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

Illinois residents Matlin and Waring (Plaintiffs) co-founded Gray Matter and developed products. In 1999, with the company facing failure, Plaintiffs executed a Withdrawal Agreement, assigning Plaintiffs' intellectual property and patent rights to Gray Matter, but entitling them to royalties on sales. In the following years, Plaintiffs frequently brought Gray Matter to arbitration to enforce their royalty rights. In 2002, Gray Matter filed an assignment of the intellectual property rights with the U.S. Patent and Trademark Office, allegedly without Plaintiff's knowledge, by forging Waring's signature. Gray Matter then sold assets to Swimways, including patent rights. A 2014 binding arbitration determined that Gray Matter did not assign the Withdrawal Agreement to Swimways and that Plaintiffs were owed no further royalties. In 2016, Spin Master acquired Swimways and its intellectual property rights. Plaintiffs sued. Swimways is a Virginia corporation with its principal place of business in Virginia Beach. The Spin Master defendants are Canadian companies with their principal places of business in Toronto. None of the defendants are registered to conduct business in, have employees in, or have registered agents for service of process in Illinois. In response to defendants’ motion to dismiss for lack of personal jurisdiction, Plaintiffs' counsel submitted an online purchase receipt from Swimways’ website and a declaration that he purchased and received a patented product in Illinois. The court dismissed, reasoning that Illinois law governed whether it had personal jurisdiction over the defendants. The Seventh Circuit affirmed, holding that the defendants had insufficient contacts with Illinois to establish either general or specific personal jurisdiction in that state. View "Matlin v. Spin Master Corp." on Justia Law

In 2005, Joliet proposed to condemn and raze New West's apartments as a public nuisance. By 2017 the district court held that Joliet is entitled to condemn the buildings, set just compensation at $15 million, and held that New West cannot obtain relief against the city under federal housing discrimination statutes. The Seventh Circuit affirmed. The parties then disputed the status of a reserve fund, about $2.8 million, that the Department of Housing and Urban Development (HUD) held for the federally-subsidized apartment complex. New West argued that the money came from rents to which it was entitled by contract with HUD and that, once it no longer had responsibility for the buildings, HUD must write it a check. The district court recognized that the fund was not part of the condemnation or housing-discrimination suits, but nonetheless rejected New West’s claim and concluded that the fund should accompany the buildings. The Seventh Circuit vacated. HUD controls the reserve fund and is the only entity that can use or disburse it; HUD was dismissed as a party in 2013. The court lacked authority to order HUD to do anything. New West needs to file a new action, seeking an order that the federal government pay it a sum of money, in the Court of Federal Claims, under the Tucker Act or in the district court. “In either forum, the judge should start from scratch, disregarding the missteps in the condemnation suit.” View "Joliet v. New West, L.P." on Justia Law

West claimed that the addition of a fiber optic communications wire to a utilities transmission tower on his property exceeded the scope of the easement that authorized the tower. West sued both Charter Communications, whose subsidiary installed the wire, and Louisville Gas and Electric Company, which owns the tower and is a party to the easement. The district court dismissed the claims against Charter, concluding that the addition of Charter’s communications wire to the tower is compatible with the scope and purpose of the easement and consequently does not violate the terms of the easement agreement nor does it amount to an unconstitutional taking of West’s property. Wishing to appeal that ruling, West entered into an agreement providing that he would voluntarily dismiss his claims against Louisville while reserving the right to revive them if the Seventh Circuit reversed the dismissal of the claims against Charter. The Seventh Circuit dismissed the appeal for lack of jurisdiction. The conditional dismissal of West’s claims against Louisville rendered the judgment non-final. West could have asked the court to enter a final judgment as to the claims against Charter under Rule 54(b) or could have sought permission to pursue an interlocutory appeal under 28 U.S.C. 1292(b). View "West v. Charter Communications, Inc." on Justia Law

Plaintiffs operate California hardware businesses. They sued under the Telephone Consumer Protection Act, 47 U.S.C. 227, claiming that defendants sent them unsolicited fax advertisements. The district judge dismissed, believing that defendants had substantially met the requirements of a section 227(b)(1)(C) defense and had not established injury. The Seventh Circuit vacated, stating that the district court treated a defense as if it were an element of subject-matter jurisdiction. A plaintiff’s failure on the merits does not divest a federal court of jurisdiction. When subject-matter jurisdiction is at stake, a district judge may resolve factual disputes and make any findings necessary to determine the court’s adjudicatory competence. If the court has jurisdiction, it must take all plausible allegations in favor of the complainant when handling a motion to dismiss. Plaintiffs alleged that they received unsolicited fax ads, causing injury: printing the faxes used costly paper and toner and the need to read the incoming faxes diverted employees' time. These are concrete, not abstract losses. The injuries may have been slight, but an “identifiable trifle” suffices. .Plaintiffs’ injuries may be redressed by an award of damages. Whether it is good public policy to use cumbersome and costly litigation to resolve disputes about annoying fax ads is for Congress to decide. A complaint need not anticipate defenses. View "Craftwood II, Inc. v. Generac Power Systems, Inc." on Justia Law

A district court ordered Jackson National Life to pay about $191,000 on a policy of life insurance. The court added that the insurer had litigated unreasonably and ordered it to reimburse Cooke’s legal fees under 215 ILCS 5/155. The insurer paid the death benefit and appealed the attorneys’ fees. Because the district court had not specified the amount, the Seventh Circuit dismissed the appeal as premature. The district court then awarded $42,835 plus interest. The district judge concluded that there had been a good faith coverage dispute, so the insurer could not be penalized for insisting that a judge resolve the parties’ dispute, but added, “Jackson’s behavior in this litigation has been much less reasonable.” The Seventh Circuit reversed, first rejecting Cooke’s appeal on the merits award. Cooke did not appeal within 30 days of the order specifying the amount payable on the policy, and a later award of fees did not reopen that subject. The court erred in applying Illinois state law to the conduct of litigation in federal court and Jackson’s litigation conduct did not violate the Federal Rules of Civil Procedure. View "Cooke v. Jackson National Life Insurance Co." on Justia Law

Surviving Mustang fighter planes are collectors’ items. In 1965 Vartanian bought a Mustang, serial number 44-74543 and kept it in a Fulton County New York hangar. In 1985 Vartanian's representative could not find it. Vartanian suspected Martin, who had promised to restore the plane. Vartanian’s lawyer unsuccessfully demanded that Martin return the plane. Vartanian complained to the FAA, the FBI, and local police. Martin denied taking Vartanian’s plane. Martin later registered with the FAA a Mustang, serial number 44-63655. Martin asserts that it was cobbled together using parts from a plane that crashed in Nicaragua plus components acquired from several sources. In 1998 Martin sold 44-63655 to Greenhill. Vartanian learned about this transaction in 2002 or 2003 by reading a magazine article that incorrectly identified it as 44-74543. Vartanian hired another lawyer, who died before filing suit. Vartanian did not follow up until after learning in 2013 that there were irregularities in the serial numbers of several of Martin’s planes. Vartanian demanded that Greenhill return the plane. Greenhill sought a declaratory judgment of ownership. Vartanian filed counterclaims. The Seventh Circuit affirmed that the counterclaims were untimely and that the aircraft is free of Vartanian's claim. Although federal law provides the registration system, state law supplies the rules for determining ownership, 49 U.S.C. 44108(c)(1). For conversion claims, Illinois law establishes a five-year limitations period that starts when the injured party “knows or reasonably should know” of the injury and its cause. Vartanian knew in 1985 that his Mustang had vanished; he suspected Martin immediately and knew long ago what serial number Martin was using. Even if Illinois would not apply a statute of limitations, the doctrine of laches would remain. View "Greenhill v. Vartanian" on Justia Law

Plaintiffs purchased land near a former GE manufacturing plant that had operated in Morrison, Illinois for 60 years. The plant leached toxic chemicals that seeped into the groundwater. The Illinois Environmental Protection Agency filed suit under state law against GE in 2004 and has been working with the company since then to investigate and develop a plan to address the contamination. In 2013, plaintiffs filed suit under the citizen suit provision of the Resource Conservation and Recovery Act, 42 U.S.C. 6901, seeking a mandatory injunction ordering GE to conduct additional investigation into the scope of the contamination and ordering the company to remove the contamination. The district court found the company liable for the contamination on summary judgment but denied injunctive relief because, despite the many opportunities, plaintiffs did not offer evidence establishing a need for injunctive relief beyond what the company had already done in the state action. The Seventh Circuit affirmed. The district court had the discretion to award injunctive relief under the RCRA but was not required to order relief after a finding of liability. Plaintiffs did not carry their burden to establish mandatory injunctive relief was necessary under the RCRA. View "Conway v. General Electric Co." on Justia Law

Anderson and Kaiser jointly borrowed about $700,000 from the Bank, secured by a mortgage. They did not pay; the Bank filed a foreclosure action in state court. That action was put on hold when Anderson commenced a bankruptcy proceeding. The Bank obtained relief from the automatic stay, 11 U.S.C. 362, to proceed with the foreclosure litigation. In state court, the Bank obtained approval to put the property up for auction. The sale was confirmed. The Bank then obtained a state court deficiency judgment against Kaiser; it did not appeal the omission of a deficiency judgment against Anderson. The state litigation ended in 2015. In the bankruptcy court, the Bank made a claim against Anderson for the same $650,000 shortfall that the state judge had awarded against Kaiser. On interlocutory appeal, the district court held that the absence of a deficiency judgment against Anderson in the state case blocks any further proceedings against him related to this loan. The Seventh Circuit affirmed, citing claim preclusion. The court rejected the Bank’s argument that the automatic bankruptcy stay deprived the state court of “jurisdiction” to make any decision at all, except to the extent allowed by the bankruptcy judge. View "BMO Harris Bank N.A. v. Anderson" on Justia Law

Telecommunications providers Peerless and Verizon entered into an Agreement, providing for lowered rates for certain switching services. If a contractual rate did not apply, Peerless billed Verizon its tariff rates, as filed with the FCC and state public utility commissions. The relationship failed. Verizon withheld payments. Peerless sued Verizon, alleging 12 counts, including breach of the Agreement and breach of tariffs. Verizon alleged that Peerless was an access stimulator and failed to reduce its rates as required by the FCC and that Peerless was billing certain services at inappropriate rates. The district court dismissed four counts and granted Verizon summary judgment on Count X. The district court referred the access stimulation and other counterclaim issues to the FCC under the primary-jurisdiction doctrine and stayed Verizon’s counterclaims. It nonetheless granted Peerless summary judgment on its breach-of-tariff claims, reasoning that Verizon’s defense could be adjudicated separately from the collection action; entered a partial final judgment on the breach-of-tariff claims pursuant to Federal Rule of Civil Procedure 54(b), finding that it would be “unjust” to make Peerless wait to collect the unpaid bills; and granted Rule 54(b) partial final judgment on claims regarding the breach of the Agreement, reasoning that Verizon had not disputed the breach, only the amount owed. The Seventh Circuit vacated in part. Rule 54(b) partial final judgment was improper, given the significant factual overlap with pending claims. A genuine issue of fact persists with respec breach-of-contract claims. View "Peerless Network, Inc. v. MCI Communications Services, Inc." on Justia Law

The plaintiffs, used car dealerships, were solicited by the defendant to enter into a “Demand Promissory Note and Security Agreement.” The defendant would issue a line of credit for the plaintiffs to access in purchasing used vehicles at automobile auctions. The plaintiffs claim defendant did not pay the auction house at the time that possession was delivered put paid only after it received the title to the vehicles purchased, which could take several weeks, but charged interest from the date of the initial purchase. The plaintiffs filed suit and sought class certification to sue on behalf of all other dealers who were subject to the same Agreement. The district court granted Rule 23(b)(3) class certification as to the breach of contract and substantive RICO claims. Weeks later, defendant filed a Motion to Reconsider, arguing that the plaintiffs had asserted in summary judgment briefing that the Agreements are ambiguous and that under such a theory courts must resort to extrinsic evidence on a plaintiff-by-plaintiff basis to determine intent. The court rescinded class certification. The Seventh Circuit vacated. Neither the categorization of the contract as ambiguous nor the prospect of extrinsic evidence necessarily imperils class status. The Agreement at issue is a standard form contract; there was no claim that its language has different meanings for different signatories. View "Red Barn Motors, Inc. v. NextGear Capital, Inc." on Justia Law