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

Choice Hotels sued SBQI, its managers, and investors, for breach of a franchise agreement. The defendants did not answer the complaint. The court entered a default. One defendant, Chawla, an Illinois attorney, had represented the others. Other defendants asked Chawla to find a new attorney. They claimed that they had been unaware that their signatures were on the franchise agreement and that the signatures are forgeries. Johnson agreed to try to vacate the default, negotiate a settlement, and defend against the demand for damages. Johnson filed an appearance and took some steps, but did not answer the complaint or move to vacate the default, engage in discovery concerning damages, or reply to a summary judgment motion on damages. In emails, Johnson insisted that he was trying to settle the litigation. He did not return phone calls. The court set damages at $430,286.75 and entered final judgment. A new attorney moved to set aside the judgment more than a year after its entry, under Fed. R. Civ. P. 60(b)(6), which covers “any other reason that justifies relief” and requires “extraordinary circumstances.” The Seventh Circuit affirmed. The defendants must bear the consequences of their inaction. They were able to monitor the proceedings, but did not follow through. View "Choice Hotels Int'l Inc. v. Grover" on Justia Law

Moje, playing minor league hockey, lost an eye during a game, and sued Oakley, which made his visor, and the League. Instead of notifying its insurer, the League hired LoFaro. Oakley’s attorney called the League’s President, to ask why it had not answered the complaint. LoFaro claimed that an answer had been filed, but the docket did not reflect any filing. Moje moved for default. LoFaro did not respond, nor did he respond after the court entered the default and permitted Moje to prove damages. The court entered a final judgment of $800,000 against the League. After the League learned of collection efforts, it notified its insurer. A lawyer hired by the insurer unsuccessfully moved, under Fed. R. Civ. P. 60(b)(1) to set aside the judgment within six months of its entry. Rule 60(b)(1), allows relief on account of “mistake, inadvertence, surprise, or excusable neglect.” The Seventh Circuit affirmed. Abandoned clients who take reasonable steps to protect themselves can expect to have judgments reopened under Rule 60(b)(1), but the League is not in that category. Its remedy is against LoFaro. View "Moje v. Federal Hockey League LLC" on Justia Law

In 1982, Gacho was arrested, along with others, and confessed his involvement in two murders, signing a written statement. Gacho and Titone stood trial in Judge Maloney’s court. Gacho’s girlfriend was the star prosecution witness, having witnessed the key events. Her testimony largely aligned with Gacho’s confession, which was admitted at trial. The jury found Gacho guilty in 1984 and he was sentenced to death. Judge Maloney was corrupt; he has “the dubious distinction of being the only Illinois judge ever convicted of fixing a murder case.” Gacho claims that Maloney solicited a bribe from him but his family could not raise the money. Titone’s family paid Maloney $10,000 to fix his case, but he was convicted anyway. Gacho also claims that his trial lawyer, McDonnell, the son-in-law of Sam Giancana, longtime boss of the Chicago Outfit, was operating under an impermissible conflict of interest and was otherwise ineffective. The district court dismissed, without prejudice his most recent federal habeas petition for failure to exhaust state court remedies, 28 U.S.C. 2254. The Seventh Circuit dismissed his appeal for lack of jurisdiction. The district court issued a non-final, non-appealable order. Gacho may refile his petition after he exhausts state remedies. View "Gacho v. Butler" on Justia Law

Officer Ortiz saw men in black hoodies and recognized Aranda, who had prior convictions for drug possession and burglaries. Aranda and Leo approached a nearby duplex. Police dispatch announced that a 911 caller was reporting a possible burglary in progress at that duplex. The caller lived in the upper unit and described two Hispanic men wearing black hoodies; one had a gun. The two reappeared and walked toward a neighboring preschool. Leo was wearing a red jacket and had a backpack. Dispatch reported that the caller had given an update that one of the suspects had changed into a red jacket and that the gun was in a backpack. Ortiz announced himself, and ordered them to stop. They kept walking. Ortiz drew his gun and again yelled "stop." They complied. Ortiz handcuffed Aranda. Officer Seeger cuffed Leo. Ortiz frisked Aranda, finding nothing. Seeger patted down Leo and did not find a gun. He emptied Leo’s backpack, finding a black hoodie, a digital scale with marijuana residue, bullets, and a loaded revolver. The officers then learned that residents of the lower unit knew Leo and Aranda, and that the men had not tried to break in. Leo was on probation for attempted burglary and possession of marijuana. The district court rejected a motion to suppress. Leo conditionally pleaded guilty as a felon in possession. The Seventh Circuit vacated, finding no probable cause or basis in Terry for the warrantless search. View "United States v. Leo" on Justia Law

Because a 1999 issue of cumulative preferred stock was impairing the company’s ability to raise capital, Emmis signed holders of 60% of the preferred shares to swaps. Emmis purchased shares; the owners delivered their shares to an escrow. Closing was deferred for five years, during which the sellers agreed to vote their shares as Emmis instructed. Emmis did this because, once it purchased any share outright, it would be retired and lose voting rights, Ind. Code 23-1-25-3(a). Emmis repurchased addition preferred stock in a tender offer and reissued it to a trust for bonuses to workers who stuck with the firm through the financial downturn. The trustee was to vote this stock at management’s direction. Senior managers and members of the board were excluded, leaving them free to propose and vote without a conflict of interest. The plans allowed Emmis to control more than 2/3 of the votes. Emmis then called on owners of common and preferred stock to vote on whether the terms of the preferred stock should be changed. The cumulative feature of the stock’s dividends and other rights were eliminated. Plaintiffs, who own remaining preferred stock, sued. The district court rejected claims under federal and Indiana law. The Seventh Circuit affirmed. Indiana, apparently alone among the states, allows a corporation to vote its own shares, which may be good, or may be bad, but the ability to negotiate better terms, or invest elsewhere, rather than judicially imposed “best practices,” is how corporate law protects investors View "Corre Opportunities Fund, LP v. Emmis Commc'ns Corp." on Justia Law

Gonzalez-Koeneke worked, for 12 years, as a Rockford School District bus driver. She experienced problems with children on her bus and filed incident reports with Sharp and, later, went to West, the terminal manager. She was told that she did not know how to discipline the children and was later suspended for two days for failing to perform a proper pre-trip inspection of her bus. Gonzalez-Koeneke claims that her suspension was actually retaliation for having gone to West. Her union steward told her that Wilson (a District official) wanted her to quit, but Wilson issued a “Removal Form” that same day, resulting in suspension of her bus-driver permit for three years. Gonzalez-Koeneke was terminated based on her suspended permit. She filed suit pro se, alleging violation of the Civil Rights Act, 42 U.S.C. 1981, and 42 U.S.C. 1983. The court dismissed with prejudice, noting its standing order that a dismissal is with prejudice unless a party requests an opportunity to amend in its response. Gonzalez-Koeneke moved to set aside the judgment and to amend her complaint. The district court denied the motion, stating that she had not explained how she would amend the complaint to cure the deficiencies identified in the order. The Seventh Circuit affirmed. View "Gonzalez-Koeneke v. West" on Justia Law

Wheaton College, a nondenominational Illinois college, hires from a various Christian traditions and admits students of varied faiths, but requires all to sign a “Covenant” that requires them to “uphold the God-given worth of human beings, from conception to death.” The Covenant does not mention contraception, but Wheaton believes that “emergency contraception” is forbidden on religious grounds if it can destroy a fertilized ovum. Wheaton also opposes intrauterine devices (IUDs) that prevent implantation of a fertilized ovum. Wheaton excludes coverage of emergency contraception and IUDs from its health plans, but covers “traditional contraception.” Of the 20 types of FDA-approved female contraceptives, Wheaton disapproves only emergency contraceptives and certain IUDs. Wheaton challenged the Affordable Care Act as violating the Religious Freedom Restoration Act, 42 U.S.C. 2000bb-1, and the First Amendment, by making it complicit in the provision of emergency-contraception. The district court denied a preliminary injunction. The Seventh Circuit affirmed, stating: What had been Wheaton’s plan, concerning emergency contraception, the Affordable Care Act made the government’s plan when Wheaton refused to comply with the Act’s provision on contraception coverage. When notified that a health insurance provider has religious objections to providing coverage for some government-approved medical procedure, the government directs the insurer to provide the coverage itself. View "Wheaton College v. Burwell" on Justia Law

Plaintiffs (a class of 1,593) alleged that Visteon failed to deliver timely notice to ex-employees, offering them an opportunity to continue health insurance at their own expense, under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). An employer has 44 days after the end of a person’s employment to provide notice and essential details, 29 U.S.C. 1166(a)(2). The court found that Visteon had provided untimely notice to 741 former employees, and that the notice averaged 376 days late for those persons. The court awarded $2,500 to each class member who had received untimely notice (a total of about $1.85 million), a sum that does not depend on how long the delay was for any given person. While the suit was pending, Visteon was reorganized in bankruptcy. The plan provides that debts of this kind will be paid 50¢ on the dollar, so each of the 741 will receive $1,250. The court also ordered Visteon to pay class counsel $302,780 as attorneys’ fees plus costs of about $11,000. The Seventh Circuit affirmed the award of attorneys’ fees, but otherwise dismissed plaintiffs’ challenge to the penalty as untimely, having been filed several months after the district court’s delayed entry of judgment. View "Pierce v. Visteon Corp." on Justia Law

Plaintiffs, residents of privately-owned Chicago building, received housing vouchers from the Chicago Housing Authority to enable them to rent apartments. They claimed that the Authority is complicit in and responsible for a deprivation of their constitutionally protected privacy by the building owners. The owners require their tenants to be tested annually for illegal drugs; passing the test is a condition of a tenant’s being allowed to renew his or her lease for another year. The requirement applies to all tenants, not just those who might be suspected of using illegal drugs. The district court denied a preliminary injunction on the ground that the drug-testing policy was private rather than state action. The Seventh Circuit affirmed. None of the plaintiffs had requested transfer from the drug-testing building in which he or she currently resides to a building that does not require drug testing. A CHA representative testified that his agency would have approved such a request. That the CHA may encourage or even request testing does not constitute state action. View "Stubenfield v. Chicago Hous. Auth." on Justia Law

From 2007-2010, Harris and co-conspirators added themselves as authorized users on existing credit card accounts without the account holders’ knowledge or permission, then took cash advances, cashed convenience checks, and made fraudulent purchases with the accounts. The scheme involved over 50 victims, and resulted in $300,000 in pecuniary loss. In 2008, Harris was taken into custody when a bank became suspicious and called police. Police took, from plain view in Harris’s truck, a notebook, containing a litany of personal information about 14 people. A fingerprint examination revealed 48/50 prints pulled from the notebook matched Harris’ prints. Harris was released, but did not claim the notebook. In 2013, Harris was convicted of fraud and conspiracy to commit fraud with identification documents, 18 U.S.C. 1028(a)(7), 1028(f), 1029(b)(2), and 1349; production and trafficking in counterfeit devices (credit card fraud), of 18 U.S.C. 1029(a)(2); and aggravated identity theft, 18 U.S.C. 1028A. The district court sentenced Harris to 156 months’ imprisonment and ordered him to pay $299,298.67 in restitution. The Seventh Circuit affirmed, rejecting arguments that the court erroneously denied his motion to suppress the notebook and of insufficient evidence to support his conviction, and a challenge to the sentence. View "United States v. Harris" on Justia Law