In this month’s podcast, Kian and Mark address two cases dealing with two completely different but equally complex areas of federal law: securities litigation and Medicaid.

In Alcarez v. Akorn, the Court examined the avenues of federal review of so-called “mootness fees” in securities litigation. These fees arise when securities plaintiffs sue over lack of disclosures but the case is rendered moot when the company later provides the disclosure. Mootness fees then sometimes become part of the settlement of the now moot litigation. Alcarez provides a roadmap for how shareholders may intervene and oppose the payment of these fees.

The second case – Saint Anthony Hospital v. Whitehorn – came back to the Seventh Circuit on remand from the Supreme Court. The opinion addressed whether a hospital could invoke Section 1983 against state regulators to compel them to enforce timely payment by managed care organizations. It provides an in-depth examination of when plaintiffs may bring Section 1983 claims to enforce federal statutes enacted under the Spending Clause.

Mark and Kian return to discuss two of the Seventh Circuit's March 2024 opinions.

In Garrick v. Moody Bible Institute, a split 2-1 panel (Judge St. Eve writing and joined by Judge Hamilton, with Judge Brennan dissenting) refused to exercise appellate jurisdiction over a district court order rejecting a motion to dismiss that was based on the church autonomy doctrine. Because they do not end the proceedings, decisions denying motions to dismiss are interlocutory and thus generally not immediately appealable. Under the collateral order doctrine, however, federal appellate courts will hear an appeal from an interlocutory order where the order is conclusive, resolves important questions separate from the merits, and is effectively unreviewable on appeal from the final judgment. The orders that fall into this category often involve "immunities" – such as prosecutorial immunity, sovereign immunity, and qualified immunity. The defendant in this case argued that the church autonomy doctrine recognizes an immunity that triggers the collateral order doctrine. Judge Brennan agreed, but the majority held otherwise, concluding that the church autonomy doctrine does not "confer immunity from trial in every employment discrimination suit."

The second case, Gerlach v. Rokita, addresses a different sort of immunity – sovereign immunity. The plaintiff argued that the State of Indiana violated the Takings Clause by failing to compensate her for interest accrued on her unclaimed property while that property was held by the State. While the unanimous panel acknowledged that the Seventh Circuit has previously held that the Takings Clause requires paying such interest, it rejected the plaintiff's claim: It held that the plaintiff's claims for "monetary relief for past Takings Clause violations ... are, in effect, claims against the State of Indiana itself and thus barred" by "Indiana’s sovereign immunity."

In this episode, Mark and Kian chat about two opinions the Seventh Circuit issued in February 2024.

The first case, Chicago Joe’s Team Room v. Village of Broadview, is a long-running Section 1983 case brought by a would-be adult-entertainment venue against the Chicago suburb that prevented it from opening. In 2008, the district court found the suburb violated the First Amendment, and the parties then spent more than a decade litigating damages, which were based on a lost-profits theory. The venue eventually failed to prove lost-profits damages because the district court excluded all of its evidence, which mostly consisted of lay opinion testimony from the owner of the plaintiff business. The Seventh Circuit affirmed, explaining that the owner’s lay opinion testimony was correctly excluded under Rule of Evidence 701 because he could not “properly base his lost-profits opinions on his knowledge obtained in day-to-day management of the company” (since the company never opened).

In the second, Bryant v. Chupack, Judge Easterbrook takes readers on a brief but informative tour through the Rooker-Feldman doctrine and claim preclusion. The Rooker-Feldman doctrine holds that because only the Supreme Court can review the judgments of state courts, district courts lack jurisdiction to hear challenges to state-court decisions. The district court dismissed Bryant on those grounds, but the Seventh Circuit reversed: Rooker-Feldman did not apply because the “plaintiffs had lost a battle in state court but had not yet lost the war.” Claim preclusion, however, barred the plaintiffs’ claims on the merits: Because the plaintiffs could have presented their federal constitutional claims in the state-court case, claim-preclusion principles mean they were “not free to move what amounts to an appellate argument to a different judicial system.”