Weekly Case Digests February 18, 2019 February 22, 2019.

Byline: Rick Benedict

7th Circuit Digests

7th Circuit Court of Appeals

Case Name: Keep Chicago Livable, et al. v. City of Chicago

Case No.: 17-1656; 17-2846

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

Focus: Ordinance Interpretation Jurisdiction

An organization known as Keep Chicago Livable and six individuals challenge the constitutionality of Chicago's Shared Housing Ordinance. The City passed the Ordinance in 2016 to regulate home-sharing activities, including services offered by companies like Airbnb. The district court denied a request for a preliminary injunction on certain claims and later dismissed without prejudice the remaining claims from an amended complaint. These two appeals then followed. We now vacate the district court's decisions, as we cannot say with any confidence that any named plaintiffKeep Chicago Livable or any of the six individualshas pleaded or otherwise established sufficient injury to confer the subject matter jurisdiction necessary to proceed to the merits of any claim.

We have before us an organization and individuals with strongly-held views about the constitutionality of the City's Ordinance, but Article III of the Constitution requires more: our authority is limited to deciding cases or controversies between adverse litigants, and without a clear indication that at least one named plaintiff has an actual or imminent injury, we have no authority to go further. So we remand to the district court to make a determination of standing and to proceed if and as appropriate from there.

Vacated and Remanded

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7th Circuit Court of Appeals

Case Name: Daniel Rivera, et al. Allstate Insurance Company

Case No.: 17-1310; 17-1649

Officials: KANNE and SYKES, Circuit Judges, and DARROW, District Judge.

Focus: FCRA Claim Subject-matter Jurisdiction

In 2009 Allstate Insurance Company launched an internal investigation into suspicious trading on its equity desk. The initial inquiry unearthed email evidence suggesting that several portfolio managers might be timing trades to inflate their bonuses at the expense of their portfolios, which included two pension funds to which Allstate owed fiduciary duties. Allstate retained attorneys from Steptoe & Johnson to investigate further, and they in turn hired an economic consulting firm to calculate potential losses. Based on the email evidence, the consulting firm found reason to believe that timed trading had potentially cost the portfolios $8 million and possibly much more. Because actual losses could not be established, the consultants used an algorithm to estimate a potential adverse impact of $91 million on the pension funds. Everyone understood that this estimate was wildly unrealistic, but in an abundance of caution, Allstate poured $91 million into the pension portfolios.

When the investigation wrapped up, Steptoe lawyers delivered oral findings to Allstate. The company thereafter determined that four portfolio managersDaniel Rivera, Stephen Kensinger, Deborah Meacock, and Rebecca Scheunemanhad violated the company's conflict-of-interest policy by timing trades to improve their bonuses. On December 3, 2009, Allstate fired them for cause. The four former employees sued Allstate in federal court for defamation based on the 10-K and the internal memo. They also alleged that Allstate violated 15 U.S.C. 1681a(y)(2), a provision in the Fair Credit Reporting Act ("FCRA or the Act"), by failing to give them a summary of Steptoe's findings after they were fired. The defamation claim was the main event in the litigation; the FCRA claim received comparatively little attention. A jury returned a verdict in the plaintiffs' favor, awarding more than $27 million in compensatory and punitive damages, and statutory damages on the FCRA claim (there are no actual damages on that claim). The district judge tacked on additional punitive damages and attorney's fees under the FCRA.

Allstate attacks the defamation awards on multiple grounds and also argues that the FCRA awards must be vacated for lack of standing under Spokeo, Inc. v. Robbins, 136 S. Ct. 1540 (2016). We agree that the plaintiffs lack a concrete injury to support Article III standing on the FCRA claim. So that claim must be dismissed on jurisdictional grounds. And that ends our review. Because the FCRA claim provided the sole basis for federal jurisdictionand thus the only basis for the district court to exercise supplemental jurisdiction over the state-law claim under 28 U.S.C. 1367(a)the district court was without power to adjudicate the defamation claim, and it too must be dismissed for lack of jurisdiction. The parties did not identify the 1367(a) jurisdictional problem in their initial briefing, but that does not matter; defects in subject-matter jurisdiction must always be addressed. Accordingly, we vacate the judgment and remand with instructions to dismiss the action in its entirety for lack of subject-matter jurisdiction. See FED. R. CIV. P. 12(h)(3).

Vacated and Remanded

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7th Circuit Court of Appeals

Case Name: William Rainsberger v. Charles Benner

Case No.: 17-2521

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

Focus: Qualified Immunity

William Rainsberger was charged with murdering his elderly mother. But the detective who built the case against him, Charles Benner, may have been dis- honest. According to Rainsberger, Benner submitted a probable cause affidavit that was riddled with lies and undercut by the omission of exculpatory evidence. Based on that affidavit, Rainsberger was arrested, charged, and imprisoned for two months. When the prosecutor dismissed the case because of evidentiary problems, Rainsberger sued Benner under 42 U.S.C. 1983 for violating his Fourth Amendment rights. Benner moved for summary judgment, arguing that he was entitled to qualified immunity. The district court denied his motion, and he now asks us to reverse the district court.

We decline to do so. Benner concedes for purposes of this appeal that he knowingly or recklessly made false statements in the probable cause affidavit. He emphasizes, however, that knowingly or recklessly misleading the magistrate in a probable cause affidavitwhether by omissions or outright lies only violates the Fourth Amendment if the omissions and lies were material to probable cause. He claims that his weren't, but we disagree. Materiality depends on whether the affidavit demonstrates probable cause when the lies are taken out and the exculpatory evidence is added in. And when that is done here, Benner's affidavit fails to establish probable cause to believe that Rainsberger murdered his mother. Because it is clearly established that it violates the Fourth Amendment "to use deliberately falsified allegations to demonstrate probable cause," Franks v. Delaware, 438 U.S. 154, 168 (1978), Benner is not entitled to qualified immunity.

Affirmed

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7th Circuit Court of Appeals

Case Name: Mark Mittelstadt v. Sonny Perdue

Case No.: 17-2447

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

Focus: APA Violation and Breach of Contract

Mark Mittelstadt owned a tract of land in Richland County, Wisconsin, that was enrolled in the Conservation Reserve Program ("CRP"), administered by the United States Department of Agriculture ("USDA"), from 1987 to 2006. Participants in the CRP agree to remove environmentally sensitive land from agricultural production in return for annual rental payments from the USDA. In 2006, the agency denied Mr. Mittelstadt's application to reenroll his land in the CRP. After exhausting his administrative appeals, he brought this action against the Secretary of the USDA ("the Secretary"). He asserted one claim under Section 702 of the Administrative Procedure Act ("APA"), 5 U.S.C. 701 et seq., challenging the Secretary's final decision denying reenrollment, and one common law claim for breach of contract. Mr. Mittelstadt moved for summary judgment in the district court, seeking an order directing reenrollment of his land in the CRP and awarding monetary relief for the alleged breach of contract. The district court denied his motion for summary judgment, affirmed the Secretary's rulings, and entered judgment in favor of the Secretary on Mr. Mittelstadt's APA and breach of contract claims. Mr. Mittelstadt now appeals the district court's decision.

Under the regulations governing the CRP, the USDA has broad discretion to evaluate offers of enrollment in the program on a competitive basis by considering the environmental benefits of a producer's land relative to its costs. Given the agency's wide latitude, we conclude that the Farm Services Agency ("FSA") did not abuse its discretion when it denied reenrollment of Mr. Mittelstadt's land. Moreover, because he never entered a new contract with the agency, there was no breach of contract. We therefore affirm the judgment of the district court.

Affirmed

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7th Circuit Court of Appeals

Case Name: EOR Energy LLC, et al. v. Illinois Environmental Protection Agency, et al.

Case No.: 17-3107

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

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