Justia Civil Procedure Opinion Summaries

Chicago Police officers pulled over a car driven by Rosado for failing to use a turn signal. After stopping the car, the officers “claimed to have seen” a badge, handcuffs, and a handgun in plain view “between the brake lever and center console.” They arrested Rosado for unlawful possession of a weapon by a felon and for violating the armed habitual criminal statute. Another officer approved the report as establishing probable cause. Rosado spent about 18 months in jail before receiving a copy of the dash cam video recorded when he was arrested, which, contrary to the officers’ accounts, showed that Rosado had used an operable turn signal. The state court dismissed the charges. Rosado filed suit under 42 U.S.C. 1983. The court dismissed Rosado’s false‐arrest claim as barred by the two‐year statute of limitations. Because his claims of conspiracy and failure to intervene arose from the false‐arrest claim, those were also dismissed. The court dismissed Rosado’s due‐process and respondeat‐superior claims on the merits. The Seventh Circuit affirmed. Rosado did not promptly file. He knew the officers had fabricated probable cause by February 2014, when he received the video, and still had seven months to timely file suit. Rosado’s unexplained failure to timely file precluded equitable tolling. View "Rosado v. Gonzalez" on Justia Law

The Seventh Circuit held, in 2012, that the plaintiffs, injured by a 2007 flood in Bagley, Wisconsin, had forfeited an argument concerning Wis. Stat. 88.87, which concerns liability for negligent design and maintenance of a railroad grade that causes an obstruction to a waterway. Plaintiffs’ counsel identified new plaintiffs and refiled the same litigation in Arkansas state court to pursue that argument. The new suit was removed to the Western District of Wisconsin, which dismissed. The defendant asked the court to sanction plaintiffs’ counsel under FRCP 11 or 28 U.S.C. 1927 for pursuing frivolous claims and engaging in abusive litigation tactics. The court denied that request, reasoning that although the claims were all but foreclosed by the 2012 decision, they were not frivolous. The Seventh Circuit affirmed the dismissal, but reversed the denial of sanctions. The record indicated that counsel unreasonably and vexatiously multiplied the proceedings by filing suit in Arkansas, which had no connection to the case. On rehearing, the Seventh Circuit noted its inherent authority to sanction willful abuse of the judicial process. Stombaugh long had notice of the conduct on which BNSF sought sanctions, and had multiple opportunities make his case against the award of sanctions. View "Boyer v. BNSF Ry. Co." on Justia Law

Teledyne terminated Shekar’s employment; 10 days later Teledyne sought injunctive relief, alleging that Shekar had accessed or attempted to access Teledyne’s servers, containing confidential information. There was a large data transfer between a Teledyne server and Shekar’s laptop computer on the day he was terminated. Before his termination, Shekar emailed Teledyne’s confidential information to his personal email addresses and saved it on his computers. Shekar refused to return electronic equipment provided by Teledyne for Shekar’s use at home. Teledyne asserted violations of the Computer Fraud and Abuse Act, the Illinois Trade Secrets Act, and the Illinois Uniform Deceptive Trade Practices Act. The district court issued a temporary restraining order requiring Shekar to return Teledyne’s electronic information and equipment and later granted Teledyne’a preliminary injunction, noting Shekar’s failure to comply with the TRO. The injunction required Shekar to provide “unrestricted access” to all of his devices that were capable of storing electronic information. The court later found Shekar in contempt for not producing several devices, not accounting for Teledyne’s electronic information, and not providing complete and truthful answers to interrogatories. The Seventh Circuit dismissed for lack of jurisdiction over Shekar’s appeal of his motion to vacate the preliminary injunction, which the court characterized as a “belated appeal” of the preliminary injunction. Since Shekar cannot appeal the preliminary injunction, he cannot appeal the contempt order while the underlying litigation remains pending. View "Teledyne Techs. Inc. v. Shekar" on Justia Law

A Wisconsin state prison inmate filed suit, in forma pauperis (28 U.S.C. 1915(a)), against prison doctors, alleging deliberate indifference to the plaintiff’s medical needs, in violation of 42 U.S.C. 1983, and medical malpractice. The defendants learned that in seeking permission to litigate in forma pauperis the plaintiff had failed to disclose that he had approximately $1400 in a trust account outside the prison. The district court dismissed, with prejudice on that basis. The Seventh Circuit affirmed, noting that, on appeal, the plaintiff had not argued that the dismissal should have been without prejudice and that such a dismissal would have had a different impact because the statute of limitations for section 1983 claims in Wisconsin is six years, not three. The decision to dismiss with prejudice was proper, however, and sends a strong message to all litigants, particularly to the prison population, that dishonesty to the court will not be tolerated. View "Kennedy v. Huibregtse" on Justia Law

In 2012, U.S. Bank, which has its main office in Ohio, filed a diversity suit asking for a foreclosure judgment on the mortgage of a residential property owned by the Fullers, citizens of Illinois, and named, as a defendant KeyBank, which held a junior mortgage on the property. After KeyBank was discovered also to be a citizen of Ohio, the district court granted U.S. Bank’s motion for voluntary dismissal. The court also dismissed claims that the Fullers had asserted against Litton Loan Servicing, a nonparty, because it had not been served with the third‐party complaint. The Seventh Circuit affirmed. Dismissal eliminated the prejudicial impact and inefficiency of forcing U.S. Bank to litigate its dispute over the same property in both federal and state court in order to obtain an adequate judgment. Whether Litton had actual notice of the claims against it is only one factor the district court may consider when deciding whether to extend the time for service. The court was free to determine, as it did, that the Fullers’ failure over two years to pursue their claims against Litton ruled out an extension. View "U.S. Bank Nat'l Ass'n v. Collins-Fuller T." on Justia Law

On behalf of Lightspeed, which operates websites purveying online pornography, attorneys Hansmeier, Steele, and Duffy sued a John Doe defendant in Illinois state court under the Computer Fraud and Abuse Act, 18 U.S.C. 1030, then served ex parte subpoenas, demanding that Internet service providers (ISPs), provide personally identifiable information of more than 6,600 “co‐ conspirators.” They filed similar actions in several states, apparently hoping to extract quick settlements from individuals whose personal information was revealed. The ISPs removed the Illinois case to federal court. Meanwhile, a California court imposed sanctions on the attorneys in a similar case; they began voluntarily dismissing cases. After the Lightspeed case was dismissed, a defendant sought attorney’s fees. The court imposed sanctions of $261,025.11, jointly and severally, against the attorneys. They failed to pay. The court scheduled a show‐cause hearing. The attorneys, who claimed insolvency, did not comply with interrogatories and requests for production. After the attorneys attempted to interfere with their financial institutions’ compliance with subpoenas, the court held them in contempt. The Seventh Circuit affirmed. The attorneys continued their "shenanigans." The Lightspeed defendants discovered efforts to hide assets; the district court again imposed contempt and discovery sanctions. The Seventh Circuit dismissed Hansmeier’s appeal, noted that Duffy is now deceased, and affirmed the discovery sanction, but vacated the contempt sanction for Steele. View "Lightspeed Media Corp. v. Smith" on Justia Law

Caudill, the owner of a real estate brokerage, sued Keller Williams for breach of a 2001 franchise contract. Caudill's position as Regional Director of Keller Williams was terminated in 2010; her franchise was terminated in 2011. The suit settled with an agreement including a prohibition against disclosure of its terms, except to tax professionals, insurance carriers, and government agencies; those recipients had to promise to keep them in confidence. Any violation entitled the victim to damages of $10,000. Months later, Keller Williams issued an FDD (Franchise Disclosure Document) to about 2000 existing or potential franchisees and other parties, describing Caudill’s lawsuit in detail. The FDD was not required by the Federal Trade Commission under 16 C.F.R. 436.2(a). Caudill sought $20 million (2000 x $10,000) in damages. The district judge rejected her claim, noting that under Texas law a liquidated damages clause is enforceable only if “the harm caused by the breach is incapable or difficult of estimation and … the [specified] amount of liquidated damages is a reasonable forecast of just compensation.” The Seventh Circuit affirmed. It is unreasonable to suppose, without evidence, that the dissemination of the FDD caused Caudill a $20 million loss. Although the burden of proving that a liquidated damages clause is actually a penalty clause is on the defendant, Keller Williams established that there was no basis for the requested damages. View "Caudill v. Keller Williams Realty, Inc." on Justia Law

The bank filed a residential mortgage foreclosure suit in Wisconsin state court. The owners, citizens of Minnesota, removed the case to federal court based on diversity of citizenship. The district court entered a judgment of foreclosure, ordered the property sold at a sheriff’s auction after the time for redemption expired, and held that the bank would not be entitled to obtain a deficiency judgment. The owners appealed. In the meantime, the Seventh Circuit held (Townsend decision) that a judgment of foreclosure applying Illinois law was not a final, appealable judgment under 28 U.S.C. 1291, then dismissed the Wisconsin foreclosure appeal. The court noted that both judgments: determined the amount owed as of the judgment date; allowed the bank to seek additional costs before the sale; ordered a sale, but only after passage of the redemption period under state law; ordered the sheriff to report the sale for court confirmation; and ordered that, upon confirmation, the auction purchaser would be entitled to possession of the property. Unlike in Townsend, the Wisconsin judgment precludes any deficiency judgment, so that the bank’s recovery is limited to the sale proceeds. Given a post‐judgment state law right of redemption and a sale that requires further court approval before taking effect, the fact that Wisconsin courts treat a foreclosure judgment ordering a sale as final and appealable does not override the federal standard of finality. View "Bank of America, N.A. v. Martinson" on Justia Law

ORIX made a $41 million loan for the purchase of a North Carolina commercial building. Inheritance (a subsidiary of Detroit’s civil service retirement plans) guaranteed the loan. The building’s sole tenant did not renew its lease. No new tenant was willing to pay as much. ORIX accelerated the loan and demanded that Inheritance assume the outstanding debt. Inheritance sought a declaratory judgment. ORIX, which has citizenship in Delaware and Texas, removed the case to federal court, based on diversity of citizenship. The district court ordered Inheritance to pay $30 million. The Seventh Circuit vacated for lack of jurisdiction, citing the Supreme Court’s 2016 decision in Americold Realty Trust v. ConAgra, that when a trustee sues (or is sued), the trustee’s citizenship matters for purposes of diversity jurisdiction. When the beneficiary is a party, or a trust litigates in its own name, it takes the citizenship of each of its members. It does not matter that Detroit’s pension funds call some people “members” and others (often the same people at different times) “beneficiaries.” People in their active work lives, retirees, and family members entitled to payments on their accounts, all have financial interests in the pension trusts, raising “grave doubt about the existence of complete diversity of citizenship.” If ORIX does not seek an adjudication of the domicile of 59 persons who, in 2013, lived in Texas or Delaware, the district court must remand to state court. View "RTP LLC v. ORIX Real Estate Capital, Inc." on Justia Law

In 2013, Panther, a marketing and brand management company, signed a contract with IndyCar, to purchase access to coveted space in the “Fan Village” at IndyCar racing events, an area where sponsors set up displays to attract fans. The Army National Guard had been Panther’s team sponsor, 2008-2013. After it signed the 2013 contract, Panther learned that another team, RLL, intended to provide the Guard with Fan Village space. Believing that RLL had conspired with IndyCar and the Docupak agency to persuade the Guard to sponsor RLL instead of Panther, Panther brought suit in state court against RLL, Docupak, IndyCar, and active‐duty Guard member Metzler, who acted as the liaison between the Guard and Panther. The defendants removed the case to federal court, where the United States was substituted as a party for Metzler, 28 U.S.C. 2679(d); Panther filed an amended complaint that did not name either Metzler or the United States. The district court dismissed the complaint against RLL, IndyCar, and Docupak and found the United States’s motion to dismiss for lack of jurisdiction moot. The Seventh Circuit vacated and remanded for dismissal for lack of jurisdiction; the basis for federal jurisdiction disappeared when Panther amended its complaint. View "Panther Brands, LLC v. Indy Racing League, LLC" on Justia Law