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

DEGUELLE v. CAMILLI (December 15, 2011)

Michael DeGuelle worked for S. C. Johnson & Son, Inc. in its tax department. In the early 2000s, he came to believe that the company was submitting false income tax reports to the IRS. He discussed his concerns with several others within the company to no avail. He complained to Human Resources that Global Tax Counsel Wenzel was creating a hostile work environment by instructing him to engage in what he considered illegal activity. Wenzel criticized DeGuelle for taking his complaints outside the department, even becoming physically aggressive, and gave DeGuelle a negative performance review. The tension between the two continued for months. Finally, DeGuelle indicated that he was going to file a whistleblower complaint with the Department of Labor. The company offered to pay some of his attorney's fees if he would sign a release and confidentiality agreement. He declined and filed the complaint, attaching financial documents and internal communications. He continued to press the issue internally at the company as well. He provided company counsel with a lengthy memorandum detailing his concerns. The company offered one-year severance if he resigned and signed a confidentiality agreement. DeGuelle refused. A few weeks later, the company began an investigation of DeGuelle relating to the documents he disclosed in his complaint. He was eventually terminated for disclosing company documents. The company filed suit in state court for breach of contract and for the recovery of documents. DeGuelle filed suit in federal court, alleging RICO violations, breach of contract, wrongful termination, and defamation. Judge Stadtmueller (E.D. Wis.) dismissed the RICO claims with prejudice and declined to exercise jurisdiction over the state law claims. DeGuelle appeals.

In their opinion, Seventh Circuit Judges Flaum, Kanne, and Hamilton reversed and remanded. The Court addressed the RICO pleading requirements. Under §1964(c), DeGuelle must allege that he was injured by reason of a § 1962 violation. DeGuelle alleged violations of subsections 1962(c) and 1962(d). Subsection (c) requires a "pattern of racketeering activity" allegation. Northwestern Bell requires that the alleged predicate acts of racketeering be related to each other and that there is a continuing threat. Finally, subsection (c) requires "but for" causation between the racketeering activity and the plaintiff's injury. Since DeGuelle’s alleged injuries were related only to the retaliation and since the retaliatory attacks were not themselves a pattern of racketeering activity, the Court concluded that the retaliatory activity must be related to the tax fraud activity. The Court found the district court erred in concluding that they were unrelated because they involved different people, motives, and victims. The retaliatory conduct was inherently related to the scheme that DeGuelle exposed. Specifically relying on the Sarbanes-Oxley whistleblower provisions, the Court stated that courts must examine the facts in each case to determine if the retaliation is related to the underlying wrongdoing. The Court concluded, on the record before it, that DeGuelle satisfied the Northwestern Bell test for his subsection (c) allegation. DeGuelle also alleged a subsection (d) claim. Under subsection (d), DeGuelle must allege an agreement to commit at least two predicate acts. The Court concluded that DeGuelle adequately alleged an agreement among the tax department defendants. Again, since DeGuelle's alleged injury was related only to the retaliatory conduct, the Court inquired whether DeGuelle adequately alleged an agreement between the participants in the tax fraud and the participants in the retaliation. It concluded that the complaint adequately, although sparsely, alleged that the retaliatory actors aided the tax fraud actors in concealing their conduct and thus were part of the original tax fraud conspiracy.

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ZELLNER v. HERRICK (April 29, 2011)

Robert Zellner was a biology teacher at Cedarburg High School in Cedarburg, Wisconsin between 1995 and 2006. He was active in Cedarburg Education Association (the teacher's union) throughout his employment and was its president between 2003 and 2005. The relationship between the District and the Union during this time was quite strained. During his presidency, Zellner was very publicly critical of the District, in particular Superintendent Daryl Herrick. After his presidency ended in August of 2005, Zellner remained active in the Union but no longer spoke out publicly. Also in August 2005, Zellner signed his consent to a new District computer usage policy. The policy notified District employees that their computer usage was not private and could be monitored, expressly prohibited access to offensive pictures, and warned that any violation could result in disciplinary action. Soon thereafter, the District’s IT Department had to clean up Zellner's computer for a second time. The IT technician reported to her supervisor her opinion that Zellner's computer problems were caused by visiting “questionable” Internet sites. The Director of Technology reported these suspicions to Superintendent Herrick, who ordered monitoring software be placed on the computer. The Director of Technology checked the usage logs from time to time. In December, the log indicated that Zellner had visited a number of pornographic websites. Herrick confronted Zellner, who admitted accessing pornography on the District computer several times and conceded that his actions violated school policy. Zellner refused to resign. The School Board held a disciplinary hearing in January. The Board gave Zellner an opportunity to testify and present evidence. He declined to testify but instead read a statement apologizing for his conduct and admitting using poor judgment. The School Board considered a range of discipline but ultimately chose to fire Zellner. A state trial court and appellate court upheld the termination. Zellner filed suit in federal court, alleging a violation of his due process rights and his First Amendment rights. Judge Randa (E.D. Wis.) dismissed the due process claim and granted summary judgment to the defendants on the First Amendment claim. Zellner appeals.

In their opinion, Judges Manion, Evans, and Hamilton affirmed. Although the Court was somewhat critical of the district court's dismissal of the due process claim sua sponte, it nevertheless upheld the dismissal. Even if the Zellner were able to make out a due process claim, the only relief to which he would be entitled was a opportunity to be heard. He was given a hearing and he was given an opportunity to testify. Instead, he read a statement which did not even dispute the charges. He is entitled to no more process. The Court also agreed with the district court's ruling on the First Amendment claim, finding an absence of proof of but-for causation. Notwithstanding the years of animosity between Zellner and the School District, the Court concluded that no jury could find that Zellner's union activities amounted to but-for causation. Zellner admits that he accessed pornography on the District computer and that his conduct violated the District’s policy. Therefore, the School District had a legitimate, nondiscriminatory reason to fire him.

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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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