Leland Stevens v. Interactive Financial Advisors, 830 F.3d 735

Stevens, a financial advisor, associated with Independent Financial Advisors, Inc. (IFA) and used IFA’s cloud database (operated by Redtail) to store clients’ nonpublic personal information (NPPI); some uploaded clients purchased only insurance and were not IFA clients.
After learning Stevens was involved in a Ponzi scheme, IFA terminated him, blocked his access to the database, and reassigned his IFA securities clients.
Stevens sued IFA and Redtail for conversion (and other claims) over the withheld NPPI for both IFA clients (those who bought securities) and non-IFA clients (insurance-only), asserting a property/right to possession theory; case adjudicated in Illinois law in federal court.
The district court granted summary judgment for defendants on conversion claims concerning IFA clients, holding federal securities privacy law barred disclosure to Stevens and thus he lacked an absolute right to immediate possession; conversion claims for non-IFA clients proceeded to trial.
During trial the jury asked whether filing a lawsuit constituted a demand for property; the court instructed that it does not, and the jury returned a verdict for defendants.
Stevens appealed summary judgment on IFA-client claims and the supplemental jury instruction; the Seventh Circuit affirmed both the grant of summary judgment and the jury instruction.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Stevens had an absolute and unconditional right to immediate possession of IFA clients’ NPPI (conversion element)	Stevens claimed ownership/possession rights because he procured and uploaded the client data, so he could convert when access was blocked	IFA/Redtail argued Regulation S-P and Gramm-Leach-Bliley prohibit disclosing NPPI to a nonaffiliated former rep, so Stevens lacked a legal right to immediate possession	Court: Affirmed summary judgment for defendants; federal privacy regulation prevented disclosure, so Stevens cannot satisfy the absolute-immediate-possession element as a matter of law
Whether filing suit satisfies the demand element of conversion under Illinois law	Stevens argued filing the lawsuit constitutes the required demand for possession	Defendants argued Illinois law requires a pre-suit demand (unless futile), and filing suit alone is not a demand	Court: Held filing suit is not a demand; Stevens forfeited objection at trial and, on the merits, Illinois appellate precedent requires a pre-suit demand (exceptions for futility/sale/destruction noted)

In re Karavidas, 999 N.E.2d 296 (Ill. 2013) (defines conversion elements under Illinois law)
Horbach v. Kaczmarek, 288 F.3d 969 (7th Cir. 2002) (explains essence of conversion as wrongful deprivation of immediate possession)
Runnemede Owners, Inc. v. Crest Mortg. Corp., 861 F.2d 1053 (7th Cir. 1988) (requires pre-suit demand in Illinois conversion claims)
LaParr v. City of Rockford, 100 F.2d 564 (7th Cir. 1938) (discussed by lower court but not controlling on conversion demand timing)
Fid. Union Trust Co. v. Field, 311 U.S. 169 (1940) (federal courts should follow intermediate state court holdings absent convincing reason to depart)