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

William Charles Construction (WCC) entered into a labor agreement with the Illinois Department of Transportation for the “Biggsville” construction project to expand a section of Rt. 34 to four lanes. A jurisdictional dispute between two unions, each claiming the right for their member drivers to operate large trucks involved in the excavation work, was resolved by an arbitrator. Later, a Joint Grievance Committee (JGC) determined, under a subordinated collective bargaining agreement, that WCC owed the Teamsters back pay and fringe benefit contributions ($1.4 million) for having assigned the operation of heavy trucks to the International Union of Operating Engineers rather than the Teamsters. A second JGC award determined that WCC was liable for two days’ back pay for having assigned work to two Teamsters in violation of other Teamsters’ seniority rights. WCC filed a declaratory action under the Labor-Management Relations Act, 29 U.S.C. 185. The court granted the Teamsters summary judgment, finding that WCC filed its complaint outside the statute of limitations. The Seventh Circuit reversed the grant of summary judgment to the Teamsters and dismissed the Teamsters’ counterclaim for enforcement of one of the JGC awards. WCC's challenge to the awards is not barred by the statute of limitations because WCC did not receive notice of their final entry. The greater of the two JGC awards is void because WCC did not agree to arbitration by the JGC. View "William Charles Constr. Co., LLC v. Teamsters Local Union 627" on Justia Law

Garbe, an experienced pharmacist, began working at Kmart pharmacy in Ohio in 2007. When Garbe picked up a personal prescription at a competitor pharmacy, he discovered the competitor pharmacy had charged his Medicare Part D insurer far less than Kmart ordinarily charged it for the same prescription. He inspected Kmart’s pharmacy reimbursement claims and discovered that Kmart routinely charged customers with insurance—whether public or private—higher prices than customers who paid out of pocket, even ignoring “discount programs sales. Garbe shared his discovery with the government and filed a qui tam suit in 2008. The government has not intervened. Garbe asserts that Kmart’s “usual and customary” prices should be based on the prices Kmart charged the majority of its cash customers. The district court granted Garbe partial summary judgment. On interlocutory appeal, the Seventh Circuit, reversed in part, holding that Medicare Part D Pharmacy Benefit Managers and Plan Sponsors are not “officers or employees of the United States” for purposes of the False Claims Act, 31 U.S.C. 3729(a). The court agreed that Garbe has satisfied the materiality requirement under the Act for his Medicare Part D claims; and that Kmart’s “discount” prices were offered to the “general public.” View "Garbe v. Kmart Corp." on Justia Law

Under the Urbanized Area Formula Program, 49 U.S.C. 5307, the Federal Transportation Administration (FTA) administers grant funding to urban transit programs for “operating costs of equipment and facilities for use in public transportation.” Recipients must submit “financial, operating, and asset condition information” to the National Transit Database. The agency apportions grants based, in part, on the number of Vehicle Revenue Miles (VRM) that accrue while a vehicle is “in revenue service,” available to the general public. In 2005, the Illinois House of Representatives called for a performance audit of the Chicago Transit Authority (CTA). The audit concluded that the CTA, from possibly as early as 1986, had been overstating its VRM and had received higher than justified UAFP disbursements. Notified of the report, the FTA required that CTA revise its data from 2011 forward. In 2012, a nonprofit watchdog organization contacted the Department of Justice requesting an investigation into the CTA’s reporting practices. The group then filed suit under the qui tam provision of the False Claims Act, 31 U.S.C. 3730. The Seventh Circuit affirmed dismissal, agreeing that the district court lacked subject matter jurisdiction because the allegations of wrongdoing had been publicly disclosed at the time the action was filed. View "Cause of Action v. CTA" on Justia Law

In 2011, Bogina sued under the False Claims Act, 31 U.S.C. 3729, seeking compensation for exposing fraud allegedly perpetrated against the federal government and several state governments. Defendants included a major supplier of medical equipment to institutions reimbursed by Medicare and other federal programs and its customer, a chain of nursing homes. The district judge dismissed the federal claims as being too similar to those in a prior suit and relinquished jurisdiction over the state claims. The Seventh Circuit affirmed, finding differences between this suit and an earlier suit “unimpressive” and stating that it did not matter that the alleged fraud continued. View "Bogina v. Medline Indus., Inc." on Justia Law

Plaintiffs, Woodward employees, filed a qui tam action under the False Claims Act, alleging that Woodward falsely certified helicopter engine parts that it sold to the government. Plaintiffs had complained that the sensors at issue did not meet quality standards and had refused to work on the order. Following an investigation, a Defense Contract Management Agency Technical Specialist concluded that there was “nothing either incorrect or wrong with the procedures, assembly, or testing of the sensors.” The government continues to order, pay for, and use Woodward’s sensor The Seventh Circuit affirmed summary judgment in favor of Woodward, agreeing that even if Woodward made false statements to the government, no reasonable jury could find that it made the statements knowingly or that the statements were material. View "Marshall v. Woodward, Inc." on Justia Law

A jury found Ferrell, a licensed psychologist, and Bryce, Ferrell’s employee, guilty of six counts of healthcare fraud, 18 U.S.C. 1347. Ferrell was sentenced to 88 months of imprisonment. The Seventh Circuit affirmed, upholding the district court’s refusal to admit two out-of-court statements made by Bryce’s brother (also Ferrell’s employee), and contained in a voicemail and an email. The district court held that these statements were hearsay and did not fall within Rule 804(b)(3)’s hearsay exception. The district court held that although the brother was unavailable to testify, the statements were not against his interest and the corroborating circumstances did not indicate that his statements were trustworthy. The court also upheld admission of testimony by another doctor concerning Ferrell’s conduct while in Texas. The court found that the testimony did not constitute impermissible character evidence under Fed. R. Evid. 404(b). View "United States v. Ferrell" on Justia Law

In 2005 the Army Corps of Engineers invited bids on a federal reservoir project in Illinois. One of the successful bidders was Slurry, which leased from Pileco a trench cutter made by Bauer. Slurry was a prime contractor on the Corps of Engineers’ project; the Miller Act, 40 U.S.C. 3131, requires prime contractors on some government construction projects to post bonds. Slurry used Fidelity as surety. The bond insured against a failure by Slurry to pay subcontractors, such as Pileco. Contending that the cutter was defective, Slurry refused to pay the agreed rental price. Pileco sued Slurry and Fidelity, asserting breach of contract that Fidelity violated the Miller Act by failing to reimburse Pileco for costs associated with Slurry’s reneging on its obligation to pay. Slurry counterclaimed. A second trial resulted in a verdict in Pileco’s favor except for a $357,716 equitable adjustment in favor of Slurry, based on time that cutter was inoperable because of a defect attributable to Pileco. The net result was that Pileco was awarded $2.23 million against Slurry for breach of contract and the same amount against Fidelity for the Miller Act violation. The Seventh Circuit affirmed, except with respect to the denial of prejudgment interest and costs. View "Pileco, Inc. v. Slurry Systems, Inc." on Justia Law

Plaintiffs, a putative class of electrical workers, claimed that their respective employers, in collusion with Metropolitan Pier and Exposition Authority (MPEA, which used electricians supplied by the employers) wrongfully terminated them, in violation of a collective bargaining agreement (CBA) and federal labor law and circumvented the CBA-mandated hiring process and that their union, International Brotherhood of Electrical Workers, failed to adequately represent them in the CBA-mandated grievance process. The district court denied motions to dismiss four counts, but dismissed a declaratory judgment motion against MPEA and two employers, and the claim of state law tortious interference with contracts against MPEA. The district court held that, as a political subdivision, MPEA is not an “employer” under Section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. 185. Plaintiffs appealed only the dismissal of the tortious interference claim against MPEA. The Seventh Circuit affirmed, rejecting an argument that jurisdiction was created by the need to interpret the CBA. With respect to political subdivisions, section 301 preempts not only claims “founded directly” on the collective bargaining agreement, but also state law claims that indirectly implicate a collective bargaining agreement. View "Healy v. Metro. Pier & Exposition Auth." on Justia Law

Beginning in 2008 Mullins served as Cook County’s Director of Public Affairs and Communications. At that time, contracts requiring the county to spend $25,000 or more had to be approved by its Board of Commissioners. Contracts that required the county to spend less than $25,000 only required the approval of the county’s purchasing agent. The government charged Mullins and co-defendants—vendors to whom the county awarded contracts—with manipulating the system. Mullins helped these vendors obtain payment under county service contracts, without the vendors having to complete any work, and in exchange they paid Mullins $34,748 in bribes. Jurors convicted him of four counts of wire fraud, 18 U.S.C. 1343, and four counts of bribery, section 666. The Seventh Circuit rejected Mullins’s challenge to the sufficiency of the evidence and claim of prosecutorial misconduct. View "United States v. Mullins" on Justia Law

Dunnet, a highway construction company, is prequalified to bid and work on Illinois Department of Transportation (IDOT) projects and competes for federally assisted highway construction contracts. Dunnet is owned and controlled by two white males. Between 2007 and 2009, its average annual gross receipts were over $52 million. To receive federal-aid funds for highway contracts, IDOT must have a “disadvantaged business enterprise” (DBE) participation program. A DBE is a for-profit small business concern that is at least 51% owned and controlled by one or more socially and economically disadvantaged individuals. There is a rebuttable presumption that women and members of racial minority groups are socially and economically disadvantaged, but an individual owner of any race or gender may qualify as “socially and economically disadvantaged.” A firm is not an eligible DBE if the firm (including affiliates) has had average annual gross receipts over its previous three fiscal years, greater than $22.41 million. Illinois has not met its DBE participation goals. Dunnet was denied a goal waiver and was not awarded a major expressway project. The Seventh Circuit affirmed summary judgment rejecting Dunnet’s claim that IDOT’s DBE Program discriminates on the basis of race, concluding that Dunnet lacked standing to raise an equal protection challenge based on race and that the Program survived the constitutional and other challenges. View "Dunnet Bay Constr. Co. v. Borggren" on Justia Law