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

Couch was employed as a truck driver by B&B, a private company that has Highway Contract Route contracts with the Postal Service. While Couch was making a delivery to a postal facility in Illinois, a U.S. Postal Service employee ran over his foot with a forklift. Two years later, Couch died, allegedly as a result of complications from the injury. After her husband died, plaintiff sued the United States under the Federal Tort Claims Act, which provides a cause of action for personal injuries negligently caused by federal employees acting within the scope of their employment, 28 U.S.C. 1346(b)(1). The district court granted the United States summary judgment, finding that Couch was a “borrowed employee,” so that workers’ compensation would provide Couch’s only remedy against both the borrowing and lending employers. The Seventh Circuit reversed. The private trucking company does not merely “lend employees” to the Postal Service but provides mail transportation and delivery services. The company trains, equips, pays, and supervises its own employees using its own equipment to provide these services. View "Couch v. United States" on Justia Law

Medicare pays teaching hospitals for work by residents when a teaching physician supervises. During the 1990s, HHS concluded that many hospitals were billing for unsupervised services and began to audit invoices. There was also a GAO report and private litigation: qui tam suits under the False Claims Act, allowing relators to collect a bounty. Under 31 U.S.C. 3730(e)(4)(A), suits cannot be based upon public disclosure of allegations or transactions in public agencies’ official reports unless the relator is an original source of information. A prior case concluded that the 1998 GAO report and similar public documents disclosed that billing for unsupervised work was common practice. The district court dismissed a suit filed against a teaching hospital in 2004, claiming to describe conduct, such as inadequate supervision, not previously disclosed. The Seventh Circuit vacated. No one who read the GAO report, or followed the progress of the audits, would suspect that Rush University was misrepresenting "immediate availability" of teaching physicians during concurrently scheduled procedures. The complaint alleged a kind of deceit that the GAO report does not attribute to any teaching hospital.

The State of Illinois, facing a significant and unprecedented fiscal deficit, brokered a series of compensation agreements with the exclusive bargaining representative for 40,000 state employees. The parties trimmed several hundred million dollars in fiscal years 2011 and 2012 by deferring general wage increases and instituting a voluntary furlough program. Despite these measures, the fiscal year 2012 budget did not contain sufficient appropriations for deferred wage increases due employees of 14 state agencies. The state froze the pay of those employees, repudiating agreements with the union. The district court dismissed a suit that alleged violations of the Contracts Clause and the Equal Protection Clause and state law. The Seventh Circuit affirmed, finding the Contracts Clause claim barred by the Eleventh Amendment. The court noted that the state’s actions did not bar a breach of contract suit. There was a rational relationship between those actions and a legitimate governmental purpose, precluding an equal protection claim.

Following published stories about an investigation of their business practices, principals of a waste-management company improved their chances of winning a bid for a contract to refurbish garbage carts for the City of Chicago by slashing their bid. They encouraged other companies to bid in hopes of being hired as a subcontractor if another company won the bid. Each bidder had to certify that it had not entered into any agreement with any other bidder or prospective bidder relating to the price, nor any agreement restraining free competition among bidders. The company won the bid, and after a Justice Department investigation for antitrust violations, the principals were convicted of mail and wire fraud. The Seventh Circuit reversed, reasoning that the purpose of "colluding" with other potential bidders had not been to prevent them from underbidding but to provide insurance against the bid being rejected based on the earlier investigation. There was no harm as a result of the company encouraging additional bidders.

Illinois law provides that workers at public works projects must be paid not less than general prevailing rate of hourly wages for work of a similar character on non-federal public works in the locality, 820 ILCS 130/3. The public body awarding the contract is required to determine prevailing wage, but the Department of Labor conducts annual investigations of prevailing wage for each type of construction and demolition work in each locality and, in practice, public bodies simply adopt that determination. Landscape contractors who do non-federal public works projects sued the Department, arguing that it violated the due process clause by delegating ascertainment of prevailing wage to private entities, namely a labor union and contractors with which it has a collective bargaining agreement. The district judge granted summary judgment in favor of the Department. The Seventh Circuit affirmed, noting that the contractors did not object to the prevailing wage determination.

Plaintiff, certified by the city as a minority-owned business eligible for favored treatment, sells a variety of products. The city is virtually its only customer. Early in 2005 the city began to suspect that plaintiff was a broker rather than a wholesaler, which would make it ineligible to bid for contracts as an MBE. Plaintiff had only six employees, though it claimed to have a warehouse. The city never completed its investigation, so plaintiff retains its certification. The city also believed that the company had shorted it on a shipment of aluminum sign blanks, and ultimately debarred it from dealing with the city. The company sued immediately and obtained a temporary restraining order; debarment was in effect for only eight days. The city abandoned its attempt to debar the company. The district court then ruled in favor of defendants. The Seventh Circuit affirmed. Claims by the principals in the company were frivolous, given that they continued to be employed by the company. The temporary diminution in business did not amount to destruction of the company nor did it constitute retaliation. Plaintiff did not prove breach of contract.

In 2000 the Tribe received funding under the Hazardous Fuels Reduction program, created by the Bureau of Indian Affairs to gradually reintroduce the beneficial aspects of fire into ecosystems such as densely-wooded forests. After obtaining BIA approval, the Tribe began HFR work in December 2000, and began invoicing BIA in 2001. Reports of diversions of funds prompted an inspection. Inspectors concluded that the invoices overstated the work done and that some of the work actually increased the risk of fire. A second inspection led to the conclusion that the defendants were submitting false invoices. After further investigation and failed settlement negotiations, the government filed a False Claims Act suit, 31 U.S.C. 3729-33, in 2007. After a nine-day trial, the defendants prevailed; they moved for attorney's fees under Equal Access to Justice Act, 28 U.S.C. 2412(d)(1)(A), or sanctions under Rule 37(c)(2). The district court denied both motions. The Seventh Circuit affirmed, acknowledging its discomfort with apparent "government overreaching." The government’s position throughout trial was substantially justified, so the district court did not abuse its discretion in denying the EAJA motion.

In a national emergency, the Department of Defense can augment its own capabilities with aircraft drawn from the "Civil Reserve Air Fleet," composed of aircraft owned by commercial carriers but committed voluntarily for use during emergencies. The Fleet is divided into teams of airlines. The Department awards mobilization value points; the more points a member has, the more non-emergency Department air transportation the member can bid on. Points are transferrable within teams. Members of defendant's team have a contract with a one-year term and a separate three-year agreement concerning distribution of business among members. Plaintiff's suit is based on a 2006 three-year agreement in the form of a letter. A change from what members of the team had been doing ultimately led to plaintiff's withdrawal from the team. Plaintiff subsequently went into bankruptcy. Plaintiff won a jury verdict of almost $66 million. The Seventh Circuit reversed, holding that the "agreement" did not include crucial terms and was so indefinite as to be unenforceable. The court also criticized the regression analysis on which the award was calculated. A promissory estoppel claim, while not preempted, failed on the facts.

Airlines, users of airports owned by the City of Chicago, have use agreements that make they city responsible for runway clearing. The airlines pay a per-landing fee, based on the city's actual expenses. In 1999 and 2000 the airports were crippled by severe snowstorms. The city obtained $6,000,000 in reimbursement from FEMA under the Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121. Years later FEMA ordered the city to return the money, based on a provision of the Act concerning duplicate benefits. FEMA asserted that the use agreements entitled the city to reimbursement of costs from the airlines. After exhausting administrative remedies the city filed suit. The district court denied the airlines' motion to intervene. The Seventh Circuit reversed. Finding that the airlines have standing, the court stated that t would not be as "efficient to litigate this three-cornered dispute in two lawsuits rather than one."

A newborn suffered severe brain damage because doctors failed to promptly diagnose and treat an infection contracted at his 2003 birth. He was born prematurely and certain tests, normally done during pregnancy, were not performed by the federally-subsidized clinic where the mother received care. The clinic and its doctors are deemed federal employees under the Federally Supported Health Centers Assistance Act, 42 U.S.C. 233(g)-(n), and shielded from liability under the Federal Tort Claims Act. In 2005 the parents filed suit in state court and, in 2006, HHS denied an administrative claim for damages. Within six months of the denial the case was removed to federal court. In 2010, the district court held that the claim was filed within the two year statute of limitations under the FTCA (28 U.S.C. 2401(b)) and awarded more than $29 million in damages against the government. The Seventh Circuit affirmed. A claim only accrues when a plaintiff obtains sufficient knowledge of the government-related cause of his injury; the plaintiffs were reasonably diligent.