Articles Posted in US Court of Appeals for the Seventh Circuit

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Allstate investigated suspicious trading on its equity desk and unearthed email evidence that portfolio managers might be timing trades to inflate their bonuses at the expense of portfolios, including pension funds to which Allstate owed fiduciary duties. Allstate retained attorneys, who hired consultants to calculate potential losses. Because actual losses could not be established, the consultants used an algorithm to estimate a potential adverse impact of $91 million. Allstate poured $91 million into the portfolios. Allstate determined that four portfolio managers had violated company policy and fired them. Allstate's 2009 Form 10-K explained these events and an internal memo described the same information. Neither document mentioned the fired portfolio managers. The former employees sued, alleging defamation based on those documents and alleged that Allstate violated 15 U.S.C. 1681a(y)(2), the Fair Credit Reporting Act, by failing to give them a summary of the attorneys' findings after they were fired. A jury awarded more than $27 million in damages. The judge added punitive damages and attorney’s fees under the Act. The Seventh Circuit vacated. The 10-K and internal memo were not defamatory per se and are actionable (if at all) only on a theory of defamation per quod, which requires proof of special damages causally connected to the publication. The plaintiffs testified that they could not find comparable work after being fired, but presented no evidence that any prospective employer declined to hire them as a consequence of Allstate’s statements in the documents. The four lacked standing for the FCRA claims. View "Rivera v. Allstate Insurance Co." on Justia Law

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Lake County, Indiana, Sheriff's Department (LCSD) Deputy Orlich, in uniform, and carrying a gun, responded to Zander’s husband’s call, reporting a domestic disturbance. Arriving at the scene, Orlich ordered Zander to leave the home and go to her other house on White Oak Avenue. Zander stated that she could not go there because the electric panel had been dismantled. Orlich's supervisor gave Orlich permission to take Zander to White Oak Avenue, where Orlich turned on the electricity. Orlich told Zander that she could not return to the other house for several hours. About 10-15 minutes after Orlich left, Zander found Orlich standing naked in the house. He attacked Zander sexually and said that he could make Zander’s life difficult if she reported him. Zander filed negligence claims against the Sheriff and intentional tort and civil rights claims against Orlich. The district court granted the Sheriff summary judgment on Zander’s respondeat superior claim and on Zander’s negligent hiring, training, and retention claim because Zander presented no evidence that Buncich knew of the necessity of exerting control to prevent Orlich's sexual misconduct. On Zander’s claims against Orlich, a jury awarded $100,000 in compensatory damages, $275,000 in punitive damages, and attorneys fees and costs totaling $97,267.80. The Seventh Circuit reversed as to Zander’s respondeat superior claim and affirmed as to the negligent hiring claim. Orlich exploited “unique institutional prerogatives of his police employment.” Whether Orlich’s employment gave rise to the abuse of that power is a question of fact for the jury. View "Zander v. Orlich" on Justia Law

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Krier operates a Wisconsin trail-riding facility. Dilley reserved a ride, informing Krier that she had no horseback-riding experience. Dilley was matched with Blue, Krier’s most docile horse. Dilley received no instruction from Krier or his employee, Kremsreiter; neither adjusted the stirrups nor provided a helmet. Kremsreiter rode in front of Dilley. During the ride, Dilley stated that she did not have the reins. Kremsreiter responded, “Don’t worry; this horse knows where it wants [to] go,” and never looked back. Blue attempted to pass Kremsreiter’s horse, which kicked, prompting Blue to rear up. Dilley fell, sustaining a head injury, fractured ribs and vertebra, and a punctured lung. The judge granted the defendants summary judgment. Wisconsin law confers immunity on the sponsors and participants in equine activities for injuries that result from “an inherent risk of equine activities,” including any participant’s negligence. Brown took a riding lesson at a Wisconsin indoor facility, using her own horse. The instructor allowed a second horse and rider to enter the arena, knowing that the second horse was “high spirited” and required a very experienced rider. The instructor directed the rider of the second horse to jump a fence. The horse sped off, leaping out of control, and collided with Brown’s horse. Brown was thrown and sustained leg fractures. Her case was dismissed. The Seventh Circuit affirmed both defense judgments. Dilley’s claims fail because a trail operator’s negligence is an “inherent risk of equine activities” under the statute; no exception applies. The operators reasonably assessed Dilley’s abilities; they did not act in willful or wanton disregard for her safety; the tack they provided was not faulty. Because Brown rode her own horse, an exception that applies when the defendant provides a horse is unavailable. View "Dilley v. Holiday Acres Properties, Inc." on Justia Law

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More than 20 current and former employees at ConAgra’s Rensselaer, Indiana microwave popcorn plant sued various manufacturers and suppliers of butter flavorings that contained the chemical diacetyl, which if inhaled can cause a respiratory disease called “popcorn lung.” All defendants were dismissed except Givaudan. a long‐time supplier to the plant, which faced claims under Indiana product liability law for strict liability, failure to warn, negligence, and design defect. The district court granted Givaudan summary judgment in full. The Seventh Circuit affirmed as to most of the claims but remanded the claim that Givaudan failed to warn plaintiffs that its products contained a dangerous substance. Whether an exception to that duty to warn—the sophisticated intermediary doctrine— applies to the employer ConAgra and exonerates Givaudan is a fact question. View "Aregood v. Givaudan Flavors Corp." on Justia Law

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Ward injured his shoulder and back when his seat collapsed in the train he was operating. Ward is a U.S. resident who is employed by a U.S. railroad, normally covered by the Federal Employers’ Liability Act (FELA), 45 U.S.C. 51. Because Ward’s seat collapsed across the border in Ontario, the FELA does not apply. Instead, Ward pursued his tort claims under state common law. The district court rejected Ward’s claims by holding that another federal law, the Locomotive Boiler Inspection Act (LIA), 49 U.S.C. 20701, preempted all state tort law remedies for injuries caused by locomotive equipment. The Seventh Circuit affirmed. The federal railroad-safety statutes left plaintiff one path that is viable and not preempted: He could assert state-law tort claims against the defendants that borrow the applicable standards of care from the federal LIA and its regulations governing the safety of locomotive equipment. Plaintiff pursued that viable theory in the district court, but, on appeal, waived any claim based on this theory. View "Ward v. Soo Line Railroad Co." on Justia Law

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In 2010, a doctor prescribed Paxil, the brand‐name version of paroxetine, to treat Stewart’s depression and anxiety. His prescription was filled with generic paroxetine manufactured by another company (not a defendant). Days later, Stewart committed suicide at age 57. He had paroxetine in his system. GSK manufactured brand‐name Paxil and was responsible under federal law for the content of the drug’s label. Labels for paroxetine and similar antidepressant drugs then warned that they were associated with suicide in patients under the age of 24 but did not warn about any association between the drugs and an increased risk of suicide in older adults. It is virtually impossible to sue generic drug manufacturers for failure to warn because they are required to use the FDA-approved label used by the brand-name (original) manufacturer. Only the brand-name manufacturer can seek FDA approval to change the label. Stewart’s wife sued GSK, alleging that it negligently failed to include warnings that paroxetine was associated with suicide in patients older than 24. The jury awarded her $3 million. The Seventh Circuit reversed, holding that federal law prevented GSK from adding a warning about the alleged association between paroxetine and suicides in adults. The FDA repeatedly told GSK not to add a paroxetine‐specific suicide risk warning. View "Dolin v. GlaxoSmithKline LLC" on Justia Law

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Owens began using Testim, a topical gel containing 1% testosterone, in July 2011 when his doctor diagnosed him with hypogonadism. Owens used Testim sporadically. Although the medication guide directs users to apply a full tube of Testim to the shoulders and arms, Owens would apply part of a tube to his thighs and stomach. In July 2013, Owens was admitted to a hospital for pain in his leg. An ultrasound revealed blood clots. He was diagnosed with deep vein thrombosis (DVT). Owens was treated with blood thinners and released the following day. Owens sued, asserting strict liability, negligence, fraud, and negligent misrepresentation under Kentucky law. Each claim requires expert testimony to establish causation. Owens’s case was selected for a bellwether trial in multidistrict litigation. Owens planned to rely on testimony by Dr. Abbas that Testim had caused Owens’s DVT. That opinion assumed that Owens was applying the prescribed dose in the proper manner. When asked during his deposition about hypothetical cases that resembled Owens’s use of Testim, Abbas had no opinion. The district court excluded the testimony and granted Auxilium summary judgment. The Seventh Circuit affirmed. The court properly applied the Daubert framework when excluding Abbas’s testimony. It did not abuse its discretion by concluding that the testimony did not fit the facts of Owens’s case or by failing to consider an argument Owens never presented. Without expert testimony on causation, Owens’s claims necessarily fail. View "Owens v. Auxilium Pharmaceuticals, Inc." on Justia Law

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Dalton’s doctor implanted Teva’s Intrauterine Device (IUD) in her uterus for long-term birth control. Dalton became dissatisfied with the IUD and asked her doctor to remove it. The doctor did so by grasping its strings with a forceps and pulling the IUD down. A piece broke off either before or during the removal and lodged in her uterus. Dalton’s doctor advised that removing the remaining portion of the IUD would require a hysterectomy. Dalton sued Teva, asserting “strict liability,” “strict products liability failure to warn,” and “manufacturer’s defect.” Dalton failed to timely disclose any expert witness and serve the expert witness report required by FRCP 26(a)(2). The district court granted Teva summary judgment. The Seventh Circuit affirmed. Claims under the Indiana Products Liability Act, which governs all consumer actions against a manufacturer for physical harm caused by a product, require proof that the injury was proximately caused by whatever defect or breach of duty underlies the claim. The Act requires expert testimony when an issue “is not within the understanding of a lay person.” Dalton did not establish how a lay juror faced with a broken IUD could identify the cause of the break—maybe the IUD was damaged after coming into the possession of the physician, maybe human error resulted in damage during implantation or removal. This case is far removed from situations in which a causation issue is so obvious that a plaintiff may forgo expert testimony. View "Dalton v. Teva North America" on Justia Law

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Derek Boogaard was a professional hockey player with the Minnesota Wild. Team doctors repeatedly prescribed Derek pain pills for injuries. He became addicted. In 2009 the NHL placed Derek into its Substance Abuse and Behavioral Health Program. Derek was checked into a rehabilitation facility and was later subject to a mandatory “Aftercare Program,” which required him to refrain from using opioids and Ambien and to submit to random drug testing. Derek joined the New York Rangers in 2010 and began asking trainers for Ambien. Derek relapsed. NHL doctors made Derek’s situation worse by violating multiple conditions of the Aftercare Program. Eventually, Derek overdosed and died. Derek’s estate sued, alleging that the NHL had failed to prevent the over-prescription of addictive medications, had breached its voluntarily undertaken duty to monitor Derek’s drug addiction, was negligent in monitoring Derek for brain trauma, and negligently permitted team doctors to inject Derek with an intramuscular analgesic. The court found some of the claims, founded on the parties’ collective bargaining agreement, were preempted by the Labor Management Relations Act and granted the NHL summary judgment. A second amended complaint was dismissed on grounds that Minnesota law applied and required a wrongful-death action to be brought by a court-appointed trustee. The Seventh Circuit affirmed, holding that the Boogaards had forfeited their claims by failing to respond to the NHL’s argument that the complaint failed to state a claim under the law of any state. View "Boogaard v. National Hockey League" on Justia Law

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Mimms, an Indiana-licensed physician, prescribes controlled substances to patients. Several times, CVS Pharmacy employees informed Mimms’s patients that they would not fill their prescriptions. Mimms sued, alleging defamation. CVS argued that Mimms had no evidence that the speakers knew their statements were false. The court granted summary judgment as to five statements and denied judgment for four statements, reasoning there was a material question of fact regarding whether the speakers knew that their statements were false, given evidence that CVS’s corporate office had investigated Mimms and had not stopped stores from filling his prescriptions. The court rejected CVS’s argument that knowledge held by the corporate office could not be imputed to the speakers. The statements were: “CVS doesn’t fill Dr. Mimms’[s] prescriptions or prescriptions for any other pill mills.” “Mimms went to jail.” “Mimms has been … or will be arrested.” “Mimms is under DEA investigation. A jury found CVS liable for defamation per se and awarded Mimms $1,025,000. The Seventh Circuit reversed. Mimms proffered no evidence that the first three statements were made with actual malice. CVS is entitled to a new trial on the fourth statement; the court should have allowed CVS to present evidence that Mimms was the subject of a DEA investigation and regarding Mimms’s reputation. In a defamation per se case, damage to reputation is presumed but evidence regarding the extent of the harm to his professional reputation was critical for minimizing damages. View "Mimms v. CVS Pharmacy, Inc." on Justia Law