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

Class actions charged defendant, a credit-reporting agency, with violating the Fair Credit Reporting Act, 15 U.S.C. 1681, by selling consumer credit information to advertisers. The actions were consolidated and settled for $75 million. Class counsel appealed approval of a settlement with members of the class who filed individual claims in state court, that allowed defendant, after paying the settlements, to be reimbursed out of the $75 million class settlement fund. The law firm (Watts) that represented the individual claimants, did nothing to create the fund out of which the settlements will be paid, but stands to receive from $10 to $15 million in attorneys’ fees out of the class settlement fund. Class counsel argued that it should receive a portion of Watts' fees on the ground that class counsel contributed to the creation of the fund. The Seventh Circuit deemed Watts' motion as one to add it as a party and granted the motion. Watts wants to be an appellee to defend its right to attorneys' fees from the fund that its clients (individual claimants) agreed to pay, according to the court, but doesn't want to be a party that could be ordered to disgorge some of the fees, should class counsel prevail.

The Seventh Circuit consolidated two cases involving transfer to courts in another country. One is an appeal from an order to transfer cases involving vehicular accidents allegedly caused by tires installed on vehicles in Latin America, from the Southern District of Indiana to the courts of Mexico. Its i a suit by Mexican citizens arising from the death of another Mexican citizen in an accident in Mexico. The second involves transfer, to Israel, of suits against manufacturers of blood products used by hemophiliacs, which turned out to be contaminated by HIV; it was brought by Israeli citizens infected by the products in Israel. The Seventh Circuit affirmed the transfers. Noting the existence of apparently dispositive precedent, the court referred to "ostrich-like tactic of pretending that potentially dispositive authority against a litigant's contention does not exist."

The district court certified a class in a suit under the Telephone Consumer Protection Act (as amended by the Junk Fax Prevention Act of 2005), 47 U.S.C. 227. The Seventh Circuit vacated and remanded for the court re-evaluate the gravity of class counsel’s misconduct and its implications for the likelihood that class counsel will adequately represent the class. The district court concluded that "only the most egregious misconduct" by the law firm representing the class "could ever arguably justify denial of class status." The court must weigh the firm's misleading statements and the risk that the firm is in this case purely for itself and not for the benefits that the suit if successful might confer on the class.

Plaintiff sued under the Telephone Consumer Protection Act, 47 U.S.C. 227, seeking to enjoin defendant from sending unsolicited text messages to cellphone users and damages. He estimated that more than 1,000 people had received these messages and requested damages fixed by the Act, $500 for each violation. The court could award three times that amount, up to $1,500 for each violation, if it determined that defendant acted "willfully and knowingly." Within a month, defendant sent a letter offering to settle the case by giving plaintiff and up to 10 other affected people $1,500 for each text message received, plus court costs, and offering to stop sending unsolicited text messages to mobile subscribers. Plaintiff did not respond. The district court dismissed. The Seventh Circuit affirmed, holding that the offer mooted the claim. To allow a case, not certified as a class action and with no motion for class certification even pending, to continue in federal court when the sole plaintiff no longer maintains a personal stake would defy the limits on federal jurisdiction.

The Illinois Attorney General filed suit against eight manufacturers of LCD panels for violations of the Illinois Antitrust Act, claiming that the defendants unlawfully inflated prices on LCD products sold to the state, its agencies, and residents. The complaint sought injunctive relief, civil penalties, and treble statutory damages for the state as a purchaser and, as parens patriae, for harmed residents. Defendants removed the case to federal court under the Class Action Fairness Act of 2005, 28 U.S.C. 1332(d), 1453. The district court granted a motion to remand. The Seventh Circuit denied appeal, rejecting defendants' characterization of the parens patriae case as a disguised class action or mass action.

Workers filed numerous class actions alleging that the company improperly classified them as independent contractors rather than employees. The Judicial Panel on Multidistrict Litigation (JPML) consolidated more than 70 cases and transferred them to the Northern District of Indiana pursuant to 28 U.S.C. 1407. After five years that judge granted the company summary judgment on state-law claims in the Kansas case and on parallel claims in most of the other pending cases, while granting summary judgment to plaintiffs on some claims in a few cases. There is no final,appealable judgment in 12 cases. Rather than proceeding under FRCP 54(b), so that plaintiffs would have to appeal immediately in those cases to the same circuit, the court transferred the cases with remaining claims back to the original courts. The JPML agreed and the Seventh Circuit denied the company's request for mandamus to require the district court to enter partial judgments and allow appeal under FRCP 54(b).

The class action alleges that the company committed fraud by charging for uninsured or underinsured motorist coverage that is worthless in light of policy restrictions. The district court remanded to state court based on the representative plaintiff's argument that the amount in controversy was less than $5,000,000. The Seventh Circuit reversed, calculating the cost if the company were to stop charging a premium or change the terms so that policyholders receive indemnity more frequently, and the availability of punitive damages in Illinois, and concluding that it is not "legally impossible" that policyholders would recover the jurisdictional amount.

When an employee left the company in 1997, took a $47,850 lump sum distribution of his pension. He later believed that the payment should have included the present value of future cost of living adjustments that would have been included had he received his pension as an annuity. In 2002, he filed a class action suit. The district court granted summary judgment on liability in favor of the class and the Seventh Circuit affirmed, holding that a COLA is an accrued benefit, as defined in ERISA, 29 U.S.C. 1002(23)(A). Before the district court ruled, the parties reached a settlement that each early retiree would receive roughly 3.5% of her original lump sum, unless the COLA on a normal-retirement-age-based annuity outweighed her early-retirement subsidy, a rare situation. The district court approved the proposed settlement and awarded attorney's fees. Objectors were not allowed to opt out. The Seventh Circuit affirmed, upholding determinations that the settlement was reasonable; that class counsel had adequately represented the early retirees and that further subclasses were unnecessary; that opt-out should be denied; and concerning attorney fees.

The parties agree that the company attempted to collect an overdue hospital bill in a way that violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692 and that plaintiff is entitled to statutory damages of $1,000. Plaintiff's lawyer endeavored to transform the case into a class action, and the district court, frustrated by the effort, dismissed the whole action. The Seventh Circuit held that dismissal for want of prosecution was an abuse of discretion. All of the errors at issue were the fault of the lawyer and had nothing to do with the claim. The court should have considered other alternatives before dismissal.

A class action suit against tobacco-related entities, first filed in 1998, alleged that for years the tobacco companies conspired to conceal the facts about the addictive and dangerous nature of cigarettes by intentionally using incomplete, misleading, or untruthful marketing and advertising. The putative class consists of Illinois residents who bought or smoked cigarettes, seeking disgorgement of profits on an unjust enrichment theory. After extensive proceedings, the district court dismissed for failure to state a claim. The Seventh Circuit affirmed. Mere violation of a consumer's legal right to know about a product's risks, without anything more, cannot support a claim that the manufacturer unjustly retained the revenue from the product's sale to the consumer’s detriment. Plaintiffs did not allege that they suffered any harm, that they relied on the marketing, or that they would have acted differently had the defendants been truthful.