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

GULLEY v. MARKOFF & KRASNY (December 22, 2011)

In 2008, the City of Chicago imposed fines on Victor Gulley for Municipal Code violations. Gulley did not pay the fines because he no longer owned the real property associated with the violations. The City retained the law firm of Markoff & Krasny to collect the fines. Gulley brought suit against Markoff & Krasny pursuant to the Fair Debt Collection Practices Act alleging a number of specific statutory violations. The law firm moved to dismiss the complaint on the ground that the fines were not "debts" under the Act. Judge Gettleman (N.D. Ill.) agreed. Gully appeals.

In their opinion, Seventh Circuit Judges Flaum, Kanne, and Sykes affirmed. In affirming, the Court relied on: a) the language of the Act, which states that a "debt" must arise out of a transaction in which the subject of the transaction is "primarily for personal, family, or household purposes" b) the FTC (which is entitled not to Chevron deference but to respectful consideration in this context), which specifically excludes fines from the definition of "debts," and c) the consistent findings of district courts (no Court of Appeals has addressed the issue in a written opinion) excluding fines from FDCPA coverage.

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CITY OF CHICAGO v. STUBHUB! (November 23, 2011)

The City of Chicago assesses an amusement tax on the sale of tickets to sporting events, concerts, etc. StubHub! and eBay both operate Internet auction sites on which they resell tickets. The City of Chicago brought separate suits against StubHub! and eBay, alleging that it had a right to assess and collect from them a tax on the difference between the original and the resale price. Judges Andersen (N.D. Ill.) and Manning (N.D. Ill.), respectively, rejected Chicago's argument. On appeal, the Seventh Circuit certified (opinion and intheiropinion) the issue to the Illinois Supreme Court. On October 6, 2011, a unanimous Illinois Supreme Court held that Chicago was not allowed to collect the amusement tax from Internet auction sites. Instead of filing a position statement pursuant to Circuit Rule 52 (b), Chicago sought an extension of time, indicating that it was going to request a rehearing from the Illinois Supreme Court.

In their opinion, Seventh Circuit Chief Judge Easterbrook and Judges Bauer and Kanne denied the request for an extension and affirmed the district court judgments. It concluded that the extension would serve no practical purpose, that Chicago did not explain why it thinks a unanimous court would suddenly reverse course, and that Chicago could file post-judgment motions in the district courts in the unlikely event the Illinois Supreme Court changed its ruling.

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HAURY v. LEMMON (August 25, 2011)

Michael Haury, an Indiana prison inmate, filed a pro se lawsuit alleging that prison personnel interfered with the delivery of his legal mail and also failed to provide a sufficient law library. Judge Miller (N.D. Ind.) denied his request to proceed in forma pauperis. He concluded that Haury had "three strikes" under the Prison Litigation Reform Act of 1995. Haury appeals.

In their opinion, Seventh Circuit Judges Coffey, Rovner, and Hamilton reversed and remanded. The Prison Litigation Reform Act does bar an inmate from filing a civil suit and proceeding in forma pauperis if he has three "strikes" -- that is, if three prior lawsuits were dismissed as frivolous, malicious, or for failing to state a claim. Here, Haury's third strike is a 1991 case that the court below described as being dismissed as "frivolous for want of jurisdiction." The Court noted that that was not entirely accurate. In fact, although a portion of the 1991 complaint was dismissed for failure to state a claim, two claims were dismissed for lack of jurisdiction. The judge who dismissed the case did not characterize the case is frivolous. The PLRA does not list lack of jurisdiction as a basis on which to impose a strike. The Court noted that the D.C., Ninth, and Second Circuits have all concluded that dismissal for lack of jurisdiction does not amount to a strike (unless, of course, the assertion of jurisdiction as frivolous). The Court was persuaded by its sister circuits’ reasoning and concluded that the district court erred in denying in forma pauperis status.

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CHICAGO TEACHERS UNION v. BOARD OF EDUCATION (June 13, 2011)

The Chicago Board of Education laid off almost 1300 teachers in the summer of 2010. The Board recalled many of them before the end of that summer, having received additional federal funds. Vacancies continued to open through attrition. The Chicago Teachers Union brought suit against the Board seeking special hiring consideration for the tenured teachers who were laid off and not recalled. Judge Coar (N.D. Ill.) granted an injunction. A divided panel of the Seventh Circuit affirmed (opinion and intheiropionion). The Board petitioned for rehearing.

In their opinion, Circuit Judges Manion and Williams and District Judge Clevert granted the petition, vacated the earlier opinion, and certified three questions to the Illinois Supreme Court. In its earlier opinion, the majority interpreted Illinois law to give tenured teachers a protected a right to continued employment and, thus, an opportunity to be considered for vacancies as they arise. But no Illinois court has addressed the question of whether tenured teachers have any right to be recalled after a good faith economic layoff. On reconsideration, the panel decided to let the Illinois Supreme Court provide guidance on Illinois law. It certified three questions regarding the rights of tenured teachers after a good faith economic layoff.

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CAVOTO v. HAYES (February 28, 2011)

When Susan and Robert Cavoto were experiencing financial difficulties, they turned to Susan’s mother, Mary Hayes. Hayes allowed the couple to accumulate $30,000 in debt on her American Express credit card. Although the couple later separated, Cavoto told Hayes that he would repay her -- but he didn't. Hayes made unsuccessful attempts to recover the debt. So she took a bad debt deduction on her 2006 tax return and filed a 1099-C form, which identified the amount of the discharged debt and the debtor. The IRS notified Cavoto that he could be liable for additional taxes because of the discharged debt. Cavoto brought suit against Hayes under § 7434, which creates a cause of action against a person who "willfully files a fraudulent information return." Cavoto argued both that Hayes’ information return was fraudulent because the information was not accurate and because, even if the information was accurate, she was not required to file the form. Hayes counterclaimed for the $30,000. Judge Coar (N.D. Ill.) rejected the latter argument. Even if Hayes was not required to file the form, doing so accurately was not fraudulent. After a bench trial, the court found for Hayes on both the complaint and her counterclaim. Cavoto appeals.

In their opinion, Judges Bauer, Rovner, and Sykes affirmed -- but on different grounds. Section 7434 creates a cause of action for the filing of some, but not all, fraudulent information returns. The statute lists nine types of returns that are covered -- cancellation of indebtedness is not one of them. The court should have dismissed the complaint for failure to state a claim. With respect to the counterclaim, the Court found no clear error in the district court's decision.

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POLZIN v. GAGE (February 18, 2011)

Gerald Polzin pleaded guilty in 2005 to sexual abuse of two teenage boys. In connection with his presentence investigation, Polzin claimed he was himself a victim of sexual abuse as a boy at the hands of his uncle, an Appleton, Wisconsin police officer. The prosecutor asked the Wisconsin Department of Justice to investigate. The Appleton Police Department declined to conduct its own investigation. Although the prosecutor expressed doubts about the allegations, the trial judge considered it a mitigating factor in Polzin's sentence. Polzin a) filed a state civil suit against Appleton and several police officers which was resolved against him and affirmed on appeal, b) took an appeal from his sentence which was also affirmed on appeal, c) brought a state motion for postconviction relief, and d) brought a § 1983 suit against the prosecutor, the trial judge, the court reporter and the state investigators. In the § 1983 case, he alleged the falsification of evidence and the fabrication of the sentencing transcript. His motion for postconviction relief was pending when he filed his § 1983 claim. He asked the district court to stay the case because of the Supreme Court’s holding in Heck that a § 1983 challenge to a conviction cannot be made unless the conviction has been invalidated. Judge Griesbach (E.D. Wis.) denied the request for a stay, concluding that Polzin was not faced with a statute of limitations problem like Wallace. His claims were akin to malicious prosecution, which do not accrue until the prosecution terminates in his favor. The court therefore dismissed the complaint as barred by Heck. On a motion for reconsideration, however, the court added that Polzin also failed to state a claim on the merits. Specifically, the court ruled that the claims against the court reporter and trial court judge were frivolous in that neither had a role in the investigation and that his claims regarding the investigation did not amount to a constitutional violation. Polzin appeals.

In their opinion, Judges Coffey, Flaum, and Ripple affirmed in part and vacated and remanded in part. The Court held (for the first time) that a district court can ignore the Heck doctrine and proceed to the merits since Heck is not jurisdictional. On the merits, the Court concluded that a) the judge had absolute immunity with respect to the claims of falsifying the transcript, b) the court reporter is not liable because the transcript attached to the complaint showed that Polzin's allegations about the transcript were actually wrong, and c) the prosecutor is entitled to absolute immunity either as a prosecutor or as a witness at the sentencing hearing. Finally, the Court did point out that the district court did not specifically address Polzin's claims against the prosecutor and state investigators in their investigatory role. It remanded for further explanation or consideration of that claim.

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JOREN v. NAPOLITANO (February 7, 2011)

Verlaine Joren was a security screener with the Transportation Security Administration (TSA) at Midway Airport in Chicago. At the age of 63, Smith claimed to have a condition that limited her ability to stand or walk. She asked her supervisor for accommodations, including a relocation to Florida and schedule modifications. Her supervisor was skeptical of her complaints and refused her requests. Joren claims that he even refused to reassign her a "safe distance" from an x-ray machine when she temporarily had a heart monitor without a doctor's clarification of "safe distance." Joren resigned her position in January 2004 after her supervisor confronted her regarding a Social Security claim she had filed. Joren filed suit pursuant to Title VII and the Rehabilitation Act, alleging age, gender, and disability discrimination and retaliation. Judge Bucklo (N.D. Ill.) dismissed the complaint, holding that Joren failed to state a cause of action under Title VII and that her Rehabilitation Act claim was foreclosed by the Aviation and Transportation Security Act (ATSA). Joren appeals

In their opinion, Judges Rovner, Evans, and Williams affirmed. First, the Court stated that the gender and age discrimination claims were properly dismissed because Joren's complaint did not suggest that gender or age motivated her employer's actions. Instead, the complaint linked those actions exclusively to her disability. Federal employees’ disability claims are generally governed by the Rehabilitation Act, but Congress passed the ATSA after the September 11 attacks. The ATSA established the TSA and gave the Under Secretary of Transportation for Security the authority to hire and fire "[n]otwithstanding any other provision of law." The Court agreed with the other circuits that have considered the question that the "notwithstanding" language meant that the Rehabilitation Act’s disability discrimination prohibitions did not apply to TSA employees.

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HOSKINS v. DART (January 20, 2011)

Joshua Hoskins had a number of complaints about the way he was treated in an Illinois prison. They included the use of excessive force, the denial of medication, and the inadequate processing of grievances. He brought five separate complaints under § 1983 against the Cook County  Sheriff and prison officials. He used a court-issued form for each of his complaints. The form contained a section which required him to list any prior lawsuits that he had filed. Hoskins listed none although he had filed three earlier civil rights lawsuits and, indeed, was still litigating them. The form contained several notices that severe sanctions, including dismissal, could result from a failure to fill out the forms correctly. During screening, the district court discovered the omission. Judge Manning (N.D. Ill.) concluded that the omissions were fraudulent and dismissed the complaints with prejudice. Hoskins appeals.

In their opinion, Judges Bauer, Tinder, and Hamilton affirmed. First, the Court found no clear error in the district court's finding of fraud. Although Hoskins claimed that the error was innocent in that it was based on another inmate's instructions, the court was well within its rights to reject that explanation. Second, the Court found no abuse of discretion in the district court's choice of sanction. Courts generally have significant discretion in imposing sanctions on those who violate its rules. Here, the district court considered lesser sanctions but chose dismissal because of the inadequacy of monetary sanctions in a pauper proceeding, the importance of the information requested in administering the three strike rule, and the multiple warnings on the form itself of the consequences of dishonesty. 

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GEORGE v. NATIONAL COLLEGIATE ATHLETIC ASSOC. (October 18, 2010)

Tom George and the other plaintiffs took part in a basketball ticket distribution system operated by the National Collegiate Athletic Association (NCAA). They submitted applications for tickets with payment for the requested tickets and a $6.00 fee for every application. Successful applicants received their tickets – unsuccessful applicants received a refund of the ticket price. Both forfeited the fee. The plaintiffs, all unsuccessful applicants, brought suit alleging that the scheme was an unlawful lottery under Indiana law. Judge Lawrence (S.D. Ind.) found that the in pari delicto defense applied and dismissed the complaint. On appeal, the Seventh Circuit reversed (opinion and intheiropinion). The Court concluded that the in pari delicto defense did not apply. It also held that the plaintiffs alleged the elements of an unlawful lottery under Indiana law and that Indiana’s “bona fide business transaction” exception did not apply. It distinguished the Indiana Supreme Court’s approval of a similar ticket distribution system used by the Indianapolis Colts. Judge Cudahy dissented, disagreeing with the majority on each of its three conclusions. The NCAA petitioned for rehearing and rehearing en banc.

In their opinion, Circuit Judges Cudahy and Kanne and District Judge Darrah granted the petition for rehearing, vacated the earlier opinion, and certified three questions to the Indiana Supreme Court. The Court noted that the question was a close one that could have significant consequences on sports ticket distribution systems. It certified to the Indiana Supreme Court three questions: a) do the complaint allegations state the elements of an unlawful lottery, b) if a), does the NCAA system meet the “bona fide business transaction” exception to an unlawful lottery, and c) if a), are the claims subject to the in pari delicto defense.

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ANNEX BOOKS, INC. v. CITY OF INDIANAPOLIS (October 1, 2010)

The City of Indianapolis passed an ordinance that restricted adult bookstores’ hours of operation. After the district court rejected a challenge to the ordinance, the Seventh Circuit reversed and remanded (the opinion and intheiropinion). The Court concluded that the evidentiary record did not satisfy intermediate scrutiny. The record evidence it related to the dispersal of adult businesses offering live entertainment -- instead of relating to hours restrictions on businesses not offering live entertainment. On remand, the City offered one additional piece of evidence at a preliminary injunction hearing. It was a study that concluded that Sioux City, Iowa saw a reduction in crime after it dispersed adult businesses. Judge Barker (S.D. Ind.) denied the injunction. The City appeals.

In their opinion, Chief Judge Easterbrook and Judges Flaum and Rovner affirmed. The Court found several flaws in the City's position. First, the study, like the earlier evidence, related to a dispersal ordinance, not a restricted-hours ordinance. Second, the study did not control for any other variables (like bars opening or closing, for example). Third, more police protection for adult business patrons is preferable to closing them. Given the state of the record, the Court concluded that the district court did not abuse its discretion in denying the injunction.

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SIEFERT v. ALEXANDER (August 31, 2010)

On June 14, 2010, a panel of the Court issued its opinion in Siefert v. Alexander (opinion here – intheiropinion here). In a 2-1 decision, the majority applied a balancing test in upholding a Wisconsin prohibition on judges or judicial candidates from publicly endorsing other partisan candidates. Siefert petitioned for Rehearing En Banc.

In their opinion, the Court denied the petition.

Judge Rovner (joined by Judges Wood, Williams, and Hamilton) dissented from the denial. Judge Rovner stated that the Supreme Court and every other circuit court that has addressed the First Amendment rights of judges have done so by applying a strict scrutiny test. She disagreed with the application of the balancing test by the majority and favored rehearing.
 

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LINDSEY v. WALGREEN CO. (August 11, 2010)

Katie Lindsey had worked as a Walgreens pharmacist for only a few years when district supervisor Connie Jenkins promoted her to manager. Her management career did not go well or last long. Lindsey admitted to multiple violations of company policy and was demoted to staff pharmacist and transferred to another store. Jenkins warned her that additional violations could result in her discharge. Lindsey claims that she was the target of age-related disparagement at her new assignment, including from her direct supervisor. Shortly after her transfer, Lindsey filled a prescription although she was aware of a potentially serious interaction the drug could have with another medication that the customer was taking. She had to manually override the pharmacy's warning system in order to dispense the drug. Her supervisor reported the incident to Jenkins, who independently reviewed the prescription history, the customer's medical history, and the threat of interaction. Jenkins concluded that Lindsey violated company policy and terminated her employment. Lindsey brought suit under the Age Discrimination in Employment Act (“ADEA”). Judge Leinenweber (N.D. Ill.) granted summary judgment to Walgreens. Lindsey appeals.

In their opinion, Judges Bauer, Ripple, and Kanne affirmed. Lindsey relies principally on the "cat’s paw" theory of recovery, under which the bias of another employee can be attributed to an unbiased decision maker. The Court noted that the record contained evidence of inappropriate age-related remarks by her supervisor but did not include evidence that Jenkins relied on the supervisor or was presented with false or incomplete information. The undisputed evidence is that Jenkins conducted an independent investigation and did not rely solely on information conveyed by the supervisor. Without such evidence, the Court stated that a cat's paw theory could not survive. The Court added that even with such evidence, Lindsey's claim would fail. ADEA requires evidence that age was a determinative factor, not just a motivating factor. Lindsey cannot meet that threshold, given the undisputed evidence that Jenkins fired Lindsey because of her violation of company policy.

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IN RE: SHERWIN-WILLIAMS CO. (June 7, 2010)

Sherwin-Williams Co. is a defendant in a number of cases pending in federal court in Wisconsin before Judge Adelman (E.D. WI). The plaintiffs in those cases seek recovery against the manufacturers of white lead carbonate pigment for injuries allegedly caused by the ingestion of the pigment. Because none of the plaintiffs can identify the actual manufacturer of the pigment ingested, they rely on the Wisconsin Supreme Court's 2005 decision in Thomas. In Thomas, the Supreme Court adopted the risk contribution exception to traditional negligence theories in the lead pigment context. The Wisconsin Supreme Court was criticized for several of its decisions during the 2005 term, including Thomas. Judge Adelman co-authored a Law Review article that was published in 2007 defending the court's decisions. Although he disclaimed any opinion on the merits of those decisions, he did call Thomas a "positive development." Sherwin-Williams asked Judge Adelman to recuse himself because of the article. He refused. Sherwin-Williams seeks a writ of mandamus.

In their opinion, Judges Kanne, Rovner, and Tinder denied the petition. The Court stated that the test for disqualification of a judge is whether his impartiality might be questioned. The test must be applied from the perspective of a reasonable person who is aware of all surrounding facts and circumstances. Applying that test, the Court concluded that no reasonable reader would believe that the judge formed any opinion on the merits. Even more importantly, however, the Court stated that Judge Adelman's views of the case were irrelevant. As a federal district court sitting in a diversity case, he is obligated to apply Wisconsin law as interpreted by the state’s Supreme Court. A reasonable person would understand that situation and not question his impartiality because of the article.

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PELLA CORP. v. SALTZMAN (May 20, 2010)

Pella Corp. is in the business of manufacturing and selling home windows. It has sold in excess of 6 million "ProLine" casement windows. When a wood rotting problem arose, Pella set up a customer service program to compensate affected purchasers. A group of those purchasers brought a class action. The suit alleges that Pella committed consumer fraud when it failed to disclose the alleged design defect and the problems it was causing. Judge Zagel (N.D. Ill.) certified seven classes: a) a nationwide Rule 23(b)(2) class of persons who own structures containing the casement windows that have not been replaced, and b) six statewide Rule 23(b)(3) classes of persons whose windows have already been replaced because of the defect. The court refused to certify causation, damages, and statute of limitations issues. Pella petitioned for leave to appeal.

In their opinion, Judges Posner, Williams, and Tinder granted the petition and affirmed. The Court agreed that consumer fraud actions frequently present problems when treated as class actions. That does not, however, equal a general rule that they can never be so treated. Here, the principal issue is whether there is a single design defect in the window that leads to wood rot. The Court concluded that the district court was well within its discretion in deciding that the issue is best resolved in a class context. The problems inherent in treating consumer fraud cases in a class context are not present in this case. The issues are not complex, the central questions are all the same, and the class members must prove causation and damages on an individual basis.

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IN RE: BURLINGTON NORTHERN SANTA FE RAILWAY CO. (May 19, 2010)

A number of residents of the town of Bagley, Wisconsin filed a class-action suit in state court against Burlington Northern Santa Fe Railway (BNSF). They allege that BNSF's failure to maintain its railroad trestle resulted in a flood and damage to their property. BNSF removed the case to federal court pursuant to the Class Action Fairness Act (CAFA). After Judge Crabb (W.D. Wis.) denied the class' motion to remand, the class moved to amend the complaint to withdraw all class allegations. The court granted the motion and remanded the case to state court. It analogized the situation to one in which class certification is denied and noted that district courts were divided on the impact of denial of class certification on CAFA jurisdiction. BNSF requested leave to appeal.

In their opinion, Judges Kanne, Wood, and Sykes granted the petition, vacated the remand order, and remanded. The Court noted the general rule that jurisdiction is determined at the time of removal. It then cited its recent decision in Cunningham Charter Corp. (see intheiropinion), which was decided after the district court's remand. In Cunningham Charter, the Court concluded that the denial of class certification did not require remand of a case removed under CAFA. The same considerations that lead to that conclusion should apply when class action status is amended away voluntarily.

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VINCE v. ROCK COUNTY (May 3, 2010)

Scot Vince had long been a confidential informant for Rock County law enforcement. Vince brought a civil rights action against the County and others after he was beaten while in the Rock County Jail. He alleged a violation of his constitutional rights by being placed in the jail's general population, considering his prior cooperation with law enforcement. Summary judgment was entered against him. His Rule 59 motion was denied on February 10, 2010. Vince's counsel filed a notice of appeal on March 12, the last day to do so. The clerk's office advised Vince's counsel that he used the wrong event code on his notice of appeal and asked that he re-file a notice with the proper code. He did so on March 18. The Seventh Circuit staff questioned the timeliness of the notice.

In their opinion, Judges Bauer, Posner, and Evans concluded that the appeal was timely. The Court relied on three rules of appellate jurisdiction to resolve the issue: a) FRCP Rule 83(a)(2) cautions that a non-willful failure to comply with a local form requirement should not cost a party a right, b) FRCP Rule 5(d)(4) directs a clerk to accept papers notwithstanding a nonconformity with local rules, and c) FRAP Rule 3(c)(4) prohibits an appeal's dismissal for "informality" of the form or title on the notice. The Court concluded that Vince's failure to include the proper event code was an error of form and was the only error on the notice. As such, and in conformity with the Court's earlier decision in Carelock, the appeal is timely. The Court concluded with an admonishment to counsel generally to be very careful with electronic transmissions so as to avoid any adverse affects on their appeals.

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

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

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

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IN RE: WHIRLPOOL CORP. (March 3, 2010)

LG Electronics brought suit against Whirlpool Corp., alleging that it infringed a trademark in a dryer. During the course of the litigation, LG requested the production of communications between Whirlpool lawyers and Whirlpool's outside advertising agencies. Whirlpool objected on two grounds: because the communications were privileged, asserting that the advertising agency employees were de facto employees of the company, and because the company and the agencies shared a common legal interest. Whirlpool appealed and filed a writ of mandamus.

In their opinion, Chief Judge Easterbrook and Judges Wood and Evans dismissed the appeal and denied the writ. Whirlpool alternatively appealed and filed for mandamus because the issue of the appealability of orders dealing with the attorney-client privilege was pending before the Supreme Court in Mohawk Industries. The Supreme Court has now ruled -- and concluded that such orders are not appealable as collateral orders. The Court thus dismissed the appeal. On a petition for a writ of mandamus, the Court stated that Whirlpool must show that the order will not be reviewable at the end of the case and is patently wrong. The Court noted that the district court gave the Whirlpool's arguments careful consideration and issued a "lengthy and thoughtful" decision. The Court found nothing in Whirlpool's petition that convinced it that the district court made a serious error.

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DAUGHERTY v. WABASH CENTER, INC. (August 14, 2009)

Michael Daugherty worked for Wabash Center, Inc. for seven years. He had an excellent employment record. He was promoted on several occasions and always received positive reviews. Things changed in 2006. He started having trouble with his coworkers and his staff. He was given a written reprimand for abusive e-mails and unacceptable management style. Permission for a month-long vacation was revoked. Daugherty immediately visited his doctor and requested two weeks FMLA leave from the Center. His request was granted. In his absence, the Center discovered that he had used the Center's credit card to make at least five unauthorized purchases. It also discovered that he had failed to follow through on some key responsibilities. When Daugherty was due back from his leave, the Center presented him with a corrective action plan -- which he refused to sign. He instead requested additional medical leave. The Center granted his request but asked that he not access the network while on leave and asked him for his keys and passwords. He refused. After further analysis revealed that he had deleted thousands of files while on leave, the Center fired him. Daugherty filed suit, alleging a violation of the FMLA. The court granted summary judgment to the Center. Doherty appeals.

In their opinion, Judges Posner, Kanne and Sykes affirmed. Under the FMLA, the Court stated, an employee is not entitled to any right he or she would otherwise not be entitled to absent the leave. The FMLA does not prohibit an employer from terminating an employee's employment during FMLA leave if it discovers misconduct that justifies the termination. Here, Daugherty admitted most, if not all, of the misconduct. The Center did not violate the FMLA by failing to reinstate Daugherty. The Court also rejected the Daugherty's alternative claim that the Center retaliated against him for taking leave. The undisputed evidence in the record is that the Center fired Daugherty for multiple instances of misconduct. Finding no factual dispute, the Court affirmed the summary judgment for the Center. 

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MCBRIDE V. GRICE (August 11, 2009) 

Dytaniel McBride owns and operates a clothing store in Peoria. One day, McBride got into a disagreement with one of his employees. She began calling him names and generally creating a scene. McBride summoned the police by activating an alarm. Instead of waiting for the police to arrive, however, he physically removed his employee from the store. She called the police and met them when they arrived in response to the alarm. A police officer interviewed both of the individuals and reviewed some portion of a security tape -- and then arrested both of them. After the charges against McBride were dismissed, he filed a lawsuit alleging that his constitutional rights were violated because of his arrest without probable cause. The district court granted summary judgment to the defendants. McBride appeals.

In their opinion, Judges Posner, Kanne and Sykes affirmed. The Court first addressed the burden of persuasion in a § 1983 case. The person complaining that he was arrested without probable cause bears the burden of establishing the absence of probable cause. The same holds true, added the Court, for a state law claim of illegal arrest. On the merits, the Court had little difficulty in finding probable cause. In fact, the employee told the police officer that McBride hit her in the head. A police officer is entitled to base his determination of probable cause on information he receives from the victim -- assuming he reasonably believes she is telling the truth. Although an officer should not ignore facts or inquiries that might clarify the situation, he may end his investigation once he is satisfied that probable cause exists. The witness’ statement and a scratch on her head were enough for the officer to reasonably believe that McBride committed the offense of battery under Illinois law. 

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KERR - MCGEE CHEMICAL CORPORATION v. LEFTON IRON & METAL COMPANY (June 30, 2009)

Kerr-McGee received a $4.8 million judgment in 1996 against Lefton Iron & Metal Company for its costs in cleaning up contaminated property. Kerr-McGee continued to expend funds on the cleanup post-judgment. The district court increased the judgment to $9.5 million in 2003. In response to Lefton’s argument that it should receive credit for Kerr-McGee's receipt of insurance proceeds, the court invited Lefton to address the issue in a separate motion Instead, Lefton appealed.

In their opinion, Chief Judge Easterbrook and Judges Evans and Sykes dismissed for want of jurisdiction. The Court noted that the lower court entered a money judgment but was prepared to consider a reduction. If the lower court simply neglected to consider the issue, the Court stated that the order would have been final. Of course, it would then have remanded the case for consideration of the issue. Here, however, the court did not neglect to consider the issue -- it invited a motion. Therefore, the decision is not final and the Court lacks jurisdiction.

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BROOKS-NGWENYA v. INDIANAPOLIS PUBLIC SCHOOLS (April 15, 2009)

While a classroom assistant in the Indianapolis Public School system ("IPS"), Angela Brooks-Ngwenya developed a program she called Transitioning Into Responsible Students (“TIRS”). When IPS did not offer Brooks-Ngwenya a permanent job, she brought suit for race discrimination. She and IPS settled the suit in 2004. She later brought a second suit, alleging that IPS infringed her copyright in TIRS, to which she added a claim for employment discrimination. The district court granted summary judgment to IPS. Brooks-Ngwenya appeals.

In their opinion, Judges Posner, Williams and Tinder affirmed. The Court first addressed the issue of copyright registration. The district court granted summary judgment to IPS because the Copyright Office had rejected Brooks-Ngwenya's application for trademark registration. Federal law requires a rejected applicant to notify the Register of Copyrights when suing for infringement. Brooks-Ngwenya presented no evidence that she had given such notice. The Court concluded that the notice requirement was, although not jurisdictional, a prerequisite to suit. Given that the Register was aware of the suit, the Court concluded that no purpose would be served by insisting on notification and proceeded to the merits. The Court held that Brooks-Ngwenya’s copyright claim must fail because she could not show that IPS used any of her words or materials, only possibly her idea. As for the discrimination claim, the Court had no difficulty in affirming the district court. The party’s earlier dismissal barred the claim. 

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POLLITT v. HEALTH CARE SERVICE CORPORATION (March 10, 2009)

Juli Pollitt was a federal employee with health care insurance administered by Health Care Service Corporation ("HCSC"). In 2007, HCSC stopped paying all claims submitted by Pollitt on behalf of her son and began trying to recoup payments it had already made to service providers on his behalf. Pollitt filed suit in state court, alleging that HCSC took the action it did when the Department of Labor failed to pay the proper premium. HCSC removed the case to federal court, where it was dismissed as preempted by the Federal Employees Health Benefits Act. Pollitt appeals.

In their opinion, Chief Judge Easterbrook and Judges Rovner and Evans vacated and remanded. The Court first concluded that the lower court erred in allowing §1441 removal. Preemption is a defense to a state law claim but a federal defense does not support removal. "Complete preemption" would support removal but not as a defense -- rather, as a conclusion that any claim in the area arises under federal law. The Court noted, however, that the Supreme Court held that federal law does not completely occupy the health-insurance coverage field for federal workers. Section 1441 is not the only basis for removal, however. The Court referred to §1442(a)(1), which provides that a person "acting under" a federal officer can remove a suit that depends on the fact that the defendant followed the directions of that officer. The Court noted the parties’ disagreement over whether HCSC was simply following instructions from the Department of Labor. The Court remanded to the district court with instructions to resolve these jurisdictional facts. If HCSC was merely following the direction of the Department of Labor, the case belongs in district court but must then be dismissed. HCSC is the improper defendant in the suit related to the agency’s coverage decisions. On the other hand, if HCSC was acting on its own, there is no basis for removal and the case should be remanded to state court.

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COLLINS v. ILLINOIS (February 2, 2009)

Margaret Collins has had a long-running dispute with the State of Illinois over her employment with the Illinois State Library. This is her third lawsuit, which the Seventh Circuit remanded to the district court for consideration of some of her claims. The road got a little bumpy after remand. The court ordered her to amend her complaint on four different occasions and forced her to respond to discovery. The parties finally arrived at an agreeable date for her deposition. Although she did appear, she refused to submit to interrogation with parties present. She was told they had a right to be there. One of the lawyers offered to call the magistrate to resolve the issue. Collins left. The defendants moved for dismissal of her complaint for discovery abuse and for their fees for preparing for the deposition. The court dismissed the complaint, stating that her refusal was “willful and egregious.” He also concluded that complaints she had about the court reporter and police officers in the vicinity were baseless. He also ordered Collins to pay the defendants’ fees and costs. Collins appeals.

In their opinion, Judges Bauer, Ripple and Rovner affirmed. The Court appreciated the severity of dismissal as a discovery abuse sanction. The sanction is appropriate, however, when there is willfulness or bad faith and the sanction is proportionate to the conduct. The Court found the district court’s decision reasonable. It made a finding of willfulness. And the record established a pattern of Collins’ efforts to hinder the progress of the case. The Court also rejected, in short shrift, Collins’ complaints about the award of fees and the bias of the district court judge.  

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IN RE LIMITNONE (December 19, 2008)

LimitNone, a software development company, was pitching an e-mail application to Google. Before a March 2007 meeting, the parties signed confidentiality agreements that included a forum-selection clause naming a California county as the exclusive venue for disputes. Both agreements limited modifications to writings signed by both parties. LimitNone claims that a Google employee later “accepted” an agreement that provided for exclusive jurisdiction in Illinois by clicking on the “Accept” button for the LimitNone License Agreement. After Google developed its own application, LimitNone brought an action in Illinois state court. It alleged violations of the Illinois Trade Secrets Act (“ITSA”) and the Illinois Consumer Fraud and Deceptive Practices Act. Google removed to federal court, asserting that the ITSA was preempted by the federal Copyright Act. LimitNone sought a remand. On Google’s motion, the district court transferred the case to the Northern District of California under § 1406(a), holding that the California forum-selection clause applied and venue was improper in Illinois. LimitNone petitions for a writ of mandamus.

In their opinion, Judges Bauer, Coffey and Sykes denied the petition. The Court first addressed whether mandamus was the proper vehicle for relief. The Court noted that the Supreme Court has approved mandamus for challenging transfers under § 1404 but has suggested that it is inappropriate for transfers under § 1406. But the Court concluded that the district court erroneously applied § 1406. Section 1406 applies only when venue is improper. Here, notwithstanding the forum-selection clause, venue was proper in the district court. The Court treated the transfer as based on § 1404 and found mandamus to be the proper vehicle for review.

On the merits, however, the Court rejected LimitNone’s arguments that the lower court erred in a) transferring the case before ruling on subject matter jurisdiction, and b) making factual determinations regarding the transfer argument before ruling on subject matter jurisdiction. The Court conceded that the Supreme Court requires a determination of subject-matter jurisdiction before a ruling on the merits. The Supreme Court does not, however, mandate a particular sequence in determining jurisdictional issues. The transfer was not a decision on the merits. The district court was within its discretion in ruling on the venue issue before the subject-matter jurisdiction issue. Furthermore, the court was well within its power to resolve factual disputes that were necessary to the adjudication of the venue issue. The Court noted that district courts are frequently required to resolve disputed factual issues before ruling on preliminary issues such as personal jurisdiction, diversity of citizenship or amount in controversy, for example. The fact that LimitNone may be barred from relitigating that issue does not change the result.

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OVERMAN v. ASTRUE  (October 7, 2008)

Gerald Overman is a 58-year old high school graduate. For years, he worked as an unskilled maintenance worker and repairman at a golf course. He was able to work, even though he suffered from diabetes, hypertension, and some fairly serious vision problems. He began to experience more serious problems. He became tired and overheated very easily and lost quite a bit of weight. He was diagnosed with Graves’ disease and anemia. Overman began radioactive iodine therapy for the Graves' disease. The treatment was somewhat successful but his physician had a difficult time finding the correct dosage.  Overman's vision was also worsening.  His physician's conclusion was that “any” visual task would be difficult for Overman and that his eyesight was continuing to deteriorate.  Overman applied for social security benefits.  An ALJ conducted a hearing in 2005. Overman testified regarding his condition and disabilities. He said he tired easily, could not see well, could not be in extreme temperatures, and could not lift much weight. The agency medical consultant testified that Overman could not perform work that required reading or fine visual determination, or that involved extreme temperatures or heavy lifting. A Vocational Expert (“VE”) also testified. He testified that Overman could not continue in his prior field of work, primarily because of the temperature extremes. He did testify, however, that he could perform two jobs: a material packaging job and a keg-filling job. The VE also testified that his testimony was consistent with the Dictionary of Occupational Titles (“DOT”). On cross-examination, the VE admitted that both jobs he said Overman could perform would be eliminated if Overman was not capable of fine visual discrimination or reading. The ALJ found that Overman could do either of the two jobs identified by the VE. He gave great weight to the VE’s testimony on direct. The ALJ believed the testimony on cross-examination merely confirmed the VE’s conclusion about other jobs he had eliminated. Overman sought review in the district court . The court upheld the ALJ’s decision. Overman appeals.

In their opinion, Judges Posner, Sykes, and Tinder (in a per curiam opinion) reversed. The Court observed that the VE’s testimony about the two available jobs did, in fact, conflict with the DOT. Both jobs require a degree of visual acuity and reading ability that Overman does not have. The Commissioner concedes as much but argues that remand is unnecessary. The Court pointed out that a Social Security Ruling requires the ALJ to confirm that the VE’s testimony is consistent with the DOT and further requires a ALJ to inquire further if an apparent conflict exists. Overman’s counsel did not bring the conflicts to the attention of the ALJ. Therefore, the Court stated, the conflicts must be obvious enough to cause the ALJ to notice them without assistance. The Court found that the conflicts with respect to vision and reading capabilities should have been apparent to the ALJ. The Court also held that the ALJ’s ruling was not supported by substantial evidence because of the flawed VE testimony.  

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