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

ROMANELLI v. SULIENE (August 11, 2010)

Ron Romanelli was incarcerated at the Columbia County Jail. He claims that he was in desperate need of medical attention while incarcerated and that Dr. Suliene and Sgt. Kuhl violated his rights to adequate medical care. The district court granted Romanelli leave to proceed on his § 1983 claim but denied his motion for court-appointed counsel as premature. The court denied a second motion a few months later, concluding that Romanelli was capable of representing himself. After the court denied the defendant's motions for summary judgment, it also denied Romanelli's third request for counsel. The court concluded that the case was not complex, that Romanelli had successfully defeated the summary judgment motions, and that the Romanelli was provided with detailed trial instructions. The case proceeded to trial before Magistrate Judge Crocker. The Magistrate Judge ruled that the defendants were permitted to impeach Romanelli with evidence of prior convictions for issuing worthless checks, bail jumping, and sexual assault -- he did not permit impeachment with evidence of Romanelli's convictions for resisting/obstructing an officer and failure to report as a sex offender. A jury concluded that Romanelli did not suffer from a serious medical condition. The court entered judgment in favor of the defendants. Romanelli appeals.

In their opinion, Judges Ripple, Kanne, and Sykes affirmed. The Court first noted the absence of any right to counsel in a civil case but added that a district court has discretion under 28 U.S.C. § 1915(e)(1) to appoint counsel. In exercising that discretion, the court should examine whether the plaintiff is indigent, whether the plaintiff has made reasonable attempts to retain counsel, whether the case is complex, and whether the plaintiff is capable of representing himself. The Court concluded that the district court applied that proper standard and did not abuse its discretion in denying court-appointed counsel to Romanelli. The court acted within its discretion in denying a) the first motion -- it was too early for the court to make the necessary determinations, b) the second motion -- exceptional circumstances were absent and the court made a threshold determination that Romanelli was capable of representing himself in a relatively simple case, and c) the third motion -- Romanelli had proven himself capable of his own representation. The Court added that Romanelli had a very weak case on the facts and suffered no obvious prejudice due to the lack of professional representation. With respect to the evidence of prior convictions, the Court also concluded that the trial court did not abuse its discretion. The Court relied on the facts that almost all of the evidence relating to Romanelli's prior convictions was brought into the record by Romanelli himself and that the court included limiting instructions to the jury. Finally, the Court also noted that any evidentiary error would have been harmless given Romanelli's lack of credibility and the dearth of corroborating evidence.

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OWNER-OPERATOR INDEPENDENT DRIVERS ASS’N v. MAYFLOWER TRANSIT (August 9, 2010)

Mayflower Transit is in the business of transporting household goods from one location to another. It frequently provides this service by leasing equipment. Mayflower pays the truck's owner-operator a per-mile fee. Federal regulations require Mayflower's trucks to be insured. Mayflower acquires insurance and deducts its cost from the fees it pays the owner-operators. A group of drivers and their trade association filed suit against Mayflower under 49 U.S.C. § 14704(a)(2), contending that Mayflower’s practice violates a federal regulation that prohibits a motor carrier from requiring its drivers to purchase any product or service from it as a condition of its lease. Judge Baker (S.D. Ind.) dismissed some claims on statute of limitations grounds and dismissed the insurance claims on the ground that the deduction did not violate the regulation. The owner-operators appeal.

In their opinion, Chief Judge Easterbrook and Judges Williams and Tinder affirmed and remanded. First addressing the limitations issue, the Court noted that § 14705(c) contains a two-year statute of limitations applicable to the administrative proceedings referenced in § 14704(b) but does not mention § 14704(a)(2). The district court applied the two-year statute anyway, concluding that a scrivener's error was responsible for the omission. The Court disagreed. It conceded that the text of the statute was inconsistent with the legislative history and that Congress may have intended a two-year limitations period. Nevertheless, the unambiguous text governs. Since the statute therefore contains no internal statute of limitations, the court concluded that the residual four-year limitations period applies. On the merits, the Court agreed with the district court. The federal regulation requires a motor carrier to purchase insurance -- the regulation is silent on who pays for it. Furthermore, the regulation relied on by the owner-operators only prohibits the lessor from requiring the purchase of a good or service from it. Since Mayflower does not and cannot sell insurance, the insurance deduction cannot be the purchase of a good or service from Mayflower. Finally, another section of the same regulation requires a lessor to specify in its lease the amount of any insurance chargeback. Although the plaintiffs suggest a convoluted reading of that section, the plain meaning of the section is inconsistent with the notion that Mayflower's charge for insurance is prohibited.

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MARSHALL JOINT SCHOOL DISTRICT v. C.D. (August 2, 2010)

Minor student C.D. was a kindergarten student when he was diagnosed with EDS, a genetic disease affecting the joints. He had poor upper body strength and stability accompanied by chronic pain. The school district evaluated him pursuant to the Individuals with Disability Education Act (“IDEA”) and began providing special education services to C.D. in his gym class. The district developed an Individualized Education Program ("IEP") pursuant to which C.D. received adaptive physical education, physical and occupational therapy, and other aids and programming modifications. The following year, the district developed a new IEP. Among other changes, the new IEP required regular consultation between his adaptive gym teacher and his regular gym teacher. When C.D. reached second grade, the district again reevaluated his entitlement to special education and determined that he no longer met the criteria -- that he had an ailment that adversely affects his educational performance and that he needs special education. The district concluded that he met neither criterion. C.D.'s parents sought administrative review. After a lengthy administrative hearing, the administrative law judge (ALJ) concluded that C.D. was still eligible for special education. Judge Crabb (W.D. Wis.) affirmed. The school district appeals.

In their opinion, Judges Cudahy (concurring), Manion, and Williams reversed and remanded. The Court first took some care in identifying the precise issue on appeal in what it viewed as a complicated case. The Court specifically noted that, notwithstanding significant discussion and attention to C.D.'s academic performance, the only issue was whether he was entitled to special education in his gym classes. In order to qualify as a "child with a disability" under the Act, C.D. must have a health condition that adversely affects his educational performance and thus requires special education. The Court found little evidence in the record addressing the first prong and indications that the ALJ misapplied the test. There was evidence in the record that C.D.'s health condition could affect his educational performance and the ALJ did conclude that C.D.'s health condition could affect his educational performance. But there was little probative evidence that it actually did affect his performance – which is what the Act requires. The Court thus concluded that C.D. was unable to satisfy the first prong of the Act's test. Alternatively, the Court addressed the second prong of the test -- whether C.D. needed special education. The Court reviewed in detail the evidence presented on that issue and concluded that the ALJ impermissibly discounted testimony of C.D.’s special education gym teacher and that the record lacked substantial evidence or a reasoned basis for the finding that C.D. needed special education in gym.

Judge Cudahy concurred. Although he joined in the majority's result, he expressed the need for caution in overruling findings of fact based on witness reliability and in balancing the weight to be given medical professionals versus education professionals.

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SPOERLE v. KRAFT FOODS GLOBAL (August 2, 2010)

Kraft Foods operates an Oscar Mayer plant in Madison, Wisconsin. It requires its employees to wear boots, hardhats, smocks, and hairnets for safety and cleanliness. Obviously, it takes a short time each day to put on and take off this equipment. The Fair Labor Standards Act provides that an employer must pay an employee for the time spent "donning and doffing." However, the Act allows for the non-payment of that time if a collective bargaining agreement so provides. The Collective Bargaining Agreement between Kraft and its union does so provide and Kraft does not compensate its employees for the activity. Several employees brought suit against Kraft. They alleged that Wisconsin's state law also requires "donning and doffing" payment and does not have a collective bargaining agreement exception. Judge Crabb (W.D. Wis.) agreed and entered judgment in plaintiffs' favor. Kraft appeals.

In their opinion, Chief Judge Easterbrook and Judges Manion and Evans affirmed. The Court first focused on the plain language of § 203(o) of the Act, which is the definition of “Hours Worked” and contains the collective bargaining agreement exception. Section 203(o) specifically limits its application to §§ 206 and 207 of the Act -- the federal provisions relating to minimum wage and overtime. The Court turned its attention to § 218(a) of the Act, which specifically allows a state to specify a higher minimum wage or a shorter maximum workweek than that provided in the Act. Since Wisconsin could establish a higher minimum hourly wage, the Court reasoned that it would be "senseless" to preclude it from dictating what work hours should be compensated. The Court therefore concluded that the Act did not prevent a state from requiring the donning and doffing payment. Finally, the Court also concluded that federal labor law did not preempt the Wisconsin law since it does not interfere with the collective bargaining process – it simply sets forth a requirement that an employer must meet.

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BOARD OF TRUSTEES v. ORGANON TEKNIKA CORP. (July 27, 2010)

The University of Illinois licenses certain intellectual property rights to Organon Teknika for the manufacture of a cancer drug. In return, the University collects a royalty. Because the royalty depends on Organon's revenue and because Organon is allowed to sell to its affiliated companies, the license allows the University to challenge the royalty rate. In the case of a challenge, an arbitrator is asked to determine whether Organon is receiving the equivalent of an arms-length negotiated rate. The University did challenge the rate in 2006. After receiving evidence, the arbitrator concluded that the rate was appropriate and issued a final award closing the proceedings without modifying the rate. He also sent the parties his final bill. In the final two sentences of his award, he explicitly "reserve[d] the right" to amend his findings if new evidence became available. The University neither sought judicial review nor reconsideration under the Federal Arbitration Act. Instead, after six months, it asked the arbitrator to reconsider. When Organon refused to consent to any further proceedings, the University filed suit to compel the resumption of arbitration. Judge Guzmán (N.D. Ill.) dismissed the suit, though on a ground neither party had requested -- that the arbitrator had never issued a final award. Organon appeals.

In their opinion, Chief Judge Easterbrook and Judges Bauer and Hamilton vacated and remanded. At first blush, the Court questioned its appellate jurisdiction. In the court below, the University had requested an order compelling Organon to arbitrate and Organon had objected to such an order. The court dismissed the suit without granting the University its requested relief. Nevertheless, the University did not appeal -- but Organon did. On the face of it, it appears that Organon prevailed. A prevailing party cannot appeal the judgment even if it disagrees with the content or rationale of the opinion. Upon deeper analysis, however, the Court appreciated that Organon was in fact attacking the judgment. What it wanted was finality -- a dismissal with prejudice -- rather than the dismissal without prejudice entered by the court. Satisfied with its jurisdiction, the Court addressed the merits. It had little difficulty in concluding that the district court erred in concluding that the arbitration was still pending. The arbitrator resolved the dispute, referred to the award as his final decision, and sent his final bill. The reservation in the final two sentences, in the Court's opinion, was nothing more than the arbitration equivalent of Rule 60(b)(2). Just as Rule 60(b)(2) does not stand in the way of the finality of a judgment, neither does the arbitrator's reservation. Under the Federal Arbitration Act, the University had 90 days within which to present new evidence. It did not do so. The arbitration is over. 

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GBUREK v. LITTON LOAN SERVICING (July 27, 2010)

Camille Gburek’s mortgage was serviced by Litton Loan Servicing. As of December 2007, Gburek was in default. She received two letters that month, one from Litton and one from Titanium Solutions on behalf of Litton. Neither letter demanded payment. The Litton letter offered to "discuss foreclosure alternatives" and "help preserve your homeownership." It requested financial information to help it consider its options. The Titanium Solutions letter also requested personal financial information and also offered to assist Gburek to find a way to avoid foreclosure. Gburek filed a class action under the Fair Debt Collection Practices Act. She alleges that each of the communications to her, as well as the communication between Litton and Titanium Solutions, violated the Act. Judge Shadur (N.D. Ill.) dismissed the complaint for failure to state a claim, concluding that the communications were not made "in connection with the collection of any debt" as required by the Act. Gburek appeals.

In their opinion, Judges Bauer, Flaum, and Sykes reversed and remanded. The Court noted that there are two threshold requirements for the FDCPA to apply. The first, that the defendant is a "debt collector," is conceded. The second, whether the communication at issue was "made in connection with the collection of any debt," is the issue on appeal. The Court looked to three of its prior decisions for guidance -- Bailey, Horkey, and Ruth. Bailey concluded that a communication was not "made in connection" because the debtor was not in default, any threats contained in the letter were prospective, and the communication contained no payment demand. The lack of payment demand was simply one factor in the analysis. Horkey concluded that the act did apply, even without an explicit demand for payment, when the reason for the communication was to induce the debtor to settle the debt. Finally, Ruth concluded that the Act applied to a privacy notice that was sent with a collection letter. The Court focused on the relationship between the parties and the fact that the communications were sent together. Thus, the Court emphasized that there is no bright line rule with respect to a demand requirement. Several factors are relevant in the analysis -- whether there is an explicit payment demand, the purpose and context of the communications, and the relationship between the parties. The Court applied the principles to each of the three communications at issue to determine whether the allegations were sufficient to survive the motion to dismiss. With respect to each of the letters sent to Gburek, the Court found that their context and content brought them within the Act. Gburek was in default and both letters sought financial information and her cooperation in discussing alternatives to foreclosure. The communication between Litton and Titanium Solutions is likewise "made in connection." It is clear that Litton engaged Titanium Solutions for the sole purpose of assisting it in collecting the debt. The Court declined to address any of the substantive issues with respect to the alleged violations in that they were not adequately developed on appeal.

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ROADWAY EXPRESS v. UNITED STATES DEPARTMENT OF LABOR (July 22, 2010)

When Peter Cefalu applied for a job as a truck driver with Roadway Express in 1999, he lied on his application. He stated that he left two prior jobs voluntarily. In fact, in both cases, he was fired for reckless driving. Roadway fired him a few years later, shortly after he supported a co-worker's grievance against Roadway. Cefalu filed an administrative complaint claiming that his dismissal violated the Surface Transportation Assistance Act of 1982. During the administrative proceedings, Roadway claimed that it fired Cefalu not because of his protected activity but because of its then recent discovery of his dishonesty on his application. Roadway refused, even when ordered, to disclose the source of its information. The administrative law judge sanctioned Roadway. The judge prohibited the introduction of any evidence learned from the undisclosed source. Without that evidence, Roadway could not rebut Cefalu's allegations. The ALJ found for Cefalu and ordered his reinstatement. The Administrative Review Board (“ARB”) affirmed. On appeal to the Seventh Circuit, the Court upheld the sanction at the merits stage but remanded to allow Roadway an opportunity to establish, for purposes of reinstatement, that it would have fired Cefalu absent the protected activity. On remand, the administrative law judge concluded that Roadway failed to meet its burden. The ARB affirmed. Roadway petitions for review.

In their opinion, Judges Posner, Ripple, and Wood denied the petition. The Court first revisited its earlier conclusions and its distinction between the use of the sanction at the merits stage and the reinstatement stage. Although the statute seems to require reinstatement, the Court borrowed the Mt. Healthy "mixed motive" framework to avoid the “absurd” result of reinstating an unsafe driver. The framework would allow Roadway to meet its burden by showing that it would have fired Cefalu because of his driving history even in the absence of his protected activity. The exception the Court adopted was limited to a showing of a public safety concern. The Court rejected Roadway's attempts to meet its burden by showing that it would have fired Cefalu for his dishonesty, as opposed to his driving. On its review of the record, the Court found the evidence of Roadway's treatment of drivers with similar records ambiguous. There was evidence that Roadway fired several drivers who were involved in accidents -- there was evidence that Roadway retained several drivers who were involved in accidents. The Court had little difficulty, therefore, in finding that the administrative decision was supported by "substantial evidence" -- the applicable standard of review.

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 RIVER OF LIFE KINGDOM MINISTRIES v. HAZEL CREST (July 2, 2010)

The Village of Hazel Crest refused to allow the River of Life Kingdom Ministries ("Ministries") to locate its church in a commercial area of the village. Ministries had a very small congregation and hoped to relocate its facilities from a dirty warehouse in Chicago Heights to Hazel Crest. The area in which it wanted to locate was designated a commercial district under the village's zoning ordinance. New noncommercial uses were excluded from the district under the ordinance. Judge Gottschall (N.D. Ill.) denied the Ministries' request for a preliminary injunction under the Religious Land Use and Institutionalized Persons Act (“RLUIPA”). On October 27, 2009, a panel of the Seventh Circuit affirmed (the intheiropinion post). On petition by Ministries, the Court granted rehearing en banc.

In their opinion, the entire court affirmed, with Judges Manion, Cudahy, Rover, and Williams concurring and Judge Sykes dissenting. The "equal-terms" provision of RLUIPA prohibits a local government from instituting a land-use regulation that treats a religious institution "on less than equal terms with" a nonreligious institution. The Court addressed two different tests - one from the Third Circuit and one from the Eleventh. The Third Circuit approach is to identify a) the ordinance’s goals and b) the nonreligious assemblies comparable to the religious assembly at issue. The ordinance is consistent with the equal terms provision if the reasons for excluding a nonreligious assembly are applicable to the religious assembly. The Eleventh Circuit approaches the equal terms provision more literally. An ordinance that permits a nonreligious assembly must permit a religious assembly. The Eleventh Circuit test does include an exception -- unequal treatment could survive if it passed a "strict scrutiny" test. Although the panel had adopted the Third Circuit approach, the en banc court rejected both approaches. The Court believed the Eleventh Circuit’s approach was overprotective of religious groups (due, in large part, to the dictionary definition of "assembly") and that the "strict scrutiny" exception had no basis in the statute. With respect to the Third Circuit's test, its focus on the regulatory purpose of the zoning regulation was problematic to the Court. Instead, the Court adopted a variation of the Third Circuit test. It replaced the "subjective and manipulable" regulatory purpose test with an "objective" zoning criteria test. The zoning criteria used by Hazel Crest include setting aside land for commercial uses in order to generate tax revenue and to provide a convenient shopping area. When it created the district, it not only excluded churches but also excluded other nonreligious assemblies that did not offer opportunities for shopping or generate tax remedy. The Court concluded that Hazel Crest's adoption of an acceptable zoning criterion -- commercial district -- and its neutral application of the regulation demonstrated that Ministries was unlikely to prevail on the merits. It thus affirmed the district court's denial of the motion for a preliminary injunction.

Judge Cudahy concurred. He wrote separately to express his view that there was little difference in the Third Circuit’s “regulatory purpose” test and the Court’s “zoning criterion” test.

Judge Manion concurred. He wrote separately to express his view that the case was rather straight forward and that the en banc court's opinion unnecessarily crafted a test to apply to more difficult cases. He also took issue with the opinion's discussion of a complicated Establishment Clause issue.

Judge Williams concurred (joined by Judges Cudahy and Rovner). Judge Williams expressed her belief that the Third Circuit's "regulatory purpose" test adopted by the panel is the proper test.

Judge Sykes dissented. She explored in detail the history of RLUIPA as well as the text of the statute, not limited to the "equal terms" provision. She also laid out the history of the "equal terms" jurisprudence in the Third, Eleventh, and Seventh Circuits. She noted that the Seventh Circuit had approved of the Eleventh Circuit approach until the panel opinion in this case. In her view, the plain language of RLUIPA prohibits any zoning regulation that treats a religious assembly on less than equal terms with a non-religious one. It contains no requirement of discriminatory motive or bias. Judge Sykes concluded that the Ministries demonstrated a likelihood of success -- the zoning regulation's allowance of gymnasiums, health clubs, and day care centers in the district where the church is not allowed is sufficient to show unequal terms.

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HABITAT EDUCATION CENTER v. U.S. FOREST SERVICE (June 29, 2010)

The federal government has been managing over 1,000,000 acres of forest in the Chequamegon-Nicolet National Forest in northern Wisconsin for almost 100 years. In the last eight years, the U.S. Forest Service has proposed 17 different timber sale projects. Habitat Education Center has administratively challenged almost every project. One of those projects is the Twentymile sale, announced in 2004, covering almost 9,000 acres. The Center argued that the sale, particularly in conjunction with a prior sale on immediately adjacent property, would have a negative impact on wildlife. The Forest Service authorized the project in February of 2007 over the Center's objections. The Center's administrative appeal was also unsuccessful. They filed suit in June 2007, contending that the Forest Service' environmental impact statement failed to consider the cumulative impacts of "past, present, and reasonably foreseeable future actions," in violation of the National Environmental Policy Act (NEPA). In November of 2008, just before argument on cross motions for summary judgment, the Forest Service announced another sale, the Twin Ghost project, on immediately adjacent property. Judge Adelman (E.D. Wis.) asked for supplemental briefing but ultimately concluded that the project was not "reasonably foreseeable" under NEPA at the time of the Twentymile project authorization and granted summary judgment to the Forest Service. The Center appeals.

In their opinion, Circuit Judges Flaum and Wood and District Judge St. Eve affirmed. The Court first addressed the Forest Service's argument that the Center forfeited any claim with respect to the Twin Ghost project by not raising it in the administrative process. Instead of addressing the Center's possible forfeiture, the Court concluded that the Forest Service waived the forfeiture argument by not raising it sufficiently in the district court in the supplemental briefing. On the merits, the Court noted that several of its sister circuits (specifically citing cases from the 1st, 3rd, 9th, and 11th) have held that the effects of a contemplated project need not be discussed if there is not yet a meaningful basis for assessing the impact of the project. The Court concurred with that approach. At the time the Twentymile project was approved, the Service had not even identified the goals of the Twin Ghost project. Of course, as the Court noted, the Twin Ghost project assessment must include a thorough analysis of the cumulative effects of the Twin Ghost and Twentymile projects. Any negative cumulative effects can be addressed during that process. Finally, the Court did concede that the better practice would have been for the Service to disclose the current state of contemplated future projects, even if a thorough analysis was not possible.  

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JAY E. HAYDEN FOUNDATION v. FIRST NEIGHBOR BANK (June 22, 2010)

Jay Hayden died in 1985. His will established the Jay E. Hayden Foundation and named Robert Cochonour as executor. Between 1985 and 2001, Cochonour allegedly embezzled from both the Foundation and from accounts belonging to Hayden's mother and his mother’s friend. Cochonour apparently had the cooperation of First Neighbor Bank in carrying out his misdeeds. By 2002, Cochonour admitted that he had stolen some money and had resigned his state court judgeship. The trustees of the Foundation were aware that it no longer had any assets but there was no record of what happened. For several years, Cochonour and the bank took steps to prevent the plaintiffs from learning additional facts. Eventually, in May of 2008, plaintiffs brought a RICO action against the bank, two law firms, and several associated individuals. Judge Reagan (S.D. Ill.) granted defendants' motion to dismiss on statute of limitations grounds. Plaintiffs appeal.

In their opinion, Judges Posner, Rovner, and Tinder affirmed. The statute of limitations for a RICO claim, stated the Court, is four years and begins to run when the plaintiffs discover or should have discovered the injury and the injurer. Here, the Court concluded that the plaintiffs had significant suspicions by mid-2003 but may not have had sufficient information to bring suit until 2005. If the defendant engages in obstructive conduct, however, that prevents a plaintiff from obtaining sufficient information to file its complaint, the defendant is equitably stopped from pleading the statute of limitations defense for the period of obstructive behavior. Plaintiffs allege that that is what happened here. The Court recognized a split of authority regarding the impact of equitable estoppel on limitations period. Some courts have allowed an extension of a limitations period for the full amount of the delay while others have held that a plaintiff must commence the action as soon as possible after the obstruction ends. The Court decided to apply the latter rule -- particularly in a RICO case where the Supreme Court has emphasized the importance of prompt action. In applying the "as soon as possible" rule, the Court stated that plaintiffs had enough information in 2005 to complete their investigation and file suit long before the three years they actually used. Notwithstanding the Court's conclusion that the action was barred by the statute of limitations, it also addressed the defendants' alternative argument that the complaint failed to state a RICO cause of action. The Court concluded that it did not since it did not allege that the defendants used an enterprise (i.e., their conspiracy) to engage in a pattern of racketeering activity.

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ANDERSON v. BAYER CORP. (June 22, 2010)

Bayer Corporation manufactured a prescription medication called Trasylol. A lawyer in St. Clair County, Illinois brought suit against Bayer alleging personal injury resulting from the use of the medication. The action was brought in five separate complaints with 171 plaintiffs spread among the complaints. All but one (the one apparently a mistake) of the virtually identical complaints named fewer than 100 plaintiffs. Bayer removed, citing the "mass action" removal mechanism of the Class Action Fairness Act ("CAFA"). Judge Murphy (S.D. Ill) remanded the four complaints that had fewer than 100 plaintiffs. Bayer petitioned to appeal under CAFA.

In their opinion, Judges Flaum, Manion, and Evans denied the petition. CAFA's "mass action" provision allows a defendant to remove an action if it has 100 or more plaintiffs and otherwise meets CAFA’s removal requirements. The provision specifically excludes an action in which claims are consolidated upon the request of a defendant. The Court found this plain language of the statute dispositive of Bayer's request. Apparently, Congress anticipated this very situation and decided to allow plaintiffs to proceed in state court by limiting each complaint to fewer than 100 plaintiffs. Although the Court concluded that CAFA removal was not available, it did note that the claims could be removable in the future if, for example, the claims were consolidated for trial. The Court declined to consider Bayer's alternative argument that diversity jurisdiction existed under a fraudulent misjoinder theory. The exception to the general rule prohibiting review of a remand order that allowed the Court's review of the "mass action" argument applies only to the remand of class actions. Since these cases are not class actions under CAFA, the Court lacks jurisdiction to review the district court's decision regarding fraudulent joinder.

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MEDICAL ASSURANCE CO. v. HELLMAN (June 21, 2010)

Dr. Mark Weinberger was a wealthy Indiana physician. It seems, however, that only a portion of his wealth resulted from his legitimate medical practice. The rest of it came from defrauding insurance companies. In 2004, facing the prospect of civil and criminal litigation, Weinberger disappeared during a European vacation (read about his escapades on America's Most Wanted). Hundreds of malpractice claims were filed against him in the months following his disappearance. Those claims are working their way through Indiana's medical malpractice statutory procedures, although only four have proceeded to the actual lawsuit stage. Medical Assurance Company is Weinberger's malpractice insurance provider. It brought a declaratory judgment action, seeking a declaration that Weinberger's disappearance breached his duty of cooperation and thus voided its duty to defend. Judge Sharp (N.D. Ind.) concluded that Medical had shown no actual prejudice and therefore stayed the proceedings. Medical appeals.

In their opinion, Judges Flaum, Manion, and Wood vacated and remanded. The Court quickly resolved two jurisdictional issues. First, the Court upheld diversity jurisdiction notwithstanding Medical's "information and belief" allegation of the citizenship of the 300+ individual defendants (the state malpractice plaintiffs). Although such an allegation is generally insufficient standing alone, the additional factors -- that each defendant was a claimant within the Indiana malpractice system and that no defendant contradicted the allegation --satisfied the Court. With respect to its appellate jurisdiction, the Court concluded that the district court's order was appealable under Quackenbush as an abstention-based stay order. On the merits, the Court noted that the Declaratory Judgment Act is a procedural device that allows a judge to declare the rights of the parties under the applicable state or federal law. One legitimate reason to refrain from such a declaration is the existence of a parallel proceeding. The proper inquiry in such a case includes consideration of the identity of the parties, the similarity of the issues, the relief available to the plaintiff, and whether a declaration will clarify the obligations of the parties. Applying those principles, the Court concluded that the district court abused its discretion by issuing its stay order. Under Indiana law, Medical must show actual prejudice to prevail on its breach of cooperation argument. Although the district court thought that Medical could not show actual prejudice without interfering with the malpractice actions, the Court concluded that Medical should at least be given the chance.

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CE DESIGN v. PRISM BUSINESS MEDIA (May 27, 2010)

Prism Business Media publishes trade magazines and sponsors tradeshows. CE Design subscribes to several Prism publications. When Prism sent an unsolicited fax to CE Design in 2004, CE Design filed a putative class action under the Telephone Consumer Protection Act (TCPA). The TCPA prohibits the sending of unsolicited advertisements to fax machines. Prism moved for summary judgment, arguing that an FCC implementing order allowed the sending of unsolicited advertisements to the fax machines of companies with which the sender had an "established business relationship (EBR)." Judge Pallmeyer (N.D. Ill.) granted summary judgment to Prism. CE Design appeals.

In their opinion, Judges Flaum, Kanne, and Evans affirmed. The Court describes the issue before it as the classic “chicken-and-the-egg” dilemma. On the one hand, the Hobbs Act reserves to the courts of appeals the power to determine the validity of an FCC order -- and requires a petition for reconsideration with the FCC before a request for relief from a court of appeals. Here, the district court relied on the Hobbs Act and refused to consider the validity of the FCC order creating the EBR exemption. On the other hand is the familiar Chevron analysis used to review an agency's construction of a statute. In the first step of that analysis, a court determines whether the statute is silent or ambiguous on the issue which is the subject of the agency's order. Only if it is silent or ambiguous does the court examine the reasonableness of the agency action. CE Design asserts that the TCPA is unambiguous on the meaning of "unsolicited advertisement" so the court need not consider the FCC order. The Court rejected CE Design's position. An Article III court's first obligation is to ensure its jurisdiction -- before any consideration of the merits. Thus, if the Hobbs Act and the Chevron analysis were really analogous to the "chicken-and-the-egg," the Court would have to address the jurisdictional question in the Hobbs Act before engaging in the Chevron analysis. Alternatively, the Court concluded that the two approaches were not really in conflict. The result of CE Design's own Chevron argument would have been the invalidation of the FCC order by the district court -- exactly the result that the Hobbs Act prohibits. On the merits of the EBR exemption itself, the Court had no difficulty in agreeing with the district court that the exemption applied on the facts of the case.

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FEDERAL TRADE COMMISSION v. TRUDEAU (May 20, 2010)

Kevin Trudeau was found guilty of civil contempt of court for violating the terms of a consent order. In 2009, the Seventh Circuit affirmed Judge Gettleman's (N.D. Ill) finding of contempt (see intheiropinion) but remanded for reconsideration of a nearly $40 million penalty. During the course of the remand proceedings, Trudeau instigated an e-mail barrage on Judge Gettleman. He asked his radio listeners, his website viewers, and his e-mail list readers to send e-mails directly to the judge in support of his cause. Most of the e-mails were polite and innocuous -- some, however, were at least mildly threatening. In all, the judge received over 300 e-mails. The next afternoon, the judge found Trudeau guilty of criminal contempt and sentenced him to 30 days of incarceration. Trudeau appeals.

In their opinion, Judges Manion, Rovner, and Tinder vacated and remanded. Substantively, a judge has the authority to punish "misbehavior of any person in its presence or so near thereto as to obstruct the administration of justice" under 18 U.S.C. § 401. Procedurally, Rule 42(a) of the Federal Rules of Criminal Procedure provides the framework for a typical finding of criminal contempt. Here, however, the court used the summary procedures of Rule 42(b). A summary finding of direct criminal contempt under Rule 42(b) requires that the contemptuous behavior occur in the presence of the judge. The fundamental principle that a court should use the least possible power in a contempt case requires not only that the contempt finding is permissible under Rule 42(b) but that there is also a compelling reason to invoke it. The Court found neither present here. The conduct that he punished did not occur in his physical presence. In fact, he had to summon Trudeau to court to impose the penalty. The Court also found no evidence in the record of a disruption of the court's ability to function or other compelling reason to use the summary procedures. The Court declined to address Trudeau's arguments that his conduct did not meet the "presence" requirement of § 401 and that it was protected by the First Amendment.

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UNITED STATES v. APRIA HEALTHCARE GROUP (May 19, 2010)

Two qui tam actions were filed against Apria Healthcare Group in the late 1990s, accusing Apria of fraudulently billing the Medicare and Medicaid programs from 1995-98. Years later, but while those actions were still pending, Christine Chovanec filed this action, similarly alleging fraudulent billing by Apria from 2002-04 in Illinois. Judge Kocoras (N.D. Ill.) dismissed the action with prejudice pursuant to 31 U.S.C. § 3730(b)(5), which provides that no person may bring a "related action" based on the facts of a pending action brought by another person. Four days later, the earlier cases were settled. Chovanec moved for reconsideration. The court denied. Chovanec appeals.

In their opinion, Chief Judge Easterbrook and Judges Cudahy and Sykes vacated and remanded. The Court first held that the statute means what it says -- that no person "may . . . bring a related action based on the facts” of another pending action. Any action thus brought must be dismissed, rather than stayed. The Court next addressed whether Chovanec's action was a "related action." It aligned itself with other courts of appeals and concluded that the statute's reference to "facts" meant the material facts in the original relator's complaint. The Court explained that it was the complaints in those cases, not the settlement, that provided the material facts. Those complaints alleged an ongoing national fraud. Therefore, even though Chovanec's allegations referred to later years and a specific office, they were related to the original allegations. Concluding, therefore, that the statute required the dismissal of her complaint, the Court nevertheless vacated the judgment. Now that the original complaints are no longer pending, nothing in § 3730(b)(5) prevents her from refiling. The district court should have dismissed without prejudice.

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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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FINCHER v. SOUTH BEND HERITAGE FOUNDATION (May 10, 2010)

The South Bend Housing Authority (SBHA) evicted Marshall Fincher from one of its public housing units. Fincher then requested tenancy, under Section 8 of the United States Housing Act, in a building owned by the South Bend Heritage Foundation (SBHF). Based on the eviction, SBHF denied his application without a hearing. Fincher brought suit against SBHF. The district court granted summary judgment to SBHF, concluding that Fincher did not have a property interest in any specific SBHF housing and that he failed to identify any contract term between SBHF and HUD for which he was a claimed third-party beneficiary. Fincher appeals.

In their opinion, Circuit Judges Flaum and Wood and District Judge St. Eve affirmed. The Court noted that its 1984 decision in Eidson v. Pierce held that there was no property interest for a Section 8 applicant for a housing unit. Considering Fincher's request that Eidson be overruled, the Court reviewed the analysis of the case and noted that another circuit had expressly adopted its reasoning. The only circuit to squarely contradict the case did so in 1982 -- and its reasoning was considered and rejected in Eidson. The Court distinguished the few other cases brought forth by Fincher. Finding that Eidson was well reasoned and seeing no significant changes in the law since its publication, the Court declined to overturn it. With respect to the third party beneficiary claim, the Court agreed with the district court that Fincher cited no contract term or federal housing regulation that gives rise to any enforceable right.

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INDIANA PROTECTION AND ADVOCACY SERVICES v. INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION (April 22, 2010)

In 1986, Congress enacted the Protection and Advocacy for Individuals with Mental Illness Act (the "Act"). The general purpose of the Act was to protect the rights of individuals with mental illnesses and specifically to assist states in operating protection and advocacy systems for those individuals. States are entitled to federal funds if they create such a protection and advocacy system. The system can be either a private entity or an independent state agency. Indiana created Indiana Protection and Advocacy Services ("Services"), an independent agency. The Act gives Services the authority to investigate instances of abuse and requires that Services have access to patient records. In 2006, Services opened investigations into two instances of possible abuse or neglect at the LaRue Carter Memorial Hospital. LaRue Carter is a psychiatric hospital operated by the Indiana Family and Social Services Administration ("FSSA"). In both investigations, Carter withheld patient records requested by Services. Services brought an action against the State of Indiana, FSSA, and three state officials in their official capacities. The complaint sought only injunctive and declaratory relief. The district court granted the relief. A panel of the Seventh Circuit reversed. The panel concluded that Services did not have a private right of action under the Act, could not sue under § 1983 because it was not a "person" under that section, and that the Eleventh Amendment barred the suit. Services sought rehearing en banc.

In their opinion, Chief Judge Easterbrook (dissenting) and Judges Posner (concurring), Flaum, Kanne, Rovner, Wood, Williams, Sykes, and Hamilton affirmed the judgment of the district court as modified to provide relief only against the named state officials. The Court first held that the Eleventh Amendment did not bar the suit. Although that amendment typically prevents a state or its agencies and officials from being sued in federal court by its own citizens, there are exceptions. Under the Ex parte Young exception, a state official who violates a federal law is considered to be acting outside his or her authority and not immune from suit. The required inquiry is whether the complaint seeks prospective relief for an ongoing violation of federal law. The Court found that inquiry satisfied with respect to the individually named state officials, although not with respect to the state and FSSA. Next, the Court concluded that the Act authorized Services’ suit. The Court undertook an analysis of whether Congress intended to create a private right and private remedy in the Act. Citing several provisions of the Act and interpreting the language, structure and purpose of the Act, the Court concluded that Congress did create a private right of action for access to patient records for protection and advocacy systems such as Services. In doing so, it rejected the defendants' arguments that the Act is simply an exercise of Congress's spending power, that the obligation to provide access to patient records is simply a condition inherent in accepting federal funding, and that the only remedy for the violation is to cut off the funding. Finally, on the merits, the Court had little difficulty in rejecting defendants' argument that the peer review records sought by Services were not "records" under the Act. It simply adopted the unanimous treatment given the question by the four circuits that have addressed the issue.

Judge Posner joined the Court's opinion "without reservation" but wrote separately on whether the Act provided a private cause of action. He wrote of several practical considerations that he believed supported the conclusion that the Act contained a private right of action.

Chief Judge Easterbrook dissented. Although he agreed with the conclusion that the Ex parte Young exception to Eleventh Amendment immunity applied, he disagreed with the conclusion that Services had a private cause of action. With respect to § 1983, Services is not a "person" and therefore cannot sue under that section. With respect to the Act itself, Chief Judge Easterbrook concluded that the Supreme Court's cases do not support the conclusion that a right of action can be implied in the Act.

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AL'S SERVICE CENTER v. BP PRODUCTS NORTH AMERICA (March 26, 2010)

Al's Service Center was a gasoline service station and a franchisee of BP Products North America. In 2002, the State of Illinois decided to condemn a portion of the service station property. Although the portion of the premises subject to condemnation was small, the impact on the property was large. It would affect two of the five entrances and increase congestion. BP notified Al's of its intent to terminate the franchise relationship when the condemnation occurred. The condemnation went forward in June of 2005. Al's franchise contracts expired a month later -- BP asked Al’s to vacate the premises. Notwithstanding the condemnation, the expiration of the agreements, and BP's request to vacate, the parties continued to do business as usual. In the summer of 2006, Al's alleges that at BP failed to deliver gasoline for a period of twelve days. Later that same summer, Al’s asked BP to replace its roadside sign that that state had removed during construction. BP refused. Al's eventually abandoned its business in May 2008. It brought suit against BP for compensatory and punitive damages under both the Petroleum Marketing Practices Act and state law. The district court granted summary judgment to BP after denying Al’s request to add the state law claims. Al’s appeals.

In their opinion, Judges Posner, Rovner, and Sykes affirmed. The Court addressed the PMPA claims. Under the PMPA, a dealer is protected from termination of his franchise under certain circumstances. The Court looked for the termination. It concluded that the franchise was not terminated by the 2003 letter (there was no change in the relationship), it was not terminated by the demand to vacate the premises after the actual condemnation (although the Court concluded that BP could have terminated at that time), it was not terminated by the alleged supply interruption (although it may have been a breach of contract), and it was not terminated by the refusal to replace the sign (it did not meet the Mac’s Shell test for constructive termination). Thus, the Court concluded that the franchise came to an end when Al’s abandoned the premises on its own volition – not a violation of the PMPA. The Court also concluded that the lower court correctly refused to allow the state law claim amendments.

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MILLER v. HERMAN (March 25, 2010)

John Miller and his wife entered into an oral agreement with James Herman and his company to build the Millers a new home in Lakemoor, Illinois. As part of the construction, Herman purchased and installed windows made by Pella Products. According to Miller, the windows leaked from the time of their installation. Herman provided some additional caulking and Pella inspectors reinstalled one of the windows – but nothing helped. Miller filed an eight-count complaint against Herman and Pella in federal court. The federal claims were breach of warranty claims pursuant to the Magnuson-Moss Warranty -- Federal Trade Commission Improvement Act (the “Act”). In effect, the Act provides a federal forum to consumers for breach of warranty claims. Miller also pleaded state law counts for breach of contract, breach of implied warranty of habitability, common law fraud, and a violation of the Illinois consumer fraud act. Herman moved to dismiss the federal claims for lack of subject matter jurisdiction, contending that the fact that the windows were not "consumer-products" under by the Act deprived the court of jurisdiction. Pella filed a motion for summary judgment, also contending that the windows were not "consumer-products," but casting its argument as Miller’s inability to satisfy the elements of the claim as opposed to a failure of jurisdiction. Miller filed a consolidated response to the motions. The district court concluded that it lacked subject matter jurisdiction and granted the motion to dismiss. Miller appeals.

In their opinion, Judges Bauer, Manion, and Tinder affirmed, as modified, the dismissal of the federal counts and vacated and remanded the dismissal of the state law claims. The Court first addressed the jurisdiction versus merits confusion below -- whether, if the windows are not covered by the Act, the court lacks jurisdiction or the plaintiff simply loses on the merits. The Court recited the Supreme Court's "bright line" test. In Arbaugh, the Supreme Court stated that a statutory limitation should be treated as non-jurisdictional unless Congress clearly states that it is jurisdictional. The "consumer product" language in the Act is not part of the jurisdictional section or otherwise clearly treated as jurisdictional. The Court concluded that it was therefore not facing a jurisdictional limitation. On the merits, the central issue in both the motion to dismiss and motion for summary judgment is whether the windows were "consumer-products" under the Act. Finding the statutory definition both expansive and "somewhat hazy," the Court directed its attention to the FTC interpretations of the Act. It decided to give the interpretations a significant degree of deference since they were issued by the administering agency, they were issued using notice and comment procedures, they have stood the test of time, and they are based on the legislative history of the Act. The parties argued competing interpretations. Miller relied on 16 C.F.R. § 700.1(e), particularly on language that stated that construction products are "consumer products" when they are sold over-the-counter. The defendants, on the other hand, relied on 16 C.F.R. § 700.1(f), and specifically on language stating that construction materials are not "consumer products" when a consumer enters into a contract with a builder to construct a new home. Although the Court conceded that the FTC interpretations cited by the parties drew a fine line between what is and what is not a consumer product, it saw no reason to not respect the line. Following the interpretations, and the application of those interpretations by other courts, the Court concluded that the windows were not "consumer-products" within the meaning of the Act. As modified to reflect the merits rather than jurisdictional dismissal, the Court affirmed the dismissal of the federal counts. The district court dismissed the state law claims because it thought it had to, since it concluded that it lacked subject matter jurisdiction. Although the general rule is that a federal court will not retain wholly state law claims once federal claims are dismissed before trial, it is not required to. Since the district court did not even consider its authority to retain the state law claims, the Court reversed and remanded for that purpose. 

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McBRIDE v. CSX TRANSPORTATION (March 16, 2010)

Robert McBride was a locomotive engineer for CSX Transportation. After several years as a long-distance engineer, McBride expressed an interest to transfer to a job where he would work more regular hours with fewer nights away from home. In April 2004, he went on a qualifying run with a supervising engineer. Much of the ten-hour shaft involved switching, the process of adding and dropping individual cars from the locomotive. The switching process requires heavy use of the manual brakes. Toward the end of his shift, while operating the brakes, McBride experienced extreme pain in his hand. He has since undergone two surgeries and physical therapy but still experiences pain and numbness. He filed an action for negligence under the Federal Employers' Liability Act. At trial, McBride offered an instruction on causation that would instruct the jury that defendant’s negligence had to play "a part - no matter how small" in bringing about the injury. CSX offered an instruction that included a requirement that defendant’s negligence be a "proximate cause" of the injury. The court used the McBride instruction. The jury found in McBride's favor. CSX appeals.

In their opinion, Judges Ripple, Rovner, and Sykes affirmed. The Court first noted that courts have "grappled" with the proper causation standard under FELA since the Act was passed. The Act provides that the injury must result "in whole or in part" from the employer's negligence. The Court noted that early cases did not conclude that the "in whole or in part of" language eliminated the common-law proximate cause requirement. Later cases, however, including the Supreme Court's decision in Rogers, suggested that a less stringent standard of causation should apply under FELA. Many courts of appeals interpreted Rogers as relaxing the standard of causation. The Supreme Court addressed the question again in Sorrell. Although the majority skirted the question, Justice Souter's concurring opinion stated that Rogers did not eliminate the proximate cause requirement. Justice Ginsburg's opinion, concurring in the judgment, stated her view that the causation standard in FELA cases is more relaxed than in tort litigation generally. Although the Court concluded that Justice Souter's position is a plausible one, it declined to adopt it. It noted that the majority in Sorrell did not even address the question, other statements of the Supreme Court have suggested a broader reading, and all other circuit courts that have addressed the issue have concluded that Rogers adopted a relaxed standard of probable cause. Finally, the Court noted that Congress is well aware of the decisions adopting a relaxed standard of causation and could clarify the FELA. It therefore found no error in the lower court's instruction.

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WILLIAMS v. FLEMING (February 26, 2010)

Jessie Williams had several million dollars of loans from Family Bank & Trust Company. As of late 2005, Williams' loans were in good standing -- he had never even been late with a payment. The FDIC conducted a routine examination of Family Bank in late 2005. Jerry Fleming was the Associate Examiner in charge. Williams alleges that Fleming made racially disparaging remarks about him, the city of Harvey, and the Bank's practice of lending to African-Americans. Williams also alleges that Fleming instructed the Bank not to lend to him anymore. Williams brought a Fifth Amendment claim against Family Bank, an Illinois Human Rights Act claim against the Bank and the United States, and a Fifth Amendment Bivens claim against Fleming. The district court: dismissed Family Bank because it is not a state actor, dismissed the United States on sovereign immunity grounds and because the FDIC did not act as a financial institution (an element of the Illinois Human Rights Act claim), and dismissed Fleming pursuant to the Federal Tort Claim Act's judgment bar. Williams appeals only the dismissal of Fleming.

In their opinion, Judges Kanne, Rovner, and Williams affirmed. The general rule, noted the Court, is that one may not sue the United States for torts committed by it or its agents. The Federal Tort Claims Act was enacted to allow suits against the United States under certain circumstances and with certain limitations. One of the limitations is the judgment bar, which provides that a judgment in one action bars a claim arising from the same subject matter against the government employee allegedly responsible for the tortious act. The issue here was whether the dismissal of the United States was such a judgment that barred the action against Fleming. Although the district court labeled its dismissal as one for lack of subject matter jurisdiction, thereby raising the issue of whether a judgment must be on the merits to trigger the judgment bar, the Court disagreed. Although it recognized that its view was the minority position, the Court reiterated its approach to the statutory exceptions to waiver. The Federal Tort Claims Act authorizes federal courts to hear tort claims against the United States. If the tort claim falls within one of the exceptions to the Act's waiver of sovereign immunity, the claim is dismissed because the United States has a defense -- not because the court is deprived of jurisdiction. The dismissal below was therefore on the merits, and the judgment bar applies.

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UNITED STATES v. THOUVENOT, WADE & MOERSCHEN (February 18, 2010)

The Equal Access to Justice Act allows a party that prevails against the United States in litigation to recover its attorneys' fees unless the position of the United States is found to be "substantially justified." Three cases before the Court allowed it to address that standard. In the first, the United States charged an apartment complex site engineer with violating the Federal Housing Act. The trial court denied defendant's motion for summary judgment and its motions for judgment as a matter of law. After the jury returned a defense verdict, however, the court awarded fees to the defendant. Because the defendant's insurer paid for much of its defense, the insurer would receive much of the award. The United States appeals. In the second case, the court affirmed the denial of a Social Security claimant's application for benefits. After the Seventh Circuit reversed and remanded, concluding that a crucial consultant's opinion was entitled to no weight, the court denied an award of fees. The claimant appeals. In the third case, the district court reversed the administrative denial of Social Security benefits but denied the claimant's application for fees. The basis for the reversal was the administrative law judge's possible mischaracterization of some testimony and failure to fully explain the connection between the claimant's condition and his ability to work. The claimant appeals.

In their opinion, Judges Posner, Flaum, and Sykes reversed, reversed, and affirmed. The Court first noted that "substantially justified" was not defined in the statute nor, in their view, was its meaning self-evident. Relying on the title of the statute and its limited application only to persons of lesser means, the Court concluded that the government's position need not be frivolous to justify an award of fees. The Court identified a threshold between frivolous and meritorious, at which a case has a reasonable basis in law and fact, that the United States must meet to be "substantially justified." Applying that standard to the first case, the Court held that there was a presumption that the United States’ position is substantially justified if it survives summary judgment. Just because the jury ultimately decided in favor of the defendant does not mean that the government fell short of its threshold. Although the Court reversed the award of fees, it decided to provide guidance to the lower courts on the additional issue of the impact of a liability insurer on an award of fees. In its view, the Act should not be applied differently if a party otherwise entitled to a fee award his had some of its fees paid by its insuror. In the second case, the Court concluded that the lower court was wrong in denying a fee award. Even though the lower court was originally convinced of the merits of the government's position, the court must be guided by the appellate opinion. If an appellate court reverses in a case it considers a close call, the fact that the lower court was convinced of the merits may support a substantial justification finding. Here, however, the Court made it clear in its earlier opinion that the government's position was not justified. Finally, in the third case, the district court had reversed an administrative denial of benefits but refused to award fees. Like the prior case's "close call" reference, the Court concluded that the lower court was well within its discretion to reverse a denial of benefits but to conclude that the position taken was "substantially justified."

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HELCHER v. DEARBORN COUNTY (February 9, 2010)

Cincinnati Bell Wireless provides wireless services to, among others, the people of Dearborn County, Indiana. In order to improve signal coverage in the area, Cincinnati Bell decided it needed a new cell phone tower. It selected a piece of agriculturally zoned property for the tower and applied for a conditional use permit. The company worked with two consultants to the local Zoning Board in completing its application. The consultants recommended that the granting of the permit, although it was the first time they had recommended the construction of a new tower over the co-location of transmitters onto existing structures. The Board met and heard from the consultants, Bell, and a number of local landowners who opposed the tower. The Board denied the application. At a later meeting, the Board denied Bell's request to reconsider the denial and approved the minutes of the earlier meeting. Bell sued the Board, alleging several violations of the Telecommunications Act of 1996. Specifically, Bell alleged that the decision was not based on substantial evidence, that the Board minutes did not constitute a sufficient written decision, that the Board unreasonably discriminated against Bell, and that the decision effectively denied wireless services. The district court granted summary judgment to the defendants. Bell appeals.

In their opinion, Judges Flaum, Rovner, and Wood affirmed. Bell raised the same four arguments. The Court started with the "in writing" requirement of the Telecommunications Act, a question of first impression in the Seventh Circuit. Other circuits' holdings range from allowing a "Denied" stamp on an application to demanding detailed conclusions linked to specific evidence. Noting that the purpose of the requirement is to ensure meaningful judicial review, the Court joined several other circuits in concluding that the requirement is met if there is a sufficient explanation of the Board's reasons to allow a court to evaluate the supporting evidence. Here, the "writing" is the seventeen pages of minutes. The Court concluded that they were sufficient under the Act. They described the issues, the evidence presented by both sides, the concerns of the Board, and the specific Ordinance provisions on which the Board based its denial. On the Court’s review of Bell’s argument that the denial was not supported by substantial evidence, it considered each of the three Ordinance provisions separately. Although the Court found the evidence in support of one of the Ordinance violations thin, it concluded that the other two were supported by substantial evidence. Finally, the Court rejected the “effectively prohibit” and “unreasonably discriminates” arguments. On the former, Bell failed to show that alternatives did not exist. On the latter, Bell presented no evidence of another carrier that was treated more favorably.

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DOE-2 v. MCLEAN COUNTY UNIT DISTRICT NO. 5  (January 22, 2010)

Jane Doe-2 was an elementary school student in the Urbana School District between 2005 and 2007. She alleges that she was sexually harassed by one of her teachers. She also alleges that: a) the same teacher was employed by the McLean County School District from 2002 to 2005, b) the teacher sexually harassed McLean County students during that time, c) McLean County school officials were aware of the harassment, and d) school officials concealed the harassment and provided a positive letter of recommendation. In fact, the teacher pleaded guilty to aggravated criminal sexual abuse of students in both school districts in 2007. Doe-2 brought suit against both school districts and district officials. The Urbana defendants settled. Against the McLean defendants, Doe-2 asserts a federal Title IX claim and a state court claim. The court dismissed the claims. Doe-2 appeals.

In their opinion, Judges Cudahy, Wood and Tinder affirmed. Although the Court recognized the existence of a private right of action under Title IX, it also noted its reluctance, pursuant to Supreme Court precedent, to expand implied statutory remedies. In order to state a Title IX claim, a victim of sexual harassment must establish that a school district had actual knowledge of the harassment and had substantial control over both the person and context of the harassment. Since the McLean defendants had no control over the teacher while he was employed in Urbana, the Court concluded that the Title IX requirements were not met. The Court also rejected Doe-2’s theory in which liability rested on the defendant's conduct while the teacher was still a McLean employee and under defendants’ control. The Court held to its requirement that the acts of harassment be under the defendants’ control. Addressing the plaintiff's state law claim of willful and wanton misconduct, the Court focused on the element of duty. One does not normally have a duty to protect another from an attack by a third person. Such a duty can sometimes arise out of a special relationship between the plaintiff and defendant. In fact, a school district sometimes does have a duty to protect its students. The Court was aware of no precedent, however, finding the existence of a duty where the student and the location of the offense were beyond the defendants' authority.

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ORTEGA v. HOLDER (January 15, 2010)

Angie Ortega was the target of removal proceedings brought by the government in 2001. She asserted as a defense in those proceedings that she was a United States national. While the proceeding was pending, she filed an application for citizenship with the Immigration and Naturalization Service. When her application was denied, she appealed to the Office of Administrative Appeals (AAO). Meanwhile, the Immigration Judge in the removal proceedings dismissed with prejudice, concluding that she had in fact proven her citizenship. Months later, the AAO denied her appeal. She filed a motion to reopen and to reconsider, in which she referred to the ruling of the Immigration Judge. The AAO, four years later, denied her motion. It concluded that her motion was untimely in that it had been filed with the wrong office. It also concluded that it was at best a motion to reconsider rather than a motion to reopen. Although the regulations permit consideration of untimely motions to reopen upon a showing of reasonableness, they do not allow such discretion for a motion to reconsider. Ortega brought an action in federal court seeking a declaration of nationality under 8 U.S.C. §1503(a). On the government's motion, the district court dismissed the action on the ground that her citizenship arose in connection with her removal proceeding and her claim therefore fell within the §1503(a) exclusion. Ortega appeals.

In their opinion, Judges Flaum, Ripple and Sykes reversed and remanded. The Court began with the language of the statute. It provides that a person who is denied a right or privilege of citizenship on the ground that she is not a national may bring an action for a declaration of citizenship. The statute contains an exception. It prohibits an action if the issue of the person’s status as a national arose "by reason of, or in connection with" a removal proceeding. The Court emphasized that its interpretation of the words of the statute must also consider its context and its relationship to other provisions. In doing so, the Court stated that the exceptions were designed to prevent judicial interference into removal proceedings and to maintain a single, exclusive opportunity to challenge a removal order. Examining the various options for obtaining a declaration of citizenship, the Court concluded that Congress failed to consider the scenario in which worked Ortega found herself. A judicial declaration of citizenship, when it is pursued through the removal route, is available only when there is an order of removal that can be reviewed under §1252. Since Ortega prevailed at her removal proceeding, there was no order of removal to challenge. The Court was quite certain that Congress did not purposefully leave those in Ortega's situation without a remedy. The proper approach in such a case is to begin the application process anew after the termination of the removal proceedings. Although the government suggested a resubmission of one's application was required, the Court preferred a motion to reopen the citizenship proceedings on the “new fact” of the termination of removal proceedings. That re-instituted matter would no longer be burdened with the “arose by reason of” exclusion of §1503. Here, Ortega already filed a motion to reconsider after the removal proceedings had been terminated. She was then denied relief. Her status as a national is no longer considered to have arisen in the removal proceeding. She can avail herself of the declaratory judgment relief available under §1503.

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WORLD OUTREACH CONFERENCE CENTER v. CITY OF CHICAGO (December 30, 2009)

In Chicago, the World Outreach Conference Center ("WOCC") operates a community center. It is a Christian organization, one of whose goals is to assist and provide relief to the needy and suffering. WOCC purchased the center in 2005 from the YMCA. Although the land was rezoned several years ago, YMCA's operations were a legal nonconforming use. WOCC wants to operate the building by renting out its many apartments – just as the YMCA did. The Center did need a single-room-occupancy (SRO) license to operate. Apparently because an alderman had wanted a financial backer to acquire the property, the City refused to grant the license. WOCC brought suit under the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA), challenging the City's refusal to grant the license. Although the City eventually did grant the license, the suit continued with its claim for damages. The court dismissed the complaint. WOCC appeals.

In Peoria, the Trinity Evangelical Lutheran Church purchased property adjacent to its church. It wanted to raze the building in order to build a family center. The City, in response to a neighborhood group’s application, designated the building a landmark and blocked the demolition. Trinity brought suit under RLUIPA, alleging that the landmark designation imposed a substantial burden on religious activities. The court granted summary judgment to Peoria. Trinity appeals. 

In their opinion (in these consolidated cases), Judges Cudahy, Posner and Rovner affirmed in part and reversed in part in Chicago and affirmed in Peoria. RLUIPA prohibits government land-use regulation that imposes a substantial burden on religious activities unless it is in support of a compelling government interest and is the least restrictive means to the end. It also prohibits non-equal or discriminatory treatment directed at a religious assembly through land-use regulation. The Court first addressed and rejected Chicago’s argument that RLUIPA exceeds Congress’ authority, relying on the enforcement clause of the Fourteenth Amendment as well as Congress’ power to regulate interstate commerce. On the merits in WOCC, the Court concluded that the dismissal of WOCC’s substantial-burden claim was erroneous. WOCC was entitled to operate without the special use permit demanded by the City and the City had no basis for refusing the SRO license. The burden was substantial and there was no compelling government interest. The Court also: a) affirmed the dismissal of the discrimination claim (WOCC was badly treated – but it had nothing to do with religion), b) reversed the dismissal of the equal protection claim (on a class-of-one theory), and c) affirmed the dismissal of the damages claim for violation of the Chicago Zoning Ordinance.On the merits in Peoria, the Court concluded that the burden imposed on Trinity did not reach “substantial.” The property had value and could be sold and there are suitable alternatives for the family center.

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COLLINS v. HERITAGE WINE CELLARS (December 21, 2009)

Heritage Wine Cellars is a wholesale wine importer and distributor. It buys wines outside of Illinois (and frequently outside of the country) and brings it to Illinois for sale to retail stores. Although it controls the wine and its shipment during the entire journey, Heritage retains independent contractor carriers to bring the wine into the state. Within Illinois, it uses its own trucks and drivers to distribute the wine. Anthony Collins is one of those truck drivers employed by Heritage. He and other drivers brought an action against Heritage pursuant to the Fair Labor Standards Act (FLSA). They allege that Heritage failed to pay required overtime. The district court ruled that Collins transported the wine in interstate commerce and Heritage was therefore exempt from the overtime provisions of the FLSA. Collins appeals.

In their opinion, Judges Posner, Manion and Tinder affirmed. The Court critically noted the jurisprudence surrounding the "interstate commerce" issue. It found no fewer than seventeen "unweighted technical criteria" in the cases and regulations. Although admitting that some cases may require a more complex analysis, the Court found four criteria that allowed it to dispose of the case. Those criteria were: a) although Heritage did not have a customer for all of the wine it imported, its volume of imports was determined by customer demand, b) Heritage did not process or otherwise modify the wine at its warehouse, c) Heritage maintained control over the wine, and d) the shipper bore the ultimate responsibility for transportation charges. Under those circumstances, concluded the Court, the wholly intrastate leg of a shipment is considered to be part of interstate commerce.

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RAO v. BP PRODUCTS NORTH AMERICA (December 9, 2009)

Salik Rao operated as a BP gasoline service station dealer in the Chicago area. For 10 years beginning in the early 1990s, Rao gave over $100,000 worth of cash and gifts to a BP sales manager. In return, the sales manager performed many favors for Rao, to his great benefit. In 2003, Rao reported this improper activity to BP. However, he characterized it as extortion on the part of the sales manager. BP begin an investigation which ultimately led to the termination of the sales manager in November of 2003. BP continued its investigation, seeking to confirm the extortion. Although Rao promised to cooperate, he never met with BP after November of 2003 and affirmatively withdrew his pledge of cooperation in June of 2004. BP notified Rao in October 2004 that it was terminating its franchise relationship with him because of his improper activity. Rao brought suit under the Petroleum Marketing Practices Act ("PMPA"), as well as RICO, fraud, breach of contract and extortion. The court dismissed the counts based on RICO, fraud and breach of contract and granted summary judgment on the PMPA claim. Rao appeals.

In their opinion, Judges Bauer, Flaum and Williams affirmed. The principal issue on appeal was whether BP's notice of termination was sufficient under the PMPA. The PMPA, which protects service station franchisees, allows early termination of franchise agreements in certain circumstances, which Rao does not contest here. The PMPA requires the franchisor to give a notice of such early termination within 120 days of when it "first acquired actual or constructive knowledge" of the reason for the termination. Here, it is uncontested that BP knew of the improper conduct well over 120 days before providing termination notice. The Court focused, however, on what BP knew when and what BP did. From the fall of 2003 through the middle of 2004, Rao continued to insist that he was a victim of the sales manager's extortion. The sales manager, at the same time, insisted that the gifts were given voluntarily in exchange for his favors. The Court concluded that the statute did not require BP to give notice while it was still investigating the allegations. It was not until Rao ceased his cooperation that the clock started. BP's notification was sent within 120 days of that date and was therefore proper. The Court affirmed the rest of the lower court's judgment as well.

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MUSCH v. DOMTAR INDUSTRIES (November 25, 2009)

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

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

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

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

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

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BLOCH v. FRISCHHOLZ (November 13, 2009)

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

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

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LAKE v. NEAL (November 6, 2009)

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

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

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

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

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

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AMERICAN RIVER TRANSPORTATION CO. v. RYAN (August 27, 2009)

Kerrie Vesolowski was a passenger on a motor boat when it collided with a barge. Vesolowski sued American River Transportation Co. to recover for injuries in state court. American filed an action in federal court pursuant to the Shipowner's Limitation of Liability Act. The Act limits a shipowner's liability to the value of its ship if it can prove that the acts complained of occurred without its privity or knowledge. The Act also requires that any claims brought against the owner “cease” during the pendency of the proceedings. The district court ordered that Vesolowski’s proceedings be stayed. Vesolowski complied. After more than a year, American asked the court to find Vesolowski (and others) in contempt and to impose sanctions. The court granted the motion and required Vesolowski to dismiss her state court action. Vesolowski appeals.

In their opinion, Judges Bauer, Ripple and Wood reversed and remanded. The Court first clarified its jurisdiction, noting that it has jurisdiction over an order modifying an injunction but lacks jurisdiction over an order interpreting an injunction. The Court concluded that the order modified the earlier injunction because it required that the case be dismissed, rather than merely stayed. Addressing the merits, the Court noted that the order had two possible bases: 1) the Act requires a dismissal rather than a stay, or 2) the Act requires only a stay and the dismissal is a sanction for Vesolowski's actions during the stay. The Court rejected the first basis. The use of the word "cease" in the Act and the Act's provision preserving Vesolowski's right to her state court remedy convinced the Court that the Act only requires a stay. The Court rejected the second basis as well, as it found no grounds for a sanction. The state case remained stayed. Vesolowski's only action was to add additional defendants and theories of liability. American never had to respond in state court. The Court expressed its opinion that the district court did not intend the dismissal order to be a sanction. If it did, however, it was an abuse of discretion.

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MIDDLETON v. CITY OF CHICAGO (August 24, 2009)

From 1960 until 1989, Charles Middleton served in the Air Force. On two occasions in the early 1990s, he applied for positions with the City of Chicago. He was not hired for either position. In 2007, Middleton sued the City pursuant to the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). He alleged that the City refused to employ him on account of his military service. The district court applied the four year "catch-all" statute of limitations in 28 U.S.C. § 1658 (a) and dismissed his complaint. Middleton appeals.

In their opinion, Judges Kanne, Rovner and Wood affirmed. The Court considered not only the application of § 1658 (a) to the claim but also the provisions of the Veterans' Benefits Improvement Act (VBIA), enacted after the appeal. Section 1658 was enacted in 1990. Its purpose, said the Court, was to minimize the borrowing of state statutes of limitations for federal causes of action. It provided a four-year statute of limitations for any federal claim brought under a later-enacted statute, if the statute had no expressed limitations period. USERRA was enacted four years later and contained no expressed statute of limitations. The Court concluded, based on the plain meaning of the statute, that the four-year limitations applied. In doing so, it rejected the Middleton's arguments that: 1) the section did not apply because USERRA was simply an amendment of an earlier-enacted statute, and 2) the legislative history indicated Congress' intent that no statute of limitations apply. The Court turned its attention to the VBIA. The VBIA eliminates any limitations period for a USERRA cause of action. The Court noted the "well-established" rule that a statute should not be applied retroactively unless Congress' intent is clear. Nothing in the statute addresses retroactivity. The Court concluded that the statute should not be given retroactive effect. Finally, the court rejected Middleton's argument that the VBIA was merely a clarification of existing law.

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QUINN v. GATES (July 29, 2009)

Congress passed the Defense Base Closure and Realignment Act of 1990 in order to prevent local interests from outweighing national needs with respect to base closures. The Act creates a Commission that recommends changes and disbands once it delivers its report to the President. The President can accept or reject the recommendations, but only in their entirety. If the President accepts the recommendations, they are forwarded to Congress. Congress can allow the recommendations to proceed, in their entirety, or they can reject the recommendations, also in their entirety. The all-or-none approach was a key component of the legislation. In 2005, a Commission made recommendations that were accepted by the President and Congress. One recommendation was to move fifteen F-16 jets assigned to the Illinois Air National Guard to a base in Indiana. The Governor of Illinois brought suit to enjoin the recommendations, contending that federal law granted veto power to a state's governor before any changes could be made to a unit of the National Guard. The district court dismissed the suit for a third time (the first two were reversed by the Seventh Circuit). The Governor appeals.

In their opinion, Chief Judge Easterbrook and Judges Rovner and Sykes affirmed. The question on appeal was whether the Act trumped other limitations on the President's power to change National Guard assignments. The Court, citing Justice Souter's concurrence in Dalton, concluded that the Act gave the President unfettered discretion to accept or reject a Commission’s recommendations. The end result, however, had to be a wholesale acceptance or rejection. Any attempt to cherry pick is forbidden by the Act. The Court concluded that the Act provided an independent means for the President to realign national resources and supersedes any prior statute that is incompatible with its premise. The Court emphasized that it was not holding that it lacked subject-matter jurisdiction -- only that the Governor loses on the merits.

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INDIANA PROTECTION AND ADVOCACY SERVICES v. INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION (July 28, 2009)

The State of Indiana receives federal funds under programs designed to assist those with disabilities and mental illnesses. In return, it must have a system to protect and advocate for their rights. The Indiana Protection and Advocacy Services ("Services") is the system the state created for that purpose. As such, it is entitled to investigate incidents of abuse and neglect and to see patient records, unless the patient has a legal guardian in charge of his or her interests. When a mentally disabled patient died at a state hospital, Services investigated. The hospital refused to turn over the patient's medical records. Services filed suit in federal court, naming the hospital and the state agency in charge of its operation, Indiana Family and Social Services Administration. The district court found that the hospital was required to turn over the records. The defendants appeal.

In their opinion, Chief Judge Easterbrook and Judges Sykes and Kendall vacated and remanded. The Court never reached the merits. It noted that neither statute in question created an express right of action for a state system such as Services. If there is a private right of action to enforce the provisions of the statutes, it comes from § 1983. The Court added, however, that Services is a state actor. It is therefore not a "person" under § 1983 and cannot sue a state agency. The Court remanded with instructions to dismiss for lack of jurisdiction.

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UNITED STATES v. HERNANDEZ-ARENADO (July 6, 2009)

Pablo Hernandez-Arenado (Hernandez) was awarded immigration parole when he came to the United States from Cuba as part of the Mariel Boatlift. Four years later, Hernandez pled guilty to the sexual assault of a young boy and was sentenced to five years in state prison. He admitted to several hundred similar episodes. The Immigration and Naturalization Service (“INS”) revoked his parole and placed him in a Bureau of Prisons (“BOP”) facility after his release from state prison, pending deportation. Hernandez filed a petition for a writ of habeas corpus after 20 years in custody, after the Supreme Court ruled that the statute under which Hernandez was being held only allowed a reasonable period of custody pending removal. The petition was granted and his release was ordered. Before Hernandez was released, the government sought to civilly commit him as a sexually dangerous person pursuant to the Adam Walsh Act. The district court denied the petition, holding that the Adam Walsh Act applied only to individuals "in the custody of" the BOP and that Hernandez was in fact in the custody of Immigration and Customs Enforcement (“ICE”), the successor agency to INS. The government appeals.

In their opinion, Judges Ripple, Rovner and Evans affirmed. The Court stated that the Supreme Court has recognized different meanings for the word "custody" in different contexts. Here, for example, the BOP has physical custody of Hernandez but the ICE has legal custody. The Court went on to say that the Bureau of Persons has physical custody of many persons for whom it does not have legal custody and, in fact, has legal custody of many persons over whom it does not have physical custody. The Court did not believe that the applicability of the Act should turn on a factor, like physical custody, that is random and manipulable. Even the government refused to suggest a standard test for determining custody, and does not believe that every person in its physical custody is subject to the Act. The Court insisted on giving the term a meaning that applied beyond the narrow facts of the case. It rejected a physical custody trigger and instead adopted the interpretation that the Act applied to all federal offenders, whether they were in the physical custody of the Bureau of Prisons or not, but not to persons in the physical control of the BOP simply as a service to another agency.

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GLASER v. WOUND CARE CONSULTANTS, INC. (July 2, 2009)
 

Carol Glaser is a Medicaid recipient with some serious medical problems. She started receiving care at Wound Care Consultants, Inc. in 2002. At some point, an attorney contacted her and advised her that Wound Care may have submitted improper billing to Medicaid. Glaser filed a qui tam action under the False Claims Act in April of 2005. However, several months before she filed, a routine audit led the Centers for Medicare & Medicaid Services ("CMS") to begin an investigation of Wound Care. Glaser and her attorney stated that they were unaware of the CMS investigation. Nevertheless, the district court dismissed the action on the ground that it was based upon a public disclosure and that Glaser was not an “original source.” Glaser appeals.

In their opinion, Judges Cudahy, Kanne and Sykes affirmed. The Court described the essence of the False Claims Act. The Act prohibits false payment claims to the government. It allows private citizens to file actions on the government’s behalf and receive a substantial share of the recovery, if successful. Qui tam actions, as they are called, are barred if the action is “based upon the public disclosure” of allegations unless the person is an “original source.” This jurisdictional bar necessitates a three-part inquiry: a) whether the allegations have been publicly disclosed, b) if so, whether the action is based upon the disclosure, and c) if so, whether the person is an original source. The Court applied the test to the facts. Public disclosure is satisfied when, as here, the very agency responsible for investigating claims of abuse has started an investigation before the action was filed. The fact of the investigation need not be widely known. With respect to the second prong, the Court noted its earlier precedent that held that “based upon” meant that the allegations actually depended on and were derived from the publicly disclosed information. However, the Court recognized that eight other circuits apply a different test -- an allegation is "based upon" publicly disclosed information when the allegations are substantially similar. The Court conceded the merits of the majority position. Although its construction of the statute is consistent with the plain language doctrine, the Court recognized that its position made the third prong of the test -- original source -- superfluous. In doing so, the Court overruled Bank of Farmington and Caremark. Applying their new standard, the Court concluded that Glaser's allegations were not only substantially similar, but were nearly identical, to those of CMS. Finally, with respect to the third prong of the test, the Court held that Glaser was not an "original source" of the information contained in her action. The Court principally relied on the fact that Glaser knew of the fraudulent conduct only through her attorney but asserted the attorney-client privilege to prevent disclosure of how she learned the information. Thus, she did not meet the burden of proving that she had independent knowledge of the fraud.

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UNITED STATES v. ROLLS-ROYCE CORPORATION (June 30, 2009)

Curtis Lusby was an engineer at Rolls-Royce Corp. He became suspicious that the company was falsely certifying that one of its aircraft engines met government specifications so he informed his superiors. He claims that the company fired him for doing so. He brought suit under the False Claims Act, alleging that the company punished him for preparing to bring an action under the statute. The parties jointly dismissed the suit in 2003. However, two months earlier, Lusby had filed a qui tam action under seal. The court dismissed the action for failure to plead fraud with particularity and because of the claim preclusion effect of the earlier lawsuit. Lusby appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Wood affirmed in part and reversed in part. The Court first addressed claim preclusion. It noted its 2007 decision in Cole. In Cole, the Court held that a person who did not prevail on a Title VII claim cannot later bring both a personal and qui tam claim under the False Claims Act. Here, however, Lusby disputes one of the elements of claim preclusion -- that the cases involve the same parties (Cole conceded the issue). The Court noted that the United States is not an actual party to a qui tam suit unless it intervenes. It is, however, the real party in interest. In addition, the Court identified several procedural requirements for qui tam litigation that would make it very difficult to bring a personal claim in the same suit. The Court concluded that the resolution of an employee's personal suit does not preclude a later qui tam suit. With respect to the particularity issue, the Court stated that the complaint contained quite specific allegations of fraud. It rejected Rolls-Royce's argument that a specific allegation of the details of the invoices was required. The Court did affirmed the lower court with respect to Lusby's allegations that Rolls-Royce committed fraud during the earlier settlement negotiations.

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FLETCHER v. CHICAGO RAIL LINK, L.L.C. (May 28, 2009)

William Fletcher was injured while driving a utility vehicle in a rail yard. He sued Chicago Rail Link under the Federal Employers Liability Act. He alleged that the accident was caused by the railroad's failure to maintain the vehicle in a safe condition. A jury awarded him $700,000 in damages but also found that he was 50% negligent himself. Under FELA, such a finding would reduce the damages by one half unless the court finds that the employer violated "any statute enacted for the safety of employees" and that the violation contributed to the accident. The district court found that Chicago Rail Link had violated an Illinois Commerce Commission regulation and awarded full damages. Chicago Rail Link appeals.

In their opinion, Judges Posner, Manion and Kanne affirmed in part and reversed in part. The Court first noted that the "any statute" language in FELA includes regulations issued by a state agency which is "participating in investigative and surveillance activities" pursuant to 49 U.S.C. § 20105. Section 20105 allows the Secretary of Transportation to prescribe investigative and surveillance activities to enforce safety regulations and provides that a state may participate in those activities when the safety practices are regulated by a state authority. The Court disagreed with the lower court's ruling that all railroad worker safety regulations are included within § 20105. Rather, the Court concluded that FELA only applies to state regulations that support or implement federal safety norms. Since the Illinois regulation at issue was not such a regulation, the Court determined that it was not "any statute" as contemplated by FELA. The Court remanded for the 50% reduction in damages.

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INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 150 v. WARD (April 16, 2009)

Local 150 represents over 22,000 union members in Illinois, Indiana and Iowa. Joseph Ward was its treasurer 1986 until 2007. In 1994, the president of the local asked Ward to purchase property adjacent to the local’s headquarters. Instead of purchasing the property for the union, however, Ward participated in the purchase of the property by an investment group. The group sold the parcel several years later at a substantial profit. Local 150 filed a complaint against Ward, alleging violations of § 501 of the Labor-Management and Reporting Disclosure Act of 1959 (the “Act”) and breaches of fiduciary duty. The district court dismissed the complaint, concluding that § 501 does not allow a labor union to bring a private cause of action. Local 150 appeals.

In their opinion, Judges Kanne, Williams and Sykes reversed and remanded. The Court started with the language of the Act. Section 501(a) imposes fiduciary duties, including a duty of loyalty, on a union’s officers and agents. Section 501(b) creates a federal cause of action for individual union members. Damages recovered under § 501 (b) inure to the benefit of the union itself. Before a union member may sue, she must make a demand that the union take appropriate action and then must receive the court’s permission, on a showing of good cause, to proceed. The Act is silent on a union’s ability to bring an action. On that threshold question, the Court first found no express cause of action under a plain reading of the Act. With respect to whether the Act contains an implied cause of action, the Court noted a split of authority between the Ninth in Eleventh Circuits. Relying on the Supreme Court’s holding in Alexander, the Court concluded that its task was to determine whether Congress intended to create both a private Right and a private remedy. The Court's analysis of the text and structure of § 501 led it to conclude that Congress did intend to create both a federal right and a federal remedy for a union.

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CITY OF JOLIET, ILLINOIS v. NEW WEST, L.P. (April 9, 2009)

The City of Joliet filed eminent domain proceedings to acquire the Evergreen Terrace Apartments. New West, the owner of the apartment complex, filed an action under 42 U.S.C. § 1983. New West sought an injunction and damages, alleging that federal law preempted Joliet's attempts to condemn the property. The district court originally put the condemnation on hold and dismissed the § 1983 action. On the first appeal, the Court reversed and directed the district court to resolve the condemnation proceedings. On remand, HUD intervened and contended that the condemnation was precluded by two different federal statutes. The district court rejected HUD’s argument and certified the case for interlocutory appeal. New West and HUD appeal.

In their opinion, Chief Judge Easterbrook and Judges Williams and Sykes affirmed. The court reviewed the three federal statutes in play. Section 8 of the Housing Act of 1937 provides federal rent subsidies. Section 221 of the National Housing Act creates a federal government mortgage insurance program. Finally, the Multifamily Assisted Housing Reform and Affordability Act of 1997 provides a mechanism for HUD to renegotiate mortgages under section 221. Owners who renegotiate under the 1997 Act must promise to maintain availability for low income tenants for 30 years. Evergreen Terrace participated in all three programs. The Court held in the first appeal that Section 8 does not preempt any eminent domain proceeding. HUD argues that a condemnation would interfere with the purposes of Section 221 and the 1997 Act, both of which are designed to preserve low income housing stock. The Court noted that the Supreme Court recently warned against using preemption inferred from a clash of goals and objectives. Only if an agency has issued a preemptive regulation with the force of law should that power be used expansively. The Court noted that no such HUD regulation exists with respect to eminent domain powers. In fact, the Court did not even agree that the clash of goals even existed. All three federal statutes are voluntary. Even when used, private owners can withdraw from the programs at any time. Without such a regulation, the Court concluded that the eminent domain should go forward.

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UNITED STATES v. BENSON (April 6, 2009)

William Benson claims to believe that the 16th Amendment to the United States Constitution was never properly ratified and that, as a result, the federal income tax system is unconstitutional. Benson has written a book on the subject and promotes and sells a package of materials that he claims will allow citizens to refuse to file federal income tax returns and still avoid liability as a result. The United States brought an action against Benson in federal court pursuant to 26 U.S.C. § 6700. The United States sought an injunction preventing Benson from promoting and selling his tax avoidance materials and also sought a list of Benson's customers. The district court enjoined Benson from promoting and selling his package of materials but declined to order him to produce a list of his customers. Benson and the United States appeal.

In their opinion, Judges Bauer, Ripple and Evans affirmed in part, reversed in part and remanded. The Court affirmed the lower court's grant of injunctive relief. The Court first concluded that Benson's activities fit within the broad definition of a § 6700 "plan." Second, the Court concluded that Benson knew or should have known that many of the statements included in the materials were false. Finally, the Court concluded that the statements were material because they could have a substantial impact on a person's decision to purchase his package of materials. Next, the Court concluded that the United States met the injunctive relief threshold contained in the statute. Considering the totality of the circumstances, the court relied on the facts that Benson's violation was not isolated and that he was not likely to stop without the injunction. With respect to Benson's First Amendment claim, the Court concluded that the language of the injunction was specific enough to prohibit only false or deceptive commercial speech -- -- speech not protected by the First Amendment. Benson is still free to encourage political action, communicate a political message, and otherwise share his views about the 16th Amendment or the federal tax system. The Court reversed the lower court with respect to its decision on the customer list. A district court has the authority to issue orders that may be necessary for the enforcement of the tax laws. The Court noted that such an order would not harm Benson but would serve the public interest by allowing the government to both warn Benson's customers of the falsity of his claims and also to enforce the income tax laws of the United States.

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HEITMANN v. CITY OF CHICAGO (March 25, 2009)

The City of Chicago and the police officers' union have agreed to a procedure for police officers to take compensatory time off in lieu of overtime pay. Under the Fair Labor Standards Act, a public employee who has accrued compensatory time off and has requested to use it is permitted to "use such time within a reasonable period after making the request if the use of the compensatory time does not unduly disrupt the operations of the public agency." Several officers with accumulated compensatory time off brought a suit against the City. They contend that they should be allowed to take a particular days of their own choosing unless their absence at that time would result in a shortage of available officers. Conversely, the City contends that it is the department's choice. In their view, an officer may submit a generic request for compensatory time off. The City then decides what days, if any, to allow. The magistrate judge below concluded that the City had no set procedure. The lack of procedure failed to ensure the rights of the officers. He issued a detailed injunction specifying the process the City must use in response to future applications. The City appeals.

In their opinion, Chief Judge Easterbrook and Judges Rovner and Williams vacated the injunction and remanded. As an initial matter, the Court noted that the Fair Labor Standards Act only allows injunctions in suits by the Secretary of Labor and only when the remedy at law is inadequate. Here, any failure of the City to honor the officers' time off rights is compensable by money. The unavailability of an injunction, however, does not mean that the officers are not entitled to a remedy. The Court concluded that the statutory language was not clear and included such open-ended words as "reasonable" and "undue." But the Court looked to an agency regulation that does address the issue. The agency's approach is not unreasonable and is thus entitled to deference under Chevron. The regulation defines "reasonable period" and "unduly disrupt" - and it does so in the same way that the officers do. The Court vacated the injunction and remanded for an award of non-injunctive relief to be determined by the magistrate judge.

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CAROLINA CASUALTY v. ESTATE OF KARPOV (March 17, 2009)

Stanislaw Gill was driving his tractor-trailer on the Indiana Toll Road when he rear-ended a stopped car. More collisions followed. Eventually, four persons died and many others were injured. Carolina Casualty insured Gill and his employer. The policy provided a limit of $1 million of coverage for any one accident. Carolina Casualty filed an interpleader action, naming Gill, his employer, and everyone who had filed a claim arising out of the accident. Carolina Casualty deposited $1 million with court and sought a declaration that $1 million was the limit of its liability. The court granted summary judgment to Carolina Casualty. Margarita Karpov appeals individually and as administratrix of the estate of Dimitry Karpov.

In their opinion, Judges Cudahy, Manion and Williams affirmed. The sole issue on appeal was whether the Motor Carrier Act (“MCA”) and the endorsement issued by Carolina Casualty verifying compliance with the MCA establish coverage limits of $750,000 per person. The Court agreed that the MCA, in § 31139(b), establishes a $750,000 minimum level of financial responsibility. Appellants cite § 13906 for the proposition that the $750,000 level was a per-person, rather than a per-accident, threshold. Section 13906 provides: “The security must be sufficient to pay not more than the amount of the security, for each final judgment against the registrant for bodily injury to, or death of, an individual resulting from the negligent operation, maintenance, or use of motor vehicles, . . . .” Appellants rely on the “for each final judgment” language to argue that the limit was per person. The Court found little authority on the subject. Two district courts have relied on the “not more than” language to hold that § 13906 creates a limit of coverage from a single accident. One of the decisions was affirmed, albeit in an unpublished opinion. The Court agreed with the rationale of the district courts and held that the MCA did not create a per-person limit. The Court also rejected appellants’ argument that the policy endorsement itself created a per-person limit, on several grounds: a) the endorsement merely verifies compliance with the MCA, which does not adopt a per-person limit, b) the endorsement specifically refers to the per-accident limits in the policy itself, and c) the language of the endorsement is provided in a government regulation and states the limits “for each accident.” Finally, the Court found nothing in legislative history or public policy that supported a different conclusion.

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 NORFOLK SOUTHERN v. BOX (February 11, 2009)

The State of Illinois requires railroads to install walkways alongside railroad tracks in any switching yard built or renovated after February 2003. Norfolk Southern challenged the requirement in the district court, contending that it is preempted by federal law. The district court found for Illinois, first holding that federal law does not cover the subject matter and then, after a bench trial, deciding that the regulation does not conflict with a federal objective. Norfolk Southern appeals. 

In their opinion, Chief Judge Easterbrook and Judges Bauer and Sykes affirmed. The Court first noted a split in both state and federal courts over whether state walkway rules are compatible with federal law. Courts have upheld rules in California, Colorado, and Maryland. Texas and Indiana rules have been struck down as preempted by federal law. The Court3 looked to the federal law. Federal law requires that regulations relating to railway safety be as nationally uniform as practicable – but it allows a state safety regulation to remain in effect until a federal regulation covers the subject matter of the state regulation. There are no federal regulations dealing with railway walkways in particular. Norfolk Southern contends that the comprehensive federal regulation of roadbed design and construction "covers" walkways because they are so integrally related. The Court, noting that the Supreme Court has adopted a more narrow reading of "cover" than Norfolk Southern, rejected that notion. In fact, the Court referred to a still-standing 1977 federal decision to leave walkway regulation to the states. The Court moved on to the question whether the Illinois scheme conflicts with federal objectives. Illinois grants broad discretion over the design and construction of the walkways. Norfolk Southern presented expert testimony that the only viable walkway construction material was gravel but that even gravel would cause drainage problems. The district court discounted the latter conclusion for two reasons. First, photographs in the record of Norfolk Southern switching yards showed that the shallower slope between tracks that the expert said would cause drainage problems already existed. Yet, the expert could not describe the drainage problems or show evidence of yards that had the V-shaped slope he testified was necessary to prevent drainage problems. Second, in response to the court’s questions, the expert was unable to testify regarding the history of compliance with walkway regulations in other states that have had the requirement for years. If compliance with the regulation led to all sorts of drainage or other problems, the records in those states surely would show that. The Court did not find the district court’s finding clearly erroneous on that issue. Finally, the Court refused to address Norfolk Southern’s complaints that specific local situations might make compliance impossible, advising the railroad to work details out with the Commission.

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WISCONSIN v. THE STOCKBRIDGE-MUNEE COMMUNITY (January 20, 2009)

The Mohican ancestors of the Stockbridge-Munee Indians (“Tribe”) moved from western Massachusetts to New York and, eventually, to Wisconsin early in the 1800s. Additional pressure to move yet again produced two factions within the Tribe – those that wanted to move farther west and those that wanted to eliminate the tribal structure, remain in Wisconsin, and become full U.S. citizens (more history here). A treaty was eventually entered into in 1856. The Tribe gave up the land it had in return for the creation of a reservation consisting of the Bartelme and Red Springs townships, also in Wisconsin. Problems with the land – it was heavily forested and hard to farm but the Tribe was not allowed to sell the timber – and continued internal conflicts led to further Congressional intervention. Pursuant to acts passed in 1871, 1893 and 1906, much of the land was sold, proceeds were divided among tribal members, some members were ousted from the Tribe, and some were later reinstated. Finally, tribal members agreed to accept land or cash in lieu in full settlement of their rights, including those arising under the 1856 treaty. Years later, the Department of the Interior helped the Tribe reacquire some, but not all, of the original two townships. Why does all of this matter? Because the Tribe is now allowed to operate gaming activities within the boundaries of its reservation. The Tribe bought the Pine Hills golf club in 1993 and operates slot machines there. Wisconsin thinks Pine Hills is not within the current boundaries of the reservation. It sued to enjoin the gambling and for a declaration setting forth the boundaries of the reservation. The district court granted summary judgment to Wisconsin. The Tribe appeals.

In their opinion, Judges Posner, Ripple and Evans affirmed. The Court made the “unremarkable” observation that a reservation, once established, must remain intact unless and until Congress explicitly alters it. An intent by Congress to do so cannot be inferred lightly. A court should first look at the language of a statute. In the absence of a clear intent, a court can look at the circumstances surrounding the act, and even subsequent events. The Court addressed the 1871 act and found, based on the language of the Act and surrounding circumstances, that Congress meant to reduce the size of the reservation. The Court noted that Congress was addressing the internal conflict in the Tribe. It expected many members of the Tribe to accept a share of the proceeds of the sale of the property and sever ties with the Tribe. A smaller Tribe needed less land. The Court also pointed out that the 1871 Act was consistently interpreted afterward as having reduced the size of the reservation. The Court next addressed the 1906 Act. It, too, lacked an explicit statement of Congressional intent. Again, the Court considered the circumstances. It concluded that all parties – Congress, the Department of Interior, the Tribe – all expected the 1871 Act to complete the allotment of land to the Tribe and extinguish the 1856 reservation in its entirety. One key fact, in the Court’s opinion, was that the land was allotted in fee simple, a requirement for the abolition of the reservation. Again, the Court noted that subsequent events supported the conclusion that the reservation had been eliminated by the Act. By 1910, all the original reservation property had been sold or was held by members of the Tribe in fee simple. The Court concluded that the current extent of the reservation is only that which has been reacquired with the assistance of the Department of the Interior – and it does not include the Pine Hills property.

Judge Ripple concurred, only to emphasize the point that the Court did not in any way depart from the general rule that Congress must be explicit in any attempt to alter or disestablish a reservation.

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REYNOLDS v. UNITED STATES (December 9, 2008)

On an August afternoon in 2003, a security guard employed by General Security Services Corp. (“GSSC”) was on duty at the Federal Building in Indianapolis. (These facts are from Reynolds complaint, taken as true for purposes of the opinion.) Somehow, he ended up naked, on the roof of the building, and locked out of the building. Eventually, a colleague let him in. The two of them reported the incident (except for the naked part) to Maureen Reynolds, a GSSC officer. Several weeks later, Federal Protective Services (“FPS”) began an investigation. Two FPS investigators interviewed Reynolds. She told them what she knew. Although they knew that she was unaware of the nudity, the two investigators told the local prosecutor that she had lied. Reynolds was charged with false reporting and acquitted at trial. GSSC fired her because of the allegations of criminal conduct. Reynolds sued the United States under the Federal Tort Claims Act (“FTCA”). She alleged that the investigators had initiated a malicious prosecution. The district court dismissed for lack of subject matter jurisdiction. Reynolds appeals.

In their opinion, Judges Ripple, Rovner and Evans reversed and remanded. The Court addressed the requirements and exceptions to a FTCA action. The FTCA allows tort suits against the United States for torts committed by federal officials if those same acts would impose liability under state law for a private person. There are several exceptions to liability. The Court first corrected the district court’s treatment of these exceptions as limitations on jurisdiction. They are not. They are, instead, limitations on the right to recover and subject to a motion to dismiss for failure to state a claim. Although the district court relied on three different exceptions to the FTCA, the government only addressed one of Reynold’s arguments. The Court agreed that the district court was in error in its analysis of the “government employee” and “law enforcement” exceptions. It turned to the “discretionary function” exception. The Court noted the two requirements needed to establish the discretionary function exception: a) the conduct must involve an element of judgment, and b) the conduct must amount to a permissible exercise of policy judgment. The Court rejected the government’s argument that the conduct was akin to a prosecutor’s decision to prosecute. The Court agreed that a decision to prosecute is discretionary but held that the conduct in this case – knowingly providing false information to the prosecutor – is separable from that decision. A federal investigator’s decision to lie under oath does not meet the discretionary function test. Reynolds has alleged conduct that would amount to malicious prosecution under Indiana law and has therefore stated a claim under the FTCA.
 

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SEEGER v. AFNI, INC. (December 8, 2008)

AFNI is a debt collector. Cingular is (or was) a cellular telephone service provider. Cingular contracts with individuals to provide telephone service. It typically includes in its contracts a provision that its customer is obligated to pay the fees of a collection agency and other costs Cingular incurs in enforcing its rights under the contracts. In 2004-05, Cingular sold some delinquent customer accounts to AFNI. AFNI sent collection letters to plaintiff Seeger and others. The letters stated that the recipient was responsible for collection fees. In 2005, Seeger and other plaintiffs filed suit. They alleged that AFNI’s actions violated the Fair Debt Collection Practices Act (“FDCPA”) and the Wisconsin Consumer Act (“WCA”). The district court certified a class and granted summary judgment to the class. It held that AFNI’s action violated both the FDCPA and WCA because the owner of a debt is not allowed to impose a collection fee for its own benefit (as opposed to that it pays a third-party collector). AFNI appeals.

In their opinion, Judges Bauer, Cudahy and Wood affirmed. The Court agreed that AFNI could prevail if the fee was allowed either by the contract or by Wisconsin law. It turned first to the law. Wisconsin does permit recovery of losses that are the natural and probable result of a breach of contract. The Court noted, however, that the record was silent on the issue of AFNI’s cost of debt collection and could not support a characterization of the fee as a form of allowable damages. Turning to the contracts, the Court agreed with the court below that the contracts allowed Cingular only to collect fees it “incurred” in collecting a debt. The way the parties structured their arrangement, neither Cingular nor AFNI “incurred” any collection fees. Finally, the Court addressed AFNI’s argument that it was entitled to the bona fide defense in the FDCPA. The Court identified a growing split in the circuits on the issue of whether the bona fide defense applies to mistakes of law. It did not express an opinion on that issue, however. Rather. it decided that AFNI did not maintain reasonable procedures to prevent the error, which is an element of the defense.

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BINGHAM v. NEW BERLIN SCHOOL DISTRICT (December 4, 2008)

Sam Bingham was a Wisconsin high school student. His parents petitioned their school district to provide special education services for him. The district did not do so. Sam transferred to a private school. After Sam graduated, his parents filed a request for a hearing with the Wisconsin Department of Public Instruction. They alleged that the school district had failed to comply with the Individuals with Disabilities Education Act (“IDEA”). They asked for reimbursement of their private school tuition costs. Before a hearing was held, the district reimbursed the Binghams for the full amount they requested. The administrative law judge dismissed the petition as moot. The Binghams asked for a declaration that they had “prevailed” for purposes of seeking attorneys’ fees under IDEA. The administrative law judge refused. The Binghams appealed to the district court. The court concluded that the Binghams were not prevailing parties and denied their motion for attorneys’ fees. The Binghams appeal.

In their opinion, Judges Flaum, Rovner and Williams affirmed. In fact, the Court very quickly and easily resolved the sole issue presented by the appeal – whether the Binghams were entitled to attorneys’ fees under IDEA – against the Binghams. In Buckhannon, the Supreme Court in 2001 held that a voluntary monetary settlement by a defendant does not entitle a plaintiff to “prevailing party” status. The Court further noted that every circuit that has considered the issue has applied Buckhannon to IDEA cases.

The Court went on because it was troubled by the plaintiffs’ conduct. The plaintiffs and their counsel were well aware of Buckhannon and yet did not even cite it in their papers. The Court emphasized that it was not the fact that they appealed which was disturbing. Buckhannon has been the target of much criticism, especially when applied to IDEA. The Court allowed for the possibility that the Binghams could have elected to appeal solely for the purpose of preserving an argument for the Supreme Court. Having decided instead to ignore binding precedent, the Court ordered the Binghams and their counsel to show cause why they should not be ordered to pay the defendant’s costs and fees of the appeal. 

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BOIM v. HOLY LAND FOUNDATION FOR RELIEF AND DEVELOPMENT (December 3, 2008)

David Boim was a Jewish teenager living in Israel. He had dual Israeli/American citizenship. In 1996, he was killed by gunfire near Jerusalem. Boim’s parents brought suit under 18 U.S.C. § 2333(a). They alleged that defendants Muhammad Salah, Holy Land Foundation for Relief and Development (“HLF”), the American Muslim Society (“AMS”) and the Quranic Literacy Institute (“QLI”) all provided financial support to Hamas and that their son had been killed by Hamas gunmen. The district court rejected the argument that financial assistance was not international terrorism under § 2333(a) in denying defendants’ motion to dismiss. On an interlocutory appeal, the Seventh Circuit affirmed. The district court granted summary judgment on liability to plaintiffs with respect to Salah, HLF and AMS. A jury found QLI liable and assessed damages against all defendants of $52 million before trebling. On appeal, a Seventh Circuit panel vacated and remanded to redetermine liability. The plaintiffs petitioned for rehearing en banc, which was granted.

In their opinion, the Court affirmed in part, reversed in part and remanded. The Court first addressed whether the statute even applies to defendants who are alleged only to have provided financial support to those engaged in terrorism. The statute does not specifically mention secondary liability and the Supreme Court in Central Bank of Denver held that a statute that did not mention secondary liability did not create secondary liability. Instead of resolving that issue directly, however, the Court explored an alternative approach. It parsed the language of sections 2331, 2332, 2333 and 2339. Section 2333 creates a cause of action for a person injured “by reason of an act of international terrorism.” Section 2331 includes in the definition of international terrorism “acts dangerous to human life” that violate the U.S. criminal law. The Court concluded that financial assistance to Hamas is an “act dangerous to human life” and violates section 2339. Section 2339 was enacted in 1994 and makes it a crime to provide “material support” knowing that it could be used in carrying out a violation of section 2332. Section 2332 criminalizes the killing of an American citizen outside the U.S. The Court followed this chain to determine that a mere financial contribution to a terrorist organization could violate section 2333. Having determined that the defendants could be liable, the Court proceeded to examine the cause of action and its elements. On the element of intent, the Court held that the defendants must either have known or been deliberately indifferent to whether the organization they funded committed terrorist acts. Given the extreme conduct of the terrorist groups, the Court concluded that it was enough to know the character of the organization. With respect to causation, the Court held that the knowing contributors could not avoid liability on causation because, as a whole, they significantly increased the possibility that Boim would be a target of a Hamas terrorist act.

Applying these principles to the facts of the case, the Court addressed each defendant’s liability. It reversed with respect to HLF. The district court had erroneously applied principles of collateral estoppel from earlier litigation to the liability of HLF. The Court remanded for an analysis of HLF’s liability in light of its opinion. The Court reversed outright the findings as against Salah. Salah had been in custody during the period between the enactment of section 2339(a) and the shooting of Boim and could not have provided material support to Hamas during that time. The Court affirmed the findings as against defendants AMS and QLI. It found sufficient evidence that AMS knew that Hamas was a terrorist organization and that it provided material support to Hamas. QLI had elected not to participate in its trial and therefore could not object to the jury instructions or findings.

Finally, the Court addressed the lower court’s determination that the men who killed Boim were members of Hamas. The principle evidence on that point was the affidavit of an expert witness, Dr. Paz. Paz, an expert on terrorism, based his conclusion on terrorist internet sites, notes from a U.S. foreign service officer, and an Islamic-language document purporting to reflect the conviction of one of the murderers. The Court conceded that much of the evidence on which Paz relied was inadmissible. Noting that experts are not limited to admissible evidence in forming their opinions, the Court concluded that the type of evidence on which Paz relied is relied on by security and terrorism experts generally. The Court also noted that the defendants did not introduce any evidence to the contrary. The Court found no error in the lower court’s consideration of the affidavit.

Judge Rovner wrote separately, concurring in part and dissenting in part. Judge Rovner took principal exception to the majority’s conclusions with respect to causation and the Paz affidavit. She believed that the majority practically eliminated a causation requirement. She would have at least required expert testimony regarding the financial structure of Hamas and the various organizations it controlled. With respect to Paz, she criticized the majority for not only allowing the affidavit based on unproven evidence but for allowing it to support summary judgment. She noted that the defendants are not required to rebut factual propositions on which plaintiff has the burden of proof and has not properly supported. Judge Rovner would remand with respect to all defendants.

Judge Wood also wrote separately, concurring in part and dissenting in part. Judge Wood principally criticized the majority for its treatment of causation with respect to AMS and QLI. She concedes that “but-for” causation is sometimes not necessary, but she noted that the majority also eliminated the requirement for “sufficient” cause and apparently put little limitation on the remoteness of liability. Judge Wood would require at least proof that AMS and QLI contributed a “non-trivial” sum of money to an organization that was sufficiently connected to Hamas that the money indirectly supported Hamas’ terrorist mission. She also would impose a proximate cause limitation on the acts of the defendants, which the majority did not do. Judge Wood also disagreed with the majority’s statements on the scope of liability under the statute, calling it “awfully vague.” Finally, she disagreed with the treatment of the Paz affidavit and would remand to allow plaintiffs to meet the threshold requirements of Rule 702.

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