Weekly Case Digests — May 15-19, 2017

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7^th Circuit Digests

7^th Circuit Court of Appeals

Case Name: Wisconsin Central Ltd., et al v. United States of America

Case No.: 16-3300, 16-3303; 16-3304

Officials: POSNER, MANION, and HAMILTON, Circuit Judges.

Focus: Excise Tax – Stock Options

Beginning in 1996, the plaintiff‐ appellants, subsidiaries of the Canadian National Railway Company (to simplify we’ll refer to the subsidiaries as “the railway”), began including stock options in the compensation plans of a number of employees. In this suit against the government, the railway argues that income from the exercise of stock options that a railroad gives its employees is not form of “money remuneration” to them and is therefore not taxable to the railway as compensation under the Rail‐ road Retirement Tax Act, 26 U.S.C. § 3231(e)(1), which de‐ fines “compensation” as “any form of money remuneration paid to an individual for services rendered as an employee to one or more employers.” See also BNSF Railway Co. v. United States, 775 F.3d 743 (5th Cir. 2015).  As explained in Standard Office Building Corp. v. United States, 819 F.2d 1371, 1373 (7th Cir. 1987), “the Railroad Retirement Tax Act, passed in 1937, is to the railroad industry what the Social Security Act is to other industries: the imposition of an employment or payroll tax on both the employer and the employee, with the proceeds used to pay pensions and other benefits. … The Act requires the railroad to pay an excise tax equal to a specified percentage of its employees’ wages, and also to withhold a specified percentage of its employees’ wages as their share of the tax. The railroad retirement tax rates are much higher than the social security tax rates.” The question presented by this case is whether the excise tax should be levied not only on employees’ wages but also on the value of stock options exercised by employees who, having received the options from their employer, exercise them when the market price exceeds the “strike price” (the price at which the employee has a right to buy the stock) and thus obtain the stock at a favorable price. The Internal Revenue Service answers yes, see 26 C.F.R. § 31.3231(e)‐1, and the district court agreed, precipitating this appeal.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Luis A. Plata v. Eureka Locker, Inc.

Case No.: 16-2030

Officials: WOOD, Chief Judge, and POSNER and EASTERBROOK, Circuit Judges.

Focus: Retaliatory Termination – Dead Man’s Act

Plata, a butcher employed by Eureka Locker, a meat-processing company, sued Eureka under both state law and federal law (42 U.S.C. § 2000e et seq.), charging it with having fired him in retaliation for his having filed a worker’s compensation claim against the company. He claimed that Scott Bittner, the company’s owner, had told him he was “done” after he told Bittner that he intended to file a worker’s compensation claim. Bittner died suddenly while the case was in its early stages. That left Plata the only witness to the alleged conversation. Eureka argued to the district court that the Illinois Dead Man’s Act, 735 ILCS 5/8-301, barred Plata from testifying about a conversation with Bittner that the latter, being dead, could no longer rebut. The statute “forbids a party to a suit by or against a firm to testify about any conversation with a dead agent of the firm, unless a living agent of the firm was also present at the conversation (to testify as the dead man himself might have testified to what was said).” Lovejoy Electronics, Inc. v. O’Berto, 873 F.2d 1001, 1005 (7th Cir. 1989). Although Plata’s suit was filed in federal rather than state court, Rule 601 of the Federal Rules of Evidence (“Competency to Testify in General”) states that “in a civil case, state law governs the witness’s competency regarding a claim or defense for which state law supplies the rule of decision,” and Plata’s suit charged a violation of state as well as federal law.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Daniel Medici, et al v. City of Chicago

Case No.: 15-3610

Officials: POSNER, RIPPLE, and SYKES, Circuit Judges.

Focus: Declaratory Judgment – 1^st Amendment

On July 2, 2015, the three plaintiffs filed this suit against the City of Chicago. Eventually they lost in the district court and two of them—Medici and Kukielka—have appealed. The plaintiffs are military veterans currently employed as Chicago police officers. All three have tattoos relating to their military service and to their religion. Medici’s is a tattoo of a pair of wings with a halo, a symbol he displays to honor members of the U.S. military services killed in combat. Leet’s and Kukielka’s tattoos depict St. Michael, the archangel who is the patron saint of warriors, including (in modern times) police officers, paramedics, and firefighters. The plaintiffs’ suit had been precipitated by an order issued by the Chicago Police Department on June 8, 2015 (slightly more than a month before the suit was filed), with no prior notice to, or discussion with, the plaintiffs or other tattooed police officers. The order required all police officers on duty or otherwise “representing” the police department (it’s not clear what is meant by “representing”) to cover all their tattoos, either with clothing, or on parts of the body not covered by clothing with either a bandage or what is called “cover-up tape.” The order was not limited to offensive tattoos, such as those conveying a racist or sexist message; all visible tattoos were outlawed. The announced reason for the order was to “promote uniformity and professionalism.”

Vacated and remanded

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7^th Circuit Court of Appeals

Case Name: Aaron Isby v. Richard Brown

Case No.: 15-3334

Officials: WOOD, Chief Judge, FLAUM, Circuit Judge, and CONLEY, District Judge. *

Focus: Due Process – 8^th Amendment

Aaron E. Isby has been held in administrative segregation—or, as it is better known, solitary confinement—for over ten years and counting. He filed suit against various prison employees under 42 U.S.C. § 1983, alleging that his continued placement in administrative segregation violated his Eighth Amendment right to be free from cruel or unusual punishment as well as his Fourteenth Amendment rights under the Due Process Clause. Isby sought leave to proceed in forma pauperis in the district court, despite having already accumulated three “strikes” for filing frivolous suits or appeals and thus being restricted under the Prison Litigation Reform Act (“PLRA”) from seeking pauper status. 28 U.S.C. § 1915(g). Unaware of Isby’s strikes, the district court granted Isby’s request. The court later granted summary judgment in favor of defendants on the due process claim, and, following a bench trial, entered judgment against Isby on his Eighth Amendment claim.   Still unaware of Isby’s three‐strikes status, the district court granted him leave to proceed in forma pauperis on appeal. After briefing on appeal was complete, Isby’s restricted status came to our and the parties’ attention; and two days prior to oral argument, defendants‐appellees moved to dis‐ miss this appeal “due to [Isby’s] deceptive acts in failing to inform the district court of his numerous ‘strikes’ under the [PLRA].” For the reasons that follow, we deny the motion to dismiss, affirm the district court with respect to Isby’s claim under the Eighth Amendment, and reverse and remand for further proceedings on Isby’s due process claim.

Reversed and remanded

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7^th Circuit Court of Appeals

Case Name: Kenneth Baker, et al v. Jean M. Lindgren, et al

Case No.: 15-2203

Officials: EASTERBROOK and ROVNER, Circuit Judges, and SHADID, District Judge

Focus: Attorneys Fees

Kenneth Baker and several of his family members sued the City of Chicago, eight named police

officers, a number of unknown officers, as well as two private citizens and the company employing them, alleging civil rights violations and state law tort claims. In the end, Baker won a modest recovery from several City defendants on one of the civil rights claims, and from the City defendants and a private defendant on one of the state law tort claims, but the defendants prevailed on all the remaining claims. The district court granted attorneys’ fees to Baker, but denied him costs as prevailing party, instead awarding costs to the City for prevailing against two other plaintiffs. Baker appeals the amount of the attorneys’ fees awarded and the denial of costs to Baker. Two other plaintiffs appeal the award of costs to the defendants. We affirm in part and vacate and remand in part.

Affirmed in part

Vacated and remanded in part

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7^th Circuit Court of Appeals

Case Name: Jesus Delgado-Arteaga v. Jeff Sessions

Case No.: 16-1816

Officials: BAUER, FLAUM, and HAMILTON, Circuit Judges.

Focus: Immigration – Removal Proceedings

Over seven years and three petitions later, these proceedings have come to a conclusion. Petitioner, Jesus Delgado-Arteaga (“Delgado”), petitions for review of an order of the Board of Immigration Appeals’ decision affirming the immigration judge’s denial of withholding of removal, 8 U.S.C. § 1231(b)(3), and relief under the Convention Against Torture, 8 C.F.R. § 1208.16(c). Delgado challenges aspects of the expedited removal process under 8 U.S.C. § 1228(b) and a corresponding regulation, 8 C.F.R. § 1208.31(g)(2)(i). He also claims that the Board committed various legal errors. For the following reasons, we dismiss the petition for review in part for lack of jurisdiction and deny the remainder of his petition for review

Petition Dismissed

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7^th Circuit Court of Appeals

Case Name: United States of America v. Clarence Nagelvoort et al

Case No.: 15-2766; 15-2821

Officials: WOOD, Chief Judge, BAUER, Circuit Judge, and SHADID, * District Judge.

Focus: Conspiracy – Referral Kickbacks

On March 25, 2015, after a seven‐week trial, a jury convicted Edward Novak and Clarence Nagelvoort of knowingly and willfully causing Sacred Heart Hospital in Chicago, Illinois, to offer and pay kickbacks to physicians in return for patient referrals, in violation of 42 U.S.C. § 1320a–7b(b)(2)(A)(Anti‐Kickback Statute), and conspiracy to do so in violation of 18 U.S.C. § 371. They now challenge their convictions on a number of grounds. For the reasons that follow, we affirm the convictions

Affirmed

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WI Court of Appeals Digests

WI Court of Appeals – District I

Case Name: John F. Kastner v. Melanie S. Kastner

Case No.: 2015AP1903

Officials: Brennan, P.J., Kessler and Brash, JJ.

Focus: Divorce – Spousal Maintenance

John F. Kastner appeals from a judgment of divorce, in which the circuit court struck John’s contest posture with regard to his request for property division and maintenance because John failed to comply with discovery demands. We affirm.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. John L. Phillips, Sr.

Case No.: 2015AP2418-CR

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Sentencing – Judge Bias

John Phillips, Sr., appeals a judgment of conviction for threatening a judge and identity theft, as well as an order denying his postconviction motion. Phillips argues the judge who presided over his trial and sentencing was objectively biased because that judge worked in the same courthouse as the judge Phillips had threatened. Phillips also argues that law enforcement obtained his confession by virtue of an inadmissible “continuation” of a polygraph examination, to which Phillips had consented. We conclude Phillips has not satisfied his burden of proving, by a preponderance of the evidence, that the trial judge was objectively biased. We also conclude the circuit court properly denied Phillips’s suppression motion. Accordingly, we affirm.

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WI Court of Appeals – District III

Case Name: Nancy T. Fitzgerald v. Karen Capezza et al

Case No.: 2016AP518

Officials: Stark, P.J., Hruz and Seidl, JJ

Focus: Personal Injury – Co-employee immunity

Nancy Fitzgerald appeals a summary judgment dismissing her personal injury action against Karen Capezza and Secura Insurance Companies. The circuit court concluded the claims were barred by the Worker’s Compensation Act’s exclusive remedy provision on the basis of co-employee immunity. We affirm.

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WI Court of Appeals – District III

Case Name: First National Bank et al v. Michael G. Trewin et al

Case No.: 2016AP1423

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Breach of Fiduciary Duty – Statute of Limitations

Michael Trewin, pro se, appeals a judgment granting Darryel and Mary Hearley rescission of a 2005 conveyance of real property to Trewin, based on Trewin’s breach of his fiduciary duties as the Hearleys’ attorney. Trewin argues the Hearleys’ rescission claim was barred by the applicable statute of limitations. We conclude the Hearleys’ claim was timely filed, pursuant to the continuing violation theory. We also reject Trewin’s argument that the circuit court erred by dismissing his counterclaim against the Hearleys for eviction. We therefore affirm

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. Anthony R. Pico

Case No.: 2015AP1799-CR

Officials: Neubauer, C.J., Reilly, P.J., and Hagedorn, J.

Focus: Ineffective Assistance of Counsel

The State appeals from an order of the circuit court which, after a Machner hearing, vacated the judgment of conviction finding Anthony R. Pico guilty of first-degree sexual assault and ordered a new trial based on Pico having received ineffective assistance of counsel at trial. We hold that trial counsel’s performance was not constitutionally ineffective; therefore, we reverse the circuit court’s order granting a new trial and reinstate the judgment of conviction.

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WI Court of Appeals – District IV

Case Name: Michael W. Coyle, et al v. Amanda K. Coyle

Case No.: 2013AP2551

Officials: Kloppenburg, P.J., Sherman and Blanchard, JJ

Focus: Power of Attorney Breach – Time-Barred Claims

Michael Coyle, Jacqueline Coyle, Jon Coyle, and Amanda Coyle are the children of Hubert Coyle, who died in 2007. After Hubert died, the Siblings sued Amanda, alleging that she had, between 1996 and 2007, engaged in identified wrongful acts that reduced the value of Hubert’s estate, and, thereby, reduced the shares of the estate bequeathed to the Siblings in Hubert’s will. After a bench trial and post-trial briefing, the circuit court found Amanda liable for breach of her duties under the power of attorney, exercising undue influence over her father, and conversion and theft under WIS. STAT. § 895.446(1) (2015-16), and awarded damages to the Siblings. Amanda appeals, arguing that: (1) the Siblings’ claim for breach of duty under the power of attorney is time-barred; (2) the Siblings’ claim for undue influence is time-barred; (3) the Siblings lack standing to bring their claim for conversion and theft; (4) the Siblings’ claim for damages under WIS. STAT. § 895.446 is time-barred; and (5) even if the Siblings are entitled to damages on their claim for conversion and theft under § 895.446, any damages arising from pre-2005 disbursements are time-barred. As we explain, we conclude that Amanda has forfeited all of the arguments that she makes on appeal by failing to timely preserve them in the circuit court.  Therefore, we affirm.

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WI Court of Appeals – District IV

Case Name: Terry Sullivan v. American Family Mutual Insurance Company, et al

Case No.: 2015AP2172

Officials: Kloppenburg, P.J., Sherman and Blanchard, JJ.

Focus: Breach of Contract – Waiver of Claims

Terry Sullivan appeals an order of the circuit court granting summary judgment in favor of American Family Mutual Insurance Company, American Family Life Insurance Company, and American Standard Insurance Company of Wisconsin (collectively, American Family). Sullivan, who was at all relevant times affiliated with American Family as an agent or an employee, brought suit against American Family alleging claims of breach of contract, breach of duty of good faith and fair dealing, and misrepresentation. The circuit court granted summary judgment in favor of American Family and dismissed Sullivan’s claims on the basis that Sullivan had waived his claims against American Family. For the reasons discussed below, we affirm

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WI Court of Appeals – District IV

Case Name: State of Wisconsin v. Shawn W. Forgue

Case No.: 2016AP2414-CR

Officials: Kloppenburg, P.J.

Focus: Court Error – Admission of Evidence

Shawn Forgue appeals the judgment of conviction entered after a jury verdict finding Forgue guilty of misdemeanor battery (domestic abuse) and misdemeanor disorderly conduct (domestic abuse), and the order of restitution. Forgue argues that the circuit court erroneously exercised its discretion by denying his motion to admit evidence concerning one prior incident of the victim’s violent conduct and two other acts by the victim. Forgue also argues that the record is insufficient to support the court’s restitution order. For the reasons discussed below, I reject Forgue’s challenges to the court’s evidentiary decisions and, therefore, affirm the judgment of conviction. Based on the State’s concession as to the insufficiency of the record to support the restitution order, I reverse the order and remand for a new hearing on restitution.

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