Estate of Pedersen v. Gecker, No. 16-1235 (7th Cir. 2017)

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Justia Opinion Summary

Emerald had an Illinois gaming license to operate in East Dubuque. Emerald operated profitably in 1993 but then struggled to compete with an Iowa casino. By 1996, Emerald had closed the casino and was lobbying for an act that would allow it to relocate. The Board denied Emerald’s license renewal application. While an appeal was pending, 230 ILCS 10/11.2 was enacted, permitting relocation. In 1998, before the enactment, defendants met with Rosemont’s mayor and representatives of Rosemont corporations about moving to Rosemont. After the enactment, the parties memorialized the terms of Emerald’s relocation. Emerald did not disclose the agreements as required by Illinois Gaming Board rules. By October 1999, Emerald had contracts with construction companies and architecture firms but had not disclosed them. Emerald altered its ownership structure; several new “investors” had connections to Rosemont’s mayor and state representative. stock transfers occurred without required Board approval. In 2001, the Board voted to revoke Emerald’s license. Its 15-month investigation was apparently based on a belief that Emerald had associated with organized crime but the denial notice focused on inadequate disclosures. The Board listed five counts but did not list who was responsible for which violation. Illinois courts affirmed the revocation but held that the Board had not proven an association with organized crime. Emerald was forced into bankruptcy. The trustee sued the defendants, asserting breach of contract and breach of fiduciary duty. The district court dismissed the breach‐of‐fiduciary‐duty claim as time-barred. The Shareholder’s Agreement required that shareholders comply with IGB rules; the court held that each defendant had violated at least one rule, calculated damages by valuing Emerald’s license, and held all but one defendant severally liable for the loss. The Seventh Circuit concluded that the defendants should be held jointly and severally liable, but otherwise affirmed.

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In the United States Court of Appeals For the Seventh Circuit ____________________ Nos. 16 1075, 16 1132, 16 1133, 16 1143, 16 1148, 16 1160, 16 1161, 16 1164, 16 1165, 16 1235 IN RE: EMERALD CASINO, Inc. Plaintiff Debtor, FRANCES GECKER, as Trustee of Emerald Casino, Inc. Plaintiff Appellee/Cross Appellant, Plaintiff Appellant/Cross Appellee, v. ESTATE OF KEVIN FLYNN, JOHN MCMAHON, KEVIN LARSON, JOSEPH MCQUAID, Defendants Appellants/Cross Appellees, and ESTATE OF PEER PEDERSEN, Defendant Appellee/Cross Appellant. ____________________ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 11 C 4714 — Rebecca R. Pallmeyer, Judge. ____________________ ARGUED MAY 31, 2017 — DECIDED AUGUST 11, 2017 2 Nos. 16 1075 et al. ____________________ Before KANNE, SYKES, and HAMILTON, Circuit Judges. KANNE, Circuit Judge. This case arises out of the Illinois Gaming Board’s decision to revoke Emerald Casino, Inc.’s1 gaming license. In an attempt to recover the value of the li cense, the bankruptcy trustee sued the defendants—former Emerald officers, directors, and shareholders—for breach of contract and breach of their fiduciary duties. This set of consolidated appeals concerns the district court’s decision on those claims. Defendants Kevin Flynn, John McMahon, Kevin Larson, and Joseph McQuaid contest the court’s decision that their conduct caused the Board to revoke Emerald’s license. The defendants thus argue that the court could not have held them severally liable for the value of Emerald’s license. The trustee contests the court’s decision that (1) defendant Peer Pedersen’s conduct did not cause the Board to revoke Emerald’s license, (2) the statute of limitations barred her breach of fiduciary duty claim, and (3) the defendants were severally liable instead of jointly and severally liable. We reverse and remand the court’s decision to hold the defendants severally liable instead of jointly and severally li able. But otherwise, we affirm. 1 Emerald Casino, Inc. was originally called HP, Inc. In 1994, HP changed its name to Emerald Casino, Inc. For sake of clarity, we simply refer to those entities as “Emerald” throughout the opinion. Nos. 16 1075 et al. 3 I. BACKGROUND2 Emerald had an Illinois gaming license to operate in East Dubuque, Illinois. Emerald operated profitably in 1993 but then began to struggle to compete with a new Dubuque, Iowa casino. Iowa’s more lenient gaming laws made continued suc cess for Emerald in East Dubuque unlikely, so Emerald ap plied to the Illinois Gaming Board for permission to relocate. The Board denied the application, claiming that it lacked the statutory authority to allow a licensee to relocate. By early 1996, Emerald had stopped operating a casino and began devoting its time to lobbying the Illinois legislature to pass an act that would allow it to relocate. In the meantime, it had to renew its gaming license. The Board voted unani mously to deny Emerald’s renewal application, citing Emer ald’s “non responsive application,” “inadequate gaming op eration,” financial inviability, “significant compliance short comings,” failure to “provide for positive economic develop ment and impact,” and general noncompliance with the Riverboat Gambling Act. In re Emerald Casino, Inc., 530 B.R. 44, 64 (N.D. Ill. 2014) (quoting the Board’s denial of Emerald’s ap plication to renew its license). Emerald appealed that decision to an Illinois administrative law judge, who agreed with the Board and recommended denying Emerald’s renewal appli cation. But before the Board could officially adopt the administra tive law judge’s recommendation, Emerald’s lobbying efforts succeeded. On May 25, 1999, the Illinois legislature passed 230 2 We have simplified the facts in this case. Anyone interested in a blow by blow account of this dispute can find the district court’s exhaustive opinion at In re Emerald Casino, Inc., 530 B.R. 44 (N.D. Ill. 2014). 4 Nos. 16 1075 et al. ILCS 10/11.2, which provides that a “licensee that was not conducting riverboat gambling on January 1, 1998 may apply to the Board for renewal and approval of relocation … and the Board shall grant the application and approval upon receipt by the licensee of approval from the new municipality or county … in which the licensee wishes to relocate.” A month later, the Governor signed § 11.2 into law. Emerald had its win: the Board interpreted the word “shall” in the statute to mean that it was required to renew Emerald’s license and grant Emerald’s request to relocate. The Board thus withdrew its decision to deny Emerald’s renewal application. Anticipating its political victory, Emerald began consider ing new relocation sites well before the legislature passed § 11.2. Specifically, Emerald considered Rosemont, Illinois. Several times during 1998—a year before § 11.2 passed— Kevin Flynn3 and McQuaid met with Rosemont’s mayor and representatives of two Rosemont corporations about moving Emerald to Rosemont. Evidence at trial suggested that, at those meetings, Kevin Flynn at least discussed selling signifi cant ownership interests in Emerald to Rosemont’s mayor and the two Rosemont corporations. And once the legislation passed, Emerald moved quickly. It sent a formal relocation request to Rosemont just five days after the Governor signed § 11.2; Rosemont agreed that day. Within months after § 11.2 passed, Emerald and Rosemont 3 We refer to Kevin Flynn by his full name because his father Donald Flynn also appears in this opinion. Donald Flynn was a defendant in the pro ceedings below, but he settled with the bankruptcy estate instead of ap pealing the district court’s decision. Nos. 16 1075 et al. 5 had executed a site access agreement and a letter of intent to memorialize the terms of Emerald’s relocation to Rosemont. Yet later when the Board asked when Emerald first consid ered Rosemont as a relocation site, Kevin Flynn and McQuaid lied and said that Emerald had not considered Rosemont until after § 11.2 passed. Emerald did not disclose its agreements with Rosemont until well over a year after the contracts were signed, in violation of Illinois Gaming Board (IGB) rules. See, e.g., Ill. Admin. Code tit. 86, § 3000.110(a)(5) (“A holder of any license shall be subject to imposition of fines, suspension or revocation [for] … fail[ing] to cooperate with any officially constituted investigatory or administrative body.”). Emerald’s dealings in Rosemont extended beyond secur ing a new site for the casino. Around the time § 11.2 passed, Kevin Flynn, McMahon, and McQuaid met with several ar chitects about a design for the Rosemont casino; within days, Emerald hired an architecture firm to design the casino. In subsequent weeks, Emerald hired a general contractor and voted to start construction without the Board’s prior approval. By October 1999, Emerald had at least nine contracts with con struction companies and architecture firms but had not dis closed any of them to the Board, in violation of IGB rules. See Ill. Admin. Code tit. 86, § 3000.140(b)(3) (“[L]icensees and ap plicants for licensure shall periodically disclose changes in or new agreements, whether oral or written, relating to … [c]on struction contracts.”). Also around this time, Emerald altered its ownership structure by issuing, selling, and reallocating stock. Three separate sets of transactions are important here. First, after the legislature passed § 11.2 but before the Gov ernor signed it into law, Donald Flynn—Kevin Flynn’s father 6 Nos. 16 1075 et al. and an original investor in Emerald who controlled Emerald’s board of directors at the time—increased his ownership inter est in Emerald from 40 to 74 percent. Then, two days later, he sold some of that stock to twelve outside investors, at least several of whom had connections to Rosemont’s mayor and Rosemont’s state representative. Donald Flynn sold 294 shares to the twelve outside investors for $6.345 million. He then bought 294 shares from Pedersen and five current share holders (insiders) for about $10.57 million—resulting in a roughly $4.225 million loss. Second, Donald Flynn and Pedersen caused Emerald to is sue stock to Kevin Flynn, McMahon, Larson, and McQuaid.4 Several months later, those same defendants each bought ad ditional shares from Donald Flynn. And third, just after § 11.2 passed, Emerald started selling shares to fulfill a statutory requirement. Emerald’s statutory lifeline had come with a hook: to take advantage of the relo cation provision in § 11.2(a), Emerald had to have at least 20 percent minority and female ownership (16 percent and 4 per cent, respectively) within twelve months of relocating. 230 ILCS 10/11.2(b). So Pedersen began drafting the necessary pa perwork while McQuaid began working to find so called stat utory investors who would satisfy the diversity requirement. 4 The same day that Emerald issued the stock, Emerald’s board approved a new management structure. The defendants received new job titles with their shares. McMahon, Larson, and McQuaid kept the same responsibili ties at Emerald but were given new titles. In addition to the new titles, Larson and McQuaid were elected to the board of directors. This is also when Kevin Flynn first received an official position at Emerald. The board of directors named him an officer, elected him Chairman of the Board, and appointed him as Chief Executive Officer. Nos. 16 1075 et al. 7 McQuaid then met with potential statutory investors and, with the approval of the board of directors, sold shares to twenty three of them. Importantly, all of these stock transfers occurred without approval from the Board, even though IGB rules require prior approval from the Board before transferring an ownership in terest in a licensee. See Ill. Admin. Code tit. 86, § 3000.235(a). As a part of the ownership restructuring, Emerald amended its Shareholders’ Agreement. All existing share holders (including Pedersen) and all new shareholders (in cluding the other defendants here) executed an Amended Shareholders’ Agreement. Paragraph 10 of that agreement re quired Each Shareholder [to] cooperate with the Corporation to provide any disclosure information to the IGB and take any actions necessary to secure the renewal of the Corporation’s gaming license. Each Shareholder further agrees to comply with the Act and all rules and orders of the IGB and shall not commit any acts which would jeopardize the license or a renewal thereof. (Defendants Appellants’ Joint Appendix at 24, ¶ 10.) Emerald’s once bright future turned bleak, however, after it filed another license renewal application with the Board in September 1999. The Illinois Riverboat Gambling Act requires the Board “to review applications for the renewal of licenses.” 230 ILCS 10/5(c)(11). Fulfilling its statutory obligation, the Board investigated Emerald’s application for fifteen months. On January 30, 2001, citing numerous IGB rule violations, the Board voted to deny Emerald’s renewal application and to re voke Emerald’s license. About a month later, the Board sent Emerald a notice of denial, which informed Emerald that the 8 Nos. 16 1075 et al. Board was not renewing its license, and a disciplinary com plaint, which served as the Board’s formal basis for revoking Emerald’s license. The district court would later describe the Board’s investi gation into Emerald’s application as “unprecedented and ag gressive.” In re Emerald Casino, Inc., 530 B.R. at 58. The Board’s interest in Emerald seems to have been a result of the Board’s belief that Emerald had associated with organized crime in its attempt to relocate to Rosemont (through the outside inves tors, a construction company, and the mayor’s office), a clear violation of IGB rules. See Ill. Admin. Code tit. 86, § 3000.110(a)(5). But the notice of denial and disciplinary complaint in cluded allegations that extended beyond Emerald’s alleged ties to organized crime: the Board focused primarily on Em erald’s inadequate disclosure of required information. As mentioned above, many IGB rules require licensees to dis close information to the Board. See Ill. Admin. Code tit. 86, § 3000.140(a) (imposing general duty on licensees to disclose “material changes in information provided to the Board”); Ill. Admin. Code tit. 86, § 3000.140(b)(3) (requiring disclosure of construction contracts); Ill. Admin. Code tit. 86, § 3000.140(b)(7) (requiring disclosure of any agreement to transfer an ownership interest in a licensee); Ill. Admin. Code tit. 86, § 3000.235(a) (requiring permission from the Board be fore transferring an ownership interest in a license). IGB rules put the burden to disclose all required infor mation on the licensee, its agents, and its employees. Ill. Ad min. Code tit. 86, § 3000.110(a). To make the importance of disclosure clear, the renewal application warned that misrep resentations or omissions on the application were grounds for Nos. 16 1075 et al. 9 denial of the application and warned that Emerald had an on going duty to update its disclosures. And as discussed above, Emerald was far from forthcoming in disclosing its agree ments with Rosemont, its construction contracts, and its stock transfers. The Board also took issue with Kevin Flynn’s involvement with Emerald before June 1999. During the Board’s investiga tion, Kevin Flynn, McQuaid, and Larson all claimed that Kevin Flynn had no role at Emerald before June 1999—which was false. Indeed, Kevin Flynn had an active role at Emerald well before June 1999: he helped lobby for the relocation leg islation; he helped manage Emerald; he attended four of six Emerald board of directors meetings held between 1997 and 1999; and he helped negotiate Emerald’s move to Rosemont. So beyond the alleged ties to organized crime, the Board’s disciplinary complaint emphasized Emerald’s nondisclosure of its early Rosemont agreements, its construction contracts, its stock transfers, and Kevin Flynn’s pre June 1999 involve ment in managing Emerald. Emerald then exercised its statutory right to an adminis trative hearing on the charges. Three years after the adminis trative hearing—settlement talks between Emerald, the Board, and the Illinois Attorney General caused the delay— an administrative law judge recommended that the Board re voke Emerald’s license. The Board adopted both the adminis trative law judge’s factual findings and recommendation to revoke Emerald’s license. In its final order revoking Emerald’s license, the Board listed five official counts. Each count corresponded to a par 10 Nos. 16 1075 et al. ticular IGB rule that the Board concluded Emerald had vio lated. Also listed under each count were the acts that violated the relevant IGB rule. But the Board did not list who was re sponsible for which IGB rule violation; instead, the Board prefaced each count by noting that Emerald violated the given rule “through its officers, employees, representatives, share holders, Key Persons, and others.” (Defendants Appellants’ Joint Appendix at 65, 66, 67, 69.) And after each count, the Board said that, “[b]y failing to comply with [the IGB rule], Emerald has failed to maintain its suitability for licensure. The Board proved Count [number] of the disciplinary complaint which alone supports revocation of Emerald’s license pursu ant to Section 5(c) of the Act and Subpart K of the Rules.” (De fendants Appellants’ Joint Appendix at 66, 67, 68, 70.) Emerald appealed the Board’s final decision to the Illinois appellate court. The court affirmed the Board’s decision to re voke Emerald’s license, but not in all respects. In particular, the appellate court held that the Board had not proved that Emerald had associated with organized crime. As the appellate court stressed, the IGB rule does not “hold a licensee ‘strictly liable’ … for ‘associating with mem bers or associates of organized crime.’” (Trustee’s Separate Appendix at 144.) Rather, the rule prohibits only “[a]ssociat ing with, either socially or in business affairs, or employing persons of notorious or unsavory reputation.” Ill. Admin. Code tit. 86, § 3000.110(a)(5) (emphasis added). The appellate court concluded that, because the Board had relied on confi dential FBI documents to show that several people involved in the Emerald to Rosemont relocation were connected to or ganized crime, it had not proved that anyone involved with Emerald had a “notorious or unsavory reputation.” Even so, Nos. 16 1075 et al. 11 the appellate court affirmed the Board’s decision to revoke Emerald’s license because the Board had proved Emerald’s other IGB rule violations. The Illinois Supreme Court denied Emerald’s petition for leave to appeal. The Board’s decision to revoke Emerald’s license is only a piece of this ongoing litigation. When the Board first issued notice of its decision to revoke Emerald’s license in early 2001, Emerald’s creditors forced it into bankruptcy. Initially filed as a Chapter 7 proceeding, Emerald converted the case into a Chapter 11 restructuring proceeding. The bankruptcy court then created a Creditors’ Committee to represent Emerald’s creditors’ interests. But when Emerald officially lost its license in 2007 and restructuring became infeasible, the bankruptcy court converted the case back into a Chapter 7 liquidation pro ceeding and appointed Frances Gecker as trustee over Emer ald’s estate. The trustee then sued the defendants in bankruptcy court. What matters here are the trustee’s breach of contract and breach of fiduciary duty claims. In late 2010, the bankruptcy court held an eighteen day bench trial. Two years later, before the bankruptcy court issued an opinion, the district court pulled the case. The district court then held an additional sev enteen days of bench trial; about a year and a half later, the court issued its 281 page decision. The court dismissed the trustee’s breach of fiduciary duty claim, holding that Illinois’s five year statute of limitations barred it. The court also rejected the trustee’s argument that, because the defendants controlled Emerald at the time, the statute of limitations had tolled. 12 Nos. 16 1075 et al. The trustee’s breach of contract claim required signifi cantly more attention. The Amended Shareholder’s Agree ment required all shareholders to comply with IGB rules. But the Board’s final order never established which defendant vi olated which IGB rule; instead, the order spoke in general terms, noting that Emerald violated the rules “through its of ficers, employees, representatives, shareholders, Key Persons, and others.” Thus, the court had to determine if each defend ant had violated an IGB rule listed in the Board’s final order. After an extensive 176 page recitation of facts, the court held that each defendant had violated at least one of the nondisclo sure rules listed in the Board’s disciplinary complaint: Kevin Flynn violated Rules 110(a) and 140(a) by failing to disclose his own involvement in managing Emerald before June 1999;5 John McMahon violated Rules 140(a) and 140(b)(3) by failing to disclose Emerald’s agreements with Rose mont; Kevin Larson violated Rules 110(a) and 140(a) by fail ing to disclose Kevin Flynn’s involvement in managing Emerald before June 1999; Joseph McQuaid violated Rules 110(a) and 140(a) by failing to disclose Kevin Flynn’s involvement in man aging Emerald before June 1999; Rules 110(a), 140(a), and 140(b)(3) by failing to disclose Emerald’s agree ments with Rosemont and by failing to disclose Emer 5 Kevin Flynn also violated Rule 110(a) by failing to disclose his ownership of another company, Field Street, and his agreement with a northwest In diana casino to lobby against Native American casinos in southwest Mich igan. Nos. 16 1075 et al. 13 ald’s construction contracts; and Rule 235(a) by trans ferring shares from Emerald to the statutory investors without first getting prior Board approval; and Peer Pedersen violated Rule 235(a) by arranging the transfer of shares from five insiders to Donald Flynn and by selling some of his own shares to Donald Flynn without getting prior Board approval. In its breach of contract analysis, the court held that Kevin Flynn’s, McMahon’s, Larson’s, and McQuaid’s violations caused the Board to revoke Emerald’s license. Only Pedersen avoided liability. The court held that, although Pedersen breached the Amended Shareholders’ Agreement, he did not cause the Board to revoke Emerald’s license because the rule that he violated was one that the Board typically handled with a fine. The court then calculated damages by valuing Emerald’s license, which the defendants (minus Pedersen) caused Emer ald to lose. To value the license, the court considered bids that companies had made for Emerald or its license in the past. The bids ranged from $268 million to $615 million. The court settled on Midwest Gaming’s $272 million bid from 2008. The court concluded by holding the liable defendants severally li able for the loss.6 This appeal followed. II. ANALYSIS This case contains a number of appeals and cross appeals. For clarity, we address all claims related to a particular issue 6 There were six liable defendants—Kevin Flynn, McMahon, Larson, McQuaid, Donald Flynn, and Walter Hanley—so the court held each re sponsible for $45,333,333.34. Donald Flynn and Hanley settled and are no longer part of this case. 14 Nos. 16 1075 et al. in the same section. First, we address the parties’ arguments regarding the trustee’s breach of contract claim. Second, we address the trustee’s argument that the statute of limitations had not run on her breach of fiduciary duty claim. Finally, we turn to damages. A. Breach of Contract Claims The parties appeal the district court’s decision on the trus tee’s breach of contract claim. We first address Kevin Flynn, McMahon, Larson, and McQuaid’s argument that the district court erred in deciding that they caused the Board to revoke Emerald’s license. We then address the trustee’s argument that the district court erred in deciding that Pedersen did not cause the Board to revoke Emerald’s license. 1. Causation — Kevin Flynn, McMahon, Larson, McQuaid None of the defendants7 dispute the district court’s conclu sion that they violated IGB rules.8 Rather, each argues that his conduct did not cause the Board to revoke Emerald’s license. So for purposes of this appeal, causation is the only issue that we need to address. “Causation is a question of fact, and our role after a bench trial is to determine whether the judge made 7 Any reference to “the defendants” in this section is limited to Kevin Flynn, McMahon, Larson, and McQuaid. 8 Of all the defendants, McMahon comes the closest to arguing that he did not violate an IGB rule. He has a subsection in his Statement of the Case titled “McMahon’s Supposed IGB Rule Violations.” (McMahon’s Br. at 2.) But he never challenges the sufficiency of the district court’s finding that he violated IGB rules. Only in his reply does he have an argument section titled “John McMahon Did Not Cause Any IGB Rule Violations.” (McMahon’s Reply at 4.) Arguments made for the first time in a reply brief are waived. United States v. Waldrip, 859 F.3d 446, 450 n.2 (7th Cir. 2017). Nos. 16 1075 et al. 15 any clearly erroneous finding.” Wis. Mut. Ins. Co. v. United States, 441 F.3d 502, 505 (7th Cir. 2006); see also Lee v. Chi. Transit Auth., 605 N.E.2d 493, 502 (Ill. 1992). A defendant who has breached a contract is liable only for the damages that the breach caused. See Avery v. State Farm Mut. Auto. Ins. Co., 835 N.E.2d 801, 832 (Ill. 2005). It is a “fun damental principle applicable alike to breaches of contract and to torts that a right of action requires a wrongful act by the defendant and a loss resulting from that act.” Turcios v. DeBruler Co., 32 N.E.3d 1117, 1125 (Ill. 2015) (citations and quotation marks omitted). In Illinois, causation is referred to as proximate causation and includes two distinct concepts: cause in fact and legal cause. Young v. Bryco Arms, 821 N.E.2d 1078, 1085–1086 (Ill. 2004); see also In re Ill. Bell Tel. Link Up II, 994 N.E.2d 553, 558 (Ill. App. Ct. 2013) (“Damages which are not the proximate cause of the breach are not allowed.”). We consider those elements in order. a. Cause in Fact To address cause in fact, we ask whether “there is a rea sonable certainty that a defendant’s acts caused the injury or damage.” Young, 821 N.E.2d at 1085 (quoting Lee, 605 N.E.2d at 502). Illinois courts employ two tests to determine cause in fact. Turcios, 32 N.E.3d at 1124; Young, 821 N.E.2d at 1085–86. First, a defendant’s breach is a cause in fact of damages if the damages would not have occurred had the defendant not breached the contract. Turcios, 32 N.E.3d at 1124. This is “the traditional ‘but for’ test.” Id. Alternatively, a defendant’s breach is a cause in fact of damages “if it was a material ele ment and a substantial factor in bringing the event about.” Id. (quoting Nolan v. Weil McLain, 910 N.E.2d 549, 557 (Ill. 2009)). 16 Nos. 16 1075 et al. Courts apply the substantial factor test when multiple de fendants caused the damages so that no one defendant could be considered a but for cause. Young, 821 N.E.2d at 1085–86. The defendants contend that the district court erred be cause it did not and could not have determined that “each in dividual defendant’s breach caused injury to Emerald.”9 (Kevin Flynn’s Br. at 35.) The defendants have accurately framed the court’s decision. As the court said in its response to the parties’ motions for reconsideration, it “did not find that any individ ual Defendant’s failure to disclose a piece of information would have, by itself, prompted the IGB investigation and revocation proceedings.” In re Emerald Casino, Inc., 538 B.R. 417, 425 (N.D. Ill. 2015). The court instead focused on the to tality of the defendants’ conduct. Id. at 424–25; see also In re Emerald Casino, Inc., 530 B.R. at 203. But the district court’s focus on the defendants’ conduct as a whole does not necessarily mean that its cause in fact anal ysis is flawed.10 The substantial factor test was designed for 9 The defendants make a related argument that requires little of our time. They argue that the district court erred in its causation analysis because it never determined that each was one sixth responsible for the damages. Apportionment of responsibility is a damages question, which we tackle below in Part C. 10 We acknowledge that, in a single sentence unaccompanied by any ad ditional analysis, the district court held that the but for test was met here because “absent Defendants’ violations of IGB rules, the IGB would not have revoked the license.” In re Emerald Casino, Inc., 530 B.R. at 203. The but for test does not work in a case like this one: if one defendant had not breached, there were still three other defendants who violated IGB rules. Thus, but for any one defendant’s conduct, the Board could still have re voked Emerald’s license because of the other defendants’ conduct. Any Nos. 16 1075 et al. 17 this type of situation. “[W]hen, as here, there are multiple fac tors that may have combined to cause the injury, we ask whether [the] defendant’s conduct was a material element and a substantial factor in bringing about the injury.” Young, 821 N.E.2d at 1086. When revoking Emerald’s license, the Board relied on a limited number of IGB rules and a limited number of acts that violated those rules. As the district court correctly concluded, “the IGB attached significant weight to the[] violations in making its determination to revoke the license.” In re Emerald Casino, Inc., 530 B.R. at 203. Thus, it was reasonable for the court to conclude that each violation was a material element and substantial factor in the Board’s decision to revoke Emer ald’s license. And because the defendants were all responsible for at least one of those violations, each defendant was a cause in fact of Emerald’s damages. That the Board might not have revoked Emerald’s license for any one defendant’s conduct alone is irrelevant for the substantial factor test. b. Legal Cause Foreseeability is the touchstone of our legal cause analy sis. Turcios, 32 N.E.3d at 1124; see also Talerico v. Olivarri, 796 N.E.2d 1083, 1086 (Ill. App. Ct. 2003). A defendant’s conduct is a legal cause of damages if the damages were a likely and thus a foreseeable result of the defendant’s conduct. Turcios, 32 N.E.3d at 1124. If the damages were not a foreseeable result of the defendant’s conduct, a plaintiff can still recover if the parties contemplated the damages at the time of contracting. Midland Hotel Corp. v. Reuben H. Donnelley Corp., 515 N.E.2d problem with the court’s but for analysis is irrelevant, however, because the substantial factor test applies here. 18 Nos. 16 1075 et al. 61, 67 (Ill. 1987); see also Restatement (Second) of Contracts § 351 (1981). The defendants argue that the Board’s decision to revoke Emerald’s license for violating nondisclosure related rules was unforeseeable. We disagree. On legal cause, there are two reasons why revocation was a foreseeable result of the defendants’ failure to comply with IGB rules. The first concerns the Board’s au thority to revoke licenses for IGB rule violations. Illinois law vests the Board with the authority to “suspend, revoke or re strict licenses … and to impose civil penalties … for each vio lation of any provision of the Act [or] any rules adopted by the Board … or any other action which, in the Board’s discre tion, is a detriment or impediment to riverboat gambling op erations.” 230 ILCS 10/5(c)(15). The defendants argue that the Board’s wide discretion made it unforeseeable that the Board would revoke Emerald’s license for violating nondisclosure related rules. But the stat ute put the defendants on notice that the Board could revoke Emerald’s license for failing to abide by any IGB rule. It would be anomalous to hold that the Board’s discretion somehow made it unforeseeable that the Board would revoke Emerald’s license. “The question asked is whether a reasonably prudent person in the position of the breaching party, at the time the parties entered into the contract, would have considered these damages to be the natural consequence of this type of breach.” Contempo Design, Inc. v. Chi. & N.E. Ill. Dist. Council of Carpen ters, 226 F.3d 535, 554 (7th Cir. 2000). And here, the Board’s authority would have put a reasonably prudent person on no tice of the potential consequences for violating IGB rules. Nos. 16 1075 et al. 19 In response, the defendants argue that revocation was un foreseeable because the Board had never revoked a license be fore; the Board instead traditionally just imposed fines for IGB rule violations. According to the defendants, revocation for nondisclosure violations was “highly extraordinary” and thus was not foreseeable. See Turcios, 32 N.E.3d at 1124. What ever the merits of that argument, the defendants pose a ques tion factually different from the one we have to address. Recall that the Board voted unanimously in 1997 to deny Emerald’s license renewal application. The Board decided not to renew Emerald’s license at that time in part because Emer ald had violated IGB rules. The complaint referenced Emer ald’s past discipline “for failing to disclose and obtain ap proval for certain transactions.” (R. 450 at Ex. 129.) Emerald had refinanced its debt, loaned money to shareholders, and issued stock options to Donald Flynn, all without prior Board approval. Admittedly, the Board never revoked Emerald’s license: Emerald’s extensive lobbying efforts proved fruitful, and the Illinois legislature passed § 11.2. But the defendants cannot hinge their argument here on the Board’s failure to revoke a license for nondisclosure related rule violations when the Board had in fact tried to do so in the past. The second reason revocation was foreseeable is that Par agraph 10 of the Amended Shareholders’ Agreement ex pressly contemplated the need to comply with the Board and IGB rules. The paragraph specifically warned that sharehold ers “shall not commit any acts which would jeopardize the license” or its renewal. (Defendants Appellants’ Joint Appen dix at 24, ¶ 10.) 20 Nos. 16 1075 et al. Under Illinois law, “all damages which naturally and gen erally result from a breach are recoverable; it is only where damages are the consequence of special or unusual circum stances that it must be shown that the damages were within the reasonable contemplation of the parties.” Midland Hotel Corp., 515 N.E.2d at 67. Paragraph 10 serves both purposes: it not only shows that license revocation was foreseeable—for why else would Emerald have known it was necessary to pro tect against that risk—but it also shows that license revocation was “reasonably within the contemplation of [the] defend ant[s] at the time the contract was entered into.” Equity Ins. Managers of Illinois, LLC v. McNichols, 755 N.E.2d 75, 80 (Ill App. Ct. 2001). In fact, the attorney who drafted the Amended Shareholders’ Agreement testified that Paragraph 10 was in cluded to protect Emerald from the risk that IGB rule viola tions would cost Emerald its license. The defendants cannot now argue that it was unforeseeable that violating IGB rules would cause the Board to revoke Emerald’s license. Finally, the defendants contend that they could not have foreseen that the Board would wrongly claim that Emerald had associated with organized crime—which is what they claim was the Board’s primary concern when revoking Emer ald’s license. The Board’s concern about Emerald’s alleged ties to organized crime is apparent from the record. The defend ants may not have been able to foresee that the Board would suspect Emerald had ties to organized crime.11 But they knew 11 We note that the Illinois appellate court held only that confidential doc uments did not prove that Emerald had associated with people having an “unsavory reputation.” Ill. Admin. Code tit. 86, § 3000.110(a)(5). The court’s decision stops short of holding that Emerald had no connection to organized crime. Nos. 16 1075 et al. 21 that the Board would review Emerald’s renewal application. See 230 ILCS § 10/5(c)(11). And the Board’s final order belies any argument that the only reason the Board revoked Emerald’s license was its con cern about organized crime. In twenty seven pages of facts, organized crime is mentioned only a handful of times. Nor do the actual counts rely heavily on Emerald’s alleged ties to or ganized crime. Organized crime appears under just one offi cial count—Count V, Rule 110(a)—and in only two of eleven factual allegations related to that count. And both of those fac tual allegations also relate to other violations—Emerald’s fail ure to get prior approval before transferring shares and its failure to disclose its construction contracts. Accordingly, the district court did not clearly err in hold ing that Kevin Flynn, McMahon, Larson, and McQuaid all caused the Board to revoke Emerald’s license. 2. Causation — Pedersen As to Pedersen, the trustee argues that the district court erred in holding that Pedersen’s IGB rule violation did not cause the Board to revoke Emerald’s license. Again, causation is a question of fact that we review for clear error. Wis. Mut. Ins. Co., 441 F.3d at 505; see also Lee, 605 N.E.2d at 502. The district court could have held that Pedersen’s failure to get preapproval before transferring Emerald stock was a cause in fact of the Board’s decision to revoke Emerald’s li cense: IGB rules require getting Board approval before trans ferring stock, the Board’s final order outlined several transfers that occurred without prior approval, and Pedersen partici pated in at least one of those transfers. 22 Nos. 16 1075 et al. But substantial evidence supports the district court’s deci sion not to do so. First, the Board had a long history of con doning the transfer of shares without prior approval. The Board frequently approved transfers after the fact; if it later determined that a shareholder was an unsuitable owner, it simply required parties to undo the transaction. An IGB rule even anticipates that situation, requiring licensees to “provide a means for the economic disassociation of a Key Person in the event such economic disassociation is required by an or der of the Board.” Ill. Admin. Code tit. 86, § 3000.224(a). Second, the court noted that on the same day that the Board first voted to revoke Emerald’s license, the Board ap proved a settlement agreement with another Illinois casino. In that case, the casino transferred 98 percent ownership to an investor without prior Board approval, and the Board re quired only that the investor divest his interest in the casino. Finally, and most importantly, evidence presented at trial suggested that the Board had already approved of the transfer of shares from Pedersen and the five insiders to Donald Flynn. A supplemental staff report stated that the “failure to disclose the purchase of shares by Donald Flynn from Peer Pedersen” had “either been resolved” or been “determined to be irrele vant.” See In re Emerald Casino, Inc., 530 B.R. at 204. And Peder sen’s role in those transactions was the only way in which the district court held that Pedersen violated IGB rules.12 12 The trustee also argues that the district court clearly erred in holding that Pedersen did not violate any other IGB rules. Regarding Pedersen’s role in any of the other transfers of Emerald shares that occurred without prior Board approval, the district court held that “[h]istorically, the IGB did not require pre approval of shareholders and had not disciplined li censees for voting to sell shares of stock.” In re Emerald Casino, 530 B.R. at Nos. 16 1075 et al. 23 The trustee argues in response that the district court was precluded from holding that Pedersen did not cause the Board to revoke Emerald’s license. According to the trustee, the Board and the Illinois appellate court had already deter mined that the defendants caused Emerald to lose its license, so the court was precluded from deciding otherwise. “State administrative findings that have been subjected to state judicial review are entitled to both claim and issue pre clusive effect in federal courts.” Staats v. Cty. of Sawyer, 220 F.3d 511, 514 (7th Cir. 2000). Under Illinois law, issue preclu sion applies if (1) the issue decided in the prior case is identi cal to the issue in the current case, (2) there was a final judg ment on the merits in the prior case, and (3) the party against whom issue preclusion is asserted was a party or in privity with a party to the prior case. Herzog v. Lexington Twp., 657 N.E.2d 926, 929–30 (Ill. 1995). The trustee’s issue preclusion argument fails at the first step: the trustee cannot show that the issue here is the same issue that was before the Illinois appellate court. The Illinois appellate court addressed whether the Board had proved that Emerald had violated IGB rules, which would then trigger the Board’s authority to revoke Emerald’s license. The court did not address who violated which IGB rule. Nor did the court decide whether a particular IGB rule violation caused the 203. Thus, the court’s analysis on the transfer of shares from Pedersen and the five insiders to Donald Flynn applies with equal force to the other transfers. As to any other potential IGB rule violations, the district court faced a stag gering amount of factual detail and conflicting evidence. The court gave serious consideration to both sides of the arguments and ruled for Peder sen. Those decisions were not clearly wrong. 24 Nos. 16 1075 et al. Board to revoke Emerald’s license. All that it did was affirm the Board’s decision that some violations occurred and that “[e]ach one …, standing alone, could support a revocation of Emerald’s gaming license.” (Trustee’s Separate Appendix at 146.) That conclusion does nothing more than reiterate the Board’s authority to “revoke … licenses … for each violation of any provision of … any rules adopted by the Board.” 230 ILCS 10/5(c)(15). At no point did the Illinois appellate court address whether Pedersen’s or any other defendant’s conduct caused the Board to revoke Emerald’s license.13 The district court was thus not precluded from holding that Pedersen’s conduct did not cause the Board to revoke Emerald’s license. And for those reasons, the district court did not clearly err in holding that Pedersen did not cause the Board to revoke Emerald’s license. B. Breach of Fiduciary Duty Claims The district court dismissed the trustee’s breach of fiduci ary duty claim, finding that Illinois’s five year statute of limi tations barred it. See 735 ILCS 5/13 205; Hassebrock v. Ceja Corp., 29 N.E.3d 412, 420 (Ill. App. Ct. 2015). On appeal, the trustee argues that the statute of limitations had not run on the claim because the cause of action accrued later than the court assumed. Alternatively, the trustee contends that even if the cause of action accrued more than five years before she 13 The trustee’s other deference related arguments fail for the same reason: the decisions that the Board and Illinois appellate court made did not ad dress causation and breach of contract. Nos. 16 1075 et al. 25 filed suit, the limitations period had tolled while the defend ants controlled Emerald. To start, we must decide when the statute of limitations began running. In Illinois, the statute of limitations begins running when the plaintiff knows or reasonably should know that that the defendant’s wrongful acts have caused damages. Nolan v. Johns Manville Asbestos, 421 N.E.2d 864, 868 (Ill. 1981). The trustee’s breach of fiduciary duty claim is based on the same acts underlying the Board’s decision to revoke Em erald’s license. Thus, as the district court held, the cause of ac tion accrued at least by January 30, 2001, when the Board first voted to revoke Emerald’s license. At that time, Emerald was on notice that the defendants’ wrongful acts had caused it damages. When the trustee filed suit on December 19, 2008, nearly eight years had passed since the Board first voted to revoke Emerald’s license. Based only on those dates, the statute of limitations bars the trustee’s breach of fiduciary duty claim. The trustee argues, however, that the statute of limitations was tolled while the defendants controlled Emerald. Under this theory, the statute of limitations did not actually begin running until March 20, 2008, when the bankruptcy court ap pointed the trustee over the bankruptcy estate. The trustee relies on Lease Resolution Corporation v. Larney to support that argument. 719 N.E.2d 165, 170–72 (Ill. App. Ct. 1999). In Larney, the Illinois appellate court adopted the ad verse domination doctrine, which “is an equitable doctrine that tolls the statute of limitations for claims by a corporation against its officers and directors while the corporation is con trolled by those wrongdoing officers or directors.” Id. at 170. 26 Nos. 16 1075 et al. The doctrine “creates a rebuttable presumption that knowledge of the injury will not be available to the corpora tion as long as the corporation is controlled by wrongdoing officers and directors.” Id. at 173. A defendant can overcome that presumption by showing “that someone other than the wrongdoing directors had knowledge of the cause of action and both the ability and the motivation to bring suit.” Id. Even though Larney is an intermediate appellate court de cision, district courts applying Illinois law are to give it per suasive weight. Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 936 (7th Cir. 2012). We review the district court’s application of the adverse domination doctrine to the facts of this case for clear error. See Keach v. U.S. Trust Co., 419 F.3d 626, 634 (7th Cir. 2005). Although the district court considered Larney here, it con cluded that the defendants were able to rebut the presump tion that their control over Emerald had tolled the statute of limitations. According to the court, the Creditors’ Committee, which was created to represent Emerald’s creditors’ interests in bankruptcy, had the knowledge, ability, and motivation to sue the defendants for breach of their fiduciary duties. The trustee disagrees. She first focuses her argument on the Illinois appellate court’s adoption of the “majority” ad verse domination doctrine. Under this version of the doctrine, only a majority of the board members have to be wrongdoers for the doctrine to apply. Larney, 719 N.E.2d at 171–72. In Lar ney, the Illinois appellate court rejected the complete domina tion theory, which would have required a plaintiff to show that the entire board was composed of wrongdoers for the doctrine to apply. Id. According to the trustee, “by adopting Nos. 16 1075 et al. 27 the ‘majority domination’ version of the doctrine, Larney nec essarily rejected the position that the mere presence of an in nocent party with knowledge of wrongdoing will defeat toll ing.” (Trustee’s Br. at 88.) True, but the trustee overreads the “majority” aspect of Il linois’s adverse domination doctrine. All the majority domi nation rule does is relieve plaintiffs of the burden of showing that every board member was a wrongdoer. Any concern that a potential plaintiff may have knowledge of the claim but no way to sue is covered in the defendants’ burden of proving that someone had the ability to sue. The majority part of the rule serves no purpose in that regard. The trustee next argues that the Creditors’ Committee was unable to sue. She admits that, under bankruptcy law, a cred itor can bring a derivative claim on behalf of a bankruptcy es tate. In re Consol. Indus., 360 F.3d 712, 716 (7th Cir. 2004).14 But she notes that creditors must satisfy certain requirements be fore they can sue. To bring a claim, a creditor “must show that the [debtor] has unjustifiably refused the creditor’s demand to pursue a colorable claim and obtain leave from the bank ruptcy court to proceed.” Id. The trustee argues that a creditor’s need to get leave from the bankruptcy court makes the creditor unable to bring a de rivative claim. To support her argument, the trustee empha sizes that during this litigation, before the district court pulled 14 Officers and directors owe fiduciary duties to the corporation, not indi vidual shareholders. Alpha Sch. Bus Co., Inc. v. Wagner, 910 N.E.2d 1134, 1158 (Ill. App. Ct. 2009). Thus, the trustee’s breach of fiduciary duty claim is brought on behalf of the bankruptcy estate, which is all that remains of Emerald. 28 Nos. 16 1075 et al. the case, the bankruptcy court said that the likelihood of a bankruptcy court granting creditors leave “in a Chapter 11 case when the management of the debtor is attempting to re organize is dubious.” (Trustee’s Appendix at 28.) We don’t read the ability to sue requirement as narrowly as the trustee does. The Creditors’ Committee had the ability to sue, albeit circumscribed by several requirements. But those limitations didn’t render the Creditors’ Committee una ble to sue. Even outside of the bankruptcy context, there is a prerequisite before a shareholder can bring a derivative suit: corporate law requires a shareholder to demand that the cor poration pursue the action before bringing the claim deriva tively. Valiquet v. First Fed. Sav. & Loan Ass’n of Chi., 408 N.E.2d 921, 925 (Ill. App. Ct. 1979). Only if demand is excused or wrongfully refused can a shareholder then bring the claim on the corporation’s behalf.15 So the mere existence of a potential barrier to suing did not negate the Creditors’ Committee’s ability “to enforce a corporate cause of action against officers, directors, and third parties.” In re Huron Consulting Grp., Inc. S’holder Derivative Litig., 971 N.E.2d 1067, 1076 (Ill. App. Ct. 2012) (emphasis omitted) (quoting Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 95 (1991)). If the Creditors’ Committee had petitioned the bankruptcy court, and if the court had denied leave, only then could we say that the committee was unable to bring the claim. The trustee cannot rely on the bankruptcy court’s conjectural after 15 That demand might have been excused in this case, see Valiquet, 408 N.E.2d at 925, does not negate the point. What matters here is that the Creditors’ Committee had an avenue for bringing the derivative claim in the same way that shareholders can bring derivative claims against cor porations generally. Nos. 16 1075 et al. 29 the fact statement to prove inability to sue; that the bank ruptcy court might have denied leave is insufficient. The Cred itors’ Committee actually had to present the issue to the bank ruptcy court. Likewise, the Creditors’ Committee was motivated to sue. The trustee claims that, until the Illinois Supreme Court de nied Emerald’s petition for review, “Emerald was still at tempting to sell its License, and a lawsuit on behalf of Emer ald accusing Defendants of breaching IGB Rules would have amounted to a concession that Emerald was not lawfully en titled to that License.” (Trustee’s Br. at 92–93.) To the trustee, the Creditors’ Committee did not have the motivation to sue because “[a] successful License sale would have provided the quickest and fullest recovery for Emerald’s creditors.” (Trus tee’s Br. at 94.) The trustee’s point is well taken—at the time these events were unfolding, selling the license might have seemed the creditors’ best method of recovery. And at least as the trustee presents the argument, the Creditors’ Committee had two choices: either try to sue the defendants or hope that Emerald could sell its license. But that strikes us as posing a false dichotomy: the Credi tors’ Committee could have sued the defendants while hoping that Emerald would sell its license. The Board voted to revoke Emerald’s license on January 30, 2001 based on Emerald’s IGB rule violations. But in August 2002, the Board and the Illinois Attorney General conditionally agreed to settle their claims against Emerald and to allow Emerald to auction off the li cense. In March 2004, the Board and Emerald held an auction and selected a winning bidder. Only when Emerald failed to satisfy certain conditions of the settlement did the Attorney 30 Nos. 16 1075 et al. General refuse to approve the sale and reinstate disciplinary proceedings. See Vill. of Rosemont v. Jaffe, 482 F.3d 926, 930–31, 934–35 (7th Cir. 2007). Based on that record, the Creditors’ Committee did not have to make a choice at all. The Board and the Illinois Attor ney General knew about Emerald’s IGB rule violations yet de cided not to revoke Emerald’s license. They had instead de cided to allow Emerald to sell the license—the remedy that the Creditors’ Committee allegedly wanted. The Creditors’ Committee thus could have pursued a derivative action against the defendants without fear that the Board would pre vent Emerald from selling its license. And even if the trustee is right and the Creditors’ Commit tee had to choose between litigation and trying to sell the li cense, our analysis would not change. As the trustee argued, the Creditors’ Committee thought that “[a] successful License sale would have provided the quickest and fullest recovery for Emerald’s creditors.” (Trustee’s Br. at 94.) The Creditors’ Committee made a strategic decision not to sue. Parties make numerous strategic decisions in every case. Whether to sue at all is one decision that every plaintiff must make; nonlitiga tion means of settling disputes are always an option. But would be plaintiffs must live with their choice. A plaintiff did not lack motivation to sue just because its chosen course of action proved to be unsuccessful in the end. Cf. Myers v. Cen tralia Cartage Co., 419 N.E.2d 465, 468 (Ill. App. Ct. 1981) (“The mere pendency of negotiations conducted in good faith and with a view of compromise, during the period of the statute of limitations, however, is not sufficient to show a waiver of the statute and does not estop the defendant from asserting the defense.”). Nos. 16 1075 et al. 31 For those reasons, the district court did not clearly err in refusing to apply the adverse domination doctrine in this case. Thus, the statute of limitations bars the trustee’s breach of fiduciary duty claim. C. Damages Turning finally to damages, we first address the district court’s valuation of damages and then address the court’s de cision to hold the defendants severally liable. The district court valued Emerald’s license at $272 million based on a bid that the Board received for Emerald’s license in 2008.16 The defendants17 challenge that valuation as clear error.18 Their argument is that damages are based on the time of breach, which they claim occurred in 2001. According to the defendants, the court erred by not adjusting $272 million from 2008 dollars (when the Board received the bid) to 2001 dollars (when the breaches occurred) to account for inflation. We review the district court’s damages award for clear error. Int’l Prod. Specialists, Inc. v. Schwing Am., Inc., 580 F.3d 587, 598 (7th Cir. 2009). The defendants are right in one respect: “[d]amages are measured as of the date of breach.” Kagan v. Edison Bros. Stores, Inc., 907 F.2d 690, 692 (7th Cir. 1990); see also 1472 N. 16 After Emerald’s license revocation became final, the Board auctioned off the license. This is where Midwest Gaming’s $272 million bid came from. 17 All references to “the defendants” in this section are to the remaining liable defendants—Kevin Flynn, McMahon, Larson, and McQuaid. 18 The trustee accepts the $272 million value, arguing only that if we find the district court clearly erred in valuing the license, that it undervalued the license. 32 Nos. 16 1075 et al. Milwaukee, Ltd. v. Feinerman, 996 N.E.2d 652, 658 (Ill. App. Ct. 2013). But they waived this argument by not making it at the district court. As best we can tell from the record, the defendants never argued to the district court that the court needed to adjust the $272 million award to account for inflation. On appeal, the defendants contend that they did not waive this argument, citing a quote from their posttrial memoran dum that “[U]nder Illinois law ‘the proper date for determin ing damages in a breach of contract action is the date of the breach, not the date of trial.’” (Kevin Flynn’s Reply Br. at 48 (quoting (R. 251 at 273)).) But that quote appears in a discus sion related to the trustee’s expert’s prejudgment interest analysis. And regurgitating a general rule of law for a differ ent argument falls well short of preserving the specific argu ment that the defendants try to make here. See United States v. Burns, 843 F.3d 679, 685 (7th Cir. 2016). Kevin Flynn’s citation to his posttrial memorandum in his reply brief contains an “E.g.,” signal. As “e.g.,” is the signal used in legal citation when “other authorities also state the proposition, but citation to them would not be helpful or is not necessary,” we assume that this is the best the defendants can come up with. The Bluebook: A Uniform System of Cita tion R. 1.2(a) at 58 (Columbia Law Review Ass’n et al. eds., 20th ed. 2015). And we found no evidence that the defendants made this argument at the district court in our own review of the record: they didn’t even make the argument in their mo tion to reconsider damages. Even if the defendants did not waive the argument, the district court did not clearly err. The court considered ten bids Nos. 16 1075 et al. 33 for Emerald or its license; the bids ranged from $216 million to $615 million and spanned from 2001 to 2008. After a thor ough analysis, the court concluded that a $272 million bid from 2008 best reflected the value of Emerald’s license. And $272 million, although from 2008, reasonably re flected the value of Emerald’s license in 2001. In 1999, Emerald sold stock to the statutory investors. During that process, Kevin Flynn’s company, EVI, valued Emerald at $307.5 mil lion; Emerald then sold stock to the statutory investors ac cording to that valuation. The court decided “that these com pleted transactions constitute additional market evidence that supports the reliability of [EVI’s] valuation.” In re Emerald Ca sino, Inc., 530 B.R. at 232. In 2000, in related litigation, Kevin Flynn and McQuaid presented expert testimony that valued Emerald between $268–$272 million as of July 1, 1999, between $286–$295 mil lion as of October 18, 1999, and between $308–$310 million as of June 1, 2000. The court gave the report minimal weight be cause it was not based on offers to buy Emerald. But the court also noted that it was useful insofar as “it was prepared on behalf of certain Defendants in a situation where Defendants had an incentive to present a modest valuation in order to re duce their potential liability.” Id. As the court stated as it concluded its damages valuation analysis, “These similar bids bolster the conclusion that the Midwest Gaming bid is an appropriate basis for determining the market value of the license.” Id. at 234. Given how similar the $272 million bid that the court used is to the indicators of Emerald’s value around the time of breach, the court did not clearly err in not adjusting the total value of damages to ac count for inflation. 34 Nos. 16 1075 et al. The second issue on appeal about damages is the district court’s decision to hold the defendants severally liable. The trustee argues that the court should have held the defendants jointly and severally liable. The defendants argue that the court never decided that each was one sixth responsible for the damages and thus could not hold them severally liable in that amount. The court clearly erred here by not holding the defendants jointly and severally liable. In Illinois, parties are generally jointly and severally liable for a breach of contract only if the contract imposes a joint and several obligation. Pritchett v. As bestos Claims Mgmt. Corp., 773 N.E.2d 1277, 1283 (Ill. App. Ct. 2002). We don’t quibble with the court’s conclusion that the defendants had individual responsibilities to comply with Paragraph 10 of the Amended Shareholders’ Agreement: the defendants signed separate Amended Shareholders’ Agree ments, which required each defendant personally to comply with IGB rules. That has been a consistent ruling throughout the course of related litigation. Flynn v. Levy, 832 F. Supp. 2d 951, 956 (N.D. Ill. 2011). But the court erred in rejecting what is called the concur rent breach doctrine. InsureOne Indep. Ins. Agency, LLC v. Hall berg, 976 N.E.2d 1014, 1029–30 (Ill. App. Ct. 2012). Under the concurrent breach doctrine, “[w]hen two defendants inde pendently breach separate contracts, and it is not ‘reasonably possible’ to segregate the damages, the defendants are jointly and severally liable.” Id. at 1030 (quoting Domtar, Inc. v. Niag ara Fire Ins. Co., 563 N.W.2d 724, 740 (Minn. 1997)). The district court decided not to apply the concurrent breach doctrine from InsureOne, despite acknowledging that, “[a]t first blush, this doctrine appears to fit the facts of this case well.” In re Nos. 16 1075 et al. 35 Emerald Casino, Inc., 530 B.R. at 209. In rejecting InsureOne, the court reasoned “that [because] only one Illinois Appellate Court has extended the doctrine of concurrent breach to Illi nois, the court is not convinced that the Illinois Supreme Court would adopt this new approach and therefore applies the general rule that independent contractual obligations do not give rise to joint and several liability.” Id. at 210. We “review de novo the district court’s determination of the content of state law.” Allstate Ins. Co. v. Menards, Inc., 285 F.3d 630, 636 (7th Cir. 2002) (citing Salve Regina Coll. v. Russell, 499 U.S. 225, 233–34 (1991)). When applying state law, federal courts are bound by the decisions of the state’s highest court. West v. Am. Tel. & Tel. Co., 311 U.S. 223, 236–37 (1940). When a state’s high court has not ruled on a matter, a federal court’s job is to decide the case like the state’s high court would if presented the issue. Zahn v. N. Am. Power & Gas, LLC, 815 F.3d 1082, 1087 (7th Cir. 2016). Alt hough not binding, intermediate state court decisions serve as guidance in a federal court’s quest to decide a case like a state’s high court would. Id. at 1087–88. When an intermediate state court announces a rule of law, “that is a datum for ascer taining state law which is not to be disregarded by a federal court unless it is convinced by other persuasive data that the highest court of the state would decide otherwise.” West, 311 U.S. at 237 (emphasis added). So a federal court applying state law should apply the law as announced by intermediate state courts unless there are reasons that convince the federal court that the state’s high court would rule differently. The district court here rejected InsureOne not because it was convinced that the Illinois Su preme Court wouldn’t apply InsureOne but because it wasn’t 36 Nos. 16 1075 et al. convinced that the Illinois Supreme Court would apply In sureOne. That has the analysis exactly backwards. And we see no reason to believe that the Illinois Supreme Court would reject the concurrent breach doctrine. “The [In sureOne] court was the first and is so far the only Illinois ap pellate court to discuss the … doctrine, and its holding has not been undermined by intervening Illinois precedent.” Indep. Trust Corp., 665 F.3d at 936 (applying that principle to the ad verse domination doctrine). Moreover, the doctrine is a reasonable way to solve the un usual damages allocation problem presented in cases like In sureOne. And this case is identical to InsureOne in all material respects. There, the defendants all violated independent cov enants not to compete; the combined violations caused dam ages; and the court could not have reasonably segregated damages among the defendants according to fault. Here, as there, the defendants all breached the Amended Sharehold ers’ Agreement by violating IGB rules; the combined viola tions caused the Board to revoke Emerald’s license; and the district court could not have reasonably segregated damages among the defendants according to fault. Indeed, the district court here simply split damages equally among the defendants without reference to each’s rel ative culpability. And splitting damages according to fault would have been nearly impossible given that the court con sistently highlighted the Board’s emphasis on the totality of Emerald’s IGB rule violations. It thus makes sense to apply the concurrent breach doctrine here. Contracts allocate risk to the party best able to bear it. Ni colet Instrument Corp. v. Lindquist & Vennum, 34 F.3d 453, 456 Nos. 16 1075 et al. 37 (7th Cir. 1994). That risk fell to the defendants. Emerald, the licensee, had to comply with IGB rules; but Emerald, a legal entity, could act only through its officers, directors, sharehold ers, and other employees. It was only natural to impose that obligation on those people. Of course, the defendants never intended to pay for the cost of a revoked license. But the way to avoid liability was to abide by IGB rules. The defendants “argument that they should be relieved of their promise be cause [damages caused by noncompliance proved] more costly than they anticipated is a poor excuse, for contracts are designed to allocate risks such as this.” Union Oil Co. of Cal. v. Leavell, 220 F.3d 562, 566 (7th Cir. 2000). In valuing damages, the district court apportioned the $272 million equally among six defendants: Kevin Flynn, McMahon, Larson, McQuaid, Donald Flynn, and Walter Han ley. Instead of appealing, Donald Flynn and Walter Hanley settled with the bankruptcy estate after trial. At oral argu ment, the trustee informed the court that Donald Flynn had settled for $45,333,333.34 (the trial court judgment in full) and that Walter Hanley had settled for $7 million. Thus, the re maining defendants are jointly and severally responsible for $272 million minus $52,333,333.34, for a total of $219,666,666.66. III. CONCLUSION For those reasons, the district court’s decisions on the trus tee’s breach of contract and breach of fiduciary duty claims are AFFIRMED. Further, the district court’s valuation of dam ages is AFFIRMED. But because the district court erred in re fusing to apply the concurrent breach doctrine and hold the 38 Nos. 16 1075 et al. defendants jointly and severally liable, the district court’s al location of damages is VACATED and REMANDED for reso lution consistent with this opinion.

Primary Holding

Seventh Circuit holds that Emerald Casino insiders are jointly and severally liable for loss of the casino's license following its relocation to Rosemont.

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