Robert Hutchinson v. American Association for Labor
21-2289
| 7th Cir. | Mar 17, 2022Background
- Hutchinson and Tefelske co-owned Metallurgical Associates; a state court receivership led to Tefelske purchasing some business assets.
- Hutchinson disputed whether client records were exempt from sale; the parties reached a settlement that the state court read into the record and incorporated in a December 2016 order stating Hutchinson sold “business books and records,” including customer and job files.
- Hutchinson moved to reopen the state judgment and appealed; Wisconsin courts denied relief.
- Hutchinson then sued in federal court, asserting RICO, 42 U.S.C. § 1985, and state-law claims (conversion, fraudulent inducement, fraud), and alleging defendants conspired to slip the December 2016 order into receivership paperwork. He also sued an accreditation association for transferring a lab accreditation to Tefelske’s company.
- The district court dismissed most claims under the Rooker–Feldman doctrine and dismissed the conversion claim against the accreditation association for failure to state a claim; Hutchinson appealed.
- The Seventh Circuit affirmed: Rooker–Feldman bars the federal challenges to the state-court settlement/order, and the conversion claim fails because Hutchinson conceded he did not own the accredited lab equipment/location.
Issues
| Issue | Hutchinson’s Argument | Defendants’ Argument | Held |
|---|---|---|---|
| Whether Rooker–Feldman bars federal claims challenging the state-court settlement/order | Claims are independent of the state judgment; federal court can hear them | The state-court order is the source of Hutchinson’s injury and federal review is barred | Barred by Rooker–Feldman; dismissal affirmed |
| Whether Hutchinson’s status as a nonparty to the original suit avoids Rooker–Feldman | He wasn’t initially a party and seeks a new ownership ruling independent of the judgment | He was a party to the settlement and the state order is a judgment causing his injury | Rooker–Feldman applies; settlement embodied in judgment bars his claim |
| Conversion claim against the accreditation association | Association improperly transferred accreditation (property) to Tefelske | The certificate accredits lab equipment/location that Tefelske owns; Hutchinson does not own that property | Dismissed for failure to state a claim; Hutchinson conceded lack of ownership |
| Scope and form of dismissal/remedies | Seeks federal adjudication | Federal courts lack jurisdiction over state-judgment-based claims; district court may dismiss state-law claims | Federal claims dismissed without prejudice; conversion dismissal on the merits affirmed |
Key Cases Cited
- Rooker v. Fidelity Trust Co., 263 U.S. 413 (Rooker–Feldman foundational case barring federal review of state-court judgments)
- D.C. Court of Appeals v. Feldman, 460 U.S. 462 (clarifies limits on federal review of state-court decisions)
- Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (describes Rooker–Feldman scope)
- Harold v. Steel, 773 F.3d 884 (7th Cir. discussion that the doctrine applies when state judgment is the source of the injury)
- Johnson v. Orr, 551 F.3d 564 (treats a settlement-incorporating order as a judgment for Rooker–Feldman)
- Kelley v. Med-1 Sols., LLC, 548 F.3d 600 (state-appeal is the appropriate remedy for injuries from state judgments)
- Al’s Serv. Ctr. v. BP Prods. N. Am. Inc., 599 F.3d 720 (district courts’ discretion to dismiss state-law claims when federal jurisdiction drops)
- H.A. Friend & Co. v. Pro. Stationery, Inc., 294 Wis. 2d 754 (Wis. law: conversion requires unconsented taking of another’s property)