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

After a collision, the driver of the struck vehicle chased the fleeing vehicle (Chandler), who turned into a dead-end alley. Rhodes, accompanied by Bridewell, Manuel, and Watkins, pulled up behind him and confronted Chandler. Hearing that Chandler had a gun, they backed off. Shots were fired. Chandler’s horn began to sound; his head was pressing the button. Witnesses indicated that two men, who may have been Manuel and Watkins, had a gun and left the scene. Police arrived. Bridewell and Rhodes told them that Chandler had shot at them. Detectives Eberle and Forberg, found Chandler dead, with a gun near his hand. They took Bridewell and Rhodes into custody, then located and arrested Manuel and Watkins. Rhodes and Watkins told police that Bridewell had shot Chandler. Bridewell, under indictment for possession of cocaine with intent to distribute, was charged with murder. The others were released. After three years in custody, Bridewell pleaded guilty to a reduced drug charge; prosecutors dismissed the murder charge. Bridewell, Rhodes, and Manuel filed suit against Eberle, Forberg, and the City of Chicago under 42 U.S.C. 1983, contending that their arrests were unlawful. Bridewell also claimed that the police took longer than the fourth amendment allows to present her to a judge, malicious prosecution, and emotional distress. The district judge granted summary judgment to all defendants on all claims. The Seventh Circuit affirmed. View "Bridewell v. Eberle" on Justia Law

Bond was shot three times by her husband, who then killed himself. She survived and filed suit under 42 U.S.C. 1983, acknowledging that the state is not obliged to protect residents from crime but arguing that when the state chooses to provide protective services it cannot protect men while failing to protect women. She claimed that relatives of her husband had informed police that her husband was suicidal and potentially violent; that she reported that her husband had hit her and had acquired an arsenal of guns, some stolen, despite being disqualified from gun ownership; that she had an order of protection; that he was not arrested despite admitting violating that order; that she requested that the sheriff confiscate the guns; and that when he was arrested for domestic battery, her husband was released. The district court denied a motion to dismiss based on qualified immunity. The Seventh Circuit vacated, stating that the fact that officials assessed the risk to bond differently than Bond herself assessed the risk did not establish sex discrimination. View " Bond v. Atkinson" on Justia Law

The Tax Court upheld the IRS’ disallowance of losses claimed by various LLCs that had been created by a tax attorney as tax shelters and a 40 percent penalty for a “gross valuation misstatement,” 26 U.S.C. 6662(a). An LLC is generally treated as a partnership for tax purposes, so that its income and losses are deemed to flow through to the owners and are taxed to them rather than to the business. How much income or loss should be recognized on the owners’ tax returns is now determined by an audit of the business. The LLCs at issue were formed to reduce taxes by transferring the losses of a bankrupt Brazilian electronics retailer to create what is called a distressed asset/debt (DAD) tax shelter, based on a tax loophole closed by the American Jobs Creation Act of 2004, 26 U.S.C. 704(c) the year after creation of the tax shelters at issue. The Seventh Circuit affirmed, characterizing the LLCs as entities without economic substance, not recognized for federal tax law purposes. View "Superior Trading, LLC v. Comm'r of Internal Revenue" on Justia Law

Attorney Turza sent out a fax, titled the “Daily Plan-It,” containing business advice. The fax was sent to CPAs who were not Turza’s clients, about every two weeks. The Telephone Consumer Protection Act of 1991, 47 U.S.C. 227, prohibits any person from sending unsolicited fax advertisements; even permitted fax ads must tell the recipient how to stop receiving future messages. Turza’s faxes did not contain opt-out information. The district court certified a class of the faxes’ recipients and ordered Turza to pay $500 in statutory damages for each of 8,430 faxes. ($4,215,000): $7,500 to the representative plaintiff ; $1,430,055.90 to class counsel for attorneys’ fees and expenses; and any residue, after payments to class members, to the Legal Assistance Foundation of Metropolitan Chicago “as a cy pres award.” The Seventh Circuit affirmed on the merits, rejecting an argument that the faxes were not ads, but vacated the remedial order. View "Holtzman v. Turza" on Justia Law

The Tax Court found that in 2003 Rogers and his wife failed without justification to report $984,655 of taxable income attributable to income of PPI, an S corporation wholly owned by Rogers, and to a distribution that he had received from PPI. The Seventh Circuit affirmed, rejecting arguments that the disputed income had been held in trust for third parties and was not taxable to Rogers. View "Rogers v. Comm'r of Internal Revenue" on Justia Law

Before its 2007 bankruptcy, Sentinel was an investment manager. Its customers were not typical investors; most were futures commission merchants (FCMs), which operate in the commodity industry like to the securities industry’s broker‐dealers. Through Sentinel, FCMs’ client money could, in compliance with industry regulations, earn a decent return while maintaining the liquidity FCMs need. To accept capital from FCM customers, Sentinel had to register as an FCM, but it did not solicit or accept orders for futures contracts; it received a no‐action letter from the Commodity Futures Trading Commission (CFTC) exempting it from certain requirements applicable to FCMs. Sentinel represented that it would maintain customer funds in segregated accounts as required under the Commodity Exchange Act, 7 U.S.C. 1. In reality, Sentinel pledged hundreds of millions of dollars in customer assets to secure an overnight loan at the Bank of New York. Sentinel’s bankruptcy trustee claimed fraudulent transfer, equitable subordination, and illegal contract, in an effort to dislodge the Bank’s secured position. The district court rejected all of the claims. The Seventh Circuit reversed, rejecting a finding that Sentinel’s failure to keep client funds properly segregated was insufficient to show actual intent to hinder, delay, or defraud. View "In re Sentinel Mgmt. Grp., Inc." on Justia Law

Mach operates an Illinois underground coal mine, using the “longwall” method, which begins with drilling tunnels for ventilation and access. A machine then shears coal from the wall and transports it out of the mine. Mach’s ventilation plan, required by 30 U.S.C. 863(o) involved blowing fresh air into the mine with an exhaust system that pulls out air containing methane, coal dust and particles. There are monitoring points throughout the mine, including at the longwall face and the top of the ventilation shaft. The system was approved for Panels 1 and 2, but not for Panel 3. There is no statutory process for obtaining review of refusal to approve a ventilation plan. Mach notified Mine Safety and Health Administration (MSHA) that it intended to operate without an approved ventilation plan in order to obtain administrative review. MSHA then issued two citations for “technical violations.” An ALJ for the Federal Mine Safety and Health Review Commission refused to consider additional evidence tendered by Mach that had not been presented to the district manager during informal negotiations and concluded that refusal to approve the ventilation plan was not arbitrary and capricious. The Commission affirmed. The Seventh Circuit denied a petition for review. View "Mach Mining, LLC v. Sec'y of Labor, Mine Safety & Health Admin." on Justia Law

Representing a class of truck owner-operators, Walker sued Trailer Transit, a broker of trucking services, for breach of contract in Indiana state court. Trailer Transit removed the suit to federal court under the Class Action Fairness Act (CAFA), section 1332(d)(2). Walker argued that notice of removal was untimely because it was filed more than 30 days after Trailer Transit “first ascertained” that the class’s theory of damages could result in recovery of more than $5 million. The district court denied a motion to remand. The Seventh Circuit affirmed. The earliest possible trigger for removal was Walker’s response to Trailer Transit’s requests for admission seeking clarification of the theory of damages. Even that response did not affirmatively specify a damages figure under the class’s new theory, so the removal clock never actually started to run View "Walker v. Trailer Transit, Inc." on Justia Law

When a Cook County, Illinois property owner fails to timely pay property, the amount of tax past due becomes a lien on the property. The county sells tax liens at auctions, with bids stated as percentages of the taxes past due. The percentage bid, multiplied by the amount of past‐due taxes, plus any interest, is the “penalty” that the owner must pay to clear the lien. The lowest penalty wins the bid. When bids are identical, the auctioneer tries to award the lien to the bidder who raised his hand first. The rules permit only one agent of a potential buyer or related entities, to bid. Plaintiffs accused defendants of fraud for having multiple bidders representing a single potential buyer and sought damages under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961 and for interference with a prospective business advantage under Illinois tort law. On remand, a jury found in favor of the plaintiffs and awarded damages of $7 million, to which the judge added $13 million in attorneys’ fees and expenses. The Seventh Circuit affirmed, describing the defendants as hyperaggressive adversaries who drove up the plaintiffs’ legal costs without justification. View "BCS Servs., Inc. v. BG Inv., Inc." on Justia Law

Hacha and his wife, Solano, extorted money from Solano’s former boyfriend, Tenorio. Hacha told Tenorio that he had kidnapped Solano and her children and would harm them and would harm Tenorio and Tenorio’s parents unless Tenorio paid ransom. After paying Hacha nearly $55,000, Tenorio contacted the FBI, which arrested Hacha after recording calls during which Hacha pretended to have shot Solano in the leg and broken her fingers, and in which she was heard screaming in the background. Hacha and Solano pleaded guilty to conspiring to commit extortion, 18 U.S.C. 371, and extortion. 18 U.S.C. 875(b). Both pleaded guilty. She was sentenced to 42 months in prison and he was sentenced to 87 months, the bottom of his guidelines sentencing range. His appointed counsel for an appeal of the sentence concluded that the appeal wholly lacked merit and moved to withdraw. The Seventh Circuit granted the motion and dismissed the appeal, rejecting arguments concerning acceptance of responsibility and an enhancement based on his “demonstrated ability to carry out” his threat to harm Solano and the others. View "United States v. Hacha" on Justia Law