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

In 2005, a van containing six family members van slipped off the edge of an Illinois roadway. In the ensuing rollover crash, everyone was hurt; one passenger died. The crash occurred in a construction zone; a guardrail had been removed and not replaced. All lines had not been repainted on the repaved road, and pieces of asphalt lay on the shoulder. In a suit against the construction companies, the defense attorney told the plaintiffs that the two companies were operating as a joint venture with a $1 million liability insurance policy. The parties settled for $1 million. Plaintiffs signed a release of all claims that stated the plaintiffs agreed they were not relying on any statements by any parties’ attorneys. Four years later, the plaintiffs discovered that the companies carried separate liability policies.The district court ruled as a matter of law that the failure to identify the individual policies violated FRCP 26; that the undisclosed policies would have covered plaintiffs’ claims; and no joint venture agreement existed under Illinois law, so joint venture exclusions in the individual policies were inapplicable. A jury awarded damages of $8,169,512.84 for negligent misrepresentation. The Seventh Circuit reversed. The district court erred in allowing plaintiffs to rely on a Federal Rule of Civil Procedure for a duty of care; in deciding, before trial, that plaintiffs reasonably relied on the insurance disclosures; and in excluding the defense’s expert testimony on liability and settlement value. View "Turubchuk v. Southern Illinois Asphalt Co., Inc." on Justia Law

HCI, on behalf of the Illinois Department of Aging, coordinates services for low-income seniors in an effort to keep them at home. HCI sometimes referred clients who needed in-home healthcare services to home healthcare companies owned by MPI. Qui tam claims against MPI, its home healthcare companies, and HCI, alleged that they orchestrated an illegal patient referral scheme that violated the Anti-Kickback Statute, 42 U.S.C. 1320a-7b(g), and, by extension, the state and federal False Claims Acts, 31 U.S.C. 3730(b)(1). The district court entered judgment for the defendants.The Seventh Circuit reversed. The evidence showed that MPI made monthly payments to HCI in return for access to the non-profit’s client records and used that information to solicit clients. The Anti-Kickback Statute definition of a referral is broad, encapsulating both direct and indirect means of connecting a patient with a provider. It goes beyond explicit recommendations; the inquiry is a practical one that focuses on substance, not form. The plaintiff’s theory was that MPI’s payments to HCI under the Management Services Agreement constituted kickbacks intended to obtain referrals in the form of receiving access to the HCI files that the defendants then exploited to solicit clients. A factfinder applying an erroneously narrow understanding of "referral "might find those facts, devoid of an explicit direction of a patient to a provider, to fall outside its scope. View "Stop Illinois Health Care Fraud, LLC v. Sayeed" on Justia Law

The doctor examined Chambers during the intake process at the Stateville Correctional Center. Chambers was housed there for a few weeks when he was processed into state custody. Chambers requested medication to treat a flare-up of a painful chronic condition, herpes. The doctor did not provide the medication. Chambers filed a grievance with the Stateville grievance office but was transferred to a different prison before the grievance was investigated. A grievance officer returned the grievance to Chambers unreviewed and invited him to take the matter to the Administrative Review Board (ARB), which normally serves in an appellate capacity reviewing decisions of grievance officers. ARB’s regulations also specify that grievances pertaining to problems at an earlier-assigned prison must be filed directly with ARB. Chambers skipped this step and instead sued the prison doctor under 42 U.S.C. 1983, alleging deliberate indifference to his medical needs. The Seventh Circuit affirmed the dismissal of the suit for failure to exhaust administrative remedies. Under the Prison Litigation Reform Act, prisoners must pursue their complaints about prison conditions through all levels of the relevant administrative-review system before bringing a lawsuit in federal court. View "Chambers v. Sood" on Justia Law

The 2018 First Step Act, 132 Stat. 5194, addresses the disparities between sentences for crack and powder cocaine and allows courts to grant sentence reductions if the defendant was previously convicted of a “covered offense.” Section 404(b) of that Act makes the Fair Sentencing Act retroactively applicable to defendants whose offenses were committed before August 3, 2010. If a defendant was convicted of a crack-cocaine offense that was later modified by the Fair Sentencing Act, he is eligible to have a court consider whether to reduce his term of imprisonment. In this consolidated appeal, the district courts denied each defendant’s motion for a sentence reduction, concluding that each defendant was ineligible under the First Step Act because the drug quantity described in each defendant’s PSR or plea agreement indicated that the Fair Sentencing Act did not alter the penalty range. The Seventh Circuit reversed and remanded, finding each defendant eligible to have a court consider whether to reduce his sentence under the First Step Act. The statute of conviction alone determines eligibility for First Step Act relief. The defendants’ offenses are “covered offenses” under the Act’s plain language because the Fair Sentencing Act modified the penalties for crack offenses as a whole, not for individual violations. View "United States v. Shaw" on Justia Law

Quincy develops and sells dietary supplements. Its Prevagen® product is sold through brick‐and‐mortar stores and online. Quincy registered its Prevagen® trademark in 2007. Ellishbooks, which was not authorized to sell Prevagen® products, sold dietary supplements identified as Prevagen® on Amazon.com, including items that were in altered or damaged packaging; lacked the appropriate purchase codes or other markings that identify the authorized retail seller of the product; and contained Radio Frequency Identification tags and security tags from retail stores. Quincy sued under the Lanham Act, 15 U.S.C. 1114. Ellishbooks did not answer the complaint. Ellishbooks opposed Quincy’s motion for default judgment, arguing that it had not been served properly and its Amazon.com products were “different and distinct” from the Quincy products The court entered default judgment, finding that Quincy had effected “legally adequate service.” Ellishbooks identified no circumstances capable of establishing good cause for default. Quincy had subpoenaed and submitted documents from Amazon.com establishing that Ellishbooks had received $480,968.13 in sales from products sold as Prevagen®.The district court entered a $480,968.13 judgment in favor of Quincy, plus costs, and permanently enjoined Ellishbooks from infringing upon the PREVAGEN® trademark and selling stolen products bearing the PREVAGEN® trademark. The Seventh Circuit affirmed, rejecting arguments that the district court failed to make “factual findings on decisive issues” and erred in holding that Ellishbook knew or had reason to know that a portion of the Prevagen® products were stolen. View "Quincy Bioscience, LLC v. Ellishbooks" on Justia Law

O’Leary and his codefendants operated a crack cocaine distribution business from 2010-2014. O’Leary sold crack cocaine rocks to customers, collected money, and looked out for police. Each distributor received one-to-eight packets daily, each containing 30 rocks, depending on demand and favor in the operation. As a preferred distributor, O’Leary received more packets than others. At O’Leary’s bench trial, the prosecution's evidence included O’Leary’s stipulations, the grand jury testimony, six intercepted phone call recordings of O’Leary making incriminating statements, a map of the distribution area, and 23 grams of seized cocaine. The parties stipulated that O’Leary had knowingly sold .4 grams of crack cocaine to an undercover officer on two specific dates. O’Leary was also present when co-conspirators sold crack cocaine packets.O’Leary was found guilty and was sentenced to 120 months in prison. The Seventh Circuit affirmed, rejecting an argument that the prosecution did not prove beyond a reasonable doubt the relevant quantity of 280 grams of cocaine. The law does not limit O’Leary’s guilt to the quantities he sold alone, but rather, to the entire operation; the conspiracy sold about 60 grams of crack cocaine daily, so the 280 grams of crack cocaine quantity was satisfied within five days View "United States v. O'Leary" on Justia Law

Beloit officers facilitated a recorded controlled buy of heroin from Perez, a suspected high-level drug dealer. Perez sold 98 grams of heroin to an informant. Based on that transaction alone, Perez pled guilty to distributing heroin. At Perez’s sentencing hearing, the judge expressed concern that the guidelines range of 33–41 months’ imprisonment did not reflect the full scope of his drug trafficking. The PSR described conduct that suggested that Perez was responsible for distributing large quantities of heroin, methamphetamine, and cocaine. The judge continued the hearing, directing the government to file a memorandum, detailing which offense conduct it could support by a preponderance of the evidence. When the hearing reconvened, the government presented witness testimony that elaborated on conduct described in the PSR, including drug ledgers, Perez’s post-arrest conversation with his girlfriend, large sums of cash, a money counter, cell phones, and Perez’s passport. The judge calculated a higher guidelines range and imposed a 121-month sentence.The Seventh Circuit affirmed, rejecting an argument that the sentencing judge should have recused himself. Perez has not demonstrated that a reasonable observer would have questioned the judge’s impartiality nor did he allege that the judge was biased based on events outside the proceedings. The judge’s continuance was laudable, not prejudicial. View "United States v. Perez" on Justia Law

Mayle, a self-proclaimed Satanist, is a follower of The Law of Thelema, a set of beliefs developed in the early 1900s by Aleister Crowley. As part of this religion, Mayle participates in what he calls “sex magick rituals” that he believes violate Illinois laws forbidding adultery and fornication. He claims that he reasonably fears prosecution for practicing his beliefs. He also says that he wants to marry more than one person at the same time and that if he were to do so, he would violate an Illinois law against bigamy. Mayle’s first challenge to the laws was dismissed. Mayle did not appeal, but the next year he filed another suit challenging the same statutes.The Seventh Circuit affirmed the dismissal of the second suit, first rejecting a challenge to the district court’s grant of a two-day extension to allow Mayle to file a notice of appeal. Mayle’s bigamy claim was precluded by the 2017 final judgment on the merits. Mayle lacked standing to challenge the state’s adultery and fornication laws because he still showed no reasonable fear of prosecution; those laws are no longer enforced. View "Mayle v. Illinois" on Justia Law

Fuqua, a mail handler, was forced to transfer to a new location when his Chicago center was downsized. He did not receive placement within 30 miles of his home. He refused to appear for work in Kansas City and was fired. Fuqua alleged his termination caused him emotional distress and made an administrative claim under the Federal Tort Claims Act (FTCA), 28 U.S.C. 2671. The Postal Service denied his claim, ruling that his exclusive remedy was through the Department of Labor (DOL) under the Federal Employees’ Compensation Act (FECA), 5 U.S.C. 8101. Fuqua filed suit for intentional and negligent infliction of emotional distress under the FTCA. During a stay in the proceedings, Fuqua corresponded with the DOL alleging he was injured because of defendants’ “extreme and outrageous conduct refusing to allow [him] to become assigned a station closer to [his] residence.” The DOL denied his FECA claim, explaining “[e]motional conditions that arise out of administrative and personnel matters, such as termination of employment are usually covered only if the weight of the evidence supports that the employer acted in an abusive manner or erred.” The district court dismissed Fuqua’s case.The Seventh Circuit affirmed. FECA applied to Fuqua’s claim, its administrative scheme ran its course, and his claim was denied for lack of evidence. The district court had no subject matter jurisdiction over his FTCA claims. Fuqua’s allegation falls within the “transfer, or reassignment” definition of “personnel action.” View "Fuqua v. United States Postal Service" on Justia Law

Skyrise bid $950,000 to supply “stick building” rough frame carpentry for building housing units near the University of Wisconsin-Oshkosh. Upon receiving a letter of intent from Annex, the general contractor, to enter into a contract, Skyrise blocked the project on its calendar and declined other work. Skyrise delayed returning the actual proposed contract for two months. Amex rejected Skyrise’s subsequent proposals for a broader scope of work and a different payment plan and awarded the carpentry contract to another firm. Skyrise sued for breach of contract, promissory estoppel, negligent misrepresentation, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and violation of the Wisconsin Deceptive Trade Practices Act.The Seventh Circuit affirmed summary judgment in favor of the defendants. Although the parties signed various proposals during their negotiations, no contract formed. The undisputed, objective evidence demonstrates that both parties intended for their relationship to be governed by a detailed contract that remained under review until Skyrise ultimately rejected that contract by making material alterations. Skyrise knew or should have known, that the negotiations could fall apart before the parties entered into a binding agreement. Annex never represented to Skyrise that it had the framing subcontract. View "Skyrise Construction Group LLC v. Annex Construction LLC" on Justia Law