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

MARION COUNTY CORONER'S OFFICE v. EEOC (July 27, 2010)

Kenneth Ackles, an African-American male, was elected Marion County, Indiana coroner in November 2004. Two deputy coroners -- white male John Linehan and African-American female Alfarena Ballew -- sought the position of chief deputy coroner. The chief deputy coroner is responsible for the day-to-day management of the office. Ackles chose Linehan because he was currently serving in that position on an interim basis. Very early on, Ackles made it clear to Linehan that he wanted to increase the number of African-American employees (particularly deputies) in the office. The relationship between Ackles and Linehan did not go well: Ackles complained that Linehan received a salary increase without his knowledge, Ackles and Linehan disagreed over disciplining Ballew, Ackles instructed Linehan not to report Ballew's tardiness, Ackles told Linehan not to file a police report concerning a missing $3000, and Ackles instructed Linehan not to discipline the janitor who allegedly took the $3000. Finally Linehan filed a hostile work environment complaint with the human resources department. On that very day (November 14), Ackles told Linehan that he was going to make a change in the chief deputy position but that Linehan was to continue performing his duties. Some of those duties were later reassigned but Linehan continued to receive the same salary. A few weeks later (December 2), Linehan received a letter terminating his employment. Although the letter provided no reason for the termination of employment, Ackles testified later that he had "lost confidence and trust" in Linehan. Ackles named Ballew the new permanent chief deputy coroner. Shortly thereafter, Ackles and Ballew canceled an outsourcing contract for autopsies and hired directly several of the company's employees. They hired only African-Americans -- none of the white employees were offered positions. Linehan filed an EEO charge against the coroner's office. He alleged race, sex, and age discrimination as well as retaliation for protected activity. His charge was processed administratively at the EEOC pursuant to the Government Employee Rights Act (GERA). The ALJ found that Ackle's testimony was incredible (among other things), that his reason for terminating Linehan's employment was pretextual, and that Linehan was demoted and fired on account of his race and in retaliation for his complaint. The ALJ awarded front and back pay, attorney's fees, and compensatory damages in the amount of $200,000. The EEOC affirmed. The Coroner's Office petitions for review.

In their opinion, Judges Manion, Evans, and Sykes granted in part, denied in part, vacated in part, and reversed and remanded. The Court noted, under GERA, that it should uphold the decision of the EEOC if it is supported by substantial evidence. Here, the heart of the case is the pretext analysis. Although the Court admitted that this analysis looks only to whether the employer’s explanation was "honestly believed," it nevertheless found a wealth of evidence that the "lost confidence and trust" rationale was pretextual. It cited the testimony concerning the discipline of Ballew, the janitor theft, and Linehan’s raise in support of its conclusion. Next, it considered the issue of the EEOC’s jurisdiction. GERA applies only to policymaking employees chosen by an elected official. The coroner’s office argued that Linehan was not a policymaking employee when he was fired because of the November 14 demotion. The Court rejected the argument. Linehan was certainly stripped of some duties before he was fired but he was never formally demoted, he continued to receive his salary, and the December 2 letter advised that he was being terminated from the position of “Chief Deputy Coroner.” Finally, the Court addressed the $200,000 award of compensatory damages. The Court concluded that the award bore no rational relation to the very scant evidence of Linehan’s suffering and was excessive compared to similar cases. It offered a remittitur of $20,000 or a new hearing on damages.

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PICKETT v. SHERIDAN HEALTH CARE CENTER (June 25, 2010)

Danielle Pickett was employed as a housekeeper at the Sheridan Health Care Center in Zion, Illinois. In 2005 and 2006, she was the victim of several incidences of inappropriate remarks and touching by nursing home residents. Although the Center responded to her complaints, the promised response never quite succeeded. In a June 2006 meeting with several Center staff members, the Center agreed to reassign Pickett from cleaning residents' rooms, although, according to Pickett, the Center's VP of Operations suggested that Pickett invited the inappropriate conduct. The next morning, Pickett had a very emotional conversation with the Center's Administrator. According to Pickett, the Administrator said some things that indicated that her job may be in jeopardy. The meeting ended with Pickett still upset and in tears. Instead of resuming her assigned tasks, she left the Center. She called the Administrator the next day to ask if she still was employed. He consulted with the VP of Operations and advised Pickett that she no longer had a job. Beginning about a month later, after Picket filed an EEOC claim, the Center offered on several occasions to reinstate Pickett. She refused several such offers but eventually returned to the Center in January of 2007. She brought suit against the Center for sexual harassment and for retaliatory firing under Title VII. Judge Pallmeyer (N.D. Ill) granted summary judgment to the Center on the harassment claim. The retaliation claim went to trial. The jury found for Pickett and awarded $15,000 in compensatory and $50,000 in punitive damages. The court awarded back pay and injunctive relief. The Center appeals.

In their opinion, Judges Flaum, Kanne, and Evans affirmed. The Court first rejected the Center's argument that Pickett could not prevail on the retaliation claim because she could not prevail on the harassment claim. In order to prevail on retaliation, a plaintiff need only show statutorily protected conduct, adverse action, and a causal link. The Court found that there was sufficient evidence of each of those elements in the record -- the jury was entitled to find in Pickett's favor. Each of the Center's other arguments was also rejected: a) counsel’s "send some message" language in closing argument was not improper, b) the compensatory damage award was not excessive and did not require corroborating evidence from a third party, and c) the court did not abuse its discretion in allowing the punitive award to stand in light of the evidence that supported a conclusion that the Center knew it might be retaliating when it terminated Pickett's employment.

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HANSON v. DANE COUNTY (June 15, 2010)

The 911 line was dead when the Dane County dispatcher picked it up. The dispatcher called the number back but there was no answer. The police were alerted. When the police arrived at the home of David and Karen Hanson, Karen asked them to leave. She advised the police that she had called 911 but could not remember why -- she also said that she and David had been arguing but that she could not remember why. The officers continued their investigation. They questioned David and Karen separately and also questioned the couple's 15 and 13-year-old daughters. David ultimately admitted that Karen had called 911 after he "bumped" her during a heated argument. The police arrested David and charged him with domestic battery. The charges were dropped when Karen refused to cooperate. David Hanson filed suit pursuant to § 1983 alleging violations of the Fourth, Fifth, and Fourteenth Amendments. Judge Crabb (W.D. Wis.) granted summary judgment to the defendants. Hanson appeals.

In their opinion, Chief Judge Easterbrook and Judges Cudahy and Manion affirmed. The Court first rejected Hanson's argument that the police entry was without probable cause in violation of the Fourth Amendment. The Court concluded that an unanswered 911 callback itself provides probable cause. The Court also rejected the argument that the officers violated the Fourth Amendment by remaining on the premises after Karen asked them to leave. Her demeanor and her obviously false statements that she could not remember why she called or why she and David were fighting support the reasonableness of the officers' actions. The officers also acted reasonably in questioning the children given David and Karen's lack of cooperation. In addition, any substantive due process rights would belong to the children, who are not parties directly or indirectly. Finally, the Court rejected David's claim that his separate questioning amounted to a custodial interrogation and that the officers "violated" Miranda by not delivering its warnings. Although the district court had resolved the issue on qualified immunity grounds by concluding that a reasonable officer would not have found the interrogation "custodial," the Court found that analysis unnecessary. The Miranda doctrine governs the use in court of incriminatory statements. It does not prohibit a compelled statement nor does it allow a claim of damages for the failure to provide the warning.

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PELLA CORP. v. SALTZMAN (May 20, 2010)

Pella Corp. is in the business of manufacturing and selling home windows. It has sold in excess of 6 million "ProLine" casement windows. When a wood rotting problem arose, Pella set up a customer service program to compensate affected purchasers. A group of those purchasers brought a class action. The suit alleges that Pella committed consumer fraud when it failed to disclose the alleged design defect and the problems it was causing. Judge Zagel (N.D. Ill.) certified seven classes: a) a nationwide Rule 23(b)(2) class of persons who own structures containing the casement windows that have not been replaced, and b) six statewide Rule 23(b)(3) classes of persons whose windows have already been replaced because of the defect. The court refused to certify causation, damages, and statute of limitations issues. Pella petitioned for leave to appeal.

In their opinion, Judges Posner, Williams, and Tinder granted the petition and affirmed. The Court agreed that consumer fraud actions frequently present problems when treated as class actions. That does not, however, equal a general rule that they can never be so treated. Here, the principal issue is whether there is a single design defect in the window that leads to wood rot. The Court concluded that the district court was well within its discretion in deciding that the issue is best resolved in a class context. The problems inherent in treating consumer fraud cases in a class context are not present in this case. The issues are not complex, the central questions are all the same, and the class members must prove causation and damages on an individual basis.

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DIRECTV v. BARCZEWSKI (May 13, 2010)

David Barczewski and Jonathan Wisler purchased electronic equipment that was actually marketed for its ability to intercept DirecTV signals. They both also participated in discussion groups whose purpose was to exchange advice about intercepting and decrypting those signals. When DirecTV sued them, a jury found that Wisler had intercepted signals without authorization for 435 days and that Barczewski had distributed four unauthorized decryption devices. The court imposed a statutory penalty of $44,000 against Barczewski and $43,500 against Wisler. Barczewski and Wisler appeal.

In their opinion, Chief Judge Easterbrook and Judges Flaum and Sykes affirmed in part and vacated and remanded in part. The Court first summarily rejected defendants' contentions that DirecTV did not have a private right of action under 18 U.S.C. § 2520 or 47 U.S.C. § 605. It noted that every court of appeals that had considered the questions agreed. It also quickly disposed of their argument that an exception in the statute for an "aeronautical communication system" applied because a DirecTV witness at trial stated that DirecTV was such a system. Whatever the witness meant, the Court interpreted the statute and concluded that DirecTV is not the kind of system referred to in the exception. Finally, the Court addressed the issue of the penalty. Although it affirmed the calculation of Barczewski’s penalty, it vacated the award of the penalty against Wisler. The statute provides that a court "may” assess the greater of a) the sum of the plaintiff's damages and the violator's profits, or b) the greater of $100 per day of violation or $10,000. In 1990, the Court held, in Rodgers v. Wood, that the imposition of the highest penalty under that calculation was mandatory. Part of the Rodgers rationale was that Congress changed the statute and replaced “shall” with “may” without any explanation for a change from mandatory to discretionary. Rodgers was also the first Court of Appeals decision interpreting that section. Since Rodgers, each of the four other circuits that have addressed the question has disagreed – and concluded that the language is permissive. Upon a careful review of the statutory language, the rationale of Rodgers, the analyses from the other circuits, and the policy considerations, the Court overruled Rodgers' holding that the maximum penalty was mandatory. It vacated the award and remanded to the district court.

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THOMAS v. COOK COUNTY SHERIFF'S DEPARTMENT (May 3, 2010)

In their opinion of December 1, 2009, Judges Flaum, Wood, and Williams affirmed in part and reversed and remanded in part a $4.45 million jury verdict awarded to the mother of a young man who died while in custody of the Cook County Jail (refer to the panel opinion and to my post). Cook County and the individual defendants petitioned for rehearing and rehearing en banc. With respect to the petition of the individual defendants, the panel unanimously voted to deny rehearing and no judge in regular active service requested a vote on the petition en banc. With respect to the petition of the County, however, three judges voted to grant the rehearing en banc with respect to the issue of damages. In consideration of the petition and the votes to grant the rehearing, the panel amended its opinion.

In their amended opinion, Judges Flaum, Wood, and Williams refined their analysis of the damages issue and provided some general prophylactic guidance regarding verdict forms. The panel reaffirmed its original decision upholding the verdict, notwithstanding the confusion apparent in the instructions and the verdict form.

Judge Sykes, joined by Judges Posner and Tinder, dissented from the denial of the County's petition for rehearing en banc. The principal claims in the case sought compensation for a single injury -- Norman Smith's suffering and death while in the custody of the Cook County Jail. Because liability is joint and several, the jury should not have been asked to assess damages by claim or by defendant. The dissent criticizes the panel for approving the district court's discretion to choose between the "ceiling" and the "cumulative" approaches to the confusion verdict. In the dissent's view, neither approach is supported by the Circuit's precedent. Finally, Judge Sykes is critical of the panel's reliance on the general proposition and presumption that jurors follow their instructions. Given the "bewildering hodgepodge" of instructions and the backwards verdict form, the Court cannot have any confidence that the jury acted properly. Judge Sykes would have granted the petition to address the treatment of the damage award.

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FOX v. HAYES (April 7, 2010)

Kevin and Melissa Fox and their children, six-year-old Tyler and three-year-old Riley, lived in a small town in Will County, Illinois, about 60 miles from Chicago. On June 6, 2004, Tyler woke his father up at about 8:00 a.m. and told him Riley was missing -- Melissa had spent the night in Chicago. Riley's lifeless body was found in a nearby forest preserve several hours later. Although the parties’ versions of the investigation vary wildly, the jury could have found the following. Will County detectives, including Scott Swearengen, conducted the investigation. At some point, Swearengen began to suspect Kevin. On October 26, the Foxes were asked to come to the station to talk about the case. Although they thought they were about to receive new information about the murder, they were mistaken. They were immediately separated. Melissa was locked in a waiting area and told that an officer would be with her shortly. Instead, she was left alone for almost 4 hours. Meanwhile, Kevin was taken to an interrogation room where Swearengen accused him of killing Riley. The officers falsely told Kevin that they had fiber evidence implicating him and a surveillance tape showing him driving his SUV during the night. Kevin took a polygraph examination, which the officers told him that he failed. When Melissa offered her love and support to Kevin, Detective Hayes started screaming. He screamed at his fellow officers to remove Melissa from the room, he screamed at Kevin that he was a "f***ing murderer," and he screamed at Melissa. Continuing to use a lot of profanity, he screamed at Melissa that Kevin was a liar and a murderer, that he never loved her, that he killed her daughter, and that she had to "get over it." After that episode, the detectives continued the interrogation of Kevin. Hayes told Kevin that if he did not confess, he would make sure that Kevin was raped every day he was in prison. At one point, Swearengen told Kevin that the state's attorney would give him a deal if he admitted that he accidentally killed his daughter. He told him he would be out on bond the very next day and wood only have to serve 3-5 years in prison. Kevin decided to go along with the story and "confessed." He immediately renounced the confession the next morning when he was allowed to meet with a lawyer. Months later, his defense team had the DNA evidence tested. The test results showed conclusively that the DNA found on Riley's body did not come from Kevin. Kevin was released the next day, after 243 days in jail. Kevin and Melissa brought suit under both § 1983 and Illinois law against several Will County detectives. Kevin's allegations included due process violations, false arrest, malicious prosecution, intentional infliction of emotional distress (IIED), and punitive damages. Melissa's claims include loss of consortium, IIED, and punitive damages. After a six-week trial, a jury awarded Kevin $9.3 million and Melissa $6.2 million. The trial judge struck some of the punitive damage award and dismissed the case against a detective whose estate had settled. The end result was an award of $12.2 million. The detectives appeal.

In their opinion, Judges Flaum, Evans, and Williams affirmed in part and reversed in vacated in part. The central issue on appeal is defendants' argument that they had probable cause to arrest Kevin and are therefore entitled to qualified immunity on all the counts except the IIED claim. In order to resolve that issue, the Court had to identify the earliest time that the jury could have found Kevin to be under arrest and then assess whether a reasonable jury could have found that the defendants lacked probable cause to arrest Kevin at that time. On the first question, the Court had little difficulty identifying a time early in the interrogation when Kevin tried to leave the room and was told to sit down. The fact that he did not specifically ask to leave is only one factor in the analysis. Here the other factors --whether he knew he was a suspect of a crime, whether his movement was limited, whether the officers were engaged in a course of conduct, and whether he was in a private location -- all support a conclusion that he was under arrest. With respect to the second issue, the Court examined the long list of facts that the defendants argued supported probable cause. After it eliminated from the list facts that were disputed, irrelevant, or mischaracterized, the Court concluded that a reasonable jury could have concluded that they fell short of probable cause. On the merits of the defendants' argument that the substantive due process claim could not stand, the Court agreed with the defendants. It is well settled that a substantive due process claim cannot prevail where state law provides an adequate post-deprivation remedy. The state law false arrest and malicious prosecution claims do exactly that here -- the jury verdict on the due process claim must be set aside. The Court next upheld the verdict on Melissa's IIED claim. Although it agreed that the evidence of Melissa's distress was weak, it concluded that Hayes' abuse of authority in a particularly emotional environment was enough to uphold the claim. Finally, the Court addressed certain damage awards. Although it upheld a $2.7 million award for Melissa's loss of consortium because it found a rational connection between the award and the evidence, it concluded that the $1 million award on the IIED claim was excessive because there it lacked such a connection. The Court also concluded that the $1.6 million false arrest award to Kevin was not supported by the evidence since the false arrest award only covered the period of time between his arrest and the first issuance of process (36 hours). Instead of a new trial, however, the Court ordered a remittitur to $150,000 on Melissa's IIED claim and $16,000 on Kevin's false arrest claim.

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ADVERTISING SPECIALTY INSTITUTE v. HALL-ERICKSON, INC. (April 7, 2010)

Advertising Specialty Institute (ASI) is in the promotional products business. It facilitates transactions between the buyers and sellers of corporate promotional materials. It has an affiliate, ASI Show, which puts on numerous trade shows throughout the year. Hall-Erickson and National Premium Show (NPS) put on The Motivation Show annually at McCormick Place in Chicago. In 2001, The Motivation Show and ASI entered into an agreement to co-sponsor a promotional product event at The Motivation Show. In the agreement, The Motivation Show gave ASI the right of first refusal regarding any other opportunity within the promotional products industry and also agreed that it would not extend the same opportunity to any other association or conference, specifically including by name ASI's close competitor, Promotional Products Association International (PPAI). Notwithstanding this agreement, The Motivation Show agreed to co-locate a show with PPAI. The district court determined that The Motivation Show breached its contract with ASI but, finding that ASI failed to offer sufficient proof of damages, awarded only nominal damages. ASI appeals the damages determination -- defendants cross-appeal the liability determination.

In their opinion, Judges Cudahy, Wood, and Tinder affirmed. The Court concluded that the right of first refusal was clear and unambiguous in the contract and that The Motivation Show violated that provision and breached the contract when it put on the show with PPAI. The Court also affirmed with respect to the damages issue, although it did express its view that the damages case was not as weak as described by the district court. Under Pennsylvania law, damages are not recoverable beyond that which is established with reasonable certainty by the evidence. The Court found portions of the evidence did provide some basis for the claim of damages. However, giving deference to the findings of the District Court, the Court also noted several gaps in the evidence. For example, ASI never introduced evidence of specific companies that either attended the joint show at issue or would have attended an ASI show, it did not introduce evidence of PPAI's own revenue or profits from the show, and it did not produce evidence of what PPAI would have done had it not shared the show with The Motivation Show. Given the ambiguities and gaps in the evidence, the Court found no clear error.

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NIGHTINGALE HOME HEALTHCARE v. ANODYNE THERAPY (December 21, 2009)

Anodyne Therapy manufactures and sells infrared lamps designed to improve circulation. The FDA approved it for that purpose. But Anodyne allegedly marketed the lamps as a treatment for peripheral neuropathy, which the FDA never approved. Nightingale purchased several of the lamps. The FDA sent Anodyne a warning letter about their marketing claims. Several months later, Nightingale stopped using the lamps, returned them to Anodyne with a demand for a refund, but then replaced them with almost identical devices. Nightingale brought a fraud case in state court. Anodyne removed the case to federal court on diversity jurisdiction grounds. Nightingale then added a federal Lanham Act claim. The court granted summary judgment to Anodyne on the Lanham Act claim, and later granted summary judgment to Anodyne on the fraud claim. The court relied on a contractual disclaimer of warranties as well as Nightingale’s failure to establish proof of damages. Nightingale appeals.

In their opinion, Judges Posner, Kanne and Rovner affirmed. On the merits, the Court disagreed with the warranty holding. It concluded that the only contractual limitation of liability related to a breach of warranty claim – not, as here, a fraud claim. The Court agreed with the district court, however, on the damages holding. Nightingale replaced the lamps with a virtually identical product. Both products served the same purpose, performed comparably and carried similar FDA approvals. The replacement of the lamps did not result in any damage to Nightingale.

The lack of any damage not only doomed the case on the merits – it showed that the jurisdictional threshold for diversity jurisdiction was not met. Ordinarily, the Court concluded, the lack of a good faith basis for meeting the threshold would result in a case being dismissed for lack of jurisdiction, even at a late stage of the case. Here, however, the fact that Nightingale added a federal claim after removal brought the case within the court’s federal question jurisdiction. The state claims were covered by supplemental jurisdiction. Even though the federal claim was later dismissed, the court had discretion to retain the state claims.

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

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

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

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

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

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

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GABBANELLI ACCORDIONS & IMPORTS, L. L. C. v. DITTA GABBANELLI UBALDO DI ELIO GABBANELLI (July 30, 2009)

Gabbenelli Accordions & Imports ("American Gabbenelli") used to be the American distributor for a predecessor of defendant Ditta Gabbenelli Ubaldo Di Elio Gabbenelli ("Italian Gabbenelli"). Disputes arose between the two companies in the 1990s. In 1999, the two companies entered into an agreement under which American Gabbenelli retained the exclusive right to use the Gabbenelli mark in North America and Italian Gabbenelli retained the exclusive right to use it in Italy. The parties further agreed that future disputes would be resolved by arbitration. Notwithstanding the arbitration agreement, Italian Gabbenelli sued American Gabbenelli in an Italian court and American Gabbenelli filed this suit in the United States. American Gabbenelli charged Italian Gabbenelli with trademark infringement. The district court first rejected Italian Gabbenelli's contention that the arbitration agreement deprived the court of jurisdiction. Nevertheless, the court stayed proceedings pending the outcome of the Italian litigation. When no decision was rendered within a few years, the court lifted the stay. American Gabbenelli served Italian Gabbenelli with requests for admissions in May of 2005. Italian Gabbenelli finally appeared through counsel in October of 2005 but did not respond to the requests for admissions. Italian Gabbenelli filed an opposition to American Gabbenelli's motion for summary judgment in June of 2007, and also asked for leave to deny the requests for admissions, which had since been deemed admitted. The court denied that request and granted American Gabbenelli's motion for summary judgment. Italian Gabbenelli appeals.

In their opinion, Judges Posner, Flaum and Wood affirmed in part, reversed in part and remanded. The Court rejected Italian Gabbenelli's appeal on liability. First, it agreed with the district court that the arbitration agreement did not deprive the court of jurisdiction. Second, it concluded that the Italian judgment (since rendered) was irrelevant because it was rendered after the district court judgment. Third, the Court concluded that the district court was within its rights in not allowing Italian Gabbenelli to reopen the requests for admissions after ignoring them for several years. The Court did reverse, however, with respect to damages. The district court awarded damages for lost profits plus statutory damages of $500 for each infringing accordion. The Lanham Act allows statutory damages only for violations on which compensatory damages are not awarded. The district court's award of lost profits and statutory damages with respect to the same accordions was improper. The Court also criticized the district court for awarding statutory damages on each individual item sold. The Act allows statutory damages on each "type of goods," not on individual goods. The Court remanded for a redetermination of damages.

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LOTT v. LEVITT (February 11, 2009)

Steven Levitt and Stephen Dubner authored the off-beat and best-selling Freakonomics. In it, the authors used economic theory to address many “freakish curiosities,’ such as the similarities between nylon stockings and crack cocaine. In one chapter, they addressed the drop in the crime rate in the 1990s. They rejected several theories before concluding that the legalization of abortion accounted for the drop. In one paragraph in that chapter, they commented on John Lott’s theory that allowing more guns into the hands of law-abiding citizens led to the reduction in crime. In addition to noting a “troubling allegation” that Lott fabricated survey data, the authors stated that other scholars tried to “replicate” his results without success. Lott brought a defamation action against Levitt, alleging that “replicate” has a specific meaning within the academic community. Applying that meaning, the statement really means Lott fabricated his results. Lott amended his complaint to add a count of defamation based on an e-mail sent by Levitt. The district court dismissed the count based on the book, holding that it could reasonably be read as not an accusation of dishonesty. Several months later, the parties settled the count based on the e-mail and Lott moved to reconsider the earlier dismissal, claiming that Virginia instead of Illinois law should have been applied. The district court concluded that Lott waived the choice-of-law argument. Lott appeals.

In their opinion, Judges Ripple, Evans and Sykes affirmed. The Court first addressed the choice-of-law issue and held that Lott waived it. The Court rejected Lott’s argument that he agreed only that Illinois’ choice-of-law principles, not substantive law, applied. Lott relied on Illinois law throughout the proceedings below – he doesn’t get a mulligan. Moving on to the substantive Illinois law of defamation, the Court noted that even statements that amount to per se defamation are not necessarily actionable. A statement is not actionable if, giving the words their natural meaning, it is reasonably capable of an innocent construction. The fact that a court must accept as true the facts alleged in plaintiff’s complaint does not alter the analysis. The determination of the meaning of a statement and whether it is susceptible of an innocent construction is a question of law. Here, although Lott makes out a case for a defamatory meaning by giving “replicate” an academic definition, the Court looked at the context of the statement and a natural definition of replicate in finding that an innocent construction was reasonable. Finally, the Court rejected Lott’s argument that he had a claim for per quod defamation, that is, defamation in which damages must be alleged and proved. Lott failed to allege special damages with enough specificity in either his original or amended complaint.

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