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

In 2000, husband and wife, with an estate valued at $3 to $4 million, revised their estate plan with the assistance of their Illinois lawyer, a Minnesota lawyer, and a law partner of their son-in-law. The plan included a trust that treated their son and his daughter, India, less favorably than their two daughters and other grandchildren. When they died within a month of each other in 2004, their son and India sued the three lawyers, alleging malpractice and breach of fiduciary duty. The district court rejected a conflict-of-interest argument and dismissed most of the claims as untimely or barred. India's minor status tolled the limitations period, but the court dismissed her claim as premature. The Seventh Circuit affirmed and held that India's claim should have been dismissed with prejudice. The district court properly chose Illinois's statute of limitations over Minnesota's; and properly rejected waiver and equitable-tolling arguments. The court properly dismissed the fiduciary-duty claims as barred by res judicata; there had been state court litigation concerning sale of the family home. There was no evidence to support India’s contention that her grandparents intended her to receive more than the documents provide.

The village fired its village manager, at the same time restructuring its work force by abolishing three positions and creating one new slot. Plaintiff occupied an abolished position: executive coordinator to the village manager. Her suit under 42 U.S.C. 1983 claimed that she was fired because she was associated with the village manager, who had lost a political struggle. Because the village implemented its plan by ordinance, the district court dismissed on the ground of legislative immunity. The Seventh Circuit affirmed. An ordinance adopted through the legislative process, and having the force of law, is covered by legislative immunity no matter the motives of those who proposed, voted for, or otherwise supported the proposal. The court acknowledged that the ordinance made the termination an official village policy, for which the village does not enjoy immunity, but: "It is common to hold a person's associations against him ... it is an important part of the new officeholder's own right of association to be able to choose who to work with, the better to promote his ideas and policies." A position as a policymaker"s right-hand woman is "confidential" in nature.

As part of a retention package, the bank purchased a split dollar life policy for plaintiff's trust with cash value of more than $662,000. The bank paid part of the premiums and had a senior interest in the policy to the extent of those premiums. To safeguard this interest, the trust assigned the policy to the bank as collateral. The bank paid $421,890 of the premiums. The trust interest was about $240,000. In 2009, the bank failed and was placed under FDIC receivership. The Insurer surrendered the entire cash value of the policy to the FDIC. The trustee demanded return of the value of the policy; the insurer refused. The trustee first contacted the FDIC receiver after expiration of the 90-day period for claims under the Financial Institutions Reform, Recovery, and Enforcement Act, 12 U.S.C. 1821(d)(13)(D), although he received notice 12 days before expiration of the period. The district court dismissed for lack of jurisdiction. The Seventh Circuit affirmed. It would be possible for a claim to arise so close to the bar date as to deprive a claimant of due process, but this case did not present that situation.

Defendant, convicted of several serious drug and firearm charges, received a mandatory life sentence. His counsel appealed on evidentiary grounds, and the Seventh Circuit affirmed. Defendant then filed a habeas petition (18 U.S.C. 2255) asserting ineffective assistance of counsel. The government admitted failure to timely file notice of enhanced penalty. The district court set aside the mandatory life sentence and held a hearing on other issues, then imposed a sentence of 480 months. The Seventh Circuit declined to issue a certificate of appealability with respect to the conviction, and affirmed the revised sentence. The district court reasonably considered defendant’s routine drug purchases.

MGIC provides private insurance on mortgage loans and incurred large losses in the financial crunch that began with the decline of prices of securities based on packages of mortgage loans. Class-action suits filed under the Securities Exchange Act of 1934 were consolidated and were dismissed when the judge concluded that the complaint did not meet the standard set by the Private Securities Litigation Reform Act, 15 U.S.C. 78u–4(b). A single plaintiff appealed, based on fraud that allegedly occurred during MGIC's quarterly earnings call on July 19, 2007. The Seventh Circuit affirmed, holding that the complained-of statement was true and that the complaint failed PSLRA's requirement for pleading scienter. At most plaintiff could allege that MGIC’s managers should have seen the looming problem, and establish negligence rather than the state of mind required for fraud. MGIC's managers did not have any private information that they could have revealed.

In 1998 Ryerson sold subsidiaries to EMC for $29 million. The following year EMC sought rescission, claiming that Ryerson concealed that a subsidiary’s largest customer had declared that unless it slashed prices, the customer would stop buying from the subsidiary. Three years later, the parties settled, with Ryerson making a $8.5 million "price adjustment." Federal refused to indemnify Ryerson under an “Executive Protection Policy.” The policy covers loss for which the insured becomes legally obligated to pay on account of any claim for a wrongful act [defined to include a "misleading statement" or "omission"] allegedly committed by the insured. Federal denied that "loss: includes restitution paid by an insured, as distinct from damages. The Seventh Circuit affirmed summary judgment in favor of Federal, stating that reimbursement of disgorgement of the profits of fraud would “encourage fraud.” Having to surrender those profits was not a loss within the meaning of the policy. The court also rejected an argument that Federal's change of position on why it denied the claim violated the doctrine of "mend the hold." In Illinois that doctrine does not forbid the defendant to add a defense after being sued.

Defendant disappeared while on release awaiting trial on a charge of possession of a gun by a felon, 18 U.S.C. 922(g)(1). He was captured nearly three months later and pleaded guilty two weeks before his trial date. At sentencing, the district court granted him a two-level reduction for acceptance of responsibility, U.S.S.G. 3E1.1(a). In keeping with the plea agreement, the government moved for an additional one-level reduction, because it was satisfied that he had given timely notice of intent to plead guilty. The district court denied that motion, however, citing defendant's flight. The Seventh Circuit remanded, holding that the additional one-level reduction is mandatory once the government determines that the U.S.S.G. 3E1.1(b) criteria are satisfied and makes the necessary motion. The court could have imposed a higher sentence by other means.

Dass, born in India, was first hired as a teacher in 1991. In 2002, Dass was hired at Casals. Donaldson was the principal and rated Dass's overall performance through 2005 as excellent, but never recommended Dass for tenure based on concern that Dass was not a strong disciplinarian. Donaldson retired in 2005 and non-renewed Dass for the 2005-2006 school year. Dass was rehired for the year, but because of an error, was displaced after that school year when Casals lost teaching positions due to budget constraints. Dass won a grievance and was reinstated. Dass received medical leave in December 2006. She did not return the rest of the school year. In 2007, the principal recommended non-renewal. The Board accepted the recommendation. Dass filed suit, alleging national origin discrimination and retaliation under the Civil Rights Act of 1964, 42 U.S.C. 2000e; discrimination in violation of the Americans with Disabilities Act, 42 U.S.C. 12101.; and discrimination under 42 U.S.C. 1981. The district court granted defendants summary judgment. The Seventh Circuit affirmed. Assignment to teach seventh grade was not an adverse employment action and there was no evidence of discrimination based on national origin.

Cerna and Alexandru, Romanian nationals, resided in the U.S. illegally while participating in a scheme to defraud online auction bidders. Individuals posed as sellers on auction sites. A co-schemer would bid and "win." Another co-schemer would contact a legitimate bidder, state that the winner had backed out, and offer to sell the items. Victims were instructed to pay by wire transfer. Co-schemers, including Cerna and Alexandru, collected payments using false identification. The scheme had more than 2,000 victims suffering losses totaling over $6,000,000. Cerna directed co-schemers and received a larger share. Cerna and Alexandru have previously been deported for commission of crimes. Both pleaded guilty to wire fraud. The district court calculated Cerna’s guideline range as 168 to 210 months and imposed a 180-month sentence. The range for Alexandru was 70 to 87 months; he was sentenced to 87 months. The Seventh Circuit affirmed, upholding a finding that Cerna held a managerial role and rejecting claims that his sentence was unconstitutionally disparate from sentences of co-defendants and that the court misapplied USSG 3553(a) factors. Defendants forfeited an argument that their sentences should be reduced for delay—both have been in custody since September 2005 but were not indicted until 2007.

The prisoner's "skeletal" complaint alleged that, while escorting him down a hallway to segregation, guards instructed him to move against the wall. When he did not comply, a guard, “slammed” him against the wall, twisted his wrist, and caused pain that lasted for two months. The district court dismissed after preliminary screening under 28 U.S.C. 1915A. The Seventh Circuit affirmed. To be cruel and unusual punishment, conduct that does not purport to be punishment must involve more than ordinary lack of due care for prisoner safety. Infliction of pain in the course of a prison security measure does not amount to cruel and unusual punishment simply because it appears, in retrospect, that the degree of force was unreasonable, and unnecessary in the strict sense. In tort law, any unconsented and offensive touching is a battery. Imprisonment strips a prisoner of that right to be let alone, and many other interests as well. In this case, action of the guards was in response to defiant behavior.