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

CIT, a large finance company, leased credit‐card processing machines to businesses and individuals. The leases describe themselves as business rather than consumer contracts and contain a forum‐selection clause that requires any disputes to be litigated in Cook County, Illinois and governed by Illinois law. Each lease also required a personal guaranty, by the lessee, an agent of the lessee, or someone else. The leases were ultimately assigned to Pushpin, which filed suits in small‐claims courts in Cook County against more than 3000 of the guarantors of defaulted leases. The guarantors filed a class-action, claiming that in invoking the forum‐selection clause Pushpin hoped to induce default judgments, in violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and related torts. After remands, the district court accepted jurisdiction under the Class Action Fairness Act, 28 U.S.C. 1453(b), and dismissed on the merits. The Seventh Circuit affirmed: Any forum‐selection clause will be an inconvenience to a nonresident signer of the contract, so that the challenge amounted to urging a blanket prohibition of such clauses. View "Johnson v. Pushpin Holdings, LLC" on Justia Law

Knauf Insulation, the Delaware subsidiary of a German corporation, has its principal place of business in Indiana. SBI was a distributor of Knauf’s insulation; the Dowds are SBI’s principals. For many years SBI was delinquent in paying Knauf. By 2012, when Knauf filed suit , SBI owed Knauf more than $3.5 million. The district judge granted Knauf summary judgment with interest on the debt. The Seventh Circuit affirmed, rejecting arguments that the Dowds’ 2003 guaranty, of SBI’s debts to Knauf did not “intend or contemplate being sued by Knauf in Indiana on its much larger claims against SBI, arising more than four years later,” and that despite the forum‐ selection clause “SBI, an out‐of‐state distributor doing business in the southeast, did not have such minimum contacts with Indiana as would subject it to Indiana’s jurisdiction.” The size disparity between the firms did not render the guaranties unconscionable or unenforceable. The statute of limitations barred a purported counter-claim. View "Knauf Insulation, Inc. v. S. Brands, Inc." on Justia Law

ACL manufactures and operates tow boats and barges that operate in U.S. inland waterways. Lubrizol manufactures industrial lubricants and additives, including a diesel‐fuel additive, LZ8411A. VCS distributed the additive. Lubrizol and VCS jointly persuaded ACL to buy it from VCS. Before delivery began, Lubrizol terminated VCS as a distributor because of suspicion that it was engaging in unethical conduct: a Lubrizol’s employee had failed to disclose to his employer that he was also a principal of VCS. Lubrizol did not inform ACL that VCS was no longer its distributor. No longer able to supply ACL with LZ8411A, VCS substituted an additive that ACL contends is inferior to LZ8411A. VCS didn’t inform ACL of the substitution. According to ACL, Lubrizol learned of the substitution, but did not inform ACL. When ACL discovered the substitution, it sued both companies. ACL settled with VCS. The district judge dismissed Lubrizol. The Seventh Circuit affirmed, rejecting claims that Lubrizol had a “special relationship” that required it to disclose ACL’s conduct, that VCS was Lubrizol’s apparent agent, and of “quasi contract” between ACL and Lubrizol. View "Am. Commercial Lines, LLC v. Lubrizol Corp." on Justia Law

Sgouros purchased a “credit score” package from TransUnion. Armed with the number TransUnion gave him, he went to a car dealership and tried to use it to negotiate a favorable loan. The score he had bought, however, was useless: it was 100 points higher than the score pulled by the dealership. Sgouros filed suit, asserting that TransUnion violated the Fair Credit Reporting Act, 15 U.S.C. 1681g(f)(7)(A); the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1; and the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.010, by misleading consumers by failing to inform them that the formula used to calculate their purchased credit scores was materially different from the formula used by lenders. TransUnion moved to compel arbitration, asserting that the website through which Sgouros purchased his product included an agreement to arbitrate. The district court concluded that no such contract had been formed and denied TransUnion’s motion. The Seventh Circuit affirmed after evaluating the website and concluding that TransUnion had not put consumers on notice of the terms of agreement, as required by Illinois law, but actually distracted them from noticing those terms. View "Sgouros v. TransUnion Corp." on Justia Law

In 1998 IGF bought Continental’s crop-insurance business at a price to be determined at either side’s option by the exercise of a put or call. In 2001 Continental exercised its put option; under the contractual formula, IGF owed Continental $25.4 million. Around that same time, IGF sold its business to Acceptance for $40 million. The Symons, who controlled IGF, structured the purchase price: $16.5 million to IGF; $9 million to IGF's parent companies Symons International and Goran in exchange for noncompetition agreements; and $15 million to Granite, an affiliated Symons-controlled company, for a reinsurance treaty. Continental, still unpaid, sued for breach of contract and fraudulent transfer. The court found for Continental and pierced the corporate veil to impose liability on the controlling companies and individuals. The Seventh Circuit affirmed, finding Symons International liable for breach of the 1998 sale agreement; Symons International, Goran, Granite, and the Symons liable as transferees under the Indiana Uniform False Transfer Act; and the Symons liable under an alter-ego theory. The Symons businesses observed corporate formalities only in their most basic sense. The noncompetes only made sense as a fraudulent diversion of the purchase money, not as legitimate protection from competition. The reinsurance treaty. which was suggested bySymons and outside industry norms, was unjustified and overpriced. View "Cont'l Cas. Co. v. Symons" on Justia Law

Beverly, a former Abbott employee whose employment was terminated on October 20, 2010, filed suit against Abbott. She alleged that during her employment, Abbott had discriminated and retaliated against her on the basis of her German nationality in violation of Title VII of the Civil Rights Act, as well as on the basis of her disabilities in violation of the Americans with Disabilities Act. The district court denied Abbott’s motion for summary judgment and the parties engaged in a private mediation. During mediation, the parties signed a handwritten agreement stating that Beverly demanded $210,000 and mediation costs in exchange for dismissing the lawsuit. Abbott later accepted Beverly’s demand and circulated a more formal settlement proposal. After Beverly refused to execute the draft proposal, Abbott moved to enforce the original handwritten agreement. The court found that the parties entered into a binding settlement agreement and granted Abbott’s motion to enforce. The Seventh Circuit affirmed, holding that the handwritten agreement was valid and enforceable, since its material terms were clearly conveyed and consented to by both parties, and the existence and content of the draft proposal do not affect enforceability. View "Beverly v. Abbott Labs., Inc." on Justia Law

Segal, a lawyer, CPA, and insurance broker, and his company, were indicted for racketeering, mail and wire fraud, making false statements, embezzlement, and conspiring to interfere with operations of the IRS. Convicted in 2004, Segal was sentenced to 121 months in prison. After further proceedings, in 2011, he was resentenced to time served and ordered to pay $842,000 in restitution and to forfeit to the government his interest in the company and $15 million. In 2013, the parties entered a binding settlement that specified the final disposition of Segal’s assets. After the district judge approved the settlement the parties disagreed and returned to court. The agreement gave Segal two of eight insurance policies on his life outright and an option to purchase the others, but required that he exercise the option within six months of approval of the settlement. He opted to purchase one policy before the deadline and asked for an extension, claiming that the government had not promptly released money owed to him and had delayed his efforts to obtain information from the insurance companies. The Seventh Circuit affirmed refusal to extend the deadline, but reversed with respect to claims relating to Segal’s right to repurchase his shares of the Chicago Bulls basketball team. View "United States v. Segal" on Justia Law

VLM, a Montreal-based supplier, sold frozen potatoes to IT in Illinois. After nine successful transactions, IT encountered financial difficulty and failed to pay for the next nine shipments. Invoices sent after delivery included a provision purporting to make IT liable for collection-related attorney’s fees if it breached the contracts. VLM sued; the deadline for an answer passed. The court entered a default. On defendants' motion, the court vacated the default as to IT’s president only. All three defendants then filed answers, contesting liability for attorney’s fees. The judge applied the Illinois Uniform Commercial Code and found that the fee provision had been incorporated into the contract. The Seventh Circuit reversed, holding that the U.N. Convention on Contracts for the International Sale of Goods applied. On remand, the judge applied the Convention and held that the fee provision was not part of the contracts and that IT could benefit from this ruling, despite the prior entry of default. The Seventh Circuit affirmed. IT never expressly assented to the attorney’s fees provision in VLM’s trailing invoices, so under the Convention that term did not become a part of the contracts. VLM waived its right to rely on the default by failing to raise the issue until its reply brief on remand. View "VLM Food Trading Int'l, Inc. v. Ill. Trading Co." on Justia Law

Plaintiffs, current and former Chicago taxi drivers, paid a “shift fee,” a lease payment that allows the driver to operate one of the defendants’ taxis and earn income. Weekly fees range from $500 to $800 or more. Drivers also pay operating expenses, including fuel, airport taxes, upkeep, and sometimes insurance payments. The drivers do not earn traditional wages or overtime pay. Their only source of income is what they make in fares and tips from passengers. The drivers contend that they often receive less than minimum wage and for some shifts, pay more for fees and expenses than they receive from fares and tips. The Seventh Circuit affirmed dismissal of their class action suit under the Illinois Wage Payment and Collection Act, 820 ILCS 115 and asserting unjust enrichment. The Act defines “wages” as compensation owed by the employer pursuant to an employment agreement between the parties. Even if the drivers were employees under an employment agreement, that agreement did not obligate defendants to compensate the drivers. The Act provides no substantive relief beyond what the underlying employment contract requires. View "Enger v. Chicago Carriage Cab Corp." on Justia Law

After its 2010 merger with Continental Airlines, United Airlines made changes to its frequent‐flier rewards program. In 2014, a member of United’s MileagePlus rewards program claimed that United breached a contract by reducing his anticipated program benefits. The Seventh Circuit concluded (Lagen decision) that the reduction of benefits was not a breach of contract because the program rules allowed United to change the benefits at any time. The plaintiffs in this case also sued for breach of contract. Relying on Lagen, the district court granted summary judgment to United. The Seventh Circuit affirmed, rejecting arguments that the case was different from Lagen because it concerned changes to the “Premier” status program. United did promise to provide the plaintiffs with premier benefits in 2012 that matched the premier benefits previously available in 2011 and cannot be liable for breaching a contract that it did not make. View "Hammarquist v. United Cont'l Holdings, Inc." on Justia Law