Number 2 and Monograph - Illinois Association of Defense Trial

Transcription

IDC Quarterly
Second Quarter 2005
Second Quarter 2005
Volume 15, Number 2
ISSN-1094-9542
FEATURED ARTICLES
Spring 2005
Spoliation of
Evidence Revisited
Page 11
IDC
Appellate Court
of Illinois Affirms
Application of
Actual Innocence
Rule in Legal
Malpractice Action
Page 43
Vacation of Voluntary
Dismissal Orders
Opens the Door
for Potential Abuse
Page 60
MONOGRAPH
The Class Action
Fairness Act –
What is it all About?
The Illinois Association of
Defense Trial Counsel
Law, Equity, Justice
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Illinois Association of
Defense Trial Counsel
IDC QUARTERLY EDITORIAL BOARD
Rick Hammond, Editor-In-Chief
Johnson & Bell, Ltd., Chicago
[email protected]
WWW.IADTC.ORG
PRESIDENT
STEPHEN J. HEINE
Heyl, Royster, Voelker & Allen, Peoria
PRESIDENT-ELECT
GLEN E. AMUNDSEN
O’Hagan, Smith & Amundsen, L.L.C.,
Chicago
1ST VICE PRESIDENT
STEVEN M. PUISZIS
Hinshaw & Culbertson, Chicago
2ND VICE PRESIDENT
JEFFREY S. HEBRANK
Burroughs, Hepler, Broom, MacDonald, Hebrank & True, Edwardsville
SECRETARY/TREASURER
GREGORY L. COCHRAN
McKenna Storer, Chicago
DIRECTORS
DAVID M. BENNETT
Pretzel & Stouffer, Chtrd., Chicago
TROY A. BOZARTH
Burroughs, Hepler, Broom, MacDonald, Hebrank & True, Edwardsville
C. WM. BUSSE, JR.
Busse & Busse, P.C., Chicago
ANDREW D. CASSIDY
Cassidy & Mueller, Peoria
JANELLE K. CHRISTENSEN
Tressler, Soderstrom, Maloney & Priess, Lincolnshire
DANIEL K. CRAY
Iwan Cray Huber Horstman &
Van Ausdall, LLC, Chicago
RICK HAMMOND
R. HOWARD JUMP
Jump and Associates, P.C., Chicago
DAVID H. LEVITT
Hinshaw & Culbertson, Chicago
KEVIN J. LUTHER
Heyl, Royster, Voelker & Allen, Rockford
JOHN P. LYNCH, JR.
Cremer, Kopon, Shaughnessy & Spina, Chicago
MATTHEW J. MADDOX
Quinn, Johnston, Henderson & Pretorius, Springfield
FRED B. MOORE
Lawrence, Moore & Ogar, Bloomington
JOHN L. MOREL
John L. Morel, P.C., Bloomington
ANNE M. OLDENBURG
Alholm, Monahan, Klauke, Hay
& Oldenburg, L.L.C., Chicago
ROBERT T. PARK
Snyder, Park & Nelson, P.C., Rock Island
MICHAEL RESIS
O’Hagen, Smith & Amundsen, Chicago
KENNETH F. WERTS
Craig & Craig, Mt. Vernon
Linda J. Hay, Executive Editor
Alholm, Monahan, Klauke, Hay & Oldenburg, L.L.C., Chicago
[email protected]
Joseph G. Feehan, Associate Editor
[email protected]
Kimberly A. Ross, Assistant Editor
Cremer, Kopon, Shaughnessy & Spina, Chicago
[email protected]
Renee J. Mortimer, Assistant Editor
Hinshaw & Culbertson, Schererville, IN
[email protected]
COLUMNISTS
Edward J. Aucoin, Jr.
John L. Morel
Hall, Prangle & Schoonveld, LLC, Chicago
John L. Morel, P.C., Bloomington
Beth A. Bauer
Martin J. O’Hara
Burroughs, Hepler, Broom, MacDonald,
Quinlan & Carroll, Ltd., Chicago
Hebrank and True, Edwardsville
David A. Perkins
James K. Borcia
Tressler, Soderstrom, Maloney & Priess, Chicago
Robert T. Park
Michael C. Bruck
Snyder, Park & Nelson, P.C., Rock Island
Crisham & Kubes, Ltd., Chicago
Michael J. Progar
Brad A. Elward
Doherty & Progar, LLC, Chicago
Michael L. Resis
Joseph G. Feehan
O’Hagan, Smith & Amundsen, L.L.C., Chicago
Kimberly A. Ross
Stacy Dolan Fulco
Cremer, Kopon, Shaughnessy & Spina, LLC, Chicago
Cremer, Kopon, Shaughnessy & Spina, LLC, Chicago
Peter R. Ryndak
Rick Hammond
Tracy E. Stevenson
Stephen J. Heine
Chuhak & Tecson, P.C., Chicago
Willis R. Tribler
Kevin J. Luther
Tribler Orpett & Meyer, P.C., Chicago
Heyl, Royster, Voelker & Allen, Rockford
CONTRIBUTORS
Brian Y. Boyd
Williams Montgomery & John Ltd., Chicago
Sean G. Joyce
John D. LaBarbera
Bradley C. Nahrstadt
Al Pranaitis
Hoagland, Fitzgerald, Smith & Pranaitis, Alton
EXECUTIVE DIRECTOR
Shirley A. Stevens
PAST PRESIDENTS: Royce Glenn Rowe - James Baylor - Jack
E. Horsley - John J. Schmidt -Thomas F. Bridgman - William J.
Voelker, Jr. - Bert M. Thompson - John F. Skeffington - John G.
Langhenry, Jr. - Lee W. Ensel - L. Bow Pritchett - John F. White - R.
Lawrence Storms - John P. Ewart - Richard C. Valentine - Richard
H. Hoffman - Ellis E. Fuqua - John E. Guy - Leo M. Tarpey - Willis R. Tribler - Alfred B. LaBarre - Patrick E. Maloney - Robert V.
Dewey, Jr. - Lawrence R. Smith - R. Michael Henderson - Paul
L. Price - Stephen L. Corn - Rudolf G. Schade, Jr. - Lyndon C.
Molzahn - Daniel R. Formeller - Gordon R. Broom - Clifford P.
Mallon - Anthony J. Tunney - Douglas J. Pomatto - Jack T. Riley,
Jr. - Peter W. Brandt - Charles H. Cole - Gregory C. Ray - Jennifer
Jerit Johnson
The IDC Quarterly is the official publication of the Illinois Association of
Defense Trial Counsel. It is published quarterly as a service to its members.
Subscriptions for non-members are $75 per year. Single copies are $20 plus $2
for postage and handling. Requests for subscriptions or back issues should be
sent to the Illinois Association of Defense Trial Counsel headquarters in Springfield, Illinois. Subscription price for members is included in membership dues.
THE ILLINOIS ASSOCIATION OF DEFENSE TRIAL COUNSEL
P.O. Box 7288 • Springfield, IL 62791
800-232-0169 • 217-636-7960 • FAX 217-636-8812
[email protected]
SHIRLEY A. STEVENS, Executive Director
TONYA M. VOEPEL, Publications Manager
9865 State Route 124 • P.O. Box 78
Sherman, IL 62684
217-566-2603 • FAX 217-566-2507
[email protected]
In This Issue
Lead Article
MonographM-1 The Class Action Fairness Act of 2005 – What is it all About?
by Bradley C. Nahrstadt and Brian Y. Boyd
Featured Articles 11 Spoliation of Evidence Revisited, by Bradley C. Nahrstadt and Sean G. Joyce
43 Appellate Court of Illinois Affirms Application of Actual Innocence Rule in
Legal Malpractice Action Arising from Underlying Criminal Plea Agreement
by John D. LaBarbera
60 Recent Opinion Regarding Voluntary Dismissal Orders Opens the Door
for Potential Abuse, by Al Pranaitis
Regular Columns
72 Alternative Dispute Resolution, by John L. Morel
74 Amicus Committee Report, by Michael L. Resis
67 Appellate Practice Corner, by Brad A. Elward
33 Case Note, by Robert T. Park
34 Civil Rights Update, by David A. Perkins
70 Commercial Law, by James K. Borcia
73 The Defense Philosophy, by Willis R. Tribler
6 Editor’s Note, by Rick Hammond
26 Employment Law Issues, by Kimberly A. Ross
38 Evidence and Practice Tips, by Joseph G. Feehan
7 IDC Candidates for Election
76 IDC New Members
19 Insurance Coverage, by Peter R. Ryndak
17 Legal Ethics, by Michael J. Progar
36 Medical Malpractice, Edward J. Aucoin, Jr.
4 President’s Message, by Stephen J. Heine
56 Professional Liability, by Martin J. O’Hara
65 Property Insurance, by Tracy E. Stevenson
48 Recent Decisions, by Stacy Dolan Fulco
54 Supreme Court Watch, by Beth A. Bauer
44 Technology Law, by Michael C. Bruck
15 Workers’ Compensation Report, by Kevin J. Luther
Manuscript Policy
Members and other readers are encouraged to submit manuscripts for possible publication in the IDC Quarterly, particularly articles of practical use to defense
trial attorneys. Manuscripts must be in article form. A copy of the IDC Quarterly Manuscript Guidelines is available upon request from
The Illinois Association of Defense Trial Counsel office in Springfield, Illinois. No compensation is made for articles published, and no article will be
considered that has been submitted simultaneously to another publication or published by any other publication. All articles submitted may be subjected to editing
and become the property of the IDC Quarterly, unless special arrangements are made.
Statements or expression of opinions in this publication are those of the authors and not necessarily those of the Association or Editors.
A copy of the IDC Quarterly Editorial Policy is available upon request. Letters to the Editor are encouraged and welcome, and should be sent to the
Illinois Association of Defense Trial Counsel headquarters in Springfield.
Editors reserve the right to publish and edit all such letters received and to reply to them.
IDC Quarterly, Second Quarter, 2005, Volume 15, No. 2. Copyright © 2005 The Illinois Association of Defense Trial Counsel. All rights reserved. Reproduction in whole or in
part without permission is prohibited. POSTMASTER: Send change of address notices to IDC Quarterly, The Illinois Association of Defense Trial Counsel,
P.O. Box 7288, Springfield, IL 62791. Second-Class postage paid at Springfield, IL and additional mailing offices.
This publication was printed by Gooch & Associates, Springfield, Illinois.
IDC Quarterly
President’s Message
By: Stephen J. Heine
Heyl, Royster, Voelker & Allen
Peoria
IDC Business
The 2005 Spring Defense Tactics
Seminar was sold out, as it should
have been. All in attendance enjoyed
a fine program at the University Club
on a Friday followed by a cocktail
party reception for attendees, speakers and sponsors. Mike Tootooian,
his committee, and Glen Amundsen,
who paved the way to the University
Club, deserve congratulations for an excellent program and a
scholarly set of materials prepared by some learned speakers.
The Fall Conference is September 23 and 24 at Eagle Ridge
Inn and Resort in beautiful Galena. Aleen Tiffany and her
excellent program planned.
committee have an
Every four or five years the leadership of the IDC participates in a long-range planning session. In August we will meet
at the Inn at Eagle Creek at Lake Shelbyville. This meeting,
as in the past, is designed to allow discussion of a wide range
of topics of significance to the organization that time does not
permit to be developed fully at regular board meetings. If you
have been invited to attend, please do whatever you can to
adjust your schedule so you can participate.
November 5 is the date for the Rookie Seminar at John
Marshall in Chicago. Send all of your young lawyers — I
guarantee that they will learn some valuable skills.
The Annual Meeting of the IDC Membership and the Board
of Directors will be held on June 17 at Arlington Park. This
should be an enjoyable event with a little business and more
than a little fun.
The Judicial Branch
The first quarter of 2005 has been fraught with varying
attacks on our judicial system. From the murder of Judge
Lefkow’s family in Chicago to the Atlanta courthouse murders of a judge, court reporter and court deputies, to the
white supremacist law graduate (but non-lawyer) convicted
of scheming to murder Judge Lefkow because of a ruling
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against him in a civil case, to the members of the executive
and legislative branches of state and federal governments who
seek to decide particular cases and controversies in private
matters and disregard the established judicial process, the
courts are under siege. Let us all remember that we are officers
of the court. We are an important part of the judicial process
that makes our country different from the rest of the world.
We are a part of the rule of law. We are not fixers, greasers or
political partisans. We are lawyers who represent our clients
but owe our first allegiance to the judicial branch. If you are
in doubt as to the extent of this duty, take time to review the
Rules of Professional Conduct. Lawyers must make reasonable efforts to expedite litigation (Rule 3.2) and shall not make
any false statements of material fact, offer false evidence,
counsel or assist a client in fraudulent or illegal conduct (Rule
3.3). Lawyers shall not make any false or reckless statements
concerning the qualifications or integrity of a judge (Rule 8.2).
Why do we have the last rule? Simply because if we, the
officers of the court, the individuals who are charged with the
responsibility of making the system work, berate or assert a
lack of qualifications or integrity on the part of judges who
rule against our clients, the system will collapse. It falls to
us, the active and regular participants in a system designed
to be a search for the truth through the adversary process, to
uphold the integrity of the system and those that govern it.
We know that there is almost always a winner and a loser; it
is the nature of the process. It is easy to be a winner, but it is
when a lawyer has lost that the challenge arises. If you berate
the judicial branch, you demean yourself. If you deride the
judges and the system, you play into the hands of the hatemongers and the mentally disturbed. Please think before you
speak ill of the process that provides you with a livelihood
and a fine intellectual challenge on a daily basis. Most are not
so fortunate.
Robert Grey, the President of the American Bar Association, as fine and distinguished a gentleman as you will ever
have the pleasure to meet, spoke recently on the same issue
as follows:
As members of the legal profession, I know you share my
concern over the public’s misunderstanding of the judiciary’s
role and the politically motivated criticism of the judiciary
stemming from the Terri Schiavo case, and are equally alarmed
about the murders of Judge Lefkow’s family members in
Chicago and the attacks at the Fulton County Courthouse in
Georgia. The circumstances of these tragic events require careful analysis, thoughtful leadership, and measured response.
The American Bar Association has long held the preservation
of judicial independence as one of the most important Association goals. These recent events have elevated the urgency
Second Quarter 2005
of that commitment among the ABA’s leadership. In the past
several days, I have issued public statements condemning the
violence against our judiciary and the gratuitous and vicious
public attacks on the dedicated men and women who are our
country’s judges. During my speaking engagements, I have
taken the opportunity to call for a change in tenor when the
national discussion turns to our justice system.
Regardless of how one feels about the specific circumstances of the Schiavo - or any - situation, the role of the
programs that support our justice system, our judges, and our
courts. Information on each of these entities’ initiatives can
be accessed through the Justice Center’s web site at http://
www.abanet.org/justicecenter/home.html
Thank you for your continued support of the ABA, the
legal profession, and the judiciary. As the voice of the legal
profession, we must not allow those among us who would
do harm, in any form, to destroy the very freedoms our legal
system is entrusted to protect.
I wish I could have said it as well.
Comings and Goings
“Let us all remember that we are
officers of the court. We are an important part of the judicial process
that makes our country different
from the rest of the world.”
judiciary is clear. Federal and state judges are charged with
weighing the facts of a case and following the remedies set
forth in the law, responsibilities they carry out valiantly and
with great dignity and sensitivity.
It is vital that the legal community address the current atmosphere in which our legal system operates, in what can only
be called a decline in civility and respect toward our justice
system. Too often judges are characterized as political tools
and the justice system merely an offshoot of politics, and not
the independent leg of our democracy that they are. Efforts
to address the problems of courthouse security have been
initiated by the Judicial Conference of the United States and
the National Center for State Courts, and I have approached
these organizations as well as a number of entities within the
ABA to determine where and how we can best contribute to
resolving problems faced by the nation’s courts and judges.
The Association is committed to promoting the importance
of judicial independence. The four entities that comprise the
ABA Justice Center: the Judicial Division, the Standing Committee on Judicial Independence, the Standing Committee on
Federal Judicial Improvements, and the Coalition for Justice
work tirelessly to develop resources, initiatives, policies, and
By the time you read this, my term as IDC President will
be nearly concluded. I have enjoyed every minute of it and
thank all of you, especially the other officers with whom I
have served for many years, Glen Amundsen, Steve Puiszis,
Jeff Hebrank, Greg Cochran and the Board of Directors.
Thanks as well to the Quarterly’s Editorial Board and especially to Linda Hay who edits this column and is responsible
for its grammatical soundness but not for the substance of
the views expressed. Thanks also to Rick Hammond who
performed admirably for the IDC as Editor in Chief and in
many other roles, and to Tonya Voepel, as well, who compiles
the words of many into a fine, comprehensive publication.
Last but not least, thanks to our Executive Director, Shirley
Stevens. Her efforts and diligence have made not only the
Officers and Directors, but the rest of the leadership shine.
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IDC Quarterly
By: Rick Hammond
Johnson & Bell, Ltd.
Chicago
Over the years, I have heard
people talk about the IDC Quarterly being regarded by other state’s
defense bar associations as the best
publication of its kind. After spending a year as its Editor-in-Chief, I
now understand why. The dedication
of the authors, editors, members, and
staff to this “little blue book” is a
thing to behold.
As I close out my term, I would like
to thank my fellow Editorial Board members, Joe Feehan,
Kim Ross, and Renee Mortimer. I could not have done it
without them . . . no way, no how. Special thanks and best
wishes to my successor and fellow editor, Linda Hay. She
has always been willing to take on more than her share of
the load, and she has contributed significantly to the quality
and success of the Quarterly as a member of the Editorial
Board. She will do a great job as Editor-in-Chief.
Tonya Voepel, the person behind the scene, receives far
less credit and visibility than she deserves. She magically
takes a very raw product and turns it into a shining jewel.
Thanks Tonya, I had a great time working with you. Shirley
Stevens, the backbone of our entire organization, thanks so
much to you for your help and support during my term and
always.
Congratulations to our out-going President, Steve Heine,
whose guidance helped our organization prosper and continue to succeed. Best wishes to our President-elect, Glen
Amundsen, a great defense lawyer and a long-standing and
dedicated member of IDC. Expect to see great things under
his leadership in the coming year.
Finally, thanks to the IDC board for your time and commitment to the organization, the Quarterly’s authors for
gratuitously sharing your knowledge and expertise, and
thanks to you, the IDC members, for your appreciation and
continued support of the Quarterly. All of you certainly made
my job easy.
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“I will end this column the way
I started it, ‘The information
contained in the IDC Quarterly
is, alone, worth the price of membership in this organization.’ ”
QUARTERLY
deadlines
Editor’s Note
I will end this column the way I started it, “The information contained in the IDC Quarterly is, alone, worth the price
of membership in this organization.”
June 28, 2005
Vol. 15, No. 3
September 27, 2005
Vol. 15, No. 4
December 27, 2005
Vol. 16, No. 1
March 28, 2006
Vol. 16, No. 2
Illinois Association of Defense Trial Counsel
Second Quarter 2005
CANDIDATES for the Board of Directors
2005-2006
S
ALEEN R. TIFFANY
ix nominations have been received
to fill the six vacancies of terms expiring
June 2005. In accordance with the bylaws
of the Illinois Association of Defense Trial
Counsel these directors will take office in
June 2005. Also, according to the bylaws
the Board of Directors shall be representative of all areas of the State of Illinois,
and to this end, two Districts are declared:
“Cook County” and “Downstate;” no more
than four of the six directors elected each
year shall office within the same District.
The nominations are listed in the
order in which they were received. New
Directors will be announced at the Annual
Meeting on June 17, 2005.
Aleen graduated from the University of Illinois with a Bachelor
of Science degree in Mathematics in 1989 and earned her Juris
Doctor degree from The John Marshall Law School, cum laude, in
1993. She has been very active in the IDC, serving as an Instructor
and as Chair of the IDC Trial Academy
for several years, and Chair/Committee
member of the Fall Seminar the last 3
years. Aleen is a trained and approved
arbitrator in the 19th Judicial Circuit
Mandatory Court-annexed Arbitration
program, and frequently serves as an
arbitrator in First Party claims.
Aleen has successfully litigated a
wide variety of civil matters throughout
northern Illinois. In recent years her
practice has focused strongly on construction matters. Aleen
regularly handles the day-to-day issues facing general and subcontractors, design professionals, and insurers, including risk
transfer and insurance matters; contract evaluation and development; defense of catastrophic bodily injury claims; construction
defect claims arising out of breach of contract, common law, and
other warranty and statutory theories; and other contract, mechanics liens, and commercial matters faced regularly by corporate
clients.
She has written and lectured in various areas of Illinois tort law
including: construction injury theories under the common law and
former Structural Work Act; risk transference and coverage; joint
and several liability and indemnification; certificates of insurance
and additional insured endorsements; cost effective handling of
discovery and the litigation process; settlement avenues; and tort
reform (1995), its repeal, and subsequent litigation theories and
changes.
Statement of Candidacy — Aleen R. Tiffany
Service on the IDC Board of Directors provides a great opportunity to help further the goals of the organization and its
members. We must continue to help members of all practice
levels to promote greater knowledge and insight, scrvice and
civility, collegiality, and administration ofjustice. I have enjoyed,
Continued
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Aleen R. Tiffany—Continued
and learned much from my activity in the organization during
my career by regular attendance at the Fall and Spring seminars,
speaking at the Fall Seminar in 2003; and regularly serving as a
committee member, Co-Chair, and Chair of the Fall Seminar and
Trial Academy (Fall Seminar Committee member 2003, co-chair
2004, Chair 2005; Tnal Academy committee and faculty member
2002, Co-Chair 2003, and Chair 2004, 2005). Through those
committees, I have reported directly to the Board of Directors
and Officers, and thus have learned a great deal regarding the
structure and operation of the IDC — and more importantly have
learned the great benefit to the organization and the defense bar
in general, of having strong and committed members at all levels
of the organization. My experience and leadership will assist the
IDC in expanding and reaching its goals, and to remain the premier
association of civil defense attomeys in Illinois.
KEVIN J. LUTHER
Kevin J. Luther is a partner in the Rockford office of Heyl,
Royster, Voelker & Allen. He has tried cases in the areas of employment law, workers’ compensation, product liability, professional liability, insurance coverage, and general tort defense. Mr.
Luther received his B.A. degree from
Blackburn University (Summa Cum
Laude) in 1981 and his J.D. degree from
Washington University in 1984. He is a
member of the Illinois Association of
Defense Trial Counsel and practices
before the Illinois Department of Human
Rights, Illinois Human Rights Commission, Illinois Industrial Commission,
EEOC, State Courts for the States of
Illinois and Wisconsin, as well as the
United States District Court for the Northern District of Illinois.
Statement of Candidacy — Kevin J. Luther
I am pleased to be a candidate for the Board of Directors for
the IDC. My first committee involvement was the Fall Conference
Committee which I eventually co-chaired in 1997 and chaired in
1998. I have been a columnist for the IDC Quarterly for several
years and have had the honor to co-author three IDC monographs.
I have spoken at prior IDC seminars. I have enjoyed my first term
as a board member.
It is my goal to take my participation in the IDC to a higher
level. I have enjoyed the opportunity to work with the leadership
of the IDC and would welcome the opportunity to participate
further as a board member in our fine organization.
RICK HAMMOND
Rick Hammond is a shareholder in the Chicago law firm of
Johnson & Bell, Ltd., and he concentrates his practice on insurance coverage, insurance fraud and bad faith litigation.
He is a current member of the IDC’s Board of Directors, and he
is a board member and an officer of the
Insurance School of Chicago. He is also a
vice-chair of the Property Insurance Law
Committee of the American Bar Association, and a member of the Federation of
Defense and Corporate Counsel.
Rick is the Editor-in-Chief of the
IDC Quarterly, a featured columnist
for SIU Awareness, a publication of the
International Association of Special
Investigation Units, and a frequent presenter both nationally and
internationally on matters relating to insurance coverage, insurance fraud and bad faith.
He previously served as Executive Director of the Insurance
Committee for Arson Control, a national insurance trade association, and he currently serves as their General Counsel. He also
serves as General Counsel for the International Association of
Arson Investigator’s Foundation, Inc. He is the former head of
the Illinois Department of Insurance’s Chicago office, and he has
held managerial positions in claims and agency for two national
insurance carriers.
Statement of Candidacy — Rick Hammond
I am pleased and excited to offer my candidacy for reelection
to the IDC’s Board of Directors, and I am proud to reflect on my
accomplishments:
• Editor-in-Chief of the IDC Quarterly, and a member of the
Quarterly’s Editorial Board for the past four years;
• As an officer and a board member of the Insurance School
of Chicago (ISC), I was successful in facilitating an alliance
to be formed between ISC and IDC. This alliance resulted in
the presentment of four jointly sponsored seminars on mold
litigation, construction defects, tripartite relations and sexual
torts. These programs were very well received and generated
several thousand dollars of additional revenue for the IDC;
• Served as a presenter for the IDC’s 2005 Spring Defense
Tactic’s Seminar;
• Served as a presenter for the IDC and ISC joint seminar on
mold litigation;
• Developed, co-chaired and moderated an IDC seminar on
marketing and business development, a program which emphasized practice building by female and minority lawyers; and
• Former chair of the IDC’s Technology Committee.
It is my hope that my record of accomplishments on your behalf will cause you to find me deserving of your vote. I appreciate
having had the opportunity to serve you for the past five years,
and I thank you in advance for the opportunity to serve you again
in the next term.
to act as a leader and feel that my contributions have played an
integral role in the growth of the organization and the professionalism of the statewide defense bar.
I would welcome the opportunity to continue to serve this
esteemed organization, and would appreciate the consideration
of the membership in that regard.
ANNE M. OLDENBURG
Anne M. Oldenburg is a partner in the Chicago law firm of
Alholm, Monahan, Klauke, Hay & Oldenburg, LLC.
She has been admitted to practice by the Supreme Court of
Illinois, the United States District Courts for the Central, Southern
and Northern Districts of Illinois, as well as the Federal Trial Bar.
Anne M. Oldenburg received her
Bachelor of Arts, cum laude, from
Ripon College in 1983 and her Juris
Doctor, with distinction, from The John
Marshall Law School in 1986. While at
John Marshall, she was a Moot Court
Executive Board Associate Justice, a
member of the Moot Court Council and
Moot Court Honors Writing.
Ms. Oldenburg is a member of the Illinois State and Chicago Bar Associations, the Illinois Association of Defense Trial
Counsel, the Defense Research Institute, the American Academy
of Healthcare Attorneys of American Hospital Association, the
American Association of Healthcare Risk Managers, the Chicago
and Healthcare Risk Management Society, and the Illinois Association of Healthcare Attorneys.
Ms. Oldenburg is also a member of the Board of Directors of
the Illinois Association of Defense Trial Counsel.
Ms. Oldenburg’s most recent publications include The 10
Biggest Mistakes Physicians Make Which Prevent Them From
Transferring Risk, and The 10 Biggest Mistakes Physicians Make
When Obtaining Insurance Coverage in SEAK, Inc.’s The Biggest
Legal Mistakes That Physicians Make and How to Avoid Them
in 2004.
Ms. Oldenburg is a frequent lecturer on various topics in the
healthcare field.
Statement of Candidacy —Anne M. Oldenberg
I am currently in the process of completing my second term on
the Board of Directors of the Illinois Association of Defense Trial
Counsel. Throughout my two terms, I have been actively involved
in the Association’s educational and social functions. I regularly
attend meetings and provide invaluable liason services between
the membership and the Board of Directors. Recently, I chaired the
40th Anniversary Gala, which was a well attended event honoring
the IDC’s continued years of service to the defense bar.
During my tenure on the Board, I have and will continue to
promote the Illinois Association of Defense Trial Counsel as an
organization to serve the needs of defense lawyers throughout the
state by providing superior educational opportunities, invaluable
resources and quality networking events. I have been honored
C. WILLIAM BUSSE, JR.
C. William Busse, Jr. is the President of the law firm of Busse
& Busse, P.C., where he concentrates his practice in defense
of tort litigation. He has handled hundreds of personal injury
and wrongful death cases in various Illinois venues, including
automobile, trucking, premises
liability, product liability, aviation and
construction injury claims, as well as
fire and explosion and property damage
claims. He has defended numerous
cases involving churches and other
charitable organizations. Mr. Busse
received his J.D. in 1982 from The John
Marshall Law School and his B.A. from
Western Illinois University in 1975.
He currently serves as Co-chair of the IDC Civil Practice and
Procedure Committee. He is a member of DRI and is also active
in the Chicago Bar Association and Illinois State Bar Association.
Mr. Busse is a past chair of the Bench/Bar Relations Committee
and the Civil Practice and Procedure Committee of the Chicago
Bar Association. He is also a founding member of the CBA
Interfaith Law Committee.
Statement of Candidacy — C. William Busse, Jr.
I have been an active member of the Illinois Association of
Defense Trial Counsel since 1982. During that time, our association has evolved into an organization that is widely regarded as
one of the premier state defense associations in this county. I am
continually impressed with the IDC and the high caliber of its
members.
Prior to becoming a director. I served as the chairman of the
Civil Procedure Committee for a number of years. In that capacity
I had the opportunity to testify on behalf of the association before
the Supreme Court Rules Committee on a number of proposed
rule changes. It was gratifying to see the respect that the IDC was
given by the committee.
In addition to publishing two Civil Practice Updates for the
organization, I have co-authored two monographs for the IDC
Quarterly. It was also my pleasure to act as a guest speaker and
as a moderator at several of our fall seminars.
Continued
IDC Quarterly
C. William Busse, Jr.—Continued
During the last two years I have had the honor to serve as a
director of our association. It has been a challenging and rewarding term.
The IDC is now at an important crossroads. In addition to
planning numerous seminars, publications and events, we are now
engaged in a strategic long range planning project to determine
the current role of our organization and the role it will play in the
next 20 years.
The IDC has a tremendous potential to influence the legislative
and judicial process by increasing its membership and achieving a
higher profile in the legal community. I want to have a role in this
critical process by continuing to represent our organization in the
planning of seminars and the publishing of timely and informative
publications. We now have an excellent opportunity to increase the
profile of our association in the legal and legislative community.
I would welcome the opportunity to serve our organization as
we look to the challenges ahead.
PATRICK C. DOWD
Born Chicago, Illinois, July 10, 1958; admitted to bar, 1985,
Illinois and U.S. District Courts, admitted to bar, Wisconsin, 1997.
Education: Northern Arizona University (B.S., cum laude, 1981);
DePaul University (J.D., 1985). Phi Kappa Phi (Honor Society).
Member: Chicago, Illinois State and American Bar Associations; American Trial Lawyers Association,: Member:
TIDA; Trucking Industry Defense Association; American Bar Association;
Section of Tort and Insurance Practice,
Commercial Transportation Litigation
Committee. Executive-Director, Children’s Charities of Chicago 1985-1996.
Catholic Charities of the Archdiocese of
Chicago Board of Advisors; Appointed
by Cardinal George 1997. Legal Advisory Committee of Catholic Charities.
Instructor, Chicago School of Commerce, 1984-1987. Business
Law, “Instruction On Debate,” CBA, 1986; “Erosion of the Peremptory Challenge: Rule against excluding jurors based on race
applies to civil cases,” ISBA Trial Briefs, July, 1992; “Determination of Good Faith Findings,” ISBA Trial Briefs, May, 1994;
ISBA, Participant, 1993 Annual Minority and Women Attorneys’
Conference; Opening Statements. ISBA, Allerton House Steering
Committee 1994; Trial Techniques Committee 1985-1986, Tort
Litigation Committee, 1985-1986; Guest Speaker: ISBA, Civil
Practice Update, February, 1994, ISBA, Participant, Allerton
House Conference, Monticello, Illinois, May, 1994; ISBA, Law
Ed Series, Anatomy of a Trial, Part II: Recurring Evidentiary
Issues, Chicago, November, 1994; Civil Practice Committee
1991-1995. ISBA; Elected Assembly Member, 1994–1996.
Tort Law Section Council 1996-1997. Illinois Tort Reform;
10
An Overview And Analysis; Illinois Supreme Court Amended
Discovery Rules, June, 1997. Pre-existing Condition; Proof of
Causal Connection Required, July, 1998. When In Doubt, Err on
the Side of Full Disclosure, July, 1999. TIDA; Presenter, Back to
Basics Program, October, 1999. Presenter, a Panel Discussion of
The How and Why of Catastrophic Investigation, October 1999.
Answers to commonly asked questions about the N.T.S.B. and
U.S.D.O.T., November 2000. Changes to Discovery Rules Under
Illinois Supreme Court Rules, April, 2002. Presenter, Defense
Perspective: Focus Groups and Mock Trials, October, 2002.
Fall, 2003, Industry Seminar: Wrongful Death – Post Mortem.
Update: Comparing and contrasting substantive law of Illinois
and Indiana, Fall, 2003. Presenter: Defense Strategies for Bad
Venues – Aftermath of Catastrophic Loss, Houston, Texas, January, 2004. Duty to Defend: A Refresher, Summer 2004. Elected
to “Leading Lawyers” for State of Illinois, December, 2004.
Statement of Candidacy —Patrick C. Dowd
I respectfully request your support as candidate for the Board
of Directors of the Illinois Defense Counsel. I am the managing
partner of a mid-sized defense firm and believe that I possess
the requisite skills and determination necessary to foster both
current and future goals of the Defense Counsel. Over my 20
years of experience as a lawyer, I have been very active in the
Illinois Bar Association, including participation in committees,
Illinois General Assembly, lectures and publications. I welcome
the challenge of serving on the Board of Directors and commit
to move the Defense Counsel forward in the upcoming years.
Second Quarter 2005
Featured Article
Spoliation of Evidence
Revisited
By: Bradley C. Nahrstadt and Sean G. Joyce
Williams Montgomery & John Ltd.
Chicago
In the Second Quarter of 2004, the authors published an
article in this journal that provided a chronological survey
of cases that contributed to the body of precedent in Illinois
dealing with the issue of spoliation of evidence. The last case
discussed in that article was Dardeen v. Kuehling, 801 N.E.2d
960, 2003 WL 22800859 (Ill. App. 5th Dist.). In December
of 2004, the Illinois Supreme Court issued an opinion in the
Dardeen case that effectively overruled the decision of the
Fifth District Appellate Court and reinstated the entry of summary judgment in favor of the defendant’s insurer. Dardeen
v. Kuehling, 213 Ill. 2d 329, 821 N.E.2d 227 (2004).
On March 17, 2005, the First District Appellate Court issued an opinion in yet another spoliation of evidence case:
Adams v. Bath and Body Works, Inc., No. 1-02-3530 (1st
Dist. March 17, 2005). In the interest of being thorough, the
authors would like to take this opportunity to address these
most recent judicial pronouncements regarding the thorny
issue of spoliation.
In Dardeen, the plaintiff, a newspaper carrier, was delivering newspapers with his daughter early in the morning on
September 1, 1999, when he tripped over a hole on a brick
sidewalk located on the property of the defendant, Alice
Kuehling, and sustained injuries. The plaintiff’s daughter
called Kuehling later that day and notified her of the plaintiff’s accident. Moreover, in the evening on the day of the
accident, the plaintiff, accompanied by his neighbor, returned
to Kuehling’s property to inspect the hole and tell Kuehling
about his accident. Kuehling’s daughter and son-in-law were
present at the evening meeting and observed the condition of
the area where the plaintiff fell.
On the same day as the accident, Kuehling reported the
plaintiff’s fall to her State Farm insurance agent, Ronald
Couch. Kuehling asked Couch whether she could remove the
uneven bricks from the sidewalk to prevent anyone else from
falling. Couch told her she could remove the bricks. Within
one week of the accident, Kuehling removed between 25
and 50 bricks without first photographing or videotaping the
sidewalk where the accident occurred.
On August 1, 2000, the plaintiff filed a complaint against
Kuehling and the City of Mt. Carmel alleging failure to repair
the hole in the sidewalk and failure to warn others that the hole
existed. Subsequently, the plaintiff voluntarily dismissed the
count against Mt. Carmel and filed an amended complaint adding counts against both Kuehling and State Farm for negligent
spoliation of evidence. The plaintiff alleged that State Farm
had a duty to preserve the sidewalk when it became aware of
the plaintiff’s claim via its agent, Ronald Couch, and breached
its duty by authorizing Kuehling to remove the bricks without
first photographing or videotaping the sidewalk. The plaintiff
further alleged that by removing the bricks, Kuehling changed
the appearance of the accident site and, as a result, destroyed
material evidence the plaintiff needed to prove his personal
injury case.
State Farm filed a motion for summary judgment on the
negligent spoliation of evidence count of the plaintiff’s complaint. On April 30, 2002, the trial court granted State Farm’s
motion and the plaintiff appealed.
On appeal, the appellate court reversed the trial court’s
(Continued on next page)
About the Authors
Bradley C. Nahrstadt is a partner with the Chicago firm of
Williams Montgomery & John Ltd. His practice is devoted
to litigation, including the defense of product liability,
medical malpractice and insurance bad faith cases in state
and federal courts. Mr. Nahrstadt received his B.A. from
Monmouth College, summa cum laude, in 1989, and his
J.D. from the University of Illinois College of Law, cum
laude, in 1992. He is a member of the Illinois State Bar
Association, IDC and DRI.
Sean G. Joyce is an associate with the Chicago law firm of
Williams Montgomery & John Ltd. and practices primarily
in the areas of product liability and commercial litigation. He received his B.S. in Accountancy from DePaul
University and his J.D. from Loyola University Chicago.
Mr. Joyce is a member of the IDC, ABA, ISBA and CBA.
11
IDC Quarterly
Spoliation Revisited (Continued)
grant of summary judgment for State Farm. In support of
its decision, the court relied upon the holdings of Boyd v.
Traveler’s Insurance Co. (a duty to preserve evidence may
arise through an agreement, a contract, or other special
circumstances such as the assumption of a duty by affirmative conduct) and Shimanovsky v. General Motors Corp. (a
potential litigant owes a duty to take reasonable measures to
preserve the integrity of relevant and material evidence). The
court emphasized that State Farm had a contractual relationship with Alice Kuehling, Kuehling notified State Farm’s
agent, Ronald Couch, of the accident, and Kuehling relied
on Couch’s advice before removing the bricks. As a State
Farm agent, Couch was well aware that the sidewalk was
material to any potential civil litigation. Nevertheless, Couch
authorized the removal of the bricks without recommending
that Kuehling photograph or videotape the site. Furthermore,
Couch could have sent an investigator to preserve the site
prior to the removal of the bricks, but chose not to do so. The
court held that as a result of State Farm’s actions, the ongoing
cases of both the insured, Kuehling, and the plaintiff had been
impaired since neither had photographic evidence showing
the condition of the sidewalk at the time of the incident.
In its defense, State Farm argued that it had no duty to
preserve evidence because it never possessed or retained
control over the sidewalk nor prevented the plaintiff or anyone
else from inspecting the sidewalk. Moreover, the plaintiff
improperly attempted to broaden the scope of a spoliation of
evidence claim by imposing liability on a party who never
had possession or control over the evidence in question. In
support of its argument, State Farm cited the case of Jones v.
O’Brien Tire & Battery Service Center, Inc., 322 Ill. App. 3d
418, 752 N.E.2d 8 (5th Dist. 2001), and noted that the court
in Jones emphasized that possession of evidence was paramount in finding that a party has a duty to preserve evidence.
While showing deference to the holding in Jones, the court in
the instant case stated that Jones does not absolutely require
that a party “have possession of the evidence before a duty
to preserve evidence is imposed.” Dardeen, 344 Ill. App. 3d
832, 801 N.E.2d at 965. Seemingly, the court broadened the
concept of “possession or control of evidence” in concluding
that, “State Farm did not have possession of the sidewalk but,
instead, exercised control or had the opportunity to exercise
control. It was reasonably foreseeable that the condition of
the sidewalk at the time of the accident was a crucial issue.
Without a doubt, this evidence should have been preserved.”
Id. (emphasis added).
Additionally, State Farm asserted that if it encouraged Kuehling to destroy the brick sidewalk, it was simply complying
12
with Illinois public policy favoring improvements that enhance public safety. In response, the court noted that in Boyd,
“the Illinois Supreme Court also declared that it is against
public policy to destroy evidence. It is clear that both these
policies could have been advanced had State Farm simply directed Kuehling to photograph or videotape the sidewalk prior
to removing between 25 and 50 bricks.” Id. at 966.
Finally, in reversing the trial court’s grant of summary
judgment in favor of State Farm, the appellate court took issue
“As a State Farm agent, Couch
was well aware that the sidewalk
was material to any potential civil
litigation. Nevertheless, Couch authorized the removal of the bricks
without recommending
that Kuehling photograph or videotape the site.”
with the trial court’s finding that there was ample evidence
on the condition of the sidewalk at the time of the incident
given that at least eight people viewed the sidewalk prior to
its destruction. The court stated, “[w]hat the trial court failed
to consider, however, was the key piece of evidence has been
destroyed. Even though several witnesses may be able to testify about the condition of the sidewalk, their descriptions on
the scene differ. A photograph or videotape of the condition of
the sidewalk at the time of the accident would be conclusive.”
Id.
Following the appellate court’s decision, State Farm filed a
petition for leave to appeal, which was granted by the supreme
court.
At the beginning of the analysis portion of its opinion, the
supreme court reaffirmed its belief in the soundness of the
Boyd v. Traveler’s Insurance Co., 166 Ill. 2d 188, 652 N.E.2d
267 (1995) decision. The court once again stated that Boyd
articulated a two-prong test for determining when there is a
duty to preserve evidence. As a threshold matter, the court
Second Quarter 2005
must first determine whether a duty arises by agreement,
contract, statute, special circumstance, or voluntary undertaking. If so, the court must then determine whether the duty
extends to the evidence at issue, i.e., whether a reasonable
person should have foreseen that the evidence was material
to a potential civil action. If the plaintiff does not satisfy both
prongs, there is no duty to preserve the evidence at issue.
Dardeen argued that he met the first prong of the Boyd
test — the relationship prong — because there was a contract
of insurance between State Farm and Kuehling. Therefore,
State Farm was vested with the power or authority to guide
or manage the actions of its insured. He also argued that
State Farm had a direct stake in the outcome of the litigation
and, consequently, owed a duty to preserve or document the
existence and condition of relevant and material evidence.
The supreme court rejected both of these arguments.
According to the court, Dardeen was not privy to the
contract of insurance between State Farm and Kuehling and,
accordingly, that contract could not satisfy Boyd’s relationship
prong. That prong can be satisfied only when the agreement
or contract exists between the parties to the spoliation claim.
The court also noted that although State Farm had an interest
in the outcome of the litigation, the company simply did not
exercise possession or control over Kuehling’s sidewalk at the
time of or after the incident in question. As the court noted,
Dardeen revisited the scene of the accident just a few hours
after he was injured, but did not photograph the scene or ask
Kuehling to preserve the sidewalk. More importantly, he never
requested any evidence from State Farm and never requested
that State Farm preserve the sidewalk or even document its
condition.
In reversing the judgment of the appellate court and affirming the entry of summary judgment in favor of State Farm,
the supreme court stated the following:
. . . [N]o Illinois court has held that a mere opportunity to exercise control over the evidence at issue is
sufficient to meet the relationship prong…We do not
intimate that, nor do we decide whether, possession is
required in every negligent spoliation case. But, in order
to avoid summary judgment, Dardeen needed to show
something more than State Farm’s agent answering affirmatively to Kuehling’s question whether she could
remove the raised bricks…The record here indicates
that State Farm had neither possession nor control over
Kuehling’s sidewalk and, therefore, owed Dardeen no
duty to preserve it.
Dardeen, 2004 WL 2745653, *5 (Dec. 2, 2004).
***
In Adams v. Bath and Body Works, Inc., No. 1-02-3530 (1st
Dist. March 17, 2005), the case revolves around a fatal fire in
a house in Oak Forest, Illinois. The plaintiff, Steve Adams,
claims that before going to bed on the night of June 17, 1997,
he blew out several candles in the living room area of a house
he rented from Sharon Kubasak. One of those candles was
allegedly a “Garden Lavender Botanical Candle” manufactured and designed by Globaltech Industries and sold by Bath
and Body Works. Sometime during the early morning hours
of June 18, 1997, Adams awoke to a fire in his living room.
Although he was able to escape the house with severe burns,
his wife, Dixie, was overcome by smoke and died from burns
and smoke inhalation.
Six days after the fire, the plaintiff retained counsel. Though
both state and city fire inspectors were unable to pin down
the cause of the fire, they were able to determine that the fire
began near a couch located in the living room. Based upon
comments he overheard from one of these inspectors, plaintiff’s counsel removed two lamps that he believed were the
potential cause of the fire. After it was determined that these
lamps were not the cause of the fire, plaintiff’s focus shifted
to the “Garden Lavender Botanical Candle” that he said was
located on an end table near the couch in the living room.
During this same time frame, unbeknownst to the plaintiff,
Sharon Kubasak, the owner of the home where the fire occurred, hired Action Fire Restoration to clean up the debris
and repair the damage to the house. Action threw out many of
the plaintiff’s belongings, including the remains of the couch
and end table that were in the living room at the time of the
fire. Action also disposed of the living room carpet. Action
was paid for its services by State Farm Fire and Casualty
Company, Kubasak’s insurer.
On April 26, 1999, the plaintiff filed suit. On February 20,
2002 the defendants filed a motion to dismiss the plaintiff’s
complaint or, alternatively, to bar the plaintiff from introducing any evidence that a candle manufactured or sold by the
defendants was involved in the fire at issue as a sanction
under Illinois Supreme Court Rule 219(c) for his failure to
preserve the couch, end table or carpet in question. On October 9, 2002, the trial court entered an order dismissing the
plaintiff’s complaint as a sanction under Rule 219(c), finding
that the plaintiff and his counsel had the opportunity and the
responsibility to preserve relevant evidence and failed to do
so, and framed their theory of the case only after allowing
relevant evidence over which they had control to be destroyed
in direct contravention of Boyd v. Travelers Insurance Com(Continued on next page)
13
IDC Quarterly
Spoliation Revisited (Continued)
pany, 166 Ill. 2d 188, 652 N.E.2d 267 (1995) and its progeny.
The plaintiff then appealed.
In deciding the appeal, the appellate court stated that it
believed that two of the most prominent spoliation of evidence
cases, Boyd v. Travelers Insurance Co., 166 Ill. 2d 188, 652
N.E.2d 267 (1995) and Shimanovsky v. General Motors Corp.,
181 Ill. 2d 112, 692 N.E.2d 286 (1998), set forth two separate
and distinct remedies for spoliation of evidence. According
to the court:
The lesson to be taken from this, we believe, is that the
two remedies discussed in those cases, i.e., a claim for
negligent spoliation of evidence in Boyd and dismissal
as a sanction under Rule 219(c) in Shimanovsky, are
separate and distinct . . . In other words, Shimanovsky
and Boyd present a party confronted with the loss or
destruction of relevant, material evidence at the hands
of an opponent with ‘two roads diverged in a wood.’
He may either (1) seek dismissal of his opponent’s
complaint under Rule 219(c) or (2) bring a claim for
negligent spoliation of evidence. The mode of relief
most appropriate will depend upon the opponent’s
culpability in the destruction of evidence. The former
requires conduct that is “deliberate [or] contumacious
or [evidences an] unwarranted disregard of the court’s
authority” and should be employed only “as a last resort
and after all the court’s other enforcement powers have
failed to advance the litigation.” Shimanovsky, 181 Ill.
2d at 123. The latter requires mere negligence, the failure
to foresee “’that the [destroyed] evidence was material
to a potential civil action.’” Dardeen, 213 Ill. 2d at 336,
quoting Boyd, 166 Ill. 2d at 195.
Adams, slip op. at 9-10.
According to the appellate court, since the defendants chose
to take the Rule 219(c) approach, any reliance on Boyd and
its progeny to support the sanction requested was inappropriate. The dismissal of the plaintiff’s complaint as a sanction
could only be upheld if there was evidence that the plaintiff’s
conduct could be characterized as deliberate, contumacious
or an unwarranted disregard of the court’s authority. Since
the plaintiff did not engage in any knowing and willful defiance of the discovery rules or the trial court’s authority, had
no knowledge that the evidence that had been destroyed may
have been relevant and material at the time of the destruction
(given his initial focus on the lamps as the cause of the fire),
and played no role in and had no notice of the destruction
of the evidence which the defendants claimed was essential
14
to their defense, the appellate court held that the trial court
erred in dismissing his complaint as a discovery sanction and
ordered that the plaintiff’s dismissed claims be reinstated.
As these two most recent opinions demonstrate, whenever
spoliation of evidence occurs, counsel for both sides must
thoroughly investigate the facts and the law and determine
the appropriate remedy to seek from the court.
“The dismissal of the plaintiff’s
complaint as a sanction could
only be upheld if there was evidence that the plaintiff’s conduct could be characterized as
deliberate, contumacious or an
unwarranted disregard of the
court’s authority.”
Second Quarter 2005
Workers’ Compensation Report
By: Kevin J. Luther
Rockford
Illinois Supreme Court Speaks Again
on the Normal Daily Activity Exception
to Workers’ Compensation Claims
The IDC Monograph that appeared in the IDC Quarterly,
Third Quarter 2004, Volume 14, Number 3, addressed the
normal daily activity exception to workers’ compensation
claims in Illinois. The Monograph was prompted by the Illinois Supreme Court Decision in Sisbro II, which examined
the compensability of aggravation of preexisting conditions
in workers’ compensation claims. Sisbro, Inc. v. Industrial
Comm’n, 207 Ill. 2d 193, 797 N.E.2d 665, 278 Ill. Dec. 70
(2003). The conclusion of Sisbro II was that the normal daily
living exception exists in the State of Illinois notwithstanding
the assertion of some representatives of the plaintiffs’ bar to
the contrary.
The IDC Monograph identified Twice Over Clean II,
which was an appellate court decision following Sisbro II. In
Twice Over Clean II, the appellate court interpreted Sisbro
II to provide that a claimant’s probability to injury during
normal daily activities is not an exception that applies to bar
recovery despite the existence of a sufficient causal connection between work and injury. Instead, it was a limitation on
when a sufficient causal connection may be found in the first
place. Compensation was denied in Twice Over Clean II, and
the Illinois Supreme Court recently issued a new decision as
analyzed below. Twice Over Clean, Inc. v. Industrial Comm’n,
2005 WL 674681 (S. Ct. IL, March 24, 2005).
By way of factual background, the workers’ compensation claimant was employed as a laborer for the respondent
and was assigned to an asbestos removal job. On January 2,
1997, while performing heavy labor, he suffered chest pains.
After he finished work, he went to his hotel and did not feel
like eating. He again experienced chest pains in the hotel
and broke out in a cold sweat. He was taken by ambulance
to a hospital and was admitted and diagnosed with an acute
inferior myocardial infarction. He was eventually released and
returned to his home in Peoria, where he received additional
care from his internist and cardiologist. Twice Over Clean,
Inc., 2005 WL 674681 at *2.
One of his treating physicians authored a report that was
admitted into evidence. That report stated that apart from
smoking, the claimant had limited risk factors for coronary
artery disease. Another report from a Dr. Cohen concluded
that, in his opinion, the myocardial infarction was precipitated
by the heavy lifting that he did all day long at work on January
2, 1997. Dr. Cohen testified at an evidence deposition that the
myocardial infarction might or could have been caused by
the physical activity engaged in by the claimant on January
2, 1997. On cross-examination, Dr. Cohen concluded that the
claimant had a 90 percent occlusion of the right coronary artery, which was very significant, and that any activity, and even
no activity, by a person having that degree of occlusion could
put enough stress on the heart to result in a myocardial infarction. He testified that anybody can experience a myocardial
infarction, even at rest. He agreed with the cross-examiner’s
statement that a person with that degree of occlusion is basically a heart attack waiting to happen. Id.
The respondent presented the evidence deposition of a Dr.
Wilner, who is board certified in internal medicine and cardiovascular diseases. He reviewed medical records and rendered
an opinion that the claimant’s work activity was not a factor
in the myocardial infarction based on the enzyme levels he
had at the time of his admission. Those enzyme levels were
within normal limits, indicating that the infarction had not
occurred prior to the preceding five or six hours. Id. at *3.
The arbitrator found that the heart attack arose out of and
in the course of the employment. The Industrial Commission
affirmed the award of compensation. The Circuit Court of
Peoria County affirmed the Industrial Commission’s decision,
but the appellate court reversed, applying the normal daily
activity exception to defeat the workers’ compensation claim.
About the Author
Kevin J. Luther is a partner in the Rockford firm of
Heyl, Royster, Voelker & Allen where he concentrates his
practice in areas of workers’ compensation, employer liability, professional liability and general civil litigation. He
also supervises the workers’ compensation practice group
in the Rockford office. Mr. Luther received his J.D. from
Washington University School of Law in 1984. He is a
member of the Winnebago County, Illinois State and American Bar Associations, as well as the IDC.
15
IDC Quarterly
Workers’ Compensation (Continued)
See Twice Over Clean, Inc. v. Industrial Comm’n, 337 Ill.
App. 3d 805, 786 N.E.2d 1096, 272 Ill. Dec. 262 (3rd Dist.
2003). The claimant filed a Petition for Leave to Appeal to the
Supreme Court. The Petition for Leave to Appeal was initially
denied, but a supervisory order was directed to the appellate
court requesting that it reconsider its opinion in light of Sisbro
II, 207 Ill. 2d 193 .
The appellate court, in reconsidering its prior decision, held
that in light of the claimant’s susceptibility to a heart attack
outside of work, the claimant failed in the first instance to
prove a sufficient causal connection between the work and
his injury. Twice Over Clean, Inc., 348 Ill. App. 3d at 652.
The Illinois Supreme Court, in its most recent Twice Over
Clean, Inc. decision, stated that this conclusion completely
ignored the competent testimony in the record establishing
that Haulk’s work activity contributed to his risk of heart attack, and that his symptoms began while he was performing
extremely stressful labor. The Illinois Supreme Court again
noted that the Illinois Industrial Commission’s determination
that a sufficient causal connection was demonstrated and is
not against the manifest weight of the evidence in light of the
testimony from one of the treating physicians. It noted that if
a causal connection between the work activity and the injury
is shown by competent testimony, no limitation or exception
to compensation can be imposed to defeat a right of recovery.
The Illinois Supreme Court noted that the respondent
conceded in its brief that if the claimant’s history of onset of
symptoms is accurate, then Dr. Cohen’s opinion on causal
connection based on the history had adequate foundation
and was entitled to be given weight by the trier of fact. The
respondent also conceded in its brief that if the claimant’s
testimony was accurate, the arbitrator’s reliance on that history was supported by the manifest weight of the evidence.
The respondent also claimed, however, that the history testified to by the claimant was inaccurate because it conflicted
with his description of the onset of symptoms that he gave to
hospital personnel at the time of his admission on January 2,
1997. The respondent argued that the petitioner’s testimony
contradicting the hospital records should be disregarded.
With respect to this factual issue, the Illinois Supreme
Court referred in its decision to Horath v. Industrial Comm’n,
96 Ill. 2d 349 (1983). In Horath, the supreme court held that
the Industrial Commission’s decision denying compensation
was not against the manifest weight of the evidence despite
undisputed expert medical testimony establishing a causal
connection between the injury and the claimant’s disability.
The Industrial Commission noted that the claimant gave a
different account of his symptoms to his treating physicians
16
immediately after the injury than what he had given to the
doctor who testified at the hearing. The Illinois Supreme Court
held that the finding regarding causal connection involved the
credibility of the claimant, and it noted that assessing credibility is a function of the Industrial Commission, not of the
reviewing court. Horath, 96 Ill. 2d at 356-57.
The Illinois Supreme Court, in its most recent decision in
Twice Over Clean, then noted that while some of the descriptions in the medical records reflected a different account of
onset of symptoms than what the claimant’s testimony was
before the arbitrator, the nature and progression of the symptoms, as described in both the records and the testimony, were
similar. In light of this, the Illinois Supreme Court could not
state that based on this particular record, the arbitrator’s acceptance of the claimant’s testimony was without foundation
or based on speculation or conjecture. It concluded that there
was a reasonable basis for the acceptance of Dr. Cohen’s
opinion from that testimony. Therefore, the decision of the
Industrial Commission was not against the manifest weight
of the evidence.
The Illinois Supreme Court stated that the normal daily
activity limitation is relevant to the question of causation, but
in this particular case, it could not be applied as a matter of
law to defeat the claim. It reversed the appellate court’s decision, which found that the claimant failed to prove a sufficient
causal connection between the work and the injury because of
the claimant’s susceptibility to a heart attack outside of work.
In conclusion, our current Illinois Supreme Court is prone
to reject an argument that the normal daily activity exception
bars recovery when the claimant’s physical condition has so
deteriorated that the condition of ill-being could have been
produced by normal daily activity despite a causal connection between the work and the condition. If the trier of fact
(arbitrator and reviewing workers’ compensation commission
panel) concludes that there is a causal connection between
the work duties and the condition, then the Illinois Supreme
Court may not apply the normal daily activity exception. Accordingly, these types of cases need to be won with a finding
of lack of causal connection at the Workers’ Compensation
Commission level for the normal daily living exception to be
accepted and applied by the reviewing courts. Practitioners
will need to develop overwhelming testimony and evidence
that there is little or no credible causal connection evidence
or opinions at the trial level that establish a medical causal
connection.
Second Quarter 2005
Legal Ethics
(1) the lawyer reasonably believes the representation will not adversely affect the relationship
with the other client; and
(2) each client consents after disclosure.
By: Michael J. Progar
Doherty & Progar, LLC
Chicago
Conflicts of Interest Arising from
Representation of Insurance Company
A lawyer who represents an insurance company as a direct
party in a lawsuit is not prohibited from representing a plaintiff in a separate lawsuit against an insured of that insurance
company. That was the conclusion of the American Bar Association’s Standing Committee on Ethics and Professional
Responsibility, in Formal Opinion 05-435, released on December 8, 2004. The Opinion addressed the duty of an attorney
under Model Rule of Professional Conduct 1.7, as amended by
the American Bar Association’s House of Delegates through
August 2003. Model Rule 1.7 provides the general rule that
addresses conflicts of interest involving current clients of a
lawyer or law firm.
Illinois is one of 44 states that uses the Model Rules as
the basis for its ethics rules. The comparable provision of the
Illinois Rules of Professional Conduct (IRPC) is Rule 1.7,
which is based on the pre-2002 version of Model Rule 1.7. An
entirely new version of Model Rule 1.7 was adopted by the
ABA House of Delegates in 2002, based on recommendations
by the Ethics 2000 Commission.
The revised Commentary to Model Rule 1.7, however,
makes it clear that no change in the substance of the Rule
was intended. Therefore, Formal Opinion 05-435 will provide
valuable guidance in evaluating potential conflicts of interest
to Illinois attorneys whose practice includes insurance defense
and coverage.
IRPC Rule 1.7 states:
Rule 1.7. Conflict of Interest: General Rule
(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to
another client, unless:
(b) A lawyer shall not represent a client if the representation of that client may be materially limited
by the lawyer’s responsibilities to another client or
to a third person, or by the lawyer’s own interests,
unless:
(1) the lawyer reasonably believes the representation will not be adversely affected; and
(2) the client consents after disclosure.
(c) When representation of multiple clients in a single
matter is undertaken, the disclosure shall include
explanation of the implications of the common representation and the advantages and risks involved.
As the updated language of Model Rule 1.7 makes clear,
IRPC Rule 1.7 deals only with conflicts of interest involving
current clients. Such a conflict of interest generally arises in
two ways: 1) when the representation of a client will be directly adverse to another client (“directly adverse” test); or, 2)
when the representation of a client may be materially limited
by the lawyer’s responsibilities to another client (“materially
limited” test).
About the Author
Michael J. Progar is a partner with the firm of Doherty & Progar, LLC. He
practices in both the Indiana and Illinois offices. A trial attorney with more
than 20 years of civil jury trial experience, Mr. Progar has tried over 50 jury
trials to verdict in both state and federal courts. Areas of special concentration
include complex product liability and toxic tort litigation, insurance coverage,
fraud and bad faith litigation, construction litigation, premises liability and
employers’ liability. He received his J.D. from DePaul University College of
Law in 1981 and his B.A. in American Studies from the University of Notre
Dame. Mr. Progar is a member of DRI, IDC, Defense Trial Counsel of Indiana,
Indiana State Bar Association, State Bar of Wisconsin and the Lake County,
Indiana Bar Association. He has served on various bar association committees
in the areas of tort and insurance litigation and alternative dispute resolution.
17
IDC Quarterly
Legal Ethics (Continued)
The ethical questions addressed by the Committee in
Formal Opinion 05-435 concerned the situation in which a
lawyer who is representing an insurance company as a named
party in a civil action, such as a declaratory judgment action,
undertakes the representation of a plaintiff in a separate civil
action, against a defendant for whom a defense is being provided under a liability insurance policy issued by that same
insurance company. In the opinion of the Committee, such
a simultaneous representation does not of itself result in a
conflict of interest under the “directly adverse” test.
The economic interest of the insurance company in that
situation may be aligned with the interests of its insured for
whom it is providing a defense in a lawsuit. However, any
apparent economic opposition between the insurance company
and the plaintiff in the second lawsuit is not a type of direct
adversity that is contemplated by the Rules.
Illinois does not permit a liability insurer to be named as
a direct party in an action seeking to impose liability on its
insured. Accordingly, there would be relatively few instances
in which the interests of an insurance company would be
directly adverse to those of another client represented by a
lawyer.
However, even if the potential representation of the plaintiff
in the second lawsuit passes the “direct adversity” test, the
question remains whether the lawyer’s representation of the
plaintiff would be “materially limited” by the lawyer’s professional obligations to the insurance company client. Such an
occasion could arise when, in representing a plaintiff against a
defendant insured by an insurance company also represented
by the lawyer, the effective prosecution of the plaintiff’s
lawsuit requires either documentary or testimonial discovery
from insurance company representatives. The lawyer might
conclude that the desire to maintain a continuing relationship
with the insurance company would create a significant risk of
materially limiting the lawyer’s representation of the plaintiff,
perhaps by causing the lawyer to fail to take or recommend
action that might be in the plaintiff’s best interests in the action against the insurance company’s insured.
In some instances, the attorney representing the plaintiff in the second action may be unaware of the identity of
the defendant’s liability insurer when the representation is
undertaken, or even until after suit is filed. At that point, it
is incumbent upon the attorney to determine whether the
representation of the plaintiff in the second action may be
materially limited by or adversely affect the relationship with
the insurance company in the first lawsuit. If so, to continue,
the lawyer would require the written consent of each client,
after disclosure of information sufficient to permit each cli18
ent to appreciate the significance of the potential conflict of
interest.
A related concern, although somewhat beyond the scope
of the Opinion, is whether the lawyer’s representation of the
plaintiff in the second lawsuit would be materially assisted
by the lawyer’s knowledge of information regarding matters
such as the insurance company’s claims evaluation and file
handling procedures. If such information was acquired by the
lawyer in connection with the representation of the insurance
company, the lawyer may be required to decline or withdraw
from representation of the plaintiff in the second lawsuit.
To provide competent and diligent representation to the
plaintiff might require the lawyer to disclose or use the
insurance company’s confidences or secrets, in violation of
IRPC Rule 1.6 (Confidentiality of Information). IRPC Rule
“To provide competent and
diligent representation to the
plaintiff might require the lawyer
to disclose or use the insurance
company’s confidences or secrets,
in violation of IRPC Rule 1.6
(Confidentiality of Information).”
1.6 prohibits both the disclosure and use of another client’s
confidences or secrets, without consent. (In contrast, Model
Rule 1.6 does not prohibit use of another client’s confidential
information without consent, only disclosure.)
In Illinois, a lawyer’s representation of an insurance company would raise a “directly adverse” conflict in relatively
few instances. In practical terms, it would be more beneficial
for an attorney whose practice involves insurance defense
or insurance coverage to consider, at the outset, whether
representation of a plaintiff against an insured of the insurance company makes good business sense. The value of the
ongoing relationship with the insurance company client may
Second Quarter 2005
outweigh any factors favoring representation of the plaintiff.
However, perhaps the first question that should be asked is
whether, under the circumstances present, the lawyer’s representation of the plaintiff would be “materially limited” by
representation of the insurance company. The lawyer might
well conclude in most, if not all cases, that it is better not to
attempt to predict in advance of litigation whether the representation of the plaintiff would be adversely affected by the
simultaneous representation of the insurance company.
In any event, disclosure to the plaintiff of the lawyer’s relationship with the insurance company might raise questions
in the mind of the plaintiff concerning the lawyer’s ability to
diligently prosecute the plaintiff’s case against an insured of
the insurance company.
In practical terms, then, the analysis of a potential conflict
involving current clients involves three steps. The first and
most obvious step is to question whether there is a “directly
adverse” client. That determination should cause little trouble
to any lawyer.
The second step is to determine whether the representation
of the plaintiff would be “materially limited” by the lawyer’s
obligations to the insurance company. If not, the third step is
to determine whether representation of the plaintiff in a competent and diligent manner involves the possible disclosure
or use of the insurance company’s confidences or secrets.
It would seem, in most instances, that the proposed representation of the plaintiff would pass the “materially limited”
test only with difficulty. At the very least, it may be bad business to take that plaintiff’s case.
Insurance Coverage
By: Peter R. Ryndak
Johnson & Bell, Ltd.
Chicago
THE SWORD AND THE SHIELD:
Defending the Carrier from Discovery
in Coverage Actions
In the context of insurance coverage litigation, policyholders have cast an increasingly broad net to discover information
external to the policy at issue. When defending insurance
coverage cases, less discovery is always more. The effective
defense of an insurance carrier always requires that its counsel narrow the issues that will ultimately be litigated. This
article discusses the policyholder’s strategies for obtaining
vast materials outside the policy at issue, as well as the carrier’s defenses to these arguments. Case law interpreting these
strategies is also examined.
I. The Policyholder’s Broad Net to Capture
Documents External to Policy Negotiation
A. Discovery of Reserve Information
Traditionally, courts would almost uniformly deny discovery requests concerning reserves established by insurers. More
recently, courts have allowed limited discovery regarding
About the Author
Peter R. Ryndak is associated with Johnson & Bell, Ltd.
and concentrates his practice primarily in the area of liability insurance coverage analysis and litigation. He regularly
assists insurers in drafting new policy forms and coverages.
Mr. Ryndak received his B.A. from Northwestern University and his J.D. from Loyola University-Chicago School
of Law. He is a member of the CBA, DCBA, and IDC.
19
IDC Quarterly
Insurance Coverage (Continued)
reserves, especially where the reserves are set without the
advice of counsel.
1. Policyholder Arguments in Favor of Discovery:
Without exception, the most common argument proffered
by an insured is that the establishment of a reserve constitutes an admission by the carrier concerning liability. The
policyholder argues that if the carrier was not worried about
the claim, it would not set any reserve. Along these lines, it
is argued that the clearer the liability, the higher the reserve.
2. Insurer Arguments for Resisting Discovery:
Reserves are often set pursuant to statutory requirement,
and hence established via a highly regulated formula, which
could never be considered tantamount to an admission of
liability. Furthermore, reserves may be set at the advice of
counsel, and not merely as an independent business decision
reflecting the beliefs of an insurer regarding coverage obligations. An insurer may also establish reserves in anticipation
of high litigation costs rather than as a consequence of the
actual merits of the coverage action. There is also a public
policy concern that the insurer should be adequately capitalized for foreseeable risk of litigation associated with coverage.
This capitalization can only be accomplished with adequate
reserves and should not be construed as an admission.
3. Case Law For Discussion:
• Independent Petro Chemical Corp. v. Aetna Cas. &
Sur. Co., 117 F.R.D. 283 (D.D.C. 1986) (reserve information
irrelevant)
In Independent Petro Chemical Corp., an insurance coverage action arising out of environmental liabilities, the insured
sought discovery of reserve and reinsurance information set
by the carrier. After an in camera inspection of the documents
sought, the magistrate held that the reserves which were the
subject of discovery were “of very tenuous relevance, if any
relevance at all.” In denying the policyholder’s request for
reserve information, the court held that “a reserve essentially
reflects an assessment of the value of a claim taking into
consideration the likelihood of an adverse judgment in that
such estimates of potential liability do not normally entail an
evaluation of coverage based upon a thorough and factual
legal consideration when routinely made as a claim analysis.”
Moreover, the court noted that where the reserves “have been
established based on legal input, the results in the supporting
papers most likely will be work product and may also reflect
attorney-client privilege communications.”
Hence, Independent Petro Chemical is an important case
20
for two reasons. First, it recognizes that reserves are often
set as a matter of course and public policy; not to adequately
fund potential losses. Moreover, reserve information does not
reflect an evaluation or analysis of coverage based upon policy
interpretation. Second, the Independent Petro Chemical case
recognizes that oftentimes reserve information is set with the
assistance of counsel. To that extent, then, reserve information
may be afforded work product and attorney-client privileges.
• In Re: Couch, 80 B.R. 512 (S.D.Cal. 1987) (discovery
of reserve information not discoverable by reason of statutory
regulation)
In Re: Couch, represents an important milestone with respect to discoverability of reserve information because there,
“An insurer may also establish
reserves in anticipation of high
litigation costs rather than as a
consequence of the actual merits
of the coverage action. There is
also a public policy concern that
the insurer should be adequately
capitalized for foreseeable risk
of litigation associated with coverage.”
the court recognized that reserves are often required to be
set by statute and/or regulation. Their values are calculated
through the use of complicated formulas set by the regulatory
body. Accordingly, the court held that because a carrier does
not set a reserve according to discretion, but rather regulation, a reserve cannot accurately or fairly be equated with an
admission of liability or the value of a particular claim.
In Re: Couch provides an important argument against the
disclosure of reserve information where the setting of same
is controlled by statute or regulation. To the extent a carrier’s
hands are tied in their ability to set reserves, the existence of
Second Quarter 2005
reserves cannot be read to be an admission of liability. Hence,
they are irrelevant and not reasonably calculated to lead to
the discovery of admissible information.
• But see, Champion International Corp. v. Liberty
Mutual Ins. Co., 128 F.R.D. 608 (S.D.N.Y. 1989) (discovery
of reserve information relevant and ordered produced in the
absence of claims of privilege)
In Champion International, a policyholder sued several
of its carriers after the carriers refused to settle underlying
product liability cases. Champion sought the carriers’ reserve
information for the underlying claims. Notably, the carriers
failed to assert an attorney-client privilege or work product
doctrine objection to any of the requests. In an absence of these
objections, the court, relying upon a series of unreported cases,
recognized that reserve information was sufficiently relevant
in coverage cases to be produced. Moreover, because the carriers did not assert that the reserves had been set or influenced
by the advice of counsel, discovery of this information could
not be protected by attorney-client privilege or work product
doctrine.
The lesson learned from Champion is that, where available, carriers should always assert a privilege objection to any
requests for reserve information.
cations between the carrier and its reinsurer may also contain
explanations and/or clarifications of terms used within the
underlying policy and may reflect the carrier’s understanding
of the terms and provisions contained within its own policy.
4. Representative Cases:
California: Union Oil Co. of Cal. v. Allianz Ins. Co., No.
BC 028270 (Cal.Super.Ct. Feb. 17, 1993) (discovery allowed);
District of Columbia: Independent Petrol Chem. Corp. v.
Aetna Cas. & Sur. Co., 117 F.R.D. 283 (D.D.C. 1986) (discovery not allowed)
New York: Gold Fields American Corp. v. Aetna Cas. &
Sur. Co., No. 1987 9/89 (N.Y.Super.Ct. Feb. 24, 1994) (discovery not allowed)
Pennsylvania: Rhone-Poulenc Rorer, Inc. v. Home Indem.
Co., 139 F.R.D. 609 (E.D.Pa. 1991) (discovery not allowed)
B. Discovery of Reinsurance Information
The majority of cases passing upon the admissibility of an
insurer’s reinsurance policies hold that they are not discoverable. Rare cases in which discovery is permitted most often
involve “lost policy” issues. Another more ambiguous line
of cases will order the disclosure of the reinsurance policies
themselves, but will protect from disclosure communications
between a carrier and its reinsurer.
Policyholders will often argue that the reinsurance contract
might contain terms used in the underlying insurance policy,
thus aiding the interpretation of same. In addition, communi-
2. Insurer Arguments For Resisting Discovery:
The most effective argument is that the policyholder lacks
privity of contract with the reinsurers, and thus the contract
between the carrier and its reinsurer is irrelevant to the meaning of the underlying policy. Furthermore, carriers argue
that the reinsurance policy is irrelevant to the intent of the
policyholder and the insurer when each executed the actual
policy at issue in the coverage litigation.
As to the communications between the carrier and its reinsurer, the carrier must argue that the similarity or difference
of terms or provisions, or communications with respect to the
reinsurance policy, has no probative value to understanding the
underlying or primary policy, because the reinsurance policy
is a separate and distinct contractual relationship among different parties. Moreover, placement of reinsurance necessarily
turns on a business decision on the part of the carrier based
upon business considerations aimed at minimizing exposure
and does not relate to policy interpretation.
3. Case Law for Discussion:
Rule 26(a)(1)(D) of the Federal Rules of Civil Procedure
provides for “inspection and copying [of] any insurance
agreement under which any person carrying on an insurance
business may be liable to satisfy part or all of a judgment
which may be entered in the action or indemnify or reimburse
for payments made to satisfy the judgment.” Cases where
courts have ordered the production of reinsurance policies
have turned upon the question of whether the policyholder
has requested merely declaratory relief or whether a claim
for monetary damages is present. Along these lines, if money
damages are sought within the coverage litigation, courts are
more likely to order the production of reinsurance agreements
because declaratory relief is not contemplated by Rule 26.
• Medmarc Cas. Ins. Co. v. Arrow International, Inc.,
2002 WL 1870452 (E.D.Pa. 1002) (production of reinsurance
policy required where carrier asserted counterclaim seeking
indemnification from policyholder, thus, action sought money
damages)
In Medmarc, the CGL carrier filed an action against its
insured seeking a declaration that it was not responsible to
indemnify its insured for punitive damages awarded it in an
underlying case. The insured filed a counterclaim seeking
a declaration that the insurer had a duty to indemnify the
21
IDC Quarterly
insured with respect to the underlying action. Moreover, the
counterclaim contained a count for breach of contract. During
discovery, the insured sought reinsurance policies. The Eastern
District of Pennsylvania noted that the counterclaim sought
money damages and, as such, discovery of the reinsurance
policies, themselves, was warranted.
The point to be gleaned from Medmarc is that if the carrier
brought its declaratory judgment action, alone, discovery of
the reinsurance contracts would be denied. However, once
the policyholder brought its counterclaim and sought money
damages, in addition to declaratory relief, the claim became
subject to Rule 26 of the Federal Rules and thus disclosure of
reinsurance policies became warranted. (Despite its ruling that
reinsurance contracts were discoverable, the Medmarc court,
consistent with most other jurisdictions, held that discovery
of reinsurance communications was not discoverable.)
• Rhone-Poulenc Rorer, Inc. v. Home Indem. Co., 139
F.R.D. 609 (E.D.Pa. 1991) (aka Rhone-Poulenc I) (reinsurance
agreements were not discoverable where coverage litigation
sought declaratory relief, exclusively)
In Rhone-Poulenc I, the Eastern District of Pennsylvania
found that reinsurance agreements were not discoverable
under Federal Rule 26. The court reasoned that disclosure
of reinsurance agreements was not required in cases where
the litigation between the policyholder and its carrier was
limited to a request for declaratory relief and did not involve
a claim for damages. In a declaratory action, no money award
is sought, thus Federal Rule 26 is not implicated because any
ruling in the case would not require the insurer to be “liable
to satisfy part or all of a judgment which may be entered in
the action.” See also, American Colloid Co. v. Old Republic
Ins. Co., 1993 WL 2226781 (N.D.Ill. 1993).
In addition to discovery of reinsurance policies, policyholders also seek to discover communications between insurers
and their reinsurers regarding either the claim or coverages
at issue. In responding to discovery, the practitioner should
distinguish between the reinsurance agreements themselves
and communications between insurers and their reinsurers.
Communications oftentimes are completely irrelevant to the
policyholder’s claim. However, some courts have permitted
discovery of reinsurance communications where they may
be relevant to the carrier’s efforts to rescind a policy or deny
coverage on the basis of late notice.
• Rhone-Poulenc I, supra (reinsurance communications
irrelevant for purposes of interpreting policy terms)
In Rhone-Poulenc I, the court denied discovery of communications between a carrier and its reinsurer aimed at
interpreting the terms of the underlying policies. The court
22
held discovery of such information would not shed any light
upon the mutual intent of policyholders and the carriers as
it related to the actual policies at issue. The court reasoned,
“Any information regarding reinsurance would at best be
evidence of undisclosed unilateral intention, which would not
be material to the interpretation of the insurance contract at
issue.” Moreover, communications between an insurer and its
reinsurer over the meaning of a particular policy provision are
not discoverable in the absence of a finding that the term at
issue is ambiguous and, thus, necessitates the use of extrinsic
evidence to explain the policy.
Hence, Rhone-Poulenc I demonstrates that communications between a carrier and its reinsurer are not valuable
to understanding the underlying or primary policy. Rather,
reinsurance merely represents a business decision on the part
of the carrier to minimize or spread risk.
• Rhone-Poulenc II, 1991 WL 23763 (E.D.Pa. 1991)
(discovery of communications to reinsurers allowed where the
carrier asserts late notice and misrepresentation as a defense
to coverage)
Following its decision in Rhone-Poulenc I, the Eastern
District of Pennsylvania was again called upon to rule upon
discovery of reinsurance communications. However, this time
the carrier asserted affirmative defenses to coverage based
upon late notice and misrepresentation, which in the court’s
view made the discovery sought relevant. Indeed, the court
did not reverse itself and reasserted that the discovery was
irrelevant to determining the mutual intent of the parties to
the insurance contract. However, the discovery of reinsurance information was relevant to the affirmative defenses of
late notice and misrepresentation. By raising these defenses,
the court noted that the carrier necessarily opens the door to
discovery regarding late notice or misrepresentation. If the
carriers gave notice to their reinsurers through various communications, the discovery of such communications would,
then, either corroborate or undercut their late notice defense
as it relates to the policyholder. Accordingly, communications
related to the notice issue was warranted.
As for the discovery of reinsurance communications related
to misrepresentations of the policyholder, the court held that
the defense clearly puts at issue the question of what the defendants knew at the time the disputed policies were issued.
Although the reinsurance communications are not relevant to
the issue of policy interpretation, such information may be
extremely relevant to whether the policyholder made a misrepresentation to the carrier. Accordingly, the communications
were subject to discovery. Thus, carriers in insurance coverage actions have solid
arguments against the disclosure of reinsurance communica-
Second Quarter 2005
tions. It is almost universally recognized that such communications are irrelevant to policy interpretation and merely
reflect business decisions in the operations of risk allocation.
However, as Rhone-Polenc II demonstrates, an insurance
carrier may unwittingly open the door by raising affirmative
defense such as late notice, lost policies, or misrepresentation. Inherent in these defenses are questions as to what the
insurer knew with respect to the claims and when they were
on notice of same. Presumably, the insurance carrier would
keep its reinsurers informed to the best of their knowledge
“Although the reinsurance
communications are not relevant
to the issue of policy interpretation, such information may be
extremely relevant to whether
the policyholder made a misrep-
documents were disclosed to the broker and the reinsurers with
the expectation that their confidentiality would be preserved
and that, above all, the common interest doctrine as it applied
to the carrier and its reinsurers would protect the documents
from disclosure.
Indeed, the increasing emphasis upon discovery of reinsurance communications places carriers in a difficult position.
In order to narrow the issues to be litigated, it is imperative
that the carrier protect from discovery red herring documents
that are external to the policies themselves. However, carriers
also operate under an extremely important duty for a frank
and honest disclosure to their reinsurers whenever presented
with a potential claim.
Carriers can reduce exposure and keep the issues at trial
narrow by carefully considering whether the defenses they
assert in a coverage litigation unwittingly make reinsurance
documents relevant. Furthermore, it is advisable for insurers
engaged in litigation between themselves to not seek discovery
of reinsurance communications that will result in reported
cases which may undercut their legal positions in subsequent
coverage litigation with policyholders.
II. The Policyholder’s Broad Net to Capture
Documents Related to Policy Negotiation
and Application
resentation to the carrier.”
A. The Production of Underwriting Files
and Claims Manuals
with respect to these issues. Accordingly, discovery of such
communications goes to the heart of these affirmative defenses
as raised by insurance carriers.
• Minnesota School Boards Association Ins. Trust v.
Employers Ins. Co. of Wausau, 183 F.R.D. 627 (N.D.Ill.
1999) (discovery of reinsurance communications protected
by work product and common interest doctrine)
In Minnesota School Boards, the policyholder sued its
carrier over coverage for a fire loss. The carrier produced a
portion of its reinsurance file but asserted that other documents were protected by privileges afforded by the work
product and common interest doctrines. The court was called
upon to determine whether the withheld communications
were discoverable. The policyholder argued that the carrier
waived any and all protection over the documents when they
were sent to reinsurers by way of insurance brokers. The
court rejected this argument and held that the broker acted
as a mere conduit for protected communications between the
carrier and its reinsurer. Moreover, the court noted that the
These documents may show that the carrier’s legal position
with respect to the meaning of a term or a provision at issue is
contradicted by the interpretation the carrier communicated to
its own underwriting and/or claims personnel. As such, to the
extent any of these documents exist, they should be produced.
Claims manuals are particularly relevant in that they
disclose the manner in which a disputed term or provision is
customarily applied and understood by the carrier within its
own organization and throughout the industry. Furthermore,
the underwriting file may contain the carrier’s instructions
to its employees on marketing and servicing the policies at
issue. To the extent that these directions contradict the legal
position taken by the carrier in coverage litigation, it will be
useful to the policyholder.
2. Insurer Arguments For Resisting Discovery:
Internal documents kept in-house by the carrier, explaining the insurer’s underwriting practices, do not reflect the
23
IDC Quarterly
mutual intent of the parties to the policy at issue. As such, any
document reflecting the unilateral intent of either the insurer
or the insured is irrelevant to deciding the mutual intent of
the contracting parties. Along these lines, claims handling
manuals are similarly useless in determining the meaning of
an insurance policy as it applies to a specific claim.
3. Case Law For Discussion:
More than any other type of extrinsic evidence, policyholders seek claims manuals through discovery in the hope that
it will demonstrate an inconsistency between the carrier’s
internal policies and their claims handling practices. An effective defense of a carrier requires staunch opposition to this
type of discovery premised on the fact that the unilateral and
internal intent of the carrier is simply irrelevant to the meeting
of the minds with respect to the insurance contract and will
not assist in interpreting the policy.
• Safeguard Lighting Systems Inc. v. North American
Specialty Ins. Co., 2004 WL 3037947 (E.D.Pa. 2004) (claims
manuals not reviewed or utilized by claims handler in connection with underlying claim not relevant or reasonably
calculated to lead to discoverable material)
In Safeguard Lighting, the insureds sought their carrier’s
claims manuals through discovery. The carrier objected to the
production of such documents as not relevant or reasonably
calculated to lead to admissible information. Along these
lines, the carrier objected that it maintained a huge library of
insurance literature including a technical claims manual that
provided a general outline of claims handling for general liability business. However, the carrier claimed that the claims
manager relied on his 15 years of experience rather than on
this manual when adjusting the claim at issue. Hence, production of a claims manual not utilized in adjusting the claim
was both irrelevant and not reasonably calculated to lead to
the discovery of admissible evidence. The Eastern District of
Pennsylvania agreed with the carrier that requiring the production of its entire claims manual library would be unduly
burdensome. However, to the extent the adjuster utilized any
internal material or instructions, to adjust the claim at issue,
such material was ordered produced.
The Safeguard case is important in that it illustrates that
claims manuals which are otherwise irrelevant, may become
relevant to the extent that the adjuster depended on the same to
adjust the claim. When responding to discovery of this nature,
the practitioner should be sure to discuss with the claims handler whether she referred to any internal memoranda to adjust
the claim. To the extent any internal claims manuals were not
utilized, the practitioner should object that their production is
24
irrelevant and not reasonably calculated to lead to discovery
of admissible material.
• Garvey v. Nat’l Grange Mut. Ins. Co., 167 F.R.D. 291
(E.D.Pa. 1996) (discovery of claims manuals not permitted
as they were irrelevant to policy interpretation)
In Garvey, the Eastern District of Pennsylvania examined
the discovery of claims manuals. This time, the court reasoned
“When responding to discovery
of this nature, the practitioner
should be sure to discuss with
the claims handler whether she
referred to any internal memoranda to adjust the claim.”
that because the internal procedures within the manual were
trade secrets and not related to a plaintiff’s claim as to whether
his loss was covered under the relevant insurance contract,
discovery of the claims manual was not permitted. Furthermore, the court noted that straying from internal procedures
within a manual does not establish, in and of itself, a claim
for bad faith.
The Garvey case is another instructive touchtone insofar
as it illustrates the importance of raising an objection based
upon proprietary information. Generally, where available, the
practitioner should raise an objection that the claims manuals
are trade secrets. As such, any production of same should be
either in camera or under seal.
Whether claims manuals are discoverable also depends on
whether the policyholder has alleged bad faith. If bad faith is
at issue, then the production of the claims manual may well
be compelled. See, e.g., Reavis v. Metropolitan Property &
Liab. Ins. Co., 117 F.R.D. 160 (S.D.Cal. 1987) (ordering the
production of claims information where policyholder has sufficiently alleged a cause of action for bad faith). Thus, in order
to narrow the issues presented to the court, it is important for
the practitioner to seek the dismissal of any bad faith counts
before answering responsive pleadings. If the practitioner is
successful in eliminating the bad faith count, the policyholder
Second Quarter 2005
will not be able to argue that the claims materials should be
produced because they are irrelevant to the issue of the carrier’s conduct and alleged bad faith.
4. Representative Case Law:
Delaware: E.I.U. duPont de Nemours & Co. v. Admiral Ins.
Co., 1993 WL 19662 (Del.Super.Ct. Jan. 8, 1993) (discovery
allowed)
Florida: Industrial Indem. Ins. Co. v. Crown Auto Dealership, Inc., 935 F.2d 240 (11th Cir. 1991) (discovery allowed)
Illinois: United States Fidelity & Guaranty Co. v. Specialty
Coatings Co., 535 N.E. 2d 1071 (Ill. App.), appeal denied,
545 N.E. 2d 133 (Ill. 1989) (discovery allowed)
New Jersey: Morton Int’l., Inc. v. General Accident Ins.
Co., 134 N.J. 1 (1993) (discovery allowed)
West Virginia: Joy Technologies, Inc. v. Liberty Mutual
Ins. Co., 421 S.E.2d 493 (W.Va.1992) (discovery allowed)
C. The Discovery of Advertising and
Marketing Materials
More recently, policyholders are seeking to obtain advertising and marketing materials in an attempt to demonstrate
that the policyholder was led to believe that claims at issue
would be covered based upon the representations made by
the carrier. Now that a claim is filed, the carrier relies upon
the “fine print” to undercut the commercial expectations of
the policyholder.
Discovery of advertising materials may demonstrate that
the carrier made public representations that certain types of
losses are covered by its products. Marketing and advertising
materials may uncover representations by the carrier, which
are at odds with its current legal position.
2. Insurer Arguments for Resisting Discovery:
Advertising and marketing materials are not part of the
insurance contract and therefore cannot alter or change the
scope of coverage that is provided by the language of the
policy itself.
In cases where the insured is a large or sophisticated corporation, perhaps equipped with its own risk management
personnel, it is preposterous to believe that the insured was
duped by the carrier’s mass marketing or advertising campaign.
Furthermore, depending on the breadth of the policyholder’s discovery request, searching for all potentially responsive
advertising and/or marketing materials would be extraordinarily burdensome, costing a great deal of personnel-hours
and taking an unreasonably long time.
3. Case Law for Discussion:
Reported case law regarding discovery efforts to obtain
advertising material of carriers is scarce. Those cases that
do exist, however, oftentimes provide little analysis behind
the reasons for their respective discovery rulings. As such,
reported case law is inconsistent and a coherent jurisprudence
has yet to emerge.
• Hoechst Celanese Corp. v. National Union Fire Ins.
Co. of Pittsburgh, PA, 623 A.2d 1099 (Sup.Ct.Del. 1991)
(discovery of advertising materials held to be irrelevant)
Here, the insured filed a motion to compel answers to
interrogatories and production of documents related to the
advertising and marketing efforts. The policyholder argued
that advertising and promotional material would provide
evidence of the carrier’s pre-litigation interpretation of the
standard form CGL policy and their coverage intent. The court
disagreed, finding that advertising and promotional materials
were irrelevant to the interpretation of the policy, and, in any
event, were not likely to lead to the discovery of admissible
evidence. Because the policyholder failed to make an adequate
showing of the relevance of the information sought, their motion to compel was denied.
• State Farm Mut. Auto. Ins. Co. v. Engelke, 824 S.W.2d
747 (Tx.App. 1992) (discovery of advertising materials compelled where materials were relevant to claim of bad faith)
Here, the insurer sought mandamus after the court ordered
it to produce advertising materials as part of a discovery request. The carrier objected that the production of advertising
materials was irrelevant because the plaintiff had not shown
that she relied on any advertising in purchasing her insurance
policy. The court disagreed and ordered the production of
advertising materials because such materials would show the
disparity between the carrier’s promises to consumers and its
treatment of those consumers when they actually file claims.
This was particularly relevant, the court reasoned, because of
the plaintiff’s claims of punitive damages and bad faith.
Again, the Engelke case, illustrates the importance of narrowing the claims against the carrier when defending it and
eliminating bad faith claims wherever possible.
D. Representative Case Law:
Delaware: E.I.U. duPont de Nemours & Co. v. Admiral Ins.
Co., 1993 WL 19662 (Del. Super. Ct. Jan. 8, 1993) (discovery
allowed)
25
IDC Quarterly
Conclusion
In recent years, policyholders have cast an aggressive
and broad net to discover information external to the policy
at issue. The practitioner defending these actions must seek
to narrow the issues that will be presented in the litigation.
Efforts to properly frame issues which will ultimately be
presented begin in discovery. It is imperative, then, that the
practitioner resist discovery efforts which will take the court’s
eye off the ball and divert attention away from the insurance
policy which is the actual subject of the litigation. Oftentimes
the policyholder’s attempts to obtain external documents is
nothing more than a campaign designed to cast the carrier in a
poor light or portray the insurance company as “speaking from
both sides of its mouth.” A court must always be reminded
that this is a simple contract action and that the majority of the
documents sought by the policyholder are simply unrelated
to the meaning of the contract at issue.
Indeed, case law passing upon these issues is both sparse
and inconsistent. The purpose of this article is to provide the
defense bar with strategies which will aid in coping in this
environment.
Employment Law Issues
By: Kimberly A. Ross*
Cremer, Kopon, Shaughnessy & Spina, LLC
Chicago
Age
Supreme Court Finds Disparate Impact Theory Available Under ADEA
In Smith v. City of Jackson, Mississippi, 125 S. Ct. 1536
(2005), police and public safety officers employed by the
city of Jackson, Mississippi (“City”) contended the salary
increases received in 1999 violated the Age Discrimination in
Employment Act (ADEA) of 1967 (29 U.S.C. § 621) because
they were less generous to officers over the age of 40 than
to younger officers. The officers’ suit raised the question of
whether the disparate impact theory of recovery for cases
brought under Title VII of the Civil Rights Act of 1964 (42
U.S.C. § 2000e) is cognizable under the ADEA.
In May 1999, the City adopted a pay plan that divided
the five basic office positions of police officer, master police
officer, police sergeant, police lieutenant and deputy police
chief, into a series of steps and half steps. The wage for
each range was based on comparable communities in the
southeastern United States. Most of the officers were in the
About the Author
Kimberly A. Ross is a partner with the law firm of Cremer,
Kopon, Shaughnessy & Spina, LLC. She received her J.D.
from DePaul University College of Law and her B.A. from
the University of Michigan. Her practice areas include
employment law and general tort litigation. Ms. Ross is an
Assistant Editor of the IDC Quarterly. In addition to IDC,
she is a member of the Defense Research Institute, Decalogue
Society of Lawyers and the Women’s Bar Association.
* The author acknowledges the assistance of Jennifer L. Colvin, an associate
with Cremer, Kopon, Shaughnessy & Spina, LLC, in the preparation of this
article.
26
Second Quarter 2005
three lowest ranks, and those ranks had officers both under
and over the age of 40. The two highest ranks had few officers and were composed of individuals all over the age of
40. Almost two-thirds of officers under 40 received raises of
more than 10 percent, whereas less than half of those over
40 did. The City’s explanation for the differential was it
perceived a need to raise the salary of junior officers to make
them competitive with comparable positions in the market.
The older officers brought suit under the ADEA, claiming
the City deliberately discriminated against them because of
age (disparate treatment), and that they were adversely affected by the plan because of their age (disparate impact).
In analyzing the claim, the Supreme Court first looked at the
legislative history of both Title VII and the ADEA, and noted
the ADEA provision prohibiting discrimination on the basis of
age paralleled Title VII’s provision prohibiting discrimination
on the basis of race, color, religion, sex or national origin. It
further noted the ADEA, unlike Title VII, narrowed its coverage by permitting any otherwise prohibited action where
the differentiation is based on reasonable factors other than
age (RFOA). Nonetheless, the Court began its review with
the premise that when Congress uses the same language in
two statutes having similar purposes, it presumes Congress
intended the text to have the same meaning in both statutes.
In reviewing Title VII’s provisions, the Court reiterated
that Congress had directed the thrust of the statute to the
consequences of employment practices and not simply the
motivations. As such, Title VII did not require a showing of
discriminatory intent. The Court further noted neither Title
VII nor comparable language in the ADEA simply prohibits
action that limits, segregates or classifies persons, but rather
prohibits actions that deprive any individual of employment
opportunities or otherwise adversely affect his or her status
as an employee. Thus, the Court found the text of the ADEA
focuses on the effects of the action on the employee rather than
the motivation for the action of the employer. Smith, 125 S.
Ct. at 1542. The Court further found the RFOA provision of
the ADEA further supports that disparate impact is available
under the ADEA. Id. at 1544.
While determining recovery on a disparate impact theory
is available under the ADEA, the Court noted the scope of
disparate impact liability under the ADEA is narrower than
under Title VII because of the RFOA provision found in the
ADEA. The Court also noted the ADEA’s scope of disparate
impact liability was narrower due to Title VII’s amendment
by the Civil Rights Act of 1991 (105 Stat. 1071). The Court
pointed out that one of the purposes of the amendment to
Title VII was to modify the Court’s holding in Wards Cove
Packing Co. v. Atonio, 490 U.S. 642 (1989), a case that nar-
rowly construed the employer’s exposure to liability on a
disparate impact theory. The court further pointed out that
while the amendments expanded the coverage of Title VII,
they did not amend the ADEA or speak to the subject of age
discrimination. Thus, Wards Cove’s pre-1991 interpretation
of Title VII’s identical language remained applicable to the
ADEA. Smith at 1545.
With regard to the City’s pay plan, the Court noted the
petitioners did not identify any specific test, requirement or
practice within the plan that had an adverse impact on older
workers. The Court found it was not enough to simply allege there was a disparate impact on workers, or point to a
generalized policy that leads to such an impact. Rather, an
employee is responsible for isolating and identifying the
specific employment practices that are allegedly responsible
for any observed statistical disparities. Id. The Court further
noted the petitioners’ failure to identify the specific practice
being challenged is the sort of omission that could result in
employers being potentially liable for the myriad of innocent
causes that may lead to statistical imbalances. Id. In addition,
the Court found that not only did the petitioners fail to identify
the relevant practice, but the record also clearly established
the City’s pay plan was based on reasonable factors other than
age since it attempted to make junior officers’ salaries more
competitive with the comparable job market.
Retaliation
Title IX Encompasses Retaliation Against Person Complaining of Sex Discrimination
In Jackson v. Birmingham Board of Education, 125 S.
Ct. 1497 (2005), Roderick Jackson, a teacher in the public
schools of Birmingham, Alabama, brought suit against the
Birmingham Board of Education (“Board”), alleging the
Board retaliated against him because he had complained
about sex discrimination in the high school’s athletic program.
Jackson claimed the Board’s retaliation violated Title IX of
the Education Amendments of 1972, 20 U.S.C. § 1681 et seq.
The Supreme Court determined Title IX encompasses claims
of retaliation where the funding recipient retaliates against an
individual because he has complained about sex discrimination.
In 1993, the Board hired Jackson to serve as a physical
education teacher and girls’ basketball coach. In August 1999,
Jackson was transferred to Ensley High School, where he discovered the girls’ team was not receiving equal funding and
equal access to athletic equipment and facilities. The lack of
27
IDC Quarterly
Employment Law Issues (Continued)
funding, equipment and facilities made it difficult for Jackson
to do his job as the team’s coach. As a result, in December
2000, Jackson began complaining to his supervisors about
the unequal treatment of the girls’ basketball team. Jackson’s
complaints went unanswered and he began to receive negative work evaluations. Ultimately, Jackson was removed as
the girls’ coach in May 2001. Jackson filed suit, alleging the
Board violated Title IX by retaliating against him for protesting the discrimination against the girls’ basketball team.
Title IX prohibits sex discrimination by recipients of
federal education funding. The statute provides that “no
person in the United States shall, on the basis of sex, be
excluded from participation in, be denied the benefits of, or
be subjected to discrimination under any education program
or activity receiving Federal financial assistance.” 20 U.S.C.
§ 1681(a). The Court noted it previously held Title IX implies a private right of action to enforce its prohibition on
intentional sex discrimination, and this right includes actions for monetary damages by private persons. See, Cannon
v. University of Chicago, 441 U.S. 677 (1979); Franklin
v. Gwinnett County Public Schools, 503 U.S. 60 (1992).
The court concluded retaliation against a person because
that person complained of sex discrimination is another
form of intentional sex discrimination encompassed by
Title IX’s private cause of action. In doing so, the Court
noted that retaliation, by definition, is an intentional act and
a form of “discrimination” because the complainant is being
subjected to differential treatment. Jackson, 125 S. Ct. at
1500. Moreover, retaliation is discrimination “on the basis
of sex” because it is an intentional response to the nature of
the complaint: an allegation of sex discrimination. Id. Thus,
retaliation by a funding recipient against a person because
he complains of sex discrimination constitutes intentional
“discrimination” ‘on the basis of sex,’” in violation of Title
IX. Id.
In determining that Title IX encompasses claims of retaliation, where the funding recipient retaliates against an individual because he has complained about sex discrimination,
the Court rejected the Board’s urging to draw a comparison
between Title IX’s provisions regarding retaliation with those
of Title VII. See, 42 U.S.C. § 2000(e)-2. The Court noted
that Congress expressly mentioned retaliation in Title VII
and spelled out in greater detail the conduct that constitutes
discrimination in violation of that statute, whereas Title IX’s
cause of action was implied. As such, the Court found Title
IX is a broadly written general prohibition on discrimination,
followed by specific, narrow exceptions. Since Congress did
not list any specific discriminatory practices when it wrote
28
Title IX, the Court determined its failure to mention one such
practice did not tell it anything about whether the intended
practice was to be covered. Id. at 1501.
The Court further rejected the Board’s argument that
Jackson was not entitled to invoke Title IX’s private right of
action because he was an indirect victim of sex discrimina-
“Title IX prohibits sex discrimination by recipients of federal
education funding. The statute
provides that ‘no person in the
United States shall, on the basis
of sex, be excluded from participation in, be denied the benefits
of, or be subjected to discrimination under any education program
or activity receiving Federal
financial assistance.’ ”
tion. The Court, again noting the broad wording of Title IX,
found the statute does not require that the victim of retaliation also be the victim of the discrimination that was the
subject of the original complaint. The Court noted that while
the language of Title VII makes it an unlawful employment
practice for an employer to discriminate against any individual because of such individual’s race, color, religion, sex
or national origin, Title IX does not contain any such limitation. The Court determined that where the retaliation occurs
because the complainant speaks out about sex discrimination, the “on the basis of sex” requirement is satisfied. Id.
Second Quarter 2005
Sexual Orientation
Illinois General Assembly Amends Human Rights
Act to Include Discrimination on Basis of Sexual Orientation as Unlawful Discrimination
On January 21, 2005, Public Law 93-1078 was codified.
This law amends the Illinois Human Rights Act (“Act”) (775
ILCS 5/1 et seq.) to include sexual orientation as a protected
status. It is important to note the Act defines sexual orientation as “actual or perceived heterosexuality, homosexuality,
bisexuality, or gender-related identity, whether or not traditionally associated with the person’s designated sex at birth.
‘Sexual orientation’ does not include a physical or sexual attraction to a minor by an adult.” 775 ILCS 5/1-103(O-1). The
Act makes clear the amendment does not require employers
or labor organizations to give preferential treatment or special
rights based on sexual orientation or to implement affirmative action policies or programs based on sexual orientation.
775 ILCS 5/1-101.1. Rather, the amendment simply makes
it unlawful to discriminate against a person because of his or
her sexual orientation in connection with employment. 775
ILCS 5/1-102. The law is effective as of January 1, 2006.
Sexual Harassment
Acts Falling Outside of Filing Limitations
Not Time-Barred
In Jenkins v. Lustig, 354 Ill. App. 3d 193, 820 N.E.2d
1181, 290 Ill. Dec. 114 (3rd Dist. 2004), Dena Jenkins filed a
discrimination charge on April 26, 2001, with the Department
of Human Rights (“DHR”) against her employer, Schuster
Media Group, and Lee J. Schuster, alleging the employer
subjected her to sexual harassment by engaging in acts that
created a hostile work environment. Jenkins alleged Schuster
had harassed her from August to December 5, 2000. Jenkins
also alleged she was retaliated against for protesting the
harassment from December 2000 until the time she filed her
charge.
An investigator for the DHR organized Jenkins’ allegations into groups. Allegations A and B were based on acts that
took place between August and October 2000. Allegations C
and D were based on actions occurring between October 28,
2000, and April 26, 2001. The DHR issued a notice dismissing allegations A and B for lack of jurisdiction under Section
7A-102(A)(1) of the Illinois Human Rights Act (775 ILCS
5/7A-102(A)(1)), which states a charge must be filed within
180 days after the date a civil rights violation has been committed.
Jenkins filed a request for review of the dismissal, arguing
the DHR erred because Schuster’s sexually offensive behavior
was a course of continuing and uninterrupted conduct between
August and December 2000. However, the DHR’s chief legal
counsel upheld the dismissal and an appeal followed.
On appeal, Jenkins maintained Section 7A-102(A)(1)
should be interpreted in lockstep with the United States
Supreme Court’s interpretation of the time limitations in
Title VII under National R.R. Passenger Corp. v. Morgan,
536 U.S. 101 (2002). In Morgan, the Supreme Court held
a hostile work environment claim under Title VII included
events that occurred prior to and outside the 180- or 300-day
limitations period, as long as at least one act occurred within
the applicable filing period.
The appellate court noted that in Gusciara v. Lustig, 346
Ill. App. 3d 1012, 806 N.E.2d 746, 282 Ill. Dec. 449 (2nd
Dist. 2004), it had previously ruled that Section 7A-102(A)
(1) is governed by the Morgan rule, and that this rule applies
unless the acts within the jurisdictional period have no relation to those outside the period and are no longer part of the
same hostile work environment claim. In analyzing Jenkins’s
claim, the appellate court concluded Jenkins’s claims, based
on acts that occurred prior to October 28, 2000, were timely.
The acts that occurred both before and after the 180-day filing
requirement involved the same employer, were committed by
the same person, occurred in similar settings and continued
with relative frequency from August to December 2000. Thus,
the court concluded a fact finder could easily conclude the
conduct that occurred prior to the 180-day filing requirement
was part of the same actionable hostile environment.
In reversing the dismissal of Jenkins’s claims, however, the
court noted there is a difference between the Illinois statute
and its federal counterpart with regard to the issue of equitable
defenses. While the filing period under Title VII is a statute
of limitations and allows for the raising of certain equitable
defenses, the Illinois statute is jurisdictional and the equitable
defenses of waiver and tolling do not apply. Hence, a lengthy
period between individual incidents and the filing of a charge
increases the likelihood that those acts that occurred within
the 180-day filing period will be unrelated to the earlier acts
and will not be part of the same hostile work environment.
Reasonable Jury Could Find Harassment
Policy Not Effective
In Loughman v. Malnati Organization, Inc., 395 F.3d 404
(7th Cir. 2005), Kathleen Loughman brought suit against her
employer, Malnati Organization, Inc., claiming it failed to
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IDC Quarterly
protect her from sexual harassment by her co-workers. Malnati
Organization owns and operates a string of pizzeria restaurants
in the Chicago area. Loughman began working at the Naperville, Illinois, restaurant when she was 17 years old. During
her first three weeks on the job, kitchen workers whistled at
her and made several inappropriate comments. Loughman
reported the comments to the restaurant’s manager, Jim Solis,
and told him the comments made her feel uncomfortable. The
comments and propositions by the kitchen workers continued
despite Solis telling Loughman he would talk to the kitchen
staff.
Five months into her employment, Martin Ruellas, a kitchen employee, cornered Loughman and attempted to kiss her.
When Loughman tried to escape Ruellas’s grasp he blocked
her path for several minutes before relenting. Loughman
reported the incident to Solis the following morning. Solis
informed Ruellas he would be fired if he ever touched Loughman again. Solis then reported the incident to a high-ranking
Malnati employee. Ruellas never again bothered Loughman.
Nearly a year later, Loughman entered a walk-in cooler
when two co-workers, Hector Hernandez and Guillermo Siffuentes, walked in behind her and closed the door. Hernandez
pinned Loughman against the wall, grabbed her chest and
tried to put his hands down her pants. Loughman screamed
and swung her arm, hitting Siffuentes. Siffuentes opened the
cooler door as he fell back against it. Loughman was able to
run out and immediately told Julie Luba, a fellow employee,
what happened. Luba reported the incident to Solis and Solis
in turn questioned Loughman about the incident. Luba also
discussed the confrontation with Cori Gros, another manager,
who told Luba that Loughman should expect such behavior
from the kitchen staff and that Loughman should not be nice
to the kitchen staff. Loughman continued working the same
shifts as Hernandez and Siffuentes, and she continued to inform Solis that the two men were still making inappropriate
comments. No action was taken.
Over a year and a half after the cooler incident, a driver for
Malnati’s walked up behind Loughman, ran his hands through
her hair, slid one hand up her shirt, wiggled his fingers on her
stomach, giggled and ran away. Loughman immediately reported this incident to Gros. A few days later, Malnati’s district
manager apologized to Loughman for the incidents and began
investigation of the first two incidents. That investigation led
to Hernandez being fired.
In reversing the district court’s granting of summary
judgment in favor of Malnati’s, the Seventh Circuit noted
employers may raise an affirmative defense to a claim under
30
Title VII by showing it exercised reasonable care to prevent
and correct promptly any sexually harassing behavior and that
the plaintiff employee unreasonably failed to take advantage
of any preventive or corrective opportunities provided by the
employer or to avoid harm otherwise. Burlington Industries,
Inc. v. Ellerth, 524 U.S. 742 (1998). The court further noted an
employer is liable for a co-employee’s harassment only when
it is negligent either discovering or remedying the harassment.
Loughman, 395 F.3d at 407.
While the district court found Malnati’s had an effective
sexual harassment policy in place, the Seventh Circuit was not
convinced. Given the serious physical violations Loughman
endured, the appellate court concluded a reasonable jury could
determine that simply talking to the people involved in the
first two incidents was not a sufficient response. Further, the
court found the mere fact that none of the employees physically assaulted Loughman a second time did not necessarily
mean Malnati’s response was adequate. Additionally, the court
concluded the consistent stream of harassment actually suggested Malnati’s policy was not very effective at all. A jury
could have determined at some point Malnati’s management
needed to stop issuing verbal warnings and start taking disciplinary action.
The Seventh Circuit also found Malnati’s other arguments
regarding the actions Loughman took to report the incident
were better made to a jury. While Malnati’s argued Loughman
should have reported the incidents to more senior managers,
the court noted Loughman’s direct managers knew about each
of the incidents. Thus, a reasonable jury could have determined Loughman took adequate steps to report the incidents
to her supervisors. Id. at 408.
Race/Gender/Age
Supervisor’s Conduct Insufficient to
Maintain Hostile Work Environment Claim
In Ezell v. Potter, 400 F.3d 1041 (7th Cir. 2005), Stephen
Ezell sued his employer, the United States Postal Service
(“USPS”) for race, gender and age discrimination. He contended he was treated in a disparate manner and that he was
subject to a hostile environment. The district court granted
summary judgment in favor of the USPS. On appeal the
Seventh Circuit affirmed in part and vacated and remanded
in part.
Ezell, a Caucasian man over the age of 50, maintained an
uneasy relationship with his supervisor, Tangela Wright, an
African-American woman. On March 6, 2001, Ezell was on
his mail route when he stopped to buy his lunch at a fast food
Second Quarter 2005
restaurant. Ezell claims he purchased his lunch, made a threeminute phone call, and then headed to a convenience store
to purchase a newspaper. He then drove to his route, parked
his truck and ate his lunch within his allowed 30 minutes.
When he exited his truck to begin deliveries, he saw another
USPS vehicle behind him. He approached the other vehicle,
and Wright and another USPS supervisor began searching
Ezell’s truck. Ezell was asked where he was on his route, but
no mention was made about Ezell taking an overextended
lunch period.
Six days later Ezell was called in for questioning by Wright
and Postmaster David Dew. When Ezell could not recall where
he had lunched six days earlier, Wright and Dew treated him
as though he were being uncooperative. Approximately two
weeks later Ezell was issued a letter terminating his employment. The reason for the termination was that Ezell had
received pay for time not worked. The letter claimed Ezell
had exceeded his 30-minute lunch by another 30 minutes
“The reason for the termination
was that Ezell had received pay for
time not worked. The letter claimed
Ezell had exceeded his 30-minute
lunch by another 30 minutes without informing a supervisor.”
without informing a supervisor. Ezell filed a grievance and
won reinstatement. However, he received a written warning
regarding the lunch incident.
On June 4, 2001, Ezell filed a one-page “EEO Complaint
of Discrimination in the Postal Service.” He subsequently
filed an equal employment opportunity (EEO) investigative
affidavit further describing the basis of his complaint. He asserted Wright discriminated against him on the basis of age,
sex and race in seeking his dismissal. He also claimed Wright
often made derogatory remarks about older workers in general
and about him in particular, and that she often referred to his
gray hair and slow work. He asserted Wright’s co-supervisor
told a new hire the plan was to get rid of older carriers and
replace them with younger, faster carriers.
Ezell also claimed Wright made racist comments when
referring to the differences between the Indiana towns of
Gary and Valparaiso. Ezell reported Wright threatened to
take Valparaiso workers to Gary for carrier training, taunting
them with claims they would not last a week in the primarily
African-American city. He also reported Wright was pleased
when a Caucasian man was shot and killed in Valparaiso.
Ezell detailed evidence of Wright’s sexism by claiming
Wright told the employees women were faster carriers then
men because women wanted to get home to their children
whereas men wanted to “milk all the overtime they can get.”
Ezell, 400 F.3d at 1045. Ezell also complained that Wright
gave favorable assignments to women.
Ezell filed suit against the USPS after the EEOC issued a
decision finding he had failed to establish a prima facie case
for race, gender and age discrimination. The district court
granted judgment in favor of the USPS on all claims, finding
Ezell failed to exhaust administrative remedies on his hostile
enviroment claims. In the alternative, the court found Wright’s
treatment of Ezell was not severe or pervasive enough to meet
the standards for hostile environment claims. On his claims of
disparate treatment, the court found Ezell failed to present sufficient direct evidence of race, gender or age discrimination,
and also failed to make out a claim under the burden-shifting
method.
On appeal, Ezell claimed he sufficiently preserved his
hostile environment claim in his original EEO complaint.
The Seventh Circuit noted a plaintiff may pursue a claim not
explicitly included in an EEOC complaint only if the allegations fall within the scope of the earlier charges contained in
the EEOC complaint. In determining whether Ezell’s current
allegations fell within the scope of the earlier charges, the
court looked to whether the allegations were like or reasonably related to those contained in the EEOC complaint. The
court found Ezell’s charge to be ambiguous with respect to a
claim for hostile environment. Although he referenced his discharge, he also complained his supervisor made racist, sexist
and age-related comments to him in a rude, disrespectful and
confrontational manner. He also stated he was “uncomfortable” working in this “environment.”
Despite the ambiguity of Ezell’s claims, the Seventh Circuit
concluded it need not conclusively determine whether Ezell’s
allegations set forth a hostile environment claim because the
conduct Ezell described was not severe or pervasive enough
to qualify as a hostile environment. The appellate court found
Ezell provided no detail on the regularity of Wright’s offensive
comments, and while her comments were rude and inappropriate, they were not so severe as to alter the conditions of
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IDC Quarterly
Ezell’s employment.
In reviewing Ezell’s disparate treatment claim the appellate court noted the lower court granted summary judgment
in favor of the USPS because the district court believed Ezell
could not demonstrate his employer had taken an adverse employment action against him because the letter of termination
was withdrawn before it ever took effect. The Seventh Circuit
disagreed and found the termination letter did constitute an
adverse employment action even though it was later withdrawn. The appellate court determined that to hold otherwise
would allow harassing supervisors to demote employees who
rejected their behavior with impunity, so long as they later
reversed the demotion/termination and restored the employees to their former positions. The appellate court also found
Ezell produced evidence that Wright treated similarly situated
employees outside his protected classes more favorably. As
such, the Seventh Circuit affirmed the district court’s judgment in favor of the USPS on the hostile environment claim
but found Ezell’s race, sex and age claims were sufficiently
supported to survive summary judgment and were therefore
remanded.
Gender
Romantically Motivated Favoritism to
Female Subordinate Not Sex Discrimination
In Preston v. Wisconsin Health Fund, 397 F.3d 539 (7th
Cir. 2005), Jay Preston, a male dentist, asserted his former
employer, the Wisconsin Health Fund (“the Fund”), discriminated against him on account of his sex in violation of Title
VII of the Civil Rights Act of 1964 (42 U.S.C. §§ 2000e et
seq.) when it replaced him as director of the Fund’s dental
clinic with a woman.
The Fund provides health services directly in clinics it
owns, as well as indirectly by paying for medical or dental
treatment its participants obtained at outside clinics. In the
year prior to Preston’s replacement as director, the Fund lost
$1 million. Despite presenting the Fund’s chief executive officer (CEO) with ideas for stemming the flow in a well-written
business plan, Preston was terminated. Linda Hamilton, a
much younger dentist, who had no apparent credentials for
the job except eagerness, replaced Preston. There also were
unsubstantiated rumors that Hamilton and the CEO were
having an affair.
In affirming the district court’s granting of summary judgment in favor of the Fund, the Seventh Circuit noted a male
executive’s romantically motivated favoritism toward a female
32
subordinate is not sex discrimination even when it disadvantages a male competitor of the woman. While Preston tried
to bolster his case by pointing out that the CEO gave large
raises to several women, the appellate court found Preston
provided no details that would enable a trier of fact to infer
the raises were motivated by the recipients’ sex. The court
found Preston’s inferences that more women than men got
large raises, together with the favoritism shown Hamilton,
were not enough to get him to a jury because courts take a
realistic view of the circumstances in which an inference that
men are discriminating in favor of rather than against women
is plausible.
The court noted it is not surprising when women discriminate in favor of women and when men discriminate in favor
of men. However, it is surprising when men discriminate
against men in favor of women. The court further noted such
discrimination is not surprising when the job in question is
traditionally “women’s work” such as nursing, in which men
believe women can do better than men based on a fixated
stereotype. The court also noted such discrimination is also
not surprising when a male executive is under pressure from
affirmative action plans, customers, public opinion, the EEOC
or a judicial decree that the company’s workforce needs to
increase diversity. However, Preston gave no reason as to
why men might be expected to discriminate against men at
the Fund. In order to raise a triable issue of discrimination,
Preston had to present some evidence beyond the bare fact
that a woman got a job that he wanted to get or keep. While
the gross disparities in qualifications between Hamilton and
Preston might have been such evidence, Preston did not develop this evidence and instead insisted Hamilton was given
the job for personal reasons.
Second Quarter 2005
Case Note
By: Robert T. Park
Snyder, Park & Nelson, P.C.
Rock Island
Damages for Loss of a Pet:
Measuring the Immeasurable
The plaintiff, Mary Ann Anzalone, a 44-year-old unmarried woman, had no children and lived alone with her pets.
According to her complaint, when she boarded her female
cat, Blackie, at the defendant, Kragness Animal Hospital, the
hospital personnel negligently allowed a Rottweiler dog to
enter the room where the cat was exercising. The large dog
attacked and killed Blackie.
Ms. Anzalone’s first amended complaint included claims
sounding in bailment, negligence, breach of fiduciary duty,
and intentional infliction of emotional distress. She sought
compensation of $100,000 plus attorney fees and costs.
Acting on the defendant’s section 2-615 motion to dismiss,
the Cook County Circuit Court dismissed the emotional distress count with prejudice, struck the prayers for relief in the
remaining counts, and granted the plaintiff the right to file a
further amended complaint.
Rather than replead, Ms. Anzalone appealed. Anzalone v.
Kragness Animal Hospital, 2005 WL 525432 (March 7, 2005).
She did not contest the dismissal of her claim for infliction
of emotional distress but sought reversal of the order striking
her compensatory damage claims.
The appellate court noted that early Illinois cases allowed
damages for the death of a pet based on the animal’s qualities and commercial value, but not all pets have a measurable
market value. According to the Restatement (Second) of
Torts § 911, Comments c and e, it would be unfair to deny
the plaintiff compensation just because a pet had no market
value, so that the trier of fact should determine the “value to
the owner” (also called “actual value to the owner” or “actual
value”) as the measure of damages.
This approach was used in Jankoski v. Preiser Animal
Hospital, Ltd., 157 Ill. App. 3d 818, 110 Ill. Dec. 53, 510
N.E.2d 1084 (1st Dist. 1987). The Jankoski court held that the
value to the owner may “include some element of sentimental
value in order to avoid limiting the [owner] to merely nominal
damages.” 157 Ill. App. 3d at 821.
The appellate court in Anzalone emphasized that even the
loss of the companionship of a child was not allowed at common law, and there is no statute comparable to the Wrongful
Death Act (740 ILCS 180/0.01 et seq.) that would allow compensation for the loss of a pet’s company.1 Nevertheless, under
the holding of Jankoski and the New York case on which it
was grounded,2 the “value to the owner,” although not based
on a monetary calculation, can include an element of the
owner’s feeling for the pet. However, Jankoski acknowledged
that “damages in such cases, while not merely nominal, are
severely circumscribed.” Id.
The Anzalone court considered plaintiff’s prayer for
$100,000 “extravagant,” but found that was no reason to
dismiss the complaint. It therefore reversed and remanded the
case for further proceedings, noting that it would be up to the
circuit court’s discretion to assign the case to the appropriate
division of the court regardless of the ad damnum plead.
In other words, the compensation to which the plaintiff will
be entitled for the loss of Blackie will be the actual value of
the beloved cat to her, so long as the damages are not enough
for the court to deem the award excessive. On this vague
standard, it is hard to say exactly how defense counsel will
advise the client regarding the probable verdict range.
Note: The Illinois Supreme Court has allowed leave to
appeal in Redmond v. Socha, 352 Ill. App. 3d 1049 (1st Dist.
2004), discussed in the last Case Note column (“A Lost Counterclaim Gives Plaintiff ‘A Second Bite,’” IDC Quarterly,
First Quarter 2005, page 33).
Endnotes
The court noted two acts that allow for recovery from one who
harms a pet, the Humane Care for Animals Act (510 ILCS 70/16.3),
dealing with the injury or death of a pet subjected to intentional acts of
aggravated cruelty or torture, and the Assistance Animal Damages Act
(740 ILCS 13/1 et seq.), concerning damages for unprovoked harm to
an animal trained to assist a physically impaired person.
2
Brousseau v. Rosenthal, 110 Misc.2d 1054, 443 N.Y.S.2d 285 (Civ.
Ct. 1980).
1
About the Author
Robert T. Park is a principal in the firm of Snyder, Park
& Nelson, P.C. He received his B.A. and J.D. from the
University of Illinois. For 30 years, he has practiced law
in Rock Island, concentrating in defense of civil cases.
Mr. Park is a member of DRI, ISBA and IDC, serving
since 1993 as an IDC Director. He is the most recent past
Editor-In-Chief of the IDC Quarterly.
33
IDC Quarterly
Civil Rights Update
By: David A. Perkins
Peoria
Qualified Immunity for Violating a
“Class of One” Equal Protection Rights:
Lunini v. Grayeb, 395 F.3d 761 (7th Cir. 2005)
Under the doctrine of qualified immunity, governmental
officials are shielded from civil damages as long as their
conduct does not violate “clearly established” statutory or
constitutional rights of which a reasonable person would have
known. See Harlow v. Fitzgerald, 457 U.S. 800, 818 (1982).
Applying the doctrine of qualified immunity in a case that alleges a violation of equal protection rights under the so-called
“class of one theory” is particularly difficult, largely due to
the inability of the courts to precisely define the contours of a
class of one equal protection claim. The lingering uncertainty
regarding the legal standards applicable to “class of one” equal
protection claims was acknowledged in the recent Seventh
Circuit Court of Appeals opinion of Lunini v. Grayeb, 395
F.3d 761 (7th Cir. 2005), reh’g en banc denied, Mar. 3, 2005.
In that case, Joseph Lunini, a Peoria, Illinois, resident,
alleged that certain Peoria police officers violated his equal
protection rights when they refused to arrest Charles Grayeb,
Lunini’s former boyfriend, after an alleged dispute. Defendant
Grayeb, a member of the Peoria City Council, and Lunini met
and began a personal relationship in 1995. The two moved
into a single-family home in 1997 on High Street in Peoria
that Grayeb owned. During the first half of 2000, Lunini and
Grayeb started to have major difficulties in their relationship.
Later that year, and after a City Council meeting, Grayeb met
with John Stenson, the Peoria Chief of Police, to discuss his
problems with Lunini, and asked Stenson how he might have
Lunini removed from the residence. After hearing of this
conversation, Lunini made plans to move out of the house.
On June 30, 2000, Lunini and Grayeb allegedly had a
confrontation at the house, and, according to Lunini, Grayeb
slapped him and punched him in the face. Lunini called the
police and reported that he had been assaulted. Two Peoria po34
lice officers, Stuart Barden and Jeffrey Kice, were dispatched
to the home. According to Lunini, the officers laughed and
“made faces” when Lunini mentioned his relationship with
Grayeb. Lunini also claimed that Grayeb called the police
chief, who thereafter called Barden and Kice and told them
that if there was insufficient evidence of a crime and for an
arrest, they should take statements from Grayeb and Lunini
and escort Lunini off the property.
Lunini filed a lawsuit alleging that the Peoria police officers
refused to arrest Grayeb due to his position on the Peoria City
Council and that Lunini was therefore, being denied equal protection of the laws. In denying the defendant officers’ motion
for summary judgment on Lunini’s equal protection claim, the
district court rejected the officer’s request for qualified immunity, ruling that Lunini’s equal protection right to be free from
deliberate withdrawal of police protection for purely personal
reasons was “clearly established.” The defendants appealed
the narrow issue of whether Lunini’s equal protection rights
were “clearly established” for qualified immunity purposes
at the time of the incident in question, June 30, 2000.
Judge Cudahy, with Chief Judge Flaum and Circuit Judge
Posner joining, wrote the opinion, and concluded that the
equal protection rights alleged to have been violated were not
“clearly established” at the time of the incident and, therefore,
reversed the district court ruling. To implement the qualified
immunity inquiry, a court must first determine whether the alleged conduct violated a constitutional or statutory right in the
first place; second, the court must determine whether the right
in question was “clearly established” at the time of the alleged
incident. In its opinion, the court of appeals acknowledged
that a “class of one” equal protection claim may be advanced
when: (1) the plaintiff alleges that she has been intentionally
treated differently from others similarly situated; and (2) there
is no rational basis for the difference in treatment or the cause
About the Author
David A. Perkins is a partner in the Peoria firm of Heyl,
Royster, Voelker & Allen. He concentrates his practice in
the areas of civil rights, municipal liability, insurance fraud,
and first party property claims. Mr. Perkins received his
B.A. in 1985 from the University of Illinois at Springfield
and his J.D. from the University of Iowa in 1987. He is a
member of the Peoria County, Illinois State, and American
Bar Associations.
Second Quarter 2005
of the differential treatment is a “totally illegitimate animus”
toward the plaintiff by the defendant. See McDonald v. Village
of Winnegka, 371 F.3d 992, 101 (7th Cir. 2004) and Village
of Willowbrook v. Olech, 528 U.S. 562, 564 (2000).
Even though the court believed the right in question was not
clearly established at the time of the incident, the court elected
to address Lunini’s allegation that the alleged conduct violated
Lunini’s equal protection right. The court found it difficult to
“The court found it difficult to
discern any equal protection
violation under the circumstances
since Lunini had not demonstrated that he suffered unequal treatment, the essence of an equal
protection violation.”
discern any equal protection violation under the circumstances
since Lunini had not demonstrated that he suffered unequal
treatment, the essence of an equal protection violation. It noted
that a “class of one” claim must fail where the plaintiff fails
to identify someone who, although similarly situated, was
intentionally treated differently than the plaintiff. Based on
the record presented, the court of appeals found there was no
evidence that the Peoria Police Department always arrested
an alleged assailant when responding to domestic violence
incidents. Thus, the court viewed the Lunini/Grayeb altercation as simply an incident that involved the ordinary exercise
of police discretion. The court also refused to conclude that
the officer’s failure to arrest Grayeb amounted to a withdrawal
of physical protection in any meaningful sense.
The court observed that, even if assuming that Lunini’s
allegation stated a cognizable “class of one” equal protection claim, Lunini nevertheless could not prevail because
the law on that particular subject was not clearly established
at the time of the incident on June 30, 2000. The court then
examined its three “class of one” equal protection cases that
had been decided prior to June 2000: Esmail v. Macrane,
53 F.3d 176, 179 (7th Cir. 1995); Olech v. Village of Willowbrook, 160 F.3d 386, 388 (7th Cir. 1998); and Hilton v.
City of Wheeling, 209 F.3d 1005 (7th Cir. 2000). Hilton, the
most analogous of the cases, involved an allegation that the
police were unfair in responding to complaints among neighbors. Specifically, the plaintiff alleged that the local police
arrested him on several occasions in response to complaints
from his neighbors, but they also did not respond similarly to
his own report about those neighbors. The court of appeals
concluded that the plaintiff in Hilton failed to present a valid
equal protection claim since he had presented no evidence
of improper police animus against him, but merely alleged
uneven enforcement of local laws. However, unlike Hilton,
where it was clear that the plaintiff was being treated differently from his neighbors, it was unclear that that occurred
in the Lunini case. The Lunini court found that it would be
difficult to charge the defendant police officer with notice
of a “clearly established” constitutional right based upon
the open-ended pronouncements in those three cases arising
under largely distinguishable facts.
Judge Cudahy’s opinion emphasized that the contours
of the right at issue were not sufficiently clear such that
a reasonable official would understand that what he did
violated the arrestee’s rights. Judge Cudahy questioned the
clarity of the legal standard applicable to “class of one”
cases and acknowledged that it continued to “elude some
of this circuit’s most capable judges.” The court concluded
that the equal protection rights alleged to have been violated
by the officers were not clearly established at that time of
the incident. The court felt uncomfortable imposing a duty
upon police officers to comprehend a legal standard that was
still in its developing stage. Given these findings, the court
felt that the officers should be entitled to qualified immunity
protection.
35
IDC Quarterly
Medical Malpractice
By: Edward J. Aucoin, Jr.
Hall, Prangle & Schoonveld, LLC
Chicago
On March 30, 2005, the Illinois Supreme Court took
many cases off the appellate stay calendars of circuit courts
throughout the state. It did so not by releasing a decision,
but rather, by refusing to hear the plaintiff’s appeal from the
Fourth District’s decision in Cargill v. Czelatdko, 353 Ill. App.
3d 654, 818 N.E.2d 898, (Ill. App. 4 Dist., 2004), thereby
supporting that decision. In the four months since the Fourth
District released its opinion in Cargill, Defense Counsel in
healing arts malpractice cases have filed motions to dismiss
any complaint filed without a supporting physician’s report
that included the name and address of the reviewing physician. Motions to dismiss were also filed as to any healing arts
malpractice complaint filed without an affidavit from the filing
attorney stating that essentially the same matter had not been
previously voluntarily dismissed.
The circuit courts around the state responded to these motions in different ways. In fact, in some circuits, the motions
were handled differently depending upon which judge the
case was assigned. Not all circuits placed these motions on
appellate stay calendars. Some circuits followed the Fourth
District’s decision in Cargill and granted the motions to dismiss. Still others found that the reviewing physicians were
akin to consultants and therefore, did not have to be disclosed
regardless of how P.A. 90-579 was worded.
The reason for the difference in handling these motions is
likely the result of uncertainty as to the current status of the
Healing Arts Malpractice Act (735 ILCS 5/2-622) since the
passage of Public Act 90-579 by the Illinois Legislature. The
Illinois Supreme Court’s decision in Best v. Taylor Machine
Works, 179 Ill. 2d 367, 689 N.E.2d 1057 (1997), stated that
certain provisions of tort reform instituted by Public Act
89-7 were unconstitutional. The court also found that the
legislation from that Act, which affected many individual
statutes, was “inseperable.” Therefore, all of the provisions
were thrown out, regardless of whether they were specifically
found unconstitutional by the court. The supreme court emphasized that “all of the remaining provisions of Public Act
36
89-7, which were not challenged in the instant cases, were
deemed invalid solely on grounds of severability. As such,
the General Assembly is free to reenact whatever provisions
it deems desirable or appropriate.” Best, 179 Ill. 2d at 471,
689 N.E.2d at 1106.
However, Public Act 90-579 was passed after the Illinois
Supreme Court’s decision in Best. Section 2-622 of the Illinois
Code of Civil Procedure, as drafted in P.A. 90-579, included
language that required the name and address of the reviewing
physician, as well as the affidavit from the plaintiff’s counsel
attesting to the fact that the claim had not been re-filed after
previously having been voluntarily dismissed. Now, the district courts had to decide whether these re-instituted requirements were consistent with the court’s decision in Best and
therefore enforceable.
In Cargill, the plaintiffs re-filed a complaint against multiple defendants, alleging healing arts malpractice in July
2003. The plaintiffs were unable to procure a reviewing physician’s report when they filed the action originally, so they
had voluntarily dismissed the original action in July 2002. In
September 2003, the defendants filed a motion to dismiss the
re-filed complaint based upon the version of Section 2-622
re-instituted by P.A. 90-759, which the trial court denied.
Cargill, 818 N.E.2d at 900.
The trial court thereafter granted the defendants’ motion
to certify three questions for interlocutory review pursuant
to Supreme Court Rule 308(a) (155 Ill. 2d R. 308(a). Those
questions were:
1) “Did P.A. 90-579 resurrect the amendments to Section 2-622 of the Code of Civil Procedure (inserted
by P.A. 89-7) which had been found unconstitutional by the Illinois Supreme Court’s decision in
Best v. Taylor Machine Works…?”;
About the Author
Edward J. Aucoin, Jr. is an associate in the Chicago
firm of Hall, Prangle & Schoonveld, LLC. He has eight
years of experience in medical malpractice defense, commercial litigation, and contract litigation practice. Mr.
Aucion’s substantial client base includes private hospitals
and medical practice groups, physicians and other medical
professionals, and national commercial corporations. He
has extensive experience in preparing complex litigation
for trial, and has second-chaired medical malpractice trials in Cook County
and DuPage County. Mr. Aucoin received his B.A. from Loyola University of
New Orleans and his J.D. from Loyola University of New Orleans School of
Law. He is also a member of the IDC.
Second Quarter 2005
2) “If the response to the first question listed above
is in the affirmative, then in a re-filed healing art
malpractice case, does the Circuit Court have discretion pursuant to Section 2-622(a)(2) to ‘waive’
the requirement found at 735 ILCS 5/2-622(a)(2)
that a plaintiff’s attorney certify that he ‘has not
previously voluntarily dismissed an action based on
the same or substantially the same acts, omissions,
or occurrences’?”; and
3) “Assuming an answer in the affirmative to question No. 1 above, and assuming that the Circuit
Court does not have discretion to waive this
certification requirement mandated by Section
2-622(a)(2), does the plaintiff’s attorney’s failure
to provide the certification mandate dismissal of
an action with prejudice under Section 2-622(g)?”
Cargill, 818 N.E.2d at 900-901.
The Fourth District reviewed the matter under the de
novo standard and stated that the cardinal rule of statutory
construction is to ascertain and give effect to the intent of the
legislature. Citing People v. Latona, 184 Ill. 2d 260, 269, 703
N.E.2d 901, 906 (1998). According to the court, the words
of a statute are to be given their plain and commonly understood meanings and when the language of a statute is clear
and unambiguous, it will be given effect without resort to the
other tools of statutory construction. Cargill, 818 N.E.2d at
901. The court found that Public Act 90-579, which Governor
Ryan signed into law in May 1998, added to Section 2-622
the requirements that the name and address of the health
professional authoring the report be included in the report
and that an affidavit be included that stated the plaintiff had
not previously voluntarily dismissed an action based on the
same or substantially the same acts. Id. at 903; See also 735
ILCS 5/2-622 (West 2002).
Addressing the first Certified Question, the Fourth District
found that Public Act 90-579 resurrected the amendments to
Section 2-622 that were previously inserted by Public Act
89-7. The court stated that “[w]here statutes are enacted after
judicial opinions are published, it must be presumed that the
legislature acted with knowledge of the prevailing case law.”
Id. at 903, citing People v. Hickman, 163 Ill. 2d 250, 262, 644
N.E.2d 1147, 1153 (1994). Since the General Assembly passed
Public Act 90-579 after the Illinois Supreme Court’s decision
in Best, the court presumed the General Assembly acted with
the knowledge of the Best ruling. Since the language contained
in the version of Section 2-622 provided by P.A. 90-579 was
not specifically held unconstitutional in Best, but merely held
infirm on the principle of severability, the General Assembly
was entitled to re-enact the pre-Best version of Section 2-622
if it chose to do so. Cargill, 818 N.E.2d at 904.
In support of its decision on the first Certified Question, the Fourth District cited the Second District’s ruling
in Giegoldt v. Condell Medical Center, 328 Ill. App. 3d
907, 767 N.E.2d 497 (2002). In finding the physician’s
address was specifically required on a 2-622 reviewing
health professional’s report in Giegoldt, the Second District
recognized the amendatory effect of Public Act 90-579 and
implicitly indicated it resurrected the portions of Section
2-622 struck down by Best. Giegoldt, 767 N.E.2d at 502.
The court in Cargill found that when looking at the plain
language of P.A. 90-579, if a physician’s report is not attached
to the complaint, then the plaintiff must attach an affidavit
indicating he “has not previously voluntarily dismissed an
action based upon the same or substantially the same acts.”
735 ILCS 5/2-622(a)(2) (West 2002). Since the plaintiffs
could not make such a statement in their affidavit, their
complaint was subject to dismissal. Therefore, the court’s
answer to Certified Question No. 1 was “yes.” Cargill, 818
N.E.2d at 905.
Addressing Certified Question No. 2, the Fourth District
found that a trial court has no discretion under Section
2-622 to waive the requirement that a plaintiff’s attorney
certify he has not previously voluntarily dismissed an action
based on the same or substantially the same acts, omissions, or
occurrences. The court stated that “[i]n construing a statute, a
court is not at liberty to depart from the plain language of the
statute by reading into it exceptions, limitations, or conditions
that the legislature did not express.” Id., citing Prairie Rivers
Network v. Illinois Pollution Control Board, 335 Ill. App. 3d
391, 400, 781 N.E.2d 372, 379 (2002).
The court found that the requirements under Section
2-622 are not mere suggestions, but are statutory requirements, which a court cannot alter or waive, but rather must
follow. The court acknowledged that trial courts may grant
plaintiff an extension of time to comply with the requirements
of Section 2-622, but those courts do not have discretion to
overlook a plaintiff’s noncompliance or deem it unnecessary for a plaintiff to follow the statute. Cargill, Cargill, 818
N.E.2d at 905-906. Therefore, the court’s answer to Certfied
Question No. 2 was “no.”
As to Certified Question No. 3, the Fourth District held that
the plaintiff’s attorney’s failure to provide the certification
provided in the statute mandated dismissal of the action with
prejudice under Section 2-622(g) (735 ILCS 5/2- 622(g) (West
2002)). Id. While a plaintiff’s failure to file a certificate under
37
IDC Quarterly
Medical Malpractice (Continued)
the Act shall be grounds for dismissal under Section 2-622(g),
the court generally has the discretion to dismiss an action with
or without prejudice. Id., citing Ingold v. Irwin, 302 Ill. App.
3d 378, 383, 705 N.E.2d 135, 139 (1998). However, under
the facts of the case before it, the Fourth District found that
the reason no affidavit regarding prior dismissal was filed was
because the plaintiffs could not file such an affidavit since the
matter had been previously voluntarily dismissed. Dismissing
their complaint without prejudice could not “change that fact
nor cure the defect in their complaint.” Cargill, 818 N.E.2d at
906. Thus, the Fourth District’s answer to answer to Certified
Question No. 3 was “yes,” and the case was remanded to the
trial court for further proceedings.
The Fourth District’s opinion in Cargill will have limited
effect on those cases with motions filed in response to the
re-instated requirements of Section 2-622 under P.A. 90-579.
Courts will most likely find the complaints insufficient under
Section 2-622, but dismiss them without prejudice. Reports
that lack the reviewing health professionals name and address
can be quickly amended and the cases re-filed. Likewise, attorneys with cases that have not previously been voluntarily
dismissed and who simply overlooked the requirement for an
affidavit attesting to such facts will prepare that affidavit and
re-file the case.
Occasionally, a defense attorney may be able to use the
name and address provided to demonstrate that the physician
named in the report fails to meet the requirements set forth
in Section 2-622 and then seek dismissal of the complaint on
that basis. To the fortunate few who are granted a dismissal
with prejudice as a result of the Fourth District’s holding in
Cargill, enjoy the moment and hope that Section 2-622 does
not draw the ire of certain lobbyists in Springfield the way
the Hospital Licensing Act previously has. If that happens,
we can probably expect Section 2-622’s language to return
to the days before tort reform, or worse.
Evidence and Practice Tips
By: Joseph G. Feehan
Peoria
Court Holds that Each Plaintiff in a
Multiple-Plaintiff Civil Case is Entitled to
One Motion for Substitution of Judge
as of Right Under Section 2-1001(a)(2)
of the Code of Civil Procedure
(735 ILCS 5/2-1001(a)(2))
In Aussieker v. City of Bloomington, 355 Ill. App. 3d
498, 822 N.E.2d 927, 291 Ill. Dec. 52 (4th Dist. 2005), the
Fourth District Appellate Court held that each plaintiff in a
multiple-plaintiff civil case is entitled to one motion for substitution of judge as a matter of right pursuant to 735 ILCS
5/2-1001(a)(2). The plaintiffs consisted of 17 taxpayers and
real estate owners in the city of Bloomington (“City”). The
plaintiffs alleged that the City did not exercise appropriate
diligence in soliciting bids for the construction of a municipal
arena. The City filed a motion to dismiss, and a hearing was
scheduled before Judge Charles Reynard. Before the hearing
was held, the plaintiff, James Elder, filed a motion to substitute Judge Reynard pursuant to Section 2-1001(a)(2). Judge
Reynard granted Elder’s motion, and the case was reassigned
to Judge Donald Bernardi.
About the Author
Joseph G. Feehan is a partner in the Peoria office of Heyl,
Royster, Voelker & Allen, where he concentrates his practice
in commercial litigation, products liability and personal
injury defense. He received his B.S. from Illinois State
University and his J.D. (Cum Laude) from the Northern
Illinois University College of Law. Mr. Feehan is a member
of the ISBA Tort Law Section Council and is also a member
of the Peoria County, Illinois State and American Bar Associations. He can be
contacted at [email protected]
38
Second Quarter 2005
The City then set a hearing on its motion to dismiss before
Judge Bernardi. Two days before the hearing, the plaintiff,
Arnold Zimmer, filed a motion for substitution of judge as
of right pursuant to Section 2-1001(a)(2). The City objected
to Zimmer’s motion, contending that it was brought for the
purpose of delay and that Zimmer had not preserved his right
to file a second motion for substitution of judge because he
did not previously inform the court that he was not joining in
Elder’s previous motion for substitution.
Judge Bernardi denied Zimmer’s motion for substitution
of judge. The court found that the 17 named individual plaintiffs constituted one party and thus collectively were entitled
to only one motion for substitution of judge under Section
2-1001(a)(2). The trial court further explained that a case
involving multiple plaintiffs can be distinguished from one
involving multiple defendants, who are considered separate
parties entitled to multiple motions for substitution under Illinois law.
On appeal, the First District Appellate Court reversed,
finding that the plain language of the statute (Section
2-1001(a)(2)) provides that each party shall be entitled to one
substitution of judge without cause as a matter of right. The
court also noted that this statute is “to be liberally construed,
and where the conditions are met, the trial court has no discretion to deny the request unless it is shown that the motion
was made simply to delay or avoid trial.” 355 Ill. App. 3d at
929 (citations omitted).
The Aussieker court also rejected the City’s argument that
a case involving multiple plaintiffs should be treated differently than a case involving multiple defendants in applying
Section 2-1001(a)(2). The Aussieker court stated:
I n this case, the defendant attempts to distinguish multiple plaintiffs from multiple defendants for purposes of
applying Section 2-1001(a)(2) of the Civil Code. We are
not persuaded. The statute refers to “each party” without
differentiating between plaintiffs and defendants, and
the statute is silent with respect to situations involving
multiple plaintiffs and multiple defendants. (Citation
omitted). Because the statute does not define the word
“party,” it must be given its plain and ordinary meaning. The word “party” is defined as “[o]ne by or against
whom a lawsuit is brought.” Black’s Law Dictionary,
1154 (8th ed. 2004). Each of the 17 plaintiffs in this case
is bringing a lawsuit against the city and, according to
the plain and ordinary meaning of the word “party,”
each plaintiff should be entitled to file a motion for
substitution of judge under Section 2-1001(a)(2) of the
Civil Code. Id.
The City also argued that a civil defendant’s constitutional
right to obtain “prompt justice” would be denied because numerous motions for substitution of judge in multiple-plaintiff
cases would result in substantial delay in the resolution of a
civil case. Interestingly, the Aussieker court did not necessarily disagree with the City’s position, but stated that the City’s
remedy is to contact the legislature and urge it to revise the
language contained in Section 2-1001(a)(2). The Aussieker
court stated:
Whatever merit the city’s assertions may have, our duty
is to apply statutes as they are written. The city should
address its proposed change in the law to the institution
in this state charged with making public policy – the
General Assembly. Id. at 930.
Court Properly Barred Plaintiff’s Expert’s
Testimony Because Backward Extrapolation
Methodology is Not Generally Accepted
in Scientific Community
In Agnew v. Shaw, 823 N.E.2d 1046, 291 Ill. Dec. 460 (1st
Dist. 2005), the plaintiff filed a medical malpractice action
alleging a failure to timely diagnose occult breast cancer. The
plaintiff filed suit against her internist, Dr. Charles Shaw; her
radiologist, Dr. Henry Wiggins; and Dr. Wiggins’ corporation,
Universal Radiology, Ltd. After a trial, the jury returned a
verdict in favor of the defendants.
At trial, the defendant, Dr. Shaw, testified that he had treated
the plaintiff, Rita Agnew, on a regular basis since December
1990. Dr. Shaw treated the plaintiff for a variety of ailments,
including thyroid problems, high blood pressure, diabetes,
high cholesterol and other chronic health problems. Dr. Shaw
ordered the plaintiff’s first mammogram in January of 1991,
which was normal. Dr. Shaw testified that he typically relied
on the radiological group to interpret the mammograms. The
plaintiff underwent mammograms every six months from 1991
through April 1997. In April 1997, the plaintiff underwent a
mammogram that revealed cancerous lymph nodes. A biopsy
revealed that the plaintiff had a rare form of cancer known as
occult primary breast cancer. Thereafter, the plaintiff underwent surgery to remove the cancerous lymph nodes.
Plaintiff’s expert, Dr. Schapira, testified at his deposition
that in his opinion, the plaintiff had cancer in her lymph nodes
a year to a year and a half before it was detected on the mammogram in April 1997. In other words, Dr. Schapira believed
39
IDC Quarterly
Evidence and Practice Tips (Continued)
that the plaintiff had cancerous lymph nodes present when
mammograms were taken in 1995 and 1996.
Prior to going on the stand, Dr. Schapira was brought into
the judge’s chambers and examined by counsel for the plaintiff
and the defendants concerning his anticipated testimony on the
linear progressive growth of lymph nodes. Dr. Schapira stated
that because the plaintiff had nine cancerous lymph nodes in
April 1997, he could “extrapolate backwards” and determine
that the plaintiff had one cancerous lymph node in August of
1995 and two to three cancerous lymph nodes in February of
1996. Dr. Schapira testified in chambers that the basis of his
opinions was his observation of patients and literature on the
growth of breast cancer. However, he conceded that he could
not identify a specific piece of scientific literature to support
his opinion. He stated that the basis for his opinions was that
the cancer “would not stand still for that period of time.” 823
N.E.2d at 1050. Dr. Schapira testified that there is a reasonable
correlation between the size of the tumors and the changes
in the size of the tumors over time and the amount of lymph
node involvement. However, when concluding his testimony
in chambers, Dr. Schapira admitted that there is no scientific
literature to support his theory concerning the systematic
sequence of spread of occult primary breast cancer.
After Dr. Schapira completed his testimony in chambers,
the trial judge did not rule on defendants’ Frye challenge.
The trial judge then allowed Dr. Schapira to take the stand,
without further objection from the defendants’ counsel. During
Dr. Schapira’s testimony before the jury, plaintiff’s counsel
elicited extrapolation opinions from him over the defendants’ objections. The parties then returned to chambers and
plaintiff’s counsel objected to any further challenges to Dr.
Schapira’s testimony, contending that the trial court should
not conduct a Frye hearing on a “piecemeal” basis. The trial
court overruled the plaintiff’s objection and explained that
there were no objections when the matter was first raised
and that all counsel were previously instructed that the court
planned to conduct the Frye hearing during the progress of
the trial.
After the plaintiff rested her case, the Frye proceedings
continued in chambers. Defendants’ proximate cause expert,
Dr. Keith Micetich, testified in chambers that he had read Dr.
Schapira’s deposition and that Dr. Schapira’s method of backward extrapolation is not generally accepted in the medical
oncologic or scientific community. Dr. Micetich also testified
that there was no literature, clinical studies, or research that
looked backwards in a patient with occult breast cancer and
calculated the number of cancerous lymph nodes at a given
point in time. When Dr. Micetich concluded his testimony
40
in chambers, the court granted the defendants’ motion in
limine. The trial court reasoned that the plaintiff had not met
her burden of proving that Dr. Schapira’s methodology was
generally accepted in the scientific community. The court
determined that it is not the court’s role to decide whether
a certain methodology is logical or not, but whether that
methodology is generally accepted in the relevant scientific
community, which in this case was the oncologic community.
After the trial court issued its ruling, the plaintiff moved for
a mistrial and again argued that the Frye hearing should not
“Dr. Schapira stated that because
the plaintiff had nine cancerous
lymph nodes in April 1997, he
could ‘extrapolate backwards’
and determine that the plaintiff
had one cancerous lymph node
in August of 1995 and two to
three cancerous lymph nodes in
February of 1996.”
have been conducted in a piecemeal fashion. The court denied
the plaintiff’s motion and again reminded plaintiff’s counsel
that the court had advised the parties that it would conduct
the Frye hearing in a piecemeal manner and that there was no
objection from plaintiff’s counsel at that time. The trial judge
then instructed the jury to disregard Dr. Schapira’s testimony
that the plaintiff had cancerous lymph nodes as early as August
1995.
On appeal, the plaintiff contended that Dr. Schapira’s extrapolation opinions should have been allowed under the Frye
test and the Illinois Supreme Court’s ruling in Donaldson v.
Central Illinois Public Service Co., 199 Ill. 2d 63, 767 N.E.2d
314, 262 Ill. Dec. 854 (2002). The Agnew court recognized
that Donaldson approved the extrapolation method utilized
by the plaintiff’s expert in that case to link the cause of the
Second Quarter 2005
plaintiff’s rare cancer to coal tar. However, the Agnew court
distinguished the Donaldson decision because Dr. Schapira
had conceded that he could not point to any scientific literature
to support his extrapolation methodology. The Agnew court
stated:
elying on Donaldson, the plaintiff first assigns error to
R
the trial court’s order excluding the doctor’s backward
extrapolation opinion by arguing that the trial court
focused on Dr. Schapira’s conclusions rather than his
methodology. We disagree. The trial record is clear
that the trial court specifically addressed this issue in
its ruling after the Frye hearing, when it stated that its
ruling was not based upon whether it agreed with Dr.
Schapira’s conclusions but that its ruling was based
upon whether it agreed with Dr. Schapira’s methodology. The trial court also stated that based upon Dr.
Schapira’s testimony and the testimony of Dr. Rossof and Dr. Micetich, the methodology of backward
extrapolation in occult breast cancer patients was not
generally accepted. In fact, in Donaldson, the court
specifically noted that “all of plaintiffs’ experts testified that they utilized the method of extrapolation, and
that the technique is generally accepted in their fields.”
199 Ill. 2d at 87-88, 262 Ill. Dec. 854, 767 N.E.2d 314.
Conversely, here the plaintiff’s doctors did not testify
that they utilized a backward extrapolation methodology
or that Dr. Schapira’s method of backward extrapolation
was generally accepted in the oncologist community. In
fact, the testimony of Dr. Schapira, the plaintiff’s only
causation expert, failed to establish that the methodology of backward extrapolation in occult breast cancer
patients is generally accepted. We find, after reviewing
this record, that backward extrapolation in occult breast
cancer cases is a methodology which is only used by
the plaintiff’s expert.
Plaintiff’s insistence that this case falls within the purview of the rules delineated by the Donaldson court
is misplaced. While the extrapolation methodology
was approved when used to determine what caused
the cancer in the Donaldson plaintiffs, that does not
mandate that this court must find that the extrapolation
methodology is acceptable in every case. See Kane v.
Motorola, Inc., 335 Ill. App. 3d 214, 268 Ill. Dec. 688,
779 N.E.2d 302 (2002) (courts may reject an expert’s
conclusions when his extrapolation methodologies are
unsound or when the scientific data upon which they rely
is not related to the conclusion reached). Dr. Schapira
admits that his methods are not only new, but that there
is no support in the literature or from any other oncologists regarding this methodology. Therefore, applying
Donaldson and Frye to the facts in this case, we cannot
conclude that the trial court abused its discretion when it
determined that Dr. Schapira’s backward extrapolation
methodology was not generally accepted in the scientific
community. Donaldson, 199 Ill. 2d at 77, 262 Ill. Dec.
854, 767 N.E. 2d 314; Frye, 293 F at 1014. Agnew, 823
N.E.2d at 1053-54.
The Agnew court also rejected the plaintiff’s argument that
the defendants’ Frye challenge was untimely because it was
raised in a motion in limine, just prior to trial. The plaintiff
contended that the defendants’ Frye objection was tardy
because it was tantamount to a dispositive motion. The First
District Appellate Court disagreed stating:
In this case, both parties presented pretrial motions,
including motions in limine, before the trial and each
side had an opportunity to raise objections during a
pretrial hearing. In addition, the trial court did not
convert the defendants’ motion in limine into a motion
for summary judgment, did not bar all the plaintiff’s
expert’s opinion testimony or enter a judgment for the
defendants . . . Here, the trial court only barred that
portion of the plaintiff’s expert’s testimony regarding
backward extrapolation.
***
. . . with regards to the Frye objections being presented
in a motion in limine, we find that this practice has not
been held improper by this court. See Petre, 331 Ill.
App. 3d at 945, 265 Ill. Dec. 125, 771 N.E.2d 1084
(Frye evidentiary hearing conducted where motion in
limine brought); People v. Taylor, 335 Ill. App. 3d 965,
967, 270 Ill. Dec. 361, 782 N.E.2d 920 (2002) (Frye
motion presented as motion in limine). We agree with
the courts in Petre and Taylor that Frye objections are
properly raised in motions in limine. . . . Therefore,
we find that the trial court did not abuse its discretion
or deny the plaintiff a fair trial when it permitted the
defendants to raise a Frye objection in a motion in limine, or when it struck the plaintiff’s expert’s backward
extrapolation testimony. Id. at 1055.
41
IDC Quarterly
Evidence and Practice Tips (Continued)
Trial Court Should Have Barred Opinion
Testimony of Neurosurgeon Due to
Defense Counsel’s Petrillo Violation
In Moss v. Amira, Nos. 1-03-2766, 1-03-2805, 2005 WL
678465 (1st Dist. March 24, 2005), the plaintiff, Richard
Moss, alleged that he was injured when his car was rearended by the defendant, Jennifer Amira’s vehicle. Thereafter,
the plaintiff was treated by several doctors for a neck injury,
including neurosurgeon Dr. Richard Moser. On February 12,
2002, the defendant’s attorney took the discovery deposition
of Dr. Moser. The defendant then served the plaintiff with
Answers to Illinois Supreme Court Rule 213 Interrogatories.
The Answers to Rule 213 Interrogatories included a detailed
summary of several treating doctors’ opinions, including Dr.
Moser’s opinions. Dr. Moser had testified at his deposition
that the plaintiff had significant pre-existing arthritis in his
neck and that he could not render an opinion on whether the
plaintiff needed surgery or would need surgery in the future.
Thereafter, defense counsel arranged the evidence deposition of Dr. Moser. In advance of the evidence deposition,
defense counsel sent Dr. Moser a notice of his evidence deposition, a copy of Dr. Moser’s discovery deposition transcript,
and the defendant’s Answers to Rule 213 Interrogatories.
Defense counsel sent these documents to Dr. Moser along
with a cover letter that stated:
My firm represents the Defendant in the abovecaptioned lawsuit. Please find enclosed a Notice of
Evidence Deposition for May 12, 2003.
For your convenience, I am enclosing a copy of your
discovery deposition transcript and Defendant’s Answers to 213 Interrogatories wherein I disclose your
expected opinions in this matter. The check for your
evidence deposition will be forwarded under separate
cover. 2005 WL 678465 at *2.
Defense counsel also sent a copy of his letter to plaintiff’s counsel.
Prior to trial, the plaintiff filed a motion in limine to bar Dr.
Moser’s testimony, contending that defense counsel’s letter to
Dr. Moser constituted a Petrillo violation. (Petrillo v. Syntex
Laboratories, Inc., 148 Ill. App. 3d 581, 499 N.E.2d 952,
102 Ill. Dec. 172 (1st Dist. 1986)). The trial court denied the
motion, finding that defense counsel’s actions did not rise to
42
the level of a Petrillo violation. The defendant admitted liability so the only issue at trial was the extent of the plaintiff’s
damages. At the conclusion of the trial, the jury returned a
verdict in favor of the plaintiff in the amount of $12,929.50.
Moss filed a post-trial motion to set aside the jury’s verdict as
to damages and requested that the court order a new trial on
damages only. Moss argued that the trial court erred when it
refused to bar Dr. Moser’s testimony based on defense counsel’s Petrillo violation. The trial court denied the plaintiff’s
post-trial motion and the plaintiff appealed.
On appeal, the plaintiff argued that defense counsel’s letter
to Dr. Moser was not a mere de minimis contact, solely for
the purpose of scheduling an evidence deposition. Rather,
the plaintiff argued that defense counsel’s letter attempted to
influence Dr. Moser’s evidence deposition testimony by suggesting that Dr. Moser review his discovery deposition and
the defendant’s Answers to Rule 213 Interrogatories. The First
District Appellate Court agreed and reversed the trial court.
The Moss court stated:
. . . [T]his was not a de minimis communication regarding incidental matters preliminary to a deposition, such
as scheduling. Here, the communication that occurred
between defense counsel and Dr. Moser could be interpreted as an attempt on the part of defense counsel to
attempt to alert Dr. Moser as to what his future testimony
should be. This is clearly improper.
***
Under Petrillo, defense counsel may communicate with
a plaintiff’s treating physician only by means of formal
discovery as outlined in Supreme Court Rule 201. (Citation omitted). Defense counsel does not have the right,
as Amira suggests, to “prepare” plaintiff’s treating physician for a deposition. This is clearly improper. Id. at *7.
The Moss court ordered that the trial court sanction the defendant by barring all of Dr. Moser’s testimony on retrial.
Second Quarter 2005
Featured Article
Appellate Court of Illinois
Affirms Application
of Actual Innocence
Rule in Legal Malpractice
Action Arising from
Underlying Criminal
Plea Agreement
By: John D. LaBarbera
O’Hagan, Smith & Amundsen, L.L.C.
Chicago
The Appellate Court of Illinois recently affirmed the application of the actual innocence rule in a legal malpractice action
alleging professional negligence arising from legal advice
provided to a criminal defendant accepting a plea agreement.
Paulsen v. Cochran, No. 1-04-1325, 2005 Ill. App. LEXIS
226, 2005 WL 589308 (1st Dist. March 14, 2005). In that
case, Paulsen, a Chicago resident, was arrested and charged in
Arizona in May 2002 with conspiracy to transport marijuana,
a Class 2 felony. Paulsen sought representation through the
Chicago law office of the Cochran firm. The Cochran firm
referred Paulsen to an attorney outside the firm, whom Paulsen
claims subcontracted the defense to a Missouri lawyer.
Paulsen entered into the plea agreement dated August 30,
2002, in which he agreed to plead guilty under various sections
of the Arizona Criminal Code. He signed the agreement and
initialed the numbered paragraphs. The paragraphs he initialed
included statements that Paulsen had discussed the case and
his rights with his lawyer and that he signed the agreement
voluntarily. The plaintiff was thereafter sentenced to one
year in jail, 850 hours of community service and $88,500
of fines and surcharges. He subsequently filed a petition for
postconviction relief seeking to reduce the amount in fines
and surcharges. The prosecutor’s office conceded that the
fine in the plea agreement was miscalculated, resulting in a
reduction of $38,500 and leaving him with a fine of $50,000.
Paulsen subsequently filed a malpractice action against the
defendant attorneys, alleging that the attorneys erred in providing legal services: (1) by failing to contest the forfeiture of certain money and personal property; (2) including an improper
fine in the plea agreement as shown by the fact that the court
reduced the fine; and (3) that with proper representation, he
would have received only probation. The trial court dismissed
the plaintiff’s complaint applying the actual innocence rule.
In short, the trial court ruled that because the plaintiff could
not and did not plead his innocence of his crimes, the plaintiff
was barred from pursuing his legal malpractice claim.
On appeal, the plaintiff argued that he should be compensated by the defendants because the plea agreement caused
him to overpay his debt to society and receive an excessively
harsh sentence. The plaintiff further contended that neither
Illinois law nor public policy required proof of a criminal defendant’s actual innocence to state a cause of action for legal
malpractice where, as here, the malpractice was grounded on
a claim other than a wrongful conviction.
The court rejected the plaintiff’s argument, holding that
the trial court properly applied the actual innocence rule in
dismissing the case. The court noted that under Illinois law, a
showing of actual innocence is required for a plaintiff to state
a cause of action for malpractice against his former criminal
defense attorney. The court further noted that Illinois courts
thus far recognize a single exception to the application of
the actual innocence rule. That exception applies where the
criminal defense attorney breaches his fiduciary duties by
intentionally undermining his own client. This intentional
breach of fiduciary duty is described by the Illinois courts as a
betrayal. The court, in analyzing the question presented by the
plaintiff in opposition to the application of the rule noted that
the plaintiff’s claim was not for the type of betrayal required
to trigger the exception.
About the Author
John D. LaBarbera is an associate with O’Hagan, Smith
& Amundsen, L.L.C. His practice includes the defense of
professionals, including attorneys, accountants and insurance brokers. He received his J.D. from the Illinois Institute
of Technology, Chicago-Kent College of Law in 2001.
43
IDC Quarterly
Innocence Rule (Continued)
Finally, the court noted that although plea agreements exist
in the criminal justice structure, they are governed to some
extent by contract law principles. An attempt by a criminal
defendant to unilaterally modify the provisions in a plea
agreement to which he agreed “flies in the face of contract law
principles.” 2005 WL 589308 at *8 (quoting People v. Evans,
174 Ill. 2d 320, 327, 673 N.E.2d 244, 220 Ill. Dec. 332 (1996)).
In fact, by signing the plea agreement and accepting the terms
of the agreement, Paulsen admitted that the substantive terms
of the plea agreement were all he was entitled to expect from
the government. Following the reasoning of the majority of
jurisdictions, the court found that the cause of the plaintiff’s
loss of property was his intentional criminal conduct, not the
negligence of his defense attorney.
ADDRESSES CHANGE . . .
ADDRESS
changes
PEOPLE MOVE
44
and of course we continue to
have new members.
We can all help to conserve
dollars if we remember to
Technology Law
By: Michael C. Bruck
Crisham & Kubes, Ltd.
Chicago
“May” is Sounding More Like
“Shall” When Awarding Fees in
Certain Copyright Cases
Historically, copyright litigation has proved to be expensive
and time-consuming. In addition, until recently, the ability of a
prevailing party to recover its fees had been, at best, uncertain.
Therefore, many plaintiffs with valid, low-value infringement
claims were unwilling or financially unable to litigate their
claims. Similarly, many defendants settled frivolous claims
for nuisance value to avoid the cost of litigation. In either
event, it is arguable that the Copyright Act (17 U.S.C. § 501
et seq.) was not serving its purpose by protecting the rights
of property owners and preventing unwarranted claims.
The Seventh Circuit’s recent decisions in Woodhaven
Homes & Realty, Inc. v. Hotz, 396 F.3d 822 (7th Cir. 2005)
and Assessment Technologies of WI, LLC v. WIREdata, Inc.,
361 F.3d 434 (7th Cir. 2004), have changed the landscape and
given incentive for the full adjudication of copyright claims
by suggesting that courts, in exercising their discretion to
enter a fee award, should apply a presumption in favor of
awarding attorney’s fees in certain cases. Specifically, fees
to a prevailing party are now presumed in cases where the
advise of an address change.
Call (1-800-232-0169) or
Fax (217-636-8812) the
IDC Office with your
mailing address or phone number changes.
About the Author
Michael C. Bruck is a partner in the Chicago law firm
of Crusham & Kubes, Ltd. He is a trial lawyer focusing
on the defense of professionals in malpractice actions,
commercial cases and intellectual property litigation. Mr.
Bruck received his B.S. from Purdue University in 1984
and his J.D. from DePaul College of Law in 1988. He is a
member of DRI, IDC, ISBA, CBA and The Illinois Society
of Trial Lawyers.
Second Quarter 2005
monetary stakes are small and are strongly presumed for all
prevailing defendants regardless of the monetary value of
the dispute. Woodhaven Homes, 396 F.3d at 824; Assessment
Technologies, 361 F.3d at 437. These decisions represent
a significant change for plaintiffs considering whether or
not to bring a small-dollar copyright claim, as most are,
and for defendants considering whether to defend or settle
a copyright claim. However, while this approach is likely
sound economic policy, it is unclear whether this “uneven”
interpretation would be affirmed if reviewed by the Supreme
Court.
The Copyright Act of 1976 (the “Act”), 17 U.S.C. § 501 et
seq., provides for a discretionary award of fees to the prevailing party. 17 U.S.C. § 505. Specifically, it provides in pertinent
part that in any copyright infringement action: “The court
may . . . award a reasonable attorney’s fee to the prevailing
party as part of the costs.”
In early rulings on the act’s fee-shifting structure, certain
circuits applied an uneven “dual” standard under which prevailing plaintiffs were generally awarded attorney’s fees as a
matter of course and prevailing defendants had to show that
the original suit was frivolous or brought in bad faith in order
to recover fees. See, McCulloch v. Albert E. Price, Inc., 823
F.2d 316, 323 (9th Cir. 1987). Other circuits applied an “evenhanded” approach where no distinction was made between
prevailing plaintiffs and prevailing defendants. See, Lieb v.
Topstone Industries, Inc., 788 F.2d 151, 156 (3rd Cir. 1986).
The U.S. Supreme Court resolved this split in the circuits
over the treatment of fee claims in Fogerty v. Fantasy, Inc.,
510 U.S. 517 (1994), a case involving John Fogerty’s successful defense of a claim that his song, “Old Man Down the
Road” was merely a copy of “Run Through the Jungle” with
new words. In Fogerty v. Fantasy, Inc., the court noted:
[D]efendants who seek to advance a variety of meritorious copyright defenses should be encouraged to litigate
them to the same extent that plaintiffs are encouraged to
litigate meritorious claims of infringement. In the case
before us, the successful defense of “The Old Man Down
the Road” increased public exposure to a musical work
that could, as a result, lead to further creative pieces.
Thus a successful defense of a copyright infringement
action may further the policies of the Copyright Act
every bit as much as a successful prosecution of an
infringement claim by the holder of a copyright.
Id. at 527.
Accordingly, in Fogerty v. Fantasy, Inc., the court held that
prevailing plaintiffs and prevailing defendants are to be treated
alike and that attorney’s fees are to be awarded to prevailing
parties only as a matter of the court’s discretion. Id. at 534.
The court further noted that there is no precise rule or formula
for making these determinations, but gave a nonexclusive list
of factors for a court to consider in its equitable discretion.
Id. at 535. These factors included “frivolousness, motivation, objective unreasonableness (both in the factual and in
the legal components of the case) and the need in particular
circumstances to advance considerations of compensation and
deterrence.” Id. (quoting Lieb v. Topstone Industries, Inc., 788
F.2d 151, 156 (1986)).
In recent decisions, the Seventh Circuit has endeavored to
simplify this nonexclusive list. See, Gonzales v. Transfer Technologies, Inc., 301 F. 3d 608, 609 (7th Cir. 2002); Assessment
Technologies of WI, LLC v. WIREdata, Inc., 361 F. 3d 434
(7th Cir. 2004). The Seventh Circuit’s latest pronouncements
are particularly important to litigants involved in a copyright
claim.
In Assessment Technologies, the court found that the two
most important considerations in determining whether to
award attorney’s fees in a copyright case are “the strength of
the prevailing party’s case and the amount of damages or other
relief the party obtained.” 361 F. 3d at 436. To demonstrate its
reasoning, the court first analyzed cases on divergent ends of
the spectrum. Specifically, the court noted that in a close case
where the plaintiff obtained generous damages or injunctive
relief of substantial monetary value, there was no urgent need
to add an award of attorney’s fees. Id. at 437. Conversely, if
the claim or defense was frivolous and the prevailing party
obtained no relief at all, the case for awarding attorney’s fees
was compelling. Id.
In simplifying the list of Fogerty factors, the court next
addressed the situation in which the prevailing plaintiff obtained only a small award of damages. Id. It had noted a prior
case, “the smaller the damages, provided there is a real, and
especially a willful, infringement, the stronger the case for an
award of attorney’s fees . . . [W]e go so far as to suggest, by
way of refinement of the Fogerty standard, that the prevailing
party in a copyright case in which the monetary stakes are
small should have a presumptive entitlement to an award of
attorney’s fees.” Id. at 437 (quoting Gonzales, 301 F.3d 608,
610 (7th Cir. 2002).
To further simplify the list of Fogerty factors, the Seventh
Circuit also addressed the case of prevailing defendants. It
held that “when the prevailing party is the defendant, who
by definition receives not a small award but no award, the
presumption in favor of awarding attorney’s fees is very
strong [citation omitted]. For without the prospect of such an
45
IDC Quarterly
Technology Law (Continued)
award, the party might be forced into a nuisance settlement
or deterred altogether from exercising his rights.” Id. at 437.
Simply, “[t]he point is only that when a meritorious claim
or defense is not lucrative, an award of attorneys’ fees may
be necessary to enable the party possessing the meritorious
claim or defense to press it to a successful conclusion rather
than surrender it because the cost of vindication exceeds the
private benefit to the party.” Id.
The Seventh Circuit recently revisited this issue and reaffirmed its position in Woodhaven Homes & Realty, Inc. v.
Hotz, 396 F. 3d 822 (7th Cir. 2005). In Woodhaven Homes,
the Hotzes paid Woodhaven $1,500 for customized blueprints
for the construction of a home. 396 F.3d at 823. The Hotzes
took the plans to another builder, Robbins, to have the home
constructed. Id. at 824. Woodhaven sued, claiming copyright
infringement. Id. The district court granted the Hotzes’ summary judgment on the copyright claim, but denied them an
award of attorney’s fees under the act. Id. On review, the 7th
Circuit reversed the denial of attorney’s fees and remanded
the case to the district court to award “reasonable fees” in
favor of the Hotzes. Id.
In reaching its conclusion in Woodhaven Homes, the Seventh Circuit noted the Fogerty factors and its ruling in Assessment Technologies where “we held that prevailing defendants
in copyright cases, like Robbins, are presumptively entitled
(and strongly so) to recover attorney fees.” Woodhaven
Homes, 396 F.3d at 824. The court further noted that “[i]n this
case, like Assessment Technologies, awarding attorney fees is
appropriate because Robbins ‘could not obtain an award of
damages from which to pay his lawyer no matter how costly
it was for [it] to defend against the suit.’” Id. (quoting Assessment Technologies, 361 F.3d at 437). Accordingly, defendants
such as Robbins in Woodhaven Homes, and their insurers, no
longer must face the Hobson’s choice of paying to exercise
their rights with little hope of recovering fees if successful,
or paying a nuisance settlement to limit the exposure.
In simplifying and refining the Fogerty factors, the Seventh
Circuit has added a degree of certainty to the prospect of a fee
award. This added certainty regarding the awarding of fees
likely will have the dual effect of both discouraging the filing
of frivolous claims and encouraging the quick resolution of
meritorious claims. Plaintiffs will be more selective about the
infringement claims they bring because, if unsuccessful, they
likely will be responsible for defendant’s attorney’s fees. Additionally, defendants will be more reluctant to offer nuisance
settlements to avoid the cost of litigation on frivolous claims
because they likely will be reimbursed for their attorney’s
fees. Further, pending small-value claims may be resolved
46
more quickly. With a presumption that prevailing plaintiffs
are entitled to attorney’s fees, defendants may be more willing to settle legitimate claims quickly, thus avoiding the extra
expense of plaintiff’s attorney’s fees.
The Seventh Circuit’s new interpretation appears to create a win-win situation, by encouraging the filing and quick
resolution of meritorious copyright infringement claims while
simultaneously discouraging frivolous claims and defenses.
However, this new interpretation could be short-lived.
In Fogerty, the Supreme Court explicitly rejected an interpretation of 17 U.S.C. § 505 that created an uneven standard.
Specifically, it rejected a standard that encouraged the award
“Simply, ‘[t]he point is only that
when a meritorious claim or defense is not lucrative, an award
of attorneys’ fees may be necessary to enable the party possessing the meritorious claim or
defense to press it to a successful
conclusion rather than surrender
it because the cost of vindication
exceeds the private benefit to the
party.’ ”
of attorney’s fees to prevailing plaintiffs while it discouraged fees for prevailing defendants. The Seventh Circuit’s
interpretation discourages fees for prevailing plaintiffs in big
money cases and favors prevailing defendants over prevailing small-value plaintiffs. Although the reasoning behind the
Seventh Circuit’s uneven interpretation is far more persuasive
and makes more economic sense than past interpretations,
Second Quarter 2005
this standard still disproportionately favors one party and it
is unclear whether, in light of Fogerty, the Supreme Court
would affirm this interpretation if reviewed.
In conclusion, fee awards in copyright cases historically
have tended to be reserved for prevailing plaintiffs as a matter of course and prevailing defendants only where plaintiff’s
claims were frivolous or in bad faith. The Fogerty court leveled
the playing field for plaintiffs and defendants, explicitly rejecting uneven standards. Now, recent Seventh Circuit decisions
encourage adjudication of meritorious claims and defenses
with a presumption in favor of awarding fees to prevailing
plaintiffs in small stakes cases, and a very strong presumption in favor of awarding fees to prevailing defendants. The
likely result of this simplification in the interpretation of the
fee-shifting provision of the Copyright Act is greater clarity
of intellectual property rights by encouraging the adjudication
of meritorious claims and defenses as opposed to forgoing
claims or succumbing to nuisance settlements. However,
because of the apparent uneven standard, this interpretation
could be finite if reviewed by the U.S. Supreme Court.
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47
IDC Quarterly
Recent Decisions
By: Stacy Dolan Fulco
Cremer, Kopon, Shaughnessy & Spina, LLC
Chicago
Allocation of Fault Under Section 2-1117
and Inclusion of Settling Parties
on Verdict Form
Skaggs v. Senior Services of Central Illinois, Inc., 2005
WL 245758 (4th Dist., January 27, 2005).
The plaintiff, Anna Skaggs, hired defendant, Help at Home,
to take her to vote at a building occupied by defendant, Senior
Services. Help at Home’s employee drove the plaintiff to the
building and parked the van near a depression in the parking
lot. When the plaintiff finished voting and attempted to get
back into the van, she fell and broke both of her ankles. The
plaintiff sued Senior Services and Help at Home for negligence.
Before the plaintiff’s complaint was filed, Help at Home
filed a petition for bankruptcy. The bankruptcy court later
granted Senior Services’ petition for contribution against
Help at Home. In the circuit court, Senior Services also filed
a counterclaim for contribution against Help at Home.
The plaintiff and Help at Home later negotiated a settlement, which provided that any money actually received by
the plaintiff would be allowed as a credit against liability that
might be imposed upon Senior Services. A motion was then
filed requesting the circuit court find the proposed settlement
to be in good faith in accordance with the Contribution Act
(740 ILCS 100/0.01 through 5) and bar any claim for contribution or any other claim against Help at Home. Over Senior
Services’ objection, the circuit court found the settlement to
be in good faith. Senior Services appealed the ruling.
After analyzing the Contribution Act, the appellate court
stated that the real issue in this case is the possibility that by
their settlement, Help at Home and the plaintiff destroyed
Senior Services’ right to have the trier of fact consider Help
at Home’s percentage of fault when determining Senior
Services’ liability under Section 2-1117 of the Code of Civil
48
Procedure. (735 ILCS 5/1-1117). Section 2-1117 provides that
in cases such as these: “all defendants found liable are jointly
and severally liable for the plaintiff’s past and future medical
and medically related expenses. Any defendant whose fault,
as determined by the trier of fact, is less than 25% of the total
fault attributable to the plaintiff, the defendants sued by the
plaintiff, and any third-party defendant except the plaintiff’s
employer, shall be severally liable for all other damages.”
(735 ILCS 5/1-1117); Skaggs, 2005 WL 245758 at *5.
The appellate court indicated that under the current
language, there are two possible interpretations of Section
2-1117. The first interpretation is that Section 2-1117 does
not allow for a settling defendant dismissed from the case
to be considered in apportioning liability. A trial court may
consider the settling defendant as no longer a “defendant sued
by the plaintiff.” A second interpretation may be that the settling defendant had actually been sued, and the fact that the
defendant settled does not prevent inclusion for purposes of
Section 2-1117. Skaggs, 2005 WL 245758 at *5.
The appellate court went on to say that if a settling defendant may not be included under Section 2-1117, a plaintiff
could sue two defendants, one who is primarily at fault but
indigent and one who is minimally at fault but wealthy. By
settling with the indigent defendant, the plaintiff could circumvent the application of Section 2-1117, leaving the wealthy
defendant, even though minimally liable, jointly liable for
all damages because the settling defendant’s portion of fault
can no longer be considered. Such an arrangement would
constitute bad faith and collusion as the parties to the settlement would be acting to deprive the non-settling party of its
statutory right to several liability for non-medical expenses.
However, if the non-settling defendant is more than 25% at
fault, there would be no problem with an otherwise “goodfaith” settlement. Id.
About the Author
Stacy Dolan Fulco is an associate at the Chicago law firm
of Cremer, Kopon, Shaughnessy & Spina, LLC. She practices primarily in the areas of premises liability, products
liability and wrongful death defense. Ms. Fulco received
her undergraduate degree from Illinois State University and
her J.D./M.B.A. degree from DePaul University. She is a
member of the IDC.
Second Quarter 2005
Considering these issues, the appellate court determined
that it would be premature to approve the settlement without
an interpretation of Section 2-1117, because it is not clear
whether Senior Services is more than 25% at fault. If Senior Services is more than 25% at fault, then the settlement
would appear to be in “good faith” regardless of the court’s
interpretation of Section 2-1117 as the plaintiff and Help at
Home would not be destroying Senior Services’ rights under
Section 2-1117. However, if Senior Services is less than 25%
at fault, Senior Services’ rights under Section 2-1117 would
be jeopardized if there was a chance Help at Home’s percentage of fault might not be considered for determining Section
2-1117 liability. Id. at *6.
In making its decision, the appellate court looked to the Supreme Court of Illinois’ recognition, prior to the latest revision,
that “the clear legislative intent behind Section 2-1117 is that
minimally responsible defendants should not have to pay entire damage awards.” See, Unzicker v. Kraft Food Ingredients
Corp., 203 Ill. 2d 64, 783 N.E.2d 1024 (2002). The revision
to Section 2-1117 prevents a plaintiff’s employer from being
considered in the apportioning of fault, but the legislative
intent remains the same with respect to minimally responsible defendants. The appellate court believed that forcing a
minimally responsible defendant to shoulder the non-medical
expenses only because the more culpable defendant settled
would allow plaintiffs to circumvent the purpose of the statute.
Skaggs, 2005 WL 245758 at *6.
Based on this analysis, the appellate court determined
that only by interpreting Section 2-1117 to include settling
defendants can Section 2-1117 reinforce the policies of the
Contribution Act. Including settling defendants in apportioning liability does not discourage settlements, but it certainly
better promotes equitable apportionment of damages according to relative fault. The plain language of the statute includes
“defendants sued by the plaintiff.” 735 ICLS 5/2-1117. Even
though a defendant settles with a plaintiff and is dismissed
from the case, that defendant does not lose its status as a defendant sued by the plaintiff. Therefore, the appellate court
held that Section 2-1117 requires the trier of fact to consider
the percentage of fault of settling defendants. In this case,
because Section 2-1117 allowed the trier of fact to consider
Help at Home’s percentage of fault, the appellate court ruled
that the trial court did not abuse its discretion in finding a
good-faith settlement. Id.
Effect of Failure to Comply with Rule 237
Production Request at Arbitration Hearing
Government Employees Insurance Co. v. Smith, 2005 WL
292233 (1st Dist., January 11, 2005).
The plaintiff, Geico, filed a subrogation action against
the defendant, David Smith, for property damage related
to a traffic accident with Rosalyn Walton, a Geico insured.
During the discovery phase of the case, the defendant served
two Rule 237 production requests on Geico. The first request
demanded that Geico produce the claim adjuster at arbitration.
The second request demanded that Geico produce the claim
adjuster and John Ciullo, Geico estimator, at arbitration.
The mandatory arbitration hearing took place and Geico
did not produce anyone at the hearing. The arbitrators unanimously ruled in favor of Geico but indicated in the award
that Geico had acted in bad faith at the hearing for failing to
produce a Rule 237 witness that the defendant requested be
produced.
Geico and the defendant rejected the arbitration award. The
defendant then filed a motion to bar Geico from producing
evidence at trial on the grounds that Geico failed to produce
its employee to testify at the arbitration hearing pursuant to
the Rule 237 notice to produce and because the arbitrators
found Geico to have participated in bad faith at the arbitration hearing. Geico responded that it was not under a duty to
produce Ciullo pursuant to the Rule 237 notice because Ciullo
was not an employee of Geico, but rather, was an employee
of the repair shop. The trial judge granted the defendant’s
motion to bar Geico from presenting evidence at trial. The
defendant then filed a motion for summary judgment, which
was granted, and Geico appealed.
The issue on appeal was whether the trial court’s sanction,
which barred Geico from presenting evidence at trial due to
Geico’s failure to comply with Rule 237, was an abuse of discretion, where the defendant requested that Geico produce its
“claims adjuster” and Geico failed to do so. The granting of the
summary judgment motion was also an issue on appeal. The
appellate court determined that the sanction imposed by the
trial court was pursuant to Rule 237. Government Employees
Insurance Co., 2005 WL 292233 at *5.
Illinois Supreme Court Rule 237(b) states in pertinent part:
“The appearance at the trial of a party or a person who at the
time of trial is an officer, director, or employee of a party may
be required by serving the party with a notice designating the
person who is required to appear. Upon a failure to comply
49
IDC Quarterly
Recent Decisions (Continued)
with the notice, the court may enter any order that is just,
including any order provided for in Rule 219(c) that may be
appropriate.”
Illinois Supreme Court Rule 90(g) provides that Rule 237
is equally applicable to arbitration hearings and trials. See,
Government Employees Insurance v. Campbell, 335 Ill. App.
3d 930, 933, 781 N.E.2d 639 (1st Dist. 2002). Illinois Supreme
Court Rule 91(b) provides that parties to an arbitration must
participate in the proceedings in good faith and in a meaningful manner. See, State Farm Mutual Insurance Co. v. Santiago,
344 Ill. App. 3d 1010, 1013, 801 N.E.2d 142 (1st Dist. 2003).
Finally, Illinois Supreme Court Rule 219(c) states that failure
to comply with a Rule 237(b) notice may include an order
barring the offending party from presenting any evidence or
witnesses. See, Santiago, 344 Ill. App. 3d at 1013.
The appellate court noted that sanctions for failing to comply with a Rule 237 notice are to be imposed when failure to
comply is determined to be unreasonable. A circuit court’s
decision barring a party from presenting evidence at trial
and imposing sanctions is subject to an abuse of discretion
standard of review and an abuse of discretion occurs when
the court’s ruling is arbitrary or exceeds the bounds of reason.
Government Employees Insurance Co., 2005 WL 292233 at
*6; citing Santiago, 344 Ill. App. 3d at 1013, and Campbell,
335 Ill. App. 3d at 933.
In this case, the defendant’s Rule 237 supplemental notice
to produce requested that Geico produce two individuals,
Geico’s claims adjuster and Ciullo. Geico failed to produce
either individual and failed to specifically notify the defendant
that Ciullo was not an employee of Geico. The arbitrators
found Geico to be acting in bad faith because of the absence
of Ciullo but the appellate court indicated that since Cuillo
was not an employee of Geico, that was not a proper basis for
a bad faith finding. However, Geico’s failure to produce the
Geico claims adjuster at the hearing was in violation of Rule
237, even if the arbitrators did not make that explicit finding.
Once the defendant made the motion to bar all evidence
from Geico, the burden was placed on Geico to demonstrate
why its noncompliance with the defendant’s Rule 237 notice
to produce was “reasonable or the result of extenuating circumstances.” Campbell, 335 Ill. App. 3d at 933. The appellate
court noted that Geico produced no evidence with regard to its
noncompliance in producing the claims adjuster either before
the trial court or the appellate court. Government Employees
Insurance Co., 2005 WL 292233 at *7-8.
The appellate court ruled that Geico had an obligation to
produce the claim’s adjuster at the arbitration hearing pursuant
to the Rule 237 notice to produce by the defendant. Therefore,
50
there was no abuse of discretion in the trial court’s order barring Geico from presenting testimony or evidence at trial. In
addition, there was no error in the trial court’s granting of
summary judgment in favor of the defendant. The trial court’s
rulings were affirmed. Id. at *8.
Summary Judgment Appropriate Where
Proximate Cause is Based on Speculation
Mann v. Producer’s Chemical Company, 2005 WL 396584
(1st Dist., February 15, 2005).
The decedent, Brooks Mann, was killed when he was hit by
a car while crossing a street. The decedent and another high
school student, Audrey Fox, were walking home from school
when Fox crossed Route 59 and stopped to sit on a wall on
the other side of the street. Fox then saw the decedent cross
Route 59 in front of a stopped truck. As soon as the decedent
stepped past the truck, a speeding vehicle driven by defendant,
Romaus Mesa, which drove around the stopped truck through
a yellow-marked no-drive zone, struck and killed him. The
decedent’s estate sued Mesa, the truck driver (Bartow) and
the owner of the truck (PCC).
Fox testified that while the decedent was crossing in front
of the truck, Bartow waved him across. Bartow testified that
the decedent started running across the street when he noticed
the arrow turn green. Bartow also stated that he never made
eye contact with the decedent and never waived him across but
he did reach for his air horn cord over his left shoulder when
he saw the decedent was about to be hit by Mesa’s vehicle.
No other witnesses to the accident testified that they saw the
truck driver wave to the decedent other than Fox. Mann, 2005
WL 396584 at *1-2.
After all of the witnesses to the accident were deposed,
PPC and Bartow filed a motion for summary judgment.
The trial court granted the motion based on the pleadings
and depositions and found that the plaintiff could not prove
proximate cause because the decedent continued to cross the
street without doing anything different from what he had been
doing before he supposedly saw Bartow wave at him. The
trial court also found that it would be pure speculation to find
that the decedent was looking at Bartow and that he relied
on Bartow’s gesture. Since case law states that speculation is
not enough, the trial court granted the motion for summary
judgment. The plaintiff appealed the ruling. Id. at *2.
The plaintiff argued that the trial court erred in entering
summary judgment in favor of PCC and Bartow because the
trial court improperly resolved, as a matter of law, the “factual”
Second Quarter 2005
question of whether the decedent relied on Bartow’s signal
in crossing the street. PCC and Bartow responded that summary judgment was appropriate because: (1) Bartow owed no
duty of care to the decedent; (2) the plaintiff failed to create a
genuine issue of material fact as to whether Bartow breached
a duty of care; and (3) the plaintiff failed, as a matter of law,
to prove the alleged negligence of Bartow was a proximate
cause of the accident. Id. at *3.
The appellate court noted that in a negligence action, the
plaintiff is required to prove: (1) the defendant owed a duty
“Cause in fact exists where
there is a reasonable certainty
that a defendant’s acts caused
the injury or damage. A defendant’s conduct is a cause in fact
of the plaintiff’s injury only if
that conduct is a material element and a substantial factor in
bringing about the injury.”
of reasonable care to the plaintiff; (2) the defendant breached
that duty; and (3) the breach was the proximate cause of the
plaintiff’s injury. Wiegman v. Hitch-Inn Post of Libertyville,
Inc., 308 Ill. App. 3d 789, 795, 721 N.E.2d 614 (2nd Dist.
1999). The issue of proximate cause is usually a question of
fact for a jury. Wojtowicz v. Cervantes, 284 Ill. App. 3d 524,
531, 672 N.E.2d 357 (1st Dist. 1996). However, a plaintiff
must demonstrate proximate cause. Otherwise, he has failed
to establish a prima facie case and a directed verdict is proper.
And, where the pleadings, depositions, and other evidence
before the court show that at trial a verdict would have to be
directed, entry of summary judgment is proper. Mann, 2005
WL 396584 at *3, citing Kennedy v. Joseph T. Ryerson &
Sons, Inc., 182 Ill. App. 3d 914, 918, 538 N.E.2d 748 (1st
Dist. 1989).
Proximate cause has two components: cause in fact (a
matter of reasonable certainty) and legal cause (a question of
foreseeability). First Springfield Bank & Trust v. Galman, 188
Ill. 2d 252, 257-58, 720 N.E.2d 1068 (1999). Cause in fact
exists where there is a reasonable certainty that a defendant’s
acts caused the injury or damage. A defendant’s conduct is
a cause in fact of the plaintiff’s injury only if that conduct is
a material element and a substantial factor in bringing about
the injury. A defendant’s conduct is a material element and a
substantial factor in bringing about an injury if, absent that
conduct, the injury would not have occurred. Mann, 2005 WL
396584 at *3, citing First Springfield, 188 Ill. 2d at 258.
In this case, the plaintiff relies on Section 324A of the
Restatement (Second) of Torts, which states:
One who undertakes, gratuitously or for consideration,
to render services to another which he should recognize
as necessary for the protection of a third person or his
things, is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable
care to protect his undertaking, if:
(a) his failure to exercise reasonable care increases the
risk of such harm, or
(b) he has undertaken to perform a duty owed by the
other to the third person, or
(c) the harm is suffered because of reliance of the other
or the third person upon the undertaking.” Restatement (Second) of Torts, Sect. 324A (1965).
The appellate court indicated that under a voluntary undertaking theory, to establish proximate cause of the injury, the
cause-in-fact component requires a showing that a plaintiff
relied on the defendant’s conduct. Restatement (Second) of
Torts, Sect. 324A (1965). As applied to this case, Section
324A(c) required the plaintiff to show the decedent relied
on Bartow’s wave in continuing to cross the street without
checking for other traffic at the point he was struck by Mesa’s
vehicle. The court stated that the showing of reliance by the
decedent is necessary to establish that Bartow’s act of waving
the decedent through the intersection “is a material element
and a substantial factor in bringing about an injury if, absent
that conduct, the injury would not have occurred.” Mann, 2005
WL 396584 at *4, citing First Springfield, 188 Ill. 2d at 258.
The trial court found the plaintiff’s evidence to be mere
speculation. The appellate court advised that it is well settled
that liability cannot be predicated upon surmise or conjecture
51
IDC Quarterly
Recent Decisions (Continued)
as to the cause of an injury, but liability can be established
where there is a reasonable certainty that the defendant’s
actions caused the injury. Wiegman, 308 Ill. App. 3d at 795;
Wojtowicz, 284 Ill. App. 3d at 531. While this can be established from circumstantial evidence, a fact is not “established
by circumstantial evidence unless the circumstances are of
such a nature and so related to each other that it is the only
probable, not merely possible, conclusion that can be drawn
therefrom.” Mann, 2005 WL 396584 at *5, citing Wiegman,
308 Ill. App. 3d at 796.
Based on the case law, the appellate court determined that
if the existence or nonexistence of reliance by the decedent
on Bartow’s wave were equally probable, then the plaintiff
is unable to establish that there is a “reasonable certainty that
the defendant’s acts caused the injury” and, therefore, failed
to establish proximate cause. Wiegman, 308 Ill. App. 3d at
795. There was no direct evidence on the question of reliance
because the decedent never regained consciousness after the
accident. As for circumstantial evidence, the only witness
who testified that Barstow waived was Fox and she admitted
that the decedent continued along his same path and did not
do anything different after the wave. Mann, 2005 WL 396584
at *6-7.
Based on the evidence presented, the appellate court held
that where non-reliance by the decedent on the alleged wave
was just as probable as reliance by the decedent on the wave,
the conclusion that there was reliance on the alleged wave is
a matter of speculation, surmise and conjecture and a trier of
fact cannot make such a conclusion. Therefore, the appellate
court ruled that summary judgment for defendants PCC and
Bartow was appropriate.
Allegations of BOCA Violations
Barred Section 2-615 Dismissal
Marshall v. Burger King, 2005 WL 545386 (2nd Dist.,
March 4, 2005).
The decedent, Detroy Marshall, III, was killed when a car
driven by defendant, Pamela Fritz, crashed through the wall
of a Burger King restaurant and struck him. The accident
happened when Fritz when trying to leave Burger King and
she backed her car into a lamppost in the parking lot. Driving
forward from the lamppost, she lost control of her vehicle,
drove up on the sidewalk, became airborne and crashed
through the largely windowed wall of the restaurant.
The decedent’s estate filed suit against defendants Burger
52
King and its franchise owner, Davekiz, Inc., for their failure
to exercise due care in the design and construction of the
restaurant by not installing protective barriers around the
building. The plaintiff claimed that these failures were the
proximate cause of the decedent’s injuries. The property
owner defendants filed a motion to dismiss pursuant to Section
2-615 of the Illinois Code of Civil Procedure. They argued
they had no duty under the law to protect their patrons from
the threat of runaway cars crashing into the restaurant. The
trial court granted the motion and the plaintiff appealed.
The issue on appeal was whether the trial court erred in
holding that the defendants had no duty to take any of the precautions cited by the plaintiff in the complaint. The elements
of a common-law action for negligence are: (1) a duty owed
by the defendant to the plaintiff; (2) a breach of that duty by
the defendant; and (3) an injury to the plaintiff proximately
resulting from the breach. Trevino v. Flash Cab Co., 272 Ill.
App. 3d 1022, 1027, 651 N.E.2d 723 (1st Dist. 1995). Whether
a duty exists depends upon whether the parties stand in such a
relationship to one another that the law imposes an obligation
on the defendant to act reasonably for the protection of the
plaintiff. Marshall, 2005 WL 545386 at *2, citing Ellison v.
Village of Northbrook, 272 Ill. App. 3d 559, 566, 650 N.E.2d
1059 (1st Dist. 1995).
The plaintiff’s complaint stated a cause of action against
the defendants for negligence. The plaintiff alleged specific
ways in which the defendants failed to guard against the possibility of cars penetrating the restaurant and injuring patrons.
The appellate court held that based on the allegations in the
complaint, it could not say as a matter of law, that such precautions were beyond the duty of reasonable care owed by
a premises owner in the defendants’ situation. The appellate
court cited to and relied on two Illinois cases that have recognized the duty of premises owners to protect invitees from
the dangers of runaway vehicles despite the relevant rarity
of such incidents. See, Ray v. Cock Robin, Inc., 57 Ill. 2d 19,
23, 310 N.E.2d 9 (1974) and Marquardt v. Cernocky, 18 Ill.
App. 2d 135, 137-38, 151 N.E.2d 109 (2nd Dist. 1958).
In granting the motion to dismiss, the trial court cited
to policy reasons why the defendants should not be held
responsible for failing to insure that runaway vehicles could
not penetrate the restaurant. The trial court determined that
the precautions the plaintiff cited could compromise the
aesthetic qualities of business premises. The appellate court
responded that by relying on the policy reasons, the trial court
was overlooking the plaintiff’s allegation that the defendants
departed from custom and practice in the industry, as well
as violated the Building Officials and Code Administrators’
(BOCA) building code, by not taking the asserted precautions.
Second Quarter 2005
Marshall, 2005 WL 545386 at *3.
The appellate court determined that in alleging that the
defendants’ conduct was unreasonable in light of an industry
code, as well as custom and usage, the plaintiff created a
question of fact as to whether the defendants’ failure to take
precautions was a breach of their duty of reasonable care,
despite whatever cost or inconvenience would be involved
in exercises that duty. Id. at *4.
The appellate court was also not persuaded by the principal
cases cited by the defendants, Simmons v. Aldi-Brenner Co.,
162 Ill. App. 3d 238, 515 N.E.2d 403 (3rd Dist. 1987) and
Stutz v. Kamm, 204 Ill. App. 3d 898, 562 N.E.2d 399 (4th Dist.
1990). In Simmons, a grocery store patron lost consciousness
as she was driving into the parking lot and drove through the
glass front wall of the store, killing several other patrons. The
appellate court reversed the jury’s verdict and ruled that a duty
did not legally exist requiring the defendant to protect against
the injury caused by the vehicle because it would be mere
speculation to say the safety features would have prevented
the accident.
In Stutz, a driver accidentally drove off the rear edge of
a parking lot of a driver service facility and crashed into the
building. The appellate court upheld the Section 2-615 dismissal of the complaint because it held a duty did not legally
exist that required the defendants to prevent the type of harm
that occurred. In this case, the appellate court declined to follow Simmons and Stutz because it disagreed with the reasoning
provided by the appellate courts in each case. Marshall, 2005
WL 545386 at *4-6.
Based on the appellate court’s ruling that the allegations
asserting BOCA violations automatically created a question
of fact, the trial court’s dismissal was reversed and the case
was remanded. A dissenting opinion was included in which
the dissenter disagreed that a duty of care existed. The dissent
relied on the cases cited by the defendant, Simmons and Stutz.
The dissent was also concerned that the court relied on the
BOCA violation allegations, even though the plaintiff failed
to identify which codes were violated and if those codes were
in effect in the town at issue. Id. at 6-7.
property managers, for negligently maintaining the building.
Approximately six months after the statute of limitations expired, the plaintiff learned during discovery that the property
owners were responsible for property maintenance and not the
property managers. The plaintiff then filed a motion to amend
the complaint and add the property owners as defendants and
the motion was granted.
The property owners filed a motion to dismiss because
the action was time barred by the statute of limitations. The
plaintiff responded that the complaint related back pursuant
to Section 2-616(d) of the Illinois Code of Civil Procedure.
The trial court granted the motion to dismiss and the plaintiff
appealed.
Section 2-616(d) prevents a cause of action against a person
not originally named a defendant from being time barred by
the lapse of time by any statute or contract as long as three
terms and conditions are met. If the conditions are met, the
amended complaint adding the new defendant relates back
to the date of the filing of the original pleading. Section
2-616(d) was recently amended in 2002 and it now requires
that would-be defendants “knew or should have known that,
but for a mistake concerning the identity of the proper party,
the action would have been brought against him or her.” 735
ILCS 5/2-616(d)(2). Under this new requirement, the appellate
court concluded that it must first determine whether there is a
case of mistaken identity before it could determine whether
the amended complaint would relate back to the original
pleading. Pruitt, 2005 WL 396585 at *2-3.
Based on the evidence, the appellate court determined
that the plaintiff did not intend to sue the property owners.
The plaintiff assumed the property managers were solely
responsible for property maintenance and that assumption
did not change until six months after the statute of limitations expired. Therefore, the plaintiff’s failure to name the
defendants was not a “mistake” as is required under Section
2-616(d). The plaintiff simply lacked sufficient information
to understand the property owner’s involvement in property
maintenance. Since there was no “mistaken identity,” the appellate court determined that the dismissal was proper and it
was affirmed. Pruitt, 2005 WL 396585 at *4.
Use of Mistaken Identity to Toll
Statute of Limitations
Pruitt v. Pervan, 2005 WL 396585 (1st Dist., February 15,
2005).
The plaintiff, Jennifer Pruitt, fell on a stairway of a building she was visiting. She filed suit against Wolin-Levin, the
53
IDC Quarterly
Supreme Court Watch
By: Beth A. Bauer
Burroughs, Hepler, Broom, MacDonald, Hebrank and True
Edwardsville
Where Both Parties Sue for Negligence, Can
the Jury Reject Both Claims
Under IPI B21.04?
Redmond v. Socha, Gen. No. 99625, appealed from 1st
Dist. No. 1-03-3568
The plaintiff filed suit against the defendant seeking damages resulting from an alleged auto accident where the defendant’s car struck the plaintiff’s motorcycle. The defendant
filed a counterclaim against the plaintiff for negligence. At
trial the court instructed the jury that it could find against both
the plaintiff on his complaint and the defendant on her counterclaim based on IPI B21.04, the Illinois Pattern Instruction
on burden of proof. Neither party objected to the instruction
given and the jury found that neither of them was negligent.
The plaintiff filed a motion for a new trial, which the trial
court granted upon finding that the verdicts were inconsistent
and against the manifest weight of the evidence. The Illinois
Appellate Court, First Judicial District, affirmed the order
granting a new trial, holding that the verdicts were inconsistent
and acknowledging that its decision conflicted with Barrick v.
Grimes, 308 Ill. App. 3d 306, 309, 720 N.E.2d 280 (4th Dist.
1999). Unlike the Barrick court, the First District found that
it would have been an “unreasonable” hypothesis to conclude
that both parties had failed to meet their burden of proof. The
First District further stated that one or both of the parties had
to be negligent, and it was impossible that both drivers could
be more than 50% at fault.
The defendant seeks review in the Illinois Supreme Court
because he argues that the opinion of the appellate court conflicts with Barrick and Boasiako v. Checker Taxi Co., 140 Ill.
App. 3d 210, 488 N.E.2d 672 (1st Dist. 1986). The defendant
maintains that the appellate court should have followed Barrick because in that case there is a similar action arising out
of an accident between two motorists, where the evidence
54
conflicted as to fault, but that court upheld the verdicts against
both the plaintiff and the defendant on the reasoning that the
evidence may have been so conflicting, inconclusive and
unsatisfactory that it was unable to determine which party
was negligent. The defendant claims that by rejecting Barrick, the First District effectively negates one of the outcomes
permitted under the instruction as written. The defendant also
claims that the appellate court’s decision is contrary to the
earlier First District opinion, Boasiako (a pure comparative
fault case). In that case the appellate court affirmed a verdict
for the plaintiff for his injuries that found him 40% negligent,
reduced the award accordingly and found no negligence on
the plaintiff’s part as to the defendant’s counterclaim.
The defendant also argues that if a jury cannot rule for
either or both parties a mistrial should be awarded. According
to the defendant, the appellate court effectively negates the
instruction as written. Instead, the First District effectively
rewrote IPI B21.04 to require a verdict for one party or for
the other party or for both parties. Because litigants can no
longer rely on IPI B21.04 as a correct statement of the law,
the defendant urges supreme court review.
Venue Analysis: Are Corporations
Residents of Counties Where Their
Employees Work from Their Homes?
Corral Junior v. Mervis Industries, Inc., Gen. No. 99698,
1st District No. 1-03-0129
The plaintiff filed suit in Cook County on behalf of his decedent who was killed in Vermilion County at the defendant’s
railroad yard. According to the defendant, it is an Illinois corporation that is headquartered in Vermilion County and whose
registered agent and president reside in Vermilion County. The
defendant states that it has no facilities or operations in Cook
County, other than a sales employee who does his work from
About the Author
Beth A. Bauer concentrates her practice in the area of
appellate practice at Burroughs, Hepler, Broom, MacDonald, Hebrank and True in Edwardsville. She graduated
cum laude from St. Louis University School of Law in
2000 and received her B.A. with honors from Washington
University in 1997. Ms. Bauer is a member of the Illinois
and Missouri State Bar Associations and National Christian
Legal Society.
Second Quarter 2005
his home. The sales person brokers sales of plastic scrap by
telephone and computer that are neither shipped to nor from
Cook County and less than 1% of the defendant’s sales are to
Cook County customers. The defendant states that on these
undisputed facts, the trial court held that Mervis had an office
in Cook County because the sales employee worked out of
his Cook County home.
The First District Appellate Court affirmed the trial court’s
finding of appropriate venue in Cook County and found no
abuse of discretion.
The defendant seeks review by the Illinois Supreme Court
to settle the issue of the appropriate standard of review on
cases of improper venue and further argues that the First District erred in finding that an employee’s home office constitutes
the employer’s “office” for purposes of the venue statute.
First, the defendant contends that de novo is the appropriate
standard of review, citing the following cases: Boxdorfer v.
Daimler Chrysler Corp., 339 Ill. App. 3d 335, 790 N.E.2d 391
(5th Dist. 2003); Reynolds v. GMAC Financial Services, 344
Ill. App. 3d 843, 801 N.E.2d 11 (5th Dist. 2003); Reichert v.
Court of Claims of the State of Illinois, 327 Ill. App. 3d 390,
736 N.E.2d 402 (5th Dist. 2002), vacated on other grounds,
203 Ill. 2d 257, 786 N.E.2d 174 (2003); Lake County Riverboat L.P. v. Illinois Gaming Board, 313 Ill. App. 3d 943, 730
N.E.2d 524 (2d Dist. 2000). According to the defendant, each
of these cases applying the de novo standard of review is better reasoned than the cases applying the abuse of discretion
standard, particularly in a case like the one at issue where the
facts are undisputed.
Second, the defendant argues that Cook County is an
improper venue because the defendant does no business in
Cook County and has no office in Cook County. The defendant contends that the appellate court’s decision is directly
contrary to Peterson v. Monsanto Co., 157 Ill. App. 3d 508,
510 N.E.2d 458 (5th Dist. 1987), which held that a corporation does not become a resident of a county merely because
it has an employee that lives there and who does business
out of his home. The defendant points out that for venue to
be proper, the defendant’s activity in the forum county “must
be of such a nature as to localize the business and make it an
operation within the district,” quoting Melliere v. Luhr Bros.,
Inc., 302 Ill. App. 3d 794, 706 N.E.2d 40 (5th Dist. 1999). The
defendant argues that the correct application of that language
to the facts of this case demand transfer from Cook County
to Vermilion County.
Does the Savings Clause Trump
the Two-Year Statute of Limitations
for Filing Contribution Claims?
Barragan v. Osman Construction Corp., et al., Gen. No.
99261, 1st District 1-01-2557
The defendant contractor settled the case in chief with the
plaintiffs who were injured while working for a subcontractor
on a construction project being run by the contractor without
contribution from the defendant architect. Approximately
six weeks before that settlement was approved the contractor filed a counterclaim for contribution against the architect
seeking to recover the portion of its payment attributable to
the architect’s negligence. The architect moved to dismiss the
contractor’s counterclaim against it, arguing that it was barred
by the statute of limitations for contribution claims under 735
ILCS 5/13-204, which requires the filing of any contribution
action within two years of being served with process in the
plaintiff’s action. It was undisputed that it had been more
than two years since the plaintiffs had originally served the
contractor with the complaint. The contractor argued that the
Code of Civil Procedure contained a savings clause in Section
13-207 that permits the filing of counterclaims that otherwise
would be time barred. The trial court agreed with the architect
and dismissed the contractor’s counterclaim.
In a split decision, the appellate court affirmed the trial
court’s dismissal. The majority held that the savings clause
was a statute of limitation, and was thus preempted by the
statute of limitation for contribution claims. One justice dissented, rejecting the majority’s characterization of the savings
clause and observing that the statute of limitations expressly
preempts only other statutes of limitation and repose.
The contractor seeks review in the Illinois Supreme Court,
arguing that there is a split in authority among Illinois appellate courts regarding whether the savings clause trumps the
statute of limitations for contribution claims. The defendant
cites several Illinois appellate court decisions that have interpreted the savings provision to control over the statute of
limitation and thereby “saving” an otherwise barred claim if
it in fact arose before the counterclaim was barred. See, e.g.,
Mermelstein v. Rothner, 349 Ill. App. 3d 800, 804-05 (1st Dist.
2004); Westbank v. Maurer, 276 Ill. App. 3d 553, 564 (2d Dist.
1995); Cameron Jenn. Corp. v. Hafnia Holdings, Inc., 289 Ill.
App. 3d 495, 506 (1st Dist. 1997); Benckendorf v. Burlington
Northern R.R., 112 Ill. App. 3d 658, 663 (2d Dist. 1983).
55
IDC Quarterly
Supreme Court Watch (Continued)
For the contrary position, where the statute of limitations
prevails over the savings provision, the contractor cites another First District case: Johnson v. Core-Vent Corp., 264 Ill.
App. 3d 833, 837-38 (1st Dist. 1993).
The contractor contends that the majority appellate opinion
characterizes the statutes in question in ways that flatly contradict their plain language and are in conflict with the previous
authority on the subject. Finally, the contractor requests that
the supreme court take this case to adopt a consistent interpretation of the savings provision and determine its scope so that
it is possible for litigants to predict how it might be applied
in any particular instance.
Professional Liability
By: Martin J. O’Hara
Quinlan & Carroll, Ltd.
Chicago
Beware of the Pitfalls Associated With
the Production of E-Discovery
E-discovery is currently one of the legal profession’s primary buzzwords. Attorneys regularly receive brochures or
flyers for legal seminars, many of which now include some
discussion of e-discovery. Because the subject is very broad,
these discussions range from document retention policies to
retrievals of deleted e-mails. Although many of us might be
inclined to ignore these discussions, a recent decision from
a Florida circuit court requires every defense counsel to
become educated in the area of e-discovery. See, Coleman
(Parent) Holdings, Inc. v. Morgan Stanley & Co., Inc., 2005
WL 674885 (Fla. Cir. Ct. March 23, 2005).
In late 1997 or early 1998, Coleman (Parent) Holdings,
Inc. (“Coleman”) negotiated and consummated a sale of its
82% interest in Coleman Company, Inc. to Sunbeam Corporation (“Sunbeam”). Morgan Stanley & Co., Inc. (“Morgan
Stanley”) served as financial advisor to Sunbeam for parts of
the acquisition transaction, and served as the lead underwriter
for a $750,000,000 debenture offering that Sunbeam used to
About the Author
Martin J. O’Hara is a partner with the Chicago firm
of Quinlan & Carroll, Ltd. His practice is devoted to
litigation, including commercial cases, and the defense of
professionals in malpractice actions. Mr. O’Hara received
his B.A. from Illinois State University and J.D. with
honors from John Marshall Law School. He is a member
of DRI, IDC, ISBA and CBA.
56
Second Quarter 2005
finance the cash portion of the deal.
Subsequent to the consummation of the sale, Coleman
brought an action against Morgan Stanley alleging fraudulent
misrepresentation, negligent misrepresentation, and aiding
and abetting fraud and conspiracy. Coleman sought damages
of at least $485 million. During the course of the litigation,
Coleman served Morgan Stanley with a request for the production of documents. The request sought all documents
connected with the Sunbeam transaction. The request defined
“documents” as items that were electronically stored. In response, Morgan Stanley produced in excess of 8,000 pages of
documents. However, the production included “only a handful
of emails.” Id. at *1.
Concerned that it had not received full compliance with its
request, Coleman filed a motion to compel. The motion sought
an order requiring Morgan Stanley to make a full investigation
for e-mail messages, including a search of magnetic tapes and
hard drives. Coleman’s motion further sought the production
of any responsive e-mails located during the search, as well
as an order requiring Morgan Stanley to produce a witness to
describe the search that had been conducted.
Morgan Stanley objected to the motion, asserting that
Coleman merely wanted the court to order a “massive safari
into the remote corners of [Morgan Stanley’s] email backup
systems.” Id. at *2. Morgan Stanley represented to the court
that the search requested by Colemen would cost hundreds of
thousands of dollars and require several months to complete.
Morgan Stanley further contended that Coleman was merely
seeking to harass and burden Morgan Stanley with unnecessary and costly discovery demands.
Despite Morgan Stanley’s objections, the parties agreed
to reciprocal corporate depositions relating to the issue of
e-mail recovery. In accordance with their agreement, Coleman deposed an executive director of IT for Morgan Stanley
regarding its production of e-mail messages that were responsive to Coleman’s discovery requests. However, Coleman
and Morgan Stanley were unable to agree on a mutual e-mail
restoration protocol. Coleman therefore filed a motion seeking
permission to have a third-party vendor be given access to
both parties’ e-mail systems for restoration purposes. Morgan
Stanley objected to this option because it purportedly would
entail an enormous cost to Morgan Stanley.
Coleman then filed another motion to compel, seeking all
responsive e-mail communications. On the eve of the hearing on that motion, the parties reached a compromise and the
court entered an agreed order. The agreed order provided that
Morgan Stanley would: (1) search the oldest full backup tape
for each of the 36 Morgan Stanley employees involved in the
Sunbeam transaction; (2) review e-mails dated from February
15, 1998, through April 15, 1998, and e-mails containing any
of the 29 specified search terms, including “Sunbeam” and
“Coleman,” regardless of their date; (3) produce all nonprivileged e-mails responsive to Coleman’s document requests; (4)
provide Coleman with a privilege log; and (5) certify that it
had fully complied with the agreed order.
Pursuant to the agreed order, Morgan Stanley produced approximately 1,300 pages of e-mails to Coleman. However, it
did not initially certify compliance with the agreed order. After
pressure from Coleman, Morgan Stanley served a certificate
of compliance signed by an executive director and manager
of Morgan Stanley’s law/compliance IT group.
Almost five months after serving the certificate, counsel
for Morgan Stanley advised Coleman’s counsel that Morgan Stanley had discovered additional e-mail backup tapes.
Morgan Stanley’s counsel stated that the data on some of the
newly discovered tapes had been restored, and that Morgan
Stanley had run the previously agreed-to searches on the newly
discovered tapes. He further advised that some responsive
e-mail had been located as a result of the process, and that
Morgan Stanley would produce the responsive documents to
Coleman as soon as the production was finalized.
Not surprisingly, counsel for Coleman responded with
numerous questions. Counsel inquired as to how it was that
Morgan Stanley located the tapes only recently. He further
asked about the status of the search of the backup tapes, and
inquired as to whether additional responsive e-mails had
been located from the recently located tapes. Rather than responding to each of the inquiries, counsel for Morgan Stanley
wrote back to Coleman’s counsel and stated that no additional
responsive e-mails had been located.
Unhappy with the lack of responses to his questions, Coleman’s counsel wrote again and posed additional questions.
Among other things, he inquired as to whether the review of
the recently located backup tapes was still ongoing. He then
requested that Morgan Stanley’s counsel confirm that all
e-mail backup tapes from the relevant time period had been
reviewed, and that all responsive e-mails had been produced.
Lastly, he stated that if the review was still proceeding, Morgan Stanley should inform Coleman as to when the review
would be completed.
Thereafter, counsel for Morgan Stanley responded to the
letter. He stated that the restoration of the e-mail backup tapes
was ongoing. He stated that restoration of the “next set of
backup tapes” would likely be completed within the month.
He further stated that Morgan Stanley would run the previously agreed-to searches on the next set of backup tapes once
the restoration was completed.
57
IDC Quarterly
Professional Liability (Continued)
At this point counsel for Coleman became skeptical of
whether Morgan Stanley had complied with the agreed
order that had been entered months earlier, and whether
the certificate of compliance had been given in good faith.
Counsel specifically requested that Morgan Stanley explain
the circumstances under which the new backup tapes were
located, including a specific indication as to when the tapes
were located. Counsel also questioned the reference to the
“next set of backup tapes.” Counsel asked for the number
of tapes that needed to be restored, and whether there were
other tapes that were not yet in the process of being restored.
He sought a specific timeline for Morgan Stanley to complete
the restoration process and to produce all responsive e-mails,
noting that the trial was scheduled to begin the following
month.
In response, counsel for Morgan Stanley stated that additional tapes were found in various locations at Morgan
Stanley. The tapes had not been clearly labeled as to their
contents and were not found in customary storage locations
for e-mail backup tapes. He further stated that many of the
tapes were in a different format than other e-mail backup
tapes. He indicated that Morgan Stanley’s efforts to restore
the backup tapes discovered after its earlier production had
been a time-consuming and painstaking process. Nonetheless,
he indicated that Morgan Stanley would attempt to complete
the search by the end of the month.
Based on these responses, Coleman filed a motion for
adverse inference instruction due to Morgan Stanley’s destruction of e-mails and Morgan Stanley’s noncompliance
with the court’s April 16, 2004, agreed order. The court held
an evidentiary hearing on the motion, and concluded that
Morgan Stanley had engaged in discovery abuses. The court
found that Morgan Stanley had located, but not produced,
more than 1,400 backup tapes prior to serving its certificate of
compliance. The court additionally found that Morgan Stanley
had discovered, but not disclosed, 738 8-mm backup tapes
prior to serving its certificate of compliance. Finally, the court
found that Morgan Stanley had located a script error that had
prevented it from locating responsive e-mail attachments, but
had failed to disclose this problem to Coleman or the court.
Based on its finding of these discovery abuses, the court
entered an order that reversed the burden of proof on the
aiding and abetting and conspiracy elements of Coleman’s
causes of action. In essence, the court held that Morgan
Stanley would have the burden of proving that it did not aid
and abet Sunbeam’s fraud upon Coleman. Additionally, the
court ordered that a statement regarding Morgan Stanley’s
efforts to hide its e-mails would be read to the jury. The
58
court found that the statement could be considered as to
both Morgan Stanley’s consciousness of guilt and the appropriateness of punitive damages against Morgan Stanley.
Lastly, the court ordered that Morgan Stanley continue to
use its best efforts to comply with the agreed order regarding
e-mail retrieval.
Subsequent to the entry of this order, the court learned of
additional discovery abuses both with respect to the e-mail
issue and other discovery matters. For example, Coleman had
requested performance evaluations relating to the primary
individual at Morgan Stanley responsible for the Sunbeam
“Based on its finding of these
discovery abuses, the court
entered an order that reversed
the burden of proof on the aiding
and abetting and conspiracy elements of Coleman’s causes
of action.”
deal. In response, Morgan Stanley produced certain evaluations, which noted reservations regarding the individual’s
candor and ethics. When two of the evaluators were deposed,
they offered vague testimony about the basis for their conclusions regarding his candor and ethics. In reality, it was later
learned that the individual was facing criminal prosecution
for complicity and bribery at the time he was working on the
Sunbeam transaction.
As a result of these additional findings, the court went even
further in sanctioning Morgan Stanley. In addition to allowing
the adverse inference and providing a statement to the jury
that Morgan Stanley had hidden e-mail communications, the
court granted, in part, Coleman’s motion for entry of a default
judgment. Specifically, the court held that approximately 73
paragraphs of Coleman’s complaint would be read to the jury,
and the jury would be instructed that those facts were deemed
established for all purposes. The court also awarded Coleman
its fees and costs incurred as a result of bringing the motion
Second Quarter 2005
for default judgment and the violations of the court’s orders
recited in the motion. Lastly, the court revoked the pro hac
vice admission of Morgan Stanley’s primary attorney.
Subsequent to these rulings, Morgan Stanley sought to
replace its counsel. Morgan Stanley additionally asserted
that its counsel may have committed malpractice. In light
of Coleman seeking $2 billion in punitive damages against
Morgan Stanley in addition to the enormous compensatory
damages being sought, a malpractice action against Morgan
Stanley’s counsel potentially could seek in excess of $2 billion
in damages.
While the magnitude of the damages involved in Coleman
is greatly in excess of the damages typically seen in most
lawsuits, the issues raised in the case are not so uncommon.
As most practitioners can attest, there has been a substantial
increase in the amount of e-mail correspondence produced
in the course of litigation. At times, 50% to 60% of the
documents produced in a case will consist of e-mail correspondence, which is particularly true when the case involves
technologically advanced companies or individuals.
Thus, attorneys must be particularly diligent in working
with their clients to ensure a full and complete production of
documents responsive to a discovery request. Attorneys must
make specific inquiries from the outset of document collection regarding the manner in which e-mail communications
are stored. For example, the attorney should determine if email communications are stored in particular folders within
the party’s system. If such e-mails are not routinely saved,
the attorney must conduct an investigation as to whether any
deleted e-mail communications can be recovered and restored
from magnetic tapes or hard drives.
The earlier in a case an attorney becomes knowledgeable on
these important issues the better. Being knowledgeable about
the client’s e-mail storage procedures allows the attorney
to be able to determine at an early stage whether electronic
document recovery is going to be an issue in the case. If it is
going to be an issue, the attorney can put a process in place
that ensures that all responsive electronic material is collected
and produced. While this process generally will require the
cooperation of the client, explaining the discovery obligations to the client at the earliest opportunity should alleviate
any problems associated with the gathering of the electronic
documents. Moreover, if full compliance with the opposing
party’s discovery requests will cause a large financial burden,
the attorney can present that issue to the court at the outset,
long before being faced with a motion to compel for failure
to produce responsive documents.
One of the most interesting things about Coleman is that
the court never discussed a single e-mail communication that
had been produced by Morgan Stanley that was detrimental
to its defense of Coleman’s claim. In other words, although
Morgan Stanley had been dilatory in producing certain e-mail
communications, it does not appear that Morgan Stanley was
protecting a “smoking gun” e-mail that would have destroyed
its case. Instead, Morgan Stanley’s defense was destroyed
by its failure to meet its discovery obligations relating to the
production of electronic discovery. Defense counsel must be
cognizant of not allowing this to happen to their clients.
59
IDC Quarterly
Featured Article
Recent Opinion
Regarding Voluntary
Dismissal Orders
Opens the Door
for Potential Abuse
By: Al Pranaitis
Hoagland, Fitzgerald, Smith & Pranaitis
Alton
Eighty-nine years ago the Illinois Supreme Court concluded
that once an order of voluntary dismissal had been entered in
a case, the trial court was deprived of jurisdiction to entertain
a motion to vacate that dismissal order. Weisguth v. Supreme
Tribe of Ben Hur, 272 Ill. 541, 112 N.E. 350 (1916). According
to the “Weisguth rule,” a plaintiff’s only recourse for going
forward with his or her action after a voluntary dismissal was
to file a new suit. Under the Weisguth rule, a trial court had no
jurisdiction to vacate a dismissal and reinstate the case when
the dismissal had resulted from the plaintiff’s deliberate and
voluntary act.
In a recent opinion, the Illinois Supreme Court abandoned
the Weisguth rule and held that a trial court now does have
jurisdiction to hear a motion to vacate a voluntary dismissal
order. Hawes v. Luhr Bros., Inc., 212 Ill. 2d 93, 816 N.E.2d
345, 287 Ill. Dec. 583 (2004), rehearing denied, 212 Ill. 2d
93, 816 N.E.2d 345, 287 Ill. Dec. 583 (2004). The court
found justification for tossing out the old rule in Section
2-1203(a) of the Code of Civil Procedure, which pertains
to “Motions after judgment in non-jury cases.” 735 ILCS
5/2-1203(a).
As will be discussed hereinafter, whether Section
2-1203(a) provides an appropriate basis for the Hawes decision is debatable, given what appears to be the purpose for
that statute. More importantly, however, Hawes opens the door
for potential abuse by plaintiffs through multiple voluntary
dismissals and reinstatements of their suits.
In Hawes, the Illinois Supreme Court noted that to the
extent the Code of Civil Procedure “regulates procedures,”
60
it “takes precedence over the common law.” 212 Ill. 2d at
106. Therefore, according to the ruling in Hawes, Section
2-1203 supersedes the common law rule first announced by
the court in Weisguth.
The Hawes opinion noted that the part of the Weisguth
opinion which became known as “the Weisguth rule” was
merely dicta because it had not been the basis of the court’s
disposition of the case. Nevertheless, because the issue was
one that had been briefed and argued before the Illinois Supreme Court in Weisguth, that part of the Weisguth opinion
amounted to judicial dicta rather than obiter dicta. “Judicial
dicta have the force of a determination by a reviewing court
and should receive dispositive weight in an inferior court.”
Id. at 100.
In reaching the conclusion that Section 2-1203(a) superseded the Weisguth rule, the Hawes court reviewed a number
of prior decisions from four districts of the Illinois Appellate
Court and its own opinion in Bettenhausen v. Guenther,
388 Ill. 487, 58 N.E.2d 550 (1945). In doing so, the Hawes
opinion noted that the various appellate court decisions had
“acknowledged the Weisguth rule” but had “taken varying
approaches to its application.” Id. at 101. The court also noted
that in Bettenhausen, “after restating the Weisguth dicta,” it
reversed a trial court order which had allowed the “petitioners
leave to withdraw their oral motions to dismiss their petition
after the court had already granted the motions.” Id. at 100-01.
The Bettenhausen opinion, according to Hawes, concluded
that the trial court’s jurisdiction had ended when the voluntary
dismissal order was entered and that the trial court had been
“wholly without power to enter the order appealed.” Id. at
101.
About the Author
Al Pranaitis is a partner in the Alton firm of Hoagland,
Fitzgerald, Smith & Pranaitis. He practices primarily in
the defense of product liability, medical malpractice and
other tort litigation and employment discrimination claims.
Mr. Pranaitis received his B.S. from the University of Illinois in 1970 and his J.D. from St. Louis University in
1975. He is licensed to practice in Illinois and Missouri.
He authored the Monograph on Voir Dire and a feature
article on Collateral Source in the IDC Quarterly, Vol. 14, No. 1. Mr. Pranaitis
is a Fellow of the American College of Trial Lawyers and a member of the
IDC, DRI, ABA, ISBA, Bar Association of the Central and Southern Districts
of Illinois (BACS), Madison County Bar Association and Alton-Wood River
Bar Association.
Second Quarter 2005
The Hawes opinion noted that the First District had “uncritically applied” the Weisguth rule and the Third District
had “consistently applied” it. Id. at 101, 102. The Hawes
opinion also pointed out that the Second District originally
acknowledged the Weisguth rule in a 1978 opinion, but several
years later found the rule to be “a relic of the past” which was
superseded by the Code of Civil Procedure and Supreme Court
Rule 304(a). Id. at 102.
Regarding the Fifth District, the Hawes opinion noted that
in Weilmuenster v. Illinois Ben Hur Construction Co., 72 Ill.
App. 3d 101, 390 N.E.2d 579, 28 Ill. Dec. 412 (5th Dist. 1979)
and Ripplinger v. Quigley, 231 Ill. App. 3d 1002, 597 N.E.2d
260, 173 Ill. Dec. 552 (5th Dist. 1992) the appellate court had
refused to apply the Weisguth rule. Discussing Weilmuenster,
the Illinois Supreme Court noted that the appellate court had
“held that jurisdiction is derived from article VI, section 9,
of the Illinois Constitution of 1970, and that jurisdiction will
generally terminate upon passage of 30 days after entry of a
final order. Within that 30-day period, however, the trial court
retains jurisdiction to reconsider its judgments and orders.”
Hawes, 212 Ill. 2d at 103.
The Hawes opinion also noted that in Ripplinger the appellate court had found that “dismissals and reinstatements
are governed by the Civil Practice Act 1 and by supreme court
rule” and that there was no reason to continue to follow the
Weisguth dicta. Id. Without expressly saying so, the Hawes
opinion agreed with the Fifth District’s rationale in Ripplinger.
The conclusion that Section 2-1203(a) confers jurisdiction on a trial court to hear a motion to vacate a voluntary
dismissal order is debatable. Neither the context of the
statute nor the background for its enactment easily leads to
the conclusion that Section 2-1203(a) pertains to motions to
vacate voluntary dismissal orders. Moreover, a plain reading
of the statute seems to lead to the conclusion that Section
2-1203(a) has nothing at all to do with the motion to vacate the
voluntary dismissal order, which was in question in Hawes.
Section 2-1203(a) states:
Motions after judgment in non-jury cases.
(a) In all cases tried without a jury, any party may,
within 30 days after the entry of the judgment or
within any further time the court may allow within
the 30 days or any extensions thereof, file a motion
for a rehearing, or a retrial, or modification of the
judgment or to vacate the judgment or for other
relief.
In considering the intent of this statute one can first note
that it appears in Part 12 of the Code of Civil Procedure. Part
12 pertains to “Post-Trial” matters. Every section in Part 12
describes procedures that take place after trial. None of the
sections in Part 12 refer to procedures that take place before
trial. The sections of the Code of Civil Procedure pertaining
to pre-trial procedures appear in Part 10, “Pre-Trial Steps.”
When an order of voluntary dismissal is entered before a
case proceeds to trial, as occurred in Hawes, obviously no
trial has taken place. How then can a motion to vacate that
voluntary dismissal order be a motion in a case tried without
a jury?
In finding Section 2-1203(a) applicable to voluntary dismissal orders, the Hawes opinion focused on the word “judgment” in Section 2-1203(a). In particular, the Illinois Supreme
Court noted that it previously had concluded that a voluntary
dismissal is a final judgment. Thus, according to the court’s
analysis, a motion to vacate a voluntary dismissal order is a
motion to vacate a judgment. Hawes, 212 Ill. 2d at 105-06,
citing Swisher v. Duffy, 117 Ill. 2d 376, 512 N.E.2d 1207, 111
Ill. Dec. 570 (1987). But what about the words “tried without
a jury” in the statute?
The restrictive introductory clause in Section 2-1203(a) –
“In all cases tried without a jury” – plainly seems to limit the
applicability of the statute to motions made after judgment
has been entered following the conclusion of non-jury trials,
not judgments entered prior to a trial.
Section 2-1009 of the Code of Civil Procedure, 735 ILCS
5/2-1009, which governs the procedure for motions for voluntary dismissal, provides that such motions can be made
before the trial or hearing begins or after the trial or hearing
begins. It is worth noting that Section 2-1009 does not provide a procedure for a motion for voluntary dismissal after
judgment has been entered in a trial – jury or non-jury. Thus
it does not appear the legislature contemplated that Section
2-1203(a) would pertain to voluntary dismissals under Section
2-1009, when the latter statute expressly refers to motions
made before or during trial (but not after) and the former
refers only to motions made after trial (but not before.)2
Even though Section 2-1203(a) refers to judgments entered
in cases that have been “tried,” the Hawes opinion does not
limit its applicability to motions made after a trial has concluded and a judgment has been entered. Indeed, the voluntary
dismissal order and vacation of that order in Hawes were both
before trial began.
The Historical and Practice Notes, which appeared after
Section 2-1203 prior to the recodification of the Code of Civil
Procedure from Chapter 110 of the Illinois Revised Statutes
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Voluntary Dismissal (Continued)
to its present location in Chapter 735 of the Illinois Compiled
Statutes (ILCS), further illustrate the curiousness of the conclusion reached in Hawes. Commenting on this statute, those
notes state as follows:
the motion to vacate the order of voluntary dismissal was not
a post-trial motion to vacate a judgment.
In interpreting Section 2-1203(a) in Hawes, the Illinois
Supreme Court stated:
The plain language of a statute provides the most reliable
indicator of legislative intent, and we must not depart
from the plain language of a statute by reading into it
exceptions, limitations, or conditions that conflict with
the express legislative intent.
Derivation
This section was section 68.3 of the Civil Practice
Act as in force at the effective date of the Code of Civil
Procedure, without change of substance. Section 68.3
was added to the Civil Practice Act in 1955 to provide
a procedure for post-trial motions in non-jury cases
comparable to that set forth in the predecessor of section 2-1202 for motions after entry of the verdict in jury
cases. People ex rel. Drury v. Catholic Home Bureau,
34 Ill. 2d 84, 213 N.E.2d 507 (1966).
Subsection (a)
While courts had always entertained motions to vacate judgments or decrees in non-jury law cases as well
as in equity cases, prior to 1955 there was no provision
for a motion for a new trial in a non-jury law case. Climax Tag Co. v. American Tag Co., 234 Ill. 179 (1908);
Atlas Finishing Company v. Anderson, 336 Ill. App.
167, 83 N.E.2d 177 (1st Dist. 1949). The predecessor of
section 2-1203(a) filled that hiatus in the existing law.
Originally, the post-trial motions which courts had
entertained in non-jury law cases and in equity cases
could be made at any time during the term of court in
which the judgment or decree was entered. The control
by the trial court over its judgments and decrees was
later limited by statute to a period of 30 days following
the entry of the judgment or decree, and the predecessor
of section 2-1203(a) correspondingly provided that all
post-trial motions in non-jury law and in equity cases
must be made within that time period.
Smith-Hurd Illinois Annotated Statutes (1983), ch. 110, par.
2-1203, Historical and Practice Notes (emphasis added)
The conclusion that Section 2-1203 was intended to apply
to motions made after trial, i.e. post-trial motions, and not to
the pre-trial motion which was the subject of Hawes, is also
supported by an update to the Historical and Practice Notes,
which stated: “Section 2-1203 authorizes the filing of a post
trial motion only after judgment has been entered . . . .” 1992
Cumulative Annual Pocket Part, S.H.A., ch. 110, par. 2-1203,
Supplement to Historical and Practice Notes.
As stated above, when the order of voluntary dismissal
was entered in Hawes, the case had not been “tried.” Thus
62
212 Ill. 2d at 105. The court then concluded that Section
2-1203(a) consists of “plain language.” Id.
Despite the apparently plain language in Section 2-1203(a)
limiting its applicability to post-trial motions, the context of
the statute as part of the “Post-Trial” part of the Code of Civil
Procedure and the background of its enactment as indicated
in the Historical and Practice Notes, the Hawes opinion extends the statute’s applicability to motions to vacate voluntary
dismissal orders entered before trial. The ruling effectively
deletes the word “tried” from the statute.
The applicability of Section 2-1203(a) to the Hawes suit
is also debatable because the suit was a jury case, not a
non-jury case.3 See, 212 Ill. 2d at 95. By ruling that Section
2-1203(a) applies to the motion to vacate the voluntary dismissal order in Hawes (a case in which a jury demand had
been made), and by ruling that Section 2-1203(a) supersedes
the ruling in Weisguth (a jury case), the Illinois Supreme Court
has effectively removed the words “non-jury cases” and the
words “tried without a jury” from the statute.
After Hawes, Section 2-1203(a) effectively reads:
Motions after judgment.
(a) In all cases any party may, within 30 days after the
entry of the judgment or within any further time
the court may allow within the 30 days or any extensions thereof, file a motion for a rehearing, or a
retrial, or modification of the judgment or to
vacate the judgment or for other relief.
Regardless of whether one may question the court’s reliance on Section 2-1203(a) as the basis for its decision, the
Hawes opinion is now a matter of stare decisis. Because it is
now clearly the law that a plaintiff has a right to seek vacation
of an order of voluntary dismissal and reinstatement of the
case prior to trial, a number of questions or concerns regarding
how this development might affect civil trial practice merit
consideration.
The first question is whether a plaintiff will automatically
be allowed to have a voluntary dismissal order vacated and
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the suit reinstated. Apparently the answer to this question is
no. Under Hawes, Section 2-1203(a) provides only the availability of the remedy of vacation of the dismissal order and
reinstatement of the suit, not a guarantee that the remedy will
be granted. Section 2-1203(a) permits the filing of a motion
to vacate within 30 days after entry of the order or within
any extension of time granted for filing the motion. But Section 2-1203(a) does not say that the trial court must grant the
motion. Whether to grant the motion is a matter for the trial
court’s discretion. See, Hawes, 212 Ill. 2d at 106.
If the trial court denies a motion to vacate an order of
voluntary dismissal, a plaintiff who wishes to keep his or her
“Additionally, under Section
13-217 any re-filing of a voluntarily dismissed suit must take
place within one year of the date
of the prior dismissal, or whatever time remains before the applicable statute of limitations runs,
whichever is longer.”
case going will have to take one of two actions – appeal from
the order denying the motion to vacate, or file a new suit.
Another concern is whether there is any limit to the number
of times a plaintiff can obtain vacations of voluntary dismissal
orders. Section 13-217 of the Code of Civil Procedure (735
ILCS 5/13-217) limits the plaintiff’s ability to refile suit after
a prior voluntary dismissal of that suit. Under Section 13-217
the plaintiff is allowed only one refiling of a suit previously
dismissed per motion for voluntary dismissal. Gendek v.
Jehangir, 119 Ill. 2d 338, 518 N.E.2d 1051, 116 Ill. Dec. 230
(1988). Additionally, under Section 13-217 any re-filing of
a voluntarily dismissed suit must take place within one year
of the date of the prior dismissal, or whatever time remains
before the applicable statute of limitations runs, whichever
is longer.
But vacating an order of voluntary dismissal and reinstating
the case is not the equivalent of a refiling of the suit. When
an order is vacated, it is as if the order had not been entered
at all; it has the same effect as a void order. Kelch v. Watson,
237 Ill. App. 3d 875, 604 N.E.2d 971, 178 Ill. Dec. 448 (3rd
Dist. 1992) Apparently no statute or rule prevents a plaintiff
who has succeeded in getting a previously dismissed case
reinstated from taking another voluntary dismissal and later
refiling the suit within one year or whatever time remains
under the statute of limitations. Id.
Additionally, because allowing or not allowing vacation
of a voluntary dismissal order and reinstatement of a suit
pursuant to a timely filed motion is a matter of discretion,
the possibility of abuse of the procedure exists. Conceivably
a trial judge could exercise discretion and allow a plaintiff
to obtain multiple voluntary dismissals followed by vacations of the dismissal orders and reinstatement of the suit. To
assure that type of abusive practice does not occur, Section
13-217 or 2-1203(a) should be changed to allow a plaintiff
who voluntarily dismisses a case either one reinstatement or
one refiling, but not both.
Yet another concern is whether plaintiffs will be allowed
to use the vehicle of a voluntary dismissal followed by a motion to vacate the dismissal order as a ruse for continuing the
trial. Subject to two qualifications, Section 2-1009(a) of the
Code of Civil Procedure (735 ILCS 5/2-1009(a)) confers on
plaintiffs an “unfettered right” to voluntarily dismiss their suits
without prejudice before the trial or hearing begins. Morrison
v. Wagner, 191 Ill. 2d 162, 165, 729 N.E.2d 486, 246 Ill. Dec.
113 (2000). The first qualification is provided by subsection
(b) of section 2-1009, which gives the trial court discretion to
hear and decide a defendant’s case-dispositive motion (e.g.,
a summary judgment motion) before ruling on the motion
for voluntary dismissal. Id. The second qualification is that a
motion for voluntary dismissal may not be granted if doing so
would directly conflict with an Illinois Supreme Court rule.
Id., citing Catlett v. Novak,116 Ill. 2d 63, 69, 506 N.E.2d 586,
106 Ill. Dec. 786 (1987) and O’Connell v. St. Francis Hospital,
112 Ill. 2d 273, 492 N.E.2d 1322, 97 Ill. Dec. 449 (1986).
Thus, assuming that neither of the two qualifications are
present, a plaintiff who may not want to go to trial, but who
has no good excuse for getting the trial continued, can effectively continue the trial by exercising the unfettered right
to dismiss the case voluntarily and then (within the next 30
days) filing a motion to vacate the dismissal. When asked to
make a discretionary ruling that will allow a plaintiff to keep
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Voluntary Dismissal (Continued)
a suit alive, which has not been disposed of on the merits,
trial judges naturally tend to exercise discretion in a way that
keeps the case going. Hopefully trial judges will discern when
a voluntary dismissal order followed by the filing of a motion
to vacate is simply a ruse by the plaintiff’s attorney to obtain
a trial continuance. Under such circumstances discretion will
be better exercised by denying the motion to vacate.
Of course, diligent, skilled plaintiff’s attorneys with
meritorious cases are not likely to abuse the process in this
way. However, a less-than-diligent plaintiff’s attorney who
finds himself or herself unprepared to proceed to trial, or a
plaintiff’s attorney who senses that the defendant might be
hindered in its defense by postponement of the trial, might
very well employ this method simply to put off the trial for a
while.
Supreme Court Rule 219(e) attempts to discourage abuse
by plaintiffs of their right to obtain voluntarily dismissals.
That rule states:
A party shall not be permitted to avoid compliance
with discovery deadlines, orders or applicable rules by
voluntarily dismissing a lawsuit. In establishing discovery deadlines and ruling on permissible discovery and
testimony, the court shall consider discovery undertaken
(or the absence of same), any misconduct, and orders
entered in prior litigation involving a party. The court
may, in addition to the assessment of costs, require the
party voluntarily dismissing a claim to pay an opposing
party or parties reasonable expenses incurred in defending the action including but not limited to discovery
expenses, expert witness fees, reproduction costs, travel
expenses, postage, and phone charges.
The first sentence of Rule 219(e) does provide some constraint on an unwarranted dismissal followed by reinstatement.
That part of the rule should guarantee that a plaintiff will not
be allowed to avoid compliance with scheduling deadlines,
rules, and so forth via a voluntary dismissal. The rule appears
to apply even if the voluntary dismissal order is vacated.
However, that part of the rule does not prevent the effective
continuance of the trial via a voluntary dismissal of the case
followed by a reinstatement, if the trial had been scheduled to
start within 30 days of the time the voluntary dismissal order
is entered.
The relief available under the second sentence of Rule
219(e) also offers only limited help to a defendant in a voluntarily dismissed but reinstated case. Once the case is reinstated,
any scheduling order previously entered under Supreme Court
64
Rule 218 should be in effect again. The only date that might
have to be amended would be the trial date, if the dismissal
and reinstatement had the effect of continuing the trial, as
discussed above.
The possibility of an award to the defendant of reasonable
expenses incurred in defending a case, as permitted by the
third sentence of Rule 219(e), can be a strong deterrent to a
plaintiff voluntarily dismissing a case. But, of course, since
the rule says the court “may” award expenses, whether to
“Because when an order is
vacated it has the same effect as
a void order (See, Kelch, 237
Ill. App. 3d at 877), it would be
difficult to justify an award of expenses on the basis of a voluntary
dismissal order which has been
vacated.”
give any award is a matter of the trial judge’s discretion. In
exercising that discretion, the trial judge may decide not to
award litigation expenses to the defendant when the case is
voluntarily dismissed.
Furthermore, even assuming that the judge does award
litigation expenses to the defendant under Rule 219(e), if
the dismissal order is vacated and the case is reinstated, it is
likely that the award of expenses also will have to be vacated.
Because when an order is vacated it has the same effect as
a void order (See, Kelch, 237 Ill. App. 3d at 877), it would
be difficult to justify an award of expenses on the basis of a
voluntary dismissal order which has been vacated. Thus, the
possibility of getting litigation expenses reimbursed likely
will benefit the defendant only if the motion to vacate the
voluntary dismissal order is denied.
Whether or not the trial judge applies Rule 219(e) in a way
that benefits the defendant, whenever a case is reinstated or
refiled after a voluntary dismissal, the defendant will have the
disadvantage of continuing to incur attorney’s fees, costs and
expenses through the protraction of the litigation.
Second Quarter 2005
Probably the most effective way of preventing a plaintiff
from abusing the system through taking multiple voluntary
dismissals is for the Illinois Supreme Court to adopt a rule
or for the legislature to enact a statute limiting a plaintiff to a
single reinstatement or refiling of the suit after any voluntary
dismissal.
Conclusion
Hawes v. Luhr Bros., Inc. is a curious decision. Its interpretation of Section 2-1203(a) as applying to motions to
vacate voluntary dismissal orders entered prior to trial seems
contrary to the plain language of that section of the Code of
Civil Procedure. More importantly, the decision opens the
door to potential abuse of the plaintiff’s right to obtain a voluntary dismissal. Amendment of the Supreme Court Rules or
Code of Civil Procedure may be required to avoid abuse of
the procedure.
Endnotes
The Civil Practice Act was the predecessor to the present Code of
Civil Procedure. Section 2-1203 of the Code of Civil Procedure was
paragraph 68.3 of the Civil Practice Act.
2
It does not seem logical that Section 2-1009 could authorize motions
for voluntary dismissal after trial. Otherwise, a plaintiff could go through
a trial and, if a judgment is entered adverse to the plaintiff, voluntarily
dismiss the case, re-file it and try it again later.
Once a trial has taken place and a judgment has been entered, the
plaintiff has no right to dismiss the case voluntarily. See, Commissioners of Union Drainage Dist. No. 3 v. Commissioners of Highways of
Towns of Virgil and Cortland, 220 Ill. 176, 77 N.E. 71 (1906); Winger
v. Chicago City Bank & Trust Co., 392 Ill. 624, 65 N.E.2d 688 (1946);
Baird & Warner, Inc. v. Addison Industrial Park, Inc., 70 Ill. App. 3d 59,
387 N.E.2d 831, 26 Ill. Dec. 1 (1st Dist. 1979). The judgment becomes
res judicata. See, Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 665
N.E.2d 1199, 216 Ill. Dec. 642 (1996).
3
The Hawes suit was brought under the Jones Act (46 App. U.S.C.
§ 688). There is a disagreement in the Illinois appellate court districts
concerning whether a defendant in a Jones Act case has a right to demand
a trial by jury. The Fifth District Appellate Court has concluded that
only the plaintiff, but not the defendant, has a right to demand a jury
in a Jones Act suit. See, e.g., Allen v. Norman Bros., Inc., 286 Ill. App.
3d 1091, 678 N.E.2d 317, 222 Ill. Dec. 705 (5th Dist. 1997); Gibbs v.
Lewis & Clark Marine, Inc., 298 Ill. App. 3d 743, 700 N.E.2d 227, 233
Ill. Dec. 126 (5th Dist. 1998); Hanks v. Luhr Bros., Inc., 303 Ill. App.
3d 661, 707 N.E.2d 1266, 236 Ill. Dec. 696 (5th Dist. 1999). But the
Fourth District disagrees, finding that the defendant also has a right to
jury trial in a Jones Act case. Hutton v. Consolidated Grain & Barge
Co., 341 Ill. App. 3d 401, 795 N.E.2d 303, 276 Ill. Dec. 950 (4th Dist.
2003).
1
Property Insurance
By: Tracy E. Stevenson
Chuhak & Tecson P.C.
Chicago
Obtaining Property after Judgment
has Been Rendered
Often times, in the excitement or stress of a trial, the
thought of what to do after the judgment is entered is not in
the forefront of our consciences. Whether you have won or
lost at trial, lawyers will quickly recognize that the next step
in trial, collection, often results in the service of citations to
discover assets. How we defend against a citation or use a
citation to obtain payment on a judgment can make a difference to a client, especially pertaining to those assets that
may potentially be exempt from collection. This article will
briefly discuss the statute and case law pertaining to citations
to discover assets.
Citations to Discover Assets – The Illinois Statute
Usually, collection activities must be commenced through
the issuance of a citation to discover assets. Illinois law proscribes that [a] “citation under [735 ILCS 5/2-1402] does not
constitute a separate ‘claim or cause of action’ but rather, is a
discovery proceeding whereby a creditor is allowed to examine any person with the view of discovering assets or income
to be applied to the satisfaction of a judgment.” Green v. Alton
Tel. Printing Co., 107 Ill. App. 3d 755, 763-764, 438 N.E.2d
203, 209 (5th Dist. 1982). Thus, the issuance of a citation to
About the Author
Tracy E. Stevenson is a partner in the Chicago firm of Chuhak and Tecson, P.C., where she concentrates her practice
in medical malpractice defense and insurance defense. She
has defended cases on behalf of physicians and hospitals
and represented various major insurance companies in
claims for personal injury. She is licensed in Michigan as
well as Illinois.
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IDC Quarterly
Property Insurance (Continued)
discover assets is a proceeding supplemental to the proceeding in which a judgment was entered. However, similar to a
Subpoena, a citation draws third parties into the jurisdiction
of the court. Importantly, the statute mandates notice to the
judgment debtor to permit the debtor to claim exemptions or
otherwise object to a Turnover of Assets. 735 ILCS 5/2-1402
(a) states “whenever a citation is served upon a person or party
other than the judgment debtor, the officer or person serving
the citation shall send to the judgment debtor, within three
business days of service upon the cited party, a copy of the
citation and the citation notice, which may be sent by regular
first-class mail to the judgment debtor’s last known address.”
735 ILCS 5/2-1402 (a). Thus, the party issuing the citation
is not obligated to unequivocally locate the judgment debtor,
but must, instead, send notice only to the last known address.
In some instances, the already minimal notice provisions
may be relaxed further. Illinois courts have recognized the
need for an exception to the personal service requirement
for 735 ILCS 5/2-1402 matters and allows service upon an
attorney who represented the party in the underlying action.
Grover v. Franks, 27 Ill. App. 3d 900, 903-905, 327 N.E.2d
71, 73-75 (2nd Dist. 1975). The court in Pub. Taxi Serv., Inc.
v. Ayrton, 15 Ill. App. 3d 706, 712-713, 304 N.E.2d 733, 73839 (1st Dist. 1973) allowed notice to be sent to a creditor’s
attorney where the attorney had been authorized to represent
the creditor in the garnishment proceedings, the attorney had
been in the process of enforcing the judgment when he received the debtor’s citation, the attorney knew the creditor’s
address but refused to reveal it, and the debtor made every
possible effort to locate the creditor before sending notice to
the attorney. Further, the court in Manley Motor Sales Co. v.
Kennedy, 419 N.E.2d 947, 949-50, 95 Ill. App. 3d 199, 202203 (2nd Dist. 1981) acknowledged that Illinois requires strict
application of service rules, but also stresses that this strict
application can be avoided if “. . . there is a basis to relax the
rules.” Thus, post judgment proceedings should be discussed
in depth with a client, whether an attorney is serving citations
or representing a judgment debtor. Proof of lack of notice may
permit recourse in the event assets are turned over.
The importance of the notice to the judgment debtor is to
advise the judgment debtor that “the judgment debtor has the
right at the citation hearing to declare exempt certain income
or assets or both.” 735 ILCS 5/2-1402. A plain reading of this
statute suggests that in order to declare certain assets exempt,
a judgment debtor must raise the exemption at the citation
hearing. (735 ILCS 5/2-1402 (b)(5)). There is little dispute
in the law that exemptions are a personal privilege and not a
right, thus, if the exemptions are not properly claimed, they
66
may be deemed waived. Guess, Inc. v. Chang, 912 F. Supp.
372, 379 (N.D. Ill. 1995). The court in Guess, Inc. expressly
held that if a defendant has the opportunity to claim exemptions and repeatedly fails to do so, the exemptions are deemed
waived. The Guess court found that a defendant waived his
exemption after claiming it 10 days late. Id. See also, In Re
Marriage of Murphy, 338 Ill. App. 3d 1095, 1097, 274 Ill.
Dec. 917, 919, (4th Dist. 2003) (finding that 735 ILCS 5/21402 (b) merely set forth the procedure to be followed in
supplementary proceedings by a judgment creditor to discover
assets that could be used to satisfy a judgment and provided
the form for the citation notice; it does not confer any substantive rights or exemptions on a judgment debtor.) The Court
Illinois courts have recognized
the need for an exception to the
personal service requirement for
735 ILCS 5/2-1402 matters and
allows service upon an attorney
who represented the party in the
underlying action.
in In Re Marriage of Murphy, 338 Ill. App. 3d 1095, 1097,
274 Ill. Dec. 917, 919, (4th Dist. 2003) found that 735 ILCS
5/2-1402 (b) merely sets forth the procedure to be followed in
supplementary proceedings by a judgment creditor to discover
assets that could be used to satisfy a judgment and provides
the form for the citation notice, but the section does not confer
any substantive rights or exemptions on a judgment debtor. If
a judgment debtor does not file his or her claim for exemptions at the appropriate time, during those third party citation
hearings, he or she may be deemed to have intentionally and
knowingly waived his rights. LaVelle v. Dominick’s 227 Ill.
App. 3d 764, 771, 592 N.E. 2d 287, 291-292 (1st Dist. 1992).
Motions for Turnover
Once a party has established that a judgment debtor has
assets held by a third party, those assets must be seized. Following receipt of information responsive to a citation, the
Second Quarter 2005
attorney for the party seeking to recover the assets generally
must file a motion to turn the assets in question over to the
Judgment Creditor. 735 ILCS 5/2-1402 (c) grants the court
authority to “compel any person cited to execute an assignment of any chose in action or a conveyance of title to real
and/or personal property.” In fact, the statute grants the court
authority to authorize the judgment creditor to maintain an
action against any person or corporation that, it appears upon
proof satisfactory to the court, is indebted to the judgment
debtor, for the recovery of the debt . . .”
The courts will often make this assessment following the
filing of a motion to turnover assets and based upon proper
conformity with the multiple elements of 735 ILCS 5/21402(c). In fact, the statute even permits the court to “. . .
provide for the disposition of any monies in excess of the sum
required to pay the judgment creditor’s judgment and costs
allowed by the court.”
Thus, the statute is aimed at collections from any source,
and citation respondents are not afforded many protections
other than a showing that the assets in question do not belong
to the judgment debtor. Further, during the time that a citation
is pending a citation respondent is enjoined from transferring or otherwise disposing of the asset in question until the
proceeding is terminated. 735 ILCS 5/2-1402(f). Thus, it behooves counsel to be aware of the citations which are outstanding so as not to unwittingly transfer an asset, thus opening up
the citation respondent or a client to additional penalty.
Conclusion
Citations to discover assets can attach to more than monetary assets. As noted above, a citation can be directed to
banks, safety deposit box holders, property, including cars,
homes, boats and other tangible assets. Valuation of these
goods then becomes an issue which may also require redress
from the courts. Citations to discover assets are both a tool
and an effective means to collect a judgment. The statute is a
replete with appropriate remedies and safeguards. While we,
as trial attorneys, think of verdicts, the next step: the collection of judgments, is of vital import to our clients and must
be considered as a phase of trial, not simply a post-judgment
proceeding. As we all know, time is of the essence in the
preparation for trial and the collection of a judgment. The next
column will consider the ramifications of transfers of assets
following judgment and the Illinois Fraudulent Transfer Act.
Appellate Practice Corner
By: Brad A. Elward
Peoria
Appellate Motion Practice
The most frequent questions I hear raised concerning appellate practice relate to motions. What does a motion for
such-and-such look like? How do we ask for more time?
What should I attach to my motion? These are all common
inquiries. Fortunately, there are few rules governing appellate
motions. As a rule of thumb, motions should seek to further
or resolve some issue in the appeal. Indeed, the only serious
limitation is that the appellate court be capable of granting
the type of relief requested. See Supreme Court Rule 366(a).
The appellate court can enter any judgment or make any order
that “ought to have been given or made.”
Whether filed with the supreme court or the appellate court,
a specified motion judge hears most motions. As noted below,
the supreme court has different rules depending on whether the
motion is a single judge or full-court motion. In the supreme
court, the justice of the district from which the motion arose
handles motions (though motions filed from cases in the First
District rotate among the three justices). Motions are granted
or denied and are at times taken with the case. However, after
hearing the full arguments, an appellate court may nevertheless grant a motion it previously denied. See Hwang v. Tyler,
About the Author
Brad A. Elward is a partner in the Peoria office of
Heyl, Royster, Voelker & Allen. He practices in the area
of appellate law, with a sub-concentration in workers’
compensation appeals and asbestos-related appeals. He
received his undergraduate degree from the University of
Illinois, Champaign-Urbana, in 1986 and his law degree
from Southern Illinois University School of Law in 1989.
Mr. Elward is a member of the Illinois Appellate Lawyers
Association, the Illinois State, Peoria County, and American Bar Associations,
and a member of the ISBA Workers’ Compensation Section Counsel.
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IDC Quarterly
Appellate Practice Corner (Continued)
253 Ill. App. 3d 43, 625 N.E.2d 243 (1st Dist. 1993). If a
motion is taken with the case, the court is simply saying that
it is not prepared to decide the motion at that time, but that
it will rule on the motion in conjunction with the appellate
briefs and argument.
Appellate motions frequently handled by the motion or
single judge include motions for extensions, motions to strike
parts of the brief, and motions relating to the timing or need
for oral argument. Where the matters raised by motion relate
to the actual issues in the case, or relate to jurisdictional issues,
the motion may be given to the panel and taken with the case
at oral argument.
Motion Procedures
Supreme Court Rule 361 outlines the general procedures
for appellate motions. In its simplest terms, a motion must
state the relief sought and supporting grounds. In this respect,
counsel should concisely state what it wants the appellate court
to do and why, with citation to legal authority. Although there
are no page limitations, long motions do not generally sit well
with the appellate court. Memoranda may also be filed, but
my experience suggests that a single, comprehensive motion
is more appropriate.
Rule 361(b) provides that all motions must be accompanied by a proof of service indicating that all parties have been
served. If the motion is filed with the supreme court when it is
in session, an original and one copy is to be sent to the court in
Springfield. Motions to the appellate courts require an original
and three copies unless the appeal is to the Appellate Court,
Illinois Workers’ Compensation Commission Division, which
requires an original and five copies (to reflect the additional
justices). Supreme Court Rule 361(b)(3).
Where the supreme court is not in session, Rule 361(c)
mandates different procedures. Since the court is only in
session part of the year, counsel should first call the clerk’s
office and verify its present status. Once the “in-session”
status is determined, the next question is to decide if the motion is one for the full court or whether it may be decided by
a single judge, which in turn determines the method of filing.
If the motion is one that may be granted by a single judge,
filing is as follows: for cases arising out of the First District,
an original and one copy of the motion (with proof of service
and a proposed order) must be filed with the justice designated
to hear motions at the supreme court clerk’s Chicago office.
Responses are filed in the same manner and are due within
three (3) days of personal service or within five (5) days of
service by mail. Rule 361(c) (1).
Single judge motions filed in the remaining districts are to
68
be served on the justice for that district at his or her district
office, with an original filed with the clerk in Springfield.
The proof of service for the clerk’s motion should indicate
the name of the justice served and that a proposed order was
filed with the motion. Responses must be filed in Springfield
within five (5) days of personal or fax service or ten (10) days
of service by mail, with a copy to the named justice.
If the supreme court motion requires full court disposi-
“If a motion is taken with the case,
the court is simply saying that it is
not prepared to decide the motion
at that time, but that it will rule on
the motion in conjunction with the
appellate briefs and argument.”
tion, the procedures are slightly different. Motions for cases
arising out of the First District must be filed as an original
and five copies in Chicago, with a copy sent to each justice
at his or her district office. Responses are filed in the same
manner, and are due within five (5) days of personal or fax
service, and ten (10) days of service by mail. Rule 361(c)(2).
For cases arising outside the First District, counsel should
send an original and one copy to the clerk in Springfield, with
service on the individual justices at their personal offices. The
response time is the same as for full-court motions filed in
First District cases.
Types of Motions
“Housekeeping” Motions
Certain appellate motions can be thought of as “housekeeping” in nature. These include motions for extension, motions
relating to the record or report of proceedings, and motions
relating to oral argument. Motions seeking an extension of
time to file a brief should be filed as soon as possible and
should state reasonable grounds for the additional time - other
commitments, emergencies, prepaid vacation, etc. Counsel
should also indicate if previous extensions have been granted
and the reasons for those rulings. Rule 361(f). Filing an af-
Second Quarter 2005
fidavit is suggested. Also, if you are asking for the extension
because of other pending matters, specifically reference those
cases by title, case number, and court, and also note the due
date and nature of the commitment. For example:
Counsel has other pre-existing appellate commitments in
the following cases:
Appellant Brief, due June 12, 2005, Milano v. State of
Illinois, No. 4-05-1000, Appellate Court, Fourth District;
Petition for Leave to Appeal, due June 16, 2005, Hingis
v. Sharapova, No. 19225, Supreme Court.
Using this format gives your motion more credibility and
informs the court of the true nature of your other commitments. If you believe that your opponent will not object, call
him and then indicate in your motion that you have spoken
with opposing counsel, who has no objection to your motion.
You can also label your motion as “Stipulated” or “Agreed,”
and note the same in your cover letter. Doing so often results
in a quicker order, as the court does not need to wait for an
objection.
Similar motions relate to the record on appeal. A party may
wish to supplement the current record with materials omitted
from the circuit court record or obtain an extension of time
to file the record or report of proceedings due to a delay in
preparation. See Rules 323(e) (reports of proceedings) and
325 (records on appeal). If supplementing the record, include
an affidavit of counsel indicating that the documents were
part of the circuit court record and considered by the circuit
court, but somehow were omitted. In the latter instance, use
an affidavit from the court reporter or the circuit clerk to support your motion. Although the rules say that a “reasonable
excuse” justifying the extension is needed only when the
motion is made after the record or report of proceedings due
date, good practice dictates always including a description of
the grounds. Examples include: a lengthy multi-week trial, a
court reporter backlog, or a voluminous court record.
Another housekeeping motion relates to additional or
supplemental authority. Such a motion should be used to notify
the court of recent decisions that may have been handed down
since the filing of the briefs, or to cite a case that was simply
overlooked. While the court may frown upon your failure
to discover the case in your initial research, justices would
nevertheless prefer to make their decision with the benefit of
accurate law. In any event, copies of the additional authority,
especially if a new decision, should be attached to the motion. Most of my motions to supplement simply provide the
additional authority, note that it was recently handed down,
and indicate to which issue the case relates. Some attorneys
will provide a more detailed argument, but that might provoke
an objection or an attempt to file a written argument by your
opponent.
Counsel may also file motions concerning oral argument.
The most common motion is one that seeks additional time
(most appellate courts limit argument time to 15 or 20 minutes)
pursuant to Rule 352(b), or seeks to distribute time among
multiple attorneys (only two attorneys may argue one side of
a case) pursuant to Rule 352(d). Such motions should reference the rule and should specifically ask for the desired time
distribution. Note that a simple request for a divided argument
may not result in additional time without a specific request
by the movant. Moreover, the motion should be filed well in
advance of the argument date. If counsel is going to be gone
during a portion of a month when he or she believes that oral
argument might be set, counsel should simply forward the
clerk a letter indicating the dates he will be gone, and then
copy opposing counsel.
Other motions include those seeking substitution of counsel, motions for leave to obtain additional pages for the brief,
motions to substitute a party (Rule 366(a)(2)), motions to
dismiss due to settlement, and motions for publication (Rule
23(f)). Motions to expedite an appeal are governed by Rule
311 and should be filed immediately after or in conjunction
with the filing of the docketing statement and should be supported by an affidavit and good cause.
Substantive Motions
Substantive motions are rare and in many cases are represented by motions to dismiss for lack of jurisdiction. For
these, a supporting record must be provided. The courts generally recommend raising dispositive jurisdictional issues as
soon as possible so that the issues may be addressed before
the parties incur the time and expense of preparing a brief.
In appropriate cases, a motion to stay the briefing schedule
pending disposition of the motion may accompany such a
request. If the motion to dismiss is denied, you may wish to
continue to preserve the issue by raising it in your brief.
Emergency Motions
A few instances might arise justifying an emergency motion. While there is no set procedure in Illinois for emergency
motions, all districts recognize that in certain cases, emergencies arise that requires immediate attention. Where possible,
call the clerk of the court to see how the emergency motion
should be handled. Motions for a stay of an underlying proceeding sometimes fall within the emergency category. Rule
69
IDC Quarterly
Appellate Practice Corner (Continued)
305 governs motions for stays and requires that the movant
show either that a motion was made and denied by the circuit
court, or that such a motion is impracticable. In any event,
emergency motions should be hand-delivered or filed with
overnight mail and the cover letter should plainly indicate
that the enclosed matters are being presented on an emergency basis. Again, appropriate supporting record documents
must be filed with the motion. If you are asking the court for
emergency relief, give it the courtesy of providing it with all
materials necessary to address the issues.
What to Attach to Motions
In addition to an affidavit, where required, and a proposed
order stated in the alternative, a movant should also include
with the motion copies of all relevant documents necessary
for the appellate court to rule on the motion. Supreme Court
Rule 328 states that if the record on appeal has not yet been
filed, the movant must provide those portions of the record
that will aid the court in ruling on the motion. It is also helpful
to include as an attachment a copy of the underlying order
and the notice of appeal. Examples of the documents for a
supporting record include copies of relevant correspondences,
lower court orders, or other pleadings. In the case of a motion seeking substantive relief, relevant documents from
the record should be attached, with the record citation mark
clearly visible. Counsel’s affidavit should also indicate that the
documents attached to the motion represent true and accurate
copies of those found in the record on appeal. See Rule 328.
Facts that are not in the record must always be supported by
an affidavit. Rule 361(a).
Responses to Motions
As a general rule, responses should only be filed to substantive motions. Motions requesting additional pages for a
brief, extensions of time, and other routine matters should
be responded to only when some overriding need exists,
such as a party’s third motion for extension of time. Also, if
you chose to respond, it sometimes helps to call the clerk’s
office and let them know that a response is forthcoming. In
the unusual event that the court rules prior to receipt of your
response, you can file a motion to reconsider. A similar call
informing the clerk you are not opposing the motion is also
welcomed. The courts do not allow replies to responses nor
oral argument, except by permission of the court.
70
Commercial Law
By: James K. Borcia
Tressler, Soderstrom, Maloney & Priess
Chicago
First District Refuses to Allow
“Chinese Wall” as a Defense to
Enforcement of a Restrictive Covenant
Appelbaum v. Appelbaum, No. 1-04-2627 (1st Dist. 2005).
The First District Appellate Court was recently faced with
the issue of whether the “Chinese Wall” concept normally pertaining to conflicts of interest in professional settings applies in
the context of enforcement of a restrictive covenant. The term
“Chinese Wall” describes a strategy used by organizations to
prevent the flow of confidential information from one person
to another. The First District refused to allow a “Chinese Wall”
defense to a restrictive covenant enforcement claim.
Appelbaum involved a dispute between members of the
Appelbaum family’s frozen shrimp business, Penguin Frozen
Foods, Inc. (“Penguin”). William Appelbaum was a brother of
the Appelbaum family and a Penguin employee. J.W. Appelbaum, William’s cousin, left Penguin and formed a new company with William called Worldwide Shrimp (“Worldwide”).
J.W., who was Penguin’s top salesperson, prior to leaving
Penguin signed a restrictive post-employment covenant with
Penguin that included a non-solicitation clause.
About the Author
James K. Borcia is a partner with the Chicago firm of
Tressler, Soderstrom, Maloney & Priess, and is active in the
firm’s litigation practice with an emphasis on commercial
and complex litigation. He was admitted to the bar in 1989
after he received his J.D. from Chicago-Kent College of
Law. Mr. Borcia is a member of the Chicago and Illinois
State Bar Associations, as well as the IDC and DRI.
Second Quarter 2005
Penguin moved for a preliminary injunction that sought to
preclude J.W. from soliciting any of the customers serviced
by J.W. while he was employed by Penguin. At the hearing on
Penguin’s motion, J.W. testified that after leaving Penguin, he
had not contacted any of the customers on Penguin’s customer
list and that he had told several of the customers he could not
sell to them due to the restrictive covenant. Worldwide had
solicited business from a number of Penguin’s customers.
J.W. claimed that William was the one who had contacted
the customers and suppliers and that William was not bound
by the restrictive covenant. William testified that he retreated
to a separate office when talking to Penguin’s customers and
that J.W. was not involved in those conversations.
The trial court granted Penguin’s motion for preliminary
injunction, finding that Penguin had a protectable interest
in its suppliers and customers. The First District reversed,
finding that there was insufficient evidence to show that Penguin had near-permanent relationships with its suppliers and
customers. The court noted the service nature of Penguin’s
business, which was selling shrimp, a non-unique product.
The court noted that service type businesses such as Penguin
are not the type that can easily show near-permanent relationships in order to establish the right to injunctive relief.
The court found that there was insufficient evidence to show
the frequency of customers’ orders with Penguin, whether
the customers used other suppliers in addition to Penguin
or whether a determination of the customers’ identity was
time-consuming, expensive or difficult for Penguin when it
attempted to acquire new customers. The court then addressed
Penguin’s attempt to enjoin William as well as J.W.
William, unlike J.W., had not signed a restrictive covenant with Penguin. In response to this claim, William and
J.W. contended that they implemented a “Chinese Wall” to
prevent J.W. from assisting William to solicit the customers
and suppliers that J.W. could not directly solicit. The appellate court found that William and J.W.’s “Chinese Wall” was
inadequate to protect Penguin’s interests. In concluding that
the trial court’s finding that Worldwide’s “Chinese Wall” did
not protect William from being enjoined was not against the
evidence, the court cited the following factors: (1) the small
size of Worldwide; (2) J.W.’s position in the company and
the likelihood of contact between J.W. and William; (3) the
fact that J.W. played several important roles at Worldwide as
its president, treasurer and half of its sales team at the time
Penguin moved for preliminary injunction; (4) Worldwide’s
small size, which made it unlikely that J.W. and William could
manage the business without sharing information about its
clientele; (5)the fact that J.W. and William ran Worldwide
together; (6) the fact that due to J.W. and William’s positions
in Worldwide, they lacked any mechanism to enforce the
“Chinese Wall,” such as a person with more authority to ensure
they did not share information about J.W.’s former customers;
(7) the fact that J.W. received financial benefit from any sales
William secured from Penguin’s customers; (8) the fact that
Worldwide was a closely held corporation; and (9) the fact
that Worldwide’s only other shareholder besides J.W. and
William were William’s two children.
Despite the fact that there was no proof of any influence
by J.W. over William on his solicitations to the customers, the
court was willing to extend the covenant to the activities of
the new company, Worldwide. This ruling will be beneficial
to those who attempt to enforce restrictive covenants against
employees who leave to go to small companies, where the
ex-employee claims that he had no direct involvement with
the new company’s solicitation.
“The court found that there was
insufficient evidence to show the
frequency of customers’ orders
with Penguin, whether the
customers used other suppliers in
addition to Penguin or whether
a determination of the customers’ identity was time-consuming,
expensive or difficult for Penguin
when it attempted to acquire new
customers.”
71
IDC Quarterly
Alternative Dispute Resolution
By: John L. Morel
John L. Morel, P.C.
Bloomington
Attorney, Retired Judge, Non-Attorney:
Whom Should a Lawyer Hire as a Mediator?
Some think a retired judge is preferable as a mediator
because the weight of the robe brings the parties together,
which is particularly true with stubborn clients. Clients usually
recognize the vast experience most judges have in presiding
over any variety of cases and the settlement process, and will
be impressed with such a mediator. In litigated cases a judge’s
opinion seems to carry more weight and his or her presence
and experience can make a difference. Others believe judges
are not good mediators because they are used to getting by on
the sheer power of their position. Unless judges are progressive and can retool their thinking, they may not do as well
as a good attorney/mediator. Good mediators don’t preside.
Others believe judges are not as effective because many of
them have used a bullying technique that is more effective
in mandatory settlement conferences, and which is counterproductive in a mediation.
Lawyers and clients alike prefer to be persuaded, listened
to and feel that they have been heard. Therefore, it can be
argued that attorney mediators are the best persuaders, as
they have become good listeners. Perhaps it can be said that
it comes down to style, demeanor and temperament. Judges’
professional experience has been to demand certain behavior
actions or activities. To engage their clients, however, lawyers
approach mediation from a “counseling” perspective. Attorney
mediators don’t view themselves as ones who can demand a
particular settlement, such as judges are used to doing. Lawyers, on the other hand, will seemingly endeavor to develop
engaging manners and not be intimidating or demanding in
the arbitration.
No judge likes to hear that practicing attorney mediators
have a style, demeanor and temperament that develops in
the general practice. Judges counsel, which they claim is
like mediating. They don’t demand or insist. Attorneys with
knowledge of an area of the law more likely than not will
72
grasp the nuances of the issues and be less intimidating than
retired judges.
Non-attorneys? I have never used a non-attorney as a
mediator, nor have I participated in any mediations where
the mediator is a non-attorney. Subtle legal issues often are
involved, and a resolution of those legal issues more likely
than not would be beyond the training, experience or understanding of the non-attorney. They may be good mediators
in certain employment cases, or cases generally, whether
the issues are less legal and more human relations. In these
instances, human resource personnel, psychologists and the
like can be effective. There may be cases where there are
multiple technical issues, non-legal technical issues, perhaps
with a product defect. There may be expertise in other areas
where knowledge and experience in the legal field brings very
little to the table.
Arguably, lawyers are better mediators because mediation
is about communication and persuasion. Architects, accountants and similar professionals are not about communication
and persuasion to the same extent. Mediating and the caucuses
with the mediator take place with the lawyer and his or her
client to indicate openly that litigation or further litigation is
not financially feasible. Therefore, the mediation must result
in a settlement. As we know, a trial, even with the strongest
case, carries with it an element of unpredictability, perhaps
not liability, but in the award.
One aspect of mediation that causes clients to be uncomfortable occurs when counsel for each side are involved in
casual banter. Without being rude or impolite, don’t give the
appearance to your client that you are “buddies” with opposing counsel, even if away from the mediation you are. Avoid
fraternizing with the enemy during a mediation.
Try not to say “no” even in the face of an unacceptable
offer. Make a counterproposal or interject an additional fact
of which, to your knowledge, opposing counsel and their
About the Author
John L. Morel concentrates his practice in civil trial
and appellate practice, as well as insurance law, at his
Bloomington firm of John L. Morel, P.C. He received his
B.A. from Western Illinois University and his J.D. from
the University of Illinois. Mr. Morel is a member of the
McLean County, Illinois State, and American Bar Associations. He is also a member of the IDC, FDCC, DRI,
National Association of College and University Attorneys
and the Illinois Appellate Lawyers Association. Mr. Morel sits on the Board
of Directors for the IDC.
Second Quarter 2005
client are not aware. Although doing so seems like tipping
your hat or hand, losing the benefit of surprise at trial if you
do not settle, attorneys must attempt to resolve the dispute, to
mediate to settlement. Don’t be intractable. Don’t hurry the
process and don’t exert pressure on the client to settle. Help
your client think through the pros and cons of accepting each
offer. Allow the client ample time to reflect.
Good mediators will take things slowly, which by far is the
best approach. Often the negotiations result in a stalemate.
Keep the matter open. Buy some time. Agree to adjourn or
recess from the mediation for the time being and to schedule
a time to reconvene after each party has had the opportunity
to reflect on the latest offer/demand. The passing of time or a
change in circumstances may result in a different approach.
Don’t take the position of “settlement is today and if it isn’t
we are going on to trial.” Sometimes it is more fruitful to
schedule several half days, rather than one full day. People get
tired and this can lead to crankiness. Take your time. Patience
should be the precursor.
The Defense Philosophy
By: Willis R. Tribler
Tribler Orpett & Meyer, P.C.
Chicago
Lessons From Basketball
I delayed the submission of this column for a week in the
hope that I could rejoice and analogize from the first national
championship for the University of Illinois basketball team.
Alas, it was not to be. Illinois was defeated in the championship game by North Carolina.
I was going to point out that Illinois’s ultimate victory
after 100 years of competition should give hope to people
who favor tort reform, merit selection of judges, the Cubs and
the White Sox. Even though that cannot be done, the Illinois
season provides two valuable lessons for trial lawyers.
The first is to start strong. Illinois fell behind by 15 points
to Arizona and two games later by 15 points to North Carolina.
It was able to come back to tie Arizona and go on to win. It
came back to tie North Carolina but could not hold on and
did not win. The lesson is that it is important to stay close. A
team that is close still has a chance, but once you get down
by 15 points, it is difficult to recover.
Thus, the opening statement is important. A lawyer must
make a solid, fact based opening statement so that the jurors
will understand what he or she hopes to prove. It is also important to present your evidence as early as possible. This is
not easy, as motions for directed verdict can be lost because
the defense introduced evidence that made a prima facie case
for the plaintiff, but it is very important to keep your story in
front of the jury.
The second lesson is found in the Arizona game that was
played the week before the championship game. Throughout
its season, Illinois had never used a strong full-court press.
However, for the several weeks before the tournament, Coach
Bruce Weber had practiced the full court press in case it
was needed. It turned out to be needed when Arizona took a
15-point lead. I cannot say that Arizona never considered the
possibility of such a press, but it did not seem to be ready for
one, and it suffered as a result.
Lawyers should not be predictable. You must study the
tendencies of the other side and plan strategy according to
those tendencies. However, you must not lock into a strategy
but must remain flexible and try to predict what the other side
might do to throw a monkey wrench into your plans. You
must prepare for such deviations. For instance, you cannot
assume that the plaintiff will call the defendant as an adverse
witness or that the other lawyer will make your case by crossexamining your client.
You must put yourself into the shoes of the other lawyer
and try to determine what that lawyer could do to upset your
applecart. You must then prepare for that tactic. Likewise,
you must not allow yourself to be too predictable.
Meanwhile, we Illinois stalwarts must keep the faith. There
is still hope for Illinois, tort reform, merit selection of judges,
the Cubs and the White Sox.
About the Author
Willis R. Tribler is a director of the firm of Tribler
Orpett & Meyer, P.C. in Chicago. He is a graduate
of Bradley University and the University of Illinois
College of Law, and served as President of the IDC in
1984-1985.
73
IDC Quarterly
Amicus Committee Report
By: Michael L. Resis
O’Hagan, Smith & Amundsen, L.L.C.
Chicago
Since we last reported, the Illinois Supreme Court has
handed down Blue v. Environmental Engineering, Inc., Docket
No. 98034, in which the IDC participated as amicus.
There, the issues before the Illinois Supreme Court were
whether (1) the risk-utility or risk-benefit analysis normally
used in strict products liability cases is applicable to defective
product design cases involving only a negligence theory of
recovery; and (2) a special interrogatory, asking if the danger
posed by the product was open and obvious, was properly
read to the jury. A divided court (one justice recused himself,
there were two concurrences and a partial dissenting opinion)
answered both questions in the negative, holding that the riskutility analysis was not applicable in a negligent design case
and that the special interrogatory on the open and obvious
defense was not proper.
First, the court held that the risk-benefit analysis normally
used in strict products liability cases is not applicable to defective product design cases involving only a negligence theory of
recovery. To establish a negligence claim for a defective design
of a product, a plaintiff must prove either (1) the defendant
deviated from the standard of care that other manufacturers
in the industry followed at the time the product was designed,
or (2) that the defendant knew or should have known, in the
exercise of ordinary care, that the product was unreasonably
dangerous and the defendant failed to warn of its dangerous
propensity. In contrast to the focus, under a negligence theory,
on the standard of care established by others in the industry,
the strict liability theory focuses on the product and only requires proof that the benefits of the challenged design do not
outweigh the risk of danger inherent in such designs, that the
alternative design would have prevented the injury, and that
the alternative design was feasible in cost practicality and
technology. Here, the appellate court erroneously held that
the risk-utility test was applicable in a negligence case, and
further erred in holding that once the plaintiff presents proof
of a defective design the burden shifts to the defendant who
must prove that the benefits of the design outweigh the risk
of danger inherent in such designs. Instead, the court made
74
clear that the burden of proof never shifts to the defendant and
remains with the plaintiff throughout his case. The court then
determined that the plaintiff may never have proven his case
because his expert did not testify to an industry standard or
that the standard was breached. However, as the defendant did
not ask for judgment notwithstanding the verdict on this basis,
the court left undisturbed the jury verdict for the plaintiff.
Next, the court considered whether the open and obvious doctrine was applicable. Generally, the doctrine is not
an absolute bar in either strict liability design or negligent
design cases. However, it may be part of the duty analysis
in negligence cases. If a defendant believes that an open and
obvious danger of the product is a complete bar to recovery,
the defendant should raise the issue in a motion for summary
judgment before trial. The court determined, however, that
the special interrogatory was not the appropriate vehicle to
raise the issue of duty when it was not a question for the jury
to decide.
One important issue deserves mention as it relates to this
case. Because only three members of the court signed the
opinion, it cannot be considered binding authority.
David B. Mueller of Cassidy & Mueller prepared the
amicus brief in support of the defendant-appellant.
During its January 2005 term, the Illinois Supreme Court
accepted the defendant’s petition for leave to appeal in TriG, Inc. v. Burke, Bosselman & Weaver, Docket No. 99584.
There, the appellate court (353 Ill. App. 3d 197, 817 N.E.2d
1230 (2d Dist. 2004)), with one justice dissenting, held that
a law firm could be held liable for punitive damages lost as a
result of legal malpractice. Thomas P. McGarry of Hinshaw
& Culbertson has written an amicus brief in support of the
defendant which the supreme court granted leave to file on
March 15, 2005.
About the Author
Michael L. Resis is a founding partner and chairman of
O’Hagan, Smith & Amundsen’s appellate department. He
concentrates his practice in the areas of appellate, insurance coverage and toxic, environmental and mass torts.
He has practiced law in Chicago for 20 years and handled
more than 400 appeals. Mr. Resis has represented government, business and professional organizations as amicus
curiae before the Illinois Supreme Court and the Illinois Appellate Court. He
received his B.A. degree, magna cum laude, from the University of Illinois at
Champaign-Urbana in 1978, and a J.D. degree from the University of Illinois
at Champaign-Urbana in 1981. Mr. Resis currently serves on the Board of
Directors for IDC.
Second Quarter 2005
On behalf of the IDC, the Amicus Committee thanks the
attorneys who took the time from their other commitments
to prepare the amicus briefs for filing in these cases.
As a reminder for future submissions, the amicus curiae
committee members are:
First Judicial District
John J. Piegore
Sanchez & Daniels
333 W. Wacker Drive, Suite 500
Chicago, Illinois 60606
(312) 641-1555
Second Judicial District
James DeAno
Norton, Mancini, Argentati, Weiler & DeAno
109 N. Hale Street
Wheaton, Illinois 60187
(312) 668-9440
Third Judicial District
Karen L. Kendall
124 SW Adams Street
Bank One Building, Suite 600
Peoria, Illinois 61602
(309) 676-0400
Fourth Judicial District
Robert W. Neirynck
Costigan & Wolrab, P.C.
308 E. Washington Street, P.O. Box 3127
Bloomington, Illinois 61701
(309) 828-4310
Fifth Judicial District
Mr. Stephen C. Mudge
Reed, Armstrong, Gorman, Coffey, Thompson,
Gilbert & Mudge
101 North Main Street, P.O. Box 368
Edwardsville, Illinois 62025-0368
While we cannot file a brief in every case in which we are
asked, we encourage your participation in making the views
of our members known to the reviewing courts on the legal
issues that affect us. We need your input and your support. If
you are interested in writing an amicus brief or submitting a
case for review by the committee, please contact any of us.
75
IDC Quarterly
W elcome ... New IDC Members
Scott J. Brown
Kathleen Marie Nester
Cassiday Schade & Gloor, LLP, Chicago
Sponsored by: David Bennett
Hebrank & True, LLP, Edwardsville
Sponsored by: Steve Kaufmann
Timothy Liam Epstein
Peter Ryndak
Sponsored by: Glen Amundsen
Sponsored by: William McVisk
Robert J. Golden
Dowd & Dowd, Ltd., Chicago
Carrie Anne Von Hoff
O’Hagan, Smith & Amundsen, Chicago
Sponsored by: Richard Valentino
Kenya Jenkins
Hinshaw & Culbertson, Rockford
Matthew Dean Walker
Sponsored by: David Levitt
Litchfield Cavo, Chicago
Sponsored by: Daniel G. Litchfield
Edward M. Kay
Clausen Miller P.C., Chicago
John Michael Ward
Sponsored by: David R. Ganfield, II
Hebrank & True, LLP, Edwardsville
Brandon J. Korft
Cassiday, Schade & Gloor, LLP, Chicago
Sponsored by: Richard Valentino
Warren J. Marwedel
Marwedel, Minichello & Reeb, P.C., Chicago
76
Sponsored by: Jeff Hebrank
IDC MONOGRAPH — Second Quarter 2005
THE IDC MONOGRAPH:
THE CLASS ACTION
FAIRNESS ACT of 2005—
WHAT IS IT ALL ABOUT?
Bradley C. Nahrstadt
Brian Y. Boyd
Williams Montgomery & John Ltd.
Chicago, Illinois
M-1
IDC Quarterly Vol. 15 No. 2
When George W. Bush ran for re-election in 2004, he
promised his supporters, and the country, that if re-elected
he would make litigation reform a top priority. Shortly after
the 2004 election, and just before the beginning of his second
term, Senate Republicans delivered on the president’s promise
and introduced legislation known as the Class Action Fairness Act of 2005 (S. 5). The bill, which was sponsored by
Senator Chuck Grassley, R-IA, was placed on the fast track
and passed in the Senate on February 10, 2005. The House of
Representatives passed the same legislation on February 17,
2005 by an overwhelming majority. President Bush signed
the Class Action Fairness Act of 2005 into law on February
18, 2005.1
Where did the perceived need for this legislation come
from? What impact will it have on the future of class action
litigation in this country? What do the opponents of the Act
contend are the problems with this legislation? This article
will provide a short history of the congressional efforts to pass
class action litigation reform, highlight the salient provisions
of the Act and analyze the impact of the Act on future class
action litigation.
Action Fairness Act. On January 25, 2005, Senator Charles
Grassley, R-IA, introduced the Class Action Fairness Act
of 2005.8 Republican senators defeated all attempts by the
Democrats to amend the bill and it passed the Senate by a
vote of 72 to 26. The House of Representatives, which had
passed a version of the Class Action Fairness Act in 2002 and
2003, promptly passed the Class Action Fairness of Act of
2005 by a vote of 279 to 149. One day later, in a high-profile
ceremony, President Bush signed the Class Action Fairness
Act of 2005 into law with a sweep of his pen.9
The History of the Class Action Fairness Act
The Class Action Fairness Act of 2005 greatly expands
federal diversity jurisdiction, in that it allows the “amount in
controversy” requirement to be satisfied by an aggregate of
class damages. According to the Act, the district courts shall
have original jurisdiction over any civil action in which the
matter in controversy exceeds $5,000,000, exclusive of inter-
In 1995, Congress passed the Private Securities Litigation
Reform Act, hereinafter “PSLRA”2 in an effort to stem the
tide of corporate securities fraud class actions. According to
one commentator, the PSLRA appeased some of the more
vocal pro-business lobbyists, but it did little to silence the
harshest critics of the class action system, including the National Association of Manufacturers and the U.S. Chamber
of Commerce.3 Those entities, and others, wanted reform for
all types of class action cases, not just securities suits.4
Against this backdrop, and a national outcry over the proliferation of class action lawsuits in state courts around the
country, in 1998 Representative Henry Hyde, R-IL, introduced
the first of many versions of what has been repeatedly labeled
the Class Action Fairness Act.5 Representative Hyde’s measure passed the House of Representatives, but the Senate never
voted on it. In 2003, the House again passed the measure, but
the supporters of the bill in the Senate failed by one vote to
get the 60 votes necessary to invoke cloture and limit debate
on the bill.6 In 2004, although the House of Representatives
again passed a version of the Class Action Fairness Act, the
supporters of the Act in the Senate again failed to get the votes
necessary for cloture, and managed to obtain the support of
only 44 senators.7
In early 2005, Senate Republicans decided to try to take
advantage of an increase in the number of Republican senators
and set about passing an unadulterated version of the Class
M-2
The Important Provisions of the
Class Action Fairness Act of 2005
The Class Action Fairness Act of 2005 contains several
provisions designed to ensure that large class action litigation is resolved in a federal forum. The Act expands federal
diversity jurisdiction, adopts special rules for the removal
and remand of class actions, limits attorneys fees for class
action work, and imposes a requirement that governmental
authorities be notified of certain proposed class settlements.
Federal Jurisdiction Over Large Class Actions
About the Authors
Bradley C. Nahrstadt is a partner with the Chicago firm of
Williams Montgomery & John Ltd. His practice is devoted
to litigation, including the defense of product liability,
medical malpractice and insurance bad faith cases in state
and federal courts. Mr. Nahrstadt received his B.A. from
Monmouth College, summa cum laude, in 1989, and his
J.D. from the University of Illinois College of Law, cum
laude, in 1992. He is a member of the Illinois State Bar
Association, IDC and DRI.
Brian Y. Boyd is an associate with the Chicago firm of
Williams Montgomery & John Ltd. He is a 2002 graduate
of Loyola University Chicago School of Law and a 1997
graduate of Davidson College. His practice focuses on
commercial litigation, including intellectual property
matters. He also practices in director and officer defense
and professional malpractice.
est and costs,10 and the claims of the individual class members
shall be aggregated to determine whether the matter in controversy exceeds $5,000,000.11 If this monetary threshold is
satisfied, the case can be filed in federal court, or removed to
federal court, so long as the citizenship of at least one member
of the plaintiff class is diverse from at least one defendant.
If one-third or fewer of the proposed class members are citizens of the original forum state, the federal court must retain
jurisdiction and hear the case.
Under the Act, the federal courts are given discretion to
accept or decline jurisdiction over a class action in which
greater than one-third but less than two-thirds of the members
of all proposed plaintiff classes and the primary defendants
are citizens of the original forum state. In these cases, the
Act sets forth six factors to be considered by the courts when
deciding whether to exercise jurisdiction:
(1) whether the claims involve matters of national or
interstate interest;
(2) whether the claims will be governed by the laws of
the state in which the action was originally filed or
by the laws of other states;
(3) whether the action has been pled in a manner that
seeks to avoid federal jurisdiction;
(4) whether the action was brought in a forum with a
distinct nexus with the class members, the alleged
harm or the defendants;
(5) whether the number of plaintiffs from the state
in which the action was originally filed in the aggregate is substantially larger than the number of
plaintiffs from any other state and the citizenship
of the other members of the proposed class is dispersed among a substantial number of states; and
(6) whether, during the 3-year period preceding the
filing of that class action, one or more other class
actions asserting the same or similar claims on behalf of the same or other persons have been filed.12
According to the Act, the federal courts must decline to
exercise jurisdiction over a class action in which: more than
two-thirds of the members of all proposed plaintiff classes are
citizens of the state in which the action was originally filed;
at least one defendant is a defendant from whom significant
relief is sought, whose conduct forms a significant basis for
the claims asserted, and who is a citizen of the state in which
the action was originally filed; the principal injuries resulting from the alleged conduct or any related conduct of each
defendant were incurred in the state where the action was
originally filed; and, during the three-year period preceding the
filing of that class action, no other class action was filed which
asserted the same or similar factual allegations against any of
the same defendants.13 In addition, under the Act, a district
court shall decline to exercise jurisdiction over a class action
in which two-thirds or more of the plaintiffs and the primary
defendants are citizens of the state in which the action was
originally filed.14
The Class Action Fairness Act of 2005 does not apply to
any class action in which the primary defendants are states,
state officials, or other governmental entities against whom
the district court may be foreclosed from ordering relief, or
to any class action in which the number of members of the
proposed plaintiff class is less than 100. The Act also does not
apply to any class action that solely involves a claim concerning a covered security as that term is defined under Section
16(f)(3) of the Securities Act of 1933 and Section 28(f)(5)
(E) of the Securities Exchange Act of 1934, that relates to the
internal affairs or governance of a corporation or other form
of business enterprise and that arises under or by virtue of
the laws of the state in which such business or corporation is
incorporated or organized, or that relates to the rights, duties
and obligations relating to or created by or pursuant to any
security as defined under Section 2(a)(1) of the Securities Act
of 1933.15
Removal Procedures
The Class Action Fairness Act drastically expands the
ability of a defendant to remove a class action from state
court to federal court. The Act provides that any defendant
may remove an eligible class action to federal court without
the consent of the other defendants. The Act further provides
that the one year limitation period that typically applies to
removals does not apply to the removal of class actions. In
addition, in a radical departure from prior law, the Act provides
that a case filed against a defendant in its home state can be
removed to federal court.16
The Class Action Fairness Act also provides for expedited
appellate review of district court decisions granting or denying remand. Under certain provisions of the Act, a court
of appeals may accept an appeal from an order of a district
court granting or denying a motion to remand a class action
to the state court from which it was removed, as long as the
application is made to the court of appeals not less than seven
days after the entry of the order by the district court. If the
court of appeals accepts such an appeal, the court is required
to complete all action, to judgment, on the appeal, not later
M-3
than 60 days after the date on which the appeal was granted
(unless an extension is allowed under the Act).17
(1) a copy of the complaint and any materials filed with
the complaint;
Settlements and Attorneys’ Fees
(2) notice of any scheduled judicial hearing in the class
action;
One of the main provisions of the Class Action Fairness Act
is designed to eliminate a perceived abuse of the class action
claim, that of disproportionate awards of attorneys’ fees while
class members receive coupons or other awards of little or
no value.18 Under the Act, if a proposed settlement in a class
action provides for a recovery of coupons to a class member,
the portion of any attorney’s fee award to class counsel that is
attributable to the award of the coupons shall be based on the
value to the class members of the coupons that are redeemed.
The Act further provides that if a proposed settlement in a class
action allows for a recovery of coupons to class members,
and a portion of the recovery of the coupons is not used to
determine the attorney’s fee to be paid to class counsel, any
attorney’s fee award, which must be approved by the court, is
to be based upon the amount of time class counsel reasonably
expended working on the matter.19
In a proposed settlement under which class members would
be awarded coupons, the court may approve the proposed
settlement only after a hearing to determine whether, and making a written finding that, the settlement is fair, reasonable and
adequate for class members. The court, in its discretion, may
also require that a proposed settlement agreement provide for
the distribution of a portion of the value of unclaimed coupons
to one or more charitable or governmental organizations, as
agreed to by the parties.20 The Act further provides that a court
may approve a proposed settlement in which any class member is required to pay sums to class counsel that would result
in a net loss to the class member only if the court makes a
written finding that non-monetary benefits to the class member
substantially outweighs the monetary loss.21 Moreover, the Act
states that a court may not approve a proposed settlement that
provides for the payment of greater sums to some class members based solely on the fact that the class members who are to
receive the higher payments are located in closer geographic
proximity to the court.
Notification of Class Action Settlements
According to the Act, no later than 10 days after a proposed
settlement of a class action is filed in court, each defendant
that participates in the proposed settlement must serve upon
the appropriate state official of each state in which a class
member resides, and the appropriate federal official a notice
of the proposed settlement.22 The notice of the proposed settlement must contain:
M-4
(3) any proposed or final notification to class members
of (a) the members’ rights to request exclusion from
the class action or, if no right to request exclusion
exists, a statement that no such right exists and (b)
a proposed settlement of a class action;
(4) any proposed or final class action settlement;
(5) any settlement or other agreement contemporaneously made between class counsel and counsel for
the defendants;
(6) any final judgment or notice of dismissal;
(7) if feasible, the names of three class members who
reside in each state and the estimated proportionate
share of the claims of such members to the entire
settlement to that state’s appropriate state official
or, if that is not possible, a reasonable estimate of
the number of class members residing in each state
and the estimated proportionate share of the claims
of such members to the entire settlement; and
(8) any written judicial opinion relating to the materials
described under sub-paragraphs (3) through (6).23
The court cannot approve a proposed settlement until 90
days after such notification. If proper notification to the officials is not made, the settlement is not binding. These provisions, according to the proponents of the Act, will serve as a
check on the backroom bargaining in settlement negotiations
and will help assure the validity of these agreements.
One final point deserves mention. The Class Action Fairness Act of 2005 applies to any civil action commenced on or
after the date of enactment of the Act (in this case, February
18, 2005.)24
Criticisms of the Act
The most common criticism of the Class Action Fairness
Act of 2005 is that plaintiffs will suffer ponderous delays in
the administration of justice from the “overburdened” federal court system. In other words, opponents argue, “justice
delayed is justice denied.”25 While it is true that many federal
courts have substantial backlogs on their dockets, and many
unfilled vacancies exist in the judiciary, there is no evidence
that cases in state courts move more quickly.26 The median
time for final disposition of a civil claim filed in federal court
is 9.3 months, and the median time to trial in a civil matter
in federal court is 22.5 months.27 The number of civil cases
pending in federal court has declined over the past several
years.28 Since 1984, filings in the state trial courts of general
jurisdiction have increased 30 percent, compared to a four
percent increase in filings in the federal courts.29 By way of
comparison, a new state court judge typically is assigned
over three times the number of cases that are assigned to a
new federal court judge. In many jurisdictions, federal courts
are known to dispose of cases more expeditiously than the
corresponding state courts.30 Based on the foregoing, it does
not appear that the Act will delay resolution of class action
lawsuits by moving them to federal court.
In fact, one proponent of the Act has argued that the Act
will actually increase the judicial efficiency of the handling
of class actions.31 According to this proponent, federal courts
“The median time for final disposition of a civil claim filed in federal
court is 9.3 months, and the median
time to trial in a civil matter in federal court is 22.5 months.”
can coordinate a greater percentage of duplicative class actions through multidistrict litigation procedures. In addition,
federal courts generally have more resources to deal with
large class actions, including multiple law clerks on staff
and the ability to delegate some or all aspects of class action
cases to magistrate judges or special masters (personnel that
are generally not available to state court judges). All in all,
federal court judges seem to be in a better position to timely
and economically handle class action litigation.32
An even greater concern to those who opposed the Class
Action Fairness Act of 2005 is whether the plaintiffs will have
their day in court. Many contend that strict class requirements
under the new federal law make class action lawsuits in federal
court more difficult, if not impossible, to maintain.33 Among
other things, the critics of the Act argue that district court
judges are less inclined to apply a particular state’s substantive law in a case where plaintiffs come from all across the
country.34 They further contend that members of a class action
that is removed to federal court and then dismissed based on
conflicts of substantive law will be left at a judicial dead end
with no court willing to hear their grievances.
These arguments ignore several exceptions built into the
act, as discussed above. Thus, when two-thirds or more of the
proposed plaintiffs in a class action are residents of a given
state, a class action brought in that state is exempt from federal
removal. The plaintiffs still control the scope of their class and
where they choose to file their lawsuit. The plaintiffs in these
situations, from any state, can always institute a class action
lawsuit in their respective state without fear of removal.
Some articles, and many of the opponents criticizing the
Class Action Fairness Act, use the popularized Erin Brockovich story as an example of class action justice that would be
hindered or thwarted by the Act.35 In fact, cases like Anderson
v. Pacific Gas & Electric36 (upon which the Brockovich story
is based) are classic examples of class action lawsuits which
would be unaffected by the act. In that case, Pacific Gas &
Electric was accused of polluting water in a small California
town causing serious health consequences to nearby residents.
All or virtually all of the plaintiffs were residents of the small
California town affected by the pollution. Pacific Gas & Electric was also a California resident. Therefore, even the less
strict diversity requirements under the Act would not have
allowed the case to be removed to federal court.37
Indeed, a recent study conducted by two lawyers in Washington, D.C. reveals that the fear of wholesale removal of
class actions from state courts to federal courts appears to
be misguided. John Beisner and Jessica Miller examined all
class actions for which there were reported decisions on the
Lexis or Westlaw legal databases between January 1, 1997 and
June 30, 2003 in the state courts of Connecticut, Delaware,
Maine, New York, Massachusetts and Rhode Island. They
also examined the class action lawsuits that had been filed in
Madison County, Illinois between 1998 and 2001. According
to Beisner and Miller, the majority of the class action lawsuits
would have remained in their respective states’ courts under
the Class Action Fairness Act.38 However, 86% of the class
actions filed in Madison County would have been removed to
federal court.39 This study demonstrates that in those jurisdictions where the plaintiffs’ lawyers take advantage of favorable
courts and jurists to bring nationwide class actions, the Class
Action Fairness Act will be invoked to “level the playing
field.” In those instances where the plaintiffs’ attorneys limit
their classes to citizens of the state in which the action is
brought, there appears to be little chance that the cases will
be removed to federal court under the Act.
Other opponents of the Act have argued that it will eliminate
M-5
the ability of ordinary consumers to keep corporate America
from engaging in deceptive practices. These opponents argue
that coupon settlements serve a valid purpose in that they hold
corporations responsible for illegal acts, and any attempt to
put controls on soft judgments or coupon awards will hinder
the policing of big business. However, these arguments ignore
the fact that in recent years, there has been a virtual explosion
in the number of cases in which the plaintiffs receive little or
nothing of value while the plaintiffs’ lawyers have received
millions of dollars in fees. In many of these cases the plaintiffs themselves were forced, after receiving coupons or other
non-monetary “benefits,” to come up with money to pay their
attorneys.
In one example, the plaintiffs’ attorneys were paid $22 million in a case where the plaintiffs received a $50.00 rebate on
future purchases.40 In another case, involving late fees charged
by Blockbuster, plaintiffs were awarded coupons of $1 off
their next rental, while plaintiffs’ attorneys were awarded
$9.25 million.41 Experts estimate that as few as 20% of the
class plaintiffs would ever actually use their $1 coupons.42
Some, like Senator Joseph Biden of Delaware, have attempted to justify the practice of such coupon settlements.43 In
a 1993 case involving major airlines accused of price fixing,
a settlement was reached valued at $458 million.44 Despite
the settlement value, most of the plaintiffs received no cash,
but rather travel vouchers with so many restrictions that they
were virtually unusable.45 Senator Biden observed that despite
the apparent injustice, the effect of this litigation was that “the
airlines stopped cheating the people . . .”46 Senator Biden went
on to rationalize: “So I’ll pay the bottom feeders their high
fees to stop the wrongdoers from doing bad things.”47 The
flaw in Senator Biden’s logic is twofold. First, contrary to
his rhetorical offer, he will not pay the class action plaintiffs’
attorneys fees—in many cases the class members themselves
pay the fees. And second, coupon settlements are not a necessary evil to keep corporate defendants honest.
Indeed, the opposite may be true. In another case involving changes to American Airlines’ frequent flier program, a
settlement in state court awarded class plaintiffs between $25
and $75 off future travel with the airline, while the plaintiffs’
attorneys received $25 million in fees.48 Some estimated that
American Airlines would ultimately enjoy a net gain from the
settlement because the class action plaintiffs who otherwise
would not have traveled on American Airlines would purchase
tickets to make use of their otherwise valueless coupons.49
Therefore, rather than penalizing the corporate wrongdoer,
American Airlines may have benefited from the settlement.
There is no reason to believe that such cases cannot be
settled for cash rather than coupons, even if that cash settleM-6
ment has a lower total value and consequently lower contingency fees for the plaintiffs’ attorneys. Cash settlements
mean more money in the pockets of the plaintiffs and may
ultimately be a greater deterrent to consumer fraud by big
companies. The Class Action Fairness Act of 2005 seeks to
address the unfairness in class action litigation that currently
exists when it comes to settlement and attempts to address
these concerns by creating the series of special consumer
“The Class Action Fairness Act
does not penalize consumers; it
helps them by ensuring that class
action settlements are fair not only
to the lawyers, but to the people
they claim to protect.”
protections outlined above (which require federal courts to
give special scrutiny to non-cash settlements and which bar
approval of class settlements that result in net losses to some
or all of the class members). The Class Action Fairness Act
does not penalize consumers; it helps them by ensuring that
class action settlements are fair not only to the lawyers, but
to the people they claim to protect.
Finally, opponents of the Act argue that the Act will result
in an unwarranted federal intrusion into the ability of states to
determine their own laws and policies concerning class action
lawsuits. This argument ignores the fact that the Class Action
Fairness Act does not touch on substantive state law in any
manner. Instead, the Act applies uniform, federal procedural
requirements to a narrow, carefully defined group of lawsuits
with national economic impact.50 In fact, the Act’s exclusion of federal jurisdiction over intra-state cases specifically
preserves the state’s authority to apply its own laws in cases
that primarily involve parties from its own state.51 Under the
current system, many state courts faced with interstate class
actions have simply applied their own laws to all claims
within the class. Since a state court decision has binding effect everywhere by virtue of the Full Faith and Credit clause,
other states, before the Class Action Fairness Act, had no way
to revisit these decisions.52 The Class Action Fairness Act of
2005 will curb this disturbing trend.
Conclusion
Class action litigation has exploded in the last decade.
In recent years, there have been substantial increases in the
number of class actions that have been filed in certain state
court forums and it appears that the popularity of these forums is directly attributable to the fact that the courts in these
jurisdictions are willing to certify almost anything as a class
action. The Class Action Fairness Act of 2005 is designed to
substantially diminish class action abuse, allow for the more
efficient resolution of duplicative class actions that are filed
in different courts and ensure that large interstate class actions
are heard in the federal courts.
Endnotes
Press Release, White House Office of the Press Secretary, President
Signs Class-Action Fairness Act of 2005 (Feb. 18, 2005)(available at:
http://www.whitehouse.gov/news/releases/2005/02/20050218-11.html).
1
2
Pub. L. No. 104-67, 109 Stat. 737.
Ashby Jones, “A Class Act?”, The American Lawyer and Corporate
Counsel (October 8, 2003).
3
4
Id.
See, e.g., The Class Action Fairness Act of 1998 (S. 2083); The Class
Action Fairness Act of 2000 (S. 353); The Class Action Fairness Act
of 2001 (H.R. 2341, S. 1712); The Class Action Fairness Act of 2002
(H.R. 2341); The Class Action Fairness Act of 2003 (H.R. 1115, S.
272 and S. 1751); and the Class Action Fairness Act of 2004 (S. 2062).
5
“Class Action Fairness Act of 2003 Fails to Clear Senate,” Hunton &
Williams Litigation Alert, (October 24, 2003).
6
Those senators who voted in favor of cloture and limiting debate on
the bill included: Lisa Murkowski (R-AK), Ted Stevens (R-AK), Jeff
Sessions (R-AL), Jon Kyl (R-AZ), Wayne Allard (R-CO), Saxby Chambliss (R-GA), Zell Miller (D-GA), Charles Grassley (R-IA), Mike Crapo
(R-ID), Richard Lugar (R-IN), Sam Brownback (R- KS), Pat Roberts
(R-KS), Jim Bunning (R- KY), Mitch McConnell (R-KY), Susan Collins
(R- ME), Olympia Snowe (R-ME), Norm Coleman (R-MN), Christopher
Bond, (R-MO), Jim Talent (R- MO), Thad Cochran (R-MS), Trent Lott
(R-MS), Conrad Burns (R-MT), Elizabeth Dole (R-NC), Ben Nelson
(R-NE), Judd Gregg (R-NH), John Sununu (R-NH), Peter Domenici
(R-NM), Mike DeWine (R-OH), George Voinovich (R-OH), James
Inhofe (R-OK), Don Nickles (R-OK), Gordon Smith (R-OR), Arlen
Specter (R-PA), Lincoln Chafee (R-RI), Lindsey Graham (R-SC), Lamar
Alexander (R-TN), Bill Frist, (R-TN), John Cornyn (R-TX), Kay Bailey Hutchinson (R-TX), Robert Bennett (R-UT), Orrin Hatch (R-UT),
George Allen (R-VA), John Warner (R-VA) and Craig Thomas (R-WY).
7
Those who voted against cloture and limiting debate on the bill included
Richard Shelby (R-AL), Blanche Lincoln (D-AR), Mark Pryor (D-AR),
John McCain (R-AZ), Dianne Feinstein (D-CA), Christopher Dodd (DCT), Joseph Lieberman (D-CT), Thomas Carper (D-DE), Bob Graham
(D-FL), Bill Nelson (D-FL), Daniel Akaka (D-HI), Daniel Inouye (DHI), Tom Harkin (D-IA), Larry Craig (R-ID), Richard Durbin (D-IL),
Evan Bayh (D-IN), John Breaux (D-LA), Mary Landrieu (D-LA),
Edward Kennedy (D-MA), Paul Sarbanes (D-MD), Carl Levin (DMI), Debbie Stabenow (D-MI), Mark Dayton (D-MN), Max Baucus
(D-MT), Kent Conrad (D-ND), Byron Dorgan (D-ND), Jon Corzine
(D-NJ), Frank Lautenberg (D-NJ), Jeff Bingaman (D-NM), Harry Reid
(D-NV), Charles Schumer (D-NY), Ron Wyden (D-OR), Jack Reed
(D-RI), Ernest Hollings (D-SC), Thomas Daschle (D-SD), Tim Johnson
(D-SD), James Jeffords (I-VT), Patrick Leahy (D-VT), Maria Cantwell
(D- WA), Patty Murray (D-WA), Russ Feingold (D-WI), Herbert Kohl
(D-WI), John Rockefeller (D-WV).
Thirteen members of the Senate did not vote: Barbara Boxer (DCA), Ben Nighthorse Campbell (R-CO), Joseph Biden (D-DE), Peter
Fitzgerald (R-IL), John Kerry (D-MA), Barbara Mikulski (D-MD),
John Edwards (D-NC), Chuck Hagel (R-NE), John Ensign (R-NV),
Hillary Clinton (D-NY), Rick Santorum (R-PA), Robert Byrd (D-WV)
and Michael Enzi (R-WY).
In addition to Grassley, there were 33 co-sponsors of the Act. The cosponsors, both Republicans and Democrats, were: Lamar Alexander (RTN), George Allen (R-VA), Christopher Bond (R-MO), Thomas Carper
(D-DE), Lincoln Chafee (R-RI), Susan Collins (R-ME), John Cornyn
(R-TX), Jim DeMint (R-SC), Mike DeWine (R-OH), Christopher Dodd
(D-CT), John Ensign (R-NV), Dianne Feinstein (D-CA), William Frist
(R-TN), Chuck Hagel (R-NE), Orrin Hatch (R-UT), Herb Kohl (D-WI),
Jon Kyl (R-AZ), Mary Landrieu (D-LA), Joseph Lieberman (D-CT),
Blanche Lincoln (D-AR), Trent Lott (R-MS), Richard Lugar (R-IN),
Mel Martinez (R-FL), John McCain (R-AZ), Mitch McConnell (R-KY),
Rick Santorum (R-PA), Charles Schumer (D-NY), Jeff Sessions (R-AL),
Olympia Snowe (R-ME), John Sununu (R-NH), John Thune (R-SD),
David Vitter (R-LA), George Voinovich (R-OH).
8
John F. Harris and William Branigin, Bush Signs Class-Action Changes
Into Law, The Washington Post, February 18, 2005.
9
10
28 U.S.C.A. § 1332 (d)(2).
11
28 U.S.C.A. § 1332 (d)(6).
12
28 U.S.C.A. § 1332 (d)(3)(A-F).
13
28 U.S.C.A. § 1332 (d)(4)(A).
14
28 U.S.C.A. § 1332 (d)(4)(B).
15
28 U.S.C.A. § 1332 (d)(9).
16
28 U.S.C.A. § 1453 (b).
28 U.S.C.A. § 1453 (c)(2-3). A court of appeals can grant an unlimited
extension of the 60-day period if all parties agree to such an extension,
or may grant an extension for a period not to exceed ten days, if such
an extension is for good cause shown and should be granted in the
interests of justice.
17
In a recent class action in Illinois against Poland Springs, the plaintiffs
received coupons for discounts on Poland Springs water (which the
plaintiffs had already claimed was not pure and was not from a spring)
while their lawyers received $1.35 million. 151 Cong. Rec. S1008
(daily ed. Feb. 7, 2005)(statement of Sen. Hatch). Also, in a recent
Texas class action settlement with Blockbuster concerning late fees on
movie rentals, class members received coupons on future movie rentals
while their lawyers received $9.25 million in fees and expenses. Dan
Ackman, Top Of The News: Bogus Blockbuster Settlement, Forbes,
Jun. 6, 2001, Management & Trends, available at: http://www.forbes.
com/2001/06/06/0606topblock.html.
18
19
28 U.S.C.A. § 1712 (b).
20
28 U.S.C.A. § 1712(e).
M-7
28 U.S.C.A. § 1713. In a recent Alabama class action against the
Bank of Boston, the plaintiffs “won” the case, but actually lost money.
The case involved the amount of money kept in customers’ mortgage
escrow accounts. According to the settlement agreement, some class
members received payments of less than $10 apiece, only to have almost
$80 deducted from their account to pay the lawyers’ fees ($8.5 million
worth) H.R. Rep. No. 108-144 at 16 (2003).
21
28 U.S.C.A. § 1715 (b). “Appropriate federal official” is defined as
the Attorney General of the United States or the person who has the
primary federal regulatory or supervisory responsibility with respect
to the defendant if some or all of the matters alleged in the class action
are subject to regulation or supervision. “Appropriate state official” is
defined as the person who has the primary regulatory or supervisory
responsibility with respect to the defendant, or who licenses or otherwise authorizes the defendant to conduct business in the state. If there
is no such person, then the appropriate state official is the state attorney
general. Id. at (a).
22
23
28 U.S.C.A. § 1715 (b)(1-8).
34
E.g. Little, Amanda Griscom, Erin Brockovich, drop dead, Feb. 12,
2005, available at http://www.salon.com/opinion/feature/2005/02/12/
class_action/index.html.
See JAMS biography on Hon. LeRoy A. Simmons (Ret.), available
at: http://www.jamsadr.com/neutrals/Bio.asp?NeutralID=1750 (“Judge
Simmons played himself as the trial judge in the movie, “Erin Brockovich,” based on the famous case, Anderson v. Pacific Gas & Electric”).
36
Moreover, the parties in Anderson v. Pacific Gas & Electric agreed
to arbitration, making it even farther a field from the application of the
Class Action Fairness Act.
37
John Beisner and Jessica Miller, Debunking a Myth (2003). According
to the study, 61% of the class actions filed in Connecticut, 91% of the
class actions filed in Delaware, 58% of the class actions filed in Maine,
63% of the class actions filed in New York, 61% of the class actions
filed in Massachusetts and 58% of the class actions filed in Rhode Island
would have remained in state court under the Class Action Fairness Act.
38
Interestingly, 34 class action lawsuits filed in Madison County, Illinois
(described by many as the nation’s top judicial “hell hole”) between
February 13 and February 18, 2005. By comparison, there were only
two class action lawsuits filed in Madison County in all of 1998. Brian
Brueggeman, Study Expects Sharp Dip in County’s Class Actions, Belleville News-Democrat, February 20, 2005.
39
Attributed to William Ewart Gladstone, four-time prime minister of
Great Britain.
42
24
25
Some observers note that the federal courts generally deal with larger,
more complex cases than state courts. This may partially explain why
a new state court judge is assigned many more cases than a newly assigned federal judge. By the same token, however, insofar as federal
courts do in fact deal with larger, more complex cases, one would
expect a federal court to take longer to resolve its average case when
compared to a state court.
26
See Administrative Office of the U.S. Courts, Judicial Business of
the United States Courts
27
2003, at 159, 172 (2004).
S. Rep. No. 108-123 at 39 (2003).
35
Id.
Lavelle, Marianne, Class Action Crackdown, U.S News and World
Report, Money & Business, February 21, 2005.
40
S. Rep. No. 108-123 at 16 (2003)(citing Scott v. Blockbuster Inc. (No.
D162–535, Jefferson County, Texas, 2001)).
41
Id.
43
See In re Domestic Air Transportation Antitrust Litig., 137 F.R.D.
677 (N.D. Ga. 1991)
44
45
46
Id.
47
Id.
48
S. Rep. No. 108-123 at 17 (2003).
49
Id.
28
H.R. Rep. No. 108-144 at 24 (2003).
50
29
Id.
Dellinger, supra note 18, p. 7.
51
30
Id.
Id.
52
Id.
Walter Dellinger, The Class Action Fairness Act: Curbing Unfairness
and Restoring Faith in Our Judicial System, Progressive Policy Institute
Policy Report March 2003.
31
32
Id. at p. 8.
S. Rep. No. 108-123 at 79-80 (2003). This argument ignores the fact
that the Class Action Reform Act does not prohibit any class actions
from being filed since it does not address whether class actions may
be brought. The Act does not alter substantive law at all and makes no
changes in a person’s right or ability to assert claims. It only addresses
where a particular type of class action must be adjudicated. Dellinger,
supra, p. 8.
33
M-8

Number 2 and Monograph - Illinois Association of Defense Trial

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