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

A dentist applied for benefits under his individual disability insurance policy after suffering impairments to his hip and back. While his claim was under review, he received payments from his insurer for over a year. During that period, he earned income through part-time teaching and performing duties for two professional dental associations. After discovering this income, the insurer terminated his benefits, determining that his continued work qualified as a “gainful occupation” and thus he did not satisfy the policy’s requirement for “total disability.”The dentist subsequently filed suit in the United States District Court for the Northern District of Illinois, Eastern Division, alleging breach of contract and seeking statutory penalties for bad faith under the Illinois Insurance Code. Both parties moved for summary judgment. The district court granted summary judgment in favor of the insurer, finding that the policy’s language was unambiguous and that the dentist was, as a matter of law, engaged in a gainful occupation based on the undisputed facts.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s ruling de novo. The appellate court held that the policy unambiguously required the claimant to show not only inability to perform his prior occupation but also that he was not engaged in any other gainful occupation. The court concluded that “gainful occupation” was not ambiguous and that the dentist’s nonclinical work, which generated substantial income, disqualified him from benefits. The court also rejected the contention that “gainful occupation” should be defined as earning at least 60% of pre-disability income, finding no support for that standard in the policy language. The Seventh Circuit affirmed the district court’s judgment for the insurer. View "Caraba v Paul Revere Life Insurance Co." on Justia Law

Matthew Frazier was convicted in federal court for possession of child pornography under 18 U.S.C. § 2252A and sentenced to 120 months' imprisonment and seven years of supervised release. Frazier had a prior history involving a state court conviction for similar offenses, during which he was initially found incompetent to stand trial but later restored to competency following mental health treatment. After his release on probation, authorities discovered that he was again accessing prohibited materials, leading to a federal search that uncovered additional incriminating evidence. Prior to his federal trial, Frazier underwent a psychological evaluation, revealing ongoing hallucinations but ultimately concluding he was competent to stand trial.Following Frazier's waiver of a jury trial in the United States District Court for the Northern District of Indiana, he made statements about experiencing hallucinations. However, neither his attorney nor the prosecutor questioned his competency at that time, and the district judge conducted a thorough inquiry into his understanding of the proceedings. Defense counsel confirmed that Frazier’s decision-making abilities were consistent with the earlier finding of competency.On appeal to the United States Court of Appeals for the Seventh Circuit, Frazier challenged the district court’s failure to order a second competency hearing and contested the supervised release condition requiring full-time employment. The Seventh Circuit held that the district court did not abuse its discretion by not ordering a second competency hearing, given the evidence and the deferential standard of review. Regarding supervised release, the court concluded that the employment condition was not plain error because it included alternatives like community service or job training, and Frazier had not shown he was incapable of meeting those requirements. The Seventh Circuit affirmed the judgment of the district court. View "USA v Frazier" on Justia Law

Maria Reynoso-Salgado, a Mexican citizen, has lived in the United States since 1997. In 2012, she pleaded guilty to a misdemeanor charge of child neglect under Wisconsin law. The following year, the Department of Homeland Security initiated removal proceedings against her, alleging she was present in the country without proper authorization. Reynoso-Salgado admitted the factual allegations and sought cancellation of removal, which is only available to noncitizens without certain disqualifying convictions.An immigration judge denied her request for cancellation, finding that her conviction for child neglect constituted a “crime of child abuse, child neglect, or child abandonment” under 8 U.S.C. § 1227(a)(2)(E)(i), making her ineligible for relief. The Board of Immigration Appeals affirmed this decision, concluding that the Wisconsin statute was a categorical match to the federal standard for such crimes. Reynoso-Salgado then petitioned the United States Court of Appeals for the Seventh Circuit for review, arguing that her state conviction should not disqualify her from cancellation of removal.The United States Court of Appeals for the Seventh Circuit considered whether the Wisconsin child neglect statute matched the federal definition of a “crime of child abuse, child neglect, or child abandonment” for immigration purposes. Employing the categorical approach, the court concluded that the elements of the Wisconsin statute—requiring intentional conduct resulting in a child’s neglect—met or exceeded the minimum mental state and conduct required by the federal statute. The court also held that the federal provision should be read as a single category encompassing various forms of child maltreatment, with a minimum mens rea of criminal negligence. The Seventh Circuit denied Reynoso-Salgado’s petition, holding that her conviction rendered her ineligible for cancellation of removal. View "Reynoso-Salgado v Blanche" on Justia Law

The plaintiff, an individual designer, developed a spill-proof cup lid and sought to have it manufactured and sold. She contacted a company for manufacturing and, during this process, shared confidential materials with a sales representative who was also representing the manufacturer in the same product category. Later, she discovered that the manufacturer had released a product almost identical to her design and had obtained both a design and a utility patent for it. The plaintiff then engaged a law firm and attorney to pursue potential legal claims and settlement discussions with the manufacturer’s parent company. During the representation, the attorney was negotiating employment with the law firm representing the opposing party, a fact not initially disclosed to the plaintiff. Eventually, the law firm terminated its representation of the plaintiff, citing unpaid fees.After the termination, the plaintiff, acting without legal counsel, filed suit in the United States District Court for the Northern District of Illinois against the law firm and the attorney, asserting multiple claims including legal malpractice, fraud, breach of contract, and intentional infliction of emotional distress. The district court dismissed the complaint with prejudice for failure to state a claim, emphasizing the plaintiff’s failure to adequately allege harm causally connected to the defendants’ conduct, particularly any lost viable legal claim or damages resulting from the alleged conflict of interest.The United States Court of Appeals for the Seventh Circuit reviewed the case and affirmed the district court’s dismissal. The appellate court held that, under Ohio law (as specified in the retainer agreement), the plaintiff did not sufficiently plead that the attorney’s conduct caused her to lose any viable underlying legal claim due to the expiration of a statute of limitations. The court also found the plaintiff’s alternative theories of harm, including loss of the retainer fee and emotional distress, insufficient to sustain a malpractice claim. Accordingly, the judgment was affirmed. View "Sima v Benesch, Friedlander, Coplan & Aronoff LLP" on Justia Law

Metroplex Communications, Inc., which operates several local news outlets in Illinois, earns revenue by selling advertising space. Meta Platforms, Inc., the owner of Facebook, also sells ads and competes for the same local advertisers. Metroplex, representing a putative class of small businesses that compete with Meta for advertisers, alleged that Meta engaged in unlawful, anticompetitive practices by misrepresenting the reach and effectiveness of its Facebook advertisements, thereby drawing advertisers away from other platforms. The suit is based on claims under the Lanham Act and the Illinois Uniform Deceptive Trade Practices Act, seeking disgorgement of profits Meta allegedly earned through misleading conduct. Although Metroplex had purchased Facebook ads in the past, its lawsuit was brought in its capacity as a competitor, not as an ad purchaser.Meta moved to compel arbitration in the United States District Court for the Southern District of Illinois, arguing that Metroplex’s prior ad purchases subjected it to an arbitration clause in Meta’s Commercial Terms. The district court denied the motion, reasoning that Metroplex’s claims arose from its status as a competitor and not from its own ad purchases or contractual relationship as an ad buyer. The court found the claims to be outside the scope of the arbitration clause.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the scope of the arbitration clause de novo, applying Illinois law. The court held that Metroplex’s unfair competition claims were not sufficiently connected to Metroplex’s ad purchases or Meta’s Commercial Terms to fall within the arbitration agreement. The claims centered on alleged anticompetitive conduct and public misrepresentations, unrelated to Metroplex’s own limited use of Meta’s ad services. The court affirmed the district court’s denial of Meta’s motion to compel arbitration, holding that the arbitration clause did not apply to Metroplex’s claims as a competitor. View "Metroplex Communications, Inc. v Meta Platforms, Inc." on Justia Law

Carrie Musselman, a chiropractor in Illinois, expanded her practice to include non-chiropractic medical services and subsequently engaged in fraudulent billing practices targeting Medicare. She directed staff to bill services performed by nurse practitioners and physician assistants under physicians’ names, circumventing Medicare’s “Incident To” requirements, which resulted in higher reimbursements. Additionally, she billed a non-surgically implanted pain-relief device using a code for surgically implanted devices and billed sublingual allergy drops under a code intended for injectable allergy treatments. Despite repeated internal and external warnings about these improper practices, Musselman persisted, primarily seeking advice from sources with vested financial interests.A federal grand jury indicted Musselman on charges of healthcare fraud, wire fraud, and obstruction of a federal audit. Following a 13-day trial in the United States District Court for the Central District of Illinois, a jury found her guilty of healthcare fraud and five counts of wire fraud, acquitting her on other charges. Post-verdict, the district court discovered that the jury foreperson had created a deliberation guide based on online articles, which included references to non-unanimous verdicts. Musselman moved for a new trial on this basis and challenged the court’s use of an “ostrich” instruction regarding deliberate ignorance. The district court denied both motions, reasoning that the outside research was harmless and the ostrich instruction was justified by the evidence.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed. The court held that the district court properly found no reasonable possibility that the jury’s verdict was affected by the foreperson’s outside research and that Musselman had waived a further evidentiary hearing. The appellate court also concluded that the evidence supported the ostrich instruction, given Musselman’s repeated disregard of obvious red flags and her heightened duty to inquire about her practice’s billing practices. View "USA v. Musselman" on Justia Law

A self-funded, multiemployer health and welfare fund that provides benefits nationwide challenged an Arkansas regulation, Rule 128, which applies to health plans operating in that state. The regulation has two main features: it authorizes the Arkansas Insurance Commissioner to require health plans to pay additional dispensing fees to pharmacies if existing payments are deemed not “fair and reasonable,” and it requires health plans to report certain compensation-related information. The fund, which covers participants in Arkansas, argued that the Employee Retirement Income Security Act of 1974 (ERISA) preempts both aspects of Rule 128 because they interfere with uniform plan administration and reporting requirements set by federal law.The United States District Court for the Northern District of Illinois, Eastern Division, heard the fund’s claims and granted the Insurance Commissioner’s motion to dismiss. The court held that the Dispensing Fee Requirement regulated only the cost of benefits and did not dictate substantive plan choices, relying on the Supreme Court’s decision in Rutledge v. Pharmaceutical Care Management Association. The court also found that the Reporting Requirement was merely incidental to enforcing cost regulation and did not constitute an impermissible intrusion into plan administration under ERISA, as discussed in Gobeille v. Liberty Mutual Insurance Company.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s dismissal de novo. The Seventh Circuit affirmed the dismissal, holding that ERISA does not preempt Rule 128’s Dispensing Fee Requirement because it is a permissible cost regulation and does not force plans to adopt a specific benefit structure. The court also concluded that the Reporting Requirement is incidental and necessary to enforce the cost regulation, and thus does not impermissibly intrude upon ERISA’s uniform reporting scheme. View "Central States SE & SW Areas Health & Welfare Fund v. McClain" on Justia Law

The defendant was charged with producing, distributing, and possessing AI-generated images that depicted minors engaged in sexually explicit conduct, as well as transferring such material to a minor. The images were alleged to be created using Stable Diffusion, a text-to-image generative AI program, and did not involve real children. Law enforcement linked the defendant to these images after a report by Meta Platforms, which found the material sent to a minor on Instagram. A search of the defendant’s devices revealed hundreds of similar AI-generated images.In the United States District Court for the Western District of Wisconsin, the defendant moved to dismiss the count charging him with knowing possession of obscene virtual child sexual abuse material (CSAM) in violation of 18 U.S.C. § 1466A(b)(1). The district court granted the motion as to the possession charge, concluding that the statute was unconstitutional as applied in this context. The court reasoned that, under Stanley v. Georgia, individuals have a First Amendment right to possess obscenity in their homes, and that this right extends to virtual CSAM, especially in light of the Supreme Court’s decision in Ashcroft v. Free Speech Coalition, which distinguished virtual CSAM from material involving actual children. The court left the production and distribution charges intact.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s dismissal de novo. The Seventh Circuit held that Supreme Court precedent—specifically Stanley v. Georgia and Ashcroft v. Free Speech Coalition—controls the as-applied challenge. The court found that, because the images did not depict real children, the government’s justifications for banning their possession in the home had been expressly rejected by the Supreme Court. Accordingly, the Seventh Circuit affirmed the district court’s judgment, holding that 18 U.S.C. § 1466A(b)(1) is unconstitutional as applied to the defendant’s in-home possession of obscene virtual CSAM. View "USA v Anderegg" on Justia Law

Richard Highbaugh, a Black man aged 60, worked for Exelead, Inc., a pharmaceutical manufacturer, for nearly three decades in various warehouse roles. In 2022, after a vacancy arose for a Materials Manager position, Highbaugh, who had experience as a supervisor and as a Sampling Specialist, expressed interest in the promotion. However, he did not apply during the internal posting period, instead submitting his materials to his supervisor, Aaron Mendez, about two months after the internal posting closed. Mendez ultimately hired an external candidate, a white man in his thirties, citing the external candidate’s experience with larger scale management and skills relevant to the position. Highbaugh believed he was passed over due to his race and age and filed charges with the EEOC before bringing suit.The United States District Court for the Southern District of Indiana granted summary judgment to Exelead. The district court concluded that Highbaugh failed to raise a genuine issue of material fact that Exelead’s stated reason for not promoting him—concerns about his qualifications and suitability for the manager role—was a pretext for discrimination.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the grant of summary judgment de novo and affirmed the lower court’s decision. The Seventh Circuit held that, even assuming Highbaugh established a prima facie case of discrimination under Title VII, § 1981, and the ADEA, Exelead provided a legitimate, non-discriminatory reason for its decision, and Highbaugh did not produce evidence sufficient for a reasonable jury to find this reason was pretextual. The court found no evidence of shifting or inconsistent explanations, nor that Highbaugh was so much better qualified that discrimination could be inferred. Accordingly, the judgment for Exelead was affirmed. View "Highbaugh v Exelead, Inc." on Justia Law

In September 2020, Microsoft and Google each reported to the National Center for Missing and Exploited Children (NCMEC) that images suspected to be child sexual abuse material (CSAM) were uploaded from the same IP address to their platforms. The images were not viewed by the companies or by NCMEC; instead, they were flagged by automated systems after matching hash values of known CSAM. NCMEC forwarded these reports to the Wisconsin Department of Justice, which traced the IP address to Peter Braun's residence. Special Agent Aaron Koehler viewed the images without a warrant, conducted surveillance, and obtained a prior report from 2015 indicating Braun had been observed chatting online with very young girls. Based on this information, Koehler applied for and obtained a state search warrant for Braun’s home, leading to charges of producing CSAM.The United States District Court for the Eastern District of Wisconsin, after referral to a magistrate judge, granted Braun’s motion to suppress the evidence from the search. The district court found that Agent Koehler’s warrantless viewing of the images was unlawful, and that, excluding his descriptions of the images, the warrant affidavit did not establish probable cause. The court also determined that the good-faith exception to the exclusionary rule did not apply. The government appealed this decision.The United States Court of Appeals for the Seventh Circuit reviewed the case, applying de novo review to legal conclusions and clear error review to factual findings. The Seventh Circuit held that, even without the descriptions of the images obtained from the unlawful search, Agent Koehler’s affidavit contained sufficient information—such as the reliability of the reporting sources, the incriminating file name, and corroborating evidence regarding Braun’s prior behavior—to establish probable cause for the search. The court concluded that the decision to seek the warrant was not prompted by the unlawfully obtained information. Accordingly, the Seventh Circuit reversed the district court’s order suppressing the evidence. View "USA v. Braun" on Justia Law