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

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

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

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

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PARKEY v. SAMPLE (October 27, 2010)

Indiana State Trooper Jason Sample was the Marijuana Eradication Coordinator in his northeastern Indiana police district. He was quite knowledgeable about marijuana, its use, and its growth. In early 2005, several things raised his suspicion about the activities of Hammond resident James Parkey: a) the DEA told him that Parkey received shipments from a company known to sell marijuana growing supplies, b) Parkey had a criminal record, and c) Parkey's basement windows were covered. Based on this suspicion, Sample inspected the trash containers behind Parkey's residence on two occasions. On each occasions, he discovered marijuana stems, marijuana cigarette remnants, and discarded mail addressed to Parkey. Sample obtained a search warrant based on the DEA tip, the trash inspection results, and Parkey's criminal record. The search resulted in the seizure of 10 marijuana plants. Although charges were filed against Parkey, they were later dismissed. Parkey filed suit pursuant to § 1983, alleging a violation of his Fourth Amendment right against unreasonable search and seizure. Judge Lee (N.D. Ind.) granted summary judgment to Sample. Parkey appeals.

In their opinion, Judges Posner, Kanne, and Sykes affirmed. Parkey principally attacks the veracity of the affidavit. But, the Court stated, there is a presumption of validity that attaches to the affidavit. In order to avoid summary judgment on that issue, Parkey must have evidence that Sample made misstatements "knowingly or intentionally or with a reckless disregard for the truth." He must also show that the misstatements were necessary to the determination of probable cause. The Court concluded that he did neither. Parkey does not contest the Sample received a tip from the DEA and that he found the stems and remnants in his trash. Instead, he asserts that Sample failed to prove that the remnants were his or that Sample researched his criminal history. Attacking the lack of evidence supporting a warrant affidavit is not sufficient to defeat summary judgment. The Court added that Parkey loses even if Sample misrepresented Parkey’s criminal record. The criminal record was not necessary to the finding of probable cause.

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JUNKERT v. MASSEY (June 21, 2010)

Roger Massey, the Sheriff of the DeWitt County, Illinois, began an investigation into a series of local burglaries. His investigation led him to Richard Baker. Baker provided much information to the police about his activities and those of Jeffrey McCall: a) he received stolen guns from McCall, b) he sold drugs with McCall, c) he named his cocaine source, d) McCall told him that McCall's attorney (a female) used cocaine, and e) McCall told him that he paid his attorney with stolen laptops. Massey corroborated some of the information from Baker. Additional investigation established that McCall's lawyer was Dodie Junkert, the only female lawyer in the county. Massey used the information from Baker in preparing an affidavit for a search warrant for Junkert's office and residence. When Massey informed Junkert of the existence of the search warrant, she admitted receiving the stolen laptops from McCall and arranged for their return. The police searched her office and home anyway. They found no computers but did find evidence of drug use. Junkert brought an action under § 1983, alleging that the Massey’s lack of probable cause for the search warrant violated her Fourth Amendment rights. A jury found in favor of Massey. Junkert appeals from Judge Mills' (C.D. Ill.) denial of her motion for judgment as a matter of law.

In their opinion, Judges Bauer, Evans, and Tinder affirmed. The Court addressed whether the affidavit provided probable cause for the search, applying a totality of the circumstances test. It focused on the degree of cooperation, the extent of personal observation, the amount of detail, the time interval, and whether the affiant appeared before the judge. The Court found the affidavit severely lacking -- it lacked personal observation, it specified no time period, and the affiant did not personally appear. Even with the other positive aspects of the affidavit, the Court found it "difficult to conclude" that the affidavit provided a substantial basis for the search. Without actually deciding whether probable cause existed, however, the Court addressed qualified immunity. It noted that Massey is personally liable for damages only if courts have held that a materially similar affidavit lacked probable cause or if the affidavit was so lacking that any reasonable officer would have known it lacked probable cause. The Court found neither. Notwithstanding the weaknesses in the affidavit, the Court concluded that there were enough indicia of probable cause to support Massey’s reliance on it. Massey was therefore entitled to a qualified immunity defense.

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