Justia Legal Ethics Opinion SummariesArticles Posted in US Court of Appeals for the Seventh Circuit
United States v. Wright
Pfister and Evans dealt methamphetamine in Illinois. In 2016, they traveled to Colorado approximately 20 times to buy meth from Wright. After Evans sold several ounces to Heavener, officers searched Heavener’s home and recovered over 50 grams of meth. Heavener knew that Evans got the meth from “Monica” in Colorado.Wright was charged with intent to distribute at least 50 grams of meth and at least 500 grams of a mixture containing meth. She retained Garfinkel. In its opening statement, the government previewed testimony from Evans, Pfister, Heavener, and Deherrera, a Colorado-based middleman. Garfinkle also foreshadowed testimony from Deherrera, referring to him as the government’s witness. During trial, the government alerted the court that Deherrera had stated that Garfinkel had encouraged him to change his testimony. The government referenced Deherrera’s potentially exculpatory testimony but stated that it no longer planned to call him as a witness, noting that if Wright called Deherrera and he testified to being pressured to change his testimony, Garfinkel would have to take the stand to impeach him. Garfinkel denied Deherrera’s allegations. The court questioned Wright, who confirmed she agreed with Garfinkel’s strategy to not call Deherrera, understanding the possibility that Garfinkel was personally motivated. Deherrera did not testify. In closing arguments, Garfinkel described Deherrera’s absence as the missing link—a burden the government had to overcome to convict Wright. Wright was convicted and sentenced to 264 months. The Seventh Circuit affirmed, finding no conflict of interest and sufficient evidence of conspiracy. View "United States v. Wright" on Justia Law
Salem v. Illinois Attorney Registration and Discipinary Commission
In 2003, Salem received a license to practice law in New York. He applied for but was denied a license to practice in Illinois, where he resides, but maintained an Illinois practice, from 2004-2019, by obtaining permission to appear pro hac vice. The Illinois Attorney Disciplinary and Registration Commission (IARDC) charged him with falsely representing that he was licensed in Illinois and successfully requested that the Illinois Supreme Court prohibit Illinois courts from allowing him to appear pro hac vice for 90 days. Salem filed suit, 42 U.S.C. 1983.The Seventh Circuit affirmed the dismissal of Salem’s suit and ordered him to show cause why he should not be sanctioned. The court first rejected Salem’s argument that every Illinois district judge should be disqualified and the case transferred to Michigan. The court then held that the decision of the Illinois Supreme Court cannot be collaterally attacked in civil litigation. The court noted that the defendant, the IARDC, did not deprive Salem of liberty or property and that there was a rational basis for the Supreme Court’s decision. The court described the litigation as frivolous and noted Salem’s history of “preposterous” behavior in federal court. View "Salem v. Illinois Attorney Registration and Discipinary Commission" on Justia Law
A. B. v. Brownsburg Community School Corp.
C.B., a minor, suffers from generalized anxiety disorder, depression, and ADHD. During the 2017-2018 school year, the Brownsburg School Corporation determined that C.B. was eligible for accommodations under the Rehabilitation Act. In 2019, C.B. brought a shotgun shell to school with a device believed capable of discharging the shell. Brownsburg recommended expulsion. Conferences and administrative hearings followed. In April 2020, Brownsburg offered to pay for a new independent education evaluation of C.B. and to revisit C.B.’s eligibility for an individualized education plan under the Individuals with Disabilities Education Act (IDEA). C.B.’s parents agreed to various compromises if Brownsburg agreed to pay for all attorney’s fees. In July, Brownsburg indicated willingness to pay part of the fees. C.B.’s parents rejected Brownsburg’s offer and reinstated their initial demands. Brownsburg sought dismissal of the proceedings, citing its concessions and “extreme effort” to resolve this case short of an administrative hearing. The parents requested factual findings regarding attorney’s fees and acknowledgment as the “prevailing party.” The hearing officer ultimately adopted the parties’ concession regarding services for C.B. and dismissed the petitions.C.B.’s parents sued for attorney’s fees under the IDEA’, 20 U.S.C. 1415(i)(3)(B)(i)(I). The district court granted Brownsburg summary judgment. The Seventh Circuit reversed, concluding that the parents were the “prevailing party” and could be eligible for fees. Brownsburg's agreement to provide every student-related remedy set out in C.B.’s parents’ due process request was not binding until the hearing officer issued a finding. View "A. B. v. Brownsburg Community School Corp." on Justia Law
Andren v. Broiler Chicken Antitrust Litigation End User Consumer Plaintiff Class
Three sets of plaintiffs alleged price fixing in the broiler chicken market, including a class of end users–persons and entities who indirectly purchased certain types of broilers from the defendants or alleged co-conspirators for personal consumption in certain jurisdictions during the class period. This class settled their claims with a subset of the defendants for $181 million. The district court entered judgment (FRCP 54(b)) as to the settling parties. Class counsel was awarded one-third of the settlement—excluding expenses and incentive awards— $57.4 million. Class member Andren argued the court erred in discounting bids made by class counsel in auctions in other cases; in suggesting the Seventh Circuit has rejected the use of declining fee scale award structures; and in crediting expert reports. In setting the fee award, the district court considered actual agreements between the parties and fee agreements reached in the market for legal services, the risk of nonpayment at the outset of the case and class counsel’s performance, and fee awards in comparable cases.The Seventh Circuit vacated the award. Under Seventh Circuit law, the district court’s task was to award fees in accord with a hypothetical “ex-ante bargain.” In doing so, the court did not consider bids made by class counsel in auctions in other cases as well as out-of-circuit fee awards. View "Andren v. Broiler Chicken Antitrust Litigation End User Consumer Plaintiff Class" on Justia Law
Live Face on Web, LLC v. Cremation Society of Illinois, Inc.
The defendants each licensed computer code from Live Face for $328. Live Face then sued them for copyright infringement, seeking about $483,000 in damages. Live Face has roughly 200 copyright suits pending. After more than five years, with summary judgment pending, Live Face successfully moved to dismiss its suit with prejudice. It argued that a 2021 Supreme Court case (Google) made the defendants’ fair-use defense insurmountable. The defendants sought fees; the district court denied the motion, finding that the defendants did not prevail because of their defenses but rather due to a fortuitous, unforeseen change in the law.The Seventh Circuit vacated and remanded. The Copyright Act authorizes prevailing parties to recover costs and fees, 17 U.S.C. 505. Four nonexclusive factors are relevant: the frivolousness of the suit; the losing party’s motivation for bringing or defending against a suit; the objective unreasonableness of the claims advanced by the losing party; and the need to advance considerations of compensation and deterrence. The defendants did prevail because of their defenses, including their fair-use defense. No matter which side prevailed in Google, the law would favor one of these parties. It is unclear whether Google changed anything relevant here, without a proper analysis of how Google affected Live Face’s claims. Even if Google did change something fundamental, the defendants raised defenses apart from fair use, which might have defeated Live Face’s claims. View "Live Face on Web, LLC v. Cremation Society of Illinois, Inc." on Justia Law
Mac Naughton v. Asher Ventures, LLC
Mac Naughton, a New Jersey attorney, represented Harmelech in a lawsuit filed by RMG until Harmelech failed to pay his legal fees. Mac Naughton later purchased from RMG the rights to the unpaid portion of a settlement judgment and filed multiple actions against Harmelech, seeking to collect the Judgment. He sought to set aside Harmelech’s conveyance of his Highland Park home to his son. Harmelech moved to disqualify Mac Naughton under New Jersey Rule of Professional Conduct 1.9(a): A lawyer who has represented a client “shall not thereafter represent another client in … a substantially related matter in which that client’s interests are materially adverse to the interests of the former client.” Judge Holderman barred Mac Naughton from acting as counsel in efforts to collect the RMG Judgment. Mac Naughton continued prosecuting the matter and filed similar actions before different judges. The Highland Park action was dismissed as a sanction for Mac Naughton’s defiance of the Order. The Seventh Circuit affirmed the dismissals of four other cases.Mac Naughton then sued Harmelech, seeking to set aside a purportedly fraudulent stock transfer to collect the RMG Judgment. The Seventh Circuit affirmed the suit's dismissal. This lawsuit was another attempt to circumvent the Holderman Order. Mac Naughton again argued that he did not violate Rule 1.9(a); he expects a New Jersey proceeding to vindicate him. But this dismissal was based on the Holderman Order, not Rule 1.9(a). Whether or not Mac Naughton violated his ethical duties as a New Jersey lawyer, he has a duty to comply with orders issued by Seventh Circuit courts. The appeal was frivolous; sanctions are warranted. View "Mac Naughton v. Asher Ventures, LLC" on Justia Law
Peraica v. Layng
Peraica represented Dordevic in her Chapter 7 bankruptcy proceeding and submitted a Statement of Financial Affairs (Rule 2016 disclosure) in which he reported that Dordevic had paid him $5,000. As the Trustee learned during discovery, Dordevic had actually paid Peraica $21,500. The Trustee informed Peraica that he needed to file an updated Rule 2016 fee disclosure. Peraica instead sent the Trustee an informal accounting document listing $21,500 in fees. The Trustee responded: “The Rule 2016 disclosures actually need to be filed with the Court” by submitting “an official form.” Peraica repeatedly ignored the Trustee’s reminders. The Trustee filed a motion, 11 U.S.C. 329, to examine the fees. Peraica failed to respond; the Trustee then requested that all fees be forfeited. The bankruptcy court granted the motion.The district court and Seventh Circuit affirmed. Beyond Peraica’s brazen disregard of the Trustee’s advice, Peraica’s proffered explanation for not updating his fee disclosure lacking, if not false. Peraica had been involved in more than 350 bankruptcy cases in the Northern District of Illinois alone. The bankruptcy court ordered Peraica to disgorge all past fees as a penalty for his blatant lack of compliance with his obligations. There is no leeway for partial or incomplete disclosure. View "Peraica v. Layng" on Justia Law
United States v. Filer
Barsanti was delinquent on $1.1 million of senior secured debt it owed to BMO Harris Bank. Barsanti’s owner, Kelly, hired attorney Filer and Gereg, a financing consultant. After negotiations with BMO failed, Filer introduced Gereg to BMO as a person interested in purchasing Barsanti’s debt. Filer created a new company, BWC, to purchase the loans. BWC purchased the loans from BMO for $575,000, paid primarily with Barsanti’s accounts receivable. Barsanti also owed $370,000 in delinquent benefit payments to the Union Trust Fund. Filer, Kelly, and Gereg used BWC’s senior lien to obtain a state court judgment against Barsanti that allowed them to transfer Barsanti’s assets beyond the reach of the Union Fund, using backdated documents to put confession-of-judgment clauses into the loan documents and incorrectly claiming that Barsanti owed BWC $1.58 million. Filer then obtained a court order transferring Barsanti’s assets to BWC, which then transferred the assets to Millwork, another new entity, which continued Barsanti’s business after the Illinois Secretary of State dissolved Barsanti for unpaid taxes. Gereg was Millwork's nominal owner in filings with the Indiana Secretary of State. Barsanti filed for bankruptcy. Filer instructed others not to produce certain documents to the bankruptcy trustee.After a jury convicted Filer of wire fraud 18 U.S.C. 1343., the district court granted his motions for a judgment of acquittal. The Seventh Circuit reversed and remanded. The evidence was sufficient to support the jury’s verdicts. View "United States v. Filer" on Justia Law
Koch v. Jerry W. Bailey Trucking, Inc.
Two drivers sued Bailey Trucking for violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. 216(b), and Indiana wage laws by failing to pay drivers for time spent working before and after hauling jobs. The employees’ first attempt at class/collective certification was unsuccessful; the court concluded that class counsel Weldy’s disciplinary record precluded him from representing the class. On reconsideration, the court conditionally certified an FLSA collective and certified a Rule 23 class. Almost four years later, the court decertified the class and collective; finding the number of plaintiffs too small for collective resolution to provide any efficiency above simple joinder. The employees amended their complaint to add nine plaintiffs. The court granted the employees partial summary judgment. The parties negotiated settlements.The court approved a settlement that reflected a full recovery of claimed damages for the two-year period preceding the suit, plus a partial recovery for the third year of damages that would have been available if the employees proved a willful FLSA violation, concluding that an immediate partial recovery outweighed the time and risk of trial. The employees sought an award of more than $200,000 in attorney’s fees under FLSA. The court awarded $70,000. The Seventh Circuit affirmed. The district court did not abuse its discretion when it lowered the fee award after concluding that Weldy overbilled his hours and the employees obtained only partial success. View "Koch v. Jerry W. Bailey Trucking, Inc." on Justia Law
Simon v. Cooperative Educational Service Agency #5
In 2014, Cooperative, a Wisconsin-based governmental entity that services 35 public-school districts, hired Simon as an Alternative Program Lead Teacher at REACH Academy. Simon taught, managed paraprofessionals, developed integrated education plans, and communicated with parents, school districts, social workers, and law enforcement officials. In 2016, a student kicked a door into Simon’s head, which caused a concussion. Simon took Family and Medical Leave Act (FMLA) leave and was cleared to return to full-time work with no restrictions weeks later. Cooperative did not allow Simon to return to her previous position, having determined that doing so would present an “unreasonable risk.” Cooperative placed her in a support position with duties resembling those of a paraprofessional and requiring her to split her time between schools. Although Simon received the same salary and benefits in her new role, it involved significantly less responsibility, independence, and discretion.The district court found that Cooperative had violated the FMLA by not returning Simon to an equivalent position following her leave and that only declaratory—rather than injunctive—relief was appropriate based on Cooperative’s hiring trends, the unavailability of Simon’s previous role, and Simon’s new job elsewhere, and awarded Simon attorney’s fees of $59,773.62. The Seventh Circuit affirmed. The FMLA’s use of the term “equitable relief” encompasses declaratory relief. Simon suffered prejudice from Cooperative’s failure to return her to an equivalent position. The district court did not err in finding that attorney’s fees were available under the circumstances. View "Simon v. Cooperative Educational Service Agency #5" on Justia Law