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

Companies underwriting workers’ compensation insurance participate in a reinsurance pool administered by the National Workers Compensation Reinsurance Association. Insurers share in the pool’s profit or loss according to the volume of business they underwrite. When the pool is profitable, it is beneficial to have a larger book of business; when the pool loses money, a smaller book means that the underwriter needs to contribute less toward the losses. The class contends that AIG underreported the size of its business in losing years, causing the pool’s other members to bear a disproportionate share of the losses and sought$3.1 billion. Some of the insurers had independent claims against AIG. AIG advanced its own claims against Liberty Mutual. The district judge approved a settlement. Liberty Mutual appealed, arguing that its share would not compensate it adequately for its stand-alone claims against AIG and that the conflicts of interest within the reinsurance pool meant that the case never should have been certified as a class. After argument, Liberty Mutual settled with AIG. The Seventh Circuit dismissed the appeal, holding that the settlement does not jeopardize the interests of the unrepresented class members. View "Am. Int'l Grp. v. Liberty Mut. Ins. Co" on Justia Law

Northington worked for H & M. She dated a fellow employee who was also involved with employee Sims. Sims made threats. Northington reported Sims’ behavior to manager Collins, who was then dating (subsequently married) Sims’ mother, the assistant manager. Sims ultimately physically assaulted Northington away from H & M property. The state court issued a protective order. Northington provided the order to the Union, but not to H & M. Northington complained to H & M officers, but did not complain that the harassment was based on race or gender. Based on her behavior during a safety inspection, the inspector suspected that Northington was under the influence of drugs. Northington left the testing facility without giving a required urine sample. Three company officers concurred in terminating her employment, unaware of her criminal complaint against Sims. Northington claimed retaliation in violation of Title VII. The district court found that H & M’s conduct in deleting inactive email accounts was negligent but not willful; assessed H & M costs and fees; deemed specific facts admitted; and precluded H & M from making certain arguments, but granted H & M summary judgment, finding that Northington did not establish that she had participated in protected activity under Title VII. The Seventh Circuit affirmed. The discovery sanction did not preclude summary judgment. View "Northington v. H & M Int'l" on Justia Law

In 2004, Harmon contracted to provide Chicago Bulls rookie Gordon with financial and consulting services for the “duration of [his] playing career,” but outlining a compensation arrangement only for the length of Gordon’s rookie contract with the Bulls, which ended in 2008. In 2007, Gordon became dissatisfied with Harmon’s services, based in part on what he viewed to be a breach of a fiduciary duty relating to a bad investment, and prematurely terminated the agreement. Gordon sued first, claiming Harmon had breached a promissory note between the parties and had breached his fiduciary duties. Harmon asserted counterclaims for breach of the agreement and tortious interference with prospective business advantage. The district court dismissed Harmon’s counterclaims. Harmon refiled his breach of contract claim in Illinois state court and also alleged malicious prosecution, abuse of process, and tortious interference with prospective business advantage. After Gordon removed the case to federal court, the district court ruled in favor of Gordon, concluding that the parties had intended their agreement to last only for the length of Gordon’s rookie contract. The Seventh Circuit affirmed. View "Harmon v. Gordon" on Justia Law

Pietkiewicz worked in auto-body repair until he engaged in securing financing with six false identities to buy at least 12 cars. He would make small down payments, then abscond with the vehicles. Although these cars were equipped with tracking systems, no signals have been detected, indicating that either Pietkiewicz has disabled the systems or that the cars are no longer in the U.S. Only one car has been recovered. It was found in Canada, inside a shipping container destined for Europe. Convicted in an Ohio federal court of fraud with identification documents, Pietkiewicz was sentenced to six months’ imprisonment and two years of supervised release. After his release, he was charged in an Illinois district court with mail fraud, 18 U.S.C. 1341, and pleaded guilty. The district court denied a motion for downward variance, adopting the PSR’s calculations of an offense level of 24 and criminal history category of II, and imposed a sentence of 71 months’ imprisonment, two years’ supervised release, and $428,461.34 restitution. The Seventh Circuit vacated. The record is silent on the court’s reasoning for possibly using Pietkiewicz’s conduct from the Ohio offense to enhance the sentence but denying a sentence reduction based on the Ohio imprisonment. View "United States v. Pietkiewicz" on Justia Law

Anchor Mortgage Corporation and its CEO, Munson, were convicted under the False Claims Act, 31 U.S.C. 3729(a)(1), of making false statements when applying for federal guarantees of 11 loans. The district court imposed a penalty of $5,500 per loan, plus treble damages of about $2.7 million. The Seventh Circuit affirmed, rejecting an argument that defendants not have the necessary state of mind, either actual knowledge that material statements were false, or suspicion that they were false plus reckless disregard of their accuracy. The court noted that Anchor submitted bogus certificates that relatives had supplied the down payments that the borrowers purported to have made, when it knew that neither the borrowers nor any of their relatives had made down payments and represented that it had not paid anyone for referring clients to it, but in fact it paid at least one referrer. View "United States v. Munson" on Justia Law

Plaintiff bought a used pickup truck in 2011 for $28,000 and financed the purchase with a six-year installment contract at an interest rate of 23.9 percent. The dealer assigned the contract to AmeriCredit. After making the first installment the plaintiff sent AmeriCredit a copy of the installment contract that he had stamped “accepted for value and returned for value for settlement and closure,” and told AmeriCredit to collect the balance under the contract from the U.S. Treasury. AmeriCredit repossessed the truck, sold it, and billed the plaintiff $11,322.28 to cover the difference. The plaintiff sued AmeriCredit and its officers for $34 million in compensatory damages and $2.2 billion in punitive damages. The district judge could not make sense of the pro se complaint and dismissed it as frivolous. The Seventh Circuit vacated and remanded with directions that the judge either dismiss without prejudice or dismiss with prejudice, as a sanction; vacate the default judgment in favor of AmeriCredit on its counterclaim; and dismiss the counterclaim without prejudice. The court noted the earmarks of the “Sovereign Citizens” movement. View "Baba-Dainja El v. AmeriCredit Fin. Servs., Inc." on Justia Law

In 1999 the Sellers conveyed businesses to CT Acquisition Corp. The price was to be paid over time. The Sellers insisted on a surety bond (put up by Frontier Insurance) and personal guarantees by the principals of CT Acquisition. The Guarantors also promised to indemnify Frontier and promised to post collateral on Frontier’s demand. CT Acquisition did not pay, the Guarantors failed to keep their promise, and the Sellers turned to Frontier, which did not pay because it was in financial distress. Frontier demanded that the Guarantors post collateral. The district court read the agreement to require collateral only after Frontier’s obligation to the Sellers had been satisfied, or at least quantified. The suit was dismissed as unripe. Meanwhile the Sellers had sued Frontier and obtained judgment of $1.5 million. Frontier then filed another suit against the Guarantors. The district court concluded that, Frontier’s obligation having been quantified, the Guarantors must post collateral and, following remand, ordered the Guarantors to deposit with the Clerk $1,559,256.78, The Seventh Circuit affirmed, rejecting the Guarantors’ argument that they need not post collateral until Frontier has paid the Sellers. View "Frontier Ins. Co. v. Hitchcock" on Justia Law

The Pekin Board of Fire and Police Commissioners determined that Simmons, an officer of the city’s police department, had disobeyed an order. It suspended him without pay for 20 days. A state court of appeals reversed, concluding that the chief of police lacked authority to issue the order. Campion, a psychologist, had concluded that Simmons was unfit for duty. Simmons told the chief that he had been evaluated by other psychologists who thought him able to serve. The chief ordered Simmons to ensure that these other psychologists provided Campion with their conclusions, supported by evaluations and data. The appellate court held that the chief could require an officer to provide no more than a psychologist’s bottom line. Simmons then sued under 42 U.S.C.1983, contending that the due process clause requires the city to make up the pay he lost. The district court dismissed, holding that Illinois requires back pay only when the board rules in an officer’s favor, while here the favorable ruling came from a court. The Seventh Circuit affirmed, noting that the district judge should not have used a section 1983 suit to resolve a claim that rests entirely on a proposition of state substantive law. View "Simmons v. Gillespie" on Justia Law

In 2008 Stein pleaded guilty to misdemeanor battery in Wisconsin, after he struck his live-in girlfriend, breaking two of her teeth and bruising her face. As part of Stein’s plea bargain, the state prosecutor dismissed a domestic-abuse surcharge that normally would apply. Stein, an avid hunter, wanted to preserve the ability to possess and use guns. His attorney advised in open court that he would not violate federal law by possessing and using the guns that he already owned. The state judge warned Stein that “there’s no guarantees” he could possess guns after his conviction. At a hearing in 2009 on his request for early termination of his probation, Stein received new information making it clear that his attorney had given him bad advice. Stein subsequently admitted to possessing guns and the district judge ruled that evidence concerning Stein’s knowledge of his legal status was irrelevant and rejected his proposed jury instruction. Stein was convicted for possessing a firearm following a misdemeanor conviction for a crime of domestic violence, 18 U.S.C. 922(g)(9). The Seventh Circuit affirmed. View "United States v. Stein" on Justia Law

Belmont did not pay subcontractors and suppliers on some projects. Gad, its CEO, disappeared. West Bend Mutual paid more than $2 million to satisfy Belmont’s obligations and has a judgment against Belmont, Gad, and Gizynski, who signed checks for more than $100,000 on Belmont’s account at U.S. Bank, payable to Banco Popular. Gizynski told Banco to apply the funds to his outstanding loan secured by commercial real estate. Banco had a mortgage and an assignment of rents and knew that Belmont was among Gizynski’s tenants; it did not become suspicious and did not ask Belmont how the funds were to be applied. Illinois law requires banks named as payees to ask the drawer how funds are to be applied. The district judge directed the parties to present evidence about how Belmont would have replied to a query from the Bank. Gizynski testified that Gad, as CEO, would have told the Bank to do whatever Gizynski wanted. The judge found Gizynski not credible, but that West Bend, as plaintiff, had the burden of production and the risk of non-persuasion. The Seventh Circuit affirmed, rejecting an argument based on fiduciary duty, but reversed an order requiring Banco to pay West Bend’s legal fees View "W. Bend Mut. Ins. Co v. Belmont St. Corp." on Justia Law