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

Donald Artz, an electric distribution controller at WEC Energy Group, retired due to multiple sclerosis (MS) and sought long-term disability benefits from a plan administered by Hartford Life and Accident Insurance Company. Hartford denied his claim, asserting that Artz was not "disabled" within the plan's definition. Artz filed a lawsuit under the Employee Retirement Income Security Act, alleging that Hartford's disability determination was arbitrary and capricious because it misconstrued the plan's terms and failed to provide a reasonable explanation for its decision.The case was initially heard in the United States District Court for the Eastern District of Wisconsin. The district court upheld the denial of benefits at summary judgment, concluding that Artz had placed too much emphasis on the duties of his specific position at WEC rather than the "essential duties" of his job in the general workplace as required by the company’s plan. The court also underscored the independent medical reviews commissioned by Hartford and found the medical evidence supported the conclusion that Artz’s MS did not prevent him from working a standard 40-hour week as a power-distribution engineer.The case was then appealed to the United States Court of Appeals for the Seventh Circuit. The appellate court affirmed the district court's decision, finding that Hartford had communicated rational reasons for its decision based on a fair reading of the plan and Artz’s medical records. The court concluded that the plan administrator provided sufficient process and that the Employee Retirement Income Security Act requires no more. The court noted that while Artz's condition was serious, the evidence did not show that the severity and persistency of his symptoms resulted in functional impairment as defined by the policy. View "Artz v. Hartford Life & Accident Insurance Company" on Justia Law

This case revolves around a real estate Ponzi scheme run by Jerome and Shaun Cohen through their companies, EquityBuild, Inc. and EquityBuild Finance, LLC (EBF), from 2010 to 2018. The Cohens sold promissory notes to investors, each note representing a fractional interest in a specific real estate property. The properties were mostly located in underdeveloped areas of Chicago and were secured by mortgages. As the scheme became unsustainable, the Cohens began offering opportunities to invest in real estate funds. BC57, LLC, a private lender and investor, lent approximately $5.3 million to EquityBuild, allegedly in exchange for a first mortgage on five properties already owned by EquityBuild and subject to preexisting liens from individual investors.The Securities and Exchange Commission (SEC) filed suit against the Cohens, EquityBuild, and EBF after the scheme collapsed in 2018. A court-appointed receiver developed a plan for the recovery and liquidation of all remaining, recoverable receivership assets. The receiver sold the five properties and now holds the proceeds, over $3 million, pending the resolution of the claims process. The individual investors whose loans BC57’s investment purportedly paid off claim priority to those proceeds, arguing that they never received payment or released their interests, despite the releases signed by Shaun Cohen. BC57 disagrees and asserts that it has priority. The district court awarded priority to the individual investors, finding that the mortgage releases were facially defective and that EBF lacked the authority to execute them.The United States Court of Appeals for the Seventh Circuit affirmed the district court's decision. The court found that under the Illinois Mortgage Act, payment alone does not extinguish any pre-existing interest absent a valid release. The court also found that the releases purportedly executed by EBF were facially invalid. The court concluded that the individual investors maintain their interests in these five properties. View "SEC v. BC57, LLC" on Justia Law

In 1996, Robert Pope was convicted of murder and sentenced to life imprisonment. He sought post-conviction relief, but his lawyer, Michael J. Backes, abandoned him and failed to take necessary steps to protect Pope's rights. After 14 months of inaction, Pope sought help from Wisconsin's public defender, who informed him that he first needed an extension from the court of appeals. However, the court of appeals denied his request, stating that he had waited too long. Pope then sought relief from the trial court, which also denied his request due to the appellate decision. Despite multiple attempts to reinstate his appeal rights, all were unsuccessful until 2016 when the state acknowledged his right to an appeal.The state court of appeals and the Supreme Court of Wisconsin reversed a 2017 decision granting Pope a new trial due to the absence of a trial transcript, which was not ordered by his lawyer and was later destroyed. The Supreme Court of Wisconsin held that a new trial based on the absence of a transcript is only appropriate if the defendant first makes a "facially valid claim of arguably prejudicial error" that requires a transcript to substantiate. Pope, not being a lawyer and barely remembering the events of 1996, was unable to do so.In the United States Court of Appeals for the Seventh Circuit, Pope filed a petition for collateral review under 28 U.S.C. §2254. The district court issued a conditional writ and directed the state to release Pope unless it set a retrial in motion within six months. The state appealed, leading to a deferral of the deadline. The Court of Appeals affirmed the district court's decision, modifying it to include deadlines for Pope's release on bail and unconditional release if a trial does not start within the specified timeframes. The court noted that Pope had suffered at least two violations of his constitutional rights: the right to assistance of counsel and the right to an appeal equivalent to that available to well-heeled litigants. View "Pope v. Taylor" on Justia Law

The case revolves around Denis Navratil, his wife Dimple Navratil, and their business, Dimple’s LLC, who filed a lawsuit against the City of Racine and Mayor Cory Mason. The lawsuit was based on several constitutional claims and a defamation claim against Mason. The core of the claims was the city's decision not to grant an emergency grant to Dimple’s LLC because Denis had attended a rally protesting the statewide “Safer at Home Order” that limited public gatherings, travel, and business operations to combat the COVID-19 pandemic. The rally was a violation of the Safer at Home Order and a permit required for holding rallies at the State Capitol had been denied due to the pandemic.The case was initially heard by a magistrate judge who granted summary judgment for both defendants on all claims. The plaintiffs appealed this decision.The United States Court of Appeals for the Seventh Circuit affirmed the lower court's decision. The court found that Denis's attendance at the rally was not protected First Amendment activity because the rally was prohibited by two valid time, place, and manner restrictions—the Safer at Home Order and the state permit requirement. The court also rejected the plaintiffs' equal protection claims, finding no evidence of political animus or similarly situated comparators. The court further dismissed the plaintiffs' due process claims, finding no deprivation of any constitutionally protected property or liberty interest. Lastly, the court found that Mayor Mason's statements were substantially true or pure opinion and thus not actionable under defamation law. View "Denis Navratil v. City of Racine" on Justia Law

The case involves John Doe, a student who was expelled from Loyola University Chicago after the university concluded that he had engaged in non-consensual sexual activity with Jane Roe, another student. Doe sued the university under Title IX of the Education Amendments Act of 1972 and Illinois contract law, alleging that the university discriminates against men.The United States District Court for the Northern District of Illinois granted summary judgment in favor of Loyola. Doe appealed this decision to the United States Court of Appeals for the Seventh Circuit. The appellate court, however, raised questions about the use of pseudonyms by the parties and the mootness of the case, given that Doe had already graduated from another university and the usual remedy of readmission was not applicable.The Seventh Circuit Court of Appeals remanded the case back to the district court to address these issues. The court questioned whether compensatory damages were an option for Doe, and if not, the case may not be justiciable. The court also questioned the use of pseudonyms, stating that while anonymity may be common in Title IX suits, it must be justified in each case. The court noted that the public has a right to know who is using their courts and that a desire to keep embarrassing information secret does not justify anonymity. The court also raised concerns about whether revealing Doe's identity would indirectly reveal Roe's identity. The court concluded that these issues should be addressed by the district court. View "Doe v. Loyola University Chicago" on Justia Law

Edward Johnson filed for bankruptcy relief under Chapter 13 and made payments to the bankruptcy trustee, Marilyn O. Marshall, under his proposed repayment plan. However, the bankruptcy court never confirmed his plan due to his inability to address an outstanding loan and his domestic support obligations, and ultimately dismissed his case for unreasonable delay. Before returning Johnson's undisbursed payments, the trustee deducted a percentage fee as compensation. Johnson filed a motion requesting that the trustee disgorge her fee, which the bankruptcy court granted, reasoning that the trustee did not have statutory authority to deduct her fee because Johnson's plan was not confirmed. The trustee appealed this decision.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court analyzed the statutory text and agreed with the Ninth and Tenth Circuits that the United States Bankruptcy Code requires the Chapter 13 trustee to return her fee when the debtor's plan is not confirmed. The court found that neither of the two exceptions in § 1326(a)(2) of the Bankruptcy Code applied to the trustee's fee. The court also rejected the trustee's argument that § 1326(b) authorized her to keep her fee when making pre-confirmation adequate protection payments to creditors, as this provision only addresses payments made after a plan has been confirmed. The court further found that the trustee had no right to keep her fee under 28 U.S.C. § 586(e)(2), which only addresses the source of funds that may be accessed to pay standing trustee fees.The court concluded that the Chapter 13 trustee must return her fee when the debtor's plan is not confirmed, affirming the decision of the bankruptcy court. View "Marshall v. Johnson" on Justia Law

The case involves Asif Sayeed and three associated healthcare companies who were found liable for violating the Anti-Kickback Statute and False Claims Act, resulting in a nearly $6 million judgment. Sayeed owned a healthcare management company, Management Principles, Inc. (MPI), which managed two smaller companies that provided home-based medical services to Medicare recipients in Illinois. Sayeed's companies received a significant amount of their business from the Healthcare Consortium of Illinois. In December 2010, Sayeed devised a scheme to bypass the Consortium’s referral process by directly soliciting its clients for additional services. MPI signed a Management Services Agreement with the Consortium, which gave MPI full access to its clients’ healthcare data. MPI used this information to identify and directly solicit Medicare-eligible seniors who might want or need additional healthcare services.The district court held a bench trial in July 2019 and found that Sayeed and his companies had not violated the Anti-Kickback Statute or False Claims Act because they had paid the Consortium with the intent to obtain information, not patient referrals. The plaintiff appealed, and the court of appeals reversed the decision, concluding that the defendants' conduct qualified as a form of indirect referral giving rise to an unlawful kickback scheme.On remand, the district court found the defendants liable under both the Anti-Kickback Statute and False Claims Act. The court imposed $5,940,972.16 in damages, which it calculated by trebling the value of the Medicare claims it deemed false and then adding a per-claim penalty of $5,500. The defendants appealed, challenging both the damages award and the underlying finding of liability. The United States Court of Appeals for the Seventh Circuit affirmed the judgment of liability but reversed in part to permit the district court to clarify which Medicare claims, all or some, resulted from the defendants’ illegal kickback scheme. View "Stop Illinois Health Care Fraud, LLC v. Sayeed" on Justia Law

John Feeney, a convicted felon, was charged with unlawfully possessing two pistols and carrying explosives, specifically modified fireworks shells, during the commission of that felony. Feeney pleaded guilty to both offenses. During sentencing, the court and the parties disagreed on the applicable base offense level under the Sentencing Guidelines for Feeney’s conviction of being a felon in possession of a firearm. The court sided with the government and applied a higher base offense level to Feeney’s sentence.The district court calculated the total offense level for the firearm possession conviction to be 15, which combined with a criminal history category of IV, yielded a guideline range of 30 to 37 months of imprisonment. The court imposed a within-guidelines sentence of 30 months for the firearm possession offense and a mandatory consecutive sentence of 120 months for the offense of carrying explosives while committing a felony.Feeney appealed his sentence, arguing that the district court erred when it applied a base offense level of 18 under the Sentencing Guidelines instead of a base offense level of 14. He contended that the court's decision resulted in him being punished twice for the same conduct, which is prohibited by the Sentencing Guidelines.The United States Court of Appeals for the Seventh Circuit agreed with Feeney's interpretation of the relevant guideline and application note. The court found that the district court had erred in applying a higher base offense level based on Feeney's possession of an explosive. The court concluded that such an application constituted an "enhancement" prohibited by the Sentencing Guidelines, which aim to prevent duplicative punishment. The court vacated Feeney's sentence and remanded the case for resentencing. View "United States v. Feeney" on Justia Law

Scott and Gayla Moore, a married couple, claimed a tax credit under Section 41 of the Internal Revenue Code for research expenses for the 2014 and 2015 tax years. The Moores treated the salary and bonus of Gary Robert, the President and COO of Nevco, Inc., as Section 41 expenses. Nevco, a Subchapter S corporation, was solely owned by Gayla Moore, and thus all of its tax attributes flowed to her. The Moores argued that Robert spent a significant amount of time conducting or supervising research.The United States Tax Court held a trial and found that the record did not support the Moores' claim that Robert spent any given fraction of his time conducting or directly supervising "qualified" research. The court noted that Robert lacked written records of how he spent his time, which is a requirement under 26 C.F.R. §1.41–4(d). Furthermore, Robert could not estimate how much of his time was devoted to "qualified" research, as defined by Section 41(d)(1). The court also found that Robert did not engage in either "direct supervision" or "direct support" of Nevco’s director of engineering, whose salary the Commissioner of Internal Revenue was willing to treat as a "qualified research" expense.The United States Court of Appeals for the Seventh Circuit affirmed the Tax Court's decision. The Court of Appeals found that the Tax Court's inability to answer the questions of whether Robert's research was "qualified" and how much time he devoted to it was not a legal error, but a factual finding. The Court of Appeals reviewed this finding for clear error and found none. The Court of Appeals also noted that the Moores bore the burdens of production and persuasion, and thus the Tax Court's conclusion was dispositive against them. View "Moore v. Commissioner of Internal Revenue" on Justia Law

The case revolves around Denny Anderson, who was sentenced in 2012 for possessing a firearm as a felon, after shooting at a man and using racial slurs. The maximum penalty for the illegal-possession offense is typically 10 years, but the Armed Career Criminal Act (ACCA) mandates a 15-year minimum sentence for anyone with three prior convictions for a "violent felony." Anderson was sentenced to an agreed-upon term of 180 months (15 years) in prison. He was resentenced in 2021, following a successful habeas petition he filed in 2013. The government maintained that he was subject to a 15-year minimum sentence due to his prior convictions.The district court agreed that Anderson's convictions for burglary, robbery, and Florida aggravated assault qualified as violent felonies, triggering a 15-year minimum sentence. Anderson did not object to his designation as an armed career criminal. The court then resentenced him to 188 months in prison.The United States Court of Appeals for the Seventh Circuit reviewed the case and concluded that Anderson’s Florida conviction in 2001 is not a predicate violent felony and that the government may not substitute one of Anderson’s other prior convictions as an alternative predicate offense. Because Anderson does not have three predicate convictions, the ACCA enhancement was improper. The court vacated the judgment and remanded the case for resentencing. View "United States v. Anderson" on Justia Law