Weekly Case Digests – August 17, 2020 – August 21, 2020

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7^th Circuit Digests

7^th Circuit Court of Appeals

Case Name: Walleye Trading LLC, v. AbbVie Inc., et al.,

Case No.: 19-3063

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

Focus: SEC Violation – Damages

AbbVie Inc. made a tender offer to repurchase as much as $7.5 billion of its outstanding shares. It conducted a Dutch auction to determine the price. In a Dutch auction one side offers a high price, which falls until the other accepts. AbbVie, acting as a buyer, began its auction at $114. Shareholders participated by offering to sell their shares at or below $114. AbbVie then selected the lowest price that would allow it to purchase $7.5 billion of shares from the tendering shareholders.

The auction was conducted from May 1, 2018 through May 29, 2018. AbbVie hired Computershare Trust Co. to receive all offers. On May 30, at eight A.M., AbbVie announced the preliminary result: it would purchase 71.4 million shares for $105 per share (using the whole $7.5 billion pot when accounting for fees and expenses). AbbVie’s stock, which had been trading at roughly $100, closed at $103 on May 30. Approximately an hour later, AbbVie announced that it had received corrected numbers from Computershare. Instead of purchasing 71.4 million shares at $105 a share, it would purchase 72.8 million shares at $103 a share, again adding to $7.5 billion. AbbVie’s share price fell to $99 the next day.

Walleye Trading LLC contends that AbbVie’s announcement of preliminary numbers, followed by corrected numbers after trading closed, violated sections 10(b) and 14(e) of the Securities Exchange Act of 1934, codified at 15 U.S.C. §§ 78j(b) and 78n(e). Walleye also contends that William Chase is liable under §20(a) of the Act, 15 U.S.C. §78t(a), as a controlling manager of AbbVie; this claim is contingent on AbbVie being liable on one of the theories. The district court dismissed Walleye’s complaint for failing to state a claim. 2019 U.S. Dist. LEXIS 158832 (N.D. Ill. Sept. 18, 2019).

The Supreme Court has held that private parties can sue under §10(b) and its corresponding rule, 17 C.F.R. §240.10b– 5, despite the lack of statutory language creating a private right of action. See Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 730 (1975). Section 10(b) and Rule 10b–5 prohibit fraudulent or misleading statements of material fact in connection with the purchase or sale of a security. A plaintiff bringing §10(b) claims must plead the fraud with particularity, see Fed. R. Civ. P. 9(b), and allegations of scienter must be as compelling as any opposing inference. That pleading standard comes from the Private Securities Litigation Reform Act (PSLRA), 15 U.S.C. §78u–4(b). See Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 324 (2007).

Walleye’s §10(b) claims are perplexing. It has not pleaded that AbbVie made any statement that is false or misleading, let alone made a statement with the required mental state. AbbVie’s initial announcement says: “[t]he number of shares to be purchased and the purchase price are preliminary and subject to change”. How can an announcement, explicitly subject to change, become misleading or false when it is indeed changed? It does not: AbbVie did not make a false or misleading statement. It accurately reported Computershare’s preliminary numbers.

Walleye contends that AbbVie executives acted with the requisite mental state because they failed to perform “grammar school arithmetic” to verify Computershare’s numbers. But neither the statute nor any regulation requires an issuer to verify someone else’s data before reporting them. (And, given the size of this transaction, a sixth grader would not be the right person to do the math.) Walleye also argues that the length of time it took AbbVie to issue the correction supports an inference of scienter because, before issuing the correcting statement, AbbVie must have known that the initial statement was incorrect. To repeat: The initial statement was correct in relaying what Computershare told AbbVie. True, Computershare must have provided the revised numbers to AbbVie before it issued the updated statement. Yet it takes time to put new numbers in a release and make them public. It takes more time if, as Walleye insists, the numbers must be checked and rechecked. Neither the statute nor any rule requires this to be done in seconds or minutes rather than hours. Most curiously, Walleye claims that AbbVie violated §10(b) and the corresponding rule because it failed in its duty to correct the initial statement. Yet AbbVie did correct the initial statement. That correction led to this suit! Walleye has failed to plead a plausible §10(b) claim.

Without discussing the problem, Walleye assumes that §14(e) gives it a private right of action to collect damages for press releases issued after a tender offer closes. Yet the end of the tender offer placed Walleye outside the zone of interests protected by §14. By May 30, when AbbVie announced the results of the Dutch auction, there was no longer any way for shareholders to participate in it. We conclude that an investor cannot use §14(e) to challenge a statement made after a tender offer has closed.

Affirmed

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7^th Circuit Court of Appeals

Case Name: United States of America v. Ryan D. Patton

Case No.: 19-2466

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

Focus: Search Warrant – Probable Cause

After pleading guilty to distributing methamphetamine, Ryan Patton was sentenced to 76 months’ imprisonment. The guilty plea reserved the right to contest on appeal the validity of a search warrant that led to the drug’s discovery. See Fed. R. Crim. P. 11(a)(2). That is the only appellate issue.

The Warrant Clause of the Fourth Amendment reads: “no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” Only the “probable cause” part of this formulation is contested, and if the record does not definitively establish the presence of probable cause, neither does it definitively establish its absence. This leads us to consult tiebreakers.

One tiebreaker is the rule that a reviewing court must accord “great deference” to the decision of the judge who issued the warrant. See, e.g., Gates, 462 U.S. at 236; United States v. McIntire, 516 F.3d 576 (7th Cir. 2008) (discussing the history of this approach). Like the district judge, Patton assumes that the federal court will make a de novo (which is to say, independent) decision about probable cause. If so, the absence of a transcript would be a serious problem. But the judge in a criminal prosecution is not supposed to make an independent decision.

One goal of the Fourth Amendment is to induce police to obtain judicial approval before searching a home. When the police turn to a judge, the principal protector of privacy is that judge. After the search has occurred, suppressing evidence does not restore privacy. Police who take the subject to a judge have done what they should, and the issuing judge’s decision deserves respect from later actors. The other tiebreaker is the rule of Leon, which holds that the exclusionary rule does not apply to evidence “obtained by officers acting in reasonable reliance on a search warrant issued by a detached and neutral magistrate but ultimately found to be unsupported by probable cause.” 468 U.S. at 900. Patton insists that it was not “reasonable” for Detective Mings to rely on the warrant issued by the state judge. But in making that argument Patton again assumes that the affidavit was its only support. Mings may not have a clear recollection of what happened before the state judge, but he remembers that the informant testified and answered the judge’s questions. We think it reasonable for an officer in that position to believe that the judge has done everything required by law.

Leon wrapped up: In the absence of an allegation that the magistrate abandoned his detached and neutral role, suppression is appropriate only if the officers were dishonest or reckless in preparing their affidavit or could not have harbored an objectively reasonable belief in the existence of probable cause. 468 U.S. at 926. The text of the affidavit is not the end-all when the state judge hears testimony (and, anyway, Mings was not “dishonest or reckless”). We do not think that it would have been impossible for an officer to have “an objectively reasonable belief in the existence of probable cause.” Nor would every reasonable officer believe that unrecorded oral presentations to a state judge must be ignored. It follows that the district judge did not err in denying Patton’s motion to suppress the evidence.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Black Bear Sports Group, Inc., et al., v. Amateur Hockey Association of Illinois, Inc.,

Case No.: 19-2076; 19-2450

Officials: BAUER, EASTERBROOK, and SYKES, Circuit Judges.

Focus: Sherman Antitrust Act Violation

Organized amateur hockey leagues in the United States come under the purview of USA Hockey, Inc., which is subject to the Ted Stevens Olympic and Amateur Sports Act, 36 U.S.C. §§ 220501–43. USA Hockey delegates most of its authority to state and regional affiliates. Since 1975 Amateur Hockey Association of Illinois (the Association) has governed the sport in that state.

Black Bear Sports Group, which owns skating rinks in Illinois, contends in this suit under §2 of the Sherman Antitrust Act, 15 U.S.C. §2, that the Association is monopolizing the sport. But Black Bear does not claim to have paid monopoly prices. Nor does it seek an order dissolving the Association and allowing free competition. Instead it asked the district judge to order the Association to admit it as a member and permit it to sponsor a club, which would use the Center Ice Arena in Glen Ellyn as its “home ice”, and to pay damages for business losses suffered until these things occur. In other words, Black Bear wants to use the Sherman Act to compel a cartel to admit a new member and distribute the monopoly profits differently.

The oddity—indeed impossibility— of this request seems to have been lost on the litigants, though many decisions have held that the Sherman Act cannot be used to regulate cartels’ membership and profit sharing. See, e.g., Four Corners Nephrology Associates, P.C. v. Mercy Medical Center, 582 F.3d 1216, 1225–26 (10th Cir. 2009); Daniel v. American Board of Emergency Medicine, 428 F.3d 408, 440 (2d Cir. 2005) (“[P]laintiffs cannot themselves state an antitrust injury when their purpose is to join the cartel rather than disband it.”). At least one district judge in a suit similar to this has grasped the point. See Reapers Hockey Association, Inc. v. Amateur Hockey Association Illinois, Inc., 412 F. Supp. 3d 941, 956 (N.D. Ill. 2019) (“And lost cartel profits are insufficient because ‘a producer’s loss is no concern of the antitrust laws, which protect consumers from suppliers rather than suppliers from each other.’”) (citing Stamatakis Industries, Inc. v. King, 965 F.2d 469, 471 (7th Cir. 1992)). Instead of summarily tossing the suit for lack of antitrust injury, see Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977), the district judge dismissed the complaint for lack of Article III standing. Black Bear lacks standing, the judge wrote, because it has not exhausted private remedies by asking the Association for admission and being turned down. 2019 U.S. Dist. LEXIS 78770 (N.D. Ill. May 9, 2019).

Black Bear wants to sponsor a Tier II team at the Center Ice Arena rink. It complains that the Association makes this impossible by limiting sponsorship to nonprofit entities. The district judge thought that the absence of a formal application to the Association made the claim too speculative. Yet the Association’s rules say that a sponsor’s nonprofit status is essential. Article 19 states that “[e]xcept as set out in the [Association] By-Laws, Rules and Regulations, each Affiliate shall have a corporate structure and at all times maintain a tax exempt status under Section 501(c)(3) of the Internal Revenue Code”. The Association has not pointed to anything in its bylaws that would make an exception for Black Bear. The Constitution does not require a potential litigant to butt its head against a wall as a condition of standing. Black Bear does not fear a potential future injury; it contends that it suffers an ongoing injury—it wants to sponsor a team but can’t. That sets up a justiciable controversy. Asking the Association for a dispensation might be a means to mitigate damages, but mitigation is not a necessary component of justiciability.

The Constitution of the United States does not establish a general exhaustion-of-private-remedies obligation. No more does the Sherman Act. The statute’s text does not require or hint at exhaustion of nonjudicial remedies. The district court did not cite, and we could not find, any decision by the Supreme Court or any court of appeals creating such a requirement. If Black Bear has a serious grievance, it arises under the Illinois law of private clubs. The Association is organized as a not-for-profit corporation. Members and potential members can enforce (or contest) its rules as a matter of state law, though a private group receives considerable leeway in the interpretation and application of those rules. See Van Daele v. Vinci, 51 Ill. 2d 389 (1972); Finn v. Beverly Country Club, 289 Ill. App. 3d 565, 568 (1997). Black Bear also asserts a claim under state antitrust law. But it invokes the supplemental jurisdiction of 28 U.S.C. §1367, not the diversity jurisdiction of 28 U.S.C. §1332. Because the federal claim fails, any statelaw claims belong in state court. See §1367(c)(3).

The judgment of the district court is modified to provide that the suit is dismissed for lack of a plausible federal claim and as so modified is affirmed. Black Bear’s second appeal (No. 19-2450) concerns the district court’s denial of a motion to supplement the record. Such a procedural order is not appealable separately from the merits. It is reviewable, if at all, by a motion under Fed. R. App. P. 10(e)(2)(C) and Circuit Rule 10(b). Black Bear did not seek relief in this court under Rule 10, and at all events the disputed document is irrelevant to the appropriate disposition of the merits. Appeal No. 19-2450 is dismissed for want of appellate jurisdiction.

Affirmed in part. Dismissed in part.

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7^th Circuit Court of Appeals

Case Name: Tyrus McNair v. United States of America

Case No.: 18-2541

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

Focus: Sentencing Guidelines

When Tyrus McNair was sentenced in 2003 for a serious drug crime, the district court calculated his range under the Sentencing Guidelines at 324 to 405 months and sentenced him to 360 months. Calculation of the range was uncontested except for one thing: McNair was placed in Criminal History Category II as a result of a 1992 conviction in Indiana for driving without a license. He asserted that this conviction is invalid and that he should be in Category I, which would have produced a range of 292 to 365 months. The district court declined to entertain a collateral attack on the state conviction, see Custis v. United States, 511 U.S. 485 (1994), and used the 324 to 405 month range. We affirmed. No. 03-3034 (7th Cir. Jan. 8, 2004) (nonprecedential disposition).

Affirmed

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7^th Circuit Court of Appeals

Case Name: Antonio G. Ramirez, Jr., v. Lizzie Tegels, Warden,

Case No.: 19-3120

Officials: FLAUM, BARRETT, and ST. EVE, Circuit Judges.

Focus: Ineffective Assistance of Counsel – Confrontation Claim

During Antonio Ramirez’s 2001 criminal trial in Wisconsin state court, the prevailing interpretation of the Sixth Amendment’s Confrontation Clause was set forth in Ohio v. Roberts, 448 U.S. 56 (1980). Under Roberts, a defendant had no confrontation right to cross-examine an unavailable declarant if the declarant’s statements were adequately reliable, which could be established where the statements fell within a firmly rooted hearsay exception. Id. at 66. Applying hearsay exceptions, the trial court admitted several out-of-court statements accusing Mr. Ramirez of sexually assaulting his stepdaughter in November 1998 and September 1999. The jury convicted Mr. Ramirez of multiple counts relating to the sexual assaults.

In 2004, while Mr. Ramirez’s conviction was pending on direct review, the Supreme Court decided Crawford v. Washington, 541 U.S. 36 (2004), which overruled Roberts by holding that a defendant is entitled to cross-examine a declarant if the declarant’s statements were “testimonial”—e.g., were statements that the declarant “would reasonably expect to be used prosecutorially.” Id. at 51. During direct review of his conviction, Mr. Ramirez urged his lawyer, Attorney Lynn Hackbarth, to raise a confrontation claim under Crawford. Attorney Hackbarth chose instead to raise a litany of other claims, each of which Wisconsin state courts rejected.

After Mr. Ramirez exhausted his state court remedies, he filed a petition for a writ of habeas corpus in federal district court, arguing that Attorney Hackbarth’s representation was ineffective based on her omission of the confrontation claim. The district court agreed and granted Mr. Ramirez’s petition, ordering the State of Wisconsin to provide Mr. Ramirez with a new appeal or release him within ninety days. The State now appeals, contending that the confrontation claim was not clearly stronger than the claims Attorney Hackbarth raised.

We affirm. An attorney exercising reasonable professional judgment would have recognized that the confrontation claim was clearly stronger than the claims Attorney Hackbarth raised. Raising a confrontation claim while Mr. Ramirez’s conviction was pending on direct review would have given Mr. Ramirez a reasonable chance of prevailing.

Affirmed

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7^th Circuit Court of Appeals

Case Name: United States of America v. Gene C. Sutton

Case No.: 19-2009

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

Focus: Abuse of Discretion – First Step Act Violation

Over a decade ago, the district court (then Chief Judge McCuskey) sentenced Gene Sutton to his then statutory minimum 15 years’ imprisonment for distributing cocaine base (“crack”) and carrying a firearm during a drug-trafficking crime. In announcing the sentence, the court emphasized that it had no authority to reduce the sentence further or amend it later, except on the government’s motion, and that the court’s authority had been so limited since the Sentencing Reform Act of 1984, Pub. L. 98-473, 98 Stat. 1837. “Nobody’s going to change it,” the court told Sutton.

But Congress did change things when it passed the First Step Act of 2018, Pub. L. No. 115-391, 132 Stat. 5194. Under § 404 of this new law, a defendant sentenced for a covered offense (which includes Sutton’s crack cocaine charge) may move for the district court to impose a reduced sentence. Sutton submitted his motion seeking relief and the district court, now Judge Shadid, denied it. On Sutton’s pro se appeal, we recruited counsel to submit supplemental briefing on the narrow question of the proper vehicle for a First Step Act motion. In other words, we asked the parties to brief how the First Step Act interacts with the Sentencing Reform Act, which, as Judge McCuskey recognized, generally prohibits a court from modifying a sentence.

We hold that the First Step Act is its own procedural vehicle. The dispute between the parties is, at this point, mostly semantic, though our conclusion does clarify that the only limits on the district court’s authority under the First Step Act come from the interpretation of the First Step Act itself. With that said, this is not the case to explore fully what those limits might be. We conclude that the district court did not abuse its discretion and, therefore, affirm the judgment.

Affirmed

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7^th Circuit Court of Appeals

Case Name: David L. Day, Jr., v. United States of America

Case No.: 18-2398

Officials: MANION, KANNE, and SYKES, Circuit Judges.

Focus: 6^th Amendment Violation

David Day, Jr., was indicted for conspiracy to commit wire fraud stemming from his participation in a fraudulent “credit repair” scheme operating in Indianapolis. The government offered Day a favorable plea deal that would have yielded a probable Guidelines sentencing range of 51 to 63 months in prison. Day’s federal defender advised him to accept the deal. He was prepared to do so, but his father urged him to consult a private lawyer—an acquaintance of his with no experience in criminal law. That lawyer brought in an attorney experienced in federal criminal law, and the two told Day that he was not guilty of any crime and should reject the government’s offer. Day accepted that advice and hired the private lawyers for a hefty fee raised by his family. The federal defender withdrew and offered to make her case file available to new counsel.

After the substitution of counsel, the government again extended the same plea offer about six weeks before the trial date. Though they hadn’t yet reviewed the case materials, Day’s new private lawyers again advised him to reject it. Day followed their advice and declined the deal. At the final pretrial hearing a month later, Day again rejected the government’s plea offer on the record. Then, soon after the hearing, the two lawyers met with Day and for the first time told him he would lose at trial. Shocked, Day told them to try to get the best deal they could. They instead advised him to plead guilty and throw himself on the mercy of the court.

Four days later, Day pleaded guilty without an agreement. When the dust settled, he faced a sentencing range of 87 to 108 months. The district judge imposed a 92-month prison sentence. Day filed a pro se motion for relief under 28 U.S.C. § 2255, arguing that his private attorneys were constitutionally ineffective for advising him to reject the favorable plea offer. The judge denied the motion without an evidentiary hearing.

That was error. The government now concedes the deficient-performance element of Day’s Sixth Amendment claim, and the facts set forth in his motion, if proven, could establish prejudice. We vacate and remand for further proceedings.

Vacated and remanded

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7^th Circuit Court of Appeals

Case Name: Carmine Greene, et al., v. Westfield Insurance Company

Case No.: 19-2260

Officials: FLAUM, ROVNER, and SCUDDER, Circuit Judges.

Focus: Insurance Claim – Garnishment Order

This appeal represents the culmination of more than ten years of litigation between a group of neighbors in Elkhart, Indiana and a nearby wood recycling facility. The neighbors alleged that VIM Recycling’s waste disposal practices exposed them to dust and odors in violation of federal environmental law. They also brought state tort law claims for the resulting loss of use and enjoyment of their property and adverse health effects. At certain points the defendants—VIM Recycling, a related entity, and their owner, Kenneth Will—successfully fended off the neighbors’ claims. But sometimes they did nothing at all. These litigation choices eventually led to a $50.56 million default judgment against VIM.

What began as a case about environmental pollution has evolved into a joint garnishment action against VIM’s insurer, Westfield Insurance, to satisfy some of that $50.56 million judgment. Now that the neighbors share their litigation interests with VIM—both want Westfield to pay the judgment— they had to adjust some of their positions to argue that VIM’s Westfield policies apply. The neighbors labor to distance themselves from certain facts they previously pleaded were true to show that VIM did not know the extent of the pollution at the time its Westfield insurance policy went into effect. This task proves too difficult. Because two exceptions in the insurance agreement apply, we affirm summary judgment for Westfield Insurance.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Carlos Bowman v. Jeffrey Korte, et al.,

Case No.: 18-2371

Officials: EASTERBROOK, RIPPLE, and SCUDDER, Circuit Judges.

Focus: Abuse of Discretion – Motion for Summary Judgment on Exhaustion

The Federal Reporter is replete with examples of prisoners losing cases because they missed litigation deadlines and courts extended little forgiveness. Much less common are cases where correctional officers experience the same outcome. But fairness is a two-way street. Carlos Bowman is a prisoner who had sued for alleged abuse in the Western Illinois Correctional Center, and as trial was fast approaching, he saw the defendant correctional officers file a surprising motion—one alleging that his case, which had been pending for nearly three years, should be dismissed on summary judgment for his failure to exhaust administrative remedies. The motion surprised Bowman not only because the defendants had already filed a prior summary judgment motion, which the district court denied, but also because the request to file a second motion came nearly two years after the deadline the district court had set for any motion based on a failure to exhaust administrative remedies.

The defendants offered no reason for the late second motion—indeed, they said it was late “for unknown reasons”—but the district court allowed it anyway, without making the finding required by Federal Rule of Civil Procedure 6(b)(1)(B) that “excusable neglect” permitted an extension of the original deadline. We reverse, as nothing in the record supported the district court’s allowing the second summary judgment motion. We conclude that the district court abused its discretion in granting the defendants leave to file a belated second motion for summary judgment on exhaustion. We VACATE the district court’s judgment and REMAND the matter for trial where Bowman may reassert his motion for the recruitment of counsel. Circuit Rule 36 shall apply on remand.

Reversed. Vacated and remanded

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7^th Circuit Court of Appeals

Case Name: Tyler N. Jaxson v. Andrew Saul, et al.,

Case No.: 19-3011; 19-3125

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

Focus: ALJ Error – Disability Benefits

David Daugherty, an administrative law judge hearing disability-benefits applications for the Social Security Administration, supplemented his salary by taking bribes. Eric Conn, who represented many claimants, paid Daugherty $400 per favorable decision; Conn himself received $5,000 or more per case out of the benefits that Daugherty awarded to Conn’s clients. Four physicians, including Frederic Huffnagle, submitted evaluations to support Daugherty’s decisions. Daugherty told Conn what kind of evidence he wanted to see. Conn wrote the reports, which one of the physicians would sign without change even if the applicant for benefits failed to appear for examination. Huffnagle’s “medical suite” was in Conn’s office.

After the scheme came to light, Conn and Daugherty pleaded guilty to several federal felonies. Bradley Adkins, one of the physicians, was convicted by a jury. Huffnagle died before he could be prosecuted. The total cost to the United States of benefits granted by Daugherty exceeds $500 million, and Conn reaped more than $5 million in legal fees. Many details of this scam are recounted in U.S. Senate Committee on Homeland Security and Governmental Affairs, Staff Report, How Some Legal, Medical, and Judicial Professionals Abused Social Security Disability Programs for the Country’s Most Vulnerable: A Case Study of the Conn Law Firm (Oct. 7, 2013).

To decide whether “there is reason to believe that fraud or similar fault was involved in the providing of [Huffnagle’s] evidence” an ALJ needs to hear from both sides. The agency’s lawyer can submit the Inspector General’s report and the Senate’s compilation of evidence about how Daugherty, Conn, and Huffnagle conducted their dealings. Jaxson’s lawyer can reply with any available reason to think that Huffnagle gave an honest medical opinion. Jaxson needs a powerful argument, for under the statute any “reason to believe” that the report is fraudulent requires its exclusion. The ALJ need not find that fraud is more likely than not. If an applicant is disabled, it should be possible to provide other evidence to that effect; excluding one potentially tainted report need not be dispositive, and erring on the side of exclusion, as the statute requires, seems a prudent precaution. Jaxson may have a hard time persuading an ALJ that there is not even “reason to believe” that Huffnagle’s report is fraudulent. But he is entitled to try, and we affirm the district court’s decision—though under ordinary norms of administrative law rather than a constitutional command. The agency’s decisional process comes within 42 U.S.C. §405(b)(1), which requires a “reasonable notice and opportunity for a hearing”, and the word “hearing” means a procedure at which both sides can give their views on potentially dispositive matters.

Jaxson’s cross-appeal contends that proceedings on remand must be treated as hearings “on the record” governed by the Administrative Procedure Act. 5 U.S.C. §554(a). The district court deemed this argument forfeited because it had not been adequately developed. That was not an abuse of discretion. What’s more, for the reasons we have given, treating a redetermination as one governed by §554 would not do Jaxson any good. Even the most formal procedures, those used by federal judges, do not guarantee evidentiary hearings on disputes about the admissibility of evidence. The APA provides that “[w]hen an agency decision rests on official notice of a material fact not appearing in the evidence in the record, a party is entitled … to an opportunity to show the contrary.” 5 U.S.C. §556(e). We’ve concluded that this is also part of the procedures ordinarily used in informal adjudication: each side is entitled to be heard. The APA would not add to Jaxson’s rights.

Affirmed

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7^th Circuit Court of Appeals

Case Name: John H. Balsewicz aka Melissa Balsewicz v. Jonathan S. Pawlyk, et al.,

Case No.: 19-3062

Officials: WOOD, Chief Judge, and MANION and KANNE, Circuit Judges.

Focus: Qualified Immunity

When a prison official knows that an inmate faces a substantial risk of serious harm, the Eighth Amendment requires that official to take reasonable measures to abate the risk. Inmate John “Melissa” Balsewicz reported to a prison guard that while she was in the shower house, another inmate threatened to beat her up.1 The guard, Sergeant Jonathan Pawlyk, took no action in response to Balsewicz’s report; and two days later, the inmate who had threatened Balsewicz punched her in the head repeatedly, causing her to fall unconscious.

Balsewicz filed a claim against Sergeant Pawlyk and other prison officials under the Civil Rights Act of 1871, Rev. Stat. § 1979, as amended, 42 U.S.C. § 1983. She alleged that Sergeant Pawlyk failed to take reasonable measures to abate a known, substantial risk of serious harm to her, and thus violated one of her Eighth Amendment rights. Granting summary judgment to Sergeant Pawlyk, the district court reasoned that the threat Balsewicz reported to the guard could only be understood as expiring once the inmates left the shower house, so no factfinder could conclude that Sergeant Pawlyk knew Balsewicz faced an ongoing risk of serious harm.

Because a reasonable juror could conclude otherwise based on the submitted evidence, and because Sergeant Pawlyk is not entitled to qualified immunity, we reverse.

Reversed and remanded

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7^th Circuit Court of Appeals

Case Name: Elizabeth G. Ruckelshaus v. Gerald L. Cowan, et al.,

Case No.: 19-2770

Officials: WOOD, Chief Judge, and BARRETT and SCUDDER, Circuit Judges.

Focus: Time-barred – Legal Malpractice Claim

Elizabeth Ruckelshaus appeals the district court’s determination that Indiana’s statute of limitations bars her legal malpractice claim. More than twenty years ago, she hired the defendants to help her and her brother, Thomas Ruckelshaus, access assets held in a trust that their father set up for their benefit. Ruckelshaus contends that she instructed the defendants to give her a future interest in her brother’s share, subject to a life estate held by his wife. And she insists that she could not have known that the defendants failed to follow her wishes until her brother and his widow died. But if there was an error, Ruckelshaus had ample opportunity to discover it when the trust was dissolved and the funds were disbursed, so any claim accrued then. Because the time for asserting this claim is long past, we affirm the district court’s judgment.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Lisa Purtue v. Wisconsin Department of Corrections, et al.,

Case No.: 19-2706

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

Focus: Title VII Violation – Discrimination Claim

Lisa Purtue was fired from her job as a Wisconsin correctional officer for falsely claiming that a prisoner hit her with an empty snack cake box that he threw from his cell. Video footage revealed that the box did not in fact hit Purtue, and, after a review process, the warden dismissed her for making a false report in violation of Wisconsin Department of Corrections policies. Purtue then filed suit, alleging that she had been fired because of her sex. But because she failed to identify evidence from which a reasonable jury could draw that inference, we affirm the district court’s entry of summary judgment against her.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Maria V. Dijamco v. Chad F. Wolf, et al.,

Case No.: 19-2689

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

Focus: Subject-matter Jurisdiction

Maria Dijamco came to the United States from the Philippines and sought lawful status to stay in the country through her mother who had a green card. What followed was a lengthy and tangled process that ultimately proved unsuccessful. Dijamco then filed suit in the district court, contending that the United States Citizenship and Immigration Service failed to follow its own laws and regulations in revoking and refusing to reinstate her petition for a visa. The district court concluded that it lacked subject matter jurisdiction to consider any of Dijamco’s claims. We agree and affirm.

Affirmed

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7^th Circuit Court of Appeals

Case Name: United States of America v. Jeremy C. Wade

Case No.: 19-2061

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

Focus: Jury Instructions

Jeremy Wade hoped to reacquaint himself with a girl he knew in high school so he could ask her for a date. Instead of simply giving her a call, Wade masqueraded as an agent of the Drug Enforcement Administration (“DEA”) to persuade the object of his unrequited affection to go out with him. In doing so he violated 18 U.S.C. § 912, which prohibits impersonating a United States employee and acting in conformity with that pretense. Wade argued to the district court that his alleged romantic motivation (as opposed to a nefarious intent to deceive or defraud) negated a culpable state of mind, but we have held intent to defraud is not a separate element of § 912. Accordingly, the district court prevented Wade from making this argument and refused to instruct the jury on intent to defraud. The jury found him guilty. We affirm the conviction.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Yeison Meza Morales v. William P. Barr

Case No.: 19-1999

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

Focus: Immigration – Removal Order

Yeison Meza Morales is a native and citizen of Mexico who entered the United States without inspection as a child. As an adult, Meza Morales petitioned for U nonimmigrant status, a special visa for victims of certain crimes. While his petition was pending, he was charged as removable based on two grounds of inadmissibility. Meza Morales cited his pending U visa petition as a defense to his removal. The immigration judge agreed to waive both grounds of inadmissibility to allow him to pursue the U visa petition, but later ordered Meza Morales removed as charged on those same grounds.

Meza Morales petitioned us for review of the removal order. He contends that the immigration judge’s initial waiver of both grounds of inadmissibility precluded their use as grounds for an order of removal. We disagree; Meza Morales’s position would effectively turn the inadmissibility waiver into a substitute for the U visa itself. We nevertheless grant his petition for review on two other bases. Meza Morales had asked the immigration judge to continue or administratively close his case instead of ordering removal. The immigration judge entered the removal order based on the conclusion that those alternative procedures were inappropriate, and the Board affirmed on the same basis. But those alternatives were wrongly rejected. We grant the petition for review and remand the case so that the Board can reconsider.

Petition granted

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WI Court of Appeals Digests

WI Court of Appeals – District I

Case Name: County of Milwaukee v. Christann Spannraft

Case No.: 2018AP1553; 2018AP1554

Officials: WHITE, J.

Focus: OWI – Suppression of Evidence

Christann Spannraft, pro se, appeals her judgments of conviction for operating while intoxicated (OWI), first offense, and operating without required lamps lighted. Spannraft argues that the trial court made three errors: (1) excluding testimony on the procedure used to administer the preliminary breath test, (2) admitting the results of the field sobriety tests, and (3) its fact-finding surrounding the intoximeter testing. We affirm.

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. Rodney Joseph Lass

Case No.: 2018AP2192-CR

Officials: Brash, P.J., Blanchard and Donald, JJ.

Focus: Evidentiary Hearing – Vindictive Prosecution

Rodney Lass appeals a judgment entered on jury verdicts convicting him of seven felonies and two misdemeanors, all as domestic abuse violations. He also appeals the order denying his motion for postconviction relief. A first trial ended in a mistrial and Lass was convicted at a retrial. At the first trial he faced only misdemeanor charges for alleged conduct in 2012. At the second trial he faced multiple felony charges for alleged conduct in 2012, but also in 2008 and 2009. The same person was the alleged victim at both trials. Lass argues that the circuit court erred in rejecting, without holding an evidentiary hearing, his postconviction motion for a new trial based on his claim of vindictive prosecution. Specifically, Lass contends that he is entitled to a hearing to allow him to prove that the prosecutor brought the additional charges after the mistrial “to retaliate against” Lass for prevailing on the mistrial motion in the first trial, and that this violated his due process protection against vindictive prosecution. Separately, Lass argues that the circuit court: erred in rejecting his request for a hearing on a postconviction motion alleging ineffective assistance of trial counsel at the second trial; denied him his constitutional right to self-representation by not allowing him to directly participate in sidebar conferences during the second trial; and relied on inaccurate information at sentencing. We reject each of Lass’s arguments and accordingly affirm.

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WI Court of Appeals – District III

Case Name: Amber M. Franks v. Charles D. Smiley

Case No.: 2018AP2278

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

Focus: Child Placement Modification – Change of Circumstances

Amber Michelizzi appeals an order providing Charles Smiley with shared legal custody and increased physical placement of their children. She contends that Smiley failed to demonstrate a “substantial change of circumstances” justifying the modifications, and that the ordered modifications were not in the children’s best interests.

We reject Michelizzi’s arguments and conclude a substantial change of circumstances occurred. Among other things, Smiley’s previous inability to provide a suitable environment for his children had been remedied; he had obtained new employment that provided regular work hours and a flexible schedule; one of his children had developed a very close relationship with Smiley’s stepdaughter following his marriage to his current spouse; and the children are now of an age where they are capable of expressing—and have expressed—a desire to spend more time with their father.

In holding that there has been a substantial change of circumstances, we conclude that this case is not analogous to Lofthus v. Lofthus, 2004 WI App 65, 270 Wis. 2d 515, 678 N.W.2d 393. Lofthus establishes that the combination of circumstances there—including the children’s natural aging process, the general increased availability of one of the parents, and a change in the law from the time of the original placement order—are insufficient to constitute a substantial change of circumstances. Here, there has been a much greater degree of change. We also reject Michelizzi’s argument that the circuit court improperly relied upon Smiley’s changes in marital and financial status, contrary to WIS. STAT. § 767.451(1)(b)3. (2017-18), in modifying the parties’ existing order. Finally, we deem undeveloped Michelizzi’s argument that the modifications were not in the children’s best interests. Accordingly, we affirm.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Russell L. Wilson

Case No.: 2019AP49-CR

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

Focus: Plea Withdrawal

Russell Wilson appeals a judgment of conviction for repeated sexual assault of a child and an order denying his postsentencing motion for plea withdrawal. Wilson contends the Information, his attorney, the plea questionnaire, and the circuit court during the plea hearing all incorrectly stated that Wilson’s maximum possible sentence was life in prison without the possibility of extended supervision. Wilson also asserts the State failed to introduce any evidence that, at the time he pled, he knew the correct maximum sentence he faced—which was forty years’ imprisonment, comprised of twenty-five years’ initial confinement and fifteen years’ extended supervision. Accordingly, Wilson asserts his guilty plea was not knowingly, intelligently and voluntarily entered, and he is therefore entitled to withdraw his plea pursuant to State v. Bangert, 131 Wis. 2d 246, 389 N.W.2d 12 (1986), and its progeny. We agree.

We conclude that, generally, a defendant who is incorrectly told during a plea colloquy, and who otherwise understands, that the maximum sentence for his or her crime is life in prison without the possibility of extended supervision, when in fact the maximum sentence is twenty-five years initial confinement and fifteen years’ extended supervision, has been advised of a maximum penalty that is substantially higher than the actual penalty. This conclusion is compelled by the unique nature of a potential sentence that largely assures the individual will die while incarcerated, as compared to a sentence that provides that individual with a reasonable possibility of release from confinement under the correct maximum. Such a reasonable possibility exists here, given Wilson’s age at the time he was sentenced. We therefore reverse both Wilson’s judgment of conviction and the circuit court’s order denying his motion for postconviction relief. We remand for further proceedings, directing that Wilson be allowed to withdraw his guilty plea.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Chad W. Kessler

Case No.: 2019AP524-CR

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

Focus: Waiver of Counsel Colloquy

Chad Kessler appeals a judgment, entered upon a jury’s verdicts, convicting him of two counts of criminal damage to property and one count each of fleeing or eluding an officer, burglary of a building or dwelling, operating a motor vehicle without the owner’s consent (OMVWOC), and misdemeanor theft. He also appeals an order denying him postconviction relief. Kessler contends he was not competent to represent himself at trial because he was suffering from auditory hallucinations caused by schizophrenia—a condition he did not disclose until he sought postconviction relief.

We conclude: (1) the circuit court’s waiver-of-counsel colloquy satisfied the requirements of State v. Klessig, 211 Wis. 2d 194, 564 N.W.2d 716 (1997); (2) notwithstanding the sufficiency of its Klessig colloquy, the court properly held a nunc pro tunc evidentiary hearing on Kessler’s postconviction claim; and (3) the court’s retrospective finding that Kessler was competent to represent himself was not clearly erroneous. Accordingly, we affirm.

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WI Court of Appeals – District III

Case Name: Michael J. Suhs, et al., v. Proassurance Casualty Company, et al.,

Case No.: 2019AP1062

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

Focus: Negligence – Malpractice

Michael Suhs and his minor daughter, Megan Suhs, (collectively, “Suhs”) appeal an order dismissing their medical negligence and loss of society and companionship claims against Mark A. Gardon, M.D., Proassurance Casualty Company, Baycare Clinic, LLP – Neurological Surgeons, and the Injured Patients and Families Compensation Fund (collectively, “Gardon”). Following the close of Suhs’ evidence at a jury trial, the circuit court granted Gardon’s motion to dismiss under WIS. STAT. § 805.14(3) (2017-18), concluding Suhs had failed to present sufficient evidence to prevail on his medical negligence claim. We conclude the court properly granted Gardon’s motion to dismiss because Suhs failed to present sufficient evidence to allow the jury to determine what, if any, damages Suhs sustained as a result of Gardon’s alleged negligence. We therefore affirm the order dismissing Suhs’ claims.

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WI Court of Appeals – District II

Case Name: Coolidge A L.L.C., et al., v. City of Waukesha, et al.,

Case No.: 2018AP1441

Officials: Neubauer, C.J., Gundrum and Seidl, JJ.

Focus: Summary Judgment – Property Damage

Coolidge A L.L.C. and Coolidge B L.L.C. (hereinafter, collectively “Coolidge”) appeal from orders granting summary judgment in favor of the City of Waukesha and the City’s contractor, D.F. Tomasini Contractors, Inc., and dismissing the property damage claims brought by Coolidge arising from a public works project commissioned by the City and completed by Tomasini. We affirm.

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WI Court of Appeals – District II

Case Name: State of Wisconsin v. Rodolfo Sanchez Mora

Case No.: 2019AP2008-CR

Officials: DAVIS, J.

Focus: Statutory Interpretation – Operators’ Licenses

What appears at first blush as a simple conviction for operating a commercial motor vehicle (CMV) without the required state-issued license in fact involves a more complicated (and as far as we can determine, unaddressed) question lying at the intersection of state and federal licensing requirements. Wisconsin law requires that Wisconsin residents wishing to drive a CMV in Wisconsin have a valid Wisconsin commercial driver’s license (CDL). WIS. STAT. § 343.05(2)(a)1. “Resident” under the Wisconsin statute is a defined term: “an adult whose one home and customary and principal residence, to which the person has the intention of returning whenever he or she is absent, is in this state.” WIS. STAT. § 343.01(2)(g).

Our legislature has also declared, however, that Wisconsin “assents to” federal law governing the licensure of commercial drivers under “the federal commercial motor vehicle safety act, 49 U.S.C. [§] 31301 to 31317 and the regulations adopted under that act.” WIS. STAT. § 343.02(1), (2). The Commercial Motor Vehicle Safety Act (CMVSA) conditions federal highway funding to states, like Wisconsin, that assent to be so bound. The CMVSA provides that only those persons who are citizens or permanent residents of the United States can obtain a state-issued CDL. This means that those who are here from Mexico on an employment authorization card (temporary work permit) can, and indeed must, rely exclusively on their Mexican CDL. This demarcation stems from a perceived need to streamline licensing, with the goal being that no one should have more than one license meeting the federal requirements. Nonetheless, when a truck driver (or other CMV operator) here on a temporary work permit also meets the definition of a resident under state law, the state and federal schemes potentially come into conflict.

Rodolfo Sanchez Mora became entangled in this potential conflict when he was cited for driving without a Wisconsin CDL. He is a commercial truck driver who has lived in Wisconsin on a full-time basis for a number of years under a temporary work permit that he has continuously renewed. Mora holds a Mexican CDL; at one point, he also held a Wisconsin CDL, but the Wisconsin Department of Motor Vehicles (DMV) required that he surrender it in keeping with Wisconsin’s efforts to remain compliant with the CMVSA and its “single license” policy. This frames the issue before us. The Wisconsin statute on its face could be read as requiring Mora to have a Wisconsin CDL, because he appears to qualify as a Wisconsin resident under the statute. But the express terms of the CMVSA, which Wisconsin has “assented to” in order to maintain eligibility for federal highway funds, requires that he have a Mexican CDL—and only a Mexican CDL.

The trial court concluded that Mora is a state resident and must therefore have a Wisconsin CDL to operate a commercial motor vehicle. That conclusion would likely hold if the only relevant authority were the definition in the state statute, but it is not. We find that Federal Motor Carrier Safety Administration (FMCSA) regulations and guidance preclude Mexican citizens holding a temporary work permit from being considered Wisconsin residents for CDL purposes. Instead, those Mexican citizens must use their Mexican CDL when operating a CMV. The result is that Mora’s failure to have a Wisconsin CDL was not a violation of the Wisconsin statute. As Mora was operating a CMV with a valid Mexican CDL at the time of his citation, he was compliant with Wisconsin law. Consequently, we reverse.

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WI Court of Appeals – District IV

Case Name: State of Wisconsin v. Dawn M. Prado

Case No.: 2016AP308-CR

Officials: Blanchard, Kloppenburg, and Graham, JJ.

Focus: OWI – Implied Consent – Blood Test

Dawn Prado was involved in a fatal car crash, and while she was unconscious, law enforcement directed that a sample of her blood be drawn for chemical testing. The officer who directed the blood draw did not obtain a warrant, and instead relied on the incapacitated driver provision of Wisconsin’s implied consent statute. The implied consent statute provides that drivers are “deemed to have given consent” to a blood draw when they drive on a Wisconsin road and certain probable cause requirements are met. WIS. STAT. § 343.305(2) (2017-2018). Its incapacitated driver provision further provides that incapacitated drivers are “presumed not to have withdrawn” the consent that is implied by statute. See § 343.305(3)(ar)1., (3)(ar)2 & (3)(b). Prado does not dispute that the probable cause requirements were met, but she argues that the blood draw was unconstitutional because implied consent does not satisfy the Fourth Amendment, which prohibits warrantless searches unless a recognized exception to the warrant requirement applies. The circuit court suppressed the result of Prado’s blood test, and the State appeals.

We are again presented with the following question: whether the “implied consent” that incapacitated drivers are deemed to have given by the implied consent statute and presumed not to have withdrawn by its incapacitated driver provision satisfies the Fourth Amendment. We have certified this question to the Wisconsin Supreme Court on three prior occasions, and it was also taken up by the Supreme Court of the United States on certiorari review of a Wisconsin appeal. However, no majority on either court has directly answered the question. The answer is of significant importance to the functioning of the Wisconsin court system. If, as the State contends, Prado had already given Fourth Amendment consent to a warrantless blood draw when she drove on a Wisconsin road, then the fact that the officer did not obtain a warrant could not be a basis for suppressing the resulting blood test. And if we accept the State’s contention, when circuit courts are faced with an incapacitated driver scenario in future cases, they would have no basis for suppressing the evidence and no need to evaluate whether some other Fourth Amendment doctrine—such as exigent circumstances or good faith—applies in any individual case.

We conclude that the incapacitated driver provision is unconstitutional because the implied consent that incapacitated drivers are deemed to have given and presumed not to have withdrawn does not satisfy any exception to the Fourth Amendment’s warrant requirement. However, we also conclude that the circuit court should not have suppressed the test result in this case because the State has met its burden to prove that the officer who drew Prado’s blood acted in objective good-faith reliance on the constitutionality of the incapacitated driver provision. Accordingly, we reverse the order suppressing the test result and remand for further proceedings consistent with this opinion.

Recommended for Publication

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WI Court of Appeals – District IV

Case Name: State of Wisconsin v. Sulayman M. Manneh

Case No.: 2018AP2004-CR

Officials: Kloppenburg, Graham, and Nashold, JJ.

Focus: Ineffective Assistance of Counsel

Sulayman Manneh appeals a judgment of conviction for repeated sexual assault of a child and exposing genitals to a child, and an order denying Manneh’s motion for postconviction relief. The parties agree that Manneh was improperly charged with and convicted of both repeated sexual assault of a child and exposing genitals to a child, contrary to WIS. STAT. § 948.025(3) (2017-18). They disagree as to the remedy. Manneh argues that the circuit court erred by vacating only the conviction for the lesser felony of exposing genitals to a child to cure the charging error. He argues that, instead, the court was required to vacate either both convictions or only the greater felony conviction of repeated sexual assault of a child. He also argues that his counsel was ineffective by failing to object to the charging error. We disagree. For the reasons set forth below, we agree with the State that the circuit court properly vacated the lesser felony as a remedy for the charging error and that Manneh was not denied his right to the effective assistance of counsel. We affirm.

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WI Court of Appeals – District IV

Case Name: State of Wisconsin v. Robert A. Washington

Case No.: 2019AP13-CR

Officials: Blanchard, Graham, and Nashold, JJ.

Focus: Court Error – Trial Transcripts

Robert Washington appeals a judgment of conviction for one felony count of pandering or pimping and an order denying his motion for postconviction relief. The basis for Washington’s postconviction motion is that the court reporter failed to transcribe the circuit court’s reading of the jury instructions; Washington asserts that his right to appellate review has been frustrated by the absence of the transcript. The dispositive issue is whether the record was sufficiently reconstructed by the circuit court. We conclude that it was, and therefore we affirm.

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WI Court of Appeals – District IV

Case Name: State of Wisconsin v. John V. Gross, Jr.,

Case No.: 2019AP263

Officials: Blanchard, Graham, and Nashold, JJ.

Focus: Time-barred – Restitution Order

In 2002, John Gross was convicted of first-degree intentional homicide as a party to the crime. Gross argues that he is entitled to an evidentiary hearing and a new trial, or a new trial in the interest of justice, based on newly discovered medical evidence, or in the alternative based on his trial counsel’s failure to consult with a medical expert. Separately, he contends that the restitution order must be vacated because it was entered outside a statutory time limit and was entered without notice. We affirm.

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WI Court of Appeals – District IV

Case Name: Susan D. Glenna v. Roger Duane Glenna, II,

Case No.: 2019AP1218

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

Focus: Divorce – Maintenance and Child Support

Roger Duane Glenna, II, appeals a judgment that awarded maintenance and child support to Roger’s ex-spouse, Susan Glenna, in this divorce case. Roger argues that the circuit court erred by sua sponte reopening the evidence after the divorce hearing and then relying on new evidence that Susan had lost her employment for part of the court’s maintenance award. Roger also argues that the circuit court erred by granting maintenance nunc pro tunc to November 29, 2018, when the court relied on evidence received after that date. Finally, Roger argues that, once those errors are corrected, the circuit court must recalculate Roger’s child support obligation. For the reasons set forth in this opinion, we reject Roger’s contentions. We affirm.

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WI Court of Appeals – District IV

Case Name: Elliot Brey, et al., v. State Farm Mutual Automobile Insurance Company

Case No.: 2019AP1320

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

Focus: Insurance Claim – Coverage

Elliot Brey brought suit in the Monroe County Circuit Court against State Farm Mutual Automobile Insurance Company seeking to recover underinsured motorist benefits based on the death of Elliot’s father, Ryan Johnson, who died from injuries sustained in a motor vehicle accident. Elliot is an insured under the State Farm policy, but Johnson was not. Elliot and State Farm agree that a provision of the State Farm policy requires that an insured suffer “bodily injury” for there to be UIM coverage, and they also agree that while Johnson suffered “bodily injury” as defined in the State Farm policy, Elliot did not. As a result, Elliot and State Farm also agree that the State Farm UIM insured requirement bars UIM coverage for Elliot’s claims. Nonetheless, Elliot argues that his UIM claim against State Farm does not fail because, pursuant to WIS. STAT. § 632.32(1) and (2)(d) (2017-18), the UIM insured requirement in the State Farm policy is void and unenforceable.

The circuit court disagreed with Elliot’s argument and granted summary judgment to State Farm dismissing Elliot’s UIM claim. We conclude that the UIM insured requirement which bars Elliot’s UIM claim is void and unenforceable pursuant to the operation of WIS. STAT. § 632.32(1) and (2)(d). Those statutory subparts do not allow for a UIM policy provision which demands that bodily injury must be sustained by an insured for there to be UIM coverage. Accordingly, we reverse the order of summary judgment and remand this matter to the circuit court with directions to grant summary judgment in favor of Elliot on the question of UIM coverage.

Recommended for Publication

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WI Supreme Court Digests

WI Supreme Court

Case Name: Office of Lawyer Regulation v. Peter Kovac

Case No.: 2020 WI 58

Focus: Attorney Disciplinary Hearing

We review Referee Kim M. Peterson’s recommendation that Attorney Peter J. Kovac’s license to practice law in Wisconsin be suspended for six months for four counts of professional misconduct. The referee also recommended that Attorney Kovac pay the full costs of this proceeding, which are $4,403.92 as of December 10, 2019.

Upon careful review of the matter, we conclude that the referee’s findings of fact are supported by clear, satisfactory, and convincing evidence. We agree with the referee’s conclusions of law that Attorney Kovac engaged in professional misconduct. We conclude, however, that the appropriate sanction for Attorney Kovac’s misconduct is a five-month suspension of his license to practice law in Wisconsin. As the misconduct at issue in this case occurred during approximately the same time period as misconduct that recently resulted in a five-month license suspension, we find it appropriate to make the five-month suspension imposed in this case concurrent with the five-month suspension in the previous case. We also agree with the referee that Attorney Kovac should bear the full costs of this proceeding. The Office of Lawyer Regulation (OLR) did not request restitution, and we impose none.

Attorney’s license suspended

Concur:

Dissent:

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WI Supreme Court

Case Name: State of Wisconsin v. Alfonso Lorenzo Brooks

Case No.: 2020 WI 60

Focus: 4^th Amendment Violation – Warrantless Seizure

Alfonso Lorenzo Brooks was parked on the side of a road after having been stopped for speeding. He was alone in the vehicle, and he had been driving with a suspended operator’s license. Although he told the Milwaukee Sheriff deputies who were issuing him his traffic citations that he could have a licensed driver retrieve the vehicle, the deputies told him department policy required them to take it to an impound lot. The deputies conducted an inventory search of the vehicle prior to the tow. Mr. Brooks, a convicted felon, could not lawfully possess the firearm the deputies found, and so he was arrested. We consider in this case whether the deputies were performing a bona fide community caretaker function when they seized Mr. Brooks’ vehicle without a warrant. We conclude they were not, and so we reverse the decision of the court of appeals because the seizure and ensuing inventory search were both unconstitutional.

Reversed and remanded

Concur:

Dissent:

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WI Supreme Court

Case Name: David E. Hammer v. Board of Bar Examiners

Case No.: 2020 WI 59

Focus: Bar Admission

This is a review, pursuant to Supreme Court Rule (SCR) 40.08(7), of a final decision of the Board of Bar Examiners (Board) declining to certify that the petitioner, David E. Hammer, satisfied the character and fitness requirements for admission to the Wisconsin bar set forth in SCR 40.06(1). The Board’s decision was based primarily on the fact that Mr. Hammer, who was a licensed Florida lawyer from 2006-2011, was disbarred in Florida for trust account violations and misappropriation of client funds.

Affirmed

Concur:

Dissent:

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WI Supreme Court

Case Name: Town of Delafield v. Central Transport Kriewaldt

Case No.: 2020 WI 61

Focus: Statutory Interpretation – Surface Transport and Assistance Act – Seasonal Weight Limitation

When spring finally arrives in Wisconsin, and roadways begin to thaw from the long winter, many municipalities impose weight limitations on certain roads especially vulnerable to deterioration during this time. The Town of Delafield did just that in March 2016. However, the federal Surface Transport and Assistance Act (STAA), along with related federal regulations, limits how states may restrict road access between interstate highways and certain destinations. This case arose when Central Transport Kriewaldt received a citation for operating a tractor-trailer in violation of the Town’s seasonal weight limitation authorized by its ordinance. Central Transport contested the citation on the grounds that the limitation was preempted, and therefore disallowed, by the STAA.

We conclude that the STAA’s reach in this case mandates only reasonable access. The Town’s limitation did not need to be grounded solely in safety considerations, as Central Transport maintains, so long as reasonable access was provided. The record in this case reflects that a seasonal weight limitation is a normal restriction transport companies would be aware of, that adequate notice of the restriction was provided, and that a permit to travel the road was readily available. Put together, these facts show reasonable access was provided, and the Town’s seasonal weight limitation was not preempted by the STAA.

Affirmed and remanded

Concur: KELLY, J., filed a concurring opinion, in which REBECCA GRASSL BRADLEY, J., joined.

Dissent:

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Supreme Court Digests

United States Supreme Court

Case Name: Charles C. Liu, et al., v. Securities and Exchange Commission

Case No.: 18-1501

Focus: SEC Enforcement Action – Equitable Relief

In Kokesh v. SEC, 581 U. S. ___ (2017), this Court held that a disgorgement order in a Securities and Exchange Commission (SEC) enforcement action imposes a “penalty” for the purposes of 28 U. S. C. §2462, the applicable statute of limitations. In so deciding, the Court reserved an antecedent question: whether, and to what extent, the SEC may seek “disgorgement” in the first instance through its power to award “equitable relief ” under 15 U. S. C. §78u(d)(5), a power that historically excludes punitive sanctions. The Court holds today that a disgorgement award that does not exceed a wrongdoer’s net profits and is awarded for victims is equitable relief permissible under §78u(d)(5). The judgment is vacated, and the case is remanded for the courts below to ensure the award was so limited.

Vacated and remanded

Dissenting: THOMAS, J., filed a dissenting opinion.

Concurring:

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United States Supreme Court

Case Name: Department of Homeland Security, et al., v. Vijayakumar Thuraissigiam

Case No.: 19-161

Focus: Immigration – Asylum

Every year, hundreds of thousands of aliens are apprehended at or near the border attempting to enter this country illegally. Many ask for asylum, claiming that they would be persecuted if returned to their home countries. Some of these claims are valid, and by granting asylum, the United States lives up to its ideals and its treaty obligations. Most asylum claims, however, ultimately fail, and some are fraudulent. In 1996, when Congress enacted the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), 110 Stat. 3009–546, it crafted a system for weeding out patently meritless claims and expeditiously removing the aliens making such claims from the country. It was Congress’s judgment that detaining all asylum seekers until the full-blown removal process is completed would place an unacceptable burden on our immigration system and that releasing them would present an undue risk that they would fail to appear for removal proceedings.

This case concerns the constitutionality of the system Congress devised. Among other things, IIRIRA placed restrictions on the ability of asylum seekers to obtain review under the federal habeas statute, but the United States Court of Appeals for the Ninth Circuit held that these restrictions are unconstitutional. According to the Ninth Circuit, they unconstitutionally suspend the writ of habeas corpus and violate asylum seekers’ right to due process. We now review that decision and reverse.

Respondent’s Suspension Clause argument fails because it would extend the writ of habeas corpus far beyond its scope “when the Constitution was drafted and ratified.” Boumediene v. Bush, 553 U. S. 723, 746 (2008). Indeed, respondent’s use of the writ would have been unrecognizable at that time. Habeas has traditionally been a means to secure release from unlawful detention, but respondent invokes the writ to achieve an entirely different end, namely, to obtain additional administrative review of his asylum claim and ultimately to obtain authorization to stay in this country.

Respondent’s due process argument fares no better. While aliens who have established connections in this country have due process rights in deportation proceedings, the Court long ago held that Congress is entitled to set the conditions for an alien’s lawful entry into this country and that, as a result, an alien at the threshold of initial entry cannot claim any greater rights under the Due Process Clause. See Nishimura Ekiu v. United States, 142 U. S. 651, 660 (1892). Respondent attempted to enter the country illegally and was apprehended just 25 yards from the border. He therefore has no entitlement to procedural rights other than those afforded by statute.

In short, under our precedents, neither the Suspension Clause nor the Due Process Clause of the Fifth Amendment requires any further review of respondent’s claims, and IIRIRA’s limitations on habeas review are constitutional as applied.

Reversed and remanded

Dissenting: SOTOMAYOR, J., filed a dissenting opinion, in which KAGAN, J., joined.

Concurring: THOMAS, J., filed a concurring opinion. BREYER, J., filed an opinion concurring in the judgment, in which GINSBURG, J., joined.

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