In the

United States Court of Appeals

For the Seventh Circuit

No. 15-2130

LELAND O. STEVENS and LELAND O.

STEVENS, INCORPORATED,

Plaintiffs-Appellants,

v.

INTERACTIVE FINANCIAL ADVISORS,

INCORPORATED and REDTAIL

TECHNOLOGY, INCORPORATED,

Defendants-Appellees.

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division.

No. 11 C 2223 — Matthew F. Kennelly, Judge.

ARGUED JUNE 1, 2016 — DECIDED JULY 29, 2016

Before WOOD, Chief Judge, and BAUER and FLAUM, Circuit

Judges.

BAUER, Circuit Judge. Plaintiff-appellant, Leland O. Stevens

(“Stevens”), is a self-employedfinancial advisor. He claims that 

defendants-appellees, Independent Financial Advisors, Inc.

(“IFA”) and Redtail Technologies, Inc. (“Redtail”) (collectively,
2 No. 15-2130

“the defendants”), stole his clients’ nonpublic personal

information. Believing that he had a property right to this

private information, Stevens sued the defendants for conversion and other claims on behalf of himself and his eponymous

corporation. The district court granted summary judgment for

the defendants on some of Stevens’ claims, and a jury found

for the defendants on the remaining claims. Stevens now

appeals the district court’s grant of summary judgment, as well

as a supplemental jury instruction that the district court gave

during trial. We affirm both of the district court’s actions.

I. BACKGROUND

After twenty years as an insurance salesman, Stevens

wanted to sell investment products. Because neither he nor his

company was registered with the Securities and Exchange

Commission, Stevens needed to associate himself with a

registered investment advisor to sell securities under federal

law. See 15 U.S.C. § 80b-3(a); 17 C.F.R. § 200.2(e). He did so in

2003, when he associated with IFA, a loosely confederated

investment advisory firm. The two parties first entered into an

oral agreement whereby Stevens became an individual

advisory representative for IFA. The parties eventually

memorialized the agreement in a June 2009 written contract.

As an independent advisory representative, Stevens could

provide investment advice and sell securities under the

umbrella of IFA; anyone who purchased securities from

Stevens was considered a client of both Stevens and IFA.

Though Stevens alone procured the clients, he and IFA shared

the fees.
No. 15-2130 3

In exchange for sharing clientele and fees with IFA, Stevens

had access to IFA’s market resources and other proprietary

information. This included access to a centralized cloud-based

data system, which Redtail operated under IFA’s direction.

Stevens uploaded client information into this database,

including sensitive nonpublic information like names, addresses, and social security numbers. Besides uploading

information from clients who purchased investment products

from him, Stevens also uploaded information from clients who

purchased only insurance products. Because these clients did

not purchase securities, they were not IFA clients. IFA did not

know that Stevens had entered the non-IFA client information

into the database.

In October 2009, IFA learned that Stevens had become

involved in a Ponzi scheme. IFA severed its association with

Stevens and ordered Redtail to block Stevens from accessing

the database. It also transferred Stevens’ securities-purchasing

clients to other independent advisory representatives. Stevens

claimed that by blocking access to the nonpublic personal

information of his clients, IFA effectively stole his property. He

sued the defendants for conversion, violation of the Illinois

Trade Secrets Act, tortious interference with business expectancy, and injunctive relief. Because there is complete diversity

and because the amount in controversy exceeds $75,000,

Stevens properly brought these state law claims in federal

court. See 28 U.S.C. §§ 1332(a)(1), 1332(c)(1). He filed suit in the

Western District of Virginia, and the case was later transferred

to the Northern District of Illinois. All parties agree that

Illinois’ substantive law governs. See McCoy v. Iberdrola

Renewables, Inc., 760 F.3d 674, 680 (7th Cir. 2014).
4 No. 15-2130

In time, the defendants moved for summary judgment. The

district court granted the defendants’ motion on the claims

relating to the information of clients who had purchased

securities from Stevens. The district court noted that federal

securities law prevented a financial institution like IFA from

disclosing the nonpublic information of its clients to a nonaffiliated third party like Stevens. See 15 U.S.C. § 6801; 17

C.F.R. § 248.10. This prevented Stevens from having an

absolute, unconditional right to immediate possession of the

property, as required to sustain a conversion claim under

Illinois law. See In re Karavidas, 999 N.E.2d 296, 310 (Ill. 2013)

(quotation marks and citations omitted). Unable to fulfill this

element of a conversion claim, the district court held that the

entire claim failed as a matter of law.

The district court did not grant summary judgment for the

conversion claim related to the information of the non-IFA

clients (those who purchased only insurance from Stevens).

The same restrictions governing the sale of securities do not

govern the sale of insurance, and relevant state law does not

proscribe IFA from sharing that information with Stevens.

Those claims instead went to trial. During its deliberations, the

jury sent the district court a question in writing, “Can we

consider [filing] the lawsuit a demand for property?” The

district court stated that filing a lawsuit does not constitute a

demand for the purposes of a conversion claim under Illinois

law. The jury then returned a verdict in favor of the defendants.

Stevens appealed.
No. 15-2130 5

II. DISCUSSION

Stevens’ arguments on appeal only relate to his conversion

claims. To prove conversion under Illinois law, a plaintiff must

show that: (1) he has a right to the property at issue; (2) he has

an absolute and unconditional right to the immediate possession of the property; (3) he made a demand for possession; and

(4) the defendant wrongfully and without authorization

assumed control, dominion, or ownership over the property.

In re Karavidas, 999 N.E.2d at 310 (quotation marks and

citations omitted). Stevens presents two arguments on appeal.

First, he argues that the district court erred by holding that he

could not prove that he had an absolute and unconditional

right to the immediate possession ofthenonpublic information

of the IFA clients. Thus, granting summary judgment on the

conversion claim relating to IFA clients was erroneous. Second,

he argues that filing a lawsuit satisfies the demand element of

the conversion claim, and that the district court erred by

instructing the jury differently. 

We disagree with both of Stevens’ arguments. First, the

district court properly understood relevant federal securities

law and correctly applied this law to Stevens’ conversion claim

regarding the IFA clients. Second, Stevens forfeited his

argument regarding the district court’s answer to the jury

question because he did not object to the district court’s

response at trial. Regardless, the district court committed no

error; it properly described what constitutes—or, more

precisely, what does not constitute—a demand under Illinois

conversion law.
6 No. 15-2130

A. Summary Judgment For ClaimsRelated to IFA Clients

Once IFA terminated its relationship with Stevens in 2009,

it could not provide him with the nonpublic information of the

IFA clients under federal law. As a result, Stevens did not have

an absolute and immediate right to immediate possession of

the information. See Horbach v. Kaczmarek, 288 F.3d 969, 978 (7th

Cir. 2002) (citations omitted) (under Illinois law, “[t]he essence

of conversion is the wrongful deprivation of one who has a

right to immediate possession of an object unlawfully held”

(quotation marks omitted)). He could not sustain a conversion

claim as a matter of law, so summary judgment for the

defendants was appropriate.

We review the grant of summary judgment de novo,

construing the facts in the light most favorable to the nonmoving party—here, Stevens. E.g., Roberts v. Columbia Coll.

Chicago, 821 F.3d 855, 861 (7th Cir. 2016) (citation omitted).

Summary judgment is appropriate and the moving party is

entitled to judgment as a matter of law where “there is no

genuine dispute as to any material fact.” Fed. R. Civ. P. 56(a);

accord. Hummel v. St. Joseph Cty. Bd. of Comm’rs, 817 F.3d 1010,

1015–16 (7th Cir. 2016). Here, summary judgment for the

defendants on the claims related to the IFA clients was appropriate because Stevens points to no evidence orlaw that allows

a circumvention of federal securities law.

The Gramm-Leach-Bliley Act famously repealed the

Depression-era Glass-Steagall Act’s “ban on affiliations

between commercial and investment banks.” Watters v.

Wachovia Bank, N.A., 550 U.S. 1, 29 (2007) (calling GrammLeach-Bliley a “seminal piece of banking legislation” for this
No. 15-2130 7

reason); see Pub. L. No. 106-102, § 101, 113 Stat. 1338 (1999).

Gramm-Leach-Bliley also enacted multiple safeguards to

protect the privacy of customers of financial institutions.

Regarding nonpublic personal information specifically, the

statute notes: “It is the policy of the Congress that each

financial institution has an affirmative and continuing obligation ... to protect the security and confidentiality of its customers’ nonpublic personal information.” 15 U.S.C. § 6801(a). The

Act also vested relevant agencies with the ability to “establish

appropriate standards for the financial institutions” in order to

further this policy of protecting consumer information. 15

U.S.C. § 6801(b). Specifically, the Securities and Exchange

Commission has the authority to regulate investment advisors

like IFA. See 15 U.S.C. § 6805(a)(5); see also 15 U.S.C. § 80b-4a.

Pursuant to its statutory authority, the SEC promulgated

Regulation S-P, which forbids investment advisors from

“directly or through any affiliate, disclos[ing] any nonpublic

personal information about a consumer to a nonaffiliated third

party.” 17 C.F.R. § 248.10(a). The regulation states that “[a]n

individual is [the advisor’s] consumer if he or she provides

nonpublic personal information to [the advisor] in connection

with obtaining or seeking to obtain brokerage services or

investment advisory services.” 17 C.F.R. 248.3(g)(2)(i) (emphasis added). It defines a “nonaffiliated third party” as “any

person” except an investment advisor’s affiliate or a joint

employee of both the investment advisor and a company that

is not the investment advisor’s affiliate. 15 C.F.R. § 248.3(s)(1).

Finally, an “affiliate” is “any company that controls, is controlled by, or is under common control with the ... investment

advis[o]r.” 15 C.F.R. § 248.3(a). The SEC has been vigorous in
8 No. 15-2130

its enforcement of Regulation S-P, punishing advisors who

have disclosed client information to nonaffiliated third parties.

See, e.g., Santos, S.E.C. Release No. 4346, 2016 WL 786444 at *2

(Feb. 29, 2016); Gisclair, S.E.C. Release No. 3703, 2013 WL

5740459 at *6–8 (Oct. 23, 2013).

Here, IFA could not have provided Stevens with the

nonpublic personal information of the IFA clients that he

procured. First, the clients in this case are consumers under the

regulation; the heart of the controversy is the nonpublic

personal information that they provided when seeking

financial advice. See 17 C.F.R. 248.3(g)(2)(i). Second, and more

importantly, Stevens ceased being an affiliate of IFA when the

relationship between the two parties ended. With the relationship terminated, Stevens was no longer controlled by or under

common control with IFA, the investment advisor. Nor was he

a joint employee of IFA and a nonaffiliated third party. He was

instead an unaffiliated third party for the purposes of Regulation S-P, and IFA could not disclose to him any nonpublic

personal information of the clients on the database. Nor could

Redtail, an affiliate of IFA controlled by IFA, give Stevens this

information.

Stevens argues that because he procured the clients and

uploaded the information at issue, he has an ownership claim

to the information superseding IFA’s claim to the information

and the mandate of Regulation S-P. But ownership is not

relevant to analysis under Regulation S-P. See In re S.W. Bach &

Co., 435 B.R. 866, 891 (Bankr. S.D.N.Y. 2010) (citing NEXT Fin.

Grp., Inc., S.E.C. Release No. 349, 2008 WL 2444775 at *26 (ALJ

June 18, 2008))(noting that RegulationS-P applies “[r]egardless
No. 15-2130 9

of who ‘owns’ the customer information”). The statutory duty

to protect a customer’s nonpublic information under both

Gramm-Leach-Bliley and Regulation S-P falls squarely “‘onthe

covered financial institution, not the individual representative.’” Id. (quoting NEXT, 2008 WL 2444775 at *26); see 15

U.S.C. § 6801(a); 17 C.F.R. § 248.10(a). An investment advisor’s

duty under the regulation quashes any ownership claim; it was

incumbent on IFA to not disclose its clients’ information to

nonaffiliated third parties, even if the unaffiliated third party

initially generated the clients.

Regulation S-P carves out a single exception to the duty of

non-disclosure to a nonaffiliated third party: an investment

advisorlike IFA could followa specifically enumerated opt-out

procedure. See 15 U.S.C. §§ 6802(b); 17 C.F.R. § 248.10(a)(1). But

this exception does not apply here, because IFA explicitly

eschews this opt-out procedure. In its compliance policy

manual, IFA states that it “does not need to provide the right

for its clients to opt out of sharing with nonaffiliated third

parties.” Its non-disclosure duty was clear and unavoidable: 1

it could not reveal the nonpublic information to Stevens when

he was no longer affiliated with the firm.

IFA exempts certain third parties from this rule: service providers, such 1

as “attorneys, auditors, consultants, brokers, custodians, and other

consultants”; those parties who help process and service transactions; and

those parties who are required or allowed to receive the information by

law, such as parties connected to an audit or subpoena. Stevens, a terminated former investment advisory representative, falls into none of these

three exempted categories. 
10 No. 15-2130

As the district court noted, Stevens may indeed have “some

right” to the client information. But any such right does not

override the requirements of Regulation S-P. The regulation

prevents him from taking immediate possession of the client

information. As a result, Stevens cannot prove an element of

his conversion claim as a matter of law. Summary judgment for

the defendants on the conversion claim relating to IFA clients

was proper.

B. Jury Instruction in Trial For Claims Related to NonIFA Clients

Stevens also argues that the district court misstated Illinois

law when it told the jury that filing a conversion lawsuit does

not constitute a demand for property. We regard a court’s

response to a question from the jury regarding the law as a

supplemental jury instruction, and generally review such

instructions for abuse of discretion. See United States v. Carani,

492 F.3d 867, 874 (7th Cir. 2007) (citations omitted). But we

have no evidence that Stevens objected to the court’s response,

or that any exceptional circumstances prevented him from

objecting. Thus, his argument is forfeited. See Fed. R. Civ. P.

51(d); Perry v. City of Chicago, 733 F.3d 248, 253 (7th Cir. 2013)

(citations omitted) (absent showing of exceptional circumstances, an effect on a party’s substantial rights, and a resulting

miscarriage of justice, appellate review not available in civil

cases if party does not object at trial).

Even if Stevens had objected, the district court did not

abuse its discretion in its instruction to the jury. When reviewing a court’s response to a jury question, we determine

whether the response: (1) fairly and adequately addressed the
No. 15-2130 11

issues; (2) correctly stated the law; and (3) answered the jury’s

question specifically. Morgan v. City of Chicago, 822 F.3d 317,

342 (7th Cir. 2016) (quotation marks and citation omitted).

Here, the district court more than adequately addressed the

narrow issue and directly answered the jury’s single question.

The salient question on appeal is whether it correctly stated

relevant Illinois law. We hold that it did.

The Illinois Supreme Court has never explicitly established

the rule that filing a lawsuit does not constitute a demand, so

a federal court sitting in diversity jurisdiction must “use [its]

own best judgment to estimate how the Illinois Supreme Court

would rule as to its law.” Zahn v. N. Am. Power & Gas, LLC, 815

F.3d 1082, 1087 (7th Cir. 2016) (brackets, quotation marks, and

citation omitted). In making this estimation, federal courts

should “give great weight to the holdings of the state’s

intermediate appellate courts[,] and ought to deviate from

those holdings only when there are persuasive indications that

the highest court of the state would decide the case differently.” Id. at 1087–88 (quoting Allstate Ins. Co. v. Menards, Inc.,

285 F.3d 630, 637 (7th Cir. 2002)); see also Fid. Union Trust Co. v.

Field, 311 U.S. 169, 177–78 (1940) (“An intermediate state court

in declaring and applying the state law is acting as an organ of

the [s]tate[,] and its determination, in the absence of more

convincing evidence of what the state law is, should be

followed by a federal court in deciding a state question.”).

Here, there is no persuasive indication that the Illinois

Supreme Court would rule that filing a lawsuit was sufficient

to meet the demand element of a conversion claim. Stevens has

not identified any Illinois appellate case holding as much. In

fact, Illinois appellate courts have held to the contrary—that a
12 No. 15-2130

pre-lawsuit demand is necessary to sustain a conversion

claim—and the Illinois Supreme Court has not overruled these

decisions. See Rybak v. Dressler, 532 N.E.2d 1375, 1387 (Ill. App.

Ct. 1988), reh’g denied, 541 N.E.2d 1115 (Ill. 1989); A.T. Kearney,

Inc. v. INCA Int’l, Inc., 477 N.E.2d 1326, 1334 (Ill. App. Ct. 1985);

Hoffman v. Allstate Ins. Co., 407 N.E.2d 156, 158 (Ill. App. Ct.

1980). We too have held that making a demand prior to filing

a lawsuit is necessary to sustain a conversion claim under

Illinois law. See Runnemede Owners, Inc. v. Crest Mortg. Corp.,

861 F.2d 1053, 1060 (7th Cir. 1988). We noted in Runnemede that

the “primary purpose” of the requirement is to facilitate the

return of the desired property to the plaintiff “before being

required to submit to unnecessary litigation.” Id.

In support of his position, Stevens only cites a single

unreported federal district court opinion, which in turn cites a

single Seventh Circuit case. See MacNeil Auto. Prod., Ltd. v.

Cannon Auto. Ltd., 2010 WL 4823592, at *1 (N.D. Ill. Nov. 19,

2010), citing LaParr v. City of Rockford, 100 F.2d 564, 565–66 (7th

Cir. 1938). MacNeil’s reliance on LaParr was misplaced: LaParr’s

discussion of a “demand” relates to a controversy regarding

the appropriate reference point for interest accrual, not

regarding what satisfies the demand element of a conversion

claim. See LaParr, 100 F.2d at 568–69. LaParr references no

Illinois case that discusses the appropriate timing for a demand

for property in a conversion claim, and certainly does not

stand for the proposition that filing a lawsuit fulfills the

demand element of a conversion claim under Illinois law. A

single tangential Seventh Circuit case cited in an unpublished

federal district court opinion is hardly “convincing evidence”

of what Illinois law would be regarding the demand element
No. 15-2130 13

of a conversion claim. See Field, 311 U.S. at 178. The district

court’s answer to the jury’s question was correct, and not an

abuse of discretion.2

A final issue: Stevens argues on appeal that he was excused

from making a demand. Under Illinois law, a demand for

property is not necessary where the demand would be futile or

if the defendant has sold, disposed of, or fundamentally

changed property at issue. See, e.g., Stathis v. Geldermann, Inc.,

630 N.E.2d 926, 931 (Ill. App. Ct. 1994); A.T. Kearney, Inc., 477

N.E.2d at 1334 (citation omitted). Stevens claims that the

district court did not address this issue of law. But the district

court did address the issue, including this language in its jury

instructions. It did not misstate the law as Stevens argues.

III. CONCLUSION

We AFFIRM the actions of the district court and the jury’s

verdict.

Logic buttresses our determination. If filing a lawsuit constituted a

2

demand for property, then a demand for property would be an unnecessary

element of a conversion claim. Filing a suit would always satisfy this

element; there would be no need for a discrete demand element.