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

Mashallah sells handcrafted jewelry at its Chicago store. Ranalli’s operates a bar and restaurant. Both purchased West Bend all-risk commercial property insurance policies. In March 2020, in response to the COVID-19 pandemic, Illinois Governor Pritzker ordered all individuals to stay at home except to perform specified “essential activities” and ordered “non-essential” businesses to cease all but minimum operations. Restaurants were considered essential businesses and permitted to sell food solely for off-premises consumption. Ranalli’s was restricted to filling takeout and delivery orders. Mashallah was not classified as an essential business and had to cease its retail activities. Both businesses sustained heavy financial losses. Their West Bend policies are materially identical. West Bend agreed to pay for actual business income lost and necessary extra expenses incurred if they were caused by “direct physical loss of or damage to” the businesses’ properties. Both policies contain virus exclusions. West Bend denied their claims.The Seventh Circuit affirmed the dismissal of contract and bad faith claims and a claim that West Bend’s retention of full premiums—despite decreased risks occasioned by the reduction in insureds’ business operations—constituted unjust enrichment, requiring rebates. The virus exclusions barred coverage for the purported losses and expenses and the businesses failed to allege viable legal bases for rebate of premiums. View "Mashallah, Inc v. West Bend Mutual Insurance Co." on Justia Law

In March 2020, in response to the rapidly expanding COVID-19 pandemic, Illinois Governor Pritzker issued an order mandating the temporary closure to the public of restaurants, bars, and movie theaters; a subsequent order required all non-essential businesses to shut down partially and temporarily. Bradley operates a Quality Inn & Suites with a restaurant, bar, and general event space and suspended in-person dining at the restaurant and bar, and canceled previously scheduled weddings and meetings.Bradley’s general business property insurance policy from Aspen requires “direct physical loss of or damage to” covered property; its loss of use exclusion bars coverage for “loss or damage caused by or resulting from … [d]elay, loss of use or loss of market” and another exclusion bars coverage for “loss or damage caused directly or indirectly by … [t]he enforcement of or compliance with any ordinance or law: (1) Regulating the construction, use or repair of any property; or (2) Requiring the tearing down of any property.”Affirming the district court, the Seventh Circuit held that the term “direct physical loss of or damage to” property does not apply to a business’s loss of use of the property without any physical alteration. The loss of use exclusion and the ordinance or law exclusion in this policy provide separate bars to coverage. View "Bradley Hotel Corp. v. Aspen Speciality Insurance Co." on Justia Law

In March 2020, the Dallas County government issued orders restricting the operations of local businesses in light of the COVID-19 pandemic. Hotels were permitted to continue to provide lodging, and delivery and take-out food services, subject to social-distancing rules. Crescent owns the Dallas Ritz-Carlton hotel, which offers guest rooms, a restaurant and bar, general event space, a salon, spa, and fitness center. Crescent alleges that COVID-19 rendered the air in the hotel unsafe and diminished the functional space available, causing significant losses of income. Crescent also alleges that it incurred expenses to install plexiglass partitions and hand sanitizer stations, to display signs throughout the hotel, and to move furniture to permit social distancing. Crescent’s Zurich insurance policy requires “direct physical loss or damage” to covered property and includes an exclusion for losses attributable to any communicable disease, including viruses, and a microorganism exclusion, which bars coverage for losses “directly or indirectly arising out of or relating to mold, mildew, fungus, spores or other microorganisms of any type, nature, or description, including but not limited to any substance whose presence poses an actual or potential threat to human health.”The Seventh Circuit affirmed the dismissal of Crescent’s suit against Zurich. The phrase “direct physical loss or damage” requires either “a permanent [dispossession] of the property due to a physical change … or physical injury to the property requiring repair.” The microorganism exclusion independently bars coverage for the hotel’s claimed losses. View "Crescent Plaza Hotel Owner, L.P. v. Zurich American Insurance Co." on Justia Law

On March 15, 2020, in response to the rapidly expanding COVID-19 pandemic, Illinois Governor Pritzker issued an order mandating the temporary closure to the public of restaurants, bars, and movie theaters. On March 20, another order required all non-essential businesses to shut down partially and temporarily. As a result of these orders, the plaintiffs (businesses) were each required to close or dramatically scale back operations. The businesses held materially identical commercial-property insurance policies, issued by Cincinnati Insurance Company, providing coverage for income losses sustained on account of a suspension of operations caused by “direct physical loss” to covered property. The policies also provided coverage for income losses sustained as a result of an action of civil authority prohibiting access to covered property, when such action was taken in response to “direct physical loss” suffered by other property. Cincinnati denied their claims.The Seventh Circuit affirmed the dismissal of each suit. The businesses did not adequately allege that either the virus that causes COVID-19, SARS-CoV-2, or the resulting closure orders caused “direct physical loss” to property; the loss of use, unaccompanied by any physical alteration to property, does not constitute “direct physical loss” under the relevant insurance policies. View "Sandy Point Dental, P.C. v. Cincinnati Insurance Co." on Justia Law

Stevens, a Political Science professor at Northwestern University, researching the relations between the foreign campuses of American universities, the federal government, and private‐sector entities, submitted Freedom of Information Act requests to the State Department. She sought all materials from the Department’s headquarters and the Qatar U.S. consulate referring to Northwestern’s Qatar campus; policy and planning materials relating to the establishment of U.S. university campuses in Qatar, Abu Dhabi, South Korea, China, and Singapore; and documents sent to or from the U.S. Agency for International Development and documents produced, received, or maintained by the Middle East Partnership Initiative relating to U.S. Government funds transferred to the Independent Center of Journalists, Northwestern University and its components, and the Center of Journalism Excellence. After Stevens filed suit, the Department provided Stevens with 128 complete records and 350 partial records responsive to the Northwestern request, 29 complete records and two partial records responsive to the USAID/MEPI request, and no records responsive to the Campuses request. It withheld 24 records and submitted a 35‐page declaration describing its search processes and a Vaughn index describing each withheld document and the grounds for withholding it.The Seventh Circuit affirmed summary judgment in favor of the Department, rejecting arguments that summary judgment was improper because the Department’s searches were inadequate and because its withholdings were unwarranted. View "Stevens v. United States Department of State" on Justia Law

Mamalakis, a Wisconsin anesthesiologist, filed a qui tam lawsuit (False Claims Act, 31 U.S.C. 3729), alleging that Anesthetix, his former employer, fraudulently billed Medicare and Medicaid for services performed by its anesthesiologists. His central allegation is that the anesthesiologists regularly billed the government using the code for “medically directed” services when their services qualified for payment only at the lower rate for services that are “medically supervised.” A magistrate judge held that the complaint did not provide enough factual particularity to satisfy the heightened pleading standard for fraud claims, FED. R. CIV. P. 9(b). Mamalakis filed an amended complaint that included 10 specific examples of inflated billing, each identifying a particular procedure and anesthesiologist and providing details about how the services did not qualify for payment at the medical-direction billing rate. Six examples included a specific allegation that the anesthesiologist billed the services using that code; the other four relied on general allegations regarding the group’s uniform policy of billing at the medical-direction rate. The judge dismissed the case with prejudice.The Seventh Circuit reversed. Although Rule 9(b) imposes a high pleading bar to protect defendants from baseless accusations of fraud, Mamalakis cleared it. The examples, read in context with the other allegations in the amended complaint, provide sufficient particularity about the alleged fraudulent billing to survive dismissal. View "Mamalakis v. Anesthetix Management LLC" on Justia Law

Belt Railway, the largest switching and terminal railroad in the U.S., has more than 250 miles of track in its main yard south of Chicago’s Midway Airport. Jointly owned by six railroads—BNSF, Canadian National, Canadian Pacific, CSX, Norfolk Southern, and Union Pacific—Belt dispatches more than 8,000 cars a day. Wisconsin Central (a Canadian National subsidiary) prefers to receive Soo Line (a Canadian Pacific subsidiary) traffic at Belt’s yard; Soo prefers the Spaulding yard, 25 miles to the west. The Surface Transportation Board ruled that Wisconsin Central cannot insist that Soo deliver to Belt because a carrier’s power to designate a place where it will receive traffic is limited to line that the designating carrier owns; Wisconsin Central does not wholly own Belt.The Seventh Circuit vacated. “A rail carrier ... shall provide reasonable, proper, and equal facilities that are within its power to provide for the interchange of traffic between … its respective line and a connecting line of another rail carrier, 49 U.S.C. 10742. The Board improperly read “that are within its power to provide” as “that it owns.” A rail carrier can have the “power to provide” facilities by ownership or under a contract. The Board also erred in assuming that the statute requires the two railroads have physically intersecting lines and in making an assumption about expenses. The word “reasonable” gives the Board interpretive leeway; the phrase “that are within its power to provide” does not. View "Wisconsin Central Ltd. v. Surface Transportation Board" on Justia Law

Von Kahl is serving a life sentence, plus consecutive terms of 10 and five years’ imprisonment, for murdering two deputy U.S. Marshals and related crimes. The Bureau of Prisons originally calculated his release date as February 2013. In 1994, the Bureau recalculated his release date as February 2023. Von Kahl contested the calculation of his release date 28 U.S.C. 2241. Von Kahl, whose crime predates the 1984 Sentencing Reform Act, is subject to the 1976 Reorganization Act, 18 U.S.C. 4201–28, and was eligible for parole as soon as he was sentenced. The Parole Commission denied him release. He contends that he is now entitled to mandatory release under section 4206(d), which caps how long anyone must serve unless the inmate has seriously or frequently violated institutional rules or that there is a reasonable probability that he will commit any crime.The Seventh Circuit upheld the 2023 release date. The statute says that a life term is treated the same as a 45-year term, so anyone sentenced to life is presumptively released after 30 years but, unless paroled earlier, a prisoner must serve two-thirds or 30 years of “each consecutive term or terms.” Von Kahl is serving three consecutive terms: life, ten years, and five years. Thirty years for the life term, plus two-thirds of each term of years, adds to 40 years, running through February 2023. View "Von Kahl v. Segal" on Justia Law

Police were called when a highly-inebriated Gupta became belligerent while trying to enter a hotel at which he was not a guest. Surveillance video shows Gupta stumbling around and knocking over a brochure rack. A police officer, attempting to move Gupta outside, tugged on his handcuffed arm causing him to fall on his head and chest and fracture a vertebra in his neck. The officer then picked Gupta up by the arms and dragged him to the sidewalk. The officer asserts that he used a reasonable amount of force because Gupta was resisting arrest. Gupta asserts that he was not resisting the arrest, and was intoxicated, unsteady on his feet, and handcuffed with his hands behind his back. The video does not show Gupta stiffening or jerking himself away from the officer.The Seventh Circuit reversed an order granting the defendant summary judgment on Gupta’s 42 U.S.C. 1983 excessive force claim. There are material disputes of fact that make resolution of this case on summary judgment inappropriate. View "Gupta v. Melloh" on Justia Law

Chambers appealed the denial of two petitions for habeas corpus, asserting that he was denied due process in prison disciplinary hearings. Chambers lost good-time credit for one incident of refusing a prison guard’s instructions to provide a urine sample, disobeying a staff member’s order, and acting with insolence towards the staff member and another incident of interfering with a security device (he had activated a cell alarm by forcibly kicking his cell door). The hearing officers discounted Chambers’s claim that the guard never asked for a sample, noting video evidence that the guard was carrying a sample bottle and found Chambers guilty based on his undisputed statement to the guard that he was not in distress or having a medical emergency when he kicked his cell door.The Seventh Circuit affirmed. The disciplinary determinations were supported by sufficient evidence. Chambers had no due-process right to call witnesses whose testimony would be repetitive and irrelevant. The record lacked any evidence of bias and the initial reviews of Chambers’s cases by a one-member Unit Disciplinary Committee complied with BOP rules. Federal courts must affirm prison disciplinary decisions if they are supported by “some evidence,” and the incident reports cleared that low bar. “Chambers, a frequent litigant, is warned that he risks monetary sanctions if he continues to repeat in future cases these arguments that we have found to be frivolous.” View "Chambers v. Ciolli" on Justia Law