Seventh Circuit's Decision Research Articles

Caught by the Cat's Paw

Federal employment discrimination law is enamored with court-created doctrines with catchy names. A fairly recent addition to the canon is the concept of the “cat’s paw,” formally recognized by the Supreme Court in Staub v. Proctor Hospital. With its name coined by Judge Richard Posner and drawn from a fable, the concept of cat’s paw has taken ground quickly, discussed in hundreds of cases. This Article argues that the cat’s paw doctrine is a mistake, and the courts should abolish it. Before the Supreme Court recognized it as a separate doctrine, the Supreme Court decided numerous cases with facts that could now be called “cat’s paw” cases. The Supreme Court did not need or even mention the need for a new doctrine to adjudicate those cases. Strangely, the Supreme Court does not cite to any of these cases in Staub. Indeed, these Supreme Court cases are going to cause a judicial headache as lower courts try to reconcile pre-Staub jurisprudence with the court-created cat’s paw doctrine. The current cat’s paw doctrine muddles rather than elucidates complex concepts of intent, causation, and agency liability. Before cat’s paw doctrine becomes further entrenched, this Article provides a new and more complete history of the doctrine. This new history shows that courts did not need the cat’s paw doctrine prior to its creation. Even the Seventh Circuit decision that coined the phrase “cat’s paw” did not rely on cat’s paw to resolve the case. Importantly, there is only one way to reconcile Staub with several other canonical Supreme Court cases — to read it as simply recognizing one set of facts under which a plaintiff could prevail under federal discrimination law. Some lower courts are interpreting Staub to place significant limits on the scope of discrimination law. However, using cat’s paw to limit the scope is inconsistent with numerous Supreme Court cases, as well as the text and purposes of the discrimination statutes. Cat’s paw doctrine should be abolished while it is in its infancy because it is not needed and will likely lead to decades of confusion in employment discrimination jurisprudence.

Death as Divorce for the Abandoned Spouse: Davis V. Combes and the Cautious and Gender-Sensitive Judiciary

Davis v. Combes is a Seventh Circuit decision by Judge Diane Wood involving a decedent who surprises her surviving family by secretly transferring assets to her sister. This Essay suggests that the case offers an opportunity to think about alternatives to forced heirship in American law. It discusses the choice among three ways to disappoint or even cheat an abandoned spouse. These are: (1) Divorce, followed by a battle over assets and future earnings; (2) Death – where the decedent attempts to dis-inherit the surviving spouse; (3) Death – where there is no will or simply few assets, and where the abandoned spouse is surprised to learn that she or he has been removed as the beneficiary of the insurance policy. In sum, one can divorce, dis-inherit, or dis-insure, with the latter being the subject of the case under discussion. I argue that for reasons of gender equality or partnership, the three cases should be treated alike as much as possible.

Rubin v. Islamic Republic of Iran (U.S. Sup. Ct.)

On February 21, 2018, the U.S. Supreme Court affirmed the Seventh Circuit's decision in the case of Rubin v. Islamic Republic of Iran, concluding that 28 U.S.C. §1610(g) does not provide a freestanding basis for parties holding a §1605A judgment to attach and execute against the property of a foreign state. Instead, §1610(g) may be used to identify property that would be available for attachment and execution to satisfy a §1605A judgment, but a separate provision within §1610 must first apply to overcome execution immunity.

Extracting Lessons from Illinois' 2010 Special Election Fiasco: A Closer Look at the Seventh Circuit's Decision in Judge v. Quinn and the Special Election Requirement of the Seventeenth Amendment

Extracting Lessons from Illinois' 2010 Special Election Fiasco: A Closer Look at the Seventh Circuit's Decision in Judge v. Quinn and the Special Election Requirement of the Seventeenth Amendment

Mutual fund advisers fees and executive compensation

The case of Jones v. Harris (2008a) that is currently before the Supreme Court poses issues with regard to mutual fund managers' fees and expense (Advisory Fees). However, the case may signal the direction courts will take in reviewing management compensation of large corporations as well. Advisory Fees pose a number of fundamental issues that appear in many fiduciary relationships. First, why do the fees and compensation of fiduciaries raise unique problems? Second, what are the solutions to the fee problem? Third, what is the role of the courts in the determination of Advisory Fees? Fourth, what are the tests that the courts or the boards of the mutual funds should apply in determining Advisory Fees? Fifth, how did the Seventh Circuit decision in Jones v. Harris determine these questions? Sixth, what are the implications of Jones v. Harris? In conclusion, by analyzing these questions we might uncover guidelines to the issues with regard to corporate executive compensation as well.

Voting with their Feet and Dollars: The Role of Investors and the Influence of the Mutual Fund Market in Regulating Fees

This Note discusses the Seventh Circuit decision in Jones v. Harris Associates, a case which was granted certiorari by the Supreme Court. Oral argument was heard on November 2, 2009 and a decision in the case is expected in early 2010. The Note weighs the standard promoted by Jones for consideration of mutual fund management fees under Section 36(b) of the Investment Company Act of 1940 against the precedential Gartenberg standard of the Second Circuit, which has stood for over 25 years. The Jones standard provides a more accurate interpretation of Section 36(b) and appropriately reflects the state of the mutual fund industry today -- an industry in which competition exists between advisers. Finally, the Note suggests that the Jones standard may be further enhanced through equipping the average mutual fund investor to more actively participate in creating competition by providing the investor with disclosure in his or her account statements of the actual fees paid by the investor.

Supreme Court Amicus Merits Brief of Law Professors in Support of Petitioners, Jones v. Harris Associates, No. 08-586

Amici curiae law professors filed this brief to urge the Court to reverse the Seventh Circuit and to apply a fiduciary standard under Section 36(b) of the Investment Company Act with modest scope but forceful effect to counterbalance the structural and behavioral vulnerabilities preventing market forces alone from imposing competitive discipline upon mutual fund advisory fees. The brief addresses the Seventh Circuit's decision to disavow the long-established Gartenberg precedent and to hold, instead, that so long as an adviser make[s] full disclosure and play[s] no tricks, a plaintiff cannot prevail in a Section 36(b) action. Amici argue that the Seventh Circuit's decision disregards Section 36(b)'s legislation, legislative history, and judicial precedent. With a greater appreciation for the unique structure and operation of mutual funds, the Supreme Court should emphasize comparisons between retail and institutional fees in the Section 36(b) fiduciary duty. Amici: Barbara Bader Aldave, William Birdthistle, Barbara Black, Douglas Branson, James Cox, Steven Davidoff, Lisa Fairfax, James Fanto, Jesse Fried, Theresa Gabaldon, Joan MacLeod Heminway, Donald Langevoort, David Millon, Lawrence Mitchell, Charles Murdock, Donna Nagy, Elizabeth Nowicki, Alan Palmiter, Frank Partnoy, Margaret V. Sachs, William Sjostrom, Marc Steinberg, Ahmed Taha, Steven Thel, Randall Thomas, Manning Warren

Supreme Court Amicus Brief of Law Professors in Support of Certiorari, Jones v. Harris Associates, No. 08-586

Amici curiae law professors filed this brief to urge the Court to grant the petition for certiorari and to clarify the proper scope of the fiduciary duty under Section 36(b) of the Investment Company Act that investment advisers owe to mutual fund shareholders with respect to the compensation that advisers receive. The brief addresses the Seventh Circuit's decision to disavow the long-established Gartenberg precedent and to hold, instead, that so long as an adviser make[s] full disclosure and play[s] no tricks, a plaintiff cannot prevail in a Section 36(b) action. Amici argue that the Seventh Circuit's decision creates a circuit split, elides a critical provision from the statutory text, and engages in a superficial market analysis.

Pleading scienter after Tellabs in Section 10(b) cases generally and in the “subprime” context

PurposeThe purpose of this paper is to examine the impact the US Supreme Court's Tellabs decision has had on Section 10 (b) cases generally and on cases related to subprime mortgage‐backed securities.Design/methodology/approachThe paper provides background including provisions of Section 10(b) of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act (PSLRA) of 1995. Analyzes the decision in Tellabs, Inc. v. Makor Issue & Rights, Ltd, recent decisions since Tellabs by the the Second, Seventh, and Ninth Circuits, and decisions in two recent subprime securities cases in which defendants moved to dismiss pursuant to Tellabs; and draws preliminary conclusions from cases that have applied Tellabs so far.FindingsThe PSLRA raised the bar for pleading scienter by requiring a “strong inference”, but the courts of appeals have differed in applying the standard. The Tellabs decision asserted that the PSLRA requires consideration of competing inferences in determination of whether scienter is adequately pleaded. The Supreme Court's “prescription” said the inference of scienter must be more than merely “reasonable” or “permissible”; it must seem to a reasonable person to be at least as cogent and compelling as any opposing inference. One lesson of Tellabs and the Seventh Circuit's decision on remand is that the “plausibility” of scienter allegations requires a fact‐specific inquiry. The Ninth Circuit court found that “deliberate recklessness” is sufficient to allege scienter. In one of the subprime cases, In re 2007 Novastar Financial, Inc., a district court found that a deterioration of a company's business was not evidence of wrongdoing. It is difficult – and premature – to draw firm conclusions from cases that have applied Tellabs so far, but requiring courts to consider competing inferences, requiring the pleadings in question to satisfy more “adjectives”, and requiring the “weighing” of inferences at the pleadings stage would all appear to help defendants. However, Tellabs could help plaintiffs by reversing previous practice in which a “tie” between competing inferences automatically resulted in a victory for the defendant.Originality/valueThe paper offers practical guidance by experienced securities lawyers.

Operating company or investment company: what would a reasonable investor think?

PurposeThis paper aims to discuss a recently‐decided Seventh Circuit case in which the Securities and Exchange Commission (SEC) alleged that National Presto Industries, Inc., a seller of household goods and munitions, was unlawfully operating as an investment company. The paper also aims to explain concisely the definition of investment company under the Investment Company Act of 1940 (the 1940 Act).Design/methodology/approachUsing the Seventh Circuit's decision as an introduction, this paper summarizes the definition of investment company under the 1940 Act, highlights a statutory exclusion from the definition and a related SEC interpretation, reviews the judicial opinion and offers commentary on the court's decision.FindingsThe study finds that a typical investment company, such as a mutual fund, is nothing more than a pool of securities and cash. Most operating companies, such as manufacturers or service providers, look nothing like an investment company. Their assets consist of buildings, plants, inventory, computers and more. Yet, it is possible for an operating company to become an investment company. The definition under the 1940 Act provides a rather mechanical test for making this determination. The Seventh Circuit's decision concerned an operating company that the SEC believed satisfied the definition. In disagreeing with the SEC, the court seemed to focus on how a reasonable investor would perceive the company's business.Originality/valueThis paper provides a useful summary of how an operating company inadvertently could become an investment company. It should be valuable to officers and employees, particularly those who are engaged in cash management activities, of both public and private operating companies because it raises awareness of the ease with which an operating company can become an investment company and the availability of options to avoid such an outcome.

From God to Gab: Analyzing the First Amendment Rights of Religious Student Groups in an Age of Free Speech and Political Correctness

This Note analyzes two separate court decisions regarding the rights of religious student groups on public university campuses: Christian Legal Soc'y v. Walker, 453 F.3d 853 (7th Cir. 2006) and Christian Legal Soc'y v. Kane, No. C 04-04484 JSW, 2006 WL 997217 (N.D. Cal. May 19, 2006). This Note argues that the Supreme Court should uphold the Seventh Circuit's decision, finding university derecognition of a student religious group that refuses to welcome as members those with beliefs directly in contrast to the founding principles of the religious organization constitutes viewpoint-based discrimination, in violation of the group's First Amendment rights to freedom of speech and expressive association. Part I will examine the Court's treatment of religious groups operating in government-sponsored forums throughout the 1980s and 1990s. This Part will analyze how these religious group rights cases came to be argued and decided as First Amendment speech cases rather than Establishment Clause and Free Exercise cases. It will also track the development of speech and expressive association claims as they pertain to religious organizations during this time period. Part II will examine the CLS cases through the lens of the Court's most recent freedom of expressive association cases: Boy Scouts v. Dale and Rumsfeld v. FAIR. Both the Seventh Circuit and the California District Court relied upon these cases in coming to their contrary opinions. How do these cases, particularly Rumsfeld, support the holding of each court, and which argument is the Supreme Court most likely to favor? Finally, Part III will look toward the future at the likely outcome of a CLS appeal to the Supreme Court. Does the Supreme Court's recent denial of certiorari for another Ninth Circuit case dealing with antidiscrimination and the expressive association rights of a group indicate reluctance by the newly constituted Court to hear religion and morality cases? Finally, assuming the Supreme Court grants certiorari in the CLS cases, this section will analyze how the newly constituted Court will analyze the issues presented by these cases, ultimately concluding that the briefs and opinions previously written by Chief Justice Roberts and Justice Alito respectively support affirmance of the Seventh Circuit decision.

Seventh Circuit says arbitrators decide on consolidation

AbstractThe American Arbitration Assocation opens two new offices abroad. Also, a Seventh Circuit decision on consolidating arbitration cases points practitioners to dealing with the issue long before arbitrators or courtrooms enter the picture

United states: court of appeals for the seventh circuit decision In alberti v. Empresa nicaraguense de la carne

United states: court of appeals for the seventh circuit decision In alberti v. Empresa nicaraguense de la carne

United States: Court of Appeals for the Seventh Circuit Decision in Eain v. Wilkes (Extradition; Political Offense Exception; Terrorist Acts)

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