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

While vacationing in Arizona, plaintiffs contracted to purchase a condominium in a planned development in Mexico. The project was managed by defendant, an Arizona resident. After making the first of three installment payments, plaintiffs became concerned and sought reassurance. Defendant sent several communications to plaintiffs (in Wisconsin) assuring them the project was properly financed and would be completed on time. They made additional payments. The unit was not completed on time and investigation revealed that the project did not have financing; advance sales were funding the development. Plaintiffs sued in Wisconsin state court, alleging intentional misrepresentation and seeking rescission and damages. Following removal to federal district court, the case was dismissed for lack of personal jurisdiction. The Seventh Circuit reversed. The complaint alleges that repeated communications to plaintiffs’ Wisconsin home were part of a deliberate attempt to create a false sense of security and to induce plaintiffs to make payments. The communications are critical to the claim of intentional misrepresentation. Defendant was aware that the harm would be felt in Wisconsin. The allegations are sufficient to establish minimum contacts necessary to satisfy due-process requirements for jurisdiction in Wisconsin. The communications satisfy the “local act or omission” provision of the Wisconsin long-arm statute.

A suit seeking to represent a class of inmates at the “supermax” Tamms Correctional Center, alleging due process violations, was dismissed. The Seventh Circuit reversed. While remand was pending, the Illinois Department of Corrections developed a “Ten-Point Plan,” revising procedures for transferring inmates to Tamms, with a detailed transfer-review process. Although it had not been implemented, IDOC submitted the Plan at trial. The court held that conditions at Tamms impose atypical and significant hardship, establishing a due-process liberty interest in avoiding transfer to Tamms, and that procedures for transfer decisions were unconstitutional. The court entered an injunction incorporating the Ten-Point Plan. The Seventh Circuit vacated. The scope and specificity of the injunction exceed what is required to remedy the due process violation, contrary to the Prison Litigation Reform Act, 18 U.S.C. 3626(a)(1)(A), and to Supreme Court statements about remedial flexibility and deference to prison administrators in this type of litigation. Injunctive relief to remedy unconstitutional prison conditions must be “narrowly drawn,” extend “no further than necessary” to remedy the violation, and use the “least intrusive means” to correct the violation of the federal right. Making the Plan a constitutional baseline eliminated operational discretion and flexibility, exceeding what due process requires and violating the PLRA.

Defendant was convicted of armed bank robbery, 18 U.S.C. 2113(a), and sentenced to the statutory maximum of 240 months, in part because of previous convictions for the same crime. The Seventh Circuit affirmed, upholding exclusion of a defense witness on the ground that he was an alibi witness and the defense had not given the prosecution the notice required before trial by FRCP 12.1(a). The proposed testimony, that defendant was calm at his employment as a personal trainer two hours after the robbery, would have no probative value. The court also rejected a challenge to the photo array shown the bank manager, whom the robber had confronted after forcing entry shortly after the bank had closed. The array was suggestive, but any error was harmless. There was no doubt that the dust mask found outside the bank was the robber’s, and DNA found on the dust mask matched defendant’s DNA; all of the bank employees gave a description that matched defendant.

Plaintiff owned a rental center and retained defendants, who provide investment banking services to the equipment rental industry, to help him obtain an investor or buyer. Defendants’ advice culminated in sale of a majority of plaintiff’s stock for about $30 million. Defendants billed plaintiff $758,675. Plaintiff paid without complaint but later sued for return of the entire fee on the ground that defendants lacked a brokerage license required by Wis. Stats. 452.01(2)(a), 452.03. The district court dismissed, finding the parties equally at fault. The Seventh Circuit affirmed, declining to definitively answer whether a license was required under the circumstances that a negotiated sale of assets fell through in favor of a sale of stock. Plaintiff is not entitled to relief even if there was a violation. Referring to the classic Highwayman’s Case, the court rejected claims of in pari delicto and unclean hands; plaintiff was not equally at fault. To bar relief, however, is not punishing a victim. Plaintiff did not incur damages and is not entitled to restitution. Plaintiff sought compensation for spotting a violation and incurring expenses to punish the violator, a bounty-hunter or private attorney general theory, not recognized under Wisconsin law. The voluntary-payment doctrine is inapplicable.

During a narcotics investigation, an informant (Tucker's brother-in-law) told the Task Force that Tucker was in possession of a stolen backhoe. Investigator Williams went to Tucker’s house, observed a backhoe, and asked Tucker about it. Tucker said that in the summer of 2000 or 2001, he bought it through a friend without any documentation. Williams took the serial number, told Tucker that it was not reported stolen, but asked Tucker not to move the backhoe. When Williams returned weeks later, neither Tucker nor the backhoe was present. Tucker later explained that he loaned it to Krulac. After tracing ownership, but without a warrant, Williams seized the backhoe from Krulac. Tucker never contacted the Task Force to object to the seizure or demand the backhoe be returned. The backhoe was returned to the titleholder. Tucker sued under 42 U.S.C. 1983, alleging violations of Fourth Amendment and due process rights. The district court granted summary judgment, concluding that the initial seizure of the backhoe satisfied the Fourth Amendment and due process requirements; that the Task Force was entitled to Eleventh Amendment immunity; and that Williams was entitled to summary judgment on the post-seizure disposition due process claim. The Seventh Circuit affirmed.

In 2006 police seized unregistered guns from Justice’s business. He sued and lost. In 2010 Justice sued again, based on the same events, and lost again. Justice asked the court to reconsider under FRCP 59(e). The 28-day period for filing such a motion cannot be extended, FRCP 6(b)(2). Justice had until November 22, 2011, to file. The Northern District of Illinois accepts electronic filing. Justice filed at 3 AM on November 23. The district court rejected the motion on the merits. The Seventh Circuit gave Justice 14 days to show cause why the judgment should not be affirmed summarily. A judge who lacks authority to grant an extension of time cannot achieve the same end by calling the extension a "nunc pro tunc order" (now for then) and backdating a document. Justice did not transmit his Rule 59 motion on November 22; he transmitted it on November 23 and must live with the consequences. Justice did not argue that anything extraordinary occurred between October 25 and November 23 that could support relief under Rule 60(b), but it is premature to decide whether Justice has satisfied the standard for relief under that rule, although his prospects are "dim."

Attorney Mehta was charged with converting escrow funds and lying to a state court. After a hearing, the Illinois Attorney Registration and Disciplinary Commission recommended disbarment. While the recommendation was pending, the Illinois Supreme Court issued a ruled to show cause why he should not be suspended, rejected Mehta's arguments, and suspended his license. Mehta sued the court and the IARDC under 42 U.S.C. 1983, claiming that the suspension violated his right to due process. The district court dismissed for lack of subject-matter jurisdiction under the Rooker-Feldman doctrine. In the meantime, Mehta was disbarred. The Seventh Circuit affirmed the dismissal, rejecting Mehta's argument that the suspension was not a final order that was subject to the doctrine. Illinois law provides that an interim suspension order is a final judgment in the Rule 774 proceeding in which it is issued.

Christmas and Banks were acquitted of drug charges. Banks, on behalf of herself and her infant daughter sued the city and police officers, asserting violations of the Fourth Amendment (42 U.S.C. 1983) and state law claims for false arrest, unlawful search, conspiracy, malicious prosecution, battery, and intentional infliction of emotional distress. After seven days of trial, the jury returned a verdict in favor of the defendants. During trial, plaintiffs moved for a mistrial and, at the conclusion of the trial moved for a new trial. In both motions, plaintiffs argued that they were denied a fair trial due to defense counsel's repeated violations of evidentiary rulings and improper comments to the jury. The district court denied both motions. The Seventh Circuit affirmed, stating that it could not concluded that defense counsel's conduct had a substantial influence on the jury.

Nation left his position as CEO of Spring Air in 2007 with a severance package of $1.2 million to be paid over 15 months provided he did not work for competitors through 2008. Spring Air paid Nation more than $836,000, but in August 2008 ceased making payments due to liquidity problems. Spring Air ultimately filed for bankruptcy. Nation sued defendant, Spring Air's majority shareholder and primary creditor, asserting tortious interference with contract: that defendant used its majority position on Spring Air's board of directors to induce the company to breach his severance agreement. The district court dismissed, finding that defendant was conditionally privileged based on its status as Spring Air's majority shareholder and that Nation had not presented sufficient evidence to overcome the privilege. The Seventh Circuit affirmed. Illinois law recognizes that a corporation's directors, officers, and shareholders are conditionally privileged to interfere with the corporation's contracts. The privilege is an aspect of the business-judgment rule. Nation failed to overcome the privilege with evidence that defendant induced breach for the specific purpose of injuring him or to further its own goals and that it acted against the best interests of the corporation.

The Bald Knob Cross is a well-known Illinois tourist attraction, claiming to be the largest cross in the Western Hemisphere. It had fallen into disrepair. The non-profit group Friends of the Cross was formed to solicit donations. In 2008 Friends secured a $20,000 grant from the Illinois Department of Commerce and Economic Opportunity. Sherman, an atheist, filed suit, alleging violation of the Establishment Clause (42 U.S.C. 1983) and claiming standing as a taxpayer. A magistrate ruled that Sherman lacked standing and that his claim was moot. The district court dismissed. The Seventh Circuit affirmed. "Whatever may be lurking in the background of this appropriations legislation, the $20,000 grant to Friends was not the result of legislative action; rather, it can be traced at most to the initiative of a single legislator. The ultimate pool of $5 million was in the hands of an executive agency, which was formally responsible for the decision to hand out the $20,000 to Friends." Taxpayer standing is foreclosed under these circumstances.