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

The FDA approved Depakote for treating seizures, migraine headaches, and conditions associated with bipolar disorder. Physicians may prescribe it for other "off-label" uses, but a drug’s manufacturer can promote it only as suitable for uses the FDA has found safe and effective. Abbott, which makes Depakote, encouraged intermediaries to promote Depakote’s off-label uses for ADHD, schizophrenia, and dementia, hiding its own involvement. Abbott pleaded guilty to unlawful promotion and paid $1.6 billion to resolve the criminal case and False Claims Act suits, 31 U.S.C. 3729–33. Welfare-benefit plans that paid for Depakote’s off-label uses sought treble damages under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1964, for a class comprising all third-party payors. Following a remand, the court dismissed the suit on the ground that the plaintiffs could not show proximate causation, a RICO requirement. The Seventh Circuit affirmed, reasoning that the Payors are not the most directly, injured parties. Patients suffer if they take Depakote when it is useless and may be harmful and costly. Physicians also may lose, though less directly. Because some off-label uses of Depakote may be beneficial to patients, it is hard to treat all off-label prescriptions as injurious to the Payors; if they did not pay for Depakote they would have paid for some other drug. In addition, some physicians were apt to write off-label prescriptions whether or not Abbott promoted such uses. Calculation of damages would require determining the volume of off-label prescriptions that would have occurred absent Abbott’s unlawful activity. View "Sidney Hillman Health Center of Rochester v. Abbott Laboratories, Inc." on Justia Law

The Illinois Department of Human Services Home Services Program pays personal home health care assistants to care for elderly and disabled persons. The assistants are considered public employees under the Illinois Public Labor Relations Act, which authorizes collective bargaining. Since 2003, the Union has been the assistants' exclusive representative, required to represent all public employees, including non-members. Under the collective bargaining agreement, the Union collected limited "fair share" fees from workers who chose not to join, which were automatically deducted from the assistants' pay. Workers who objected to this fair-share arrangement sued under 42 U.S.C. 1983. The Seventh Circuit affirmed the dismissal of their claim; the Supreme Court reversed. On remand, the Objectors sought certification of a class of all non-union member assistants from whom the fees were collected until June 30, 2014, when the state stopped the fair-share deductions. They argued that their proposed class of around 80,000 members is entitled to a refund of approximately $32 million. The Seventh Circuit affirmed a holding that class certification was inappropriate, stating that: the class definition was overly broad in light of evidence that a substantial number of class members did not object to the fee and could not have suffered an injury; named plaintiffs were not adequate representatives; individual questions regarding damages predominated over common ones; the class faced manageability issues; and a class action was not a superior method of resolving the issue. View "Riffey v. Rauner" on Justia Law

HCSC is an Illinois not-for-profit corporation that offers Blue Cross and Blue Shield insurance through licensed affiliates in five states and contracts with outside affiliates for prescription drug services, claim payments, and other administrative work. HCSC owns or controls its affiliates and places its officers on their boards. HCSC does not disclose the extent of these ties to its insureds. Its policies state that the affiliates pay it rebates, but it does not share those rebates with its customers. Alleging that these arrangements violated Illinois law and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, Priddy and others filed a putative class. The district court certified four classes under Federal Rule of Civil Procedure 23(b)(3): employers who purchased HCSC plans for employees in any of the five states served by HCSC; beneficiaries of employer-furnished plans provided by HCSC in any of the five states; individuals who purchased insurance directly from HCSC in any of the five states; and Illinois insureds who were protected by Illinois insurance regulations. The four classes included approximately 10 million people. The Seventh Circuit vacated class certification. It is not clear that HCSC owed many class members any fiduciary duty. Three of the four classes certified include people whom HCSC does not insure and who do not pay it premiums. View "Priddy v. Health Care Service Corp." on Justia Law

In 2011, Roppo suffered serious injuries in an auto accident with Block, who was insured by Travelers. Travelers and the attorneys it retained for Block disclosed only the limits of Block’s automobile liability policy; they did not disclose the existence of his additional umbrella policy. Roppo eventually learned of the umbrella policy and then settled the case. She brought a proposed class action, challenging the company’s alleged practice of not disclosing the existence of umbrella policies. The case was removed to federal court under the Class Action Fairness Act, 28 U.S.C. 1332(d). The district court denied Roppo’s motion to remand to state court but allowed her to file a second amended complaint, which added Block’s defense attorneys as defendants. Her third amended complaint added a cause of action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1962(c). The Seventh Circuit affirmed dismissal with prejudice the complaint’s 11 counts, finding that the district court had jurisdiction and that her complaint did not sufficiently state claims of fraudulent misrepresentation, negligent misrepresentation, and negligence under Illinois law, or violations of the Illinois Insurance Code and the Illinois Consumer Fraud and Deceptive Business Practices Act. View "Roppo v. Travelers Commercial Insurance Co." on Justia Law

In 2013, an Australian teenager measured his Subway Footlong sandwich, which was 11 inches long. He photographed it alongside a tape measure and posted the photo on Facebook. It went viral. U.S. plaintiffs’ lawyers sued under state consumer-protection laws and sought class certification under FRCP 23. The suits were combined in a multidistrict litigation. Limited discovery established that Subway’s unbaked rolls are uniform; baked rolls rarely fall short of 12 inches. Minor variations occur due to natural variability in the baking process and cannot be prevented. No customer is shorted any food. With no compensable injury, the lawyers sought injunctive relief. Subway agreed to implement measures to ensure, to the extent practicable, that all Footlong sandwiches are at least 12 inches long. The parties agreed to cap class counsel's fees at $525,000. The court preliminarily approved the settlement. A class member and “professional objector to hollow class-action settlements,” argued that the settlement enriched only the lawyers and provided no meaningful benefits to the class. The judge certified the class and approved the settlement. The Seventh Circuit reversed. A class action that “seeks only worthless benefits for the class” and “yields [only] fees for class counsel” is “no better than a racket” and “should be dismissed out of hand.” View "Buren v. Doctor's Associates Inc." on Justia Law

Boiron makes homeopathic products, including an over‐the‐counter remedy called Oscillo that retails for between $12 and $20. Oscillo is made by mixing one percent Anas Barbariae Hepatis et Cordis Extractum (duck hearts and livers) with 99 percent water, repeating the dilution process 200 times, and then selling the result in pill form. The repeated dilutions render the finished product nothing more than a placebo. Boiron’s claim that Oscillo has a therapeutic effect on flu symptoms is “highly doubtful.” Conrad filed a class action against Boiron for deceptive marketing. About a year later Boiron offered Conrad $5,025, more than he could hope to win at trial. Conrad did not accept the money because it would moot his claim. The district court refused to certify Conrad’s proposed class and found his individual claim moot. The Seventh Circuit remanded; an unaccepted offer cannot moot a case. There are other measures available to address the problem (if it exists here) of “unreasonably and vexatiously” persisting in litigation, such as 28 U.S.C. 1927, but the district court did not decide whether they should be used. View "Conrad v. Boiron, Inc." on Justia Law

Husband and wife paid $83,475 for a new Volvo T8, plus $2,700 for a charging station. Volvo’s advertisements claimed that the T8’s battery range was 25 miles. In practice their T8 averaged a eight-10 miles of battery‐only driving. Husband filed suit, asserting a class of others similarly situated under the Class Action Fairness Act (CAFA), 28 U.S.C. 1332(d), and received a letter from Volvo that offered “a full refund upon return of the vehicle if you are not satisfied with it for any reason” and to “arrange to pick up your vehicle.” The next day Volvo moved to dismiss husband’s suit on the theory that he lacked standing because only his wife was on the car’s title. Before the court ruled on the motion, his wife was added to the complaint. Volvo moved to dismiss, contending that she lacked standing because its letter had offered complete relief before she filed suit. The district judge agreed and dismissed. The Seventh Circuit reversed, seeing “no reason why the timing of the offer has such a powerful effect. Offers do not bind recipients until they are accepted. An unaccepted pre‐litigation offer does not deprive a plaintiff of her day in court. View "Laurens v. Volvo Cars of North America, LLC" on Justia Law

Regency operated for‐profit cosmetology schools in 20 states. Each offered classroom instruction and practical instruction in a salon, where members of the public could receive cosmetology services at low prices. Hollins, formerly a Regency student, asserts that the work she performed was compensable under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, and that Regency violated state wage laws. She wanted to bring suit as an FLSA collective action and a state class action but the district court denied her motion to conditionally certify the FLSA action and never certified a class action under FRCP 23. The court addressed the individual merits of her case and granted summary judgment in Regency’s favor. Regency has since closed. The Seventh Circuit affirmed, first rejecting a claim that it lacked jurisdiction. There was a final judgment despite the unaccepted opt‐in notices that the court received. On the merits, the court noted that time on the Professional Floor was a state‐mandated requirement for professional licensure; Hollins was actually paying for supervised practical experience; Regency was in the educational business, not in the beauty salon business; and Hollins did not need to go out and find a place where she could serve her supervised practice. View "Hollins v. Regency Corp." on Justia Law

In a class action against Sears concerning a defect in washing machines, the district court awarded class counsel $4.8 million, 1.75 times the fees counsel originally charged for their work on the case. The court reasoned that the case was unusually complex and had served the public interest and that the attorneys obtained an especially favorable settlement. The amount of damages that the class will receive has not yet been determined. The district court accepted Sears' estimate that the class members would receive no more than $900,000. The Seventh Circuit reversed, noting that the “case wasn’t very complex—it was just about whether or not Sears had sold defective washing machines.” A district court should compare attorney fees to what is actually recovered by the class and presume that fees that exceed the recovery to the class are unreasonable. The presumption is not irrebuttable, but in this case, class counsel failed to prove that a reasonable fee would exceed $2.7 million. View "Barnes v. Sears, Roebuck and Co." on Justia Law

In 2014, Haley and others filed a putative class action against Kolbe & Kolbe Millwork, claiming that windows purchased from Kolbe were defective and had allowed air and water to leak into (and damage) the plaintiffs’ homes. Kolbe tendered the defense of the defective-product claims to several insurance companies. Two companies—United States Fire Insurance and Fireman’s Fund—obtained permission to intervene in the case. United States Fire successfully moved for summary judgment, arguing that a 2016 decision of the Wisconsin Supreme Court (Pharmacal) absolved the insurers of their duty to defend Kolbe in the underlying suit. The court sua sponte awarded judgment to Fireman’s Fund. The Seventh Circuit reversed the judgment that the insurance companies had no duty to defend. The “Pharmacal” analysis does not apply because the homeowners sought compensation for the repair or replacement of individual elements of a larger structure. This kind of particularized demand was not at issue in Pharmacal, which applied an "integrated structure" analysis. Whether the walls and other elements of the plaintiffs’ homes constitute Kolbe’s “product,” such that coverage for any damage to those materials is extinguished by a policy exclusion is ambiguous. View "Haley v. Kolbe & Kolbe Millwork Co." on Justia Law