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

Penske provided transportation services for a newspaper, its only customer, 1999 to 2009, but lost the bid for the contract and informed the union that it would cease operations. The collective bargaining agreement expired two days after operations shut down. Penske and the union engaged in "effects bargaining." Penske agreed to give workers extended recall rights, preferential treatment should they apply for employment at other firms within the Penske group, pay for unused vacation time, severance pay of one week's wages, and assistance in preparing resumes and securing letters of recommendation. Employees filed claims they characterized as a "hybrid" breach of contract and Labor-Management Relations Act, 29 U.S.C. 185 suit. The Seventh Circuit agreed with the district court that the suit was "doomed" because the plaintiffs did not even contend that Penske failed to implement the collective bargaining agreement. The court also dismissed a claim that the union did not bargain hard enough.

Defendant pleaded guilty to traveling in interstate commerce to engage in sexual conduct with a minor, 18 U.S.C. 2423, and was first sentenced to 240 months' imprisonment with 10 years of supervised release, despite a guidelines range of 57-71 months. The court based the sentence on presumed prior acts by defendant and an unsupported assumption of recidivism. On remand, the district court again imposed a sentence of 240 months, despite the guidelines range and a government recommendation of 71 months, and added a lifetime term of supervised release. The Seventh Circuit again vacated and remanded. Although the district judge avoided the errors committed at the first sentencing, he did not give adequate reasons for the sentence.

In 2002 Bell established mutual funds and raised about $2.5 billion for investment. Most of the firms to which the funds routed money were controlled by Petters. He was running a Ponzi scheme. There was no inventory. New investments paid older debts, with some money siphoned off for personal use. When Petters was caught in 2008, the funds collapsed; about 60% of the money was gone. The funds' bankruptcy trustee filed suit against the funds' auditor, alleging negligence. The district court dismissed without deciding whether the auditor had acted competently, invoking the doctrine of in pari delicto, based on Bell's knowledge of the scheme. The Seventh Circuit vacated, noting that Bell was not stealing funds and that the extent of his knowledge cannot be determined at this stage. An allegation that Bell was negligent but not criminally culpable in 2006 and 2007 makes the claim against the auditor sufficient.

In 2011 the court vacated a rule issued by the Federal Motor Carrier Safety Administration about the use of electronic monitoring devices in commercial trucks. Petitioners, commercial truck drivers, sought attorneys’ fees and costs under the Equal Access to Justice Act 28 U.S.C. 2412. The other party, Owner-Operator Independent Drivers Association, was not included in the petition, but was the only party responsible for paying the fees. The EAJA defines a party eligible for an award as “an individual whose net worth did not exceed $2,000,000” or an “organization, the net worth of which did not exceed $7,000,000.” The Seventh Circuit denied fees. The absence of OOIDA from the petition indicates that it is not eligible for fees. Even if the petitioners did not have an explicit fee arrangement among themselves, their fee arrangements with the same law firm, which had represented OOIDA for over 20 years, resulted in an implicit arrangement whereby the organization paid all fees and costs and the individual drivers were not responsible for any payment. The purpose of the EAJA would not be served by awarding fees to the individuals. Financial considerations would not have deterred them from pursuing this action. .

Petitioner, then 45 years old and having previously worked in a factory and as a health aid, applied for disability benefits in 2004, claiming an onset date in 2004. Her conditions include peripheral vascular disease, chronic obstructive pulmonary disease, osteoarthritis, obesity, vascular dementia, depression, panic disorder, and anxiety. The Social Security Appeals Council denied review of the ALJ's adverse decision. The Seventh Circuit reversed and remanded. The ALJ failed to adequately consider petitioner's mental impairments, her obesity, and several of her physical problems.

For more than 30 years, Blue was an administrative assistant at IBEW and had an excellent record. In 2006 Phillips filed a complaint against IBEW, alleging that his information was removed from the referral book and his initiation fee returned because of his race (African-American). Around the same time, Blue questioned a supervisor about a white electrician, allowed to sign the referral book without paying his initiation fee. Blue was stripped of essential job duties, denied over- time opportunities, and subjected to a hostile work environment. She was disciplined for minor infractions, suspended without pay, and had to take leave to escape the stress. She filed her own complaint with the local agency, alleging retaliation. The district court denied a motion to exclude documents relating to Phillips's complaint. A jury awarded Blue $202,396.76. The Seventh Circuit affirmed, finding the documents relevant and the evidence sufficient to sustain the verdict.

A friend of defendant told Sergeant Wilson that he had seen sexual images of young girls on defendant's cell phone, and that defendant, 21 years old, had bragged about having sex with them. The friend later texted Wilson that he and defendant were together in a car. Wilson stopped the car and seized defendant's phone, but did not immediately apply for a search warrant. He sent a report to Detective Krug, who worked with the FBI Cyber Crimes Task Force. Krug tried to contact Wilson for more details, but shift differences and other delays resulted in a six-day gap before Krug obtained a federal warrant, searched the phone, and found the images. The district court denied a motion to suppress, finding the delay not unreasonable, and that, if were unreasonable, the good-faith exception to the exclusionary rule would apply. Defendant entered a conditional plea of guilty to receiving child pornography, 18 U.S.C. 2252(a)(2), and was sentenced to 210 months in prison. The Seventh Circuit affirmed. While the officers did not act with perfect diligence, the delay was not so egregious as to render the search and seizure unreasonable.

FS and AOS discussed working together to develop a pump motor to prevent entrapment of swimmers by suction created by pool drains. FS sent a letter discussing specific features. After months of correspondence, FS sent another letter, with test results from a previous unsuccessful design and desired features. None of the correspondence mentioned confidentiality. Eventually FS signed the AOS standard one-way confidentiality agreement, stating that FS was a supplier of research consulting services. FS did not require AOS to enter into a confidentiality agreement. After signing the agreement FS shared more details. The relationship broke down when the companies began discussing a formal marketing agreement. AOS eventually introduced and marketed pump motors that FS claims incorporated its trade secrets. FS sued for misappropriation of trade secrets and unjust enrichment under Wisconsin law. The district court granted summary judgment in favor of AOS, finding the misappropriation claim barred by a three-year statute of limitations and that FS failed to take reasonable steps to protect claimed trade secrets. Voluntary disclosure of information defeated the unjust enrichment claim. The Seventh Circuit affirmed.

In 2010 the Seventh Circuit held that California law applied to plaintiff’s securities fraud claims and remanded because California, unlike federal securities law, permits a person who did not purchase or sell stock in reliance on a fraudulent representation to sue for damages. On remand the district court dismissed, ruling that the complaint did not adequately allege defendants' state of mind and plaintiff's reliance on particular false statements. The Seventh Circuit affirmed. Plaintiff never explained how he could have avoided loss on his shares, had there been earlier disclosure. Mismanagement, not fraud, caused the loss. Any fraud just delayed the inevitable and affected which investors bore the loss. Plaintiff cannot show that earlier disclosure would have enabled him to sell and shift the loss to others before the price dropped.

The Atomic Energy Act, 42 U.S.C. 2011, requires that nuclear generators implement access authorization programs. Many employees at privately-owned nuclear power plants must receive a security clearance with "unescorted access" privileges. When such access is denied or revoked, the Nuclear Regulatory Commission requires owner-licensees to provide the aggrieved worker with a review procedure. From 1991 to 2009, the Commission took the position that labor arbitrators could review access denials at unionized facilities. Courts agreed. In 2009, the Commission completed post-9/11 overhaul of security requirements. New language was ambiguous as to whether the Commission had changed its policy to prohibit arbitral review. The district court entered declaratory judgment that the amendments prohibited arbitration of access denial decisions. The Seventh Circuit reversed, concluding that the Commission did not "flip-flop on an important, longstanding, and controversial policy without clearly indicating either in the text of the rule or at any point in the rulemaking history that it was doing so."