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

In 1988, Department of Professional Regulation investigator visited Gekas, a Springfield, Illinois dentist, and expressed concern that Gekas had administered nitrous oxide to a child. He ordered Gekas to provide information on all prescriptions on a continuing basis. Gekas contacted Deputy Governor Riley for assistance. After a meeting, the Department imposed less onerous requirements. In 2002, a Department investigator raided Gekas’ offices, with the assistance of the Federal Drug Enforcement Agency. After failed negotiations, the Department issued a cease and desist order against Gekas for the unlicensed practice of medicine and prescribing controlled substances while not a licensed physician and sought to have his license suspended, on grounds that Gekas had prescribed 4,600 doses of Hydrocodone and Vicoprofen to a patient. Gekas contacted his Senator. In 2008, the cease-and-desist was vacated and the complaint dismissed. Gekas submitted a FOIA request concerning the administrative complaint. The Department responded that no public documents were available. In 2009, Gekas filed suit; it was dismissed by stipulation in 2010. Meanwhile, a Chairman on the Illinois Board of Dentistry issued subpoenas against Gekas, stating that there was reasonable cause to believe that Gekas had violated the Illinois Dental Practice Act. Gekas filed suit, alleging First Amendment retaliation. The district court granted defendants summary judgment, finding no evidence of retaliatory motive. The Seventh Circuit affirmed. View "Gekas v. Vasiliades" on Justia Law

Bell established mutual funds, raised $2.5 billion, and invested in vehicles managed by Petters, who said that he was financing Costco’s electronics inventory. Instead he was running a Ponzi scheme, which collapsed in 2008. The scheme involved a claim that money lent to Petters entities was secured by Costco’s inventory and that repayment was ensured by a “lockbox” arrangement under which Costco would make payments into accounts that the Funds (not Petters) controlled. Petters insisted that the Funds not contact Costco, to avoid upsetting his favorable business relations. Bell and Petters went to prison for fraud. The Funds’ trustee in bankruptcy filed multiple suits. The district court dismissed a claim of legal malpractice. The Seventh Circuit reversed. Even if Bell was determined to do business with Petters, the Fund’s lawyers ould have explained how to structure the transactions in a less risky way, and if Petters refused to cooperate then Bell might have reconsidered lending the Funds’ money. The Trustee alleges that the firm did not offer any advice about how relative risks correspond to different legal devices, and its complaint states a legally recognized claim. Whether the law firm has a defense, and whether any neglect on its part caused injury, are subjects for the district court. View "Peterson v. Katten Muchin Rosenman LLP" on Justia Law

Choice Hotels sued SBQI, its managers, and investors, for breach of a franchise agreement. The defendants did not answer the complaint. The court entered a default. One defendant, Chawla, an Illinois attorney, had represented the others. Other defendants asked Chawla to find a new attorney. They claimed that they had been unaware that their signatures were on the franchise agreement and that the signatures are forgeries. Johnson agreed to try to vacate the default, negotiate a settlement, and defend against the demand for damages. Johnson filed an appearance and took some steps, but did not answer the complaint or move to vacate the default, engage in discovery concerning damages, or reply to a summary judgment motion on damages. In emails, Johnson insisted that he was trying to settle the litigation. He did not return phone calls. The court set damages at $430,286.75 and entered final judgment. A new attorney moved to set aside the judgment more than a year after its entry, under Fed. R. Civ. P. 60(b)(6), which covers “any other reason that justifies relief” and requires “extraordinary circumstances.” The Seventh Circuit affirmed. The defendants must bear the consequences of their inaction. They were able to monitor the proceedings, but did not follow through. View "Choice Hotels Int'l Inc. v. Grover" on Justia Law

Moje, playing minor league hockey, lost an eye during a game, and sued Oakley, which made his visor, and the League. Instead of notifying its insurer, the League hired LoFaro. Oakley’s attorney called the League’s President, to ask why it had not answered the complaint. LoFaro claimed that an answer had been filed, but the docket did not reflect any filing. Moje moved for default. LoFaro did not respond, nor did he respond after the court entered the default and permitted Moje to prove damages. The court entered a final judgment of $800,000 against the League. After the League learned of collection efforts, it notified its insurer. A lawyer hired by the insurer unsuccessfully moved, under Fed. R. Civ. P. 60(b)(1) to set aside the judgment within six months of its entry. Rule 60(b)(1), allows relief on account of “mistake, inadvertence, surprise, or excusable neglect.” The Seventh Circuit affirmed. Abandoned clients who take reasonable steps to protect themselves can expect to have judgments reopened under Rule 60(b)(1), but the League is not in that category. Its remedy is against LoFaro. View "Moje v. Federal Hockey League LLC" on Justia Law

Spencer stopped paying her mortgage in 2008. In Wisconsin state court foreclosure proceedings, Spencer’s attorney, Nora, adopted an “object-to-everything litigation strategy and buried the state court in a blizzard of motions.” While a hearing on a summary judgment motion was pending in state court, Nora removed the case to federal court. Finding no objectively reasonable basis for removal, the district court remanded the case and awarded attorney’s fees and costs to the lender, 28 U.S.C. 1447(c). The Seventh Circuit dismissed Spencer’s appeal as frivolous; the district court did not order her to pay anything. The court affirmed the award as to Spencer “because she has not offered even a colorable argument that removal was reasonable” and ordered Nora to show cause why she should not be sanctioned for litigating a frivolous appeal. Several months later, noting Nora’s similar behavior in another case, the court imposed an increased sanction of $2,500, suspended until the time, if ever, that Nora submits further inappropriate filings, and directed the clerk of court to forward a copy of the order and earlier opinion to the Office of Lawyer Regulation of the Wisconsin Supreme Court. View "PNC Bank v. Spencer" on Justia Law

HSBC initiated a Wisconsin foreclosure action on the Rinaldi’s mortgage. The Rinaldis counterclaimed, alleging that the mortgage paperwork had been fraudulently altered and that HSBC lacked standing to enforce the mortgage. The Rinaldis lost at summary judgment and did not appeal. The court later vacated its foreclosure judgment after HSBC agreed to modify the loan. The Rinaldis filed a new state lawsuit reasserting their counterclaims. Before the court ruled on the defendants’ motion to dismiss, the Rinaldis filed for bankruptcy. In those proceedings, HSBC filed a proof of claim for the mortgage. The Rinaldis objected and filed adversary claims, alleging fraud, abuse of process, tortious interference, breach of contract, and violations of RICO and the Fair Debt Collection Practices Act. The bankruptcy court found in favor of HSBC and recommended denial of the adversarial claims. The district court agreed, noting the Rinaldis’ failure to comply with Federal Rules. The court dismissed the Rinaldis’ adversary claims as meritless and warned that the Rinaldis would face sanctions if they filed additional frivolous filings because their tactics had “vexatious and time- and resource-consuming” and their filings “nigh-unintelligible.” After additional filings of the same type, the Rinaldis voluntarily dismissed their bankruptcy. Their attorney filed additional frivolous motions. The court ordered the attorney to pay $1,000. The Seventh Circuit upheld the sanction. View "Nora v. HSBC Bank USA, N.A." on Justia Law

The Nelsons sued Chicago law firm Freeborn & Peters for malpractice, seeking $1.3 million in damages and were awarded more than $1 million. The malpractice claim arose from a transaction that the law firm handled involving acquisition of a shopping center under construction in Algonquin, Illinois. The law firm represented both the contract purchaser and the Nelsons, who invested in the venture, which suffered losses following the downturn of September 2008. The Seventh Circuit affirmed, finding that any error in the allocation of damages did not hurt the law firm or any creditors. View "Nelson Bros. Prof'l Real Estate, LLC v. Freeborn & Peters, LLP" on Justia Law

Nayak owned outpatient surgery centers and made under-the-table payments to physicians that referred patients to his centers, including cash payments and payments to cover referring physicians’ advertising expenses. Nayak instructed some of his collaborators not to report these payments on their tax returns. Nayak was charged with honest-services mail fraud, 18 U.S.C. 1341 and 1346, and obstruction of the administration of the tax system, 26 U.S.C. 7212(a). Although the indictment a alleged that Nayak intended “to defraud and to deprive patients of their right to honest services of their physicians” through his scheme, there was no allegation that Nayak caused or intended to cause any sort of tangible harm to the patients in the form of higher costs or inferior care. After denial of his motion to dismiss, Nayak entered a conditional guilty plea, reserving his right to appeal denial of his motion to dismiss the mail fraud charge. On appeal he argued that tangible harm to a victim is a necessary element of honest-services mail fraud, at least in cases not involving fraud by a public official. The Seventh Circuit affirmed, holding that actual or intended tangible harm is not an element.View "United States v. Nayak" on Justia Law

In 2009 the doctor was hired by a small rural Wisconsin critical access hospital, as the director of its emergency room. Fired just months after being hired, he sued the hospital in under Title VII, claiming that the hospital had discriminated against him because of his Indian ethnicity. He alleged that a hospital employee said to him “you must be that Middle Eastern guy whom they hired as ER director” and accused him of taking her job, spat at him, and told him he belonged to a terrorist class of people and was a danger to the hospital. Hospital personnel complained to the plaintiff’s superior that he was incompetent—that he had poor patient skills, behaved unprofessionally, misdiagnosed patient ailments, and couldn’t get along with staff. His superior urged him to resign after he had worked only 12 shifts. After delays because the plaintiff initially acted pro se, and filings that were inadequate or nonresponsive, the judge dismissed the case for failure to respond to a motion for summary judgment. The Seventh Circuit affirmed, noting that “the pratfalls of a party’s lawyer are imputed to the party” and that plaintiff offered no excuse for missing the deadline.View "Sheikh v. Grant Reg'l Health Ctr." on Justia Law

Lightspeed operates online pornography sites and sued a defendant, identified only Internet Protocol address, which was allegedly associated with unlawful viewing of Lightspeed’s content, using a “hacked” password. Lightspeed identified 6,600 others (by IP addresses only) as “co‐conspirators” in a scheme to steal passwords and content. Lightspeed, acting ex parte, served subpoenas on the ISPs (then non‐parties) for the personally identifiable information of each alleged coconspirator, none of whom had been joined as parties. The ISPs moved to quash and for a protective order. The Illinois Supreme Court ultimately ruled in favor of the ISPs. Lightspeed amended its complaint to name as co‐conspirator parties the ISPs and unidentified “corporate representatives,” alleging negligence, violations of the Computer Fraud and Abuse Act, 18 U.S.C. 1030 and 1030(g), and deceptive practices. Lightspeed issued new subpoenas seeking the personally identifiable information. The ISPs removed the case to federal court. The district judge denied an emergency motion to obtain the identification information. After several “changes” with respect to Lightspeed’s lawyers, the court stated that they “demonstrated willingness to deceive … about their operations, relationships, and financial interests have varied from feigned ignorance to misstatements to outright lies … calculated so that the Court would grant early‐discovery requests, thereby allowing [them] to identify defendants and exact settlement proceeds.” After granting Lightspeed’s motion for voluntary dismissal, the court granted attorney’s fees under 28 U.S.C. 1927, stating that the litigation “smacked of bullying pretense.” Failing to pay, the lawyers were found to be in civil contempt and ordered to pay 10% of the original sanctions award to cover costs for the contempt litigation. The Seventh Circuit affirmed.View "Duffy v. Smith" on Justia Law