Weekly Case Digests October 18, 2021 - October 22, 2021.

Byline: Derek Hawkins

7th Circuit Digests

7th Circuit Court of Appeals

Case Name: Ronald Schmucker, et al., v. Johnson Controls, Inc., et al.,

Case No.: 20-3432

Officials: Easterbrook, Rovner, and Hamilton, Circuit Judges.

Focus: Statutory Interpretation RCRA Imminent or Substantial Hazards

Between 1937 and 2006 Johnson Controls and a predecessor operated a manufacturing plant in Goshen, Indiana. The plant used chlorinated volatile organic compounds in its degreasing agents, some of which reached the groundwater. Chlorinated organics slowly break down by losing chlorine atoms. The version with three chlorine atoms, known as trichloroethylene or TCE, is a carcinogen. The end product with no chlorine atoms, ethene, is harmless. The breakdown process can take decades, and a plume of TCE remains in water under part of Goshen. Plaintiffs contend in this suit under 42 U.S.C. 6972(a), part of the Resource Conservation and Recovery Act (RCRA or the ACT) that Johnson Controls and Tocon Holdings (which bought the land in 2007) must do more to reduce the amount of TCE in the environment. For simplicity we refer to both defendants as Johnson Controls.

The district judge wrote much, much more, and the opinion shows compellingly why homeowners' risk from TCE in Goshen is neither imminent nor substantial. Plaintiffs lost this case on the facts, not on the law. If vapor mitigation systems begin to fail, or the contaminated water migrates toward the aquifer, or conditions otherwise change for the worse, plaintiffs will be free to renew their litigation. A conclusion that hazards are not "imminent and substantial" today does not mean that they will be slight forever. But the district judge did not err in concluding on this records that the risks are too slight to compel more action than Johnson Controls is already undertaking with Indiana's supervision.

Affirmed

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7th Circuit Court of Appeals

Case Name: Stanley Boim, et al., v. American Muslims for Palestine, et al.,

Case No.: 20-3233

Officials: KANNE, SCUDDER, and KIRSCH, Circuit Judges.

Focus: Anti-Terrorism Act Subject-matter Jurisdiction

In 1996 David Boim was shot and killed by Hamas terrorists while studying abroad in Israel. His parents later sued several American nonprofit organizations for their role in funding Hamas and secured a $156 million judgment under the federal Anti-Terrorism Act. Those organizations then shuttered, leaving Stanley and Joyce Boim mostly empty handed. So in 2017 they filed a new lawsuit against two different American entities and three individuals, alleging that these new defendants are alter egos of the now defunct nonprofit organizations and therefore liable for the remainder of the $156 million judgment.

In the new lawsuit, the district court allowed limited jurisdictional discovery, decided the new entities and individuals were not alter egos of the defunct nonprofits, and then dismissed the action for lack of subject matter jurisdiction. This should not have happened, for the district court's finding on the alter ego question constituted a merits determination that went beyond a proper jurisdictional inquiry. Because the Boims' new lawsuit arises under the Anti-Terrorism Act, the district court possessed federal jurisdiction and should have allowed the case to proceed on the merits, consistent with the ordinary course of civil litigation. We therefore reverse and remand for renewed proceedings.

Reversed and remanded

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7th Circuit Court of Appeals

Case Name: Brian Hope, et al., v. Commissioner of Indiana Department of Correction, et al.,

Case No.: 19-2523

Officials: ST. EVE, Circuit Judge.

Focus: Equal Protection Claim Sex Offender Registration Act

Indiana's Sex Offender Registration Act ("SORA") imposes registration requirements and restrictions on sex offenders who reside, work, or study in the State. Ind. Code 11-8-8-1 et seq. By virtue of the State supreme court's construction of the Indiana Constitution, Indiana's Ex Post Facto Clause prohibits retroactive application of SORA to offenders convicted before its enactment unless the marginal effects of doing so would not be punitive. Wallace v. State, 905 N.E.2d 371 (Ind. 2009); Jensen v. State, 905 N.E.2d 384 (Ind. 2009). If an offender was under no registration requirement prior to SORA's passage, imposing a registration requirement in the first instance is impermissibly punitive. Wallace, 905 N.E.2d at 371. The Indiana Supreme Court has held, however, that if another state previously subjected a preSORA offender to a registration requirement, requiring him to register in Indiana is not punitive. See, e.g., Tyson v. State, 51 N.E.3d 88 (Ind. 2016). Indiana caselaw thus has the peculiar effect of permitting the State to treat similarly situated offenders differently based solely on whether an offender had an out-of-state registration obligation. That feature underlies the present appeal.

The plaintiffs, six sex offenders residing in Indiana, were convicted prior to SORA's passage. Each of them had to register in another state. After moving to Indiana, the State required them to register under SORA. Absent their out-of-state registration obligations, Indiana's Constitution would prohibit SORA's application to them. Plaintiffs challenge the constitutionality of SORA on three fronts, arguing that it violates their right to travel under the Privileges or Immunities Clause, their right to equal protection under the Fourteenth Amendment, and Article I's prohibition on ex post facto laws. The district court granted summary judgment for the plaintiffs on all claims, and Indiana appealed. A divided panel of this Court affirmed the district court, but we subsequently agreed to hear the case en banc.

We now reverse. SORA does not violate the right to travel because it does not expressly discriminate based on residency, as consistently required by the Supreme Court. Plaintiffs' ex post facto claim is likewise precluded by precedent. Applying Smith v. Doe, 538 U.S. 84 (2003), we hold that SORA is not "so punitive either in purpose or effect" as to surmount Indiana's nonpunitive intent for the law. But because the district court did not address whether SORA passes rational basis scrutiny under an equal protection analysis, we remand for consideration of the equal protection claim.

Reversed and remanded

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7th Circuit Court of Appeals

Case Name: Frances L. Rogers v. Commissioner of Internal Revenue

Case No.: 20-2789; 20-2790; 20-2791; 20-2869; 20-2870; 20-2871;20-2872; 20-2873

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

Focus: Tax Code Spousal Relief

Married since 1967, John and Frances Rogers filed joint federal income tax returns for many years. They underreported their tax obligations many times over, and the misreporting was the product of a fraudulent tax scheme designed by John, a Harvard-trained tax attorney. The fraud did not elude the Internal Revenue Service, though, and the many subsequent collection and enforcement proceedings in the U.S. Tax Court have not gone well for the Rogerses. Our court has affirmed the Tax Court's rulings every time.

Before us now is another appeal by Frances challenging two Tax Court decisions denying her requests for what the Tax Code calls innocent spouse relief. Our review of the record shows that the Tax Court took considerable care assessing Frances's pleas for relief, in the end denying them largely on the basis that she was aware of too many facts and too many warning signs during the relevant tax years to escape financial responsibility for the clear fraud perpetrated on the U.S. Treasury. While the tragedy of what Frances has endured over the years is in no way lost on us, we are left to affirm, for the Tax Court got it right.

Affirmed

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7th Circuit Court of Appeals

Case Name: Robert Bless v. Cook County Sheriff's Office et al.,

Case No.: 20-2733

Officials: EASTERBROOK, RIPPLE, and KANNE...