| Docket: 13-1480 | Opinion Date: February 4, 2014 |
| Judge: Flaum |
| Areas of Law: Bankruptcy, Tax Law |
EAR, a subchapter S corporation, filed for Chapter 11 bankruptcy. In the years before its petition, EAR made federal income tax payments on behalf of its shareholders; eight of the payments in the two years preceding its petition. Once in Chapter 11, EAR, acting as debtor in possession, filed an adversary complaint against the government seeking to recover all nine payments as fraudulent transfers: the eight most recent payments under 11 U.S.C. 548(a)(1), which provides for recovery of transfers made within two years of the filing, and the ninth under 11 U.S.C. 544(b), which enables a trustee to bring a state‐law fraudulent‐transfer action. EAR asserted that the IRS was precluded from raising sovereign immunity as a defense. The U.S. agreed to disgorge the eight payments, but contested EAR’s ability to recover the ninth payment under 544(b). The bankruptcy court rejected the government’s theory, finding that 11 U.S.C. 106(a)(1) abolished federal immunity from suit under listed bankruptcy causes of action, including section 544. The district court affirmed. The Seventh Circuit reversed, holding that 106(a)(1) does not displace the actual‐creditor requirement in section 544(b)(1). Ordinarily, a creditor cannot bring an Illinois fraudulent‐transfer claim against the IRS; therefore, under 544(b)(1), neither can the debtor in possession.
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| Docket: 13-2435 | Opinion Date: February 4, 2014 |
| Judge: Flaum |
| Areas of Law: Business Law, White Collar Crime |
KBP is a Polish entity, formed to develop a business park near Krakow. Plaintiffs are KBP shareholders and defendants are either current or former shareholders. The plaintiffs alleged a fraudulent scheme to loot the company by payments for services never performed and sought relief under RICO, 18 U.S.C. 1962(a)–(d), with supplemental state claims for fraud, conversion, breach of fiduciary duty, tortious interference with prospective business advantage, civil conspiracy, violation of the Illinois Uniform Fraudulent Transfer Act, and for an accounting. The defendants allegedly invested some of their proceeds in a Chicago subdivision. Polish authorities charged the defendants for crimes related to KBP. In the RICO civil suit, the defendants’ abuse of the discovery process resulted in several sanctions rulings; when the plaintiffs objected to the magistrate’s relatively lenient decisions, the district judge found the sanctions too light and imposed more onerous ones, including contempt and an order barring the defendants from using certain evidence, and ultimately a $413,000,000 default judgment. The Seventh Circuit affirmed.
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| Docket: 12-1874 | Opinion Date: February 4, 2014 |
| Judge: Sykes |
| Areas of Law: Civil Rights, Government & Administrative Law, Labor & Employment Law |
A large group of African-American police officers and firefighters sued the City of Indianapolis, alleging that the examination process it uses to rank candidates for promotion in the police and fire departments has a disparate impact on black candidates and is intentionally discriminatory. They filed lawsuits targeting promotion decisions made in successive promotion cycles starting inv2002, but most of the challenged decisions were based on scores generated by testing administered by the police department in 2008 and the fire department in 2007. The district court dismissed many of the claims as either time-barred or substantively flawed. The Seventh Circuit affirmed. Although the district court mistakenly assumed that allegations of intentional discrimination necessarily defeat a disparate-impact claim, here the disparate-impact claims fail because they are stated as legal conclusions, without any factual content to support an inference that the examination procedures caused a disparate impact on black applicants for promotion. The disparate-treatment claims lacked evidentiary support and were properly resolved on summary judgment. Although the second complaint concerns a different set of promotion decisions, it attacked the same eligibility list that was at issue in the first case and was, therefore, barred.
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| Docket: 12-3498 | Opinion Date: February 4, 2014 |
| Judge: Hamilton |
| Areas of Law: Criminal Law |
Trying to avoid a traffic stop, Alexander lost control of his car and landed in a snow bank. Opening the door, Officer Honzel smelled “fresh raw cannabis.” Honzel called in a drug-sniffing dog, which alerted to the car’s center console. A search revealed six grams of marijuana divided into plastic bags, $365 in cash, a digital scale, cell phones, and a loaded gun, beneath the front passenger seat. Honzel testified that a cell phone displayed a text message inquiring about drugs. Another $470 in cash was found on Alexander’s person. Alexander was charged with possessing marijuana for distribution, 21 U.S.C. 841(a)(1), possessing a gun in connection with a drug crime, 18 U.S.C. 924(c)(1)(A), and possessing a gun as a felon, 18 U.S.C. 922(g)(1), 924(e)(1). Alexander claimed that he did not know the marijuana and gun were in the car, which he did not own. He did not testify or present evidence to support the claim. The government presented no fingerprint or DNA evidence to establish that Alexander had touched the gun or the drug-related items. Alexander’s lawyer argued that Honzel’s account was not trustworthy and that the text message was not recovered. The prosecutor responded that Honzel had no incentive to falsely implicate Alexander and attempted to bolster the officer’s credibility. Alexander’s lawyer did not object to the remarks. Convicted, Alexander was sentenced to a term of 390 months. The Seventh Circuit affirmed. The prosecutor’s remarks strayed into improper vouching, but the errors were not serious and did not deprive Alexander of a fair trial or cause his convictions.
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| Docket: 13-1511 | Opinion Date: February 4, 2014 |
| Judge: Wood |
| Areas of Law: Civil Rights, Constitutional Law, Criminal Law |
In November, 2005, Rooni and others went hunting. They shot three deer, which they took to a DNR post in a gas station for registration. While DNR employees tagged the deer, Rooni went inside. DNR agent Biser arrived and asked Rooni how many deer he had. Rooni did not respond. Biser proclaimed, loudly, that Rooni did not like the DNR. Rooni said “no, just people like you.” Biser left the station and leaned against the trailer while speaking to DNR employees. Rooni came out and attempted to walk around Biser. He had to pass closely because of slush on the ground. Biser extended his leg to block Rooni’s way. Rooni stopped and said, “let me get through,” and “brushed” between Biser and the trailer. Biser allegedly spit food at Rooni. As the encounter escalated, Rooni told his son to call the police. Biser told Rooni he was under arrest. While handcuffing Rooni, Biser allegedly jerked him back and made the cuffs too tight. While in the jail, Rooni did not seek medical attention. He had discoloration under his skin, painful hands and swollen fingers. Charges of disorderly conduct and obstructing an officer were dismissed. In April 2006, Rooni was diagnosed with carpal tunnel syndrome. The district court dismissed his suit under 42 U.S.C. 1983. The Seventh Circuit affirmed with respect to the handcuffing claim, citing qualified immunity. The court remanded Rooni’s arrest claim; taking his reasonable allegations as true, neither probable cause nor “arguable” probable cause supported an arrest.
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| Docket: 13-1939 | Opinion Date: February 4, 2014 |
| Judge: Hamilton |
| Areas of Law: Communications Law, Constitutional Law |
The Indiana War Memorials Commission requires a permit for even small gatherings at the Soldiers and Sailors Monument at Monument Circle in Indianapolis and at several other monuments. Smith and his young son were expelled from Monument Circle for protesting, without a permit, a proposed United Nations arms treaty. Smith sought an injunction against the policy’s enforcement. The district court denied his motion. The Seventh Circuit reversed, noting that the U.S. has signed, but has not ratified the treaty and that the permit policy has changed since the district court denied the motion. The new policy retains the problematic features of the old, so Smith’s appeal is not moot. Smith seems likely to succeed in showing that the 14‐person limit on demonstrations without a permit, and a provision that, if a gathering has been advertised or the public has been invited, a permit is required even if the group ultimately is made up of fewer than 15 people, are not narrowly tailored.
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