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

Current and former policyholders filed a class action lawsuit in Illinois against Country Mutual and 46 of its current and former officers and directors. Every member of the proposed class is an Illinois citizen under the Class Action Fairness Act, CAFA, 28 U.S.C. 1332(d)(2), as are Country Mutual and 45 of the individuals. The 46th defendant, Bateman, is a citizen of Massachusetts. The plaintiffs alleged that the firm accumulated and retained excess surplus of over $3.5 billion from premium revenues exceeding the cost of claims and thereby failed to supply those policies at cost. They claimed breach of contract, violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, unjust enrichment, and breach of fiduciary duty.Based on putative class size, the amount in controversy, and the minimal diversity created by Bateman, Country Mutual removed this case to federal district court, 28 U.S.C. 1332(d); 1453(b). The Seventh Circuit remanded to state court. Under CAFA’s internal affairs exception, each claim sounds in allegations of corporate mismanagement that cannot be adjudicated without immersion into the boundaries of the discretion afforded by Illinois law to officers and directors of a mutual insurance company to set capital levels and make related decisions about surplus distributions to policyholder members. The case is also within CAFA’s home-state controversy exception, 28 U.S.C. 1332(d)(4)(B), as Bateman, who creates minimal diversity, is not a “primary defendant.” View "Sudholt v. Country Mutual Insurance Co." on Justia Law

Three sets of plaintiffs alleged price fixing in the broiler chicken market, including a class of end users–persons and entities who indirectly purchased certain types of broilers from the defendants or alleged co-conspirators for personal consumption in certain jurisdictions during the class period. This class settled their claims with a subset of the defendants for $181 million. The district court entered judgment (FRCP 54(b)) as to the settling parties. Class counsel was awarded one-third of the settlement—excluding expenses and incentive awards— $57.4 million. Class member Andren argued the court erred in discounting bids made by class counsel in auctions in other cases; in suggesting the Seventh Circuit has rejected the use of declining fee scale award structures; and in crediting expert reports. In setting the fee award, the district court considered actual agreements between the parties and fee agreements reached in the market for legal services, the risk of nonpayment at the outset of the case and class counsel’s performance, and fee awards in comparable cases.The Seventh Circuit vacated the award. Under Seventh Circuit law, the district court’s task was to award fees in accord with a hypothetical “ex-ante bargain.” In doing so, the court did not consider bids made by class counsel in auctions in other cases as well as out-of-circuit fee awards. View "Andren v. Broiler Chicken Antitrust Litigation End User Consumer Plaintiff Class" on Justia Law

Plaintiff was taking a testosterone replacement therapy drug (“TRT”) called Androderm when he suffered a heart attack. The resulting lawsuits against TRT-producing pharmaceutical companies were consolidated as multidistrict litigation (“MDL”), and Plaintiff filed his lawsuit as part of that MDL. When Defendant Actavis, the company that produces Androderm, reached a global settlement with most of the MDL plaintiffs, Plaintiff opted to take his case to trial. Plaintiff’s attorney filed a motion for a new trial, alleging that Actavis had intentionally withheld evidence to protect its defense strategy against Plaintiff. Plaintiff’s attorney received the last documents in a months-overdue discovery production for another Androderm case in the MDL on which he was also lead counsel. These documents included a previously undisclosed letter from the Food and Drug Administration (“FDA”) requiring Actavis to conduct a trial to study a potential causal link between Androderm and high blood pressure. The district court denied the motion, holding that the evidence did not warrant a new trial.The Seventh Circuit affirmed, holding that the FDA letter would probably not have resulted in a verdict in Plaintiff’s favor. The court explained that even if the high blood pressure evidence had been more important to the trial, the considerations highlighted in Marcus make clear that the FDA study would not have made a new outcome probable. Removing Actavis’s blood pressure argument would leave seven alternative causes for Plaintiff’s heart attack. And the significance of Plaintiff’s blood pressure had already been undercut throughout trial. Taken together, the introduction of the FDA letter simply would not make a different outcome probable. View "Brad Martin v. Actavis Inc." on Justia Law

After Wynndalco Enterprises, LLC was sued in two putative class actions for violating Illinois’ Biometric Information Privacy Act (“BIPA”), its business liability insurer, Citizens Insurance Company of America, filed an action seeking a declaration that it has no obligation under the terms of the insurance contract to indemnify Wynndalco for the BIPA violations or to supply Wynndalco with a defense. Citizens’ theory is that alleged violations of BIPA are expressly excluded from the policy coverage. Wynndalco counterclaimed, seeking a declaration to the contrary that Citizens is obligated to provide it with defense in both actions. The district court entered judgment on the pleadings for Wynndalco.   The Seventh Circuit affirmed. The court explained that the narrowing construction that Citizens proposes to resolve that ambiguity is not supported by the language of the provision and does not resolve the ambiguity. Given what the district court described as the “intractable ambiguity” of the provision, the court held Citizens must defend Wynndalco in the two class actions. This duty extends to the common law claims asserted against Wynndalco in the other litigation, which, as Citizens itself argued, arise out of the same acts or omissions as the BIPA claim asserted in that suit. View "Citizens Insurance Company of America v. Wynndalco Enterprises, LLC" on Justia Law

Plaintiffs asserted that CWT violated the Telephone Consumer Protection Act (TCPA) by calling class members using prerecorded messages. Plaintiffs moved to certify a nationwide class of people who had received VVT’s calls. The district court certified a class of Illinois residents, believing that Supreme Court precedent required a finding of no personal jurisdiction over CWT for purposes of the claims of the proposed nonresident class members. Plaintiffs used third-party service providers to identify and send notices to the 28,239 Illinois class members.The district court granted the class summary judgment on the TCPA claim, finding that CWT’s TCPA violations were committed willfully or knowingly. A subsequent Seventh Circuit decision undercut the reason behind limiting the class to Illinois. The court re-opened that question, certified a nationwide class. and granted that class summary judgment, holding that the new class members were entitled to notice and an opportunity to opt-out. The district court ordered CWT to bear the costs of providing notice to the nationwide class, reasoning that CWT’s liability already had been established. The Seventh Circuit affirmed. While it would be unfair to shift costs to a defendant based solely on “[a] bare allegation of wrongdoing,” in these unusual circumstances, the court had the authority to assign costs to CWT. View "Bakov v. Consolidated World Travel, Inc." on Justia Law

In March 2020, Bradley University closed its campus and canceled in-person activities because of the COVID-19 pandemic. It canceled one week of classes as it migrated to remote learning. Bradley resumed classes virtually and offered remote activities and resources. The campus remained closed for the rest of the semester. Bradley never rescheduled the week of canceled classes; the Spring 2020 Semester was 14 weeks instead of the planned 15 weeks of classes listed in Bradley’s Catalog, which stated: “This catalog serves as a contract between a student and Bradley.” Full-time, on-campus students had paid $17,100 in tuition and an $85 activity fee. The University provided pro-rata refunds for room and board to students who were forced to leave on-campus housing but did not refund tuition or activity fees.Eddlemon filed a purported class action, alleging that Bradley breached an implied contract to provide 15 weeks of classes and on-campus activities, and, alternatively that the University’s retention of tuition and activity fees constituted unjust enrichment. The district court certified a “Tuition Class” and an “Activity Fee Class.” The Seventh Circuit vacated. The district court did not conduct the rigorous analysis required by Rule 23 for class certification but repeatedly referred to Eddlemon’s allegations without addressing his proffered evidence or examining how he would prove his allegations with common evidence. View "Eddlemon v. Bradley Universityx" on Justia Law

HyreCar is an intermediary between people who own vehicles and people who would like to drive for services such as Uber and GrubHub. Before leasing a car, HyreCar sends an applicant’s information, including a photograph, to Mitek, which provides identity-verification services. Johnson, a HyreCar driver, brought a putative class action, alleging Mitek used that information without the consent required by the Illinois Biometric Privacy Act. Mitek asked the district court to send the case to arbitration, citing an Arbitration Agreement in Johnson’s contract with HyreCar, applicable to drivers, HyreCar, and “any subsidiaries, affiliates, agents, employees, predecessors in interest, successors, and assigns, as well as all authorized or unauthorized users or beneficiaries of services or goods provided under the Agreement.The district court concluded that suppliers such as Mitek were not covered. The Seventh Circuit affirmed, rejecting Mitek’s claim that it is a “beneficiary of services or goods provided under the Agreement.” The “services or goods provided under the Agreement” are vehicles. Mitek cannot be classified as a “user” of HyreCar’s services or goods. Mitek has its own contract with HyreCar, but does not have a contract with any HyreCar driver. The Federal Arbitration Act, 9 U.S.C. 2 does not change the result. The court noted that claims under the Illinois Act cannot be litigated in federal court unless the plaintiff can show concrete harm. Johnson seeks only statutory damages. Johnson’s claim must be remanded to state court. View "Johnson v. Mitek Systems, Inc." on Justia Law

Bennett contends that Division 10 of Cook County Jail does not satisfy the Americans with Disabilities Act and the Rehabilitation Act because it lacks grab bars and other fixtures that disabled inmates need in order to use showers and toilets safely. Bennett cited a regulation providing that as of 1988, "construction[] or alteration of buildings” must comply with the Uniform Federal Accessibility Standards (UFAS), 28 C.F.R. 42.522(b)(1). UFAS requires accessible toilets with grab bars nearby and accessible showers with mounted seats, Division 10 was constructed in 1992.In 2020, the Seventh Circuit reversed the denial of class certification, stating that Bennett “proposes a class that will win if the Standards apply (and were violated, to detainees’ detriment).” On remand, the district court certified a class. More than two years later, the judge decertified the class, reasoning that some class members, although using aids such as wheelchairs, may not be disabled under the statutes.The Seventh Circuit again reversed. The 2020 decision identified an issue relevant to every Division 10 detainee. Class certification under Rule 23(c)(4) resolves the issue, not the whole case. Class members could receive the benefit of a declaratory judgment on the issue but would need to proceed in individual suits to seek damages; if the class loses, every detainee would be bound by issue preclusion. The application of UFAS can be determined class-wide while leaving to the future any particular inmate’s claim to relief. View "Bennett v. Dart" on Justia Law

Wisconsin inmates undergo regular strip searches. One guard performs the search; another observes. West is a Muslim. Strip searches by guards of the opposite sex violate the tenets of his faith. He was required to submit to a strip search by a guard who is a transgender man—a woman who identifies as a man. West objected but was refused an accommodation. West unsuccessfully requested an exemption from future cross-sex strip searches. The warden stated that he would be disciplined if he objects again. West sought an injunction under the Religious Land Use and Institutionalized Persons Act (RLUIPA), 42 U.S.C. 2000cc, and alleged Fourth Amendment violations. The district court dismissed the constitutional claim; circuit precedent held that a prisoner has no Fourth Amendment interest against visual inspections of his body. Rejecting the RLUIPA claim, the judge concluded that West had not shown a substantial burden on his religious exercise and that cross-sex strip searches are permissible as the prison’s only means to avoid unlawfully discriminating against transgender employees.The Seventh Circuit reversed. Intervening precedent revives the Fourth Amendment claim. West is entitled to judgment on the RLUIPA claim. His objection to cross-sex strip searches is religious in nature and sincere. The prison has substantially burdened his religious exercise by requiring him to either submit, in violation of his faith, or face discipline. The burden is unjustified under RLUIPA’s strict-scrutiny standard: providing an exemption will not violate the rights of transgender prison employees under Title VII or the Equal Protection Clause. View "West v. Radtke" on Justia Law

Innovel hired Diakon to take furniture from warehouses to customers’ homes. Plaintiffs, two of Diakon's drivers, were citizens of Illinois who drove out of Innovel’s Illinois warehouses and made deliveries to customers in Illinois, Indiana, and Missouri. They signed “Service Agreements” that classify the drivers as independent contractors yet include detailed expectations for the drivers, covering uniforms, business cards, truck decals, and how to perform deliveries and installations. The Agreements select Virginia law to govern the parties’ relations and authorize Diakon to deduct fees and penalties from the drivers’ pay for truck rental fees, insurance, workers’ compensation coverage, damaged merchandise, and customers’ refused deliveries.Plaintiffs sued, alleging that Diakon misclassified them as independent contractors when they were employees under Illinois law. Illinois courts apply a three-part test to determine employee status, which is more likely to classify workers as employees than is Virginia law, which would treat the plaintiffs as contractors. The Illinois Wage Payment and Collections Act allows deductions from pay only if the employee consents in writing at the time of the deduction.The district judge certified a class but ruled in favor of Diakon. The Seventh Circuit reversed. The plaintiffs’ claims arise from their work in Illinois, not from their contracts. The Illinois Act governs payment for work in Illinois regardless of what state’s law governs other aspects of the parties' relations. View "Timothy Johnson v. Diakon Logistics, Inc." on Justia Law