FDIC v. ERNST & YOUNG LLP (ND Ill.)
Complex financial issues, opinion by Judge Easterbrook. A quote: "The FDIC says that the net loss to the insurance fund exceeds $500 million. Superior’s equity owners have promised to pay $460 million over time. Believing that the accountants also bear responsibility for the bank’s failure—that generally accepted accounting principles required the residual interests to be discounted in light of the possibility of prepayments and other events that could intervene before the outside investors had been paid off— the FDIC has sued Ernst & Young for hefty compensatory and punitive damages. Illinois law, which the FDIC agrees controls, permits third parties such as investors to sue accountants for fraud (which the FDIC alleges). 225 ILCS 450/30.1(1). It allows third parties to recover for ordinary negligence (which the FDIC also alleges) if the accountant knew that “a primary intent of the client was for the professional services to benefit . . . the particular person bringing the action”. 225 ILCS 450/30.1(2). If the FDIC prevails, 25% will go to the equity investors (effectively reducing the net proceeds of that settlement) and the rest will be applied to the benefit of Superior’s other creditors, principally the insurance fund."
GUSEWELLE, DELMAR v. CITY OF WOOD RIVER (SD Ill.)
Before BAUER, EASTERBROOK, and KANNE, Circuit Judges.Posted by Marcia Oddi at July 8, 2004 12:42 PM
BAUER, Circuit Judge. * * * There are numerous conceivable reasons for retaining a residency requirement for government employees. One, discussed by Wood River’s mayor, is that resident employees are available for work emergencies on short notice. Granted, there are probably not too many middle-of-the-night emergencies where a golf course mechanic would be needed, but it is not outside the realm of possibility. Furthermore, this court and others have repeatedly found that residency requirements are rationally related to a legitimate governmental interest. [cites omitted]III. Conclusion. While we sympathize with Mr. Gusewelle’s loss of his job, we do not find that his termination or the residency requirement that caused his termination create any legally cognizable claim for relief. AFFIRMED