Seventh Circuit Determines that Service-of-Suit Clauses Can Waive Statutory Right of Removal


Pine Top Receivables has returned to the published opinions of the U.S. Court of Appeals for the Seventh Circuit. We previously wrote about Pine Top’s successful attempt to compel arbitration with a Uruguayan company and the intersection of the Federal Arbitration Act and the Panama Convention.

Pine Top was again before the Seventh Circuit in Pine Top Receivables of Illinois, LLC v. Transfercom, Ltd., No. 16-1073 (7th Cir. Sept. 1, 2016), which addressed the effect of a contractual service-of-suit clause on a party’s right to remove a case to federal court.

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Coming Up Short: When There Aren't Enough Judges Eligible To Rehear A Case En Banc


Every now and then we see something in the reported decisions of the U.S. Court of Appeals for the Seventh Circuit that seems noteworthy because we’ve never seen it before. The following is one such example.

Seventh Circuit Rule 40(e) is entitled “Rehearing Sua Sponte before Decision,” and it provides, in relevant part, that a soon-to-be-issued opinion, if it takes a position that would overrule prior decisions of the circuit, or if it creates a circuit split, “shall not be published unless it is first circulated among the active members of this court and a majority of them do not vote to rehear en banc the issue of whether the position should be adopted.”

Rubin v. Islamic Republic of Iran, No. 14-1935 (7th Cir. July 19, 2016), written by Judge Diane Sykes and joined by Judge William Bauer and Judge Michael Reagan (of the Southern District of Illinois, sitting by designation), met both Rule 40(e) prerequisites. It overruled prior circuit law and created a split with a recent 9th Circuit decision.

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Wisconsin Court Strikes Clause Restricting Solicitation of Employees


An engineer’s employment contract provision broadly limiting his post-termination solicitation of former co-workers for competitive employment is an unenforceable restraint of trade under a new decision of the Wisconsin Court of Appeals. Manitowoc Co. v. Lanning, 2015AP1530 (Aug. 17, 2016). The decision, written by Judge Brian Hagedorn of District II, reversed a judgment for more than $1 million in attorneys’ fees and costs won by the engineer’s former employer after the trial court found that the engineer had repeatedly breached the covenant by soliciting his former colleagues for a direct competitor. On appeal, the court held that the covenant against soliciting employees was a restraint of trade within the purview of section 103.465 of the Wisconsin Statutes, and failed to meet the law’s requirements.

The court rejected the employer’s argument that the clause was not a restraint on competition, holding that because the “provision does not allow for the ordinary sort of competition attendant to a free market, which includes recruiting employees from competitors,” it is a restraint of trade under Wisconsin law. The court then concluded that because the clause barred the engineer’s solicitation of “any employee” of the company – including employees in a division separate from the one in which the engineer worked, and other employees the engineer never even knew worked for the company – it was too broad to be enforceable.

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Seventh Circuit Reverses Promotional Service Decision Under the Robinson-Patman Act


On August 12, 2016, the Seventh Circuit decided Woodman’s Food Market, Inc. v. Clorox Co., No. 15-3001, and held that Clorox’s refusal to sell bulk-sized packages of certain products to some retailers, like Woodman’s, when it sold bulk-sized items to “big box” retailers, like Costco and Sam’s Club, was not a violation of the Robinson-Patman Act’s prohibition on the disproportionate provision of promotional services under 15 U.S.C. § 13(e).

The Court held that size alone is not enough to constitute a promotional “service or facility,” though it did leave open the possibility that, under different facts, package size or design could constitute a “service or facility” when combined with other promotional content.

This decision provides some clarity for manufacturers (particularly in light of the district court’s interpretation of the Robinson-Patman Act), but businesses who offer different packaging sizes or other types of specialized packaging to different channels or to different resellers should still consider the potential risk for Robinson-Patman claims in light of Woodman’s.

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Seventh Circuit Ditches “Convincing Mosaic” Standard in Employment Cases


In the past, we have counseled our clients on steps they can take to avoid creating a “convincing mosaic” of employment discrimination. The Seventh Circuit Court of Appeals first discussed the convincing mosaic of discrimination more than 20 years ago as a metaphor to explain one way that an employee could combine lots of different evidence – none of which might entitle the employee to a trial on its own – and create enough of a picture of potential discrimination to survive summary judgment.

Since the Seventh Circuit’s first discussion of the convincing mosaic, courts increasingly treated it like a legal test that had to be satisfied in order to reach a trial. A few days ago, however, in Ortiz v. Werner Enterprises, No. 15-2574 (7th Cir. Aug. 19, 2016), the Seventh Circuit attempted to put a stop to this practice. It held that it never intended that the “metaphor” it created in 1994 would develop into a strict legal test. And it put district courts on notice that the use of a “convincing mosaic” as a legal requirement would get them reversed: “From now on, any decision of a district court that treats this phrase as a legal requirement in an employment discrimination case is subject to summary reversal, so that the district court can evaluate the evidence under the correct standard.”

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