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

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.

The company made and sold a toy that, when swallowed, made children seriously ill. The product was recalled and removed from store shelves. Plaintiffs, purchasers whose children were not harmed and who did not ask for a refund, challenged the adequacy of the recall and alleged violations of the Consumer Products Safety Act, 15 U.S.C. 2051–89, express and implied warranties, and state consumer-protection statutes. The district court denied class certification. The Seventh Circuit affirmed, first holding that plaintiffs' had standing, based on financial harm. There would be serious problems of class action management, apart from differences in state law. Individual notice would be impossible, making it hard for class members to opt out. No one knows who bought the kits or who used them without problems. It would be difficult to determine who would be entitled to a remedy. The per-buyer costs of identifying class members and giving notice would exceed the price of the toys. The principal effect of class certification would be to induce defendants to pay class lawyers enough to make them go away; effectual relief for consumers is unlikely.

Plaintiff claims that defendants are billing aggregators engaged in "cramming" by placing unauthorized charges on telephone bills, arranged unauthorized charges on plaintiff's telephone bill, and were responsible for unauthorized charges on the telephone bills of more than one million Indiana telephone numbers. Defendants produced evidence that plaintiff actually ordered the services in question. Plaintiff argued that the service was not legally authorized if defendants did not possess all customer authorization documentation required by the Indiana anti-cramming regulation, 170 IAC 7-1.1-19(p). That law does not provide a private right of action, but plaintiff argued that defendants' failure to comply proved unjust enrichment and provided a basis for suit under Indiana's Deceptive Commercial Solicitation Act, Ind. Code 24-5-19-9. The district court denied class certification and granted defendants' motions for summary judgment. The Seventh Circuit affirmed. The anti-cramming regulation does not apply to these defendants, which are not telephone companies and did not act in this case as billing agents for telephone companies. There was no unjust enrichment and the DCSA does not apply; plaintiff ordered and received services. Common issues do not predominate over individual issues, as required for a class under FRCP 23(b)(3).