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

Articles Posted in Class Action

By
Wright was arrested by Calumet City police, without a warrant, based on the murder of one individual and the shooting of others. Wright admitted to having a gun. At a minimum, he was to be charged with felony unlawful use of a weapon by a felon, but the prosecutor instructed the officers to wait to charge Wright until lab results came back establishing whether his gun matched casings and bullets at the scene. After being in custody for 55 hours, Wright sued under 42 U.S.C. 1983, alleging that the city violated his Fourth and Fourteenth Amendment rights by failing to provide him with a judicial determination of probable cause within 48 hours of his arrest. The next day, a judge made a probable cause finding. In the section 1983 action, Wright sought class certification, asserting that the city had a policy or practice authorizing officers to detain persons arrested without a warrant for up to 72 hours before permitting the arrestee to appear before a judge. The city made an offer of judgment. Despite accepting that Rule 68 offer, granting him relief as to "all claims brought under this lawsuit,” Wright appealed the denial of certification of a proposed class of “[a]ll persons who will in the future be detained.” He did not appeal with respect to persons who had been detained. The Seventh Circuit dismissed, finding that Wright is not an aggrieved person with a personal stake in the case as required under Article III of the Constitution. View "Wright v. Calumet City" on Justia Law

By
JPMorgan offers to manage clients’ securities portfolios. Its affiliates sponsor mutual funds in which the funds can be placed. Plaintiffs in a putative class action under the Class Action Fairness Act, 28 U.S.C. 1332(d)(2), alleged that customers invested in these mutual funds believing that, when recommending them as suitable vehicles, JPMorgan acts in clients’ best interests (as its website proclaims), while JPMorgan actually gives employees incentives to place clients’ money in its own mutual funds, even when those funds have higher fees or lower returns than third-party funds. The Seventh Circuit affirmed dismissal under the Securities Litigation Uniform Standards Act, 15 U.S.C. 78bb(f), which requires the district court to dismiss any “covered class action” in which the plaintiff alleges “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security.” Under SLUSA, securities claims that depend on the nondisclosure of material facts must proceed under the federal securities laws exclusively. The claims were framed entirely under state contract and fiduciary principles, but necessarily rest on the “omission of a material fact,” the assertion that JPMorgan concealed the incentives it gave its employees. View "Holtz v. J.P. Morgan Chase Bank, N.A." on Justia Law

By
If a LaSalle Bank custodial account had a cash balance at the end of a day, the cash would be invested in (swept into) a mutual fund chosen by the client. The Trust had a custodial account with a sweeps feature. After LaSalle was acquired by Bank of America, clients were notified that a particular fee was being eliminated. The trustee, who had not known about the fee, brought a putative class action in state court, claiming breach of the contract (which did not mention this fee) and violation of fiduciary duties. The bank removed the suit to federal court, relying on the Securities Litigation Uniform Standards Act, 15 U.S.C. 78bb(f), which authorizes removal of any “covered class action” in which the plaintiff alleges “a misrepresentation or omission of a material fact in connection with the purchase or sale of a covered security.” The statute requires that such state‑law claims be dismissed. The district court held that the suit fit the standards for removal and dismissal. The Seventh Circuit affirmed. The complaint alleged a material omission in connection with sweeps to mutual funds that are covered securities; no more is needed. The Trust may have had a good claim under federal securities law, but chose not to pursue it; the Act prohibits use of a state-law theory. View "Goldberg v. Bank of America, N.A." on Justia Law

By
In her case, consolidated for pretrial proceedings as part of multidistrict litigation, Dzik alleged that she suffered a venous thromboembolism because she used a prescription birth control pill, Yasmin. Dzik’s medical records disclosed that she last filled a Yasmin prescription 10 months before her injury. Dzik’s counsel “suggested” that her doctor had provided samples of Yasmin before Dzik suffered the VTE. In March 2014, defendants requested additional medical records or an affidavit from Dzik’s doctor substantiating her use of the drug near the time of her injury. Dzik’s counsel ignored the request for 15 months. Bayer settled other cases, prompting the court to enter a case‐management order in August 2015 that provided for automatic dismissal should any plaintiff fail to comply. Defendants notified Dzik’s counsel of their obligations under the order, but got no response. In December 2015, Bayer moved to dismiss several cases, including Dzik’s. Dzik failed to respond. In January 2016, the court dismissed her suit with prejudice. Her attorney, having taken no action for nearly two years, immediately moved (unsuccessfully) to set aside the dismissal. The Seventh Circuit affirmed, noting that affidavits submitted by Dzik’s attorneys contradicted the sworn account of defense counsel and concluding that those affidavits were “a red flag,” based on vagueness and a concession of “neglect” by the firm. The order was “crystal clear,” Dzik’s attorneys had ample time to respond to discovery, and their neglect was not excusable. View "Dzik v. Bayer Corp." on Justia Law

By
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

By
Darden operates restaurants throughout Illinois under brand names including Olive Garden and Red Lobster. The plaintiffs worked intermittently as hourly employees at Darden-owned restaurants from 2004-2012. After quitting, they brought a proposed class action alleging that Darden failed to pay them pro rata vacation pay upon separation in violation of the Illinois Wage Payment and Collection Act, 820 ILCS 115/1-15. The district judge declined to certify their proposed class and granted Darden summary judgment on Clark’s individual claim. McMaster settled his claim with Darden, reserving the right to appeal the denial of class certification. The Seventh Circuit affirmed. The proposed class definition, “All persons separated from hourly employment with [Darden] in Illinois between December 11, 2003, and the conclusion of this action[] who were subject to Darden’s Vacation Policy … and who did not receive all earned vacation pay benefits,” described an impermissible “fail safe” class, and their proposed alternative did not satisfy FRCP 23. The statute does not mandate paid time off. It merely prohibits the forfeiture of accrued earned vacation pay upon separation if the employee is otherwise eligible for paid vacation. Darden’s policy on paid vacation covered only full-time employees. Clark was ineligible because she worked part-time. View "McCaster v. Darden Restaurants, Inc." on Justia Law

By
The City of Chicago obtained a default administrative judgment of $3,540 against Plaintiff (Manistee Apartments), based upon a finding of code violations. The city registered the judgment and imposed a lien against plaintiff’s real estate. Plaintiff contends that it first received actual notice of the lien during routine title insurance review while it was preparing to sell its properties. In response to plaintiff’s effort to settle the matter, the city demanded $5,655.16, reflecting $720.34 in statutory interest plus $1,394.82 in collection costs and attorneys’ fees. Plaintiff conveyed its property, paid $5,655.16 under protest, and filed a federal class action, alleging due process violations. The court dismissed, stating that the plaintiff failed to allege facts that plausibly supported the assertion that it paid the demand under duress; because its payment was voluntary, plaintiff was not deprived of a constitutionally-protected property interest under 42 U.S.C. 1983. The Seventh Circuit affirmed, stating that the claim was more appropriate for small claims court and questioning: why would such a small amount cause the plaintiff to exert so much time and effort? The court stated that it suspected that only lawyers stood to benefit. View "Manistee Apartments, LLC v. City of Chicago" on Justia Law

By
On February 10, 2015, Meyers was given a copy of his receipt after dining at Nicolet Restaurant in de Pere, Wisconsin. He noticed that Nicolet’s receipt did not truncate the expiration date, as required by the Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. 1681. Meyers filed a putative class action, purportedly on behalf of everyone who had been provided a non‐compliant receipt at Nicolet, seeking only statutory damages. The district court denied Meyers’ motion for class certification, holding that Meyers had satisfied FRCP 23(a)’s four prerequisites, but failed to establish that class‐wide issues would “predominate” over issues affecting only individual potential class members. Fed R. Civ. P. 23(b)(3)). In a separate suit, the Seventh Circuit affirmed that sovereign immunity barred Meyers’ claim against the Oneida Tribe, the owner of the restaurant. The Seventh Circuit then held that Meyers lacked standing in his suit against the restaurant. Violation of a statute, completely divorced from any potential real‐world harm, is not sufficient to satisfy Article III’s injury‐in‐fact requirement so, the district court lacked authority to certify a class action. View "Meyers v. Nicolet Restaurant of DePere, LLC" on Justia Law

By
In 2012 Walgreens acquired a 45 percent equity stake in Alliance, plus an option to acquire the rest of Alliance’s equity for a mixture of cash and Walgreens stock. Walgreens later announced its intent to purchase the remainder of Alliance and engineer a reorganization whereby Walgreens would become a wholly-owned subsidiary of a new corporation, Walgreens Boots Alliance. Within two weeks after Walgreens filed a proxy statement seeking shareholder approval, a class action was filed; 18 days later, less than a week before the shareholder vote, the parties agreed to settle. The settlement required Walgreens to issue several requested disclosures and authorized class counsel to request $370,000 in attorneys’ fees, without opposition from Walgreens. The Seventh Circuit reversed approval of the settlement, calling the supplemental disclosures “a trivial addition to the extensive disclosures already made in the proxy statement.” “The oddity of this case is the absence of any indication that members of the class have an interest in challenging the reorganization.... The only concrete interest suggested … is an interest in attorneys’ fees.... Certainly class counsel, if one may judge from their performance in this litigation, can’t be trusted to represent the interests of the class.” View "Hays v. Berlau" on Justia Law

By
The plaintiffs (purchasers of containerboard) filed suit under the Sherman Act, 15 U.S.C. 1, alleging that the defendants (producers and sellers of containerboard) agreed “to restrict the supply of containerboard by cutting capacity, slowing back production, taking downtime, idling plants, and tightly restricting inventory,” which led to an increase in the price of containerboard. The court certified a class under FRCP 23: All persons that purchased Containerboard Products directly from any of the Defendants or their subsidiaries or affiliates for use or delivery in the United States from at least as early as February 15, 2004 through November 8, 2010. The proposed definition carved out the defendants themselves, entities or personnel related to them, and governmental entities. The Seventh Circuit affirmed after examining: whether common questions predominate; whether antitrust injury can be proved using a common method; whether the amount of damages can be proved using a common method; and whether a class action is superior. The court noted that no defendant challenged the Purchasers’ experts and there were few factual disputes. A “smattering” of individual contract defenses did not undermine the superiority of the (b)(3) class action. View "Kleen Prods. LLC v. Int'l Paper Co." on Justia Law