Aaron McCoy v. Iberdrola Renewables, Inc.
769 F.3d 535
7th Cir.2014Background
- Outland entities appealed dismissal of their third-party counterclaims; this court previously affirmed the district court and Outland sought panel rehearing.
- Outland had asserted federal antitrust counterclaims and related state-law commercial counterclaims in federal court; the appeal attacked the federal jurisdiction supporting those claims.
- Outland argued the court misapplied Illinois law on tortious interference with prospective economic advantage and tried to revive an indemnification claim for OSHA fines tied to the McCoy accident.
- The record lacked the settlement agreement underlying the indemnification theory; Outland conceded uncertainty whether it was in the district-court record.
- Gamesa moved for sanctions under Federal Rule of Appellate Procedure 38, seeking attorney fees and costs because Outland’s appellate positions undermined the jurisdiction it had invoked below.
- The panel denied rehearing and awarded sanctions of $50,000 jointly and severally against Outland, its related entities, and their owner/counsel Thomas Melone.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Illinois tortious-interference claim requires direct communication with the third party | Outland: court misinterpreted Illinois law and required direct contact | Gamesa: the court correctly required acts directed to the third party | Court: no requirement of direct contact; actions must be directed to the third party; affirmed district court dismissal |
| Whether Outland could revive indemnification claim for OSHA fines (McCoy settlement) | Outland: indemnification for OSHA fines should be allowed | Gamesa: claim excluded by settlement terms and record absence | Court: claim not properly before court (settlement not in record) and district court correctly rejected indemnification as excluded from commercial counterclaims |
| Whether Outland’s state claims were part of the same case or controversy under §1367(a) and whether §1367(c) discretion was abused | Outland: state claims were improperly retained; district court should have considered §1367(c) | Gamesa: supplemental jurisdiction and §1367(c) issues were waived/appropriately handled | Court: Outland waived the §1367(c) argument by not raising it below; §1367 is discretionary and not a basis to revive waived issues |
| Whether sanctionable conduct under App. R. 38 occurred | Gamesa: appeal was frivolous because Outland attacked jurisdiction it had invoked and pursued below | Outland: lacked appellate experience; some merits arguments were non-frivolous | Court: appeal was frivolous in its dominant thrust (contradictory jurisdictional arguments); awarded reduced sanctions $50,000 to compensate and deter |
Key Cases Cited
- F:A J Kikson v. Underwriters Laboratories, Inc., 492 F.3d 794 (7th Cir.) (Illinois tortious-interference authority cited)
- Galinski v. Kessler, 480 N.E.2d 1176 (Ill. App.) (interpreting directed-action requirement for interference claims)
- Schuler v. Abbott Laboratories, 639 N.E.2d 144 (Ill. App.) (rejecting direct-contact requirement)
- Grund v. Donegan, 700 N.E.2d 157 (Ill. App.) (affirming dismissal where no directed communications to third party)
- Harris N.A. v. Hershey, 711 F.3d 794 (7th Cir. 2013) (discussing Rule 38 deterrent/compensatory purposes)
- Crowley Cutlery Co. v. United States, 849 F.2d 273 (7th Cir.) (utterly frivolous federal claims do not support jurisdiction)
- City of Chicago v. International College of Surgeons, 522 U.S. 156 (discretionary nature of pendent/supplemental jurisdiction)
- Burlington Northern R.R. Co. v. Woods, 480 U.S. 1 (Rule 38 purposes and court discretion in awarding sanctions)
- Hensley v. Eckerhart, 461 U.S. 424 (billing judgment factor in assessing attorney-fee reasonableness)
- Assessment Technologies of WI, LLC v. WIREdata, Inc., 361 F.3d 434 (7th Cir.) (market evidence for fee valuations)