Weekly Case Digests January 6, 2019 January 10, 2020.

Byline: WISCONSIN LAW JOURNAL STAFF

7th Circuit Digests

7th Circuit Court of Appeals

Case Name: Fabick, Inc., v. JFTCO, Inc.,

Case No.: 19-1760; 19-1872

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

Focus: Jury Instructions

Two non-competing Midwestern companies operated by brothers used marks containing the family name, Fabick. The owner of the registered mark (or "senior user") (Fabick, Inc., or "FI"), a small manufacturer of sealants, sued the "junior user" (JFTCO, Inc.), a larger distributor of Caterpillar equipment, for trademark infringement. In a mixed verdict, a jury found that JFTCO had violated the Lanham Act but had not committed common law infringement. FI sought an order permanently enjoining JFTCO from using the name "Fabick," but the district court entered limited injunctive relief requiring that JFTCO issue, for five years, disclaimers clarifying that it is not associated with FI.

Both parties appealed. FI complains that the district court erred in setting remedies: it should have entered a broad permanent injunction against JFTCO, and further should have allowed FI to recover JFTCO's profits. JFTCO, in its counter-appeal, seeks reversal of the jury's finding that it violated the Lanham Act based on an allegedly erroneous jury instruction and the district court's refusal to overturn the jury's verdict as a matter of law. We now affirm on each issue.

Affirmed

Full Text

[divider]

7th Circuit Court of Appeals

Case Name: Clarisha Benson, et al. v. Fannie May Confections Brands, Inc.,

Case No.: 19-1032

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

Focus: FDCA Violation

Proving that almost anything can give rise to litigation, this case concerns chocolates that Clarisha Benson and Lorenzo Smith purchased at their local Fannie May stores in Chicago. Upon opening their boxes of candy, Benson and Smith were dismayed to find that the boxes were not brimming with goodies. Far from it: the boxes appeared to be only about half full. Believing that they had been duped, they sued Fannie May on behalf of themselves and a putative class, alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILCS 505/1 505/12, and asserting claims for unjust enrichment and breach of implied contract. The plaintiffs contend that Fannie May's boxes of chocolate contain needless empty space, and that this practice misleads consumers. After allowing Benson and Smith to amend their complaint, the district court granted Fannie May's motion under Federal Rule of Civil Procedure 12(b)(6) to dismiss the complaint with prejudice. The court found that the plaintiffs had not adequately pleaded a violation of the Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. 301399, and that the FDCA preempted their state-law claims. We affirm the judgment, though on other grounds.

Affirmed

Full Text

[divider]

7th Circuit Court of Appeals

Case Name: CSI Wordlwide, LLC, v. Trumpf Inc.,

Case No.: 19-2189

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

Focus: Bankruptcy Judicial Estoppel

TRUMPF Inc., the U.S. subsidiary of an international business, makes specialty tools such as precision laser cutters. Trade shows are among its selling venues, and it hired Lynch Exhibits to handle its appearance at 2017 FABTECH show in Chicago. Lynch subcontracted with CSI Worldwide to provide some of the necessary services.

CSI contends that it told TRUMPF that it was unsure of Lynch's reliability and would do the work only if TRUMPF paid it directly or guaranteed Lynch's payment. According to CSI, TRUMPF assented though it did not sign any undertaking to that effect. CSI did the work and billed Lynch, which did not pay. CSI filed an involuntary bankruptcy petition against Lynch, which soon filed a voluntary bankruptcy petition. CSI claimed approximately $530,000 as a creditor. It also filed this suit against TRUMPF under the diversity jurisdiction, seeking $530,000 on theories including unjust enrichment and promissory estoppel. The district court dismissed the suit on the pleadings, ruling that, by making a claim in Lynch's bankruptcy, CSI necessarily represented that Lynch is the sole debtor. The district court called its approach judicial estoppel.

This is not a novel problem, and the Bankruptcy Code itself provides the answer. Filing a claim in bankruptcy does not foreclose claims against non-bankrupt obligors. Even a discharge in bankruptcy does not do that. 11 U.S.C. 524(e). Many decisions recognize that a claim in bankruptcy does not block recovery from third parties such as guarantors or jointly responsible persons. See, e.g.., In re Shondel, 950 F.2d 1301, 1306 (7th Cir. 1991). See also Union Carbide Corp. v. Newboles, 686 F.2d 593, 595 (7th Cir. 1982) (same outcome under 16 of the Bankruptcy Act of 1898, which preceded the Bankruptcy Code of 1978).

CSI may or may not have a good claim on the merits and TRUMPF may or may not have a defense that it has paid what it owes. These matters must be resolved on remand.

Reversed and remanded

Full Text

[divider]

7th Circuit Court of Appeals

Case Name: Sauk Prairie Conservation Alliance v. United States Department of the Interior, et al.

Case No.: 18-2213

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

Focus: Property Act and NEPA Violations

The National Park Service donated more than 3,000 acres in central Wisconsin to the state's Department of Natural Resources. The goal was to turn the site of a Cold War munitions plant into a state park designed for a variety of recreational uses. That land now makes up the Sauk Prairie Recreation Area ("Sauk Prairie Park"). The Sauk Prairie Conservation Alliance ("the Alliance"), an environmentalist group, sued to halt three activities now permitted at the park: dog training for hunting, off-road motorcycle riding, and helicopter drills conducted by the Wisconsin National Guard. The defendants include the Department of the Interior, the National Park Service, and several federal officers. The State of Wisconsin intervened.

The Alliance invokes two federal statutes. The first is the Property and Administrative Services Act ("the Property Act"), which, among other things, controls the terms of deeds issued through the Federal Land to Parks Program, 40 U.S.C. 550, the program that led to the creation of Sauk Prairie Park. The statute requires the federal government to enforce the terms of any deed it issues. And here, the relevant deeds provide that Wisconsin must use Sauk Prairie Park for its originally intended purposes. The Alliance argues that dog training and motorcycle riding are inconsistent with the park's original purposes because neither was mentioned in Wisconsin's initial application. So, the argument goes, the statute requires the National Park Service to enforce the deeds by taking action to end those uses. The Property Act also requires, with some important qualifications, that any land conveyed through the program must be conveyed for recreational purposes. The Alliance argues that this provision precludes military helicopter training.

The second statute at issue is the National Environmental Policy Act ("NEPA"), 42 U.S.C. 4321 et seq. The Alliance claims that the federal defendants violated NEPA by failing to prepare an environmental-impact statement prior to approving these three uses. The district court entered summary judgment for the defendants on all claims, and we affirm. To start, the National Park Service's approval of these three uses did not violate the Property Act. Dog training and off-road motorcycle riding were not explicitly mentioned in the State's initial application, but both are recreational uses and therefore consistent with the original purposes of Sauk Prairie Park. And while military helicopter training is obviously not recreational, the National Park Service included a provision in the final deed explicitly reserving the right to continue the flights, and the Property Act authorizes reservations of this kind.

As for the NEPA claim, the Alliance failed to show that the National Park Service acted in an arbitrary and capricious manner. The agency reasonably concluded that its approval of both dog training and off-road motorcycle riding fell within a categorical exclusion to NEPA's requirementsan exclusion for minor amendments to an existing plan. Helicopter training, on the other hand, likely doesn't fall within that category. Still, the National Park Service was not required to prepare an environmental-impact statement for this use because the agency had no authority to discontinue the flights. Because the Park Service had no discretion, it was not required to prepare an environmental-impact statement.

Affirmed

Full Text

[divider]

7th Circuit Court of Appeals

Case Name: George Burciaga v. Alex Moglia

Case No.: 19-2246

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

Focus: Bankruptcy Exemptions

George Burciaga lost his job in May 2018 and filed for bankruptcy a week later. On the date the bankruptcy proceeding began, Burciaga's former employer owed him approximately $24,000 for unused vacation time. Illinois, where Burciaga lives, treats vacation pay as a form of...