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Domanus v. Locke Lord LLP

United States Court of Appeals, Seventh Circuit

January 31, 2017

Jan Domanus, et al, Plaintiffs-Appellants,
Locke Lord LLP, et al, Defendants-Appellees.

          Argued September 8, 2016

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 08 C 4922 - Manish S. Shah, Judge.

          Before Wood, Chief Judge, and Kanne and Hamilton, Circuit Judges.

          WOOD, Chief Judge.

         If the allegations in the supplemental complaints filed in this case are to be believed, the defendant law firms and lawyers were involved in a hornet's nest of ethical violations. The more difficult question, however, is whether the complaints state claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962(d), commonly known as RICO. Complicating matters is the fact that the alleged RICO violations all relate to a Polish company, Krakow Business Park Sp. z o.o. (Spolka z ograniczona od-powiedzialnoscia which roughly means private limited company), and its affiliates and owners. See RJR Nabisco, Inc. v. European Community, 136 S.Ct. 2090 (2016). The district court concluded, in an exhaustive opinion, that plaintiffs were estopped from asserting certain aspects of their claim and that nothing in the complaint plausibly asserted that the lawyer-defendants (which we will call them unless greater precision is needed) stepped over the line between representation of their clients and participation in a RICO conspiracy. We agree that the complaints do not state any federal claim, and so we affirm the district court's judgment.


         This is not the first time this court has encountered the problems of the Krakow Business Park. In Domanus v. Lewicki, 742 F.3d 290 (7th Cir. 2014) (Domanus T), we addressed a different slice of this litigation: a case brought (as this one is) by Jan Domanus and Andrew Kozlowski, two shareholders in the Business Park, against Adam Swiech, Richard Swiech, and Derek Lewicki, the other major shareholders. Domanus I reached us after a certification under Federal Rule of Civil Procedure 54(b) to the effect that the judgment was final, separable from the remainder of the case, and there was no just reason for delaying the appeal. At that time, the Swiechs and Lewicki challenged a default judgment of $413, 000, 000 that had been entered against them. The default was imposed as a sanction for discovery abuse. The plaintiffs offered evidence showing that they had suffered damages in the amount of $137, 800, 000. That number was then trebled to $413, 000, 000 pursuant to 18 U.S.C. § 1964(c).

          Critically for the present appeal, the Swiechs and Lewicki argued in Domanus I that the district court should have stayed its determination of damages until the plaintiffs' claims against nondefaulting defendants that were not involved in the appeal had been resolved-essentially that there should have been no Rule 54(b) certification because the judgment was not sufficiently final. We responded as follows:

Though we have in the past prohibited district courts from holding a damages hearing against a defaulting defendant when the same claim remains pending against non-defaulting defendants, this rule comes from concerns of judicial economy and inconsistent damages awards. In re Uranium Antitrust Litig., 617 F.2d 1248, 1262 (7th Cir. 1980). There is no concern for inconsistent awards here. The plaintiffs have committed-both in open court and in their briefs-to dismiss all claims against the nondefaulting defendants if the judgment against the Swiechs and Lewicki is affirmed. Accordingly, they will be judicially estopped from abandoning their firm commitment once we do so. See, e.g., Grochocinski v. Mayer Brown Rowe & Maw LLP, 719 F.3d 785, 795 (7th Cir. 2013).

         The scope of the judicial estoppel on which we relied is one of the issues in the present appeal.

         Before delving much further into the case now before us, it may help to set out the cast of characters, along with the shorthand designations we use in this opinion. The briefs present a bewildering alphabet soup of abbreviations, which we prefer to avoid.

          Plaintiffs (collectively Domanus, unless context requires otherwise):

• Jan Domanus, shareholder in Krakow Business Park
• Andrew Kozlowski, shareholder in Krakow Business Park
• Krakow Business Park SP z o.o. (now in bankruptcy in Poland) and its subsidiaries (i.e., KBP-2 SP. z o.o., etc.), referred to collectively as the Business Park

         Original Defendants (collectively the Swiech Group unless context requires otherwise):

• Adam Swiech, shareholder in the Business Park
• Richard Swiech, shareholder in the Business Park
• Derek Lewicki, shareholder in the Business Park

          Supplemental Defendants (also referred to as the lawyer-defendants):

• Kubasiak, Fylstra, Thorpe & Rotunno PC. ("the Ku-basiak ...

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