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

KASALO v. HARRIS & HARRIS, LTD. (August 26, 2011)

Mariana Kasalo brought suit under the Fair Debt Collection Practices Act against Harris & Harris. Her attorney included two class accounts in her complaint. Harris & Harris admitted that it violated the Act with respect to Kasalo, but denied that its normal practices violated the Act. The parties informed the district court judge that they intended to settle the individual claim. Although the court expressed skepticism with respect to the class claims, he allowed some discovery. Over the following months, status hearings were held, Kasalo's attorney abandoned two class theories but developed a third, and the attorney missed due dates and failed to inform the court of his intentions. When Kasalo's attorney showed up late for a May 2010 status hearing, Judge Guzmán (N.D. Ill.) dismissed the case for want of prosecution. When he showed up minutes later, the court instructed him to file a motion for reconsideration explaining why he had not been more diligent in prosecuting the case. The court later denied that motion. Kasalo appeals.

In their opinion, Seventh Circuit Judges Rovner, Wood, and Evans (who, as a result of his death, took no part in the decision) reversed and remanded. A dismissal for want of prosecution is an extremely harsh remedy and should only be used when, considering all the circumstances, less serious sanctions are unsatisfactory. The factors include the frequency of plaintiff's shortcomings, whether the shortcomings are attributal to the plaintiff or her lawyer, any prejudice, the impact on the court, and the merits of the suit. The Court noted that most of the factors weigh against an outright dismissal. Courts should consider less serious sanctions and normally should provide a warning to a party before dismissal. Here, the district court did neither. In fact, the Court specifically noted the presence of a much more appropriate remedy. The district court could have denied class certification and allowed the parties to settle the individual claim. The plaintiff then could have sought review of the class certification denial.

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EQUAL EMPLOYMENT OPPORTUNITY COMMISSION v. KONICA MINOLTA BUSINESS SOLUTIONS U.S.A. (April 29, 2011)

Konica Minolta Business Solutions hired Elliot Thompson, an African-American male, in early 2005. Konica assigned him to a Tinley Park, Illinois sales team. Thompson believe that he was being discriminated against because of his race and registered a complaint with Konica's Human Resources Department in late October. Konica fired him the very next day, Thompson filed a charge with the EEOC. He alleged that he was subjected to different terms and conditions of employment and was discriminated against on account of his race. Konica initially cooperated with the EEOC investigation. During its investigation, the EEOC learned that Konica had four Chicago area facilities, that only six of its 120 employees were African-American, that all six were assigned to the Tinley Park facility, and that five of the six were on the same sales team. The EEOC issued a comprehensive subpoena, requesting substantial information regarding Konica's hiring history at all four sites. Konica petitioned to revoke the subpoena. The EEOC denied the petition. Judge Manning (N.D. Ill.) granted the EEOC's application for an order enforcing the subpoena. Konica appeals.

In their opinion, Judges Cudahy, Flaum, and Wood affirmed. Although the EEOC has primary authority for enforcing Title VII and must investigate discrimination charges, its authority is limited to evidence relevant to the charge. The Supreme Court adopted a generous relevance standard in Shell Oil. The EEOC need only have a "realistic expectation" that the requested evidence will advance its investigation. Although Thompson's charge did not include any allegations relating to his hiring, the Court had no trouble finding that the EEOC subpoena met the relevance test. Any discrimination in hiring or team assignments would be relevant to the EEOC's investigation of Thompson’s treatment. The Court also concluded that Konica failed to adequately develop its burdensomeness argument.

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WICKENS v. SHELL OIL CO. (August 31, 2010)

Daniel and Pamela Wickens owned a small parcel of land in central Indiana that had previously been the site of a Shell gasoline station. During preparations for the sale of the parcel, they discovered that the soils were contaminated. Their attorney, Mark Shere, began negotiations with Shell -- under the Indiana Underground Storage Tank Act (the “Act”), a person who takes steps to remedy soil contamination caused by an underground storage tank may be reimbursed by the owner and may recover his attorneys' fees if he brings a successful suit. When a neighbor's property (also the site of a former gasoline station -- but not owned by Shell) was also found to be contaminated, the parties fought over the source and responsibility for the contamination. The Wickenses brought suit in early 2005. The district court denied Shell's summary judgment motion, concluding that it probably bore full responsibility for the contamination. Although the Wickenses continued to control the investigation and rack up remediation costs and attorneys' fees, the parties could not seem to reach a settlement. The court adopted a three month freeze on the parties' liability for each other's fees and costs in early 2007 in an attempt to foster a resolution. She also instructed the parties to select and retain an independent consultant to investigate the properties. Notwithstanding the court's order, the parties continued to incur substantial fees and costs during and after the freeze. The parties finally reached an agreement -- Shell purchased the property, made a payment for property damages, and agreed that the Wickenses were entitled to their costs and fees. They left the calculation up to the court. Judge Barker (S.D. Ind.) awarded all of the Wickenses' costs and fees up to the point of her freeze order, after which she disallowed all costs (with the exception of some corrective action costs pursuant to a state work plan) and fees. On post-judgment motions, the court a) deducted the amount of fees billed as attorney services by Shere’s wife, a non-attorney, and b) admonished Shere for concealing the fact that his fees were largely paid by an insurance company throughout the litigation but granted Shell no relief. Shell appeals. Shere (after being allowed to appear as a real party in interest) cross-appeals.

In their opinion, Circuit Judges Bauer and Wood and District Judge Kennelly affirmed in part and reversed and remanded in part. The only issues on appeal relates to the award of expert costs and attorneys' fees. The Court first concluded that the lower court correctly applied a statutory purpose test for calculating a fee award under the Act. Second, the Court ruled that the lower court did not abuse its discretion in concluding that the statutory purpose was satisfied as of January 2007. The Court rejected Shell's suggestions that an earlier date was appropriate and the Wickenses's suggestions that a later date was required. Next, the Court upheld (with a small clerical error reversed and remanded) the deduction for fees incurred by Shere’s wife. There was nothing wrong with the her time entries. They could have been billed as non-attorney time -- but were improperly billed as attorney time. Finally, the Court concluded that the district court did not clearly err in its award of expert costs after January 2007. On Shere’s cross-appeal, the Court a) found no abuse of discretion in denying prejudgment interest, b) concluded that Shell suffered no prejudice from Shere’s insurance concealment and found no error in the court's denial of relief, and c) refused to consider Shere’s complaint that the district court was unduly critical of his litigation conduct.

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LINE CONSTRUCTION BENEFIT FUND v. ALLIED ELECTRIC CONTRACTORS (January 8, 2010)

Allied Electric Contractors has been a member of the National Electrical Contractors Association (NECA), an association of union employers, since 2002. It has been making employee benefit contributions to Line Construction Benefit Fund since the 1990s. In 2005, NECA entered into a Collective Bargaining Agreement (CBA) with the union. It set forth the terms of employer contributions to the Fund and increased the hourly contribution by a quarter. By its own terms, it bound all employers who signed a letter of consent. Although Allied did not sign a letter of consent until December of 2006, it continued to make the required contributions, including the extra quarter, until July 2006. It failed to make contributions for July, August, and December of 2006 as well as for January and February of 2007. The Fund brought suit under ERISA. The court denied Allied's motion to dismiss and granted summary judgment to the Fund. Allied appeals.

In their opinion, Judges Cudahy, Wood, and Tinder affirmed. The Court first addressed Allied's argument that the Fund had no cause of action under ERISA. It concluded that a multiemployer plan is authorized to bring suit under section 502(e) of ERISA as a plan fiduciary, reaffirming its holding in Vanguard Car Rental. The Court then rejected Allied's position that the CBA requirement of a signed letter of consent excused its nonpayment. Conduct manifesting consent, said the Court, is sufficient. Here the undisputed events, including the payments in early 2006 and the payments reflecting the additional quarter contribution, established that consent. Finally, the Court concluded that the CBA met the LMRA's requirement that an employer must have a written agreement before it makes contributions to employee benefit funds.

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