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

Arla, a Denmark-based global dairy conglomerate, launched a $30 million advertising campaign aimed at expanding its U.S. cheese sales, branded “Live Unprocessed.” The ads assure consumers that Arla cheese contains no “weird stuff” or “ingredients that you can’t pronounce,” particularly, no milk from cows treated with recombinant bovine somatotropin (“rbST”), an artificial growth hormone. The flagship ad implies that milk from rbST-treated cows is unwholesome. Narrated by a seven-year-old girl, the ad depicts rbST as a cartoon monster with razor-sharp horns. Elanco makes the only FDA-approved rbST supplement. Elanco sued, alleging that the ads contain false and misleading statements in violation of the Lanham Act. Elanco provided scientific literature documenting rbST’s safety, and evidence that a major cheese producer had decreased its demand for rbST in response to the ads. The Seventh Circuit affirmed the issuance of a preliminary injunction, rejecting arguments that Elanco failed to produce consumer surveys or other reliable evidence of actual consumer confusion and did not submit adequate evidence linking the ad campaign to decreased demand for its rbST. Consumer surveys or other “hard” evidence of actual consumer confusion are unnecessary at the preliminary-injunction stage. The evidence of causation is sufficient at this stage: the harm is easily traced because Elanco manufactures the only FDA-approved rbST. The injunction is sufficiently definite and adequately supported by the record and the judge’s findings. View "Eli Lilly and Co. v. Arla Foods USA, Inc." on Justia Law

Plaintiffs defaulted on credit cards. PRA, an Illinois debt collection agency, bought the accounts for collection. Debtors Legal Clinic sent separate letters on behalf of each plaintiff to PRA, stating “the amount reported is not accurate.” PRA later reported each debt to credit reporting agencies without noting that the debt was “disputed.” Plaintiffs each filed a suit under the Fair Debt Collection Practices Act, 15 U.S.C. 1692e(8), alleging that PRA communicated their debts to credit reporting agencies without indicating they had disputed the debt. The Seventh Circuit affirmed summary judgment in favor of plaintiffs. PRA’s alleged violation of section 1692e(8) is sufficient to show an injury‐in‐fact; the plaintiffs suffered “a real risk of financial harm caused by an inaccurate credit rating.” The court rejected PRA’s argument that the phrase “the amount reported is not accurate” was ambiguous. Section 1692e(8) does not require the use of the word “dispute.” The “knows or should know” standard of section 1692e(8) “requires no notification by the consumer … and instead, depends solely on the debt collector’s knowledge that a debt is disputed, regardless of how that knowledge is acquired.” The court concluded that PRA’s error was material. View "Bowse v. Portfolio Recovery Associates, LLC" on Justia Law

Baek purchased property through his LLC and obtained financing from Labe Bank; Frank was the loan officer. Frank later moved to NCB and asked Baek to move his business, representing that NCB would provide a larger construction loan at a lower rate. In 2006, Baek entered a construction loan with NCB for $11,750,000. Baek executed a loan agreement, mortgage, promissory note, and commercial guaranty. Baek’s wife did not sign the guaranty at closing. NCB maintains that, 18 months after closing, she signed a guaranty. One loan modification agreement bears her signature but Baek‐Lee contends that it was forged and that she was out of the country on the signing date. NCB repeatedly demanded additional collateral and refused to disburse funds to contractors. The Baeks claim that NCB frustrated Baek’s efforts to comply with its demands. In 2010, NCB filed state suits for foreclosure and on the guaranty. The Baeks filed affirmative defenses and a counterclaim, then filed a breach of contract and fraud suit against NCB. The Baeks later filed a federal Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964(c), suit alleging fraud. The state court granted NCB summary judgment. The federal district court dismissed, citing res judicata. The Seventh Circuit affirmed. There has been a final judgment on the merits with the same parties, in state court, on claims arising from a single group of operative facts. View "Baek v. Clausen" on Justia Law

CNH, which manufactures “New Holland” brand farming and construction machinery, hired the real estate services firm, JLL, to manage a corporate re-branding program that involved the replacement of signage more than 1,400 North American dealerships. The vinyl used in the new signs was defective, necessitating the re-manufacture and replacement of virtually all of the installed signs. After the vinyl manufacturer repudiated its commitment to replace, at its own cost, the defective signs, CNH sued, alleging that JLL had failed to perform adequate quality control in the manufacturing of the signs, failed to negotiate the best possible warranty on the vinyl and the signs, and failed to properly document and manage the warranties. The district court found that CNH had suffered damages of $5,482,735 but reduced JLL’s liability to $3,026.361.60—the sum CNH paid to JLL in project management fees—plus such other amounts JLL might recover from third parties (the vinyl manufacturer and the sign fabricators) in the future. The Seventh Circuit affirmed. The district court’s findings were supported by the evidence and make clear that JLL’s own failures with respect to quality control in the manufacturing process and with respect to the vinyl warranty made the defective-sign problem much worse for CNH than it otherwise would have been. View "CNH Industrial America LLC v. Jones Lang LaSalle Americas, Inc." on Justia Law

CNH, which manufactures “New Holland” brand farming and construction machinery, hired the real estate services firm, JLL, to manage a corporate re-branding program that involved the replacement of signage more than 1,400 North American dealerships. The vinyl used in the new signs was defective, necessitating the re-manufacture and replacement of virtually all of the installed signs. After the vinyl manufacturer repudiated its commitment to replace, at its own cost, the defective signs, CNH sued, alleging that JLL had failed to perform adequate quality control in the manufacturing of the signs, failed to negotiate the best possible warranty on the vinyl and the signs, and failed to properly document and manage the warranties. The district court found that CNH had suffered damages of $5,482,735 but reduced JLL’s liability to $3,026.361.60—the sum CNH paid to JLL in project management fees—plus such other amounts JLL might recover from third parties (the vinyl manufacturer and the sign fabricators) in the future. The Seventh Circuit affirmed. The district court’s findings were supported by the evidence and make clear that JLL’s own failures with respect to quality control in the manufacturing process and with respect to the vinyl warranty made the defective-sign problem much worse for CNH than it otherwise would have been. View "CNH Industrial America LLC v. Jones Lang LaSalle Americas, Inc." on Justia Law

A father and son left employment at Engineered Abrasives to start a competing business, American Machine, in 2011. Several lawsuits followed. In 2015, Engineered Abrasives won a default judgment against American Machine and its principals for $714,814.04 and injunctive relief for stealing trade secrets and infringing trademarks. Five months later, Engineered Abrasives sued again; the parties reached a settlement. American Machine’s insurer would pay $75,000 to Engineered Abrasives, and a permanent injunction would be entered against slander by American Machine or its principals with a $250,000 liquidated damages clause accompanying the injunction. American Machine returned to court in the earlier case under FRCP 60(b), reporting that the settlement covered the earlier trademark judgment as well as the new case; Engineered Abrasives contended that it had only settled the new case. The written settlement did not mention a global settlement. The district court and Seventh Circuit agreed that the settlement’s release clause is unambiguous and releases all claims and liabilities between the parties, including the earlier default judgment. Under Illinois law, a court deciding whether the parties intended to include other claims in a release cannot consider extrinsic evidence unless the contract is ambiguous. View "Engineered Abrasives, Inc. v. American Machine Products & Service, Inc." on Justia Law

While Beebe and Lucas Roh were at Starbucks on Rush Street in Chicago, with their sons, five-year-old Alexander and three-year-old Marcus, a wood and metal stanchion, part of a grouping intended to direct customers, fell onto Marcus’s finger, which had to be amputated that same day. Beebe sued. The district court granted summary judgment in favor of Starbucks. The Seventh Circuit affirmed. Any duty Starbucks may have owed Marcus was abrogated by his parents’ presence with him in Starbucks at the time of the accident. The boys were playing on the rope and stanchions. HIs parents had the duty to protect them from the obvious danger posed by playing on the unsecured stanchions, even if the parents were unable to foresee the particular injury that resulted. View "Roh v. Starbucks Corp." on Justia Law

Meyer, a disbarred lawyer, owns JHM, which installed and maintained laundry machines in apartment buildings; Dolphin, which sold commercial laundry equipment to JHM and others; and JH Meyer, which operated a laundry facility. In 2012-2013, Firestone financed JHM’s business with loans totaling about $250,000. Because JHM obtained its equipment from Dolphin, the loans actually financed Dolphin’s purchases from the manufacturer. Firestone retained a security interest in JHM’s assets. Dolphin, JH Meyer, and Meyer guaranteed JHM’s loan obligations. In 2013 Firestone sued JHM for default and sued Meyer, Dolphin, and JH Meyer under the guarantees. The defendants raised the affirmative defense and counterclaim of promissory estoppel, asserting that after Firestone issued JHM two loans, Firestone’s Vice President McAllister told Meyer that Firestone would set up a $500,000 line of credit for JHM and that, until the line of credit was established, Firestone would finance “any” equipment that JHM needed on “identical terms” to the first two loans. Firestone subsequently issued the third loan. After McAllister left Firestone, Firestone’s CEO approved the final loan. The defendants assert that Firestone’s refusal to issue further loans harmed them. The Seventh Circuit affirmed summary judgment in favor of Firestone. Meyer’s allegations were implausible because no financial firm would commit orally to loaning substantial sums to a startup. Meyer conceded that he “made no payments” to Firestone. A reasonable jury could not conclude that Meyer has satisfied any of the elements of promissory estoppel. View "Firestone Financial Corp. v. Meyer" on Justia Law

A “pickle line” processes hot rolled steel coil through acid tanks to remove impurities. In 2006, Toll purchased a used pickle line, in need of repair. Kastalon had previously serviced the machine. In 2008, Kastalon agreed to move and store the machine, at no cost, until Toll could order reconditioning. Both parties believed that Toll would move the equipment within months; they did not discuss a specific timeframe. For two years, Kastalon stored the equipment indoors. Toll negotiated with various companies, to run or sell the equipment, but was not in communication with Kastalon. Kastalon eventually greased and wrapped the equipment before moving it to outside storage under tarps. Toll employees with whom Kastalon had communicated were laid off. Kastalon thought that Toll had gone out of business and that the equipment had been abandoned. Kastalon had the equipment scrapped, without inspecting it, and received $6,380.80. In June 2011, Toll requested a price for reconditioning and learned that they had been scrapped. Toll obtained quotes for replacement: the lowest was about $416,655. Toll sued. The Seventh Circuit reversed, in part, summary judgment entered in favor of Kastalon. A reasonable jury could conclude that Toll’s prolonged silence, alone, did not constitute unambiguous evidence of intent to abandon. The court did not consider whether Kastalon had an extra-contractual duty not to dispose of the equipment or Kastalon’s evidence that the loss was not due to Kastalon’s failure to exercise reasonable care. Affirming rejection of a contract claim, the court stated the parties’ oral agreement was not sufficiently definite as to duration. View "Toll Processing Services, LLC v. Kastalon, Inc." on Justia Law

Verfuerth, the founder and former CEO of Orion, had disputes with Orion’s board of directors, involving outside counsel's billing practices, potential patent infringement, potential conflicts of interests involving a board member, violations of internal company policy, such as consumption of alcohol at an informal meeting, the board’s handling of a defamation suit by a former employee, and the fact that the chairman of Orion’s audit committee allowed his CPA license to expire. The board ignored his advice to disclose those matters to stockholders. Orion removed Verfuerth as CEO, citing high rates of management turnover. The board conditionally offered Verfuerth emeritus status. Verfeurth declined. The parties were unable to negotiate his severance package. The board fired him for cause, citing misappropriation of company funds in connection with his divorce, disparagement of the new CEO, and attempts to form a dissident shareholder group. Verfuerth filed suit, claiming that his complaints to the board were “whistleblowing” and that, by firing him, Orion violated the Sarbanes‐Oxley Act, 18 U.S.C. 1514A(a), and the Dodd‐Frank Act, 15 U.S.C. 78u‐6.e. The Seventh Circuit affirmed summary judgment for Orion. An executive who advises board members to disclose a fact that the board already knows about has not “provide[d] information” about fraud.. Nothing in any federal statute prevents a company from firing its executives over differences of opinion. View "Verfuerth v. Orion Energy Systems, Inc." on Justia Law