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

Scott alleged that Westlake repeatedly called her cell phone using an automated dialer in violation of the Telephone Consumer Protection Act, 47 U.S.C. 227, and sought, for herself and a putative class, statutory damages of $500 for each negligent violation and $1500 for each intentional violation, injunctive relief, and attorney fees. Before she moved for class certification, Westlake sent Scott’s attorney an offer to pay Scott $1500 (the statutory maximum) “for each and every dialer-generated telephone call made to plaintiff.” Westlake agreed to pay costs and to entry of an injunction. The message concluded by warning Scott that, in Westlake’s opinion, its offer rendered her case moot. The next day, Scott moved for class certification and declined the offer, stating that there was “a significant controversy” concerning how many dialer-generated calls Westlake had placed to her phone, so the offer was inadequate and did not render her case moot. The district court dismissed, finding that Westlake had offered Scott everything she sought, depriving the court of subject matter jurisdiction, but retained jurisdiction to enforce compliance with the offer and directed the parties to conduct discovery to determine how many calls Scott received from Westlake. The Seventh Circuit reversed, finding that the case is not moot. View "Scott v. Westlake Servs., LLC" on Justia Law

Beginning in 1998, consumer class actions were filed against Trans Union alleging violation of the Fair Credit Reporting Act, 15 U.S.C. 1681, by selling consumer information to target marketers and credit and insurance companies. The court approved a settlement. Trans Union agreed to give all class members “basic” credit monitoring services. Class members could also either claim cash from a $75 million fund or claim “enhanced” in-kind relief consisting of additional financial services. Trans Union was to provide $35 million worth of enhanced relief. The class was estimated at 190 million people. The Act authorizes damages of between $100 and $1000 per consumer for willful violations, so Trans Union faced theoretically possible liability of $190 billion. To persuade the court to approve the settlement, the parties agreed to an unusual provision that preserved substantive claims after settlement. Instead of releasing their claims, class members who did not get cash or enhanced in-kind relief retained the right to bring individual claims. Trans Union also partially waived the limitations period. The settlement authorized reimbursements from the fund to Trans Union itself “equal to any amounts paid to satisfy settlements or judgments arising from Post-Settlement Claims,” not including defense costs. There have been more PSCs than expected, depleting the fund. In a second appeal, the Seventh Circuit affirmed the orders authorizing disbursement of the remainder of the fund. View "Wheelahan v. Trans Union LLC" on Justia Law

About 150 property owners in a village near the Mississippi River claim that defendants’ refinery leaked benzene and other contaminants into the groundwater. They sued, alleging nuisance and related torts. The district court certified the class. The Seventh Circuit reversed. The court first rejected an argument that most class members had suffered no injury. How many class members have a valid claim is determined after certification. Predominance of issues common to all class members, like other certification requirements, goes to the efficiency of a class action as an alternative to individual suits. In this case, the alleged contamination occurred over a 90‐year period and involved different levels of contamination, caused by different polluters. Not every class member has experienced the same diminution in property value even if everyone had the same level of contamination. Plaintiff’s hydrogeologist, intended to measure contamination by the benzene levels in the groundwater beneath the plaintiffs’ properties, even though their water does not come from groundwater, but from an uncontaminated aquifer. It cannot be assumed that a decline in the value of property in the village is the result of proximity to a refinery. The district judge did not explore any of these issues, but treated predominance as a pleading requirement. View "Shell Oil Co. v. Parko" on Justia Law

The district court certified a class of waiters, bartenders, and other tipped employees at defendant restaurants. Under the Fair Labor Standards Act, 29 U.S.C. 203(d), and the Illinois Minimum Wage Law their employer is not required to pay tipped employees full federal or state minimum wage. If tipped employees also perform unrelated non‐tipped duties such as washing dishes, preparing food, or cleaning bathrooms, they are entitled to full minimum wage for time spent at that work. After the court amended the class definition to employees “who worked as tipped employees earning a sub‐minimum, tip credit wage rate,” the last remaining defendant sought permission to appeal for a second time. The Seventh Circuit denied the petition. While the definition is overinclusive because it says nothing about untipped work, the defendant did not challenge the definition. The change to the definition since denial of the previous petition does not open the door to a challenge to the initial grant of class certification on grounds derived from developments since that grant, including rulings by the district court. To justify a second appeal from grant or denial of class certification the order appealed from must have materially altered a previous order granting or denying certification. View "Smith v. Driver" on Justia Law

Plaintiffs filed a class action suit against B&B and others, alleging violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962. The alleged scheme involved "Population Equivalents" (PEs), specified quantities of sewage that a house or other building was estimated to dump into the local sewage system. The complaint alleged that B&B had improperly taken control of the Wasco Sanitary District and used that control to divert to itself permit fees that should have gone to the district to finance an expansion of its sewage system. The district court dismissed the claim for want of RICO standing because plaintiffs could not demonstrate an injury to their business or property. On appeal, defendants challenged the district court's denial of their application for an award of attorneys' fees under Fed. R. Civ. P. 11(b)(1) and (2). The court concluded that plaintiffs' suit, while meritless, was not frivolous. Accordingly, the court affirmed the judgment of the district court. View "Fiala, et al. v. B&B Enterprises, et al." on Justia Law

In 1994, Norem purchased a “Flexible Premium Variable Life Insurance Policy” from Lincoln Benefit. With variable life insurance, part of the premium is allocated to the insurer’s investment funds, called subaccounts. Policyholders may move their investments within the subaccounts and the death benefit, which is guaranteed not to fall below a certain amount. With variable universal life, the policyholder may easily invest and alter insurance coverage. The policy is comprised of the policy value, which represents the investment component, and its net amount at risk, which represents the insurance component. Norem purchased his policy because he wanted both life insurance and an investment vehicle for the proceeds from the sale of his ownership of a medical business. The policy has a “cost of insurance” (COI) charge deducted monthly from the policy. The policy explains how the COI rate is calculated. Norem filed a putative class action on behalf of himself and other similarly situated policyholders, claiming that Lincoln Benefit breached the terms of its policies in its method of calculating the COI rate.Before deciding on class certification, the district court granted summary judgment to Lincoln Benefit, concluding that its calculation of COI rates did not breach the contract. The Seventh Circuit affirmed. View "Norem v. Lincoln Benefit Life Co." on Justia Law

MERSCORP operates an online membership organization that records, trades, and forecloses loans on behalf of many lenders. Banks can register their mortgages on the system and assign the mortgages to MERSCORP, which then records them in the counties in which the mortgaged properties are located. MERSCORP has no financial interest in the mortgages. The underlying debts can be repeatedly assigned without transfers being recorded in a public‐records office, facilitating successive interbank sales of mortgages, often to create mortgage‐backed securities. Union County, Illinois filed a class action suit on behalf of all Illinois counties against MERSCORP and banks that do business with MERSCORP, claiming that MERSCORP is violating a statute that requires every Illinois mortgage be recorded; 765 ILCS 5/28 provides that deeds, mortgages, powers of attorney, and other instruments relating to or affecting the title to real estate “shall be recorded in the county in which such real estate is situated.” The district court dismissed, holding that Illinois law does not require that mortgages be recorded, without deciding whether to certify it as a class action. The Seventh Circuit affirmed, declining to certify the issue to the Illinois Supreme Court. View "Union Countyv. Merscorp, Inc." on Justia Law

In a proposed class action, Schilke alleged that Wachovia, her lender and holder of a mortgage on her home, fraudulently placed insurance on her property when her homeowner’s policy lapsed. Wachovia secured the replacement coverage from ASI and charged her for it, as specifically permitted by her loan agreement. The premium was more than twice what she had paid for her own policy and included a commission to Wachovia’s insurance-agency affiliate, also as permitted under the loan agreement. Schilke calls the commission a “kickback” and asserted statutory and common-law claims, most sounding in fraud or contract. The district court dismissed based on federal preemption and the filed-rate doctrine. The Seventh Circuit affirmed. The loan agreement and related disclosures and notices conclusively show that there was no deception at work. Wachovia fully disclosed that lender-placed insurance could be significantly more expensive than her own policy and could include a fee or other compensation to the bank and its insurance-agency affiliate. Maintaining property insurance was Schilke’s contractual obligation and she failed to fulfill it. . View "Schilke v. Am. Sec. Ins. Co." on Justia Law

Waupaca manufactures iron castings and provides its foundry employees with personal protective equipment (PPE), including hard hats, safety glasses, ear protection, steel-toed footwear, and a fire-retardant uniform. Waupaca requires these employees to wear PPE while working; failure to comply can result in discipline. Waupaca provides locker rooms with showers. Typically, foundry workers finish their shift, clock out and proceed to locker rooms, where they remove their PPE, shower, and change into street clothes. Because of hazards associated with chemicals and dust to which some workers are exposed, Waupaca recommends that employees shower and remove their PPE on-site. Not all employees do so. Employees, representing a class of more than 400 (an opt-in class, 29 .S.C. 216(b)) alleged that Waupaca violated the Fair Labor Standards Act, 29 U.S.C. 201, by not paying for time spent showering and changing clothes at work. The district court granted Waupaca summary judgment, ruling that those activities were not compensable under the FLSA because the Occupational Safety and Health Administration had not mandated that foundry workers shower and change clothes on-site. The Seventh Circuit reversed, reasoning that OSHA’s decision not to promulgate a rule requiring such activities does not bar a party from presenting evidence as to compensability under the FLSA and that factual disputes otherwise precluded summary judgment.View "DeKeyser v. Thyssenkrupp Waupaca, Inc." on Justia Law

Addison filed a class action, alleging that Domino had sent thousands of “junk faxes” in violation of the Telephone Consumer Protection Act, 47 U.S.C. 227, and the Illinois Consumer Fraud Act, and had committed the tort of conversion. Domino’s insurers refused to defend. Domino negotiated a settlement to protect its own interests; Addison and Domino agreed that the state court should certify a class and enter a judgment of $18 million. Addison agreed that the class would not recover any money from Domino, but that Domino would assign to Addison, as class representative and for the class, whatever claims Domino might have against its insurers. The state court approved the settlement. Addison sought a state court declaratory judgment holding Hartford liable for the judgment. Hartford removed the case to federal court. Addison dismissed the case voluntarily and filed another state court suit, naming Addison as the only plaintiff. Hartford again removed the case under the Class Action Fairness Act, 28 U.S.C. 1453. The district court granted remand, finding that the suit did not fit the CAFA definition. Hartford argued that under the assignment in the underlying settlement, Addison had standing only as a class representative. The Seventh Circuit agreed, reversed, and remanded to state court. View "Addison Automatics, Inc. v. Hartford Cas. Ins. Co." on Justia Law