author: MANION, Circuit Judge.

text:
    ALLIED PROPERTY & CASUALTY INSURANCE COMPANY, et al., Plaintiffs-Appellees, v. METRO NORTH CONDOMINIUM ASSOCIATION, Defendant-Appellant.
    No. 16-1868
    United States Court of Appeals, Seventh Circuit.
    Argued October 27, 2016
    Decided March 8, 2017

      Steven N. Novosad, Don R. Sampen, Attorneys, Clausen Miller, Chicago, IL, for Plaintiffs-Appellees.
    Craig Gordon Penrose, Attorney, Laurie & Brennan, LLP, Chicago, IL, for Defendant-Appellant.
    Before WOOD, Chief Judge, and-BAUER and MANION, Circuit Judges.
   MANION, Circuit Judge.

Allied Property and Casualty Insurance Company issued a commercial general liability policy insuring a subcontractor who worked on a multi-unit residential property owned by Metro North Condominium Association. In 2006 the Metro North property sustained extensive water damage caused by the subcontractor’s defective window installation. Metro North and the subcontractor reached a settlement in which the subcontractor assigned to Metro North its right to any insurance proceeds covering the damage. The subcontractor’s insurers (Allied and another insurer named AMCO) then filed this declaratory judgment action seeking a declaration that they were not required to cover the losses claimed in the settlement. The district court found for the insurers, and Metro North appeals. We affirm.

I. BACKGROUND

Over ten years ago, Metro North Condominium Association hired a developer to build a condominium in Chicago. The developer used two subcontractors, CSC Glass and CSC Construction (collectively called CSC), to install the building’s windows. CSC installed the windows defectively, and as a result the building sustained significant water damage following a rain storm in October 2006. The condominium unit owners also incurred personal-property damage.

In 2009 Metro North sued the developer in Illinois state court for more than $5 million in damages. The developer apparently turned out to be insolvent, and in 2013 Metro North filed a fourth amended complaint that added a claim against CSC for breach of the implied warranty of habitability. Metro North also brought a negligence claim against CSC, but that claim was dismissed with prejudice because it was filed after the statute of limitations had expired.

In 2015 Metro North and CSC reached a settlement in which Metro North dismissed its pending lawsuit. In exchange, CSC assigned to Metro North CSC’s rights to payment, if any, of up to $700,000 of insurance coverage from Allied Property & Casualty Insurance Company (“Allied”). The settlement specified that the right to payment had to “aris[e] out of the claims asserted against CSC in the [underlying Illinois] Action or this Settlement thereof.” At the time of the settlement, the only pending claim against CSC in the underlying lawsuit was Metro North’s claim for breach of the implied warranty of habitability. The settlement further specified that it was not intended to compensate Metro North for the cost of repairing or replacing CSC’s defectively installed windows, but rather for the resultant damage to the remaining parts of Metro North’s condominium arid to the unit owners’ personal property.

Allied insured CSC under a standard commercial general liability policy (CGL policy) effective from March 2006 to March 2007. The policy required- Allied to pay CSC for any covered property damage for which CSC became liable: “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” The policy also contained a number of exclusions identifying damages for which there was no coverage. For instance, several provisions (collectively referred to here as the “your work” exclusions), excluded coverage for damage to the particular part of the relevant property worked on by CSC, or for the cost of repairing or replacing CSC’s pwn defective work. Under Exclusion 2.b, the policy also excluded coverage for damages arising from “contractual liability,” that is, damages that CSC became obligated to pay “by reason of the assumption of liability in a contract or agreement.” This exclusion applied only if CSC would not have been liable “in the absence of the contract or agreement.”

When Allied learned of CSC’s settlement, it brought this diversity action against Metro North in federal court, seeking a declaratory judgment that it was not hable for the damages claimed in the settlement. Metro North filed a cross-motion for summary judgment to the contrary. In 2016 the district court entered an order denying Metro North’s cross-motion and granting summary judgment for Allied, finding that the settlement damages were not covered under Allied’s policy. Metro appeals.

II. ANALYSIS

We review the district court’s grant of summary judgment de novo, construing all facts and reasonable inferences “in favor of the party against whom the motion under consideration was made.” Nat’l Am. Ins. Co. v. Artisan & Truckers Cas. Co., 796 F.3d 717, 728 (7th Cir. 2015). Summary judgment is required if the movant shows that “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).

The parties agree that this dispute is governed by Illinois law. See Santa’s Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., 611 F.3d 339, 345 (7th Cir. 2010). In Illinois, an insurer has a duty to indemnify “when the insured becomes legally obligated to pay damages in the underlying action that gives rise to a claim under the policy.” Traveler’s Ins. Co. v. Eljer Mfg., Inc., 197 Ill.2d 278, 258 Ill.Dec. 792, 757 N.E.2d 481, 491 (2001). “Once the insured has incurred liability as a result of the underlying claim, an insurer’s duty to indemnify arises only if ‘the insured’s activity and the resulting loss or damage actually fall within the CGL policy’s coverage.’” Id., 258 Ill.Dec. 792, 757 N.E.2d at 492. The duty to indemnify is significantly narrower than the duty to defend, which applies “if the complaint alleges facts that are even potentially within the coverage of the insurance policy.” Ohio Cas. Ins. Co. v. Bazzi Constr. Co., 815 F.2d 1146, 1147 (7th Cir. 1987). The construction of a CGL policy is a question of law. See CMK Dev. Corp. v. W. Bend Mut. Ins. Co., 395 Ill.App.3d 830, 335 Ill.Dec. 91, 917 N.E.2d 1155, 1162 (2009).

The question in this appeal is whether Allied’s policy requires it to indemnify CSC (and hence CSC’s assignee, Metro North) for the damages claimed in CSC’s settlement. Allied has a duty to indemnify only if the damages stemming from the underlying claim that resulted in liability actually fall within the policy’s coverage. See Eljer Mfg., 258 Ill.Dec. 792, 757 N.E.2d at 492. According to the settlement, Metro North’s claim for breach of the implied warranty of habitability is the only claim giving rise to CSC’s liability. Thus, Allied is liable only if the legally recoverable damages stemming from that claim are covered by the policy. We agree with the district court that they are not.

The measure of damages for a breach of the implied warranty of habitability is the cost of repairing the “defective conditions,” here the defectively installed windows. See Park v. Sohn, 89 Ill.2d 453, 60 Ill.Dec. 609, 433 N.E.2d 651, 657 (1982); Hills of Palos Condo. Ass’n, Inc. v. I-Del, Inc., 255 Ill.App.3d 448, 193 Ill.Dec. 760, 626 N.E.2d 1311, 1330 (1993). But Illinois courts have concluded that CGL policies like Allied’s do not cover the cost of repairing the insured’s defectively completed work. See Pekin v. Richard Marker Assocs., Inc., 289 Ill.App.3d 819, 224 Ill.Dec. 801, 682 N.E.2d 362, 365 (1997) (CGL policies are “not intended to pay the costs associated with repairing or replacing the insured’s defective work and products, which are purely economic losses”); Bazzi, 815 F.2d at 1148 (collecting cases). That conclusion is certainly true here, where the “your work” exclusions of Allied’s policy specifically exclude the cost of repairing CSC’s defective work. What is more, notwithstanding the limited recovery available for breach of the implied warranty of habitability, the settlement indicates (ironically) that Metro North was not seeking the cost of repairing CSC’s defectively installed windows, a point that Metro North also concedes on appeal.

Although the precise labeling of the claim against the insured is not dispositive when determining coverage, coverage must still be consistent with some viable theory of recovery before a duty to indemnify can arise. See Medmarc Cas. Ins. Co. v. Avent Am., Inc., 612 F.3d 607, 613 (7th Cir. 2010) (“Although we focus on factual allegations above legal theories, ‘factual allegations are only important insofar as they point to a theory of recovery.’ ”); Health Care Indus. Liab. Ins. Program v. Momence Meadows Nursing Ctr., Inc., 566 F.3d 689, 696 (7th Cir. 2009); U.S. Fid. & Guar. Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 161 Ill.Dec. 280, 578 N.E.2d 926, 932 (1991) (noting that the duty to defend arises when a “theory of recovery alleges potential coverage”). See also William J. Templeman Co. v. Liberty Mut. Ins. Co., 316 Ill.App.3d 379, 249 Ill.Dec. 65, 735 N.E.2d 669, 676 (2000) (explaining that coverage depends on the cause of action claiming a right to recovery; “[i]t is not sufficient that the facts alleged could have been framed in a different proceeding to cover a cause of action which would fall within the policy”). Here, breach of the implied warranty of habitability was the only legal theory in play at the time of the settlement, but that theory does not allow for the recovery of damages covered by the policy.

In short, liability for the cost of remedying CSC’s defectively installed windows— which is the only cost for which CSC was liable based on Metro North’s only claim against it — is not covered under Allied’s policy. By the settlement’s own terms, then, the claimed right to payment .does not “arisfe] out of the claims asserted against CSC” in the underlying lawsuit or the parties’ agreement, and CSC therefore has no duty to indemnify.

Furthermore, even if CSC assumed liability for damages to other parts of the building besides the windows themselves, coverage for those damages would be precluded under Exclusion 2.b of the policy, since the liability would then have arisen contractually from the settlement agreement. Nor could such liability have existed under a negligence theory “in the absence of the contract or agreement” since, as mentioned earlier, Metro North’s negligence claim had already been eliminated as an avenue of recovery before the settlement occurred.

Finally, we agree with the district court that Metro North lacks standing to sue on behalf of the individual unit owners for damage to their personal property. Under Illinois’ Condominium Property Act, a condominium association may act in a representative capacity on behalf of the unit owners only “in relation to matters involving the common elements or more than one unit[.]” 765 Ill. Comp. Stat. 605/9.1(b); Poulet v. H.F.O., L.L.C., 353 Ill.App.3d 82, 288 Ill.Dec. 404, 817 N.E.2d 1054, 1060 (2004). In the settlement, Metro North claims that it is entitled to recover (in part) for the unit owners’ loss of personal property resulting from water damage caused by CSC. But individual damage to the unit owners’ privately-owned belong ings is an individual loss that affects each owner separately; it is not a collective loss affecting multiple units or the “common elements” of the building. Cf. Sandy Creek Condo. Ass’n v. Stolt & Egner, Inc., 267 Ill.App.3d 291, 204 Ill.Dec. 709, 642 N.E.2d 171, 175-76 (1994) (condominium association had standing to sue developer for fraudulently misrepresenting to unit owners that the buildings as a whole were generally free of defects and constructed in substantial compliance with the condominium plans). Accordingly, to the extent the damages identified in the settlement are premised on the unit owners’ loss of personal property, Metro North has no duty to indemnify for the additional reason that the damages do not arise from a claim on which Metro North had standing to recover.

III. CONCLUSION

In sum, the settlement damages for which CSC incurred liability do not fall within the coverage of Allied’s policy. Because CSC did not become legally obligated to pay any sums to which the insurance applied, there is no duty to indemnify. The judgment of the district court in favor of the insurers is AFFIRMED.

      . Ordinarily the implied warranty of habitability does not apply to subcontractors like CSC, but Illinois courts have recognized an exception when the developer is insolvent. Minton v. Richards Grp. of Chic., 116 Ill.App.3d 852, 72 Ill.Dec. 582, 452 N.E.2d 835, 837 (1983).

      . During that time, CSC also had coverage through an umbrella policy issued by AMCO Insurance Company. The relevant terms of the AMCO and Allied policies are materially the same, so we (like the parties) will simply refer to Allied's policy for the remainder of our discussion.

      . Even apart from those exclusions, claims based on the implied warranty of habitability are contract claims that are not covered by standard CGL policies. See 933 Van Buren Condo. Ass’n v. W. Van Buren, LLC, 406 Ill. Dec. 661, 61 N.E.3d 929, 945 (Ill App. Ct. 2016) (claim for breach of the implied warranty of habitability is a contract claim, not a tort claim); Viking Constr. Mgmt., Inc. v. Liberty Mut. Ins. Co., 358 Ill.App.3d 34, 294 Ill.Dec. 478, 831 N.E.2d 1, 8-9 (2005) (potential liability' arising from breach-of-contract claims against insured did not fall within coverage of policy and did not trigger duty to defend).

      . Perhaps Metro North could have established coverage based on a theory of negligence (which allows for a broader recovery), but by the time of the settlement, negligence was not a viable theory of recovery because Metro North's negligence claim had already been dismissed with prejudice as time-barred under the statute of limitations. See Del Monte Fresh Produce N.A., Inc. v. Transp. Ins. Co., 500 F.3d 640, 643 (7th Cir. 2007) (in determining whether a legal claim against the insured is covered by the policy, " ‘it is the actual complaint, not some hypothetical version, that must be considered’ ").


source: Caselaw Access Project

author: HAMILTON, Circuit Judge.

license: Public Domain

text:
    Joan E. MULVANIA, et al., Plaintiffs-Appellants, v. SHERIFF OF ROCK ISLAND COUNTY and Rock Island County, Defendants-Appellees.
    No. 16-1711
    United States Court of Appeals, Seventh Circuit.
    Argued November 29, 2016
    Decided March 9, 2017

      Kenneth N. Flaxman, Joel A. Flaxman, Attorneys, Law Office of Kenneth N. Flax-man P.C., Chicago, IL, for Plaintiffs-Appellants.
    Kathy Laura Swett, Heidi J. Weller, Attorneys, Rock Island County State’s Attorney, Rock Island, ÍL, for Defendants-Appellees.
    Before BAUER, FLAUM, and HAMILTON, Circuit Judges.
   HAMILTON, Circuit Judge.

This appeal presents two distinct claims. The first arises from plaintiff Joan Mulva-nia’s arrest and detention at the Rock Island County Jail in November 2010. Mul-vania claims the jail has a widespread practice of conducting strip searches with excessive force and without accommodating people who are experiencing mental distress. The second claim arises from ten other plaintiffs who joined the suit to challenge the Rock Island Sheriffs policy that requires female detainees to wear either white underwear or no underwear at all. They argue the policy is not rationally related to a legitimate governmental objective and that it impairs their dignity without sufficient justification. They also seek certification to pursue that claim as a class.

We affirm the district court’s grant of summary judgment against Mulvania on both of her claims. We reverse the district court’s grant of summary judgment against the other plaintiffs on the underwear policy, but we affirm denial of class certification on that claim. We recount the facts as told in the parties’ undisputed statement of facts. Where a dispute exists, we note the dispute and resolve it in favor of plaintiffs for purposes of summary judgment, giving them the benefit of reasonable inferences. E.g., Zerante v. DeLuca, 555 F.3d 582, 584 (7th Cir. 2009).

I. Mulvania’s Claims

A. Undisputed Facts of Mulvania’s Arrest and Detention

On November 7, 2010, two police officers arrested Joan Mulvania for domestic battery. They brought her to the Rock Island County Jail, but upon arrival, Mulvania refused to exit the vehicle. Several corrections officers moved her from the car to a holding cell in the jail. Mulvania’s speech was slurred, and she screamed obscenities, refused to cooperate with the officers, and was physically combative. The officers testified that Mulvania appeared intoxicated and was acting erratically. Mulvania claims she was experiencing a “posh-traumatic stress disorder flashback.” She disputes that the officers smelled alcohol on her breath. Defendants acknowledge that they did not smell alcohol, but they rely on hospital laboratory results from that day in which Mulvania tested positive for cocaine and cannabinoids.

Once in the holding cell, Mulvania refused to change from her clothes into a jail uniform, which is part of the jail’s booking process for all detainees. The defendants claim that misdemeanor detainees are permitted to change in a private room when they are cooperative; however, the plaintiffs dispute this. When detainees are not cooperative, the Sheriff permits officers to use reasonable force to ensure compliance with the policy.

After Mulvania refused to change into the jail uniform, two female corrections officers and three or four male officers restrained her and removed her clothing. They placed Mulvania on her stomach, held her arms straight over her head, and then lifted her shirt off. During this process, Mulvania banged her head against the floor and yelled, “They’re going to rape me.” After they removed her clothing, the officers draped a jail uniform over her naked body and left the holding cell. Several minutes later, Mulvania had a seizure and was brought to the hospital. After she returned from the hospital, she was released from the jail without any charges.

B. Procedural History

In November 2010 Mulvania filed this suit under 42 U.S.C. § 1983 against Rock Island County and the Sheriff of Rock Island County. She alleged that the officers unlawfully arrested her, detained her without probable cause, conducted an unconstitutional strip search, used unreasonable force by shackling her, continued to detain her after she was informed that she would not be prosecuted, and sexually assaulted her because of her sexual orientation. Mulvania amended her complaint numerous times over the next several years, dropping most of her original claims and adding new ones, including the underwear claim.

On April 15, 2015, Mulvania sought to file a fourth amended complaint in which she intended to “delete all of the allegations pertaining to the individual defendants and to clarify plaintiffs official capacity claims against the Sheriff.” She also sought to add a new claim under the Americans with Disabilities Act. The district court denied her motion as it pertained to the Americans with Disabilities Act. The court said the new claim did not relate back to the third amended complaint and that it was not in the interest of justice to amend the complaint once again to add that new claim after so many years of litigation. The court permitted plaintiffs to file a fourth amended complaint “that includes only the allegations related to the underwear claim.”

When the plaintiffs filed their fourth amended complaint, however, they included not only the underwear claim but also Mulvania’s earlier excessive force claim. The Sheriff moved to strike those allegations because they exceeded the court’s order granting leave to amend the complaint. On March 31, 2016, the district court granted the motion to strike, but also proceeded to address the merits of the claim to avoid deciding the case on a “procedural technicality.”

C. Summary Judgment on Excessive Force Claim

Mulvania claims the Rock Island County Jail has a widespread custom or practice of using excessive force to require detainees to change into jail-issued uniforms. She acknowledges that the jail’s official policy authorizes a use-of-force continuum to ensure compliance with the uniform policy. She claims that in practice, however, excessive force is the norm. The district court Concluded that Mulvania put forward insufficient evidence of such a custom or practice of using excessive force. We agree.

We review de novo the district court’s decision granting the Sheriffs motion for summary judgment. Chaib v. Geo Group, Inc., 819 F.3d 337, 340 (7th Cir. 2016). We construe all facts in the light most favorable to Mulvania, who is the non-moving party. Id. Summary judgment is appropriate if there is no genuine dispute of material fact and the Sheriff is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).

Mulvania relies on two statements by corrections officers to support her claim of a widespread practice of using excessive force to ensure compliance with the jail’s uniform policy. Officer Bailey testified in his deposition, “When someone refuses to remove their clothes, we have to take their clothes away from them and give them a jumpsuit.” Officer Nesseler testified that if a detainee refuses to remove her clothing, ‘We just take ’em off.” Neither of these statements is evidence of the use of excessive force, let alone a widespread practice of it. The first statement is consistent with the Sheriffs stated use-of-force continuum policy. The second statement is quoted misleadingly by plaintiffs. Officer Nes-seler’s “We just take ’em off’ statement responded to the question: “how would you go about taking a detainee’s clothes off?” Her response is not evidence of any use of excessive force.

Mulvania argues, however, that the defendants did not challenge the sufficiency of the evidence in their motion for summary judgment. She claims that the district court raised this argument on its own and failed to give her notice and a reasonable time to respond on the issue as required by Rule 56(f). This is not correct. The defendants did argue that there was insufficient evidence of a widespread practice of excessive force in their motion. They claimed that Mulvania “cannot show that the policy of the Sheriff requires excessive force given the circumstances” nor can she “show a widespread practice or custom based on only her arrest and detention.” That was sufficient to require her to come forward with evidence of a widespread practice. It was not an error for the district court to decide the motion on these grounds.

D. Americans with Disabilities Act Claim

Mulvania argues next that the district court abused its discretion when it denied her motion for leave to amend her complaint to include a claim under the Americans with Disabilities Act (ADA), 42 U.S.C. § 12101 et seq. The ADA claim sought to challenge the jail’s intake procedures, alleging that the jail’s' practice of enforcing the uniform policy before providing mental health screening was unlawful. Mulvania alleged that she had PTSD and was experiencing a flashback during her intake, and that the jail policy failed to accommodate her disability.

The district court denied Mulvania’s motion for two reasons. First, the court said her motion did not relate back to the original pleading under Rule 15(c)(1) and was thus timebarred. The court noted that none of Mulvania’s earlier complaints included any reference to PTSD or mental health screening. Second, the court said that amending the complaint to allow the ADA claim would not further the interests of justice. See Fed R. Civ. P. 15(a). The court noted that Mulvania was attempting to recast her claims after years of litigation and that the lengthy delay in bringing the ADA claim seemed strategic.

We review for abuse of discretion the district court’s denial of Mulvania’s motion to amend her complaint. Hall v. Norfolk Southern Railway Co., 469 F.3d 590, 594 (7th Cir. 2006). As a general rule, district courts should liberally grant leave to amend pleadings. Fed. R. Civ. P. 15(a); Roman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962) (reversing denial of leave to amend by citing Rule 15(a)(2)’s mandate to freely grant leave to amend and stating “this mandate is to be heeded”); Barry Aviation Inc. v. Land O’Lakes Municipal Airport Comm’n, 377 F.3d 682, 687 & n.3 (7th Cir. 2004) (collecting cases). This liberal approach to amendments is particularly important where the law is uncertain, such as with pleading standards. Runnion v. Girl Scouts of Greater Chicago & Northwest Indiana, 786 F.3d 510, 520 (7th Cir. 2015) (“In the wake of Twombly and Iqbal, there remain considerable uncertainty and variation among the lower courts as to just how demanding pleading standards have become .... In the face of that uncertainty, applying the liberal standard for amending pleadings, especially in the early stages of a lawsuit, is the best way to ensure that cases will be decided justly and on their merits.”) (citations omitted).

Despite this generally liberal approach to pleading amendments, the district court did not abuse its discretion in this case. The court quite reasonably found that Mulvania’s amendment would not have furthered the interests of justice. Fed. R. Civ. P. 15(a). We have noted that “district courts have broad discretion to deny leave to amend where there is undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies, undue prejudice to defendants, or where the amendment would be futile.” Arreola v. Godinez, 546 F.3d 788, 796 (7th Cir. 2008); accord, e.g., Runnion, 786 F.3d at 520 (noting undue delay is sound basis for denying leave to amend pleadings).

Here, the district court found that the plaintiffs had unreasonably delayed introducing the ADA claim, and the court suggested that the delay was strategic. Mulva-nia could have alleged the ADA claim at the beginning of the suit. The lengthy delay could not be justified by newly discovered information. Moreover, allowing the new claim after several years of litigation would have burdened the defendants by requiring them to engage in-substantial additional discovéry. The court also found that the claim would be futile because it would be barred by the two-year statute of limitations for ADA claims. The district court set forth sufficient reasons to deny the proposed amendment. It did not abuse its discretion.

II. White Underwear Policy Claim

Mulvania filed her third amended complaint on April 24, 2012. It added ten plaintiffs who sued the Sheriff because of his policy that requires female detainees to wear white underwear or no underwear at all. The policy allows a detainee to purchase underwear from the jail’s commissary if she has sufficient funds. It is unclear how much the underwear costs or when the underwear would be delivered to the detainee. In addition, a detainee may contact family or friends outside of the jail and ask them to bring her white underwear.

Mulvania added these ten plaintiffs in response to the defendants’ argument that she was not representative of the class because she was not wearing underwear when she arrived at the jail. The other plaintiffs are women who were required to remove their underwear due to the policy. Some plaintiffs allege that corrections officers watched as they removed their underwear and changed into jail uniforms. They describe the experience as “very uncomfortable,” “embarrassing,” “humiliating,” and “upsetting.” They argue that the policy is not rationally related to a legitimate governmental objective and that it imposes an unjustified dignitary harm in violation of their rights under the Fourth, Eighth, and Fourteenth Amendments.

The Sheriffs sole stated rationale for the underwear policy was to prevent detainees from extracting ink from colored underwear. The theory was that detainees could use that ink to make tattoos. The Sheriff did not identify any instances of this occurring, but testified that he was “told ... when [he] wrote the policy” that such a security concern exists. The district court denied certification to the proposed class on August 15, 2012, in part because plaintiffs failed to satisfy the numerosity and predominance requirements of Rule 23(a) and (b)(3).

A. Summary Judgment on Merits

Plaintiffs' appeal the district court’s grant of summary judgment against their challenge to the white underwear policy. The court found that while the Sheriffs security interest in the underwear policy was “weak,” the dignity intrusion to plaintiffs was “minimal.” The court made this finding based in part on its conclusion that the policy was close to the “correctional mainstream” and because detainees would be forced to go without underwear for at most one day. The court noted that plaintiffs’ declarations discussed only the “actual process of removing their underwear” and did not show that they suffered dignitary harm when forced to go without underwear throughout the rest of their detention. Noting that “Federal courts defer to the judgment of jail administrators,” the court ruled that the Sheriff was entitled to summary judgement.

On appeal plaintiffs claim, among other things, that the district court erred by viewing the facts in the light most favorable to the defendants. We review de novo the district court’s grant of summary judgment for the Sheriff. Chaib, 819 F.3d at 340.

Because plaintiffs were pretrial detainees, not convicted prisoners, we assess their claim under the Fourteenth Amendment instead of the Eighth Amendment. In Bell v. Wolfish, the Supreme Court held that the Fourteenth Amendment’s Due Process Clause prohibits holding pretrial detainees in conditions that “amount to punishment.” 441 U.S. 520, 535, 99 S.Ct. 1861, 60 L.Ed.2d 447 (1979). A pretrial condition can amount to punishment in two ways: first, if it is “imposed for the purpose of punishment,” or second, if the condition “is not reasonably related to a legitimate goal — if it is arbitrary or purposeless — a court permissibly may infer that the purpose of the government action is punishment.” Id. at 538-39, 99 S.Ct. 1861. The Supreme Court recently explained that “a pretrial detainee can prevail by providing only objective evidence that the challenged governmental action is not rationally related to a legitimate governmental objective or that it is excessive in relation to that purpose.” Kingsley v. Hendrickson, 576 U.S. -, -, 135 S.Ct. 2466, 2473-74, 192 L.Ed.2d 416 (2015).

Defendants offer meagre justification for the white underwear policy. The only evidence in the record that supports the policy is the Sheriffs deposition testimony that he was “told ... when [he] wrote the policy” that such a security concern about tattoo ink exists. There is no evidence that detainees at the Rock Island County Jail have ever extracted ink from colored underwear to make tattoos. Nor, for that matter, have defendants identified an instance of this occurring anywhere else. The district court asserted that the policy might be close to the “correctional mainstream,” but we find no support for that conclusion in the record.

In its summary judgment order, the district court noted: “While the underwear policy may strike the reader as odd, and the Sheriffs explanation as implausible, the Court notes that many other jails have the same or similar policies.” Mulvania v. City of Rock Island, No. 4:10-cv-04080-SLD-JEH, slip op. at 15 n.11 (C.D. Ill. Mar. 31, 2016). The court then cited four cases to demonstrate this point, noting that “the Jail’s interest is perhaps close to the correctional mainstream and therefore makes the Court’s view of the> Sheriffs rationale stronger.” Id., citing Gaston v. McCoy, No. 15cv1054, 2015 WL 3484237 (C.D. Ill. June 1, 2015); Gallup v. Schmaeling, No. 12-cv-1264, 2013 WL 4855181 (E.D. Wis. Sept. 10, 2013); Batchelor v. Fenwick, 710 F.Supp.2d 811, 816 (S.D. Ind. 2010); Marriott v. County of Montgomery, 426 F.Supp.2d 1, 9 (N.D.N.Y. 2006).

We agree that the white underwear policy seems odd and that the Sheriffs explanation seems at least questionable. We disagree that the four cases cited by the district court show that “many other jails” have the same policy or that the policy may be within the “correctional mainstream.” Most of these cases are distinguishable from the Rock Island County Jail’s white underwear policy. Even if they were not, four cases are insufficient to establish the norms of correctional institutions. We address the four cases in turn.

Gaston involved a pro se complaint that merely alleged that a jail would not provide the plaintiff with underwear. 2015 WL 3484237, at *1. It did not claim that detainees were forced to remove their nonwhite underwear as a jail policy. Failing to give a new detainee underwear is considerably different from taking away her underwear. The second case, Gallup, was another pro se complaint. It did allege that the jail had a white underwear policy. 2013 WL 4855181, at *2. In any event, though, these unsupported allegations in unrelated complaints do not prove any fact sufficient for the court to make a finding at summary judgment.

In Batchelor, an opinion from 2010, the district court noted that a jail used to have a white underwear policy “whereby inmates wearing colored underwear were asked to exchange it for white underwear.” Batchelor, 710 F.Supp.2d at 816. In addition to the fact that the policy had been revoked, the Batchelor policy is readily distinguishable from the Rock Island policy. The policy may have been voluntary (detainees were “asked” to exchange their underwear), and detainees appeár to have been given underwear to replace their nonwhite underwear (“in exchange for”). Finally, in Marriott, it is unclear that a white underwear policy existed. There the court said that the defendants’ assertion about a white underwear policy “contravenes all of the prior testimony given by defendants and their officials — no CO, Jail administrator, or other official ever testified about arrestees and their white underwear.” 426 F.Supp.2d at 9.

Even if we assume the Rock Island County Jail is not the only jail ever to have had a white underwear policy, this record does not show the policy is within any correctional mainstream. Even if all four of these cases involved similar white underwear policies, that would still seem to imply that the Rock Island County Jail’s policy is an outlier. See Holt v. Hobbs, 574 U.S. -, -, 135 S.Ct. 853, 866, 190 L.Ed.2d 747 (2015) (“While not necessarily controlling, the policies followed at other well-run institutions would be relevant to a determination of the need for a particular type of restriction.”), citing Procunier v. Martinez, 416 U.S. 396, 414 n.14, 94 S.Ct. 1800, 40 L.Ed.2d 224 (1974). We make no judgment now about whether the policy is within a correctional mainstream, but this record does not show that it is.

Any security justification for the underwear policy is further undermined by defendants’ own claim that they often did not enforce the policy. Defendants state that the prohibition “was not consistently applied” and that “detainees often were permitted to wear colored underwear.” This admission supports an inference that the asserted security concern about tattoo ink from underwear is not genuine. See King v. McCarty, 781 F.3d 889, 898 (7th Cir. 2015) (prisoner challenged jail’s use of a transparent jumpsuit to transport prisoner: “Detainees arriving at the intake facility from other jails were not wearing similar garments, which at least tends to suggest that such clothing is not necessary for safe and secure penal transfers”). The irregular enforcement of the underwear policy also creates the potential for abuse, for instance by providing a way to harass bothersome detainees.

Giving plaintiffs the benefit of favorable inferences from this record, a reasonable trier of fact could find that the white underwear policy is not rationally related to a legitimate governmental objective, or is at least excessive in relation to such a purpose. This conclusion, without more, supports an inference that the policy punishes pretrial detainees in violation of the Fourteenth Amendment. Kingsley, 576 U.S. at -, 135 S.Ct. at 2473-74; Bell, 441 U.S. at 539, 99 S.Ct. 1861. We therefore reverse the district court’s grant of summary judgment against the plaintiffs on their challenge to the white underwear policy.

Even if the jail’s policy might ultimately be found to be rationally related to a legitimate governmental objective, the deprivation it imposes must not be excessive in relation to that purpose. Kingsley, 576 U.S. at -, 135 S.Ct. at 2473-74. This assessment calls for considering not just the government’s interest but also the dignity interests of the plaintiffs. See Brown v. Plata, 563 U.S. 493, 510, 131 S.Ct. 1910, 179 L.Ed.2d 969 (2011) (although prisoners are deprived of many rights while in custody, “the law and the Constitution demand recognition of certain other rights. Prisoners retain the essence of human dignity inherent in all persons.”).

Dignity serves an important balancing function alongside the legitimate safety and management concerns of jails and prisons. See King, 781 F.3d at 897 (“Claims such as [plaintiffs] require that we consider the larger tension between the privacy and dignity of prisoners and the pressing institutional needs for security and safety. Courts give wardens substantial deference in pursuing the latter ends, but that deference is not complete.”); see also Canedy v. Boardman, 16 F.3d 183, 186 (7th Cir. 1994) (“The judicial inquiry, then is to ‘balanc[e] the significant and legitimate security interests of the institution against the privacy interests of the inmates.’ ”), quoting Bell, 441 U.S. at 560, 99 S.Ct. 1861. Without the counterweight of dignity, a jail could presumably set forth security reasons to require detainees to remain naked throughout their detention or other such unseemly measures. The Constitution forbids such tactics. It requires consideration of individual dignity interests when assessing the permissibility of restrictive custodial policies.

Here, the plaintiff-detainees allege a credible dignitary' harm. They describe their experiences being deprived of their underwear as “very uncomfortable,” “embarrassing,” “humiliating,” and “upsetting.” In addition, the policy resulted in detainees attending their own court hearings without underwear. At least one plaintiff was deprived of her underwear during her menstrual cycle.

This indignity lasted for indeterminate periods of time. The district court found that detainees would be deprived of underwear for at most one day, but we have not found support for that finding. Defendants appear to concede this point in their brief. Thus, even if the white underwear policy turns out to be rationally related to a legitimate interest, the dignitary harm imposed by the policy might still be excessive in relation to that interest.

B. Denial of Class Certification

Plaintiffs also appeal the district court’s denial of class certification for the underwear claim. They argue the district court erred when it concluded that they failed to meet the predominance and numerosity requirements of Rule 23.. We agree that the district court incorrectly applied the predominance requirement, but we find no error in its numerosity ruling. We affirm the denial of class certification.

Federal Rule of Civil Procedure 23 governs class certification. A court may certify a plaintiff class when the named plaintiff demonstrates that the proposed class meets the four requirements of Rule 23(a) — numerosity, commonality, typicality, and adequacy of representation — and at least one of the branches of Rule 23(b). Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006). Plaintiffs have the burden of demonstrating that the requirements of Rule 23 are met. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350, 131 S.Ct. 2541, 180 L.Ed.2d 374 (2011).

District courts have “broad discretion to determine whether certification of a class-action lawsuit is appropri-áte.” Chavez v. Illinois State Police, 251 F.3d 612, 629 (7th Cir. 2001), quoting Mira v. Nuclear Measurements Corp., 107 F.3d 466, 474 (7th Cir. 1997). We review for abuse of discretion the district court’s denial of class certification. Chicago Teachers Union, Local No. 1 v. Board of Education of City of Chicago, 797 F.3d 426, 433 (7th Cir. 2015).

Plaintiffs sought class certification pursuant to Rule 23(b)(3), which requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.” The district court concluded that common issues did not predominate in the underwear claim because the damages would vary for individual class members based on factors such as how long a detainee was deprived of her underwear, whether she was on her menstrual cycle or pregnant, and other considerations. In short, the court concluded that “there would be no simple or formulaic method to calculate these damages across all of the individuals of the proposed class.” Mulvania v. Sheriff of Rock Island County, No. 4:10-cv-4080-SLD-JAG, 2012 WL 3486133, at *9 (C.D. Ill. Aug. 15, 2012).

This reasoning was a mistake. “It has long been recognized that the need for individual damages determinations at [a] later stage of the litigation does not itself justify the denial of certification.” Mullins v. Direct Digital, LLC, 795 F.3d 654, 671 (7th Cir. 2015); see also, e.g., Schleicher v. Wendt, 618 F.3d 679, 685 (7th Cir. 2010) (“The possibility that individual hearings will be required for some plaintiffs to establish damages does not preclude certification.”); William B. Rubenstein, Newberg on Class Actions, § 4:54 (5th ed. Dec. 2016 Update) (“[C]ourts in every circuit have uniformly held that the 23(b)(3) predominance requirement is satisfied despite the need to make individualized damage determinations and a recent dissenting decision of four Supreme Court Justices characterized the point as “well nigh universal.’”), citing Comcast Corp. v. Behrend, 569 U.S. -, -, 133 S.Ct. 1426, 1437, 185 L.Ed.2d 515 (2013) (Ginsburg and Breyer, JJ., joined by Sotomayor and Kagan, JJ., dissenting).

In cases like this, where damages must be assessed individually, district courts may “bifurcate the case into a liability phase and a damages phase.” Mullins, 795 F.3d at 671. The district court thus, erred when it ruled that class certification was precluded based on the need for damages to be assessed individually. This error was harmless, however, because the court did not abuse its discretion when it ruled that plaintiffs failed to meet the numerosity requirement.

To satisfy Rule 23’s numerosity requirement, the proposed class must be “so numerous that joinder of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). While there is no magic number that applies to every case, a forty-member class is often regarded as sufficient to meet the numer-osity requirement. See Swanson v. American Consumer Industries, Inc., 415 F.2d 1326, 1333 & n.9 (7th Cir. 1969) (even forty class members “is a sufficiently large group to satisfy Rule 23(a)”); see also Rubenstein, Newberg on Class Actions, § 3:12 (“[A] class of 40 or more members raises a presumption of impracticability of joinder based on numbers alone.”).

The plaintiffs estimated that their class would have forty-one members. The district court identified several problems with plaintiffs’ calculation and overall nu-merosity argument,, yet plaintiffs fail to address most of these problems on appeal. First, as the district court noted, plaintiffs did not address the impracticability of join-der in their amended motion in support of class certification. Nor do they on appeal. See Pruitt v. City of Chicago, 472 F.3d 925, 926-27 (7th Cir. 2006) (affirming denial of class certification; no showing that joinder of forty possible class members was impracticable). Second, plaintiffs did not explain critical ambiguities in how they calculated the potential class size. Nor do they on appeal. Third, the district court disagreed with plaintiffs’ class start date of November 15, 2008, which is two years before Mulvania’s first complaint. Plaintiffs address only this third issue on appeal. The district court’s first two reasons alone would be sufficient for us to affirm its ruling. The court’s approach to the third issue — the class start date — likewise was not an abuse of discretion.

The district court calculated a class of 29 members based on a class start date of April 24, 2010, two years before Mulvania filed the third amended complaint, which first introduced the underwear class allegations. Plaintiffs argue that this class start date is incorrect because, under Rule 15(c), the third amended complaint “related back” to the initial complaint Mulvania filed on November 15, 2010. Plaintiffs cited no authority to support this calculation method in their briefs, but at oral argument they cited Arreola v. Godinez, 546 F.3d 788, 796 (7th Cir. 2008).

Arreola does not stand for the proposition that plaintiffs claim. Although Arreola did address relation back under Rule 15(c) and numerosity under Rule 23(a), it addressed them separately. Id. at 796 (district court did not abuse discretion by granting leave to amend complaint to add class allegations to claim that related back to initial complaint); id. at 798 (plaintiff provided sufficient information in the record to establish numerosity).

One of the examples in Arreola might seem to assume that Rule 15(c) may push back the class start date to an earlier complaint (before any class allegations were made) for the purpose of satisfying Rule 23(a)’s numerosity requirement. See id. However, Arreola made no holding to that effect. The court merely hypothesized, for illustrative purposes, the ways in which the plaintiff in that case could easily meet the numerosity requirement. The court’s example showed how the record could have supported a finding that the putative class would exceed 350 members. It would have made no difference in the court’s example if it had used either complaint to calculate the class start date.

Plaintiffs cite no authority that directly supports their argument, and we need not make their arguments for them. See Vaughn v. King, 167 F.3d 347, 354 (7th Cir. 1999) (“It is not the responsibility of this court to make arguments for the parties.”). The district court did not err by basing its start date for the numerosity calculation on the third amended complaint, which is when the white underwear class allegations were first introduced.

We AFFIRM the district court’s grant of summary judgment for defendants on Mulvania’s excessive force claim, its partial denial of Mulvania’s motion to amend her complaint, and its denial of class certification in the underwear matter. We REVERSE the district court’s grant of summary judgment to defendants in the underwear matter, and we REMAND for further proceedings consistent with this opinion.


author: FLAUM, Circuit Judge.

text:
    Rebecca HILL, et al., Plaintiffs-Appellants, v. SERVICE EMPLOYEES INTERNATIONAL UNION, Healthcare Illinois, Indiana, Missouri, Kansas, et al., Defendants-Appellees.
    No. 16-2327
    United States Court of Appeals, Seventh Circuit.
    Argued December 7, 2016
    Decided March 9, 2017

      Amanda Kae Freeman, Attorney, William L. Messenger, Attorney, National Right to Work Legal Defense Foundation, Springfield, VA, Jacob H. Huebert, Jeffrey M. Schwab, Attorney, Liberty Justice Center, Chicago, IL, for Plaintiffs-Appellants.
    Scott A. Kronland, Attorney, Altshuler Berzon LLP, San Francisco, CA, for Defendant-Appellee Service Employees - International Union, Healthcare Illinois, Indiana, Missouri, Kansas.
    Frank Henry Bieszczat, Attorney, Office of the Attorney General, Civil Appeals Division, Chicago, IL, for Defendants-Appel-lees Michael Hoffman, Director of the Illinois Department of Central Management Services, James Dimas.
    Before BAUER and FLAUM, Circuit Judges, and SHADID, District Judge.

       Of the Central District of Illinois, sitting by designation. .

   FLAUM, Circuit Judge.

Appellants, home healthcare and childcare providers, challenge the exclusive-bargaining-representative provisions of the Illinois Public Labor Relations Act, 5 Ill. Comp. Stat. 315/1 et seq. (“IPLRA”). Appellants argue that the'statutory scheme violates their First Amendment associational rights. The district court dismissed their complaint for failing to state a claim. We affirm.

I. Background

Appellants provide home-based personal care and childcare services under various programs administered by Illinois agencies. The Home’ Services Program (“HSP”), 20 Ill. Comp. Stat. 2405/3(f), pays about 25,000 “personal assistants” who help “customers” with basic living needs. The customers are responsible for hiring and supervising the personal assistants, and the State of Illinois pays the assistants. See generally Harris v. Quinn, — U.S. -, 134 S.Ct. 2618, 2623-25, 189 L.Ed.2d 620 (2014). Illinois’ Child Care Assistance Program (“CCAP”), 305 Ill. Comp. Stat. 5/9A-11, subsidizes childcare services for low-income and at-risk famines. Parents choose their own providers and contribute to the cost if financially able. The program pays about 60,000 childcare providers. We refer collectively to the people working under these programs as “providers.”

The IPLRA generally allows public employees in a bargaining unit to choose, by majority vote, an exclusive bargaining representative to negotiate with the State over employment terms. See 5 Ill. Comp. Stat. 315/3(f); id. 315/9(a-5). A majority of both HSP and CCAP providers chose defendant-appellee Service Employees International Union (“SEIU”) as their exclusive bargaining representative. Though the SEIU bargains with Illinois over key employment terms for the providers, they are under no obligation to join the SEIU or pay dues. The SEIU cannot discriminate against a provider because of his or her membership in a labor union, or lack thereof. Id. 315/10(a)(2). Thus, providers are able to present their own grievances to the State, publicly oppose the SEIU, and associate with whomever they want, without retaliation from the union. In effect, the IPLRA authorizes Illinois to listen to only one voice before deciding pay rates, hours, and other key work conditions for the providers, and allows' a majority of a given bargaining unit to select that voice.

Appellants sued the SEIU and Illinois officials under 42 U.S.C. § 1983. The providers alleged that the IPLRA violates the First and Fourteenth Amendments because, by authorizing the SEIU to bargain on behalf of HSP and CCAP providers, the statute forces appellants into an agency-like association with the SEIU. They sought declaratory and injunctive relief prohibiting the HSP and CCAP bargaining units from choosing bargaining representatives.

Defendants-appellees moved to dismiss the complaint for failure to state a claim. The district court granted the motion, holding that “plaintiffs’ theory runs counter to the established principle that a state does not infringe on associational rights by requiring the type of exclusive representation at issue here.” Hill v. Serv. Emps. Int’l Union, Healthcare Ill., Ind., Mo., Kan., No. 15 CV 10175, 2016 WL 2755472, at *1 (N.D. Ill. May 12, 2016).

II. Discussion

We review de novo a district court’s grant of a motion to dismiss. Volling v. Kurtz Paramedic Servs., Inc., 840 F.3d 378, 382 (7th Cir. 2016). Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). “To properly state a claim, a plaintiffs complaint must contain allegations that plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level.” Kubiak v. City of Chi., 810 F.3d 476, 480 (7th Cir.), cert. denied sub nom. Kubiak v. City of Chi., Ill., — U.S. -, 137 S.Ct. 491, 196 L.Ed.2d 402 (2016) (internal quotation marks and citation omitted). “We accept as true all of the well-pleaded facts in the complaint and draw all reasonable inferences in favor of plaintiff[s-appellants].” Id. at 480-81.

The First Amendment encompasses both the freedom to associate and the freedom not to associate. Knox v. Serv. Emps. Int’l Union, Local 1000, 567 U.S. 298, 132 S.Ct. 2277, 2288, 183 L.Ed.2d 281 (2012) (citing Roberts v. United States Jaycees, 468 U.S. 609, 623, 104 S.Ct. 3244, 82 L.Ed.2d 462 (1984)). Mandatory associations are subject to exacting scrutiny, meaning they require a compelling state interest that cannot be achieved through significantly less-restrictive means. Id. at 2289. Appellants argue that the IPLRA creates a mandatory association subject to heightened scrutiny. However, case law forecloses such an argument.

In Minnesota State Board for Community Colleges v. Knight, 465 U.S. 271, 104 S.Ct. 1058, 79 L.Ed.2d 299 (1984), the Supreme Court held that a Minnesota law giving elected bargaining units exclusive power to “meet and confer” with employers did not interfere with the employees’ First Amendment associational rights. Id. at 273, 104 S.Ct. 1058. The Court found that the challenged laws “in no way restrained appellees’ freedom to speak ... [or] to associate or not to associate with whom they please, including the exclusive representative.” Id. at 288, 104 S.Ct. 1058 (emphasis added). Noting that the plaintiffs were free to form advocacy groups and were not required to join the union, the Court reasoned that any “pressure to join the exclusive representative ... [was] no different from the pressure to join a majority party that persons in the minority always feel ... [and did] not create an unconstitutional inhibition on associational freedom.” Id. at 289-90, 104 S.Ct. 1058 (footnotes omitted). Similarly, here, appellants do not need to join the SEIU or financially support it in any way. They are also free to form their own groups, oppose the SEIU, and present their complaints to the State. Thus, under Knight, the IPLRA’s exclusive-bargaining-representative scheme is constitutionally firm and not subject to heightened scrutiny.

Harris does not alter this proposition. In Harris, the Supreme Court assessed the IPLRA (the .same law at issue here), struck down its mandatory-fee provision, and left the balance of the act intact. See generally 134 S.Ct. 2618. In so doing, the Court declined to extend Abood v. Detroit Board of Education, 431 U.S. 209, 97 S.Ct. 1782, 52 L.Ed.2d 261 (1977) (upholding a mandatory union fee for nonunion-member teachers) beyond applying to “full-fledged” public employees. 134 S.Ct. at 2638. The Court also reasoned that personal assistants are not full-fledged public employees, because they are considered public employees only for purposes of the IPLRA, and not in other contexts. Id. at 2635-36. The Court held that requiring non-full-fledged public employees to pay fees supporting the union interfered with the employees’ associational rights and did not serve a compelling governmental interest, id. at 2639-40 (citing Knox, 567 U.S. 298, 132 S.Ct. at 2289; Roberts, 468 U.S. at 623, 104 S.Ct. 3244). Yet, though the Court was aware of the entire statutory scheme, it focused almost exclusively on the mandatory-fee provisions. See id. at 2640 (“Nor do [plaintiffs] challenge the authority of the SEIU[ ] to serve as the exclusive representative of all the personal assistants in bargaining with the State. All they seek is the right not to be forced to contribute to the union, with which they broadly disagree.”). Thus, Harris did not speak to the constitutionality of the exclusive-bargaining-representative provisions of the IPLRA.

Other courts examining similar challenges and state programs have also concluded that Harris did not limit Knight’s approval of exclusive bargaining representatives. D’Agostino v. Baker, 812 F.3d 240, 244 (1st Cir.) (Souter, J., by designation), cert. denied, - U.S. —, 136 S.Ct. 2473, 195 L.Ed.2d 812 (2016) (“What Harris did not speak to, however, was the premise assumed and extended in Knight-, that exclusive bargaining representation by a democratically selected union does not, without more, violate the right of free association on the part of dissenting nonunion members of the bargaining unit.”); see also Jarvis v. Cuomo, 660 Fed.Appx. 72, 74-75 (2d Cir. 2016), cert. denied, No. 16-753, — U.S. -, 137 S.Ct. 1204, 197 L.Ed.2d 246, 2017 WL 737827 (U.S. Feb. 27, 2017) (“Harris addressed only the narrow question of whether individuals who were neither full-fledged state employees nor union members could be required to pay fair share fees to their bargaining unit’s exclusive representative; it did not consider the constitutionality of a union serving as the exclusive representative of non-full-fledged state employees in bargaining with the State. Thus, Harris does not relieve us from the duty to follow Knight even where, as here, plaintiffs are not full-fledged state employees.”) (internal citations, brackets, and quotation marks omitted); Bierman v. Dayton, No. CV 14-3021 (MJD/LIB), — F.3d -, -, 2017 WL 29661, at *7 (D. Minn. Jan. 3, 2017) (similar). In short, the IPLRA’s authorization of a majority-elected exclusive bargaining representative does not compel an association that triggers heightened First Amendment scrutiny.

Appellants argue that this case is akin to several Supreme Court association cases employing heightened scrutiny. Appellants’ Br. at 11-12 (citing Elrod v. Burns, 427 U.S. 347, 362-63, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976) (termination due to employee’s political affiliation triggers heightened scrutiny); O’Hare Truck Serv., Inc. v. City of Northlake, 518 U.S. 712, 714-15, 116 S.Ct. 2353, 135 L.Ed.2d 874 (1996) (same for independent government contractors); Roberts, 468 U.S. at 623, 104 S.Ct. 3244 (forced admittance of female club members triggers heightened scrutiny); Hurley v. Irish-Am. Gay, Lesbian & Bisexual Grp. of Bos., 515 U.S. 557, 577-78, 115 S.Ct. 2338, 132 L.Ed.2d 487 (1995) (parade organizers could not be required to include among marchers a group imparting a message the organizers did not wish to convey absent “a compelling, or at least important, governmental object”); Boy Scouts of Am. v. Dale, 530 U.S. 640, 656, 658-59, 120 S.Ct. 2446, 147 L.Ed.2d 554 (2000) (“forced inclusion of an unwanted person in a group” triggers heightened scrutiny)). However, these cases are inapposite. As the First Circuit explained in D’Agostino in assessing a substantially similar state program, exclusive bargaining representation does not rise to the level of the above cases, as providers “are not compelled to act as public bearers of an ideological message they disagree with[,] ... accept an undesired member of any association they may belong to, ... [or] modify the expressive message of any public conduct they may choose to engage in.” 812 F.3d at 244 (internal citations omitted). We agree with this reasoning; the IPLRA’s exclusive-bargaining provision does not create associations like those the Supreme Court has found to be constitutionally problematic.

As the IPLRA does not create a mandatory association, it is not subject to heightened scrutiny. And appellants do not argue that the IPLRA would fail rational-basis scrutiny. Illinois has legitimate interests in hearing the concerns of providers when deciding what employment terms to offer them, and in having efficient access to this information. Negotiating with one majority-elected exclusive bargaining representative seems a rational means of serving these interests. See Knight, 465 U.S. at 291, 104 S.Ct. 1058.

III. Conclusion

For the foregoing reasons, we Affirm the judgment of the district court.

      . Home healthcare and childcare providers are unlike many public employees, because the providers are defined as public employees only for purposes of the IPLRA. 5 Ill. Comp. Stat. 315/3(n). As a result, they are not considered "full-fledged” public employees. Harris, 134 S.Ct. at 2638. However, under the IPLRA the providers still choose exclusive bargaining representatives.

      . Previously, the IPLRA contained a mandatory fee provision requiring HSP and CCAP bargaining-unit members to pay union dues. However, that part of the statute was struck down in Hams as creating an unconstituti'onal mandatory association between the providers and SEIU. 134 S.Ct. at 2639-40.

      . Appellants argue that this Court should disregard the above authority and instead rely on Mulhall v. UNITE HERE Local 355, 618 F.3d 1279 (11th Cir. 2010). However, Mulhall is distinguishable from this appeal. In that case, the Eleventh Circuit held that a plaintiff had standing to challenge the impending forced unionization of his company. Aside from the fact that Mulhall did not address the merits of the plaintiff's claims, id. at 1288, the associational-interest analysis turned on employees being forced to belong to a union, id. ("while compulsory affiliation with a union does not, without more, violate the First Amendment rights of employees, it is no less true that compelling an employee to belong to a union implicates that person's First Amendment right not to associate”) (internal citations, quotation marks, and alterations omitted). In this case, there is no allegation that appellants are forced to join — or even support — the SEIU.

      . Because we hold that the IPLRA does not give rise to a mandatory association, we decline to address appellants' argument that the IPLRA gives Illinois "untrammeled authority ... to designate mandatory agents to speak and contract for citizens in their relations with government.”


author: WOOD, Chief Judge.

text:
    TELAMON CORPORATION, Plaintiff-Appellant, v. CHARTER OAK FIRE INSURANCE COMPANY and St. Paul Fire and Marine Insurance Company, Defendants-Appellees. Telamon Corporation, Plaintiff-Appellant, v. Charter Oak Fire Insurance Company and Travelers Casualty & Surety Company of America, Defendants-Appellees.
    No. 16-1205, No. 16-1815
    United States Court of Appeals, Seventh Circuit.
    Argued September 29, 2016
    Decided March 9, 2017

      Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. l:13-cv-00382-RLY-DML, Richard L. Young, Judge.

    Sean M. Hirschten, Attorney, George M. Plews, Attorney, Plews, Shadley, Racher & Braun LLP, Indianapolis, IN, for Plaintiff-Appellant.
    Michele A. Chapnick, Attorney, Gregory & Meyer P.C., Troy, MI, Richard K. Shoultz, Attorney, Lewis Wagner, LLP, Indianapolis, IN, for Defendants-Appel-lees Charter Oak Fire Insurance Company (Case Ños. 16-1205, 16-1815), St. Paul Fire & Marine Insurance Company (Case No. 16-1205).
    Christie M. Bird, Attorney, Arthur Neil Lambert, Attorney, Frenkel Lambert Weiss Weisman & Gordon, LLP, New York, NY, Darren A. Craig, Attorney, Julia Blackwell Gelinas, Attorney, Frost Brown Todd LLC, Indianapolis, IN, for DefendanL-Appellee Travelers Casualty and Surety Company of America (Case No. 16-1815).
    Before WOOD, Chief Judge, and RIPPLE and WILLIAMS, Circuit Judges.
   WOOD, Chief Judge.

Underlying this insurance dispute is a regrettably common tale of greed and dishonesty. Telamon, an Indiana telecommunications firm, engaged Juanita Berry to work for it from 2005 to 2011 as its Vice President of Major Accounts. Berry used that position to steal over $5 million from the firm. Upon discovering this loss, Tela-mon then turned to two insurance policies in an effort to recover its money: a crime insurance policy with Travelers Casualty <& Surety (Travelers), and a commercial property policy with Charter Oak Fire Insurance (Charter Oak). At that point, Tela-mon crashed into a brick wall. Travelers denied coverage because Berry was not, legally speaking, an employee. And Charter Oak refused to pay because, in practice, she was.

Telamon cried foul and filed a lawsuit in which it argued that Berry’s actions were covered under both policies and that the insurers had breached their duty of good faith. At the eleventh hour, it tried to add St. Paul Fire and Marine Insurance (St. Paul) as a defendant. The court rejected the amendment, at which point Telamon filed a new action against St. Paul and Charter Oak. That case promptly found its way back to the same court and was dismissed as an impermissible effort to split the claim. Telamon appealed (case 16-1205). Later the court granted summary judgment in favor of the defendants in the original case. Again, Telamon appealed (case 16-1815). We consolidated the appeals for disposition. Finding no error in either of the district court’s decisions, we affirm.

I

We refer to the original suit against Charter Oak. and Travelers as Telamon I, and the suit against Charter Oak and St. Paul as Telamon II. The critical background facts are the same for both eases.

Berry worked for Telamon from 2005 to 2011. Her employment was governed by a series of Consulting Services Agreements (Agreements) between Telamon and J. Starr Communications, Berry’s one-woman company through which she provided her services. The terms of the Agreements remained largely unchanged during Berry’s six-year association with Telamon. Her role, however, did not. Berry’s responsibilities expanded well beyond those described in the Agreements, and she eventually became Telamon’s Vice President of Major Accounts, making her the company’s senior manager in the New York and New Jersey region. In this capacity she oversaw Telamon’s AT&T Asset Recovery Program, which was supposed to remove old telecommunications equipment from AT&T sites and sell it to salvagers. Berry removed the equipment and sold it, but she pocketed the profits. By the time the company realized something was amiss in 2011, it had suffered $5.2 million in losses. Telamon fired Berry and she was later convicted in the District of New Jersey on federal charges of wire fraud and tax evasion; she was sentenced to 60 months’ imprisonment and was assessed $3,440,885 in restitution payable to Telamon.

Berry’s misdeeds left Telamon with the problem of recouping its losses. Undoubtedly dubious that it would ever see much of the required restitution, it turned to two insurance policies for that purpose: its crime insurance policy with Travelers and its general commercial insurance policy with Charter Oak. These two insurers are subsidiaries of a larger Travelers entity, and so Telamon asked them to work together to avoid duplicative claims investigations. They obliged, but in late 2012 they each gave Telamon the disappointing news that they were denying coverage. Telamon fought back by filing Telamon I, which started out in Indiana state court and landed in the federal court via removal. Telamon asserted that its loss was covered under both policies and that the insurers had acted in bad faith (a tort under Indiana law). The district court granted summary judgment for the insurers on the coverage issues in December of 2015, and dismissed the remaining bad faith claims the following April.

Meanwhile, in June 2014, Telamon sought permission to amend its complaint in Telamon I to add another set of claims based on older policies issued by St. Paul and Charter Oak. Because this request came almost a year after the deadline for amending pleadings had expired, the court said no. At that point, Telamon filed Tela-mon II in Indiana state court, raising essentially the same claims. The insurers again removed, and in January 2016, the district court dismissed the suit as an impermissible attempt to split claims.

II

As these cases rest on diversity jurisdiction, we resolve Telamon’s claims under Indiana law. See Native Am. Arts, Inc. v. Hartford Cas. Ins. Co., 435 F.3d 729, 731 (7th Cir. 2006). Indiana courts interpret insurance policies under “the same rules of construction as other contracts,” taking “the perspective of an ordinary policyholder of average intelligence.” Bradshaw v. Chandler, 916 N.E.2d 163, 166 (Ind. 2009). An insured has the burden of proving the existence of coverage, while the insurer must show that an exclusion applies. Nat’l Fire & Cas. Co. v. W. By & Through Norris, 107 F.3d 531, 535 (7th Cir. 1997); Home Fed. Sav. Bank v. Ticor Title Ins. Co., 695 F.3d 725, 732 (7th Cir. 2012).

The analysis of an insurance policy proceeds in two steps. First, the court examines whether the terms of a policy are unambiguous. If they are, then the court adopts the ordinary meaning of the words. Beam v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind. 2002); Allgood v. Meridian Sec. Ins. Co., 836 N.E.2d 243, 246-47 (Ind. 2005) (referring to the dictionary). If there is ambiguity, the court advances to the second step, where it construes any ambiguity strictly against the insurer and in favor of coverage. Bradshaw, 916 N.E.2d at 166. A policy is ambiguous if “reasonable people would differ as to its meaning.” Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d 1171, 1176 (Ind. 2014).

A

The Travelers policy at issue covers theft by “an Employee.” It defines “an Employee” to include “any natural person ... who is leased to. the Insured under a written agreement between the Insured and a labor leasing firm, while that person is subject to the Insured’s direction and control and performing services for the Insured.” Berry is a natural person, and there was a written agreement between Telamon and J. Starr. To prevail, Telamon must show both that J. Starr was a “labor leasing firm” and that Berry was “subject to [Telamon’s] direction and control.” Failure to prove either of these is enough to defeat its claim.

Telamon argues that the plain meaning of a “labor leasing firm” is a company “in the business of placing its employees at client companies for varying lengths of time in exchange for a fee.” Pac. Emp’rs Ins. Co. v. Wausau Bus. Ins. Co., 2007 WL 2900452, at *8 (M.D. Fla. Oct. 15, 2007); see also Scottsdale Ins. Co. v. Torres, 561 F.3d 74, 76, 78 (1st Cir. 2009) (adopting a similar interpretation). In other words, a “labor leasing firm” is a business concern that sells another person’s work for a specified time and for a specified fee.

We will accept that definition for purposes of this opinion. Yet even so, we cannot conclude that'J. Starr meets it. It is true that the Agreements were contracts between Telamon and J. Starr under which the former obtained the right to Berry’s labor. But J. Starr was not a firm in the business of leasing labor; it was just Berry’s vehicle for providing her own services. To classify her corporate alter ego as a “labor leasing firm” would be to elevate form over substance. The cases Tela-mon cites to support its position underscore our point. The “labor leasing firm” in Pacific Employers had multiple branches and specialized “in providing industrial clients with daily workers.” 2007 WL 2900452, at *1-2. Similarly, the firm in Torres “hire[d] individuals and place[d] them with client companies for varying lengths of time,” including at least six with the company litigating its insurance coverage. 561 F.3d at 75-76. There is no way to squeeze J. Starr into the same box. Berry’s company was a legal convenience, and nothing more. Because it was not a “labor leasing firm,” she was not an “Employee” for purposes of the Travelers policy.

B

Telamon also claims that Berry’s theft is covered by its Charter Oak commercial property policy. That policy covers risks of direct physical loss, unless one of its exclusions applies. We can assume that Tela-mon suffered a loss covered by the policy. We thus turn to the exclusions, and in particular to the exclusion for any “[d]is-honest or criminal act by ... employees (including leased employees), directors, trustees, authorized representatives or anyone (other than a carrier for hire or bailee) to whom you entrust the property for any purpose.” (Emphasis added.) The parties agree that Berry committed a “dishonest or criminal act.” What they dispute is whether she falls into one of the specified personnel categories. If so, the exclusion applies, and coverage was properly denied.

We consider first whether Berry was an “authorized representative” of Tel-amon. Courts that have looked at this term in other cases dealing with the same policy language have concluded that it is unambiguous. See Stop & Shop Cos., Inc. v. Fed. Ins. Co., 136 F.3d 71, 75-76 (1st Cir. 1998); Stanford Univ. Hosp. v. Fed. Ins. Co., 174 F.3d 1077, 1085-86 (9th Cir. 1999) (interpreting same policy as Stop & Shop). We agree with them, and since Indiana has no case on point, we adopt Stop & Shop’s definition of “authorized representative” as “a person or company empowered to act on an entity’s behalf.” 136 F.3d at 74.

This describes Berry’s relationship with Telamon well. Telamon authorized her to act on its behalf. She was its most senior person in New York and New Jersey, and she had operational oversight over the company’s facilities in that area. She hired and fired employees, ran meetings, and signed contracts on Telamon’s behalf. Indeed, she was engaged in' large part to be an “authorized representative.” Telamon arranged for her services in order to take advantage of her relationship with AT&T, one of its largest customers. Even Berry’s title, Vice President of Major Accounts, reflects this role: AT&T was a “major account,” and she was in charge of managing it.

Telamon resists this conclusion. In its view, unless Berry was authorized to do the specific activity that gave rise to the theft, "she was not an “authorized representative.” And since the Agreements did not expressly mention making contracts to sell equipment, it reasons that Berry lacked the requisite authorization. This view requires us to ignore reality. Even Telamon concedes that Berry’s actual role grew over time to reach matters far beyond the Agreements’ terms. It did not expect slavish adherence to the list of responsibilities in the Agreements, and so neither should we. Such an approach is inconsistent with the breadth of the list of exclusions. Moreover, even using the narrow definition of duties that Telamon prefers, it cannot prevail. Berry was spearheading the AT&T equipment removal program and was thus authorized to conduct the very activity that led to her crime. This also made her a person to whom Telamon “entrust[ed] the property for any. purpose,” since she was entrusted with the'equipment she stole. An ordinary reader would understand that Berry fell within the exclusion, and thus that the Charter Oak policy did not cover the losses for which she was responsible.

Ill

We turn now to Telamon’s assertion that both insurers breached their duty of good faith, which is a standalone tort in Indiana. Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 518-20 (Ind. 1993); Monroe Guar. Ins. Co. v. Magwerks Corp., 829 N.E.2d 968, 975-76 (Ind. 2005). There are four well-established grounds for such a claim. Hickman, 622 N.E.2d at 519; Magwerks, 829 N.E.2d at 976. Telamon concedes that none of them applies to its case. It argues instead that the plaintiff should never have to establish the insurer’s ill will and that there should be a fifth ground for the tort — bad faith in handling an insurance claim — even though it knows that this court has no power to change Indiana law. Telamon predicts that Indiana’s courts are on the cusp of taking this step, however, and so it asks us to certify this case to the Supreme Court of Indiana.

Certification to Indiana’s highest court is available if there is “an issue of state law that is determinative of the case and on which there is no clear controlling Indiana precedent.” Ind. R. App. P. 64. Although we have the authority to certify questions when we conclude that the state-law issue “will control the outcome of a case pending in the federal court,” Cir. R. 52(a), we do not take this step lightly. Telamon has not persuaded us that we should exercise our discretion here to do so. The principal cases on which it relied, Hickman and Magwerks, did leave open the possibility of expanding the grounds that would support the tort of an insurer’s breach of the duty of good faith. Hickman, 622 N.E.2d at 519; Magwerks, 829 N.E.2d at 976. But it has been over 20 years since Hickman and over 10 since Magwerks, and the list has not expanded. We see no reason to ignore the Indiana Supreme Court’s apparent satisfaction with the status quo, especially given the fact that Mag-werks explicitly refused to recognize the claim-handling ground for which Telamon advocates here. 829 N.E.2d at 976.

Against all this, Telamon points to two cases from the Indiana Court of Appeals: HemoCleanse, Inc. v. Phila. Indem. Ins. Co., 831 N.E.2d 259 (Ind. Ct. App. 2005), and Klepper v. ACE Am. Ins. Co., 999 N.E.2d 86 (Ind. Ct. App. 2013). Neither one persuades us that Indiana’s courts have already taken the step for which Tel-amon argues, or that they are on the brink of doing so. A footnote in HemoCleanse cites Magwerks in support of an offhand remark that “an insurer may exhibit bad faith in, for example, its handling of the claim....” 831 N.E.2d at 264 n.2. Yet that statement is incorrect — Magwerks expressly rejected that argument. Klepper is similarly unhelpful. After noting that Mag-werks refused to recognize a claims-handling theory, the court again declined to do so in Klepper. See 999 N.E.2d at 98 & n.11. In the 23 years since Hickman, no Indiana court has embraced Telamon’s theory. We certify questions only when the answer is unclear. That is not the case here.

Without a new exception, Telamon cannot succeed under this theory. We thus have no need to address its argument that its bad-faith claim does not require proof of ill will, or at least that Indiana law is unsettled on the point. We will comment only that this too looks like an uphill battle, in light of the observation in Magwerks that “[a]s a general proposition, a finding of bad faith requires evidence of a state of mind reflecting dishonest purpose, moral obliquity, furtive design, or ill will.” 829 N.E.2d at 977 (internal quotation marks and alterations omitted). Nor does it matter whether, as Telamon argues, its evidence would permit a finding of ill will. Telamon finds it suspicious that Travelers determined in May 2012 that its loss was not covered, but it did not share its decision until November 29, 2012, by which time it was too late to sue under the policy. Telamon’ also sees ill will in the decision to delay disclosure until after the Travelers adjuster spoke to his Charter Oak counterpart (recall they are part of the same corporate entity). Even viewed in isolation, we doubt this is a sufficient showing of ill will. But it does not stand alone. Telamon omits the obvious explanation for the delay and communication: It asked the insurers to coordinate their investigations. No rational finder of fact could find bad faith on such a flimsy basis.

IV

The final question is whether the district court erred in dismissing Telamon II. The court rested this finding on claim preclusion principles. In deciding the pre-clusive effect of a federal-court judgment in a diversity case, the Supreme Court has adopted a two-part procedure. In principle, the effect to be given any federal judgment is a question of federal common law. See Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001). But when the earlier judgment rested on diversity (or another area where state law furnishes the rule of decision), “the federal court should ... adopt as the federal common law rule of res judicata' the rule of the state in which the court is located.” Allan Block Corp. v. Cnty. Materials Corp., 512 F.3d 912, 915 (7th Cir. 2008). Since nothing that justifies departing from the general rule comes to mind, we thus look to Indiana law to see what effect we should give to Telamon I.

Indiana bars parties from “split[ting] a cause of action, pursuing it in a piecemeal fashion and subjecting a defendant to needless multiple suits.” Hilliard v. Jacobs, 957 N.E.2d 1043, 1048 (Ind. Ct. App. 2011) (citation omitted). Instead, “[mjultiple legal theories supporting relief on account of one transaction must be litigated at one go.” Erie Ins. Co. v. George, 681 N.E.2d 183, 190 (Ind. 1997) (citation omitted). Hilliard is especially relevant, because it concerned insurance coverage. As in our case, the trial court rebuffed the plaintiffs attempt to add more claims to her complaint, and the plaintiff later filed a new suit “asserting previously-stricken claims based on the same facts and transaction as the first lawsuit.” 957 N.E.2d at 1045. The Indiana Court of Appeals found that the second suit was barred by Indiana’s rule against claim splitting, because- although “the legal theories advanced have changed, the facts being litigated and the ultimate goal have remained exactly the same.” Id. at 1048.

So too here. The claims in Tela-mon II are nearly identical to those the district court refused to permit Telamon to add to its complaint in Telamon I. That ruling was well within the district court’s discretion, and in any event is not challenged here. That was a wise decision: Telamon missed the deadline to amend by nearly a year. At this point, however, the reason why the new claims were not advanced in the earlier case has fallen by the wayside. Under Indiana law, Telamon was not at liberty to split its cause of action and subject the insurers to repetitious lawsuits. A quick look at the policies at issue in Telamon II reveals that they are materially indistinguishable from those in Tela-mon I, and they were being invoked to cover the same loss. The district court was thus correct to invoke the bar against claim splitting.

V

Berry’s theft was not covered under either the Travelers or the Charter Oak policy. In addition, Telamon has not stated a claim for a breach of the-duty of good faith. Finally, it was not entitled to bring a new lawsuit that did no more than add a few additional insurers and policies to its basic case. The judgments of the district court are Affirmed.