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

BCS SERVICES v. HEARTWOOD 88 (March 24, 2011)

Cook County, Illinois obtains tax liens on properties whose owners fail to pay their taxes on time. The County, in turn, sells the liens at auction. The bidders at the auction must agree to pay the amount of the lien and can bid a percentage penalty in addition. In theory, the lien is sold to the bidder who bids the lowest penalty. In actuality, almost 85% of the bids include no penalty. The auctioneer is supposed to award the bid to the first bidder to raise her hand but, given the speed with which the bids are made, it is unlikely that she is able to do that. One way the County attempted to ensure that the bids are fair is to allow only one bidder to represent a buyer or group of buyers. Therefore, a buyer cannot increase his chances of getting a lien by flooding the room with bidders. One of the bidders at these auctions brought suit against three groups of bidders who allegedly sent multiple agents to each auction in violation of the County's rules. The plaintiffs alleged RICO violations. The district court dismissed for lack of standing because the plaintiffs had not relied on the fraud. The Seventh Circuit reversed and the Supreme Court affirmed the reversal. On remand, Chief Judge Holderman (N.D. Ill.) granted summary judgment to the defendants on the ground the plaintiffs failed to prove proximate cause. Again, the plaintiffs appeal.

In their opinion, Judges Bauer, Posner, and Manion reversed and remanded. The Court discussed, at some length, the doctrine and background of the concept of proximate cause. It concluded that discussion by noting that the concept helps the principal tort victims get compensation, simplifies litigation, appreciates the fact that people do not make decisions based on the unforeseeable consequences of their conduct, and eliminates liability in some situations where the act is only a minor clause of an injury. On the record before it, the Court then concluded that the concept had no application. The only injury was to the plaintiffs. The district court was wrong when it required the plaintiffs to prove the absence of a superseding cause rather than requiring the defendants to present evidence of the existence of such causes. Here, the defendants failed to do so. The Court also rejected defendants' alternate argument that plaintiffs could not prove damages. Relying on statistical evidence, the Court concluded that plaintiffs met their burden, at least at this stage of the case. Finally, the Court also disagreed with the district court's conclusion that plaintiffs’ inability to show an actual expectancy of a particular lien purchase doomed their intentional interference claim. On the contrary, the plaintiffs met their burden. The expectancy identified was their expectation that they would be allowed to purchase liens at a County auction conducted without fraud.

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PARISH v. CITY OF ELKHART (July 30, 2010)

A jury found Christopher Parish guilty of the 1996 shooting of Michael Kershner in his Elkhart, Indiana home. Evidence uncovered during his post-conviction proceedings supported a different conclusion: that Kershner was shot in a drug deal and was not even in his home at the time, and that local police threatened witnesses and otherwise fabricated evidence in an effort to falsely convict Parish of the crime. Parish's conviction was vacated in 2006 by the Indiana Court of Appeals. The state then dropped all charges. Parish brought suit pursuant to § 1983, alleging the denial of a fair trial. He also brought state claims for false arrest, false imprisonment, and intentional infliction of emotional distress (“IIED”). Judge Lozano (N.D. Ind.) dismissed all but the § 1983 fair trial claim on statute of limitations grounds. The court granted Parish's request for a Rule 54(b) certification. Parish appeals.

In their opinion, Judges Posner, Flaum, and Williams affirmed in part and reversed in part. Parish conceded, at oral argument, the propriety of the dismissal with respect to the claims for false arrest and false imprisonment. Thus, the only issue on appeal is the dismissal of the IIED claim. The parties agreed that the statute of limitations for the claim is two years from the date it accrued. The Court discussed four cases in its analysis of when an Indiana IIED claim accrues. In Heck, the Supreme Court held that a state prisoner could not bring a § 1983 suit for damages until his conviction was overturned. A judgment would have implied the invalidity of his conviction – the claim was therefore an improper collateral attack on the conviction. An Indiana appellate court followed Heck in Scruggs, when it dismissed false imprisonment claims. The Scruggs plaintiffs, still imprisoned, were also attacking the validity of their convictions. Next, in Wallace, the Supreme Court held that a claim for false arrest or false imprisonment requires a detention without legal process and therefore ends when legal process (e.g., appearance before a magistrate) is granted. The cause of action accrues at the same time -- when the false imprisonment ends. The Court distinguished Heck. Unlike in Heck, the Wallace claim for false imprisonment did not challenge the validity of a conviction. In fact, it did not even require a conviction. Finally, in Johnson, another Indiana appellate court concluded that a false arrest claim accrued at the time of arraignment (when process was granted) but that other claims of emotional discretion and invasion of privacy based on an unreasonable search accrued at the time of the search. Thus, the general rule requires an examination of whether the tort was complete before conviction (e.g., an IIED claim tied to an unreasonable search) or not (e.g. an IIED claim tied to a false conviction). If the former, the claim accrues upon completion of the tort. If the latter, the claim accrues upon completion of the tort unless it directly implicates the validity of the conviction. If it does, the claim does not accrue until the conviction has been lifted. Applying these principles to Parish's claim, the Court concluded that the IIED claims were not complete prior to conviction. In fact, the conviction was an integral part of Parish’s IIED allegations. The Court then concluded that the claim also attacks the validity of Parish's conviction and could not have been brought while the conviction was still outstanding. Parish brought the claim within two years of his exoneration – it is timely.

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SWEARNIGEN-EL v. COOK COUNTY SHERIFF'S DEPARTMENT (April 22, 2010)

Swearnigen-El was a black male guard in the women's division at the Cook County Jail. He had a run-in with the head of the division, who wanted the correctional staff in the women's division to be comprised totally of women. Swearnigen-El thought that belief was discriminatory and he reported his concerns to other supervisors. Shortly thereafter, Swearnigen-El found himself in trouble when a female prisoner's allegations that male guards were engaged in sexual activity with female prisoners launched an investigation. The Sheriff's Police conducted the initial investigation, followed by an investigation by the State's Attorney’s office. Several prisoners reported that Swearnigen-El was having sex with a female prisoner. The prisoner herself admitted the activity. Swearnigen-El was de-deputized and transferred for violating a General Order that forbids "activities unbecoming" an employee. He was later charged with sexual misconduct and suspended with pay. Before he had a termination hearing with the merit board, Swearnigen-El resigned. After he was acquitted of the criminal charges, he filed a complaint alleging gender discrimination, race discrimination, Title VII retaliation, First Amendment retaliation, malicious prosecution, and intentional infliction of emotional distress. The district court dismissed the Title VII retaliation claim and granted summary judgment to the defendants on all other claims. Swearnigen-El appeals.

In their opinion, Judges Wood, Evans, and Sykes affirmed. The Court first upheld summary judgment on all gender and race discrimination claims because there was no adverse employment action. Swearnigen-El was de-deputized and transferred after a internal investigation demonstrated evidence of misconduct. His pay was not affected and there was no evidence that the conditions were intolerable. The Court concluded that no reasonable jury could find a constructive discharge under those circumstances. Alternatively, the Court found that Swearnigen-El a) failed to establish sufficient evidence of race or gender discrimination to create a triable issue, and b) was not meeting his legitimate job expectations. Next, the Court considered the First Amendment retaliation claim. The principal speech at issue was Swearnigen-El's disagreement with his superior regarding the staffing of the women's division and his subsequent complaints to other officials that her actions constituted discrimination. The Court concluded that the speech was not protected -- Swearnigen-El was speaking not "as a citizen" but as a public employee under Garcetti. Again, the Court came to the alternative conclusion that no reasonable juror could find the defendants' actions pretextual. On the claim of malicious prosecution, the Court found sufficient evidence of misconduct after the investigation to establish probable cause. Since the absence of probable cause is an element of a malicious prosecution claim, Swearnigen-El's claim must fail. Finally, the Court agreed that there was no "outrageous" conduct that would amount to an intentional infliction of emotional distress claim and upheld the district court's dismissal of the Title VII retaliation claim on the ground that Swearnigen-El failed to include it in his EEOC charge.

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FOX v. HAYES (April 7, 2010)

Kevin and Melissa Fox and their children, six-year-old Tyler and three-year-old Riley, lived in a small town in Will County, Illinois, about 60 miles from Chicago. On June 6, 2004, Tyler woke his father up at about 8:00 a.m. and told him Riley was missing -- Melissa had spent the night in Chicago. Riley's lifeless body was found in a nearby forest preserve several hours later. Although the parties’ versions of the investigation vary wildly, the jury could have found the following. Will County detectives, including Scott Swearengen, conducted the investigation. At some point, Swearengen began to suspect Kevin. On October 26, the Foxes were asked to come to the station to talk about the case. Although they thought they were about to receive new information about the murder, they were mistaken. They were immediately separated. Melissa was locked in a waiting area and told that an officer would be with her shortly. Instead, she was left alone for almost 4 hours. Meanwhile, Kevin was taken to an interrogation room where Swearengen accused him of killing Riley. The officers falsely told Kevin that they had fiber evidence implicating him and a surveillance tape showing him driving his SUV during the night. Kevin took a polygraph examination, which the officers told him that he failed. When Melissa offered her love and support to Kevin, Detective Hayes started screaming. He screamed at his fellow officers to remove Melissa from the room, he screamed at Kevin that he was a "f***ing murderer," and he screamed at Melissa. Continuing to use a lot of profanity, he screamed at Melissa that Kevin was a liar and a murderer, that he never loved her, that he killed her daughter, and that she had to "get over it." After that episode, the detectives continued the interrogation of Kevin. Hayes told Kevin that if he did not confess, he would make sure that Kevin was raped every day he was in prison. At one point, Swearengen told Kevin that the state's attorney would give him a deal if he admitted that he accidentally killed his daughter. He told him he would be out on bond the very next day and wood only have to serve 3-5 years in prison. Kevin decided to go along with the story and "confessed." He immediately renounced the confession the next morning when he was allowed to meet with a lawyer. Months later, his defense team had the DNA evidence tested. The test results showed conclusively that the DNA found on Riley's body did not come from Kevin. Kevin was released the next day, after 243 days in jail. Kevin and Melissa brought suit under both § 1983 and Illinois law against several Will County detectives. Kevin's allegations included due process violations, false arrest, malicious prosecution, intentional infliction of emotional distress (IIED), and punitive damages. Melissa's claims include loss of consortium, IIED, and punitive damages. After a six-week trial, a jury awarded Kevin $9.3 million and Melissa $6.2 million. The trial judge struck some of the punitive damage award and dismissed the case against a detective whose estate had settled. The end result was an award of $12.2 million. The detectives appeal.

In their opinion, Judges Flaum, Evans, and Williams affirmed in part and reversed in vacated in part. The central issue on appeal is defendants' argument that they had probable cause to arrest Kevin and are therefore entitled to qualified immunity on all the counts except the IIED claim. In order to resolve that issue, the Court had to identify the earliest time that the jury could have found Kevin to be under arrest and then assess whether a reasonable jury could have found that the defendants lacked probable cause to arrest Kevin at that time. On the first question, the Court had little difficulty identifying a time early in the interrogation when Kevin tried to leave the room and was told to sit down. The fact that he did not specifically ask to leave is only one factor in the analysis. Here the other factors --whether he knew he was a suspect of a crime, whether his movement was limited, whether the officers were engaged in a course of conduct, and whether he was in a private location -- all support a conclusion that he was under arrest. With respect to the second issue, the Court examined the long list of facts that the defendants argued supported probable cause. After it eliminated from the list facts that were disputed, irrelevant, or mischaracterized, the Court concluded that a reasonable jury could have concluded that they fell short of probable cause. On the merits of the defendants' argument that the substantive due process claim could not stand, the Court agreed with the defendants. It is well settled that a substantive due process claim cannot prevail where state law provides an adequate post-deprivation remedy. The state law false arrest and malicious prosecution claims do exactly that here -- the jury verdict on the due process claim must be set aside. The Court next upheld the verdict on Melissa's IIED claim. Although it agreed that the evidence of Melissa's distress was weak, it concluded that Hayes' abuse of authority in a particularly emotional environment was enough to uphold the claim. Finally, the Court addressed certain damage awards. Although it upheld a $2.7 million award for Melissa's loss of consortium because it found a rational connection between the award and the evidence, it concluded that the $1 million award on the IIED claim was excessive because there it lacked such a connection. The Court also concluded that the $1.6 million false arrest award to Kevin was not supported by the evidence since the false arrest award only covered the period of time between his arrest and the first issuance of process (36 hours). Instead of a new trial, however, the Court ordered a remittitur to $150,000 on Melissa's IIED claim and $16,000 on Kevin's false arrest claim.

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LUCTERHAND v. GRANITE MICROSYSTEMS, INC. (April 28, 2009)

Mark Lucterhand was the Director of Global Operations for Granite Microsystems, Inc. (GMI). In late 2004, he fell and seriously injured his leg while at work. Daniel Armbrust, GMI's president, witnessed the accident but nevertheless forced Lucterhand to attend a scheduled business meeting. When finally allowed to do so, Lucterhand went to the hospital, had surgery and spent several days recovering. Armbrust fired Lucterhand a few days after he returned to work. Lucterhand sued GMI and Armbrust for intentionally terminating his employment in retaliation for exercising his FMLA rights. He also brought state law claims for false imprisonment and intentional infliction of emotional distress. Federal Insurance Company and Vigilant Insurance Company insured GMI under a variety of policies.. GMI tendered the lawsuit. The insurance companies refused the tender, intervened in the lawsuit, and sought and received a declaratory judgment that there was no coverage. GMI appeals.

In their opinion, Judges Ripple, Sykes and Tinder affirmed. Wisconsin law, which governs the suit, requires an insurer to defend an insured if the allegations of the complaint raise the possibility of coverage. The Court examined the allegations of the complaint to make that determination. The complaint contained allegations of intentional conduct -- that GMI intentionally terminated Lucterhand and that it intentionally inflicted emotional distress and falsely imprisoned him. Insurance policies generally do not cover losses that are the result of intentional conduct. Here, the policies cover losses incurred only as the result of an “accident." The Court recognized the debate between courts that hold that an act is an "accident" if the resulting damage is unintentional and courts that hold that an unintended consequence is irrelevant if the act itself was intentional. In fact, the Wisconsin Supreme Court issued two opinions recently on the issue. Although the decisions produced many different opinions and left some unresolved issues, the Court concluded that they provided enough guidance to resolve the case. The complaint alleges both the intent to act and an intent to harm. As such, the losses are not accidental and, under Wisconsin law, the insurance companies have no obligation to defend.

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