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

A Wisconsin statute enacted in 2023 required that electronic nicotine delivery systems (such as vapes and e-cigarettes) could only be sold in the state if they had received premarket authorization from the Food and Drug Administration (FDA), were pending FDA review as of specified dates, or did not contain nicotine. The law also imposed financial penalties and authorized private lawsuits against violators. Several businesses and consumers involved in the manufacture, distribution, retail, and use of these products challenged the statute, arguing that federal law granting the FDA authority over tobacco products preempted the Wisconsin statute. They also asserted that the law violated the Equal Protection Clause, and sought preliminary and permanent injunctions to prevent enforcement.The United States District Court for the Western District of Wisconsin denied the motion for a preliminary injunction. The district court found that the Wisconsin law was not preempted by federal statutes, specifically the Federal Food, Drug, and Cosmetic Act (FDCA) and the Family Smoking Prevention and Tobacco Control Act (TCA). The court concluded that Congress had not intended to preempt states from imposing additional or more stringent requirements on the sale of tobacco products, and that the plaintiffs had not shown a likelihood of success on the merits or that the balance of equities favored an injunction.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s decision. The Seventh Circuit held that the text and structure of the relevant federal statutes, including the TCA’s preservation and savings clauses, demonstrated that Congress did not preempt state authority to regulate, or even prohibit, the sale of tobacco products. The court affirmed the district court’s denial of a preliminary injunction, holding that the plaintiffs had failed to show a reasonable likelihood of success on the merits of their preemption claim. View "Wisconsinites for Alternatives to Smoking v. Casey" on Justia Law

Several plaintiffs, including a truck driver and employees, alleged that their employers or associated companies collected their biometric data, such as fingerprints or hand geometry, without complying with the requirements of the Illinois Biometric Information Privacy Act (BIPA). Each plaintiff claimed that every instance of data collection constituted a separate violation, resulting in potentially massive statutory damages. Some claims were brought as class actions, raising the possibility of billions in liability for the defendants.In the United States District Court for the Northern District of Illinois, the district judges addressed whether a 2024 amendment to BIPA Section 20, which clarified that damages should be assessed per person rather than per scan, applied retroactively to cases pending when the amendment was enacted. The district courts determined that the amendment did not apply retroactively and certified this question for interlocutory appeal under 28 U.S.C. § 1292(b).The United States Court of Appeals for the Seventh Circuit reviewed the certified question de novo. The court considered Illinois’s established law of statutory retroactivity, which distinguishes between substantive and procedural (including remedial) changes. The Seventh Circuit held that the BIPA amendment was remedial because it addressed only the scope of available damages and did not alter the underlying substantive obligations or standards of liability. The court reasoned that, under Illinois law, remedial amendments apply to pending cases unless precluded by constitutional concerns, which were not present here.The Seventh Circuit concluded that the 2024 amendment to BIPA Section 20 applies retroactively to all pending cases. The court reversed the district courts’ rulings and remanded the cases for further proceedings consistent with its holding. View "Clay v Union Pacific Railroad Company" on Justia Law

Two Illinois residents obtained online loans of $600 each from a lender operating under the laws of the Otoe-Missouria Tribe of Indians, with interest rates approaching 500% per year. The loan agreements included an arbitration clause, which delegated to the arbitrator all questions including the enforceability and formation of the agreement, specifying that such issues would be determined under “tribal law and applicable federal law.” At the time the loans were issued, the referenced tribal law did not exist.After receiving the loans, the borrowers filed a putative class action in the United States District Court for the Northern District of Illinois, alleging violations of Illinois consumer-protection statutes and federal laws. The defendants moved to compel arbitration under the terms of the loan agreements. The district court denied the motion, finding that the arbitration and delegation provisions were unenforceable because they effectively forced the plaintiffs to waive their substantive rights under Illinois law, applying the “prospective waiver” doctrine.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s denial de novo. The Seventh Circuit affirmed, holding that there was no mutual assent to the arbitration and delegation provisions. The court determined that, at the time of contracting, the specified tribal law did not exist, and federal law does not supply substantive contract-formation rules. Because the contract’s governing law provision referred to a body of law that was nonexistent and subject to unilateral creation by the defendants’ affiliate, there was no meeting of the minds as to an essential term. The Seventh Circuit concluded that the absence of mutual assent rendered the arbitration and delegation provisions unenforceable and affirmed the district court’s order denying the motion to compel arbitration. View "Harris v W6LS, Inc." on Justia Law

USAA Savings Bank closed Michael Goff’s credit card account, providing him with inconsistent explanations for its actions. Goff pursued arbitration under the arbitration agreement contained in his credit card contract, seeking actual and punitive damages. The agreement allowed the arbitrator to award punitive damages but explicitly required a post-award review of such damages, with procedural protections and a written, reasoned explanation, before any punitive damages award could become final.An arbitrator held an evidentiary hearing and determined that USAA had violated the Equal Credit Opportunity Act by failing to provide Goff with adequate notice upon closing his account. Despite finding that Goff suffered no actual damages, the arbitrator awarded $10,000 in punitive damages and over $77,000 in attorney’s fees. USAA requested the post-award review mandated by the agreement, but the arbitrator declined, citing American Arbitration Association rules, and finalized the award without conducting the review.USAA filed a motion in the United States District Court for the Northern District of Illinois, seeking to vacate the arbitral award on the ground that the arbitrator had exceeded her authority by disregarding the post-award review requirement. The district court acknowledged the arbitrator’s error but confirmed the award, concluding it nonetheless “drew from the essence of the arbitration agreement.” USAA appealed, and Goff sought sanctions.The United States Court of Appeals for the Seventh Circuit held that the arbitrator exceeded her authority by ignoring the arbitration agreement’s clear requirement for a post-award review of punitive damages. The court determined there was no “possible interpretive route” to support the arbitrator’s action, vacated the district court’s judgment, denied Goff’s motion for sanctions, and remanded with instructions to refer the matter back to the original arbitrator for proceedings consistent with the agreement. View "USAA Savings Bank v Goff" on Justia Law

Two individuals each purchased a Mercedes-Benz vehicle that included a subscription-based system called “mbrace,” which provided various features through a 3G wireless network. When newer cellular technology rendered the 3G-dependent system obsolete, both customers asked their dealerships to replace the outdated system at no charge, but their requests were denied. Subsequently, they filed a class action lawsuit against Mercedes-Benz USA, LLC and Mercedes-Benz Group AG, asserting claims including breach of warranty under federal and state law.The United States District Court for the Northern District of Illinois, Eastern Division, considered Mercedes’s motion to compel arbitration pursuant to the Federal Arbitration Act, based on the arbitration provision within the mbrace Terms of Service. The district court found in favor of Mercedes, concluding that the plaintiffs were bound by an agreement to arbitrate their claims. Since neither party requested a stay, the court dismissed the case without prejudice. The plaintiffs appealed, arguing that they had not agreed to arbitrate.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s factual findings for clear error and legal conclusions de novo. Applying Illinois contract law, the appellate court determined that Mercedes had provided sufficient notice of the arbitration agreement to the plaintiffs through the subscription activation process and follow-up communications. The court found that Mercedes established a rebuttable presumption of notice, which the plaintiffs failed to overcome, as they only stated they did not recall receiving such notice, rather than expressly denying it. The Seventh Circuit held that the plaintiffs had assented to the agreement by subscribing to the service and thus were bound by the arbitration provision. The judgment of the district court was affirmed. View "Jim Rose v Mercedes-Benz USA, LLC" on Justia Law

Nicholas Giovannelli, a United States Army veteran, was photographed in Afghanistan in 2009. The image appeared on a Department of Defense website and was later downloaded and licensed by Stocktrek Images to Posterazzi, which produced posters featuring Giovannelli’s likeness. These posters were sold online through retailers including Walmart, Pixels, Amazon, and Posterazzi. Giovannelli only learned of the commercial use of his image in 2020, when a friend discovered the posters online. Experiencing renewed PTSD symptoms, Giovannelli sued the companies for violating the Illinois Right of Publicity Act, which prohibits using a person’s identity for commercial purposes without consent.The lawsuits were removed to the United States District Court for the Northern District of Illinois and severed due to misjoinder. The defendants moved for summary judgment, arguing Giovannelli’s claims were barred by the Act’s one-year statute of limitations. Each district judge—Edmond E. Chang, LaShonda A. Hunt, and Jeffrey I. Cummings—granted summary judgment for the defendants, citing Blair v. Nevada Landing Partnership, where the Illinois Appellate Court held that the limitations period starts when the photo is first published, not when the plaintiff discovers the use.Reviewing the case, the United States Court of Appeals for the Seventh Circuit applied de novo review. The court held that, under Illinois law and Blair, the single-publication rule governs claims under the Illinois Right of Publicity Act—so the statute of limitations begins at first publication. The court found no basis for applying the discovery rule, and the exception for “hidden, inherently undiscoverable, or inherently unknowable” publications did not apply since the image was publicly accessible. The Seventh Circuit affirmed the district courts’ judgments, finding Giovannelli’s claims time-barred. View "Giovannelli v Stocktrek Images, Inc." on Justia Law

Ramona Milam, an Illinois homeowner, obtained a mortgage loan in 2005 and later fell behind on her payments. Selene Finance, acting as the loan servicer since 2021, sent Milam a letter warning of possible acceleration and foreclosure if she did not cure her default within 35 days. Milam argued that, due to federal regulations and Selene’s internal practices, Selene would not actually seek foreclosure or acceleration until at least 120 days of delinquency, making the letter’s threat misleading and intended to spur premature payment. After making a payment, Milam sued Selene, alleging violations of the Fair Debt Collection Practices Act and Illinois law, and claimed negligent misrepresentation.Selene moved to dismiss the complaint in the United States District Court for the Northern District of Illinois, Eastern Division, arguing that, as the lender’s assignee under the mortgage, it was entitled to notice and an opportunity to cure before being sued. The district court agreed, finding Selene to be an assignee and holding that Milam failed to comply with the mortgage’s notice and cure provision, thus barring her claims. The court also dismissed Milam’s state law claims for lack of pleaded pecuniary loss.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed whether Milam had standing and whether Selene was properly considered an assignee under Illinois law. The court found Milam had standing based on supplemental allegations of monetary harm from accelerated payment. However, the Seventh Circuit held that the pleadings did not establish Selene as an assignee under Illinois law, distinguishing between assignment and delegation of duties. The Seventh Circuit reversed the district court’s dismissal and remanded the case for further proceedings to resolve the assignee issue and reconsider the state law claims. View "Milam v Selene Finance" on Justia Law

Two individuals brought a class action against Amazon, alleging that its Virtual Try-On (VTO) feature—used to preview makeup and eyewear products by rendering them on users’ faces via their mobile devices—violated the Illinois Biometric Information Privacy Act (BIPA). The VTO software, developed both in-house and by a third party, captured users’ facial geometry to overlay products for virtual preview. The plaintiffs claimed Amazon collected, stored, and used their facial data and that of many others in Illinois without proper notice, informed consent, or the creation of required data retention and destruction policies as mandated by BIPA.After removal from Illinois state court to the United States District Court for the Northern District of Illinois, the plaintiffs moved for class certification under Federal Rule of Civil Procedure 23(b)(3). The district court certified a class of all individuals who used Amazon’s VTO feature in Illinois after September 7, 2016. The district court found the class satisfied the requirements of numerosity, commonality, typicality, and adequacy, and that common questions—primarily concerning the VTO’s functionality and Amazon’s use of biometric data—predominated over individual questions such as location and damages. It also found a class action was superior due to the size and cost of potential individual litigation.On interlocutory appeal, the United States Court of Appeals for the Seventh Circuit reviewed only the class certification decision, focusing on predominance and superiority. The court affirmed the district court’s certification, holding that common questions about Amazon’s alleged statutory violations predominated and that individual questions regarding user location and damages were manageable. The court also agreed that a class action was superior to individual suits, given the complexity and cost of litigation, and affirmed the district court’s discretion. View "Svoboda v Amazon.com Inc." on Justia Law

Dr. Padma Rao brought a defamation suit against JP Morgan Chase Bank and its employee, Keifer Krause, after Krause informed the administrator of her late mother’s estate that Rao, acting under a power of attorney, had designated herself as the payable on death (POD) beneficiary of her mother’s accounts. This statement led the estate administrator to accuse Rao of fraud and breach of fiduciary duty in probate court. The dispute centered on whether Rao had improperly used her authority to benefit herself, which would be illegal under Illinois law.The case was initially filed in Illinois state court, but Chase removed it to the United States District Court for the Northern District of Illinois before any defendant was served, invoking “snap removal.” The district court dismissed all claims except for defamation per se. On summary judgment, the court ruled in favor of the defendants, finding that Krause’s statements were not defamatory, could be innocently construed, and were protected by qualified privilege. Rao appealed both the dismissal of her consumer fraud claim and the grant of summary judgment on her defamation claim.The United States Court of Appeals for the Seventh Circuit first addressed jurisdiction, dismissing Krause as a party to preserve diversity jurisdiction. The court affirmed the dismissal of Rao’s consumer fraud claim, finding she had not alleged unauthorized disclosure of personal information. However, it reversed the summary judgment on the defamation per se claim against Chase, holding that Krause’s statements could not be innocently construed and that a qualified privilege did not apply, given evidence of possible recklessness. The case was remanded for a jury to determine whether the statements were understood as defamatory. View "Padma Rao v J.P. Morgan Chase Bank, N.A." on Justia Law

Fifteen individuals who purchased new motorcycles from a major American manufacturer received a limited warranty with their purchases. The warranty provided for free repair or replacement of defective parts for up to 24 months but excluded coverage for defects or damage caused by non-approved or non-manufacturer parts. The plaintiffs, concerned that using non-manufacturer parts would void their warranties, opted to buy higher-priced parts from the manufacturer. They later alleged that the company’s warranty practices unlawfully conditioned warranty coverage on the exclusive use of its own parts, in violation of the Magnuson-Moss Warranty Act and various state antitrust laws.The United States Judicial Panel on Multidistrict Litigation consolidated the plaintiffs’ lawsuits and transferred them to the United States District Court for the Eastern District of Wisconsin. The district court dismissed the consolidated complaint for failure to state a claim. It found that the limited warranty did not condition benefits on exclusive use of manufacturer parts and that the risk of losing warranty coverage was insufficient to establish an anticompetitive tying arrangement or economic coercion under state antitrust law. The court also dismissed related state law claims premised on the same conduct.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s dismissal. The Seventh Circuit held that the warranty’s terms did not create an express or implied tie prohibited by the Magnuson-Moss Warranty Act, nor did the complaint plausibly allege violations of the Act’s disclosure or pre-sale availability requirements. The court further held that the plaintiffs failed to plausibly allege sufficient market power or anticompetitive effects to support their state antitrust claims, and that the warranty’s terms were available to consumers at the time of purchase, precluding a Kodak-style lock-in theory. The court affirmed dismissal of all claims. View "Heymer v. Harley-Davidson Motor Company Group, LLC" on Justia Law