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

Articles Posted in Civil Procedure

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Parker and her sister, Schiavon, checked into adjoining rooms at the Four Seasons. In each, a sliding glass door separated the shower area from the vanity area. As Parker exited the shower area by opening that door, it exploded, raining shards of glass onto her naked body and causing her injuries. Schiavon summoned help. Gartin, a hotel engineer, arrived, immediately looked at the overhead track and said: “Looks like the stopper moved again!” He explained that a “bunch” of newly installed glass doors had exploded because the track stoppers were not working properly, allowing the door-handles to crash into walls and cause the glass to explode. Gartin said the room was on a “do not sell” list; “You might want to check yours.” Schiavon checked and determined that the door in her room had the same defect. Parker uncovered evidence suggesting that the door in her room had previously shattered and had been replaced. An email between third party contractors revealed that several rooms had similar issues. The hotel conceded negligence. The court blocked Parker from raising the issue of punitive damages before the jury, finding her evidence insufficient as a matter of law. Parker recovered $20,000 in compensatory damages, reduced to $12,000 after set-off. The Seventh Circuit reversed. Four Seasons may have thought it repaired the problem. Parker’s room could have been pulled from service for another reason. These are issues for a fact-finder. Parker has the right to present her punitive damages claim to the jury. View "Parker v. Four Seasons Hotels, Ltd." on Justia Law

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Tri-State sued the Bauers in small claims court for the cost of a water treatment system it had installed following a free, in-home assessment of their water. The Bauers answered and filed a counterclaim, asserting a multi-state class action for fraud. Their subsequent, amended class-action counterclaim added Home Depot and Aquion as counterclaim-defendants and asserts that the counterclaim-defendants conducted in-home water tests that did nothing but identify mineral content, rather than contaminants, and thereby misled consumers into buying their water treatment systems. Home Depot filed notice of removal, 28 U.S.C. 1446(b)(1), 1453(b), arguing that although it was not an original “defendant” in the underlying case, its status as an additional counterclaim-defendant in an action meeting criteria of the Class Action Fairness Act (CAFA), 28 U.S.C. 1453(b), entitled it to do so. The Bauers argued that the general removal statute, as modified by CAFA, does not permit any kind of counterclaim-defendant to remove. The district court held that CAFA did not disturb the longstanding rule that only original defendants can remove cases to federal court. The Seventh Circuit affirmed the remand to state court. The court has previously held that a counterclaim-defendant is not entitled to remove a case to federal court under CAFA; the statute does not support treating an original counterclaim-defendant differently from a new one. View "Bauer v. Home Depot U.S.A., Inc." on Justia Law

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Williams filed suit under 42 U.S.C. 1983, based on an injury he suffered in Cook County jail. For his in forma pauperis (IFP) applications, McWilliams used a form provided by the Northern District of Illinois clerk’s office. McWilliams checked a box, indicating that his application was for “both” leave to proceed IFP and appointment of counsel. The form, which says nothing about the need for a separate motion if assistance of counsel is desired, asks for an inmate identification number, the name of the applicant’s institution, and records from the inmate’s trust account. He omitted his identification number and the name of the prison (both appeared on his complaint, submitted contemporaneously, and in the attached trust officer’s certification). The court denied IFP, for failure “to provide sufficient or accurate information” and denied McWilliams’s “motion for attorney assistance,” although no such motion had been filed. McWilliams submitted a second IFP application, with a motion for appointment of counsel, providing his inmate identification number and the name of the prison. Instead of checking “no” in response to every question about sources of funds, he said that he was not employed and wrote “N/A” across the questions. The prison trust officer certified that McWilliams had $106.85 in his account. In seeking appointment of counsel, McWilliams explained that he “has limited formal education of a fourth grader.” The court denied the IFP application because McWilliams had written “N/A” instead of answering “no,” struck McWilliams’s motion for appointment of counsel as moot, and dismissed. The Seventh Circuit authorized McWilliams to file an appeal IFP and reversed. That McWilliams was indigent and qualified to proceed IFP is apparent from the applications he submitted. View "McWilliams v. Cook County" on Justia Law

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Ramirez, born in Mexico, alleges that his former employer, T&H, subjected him to discriminatory working conditions and a hostile work environment based on his national original and fired him in retaliation for reporting the harassment, in violation of Title VII, 42 U.S.C. 2000e. Nearly three years into discovery, Ramirez had not located any witnesses to corroborate his allegations. His attorney was seeking leave to withdraw. Ramirez then located three former T&H co-workers, willing to testify on his behalf. The witnesses, Hernandez, Velasquez, and Villagrana were serially deposed; all three testified that they had witnessed a supervisor refer to Ramirez as a burro. Three months later, Villagrana sent a text to Ramirez’s counsel asking for a letter “saying what percent I will receive when the case is settled.” Ramirez’s counsel reported the text to defense counsel. Villagrana also contacted a T&H employee, stating that he and the others were no longer supporting Ramirez and that he was willing to testify for T&H if he could get his job back. After hearing testimony, the district court dismissed the case with prejudice, finding “clear and convincing evidence of witness tampering.” The Seventh Circuit affirmed, holding that the finding was supported by sufficient evidence and that the sanction was reasonable. View "Ramirez v. T&H Lemont, Inc." on Justia Law

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Pension funds regulated by the Multiemployer Pension Plan Amendments Act, part of the Employee Retirement Income Security Act (ERISA), sued to collect shortfalls in contributions for 2003-2008 from System Parking, under four collective bargaining agreements with the union. The Seventh Circuit affirmed a judgment of $2,000,000, after concluding that it had authority to change the name on the judgment. The funds’ complaint and the judgment named, as defendant, the “L&R Group of Companies,” which is not a recognized business entity, organization, partnership, or trust; Fed. R. Civ. P. 17(a) states that suits must be conducted in the name of the real parties in interest. Rule 17(b) says that only persons or entities with the capacity to sue or be sued may be litigants. A “description” is not a juridical entity. System Parking’s assets were acquired by an entity not named in the complaint or served with process, so a motion to dismiss would have been granted, had the parties or the court been “paying attention.” With respect to the merits, the court upheld a finding that the employer’s audit was unreliable, having been prepared in-house, by a person without relevant experience, rather than by an independent accounting firm and being based on “murky” assumptions. View "Teamsters Local Union No. 727 v. L&R Group of Companies" on Justia Law
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On the night of January 27, 2014, DND’s driver, Velasquez, crashed his semi-truck into two emergency vehicles and another semi which were stopped on an unlit highway. An Illinois Toll Authority employee was killed and a police officer was seriously injured. The Federal Motor Carrier Safety Administration (FMCSA) immediately revoked Velasquez’s commercial-driving privileges and opened a company-wide investigation. After a very thorough, two-month investigation, FMCSA issued an imminent-hazard out-of-service order (IHOOSO) without warning, directing DND to immediately halt its trucking operations nationwide and freeze trucks in place within eight hours. During the investigation DND had been permitted to continue normal operations and there were two or three minor problems. An administrative law judge opened a hearing nine days after the order issued and rendered his decision after another six days, finding that the IHOOSO should not have been issued and was an effective “death penalty” to the small company. Apparently, the sudden halt to the company’s operations put the company out of business. The Seventh Circuit dismissed, for lack of Article III standing, a petition for review seeking to correct a decision of an assistant administrator that upheld the ALJ grant of relief to DND. The case is moot. View "DND International, Inc. v. Federal Motor Carrier Safety Administration" on Justia Law

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A barge exploded in 2005, while under way between Joliet and Chicago with a cargo of slurry oil. Deckhand Oliva did not survive. Claiming that Egan, master of the tug that had been pushing the barge, told Oliva to warm a pump using a propane torch, the United States filed a civil suit. Open flames on oil carriers are forbidden by Coast Guard regulations. The judge determined that the government did not prove, by a preponderance of the evidence, that Oliva was using a propane torch at the time of the incident. There was no appeal. Two years later, the government charged Egan under 18 U.S.C.1115, which penalizes maritime negligence that results in death, plus other statutes that penalize the negligent discharge of oil into navigable waters. The judge found that the prosecution had established, beyond a reasonable doubt, that Egan gave the order to Oliva, that the torch caused the explosion, and that Oliva died and that the barge released oil as results. The Seventh Circuit reversed. The Supreme Court has said that the outcome of a civil case has preclusive force in a criminal prosecution. If the government could not prove a claim on the preponderance standard, it cannot show the same thing beyond a reasonable doubt. View "United States v. Egan" on Justia Law

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NMEPT, a joint venture, was formed to sell environmental equipment in China. Nalco owned 55% of the venture, Chen 40%, and a third party 5%. When NMEPT encountered business problems, Nalco paid its creditor and sued Chen for his 40% share of the outlay. The district court awarded Nalco more than $2 million, rejecting Chen's counterclaim that Nalco’s subsidiary, NMI, had caused the joint venture to borrow $300,000 without Chen's approval, even though the agreement required all investors’ consent for borrowing. Chen also claimed that the creditor petitioned the joint venture into bankruptcy under Chinese law, on behalf of NMI, in an effort to avoid a clause requiring the investors’ unanimous consent for bankruptcy proceedings. Nalco wanted to wind up the unprofitable venture, but Chen preferred to keep it alive (if dormant) to protect its intellectual property. Chen did not appeal, but filed a new suit in China, against Mobotec. The Seventh Circuit affirmed an injunction, prohibiting Chen from pursuing the Chinese litigation. Rejecting an argument that Mobotec was not a party to and could not benefit from the Illinois judgment, the court stated: “That would be a questionable proposition even if Mobotec were a distinct entity, for federal courts no longer require mutuality in civil litigation.” The district court found that NMI and Mobotec are the same entity. View "Nalco Co. v. Chen" on Justia Law

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Doctors replaced Dobbs’s hip with a DePuy ASR artificial hip, which was defective and caused Dobbs pain and other problems. Dobbs hired McLaughlin to represent him in the DePuy ASR Hip Implant Multidistrict Litigation for a 35 percent contingency fee. A year later, DePuy proposed a “Global Settlement,” offering represented parties $250,000 and unrepresented parties $165,000. McLaughlin advised Dobbs to accept the offer because going to trial would be expensive, time consuming, and risky. Dobbs stated that he wanted to register for the settlement but that he did not want to “waive any rights to a trial,” or “be forced to accept the present settlement offer.” Dobbs moved to remove McLaughlin. McLaughlin acknowledged that he no longer represented Dobbs and withdrew as counsel. Acting pro se, Dobbs accepted the settlement; because he was considered “represented,” Dobbs received $250,000. McLaughlin asserted a lien on the award and sought attorneys’ fees under a quantum meruit theory. The district court held that the full contingency fee was a reasonable award. The Seventh Circuit vacated. The court listed the factors relevant to quantum meruit under Illinois law, but did not consider evidence related to the factors. The only factor specifically addressed was that Dobbs “undoubtedly benefitted” from McLaughlin’s work. The court did not analyze: how many hours McLaughlin spent on Dobbs’s case; the difficulty of the underlying claim; the ordinary charge for such work; or McLaughlin’s skill and standing. View "Dobbs v. McLaughlin" on Justia Law

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In 2014, the IRS attempted to collect $244,464 in unpaid taxes and penalties from Adolphson for tax years 2002 and 2006-2010. Adolphson claims he was unaware of the IRS’s collection efforts until the agency levied on his funds held by third parties (26 U.S.C. 6330). Rather than challenge the levies with the IRS, Adolphson filed a pro se petition, asking the tax court to enjoin the collection efforts and refund amounts already collected. Adolphson argued that the IRS had not mailed him the required Final Notice of Intent to Levy, so that he was deprived of a “collection due process hearing” (CDP) before the IRS Office of Appeals. Adolphson cited tax court decisions in which the tax court asserted that it lacked jurisdiction without an IRS notice of determination, yet nevertheless invalidated levies after finding that the taxpayer was prevented from requesting a CDP by failure to mail a Final Notice to the proper address. The IRS was unable to say “with certainty” whether the Final Notices were sent to proper addresses. Exhibits corroborated the dates on which the Final Notices were issued but did not show where the notices were mailed. The tax court dismissed, reasoning that it lacked authority to grant relief without a notice of determination. The Seventh Circuit affirmed. While Adolphson’s case is indistinguishable from the tax court precedent he cited, those decisions were unsound and reflect an improper extension of the tax court’s jurisdiction. View "Adolphson v. Commissioner of Internal Revenue" on Justia Law