Articles Posted in Legal Ethics

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Camp Drug Store filed a proposed class action, alleging that Cochran Wholesale had violated the Telephone Consumer Protection Act, 47 U.S.C. 227, by faxing unsolicited advertisements to class members. The parties entered into early mediation and reached a settlement. Cochran would “make up to $700,000.00 available” but was not required to create a separate account to hold the funds or to deposit them with the court. Each class member could submit a claim for $125; if the value of the claims exceeded the total available funds, each timely claim would be subject to a pro‐rata reduction. Any funds that were not claimed by class members were to be kept by Cochran. Each representative plaintiff was entitled to an incentive award of $15,000, and class counsel was to be paid one-third of the Settlement Fund ($233,333.33). The total Cochran actually paid to claimants was $220,625.00. The court approved the settlement but reduced the proposed attorney fee to $73,468.13 and incentive awards to $1,000. Camp argued that the settlement created a common fund against which the reasonableness of the fee award should be assessed. The Seventh Circuit affirmed, rejecting the “common fund” argument.. Given the early stage at which the litigation settled, the reductions in the fee and incentive awards were not an abuse of discretion. View "Camp Drug Store, Inc. v. Cochran Wholesale Pharmaceutic, Inc." on Justia Law

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In 2005, World Outreach, a Christian religious organization, purchased a Chicago building from the YMCA, which had operated a community center and 168 single-room occupancies (SROs) for 80 years. The community center was a “legal nonconforming use,” which, under Chicago’s zoning ordinance, “is not affected by changes of tenancy, ownership, or management.” The city nonetheless insisted that a Special Use Permit was required. While the city was unlawfully withholding licenses, Hurricane Katrina struck New Orleans. Thousands of residents were evacuated and transplanted. WO claimed that it had a verbal agreement with Federal Emergency Management Agency to use the SRO rooms at $750 per room, per month, for one year, but never received any evacuees. The city sued WO for operating the community center without a permit but later voluntarily dismissed. WO then sued the city, citing the Religious Land Use and Institutionalized Persons Act (RLUIPA), 42 U.S.C. 2000cc. In August 2007, the city issued the licenses. Following a remand, the district court granted WO summary judgment on its claim for defending the frivolous lawsuit, awarding $15,000, but rejected all other claims. On remand of the RLUIPA claim regarding the city’s unlawful deprivation of the licenses. WO ultimately reduced its damages claim from $2.44 million to $363,000 in February 2016. In April 2016, the city made an offer of judgment of $25,001 “plus reasonable costs and attorney’s fees.” WO accepted and sought $1,913,929.20 in attorney’s fees. The Seventh Circuit affirmed the district court’s modification of the lodestar to $1,559,991.50, application of a 70% across-the-board reduction, and award of $467,973.45, noting that the award of $40,001 was a “dismal failure” in contrast to the damages sought for nearly nine years. View "World Outreach Conference Center v. City of Chicago" on Justia Law

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In 2011-2012 a million people received phone calls asking them to take political surveys in exchange for a chance to go on a free cruise. Some recipients filed a class action under the Telephone Consumer Protection Act, 47 U.S.C. 227, seeking damages from defendants who had not placed the calls but had directed them. The district court certified a class and later granted plaintiffs partial summary judgment. The parties settled. Plaintiffs agreed to release their claims against all defendants and their agents. Defendants agreed to pay into a fund between $56 million and $76 million, depending on the number of approved claims submitted. Out of the fund will come payments to the class, incentive awards to the named representatives, about $2 million in administrative expenses, and attorneys’ fees. The class will receive payments in two rounds. If some claimants do not cash the checks during the second round, remaining funds will go to “an appropriate cy pres recipient.” Over the objections of a class member, the court approved the settlement, estimating that each claimant will receive $400. Class counsel will receive 36% of the first $10 million, 30% of the next $10 million, 24% of the next $36 million, and 18% of any additional recovery. The Seventh Circuit affirmed, rejecting arguments that the award of fees overcompensates class counsel and that the settlement’s approval was improper. View "McCabe v. Caribbean Cruise Line, Inc." on Justia Law

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After Indianapolis police officers Anders and Carmack divorced, Anders stalked and threatened Carmack. The police department eventually opened a criminal investigation and placed a GPS tracking device on Anders's car with a warning mechanism to alert Carmack if he passed nearby. Carmack spent nights away from home so Anders could not locate her. Anders eventually discovered the device on his car and called Robinett—his friend and fellow police officer—who examined it and confirmed that the device was a GPS. Robinett did not tell investigators that Anders had discovered the device. Days later Anders drove to Carmack’s house and killed her and himself. She was not alerted to his approach. Carmack’s estate sued the city, Robinett, and others. The judge granted the defendants summary judgment, holding that Robinett was not liable under 42 U.S.C. 1983 because he did not act under color of state law. Robinett requested that the city pay his attorney’s fees and costs under the Indiana public-employee indemnification statute. The judge denied the motion, ruling that the statute applies only when the employee acted within the scope of his employment. The Seventh Circuit affirmed. A mere allegation that the employee acted within the scope of his employment does not trigger the indemnification obligation. View "Robinett v. City of Indianapolis" on Justia Law

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Capps sued six law enforcement officers under 42 U.S.C. 1983, for failure to intervene in an unlawful search and for use of excessive force. The parties attempted to negotiate a settlement: the defendants offered $47,500; Capps countered with $2 million. The defendants then offered $200,000, Capps demanded $3.5 million. Capps’s final settlement demand was for $3.6 million, which the defendants rejected. At trial, Capps succeeded on eight of his 10 claims, including his failure-to-intervene claims against each defendant and on his excessive-force claims against two defendants. A jury awarded Capps $22,000 in compensatory damages and $10,092 in punitive damages. After trial Capps sought to recover attorney’s fees pursuant to section 1988(b). After a failed settlement conference before a magistrate, the trial judge sua sponte “referred” the fee petition Chief Judge Reagan. No party objected. Judge Reagan explained that he was hearing the motion because he has a special interest in attorney’s fees based on his work with the Illinois Attorney Registration and Disciplinary Commission and other experiences. Judge Reagan denied the petition. The Seventh Circuit reversed. Capps was awarded substantial damages and thus should have been awarded attorney’s fees. View "Capps v. Drake" on Justia Law

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Plaintiff filed suit under 42 U.S.C. 1983 and 1985, alleging that several state judges and officials have been unfair to him in divorce and child custody proceedings. The Seventh Circuit affirmed the dismissal of the action and held that, to the extent plaintiff's suit implicated its own subject matter jurisdiction, the court was free to entertain his appeal; the Rooker-Feldman doctrine did not bar this case; even if Rooker‐Feldman applied to interlocutory orders, the doctrine still would have no bearing on plaintiff's appeal because he has not asked the court to reject any such order; and the domestic-relations exception to federal jurisdiction was not applicable. The court held that the district court should not have dismissed plaintiff's complaint before the date it had set for him to respond to the sheriff's motion to dismiss the claims against them, but the error was harmless. On the merits, the court held that Judge Boliker could not claim the protection of judicial immunity where she acted in the clear absence of jurisdiction, but that Judge Dickler's alleged actions fell within its scope; plaintiff has not alleged that he suffered any adverse consequences to his parental (or other) rights as a result of his allegedly prejudiced judge and thus his section 1983 claim failed; and section 1985 did not apply to plaintiff's case. View "Kowalski v. Boliker" on Justia Law

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Kennedy had decades of experience working for Schneider Electric and taught classes, part-time, in electrical and industrial safety at Prairie State community college. Schneider requires its employees to obtain advance approval before they teach classes or submit articles for publication. Without obtaining permission, Kennedy published articles about power-distribution equipment, identifying himself as a Prairie State instructor. When Schneider learned of these articles a manager contacted Prairie State to ask about Kennedy’s course materials, which she worried might contain proprietary information. Weeks later, while reviewing instructors' credentials, Prairie State realized that Kennedy did not possess the qualifications to teach and did not rehire Kennedy as an adjunct instructor. A year later, Kennedy sued Schneider, alleging defamation and malicious interference with an advantageous relationship. The court granted Schneider summary judgment, finding that Prairie State acted solely because Kennedy did not meet its credentialing requirements and not because of Schneider’s telephone call. More than a year later, Kennedy moved to set aside the judgment (Federal Rule of Civil Procedure 60(d)(3)), asserting that Schneider’s lawyers knowingly submitted perjured evidence. The court denied the motion, stating that the cited evidentiary discrepancies were known at the time of summary judgment, and granted Rule 11 sanctions against Kennedy’s lawyer for having to defend against the motion ($10,627.16). The Seventh Circuit affirmed. Kennedy could have challenged the same evidence on summary judgment. If the court made a mistake, Kennedy could have asked for reconsideration or appealed. View "Kennedy v. Schneider Electric" on Justia Law

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Ramos, filed a charge with the Equal Employment Opportunity Commission (EEOC) regarding her severance agreement's broad release of claims and covenant not to sue, with exceptions for “rights that Employee cannot lawfully waive” and for participation “in a proceeding with any appropriate federal, state or local government agency enforcing discrimination laws.” The EEOC abandoned Ramos’s charge by issuing her a right-to-sue letter and, eight months later, filed suit under section 707(a), which it believed granted independent litigation authority for suits against “any person or group of persons … engaged in a pattern or practice ....” 42 U.S.C. 2000e-6(a). While section 707(e)’s incorporation of section 706’s procedural requirements generally requires the EEOC to follow the same pre-suit procedures whether the suit is an individual one or a pattern-or-practice action, the EEOC believed that a distinction between section 707’s subsections excused it from doing so. Section 707(a), unlike section 707(e), gives the EEOC a right to litigate without an underlying charge or unlawful employment practice, and (EEOC thought) by extension, without first conciliating. The EEOC distinguished between section 707(a)’s reach to “any person or group of persons” and section 707(e)’s limitation to employers. In 2015, the Seventh Circuit held that conciliation is necessary under both sections. The district court subsequently awarded $307,902.30 in attorneys’ fees, finding that EEOC had taken a position contrary to its own regulations. The Seventh Circuit reversed, holding that the Sevdecision impermissibly rested on hindsight. View "Equal Employment Opportunity Commission v. CVS Pharmacy, Inc." on Justia Law

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Fryer and the Alliance for Water Efficiency collaborated on a study about drought. The Alliance worked on funding. Fryer circulated a draft of the report. The Alliance expressed concern with the methodology and sued Fryer under the Copyright Act, 17 U.S.C. 101. Under a settlement Fryer agreed to turn over his data from public utilities in exchange for $25,000. If any utility had disclosed data with a confidentiality agreement, the Alliance was required to secure a release. Each party could publish a report, but could not acknowledge the other’s involvement. The parties have litigated ever since. The district court concluded that the Alliance was entitled to specific data and that Fryer was bound by the settlement to refrain from acknowledging disputed organizations unless they contacted him first and asked to be recognized. The judge required the Alliance to provide those organizations with Fryer’s contact information. The Seventh Circuit reversed solely on the acknowledgment issue. Fryer returned to the district court, seeking restitution for injuries caused by the court’s erroneous injunction and attorney’s fees under section 505 of the Copyright Act for having prevailed in the first appeal. The Seventh Circuit affirmed denial of both motions. Fryer does not present genuine claims for restitution; he seeks to relitigate unrelated claims for breach of the settlement. He did not prevail on the Alliance’s copyright claim. View "Alliance for Water Efficiency v. Fryer" on Justia Law

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JCI is a manufacturing company with its principal place of business in Illinois. The Shein Law Center is a law firm based in Pennsylvania. Simon Greenstone Panatier Bartlett is a law firm based in Texas, with offices in Texas and California; its partners and shareholders are residents of those states. The two firms sued JCI on behalf of their clients in Pennsylvania, California, and Texas state courts. JCI alleges these suits were part of a conspiracy to defraud JCI because the firms concealed information during discovery regarding their clients’ exposure to asbestos from other manufacturers’ products so that they could extract larger recoveries. The other manufacturers are bankrupt. After winning verdicts against JCI, the defendants allegedly filed claims against the bankrupt manufacturers’ trusts. JCI filed lawsuits against the law firms in the Northern District of Illinois alleging fraud, conspiracy, and violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961, The district court dismissed the cases for lack of personal jurisdiction. The Seventh Circuit affirmed. The law firms sent allegedly fraudulent communications to JCI through JCI’s local counsel in Texas, Pennsylvania, and California. Those communications were incidental to the litigation, which is the basis of JCI’s claims, so the communications were not enough to establish specific personal jurisdiction in Illinois. View "John Crane, Inc. v. Simon Greenstone Panatier Bartlett" on Justia Law