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

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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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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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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ORTIZ v. CITY OF CHICAGO (August 25, 2011)

Acting pursuant to a confidential tip, the Chicago Police raided May Molina's apartment. They placed Molina under arrest. Molina happens to be a local civil rights activist and a harsh critic of police practices. Molina also suffers from diabetes, hypertension, and a thyroid condition. She takes medications for those conditions. Pursuant to department policy, she was not allowed to take her medication into the lockup. Molina died after approximately 27 hours of confinement. Her estate brought suit against a number of police officers involved in her detention pursuant to § 1983, alleging constitutionally inadequate medical care and an unreasonable delay in providing her a probable cause hearing. Judge Grady (N.D. Ill.) excluded the estate's expert witness and granted summary judgment to the defendants on both claims. The estate appeals.

In their opinion, Seventh Circuit Judges Rovner, Wood, and Evans (who, as a result of his death, took no part in the decision) affirmed in part and reversed and remanded in part. The Court first addressed the inadequate medical care count. It pointed out that, since Molina had not yet had a probable cause hearing, her estate’s claim was governed by the Fourth Amendment reasonableness standard and not the Eight Amendment deliberate indifference standard. Since the defendants did not argue burdensomeness or police interest, the only reasonableness factors at issue are whether each individual defendant was on notice of a serious medical condition and causation. With respect to notice, the Court identified the allegations with respect to each individual defendant and concluded, in each case, that the allegations created genuine issues of fact. Considering the evidence in the light most favorable to Molina, each individual defendants either heard her ask for medical attention, heard her cry for help, were told by her lawyer that she needed to be hospitalized, or received numerous telephone calls from friends and relatives advising that she needed her medication. Therefore, the Court concluded that each was on notice of her serious medical condition. With respect to causation, the question is whether, had the defendants responded and taken her to the hospital, she would not have died or suffered pain and suffering. The district court applied too narrow a test when it required the estate to prove that it was the failure to provide her medication that caused her death. Because the defendants' expert testified that she died from an overdose of drugs she ingested at the time of the police raid, and because the district court excluded the estate’s expert testimony that she died because she was not giving her medication, the district court concluded that the estate failed to prove causation. But the estate did not need to prove that it was the lack of medication -- it only needed to prove that it was the failure to take her to the hospital. The Court therefore concluded that the expert testimony was not even required on that point. There was enough lay testimony in the record to establish causation. The Court also found the district court improperly excluded the expert testimony because of its misunderstanding of the factual record. With respect to the defendants' qualified immunity claim, the Court had no difficulty concluding that failing to provide medical care to a prisoner with a serious health risk satisfied the estate’s burden (without deciding whether it should apply the deliberate indifference or objectively unreasonable standard). On the unreasonable delay count, the Court agreed with the district court. The Supreme Court adopted a 48-hour burden shifting rule in Gerstein. Therefore, this 27-hour detention is presumptively reasonable. The estate failed to overcome the presumption.

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ORTIZ v. WEBSTER (August 24, 2011)

Shortly after Arboleda Ortiz was incarcerated in the Terre Haute federal prison, an ophthalmologist diagnosed him with a pterygium, a thin film covering the eye, and recommended surgery. The prison denied the request. Someone wrote on the request "NO TOWN TRIPS." Over the next few years, two other doctors concurred with the surgery recommendation while a fourth doctor concluded that the condition was not serious enough for surgery. Dr. Thomas Webster, the prison medical director, reviewed Ortiz’ file and concluded that surgery was not medically necessary, but that it might be required within two years after further evaluation. Ortiz filed suit in 2005 under Bivens, alleging that Dr. Webster was deliberately indifferent to his medical needs. Ortiz eventually got the surgery while his lawsuit progressed. The district court originally granted summary judgment to Webster. On appeal, the Seventh Circuit reversed and remanded, identifying several fact disputes: a) the seriousness of Ortiz’ condition, given the several surgery recommendations, b) Dr. Webster's motivation, given that his stated reason for denying surgery was contrary to the medical record, and c) whether the "NO TOWN TRIP" reflected a prison policy against off-site trips for death row inmates. On remand, the author of the "NO TOWN TRIP" explained it away and Dr. Webster presented evidence that there was no prison policy against off-site medical treatment. Dr. Webster also presented expert testimony that his treatment was within the standard of care because surgical removal of the film is not necessary until there is corneal distortion. Judge McKinney (S.D. Ind.) granted summary judgment to Dr. Webster. Ortiz appeals.

In their opinion, Seventh Circuit Judges Bauer, Manion, and Kanne (dissenting) vacated and remanded. In order to prevail on summary judgment, Ortiz had to show both that his condition was objectively serious and that Dr. Webster knowingly disregarded it. The Court had no difficulty concluding that, at a minimum, there was a fact dispute as to whether the condition was objectively serious. The Court also concluded that Ortiz presented sufficient evidence to get to a jury on the deliberate indifference element. First, construing the evidence in Ortiz' favor, the conditions identified by the expert as requiring surgery actually existed when Dr. Webster refused surgery. Second, even when Dr. Webster refused surgery, he indicated the need for further evaluation and the possibility of the need for surgery within two years. But no further evaluation took place within the next two years. A jury could conclude that Dr. Webster's inaction unreasonably delayed the necessary surgery. Finally, the Court noted that the expert opinion that surgery was not necessary did not resolve the fact dispute -- it merely added one more opinion on the no-surgery side of the debate.

Judge Kanne dissented, taking issue with the majority’s treatment of the deliberate indifference prong. He pointed out that deliberate indifference in a medical context is especially hard to prove. A difference of opinion about a condition’s proper treatment is not enough. Judge Kanne saw nothing either in Dr. Webster's initial review of the file or his later treatment, even taking the facts in a light most favorable to Ortiz, that rose to the level of deliberate indifference.

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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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RANDALL v. ROLLS-ROYCE CORP. (March 30, 2011)

Rolls-Royce Corporation sets its employee compensation in three stages. First, it sets up compensation categories with broad pay ranges into which it assigns classes of employees it thinks are of equal value to the company. Second, within each compensation category, it creates narrower pay ranges for each job based on market conditions. Third, the company authorizes supervisors to adjust compensation individually. Female employees of one of the Rolls-Royce's Indiana facilities brought a class action pursuant to the Equal Pay Act and Title VII, alleging that Rolls-Royce engaged in sex discrimination by paying male employees more than female employees and by denying female employees promotions. Judge Barker (S.D. Ind.) denied class certification and granted summary judgment to Rolls-Royce. Plaintiffs appeal.

In their opinion, Judges Posner, Flaum, and Sykes affirmed. The Court noted that the average male employee compensation was approximately 5% higher than female employee compensation in the same compensation categories throughout the complaint period. But is that differential the result of sex discrimination, which would violate Title VII? The company's expert testified that the differential disappeared when adjustments were made for differences in the jobs performed. The plaintiff's expert failed to rebut this testimony. Plaintiffs’ Title VII base pay claim must therefore fail. Their Equal Pay Act claim also fails. Although that claim does not require proof of discrimination, the Court concluded that the district court was correct in finding that the plaintiffs failed to meet the statutory comparator requirement. The named plaintiffs' promotion claims also fail. Again, the company's expert corrected the data to account for male employees with the same title but substantially different responsibilities and found that females are, in fact, much more likely to be promoted that males. Again, plaintiffs failed to rebut the testimony. The Court also affirmed the district court's denial of class certification. It concluded that the named plaintiffs were not adequate class representatives because their promotion claims were weaker than many other class members and because they had a conflict of interest. They are supervisors and have some control over the compensation of both male and female employees. In reaching its conclusion, the Court rejected plaintiffs' attempt to style its action as a Rule 23(b)(2) claim (under which they might avoid the adequacy issues). The request for monetary relief and the need for individual calculations and hearings make the case inappropriate for Rule 23(b)(2) treatment.

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MYERS v. ILLINOIS CENTRAL RAILROAD CO. (December 15, 2010)

Timothy Myers joined the Illinois Central Railroad (now part of CN Southern) right after his high school graduation. He worked for the Railroad for over 30 years in a number of jobs. All of his jobs were physically demanding and dangerous. Over his career. Myers injured an ankle, both knees, an elbow, and his back. He had surgeries on his back (twice) and on his left elbow and his right knee. He brought suit against the Railroad under the Federal Employers' Liability Act (FELA). He alleged that his physical problems were caused by the Railroad's failure to provide a safe workplace. Myers listed four experts -- three treating physicians and an ergonomist. Chief Judge McCuskey (C.D. Ill.) struck all four experts and granted summary judgment to the Railroad. Myers appeals.

In their opinion, Seventh Circuit Judges Manion, Sykes, and Hamilton affirmed. FELA is not a strict liability scheme -- negligence and causation are both required. Sometimes, expert testimony is unnecessary because a layperson can understand the causal link between particular conduct and an injury. Here, however, Myers does not allege a specific injury. He alleges gradual deterioration. The Court stated that the general rule in such cases is that expert testimony on causation is required. That general rule applies here. Although Myers proffered four experts, none of them can satisfy this requirement. The ergonomist can testify about the dangerous conditions in a rail yard but cannot link those conditions to any specific injury. The treating physicians were prepared to offer an opinion that the working conditions were the cause of Myers' injuries. However, the Court concluded that those opinions were general medical opinions that were not the product of any particular acceptable methodology. Indeed, the treating physicians simply made causation assumptions. The district court did not err in striking the experts, nor in granting summary judgment. 

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CAMPBELL v. ASTRUE (December 6, 2010)

Curtis Campbell applied for Social Security benefits in January of 2004, based principally on his mental impairments. The agency arranged for Campbell to be seen by Dr. Mason, who concluded that his problems were mostly related to his substance abuse. Another agency psychologist, Dr. Boyenga, reviewed Campbell's record and concluded that he was capable of performing simple and detailed tasks. Another mental health assessment was conducted in May of 2004. A therapist recommended evaluation, medication, and therapy and a psychiatrist diagnosed Campbell with major depression and substance abuse. In October, Campbell began a regular course of treatment with Dr. Powell. Powell saw Campbell almost 20 times over the following 15 months. Throughout that time, she assessed his Global Assessment of Functioning Scale score between 45-50, an indication of severe social impairment. Early on, she noted his excessive use of alcohol. She diagnosed Major Depressive Disorder with psychotic features. She also noted that he was not a malingerer. In mid-2005, Powell diagnosed Campbell with Bipolar Disorder, but continued to question the effect of his excessive alcohol use. Later in 2005, Campbell reported that he was no longer using alcohol. Powell’s treatment notes from that point on mention alcohol use only in the sense of her continued support of his abstinence. Her clinical assessment remained much the same. The agency conducted a hearing in January of 2006. The agency's medical expert testified that Campbell had a history of substance abuse, that he was currently using alcohol, and that he was capable of simple, repetitive work. The expert was unaware of Powell's Bipolar Disorder diagnosis. Campbell testified that he had not used alcohol for six or seven months. The ALJ found that Campbell was not disabled, siding more with the testifying expert and the other agency consultants then with Dr. Powell. Judge Darrah (N.D. Ill.) affirmed. Campbell appeals.

In their opinion, Seventh Circuit Judges Wood, Evans, and Tinder reversed and remanded. Normally, the treating doctor's opinion is entitled to controlling weight if it is adequately supported. The ALJ rejected the treating doctor's opinion for two reasons -- the absence of any significant abnormal findings in a December 2005 evaluation and Powell’s failure to determine the effect of alcohol on Campbell's symptoms. The Court found both reasons wanting. First, with respect to the December report, the Court determined that the ALJ focused on one aspect of the report and ignored other aspects of the same report as well as Powell's other reports. That, an ALJ may not do. With respect to the alcohol use, the Court noted that Powell's treatment notes suggested she had ruled out alcohol abuse. The fact that she began recommending "continued abstinence" in September and noted that his symptoms persisted makes it clear that she thought something other than alcohol abuse was the cause of his symptoms. The Court then stated that, even if the ALJ was correct in discounting the treating doctor's opinion, she is required to apply the Larson factors to determine the proper weight to give the opinion. Here, the ALJ did not address those factors -- several of which support Powell. Finally, the Court noted that the opinions the ALJ gave the greatest weight to were, on the one hand, opinions of doctors given prior to the 15 month course of treatment and, on the other hand, the opinion of the expert whose own testimony showed that he was unfamiliar with the medical records.

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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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CYRUS v. TOWN OF MUKWONAGO (November 10, 2010)

Twenty-nine-year-old Nicholas Cyrus lived with his parents in Mukwonago, Wisconsin. Cyrus suffered from bipolar disorder and had occasional delusional episodes. He was known by the local police in his small community for his unusual behavior but was not considered dangerous. On the evening of July 8, 2006, Cyrus left his parents' home wearing only his bathrobe following a dispute with his mother . He remained missing until early the next morning when a town resident reported to the police that an unknown man wearing only a bathrobe was trespassing on his property. Lt. Czarnecki responded to the call. Czarnecki suspected that the "unknown man" was Cyrus. He knew Cyrus and knew that he had been reported missing the night before. There are slight factual disputes regarding what happened next but, generally, Czarnecki unsuccessfully tried to get Cyrus' attention and cooperation. After Cyrus refused a request to talk and moved toward the house, Czarnecki used his Taser on him. Cyrus fell to the ground. He tried to get up but wobbled and fell. Czarnecki used his Taser again and Cyrus rolled down the driveway. By this time, a second officer had arrived at the scene. The two officers tried to handcuff Cyrus but he was lying on his hands. When the officers could not pry his hands loose, Czarnecki used his Taser several more times. The officers finally got him handcuffed but, when they rolled him over, they discovered he was not breathing. Cyrus died later that day. His parents brought a § 1983 Fourth Amendment excessive force claim against the officers and the municipality. The plaintiffs offered two experts -- one to testify regarding reasonable force and one (the Medical Examiner, who reformed the autopsy) on the cause of death. The Medical Examiner testified at her deposition that many factors contributed to Cyrus' death, including the stress of the struggle, his fear, his mental condition, his physical position, the pain, and the shock. She testified that she could not state that any particular factor was more significant than another. Judge Randa (E.D. Wis.) excluded the testimony of both experts relating to the cause of death, principally because the Medical Examiner could not isolate a primary cause of Cyrus' death. The court then granted summary judgment to the defendants, finding that there were no material disputes of fact and that the Taser use was not excessive force as a matter of law. Plaintiffs appeal.

In their opinion, Circuit Judges Bauer and Sykes and District Judge Simon reversed and remanded. The Court recognized that most of the material facts were undisputed (principally because the victim was dead). However, it rejected the district court's conclusion for two reasons. First, the Court identified several material facts that were in dispute. Czarnecki testified that he used his Taser only five or six times but the Taser's internal register recorded 12 trigger pulls. The parties also disagreed about whether Cyrus walked or ran toward the house. Second, excessive force claims require an analysis of all the circumstances surrounding the use of force. Facts that may not technically be in dispute may be susceptible of different interpretations, making summary judgment appropriate. For example, there were potentially different inferences that a jury could draw from the fact that Cyrus rolled down the driveway. Was it an attempt to escape or merely an involuntary reaction to the shock? Other factors the jury could consider also tended to support the unreasonableness of the force: Cyrus had not committed a serious offense, he did not violently resist the officers, he was not armed, and he suffered from a mental illness. Since a jury could reasonably conclude that Czarnecki's multiple Taser uses constituted unreasonable force, summary judgment was inappropriate. The Court also rejected defendants' alternative position that plaintiffs could not prove causation without the excluded expert testimony. The Court conceded that proof of causation will be more difficult without the Medical Examiner's testimony. However, it found that the record was not totally devoid of evidence upon which a jury could conclude that the force caused Cyrus's death. Expert testimony is not necessary if the facts relied on are such that lay persons can understand them and draw appropriate conclusions from them. Here, Cyrus stopped breathing shortly after receiving the shocks, there is no evidence of a prior injury or condition, the toxicology report showed the absence of drugs, and there is no evidence of an intervening cause. On this record, the Court concluded that a jury could find causation.

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UNITED STATES v. CINERGY CORP. (October 12, 2010)

Cinergy Corp. (and its affiliates) owns several electric power plants in the Midwest. Years ago, the U.S. EPA charged Cinergy with violations of the Clean Air Act at several of its facilities. Specifically, the agency alleged that the company made "major" modifications that resulted in increased nitrogen oxide and sulfur dioxide emissions without obtaining a permit. In an earlier appeal, the Seventh Circuit held that the federal regulation at issue required emissions to be measured on an annual, rather than an hourly, basis. On remand to Judge McKinney (S.D. Ind.), the case was tried. A jury found that four of the alleged modifications were likely to have increased the sulfur dioxide and nitrogen oxide annual emissions and should have been permitted. Cinergy appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner and Rovner reversed. The Court addressed the verdict with respect to the two pollutants separately. With respect to sulfur dioxide, Indiana's implementation plan in effect at the time of the modifications did use hourly capacity rather than annual emissions to determine the necessity of a permit. This was true even though: the federal statute and regulation defined it otherwise, Indiana had agreed to revise its plan, and Indiana had actually adopted appropriate amendments to its plan -- but it failed to submit the plan for approval for several years. The Court concluded that Cinergy could not be held liable when it complied with the approved Indiana plan. With respect to nitrogen oxide, the parties agree that the annual emissions standard governs. Here, Cinergy attacks the agency's experts and the formula they used to predict those annual emissions. In effect, the expert witnesses testified that an increase in capacity would result in an equal increase in generation and pollutant emissions. The Court concluded that that formula was only appropriate in the case of a baseload generating plant, which is in almost continuous operation. It did not take into consideration the operational differences between baseload, cycling, and peaking plants. The plant at issue is a cycling plant and operated on a regular, although not continuous, schedule. Although there are methods for predicting annual emissions from a cycling plant, the Court concluded that a remand was not necessary. The agency conceded that it could not prove its case if the expert testimony was disallowed.

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BODUM USA v. LA CAFETIERE, INC. (September 2, 2010)

In 1991, Bodum Holding purchased the stock of a French company whose principal product was a french-press coffeemaker sold under the name “Chambord.” One of the principal investors in the French company also owned Household, a British company that sold a very similar looking French-press coffeemaker under the “La Cafetiere” name. The parties negotiated over Household's ability to continue selling its coffeemaker after the sale. An early draft of the sales agreement allowed it to sell the La Cafetiere only in England. The later, signed version allowed it to sell the La Cafetiere anywhere in the world except France. In 2006, Household began distributing the La Cafetiere in the United States. Bodum filed suit under state and federal law. Judge Kennelly (N.D. Ill.) granted summary judgment to Household. Bodum appeals.

In their opinion, Chief Judge Easterbrook and Judges Posner (concurring) and Wood (concurring) affirmed. The only issue the Court addressed was the meaning of the contract, which was governed by French law. Although FRCP 44.1 allows the use of expert testimony as an aid to the interpretation of foreign law, the Court criticized the practice. Instead, it noted its preference for treatises. Here, the Court relied on the plain language of the contract and its "straightforward" negotiation history in concluding that Household was within its rights to sell its product in the United States. It rejected Bodum's argument that a provision in the French Civil Code required a trial to determine the actual intent of the parties.

Judge Posner agreed with the disposition on the merits but wrote a separate concurrence even more critical than Chief Judge Easterbrook of the practice of using experts to aid the court in foreign law interpretation. In his judgment, courts should rarely rely on expert testimony for the meaning of foreign law. Judge Posner has expressed this view in the past, as well (see his opinion in Sunstar, Inc. v. Alberto-Culver Co. - and my post).

Judge Wood also agreed with the disposition of the case on the merits and also wrote separately on the subject of Rule 44.1. Judge Wood, however, disagreed with the harsh criticism from her colleagues. In her judgment, experts are frequently necessary to ensure that a district court judge completely understands the nuances of foreign law.

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MEYERS v. NATIONAL RAILROAD PASSENGER CORP. (AMTRAK)(August 30, 2010)

Greg Meyers was an Amtrak pipe fitter for years. It was a difficult job -- requiring lifting, twisting, reaching, etc., frequently in confined spaces. Meyers' size (approximately 350 pounds) made the job even more difficult. He started experiencing problems in 2004. He was referred to Dr. Rosseau, a neurosurgeon, who diagnosed him with cervical spondylosis and carpal tunnel syndrome. Rosseau performed carpal tunnel surgery in 2004 and back surgery in 2008. Dr. Tonino, an orthopedic surgeon, operated on his right shoulder in 2007. Meyers brought suit against Amtrak under the Federal Employers' Liability Act ("FELA"). He alleged that his injuries were caused by Amtrak's failure to use ordinary care. He relied on the Rosseau and Tonino expert reports and a report by his expert ergonomist. Judge Der-Yeghiayan (N.D. Ill.) granted partial summary judgment to Amtrak on statute of limitations grounds but then struck the reports of both doctors and the ergonomist. Without those reports and testimony, Meyers was unable to establish the elements of the offense. The court granted full summary judgment. Meyers appeals.

In their opinion, Judges Kanne, Williams, Hamilton affirmed. The Court addressed only the doctor expert issue. It stated that a party offering an expert witness who was retained to provide expert testimony in a case must comply with the requirements of Rule 26(a)(2). Those requirements include disclosing the bases of the expert's opinions and the reasons for them, which Meyers did not. The Court noted that it had never ruled on whether a treating physician is required to comply with those disclosure requirements if the subject of the opinion was not determined at the time of treatment. It concluded that a treating physician should be held to the same disclosure requirement if the physician is offered for testimony regarding the cause of injury and that testimony is based on a conclusion that was not made at the time of treatment. The testimony of Meyers' two doctors fits that definition and was properly excluded. Without those reports, there is no evidence of causation and summary judgment was appropriate.

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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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HAPPEL v. WALMART STORES (April 19, 2010)

Heidi Happel was diagnosed with multiple sclerosis in the early 1990s. In 1993, her primary care physician prescribed a pain reliever for an unrelated condition. In fact, she was allergic to the medication. Her physician phoned the prescription to a Walmart pharmacy were Happel typically filled her prescriptions. Despite the fact that Walmart's computer system and Happel's husband both alerted the pharmacist to her allergy, he filled the prescription anyway. Happel immediately went into anaphylactic shock. Her general health quickly deteriorated. She and her husband sued Walmart -- Happel brought a negligence claim and her husband brought a loss of society claim. The Happels listed the original diagnosing physician as a witness but did not disclose him as an expert or tender an expert report. They did list a neurologist as their expert. Just before trial, the Happels attempted to add the diagnosing physician as an expert. The district court denied their request. The court also excluded much of the neurologist’s testimony. In its instructions, the court included the loss of society claim within the negligence claim. It then submitted to the jury a verdict form that contained only a single line for an award of damages. The jury awarded $465,400. The court reduced the award by $150,000 because of a settlement before trial with the primary care physician. The Happels appeal.

In their opinion, Judges Flaum, Williams, and Sykes reversed and remanded. The Court first addressed the expert issues. With respect to the diagnosing physician, the Court noted that the Happels only addressed his qualifications – but that was not the basis for the lower court's exclusion. The Court found no abuse of discretion in the lower court's excluding the diagnosing physician as an expert when plaintiffs failed to disclose him as such during discovery. With respect to the neurologist, the district court excluded his testimony regarding Happel's multiple sclerosis because he had very little experience with multiple sclerosis. The Court found no abuse of discretion. With respect to the damages verdict, the Court noted that the lower court treated the loss of society claim as simply one aspect of the overarching negligence claim. Although the court instructed the jury to return separate verdicts for each of the plaintiffs, the verdict form it provided had only a single line for a damages award. The Court concluded that the jury instructions and the form of verdict were ambiguous. As a result, it is impossible to determine Although it was error to give the instruction and use the form, the Court noted that it still had to find prejudice before granting a new trial. It found prejudice in reference to the set-off amounts. Each individual plaintiff had settled with the primary care physician for $75,000 each. If the jury intended to award each of the plaintiffs more than $75,000, the $150,000 ($75,000 from each) set off is correct. However, if the jury's intent was to award either plaintiff less than $75,000, that plaintiff's set-off would be capped at the amount of the award and the total set-off would then be less than $150,000. Having found prejudice, the court reversed for new trial on damages.

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AMERICAN HONDA MOTOR CO. V. ALLEN (April 7, 2010)

American Honda Motor Co. ("Honda") manufactures motorcycles. One such motorcycle, the Gold Wing GL1800, is the subject of a class action lawsuit. The plaintiffs, purchasers of the GL1800, allege that the motorcycle has a design defect. The defect, they allege, results in excessive shaking of the steering assembly. The plaintiffs moved for class certification. They relied on a report prepared by Mark Ezra for support for their allegation of the predominance of common issues. In his report, Ezra had developed a standard for the dissipation of steering oscillation in motorcycles. He tested one GL 1800 and concluded that it did not meet this standard. Honda argued that the report did not meet the Daubert standard. The district court expressed its concern that the standard was not supported by empirical evidence and was not generally accepted by the engineering community and that his sample size of one was inadequate. Nevertheless, it refused to strike the report and granted the motion for class certification. Honda petitioned for leave to appeal.

In their opinion, Judges Posner, Evans, and Tinder granted the petition, vacated the denial of the motion to strike and the order certifying a class, and remanded. The Court acknowledged that it had not yet considered the specific question of whether a Daubert challenge must be resolved prior to class certification. It has, however, held that a district court must make all legal and factual determinations necessary to ensure that class requirements are met. The Court thus held that a district court must conclusively resolve challenges to an expert report if the report is critical to class certification. Here, the district court started the correct analysis but never actually decided the question. Instead, it simply decided not to exclude the entire report at what it referred to as the "early stage of the proceedings." The district court abused its discretion in doing so. In fact, the Court went on to conclude that the Ezra report should have been excluded under a Daubert analysis. Applying the Daubert factors, the Court noted the lack of evidence that the standard has been generally accepted or that any tests have been performed to support it. The Court also stated that the sample size of one would rarely be sufficient to extrapolate its results to an entire fleet of motorcycles. Without the report, the plaintiffs cannot meet the predomination requirement of class certification.

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DEKOVEN v. PLAZA ASSOCIATES (March 17, 2010)

Plaza Associates is a well-known debt collection agency. It sent two collection letters to DeKoven stating that it had the authority to offer a lump-sum settlement but that the offer would only be "valid for a period of thirty-five (35) days." In a different letter to a plaintiff in a related suit, Plaza Associates included the DeKoven statement and also stated that a recipient who disputed the validity of the debt with "satisfactory proof" should provide that information to Plaza. The plaintiffs filed suit under the Fair Debt Collection Practices Act. They complained about the "35 day" language and the "satisfactory proof" language. The former, they complain, might be construed by some as a final offer -- when in fact it is not. The latter, they complain, might be construed by some that a recipient must have "proof" to dispute the validity of the debt. Both plaintiffs retained the same survey expert. The expert conducted a survey but the judges in both cases considered it inadmissible. In both cases, the court below entered summary judgment for Plaza Associates. In both cases, the plaintiff appeals.

In their opinion, Judges Posner, Flaum, and Williams affirmed. The Court reviewed the circumstances of the survey. The expert surveyed 160 people in a shopping mall near Chicago. One half of the people were given the letter with both challenged clauses -- the others (the “control group”) were shown a letter with neither clause. The survey respondents were then asked a series of questions about the letters. The Court agreed with the district court in finding numerous flaws in the survey: the composition of the response group, the content of the original oral questions, and the content of the "control group" letter, among others. The Court noted that many Fair Debt Collection Practices Act cases fail because of survey flaws. It suggested that district courts consider exercising their authority to use a court-appointed expert in FDCPA cases.

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GAYTON v. MCCOY (January 28, 2010)

India Taylor had a life-threatening heart condition. She took six different medications to treat the condition. The six drugs were not the only drugs Taylor took – she was also a heroin user. Taylor was arrested on four different occasions in the summer of 2003. As a result, personnel at the Peoria County Jail became very familiar with her condition and her medications. Both her medical history and her prescriptions became part of her file. She was arrested again in October. Because she complained of chest pain, she was taken for a medical examination. Nurse Radcliffe knew her history and medications and asked her brother to bring her medications to the jail. She also made a notation that Taylor should see the doctor the next day if her medications did not arrive. The next day, Taylor complained of nausea on multiple occasions. By mid-afternoon, she was vomiting violently. The guards called the nurse, and even collected her vomit in a bag. Nurse Hibbert suspected that Taylor was faking her symptoms in order to get drugs and refused to see her. Although her name was on the list to see the doctor the next day, she died during the night. Lester Gayton, her brother and administrator of her estate, brought a wrongful death action pursuant to §1983. He named the sheriff, the jail superintendent, the doctor, three nurses, and the outsourced health care provider at the jail. The district court excluded the testimony of the plaintiff's medical expert and granted summary judgment to the defendants. Gayton appeals.

In their opinion, Judges Flaum and Williams and District Judge Lawrence affirmed in part and reversed in part. The Court started with the district court’s exclusion of the medical expert, Dr. Weinstein. First, the Court concluded that the lower court erred in finding Weinstein unqualified to opine on the cause of death. In fact, Weinstein did not testify as to cause of death -- he simply adopted the other experts' conclusion that Taylor died of nonspecific heart failure. Next, the Court stated that the fact that Weinstein was not a cardiologist did not make him unqualified. Finally, with respect to the reliability of his specific conclusions, the Court considered each conclusion individually: a) the lower court properly barred the conclusion that Taylor might have lived had she been given her medication since he gave no basis for his opinion and claims no specific expertise regarding the medication, b) the court improperly barred his testimony that the combination of her vomiting and certain medications might have contributed to her heart failure since that opinion requires no specialized expertise, and c) although the court did not address it, Weinstein is an expert in prison healthcare and is qualified to give his opinion that prison medical personnel fell short of accepted standards of medical care.

The Court next addressed summary judgment. A cause of action for failure to provide adequate medical care requires a showing of a serious medical condition, deliberate indifference, and causation. The deliberate indifference element itself requires knowledge of the health risk and a disregarding of that risk. Given Taylor's serious heart condition, her complaints of chest pain and nausea, and her excessive vomiting, the Court had little difficulty in finding enough evidence of a serious medical condition to overcome summary judgment. On the issue of deliberate indifference, the Court analyzed each defendant separately: a) summary judgment was proper for the sheriff, the doctor, and the superintendent since they had no contact with Taylor and did not know of her request for medical attention, b) summary judgment was proper for the outsourced medical care organization since the plaintiff conceded that the medical policies were sufficient, thus precluding Monell liability, c) summary judgment was proper for two of the three nurses in that one acted reasonably and the other, although negligent, was not deliberately indifferent, and d) summary judgment in Nurse Hibbert’s favor was improper since a jury could find that her refusal to see Taylor despite strong indications that she was in need of medical treatment amounted to deliberate indifference. Finally, the Court also found sufficient evidence in the record on which a jury could find proximate causation between Nurse Hibbert’s conduct and a delay in treatment that exacerbated Taylor’s suffering.

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SUNSTAR v. ALBERTO-CULVER CO. (October 28, 2009)

Alberto-Culver is a significant domestic producer of hair and skin-care products. In 1980, it transferred Japanese trademark registrations to Sunstar, a Japanese manufacturer of similar products. The deal required Sunstar to transfer the trademarks to Bank One Corporation in trust for 99 years. Bank One, in turn, licensed them back to Sunstar and was obligated to return the marks to Sunstar after the term of years. As trustee, Bank One could stop the use of the mark if it had reasonable grounds to think that Sunstar committed an act that created a danger to the value or validity of the marks. Alberto-Culver and Sunstar referred to the rights granted as a senyoshiyoken, the Japanese legal term describing a license under which the licensee has the exclusive right to use the marks in its geographic area and can sue infringers in its own name. Sunstar paid $10 million for the license. In 1989, Sunstar asked for permission to use a variant of one of the marks. Alberto-Culver refused. Sunstar ended up paying another $10 million for the rights to use the variant. In 1999, Sunstar again asked for permission to use a variation of one of the marks. This time, when Alberto-Culver refused, Sunstar filed suit. The suit sought a declaration that the requested variation was permitted by the license agreement. At trial, the district court refused to instruct the jury on the legal meaning of the term senyoshiyoken, concluding that it was irrelevant. The jury returned a verdict for Alberto-Culver but awarded no damages. The judge enjoined Sunstar from using the variation of the mark, terminated the agreement as a result of Sunstar's breach and ordered the marks returned to Alberto-Culver. Sunstar appeals.

In their opinion, Judges Posner, Manion and Evans vacated and remanded. The Court first disagreed with the lower court's conclusion that Japanese law was irrelevant. The Court stated that if sophisticated contracting parties use a foreign technical legal term in their contract, the presumption is that it is used in its technical legal sense. The issue for the Court, therefore, was whether the holder of the Japanese senyoshiyoken is permitted to use variants of licensed marks. The Court then criticized the general use of expert testimony to prove the content and meaning of foreign law. Noting that such testimony is not permitted when a federal court applies the law of a state or when the court of one state applies the law of another state, the Court expressed a strong preference for secondary materials over the testimony of expert witnesses. On the merits, the Court noted that American law does not consider a change in a mark's typeface or a modest change in the appearance or wording of a mark a material alteration. Japanese law is the same. Particularly here, where the license was for a period of 99 years, it may have even required modest changes in the mark over time to ensure its continued value and validity. The Court concluded that the holder of a Japanese senyoshiyoken is entitled to make minor changes in the mark. Although the Court expressed its temptation to order Alberto-Culver’s claims dismissed with prejudice, it declined to do so. Sunstar had not requested that relief and Alberto-Culver was not afforded an opportunity to respond. It did, however, vacate the judgments and remand the case.

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GICLA v. UNITED STATES (July 15, 2009)

David Gicla fractured his right ankle in a motorcycle accident when he was 20. Twenty years later, experiencing pain and swelling, he went to the Westside VA Medical Center in Chicago for treatment. He had ankle implant surgery. Unfortunately, the surgery was not successful. More unfortunately, additional treatment and surgeries were also unsuccessful and doctors had to amputate Gicla's right leg below the knee. Gicla brought this malpractice action under the Federal Tort Claims Act. After a bench trial, the court found in favor of the United States. Gicla appeals.

In their opinion, Judges Bauer, Posner and Rovner affirmed. Gicla's principal argument was that the court should have stricken the testimony of the government's medical expert for a Rule 26 disclosure violation. The expert had testified at his deposition that he had not reviewed a series of x-rays in reaching his opinion. On the day of his testimony, however, he did review the x-rays. Gicla's counsel did not learn of that fact until the he cross-examined the expert. The Court agreed with Gicla that Rule 26 requires disclosure of any information considered by an expert in forming an opinion, and requires a party to supplement that disclosure. The Court also agreed that Rule 37 provides for the exclusion of expert testimony in the case of a disclosure violation. But the Court also noted that Rule 37 provides that exclusion is not appropriate if the failure to disclose was harmless. Here, the only real impact of the violation was that Gicla could no longer cross examine him on his failure to examine the x-rays. The court allowed Gicla's counsel a recess to reassess his cross-examination, or to contact his own expert, or to demonstrate actual prejudice to the court. The Court concluded that the lower court did not abuse its discretion when it determined that the violation was harmless. 

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TRUSTEES OF THE CHICAGO PLASTERING INSTITUTE PENSION TRUST v. CORK PLASTERING COMPANY (July 1, 2009)

G&J Plastering Company is a plastering contractor in the Greater Chicago area. Between 1993 and 2002, three different labor unions represented the plastering employees of G&J, including Local 5 of the Journeymen Plasterers' Protective and Benevolent Society of Chicago. The collective bargaining agreements of each union required G&J to make contributions to various union trust funds. Local 5 required the company to contribute based on an employee’s union, regardless of where the work was performed. One of the other unions required the company to make contributions based on work location, not the employee’s union. A union election conducted in 2002 resulted in the termination of Local 5’s representation of the company. In an exit audit, the company disclosed that it had been making contributions based on union membership rather than work location and had no records showing where work was performed. Given this absence of data, Local 5 instructed its auditors to compute the amount owed based on a set of assumptions and a review of the company’s payroll records. The auditors concluded that the company owed in excess of $800,000. Local 5 filed suit. After a three-day bench trial, the court awarded $1.1 million for unpaid contributions plus interest but disallowed the union's request to recover $45,000 in audit costs. Both sides appeal.

In their opinion, Judges Bauer, Rovner and Evans affirmed. The Court considered three issues on appeal: a) the admissibility of the audit report, b) the admissibility of testimony about the report by one of the auditors, and c) the court's refusal to award audit costs. The Court first upheld the admissibility of the audit report. The report itself was not hearsay -- it was merely a summary of the company's payroll data. The assumptions the auditors applied to the data were not secret, were required because of the company's failure to keep records, and were considered by the lower court and accepted in part and rejected in part. The Court also found that the testimony in support of the report proper. The witness, although he was not a field auditor, was in regular contact with them, reviewed their work, and reviewed the final report. His testimony was not an audit opinion and he did not have to be qualified as an expert. Finally, with respect to the audit costs, the Court concluded that the lower court was within its discretion to deny the request when the union failed to provide sufficient supporting documentation (hours spent, individuals performing the work, qualifications of individuals, hourly rates, etc.).

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GERHARD VON DER RUHR v. IMMTECH INTERNATIONAL, INC. (June 30, 2009)

Gerhard Von der Ruhr founded Immtech and Septech, both medical technology companies. Immtech patented a human protein product. Septech claims it has a worldwide license and a right to purchase the product from Immtech. Septech claims that Immtech breached the agreement, resulting in lost profits. Septech offered the lay opinion testimony of Von der Ruhr that, had Immtech not breached: a) Septech would have partnered with a major, undetermined pharmaceutical company, b) the pharmaceutical company would have developed and received FDA clearance of the product at its cost, c) the product would have immediately captured half of the target market, and d) Septech would have received 5% of sales proceeds. He would have testified that Septech’s lost sales amount to $42 million. The district court did not allow the testimony and precluded the lost profits claim. Septech appeals.

Von der Ruhr had an option to purchase 24,390 shares of Immtech stock at $.34 a share, exercisable in whole or in part by May 1, 2001. He attempted to exercise the options in April of that year and sent a check in an amount equal to the number of shares times $.34. The company never issued the shares. Instead, relying on the fact that the option price was really $. 3409594, returned the check. A jury found that Immtech breached the contract and also found that three individual officers were guilty of tortious interference with the contract. The individuals appeal.

In their opinion, Judges Bauer, Flaum and Wood affirmed. With respect to the lay opinion testimony, the Court recognized that lay opinion testimony is permissible in limited situations when the witness has particularized, personal knowledge. Von der Ruhr had no such knowledge – he never entered into the kind of licensing agreement he described, he never brought a pharmaceutical to market, he never even made a profit in the business, and he had no knowledge of the market. The Court found no abuse of discretion in disallowing the testimony.

With respect to the tortious interference, the Court conceded that there was evidence to support the defendants’ assertions of innocence. However, a jury found otherwise and the Court concluded that their decision was not irrational based on other evidence -- Von der Ruhr was treated differently, they originally authorized the share transfer, only $23.40 was at stake, there was a history of tension and strife, etc.

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CUNNINGHAM v. MASTERWEAR CORP. (June 23, 2009
 

The Cunninghams owned a building in Martinsville, Indiana in which they operated a photographic studio from 1986 until 2004. The building next door contained a dry cleaning establishment. Soon after the Cunninghams made the building their residence, they both began to experience headaches and other physical maladies. They moved out as soon as the EPA advised them that high levels of perchloroethylene (PCE), a chemical used in dry cleaning, in their home posed a potential health risk. The Cunninghams brought an action for common law nuisance, seeking damages for both their physical injuries and their loss of property value. The court disqualified their only medical expert and barred them from testifying regarding appraisals of their property. The court then granted summary judgment to the defendant. The Cunninghams appeal.

In their opinion, Judges Posner, Manion and Kanne affirmed. Although the expert had concluded that all of the Cunningham’s symptoms were caused by exposure to PCE, the Court noted that he was not a toxicologist, and he presented no scientific theory that linked the Cunningham’s exposure level to their symptoms. The Court concluded, therefore, he presented no evidence upon which a trier of fact could rely to conclude that the exposure was the cause of the ailments. With respect to the valuation of the property, the Court stated that a property owner can testify about the value of his property if he is an expert on property values or if he has personal knowledge. Cunningham simply wanted to repeat others’ assessments of the property’s value. The Court concluded that the testimony was properly disallowed as hearsay. The Court added that, even if the testimony was allowed, there was no evidence regarding the cause of any loss in value. Since the Cunningham’s were entitled only to the loss of value that could be fairly attributed to the PCE, as opposed to market forces or otherwise, they could not have prevailed even with the testimony.

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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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SECURITIES AND EXCHANGE COMM. v. KOENIG (February 26, 2009)

James Koenig was the Chief Financial Officer of Waste Management, Inc. In the early 1990s, after years of acceptable growth, the company’s financial performance began to suffer. Koenig devised several accounting strategies that made the company appear more profitable than it was. Koenig resigned in January of 1997. In October of 1997, the company disclosed in a press release that its financial statements were inaccurate and unreliable. The SEC filed a complaint against Koenig in March of 2002. At trial, the jury found that his accounting strategies were fraudulent. The court imposed a $2.1 million civil penalty, ordered the disgorgement of almost $1 million in bonuses, imposed $1.2 million in pretax interest, and enjoined Koenig from serving as a director of a public company. Koenig appeals.

In their opinion, Chief Judge Easterbrook and Judges Manion and Wood affirmed in part, reversed in part and remanded. The Court first addressed Koenig's statute of limitations argument. Although recognizing that the statute is five years and that more than five years passed between Koenig's resignation and the filing of the complaint, the Court rejected Koenig's argument. Instead, the Court noted that there has long been a special rule for statutes of limitations in fraud cases. A victim of fraud has the full statutory time to file, beginning from the date the wrong came to light or would have with due diligence. Since Koenig's accounting misdeeds were not public until the company issued its press release and Koenig never claimed that the SEC could have known earlier, the complaint was timely. The Court then addressed several trial management objections. It concluded that the lower court did not err in allowing the SEC to put on evidence of the motives of the company's new management. Although originally denying the SEC's motion in limine, the lower court admitted motive evidence after Koenig "opened the door." The court had warned Koenig that it would allow the evidence if Koenig made motive at issue. Second, the Court approved of the trial court’s practice of allowing the jurors to submit questions for witnesses and found no abuse of discretion. Third, the Court found no violation of the discovery or notice rules in the SEC's calling as its witness Koenig’s own expert, whom he did not call. Koenig also complains that the $2.1 million penalty was greater than allowed by the statute. The statute limits a penalty to no greater than the greater of $100,000 or the defendant’s pecuniary gain. The court included pre-judgment interest in its calculation of pecuniary gain. The Court approved of this formula. It held that pecuniary gain is the amount the defendant obtained as a result of his fraudulent accounting practices plus any return he could have made by investing that sum, until its disgorgement. The Court did disagree with the district court's computation of Koenig's bonuses. The company awards bonuses based on increases in the company's earnings over the prior year. Based upon the testimony of the SEC's expert, the Court concluded that the company’s corrected earnings increased from 1991 - 1992. The Court remanded for a recalculation of Koenig’s bonuses and, if necessary, a recalculation of the penalties.

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

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

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

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

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

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

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

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