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

George was charged with conspiracy, 18 U.S.C. 371, and a Medicare‐fraud kickback scheme, 42 U.S.C. 1320a-7b(b)(1) based a scheme whereby George received payments of $500 per person from Rosner Home Health Care, for each Medicare patient that she referred to it. Two owners and an employee of Rosner (Tolentino, Magsino, and Hernal) pled guilty before trial. The district court found George guilty and sentenced her to six months of imprisonment. The Seventh Circuit affirmed, rejecting George’s arguments that there was insufficient evidence to support the conviction and that the court erred in failing to limit the cross‐examination of George to matters within her knowledge as a layperson. Hernal had cooperated in the investigation, so the prosecution’s evidence included recordings of the two discussing the illegality of the scheme and establishing the referrals and payments, in cash or check, plus bank records of George’s deposits, and referral logs. The district court properly allowed cross‐examination as to the book that George raised in her direct examination and which she introduced into evidence and properly allowed questioning about her knowledge of the illegality of referral payments. A defendant can be asked about her knowledge or state of mind: a question which seeks factual information, not a conclusion as to its legal significance. View "United States v. George" on Justia Law

Portalatin allegedly owed $1,330.75 in consumer debt. The Blatt law firm, on behalf of Midland, filed a debt‐collection suit against Portalatin in the Circuit Court of Cook County’s First Municipal District (Chicago). Seventh Circuit precedent under the Fair Debt Collection Practices Act (FDCPA) then allowed Blatt to sue Portalatin in that forum even though she lived in the Fourth Municipal District (15 U.S.C. 1692i(a)(2)). The Seventh Circuit subsequently overruled that precedent and held the FDCPA requires debt collectors to file suits in the smallest venue‐relevant geographic unit where the debtor signed the contract or resides. Blatt complied, but the ruling was retroactive. Portalatin sued Blatt and Midland for violating the FDCPA. Portalatin settled with Midland and expressly abandoned all claims against Blatt except her claim for FDCPA statutory damages. Blatt argued that Portalatin’s settlement with Midland mooted her claim for FDCPA statutory damages against Blatt. The district court denied Blatt's motions. The jury awarded Portalatin $200 in statutory damages against Blatt; the court awarded Portalatin $69,393.75 in attorney’s fees and $772.95 in costs against Blatt. The Seventh Circuit reversed. The settlement with Midland mooted Portalatin’s claim for FDCPA statutory damages against Blatt. Portalatin is not entitled to attorney’s fees or costs from Blatt. View "Portalatin v. Blatt, Hasenmiller, Leibsker & Moore, LLC" on Justia Law

United Airlines pilot instructors sued their union, ALPA, alleging that ALPA had breached its duty of fair representation in its allocation of a retroactive pay settlement among different groups of pilots. The district court dismissed the case. The Seventh Circuit reversed. A claim of discrimination or bad faith must rest on more than a showing that a union’s actions treat different groups of employees differently and must be based on more than the discriminatory impact of the union’s otherwise rational decision to compromise. The Instructors sufficiently and plausibly pleaded that ALPA acted in bad faith in its allocation of retroactive pay between the line pilots and pilot instructors. A union may not make decisions “solely for the benefit of a stronger, more politically favored group over a minority group.” The plaintiffs have alleged that pilot instructors make up a minority of ALPA’s membership and that ALPA acted with the intent to appease its majority membership, the line pilots, after a lengthy and contentious CBA negotiation. View "Bishop v. Air Line Pilots Association, International" on Justia Law

Carter, through broker Perkins, opened a commodities trading account to secure the prices his Wyoming ranch would receive for its cattle using financial instruments (hedging). After Perkins changed offices, those accounts were part of a “bulk transfer” to Straits. Carter did not sign new agreements. At Perkins’s request, Carter opened another Straits account to speculate in other categories. After Carter and Perkins split a $300,000 profit, Carter instructed Perkins to close the account. Perkins did not do so but continued speculating on Treasury Bond futures, losing $2 million over three months. Straits liquidated Carter’s livestock commodities holdings to satisfy most of the shortfall and sued for the deficiency. Carter established his right to the seized funds and an award of attorney fees but the court significantly reduced damages, finding that Carter failed to mitigate by not closely reading account statements and trading confirmations. The Seventh Circuit affirmed the interpretation of the contract but remanded for recalculation of damages. Finding Carte responsible for losses resulting from Perkins's fraud would apply a guarantee or ratification that was never given. Fraud victims are not responsible for their agent’s fraud before they learn of unauthorized activity. Under Illinois law, the injured party must have actual knowledge before it must act to mitigate its damages. The court affirmed the attorney fee award under the Illinois Consumer Fraud and Deceptive Business Practices Act. View "Straits Financial LLC v. Ten Sleep Cattle Co." on Justia Law

The warrant application was supported by statements from “Doe,” that for the previous six months she regularly bought heroin from T (Doe only knew him by sight and street name) in a house, which she identified while driving with the police. A judge questioned Doe under oath and issued the warrant. Executing the warrant, officers found Walker in a house that looked like a drug house. Walker stated that she had a gun but could not remember where it was. The search took 90-120 minutes. Officers left without drugs or evidence of T’s whereabouts. Walker sued under 42 U.S.C. 1983. The district court granted defendants summary judgment; more than 16 months passed before the judge released her opinion. Walker appealed that day. The Seventh Circuit affirmed, first noting that under Fed.R.App.P. 4(a)(7)(A)(ii), a judgment is deemed to be entered on the earlier of the Rule 58 judgment or 150 days after a dispositive order is entered. “Deferring the opinion until after the time allowed by Rule. 4(a)(7)(A)(ii) is never appropriate, as it can spell disaster for a litigant not versed in the appellate rules.” Addressing the merits, the court stated that Walker’s goal was to have a jury decide whether the state judge should have issued the warrant but with the benefit of “great deference” the state judge’s probable-cause evaluation must prevail. Nothing was concealed from the judge and, under the circumstances, a two-hour search was not unreasonable. View "Walker v. Weatherspoon" on Justia Law

The FHA-insured mortgage on the Schlafs’ property is serviced by Green Tree. The Schlafs defaulted. Green Tree was unable to contact them. Green Tree contracts with Safeguard, a “mortgage field servicing company,” to perform services on properties with defaulted mortgages, including maintenance, winterizing, lock changes, and utility management. Safeguard assists Green Tree in complying with HUD regulations: When a mortgage is in default and efforts to reach the mortgagor have proven unsuccessful, the mortgagee must make an inspection to determine if the property is vacant or abandoned. During these inspections, Safeguard representatives place hangers on an outside doorknob, with instructions for the property owner: PLEASE CALL … GREEN TREE 800‐666‐1143. The door hanger does not identify Safeguard. Safeguard representatives leave the notice even if they encounter the homeowner; they do not identify themselves as Safeguard representatives and avoid talking about why they are there. Safeguard acknowledges that the door hanger is an effort to have the mortgagor contact the client. At least once, Schlaf encountered a Safeguard representative. Schlaf, unable to identify or speak with the Safeguard representative, called the number on the door hanger, which “took [him] right to Green Tree.” He testified that he did not know if Safeguard collected debt. Schlaf sued Safeguard under the Fair Debt Collection Practices Act. The court granted Safeguard summary judgment The Seventh Circuit affirmed. Safeguard’s actions were too attenuated from Green Tree’s debt‐collection efforts; Safeguard is not a debt collector. View "Schlaf v. Safeguard Property, LLC" on Justia Law

Pronschinske entered into a Mining Leasing Agreement, giving Kaw the right to mine the sand, stone and rock products on the Pronschinske land but providing that it was not obligated to extract any materials or sell any product. Kaw decided not to mine the land and terminated the lease through its provisions. Pronschinske filed suit alleging that Kaw owed $400,000 as payment of a Commencement Royalty credit and a Minimum Production Royalty. The district court granted Kaw summary judgment. The Seventh Circuit affirmed as to production royalties. Pronschinske argued that paragraph 6 reflected a stand‐alone requirement of a minimum annual payment of $75,000 beginning with the first anniversary of the Effective Date, regardless of what actions are taking place on the property, reading “[n]otwithstanding anything to the contrary contained herein” as meaning that its location in paragraph 6 is irrelevant and that it represents a minimum annual payment unconnected to Production Royalties generally. Kaw argued that the “notwithstanding” language references the paragraph in which it is found, and means that notwithstanding the calculation of Production Royalties in this paragraph, a minimum payment of $75,000 is owed once the Production Royalty provision is triggered. The court characterized the contract as unambiguous and concluded that the provision’s placement and the term “Production Royalty,” indicate it is inapplicable before the mining commences. View "Pronschinske Trust v. Kaw Valley Companies, Inc." on Justia Law

On October 12, Gomes, a 52-year-old Indian national, was arrested for failing to appear for jury duty. A non-citizen, Gomes, was actually ineligible for jury duty. Gomes pulled away from the officer and was charged with resisting arrest. At Lake County Jail, Gomes was placed on suicide watch. On October 14, Gomes was transferred to ICE custody. She was released within days. On December 14, after failing to appear on the resisting-arrest charge, Gomes was back in the Jail. Her physical and mental health were deteriorating. She refused to eat and drink. Medical providers did little other than monitoring. Gomes died. The administrator of Gomes’s estate filed suit under 42 U.S.C. 1983 against Lake County, Jail officials, and CCS, the Jail’s contract medical provider, and its employees. The court dismissed the County defendants and granted the medical defendants FRCP 50(a) judgment on some claims. The Estate prevailed on another claim. The Seventh Circuit affirmed in part. Nothing in the record justifies a finding of personal liability against the County defendants, who received assurances that CCS staff were regularly monitoring Gomes. Medical providers stated that Gomes was stable and promised to send her to the hospital if necessary. The Estate presented no evidence that some feature in the Jail’s policy caused Gomes’s death. Rule 50(a) judgment, however, was premature. The record contains ample evidence from which a jury could infer that the doctors’ inaction diminished Gomes’s chances of survival. View "Miranda v. County of Lake" on Justia Law

Lester and William Lee created LIA in 1974 as a public company. William’s sons (Lester's nephews) later joined the business. LIA subsequently bought out the public shareholders, leaving Lester owning 516 shares; William owned 484. William created the Trust to hold his shares. The nephews served as trustees. Lester encountered difficulties with another company he owned, Maxim. He proposed that Maxim merge with LIA; William rejected this idea. Lester told the nephews, “I will screw you at every opportunity,” and made other threats, then, as majority shareholder, approved a merger of LIA and another company. The Trust asserted its rights under Indiana’s Dissenters’ Rights Statute. Lester gutted LIA to prevent the Trust from collecting the value of its LIA shares. He bought property from LIA on terms favorable to him and realized substantial profits. LIA subsidiaries were transferred for little or no consideration to Lester’s immediate family. Lester also perpetrated a collusive lawsuit, resulting in an agreed judgment that all LIA assets should be transferred to him and his companies. Lester did not disclose these actions to the nephews. In 2008, the Jennings Circuit Court conducted an appraisal in the dissenters’ rights action. Between the trial and the judgment, Lester dissolved LIA. The court entered a $7,522,879.73 judgment for the Trust. In 2012, Lester petitioned for Chapter 7 bankruptcy. The Trust initiated a successful adversary proceeding to pierce LIA’s corporate veil and hold Lester personally liable for the judgment. The Seventh Circuit affirmed, noting the facts were undisputed. View "William R. Lee Irrevocable Trust v. Lee" on Justia Law

Chicago Officer Frano obtained the approval of the state’s attorney’s office and obtained a search warrant based on a tip from a confidential informant, who claimed to have purchased heroin from Edmond at 736 North Ridgeway. Frano had driven the informant past the building to confirm the location and showed the informant a photograph to confirm Edmond's identity. The complaint specified the date of the tip but not the date of the alleged drug sale. Frano attested that the informant had provided dependable information about narcotics activities for five years. The complaint did not mention that the informant was facing felony drug charges or that a state court had revoked his bail and issued an arrest warrant. Officers searched the Ridgeway apartment and recovered loaded handguns, heroin, and cocaine. Edmond was not present but was arrested later. Before trial, Edmond unsuccessfully moved to suppress his post-arrest statements, claiming that he did not waive voluntarily his Miranda rights. .He was convicted of firearm and heroin charges but acquitted of a cocaine charge. The Seventh Circuit dismissed his appeal, citing "Anders."The district court denied his 28 U.S.C. 2255 pro se motion to set aside his conviction. The Seventh Circuit affirmed. Applying "Strickland," the court agreed that Edmond’s trial attorney performed below an objective standard of reasonableness; but, although the search warrant was not supported by probable cause, the good-faith exception to the exclusionary rule applied. Objectively reasonable police officers could have relied in good faith on the search warrant so Edmond was not prejudiced by his attorney’s deficient performance. View "Edmond v. United States" on Justia Law