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

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

CE, an Illinois corporation that litigates claims under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227, filed a class action in Illinois state court accusing Homegrown, a Canadian marketing firm, of sending CE junk faxes. The parties settled in 2007 for $5 million plus interest and costs. Homegrown failed to notify its insurer, SMI, about the litigation and used its own counsel; the settlement was structured to be enforceable only against Homegrown’s SMI liability policy. CE, as assignee of Homegrown's rights under the policy, filed a citation to discover assets in an effort to recover on the judgment. Rath, SMI’s Canadian attorney, wrote a letter to the Illinois court advising that SMI was denying coverage. SMI took no other steps to fight the citation. The court entered judgment for CE. CE unsuccessfully attempted to enforce that judgment in Saskatchewan, where SMI is based. The Saskatchewan court awarded SMI costs. Seven years later, SMI moved to enforce the Saskatchewan judgment in federal district court. The Seventh Circuit agreed with the district court that there was no basis for federal jurisdiction, “an outcome that is especially appropriate given the comity concerns that pervade this litigation.” The Class Action Fairness Act, 28 U.S.C. 1332(d), is inapplicable because the defendant is the class and diversity jurisdiction, 28 U.S.C. 1332(a)(2), is inapplicable because no individual class member could satisfy the $75,000 amount‐in‐controversy requirement. No exception to the general prohibition on aggregating claims applies. View "Saskatchewan Mutual Insurance Co. v. CE Design, Ltd." on Justia Law

Plaintiffs filed a putative class action against Kolbe & Kolbe Millwork, alleging that Kolbe sold them defective windows that leak and rot. Plaintiffs brought common-law and statutory claims for breach of express and implied warranties, negligent design and manufacturing of the windows, negligent or fraudulent misrepresentations as to the condition of the windows, and unjust enrichment. The district court granted partial summary judgment in Kolbe’s favor on a number of claims, excluded plaintiffs’ experts, denied class certification, and found that plaintiffs’ individual claims could not survive without expert support. The Seventh Circuit affirmed. Plaintiffs forfeited their arguments with respect to their experts’ qualifications under “Daubert.” Individual plaintiffs failed to establish that Kolbe’s alleged misrepresentation somehow caused them loss, given that their builders only used Kolbe windows. Though internal emails, service-request forms, and photos of rotting or leaking windows may suggest problems with Kolbe windows, that evidence did not link the problems to an underlying design defect, as opposed to other, external factors such as construction flaws or climate issues. View "Haley v. Kolbe & Kolbe Millwork Co.," on Justia Law

Workers in Waupaca foundries alleged violation of the Fair Labor Standards Act (FLSA), 29 U.S.C. 201, by not treating the time that workers spend changing clothes and showering on-site after a shift to be compensable “work” time. They alleged that they end their shifts covered in a layer of “foundry dust,” which can irritate the skin and cause lung disease if inhaled. FLSA authorizes collective actions by employees on behalf of “similarly situated” employees. Unlike class actions under FRCP 23, collective actions under FLSA require would-be members to opt in (voluntarily join). The district judge ruled that he would “conditionally certify” the class since the plaintiffs showed a “reasonable basis” for believing that all the class members were similarly situated. After discovery, the judge would determine whether plaintiffs who had opted in were actually similarly situated. After several hundred current and former employees from three states opted in, Waupaca moved to decertify the class. The plaintiffs, deciding to proceed with only Waupaca’s Wisconsin employees, moved to certify a Rule 23 class just for Wisconsin state-law claims, and did not oppose the decertification of Indiana and Tennessee employees. The Seventh Circuit affirmed denial of Waupaca’s request to decertify the entire FSLA class; division of the FLSA class into three subclasses and their transfer to district courts in their respective states; and Rule 23 ceritfication of the Wisconsin claims. View "DeKeyser v. Thyssenkrupp Waupaca, Inc." on Justia Law

Fulton received an unsolicited fax from Bisco and sued for damages under the Telephone Consumer Protection Act, 47 U.S.C. 227. Before Fulton moved for class certification, Bisco tried to moot its claim by tendering an offer ($3,005 plus costs) under Federal Rule of Civil Procedure 68 that, Bisco claimed, gave Fulton all possible individual relief. Two days after Bisco’s offer, the Supreme Court held that “an unaccepted settlement offer or offer of judgment does not moot a plaintiff’s case.” Fulton rejected the offer. Bisco then moved to deposit $3,600 with the court under Rule 67. The court dismissed the suit, concluding that Bisco’s maneuver mooted Fulton’s individual claim and disqualified it from serving as a class representative. The Seventh Circuit remanded, finding dismissal premature. Bisco’s payment did not moot the case; the court’s registry does not function as plaintiff’s account. An unaccepted offer to settle a case, accompanied by a payment intended to provide full compensation into the registry of the court under Rule 67, is no different in principle from an offer of settlement made under Rule 68. It is not clear, as a matter of law, that the unaccepted offer was sufficient to compensate Fulton for its loss of the opportunity to represent the putative class. View "Fulton Dental, LLC v. Bisco, Inc." on Justia Law