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

In 2002, Toulon applied for Continental’s long-term care insurance policy. Continental provided a Long-Term Care Insurance Personal Worksheet to help Toulon determine whether the policy would work for her, given her financial circumstances. The Worksheet discussed Continental’s right to increase premiums and how such increases had previously been applied. Toulon did not fill out the Worksheet but signed and submitted it with her application. Toulon’s Policy stated that although Continental could not cancel the Policy if each premium was paid on time, Continental could change the premium rates. There was a rider, stating that premiums would not be increased during the first 10 years after the coverage date. In September 2013, Continental raised Toulon’s premiums by 76.5%. Toulon sued, on behalf of herself and a purported class. The Seventh Circuit affirmed dismissal, agreeing that Toulon failed to state claims for fraudulent misrepresentation because she did not identify a false statement or for fraudulent omission because Continental did not owe Toulon a duty to disclose. The court also properly dismissed Toulon’s claim under the Illinois Consumer Fraud and Deceptive Practices Act (ICFA) because she did not identify a deceptive practice, a material omission, or an unfair practice. The unjust enrichment claim failed because claims of fraud and statutory violation, upon which Toulon's unjust enrichment claim was based, were legally insufficient and an express contract governed the parties’ relationship. View "Toulon v. Continental Casualty Co." on Justia Law

SGA Pharm Lab supplied ADM Alliance Nutrition with a product used to make medicated animal feed. The parties ended their relationship by signing a termination agreement. ADM later came to believe that SGA had made false representations concerning the potency of the product while SGA was supplying it to ADM. ADM brought breach of contract and fraud claims against SGA and its president. The district court concluded that ADM had released the claims. The Seventh Circuit affirmed The termination agreement stated ADM released SGA and its officers from any and all claims, whether known or unknown, so by its terms the release includes claims for breach of contract and fraud. The agreement also stated that it superseded all prior understandings and that no representations were made to induce the other party to enter into the agreement other than those it contained. The agreement was between sophisticated commercial parties View "ADM Alliance Nutrition, Inc. v. SGA Pharm Lab, Inc." on Justia Law

Indiana law previously provided that, when school districts needed to reduce their teaching staffs, tenured teachers that were qualified for an available position had a right to be retained over non-tenured teachers. A 2012 amendment eliminated that right and orders school districts to base layoff choices on performance reviews without regard for tenure status. Madison Consolidated Schools relied on the new law to lay off Elliott, a teacher who earned tenure 14 years before the new law took effect, while it retained non-tenured teachers in positions for which Elliott was qualified. Elliott, who had been elected as president of his union, sued, claiming that the amendment violated the Contract Clause when applied to him. The Seventh Circuit affirmed summary judgment in Elliott’s favor. The statute, not the annual contracts, granted Elliott his contractual tenure rights, which became enforceable the year Elliott earned tenure. A decrease in job security necessarily impairs his rights under that contract. The change substantially disrupted teachers’ important and reasonable reliance interests. Improving teacher quality and public-education outcomes are important public interests of the highest order but even important goals and good intentions do not justify this substantial impairment of the tenure contract for already-tenured teachers. View "Elliott v. Board of School Trustees of Madison Consolidated Schools" on Justia Law

Hyatt and Shen Zhen entered into an agreement providing that Shen Zhen would renovate a Los Angeles hotel and operate it using Hyatt’s business methods and trademarks. Two years later Hyatt declared that Shen Zhen was in breach. An arbitrator concluded that Shen Zhen owes Hyatt $7.7 million in damages plus$1.3 million in attorneys’ fees and costs. The Seventh Circuit affirmed the district court’s order of enforcement, upholding the arbitrator’s refusal to issue a subpoena to Cadwalader, who represented Shen Zhen during the contract negotiations. The dispute arose two years after Cadwalader stopped working for Shen Zhen. The contract has an integration clause that forecloses resort to the negotiating history as an interpretive tool. The arbitrator also declined to disqualify Hyatt’s law firm, which Cadwalader joined about three years after the contract was signed, finding that the firm’s ethics screen ensured that no confidential information would reach Hyatt's lawyers. The court also rejected an argument that the award disregarded federal and state franchise law and should be set aside under 9 U.S.C. 10(a)(4), which covers situations in which “the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” View "Hyatt Franchising, L.L.C. v. Shen Zhen New World I, LLC" on Justia Law

Bio‐Systems produced biodegradation products that use bacteria to break down waste. Customers often required certificates of analysis, so Bio‐Systems counted the bacteria in a product before its sale. Betco purchased Bio‐Systems, after visiting Bio‐Systems’s sites, speaking with personnel, and examining financial information. Betco paid Peacock $5 million and placed $500,000 in escrow, to be released two years after closing if Belco had not identified any problems. Peacock continued to run the plant. Betco instructed him to focus on sales and profits. Betco knew before closing that the bacteria yields were inconsistent at the plant; it learned within a year of closing that some products were being shipped with below‐specification bacteria counts. Betco nonetheless released the escrow early in exchange for a discount. Betco subsequently discovered that certificates of analysis were being falsified. Betco sued Peacock. The court dismissed negligent misrepresentation and breach of contract claims as time‐barred by the Agreement, and found that Betco failed to prove violation of the duty of good faith and hadn’t shown any cognizable injury from the alleged violation. The Seventh Circuit affirmed rejection of all of Betco’s claims. When Betco purchased Bio‐Systems, it expected profitability and not to face claims for shipping products with intentionally falsified certificates; it received that. Betco did not expect that it was purchasing flawless processes. Under Wisconsin law, the inquiry is not whether Betco paid the appropriate price but whether Betco received the benefits that it expected. View "Betco Corp., Ltd. v. Peacock" on Justia Law

In 2009, Bancorp, which provides checking and savings accounts to individuals, purchased a bankers’ professional liability insurance policy from Federal. The policy stated: [Federal] shall pay, on behalf of an Insured, Loss on account of any Claim first made against such Insured during the Policy Period … for a Wrongful Act committed by an Insured or any person for whose acts the Insured is legally liable while performing Professional Services, including failure to perform Professional Services" but that Federal “shall not be liable for Loss on account of any Claim … based upon, arising from, or in consequence of any fees or charges” (Exclusion 3(n)). The 2010 Swift Complaint sought damages for Bancorp's "unfair and unconscionable assessment and collection of excessive overdraft fees.” Swift sought to represent a class of all U.S. BancorpSouth customers who "incurred an overdraft fee as a result of BancorpSouth’s practice of re-sequencing debit card transactions from highest to lowest.” In 2016, Bancorp agreed to pay $24 million to resolve all the claims, $8.4 million of which was for attorney’s fees, plus $500,000 in class administrative costs. Federal denied coverage. The Seventh Circuit agreed that Exclusion 3(n) excluded from coverage losses arising from fees and affirmed the dismissal of breach of contract claims and a bad faith claim. View "BancorpSouth Inc. v. Federal Insurance Co." on Justia Law

Doug Miller and his son signed a broad noncompetition agreement when Doug sold his fuel-additives business, E.T., in 2011. Doug sold his other company, Petroleum Solutions, to Kuhns about a year later. E.T.’s new owners sued the Millers for breaching the noncompete by providing assistance to Kuhns as he learned the Petroleum Solutions business. The Millers claimed the noncompete was overbroad and unenforceable and that their assistance to Kuhns came at a time when Petroleum Solutions was E.T.’s distributor, not its competitor. When E.T. severed its relationship with Petroleum Solutions in 2012, Doug told Kuhns that the noncompetition agreement prevented further help and ceased assisting him. On summary judgment, the district judge held that the noncompetition agreement was enforceable but the Millers did not breach it. The Seventh Circuit affirmed, agreeing that the contract was not overbroad, but that the Millers did not breach it. A company’s distributor is not its competitor, so the Millers’ assistance to Kuhns in 2012 was "fair game." The contract, read reasonably, did not require Doug to break his preexisting lease with Kuhns. View "E.T. Products, LLC v. D.E. Miller Holdings, Inc." on Justia Law

Rooftops sells tickets to view Cubs games and other events at Wrigley Field from the roofs of buildings it controls. Chicago has an ordinance allowing the rooftop businesses. Before the 2002 season, the Cubs installed a windscreen above the outfield bleachers, obstructing the views from rooftop businesses and sued Rooftops, claiming misappropriation of Cubs’ property by charging fees to watch games.The parties settled by entering into the License Agreement running through 2023. Rooftops agreed to pay the Cubs 17% of their gross revenues in exchange for views into Wrigley Field. The Agreement contemplated Wrigley Field's expansion. In 2013, the Cubs released a mock‐up of its proposed renovation, showing that rooftop businesses would be largely blocked by the construction. The city approved the plan over objections. Rooftops claimed that Cubs’ representatives used the threat of blocking views and other “strong-arm tactics” as leverage to force a sale, and sued, alleging: attempted monopolization; false and misleading commercial representations, defamation, false light, and breach of the non‐disparagement provision; and breach of contract. The court denied Rooftops’ motion for a preliminary injunction. The Seventh CIrcuit affirmed its dismissal of monopolization claims because Major League Baseball’s antitrust exemption applies; Rooftops failed to establish a plausible relevant market; and the Cubs cannot be limited by antitrust law from distributing their own product. The contract's plain language did not limit expansions to Wrigley Field's seating capacity. View "Right Field Rooftops, LLC v. Chicago Cubs Baseball Club, LLC" on Justia Law

From 2006-2012 Packerland deceived at least one of its customers about the protein content of its Whey Protein Concentrate. Land O’Lakes purchased Packerland’s protein concentrate for use in making foods for calves and other young animals. Buyers infer protein levels from measuring nitrogen: a seller can add another nitrogen-rich substance to produce higher scores. The Ratajczaks, who owned Packerland, started adding urea to its protein concentrate. in 2006. Land O’Lakes suspected that the concentrate was high in nonprotein nitrogen but could not learn why; the Ratajczaks made excuses that Land O’Lakes accepted. The Ratajczaks sold Packerland in 2012. The new owner kept them as employees; they kept adding urea until the buyer learned what the truth. The Ratajczaks lost their jobs and settled for about $10 million before the buyer filed a complaint. Land O’Lakes stopped buying Packerland’s product and asserted claims of breach of contract, fraud, and violation of the Racketeer Influenced and Corrupt Organizations Act. Packerland’s insurers refused to defend or indemnify it or the Ratajczaks; the Ratajczaks’ personal insurer refused to indemnify them for their settlement with Packerland’s buyer. The district court dismissed Land O’Lakes’s suit and ruled in favor of the insurers. The Seventh Circuit affirmed, rejecting Land O’Lakes’ claim to treble damages under RICO and state-law and the Ratajczaks’ claims that Packerland’s insurers and their own insurers had to defend and indemnify them. View "Land O'Lakes, Inc. v. Ratajczak" on Justia Law

In 2010, Mohr and Volvo entered into a heavy truck dealership agreement. In 2012, Volvo sought a declaratory judgment that it was entitled to terminate Mohr’s dealership because Mohr had misrepresented that it would build a new long‐term facility for the dealership. Mohr complained that Volvo had violated Indiana’s Franchise Disclosure and Deceptive Franchise Practices Acts by promising to award Mohr a Mack Truck dealership franchise, which would have justified Mohr’s investment in the new facility. Volvo gave the Mack franchise to another company. Mohr also accused Volvo of providing more favorable concessions on truck pricing to other franchise dealerships through its Retail Sales Assistance program. The district court granted summary judgment, holding that the integration clause in the dealer agreement barred the new‐facility claim and the Mack franchise claim. Following a trial on the unfair discrimination claim, a jury awarded Mohr $6.5 million. The Seventh Circuit reversed the award for the unfair discrimination claim and affirmed the summary judgment rulings. The court stated that these were sophisticated parties, bound by the integration clause and that Mohr did not establish unfair discrimination with respect to price concessions. View "Andy Mohr Truck Center, Inc. v. Volvo Trucks North America" on Justia Law