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

The defendant was convicted of conspiracy to sell drugs and being a felon in possession of a firearm. The Seventh Circuit affirmed. Responding to a witness statement that defendant was tired of "BDs," the prosecutor had stated "he was tired of these GDs," and, following "yes," "what are GDs?" The witness responded "that's another gang." The questioning did not amount to prosecutorial misconduct, justifying a mistrial. There was no direct reference to gang ties and any inference of gang affiliation played a minor role in the conviction. Evidence of defendant's prior drug transactions was admissible under Rule 404(b)because it was directed to a matter in issue other than propensity to commit a crime (that defendant was a felon in possession); the other act was similar enough and close enough in time to be relevant; the evidence was sufficient to support finding that defendant committed the similar act; and the probative value was not substantially outweighed by danger of unfair prejudice. Similarly, any prejudice from evidence suggestive of involvement in dog fighting was minor, given that defendant's residence was known as "Murder Avenue." The court properly denied a mistrial based on a juror's encounter with defendant's associates in a restaurant during a lunch break. The encounter did not involve conversation; the juror reported it and indicated that she did not feel intimidated or hold it against the defendant. The court refused to apply the cumulative error doctrine.

A recent retiree (employee) unsuccessfully tried to enroll her adult dependent child in the medical plan. The district court found the plan administrator's decision to be in violation of ERISA and imposed penalties. The Seventh Circuit vacated in part and remanded to allow the plan administrator to make a decision under the correct contract language. The denial was incorrectly based on a version of the plan in effect at the time of application, rather than that in effect when the employee's ability to comply with a condition precedent to enrollment expired, but the language of the earlier plan was ambiguous and the evidence of the employee's compliance was unclear. The court affirmed an award of a $3,780 for failure to timely comply with the employee's first request for documents, but reversed a penalty of $11,440 for a second request, calling for documents that were not essential to the claim. The court remanded an award of attorney fees, stating outcome was "some success on the merits" for the employee but that the plan's position was not without merit.

The plaintiff's investment in his former employer's ERISA plan (Employee Retirement Income Security Act) was primarily in the employer's stock. The employer went out of business. The plaintiff, unable to recover from the plan, filed suit against the fiduciaries and an insurer. The district court found breach of fiduciary duty, but held that the plaintiff lacked standing to sue the insurer. The Seventh Circuit plan affirmed in part and remanded for calculation of damages. The plaintiff established breach of fiduciary duty. Although the plan was exempt from ERISA's diversification requirement, a prudent investor would not have remained so heavily invested in the employer's stock as its fortunes fell. It is arguable that the plaintiff waived the claim by initially agreeing to investment in the stock and not requesting diversification, but the burden of proving that defense was on the fiduciaries. The plan's exchange of "worthless stock for a worthless loan" was a violation of ERISA, but resulted in no damages. Rejecting a claim of adverse domination, the court affirmed that the plaintiff lacked standing to sue the insurer.

Participants in a defined-contribution retirement plan filed a class action suit under the Employee Retirement Income Security Act (ERISA, 29 U.S.C. 1002(34)), alleging mismanagement and payment of excessive funds. The district court certified the class, but entered summary judgment in favor of the defendants. The Seventh Circuit reversed in part, first upholding denial of a motion to amend the complaint and the court's decision to strike expert testimony relating to matters not in the original complaint. The court remanded a count it characterized as alleging that prudent fiduciaries, armed with the information presented to fiduciaries between 2002 and 2004, would have at least decided between maintaining the status quo and making changes to the common stock funds to limit investment and transactional drag. There is a genuine issue of material fact as to whether defendants breached the prudent man standard of care by failing to make a reasoned decision under circumstances in which a prudent fiduciary would have done so. The court also remanded a claim that prudent fiduciaries would have solicited competitive bids for record-keeping services on a periodic basis. The court affirmed summary judgment on a claim relating to the trustee's compensation including interest income from "float."

A 1994 regulation concerning fall protection in the residential construction industry was subject to a 1999 directive instructing OSHA to not commence enforcement actions against employers using certain systems. The directive included notice of rule-making, soliciting comments on how the regulation should be amended. In 2010 the rule-making closed without amendment to the 1994 regulation. The 1999 directive was rescinded and a new directive issued, authorizing proceedings that may require employers to show, on a case-by-case basis, why they employed fall protection other than described in the 1994 regulation. Employers argued that the 2010 directive constituted an occupational health and safety standard, subject to rule-making procedures. The Seventh Circuit dismissed a petition for review. Although employers using certain systems have not been required to make case-by-case showings since 1999, the 1999 directive did not change the 1994 regulation and was only an exercise of prosecutorial discretion, as was the 2010 directive.

The union claimed that the company owed $2.2 million to benefits funds, based on what would have been contributed had the company used plumbers' union workers for certain work, as required by contract. The union submitted a grievance to the Joint Arbitration Board (JAB); the company submitted its own grievance, claiming that some work was performed by members of other unions. The company contacted the Plan for Settlement of Jurisdictional Disputes in the Construction Industry, which determined that the JAB did not have authority over the dispute. The plumbers union is not a participant in the Plan. The JAB was not notified of the order, held a hearing that the company did not attend, found violation of the contract, and ordered payment of $3.3 million. The district court declined to invalidate the order. The Seventh Circuit reversed and remanded. The Union was not required to file suit challenging the Plan order, but was entitled to challenge it when raised as a defense to the JAB order. Two parties can agree to settle a dispute in any way that does not violate the rights of third parties, but the company withdrew its consent to arbitrate with JAB by seeking relief with the Plan. Of the inconsistent arbitration orders, Plan's order takes precedence.

The petitioner re-entered the United States illegally after being removed in 1997 following convictions related to a hit-and-run. He was caught in 2010. The Department of Homeland Security rejected his petition to stay removal and rescind the 1997 order based on post-1997 decisions under which the underlying convictions would not be characterized as felonies. The Seventh Circuit affirmed, holding that the petition was untimely based on the date on which the petitioner had knowledge of the 2010 removal order. The court declined to characterize the proceedings as denial of a motion to reopen the 1997 order, which would have also been untimely.

Executing a warrant to search for marijuana and other drugs, officers found 11 grams of crack cocaine in the defendant's home. The defendant accepted a conditional plea and, after the court rejected a challenge to the warrant, was sentenced to 120 months. The Seventh Circuit affirmed. The affidavit in support of the warrant included information from an informant, describing cash transactions observed at the property, and the officer's description of searching a sealed trash bag from the alley and finding mail addressed to the defendant and a leaf that field-tested as marijuana. It did not indicate the size of the tiny flake found and tested. The defendant had at least five prior drug convictions. The omission of the amount was not material so that it would likely have defeated a finding of probable cause.

A police officer identified herself as a 13-year-old girl in an online chatroom. The defendant made sexual suggestions, masturbated in front of a webcam, and invited the "girl" to masturbate. The defendant was convicted of attempting to induce sexual activity by a minor (18 U.S.C. 2422), using Indiana statutory definitions of sexual activity that refer to fondling oneself in the presence of a person less than 14 years old with intent to arouse sexual desire. The Seventh Circuit reversed and ordered acquittal. The federal law definition of "sexual act" refers to touching; the term is treated as synonymous with "sexual activity" in the federal code. The court acknowledged that the federal law encompasses viewing child pornography, which does not involve touching, but stated that ambiguity must be resolved in favor of the defendant and noted that the defendant is subject to prosecution under state law.

Defendants were convicted of conspiracy to possess cocaine with intent to distribute and carrying and possessing a fireman during and in relation to a drug trafficking offense (18 U.S.C. 924c); one was tried separately and also convicted of being a felon in possession of a firearm. The three were involved in a "sting" in which undercover agents staged a robbery at an imaginary Mexican drug cartel warehouse and recorded the defendants' participation in the plans and in the activities on the day of the robbery. The Seventh Circuit affirmed. There was sufficient evidence to support convictions, despite some inconsistencies in the testimony of an agent and missing recordings, and to reject defenses of coercion and entrapment. Admission of evidence concerning one defendant's prior convictions was appropriate to show predisposition and was not unduly prejudicial. The trial judge properly refused to allow the defense to bring in its theory by cross-examination of an officer covering topics not addressed on direct and involving statements made by a defendant who did not testify. Imposition of mandatory consecutive sentences for the 924c convictions was appropriate, regardless of other mandatory minimum sentences imposed.