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

Defendant, the billionaire creator of Beanie Babies, pled guilty to one count of tax evasion after hiding assets in a Swiss bank account, made full restitution, and paid a $53.6 million civil penalty. On appeal, the government challenged defendant's sentence of two years' probation with community service, plus $100,000 fine and costs. The court concluded that the district court did not abuse its discretion by not including a term of incarceration to the sentence. In this case, the district court fully explained and supported its decision and reached an outcome that is reasonable under the circumstances. The district judge found defendant’s record of charity and benevolence “overwhelming.” Further mitigating factors - including the uncharacteristic nature of defendant’s crime, his attempt to disclose his account, his payment of a penalty ten times the size of the tax loss, and the government’s own request for a sentence well below the guidelines range - justified leniency. Accordingly, the court affirmed the judgment. View "United States v. Warner" on Justia Law

Jones and others pickpocketed wallets and bought stolen wallets to create counterfeit driver’s licenses and checks, producing at least 60 counterfeit documents. With stolen checkbooks belonging to at least 26 people, they made checks payable to match the fraudulent identification documents. “Writers” presented the forged checks and documents to banks to withdraw cash, while Jones waited outside. The scheme resulted in a loss of approximately $770,000. Jones recruited six and trained all eight writers. He furnished fraudulent IDs, decided which banks to target, provided transportation, and divided the proceeds. Jones was charged with 10 counts of bank fraud, 18 U.S.C. 1344, and aggravated identity theft, 18 U.S.C. 1028A(a)(1). While on bond, Jones was arrested again for stealing wallets and making fraudulent credit card purchases. Jones pleaded guilty, without a plea agreement, to one bank fraud count and aggravated identity theft. The court calculated 12 criminal history points and applied a four-level enhancement for possession or use of device-making equipment and production of counterfeit devices, a two-level enhancement for having more than 50 victims, and a four-level enhancement as a leader of criminal activity involving five or more participants, for a guidelines range of 151–188 months, and imposed a sentence of 160 months plus a statutorily-mandated consecutive 24- month term for aggravated identity theft. The Seventh Circuit affirmed. View "United States v. Jones" on Justia Law

Plaintiff, a civil detainee in Illinois, appealed an adverse jury verdict in his deliberate indifference suit under 42 U.S.C. 1983 against a facility physician. Plaintiff alleged that the district court should have declared a mistrial after the physician violated a pretrial ruling by the court by mentioning to the jury that plaintiff was incarcerated for 26 years. Plaintiff also challenged the strength of the evidence supporting the jury’s verdict. The court concluded that the district court did not abuse its discretion in not declaring a mistrial where the jury could already infer from plaintiff's testimony and the medical issues that plaintiff had dating back to 2002 that plaintiff had spent a long in prison. Because plaintiff did not preserve his second argument, the court cannot reach the issue. Accordingly, the court affirmed the judgment. View "Collins v. Lochard" on Justia Law

This appeal concerns the District's construction of an ambitious project to impound water until it can be cleaned up and released safely: the Tunnel and Reservoir Plan (TARP). The United States and the State of Illinois jointly filed suit, under sections 301 and 309 of the Clean Water Act, 33 U.S.C. 1311, 1319, seeking an order that the District improve the TARP’s performance, accelerate its completion date, and do more to contain and mitigate overflows in the interim. The Alliance was permitted to intervene. The district court entered a proposed consent decree that accompanied the complaint and rejected the Alliance's protest of the proposal. The district judge also concluded that the settlement binds the Alliance. The Alliance appealed, arguing that it cannot be bound by the consent decree - essentially a contract - to which it did not agree. The court concluded that the consent decree that the district court has approved is reasonable in light of the current infrastructure, the costs of doing things differently (no one proposes to build a new sewer system or redo the Deep Tunnel project), and the limits of knowledge about what will happen when the system is completed. Because the decree is the outcome of diligent prosecution, it binds would-be private litigants such as the Alliance. Accordingly, the court affirmed the judgment. View "United States v. Metropolitan Water Reclamation" on Justia Law

Plaintiffs, airplane passengers, filed suit against Boeing in state court after a Boeing 777 hit a seawall at the end of a runway at the San Francisco International Airport and injured 49 passengers, killing three passengers. Suits were also brought in federal courts and were consolidated by the Panel on Multidistrict Litigation (MDL) under 28 U.S.C. 1407(a). Boeing removed the state suits to federal court, asserting admiralty jurisdiction under 28 U.S.C. 1333 and asserting federal officials' right to have claims against them resolved by federal courts under 28 U.S.C. 1442. The MDL decided that the state suits should be transferred to California to participate in the consolidated pretrial proceedings, but the district court remanded them for lack of subject-matter jurisdiction. The court agreed with the district court that Boeing was not entitled to remove under section 1442(a)(1) because Boeing was not acting as a federal officer in light of Watson v. Philip Morris Cos. However, the court concluded that subject-matter jurisdiction exists under section 1333(1) because section 1333(1) includes accidents caused by problems that occur in transocean commerce. In this case, the plane was a trans-ocean flight, a substitute for an ocean-going vessel. Accordingly, the court reversed the district court's judgment and remanded with instructions. View "Lu Junhong v. Boeing Co." on Justia Law

Bell established mutual funds, raised $2.5 billion, and invested in vehicles managed by Petters, who said that he was financing Costco’s electronics inventory. Instead he was running a Ponzi scheme, which collapsed in 2008. The scheme involved a claim that money lent to Petters entities was secured by Costco’s inventory and that repayment was ensured by a “lockbox” arrangement under which Costco would make payments into accounts that the Funds (not Petters) controlled. Petters insisted that the Funds not contact Costco, to avoid upsetting his favorable business relations. Bell and Petters went to prison for fraud. The Funds’ trustee in bankruptcy filed multiple suits. The district court dismissed a claim of legal malpractice. The Seventh Circuit reversed. Even if Bell was determined to do business with Petters, the Fund’s lawyers ould have explained how to structure the transactions in a less risky way, and if Petters refused to cooperate then Bell might have reconsidered lending the Funds’ money. The Trustee alleges that the firm did not offer any advice about how relative risks correspond to different legal devices, and its complaint states a legally recognized claim. Whether the law firm has a defense, and whether any neglect on its part caused injury, are subjects for the district court. View "Peterson v. Katten Muchin Rosenman LLP" on Justia Law

Davis, a civil detainee under the Sexually Violent Persons Commitment Act, sued security guards under 42 U.S.C. 1983, alleging that they refused to remove Davis’s hand restraints while he used the restroom and then laughed as he struggled to unzip his pants and urinate. A jury awarded him $1,000 in compensatory damages. The Seventh Circuit vacated, based on an improper “elements” jury instruction, but rejected an argument based on a Facility directive that permitted removal of restraints only “[w]ithin a secure facility in order to utilize the restroom.” There was conflicting testimony as to whether the corridor behind the courtroom was “secure.” The directive allowed Wessel and Lay to call their supervisor for permission to remove the restraints, and a reasonable jury could find that they chose not to do so for the purpose of humiliating Davis. Davis had no means of escape from the windowless restroom other than by force through Wessel and Lay (while Davis still wore leg shackles), and Wessel and Lay were each considerably larger, younger, and healthier than Davis. A jail cannot shield a cruel and unusual punishment from legal challenge simply by imposing it on everyone equally. View "Davis v. Wessel" on Justia Law

Bell established mutual funds, raised $2.5 billion, and invested in vehicles managed by Petters, who said that he was financing Costco’s electronics inventory. Instead he was running a Ponzi scheme, which collapsed in 2008. Bell and Petters went to prison for fraud. Peterson, the Funds’ trustee in bankruptcy, filed multiple suits. The Funds’ auditors appealed a finding that they committed accounting malpractice because they did not perform spot checks that would have revealed the Petters scheme. On remand, the auditors contended that Bell had committed fraud because documents sent to potential investors represented that the money lent to Petters entities was secured by Costco’s inventory and that repayment was ensured by a “lockbox” arrangement under which Costco would make payments into accounts that the Funds (not Petters) would control. Bell admitted that he knew from the outset that this was not true. The district court concluded that the Funds’ misconduct was at least equal to the auditors, if not greater, and dismissed the auditors, without considering whether they failed to perform their duties. The Seventh Circuit affirmed, rejecting an argument that the pari delicto doctrine in Illinois applies only when plaintiff and defendant commit the same misconduct and stating that it is time to focus on the investors’ claims. View "Peterson v. Lesser" on Justia Law

Inmate Perez was injured during a prison basketball game. A nurse wrapped his hand. She could not provide medicine or stitch his wound. The following day, Perez saw a physician who prescribed antibiotics, but did not stitch his wound, and, recognizing the injury's severity, recommended a specialist. Approval took days, while Perez had an open, bleeding wound. On May 20, Perez filed a grievance, claiming retribution for a prior grievance. Perez’s May 20th grievance was rejected. On May 21, Perez was taken to Carle Clinic and saw a physician’s assistant, who could not suture the wound because of its age. Prison officials did not follow care instructions, nor did they return Perez for follow-up. Perez filed another grievance on June 17 and unsuccessfully appealed denial of his earlier grievance. On December 6, Perez returned to the Clinic. On January 10, 2011, Perez filed another grievance, concerning the seven-month delay , continued pain, and indifference by prison medical staff. In March, Perez had surgery. Due to the 10-month delay, Perez claims to have irreparable damage. He unsuccessfully sought assistance with his grievance. Perez filed suit under 42 U.S.C. 1983. The court twice denied requests for counsel, screened his complaint under the Prison Litigation Reform Act, 28 U.S.C. 1915A, and dismissed. The Seventh Circuit reversed, finding that, liberally construed, Perez’s complaint stated valid Eighth Amendment and First Amendment retaliation claims. View "Perez v. Fenoglio" on Justia Law

Smith was a part-time police officer and owned security and towing businesses. Detective Anderson began investigating Smith for employment tax crimes and other offenses. She enlisted Roberson, Smith’s employee and close friend, as an informant. Roberson had been a member of the Latin Kings and had been convicted of selling drugs and of shooting a rival drug dealer. Roberson told Anderson that Smith had committed insurance fraud and arson and had extorted money from undocumented immigrants. Smith told Roberson that he needed money and asked Roberson to find a drug stash house that he could rob while wearing police gear and whether Roberson knew any Latin Kings that needed protection while transporting drugs. Roberson relayed this information to Anderson, who referred the case to the Bureau of Alcohol, Tobacco, Firearms and Explosives. Roberson introduced the ATF agent to Smith in a sting operation. Smith was convicted of conspiring and attempting to possess with intent to distribute cocaine, transferring firearms with knowledge that they would be used in a drug trafficking crime, and possessing a firearm in furtherance of a drug trafficking crime. The Seventh Circuit affirmed, rejecting arguments that the government’s conduct violated Smith’s right to due process of law by coercing him to engage in illegal activity. View "United States v. Smith" on Justia Law