Heavy Workload Is Not Excusable Neglect

SHERMAN v. QUINN (January 3, 2012)

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

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

Company Not Liable When It Had No Reason To Believe Employee Was Working Overtime

KELLAR v. SUMMIT SEATING INC. (December 14, 2011)

Susan Kellar was promoted to a sewing manager at Summit Seating, a small vehicle-seat manufacturer, in 2004. She remained an hourly employee. Keller managed about eight employees and was responsible for making sure they had their equipment and instructions and that their work was completed on time. Shortly after she voluntarily resigned in 2009, she brought a Fair Labor Standards Act claim. She alleged that she regularly arrived at work 15-45 minutes early and that she used much of the time working (checking schedules, handing out materials, checking patterns, etc.). Her sister, another Summit employee who was frequently with her during those times, claims that Kellar did not work before her shift began. Keller admits that she never told Summit's owners that she was working prior to the beginning of her shift and that Summit had a written policy requiring preapproval for overtime. Magistrate Judge Nuechterlein (N.D. Ind.) granted summary judgment to Summit. Keller appeals.

In their opinion, Seventh Circuit Judges Evans (who, as a result of his death, took no part in the decision) and Williams and District Judge Conley affirmed, although on different grounds. Although the FLSA requires an employer to pay overtime when an employee works over 40 hours, the Portal-To-Portal Act exempts certain preliminary activities. The magistrate judge concluded that the exemption applied, but in doing so ignored Kellar’s own affidavit. He erred in doing so. Although she offered no additional evidence, her affidavit was sufficient to create an issue of fact with respect to the preliminary activities exemption. The Court also concluded that Kellar's work did not fit within the de minimis doctrine, which allows an employer to ignore otherwise compensable work if it only amounts to a few minutes. Keller asserts that she worked anywhere from 10-40 minutes a day before her actual shift began. That does not qualify as to minimus. In order to qualify for overtime, however, Keller must demonstrate that her employer had actual or constructive knowledge of her effort. The FLSA does require an employer to be reasonably diligent and oversee the work of its employees. Here, Summit had no reason to believe that Kellar was working overtime and is not liable for overtime payments under the FLSA.

Record Established That RV Buyer Gave Manufacturer An Opportunity To Cure

ANDERSON v. GULF STREAM COACH (November 3, 2011)

Jeff and Liz Anderson had a 2008 Crescendo RV manufactured by Gulf Stream. They liked the vehicle but wanted to upgrade to a more powerful version for their tour of the Western United States. They contacted Mike Apple at Royal Gorge, a Gulf Stream dealer. He suggested a 2009 Tourmaster. The Anderson's, with Apple, examined the vehicle and consulted Gulf Stream's website. The website indicated that the vehicle came with a standard 425-hp engine. In fact, the vehicle at issue had only a 360-hp engine. Assuming the RV had the larger engine, the Anderson's purchased it "as is" and accepted delivery in September 2008. After only a few uses, they discovered numerous significant problems. They returned the RV to Royal Gorge. During the repair process, Apple discovered the presence of the smaller engine, although the original paperwork had correctly identified the engine’s horsepower. The Anderson's went back and forth with Apple and Gulf Stream. Finally, in April 2009, the Anderson's brought suit for breach of express warranty, breach of the implied warranty of merchantability, Magnuson-Moss Warranty Act violations, Indiana’s Deceptive Consumer Sales Act violations, and fraud. Magistrate Judge Nuechterlein (N.D. Ind.) granted summary judgment to the defendants on all counts. The Anderson's appeal.

In their opinion, Circuit Judges Bauer, Flaum, and Williams affirmed in part and reversed in part. The Court first addressed the Magnuson-Moss Warranty Act claim, which was based on the state law warranty claims. The statute provides a federal cause of action for failure to comply with a warranty. The statute requires, however, notice and a reasonable opportunity to cure. Although the district court concluded that the Anderson's did not give a reasonable opportunity to cure, the Court disagreed, when the record was viewed in the light most favorable to the Anderson's. Thus, summary judgment on the state law expressed warranty claim and related MMWA claim was improper. The Court reached the same conclusion with respect to the Anderson's state law implied warranty claim and its related MMWA claim. Again, the district court relied on its conclusion that the Anderson's failed to provide an opportunity to cure, with which the Court disagreed. The Court turned to the Indiana Deceptive Consumer Sales Act claim. That claim was based on the fact that the Tourmaster was designated a 2009 model but was manufactured to fulfill an order for 2008 model. The FTC is responsible for enforcing model year designation requirements. Under those requirements, although an RV manufacturer may use an older chassis on a newer model, or even the same chassis on different model years, it cannot do as it did here – use a 2007 chassis on a vehicle that is completed during the 2008 model year and call it a 2009. The district court erred in concluding that it could. But the Court also concluded that there were issues of material fact with respect to this claim because the Anderson's allegedly received documents with the RV that accurately identified the 360-hp engine. Summary judgment is therefore not appropriate for either party. Finally, the Court concluded that there was no evidence in the record of intent to deceive and affirmed summary judgment on the fraud claim.

Two Plausible Explanations For Firing Preclude Summary Judgment

EGAN v. FREEDOM BANK (October 6, 2011)

Freedom Bank president Greg Dempsey hired Belinda Egan as a vice president in July 2007. According to her complaint, Egan met with Don Burton, a bank director, at his request several times over the next few months. At one of those meetings in September, Burton told Egan that he thought she should be the next bank president and that the directors had the power to fire anyone on the management team. He then made a sexual advance. Egan left but later discussed the conversation with Dempsey and Human Resources. Burton resigned shortly thereafter. The bank hired Dave Barajas to replace Greg Dempsey as president. According to Dempsey, Barajas told him that he had heard that Egan had done something for which she should have been fired. Barajas took over in December and hired four new employees over the next several months. Then, in February of 2008, Barajas told Egan that he had eliminated her position. Egan brought suit for retaliation, hostile work environment, and gender discrimination. Judge Reinhard (N.D. Ill.) granted summary judgment to the Bank. Egan appeals.

In their opinion, Seventh Circuit Judges Manion, Williams, and Hamilton reversed and remanded. The Court first addressed the retaliation claim, which Egan prosecuted under the direct method of proof. The parties agreed that she engaged in statutorily protected activity and suffered an adverse action. The only issue was whether she introduced sufficient evidence of a causal connection between her report of Burton's sexual advances and her termination. Although the Court found the Bank's explanation plausible, it concluded that it was not the only plausible explanation. Several things supported Egan's contention: Barajas' remark to Dempsey, the fact that Egan’s was the only position eliminated while four other positions were filled, and the fact that there were no complaints about her performance. Since a reasonable jury could conclude that the Bank fired her in retaliation for her complaint, the summary judgment was reversed. The Court affirmed summary judgment on both the hostile work environment (a single sexual overture does not establish hostile work environment)and gender discrimination claims (Egan failed to develop this claim below). Finally, the Court concluded that it lacked jurisdiction over a magistrate judge's sanctions order that Egan challenges. The magistrate judge has only the power to recommend a sanction (since there was no consent to proceed before the magistrate judge). Since the district court judge never addressed the recommended sanction, it is not reviewable on appeal.

Party Cannot Rely On Pleadings At Summary Judgment Stage

CEDAR FARM v. LOUISVILLE GAS AND ELECTRIC COMPANY (September 29, 2011)

Cedar Farm owns almost 2500 acres of property bordering the Ohio River in southern Indiana. The property is unusual. It contains, among other things, an antebellum mansion listed on the National Register of Historic Places and a habitat for a number of rare and endangered species. Almost 90% of the property is encumbered by an oil and gas lease with Louisville Gas and Electric Company. Under the express terms of the Lease, it terminates if: a) Louisville stops using it for gas production or storage, b) Louisville surrenders it (for $1.00), or c) Louisville fails to make required payments after a demand and 30 days to cure. The Lease also requires Louisville to pay for any damages it causes the property. Cedar Farm brought suit against Louisville, alleging that Louisville removed trees unnecessarily, installed unsightly pump jacks, and dumped construction debris, among other things. Although its original complaint sought both damages and ejectment, Cedar Farm ultimately dismissed its damages count with prejudice and proceeded solely on its ejectment claim. Judge Hamilton (S.D. Ind.) granted summary judgment to Louisville, concluding that the only remedy in the Lease for Louisville's alleged conduct is damages. Cedar Farm appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Wood and Williams affirmed. Under Indiana law, a lessee under an oil and gas lease acquires a property interest once it begins production. After that point, courts are reluctant to terminate leases if the lessor can be adequately compensated by damages. Cedar Farm contends that this is such a case, given the property's historical and environmental significance and Louisville's egregious treatment of the land. The Court conceded that such could be the case but concluded that Cedar Farm could not simply rely on its allegations at summary judgment stage. Since there is no evidence in the record supporting the complaint's allegations, and no claim that Cedar Farm was prevented from presenting such evidence, summary judgment for Louisville was appropriate. The Court also declined Cedar Farm's request for certification to the Indiana Supreme Court.

Driver's Privacy Protection Act Does Not Prohibit Bulk Sale Of Private Information For Later Authorized Use

GRACZYK v. WEST PUBLISHING COMPANY (September 28, 2011)

Congress passed the Driver's Privacy Protection Act in 1993 to limit the dissemination of sensitive information acquired by state departments of motor vehicles. In general, the Act prohibits the disclosure of personal information obtained in connection with a motor vehicle record, although it contains several exceptions. A class of Illinois licensed drivers brought suit against West Publishing Company, alleging that West acquires sensitive personal information from motor vehicle departments for the purpose of reselling it, all in violation of the Act. Judge Gettleman (N.D. Ill.) dismissed the complaint, concluding both of that the plaintiff class lacked standing and that the complaint failed to state a claim. The class appeals.

In their opinion, Seventh Circuit Judges Posner, Flaum, and Williams affirmed. The Court first addressed and rejected the district court's conclusion with respect to standing. The Act creates a private right of action for the improper disclosure of personal information. The plaintiffs have alleged that West's acquisition and use of the information violates the Act. If plaintiffs prevail, West could no longer obtain and sell that information. The plaintiffs have alleged injury in fact that would be redressed by a ruling in their favor. They therefore have standing. With respect to the merits, however, the Court agreed with the district court that the complaint failed to state a claim. Here, the class does not dispute that the ultimate recipients of the sensitive information (i.e., West's customers) have a permissible use under the Act. Furthermore, the class concedes that West can lawfully obtain sensitive information from motor vehicle departments, if that information is first requested by a West customer. The class' contention is that West cannot obtain the sensitive information in bulk, without a specific request, and later sell it for an authorized purpose. Although "authorized recipient," is not defined in the Act, the Court concluded that the class' interpretation was not consistent with Congressional intent. There is no meaningful distinction between obtaining information to respond to a specific request or storing information in bulk in order to respond more efficiently to later requests. The Court also noted that the Fifth Circuit agrees and that the Department of Justice has issued an unpublished letter approving the practice. The complaint does not state a cause of action and was properly dismissed.

Record Supports Poor Performance, Not Discrimination, As Reason For Termination

DICKERSON v. BOARD OF TRUSTEES (September 16, 2011)

The Belleville Area Community College District 522 has employed Robert Dickerson, who suffers from a mild mental impairment, as a part-time janitor since 1999. He unsuccessfully applied for full-time positions in 2005, 2006, and 2007. In October of 2007, he complained, both at a Board meeting and to the District's attorney, that he was the victim of discrimination. Less than two months later, the District conducted its first formal evaluation of Dickerson's work performance and gave him an overall Unsatisfactory rating. Dickerson disagreed with the evaluation and filed a union grievance and an EEOC charge. The District conducted a second review six months later and found his performance still Unsatisfactory. Although the District fired Dickerson in September of 2008, it later reinstated him. A union arbitrator ruled that the termination violated the collective bargaining agreement. Dickerson brought suit alleging that the District's failure to promote him, its negative evaluations, and its termination all violated the Americans with Disabilities Act. Judge Murphy (S.D. Ill.) granted summary judgment to the District. Dickerson appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Bauer and Williams affirmed. The ADA makes it illegal to discriminate against a disabled employee because of his disability. The Court addressed Dickerson's discrimination and retaliation claims together. It first concluded that neither claim could survive summary judgment under the direct method of proof. The Court concluded that the record established that it was Dickerson's work performance that was connected to his termination, not any discriminatory or retaliatory intent on the District’s part. The Court also addressed the claims under the indirect method of proof. Under that method, Dickerson had the burden to show that he was meeting the District's legitimate employment expectations. The Court noted that the record was replete with evidence of Dickerson's unsatisfactory work performance. Dickerson failed to create an issue fact with respect to satisfactory performance. Summary judgment was proper.

Knowledge Of Suspect's "Turbulent History" Contributed To A Probable Cause Finding

REHER v. VIVO (September 7, 2011)

Ronald Reher caused a bit of a commotion in Edson Park in Lombard, Illinois on a May day in 2007. The park is located behind the apartment building where Ezeldra Outlaw and her daughter Ashley lived. Outlaw and Reher had been romantically involved in the past. In fact, Ashley was their daughter. Reher had seen neither of them for over four years. Apparently because he carried a video camera and binoculars, several of the adults in the park became suspicious. Outlaw approached him and yelled at him and broke his video camera. Others in the park took his bicycle. Soon, a number of police officers arrived. Officer Gabinski was aware of a history of domestic disputes and orders of protection concerning Reher and Outlaw. When she told Reher that she did not believe his story (that he was videotaping nature scenes), he became upset and called her a “bitch.” At that point, Officer Vivo arrested him for disorderly conduct. Reher brought suit against Gabinski and Vivo pursuant to § 1983 for an unlawful arrest. Judge Conlon (N.D. Ill.) granted summary judgment to the defendants, finding that the defendants had probable cause for the arrest or, in the alternative, were entitled to qualified immunity.

In their opinion, Seventh Circuit Judges Rovner, Williams, and Hamilton affirmed. Under Illinois law, a disorderly conduct charge requires unreasonable conduct that disturbs another and threatens to provoke a breach of the peace. Videotaping others in Illinois is not illegal unless it is also accompanied by other suspicious circumstances. The Court emphasized that neither Reher's swearing nor the neighbors’ general agitation satisfied the test. Officer Gabinski knew a lot more, however. Based on her extensive knowledge of the Reher /Outlaw relationship and past incidents, the Court concluded that she had probable cause to arrest Reher. In the alternative, it concluded that she was entitled to qualified immunity. Officer Vivo did not have the same historic knowledge. He was aware that some of the adults in the park accused Reher of videotaping the children. He also knew that one woman stated that Reher had been to the park several times earlier watching the children. The Court concluded that those allegations did not give rise to probable cause. It did conclude, however, that Vivo could have had a reasonable belief that they did. He was therefore entitled to qualified immunity.

Law Of The Case Doctrine Applies To Subject Matter Jurisdiction

SIERRA CLUB v. KHANJEE HOLDING (US) (August 24, 2011)

Franklin County Power wanted to build a coal power plant in southern Illinois. It applied to the Illinois Environmental Protection Agency for a permit in 2000. The EPA issued the permit. By its terms, the permit would become invalid if construction was not commenced within 18 months. Khanjee Holding became lead developer for the project in 2002. The project was delayed due to collateral disputes. In late 2004, the EPA determined, at least on a preliminary basis, that the permit had expired. Sierra Club filed suit to prevent construction of the power plant. The district court granted the motion for summary judgment and enjoined construction. The Seventh Circuit affirmed (opinion and intheiropinion), concluding that Sierra Club had standing to sue, that the defendants failed to commence construction within the required 18 months, and that the permit had expired. Sierra Club sought penalties and fees in the district court. Judge Gilbert (S.D. Ill.) imposed a $100,000 statutory penalty and awarded attorneys fees and costs. Khanjee appeals.

In their opinion, Seventh Circuit Judges Bauer, Ripple, and Williams affirmed. The Court first addressed Khanjee's challenge to subject matter jurisdiction under the Clean Air Act. It noted that it had decided the jurisdictional issue in the first appeal and that it had become the law of the case. It rejected Khanjee's argument that the doctrine did not appy to subject matter jurisdiction, although it recognized some earlier precedents that suggested as much. On the merits, the Court concluded that Khanjee had waived its constitutional violation claims and was left only with its claim that its relationship with the other original defendants was insufficient to support a penalty. The Court rejected that argument both on the law of the case doctrine and, alternatively, on the merits. Even if, as Khanjee argues, the Claim Air Act citizen suit provision allows an action only against an owner or operator, Khanjee exercised enough control over the project that it can be considered an owner or operator. With respect to the size of the penalty, the Court concluded that the district court considered all the appropriate factors and imposed a reasonable penalty. Finally, the Court found that the district court did not abuse its discretion in awarding fees and costs. It rejected Khanjee’s argument that a court should not award fees to "well-funded" parties.

Plaintiffs Adequately Alleged That Defendant's Conduct Was A Plausible Cause Of Some Of Its Loss

ANCHORBANK v. HOFER (August 18, 2011)

Clark Hofer was an AnchorBank employee. Through his employer, he had an individual 401(k) account. One of the investment options in the account was the AnchorBank Unitized Fund, which consisted of cash and AnchorBank stock. In late 2008 and early 2009, Hofer and two colleagues, also bank employees, engaged in trades in the Fund. AnchorBank and the Trustee of the Fund brought suit against Hofer, alleging violations of Sections 9(a) and 10(b) of the Securities Exchange Act of 1934, Wisconsin securities law, and common law claims for breach of fiduciary duty and unjust enrichment. Magistrate Judge Crocker (W.D. Wis.) dismissed the complaint with prejudice. He concluded that plaintiffs failed to meet the loss causation pleading requirements. Plaintiffs appeal.

In their opinion, Seventh Circuit Judges Manion, Wood, and Williams reversed and remanded. The only issue on appeal was the sufficiency of the complaint. The Court noted that plaintiffs had to satisfy the Federal Rules of Civil Procedure 8(a) and 9(b) general pleading requirements, the Securities Exchange Act of 1934 sections 9(a) and 10(b) pleading requirements, and the Private Securities Litigation Reform Act pleading requirements. The Court concluded that plaintiffs satisfied the Rule 8(a) short and plain statement requirement and the Rule 9(b) fraud with particularity requirement. With respect to the latter, the Court noted that the complaint described the setup of the Fund, how it bought and sold stock on the open market, how it maintained its cash-to-stock ratio, how Hofer and his colleagues used their knowledge of Fund practices to buy and sell in ways that affected the price of the underlying stock, and how Hofer and his colleagues enjoyed extraordinary gains in doing so. The Court turned to the pleading requirements of the Securities Exchange Act and the PSLRA. On appeal, Hofer asserts that the complaint failed to adequately allege scienter, reliance, economic loss, and loss causation. The Court disagreed. It summarized the particular allegations of the complaint and found each of the elements adequately alleged. It noted that Hofer had competing explanations for his conduct that could affect scienter and reliance -- but rejected the assertion that they justified dismissal of the complaint. The Court also conceded that general economic conditions could have contributed to the dramatic decline in the value of AnchorBank stock. A plaintiff need not allege or prove that its entire loss is the result of the defendant's conduct -- only that it is a plausible cause of some of the loss.

Subcontractor Is Not Third-Party Beneficiary Of Performance Bond

CITY OF YORKVILLE v. AMERICAN SOUTHERN INSURANCE COMPANY (August 12, 2011)

Ocean Atlantic Services was the real estate developer for the Westbury East Village subdivision in Yorkville, Illinois. Yorkville required Ocean to include certain public improvement projects in its plan, which would eventually be turned over to Yorkville. It also required Ocean to post a bond to ensure completion of the improvements. Ocean obtained a number of bonds from American Southern Insurance Company. Ocean ran into financial difficulties and was unable to complete the project. Several subcontractors, including Aurora Blacktop Incorporated, went unpaid. The City of Yorkville made a demand on American Southern. American Southern refused the demand but Yorkville did not pursue the matter further. Aurora filed suit against American Southern in the name of the City of Yorkville but for its own benefit. Judge Darrah (N.D. Ill.) concluded that Aurora had no standing to assert a claim on the bonds and dismissed the complaint. Aurora appeals.

In their opinion, Seventh Circuit Judges Rovner, Williams, and Hamilton affirmed. Aurora concedes it is not a party to the bonds but nevertheless asserts that is a third party beneficiary with standing to bring a claim. Relying on Illinois law and the Restatement (Third) of Suretyship and Guaranty, the Court distinguished between payment bonds and performance bonds. Illinois courts generally recognize third-party beneficiaries in the context of a payment bond, in which the surety is liable for the contractor’s promise to pay for all labor and materials. Illinois courts are less likely to find third-party beneficiary status in the context of a performance bond, where there is no promise to pay for labor and materials. The bonds at issue here contain no language suggesting that American Southern was liable to anyone other than the City of Yorkville. The district court did not err.

School District's Failure To Protect Teacher From Harm Did Not "Shock The Conscience"

JACKSON v. INDIAN PRAIRIE SCHOOL DISTRICT 204 (August 11, 2011)

Paula Jackson is a special education support teacher for Indian Prairie School District 204. Her role was to assist the classroom teachers by providing individual support for special needs students. Beginning with the 2005-2006 school year, she was assigned to the White Eagle Elementary School. For the following three school years, she had responsibility for W. K., a troubled boy prone to violence. Over those three years, she witnessed episode after episode of erratic and violent behavior. The district held Individual Education Plan meetings in April 2006, June of 2006 , September of 2006, May of 2007, June 2007, October 2007, and March 2008. By the early 2007 meetings, Jackson recommended that the W.K. be transferred. Jackson also requested that he be reassigned to a different support teacher. Before either of those things happened, W.K. had another outburst. The school principal calmed him down and instructed Jackson to meet with him. When she arrived at his room, he swung a chair at her. In the ensuing struggle, she fell and was injured. W.K. was suspended and never returned to White Eagle. Jackson brought suit against the school district and several administrators pursuant to § 1983, alleging a substantive due process violation. Judge St. Eve (N.D. Ill.) granted summary judgment to the defendants. Jackson appeals.

In their opinion, Seventh Circuit Judges Bauer, Posner, and Williams affirmed. The Court noted the two exceptions to the general rule that the due process clause does not impose a duty on a state to protect individuals from harm by private actors. One is when the state has custody over a person, which is not applicable here. The other, on which Jackson bases her claim, is when the state affirmatively places a person in danger. Under that exception, a plaintiff must establish that the defendant affirmatively created or increased the danger, that her injuries were the proximate result of the defendant's failure to protect her, and the failure to protect her "shocks the conscience." The Court resolved the case on that third prong. Although the "shocks the conscience" standard is not precisely defined, the Court noted that it requires conduct on the "more culpable end of the tort law spectrum of liability." The Court recited the facts that supported a finding of such conduct and those that supported the opposite conclusion. Although admitting that it was a close call, the Court concluded that they did not satisfy the due process standard.

Plaintiff Fails To Allege Facts To Support Fraudulent Concealment

LOGAN v. WILKINS (July 8, 2011)

John Logan used to own a mobile home park in east-central Indiana. He claims that he no longer owns it as a result of the conduct of various local government officials and employees. Beginning in 2005, he says, these people started rumors that the health department was going to close the park, told the tenants to stop paying rent, obtained an order for the destruction of thirteen homes, hired an inept contractor who ended up destroying fourteen homes, and stole property. In September 2007, he lost the mobile home park to foreclosure. He also claims that the sheriff had someone order the tenants to vacate after the foreclosure. Logan brought suit in March of 2009 pursuant to §§ 1983 and 1981. Judge Lawrence (S.D. Ind.) dismissed the complaint. He found most of the allegations untimely under § 1983's two-year statute of limitations. The only claims within the two-year period related to the post-foreclosure conduct. Since Logan no longer own the property at that time, he had no claim. In an amended complaint, Logan alleged that the defendants concealed their conspiracy. The district court again dismissed. Logan appeals.

In their opinion, Chief Judge Easterbrook and Judges Manion and Williams affirmed. In Indiana, the statute of limitations for a § 1983 claim is two years and it runs from the time a plaintiff knew or should have known of a constitutional violation. A defendant may be estopped from asserting a statute of limitations defense if the defendant has concealed material facts from the plaintiff. Logan has not alleged any such facts on the part of the defendants. He simply claims that his attorney was prompted to investigate upon receiving some information at some point after the conduct occurred. But Logan and his attorney knew of the facts as they occurred and they could have investigated earlier. With respect to the post-foreclosure claims, the Court stated that Logan waived any argument by not addressing the claims in his opening brief. The Court added that no facts were alleged to support Logan's conspiracy theory. Finally, the Court declined Logan's request to remand for an opportunity to amend his complaint once again.

Vague Affidavit Did Not Carry Employer's Burden

JOHNSON v. HIX WRECKER SERVICE (July 1, 2011)

Bobby Johnson worked twelve-hour shifts as a tow truck driver for Hix Wrecker Service in 2006. He later sued the company, claiming that he had not been paid for overtime in violation of the Fair Labor Standards Act. Hix Wrecker claimed that Johnson was not subject to the FLSA but, rather, was exempt under its motor carrier exemption. Judge Lawrence (S.D. Ind.) granted summary judgment to Hix. Johnson appeals.

In their opinion, Chief Judge Easterbrook, Circuit Judge Williams, and District Judge Pallmeyer reversed and remanded. The Court recognized that not all employees of a motor carrier are governed by the FLSA. If the employee engages only in intrastate commerce, the FLSA governs. If the employee is wholly engaged in interstate commerce, the employee is exempt from the FLSA and comes under the jurisdiction of the Secretary of Transportation. Many motor carriers and their employees engage in both in intrastate and interstate commerce -- but they cannot be subject to both statutory schemes. Under a Department of Transportation interpretation, an employee is exempt from the FLSA if the employer presents "concrete evidence" that the employee is "engaged in interstate commerce within a reasonable period of time" before the time period in question. A driver who has not engaged in interstate commerce can still be exempt if the carrier has been engaged in interstate commerce and the employee could be expected to engage in the commerce. The interpretation also adopted four months as a "reasonable period of time." In support of its motion for summary judgment, Hix did not assert that Johnson actually engaged in interstate commerce. Instead, it submitted an affidavit that asserted that Hix "routinely" provides interstate services and that Johnson could have been assigned an interstate wrecker run at any time during his employment. The Court concluded that Hicks did not carry its burden of proving the exemption. The affidavit's use of the term "routinely" was too vague to meet the four-months reasonable time threshold. In the Court's view, "routinely" could mean, for example, once every six months or once a year.

Laid Off Tenured Teachers Are Entitled To Recall Procedures

On June 13, 2011, the Court granted the Board's Petition for Rehearing, vacated this opinion, and certified three questions to the Illinois Supreme Court.

CHICAGO TEACHERS UNION v. BOARD OF EDUCATION (March 29, 2011)

Chicago's Board of Education operates the city's public school system and employs more than 20,000 teachers. In the summer of 2010, the Board laid off almost 1300 of them. The Board received an increase in federal funding toward the end of that summer and was able to recall over 700 teachers who had been given the layoff notices. The Board used no particular procedure or policy in the recall. The Board has also continued to fill vacancies as they open up in the system naturally, again without any particular policy with respect to laid off teachers. The Chicago Teachers Union filed suit complaining that the Board was filling many of those vacancies with new hires instead of recalls. They sought injunctive relief. Judge Coar (N.D. Ill.) concluded that the laid-off teachers had a property interest emanating from state law that entitled them to some retention procedures. The court also found that the Union met the other elements of injunctive relief and therefore entered an injunction ordering the Board to rescind the discharges of (although not reinstate) tenured teachers and to promulgate a set of recall rules in conjunction with the Union. The court enjoined further layoffs until such rules had been promulgated. The Board appeals.

In their opinion, Circuit Judges Manion (concurring in part and dissenting in part) and Williams and District Judge Clevert affirmed, with modifications to the injunction. In order to be entitled to Fourteenth Amendment due process protection, one must first establish the existence of a protected property (or liberty) interest. Property interest themselves are not created by the Constitution but come from independent sources, frequently state law. In the employment context, a property interest only arises when an employer's discretion to deny employment is limited. Under Illinois law, tenured teachers enjoy permanent employment, subject only to removal for clause. The Court concluded, therefore, that an Illinois tenured teacher has a property interest in continued employment. But establishing the property interest only takes us to the next question -- what process is due. Hearings are generally not necessary when the deprivation of the property interest is caused by a good faith economic layoff. Here, the Union does not challenge the good faith of the layoffs nor does it ask for hearings. Instead, it seeks opportunities for its members to compete for vacancies as they arise. The Court looked to state law prior to 1995, when Illinois had "reserve teachers." Basically, reserve teachers were competent teachers who were laid off but who had significant opportunities with respect to vacant positions. When the Legislature eliminated reserve teachers in 1995, it authorized the Board to establish procedures for layoffs and recall rights. Relying in large part on Illinois law interpreting the new provision, the Court concluded that the Board must use the "authority" given it by the Legislature to formulate layoff and recall procedures. Applying the Mathews weighing analysis, the Court noted an employee has a substantial interest in retaining her job and a significant risk of deprivation without any procedures at all. It concluded that the teachers were entitled to a recall procedure that would allow them a meaningful opportunity to demonstrate their qualifications for open positions for a reasonable period of time. With respect to the content of the injunction, however, the Court had two comments. First, it removed the requirement that the Board promulgate rules in conjunction with the Union. Nothing in the statute requires consultation with the Union -- although nothing prohibits it, either. Second, the Court emphasized that the district court's order requiring that the discharges be rescinded did not result in the recall of any teachers. The teachers are still laid-off.

Judge Manion dissented in part and concurred in part, although his concurrence was limited to the majority’s modification of the injunction. First, Judge Manion disagreed with the conclusion that the Illinois statute required the Board to enact recall procedures in the event of the layoff. He pointed out that the Board has established recall procedures in other circumstances, such as a school closing. Second, although teachers have a property interest in their employment, he noted that the Board terminated their employment and honored all process to which they were entitled. No case holds that an employee in that situation has some residual property rights. Third, Judge Manion disagreed with the majority's identification of recall rights as property rights. He pointed out the circularity of the logic. The majority concluded that the recall procedures were the property rights. In order to protect those rights, the Court ordered the Board to develop the procedures. Simply put, even if the statute and other circumstances created a property interest, the property interest cannot be the procedures themselves.

Unequivocal Intent Not To Perform Is A Breach

ARLINGTON LF, LLC v. ARLINGTON HOSPITALITY, INC. (March 3, 2011)

Arlington Hospitality, Inc. owned a number of hotels, mostly in the Midwest. Because of financial difficulties, Arlington filed for Chapter 11 bankruptcy in 2005. At about the same time, it entered into an agreement with a special-purpose entity, Arlington LF. Pursuant to the agreement, LF agreed to provide a $6 million revolving loan as well as other financing. Arlington agreed to two fees, "payable immediately" -- a $100,000 commitment fee and a $210,000 funding fee. The bankruptcy court approved the agreement with the caveat that LF had to give Arlington notice of any default and three business days to cure. A few weeks later, after Arlington had drawn down over $3 million of the loan, LF told Arlington's investment banker that it was unwilling to fund additional monies. LF also told the creditors’ committee did it would make no further loans. Only after those statements were made did tell LF actually send Arlington an invoice for the unpaid fees. When Arlington failed to pay, LF sent the required notice of default and gave Arlington three days to cure. Arlington still did not pay. Instead, with the court's approval, it sold its assets to a third party. It repaid the money it had borrowed from LF but not the fees. LF filed a motion in the bankruptcy court for its fees. The bankruptcy court denied the motion, ruling that LF was not entitled to the fees because it was guilty of an anticipatory breach. The district court reversed and remanded. It noted that, because the fees were "payable immediately," Arlington was already in default at the time of the breach. On remand, the bankruptcy court agreed with Arlington that it was not in default before LF’s breach because LF had not provided the required notice and opportunity to cure. It nevertheless felt bound by the district court's earlier opinion and awarded LF $842,000. The district court again reversed. It stated that the bankruptcy court had misunderstood the scope of its earlier ruling. It agreed that Arlington could not have been in default until it had an opportunity to cure. It remanded with instructions to enter judgment for Arlington. LF appeals.

In their opinion, Judges Bauer, Wood, and Williams affirmed. The Court concluded that it was faced with a rather simple question -- who breached the contract first? Under Illinois law, an unequivocal intent not to perform amounts to an anticipatory breach. The Court found no clear error (and, in fact, agreed with) the bankruptcy court's findings that the statements to the investment banker and the creditor's committee constituted just such a breach. Statements to the investment banker, Arlington’s agent, are the same as statements to Arlington. The Court also rejected LF's argument that the Statement of Account that it later sent to Arlington acted as a retraction of its breach. The only "retraction" was one line on the form indicating $2.5 million of available loan commitment. That statement is not sufficiently clear and unequivocal to constitute a retraction of the earlier breach. By the time LF provided the required notice, it was in breach. Its breach discharged Arlington's remaining obligations, including its obligation to pay the fees.

Court Lacks Appellate Jurisdiction Over Immunity Denial If It Cannot Resolve the Question On Undisputed Facts

HILL v. COPPLESON (November 22, 2010)

Eighteen-year-old Harold Hill was arrested in early 1992. While in custody, two detectives began questioning him about a sexual assault and murder that happened almost 2 years earlier. According to Hill, they questioned him for hours and abused him both physically and mentally. At some point, Assistant State's Attorney Rogers also began questioning Hill. Hill eventually confessed to the crime and implicated two other men. Those two men were arrested and also eventually confessed to the crime -- although one was never charged because, even though he gave a detailed confession, he was in jail at the time of the crime. In late 1994, Hill was convicted of the crime and sentenced to life in prison. Over 10 years later, Hill was exonerated through DNA testing and his conviction was vacated. Hill filed suit against the two detectives, Rogers, and the City of Chicago alleging that the defendants violated his Fifth Amendment rights by coercing the confession and that they engaged in a civil conspiracy in violation of § 1983. Judge St. Eve (N.D. Ill.) denied the individual defendants' motions for summary judgment, including Rogers' claim that he was entitled to both absolute prosecutorial immunity as well as qualified immunity. Rogers appeals.

In their opinion, Seventh Circuit Judges Ripple, Williams, and Tinder dismissed for want of jurisdiction. The Court has jurisdiction of an appeal from the denial of summary judgment on either absolute or qualified immunity grounds only if they can decide the questions presented based on undisputed facts. Here, there is a dispute in the record over the timing of Rogers' arrival at the police station. Rogers claims that he arrived only after Hill's confession -- Hill claims that he did not confess until after meeting with Rogers. Rogers' success on his absolute immunity claim depends on whether he was acting as a prosecutor or investigator. The answer to that question depends on whether probable cause existed prior to his arrival. Rogers' success on his qualified immunity claim depends on whether there is evidence that he was involved in the coerced confession. The probable cause and the coercion questions depend on the timing of Rogers' arrival at the police station and thus cannot be decided on a record of undisputed facts. Because the Court cannot resolve the question on undisputed facts, it lacks jurisdiction.

Plaintiffs Foreseeable Conduct Does Not Stand As An Accident's Sole Cause

MALEN v. MTD PRODUCTS (November 19, 2010)

Donald Malen bought a reconditioned riding lawnmower in 2001 from Home Depot. The mower was manufactured in 1998 by MTD Products. It was designed with two particular safety features that turned off the engine if the operator rose from his seat or shifted into reverse, respectively, without completely disengaging the mower blade. It also came with warning labels instructing the operator to disengage the blade before leaving his seat. Malen operated the mower for several years without a problem. In late 2004, the mower got hung up on a curb while Malen was mulching leaves. He tried "rocking" between forward and reverse but without success. He lifted his foot from the pedal that engages the blade and stepped off the mower. He did not turn off the engine. He slipped as he stepped to the ground and the blade struck and severely injured his foot as it went under the mower. He brought suit against Home Depot and MTD Products under strict products liability and negligence theories. The negligence theories were that: a) the mower was negligently manufactured because the safety devices were not operable and b) the mower was negligently designed because it did not have a fail-safe system that would have stopped the blade even without the safety device. Discovery established that: a) Malen thought he disengaged the blade when he lifted his foot off the pedal, b) the safety devices were present but not connected, c) when connected, the devices worked and stopped the blade within 2.6 seconds of the operator rising from his seat, and d) a fail-safe version of the safety feature was available at the time Malen purchased the reconditioned mower. Judge Norgle (N.D. Ill) granted summary judgment to the defendants, concluding that Malen understood and ignored the warning labels and was, therefore, the sole cause of his accident. Malen appeals.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Evans and Williams reversed and remanded. Under both the strict liability and negligence theories of liability, causation is a necessary element. The Court concluded that a reasonable jury could find that the mower was defective and the proximate cause of Malen's injury. The Court first addressed the issues of unreasonably dangerous and negligent design, even though the district court found no need to. It concluded that a jury could find, on the record before it, that the mower was originally put into the stream of commerce without the safety switch. Such a finding would lead to the conclusion that the mower was unreasonably dangerous and that its manufacturer was negligent. Although Malen did not purchase the mower new, the Court concluded that a reconditioned product sold with a full warranty should be treated like a new one. The Court found no controlling Illinois decision on that point, but found support for its conclusion in other jurisdictions and from the Restatement. The Court found sufficient evidence to go to a jury on the negligent design theory as well. The evidence established that MTD incorporated the improved, fail-safe design in its products before Malen purchased his mower. Finally, the Court addressed proximate cause and identified several reasons why summary judgment based on proximate cause was improper. First, the Court concluded that Malen’s failure to heed the warnings was not relevant if the mower was defective for lack of a safety system. Second, if it was relevant, it would be a factor only in determining whether Malen’s conduct was foreseeable. The evidence in the record is that the safety device was developed because that kind of conduct was actually not only foreseeable but routine. Third, the Court concluded that Illinois would extend crashworthiness doctrine to mowers. That doctrine requires a manufacturer to reasonably design a product to minimize the effects of an accident. Malen's conduct here was foreseeable under the crashworthiness doctrine and does not establish proximate cause. Finally, under Illinois law, Malen is barred from recovery only if his negligence contributed more than 50% to the proximate cause of the injury. For all those reasons, the Court found summary judgment erroneous.

Employer Cannot Raise Issues On Appeal That It Failed To Argue Or Present To Jury Below

THOMPSON v. MEMORIAL HOSPITAL OF CARBONDALE (November 3, 2010)

Archie Thompson was a paramedic with the Jackson County Ambulance Service (JCAS), which served the Southern Illinois Regional Emergency System. Memorial Hospital of Carbondale had medical control of the System. Thompson was the only African-American full-time paramedic in the entire System. In late 2003, Thompson handled a diabetic emergency call. He administered an intravenous solution and revived the patient. The patient declined further medical assistance and Thompson left. After he returned to his base, Tim Brumley (Thompson's supervisor) criticized him for not following the proper protocol of calling medical control before leaving the scene of a diabetic emergency. Thompson claimed not to know the protocol. It was not posted at the base or in his ambulance. Brumley also learned, on inquiry, that other paramedics were doing the same thing. Brumley reported his concerns to Paula Bierman, the System Coordinator. Bierman advised the Hospital's Medical Director that Thompson should be disciplined, citing both his “total disregard” for protocol and a then-recent failing test result. A few days later, Bierman prepared a disciplinary report removing Thompson from primary care medical duties and signed Doolittle's initials. Thompson was placed on paid probation for three months, during which time he was under constant supervision. While on probation, he began seeing a counselor. Shortly thereafter, he took a medical leave of absence and eventually decided not to return to work. Thompson filed suit against Memorial Hospital and the ambulance service, alleging race discrimination, hostile work environment, and constructive discharge. Judge Murphy (S.D. Ill.) granted summary judgment to the ambulance service on all claims and to Memorial Hospital on the hostile work environment and constructive discharge claims. A jury heard the race discrimination claim against the Hospital, found in Thompson's favor, and awarded $500,000. The Hospital appeals from the jury verdict -- Thompson cross-appeals from the hostile work environment and constructive discharge summary judgment rulings.

In their opinion, Judges Kanne, Evans, and Williams affirmed in all respects except with respect to the amount of damages. The Court dispensed with the cross-appeal in relatively short order. To be successful, a hostile work environment claim must contain evidence of severe and pervasive harassment -- so much so that it changes the conditions of employment. The test is even higher for a constructive discharge claim. The Court concluded that the evidence here did not reach that level. With respect to the Hospital's appeal, the Court noted that it raised several arguments that were improperly preserved below. First, the Hospital argues that Thompson was not its employee. But it admitted below that this was a factual question and it never presented the issue to the jury. Second, the Hospital argues that the jury should not have heard testimony of the racial comments Bierman made because she was not the decision maker. But the evidence is relevant if she exerted significant influence over the decision maker. Here, the district court made a threshold determination that there was enough evidence on that issue to go to the jury and the Hospital did not seek an instruction on the point. Third, the Hospital argued that the probation was not an adverse employment action. But, although probation is not always an adverse employment action, the district court ruled that whether it was here was a factual question. The Hospital did not argue the point the jury or ask for an instruction. Having decided not to press these issues before the jury, the Hospital cannot rely on them now. Finally, the Court did believe that the $500,000 award was excessive. There was testimony of Thompson's depression and anxiety that his therapist characterized as "severe." But the adverse employment action was only placement on probationary status with no change in compensation. After reviewing awards in similar cases, the Court landed on a remittitur to $250,000.

Satisfaction Of Arbitration Precondition Is A Question For The Arbitrator

LUMBERMENS MUTUAL CASUALTY CO. v. BROADSPIRE MANAGEMENT SERVICES (October 13, 2010)

Broadspire Management Services purchased an insurance administration business from Lumbermens Mutual Casualty Co. The parties agreed on a purchase price formula tied to the business’ success over the following four years. Under the contract, Broadspire calculated a proposed payment each year and submitted a report to Lumbermens. It used a different contract formula to calculate the expected earnings of any business sold during the first four years and submitted a similar report to Lumbermens. Lumbermens had 90 days to accept the calculation or submit a "Disagreement Notice" with a reasonably detailed basis for its disagreement. The agreement provided for binding arbitration in the event of a disagreement. Lumbermens ultimately disagreed with four Broadspire reports and sought arbitration. Broadspire claimed that the "Disagreement Notices" were deficient and refused to arbitrate. Lumbermens filed a Petition in Aid of Arbitration. Judge Leinenweber (N.D. Ill.) ordered arbitration, concluding that the sufficiency of the notice was a question for the arbitrator. Broadspire appeals.

In their opinion, Justice O'Connor and Judges Williams and Sykes affirmed. The only question before the Court was whether a court or an arbitrator should rule on Broadspire's "insufficient notice" argument. The Court concluded that the Supreme Court's decision in Howsam provided the answer. There, the Supreme Court held that a question relating to a grievance’s timeliness was a "gateway procedural dispute" for the arbitrator. The Seventh Circuit, following Howsam, has distinguished between substantive and procedural questions – the latter being questions for the arbitrator. Employers Insurance held that a consolidation question was a procedural one for the arbitrator. Zürich American likewise held that a question regarding the preclusive effect of a state court judgment was a procedural question for the arbitrator. Here, there is no disagreement regarding the existence of an agreement to arbitrate, which would be decided by a judge. The only disagreement is a procedural one and is properly in the hands of the arbitrator.

Acts Outside The Bounds Of Granted Authority Are Not "Under Color Of State Law"

WILSON v. PRICE (October 4, 2010)

Midnight Auto Express is a car repair business located in Aldermen Keith Price's Sixth Ward in Harvey, Illinois. Midnight apparently had a number of cars parked illegally in front of its shop on May 2, 2008 because Price received a number of complaints from his constituents. Price unsuccessfully tried to get the City to remove the cars. Undaunted, he paid a personal visit to the shop and spoke with Christopher Wilson, a mechanic. Wilson refused Price's demand to move the cars and also refused to contact the owner. Instead, he walked away. Price attacked Wilson, leaving him unconscious. Wilson and his wife brought suit against Price and Harvey, alleging claims under and state law. Judge Hibbler (N.D. Ill.) dismissed the § 1983 claim on the ground that Price had not acted under color of state law and declined to exercise jurisdiction over the state claims. The Wilsons appeal.

In their opinion, Judges Ripple, Manion, and Williams affirmed. The only issue on appeal was whether Price was acting under color of state law. The Court noted that the fact that he is a government official is not enough. An act is under color of state law when it is a misuse of the power the actor has been granted by state law. In other words, it must be related to the performance of his official duties. The Court noted that Price's aldermanic duties are purely legislative. As such, they involve enacting legislation and related legislative investigation. The Court analyzed his conduct to determine whether the required relationship existed. Of course, none of his activities that day related to the passage of legislation. He could, however, have visited the repair shop as part of his legislative investigation role. Even if that is so, however, the Court concluded that he crossed over into a law enforcement role once he ordered the cars moved. Since Price had no enforcement authority, his actions were not related to his official duties – and not under color of state law. The altercation was one between private citizens and does not support a § 1983 action.

Rule 17(a) Real Party In Interest Objection Waived

RK CO. v. SEE (September 22, 2010)

Dr. Jackie See founded Harvard Scientific Corporation (HSC) and was very active in its efforts to develop and market a product to treat sexual dysfunction. In 1997, the FDA discovered that HSC had falsified some findings in its new drug application. The FDA began an audit and instructed HSC to cease its clinical studies. Throughout 1997 and 1998, however, HSC continued to make public statements claiming that it was moving forward with its product and that the FDA had approved further clinical trials, when it had not. In mid-1998, RK Co. purchased $500,000 worth of HSC stock. By mid-1999, HSC was bankrupt and RK’s stock was worthless. RK sued HSC, Dr. See, and other HSC employees. After lengthy litigation, Dr. See (the last remaining defendant) and RK consented to a bench trial before a magistrate judge. Magistrate Judge Keys (N.D. Ill.) found for RK on each of the claims. See appeals.

In their opinion, Judges Bauer, Rovner, and Williams affirmed. The Court first rejected See's argument that RK was not the "real party in interest" because it was not a true legal entity for several reasons: a Rule 17 (a) "real party in interest" objection may be waived, See waived it by not bringing it up until midway through the trial, the fact that he may not have known until trial is not excused since over seven years had elapsed since the complaint's filing, and the only consequence of a more timely objection would have been a substitution of parties. The Court also rejected See's standing arguments. It concluded that RK easily met the minimum requirements for constitutional standing (injury in fact, causation, and redressability) and that See waived the prudential standing argument. Next, the Court held that the magistrate judge did not err in finding that the evidence was sufficient to support the claims. See challenged the lower court's decision to admit certain deposition testimony but failed to include in the record the transcript of the proceedings below. The Court dismissed his challenge, being unable to meaningfully review the court's reasoning. Finally, the Court found no abuse of discretion in the lower court's award of prejudgment interest and attorney's fees. Prejudgment interest is presumptively available and See failed to specify any particular objections to the fees.

Plant Closing Agreement Unambiguously Granted Retirees Lifetime Medical Benefits

TEMME v. BEMIS CO. (September 13, 2010)

Hayssen Manufacturing Company operated a facility in Sheboygan, Wisconsin until 1985. A strike during the summer of that year led to the company's decision to close the plant. The company and the union representing its workers entered into a Plant Closing Agreement (the “Agreement”). The agreement terminated the strike, all employment relationships, and the union bargaining relationship. It also addressed employee benefits. With respect to health benefits, it provided that terminated employees who were not eligible for or who did not apply for retirement benefits could continue their medical coverage for 12 months, or until they were covered by another plan, by paying the full monthly premiums. It further provided that individuals who qualified and elected to retire were eligible for retired employee medical benefits. Although the agreement did not define the scope of "retired employee medical benefits," the final Collective Bargaining Agreement (CBA) did. Among other terms, it provided for: a) two $50 deductibles per year, b) 100% prescription drug coverage, and c) dependent spouse coverage after the death of a retiree. The company provided those benefits, even after being acquired by Bemis Company, until 2004. In 2005, the deductible was increased to $250. In 2007, prescription drug coverage was eliminated. A class action was filed on behalf of the retirees. Judge Stadtmueller (E.D. Wis.) certified the class and granted summary judgment to Bemis. The class appeals.

In their opinion, Circuit Judges Kanne and Williams and District Judge Springmann reversed and remanded. The Court laid out several principles of contract interpretation: a) if a contract is not ambiguous, there is no need for external evidence, b) contract terms are given their ordinary meaning, c) a contract is read as a whole and in conjunction with related documents, and d) welfare benefits contracts are presumed not to create a lifetime vested benefit unless specifically provided. Applying those principles, the Court looked to both the Agreement and the CBA. It rejected Bemis’ argument that the CBA was extrinsic evidence, citing language in the Agreement expressly permitting reference to the CBA "to effectuate the provisions" of the Agreement. Reading the agreements together, the Court concluded that they unambiguously provided retired employees with health benefits. Bemis further argued, however, that any benefits were not vested for life. The Court disagreed, noting that the presumption against vesting is not as strong in a plant closing agreement as it is in, for example, a short-term collective bargaining agreement. It found several indicia of an intent to vest. It identified the "stark contrast" between the terminated employee and retired employee benefits. The retired employee benefits do not have an end date, as do those for the terminated employees. In addition, the provision granting coverage to spouses after the death of a retiree strongly implied an intent to vest lifetime coverage. Although the Court concluded that the Agreement provided for lifetime medical benefits (and it reversed summary judgment in Bemis' favor), it did not conclude that Bemis breached the agreement. The Court found questions of fact regarding whether any changes could be made to the lifetime coverage and the impact, if any, of a reservation of rights clause in the underlying insurance contract. The Court remanded for further determinations. 

Isolated Statements, Inconsistent With The Entire Context, Do Not Support A Finding Of Actual Discharge

CHAPIN v. FORT-ROHR MOTORS (September 3, 2010)

Trent Chapin is a used-car salesman. For years, he has worked on and off for Larry Kruse at several different dealerships owned by Bob Rohrman. In early 2004, Kruse hired him at Rohrman's Mid-States Motors in Fort Wayne, Indiana. Within weeks, however, Kruse was replaced by a Pakistani Muslim. The new manager fired Chapin within a month. In June, Kruse became the manager of Rohrman's newly opened Fort-Rohr dealership, also in Fort Wayne. He hired Chapin again as a used-car salesman. Chapin filed an EEOC charge in February of the following year. He alleged that Mid-States had discriminated against him on the basis of race. When Kruse found out about it, he was very upset. He met with Chapin and made it very clear to him that he needed to withdraw the EEOC charge if he wanted to keep his job. Although Chapin indicated at the meeting that he would withdraw the charge, he did not -- and he did not return to work. Kruse tried to contact Chapin on several occasions after the meeting. They finally met again in March. Kruse made it clear at that meeting that he had not intended to fire Chapin and that he still had a job. Chapin told him that he would return to work when he was finished with a painting project. The dealership followed up that meeting with several letters to Chapin stating that he was still employed and was expected to be at work. Chapin filed suit under Title VII, alleging racial discrimination against Mid-States and retaliation against Fort-Rohr. A jury found against him on his discrimination claim but found in his favor on the retaliation claim, awarding $1.1 million in compensatory and punitive damages. Fort-Rohr appeals.

In their opinion, Judges Flaum, Williams, and Sykes reversed and remanded. Title VII makes it illegal for an employer to take an adverse employment action against an employee for filing an unfair employment charge. The Court addressed both of Chapin's “adverse employment action” theories -- that he was actually discharged or that he was constructively discharged. On the former, the Court concluded that no rational juror could have found that Chapin was actually discharged at the first meeting with Kruse. The Court conceded that the exchange at the first meeting, in a vacuum, could support an argument for discharge, particularly if he filed suit the next day. Kruse was angry, raised his voice, and told Chapin that he would not have a job unless he withdrew the charge (which Chapin did not). However, the Court emphasized that the question must be addressed not in isolation but in the context of all subsequent interaction. All of the dealership's conduct after that short meeting is inconsistent with an actual discharge. In fact, Chapin's own testimony is that he was not fired at that meeting but that he would have been fired had he returned without withdrawing the charge. There was no actual discharge. With respect to the constructive discharge argument, the Court again concluded that no reasonable juror could find for Chapin. Two forms of constructive discharge are recognized in this Circuit and both require intolerable working conditions. In the first, an employee resigns because of discriminatory harassment -- that does not apply here. In the second, an employer acts in such a way as to communicate to a reasonable employee that he or she will be terminated. Again, Chapin may have had such a belief immediately after the first meeting but such a belief would have been corrected almost immediately in response to subsequent events and communications. Chapin simply decided not to return to work -- the Court refused to speculate on what would have happened had he decided otherwise.

Nursing Home's Accession To Residents' Racial Preferences Created Hostile Environment

CHANEY v. PLAINFIELD HEALTHCARE CENTER (July 20, 2010)

Brenda Chaney, an African-American female, worked at the Plainfield Healthcare Center as a nursing assistant for three months in the summer of 2006. Plainfield's policy (possibly undertaken in a good faith belief that it was required by law to do so) was to acquiesce in its residents' racial preferences. Accordingly, every daily assignment sheet noted that particular residents preferred no African-American nursing assistants. Chaney also was the target of a number of derogatory racial comments during her employment. Plainfield did take corrective action when instances of racial remarks were reported. In September of 2006, Chaney and a coworker both refused to come to the aid of a resident. A nurse reported the incident and also reported that Chaney used profanity when she ultimately did respond. Although the unit supervisor's investigation and knowledge of Chaney led her to be skeptical of that charge, the director of nursing decided to fire Chaney. She was informed that the reason for her termination of employment was her use of profanity. Chaney brought an action under Title VII alleging a hostile work environment and an unlawful termination. Judge Barker (S.D. Ind.) granted summary judgment to Plainfield. Chaney appeals.

In their opinion, Judges Rovner, Williams, and Sykes reversed and remanded. The Court had "no trouble" concluding that Chaney's work environment was objectively offensive. It relied not only on the overt derogatory comments and the more subtle remarks supported by the record, but also the fact that the daily assignment sheet contained the racial restrictions. The Court rejected Plainfield's argument that its policy was reasonable and necessary to comply with law. Although recognizing that gender discrimination may sometimes be allowed to accommodate privacy interests, the Court stated that the same is not true for racial discrimination. The Court also concluded that Indiana law did not require the policy and, even if it did, federal law would trump the requirement. On a practical level, the Court recited a number of options an employer has when faced with racial hostilities. With respect to the discharge claim, the Court concluded that a reasonable jury could find that Plainfield's decision to fire Chaney was motivated by race. It relied on Plainfield's shifting justification for its action, the unusual way in which the incident investigation was conducted and concluded, and the absence of any disciplinary action with respect to the other nursing assistant involved in the incident.

FMLA Plaintiff Presents Enough Evidence Of Interference And Retaliation To Survive Summary Judgment

GOELZER v. SHEBOYGAN COUNTY (May 12, 2010)

Dorothy Goelzer began her employment with Sheboygan County, Wisconsin in 1986. In 1999, she became the full-time assistant to Adam Payne, the Administrative Coordinator for the County. For several years, she received consistently favorable performance reviews. Her health deteriorated beginning in 2002. She used over 300 hours of FMLA leave in 2002, over 175 hours in 2003, and almost 100 hours in 2004. Although her health improved in 2005, she continued to take intermittent FMLA leave to care for her mother. Her significant use of FMLA leave was noted negatively in each of her performance reviews and salary discussions during this time. In May of 2006, Goelzer requested two months of FMLA leave for a foot surgery. Although the County approved her request on August 8, she was fired on September 8. Payne had been promoted to the new position of County Administrator on August 15 and, for the first time, had been given the power to fire Goelzer. Goelzer filed an action against the County and Payne. She alleged violations of the FMLA for the County's failure to restore her to her position and for discrimination. The district court granted summary judgment to the defendants. Goelzer appeals.

In their opinion, Judges Bauer, Wood, and Williams reversed. The Court noted two fundamental principles of the FMLA: the right to be restored to one's position (or an equivalent one) upon return from a leave and the right not to be discriminated against for using leave. The only contested issue in Goelzer's interference claim was whether she was terminated to prevent her from being reinstated. Although Payne's stated rationale was his desire for a greater skill set, the Court concluded that there was sufficient evidence for a jury to decide in Goelzer’s favor. That evidence included the many references by Payne over the years to her use of sick leave. The Court next addressed the retaliation claim, which differs from the interference claim by requiring proof of discriminatory intent. Again, the Court concluded that the record supported two possible explanations for Payne's decision to terminate Goelzer. Goelzer was entitled to have a jury select one.

Three Judges Would Grant Rehearing En Banc To Address Damages Issues

THOMAS v. COOK COUNTY SHERIFF'S DEPARTMENT (May 3, 2010)

In their opinion of December 1, 2009, Judges Flaum, Wood, and Williams affirmed in part and reversed and remanded in part a $4.45 million jury verdict awarded to the mother of a young man who died while in custody of the Cook County Jail (refer to the panel opinion and to my post). Cook County and the individual defendants petitioned for rehearing and rehearing en banc. With respect to the petition of the individual defendants, the panel unanimously voted to deny rehearing and no judge in regular active service requested a vote on the petition en banc. With respect to the petition of the County, however, three judges voted to grant the rehearing en banc with respect to the issue of damages. In consideration of the petition and the votes to grant the rehearing, the panel amended its opinion.

In their amended opinion, Judges Flaum, Wood, and Williams refined their analysis of the damages issue and provided some general prophylactic guidance regarding verdict forms. The panel reaffirmed its original decision upholding the verdict, notwithstanding the confusion apparent in the instructions and the verdict form.

Judge Sykes, joined by Judges Posner and Tinder, dissented from the denial of the County's petition for rehearing en banc. The principal claims in the case sought compensation for a single injury -- Norman Smith's suffering and death while in the custody of the Cook County Jail. Because liability is joint and several, the jury should not have been asked to assess damages by claim or by defendant. The dissent criticizes the panel for approving the district court's discretion to choose between the "ceiling" and the "cumulative" approaches to the confusion verdict. In the dissent's view, neither approach is supported by the Circuit's precedent. Finally, Judge Sykes is critical of the panel's reliance on the general proposition and presumption that jurors follow their instructions. Given the "bewildering hodgepodge" of instructions and the backwards verdict form, the Court cannot have any confidence that the jury acted properly. Judge Sykes would have granted the petition to address the treatment of the damage award.

Separate Claims By Two Plaintiffs Require Submission Of A Verdict Form With Separate Lines For Damage Awards

HAPPEL v. WALMART STORES (April 19, 2010)

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

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

District Court Improperly Excluded Expert Medical Testimony

GAYTON v. MCCOY (January 28, 2010)

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

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

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

PMPA Notice Period Does Not Start While Franchisor Is Investigating Conflicting Accounts

RAO v. BP PRODUCTS NORTH AMERICA (December 9, 2009)

Salik Rao operated as a BP gasoline service station dealer in the Chicago area. For 10 years beginning in the early 1990s, Rao gave over $100,000 worth of cash and gifts to a BP sales manager. In return, the sales manager performed many favors for Rao, to his great benefit. In 2003, Rao reported this improper activity to BP. However, he characterized it as extortion on the part of the sales manager. BP begin an investigation which ultimately led to the termination of the sales manager in November of 2003. BP continued its investigation, seeking to confirm the extortion. Although Rao promised to cooperate, he never met with BP after November of 2003 and affirmatively withdrew his pledge of cooperation in June of 2004. BP notified Rao in October 2004 that it was terminating its franchise relationship with him because of his improper activity. Rao brought suit under the Petroleum Marketing Practices Act ("PMPA"), as well as RICO, fraud, breach of contract and extortion. The court dismissed the counts based on RICO, fraud and breach of contract and granted summary judgment on the PMPA claim. Rao appeals.

In their opinion, Judges Bauer, Flaum and Williams affirmed. The principal issue on appeal was whether BP's notice of termination was sufficient under the PMPA. The PMPA, which protects service station franchisees, allows early termination of franchise agreements in certain circumstances, which Rao does not contest here. The PMPA requires the franchisor to give a notice of such early termination within 120 days of when it "first acquired actual or constructive knowledge" of the reason for the termination. Here, it is uncontested that BP knew of the improper conduct well over 120 days before providing termination notice. The Court focused, however, on what BP knew when and what BP did. From the fall of 2003 through the middle of 2004, Rao continued to insist that he was a victim of the sales manager's extortion. The sales manager, at the same time, insisted that the gifts were given voluntarily in exchange for his favors. The Court concluded that the statute did not require BP to give notice while it was still investigating the allegations. It was not until Rao ceased his cooperation that the clock started. BP's notification was sent within 120 days of that date and was therefore proper. The Court affirmed the rest of the lower court's judgment as well.

Sheriff's Endorsement Of Religious Group Violates First Amendment

MILWAUKEE DEPUTY SHERIFFS' ASSOCIATION v. CLARKE (December 4, 2009)

The Milwaukee County Sheriff, David Clarke, invited a religious group, the Fellowship of the Christian Centurions, to attend and speak at a department leadership conference. All deputies above the rank of sergeant were required to attend. At the conference, Clarke announced some upcoming promotions, distributed written material with quotations from the Bible, and described "people of faith" as one of the qualities he was looking for in a leader. One of the Centurions then spoke and distributed additional material. After the conference, representatives of the Centurions also made presentations and distributed flyers at a number of mandatory roll calls. Two deputies, and their union, brought suit under § 1983. They alleged a violation of the Establishment Clause and the Free Exercise Clause of the First Amendment. The court granted summary judgment to the plaintiffs on the Establishment Clause claim. The defendants appeal.

In their opinion, Judges Bauer, Cudahy and Williams affirmed. Under the Establishment Clause, government action may not: a) have a non-secular purpose, b) have the principal effect of advancing or inhibiting religion, or c) foster an excessive government entanglement with religion. Although the first prong requires an analysis of the government's actual purpose, the second does not. A violation can be established if a reasonable person would conclude that the government action amounted to an endorsement of religion. Here, very few outside organizations have the kind of access given to the Centurions -- and those that were were organizations that partnered with the department in some fashion. The Court concluded that a reasonable observer would interpret the Sheriff's actions as an endorsement, although it was careful to limit its conclusion to the facts presented. In its analysis, the Court also rejected the Sheriff's argument that the First Amendment compelled him to grant access to the Centurions. The Court reasoned that the Sheriff did not create a forum of any kind by having a department meeting or a roll call. The Centurions were not looking for a place to speak -- they were looking for a specific audience to speak to. The Sheriff was not required to give that access.

Monell Requires Causal Link Between Unconstitutional Act and Harm

THOMAS v. COOK COUNTY SHERIFF'S DEPARTMENT (December 1, 2009)

Norman Smith was arrested by the Chicago police on April 23, 2004. He was delivered to the Cook County Jail on April 24, where he was scheduled to remain until his trial date. An intake medical examination showed elevated blood pressure but no other medical problems. Smith showed symptoms of something more serious, however, from that first day. He was dizzy and vomiting. His symptoms became more serious over the next several days. Despite repeated requests by Smith and by other detainees on his behalf for medical assistance, he received none. On April 30, his cellmate discovered Smith convulsing on the floor. The cellmate reported it immediately to the officer on duty. There was a significant delay before Smith received any treatment. He died that morning of pneumococcal meningitis. His mother, Marlita Thomas, brought a § 1983 case against a number of individual correctional officers, the Cook County Sheriff and Cook County. A jury awarded Thomas $4,450,000 against the County, the Sheriff and three correctional officers. The jury then allocated the damages amongst the defendants. The court denied the defendants' motions for judgment as a matter of law or for a new trial. The defendants appeal.

In their opinion, Judges Flaum, Wood and Williams affirmed in part and reversed and remanded in part. The Court first addressed the verdict against the individual officers. In order to prevail, the Court stated that a plaintiff must demonstrate that a medical condition is objectively serious, that the defendant has subjective knowledge of the health risk and the defendant disregarded the risk. The Court concluded that there was sufficient evidence in the record to allow a jury to conclude that the individual officers knew about Smith's health risk and ignored it. Thus, the verdict is affirmed. The Court next addressed the verdict against the County. The County can be liable only if the unconstitutional act is the result of an official policy or a widespread practice or custom or is caused by an official with policy-making authority. The Court refused to adopt a bright-line test on how widespread a policy need be, but noted that it must be more than a random event. The Court concluded that there was sufficient evidence of a widespread policy: a failure to review medical requests, a failure to collect medical requests, keeping request forms in a locked box, etc. Thus, the verdict against the County was affirmed. The Court next addressed the verdict against the Sheriff. The basis for imposing liability under Monell against the Sheriff was his policy of severely understaffing the jail. In order to sustain the verdict, there must be a causal link between the policy and the unconstitutional act. Here, the individual officers were found liable based on their deliberate indifference to Smith's medical needs. The Court found no relationship between the officers' conduct and the understaffing. The Court concluded that the understaffing theory was too remote to support the verdict. Thus, the Court reversed for entry of judgment in the Sheriff's favor. After rejecting several evidentiary arguments of the defendants, the Court addressed the verdict. On the verdict form, the jury entered $150,000 against the officers, $3 million against the County, and $1 million against the Sheriff. This allocation was improper, in that the defendants were jointly and severally liable for one indivisible injury. It raised the question of whether the total damages is the sum of all of the damage awards, or the highest single assessment. The Court presumed that the jury followed instructions to not award duplicate damages and concluded that adding the damage awards would be proper. Under that analysis, the award against the Sheriff ($1 million) remains as part of the verdict against the County and individual officers, notwithstanding the reversal of the verdict against the Sheriff. Finally, the Court rejected the defendants' argument that the award was excessive.

Defamation Per Quod Requires Proof Of Special Damages

HUKIC v. AURORA LOAN SERVICES (November 20, 2009)

Avdo Hukic took out a mortgage in 1997. The monthly obligation was $1335. The agreement allowed him to pay taxes and insurance directly -- as long as he provided proof of payment to the lender. Through no fault of his own, his April 1998 payment was processed for $200 less than the required amount. Although the lender notified Hukic of the error, he took no steps to rectify it. Instead. Hukic continued to pay the correct amount each month, but the lender always considered him one month in arrears because of the continuing shortage. At about the same time, the lender advised Hukic that it would start to pay the taxes and insurance unless Hukic provided proof of payment. Hukic did not respond. The lender set up an escrow for the payments and advised Hukic of a new monthly payment amount. Hukic continued to pay the original $1335 each month. The lender, now Aurora Loan Services, reported the mortgage to credit agencies as delinquent in November of 1999. In early 2000, Aurora assigned the loan to Ocwen. Ocwen notified Hukic of his default but continued to pay the taxes and insurance. In January of 2001, Hukic's lawyer advised Aurora that he was paying his taxes directly and complained about negative information on credit reports. Hukic filed a multiple-count suit against Aurora and Ocwen. The court dismissed seven counts and granted summary judgment to the defendants on the Fair Credit Reporting Act, breach of contract and tortious interference with prospective economic advantage counts. Hukic appeals.

In their opinion, Judges Bauer, Evans and Williams affirmed. The Court first considered its jurisdiction-and first considered diversity jurisdiction, the basis of the original removal to federal court. The Court pointed out several problems: Aurora was a limited liability company, the citizenship of an L.L.C. is the citizenship of its members, its only member was a federally chartered savings association, the citizenship of a federally chartered savings association was in doubt under the law, a federal statute that clarified an association's citizenship was not enacted until after the date of removal, and the statute clarifying the citizenship question only applied if the association was a party in a lawsuit (instead of, as here, the member of a party). Luckily, the Court was able to bypass those issues because it concluded that the presence of the FCRA claim provided federal question jurisdiction. Since the state law claims arose out of the same nucleus of fact, they were covered by supplemental federal jurisdiction. After rejecting several procedural arguments, the Court addressed the merits. The Court affirmed the summary judgment on the breach of contract, tortious interference and FCRA claims. It concluded that Hukic was in default and that Aurora and Ocwen thus never provided false information to credit agencies. The Court then addressed the dismissal of the defamation claim on statute of limitations grounds. Like the jurisdictional analysis, the Court's analytic path was tortured. It included discussion of the defamation limitations period, the discovery rule, the continuing violation rule and the single publication rule. Concluding that the Illinois Supreme Court would apply neither the single publication rule nor the continuing violation rule to the facts and therefore that Hukic could maintain a claim for defamation for statements made by Aurora within a year of the filing of the suit, the Court nevertheless affirmed the dismissal. Illinois requires that special damages be pled in a defamation per quod case, which this is. Hukic alleged no harm from the reports that are actionable. Finally, the Court affirmed the dismissal of the intentional infliction of emotional distress claim because it did not allege conduct so extreme or outrageous to state a claim under Illinois law.

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Plaintiff Fails To Create Issue Of Fact With Respect To Employer's Non-Discriminatory Reasons For Actions

SCRUGGS v. GARST SEED CO. (November 20, 2009)

Dayna Scruggs worked for Garst Seed Company as a Research Technician. Curtis Beazer became her supervisor in 1995. Scruggs and Beazer did not get along. In fact, Beazer did not get along with a number of people. He made many derogatory remarks directed at Scruggs, several of them with a gender bias. In 2004, company management decided to demote or sever Beazer. Before they could do so, however, Garst was purchased by a competitor. New management decided to eliminate Scruggs' position. Scruggs filed an EEOC charge in December 2004 in response. In 2005, Scruggs applied for a Research Assistant position as part of the restructuring. New management did not hire Scruggs -- instead selecting the incumbent (a man) in the Research Assistant position with Garst. Scruggs filed a lawsuit, alleging retaliation and hostile work environment. The district court granted summary judgment against Scruggs. Scruggs appeals.

In their opinion, Judges Bauer, Wood and Williams affirmed. Scruggs' retaliation claim had two prongs -- that her technician position was eliminated and that the company failed to hire her for the Research Assistant position. Instead of addressing the elements of her retaliation claim, the Court went directly to the company's reasons for its actions. If Scruggs cannot create a material issue of fact with respect to whether the reasons were pretextual, she loses. The Court concluded the Scruggs failed to raise an issue of fact with respect to either the elimination of her technician position or her failure to be hired for the assistant position. Her technician position was eliminated as part of a restructuring and the company's decision to hire someone else for the assistant position was based on their evaluation of qualifications. Summary judgment was appropriate. With respect to the hostile work environment claim, the Court considered that the occasional inappropriate comments, which were not physically threatening, by someone who made such comments to males and females alike did not rise to the level of comments that alter the terms and conditions of employment.

Court Considers Effect Of Permitted And Non-Permitted Uses On Government Goals In Considering RLUIPA Violation

RIVER OF LIFE KINGDOM MINISTRIES v. HAZEL CREST (October 27, 2009)

River of Life Kingdom Ministries ("Ministries") is a small religious organization that does not occupy its own facility. Instead, it shares space with two other religious organizations in a dirty warehouse. The Ministries decided to purchase a new facility where it could better promote its community goals. It purchased property in Hazel Crest, even though the village had zoned the area for economic redevelopment. The ordinances allowed general commercial and retail uses but did not allow religious services. After its application for a special-use exception was denied, the Ministries filed a complaint and motions for a temporary restraining order and preliminary injunction. The complaint alleged that the ordinance violated the Equal Terms provision of the Religious Land Use and Institutionalized Persons Act ("RLUIPA"). While the motion for a preliminary injunction was pending, the village amended the ordinance to exclude meeting halls, public schools, community centers and other uses in an effort to ensure the ordinance's compliance with RLUIPA. The court denied the preliminary injunction. The Ministries appeal.

In their opinion, Judges Cudahy, Manion and Williams affirmed. The Court first stated the burden for obtaining a preliminary injunction: a reasonable likelihood of success on the merits, irreparable harm and a balancing of the harms based on the likelihood of success. With respect to its likelihood of success on the merits, the Court concluded that the Ministries was unlikely to succeed. The Equal Terms provision of the Act prohibits land-use regulations that treat religious assemblies on "less than equal terms" with non-religious assemblies. The Court discussed and critiqued the approaches of the Eleventh and Third Circuits. The Court preferred the Third Circuit approach, which allows a court to compare the effects of the allowed and disallowed uses on the local government's goals. Here, Hazel Crest's goal was to create a tax-generating commercial district. All of the "assemblies" that were allowed by the ordinance were commercial ventures. The Court concluded that the village's exclusion of non-commercial uses, including religious assemblies, was not likely to violate the RLUIPA. Although the Court then concluded that the relocation was instrumental to the Ministries' mission and could be considered irreparable harm, it did not believe that that harm significantly outweighed the harm to Hazel Crest.

Pension Plan Properly Construed Plan Language In Denying Benefits

PERRY v. SHEET METAL WORKERS' LOCAL NO. 73 PENSION FUND (October 27, 2009)

Donald Perry and William Wilk both participated in their union's Pension Fund. Neither was awarded pension credit for the eight years they each worked in a training program at Washburne Trade School (now demolished). When they sought an adjustment, the Pension Fund explained that the school had been their actual employer during the period in question and was not a "contributing employer" under the terms of the Plan. The Fund further explained that the reason another union member who taught at the school at the same time did receive credit was because he was an employee of a "contributing employer" that made contributions in his name. Perry and Wilk filed suit under ERISA, alleging a denial of benefits. The district court granted summary judgment to the Pension Fund in a memorandum opinion dated March 24, 2008. Perry and Wilk appeal (on April 24).

In their opinion, Chief Judge Easterbrook and Judges Williams and Sykes affirmed. The Court first addressed the timeliness of the appeal, given that more than 30 days had passed between the time of the memorandum opinion and the notice of appeal. An appeal must be filed, however, within 30 days after the judgment is entered. Rule 58(a) requires a separate document for the entry of the judgment upon the granting of a motion for summary judgment. Pursuant to Appellate Rule 4, judgment is thus entered upon the earlier of the date on which the separate document is issued or 150 days have run from the entry of the order. Here, there was no separate order. The judgment is therefore not considered entered until 150 days have run. The appeal is timely, since an appeal filed after a decision but before the entry of a judgment is considered to be filed on the date of the entry of the judgment. On the merits, the Court's inquiry was limited to whether the Fund complied with the Plan's provisions in determining the members' pension credits. The Plan specifically provides that members receive pension credits for hours of work for which contributions are required to be paid by an employer. Since it is undisputed that no employer made or was required to make such contributions on behalf of Perry or Wilk, the Court concluded that the Fund acted in accordance with the Plan.

Filing Claim, Albeit In Improper Proceeding, Is Nevertheless Commencement Of Action For Limitations Purposes

IN RE: ROSE (October 7, 2009)

Mercantile National Bank of Indiana sued Jasper- Newton Utility in state court for breach of contract and specific performance. Judgment was entered in Mercantile's favor for approximately $160,000. James Rose was a 50% shareholder in Jasper- Newton. A few weeks later, Rose and the other shareholder sold Jasper-Newton to WSCI. The shareholders indemnified WSCI for the liability to Mercantile. In proceedings to collect on the judgment, Mercantile sought leave to amend its complaint to add a claim under the Indiana Crime Victim Compensation Act. The court entered judgment in Mercantile's favor of almost $600,000. The state appellate court affirmed on the merits. The state Supreme Court reversed, holding that Mercantile could not assert a new CVCA claim in supplemental proceedings to collect the judgment. Rose filed a petition for bankruptcy in the meantime. Mercantile filed an adversary proceeding in the bankruptcy court challenging the dischargeability of its CVCA claim. The bankruptcy court granted Rose's motion to dismiss Mercantile's complaint, concluding that the CVCA claim was barred by the statute of limitations. The district court affirmed the bankruptcy court. Mercantile appeals. During the appeal, the state appellate court ruled that the CVCA claim was commenced within the appropriate limitations period.

In their opinion, Judges Flaum and Williams and District Judge Kapala reversed. The Court looked to the various opinions of the state courts to decide whether Mercantile filed within the statutory period. Although the state Supreme Court reversed the trial court's order granting Mercantile leave to amend, it did so because it was improper to file the claim in supplemental proceedings. The court, in its opinion, specifically stated that Mercantile could pursue the claim in some other manner. After remand, the state Court of Appeals concluded that the claim was commenced when Mercantile moved to amend its complaint and was therefore filed within the limitations period. The Court concurred with the reasoning of the state appellate court in concluding that the claim was properly commenced within the limitations period.

Plaintiff's Conclusory Allegations Fail to Meet The Federal Pleading Standard

BISSESSUR v. THE INDIANA UNIVERSITY BOARD OF TRUSTEES (September 11, 2009)

Bissessur was a graduate student in the School of Optometry at Indiana University. The 2004-2005 school year was not a banner one for him. He received an incomplete and two D+ grades, was banned from one clinical rotation and failed another rotation. The University dismissed him. Bissessur filed suit and alleged violations of his substantive and procedural due process and equal protection rights. He also alleged a breach of implied contract. The district court dismissed for failure to state a claim. Bissessur appeals.

In their opinion, Judges Flaum, Williams and Tinder affirmed. The Court first concluded that, although a student does not have a federal constitutional right to a graduate education, an implied contract could give rise to a property interest. That interest, in turn, would receive constitutional protection. In order to find the implied contract, however, a student must establish an identifiable promise that was breached. Bissessur admittedly made no such allegations in this complaint. He instead relies on the conclusory allegations of his complaint and his representation that the specific promises will be unearthed during discovery. Citing Bell Atlantic and Iqbal, the Court concluded that be fell "drastically short" of the current federal pleading requirements.

Limited Explanation Of Fee Award Calculation Is Sufficient When Amount Of Award Is Not Substantial

SCHLACHER v. LAW OFFICES OF PHILLIP J. ROTCHE AND ASSOCIATES (August 3, 2009)

Jean Schlacher got a root canal but fell behind in payments to her dentist. Her dentist obtained a judgment against her. Again, Schlacher fell behind on her payments on the judgment. The debt-collection law firm representing the dentist became quite abusive and threatening. Jean sought legal advice. Unfortunately, due to various lawyers' schedules and skill sets, she ended up with four different lawyers assisting her in her Fair Debt Collection Practices Act ("FDCPA") suit against the law firm. Fortunately, the suit was resolved in a short time, before any discovery, for a total of $6,500. Unfortunately, the parties were unable to agree on a fee award. The plaintiff petitioned for fees in excess of $12,000. The defendants objected to the attorneys’ hours and rates. The court awarded $6,500 in fees. Schlacher appeals.

In their opinion, Judges Rovner, Wood and Williams affirmed. The Court first rejected the plaintiff’s argument that the district court abused its discretion in awarding an amount in fees equal to the amount of the judgment. The Court explained that the district court reduced the requested amount because of its view that the work of the four attorneys was duplicative and excessive. The fact that the court noticed a coincidence that the amount of the fee equaled the amount of the judgment is irrelevant. The Court also rejected the argument that the lower court's fee award was an abuse of discretion because of its lack of specific findings and calculations. When a fee award is substantial, the Court cautioned that a district court must be precise in its calculations. Here, when the amount is not substantial, less precision is required. The court questioned the hourly rates for several of the attorneys because of their lack of experience in FDCPA cases, noted the lack of complexity in the case, and believed that one attorney would have been sufficient. That explanation is sufficient to sustain the award.

Village Employee's Speech Of Public Importance Becomes Unprotected Private Speech Only When It Is Solely Motivated By The Employee's Personal Interest

VALENTINO v. SOUTH CHICAGO HEIGHTS (July 30, 2009)

Sandra Valentino worked for the Village of South Chicago Heights for several years. In 2001, she became suspicious of Mayor David Owen's hiring practices. She was aware that the Village employed many of the mayor's friends and family members. She believed that many of these employees were on a “ghost payroll,” i.e., being paid for work they did not perform. She shared her concerns with William Bramanti, a former village employee who quit as a result of a dispute with the mayor. Bramanti submitted a FOIA request to the village for employee time records. At the same time, Valentino began to make copies of the daily employee sign-in sheets. In February of 2003, Bramanti accused the mayor publicly of ghost payrolling. The very next business day, the Village Administrator searched Valentino's desk, found the copies, and fired Valentino when she arrived for work. Valentino filed a § 1983 action against the Village, the mayor and others. She alleged retaliation in violation of her First Amendment rights. The district court granted summary judgment to the defendants. Valentino appeals.

In their opinion, Judges Rovner, Evans and Williams reversed and remanded. The Court first looked to whether Valentino's speech was constitutionally protected, i.e., whether she spoke as a private citizen on a matter of concern. The Court found it "well-established" that speech which protests government waste is entitled to constitutional protection. Although the Court recognized that Valentino had a private interest in determining whether she was receiving proper compensation, it concluded that her speech was protected since she was not motivated solely by those personal interests. The Court next addressed whether there was evidence that the protected speech was a motivating factor in her termination. The Court found the circumstantial evidence -- knowledge of her relationship with Bramanti, the search of her desk, the search and firing the day after Bramanti's public accusations, and a comment by the mayor threatening her employment -- sufficient to take that issue to a jury. That same evidence, as well as the fact that the sign-in sheets were on public display and were simply copied by Valentino, was enough for the Court to conclude that a jury could also find the village's stated reason for her termination pretextual. Thus, the Court reversed the summary judgment for the defendants. With respect to the Monell claim, the Court stated that the Village could be liable for the constitutional violation if it was caused by an individual with final policymaking authority. The question for the Court was whether Owens had final authority on matters of hiring and firing. The Court concluded that the evidence was conclusive that Mayor Owen made personnel decisions for the village without any meaningful oversight, and thus had final authority. The Court reversed the district court with respect to the village's liability under Monell. Finally, the Court rejected defendants' argument that the Illinois Tort Immunity Act immunized them. That Act immunizes village officials from certain discretionary policy decisions. The decision to fired Valentino was not a policy decision -- the defendants are not entitled to immunity.

Evidence In The Record That The Promoted Employee Was Better Qualified Than Plaintiff Defeats Her Gender And Race Discrimination Claim

HOBBS v. CITY OF CHICAGO (July 21, 2009)

Kelly Hobbs was an African-American woman employed by the City of Chicago's Department of Transportation since 1989. She began her employment as a truck driver and was promoted to Lot Supervisor in 2000. She applied for a Foreman position in both 1997 and 2000and was rejected both times in favor of white males. She filed a charge of gender and race discrimination in January of 2005, shortly after she found out that another white male had been promoted to Acting Foreman. She complains that, after her discrimination charges were filed, she was disciplined on several occasions, her car was vandalized and her job duties were changed. In 2006, she brought suit against the City, alleging race and gender discrimination and retaliation claims against the City under Title VII, race discrimination and retaliation claims against the individual defendants under § 1981, and a hostile work environment claim against the City. The district court granted summary judgment to the defendants on all claims. Hobbs appeals.

In their opinion, Judges Bauer, Kanne and Williams affirmed. The Court considered the Title VII and § 1981 race and gender discrimination claims together. Under the indirect method of proof, the Court concluded that Hobbs failed to establish she was passed over in favor of a person similarly or less qualified than she. The record showed that the male was more qualified, at least with respect to those skills that were part of the job qualifications. Hobbs also failed to show that the City's reasons for promoting him were pretextual. The Court admitted that the process by which he was promoted was somewhat questionable and may suggest favoritism, but did not prove discrimination. Her retaliation claims failed as well. She failed to show a materially adverse job action and she failed to establish a causal connection between her charges and the discipline imposed on her. The Court was troubled by her charge of automobile vandalism and the City's failure to investigate it, but concluded that the mere fact that it occurred after she filed charges was not enough to survive summary judgment. Finally, the Court concluded that the same facts upon which she based her retaliation claim were similarly insufficient to rise to the "severe or pervasive" threshold of hostile work environment.

Department Of Correction Officials Are Entitled To Qualified Community Because They Violated No "Clearly Established Right" When They Transferred A Senior Department Official For Testifying In Support Of A Prisoner's Parole

MATRISCIANO v. RANDLE (June 26, 2009)

Ron Matrisciano worked for the Illinois Department of Corrections (IDOC) for over 20 years. By 2002, he had risen to the level of Assistant Deputy Director. Over the course of his employment with IDOC, he had become acquainted with a particularly notorious inmate, Harry Aleman. Aleman was serving a 100-300 year sentence for murder. Ten years into his sentence, when Aleman was about to be afforded a parole board hearing, his family asked Matrisciano if he would speak at the hearing. Matrisciano advised his superiors that he planned to testify at a parole board hearing, although he apparently did not advise them that Aleman was the subject of the hearing. Matrisciano took a personal day on the day of the hearing and testified in favor of Aleman's release. The fact that a relatively senior official of IDOC testified in favor of the release of a particularly notorious inmate generated significant media inquiry. IDOC officials reassigned Matrisciano to a new position within the department. Matrisciano filed suit, alleging that the transfer violated his First Amendment rights. The district court granted summary judgment against Matrisciano. Matrisciano appeals.

In their opinion, Judges Ripple, Williams and Sykes affirmed. The Court addressed the issue in the context of qualified immunity. The defendant government officials are entitled to qualified immunity if their conduct did not violate "clearly established" constitutional rights of which a reasonable person would be aware. The Court noted the Supreme Court's recent retreat from the mandatory two-step sequence of Saucier and used its discretion to address the "clearly established" prong first. The elements of a case of First Amendment retaliation are constitutionally protected speech, a deprivation likely to deter speech, and speech being a motivating factor for the adverse action. The defendants did not contest the second element and the Court easily found sufficient evidence of the third element on which a jury could rely. Therefore, the Court addressed whether the speech was constitutionally protected. First, the Court found or assumed that Matrisciano was speaking as a "citizen" and was speaking on a matter of public concern. The Court next rejected the "policy-maker" exception, under which a policy-making employee may be discharged for engaging in speech that is critical of his superiors or their policies. Although the Court found that Matrisciano was a policy-making employee, it found that his speech was too remote from the policies of the department to trigger the exception. Finally, the court moved to the Pickering balancing of the speech interests of the employee and the public service interests of the employer. Under that balancing, the Court considered several factors: whether the speech would create discipline problems, whether the employee’s position is one in which loyalty and competence are necessary, whether the speech affected the employee’s ability to perform, the time and place and manner and context of the speech, whether the subject of the speech was vital, and whether the speaker would be considered a member of the general public. In engaging in that balancing, the Court identified a number of factors on each side of the analysis: on the one hand, there was no policy prohibiting the testimony, Matrisciano advised and got permission for the testimony, IDOC employees frequently have relevant information helpful for parole determinations – on the other hand, Matrisciano had only minimal contact with the prisoner, Matrisciano was a high ranking employee, Matrisciano spoke voluntarily, and Matrisciano testified beyond his personal observations and actually requested the prisoner's release. Having found considerations on both sides of the equation, the Court was not inclined to decide whether Matrisciano's First Amendment rights were violated. Having decided that, it was not difficult to conclude that the law was such that reasonable officials would not know that their transfer of Matrisciano was unlawful. The defendants were entitled to qualified immunity. 

The Absence of Any Factual Allegations Which Could Be Resolved to Preclude Insurance Coverage Defeats Insured's Claim for Independent Counsel

NATIONAL CASUALTY COMPANY v. FORGE INDUSTRIAL STAFFING INC. (June 3, 2009)

Forge Industrial Staffing, Inc. is an employee staffing company. It has insurance coverage through National Casualty Company (NCC) that insurers it, among other things, from intentionally discriminating against its employees. When several of Forge's former employees brought anti-discrimination charges before the EEOC, NCC agreed to defend Forge but reserved the right to deny coverage later. Given NCC's reservation of rights and the exclusion in the policy of coverage for punitive damages or claims arising from Forge’s intentional or reckless disregard of the law, Forge requested independent counsel. NCC refused. After Forge hired its own counsel, NCC brought a declaratory judgment action to resolve the issue. The district court found no actual conflict and concluded that NCC did not have to pay for Forge’s own counsel. Forge appeals.

In their opinion, Judges Cudahy, Williams and Tinder affirmed. The Court noted that Illinois law provides a broad duty to defend as well as a right to direct the defense. Only if an actual conflict exists does the insured have a right to have the insurer pay for independent counsel. The Court looked to the allegations of the complaint and the terms of the policy to determine whether an actual conflict existed. An actual conflict exists if the underlying complaint contains two mutually exclusive theories of liability, only one of which is covered by the policy. Here, the Court held that neither the possibility of punitive damages in future litigation nor the policy exclusion of willful conduct created an actual conflict. The possibility of punitive damages was too speculative. With respect to the policy exclusion, there were no allegations of willful conduct and there were no allegations which would preclude coverage if resolved a certain way. Thus, the requirements for independent counsel were not met.

A Chapter 13 Creditor In Possession Of Property Of The Bankruptcy Estate Must First Return The Property And The Move To Protect Its Interest

THOMPSON v. GENERAL MOTORS ACCEPTANCE CORP. (May 27, 2009)

Theodore Thompson financed his purchase of a 2003 Chevy with General Motors Acceptance Corp. ("GMAC"). After he defaulted, GMAC repossessed the Chevy. A few weeks later, Thompson filed for bankruptcy. GMAC refused his request to return the vehicle to the bankruptcy estate. Thompson claimed that GMAC willfully violated the automatic stay and moved for sanctions. The bankruptcy court denied the motion, holding that a creditor need not return property absent adequate security. Thompson appeals.

In their opinion, Judges Cudahy, Williams and Tinder reversed and remanded. The Court first addressed whether GMAC "exercised control" over the property of the bankruptcy estate. GMAC argued that something more than the passive act of possession was required to meet the "exercise control" prohibition of the Bankruptcy Code. The Court, relying principally on the plain meaning of the Code, concluded that GMAC exercised control over the Chevy when it refused to return it. The Court next addressed whether GMAC's entitlement to adequate protection of its interests allowed it to retain the property until such protection was afforded. The Court identified a split of authority on this issue, a question of first impression in the Seventh Circuit. Most district courts in Illinois follow the same precedent relied on by the bankruptcy court below -- that a creditor need not return property to the bankruptcy estate absent adequate protection. Several other circuits have held that a creditor must return the property to the estate and move to protect its interests. The Court relied on a plain reading of the Bankruptcy Code, the Supreme Court’s holding in Whiting Pools in the corporate reorganization context, and policy considerations in concluding that a Chapter 13 creditor must first return property in which the bankruptcy estate has an interest and then seek protection of its interests in the bankruptcy court. The Court remanded for a determination of whether GMAC willfully violated the automatic stay and was thus subject to sanctions.

"Quirky" Facts Of Case Demonstrate That, At A Minimum, The Constitutional Right Was Not "Clearly Established"

CHAKLOS v. STEVENS (March 30, 2009)

Richard Chaklos and Andrew Wist were employees of the Illinois State Police ("ISP"). Their job was to train forensic scientists. Chaklos and Wist also owned Midwest Forensic Services ("MFS"). In 2004, Illinois allocated funds to process a back load of DNA evidence from rape victims. The ISP received some of the money in order to hire and train additional forensic scientists. The ISP decided to retain a Florida company for those services. When Chaklos and Wist learned of this decision, they sent a protest letter to the ISP on MFS letterhead. The letter criticized the ISP for its use of a no-bid process, it criticized the Florida company, and it indicated that MFS could provide the same training at a lower cost. Upon receipt of the letter, the ISP suspended Chaklos and Wist for violating its policy regarding secondary employment. Chaklos and Wist filed a § 1983 action, alleging retaliation for their exercise of First Amendment rights. The district court found that the letter was protected speech but granted summary judgment to defendants on the grounds they were entitled to qualified immunity. Chaklos and Wist appeal.

In their opinion, Chief Judge Easterbrook and Judges Rovner and Williams affirmed. The Court noted that the law with respect to qualified immunity had changed since the case was argued. At the time of argument, Saucier required courts to first determine whether a plaintiff had been deprived of a constitutional right and then determine whether that particular right was "clearly established." In Pearson, the Supreme Court recently concluded that lower courts could use their discretion in deciding which prong to address first. In addressing the First Amendment issue, the Court concluded that: a) plaintiffs were not speaking pursuant to their official duties under Garcetti, and b) looking at the content of the speech as a whole, it addressed a matter of public concern and was not motivated solely by personal interests. These conclusions led the Court to a balancing of the interests of the plaintiffs and their government employer. The Court noted the lack of disruption caused by the letter, the ISP's policy allowing secondary employment, the ISP's erratic enforcement of its secondary employment policy, and the dual purpose of the letter. Based on the closeness of this balancing, the Court determined that it was unnecessary to decide whether the letter was constitutionally protected. Instead, the Court concluded that it was not sufficiently clear to a government official that the conduct complained of would violate a constitutional right. The right was therefore not “clearly established." Defendants were entitled to qualified immunity.

Notice Of Appeal Filed After Judgment On Counterclaim Is Treated As If Filed On The Day Of Judgment On The Complaint Months Later

A. BAUER MECHANICAL, INC. v. JOINT ARBITRATION BOARD (March 25, 2009)

A. Bauer Mechanical, Inc. ("Bauer") and Chicago Journeymen Plumbers' Local Union 130 ("Union") were parties to a collective bargaining agreement. Pursuant to that agreement, the Joint Arbitration Board of the Plumbing Contractors' Association and Chicago Journeymen Plumbers' Local Union ("Board") has the authority to resolve their disputes. In 2005, the Board found that Bauer had failed to make some required contributions and ordered it to pay over $54,000. Bauer filed a complaint in state court to vacate the award. The Union removed the case to federal court and filed a motion for leave to file instanter an answer to Bauer's complaint and a counterclaim to enforce the arbitration award. The answer and counterclaim were attached to the motion. The district court granted the motion. Bauer did not respond. At a hearing on the Union's motion for entry of judgment, Bauer argued that the pleadings were not properly filed. The court explicitly recognized the pleadings and gave Bauer 14 days to respond to the counterclaim. Bauer filed a response but, again, challenged the propriety of the pleadings and did not address the merits. The court entered judgment on the Union's counterclaim. Bauer filed a timely notice of appeal. A few months later, on the Union's motion, the court dismissed Bauer's complaint and declared all judgments final and appealable. Bauer did not file a timely appeal of that order.

In their opinion, Judges Manion, Wood and Williams affirmed. The Court first addressed the jurisdictional issue. The parties all agreed that the final judgment was the judgment of the court dismissing the complaint. Bauer filed its notice of appeal several months earlier. The Court cited Rule 4 (a)(2) of the Federal Rules of Appellate Procedure, which treats a notice of appeal that is filed after a decision but before the entry of judgment as if it was filed on the date of judgment. Here, Bauer's complaint and the Union's counterclaim were mirror images of the other. The Court concluded that Bauer's belief that the earlier order disposed of all issues was reasonable and treated his notice of appeal as if it were filed on the date of judgment.

On the merits, the Court agreed with the district court that the Union's answer and counterclaim were properly considered. The Court agreed with Bauer that a motion is not a pleading. However, relying on the district court's discretion to manage its docket, the fact that the federal rules do not prohibit the attachment of a pleading to a motion and the plain reading of Rules 7 (a), (b), and 10, the Court approved of the district court's approach.

OFAC Satisfied Procedural Due Process In Penalty Assessment Under Iraq Sanctions Act By Providing Pre-penalty Notice, A Statement Of The Charges And An Opportunity To Respond

CLANCY v. OFFICE OF FOREIGN ASSETS CONTROL (March 11, 2009)

Ryan Clancy, an American citizen, traveled to Iraq in January 2003. Clancy's purpose was to protest the United States’ involvement in Iraq by acting as a “human shield.” Upon his return to the United States, Clancy admitted to a customs official the reason for his trip. The Office of Foreign Assets Control ("OFAC") issued a Pre-penalty Notice ("PPN"), charging Clancy with providing services to Iraq by shielding facilities from possible military action. OFAC relied on regulations, promulgated post-September 11, restricting trade and transactions with Iraq. OFAC advised Clancy that he could be assessed a penalty of up to $250,000. It offered him the opportunity to make a written response. Clancy submitted a response in which he challenged the validity of the regulations. He did not dispute the factual basis of the charges. OFAC assessed a final civil penalty of $8,000. Clancy filed suit. The district court granted summary judgment against Clancy on all of his claims. Clancy appeals.

In their opinion, Judges Bauer, Kanne and Williams affirmed. The Court first addressed Clancy's procedural due process argument. The relevant inquiry, it said, is whether the procedures afforded presented an unreasonable risk of an erroneous deprivation of a protected interest. The Court concluded that the procedures afforded to Clancy -- the pre-penalty notice, a statement of the underlying facts, an opportunity to respond -- were constitutionally sufficient. The Court then addressed Clancy's challenge to the validity of the regulations. It rejected each of Clancy's arguments. It concluded: a) that the regulations were a proper exercise of OFAC's authority, b) that the travel restrictions were justified by national foreign-policy considerations, c) that Clancy's travel was not "inherently expressive" so as to invoke rights under the First Amendment, and d) that Clancy's actions in Iraq attempted to confer a benefit on the country and therefore met the definition of "services" as that term is used in the regulation.

Specific Discriminatory Remarks, Without Other Evidence Of Intent, Are Insufficient To Establish a Prima Facie Case Of Race Discrimination

NAGLE v. VILLAGE OF CALUMET PARK (February 4, 2009)

William Nagle, a white male in his fifties, is a police officer with the Village of Calumet Park and has been for almost thirst years. He has been active in union matters for most of that time. The Village hired a new Police Chief (Davis, a black male in his fifties) and Assistant Chief (Rockett, a white female in her forties) in 2002. Nagle claims that Davis discriminated against him on racial and age bases. The incidents he complains of include: a) Davis asked Nagle when he was going to retire, b) Davis referred to Nagle and his peer group on several occasions as “old white mother f*****s,” c) Davis selectively disciplined Nagle in comparison to younger officers, d) Davis said he might be getting “too old” for the job, e) Davis suspended Nagle for failing to assist another officer but did not discipline another officer for the same conduct, and f) Davis reassigned Nagle to duties that Nagle considered undesirable. Nagle also contends that Davis discriminated against him because of his speech. Nagle had spoken up publicly at a meeting in opposition to Davis’ manpower reduction plans. Davis later criticized him for doing so. A few days later, Nagle was suspended for violating a new sick-leave policy. Nagle filed charges with the EEOC. A few weeks later, Davis again suspended Nagle, this time for preparing a union grievance while on-duty. The suspension was overturned and Nagle was paid for the time. He nevertheless filed a second EEOC charge alleging that his suspension was on account of his age and race and in retaliation for the earlier EEOC charge. After being suspended again for violating the sick-leave policy, Nagle filed a third charge alleging that that suspension and an earlier reassignment were made due to his age and race and in retaliation for his complaints. Nagle brought an action, alleging age discrimination under ADEA and race discrimination and retaliation under Title VII. He also brought a § 1983 action, alleging a violation of the First Amendment. The court granted summary judgment for defendants on all counts. Nagle appeals.

In their opinion, Judges Flaum, Evans and Williams affirmed. The Court first addressed Nagle’s race and age discrimination claims. The Court noted the lack of direct evidence of discriminatory intent. But the direct method of proof also allows a plaintiff to rely on circumstantial evidence. That evidence could include a) suspicious timing, b) ambiguous statements or conduct directed at the protected group, c) evidence of better treatment of those outside the group. or d) evidence that a qualified employee was passed over in favor of a person outside the group. The Court refused to disregard Davis’ race and age-based remarks simply because they were not close in time to the complained of discrimination. A determination must be made on all the facts. Here, Nagle tried to buttress his claim by showing that Davis generally hired non-white or non-male applicants and that he treated non-white and non-male officers better. The Court found that Nagle failed to produce enough evidence on either point. In addition, most of Nagle’s complaints did not refer to adverse employment actions. None of the reassignments he complained of changed the terms or conditions of his employment or affected his career prospects. The Court concluded that Davis’ comments were the only evidence under the direct method and insufficient to establish a prima facie case, given their lack of proximity to the complained-of conduct. The Court addressed Nagle’s claims under the indirect method. Under that method, among other things, a plaintiff must show adverse employment actions and that similarly situated individuals were treated better. The Court’s analysis of these same issues under the direct method show the lack of claim under the indirect method. The Court proceeded to address Nagle’s retaliation claim, again under a direct and indirect method. Nagle failed to carry the day on his retaliation claim because, on most, he failed to prove that he suffered materially adverse employment decisions and on one other, he failed to prove that Davis even knew of his EEOC charge when Davis suspended him. Finally, with respect to Nagle’s First Amendment claim, the Court found the record sparse with respect to the particulars of the speech. Without more information about content, form, and relationship of the speech to his job as a police officer and his role as a union representative, the Court was unable to determine whether his speech was protected.

Employer in Illinois is Entitled to Wait Until Verdict Establishes Liability and Employer's Degree of Fault Before Deciding Whether to Waive Its Workers' Compensation Lien on Employee's Recovery

BALTZELL v. R&R TRUCKING (February 4, 2009)

"Skeeter" Baltzell worked for Ensign-Bickford Company (“Ensign”) as a truck loader. R&R Trucking (“R&R”) had a contract with Ensign to provide specialized tractor-trailers and drivers. Baltzell was the victim of an unfortunate accident in May 2000, when one of his Ensign co-workers backed up and crushed him between the trailer and the dock. Baltzell was severely injured in the accident and still requires constant care. Baltzell filed a claim with the Illinois Workers’ Compensation Commission and he and his wife filed this lawsuit. The Baltzells claimed damages arising from Baltzell’s injuries and his wife’s loss of consortium, naming R&R and the manufacturers of the tractor and trailer. The defendants brought contribution claims against Ensign. The jury awarded almost $14 million dollars and allocated fault 30% to Ensign and 70% to the other three defendants. Ensign moved to waive its workers’ compensation lien and to dismiss the contribution claims. The court denied its motion. Ensign appeals.

In their opinion, Judges Bauer, Evans and Williams reversed and remanded. The Court first reviewed Illinois’ workers compensation scheme (in relevant part): a) an employer compensates an employee for injuries on the job regardless of fault, b) an employee cannot sue an employer for the injuries, c) an employee can sure a third party who may be at fault, d) the third party can seek contribution from an employer, e) an employer has a lien on third party recovery, and f) the lien is the amount of recovery less the amount equal to the employer’s pro rata share of the common liability (up to its workers’ compensation obligation). It is possible under this scheme for the employer to be liable for more than its workers compensation obligation, a result disfavored by the workers’ compensation policy. Illinois has provided two safeguards. First, the Illinois Supreme Court in Kotecki v. Cyclops Welding Corp. capped an employer’s contribution liability at its workers’ compensation liability. Second, to allow for the possibility that an employer would rather be liable under the workers’ compensation statute than for contribution, even if the amount is the same, Illinois allows an employer to waive its lien on third party recovery and be protected from contribution. Here, the court below did not allow Ensign to waive its lien. The court believed that Ensign’s delay in waiving until it knew the amount of the verdict and the jury’s assessment of its share frustrated the purposes of the Contribution Act. Ensign could have decided not to waive if the jury found its share of fault low or non-existent. The Court appreciated the lower court’s concern but noted that the Illinois Supreme Court in LaFever v. Kemlite Co. had approved the very strategy employed by Ensign. The Court also rejected the distinction that LaFever dealt with a situation where the employer had completed its compensation payments. The court should have allowed the waiver. The Court did agree with defendants that they are entitled, vis-a-vis Baltzell, to a setoff for the payments already received by Baltzell from Ensign. It declined, however, to either grant a setoff for estimated future payments or to order some form of trust to distribute the future payments. It did recommend that the parties voluntarily set up a mechanism to distribute future payments to the defendants according to their shares of liability

Federal Jurisdiction Lies For a Suit to Enforce a Settlement Agreement Under the Rehabilitation Act

HOLMES v. POTTER (December 31, 2008)

Robert Holmes was an employee of the United States Postal Service (“USPS”) in Minnesota from 1970 until 1992. He sued the USPS under Title VII of the Civil Rights Act of 1964 (“Title VII”). The case settled in 1994. Shortly thereafter, he returned to the employ of USPS in Indiana. In 2003, Holmes filed a complaint with the EEOC that the USPS failed to accommodate a disability, in violation of the Rehabilitation Act. In mid-2004, Holmes and USPS resolved their dispute at an EEOC mediation. The settlement agreement a) placed Holmes on twenty hours per week administrative leave/twenty hours per week leave-without-pay status through October 2004 and retroactive to January 2003, b) specified his salary, and c) required him to retire or resign in October 2004. Holmes filed this suit to enforce the settlement agreement, complaining that several actions taken by USPS after the settlement violated its terms. The district court granted summary judgment to USPS. Holmes appeals.

In their opinion, Judges Bauer, Williams and Sykes affirmed. Addressing their jurisdiction, the Court noted that a suit to enforce a settlement agreement requires an independent basis for federal jurisdiction. Because this is a suit to enforce a pre-determination settlement enforceable under Title VII, jurisdiction lies. The Court also stated that it would apply Indiana law, not federal law. The settlement of a federal claim is enforced like any other contract under state law. The Court recited some of the Indiana rules of contract construction: a) the goal is to give effect to the parties’ intent, b) extrinsic evidence is not allowed to create an ambiguity, and c) extrinsic evidence is not admissible to vary or add to the terms of an unambiguous contract. Holmes complains that USPS breached the settlement agreement by recalculating his retirement benefit, by improperly calculating the amount of his leave, and by deducting health insurance premiums. In large part, Holmes relied on statements allegedly made to him by the mediator before settlement. The Court concluded that the agreement was unambiguous, that USPS had complied with its requirements, and that none of the conduct Holmes complained of was even addressed in the agreement. There was, therefore, no breach. If Holmes was correct in any of his complaints, the Court advised, his remedy was not in a breach of contract suit.

Sierra Club Has Standing to Challenge Construction of Power Plant - Construction Enjoined

SIERRA CLUB V. FRANKLIN COUNTY POWER (October 27, 2008)

In August of 2000, Franklin County Power of Illinois (“FCPI”) applied to the Illinois EPA (“IEPA”) for a Prevention of Significant Deterioration permit in order to construct a power plant. The IEPA issued the permit on July 3, 2001. The permit provided that it would become invalid if FCPI: a) did not begin construction of the plant’s boilers within eighteen months, or b) discontinued construction for eighteen months, or c) failed to complete construction within a reasonable time. On December 2, 2002, FCPI contracted with an engineering and construction company to work with it exclusively to negotiate a construction contract. On December 18, FCPI arranged for excavation to begin. Excavation equipment was delivered to the site on January 3, 2003. Although the contractor began the excavation on January 8, it terminated its work in February because of a dispute. The landlord filled in the excavation in July. FCPI began the excavation anew in September of 2004. Shortly afterward, the IEPA determined that construction had commenced. In November, the IEPA made a preliminary determination that the permit had expired. The determination was appealed and the appeal is still pending. In May of 2005, the Sierra Club filed suit under the citizen suit provision of the Clean Air Act (“CAA”). FCPI moved to dismiss and for summary judgment on the grounds that the permit was valid and that Sierra Club lacked standing. The district court denied the motion. Instead, it entered summary judgment for Sierra Club and permanently enjoined FCPI from building the power plant until it obtained a permit.

In their opinion, Judges Bauer, Ripple, and Williams affirmed. The Court first addressed Sierra Club’s standing. An organization has standing only if: a) one of its members has standing, b) the interests at stake in the litigation are germane to the organization’s purpose, and c) an individual’s participation is not required. FCPI challenged only the first prong. Sierra Club relied on its member Barbara McKasson. In order to prevail on summary judgment, Sierra Club had to submit evidence to establish that: a) she suffered an actual or imminent, concrete injury, b) the injury is traceable to the actions complained of, and c) a favorable decision would likely redress the injury. McKasson stated that she and her family have regularly traveled to within three miles of the proposed plant site and there engaged in such activities as camping, fishing, and kayaking. The Court found that Sierra Club satisfied the individual standing test: a) McKasson will either be exposed to pollutants if she continues her trips or will have to forego the trips, either of which is sufficient injury, b) the injury is actual even though the plant is not yet built, c) the injury is traceable to the plant, even if the plant reduces its emissions, and d) an injunction will redress the harm for some period of time, even if FCPI eventually obtains a new permit.

The Court next addressed FCPI’s claim that Sierra Club’s action is not ripe until IEPA issues a decision on the permit appeal. The Court said that the plain language of the CAA allows a citizen suit against a person who is alleged to be in violation of a permit or who proposes to construct without a permit. The Court found that FCPI was either in violation of the permit because it failed to commence construction in time or, if the expired permit is akin to no permit, it is proposing to build one without one. Either way, the Court found that the suit was proper under the CAA.

On the issue of whether FCPI “commenced” construction, the Court stated that FCPI could commence construction in either of two ways.  It could begin “ a continuous program of physical on-site construction” or it could enter into binding contracts to complete construction within a reasonable tim.  To qualify, the contracts could not be canceled without a substantial penalty.  FCPI argued that there were genuine issues of fact regarding this test, precluding summary judgment. The Court had little trouble concluding that FCPI could not meet the continuous construction test. The only work it did was to excavate a hole. Even that was not permanent, since it was later filled in. The Court also found that FCPI lapsed in its construction activities for over eighteen months, even if it did begin on time. The Court also rejected FCPI’s argument that it’s binding contract meant that it had “commenced construction.” The contract was merely an agreement to negotiate in good faith in an attempt to reach an agreement on a construction contract. The fact that it contained a penalty clause was not enough to make it a qualifying contract.

Finally, FCPI argued that the district court had no authority to enter an injunction or, in the alternative, that it erred in not applying the traditional four-part analysis for injunctive relief. The Court relied on the plain language of the CAA to reject FCPI’s lack of authority argument. Although the Court was a little more troubled by the second argument, it also resolved it in Sierra Club’s favor. It first found that the lower court’s merits decision that FCPI did not have a valid permit accomplished essentially the same thing as an injunction - it required FCPI to get a permit. The Court’s also conducted its own analysis of the four factors and found that they favored Sierra Club. 

Employee's Allegation That Employer Denied Him a Raise Every Year Survives Ledbetter Challenge

CHAUDHRY v. NUCOR STEEL  (October 15, 2008)

Subhash Chaudhry has worked at Nucor, which manufactures rolled steel sheets, since 1988. In 2007, he worked as a Quality Control Inspector (“QCI”). [The following are allegations of the complaint, taken as true.] His responsibilities included inspecting the rolled steel sheets produced at the temper mill. Nucor increased the pay grades of some QCIs in 2003, but not those, like Chaudhry, who worked at the temper mill. Chaudhry’s complaints fell on deaf ears. Chaudhry complained that some of his co-workers made fun of him and called him names. Those complaints were ignored as well. Chaudhry also tried to improve his salary through a program in which QCIs who attended a training session and made four customer visits in a year could qualify for a pay grade increase. Chaudhry frequently asked for opportunities to make a customer visit.  Nucor controlled the visits and never gave him such an opportunity. On July 28, 2006, Chaudhry filed a charge of discrimination with the EEOC. He alleged that Nucor’s failure to give him the pay raise that they gave other QCIs amounted to discrimination against him on account of his race, religion, and national origin in violation of Title VII of the Civil Rights Act of 1964. He further stated that Nucor had prevented him from making customer visits and qualifying for a pay grade increase. In a later letter to the EEOC, he complained of the harassment. On February 7, 2007, Chaudhry filed suit alleging that Nucor violated Title VII by: a) raising the salaries of other QCIs whose jobs required less effort, b) informing other QCIs of customer visit opportunities, and c) failing to control the employees’ harassment of him. Nucor initially answered the complaint. A few months later, however, the Supreme Court decided Ledbetter. Nucor, relying on Ledbetter, asked the district court to dismiss the complaint. The court agreed and dismissed the pay discrimination claim. It also dismissed the harassment claim, holding that it was not a part of the EEOC charge and Chaudhry’s letter did not expand the scope of the charge. The court then dismissed the case and entered final judgment (the same day) without addressing the customer visit charge. Chaudhry attempted to amend his complaint to add a § 1981 claim. Nucor objected because judgment had already been entered. In his reply, Chaudhry asked the court to treat his motion as a motion to amend the judgment. The court apparently did so but treated the date of the reply brief as the date of the motion and denied it as untimely. Chaudhry appeals.

In their opinion, Judges Bauer, Flaum, and Williams reversed and remanded. The Court began its analysis with Title VII and Ledbetter. Before filing a Title VII complaint, an employee must file a charge with the EEOC. The charge must be filed within 300 days of the alleged unlawful employment practice. The alleged unlawful employment practice, under Ledbetter, is the single, discrete unlawful act at issue, even if the effects of the act continue with each paycheck. The Court agreed with the conclusion of the district court that the discrete act with respect to the raise claim was Nucor’s June, 2003 decision to give raises to the other QCIs. Since Chaudhry did not file his charge within 300 days of that date, the district court correctly dismissed this claim.

With respect to the customer visit claim, however, the same analysis produced a different result . The Court observed that Chaudhry’s EEOC charge and complaint alleges that Nucor denied him a raise every year by preventing him from participating in customer visits. Each of those decisions was a new violation. Since Chaudhry filed his charge within 300 days of the last of those acts, his customer visit claim is not time-barred by Ledbetter. The Court also rejected Nucor’s claim that its alleged failure to notify Chaudhry of a customer visit opportunity was not a materially adverse employment decision. The failure to notify deprived Chaudhry of compensation which he would have earned, at least as the complaint reads, but for the failure.

The Court commented on the pleading amendment dispute as well, although the remand eliminated any need to decide the issue. The Court criticized the district court, referring to its actions in entering judgment on the same day it granted the motion to dismiss as “unorthodox” and its handling of the motion to reopen as “hyper-technical.”

Employee's Protest of Supervisor's Conduct for Personal Reasons Does Not Support a Title VII Retaliation Claim

TATE v. EXECUTIVE MANAGEMENT SERVICES  (October 10, 2008)

Alshafi Tate started working for Executive Management Services (“EMS”) as a commercial building cleaner in August, 2002. Dawn Burban was his immediate supervisor. Tate alleges, and Burban denies, that he and Burban began a long, consensual sexual relationship almost immediately. Tate also alleges, and Burban denies, that when he tried to end the relationship in late 2003, Burban threatened that he would lose his job if he did so. They both agree that they had a heated argument in Burban’s office in January 2004. Tate claims that it occurred when he finally insisted that he was ending the relationship. Burban claims it resulted from Tate’s refusal to perform a proper work assignment. Burban called her supervisor, who told Burban to tell Tate to go home. Burban also called her district manager and reported Tate for insubordination. Tate tried to reach both the supervisor and district manager the next day to relate his side of the story. Instead, he was told he was fired for insubordination. Tate filed suit, alleging both sexual harassment and retaliation in violation of Title VII of the Civil Rights Act of 1964. The jury found for EMS on the sexual harassment claim and in Tate’s favor on the retaliation claim. The district court denied EMS’ FRCP 50(b) motion on the retaliation claim. EMS appeals.

In their opinion, Judges Bauer, Posner, and Williams reversed. The Court laid out the elements of Tate’s Title VII retaliation action: a) a statutorily protected activity, b) the employer’s adverse action, and c) a causal relationship. To show he engaged in protected activity, the Court stated that Tate had to show a reasonable belief that he opposed a practice that violated Title VII. There is a split in the circuits on the issue of whether the rejection of a supervisor’s sexual advances could amount to protected activity. The Court decided that it did not have to take a position on the issue. Instead, it found no evidence that Tate actually believed Burban’s conduct was unlawful. The Court recognized that Tate protested Burban’s actions. But it found that the evidence supported the conclusion that his protests were personal, not because he believed that Burban’s behavior was unlawful. Title VII exists to protect employees from retaliation for protesting discrimination they, in good faith, believe they have suffered. Tate does not meet the protected activity element.

President of Non-Profit's Board of Directors is Personally Liable to IRS as "Responsible Person" Because He Had Significant Involvement in the Organization's Financial Affairs

JEFFERSON v. UNITED STATES  (October 8, 2008)

Charles Jefferson served as the voluntary, uncompensated president of the board of directors of New Zion Day Care Center (“Center”). Velma Hayes was the paid director of the Center and ran its day-to-day operations. Jefferson had authority to direct the financial affairs of the Center. The United Way provided financial support to the Center . In early 1998, the United Way informed Jefferson that the Center was not paying its payroll taxes properly. The board ordered Hayes to pay any taxes due to the IRS. By 2000, the Center was in severe financial trouble. It did not pay income and FICA taxes from early 2000 through mid-2001. Hayes reported to the board at its monthly meetings that the Center was delinquent in its bills and tax liabilities. The United Way ceased its support of the Center, in part because of the tax issue. Jefferson arranged for the Center to borrow money to pay the delinquent taxes. In August, 2000, Jefferson co-signed two checks to the IRS for penalties and interest. In 2002, the IRS made assessments against both Hayes and Jefferson for the delinquent taxes. Jefferson filed suit to recover the $41,432 he paid pursuant to the assessment. The district court granted the United States’ motion for summary judgment. Jefferson appeals.

In their opinion, Judges Bauer, Williams, and Sykes affirmed. The Court addressed each of Jefferson’s arguments in turn: a) that he was not a “responsible person” under the statute, b) that his conduct was not willful, c) that he was exempt as an honorary board member, d) that the IRS was estopped because of its failure to develop explanatory materials as required by statute, and e) that the IRS failed to disclose evidence. The Court stated that a “responsible person” under Section 6672(a) of the Internal Revenue Code is a person who has enough authority over the organization’s finances to determine which debts will be paid. Jefferson had significant involvement in the Center’s financial affairs. The Court found that Jefferson was a “responsible person,” relying on his position on the board, his review of finances at monthly meetings, his securing of the loan to pay IRS penalties and interest, and his direction to Hayes to pay the taxes. On the “willful” issue, the Court observed that a person acts willfully when he acts in reckless disregard of a known risk that taxes are going unpaid. The Court recognized that the board had directed Hayes to pay the taxes but found that Jefferson had taken no steps to make sure that the taxes were, in fact, paid or that effective controls were in place. This made Jefferson’s conduct willful, even if he did not actually know the taxes were still unpaid. The Court rejected Jefferson’s honorary board member argument, noting that the statutory exemption only applied to board members who did not participate in the financial operations of the organization. Jefferson’s estoppel argument is that the government is required by law to develop explanatory materials relating to the circumstances under which a board member of a non-profit organization could be held liable for tax delinquencies. The Court agreed that the materials are required by law and that they were never developed. However, it refused to adopt a blanket rule that would make the assessment invalid as a result. Instead, the Court required a showing of prejudice, which it said Jefferson could not make. The Court rather summarily rejected Jefferson’s evidence argument, citing the substantial evidence of his liability and the fact that the evidence was relevant, if at all, only to collateral issues (e.g., his knowledge of the delinquencies).

Improperly Spoiled Ballots Not Enough for § 1983 Liability When There is No Evidence of Willful Conduct

KOZUSZEK v. BREWER  (October 8, 2008)

Nicole Kozuszek and her brother Wesley lived with their parents and were registered to vote in Porter, Indiana. About a month before the 2003 general election, Wesley reported his car stolen in the neighboring town of Chesterton. The police met him at an apartment he rented in Chesterton. The police report of the theft lists the apartment as the residence of  Wesley and Nicole. Wesley was scheduled to be a poll-watcher in Chesterton on election day. At a pre-election training session, Chesterton Police Chief Nelson noticed a document on which Wesley had asked that his fee for poll-watching be sent to the Porter address. Nelson recalled the theft incident and the Chesterton address Wesley gave the police. He mentioned the discrepancy to Dale Brewer, an election official. Brewer did nothing with the information until election day. She and Wesley were both at the Chesterton polls. Brewer asked Wesley if he liked living in Chesterton. Wesley responded that he did not live in Chesterton, at least on a regular basis. Brewer did not question Wesley further about the address discrepancy . Instead, she consulted with the other election board members. All of them agreed that Wesley’s vote should be challenged if there was a residence conflict. Brewer learned from election officials in Porter that Nicole and Wesley had both voted by absentee ballot in Porter. Brewer challenged both ballots.  The Porter poll inspector spoiled the ballots.  The Kozuszeks brought a § 1983 claim, alleging that Nelson and Brewer violated their right to vote. The district court granted the defendants’ motion for summary judgment. The Kozuszeks appeal.

In their opinion, Judges Kanne, Williams, and Tinder affirmed. They observed that the parties agreed that the votes should not have been spoiled.  To be successful on their § 1983 cliam, however, the Kozuszeks had to prove that Nelson and Brewer willfully acted to spoil the ballots. Willfulness requires an intent to undermine the electoral process. Addressing Wilson, the Court found that he did nothing wrong. He merely reported a voting record discrepancy to an elected official. With respect to Brewer, the Kozuszeks rely on a) the fact that Brewer waited until election day to challenge the vote, leaving no time to resolve the issue pre-election, and b) the fact that Brewer neglected to tell the Porter poll inspector about the information (Wesley's statement to Brewer and the pay voucher) that would have supported Wesley's Porter registration.  The Court determined that neither of these facts amounted to willfullness on Brewer's part.  The Court also relied on the fact that there was no evidence that the poll inspector did not exercise independent judgment.  The Court held that no reasonable jury, particularly because Brewer had reasonable explanations for her actions, could find that Brewer acted willfully.

Denial of Rule 15(a) "Matter of Course" Amendment Without Explanation is an Abuse of Discretion

FOSTER V. DELUCA (September 29, 2008)

Stacie Foster, a Democrat, was employed by the City of Chicago Heights, Illinois. Shortly after the citizens of Chicago Heights elected a Republican mayor, Anthony DeLuca, her employment was terminated. Foster brought suit against the City and DeLuca under 42 U.S.C. §1983, alleging that her First Amendment freedom of association rights had been violated. The district court granted a motion to dismiss and, on the same day, entered final judgment. Foster moved to alter the judgment pursuant to Rule 60(b) of the Federal Rules of Civil Procedure (FRCP) and to amend her complaint. The court denied the motions. Foster appeals.

In their opinion, Judges Rovner, Evans, and Williams reversed. The Court noted that relief under Rule 60(b) is extraordinary and that its review of the lower court’s denial of leave to amend is for abuse of discretion. Notwithstanding these high bars, the Court determined that the circumstances warranted a reversal. FRCP 15(a) provides that amendments to pleadings should be “freely given” and that one opportunity to amend is available “as a matter of course” before a responsive pleading is served. Since the motion to dismiss is not considered a responsive pleading under Rule 15(a), the court have either given Foster an opportunity to amend or provided an explanation for its denial. The court abused its discretion in not doing either. Also, the court left Foster with no option but to move to alter the judgment since it entered final judgment the same day.

Trial Court's Refusal to Provide Trial Exhibit Risks Jury Confusion and is Clear Abuse of Discretion

DEICHER v. CITY OF EVANSVILLE, WISCONSIN (September 19, 2008)

Mary Mezera divorced Jimmy Reiners after years of alleged physical and psychological abuse. She remarried and moved from Evansville, Wisconsin into a new community, keeping her location secret from Reiners. In February 2006, Reiners phoned the Evansville Police and asked for Mezera’s current address, claiming he needed to contact her in relation to past due mortgage payments. The police obtained her address from the state motor vehicle records and gave it to Reiners. He began to contact Mezera, putting her and her husband in fear of their safety. Mezera and her husband sent a Notice of Claim to the Police Department on April 22. They filed suit on June 30, alleging a violation of the Driver’s Privacy Protection Act (“DPPA”). During damages deliberations at trial, the jury asked for the date of the filing of the complaint, a date which was not in the record. The plaintiffs asked that instead they be given the Notice of Claim, which was a trial exhibit. The trial judge gave the jury the date of the complaint and refused to provide the Notice of Claim. The jury awarded $25,000 in compensatory and punitive damages. The district court granted plaintiffs’ request for attorney fees under DPPA but reduced the amount from almost $200,000 to $25,000 on the ground that the fee award should not exceed the damage award. Then he reduced their request for fees in preparing the fee petition by an equal percentage on the ground that that was the degree to which their petition was successful. Plaintiffs appeal.

in their opinion, Judges Posner, Rovner, and Williams reversed and remanded for a new trial on damages. The Court considered whether the lower court erred in providing the date of the complaint to the jury or erred in not providing the Notice of Claim. First, the Court held that the date of the filing of the complaint is a public record, not extrinsic evidence, and therefore the court did not err. Next, the Court observed that it is generally within the trial court’s discretion to determine which exhibits are provided to the jury. Thus, a trial court’s decision is reviewed under a clear abuse of discretion standard. Nevertheless, the court found a clear abuse of discretion here. At trial, the plaintiffs argued that the police officer who gave the address to Reiners had fabricated his report in order to come within an exception to DPPA liability. The date on which the police first learned of the claim (i.e., the date of the Notice) was a key part of this argument. The plaintiffs argued to the trial court that the real target of the jury’s inquiry during their deliberations was the date of the Notice, not the date of the complaint (which had not even been discussed at trial). The Court emphasized that the error was not in failing to provide the Notice but the possible prejudice in providing the date of the complaint without providing the Notice, thus possibly creating confusion in the eyes of the jury.
Although the Court did not rule on the plaintiffs’ objections to the district court’s fee decisions because of the remand, it did note that the automatic reduction of trial fees to the amount of the damage award and the automatic reduction of the fee petition fee in the same ratio were “likely unreasonable.”
 

Benefit Plan's Denial of Long-Term Disability Benefits Without Assessment of Qualifications and Available Jobs Violates ERISA

TATE V. LONG-TERM DISABILITY PLAN FOR SALARIED EMPLOYEES OF CHAMPION INT’L CORP. #506 (September 19, 2008)

in 1988, Jo Ann Tate left her job with Nationwide Papers as a sales representative because of problems with anxiety and depression. Her employer’s benefits plan (the “Plan”), governed by ERISA, gave her the right to short-term and long-term disability benefits. The long-term disability program was divided into two stages. A person could receive up to two years of long-term disability on a showing that she was unable to perform the duties of her job. After two years, a person had to show that she was unable to perform the duties of any job for which she was or could be qualified. Tate received short-term disability benefits for six months and applied for and was granted long-term disability benefits in 1999. In 2003, the Plan notified Tate that she was no longer eligible for benefits because she did not meet the second stage (i.e., any job) test. The Plan based its decision terminating her benefits on the report of a physician who had not examined Tate but had access to her file. Tate appealed the denial. A second physician reviewed her file and came to the same conclusion. She based her conclusion on the facts that Tate kept her home, complied with her treatment schedule, and experienced some benefit from medication. Tate challenged the determination in district court. On cross motions for summary judgment, the court found that the Plan’s decision to terminate her benefits was arbitrary and capricious in that it consisted only of conclusory statements unsupported by fact. The court specifically noted the absence of any employability review or identification of jobs available to Tate. The Plan appeals. In addition, the court remanded in order for the Plan to make a proper determination of benefits and denied Tate’s request for attorneys’ fees. Tate appeals.

In their opinion, Judges Posner, Kanne, and Williams affirmed all aspects of the district court’s decision. On the Plan’s appeal, the Court noted its de novo review of the district court’s decision and the highly deferential, “arbitrary and capricious,” standard of review of the denial of benefits. Nevertheless, the panel found that it was arbitrary and capricious because neither physician’s report was based on any explanation or reasoning. The first physician apparently did not even review her employment file. The second physician reviewed her employment file but did not tie the conclusion that Tate was unable to work to anything that was relevant to that issue. ERISA requires the Plan to assess her qualifications to work and relate those to jobs she might be able to perform.

Tate’s appeal argued that reinstatement, not remand, was appropriate because the Plan terminated previously awarded benefits, and did not simply deny benefits. Tate relied on the fact that the Plan provided benefits for two years after the “any job” standard took effect. The Court was puzzled by the Plan’s continued payments of benefits after two years without any determination but still found no such determination and held that a remand was proper. The panel also agreed with the district court’s conclusion that obtaining a remand in an ERISA case is not equivalent to “prevailing” for purposes of attorneys’ fees awards.