Weekly Case Digests March 23, 2020 March 27, 2020.

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7th Circuit Digests

7th Circuit Court of Appeals

Case Name: United States of America v. Roberto Guzman-Ramirez

Case No.: 19-1960

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

Focus: Sentencing Guidelines

After Roberto Guzman-Ramirez pled guilty to conspiracy to distribute cocaine, he was sentenced to 72 months' imprisonment. On appeal, he contends that the district court should have applied a minor-role adjustment under the Sentencing Guidelines. He also argues thatcompared to his coconspirator's sentencehis sentence is unreasonable. But the district court did not clearly err in its findings on Guzman-Ramirez's role in the offense. And because the court was not required to consider a coconspirator's sentence that had not yet been imposed, it did not abuse its discretion by imposing a sentence longer than the coconspirator's. Accordingly, we affirm.

Affirmed

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7th Circuit Court of Appeals

Case Name: Charles Curry dba Get Diesel Nutrition v. Revolution Laboratories, LLC, et al.

Case No.: 17-2900

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

Focus: Trademark Infringement Personal Jurisdiction

Charles Curry brought this action pro se in the district court, alleging that Revolution Laboratories, LLC ("Revolution"), Rev Labs Management, Inc. ("Management"), and Joshua and Barry Nussbaum (collectively the "defendants") had infringed and diluted his trademark, violated the Illinois Consumer Fraud and Deceptive Practices Act, violated the Illinois Uniform Deceptive Trade Practices Act, engaged in false advertising and cybersquatting, and filed a fraudulent trademark application.

Revolution is a limited liability company that is in the business of selling sports nutritional supplements and apparel. Management is a corporation that was formed for the sole purpose of being the manager of Revolution. According to Mr. Curry, Joshua and Barry Nussbaum co-founded Revolution and Management. Joshua Nussbaum is the President of Management and Revolution; Barry Nussbaum is the Director of Management and the Chief Executive Officer of Revolution.

The defendants moved to dismiss Mr. Curry's suit for lack of personal jurisdiction. The district court dismissed the action, holding that it lacked personal jurisdiction. Mr. Curry timely appealed that decision to this court. We respectfully disagree with the district court's ruling and hold that the district court did have personal jurisdiction over Revolution. Accordingly, we reverse the judgment of the district court and remand the case for further proceedings consistent with this opinion.

Reversed and remanded

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7th Circuit Court of Appeals

Case Name: United States of America v. Roy Collins

Case No.: 19-1176

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

Focus: Sentencing Guidelines

From 2011 through 2016, Roy Collins was the executive director of the Kankakee Valley Park District ("the Park District"), which is a municipal entity that serves residents of Aroma Park and Kankakee Townships, Illinois. The Park District, which is not tax-exempt, works with the Kankakee Valley Park Foundation ("the Foundation"), which does have tax-exempt status and raises funds for Park District programs. Collins served as treasurer for the Foundation. He proved to be a bad choice for both posts: eventually it came to light that he had been lining his own pockets with the Park District and Foundation's money. Federal prosecution for mail and wire fraud in violation of 18 U.S.C. 1341 and 1343 followed. Collins pleaded guilty to both counts and was sentenced to concurrent terms of 42 months' imprisonment, two-year terms of supervised release, and overall restitution of $194,383.51. On appeal he has raised several challenges to that sentence, but we are satisfied that there is no reversible error and thus affirm the district court's judgment.

Affirmed

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7th Circuit Court of Appeals

Case Name: Whirlpool Corporation v. Wells Fargo Bank, National Association, et al.

Case No.: 18-3363

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

Focus: Bankruptcy Reclamation Claim

This is an appeal from an adversary proceeding in a Chapter 11 bankruptcy and concerns a trade creditor's right to reclaim goods it sold to the debtor on the eve of bankruptcy. The question is whether the seller's reclamation claim is superior to the claims of secured lendersmore specifically, the lenders that extended debtor-inpossession financing in exchange for a priming, first-priority floating lien on existing and after-acquired inventory. The debtor is appliance retailer hhgregg, Inc. Whirlpool Corporation, a longtime supplier, delivered appliances to hhgregg during the period just before the bankruptcy filing. Wells Fargo Bank, as administrative agent for several lenders, extended operating financing to hhgregg in the years leading up to the bankruptcy. Under the prepetition credit agreement, Wells Fargo's advances were secured by a first priority floating lien on nearly all of hhgregg's assets, including existing and after-acquired inventory and its proceeds.

In the first 24 hours of the Chapter 11 proceeding, hhgregg sought the court's approval for $80 million in debtor-in-possession ("DIP") financing, with Wells Fargo now acting as administrative agent for a group of postpetition lenders. The DIP financing agreement authorized a "creeping roll-up" of the secured lenders' prepetition debt and gave Wells Fargo a priming, first-priority floating lien on substantially all of hhgregg's assets, including existing and after-acquired inventory and its proceeds. The bankruptcy judge approved the DIP financing that same day. Three days later Whirlpool sent a reclamation demand to hhgregg seeking the return of appliances it had delivered in the 45-day period before the bankruptcy petition. Whirlpool later filed an adversary action against Wells Fargo seeking a declaration that its reclamation claim is first in priority as to the reclaimed goods. Wells Fargo moved to dismiss. The bankruptcy judge treated the motion as one for summary judgment and entered final judgment for Wells Fargo. The district court affirmed.

We likewise affirm. Reclamation is a limited in rem remedy that permits a seller to recover possession of goods delivered to an insolvent purchasersubject, however, to significant temporal, procedural, and substantive restrictions. It is not the same as a purchase money security interest. The remedy appears in Article 2 of the Uniform Commercial Codenot Article 9and is codified in the relevant state's version of U.C.C. 2-702. Within bankruptcy a reclamation claim is governed by 11 U.S.C. 546(c).

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA" or "the 2005 amendments") made important changes to 546(c). Before BAPCPA most bankruptcy courts applied a "prior lien defense" drawn from the U.C.C.'s substantive limitations on the reclamation remedy, subordinating the seller's reclamation claim to a secured lender's floating lien on the debtor's inventory. The 2005 amendments adopted that norm as a federal priority rule: under BAPCPA a seller's right to reclaim goods is "subject to the prior rights of a holder of a security interest in such goods or the proceeds thereof." 546(c).

Wells Fargo, as agent for the postpetition lenders, holds a priming, first-priority lien on hhgregg's existing and after acquired inventory and its proceeds under the DIP financing agreement, approved by the court in the first 24 hours of the Chapter 11 proceeding. By operation of 546(c), Whirlpool's later-in-time reclamation demand is "subject to" Wells Fargo's prior rights as a secured creditor, so its reclamation claim is subordinate to the DIP financing lien.

Affirmed

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7th Circuit Court of Appeals

Case Name: United States of America v. Randy Williams

Case No.: 18-3318

Officials: ROVNER, BRENNAN, and ST. EVE, Circuit Judges.

Focus: Due Process Violation

On July 28, 2016, two men entered a Sprint store with a gun, threatened and zip-tied all witnesses, grabbed some merchandise, and fled the store in two vehicles. Randy Williams was one of the getaway drivers. He was caught and indicted for obstruction of commerce by robbery under 18 U.S.C. 1951.

Williams pleaded not guilty. Judge Colin S. Bruce presided over his jury trial, and, on June 14, 2018, the jury found Williams guilty. A few months later, it became public that Judge Bruce had engaged in ex parte communications with members of the United States Attorney's Office for the Central District of Illinois (the "Office"). As a result, all criminal cases assigned to Judge Bruce were reassigned to other judges. Williams's case was reassigned to now Chief Judge Darrow who presided over his sentencing hearing and sentenced him to 180 months' imprisonment.

Williams now appeals his conviction and sentence. He argues that Judge Bruce's ex parte communications with the Office violated his due process rights and the federal recusal statute, warranting a new trial. We conclude that Judge Bruce did not violate Williams's due process rights on the facts before us. And although Judge Bruce's conduct created an appearance of impropriety violating the federal recusal statute, there is no evidence of actual bias in this case to justify a new trial.

As to his sentence, Williams contends that he is entitled to a new sentencing hearing because Chief Judge Darrow improperly found that he was a career offender and was subject to a firearm enhancement. Williams does not qualify as a career offender, but the district court's finding otherwise was not plain error. Chief Judge Darrow thoroughly considered the 3553(a) factors, made clear that she would impose the same sentence even if the career offender provision did not apply, and explained her...

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