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

The case involves a dispute between Direct Supply, Inc., and the United States of America regarding tax deductions. Direct Supply, a company that assists nursing homes in purchasing equipment, medical supplies, and furniture through a system it calls "Direct Supply DSSI" (DSSI), filed for deductions under §199 of the Internal Revenue Code. This section allowed for deductions based on revenues from the "disposition" of "qualifying production property," which includes software. However, the Internal Revenue Service (IRS) disallowed these deductions, prompting Direct Supply to sue for a refund.Direct Supply argued that DSSI is the "disposition" of the software that runs the system. However, the IRS and the district court viewed DSSI as a service based on software, not a disposition of software. The court noted that Direct Supply's customers did not possess the software code or a license to use any of DSSI’s software. Furthermore, the majority of the revenue flowing to Direct Supply came from fees that were a percentage of the vendors' sales, rather than anything that measured the value of software.The United States Court of Appeals for the Seventh Circuit agreed with the district court and the IRS. The court noted that while DSSI depended on software, it did not "dispose" of that software. The court also pointed out that Direct Supply's receipts were not "directly derived" from the software, as required by the governing regulation, but were instead derived from the goods the vendors sold to the customers. The court affirmed the district court's decision that Direct Supply's deductions under §199 of the Internal Revenue Code were correctly disallowed. View "Direct Supply, Inc. v. United States" on Justia Law

In this case, the petitioner, Tony Rogers, convicted of sexually assaulting his daughter, DAR, appealed his conviction alleging ineffective assistance of counsel. Rogers claimed his trial lawyer failed to move for in-camera review of DAR’s medical records, which he believed contained information about her mental health that could have impacted the credibility of her testimony. The Wisconsin Court of Appeals rejected Rogers's claim, and the Supreme Court of Wisconsin denied review.Rogers then filed a federal habeas corpus petition, asserting that the state court decision was contrary to or an unreasonable application of established federal law. He contended that his trial counsel's failure to obtain DAR’s medical records or at least file a motion for in camera review violated his rights. The district court denied Rogers's petition, concluding that the state court decision did not contravene federal law and that the state court's application of the federal standard to Rogers's case was not unreasonable.The United States Court of Appeals for the Seventh Circuit affirmed the district court. It found that Rogers's counsel was not ineffective for failing to make a motion for in camera review of DAR’s medical records. The court held that such a motion would have been meritless because Rogers could not make the preliminary showing of the records’ materiality required under state law. The court also found that Rogers's claim that he made a plausible showing for in camera review of DAR’s medical records was based on speculation and devoid of context. The court held that the Wisconsin Court of Appeals' decision was not an unreasonable application of federal law. View "Rogers v. Wells" on Justia Law

In this appeal before the United States Court of Appeals for the Seventh Circuit, the plaintiff, Kelly Chavez, had been denied supplemental security income due to her various mental and physical impairments. The administrative law judge (ALJ) at a hearing found that Chavez could perform jobs that existed in significant numbers in the economy. This decision was affirmed by the district court, leading to this appeal. Chavez contended that the vocational expert's testimony, which the ALJ relied on, did not provide substantial evidence supporting the ALJ's decision.The vocational expert, Sarah Holmes, testified that a person with Chavez's age, background, and ability could perform several light exertion jobs, such as cleaner, office helper, and storage rental clerk. She used a software program, Job Browser Pro, to estimate the number of jobs, which uses data from the Bureau of Labor Statistics.Chavez's main argument was that Holmes did not explain Job Browser Pro's underlying formula, thereby rendering her testimony unreliable. However, the court held that Holmes's testimony provided substantial evidence for the ALJ's finding. The court highlighted that Holmes used a generally accepted source of job numbers, provided a straightforward overview of how the source worked, offered to provide additional information about the source's underlying formula, and identified jobs commonly found in the national economy. Therefore, the court affirmed the district court's judgment. View "Chavez v. O'Malley" on Justia Law

This case concerns a lawsuit filed by Mark A. Patterson against attorney Howard Howe in the United States Court of Appeals for the Seventh Circuit. Patterson had been sued by Howe in Indiana state court over an unpaid educational debt. Along with the complaint and summons, Howe served Patterson with four requests for admission under Indiana law, but failed to warn Patterson about the consequences of not responding within thirty days. Patterson answered the complaint but did not respond to the requests for admission. Concurrently, Patterson filed a federal lawsuit alleging that Howe's practice of serving requests for admission without warning him of the consequences violated the Fair Debt Collection Practices Act (FDCPA).The district court granted summary judgment to Patterson, awarding him statutory damages of $1,000 and more than $58,000 in attorney fees and costs. Howe appealed both the merits judgment and the award of fees and costs.The Court of Appeals vacated both judgments and ordered the dismissal of the case. The court held that Patterson lacked standing to bring his claim because he was not concretely harmed by Howe’s alleged statutory violation. Patterson's argument that he would have denied the requests for admission if he had been warned was insufficient to establish a concrete injury. Additionally, his claim that he lost negotiating leverage and was forced to settle for the full amount he allegedly owed was speculative and occurred after he filed his complaint, which meant it could not provide the basis for standing in this case. View "Patterson v. Howe" on Justia Law

LaTonya Foxx, along with two others, was charged and convicted for engaging in a fraudulent tax scheme. Foxx pleaded guilty to one count of wire fraud and was sentenced to 18 months’ imprisonment, one year of supervised release, and ordered to pay $1,261,903 in restitution. The scheme involved filing fraudulent tax returns to generate improper refunds for clients and the defendants. The United States Court of Appeals for the Seventh Circuit heard Foxx's appeal of the restitution order.The court noted that any power to award restitution must come from a statute. In this case, the Mandatory Victims Restitution Act authorizes restitution for wire fraud offenses. The court noted that restitution is limited to the actual losses caused by the specific conduct underlying the offense, and the government must establish those losses by a preponderance of the evidence.Foxx argued that the district court failed to adequately delineate the scheme and make specific findings that the losses included in the restitution derived from the same scheme for which she was convicted. The court found no fatal deficiency in the district court's findings and concluded that Foxx failed to demonstrate a plain error. The court held that Foxx could be ordered to pay restitution for all the losses she caused during the scheme, not just those relating to the specific wire transactions to which she pleaded guilty. The court affirmed the restitution order. View "United States v. Foxx" on Justia Law

The United States Court of Appeals For the Seventh Circuit heard an appeal from Herbert Hardimon against the American River Transportation Company, LLC (ARTCO). Hardimon worked on a flat deck crane barge and was injured after slipping on ice on the deck and falling into the freezing Mississippi River. This incident occurred the day after barges controlled by ARTCO had broken away from their moorings and struck Hardimon's barge, damaging a hatch cover.Hardimon filed a general maritime negligence claim against ARTCO, which was dismissed by a magistrate judge who concluded that Hardimon failed to demonstrate that his injuries were proximately caused by ARTCO. Hardimon appealed this decision.The Court of Appeals affirmed the lower court's dismissal, stating that Hardimon's injury was not a foreseeable result of the barge collision. It ruled that while Hardimon may have been within the general class of victims foreseeable to ARTCO, the harm was not. The court found that the general sort of harm in this case—slipping on ice on the deck of a barge—was not within the class of harms ARTCO should reasonably be expected to foresee resulting from its negligent barge mooring.Hardimon also claimed he was a rescuer coming to the aid of the damaged barge, asserting that ARTCO owed him a duty of care. The court rejected this argument, stating the complaint failed to allege that he was injured while attempting to rescue the barge or that he was responding to an exigent or dangerous situation. View "Hardimon v. American River Transportation Company, LLC" on Justia Law

The case involves Janay Garrick, a former instructor at Moody Bible Institute, who alleged sex discrimination and other Title VII violations. Garrick claimed that she was subjected to hostile treatment due to her gender and the Institute's religious beliefs. Moody argued that her suit was barred by Title VII’s religious exemptions and the First Amendment doctrine of church autonomy. The district court denied Moody's motion to dismiss in part, leading to Moody's appeal.However, the United States Court of Appeals for the Seventh Circuit dismissed the appeal for lack of jurisdiction. The court reasoned that it could only review a small class of interlocutory orders under the collateral order doctrine, and Moody's appeal did not fit within this class. The court found that the district court's denial of Moody's motion to dismiss was not conclusive, did not resolve important questions separate from the merits of the case, and would not effectively be unreviewable on appeal from a final judgment.The appellate court also emphasized that Moody's defense, based on the doctrine of church autonomy, was not separate from the merits of Garrick's gender discrimination claims. Furthermore, the court noted that Moody's argument that it would experience irreparable harm without immediate review was unavailing, as the district court could limit discovery to instances of discriminatory treatment not implicated by Moody's religious beliefs. The court concluded that religious autonomy to shape and control doctrine would not be threatened by the further progression of Garrick's lawsuit. View "Garrick v. Moody Bible Institute" on Justia Law

The case involves a dispute between the Trustee for the bankrupt company BWGS, LLC and BMO Harris Bank N.A. and Sun Capital Partners VI, L.P. The Trustee sought to avoid a payment made by BWGS to BMO Harris, which was used to finance the acquisition of BWGS by Sun Capital's subsidiary. The Trustee argued that the payment constituted a constructively fraudulent transfer under the U.S. Bankruptcy Code and Indiana state law.The United States Court of Appeals for the Seventh Circuit had to address two novel issues: whether Section 546(e) of the Bankruptcy Code, which protects certain transactions made “in connection with a securities contract,” applies to transactions involving private securities; and, if so, whether it also preempts state law claims seeking similar relief.The Court held that Section 546(e) does apply to transactions involving private securities and does preempt state law claims seeking similar relief. Consequently, the Trustee's attempt to avoid the payment under the Bankruptcy Code and Indiana law was barred by Section 546(e). The Court also rejected the Trustee's argument that he could recover the value of the payment from Sun Capital under a different provision of the Bankruptcy Code, holding that this claim was also preempted by Section 546(e). The Court thus affirmed the lower court's decision to dismiss the Trustee's complaint with prejudice. View "Petr v. BMO Harris Bank N.A." on Justia Law

The case concerns a dispute between LKQ Corporation and its former Plant Manager, Robert Rutledge, who resigned from the company and joined a competing firm. LKQ sought to recover proceeds Rutledge realized from multiple stock sales over many years, based on a forfeiture-for-competition provision in their Restricted Stock Unit Agreements.The key legal issue revolves around the applicability of Delaware law on forfeiture-for-competition provisions. These provisions require former employees to forfeit a monetary benefit upon joining a competitor. The Delaware Supreme Court held in a recent case that such provisions are not subject to a reasonableness review. However, the United States Court of Appeals for the Seventh Circuit found it unclear whether this ruling applies outside the context of highly sophisticated parties.The Court of Appeals affirmed the lower court's judgment in favor of Rutledge on the breach of the Restrictive Covenant Agreements and unjust enrichment claims. However, due to the complexity of the Delaware law issue, the Court decided to certify questions to the Delaware Supreme Court for clarification. Specifically, the certified questions ask whether the Delaware Supreme Court's ruling on forfeiture-for-competition provisions applies outside the limited partnership context and, if not, what factors inform its application. View "LKQ Corporation v. Rutledge" on Justia Law

The case before the United States Court of Appeals For the Seventh Circuit involves an appeal by Shamone White, who had been convicted by a jury of possessing marijuana with intent to distribute, possessing a firearm in furtherance of a drug trafficking crime, and possessing a firearm as a felon. White appealed his firearm convictions, arguing that the prosecution presented inadequate evidence to establish possession. He also argued that the district court incorrectly instructed the jury, allowing them to find him guilty based solely on his admission that he touched the gun a week before his arrest.White was arrested after a vehicle he was a passenger in was pulled over. Inside the vehicle, the police found two bags, one of which White admitted to owning. This bag contained cash and cannabis, while the other bag, which White denied ownership of, contained a firearm, ammunition, scales with cannabis residue, and other items.The court found that the evidence was sufficient for each conviction and that the jury instruction was not misleading. The court highlighted that possession could be either actual or constructive. The court determined that a reasonable jury could infer that White constructively possessed the firearm due to its proximity, the presence of scales with drug residue in the same bag, and the fact that the contents of the two bags collectively formed a complete set of drug trafficking tools. The court also found that White's admission to having previously touched the gun did not mislead the jury. The judgement of the district court was thus affirmed. View "USA v. White" on Justia Law