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

In 2004 GEA, a German company, agreed to sell a subsidiary, DNK, to Flex‐N‐Gate, a U.S. manufacturer for €430 million. The contract required arbitration of all disputes in Germany. The sale did not close. GEA initiated arbitration before the Arbitral Tribunal of the German Institution of Arbitration. The arbitration was pending in 2009 when GEA filed suit in an Illinois federal district court, against Flex‐N‐Gate and its CEO, Khan, alleging that the defendants had fraudulently induced it to enter into the contract; that Khan stripped the company of assets so that it would be unable to pay any arbitration award; and that Khan was Flex‐N‐Gate’s alter ego. GEA then asked the district judge to stay proceedings, including discovery. The judge declined to stay discovery. GEA filed a notice of appeal after the German arbitration panel awarded GEA damages and costs totaling $293.3 million. The Seventh Circuit dismissed GEA’s appeal as moot, but the German Higher Regional Court in vacated the arbitration award. GEA renewed its motion. The district judge again denied the stay, stating that he was unsure how the arbitration would affect the case before him and didn’t want to wait to find out. The Seventh Circuit reversed. The district judge then imposed a stay, which it later lifted for the limited purpose of allowing Khan to conduct discovery aimed at preserving evidence that might be germane to GEA’s claims against him in the district court suit. The Seventh Circuit affirmed, first holding that it had appellate jurisdiction.View "GEA Group AG v. Baker" on Justia Law

Walczak, hired as a teacher in the Chicago Public School system in 1970, obtained tenure and taught continuously until her school’s new principal placed her in a performance remediation program during the 2007–2008 academic year. At the end of that year, she was facing discharge proceedings. Walczak filed a charge with the Equal Employment Opportunity Commission alleging violation of the Age Discrimination in Employment Act, 29 U.S.C. 621. While the EEOC charge was pending, a hearing officer assigned to her discharge proceeding recommended that Walczak be reinstated as a tenured teacher. The Chicago Board of Education rejected the recommendation and terminated her employment. Illinois trial and appellate courts affirmed, applying state law. After the trial court decision, Walczak received a right-to-sue letter from the EEOC and filed suit in federal court The district court dismissed the ADEA suit on the basis of preclusion. The Seventh Circuit affirmed. Walczak could have brought her ADEA claim in her state-court suit for judicial review of the Board’s decision. The Board did not acquiesce to claim-splitting. View "Walczak v. Chicago Bd. of Educ." on Justia Law

Kovacs received a bankruptcy discharge of her debts in 2001. weeks later, the IRS notified her that it had applied part of her 2000 tax refund to her outstanding tax debts from tax years 1990 to 1995. Kovacs’s attorneys and the IRS went back and forth about the status of those debts, with the IRS claiming that Kovacs still owed more than $150,000. In 2003 IRS Officer Mulcahy informed Kovacs that the 2000 refund would be applied against her non-discharged 1999 tax debt. Despite that statement, the IRS sent Kovacs two letters, erroneously stating that Kovacs still owed more than $13,000 for 1990–1995; those debts had been discharged. Her attorneys wrote a note clarifying the status of the discharged debt in correspondence about Kovacs’s non‐discharged 1999 tax debt. In 2005, Kovacs filed an administrative claim against the IRS, under 26 U.S.C. 7430(b)(1) as a predicate to a lawsuit for violation of 11 U.S.C. 524(a). When the IRS did not respond, Kovacs filed a complaint. The IRS admitted its fault but argued that the two-year statute of limitations barred the action. After a third remand, the district court upheld the bankruptcy court’s $3,750 award and declared that the award was premised on litigation costs, not actual damages. The Seventh Circuit affirmed. View "Kovacs v. United States" on Justia Law

Spencer pleaded guilty to possessing a firearm, in violation of 18 U.S.C. 922(g). The district court concluded that he is an armed career criminal and sentenced him to the 15-year minimum term, 18 U.S.C. 924€. He denied that one of his three prior convictions, for a methamphetamine crime, met the statutory standard for a “serious drug offense,” which, for state convictions means one “involving manufacturing, distributing, or possessing with intent to manufacture or distribute, a controlled substance (as defined in … (21 U.S.C. 802)), for which a maximum term of imprisonment of ten years or more is prescribed by law”. Spencer argued that Wis. Stat. 961.41(1)(e)(1), which prohibits the manufacture or delivery of methamphetamine, does not carry “a maximum term of imprisonment of ten years or more.” The Seventh Circuit vacated and remanded for resentencing without the enhancement, interpreting statutory ambiguity in favor of lenity. View "United States v. Spencer" on Justia Law

Jones acknowledged participating in the armed robbery of the Guaranty Bank in Milwaukee as a getaway driver, but the government agreed to drop that charge and the charge in a second bank robbery, and to prosecute him only on a third bank robbery charge in exchange for testimony against Brown for the Guaranty Bank robbery. Brown was convicted of armed bank robbery under 18 U.S.C. 2 & 2113(a) and (d), and brandishing a firearm in connection with a crime of violence under 18 U.S.C. 2 and 924(c)(1)(A)(ii). Brown appealed, arguing that the court allowed the government to introduce expert testimony as lay testimony, that the jury instructions reduced the prosecution’s burden of proof, and that improper closing argument statements by the prosecution denied him a fair trial. Jones, who pled guilty to reduced charges, appealed only his sentence. The Seventh Circuit consolidated the appeals and affirmed. View "United States v. Jones" on Justia Law

After the end of World War II, holders of public and private bonds issued in Germany demanded repayment. Germany had suspended payment on many bonds during the 1930s, but some were not due until the 1950s or 1960s. A Debt Agreement involving 21 creditor nations specified that Germany would pay valid debts outstanding in 1945. Germany enacted a Validation Law requiring holders to submit foreign debt instruments for determination of whether the claims were genuine. In 1953 the U.S. and West Germany agreed by treaty (applicable to Germany as reconstituted in 1990) that the debts would be paid only if found to be legitimate. Holders had five years to submit documents for validation by a New York panel. Later claims went to an Examining Agency in Germany. Decisions were subject to review in Germany. Plaintiffs sued in 2008 under international diversity jurisdiction, 28 U.S.C. 1332(a)(2), to recover on bearer bonds issued or guaranteed by Germany before the war. One holder never submitted to validation. The other submitted bonds to a panel in Germany, which found them ineligible, and did not seek review. The district court dismissed, holding that the Treaty is binding and that the suit was barred by a 10-year (Illinois) statute of limitations. The Seventh Circuit affirmed, rejecting an argument that the Treaty amounted to a taking without just compensation. The Tucker Act, 28 U.S.C. 1491(a)(1), authorizes whatever compensation the Constitution requires and the Supreme Court has stated that there is no constitutional obstacle to an international property settlement. The Treaty is not self-executing; the Alien Tort Statute, 28 U.S.C. 1350, cannot be used to contest the acts of foreign nations within their own borders. How Germany administers the validation process is for German courts to consider. The case was also barred by the limitations period. View "Korber v. Bundesrepublik Deutscheland" on Justia Law

Chavarria, born in Mexico, became a legal permanent U.S. resident in 1982. In 2009, Chavarria pleaded guilty to distributing cocaine. One year later, the Supreme Court decided Padilla v. Kentucky, imposing a duty on defense attorneys to inform noncitizen clients of deportation risks stemming from plea agreements, and held that legal advice, or the lack thereof, involving the prospect of deportation resulting from guilty pleas can support a Sixth Amendment claim of ineffective assistance of counsel. Chavarria filed a pro se motion under 28 U.S.C. 2255, claiming that his trial counsel stated that “the attorney had checked with the Bureau of Immigration and Customs Enforcement … and they said they were not interested” in deporting him. Chavarria was deported before counsel was appointed. The district court denied a motion to dismiss, holding that Padilla could be applied retroactively. Shortly thereafter, the Seventh Circuit decided, in Chaidez v. U.S., that Padilla was a new rule and not retroactive. The district court vacated its ruling and dismissed. While appeal was pending, the Supreme Court affirmed Chaidez, foreclosing Chavarria’s argument that Padilla was retroactive. The Seventh Circuit affirmed, rejecting an argument that Chaidez distinguished between providing no advice (actionable under Padilla) and providing bad advice (actionable under pre‐Padilla law). View "Chavarria v. United States" on Justia Law

Alpine was an irrigation business owned by Robert from 1961 until it closed in 2009. Alpine was in arrears on pension fund payments to the Union. After a Joint Arbitration Board awarded it $56,269.97, the Union sought to compel the award under the Labor Management Relations Act, 29 U.S.C. 185, and the Employee Retirement Security Act, 29 U.S.C. 1132(e)(1). During a deposition, Robert’s son, Jeffery, admitted his sole ownership of RWI and JV, which were established upon Alpine’s closing. Like Alpine, RWI services and installs lawn irrigation systems. JV’s sole business is leasing to RWI equipment that it purchased from Alpine. RWI operates out of Jeffery’s home, Alpine’s prior business address; all but one of RWI’s employees worked for Alpine. Almost all of RWI’s customers are former Alpine customers. The magistrate first denied the Union’s motion to impose judgment against RWI and JV as successors, but determined that the companies were successors under ERISA and that FRCP 25(c) provided an appropriate procedure and granted a motion to substitute. The Seventh Circuit affirmed, holding that the court properly applied the multifactor ERISA successorship test to find that an “interest” had been transferred within the meaning of FRCP 25(c) and properly resolved the motion without an evidentiary hearing. View "Sullivan v. Running Waters Irrigation, Inc." on Justia Law

In 1981, a drug dealer (TJ) was shot to death in his Chicago home; the gunmen stole a necklace and ring with the initials “TJ” written in diamonds. Witnesses did not know the gunmen and provided general descriptions. On the day of the crime, they viewed mug shots but did not identify TJ’s murderer. During police interviews, Wright stated that on the day of the murder he was trying to coordinate a drug deal with TJ, that he took two men (one was Coleman) to TJ’s house on the night of the murder and that Coleman had tried to sell him TJ’s jewelry. About two weeks after the murder, witnesses separately viewed a lineup that included Coleman and six others. Two identified Coleman. A third witness did not make any identification. The witnesses later viewed another lineup and identified Barnes as the other perpetrator. Coleman and Barnes were tried together, with separate counsel. The Seventh Circuit reversed denial of Coleman’s first habeas petition, stating that the facts could potentially demonstrate actual innocence. On remand, the district court held an evidentiary hearing and concluded that Coleman had not satisfied the actual innocence standard. The Seventh Circuit affirmed. Coleman’s evidence that two eyewitnesses were unable to place him at the scene of the crime was not enough to overcome the testimony of two eyewitnesses who identified Coleman as the perpetrator and another who implicated Coleman in the murder. View "Coleman v. Hardy" on Justia Law

Woodridge enacted an ordinance that imposes a $30.00 booking fee on any person subject to a custodial arrest and collects the fee without any hearing. It does not offer an opportunity to challenge the deprivation or seek reimbursement. Markadonatos was charged with retail theft. He was booked and Woodridge collected its fee. A court sentenced Markadonatos to supervision, which he successfully completed. He therefore received an adjudication of “not guilty” on his record. He sued, on behalf of himself and all arrestees who have been charged the fee, arguing that the lack of a procedure to challenge the fee violated their procedural and substantive due process rights (42 U.S.C. 1983). The district court dismissed. The Seventh Circuit affirmed, stating that the procedural due process argument failed based on balancing the private interest in the $30; the risk of erroneous deprivation and probable value of additional safeguards; and the government’s interest, “including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.” Markadonatos lacked standing under a substantive due process claim; he was arrested for cause and was adjudicated not guilty only after completing a term of supervision after admitting the factual basis for the charges. View "Markadonatos v. Village of Woodridge" on Justia Law