Weekly Case Digests – June 28, 2021 – July 2, 2021

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7^th Circuit Digests

7^th Circuit Court of Appeals

Case Name: Mesa Laboratories, Inc., v. Federal Insurance Company

Case No.: 20-1983

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

Focus: Insurance Claim – Duty to Defend – TCPA Violation

Mesa Laboratories, Inc., was sued for sending unsolicited fax advertisements, but when it sought a defense from its insurer, its claim was denied. In support of the denial, the insurer cited an exclusion in the policy barring coverage for any claims “arising out of” the Telephone Consumer Protection Act (“TCPA”) of 1991.

The question in this case is straightforward: When an insurance policy provides that the insurer has no duty to defend its insured against any claim “arising out of” the TCPA, does that exclusion extend to common‐law claims arising from the TCPA‐violating conduct? The district court said yes, and we agree. We therefore affirm the district court’s decision granting judgment on the pleadings in favor of the insurer.

Affirmed

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7^th Circuit Court of Appeals

Case Name: MAO-MSO Recovery II, LLC, et al., v. State Farm Mutual Automobile Insurance Company, an Illinois Company.

Case No.: 20-1268

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

Focus: Medicare Act – Standing to Sue

For the second time in as many years we affirm the district court’s dismissal of a lawsuit brought under the Medicare Act by entities seeking to collect on healthcare receivables assigned to them by so-called Medicare Advantage Organizations. The Medicare Act may authorize the lawsuit but, regardless, the district court rightly recognized that identifying a federal cause of action satisfies only half of the inquiry necessary to establish subject matter jurisdiction. The half left unsatisfied is Article III standing— the same shortcoming that resulted in the dismissal of the analogous lawsuit two years ago. Despite ample opportunity, the plaintiffs once again were unable to show any injury in fact. They failed to find within their basket of assigned receivables an example of a concrete and definite amount owed them by the defendant, State Farm Mutual Automobile Insurance Company. In affirming, we sound a word of caution. This lawsuit mirrors scores like it filed in federal courts throughout the country that have all the earmarks of abusive litigation and indeed have drawn intense criticism from many a federal judge. The plaintiffs should think hard before risking a third strike within our Circuit.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Rexing Quality Eggs, v. Rembrandt Enterprises, Inc.,

Case No.: 20-1726; 20-1727

Officials: RIPPLE, KANNE, and ROVNER, Circuit Judges.

Focus: Damages

On August 16, 2017, Rexing Quality Eggs and owners Joseph and Leo Rexing (collectively “Rexing”) filed a declaratory judgment action in Vanderburgh County, Indiana. They sought a ruling that Rexing was excused from its obligations to purchase eggs under a contract that it had with Rembrandt Enterprises, Inc. (“Rembrandt”). Rembrandt removed the action to federal district court, answered the complaint, and filed a counterclaim seeking damages for Rexing’s repudiation of the contract. Rembrandt requested damages, attorneys’ fees, and interest.

Following discovery, Rembrandt moved for summary judgment on Rexing’s claims as well as on its own counterclaim. The district court granted Rembrandt’s motion on liability, but concluded that there were genuine issues of triable fact as to the damages Rembrandt had suffered because of Rexing’s repudiation.

After a trial on the damages issue, a jury awarded Rembrandt $1,268,481 for losses on eggs it had resold and another $193,752 for losses on eggs that it was not able to resell. Rembrandt then requested that the court award it interest, attorneys’ fees, and costs. The district court denied the request; it determined that the interest term in the parties’ agreement was usurious, and, as a result, Rembrandt was not entitled to contractual interest or to attorneys’ fees. The district court therefore entered final judgment in the amount of $1,522,302.61. Rexing appealed the damages award in favor of Rembrandt, and Rembrandt cross-appealed the denial of contractual interest and attorneys’ fees.

We now affirm the district court’s judgment on the damages award. The district court properly concluded that the resale remedy under Iowa’s version of the Uniform Commercial Code (“UCC”), Iowa Code § 554.2706, was the appropriate mechanism for calculating Rembrandt’s damages. Moreover, Rexing waived its arguments challenging the jury’s damage award by not presenting them to the district court in a postverdict motion. As for Rembrandt’s counterclaim for interest and attorneys’ fees, Rembrandt is correct that the parties’ agreement fell within the “Business Credit Exception” to Iowa’s usury statute, Iowa Code § 535.5(2)(a)(5). We therefore reverse the district court’s denial of Rembrandt’s request for interest and fees, and we remand for further proceedings on these matters.

Affirmed in part. Reversed and remanded in part.

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7^th Circuit Court of Appeals

Case Name: Alice L. Gedatus v. Andrew M. Saul

Case No.: 20-1753

Officials: SYKES, Chief Judge, and MANION and ST. EVE, Circuit Judges.

Focus: ALJ Error – Disability Benefits

Alice Gedatus seeks social security disability benefits. She alleged many medical conditions, including lumbar degenerative disc disease, sciatica, leg pain, knee pain, wrist difficulties, tremors, and residual effects from a head hemorrhage. Over the years, she underwent multiple surgeries and other treatments. After a hearing, the Administrative Law Judge agreed with Gedatus about several issues, but concluded she could perform light work with some limits, so she was not disabled. No doctor opined she needed more limits than the ALJ determined. The district judge affirmed. Gedatus appeals, raising myriad errors collected in two clusters. First, she argues errors permeate the ALJ’s symptom evaluation. Second, she argues the ALJ erred by not setting forth an assessment of her limited sitting tolerance or tremors. We conclude substantial evidence supports the ALJ’s decision, and the ALJ did not otherwise reversibly err. So we affirm.

Affirmed

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7^th Circuit Court of Appeals

Case Name: Design Basics, LLC, et al., v. Signature Construction, Inc., et al.,

Case No.: 19-2716

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

Focus: Copyright Infringement

Copyright law strikes a practical balance between the intellectual-property rights of authors and the public interest in preserving the free flow of ideas and information and encouraging creative expression, all in furtherance of the constitutional purpose to “promote the Progress of Science and useful Arts.” U.S. CONST. art. 1, § 8, cl. 8; see generally Google LLC v. Oracle Am., Inc., 141 S. Ct. 1183, 1195 (2021). Copyright trolls—opportunistic holders of registered copyrights whose business models center on litigation rather than creative expression—disrupt this balance by inhibiting future creativity with negligible societal benefit. “Like the proverbial troll under the bridge, these firms try to extract rents from market participants who must choose between the cost of settlement and the costs and risks of litigation.” Design Basics, LLC v. Lexington Homes, Inc., 858 F.3d 1093, 1097 (7th Cir. 2017).

Plaintiff Design Basics, LLC, is a copyright troll. Id. at 1096–97. The firm holds registered copyrights in thousands of floor plans for suburban, single-family tract homes, and its employees trawl the Internet in search of targets for strategic infringement suits of questionable merit. The goal is to secure “prompt settlements with defendants who would prefer to pay modest or nuisance settlements rather than be tied up in expensive litigation.” Id. at 1097. As we explained in Lexington Homes, “[t]his business strategy is far removed from the goals of the Constitution’s intellectual property clause.” Id. Instead, it amounts to an “intellectual property shakedown.” Id. at 1096.

This appeal involves yet another Design Basics infringement action, one of more than 100 such suits in the last decade or so. Id. at 1097. When Design Basics was last before this court in Lexington Homes, we were guided by two well established copyright doctrines—scènes à faire and merger— that constrain the ability of infringement plaintiffs to claim expansive intellectual-property rights in a manner that impedes future creativity. Applying these doctrines, we held that Design Basics’ copyright in its floor plans is thin. Id. at 1101–05. The designs consist mainly of unprotectable stock elements—a few bedrooms, a kitchen, a great room, etc.— and much of their content is dictated by functional considerations and existing design conventions for affordable, suburban, single-family homes. When copyright in an architectural work is thin, only a “strikingly similar” work will give rise to a possible infringement claim. Id. at 1105. Applying this standard, we held that no reasonable jury could find for Design Basics and affirmed a summary judgment against it. Id.

This latest appeal meets the same fate. Design Basics sued Signature Construction, Inc., and related companies, accusing them of copying ten of its registered floor plans for suburban, single-family homes. The district court entered summary judgment for the defendants based largely on the reasoning of Lexington Homes.

Design Basics asks us to overrule Lexington Homes. We decline to do so. And we take this opportunity to restate and clarify the elements of a prima facie case of infringement, both as a general matter and more particularly in cases involving works of this type in which copyright protection is thin. For this category of claims, only extremely close copying is actionable as unlawful infringement. Put more precisely, this type of claim may move forward only if the plaintiff’s copyrighted design and the allegedly infringing design are virtually identical. That standard is not satisfied here, so we affirm.

Affirmed

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WI Court of Appeals Digests

WI Court of Appeals – District III

Case Name: State of Wisconsin v. Kimberly Dale Crone

Case No.: 2018AP1764-CR

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

Focus: Unlawful-stop Claim – Suppression of Evidence

Kimberly Crone appeals a judgment of conviction, entered upon her no-contest plea, for possession of a controlled substance. She argues the circuit court erred by denying her motion to suppress evidence that a law enforcement officer obtained during a traffic stop, after she consented to a search of her purse. Crone contends the officer’s request to look at two pill bottles in her purse—which were in plain view of the officer standing next to her vehicle—unlawfully extended the stop, violating her Fourth Amendment rights. We disagree, as the officer’s simple request for Crone’s consent—even when that request occurred at the end of the traffic stop—did not unreasonably extend the stop under the totality of the circumstances. Therefore, we affirm.

Recommended for Publication

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Christopher William John Caley

Case No.: 2019AP665-CR

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

Focus: Sentence Modification

Christopher Caley appeals from a judgment of conviction for eleven counts of capturing an image of nudity on camera without consent of the victims, contrary to WIS. STAT. § 942.09(2)(am)1. (2019-20), and for one count of disorderly conduct. Caley also appeals an order denying his postconviction motion seeking sentence modification, or, in the alternative, resentencing. Caley contends the circuit court erred at sentencing by relying on speculative testimony that overstated the number of potential victims to Caley’s crimes. Caley also contends the State violated its discovery obligations by not disclosing to him prior to sentencing the basis for its witness’s testimony estimating the number of his victims. Finally, Caley claims that there were actually a lower number of victims than was evidenced at sentencing, which is a new factor justifying a modification of his sentence. We reject Caley’s arguments and affirm.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Daryl J. Strenke

Case No.: 2019AP1451-CR

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

Focus: Postconviction Motion Denied – Restitution Order

Daryl Strenke appeals an amended judgment of conviction, entered upon his guilty plea, convicting him of second-degree intentional homicide. Strenke also appeals the order denying in part his postconviction motion challenging the circuit court’s restitution award. Strenke argues that the court erred by failing to vacate the restitution order as being “untimely requested.” Strenke also challenges the amount of restitution ordered and the court’s conclusion that Strenke had the ability to pay. Finally, Strenke asserts that the court erred by denying his ineffective assistance of counsel claim without an evidentiary hearing. We reject these arguments and affirm the judgment and order.

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WI Court of Appeals – District III

Case Name: Voters with Facts, et al., v. City of Eau Claire, et al.,

Case No.: 2019AP1528

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

Focus: Statue of Limitations – Certiorari Action

Voters with Facts, as well as numerous individual plaintiffs (collectively, “Voters with Facts”), appeals an order dismissing its certiorari action seeking a judgment voiding a particular tax incremental district (“TID”) enacted by the City of Eau Claire and its Joint Review Board (collectively, “the City”). The circuit court concluded that Voters with Facts’ action was untimely filed under precedential case law setting forth a six-month common law rule for commencing a certiorari action.

On appeal, Voters with Facts argues that the six-month common law rule does not apply here because WIS. STAT. § 893.80 (2019-20)—the notice of claim statute applicable to actions against certain government actors—sets forth the operative limitations period. But, in a wrinkle, Voters with Facts argues that the limitations period set forth in the notice of claim statute does not apply to its certiorari action either, because that period only begins running upon the government actor issuing a formal notice of disallowance. Because the City passively disallowed its claim by operation of law, Voters with Facts contends there is no specific limitations period applicable to its certiorari action.

We conclude the cases articulating the six-month common law rule for commencing a certiorari action remain good law. Those authorities have not been overruled, either expressly or by necessary implication upon WIS. STAT. § 893.80’s enactment. Moreover, we need not decide whether and precisely how the six-month common law rule interacts with the notice of claim statute, because under any conceivable interaction, Voters with Facts’ certiorari claim was untimely filed. Accordingly, we affirm the order dismissing Voters with Facts’ complaint.

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WI Court of Appeals – District I

Case Name: State of Wisconsin v. Stanley E. Martin

Case No.: 2019AP1794

Officials: Brash, P.J., Graham and White, JJ.

Focus: Petition for Discharge Commitment Denied

Stanley E. Martin appeals the order denying his petition for discharge from a WIS. STAT. ch. 980 commitment. Martin argues that the trial court failed to make ultimate findings of fact to support his continued commitment. We reject his argument and accordingly, we affirm.

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WI Court of Appeals – District III

Case Name: Daniel S. Krueger v. Paul C. Hsu, et al.,

Case No.: 2019AP2030

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

Focus: Monetary Judgment – Contract Modification

Paul Hsu and Hsu’s Ginseng Enterprises, Inc., (collectively Hsu) appeal from a money judgment entered against both Paul and the corporation, stemming from a futures contract for the sale of ginseng grown by Daniel Krueger. Hsu argues that Paul was not a party to the contract with Krueger; the parties had modified the contract by their conduct; and even if the parties did not modify the contract, Krueger failed to mitigate his damages. We reject Hsu’s arguments and affirm.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Rudy Earl McWashington

Case No.: 2019AP2395-CR

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

Focus: Postconviction Order – Forfeiture of Counsel 

Rudy McWashington appeals from a postconviction order permitting appointed postconviction counsel to withdraw over McWashington’s objection. We conclude the order was properly based upon McWashington’s forfeiture of counsel, and affirm.

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WI Court of Appeals – District III

Case Name: State of Wisconsin v. Justin L. Douglas

Case No.: 2020AP84-CR

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

Focus: Postconviction Motion Denied – Ineffective Assistance of Counsel

Justin Douglas appeals a judgment, entered upon a jury’s verdict, convicting him of two counts of first-degree sexual assault of a child; four counts of sexual exploitation of a child; two counts of possession of child pornography; and eight counts of felony bail jumping, with all sixteen counts as a habitual criminal. Douglas also appeals the order denying his postconviction motion for a new trial. Douglas argues that his trial counsel was ineffective in pursuing a motion to suppress evidence obtained from a cell phone. We reject Douglas’s arguments and affirm the judgment and order.

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WI Court of Appeals – District IV

Case Name: Savanah R. Thom, et al., 1^st Auto & Casualty Insurance Company, et al.,

Case No.: 2020AP285

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

Focus: Insurance Claim – Maximum Liability

Savanah Thom was severely injured when her vehicle collided with a vehicle driven by a thirteen-year-old child. Thom brought claims against several of the child’s relatives and their insurers. Thom sought, in relevant part, a money judgment against the child’s insurers based on his negligent operation of the vehicle and against the child’s parents, Jason and Wendy Foerster, for their alleged negligent failure to control and supervise their child.

This appeal concerns a single defendant, Rural Mutual Insurance Company, which issued a motor vehicle policy to Jason. The Rural policy has a $300,000 per-accident limit of liability, and it insures Jason, Wendy, and any family member for their use of “any auto.” The Foerster child was driving his aunt’s vehicle with permission at the time of the collision, and this vehicle is not listed on the declarations page of the Rural policy. The parties dispute whether it is “described” in the Rural policy and, if so, whether Rural’s maximum liability is $300,000 or $900,000 based on the requirements of WIS. STAT. § 632.32(3) (2019- 20). The circuit court determined that Rural’s maximum liability is $300,000. The court then granted the motion. Thom filed pursuant to WIS. STAT. § 628.46, which requested prejudgment interest dating back nearly eighteen months.

Thom appeals the circuit court’s determination of Rural’s maximum liability, and Rural cross-appeals the court’s award of prejudgment interest. We affirm the order determining Rural’s maximum liability to be $300,000, although we base our decision on a different rationale than that relied on by the circuit court. Specifically, we conclude that WIS. STAT. § 632.32(3)’s requirements do not supersede the policy’s $300,000 limit of liability because the aunt’s vehicle is not “a motor vehicle described in the [Rural] policy,” as required by § 632.32(3). We also affirm the order requiring Rural to pay statutory prejudgment interest. At the pertinent time, the conditions necessary to trigger interest under WIS. STAT. § 628.46 were satisfied, and the court’s finding that Rural lacked reasonable proof that it was not responsible for paying Thom’s claim is not clearly erroneous.

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WI Supreme Court Digests

WI Supreme Court

Case Name: Country Visions Cooperative v. Archer-Daniels-Midland Company and United Cooperative

Case No.: 2021 WI 35

Focus: Right of First Refusal – Appraised Value

This is a review of a published decision of the court of appeals, Country Visions Cooperative v. Archer-Daniels-Midland Co., 2020 WI App 32, 392 Wis. 2d 672, 946 N.W.2d 169, affirming in part, reversing in part, and remanding with directions the Fond du Lac County circuit court’s order granting Country Visions Cooperative (“Country Visions”) specific performance of its right of first refusal to a property that Archer-Daniels-Midland Co. (“ADM”) was attempting to sell to United Cooperative (“United”). This case requires us to determine whether the circuit court properly set the price at which Country Visions may exercise its right of first refusal.

We conclude that the circuit court did not err in considering the unique synergies that the Ripon Property provides to United when it set the exercise price higher than the appraised value. For rights of first refusal, a prospective buyer may choose to offer significantly more than the appraised value of a property, especially in the context of a package deal. Thus, depending on the terms of the right of first refusal contract and the facts of the case, a circuit court may set an exercise price that exceeds the appraised value of the burdened property. However, we conclude that remand is necessary to determine whether the $16.6 million exercise price includes more than is called for in the right of first refusal contract. Accordingly, we affirm the court of appeals’ decision and remand to the circuit court for proceedings consistent with this opinion.

Affirmed

Concur: ROGGENSACK, C.J., filed a concurring opinion.

Dissent:
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WI Supreme Court

Case Name: Office of Lawyer Regulation v. James C. Ritland

Case No.: 2021 WI 36

Focus: Attorney Disciplinary Proceedings

This disciplinary matter comes to the court on Attorney James C. Ritland’s appeal and the Office of Lawyer Regulation’s (OLR) cross-appeal of a report and recommendation of Referee Allan Beatty. After holding an evidentiary hearing, the referee concluded that the OLR had proven the sole misconduct charge asserted in its complaint; namely, that Attorney Ritland’s conduct resulting in convictions for two counts of attempted adultery and one count of disorderly conduct reflected adversely on his honesty, trustworthiness, and fitness as a lawyer in other respects. See Supreme Court Rule (SCR) 20:8.4(b). As a sanction, the referee recommended that the court suspend Attorney Ritland’s Wisconsin law license for three months and order him to pay the full costs of this disciplinary matter, which total $21,017.24 as of March 2, 2020. Restitution is not at issue; because this case solely concerns Attorney Ritland’s sexual misconduct, there are no funds to restore.

Both Attorney Ritland and the OLR have appealed the referee’s report and recommendation. In his appeal, Attorney Ritland generally contests the sufficiency of the evidence against him and claims his behavior merits, at most, a public reprimand. In its cross-appeal, the OLR argues that a six-month suspension——not a three-month suspension, as the referee recommended——is warranted.

After reviewing this matter and considering Attorney Ritland’s appeal and the OLR’s cross-appeal, we accept the referee’s factual findings, and we agree with the referee that Attorney Ritland committed the charged SCR 20:8.4(b) violation. We deem the referee’s recommended three-month suspension insufficient: Attorney Ritland’s conduct and our case law call for a two-year suspension. We impose full costs. The OLR initiated this disciplinary proceeding with the filing of a one-count complaint in September 2018, alleging an SCR 20:8.4(b) violation. Attorney Ritland filed an answer in which he denied any misconduct.

Attorney’s license suspended

Concur:

Dissent:
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Supreme Court Digests

United States Supreme Court

Case Name: AMG Capital Management, LLC, et al., v. Federal Trade Commission

Case No.: 19-508

Focus: Federal Trade Commission Act – Restitution

Section 13(b) of the Federal Trade Commission Act authorizes the Commission to obtain, “in proper cases,” a “permanent injunction” in federal court against “any person, partnership, or corporation” that it believes “is violating, or is about to violate, any provision of law” that the Commission enforces. 87 Stat. 592, 15 U. S. C. §53(b). The question presented is whether this statutory language authorizes the Commission to seek, and a court to award, equitable monetary relief such as restitution or disgorgement. We conclude that it does not.

Reversed and remanded

Dissenting:

Concurring:
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United States Supreme Court

Case Name: Willie Earl Carr, et al., v. Andrew M. Saul, Commissioner of Social Security

Case No.: 19-1442; 20-105

Focus: ALJ Error – Disability Benefits

When the Social Security Administration (SSA) denies a claim for disability benefits, a claimant who wishes to contest that decision in federal court must first seek a hearing before an administrative law judge (ALJ). The petitioners here did just that: They each unsuccessfully challenged an adverse benefits determination in ALJ proceedings, and they now ask for judicial review. Specifically, petitioners argue that they are entitled to new hearings before different ALJs because the ALJs who originally heard their cases were not properly appointed under the Appointments Clause of the U. S. Constitution. The question for the Court is whether petitioners forfeited their Appointments Clause challenges by failing to make them first to their respective ALJs. The Court holds that petitioners did not forfeit their claims.

Reversed and remanded

Dissenting:

Concurring: THOMAS, J., filed an opinion concurring in part and concurring in the judgment, in which GORSUCH and BARRETT, JJ., joined. BREYER, J., filed an opinion concurring in part and concurring in the judgment.
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United States Supreme Court

Case Name: Brett Jones v. Mississippi

Case No.: 18-1259

Focus: Sentencing Guidelines – Abuse of Discretion

Under Miller v. Alabama, 567 U. S. 460 (2012), an individual who commits a homicide when he or she is under 18 may be sentenced to life without parole, but only if the sentence is not mandatory and the sentencer therefore has discretion to impose a lesser punishment. In this case, a Mississippi trial judge acknowledged his sentencing discretion under Miller and then sentenced petitioner Brett Jones to life without parole for a murder that Jones committed when he was under 18. The Mississippi Court of Appeals affirmed, concluding that the discretionary sentencing procedure satisfied Miller.

Jones argues, however, that a sentencer’s discretion to impose a sentence less than life without parole does not alone satisfy Miller. Jones contends that a sentencer who imposes a life-without-parole sentence must also make a separate factual finding that the defendant is permanently incorrigible, or at least provide an on-the-record sentencing explanation with an implicit finding that the defendant is permanently incorrigible. And Jones says that the trial judge did not make such a finding in his case.

Jones’s argument that the sentencer must make a finding of permanent incorrigibility is inconsistent with the Court’s precedents. In Miller, the Court mandated “only that a sentencer follow a certain process—considering an offender’s youth and attendant characteristics—before imposing” a life-without-parole sentence. Id., at 483. And in Montgomery v. Louisiana, which held that Miller applies retroactively on collateral review, the Court flatly stated that “Miller did not impose a formal factfinding requirement” and added that “a finding of fact regarding a child’s incorrigibility . . . is not required.” 577 U. S. 190, 211 (2016). In light of that explicit language in the Court’s prior decisions, we must reject Jones’s argument. We affirm the judgment of the Mississippi Court of Appeals.

Affirmed

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

Concurring: THOMAS, J., filed an opinion concurring in the judgment.
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