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

BPI ENERGY HOLDINGS v. IEC (MONTGOMERY), LLC (December 8, 2011)

BPI is in the business of producing natural gas from coal. Drummond Company is a large coal mining company. Because companies like BPI need access to coal from which to extract natural gas and companies like Drummond need someone like BPI to extract the gas before it can be safely mine the coal, alliances between companies like these are common. BPI and Drummond entered into a memorandum of understanding pursuant to which the parties agreed that BPI would sell its coal rights to Drummond and Drummond would lease to BPI the extraction rights in its coal holdings. The MOA stated that it was not a binding agreement and merely was intended to form the basis of an agreement. The parties soon entered into a letter of intent that was more specific. It identified BPI's coal interests and Drummond's gas extraction opportunities and further described the alliance expectations of the parties. It also provided, however, that it was not binding upon the parties and it did not provide the terms for the gas extraction leases. Notwithstanding the nonbinding nature of the agreement, BPI began transferring some of its coal rights to Drummond. Drummond did not return the favor and eventually terminated the alliance. BPI brought suit against Drummond for promissory fraud. Chief Judge Herndon (S.D. Ill.) granted summary judgment to Drummond. BPI appeals.

In their opinion, Seventh Circuit Judges Posner, Sykes, and Hamilton affirmed. Because there was no contract between the parties, BPI brought its action based on promissory fraud. Although promissory fraud is recognized in Illinois, it is recognized only if it is part of a scheme to defraud. Illinois’ "scheme" requires either a pattern of fraudulent statements or a particularly egregious one. The Court first addressed and rejected Drummond's statute of frauds defense. Although it characterized Illinois' position as "murky," it concluded that Illinois has adopted the majority rule that promissory fraud is a tort and not subject to the Statute of Frauds. Turning to the merits of the fraud claim, the court simply concluded that BPI's evidence was insufficient. The Court also noted that the case would fail for lack of reliance. Both the memorandum and the letter of intent with were nonbinding. Both anticipated that a final, binding agreement would be negotiated. They had not yet even agreed on the terms for the gas extraction leases. Drummond's reliance on these nonbinding agreements was reckless and does not satisfy the justifiable reliance element of fraud.

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SWEARINGEN v. MOMENTIVE SPECIALTY CHEMICALS (December 7, 2011)

Paul Swearingen delivered a tank of chemicals to the Momentive Specialty Chemical facility in Carpentersville, Illinois in March of 2010. At the request of Momentive’s personnel, he climbed on top of the truck to open the dome lid. Although he noticed low-hanging fire extinguishing system piping, he nevertheless began to stand on top of the truck. He hit his head and fell to the ground, suffering injuries. Swearingen filed suit against Momentive, alleging that it failed to warn him of the risk from the piping and failed to provide him with a harness. Judge St. Eve (N.D. Ill.) granted summary judgment to Momentive, concluding that it owed no duty of care because the hazard was open and obvious and the deliberate encounter exception did not apply. Swearingen appeals.

In their opinion, Seventh Circuit Judges Flaum and Manion and District Judge Magnus-Stinson affirmed. Under Illinois law, a negligence plaintiff must plead and prove the existence of a duty of care. Without a duty, there is no liability. The Illinois Supreme Court has identified four factors in the duty inquiry: the injury's reasonable foreseeability, its likelihood, the extent of the burden of guarding against it, and the consequences of placing the burden on the defendant. Although the Court noted that Illinois law requires the four-factor inquiry even in an open and obvious or deliberate encounter exception situation, it addressed the appeal from both perspectives. First, on the open and obvious inquiry, the Court noted that Swearingen did not dispute that the hazard was open and obvious. The Court rejected his deliberate encounter exception, which requires evidence that the defendant had reason to believe that Swearingen would nevertheless deliberately encounter the known hazard. Swearingen presented no such evidence. In fact, the evidence was that Swearingen ignored his own training and the company's safety protocols when he failed to maintain three points of contact with the ladder. Second, with respect to the four-factor test, the Court concluded that the injury was not reasonably foreseeable or likely and the burden and consequences of requiring Momentive to guard against the injury were significant. Therefore, there was no duty under the four-factors analysis, either. Finally, the Court rejected Swearingen's argument that he created material issues of genuine fact. Even if he did, the facts at issue were unrelated to duty. Without a duty, there is no liability. 

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

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

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

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

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

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

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

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

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

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

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

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

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MORISCH v. UNITED STATES OF AMERICA (July 29, 2011)

Gerald Morisch visited the emergency room at the VA Medical Center in Marion, Illinois, complaining of jaw and neck pain. He was referred to a dentist. A few days later, he had an appointment with his primary care physician at the Medical Center. He was referred to an ENT specialist. The specialist noticed a small mass of his neck. She performed a biopsy and ordered a CT scan. The radiologist that perform a CT scan recommended an ultrasound follow-up -- but no one told Morisch. About a month later, Morisch suffered a stroke. He brought a medical malpractice claim against the United States under the Federal Tort Claims Act. Morisch and his wife both testified that she called the St. Louis VA Hospital, where Morisch had the CT scan, on two occasions and reported stroke symptoms. Judge Murphy (S.D. Ill.) entered judgment in the government's favor after a four-day bench trial, concluding that he failed to establish a violation of the standard of care or any proximately caused injury. Morisch appeals.

In their opinion, Seventh Circuit Judges Williams and Tinder and District Judge Gottschall dismissed. The Court first noted that the transcript of the government expert’s testimony from the four-day trial is the only part of the trial record included in the appellate record. The Court concluded that it could not sufficiently review the record. Morisch thus forfeited his appeal. Notwithstanding that conclusion, the Court went on to conclude that the district court did not err in its finding. In order to prevail on his tort claim, Morisch had to establish the proper standard of care, a failure to comply with that standard, and a proximately caused injury. Proximate cause requires expert testimony. Here, the expert testimony was that, without the evidence of the phone call, the doctors had no reason to follow-up with Morisch after his examination. The district court did not err in concluding that the telephone call testimony should be disregarded. It was unsupported by phone records and inconsistent with other testimony and logic. Morisch’s stroke was therefore not the foreseeable result of any conduct on the part of the VA Hospital. 

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COBIGE v. CITY OF CHICAGO (July 12, 2011)

In the summer of 2006, the Chicago Police arrested Patricia Cobige on a drug charge. It was not the first time she was arrested. She was sentenced to four years in prison in 1998 on drug charges and, again, sentenced to three years in prison in 2001. Unfortunately, after her 2006 arrest, she suffered a heart arrhythmia and died while in police custody. Her son brought suit against several police officers and the City under both state and federal law. A jury awarded $5 million in compensatory damages and $4,000 in punitive damages. The defendants appeal.

In their opinion, Chief Judge Easterbrook and Judges Bauer and Williams affirmed in part and vacated and remanded in part. The Court examined the trial evidence. It concluded that a jury could have found that Cobige had uterine tumors, that she experienced severe abdominal pain as a result, that the pain led her to produce more adrenaline, that the adrenaline in combination with a pre-existing heart condition caused her death, that routine examinations and care would have prevented her death, and that four police officers ignored her complaints of pain. The City's principal argument is that the plaintiff's expert testified that death can occur only a short period after each spike in adrenaline and that there was testimony that Cobige died in a peaceful sleep. The Court conceded the point but countered that the jury was not required to believe the testimony that she died in her sleep. They could have reasonably believed that she continued to experience the pain throughout the night until her death -- or even that she had been dead for hours. The City also complained that plaintiff's expert was not an expert in police procedures. Again, the Court conceded the point but countered that his testimony only went to Cobige's need for treatment. The City could have presented evidence that she was not treated because of other extenuating circumstances. But it did not. The Court did take issue with the district court's exclusion of much evidence concerning Cobige's drug problem and history of arrests. The district court allowed her son to testify that she was a friend, a supporter, and a role model and that she provided wise advice. The court then admitted evidence only of Cobige 's latest drug conviction. The court relied on evidence Rules 404(b) and 609. Rule 609 is irrelevant in that it deals with attacks on the witness’ character for truthfulness and Cobige obviously never testified. Rule 404(b) also deals with evidence of character and prohibits such evidence when it is offered to show "action in conformity therewith." That is not why the City offered the evidence. It offered the evidence on the question of damages. The exclusion of that evidence requires a new trial, which should be limited to the subject of damages.

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SCHREIBER FOODS v. LEI WANG (July 5, 2011)

Cade Wang lives in China and operates Mature Sky, a trading company. Wang’s cousin, Lei Wang, operates an automotive supply company in Chicago. When Cade was looking for a dairy products supplier in the United States, he approached Lei. Lei, in turn, approached Schreiber Foods. Mature Sky placed a small order for whey protein concentrate -- the transaction was a success. A few months later, Lei Wang negotiated a much larger order -- a $600,000 order for D70, an ingredient in infant formula. Without telling anyone, Schreiber substituted RMW-2 (which it claims is materially identical) for the D70. The end customer refused to accept the product or pay for it. Schreiber did not pursue either the end customer or Mature Sky. Instead, it filed suit against Lei Wang. Schreiber alleged that Wang fraudulently represented that the end customer had promised to buy the product from Mature Sky. Judge Griesbach (E.D. Wis.) granted summary judgment to Wang on the ground that the claim was barred by the economic-loss doctrine. Schreiber appeals.

In their opinion, Judges Posner, Kanne, and Hamilton affirmed. Under the economic-loss doctrine, a plaintiff cannot pursue a tort remedy when he has a contract and an adequate remedy under contract law. Some states do not apply the doctrine where, as here, there are fraud allegations. Wisconsin's fraud exception, however, is very narrow. It requires that the fraud be extraneous to the contract. Here, the alleged fraud is "interwoven" with the contract. The Court noted that the circumstances (two foreign companies with which Schreiber was not familiar, an automobile parts supplier intermediary, the product substitution) required Schreiber to deal with these uncertainties through the contract. The Court also rejected Schreiber's contention that its claim fell within the sale of services exception to the economic-loss doctrine. The Court noted that Wisconsin applies that exception only when the contract is predominantly one for the sale of services, which this is not.

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HOLLAND v. CITY OF CHICAGO (June 23, 2011)

In 1997, Dana Holland was convicted of sexually assaulting Dionne Stanley. At Holland's trial, Stanley positively identified Holland. She also described how she met him at a bar the night before and the particulars of the assault. Five years later, a DNA test established Holland’s innocence. His conviction was vacated. He brought suit against the City of Chicago and two police officers for Brady violations and state law malicious prosecution. At her deposition, Stanley testified that she committed perjury in her trial testimony. She testified that she told the police officers on the scene three times that Holland was not her assaulter. She stated that she identified him at the scene only after the police pointed out all the evidence against him and told her she could go home if she identified him. She also testified that she told the Assistant State's Attorney shortly before trial that Holland did not do it. Judge Zagel (N.D. Ill.) granted summary judgment to the defendants.

In their opinion, Judges Flaum, Manion, and Evans affirmed. The Court first addressed the malicious prosecution claim. Among other things, a plaintiff must prove the absence of probable cause and the presence of malice in order to prevail on a malicious prosecution claim. In testing for probable cause, one must look at the time when the charges were filed, not the time of arrest. The Court recited the "ample" evidence of probable cause; including the facts that he was found with clothing matching that of the assailant, that his wallet was in the clothing, and that he had no alibi. The Court noted that probable cause existed even without Stanley’s identification. Although the presence of probable clause itself defeats Holland's case, the Court also noted that he had no proof of malice. The Court turned to the Brady argument. A police officer can be liable under Brady if he withholds exculpatory evidence and the evidence is material. The materiality test is that there must be a reasonable probability that the proceeding would have turned out differently had the evidence been disclosed. The evidence Holland takes issue with is the police officer's failure to disclose the "pressure" they put on Stanley to identify him. They Court identified several reasons to reject the Brady claim. First, Holland's attorney had the opportunity to cross-examine Stanley at trial. Second, the Court thought it unlikely, given Stanley's explanation that she did not identify him because she was afraid and the significant physical evidence, that the outcome would have been different. Third, Stanley was a particularly strong eyewitness at trial because of her lengthy, and initially friendly, encounter with Holland.

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WALTON v. BAYER CORPORATION (May 23, 2011)

Cathy Walton alleges that she suffered serious injuries as a result of taking a prescription drug manufactured by a Bayer Corporation affiliate and sold at a pharmacy operated by Niemann Foods. She brought suit against Bayer and Niemann in Illinois state court, alleging that the two defendants failed to warn of the drug's serious side effects. Although Niemann is an Illinois citizen, Bayer removed the case to federal court on the grounds that Niemann was improperly joined. Chief Judge Herndon (S.D. Ill.) denied Walton's request to remand and dismissed Niemann, with prejudice. Walton abandoned prosecution of the suit after that order. The court later dismissed the suit with prejudice when Walton refused to comply with a discovery order. Walton appeals.

In their opinion, Judges Cudahy, Posner, and Manion affirmed. The Court first confirmed its own appellate jurisdiction, notwithstanding Bayer's argument that Walton should not be allowed to turn a non-appealable interlocutory order into an appealable order by abandoning the case. The Court distinguished the cases Bayer cited and concluded that there was nothing wrong with her tactic. She should be allowed to risk her claim's success on being right about jurisdiction. The Court next turned to the question of the district court's jurisdiction. It rejected Walton’s first argument that the complaint did not meet jurisdictional amount. Her alleged injuries are quite serious and suggest that she is seeking at least the jurisdictional amount -- and she has not exercised her absolute ability to defeat removal by committing to accept no more than the jurisdictional amount. The Court also rejected her argument that a minor procedural defect precluded federal jurisdiction. The Court turned to her principal argument -- lack of complete diversity. Walton argued both that Niemann was a proper defendant and that, if it was not, fraudulent joinder's "common defense" exception applied. With respect to the first of those arguments, the Court looked to the "learned intermediary" doctrine, under which one's prescribing physician is principally responsible for warning a patient of a drug's side effects and a manufacturer is excused from any obligation to warn. Under Illinois law, a pharmacy like Niemann is only obligated to warn a customer of risks that are known to it but possibly unknown to the prescribing physician (for example, potential interactions with other prescriptions dispensed by the pharmacy). Since Walton did not allege that Niemann had such knowledge, Niemann had no obligation to warn and was properly dismissed. With respect to Walton's second argument, the Court turned to the common defense exception to fraudulent joinder. Under that doctrine, if a plaintiff makes identical claims against both the diverse and non-diverse defendants, a fraudulent joinder argument is really an attack on the merits of the entire case. That attack must be resolved in the state court. If, therefore, Bayer and Niemann both have the same learned intermediary defense, it must be resolved in state court. That is not the case, however. Walton alleges that Bayer concealed the drug's side effects, even from physicians. The two defendants therefore do not share a common defense, the exception to fraudulent joinder does not apply, and the district court properly dismissed Niemann. As an aside, the Court noted that a Walton victory based on the common defense exception in the appellate court would have resulted in a remand, only for Walton to lose in state court. The doctrine of judicial estoppel would not allow Walton to argue in the appellate court that her claims against Bayer and Niemann were identical and then argue in state court that her claim against Bayer was different.

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BOURKE v. CONGER (April 19, 2011)

David Bourke was tried and convicted of murder in 1998. His attorneys, Scott Conger and Wayne Brucar, argued self-defense. The appellate court reversed his conviction on the grounds that the state did not disprove his self-defense claim. Bourke brought suit in federal court alleging that certain state officials suppressed evidence in violation of the Constitution and that his attorneys committed malpractice. He later dismissed all federal claims but the District Court retained is discretionary supplemental jurisdiction over the malpractice claim. The only surviving claim is that his attorneys did not adequately voir dire a potential juror about his views on firearms and alcohol. Bourke's expert concluded that his attorneys did not meet the applicable standard of care. Judge Zagel (N.D. Ill.) granted summary judgment to the attorneys, concluding that Bourke failed to establish that the attorneys' omissions were a but-for cause of the guilty verdict. Bourke appeals.

In their opinion, Judges Cudahy, Flaum, and Kanne affirmed. One of Illinois’ requirements for a legal malpractice claim is that the attorney's breach of duty proximately caused the damages. Here, Bourke had to show that, but for the malpractice, he would have prevailed at trial. The Court recognized that Illinois courts generally prefer to have juries decide proximate cause but added that those same courts do not hesitate to decide it when there are no factual issues. Here, the only evidence in support of the causation is the expert’s conclusion that there was a "reasonable likelihood" that the attorneys' conduct resulted in the guilty verdict. The Court noted that the expert provided no basis for that conclusion. When an expert report provides only conclusions, without supporting analysis or reasoning, it is not enough to create a genuine issue of fact. Summary judgment was proper.

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SUTHERLAND v. WALMART STORES (January 21, 2011)

Arturo Aguas and Maria Sutherland worked together in the deli section of a Walmart store in Seymour, Indiana. They had worked together for years without incident -- but that changed on December 11, 2006. On that day, Aguas assaulted Sutherland in the deli cooler. He kissed her and fondled her and gave her an inappropriate Christmas card. Sutherland reported the incident to her supervisor the following day. A Walmart manager interviewed one co-worker on that day and another co-worker the following day. They continued their investigation throughout December, while Aguas was on vacation. When confronted upon his return, Aguas admitted some inappropriate conduct but denied the most serious allegations. The company decided that it could not substantiate all the allegations but disciplined Aguas severely for those that they could substantiate. The company also adjusted both employees' time schedules so that they rarely worked at the same time and also assigned them to workstations almost 80 feet apart when they did work together. Not satisfied with the company's response, Sutherland filed a police report. The police investigation was more successful than the company's. Aguas ultimately admitted the allegations and pled guilty to a sexual battery charge. Walmart revisited its investigation and terminated Aguas' employment. Sutherland took medical leave shortly thereafter for stress. Walmart terminated her employment when she failed to return to work, even after her leave expired. Sutherland brought suit against Walmart, alleging a hostile work environment and negligent infliction of emotional distress. Judge Lawrence (S.D. Ind.) granted summary judgment to Walmart. Sutherland appeals.

In their opinion, Seventh Circuit Judges Cudahy, Flaum, and Kanne affirmed. The Court assumed that the harassment was severe enough to create a hostile work environment and addressed only the issue of employer liability. Sutherland presented two theories -- a failure to prevent the assault theory based on an incident two or three years earlier in which Aguas was accused of harassment and a failure to investigate theory. The Court rejected the first theory based on its opinion in Longstreet in which it found no employer liability on very similar facts (one prior incident, probably not rising to the level of actionable harassment, properly investigated). On the second theory, the Court conceded that employer liability can arise when its investigation is not prompt and adequate. Here, the Court found that Walmart's investigation was prompt and adequate and that its corrective actions were reasonably likely to end the harassment. There is, therefore, no basis for employer liability and summary judgment was proper. The Court also rejected Sutherland's "underdeveloped" negligent infliction of emotional distress claim. To the extent the claim is based on pre-assault actions, it fails because Walmart was not on notice that Aguas was likely to assault her. To the extent that the claim is based on post-assault actions, it fails because Sutherland has not even alleged a physical impact, a requirement of Indiana law.

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R.G. WEGMAN CONSTRUCTION CO. v. ADMIRAL INSURANCE CO. (January 14, 2011)

Brian Budrik suffered serious injuries in a fall at a construction site where he was working. He brought a negligence action against several parties, including R.G. Wegman Construction Company, which managed the site. Wegman was an additional insured on a $1 million policy with Admiral Insurance Company. Wegman also had an excess policy with a $10 million limit. Wegman tendered the case to Admiral, which accepted and controlled the defense. According to Wegman, Admiral knew fairly early on that Budrik's injuries were quite serious, and knew that there was a significant possibility that the ultimate loss would exceed the policy limits, and yet failed to advise Wegman of that risk. Wegman claims that it did not appreciate the risk until right before trial. It advised its excess carrier immediately but the carrier refused coverage because of the late notice. Budrik prevailed at trial and the court entered a judgment in excess of $2 million against Wegman. Wegman filed suit against Admiral, alleging that it breached its duty of good faith. Judge Zagel (N.D. Ill.) dismissed the complaint. Wegman appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Tinder reversed and remanded. The Court first had to deal with a jurisdictional issue. After Admiral removed the case to federal court, Wegman amended its complaint to add Budrik as a defendant. Since Budrik and Wegman are both Illinois citizens, the federal court may not have had diversity jurisdiction. But the Court noted that Wegman sought no relief against Budrik. Since there was no basis for adding him, and he is not necessary to resolve the case, the Court dismissed him and proceeded to the merits. The Court noted that a defendant with insurance coverage frequently has no interest in the litigation. If there is no reason to believe that the outcome will exceed the policy limits, only the insurer has a financial stake in the case. In those cases, it makes sense for the insurer to control the defense, to retain competent counsel, and to stay informed of the progress of the litigation. But here, accepting the allegations as true, Admiral learned early on that the outcome could exceed the $1 million policy limit. This fact created a conflict of interest between Admiral and Wegman. The existence of the conflict of interest requires the insurer to notify the insured. Admiral was duty bound to advise Wegman so that Wegman could take whatever steps were necessary to protect its own interest. Of course, the Court emphasized that it was relying only on the pleadings and that Wegman would still have to prove its allegations.

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BAUSCH v. STRYKER CORP. (December 23, 2010)

Several days after the FDA advised the Stryker Corp. that its Trident hip replacement system’s manufacturing process was deficient, Margaret Bausch received a new hip -- a Trident. Bausch's Trident failed, she required additional surgery, and she experienced a number of medical problems. Bausch brought a negligence and strict liability suit under state law, alleging that the device violated federal law. Judge Der-Yeghiayan (N.D. Ill) granted the defendants' motion to dismiss on the grounds that the claims were preempted by federal law. The court also entered final judgment without allowing Bausch an opportunity to amend. Bausch appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Manion and Hamilton reversed and remanded. The Court first considered express preemption. Class III medical devices such as the Trident system are granted an express, but limited, preemption defense from product liability claims by the Medical Device Amendments of 1976. Citing the Supreme Court's decisions in Lohr and Riegel, the Court stated that the preemption protection applies to devices that comply with federal law and does not preclude claims based on a violation of federal law. Although expressly not deciding whether Bausch would be able to prove the allegations of her complaint that the device violates federal law, the Court concluded that the express preemption defense should not preclude her from trying. The Court also rejected the defendants' implied preemption defense under Buckman. Buckman involved an allegation of fraud on the FDA -- the Supreme Court expressly distinguished that type of claim from a traditional state court claim. Having concluded that the claims alleged were not preempted, the Court next addressed whether they were adequately stated under Iqbal and Twombly. The Court concluded that both the original complaint and the proffered amended complaint met that standard. With respect to the original complaint, although it did not specify the specific federal violation, it did provide enough information to put defendants on notice of the nature of the claim. This is particularly true in the situation here, because the victim of a defective product frequently does not know the exact nature of the defect and much information regarding Class III medical devices is kept confidential by law. The Court also concluded that the proffered amended complaint was sufficient and should not have been rejected. It provided additional factual detail as well as a clarification that Bausch was proceeding under a federal violation theory. The Court found no merit in any of the district court's rationales for denying leave to amend and cautioned district courts to allow a party an opportunity to amend after dismissal for failure to state a claim, even if the court is skeptical of the party's ability to successfully do so. 

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CLIFFORD v. CROP PRODUCTION SERVICES (November 29, 2010)

John Clifford, III, had a contract with Monsanto to farm seed corn. One of the strains he planted in 2007 was a sensitive to two herbicides. When he noticed weeds in his corn and sought advice from Monsanto, however, he was told that there were no herbicide restrictions. Clifford went to Crop Production Services (“CPS”) for the proper treatment. CPS recommended a blend of the very two herbicides to which this particular strain was sensitive. CPS mixed a custom blend on several occasions and dispensed it into a tank that it had loaned Clifford for the season. Clifford applied the herbicide himself. Within a week, Clifford noticed corn damage. He eventually destroyed all the corn in one field and some of the corn in another. Pat Geneser, a Monsanto employee, inspected the fields and suspected that the damage was caused by glyphosphate, an ingredient in a different Monsanto herbicide. Laboratory tests confirmed trace amounts of glyphosphate in the corn. Clifford brought suit against CPS for negligence. CPS defended on four grounds: a) that the glyphosphate did not cause the harm, b) that if the glyphosphate did cause the harm, it did not come from CPS, c) that if CPS was the source of the glyphosphate and it did cause the harm, CPS did not breach a duty of care, and d) the claim was barred by the economic loss doctrine. Clifford did not disclose Geneser (or anyone else) as an expert witness within the time limitations, CPS moved for summary judgment on all four of its defenses, specifically relying on the absence of expert testimony for the first three. Magistrate Judge Bernthal (C.D. Ill.) concluded that Geneser's testimony was expert testimony and that it was inadmissible because of Clifford's failure to disclose. He granted summary judgment to CPS on the grounds that Clifford could not establish causation or breach of duty. Clifford appeals.

In their opinion, Seventh Circuit Judges Posner and Wood and District Judge Adelman affirmed. The Court first concluded that Clifford waived his arguments that Geneser was a lay witness and that, even if he was an expert, his failure to disclose him was harmless. Clifford never even responded to CPS's waiver argument in its briefs. Alternatively, the Court concluded that it would affirm the summary judgment ruling even if it considered Geneser’s testimony. To defeat summary judgment, Clifford had to present sufficient testimony in three areas: that glyphosphate caused the harm, that CPS was the source of the glyphosphate, and that the harm would have been prevented had CPS exercised reasonable care. Even if admitted, Geneser's testimony would not permit a reasonable trier of fact to infer that CPS was the source of the glyphosphate or that it breached a duty of care. In fact, Clifford offered no evidence on a standard of care or its breach. To the extent that Clifford was invoking the doctrine of res ipsa loquitor, the Court stated that it was not a proper case for that doctrine. 

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MALEN v. MTD PRODUCTS (November 19, 2010)

Donald Malen bought a reconditioned riding lawnmower in 2001 from Home Depot. The mower was manufactured in 1998 by MTD Products. It was designed with two particular safety features that turned off the engine if the operator rose from his seat or shifted into reverse, respectively, without completely disengaging the mower blade. It also came with warning labels instructing the operator to disengage the blade before leaving his seat. Malen operated the mower for several years without a problem. In late 2004, the mower got hung up on a curb while Malen was mulching leaves. He tried "rocking" between forward and reverse but without success. He lifted his foot from the pedal that engages the blade and stepped off the mower. He did not turn off the engine. He slipped as he stepped to the ground and the blade struck and severely injured his foot as it went under the mower. He brought suit against Home Depot and MTD Products under strict products liability and negligence theories. The negligence theories were that: a) the mower was negligently manufactured because the safety devices were not operable and b) the mower was negligently designed because it did not have a fail-safe system that would have stopped the blade even without the safety device. Discovery established that: a) Malen thought he disengaged the blade when he lifted his foot off the pedal, b) the safety devices were present but not connected, c) when connected, the devices worked and stopped the blade within 2.6 seconds of the operator rising from his seat, and d) a fail-safe version of the safety feature was available at the time Malen purchased the reconditioned mower. Judge Norgle (N.D. Ill) granted summary judgment to the defendants, concluding that Malen understood and ignored the warning labels and was, therefore, the sole cause of his accident. Malen appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Evans and Williams reversed and remanded. Under both the strict liability and negligence theories of liability, causation is a necessary element. The Court concluded that a reasonable jury could find that the mower was defective and the proximate cause of Malen's injury. The Court first addressed the issues of unreasonably dangerous and negligent design, even though the district court found no need to. It concluded that a jury could find, on the record before it, that the mower was originally put into the stream of commerce without the safety switch. Such a finding would lead to the conclusion that the mower was unreasonably dangerous and that its manufacturer was negligent. Although Malen did not purchase the mower new, the Court concluded that a reconditioned product sold with a full warranty should be treated like a new one. The Court found no controlling Illinois decision on that point, but found support for its conclusion in other jurisdictions and from the Restatement. The Court found sufficient evidence to go to a jury on the negligent design theory as well. The evidence established that MTD incorporated the improved, fail-safe design in its products before Malen purchased his mower. Finally, the Court addressed proximate cause and identified several reasons why summary judgment based on proximate cause was improper. First, the Court concluded that Malen’s failure to heed the warnings was not relevant if the mower was defective for lack of a safety system. Second, if it was relevant, it would be a factor only in determining whether Malen’s conduct was foreseeable. The evidence in the record is that the safety device was developed because that kind of conduct was actually not only foreseeable but routine. Third, the Court concluded that Illinois would extend crashworthiness doctrine to mowers. That doctrine requires a manufacturer to reasonably design a product to minimize the effects of an accident. Malen's conduct here was foreseeable under the crashworthiness doctrine and does not establish proximate cause. Finally, under Illinois law, Malen is barred from recovery only if his negligence contributed more than 50% to the proximate cause of the injury. For all those reasons, the Court found summary judgment erroneous.

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REYNOLDS v. CB SPORTS BAR (October 22, 2010)

Loretta Reynolds (according to her complaint) had car trouble while leaving Jerzey’s Sports Bar in O’Fallon, Illinois. The bartender told her no cabs were available and suggested she get a ride from another patron. Two other patrons agreed to give her a ride but first bought her several drinks (and possibly drugged her). Reynolds realized while in their car that they were not driving her to her hotel but were intent on sexually assaulting her. She managed to escape but, in the process, was hit by a car and severely injured. She brought suit against the two other patrons and CB Sports, the establishment’s owner. She alleged alternatively that the bartender “knew or should have known” that the patrons were getting her drunk in order to sexually assault her or that the bar and bartender intentionally aided the patrons in doing so. Judge Gilbert (S.D. Ill.) dismissed the complaint against CB Sports, finding no duty under the circumstances. Reynolds appealed. While her appeal was pending, the court entered a default judgment against one of the individual defendants and held a hearing on damages. At the hearing, Reynolds presented additional facts with respect to the night in question – including that two different bartenders refused her request for a phone book, told her that no taxis were available, and vouched for the character of the two other patrons.

In their opinion, Judges Posner, Ripple (dissenting), and Kanne reversed and remanded. The Court first considered the significance of the testimony at the damages hearing. Prior to Iqbal and Twombly, a plaintiff was free to offer an unsubstantiated version of the events on appeal in support of its position as long as it was consistent with the complaint. The Court concluded that Iqbal and Twombly raised the bar with respect to the content of the complaint but did not limit a plaintiff’s ability to argue facts outside the complaint to show that a complaint should not have been dismissed. Next, to the extent the complaint alleged an intentional tort, the Court noted that CB Sports could not be liable. It turned to the negligence claim and, specifically, the existence of a duty. Under Illinois law, the general rule is that a business owner is liable for foreseeable criminal attacks while an invitee is on the premises. Generally, liability does not attach for an attack off the premises. The Court noted, however, that Illinois courts have recognized some exceptions to the off-premises rule. Illinois courts have extended liability to off-premises attacks In Shortall, Osborne, and Haupt – but in each case the attack took place just off the premises. Here, the attack was over a mile away. Nevertheless, it was the foreseeability of the attack that the courts considered in Shortall, Osborne, and Haupt. And here, taking the facts alleged as true, the attack was foreseeable. Foreseeability is not enough, however. The Court also considered the likelihood of the injury, the burden on the establishment owner, and the consequences of that burden. Here, the likelihood is high given the intentional scheme at play. The burden and consequences of imposing that duty are not high. The Court emphasized that this was not a burden to investigate – only a burden to protect when it was aware of an intent to injure. The Court was satisfied that Reynold’s allegations sufficiently pled a duty. Finally, the Court declined to find an absence of proximate cause as a matter of law and emphasized that it was not accepting Reynold’s “voluntary undertaking” theory of liability.

Judge Ripple dissented. Although he recognized the Illinois courts’ expansion of off-premises business invitee liability, he disagreed with the Court’s further extension of the principle. On the one hand, Reynold’s complaint alleges an intentional act. Judge Ripple would not extend negligence principles to the situation where the employee is a participant in the execution of the planned attack. As for the alternate allegation that the bartender “should have known,” Judge Ripple believed the burden imposed by the panel opinion on the establishment is too great. He saw no facts alleged in the complaint upon which to base a “should have known” conclusion. Either way, Judge Ripple thought the panel opinion extended Illinois law beyond where the Illinois Supreme Court would go.

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ROBINSON v. MCNEIL CONSUMER HEALTHCARE (August 11, 2010)

In early 2005, Karen Robinson purchased Children's Motrin for her child. Motrin is manufactured by McNeil Consumer Healthcare. The label, which she read before purchase, warned of a possible severe allergic reaction. Several months later, she took a dose of the Motrin for a headache. She neither reread nor recalled the warnings. The next day, Robinson developed a rash and a fever – so she took more Motrin. A doctor’s visit resulted in treatment for an allergic reaction. The doctor did not comment on her disclosure that she had taken Motrin. Her rash and fever worsened and she took a third dose of the Motrin. She was hospitalized the next day and diagnosed with toxic epidermal necrolysis (TEN). She recovered but lost much of her skin, is blind in one eye and expected to lose sight in the other, and has had multiple operations to treat organ damage. She brought a products liability suit against McNeil. The jury awarded damages of $3.5 million but also found Robinson contributorily negligent. Applying Virginia law, where contributory negligence is a complete defense to a negligence claim, Judge Holderman (N.D. Ill.) entered judgment for McNeil. Robinson appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Kanne affirmed. The Court first addressed the district court's application of Virginia law. Illinois' conflict rule is the "most significant relationship" test. In the case of a tort, that test points to the location of the injury. Here, the place of the initial injury was Virginia, although the Robinsons have since moved to Illinois where her condition worsens and her injury continues. The Court rejected a "continuation of the injury" location test. That approach would allow potential plaintiffs to relocate to favorable jurisdictions after an initial injury. Since the law was correctly applied and there was evidence of contributory negligence, the court ruled correctly. The Court then embarked on a lengthy and interesting, albeit unnecessary, analysis applying Illinois law to show that the result would be the same. In Illinois, a plaintiff's contributory negligence is only a complete defense if it exceeds the negligence of the defendant. The Court adopted a test under which the party who could have avoided the accident at a "lower cost" was the least negligent. After a discussion of the benefits of Motrin, the evidence of any causal connection between Motrin and TEN, the effect of requiring a prescription for Motrin, the role of the FDA, the warnings, and the effect of additional warnings, the Court concluded that Robinson had the lower cost of avoidance. The outcome would have therefore been the same. Finally, the Court concluded that a) the defendant's statement in closing argument that it was "not blaming" Robinson for her injuries was not so deliberate and unambiguous so as to amount to a judicial admission that she was not contributorily negligent, and b) the district court did not abuse its discretion in denying Robinson's request to reinstate her breach of warranty claim right before trial.

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TINDLE v. PULTE HOME CORP. (June 9, 2010)

Terry and Diane Tindle moved into their new home in West Dundee, Illinois in late 2003. Their home was part of a subdivision developed by Pulte Home Corp. Soon after moving in, the Tindles noticed holes developing in both their front and rear yards. They complained about the holes in the front yard. Although Pulte considered them normal, they did repair the holes. For months, the Tindles used their rear yard without incident. In the summer of 2004, however, Terry Tindle stepped into a concealed hole in the rear yard. He suffered serious injuries to his leg. Tindle brought suit against Pulte. Judge Manning (N.D. Ill.) granted summary judgment to Pulte. Tindle appeals.

In their opinion, Judges Flaum, Kanne, and Evans affirmed. The Court noted that Illinois law generally excuses a vendor of real property from liability for personal injury after transfer of possession. Section 353 of the Restatement (Second) of Torts, also the law in Illinois, creates a five-pronged exception to the general rule. A vendor can be liable if a) it knew of a hazardous condition that created an unreasonable risk, b) it concealed or failed to disclose the condition, c) it had reason to believe the purchaser would not discover the condition, d) physical harm resulted from the condition before the purchaser knew of the condition and risk, and e) the purchaser did not have an opportunity to protect against the risk. The Court concurred with the district court that Tindle could not meet his § 353 obligations both because of the state of his knowledge and that of Pulte. First, Tindle was well aware of the dangerous condition created by the holes in his yard. That knowledge defeats any recovery under § 353. Second, Tindle presented no evidence that Pulte was aware of the dangerous condition at the time of the sale. That lack of knowledge independently defeats recovery under § 353.

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WALLACE v. MCGLOTHAN (MAY 26, 2010)

Tracey Wallace had trouble reading small print and driving at night. She decided to have surgery so that she would not need to wear contacts or glasses. She went to Dr. McGlothan for LASIK surgery. Unfortunately, the surgery was not successful. A complication arose first during the procedure on her right eye. Notwithstanding the complication, Dr. McGlothan nevertheless performed the same procedure on her left eye -- with the same result. Wallace sought treatment from Drs. Connor and Price. They treated her for years, with some improvement. She continues, however, to suffer the effects of the unsuccessful surgery. The Indiana Medical Review Panel concluded that McGlothan was negligent but only with respect to the left eye. Wallace and her husband brought suit. Judge McKinney (S.D. Ind.) granted partial summary judgment. He relied on the Panel’s opinion in finding that McGlothan violated the standard of care with respect to her left eye but was not liable for any damage to her right. A jury trial was held on damages. The defendant moved for judgment as a matter of law at the close of the evidence, arguing that Wallace failed to prove the permanence of the injury. After a jury verdict of approximately $700,000, McGlothan renewed his motion with respect to the permanence of the injury and also addressed an allegedly undisclosed pre-existing condition. The court denied the motion. McGlothan appeals.

In their opinion, Chief Judge Easterbrook and Judges Kanne and Tinder affirmed. First, the Court rejected Wallace's argument that McGlothan waived the pre-existing condition argument by failing to include it in his pre-verdict motion. The Court agreed that McGlothan improperly included in his Rule 50 (b) motion an argument that was not included in his pre-verdict motion. Although the plaintiffs could have objected, they did not. They therefore waived their waiver argument. The Court then proceeded to uphold the decision on the merits. First, it concluded that the objections to the expert testimony were forfeited. Second, it found the testimony of the experts sufficient for the jury to conclude that the damage was permanent. Third, it concluded that the testimony of the experts was sufficient for the jury to find a causal link between the surgery and Wallace's condition, unrelated to a pre-existing condition. Fourth, it concluded that the evidence linking the condition to the left eye as opposed to the right eye, although sparse, was sufficient. Finally, the Court rejected defendant's complaints about discovery abuse and perjury.

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WHITTINGTON v. INDIANAPOLIS MOTOR SPEEDWAY FOUNDATION (April 13, 2010)

DonWhittington and his brother Bill used to race cars. In fact, they (with a third driver) won the famous Le Mans 24-hour endurance race in 1979 driving a Porsche 935 K3 (finishing just ahead of Paul Newman). A few years later, the K3 was transferred to the Indianapolis Motor Speedway Foundation and has since been on display in the Foundation's Hall of Fame Museum. In 2004, after Whittington requested the car’s return, the Foundation sent a letter claiming ownership of the car. Whittington filed a complaint for tortious conversion and replevin. He alleged that he has always owned the Porsche and only loaned it to the Foundation. Neither party had any documentary evidence in support of its position and at least one principal witness has since died. After a one-day bench trial, the court found in favor of the Foundation. Whittington appeals.

In their opinion, Judges Bauer, Ripple, and Kanne affirmed. The Court noted that Indiana law requires a replevin plaintiff to establish a prima facie case of personal possession before any burden shifts to the defendant. Similarly, under Indiana law, a conversion plaintiff must establish a property right. The Court noted the lack of documentation and the conflicting evidence and inferences in the court below. Each party presented evidence in support of its respective position. The Court concluded that the district court did not clearly err in its conclusion that Whittington failed to establish a prima facie right of possession.

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CHANG v. BAXTER HEALTHCARE CORP. (March 26, 2010)

A number of residents of Taiwan brought suit against manufacturers of clotting factors. They allege that the defendants improperly processed donated blood in California and continued to sell it in foreign countries after they knew it was contaminated. The plaintiffs are mainly hemophiliacs who were infected with HIV from the contaminated clotting factors. The plaintiffs also allege that the defendants fraudulently induced a settlement agreement and they allege a breach of the settlement agreement. The district court dismissed the claims, some on the merits as untimely and others pursuant to the doctrine of forum non conveniens. The plaintiffs appeal.

In their opinion, Judges Posner, Evans, and Tinder affirmed. The Court first addressed the dismissals on the merits. It approved the district court’s conclusion that the claims were untimely both because they were filed outside the statute of limitations period and because the California court would apply the Taiwanese 10 year statute of repose (the plaintiffs were infected in the 1980s). Although the plaintiffs assert that their claims arose in California, the Court disagreed. The rule in California is there is no tort without an injury -- and the injuries occurred in Taiwan. A California court would apply the statute of repose either under its own “borrowing” statute or under a more general "balancing of interests" approach to conflict of laws. The Court next addressed the breach of settlement agreement claim which the district court dismissed on forum non conveniens grounds. The Court found that the relevant clause in the settlement agreement was ambiguous and that extrinsic evidence would be necessary. Most of the people with relevant evidence live in Taiwan. In addition, Taiwan law makes it difficult to gather evidence in Taiwan for use in another country. The Court found nothing that would favor the case being tried in United States – dismissal was proper. Another claim that was dismissed on forum non-conveniens grounds is the individual claim by a woman who claims to have been infected by her boyfriend. Although all the same considerations favored the dismissal of this claim, the Court examined it more closely because of the possibility the claim would be time-barred if brought in Taiwan. Dismissal under forum non-conveniens is improper if the other forum is inadequate and will not provide a fair hearing. Here, however, the California court would apply the Taiwanese limitations period just as the Taiwanese court would. Since the statute of limitations would be the same and the convenience factors all favor Taiwan, the Court affirmed the dismissal.

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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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MASON v. SMITHKLINE BEECHAM (February 23, 2010)

Two days after twenty-three year old Tricia Mason began taking an antidepressant drug manufactured by defendant, she committed suicide. Mason's parents sued the manufacturer, alleging that it was negligent for not warning of an increased suicide risk. The district court granted summary judgment to the defendant, holding that the claims were preempted by federal law. The Masons appeal.

In their opinion, Circuit Judges Evans and Sykes and District Judge Simon reversed and remanded. The Court noted that conflict preemption was the type of preemption at issue in the case. The Supreme Court addressed conflict preemption in Levine, which was decided a year after the district court granted summary judgment. In Levine, the Supreme Court rejected the argument that state law failure-to-warn claims were generally preempted as a result of the FDA's drug labeling responsibilities. The Supreme Court stated that preemption could exist if a drug manufacturer presented "clear evidence" that the FDA would have rejected the proposed warning in the label but held that preemption did not exist in Levine. Since the Supreme Court did not clarify what it meant by "clear evidence," the Court simply compared the administrative history of the defendant's drug with the drug at issue in Levine. After that comparison, the Court concluded that the defendant had not met the burden established by Levine.

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JOHNSON v. WAL-MART STORES (December 1, 2009)

Candace Johnson visited her local Wal-Mart store in January 2008. Although she did not possess a Firearm Owners Identification Card, a salesclerk nevertheless sold her some bullets. Tragically, Candace Johnson then shot and killed herself. Her husband and the administrator of her estate, Mark Johnson, sued Wal-Mart for negligence and wrongful death. The district court dismissed the claims on the ground that suicide is an independent intervening event, negating proximate cause. Johnson appeals.

In their opinion, Judges Cudahy, Flaum and Evans affirmed. The Court recited the traditional elements of a negligence claim: a duty, a breach, and proximate cause. Historically, Illinois courts have found that suicide is unforeseeable and its presence breaks the chain of causation that is necessary for probable cause. The Court agreed that the sale of the bullets violated federal law and amounted to prima facie evidence of negligence, since the federal law is a public safety statute. The Court concluded, however, that Illinois courts continue to find that suicide breaks the chain of causation.

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HUKIC v. AURORA LOAN SERVICES (November 20, 2009)

Avdo Hukic took out a mortgage in 1997. The monthly obligation was $1335. The agreement allowed him to pay taxes and insurance directly -- as long as he provided proof of payment to the lender. Through no fault of his own, his April 1998 payment was processed for $200 less than the required amount. Although the lender notified Hukic of the error, he took no steps to rectify it. Instead. Hukic continued to pay the correct amount each month, but the lender always considered him one month in arrears because of the continuing shortage. At about the same time, the lender advised Hukic that it would start to pay the taxes and insurance unless Hukic provided proof of payment. Hukic did not respond. The lender set up an escrow for the payments and advised Hukic of a new monthly payment amount. Hukic continued to pay the original $1335 each month. The lender, now Aurora Loan Services, reported the mortgage to credit agencies as delinquent in November of 1999. In early 2000, Aurora assigned the loan to Ocwen. Ocwen notified Hukic of his default but continued to pay the taxes and insurance. In January of 2001, Hukic's lawyer advised Aurora that he was paying his taxes directly and complained about negative information on credit reports. Hukic filed a multiple-count suit against Aurora and Ocwen. The court dismissed seven counts and granted summary judgment to the defendants on the Fair Credit Reporting Act, breach of contract and tortious interference with prospective economic advantage counts. Hukic appeals.

In their opinion, Judges Bauer, Evans and Williams affirmed. The Court first considered its jurisdiction-and first considered diversity jurisdiction, the basis of the original removal to federal court. The Court pointed out several problems: Aurora was a limited liability company, the citizenship of an L.L.C. is the citizenship of its members, its only member was a federally chartered savings association, the citizenship of a federally chartered savings association was in doubt under the law, a federal statute that clarified an association's citizenship was not enacted until after the date of removal, and the statute clarifying the citizenship question only applied if the association was a party in a lawsuit (instead of, as here, the member of a party). Luckily, the Court was able to bypass those issues because it concluded that the presence of the FCRA claim provided federal question jurisdiction. Since the state law claims arose out of the same nucleus of fact, they were covered by supplemental federal jurisdiction. After rejecting several procedural arguments, the Court addressed the merits. The Court affirmed the summary judgment on the breach of contract, tortious interference and FCRA claims. It concluded that Hukic was in default and that Aurora and Ocwen thus never provided false information to credit agencies. The Court then addressed the dismissal of the defamation claim on statute of limitations grounds. Like the jurisdictional analysis, the Court's analytic path was tortured. It included discussion of the defamation limitations period, the discovery rule, the continuing violation rule and the single publication rule. Concluding that the Illinois Supreme Court would apply neither the single publication rule nor the continuing violation rule to the facts and therefore that Hukic could maintain a claim for defamation for statements made by Aurora within a year of the filing of the suit, the Court nevertheless affirmed the dismissal. Illinois requires that special damages be pled in a defamation per quod case, which this is. Hukic alleged no harm from the reports that are actionable. Finally, the Court affirmed the dismissal of the intentional infliction of emotional distress claim because it did not allege conduct so extreme or outrageous to state a claim under Illinois law.

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KAMELGARD v. MACURA (October 23, 2009)

Kamelgard and Macura are both bariatric surgeons. Kamelgard practices in New Jersey and Macura practices in New York. After Kamelgard testified against Macura in a malpractice action in New York, Macura allegedly sent similar letters of complaint to the American Society of Bariatric Surgeons in Florida and the American College of Surgeons in Chicago. The American College took no disciplinary action on the complaint. Kamelgard claims not to have known the source of the American College complaint until he learned about Macura's letter to the American Society at a convention in mid-2007. Kamelgard brought a defamation action in Chicago within a year of the convention but two years after the publication of the letter. The district court concluded that the Chicago venue was improper and dismissed the suit without prejudice. Kamelgard appeals -- Macura cross-appeals seeking a dismissal with prejudice.

In their opinion, Judges Posner, Flaum and Rovner modified the judgment of the lower court to a dismissal with prejudice. The Court expressed some confusion over the intent of the lower court's ruling. It concluded, however, that the court dismissed the claim based upon the Illinois (American College) letter for failure to state a claim because of the absence of the letter and Kamelgard’s inability to obtain it. It then dismissed without prejudice the claim based on the Florida (American Society) letter because venue was not proper in Illinois. Nevertheless, given the uncertainty of the lower court's ruling, the Court went on to address the choice of law issue presented in the appeal. Although both Illinois law (favored by the plaintiff) and New Jersey law (favored by the defendant) have a one year statute of limitations for defamation, Illinois has a discovery rule -- New Jersey does not. The Court opined that the general "most significant relation" test that looks to the place of the injury does not always fit defamation cases, particularly were a defamatory statement is communicated in many different locations. In that situation, Court concluded that the application of the law of the plaintiff's domicile makes the most sense. Even though there was no publication of the letter in New Jersey, it is the location where the plaintiff is likely to be harmed and it is the state with a substantial interest in protecting his reputation. New Jersey law should therefore apply and both defamation claims are barred by the statute of limitations. 

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WALSH v. CHEZ (October 21, 2009)

Jason Walsh was diagnosed with autism early in his life. His parents took him to Dr. Michael Chez for treatment. Chez prescribed a daily dosage of 50 mg of prednisone. One side-effect of prednisone is its negative impact on the body's ability to fight infection. A short time after the beginning of his prednisone treatment, Jason developed pneumonia. Dr. Chez reduced the prednisone treatment from 50 mg per day to 50 mg twice a week. A few months later, Jason died. Jason's parents brought a medical malpractice case against Dr. Chez. The Walshes submitted expert reports supporting their theory that the abrupt dosage reduction was the cause of their son's death. The district court excluded the reports on the ground that they failed to articulate a standard of care. The court dismissed the case. The Walshes appeal.

In their opinion, Judges Cudahy, Flaum and Wood reversed and remanded. The Court focused on the Rule 26 duty to disclose information regarding an expert's testimony. The purpose of the rule is to allow an opposing party a reasonable opportunity to address the expert's opinion. Examining the reports of the two experts, the Court concluded that each expressed an opinion that the conduct of Dr. Chez was not consistent with the standard of care. Dr. Chez was on notice of the Walshes' theory of malpractice. The fact that there may have been numerous ways of properly weaning Jason from the prednisone does not affect the experts' opinions that Dr. Chez' approach fell below the standard of care.

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HUNTER v. AMIN (October 1, 2009)

Stanley Bell was sent to the St. Clair County Jail as a pretrial detainee. At the time, he was taking several medications, including an antidepressant and a sleep aid. The prison psychiatrist, Dr. Amin, met with Bell about a week later. Bell refused to speak with Amin with a jail officer present. Amin refused to meet with Bell without a jail officer present, a practice that was also required by state regulations. Bell became agitated -- Amin told him his medication would be discontinued without the examination -- Bell became more agitated and belligerent. Amin discontinued all of Bell's medications and planned to meet with him the following week. Bell committed suicide two days later. Bell's sister, Elisha Hunter, brought a claim pursuant to § 1983 against Amin, the County, and others. She also bought medical malpractice claims. The district court entered summary judgment in favor of all the defendants. Hunter appeals.

In their opinion, Judges Ripple and Sykes (dissenting) and District Judge Lawrence affirmed in part, reversed in part and remanded. The Court first considered the argument that the policy requiring the presence of a corrections officer was a violation of Dell's right to mental health treatment. In order for a municipality to be liable under these circumstances, its policy must violate constitutional rights. Here, the Court stated that the policy did not violate Bell's rights. Bell had a constitutional right to adequate mental health treatment but nothing in the County's policy affected that right. In fact, the Court noted that the fact that the communications would be privileged from disclosure supported their conclusion. With respect to the medical malpractice claim, however, the Court reversed. Although it is true that no physician duty arises if a patient refuses treatment, Bell did not refuse treatment -- he only refused to be examined. The Court found no evidence in the record supporting Amin's position that the examination was necessary in order for him to continue the prescription medications. The Court medical remanded the malpractice claim for further proceedings. Finally, given the affirmance on the only federal claim in the case, the Court instructed the district court to determine whether it should continue to exercise jurisdiction.

Judge Sykes dissented from the majority's reversal of the medical malpractice claim. Judge Sykes concluded that Bell's refusal to consent to the examination meant that Amin had no right to render any treatment. Amin testified that he needed the examination before any treatment. Judge Sykes noted the lack of support in the record for the majority's conclusion that the examination was required.

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AGUIRRE v. TURNER CONSTRUCTION COMPANY (September 30, 2009)

Jose Aguirre was employed as a bricklayer by one of the subcontractors involved in the renovation of Chicago's Soldier Field. He was seriously injured when he fell off a scaffold. He brought this personal injury suit against the joint venture that was acting as general contractor for the project. The court first found that the general contractor had no duty to Aguirre and that Aguirre could not avail himself of res ipsa loquitur, in that the general contractor did not have exclusive control of the scaffold. It granted summary judgment to the defendants. On appeal, the Seventh Circuit reversed on both grounds, concluding that the defendants assumed a duty and that exclusive control is not an element of res ipsa loquitur. On remand, the case was tried to a defense verdict. Aguirre appeals.

In their opinion, Judges Posner, Ripple and Kanne affirmed. The general rule, stated the Court, is that a general contractor is not liable to someone injured as a result of the negligence of a subcontractor. An exception applies, however, when the contractor either by law or contract is required to care for the safety of the subcontractor's employees. Here, the general contractor took active steps to ensure the safety of all employees on the project. The exception therefore applies. Having found a duty, the Court proceeded to address the issue of whether it was breached. The subcontractor itself assembled the scaffold hours before the accident. Although the general contractor imposed strict requirements for scaffolds and inspected them frequently, the Court concluded that it did not breach its duty by not inspecting every one before it was used. The accident was caused either by the negligence of Aguirre or the subcontractor. Finally, the Court addressed the fact that the scaffold was missing a middle railing, the presence of which might have prevented the injuries by giving Aguirre something to grab as he fell. The problem with that, said the Court, is that the middle railing is not designed for that purpose. To rely on the absence of a safety measure, the injury complained of must be one that the safety measure was designed to prevent.

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CICIORA v. CCAA, INC. (September 4, 2009)

Lela Ciciora went to Burrito Jalisco one winter day in Chicago to pick up her lunch. She parked in the lot and used the sidewalk to get to the store. It had snowed earlier but the snow had been removed from the sidewalk. A store employee had also salted the sidewalk that morning. Nevertheless, Ciciora slipped on a small patch of ice and fractured her ankle. She brought a personal injury lawsuit against the owner of the premises and CCAA, who ran the restaurant. The district court granted summary judgment to the defendants. Ciciora appeals.

In their opinion, Judges Kanne, Rovner and Evans affirmed. The Court started with the general rule that a property owner has no duty to remove natural accumulations of snow and ice. A duty may exist, however, if one is contractually obligated to do so or if one voluntarily does so. Here, the restaurant owner voluntarily cleared and salted the sidewalk regularly. The Court noted that a volunteer could be liable if her actions resulted in an unnatural accumulation or increased an existing hazard in some other manner. There was simply no evidence presented, however, of an unnatural accumulation or of an aggravation of existing hazard. Ciciora relied on mere speculation. The district court properly granted summary judgment. Similarly, the court concluded that Ciciora failed to present any evidence that the owner of the premises failed to exercise reasonable care in its obligation to maintain the sidewalks.

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SCHUR v. L.A. WEIGHT LOSS CENTERS, INC. (August 14, 2009)

Pamela Hoppe, an Illinois citizen, joined a weight loss program at her local L.A. Weight Loss Center ("Center"). After just several months of diet and nutritional supplements, Hoppe died of acute liver hepatitis. Her estate filed suit in state court against the Center alleging a variety of state law claims. The Center removed the case to federal court on diversity grounds, where the parties conducted discovery for just over one year. The estate then amended its complaint, adding claims against two Center employees, both Illinois residents. The estate then moved to remand the case to state court because of the new lack of diversity. On the Center's motion, the court struck the amended complaint on the grounds that the new defendants were fraudulently joined. Later, the court granted summary judgment to the Center. The estate appeals.

In their opinion, Judges Bauer, Kanne and Sykes vacated and remanded. The Court addressed the jurisdictional issue first. It noted that 28 U.S.C § 1447(e) applies when a plaintiff seeks to join a non-diverse party that would eliminate subject matter jurisdiction. A district court has two options -- it can deny the joinder and keep the case or it can allow the joinder and remand the case. It should not do what the court did here – allow the joinder and keep the case. The Court then adopted a framework of factors a lower court should consider in exercising its discretion on joinder: the plaintiff's motive, the timeliness of the request, the harm to the plaintiff if denied, and other equitable considerations. Before addressing these factors, the Court “detoured” to address whether the district court had the authority to reverse the joinder decision, further complicated by the fact that a magistrate judge had granted the motion to amend. In the particular posture of this case, the Court concluded that the district court was permitted to reconsider the magistrate's order. Because the motion was granted as a routine matter without any indication of its jurisdictional significance, the Court joined several other courts in concluding that a district court may reconsider a prior joinder decision when it was unaware that joinder would defeat diversity. Finally, the Court proceeded to examine the lower court's exercise of its discretion. The lower court had relied on the doctrine of fraudulent joinder in striking the amended complaint. It found that it was unlikely that the estate could prevail against the individual defendants. The Court concluded that the district court misapplied Illinois law in reaching that conclusion. Although vicarious liability can result in employer liability for employees' misconduct when the acts were committed within the scope of employment, it does not affect the employees' direct liability. The Court found that it was error to conclude that it was unlikely for the state to succeed against the individual employees. With respect to the plaintiff’s delay in adding the individual employees, the Court acknowledged that the amendment followed a year of discovery but emphasized that the amendment came within a few months of the estate learning of each employee's role in the events prior to Hoppe's death. Thus, the Court concluded that the lower court abused its discretion in denying the remand. Since it had no jurisdiction, it should not have reached the merits and neither did the Court.

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BOTVINIK v. RUSH UNIVERSITY MEDICAL CENTER (July 24, 2009) 

In his last year of a residency at Rush University Medical Center, Bradley Botvinik was accused of playing a prank on a female physician by sending her unwanted, sexually explicit items. Botvinik denied the charges and was never disciplined as a result. Botvinik entered into an employment agreement with a physicians’ association in Florida. The hospital at which the physicians practiced granted Botvinik temporary privileges and began processing his application for permanent privileges. Before he moved to Florida, Botvinik learned from his new employer and the hospital that the hospital had received negative evaluations of Botvinik's work and suspended his temporary privileges. Botvinik withdrew his application for privileges once he realized it was going to be denied. He filed this action against Rush and five Rush physicians. He alleged that the defendants tortiously interfered with his expectation of employment by telling the hospital about his involvement in the sex scandal. The district court granted summary judgment to the defendants. Botvinik appeals.

In their opinion, Judges Bauer, Sykes and Tinder affirmed. The Court stated that one of the elements of tortious interference in Illinois is a purposeful interference by the defendant. The Court agreed with the lower court that Botvinik failed to present evidence on this element. Four of the five defendant physicians swore that they provided no evaluation of any kind to the Florida hospital. Although one physician did speak with the hospital about Botvinik, the record is silent with respect to whether the hospital relied on anything he said in making its decision.

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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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ABAD v. BAYER CORPORATION (May 1, 2009)

In one case, several hundred Argentine hemophiliacs brought a class action against Bayer Corporation and others, alleging that they were infected with AIDS as a result of the defendants’ negligence. In another case, Argentina plaintiffs brought suit against U.S. companies arising out of an automobile accident. Plaintiffs allege that defendants were negligent in the design and manufacture of the vehicle and its tires. Both cases were filed in federal district courts against American defendants by foreign plaintiffs for injuries sustained in Argentina. After significant discovery, the judge in each case dismissed the case based on the doctrine of forum non conveniens. The plaintiffs appealed.

In their opinion, Judges Posner, Evans and Tinder affirmed. The parties agree that the standard of review is an abuse of discretion. The Court first addressed whether the plaintiffs are entitled to a choice of forum presumption. Although the Court conceded that such a presumption is typical, it concluded that the presumption has little influence on the outcome when plaintiffs seek to maintain the litigation on the defendants’ turf while the defendants would rather engage on the plaintiffs’ turf. In those cases, district courts should simply weigh the advantages and disadvantages of the respective fora. In Gulf Oil Corp., the Supreme Court provided a long list of factors that a lower court should consider in applying forum non conveniens. The Court reviewed the circumstances of the two cases to determine whether either district judge abused his/her discretion. In the AIDS case, the Court looked at a number of factors, including the burden of translation and the cost of discovery. In the end, however, the determining factor was that Argentine law would govern, whether the cases were tried in the United States or Argentina. The Court found further support for dismissal in the fact that the case involved the application of market share liability, an uncertain area of Argentine law. The Court reached the same conclusion with respect to the automobile accident case. Again, although the legal issues were not as complex or uncertain, Argentine law would apply. An Argentine court is more competent than an American court to apply its law. The Court found no abuse of discretion.

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COLLINS v. UNITED STATES OF AMERICA (May 1, 2009)

Two private planes collided while approaching a small airport. The three people aboard all died. Air traffic control at the small airport was under the control of Midwest Air Traffic Control Services, a company hired by the Federal Aviation Administration. The representatives of the deceased brought an action against the United States under the Federal Tort Claims Act. They allege both that the air traffic controller was negligent in clearing both planes to land and that the FAA was negligent because it had not installed a radar system at the small airport. The district court entered judgment for the United States after a bench trial. The representatives appeal.

In their opinion, Judges Posner, Ripple and Evans affirmed. Before addressing the merits, the Court addressed the United States’ argument that the district court lost jurisdiction when Midwest settled the representatives’ claims. The Court recited the general Illinois rule that a principal whose liability is based on the negligence of its agent cannot be sued if the agent settles with the plaintiff. The Court concluded, however, that the rule has no application when the principal is the United States and liability is based on the Federal Tort Claims Act. Under the Act, the United States does not have a right of indemnity from the agent -- in fact, the government is exclusively liable. Under those circumstances, the rationale for the rule does not apply. On the merits, the Court quickly disposed of the controller negligence claim. The Court has held, and continues to hold, that independent contractor air traffic controllers are not employees of the United States, notwithstanding extensive FAA control. The Act therefore does not create U.S. liability. With respect to the FAA negligence issue, the Court stated that the Act does not apply to a claim related to a discretionary function of a federal agency. The Court concluded that the FAA’s consideration of a whole host of factors in determining where to install radar equipment was a quintessential discretionary function. Negligent or not, the government was shielded from liability for the FAA's failure to install radar at the airport.

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NAUTILUS INSURANCE CO. v. 1452-4 N. MILWAUKEE AVENUE, LLC (April 7, 2009)

1452-4 N. Milwaukee Avenue, LLC ("1452") was the owner of the property at that address in Chicago. 1452 had a comprehensive general liability insurance policy issued by Nautilus Insurance Co. ("Nautilus"). The policy contained an exclusion for property damage arising out of operations performed by contractors or subcontractors. When 1452 was sued by the owner and insurer of the property next door for damages allegedly caused by its contractor’s negligent excavation, 1452 tendered the action to Nautilus. Nautilus brought an action seeking a declaratory judgment that it had no duty to defend or indemnify 1452 in the underlying lawsuit, relying on the exclusion. The court rejected Nautilus' argument and entered a declaration that Nautilus had a duty to defend. Nautilus appeals.

In their opinion, Judges Ripple, Sykes and Tinder reversed and remanded. The Court identified the issue as whether the damages alleged in the underlying complaint fall or potentially fall within the policy’s coverage. The Court noted that the lower court did not apply the contractor exclusion because of an allegation in the complaint that 1452 itself was directly liable because it failed to provide statutorily required notice of excavation to the neighbor. The Court disagreed with the lower court’s analysis. The Court emphasized that the notice claim sought recovery for the same loss as the other claims. Relying on Illinois jurisprudence, the Court concluded that, because the property damage alleged in the complaint falls within the policy exclusion, the alternative theory of relief does not trigger coverage.

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LEWIS v. CITGO PETROLEUM CORP. (April 6, 2009)

Michael Lewis and Tammy Livingston, employees of Philip Services Corporation, were performing maintenance work at a CITGO refinery when they were allegedly exposed to a hazardous gas. Emergency personnel responded, they went to the hospital, they received a full medical examination, they were released, and they returned to work the next day. Several years later, Lewis and Livingston asserted common-law negligence claims against CITGO. Livingston also asserted a negligent infliction of emotional distress claim. Their claims were supported by two physicians -- -- Dr. Jordan Fink, a doctor of internal medicine, and Dr. Norman Kohn, a psychiatrist and neurologist. The court granted summary judgment to CITGO, holding that the plaintiffs had failed to satisfy their burden of demonstrating the reliability of the expert testimony. Lewis and Livingston appeal.

In their opinion, Judges Ripple, Kanne and Tinder affirmed. The Court first addressed the question of whether Livingston was a "bystander" or a "direct victim" for purposes of the emotional distress claim under Illinois law. Concluding that she was a "direct victim," the Court noted that the plaintiffs' burden on both the common-law negligence and negligent infliction claims were to demonstrate a duty on the part of defendant and a breach that proximately caused the injury. The Court turned to causation and the lower court’s exclusion of the expert testimony. The Court approved the lower court’s application of Rule 702 and Daubert. It is the burden of the proponent, said the Court, to establish both the qualifications and the methodology of its experts. CITGO challenged Dr. Fink on both qualifications and methodology -- it challenged Dr. Kohn only on methodology. Although the Court recited some of the problems relating to the experts, it ultimately relied on the fact that plaintiffs failed to advance any substantive arguments in support of their experts’ qualifications. The Court concluded that the lower court was well within its discretion to exclude the evidence. Without this testimony, neither Lewis nor Livingston could provide evidence of causation with respect to the common law negligence claims. With respect to Livingston's claim for negligent infliction of emotional distress, however, one of CITGO's own experts did testify that Livingston experienced "relatively mild" anxiety as a result of the exposure. The Court agreed with the lower court’s conclusion that the injury did not reach the threshold of severity to be compensable and was properly dismissed.

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GILES v. WYETH, INC. (February 12, 2009)

Coal miner Jeff Giles suffered a serious neck injury in the 1990s, which continued to cause him pain and limited his mobility for years. In 2002, the mine laid him off. Soon after, he had neck surgery, from which he failed to heal properly. Then, the mine announced its permanent closure. In late 2002, Giles’ doctor diagnosed him as having major depression. He prescribed Effexor, made by Wyeth, Inc. After taking Effexor for two days, Giles committed suicide. Effexor did contain a warning at the time. It recommended close supervision, “good patient management,” and the smallest dosage. In the following years, both Wyeth and the FDA learned more about a potential relationship between antidepressants and an increase in suicidal thinking in teens and adolescents. The FDA required stronger warnings of suicide risks in young people, eventually including persons up to the age of twenty-five. Giles’ widow brought a wrongful death action against Wyeth. The court granted a Wyeth motion in limine and excluded evidence of post-2002 suicide warnings. A jury found for Wyeth. Jacquelyn Giles appeals.

In their opinion, Judges Manion, Rovner and Williams affirmed. First, the Court resolved a dispute between Giles and Wyeth as to the basis for the district court’s ruling on the exclusion of the warnings. After reviewing the pre-trial and trial record, the Court concluded that the judge relied on Rule 403, weighing the evidence’s probative value against the danger of confusion, and not Rule 407. In analyzing the application of Rule 403 to the evidence, the Court determined that the court below did not abuse its discretion. Several factors contributed to that finding: a) the warnings applied only to children, adolescents, and, to some degree, adults under the age of twenty-five (Jeff Giles was forty-six at the time of his death), b) the warnings actually disclaimed increased risk of suicide in adults, c) the 2002 warnings already addressed the general risk of suicide, and d) there is no evidence that the later warnings were based on information that Wyeth knew or should have known in 2002. Finally, the Court rejected Giles’ argument that the lower court should not have admitted post-2002 scientific evidence, particularly in light of its ruling to exclude the later warnings. The Court distinguished between the probative value of the two based on the issue in the case – whether Effexor caused Giles to commit suicide. The later warnings are not relevant to that determination; the later scientific evidence is.

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GIANT SCREEN SPORTS v. CANADIAN IMPERIAL BANK OF COMMERCE (January 20, 2009)

Giant Screen Sports (“GSS”) entered into an agreement with Sky High whereby GSS would distribute three Sky High films. GSS agreed to pay Sky High $3 million dollars over three years, after distribution. Sky High financed the production of one of the films through Canadian Imperial Bank of Commerce (“CIBC”). Although Sky High assigned its rights to the $3 million to CIBC, CIBC also required Sky High to obtain insurance from Export Development Canada (“EDC”) in the event of GSS’ default. EDC insisted on modifications to the distribution agreement between GSS and Sky High, including an accelerated payment schedule and a guarantee of Sky High’s obligation. In late 2002, Sky High provided contract documents to CIBC evidencing the changes and purportedly signed by GSS. GSS maintains that it did not sign and had no knowledge of the new agreements. In 2004, CIBC attempted to trigger the protections in the agreements. GSS notified CIBC that the signature was not that of the GSS officer. When presented by CIBC with the group of agreements, all purportedly bearing a GSS signature, GSS advised CIBC that it would cooperate with its investigation of forgery but only through legal process. CIBC did not tell CIBC that the signatures were forged but stated that CIBC “would not like” the answers to the questions of legitimacy. CIBC then filed an insurance claim with EDC, alleging a loss as a result of GSS’ failure to make the first payment under the agreements. In response to inquiries from EDC, CIBC stated that: a) GSS was in default, b) CIBC was unaware of any disputes that would impede payment, and c) CIBC knew of no reason why GSS did not pay. GSS brought an action against Sky High and CIBC. Against CIBC, GSS alleged that CIBC’s statements to EDC concerning GSS were defamatory per se. The district court granted summary judgment to CIBC on the ground that the statements were susceptible of an innocent construction. GSS appeals.

In their opinion, Judges Bauer, Cudahy (dissenting) and Wood reversed and remanded. The Court outlined Illinois law of defamation. To prevail on a defamation claim, a plaintiff must prove a false statement, an unprivileged publication to a third party, and damages. Illinois recognizes defamation per se, in which damages are presumed because of the obvious harm caused by the statements. Two kinds of statements constituting defamation per se are relevant to the case: those imputing an inability to discharge one’s duties and those that impute lack of ability in his or her business. Even statements meeting these criteria may be not actionable if they are reasonably capable of an innocent interpretation or are statements of opinion. The Court applied Illinois law to the three statements at issue: that GSS’ failure to pay resulted in a loss to CIBC, that GSS was still in default, and that CIBC was unaware of any dispute between GSS and Sky High that would affect GSS’ desire to pay. The Court believed that the district court’s conclusion put an undue strain on the statements’ meaning. The Court concluded that the statements, taken as a whole and in the context in which they were made, conveyed an untrue imputation that GSS was dishonest. The Court also concluded that the statements contained verifiable factual assertions and were not statements of opinion. Although GSS concedes that CIBC has a qualified privilege, the Court agreed with GSS that there existed genuine issues of fact as to whether CIBC abused the privilege – by failing to properly investigate the truth.

Judge Cudahy dissented. He believed that the majority gave only lip service to the innocent construction rule. He saw the statements of CIBC to be rather ordinary statements made during the course of a business dispute. Illinois precedent, in his view, holds that the mere statement of one’s failure to perform is not defamation per se. He would have affirmed the district court.

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CAMP v. TNT LOGISTICS CORPORATION (January 14, 2009)

Lola Camp was a truck driver in the employ of Transport Leasing Company (“TLC”). TLC in turn provided her services to DeKeyser Express (“DeKeyser”), a transport company. One of DeKeyser’s customers was TNT Logistics Corporation (“TNT”). TNT provided transportation logistics services to shippers. In January 2003, TNT directed DeKeyser to pick up a shipment of automobile parts from Trelleborg YSH, Inc. (“Trelleborg”) for delivery to a Mitsubishi automobile plant. DeKeyser assigned the job to Camp. When Camp arrived and surveyed the shipment, consisting of three pallets of parts, she concluded that the only way to fit them onto the truck was to stack one of the pallets on top of one of the others. She was concerned that such a load might not be safe. She advised Trelleborg, DeKeyser and TNT of her concern. TNT personnel advised DeKeyser and Camp that it understood the risk. TNT advised Camp to go ahead with the shipment. TNT released Trelleborg and Camp of any liability for cargo damage. When Camp arrived at her destination, she opened the truck door. The pallet started to fall – she injured herself while trying to prevent the fall. Camp brought an action against TNT and Trelleborg for negligence. The court granted summary judgment to TNT and Trelleborg. Camp appeals.

In their opinion, Judges Ripple, Manion and Sykes affirmed. The Court started with the elements of a negligence claim in Illinois – duty, breach of the duty, and an injury proximately caused by the breach. The Court found it necessary to discuss only the duty requirement. It understood Camp’s claim to be one for common-law negligence based on two alternate theories of duty – statutory and common-law. Camp alleged that the statutory duty claim arose from TNT’s and Trelleborg’s violation of the Federal Motor Carrier Safety Regulations (“FMCSR”). The Court disagreed. It noted that the regulations applied only to “motor carriers.” It held that TNT was not a motor carrier (Camp conceded that Trelleborg was not.) The Court distinguished between a “motor carrier,” defined as a “person engaged in the transportation of goods,” and a “broker,” defined as one who “provid[es] . . . or arrang[es]” for transportation by motor carriers. Even though “transportation” includes “services related to” the movement of property, the Court determined that TNT’s activities were that of a broker and did not rise to the level of providing services relating to the transportation. Also with respect to the statutory duty claim, the Court held that Camp could not recover from TNT or Trelleborg for aiding and abetting the violation of FMCSR. Camp herself violated the FMCSR. Illinois law does not allow a plaintiff to recover from a defendant for adding or abetting the plaintiff’s own tortious conduct.

With respect to the common-law duty claim, the Court identified the factors under Illinois law that courts consider to determine the existence of a duty: a) reasonable foreseeability of an injury, b) likelihood of an injury, c) magnitude of the burden of protecting against the injury and d) the consequences of placing this burden on the defendant. The Court concluded that neither TNT nor Trelleborg owed a duty of care to Camp -- Camp was aware of the risk, a reasonable person would have avoided the danger, TNT and Trelleborg knew of no particular reason why Camp would be compelled to act otherwise, Camp was in a better position to avoid the injury, it would be a burden to impose the obligation to avoid the injury on TNT or Trelleborg, and placing the burden on TNT and Trelleborg would result in significant resources devoted to preventing the injury. Having found no duty, Camp cannot establish negligence.

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DENG v. SEARS (January 5, 2009)

Yuming Deng was a software developer at Sears Roebuck and Co. (“Sears”). He compiled data that Sears used in making credit decisions. Unfortunately, Deng took serious issue with a 2001 performance review and erupted. Deng stopped coming to work, claiming a disability. He continued to show up at Sears occasionally, sometimes causing a disruption. On his last visit, he deleted from Sears computers much data and the software models Sears used in analyzing the data. After an internal investigation concluded that Deng destroyed the data in retaliation for the performance review, Sears reported his conduct to the local police. The police concluded that Deng had violated Illinois law and sought him out for his version of the story. Deng, however, had left the state. Charges against him were filed in his absence. A year and a half later, Deng was arrested and brought back to Illinois. When a witness did not appear at his preliminary hearing and the judge refused a request for a continuance, the prosecutor filed a nolle prosequi. Deng then brought this action for malicious prosecution against Sears. The court granted summary judgment to Sears, holding that the nolle prosequi was not a “favorable” outcome for Deng. Deng appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Evans affirmed. The relevant elements of the tort of malicious prosecution in Illinois are a) a favorable outcome in the criminal case, b) an absence of probable cause, and c) malice. The Court took note of the problems presented by the first element – favorable outcome – which was relied on by the district court. The Illinois Supreme Court has held that a nolle prosequi is not a favorable outcome if the case is abandoned for reasons not related to the innocence of the accused. But whether the failure of a witness to appear is a favorable outcome is an open question in Illinois. The Court questioned the merits of Illinois’ approach. Here, for example, the prosecutor was forced to attend and testify at a deposition - which the Court viewed as an intrusion on the prosecutorial function. Nevertheless, the Court respected Illinois’ right to its choice. The Court solved its dilemma by sidestepping the favorable outcome element of the tort and focusing on the absence of probable cause. Although Deng tried to explain away his conduct, the Court had no difficulty in finding probable cause.

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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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BREGIN v. LIQUIDEBT SYSTEMS, INC. (November 19, 2008)

Donald Bregin was employed as an accounts receivable collector for North American Van Lines, Inc. (“NAVLI”) until the late 1990s. Later, he was a consultant for SIRVA , NAVLI’s parent. In this role, Bregin was involved in NAVLI’s efforts to outsource its collection services. In fact, Bregin took part in negotiations that resulted in a contract between NAVLI and Liquidebt Systems, Inc. (“LSI”), under which LSI would perform those collection services. Bregin was also instrumental in determining the standards under which LSI’s performance would be measured. The parties agreed that SIRVA would evaluate LSI’s performance on how quickly receivables were collected. LSI stood to gain or lose $150,000 depending on whether it was able to show a 10% increase compared to prior years.  LSI hired Bregin away from SIRVA to head up LSI’s delivery of services to NAVLI. Before Bregin left SIRVA, he authored a report that concluded that SIRVA’s accounts receivable were overstated because they included amounts that should be refunded to customers. LSI was not able to meet the agreed performance goal. Bregin believed that SIRVA’s accounting practices were to blame. He reported his concerns to LSI’s management. LSI’s president had Bregin’s complaints evaluated to determine their validity. He discovered that LSI was performing so poorly that it would be subject to the penalty even if SIRVA changed its accounting practices. Bregin was removed from the SIRVA account but initially kept on at LSI. He was eventually fired in December of 2003. Bregin brought suit under Indiana law against LSI and SIRVA, alleging that LSI fired him in retaliation for his reporting the SIRVA accounting practices and that SIRVA tortiously interfered with his employment. The district court granted summary judgment to LSI and SIRVA. Bregin appeals.

In their opinion, Judges Posner, Flaum, and Evans affirmed. The Court noted that the Indiana Supreme Court has recently affirmed its adherence to the employment-at-will doctrine. Under the employment-at-will doctrine, an employer and employee can each terminate an employment relationship for any (or no) reason. The Court observed that Indiana did recognize some narrow exceptions. Bregin relied on the McClanahan exception, based on a case in which the Indiana Supreme Court allowed a cause of action for a truck driver who was fired when he refused to haul an illegal load. The act would have subjected him to personal criminal liability. The Court concluded that Bregin’s claim did not fit the exception. Bregin did not identify any criminal act he was asked to perform. Bregin also asked the Court to recognize a new exception for “whistle-blowers.” The Court rejected his request, noting that an Indiana appellate court had rejected the exception in 1980 in a case in which a “vigorous dissent” raised the same argument for the exception.

With respect to Bregin’s allegation that SIRVA tortiously interfered with his employment, the Court was critical of Bregin’s vague articulation of his claim. The Court conceded that SIRVA complained to LSI about Bregin. It also noted, however, that LSI was not meeting its performance goals and was unresponsive to SIRVA’s requests for information. SIRVA’s complaints to LSI were therefore justified and did not support a claim of tortious interference. In addition, LSI’s president testified that he alone made the decisions to remove Bregin from the SIRVA account and to fire him. Bregin cannot make out a case of tortious interference.

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INTERACTIVE INTELLIGENCE, INC. v. KEYCORP (October 24, 2008) 

For seven years, KeyBank provided foreign exchange currency conversion services to Interactive Intelligence, Inc. (“Interactive”). The parties operated without a written contract for three years. They signed a written agreement in 2001, but the agreement was silent on how Interactive was going to compensate KeyBank. Apparently, Interactive believed it paid a service fee on each transaction. In fact, KeyBank charged Interactive a percentage mark-up on each transaction. The amount of the mark-up increased over time. Adam Ravens was the KeyBank employee who managed the Interactive account. Ravens never told Interactive that he was applying a spread. Interactive, on a couple of occasions, was troubled by the difference between the market rates for the transactions and what they were paying KeyBank. They inquired but never received an adequate response. Interactive brought this action against KeyBank to recover more than $2 million in alleged overcharges. The district court granted summary judgment to KeyBank. Interactive appeals. 

In their opinion, Judges Ripple, Rovner, and Evans affirmed. The Court first addressed Interactive’s principal argument that it was a third-party beneficiary of a contract between Raven and KeyBank. There was no employment contract between Raven and KeyBank of which Interactive could be a beneficiary. Although Raven did sign a Code of Ethics, which he allegedly breached, the Court observed that it would be against public policy for customers to be considered a third-party beneficiary of an ethics code. The Court was concerned that such an approach would encourage companies to weaken or eliminate codes of conduct. Thus, the district court properly granted summary judgment on this claim. Next, the Court upheld the court below on the negligent supervision, breach of fiduciary duty, and breach of contract claims. The Court held that: a) since Ravens had no duty to Interactive, KeyBank could not have been negligent, b) Ravens had no fiduciary duty to Interactive, and c) the oral contract that left the price term to be negotiated was too vague to be enforceable.  

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REID v. KOHL’S DEPARTMENT STORES, INC. (September 16, 2008)

On a December afternoon, Lenora Reid and a friend were shopping for men's shirts at Kohl’s Department Store. As they moved through the store from a carpeted section into a tiled section, she slipped and fell. Reid noticed a pink milkshake and cup lying in a pool on the floor. A manager arrived to assist and also noticed the spill. The manager had passed through the same area ten minutes earlier and had not seen a spill. Reid brought a negligence action against Kohl’s. On Kohl’s motion, the court granted summary judgment. The court found that (a) Kohl’s had no actual or constructive notice of the spill, and (b) the spilled shake was an open and obvious condition that created no duty on the part of Kohl’s. Reid appeals.

In their opinion, Judges Bauer, Wood, and Williams affirmed. The Court restated the Illinois law that business owners owe their invitees a duty to keep their physical premises in a reasonably safe condition. Liability is found for a slip-and-fall on a foreign substance if the invitee establishes that the business had actual or constructive knowledge of a dangerous condition. Reid attempted to establish constructive knowledge. The Court held that Reid needed to present evidence on how long the foreign substance had been on the floor. She presented evidence only of a photograph of the scene and her and her friend’s lay opinion testimony. The Court found none of that evidence strong enough to support even an inference of any measurable length of time. Conversely, the manager testified that she was in the area ten minutes before the fall and that the spill had not been there at the time. The Court observed that Illinois law does not employ a bright line test but considers the circumstances of the case to determine the existence of constructive notice. Considering the circumstances here, including Kohl’s internal procedures for monitoring for dangerous conditions and the actual monitoring done in an “almost empty” store, the Court held that no reasonable person could conclude that ten minutes is constructive notice.
 

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