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

Budrik sued Wegman for injuries sustained in an accident on a construction site managed by Wegman and was demanding almost presented a realistic possibility of a potential loss above the policy limit, $1 million), but failed to warn Wegman of this possibility. Wegman sued Admiral for failure to act in good faith, alleging that it would promptly have sought indemnity from its excess insurer, AIG (policy limit $10 million). Budrik filed suit four years before Wegman notified AIG, which denied coverage for failure to timely notify. Budrik obtained a judgment of slightly more than $2 million. The district court dismissed Wegman’s suit against Admiral, and, on remand, granted a stay, pending state court resolution of Wegman’s suit against AIG. The Seventh Circuit dismissed appeal of the stay. Although Wegman’s suit against Admiral in federal court and against AIG in state court, are related, they do not satisfy the conditions for abstention.; the district court is not finished with the case. The stay really is a stay, and not a dismissal. View "R.C. Wegman Constr. Co. v. Admiral Ins. Co." on Justia Law

In a class action under ERISA, the district court partially decertified the class, 3000 to 3500 members (57 to 71 percent). Plaintiffs appealed under Rule 23(f), which authorizes a court of appeals to “permit an appeal from an order granting or denying class-action certification.” After holding that an order materially altering a previous order granting or denying class certification is within the scope of Rule 23(f), the Seventh Circuit denied the appeal for failure to satisfy the criteria for a Rule 23(f) appeal. View "Matz v. Household Int'l Tax Reduction Inv. Plan" on Justia Law

While working as a flight attendant, LeGrande was injured when the aircraft encountered severe turbulence. She sued the United States under the Federal Tort Claims Act, 28 U.S.C. 2674, alleging that air traffic controllers employed by the FAA negligently had failed to warn the flight’s captain that turbulence had been forecast along the flight path. The district court concluded that FAA employees did not breach any duty owed LeGrande and granted summary judgment for the government. The Seventh Circuit affirmed. LeGrande argued, for the first time, that her injuries resulted from the negligence of a National Weather Service meteorologist. The court concluded that the FAA breached no duty owed to LeGrande and that LeGrande failed to give the NWS the notice that the FTCA requires. View "LeGrande v. United States" on Justia Law

The Federal Deposit Insurance Corporation (FDIC) sought an order to prohibit brothers George and Robert Michael, former owners, directors, (Robert), officer of Citizens Bank, from participation in the affairs of any insured depository, 12 U.S.C. 1818(e)(7), and civil penalties, 12 U.S.C. 1818(i), for violations of Federal Reserve regulations, breaches of fiduciary duty, and unsafe and unsound practices. The ALJ issued a 142-page decision with detailed findings showing that the Michaels engaged in insider transactions and improper lending practices and recommending that the FDIC Board issue a prohibition order and civil penalties. The FDIC Board affirmed the decision. The Seventh Circuit affirmed. The Michaels urged overturn of numerous adverse credibility determinations and proposed inferences from the record in a way that paints a picture of legitimacy despite the Board’s contrary determinations. The court noted the deference owed the agency determination and found substantial evidence to support the Board’s decision.. View "Michael v. Fed. Deposit Ins. Corp." on Justia Law

Tello and Hill, members of the Latin Kings street gang, pleaded guilty to a charge that they conspired to conduct the affairs of the Latin Kings through a pattern of racketeering activity, 18 U.S.C. 1962(d). Tello appealed, contending that the acts of racketeering referenced in his plea agreement varied materially from those alleged in the indictment. Hill challenged his sentence following a prior, successful appeal challenging his treatment as a career offender, claiming that the district court on remand substantially enhanced his offense level based on a ground that the government had waived by not raising it sooner. The Seventh Circuit affirmed Tello’s conviction, but vacated Hill’s sentence. Both the indictment and plea agreement contained sufficient information for Tello to knowingly and voluntarily plead guilty, and the two documents were wholly consistent with respect to essential elements of racketeering conspiracy. Tello admitted to the elements of RICO conspiracy; any disparity between the predicate acts of racketeering attributed to him in the indictment and the acts in furtherance of the conspiracy that he acknowledged in the plea agreement did not impact the validity of the guilty plea and conviction. The district court erred in applying the accessory guideline on remand. View "United States v. Tello" on Justia Law

In 2001, Dixon pled guilty to conspiracy to distribute crack cocaine, with an agreement that the sentence would be 15 to 20 years. The district court imposed a sentence of 15 years, 10 months. In 2011, the Sentencing Commission issued a policy statement that made retroactive the terms of Amendment 748, which had lowered the offense levels for most crack cocaine offenses. U.S.S.G. 1B1.10(c); U.S.S.G. Appx. C., Amend. 750 (Part A). Dixon then filed a motion to reduce his sentence pursuant to 18 U.S.C. 3582(c)(2). The district court denied his motion, concluding that Dixon’s sentence was based on his binding plea agreement rather than on a Guideline sentencing range that had been lowered. The Seventh Circuit affirmed. The precise phrasing of the statutory exception to the general rule that sentencing courts are not authorized to modify sentences after they are imposed indicates that a district court may exercise this authority “in the case of a defendant who has been sentenced to a term of imprisonment based on a sentencing range that has subsequently been lowered by the Sentencing Commission.” Dixon’s sentence was not based on one of the guidelines that has been lowered. View "United States v. Dixon" on Justia Law

In 2005, Banks, a construction worker, wanted to flip houses, but did not have capital. John, a mortgage broker, suggested that they purchase homes from distressed owners at inflated prices, with the sellers promising to return money above what they owed their own lenders. Owners cooperated rather than face foreclosure. Banks renovated the houses using funds received from sellers and resold them. Johns collected a broker’s fee. When they purchased a house from owners in bankruptcy, they wanted a mortgage to secure payment from the sellers and informed the trustee of the bankruptcy estate. Despite protestations by the trustee, the sale went through, and Banks used the rinsed equity to pay off sellers’ creditors through the trustee. The sellers’ lawyer discovered the scheme, which led to indictments. Johns was convicted of making false representations to the trustee regarding the second mortgage and for receiving property from a debtor with intent to defeat provisions of the Bankruptcy Code. With enhancements for financial loss and for targeting vulnerable victims, Johns was sentenced to 30 months. The Seventh Circuit affirmed the conviction, rejecting challenges to sufficiency of the evidence and jury instructions, but remanded for clarification of sentencing enhancements. View "United States v. Johns" on Justia Law

McKinney and his brother own a construction business. In 2003, the IRS filed notice of tax liens and pursued collection. McKinney avoided payment by transferring money from the business into accounts used for personal expenses. He made false statements about his ability to pay. He failed to pay taxes during 1999, 2000, 2002, 2003, 2004, 2005, and 2006. Because of the tax liens, McKinney was unable to obtain a residential mortgage. His wife obtained a loan to purchase a home, falsely stating that she was a full-time manager of the construction business with a gross monthly income of $15,374.23. Her husband signed a false employment verification; he earned the income used to pay the mortgage. His brother and his brother’s wife acted similarly. McKinney entered a plea to charges of conspiracy to defraud, impede, impair, obstruct, and defeat functions of the IRS in collection of income taxes, 18 U.S.C. 371; tax evasion, 26 U.S.C. 7201; and false statements to revenue agents, 26 U.S.C. 1001. He received a two-level enhancement to his base offense level for failing to report income exceeding $10,000 from criminal activity, U.S.S.G. 2T1.1(b)(1), and a two-level enhancement for obstruction of justice, U.S.S.G. 3C1.1. The Seventh Circuit affirmed. View "United States v. McKinney" on Justia Law

Mund, an American, married Liu, a Chinese woman in China. They moved to the U.S. For Liu to be admitted as a permanent resident, her husband had to sign an I-864 affidavit, agreeing to support his wife at 125 percent of the poverty level ($13,500 a year), if they divorced, 8 U.S.C. 1183a. They divorced two years later. Without relying on the affidavit, the divorce court ordered Mund to support Liu for one year at $500 a month, contingent on her proving that despite making at least four job applications a month, she had not found work. Mund refused to provide support specified in the federal affidavit because Liu was not seeking work. The district judge held that Liu was not entitled to support while not seeking work. The Seventh Circuit reversed, holding there is no duty of mitigation with respect to obligations under the affidavit. The court noted form language that the obligation continues “until my death or the sponsored immigrant(s) have become U.S. citizens, can be credited with 40 quarters of work, depart the U.S. permanently, or die.” The level of support is meager, so the sponsored immigrant has a strong incentive to seek employment, apart from any legal duty. View "Liu v. Mund" on Justia Law

Plaintiffs are current and former drivers for FedEx delivery service who allege that they were employees rather than independent contractors under the laws of the states in which they worked and under federal law. The district court used the Craig. case, which was based on ERISA and Kansas law, as its “lead” case; certified a nationwide class seeking relief under ERISA and certified statewide classes under FRCP 23(b)(3). The Kansas class has 479 members. They allege that they were improperly classified as independent contractors rather than employees under the Kansas Wage Payment Act, Kan. Stat. 44-313, and that as employees, they are entitled to repayment of costs and expenses they paid during their time as FedEx employees. They also seek payment of overtime wages. The district court granted FedEx summary judgment in Craig and other cases; 21 cases are on appeal. The Seventh Circuit stayed proceedings and certified questions to the Kansas Supreme Court: Given the undisputed facts, are the plaintiff drivers employees of FedEx as a matter of law under the KWPA? Drivers can acquire more than one service area from FedEx. Is the answer different for plaintiff drivers who have more than one service area? View "Craig v. FedEx Ground Package Sys., Inc." on Justia Law