author: JANE B. STRANCH, Circuit Judge.

text:
    Samantha MILBY, Plaintiff-Appellant, v. MCMC LLC, Defendant-Appellee.
    No. 16-5483
    United States Court of Appeals, Sixth Circuit.
    Decided and Filed: December 22, 2016

      ON BRIEF: Michael D. Grabhorn, Andrew M. Grabhorn, GRABHORN LAW OFFICE, PLLC, Louisville, Kentucky, for Appellant. Matthew W. Breetz, Michael E. Kleinert, STITES & HARISON, PLLC, Louisville, Kentucky, for Appellee.
    Before: BATCHELDER, STRANCH, and DONALD, Circuit Judges.
   OPINION

JANE B. STRANCH, Circuit Judge.

Samantha Milby was granted monthly long-term disability benefits through a group insurance policy provided by her employer, University of Louisville Hospital. Her benefits were subsequently terminated after her disability carrier hired defendant MCMC, a third-party medical record reviewer, and MCMC opined that Milby could return to work. Milby brought this state-law claim against MCMC, which removed the case to federal court alleging complete preemption under the Employee Retirement Income Security Act of 1974 (ERISA). Milby appeals the district court’s denial of her motion to remand the case and its grant of MCMC’s motion to dismiss her case. Based on this court’s decision in Hogan v. Jacobson, 823 F.3d 872, 879-83 (6th Cir. 2016), applied to the specific facts in this record, we affirm.

I. BACKGROUND

Milby worked as a nurse at the University of Louisville Hospital in Kentucky. Through her employment, Milby was covered by a long-term disability insurance policy. In April 2011, health conditions made it so Milby could no longer work. She applied for and received disability benefits through her insurance policy for approximately seventeen months. As part of a subsequent eligibility review, the plan engaged MCMC, a Massachusetts-based third-party reviewer, to go through Milby’s medical documents and provide an opinion on whether the medical evidence supported Milby’s work restrictions. MCMC and its agent opined that Milby was able to work, stating:

The opinions of [Milby’s treating physicians] are not supported by the available medical documentation as there are no objective findings which would support the claimant’s inability to stand and move for more than just a few minutes, as well as repetitively bend, squat, kneel, and crouch. The claimant would have the capacity to perform sustained full time work without restrictions as of 2/22/2013 forward.

(R. 1-1, PagelD 13) Neither MCMC nor its agent Jamie Lewis was licensed to practice medicine in the Commonwealth of Kentucky at the time they rendered the medical opinion on Milby. Based in part on MCMC’s recommendation, the plan terminated Milby’s benefits effective February 21, 2013.

Milby filed a lawsuit in state court, separate from this one, against her disability insurance provider. That case was re-’ moved to federal court and remains pending. See Milby v. Liberty Life Assurance Co. of Boston, No. 3:13-cv-487 (W.D. Ky.).

Milby filed this lawsuit in state court alleging a state-law claim of negligence per se against MCMC for practicing medicine in Kentucky without the appropriate licenses. MCMC removed the ease to federal court based on complete preemption under ERISA. The trial court denied Mil-by s motion to remand the case to- state court and granted MCMC’s motion to dismiss under Rule 12(b)(6). Milby timely appealed the final judgment against her.

II. ANALYSIS

A. Standard of Review

We review de novo a district court’s decision involving legal questions of subject matter jurisdiction. Hogan v. Jacobson, 823 F.3d 872, 879 (6th Cir. 2016). Factual determinations regarding jurisdictional matters are reviewed for clear error. Jd. A district court’s ruling on a motion to dismiss a claim is reviewed de novo. Id. at 883.

B. Complete Preemption of State-Law Claims under ERISA

We begin with an overview. ERISA creates a “uniform regulatory regime over employee benefit plans.” Aetna Health Inc. v. Davila, 642 U.S. 200, 208, 124 S.Ct. 2488, 159 L.Ed.2d 312 (2004). Congress intended that this federal regime protect beneficiaries of employee benefit plans while providing employers with uniform national standards for plan administration. Id. ERISA’s regime includes “an integrated system of procedures for enforcement.” Id. (quoting Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147, 105 S.Ct. 3085, 87 L.Ed.2d 96 (1985)). Section 1132(a) of ERISA completely preempts “any state-law cause of action that duplicates, supplements, or supplants the ERISA civil enforcement remedy” because such actions “conflict[ ] with the clear congressional intent to make the ERISA remedy exclusive _” Hogan, 823 F.3d at 879 (quoting Davila, 542 U.S. at 209, 124 S.Ct. 2488). But claims that stem from a duty that “is not derived from, or conditioned upon, the terms” of an ERISA plan are not completely preempted. Gardner v. Heartland Indus. Partners, LP, 715 F.3d 609, 614 (6th Cir. 2013). This division between preempted and not preempted claims is part of a “carefully integrated” civil enforcement scheme. Id. at 613 (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987)).

Determining the side of the dividing line on which a claim should fall is not always simple. Courts have provided guidance, however, by placing a range of state-law claims in the category of no preemption. See, e.g., Darcangelo v. Verizon Commc’ns, Inc., 292 F.3d 181, 186 (4th Cir. 2002) (tort claims for disseminating private medical information as part of a scheme to get an employee fired); Erlandson v. Liberty Life Assur. Co. of Boston, 320 F.Supp.2d 501, 508 (N.D. Tex. 2004) (claims for assault and invasion of privacy stemming from an investigation ordered by an insurer); Byars v. Greenway, No. 14-cv-1181, 2014 WL 7335694, *4 (W.D. Tenn. Dec. 19, 2014) (unpublished opinion) (negligence claims . related to notarization process). Other claims have been placed in the category of claims that duplicate ERISA’s enforcement mechanism and are completely preempted. See, e.g., Hogan, 823 F.3d at 883 (negligence per se for unlicensed practice of medicine); Davila, 542 U.S. at 210, 124 S.Ct. 2488.

In Davila, the Supreme Court articulated a two-prong test to determine whether a claim falls in the category that is completely preempted or in the category not preempted. 542 U.S. at 210, 124 S.Ct. 2488. A claim falls in the category of complete preemption under § 1132(a) when a claim satisfies both prongs of the following test:

(1) the plaintiff complains about the denial of benefits to which he is entitled only because of the terms of an ERISA-regulated employee benefit plan; and (2) the plaintiff does hot allege the violation of any legal duty (state or federal) independent of ERISA or the plan terms.

Gardner, 715 F.3d at 613 (quoting Davila, 542 U.S. at 210, 124 S.Ct. 2488). The state-law claims in Davila involved insurance plans fáiling to exercise ordinary care when the plans denied coverage for certain medical .procedures. Davila, 542 U.S. at 204-05, 124 S.Ct. 2488. Those claims involved “pure eligibility decisions” and were preempted by ERISA. Id. at 221, 124 S.Ct. 2488.

In light of this overview of the governing law, we turn to the Davila test and its application to Milby’s case. .

1. Claims Based on the Terms of an ERISA-Regulated Plan .

To determine whether a claim satisfies the- first prong of the Davila test, courts -look beyond the “label placed on a state law claim” and instead ask “whether in essence such a claim is for the recovery of an ERISA benefit plan.” Hogan, 823 F.3d at 880 (quoting Peters v. Lincoln Elec. Co., 285 F.3d 456, 469 (6th Cir. 2002)). A claim “likely falls within the scope of § 1132 when the only action, complained of is a refusal to provide benefits under an ERISA plan and the only relationship between the plaintiff and defendant is based on the plan,” Id. (quoting Davila, 542 U.S. at 211, 124 S.Ct. 2488).

The plaintiff in Hogan brought negligence per se claims against two medical professionals who were employees of the insurance company that administered a plan governed by ERISA. Id. at 877. The medical professionals were allegedly negligent because they were not licensed to practice medicine or psychology in the Commonwealth of Kentucky at the time they reviewed the plaintiffs records and rendered opinions that were relied on by the- insurance company. Id. In Hogan, we held that the claim of negligence per se against the plan’s medical professionals involved “a relationship created solely by the ERISA plan -and an incident that is subsumed entirely within the denial of benefits under an ERISA plan.” Id. at 881. The claim was completely preempted by ERISA because the negligence it alleged was “the negligent processing and denial of [Hogan’s] claim for ERISA benefits.” Id.

As both parties concede, the claim in this case shares many parallels with the claims in Hogan. The alleged negligence of medical professionals in both cases involves the same Kentucky licensing law: Ky. Rev. Stat. § 311.560. Id. at 878. As in this case, the medical professional defendants in Hogan rendered opinions that were considered by the plan as it decided to deny benefits. Id. at 877. There is also a meaningful difference between the facts in the cases—the medical professionals in Hogan were straight employees of the plan administrator; the medical professionals here were employed by an independent third party. Claims against an employee of the plan administrator are more .likely to be duplicative of ERISA’s enforcement mechanism than are claims against third parties, who generally fall outside the ERISA enforcement regime. See id. at 884. Because a third-party reviewer is not acting as the plan administrator nor making the benefits determination—and depending upon laws a state may have enacted to govern such separate entity or actions—the type of claim here may edge toward the category of those not preempted.

Despite this relevant factual difference, however, Hogan determines the outcome for the first prong of the Davila test here. MCMC’s “conduct was indisputably part of the process used to assess a participant’s claim for a benefit payment under the plan, making the negligence claim an alternative enforcement mechanism to ERISA’s civil enforcement provisions.” Id. at 880 (quoting Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1489 (7th Cir. 1996)). As in Hogan, the damages in this ease “arise from the ultimate denial of disability benefits.” Id. at 881.

Milby argues that the first prong of the Davila test is not satisfied because MCMC is not a proper defendant for an ERISA action and therefore Milby could not have brought her claim against MCMC under ERISA. But Hogan addressed this issue and determined that the analysis hinges on “whether in essence such a claim is for the recovery of an ERISA plan benefit,” and not on who was sued. 823 F.3d at 880. Milby’s claim in this case arises from the denial of benefits from an ERISA plan and satisfies the first prong of the Davila test for complete preemption.

2. Legal Duty Independent of ERISA

The second prong of the Davi-la test instructs us to ask whether the plaintiff alleges the violation of an independent legal duty. 542 U.S. at 210, 124 S.Ct. 2488. A state-law tort is independent of ERISA when the duty conferred was “not derived from, or conditioned upon, the terms of’ the plan and there is no “need[ ] to interpret the plan to determine whether that duty exists.” Gardner, 715 F.3d at 614. In Gardner, we held that a claim for tortious interference with a plaintiffs right to receive benefits under an ERISA plan was not preempted when the court could determine liability without having to interpret any plan terms. Id. at 615. Similarly, a duty can be created by a contract that is separate from the agreement that created the ERISA-governed plan; such a duty may be breached and liability may be determined independent of the ERISA plan. Erlandson, 320 F.Supp.2d at 509. In Er-landson, a breach of contract claim against a third-party service provider was not preempted despite a relationship to an ERISA plan because the claim arose from a separate contract between the plan administrator and the third-party provider. Id.

Milby argues that the claim here does not require the interpretation of. any terms in the plan agreement so the duty is independent. MCMC argues that the independent- duty inquiry should end with the determination that the relationship between it and Milby arose solely from an ERISA plan. But as Gardner and Erland-son demonstrate, an independent duty may exist even when an ERISA plan is the basis for the relationship between the parties. See Gardner, 715 F.3d at 615; see also Erlandson, 320 F.Supp.2d at 509. Essentially, MCMC would have us ask whether an ERISA plan is the “but-for” causé of a relationship between the parties. But such a test would capture too many claims that courts have found to be based on independent duties. See, e.g., Gardner, 715 F.3d at 615; Erlandson, 320 F.Supp.2d at 508; Byars, 2014 WL 7335694 at *4. The inquiry is instead a case-specific one that requires examination of the complaint and its alleged facts, the state law on which the claims are based, and various plan documents. Davila, 542 U.S. at 211, 124 S.Ct. 2488.

We turn to Kentucky; law to determine whether state law creates an independent duty between the medical reviewers and Milby. Milby asserts that the medical reviewers owe her an independent duty under Ky. Rev. Stat. § 311.560, which prohibits the practice of medicine without a license. We recently addressed a similar issue in Hackney v. Lincoln Nat’l Life Ins. Co., 657 Fed.Appx. 563 (6th Cir. 2016) (unpublished opinion), another case involving claims of negligence per se for the unlicensed practice of medicine. In Hackney, we determined that reviewing medical records does not by itself constitute the practice of medicine in Kentucky, Id. at 579, 2016 WL 6471763 *12. The practice of medicine is defined as “the diagnosis, treatment, or correction of any and all human conditions, ailments, diseases, injuries, or infirmities by any and all means, methods, devices, or instrumen-talities.” Id. (quoting Ky. Rev. Stat. § 311.550(10)). The Hackney court determined that the nurses who reviewed the medical files in that case “made no determinations regarding the medical necessity of any treatment; they simply' determined whether Hackney was capable of performing the necessary functions of his job.” Id. The court found that “[s]uch determinations d[id] not fall within the ambit of § 311.560.” Id. If medical professionals reviewing documents without making determinations regarding medical necessity are not practicing medicine within the meaning of the Kentucky licensing law, it follows that the licensing law does not create a duty that flows from those professionals to claimants. As such, MCMC—which the complaint does not allege is involved in any determinations regarding medical necessity of treatments—is not practicing medicine and does not have an independent duty to Milby under the Kentucky medical licensing statute invoked in this case. Instead, the allegations in Milby’s complaint implicitly rely on ERISA to establish the duty required for her negligence, claim: The claim here therefore satisfies the second prong of the Davila test.

Because both of the prongs of the Davi-la test are met, the state-law negligence claim in this case fits in the category of claims that are completely preempted by ERISA. We affirm the district court’s denial of Milby’s motion to have the case remanded to state court.

C. Dismissal under Rule 12(b)(6)

The district court found that MCMC was not a proper defendant for an ERISA claim and dismissed the complaint. In Hogan, we affirmed dismissal of similar claims against nurses employed by a plan administrator in part because “the proper defendant in an ERISA action concerning benefits is the plan administrator.” 823 F.3d at 884 (quoting Riverview Health Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505, 522 (6th Cir. 2010)). The appropriate avenue for Milby’s potential relief on these matters is in the pending case against the plan administrator. We therefore affirm the district court’s grant of MCMC’s motion to dismiss the claim under Rule 12(b)(6).

III. CONCLUSION

The state-law claim in this case fits in the category of claims that are completely preempted by ERISA. First, the claim is in essence about the denial of benefits under an ERISA plan. Second, the defendant does not owe an independent duty to the plaintiff because the defendants were not practicing medicine under the specific Kentucky law invoked here as the basis for negligence per se. Denial of the plaintiffs motion to remand and dismissal of 'the claim were proper. The district court’s judgment is therefore affirmed.


source: Caselaw Access Project

author: GRIFFIN, Circuit Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff-Appellee, v. Michael Demetrus GRUNDY, Defendant-Appellant.
    No. 14-2287
    United States Court of Appeals, Sixth Circuit.
    Decided and Filed: December 22, 2016
    Rehearing En Banc Denied February 02, 2017
    ON BRIEF: Amy Lee Copeland, ROUSE + COPELAND LLC, Savannah, Georgia, for Appellant. Patricia Gaedeke, UNITED STATES ATTORNEY’S OF-. FICE, Detroit, Michigan, for Appellee.
    Before: SILER, BATCHELDER, and GRIFFIN, Circuit Judges.
   OPINION

GRIFFIN, Circuit Judge.

In exchange for the government’s promise to dismiss the bulk of criminal charges against him, defendant Michael Grundy agreed to plead guilty to a single count of honest services wire fraud and to waive his right to appeal his conviction and sentence. After the district court ordered a restitution amount with which he disagreed, Grundy appealed. He insists that his appeal waiver does not. preclude challenges to the restitution order. After applying the terms of his plea agreement and our precedent, we disagree. We therefore grant the government’s motion to dismiss defendant’s appeal as barred by the terms of his plea agreement

I.

Grundy was a high-ranking public official in Wayne County, Michigan, wearing a number of different hats. He was an Assis-' tant County Executive; the Executive Director of HealthChoice, a municipal corporation chartered to promote the health and welfare of area residents; and the Division Director of the County’s Patient Care Management System, whieh administered its programs through a company called ProCare Plus. According to the superseding indictment, he used those positions of power to perpetrate a kickback scheme that bilked HealthChoice and ProCare Plus out of over $1 million. The overarching conspiracy included three schemes, which the government labeled the Health-Choice-Medtrix Scheme, the Health-Choice-Advertise Me Scheme, and the ProCare Plus-Medtrix Scheme. In each, Grundy’s long-time friend, Keith Griffin, would form businesses (Advertise Me and Medtrix) for the purposes of providing services (advertising and an electronic medical records program) to HealthChoice and ProCare Plus. At Grundy’s direction, Griffin would inflate the price of his services and then “kickback” the excess to Grundy. According to the government, the benefit to Grundy associated with each scheme was: HealthChoice-Medtrix, $400,000; HealthChoice-Advertise Me, $681,766; and ProCare Plus-Medtrix, $350,000. The total: $1,381,766.

Defendant pleaded guilty to one count of honest services wire fraud arising from the HealthChoice-Medtrix scheme. See 18 U.S.C. §§ 1343 & 1346. As part of his plea agreement, he agreed to “waive[] any right he may have to appeal his sentence” if “the sentence imposed does not exceed the 210 month maximum allowed by Part 3 of th[e] agreement.” The 210-month figure represented the top end of the Guidelines range proposed by the government. That range (168 to 210 months) was dictated in large part by the government’s position that the loss associated with defendant’s criminal conduct was between $1 million and $2.5 million. See U.S.S.G. §§ 2Cl.l(b)(2), 2Bl.l(b)(I). Defendant proposed a different Guidelines range (37 to 46 months) based, in large part, on his position that the loss amount was limited to $400,000, the amount associated with his offense of conviction. The agreement provided that “[t]he Court shall order restitution to every identifiable victim of defendant’s offenses” and that “[t]he Court will determine who the victims are and the amounts of restitution they are owed.”

At sentencing, the district court accepted the government’s proposed Guidelines calculation with the exception of a two-level adjustment not relevant here. The final Guidelines range was -135 to 168 months, from which the district court varied downward to impose a 90-month term of imprisonment, The district court deferred setting the restitution amount, directing the parties to try and reach an agreement on the final amount.

After negotiations broke down, the government filed a motion for restitution, which it later amended. It requested a total of $1,380,767 in restitution, representing the loss amount for all three schemes (HealthChoice-Medtrix, $400,000; Health-Choice-Advertise Me, $631,766; and Pro-Care Plus-Medtrix, $350,000). Defendant initially agreed that he was responsible for restitution relating to. the HealthChoice-Advertise Me scheme, but changed course and argued -that restitution should be capped at the amount associated with the offense of conviction, i.e., $400,000. The district court resolved the conflict in the government’s favor, ordering defendant to pay $1,380,767 in restitution.

Defendant filed a notice of appeal. The government filed a motion to dismiss based on defendant’s appeal waiver, which was referred to a motions panel of this court. However, “[gjiven the fact-specific inquiry necessary to determine whether the appellate-waiver provision is enforceable,” we deferred decision on the government’s motion until full briefing and preparation of the record. United States v. Grundy, No. 14-2287, at 2 (6th Cir. Jan. 21,2015). Having received both, the appeal and motion are ripe for decision.

II.

Our precedent is against defendant’s position. In United States v. Winans, 748 F.3d 268 (6th Cir. 2014), the defendant pleaded guilty to one count of wire fraud under a plea agreement. That agreement contained an appeal waiver, which provided, “If the sentence imposed does not exceed the maximum allowed by Part 3 of this agreement, defendant also waives any right he may have to appeal his sentence.” 748 F.3d at 270. Part 3 of the defendant’s plea agreement calculated a Guidelines range of 151 to 188 months based on, among other things, a loss amount between $7 million and $20 million. Id. at 269. The plea agreement left the exact amount of restitution for the court to decide, stating that “[t]he Court shall order restitution to every identifiable victim of defendant’s offense and all other relevant conduct. The victims, and .the full amounts of restitution in this case, are to be determined.” Id. at 270-71, The district court sentenced Winans to 165 months of incarceration, within the sentencing Guidelines range set out in the plea agreement, and ordered him to pay $4,796,522 in restitution. Id. at 269.

Despite his waiver, Winans appealed and challenged his restitution amount. On the government’s motion, we dismissed Win-ans’s appeal because it was barred by the express terms of his appeal waiver. Id. at 269. “[R]estitution,” we said, “is a part of one’s sentence.” Id. at 271 (citation omitted). Thus, by waiving “any right he may have to appeal his sentence” if he received a sentence below 188 months (which he did), “the waiver extinguished Winans’s right to appeal the restitution order.” Id.

Winans controls this case. As in Win-ans, Grundy agreed to plead guilty and “waive any right he may have to appeal his sentence” if he was sentenced below the maximum of a specified range, in this case 210 months. Defendant received a sentence under the 210-month maximum. Under the terms of his plea agreement, then, defendant waived the right to appeal his sentence, which includes any obligation to pay restitution. Id.; see also United States v. Gibney, 519 F.3d 301, 306 (6th Cir. 2008) (“[Restitution is a part of one’s sentence under the statutory seheme[J”) (citation omitted). To quote Winans: “Because restitution is a part of [Grundy’s] sentence, and [Grundy] waived ‘any right he may have to appeal his sentence,’ the waiver extinguished [Grundy’s] right to appeal the restitution order.” Winans, 748 F.3d at 271.

Defendant argues against this conclusion on three grounds.

First, he contends Winans is distinguishable. Unlike Winans, defendant contested the government’s Guidelines and restitution calculation. Cf. id. at 269. Grundy argues this factual difference, coupled with the plea agreement’s silence on how restitution would be calculated, demonstrates he did not knowingly waive his right to appeal the amount of, or manner of calculating, restitution.

It is true Grundy disputed the government’s Guidelines and loss amount calculations. But, what is important as it relates to his understanding of the appeal waiver (and Winans’s applicability) is that Grundy expressly tied his waiver to the district court’s acceptance of the government’s Guidelines calculation, which in turn was based on a loss amount of between $1 million and $2.5 million. Thus, not only was Grundy on notice that the district court could sentence him based on a finding that he was responsible for over $1 million in losses, he expressly agreed not to appeal even if the court did so, as long as the final sentence did not exceed the high end of the government’s proposed Guidelines range. In this respect, this case is indistinguishable from Winans, in which the defendant agreed to waive his appeal rights if he was sentenced within a Guidelines range that was based on a particular loss amount range. Id. at 271. As in Winans, defendant cannot be heard to argue he did not know the potential restitution exposure since he based his appeal waiver on a Guidelines range that itself was explicitly based on a specific loss amount range.

Moreover, we disagree with Grundy’s premise that disputing and reserving calculation of restitution shows that he understood it was not encompassed by an appeal waiver. As we stated in United States v. Curry, “By reserving the right to challenge the amount of restitution in the district court, [the defendant] recognized that restitution would be part of his sentence, that the amount of restitution would be disputed and that he could have reserved (but did not reserve) the right to challenge the restitution order before the appellate court.” 547 Fed.Appx. 768, 771 (6th Cir. 2013). That he expressly reserved the right to challenge restitution before the district court, but did not do so for appeal purposes, indicates that “exclusion of the latter was a deliberate choice.” Id.

Second, Grundy argues that the text of his plea agreement limits the appeal waiver to challenges to the term of incarceration. “By tying the appeal waiver to the 210 month maximum,” Grundy argues, “the plea agreement equates ‘sentence’ with ‘sentence of imprisonment,’” leaving the other components of the judgment ripe for appeal. Defendant is right to read the word “sentence” in context. United States v. Villareal, 491 F.3d 605, 608 (6th Cir. 2007) (plea agreements are subject to traditional principles of interpretation). But a contextual reading of the plea agreement reveals that “sentence” refers to the sum of the constituent parts of the judgment of sentence, not simply the term of incarceration. Defendant’s plea agreement included a section called “Sentence” and that section included subheadings for “Imprisonment,” “Supervised Release,” “Special Assessment,” “Fine,” “Restitution,” and “Forfeiture.” This demonstrates that “sentence” refers to the overall judgment, which encompasses the various components like imprisonment and restitution. The text only confirms what our case law holds: by agreeing to waive his right to appeal his “sentence,” defendant waived any challenges to each of the constituent elements of his sentence, including restitution.

Finally, Grundy asserts that his appeal waiver should not be enforced on policy grounds because it would “subject him[] to being sentenced entirely at the whim of the district court.” Appellant’s Br., p. 30, citing United States v. Freeman, 640 F.3d 180, 193-94 (6th Cir. 2011). But our notions of good policy cannot trump the plain text of the parties’ agreement. Defendant expressly agreed to waive any right to appeal his sentence if he received a sentence of less than 210 months. The wisdom of the bargain struck is not for us to judge; our task is to enforce the terms of agreements freely and knowingly entered into. See United States v. Beals, 698 F.3d 248, 255 (6th Cir. 2012) (stating that if a defendant wished to. preserve a particular challenge to her sentence, “she certainly could have bargained for it. We must give effect to the intent of the parties as expressed by the plain language in the plea agreement”) (internal citation omitted). To the extent defendant relies on Freeman for the proposition that an appeal waiver does not bar restitution orders above the statutory maximum, we have previously rejected Freeman's premise (that there is a statutory maximum for restitution) as conflicting with prior controlling precedent. United States v. Churn, 800 F.3d 768, 782 (6th Cir. 2015) (“Freeman’s statement does not alter our conclusion to the extent it conflicts with [United States v. Sosebee, 419 F.3d 451, 461 (6th Cir. 2005)].”); Sosebee, 419 F.3d at 461 (“[T]he restitution statutes do not specify a statutory maximum.”).

III.

We dismiss defendant’s appeal as barred by the appeal waiver provision contained in the plea agreement.

      . An attentive reader will have noticed there is a mathematical discrepancy between the restitution amounts for each scheme and the government’s proposed sum—the total should be $1,381,766. Because the error inured to defendant's benefit and the government did not challenge it, we do not disturb the district court’s final order adopting the government’s proposed total restitution amount.


author: POSNER, Circuit Judge.

text:
    TEXAS UJOINTS LLC, Plaintiff-Appellant, v. DANA HOLDING CORP., et al., Defendants-Appellees.
    No. 16-2239
    United States Court of Appeals, Seventh Circuit.
    Argued November 29, 2016
    Decided December 16, 2016

      David H. Weber, Attorney, Conway, Olejniczak & Jerry, S.C., Green Bay, WI, for Plaintiff-Appellant. •
    Sean O’D Bosack, Attorney, Godfrey & Kahn S.C., Milwaukee, WI, Cary Rodman Cooper, David Rodman Cooper, Attorneys, Marshall & Melhorn LLC, Toledo, OH, Jonathan T. Smies, Attorney, Godfrey & Kahn S.C., Green Bay, WI, for Defendants-Appellees.
    Before POSNER, EASTERBROOK, and SYKES, Circuit Judges.
   POSNER, Circuit Judge.

In this diversity suit, governed by Texas law, the plaintiff, Texas UJoints (to simplify, we’ll call it just UJoints), argues that it was a dealer in products of Dana Holding Corporation (a supplier of drive shafts, which typically are devices for transmitting power, from an engine to the wheels of a vehicle, and other industrial equipment), in particular Dana’s GWB and Spicer products, and that Dana terminated the dealership of GWB products in violation of a Texas statute. (Dana is the principal defendant; we can ignore- the others.) The statute provides that “a supplier may not terminate a dealer agreement without good cause,” Vernon’s Texas Statutes and Codes Annotated, Business and Commerce Code § 57.153, “dealer agreement” being defined as “an oral or written agreement or arrangement, of definite or indefinite duration, between a dealer arid a supplier that provides for the rights and obligations of the parties with respect to the purchase or sale of equipment or repair parts.” § 57.002(4). But “good cause for termination of a dealer agreement exists ... if there has been a sale or other closeout of a substantial part of the dealer’s assets related to the business.” § 57.154(a)(4).

Dana had a dealer agreement in Texas with a company named Automotive Industrial Supply Co. (“AISCO”). Unbeknownst to Dana, AISCO sold off most of its assets to a newly formed company named Dan-Mar Holdings (unrelated to Dana), which in turn transferred the assets to a firm named Texas UJoints. The name “UJoints” had been a trade name used by AISCO, but now became the name of an independent firm, the plaintiff in this case. That transfer of assets, like AISCO’s sale of its assets to DanMar, gave Dana, pursuant to § 57.154(a)(4), quoted above, good cause to terminate its dealer agreement with AISCO. The termination precluded Texas UJoints from claiming to have been authorized to step into AISCO’s shoes and thereby become a Dana dealer in Texas. And so the district judge held, granting summary judgment in favor of Dana.

The transfer of assets from DanMar to UJoints had taken place in September 2012. In November the two owners of Dan-Mar (who were also the owners of UJoints), Dan Zahn and Martin Brown (hence “DanMar”), met for the first time with representatives of Dana. Zahn and Brown did not reveal the existence of Dan-Mar or UJoints but said they’d bought AISCO; they hadn’t, though they had bought its assets.

Dana’s representatives told Zahn and Brown that they would have to submit a business plan for their reconstituted AIS-CO (i.e., UJoints). Discussions with Dana continued for months, and finally in May 2013 Zahn sent Dana a PowerPoint presentation containing the business plan. But the following month Dana informed Zahn that it wouldn’t make UJoints a Dana dealer of its GWB products, although it would allow UJoints to continue selling the Spi-cer products. UJoints responded by filing this suit, which Dana removed to the federal district court in the Eastern District of Wisconsin. The court ruled for Dana, precipitating this appeal.

UJoints argues that either Dana entered into a new dealer agreement with it or UJoints had become a party to Dana’s agreement with AISCO just by virtue of the transfer of AISCO’s assets to it. There was no new dealer agreement, however; and as for the sale of AISCO’s assets to UJoints, since that was “a sale or other closeout of a substantial part of the dealer’s assets related to the business” it gave Dana good cause to terminate its dealer agreement with AISCO pursuant to § 57.154(a)(4). The termination left Dana with no business relations with AISCO and no' shoes for UJoints to step into and to claim to be an authorized Dana dealer, bound to Dana by an agreement.

UJoints argues that Dana terminated the agreement only because of complaints from other dealers. That’s irrelevant. Dana had good cause to terminate the agreement once AISCO sold its assets. UJoints points out that at the November meeting a Dana representative told Brown, and Zahn: “I don’t care what you are going to do or how you are going to do it as long as it includes [Bob Stoddard, a long-time AIS-CO employee].” .UJoints argues that this statement constituted Dana’s blessing UJoints’ stepping into AISCO’s shoes as a Dana dealer by purchasing AISCO’s assets. No.way; at the November meeting Dana’s representatives didn’t know that UJoints had purchased AISCO’s assets. And Zahn testified that Dana’s representatives didn’t make any promises at the November meeting, or at any other meeting.

UJoints is left to argue that Dana “intentionally and expressly entered into a dealership agreement with” UJoints after learning that UJoints had acquired AIS-CO’s assets. This is not inconceivable, since Dana had been content to use those assets in its business. As evidence of a dealership agreement with Dana, UJoints points out that until Dana terminated its relationship with it in June 2013, Dana gave it its standard distributor terms and conditions and protocols for ordering product, introduced Zahn and Brown to Dana officials in Germany (where apparently some of Dana’s products originate), sent UJoints a credit application ¡to fill out “as part of the partnership going forward,” .provided UJoints with certain product specifications, and continued filling orders by UJoints for products for UJoints to distribute.

But UJoints has again missed the point. When AISCO’s assets were shifted to UJoints, Dana naturally wanted to learn more about the new company, and so it cooperated with UJoints to the extent of providing some inducements to it to continue distributing Dana products. That does not mean that Dana entered into a “dealer agreement,” specifying the ongoing rights and obligations of it and UJoints—a new, unknown entity the identity of which the owners had concealed from Dana for a significant time, which must have undermined their credibility with Dana. Glancing back at our quotations from the Texas statute, we see that a distributor agreement can be of indefinite duration, implying that it can be terminated at any time if no duration is specified, and none was here, and also that it can be terminated because the distributor sold its assets, which AISCO did.

All else aside, precipitate classification of a pattern of dealing as a dealership agreement terminable only for good cause would have a disruptive effect on distribution. When a distributor suddenly vanishes, the supplier may still need its distribution; it may be unable to afford the protracted interruption that might ensue if it lost its existing distribution and had to create a new system of distribution from scratch. It is also natural for a supplier to want to learn more about a successor to its former dealer before granting the successor a dealership. And so it was natural for Dana to continue selling, for a time, to its dealer’s, AISCO’s, successor—UJoints.

Obviously not all sales are pursuant to dealer agreements, as opposed to merely being agreed upon. If you buy a car from someone and resell it, that doesn’t make you a dealer, and so the fact that UJoints bought products from Dana and resold them did not make UJoints a party to a dealer agreement. Because UJoints was distributing Dana’s products, Dana had to furnish it with information necessary to facilitate that distribution and avoid errors. That provision of information, necessary for efficient distribution even if there is no dealer agreement, did not constitute or create such an agreement.

The judgment of the district court is therefore affirmed.


author: HAMILTON, Circuit Judge.

text:
    Anthony S. FOREMAN, Plaintiff-Appellant, and Lawrence C. Redmond, Respondent-Appellant, v. Brian WADSWORTH, et al., Defendants-Appellees.
    No. 15-3096
    United States Court of Appeals, Seventh Circuit.
    Argued July 6, 2016
    Decided December 20, 2016

      Lawrence C. Redmond, Attorney, Chicago, IL, for Plaintiff-Appellant.
    Ifeanyichukwu C. Mogbana, Kerry Franklin Partridge, Attorneys, City of Rockford, Law Department, Rockford, IL, for Defendants-Appellees Brian Wads-worth, Edward King, and Michael Garn-hart.
    Sara M. Hohe, Attorney, Office of the State’s Attorney of Winnebago County, Rockford, IL, for Defendants-Appellees Winnebago County, Illinois ánd Matthew R. Leisten.

      Before POSNER, SYKES, and HAMILTON, Circuit Judges.
   HAMILTON, Circuit Judge.

Anthony Foreman, who used to own a restaurant in Rockford, Illinois, brought this suit under 42 U.S.C. § 1983 and Illinois tort law. He alleged that a state prosecutor and four Rockford police officers conspired to push him out of business by bringing false criminal charges against him. Foreman argued—contrary to settled Supreme Court precedent, see Imbler v. Pachtman, 424 U.S. 409, 427, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976)—that the state prosecutor should not be entitled to absolute immunity for his actions in an official prosecutorial role, including bringing charges, against Foreman. The district court rejected this contention and then publicly censured Foreman’s lawyer for making it without offering a non-frivolous argument in favor of overturning Imbler. See Fed. R. Civ. P. 11(c). The court then granted summary judgment for the police officers. We affirm the judgment and the order of censure.

I. Factual and Procedural Background

In his complaint Foreman alleged that two Rockford police officers came to his restaurant after receiving a call from the man living in an upstairs apartment (unlawfully, according to Foreman). The occupant had accused Foreman of cutting off his electricity. By Foreman’s account, the officers tried to interview him about this complaint but were “loud and boisterous,” so he refused to answer their questions. The officers responded by arresting him, he alleged. Prosecutor Matthew Leisten later filed an information falsely charging Foreman with obstructing a police officer, see 720 ILCS 5/31—1(a), but the charge was dismissed eventually.

Foreman later sought leave to amend his complaint to add claims against another prosecutor. He told the district court that he had learned through discovery that a different prosecutor had pursued the criminal case after Leisten had first filed it. The district court denied leave to amend, reasoning that the proposed claims against the second prosecutor would be frivolous because the prosecutor would have absolute immunity in her individual capacity, and the Eleventh Amendment would bar any claims against her in her official capacity. The court also ordered Foreman to show cause why the claims against prosecutor Leisten should not be dismissed for the same reasons. Additionally, because in a previous case Foreman’s lawyer, Lawrence Redmond, had raised similar claims against prosecutors that were dismissed because of absolute immunity, the court ordered Redmond to show cause why he should not be sanctioned under Federal Rule of Civil Procedure 11(c).

Shortly after the district court issued its order to show cause, prosecutor Leisten moved for judgment on the pleadings, arguing that in his personal capacity he was absolutely immune from suit concerning his decision to charge Foreman. Leisten also asserted that the Eleventh Amendment bars damages claims against him in his official capacity. In response, Foreman conceded that under current- law Leisten would be absolutely -immune- -from a claim for damages in his individual capacity. Foreman asserted, though, that he was seeking to change that law. He also contended that the Eleventh Amendment would not preclude injunctive relief against Leisten in his official capacity, but he did not say what injunctive relief he wanted or could obtain against the prosecutor.

The district court granted Leisten’s motion for judgment- on the pleadings, noting that Foreman had not offered a basis for challenging the existing law of prosecutorial immunity. In addition, the court reasoned that a claim against Leisten in his official capacity would not fall under the exception to the Eleventh Amendment for injunctive relief because Foreman’s complaint did not sufficiently allege an ongoing constitutional violation, as opposed to a claim for damages to remedy a past injury.

After the claims against prosecutor Leisten' were dismissed, a magistrate judge issued a report recommending that attorney Redmond be publicly censured under Rule 11(c) for advancing frivolous claims without offering any argument or authority that would support a change in existing law. The magistrate judge concluded that a censure would be an appropriate punishment and deterrent, especially in light of Redmond’s previous censure by the Supreme Court of Illinois in a post-conviction capital appeal.

Redmond objected to the magistrate judge’s recommendation, asserting that he had intended to challenge Supreme Court precedent on prosecutorial immunity on appeal. He acknowledged that he had unsuccessfully presented this argument'for a change in existing law in a previous case in the same district court, but he said that the other case had settled before he had the opportunity to appeal the dismissal of the claims. He also explained that he had not yet presented his argument for overturning Imbler in this case, as he had done in the prior case, because “there was no point.” The same district judge had already rejected his argument in the earlier case: “There was no reason to believe that raising it in the instant case would yield a different result.” Redmond attached to his written objection a portion of the brief that he filed in the earlier case explaining his argument for overturning Imbler. No lower federal court can overrule a Supreme Court precedent, of course, which is Redmond’s goal with Imbler. Nevertheless, a party who wants to . ask the Supreme Court to overrule one of its precedents must raise the issue in lower courts to set it up clearly for Supreme Court review.

The district judge adopted the magistrate judge’s recommendation and issued an order censuring attorney Redmond for violating Rule 11(b)(2). Redmond, the court said, did not, argue for a change in the law until after he was faced with a recommendation of censure, and the court was “not persuaded by counsel’s last-minute effort to salvage the unsupported claims.”

First, although Redmond’s argument had been rejected in an earlier case, the court said, that “does not excuse counsel from raising it anew in another, unrelated case, if necessary to comply with his obligations under Rule 11(b)(2).” Redmond could not just wait to make his argument on appeal, the court said, because any argument not made in the district court is waived on appeal. Second, the court said, Redmond’s argument for changing the existing law on absolute immunity for prosecutors would fail anyway because it was “based on the faulty premise that the Im-bler decision is based solely on a review of historical immunities,” rather than on other policy considerations. The court noted that the Supreme Court had recently rejected Foreman’s understanding of historical immunities, which was the foundation of his argument for overruling Imbler. See Rehberg v. Paulk, 566 U.S. 356, 366, 132 S.Ct. 1497, 1504, 182 L.Ed.2d 593 (2012) (“[W]hen the issue of prosecutorial immunity under § 1983 reached this Court in Imbler, the Court did not simply apply the scope of immunity recognized by common-law courts as of 1871 but instead placed substantial reliance on post>-1871 cases extending broad immunity to public prosecutors sued for common-law torts.”).

The district judge also agreed with the magistrate judge’s alternative rationale, that sanctions were justified based on Foreman’s official-capacity claims against Leisten’s office—which were barred by the Eleventh Amendment—because Redmond did nothing to show that the claims were “warranted by existing law or by a non-frivolous argument for extending, modifying, or reversing existing law.” Fed. R. Civ. P. 11(b)(2).

With only his claims against the four Rockford police officers remaining, Foreman moved to compel and extend the time for discovery because, he said, attorneys for the city had not responded to several of his discovery requests. The magistrate judge granted his request in part, but only as to the depositions of two police-officer defendants. The judge denied his motion to compel the deposition of the mayor and other city officials, as well as answers to the interrogatories he had sent to the City of Rockford, and then denied both of Foreman’s motions to reconsider.

The police officers moved for summary judgment on the remaining claims of false arrest, see 42 U.S.C. § 1983, civil conspiracy, and state-law false arrest and false imprisonment. The district court granted the motion, concluding that the officers had probable cause to arrest Foreman.

II. Appeal of the Summary Judgment

Foreman’s primary argument on appeal is that prosecutor Leisten should not be protected by absolute immunity for his decision to charge Foreman with obstructing a police officer despite knowing, Foreman alleges, that he did not have probable cause to do so. The Supreme Court held in Imbler that state prosecutors enjoy absolute immunity from suits under § 1983 for activities that are “intimately associated with the judicial phase of the criminal process.” 424 U.S. at 430, 96 S.Ct. 984; see id. at 427, 96 S.Ct. 984. Filing a criminal charge is at the core of the activities protected by prosecutorial immunity. See Kalina v. Fletcher, 522 U.S. 118, 129, 118 S.Ct. 502, 139 L.Ed.2d 471 (1997); Olson v. Champaign County, 784 F.3d 1093, 1102 (7th Cir. 2015). Prosecutors do not enjoy absolute immunity when giving legal advice to police officers during an investigation, see Burns v. Reed, 500 U.S. 478, 496, 111 S.Ct. 1934, 114 L.Ed.2d 547 (1991), nor when they swear to a factual affidavit submitted with an information for the purpose of obtaining an arrest warrant, Kalina, 522 U.S. at 120-21, 130-31, 118 S.Ct. 502. Foreman did not allege in his complaint, however, that Leisten had engaged in such activities. Nor does Foreman argue that Imbler is somehow distinguishable or has been superseded by later legislation. Rather, Foreman argues that Imbler was wrongly decided and that prosecutors should be entitled only to qualified immunity. Because Imbler remains controlling law, the district court correctly concluded that Leisten is absolutely immune from Foreman’s damages claims against him. If Imbler is to be overruled, only the Supreme Court itself can overrule it. E.g., Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 535, 103 S.Ct. 1343, 75 L.Ed.2d 260 (1983); Hutto v. Davis, 454 U.S. 370, 375, 102 S.Ct. 703, 70 L.Ed.2d 556 (1982).

Foreman- also challenges the dismissal at summary judgment of the four Rockford police officers before “discovery was complete.” He argues that the City of Rockford deliberately delayed complying with his discovery requests for over a year in a strategic attempt to undermine his case. Although he asks us to reverse the district court’s grant of summary judgment, he does not directly challenge the merits of that decision. Rather, he challenges the magistrate judge’s denial of his request to extend the time for discovery. But Foreman did not ask the district court to review the magistrate judge’s discovery ruling and thus waived his right to attack it on appeal. See Fed. R. Civ. P. 72(a) (requiring parties to file objections with district court to magistrate judge’s non-dispositive pretrial rulings); Flint v. City of Belvidere, 791 F.3d 764, 769 (7th Cir. 2015). If Foreman believed after the defendants moved for summary judgment that he needed further discovery to respond, he could and should have moved under Federal Rule of Civil Procedure 56(d), explaining why he could not present facts essential to his opposition. See Herzog v. Graphic Packaging Int'l, Inc., 742 F.3d 802, 807 (7th Cir. 2014); Deere & Co. v. Ohio Gear, 462 F.3d 701, 706 (7th Cir. 2006); see also Abdulhaseeb v. Calbone, 600 F.3d 1301, 1310 (10th Cir. 2010) (applying rule to pro se litigant); Walker v. Bowersox, 526 F.3d 1186, 1188 (8th Cir. 2008) (same). He did not do so.

III. Appeal of the Censure Order

In addition to Foreman’s arguments on appeal, attorney Redmond contests the district court’s decision to censure him publicly for suing in the teeth of the controlling Supreme Court precedent on pros-ecutorial immunity. We first pause to address our jurisdiction to review the order of censure since Redmond was not named as a party in the notice of appeal. See Fed. R. App. P. 3(c) (requiring notice of appeal to “specify the party or parties taking the appeal by naming each one in the caption or body of the notice”); Gonzalez v. Thaler, 565 U.S. 134, 147-48, 132 S.Ct. 641, 652, 181 L.Ed.2d 619 (2012) (explaining that Rule 3(c) is jurisdictional).

The Supreme Court held in 1988 that omitting a party’s name from a notice of appeal “constitutes failure of that party to appeal.” Torres v. Oakland Scavenger Co., 487 U.S. 312, 314, 108 S.Ct. 2405, 101 L.Ed.2d 285 (1988). Following Torres, we held that we lacked jurisdiction to review an attorney’s challenge to an order of sanctions where the attorney was not named in the notice of appeal. See Allison v. Ticor Title Ins. Co., 907 F.2d 645, 653 (7th Cir. 1990); FTC v. Amy Travel Serv., Inc., 894 F.2d 879, 881 (7th Cir. 1989).

After Torres, though, Rule 3(c) was amended to add: “An appeal must not be dismissed for ... failure to name a party whose intent to appeal is otherwise clear from the notice.” Fed. R. App. P. 3(c)(4); see Becker v. Montgomery, 532 U.S. 757, 767, 121 S.Ct. 1801, 149 L.Ed.2d 983 (2001) (explaining .that amendment was intended to reduce litigation spawned by Torres). After the amendment, “imperfections in noticing an appeal should not be fatal where no genuine doubt exists about who is appealing, from what judgment, to which appellate court.” Becker, 532 U.S. at 767, 121 S.Ct. 1801.

While attorney. Redmond is not named as a party in either the caption or the body of the notice of appeal, the notice said that the appeal would address “the order recommending censure of plaintiffs counsel entered on October 15, 2014,” and “the order accepting the recommendation of censure of plaintiffs-counsel entered on November 20, 2014,” Redmond is the only-party with an interest in those orders. He could face adverse professional consequences as a result of the censure. See Martinez v. City of Chicago, 823 F.3d 1050 (7th Cir. 2016). Redmond’s failure to name himself in the notice of appeal is harmless because his “intent to appeal is otherwise clear from the notice.” Fed. R. App. P. 3(c)(4); see 1756 W. Lake St. LLC v. American Chartered Bank, 787 F.3d 383, 385 (7th Cir. 2015).

On the merits of Redmond’s challenge to the order of censure, Federal Rule of Civil Procedure 11(b)(2) permits an attorney to assert claims precluded by existing law if the attorney identifies “a nonfrivolous argument for extending, modifying, or reversing existing law.” See Nisenbaum v. Milwaukee County, 333 F.3d 804, 809 (7th Cir. 2003) (“[C]ourts do not pénalize litigants who try to distinguish adverse precedents, argue for the modification of existing law, or preserve positions for presentation to the Supreme Court.”); Szabo Food Serv., Inc. v. Canteen Corp., 823 F.2d 1073, 1081 (7th Cir. 1987) (“[A] party is free to ask for reconsideration [of a Supreme Court decision] even when the court is unlikely to respond favorably.”). But if the attorney fails to provide a non-frivolous argument for changing the law, the district court may order the attorney to show cause why he or she should not' be sanctioned. Fed. R. Civ. P. 11(c); see Nisenbaum, 333 F.3d at 809 (“Burying one’s head in the sand, in the hope that a judge will disregard an adverse decision by the Supreme Court, is a paradigm of frivolous litigation.”).

In this case the district court, after reviewing only Foreman’s complaint and prosecutor Leisten’s answer, ordered attorney Redmond to show cause why he should not be sanctioned under Rule 11(c). That order to show cause was premature. Redmond had a duty of candor to the court, including a duty to disclose controlling legal precedent adverse to his position, see Model Rules of Prof 1 Conduct r. 3.3(a)(2) (Am. Bar. Ass’n 2016), but he was not required to anticipate and respond to affirmative defenses within the complaint itself. Indeed, as counsel for Leisten candidly acknowledged at oral argument, it was not clear from the face of the complaint whether absolute immunity would even apply to the claims against Leisten.

While premature, the district court’s order put Redmond on .notice of the need to offer an argument for overturning Imbler. See Fed. R. Civ. P. 11(b)(2). The problem was that Redmond did not respond to the order to show cause. When Leisten,later moved for judgment on the pleadings on the ground of absolute immunity, Redmond asserted only that he planned to challenge Imbler on appeal; he did not provide a substantive argument for doing so.

Only after the magistrate judge recommended a public censure did Redmond first offer an argument for overturning Imbler, by attaching to his written objection a portion of his brief from the earlier case. Attaching the brief may be enough to put the opposing party and the court on notice of the substance of his argument, at least for purposes of sanctions issues. Even so, the district court did not abuse its discretion in concluding that counsel’s argument came too late. See United States v. Rogers Cartage, Co., 794 F.3d 854, 862 (7th Cir. 2015). Redmond explained that he did not identify the argument earlier because he thought “there was no point.” But even if he believed it would be futile, Redmond was still required to present a non-frivolous argument for changing the law to the district court rather than raising it for the first time on appeal. See Fed. R. Civ. P. 11(b)(2); Hess v. Bresney, 784 F.3d 1154, 1161 (7th Cir. 2015) (“It is well settled that arguments not developed before the district court are deemed waived on appeal.”).

Rule 11 sanctions are left to the sound discretion of the district court. While we might not have taken the same action in the first instance, the district court’s order of censure was not based on any legal error and was not an abuse of discretion.

Accordingly, both the judgment of the district court in favor of the defendants and the court’s order of censure are AFFIRMED.

      . Foreman does not challenge on appeal the district court’s dismissal under the Eleventh Amendment of his claims against Leisten in his official capacity and against the Winnebago County State’s Attorney’s Office. This rul-tag was correct. The claims also fail for another reason. A state official in his or her official capacity is not deemed a "person” under § 1983. Will v. Michigan Dep’t of State Police, 491 U.S. 58, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989); Mercado v. Dart, 604 F,3d 360, 361-62 (7th Cir. 2010); Garcia v. City of Chicago, 24 F.3d 966, 969 (7th Cir. 1994) (under Illinois law, state’s 'attorney is state official).

      . For example, Leisten would be entitled to only qualified immunity if Foreman had alleged that the prosecutor colluded with the police officers during the investigation to fabricate false charges against him. See Burns, 500 U.S. at 496, 111 S.Ct. 1934. Alternatively, Leisten might have been entitled to only qualified immunity if he swore to an affidavit in support of the Information that he filed against Foreman. Kalina, 522 U.S. at 121-22, 129-31, 118 S.Ct. 502 (prosecutor who submitted affidavit in support of arrest warrant acted as complaining witness rather than lawyer and was entitled to only qualified, not absolute, immunity).


text:
    MIDWEST OPERATING ENGINEERS WELFARE FUND, et al., Plaintiffs-Appellees, v. CLEVELAND QUARRY, et al., Defendants-Appellants.
    Nos. 15-2628, -3221, -3861, 16-1870
    United States Court of Appeals, Seventh Circuit.
    Argued November 8, 2016
    Decided December 20, 2016

      Dale D. Pierson, Attorney, Iuoe Local 150 Legal Department, Countryside, IL, for Plaintiffs-Appellees.
    Andrew J. Martone, Matthew B. Robinson, Attorneys, Hesse Martone, St. Louis, MO, for Defendants-Appellants.
    Before WOOD, Chief Judge, and . POSNER and ROVNER, Circuit Judges.
   POSNER, Circuit Judge.

The plaintiffs in this labor litigation are employee welfare and pension funds (we’ll drop “and pension” to simplify the opinion). Three defendants are named. Each is a division (not, so far as we are able to determine, a subsidiary) of RiverStone Group, Inc., a producer of crushed stone, sand, and gravel. Each division is a defendant in a separate, but nearly identical, suit before a different district judge. The judges were apparently confused by the fact that each division had a separate collective bargaining agreement, but. that turns out to be a distinction without a difference. The proper defendant is the company, RiverStone, not its divisions, and we shall assume it is indeed the one and only defendant in what is really one case, not three cases.

RiverStone’s collective bargaining agreements were with Local 150 of the International Union of Operating Engineers, AFL-CIO. The latest agreement, made, in 2010, was scheduled to expire in 2015. It required RiverStone to contribute a speck fied dollar amount to welfare funds specified in the agreement “for each hour for which an employee receives wages under the terms of this Agreement.” But in 2013 employees in one of RiverStone’s divisions voted in an election supervised by the National Labor Relations Board to decertify Local 150 as their collective bargaining representative, and this was followed by similar votes by employees at the other two divisions mistakenly named as defendants in this litigation. Whereupon River-Stone stopped contributing to the welfare funds, precipitating these suits against it by the funds under 29 U.S.C. § 1145, a provision of ERISA, added by the Mul-tiemployer Pension Plan Amendments Act of 1980, Pub. L. 96-364, 94 Stat. 1208, that creates a right to sue to collect delinquent employer contributions. The funds seek payment of the contributions that would have been due pursuant to the terms of the last collective bargaining agreement until its 2015 expiration. In each suit a different district judge granted summary judgment in favor of the funds, confirming that RiverStone had to continue making the contributions to the funds specified in that last, 2010, collective bargaining agreement until the agreement expired by its terms in 2015.

It is arguable that-the agreement expired earlier, when the union was decerti-fied, as a result of which one of the two parties to. the agreement effectively vanished, since it could no longer enforce any part of it (the “agreement” among the three divisions of RiverStone doesn’t count; RiverStone and the union were the only real parties to the agreement). And the collective bargaining agreement stated that “the Employer’s responsibility to make contributions to the Welfare Plan[s] shall terminate upon expiration of this agreement.”

RiverStone quotes our statement in Central States, Southeast & Southwest Areas Pension Fund v. Schilli Corp., 420 F.3d 663, 669 (7th Cir. 2005), that “although the decertification voided the 1994 CBA, the terms of the Participation Agreement make clear that [the company’s] obligations survive that event,” even though the union, no longer-representing the employees, could not have enforced a participation agreement. But because the agreement made the company’s obligations to the pension fund survive the de-certification, Schilli didn’t have to, and didn’t, decide that a collective bargaining agreement could not continue to impose a contribution obligation after the union’s decertification, which merely eliminated its right to enforce the collective bargaining agreement, including provisions relating to contributions to employee welfare plans. Schilli was explicit that “the union is not the only party with standing to enforce” an employer’s obligation to contribute to an employee welfare plan, noting that the Multiemployer Pension Plan Amendments Act “authorizes multiemployer plans to sue for delinquent contributions owed ‘under the terms of the plan or under the terms of a collectively bargained agreement.’ ” 420 F.3d at 670.

The “delinquent contributions” in the present case were the contributions that RiverStone had failed to make in the interim between the decertification of the union and the expiration of the collective bargaining agreement. That an employer could cease making contributions to a plan once its employees’ union is decertified is no defense. For “once [multiemployer plans] promise a level of benefits to employees, they must pay even if the contributions they expected to receive do not materialize.” Central States, Southeast & Southwest Areas Pension Plan v. Gerber Truck Service, Inc., 870 F.2d 1148, 1151 (7th Cir. 1989) (en banc) (emphasis added). Their promise is binding, contractual. And so “if some employers do not pay, others must make up the difference.” Id. In short, “nothing in ERISA makes the obligation to contribute depend on the existence of a valid collective bargaining agreement.” Id. at 1153.

But what is one to make of the provision of the collective bargaining agreement that “the- employer’s responsibility to make contributions to the Welfare Plan[s] shall terminate upon expiration of this agreement” (emphasis added)? The meaning depends on whether “expiration” means the date on which the agreement becomes unenforceable or the date on which it lapses by passage of time. It became unenforceable by the union when the union was decertified, whereby the employer was no longer bound to the promises it had made to the union; but the agreement did not thereby cease to exist— and therefore did not expire—until its five-year term ended. By prematurely ceasing to contribute to the welfare funds, River-Stone became liable under 29 U.S.O.. § 1145 to make delinquent contributions, which is the relief sought by the funds and ordered by the three district judges whose identical rulings RiverStone challenges. RiverStone might have negotiated a collective bargaining agreement that obligated it to contribute to the funds only unless and until the union was decertified. But it didn’t.

Another path to the same result is to note that the plaintiff funds were third-party beneficiaries of the collective bargaining agreement and therefore entitled to enforce it even if another enforcer—the union—fell out.

RiverStone makes two other arguments for reversal. The first is that the collective bargaining agreement required it only to contribute to the funds for each hour an employee is paid “under the terms of the [Collective Bargaining] Agreement.” True, but irrelevant to this case. After the decer-tification, RiverStone’s employees were no longer working "under the terms of’ the colléctive bargaining agreement, so River-Stone could pay them lower wages or otherwise change the terms of them employment from what the collective bargaining agreement had provided. But as we’ve explained, so far as benefits law is concerned the employees were still working “under the terms of’ the collective bargaining agreement. The agreement established a five-year-long obligation for RiverStone to contribute to the funds for each employee in the bargaining unit (that is, each employee who received wages “under the terms of the agreement”). The funds budgeted accordingly. The agreement did not provide that RiverStone could stop contributing as soon as its employees’ union was decertified.

The second argument is that the Labor Management Relations Act forbids payments to trust funds that are not “éstab-lished by such representative” of the employer’s employees, 29 U.S.C. § 186(c)(5). Again true, but again irrelevant. The union, Local 150, established the funds and did so at a time when it was the representative of RiverStone’s employees. The de-certification of the union, years later, did not alter the fact that the funds had been established by the representative.

Each of the district judges ordered Riv-erStone (more precisely, each judge ordered one of the three divisions that are the named defendants) to reimburse the union for the delinquent contributions. Those judgments are

AFFIRMED.


author: MANION, Circuit Judge.

text:
    MANISTEE APARTMENTS, LLC, individually and as class representative, Plaintiff-Appellant, v. CITY OF CHICAGO, a municipal corporation, Defendant-Appellee.
    No. 15-3113
    United States Court of Appeals, Seventh Circuit.
    Argued September 28, 2016
    Decided December 20, 2016

      Anthony G. Barone, Attorney, Barone Law Group, Oakbrook Terrace, IL, David M. Jenkins, Attorney, Jenkins Law Group, P.C., Chicago, IL, John Robel, Attorney, John Robel P.C., Riverside, IL, for Plaintiff-Appellant.
    Myriam Z. Kasper, Attorney, Office of the Corporation Counsel, Appeals Division, Carl Newman, Attorney, City of Chicago Law Department, Chicago, IL, for Defendant-Appellee.
    Before POSNER, FLAUM, and MANION, Circuit Judges.
   MANION, Circuit Judge.

Plaintiff Manistee Apartments sued the City of Chicago alleging that the City violated their due process rights by refusing to release judgment liens until the debtors paid attorneys’ fees and costs. The district court dismissed the plaintiffs class action complaint, holding that the plaintiff suffered no deprivation of a constitutionally protected property interest. The court also denied the plaintiffs motion for reconsideration and for leave to file an amended complaint. For the reasons below, we affirm.

I. Background

On September 19, 2011, the City of Chicago obtained a default administrative judgment of $3,540 against Manistee Apartments, based upon a finding of various violations of the Chicago Municipal Code. Pursuant to Illinois state law, the City later registered this judgment with the Circuit Court of Cook County and imposed a lien against plaintiffs real estate. 735 ILCS 5/12-101; 65 ILCS 5/1-2.1-8(d). Plaintiff contends that it first received actual notice of this lien (as opposed to constructive notice, which it received as soon as the lien was recorded) during routine title insurance review and underwriting that occurred as it was preparing to sell its properties. Upon discovery that the title to the property was not clean, and with a pending sale, plaintiff sought to quickly settle its bill with the City.

On January 27, 2014, and in response to inquiry, the City of Chicago provided a “payoff letter” demanding $5,655.16. This demand letter reflected the original, undisputed $3,540 lien, plus $720.34 in uncontested statutory interest. The remainder, $1,394.82, represents collection costs and attorneys’ fees that the City demanded, and is the sole amount in controversy before this court, an amount better suited for small claims court in Illinois.

The day after the City issued the payoff letter, January 28, 2014, the plaintiff conveyed the property via warranty deed, alleging to an out-of-state buyer that the title was unencumbered. Around this time, the plaintiff also settled with the City, paying the full amount demanded, $5,655.16, under protest. Eight months later, plaintiff filed a class action complaint in federal district court, alleging violations of the Due Process Clause of the Fourteenth Amendment, the Illinois state constitution, and other violations of Illinois state law.

The plaintiff contends that by responding to its request for a payoff letter with a demand for payment greater than the lien amount, the City of Chicago was violating the plaintiffs due process rights. What the City should have done, apparently, is one of two things. It could have responded with information the plaintiff already had—the publicly available lien recorded in Cook County and the publicly available statutory interest calculation, along with an offer to settle for that amount or less. It also could have replied with a lawsuit in Illinois court seeking from plaintiff the fees and costs. What was not permissible, in the plaintiffs view, was asking for anything more. By refusing to release the lien immediately or take action in Illinois state court, the plaintiff contends, the City was depriving it of a property interest and thus needed to provide the plaintiff due process. Since the City already had a judgment, however, it had no incentive to settle for less. Manistee’s litigation position, it seems, was intentionally unreasonable: more calculated to triggering a ripe lawsuit than actually seeking quick release of a lien.

The district court disagreed, granting the City’s motion to dismiss. It noted that the plaintiff failed to allege facts that plausibly supported the assertion that it paid the City’s demand under duress. Because it was not under duress, Manistee’s payment was voluntary. And because its payment was voluntary, Manistee was not deprived of a constitutionally protected property interest, and- therefore failed to state a claim under 42 U.S.C. § 1983.

Finding no violation of the federal Constitution, the district court went on to find no violation of the state.constitution (“the same tests apply”), and declined to exercise supplemental jurisdiction over the purely state law claims. Plaintiff then moved for reconsideration and leave to amend the class action complaint,. which the court .denied. Plaintiff appeals both the dismissal of its case and the denial of its motions. for reconsideration and leave to amend,

II. ANALYSIS

We review a. district court’s order granting a motion to dismiss under Rule 12(b)(6) de novo. Andonissamy v. Hewlett-Packard Co., 547 F.3d 841, 847 (7th Cir. 2008). We assume all well-pleaded allegations are true and draw all reasonable inferences in the light most favorable to the plaintiff. To survive such a motion, a complaint must “state a claim to relief that is plausible on its face.” Justice v. Town of Cicero, 577 F.3d 768, 771 (7th Cir. 2009). We review a district court’s denial of a motion for reconsideration under Rule 59(e) and denial of a motion for' leave to amend only for abuse of discretion. Billups v. Methodist Hosp. of Chicago, 922 F.2d 1300, 1305 (7th Cir. 1991); Chavez V. Ill. State Police, 251 F.3d 612, 628 (7th Cir. 2001).

A. Dismissal of Constitutional Due Process Claims

The Fourteenth Amendment explicitly prohibits state governments from depriving persons of “life, liberty, or property, without due process of law.” U.S. Const. amend. XIV, § 1. Individual citizens are afforded a cause of action to vindicate this constitutional right to procedural due process through 42 U.S.C. § 1983. To state a claim for a procedural due process violation, a plaintiff must demonstrate (1) a cognizable property interest; (2) a deprivation of that property interest; and (3) a denial of due process. Buttitta v. City of Chicago, 9 F.3d 1198, 1201 (7th Cir. 1993).

It is, of course, indisputable that the plaintiff had a cognizable property interest in the entirety of the amount it paid to the City of Chicago, $5,655.16. But, as the district court correctly noted, Manistee voluntarily paid this amount to the City, and voluntary payment is not a property deprivation.

Against this, the plaintiff alleges that its payment was not, in fact, voluntary, but coerced. Obviously, no one wants to have to'pay more than they have to in order to obtain a.benefit, such as the release of a hen outside established formal process. Here, the City did not threaten to do anything to Manistee: it just refused to accede to a demand by a private party for a thing—immediate release of a lien—to which that private party was not entitled.

As the district court properly held, Man-istee was not coerced to pay anything. The district court noted that Manistee had a number of other options it could have taken without affecting the legal relationship between it and the City. Manistee could have done as it had for years prior: nothing. Eventually the City might move to foreclose on its property, or the City might not. Or Manistee could have tendered payment of principal and interest to the City and sought immediate release of its lien under Illinois state law. 735 ILCS 5/12— 183(b). It chose not to do that. Or Manis-tee could have sought a declaratory judgment action in state court.

The district court notes a fourth option available to Manistee: it could have sold the property encumbered by the lien. And in its reply brief, the City raises a curious fact relating to Manistee’s claim to have been over a barrel: plaintiff managed to sell its property without actually recording the release of judgment provided by the City. The lien was only released on June 10, 2016, while this action was pending. The property, however, was sold for $10 via warranty deed to an Arizona corporation on January 28, 2014.

These facts cut to the heart of the plaintiffs contention that it was forced to pay the $5,655.16 to the City, lest it break its contract and miss out on a lucrative business deal. At the time Manistee paid the City, the contract was already broken. Presuming that the sale of the property was arm’s-length, it appears the value of the property less the City’s lien was negative. The administrative record of municipal code violations suggests that, at the time,, the out-of-compliance property was abandoned, requiring extensive repairs before being certified for occupancy.. In such a situation the economically rational thing to do would be to do nothing. Surely if the property had substantial value and the plaintiff were in a hurry to clear the title, the closing price would not turn out to be $10.

And if the property were not valuable, what would be the hurry? After recording the lien in January 2012 and then failing to serve the plaintiff with a citation to discover assets, the City simply gave up. Under state law,, the City could have foreclosed, however. And that might have mooted the plaintiffs class action.

The fact of the sale prior to clearing title also exposes the heart of the plaintiffs proposed class action. It claims that the aggrieved class is numerous—in the hundreds, if not thousands. But how many corporations find themselves in a position like Manistee’s—having promised a third party that title was clean, conveyed that property without clean title, and allegedly at the mercy of the City over a lien no longer attached to real property they own? Put another way:' how often is the City in a position to “coerce” payment from a payee on the hook for a broken contract? That class cannot be very large.

Finally, on appeal the plaintiff suggests that the deprivation of the property interest occurred when the City refused to release the hen upon receipt, of the request for a payoff letter. This might be taken to allege that the cognizable property interest was not the $5,655.16, but a sort of option-contract interest—immediate release of a lien upon tendering payment. But as the. City, makes clear, Manistee never actually did tehder payment of-the judgment plus interest, nor did it seek immediate release of the lien through the state law process established by 735 ILCS 5/12—183(b).

In sum, on any read of the plaintiffs allegations, no property deprivation occurred, and thus, no violation of constitutional due process.

So why would such a small amount cause the plaintiff to exert so much time and effort? Obviously the filing fees and attorneys’ fees relating to the many hours and hundreds of pages of brief-writing far eclipses $1,394.82. Bringing a federal civil suit and litigating it to conclusion is an expensive business. As conceded at oral argument by plaintiffs counsel, the only reason this case makes any economic sense is due to its anticipated class action payout.

By demanding a payoff letter, and -knowing full well that the letter would include attorneys’ fees and costs above and beyond the lien amount plus interest, plaintiffs counsel was able to obtain a benchmark for determining class damages. And the hope in such cases is typically not to litigate the claim to resolution, but to survive a motion to dismiss and settle the case, obtaining a large award from the City.

Upon surviving a motion to dismiss, it is certain that class counsel would argue the potential class to be extremely broad. But as noted, given the uniqueness of the plaintiffs case it is highly unlikely there could be any class certification. As a result, it is apparent that the goal here would be to settle after surviving a motion to dismiss, but before losing at the class certification stage.

The City might suspect as much, but might still be faced with a situation where the costs to get through discovery and briefing on the subject would -be greater than the settlement offer that plaintiffs counsel might offer. In such a situation the settlement offer represents the “nuisance value” of the case. This is a persistent problem for defendants in class action lawsuits. •

One possible solution to this problem is requiring judges to do some threshold level of review of the merits of a class action before allowing certification of a class, or before approving a- settlement. This has been held to-be generally barred under the current Buie 23,- although the line has not always .been clear. Nevertheless, it is cases like the one before us that - demonstrate precisely why the courts, an,d Congress, ought to be on the lookout for ways to correct class action abuses.

Given the complexity, of our legal system, it is impossible to develop perfect standards for identifying and quickly disposing of frivolous claims. Inevitably this court and other courts will be faced with cases that waste the time and money of everybody. Beyond addressing the legal claims before us as we would in any ordinary case, we must frankly' identify situations where we suspect the lawyers, rather than the claimants, are the only potential beneficiaries. This is one such case.

B. Denial of Motions to Reconsider and Amend

We also affirm the district court’s decision to deny both Manistee’s motion for reconsideration and its motion for leave to amend its complaint. The plaintiffs motion for reconsideration and its proposed amended complaint, both of which are in the record, allege no new facts or law which could turn Manistee’s payment into a property deprivation, and thus state a claim for relief. Reconsideration or amendment would have been a waste of that court’s time.

III. Conclusion

We agree with the district court that the plaintiff has failed to state a claim against the City of Chicago. The dismissal of its case, and denial of its motions for reconsideration and amendment, are therefore

Affirmed.

      . Even assuming Manistee were deprived of this payment, there appears to have been ample pre- and post-deprivation process. First, the underlying administrative judgment itself—uncontested by the plaintiff—explicitly noted that "Pursuant to Municipal Code Chapter 1-19, the city’s collection costs and attorney's fees shall be added to the balance due if the debt is not paid prior to being referred for collection.” This constituted pre-deprivation notice. Second, the plaintiff's original complaint alleged state law claims for restitution—this, and any prerequisite state law administrative filings for overpayment suggest that state law provides avenues for relief.

      . Brief and Appendix of Defendant-Appellee at A4.

      . See Randy J. Kozel & David Rosenberg, Solving the Nuisance-Value Settlement Problem: Mandatory Summary Judgment, 90 Va. L. Rev. 1849 (2004). This article was written prior to the Class Action Fairness Act of 2005, Pub. L. No. 109-2. That law ameliorated, but by no means solved, the problem of class action abuse. See Mark Moller, The Rule of Law Problem: Unconstitutional Class Actions and Options for Reform, 28 Harv. J.L. & Pub. Pol’y 855 (2005); Keith N. Hylton, Asbestos and Mass Torts with Fraudulent Victims, 37 Sw. U. L. Rev. 575 (2008).

      . Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974); see also Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 677 (7th Cir. 2001).