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

In November 2010 Ladish agreed to be acquired by Allegheny for $24 cash plus .4556 shares of Allegheny stock per share. At the closing price after the announcement, the package was worth $46.75 per Ladish share, a premium of 59% relative to Ladish's trading price before the announcement. The transaction closed in May, 2011. Ladish became ATI. Investors' reactions implied that Allegheny bid too high: the price of its shares fell when the merger was announced. No Ladish shareholder dissented and demanded an appraisal. But one shareholder filed a suit seeking damages, claiming breach of federal securities law and Wisconsin corporate law by failing to disclose material facts. The district court granted judgment on the pleadings in defendants' favor. On appeal, the shareholder abandoned federal claims. The Seventh Circuit affirmed on the state law claims, citing the business judgment rule.

Plaintiff was arrested for drinking on a public way. A search incident to arrest turned up a heroin packet and a baggie of crack cocaine, so drug possession charges were added. He was jailed for 12 days before bonding out. The drinking charge was dismissed and, at a preliminary hearing, a state judge concluded there was no probable cause for the drug charges. Plaintiff filed a 42 U.S.C. 1983 suit against the officers. After the jury returned a verdict for defendants, plaintiff argued that the court erred in allowing an assistant prosecutor to testify that low-weight cases are routinely thrown out, as an expert, without proper disclosures and foundation. The district court rejected the argument, stating that the prosecutor never offered an opinion, but testified as to her experience on the narcotics call in the state court, offering factual statements based on her personal observations. The Seventh Circuit held that plaintiff was entitled to a new trial. The prosecutor testified based on her specialized knowledge and non-disclosure of her planned testimony as an expert was not harmless.

Plaintiff, certified by the city as a minority-owned business eligible for favored treatment, sells a variety of products. The city is virtually its only customer. Early in 2005 the city began to suspect that plaintiff was a broker rather than a wholesaler, which would make it ineligible to bid for contracts as an MBE. Plaintiff had only six employees, though it claimed to have a warehouse. The city never completed its investigation, so plaintiff retains its certification. The city also believed that the company had shorted it on a shipment of aluminum sign blanks, and ultimately debarred it from dealing with the city. The company sued immediately and obtained a temporary restraining order; debarment was in effect for only eight days. The city abandoned its attempt to debar the company. The district court then ruled in favor of defendants. The Seventh Circuit affirmed. Claims by the principals in the company were frivolous, given that they continued to be employed by the company. The temporary diminution in business did not amount to destruction of the company nor did it constitute retaliation. Plaintiff did not prove breach of contract.

Plaintiff alleged that while he was a pretrial detainee, asleep in his cell, a guard opened the door, allowing another inmate to enter and attack him. He sustained injuries to his head and eyes. He requested medical attention, but received none for five days. He was locked down for 72 hours following the attack. The district court screened the 42 U.S.C. 1983 complaint under 28 U.S.C. 1915A and held a brief telephonic merit-review hearing, then dismissed. The Seventh Circuit vacated, reasoning that even if plaintiff's condition did not worsen from the delay, deliberate indifference to prolonged, unnecessary pain can itself be the basis for an Eighth Amendment claim. Although the evidence may not ultimately substantiate plaintiff's allegations, if proven the conditions are severe enough to have required more prompt attention. On remand the district court should give plaintiff, who was acting pro se, an opportunity to amend his complaint to name the officers who ignored his injuries.

The Seventh Circuit previously affirmed the convictions of members of a Chicago operation that trafficked heavily in various controlled substances, but ordered a limited remand asking whether the district court wanted to resentence in light of the 2007 Supreme Court decision, Kimbrough v. United States. On remand the district court lowered one sentence from 456 to 360 months and the other from 300 to 240 months. With respect to one defendant, the Seventh Circuit affirmed, finding that the district court did not err in calculating the drug quantity attributable to that defendant. The calculation was based on reliable evidence. The other defendant's appeal presented no nonfrivolous issues, so the court granted his counsel's Anders motion to withdraw and dismissed the appeal.

The current beneficiary of several discretionary trusts brought claims of legal malpractice and breach of fiduciary duty against the trustee and her lawyers. The district court dismissed with prejudice for lack of standing because she did not allege a likelihood that the trusts' corpus were insufficient to pay her discretionary distributions. The Seventh Circuit reversed. Looking to Illinois law, the court reasoned that plaintiff has an equitable interest in the trust property that gives her standing to enforce the trusts. There is a fiduciary relationship between her and the trustee that gives rise to equitable remedies.

A jury convicted the defendant of defrauding a large bank. The district judge sentenced him to 96 months in prison and ordered him to forfeit the money that he had obtained from the fraud, which the judge determined to be $16,241,202, plus property that he had bought with proceeds of the fraud, and to pay restitution to the bank also in the amount of $16,241,202. Defendant challenged the order of restitution. The Seventh Circuit reversed in part. Restitution, unlike forfeiture, is limited to the victim's loss, 18 U.S.C. 3664(f)(1)(A); the court remanded for determination of that loss. The court noted that loss has been limited by the government's decision to convey forfeited assets to the victim up to the limit of the loss.

Plaintiff entered into a two-year wireless service agreement with First Cellular in 2005. The company was acquired by defendant, which began dismantling and reorganizing. Plaintiff initially agreed to defendant's terms, but later filed a class action, claiming breach of contract for rendering his phone and equipment useless and refusing to honor the features and prices of the First Cellular Agreement. He also claimed deceptive rade practices under Illinois law and civil conspiracy. The district court denied defendant's motion to compel arbitration. The Seventh Circuit reversed, finding that defendant's arbitration clause applies because part of the claims are based on services and products received under defendant's contract. Defendant's contract unambiguously covers any dispute "arising out of" or "relating to the services and equipment." If a contract provides for arbitration of some issues, any doubt concerning the scope of the arbitration clause is resolved in favor of arbitration as a matter of federal law, 9 U.S.C. 2.

The debtor's single asset is a commercial building. The lender promptly started foreclosure proceedings in state court, prevailed, and a foreclosure sale of the property was scheduled, but was stayed when the debtor filed for bankruptcy, 11 U.S.C. 362(a)(4). The lender became a participant in the bankruptcy The bankruptcy court rejected the debtor's plan to exchange the mortgage for an "indubitable equivalent," lifted the stay, and dismissed the bankruptcy. The Seventh Circuit affirmed, noting that the lender has waited years to enforce its lien and that the court was not required to further stretch the wait. The lien on Treasury bonds proposed by the debtor would not be equivalent to the lender retaining its lien on the building.

Defendant sold heroin to an informant and was indicted for distribution of heroin, 21 U.S.C. 841(a)(1). He pleaded guilty and was sentenced to 216 months. The government agreed to request a reduced sentence if he provided assistance and later filed a Rule 35(b) motion requesting sentence reduction. The court reduced the sentence to 168 months. The Seventh Circuit affirmed. The defendant failed to request a reduced sentence at the hearing and therefore is unable to argue that the court erred by deviating from a requested reduction. Rule 35(b) hearings are not an opportunity for full resentencing, so the court cannot consider factors other than defendant's substantial assistance in deciding by how much to reduce the sentence if the reduction is less than the request, so the court properly declined to consider the 3553(a) factors.