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

Sentinel specialized in short-term cash management, promising to invest customers’ cash in safe securities for good returns with high liquidity. Customers did not acquire rights to specific securities, but received a pro rata share of the value of securities in an investment pool (Segment) based on the type of customer and regulations that applied to that customer. Segment 1 was protected by the Commodity Exchange Act; Segment 3 customers by the Investment Advisors Act and SEC regulations. Despite those laws, Sentinel lumped cash together, used it to purchase risky securities, and issued misleading statements. Some securities were collateral for a loan (BONY). In 2007 customers began demanding cash and BONY pressured Sentinel for payment. Sentinel moved $166 million in corporate securities out of a Segment 1 trust to a lienable account as collateral for BONY and sold Segment 1 and 3 securities to pay BONY. Sentinel filed for bankruptcy after returning $264 million to Segment 1 from a lienable account and moving $290 million from the Segment 3 trust to the lienable account. After informing customers that it would not honor redemption requests, Sentinel distributed the full cash value of their accounts to some Segment 1 groups. After filing for bankruptcy Sentinel obtained bankruptcy court permission to have BONY distribute $300 million from Sentinel accounts to favored customers. The trustee obtained district court approval to avoid the transfers, 11 U.S.C. 547; 11 U.S.C. 549. The Seventh Circuit, noting the unique conflict between the rights of two groups of wronged customers, reversed. Sentinel’s pre-petition transfer fell within the securities exception in 11 U.S.C. 546(e); the post-petition transfer was authorized by the bankruptcy court, 11 U.S.C. 549. Neither can be avoided.View "Grede v. FCStone LLC" on Justia Law

The employees of the Chicago poultry processing plant are represented by a union. Before beginning work, they are required to put on a sterilized jacket, plastic apron, cut‐resistant gloves, plastic sleeves, earplugs, and a hairnet. They must remove this sanitary gear at the start of their half‐hour lunch break and put it back on before returning to work. They are not compensated for the time spent changing. They alleged that the employer violated overtime provisions of the Fair Labor Standards Act, 29 U.S.C. 201 and of the Illinois Minimum Wage Law. The district judge granted the employer summary judgment and denied class certification with respect to the state‐law claim. The Seventh Circuit affirmed. The Act excludes from time for which an employee must be compensated for “any time spent in changing clothes at the beginning or end of each workday which was excluded from measured working time … by the express terms of or by custom or practice under a bona fide collective‐ bargaining agreement applicable to the particular employee.” The cause of amicable labor relations would be impaired by reading broadly laws that remove wage and hour issues from the scope of collective bargaining. Employer and union in this case agreed not to count the tiny changing times as compensated work. The plaintiffs were trying to upend the deal struck by their own union. View "Mitchell v. JCG Indus., Inc." on Justia Law

Convicted of distributing more than 50 grams of cocaine base, 21 U.S.C. 841(a)(1), White was sentenced to 360 months’ imprisonment. He filed an unsuccessful collateral attack under 28 U.S.C. 255. After the Sentencing Commission adopted Amendment 750, retroactively cutting the offense levels for crack-cocaine offenses, White sought sentence reduction under 18 U.S.C. 3582(c). The judge calculated the new range and reduced White’s sentence to 292 months. Nine months later White filed another 255 petition, arguing that the calculated range was wrong: the judge should not have treated him as a manager of other criminals, and should have deducted offense levels for acceptance of responsibility. The district judge dismissed the petition as barred by 28 U.S.C. 2244 and 2255(h), which forbid any “second or successive” petition that has not been authorized by the court of appeals under specified criteria and as untimely. The petition is not authorized under those criteria. The Seventh Circuit dismissed, rejecting an argument that the sentence reduction “wiped the slate clean.” There are substantial differences between resentencing and sentence reduction. White was not resentenced in 2012. The judge was forbidden to reexamine the effect that acceptance of responsibility and supervision of others have on White’s Guidelines range. View "White v. United States" on Justia Law

In 2009 Betty and Wayne submitted a tax return on behalf of a Betty Phillips Trust, signed by Betty, who was listed as the trustee, claiming income of $47,997. A second return on behalf of a Wayne Phillips trust, was signed by Wayne, but Betty was listed as trustee. This return reported income of $1,057,585. Both returns claimed that all income had gone to pay fiduciary fees, so that the trusts had no taxable income. The Wayne Trust claimed a refund of $352,528. The Betty Trust claimed $15,999. The IRS issued a check for $352,528. They endorsed the check and deposited it into a joint account. The returns were fraudulent. The IRS had no record of any taxes being paid by the trusts. In December, the IRS served summonses. That month, the couple withdrew $244,137 remaining from their refund proceeds using 13 different locations. They followed the same strategy the next year, but did not receive checks. A jury convicted Betty of conspiracy to defraud the government with respect to claims (18 U.S.C. 286), and of knowingly making a false claim to the government (18 U.S.C. 287.1). The district court sentenced her to 41 months’ imprisonment and ordered them to pay $352,528 in restitution. The Seventh Circuit affirmed, rejecting claims that the court improperly admitted evidence, and that the government constructively amended the indictment and violated Betty’s right against self‐incrimination.View "United States v. Phillips" on Justia Law

Days after the collective bargaining agreement expired, a bargaining-unit employee asked the Labor Board to conduct a decertification election. Neither the company nor the union opposed the request. In the election 19 votes were cast for the union and 18 against, with the remaining ballot not opened. The union claimed that the employee who had cast it was not a bargaining unit member. The Board rejected that challenge, the ballot was opened, and the vote was against the union. The union also claimed that the company used objectionable conduct to turn employees against the union, including sending a letter of unknown origin to a member, threatening jail if she voted for the union. The Board agreed with three of the charges and ordered a new election. Before then, however, the company announced that it would no longer cooperate with the union. The union filed an unfair labor practice complaint, 29 U.S.C. 158(a)(1), (5), which was upheld. The Board ordered the company to recognize the union and bargain on request and sought enforcement of its order. The Seventh Circuit enforced the order. The order refusing to decertify the union and ordering a new election is outside of the court’s jurisdiction: the result of the old election has not been vindicated and a new election has not been held. The union remains certified and the employer must continue to recognize it. View "Nat'l Labor Relations Bd. v. Heartland Human Servs." on Justia Law

The general contractor of a Wisconsin construction project, hired Harsco to supply scaffolding. Krien, injured in a fall when a plank on a scaffold on which he was standing, broke, sued Harsco. The parties settled his claim for $900,000. Harsco filed a third‐party complaint against the contractor, seeking indemnification plus interest and attorneys’ fees. The district judge granted the contractor summary judgment. The Seventh Circuit reversed and remanded after examining the complex provisions of the contract between the two. The plank may or may have been supplied by Harsco and may or may not have been defective, as claimed by Krien, who could not sue Riley in tort, because against his employer his only remedy for a work‐related accident was a claim for workers’ compensation, but there has never been judicial resolution of these questions, because Krien’s suit was settled before there was any judgment. Indemnification, however, is a form of insurance, and could apply even if the party seeking indemnification was negligent. Riley’s duty to indemnify Harsco extends to legal expenses incurred by Harsco in defending against Krien’s suit and in litigating this suit. View "Krien v. Harsco Corp." on Justia Law

Thomas, an Indiana prisoner, sued prison officials and medical personnel at the Pendleton Correctional Facility under 42 U.S.C. 1983 for deliberate indifference to his epilepsy in violation of the Eighth Amendment. The district court dismissed without prejudice because Thomas did not pay the initial partial filing fee of $8.40, assessed under 28 U.S.C. 1915(b)(1) in response to his motion to proceed in forma pauperis. Thomas claimed that when his payment came due he had no money or income, and that any money he does receive is immediately and automatically deducted by the prison to pay for debts he incurred by printing copies of his complaint. The judge did not respond to Thomas’s letter, but later allowed an appeal. After determining that it had jurisdiction, the Seventh Circuit vacated the dismissal because the judge dismissed the suit without determining if Thomas was at fault for not paying. View "Thomas v. Butts" on Justia Law

Tian, a 48‐year old Chinese citizen, was admitted to the U.S.in 2001, on a non‐immigrant visa, to participate in an international exchange program. He overstayed and, in 2007, was questioned during an investigation of human trafficking. There were in no charges, but Tian was placed in removal hearings. While the matter was pending, Tian pled guilty to drawing and passing a check with intent to defraud and was ordered to pay $100,000 in restitution; his sentence was suspended. Tian sought asylum, withholding of removal, and Convention Against Torture protection, asserting that, in 1989, he participated in demonstrations and was detained by the police for 10 days, repeatedly assaulted, and undressed and tied to a tree for an entire day. After his release Tian had report to the Public Security Bureau regularly. Tian asserted that he was demoted from being a hotel manager to being a kitchen helper, and that his wife divorced him, because of persecution for his participation in the prodemocracy movement. He claimed that he failed to timely apply for asylum because of “language barriers” and “ignorance of U.S. laws.” Tian did not have documentation of participation in the demonstration, or his detention, or of subsequent medical treatment. The IJ and BIA rejected his claims. The Seventh Circuit dismissed, for lack of jurisdiction, the conclusion that Tian’s asylum application was time‐barred. Because Tian did not exhaust administrative remedies with regard to his CAT claim, the court denied that claim. Tian failed to establish eligibility for withholding of removal.View "Tian v. Holder" on Justia Law

In 2008, Shields, an Illinois prisoner was lifting weights and ruptured the pectoralis tendon in his left shoulder. Although he received some medical attention, he did not receive the prompt surgery needed for effective treatment. Due to oversights and delays by those responsible for his medical care, too much time passed for surgery to do any good. He has serious and permanent impairment that could have been avoided. After his release from prison, Shields filed suit under 42 U.S.C. 1983, alleging that several defendants were deliberately indifferent to his serious medical needs and violated his rights under the Eighth Amendment to the Constitution. The district court granted summary judgment in favor of the defendants. The Seventh Circuit affirmed, reasoning that Shields was the victim not of any one person’s deliberate indifference, but of a system of medical care that diffused responsibility for his care to the point that no single individual was responsible for seeing that he timely received the care he needed. As a result, no one person can be held liable for any constitutional violation. Shields’ efforts to rely on state medical malpractice law against certain private defendants also failed. View "Shields v. IL Dep't of Corrs." on Justia Law

Beginning in 2007, Mississippi Valley agreed to sell cattle to Swift, planning to fulfill that agreement in part with cattle it had received from J&R. Mississippi Valley was merely the holder of J&R’s cattle, not the purchaser or owner. Because the relationship between Swift and J&R had soured, Mississippi Valley did not inform Swift that some of the cattle were actually J&R’s. Swift paid for the purchases with checks made out to Mississippi Valley, which deposited the checks in its general operating account and periodically sent J&R checks for sales of J&R cattle. Mississippi Valley stopped making timely payments. As the debt mounted, J&R sent increasingly frantic demands for payment. Mississippi Valley sent seven checks to J&R totaling $862,747.31. Less than 90 days later, creditors filed an involuntary Chapter 7 bankruptcy petition against Mississippi Valley. The bankruptcy trustee sought to avoid the seven payments as preferential transfers, 11 U.S.C. 547(b), but J&R argued that Mississippi Valley never had a property interest in the funds but only held the sale proceeds for J&R’s benefit. The bankruptcy court granted J&R summary judgment. The district court affirmed. The Seventh Circuit remanded, stating that it is unclear how much money could properly be traced to a constructive trust in favor of J&R.View "In re: MS Livestock, Inc." on Justia Law