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

Malone owned a cattle feedlot. He cared for cattle, including some owned by GLS, and worked as an agent of GLS to buy cattle. Anderson was president of GLS, which was owned by others. GLS’s cattle were collateral for its loans. In 2008, the feedlot started losing money, jeopardizing Malone’s business and GLS’s loans. Malone and Anderson began kiting checks; one would write a check to the other, and before it was collected, the other would write a check back to the first. Malone was overdrawn by $400,000 in 2009. Malone and Anderson arranged to sell O’Hern 700 cattle. O’Hern paid $400,000, which Malone deposited to his overdrawn bank account. In reality, there were no cattle. Malone gave O’Hern $115,000. Unsatisfied, O’Hern visited the feedlot and removed cattle that did not belong to Malone; obtained liens on property owned by Malone and Anderson; and filed a state court civil suit. Malone pled guilty to bank fraud and money laundering. He urged the district judge to refrain from ordering restitution, arguing that O’Hern had already received full recovery and that the judge exercise her discretion under 18 U.S.C. 3663A(c)(3)(B), because the need to compensate O’Hern was outweighed by the burden of determining complex issues regarding his losses. The judge imposed restitution of $285,000, stating that she had no discretion under the Mandatory Victims Restitution Act, 18 U.S.C. 3663A.The Seventh Circuit affirmed the award as supported by the preponderance of the evidence regarding O’Hern’s loss and the cash returned to him, the only relevant factors. It would have been error for the judge to consider other amounts O’Hern may be adjudged to owe Malone or Anderson in the state court litigation. View "United States v. Malone" on Justia Law

A business that manages commercial real estate and its owners were sued in a purported class action under the Telephone Consumer Protection Act, 47 U.S.C. 227, for having paid a “fax blaster” (Business to Business Solutions) to send unsolicited fax advertisements. Aggregate statutory damages would be more than $5 million or, if the violation is determined to be willful or knowing, as much as three times greater. The Seventh Circuit denied leave to appeal class certification in the suit, which is more than five years old. The court noted that it had no knowledge of the value of the defendant-business and that, even if the defendants could prove that they will be forced to settle unless class certification is reversed, they would have to demonstrate a significant probability that the order was erroneous. Rejecting challenges concerning individual class members, the court noted that no monetary loss or injury need be shown to entitle junk‐fax recipient to statutory damages. The adequacy of the class representative was not challenged. View "Wagener Equities, Inc. v. Chapman" on Justia Law

As a mortgage broker, Chandler was able to falsify documents, close fraudulent loans, and judge what a house would appraise for after cosmetic work. In 2005, Causey and Rainey founded a construction company to make minimal changes to houses. They recruited real estate novices to buy houses. Chandler would fill out a mortgage application, falsifying income, down payments and other information to make the buyer a viable loan candidate. She would order appraisals, title work and pre‐approval from the lender. A “trainee” appraiser reported a greatly inflated price. Chandler gave false information to the lenders on HUD‐1 statements. Chandler made up false construction invoices for the remainder of the loan after expenses were paid. Before the participants were arrested, they had executed the mortgage scheme 25 times. Causey, the only co‐conspirator who did not plead guilty, was convicted. The Seventh Circuit affirmed, rejecting arguments that the court improperly admitted prejudicial photographs taken of the houses around the time of trial rather than at the time of the sale and evidence of a fraudulent sale that took place outside of the conspiracy. A defense witness’s testimony was properly excluded as undisclosed expert testimony. The court also upheld admission of testimony by a co-conspirator and a two‐level sentencing enhancement for being an “organizer, leader, manager, or supervisor.”View "United States v. Causey" on Justia Law

Carmody worked for the University of Illinois for 25 years until he was fired for reasons involving a security breach of the university’s email system. The breach was connected to a state court lawsuit Carmody was pursuing against a university professor, alleging that the professor had assaulted him. Carmody says that he discovered several printed emails, contradicting affidavits filed in the case, in the newspaper box outside his home. Carmody gave the emails to his lawyer. After unsuccessfully appealing his discharge, Carmody filed, claiming violations of the Due Process Clause and an Illinois statute designed to protect whistle-blowers. The district court dismissed. The Seventh Circuit reversed in part, stating that Carmody has plausibly alleged that his pre-termination opportunity to be heard was meaningless because he could not answer the university’s crucial questions or respond to its accusations without violating a state court order that required him not to discuss the subject. The university fired Carmody on the same day the state court modified its order to allow him to respond to the charges. Carmody also alleged that he was actually fired based in part on a charge for which he had no prior notice and opportunity to be heard. View "Carmody v. Bd. of Trs. of the Univ. of IL" on Justia Law

Sandoval, a Mexican citizen, illegally entered the U.S. in the 1990s. After five illegal reentries and removals, Sandoval again attempted to re-enter and, in 2005, was convicted of attempted illegal entry by means of false misrepresentation. He was removed again. Sandoval illegally re-entered and was arrested after providing a false name during a traffic stop. He was removed, but re-entered in 2006. In 2009, Sandoval met Quinonez at a truck stop to purchase 20 kilograms of cocaine that he believed Quinonez had transported from Texas. Sandoval gave Quinonez $500 for fuel and said that he would pay $300,000 for the cocaine the next day. Quinonez was actually cooperating with law enforcement and the meeting was surreptitiously recorded. After Sandoval took the sham cocaine, law enforcement stopped his vehicle. A search revealed cocaine as well as the bags full of sham cocaine. Sandoval denied knowing what was inside the bags. Sandoval was charged with attempted possession of cocaine, 21 U.S.C. 841, 846. He gave a false name and continued to invoke the alias at his pretrial services interview, initial appearance, and other court proceedings. The district court granted Sandoval bond and released him on his own recognizance. When the government learned his true identity he was taken into custody. He eventually changed his story and entered a plea. The district court imposed an obstruction of justice enhancement, denied credit for acceptance of responsibility, and denied safety-valve relief from the statutory mandatory minimum sentence of 120 months, 21 U.S.C. 841(b)(1)(A). The Seventh Circuit affirmed. View "United States v. Sandoval" on Justia Law

Grady told Wolf that he wanted to blow up a Planned Parenthood clinic, then drove to a gas station and put some gas in his van and a smaller amount in a bottle. He drove to the clinic, broke a window with a hammer, poured gasoline into the building, and set it on fire. After seeing news reports of the fire, Wolf informed police that Grady may have been responsible. The police questioned Grady in a videotaped interview. Grady admitted that his “intention was to light the building,” and that he told friends that “I thought it f... burned right down.” Grady was charged with arson and intentionally damaging the property of a facility providing reproductive health services. At trial, Grady reiterated his desire to burn the clinic and referred to his anti-abortion views. The parties disputed how to define the term “maliciously” under 18 U.S.C. 844(i) for jury instructions. Neither the Seventh Circuit Pattern Jury Instructions nor the court has defined the term. The district court used the government’s definition, explaining that Grady’s proposed instruction would shift the burden to the government to prove that the defendant acted without justification. The jury found Grady guilty. The Seventh Circuit affirmed. The court’s decision to omit the words “without just cause or reason” from the instruction was supported by the record. A jury instruction should address an issue reasonably raised by the evidence. Grady did not point to any cognizable legal justification for starting the fire. View "United States v. Grady" on Justia Law

Motorola and its foreign subsidiaries buy LCD panels and incorporate them into cellphones. They alleged that foreign LCD panel manufacturers violated section 1 of the Sherman Act, 15 U.S.C. 1, by fixing prices. Only about one percent of the panels were bought by Motorola in the U.S. The other 99 percent were bought by, paid for, and delivered to foreign subsidiaries; 42 percent of the panels were bought by subsidiaries and incorporated into products that were shipped to Motorola in the U.S. for resale. The other 57 percent were incorporated into products that were sold abroad and never became U.S. domestic commerce, subject to the Sherman Act. The district judge ruled that Motorola’s claim regarding the 42 percent was barred by 15 U.S.C. 6a(1)(A): the Act “shall not apply to conduct involving trade or commerce (other than import trade or import commerce) with foreign nations unless such conduct has a direct, substantial, and reasonably foreseeable effect on trade or commerce which is not trade or commerce with foreign nations, or on import trade or import commerce with foreign nations.” The Seventh Circuit affirmed, reasoning that rampant extraterritorial application of U.S. law “creates a serious risk of interference with a foreign nation’s ability independently to regulate its own commercial affairs.” View "Motorola Mobility LLC v. AU Optronics Corp." on Justia Law

Bass worked as a custodian. In 2002, she was assigned to work at a single-story elementary school. In 2003 a second story was added. A male was responsible for cleaning the second floor. In 2008–09, the District commissioned a study of custodial duties at 11 schools, which revealed that second floor took tasks more time than one shift permitted, while the first floor could be finished in less than one shift. While Bass was on leave, the District had the substitute custodian try a new arrangement. She was able to finish during her shift. The District reassigned second‐floor restrooms to Bass. The study also resulted in seven male custodians being assigned additional duties. Bass then had two suspensions without pay. She did not contest the suspensions; she had failed to complete her duties. Her work improved significantly. Before 2010, Bass had taken two leaves that exceeded the leave to which she was entitled under the collective bargaining agreement. Bass injured her back in August 2010 and again took leave. The District told Bass that she would have no more available leave as of November 3, and would be fired if she failed to return to work. Bass returned to work on November 4. She injured her back again 12 days later and was out for 2.5 days. The District issued a reprimand. On January 3, Bass again did not report to work. She provided a doctor’s note, but exceeded available leave time. When asked when she would be able to return without restrictions, Bass did not reply. She was fired on February 2, for job abandonment. Three male custodians lost their jobs between 2008 and 2011 on the same ground. The EEOC issued a Notice of Right to Sue on her sex discrimination claims. The district court dismissed her sit under Title VII of the Civil Rights Act, 42 U.S.C. 2000e. The Seventh Circuit affirmed. View "Bass v. Joliet Pub. Sch. Dist." on Justia Law

Morales operated IPS to defraud small businesses. His sales agents contacted business owners and offered to collect on bad checks for a small commission. The agents would tell the owners that they worked for another business, not IPS, and asked them for personal information and a voided check, ostensibly for wiring funds. With that data, IPS made unauthorized withdrawals from bank accounts through financial intermediaries, stating that the withdrawals covered payments for credit card processing equipment. IPS neither collected bad checks nor leased credit‐card processing equipment. IPS fraudulently withdrew $645,000. In 2004, a team led by Secret Service Agent Kane executed a search warrant on IPS’s office and found extensive evidence. Morales was indicted for mail fraud, 18 U.S.C. 1341. At trial, the government presented witnesses including 10 victims, forensic analysts, the IPS receptionist, and Agent Kane. Convicted, Morales was sentenced to nine years in prison. Three weeks after the trial, an assistant U.S. attorney sent Morales’s lawyer two emails from Agent Kane to government attorneys that had not previously been disclosed. One attached a screenshot from the laptop as it appeared when discovered in Morales’s office; the other responded concerning picking up a grand jury subpoena for Paulina Morales. The email included a threat to "taze" Morales’s pet, although that never happened. The court denied a motion for a new trial. The Seventh Circuit affirmed, finding any Brady violation harmless because evidence implicating Morales was overwhelming. View "United States v. Morales" on Justia Law

In 2006 Finkl, a Chicago steel producer, initiated termination of its defined benefit pension plan under the Employment Retirement Income Security Act, apparently anticipating merger with another company. The Plan was amended in 2008, to include Section 11.6, a special provision for distributions in connection with the contemplated termination, to apply if a participant “ha[d] not begun to receive a benefit under the Plan at the time benefits are to be distributed on account of termination of the Plan.” In May 2008, Finkl decided not to terminate the Plan. Section 11.6 was deleted. Finkl notified the IRS that the Plan was not going to terminate. Seven Finkl employees sued, alleging that they were entitled to an immediate distribution of benefits while they were still working for Finkl and that repeal of Section 11.6 violated the anti-cutback terms of the Plan, I.R.C. 411(d)(6), and ERISA, 29 U.S.C. 1054(g). The IRS sent Finkl a favorable determination letter that the Plan had retained its tax qualified status. In 2011, the Seventh Circuit affirmed the district court’s award of summary judgment to Finkl. The employees then pursued a claim in the Tax Court, which ruled that they were collaterally estopped by the Seventh Circuit decision from challenging the 2009, determination letter, which concluded that the Plan had not been terminated and continued to qualify for favorable tax treatment. The Seventh Circuit affirmed. View "Carter v. Comm'r of Internal Revenue" on Justia Law