definition of a franchise under the Connecticut Franchise Act. Judicial interpretations of the statute hold that a party is a franchisee of another party if more than half of its business comes as a result of that relationship. The affidavit was designed to support a calculation that met the half-of-its-business test. The Court was not impressed. Of the four points of calculation stricken from the affidavit, the Court: a) agreed that one should be stricken, even if not expert testimony, because it was unsupported by any analysis, b) concluded that two points no longer mattered once the first was stricken, and c) disagreed with the exclusion of one point regarding certain sales numbers, given the president's knowledge as a result of his role in the corporation. Nevertheless, the Court disagreed with the substantive point made in the affidavit, concluded that the relevant sales figures were less than 35%, and affirmed summary judgment on the Franchise Act claim. With respect to the award of interest on the account stated claim, the Court concluded that Timberland waived its objection. Even had it not waived its objection, the interest award was appropriate in that Timberland accepted the goods and was obligated to pay for them, with interest, pursuant to the parties’ prior relationship. Finally, the Court found no genuine issues of material fact with respect to Timberland’s tortious interference, Unfair Trade Practices Act, or unjust enrichment claims.

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HUTCHINS v. CLARKE (October 24, 2011)

On May 17, 2007, callers to a popular Milwaukee radio call-in show were discussing the performance of Milwaukee County Sheriff David Clarke, and particularly his relationship with African-Americans. Deputy Sheriff David Hutchins criticized Clarke during his call. In response, Sheriff Clarke called the show and was critical of Hutchins. Specifically, he suggested that Hutchins held a grudge because Clarke had disciplined Hutchins years earlier for sexual harassment. Hutchins brought suit pursuant to § 1983, alleging that Clarke violated his First Amendment rights by retaliating against him. He also brought claims under Wisconsin's Open Records Law and Right of Privacy statute. Magistrate Judge Callahan (E.D. Wis.) granted summary judgment to Hutchins. Clarke appeals.

In their opinion, Seventh Circuit Judges Bauer, Flaum, and Williams (concurring) reversed. The Court first summarily disposed of the state Open Records Law claim. That law deals with access to government records and limits access to government employees' disciplinary records. Although this case is about a disciplinary record, there was no request for access to that record -- the law simply does not apply. The Court turned to the Right of Privacy statute. The statute creates a right of action for "invasion of privacy." But it explicitly excludes from its definition the communication of any information that is a matter of public record. The Court disagreed with the magistrate's conclusion that Hutchins’ disciplinary record was not a matter of public record. The district court never engaged in the balancing test required by the Open Records Law to determine whether the record is a public record. Since the balancing test is a matter of law, the Court engaged in its own analysis. Although it found factors in favor of both privacy and disclosure, it concluded that the public interest in disclosure was not outweighed by the interest in keeping it private. Thus, Hutchins’ disciplinary record should be considered a matter of public record and his Right of Privacy claim fails. Finally, the Court turned to the only federal claim, the First Amendment retaliation claim. One of the elements of the claim is that there be some retaliatory action, although it need not rise to the level of an adverse employment action. It must be enough of an action, however, to chill further speech. Here, the retaliatory action is itself speech, which also must be afforded some protection. The Court looked to other circuits and district courts within its circuit and agreed that for such speech to be retaliatory, it must be threatening, harassing, or intimidating. Concluding that Sheriff Clarke's speech was not, the Court reversed the First Amendment retaliation claim.

Judge Williams wrote separately, concurring in the opinion and expressing her views on the panel's disposition of the First Amendment retaliation claim. Judge Williams emphasized the Court's precedent that retaliatory speech that is likely to deter a person for exercising First Amendment rights may be actionable, even if not threatening, harassing, or intimidating.

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KAWASAKI HEAVY INDUSTRIES v. BOMBARDIER RECREATIONAL PRODUCTS (October 21, 2011)

In 2006 and 2007, Kawasaki and Bombardier were embroiled in a patent dispute that led to several federal lawsuits. Kawasaki brought suit in Texas and Bombardier brought suits in both Florida and Texas. The parties reached a settlement in late 2007, pursuant to which they agreed to dismiss the lawsuits, agreed not to bring a future suit for patent infringement, and agreed to resolve any controversy arising out of the settlement through various alternative dispute mechanisms, including binding arbitration. The agreement also required Bombardier to cause its security agreements with its bank to be subordinated to the settlement agreement. Kawasaki executed the agreement in March of 2008, after receiving assurances from Bombardier that its bank had agreed to the subordination. In fact, Bombardier's bank refused to subordinate its security interests. Kawasaki returned to federal court in Texas and asked the court to vacate the earlier dismissal and require Bombardier to comply with the settlement agreement. The court refused. Kawasaki appealed but also engaged, with Bombardier, in court-ordered mediation. Kawasaki later dismissed the appeal and filed a new action in the Southern District of Illinois requesting specific performance of the settlement agreement's obligations. Kawasaki also brought claims against Bombardier's attorneys and its bank. Bombardier moved to dismiss or, in the alternative, to stay the claims pending arbitration. Chief Judge Herndon (S.D. Ill.) denied the motion. Bombardier appeals.

In their opinion, Seventh Circuit Judges Flaum, Manion, and Sykes reversed as to the Bombardier claims and vacated as to the other claims. The Court noted that the arbitration agreement was broad enough to cover the dispute between the parties. The only reason to deny Bombardier's request to arbitrate, then, would be that it waived that right. The district court so concluded, citing Bombardier's participation in the Texas district court litigation, the appeal, and the court-ordered mediation. The Court recognized that a party can waive a contractual arbitration right, and that the waiver can be explicit or inferred. In order to infer such a waiver, however, a court must determine the party acted inconsistent with its right to arbitrate, given all the circumstances. Relevant considerations include a party's diligence, delay, participation in court proceedings, and prejudice. Although the Court conceded that Bombardier participated in the court proceedings and mediation, it concluded that its participation was not inconsistent with exercising its right to arbitrate. All of its actions were in response to Kawasaki's actions and it never agreed to allow the Texas court to resolve the dispute -- it never even addressed the merits. Had it not participated in the proceedings or mediation, it risked a default judgment. Likewise, although there has been some delay, the delay is not inconsistent with Bombardier's right to arbitrate. It has consistently asserted its right to arbitrate the dispute, and it is Kawasaki's dispute that is an issue. Bombardier was not required to take any affirmative steps. It is enough for it to continue to assert its willingness to arbitrate and forgo any participation in substantive litigation. The district court erred in denying the motion to dismiss or stay. With respect to the other parties, the Court vacated the district court's order. First, Bombardier has no standing to protect the rights of the other defendants. Second, the issue whether the arbitration clause applies to the non-signatories is not ripe for review. Kawasaki does not want to arbitrate those claims and the non-signatories have not indicated their desire, one way or the other.

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MCCAULEY v. CITY OF CHICAGO (October 20, 2011)

Glenford Martinez was released from prison in 2006, after serving 13 years for attempted murder. The following year, he was arrested for domestic battery after he allegedly choked his former girlfriend, Mersaides McCauley. Martinez could have been held without bail had the Illinois Department of Corrections issued a parole violation warrant. They did not -- and he was released on bail. McCauley obtained an order of protection, but to no avail. Martinez continued to violate the order. In early 2008, Martinez shot and killed McCauley and then killed himself. McCauley's estate brought a number of federal and state claims against numerous defendants, including an equal protection claim against the City of Chicago and Roger Walker, the then-IDOC Director. Judge St. Eve (N.D. Ill.) dismissed the federal claims and declined to exercise jurisdiction over the state claims. With respect to the equal protection claims, she concluded that female victims of domestic violence are not a protected class and that Eleventh Amendment sovereign immunity precluded any recovery against Walker in his official capacity. The court denied the estate's request to conduct discovery to support a personal capacity claim against Walker. The estate appeals.

In their opinion, Seventh Circuit Judges Manion, Sykes, and Hamilton (dissenting in part) affirmed. The Court criticized the district court's analysis but ended up with the same result. The Court approached the case by asking whether the complaint sufficiently pleaded facts that would allow an inference that the City maintained a "policy, custom, or practice" of discrimination against a group to which McCauley belonged. Twombly and Iqbal require specific facts that support the legal claims, rather than legal conclusions and conclusory allegations. After disregarding the complaint's legal conclusions, the Court found that the factual allegations did not satisfy the Monell standard. In fact, the factual allegations alleged that the City failed to provide special protection to female victims of domestic violence, not that it failed to provide equal protection. The equal protection claim against the City was properly dismissed. The Court also affirmed the denial of discovery related to the Walker personal capacity claim, although again for different reasons. Given that there is nothing in the record to suggest that Walker had any personal involvement in Martinez' parole, the district court's refusal to allow discovery on the issue was not an abuse of discretion.

Judge Hamilton dissented from the majority's dismissal of the equal protection claim against the court City. His dissent was primarily an attack on Iqbal, its heightened pleading requirements, its inconsistency with other rules and practice, and its difficulty in application. He believed that the estate's complaint adequately alleged an equal protection claim by alleging that the City treated domestic violence less seriously than other crimes and that it had a custom of doing so. Even if he concluded that the complaint fell short, however, he would have remanded to give the estate an opportunity to amend its pleading to meet the heightened standard.

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COMMON v. CITY OF CHICAGO (October 20, 2011)

Chicago police officers Guy Nelson and Sean O'Brien responded to a call that a robbery suspect could be found in a south-side convenience store. As they approached the store, they saw three men that fit the description they had been given by the store owner leaving the store. Considering the inconsistent evidence in a light most favorable to the officers, a) Officer Nelson identified himself, b) Nelson ordered the three men to stop and show their hands, c) two of the three men complied, d) Michael Smith did not comply (even after repeated requests), e) Nelson removed a gun from his pocket, f) Smith grabbed for the wrist of Nelson's gun-hand, and g) Nelson fatally shot Smith. The medical examiner found five small bags of cocaine in Smith's chest and trachea and concluded that they made their way there through the upper airway. Smith's estate brought suit against the officers and the City, alleging excessive force. Judge Kennelly (N.D. Ill.) ruled, in limine, that the cocaine evidence was admissible. After trial, a jury found in favor of the defendants. Smith's estate appeals.

In their opinion, Seventh Circuit Judges Posner, Rovner, and Tinder affirmed. The question for the jury in this case was whether Officer Nelson's actions were objectively reasonable, given the facts and circumstances known to him at the time. The general rule is that the jury should not consider information that the officer did not know at the time of his actions. The Court noted two exceptions to the general rule -- to challenge the credibility of a witness 1) by attacking his capacity to observe, recall, or relate or 2) by pointing out contradictions in his testimony. Here, the testimony of the various witnesses was inconsistent. The estate's version was that Smith complied with the officers' request and stood quietly, with arms raised, when Officer Nelson shot him. The evidence that Smith possessed five small bags of cocaine makes it more likely that his conduct fit the description given by the officers rather than that of the other witnesses. It would, for example, explain why he was less willing to cooperate and why he did not want to face the officers and show his hands. It therefore fits within the exception to the rule that the jury should only consider what the officer knew. The Court added that the district court could have excluded the evidence on unfair prejudice grounds. Appellate review of a district court’s findings in this area is quite deferential. The Court concluded that the district court did not err in admitting the evidence.

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BARTON v. ZIMMER, INC. (October 18, 2011)

Zimmer, Inc. sells artificial hips and knees. It employed Bruce Barton as part of its sales force since 1993. Andy Richardson became Barton's supervisor in 2004. Richardson eliminated many of Barton's duties over the course of the next year, most likely due to age discrimination (conceded, for purposes of argument, by Zimmer). Barton complained to Human Resources representative Richard Abel after a negative May 2005 performance review. Able investigated the situation, met with Barton and Richardson, and ultimately recommended that Richardson be fired for his divisive leadership. In the meantime, Barton had been on vacation,FMLA leave, and paid administrative leave. In September, Barton returned and began reporting to Sherri Milton. Barton complained about the assignments he received from Milton and filed an EEOC charge, alleging that the assignments were in retaliation for his earlier EEOC charge against Richardson. After Milton criticized his performance, Barton suffered a mental breakdown. He used up his FMLA leave, as well as his short and long-term disability benefits. The Social Security Administration granted a total disability benefits claim and Burton retired from Zimmer. Barton filed suit against Zimmer for ADEA discrimination and retaliation and FMLA interference. Judge Springmann (N.D. Ind.) granted summary judgment to Zimmer. In part, she concluded that Barton could not prevail on his ADEA claim because he was only seeking front pay, not reinstatement. Barton appeals.

In their opinion, Seventh Circuit Judges Evans (who, as a result of his death, took no part in the decision), Sykes, and Hamilton affirmed. The Court first addressed the Richardson ADEA claim. It disagreed with the district court's conclusion that front pay is not available because of the statute's compensatory damages exclusion. In Pollard, the Supreme Court held, in the context of Title VII, that front pay could be an appropriate substitute for reinstatement if the reinstatement remedy was not viable as a result of psychological injuries caused by the discrimination. The Court assumed that the Pollard Title VII approach would apply in an ADEA case but concluded that Barton was not entitled to it. Here, Barton’s psychological injuries that precluded his reinstatement arose out of the job assignments from Milton, not from Richardson. The Milton job assignments were not the result of any age discrimination. The Court turned to the ADEA retaliation claim. To prevail, Barton was required to show a statutorily protected activity, a materially adverse employment action, and a causal relation between the two. The Court concluded that Barton's challenging new job assignment was probably not a materially adverse employment action but that, even if it was, no reasonable jury could conclude that Milton assigned the task to him in retaliation for his protected activity. The project was important to the company and Barton's work history showed that he was qualified to complete it. Finally, the Court addressed the FMLA interference claim. The FMLA requires employers to restore an employee to his prior or equivalent position upon the termination of leave. It is true that Barton was not returned to his prior position since most of his duties had been eliminated and the few projects he had were completed. The record supports, however, the conclusion that Zimmer assigned him to the same duties he would have had he not taken leave. The FMLA requires no more.

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SHAFFER v. AMERICAN MEDICAL ASSOCIATION (October 18, 2011)

In late 2008, William Shaffer held the position of Director of Leadership Communications for the American Medical Association. In late October, as a result of budget pressures, the AMA's Chief Marketing Officer asked Michael Lynch, Shaffer's direct supervisor, to recommend a position to eliminate. Lynch recommended the elimination of only one position -- the one held by Peter Friedman. A month later, Shaffer advised Lynch that he had scheduled knee replacement surgery for January of 2009 and would be out of work from 4 to 6 weeks. About a week later, Lynch retracted his earlier recommendation and recommended that Shaffer's position be eliminated rather than Friedman's. The AMA terminated Shaffer's employment in January of 2009. In February, after learning of threatened litigation, the AMA's human resources representative typed up his original notes regarding conversations with Lynch and dated them November 25, 2008. He then destroyed the handwritten notes. At the same time, he instructed Lynch to prepare a memorandum describing his rationale for selecting Shaffer. Lynch prepared the memorandum but dated it November 21, 2008. Shaffer brought suit pursuant to the Family and Medical Leave Act. Judge St. Eve (N.D. Ill.) granted summary judgment to the AMA. Shaffer appeals.

In their opinion, Seventh Circuit Judges Kanne, Williams, and Tinder reversed and remanded. The FMLA prohibits an employer from interfering with an employee's right to take leave and also forbids an employer for retaliating against an employee for taking leave. Although an interference claim and a retaliation claim are similar, a retaliation claim requires proof of discriminatory intent while an interference claim does not. The record here shows that Lynch changed his mind about what position to eliminate between late October and late November of 2008. One event of note that occurred between those two dates is Shaffer's notification that he was taking leave in 2009. The Court concluded that a jury could find that Lynch's change of mind shortly after learning of Shaffer's intent to take leave supported a conclusion that the request for leave and the termination were causally related. The Court also pointed to the facts that the human resources representative backdated his memorandum and destroyed his original notes and that the AMA gave different explanations of its decision over time. Finally, the Court considered whether Lynch’s "November 21, 2008" memo (actually prepared in February of 2009) was protected by the attorney-client privilege. Although the memorandum was backdated and addressed to the human resources representative, the fact is that it was prepared for and only shared with AMA's in-house counsel. The Court concluded that the memorandum met all of the requirements for the privilege to apply and that the district court did not err in excluding it.

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PALKA v. CITY OF CHICAGO (October 18, 2011)

In early 2007, Assistant Deputy Superintendent Matthew Tobias recommended that Peter Palka be terminated from his position as a Chicago probationary police officer. Matthew's father, Tadeusz, himself a Cook County Deputy Sheriff, complained to Tobias and sought Peter’s reinstatement. Tobias refused. A few months later, an unidentified person placed a suspicious call to the school attended by Tobias' children. Tadeusz was accused of making the call. After an investigation concluded that he was responsible, he took early retirement. He later brought suit against the County and others alleging violations of his constitutional rights. The district court dismissed his complaint and the Seventh Circuit affirmed (opinion and intheiropinion). At about the same time, Peter filed a § 1983 suit against the City and Tobias, alleging discrimination based on his Polish ancestry. He sought reinstatement and back pay. The district court granted summary judgment to the City on the ground that Tobias was not a policymaker under a Monell analysis. Magistrate Judge Nolan (N.D. Ill.) then ruled that Peter was not entitled to reinstatement on the grounds that Tobias, the only defendant, lacked any authority to grant reinstatement. Peter moved for voluntary dismissal. The magistrate judge dismissed the City claims with prejudice and the Tobias claim without prejudice. Peter appealed. In the meantime, Tadeusz and Peter both received EEOC right to sue letters and filed yet a third case based on Title VII against the City (by Peter) and the Sheriff’s Department (by Tadeusz). Judge Kendall (N.D. Ill.) dismissed the claims on res judicata grounds. The Palkas appeal. The appeals were consolidated.

In their opinion, Seventh Circuit Judges Ripple, Kanne, and Sykes affirmed. The Court addressed Peter's appeal first. Normally, a dismissal without prejudice is not considered final and appealable. Here, however, the statute of limitations on Peter's § 1983 claim has expired. Since the case cannot be refiled, the judgment below is considered final. With respect to the judgment in favor of the City, the Court found no Monell liability and affirmed. It concluded that the two allegations of discrimination could not amount to a widespread pattern or practice and that Tobias was not a final policymaker, since his decisions were subject to review. Turning to the availability of a reinstatement remedy, the Court refused to consider Peter's argument. Since Peter requested and received dismissal of his claim against Tobias, he cannot complain about the earlier interlocutory order barring the reinstatement remedy. The Court next considered the Title VII claims dismissal. It found that the case was a "quintessential example of claim splitting." The cases involve the same parties and the same cause of action (albeit under different theories) and were litigated through final judgment. The Court rejected the Palkas' arguments to the contrary.

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CITY OF CHICAGO v. FEDERAL EMERGENCY MANAGEMENT AGENCY (October 17, 2011)

The airlines that use O'Hare and Midway Airports have Use Agreements with the City of Chicago that define the rights of the parties. Pursuant to the Agreement, the City estimates its operating and maintenance expenses each year for the upcoming year. Each airline is obligated to pay its proportionate share of these expenses, based on its projected landings. At the end of each year, the City compares its actual costs to its projected costs and either collects additional funds from the airlines or refunds any excess money. The City only projects for ordinary snow removal expenses. In 1999 and 2000, the City spent approximately $8 million in extraordinary snow removal costs. The Federal Emergency Management Agency picked up almost $6 million of that amount pursuant to federal law. FEMA's generosity, however, was short-lived. Relying on another provision of federal law that requires recipients of federal assistance to repay the United States if the assistance duplicates other benefits available, FEMA asked the City to return the funds. It took the position that the federal assistance duplicated the funds available to the city under the Use Agreements. The City brought suit against FEMA under the Administrative Procedure Act on the ground that the duplicate benefits provision relied on applies only to available insurance proceeds. But, as alternative protection, the City stipulated that the airlines were responsible for the snow removal costs under the Use Agreements. The airlines moved to intervene either as a matter of right or permissively in order to argue the position that the Use Agreements are limited to ordinary snow removal expenses. Judge Norgle (N.D. Ill.) denied the motions. The airlines appeal.

In their opinion, Seventh Circuit Judges Cudahy, Posner, and Williams reversed. The Court discussed at length, without deciding its applicability, intervention as a matter of right under Rule 24(a). It declined to decide that issue because it decided that the airlines should have been permitted to intervene permissively under Rule 24(b). Permissive intervention is about economies of litigation and is allowed when a party has a claim or defense sharing a common question of law or fact and when the intervention would not unnecessarily delay or prejudice the underlying adjudication. The Court concluded that the intervention might cause some delay and require some limited additional discovery. On the other hand, it might eliminate the need for subsequent litigation between the airlines and the City. The Court concluded that there was no basis to deny permissive intervention.

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TUREK v. GENERAL MILLS (October 17, 2011)

Carolyn Turek brought suit against General Mills and Kellogg, alleging that the defendants' marketing of chewy bars violated the Illinois Consumer Fraud and Deceptive Business Practices Act. Specifically, she alleged that the defendants label the product as containing dietary fiber without disclosing that the principal fiber used in the product is processed and does not provide the normal benefits associated with fiber consumption. Judge Gettleman (N.D. Ill.) dismissed the suit for want of jurisdiction on the grounds that the action was preempted by federal law. Turek appeals.

In their opinion, Seventh Circuit Judges Cudahy, Posner, and Williams affirmed (but on different grounds). First of all, the Court noted that the case was not one of complete preemption, where federal law pervades a field such that no state law claim could exist. The statute at issue here, the Nutrition Labeling and Education Act of 1990, provides specifically that it preempts no state law unless it is expressly preempted by the Federal Food, Drug, and Cosmetic Act. Therefore, the Court stated, the district court had jurisdiction to hear the case on the merits. The FFDCA does prohibit states from imposing labeling requirements that are not identical to the federal requirements. Federal law does impose a labeling requirements on dietary fiber. The principal requirement is that a manufacturer state the amount of fiber in each serving. The chewy bars at issue meet all the federal labeling requirements. The labeling that plaintiff suggests is missing is not identical to the federal labeling requirements and thus barred by federal law. Plaintiff's claim should have been dismissed for failure to state a claim, rather than for want of jurisdiction.

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