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

SHERMAN v. QUINN (January 3, 2012)

The 2009 "Illinois Jobs Now!" bill included grants to thousands of not-for-profit corporations and local governments. Robert Sherman filed suit against Governor Quinn seeking injunctive relief, contending that numerous grants to religious organizations and others violated the First Amendment’s Establishment Clause. On August 6, 2010, Chief Judge McCuskey (C.D. Ill.) granted defendants' motion to dismiss, on various grounds. The court denied a motion to reconsider on October 14. On November 16, one day after the period to appeal had expired, Sherman sought an extension of time within which to file his notice of appeal. The district court granted the motion and Sherman filed his notice of appeal within the extended time. Defendants appeal.

In their opinion, Seventh Circuit Judges Cudahy, Posner, and Williams dismissed for lack of jurisdiction. The Court noted that there was some confusion regarding the interpretation of Federal Rule of Appellate Procedure 4(a)(5). Prior to the 2002 amendments, the Court had held that the more lenient "good cause" standard applied if the request for extension was made within the 30-day appeal period and the "excusable neglect" standard applied after the period had run. The 2002 amendments clarified the rule. During or after the 30-day period does not matter. What matters is fault. The excusable neglect standard applies when there is fault and the good cause standard applies when there is no fault. Here, Sherman relied on the good cause standard but he concedes that the conditions leading to his need for an extension were within his control, and therefore constituted fault. The Court applied the excusable neglect standard. The only reason Sherman’s counsel gave was that he was overloaded with obligations, including running for governor. The Court stated that a heavy workload does not constitute excusable neglect. The district court abused its discretion in granting the extension and the Court lacks jurisdiction to hear the appeal.

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GIRL SCOUTS OF MANITOU COUNCIL v. GIRL SCOUTS OF THE UNITED STATES OF AMERICA (May 31, 2011)

The Girl Scouts of the United States of America is the national Girl Scouts organization. It charters local councils, authorizing them to use the "Girl Scout" mark and sell Girl Scout cookies. One of those councils is the Manitou Counsel in eastern Wisconsin. Several years ago, the national organization decided to reduce the number of local councils. Manitou was one of the councils that would disappear under the reorganization. Manitou brought suit under the Wisconsin Fair Dealership Law. It obtained a preliminary injunction stopping the restructuring. However, on the merits, Judge Stadtmueller (E.D. Wis.) granted summary judgment to the national organization, concluding that applying the Wisconsin law to the national organization would violate their First Amendment freedom of expression rights. Manitou appeals.

In their opinion, Judges Posner, Kanne, and Tinder affirmed in part, reversed in part, and remanded. The Court rejected the First Amendment argument. Although the national organization's activities do include protected expression, that does not mean they are exempt from state laws that have a remote, at worst, impact on that expression. The national organization claims that its First of Amendment protection comes from its attempts to reorganize its structure to become more racially and ethnically diverse. The Court noted that there was actually no evidence in the record connecting diversity with the reorganization. Without that connection, the argument fails. The Court turned to the alternative argument, rejected by the district court, that the national organization's activities do not violate the Wisconsin Fair Dealership Law. The Court first refused to recognize a statutory exemption for non-profits. Next, the Court concluded that the statute required "good cause" to eliminate the council entirely, even though the national organization had the right to alter territory boundaries. They Court wrestled with a definition of "good cause" but ultimately found no need to resolve it. It concluded that: a) the national organization abandoned its argument that business reasons provided the good cause, and b) it found its argument that its expressive activity provided good cause unsupported by the record. The Court also affirmed the dismissal of the common law claims and ordered the reinstatement of the injunction.

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HURST v. HANTKE (February 10, 2011)

Joseph Hurst suffered a stroke while incarcerated in an Illinois prison. More than eight months later, he filed a grievance complaining of his treatment by the prison’s medical staff. The prison denied the grievance on the grounds that it was not filed within 60 days, as required by law. Hurst appealed the denial, contending that the stroke left him almost totally incapacitated "until just recently." The prison rejected his appeal on the ground that Hurst provided no justification. Hurst brought suit pursuant to § 1983 alleging deliberate indifference on the part of the prison’s medical staff. Judge Kapala (N.D. Ill.) granted summary judgment for the defendants on the ground that Hurst had failed to exhaust his internal prison remedies. Hurst appeals.

In their opinion, Judges Posner, Evans, and Hamilton affirmed. The Court concluded that the prison was wrong in denying Hurst's appeal. The law does not require an inmate to submit evidence in support of a claim of good cause any more than a plaintiff is required to submit evidence with a complaint. The prison could have insisted on additional substantiation, in which case Hurst would have had to supply it. Notwithstanding the error at the internal prison level, the Court nevertheless affirmed. Because when he sued, and when the defendants moved for summary judgment, Hurst was required to present evidence that he exhausted his administrative remedies -- that is, that he had filed a grievance as soon as he was reasonably able. He had an opportunity -- and an obligation -- at that stage to substantiate his good cause claim. Because he did not, summary judgment for defendants was appropriate.

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FMS, INC. v. VOLVO CONSTRUCTION EQUIPMENT NORTH AMERICA, INCORPORATED (March 4, 2009)

In 1997, FMS and Samsung entered into a dealer agreement under which FMS was authorized to sell Samsung construction equipment in Maine. The next year, Samsung sold its construction equipment business to Volvo. Volvo acquired the division, the factory, the design, and the franchise relationships -- but not the name. It was only authorized to sell under the Samsung name for three years. Volvo did manufacture and sell equipment under the Samsung name. In short order, however, it redesigned the equipment and rebranded it with the Volvo name. It then terminated the agreements with most of the Samsung dealers. FMS and other dealers brought an action against Volvo, alleging a breach of contract and wrongful termination. The District Court granted summary judgment to Volvo. On appeal, the Seventh Circuit affirmed in large part but reversed with respect to FMS's Maine franchise law claim. The Court held that there was a genuine factual dispute about whether Volvo had "good cause" under the Maine statute to terminate the franchise. On remand, a jury found for FMS. Volvo appeals.

In their opinion, Judges Flaum, Rovner and Sykes reversed and remanded. The court first considered the Maine franchise law. That law requires "good cause" for a manufacturer to terminate a franchisee. A manufacture’s discontinuation of the production of the franchise goods constitutes good cause under the statute. Volvo argued that it's redesign and rebranding of the equipment constituted a discontinuation of the franchise goods. The Court turned its analysis to the statutory definition of “franchise goods.” It found that the definition centered on the grant of a license to use a trademark or trade name. Considering that definition in conjunction with the dealer agreement, which defined the target of the franchise to be “all Samsung construction equipment,” the Court concluded that the contract only covered equipment that was branded Samsung. The Court then addressed whether the contractual inclusion of "later improved or superseding models" in its definition of “product” was enough to include the Volvo equipment. The Court cited the contract interpretation principle that when a contract refers to items “including” other items, the latter must be a subset of the former. It therefore concluded that that phrase included only later models that were branded Samsung. Concluding that the franchise covered only Samsung branded equipment, the Court had little difficulty in finding that Volvo met the good cause requirement when it discontinued the production of Samsung-branded equipment. Volvo is therefore not liable for improper termination under the Maine franchise statute and was entitled to summary judgment in its favor.

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