Seventh Circuit Review

The U.S. Supreme Court has employed the per se standard for illegality of tying arrangements under antitrust laws for some sixty years. The tying arrangement, once reviled by the House of Representatives as "one of the greatest agencies and instrumentalities of monopoly ever devised by man," is now understood by many to have potentially redeeming, as well as condemning, qualities. As a result, scholars and judges alike have decried the per se standard as ineffective and called for its abandonment. However, the Supreme Court continues to endorse the per se standard when assessing tying arrangements. The Seventh Circuit, like other circuits, has struggled in applying the Supreme Court's per se tying analysis; this is evident in its recent decision, Reifert v. South Central MLS Corp. While all three judges hearing the case agreed on the outcome, Judge Wood contended that the majority misstated the Supreme Court's per se analysis by adding a factor (the economic interest requirement) never recognized by the Court as a requisite for per se illegality of tying arrangements. This Comment examines and critiques the Supreme Court's per se tying standard, and assesses whether the per se test provides room for the additional factor approved by the Seventh Circuit's Reifert majority. [Hide Abstract]

The Seventh Circuit harbors a known distrust for class actions, particularly those adjudicated on the state level. One of the court's concerns involves class action plaintiffs that initially limit the value of their damages in order to avoid less-lenient federal courts, but later attempt to amend their complaint for greater damages after the defendant's opportunity to remove has foreclosed. In response to these and other concerns, Congress passed the Class Action Fairness Act, which greatly reduces plaintiffs' ability to keep class actions on the state level. Nevertheless, the Seventh Circuit continues to unnecessarily federalize class actions. Recently, in Oshana v. Coca-Cola, the Seventh Circuit affirmed the removal of a plaintiff's class action on the basis of diversity, despite the plaintiff expressly disclaiming damages and relief exceeding $75,000. The Seventh Circuit then took unusual measure to affirm the lower court's decision not to certify a class. This Note suggests that the Seventh Circuit should shed its paranoia of class actions, particularly in light of the protections that are already afforded to defendants of class actions. [Hide Abstract]

Judge Easterbrook of the U.S. Court of Appeals for the Seventh Circuit has become an unlikely force in software licensing issues. His application of law and economics has benefited consumers and promulgated software innovation. In upholding clickwrap licensing agreements within the context of copyright law, the floodgates were opened for sister circuits to do the same. Judge Easterbrook later applied this reasoning and further advanced his policies in a case about an "in the box" warranty of a computer purchase. Through this jurisprudence, open source software has flourished and thrived, largely through clickwrap agreements. The benefits to consumers and to society from open source are substantial, as it is a worthy alternative to the traditional commercial software model. Recently, the court recognized these benefits in striking down an antitrust challenge to the open source model. The application of law and economics to software licensing issues has resulted in a positive outcome for consumers: an outcome that promotes innovation in the best sense of the Copyright Act and competition in the best sense of antitrust laws. [Hide Abstract]

In 2004, the Supreme Court of the United States changed the legal landscape when it decided United States v. Crawford. The Court declared that a prior testimonial statement made by a declarant who does not testify at trial may only be admitted against a criminal defendant if both the declarant is unavailable to testify and the defendant had a prior opportunity to cross-examine him or her. Over time, courts have made clear that if a statement is testimonial in nature it is subject to the constraints of the Sixth Amendment's Confrontation Clause. However, despite these holdings, courts and scholars have grappled with the meaning of "testimonial" and with the way to apply the haphazard definition to courtroom situations. Most troubling is the handling of statements that normally would fall under an accepted hearsay exception (usually deemed nontestimonial), but in fact were prepared in anticipation of litigation (usually considered testimonial). Is such a hybrid statement afforded the protections of the Confrontation Clause? The Seventh Circuit, in United States v. Ellis, has said no. However, other courts have said yes. Even after three years and countless decisions, the meaning of testimonial still causes legal headaches. This Note will attempt to bring coherence to the intersection between the Confrontation Clause and the business-records exception and propose a new rule: If a document is prepared in anticipation of litigation, then it should be considered testimonial, and thus afforded the protection of the Confrontation Clause. [Hide Abstract]

In United States v. Haddad, a case of first impression for the Seventh Circuit, the court held that commingling of funds cannot serve to circumvent the transaction value limits imposed by 18 U.S.C. § 1957, one of the two primary federal money laundering statutes. The key component of any § 1957 violation is that the monetary transaction upon which the charge is based must be in an amount greater than $10,000 of illegally obtained funds. In cases where the accused money launderer has combined "clean" money with "dirty" money, it becomes difficult to determine whether the transaction in question actually has a value of over $10,000 in illegally generated funds. Taking note of a circuit split which had developed regarding commingled funds in § 1957 cases, the Seventh Circuit sided with the Fourth and Fifth Circuits, holding that commingling will not defeat prosecution, and rejected the holding of the Ninth Circuit. This Comment examines the Seventh Circuit's decision, and its use of the Fourth, Fifth and Ninth Circuit cases; and then argues for a more nuanced approach to the issue of commingled funds in 18 U.S.C. § 1957 prosecutions in order to clarify and refine the law. [Hide Abstract]

In 2005, Indiana passed a law requiring voters to present a government-issued photo ID to vote. To most, this seems like a minor burden. Yet, for many poor Indiana residents who cannot afford the expense of obtaining an ID, voting is now a near impossibility. This Comment will demonstrate that the Seventh Circuit incorrectly upheld the Indiana photo ID requirement, eroding voting rights. By affirming the Indiana photo ID requirement, the Seventh Circuit has encouraged state legislatures to enact subtle discriminatory measures to exclude those who vote against them from the political process. [Hide Abstract]

The U.S. Supreme Court recently held in Garcetti v. Ceballos that government employees are not protected by the First Amendment for statements made pursuant to their employment duties. The Seventh Circuit applied that holding in Mills v. City of Evansville and suggested that a government employee enjoys no protection for any speech relating to that employee's job responsibilities. This Comment argues that the three-judge panel in Mills erred by failing to consider the analytical guidelines articulated by the Supreme Court and created a rule that is contrary to Supreme Court precedent. [Hide Abstract]

What happens when a United States citizen parent takes her child from a foreign country, where they have been living, to the United States in order to escape domestic violence? Traditionally, under the Hague Convention, American courts would implement the "remedy of return," thereby returning the child to the foreign country, where the abuser resides. While the Hague Convention provides a defense to this remedy if there is a "grave risk of harm" to the child, some circuit courts have declined to extend this defense to cases of domestic violence or have nevertheless implemented the remedy of return. The Seventh Circuit, however, has set an example for other circuits by expanding the scope of the "grave risk of harm" defense under the Hague Convention to include cases of domestic violence, declining to return children to the country where the abuser resides. This Comment will provide background on the Hague Convention and an overview on American jurisprudence concerning application of the Convention in cases of domestic violence. It will then conclude that the Seventh Circuit, in Van de Sande v. Van de Sande, properly expanded the scope of the grave risk of harm defense in cases of domestic violence. [Hide Abstract]

The U.S. Supreme Court holds that obscenity warrants no First Amendment protection whereas violent speech garners complete constitutional protection. In Entertainment Software Association v. Blagojevich, et al., the Seventh Circuit struck down two statutes regulating the sale of sexually explicit and violent video games to minors for violating the First Amendment. While the Seventh Circuit correctly applied Supreme Court precedent, it strained to find any logic to support holding the two categories of speech to different levels of protection. Accordingly, this Note will argue that the Supreme Court should grant full First Amendment protection to obscenity. It will also argue that the compelling interest of protecting the well-being of minors requires the Court to hold sexually explicit and violent expression to the same standard. [Hide Abstract]

During a curriculum-specified class discussion of the war in Iraq, a sixth grader asked her teacher, Ms. Mayer, if she would ever march to protest the war. The school dismissed the teacher for answering the student. In Mayer v. Monroe County Community School Corp., the Seventh Circuit ruled that no teacher has the First Amendment right to express an opinion in the classroom. The case inappropriately applied the U.S. Supreme Court's recent Garcetti v. Ceballos decision in a way that overruled previous precedent. This Note will argue that the Seventh Circuit should have followed its earlier decisions by asking the school to show a legitimate pedagogical reason for its decision. [Hide Abstract]

In a case of first impression, the Seventh Circuit incorrectly held that a settlement agreement for patent infringement may never be considered a license. In Waterloo Furniture Components Ltd. v. Haworth, Inc., the court mischaracterizes the nature of license agreements and their relationship to the rights of patent holders. It does so by drawing a potential false dichotomy between settlements and licensing agreements. In this holding, the court misunderstands the purpose of a license agreement, its legal effects, and its dual prospective and retrospective qualities as recognized by the Federal Circuit and other appellate courts. [Hide Abstract]

How much is common sense worth? What you paid is what it's worth, except when it comes to debt-equity swaps in the Seventh Circuit. How much something is worth is very important to taxpayers because it plays a role in determining taxpayers' tax bills. Most people would think that when two people exchange property, both properties must be equal in value. Otherwise, why would the two people have made the trade? Recently, the Seventh Circuit Court of Appeals, in Kohler Company v. United States, advocated for a different approach. The Kohler case involved the taxation of a debt-equity swap: $19 million of pesos, which could only be spent in Mexico on an extremely limited basis, were traded for the retirement of an $11 million debt. How much were the restricted pesos worth? You could ignore the price you paid for the pesos and instead hire an expert to value your pesos, and then spend several years litigating the matter after the IRS disagrees with your expert's opinion. That is exactly what the Seventh Circuit suggested! The court mistakenly found that the Supreme Court's holding in United States v. Davis, that held when property lacks a readily ascertainable value, the value assigned to it should be how much was paid for it, was inapplicable to Kohler. Instead, the court argued, in dicta, that fair market value should be determined through the use of experts. This Note discusses how the gain resulting from a debt-equity swap should be valued for tax purposes and concludes that the Seventh Circuit should have followed the Davis rule. [Hide Abstract]