Weekly Case Digests – December 16, 2019 – December 20, 2019

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7^th Circuit Digests

7^th Circuit Court of Appeals

Case Name: City of Chicago, Illinois v. Marilyn O. Marshall

Case No.: 17-3630

Officials: EASTERBROOK, ROVNER, and HAMILTON, Circuit Judges.

Focus: Bankruptcy – Chapter 13 Payment Plan

In re Steenes, 918 F.3d 554 (7th Cir. 2019) (Steenes I), holds that the confirmation of a payment plan under Chapter 13 of the Bankruptcy Code causes the debtor’s assets, including automobiles, to revert to the debtor’s personal ownership unless the judge has made a debtor-specific finding under 11 U.S.C. §1327(b). We thought that this conclusion resolved the appeals. Although counsel briefed an additional question—whether automotive fines incurred by estates during confirmed Chapter 13 payment plans should be treated as administrative expenses—the City of Chicago said that this question need not be answered if we decided the §1327(b) issue in its favor, as we did.

Section 1305(a) allows a city to file a proof of claim for unpaid taxes—which means, Steenes and Dudley contend, that a city may not recover unpaid fines and penalties. Otherwise §1305(a)(1) would be surplusage, the argument runs, and it must not be read that way. See Hall v. United States, 566 U.S. 506, 517 (2012).  This is a non-sequitur. Section 1305 does not mention administrative expenses, as defined in §503, or change the priority of payment laid out in §507. It does not read like an exemption from payment, so that a debtor under Chapter 13 who hired a chauffeur would not ever need to pay the employee’s wages. (After all, §1305 does not mention wages any more than it mentions fines.) To the extent §1305 bears on our situation, the important subsection is §1305(a)(2), which authorizes claims for “property or services necessary for the debtor’s performance under the plan.” That reference to necessity kicks us back to §503(b)(1)(A), which says that necessary expenses receive administrative priority. And, as we have mentioned several times, it won’t do to ask whether violating local law was itself “necessary”; the question is whether operating a vehicle is necessary to earn the money needed to perform the Chapter 13 plan. If the answer is yes—and the debtors insist that cars are essential—then the costs of operating that necessary asset are themselves necessary. That’s why a debtor who must pay to park in private parking lots also must pay to park on public streets. The debtors have not cited any appellate decision holding or even suggesting that administrative expenses as defined in §503(b)(1)(A) are outside the scope of §1305(a)(2).

We hold that vehicular fines incurred during the course of a Chapter 13 bankruptcy are administrative expenses that must be paid promptly and in full.

Reversed

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7^th Circuit Court of Appeals

Case Name: Steven Menzies v. Seyfarth Shaw LLP, et al.

Case No.: 18-3232

Officials: HAMILTON, SCUDDER, and ST. EVE, Circuit Judges.

Focus: RICO Claims

Insurance executive Steven Menzies sold over $64 million in his company’s stock but did not report any capital gains on his 2006 federal income tax return. He alleges that his underpayment of capital gains taxes (and the related penalties and interest subsequently imposed by the Internal Revenue Service) was because of a fraudulent tax shelter peddled to him and others by a lawyer, law firm, and two financial services firms. Menzies advanced this contention in claims he brought under the Racketeer Influenced and Corrupt Organizations Act or RICO and Illinois law. The district court dismissed all claims.

Menzies’s RICO claim falls short on the statute’s pattern of-racketeering element. Courts have labored mightily to articulate what the pattern element requires, and Menzies’s claim presents a close question. In the end, we believe Menzies failed to plead not only the particulars of how the defendants marketed the same or a similar tax shelter to other taxpayers, but also facts to support a finding that the alleged racketeering activity would continue. To conclude otherwise would allow an ordinary (albeit grave) claim of fraud to advance in the name of RICO—an outcome we have time and again cautioned should not occur. In so holding, we in no way question whether a fraudulent tax shelter scheme can violate RICO. The shortcoming here is one of pleading alone, and it occurred after the district court authorized discovery to allow Menzies to develop his claims.

As for Menzies’s state law claims, we hold that an Illinois statute bars as untimely the claims advanced against the lawyer and law firm defendants. The claims against the two remaining financial services defendants can proceed, however.

So we affirm in part, reverse in part, and remand.

Affirmed in part, reversed and remanded in part.

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7^th Circuit Court of Appeals

Case Name: Noemi Valdivia v. Township High School District 214

Case No.: 19-1410

Officials: WOOD, Chief Judge, and BAUER and HAMILTON, Circuit Judges.

Focus: Damages

Noemi Valdivia worked successfully as an administrative assistant for Township High School District 214, which is headquartered in Arlington Heights, Illinois, until she began experiencing severe psychological problems that ultimately led to the end of her employment there. She sued the District under the Family and Medical Leave Act (“FMLA”), 29 U.S.C. §§ 2601−2654, claiming that it interfered with her rights under the Act by failing to provide her with notice or information about her right to take job‐protected leave. After a trial over which a magistrate judge presided by consent, see 28 U.S.C. § 636(c), a jury returned a verdict in Valdivia’s favor and awarded her $12,000 in damages. The District then moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(b). The district court denied that motion, and the District has now appealed. It takes a lot to set aside a jury verdict, and we conclude that the District has not met that high bar. We thus affirm the judgment.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Brigid A. Ford v. Marion County Sheriff’s Office, et al.

Case No.: 18-3217

Officials: SYKES, HAMILTON, and SCUDDER, Circuit Judges.

Focus: Court Error – Abuse of Discretion

Plaintiff Brigid Ford worked as a deputy in the Marion County Sheriff’s Office until her hand was seriously injured in a car accident while on duty. After assigning Ford to light duty for about a year, the Sheriff’s Office told Ford that she must either transfer to a permanent position with a cut in pay or be terminated. After some back and forth, Ford accepted a civilian job as a jail visitation clerk. In the following years, Ford alleges, she suffered disability-based harassment by co-workers, refusals to accommodate her scheduling needs, and several discriminatory promotion denials. Ford sued the Sheriff’s Office for discriminatory employment practices in violation of the Americans with Disabilities Act of 1990 (ADA), 42 U.S.C. § 12101 et seq.

The district court granted summary judgment on most of Ford’s claims. Two claims were tried to a jury, which rendered a verdict for the defense. Ford has appealed and raised a host of issues. The district court properly granted partial summary judgment as to some of plaintiff’s claims and then exercised its discretion fairly to manage the trial on the remaining claims. The district court committed no reversible error in the trial. We affirm.

Affirmed

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WI Court of Appeals Digests

WI Court of Appeals – District I

Case Name: State of Wisconsin v. A.C.M.

Case No.: 2018AP2423; 2018AP2424

Officials: KESSLER, J.

Focus: Termination of Parental Rights

A.C.M. appeals the orders terminating her parental rights to her children, L.M. and G.M. A.C.M. contends that her counsel was ineffective for failing to call her therapist as a witness at the fact-finding hearing. A.C.M. also contends that there was insufficient evidence to support the circuit court’s finding that there was a substantial likelihood that she would not meet the court-ordered conditions for her children’s return within the nine months following the fact-finding hearing. We affirm.

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WI Court of Appeals – District I

Case Name: Attorney Laura Schwefel v. Stephanie M. Przytarski, et al.

Case No.: 2019AP52

Officials: KESSLER, J.

Focus: Guardian ad Litem Fees

Stephanie M. Przytarski, pro se, and Gary and Sandra Kramschuster, pro se, appeal an order of the circuit court which (1) established guardian ad litem (GAL) fees for the GAL in an ongoing custody dispute, and (2) refused to sanction the GAL for filing contempt motions against Przytarski and the Kramschusters. We affirm.

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. E.F.

Case No.: 2019AP1559; 2019AP1560; 2019AP1561

Officials: DUGAN, J.

Focus: Termination of Parental Rights

E.F. appeals the orders terminating the parental rights to her three children, C.F.-G., S.G., and J.G.-F. E.F. contends that the trial court erroneously exercised its discretion because it failed to consider the best interests of the child factor in deciding to terminate her parental rights to each of her children.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Brian L. Halverson

Case No.: 2018AP858-CR

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

Focus: Miranda Warnings – Motion to Suppress

The State of Wisconsin appeals both an order granting Brian Halverson’s motion to suppress evidence and an order denying its motion for reconsideration. Halverson argues that his admission to a crime made during a telephone call with a police officer while Halverson was incarcerated should be suppressed because the officer’s failure to provide Miranda warnings violated his constitutional rights. Halverson relies upon a case from our supreme court, State v. Armstrong, 223 Wis. 2d 331, 588 N.W.2d 606 (1999), which held that an incarcerated person is per se in custody for purposes of Miranda. The State, however, contends that a subsequent United States Supreme Court case, Howes v. Fields, 565 U.S. 499 (2012), effectively overruled Armstrong’s per se custody rule.

We hold that Howes effectively overruled Armstrong. Armstrong relied solely upon federal case law interpreting the Fifth Amendment to the United States Constitution when it created the per se custody rule; it did not rely on any unique rights or protections afforded under the Wisconsin Constitution. Howes now teaches that the cases upon which Armstrong relied do not establish that a person who is incarcerated is always in custody for purposes of Miranda when he or she is isolated from the general prison population and questioned about conduct that occurred outside of the prison. Instead, custody is determined by analyzing the totality of the circumstances surrounding the interrogation in question.

We also reject Halverson’s invitation to interpret the Wisconsin Constitution—specifically, article I, section 8—as “more fully protect[ing] the right against compelled self-incrimination” than the rights afforded to individuals under the Fifth Amendment, so as to retain Armstrong’s per se custody rule as a matter of state constitutional law. Consequently, we conclude the circuit court erred by applying Armstrong’s per se custody rule instead of the totality-of-the circumstances analysis outlined in Howes.

Assessing the totality of the circumstances surrounding Halverson’s telephone interrogation, we conclude he was not in custody for Miranda purposes. Accordingly, the officer’s failure to provide Halverson with Miranda warnings did not violate Halverson’s constitutional rights. We therefore reverse the circuit court’s orders granting Halverson’s motion to suppress and denying the State’s motion for reconsideration, and we remand with directions to deny Halverson’s suppression motion.

Recommended for Publication

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. Jeffrey L. Ionescu

Case No.: 2018AP1620-CR

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

Focus: 4^th Amendment Violation

Jeffrey Ionescu appeals from his judgment of conviction for burglary, challenging the circuit court’s denial of his motion to suppress evidence. Specifically, he claims New Berlin Police Officer James Ament, a K-9 officer, violated his Fourth Amendment rights when Ament and his trained tracking dog, Condor, entered onto the yard of Ionescu’s mother without a warrant while tracking a burglar, Ionescu. Because we conclude Ament’s entry was lawful as he was in “hot pursuit” of Ionescu, we affirm.

Recommended for Publication

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Shawn A. Anderson

Case No.: 2019AP173-CR

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

Focus: Abuse of Discretion – Sentencing

Shawn Anderson appeals a judgment convicting him of second-degree sexual assault of a child and an order denying, in part, his motion for postconviction relief. Anderson’s sole argument on appeal is that the circuit court erroneously exercised its discretion by ordering him placed on lifetime supervision as a serious sex offender, pursuant to WIS. STAT. § 939.615 (2017-18).  As relevant here, § 939.615(2)(a) provides that a court may place an offender on lifetime supervision if it determines lifetime supervision “is necessary to protect the public.” Anderson argues the circuit court failed to expressly make this determination on the record during the sentencing hearing and failed to explain why placing him on lifetime supervision was necessary to protect the public. He further asserts that a court’s explanation for its decision to place an offender on lifetime supervision must be separate and distinct from the court’s remarks explaining the length of the offender’s sentence.

We agree with Anderson that, ideally, the circuit court in this case would have provided a separate explanation for its decision to place Anderson on lifetime supervision, distinct from the court’s remarks regarding the length of his sentence. On the record before us, however, we cannot conclude that the court erroneously exercised its discretion by failing to do so. The court’s sentencing remarks, when considered in their totality, show that the court properly exercised its discretion by ordering Anderson placed on lifetime supervision based on the court’s findings regarding the need to protect the public. Moreover, the court’s postconviction decision adequately explained the link between the court’s sentencing remarks and its decision to place Anderson on lifetime supervision. We therefore affirm.

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WI Court of Appeals – District IV

Case Name: Petitioner v. Sam Rahder

Case No.: 2018AP1923

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

Focus: Due Process Violation

Samuel Rahder, pro se, appeals a harassment injunction order entered by the circuit court. On appeal, he challenges the court’s finding that he was not a credible witness, argues that his due process rights were violated, and argues that the circuit court judge was biased against him. We reject these arguments and affirm the order of the circuit court.

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WI Supreme Court Digests

WI Supreme Court

Case Name: State of Wisconsin v. Matthew C. Hinkle

Case No.: 2019 WI 96

Focus: Criminal Jurisdiction over a Minor – Statutory Interpretation

We review whether Fond du Lac County Circuit Court properly exercised adult-court criminal jurisdiction over then-16-year-old Matthew C. Hinkle based on Milwaukee County Circuit Court’s prior decision to waive Hinkle from juvenile court to adult court. Our decision turns on the interpretation of Wis. Stat. § 938.183(1) and how its text prescribes the practice commonly referenced by those handling juvenile cases as “once waived, always waived.

Hinkle contends Wis. Stat. § 938.183(1) confines the “once waived, always waived” rule to each individual county— meaning Hinkle could be waived into adult court only if another Fond du Lac County Circuit Court previously waived him. He argues Fond du Lac improperly relied on Milwaukee’s waiver and, as a result, the Fond du Lac County Circuit Court lacked competency to handle his case. The State disagrees with Hinkle’s restrictive view of Wis. Stat. § 938.183(1). The State argues the statute’s text does not impose a county-specific restriction; instead, the State construes the statute to give circuit courts across Wisconsin original adult-court jurisdiction over crimes committed by juveniles who have been previously waived into adult court when those prior proceedings are still pending or when the prior proceedings resulted in conviction. Both the circuit court and the court of appeals agreed with the State. We do as well.

We hold Wis. Stat. § 938.183(1) conferred exclusive original adult jurisdiction over Hinkle based on Milwaukee County Circuit Court’s prior waiver. The text of the statute does not impose a county-specific limitation on the rule commonly referred to as “once waived, always waived.” The Fond du Lac County Circuit Court properly relied on Milwaukee’s waiver to move Hinkle from Fond du Lac’s juvenile jurisdiction to Fond du Lac’s adult jurisdiction. Accordingly, the Fond du Lac County Circuit Court possessed competency to hear Hinkle’s case under the criminal code applicable to adults. We affirm the decision of the court of appeals.

Affirmed

Concur:

Dissent: DALLET, J. dissents, joined by A.W. BRADLEY, J. (opinion filed)
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WI Supreme Court

Case Name: State of Wisconsin v. Roy S. Anderson

Case No.: 2019 WI 97

Focus: Motion to Suppress – Warrantless Search

The petitioner, Roy S. Anderson (“Anderson”), seeks review of an unpublished, per curiam decision of the court of appeals affirming both his judgment of conviction and the denial of his motion to suppress evidence. He asserts that the court of appeals erred in determining that law enforcement’s search of his person pursuant to 2013 Wisconsin Act 79 (“Act 79”) was valid. Act 79 allows law enforcement to search a person on a specified probation, parole, or extended supervision status without consent or a warrant if the officer reasonably suspects that the person is committing, is about to commit, or has committed a crime. Generally, a full search cannot be accomplished absent probable cause.3 However, if a person is subject to Act 79, a full search may be conducted on the lesser showing of reasonable suspicion.

Anderson specifically contends that the arresting officer who searched him did not know that he was on supervision. Absent such knowledge, the officer could not have appreciated that Anderson was subject to search based on Act 79’s reduced protections before conducting a warrantless search. He argues next that even if the officer had knowledge of his supervision status, the search was still illegal. Anderson contends that under the totality of the circumstances, the arresting officer lacked reasonable suspicion that Anderson was committing, was about to commit, or had committed a crime. As part of this argument, he asserts that tips received from an unnamed informant lacked any indicia of reliability and should be discarded completely from our analysis of the totality of the circumstances.

We conclude that the circuit court’s finding of fact that the officer in this case had knowledge of Anderson’s supervision status prior to conducting the warrantless search at issue is not clearly erroneous. Next, we determine that the corroborated tips of the unnamed informant in this case may be considered in our analysis of the totality of the circumstances, giving them such weight as they are due. Finally, we conclude that under the totality of the circumstances, the officer in this case had reasonable suspicion that Anderson was committing, was about to commit, or had committed a crime. Accordingly, we affirm the decision of the court of appeals.

Affirmed

Concur: HAGEDORN, J. concurs, joined by ZIEGLER, J. (opinion filed)
Dissent:

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