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

Representing a class of truck owner-operators, Walker sued Trailer Transit, a broker of trucking services, for breach of contract in Indiana state court. Trailer Transit removed the suit to federal court under the Class Action Fairness Act (CAFA), section 1332(d)(2). Walker argued that notice of removal was untimely because it was filed more than 30 days after Trailer Transit “first ascertained” that the class’s theory of damages could result in recovery of more than $5 million. The district court denied a motion to remand. The Seventh Circuit affirmed. The earliest possible trigger for removal was Walker’s response to Trailer Transit’s requests for admission seeking clarification of the theory of damages. Even that response did not affirmatively specify a damages figure under the class’s new theory, so the removal clock never actually started to run View "Walker v. Trailer Transit, Inc." on Justia Law

Buyers of Sears washing machines complained of a defect that causes mold, others complained of a control unit defect that stops the machine inopportunely. The district court denied certification of the class complaining about mold and granted certification of the class complaining about the control unit defect. The Seventh Circuit reversed with respect to the mold claims. The Supreme Court remanded for reconsideration in light of Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013). The Seventh Circuit reinstated its prior order, stating that there was a single, central, common issue of liability: whether the washing machine was defective. Complications that arise from the design changes and from separate state warranty laws can be handled by creation of subclasses. View "Butlerl v. Sears, Roebuck & Co." on Justia Law

A class of Motorola investors claimed that, during 2006, the firm made false statements to disguise its inability to deliver a competitive mobile phone that could employ 3G protocols. When the problem became public, the price of Motorola’s stock declined. The parties settled for $200 million. None of the class members contends that the amount is inadequate. Two objected to approval of counsel’s proposal that it receive 27.5 percent of the fund. One objector protested almost a month after the deadline and failed to file a claim to his share of the recovery. The Seventh Circuit dismissed his appeal, stating that he lacks any interest in the amount of fees, since he would not receive a penny from the fund even if counsel’s share were reduced to zero. The other objector claimed that fee schedules should be set at the outset, preferably by an auction in which law firms compete to represent the class. Noting the problems inherent in such a system, the court held that the district judge did not abuse her discretion in approving the award. View "Liles v. Motorola Solutions, Inc." on Justia Law

Participants in a cash balance defined benefit pension plan filed a purported class action, alleging that the plan violated ERISA, 29 U.S.C. 1132(a)(1)(B), and seeking recovery of benefits denied the participants as a consequence of the violation. The district judge granted summary judgment in favor of sub‐class A, which challenged the projection rate used by the defendant, and subclass B, which challenged the defendant’s handling of the pre‐mortality retirement discount. A cash balance plan is a “notional” retirement account because individual accounts are not funded; every year the employer adds a specified percentage of the employee’s salary plus interest at a specified rate on the amount in each individual’s notional account. The challenged projection rate and discount rate relate to the entitlement of employees who leave before reaching retirement age. The Seventh Circuit reversed and remanded with respect to the statute of limitations for class members who took lump sum benefits more than six years before the suit was filed and also with respect to the adequacy of the class representatives, but otherwise affirmed. View "Ruppert v. Alliant Energy Cash Balance Pension Plan" on Justia Law

Plaintiffs claim that Lockheed breached its fiduciary duty to its retirement savings plan, under the Employee Retirement Income Security Act, 29 U.S.C. 1132(a)(2). The Plan is a defined-contribution plan, (401(k)); employees direct part of their earnings to a tax-deferred savings account. Participants may allocate funds as they choose. Among the investment options Lockheed offered was a “stable-value fund” (SVF). SVFs typically invest in a mix of short- and intermediate-term securities, such as Treasury securities, corporate bonds, and mortgage-backed securities. Holding longer-term instruments, SVFs generally outperform money market funds. For stability, SVFs are provided through “wrap” contracts with banks or insurance companies that guarantee the fund’s principal and shield it from interest-rate volatility. Plaintiffs allege that the Lockheed SVF was heavily invested in short-term money market investments, with a low rate of return that did “not beat inflation by a sufficient margin to provide a meaningful retirement asset.” The district court granted Lockheed summary judgment with respect to some claims. The SVF claim survived. The district court initially certified two classes under FRCP 23(b)(1)(A). On remand, the court declined to certify further narrowed classes. The Seventh Circuit reversed, reasoning that the plaintiffs carefully limited the class to plan participants who invested in the SVF during the class period and employed reasonable means to exclude from the class persons who did not experience injury. View "Abbott v. Lockheed Martin Corp." on Justia Law

Plaintiffs filed a class action on behalf of stock purchasers, alleging that Boeing committed securities fraud under the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), and SEC Rule 10b-5. The suit related to statements concerning the new 787-8 Dreamliner, which had not yet flown, and did not specify a damages figure. At argument the plaintiffs’ lawyer indicated that the class was seeking hundreds of millions of dollars. The district court dismissed the suit under Rule 12(b)(6) before deciding whether to certify a class. Plaintiffs appealed the dismissal; Boeing cross-appealed denial of sanctions on the plaintiffs’ lawyers for violating Fed. R. Civ. P. 11. The Seventh Circuit affirmed dismissal with prejudice, but remanded for consideration under 15 U.S.C. 78u-4(c)(1), (2), of Rule 11 sanctions on the plaintiffs’ lawyers. No one who made optimistic public statements about the timing of the first flight knew that their optimism was unfounded; there is no securities fraud by hindsight. Plaintiffs’ lawyers had made confident assurances in their complaints about a confidential source, their only barrier to dismissal of their suit, even though none of them had spoken to the source and their investigator had acknowledged that she could not verify what he had told her. View "City of Livonia Emps' Ret. Sys. v. Boeing Co." on Justia Law

Companies underwriting workers’ compensation insurance participate in a reinsurance pool administered by the National Workers Compensation Reinsurance Association. Insurers share in the pool’s profit or loss according to the volume of business they underwrite. When the pool is profitable, it is beneficial to have a larger book of business; when the pool loses money, a smaller book means that the underwriter needs to contribute less toward the losses. The class contends that AIG underreported the size of its business in losing years, causing the pool’s other members to bear a disproportionate share of the losses and sought$3.1 billion. Some of the insurers had independent claims against AIG. AIG advanced its own claims against Liberty Mutual. The district judge approved a settlement. Liberty Mutual appealed, arguing that its share would not compensate it adequately for its stand-alone claims against AIG and that the conflicts of interest within the reinsurance pool meant that the case never should have been certified as a class. After argument, Liberty Mutual settled with AIG. The Seventh Circuit dismissed the appeal, holding that the settlement does not jeopardize the interests of the unrepresented class members. View "Am. Int'l Grp. v. Liberty Mut. Ins. Co" on Justia Law

Plaintiff left his senior position in 1996, having participated in the Retirement Income Security Plan for Employees (RISPE), a tax-qualified defined benefits plan that guarantees specified retirement benefits, and in the Excess Benefit Plan, a defined unfunded benefits pension plan under which benefits are paid directly by the employer rather than by a trust funded by the employer. Both plans allowed him to choose between an annuity and an actuarial equivalent lump sum distribution. In 2009 he received his RISPE lump sum, $325,054.28 and his Excess Plan lump sum, $218,726.38. The discount rate used to calculate lump sum RISPE benefits was a “segment rate,” 26 U.S.C. 417(e)(3)(C), of 5.24 percent. The discount rate applied to the Excess Plan lump sum was 7.5 percent. The district court rejected his ERISA claim that the discount rate required by both plans was a rate computed by the Pension Benefit Guaranty Corporation on the basis of annuity premiums charged by insurance companies. The Seventh Circuit affirmed. With respect to the RISPE, the accrued benefit, which cannot be reduced retroactively, is the annuity; the lump sum is not the accrued benefit and can be reduced retroactively. The court rejected a conflict-of-interest argument concerning calculation of the Excess Benefit Plan discount rate. View "Dennison v. MONY Life Ret. Income Sec. Plan for Emps." on Justia Law

The Chicago-area law firms (Anderson) represent plaintiffs in class action lawsuits under the Telephone Consumer Protection Act-Junk Fax Prevention Act, which authorizes $500 in damages for faxing an unsolicited advertisement, 47 U.S.C. 227(b)(1)(C), (b)(3). This award triples upon a showing of willfulness, and each transmission is a separate violation. Advertisers would pay a fee, and B2B would send an ad to hundreds of fax numbers without obtaining permission from the recipients. When Anderson learned that defendants in four cases under the Act had contracted with B2B, B2B records became the focus of discovery. Despite obtaining all information necessary to certify classes in the four cases, Anderson continued pushing for B2B, and, at a deposition at which B2B was represented by Ruben, obtained the names of other B2B clients, and sent solicitation letters. Anderson attempted to give Ruben $ 5000. Defendants in new cases learned that Anderson had promised B2B confidentiality and unsuccessfully challenged class certification. The Seventh Circuit affirmed, stating that when an ethical breach neither prejudices an attorney’s client nor undermines the integrity of judicial proceedings, state bar authorities are generally better positioned to address the matter through disciplinary proceedings, rather than the courts through substantive sanction in the underlying lawsuit. View "Reliable Money Order, Inc. v. McKnight Sales Co., Inc." on Justia Law

The class consists of chemical companies that purchase sulfuric acid as one of the inputs into their production of chemicals. The defendants own smelters that process nonferrous minerals such as nickel and copper. They also produce sulfuric acid and sell or sold it to the members of the class. The class was certified, but the suit, alleging violation of the Sherman Act, 15 U.S.C. 1, was dismissed on the merits. The district judge ruled that the case could not go to trial on a theory of per se liability. The plaintiffs could have gone to trial on a theory of liability under the rule of reason, but chose to appeal the dismissal. The Seventh Circuit affirmed, rejecting an argument based on how the defendants organized their operations. The court stated that: “ If there were no joint venture, there would still be no per se violation for there would still be the legitimate business reasons for the defendants to have cooperated.” View "In re Sulfuric Acid Antitrust Litigation" on Justia Law