Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

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Musa owns and operates a restaurant in Milwaukee. The IRS determined that Musa made misrepresentations on his tax returns, including underreporting his federal income taxes by more than $500,000 for the years 2006-2010. The Tax Court upheld that determination, plus a civil fraud penalty of more than $380,000. The Seventh Circuit affirmed, rejecting, as “heavy on chutzpah but light on reasoning or any sense of basic fairness,” Musa’s argument that after his fraud was discovered, the Commissioner should have allowed him additional deductions on his individual tax returns based on amended employment tax returns in which Musa had corrected earlier false underreporting of wages. The court noted that he made those corrections after the statute of limitations had run on the Commissioner’s ability to collect the correct amounts of employment taxes that Musa’s amended returns admitted were due. The court also rejected Musa’s argument that the Tax Court erred by permitting the Commissioner to amend his answer to add the affirmative defense of the duty of consistency under tax law, and then erred by granting partial summary judgment to the Commissioner on that defense. View "Musa v. Commissioner of Internal Revenue" on Justia Law
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Medical College of Wisconsin, a nonprofit corporation, received a refund of Social Security (FICA) taxes after the IRS ruled that medical residents were exempt from them until April 2005. The IRS added to the refund approximately $13 million in interest but later demanded $6.7 million back, claiming to have used too high a rate. Medical College returned the money and filed suit under 28 U.S.C. 1346(a)(1), asking to have the disputed sum restored. The district court and Seventh Circuit denied the request, rejecting Medical College’s argument that, under 26 U.S.C. 6621, a nonprofit is not the sort of corporation to which a lower rate in paragraph (a)(1)(B) refers. View "Medical College of Wisconsin v. United States" on Justia Law
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Hirschbach, a trucking company, offered Turner, an African-American, a job as a driver contingent on his completion of orientation and a drug test. Turner claims that throughout orientation, the evaluator stared at him and once whispered insults. An independent facility collected a urine sample. MedTox split the sample, tested one part, and stored the other. As required by Department of Transportation regulations, MedTox reported Turner's positive result to Hirschbach’s independent medical review officer. Hirschbach’s safety officer, Winegarden, told Turner he could request that the second half of his sample be tested by a different laboratory. Turner told Winegarden he wanted the split test. That test never took place; the reason is disputed. Turner left the orientation program. Hirschbach, as permitted by DOT regulations, reported Turner’s results to an industry consortium which can be seen by future employers, with Turner’s permission. Turner sued under the Civil Rights Act, 42 U.S.C. 2000– e(2)(a)(1), 42 U.S.C. 1981, and Illinois civil conspiracy law. The district court granted Hirschbach summary judgment. The Seventh Circuit affirmed. Turner did not respond to most of Hirschbach’s statements of undisputed facts. Giving Turner the benefit of conflicts in the evidence, the court found evidence that Winegarden cancelled the split test and acted based on racial animus but no evidence that Winegarden’s racial animus caused him not to be hired. There was no evidence that the MedTox test was unreliable or that the split test would have been negative. View "Turner v. Hirschbach Motor Lines" on Justia Law

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Blagojevich was convicted of 18 crimes committed while he was Governor of Illinois and sentenced to 168 months’ imprisonment. In 2015, the Seventh Circuit vacated five of the convictions but affirmed the others and remanded. After the Supreme Court denied certiorari, the prosecutor announced that the five vacated charges would not be retried. For the remaining 13 convictions, the district court again imposed a sentence of 168 months, after determining that the Sentencing Guidelines recommend a term of 360-months-to-life, and making reductions that produced a final range of 151-188 months. The Seventh Circuit affirmed, acknowledging that the sentence was high for nonviolent crimes by a first-time offender. The court rejected arguments that the judge should have considered evidence of Blagojevich’s “extraordinary” rehabilitation while in prison; that the judge should have revised the sentence in light of the dismissal of the five vacated counts; and that the judge failed to address an argument about sentencing disparities. View "United States v. Blagojevich" on Justia Law
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After Brown was charged with sexually abusing his children, before trial, the court three times allowed Brown’s appointed counsel to withdraw because Brown would not cooperate. Brown appeared pro se but after “multiple outbursts” and attempts “to intimidate the victim‐witnesses,” the court held that he had “forfeited his right to represent himself.” Brown was convicted. The Public Defender’s Office appointed attorney Rosen to represent Brown on appeal. Brown objected, arguing Rosen was acting without his “consent or participation.” Brown sued under 42 U.S.C. 1983, claiming violation of “his constitutional right to represent himself on appeal” and that a lawyer had deprived him of legal documents and prevented him from requesting legal help from a nonprofit organization. The district court screened Brown’s complaint under 28 U.S.C. 1915A and concluded that his claim that Rosen had been ineffective in representing him was barred because it implied that his conviction may have been invalid and there is no constitutional right to self‐representation on appeal. The Supreme Court has held that in an appeal the state’s “interest in the fair and efficient administration of justice” outweighs the defendant’s interest in autonomy because there is no longer the presumption of innocence and because the Sixth Amendment does not refer to appellate proceedings. The Seventh Circuit affirmed, held that Brown’s appeal was frivolous, and imposed two strikes on him under 28 U.S.C. 1915(g). View "Brown v. Milwaukee County Public Defender's Office" on Justia Law

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Medical service providers referred plaintiffs’ debts to defendants, who sent letters, demanding payment of the principal plus 5% interest. Plaintiffs claimed that this violated 15 U.S.C. 1692g(a)(1), the Fair Debt Collection Practices Act, which states that debt collectors must specify the amount of the debt, and that Wisconsin law provides for interest (absent a contractual provision) only if a debt has been reduced to judgment, and any pre-judgment request for interest is forbidden. The Seventh Circuit affirmed summary judgment for the defendants. Wis. Stat. 426.104(4)(b), the “safe harbor” for people who act in ways approved by the Administrator of Wisconsin’s Department of Financial Institutions applies because the defendants sent the Administrator a letter asking whether they were entitled to add 5% interest to debts for the provision of medical services. The Administrator’s silence for 60 days resulted in deemed approval. The defendants were entitled to demand payment of both principal and interest, so the letters did not violate 15 U.S.C. 1692e(2)(A), which prohibits false representations about the character, amount, or legal status of a debt. The federal Act otherwise allows debt collectors to add interest when permitted by law. Plaintiffs’ debts arose under state contract law and are subject to the safe harbor provision. View "Aker v. Collection Associates, LTD." on Justia Law

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Smego, a civilly committed sex offender at Rushville, sued his treatment team, alleging that another resident sexually assaulted him and that defendants forced Smego to continue group therapy with his alleged assailant and retaliated against Smego. After the Seventh Circuit held that Smego was entitled to a jury trial, Smego was represented by University of Illinois law students. Before trial, Smego appeared by video conference or telephone at hearings. For trial, Smego appeared in person. During an off‐the‐record break after closing arguments, the judge removed Smego for transport back to Rushville. The court did not address this removal on the record and issued no cautionary jury instruction regarding Smego’s absence, but instructed the jury that its verdict must be unanimous. Smego was not presemt when the jury found in favor of defendants. The judge asked whether the students wanted the jury polled, and a student, without consulting Smego, responded in the negative. The Seventh Circuit affirmed. There is no evidence that the jury had questions during deliberation or had any reason to know that Smego was not present during deliberations. Failing to poll the jury when it is clear that the verdict was unanimous, was a “minor matter.” View "Smego v. Payne" on Justia Law

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The Madison Police Department established a focused deterrence program to increase surveillance of repeat violent offenders. Alston, one of 10 repeat violent offenders originally selected for the program, filed suit under 42 U.S.C. 1983, claiming that he was selected for the program because of his race, and arguing that his inclusion in the program deprived him of liberty without due process of law and that he was stigmatized and subjected to increased surveillance, penalties, and reporting requirements. Alston presented evidence that blacks accounted for only 4.5 percent of the Madison population but 37.6 percent of arrests and 86 percent of the program; four candidates associated with allegedly black gangs were selected while the one candidate associated with an allegedly white gang was not. The district court granted the defendants summary judgment. The Seventh Circuit affirmed. Alston failed to produce evidence that would allow a reasonable trier of fact to conclude that the program had a discriminatory effect or purpose or that Alston’s legal rights were altered by inclusion in the program. Alston’s statistics did not address whether black, repeat violent offenders were treated differently from white, repeat violent offenders and were not evidence of discriminatory effect. View "Alston v. City of Madison" on Justia Law

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Nance shot and killed her husband, Timothy, in the shower. Four days later, Nance reported him missing. Fond du Lac detectives interviewed Timothy’s family, his new girlfriend, friends, and Nance’s sister, Ewell. They learned of the couple’s history of threats and violence. One witness had noticed that the shower curtain, liner, and hooks in the Nance bathroom had been replaced after Timothy disappeared. The detectives reviewed surveillance tapes from a local store, which showed Ewell and Nance buying new shower curtain liners and hooks the night Timothy went missing. Executing a search warrant at the Nance house, detectives seized “biological specimens,” a “projectile” from the bathtub pipes, and other evidence. Ewell refused to answer questions. Both sisters were arrested. A judge, relying on Ledger’s statement and affidavit, determined that probable cause existed to detain Ewell. She spent 12 days in custody before her release. Ewell filed suit under 42 U.S.C. 1983. While her appeal of the dismissal of that case was pending. Ewell was convicted in state court of hiding a corpse, harboring or aiding a felony, and resisting or obstructing an officer. The Seventh Circuit affirmed. For purposes of qualified immunity, it would not have been plain to a reasonable officer that arresting and detaining Ewell under the circumstances would have been unlawful under the Fourth Amendment. View "Ewell v. Toney" on Justia Law

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In 2008, Chicago Abstract was sued in state court by a title insurance company and financial firms. Chicago Abstract tendered these lawsuits to its “errors and omissions” liability insurer, TIAC. TIAC could defend without reservation; defend while reserving its rights; seek a declaratory judgment concerning the scope of coverage; or decline to defend. Under Illinois law, when a liability insurer unjustifiably refuses to defend, the insurer is estopped from later asserting policy defenses to coverage. TIAC declined to defend. Years passed without further communications between TIAC and its insured. In 2014, a state court plaintiff filed an amended complaint. An attorney appointed by TIAC made an appearance in that case. TIAC then sought a declaration that coverage was unavailable based on policy exclusions. Chicago Abstract did not defend; the company had been involuntarily dissolved. Plaintiffs from the state-court litigation against Chicago Abstract appeared in the federal case as defendants. The Seventh Circuit affirmed judgment in favor of those defendants. The undisputed facts show that TIAC breached its duty to defend in the underlying litigation and is estopped from asserting “at this very late stage” any policy defenses to coverage that might have been available if TIAC had made a different choice when the complaints were first tendered. View "Title Industry Assurance Co., R.R.G. v. First American Title Insurance Co." on Justia Law
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