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

MCALLISTER v. PRICE (August 12, 2010)

Frank McAllister, who suffers from diabetes, was driving his car alone early one afternoon when he suddenly went into a severe hypoglycemic state. McAllister's car struck two other vehicles before coming to rest. Although McAllister was not injured, witnesses described him as staring into space and convulsing. Burns Harbor police officer Jerry Price responded. The dispatch advised Price that the accident may have been caused by an intoxicated driver. Price confronted McAllister. When McAllister failed to follow his instructions or respond to his questions, Price removed him from his car with force. According to a witness, Price threw him to the ground, put his full weight on his back, and handcuffed him. Eventually, and only after the suggestion of a bystander, Price checked McAllister for medical alert identification. He discovered a diabetes alert necklace on McAllister and released him. McAllister suffered from a broken hip and a bruised lung. He brought a § 1983 complaint against Price. Judge Van Bokkelen (N.D. Ind.) denied Price's request for summary judgment on qualified immunity grounds, concluding that there were genuine issues of material fact. Price brought an interlocutory appeal.

In their opinion, Judges Bauer, Flaum, and Tinder affirmed. A qualified immunity defense requires that a court answer two questions: whether there is a constitutional deprivation and whether the constitutional right was "clearly established" at the time. The Court first addressed the deprivation -- whether Price used excessive force. Three factors mattered: the degree of severity of any offense, whether the victim was a safety threat, and whether the victim was a flight risk. Before addressing the merits of the excessive force claim, the Court resolved two evidentiary issues. First, it concluded that the district court did not err in allowing evidence of McAllister's hip injury, even though there was no conclusive medical testimony that Price's actions caused the injury. Some causal evidence is all that is required for the jury to consider the evidence. Second, the Court concluded that the district court did not err in considering McAllister's diabetic condition. Although a police officer is not required to accommodate unknown conditions, here McAllister was obviously suffering from something and Price was trained in recognizing diabetes, trained in recognizing intoxication, and trained to look for medical alert identifications. On the merits of the constitutional deprivation question, the Court concluded that there was sufficient evidence for a jury to conclude that the amount of force used was excessive. On the second question, the Court concluded that the case law in effect at the time of the incident was sufficient to "clearly establish" McAllister's rights to be free from the excessive force as alleged.

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WALKER v. MONSANTO COMPANY PENSION PLAN (July 30, 2010)

Prior to 1997, Monsanto's employees had a variety of the retirement plan benefits. All employees had an age-65 benefit, but some employees had a discounted early retirement option while others had a subsidized early retirement option. Monsanto standardized and restructured its retirement plan in 1997 from a traditional plan into a cash balance plan. It created two accounts for each employee -- one that reflected benefits already earned at the time of the restructuring (the Prior Plan Account or PPA) and one to reflect newly earned benefits. The opening PPA balance was arrived at by converting the prior plan annuity amount to a lump sum equivalent and then discounting the amount by 8.5% per year for each year under 55 the employee was at the time of restructuring. Once the PPA was created, its balance increased through pay credits (4% per year law while employed) and interest credits (8.5% per year until age 55). It granted to all employees the subsidized early retirement option that only some of them had previously had. For the first time, it also gave employees an opportunity to receive retirement benefits before the age of 55. A number of Monsanto employees filed lawsuits, which were then consolidated. The employees allege that the restructured plan violates ERISA's prohibition on reducing an employee’s benefit accrual when the employee reaches a certain age. Judge Gilbert (S.D. Ill.) granted summary judgment to defendants. Plaintiffs appeal.

In their opinion, Judges Bauer, Flaum, and Evans affirmed. The plaintiffs claim that the 8.5% interest credit is a "benefit accrual" under ERISA and that termination of that benefit once an employee reaches the age of 55 violates the statute. The Court noted that ERISA prohibits a plan from reducing "an employee’s rate of benefit accrual" but does not define "benefit accrual." Benefit accrual depends, in part, on the type of plan at issue. Many cash balance plans operate like defined contribution plans. In those situations, the court must look to the annual additions to the employee’s hypothetical account. The Monsanto plan, however, operates like a defined benefit plan. Here, the court should look instead to the total accrued benefit at retirement. The Court looked at the total benefit at retirement under various scenarios and concluded that the Monsanto interest credits do not increase the employee’s total benefits. They are therefore not "benefit accruals" under ERISA and their termination at age 55 does not violate ERISA.

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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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MOSLEY v. CITY OF CHICAGO (July 29, 2010)

It was mid-summer 1999 when Jovan Mosley and three other individuals were standing near the porch of a friend when Howard Thomas walked by. The four of them ran at Thomas. Thomas was beaten to death and the four of them left the area together. All four were arrested and charged with murder. The police took statements from them as well as several eyewitnesses. One eyewitness, Anton Williams, viewed Mosley in a lineup and identified him as a person who was on the scene. The lineup was not documented until 15 months later and the report does not what Williams said about Mosley's particular role in the murder. Another eyewitness, Gregory Reed, implicated all four of the defendants in the beating and specifically identified Mosley as having participated. Reed never testified at trial because he admitted to the prosecutor just before trial that he was quite drunk the night of the incident and had no independent recollection. Mosley remained in jail for over five years until he was tried and acquitted by a jury (see this for commentary on that delay). He brought a § 1983 action against the City of Chicago and several individual police officers who were involved in the investigation. He alleged a due process denial for the withholding of exculpatory evidence, malicious prosecution, and civil conspiracy. Judge Coar (N.D. Ill.) granted summary judgment to the defendants. Mosley appeals.

In their opinion, Judges Flaum, Rovner, and Wood affirmed. The Court first addressed the main issue, the failure to produce exculpatory evidence under Brady. The claim has two parts: a) that the prosecutors did not inform Mosley that Williams told the police at the lineup that Mosley did not participate in the beating, and b) that the prosecutors did not tell Mosley that Reed admitted to being drunk on the night of the incident. The Court noted the "logical tension" in a Brady claim when the case results in an acquittal. The normal test for a Brady claim is that the non-disclosed evidence could put the case in a different light and undermine confidence in the verdict. That test makes no sense when the verdict is an acquittal. In fact, the Court noted that several circuits have concluded that a Brady claim cannot exist after an acquittal. The Court has reserved answering that question in the past and did so again. In Bielanski, the Court concluded that the elements of a post-acquittal Brady claim, if one even exists, are a) the withholding of material and favorable evidence, and b) that would have changed the prosecutor’s decision to try the case. Since Mosley cannot meet either element, his Brady claim fails. With respect to the lineup, the Court concluded that there was literally no evidence in the record that Williams told police that Mosley did not participate in the crime. Other than a one-word answer to a leading question on cross-examination, his testimony was inconsistent with that conclusion. In addition, even if it was said, the prosecutors approach would not have changed. It did not have to prove that Mosley actually participated to prevail on the accountability theory it was pursuing. With respect to Reed being drunk, the prosecutor had no obligation to disclose the statement since Reed never testified at trial. The Court next addressed the state malicious prosecution claim, one of the elements of which is the lack of probable cause. The Court had no difficulty in concluding that the district court's finding that probable cause existed was correct. Finally, with respect to the civil conspiracy claim, the Court pointed out that Mosley offered no evidence of the common scheme element of the conspiracy claim. At the summary judgment stage, Mosley cannot rest on the allegations of his complaint but must come forward with evidence.

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MEDMARK CASUALTY INSURANCE CO. v. AVENT AMERICA (July 15, 2010)

Avent America manufactures a number of products for children and babies. Several class actions have been filed against Avent alleging a) that certain Avent products contain Bisphenol-A (“BPA”), b) that Avent was aware of research indicating that BPA was harmful, c) that Avent claimed their products were safer than its competitors', and d) that plaintiffs suffered economic damages because they stopped using the products once they learned of the risk of harm. The complaints contained no allegations of actual bodily injury to the plaintiffs. In fact, Avent moved to dismiss the complaints because they lacked sufficient allegation of injury. The court did dismiss all but the unjust enrichment counts for any plaintiff who either used or disposed of the product before learning of the BPA -- concluding that those plaintiffs were unaffected by the alleged concealment. Meanwhile, Avent tendered the cases to a number of insurance carriers who had provided general commercial liability insurance over the relevant years. The language in each of the policies was substantially the same and provided coverage for damages "because of bodily injury." The carriers denied coverage and suit was filed. Judge Leinenweber (N.D. Ill) held for the carriers because of the absence of any allegation of bodily injury in the underlying complaint. Avent appeals.

In their opinion, Judges Flaum, Wood, and Hamilton affirmed. The Court began with the familiar Illinois standard for a duty to defend -- the duty to defend arises if the complaint’s allegations are even potentially within the scope of coverage. The Court considered and rejected the carriers' argument that Avent was judicially estopped from arguing that the underlying complaint alleged bodily injury when it argued in its motion to dismiss that the complaint did not allege bodily injury. Cautioning that a court must be careful in applying judicial estoppel in duty to defend cases, the Court found that Avent's argument was not in direct tension with its prior position. On the merits, the Court agreed with the carriers. The theory of relief stated in the complaints was for economic harm -- had the plaintiffs known of the risk of harm of BPA, they would not have purchased the product. There is a total absence of any claim of bodily injury, direct or indirect. The "because of" language in the policies may broaden the umbrella of coverage over a simple "bodily injury" policy, but the damages in such a case must be related somehow to bodily injury. Here, they are not. The Court recognized that the complaints could be amended in the future to include allegations of bodily injury. The Court noted that the carriers admitted during oral argument that they would have to reassess their coverage positions in such a case.

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HABITAT EDUCATION CENTER v. U.S. FOREST SERVICE (June 29, 2010)

The federal government has been managing over 1,000,000 acres of forest in the Chequamegon-Nicolet National Forest in northern Wisconsin for almost 100 years. In the last eight years, the U.S. Forest Service has proposed 17 different timber sale projects. Habitat Education Center has administratively challenged almost every project. One of those projects is the Twentymile sale, announced in 2004, covering almost 9,000 acres. The Center argued that the sale, particularly in conjunction with a prior sale on immediately adjacent property, would have a negative impact on wildlife. The Forest Service authorized the project in February of 2007 over the Center's objections. The Center's administrative appeal was also unsuccessful. They filed suit in June 2007, contending that the Forest Service' environmental impact statement failed to consider the cumulative impacts of "past, present, and reasonably foreseeable future actions," in violation of the National Environmental Policy Act (NEPA). In November of 2008, just before argument on cross motions for summary judgment, the Forest Service announced another sale, the Twin Ghost project, on immediately adjacent property. Judge Adelman (E.D. Wis.) asked for supplemental briefing but ultimately concluded that the project was not "reasonably foreseeable" under NEPA at the time of the Twentymile project authorization and granted summary judgment to the Forest Service. The Center appeals.

In their opinion, Circuit Judges Flaum and Wood and District Judge St. Eve affirmed. The Court first addressed the Forest Service's argument that the Center forfeited any claim with respect to the Twin Ghost project by not raising it in the administrative process. Instead of addressing the Center's possible forfeiture, the Court concluded that the Forest Service waived the forfeiture argument by not raising it sufficiently in the district court in the supplemental briefing. On the merits, the Court noted that several of its sister circuits (specifically citing cases from the 1st, 3rd, 9th, and 11th) have held that the effects of a contemplated project need not be discussed if there is not yet a meaningful basis for assessing the impact of the project. The Court concurred with that approach. At the time the Twentymile project was approved, the Service had not even identified the goals of the Twin Ghost project. Of course, as the Court noted, the Twin Ghost project assessment must include a thorough analysis of the cumulative effects of the Twin Ghost and Twentymile projects. Any negative cumulative effects can be addressed during that process. Finally, the Court did concede that the better practice would have been for the Service to disclose the current state of contemplated future projects, even if a thorough analysis was not possible.  

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PICKETT v. SHERIDAN HEALTH CARE CENTER (June 25, 2010)

Danielle Pickett was employed as a housekeeper at the Sheridan Health Care Center in Zion, Illinois. In 2005 and 2006, she was the victim of several incidences of inappropriate remarks and touching by nursing home residents. Although the Center responded to her complaints, the promised response never quite succeeded. In a June 2006 meeting with several Center staff members, the Center agreed to reassign Pickett from cleaning residents' rooms, although, according to Pickett, the Center's VP of Operations suggested that Pickett invited the inappropriate conduct. The next morning, Pickett had a very emotional conversation with the Center's Administrator. According to Pickett, the Administrator said some things that indicated that her job may be in jeopardy. The meeting ended with Pickett still upset and in tears. Instead of resuming her assigned tasks, she left the Center. She called the Administrator the next day to ask if she still was employed. He consulted with the VP of Operations and advised Pickett that she no longer had a job. Beginning about a month later, after Picket filed an EEOC claim, the Center offered on several occasions to reinstate Pickett. She refused several such offers but eventually returned to the Center in January of 2007. She brought suit against the Center for sexual harassment and for retaliatory firing under Title VII. Judge Pallmeyer (N.D. Ill) granted summary judgment to the Center on the harassment claim. The retaliation claim went to trial. The jury found for Pickett and awarded $15,000 in compensatory and $50,000 in punitive damages. The court awarded back pay and injunctive relief. The Center appeals.

In their opinion, Judges Flaum, Kanne, and Evans affirmed. The Court first rejected the Center's argument that Pickett could not prevail on the retaliation claim because she could not prevail on the harassment claim. In order to prevail on retaliation, a plaintiff need only show statutorily protected conduct, adverse action, and a causal link. The Court found that there was sufficient evidence of each of those elements in the record -- the jury was entitled to find in Pickett's favor. Each of the Center's other arguments was also rejected: a) counsel’s "send some message" language in closing argument was not improper, b) the compensatory damage award was not excessive and did not require corroborating evidence from a third party, and c) the court did not abuse its discretion in allowing the punitive award to stand in light of the evidence that supported a conclusion that the Center knew it might be retaliating when it terminated Pickett's employment.

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ANDERSON v. BAYER CORP. (June 22, 2010)

Bayer Corporation manufactured a prescription medication called Trasylol. A lawyer in St. Clair County, Illinois brought suit against Bayer alleging personal injury resulting from the use of the medication. The action was brought in five separate complaints with 171 plaintiffs spread among the complaints. All but one (the one apparently a mistake) of the virtually identical complaints named fewer than 100 plaintiffs. Bayer removed, citing the "mass action" removal mechanism of the Class Action Fairness Act ("CAFA"). Judge Murphy (S.D. Ill) remanded the four complaints that had fewer than 100 plaintiffs. Bayer petitioned to appeal under CAFA.

In their opinion, Judges Flaum, Manion, and Evans denied the petition. CAFA's "mass action" provision allows a defendant to remove an action if it has 100 or more plaintiffs and otherwise meets CAFA’s removal requirements. The provision specifically excludes an action in which claims are consolidated upon the request of a defendant. The Court found this plain language of the statute dispositive of Bayer's request. Apparently, Congress anticipated this very situation and decided to allow plaintiffs to proceed in state court by limiting each complaint to fewer than 100 plaintiffs. Although the Court concluded that CAFA removal was not available, it did note that the claims could be removable in the future if, for example, the claims were consolidated for trial. The Court declined to consider Bayer's alternative argument that diversity jurisdiction existed under a fraudulent misjoinder theory. The exception to the general rule prohibiting review of a remand order that allowed the Court's review of the "mass action" argument applies only to the remand of class actions. Since these cases are not class actions under CAFA, the Court lacks jurisdiction to review the district court's decision regarding fraudulent joinder.

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ALVAREZ v. CITY OF CHICAGO (May 21, 2010)

A group of Chicago Fire Department paramedics brought a collective action under the Fair Labor Standards (FLSA) against the City of Chicago. The complaint alleged that this City violated the FLSA by not properly calculating overtime payments. The plaintiffs identified ten different ways the City allegedly miscalculated overtime pay, not all of which applied to each paramedic's situation. Over three hundred paramedics eventually opted into the collective action. When several were dismissed for failure to opt in in time, they filed their own individual suit with the same allegations. The two cases were consolidated. Judge Hibbler (N.D. Ill.) granted summary judgment to the City as against all plaintiffs. He concluded that the fact that each plaintiff would use a different combination of the various alleged miscalculations prevented them from being similarly situated. He also directed the plaintiffs to arbitrate their complaints, even though he recognized that arbitration under the collective bargaining agreement was not mandatory. The plaintiffs appeal.

In their opinion, Judges Cudahy, Flaum, and Evans reversed and remanded. The Fair Labor Standards Act allows employees to bring complaints as collective actions, on behalf of themselves and others similarly situated. Although a district court is given substantial discretion to manage collective actions, the Court concluded that the district court had misinterpreted a prior case. In Jonites, the Court had found a collective action inappropriate in a situation requiring significant individual fact-finding. Here, although different plaintiffs would be affected by different sub claims, very little individual fact-finding will be required. In addition, the Court concluded that the district court erred in comparing the efficiency of the collective action to arbitration. If the plaintiffs are willing to proceed individually, the proper comparison is between those individual actions and a collective action. Finally, even if a collective action is unwarranted, the proper remedy is not to dismiss the action but to convert it to individual actions.

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FINCHER v. SOUTH BEND HERITAGE FOUNDATION (May 10, 2010)

The South Bend Housing Authority (SBHA) evicted Marshall Fincher from one of its public housing units. Fincher then requested tenancy, under Section 8 of the United States Housing Act, in a building owned by the South Bend Heritage Foundation (SBHF). Based on the eviction, SBHF denied his application without a hearing. Fincher brought suit against SBHF. The district court granted summary judgment to SBHF, concluding that Fincher did not have a property interest in any specific SBHF housing and that he failed to identify any contract term between SBHF and HUD for which he was a claimed third-party beneficiary. Fincher appeals.

In their opinion, Circuit Judges Flaum and Wood and District Judge St. Eve affirmed. The Court noted that its 1984 decision in Eidson v. Pierce held that there was no property interest for a Section 8 applicant for a housing unit. Considering Fincher's request that Eidson be overruled, the Court reviewed the analysis of the case and noted that another circuit had expressly adopted its reasoning. The only circuit to squarely contradict the case did so in 1982 -- and its reasoning was considered and rejected in Eidson. The Court distinguished the few other cases brought forth by Fincher. Finding that Eidson was well reasoned and seeing no significant changes in the law since its publication, the Court declined to overturn it. With respect to the third party beneficiary claim, the Court agreed with the district court that Fincher cited no contract term or federal housing regulation that gives rise to any enforceable right.

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WEST BEND MUTUAL INSURANCE CO. v. UNITED STATES FIDELITY AND GUARANTEE CO. (March 25, 2010)

MDK owned a gasoline station in Goshen, Indiana. In 1996, it discovered that one of its underground gasoline storage tanks was leaking. Several years later, a group of nearby residents allegedly affected by the release sued MDK for personal injury and property damage. MDK requested coverage from its insurers, including West Bend Mutual Insurance Company ("West Bend") and Federated Mutual Insurance Company "(Federated"). West Bend agreed and eventually settled the case for $4 million. Federated declined based on its policy's pollution exclusion and other limitations. West Bend sued Federated. The district court granted summary judgment to Federated, concluding that the policy’s Pollution Exclusion provided a defense to coverage and that the Products-Completed Operations Hazard coverage did not obligate Federated to provide coverage. The court did not address whether the Known Loss Exclusion affected coverage. West Bend appeals.

In their opinion, Judges Flaum, Williams, and Sykes (dissenting) affirmed. The Court identified its task as to construe the policy as a whole, giving words their ordinary meaning, and construing any ambiguities against the insurer. The principal focus of the Court's approach was the Indiana Supreme Court's decision in American States. That case also dealt with a release from a gasoline storage tank. The policy in question contained a Pollution Exclusion that excluded coverage for certain losses arising out of the release of "pollutants." The definition of "pollutants" was identical to that in the Federated policy and did not mention motor fuels or gasoline. The Indiana Supreme Court found that the policy did not unambiguously identify gasoline as a pollutant. It resolved the ambiguity against the insurer and found coverage to exist. Although the definition of "pollutant" was identical in the policies, the Court noted that the Federated policy's Pollution Exclusion did include "motor fuels," which included gasoline. Thus, the Court concluded that the Federated Pollution Exclusion unambiguously and explicitly excluded gasoline contamination from the policy's coverage. The Court proceeded to consider both the excess liability coverage and the Products-Completed Operations Hazard coverage as possible sources for coverage. It concluded that; a) the excess coverage was coextensive with the primary coverage, and thus also excluded gasoline contamination, and b) the Products-Completed Operations Hazard coverage did not cover the loss. That coverage only applies to abandoned product and knowingly completed market transactions, neither of which is present here.

Judge Sykes dissented. She concurred with the majority's treatment of the policy’s Pollution Exclusion but disagreed with its treatment of the Products-Completed Operations Hazard coverage. Specifically, she disagreed that the case relied upon by the majority created a general rule of insurance law that the coverage only applies to abandoned product or knowingly completed market transactions. Without that general rule, Judge Sykes would conclude that the plain policy language covers the loss.

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SCHMIDT v. EAGLE WASTE & RECYCLING (March 22, 2010)

Eagle Waste & Recycling hired Tammy Schmidt as a sales representative. Eagle is in the business of residential and commercial waste removal services. Schmidt spent most of her time outside the office on sales calls. When she was in the office, she managed her sales calls and plans, she worked on marketing and advertising plans for the business, she was responsible for customer service and customer database maintenance, and she ordered parts and authorized repairs. Schmidt was compensated with a base salary and a commission. Schmidt brought an action under the Fair Labor Standards Act for overtime. Eagle filed for summary judgment – Schmidt responded but not in accordance with local rules. When Eagle pointed out the error, Schmidt sought to modify her response but she waited two weeks and did not file her proposed modification with her request. The court denied her request and granted summary judgment to Eagle. Schmidt appeals.

In their opinion, Judges Posner, Flaum, and Sykes affirmed. The Court first addressed the procedural issue. It remarked that it “routinely” affirms district courts’ strict adherence to the local rules regarding summary judgment. Particularly here, where Schmidt did not respond quickly after she became aware of the error, the district court did not abuse its discretion. On the merits, the Court noted that an “outside salesperson” is exempt from the overtime requirements of the FLSA. An outside salesperson is one whose primary duty is making sales and who is regularly engaged in activity outside the office. Although it is the employer’s burden to prove the exemption and the exemption is narrowly construed against the employer, the Court concluded Schmidt was exempt. She spent the majority of her time outside the office and much of her work at the office was incidental to her outside sales work. Alternatively, the Court concluded that Schmidt was exempt under the FSLA’s combination exemption, which exempts persons who perform a combination of otherwise exempt duties. The majority of Schmidt’s non-sales duties were duties that are exempt under the administrative employee exemption. If she does not qualify as exempt purely on the basis of her sales work, she certainly does on the basis of her combined sales and administrative work.

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SANDRA T.E. v. GRINDLE (March 17, 2010)

Three female elementary school classmates at Pershing Elementary School attended a seminar on "inappropriate touching" at their school in May of 2001. After the seminar, they wrote a short letter to the presenter stating that they were uncomfortable with the conduct of their band teacher. The presenter shared the note with Karen Grindle, Pershing's principal. Although Grindle met with the band teacher, the students, some parents, and the school's social worker, the accounts of their meetings varied. The allegations are that Grindle downplayed the significance and the seriousness of the accusations. Additional incidents surfaced in January and April of the following year. Again, Grindle is alleged to have minimized the significance of the incidents. One of the students who wrote the original letter in 2001 revealed to her mother, in 2005, her version of what happened. Her mother informed the police, a criminal investigation was launched, other victims came forward, and the band teacher pleaded guilty to multiple counts of aggravated criminal sexual abuse. Several of the children and their parents filed an action pursuant to section 1983, alleging a violation of their equal protection and substantive due process rights. The district court granted summary judgment on the section 1983 claim to all defendants except Grindle and the band teacher. Grindle appeals.

In their opinion, Judges Flaum, Rovner, and Hamilton affirmed. The basis of Grindle's appeal is her claim to qualified immunity. The Court recited the familiar two-part test: whether a constitutional right was violated, and whether the right was "clearly established" at the time of the conduct. With respect to the equal protection claim, the Court concluded that well-developed law at the time of Grindle's conduct held that a supervisor could be liable for deliberately ignoring an equal protection violation of her subordinate. In addition, the sexual harassment by the subordinate was a well-established equal protection violation. The Court concluded that plaintiffs presented sufficient evidence from which a jury could infer that Grindle intentionally discriminated against the girls to withstand summary judgment. With respect to the substantive due process claim, Grindle argued that she had no duty to protect the students from the abuse at the hands of the band teacher. The Court agreed that state officials do not generally have an obligation to protect citizens from violence, but noted the "special relationship" exception to that rule. Although the Court agreed that it had once rejected the "special relationship" theory in the student context, it also noted that the Third Circuit held otherwise in Stoneking. The Stoneking decision has been recognized in the circuit as one that is viable and, in fact, has been followed on several occasions in the district courts of the circuit. The Court concluded that a reasonable elementary school principal should have concluded that she could be liable for ignoring, or even covering up, a teacher's sexual abuse of a student. Finally, the Court noted that the plaintiffs allege that Grindle's own actions establish the constitutional violation, and not just her mere failure to act or prevent. Thus, they meet the test of Iqbal.

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REGER DEVELOPMENT v. NATIONAL CITY BANK (January 20, 2010)

Reger Development is an Illinois real estate development company. In 2007, the company opened a $750,000 line of credit with National City Bank. The company signed a promissory note and provided the personal guarantee of its principal, Kevin Reger. In several places, the note makes reference to the fact that it is payable "on demand." The company made its payments in a timely manner for the first year. Nevertheless, the bank asked it to pay down $125,000 of principal. Reger did so. A month later, the bank advised Reger that it was reducing the amount of the line of credit and also wanted to restructure some of the principal and secure it with a mortgage. The bank told Reger that it was possible that they would demand payment of the entire amount if he did not agree to the modifications. Reger brought suit, alleging breach of contract and fraud. The district court dismissed the case for failure to state a claim. Reger appeals.

In their opinion, Judges Flaum, Williams, and Sykes affirmed. The Court noted that Illinois law generally implies a covenant of good faith and fair dealing in a contract. It does not apply, however, to demand notes. Reger argued that general references to due dates and default provisions in the note were inconsistent with a demand instrument. The Court noted the repeated and explicit references in the instrument to National City's right to demand payment at any time. The note is clearly and unambiguously a demand note, concluded the Court. Since it is a demand instrument, the bank's insistence on modifications did not amount to a breach. With respect to the fraud count, the Court focused on the intent element. It stated that Reger must establish that the bank intended to and did induce him. In order to meet that element, Reger asked the court to infer that the bank intentionally drafted ambiguous documents so as to mislead him. The Court had already considered the ambiguity of the document with respect to the breach of contract claim. Not only had it not found it ambiguous, it found it rather straightforward. Reger failed to allege the element of intent with the particularity necessary in a fraud count -- the dismissal of that count is affirmed.

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KNIGHT v. WISEMAN (December 22, 2009)

Shortly before Rick Knight began serving a prison term, he had surgery on his shoulder. Although he had no medical work restrictions, he did advise prison personnel of the surgery and some lingering pain. Nevertheless, several months later, he was transferred to a work camp. Prison inmates at the work camp participate in the work gangs, typically trimming trees and picking up roadside logs. At the camp, Knight participated in several work details without complaint, although he was generally successful in finding the less-strenuous tasks. On February 16, Knight was assigned to a work gang with Officers Wiseman and Wiedau. Although Knight again selected easier tasks, the officers insisted he do more. They were unaware of his shoulder complaints. The result -- he re-injured his shoulder throwing a log. A third officer returned Knight to the camp, although he took a short detour to run an errand on the way. Knight was diagnosed with a torn rotator cuff. He brought suit against the two officers pursuant to § 1983, alleging violations of this Eighth and Fourteenth Amendment rights. The district court granted summary judgment to the officers, concluding that they did not act with deliberate indifference. Knight appeals.

In their opinion, Judges Flaum, Manion and Wood affirmed. Two elements are required to state a claim for an Eighth amendment violation. There must be a serious medical condition and the plaintiff must demonstrate deliberate indifference on the part of the prison official to that condition. Deliberate indifference requires a showing that the defendant was actually aware of the serious medical condition. Here, there is no evidence in the record that the officers were aware of Knight's condition when they first ordered him to work. Although one of the officers ordered Knight back to work after his first complaint of pain, he quickly retracted his order when he realized the seriousness of Knight's injury. Finally, the Court rejected Knight's argument that the few hour delay in receiving treatment, including the brief detour, amounted to deliberate indifference. Such a claim would require medical evidence that showed his condition deteriorated due to the delay, which does not exist here.

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PRO'S SPORTS BAR & GRILL v. CITY OF COUNTRY CLUB HILLS (December 16, 2009)

Pro's Sports Bar & Grill is located in Country Club Hills, Illinois. Pro's submitted an application for a liquor license. Pursuant to local procedure, the City Council considered an ordinance on November 26, 2007 for the granting of that license. There is significant dispute about what happened at the council meeting. At a minimum, there is confusion about the formalities undertaken. There certainly was discussion about granting a license with limited hours. In any event, at the end of the meeting, an ordinance granting the license was approved. A Class A license with regular hours was issued. Shortly thereafter, however, the license was reissued as a Class A-1 license (a category of license not even defined in the municipal code). The local police began enforcing the license as if it had the limited hours which were discussed in the earlier council meeting. In 2008, when Pro's applied for a reissuance of the license, it was issued with limited hours, even though the normal practice is to be issued a license on its original terms and conditions. Pro's filed suit pursuant to § 1983, alleging a violation of its procedural due process rights. The court granted a preliminary injunction prohibiting the enforcement of the limited hours. The City of Country Club Hills appeals.

In their opinion, Judges Flaum, Manion and Wood affirmed. The Court started with its two-part test for approaching a procedural due process claim. It first identifies whether there is a protected liberty or property interest and then asks whether a party was deprived of its interest without due process. The principal issue in dispute was whether the original license contained the limited hours. If it did, the renewal did not result in any deprivation. If it did not, the renewal restrictions would have resulted in a deprivation. The bare language of the original ordinance granted an unrestricted license. The Court found the language of the ordinance unambiguous and rejected the defendants' argument that it should be interpreted otherwise because of either the intent of the City Council or because it was a scrivener's error. Having found a deprivation of the property interest, there was little dispute about the City's failure to provide adequate process -- since it provided none. Finally, the Court found no error in the lower court's balancing of the preliminary injunction factors.
 

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JOHNSON v. WAL-MART STORES (December 1, 2009)

Candace Johnson visited her local Wal-Mart store in January 2008. Although she did not possess a Firearm Owners Identification Card, a salesclerk nevertheless sold her some bullets. Tragically, Candace Johnson then shot and killed herself. Her husband and the administrator of her estate, Mark Johnson, sued Wal-Mart for negligence and wrongful death. The district court dismissed the claims on the ground that suicide is an independent intervening event, negating proximate cause. Johnson appeals.

In their opinion, Judges Cudahy, Flaum and Evans affirmed. The Court recited the traditional elements of a negligence claim: a duty, a breach, and proximate cause. Historically, Illinois courts have found that suicide is unforeseeable and its presence breaks the chain of causation that is necessary for probable cause. The Court agreed that the sale of the bullets violated federal law and amounted to prima facie evidence of negligence, since the federal law is a public safety statute. The Court concluded, however, that Illinois courts continue to find that suicide breaks the chain of causation.

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LITTLE COMPANY OF MARY HOSPITAL v. SEBELIUS (November 24, 2009)

Little Company of Mary Hospital (the "Hospital") participates in the federal Medicare program. Because it serves a disproportionate number of low-income patients, it is entitled to an adjustment to its payments based on a formula that takes into account both Medicaid patient-days and Supplemental Security Income patient-days. Under the reimbursement scheme, the hospital submits its reports and its assigned Intermediary reviews and issues a Notice of Program Reimbursement (NPR). The NPR is final if not appealed within 180 days. Beyond the direct appeal process, however, an Intermediary can reopen a specific issue within three years, on its own or at a provider's request. The Intermediary then issues a revised NPR. The revised NPR is subject to the same appeal rights, but only with respect to those issues actually reopened. The Hospital did not appeal the NPR issued in September 2000, covering the period ending June 1998. It did, however, request a reopening within three years. It requested a recalculation of both its Medicaid and SSI patient-days. The Intermediary granted the reopening with respect to Medicaid patient-days but did not mention SSI patient-days. When the Intermediary issued its revised NPR with adjusted Medicaid days, the Hospital appealed with respect to both the revised Medicaid days and the refusal to adjust SSI days. After it exhausted its administrative remedies without success, the Hospital filed suit. The court denied the Hospital's requested discovery and granted summary judgment against it. The Hospital appeals.

In their opinion, Judges Posner, Flaum and Rovner affirmed. The Court identified the issue as whether the intermediary reopened the SSI calculation when it reopened the Medicaid calculation. If the SSI calculation was never reopened, it is not subject to appeal. The Hospital argues that the SSI calculation was reopened -- but that the Intermediary simply denied relief. The Court relied on the Intermediary's notice of reopening. The notice of reopening is required by the regulations and here gave the Hospital notice that the Intermediary was reopening the Medicaid calculation. It did not provide notice of a reopening of the SSI calculation. The Court concluded that the silence with respect to the SSI calculation indicated that it was not reopened. With respect to the discovery requests, the Court concluded that the district court did not abuse its discretion. The general rule is that administrative review is confined to the administrative record. The Hospital failed to make its case for an exception.

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MONCEF LAOUINI v. CLM FREIGHT LINES, INC. (August 20, 2009)

Moncef Laouini, an Arab from Tunisia, worked as a truck driver for CLM until he was fired in 2006. He sued the company under Title VII for race and national-origin discrimination. He alleges that he filed a charge with the EEOC on April 12, 2007 (a date that both parties agree was the deadline). The EEOC's record of the charge indicates that it was not processed until April 16. CLM moved to dismiss the complaint as untimely. Laouini responded with an affidavit from his lawyer. The affidavit indicated that either the lawyer or his assistant faxed the charge to the EEOC on April 12. Laouini also submitted a printout of the confirmation from his lawyer’s fax machine indicating that a three-page document had been transmitted to the EEOC's fax number on April 12. The district court converted the motion to dismiss into a motion for summary judgment and granted summary judgment to CLM. Laouini appeals.

In their opinion, Judges Flaum, Kanne and Wood vacated and remanded. The Court began by noting that the failure to file a charge in a timely manner is an affirmative defense and the burden is on CLM to demonstrate an absence of a genuine issue of material fact. The Court moved on to the significance of the fax confirmation, an issue not yet addressed by the Court. The Court noted that several other courts have concluded that a fax confirmation creates a rebuttable presumption that the fax was, indeed, received by the intended recipient. Other courts have stopped short of that, but treat the fax confirmation as creating an issue of fact on the question of receipt. The Court concluded that the fax confirmation was strong evidence of receipt and that CLM presented no evidence to the contrary. Summary judgment was therefore inappropriate.

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NEMSKY v. CONOCOPHILLIPS COMPANY (August 3, 2009)

George Nemsky had been an engineer at ConocoPhillips’ Wood River Refinery for over twenty years and had a solid reputation. He was represented by Local 399 of the International Union of Operating Engineers (the Union). In 2004, ConocoPhillips adopted a substance abuse policy which provided for random drug and alcohol testing. It also provided that any employee who had a confirmed positive test result would be terminated. Although the Union filed a collective grievance over the company's adoption of the policy as well as an unfair labor practice charge, it eventually entered into a Memorandum of Agreement with the company in which it agreed not to grieve a termination under the policy. In 2006, Nemsky was selected for a random drug and alcohol test shortly after he used solvent to remove cement from his shoes. The test came back as a confirmed positive. ConocoPhillips terminated Nemsky's employment. The Union indicated its intent to arbitrate his termination. Nemsky filed an action against the Union and ConocoPhillips with the NLRB, complaining that the Union and ConocoPhillips never arbitrated his termination. Nemsky filed suit against both ConocoPhillips and the Union. Nemsky alleged that ConocoPhillips breached the Collective Bargaining Agreement and that the Union had breached its duty of fair representation. The district court granted summary judgment to defendants. Nemsky appeals.

In their opinion, Judges Flaum, Wood and Tinder affirmed. The Court identified Nemsky's claim as a "hybrid 301" action. In such an action, Nemsky must prevail on both his claim that the company breached the Collective Bargaining Agreement and his claim that the Union breached its duty of fair representation. The Court first addressed the fair representation claim. In order to prevail on that claim, the Court noted that Nemsky must show that the Union’s conduct was arbitrary or discriminatory or in bad faith. Nemsky argued that the Union acted arbitrarily in agreeing to the Memorandum of Understanding. The Court concluded otherwise. The Union’s unfair labor practice charge had been dismissed and no other union in the country had been successful in challenging the company's policy. The Court did, however, note that there was evidence that the Union failed to arbitrate Nemsky's termination after he filed his charges. The Court concluded that that was enough to preclude summary judgment on the fair representation aspect of Nemsky's claim. With respect to the company's breach however, the Court concluded that the Union’s agreement to the Memorandum of Understanding defeated any allegation that Nemsky's termination was a breach of the Collective Bargaining Agreement. Since he was required to prevail on both aspects of the hybrid claim, the Court affirmed the lower court's ruling.

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WOLF v. KENNELLY (July 23, 2009)

Ford Kennelly, an Indiana citizen, received a $1.3 million arbitration award, jointly and severally, against commodities brokers Rosenthal Collins Group ("RCG") and Ken Wolf. Wolf filed a petition to vacate in state court. He included a request for declaratory relief against RCG, alleging that RCG had made a demand for indemnity against him. Kennelly removed the petition to federal court and asked that RCG be realigned as a petitioner. RCG was an Illinois citizen. Its presence as a defendant prevented removal. Wolf moved to remand, opposing the realignment of RCG. Several months later, the parties discovered that one of RCG's limited partners was an Indiana citizen. Since Kennelly was also an Indiana citizen, diversity would be destroyed if RCG was realigned as a petitioner. The district court granted the motion to remand. The court then denied Wolf's request for attorneys' fees, concluding that the case was an exceptional one not warranting a fee award. Wolf appeals.

In their opinion, Judges Bauer, Flaum and Kanne reversed and remanded. The Court first rejected Wolf's argument that the court's brief minute order, without much discussion or analysis, was an abuse of discretion. The Court noted that the issue had been fully briefed and the judge explained his rationale on the record, although not repeating it in the minute order. On the merits, the Court concluded that Wolf did not have an objectively reasonable basis for seeking removal. The "objectively reasonable basis" standard is similar to the qualified immunity doctrine. A district court may award fees if "clearly established" law prevents removal. At the time Kennelly sought removal, the long-standing precedent in the circuit was that realignment of a party was improper if an actual and substantial controversy existed between the plaintiff and that party. The fact that Wolf and RCG shared an interest in escaping liability altogether did not justify the realignment. The Court remanded for consideration of the fee petition.

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NARDUCCI v. MOORE (July 9, 2009)

Many years ago, the Bellwood, Illinois comptroller became concerned that some finance department employees were making personal phone calls on village time and also were subjected to harassing phone calls from irate village residents. The village approved a proposal to begin recording department phone calls. Nicholas Narducci took over as controller several years later. When he learned about the recording, he advised village trustees that it was illegal, he alerted the FBI and he directed the Chief of Police to discontinue the activity. In 2001, he brought an action against the village, the mayor, and the police chief on behalf of a class of finance department employees whose calls were recorded. He brought a Fourth Amendment claim under § 1983 and an illegal wiretapping claim under Title III of the Omnibus Crime Control and Safe Streets Act of 1968, as well as state law claims. The mayor and the police chief moved for summary judgment on qualified immunity grounds. The district court denied the motion with respect to the § 1983 claims and some of the Title III claims. The mayor and the police chief appeal.

In their opinion, Judges Flaum, Williams and Lawrence affirmed. The issue on appeal, whether the defendants were entitled to qualified immunity, required the Court to examine whether there had been a violation of a constitutional right and, if so, whether it was "well-established." With respect to the Fourth Amendment violation, the Court looked to the totality of the circumstances. It first found, drawing all reasonable inferences in Narducci's favor, that he had demonstrated a reasonable expectation of privacy. The Court next concluded that Narducci presented enough evidence to survive summary judgment, given that the recording lasted more than six years with no notice to the employees. Although the Court realized that no Supreme Court or prior Seventh Circuit decision squarely addressed the issue, it concluded based on decisions of other circuits that the right was sufficiently clear to preclude qualified immunity. Lastly, the Court rejected the defendants' qualified immunity defense to the Title III claims. The Court concluded that the lower court did not err in holding that defendants waived the argument by not presenting it in their opening brief. 

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CASTRONOVO v. NATIONAL UNION FIRE INSURANCE COMPANY (July 6, 2009)

Sandra Castronovo died the day after her car was struck by a truck driven by Kenneth Lively. At the time of the accident, Lively was employed by and driving a truck owned by Doug Lavery, Ltd. He was hauling a trailer owned by GE Capital Corp. and leased to Greif Brothers Corp., who loaned it to Lavery. Lavery and Lively were named insureds under a $1 million policy issued by Owners Insurance. Travelers Property Casualty Company issued a $2 million policy to Greif. National Union issued a $25 million umbrella policy to Grief which covered permissive users of vehicles owned by Grief. The National Union policy provided excess coverage to the Travelers policy and provided primary coverage for covered risks that were not covered at all by any other insurance. Sandra’s husband John sued Lively, Lavery, GE and Greif. Owners provided a defense to Lively and Lavery but eventually tendered its $1 million policy limit to the court. Travelers defended GE and Greif under the Greif policy. Travelers refused to defend Lavery and made no decision with respect to Lively. In early 2005, Greif and Travelers both spoke with National Union about the case. And National Union continued to follow the developments. In September the court approved a consent judgment against Lively and Lavery in the amount of $6 million. They assigned their rights of coverage to Castronovo in return for a covenant not to execute on their personal assets. National Union learned of the consent judgment only after it was entered. In October, Travelers determined that Lively and Lavery were both insureds and paid their $2 million policy limit to Castronovo. Castronovo sued National Union to recover the approximate $3 million balance. The court granted summary judgment to National Union, holding that Lively and Lavery breached the policy by not notifying National Union of the consent judgment. Castronovo appeals.

In their opinion, Chief Judge Easterbrook and Judges Bauer and Flaum affirmed. The only issue on appeal was whether National Union breached its duty to defend under the umbrella policy. The policy required National Union to defend in two circumstances: a) when all underlying policy limits were exhausted, or b) when the National Union policy provides the only coverage. Castronovo conceded that the former did not apply because the policy limits of the other policies were not exhausted until after the consent judgment was entered. The Court rejected the argument that a duty to defend arose under the “only coverage” clause once Owners tendered its policy limit and Travelers was disputing coverage. The Court ruled that the clauses were mutually exclusive. The first always applies when there is other coverage and the second only applies when there is no other coverage. The Court concluded that National Union had no duty to defend under either clause. The Court also concluded that National Union had no duty to defend because Lively and Lavery never actually requested a defense, a requirement under Ohio law.

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KASTEN v. SAINT-GOBAIN PERFORMANCE PLASTIC CORP. (June 29, 2009)

Kevin Kasten worked at one of Saint-Gobain's facilities in Wisconsin. In 2006, Kasten received three warnings regarding his use of the on-site time clock. The third warning included a statement that it was the last step of the disciplinary process and that another violation could result in further discipline, up to termination. Kasten alleges, and Saint-Gobain denies, that he verbally complained about the legality of the time clock’s location about the same time he received the third warning. He alleges that his complaints consisted of a) telling his supervisor, b) telling a human resources representative, c) telling a lead operator and d) telling the lead operator he was considering a lawsuit. Saint-Gobain suspended Kasten after his fourth violation and later terminated his employment. Kasten alleges, and Saint-Gobain denies, that he also complained about the legality of the clock’s placement at a meeting regarding his suspension. Kasten brought an action under the Fair Labor Standards Act, alleging that he was terminated in retaliation for his complaints. The court granted summary judgment to Saint-Gobain. Kasten appeals.

In their opinion, Judges Bauer, Flaum and Kapala affirmed. Kasten alleges that Saint-Gobain violated the FLSA when it terminated him after he "filed any complaint." The Court focused on two issues: whether the FLSA's use of the term "complaint" includes informal, intra-company complaints not formally filed with any body and whether it includes wholly verbal complaints. The district court had answered the first question yes but the second question no. With respect to the intra-company complaint issue, the Court relied on the plain language of the statute and the majority of other appellate courts to conclude that "any complaint" includes internal complaints. If then decided, however, that purely verbal complaints are not protected. The Court relied again on the plain language of the statute and the use of the word "file," which connotes the use of a writing, and the fact that Congress used broader language (i.e., “opposed any practice”) in analogous provisions of other statutes.

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JAFARI v. WYNN LAS VEGAS, LLC (June 17, 2009)

Robert Jafari, a Wisconsin resident, liked to gamble. In September, 2005, Wynn Las Vegas and Caesar’s Palace extended him credit in the total amount of $1,250,000. Each of the credit agreements contained a Nevada choice-of-law provision. After Jafari failed to repay the credit advance and his bank denied payment, Wynn and Caesar’s sued Jafari. Jafari later filed an individual bankruptcy proceeding in Wisconsin. Wynn and Caesar’s filed proofs of claim. Jafari and the bankruptcy trustee objected to the claims on the grounds that gambling debts are unenforceable in Wisconsin. The bankruptcy court applied Wisconsin choice-of-law rules, which led it to apply Wisconsin substantive law, which led it to conclude that the gambling claims were unenforceable under Wisconsin law. On appeal to the district court, the court concluded that both federal and Wisconsin choice-of-law rules would require the application of Nevada substantive law. On remand, the bankruptcy court applied Nevada substantive law and upheld the claims. Jafari and the trustee appeal.

In their opinion, Judges Flaum, Evans and Williams affirmed. The Court noted a tension surrounding whether a bankruptcy court should apply the choice-of-law principles from federal law or from the forum state. Since neither the Supreme Court nor the Seventh Circuit has decided the issue, the Court asked itself whether the question mattered. The parties agreed both that federal common law would apply Nevada substantive law and that Nevada would allow the claims. Therefore, the Court undertook an analysis of Wisconsin choice-of-law principles to see if it would end up elsewhere. Wisconsin courts apply a "grouping of contacts" rule in contract cases. Under that rule, the law of the forum state is applied unless contacts with a non-forum state are greater. Here, the Court concluded that the relevant contacts (place of negotiation, place of contracting, place of performance, location of the subject matter, domiciles of the parties) are undoubtedly greater for Nevada than they are for Wisconsin. Therefore, Wisconsin would apply the substantive law of Nevada and also uphold the claims. The Court rejected Jafari’s argument that notwithstanding the "grouping of contacts" rule, a Wisconsin court would apply its own law if applying the law of another state would contravene Wisconsin public policy. Having decided that an application of either federal common law or Wisconsin choice-of-law principles would lead to the same conclusion, the Court declined to resolve the choice-of-law issue.

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BAILEY v. ROOB (June 8, 2009)

The State of Indiana has a Medicaid for the Disabled program that provides medical benefits to persons who suffer from disabilities. A consent decree resulting from earlier litigation required the State to follow certain procedures in collecting and evaluating applications. It must obtain complete medical histories for twelve months, it must get additional medical information when necessary, and it must ensure that the medical records are complete before an eligibility determination. Plaintiffs filed a petition to hold the defendants in civil contempt for violating these requirements of the consent decree. In discovery, the State produced a representative sample of benefit applications, consisting of 26 files. The district court reviewed the files and concluded 17 were complete, five contained only a summary form of medical history, and four were “less complete” than the five that contained the form. The court denied the contempt motion, however, because neither party presented evidence of what should be considered a "complete" history. In fact, the court invited the plaintiffs to refile their motion and introduce testimony on that issue. Instead, plaintiffs appeal.

In their opinion, Judges Flaum, Manion and Rovner affirmed. The Court first rejected plaintiffs’ argument that the district court imposed an erroneous burden of proof. Plaintiffs claimed that the court required them to prove the State's lack of reasonable diligence instead of treating it as an affirmative defense. The Court held that it is a plaintiff's burden to foreclose a finding of reasonable diligence by clear and convincing evidence. Alternatively, the Court concluded that the district court rejected plaintiffs’ motion simply because they had not shown a violation, not that they had failed to foreclose reasonable diligence. The Court next rejected plaintiffs’ argument that it had shown a violation, at least with respect to the four least-complete files. The Court concluded that the district court did not abuse its discretion in declining to make factual findings that the four files violated the consent order. The district court found the arguments of the parties inconclusive on what constituted a complete medical file. Finally, the Court rejected the plaintiffs’ argument that "complete medical history" always requires a treating physician's records. A court reads the requirements of the consent decree just like it reads the requirements of a contract. The Court concluded that, in similar contexts, it has not interpreted "complete" in a strict, absolute sense. The Court was unable, on the incomplete record, to categorically conclude that a summary form of medical history is always a violation of the regulation. 

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LUCERO V. NETTLE CREEK SCHOOL CORPORATION (May 29, 2009)

Sharon Lucero, a female Hispanic, was hired by the Nettle Creek School Corporation in 2001 to teach English at the Hagerstown Junior - Senior High School (the "School"). The School served students in grades 7 through 12 in the same building. Lucero was informed, at the time of her hire, that she could be assigned to teach English at any of the grade levels. For her first two years, Lucero taught 7th and 8th grade English, respectively. For the third year, the School assented to her request to teach 12th grade English. The year progressed quite differently than her prior years of service. The principal criticized her performance, the students complained of her teaching style, and the parents complained of her grading policies, to name just a few of her problems. In addition, two specific incidents late in the year stood out. In one, a student showed a photograph in class of a partially naked classmate. In another, a group of students left several Playboy magazines in her classroom. The students involved in these two incidents were all suspended. After the school year, the School hired a new English teacher, a white male. The school assigned the new teacher to 12th grade English and reassigned Lucero to 7th grade English. Lucero sued the School, challenging her reassignment under theories of retaliation, discrimination, hostile work environment and breach of contract. The district court granted summary judgment to the School. Lucero appeals.

In their opinion, Judges Bauer, Flaum and Evans affirmed. The Court addressed each of Lucero’s legal theories in turn. With respect to her retaliation claim, the Court noted that she was required to establish that she suffered a materially adverse employment action. The Court addressed the reassignment in light of the Supreme Court's decision in Burlington Northern. Burlington Northern tells us that a court should apply an objective standard for assessing whether the reassignment might have dissuaded a reasonable person from making a charge of discrimination. Here, Lucero was reassigned to teach the same subject in the same building under the same conditions. The Court concluded that her reassignment was not a materially adverse action. The Court similarly found that Lucero failed to demonstrate a materially adverse employment action with respect to her discrimination claim, albeit under a different test. Since her compensation and work conditions were unchanged, Lucero attempted to establish that her reassignment was an adverse employment action by asserting that it would negatively impact her career prospects. The Court found that she failed to submit adequate evidence of a negative career impact and upheld the lower court on the discrimination claim. Next, the Court concluded that Lucero's allegations of hostile work environment failed as a matter of law. Although depicting inappropriate behavior, the Court concluded that they were isolated incidents, were not related to her gender or national origin, and did not support employer liability. Finally, the Court summarily rejected Lucero's breach of contract claims.

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BROOKS v. THE CITY OF CHICAGO (May 1, 2009)

Terence Brooks was arrested, allegedly without probable cause, in May 2004 by two Chicago police officers. The charges were dropped and he was released after about three weeks in custody. A few months later, he was indicted as a result of evidence seized at the time of the arrest. A warrant was issued when he failed to appear in court on the indictment. Brooks was arrested on the warrant by different police officers in May of 2007. Again, the charges were dismissed and Brooks was released. Brooks brought an action against the City of Chicago and the police officers who were responsible for the 2004 arrest. He brought due process and false arrest claims under § 1983, as well as claims under state law. The district court dismissed the complaint on the ground that, although it purported to complain of the 2007 arrest, it depended entirely on the 2004 arrest. Claims based on the 2004 arrest were barred by the statute of limitations. Brooks appealed.

In their opinion, Judges Flaum, Manion and Rovner affirmed. The Court recognized that Brooks' theory was that the 2007 arrest culminated from a series of events that began with the allegedly unlawful 2004 arrest. The Court noted, however, that the existence of the warrant supported probable cause for the 2007 arrest. One cannot maintain a false arrest claim based on an arrest made with probable cause. Even if Brooks had a false arrest claim in 2004, his arrest in 2007 cannot revive that claim. The Court also rejected Brooks' due process claim on the grounds that it was merely a recast false imprisonment claim.

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SMITH v. THE HOPE SCHOOL (March 30, 2009)

Tanum Smith was an aide at the Hope School, a residential facility for developmentally disabled children. On two different occasions in 2006, Smith was injured by students. After the second incident, Smith took some time off and received medical attention. Although an independent medical examination approved her return to work without restrictions, her primary care physician restricted her to light-duty and to assignments that did not require her to interact with the school's residents. The school assigned Smith to its dietary department so that she would not interact with residents. Later, she complained that a student approached her in the kitchen. She informed the school that she was leaving and would not return until the school provided her with a safe work environment. There is significant disagreement in the record over what happened next. What is not disputed is that Smith was absent from work many days and, when she submitted her FMLA paperwork, she had altered the physician’s certification form to add a diagnosis for "previous depression." The school found out about the alteration, denied her request for FMLA leave, and began disciplinary proceedings because of her absences. Ultimately, Hope School terminated Smith's employment because of the absences. Smith brought this action alleging that the school interfered with her FMLA rights and that they terminated her employment in retaliation for requesting FMLA leave. The district court granted summary judgment to Hope School. Smith appeals.

In their opinion, Judges Flaum, Williams and Kapala affirmed. The Court first addressed her interference claim. In order to prevail, the Court indicated that she must demonstrate that she was eligible for FMLA protection, that she was covered, that she was entitled to leave, that she provided notice, and that her employer denied her benefits. Here, the only issue is whether an employer can deny FMLA leave because an employee submits false paperwork. The Court agreed with the district court that an employer can deny a request for FMLA leave when an employee adds a diagnosis to the physician’s certification form without the physician's knowledge. The Court concluded that her retaliation claim was closely linked to the interference claim. Because Hope School was entitled to deny her request for leave, they were entitled to terminate her employment on account of her unexcused absences.

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MARION v. THE CITY OF CORYDON (March 23, 2009)

Having been caught shoplifting, Trent Marion fled from police, scuffled with police, fled again, and led police on a high-speed chase down a divided highway. For miles, Marion eluded the police and their attempts to stop him. Even with three deflated tires, Marion refused to stop. Eventually, Marion swerved into the median and drove toward the other side of the highway. The police surrounded and fired shots at the vehicle. Marion continued to rev his engine and shift from forward to reverse. The police continued firing at the vehicle until Marion stopped. Marion suffered serious gunshot wounds. He filed suit under §1983, claiming that the police violated his Fourth Amendment rights. The district court granted summary judgment to the defendants. Although Marion opposed the motion, he did not file an affidavit. He did submit an affidavit with a motion to reconsider. The court denied the motion. Marion appeals.

In their opinion, Judges Flaum, Williams and Kapala affirmed. The Court first concluded that it would not consider Marion's affidavit. The Court could consider it only if it consisted of newly discovered evidence, which it did not. On the merits of Marion's Fourth Amendment excessive force claim, the Court stated that it would apply an objective reasonableness standard and consider the totality of the circumstances. The Court concluded that it was reasonable for the police officers to believe that Marion posed a threat to their safety and the safety of nearby motorists while he was in the median. The amount of force they employed was therefore reasonable.

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CAPITOL INDEMNITY CORP. v. ELSTON SELF SERVICE WHOLESALE GROCERS, INC. (March 12, 2009)

Elston Self-Service Wholesale Grocers, Inc. ("Elston") is a wholesale cigarette distributor. Lorillard Tobacco Co. ("Lorillard") filed a complaint against Elston, alleging that it sold counterfeit cigarettes bearing a Lorillard trademark. Elston was insured by Capitol Indemnity Corp. When Elston claimed coverage, Capitol Indemnity disclaimed any duty to indemnify or defend. Capitol Indemnity sought a declaratory judgment that it had no such duty. The district court ruled that Capitol Indemnity had an obligation to defend Elston in the Lorillard litigation. Capitol Indemnity appeals.

In their opinion, Chief Judge Easterbrook and Judges Flaum and Manion affirmed. The Court addressed the policy provisions. At issue was an exclusion to the policy's coverage of "advertising injury." The policy excluded from coverage any injury arising out of the publication of “material” whose first publication took place before the policy period. Capitol Indemnity argued that Elston's years of lawful sales of Lorillard cigarettes before the beginning of the policy term constituted a prior publication. The counterfeit packaging was nearly identical to the Lorillard packaging. The Court rejected Capitol Indemnity’s position. It interpreted the term "material" in the policy exclusion to refer to the same wrongful material alleged in the complaint. Because there was no allegation of counterfeit sales prior to the policy term, there was no prior publication. Under Illinois law, Capitol Indemnity is required to defend Elston if the underlying complaint potentially falls within the scope of coverage. Having found that the prior publication exclusion does not apply, the Court affirmed the district court’s finding of a duty to defend.

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AKANDE v. GROUNDS (February 9, 2009)

Adetunji Akande was employed by the Illinois Department of Corrections. He served as a clinical casework supervisor in the clinical services division at the Robinson Correctional Facility (“RCF”). His job was subject to the Illinois Personnel Code. The Code provided that he could not be fired or demoted except for cause. The division was responsible for counseling and disciplinary activity at RCF. The division was run by a clinical services supervisor. The casework supervisors were intermediate managers. Their responsibilities included: resolving and reporting on serious disciplinary matters, supervising the delivery of services by the correctional counselors, evaluating correctional counselors, and performing other like duties. As of late 2003, Akande was the only supervisor. A new warden, Randall Grounds, arrived in early 2004. He came to doubt Akande’s job performance, particularly as it related to inputting disciplinary reports. He instructed Akande to personally input all data at the end of each day. Akande delegated the task. Grounds repeated his instructions. Akande continued to delegate the task. Ground referred Akande for discipline. His position that he was allowed to delegate the assigned tasks notwithstanding Grounds’ instructions was rejected. He received oral and written reprimands and a three-day suspension. In early 2004, Grounds removed Akande’s supervisory responsibilities. Shortly thereafter, Grounds presented Akande with a formal memorandum of responsibilities stating that all data entry for serious discipline was the supervisor’s responsibility. Akande left RCF with a “headache,” went on disability and never returned. Akande brought this action, alleging that he was effectively eliminated from his position, in which he had a property interest. The court granted summary judgment to defendants, holding that they were entitled to qualified immunity. Akande appealed.

In their opinion, Judges Flaum, Wood and Williams affirmed. The Court identified the threshold question as whether Akande has been deprived of a constitutionally protected property interest. The Court agreed that state law gave Akande a property right not to be removed from his job or demoted without cause. Under the Illinois Code, “demotion” is defined as the assignment of an employee to a job of a lower grade because of the employee’s performance in the higher grade job. Here, Akande was not terminated, not told to leave, not assigned to a different job – his duties were simply altered. Therefore, he was not deprived of a property interest. Since he failed to show the deprivation of a property interest, the Court did not need to the “clearly established” prong of the qualified immunity test.

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ESTATE OF SUSKOVICH v. ANTHEM HEALTH PLANS (January 22, 2009)

Anthony Suskovich was a computer programmer and analyst. From 1996 until his unfortunate and sudden death in 2006, he provided services to WellPoint. WellPoint retained Suskovich on many projects with limited duration, although frequently one project rolled over into another. He billed WellPoint on an invoice, was paid by the hour, and his income was reported on a 1099. WellPoint adopted a preferred vendor program around 2000 under which it could only avail itself of Suskovich’s services if they were provided by a preferred vendor. Suskovich began a relationship with Trasys. Suskovich would send an invoice to WellPoint, which in turn would refer them to Trasys for payment to Suskovich. Suskovich’s income was still reported on a 1099. In 2001, Suskovich signed an “independent contractor” agreement. Suskovich worked on many different projects, sometimes on more than one at once. He usually worked at WellPoint’s offices with a computer supplied by WellPoint. In 2005, WellPoint informed Suskovich that they would not be using him anymore and asked him to train a replacement. Later, Suskovich and WellPoint had discussions about the possibility of Suskovich becoming an employee of WellPoint but nothing ever came of them. Before his death, the IRS began an investigation of Suskovich for not filing tax returns. The investigation led to his filing of returns for several years in which he listed himself as self-employed. He still had remaining tax liability when he died. His estate brought an action against WellPoint and Trasys, seeking a declaratory judgment that Suskovich was an employee of WellPoint and Trasys and for compensation under the Fair Labor Standards Act (“FLSA”), benefits under ERISA, and tax indemnity. The district court granted summary judgment for the defendants, holding that Suskovich was an independent contractor. The Estate appeals.

In their opinion, Judges Cudahy, Flaum and Sykes affirmed. First, the Court held that the district court did not give improper weight to the “independent contractor” agreement. The Court held that the court below properly followed the law of the Circuit that parties can define their relationship as long as the other factors do not lead to the opposite conclusion. The district court gave primary weight to the contract but did consider and weigh other factors. Next, the Court held that the district court properly resolved the ambiguity in the contract by considering the language of the contract as well as extrinsic evidence. The Court proceeded to the meat of the appeal – whether Suskovich was an independent contractor or an employee. The Court decided to approach the question under the 10-factor Restatement test, even though the asserted claims have different tests. ERISA claims use a 12-factor common law test. FLSA claims use a broader 6-factor test. The Supreme Court has held that the ERISA test is similar to the Restatement test and the Estate relied on the Restatement test. The Court evaluated and weighed the ten factors: a) extent of control, b) whether the worker is engaged in a distinct occupation, c) whether the type of work is generally done without supervision, d) skill required, e) who supplies the tools and workplace, f) length of employment, g) whether the payment is by time or job, h) whether the work is the regular business of the employer, i) the parties’ belief, and j) whether the principal is in business. The Court concluded that only two factors weighed at all in Suskovich’s favor: who supplied the tools and whether the work was the regular part of the business. The former is a relatively unimportant factor and the latter only favors Suskovich as against Trasys. All of the other factors weighed against Suskovich. The district court was correct in awarding summary judgment to WellPoint and Trasys.

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ROSS-TOUSEY v. NEARY (December 17, 2008)

Marvin Ross-Tousey and his wife Deborah (the “debtors”) filed a Chapter 7 bankruptcy petition. Because their household income was above the median income level, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”) subjected their petition to a means test. The means test is used to distinguish those debtors who can repay a portion of their debts from those who cannot. A debtor who has enough disposable income to pay at least $166.67 per month to his creditors is expected to file under Chapter 13. A Chapter 7 filing is presumptively abusive in that circumstance. The debtors claimed a vehicle ownership expense allowance of over $800, although they had no debt or lease payments. With that deduction, they had no disposable income and met the means test. The United States Trustee (“UST”) moved to dismiss their petition for abuse. The UST first asserted abuse based on a totality of the circumstances. The UST later amended the motion to include presumptive abuse on the grounds that they should not have taken the vehicle ownership allowance. The bankruptcy court denied the motion. The district court reversed, holding that a debtor cannot claim a vehicle ownership allowance for vehicles he owns outright. The district court remanded for proceedings to determine whether the debtors could rebut the presumption. The debtors appealed. The UST moved to dismiss for absence of finality because the bankruptcy court had not ruled on whether the presumption could be rebutted. The debtors conceded that they could not rebut the presumption.

In their opinion, Judges Flaum, Rovner and Williams reversed and remanded. The Court first considered two jurisdictional issues: whether there was a “final order” to review and whether the time period for the UST’s amendment of the motion to dismiss was jurisdictional. On the first issue, the Court found that both the bankruptcy court’s order and the district court’s order were final. In the case of the bankruptcy order, the only remaining act was to distribute the debtors’ assets. In the district court’s reversal and remand, the only obligation of the bankruptcy court was to either dismiss the petition or convert it to a Chapter 13 proceeding, at the option of the debtors. The presence of these continued ministerial acts did not divest the Court of jurisdiction. On the timing issue, the Court stated that the statute set a deadline for filing a motion to dismiss. The UST’s original motion met the deadline but the amendment to add the presumptive abuse ground did not. The Court appreciated that the Supreme Court’s decision in Bowles seems to say that filing deadlines found in statutes are jurisdictional, while those found elsewhere are not. Nevertheless, relying on the Supreme Court’s later decision in John R. Sand & Gravel and the fact that much case law would be overturned by such a reading of Bowles, the Court found a different path. In John R. Sand & Gravel, the Supreme Court distinguished between statutes of limitations designed to protect defendants from stale claims from those that that sought to achieve a “system-related goal,” with only the latter classified as jurisdictional. Since the bankruptcy deadline existed principally to protect a debtor from delay and not to achieve some broader system goal, the Court held that it was not jurisdictional and any objection was waived by the debtors.

The Court proceeded to the merits. The means test in the BAPCPA includes, in the definition of monthly expenses, “applicable" monthly expenses specified by the National and Local Standards found in the Internal Revenue Manual (“IRM") and “actual" monthly expenses for other defined expenses. The vehicle ownership allowance at issue is one of two transportation components found in the Local Standards. The Court noted that the issue it faced has been litigated frequently but never decided by a circuit court. Two approaches have emerged, depending on the treatment of the word “applicable” in the statute. The IRM approach treats “applicable” as meaning “relevant” and concludes that a debtor with no lease or debt payment on a vehicle has no “relevant” cost of ownership. The Plain Language approach, on the other hand, treats “applicable” as that number “applied” by the Local Standards for the debtors’ region and number of vehicles. The Court was persuaded by the Plain Language approach. It decided that, to give effect to all the words of the statute, “applicable” could not mean the same as “actual.” Since it could not refer to the debtors’ actual expense, it must refer to the deductions listed in the Local Standards. The Court found additional support for its holding in: a) the inconsistency in the statute’s disallowance of debt as an expense and the IRM approach’s conditioning the transportation allowance on debt, b) Congress’ specific language throughout other sections of the means test to describe allowable deductions, c) an absence of any indication that Congress intended the IRM methodology to be used in the means test, d) the avoidance of an unfair result if the allowance is limited to debtors with car payments, and e) the recognition that allowing the deduction only avoids a presumption of abuse – abuse can be shown independently.  

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FLYING J INC. v. CITY OF NEW HAVEN (December 5, 2008)

Flying J develops and operates travel plazas for truck drivers and other travelers. It purchased 50+ acres in New Haven, Indiana (the “City”) to develop a new travel plaza. The City opposed the development and took the position that it was not allowed under the then-current zoning. Flying J ultimately prevailed in the Indiana state courts on its challenge to the City’s position. Undaunted, the City amended its zoning ordinance to limit developments of this type to two acres. The Flying J development was the only parcel affected by this limitation. The City held several public meetings on the amendment but never gave Flying J specific notice of them. In August of 2007, the City advised Flying J that its development must comply with the two acre rule. Flying J filed suit in September, alleging violations of its rights under the U.S. and Indiana Constitutions. The district court dismissed for failure to state a claim. Flying J appeals.

In their opinion, Judges Bauer, Flaum and Williams affirmed. The Court first addressed the City’s position that the Court lacked jurisdiction under the principles of Williamson County. The Supreme Court in Williamson County held that takings claims in land use cases are not ripe until the local authority has reached a final decision, including a decision on a variance application and compensation. Courts have applied the doctrine to takings claims even when they are labeled as due process or equal protection claims. The Court noted that it has created an exception for claims alleging the malicious conduct of a government agent unrelated to a legitimate state objective. Flying J’s allegations of the City’s protracted litigation, its covert amendment to the ordinance, the ordinance’s application only to Flying J, and the potential conflicts of interest of several commission members fit its claim within that exception.

The Court next addressed whether Flying J stated a claim. Relying on its precedent in Wroblewski and Lauth, the Court identified the pleading standard for a class-of-one equal protection claim. In those cases, the plaintiff must negate any set of facts that provides a rational basis for the classification challenged. Animus of the defendant comes into play only after the plaintiff has pled facts that show the irrationality of the government’s conduct. Flying J does allege facts that would show that the City took its actions in response solely to Flying J’s development but it does not allege facts to establish that the zoning amendment was irrational. Flying J’s allegations therefore do not overcome the presumption of rationality the government enjoys in cases of this nature.

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KELLEY v. MED-1 SOLUTIONS  (November 25, 2008)

Brian Kelley received medical treatment at St. Vincent Carmel Hospital (“St. Vincent”). When Kelley failed to pay for the services, St. Vincent hired Med-1 Solutions, LLC (“Med-1”) to collect the amounts due. Although St. Vincent always owned the debt, it gave Med-1 the right to collect it. Med-1 sued Kelley in an Indiana small claims court. It attached documents to the small claims court form which indicated that the debt was owed to St. Vincent. Med-1 also attached Kelley’s financial responsibility form he had signed prior to receiving medical treatment. That form provided for payment of “reasonable attorney fees” if the debt was assigned to a collection agency. St. Vincent paid Med-1’s fees and costs and a percentage of the amount collected. Med-1’s in-house attorneys received a percentage of the attorney fees collected by Med-1. Med-1 obtained a judgment against Kelley for $892.09. Kelley and several others in a similar situation brought suit against Med-1, its owner, and its in-house attorneys. Plaintiffs alleged violations of the Fair Debt Collection Practices Act (“FDCPA”), claiming that Med-1 was not entitled to attorney fees and that its claims that it was were false and deceptive. The district court dismissed the complaint. Plaintiffs appeal.

In their opinion, Judges Bauer, Flaum and Williams affirmed. The issue before the Court was whether the case was controlled by the Rooker-Feldman doctrine. That doctrine, taken from two Supreme Court decisions, Rooker v. Fidelity Trust Co. and District of Columbia Court of Appeals v. Feldman, prohibits a lower federal court review of a decision of a state court. Plaintiffs attempted to avoid the application of Rooker-Feldman by characterizing their complaint as one attacking defendants’ representations and requests for attorneys fees, not the actual state court judgment awarding the fees. The Court did not accept the distinction. It concluded that if it found that defendants were not entitled to fees and therefore violated the FDCPA, it was also determining that the state court judgments were in error. The Court next addressed the “reasonable opportunity” exception to the Rooker-Feldman doctrine. Plaintiffs contended that they were unable to raise their FDCPA claims in the Indiana small claims venue. The Court disagreed. The plaintiffs could have transferred their case out of the small claims venue and litigated their FDCPA claims. The Court concluded that plaintiffs had a “reasonable opportunity” to litigate their claims and their complaint was properly dismissed. In addition, the Court questioned the continued viability of the “reasonable opportunity” exception since the Supreme Court’s decision in Exxon Mobil Corp. v. Saudi Basic Industries.

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KAHN v. UNITED STATES (November 20, 2008)

Shahid Khan was a partner in several investment entities. The IRS was investigating Kahn and his wife because of its belief that the Kahns had sheltered hundreds of millions of dollars from income taxes. The IRS agent assigned to the case issued summonses to Robert Greisman, an accountant and tax shelter expert with whom Khan and his wife had met on several occasions. The Kahns had paid Greisman over $8 million dollars but, according to an IRS affidavit, they could not identify what services he provided. The Kahns filed petitions to quash the subpoenas on a number of grounds. The IRS opposed the petitions and also filed a motion to enforce the summonses. The agent’s affidavit accompanying the motion stated that the purpose of the summonses was to quantify the Kahns’ tax liability. The Kahns opposed the motion on the ground that 26 U.S.C. § 7602(d)(1) prohibited the summons because the IRS did not disclose whether the IRS had referred Greisman to the Justice Department. The district court agreed, and quashed the summons. The IRS appeals.

In their opinion, Judges Flaum, Rovner, and Wood reversed. The Court first recognized the broad power of the IRS to issue summonses. Section 7602(d)(1) provides, however, that “[n]o summons may be issued . . . with respect to any person if a Justice Department referral is in effect with respect to such person.” The Kahns argued that the summonses were issued "with respect to" Greisman and were therefore not allowed if Greisman had been referred to the Justice Department.  The IRS, on the other hand, argued that the summonses were issued "to" Greisman but "with respect to" the Kahns since it was the Kahns' tax liability at issue. The Commissioner of the IRS has promulgated a regulation supporting the IRS'ition.  The regulation interprets the section to apply only when there is a Justice Department referral of the person whose tax liability is at stake. The Court approached the “question of first impression” under the Chevron two-part analysis. Under Chevron, the Court will uphold or strike a regulation if it is supported or opposed, respectively, by the plain meaning of the pertinent statute. If the statute is silent or not clear, the Court will determine in a second step whether the regulation is a reasonable interpretation of the statute. The Court will uphold it if it is. With respect to the plain meaning of § 7602(d)(1), the Court was attracted to the arguments of both parties. Having found their two competing interpretations both plausible, the Court necessarily found ambiguity in the statute. In its second step analysis, the Court found the Commissioner’s regulation consistent with the statute, as well as the legislative history, and a reasonable interpretation of it. As long as the Kahns were not referred to the Justice Department (which they were not), the summons to Greisman can be enforced.
 

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ANDONISSAMY v. HEWLETT-PACKARD CO. (November 7, 2008)

Sanjay Andonissamy, a French citizen of Indian ancestry, began his employment with Hewlett-Packard (“HP”) in April of 2001. He was in the country on an HP-sponsored H-1B visa. [The following is Andonissamy’s version of the story – HP’s version differs greatly] After the events of September 11, 2001, Ken Smith, Andonissamy’s supervisor, began to make derogatory racial, ethnic, and nationalist remarks to and about Andonissamy. Andonissamy frequently complained to Smith’s supervisor. Smith placed Andonissamy on remedial performance plans, allegedly in retaliation for Andonissamy’s complaints about Smith. Andonissamy began taking medication for anxiety and depression in 2002. He was being treated, but his physician never placed him on any restricted work schedule. Andonissamy’s condition worsened in early 2003 after the deaths of his brother and nephew. In May of 2003, Smith made a false report to the company implicating Andonissamy as a security threat. HP fired Andonissamy on June 23, 2003. On September 16, Andonissamy filed an EEOC complaint alleging national origin discrimination. The EEOC dismissed his complaint and issued a right to sue letter. Andonissamy filed a complaint in federal court in April of 2004. In addition to his complaints of national origin discrimination under Title VII and 42 U.S.C. § 1981, Andonissamy added a Family and Medical Leave Act count. In November of 2005, Andonissamy added Smith as a defendant on an assault count. The district court dismissed Smith and granted summary judgment to HP. Andonissamy appeals.

In their opinion, Judges Flaum, Williams, and Sykes affirmed. The Court first addressed Andonissamy’s Title VII hostile work environment claim. In order to survive summary judgment, Andonissamy had to show that a) he was subjected to unwelcome harassment, b) the harassment was based on his national origin, c) it was severe and pervasive enough to amount to a hostile and abusive environment, and d) there exists a basis for employer liability. The Court did not address the first three elements because it found no basis for employer liability. An employer can be vicariously liable for the conduct of a supervisor but can only be liable for the conduct of a co-worker if the company was negligent in discovering or remedying the harassment. A supervisor for purposes of Title VII is the person with the ability to affect the terms and conditions of the plaintiff’s employment. Smith, although he was Andonissamy’s “supervisor” in the sense that he directed his performance, was not a Title VII supervisor. There was no evidence that Smith was able "to hire, fire, promote, demote, discipline or transfer" Andonissamy. In order to hold HP liable for the acts of Smith as co-worker, Andonissamy had to establish that he complained or that the discrimination was so pervasive that HP’s knowledge could be inferred. Although Andonissamy did complain to Smith’s supervisor, he did not specifically complain about national origin discrimination. The Court agreed with the district court that Andonissamy therefore did not make out a Title VII claim. With respect to his companion § 1981 claim, the Court stated that a plaintiff can proceed under the direct or indirect method. The direct method requires evidence that an adverse employment action was based on the plaintiff's national origin. The Court found no such evidence in the record. Under the indirect method, a plaintiff must establish, among other elements, that he was meeting his employer’s legitimate performance expectations. The Court noted that the record contained numerous references to Andonissamy’s performance problems. The Court concluded that Andonissamy was therefore unable to establish a § 1981 claim under either method.

Andonissamy’s retaliation claim could also be established under the direct or indirect method. The indirect method for retaliation, like discrimination, contains an element that Andonissamy was meeting HP’s performance obligations. The Court rejected Andonissamy’s indirect method for establishing his retaliation claim for the same reason it rejected it for his discrimination claim. Under the direct method, Andonissamy had to establish that: a) he engaged in statutorily protected activity, b) his employer took an adverse employment action, and c) there was a causal connection between the two. The Court held that his complaints to HP did not include complaints of national origin discrimination. He was thus unable to establish the statutorily protected activity element. The Court concluded that he failed to establish a retaliation claim under either method. With respect to the FMLA count, the Court noted that Andonissamy never asked for any leave and did not exhibit any dramatic changes in behavior that would have put HP on notice of a need for leave. The Court agreed with the district court that Andonissamy failed to meet his burden under the FMLA.

Finally, the Court addressed Andonissamy’s assault claim against Smith. The assault claim was added to the case after the statute of limitations on the claim had expired. Andonissamy argued that the claim related back to the original claim and was thus permissible under FRCP 15(c). The Court affirmed the dismissal, stating that a claim against a new defendant relates back only when there is a case of mistaken identity. Since Smith supervised Andonissamy for years, that cannot be the case here.

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SYCAMORE INDUSTRIAL PARK ASSOC. v. ERICSSON  (October 20, 2008)

Ericsson used to manufacture wiring and cable at its 28-acre, nine-building facility in Sycamore, Illinois. The buildings were heated by two large steam boilers and a network of piping. Most of the system is insulated. In January of 1983, Ericsson ceased its operations and decided to sell the property. Michael Kreiger, Ericsson’s property manager at the site, decided to buy the property and operate it as an industrial park. Between December of 1984 and the spring of 1985, Ericsson installed natural gas heaters throughout the property and discontinued the use of the steam boiler system. Meanwhile, Kreiger agreed to buy the building and formed Sycamore Industrial Park Associates (“Sycamore”) to hold title to the property after the purchase. The sale closed in May of 1985 and the property was immediately assigned to Sycamore. Sycamore discovered asbestos in the insulation of the boilers and associated piping. Sycamore brought an action against Ericsson based on CERCLA and RCRA to compel it to remove the asbestos. The court granted summary judgment for Ericsson, holding that the abandonment of the insulation in place was neither a CERCLA “disposal” nor a RCRA “handling, storage, treatment, transportation, or disposal.” Sycamore appeals.

In their opinion, Judges Flaum, Williams, and Sykes affirmed. The Court first addressed the CERCLA claim. To prevail, Sycamore had to show that Ericsson owned the facility at the time it “discharged, deposited, injected, dumped, spilled, or leaked” a solid or hazardous waste. The Court referred to its prior decision in G.J. Leasing for the proposition that asbestos abandoned in place in a structure does not create CERCLA liability, even when the structure is sold. CERCLA “disposal” requires a threat that the asbestos will be emitted or discharged into air or water. Here, all of the asbestos is enclosed and not a threat to enter the environment. The Court found no CERCLA liability and proceeded to address the RCRA count. To prevail on its RCRA count, the Court stated that Sycamore had to show that Ericsson “handled, stored, treated, transported, or disposed of” solid or hazardous waste. Because RCRA and CERCLA use the same definition of disposal, the Court adopted its analysis of the CERCLA claim to conclude that there was no RCRA disposal either. The district court properly entered judgment for Ericsson on the both counts. 

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