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

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

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

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

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BIELSKIS v. LOUISVILLE LADDER (November 18, 2011)

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

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

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STEVO v. FRASOR (November 17, 2011)

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

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

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

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

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

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TOWNSQUARE MEDIA v. BRILL (July 21, 2011)

In 2002, creditors of several of Alan Brill's media companies forced them into bankruptcy. The bankruptcy court ordered the companies' radio stations sold. Regent Communications, Inc. was the successful bidder at the sale, although Brill also bid. After several years passed, Brill filed a 111-page complaint in Indiana state court against Regent and a number of other defendants, alleging both tort and contract claims based on state law. The gist of Brill's claim against Regent is that Regent used information obtained from Brill but subject to a confidentiality agreement to outbid Brill for the radio stations. Several of the defendants, creditors in the original bankruptcy case, removed the case to the bankruptcy court in the Southern District of Indiana. Before the bankruptcy court ruled, Brill filed an amended complaint in which Regent was the only defendant and the confidentiality agreement violations were the only claims. The bankruptcy court concluded that the amended complaint was not related to the bankruptcy case. The court therefore concluded that it had no jurisdiction over the case and remanded it to the Indiana state court. Chief Judge Young (S.D. Ind.) affirmed the remand order. Regent appeals.

In their opinion, Seventh Circuit Judges Posner, Kanne, and Rovner dismissed the appeal. The first question for the Court was whether the order was appealable. Under the Supreme Court's reading of § 1447 (the Seventh Circuit has held that the bankruptcy removal section is identical to § 1447), a case remanded for lack of subject matter jurisdiction is not appealable. Although the district court said it lacked jurisdiction, the Court disagreed. When the case was removed, the original creditors were still defendants and the case was challenging the confirmation of the plan. The case was therefore related to the bankruptcy case and within the court's jurisdiction. The Court then assumed, without deciding, that the bankruptcy court also acquired supplemental jurisdiction over the state law claims. The resolution of the federal claim (here by the filing of an amended complaint) did not eliminate the court's jurisdiction over the state law claims. It did create a situation in which the court had the discretion, depending on the number of factors, to keep or remand the claims. Under Carlsbad Technology, the remand of such state law claims is not a remand for lack of jurisdiction but simply a decision to relinquish supplemental jurisdiction. That would normally mean that the order is reviewable under § 1447. But that is not what happened in the bankruptcy court. Regent tried to keep the case in federal court on the ground that even the amended complaint's claims were within the bankruptcy court's jurisdiction -- and that argument was properly rejected by the lower courts. The Court concluded that it could review the order only if it could properly characterize the lower courts' orders as declining to exercise supplemental jurisdiction, despite the words used. The bankruptcy court was very clear in its order that the dismissal was for want of jurisdiction. The Supreme Court concluded in Kircher that an order unmistakably premised on lack of subject matter jurisdiction, even if clearly wrong, is not reviewable. The Court concluded that that was the case here, particularly since neither the courts nor Regent ever argued supplemental jurisdiction.

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GENERAL INSURANCE COMPANY OF AMERICA v. CLARK MALL CORP. (May 4, 2011)

Discount Mega Mall in Chicago was damaged in a major fire in the fall of 2007. It filed a claim with its commercial general liability carrier, General Insurance. It also tendered to General the defense of claims brought by its tenants. General filed a declaratory judgment action against Clark Mall Corporation d/b/a Discount Mega Mall Corporation as well as its principals and tenants seeking an order that it had no duty to defend or indemnify. The defendants asserted five counterclaims for: a) an order that defense and indemnity was required, b) damages for breach of contract, c) damages for a vexatious refusal to defend, d) damages for a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and e) damages for fraud. The defendants moved for judgment on the pleadings with respect to the duty to defend. Magistrate Judge Cole (N.D. Ill.) ruled that General failed to produce evidence establishing the exclusion on which they based their denial of coverage and concluded that it had a duty to defend. Although the magistrate judge originally concluded that the refusal to defend was not vexatious, he later explained that he had not rejected the argument conclusively. At General's request, the magistrate judge entered his ruling as a final judgment under Rule 54(b). General appeals.

In their opinion, Chief Judge Easterbrook and Judges Rovner and Sykes dismissed for want of appellate jurisdiction. The Court made a few comments on the merits presented by the appeal but moved quickly to consider appellate jurisdiction. Rule 54(b) requires that an order be final and that there is no just reason to delay an appeal. In order for in order to be final, it must be the final disposition of a claim in the case. A court must compare the issue resolved in the claim on appeal with those that remain. That comparison here shows that the judgment was not final. The vexatious refusal to defend claim still pends. The common law fraud claim still pending includes allegations relating to General's refusal to defend. Since several of the counterclaims still pending are intertwined with the judgment on the duty to defend, the judgment was not final and the Court has no appellate jurisdiction.

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JONES v. CLARK (January 14, 2011)

Early one August morning, Christina Jones had begun her job reading meters for Commonwealth Edison. Jones is African-American. On this particular day, her job took her to Braidwood, Illinois. Braidwood, a small town about 50 miles southwest of Chicago, has an almost exclusively white population. Apparently, a "concerned citizen" thought that she was something other than a meter reader and called the police. [According to her complaint:] Officer Clark was the first to arrive and question her. Although she wore numerous articles of clothing with her employer's logo and provided two separate pieces of identification, Clark would not let her go. When he asked for her date of birth, she stepped away and started to call her supervisor on her cell phone. At that point, Officer Kaminski arrived. He screamed at her, knocked the phone out of her hand, cuffed her hands behind her back, threw her against the car, and arrested her. She was charged with obstructing a peace officer and released on bond. The charges were later terminated in her favor. Jones brought suit, alleging Fourth Amendment violations. Judge Andersen (N.D. Ill.) concluded that disputed issues of fact precluded resolution either of the merits or defendants' request for qualified immunity. Defendants appeal.

In their opinion, Judges Wood, Evans, and Sykes affirmed. The Court first addressed its appellate jurisdiction. Although the "collateral orders" exception to the finality rule does apply to the appeal of qualified immunity denials, it does so only in so far as the appeal raises an issue of law. Even in a case, like this, where there are disputed issues of fact, defendants can (and these defendants have) get their appeal if they limit it to plaintiffs version of the facts. Comfortable with its jurisdiction, the Court turned to the merits. Qualified immunity has two prongs: was there a constitutional deprivation and were the constitutional rights at issue clearly established. With respect to the second prong, the constitutional right at issue here -- the right to be free from an arrest without probable cause -- was certainly clearly established. Therefore, the only question for the Court on the merits is whether Clark and Kaminski violated Jones' rights. The Court appeared to have little difficulty in answering that question affirmatively (again, on Jones' version of the facts). The Court noted that there was nothing in the record that would provide reasonable suspicion that she was engaged in unlawful activity. Their initial detention of her was therefore a constitutional deprivation. In addition, her actual arrest was a constitutional violation. Since the officers had no reason to detain her in the first place, anything supporting probable cause to arrest her must have occurred after her detention. Her post-detention conduct does not support probable cause either for disorderly conduct or for obstructing a peace officer. With respect to the former, she acted professionally at all times. With respect to the latter, the offense requires a physical act rather than just an argument with a policeman. The officers are therefore not entitled to qualified immunity on this record.

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ARROW GEAR CO. v. DOWNERS GROVE SANITARY DISTRICT (December 10, 2010)

A number of residents of Downers Grove, Illinois brought a class action in 2004 against Arrow Gear Company and others for damages. The suit alleged that Arrow and the others contaminated the local groundwater with industrial solvents. The parties settled the suit in 2006 for approximately $16 million. The defendants allocated the settlement amount amongst themselves in a series of agreements. As part of the settlement, each defendant released every other defendant from a future claim for contribution. Although the release was broad, it provided that it did not release any claims other than those specified and did not release claims that "may arise in other litigation or in other contexts." The court then dismissed the case with prejudice. A few years later, Arrow brought CERCLA contribution suits for costs it had incurred against those same defendants. Judge Darrah (N.D. Ill.) dismissed the suit as barred by res judicata. Arrow appeals.

In their opinion, Seventh Circuit Judges Posner, Kanne, and Sykes reversed. The Court first addressed its appellate jurisdiction, since the district court did not dismiss the suit against all defendants. Arrow took a voluntary dismissal without prejudice with respect to two of the defendants. A decision is not final, and appellate jurisdiction does not exist, if the plaintiff has the opportunity to refile against some defendants. That was the case here. However, as the Court has done before on more than one occasion, it provided Arrow's lawyer an opportunity at oral argument to convert the without prejudice dismissal to a with prejudice dismissal. Arrow's lawyer accepted the invitation and satisfied the Court of its appellate jurisdiction. The Court also briefly addressed the district court's jurisdiction. This is a case that involves enforcement of a settlement agreement -- and the general rule is that a district court does not have jurisdiction of such a claim without an independent basis for its jurisdiction. But here, Arrow's claim does have such an independent basis. The claim is based on CERCLA. The fact that the defendants interposed a settlement agreement as the basis for its res judicata defense does not strip the court of its federal question jurisdiction. On the merits, the Court seemed to have little difficulty concluding that res judicata did not bar the suit. The agreements between the defendants in the earlier class action was limited to the allocation of the $16 million in damages paid to the private plaintiffs. The current suit seeks contribution for an additional $5 million that Arrow has incurred as a result of an EPA investigation. The settlements in the earlier suit did not release Arrow's claims in the current one.

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HILL v. COPPLESON (November 22, 2010)

Eighteen-year-old Harold Hill was arrested in early 1992. While in custody, two detectives began questioning him about a sexual assault and murder that happened almost 2 years earlier. According to Hill, they questioned him for hours and abused him both physically and mentally. At some point, Assistant State's Attorney Rogers also began questioning Hill. Hill eventually confessed to the crime and implicated two other men. Those two men were arrested and also eventually confessed to the crime -- although one was never charged because, even though he gave a detailed confession, he was in jail at the time of the crime. In late 1994, Hill was convicted of the crime and sentenced to life in prison. Over 10 years later, Hill was exonerated through DNA testing and his conviction was vacated. Hill filed suit against the two detectives, Rogers, and the City of Chicago alleging that the defendants violated his Fifth Amendment rights by coercing the confession and that they engaged in a civil conspiracy in violation of § 1983. Judge St. Eve (N.D. Ill.) denied the individual defendants' motions for summary judgment, including Rogers' claim that he was entitled to both absolute prosecutorial immunity as well as qualified immunity. Rogers appeals.

In their opinion, Seventh Circuit Judges Ripple, Williams, and Tinder dismissed for want of jurisdiction. The Court has jurisdiction of an appeal from the denial of summary judgment on either absolute or qualified immunity grounds only if they can decide the questions presented based on undisputed facts. Here, there is a dispute in the record over the timing of Rogers' arrival at the police station. Rogers claims that he arrived only after Hill's confession -- Hill claims that he did not confess until after meeting with Rogers. Rogers' success on his absolute immunity claim depends on whether he was acting as a prosecutor or investigator. The answer to that question depends on whether probable cause existed prior to his arrival. Rogers' success on his qualified immunity claim depends on whether there is evidence that he was involved in the coerced confession. The probable cause and the coercion questions depend on the timing of Rogers' arrival at the police station and thus cannot be decided on a record of undisputed facts. Because the Court cannot resolve the question on undisputed facts, it lacks jurisdiction.

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JANIGA v. QUESTAR CAPITAL CORP. (August 2, 2010)

Alfred Janiga has lived and worked in the United States for over 20 years since his arrival from Poland. However, he still understands very little English. His brother, Weislaw Hessek, operates Hessek Financial Services and is a registered representative of Questar Capital Corp. After much prodding from Hessek, Janiga agreed to open a Questar account. He signed one piece of paper and claims that he never saw any of the documents related to his account. Just above his signature, however, in large letters, was a reference to an arbitration agreement in the contract and an admission that he had received a copy. Janiga was originally content with his investment. In fact, he increased his investment after a few months. After about a year, Janiga filed a complaint against his brother and Questar. His complaint included counts of securities violations, negligence, fraud, and others. The defendants moved to stay the proceedings and order arbitration. Judge Shadur (N.D. Ill.) denied the motions without prejudice until he determined whether a contract had even been formed. The defendants appeal.

In their opinion, Judges Wood, Evans, and Sykes reversed and remanded. The Court first commented on its appellate jurisdiction. Although the decision of the district court was not a final decision, the Federal Arbitration Act allows for an interlocutory appeal of the district court's refusal to stay and order arbitration. The Court turned to the merits -- whether the threshold question of the existence of a contract is a question for the court or the arbitrator. The Supreme Court has distinguished between challenges to the validity of an arbitration agreement and challenges to the validity of a contract. A court decides the former; the arbitrator decides the latter. At the time of the district court’s opinion (and even oral argument), the Supreme Court had not decided which decided the contract formation issue. On June 24, 2010, in the Granite Rock Co. case, the Supreme Court held that a courts, not an arbitrator, should decide issues of contract formation. The district court was therefore correct in not referring that issue to arbitration. The Court did take issue with the lower court's hesitation to decide the issue. The district court focused on issues such as Janiga's language barriers, whether he understood or read or even saw the contract, and whether the contract was valid under state law. But these are enforceability issues, said the Court. The fundamental point is that Janiga signed the contract and both parties performed under it for a year. Janiga clearly intended to open a brokerage account and his admittedly voluntary signature is evidence of his assent to the agreement. Contract formation has been established -- other questions may remain for the arbitrator. The Court was less confident of the resolution of the formation issue with respect to Hessek. If Hessek is an agent of Questar and the claims asserted are within the scope of that agency, he may receive the benefit of the arbitration agreement. Since the district court never addressed that issue, the Court remanded for further consideration.

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

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

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

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INDIA BREWERIES v. MILLER BREWING CO. (July 21, 2010)

India Breweries, Inc. (IBI) is a "virtual brewer." On the one hand, it acquires the rights to brew a beer. On the other hand, it partners with other companies to actually brew and distribute the beer. One of those companies was Mohan Meakin, an Indian brewer with whom it entered into a joint venture to brew and distribute beer in India. IBI then entered into an agreement with Miller Brewing Company pursuant to which it hoped to market Miller's brands in India. The agreement required IBI to get written approval from Miller before it began commercial brewing at any brewery. If the brewing was going to take place with a contract brewer, the agreement required IBI to obtain Miller's approval of its contractual relationship as well. IBI proposed two breweries to Miller. A Miller team visited the breweries and advised IBI that they did not meet Miller's requirements. IBI continued to explore other options with limited success. On a few occasions, it sent Miller equipment lists from potential brewing partners. On each occasion, Miller concluded that the facilities did not meet its requirements. It refused to actually visit and inspect any facility until it received assurances of adequate equipment and specifications. IBI filed suit for breach of contract. It claimed that Miller was required to inspect each brewery it proffered. Miller counterclaimed for fraudulent inducement and negligent misrepresentation. Judge Clevert (E.D. Wis.) granted summary judgment to Miller on IBI's claim but denied summary judgment on the counterclaim. The parties then stipulated to a dismissal without prejudice of the counterclaim, under which Miller agreed not to refile it unless IBI was successful in its appeal. IBI appeals.

In their opinion, Chief Judge Easterbrook and Judges Bauer and Tinder affirmed. The Court first addressed its appellate jurisdiction. It noted that the stipulation of the parties that permitted the refiling of the counterclaim in certain circumstances destroyed the finality of the district court's order. Without finality, there is no appellate jurisdiction. However, because Miller agreed to an unconditional dismissal when pressed at oral argument, the finality requirement is satisfied and the Court proceeded to the merits. On the merits, the Court found for Miller. It rejected IBI's argument that the contract was ambiguous and could be read to require Miller to inspect any brewery it proffered. In fact, the Court found that interpretation "patently unreasonable." First, that requirement would not be rational since it would require Miller to go all the way to India to inspect a brewery that it already knew would not meet its requirements. Second, since Miller could reject a nonaffiliated brewer for any or no reason, requiring inspection in those circumstances would also be irrational. The Court also noted that the contract required Miller's approval of the contractual relationship with nonaffiliated brewers. Since Miller had not yet had an opportunity to review those relationships, it could also reject the brewers on that ground. Finally, although the Court conceded that Wisconsin law implies a duty of good faith in any contractual relationship, it found that Miller did not breach that duty.

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