Number 4 and Monograph - Illinois Association of Defense Trial

Transcription

IDC Quarterly
Fourth Quarter 2005
Fourth Quarter 2005
Volume 15, Number 4
ISSN-1094-9542
FEATURED ARTICLES
Fall 2005
Analyzing Amendments for
Lack of Timeliness Under the
“Relation Back” Doctrine
Page 6
IDC
Construction Law Versus
IPI Jury Instructions
Page 25
Defusing Sexual
Abuse Claims
Page 42
The Case of the
Assailing Psychiatrist
Page 61
MONOGRAPH
Is the Third Time
a Charm?
Has the Legislature
Formulated Damages
Caps That Survive
Constitutional
Scrutiny?
The Illinois Association of
Defense Trial Counsel
Law, Equity, Justice
1
Illinois Association of
Defense Trial Counsel
IDC QUARTERLY EDITORIAL BOARD
Linda J. Hay, Editor-In-Chief
Alholm, Monahan, Klauke, Hay & Oldenburg, L.L.C., Chicago
[email protected]
Joseph G. Feehan, Executive Editor
Heyl, Royster, Voelker & Allen, Peoria
[email protected]
Kimberly A. Ross, Associate Editor
Cremer, Kopon, Shaughnessy & Spina, Chicago
[email protected]
Renee J. Mortimer, Assistant Editor
Hinshaw & Culbertson, Schererville, IN
[email protected]
Al J. Pranaitis, Assistant Editor
Hoagland, Fitzgerald, Smith & Pranaitis, Alton
[email protected]
WWW.IADTC.ORG
PRESIDENT
GLEN E. AMUNDSEN
O’Hagan, Smith & Amundsen, L.L.C.,
Chicago
PRESIDENT-ELECT
STEVEN M. PUISZIS
Hinshaw & Culbertson, Chicago
1ST VICE PRESIDENT
JEFFREY S. HEBRANK
Burroughs, Hepler, Broom, MacDonald, Hebrank & True, LLP, Edwardsville
2ND VICE PRESIDENT
GREGORY L. COCHRAN
McKenna Storer, Chicago
SECRETARY/TREASURER
RICK HAMMOND
Johnson & Bell, Ltd., Chicago
DIRECTORS
DAVID M. BENNETT
Pretzel & Stouffer, Chtrd., Chicago
TROY A. BOZARTH
Burroughs, Hepler, Broom, MacDonald, Hebrank & True, LLP, Edwardsville
C. WM. BUSSE, JR.
Busse & Busse, P.C., Chicago
ANDREW D. CASSIDY
Cassidy & Mueller, Peoria
JANELLE CHRISTENSEN
Tressler, Soderstrom, Maloney & Priess, Chicago
DANIEL K. CRAY
Iwan Cray Huber Horstman &
Van Ausdall, LLC, Chicago
PATRICK C. DOWD
Dowd and Dowd, Chicago
BARBARA FRITSCHE
Rammelkamp Bradney, Jacksonville
R. HOWARD JUMP
Jump and Associates, P.C., Chicago
DAVID H. LEVITT
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 & Jacobs, Bloomington
ANNE M. OLDENBURG
Alholm, Monahan, Klauke, Hay
& Oldenburg, L.L.C., Chicago
MICHAEL RESIS
O’Hagen, Smith & Amundsen, Chicago
ALEEN R. TIFFANY
Aleen R. Tiffany, P.C., Crystal Lake
KENNETH F. WERTS
Craig & Craig, Mt. Vernon
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 - Stephen J. Heine
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.
COLUMNISTS
Glen E. Amundsen
John L. Morel
O’Hagan, Smith & Amundsen, L.L.C., Chicago
John L. Morel, P.C., Bloomington
James K. Borcia
Bradley C. Nahrstadt
Tressler, Soderstrom, Maloney & Priess, Chicago
Williams Montgomery & John Ltd., Chicago
Michael C. Bruck
Martin J. O’Hara
Crisham & Kubes, Ltd., Chicago
Quinlan & Carroll, Ltd., Chicago
Roger R. Clayton
James W. Ozog
Wiedner & McAuliffe, Ltd., Chicago
Brad A. Elward
Robert T. Park
Snyder, Park & Nelson, P.C., Rock Island
Stacy Dolan Fulco
Michael J. Progar
Cremer, Kopon, Shaughnessy & Spina, LLC, Chicago
Doherty & Progar, LLC, Chicago
Linda J. Hay
Kimberly A. Ross
Cremer, Kopon, Shaughnessy & Spina, LLC, Chicago
Tracy E. Stevenson
David A. Perkins
Chuhak & Tecson, P.C., Chicago
Willis R. Tribler
Kevin J. Luther
Tribler Orpett & Meyer, P.C., Chicago
CONTRIBUTORS
Adnan Arain
Daniel W. Farroll
Burroughs, Hepler, Broom, MacDonald,
Hebrank and True, Edwardsville
Daniel P. Hiser
John K. Kim
Chad M. Loughrey
Jesse L. Placher
Kingshuk Roy
Heyl, Royster, Voelker & Allen, Urbana
Douglas A. Miller
Haynes, Studnicka, Kahan, O’Neill & Miller, LLC,
Chicago
Gary K. Moore
Moore, Strickland & Whitson-Owen, Chicago
Edward M. Wagner
Heyl, Royster, Voelker & Allen, Urbana
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
Monograph M-1
Is the Third Time a Charm? Has the Legislature Formulated Damages
Caps That Survive Constitutional Scrutiny? by Daniel W. Farroll
Featured Articles 6 The Necessity of Analyzing All Amendments for Lack of Timeliness
Under the “Relation Back” Doctrine of 735 ILCS 5/2-616(b)
by Edward M. Wagner and Kingshuk Roy
25 Construction Law Versus IPI Jury Instructions: A Conflict in Need of Resolution
by Douglas A. Miller
42 Defusing Sexual Abuse Claims: Eliminate the National Defendant From the
Equation, by Gary K. Moore
61 The Case of the Assailing Psychiatrist: Testing the Bounds of Apparent
Agency in Illinois, by Adnan Arain
Regular Columns
67
Alternative Dispute Resolution, by John L. Morel
56 Appellate Practice Corner, by Brad A. Elward
69 Association News
23 Case Note, by Robert T. Park
29 Civil Rights Update, by David A. Perkins, Daniel P. Hiser and Jesse J. Placher
59 Commercial Law, by James K. Borcia
60 The Defense Philosophy, by Willis R. Tribler
5 Editor’s Note, by Linda J. Hay
16 Employment Law Issues, by Kimberly A. Ross
11 Health Law, by Roger R. Clayton, John K. Kim and Chad M. Loughrey
72 IDC New Members
53
The Law in Review, by Bradley C. Nahrstadt
22 Legal Ethics, by Michael J. Progar
4 President’s Message, by Glen E. Amundsen
38 Product Liability, by James W. Ozog
47 Professional Liability, by Martin J. O’Hara
50 Property Insurance, by Tracy E. Stevenson
35 Recent Decisions, by Stacy Dolan Fulco
31 Technology Law, by Michael C. Bruck
14 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, Fourth Quarter, 2005, Volume 15, No. 4. 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: Glen E. Amundsen
O’Hagan, Smith & Amundsen, L.L.C.
Chicago
The first order of business is to
wish all who read this message the
warmest regards for a wonderful
holiday season and a healthy New
Year. On behalf of all the Officers
and Directors of the IDC I extend our
holiday greetings to you and all your
loved ones!
Report of Strategic
Planning Meeting
In my last column in this Quarterly, I mentioned the planning retreat we held in Shelbyville, Illinois during August.
Every four or five years leaders in this organization take
two days to get together and do some strategic thinking on
matters that are beyond the scope of what we reasonably can
address in our regular monthly Board of Directors meetings.
In addition to the current Board of Directors, we invited other
current and past leaders of the organization to participate in
this meeting. We benefited from the participation of these
other leaders of the organization, including past presidents,
committee chair persons and others who have been actively
committed to various aspects of the IDC’s business.
A famous 20th century baseball player and philosopher,
Yogi Berra, observed that “You got to be careful if you don’t
know where you’re going, because you might not get there.”
Truer words were never spoken. In keeping with this advice
we spent considerable time developing a consensus about our
collective vision for the future direction of the IDC and what
we want to do to make it even more relevant to our members
as we continue to cope with the challenges of our profession.
I am pleased to report that quite a bit was accomplished at the
meeting.
We decided that it is the purpose of the IDC to be the
preeminent association of defense trial attorneys and voice
of the defense bar in Illinois and to serve the business and
professional interests of its members. To meet that purpose
we adopted some specific objectives that, I am pleased to
report, are already in the process of being achieved. Our vi4
sion is to create an organization that is so vital to the success
of our members that no person who seriously holds himself
or herself out as a civil defense trial lawyer in Illinois can
consider practicing without being actively involved in the
IDC. Although we have a ways to go to get there, we have
started the process already.
The specific goals we seek to achieve in the short term as
an outgrowth of the strategic planning meeting are:
1. To increase public awareness by June 1, 2006 that
IDC members are the best defense trial attorneys in
Illinois;
2. To create a more specific message of the IDC’s core
values and to disseminate the statement of those
values to our members and the public at large by
June 1, 2006;
3. To take public positions consistent with our core
values on issues impacting our members or our clients at least 6 times within the 12 months following
adoption of our core values statement;
4. To place in recognized popular media sources
throughout Illinois a minimum of 6 articles about
the IDC and/or its members by June 1, 2006; and
5. To produce joint educational or professional development seminars between the IDC and at least
4 different associations or trade groups by June 1,
2007.
These goals are being pursued by teams of leaders within
the organization that already have been appointed and started
to work. One is a Public Relations Team, whose function is
to increase public awareness of who we are and what we do,
that is vital to the administration of the civil justice system
in Illinois. Another is a Core Values Team, which will help
us better articulate and define what we stand for and what
we believe. The third is a Joint Seminar Team. This team has
assembled and begun to work on changing the nature of some
of our educational and professional development programs in
order to reach out to other organizations that may have some
of the same or similar interests that we have, including the
Association of Corporate Counsel, the Illinois Chamber of
Commerce, and others.
As progress is made toward accomplishing these goals, I
will use this column to keep the membership posted on the
progress, as well as commenting on other organization events.
(Continued on page 72)
Fourth Quarter 2005
By: Linda J. Hay
& Oldenburg, L.L.C.
Chicago
At our recent IDC strategic planning meeting, the association’s
leadership clarified the purpose of
this organization, namely, to be the
preeminent association of defense
trial attorneys and the voice of the defense bar in Illinois, and to serve the
business and professional interests of
its members. This edition of the IDC
Quarterly exemplifies this purpose.
A review of the names of the authors and editors, along with the IDC Leadership, shows a
wide diversity of preeminent defense trial lawyers throughout
the state who have contributed their time and effort to the
Quarterly. The quality of the analysis of timely issues, from
the new medical malpractice legislation to issues addressing
copyright infringement related to web use, provides the reader
with a wealth of information to better defend their clients in
varied types of litigation. The Quarterly, as an integral part of
the voice of the defense bar, through its contributors, provides
an excellent resource to better serve the members’ business
and professional interests.
This edition of the Quarterly contains some excellent articles. Specific to the medical malpractice practitioner, Dan
Farroll’s Monograph provides an in-depth review of the
history of constitutional challenges to tort reform in Illinois
in the past, and contemplates whether the new legislation
can withstand those challenges. In a detailed and thoughtful
analysis of apparent agency law in Illinois, within the context of an atypical fact pattern, Adnan Arain examines the
troublesome issues facing defense counsel seeking to deny the
agency relationship. On a somewhat related topic, but in the
employment law context, Gary Moore provides an analysis
of a recent child sex abuse case concerning Big Brothers Big
Sisters of America, and whether a national organization can
be held liable for actions related to its local chapters. Interestingly, Doug Miller’s article on why the IPI instructions are
in conflict with the case law in construction negligence cases
QUARTERLY
deadlines
Editor’s Note
is based on an analysis of Section 414 of the Restatement
(Second) of Torts, which was also a basis for the decision
in Big Brothers Big Sisters. Finally, Ed Wagner’s article
on Section 2-616 (b), the relation back doctrine, provides a
practical reminder to closely review all amended pleadings
to assess attack under this theory, and outlines the issues to
raise in such an attack.
I urge the reader, however, to focus not only on those
areas or topics noted above, or even on those related only to
a specific practice area. The remainder of the Quarterly is
filled with a wealth of other columns on a diverse range of
subjects, such as how to preserve a record on appeal, pitfalls
in minor’s settlements when there is no court approval, and
the strict requirement of actual damages in a legal malpractice
case, as set out by the Illinois Supreme Court.
Last, but certainly not least, Bill Tribler’s column is a
great read. Although the baseball season ended (and on a high
note at that) this lesson should never be out of season. Have
a wonderful holiday and a happy new year.
December 27, 2005
Vol. 16, No. 1
March 28, 2006
Vol. 16, No. 2
June 27, 2006
Vol. 16, No. 3
September 26, 2006
Vol. 16, No. 4
5
IDC Quarterly
Featured Article
The Necessity of Analyzing
All Amendments for Lack
of Timeliness Under the
“Relation Back” Doctrine
of 735 ILCS 5/2-616(b)
By: Edward M. Wagner and Kingshuk Roy
Heyl, Royster, Voelker & Allen
Urbana
The Need to Analyze Each
Amended Complaint
All too often plaintiffs learn more about their case during discovery, and this new information frequently leads to
amendments of the original complaint. It is also very common
for plaintiffs to seek leave to amend prior to trial in an attempt
to file a comprehensive pleading once discovery is complete.
Diligent, successful plaintiffs also occasionally attempt to
amend their complaint shortly after a judgment. Regardless
of whether the amendment is made prior to, during or after
trial, each amendment should be compared to the original
complaint to determine if there are any new allegations that
do not appear in that initial pleading. Assuming the original
complaint was timely and that subsequent amendments are
filed after the applicable limitations period has expired,
the new allegations may not “relate back” to the original
complaint and should thus be challenged as time-barred and
stricken per 735 ILCS 5/2-616(b). With the passage of time
and after numerous depositions, it is very easy to lose sight
of the possible limited scope of the original, timely allegations. As many of these opportunities to challenge time-barred
amendments occur during last-minute trial preparations, this
article hopes to provide defense attorneys with a ready-made
analysis, able to be quickly adapted to any particular case and
used to attack new allegations or theories that do not “relate
back.” However, unless defense attorneys keep this potential
defense in mind when analyzing each amended pleading, this
valuable challenge may be lost.
6
The Statutory Requirements
for Amendments
If the limitations period has run, any amendment to a
complaint raises an obligation upon that plaintiff to ensure it
is timely and relates back. Pursuant to 735 ILCS 5/2-616(b),
an amended pleading only relates back if any new allegation
“grew out of the same transaction or occurrence set up in the
original pleading.” If the new amendment or allegation appears to be different than the initially pled occurrence, then
there may be no relation back and the following analysis may
result in dismissal of any new allegation or theory as timebarred. The limitations period “does not begin anew each time
pretrial discovery reveals . . . that other theories of liability
may apply.” McCorry v. Gooneratne, 332 Ill. App. 3d 935,
943, 775 N.E.2d 591, 266 Ill. Dec. 751 (1st Dist. 2002).
“Same Occurrence” Versus
“Same Cause of Action”
To any timeliness challenge filed against an amendment,
plaintiffs always will first respond that their original complaint
and the subsequent amendment both assert the “same cause of
action.” Although erroneous, this argument will proceed and
claim that both pleadings are, for example, allegations of “a
failure to timely diagnose lung cancer,” or, in another case,
“a failure to timely diagnose and treat a pending myocardial
infarction.” Plaintiffs will then proceed to show similarities in
the two pleadings and claim that since both deal with the same
cause of action or injury, they are so related to each other that
About the Authors
Edward M. Wagner is a partner in the Urbana office of
Heyl, Royster, Voelker & Allen where he concentrates his
practice in physician medical malpractice, hospital and
nursing home defense cases. He received his J.D. from
Creighton University School of Law (cum laude) in 1980
and he is also currently a member of the Illinois Supreme
Court Rules Committee.
Kingshuk K. Roy is an associate in the Urbana office
of Heyl, Royster, Voelker & Allen where he practices in
the defense of general civil litigation as well as insurance
coverage matters. Mr. Roy received his J.D. from the
University of Illinois in 2003.
Fourth Quarter 2005
§ 2-616(b) must apply and save the later amendment under
the relations back doctrine. However, this argument improperly focuses attention on some general conclusory label that
characterizes the overall case or on the injury, as opposed to
the appropriate focus on the identity of the occurrence. These
two concepts are substantially different and unless properly
explained to the trial court, their distinction becomes blurred
and may result in allowing an untimely and unfair amendment
into the case.
Again, the “same cause of action” argument erroneously
views the general nature of the entire case, which is nothing
more than a label or title for the overall type of case originally
pled. The proper statutory analysis focuses on the specific alleged wrongful acts or omissions and whether the challenged
pleadings allege the same occurrence. Thus, while both the
original and the subsequent pleadings may indeed allege “a
failure to timely diagnose lung cancer,” there may be a new
allegation in the subsequent amendment that alleges some act
or omission from a different or earlier date than was initially
pled and thus it is not the same occurrence. If the subsequent
pleading includes a new allegation against a different employee or introduces new conduct into the case – regardless
that it may have resulted in the same injury – these allegations
are all new occurrences and should be time-barred. Thus, the
focus must be directed at the specific allegations of factual
negligent acts or omissions, as they represent the occurrences
that limit any subsequent amendment attempted after the
statute of limitations has run.
In a premises liability setting, one might encounter a situation where both an original complaint and subsequent amendment may be fairly characterized as “slip and fall” allegations,
and thus both are the same cause of action. However, if the
original complaint alleges a fall due to a foreign substance
on the pavement and the amendment filed after the statute of
limitations has expired alleges a fall due to a trip on a crack
in the pavement, these are two different occurrences and the
amendment does not relate back.
An example in the products liability area would be where
both an original complaint and subsequent amendment undisputedly allege allegations of an unreasonably dangerous lawn
mower, again both are the same cause of action. However, in
comparing the two pleadings, the original complaint alleges
only that a center bolt is defective and fractures after minimal use, while the later amendment added a defective design
theory by alleging the absence of a guard at the rear of the
undercarriage. The latter is different conduct and a different
theory, and under the relation back analysis is a new occurrence and time-barred per § 2-616(b).
Case Law Support for the Proper Analysis of
What Constitutes an Allegation That Grows
Out of the “Same Occurrence”
In McCorry, supra, the original complaint referred to an
alleged misinterpretation of “the MRI films,” but from a close
examination of that initial pleading, it was clear that the reference was to MRI films obtained preoperatively. After the
limitations period expired, the plaintiff amended his complaint
to add an allegation of negligent interpretation of postoperative MRI films. Affirming the trial court’s refusal to allow the
amendment to relate back to the original complaint, the appellate court noted, “[b]ecause the preparation of a defense to
the allegations of delay and misinterpretation of postoperative
MRIs would involve an investigation into facts completely
irrelevant to the defense against the original complaint, the
new allegations do not relate back to the original complaint.”
332 Ill. App. 3d at 945. Thus, while both complaints could
generally be classified as a “failure to properly interpret radiological studies” or the “same cause of action,” different
conduct at different times led the court to conclude that they
were not the same occurrence.
McCorry also held that other amended allegations did not
relate back under this proper analysis. As there was nothing in the original complaint that indicated any problem or
negligence in the manner a radiologist’s findings were transmitted to surgeons, the appellate court affirmed dismissal
of the new allegation from the amended complaint that the
defendant-hospital negligently failed to have a sufficient
written policy requiring prompt transmittal of such reports
to surgeons. “These allegations involve conduct by different
persons at times different from the occasions of the negligent
acts alleged in the original complaint.” Id. at 944.
Similarly, in Cammon v. West Suburban Hosp. Med. Ctr.,
301 Ill. App. 3d 939, 704 N.E.2d 731, 235 Ill. Dec. 158 (1st
Dist. 1998), although the basic cause of action was identified as a “failure to monitor postoperatively,” resulting in the
patient’s death, the occurrence initially pled was properly
identified by the court as only involving an alleged failure to
achieve hemostasis following surgery. Thus, new amendments
after the limitations period had expired were held not to relate
back when they alleged inappropriate postoperative administration of medication and a failure to monitor respiratory
status postoperatively. Although the original complaint and
the subsequent amendments all alleged postoperative activity
during the same few hours after the surgery, and all were alleged to have resulted in the patient’s rapid degeneration and
death, these subsequent allegations were held to allege new
(Continued on next page)
7
IDC Quarterly
Analyzing Amendments (Continued)
conduct or occurrences and were stricken. 301 Ill. App. 3d at
943.
In a case involving a cause of action for automobile negligence, the court in Kennedy v. King, 252 Ill. App. 3d 52, 56,
623 N.E.2d 955, 191 Ill. Dec. 365 (4th Dist. 1993) found no
relation back where the original complaint alleged misconduct
that involved the defendant’s own actions and the subsequent
amendment alleged that the defendant was liable for the actions of another.
This analysis, in a reverse setting, was properly applied
in an earlier malpractice case, Weidner v. Carle Foundation
Hosp., 159 Ill. App. 3d 710, 713, 512 N.E.2d 824, 111 Ill. Dec.
435 (4th Dist. 1987), where no relation back was found. In
Weidner, the original complaint alleged a hospital was vicariously liable for injuries arising from an alleged misdiagnosis
by one of its physicians. The untimely amendments alleged
the hospital was liable as a result of claimed negligence in the
failure to ascertain adequately the credentials of, supervise
and review the performance of its staff physicians. While both
causes of action were the same and both allegedly resulted
in the same injury, the court properly separated the alleged
conduct into identifiable, different omissions or occurrences.
This correct defense challenge is rooted in two Illinois
Supreme Court cases, Bryson v. News America Publications,
Inc., 174 Ill. 2d 77, 672 N.E.2d 1207, 220 Ill. Dec. 195 (1996),
and Zeh v. Wheeler, 111 Ill. 2d 266, 489 N.E.2d 1342, 95 Ill.
Dec. 478 (1986). In Zeh, the court analyzed two slip and fall
cases on apartment common stairway pleadings. The original
complaint alleged the location of the premises on one street
and the amendment alleged the location of the accident to be
at a building on a different street. The court then noted that
the location of the alleged accident was a required element
under Illinois rules of fact pleading and that the allegation of
an occurrence at a different premise was a new occurrence
that did not relate back. “To allow the amended complaint
to relate back under the circumstances would be to disregard
the purpose of a statute of limitations which is ‘to afford a
defendant a fair opportunity to investigate the circumstances
upon which liability against him is predicated while the facts
are accessible.’” Zeh, 111 Ill. 2d at 282-83. Subsequently, in
Bryson, the Illinois Supreme Court found a relation back after
a detailed analysis that was consistent with the earlier Zeh
decision. The focus of the analysis is to be “on the identity
of the transaction or occurrence. (citation omitted) . . . Under
the ‘same transaction or occurrence’ standard, the focus is on
the facts and occurrence alleged in the original complaint, not
the name of the cause of action or legal theory used to support
the claim for damages. Thus, those decisions which impose
8
a ‘same cause of action’ or ‘substantially similar cause of
action’ requirement on amended complaints are inconsistent
with Zeh.” Bryson, 174 Ill. 2d at 108. This test proved much
more conservative and narrow than in prior decisions, which
all too often erroneously allowed an untimely amendment if
the same general theory or cause of action was asserted.
Although courts sometimes seem to stray from the proper,
strict analysis established in Zeh and Bryson based on certain
elements that do not appear in the statute, namely § 2-616(b),
“The untimely amendments
alleged the hospital was liable as
a result of claimed negligence in
the failure to ascertain adequately
the credentials of, supervise and
review the performance of its staff
physicians.”
more often than not, the correct analysis is utilized. In Onsite
Engineering & Management, Inc. v. Illinois Tool Works, Inc.,
Dist. 2001), the court was asked to examine two pleadings
based on a mechanic’s lien. In the original, timely complaint,
the plaintiff based its lien claims on having furnished labor to
the defendant pursuant to a written contract. In the challenged
amendment, the plaintiff based its lien claims on having
furnished labor pursuant to a subsequent oral contract. 319
Ill. App. 3d at 369. The court found no relation back for the
oral contract claim and noted that although in both claims
the plaintiff allegedly furnished employees who performed
services at the same, specific project site, the contract under
which those services were provided was not the same. Id. The
first, written agreement was a general sole-provider contract
whereby the plaintiff was to be the defendant’s sole source
provider of temporary contract employees for any project over
a certain extended period of time. However, in the untimely
amendment, the plaintiff alleged that there was a subsequent,
specific oral contract that involved the one, specific project
for which the plaintiff provided labor and remained unpaid.
Id. The two contracts were different transactions under the §
Fourth Quarter 2005
2-616(b) analysis, even though the payment or value for the
same services were being sought.
In Yette v. Casey’s General Stores, Inc., 263 Ill. App. 3d
422, 635 N.E.2d 1091, 200 Ill. Dec. 752 (4th Dist. 1994), the
plaintiff sustained injuries from a fall on an icy sidewalk. The
initial complaint merely alleged that the defendant failed to
salt or remove the ice from the sidewalk in front of its main
entrance. In an attempted amendment after the limitations
period had run, the plaintiff added a new count alleging he
fell on ice accumulation caused by a runoff of snow and ice
because of the building’s siding. 263 Ill. App. 3d at 424. The
court held that the amendment did not relate back as the initial
pleading was “insufficient to notify defendant that the condition of its building is a material fact upon which plaintiff’s
theory of liability or cause of action is predicated.” Id. at 425.
The amended pleadings were based on “conduct or conditions” different from those alleged in the original complaint.
Id. at 426.
In a products liability case, certain new allegations as to
one of the defendants were held not to relate back in Heyen
v. Sanborn Mfg. Co., 223 Ill. App. 3d 307, 312-14, 584
N.E.2d 841, 165 Ill. Dec. 407 (4th Dist. 1991). The original
complaint alleged that an air compressor was unreasonably
dangerous when sold by a defendant-retailer. The attempted
amendment against the retailer alleged a failure to inform the
plaintiff of the dangerous condition after being given notice
by the manufacturer of a recall relating to the alleged danger.
The appellate court correctly reasoned that the original allegations of the defective nature of the air compressor did not
sufficiently alert the retailer of a possible later contention that
it failed to inform the plaintiff of a subsequent recall by the
manufacturer and make a timely investigation in that respect.
223 Ill. App. 3d at 313. The court admitted that one might
consider this judgment a close call, unless one considers the
purpose behind both the statute of limitations and the “relation back” doctrine, which would lead to a clear distinction
and dismissal.
The allegations of the defective nature of the compressor come closer to alerting R & H that it could be
charged with knowledge of the dangerous condition
of the compressor and failing to warn plaintiff of this.
However, the focus of the defective product charge was
on the actual condition of the product. The focus of the
amended charge includes the issue of whether R & H
knew or should have known of the defect. To investigate
this question, R & H would have had to timely check
with its employees to see what they knew and what
circumstances existed which might have required them
to know of the defect. Id.
This type of analysis must be presented to the trial court
in order to differentiate between allegations which, at first
glance, appear similar. A different occurrence requires a different investigation, and although there may be some factual
similarities or general elements that may even be identical,
whether the correct investigations would have been triggered
or required by an earlier or original allegation is a key focus.
An interesting decision resulting in no relation back is
Pierce v. Joe Keim Builders Inc., 274 Ill. App. 3d 371, 653
N.E.2d 928, 210 Ill. Dec. 733 (1st Dist. 1995), where the issue was correct identification of an accident site where the
plaintiff’s decedent was injured. In the initial complaint, the
plaintiff alleged her deceased husband was injured while
working at a specific new home site. After the limitations
period expired, discovery revealed that the injury was sustained at a different new home site approximately one-half
mile away in a different subdivision. Plaintiff then amended
her complaint but deleted any reference to any lot number
or subdivision. Relying on Zeh, the appellate court affirmed
dismissal of this amended complaint and specifically ruled that
the location of the accident is critical to a defendant’s ability
to defend against a claim. Even with that plaintiff acknowledging in her briefs that the specific location of the accident
had not been ascertained, there was no valid argument that
the defendant had any notice of the correct location prior to
the expiration of the statute of limitations. 274 Ill. App. 3d at
375.
roper Defense Arguments to Counter
P
Common Attempts by Plaintiffs to Relate
Back Untimely Amendments
The greater the difference in the alleged facts supporting
the two occurrences, the greater the chance of persuading a
court that there should be no relation back. It has been held
that if the two claims do not require the same proof, there is
no relation back. Weber v. Cueto, 253 Ill. App. 3d 509, 624
N.E.2d 442, 191 Ill. Dec. 593 (5th Dist. 1993). Thus, in a
medical setting, the defense can always note that physicians,
nurses, hospital staff and administrative staff have different
duties, different standards of care, different professional licenses and thus different experts and proof will be required
as to each. See, Sullivan v. Edward Hosp., 209 Ill. 2d 100,
806 N.E.2d 645, 282 Ill. Dec. 348 (2004), and Kolakowski v.
Voris, 76 Ill. App. 3d 453, 395 N.E.2d 6, 32 Ill. Dec. 59 (1st
9
IDC Quarterly
Analyzing Amendments (Continued)
Dist. 1979), aff’d, 83 Ill. 2d 388, 415 N.E.2d 397, 47 Ill. Dec.
392 (1980).
When the differences in the alleged facts supporting the two
occurrences are argued by the plaintiff as not being substantially different and some similarities do exist, the defense can
rely on rulings where relation back was only allowed when
the original complaint supplied the defendant with all the information necessary to prepare a defense to the subsequently
filed amendment. See, Bryson, supra; Zeh, supra; McCorry,
supra; Weber, supra; Pierce, supra and Digby v. Chicago Park
Dist., 240 Ill. App. 3d 88, 608 N.E.2d 116, 181 Ill. Dec. 43
(1st Dist. 1992).
When the alleged facts in the two occurrences result in the
same injury, but the subsequently filed amendment shifts the
focus from individual liability to institutional liability that is
clearly not simply vicarious liability, then the occurrences
can be shown to be different. In Weidner v. Carle Foundation
Hosp., 159 Ill. App. 3d 710, 512 N.E.2d 824, 111 Ill. Dec. 435
(4th Dist. 1987), the original complaint alleged liability to the
hospital based only on vicarious liability for the specific alleged misconduct of individual physicians. The amendment,
which was held not to relate back, alleged the hospital was
negligent for not ascertaining the qualifications of its physicians adequately and for not reviewing and adequately supervising care and treatment rendered to that plaintiff. In short,
it’s one thing to allege an individual physician did something
wrong, and it’s another to allege that the employer of that physician was negligent in not supervising that physician. These
occurrences are different and independent, regardless if they
result in the same alleged injury and regardless if they both can
be included under the same cause of action label of a “failure
to timely diagnose a patient’s condition.” Weidner, supra.
When the alleged facts in the two pleadings result in the
same injury and are alleged to have been the responsibility or
action of the same defendant, yet are different conduct, or even
the same conduct performed at different times, there should be
no relation back. In Bailey v. Petroff, 170 Ill. App. 3d 791, 525
N.E.2d 278, 121 Ill. Dec. 472 (5th Dist. 1988), it was held that
a subsequent amendment alleging that a physician negligently
failed to diagnose an unborn child’s genetic disorder and to
notify the parents of the complication so they could terminate
the pregnancy did not relate back to the original allegations
of a physician’s negligent prescription of a certain drug that
caused the infant’s birth defects during pregnancy. Similarly,
the Cammon case discussed earlier is another example where
the alleged conduct in both pleadings occurred during the
same brief postoperative period, merely hours apart, but the
focus and the evidence necessary to prove each occurrence
10
was different, even though each was alleged to have caused the
death and each was directed at the same defendants. Cammon,
supra, 301 Ill. App. 3d at 943; see also, Chestnut v. Adeli, 131
Ill. App. 3d 24, 475 N.E.2d 260, 86 Ill. Dec. 263 (4th Dist.
1985).
When a plaintiff argues that fairness dictates a finding of relation back, the defense should counter by arguing the numerous fairness principles that underlie the statute of limitations.
“The limitations period begins to run when a plaintiff has
sufficient information to put a reasonable person on inquiry to
determine whether actionable conduct caused the injury, even
if the plaintiff lacks knowledge of a specific person’s negligent conduct.” (citation omitted). Thus, the limitations period
does not begin anew each time pretrial discovery reveals that
unsued persons may be liable or that other theories of liability
may apply.” McCorry, supra, 332 Ill. App. 3d at 943. The
purpose and rationale of a statute of limitations must be taken
into consideration in every relation back analysis, and to allow
a new occurrence to relate back would be to disregard the purpose of a statute of limitations, which is to afford a defendant
a fair opportunity to investigate the circumstances upon which
liability against him or her is predicated while the facts are accessible. Zeh, supra, 111 Ill. 2d at 282-83.
All of these positions emphasize the basic rule that has been
repeated as a common requirement when relation back has
been allowed: An amendment will be allowed only when the
allegations timely filed supply a defendant with all of the information necessary to have triggered a focused investigation
to timely collect information in order to prepare a defense to
the new claim asserted in any subsequent amendment. Thus,
the defense must show that the new claim consists of different
conduct and now requires a new and different investigation
after the limitations period has expired.
Conclusion
While most trial courts are reluctant to dismiss amendments
when the original complaint was timely filed, if a logical argument can be presented with multiple examples of dismissal
from other cases, it should be expected that a motion to dismiss
based on a failure to relate back will receive a more favorable
analysis and ruling. In any event, the record is preserved, and
if the motion is denied, the defendant should include this
challenge or defense as an affirmative defense. However, the
more effort made to show the differences between the conduct
alleged and the necessary investigations triggered by different
conduct, the more this timeliness challenge will be accepted
at the trial court level.
Fourth Quarter 2005
Health Law
By: Roger R. Clayton, John K. Kim and
Chad M. Loughrey*
Peoria
What Every Litigator Needs to Know
About Medical Staff Clinical Privileges
and the Health Care Quality
Improvement Act of 1986
Congress enacted the Health Care Quality Improvement
Act of 1986 (“HCQIA”) (42 U.S.C. § 11101 et seq. (West
1995)) for the purpose of improving the quality of medical
care by encouraging physicians to participate in peer review
and by restricting incompetent physicians’ ability to move
from state to state without disclosure or discovery of their
previous substandard performance. Thereafter, Congress
created the National Practitioner Data Bank (NPDB). The
NPDB is an information clearinghouse that allows subsequent
employers to conduct a comprehensive review of physicians’
and other health care practitioners’ professional credentials.
HCQIA requires hospitals to report physicians to the NPDB
if (1) the physician is under a professional review action that
adversely affects the clinical privileges of a physician for a
period longer than 30 days, and (2) the hospital accepts surrender of the physician’s clinical privileges while the physician is under investigation, or if the surrender was made to
avoid investigation. 42 U.S.C. § 11133. Entities that meet
eligibility requirements, as set out in the governing regulations, can consult the NPDB to obtain information about a
particular physician. See, 45 C.F.R. § 60.11 (2005). Thus,
HCQIA provides patients with transparency regarding their
physicians’ qualifications. If a physician shows incompetency,
a health care entity will report him or her to the NPDB. If the
physician always practices with care and diligence his or her
name will remain clear.
However, problems do arise with regard to the method of
reporting and as to what types of incidents require reporting
to the NPDB. In one recent case, a hospital had to decide
whether to follow federal law while simultaneously acting
in contempt of court, or to follow the court order and violate
state law. This is the situation the Second District Appellate
Court addressed in Diaz v. Provena Hospitals, 352 Ill. App.
3d 1165, 817 N.E.2d 206 (2d Dist. 2004).
A. Background
On November 5, 2002, Provena Saint Joseph Hospital
(Hospital) suspended summarily Dr. Evelyn Diaz’ medical
staff membership. The Hospital’s notice indicated that Dr.
Diaz’ suspension was based upon (1) a review of her charts,
which showed at least five incidents demonstrating a substandard level of care; (2) her unavailability for over four hours
while on emergency call; (3) her failure to see patients in a
timely manner following their admission; and (4) her failure
to comply with medical staff bylaws regarding timeliness of
medical record documentation. On April 16, 2003, the hospital
Board decided, after a hearing on the issue, to permanently
revoke Dr. Diaz’ privileges. On April 28, 2003, Dr. Diaz filed
a suit against the Hospital.
B. Trial Court Stage
Dr. Diaz’ complained that the Hospital and the Board
violated the Hospital Licensing Act, 210 ILCS 85/1 et seq.
(West 2002), and the Hospital’s medical staff bylaws during
the summary suspension and the hearing process. Dr. Diaz
About the Authors
Roger R. Clayton is a partner in the Peoria office of
Heyl, Royster, Voelker and Allen where he chairs the firm’s
healthcare practice group. He also regularly defends physicians and hospitals in medical malpractice litigation. Mr.
Clayton is a frequent national speaker on healthcare issues,
medical malpractice and risk prevention. He received his
undergraduate degree from Bradley University and law
degree from Southern Illinois University in 1978. He is a member of IDC, the
Illinois State Bar Association, past president of the Abraham Lincoln Inn of
Court, a board member of the Illinois Association of Healthcare Attorneys, and
the current president of the Illinois Society of Healthcare Risk Management.
*The author acknowledges the assistance of John K. Kim, an associate with
the Peoria firm of Heyl, Royster, Voelker & Allen, and Chad M. Loughrey, a
summer associate with the firm.
11
IDC Quarterly
Health Law (Continued)
requested that the court (1) declare the suspension and/or
termination of her privileges to be in violation of the Act
and the bylaws, (2) enjoin the Hospital from terminating her
privileges, and (3) reinstate her to the medical staff. Dr. Diaz
also filed a temporary restraining order (“TRO”), requesting
the same relief she sought in her complaint. The trial court
granted the TRO, which reinstated Dr. Diaz’ medical staff
privileges and enjoined the Hospital from implementing the
termination of Diaz’s privileges.
C. Aftermath of Temporary Restraining Order
The TRO prevented the Hospital from reporting the termination of Dr. Diaz’ privileges to the NPDB. It also reinstated
her privileges pending an evidentiary hearing. In July 2003,
after the court granted the TRO, Dr. Diaz allowed her privileges with the Hospital to lapse. The Hospital then reported
her to the NPDB for surrendering voluntarily her privileges
while under investigation. After the Hospital filed its report
with the NPDB, Dr. Diaz filed a “Petition for Rule to Show
Cause and for Award of Immediate Mandatory and Injunctive
Relief,” in which she asserted the Hospital had violated the
TRO by filing the NPDB report.
On August 8, 2003, the court entered a rule to show cause
against the Hospital and ordered the Hospital to submit a
void report to the NPDB that same day. When the Hospital
began to file its interlocutory appeal, the trial court ordered
the Hospital to submit a void report for a second time. Again,
the Hospital refused to comply. In early September, the court
held a hearing and found the Hospital guilty of indirect civil
contempt for refusing to comply with the previous orders. The
court ordered the Hospital to pay a monetary penalty of $500
per day for the first 14 days of noncompliance and $1000 per
day thereafter. The court denied the Hospital’s motion to stay
the contempt order pending appeal.
The next day, the Hospital filed a notice of appeal and a
motion to stay the contempt order. The appellate court granted
the motion and stayed any action enforcing the contempt order.
The appellate court indicated that the trial court’s contempt
order was appealable pursuant to Illinois Supreme Court Rule
304(b)(5).
D. The Case on Appeal
The appellate court had to determine (1) whether federal
law required the Hospital to file the NPDB report, (2) whether
federal law preempted the trial court’s orders, and (3) whether
the Hospital was guilty of contempt for disobeying the trial
court’s order.
12
1. Was the Hospital Required to File the Report?
The court looked to Section 11133(a) of HCQIA which
reads in part, “[e]ach health care entity which . . . accepts
the surrender of clinical privileges of a physician while the
physician is under investigation by the entity relating to
possible incompetence or improper professional conduct .
. . shall report to the Board of Medical Examiners, in accordance with Section 11134(a) of this title, the information
described in paragraph (3).” 42 U.S.C. § 11133(a)(1)(B)
(1). The Department of Health and Human Services, which
publishes the NPDB Guidebook, provides interpretation of
its own regulations. Therefore, the court gave the Guidebook
great deference.
The Guidebook provides that a surrender of clinical privileges would include “a failure to renew clinical privileges
while under investigation.” The Guidebook also reflects that
an investigation “is considered ongoing until the health care
entity’s decision making authority takes a final action or
formally closes the investigation.” The court held that even
though the Board had already made its final decision on the
matter, the court’s order prevented the Board from implementing Dr. Diaz’ termination. Therefore, pursuant to the Guidebook’s language, the investigation was ongoing. Because Dr.
Diaz surrendered her privileges while under investigation,
Section 11133(a) required the Hospital to file a report on Dr.
Diaz.
2. Did Federal Law Preempt the Trial Court’s Order?
Next, in determining whether federal law preempted the
court’s order, the appellate court looked to the supremacy
clause of the United States Constitution (U.S. Const., art.
VI, cl. 2) and Supreme Court decisions. See, Morales v.
Trans World Airlines, Inc., 504 U.S. 374, 383, 112 S. Ct.
2031, 119 L. Ed. 157 (1992). There was no contention that
HCQIA expressly preempts Illinois law, however, the Department of Health and Human Services argued that HCQIA
impliedly preempts Illinois law. The court stated, “[f]ederal
law impliedly preempts state law if (1) a state common-law
claim directly conflicts with federal law, (2) it is impossible to
comply with the federal law without incurring liability under
state common law, or (3) state law stands as an obstacle to
the accomplishment and execution of the full purposes and
objectives of Congress.” Diaz, 352 Ill. App. 3d at 1172.
The court found the court’s imposition of a monetary
penalty constituted a “liability under state common law.”
Id. The court also noted that a contempt proceeding is “an
original, special proceeding collateral to and independent
of the case in which the contempt arises.” Id. Because Dr.
Fourth Quarter 2005
Diaz’ failure to renew her privileges created the Hospital’s
reporting obligation under HCQIA, it was impossible for the
Hospital to comply with HCQIA without the court finding and
holding the Hospital in contempt of court. Thus, the doctrine
of implied preemption applied to the case. The purpose of
HCQIA was to protect patients, not doctors. By requiring the
Hospital to submit a void report to the NPDB, the trial court
directly frustrated Congress’s objectives in enacting HCQIA.
Therefore, federal law preempted the orders at issue in this
case.
“The purpose of HCQIA was to
protect patients, not doctors. By
requiring the Hospital to submit a
void report to the NPDB, the trial
court directly frustrated Congress’s
objectives in enacting HCQIA.”
report to the NPDB, therefore, the court’s orders were void
for lack of subject matter jurisdiction. Therefore, the Hospital
could not be held in contempt for refusing to comply with
those orders.
E. Conclusion
Congress created HCQIA to prevent physicians, who are
guilty of incompetence, from relocating and escaping the
repercussions of their past mistakes. State courts do not have
the power to prevent a hospital from fulfilling their reporting obligations under HCQIA. HCQIA requires hospitals to
submit reports, regardless of whether the physician at issue
has filed a suit in state court. State courts do not have jurisdiction to provide any relief to the physician and cannot prevent
the hospital from submitting a report that might damage the
reputation of that physician. However, the provisions on
reporting physicians to the NPDB are not crystal clear. The
Guidebook provides some clarity, but there are still issues that
are left somewhat murky. The NPDB does provide advisory
opinions to hospitals that are unsure if they have a duty to
submit a report. A hospital has a duty to protect its patients
and by following the requirements of HCQIA, it will help to
make sure that physicians who display incompetence cannot
escape the consequences of their action or inaction.
3. Was the Hospital Guilty of Contempt of Court?
ADDRESS
changes
Usually, a party must obey a court order until a court
modifies or sets it aside. A court may use its contempt powers to enforce its orders. However, if a reviewing court finds
the underlying order to be void, then the contempt judgment
must be set aside. Illinois courts have held that an order or
judgment is void if the court lacked personal jurisdiction or
subject matter jurisdiction, or otherwise lacked the power to
decide the particular matter presented to it. See, e.g., Jenner
v. Wissore, 164 Ill. App. 3d 259, 266, 517 N.E.2d 1220 (5th
Dist. 1988). Jurisdiction involves not only the power to hear
and determine a given case, but also the power to grant the
particular relief requested. Every act beyond the jurisdiction
of the court is void.
In this case, the appellate court found that the trial court
had personal jurisdiction over the matter. However, the trial
court did not have the jurisdiction to grant the relief Dr. Diaz
requested in her “Petition for Rule to Show Cause and for
Award of Immediate Mandatory and Injunctive Relief.” The
trial court could not require the Hospital to submit a void
ADDRESSES CHANGE . . .
PEOPLE MOVE
and of course we continue to
have new members.
We can all help to conserve
dollars if we remember to
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.
13
IDC Quarterly
Workers’ Compensation Report
By: Kevin J. Luther
Rockford
Requirements in
Repetitive Trauma Claims
In Edward Hines Precision Components v. Indus. Comm’n,
365 Ill. App. 3d 186, 825 N.E.2d 773, 292 Ill. Dec. 185 (2d
Dist. 2005), the Second Appellate District, Workers’ Compensation Division, was asked to consider a repetitive trauma
claim involving bilateral carpal tunnel syndrome and medial
epicondylitis. The appellate court held that repetitive trauma
claims do not require a showing of regular or persistent activity but only that the petitioner’s work duties contributed to
the cause of the physical injury.
In Edward Hines Precision Components, the petitioner
was a tractor-trailer driver for approximately five years. As
a driver, his job duties included driving approximately 200
miles a day in a manual transmission cab. From time to time,
he was required to secure roof trusses on a trailer bed. He
made approximately two to three trips per day. Specifically,
his job required him to tie down the loads with approximately
10 straps per load. These straps were tightened with a manual
winch requiring some force. During the course of a drive,
from time to time he would have to stop and retighten the
straps. It was his estimation that he tied down approximately
40 straps a day. There was a factual dispute with respect to
the amount of force, frequency, and number of straps necessary to tie down the loads.
The petitioner began to notice pain in his elbows and presented to a local medical clinic. He was referred to a specialist,
who diagnosed bilateral carpal tunnel syndrome and medial
epicondylitis. His treating physician testified that he generally understood the petitioner’s job duties which involved the
tightening of belts down to secure a load on his truck using
a “crowbar.” This physician testified that the petitioner’s
job activities could have contributed to the development of
the petitioner’s physical complaints. It was this physician’s
opinion that the force of repetitive gripping can contribute
14
to carpal tunnel syndrome and medial epicondylitis.
At the request of the respondent, the petitioner was examined for an independent medical examination pursuant to
Section 12 of the Workers Compensation Act. In addition to
a physical exam and review of medical records, this examining physician hired by the employer reviewed a written job
description provided by the employer and also a videotape
depicting the activity of tying down straps. Based on this
information, the employer’s evaluating physician agreed with
the diagnosis of bilateral carpal tunnel syndrome. However,
he determined that because the petitioner did not perform the
tasks repetitively but only in an “intermittent exertional nature
that would not be persistently performed during the work,”
he concluded that the petitioner’s bilateral carpal tunnel syndrome was not related to work duties.
At the trial level, the arbitrator found that the petitioner
failed to establish causal connection between his condition
of ill-being and the work activities. The arbitrator concluded
that the petitioner failed to show that the activities were
“repetitive” in nature. The arbitrator noted that 90 percent
of the workday was spent driving. During the 10 percent of
the day spent tying down the straps, the arbitrator concluded
that while the petitioner did prove force, he did not prove
persistent repetitive force, which by definition is not repetitive
trauma. The arbitrator adopted the opinions of the employer’s
evaluating physician, who had reviewed a more detailed job
description and had a more accurate understanding of the
petitioner’s job duties.
On review, the Illinois Workers’ Compensation Commission reversed the arbitrator’s decision and found that there
was causal connection based on the opinions of the treating
physician. The circuit court affirmed the decision.
The Second District Appellate Court, Industrial Com-
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.
Fourth Quarter 2005
mission Division, focused only on the issue of causation as
opposed to an analysis of whether or not the work duties
were repetitive. Although the term repetitive implies an
activity which is performed on a persistent basis, the appellate court determined that the legal definition of accident in
workers’ compensation does not include a percentage of the
petitioner’s workday. Rather, the purpose of establishing a
category of repetitive trauma was to create an accident date
which allows an employee to be compensated for injuries that
develop gradually without requiring the employee to work
until the point of physical collapse. A repetitive trauma date
of accident is the date that the injury manifested itself. The
proper manifestation date is the date the injury and its causal
relationship to work would become apparent to a “reasonable
person.”
The appellate court concluded that a repetitive trauma
claim meets the causation requirement if the job activity was
repeated sufficiently to cause the injury. While this still is
necessarily a “factual” determination to be made by the trier of
fact, the petitioners’ bar has claimed that this case eliminates
the “repetitive requirement” in a repetitive trauma claim. It
is this author’s opinion that this case merely stands for the
proposition that if a petitioner has an opinion from a physician
that work “sufficiently” repetitive could or might have caused
a particular injury, and if that opinion carries weight at the
workers’ compensation level, then the appellate court may
not look any further than the causation opinion itself without
regard to scrutiny of the degree of “repetitiveness” in the job
duties.
Request for Penalties
Rejected by Appellate Court
In Armour Swift-Eckrich v. Indus. Comm’n, 355 Ill. App. 3d
708, 823 N.E.2d 1103, 291 Ill. Dec. 517 (2d Dist. 2005), the
claimant alleged that repetitive work duties caused injuries to
both arms. The matter proceeded to arbitration. The arbitrator
awarded permanent partial disability for a percentage of each
arm on November 27, 2000. Neither party sought a review.
On March 14, 2001, the petitioner filed a petition seeking
penalties and attorney’s fees for nonpayment of the award.
That same day, the respondent overnight mailed the draft to
the petitioner’s attorney for the full amount of the award plus
an additional sum for voluntary payment of accrued interest.
On May 10, 2001, the Workers’ Compensation Commission
heard the petitioner’s request for penalties and fees. At that
hearing, the respondent contended that the delay in payment
was due to personnel changes at the third-party administrator of the respondent. After taking the matter under advisement, the Workers’ Compensation Commission denied the
petitioner’s request for penalties and attorney’s fees, noting
specifically the impact of the personnel change at the thirdparty administrator (the claims representative had left) as well
as the voluntary addition of interest to the PPD draft that was
delivered to the petitioner.
On appeal, the circuit court judge reversed the worker’s
compensation denial and remanded the matter to the Workers’ Compensation Commission, requesting the commission
to assess 19(k) penalties against the respondent amounting to
50 percent of the original PPD award and to assess attorney’s
fees due under Section 16. On remand, the Workers’ Compensation Commission assessed 19(k) penalties and Section
16 attorney’s fees. The matter was appealed to the appellate
court, and the Second Appellate District reversed the worker’s
compensation award of penalties and attorney’s fees pursuant
to Section 19(k) and Section 16.
Generally, the employer has the burden of proving its delay
in payment was justified. See, Roodhouse Envelope Co. v.
Indus. Comm’n, 276 Ill. App. 3d 576, 658 N.E.2d 838, 213
Ill. Dec. 89 (1995). Whether the employer acted unreasonably
or was vexatious is a question of fact to be determined by the
Workers’ Compensation Commission, and its findings should
not be disturbed unless the commission’s findings are against
the manifest weight of the evidence.
In reviewing the matter, the Second Appellate District noted
that the imposition of Section 19(k) penalties and Section 16
attorney’s fees requires a higher standard than an award of
additional compensation under Section 19(l) of the Act (which
also provides for penalties). The court determined that Section
19(k) provides for substantial penalties in which the imposition of penalties is discretionary in nature. The appellate court
reversed the Kane County Circuit Court’s order and reinstated
the Workers’ Compensation Commission’s original decision,
which denied the petition for penalties and attorney’s fees on
the ground that the respondent was not guilty of unreasonable
or vexatious delay in payment of the award. This decision is
a breath of fresh air to employers because there has been a
recent increase in activity on the part of the plaintiffs’ bar to
obtain penalties and attorney’s fees for a delay in payment of
an award or compensation.
15
IDC Quarterly
Employment Law Issues
By: Kimberly A. Ross*
Cremer, Kopon, Shaughnessy & Spina, LLC
Chicago
Sexual Harassment
Husband and Wife Could Maintain Joined Complaint
In Venezia v. Gottlieb Memorial Hospital, Inc., 421 F.3d
468 (7th Cir. 2005), husband and wife Frank and Leslie
Venezia brought suit alleging each had suffered sexual harassment and a hostile work environment while working for
the defendant, Gottlieb Memorial Hospital. The district court
granted the defendant’s motion to dismiss on the theory that
a husband and wife could not logically both maintain claims
based on Title VII of the Civil Rights Act of 1964, 42 U.S.C. §
2000e, against a single employer in one action. The appellate
court reversed, finding that the it was err to assume the normal
rule permitting joinder of parties did not apply to co-plaintiffs
who were husband and wife. The court further found that the
plaintiffs’ complaint was sufficient to state a claim under Title
VII.
Leslie Venezia worked for the defendant as Director of
Child Care. Frank Venezia worked as a maintenance worker.
Leslie resigned on July 12, 2002. Frank resigned approximately three months later.
Frank alleged his supervisors and co-workers created a
hostile work environment by suggesting he obtained his job
“through the efforts of his wife.” Frank was left an anonymous
note insinuating that these “efforts” involved sexual acts.
Frank also asserted that pictures of nude men were left on
his bulletin board and another employee forced him to leave
them in place. He alleged other co-workers crassly inquired
about his relationship with his wife and someone had sent
him a pornographic picture of a woman that referred to his
wife. Frank also maintained that his property was damaged,
he was spit on and shunned by co-workers and he discovered
the words “your dead” in his workstation. Frank complained
to the defendant. An investigation was conducted but no corrective actions were taken.
Leslie alleged that a co-worker of Frank’s began telling
hospital employees that she had sat on his lap in front of Frank
16
to demean him. She also alleged that she discovered notes
directed to Frank that were pornographic. Additionally, she
contended an employee had slashed the tires of her car. Leslie
also complained to the hospital but no corrective action was
taken.
On appeal, the court noted that the district court, in dismissing the plaintiffs’ claims, relied on the United States Supreme
Court’s ruling in Oncale v. Sundowner Offshore Services,
Inc. 523 U.S. 75, 118 S. Ct. 998 (1998). In Oncale, the court
held that discrimination in sexual harassment cases is to be
determined on a gender-comparative basis. The critical issue
is whether members of one sex are exposed to disadvantageous terms or conditions of employment to which members
of the other sex are not exposed. The district court dismissed
the Venezias complaint because it concluded they could not
together maintain a claim against an “equal opportunity harasser.” Venezia, 421 F.3d at 471.
The appellate court noted that it was indeed possible for
a husband and wife to file separate suits against a company
when different individuals enacted the discrimination. The
court noted that allegations supporting Frank and Leslie’s
joined complaints were sufficiently distinct such that it was
error to dismiss them.
The appellate court also found that even if one assumed
Frank’s work environment was unisex, Oncale supported a
claim that he was harassed because of his sex. Oncale held
that a hostile work environment claim was possible even when
the harasser was the same sex as his victim. The court also
noted both Frank and Leslie’s complaint sufficiently alleged
numerous instances of harassment by co-workers because of
their respective sexes.
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.
Fourth Quarter 2005
Co-worker’s Assault and Harassment Did
Not Amount to Sex Discrimination
In Shafer v. Kal Kan Foods, Inc., 417 F.3d 663 (7th Cir.
2005), Thad Shafer had worked without incident from 1989
until June 2001. In June 2001, Shafer was attacked by his coworker Alan Dill. Dill was six inches taller and approximately
100 pounds heavier than Shafer. Dill forced Shafer’s face
down to his clothed crotch and moved his groin to give the
impression that Shafer was performing oral sex. A few weeks
later, Dill grabbed Shafer’s hand and moved it to his clothed
crotch in a manner suggesting that Shafer was masturbating
him. The next month Dill approached Shafer in the workplace
locker room and pulled a handful of hair from Shafer’s chest.
The following month, Dill bit Shafer in the neck hard enough
to raise welts. Schafer contended he complained to Cheryl
Hargis, a personnel officer. Hargis denies any complaints
were made.
Shafer was discharged six months after his last encounter
“The court, however, noted Title
VII does not deal with co-workers’
torts but only addresses discrimination by employers.”
with Dill. The defendant claimed Shafer was terminated for
fighting with co-workers. Shafer contended he was terminated
in retaliation for his complaints about Dill. As such, he brought
suit against his employer and co-worker Dill. The district
court granted summary judgment in favor of the defendant
employer.
In affirming the district court’s decision, the appellate
court noted that Dill set out to humiliate Shafer sexually and
in other ways. The court, however, noted Title VII does not
deal with co-workers’ torts but only addresses discrimination by employers. See 42 U.S.C. § 2000e-2(a)(1). The court
found Dill was not a supervisor and Shafer’s salary, duties,
and promotion opportunities were unaffected by Dill’s conduct. The court also noted that the defendant had no reason
to suspect a problem was going on because Shafer had not
been troubled for his first 12 years of employment. Because
Dill had a history of making sexual remarks, but no history
of attacking other employees, the court found it impossible
to show discrimination via the employer’s knowledge that
working conditions were worse for one sex coupled with
failure to intervene. Shafer, 417 F.3d 663, 665.
The court also found Shafer offered no evidence that
Hargis was the appropriate recipient of his complaints about
Dill. The employer presented evidence that by the summer of
2001, Hargis was no longer a personnel officer. Further, Shafer
offered no reason to believe the employer sheltered women
but not men from aggressive co-workers. Moreover, the court
noted that when Shafer finally told his direct supervisor about
the problem, after the fourth attack, the aggression ended. Id.
at 666.
Additionally, the court found there was a question whether
Dill’s behavior was sex discrimination. It pointed to the
Supreme Court’s decision in Oncale v. Sundowner Offshore
Services, Inc., 523 U.S. 75, 188 S. Ct. 998 (1998), which found
that even sexually explicit roughhousing among men must be
distinguished from sex discrimination. The court noted that
Title VII is implicated only when severe or pervasive conduct
creates an objectively hostile or abusive working environment
so that the conditions of employment differ on account of sex.
Shafer, 417 F.3d at 666.
The court found that what happened to Shafer was not a
“pervasive” deterioration in conditions of his employment
on account of sex because most of his time at Kal Kan was
untroubled. Dill’s four batteries did not establish that working conditions were worse for men than for women. Thus,
actionable sex discrimination did not occur. Id. at 666-667.
ADA
Uncontrolled Diabetes a Direct Threat to Safety
and Plaintiff Not Qualified Individual
In Darnell v. Thermafiber, Inc., 417 F.3d 657 (7th Cir.
2005), Brent Darnell sued Thermafiber, alleging discrimination in violation of the Americans with Disabilities Act
(ADA), 42 U.S.C. § 12101, et seq. The district court granted
Thermafiber’s motion for summary judgment and the appellate court affirmed.
Thermafiber manufactures mineral wool insulation. The
process involves operation of heavy machinery and the melting of rock and blast furnace slag in a furnace at temperatures
of over 2,600 degrees Fahrenheit. In October 2000, Darnell
was hired through a temporary employment agency. Before
starting the job, he was required to pass a pre-employment
physical. Thermafiber’s independent medical examiner found
17
IDC Quarterly
Employment Law Issues (Continued)
Darnell to be capable of performing the requirements of the
job. Darnell is a Type I diabetic who is insulin-dependent.
Darnell left Thermafiber’s employment in May 2001. Prior
to his resignation he did not have any medical episodes relating to his diabetes while at work. He reapplied for a position
in August 2001. He was offered a position contingent upon
passing another pre-employment physical. The physician
who performed the physical found that Darnell’s diabetes
was not under control and he reported that Darnell was not
capable of the physical requirements of the job because of his
uncontrolled diabetes.
The ADA prohibits an employer from discriminating
against a qualified individual with a disability. 42 U.S.C. §
12112(a). A “qualified individual” with a disability is a person
who can perform the essential functions of the employment
position with or without an accommodation. 42 U.S.C. §
12111(8). An individual is not qualified if he presents a “direct threat” to his own health or safety. Darnell, 417 F.3d at
660. The determination that he poses a direct threat must be
premised upon “a reasonable medical judgment that relies on
the most current medical knowledge and/or the best available
objective evidence, and upon an expressly individualized
assessment of the individuals’ present ability to safely perform the essential functions of the job. Chevron U.S.A. Inc.,
v. Echazabal, 536 U.S. 73, 86, 122 S. Ct. 2045 (2002). The
assessment should take into account: (1) the duration of the
risk, (2) the nature and severity of the potential harm, (3) the
likelihood that the potential harm will occur, and (4) the imminence of the potential harm. Chevron, 536 U.S. at 86.
The appellate court rejected Darnell’s argument that there
was no evidence that his noncompliance in monitoring his
diabetes was likely to cause substantial injury, apart from
generalizations about diabetics and Thermafiber’s work
environment. The court noted it was uncontested that blood
sugar levels can fluctuate dramatically when diabetes goes
unregulated and that this could cause unconsciousness, confusion and impaired judgment. The court also noted Darnell’s
job required him to climb tall ladders and operate dangerous
machinery. Additionally, the heat within the plant could reach
110 degrees, which could magnify the effects of Darnell’s
diabetes.
The court rejected Darnell’s argument that it was unlikely
he would experience an on-the-job episode simply because
he had not had one during his previous employment with
Thermafiber. The court noted that an employee with an uncontrolled condition can still pose a direct threat to workplace
safety and Darnell’s admitted noncompliance with monitoring his diabetes made it likely that he would have an episode
18
capable of causing serious harm or injury. Darnell, 417 F.3d
at 662.
Seventh Circuit Remands ADA
Case for Second Time
In E.E.O.C. v. Sears, Roebuck & Co., 417 F.3d 789 (7th
Cir. 2005), the EEOC filed suit against the defendant Sears
for failing to reasonably accommodate the disability of its
employee, Judith Keane. The district court initially granted
summary judgment in favor of Sears, concluding Keane was
not disabled under the Americans with Disabilities Act (ADA).
The appellate court reversed, finding there were genuine issues of material fact as to whether Keane was disabled.
On remand, the district court concluded the Supreme
Court’s decision in Toyota Motor Mfg., Kentucky, Inc. v. Williams, 534 U.S. 184, 122 S. Ct. 681 (2002), issued after the
appellate court’s decision, changed the standard for determining whether an employee is disabled. The district court again
granted summary judgment to Sears by finding Keane was
not disabled and that she could not establish any of the other
elements of her failure to accommodate claim. The EEOC
appealed a second time and the appellate court again reversed.
Keane worked as a sales associate in Sears’ intimate apparel
department. Her tasks included handling purchases, assisting
customers, sizing racks and occasionally transporting money
to and from cash registers. Keane’s immediate supervisor was
Jacqueline Klisiak.
In the summer of 1994, Keane began experiencing numbness in her right leg that precluded her from taking longer
walks such as required to reach the employee cafeteria or the
food court. Keane requested permission to eat in the stockroom. Klisiak initially allowed Keane to eat in the stockroom
but then announced there was a policy forbidding eating in
the stockroom.
Keane’s condition worsened and she requested permission
to walk through the shoe stockroom when going between the
employee swipe-in area and the intimate apparel department
because it would reduce her walking distance by half. This
request was denied. Keane also requested permission to park
in the merchandise pick-up lot near the employee entrance
so her walking would be reduced. This request was denied
but she was allowed to park in a space reserved for people
with disabilities outside of her department. Parking near her
department did not lessen her commute because she still had
to swipe-in at a specific location.
The condition continued to worsen and Keane could not
walk more than a block without losing sensation in her leg. She
was diagnosed with nerve damage and non-insulin-dependant
diabetes. Her physician wrote a note stating she should avoid
Fourth Quarter 2005
walking long distances or walking for prolonged periods. The
note was given to Klisiak. Klisiak knew Keane’s hours had
been reduced at the end of the holiday season and unilaterally
decided that the shortened schedule sufficiently limited Keane’s walking. In fact, the changed hours did not help Keane
because her difficulties arose from walking to and from her
work area regardless of the length of her shift.
Keane’s physician completed a Sears’ Physician Certificate Form recommending she be allowed easy/short access
to her job site. However, Sears assumed Keane’s request for
accommodation had been fulfilled because she was allowed
“The appellate court noted that
discrimination under the ADA includes not making reasonable accommodation to the known physical or mental limitations of an
otherwise qualified individual with
a disability who is an applicant
or employee unless the employer
can demonstrate that the accommodation would impose an undue
hardship on the operation of the
business.”
to use a reserved parking space. Keane was again informed
she was not allowed to use the stockroom as a shortcut. Sears
also changed Keane’s hours to Thursdays and Fridays. Keane
protested that she was then, and always had been, unavailable
to work on those days. Klisiak told Keane the schedule could
not be changed.
After the change in hours, Keane believed Sears had failed
to accommodate her disability and was attempting to make
her work environment inhospitable. Keane told Klisiak that
she was walking too much at work and that she would have
to resign. Klisiak accepted Keane’s resignation.
The appellate court noted that discrimination under the
ADA includes not making reasonable accommodation to the
known physical or mental limitations of an otherwise qualified
individual with a disability who is an applicant or employee
unless the employer can demonstrate that the accommodation would impose an undue hardship on the operation of the
business. 42 U.S.C. § 12112(b)(5)(A). To establish a claim
for failure to accommodate, a plaintiff must show: (1) she is
a qualified individual with a disability; (2) the employer was
aware of her disability; and (3) the employer failed to reasonably accommodate the disability. Hoffman v. Caterpillar,
Inc., 256 F.3d 568 (7th Cir. 2001). The ADA also requires an
employer and employee engage in an interactive process to
determine a reasonable accommodation. Baert v. Euclid Beverage, Ltd., 149 F.3d 626 (7th Cir. 1998). An employer will be
liable only if it bears the responsibility for the breakdown of
the interactive process. Beck v. Univ of Wisc. Bd. of Regents,
75 F.3d 1130 (7th Cir. 1996).
In Keane I, the appellate court cited the EEOC’s regulation defining “substantially limits” in determining there was
a genuine issue of whether Keane was disabled. The EEOC’s
definition of substantially limits states that an individual is
unable to perform a major life activity or the individual is
significantly restricted as to the manner or duration under
which he or she can perform a particular major life activity.
See 29 C.F.R. § 1630.2(j)(l). On remand, the district court
determined that the Supreme Court’s decision in Toyota
changed the EEOC’s regulation definition of “substantially
limits” from “significantly restricted” to “severely restricted.”
The district court found Keane was not disabled under this
new standard.
In a case of first impression, the Seventh Circuit found
the Toyota decision did not preclude continuing reference
to § 1630.2(j). The court noted the Toyota decision simply
cautioned against letting the EEOC’s regulations obscure the
ADA’s demanding standard for qualifying as disabled. The
court also noted that while the Toyota decision may have set
a higher threshold for the statute than some had believed it
contained, it did not alter the statutory prescription that to be
disabled, one’s impairment must substantially limit a major
life activity. Sears, 417 F.3d at 801. The Seventh Circuit also
found that Toyota’s requirement that a plaintiff be unable to
perform a “variety of tasks” may not apply where the major
life activity at issue is something other than the performance
of manual tasks. Id.
The court noted to be disabled with regard to the major
life activity of walking, the employee must be “substantially
limited” in her ability to walk and the limitation must be
19
IDC Quarterly
Employment Law Issues (Continued)
permanent or long term. Id. at 802. Examining the evidence,
the court found a reasonable jury could find Keane disabled
because she was unable to walk one city block.
The court also concluded a jury could conclude Sears did
not provide reasonable accommodations to Keane because
they denied her request to walk shorter distances by using the
stockroom as a pass through to the intimate apparel department and as a lunchroom. The court also concluded a jury
could reasonably determine allowing her to park in a reserved
parking space did not accommodate her because it did not
reduce the distance she was required to walk. Id. at 803.
Lastly, the court held that a jury could reasonably conclude
that Sears was sufficiently aware of Keane’s disability to
trigger the interactive process of making a reasonable accommodation. The court noted there was evidence that Sears did
not seek Keane’s input in its determination of accommodations. The court also noted that a reasonable accommodation
existed in allowing Keane access to the stockroom. As such,
the court determined the breakdown of the interactive process
rested upon Sears because Keane made requests for accommodations, which were denied, and Sears then disengaged
from the interactive process and did nothing to facilitate any
accommodation. Id. at 804-808.
Retaliation
Removal of Flex-Time Potentially Constituted
Material Change to Working Conditions
In Washington v. Illinois Dept. of Revenue, 420 F.3d 658
(7th Cir. 2005), Chrissie Washington had worked from 7
a.m. until 3 p.m. for 16 years. A standard schedule at the Illinois Department of Revenue was from 9 a.m. until 5 p.m.
The earlier hours allowed Washington to care for her son,
who had Down syndrome, when he arrived home. In 1999,
Washington filed a formal charge of race discrimination with
state and federal officials. She later claimed that the charge
led her supervisors to rescind the flex-time schedule on which
her son depended. As such, Washington brought a retaliation
charge pursuant to Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-3(a).
When Washington refused to work the 9 to 5 shift, her
position was abolished and she was assigned to another post
with a different supervisor. The reassignment required her to
apply anew for a flex-time schedule. Her request was refused
and she took vacation or sick leave each day from 3 p.m. to
5 p.m. until those benefits were exhausted. She then took
unpaid leave from August 2000 to January 2001. When she
20
returned to work for a different supervisor, she was allowed
a flex-time schedule.
A magistrate judge granted summary judgment for the defendant because he concluded Washington could not establish
a prima facie case of retaliation. The judge ruled that when
work hours change but salary and duties remain the same,
no adverse employment action is taken. Without an adverse
employment action there could be no violation of Title VII.
“The judge ruled that when work
hours change but salary and
duties remain the same, no adverse
employment action is taken.”
On appeal, Washington asked the court to find that an “adverse employment action” is unnecessary in retaliation suits.
She relied on decisions providing that proof of an “adverse
employment action” was unnecessary in litigation under §
2000e-3(a), which deals with retaliation, because that section
is “broader” than § 2000e-2(a), which deals with discrimination in the terms and conditions of employment.
The court noted that § 2000e-3(a) is “broader” than §
2000e-2(a) in the sense that retaliation may take many forms,
while § 2000e-2(a) is limited to discrimination with respect
to compensation, terms, conditions or privileges of employment. Washington, 420 F.3d at 660. As such, the court noted
retaliation need not entail an adverse employment action. Id.
The court also noted that nothing in § 2000e-3(a) “says or
even hints that the significance or materiality requirement
had been dispensed with.” Washington, 420 F.3d at 661.
The court found that materiality requirements are built
into the word “discrimination” and thus must apply to the
anti-retaliation rule in § 2000e-3(a). The court further found
the word “material” resists further definition and that an act
may be immaterial in some situations and material in others.
Id. The court thus found that “discrimination” entails a requirement that the employer’s challenged action would have
been material to a reasonable employee, which means the
same requirement applies to § 2000e-3(a), the anti-retaliation
clause, as well as to other provision in Title VII that use the
word “discrimination.” Id. at 662.
Fourth Quarter 2005
The court concluded an employer’s action is not material
under § 2000e-3(a) if it would not have dissuaded a reasonable
worker from making or supporting a charge of discrimination. By and large, a reassignment that does not affect pay or
promotion opportunities lacks the potential to dissuade and
is not actionable. Id. at 662. Nonetheless, the court noted that
“by and large” differs from “never.” It noted a material change
may exist if an employer sought to retaliate for a charge of
discrimination by exploiting an employee’s idiosyncratic
vulnerabilities that may be harmless to most people but do
real damage to the employee. Id.
Specifically looking at Washington’s situation, the court
noted she was assigned a new position rather than just a new
supervisor. The new position required her to reapply for a
flex-time schedule. The court found the defendant effectively
assigned Washington a new supervisor and changed her hours.
While this would not be materially adverse for a normal
employee, the defendant knew Washington was not a normal
employee and that she had a son with a medical condition that
required her to care for him. The court found that changing
Washington’s hours was a materially adverse change for her,
even though it would not have been for 99% of the staff. The
court further noted the practical effect of the change was to
cut her wages by 25% because it induced her to use vacation
and sick pay. Id. The court concluded that a jury could find
the defendant set out to exploit a known vulnerability and did
so in a way that caused a significant loss. Id. at 663.
Race
Plaintiff Fails to Establish Prima Facie
Case of Race Discrimination
In Bio v. Federal Express Corp., 424 F.3d 593 (7th Cir.
2005), Maman Bio, an African American, sued FedEx under
Title VII of the Civil Rights Act of 1964, claiming FedEx took
disciplinary action against him and terminated him for racially
discriminatory reasons. The Seventh Circuit upheld the district
court’s ruling granting summary judgment to FedEx.
Bio began working as a material handler for FedEx in
1994. He was promoted to engineering specialist in 1996.
He was responsible for preparing and monitoring long-range
operational plans and providing engineering support to the
operating and corporate department of the Indianapolis Hub.
Bio had received oral and written counseling on numerous
occasions about difficulties he had in performing his duties. He
was disciplined at least eight times for poor performance prior
to his termination. In conjunction with his eighth disciplinary
action, Bio was issued a “Decision Day.” A “Decision Day”
allows an employee to take a day off and decide whether he
wishes to continue employment with FedEx. If he decides to
continue his employment he is required to complete a personal
performance agreement demonstrating his commitment to
improving his performance. Bio had been warned that if he
did not submit a personal performance agreement he would
be considered as having voluntarily resigned his employment.
Bio returned to work and informed FedEx that he wished to
remain employed. However, he refused to prepare a personal
performance agreement because he believed the eighth disciplinary warning was unwarranted. Bio received a disciplinary
warning for his refusal to submit the plan. He was terminated
five days later for having received three disciplinary warnings
within a twelve-month period. Four days later, Bio submitted
an internal complaint claiming he was treated unfairly. He did
not mention racial discrimination in this complaint.
The Seventh Circuit found that Bio failed to establish a
prima facie case of discrimination. In order to do so, he was
required to show: (1) he was a member of a protected class; (2)
his performance met his employer’s legitimate expectations;
(3) he suffered an adverse employment action; and (4) he was
treated less favorably than similarly situated employees in a
different class. The court found that Bio could not point to a
similarly situated non-African American employee who was
treated more favorably. Bio, 424 F.3d at 597.
The court further found it was not a sign of racial discrimination on FedEx’s part to decide that Bio had to comply with
its requirement that he submit a personal performance agreement as a condition of his continued employment. Bio was
unable to identify any other employee who was also required
to prepare the agreement who evaded disciplinary action upon
refusing to complete the agreement. As such, the court found
Bio could not support his claim of discrimination. Id at 598.
21
IDC Quarterly
Legal Ethics
By: Michael J. Progar
Doherty & Progar, LLC
Chicago
Obtaining a Client’s Informed
Consent to Future Conflicts of Interest
A client may give effective informed consent to future
conflicts of interest in appropriate circumstances. That was
the recent conclusion of the American Bar Association Standing Committee on Ethics and Professional Responsibility,
in Formal Opinion 05-436. Although it remains to be seen
whether Illinois will reach a similar result, the new opinion
may ultimately benefit law firms with multiple offices and
attorneys who represent corporate clients.
Formal Opinion 05-436 addresses Model Rule of Professional Conduct 1.7, which concerns conflicts of interest
between current clients. Model Rule 1.7 was revised and
restructured in 2002 and new comments were added. Prior to
that time, no Model Rule or Comment specifically considered
whether an attorney could obtain a client’s informed consent
to future conflicts of interest.
In Illinois, Rule 1.7 of the Illinois Rules of Professional
Conduct (IRPC) provides the general rule for an attorney faced
with a conflict of interest between current clients. Illinois is
one of 44 states that uses the American Bar Association’s
Model Rules of Professional Conduct as the basis for its ethics rules.
IRPC Rule 1.7, which was adopted in 1990, is based on
the pre-2002 version of Model Rule 1.7. IRPC Rule 1.7 was
virtually identical to Model Rule 1.7, with the exception of
paragraph structure, and replacement of the Model Rule’s
term “consultation” with the defined term “disclosure.”
IRPC 1.7(a) is limited to situations involving the concurrent representation of clients with directly adverse interests.
IRPC 1.7(b), however, is broader in scope. That rule prohibits
an attorney from undertaking the representation of a client if
the attorney’s representation of the client may be materially
limited by: (1) the attorney’s responsibilities to another cli22
ent; (2) the lawyer’s responsibilities to a third party; or (3)
the attorney’s own interests.
Although such conflicts can be waived by each client, such
a waiver requires, in addition to the lawyer’s own reasonable
belief that the representation will not be adversely affected,
the client consent after “disclosure.” The IRPC define “disclosure” as “communication of information reasonably sufficient
to permit the client to appreciate the significance of the matter
in question.” As was the case with the 1990 version of the
ABA’s Model Rules, IRPC 1.7(b) does not directly deal with
the issue of a client’s informed consent to future conflicts of
interest.
The Committee’s apparent concern about the earlier version
of Model Rule 1.7 was regarding the disclosure or use of a
client’s confidential information. However, the Committee did
not consider the implications of a waiver of future conflicts in
matters unrelated to the subject of the earlier representation.
New Comment 22 specifically relates to the circumstances
under which a client’s waiver of conflicts that might arise in
the future would be considered effective. The general test is
the extent to which the client reasonably understands the material risks that the waiver involves. The more comprehensive
the disclosure, including the actual and reasonably foreseeable adverse consequences, the more likely the waiver will
be given effect.
The Comment goes on to state that consent given by an
experienced user of the type of legal services involved is more
likely to be effective. That is particularly so where the client
may have been represented by independent counsel in giving
consent, and where the consent is limited to future conflicts
that are unrelated to the subject of the original representation.
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.
Fourth Quarter 2005
However, no consent to future conflicts is effective under
circumstances that would make the conflict nonconsentable
under Rule 1.7(b).
Whether and how the rationale of Formal Opinion 05-436
will be applied in Illinois remains to be seen. However, since
the IRPC does not specifically prohibit a waiver of future
conflicts, with the exception of those that are otherwise nonconsentable, following are some general rules to keep in mind
when obtaining a client’s consent to future conflicts.
1. A general, open-ended consent is unlikely to be effective. To the extent possible, the disclosure should
identify the types of future representations that may
arise, the potential party or class of parties who may
be represented in the future matter, and the actual or
reasonably foreseeable consequences of those future
representations.
2. Consent given by an experienced user of the legal
services involved, who is reasonably informed about
the risk that a particular type of conflict may arise,
is more likely to be effective. That is particularly so
where the client is represented by independent counsel
in relation to the consent, as in the case of a corporation or insurance company that may employ its own
attorneys or have separate corporate counsel.
3. Consent that is limited to future conflicts unrelated to
the original representation is more likely to be effective.
4. Under Rule 1.7(b), some conflicts cannot be consented
to, whether they are current or future.
5. A client’s consent to future conflicts does not, of itself,
constitute informed consent to use of the client’s own
confidential information against the client, as required
by IRPC 1.6(a).
6. Regardless of consent, the attorney may be prohibited
from undertaking the future representation if it involves
the same or a substantially related matter, or the use
of information relating to the former representation to
the disadvantage of the former client, in violation of
IRPC 1.9.
7. The attorney must determine whether the future representation may be prohibited under other rule.
Case Note
By: Robert T. Park
Snyder, Park & Nelson, P.C.
Rock Island
Settlement of a Minor’s Claim
American movie mogul Louis B. Mayer once remarked,
“A verbal contract isn’t worth the paper it’s written on.” The
recent case of Smith v. Smith1 illustrates that the settlement of
a minor’s claim without court approval is similarly worthless.
In Smith, a six-year-old girl was riding in her mother’s car
when it was involved in a one-car collision, resulting in her
injury.
When the girl, by her father, brought a personal injury
negligence suit against her mother, the defense filed a Section
2-619(a)(6)2 motion to dismiss, claiming the action was barred
by a prior release. The motion was supported by the mother’s
affidavit, filed pursuant to Section 25-2 of the Probate Act,3
stating that the girl’s personal estate was less than $10,000,
that no representative had been appointed for the minor’s
estate, and that the defendant stood in loco parentis to her.4
The circuit court dismissed the suit, finding that the defendant’s insurer had settled the claim under its uninsured
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 a recent past Editor-In-Chief
of the IDC Quarterly.
23
IDC Quarterly
Case Note (Continued)
motorist coverage and that the defendant had executed a
release, so that the claim was released or satisfied.5
The appellate court reviewed the dismissal de novo. It
first noted that a minor is a ward of the court, which has a
broad duty to protect the child’s interests. Section 19-8 of the
Probate Act provides that a minor’s representative “may …
compromise any claim … of the ward … upon such terms at
the court directs.”
The parental relationship gives a mother or father no right
to settle a minor’s cause of action, and court approval of a
settlement is mandatory. Thus, “any settlement of a minor’s
claim is unenforceable until there has been approval by the
probate court. [Citation omitted.]”6
The Smith court next looked at 25-2 of the Probate Act,
which provides:
Upon receiving an affidavit that the personal estate of a
ward does not exceed $10,000 in value, that no representative has been appointed for his estate and that the
affiant is a parent or a person standing in loco parentis
to the minor … any person or corporation indebted
to or holding personal estate of the ward may pay the
amount of the indebtedness or deliver the personal estate
to the affiant.7
The court noted that this section is directed to someone
holding property of a ward and allows a payor to discharge its
obligation pursuant to a proper affidavit. It does not provide
that the filing of an affidavit can bypass the need for court
approval of a minor’s claim settlement.
In Smith, the mother’s Section 25-2 affidavit did not substitute for the court’s stamp of approval, and there was no
indication that the circuit judge found the insurer’s settlement
was in the minor’s best interest.8
In addition, the release named only the insurer and was
signed only by the defendant on her daughter’s behalf. It
did not identify the defendant as a party released. Parties
not specifically identified as subject to a release cannot rely
on it as a defense.9 See Section 2(c) of the Joint Tortfeasor
Contribution Act.10
Although it may involve considerable inconvenience, delay and expense, a binding settlement of a minor’s personal
injury claim can be achieved only with the court’s approval.
Any other manner of resolving a minor’s claim is subject to
being later cast aside as ineffective and unenforceable.
24
Endnotes
358 Ill. App. 3d 790, 295 Ill. Dec. 510, 832 N.E.2d 960 (4th Dist.
2005).
1
2
735 ILCS 5/2-619(a)(6).
3
755 ILCS 5/25-2.
4
295 Ill. Dec. at 512, 832 N.E.2d at 962.
As to the reason the claim was handled under the policy’s uninsured
motorist coverage, see Kerouac v. Kerouac, 99 Ill. App. 3d 254, 259-60,
54 Ill. Dec. 678, 682, 425 N.E.2d 543, 547 (3d Dist. 1981), and Illinois
Emasco Ins. Co. v. Doran, 160 Ill. App. 3d 927, 931-32, 2 Ill. Dec. 361,
363-64, 513 N.E.2d 970, 972-73 (1st Dist. 1987), holding that, where a
family member coverage exclusion makes liability coverage unavailable
to an injured party, the insured vehicle will be treated as uninsured for
purposes of uninsured motorist benefits.
5
6
295 Ill. Dec. at 512-13, 832 N.E.2d at 962-63.
7
755 ILCS 5/25-2.
8
295 Ill. Dec. at 513, 832 N.E.2d at 963.
9
Id.
740 ILCS 100/2(c), which provides: “When a release or covenant
not to sue or not to enforce judgment is given in good faith to one or
more persons liable in tort arising out of the same injury or the same
wrongful death, it does not discharge any of the other tortfeasors from
liability for the injury or wrongful death unless its terms so provide but
it reduces the recovery on any claim against the others to the extent of
any amount stated in the release or the covenant, or in the amount of the
consideration actually paid for it, whichever is greater.” (Underlining
added.)
10
Fourth Quarter 2005
Featured Article
Construction Law Versus
IPI Jury Instructions:
A Conflict in Need
of Resolution
By: Douglas A. Miller
Haynes, Studnicka, Kahan, O’Neill & Miller, LLC
Chicago
The author explains the conflict between existing IPI jury
instructions and Illinois construction negligence law.
Between 1907 and 1994 injured workers in the construction trades were governed by the Illinois Structural Work Act.
Since the repeal of the Act, a new analysis of legal duties has
emerged in the area of construction torts. However, much
confusion remains as to exactly what duties are owed to such
workers and by whom. This problem has been exacerbated by
the failure to ensure that the Illinois Pattern Jury Instructions
properly reflect the law.
without consideration of the plaintiff’s own conduct. In the
future a plaintiff-worker’s negligence, if any, will be addressed
by the trier-of fact.4
In addition, repeal of the Structural Work Act revived the
application of common law negligence principles to construction cases. Many attorneys, and judges for that matter, assume
that the repeal of the Structural Work Act has created a new
basis of construction negligence law. However, negligence
theories in construction cases have been available for decades.
Negligence theories were not typically pursued in the past,
and were often voluntarily dismissed when trial approached,
since the Structural Work Act presented a much easier standard
for a plaintiff to meet and removed the risk of a diminished
judgment based on the plaintiff-workers’ own comparative
negligence.
II. Section 414
Many practitioners have been confused in the past due
to opinions implying that under common law negligence
principles, liability for acts of independent contractors in the
context of a construction-related injury is analyzed under
Section 414 of the Restatement (2d) of Torts.5 This is incorrect. Section 414 of the Restatement (2d) of Torts is not the
general rule; Section 414 is the exception to the general rule.
What is the general rule? Simply, one who employs an
independent contractor is not liable for the acts or omissions
of that independent contractor.6
Why is this the general rule? The rationale is that a principal
may not only lack knowledge regarding the best and safest
manner to perform certain work, but also cannot be expected to
I. Background
Seasoned, meaning old, practitioners in the field of construction law can likely still recite by memory the various
factors considered in whether a particular party may have
been deemed “in charge” of construction work under the now
repealed Structural Work Act.1 However, with repeal of the
Act in 1994 construction-related injuries are now analyzed
solely under common law negligence principles.2
The result of this development is two-fold. Under the
Structural Work Act, the sole inquiry was a determination of
the defendants’ relative culpability. The plaintiff-workers’ own
conduct was not addressed by the trier-of-fact because proof
of comparative negligence was not permitted under the Act.3
This often resulted in substantial judgments against defendants
About the Author
Douglas A. Miller is a partner with Haynes, Studnicka,
Kahan, O’Neill & Miller, LLC. A trial attorney with twenty
years of civil trial experience, Mr. Miller has tried over fifty
jury trials to verdict in both state and federal courts. He
is also an Adjunct Professor of Torts and Civil Procedure
at Loyola University School of Law. Mr. Miller’s areas of
concentration include construction negligence, commercial
premises liability, transportation negligence and insurance coverage. He is a
graduate of the Illinois Institute of Technology and Boston College. Mr. Miller
is a member of IADTC and can be reached at [email protected].
25
IDC Quarterly
Construction Law (Continued)
constantly supervise the details of an independent contractor’s
specific work. A general contractor, for instance, is not in the
best position to prevent negligent performance of a particular
worker. Rather, the worker’s own employer typically knows
the best way, and safest way, to perform particular work,
such as welding. Therefore, the employer can best supervise,
instruct and direct its employee.
By analogy, a homeowner would not be able to instruct an
electrician in the safest way to wire a home. A homeowner
probably hired the electrician because of a lack of the requisite
knowledge to perform the work. Such is true of many project
owners, general contractors, and even sub-contractors who
hire additional sub-contractors. For instance, a steel fabricator, itself a sub-contractor, may hire yet another company to
erect the steel which it fabricates.
So where does Section 414 fit into this analysis? Comment
(a) and Comment (b) of Section 414 provide limited exceptions to the general rule that one who employs an independent
contractor is not liable for the negligence of the independent
contractor. Comment (a) states that one who employs an
independent contractor, such as an owner, general contractor
or sub-contractor, may be subject to liability if it retains the
power to direct the order in which work is done, or to forbid
work to be done in a dangerous manner, and then fails to
exercise supervisory control with reasonable care.
Comment (b) allows for liability against a principal, someone who employs an independent contractor, only if the principal superintends the entire job and the plaintiff can prove all
of three factors: the principal failed to prevent sub-contractors
from performing work in a way unreasonably dangerous to
others (not themselves), knew or should have known the work
was being done in an unreasonably dangerous manner, and
had the opportunity to prevent the unreasonably dangerous
work method. If any of these criteria are missing then the
exception afforded under Comment (b) is not available.
Most importantly, and often misunderstood, is that neither
Comment (a) nor Comment (b) is available as an exception
to the general rule if the factors described in Comment (c)
of Section 414 exist. Under Comment (c), the fact that an
employing principal has a general right to order the work
stopped, to inspect its progress, to receive reports, to make
suggestions or recommendations, or to prescribe alterations
or deviations will not subject the principal to liability for
construction-related injuries. Rather, in order for the exceptions of Comment (a) and Comment (b) to apply, it must be
shown that the principal controlled the methods of work or the
operative detail of the work of the sub-contractor. Expressed
differently within Comment (c), there must be such a retention
26
of a right to supervision that the contractor is not entirely free
to do the work in his own way.
In reality, the exceptions offered in Comment (a) and
Comment (b) are taken away by Comment (c). Practically
speaking, since any particular trade is hired for its specialized knowledge and ability to perform unique work they are
in the best position to determine the safest work method.
By example, a general contractor cannot be expected to be
knowledgeable in all given trades or to go to the expense to
have safety personnel looking over the shoulders of each and
every worker. On high-rise developments there may literally
be hundreds of trades working on diverse tasks, from erecting
huge beams to installing computer lines. No one person, or
group of individuals, could be expected to be knowledgeable
regarding the means and methods or operative details best
suited to these unique tasks.
III. Attempts to Avoid Comment (c)
Since 1994 several litigants have relied on contract language to argue that a principal, per contract terms, retained
“control” over the construction techniques of sub-contracting
parties. These attempts, in general, have met without success.
An example is found in the opinion of Martens v. MCL Construction Corporation,7 in which a party argued that contract
language created an issue of whether the general contractor,
and a superior sub-contractor, retained control based on the
contracts between the parties. In Martens, the plaintiff was
employed by a sub-contractor hired to erect steel provided
by a steel fabricator which itself was a sub-contractor of the
general contractor. Contract language established that the general contractor was responsible for initiating and supervising
a safety program, and could cite sub-contractors for rule or
regulation violations, and even designated a safety director to
prevent accidents. However, this detailed contract language
was found by the court to be irrelevant to the primary issue
of control over the plaintiff’s work.
Rather, despite these contractual obligations, the more
important and realistic issue was whether or not the parties
exercised control “over the means and methods” of the plaintiff’s employer’s steel erection work. In other words, despite
general statements in the contract that the primary contractor
reserved the general right to control job site safety, it did not
mean that the independent contractor, the plaintiff’s employer,
was prohibited from exercising its own means and methods
in accomplishing its work.8
Some courts have used slightly different language to express the same analysis by asking if the general contractor
exercised control over the “incidental aspects” of the independent contractor’s work. These courts have found control
Fourth Quarter 2005
over “incidental aspects” only in those scenarios where the
plaintiff’s employer was not free to perform the required work
in its own way.9
In the past it has been argued that certain principals and
general contractors, or project managers, should be held liable since they have a regular worksite presence and therefore
exercise supervisory control over work of all individuals
on the jobsite. However, the appellate courts have rejected
“A general contractor, for
instance, is not in the best
position to prevent negligent
performance of a particular
worker. Rather, the worker’s
own employer typically knows
the best way, and safest way,
to perform particular work,
such as welding. Therefore, the
employer can best supervise,
instruct and direct its
employee.”
this argument as well and have reasoned that regardless of
how much time a representative of a principal may be on the
premises, they cannot be considered knowledgeable about
work methods of specialized trades and ordinarily do not
control the means and methods of such work.10 Therefore, if
a sub-contractor, including a plaintiff’s employer, is free to
perform its work in its own way then no liability will attach
to owners or general contractors.11
One court set forth a number of criteria to be considered
in determining whether exercise of control over a specific
plaintiff’s work can be established.12 Such factors include an
examination of who supplied materials and equipment, who
directed the “operative details” of the work in question, and
who directly supervised the plaintiff’s work. These factors
have been followed by numerous appellate courts over the
last few years.13
Certain older decisions, particularly those emanating from
the 3rd, 4th and 5th Districts have found liability where a
general contractor has exercised pervasive supervision and
constant monitoring of workers’ methods.14 However, these
decisions are readily distinguishable from common scenarios.
These cases, for the most part, involved situations where a
general contractor knew of a particular unsafe work method,
actively inspected and directed the work method in question,
or retained by contract the sole right to control the safety of all
workers on the project. These decisions have been superceded
by recent decisions which have refined the degree of control
deemed necessary to impose derivative liability upon owners,
general contractors or prime sub-contractors.15
For example, in one such case a general contractor required
that each subcontractor obtain a “permit” from the general
contractor before beginning any work and required that a
representative of the general contractor be physically present
during the welding work of the plaintiff and his employer.16
Such active participation by a principal is extremely rare.
Several secondary concepts have been re-established in
these opinions which should be kept in mind as well. For
one, the concept of “direct negligence” in the construction
negligence field simply does not exist. Rather, the abovestated general rule regarding common law negligence liability
controls.17 Furthermore, contrary to popular belief, safety
responsibilities may be delegated by a contractor.18
Recent case law developments have also affected the utility of experts in construction injury cases. Parties quite often
retain “safety experts’ to opine that particular standards were
either followed or ignored by a particular party. However, as
the courts have long noted, such standards or codes do not
create a legal duty. Violations of such standards or codes are
merely evidence in regard to the issue of reasonable care. In
fact, such evidence does not become relevant unless a party
first establishes that another party actually exercised sufficient
control over the operative details of the plaintiff’s employer.
If not, the discussion of standards becomes moot and expert
testimony on such standards is not allowed.19 Furthermore,
the question of who supervised the operative details of one’s
work method is not a concept that requires expert testimony
and can be determined by a trier-of-fact based on witness
testimony alone.
Some construction-related cases may involve allegations
of a failure of a party to reasonably maintain the premises.
Such cases are addressed by Sections 343 and 343 (a) of the
27
IDC Quarterly
Construction Law (Continued)
Restatement (2d) of Torts.20 Rather than focusing on the defendant’s conduct, such cases typically involve a condition of
the premises. This writing will not address Section 343 and
343 (a) based on space limitations.
IV. The Law Versus the IPIs
The most recent edition of the Illinois Civil Pattern Jury
Instructions is in conflict with current construction negligence
law. For instance, the “55 series” of IPI fails to recognize that
the central issue under common law negligence evaluation is
whether a defendant controlled the means and methods, or the
operative details, of the plaintiff or the plaintiff’s employer.
This series of instructions does not address this concept.
In fact, several appellate court justices have questioned
whether the 55 Series accurately reflects the law.21 In a recent
Rule 23 Opinion a First District panel, in reversing a plaintiff’s
verdict, agreed that these instructions improperly combine
theories of construction law negligence and premises liability
law. One justice went so far as to suggest that IPI 55.02 and
55.03 should be sent back to the drawing board.22
There are many problems with the current IPIs. For instance, while the instructions make no mention of “means,”
“methods” or “operative details,” they instead refer to “control.” As discussed above, the concept of “control” no longer
applies in construction negligence law.
Furthermore, 55.02 and 55.03 of the IPI impose a legal
duty upon any party who has “retained some control” over
the “safety” of the work. This is contradictory to the case
law and could result in juries focusing on “safety” as opposed to whether a defendant actually directed the means
and methods or operative details of the plaintiff’s work. This
approach could likely cause juries to ignore the general rule
of non-liability for employers of independent contractors. It
also avoids the question of whether the plaintiff’s employer
was free to perform the work in its own way as per Comment
(c) of Section 414. In short, the common law is vitiated by
the IPIs.
This conflict has strong implications on pending and future
litigation in the construction negligence arena. To date the appellate courts and the Illinois Supreme Court have not directly
addressed this conflict. Trial judges and practitioners alike
should therefore be aware that the use of the instructions and
verdict forms may result in appealable issues.23 For example,
an appealable issue could be advanced that in light of existing case law the use of the current 55 series of instructions
constitutes legal error.
One possible resolution of this issue is a review by the Illinois Supreme Court, resulting in a rejection of the 55 Series
28
of IPI jury instructions on the basis that they do not accurately
reflect the law. Alternatively, the Illinois Supreme Court could
accept for review one of the many pending cases dealing
with the element of legal duty in the construction negligence
context. A published opinion by the Illinois Supreme Court
could resolve this issue and clarify for all the general rule of
non-liability of principals for the acts and omissions of independent contractors. It would also allow for the publication of
jury instructions which more accurately reflect the law rather
than instructions which appear to directly contradict the case
law. Without a resolution, litigants, lawyers, and judges have
no clear authority as to the law that applies in the context of
construction negligence.
Endnotes
See, Simmons v. Union Electric Co., 104 Ill. 2d 444, 473 N.E.2d 946
(1984); Chance v. City of Collinsville, 112 Ill. App. 3d 6, 445 N.E.2d
39 (1983).
1
See, Martens v. MCL Construction Corp., 397 Ill. App. 3d 303, 313,
807 N.E.2d 480 (1st Dist. 2004) for a succinct history of the Structural
Work Act and its repeal.
2
3
Id. at 313.
However, the Worker’s Compensation Act still permits workers to
bring actions against their employers to recover guaranteed disability
payments, regardless of his or her own fault, as long as the injury occurred within the scope of employment.
4
See, e.g., Kotecki v. Walsh Construction Company, 333 Ill. App. 3d
583, 587, 776 N.E.2d 774, 777 (1st Dist. 2002).
5
Rangel v. Brookhaven Constructors, Inc., 307 Ill. App. 3d 835, 838,
719 N.E.2d 174 (1st Dist. 1999); Gomien v. Wear-Ever Aluminum, Inc.,
50 Ill. 2d 19, 276 N.E.2d 336 (1971).
6
Martens v. MCL Construction Corp., 347 Ill. App. 3d 303, 807 N.E.2d
480 (1st Dist. 2004).
7
Typically, sub-contractors, by contract terms, assume all of the obligations and responsibilities that the general contractor assumes toward
the owner.
8
See, e.g., Bieruta v. Klein Creek Corp., 331 Ill. App. 3d 269, 278,
770 N.E.2d 1175 (1st Dist. 2002); Kotecki v. Walsh Construction Co.,
333 Ill. App. 3d 583, 588, 776 N.E.2d 774 (1st Dist. 2002).
9
Rangel v. Brookhaven Constructors, Inc., 307 Ill. App. 3d 174 (1st
Dist. 1999); Fris v. Personal. Products Co., 255 Ill. App. 3d 916, 924,
627 N.E.2d 1265 (1st Dist. 1994).
10
Fris, supra.
11
Rangel v. Brookhaven Constructors, Inc., 307 Ill. App. 3d 835, 839,
719 N.E.2d 174 (1st Dist. 1999).
12
Martens v. MCL Construction Corp., 347 Ill. App. 3d 303, 807 N.E.2d
840 (1st Dist. 2004), Ross v. Dae Julie, Inc., 341 Ill. App. 3d 1065, 793
N.E.2d 68 (1st Dist. 2003); Kotecki v. Walsh Construction Co., 333 Ill.
App. 3d 583, 776 N.E.2d 774 (1st Dist. 2002); Bieruta v. Klein Creek
Corp., 331 Ill. App. 3d 269, 770 N.E.2d 1175 (1st Dist. 2002); and
13
Fourth Quarter 2005
Connaghan v. Caplice, 325 Ill. App. 3d 245, 757 N.E.2d 971 (2d Dist.
2001).
See, e.g., Moorehead v. Mustang Construction Co., 354 Ill. App. 3d
456, 821 N.E.2d 358 (3d Dist. 2004); Moss v. Rowe Construction Co.,
344 Ill. App. 3d 772, 801 N.E.2d 612 (4th Dist. 2003); Brooks v. Midwest
Grain Products, 311 Ill. App. 3d 871, 726 N.E.2d 153 (3d Dist. 2000);
Fancher v. Central Illinois Public Service Co., 279 Ill. App. 3d 530,
664 N.E.2d 692 (5th Dist. 1996); and McConnell v. Freeman United
Coal Co., 198 Ill. App. 3d 322, 555 N.E.2d 993 (5th Dist. 1990).
14
See, e.g., Cochran v. Sollitt Construction Company, 2005 WL 153
8240 (1st Dist. June, 2005) wherein the First District Appellate Court
concisely distinguishes the decisions referenced in footnote 14 above.
See also, Martens, supra, 347 Ill. App. 3d 303, 317 (distinguishing
Brooks v. Midwest Grain Products of Illinois, Inc., 311 Ill. App. 3d 871,
726 N.E.2d 153 (1st Dist. 2000); and Bokodi v. Foster Wheeler Robbins,
Inc., 312 Ill. App. 3d 1051, 728 N.E.2d 726 (1st Dist. 2000)).
15
Brooks v. Mid-West Grain Products of Illinois, Inc., 311 Ill. App. 3d
871, 726 N.E.2d 153 (1st Dist. 2000).
16
Martens, supra; Shaughnessy v. Skinner Construction Company, 342
Ill. App. 3d 794 N.E.2d 937 (1st Dist. 2003).
17
Steuri v. Prudential Insurance Co. of America, 282 Ill. App. 3d 753,
668 N.E.2d 1066 (1st Dist. 1986).
18
Ross v. Dae Julie, Inc., 341 Ill. App. 3d 1065, 1074, 193 N.E.2d 68
(1st Dist. 2003).
19
See, e.g., Kotecki, supra; Bieruta, supra.
20
See, Moss v. Rowe Construction Co., 344 Ill. App. 3d 772, 784, 801
N.E.2d 612 (4th Dist. 2003) (special concurrence); Bokodi v. Foster
Wheeler Robbins, Inc., 312 Ill. App. 3d 1051, 728 N.E.2d 726 (1st Dist.
2000).
21
22
Sheldon v. Kimball Hill, Inc., No. 1-02-3693 (1st Dist. 2004).
See, People v. Hester, 131 Ill. 2d 91, 544 N.E.2d 797 (1989); Los
Amigos Supermarket, Inc. v. Metropolitan Bank and Trust Co., 306 Ill.
App. 115, 713 N.E.2d 686 (1st Dist. 1999); Powers v. Illinois Central
R.R. Co., 91 Ill. 2d 375, 438 N.E.2d 152 (1982).
23
Civil Rights Update
By: David A. Perkins, Daniel P. Hiser and
Jesse L. Placher*
Peoria
Seventh Circuit Rejects Claim
for Loss of Society and
Companionship for Adult Child
On July 11, 2005, the Seventh Circuit released its decision
in the case of Russ v. Watts, 414 F.3d 783 (7th Cir. 2005),
which held that a parent does not have a viable claim for loss
of society and companionship for an emancipated adult child.
The Seventh Circuit decision overruled its earlier decision in
Bell v. City of Milwaukee, 746 F.2d 1205 (7th Cir. 1984), and
brought the Seventh Circuit back in line with a majority of
the other federal circuit courts.
On June 5, 1999, Robert Russ, a 22-year-old student at
Northwestern University, was driving from campus to his
mother’s home in Calumet City, Illinois. At approximately
1:00 A.M., Chicago police attempted to stop Russ’ car. A chase
ensued with three separate squad cars pursuing Russ’ vehicle.
About the Authors
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.
* The author acknowledges the assistance of Daniel P. Hiser, an associate with
Heyl, Royster, Voelker & Allen, and Jesse L. Placher, a law clerk with Heyl,
Royster, Voelker & Allen, in the preparation of this article.
29
IDC Quarterly
Civil Rights Update (Continued)
Russ’ vehicle was eventually stopped when it collided with
several other police vehicles. Once stopped, Russ’ car was
surrounded by the three officers, who had weapons drawn.
Officer Watts then broke through the driver’s side window
and fired a single gun shot, killing Russ.
Months before Russ was killed, he and Erin Lewis conceived a son, Robert Anthony Russ, who was born on September 26, 1999, about four months after Russ’ death. The
probate division of the circuit court subsequently declared
Robert Russ as the sole heir to Russ’ estate, and appointed
Lewis as the independent administrator of the estate. The
court then entered an order substituting Lewis as the plaintiff
in the wrongful death action filed by Russ’ mother, Vera Love.
In October 2003, a jury found Officer Watts liable for Russ’
death and awarded $9.6 million in damages to Russ’ estate.
As a result of the substitution in the state court action, Russ’
parents filed suit in federal court against the same defendants.
Based upon the prior decision handed down in Bell, the district
court determined the crucial issue to be whether Russ had
become part of another family unit, thus precluding recovery
by Russ’ parents. In granting a summary judgment motion to
the defendants, the district court concluded that the parents
lacked standing to bring the action on the basis that Russ had
formed a new family unit with Lewis at the time of the shooting. The parents then appealed to the Seventh Circuit Court
of Appeals. The Seventh Circuit noted that most of the courts
that considered the identical issue declined to find a violation
of the familial liberty interests where the state action at issue
was not aimed specifically at interfering with the relationship.
Therefore the court re-examined its earlier decision in Bell.
The facts in Bell are as follows: On February 2, 1958,
Daniel Bell, a 23-year-old African-American male, was pulled
over by Milwaukee police officers Grady and Krause for driving a vehicle with a missing taillight. Bell fled on foot and
was pursued by both Grady and Krause. Grady soon caught
up to Bell and extended his hand to grab him. Grady’s gun
discharged, hitting Bell in the upper back, killing him. After
determining that Bell was dead, Grady planted a knife in Bell’s
hand in an attempt to divert blame. It was not until 1978 that
Krause revealed that the two officers had lied about the details
of Bell’s shooting. After Krause pled guilty to homicide, reckless conduct, and perjury, Bell’s siblings filed suit against the
officers and a jury awarded a verdict of $75,000 for the loss
of society and companionship to the Estate of Daniel Bell’s
father, Dolphus Bell.
The Bell case was appealed and the Seventh Circuit held
that Bell’s father could recover under § 1983 for a violation
of his substantive due process right to associate with his son.
30
The Seventh Circuit in Bell held that Daniel’s status as an adult
living on his own at the time he was killed did not preclude
recovery. The court observed that “We are unpersuaded that
a constitutional line based solely on age of the child should
be drawn.” Therefore, the Seventh Circuit in Bell concluded
that Daniel Bell’s age and separate residence were matters for
the jury to consider when determining damages, but were not
a bar to recovery.
The Seventh Circuit analyzed the decisions of its sister
circuits when deciding Russ and determined that Bell was
wrongfully decided. The court observed:
We now see that our conclusion that Dolphus Bell’s
parental liberty interest was violated by the killing
of his son was not well grounded in the Constitution
or Supreme Court case law. The Supreme Court has
recognized violations of the due process liberty interest in the parent-child relationship only where the state
took action specifically aimed at interfering with that
relationship. As the Supreme Court has explained, [h]
istorically, the guarantee of due process has been applied to deliberate decisions of government officials to
deprive a person of life, liberty, or property. (Emphasis
added), Russ, 414 F.3d at 788-789 citing Daniels v.
Williams, 474 U.S. 327, 331 (1986).
The Seventh Circuit in Russ determined that neither the
Bell nor the Russ case involved intentional action by a state
official to interfere with a familial relationship. In the Russ
case, there were no allegations that Watts shot Russ for the
specific purpose of terminating Russ’ relationship with his
family. The Seventh Circuit was concerned that affording the
plaintiffs a constitutional due process right to recover against
the state in circumstances such as were present in Russ would
create the risk of constitutionalizing all torts against individuals who happen to have families. Therefore, the Seventh
Circuit elected to join a majority of its sister courts and held
that Russ’ parents had no constitutional right to recover for
the loss of society and companionship of Russ.
Fourth Quarter 2005
II. Background – The Nature of the Issue and
the Existing Supreme Court Precedent
Technology Law
By: Michael C. Bruck
Crisham & Kubes, Ltd.
Chicago
Teaching Old Tricks to a New Dog:
The Supreme Court’s
Application of Common Law
Doctrines to New Technology in
MGM v. Grokster
I. Introduction
The United States Supreme Court’s recent decision in
Metro-Goldwyn-Mayer Studios, Inc., et al. v. Grokster Ltd.,
et al., 125 S. Ct. 2764 at 2770 (2005) presented the issue of
“under what circumstances the distributor of a product capable
of both lawful and unlawful use is liable for acts of copyright
infringement by third parties using the product.” The question
had apparently been answered by the Court over 20 years ago
in Sony Corp. of America v. Universal City Studios, Inc., 464
U.S. 417 (1984), a case involving vicarious copyright liability
for the manufacture and sale of the video cassette recorder
(“VCR”). In that case, the Court found that the makers of the
VCR could not be held secondarily liable for infringement by
consumers because the product was capable of commercially
significant noninfringing uses. However, Grokster involved
internet file sharing technology that is far more threatening
and harmful to copyright holders, and which was marketed
with a far more malevolent intent, than the VCR. Therefore,
to address the pervasive harm to copyright holders’ rights that
advancing technologies may present, and mindful of the need
to balance two competing goals of innovation and protection
of intellectual property rights, the Grokster court applied common law principles of secondary liability in order to expand
the reach and protection offered by the Copyright Act. Just as
Sony framed the legal debate in the VCR and early Internet
eras of the last 20 years, the Grokster court’s reversal of the
Ninth Circuit’s ruling should have an equal, if not greater
impact, in the coming years.
The Grokster case involved the distribution of free “peerto-peer” file sharing software by defendants Grokster, Ltd.
(“Grokster”) and StreamCast Networks, Inc. (“StreamCast”)
(referred to here collectively as “the defendants”). Peer-topeer file sharing, as the name implies, allows computer users
to communicate directly with each other over the Internet
and search for and exchange files directly with others using
compatible software. In a peer-to-peer network, when a user
enters a search request into the peer-to-peer software, it sends
the request to peer computers connected with it, which in turn
pass the request to other connected peers. The search results
are then communicated back to the requesting computer, allowing the user to download desired files directly from peers’
computers. Unlike centralized file sharing methods used by
services such as Napster, “Grokster and StreamCast used no
servers to intercept the content of the search requests or to
mediate the file transfers conducted by users of the software,
there being no central point through which the substance of
the communications passes in either direction.” Grokster, 125
S. Ct. at 2771. Therefore, given the decentralized nature of
the defendants’ file sharing networks, and perhaps by design,
the defendants did not have actual knowledge of their users’
copyright-infringing conduct.
The evidence showed, however, that over 100 million
copies of Grokster’s and StreamCast’s programs had been
downloaded, and that billions of files were being shared across
the defendants’ networks each month. Indeed, the plaintiffs
introduced uncontroverted evidence that up to 90% of the
traffic on the defendants’ networks consisted of copyrighted
material. As the Supreme Court noted, the sheer volume of
such transfers suggested that the probable scope of copyright
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.
31
IDC Quarterly
Technology Law (Continued)
infringement taking place was “staggering.” Grokster, 125
S. Ct. at 2772. Moreover, the defendants had every incentive
to further increase the amount of traffic on their networks,
because they received advertising revenue that was tied to
the use of their sites.
As a result, certain copyright holders, including motion
picture studios, recording companies, songwriters and music
publishers, sued Grokster and StreamCast for their users’
copyright infringements. Although the Copyright Act does not
explicitly allow for one party to be liable for another party’s
infringement, the copyright holders claimed that Grokster
and StreamCast should be secondarily liable for their users’ infringement because they knowingly and intentionally
distributed their software to enable users to reproduce and
distribute the copyrighted works in violation of the Copyright
Act, 17 U.S.C. § 101 et seq. Such secondary liability has been
described as the copyright equivalent of aiding and abetting
in criminal law. See, In re, Aimster Copyright Litigation, 334
F.3d 643, 651 (7th Cir. 2003).
For the past 20 years the Supreme Court’s opinion in Sony
has been the Court’s only modern pronouncement concerning secondary liability of copyright claims and, therefore,
the Sony decision largely provided the framework for the
litigation of such claims. Sony involved the motion picture
industry’s challenge to Sony’s manufacture and sale of the
VCR. The copyright holders in that case argued that the VCR
allowed consumers to make unauthorized copies of movies
and television broadcasts and that Sony should be liable for
such infringement because it provided the “means” to infringe
and it had “constructive knowledge” that consumers would
use the machines to infringe.
Notably, in Sony there was no evidence of intent by Sony
to promote infringement through the manufacture and sale of
VCR’s. Therefore, the Sony court was faced with a defendant
that manufactured and sold a product capable of infringing on
copyrighted materials, with knowledge that some consumers
would use the product to infringe, and no evidence of intent
to encourage or bring about infringement by others. As a
result, the Court considered liability against Sony based on
the secondary liability theory of “contributory infringement”
and announced the following test for such cases:
[T]he sale of copying equipment, like the sale of other
articles of commerce, does not constitute contributory
infringement if the product is widely used for legitimate,
unobjectionable purposes. Indeed, it need merely be
capable of substantial noninfringing uses.
32
The question is thus whether the Betamax is capable of
commercially significant noninfringing uses.
Sony, 464 U.S. at 442.
Accordingly, the parties in Grokster focused their arguments on cross-motions for summary judgment based on Sony
and its “substantial noninfringing uses” language. StreamCast
and Grokster argued that there were many noninfringing uses
“Although the Copyright Act
does not explicitly allow for
one party to be liable for another party’s infringement,
the copyright holders claimed
that Grokster and StreamCast
should be secondarily liable for
their users’ infringement
because they knowingly and
intentionally distributed their
software to enable users to reproduce and distribute the copyrighted works in violation of the
Copyright Act.”
for their software, noting that many materials available on the
peer-to-peer networks accessible with that software were not
protected by copyright. It also argued that, given the decentralized nature of its networks, it did not have actual knowledge
of infringement by any user.
The copyright holders, on the other hand, argued that
millions of copies of the defendants’ software had been
downloaded, billions of files had been exchanged using the
software, and that 90% of the exchanges involved copyrighted
Fourth Quarter 2005
materials. Therefore, they argued that the other 10% of files
did not qualify as “substantial” under Sony, and a product
used “principally” for infringement should not be protected
by the Sony holding.
The district court granted summary judgment to the defendants because Grokster and StreamCast had merely distributed
the software at issue, and because the decentralized nature of
their networks prevented the defendants from having actual
knowledge of specific infringing activity. On appeal, the Ninth
Circuit affirmed. Metro-Goldwyn-Mayer Studios, Inc., et al. v.
Grokster Ltd., et al., 380 F.3d 1154 (9th Cir. 2004). Relying on
Sony, the Ninth Circuit held that when a product is capable of
substantial noninfringing uses, a copyright owner must demonstrate that the defendant had actual knowledge of specific
instances of infringement and failed to act on that knowledge
for there to be liability based on contributory infringement.
Grokster, 380 F.3d at 1161. The Ninth Circuit held that even
if 90% of the traffic on the defendants’ networks consisted of
copyright-infringing files, the remaining 10% constituted a
“substantial” noninfringing use of those networks. Grokster,
380 F.3d 1154 at n. 10. As such, under Sony the copyright
holders would have to show that the Grokster and StreamCast
defendants had specific knowledge of the infringement taking
place on their networks. This they could not do, given the
decentralized architecture of the defendants’ networks, and
therefore Sony’s substantial noninfringing use test shielded
them from liability and required summary judgment for the
defendants.
III. Grokster’s Shift in Focus
Grokster involved secondary liability for the copyright
infringement of another. The concept of secondary liability
is not specifically found in the Copyright Act but is based on
common law principles such as vicarious and contributory
liability that have become well established in copyright law.
Contributory infringement is “intentionally inducing or encouraging direct infringement.” Grokster, 125 S. Ct. at 2776
(citing Gershwin Pub. Corp. v. Columbia Artists Management,
Inc., 443 F.2d 1159, 1162 (C.A. 2 1971)). Vicarious infringement is more passive and involves the “profiting from direct
infringement while declining to exercise a right to stop or limit
it.” Id. (citing Shapiro, Bernstein & Co. v. H.L. Green Co., Inc.,
316 F.2d 304, 307 (2d Cir. 1963)). The lines between what
constitutes direct infringement, contributory infringement and
vicarious infringement are not clearly drawn, but generally
involve a sliding scale of involvement in the infringement.
See, Grokster, 125 S. Ct. 2764 at n. 9.
To explain where the defendants’ conduct in Grokster fell
in the range of possible involvement in infringement, the Su-
preme Court first distinguished Sony from Grokster based on
how the defendants in each case intended their products to be
used. In particular, the Court noted that Sony was a case where
there was no evidence of intent by Sony to promote infringing
uses of its product. The Court found that the VCR’s at issue
in Sony were devices intended and marketed for legitimate
use, but which also held some potential for illegitimate misuse. Conversely, the software at issue in Grokster involved
products that were intentionally marketed with illegal uses in
mind, and which just happened to also have some potential
for legitimate use. Therefore, the Sony and Grokster cases
were distinguishable based on the manufacturers’ intended
applications for their respective products.
The Supreme Court further found that the Ninth Circuit
had misread Sony to mean that whenever a substantial lawful use of a product can be shown, the producer can never be
contributorily liable for infringement, even when the actual
purpose of the product was to facilitate infringement, unless
the producer had specific knowledge of the infringement and
a failure to act on it. Grokster, 125 S. Ct. at 2778-79. The
Court simply noted that Sony was a case based on imputed
intent, that it was not meant to displace other theories of secondary liability, that it was never meant to foreclose rules of
fault-based liability derived from the common law, and that
nothing in Sony required a court to ignore evidence of intent
to encourage infringement if such evidence exists. Id. Indeed,
it would seem absurd for a producer’s intent to encourage
infringement to not matter in a secondary infringement claim.
The Court seemed to recognize this absurdity by finding that
where evidence demonstrates a producer’s promotion of infringement, the Sony significant noninfringing uses test would
not prevent liability from attaching. Id.
Accordingly, in Grokster the Supreme Court pointed out
that secondary liability for infringement can be based on
the “inducement of infringement” and that this principle is
imbedded in the common law concepts of secondary liability
previously applied to copyright law. It explained that evidence
of active steps taken to encourage direct infringement such as
advertising an infringing use or instructing how to engage in
an infringing use, show an affirmative intent that the product
be used to infringe, and a showing that infringement was
encouraged overcomes the law’s reluctance to find liability
when a defendant merely sells a commercial product suitable
for some lawful use. Grokster, 125 S. Ct. at 2779.
Therefore, the Grokster court announced its “inducement
rule” and held:
33
IDC Quarterly
Technology Law (Continued)
[O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear
expression or other affirmative steps taken to foster
infringement, is liable for the resulting acts of infringement by third parties.
Grokster, 125 S. Ct. at 2770.
Careful to maintain the balance between innovation and
commerce, like in Sony, the Court reaffirmed that a producer
would not be subject to liability based solely on the mere
knowledge of infringing potential or actual infringing uses,
or ordinary acts incident to product distribution, such as offering customers technical support or product updates. In this
regard, the Court noted that:
The inducement rule, instead, premises liability on
purposeful, culpable expression and conduct, and thus
does nothing to compromise legitimate commerce or
discourage innovation having a lawful promise.
Grokster, 125 S. Ct. at 2780.
Applied to the facts in Grokster, the Court found that the
defendants’ intent to induce infringement by others was manifest, and it therefore vacated the summary judgment which
had been entered in their favor. In particular, the Supreme
Court identified three specific features of intent which it
found notable. First, the Court noted that both Grokster and
StreamCast characterized themselves as aiming to appeal
to the market of former Napster users – a body which had
been associated with rampant copyright infringement. See,
Grokster, 125 S. Ct. at 2781. Second, the defendants failed
to employ filtering mechanisms or take any other technical
steps which may have thwarted their users’ infringing activity.
Id. While such failure to act would not be dispositive on its
own, the Court felt that it was significant when considered
cumulatively with other evidence of the defendants’ intent.
See, Grokster, 125 S. Ct. 2764 at n. 12. Third, the Court
noted that the defendants made money by selling advertising
space, and therefore the more their software was used, the
more income the defendants stood to gain. Accordingly, the
Court found that the defendants encouraged high-volume
use, which the record showed was infringing. Grokster, 125
S. Ct. at 2781-82. Based on these findings, the Court thus
vacated the summary judgment ruling of the appellate court,
and remanded the case for further proceedings consistent
with its opinion.
34
IV. Conclusion
In summary, the Supreme Court’s decision in Grokster
represents an important move forward in the area of secondary
liability for copyright infringement. The decision maintains
the rule in Sony that good-intentioned manufacturers will not
be held secondarily liable for the infringing conduct of others,
even if they know their product may likely be used by others
to infringe. However, manufacturers who evince an active
intent to facilitate infringing conduct by others will lose the
protections that Sony offers and will face potential liability.
Among other things, the decision demonstrates the vitality
of the copyright law and its ability to respond to and address
advances in technology that are meant to circumvent the law
and harm copyright owners’ rights. It also demonstrates the
continued willingness by the Court to dip into and apply common law concepts to statutory intellectual property claims in
order to maintain the law’s vitality. Further, the Court’s ruling,
which focuses more on the manufacturer’s intent as opposed
to the characteristics of its product, seemingly strikes the
delicate balance between fostering technological innovation
and protecting the property rights of copyright owners.
Like Sony before it, Grokster will also likely form the
framework for future litigation of secondary liability copyright claims. For the practitioner, it represents a shift in
focus, from the characteristics and uses of the product to the
manufacturer’s intent in promoting the product. Therefore,
because intent questions are usually questions for the trier
of fact, this is likely to become a much more fertile area of
dispute in copyright litigation, and clients should be advised
accordingly.
Fourth Quarter 2005
Recent Decisions
By: Stacy Dolan Fulco
Cremer, Kopon, Shaughnessy & Spina, LLC
Chicago
Damages
Plaintiffs Able to Recover Amount Billed
for Medical Care, Not Amount Paid
In Arthur v. Catour, 216 Ill. 2d 72, ___ N.E.2d ___, 2005
WL 1693760 (July 12, 2005), the Illinois Supreme Court
analyzed whether a plaintiff could recover the full amount of
her medical bills or only that portion paid by her insurance
company. The plaintiff, Joyce Arthur, brought a negligence
action against Laurie Catour and Stenzel Brothers Auction
Services, Inc. after stepping into a hole at an auction and suffering injuries. The plaintiff incurred $19,314.07 in medical
bills but her insurance carrier only paid $13,577.97 to satisfy
the bills because of a contractual agreement with the medical
providers to discount the medical services.
The defendants filed a motion for partial summary judgment, seeking to limit the plaintiff’s claim for medical expenses to the amount paid rather than the amount billed. The
circuit court granted the defendants’ motion, holding that to
allow the plaintiff to seek and recover $19,355.25 worth of
medical damages when she was only charged for and became
liable for $13,577.97 would only serve to punish the defendants punitively and provide a windfall for the plaintiff.
The circuit court ruled that the “plaintiff will be limited to
seeking compensatory damages not exceeding those actually
paid to her medical providers.” The ruling was allowed for
immediate appeal. Arthur, 2005 WL 1693760 at *2.
The appellate court, with one justice dissenting, reversed
the circuit court’s ruling, holding that “plaintiff’s damages
are not limited to the amount paid by her insurer, but may
extend to the entire amount billed, provided those charges
are reasonable expenses of necessary medical care.” Id. Each
party petitioned for leave to appeal and the Illinois Supreme
Court agreed to review the case.
The Illinois Supreme Court’s analysis started with a review
of the collateral source rule. The defendants did not dispute
that the collateral source rule protected the $13,577.97 that
the insurer paid and accepted as payment in full. Rather,
the defendants contended that the collateral source rule did
not apply to the $5,777.28 difference between the amount
billed and the amount paid. “Under the collateral source rule,
benefits received by the injured party from a source wholly
independent of, and collateral to, the tortfeasor will not diminish damages otherwise recoverable from the tortfeasor.” See,
Wilson v. The Hoffman Group, Inc., 131 Ill. 2d 308, 320, 546
N.E.2d 524 (1989). The collateral source rule protects collateral payments made to or benefits conferred on the plaintiff
by denying the defendant any corresponding offset or credit.
Such collateral benefits do not reduce the defendant’s tort
liability, even though they reduce the plaintiff’s loss. Arthur,
2005 WL 1693760 at *3.
The supreme court noted that the rule is well established
that damages recovered by the plaintiff from the defendant
are not decreased by the amount the plaintiff received from
insurance proceeds, where the defendant did not contribute
to the payment of the insurance premiums. See, Peterson v.
Lou Bachrodt Chevrolet Co., 76 Ill. 2d 353, 362, 392 N.E.2d
1 (1979); Biehler v. White Metal Rolling & Stamping Corp.,
30 Ill. App. 3d 435, 444, 333 N.E.2d 716 (3d Dist. 1975).
“The justification for this rule is that the wrongdoer should
not benefit from the expenditures made by the injured party
or take advantage of contracts or other relations that may exist
between the injured party and third persons.” Arthur, 2005
WL 1693760 at *3.
The court went on to identify the controlling principles of
this issue, which the court noted are quite settled. In order to
recover for medical expenses, the plaintiff must prove that he
or she has paid or become liable to pay a medical bill, that he
or she necessarily incurred the medical expenses because of
injuries resulting from the defendant’s negligence, and that
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.
35
IDC Quarterly
Recent Decisions (Continued)
the charges were reasonable for services of that nature. See,
North Chicago Street Ry Co. v. Cotton, 140 Ill. 486, 498, 29
N.E. 899, 902 (1892); Wicks v. Cuneo-Henneberry Co., 319
Ill. 344, 349, 150 N.E. 276, 279 (1925). When evidence is
admitted, through testimony or otherwise, that a medical bill
was for treatment rendered and that the bill has been paid, the
bill is prima facie reasonable. See, Flynn v. Cusentino, 59 Ill.
App. 3d 262, 266, 375 N.E.2d 433, 436 (3d Dist. 1978).
A party seeking the admission into evidence of a bill that
has not been paid can establish reasonableness by introducing the testimony of a person having knowledge of the services rendered and the usual and customary charges for such
services. Once the witness is shown to possess the requisite
knowledge, the reasonableness requirement necessary for
admission is satisfied if the witness testifies that the bills are
fair and reasonable. Arthur, 2005 WL 1693760 at *5.
The prima facie reasonableness of a paid bill can be traced
to the enduring principle that the free and voluntary payment
of a charge for a service by a consumer is presumptive evidence of the reasonable or fair market value of that service.
The premise is that a consumer will not willingly pay an
unreasonable or unusual charge for a service. When a bill
has been paid, there is little reason to suspect that the charge
is collusive or speculative. The defendant may rebut the
prima facie reasonableness of a medical expense by presenting proper evidence casting suspicion upon the transaction.
Offering a paid bill or the testimony of a knowledgeable
witness that a bill is fair and reasonable merely satisfies the
requirement to prove reasonableness. The proponent must also
present evidence that the charges were necessarily incurred
because of injuries caused by the defendant’s negligence.
Only then have the evidentiary requirements for admission
into evidence been satisfied. However, the admission of the
bill into evidence simply allows the jury to consider whether
to award none, part, or all of the bill as damages. See, Arthur,
2005 WL 1693760 at *5; Baker v. Hutson, 333 Ill. App. 3d
486, 493-94, 775 N.E.2d 631 (5th Dist. 2002).
Applying these principles to the present case, the supreme
court determined that the plaintiff could not make a prima
facie case of reasonableness based on the bill alone, because
she could not truthfully testify that the total billed amount
had been paid. Instead, she needed to establish the reasonable cost by other means – just as she would have to do if the
services had not yet been rendered, e.g., in the case of required
future surgery, or if the bill remained unpaid. The defendants
would then be free to challenge the plaintiff’s proof on crossexamination and to offer their own evidence pertaining to the
reasonableness of the charges.
36
Therefore, the Illinois Supreme Court determined that the
plaintiff may present to the jury the amount that her healthcare providers initially billed for services rendered. However,
where the actual amount paid was less than the amount billed
by virtue of an insurance contract, the plaintiff must provide
additional proof of the reasonableness of the entire amount
billed. Arthur, 2005 WL 1693760 at *6.
Duty of Care
Section 414’s Retained Control Theory –
Comparison of Moss and Martens Opinions
In Cochran v. George Sollitt Construction Company, 832
N.E.2d 355, 295 Ill. Dec. 204 (1st Dist. 2005), the plaintiff
brought a negligence action against George Sollitt Construction Company and Loyola University Medical Center. Sollitt
was a general contractor on a construction project at Loyola.
The plaintiff was an employee of a sub-contractor and performing work on an old air duct in the sub-basement of the
hospital. On his first day of work, the plaintiff stood on a ladder, which had been placed on a piece of plywood that was
set on top of two milk crates. When the ladder shifted to the
edge, it tipped and the plaintiff fell. The plaintiff claimed that
Sollitt failed to provide him with a safe place to work, failed
to provide a safe, suitable, and proper support for his protection and failed to properly manage, maintain or control the
premises and the support equipment used thereon. Cochran,
832 N.E.2d at 357.
Sollitt moved for summary judgment, arguing that the
language of the construction contract between it and Loyola
Hospital was not controlling, but instead the existence of a
duty on the part of a general contractor such as itself was governed by the “retained control” theory articulated in Section
414 of the Restatement (Second) of Torts (the Restatement).
The circuit court granted Sollitt’s motion and the plaintiff
appealed.
Section 414, which has been adopted in Illinois, provides:
“One who entrusts work to an independent contractor, but
who retains the control of any part of the work, is subject
to liability for physical harm to others for whose safety the
employer owes a duty to exercise reasonable care, which is
caused by his failure to exercise his control with reasonable
care.” Restatement (Second) of Torts § 414, at 387 (1965).
The “retained control” concept is further explained in comment c to Section 414:
In order for the rule stated in this Section to apply, the
employer must have retained at least some degree of
control over the manner in which the work is done. It
Fourth Quarter 2005
is not enough that he has merely a general right to order
the work stopped or resumed, to inspect its progress
or to receive reports, to make suggestions or recommendations which need not necessarily be followed, or
to prescribe alterations and deviations. Such a general
right is usually reserved to employers, but it does not
mean that the contractor is controlled as to his methods
of work, or as to operative detail. There must be such
a retention of a right of supervision that the contractor
is not entirely free to do the work in his own way. Restatement (Second) of Torts § 414, Comment c, at 388
(1965); Cochran, 832 N.E.2d at 359.
Section 414 articulates the duty of those who employ
independent contractors. It provides a “retained control” exception to the general rule that an employer of an independent
“The appellate court in Cochran
determined that in its view,
Martens and Moss focus on different facets of Section 414.”
contractor is not liable for the independent contractor’s acts
or omissions. Gomien v. Wear-Ever Aluminum, Inc., 50 Ill. 2d
19, 21, 276 N.E.2d 336, 338 (1971). Comment a to Section
414 explains:
If the employer of an independent contractor retains
control over the operative detail of doing any part of the
work, he is subject to liability for the negligence of the
employees of the contractor engaged therein, under the
rules of that part of the law of Agency which deals with
the relation of master and servant. The employer may,
however, retain a control less than that which is necessary to subject him to liability as master. He may retain
only the power to direct the order in which the work shall
be done, or to forbid its being done in a manner likely
to be dangerous to himself or others. Such a supervisory
control may not subject him to liability under the principles of Agency, but he may be liable under the rule
stated in this Section unless he exercises his supervisory
control with reasonable care so as to prevent the work
which he has ordered to be done from causing injury to
others. Restatement (Second) of Torts § 414, Comment
a, at 387 (1965); Cochran, 832 N.E.2d at 361.
The Cochran plaintiff complained of Sollitt’s failure to
correct the unsafe ladder setup in the “old fan room” or to
cause others to do so. The plaintiff relied on the Fourth District’s decision in Moss v. Rowe Construction, 344 Ill. App.
3d 772, 801 N.E.2d 612 (4th Dist. 2003). The court in Moss,
although acknowledging that Section 414 of the Restatement
applied, held that in that case, the retention of the duty to
control safety is answered directly by the contracts. The court
framed the central issue of retained control not in terms of
who had control of the means and methods of performing the
task, but rather who contractually and/or physically had the
duty to control the safety of the project. The court reasoned
that it could not ignore the language of the contract because
“[t]o do so, * * * would make the contractual obligations for
safety a meaningless nullity.” The Moss court further stated
that “regardless of whether language of a contract originates
from governmental regulations or is specifically written for an
individualized transaction, it may create a duty that is owed
to a third party.” Restatement (Second) of Contracts § 304,
Comment b, at 448 (1981); Moss, 344 Ill. App. 3d at 776.
The Moss court articulated the following test: “First, the
contractual language must be reviewed to determine what
terms address the duty to control safety. The facts must then
be reviewed to determine whether the duty was physically
fulfilled under the contract.” Moss, 344 Ill. App. 3d at 777.
Ultimately, the Moss court, relying on the language of the
contract, decided that summary judgment for the general
contractor was inappropriate because genuine issues of material fact remained “as to whether the contract placed a duty to
control safety on defendant and whether defendant physically
exercised or failed to exercise that duty.” Moss, 344 Ill. App.
3d at 784, Cochran, 832 N.E.2d at 362-63.
Sollitt argued that the Moss analysis was legally flawed
and asserted that the First District had already rejected it in its
recent decision in Martens v. MCL Construction Corp., 347 Ill.
App. 3d 303, 807 N.E.2d 480 (1st Dist. 2004). In Martens, the
appellate court disagreed with Moss that the central issue was
whether the defendant had undertaken the task of controlling
the safety of the project. Rather, Martens stated:
37
IDC Quarterly
Recent Decisions (Continued)
The central issue is retained control of the independent
contractor’s work, whether contractual, supervisory,
operational, or some mix thereof. The party who retains
control is the logical party upon whom to impose a duty
to ensure worker safety. Penalizing a general contractor’s efforts to promote safety and coordinate a general
safety program among various independent contractors
at a large jobsite hardly serves to advance the goal of
work site safety. A party who retains some control over
the safety of the work has a duty to exercise that control with ordinary care. Nevertheless, the existence of
a safety program, safety manual or safety director does
not constitute retained control per se; the court must still
conduct an analysis pursuant to the Section 414 retained
control exception. Martens, 347 Ill. App. 3d at 318-19,
Cochran, 832 N.E.2d at 363.
The appellate court in Cochran determined that in its view,
Martens and Moss focus on different facets of Section 414.
As noted, comment a to Section 414 explains that the general
contractor, by retaining control over the operative details of
its subcontractor’s work, may become vicariously liable for
the subcontractor’s negligence; alternatively, even in the absence of such control, the general contractor may be directly
liable for not exercising his supervisory control with reasonable care. Martens spoke in terms of “retained control of the
independent contractor’s work” and whether “the defendant’s
safety program sufficiently affected a sub-contractor’s means
and methods of doing its work.” (See, Martens, 347 Ill. App.
3d at 318, 807 N.E.2d at 492). Moss, however, was decided
on the theory of direct liability for failing to exercise what the
court termed a “specific mandate for safety contained in the
contracts.” (See, Moss, 344 Ill. App. 3d at 783, 801 N.E.2d
at 620). The appellate court noted that taken together, these
two cases illustrate the full reach of Section 414. Cochran,
832 N.E.2d at 363-64.
The appellate court went on to note that Sollitt’s knowledge, actual or constructive, of the unsafe work methods or
a dangerous condition was a precondition to direct liability.
Since there was no evidence of this, the circuit court’s granting of summary judgment for Sollitt was affirmed. Cochran,
832 N.E.2d at 365-66.
38
Product Liability
By: James W. Ozog
Wiedner & McAuliffe, Ltd.
Chicago
Seventh Circuit Again Rejects
Unreliable Expert Testimony:
Fuesting v. Zimmer, Inc. 421 F. 3d 528 (7th Cir. 2005)
In Fuesting v. Zimmer, Inc., 421 F.3d 528 (7th Cir. 2005),
the Seventh Circuit rejected the testimony of an otherwise
skilled and qualified expert witness. The court affirmed that
“requisite credentials” alone are not enough to render unreliable expert testimony admissible. The court also reminded
trial judges that in keeping with their gatekeeper’s duty under
Federal Rule of Evidence 702, the court must “assess the reliability of the methodology the expert has employed” in order
to rule upon admissibility.
The defendant, Zimmer, manufactured the I/B Knee implant in 1991 for use in the total knee anthroplasty procedure.
This procedure involves replacement of three bone surfaces
with artificial metal components covered by a polyethylene
About the Author
James W. Ozog is a partner in the Chicago firm of
Wiedner & McAuliffe, Ltd. He received his undergraduate
degree from Northwestern University and law degree from
Washington University in 1977. Mr. Ozog concentrates his
practice in product liability defense matters and commercial
litigation. In addition to his Illinois defense practice, he is
National Trial Counsel for several product manufacturers. He has appeared as lead defense counsel in over twenty states and tried
cases to verdict in seven states besides Illinois. He also represents clients on
a regular basis in matters before the United States Consumer Products Safety
Commission. He is a member of the American Bar Association, DRI, IDC and
the Propane Gas Defense Association.
Fourth Quarter 2005
surface. On February 5, 1992, the plaintiff underwent a knee
replacement, which utilized an I/B Knee implant manufactured by Zimmer. By May of 2001, Fuesting began experiencing pain and swelling in the knee. On November 14, 2001,
the defendant’s physician replaced the Zimmer knee implant
with a Johnson & Johnson model.
In October of 2002, the defendant brought two claims
against Zimmer based on theories of strict liability and negligence related to a design defect of the I/B Knee implant.
According to the defendant, the implant was defective based
on the way it was sterilized at the time of its manufacture.
In 1991, Zimmer sterilized all of its I/B Knee components
by way of gamma irradiation in air. (This was a universally
employed process at the time.) The plaintiff’s knee implant
had been sterilized seven months before his procedure, a short
time by industry standards.
The defendant proffered witness James Pugh, a so called
“litigation consultant.” Pugh opined that Zimmer’s method
of sterilization, coupled with the implant’s time on the shelf,
caused the implant’s polyethylene to oxidate, resulting in its
delamination and ultimate failure. Pugh believed that Zimmer
should have been aware of the alternative superior sterilization methods that were available at the time of the I/B Knee’s
manufacture.
The district court denied Zimmer’s pre-trial motion in
limine to exclude Pugh’s opinions on causation and defect
as unreliable under Federal Rule of Evidence 702. At trial,
Pugh attributed his opinions to “basic polymer science” and
testified that the gamma irradiation in air caused the premature
failure in Fuesting’s right I/B Knee. He added that any knee
implant with a polyethylene tibial component sterilized in
such a manner would be defective. Based upon his “major in
chemistry,” the defendant’s treating orthopedic surgeon, Dr.
James McKechni, concurred.
Zimmer countered with expert testimony from Dr. William
Maloney, an orthopedic surgeon and leading researcher in the
field of joint replacement and osteolysis. He testified that the
wear and tear in Fuesting’s implant was most likely attributable, not to oxidation of its polyethylene component, but to
peculiarities in Fuesting’s gait and bone growth, exacerbated
by the plaintiff’s post-implant weight-gain. Dr. Albert Burstein, co-inventor of the implant, agreed with Dr. Maloney’s
conclusion and added that the alternative proffered by Pugh
was more dangerous and more likely to cause wear.
To oppose the theory of design defect, Dr. Albert Burstein
testified that it was virtually universal industry practice to
sterilize implants using gamma irradiation in air in 1991.
Fuesting objected to the testimony, claiming that Burstein
failed to disclose the basis of his opinion as required of Rule
702 witnesses by Federal Rules of Civil Procedure 26(a)(2)
(A)&(B). Notwithstanding Fuesting’s admitted evidence that
Zimmer and other manufacturers today sterilize implants in
inert (as opposed to open air) environments, the district court
barred Dr. Burstein’s state of the art testimony, and the jury
awarded Fuesting $650,000.00. On appeal, Zimmer challenged the denial of its motion to exclude Pugh’s testimony
on causation and defect.
Upon review, the Seventh Circuit first held that the trial
court did not conduct an appropriate analysis of the reliability of the expert’s testimony under Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786 (1993)
and Federal Rule of Evidence 702. The court observed:
The district court must also, in keeping with its gatekeeper’s duty, assess the reliability of the methodology
the expert has employed in arriving at his opinion. This
the district court did not do. Instead, the court made
reference to Pugh’s deposition, satisfying itself that
“his analysis was discussed at length throughout the
deposition [where] he articulated a scientific reason
for the failure of the polyethylene in Fuesting’s “knee”
without “rely[ing] on generalized analogies or inapplicable scientific principles.” But nothing is said as
to what exactly that articulate scientific reason is, or
how it measures up to Daubert’s indicia of reliability.
The court invoking again Pugh’s deposition as well as
his expert report, further found that the expert had sufficiently ruled out Fuesting’s weight and activity level as
potential causes of polyethylene failure in the plaintiff’s
implant. But the court made no mention of how Pugh
ruled those alternative causes out, let alone whether and
why it found that method reliable. To satisfy its essential
role, the gatekeeper must do more than just make conclusory statements. A more searching Daubert analysis
is required, and we find the district court’s examination
of Pugh’s testimony inadequate.421 F.3d at 535.
The Seventh Circuit then conducted a de novo Daubert
analysis of Pugh’s testimony. Using the standard Daubert
guideposts, the Seventh Circuit held that the testimony proved
unreliable.
Pugh’s testimony failed to meet most, if not all of the
Daubert factors for reliability. First, the plaintiff’s expert did
not subject his theory to scientific method by conducting any
scientific test or experiments. The failure to test, the court
observed, “fatally” compromised the testimony’s reliability.
The expert’s reliance on “basic polymer science” was “the
39
IDC Quarterly
Product Liability (Continued)
unjustifiable extrapolation from an accepted premise to an
unfounded conclusion.” 421 F.3d at 536. Such extrapolation
without analysis of the details does not bridge the analytical
gap between basic principle and an expert’s complex conclusions.
Other indications of unreliability included the lack of
publication and peer review. This proved that there was no
evidence of acceptance of the expert’s theory in the scientific
community. Finally, it was also clear that the opinion was
developed solely and expressly for this litigation. Therefore,
the Seventh Circuit not only reversed the trial court but remanded the case with an instruction to direct a verdict in the
defendant’s favor.
The Fuesting opinion is another case to keep in your
Daubert/Rule 702 file. It is a reminder to all trial judges
that they must conduct a thorough and reasoned analysis
under Federal Rule of Evidence 702 before admitting expert
testimony. The opinion offers another excellent guideline
regarding how to apply the Daubert factors in order to expose
unreliable expert testimony in a product liability case.
Risk-Utility Test Reverses
Summary Judgment
in Favor of Manufacturer:
Calles v. Scripto-Tokai Corp. 358 Ill. App. 3d 975, 832
N.E. 2d 409, 295 Ill. Dec. 258 (1st Dist. 2005)
In Calles v. Scripto-Tokai Corp., 358 Ill. App. 3d 975, 832
N.E.2d 409, 295 Ill. Dec. 258 (1st Dist. 2005), the First District
answered a straightforward question concerning the reach of
tort law. Applying the risk-utility test for determination of a
product defect, the court held that the failure to incorporate
available inexpensive technology to make a flame lighter
child-resistant presented a question of fact regarding whether
the design was defective.
In March of 1998, Susan Calles purchased a gun-shaped
Aim ‘n Flame lighting rod, which formed a flame at the end
of the barrel with a pull of its trigger. On March 31, 1998, Ms.
Calles put her three-year-old daughters, Jillian and Jenna, to
sleep in their bedroom, leaving them in the care of their oldest sister while she went to the store. Investigators concluded
that, in the thirty minutes Ms. Calles was gone, Jenna used the
Aim ‘n Flame lighting rod to start a fire in the three-year-olds’
bedroom. The children were taken to the hospital that night,
where Jillian died a few weeks later.
Jillian’s estate sued Tokai Corporation, the designer and
40
seller of the Aim ‘n Flame, Tokai’s subsidiary and distributor, Scripto-Tokai Corporation, Jillian’s doctor, Richard Fox
and Loyola University Medial Center, where Dr. Fox treated
Jillian. Fox and Loyola filed a cross-claim against Tokai and
Scripto-Tokai. The estate, Fox, and Loyola sought to recover
on theories of strict liability and negligence, with both theories
premised upon defective design and failure to warn.
Claiming that Illinois law imposes no duty to make products child-resistant, Tokai and Scripto-Tokai moved for summary judgment. Because the rod worked exactly as Ms. Calles
expected it to work, the defendants argued that she could not
show a design defect. Additionally, the defendants claimed
that they had no duty to warn Ms. Calles of the dangers, because she was aware of the open and obvious dangers of the
Aim ‘n Flame.
Ms. Calles testified in her deposition that the rod worked
as she expected it to work, she knew lighters could be dangerous in the hands of children, and she had instructed all of her
children about these dangers. She stored the lighter on the top
shelf of her kitchen cabinet out of her children’s reach, but she
admitted that the children could reach the rod by climbing up
on to the counter.
By affidavit, the plaintiff experts proffered that Tokai was
able to design a child-resistant lighting rod with technology
available long before Ms. Calles bought the subject Aim ‘n
Flame. Producing the child-resistant rod, the experts claimed,
would cost only a few cents more than producing the rod without the feature, and the feature would almost certainly have
prevented Jenna from using the lighting rod to start the fire.
One expert opined that the label required a more conspicuous
danger symbol and should have warned that children may be
able to operate the lighter. Another expert discovered reports
of at least 200 incidents involving accidental fires started
with the Tokai Aim ‘n Flame. According to the reports, prior
to September 1998, children had started about 250 fires using
the Aim ‘n Flame, and more than three-fourths of these fires
were started by children under the age of five years.
Additional reports also summarized the danger of cigarette
lighters. Between 1980 and 1985, 120 people died annually in
residential fires started by children playing with lighters. Costs
were between $300 and $375 million dollars, and between
1988 and 1990, the number of deaths attributable to children
playing with lighters increased to 150. Children three to four
years old caused most of these fires. These studies estimated
that 80 to 105 deaths could be avoided with the implementation of childproof lighters, and $205 to $270 million in costs
could be saved. The initial production costs were estimated
to approach $50 million, and in 1993, manufacturers were
expected to see a one to five percent increase in production
Fourth Quarter 2005
costs and a one to five cent increase in per-unit cost.
Nevertheless, the trial court held that Tokai and ScriptoTokai “neither owed nor breached any duty imposed upon
them by law,” and the court entered summary judgment for
Tokai and Scripto-Tokai on all counts filed against them in
both the estate’s complaint and the cross-complaint. 832
N.E.2d at 412, 295 Ill. Dec. at 261.
“It is a reminder to all trial judges that they must conduct
a thorough and reasoned analysis
under Federal Rule of Evidence
702 before admitting expert
testimony. The opinion offers another excellent guideline
regarding how to apply the
Daubert factors in order to
expose unreliable expert testimony in a product liability case.”
That is, the simplicity of the product, and its obvious
danger, will not warrant summary judgment for the product’s designer unless the balance of all considerations
so clearly favors the defendant that no reasonable jury
could find for the plaintiff.832 N.E.2d at 416, 295 Ill.
Dec. at 265.
In this case, the design of the lighter did not outweigh the
risk. In particular, the court appeared to be persuaded by the
fact that a child-resistant modification would cost only a few
cents in contrast to the high “social costs” of fires started by
children playing with cigarette lighters.
On a brighter note for the defense, the court did affirm
summary judgment regarding the plaintiff’s failure to warn
claims. In her deposition, Ms. Calles testified that she was
well aware that lighters could be dangerous in the hands of
children. She also knew that it was necessary to store the
lighter in an area where children could not reach it. In light
of those admissions the court observed that further warnings
could not have helped the plaintiff understand the danger of
the product and measures to prevent the children’s access to
the product. The court concluded: “The manufacturer has no
duty to add pointless warnings about dangers the consumer
already recognizes.” 832 N.E.2d 417, 295 Ill. Dec. 266.
The Calles opinion again demonstrates how difficult it is to
defend a summary judgment order if the court has not applied
a “risk utility” analysis to the evidence of defect. As to the
vast majority of products, Illinois law permits the plaintiffs to
prove up a defect under either the consumer expectation test
or risk utility test. Thus, evidence of defect must be eliminated
under both theories in order to prevail on summary judgment.
On appeal, the defendant argued that the “consumer expectation” test should be applied because the lighter was a
“simple” product (citing Scoby v. Vulcan-Hart Corp., 211 Ill.
App. 3d 106, 569 N.E.2d 1147, 155 Ill. Dec. 536 (4th Dist.
1991)). In fact, the Seventh Circuit followed the Scoby decision in affirming summary judgment in favor of a cigarette
lighter manufacturer in another child death case. Todd v.
Societe Bic, S.A., 21 F.3d 1402 (7th Cir. 1994).
Based upon the more recent case of Miller v. Rinker Boat
Co., 352 Ill. App. 3d 648, 815 N.E.2d 1219, 287 Ill. Dec. 416
(4th Dist. 2004), the court refused to follow Scoby and in particular the Todd case. While acknowledging that some simple
products might present obvious dangers that might preclude
the application of the risk-utility test, the court observed:
41
IDC Quarterly
Featured Article
Defusing Sexual
Abuse Claims:
Eliminate the National
Defendant From the Equation
The court upheld summary judgment in favor of the national
organization, holding that America owed no duty to protect the
minor plaintiff from the alleged abuse by a local volunteer. In
so doing, the First District addressed familiar theories under
Section 314 of the Restatement (Second) of Torts, clarifying
the definition of the phrase “to take custody.” It also reviewed
Illinois law regarding the “voluntary undertaking” doctrine
under Restatement Section 324A. Most interestingly, however,
the court provided an in-depth analysis of the “retained control” doctrine conceptualized by Restatement Section 414.
The Doe Facts
By: Gary K. Moore
Moore, Strickland & Whitson-Owen
Chicago
Child sexual abuse claims are some of the most difficult
types of cases to defend. Attendant to these emotionallycharged cases are notoriety, sympathetic plaintiffs and the
danger of runaway verdicts. For youth mentoring organizations, these claims strike at the very heart of their mission - to
have a positive impact on the lives of children. Sexual abuse
lawsuits being filed across the nation further pose a threat
to the viability of these organizations, which have limited
resources, by making insurance coverage unaffordable. The
irony is thus that the perpetrators’ net of victims is widened
to include the benevolent organizations that they infiltrate and
the innumerable children and families that so badly need their
help.
Compounding the complications in these types of cases is
that the plaintiffs commonly sue the national organization, as
well as the local agency. Usually, the national organization will
have had no contact with either the plaintiff or the assailant.
Nonetheless, a thorough understanding of the organizational
structure, procedures and relationships at the national and local
levels is essential to an effective defense. Developing evidence
in these key areas can prevent liability from attaching at the
national level and provide the basis for dismissal. Eliminating
the national organization both deflates the plaintiff’s case and
fortifies the local defendant’s ability to defend its case.
The First District of the Illinois Court of Appeals recently
weighed in on this issue in a case alleging the sexual abuse
of a child enrolled in the mentoring program run by a local
affiliate of Big Brothers Big Sisters of America. (“America”).
Doe v. Big Brothers Big Sisters of America, No. 1-04-1985,
2005 Ill. App. 3d LEXIS 803 (1st Dist. August 16, 2005).
42
The minor plaintiff was a Little Brother in the Big Brothers
Big Sisters of Metropolitan Chicago program. The plaintiff
claimed that he had been sexually abused by his volunteer
Big Brother, who was also an employee of the local agency.
The complaint alleged four acts of negligence on the part of
America: (1) that it provided inadequate methods to interview prospective employees; (2) that it provided inadequate
methods to screen potential employees; (3) that it provided
procedures for announced, rather than unannounced visits to
the homes of prospective volunteer mentors; and (4) that it
provided insufficient methods for case managers to supervise
the match.
The relationship between America and its local affiliates
was governed by a Membership Affiliation Agreement. Under
the Agreement, America controlled the local affiliate’s service
area. It’s obligations included: promulgating guidelines to
the local affiliates in the form of “Standards of Practice for
One-To-One Service,” reviewing the local affiliate’s poli-
About the Author
Gary Moore is a partner in the law firm of Moore, Strickland & Whitson-Owen. He received his B.A. and M.A. at
the University of Illinois. He received his J.D. from Loyola
University School of Law in 1974, and was admitted to
the bar the same year. Mr. Moore presently serves as
National Counsel for Sexual Abuse Claims for Big Brothers Big Sisters of America. He also represents numerous
public and private entities in the areas of premises liability, third-party assault,
general liability, products liability, civil rights and toxic torts. Mr. Moore is
a member of the IDC, DRI, the American and Chicago Bar Associations. He
can be contacted at [email protected].
Fourth Quarter 2005
cies and procedures once every five years, and providing the
opportunity for materials, programs and training. The local
affiliate was to use a variation of the Big Brothers/Big Sisters
name and logo; provide “One-To-One Mentoring Service”;
and comply with America’s Standards of Practice.
As to the relationship between the parties, the Agreement
explicitly contemplated the local agency’s autonomy as an
independent contractor with independent directors and officers. Only the local agency had rights with respect to its
employees, volunteers, and daily operations.
While America’s Standards of Practice echoed the autonomous nature of local agencies, they did require those agencies
to develop systems, procedures and policies in certain areas.
A policy on child sex abuse prevention orientation, education and training, and an intake process for volunteers were
specifically addressed.
These Standards of Practice did not, however, mandate the
manner in which the local agency went about enacting these
policies and procedures; despite being required to meet the
Standards of Practice, the membership agreement defined local agencies as autonomous. Local agencies were free to use
whatever methods they deemed optimal for the creation of
a local policy. The agreement expressly prohibited America
from intruding into the day-to-day operations of the local
agency. America’s oversight of the local agency’s operations
was limited to an on-site review taking place every five years.
In light of these relationships, America moved for summary
judgment, arguing that there was no evidence that it had ever
performed the acts alleged by the plaintiff and thus it had no
duty to protect the minor. America argued in the alternative
that if there was an undertaking, it was limited in scope and
insufficient to create a duty toward the minor plaintiff. Summary judgment was granted to America by the trial court and
the plaintiff subsequently appealed.
On appeal, the plaintiff argued that America owed him
a duty of protection under three theories. Interestingly, the
plaintiff first argued that America retained control over the
local agency’s work and was therefore liable under the retained
control concept articulated in the Restatement (Second) of
Torts Section 414. Second, the plaintiff argued that America
took custody of the plaintiff, creating a “special relationship”
under Section 314(A)(4). Third, the plaintiff argued that
America voluntarily undertook to protect the plaintiff under
Section 324A of the Restatement by providing training materials and dictating the methodology under which the mentoring
relationship took place.
Analysis Under the Retained Control Concept
The plaintiff’s first argument was that America owed a
duty to the plaintiff because it retained control over the local
agency. Although the plaintiff did not cite Section 414 of the
Restatement (Second) of Torts explicitly in his brief, the section provided the basis for the plaintiff’s argument. Section
414 reads as follows:
One who entrusts work to an independent contractor,
but who retains the control of any part of the work, is
subject to liability for physical harm to others for whose
safety the employer owes a duty to exercise reasonable
care, which is caused by his failure to exercise control
with reasonable care. Restatement (Second) of Torts,
Section 414, at 387 (1965).
Section 414 provides an exception to the general rule that
“an employer of an independent contractor is not liable for
the acts or omissions of the latter.” Pasko v. Commonwealth
Edison Co., 14 Ill. App. 3d 481, 487, 302 N.E.2d 642, 647
(1st Dist. 1973).
Historically, Section 414 has been used as a theoretical
underpinning to the Structural Work Act for determining liability in construction negligence cases. The Structural Work
Act was repealed in 1995 by P.A. 89-2, and post-repeal Section
414 rose from its secondary role in construction negligence
cases to the sole analytical framework. The implementation
of Section 414 has not been smooth, as Illinois’ appellate
districts have applied it differently.
Consider the Fourth District’s application in Moss v. Rowe
Construction Co., 344 Ill. App. 3d 772, 801 N.E.2d 612,
279 Ill. Dec. 938 (4th Dist. 2003), which, despite relying on
Section 414’s comment c, looked primarily to the contract
between the general contractor and subcontractor to determine
“control,” and therefore duty. “The issue is not control of the
‘means and methods’ of performing the task, but rather who
contractually and/or physically has the duty to control safety
of the project. First, the contractual language must be reviewed
to determine what terms address the duty to control for safety.
The facts must then be reviewed to determine whether the duty
was physically fulfilled under the contract.” Moss, at 777.
The First District, in a construction negligence case three
months later, also relied upon Section 414’s comment c.
Martens v. MCL Construction Corp., 347 Ill. App. 3d 303,
807 N.E.2d 480, 282 Ill. Dec. 856 ( 1st Dist. 2004). The
Martens court divided its analysis of “control,” or duty, into
three components: control by contract, supervisory control
43
IDC Quarterly
Sexual Abuse Claims (Continued)
and operational control. While the Fourth District, at least in
Moss, concentrated heavily on the contract, the First District’s
control analysis is three-pronged. This approach was identical
to the one the First District used in analyzing Doe.
While the plaintiff relied upon Section 414, he did not
employ construction negligence cases. Rather, he used two
non-construction negligence cases. See, Coty v. United States
Slicing Machine Co., Inc., 58 Ill. App. 3d 237, 373 N.E.2d
1371, 15 Ill. Dec. 687 (2d Dist.1978); and Foster v. Englewood Hospital Ass’n, 19 Ill. App. 3d 1055, 313 N.E.2d 255
(1st Dist. 1974). The Doe court commented:
Coty and Foster are the only two occasions when Illinois
courts have extended section 414 to cover nonconstruction work case scenarios. Neither case, however,
analyzed section 414, nor stated any specific analysis or
rationale for extending section 414 to the circumstances
before the courts. Rather, Coty and Foster simply found
the principle analogous. Moreover, these cases are over
25 years old. No recent case has applied section 414 to
any situation other than a construction work case. Doe,
No. 1-04-1985, 2005 Ill. App. 3d LEXIS 803 (1st Dist.
August 16, 2005).
The Doe court declined ruling on the applicability of Section 414 outside of the construction context, stating that “[E]
ven assuming we found section 414 applicable, we find that
its requirements cannot be satisfied under the facts present
here.” Id. The court thus left for another day the issue of
whether Section 414’s analytical framework will see broader
application.
The Doe court took the opportunity, however, to engage in
an extensive duty analysis under the Section 414 framework.
The court began by once again emphasizing the importance
of comment c to the duty analysis, contrasting this approach
with that used by the Fourth District, and relied on by the
plaintiff:
This narrow analysis [of the Moss court] has subsequently been rejected, specifically by Martens[.] . . .
[I]f courts found language in a contract with respect to
the right to control safety alone sufficient to subject a
general contractor to liability under section 414, “then
the distinction in Comment c . . . between retained control versus a general right of control would be rendered
meaningless.” . . . [A]ccording to the Martens court,
“the central issue is retained control of the independent
contractor’s work, whether contractual, supervisory,
44
operational, or some mix thereof.” Doe, No. 1-04-1985,
2005 Ill. App. 3d LEXIS 803 at 21 - 22 (citing Martens,
347 Ill. App. 3d at 318).
Having dismissed the Moss analysis and laying the framework of comment c’s retained control analysis via the model
set up by the Martens court, the Doe court began the first
component of its three-pronged analysis. First, it looked to
contractual control. Specifically, it analyzed the Agreement
between America and its local agency, the One-To-One
mentoring model, the Standards of Practice, and the local
organization’s use of America’s name and logo. The court found that nothing in the agreement spoke contractually to the protection of children from sexual abuse, in
that “a review of the Agreement does not disclose that the
“The Doe court declined ruling
on the applicability of Section
414 outside of the construction
context, stating that ‘[E]ven assuming we found section 414 applicable, we find that its requirements cannot be satisfied under
the facts present here.’ ”
terms of the ‘sexual abuse, molestation, assault’ or anything
akin were used at all.” Doe at 26. Regarding the One-To-One
mentoring model, “contrary to plaintiff’s argument, it is not
the sole model that an affiliate could utilize.” Id. at 27. The
court found local flexibility in the Standards of Practice in
that local agencies could petition America “for approval of a
different type of model of mentoring.” Id.
Despite the fact that America required its local agency to
use its name and logo, the Doe court found this “insufficient
in itself to demonstrate America contractually retained [con-
Fourth Quarter 2005
trol over the local agency]” Id. In closing out its contractual
control analysis, the Doe court looked to the Standards of
Practice on sexual abuse. Again, there were no top-down
mandates: “The only reference in the Standards to sexual
abuse requires [the local agency’s] board of directors to
adopt policies that address child sexual abuse protection in
its casework manual. However, the Standards do not provide
suggestions, recommendations, or even a skeletal framework
of what those policies should or could entail.” Id. at 27 - 28.
The bottom line was that even though there was a contract
and standards, a lack of mandates and a great deal of local
affiliate flexibility tipped the balance to a lack of contractual
control.
On the issue of supervisory control the Doe court stated:
[C]learly there is no evidence that America retained any
supervision over [the local agency] or its volunteers.
There is no evidence that any member of America’s
staff was present at [the local agency’s] office except
for one time every five years. Moreover, there is no
evidence that any of America’s staff ever supervised the
volunteers and children or that it had any control over
how the volunteers and children interacted, including
what they did, where they went, etc. Doe, No. 1-041985, 2005 Ill. App. 3d LEXIS 803 at 28.
In the final part of its analysis, operational control, the
Doe court focused on how much autonomy the local agency
had in conducting its operations and who was in control of
its operation. “[T]he evidence clearly demonstrates that
America retained no control over [the local agency’s] operations or volunteers. . . . Specifically, [the local agency] has
an executive who possesses overall, responsibility for the
employment, supervision, evaluation, and termination of
all staff and volunteers. . . . Moreover, [the local agency’s]
board is required to adopt policies and procedures, which
it must incorporate into its casework manual in connection
with all aspects of its internal functioning.” Id. at 28-29.
In sustaining summary judgment, the court summarized:
“There is simply no evidence in the record to demonstrate
America retained direct supervisory control over the method
and manner in which [the local agency] or its mentors accomplished their tasks, either by contract, supervision, or
operation.” Id. at 29-30. The court concluded, even “assuming
section 414 was applicable,” America did not owe the plaintiff
a duty under Section 414’s retained control exception. Id. at
32.
Custody of Another Under Section 314
The plaintiff next argued, under Section 314(A)(4), that
there was a special relationship between he and America. Illinois law generally does not impart liability for failing to protect another from a third party’s criminal attack. See, Platson
v. NSM, America, Inc., 322 Ill. App. 3d 138, 748 N.E.2d 1278,
255 Ill. Dec. 208 (1st Dist. 2001). However, an exception is
provided by Restatement (Second) of Torts Section 314(A)
(4), when “[O]ne voluntarily takes custody of another so as to
deprive the other of his normal opportunities for protection.”
Platson, 322 Ill. App. 3d at 146. The plaintiff argued that despite being enrolled through the local agency, it
was actually America’s One-To-One program. Accordingly,
he argued that America owed him a duty of protection from a
criminal attack. America countered that there was no custody
and no special relationship. America maintained that they
had no control over the plaintiff, as their offices were half a
continent away. Further, this distance prevented America from
having any authority over the plaintiff.
The only case in Illinois to address a similar organization
and issue involved a boy scout who was molested while at a
Boy Scouts of America summer camp. Doe v. Goff, 306 Ill.
App. 3d 1131, 716 N.E.2d 323, 240 Ill. Dec. 190 (3d Dist.
1999). The plaintiff in Goff subsequently sued his abuser, the
local chapter of the Boy Scouts, and Boy Scouts of America.
However, the Third District left a vacuum for future cases
when it failed to analyze or define “custody.” The full extent
of the Goff court’s analysis being the simple statement that
“As the plaintiff’s voluntary custodian, the appellees had a
duty to protect him from foreseeable harm.” Goff, 306 Ill.
App. 3d at 1134. As a result, Goff offered no aid to the Doe
court in its analysis.
Of more help to the court was the analysis of the voluntary
custodian issue in Platson v. NSM, America, Inc. The court in
Platson noted that “to take custody of another” or to “deprive
another of his normal opportunities for protection” is not defined by the Restatement. In an attempt to rectify this situation,
the court in Platson looked to persuasive authority outside of
Illinois, relying on a case holding “that to assume custody of
a child is to stand ‘in loco parentis to the child, accepting all
rights and responsibilities that go with that status.” Platson,
322 Ill. App. 3d at 147, citing Slagle v. White Castle Systems,
Inc., 79 Ohio App. 3d 210, 217 (1992). The Platson court
ultimately found that “to establish a custodial relationship . . .
there must be proof that an employer voluntarily assumed the
additional responsibilities of a custodian towards the child.”
Id.
45
IDC Quarterly
Sexual Abuse Claims (Continued)
Ultimately, the Doe court chose dictionary definitions to
aid them in their analysis, defining “custody” as “control of
a thing or person with such actual or constructive possession
as fulfills the purpose of the law or duty requiring it,” and
“custodian” as “one that guards and protects and maintains.”
Doe, 2005 Ill. App. 3d LEXIS at 36-37 (citing Webster’s
Third New International Dictionary at 559). After surveying
these definitions for the various forms of “custody,” the First
District held that America “did not have actual or constructive
possession of [the plaintiff.]” Doe, 2005 Ill. App. LEXIS 803
at 37. America was “half way across the country” from the
plaintiff and did not assume any of the responsibilities attendant in acting as a custodian. Id. Because the court found there
was no custody, step two of the special relationship analysis,
whether the attack was foreseeable, was not addressed.
Doe clarifies 314(A)(4)’s “special relationship” analysis by
providing a definition where there had previously been none.
This definition signals that there is not an implicit custodial
relationship, but rather a defendant must have exerted control
over the guardianship or safety of a plaintiff.
Voluntary Undertaking
The plaintiff’s final theory on appeal was the “voluntary
undertaking” exception provided by Restatement (Second) of
Torts Section 324A. The plaintiff argued that America voluntarily assumed a duty to protect him by virtue of engaging “in
a range of activities designed to prevent sexual abuse.” Doe
at 38. Specifically, the plaintiff pointed to the single mention
of child abuse contained in the Standards of Practice and the
five-year review.
In its analysis, the court reiterated the basic tenets of the
voluntary undertaking doctrine. Namely, that duty, in any
voluntary undertaking scenario, must be limited to scope of the
undertaking. Doe at 39, citing Chelkova v. Southland Corp.,
331 Ill. App. 3d 716, 722 (1st Dist. 2002). The court further
noted that Illinois public policy supports a “narrow construction of voluntary undertakings.” Id., citing Jakubowski v.
Alden-Bennett Construction Co., 327 Ill. App. 3d 627, 641 (1st
Dist. 2002). The court also discussed the importance of the
distinction between misfeasance and nonfeasance. Allegations
of nonfeasance “cannot be a basis for tort liability to a third
party under a voluntary undertaking theory.” Jakubowski, 347
Ill. App. 3d at 640. The Doe court found that the plaintiff’s
allegations were ones of nonfeasance. As a result, summary
judgment would have been proper “on this basis alone.” Doe,
2005 Ill. App. 3d LEXIS 803 at 41.
The plaintiff relied extensively on the analysis provided
by Platson, 322 Ill. App. 3d at 140. Platson involved a claim
46
of voluntary undertaking made by a high school student. The
student was sexually abused by a fellow employee while
employed in a work-study program. However, in Platson,
the employer had entered into an explicit agreement with
the school district whereby it agreed to supervise students at
all times. This was the crucial distinction for the Doe court,
as there was no agreement between America and their local
affiliate whereby America undertook to supervise or protect
the plaintiff.
The court also analyzed a number of franchisee/franchisor cases as “illustrative on when a voluntary undertaking
will be found and when it will not.” Doe, 2005 Ill. App. 3d
LEXIS 803 at 42. Again, the level of control exerted by the
“Ultimately, the Doe court chose
dictionary definitions to aid
them in their analysis, defining
‘custody’ as ‘control of a thing
or person with such actual or
constructive possession as fulfills
the purpose of the law or duty
requiring it,’ and ‘custodian’ as
‘one that guards and protects
and maintains.’ ”
franchisor, or national organization, was the linchpin of the
court’s analysis. In those cases where Illinois courts found no
voluntary undertaking, the national had no mandatory safety
policies or procedures in place. Not only were there no mandates regarding safety programs, but the local franchisee was
ultimately free to fashion its own safety procedures and decide
upon their implementation as it saw fit. See, Chelkova, 331
Ill. App. 3d at 725 and Castro v. Brown’s Chicken & Pasta,
Inc., 314 Ill. App. 3d 542, 732 N.E.2d 37, 247 Ill. Dec. 321
(1st Dist. 2000).
Fourth Quarter 2005
In cases where a voluntary undertaking of duty was found,
the control asserted by the franchisor was much greater. The
creation of a dedicated corporate branch or committee responsible for safety or security was universally present. Training
and subsequent safety inspections designed to check security
standards could also create a voluntary duty, as could creating
a “Bible” of required procedures. See, Decker v. Domino’s
Pizza, Inc., 268 Ill. App. 3d 521, 644 N.E.2d 515, 205 Ill.
Dec. 959(5th Dist. 1994) and Martin v. McDonald’s Corp.,
Dist. 1991).
The Doe court found no voluntary undertaking, finding
the facts “more akin to Chelkova and Castro.” Doe, 2005 Ill.
App. 3d LEXIS 803 at 45. America did not implement any
mandatory programs and did not create a “Bible” containing
required procedures. Of the utmost importance was the fact
that the local affiliate “was responsible for running its day-today operations and to adopt child protection or sexual abuse
prevention policies as it deemed necessary.” Id.
Conclusion
The Doe case provides a valuable road map for liability
defenses. By understanding and aggressively pursuing the
evidence necessary to support these defenses, counsel can
position the national organization for dismissal. Without the
national defendant, the case decreases in value and the local
agency’s defense position is optimized. A carefully considered and coordinated defense strategy along such lines can,
therefore, defuse the common dangers presented by sex abuse
claims.
Professional Liability
By: Martin J. O’Hara
Quinlan & Carroll, Ltd.
Chicago
The Supreme Court’s Analysis of
“Proximate Cause” and
“Actual Damages” in
Legal Malpractice Actions
In the context of legal malpractice claims, the elements
of proximate cause and damages take on a heightened importance. As defense attorneys well know, the question of
whether the standard of care was violated is often not the
most critical question in a legal malpractice action. Often
times, a plaintiff’s attorney who does not specialize in legal
malpractice claims will think that he or she has a great case
merely because the standard of care was violated. Only when
the plaintiff’s attorney becomes educated does he or she realize that the breach of the standard of care is meaningless if it
cannot be established that the breach proximately resulted in
actual damages. The recent decision by the Illinois Supreme
Court in Northern Illinois Emergency Physicians v. Landau,
Omahana & Kopka, Ltd., No. 97895, 97899 cons., 2005 WL
2298171 (Ill. September 22, 2005), again demonstrates this
important concept.
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.
47
IDC Quarterly
Professional Liability (Continued)
In Landau, the parents of a deceased 22-month-old child
filed a medical malpractice action against Northern Illinois
Emergency Physicians (“NIEP”), one of its principals, Dr.
Bruce Sands, and St. Therese Medical Center (“St. Therese”).
Id. at *1. The parents had taken their child to St. Therese’s
emergency room after the child showed symptoms of a high
fever, a rash, an elevated respiratory rate and a purple mark
on the back of her neck and shoulder. Id. Dr. Sands misdiagnosed the child as suffering from an ear infection and child
abuse and discharged the child from St. Therese. Id. Eleven
hours later, the child lapsed into a coma and died as a result
of suffering from purpura, petechiae and a bacterial infection
known as meningococcemia. Id. The child’s condition could
have been treated successfully had it been properly diagnosed
by Dr. Sands. Id.
The law firm of Landau, Omahana & Kopka, Ltd. (hereinafter the “Landau firm”) represented Dr. Sands and NIEP in
the medical malpractice action. Id. at *3. Shortly before trial,
St. Therese filed a third-party claim for implied indemnity
against Dr. Sands and NIEP based on a theory of vicarious
liability. Id. at *1 It appears that the third-party claim was
filed primarily to put pressure on the Illinois Guaranty Fund
to settle the matter for a higher amount. Id. at *3. The Illinois
Guaranty Fund had assumed the obligations of the insurer
for Dr. Sands and NIEP when the insurer became insolvent
while the medical malpractice suit was pending. Id. at *2.
Although the third-party claim was time-barred, the Landau
firm did not move to dismiss the claim. Id. at *3. According
to the Landau firm, in return for not moving to dismiss the
indemnity claim, St. Therese had orally agreed not to enforce
its claim against NIEP and its principals if St. Therese successfully obtained a judgment on the claim. Id.
Following a jury trial in the medical malpractice claim,
NIEP, Dr. Sands and St. Therese were each found to be liable
to the parents in the amount of $4 million. Id. at *1. After
the parents initiated postjudgment collection proceedings
against Dr. Sands and the individual partners who comprised
NIEP, St. Therese satisfied the full judgment and the parents
executed a release of the judgment as to St. Therese. Id. at
*2.
Thereafter, NIEP and the individual partners of NIEP
brought a legal malpractice action against the Landau firm
alleging that it failed to assert the statute of limitations as a
defense to the third-party indemnity action brought by St.
Therese. Id. at *3. The plaintiffs sought recovery of the full
amount of the third-party judgment, $4 million, plus interest.
Id. The legal malpractice claims brought by the individual
partners of NIEP were dismissed, leaving NIEP as the sole
48
plaintiff. Id. at *4.
Subsequently, the Landau firm filed a motion for summary
judgment arguing that NIEP’s claim should be dismissed
because it suffered no actual damages. Id. The trial court ultimately dismissed NIEP’s claim, finding that any malpractice
did not cause actual damage to NIEP because St. Therese had
never attempted to collect the indemnity judgment and NIEP
had never been required to pay St. Therese. Id. The appellate court reversed the trial court’s decision, holding that the
judgment entered against NIEP on the third-party claim was
sufficient to create actual damages, regardless of whether St.
Therese had attempted to collect that judgment. Id.
On appeal to the Illinois Supreme Court, the Landau firm
again argued that the legal malpractice claim was deficient
as a matter of law because NIEP had not sustained any actual
damages as a result of the alleged negligence. Id. at *5. The
Landau firm additionally argued that permitting NIEP to
recover on the malpractice claim would result in a windfall
to NIEP because St. Therese was never going to collect on
the judgment. Id. Alternatively, the Landau firm argued that
if “NIEP handed the award over to St. Therese, the partnership would violate the prohibition against the assignment of
malpractice claims.” Id.
The court began its analysis by noting that, in order to
prevail on a legal malpractice claim, a plaintiff must plead
and prove that it was owed a duty by the defendants, that the
defendants breached that duty and that, as a proximate result
of the breach, the plaintiff suffered an injury. Id. at *6. The
injury in a legal malpractice action is not a personal injury,
“nor is it the attorneys’ negligent act itself.” Id. Therefore, “a
client is not considered to be injured unless and until he has
suffered a loss for which he may seek monetary damages.” Id.
“Even if negligence on the part of the attorney is established,
no action will lie against the attorney unless that negligence
proximately caused damage to the client.” Id. Equally important, the court stated that, “[w]here the mere possibility
of harm exists or damages are otherwise speculative, actual
damages are absent and no cause of action for malpractice
yet exists.” Id.
This language would appear to be supportive of the position asserted by the Landau firm. The alleged negligence in
failing to move to dismiss the third-party action would not be
sufficient to establish actual damages. NIEP had not suffered
any injury because St. Therese had never sought to collect
on the judgment, and may have been precluded from doing
so based upon the oral agreement made before trial. Further,
until St. Therese actually attempted to collect the judgment,
at most there was a mere possibility of harm that would not
be sufficient to support the legal malpractice claim. Thus,
Fourth Quarter 2005
the language of the court’s opinion appeared to signal that it
would find for the Landau firm based upon a lack of actual
damages.
However, the court abruptly changed course. Despite the
discussion regarding the need for actual damages, the court
found that it did not need to decide whether the judgment alone
“The alleged negligence in failing
to move to dismiss the third-party
action would not be sufficient to
establish actual damages. NIEP
had not suffered any injury
because St. Therese had never
sought to collect on the judgment,
and may have been precluded
from doing so based upon the oral
agreement made before trial.”
case, however, the amount NIEP owed remained exactly
the same. The acts or omissions of NIEP’s lawyers in
defending against the indemnity claim therefore did not
place NIEP in any worse position than it was already in.
Id. at *9.
The court additionally held that there were no actual damages because “[a] mere change in the identity of the judgment
creditor, without more, entails no quantifiable damages. It
is therefore insufficient to meet the requirement of actual
damages necessary to sustain a cause of action for legal
malpractice.” Id. at *10. Accordingly, regardless of whether
there was negligence on the part of the Landau firm, NIEP
was precluded from pursuing a claim for legal malpractice.
Id.
Defense attorneys should be able to utilize the court’s decision very effectively. First, despite the fact that the court’s
holding was not based upon whether there were actual damages, the opinion contains excellent language relating to the
need for actual damages. This language should be widely
cited as support for motions directed at a plaintiff’s inability
to establish actual damages. Second, the holding of the case
is important when analyzing whether the alleged negligence
proximately caused damages. If the possibility exists that the
alleged damage would have occurred despite the negligence,
or that the negligence did not place the plaintiff in a worse
position than it otherwise would have been, the proximate
cause element of the cause of action cannot be met. Accordingly, this is an important decision for defense practitioners.
constituted actual damages. Id. at *8. Instead, the court found
that the Landau firm was entitled to judgment because NIEP
could not establish that the alleged negligence proximately
caused the damages it was seeking. Id. at *9. In essence, the
court held that the alleged negligence could not have “proximately caused” any injury to NIEP since its damages claim
was not created by St. Therese’s third-party indemnity action.
Id. at *8-9. Rather, NIEP’s $4 million liability was created by
the medical malpractice judgment because NIEP was jointly
and severally liable for the entire $4 million judgment. Id. at
*8. The court explained that, because NIEP was already liable
to the parents for the $4 million judgment,
[t]he indemnity judgment’s only effect was to change
the party to whom the $4 million was owed. . . . In each
49
IDC Quarterly
Property Insurance
By: Tracy E. Stevenson
Chuhak & Tecson P.C.
Chicago
inclusion in a municipality; or if located within a municipality, to the extent of one-half acre of contiguous
land, upon which the exemption shall be limited to the
residence of the owner or the owner’s family. Fla. Const.
Art. X, § 4 (2002);
The Constitutional provision does allow for three exceptions to the rule barring breach of the Homestead exemption
including:
1. Purchase money mortgage;
Why is Everyone Moving to Florida?
In light of the severe weather which has struck Florida in
the past several years, it may be surprising that people continuously take all of their belongings and assets and purchase
a home in that state. Despite the risks of inclement weather,
hurricanes or, alternatively, droughts and fires, people in part,
continue to move to Florida because of the wonderful protections offered to homeowners under the Florida Homestead
Act. This Act has become important to attorneys in various
states, including Illinois, when they see the assets earmarked
for their judgment creditor disappear into a Florida home to
remain in many ways untouchable. Alternatively, the Florida
Homestead Act can also be used by clients so that assets are
protected for purposes of estate planning, divorce or otherwise. Thus, a brief review of the Act and a few of the pivotal
cases interpreting the Act may now be warranted.
Florida’s Homestead Act
Unlike many state’s statutory homestead exemptions,
Florida’s homestead exemption is contained in Article 10,
Section 4 of the Florida State Constitution. Specifically the
Florida Constitution mandates:
(a) There shall be exempt from forced sale under process
of any court, and no judgment, decree, or execution
shall be a lien thereon, except for the payment of taxes
and assessments thereon, obligations contracted for the
purchase, improvement or repair thereof, or obligations
contracted for house, field or other labor performed on
the realty, the following property owned by a natural
person:
(1) a homestead, if located outside a municipality, to
the extent of one hundred sixty acres of contiguous land
and improvements thereon, which shall not be reduced
without the owner’s consent by reason of subsequent
50
2. Mechanics Liens for Improvements to the Real
Property, or;
3. Obligations contracted for House, Field or other
labor performed on the realty.
The plain language of the Act makes a reality the often
coined phrase “a person’s home truly is his or her castle.”
The important distinction between Florida’s Homestead Act
and the homestead exemptions of many other states is that
Florida’s homestead exemption is constitutional while many
other states rely upon statutory language for purposes of granting homestead exemptions. The Florida Supreme Court as well
as the Federal Bankruptcy Court in Florida have determined
that a constitutional mandate may not be overturned by a state
statute. In states where both the Homestead Act and potential
limits to the act are each statutory, lawyers may attack the
matters at hand through statutory analysis and look to the
intent of the lawmakers. In Florida, the constitution prevails
over statute.
Florida statutes specifically address issues related to bars
against fraudulent conveyances including the Fraudulent Conveyance Act contained in Chapter 726 et seq. of the Florida
statutes and the antifraud provision in Chapter 22 et seq. of the
Florida statutes. While these statutes have repeatedly been up-
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.
Fourth Quarter 2005
held by Florida courts, the courts have ruled that these statutes
are not sufficient to overturn the constitutional Homestead Act
provisions. Thus, while the intent of the law makers in creating
statutes barring fraudulent conveyances is clear, the basic rules
of construction conclude that statutory laws cannot impair
rights granted by the constitution.
A Review of Some of the Deciding Cases
In 1993, the Florida Supreme Court in the case Palm
Beach Savings v. Fishbein, 619 S.2d 267 (1993) did create
a limited loophole in the Homestead Act which permitted a
lien to attach to homestead property. In the Fishbein case, Mr.
Fishbein forged his wife’s name on a bank loan with Palm
Beach Savings to pay off three pre-existing mortgages on
the homestead property. The court found that the bank’s lien
was valid only to the extent that the owner, Mrs. Fishbein,
had previously waived her homestead right for three inferior
mortgages which were supplanted by Palm Beach Saving’s
refinance. In reviewing that case, the court found that Mr.
Fishbein’s act of forging a mortgage deed (amongst other
improper acts) constituted reprehensible conduct sufficient
to allow his portion of the homestead to be taken. However,
even this case where the court found that Mr. Fishbein’s
conduct was reprehensible, the court limited the extent of
the lien under an equitable analysis to attach to the property
only to the extent of the pre-existing mortgages which Palm
Beach Savings had satisfied with their refinance proceeds.
The court noted that it may go beyond the literal language of
the statute where equity demands and imposes equitable liens
on homesteads that would usually be exempt under the Act.
Palm Beach Savings & Loan Assoc. v. Fishbein, 619 So. 2d
267, 270 (Fla. 1993).
Thereafter, in 2001 the Florida Supreme Court decided
Havaco v. Hill, 790 S.2d 1018 (Florida 2001). This case helped
to minimize the opening created by the Fishbein case and
steers the direction of the law towards strictly construing the
homestead exemption and the refusal to allow any penetration whatsoever into the exemption. The Florida Supreme
Court, in interpreting the Homestead Act, has stressed that the
homestead exemption must not be so liberally construed as to
allow the Act to become an instrument of fraud or a way to
escape debt. Havoco of Am., Ltd. v. Hill, 790 So. 2d 1020, 1027
(Fla. 2001); see also, In re Quraeshi, 289 B.R. 240 (S.D. Fla.
2002) (reiterating this idea). The Havaco court also stressed
in its holding that “[w]here equity demands it, this court has
not hesitated to permit equitable liens to be imposed upon
homesteads beyond the literal language of Article X, Section
4.” Havaco, at 1028. The court will impose such equitable
liens on property otherwise exempt under the Homestead Act
when proceeds from fraud or reprehensible conduct are used
to purchase the homestead. Havoco, 790 So. 2d at 1027. But
then the Florida Supreme Court limited this equitable policy
only in those instances where funds that have been obtained
through fraud or egregious conduct. Id. at 1028. Specifically,
the Havaco court also noted that the use of the homestead
exemption to shield assets from creditors’ claims is not alone
conduct sufficient to forfeit the exemption. Id. Thus, a floor
has been set which permits the “mere” hiding of assets from
creditors as long as the hiding of assets was not completed
through fraud or egregious conduct.
“The Florida Supreme Court, in
interpreting the Homestead Act,
has stressed that the homestead
exemption must not be so liberally
construed as to allow the Act to
become an instrument of fraud or
a way to escape debt.”
The Havaco Facts
The Havaco court was asked to answer a specific certified
question as follows: “Does Article 10, Section 4 of the Florida
Constitution exempt a Florida Homestead, where the debtor
acquired the Homestead using a non-exempt fund with the
specific intent of hindering, delaying or defrauding creditors in
violation of Florida Statute 726.105 or Florida Statute 222.29
or 30?”
The Havaco case analysis is interesting because the Florida
Supreme Court began review of the case with the specific
assumption that Mr. Hill, the Defendant, actually intended
to defraud his creditor. Mr. Hill was involved in litigation in
Alabama in which he was subject to a substantial judgment
being entered against him. Prior to the time that a judgment
was entered, Mr. Hill disposed of virtually all of his Alabama
assets and made a quick purchase of a home in Dustin, Florida.
In fact, Mr. Hill’s homestead purchase in Florida was only
51
IDC Quarterly
Property Insurance (Continued)
three days prior to the judgment becoming enforceable. Even
assuming for purposes of evaluating the Havaco case that the
debtor had fraudulently intended to shield his assets from a
known creditor, the Florida Supreme Court ruled that the
homestead exemption could not be penetrated to impose an
equitable lien on the property. In upholding the exemption,
the Florida Supreme Court specifically held that defrauding creditors has no impact on the exemption. In fact, the
Florida Supreme Court went so far as to rationalize and hold
that intentional fraud is not an excuse to allow a creditor to
impinge upon the Homestead Act. In fact, the Havaco case
invites perpetrators of fraud to purchase homes which will be
their domicile in Florida regardless of the manner in which
they arrived at the purchase money. Nevertheless, despite the
court’s conclusion in Havaco, the case continues to contain
that language which plainly states that in certain instances,
the Homestead Act may be impinged upon. The right set of
facts may make the difference.
Bankruptcy Courts Have Also
Considered Florida’s Homestead Act
The bankruptcy courts have repeatedly addressed the issue of the Florida Homestead Act in determining whether a
bankruptcy claimant may maintain his or her home and protect
this usually large asset from creditors. The bankruptcy courts’
analysis of the issues seems to turn much more sharply on
the debtor’s intent in completing the transfer of assets from
non-exempt property to exempt homestead property. For
example, the bankruptcy court in In Re: Lazin, 221 B.R. 982
(1998) held that while conversion of non-exempt property into
exempt property should be permitted with certain limitations,
such a transfer and the protections which go with it may be
denied upon a showing by extrinsic evidence that the debtor
converted with the specific intent to defraud. This case cites
to the Fishbein court’s analysis related to egregious or reprehensible conduct.
Likewise, the bankruptcy court in In Re: William Tabone,
247 B.R. 541 (2000) also relied on the Fishbein analysis. The
bankruptcy court held that the mere act of converting nonexempt assets into exempt assets is not fraudulent per se, but it
may be, depending on such factors including the timing of the
conversion and proof of attempts to conceal the conversion.
Thus, whether a homestead is protected becomes a question
of fact to be considered in conjunction with the applicable
anti-fraud statutes.
The bankruptcy courts have also relied upon extrinsic
evidence including: 1) timing of flight to Florida; 2) timing
of transfer and home purchase; 3) close proximity to debtor
52
losing in state court and transfer of funds; and 4) timing of
mortgage obtained to provide living expenses. See, e.g., In Re
Pomerantz, 215 B.R. 261 (1997); In Re Bandkau, 187 B.R.
373 (1995); and In Re Coplan, 156 B.R. 88 (1993). Therefore,
the case law indicates that while the Florida courts are diligently protecting the constitutional mandates of the Florida
Homestead Act, the bankruptcy courts have seemingly more
inclined to delve into the intent of the debtor prior to allowing
a transfer of assets away from creditors into a debtor’s exempt
homestead property.
Florida Permits Filing of Foreign Judgments
Florida does provide a statutory remedy for creditors to
enforce foreign judgments in Florida without having to bring a
new action in the Florida court system. See, Muka v. Horizon
Fin. Corp., 765 6th S.2d 239, 239-40 (Fla. Dist. Ct. App.
2000). The Florida Enforcement of Foreign Judgment Act
allows creditors to report foreign judgments with the clerk of
any county in Florida. Specifically, the statute states that (1)
a copy of any foreign judgment certified in accordance with
the laws of the United States or Florida may be recorded in
the office of the Clerk of the Circuit Court of any county. The
clerk shall file, record, and index the foreign judgment in the
same manner as a judgment of a Circuit or County Court of
Florida. A judgment so recorded shall have the same effect and
shall be subject to the same rules of civil procedure, legal and
equitable defenses and proceedings for re-opening, vacating
or staying judgments, and it may be enforced, released, or
satisfied as a judgment of a circuit or county court of Florida.
Fla. Stat. Ch. 65.503(1) (2003). Thus, a creditor can lie in
wait in Florida courts by filing the foreign judgment there
in the hopes that the judgment debtor will ultimately sell the
homestead and fail to purchase a new homestead with the
proceeds of the sale.
Conclusion
Attorneys for both plaintiff and defendant should be aware
of the ramifications and benefits of advising clients to transfer
assets to a Florida domicile if creditors are lurking. While the
Florida Homestead Act provides constitutional rights to a
domicile, those rights are not absolute and may be challenged
in a variety of ways. Asset protection in Florida is a benefit
offered by the state but is not one that should be construed
haphazardly and is not a fool proof guarantee of long term
protections.
Fourth Quarter 2005
The Law in Review
By: Bradley C. Nahrstadt
Williams Montgomery & John Ltd.
Chicago
• In
The Procedural Posture of Minimum Employee
Thresholds in Federal Anti-discrimination Statutes, 72
U.Chi.L.Rev. 1047 (Summer 2005), Jeffrey A. Mandell explores the definition of the word “employer” and how it affects
the federal courts’ jurisdiction over cases under Title VII and
other similarly structured federal anti-discrimination laws. As
Mandell notes in his comment, the procedural posture under
which a court construes the minimum employee threshold
has substantial consequences. These consequences affect
the obligation of the court to raise the issue sua sponte, the
scope of a federal court’s jurisdiction to hear supplemental
claims for employment discrimination under state law, the
evidentiary burdens on each party, and the res judicata effects
of the court’s verdict. Given these consequences, it is no wonder that much has been made in recent years concerning the
proper way to interpret the employer requirement in federal
anti-discrimination statutes.
It is universally acknowledged that in order to make out a
successful Title VII claim, a plaintiff must prove that at the
time of the alleged discrimination the defendant-employer
employed 15 or more employees. However, the federal courts
of appeal disagree as to whether this minimum employee
threshold is a jurisdictional question, a question on the merits,
or some hybrid of the two.
According to Mandell, in 1972, the Sixth Circuit Court
of Appeals upheld the dismissal of a Title VII claim on the
basis that the defendant did not have the requisite number of
employees for exposure to liability under the statute. Hassell
v. Harmon Foods, Inc., 454 F.2d 199 (6th Cir. 1972). The
Fifth Circuit followed suit in 1980. Dumas v. Town of Mount
Vernon, Ala., 612 F.2d 974 (5th Cir. 1980). The First Circuit
adopted the jurisdictional approach by implication in the
case of Thurber v. Jack Reilly’s, Inc., 717 F.2d 633 (1st Cir.
1983) and the Fourth and Ninth Circuits explicitly adopted
the jurisdictional approach in the cases of Hukill v. Auto Care,
Inc., 192 F.3d 437 (4th Cir. 1999) and Childs v. Local 18,
International Brotherhood of Electrical Workers, 719 F.2d
1379 (9th Cir. 1983).
Two of the three federal circuits confronting the minimum
employee threshold as an issue of first impression in the past
decade have adopted the merit-based approach. See, Da Silva
v. Kinsho International Corporation, 229 F.3d 358 (2d Cir.
2000); E.E.O.C. v. St. Francis Xavier Parochial School, 117
F.3d 621 (D.C. Cir. 1997). In addition, the Seventh Circuit
Court of Appeals has abandoned the jurisdictional approach
in favor of the merit-based analysis. EEOC v. The Chicago
Club, 86 F.3d 1423 (7th Cir. 1996). The Third Circuit, like
the Fourth, Seventh and Ninth Circuits, has also chosen to
follow the merit-based approach. See, Martin v. United Way
of Erie County, 829 F.2d 445 (3d Cir. 1987).
The Eleventh Circuit Court of Appeals appears to disagree
with both the jurisdictional and the merit-based approaches.
In two cases, Garcia v. Copenhaver, Bell & Associates, 104
F.3d 1256 (11th Cir. 1997) and Morrison v. Amway Corporation, 323 F.3d 920 (11th Cir. 2003), it ruled that the minimum
employee threshold implicates both federal jurisdiction and
the merits of the federal claim. The court’s hybrid approach
grows out of intense adherence to both the theory of limited
jurisdiction and the jury’s role in factual determinations.
Thus, the Eleventh Circuit’s hybrid approach acknowledges
the jurisdictional relevance of its inquiry while treating the
minimum employee threshold as an element of the plaintiff’s
federal anti-discrimination claim. The Tenth Circuit Court of
Appeals has adopted the same approach. See, Trainor v. Apollo
Metal Specialties, Inc., 318 F.3d 976 (10th Cir. 2002).
Mandell argues that the jurisdictional approach is ultimately the best legal outcome. Considered in a larger constitutional
framework, Mandell believes that the minimum employee
threshold must be a jurisdictional prerequisite. He argues that
Supreme Court precedent points, faintly but directly, in the
About the Author
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.
53
IDC Quarterly
The Law in Review (Continued)
direction of the jurisdictional approach. In his view, the Americans with Disabilities Act (ADA) provides a unique window
into congressional understanding that shows a ratification of
the jurisdictional approach. Though no court has articulated
a detailed argument in favor of the jurisdictional approach
to the minimum employee threshold, Mandell argues that
the rationale underlying the jurisdictional approach not only
exists, but is more compelling than the rationale articulated
in favor of the substantive approach. According to Mandell,
given the deliberate structural and substantive similarities
among the federal anti-discrimination statutes, including Title
VII, the Age Discrimination in Employment Act (ADEA), the
ADA, and the Family and Medical Leave Act (FMLA), all of
these statutes should be understood as requiring a threshold
showing of the minimum number of employees required by
the statute in question to establish subject matter jurisdiction
in federal court.
• In You Can’t Always Use The Zippo Code: The Fallacy
Of A Uniform Theory of Internet Personal Jurisdiction, 54
DePaul L. Rev. 1147 (Summer 2005), Dennis T. Yokoyama
discusses the very real problems associated with the exercise of personal jurisdiction in cases involving the Internet.
Yokohama begins his article with a discussion of the now
famous trademark infringement case of Zippo Manufacturing
Company v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D.Pa.
1997). In that case, Zippo Manufacturing Corporation, the
Pennsylvania-based maker of the world-famous Zippo tobacco
lighters, sued Zippo Dot Com, Inc., alleging various claims
based on federal and state trademark law. Zippo Dot Com,
a California-based corporation, was operating a Web site
through which it advertised its internet news service. Zippo
Dot Com’s Web site gave subscribers to its service access to
various internet news groups. Zippo Dot Com offered three
levels of subscription, ranging from a free subscription to two
types of paid subscriptions. Zippo Dot Com’s contacts with
Pennsylvania existed almost entirely through the Internet.
Zippo Dot Com advertised its news service solely through its
Web site. People paid for their subscriptions through either
the telephone or Zippo Dot Com’s Web site. At the time of
the lawsuit, Zippo Dot Com had about 140,000 subscribers,
about 3,000 of whom were Pennsylvanians.
In fashioning a novel personal jurisdiction framework for
evaluating Internet activities, the Zippo court characterized
Internet activities as running along a sliding scale of purposeful availment. The court stated that the purposeful availment
pole is anchored whenever “a defendant clearly does business
over the Internet. If the defendant enters into contracts with
54
residents of a foreign jurisdiction that involve the knowing
and repeated transmission of computer files over the Internet,
personal jurisdiction is proper.” Zippo, 952 F. Supp. at 1124.
At the opposite end of the spectrum are passive Web sites
“where a defendant has simply posted information . . . which
is accessible to users in foreign jurisdictions.” Id. In the middle
of the spectrum are “interactive Web sites where a user can
exchange information with the host computer. In these cases,
the exercise of jurisdiction is determined by examining the
level of interactivity and commercial nature of the exchange
of information that occurs on the Web site.” Id.
Yokohama argues that although the Zippo opinion was well
reasoned and served a valid purpose at the time it was decided,
courts have latched on to the Zippo opinion as a panacea in all
cases involving the Internet and issues of personal jurisdiction.
Yokohama argues that the Zippo opinion should not be used as
a basis for imposing jurisdiction in cases involving questions
of general jurisdiction, as opposed to specific jurisdiction.
As we all learned in law school, general jurisdiction, as
opposed to specific jurisdiction, may be asserted when the
defendant’s contacts with the foreign state are unrelated to the
plaintiff’s claims. Yokohama argues that in too many cases
the courts have used the Zippo decision, a decision involving
specific jurisdiction, to find jurisdiction in cases involving
questions of general jurisdiction. In his opinion, establishing
general jurisdiction simply because a defendant’s interactive
Web site is accessible in the forum state would essentially
establish universal jurisdiction. In other words, the application
of the Zippo sliding scale test to general jurisdiction would
unreasonably equate Internet interactivity with continuous
and systematic activities in the forum state.
In Yokohama’s opinion, the judicial exercise of general
jurisdiction must turn on the evaluation of all of the defendant’s activities in the forum state. The defendant’s activities
in the forum state, for purposes of general jurisdiction, must
rise beyond the mere potential for marketing and sales that
an interactive Web site may provide. In his view, a more traditional general jurisdiction analysis is warranted: an inquiry
that taps into the quantification of the amount of business
that the defendant does in the forum state. In other words,
the jurisdictional issues involving Internet activity, like issues involving more traditional activity, should be resolved
according to the defendant’s overall contacts with the forum
state and in relation to the substantive and factual underpinnings of the lawsuit.
• Finally,
in The Illinois Commonsense Consumption
Act: End of the Road for Fast Food Litigation in Illinois?,
36 Loy.U.Chi.L.J. 983 (spring 2005), Norah Leary Jones
Fourth Quarter 2005
discusses the recent increase in litigation against fast food
retailers and the steps that the Illinois legislature has taken in
an effort to curb lawsuits seeking to hold fast food retailers
liable for the obesity of their patrons.
Jones begins her note by providing some very interesting
background information regarding fast food and obesity in
the United States. One mind boggling statistic: a 2002 study
revealed that nearly 60% of Illinois adults are overweight or
obese, representing a 100% increase since 1992.
The bulk of Jones’ note focuses on a detailed discussion
of the legal theories often employed by plaintiff’s attorneys
against the fast food industry. According to Jones, the most
widely-used theory in fast food litigation thus far has been
“As we all learned in law school,
general jurisdiction, as opposed
to specific jurisdiction, may be
asserted when the defendant’s
contacts with the foreign state are
unrelated to the plaintiff’s claims.”
the allegation that the fast food industry misrepresents the
quality and effects of its food. In Illinois, such allegations
are cognizable either under a common law theory of fraud or
as a violation of the state’s consumer protection statute. Fast
food litigation advocates also propose breach of contract as a
possible theory upon which to find the fast food industry liable
for American obesity. The Illinois Uniform Commercial Code
codifies contract law for the sale of goods in Illinois. Three
contract theories potentially apply to obesity claims against
fast food companies: (1) express warranty; (2) implied warranty of merchantability; and (3) implied warranty of fitness
for a particular purpose. In addition to the foregoing theories,
some plaintiffs also sue based on strict products liability and
negligence. Under a theory of strict liability, the plaintiffs allege that fast food companies should be held strictly liable for
not warning consumers about the hidden nutritional content of
fast food. Under a negligence approach, the plaintiffs allege
that the restaurant at issue breached its duty to its customers
by selling unhealthy and dangerous foods.
On July 30, 2004, in an effort to rein in claims against
fast food companies, Governor Rod Blagojevich signed the
Illinois Commonsense Consumption Act into law. P.A. 93848, 745 ILCS 43/1 to 43/20. The ICCA, co-sponsored by
Illinois State Representative John Fritchey and State Senator
John Cullerton, purports to prohibit claims against fast food
companies based on a consumer’s obesity or obesity-related
illnesses. The ICCA narrowly limits protection to fast food
“sellers.” It does not protect manufacturers or trade associations. It also narrowly defines the scope of protected activities by including only the sale of fast food, rather than its
manufacturing, advertising, distribution, and marketing. The
litigation precluded by the ICCA encompasses “a civil action
brought by any person against a seller of a qualified product,
for damages or injunctive relief based on a claim of injury
resulting from a person’s weight gain, obesity, or any health
condition that is related to weight gain or obesity.” 745 ILCS
43/5.
There are three exceptions to the litigation prohibition.
First, the Act excepts actions alleging violations of state or
federal consumer protection statutes when the plaintiff can
demonstrate the violation was willful and knowing and that
the violation was the proximate cause of the plaintiff’s injury.
The second exception allows claims for breaches of contract
or express warranty. The third exception provides that the
plaintiffs can also sue sellers of qualified products if those
products are adulterated under the Federal Food, Drug and
Cosmetic Act. 745 ILCS 43/15.
According to Jones, the Illinois Commonsense Consumption Act alters the legal theories available to consumers
looking to hold fast food restaurants accountable for their
obesity-related illnesses. However, it does not eliminate all
ability to recover. Although Illinois consumers will no longer
be able to sue fast food companies under common law theories
such as negligence and fraud, claims brought under the Illinois
Consumer Fraud and Deceptive Business Practices Act and
claims based on breach of contract continue to offer viable
alternatives for the plaintiffs who suffer from obesity.
55
IDC Quarterly
Appellate Practice Corner
By: Brad A. Elward
Peoria
Preserving Error for Appellate Review
An appeal is only as good as the record from which it arises.
Strong issues can be lost if counsel is not careful to construct
a complete appellate record that includes all matters necessary to support his contention of error. Generally speaking,
an appellate court will consider only those issues that were
raised and preserved before the circuit court. Dopp v. Village
of Northbrook, 257 Ill. App. 3d 820, 824, 630 N.E.2d 84 (1st
Dist. 1993). Indeed, the purpose of appellate review is to
evaluate the record as presented to the circuit court. The court
will only review those facts and evidence that were made part
of the record on appeal. Referencing certain deposition testimony during a motion hearing is of no avail if the deposition
containing those facts is not made part of the record during
the motion hearing or as part of the motion itself.
In its simplest sense, the record on appeal is a mechanism to
preserve error for reviewing court analysis. A record on appeal
properly consists of 1) the common law record (all pleadings,
exhibits, and orders) (see Hall v. Turney, 56 Ill. App. 3d 644,
647, 371 N.E.2d 1177 (1st Dist. 1977), and S. Ct. Rules 321,
328, and 329), and 2) the report of proceedings. S. Ct. Rule
323 (transcripts of hearings and trial testimony). The reports
of proceedings and the record on appeal are read together
as a whole. From this collection of documents the appellate
court reviews the case and decides whether the circuit court
committed error, and if so, whether that error prejudiced a
party. The record is best looked upon as a “box” containing
everything that the appellate court can consider in evaluating
an appeal. Anything not contained in the box, no matter how
enticing, cannot be considered on review. City of Chicago v.
Hutter, 58 Ill. App. 3d 468, 469, 374 N.E.2d 802 (1st Dist.
1978).
Major Mistakes in Preserving Appellate Issues
The following items represent the most common mistakes
made in failing to preserve issues for appellate review. Being aware of these and preparing to preserve errors prior to a
56
significant hearing or trial will save much time and make the
entire appellate process proceed smoothly.
A. Failing to Preserve Court Rulings
Counsel must always obtain a ruling on any motion or
objection presented to the court. Illinois law is well settled
that even where a proper objection has been made, the error
is not preserved for review if the circuit court did not rule
on the objection. Watson v. City of Chicago, 124 Ill. App. 3d
348, 353, 464 N.E.2d 1100 (1st Dist. 1984). The burden is
on the moving party to either obtain a ruling or a refusal to
rule, which itself can form the basis of a reversal. Swieton v.
City of Chicago, 129 Ill. App. 3d 379, 385, 472 N.E.2d 503
(1st Dist. 1984). This concern is especially apparent where
the circuit court reserves its ruling on a motion or objection.
A good example is where the court takes a party’s motion
in limine under advisement pending the presentation of the
evidence or testimony at trial when the evidence or testimony
later surfaces, the opponent fails to seek a ruling. Selby v.
Danville Pepsi-Cola Bottling Co., 169 Ill. App. 3d 427, 439,
523 N.E.2d 697 (4th Dist. 1988). In that situation, the error
is not preserved. The movant must seek some decision by the
court in order to preserve the issue for subsequent review.
B. Failing to Preserve Objections
A similar result occurs where a party fails to make a proper
objection. The objection is the key to preserving for review
any error in the admission of evidence, whether the evidence
is a document or a witness’ testimony. As a general rule,
counsel must object contemporaneously with the offer of the
objectionable evidence or testimony.
Moreover, when an objection is made, specific grounds
(and all grounds) must be stated as grounds not stated are
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.
Fourth Quarter 2005
waived. Objections other than those stated on the record are
waived and cannot be asserted on appeal. A general objection,
“I object,” preserves only relevancy and materiality grounds.
A specific objection, such as, “Objection, violates the hearsay
rule” preserves the objection on hearsay grounds, but waives
all other specific objections, if not stated.
One exception to this rule is the continuing objection. In
some circumstances, counsel may object to an entire line or
area of questioning. The continuing objection permits counsel
“An appeal is only as good
as the record from which it
arises. Strong issues can be
lost if counsel is not careful to
construct a complete appellate
record that includes all matters
necessary to support his contention of error.”
to raise the objection once, and then indicate that the objection
is continuing. O’Keefe v. Fitzpatrick, 153 Ill. App. 3d 384,
388, 505 N.E.2d 1355 (2d Dist. 1987). This dispenses with the
need to repeat the objection each time the issue is breached.
Be aware, though, that continuing objections are not always
accepted by the circuit court. Thus, the court’s preference
should always be clarified prior to trial.
C. Offer of Proof
An offer of proof serves the opposite purpose of an objection and is used to preserve error in the exclusion of evidence.
Turgeon v. Commonwealth Edison Co., 258 Ill. App. 3d 234,
241, 630 N.E.2d 1318 (2d Dist. 1994). An offer of proof
permits the appellate court to see for itself the evidence that
the circuit court deemed inadmissible. Case law states that
the primary purpose of the offer of proof is to indicate to
the circuit court, opposing party, and the appellate court the
substance of the excluded testimony sought to be offered.
Turgeon, 258 Ill. App. 3d at 240. In the absence of an offer,
the appellate court will typically refuse to speculate about
what the evidence would have shown and will simply affirm
the lower court’s ruling.
Most situations call for a formal offer of proof whereby
the proponent of the testimony calls the witnesses to the stand
and asks questions. An offer of proof must contain facts and
not conclusions. Romine v. City of Watseka, 341 Ill. App. 370,
376, 91 N.E.2d 76 (2d Dist. 1950). In certain cases, counsel
may present the offer by way of representations of what the
evidence, if allowed, would show. However, this should be
clear and there should be no objection to this method voiced
by opposing counsel. If counsel does object, the witness will
have to testify.
Offers of proof are required in all but a few circumstances,
namely: (1) the court has refused to permit counsel to make
an offer of proof; (2) it is apparent from the record that the
court’s attitude toward the witness would have prevented an
offer; and (3) the question is in such a form that it indicates
that a particular answer would have been elicited. However,
counsel should not rely on these and try to present an offer.
Also, counsel opposing an offer must remember to raise any
objections during the offer of proof that would have been
raised if the testimony was actually being presented to the
jury so that the objections are properly preserved.
Offers of proof must indicate to the court the purpose of the
proffered evidence and must be conducted outside the presence of the jury. The court reporter must record any offer of
proof to make the offer part of the record. If the offer consists
of physical evidence, the evidence should be identified and
described. If the evidence is admitted, its relevancy should
be explained. The exhibit should then be made available for
the court record so that it may be reviewed by the appellate
court.
D. Jury Instructions
To preserve for appeal an issue relating to a jury instruction,
the party must object to the instruction during the instruction conference and renew that objection in the subsequent
post trial motion. Barrett v. Fritz, 42 Ill. 2d 529, 532-33, 248
N.E.2d 111 (1969). Including the objection in the latter only
is not sufficient. Here, counsel should make sure that the
jury instruction conference, or at least a formal record of the
rulings on the instructions, is recorded by the court reporter.
The same caveat applies to voir dire; always ensure that jury
selection is recorded by a court reporter. American State Bank
v. Woodford County, 55 Ill. App. 3d 123, 129, 371 N.E.2d 232
(4th Dist. 1977). As with objections to testimony, objections
57
IDC Quarterly
Appellate Practice Corner (Continued)
on jury instructions must be specific.
Equally important to preserving instructional errors is
tendering an alternative instruction. Auton v. Logan Landfill,
Inc., 105 Ill. 2d 537, 549, 475 N.E.2d 817 (1984). It is not
enough to simply object. Where appropriate, counsel should
tender a version of how the instruction should read and have
the court rule on the submission. The same holds true with
special interrogatories. Objections must be made and ruled
on in the same manner as standard jury instructions.
E. Motions in Limine
Motions in limine are the best way to challenge questionable evidence (or get a pre-ruling on the evidence) before the
trial begins. Most important, the court’s ruling on a motion
in limine is not the end of the process. If evidence will be
allowed after the denial of a motion in limine, counsel must
also reassert the objection to the testimony or evidence when it
actually appears in the trial and when it is offered as evidence.
Otherwise, the objection on the admissibility of that evidence
is waived. Chubb/Home Ins. Co. v. Outboard Marine Corp.,
238 Ill. App. 3d 558, 567, 606 N.E.2d 423 (1st Dist. 1992).
Other Items of Interest
Exhibits can sometimes be the key to explaining a position
on appeal. Given that, counsel should be careful to provide the
court with complete copies of all documents that are necessary
to support the point. It goes without saying that any exhibit
should be clearly and properly marked. If the exhibits are
lengthy, file excerpts in support of the motion, then follow
with a “Notice of Filing” that contains the complete document.
Also, make sure the filing is referenced in the motion and at
the hearing on the motion. Spencer v. Community Hosp. of
Evanston, 87 Ill. App. 3d 214, 215, 408 N.E.2d 981 (1st Dist.
1980).
Another area of interest is the preservation of legal issues
raised. Arguments and issues must be raised before the circuit court or they are waived on appeal. Robinson v. Toyota
Motor Credit Corp., 201 Ill. 2d 403, 413, 775 N.E.2d 951
(2002). For example, in the recent Robinson case, the Illinois
Supreme Court rejected the appellant’s full faith and credit
argument, because it was raised for the first time on appeal.
Id. Moreover, it is important to include all arguments in the
post trial motion and then select the best arguments once the
appeal is underway.
Tips for Record Preservation
Counsel can help ensure that all issues are preserved for
appeal by following some basic rules. First, keep a separate file
58
folder clearly marked “potential errors for appeal” and place in
that folder all notes, documents and orders that might eventually create an appellate issue in the case. These documents
would include significant or dispositive motions, motions in
limine, and appropriate orders. Second, for cases proceeding
to trial or at least some type of evidentiary hearing, maintain
a running list of all exhibits to ensure that each is offered and
ruled upon, and track all motions in limine. This list can also
be used to ensure that any alternative jury instructions are
presented. Consult this list before dismissing each witness
and at the close of your case and, where necessary, obtain the
proper rulings.
Third, prepare a short memorandum prior to trial on potential issues that might arise from the trial testimony, any
evidentiary foundations, and possible offer of proof. Preparing these as much as possible prior to the trial, provides a
“It goes without saying that any exhibit should be clearly and properly
marked. If the exhibits are lengthy,
file excerpts in support of the motion, then follow with a ‘Notice of
Filing’ that contains the complete
document.”
quick reference for all evidentiary matters that will ensure
you have the necessary foundations when the need arises.
Finally, remember that there are options for capturing the
court’s verbal rulings if no court reporter is present. Counsel
can elaborate the rulings and reasoning in a written order or
prepare a bystander’s report.
Hopefully this short primer will help better preserve errors
for appellate review. Remember, the responsibility for preparing a full and accurate record belongs to the party seeking the
appeal. Any discrepancies in the record are resolved against
the party appealing. Gilmore v. City of Zion, 237 Ill. App. 3d
744, 754, 605 N.E.2d 110 (2d Dist. 1992).
Fourth Quarter 2005
Commercial Law
By: James K. Borcia
Tressler, Soderstrom, Maloney & Priess
Chicago
Integration Plus Non-Reliance Clauses
Spell Doom for Sophisticated Investors
Purchasers of securities bringing an action for securities
fraud often rely upon oral representations not contained in the
written documents. In the recent decision, Tirapelli v. Advance
Equities, Inc., 351 Ill. App. 3d 450, 813 N.E.2d 1138, 286 Ill.
Dec. 445 (1st Dist. 2004), the First District Appellate Court
was faced with a lawsuit brought by sophisticated investors
who were claiming fraud based upon oral statements not contained in the written agreements. The written agreements in
question contained both non-reliance and integration clauses.
In Tirapelli, the plaintiffs were sophisticated investors
each of whom owned car dealerships and had a net worth
of over $5 million. The plaintiffs bought stock in Telecom
Capital Group, LLC (“TCG”). The plaintiffs alleged that
during meetings held before they signed the subscription
documents, the defendants made oral representations to them,
including that TCG owned property, that TCG had a lease,
that TCG had completed design work and entered into certain
contracts, that TCG had concluded all preliminary work for
initial public issue, that few shares of TCG remained and
that unless the plaintiffs invested immediately they would
lose the opportunity to invest. The plaintiffs alleged that the
defendants’ representations about TCG were later found to be
false. However, none of the alleged representations were found
in the subscription documents. Additionally, the subscription
documents contained the following non-reliance clause:
[I]n evaluating the suitability of an investment by the
undersigned Company, the undersigned has relied solely
upon the materials made available to the undersigned
at the undersigned’s request and independent investigations made by the undersigned in making the decision to
purchase the Preferred Membership Interests subscribed
for herein, and acknowledges that no representations
or warranties (oral or written), have been made to the
undersigned with respect thereto.
351 Ill. App. 3d at 447, 813 N.E.2d at 1140 (quoting from the
subscription documents).
The subscription documents also contained the following
integration clause:
The Subscription Documents constitute the entire agreement among the parties hereto with respect to the subject
matter hereof and may be amended only by a written
execution of all parties.
351 Ill. App. 3d at 447-448, 813 N.E.2d at 1140-1141 (quoting
from the subscription documents).
These documents also contained several warnings about
various risks involved with the investment and required the
plaintiffs to verify that they were “accredited investors” which
was defined in the documents as persons with net worth exceeding $1 million at the time of purchase.
After discovering a few discrepancies, the plaintiffs tendered their shares to the defendants and sought a return of
the money they had invested in TCG. The defendants refused
to rescind the transaction or return the money. The plaintiffs
eventually lost all of their investments.
The First District affirmed the trial court’s granting of the
defendants’ motion for summary judgment. The appellate
court first noted that reasonable reliance was an essential element of Section 12(F), 12(G) and 12(I) of the Illinois securities
law. 815 ILCS 5/12(F), (G) and (I). The court held that the
plaintiffs’ reliance on the alleged oral representations by the
defendants was unreasonable as a matter of law. The court
noted those cases cited by the plaintiffs for the proposition
that integration clauses do not protect against intentional torts,
including fraud claims, based on oral statements outside the
written agreements. However, the court noted that those cases
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.
59
IDC Quarterly
Commercial Law (Continued)
involved contracts that had integration, but not non-reliance
clauses. The court found the combination of the non-reliance
clause with the integration clause was dispositive and mandated summary judgment in favor of the defendants.
This case points out the benefits of having non-reliance
clauses in securities transactions, especially when dealing
with sophisticated investors. The combination of non-reliance
clauses and integration clauses is helpful for defending against
claims based upon oral representations. If securities purchasers are relying on information not contained in the documents
pertaining to securities transactions, it is imperative that the
purchasers have the representations put into writing in the
documents in order to protect their interests.
The Defense Philosophy
By: Willis R. Tribler
Tribler Orpett & Meyer, P.C.
Chicago
This would be a joy to my father, who knew a great deal
about baseball and who detested “false hustle,” defined as
racing around with great energy when nothing was at stake.
As a result, he was annoyed by the likes of Pete Rose, who ran
hard to first base when he drew a base on balls, and pitchers
who gallop off the field at the end of an inning.
There is a certain degree of false hustle in the practice of
law. This includes violating my Rule 30 (set forth above) by
doing things that are not necessary and do not increase the
chance of a good result. Examples are the deposition that could
be covered by an interview, the motion or discovery that is
filed to harass the other side and the refusal to make a serious
effort to settle a case at mediation or pre-trial conference. It is
important to set goals and work toward those goals. Do those
things that help the client win the case and avoid those things
that do not help the client win the case. This should result in
a happier client, more cases, and a boost in your self-esteem.
The best rule is to do only those things that you would be
willing to have done if you had to use your own money to
pay someone else to do them.
For the record, with all the moaning about the departure
of Sosa, he appeared in only 102 games for Baltimore, batted 380 times, hit 14 home runs, drove in 45 runs and had a
batting average of .221. Burnitz, on the other hand played in
160 games, batted 605 times, hit 24 home runs, drove in 87
runs and had a batting average of .258. Burnitz always hustled when it mattered. A lawyer must
do the same.
False Hustle
Tribler’s 30th Rule: Nothing should be done in the
handling of a case that does not increase the chance of
a successful result.
In this season of sleet, snow and severe cold, it is always
good to look back to summer and the last baseball season
to see if there are any lessons to be learned. Today’s lesson
comes from the Chicago Cubs.
The arrival of Jeromy Burnitz as the new right fielder for
the Cubs led to an initial interview in which Burnitz was asked
whether he would emulate his predecessor, Sammy Sosa, and
sprint out to right field to start the game. Burnitz answered,
“You probably won’t see that out of me. I don’t waste energy
except when it counts. That’s kind of like my philosophy.”
60
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.
Fourth Quarter 2005
Featured Article
The Case of the
Assailing Psychiatrist:
Testing the Bounds of
Apparent Agency in Illinois
By: Adnan Arain
Alholm, Monahan, Klauke, Hay & Oldenburg, L.L.C.
Chicago
Since the advent of Gilbert v. Sycamore, 156 Ill. 2d 511,
525, 622 N.E.2d 788, 795 (1993), defense attorneys, and specifically medical malpractice defense attorneys, have found
themselves contending with the ever expanding doctrine of
apparent agency. Based upon the holdings in Gilbert and its
progeny, there are many considerations which come into play.1
A number of Illinois cases can be read to erroneously imply
that any act committed by a physician imputes liability upon
the hospital and that the plaintiff need merely allege that the
physician invoked the hospital’s name while committing the
act. Common sense dictates that there must be a limit as to
what acts a physician can commit in the name of the hospital
that impute liability to the institution. For example, attempted
murder by a physician with privileges must not be placed
on the same level, in terms of apparent agency, as an emergency room failure to diagnose. An absurd result would ensue
otherwise.
But while common sense dictates that such a limit be clearly
defined, currently, no case law in Illinois sets forth this line
of demarcation. Thus one approach to defending a hospital
against spurious claims of apparent agency is to first consider
the big-picture concepts of objectivity and proximate cause.
Consider the case Doe v. Smith2, in which a perpetrator
(Dr. Smith), a non-agent psychiatrist with privileges at the
defendant hospital, physically assaulted a woman he was dating. He met the woman at her home, at the recommendation
of the woman’s sister, under the auspices of performing an
initial psychiatric consultation. The initial meeting occurred
in the final week of December 1999. The two met and continued their personal, romantic3 relationship completely outside
of the hospital’s knowledge and mutually decided against a
physician-patient relationship so that they could date each
other. The woman now claims to have been a patient of Smith
throughout the time that they were dating. The relationship
ended with Smith attacking Doe on February 17, 2000, essentially bludgeoning her about the head over a matter of
hours before leaving the scene.
Dr. Smith was criminally prosecuted and convicted for the
attack. His license to practice medicine was revoked and he
served a jail sentence for aggravated physical battery. Doe
filed a civil suit against Smith for battery and for medical
malpractice.4 Presumably due to the difficulty in recovering
against Smith,5 Doe’s counsel also named the hospital as a
defendant in two counts: apparent agency and negligent hiring
and retention. The trial court granted the hospital’s motion for
summary judgment premised upon the objective standard for
the first and third elements of apparent agency, along with
lack of proximate cause.
This article will focus only on the apparent agency portion of the case, and specifically, the way in which the facts
of this case clearly delineate the outer limits of the doctrine
of apparent agency. Using the concepts of (1) the objective
standard for the first and third prongs of apparent agency, and
(2) proximate cause, the facts of this case should clearly place
the hospital (the psychiatrist’s ostensible employer) outside
of the realm of any liability on apparent agency grounds. The
facts of his case would also ideally serve as an example of
how liability must not be mechanically assigned to the hospital
under the theory of apparent agency in all circumstances.
About the Author
Adnan Arain is an associate in the Chicago firm of Alholm,
Monahan, Klauke, Hay & Oldenburg, L.L.C. where he concentrates his practice in the areas of professional liability
defense (both legal malpractice and medical malpractice),
general liability defense and products liability defense. Mr.
Arain received his J.D. in 2000 from Northwestern University School of Law and his B.A. in 1995 from University
of Chicago. He is a member of the American Bar Association and the IDC.
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IDC Quarterly
The Assailing Psychiatrist (Continued)
Applicable Case Law
Apparent Agency
In order to establish liability on a theory of apparent agency,
the plaintiff must plead and prove the following three elements: (1) the hospital, or its agent, acted in a manner that
would lead a reasonable person to conclude that the individual
who was alleged to be negligent was an employee or agent
of the hospital; (2) where the acts of the agent create the appearance of authority, the plaintiff must also prove that the
hospital had knowledge of and acquiesced in them; and (3) the
plaintiff acted in reliance upon the conduct of the hospital or
its agent, consistent with ordinary care and prudence. Gilbert
v. Sycamore, 156 Ill. 2d 511, 525, 622 N.E.2d 788, 795 (1993),
quoting Pamperin v. Trinity Memorial Hospital, 144 Wis.2d
188, 423 N.W.2d 848 (1988), and citing to Kashishian v.
Port, 167 Wis.2d 24, 481 N.W.2d 277 (1992). These elements
are commonly known as (1) holding out, (2) knowledge or
acquiescence, and (3) justifiable reliance.
Objective Standard Applies
In Illinois, the court as a matter of law may determine
whether an objective standard has been met. See, Maras v.
Milestone, Inc., 348 Ill. App. 3d 1004, 809 N.E.2d 825 (2d
Dist. 2004) (holding that court objectively determines whether
act was reasonably within the scope of employment in vicarious liability context); Zurich Ins. Co. v. Walsh Const. Co. of
Illinois, Inc., 352 Ill. App. 3d 504, 816 N.E.2d 801 (1st Dist.
2004) (holding that as matter of law, the court objectively
determines whether time in which notification of loss was
provided to insurer was reasonable); Burnidge Bros. Almora
Heights, Inc. v. Wiese, 142 Ill. App. 3d 486, 491 N.E.2d 841
(2d Dist. 1986) (finding as a matter of law that developer’s
reliance on commissioner’s representations was not reasonable).
The objective standard, especially as it applies to the third
element of apparent agency, and to a lesser degree the first
element, precludes a finding of liability against the Hospital
under the doctrine of apparent agency.6
Holding Out
According to Gilbert, the first element of apparent agency,
“holding out,” is defined as follows: “the hospital, or its agent,
acted in a manner that would lead a reasonable person to
conclude that the individual who was alleged to be negligent
was an employee or agent of the hospital.” Gilbert, 622 N.E.2d
at 525 (emphasis added).
It would be irrational for the court to hold that merely be62
cause the hospital exists in a community as a comprehensive
healthcare facility, either in the context of emergency services
or other health care, the Plaintiff will under all circumstances
defeat summary judgment on apparent agency. Instead, the
defendants should argue that this element should be evaluated
on a case-by-case basis.
As a starting point, defendants may analogize to the one
“A number of Illinois cases can
be read to erroneously imply that
any act committed by a physician
imputes liability upon the hospital and that the plaintiff need
merely allege that the physician
invoked the hospital’s name while
committing the act.”
exception that has been carved out in Illinois case law, namely,
situations in which the patient signed a consent form specifying that the treater is an independent contractor. James v.
Ingalls, 299 Ill. App. 3d 627, 701 N.E.2d 207 (1st Dist. 1998).
While the James court refrained from stating that the existence
of a signed consent form laying out the independent contractor
status of a treater would be dispositive in all cases, the First
District Appellate Court clearly felt in that case that there was
no reconciling the plaintiff’s apparent agency claim with his
earlier acknowledgment that the treater was an independent
contractor.
By contrast, the classic plaintiff’s stance is that the element
is fulfilled where the hospital simply fails to specify that the
physicians are independent contractors. Gilbert, 622 N.E.2d
796. See also, Dahan v. UHS of Bethesda, Inc., 295 Ill. App.
3d 770, 692 N.E.2d 1303 (1st Dist. 1998); Kane v. Doctors
Hospital, 302 Ill. App. 3d 755, 706 N.E.2d 71 (4th Dist. 1999).
This formulation of the “holding out” element is based
upon the principle, set forth in Pamperin v. Trinity Hospital,
144 Wis.2d 188, 423 N.W.2d 848 (1988), that
Fourth Quarter 2005
when a hospital holds itself out to the public as providing complete medical care, a hospital can be held
liable under the doctrine of apparent authority for the
negligent acts of the physicians retained by the hospital
to provide emergency room care, irrespective of the fact
that the person who committed the negligent act was an
independent contractor.
Pamperin, 144 Wis.2d at 193.
The optimal defense approach to the first element would
include citation to the reasonable person standard set forth in
Gilbert, along with analogies to the James case. For additional
guidance, the defense may look to the dissenting opinion in
Pamperin regarding the inequities of an extremely permissible policy on holding out. Pamperin v. Trinity Memorial
Hospital, 144 Wis.2d 188, 423 N.W.2d 848 (1988) (Steinmetz,
J., dissenting). However, Illinois case law provides few other
opportunities for the defense to emphasize the applicability
of the objective standard to the first element. When taken
together with the holdings of Dahan and Kane, along with
the rationale set forth in Pamperin, the defense would fare
better in arguing the objective standard in the context of the
third element.
Justifiable Reliance
The third element of apparent agency, justifiable reliance,
lends itself better to the objective standard analysis. In Gilbert,
the Illinois Supreme Court defined the “justifiable reliance”
element as follows: does the plaintiff rely upon the hospital
to provide comprehensive emergency room care? The plaintiff must prove that she acted in reliance upon the conduct
of the hospital or its agent consistent with ordinary care and
procedure. Gilbert, 156 Ill. 2d 511.7
With regard to the boundaries of finding that there was
justifiable reliance, Illinois case law provides the following
rule: if the patient goes to a hospital in order to be treated
by his or her private physician, and that private physician
committed the malpractice, then as a matter of law, there is
no reliance upon the hospital. McCorry v. Evangelical Hosp.
Corp., 331 Ill. App. 3d 668, N.E.2d 1067 (1st Dist. 2002).
However, aside from this specific situation, Illinois case law
provides little guidance with regard to this element.
In the context of justifiable reliance, some case law seems
to support application of an objective standard. In James v.
Ingalls Memorial Hospital, 299 Ill. App. 3d 627, 701 N.E.2d
1037 (1st Dist. 1998), the patient was brought to the emergency room of the hospital with complaints of vomiting and
leaking amniotic fluid during her 22nd week of pregnancy.
Her personal physician was contacted to see if he wanted
her transferred, and at the time, approved of her staying at
the hospital. The patient signed a consent form containing a
disclaimer that all physicians treating her are independent
contractors. She was then treated by an obstetrician/gynecologist. The treating physician discharged her and one week
thereafter, she gave birth to the plaintiff, a premature infant
who suffered from blindness and neurological impairment.
The patient testified that she thought she had no choice
but to go to that particular hospital, since public aid was to
pay for her medical treatment. The appellate court upheld the
summary judgment ruling in favor of the hospital, holding that
where the patient did not affirmatively exercise the choice of
which hospital to attend, this precluded the fulfilling of the
justifiable reliance element, and therefore summary judgment
must be granted.
In Butkiewicz v. Loyola, 311 Ill. App. 3d 508, 724 N.E.2d
1037 (1st Dist. 2000), the First District Appellate Court held
that the patient must show actual reliance upon the apparent
agency relationship in going to a specific hospital in order to
survive summary judgment. The court also criticized Kane
as misapplying the holding of Monti v. Silver Cross Hospital,
262 Ill. App. 3d 503, 637 N.E.2d 427 (3d Dist. 1994) (holding that the fact that a patient is unconscious at the time he
comes to emergency hospital room for emergency care does
not preclude imposition of vicarious liability on the hospital
under the doctrine of apparent agency). The Butkiewicz court
stated that the Monti holding only applies to situations where
the patient is unconscious or otherwise unable to decide which
hospital to go to. Thus, the court explained, the Kane decision
erroneously held that the reliance element may be fulfilled
by a third party, such as a private physician, relying upon
the holding out of the hospital. The Butkiewicz court upheld
summary judgment.
Once again, however, the Illinois Supreme Court in Gilbert
set forth extremely low thresholds for determining whether
the element has been fulfilled. Gilbert, 156 Ill. 2d at 525-526.
Quoting Pamperin, the Court stated that the critical distinction
is whether the plaintiff seeks care from the hospital itself or
views the hospital as merely a place where a personal physician can provide medical care. Id.
It should also be noted that a number of Illinois cases severely criticize the James and Butkiewicz holdings, although
not specifically criticizing any objective standard set forth
therein. Scardina v. Alexian Brothers Medical Center, 308
Ill. App. 3d 359, 719 N.E.2d 1150, (1st Dist. 1999); McCorry
v. Evangelical Hospitals Corporation, 331 Ill. App. 3d 668,
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IDC Quarterly
771 N.E.2d 1067 (1st Dist. 2002); York v. El-Ganzouri, 353
Ill. App. 3d 1, 817 N.E.2d 1179 (1st Dist. 2004).
Applying the Objective Standard to the
First and Third Elements
In the Doe v. Smith case, the plaintiff argued that the
hospital allowed Smith to wear his lab coat and ID badge
when originally seeing the Plaintiff. Nevertheless, a number
of circumstances placed the behavior of the doctor outside
of any legitimate, objectively reasonable apparent agency
claim from the aspect of holding out. The relationship was
marked with the overall outrageousness of the acts by the
psychiatrist throughout. The patient admitted that within the
first ten seconds of their second meeting, they started kissing.
They reached an explicit, mutual agreement to date each other
rather than initiate or continue a physician-patient relationship. Sexual activity started by the third meeting, and sexual
intercourse took place by the fourth meeting.
The two saw each other exclusively off of hospital premises
until the doctor visited the plaintiff at an affiliated hospital
during her hospitalization on unrelated, non-psychiatric complaints approximately three weeks into the relationship.8 The
plaintiff and psychiatrist discussed marriage and cohabitation often, at one point staying at the psychiatrist’s father’s
home together as a gift paid to the plaintiff in anticipation
of marriage. The relationship was both social and intimate
and included all-night fraternization, which consisted also
of ordering pizza, going shopping, a restaurant rendezvous,
and the plaintiff using the psychiatrist’s computer to prepare
resumes in her job search. The relationship also consisted
of illicit drug consumption, staying awake for a number of
consecutive days, and abusive and coercive behavior by the
psychiatrist, such as holding the plaintiff against her will.
By the plaintiff’s own testimony, the relationship was characterized by a number of warning signs, or “red flags” whereby
the plaintiff was made aware that Smith was someone to be
avoided. There was never any treatment sought at the hospital,
and in fact, there was little or no actual medical treatment of
the plaintiff by Smith. Therefore the case at hand is clearly
distinguishable from Petrovich v. Share Health Plan of Illinois,
Inc., 188 Ill. 2d 17, 719 N.E.2d 756 (1999), and Malanowski
v. Jabamoni, 293 Ill. App. 3d 720, 688 N.E.2d 732 (1st Dist.
1997). In those cases, actual medical treatment occurred on
hospital or clinic premises, and within the knowledge and
control of the defendant entity.
Second, a physician-patient relationship definitively did
not exist after the plaintiff and Smith explicitly agreed to have
a personal relationship instead. The court may determine as
64
a matter of law whether a physician-patient relationship exists. See, Gathings v. Muscadin, 318 Ill. App. 3d 1091, 743
N.E.2d 659 (1st Dist. 2001) (holding that no physician-patient
relationship existed between patient and consulted physician);
Tsoukas v. Lapid, 315 Ill. App. 3d 372, 733 N.E.2d 823 (1st
Dist. 2000) (holding that no physician-patient relationship
existed where HMO called physician on behalf of patient). A
“physician-patient relationship” is a consensual relationship in
which the patient knowingly seeks the physician’s assistance
and in which the physician knowingly accepts the person as
a patient. Reynolds v. Decatur Memorial Hospital, 277 Ill.
App. 3d 80, 660 N.E.2d 235 (4th Dist. 1996).
The plaintiff characterized the relationship as romantic and
sexual, both in the pleadings and at deposition. The plaintiff
consistently testified that Smith was her boyfriend, and not
her treating physician, in committing the complained-of acts.
“With regard to the boundaries of
finding that there was justifiable
reliance, Illinois case law provides
the following rule: if the patient
goes to a hospital in order to be
treated by his or her private physician, and that private physician
committed the malpractice, then as
a matter of law, there is no reliance upon the hospital.”
The duly executed pleading entered by Smith,9 confirms that
as a matter of law no physician-patient relationship existed.
Third, the hospital was only implicated through the fraudulent misrepresentations of Smith. The misrepresentations
were of two types. According to the plaintiff, Smith claimed
that he was a hospital employee at the time that he first met
the plaintiff, and continued to claim so throughout their re-
Fourth Quarter 2005
lationship. Later, after the plaintiff successfully avoided him
from mid-January to mid-February of 2000, Smith induced
her to call him back by leaving messages under an assumed
name. By representing that he was someone else entirely, he
in effect lured the plaintiff into calling him back, and once
in contact with her, apologized profusely and promised to be
on his best behavior if they could go out on a dinner date.
The fact pattern as set forth can only lead to the finding that,
as a matter of law, it would not be reasonable to assume that
Smith acted on behalf of the hospital in his relationship with
the plaintiff.
No Proximate Cause
In fact, it was this final misrepresentation by Smith, claiming to be someone else, which also operated to sever any
proximate cause. Although proximate cause, as an element
of negligence, is generally a question of fact, the lack of
proximate cause may be determined by the court as a matter
of law where the facts alleged do not sufficiently demonstrate
both cause in fact and legal cause. Young v. Bryco Adams,
213 Ill. 2d 433, 821 N.E.2d 1078 (2004), citing Harrison v.
Hardin County Community Unit School District No. 1, 197
Ill. 2d 466, 476, 758 N.E.2d 848 (2001). Even if this defendant hospital could be found to have neglected to investigate
a condition, for example if treaters at an affiliated institution
made a record of the plaintiff’s statements that she was dating her psychiatrist, as occurred in this case, the intervening
and proximate cause of the plaintiff’s damages was Smith’s
luring her on a date and subsequently battering her. In such a
situation, this defendant hospital cannot be held liable for the
plaintiff’s damages. First Springfield Bank & Trust v. Galman,
188 Ill. 2d 252, 720 N.E.2d 1068, (1999).
If the negligence charged does nothing more than furnish
a condition by which the injury is made possible, and that
condition causes an injury by the subsequent, independent
act of a third person, the creation of the condition is not the
proximate cause of the injury. Abrams v. City of Chicago, 211
Ill. 2d 251, 811 N.E.2d 670 (2004). In order for the intervening
act to sever the initial wrongdoer’s culpability, the intervening
event must be unforeseeable as a matter of law. In this context,
“foreseeability” means that which is objectively reasonable
to expect, and not anything which might conceivably occur.
Carter v. Indiana Harbor Belt R. Co., 547 N.E.2d 488 (1st
Dist. 1989). This is the correct standard to be applied in any
case in which there is an intervening cause, including those
in the context of apparent agency. See, e.g., Albright v. Parr,
126 Ill. App. 3d 464, 467 N.E.2d 348 (5th Dist. 1984).10
Thus, on the defense side of the issue, the case once again
comes down to an objective determination. As the hospital
argued, it was not reasonably foreseeable that the plaintiff
would successfully avoid an alleged apparent agent of the
defendant, then succumb to his stalking advances and agree to
date him, only to be brutally beaten by him. The fact that the
plaintiff affirmatively decided to avoid Smith, and succeeded
in doing so, severed any causal link between Smith’s apparent
master and any tortious act later committed by Smith. The fact
that Smith reentered his victim’s life by means of fraudulent
misrepresentation only further supports the argument that his
torts were objectively unforeseeable by the hospital.
Despite the applicability of the doctrines of the objective
standard and proximate cause to this case, Illinois case law
suffers a serious lack of guidance on the theory of apparent
agency. The holdings of certain cases among Gilbert and its
progeny are counterintuitive in that they restrict or ignore
the clear requirements that the plaintiff act reasonably with
regard to the holding out and justifiable reliance elements.
The loosening of the standards for finding liability on the
part of the hospital, by the courts’ own admissions, is an innovation with no basis in Illinois law.11 The effect is to imply
a standard similar to that of strict liability of a hospital for
even intentional acts of non-agent physicians.
In the case at hand, proximate cause figures prominently
in the analysis, but even here, the applicability of the doctrine
might be limited. Apparent agency is rooted in equity and not
in law, and therefore the role of proximate cause in a typical
apparent agency case may come into question.12
Conclusion
There is no question that Gilbert and its progeny show a
definitive tilt in favor of plaintiffs regarding the doctrine of
apparent agency, even to the extent of possibly implying liability on the part of a hospital for a non-medical, intentional
tort by a non-agent physician, committed fully outside of
the hospital’s knowledge. One can only hope that the next
generation of appellate cases remedies the troubling trend
toward a strict liability standard for hospitals regardless of
the nature of the tort committed by the non-agent physician.
In the meantime, defendants should emphasize the objective
standard set forth in the law of apparent agency, and where
applicable, lack of proximate cause, as ways to combat against
this doctrine and its accompanying trend of ever-expanding
liability.
Endnotes
See, e.g., Roger R. Clayton & Maureen R. De Armond, What Every
Litigator Needs to Know About Apparent Agency, IDC Quarterly, Fall
2004, at 14.
1
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IDC Quarterly
The real names of the parties are not being used herein. Summary
judgment was granted in March 2005 and the plaintiff’s motion to reconsider was denied in May 2005. Plaintiff has filed a Notice of Appeal.
2
The complaint in this case affirmatively characterized the relationship
as an “intimate sexual relationship,” an “ongoing romantic relationship,”
and an “emotional involvement.”
3
The suit was initially filed while Dr. Smith remained in prison for
the attack.
4
Dr. Smith’s license to practice medicine was revoked shortly after
his conviction in this incident. His malpractice carrier denied coverage
on this claim due to late notice and his failure to renew his policy. After
his limited participation in this case, the other parties in this case have
been unable to locate him.
5
“An apparent agency is initiated by a manifestation of the principal,
and the necessary manifestation is one made by the principal to a third
party who, in turn, is instilled with a reasonable belief that another
individual is an agent of the principal.” 2A C.J.S. Agency § 140, footnote 8 (West 2003) (emphasis added). “An apparent agent is a person
who, whether authorized or not, reasonably appears to third persons
because of the acts of another, to be authorized to act as the agent for
such other persons.” I.L.P. Agency § 3 (1988) (emphasis added), citing
Mitchell Buick & Oldsmobile Sales, Inc. v. National Dealer Services,
Inc., 138 Ill. App. 3d 574, 485 N.E.2d 1281 (2d Dist. 1985). See also,
I.L.P. Agency § 62 (1988), citing Hofner v. Glenn Ingram & Co., 140
Ill. App. 3d 874, 489 N.E.2d 311 (1st Dist. 1985).
6
“However, a third party with whom the agent deals may rely on an appearance of authority only to the extent that such reliance is reasonable.
Thus, in order to establish ostensible or apparent authority, the record
must reflect that the alleged principal not only represented another as
7
66
his or her agent, but that the person who relied upon the manifestation
was reasonably justified in doing so under the facts of the case.” 2A
C.J.S. Agency § 142 (2003) (emphasis added). “The doctrine of apparent authority protects only those who reasonably rely. Thus, apparent
authority vanishes when the third party gains knowledge of the agent’s
lack of authority.” Harold Gill & William A. Gregory, The Law of
Agency and Partnership §§ 23 (2d ed. 1989) (emphasis added).
The psychiatrist visited the plaintiff at the affiliated hospital. The
plaintiff then requested in writing to be transferred to the defendant
hospital, at which the psychiatrist had privileges. However, having no
documentation to accept her, the hospital appropriately refused to admit
her.
8
After serving his sentence, Smith filed a responsive pleading in this
case.
9
However, the issue of interplay between the fact that apparent agency
is based in equity, and the fact that medical malpractice claims consist of
the tort components of duty, breach, causation and damages, is slightly
more complex. Admittedly, proximate cause plays a key role in the case
at hand due to the intervening fraudulent misrepresentations of Smith
in luring the plaintiff to reestablish contact with him. See, e.g., Harold
Gill & William A. Gregory, The Law of Agency and Partnership §§
23, 25 (2d ed. 1989).
10
As discussed above, the innovation is based on Wisconsin
law, Pamperin, 144 Wis.2d 188.
11
12
Harold Gill & William A. Gregory, The Law of Agency
Partnership §§ 23, 25 (2d ed. 1989).
and
Fourth Quarter 2005
Alternative Dispute Resolution
By: John L. Morel
John L. Morel, P.C.
Bloomington
As has been pointed out in previous articles, mediation can
result in significant savings, less settlement costs and more
timely resolution of a dispute. The Center for Public Resources
Institute for Dispute Resolution found 109 businesses saved
more than $75.7 million in direct legal costs by using Alternative Dispute Resolution. The resolution rate for clients who
voluntarily participate in mediation in many communities is
in excess of 90 percent.
Most mediations involve conflicts which result in cash
settlements. However, not all parties in a dispute are motivated by financial incentives. Many disputes in the workplace
involve ongoing relationships. Many businesses are concerned
with sustaining relationships given the low employment rate
and the unavailability of persons that can mesh into the relationship with the minimum of down or learning time.
One of the reasons for the growing preference for mediation
is that it allows parties to participate in the decision-making
and have a much fuller opportunity to be heard. One of the
purposes of mediation is to help people involved in a dispute,
whether as a party in conflict, a representative or counselor,
to better utilize the services of mediators by understanding
the different types of mediation that are practiced and how
the process works.
The mediation process is generally private and confidential. However, privacy and confidentiality may be difficult
to achieve if there are multiple parties in the dispute. When
multiple parties are involved, the mediation can become
counter productive. A mediator may be able to direct, better
explain and offer opinions, but the people in conflict, not the
mediator, control the outcome.
A conclusion reached in mediation need not resolve all of
the issues. It will, however, move the discussion forward and,
after a recess, the parties have an opportunity to re-evaluate
their positions. Often the issues are resolved without any
further mediation.
While there are two styles of mediation, evaluative or
facilitative, many mediators do not view themselves in a particular framework that indicates or differentiates their style.
An evaluative mediator assesses strengths and weaknesses in
a party’s case and predicts court outcome. Evaluative mediators are asked to or voluntarily offer to suggest solutions and
judgments given the merits of the case. Facilitative mediators
focus on the emotional aspects of disputes seeking to moderate
the respective positions. They acknowledge and re-frame the
parties’ concerns and assist them in constructing a workable
plan for future behavior.
Mediation styles can also be referred to as outcome-oriented and change-oriented. In an outcome-oriented mediation, a
specific solution is sought and success is measured by a signed
agreement. This is particularly effective when the parties do
not expect to have a further relationship. A change-oriented
mediation assists parties in expressing their underlying interests and in searching for ways to improve their relationship or
the situation. When there is an ongoing relationship, changeoriented mediation is preferable. Workers’ compensation or
worker injury cases, more often than not, are outcome-oriented
mediation. This is especially true if the employee has no plan
to return to that employer.
There is a significant difference of opinion as to the appropriateness of evaluative, or outcome-oriented, mediation.
Many authors believe it jeopardizes the neutrality of the
mediator and the integrity of the mediation process. They
think that by assessing the facts and suggesting an outcome,
the mediator favors, or appears to favor, one side over the
other. This evaluation can be viewed as similar to settlement
conferences conducted by judges, persons who evaluate
the strengths and weaknesses of each party’s case and urge
early settlement. For many mediators, evaluative mediation
is preferable. Mediations where there may be a continuing
relationship call for a different focus.
In choosing a mediator, one should attempt to match the
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.
67
IDC Quarterly
Alternative Dispute Resolution (Continued)
needs of the parties with the style of the mediator. This may
be difficult to do whether the parties are familiar with the
mediator, or if they are not familiar with his or her mediation
style. By the same token, a mediator for a particular situation may be more effective in a familiar situation, rather than
mediating a dispute in an area of the law with which he or she
is not familiar.
Seldom do the parties or their counsel interview potential
mediators in an attempt to match the mediator with the parties or the mediator’s style with the parties. However, it may
benefit their case if they do. The parties or their counsel may
consider the following questions in choosing an appropriate
mediator for their case:
• Does the mediator need to be familiar with the
subject?
• Does the dispute involve a complex or technical issue?
• Does the mediator need to be familiar with civil litigation?
• Does the mediator need experience with the particular
type of dispute?
• What type of person do the participants best work with?
• Do the participants react negatively to an authoritative
person?
During interviews with proposed mediators or the mediator selected for a specific dispute, the parties or counsel may
ask them to describe what they believe to be a successful
mediation. This isn’t a foolish question. Every mediator is
going to say one in which the issue or case is resolved. The
outcome-oriented mediator is more likely to talk about a
signed agreement. A signed agreement, which can be readily
prepared following a successful mediation, is the preferred
method for resolving a case and tying up any loose ends regarding the dispute.
Mediators should also decide if the parties will speak for
themselves or, as an outcome-oriented mediator, if the attorneys will speak for their parties. If the parties themselves
speak, the plaintiffs may thoroughly and completely vent.
This opportunity to vent sometimes leads to a more reasonable
understanding and compliant client. The venting has many
advantages, for various participants.
A mediator can point out the strengths and weaknesses of
the parties’ case, the likely jury verdict, or the range of an
award. Someone knowledgeable with the subject matter and
who has expertise with the issues can be of great assistance in
68
mediating and resolving the differences. By the same token,
if one is chosen to be a mediator and it is a field of law with
which the mediator is not familiar, the mediator should advise
the parties of that fact. Otherwise, the mediator’s value in
the resolution of the mediation is little, if none. Participants
should ask the potential mediator how many cases they have
mediated, what types of cases they have the most experience
with, and whether there is a particular type of subject matter
or case they are more interested in mediating than others.
Oftentimes where the mediation takes place can have an
effect on the mediation. It can be in the office of one of the
advocates, the mediator’s office, or some other neutral location. Recesses can be useful.
“Seldom do the parties or their
counsel interview potential
mediators in an attempt to match
the mediator with the parties
or the mediator’s style with the
parties. However, it may benefit
their case if they do.”
A mediator must have a good fit in terms of either subject
matter or the process. If there is an impasse, there may be
options to continue the meeting to another date with the
hope that the parties, through their respective counsel, may
reflect upon it and wish to renew the mediation, or terminate
it because the prospects for resolution are slim. A continuation of the mediation can often lead to a resolution when the
mediation is revisited or if the parties, through their counsel,
keep in contact with the mediator by telephone or otherwise
sharing their respective viewpoints. The styles of a mediator and effective communication skills are very important
in matching the parties’ goals and expectations to resolve a
dispute successfully.
Fourth Quarter 2005
Association News
IDC – Hurricane Katrina Relief Efforts
The IDC has collected over $5,000 from its members for
Hurricane Katrina relief efforts. The members of the IDC are
proud to support the efforts of the American Red Cross and offer their support to those in
need and the communities
affected by this disaster.
The donations were
formally presented to
Francesca Maher, the
Chief Executive Officer
of the American Red
Cross of Greater Chicago
by IDC President, Glen
E. Amundsen, O’Hagan,
Smith & Amundsen and
IDC President-Elect, Steven M. Puiszis, Hinshaw
& Culbertson.
42nd Annual Defense Tactics
Seminar, March 10, 2006
at the University Club of Chicago
Another great program is planned for the 42nd Annual
Defense Tactics Seminar that will be held again on a Friday
at the University Club of Chicago.
Mark Hansen, Chair of this year’s program advises some
of the topics are: Joint and Several Liability Issues: Defending Multi-Party Cases, speaker Jeffrey T. Kubes, Crisham
& Kubes, Ltd., Chicago; Construction Negligence Update:
Potential Premises Liability Exposure in Construction Injury
Cases, speaker David B. Mueller, Cassidy & Mueller, Peoria; Examinations Under Oath, speaker Rick L. Hammond,
Johnson & Bell, Ltd., Chicago; Preserving the Record on
Appeal, speaker Scott L. Howie, Pretzel & Stouffer, Chtd.,
Chicago; E-Discovery, speaker Paige C. Donaldson, Sanchez, Daniels & Hoffman LLP, Chicago; Medical Evaluation
of Closed Head Injuries, speaker Richard B. Lazar, M.D.,
Schwab Rehabilitation Hospital, Chicago; Residual Effects of
Closed Head Injuries, speaker Randy Georgemiller, Ph.D.,
Georgemiller, Whyte & Associates, Des Plaines; The Defense
of Closed Head Injury Claims, speaker Lawrence R. Smith,
O’Hagan, Smith & Amundsen, LLC, Chicago. Update topics
will include Insurance Update, Mark D. Sheaffer, Garretson
& Santora, Ltd., Chicago and Tort Update, Joseph G. Feehan,
Heyl, Royster, Voelker & Allen, Peoria.
Watch the mail for the early registration letter. Seats will
be limited to the first 200 registrations.
Illinois Continuing Education
As you have probably learned, the Illinois Supreme Court
has adopted new rules (and amended some existing ones)
in order to implement a mandatory program of minimum
continuing legal education for all Illinois attorneys. These
rules were made effective immediately (September 29, 2005).
Primarily, the new procedures can be found in Part C, Rules
790 through 797 respectively. These Rules can be accessed
on the Illinois Supreme Court web site (http://www.state.il.us/
court/SupremeCourt) for your ease of reference.
The IDC welcomes this initiative by our Supreme Court
to improve the professional development and competency
of Illinois attorneys. One of the core values of the IDC since
its inception over forty years ago has been a commitment to
keep our members abreast of the latest developments in the
law applicable to civil litigation practice. Indeed, the impetus
to forming the IDC was the realization by the then leaders of
the defense trial bar that it was necessary to learn from each
other, share expertise and develop competencies that would
help all of us serve our clients better. The first Annual Defense
Tactics Seminar was the by product of that vision and it has
been one of most popular member programs for over 40 years
since the inception of our bar association.
When you review the new rules you will see that the reporting period for the required CLE begins in 2006. All new
attorneys admitted to the bar after 12/31/05 will be required
to take a 15 hour basic skills course within the first year of
practice. We intend to use our current Rookie Seminar with
some modifications and enhancements to meet some of the
expanded requirements of new S.Ct. Rule 793 as a platform
for helping our newest members and member firms meet this
aspect of our new professional obligations.
The reporting period for other attorneys will roll on in
staggered fashion beginning July 1, 2006.
69
IDC Quarterly
Association News (Continued)
Fortunately, your organization will be ready to meet the
challenge of continuing to provide timely and topical continuing education opportunities that are specifically tailored to the
defense civil trial attorney. At our strategic planning meeting
in August the IDC Board of Directors made a commitment to
expand upon and broaden the scope of our continuing education programming to help our members meet their professional
obligations to be the best trial attorneys in Illinois. As an
outgrowth of that meeting a task force chaired by First Vice
President, Jeff Hebrank, and Past President, Chuck Cole, has
been appointed and is working on developing continuing legal
education opportunities internally and in concert with other
organizations. Both Jeff and Chuck have been past chairs of
some of our most successful and well regarded educational
programs.
You will be hearing more in the coming weeks and months
about the expanded educational programming that we were
committed to bringing our members even before the new
Supreme Court Rules were promulgated.
In the meantime, I am also pleased to announce a new
membership initiative that is directly tied in to the planned
expansion of our CLE and professional development programming as well as the new environment in Illinois where all civil
defense trial attorneys will be required to avail themselves of
high quality educational programming to maintain and grow
their professional competency.
Effective immediately and through December 31, 2005
all new members of IDC will receive a certificate good for
free registration at one (1) IDC educational seminar that will
be presented after the CLE reporting period begins on July
1, 2006. This offer is worth several hundred dollars alone. In
addition all new members will receive the other benefits of
membership including a subscription to the best defense journal in the country, the IDC Quarterly. Beginning in July 2006
there will be an even more significant differential between
members and non members when it comes to the registration
for attending our programs.
As an additional incentive to join the IDC new members
who have not previously been members of the defense Research Institute (DRI) will receive a free one year membership to that organization. That free membership includes a
subscription to “For the Defense” the DRI’s highly regarded
professional journal.
On the inside back cover of the Quarterly is an application for membership to both the IDC and the DRI. Please
take these applications to your colleagues and partners in
your firm and to other civil defense trial lawyers that you are
working with from other firms. Let them know about this
70
great opportunity to become affiliated with the organization
that has always been committed to the concept of helping its
members be the preeminent defense trial attorneys in Illinois.
That has been our hallmark quietly over more than 40 years
of member commitment to excellence. It is time to spread that
word and encourage those you know and work with that they
should be counted among the most qualified and competent
trial attorneys in Illinois.
“It is time to spread that word
and encourage those you know
and work with that they should
be counted among the most qualified and competent trial attorneys in Illinois.”
In the meantime if you have any ideas and suggestions
about how IDC can improve upon and expand our educational and professional development programming, please
contact, Jeff Hebrank, Chuck Cole or any of the Officers
and Directors of the organization. Now is the time to have
meaningful input as we chart the course for the next years in
an environment where even more emphasis will be placed on
keeping ahead of the curve professionally.
Fourth Quarter 2005
President’s Message (Continued from page 4)
Fall Seminar
Approximately 60 members attended the fall educational
conference at Eagle Ridge Resort in Galena on September
23-24. Thanks to our Fall Conference Chairperson, Aleen
Tiffany, and her committee, David Ganfield, Eugena Whitson-Owen, Joseph Postel, Martin O’Hara, Troy Bozarth,
Kathleen Stockwell and John Lynch, for a tremendous event
and educational opportunity. The speakers were uniformly
outstanding and the social time was enjoyed by all.
Minimum Continuing Legal Education
On September 29, 2005 the Illinois Supreme Court issued
new rules (Illinois Supreme Court Rules, Article VII, Part C,
Rules 790-797) requiring all members of the Illinois bar to
participate in a specified amount of approved continuing legal
education over various reporting periods that will be phased
in beginning in calendar year 2006. Newly admitted attorneys
(admitted after January 1, 2006) will be required to attend a
15 hour, basic skills course. The promulgation of these new
rules was presaged by Illinois Supreme Court Justice Thomas
Kilbride, who addressed our Fall Conference in Galena on
the Court’s rule making procedures just a few days before the
new rules were announced.
Of course, it has always been a core part of the IDC’s
mission to produce high caliber continuing education opportunities for members of the civil defense trial community. We
intend to build on that tradition. One of the ways that we will
make our organization even more useful to members and their
firms will be to provide a platform of great CLE programs
(beginning with our annual Spring Defense Tactics seminar
in March 2006) from which our members can choose in order
to meet their obligations under Supreme Court Rules 790797. This, of course, ties into the work of our Joint Seminar
Team, which grew out of our strategic planning meeting. Also
we are embarking already on an effort with members of our
Young Lawyers Division to expand and improve one of our
most popular educational programs, the Rookie Seminar (see
below), so that it will meet all of the requirements for the new
Basic Skills Course beginning in 2006.
Rookie Seminar and YLD
On November 5, 2005 about 70 attorneys, who had just
started to practice as defense trial attorneys or who were soon
to be sworn in as attorneys, participated in the annual Rookie
Seminar at John Marshall Law School. Many thanks to our
distinguished panel of speakers, Carlton Fisher, Tracy E.
Stevenson, Richard M. Clark, Bruce B. Marr, Lyndon C.
Molzahn, John M. Foley, John W. Patton, Jr. and Scott
L. Howie, who gave their time and talent to the effort to help
these newest members of our profession. The seminar was
very ably produced by Sarah Kennedy and Paige Neel. Every
person who attended the seminar received a free membership
to the IDC and a related benefit, a free year of membership to
DRI.
“On September 29, 2005 the
Illinois Supreme Court issued
new rules (Illinois Supreme Court
Rules, Article VII, Part C, Rules
790-797) requiring all members
of the Illinois bar to participate
in a specified amount of approved
continuing legal education over
various reporting periods that will
be phased in beginning in calendar
year 2006.”
Paige and Sarah, along with Tim Epstein, have put a great
deal of effort into plans to invigorate and grow the Young
Lawyers Division (YLD) of the IDC. The Board of Directors
adopted some proposals made by these members to help foster
the growth of the YLD and underwrite some of its activities.
As mentioned above, members of the YLD will be involved
with others in the development of the new 15 hour, Basic Skills
Course, which we expect to offer in Chicago and a downstate
location in November 2006 for newly admitted attorneys of
member firms.
As you can see, there is a lot happening in our organization.
Please take a look and let us know what we can be doing to
make your membership more valuable in 2006. Again, Happy
Holidays to all! We look forward to working together to make
2006 an even better year for the IDC and its members.
71
IDC Quarterly
W elcome ... New IDC Members
Ari Ryan Amin
Sponsored by: David M. Lewin
Rachael G. Malkin
O’Hagan, Smith & Amundsen, L.L.C., Chicago
Sponsored by: Glen Amundsen
Michael Ayers
Illinois State Chamber of Commerce, Springfield
Thomas H. Marrs
Burroughs, Hepler, Broom, MacDonald, Hebrank
& True, LLP, Edwardsville
Sponsored by: John Michael Ward
Jack Bernhardt
Illinois State Chamber of Commerce, Chicago
Rob Carney
Mara Elizabeth Cohen
Gunty & McCarthy, Chicago
Sponsored by: Susan Gunty
Sarah Condon
Sponsored by: David M. Lewin
Joseph M. Eichberger
O’Hagan, Smith & Amundsen, Chicago
Jennifer Guthrie
Sponsored by: Steven Puiszis
Karen McDonnell Hilligoss
Momkus, McCluskey & Moltzen, Downers Grove
Sponsored by: Howad Jump
Robert F. Hogan
Law Offices of Robert L. Martier, Chicago
Sponsored by: Robert L. Martier
Todd Maisch
72
Gary K. Moore
Moore, Strickland & Whitson-Owen, Chicago
Sponsored by: Eugena Whitson-Owen
Michael P. Murphy
Burroughs, Hepler, Broom, MacDonald, Hebrank
& True, LLP, Edwardsville
Sponsored by: Michael Reda
Carlos Andres Padua
Robert T. Varney & Associates, Bloomington
Sponsored by: Robert T. Varney
John William Patton, Jr.
Patton & Ryan LLC, Chicago
Sponsored by: Sarah Kennedy
Jill Rogers-Manning
Sponsored by: Doug Pomatto
Eugene A. Schoon
Sidley Austin Brown & Wood LLP, Chicago
Dina L. Torrisi
Price Tunney Reiter, Chicago
Sponsored by: Steve Martin
Tess L. Wood
Jump & Associates, P.C., Chicago
Sponsored by: Howard Jump
IDC MONOGRAPH — Fourth Quarter 2005
THE IDC MONOGRAPH:
IS THE THIRD TIME A CHARM?
HAS THE LEGISLATURE FORMULATED
DAMAGES CAPS THAT SURVIVE
CONSTITUTIONAL SCRUTINY?
Daniel W. Farroll
Burroughs, Helper, Broom, MacDonald, Hebrank & True, LLP
Edwardsville, Illinois
M-1
IDC Quarterly Vol. 15 No. 4
I. Introduction
On August 25, 2005, Governor Blagojevich signed into law
Illinois Public Act 94-677. In his press release, he referred to it
as “critical legislation to address the growing cost of medical
malpractice insurance.”1 The comprehensive new law gives
authority to the state to regulate medical malpractice premium
increases, provides greater ability of Illinois regulators to enforce regulations pertaining to physician practices and allows
consumers to learn about previous judgments or complaints
against any physician licensed in Illinois.
The legislation also modifies the Illinois Code of Civil
Procedure in several respects. It places additional restrictions
on the medical malpractice certificate of merit, sets forth additional qualifications for expert witnesses and allows 80%
of an award against health care providers for certain future
expenses to be satisfied by the purchase of an annuity. The
medical malpractice damages limitations provided by new
Section 2-1706.52 are perhaps the most contentious part of
the legislation. These provisions limit non-economic damages to $500,000 against physicians and other health care
professionals, and $1,000,000 against hospitals. This section
also provides that for lost income damages, an individual can
obtain a recovery equal to his actual lost wages, or an amount
equal to the average annual weekly wage as determined by
the Workers’ Compensation Commission.3
The 2005 damages caps mark the third time in 30 years
that the General Assembly limited damages recoverable in
tort actions. Damages caps enacted in 1975 and 1995 did
not survive constitutional scrutiny. Already special interest
groups have promised a constitutional challenge to the new
law limiting non-economic damages awarded against physicians and hospitals.
Material differences exist between the current law and the
prior damages caps that were stricken as unconstitutional.
The 1975 cap limited all damages recoverable in medical
malpractice actions, both economic and non-economic, to
$500,000. Sec. 2-1706.5 does not limit economic damages.
The 1995 law capped non-economic damages at $500,000,
but it applied to all statutory and common law actions for
death, bodily injury and property, not just medical malpractice actions. The 2005 legislation applies only to medical
malpractice actions presumably because the legislature determined that “increasing costs of medical liability insurance”
contributed to a “health care crisis.”4
The 2005 damages caps are unique in another sense. Unlike
the 1975 and 1995 damages caps, the 2005 statute provides a
quid pro quo. For individuals who earn less than the average
annual weekly wage, their lost income claims can be based
M-2
on the average annual weekly wage as determined by the
Workers’ Compensation Commission.
Section 2-1706.5 appears to have avoided the problems
of prior unsuccessful efforts to limit damages in tort actions.
The General Assembly aimed to reduce the cost of medical
liability insurance and to increase access to medical care.
Limiting the non-economic damages available in medical
malpractice actions was one method to achieve the legislative
goals. While the statute caps non-economic damages, it also
includes a quid pro quo in the form of a minimum weekly
wage for lost income claims. In this manner, the General
Assembly defined a narrow set of legislative purposes and
specifically addressed constitutional infirmities identified in
prior constitutional challenges of damages caps legislation.5 It
remains to be seen whether the current legislation will survive
constitutional scrutiny.
This monograph will focus on Section 2-1706.5, the provision limiting recovery of non-economic damages.6 First, this
article will review the legislative damages caps from 1995
and 1975, and will examine the arguments of the parties in
connection with the constitutional challenges and evaluate the
court’s rationale in striking the earlier legislation as unconstitutional. Next, the article will examine several medical malpractice statutory provisions that have survived constitutional
scrutiny since 1975. Finally, this monograph will examine the
constitutional arguments likely to be employed in evaluating
whether Section 2-1706.5 will survive constitutional scrutiny.
II. Prior Limitations on Damages in
Medical Malpractice Actions
A. Enacted in 1995, Public Act 89-7 Limited NonEconomic Damages to $500,000 for Bodily
Injury, Death and Property Damage
Prior to the enactment of P.A. 94-677, 1995 marked the
last time Illinois enacted legislation7 that included a cap on
damages. The 1995 damages caps limited non-economic
About the Author
Daniel W. Farroll is a partner with Burroughs, Hepler,
Broom, MacDonald, Hebrank & True in Edwardsville,
Illinois. His practice includes the defense of medical
malpractice actions against hospitals, physicians and other
health professionals. He represents clients in state and federal
courts in Illinois and Missouri. Mr. Farroll received his J.D.
from Southern Illinois University School of Law in 1992.
damages to $500,000 for all common law, statutory and other
actions based on death, bodily injury and physical damage to
property. Unlike the current legislation, it was not limited to
medical malpractice actions. Section 2-1115.1(a) of the Act8
provided:
In all common law, statutory or other actions that seek
damages on account of death, bodily injury, or physical
damage to property based on negligence, or product
liability based on any theory or doctrine, recovery of
non-economic damages shall be limited to $500,000
per plaintiff. There shall be no recovery for hedonic
damages.
The 1995 Act did not place a limit on economic damages
which it defined as “all damages which are tangible, such as
damages for past and future medical expenses, loss of income
or earnings and other property loss.”9
The Illinois Supreme Court considered the constitutionality of the 1995 damages caps in a consolidated appeal.10 The
plaintiffs argued that the 1995 damages caps violated several
provisions of the Illinois Constitution: the special legislation clause, the certain remedy provision, a litigant’s right
to a jury trial and the separation of powers clause. They also
argued that enforcement of the law would disproportionately
discriminate against low-wage workers, African-Americans
and other minorities who are overrepresented in the riskiest
and lowest paying jobs.11
1.The Best Opinion Concluded That Error in
the Legislative Findings for the 1995 Damages
Caps Could Not be a Basis for Striking the
Caps
In support of their arguments that the 1995 Act was unconstitutional, the plaintiffs introduced three affidavits attacking
the legislative “findings” stated in the preamble to the Act. The
affidavits claimed that assertions in the preamble, statements
during the hearings and debates and the anecdotal evidence
were erroneous when compared to reliable empirical data.
The preamble to Public Act 89-7 contained 18 specific
findings. Eight of the “findings” pertained to non-economic
damages:
1. Limiting non-economic damages will improve
health care in rural Illinois,
2. More than 20 states limit non-economic damages,
3. The cost of health care has decreased in those states,
4. Non-economic losses have no monetary dimension,
and no objective criteria or jurisprudence exists
for assessing or reviewing non-economic damages
awards,
5. Such awards are highly erratic and depend on subjective preferences of the trier of fact,
6. Highly erratic non-economic damages awards subvert the credibility of such awards and undercut the
deterrent function of tort law,
7. Such awards must be limited to provide consistency
and stability for all parties and society, and
8. A federal executive branch working group determined that limiting non-economic damages was
the most effective step toward legislative reform
of tort law because it reduces litigation costs and
expedites settlement.12
In addition to the “findings,” the preamble stated legislative
“purposes” that relate to the limit on non-economic damages.
These purposes were summarized by the Illinois Supreme
Court as follows:
1. Reduce the cost of health care and increase accessibility to health care,
2. Promote consistency in awards,
3. Reestablish parameters or guidelines for noneconomic damages,
4. Protect the economic health of the state by decreasing systemic costs, and
5. Ensure the affordability of insurance.13
The Illinois Supreme Court stated that “plaintiffs may not
prevail on their constitutional challenges merely by showing
that the General Assembly was mistaken in its legislative
findings of fact.” Instead, the court recognized that legislative
fact-finding authority is broad and should be accorded great
deference by the judiciary. The court’s “task is limited to determining whether the challenged legislation is constitutional,
and not whether it is wise.”14
2.The Best Court Determined that the 1995
Damages Caps Constituted Improper Special
Legislation
The Best opinion included a lengthy and detailed analysis
of damages caps under the special legislation clause. In the
M-3
final analysis, the court held the 1995 damages caps violated
the special legislation clause of the Illinois Constitution. The
special legislation clause provides:
The General Assembly shall pass no special or local
law when a general law is or can be made applicable.
Whether a general law is or can be made applicable shall
be a matter for judicial determination.15
The Illinois Supreme Court has consistently held that the
purpose of the special legislation clause is to prevent arbitrary
legislative classifications that discriminate in favor of a select
group without a sound, reasonable basis.16 The special legislation clause does not prevent classification of persons and
objects. To survive constitutional scrutiny, “the classifications
must be reasonably related to the legislative purpose and it
must appear that there is a sound basis for regarding the class
as distinct and separate for the purpose of the legislation.”17
The same standards applicable to an equal protection challenge apply to a special legislation challenge.18 Where legislation does not affect a fundamental right or involve a suspect or
quasi-suspect classification, the appropriate standard of review
is the rational basis test. The court in Best determined that the
limit on non-economic damages did not affect a fundamental
right or involve an improper classification. Under this standard
the court evaluated whether the statutory classification was
rationally related to a legitimate state interest.
The Illinois Supreme Court acknowledged the difficulty
in determining whether a particular statute constitutes special
legislation:
It is impossible to conceive of a law that has universal
impact and affects everyone or everything in the same
way. By enacting laws, the legislature can hardly avoid
excluding some category of people or objects. In enforcing this prohibition, the courts must decide if the legislature has made a reasonable classification. Differences
of opinion are bound to exist in such situations and the
ultimate decision must rest with some judgment as to the
soundness of the legislature’s action.19
According to the Best opinion, determining whether a
statute violates the special legislation clause does not merely
involve reiterating that a classification has been made. The
analysis hinges on whether legislative classifications are
based upon reasonable differences, and whether the basis
for the classifications is sufficiently related to the evil to be
obviated by the statute.20 The “hallmark of an unconstitutional
classification is its arbitrary application to similarly situated
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individuals without adequate justification or connection to
the purpose of the statute.”21
The plaintiff’s challenge that the damages caps constituted improper special legislation in violation of the Illinois
Constitution was multi-faceted. The plaintiffs claimed that
the caps would rarely be implicated for minor or moderate
injuries and would impermissibly penalize the most severely
injured individuals. They also maintained that the caps would
arbitrarily benefit certain tortfeasors who would be relieved
of liability for fully compensating plaintiffs.22
The plaintiffs in Best pointed out that the damages caps
created three arbitrary classifications that had no reasonable
connection to the legislative goals:
(1)The limitation distinguished between slightly and
severely injured individuals,
(2)The limitation arbitrarily distinguished between
individuals with identical injuries, and
(3)The limitation arbitrarily distinguished types of
injury.23
The plaintiffs used several examples to support their argument that the 1995 damages caps constituted impermissible
special legislation. In one hypothetical, the same tortfeasor
injures two individuals, where the first suffers pain, disability and disfigurement for a month and the other suffers pain
and disability for one year. If the jury awards $100,000 for
non-economic damages to each plaintiff for different noneconomic injuries, the damages cap would not meet the legislative goal of providing consistency of awards. The plaintiffs
argued that similarly, if a third hypothetical plaintiff receives
an award of $1,000,000 for his lifelong pain and disability, the
damages cap would arbitrarily and automatically reduce the
award without regard to whether the verdict was reasonable
and fair.
The plaintiffs in Best offered another illustration to support
their claim that the caps arbitrarily distinguished individuals
who suffered identical injuries. For an individual who loses
both legs in a single accident and receives a non-economic
damage award of $800,000, the damages cap would apply. On
the other hand, if an individual suffers the same injuries from
two unrelated accidents, each causing non-economic damages
of $400,000 for the loss of a single leg, then the damages cap
would not apply.
The plaintiffs also argued that the damages caps created a
third arbitrary classification because they discriminated among
types of injuries. While the legislative statements concerning
the difficulties of assessing damages for non-economic inju-
ries would apply to all tort claims, the damages caps applied
only to bodily injury, death and property damage. Other torts
such as invasion of privacy, defamation, negligent and intentional infliction of emotional distress, damage to reputation
and breach of fiduciary duty were unaffected by the legislation.
In response, the defendants in Best maintained that the
plaintiffs’ position erroneously assumed that non-economic
injuries, which are difficult to assess, should be monetarily
“The Illinois Supreme Court has
consistently held that the purpose
of the special legislation clause is to
prevent arbitrary legislative classifications that discriminate in favor of a
select group without a sound,
reasonable basis.”
compensable. The court found the defendants’ argument
unsound as the legislature judged remuneration an appropriate means by which to compensate tort victims for their
non-economic loss. The court believed that the difficulty in
assessing non-economic damages awards was not sufficient
justification to place a limit on such damages without regard
to the facts or circumstances. The court stated that the cap
actually undermined the legislature’s stated goal of providing
consistency and rationality to the civil justice system.
The defendants also maintained that the 1995 damages
cap was rationally related to the legislative goal of reducing
systemic costs of the civil justice system, even if such a goal is
accomplished one step at a time. The court considered whether
reducing the “systemic costs of tort liability” was a sufficient
legislative interest to overcome the special legislation challenge. In the past, the court twice had rejected a cost-based
justification to overcome a special legislation challenge,24 but
had accepted it as a legitimate justification when it upheld the
prohibition on punitive damages.25
The court rejected the cost-based justification for the 1995
damages caps because it could not “discern any connection
between the automatic reduction of one type of compensatory damages awarded to one class of injured plaintiffs and a
savings in the systemwide costs of litigation.”26 Even if such
savings could be achieved, the court held that “the prohibition
on special legislation does not permit the entire burden of the
cost savings to rest on one class of injured plaintiffs.”27
As support for the damages caps, the defendants cited several other state court decisions upholding damages limitations,
but the court noted that other jurisdictions had found them
unconstitutional. The variability of damages caps in other
states, the unique constitutional provisions in each state and
precedents of each jurisdiction were of limited assistance in
the court’s special legislation analysis in Best.
Although acknowledging that the legislature has power to
change the common law and to change or limit remedies, the
court held that the legislature is not “free to enact changes
to the common law which are not rationally related to a
legitimate government interest.”28 Legislative authority is
dependent upon the nature and scope of the particular change
in the law. With respect to the 1995 change of the law limiting
non-economic damages, the court held that it was arbitrary29
and offensive to the special legislation clause of the Illinois
Constitution.30
3.The Best Court Determined that the 1995
Damages Caps Violated the Separation of
Powers Provision as a “Legislative
Remittitur”
The plaintiffs in Best also argued that the 1995 damages
caps violated the separation of powers clause.31 Specifically,
they argued that the establishment of caps improperly delegated to the legislature the power to remit verdicts and
judgments, a power unique to the judiciary. The plaintiffs
characterized the provision as a “one-size-fits-all ‘legislative
remittitur’” that contravened the traditional authority of the
courts to judge the excessiveness of a damages award on a
case-by-case basis.32
The Illinois Supreme Court agreed with the plaintiff’s characterization of the damages caps as a “legislative remittitur.”
Most of the court’s separation of powers analysis discussed
the traditional role and inherent power of the judicial branch to
apply the doctrine of remittitur. The Best court found support
for the legislative remittitur characterization in the reasoning
of the Supreme Court of Washington. Damages caps “change[]
the outcome of a jury determination . . . by taking a jury’s
finding of fact and altering it to conform to a predetermined
formula.”33 Although the Washington court did not decide the
case on this basis, it postulated that the damages caps may
violate the separation of powers.34
The Best court concluded that the cap on non-economic
damages would reduce damages by operation of law and
without regard to the specific circumstances of individual jury
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awards.35 In this way the damages cap operated as a legislative
remittitur and improperly invaded the power of the judiciary
to limit excessive awards of damages. For this reason, the
court held the damage cap violated the separation of powers
clause of the Illinois Constitution.
4. Constitutional Challenges Not Addressed by
the Court in Best
a. “Certain Remedy” Provision (Art. I,
Sec. 12 of the Illinois Constitution)
In their constitutional challenge to the 1995 damages caps,
the plaintiffs in Best argued that the caps offended the “certain
remedy” provision of the Illinois Constitution. It provides,
Every person shall find a certain remedy in the laws for
all injuries and wrongs which he receives to his person,
privacy, property or reputation. He shall obtain justice
by law, freely, completely, and promptly.36
The plaintiffs argued that the Illinois legislature has not
abrogated a common law right or limited the damages available as a remedy for breach of a common law right, without
providing an equivalent alternative, a quid pro quo, as in the
Worker’s Compensation legislation.37 The plaintiffs added
that the only time the legislature exceeded this authority was
when it passed damages caps in 1975, which the Illinois Supreme Court unequivocally found unconstitutional in Wright
v. Central DuPage Hospital Assoc.38
The defendants in Best argued that the “certain remedy”
provision has traditionally been viewed by the court as an
“expression of a philosophy and not a mandate that ‘certain
remedy’ be provided in any specific form.”39 The defendants
also argued that the Illinois Supreme Court had reinforced this
position in 1992 and that this “view continues in force and
guides the interpretation of the ‘certain remedy’ provision of
the current Illinois Constitution.”40
However, having stricken the 1995 damages caps on other
grounds, the Best court did not consider the parties’ arguments
based upon the “certain remedy” provision.41
b. Right to Jury Trial
The plaintiffs in Best also argued that damages caps interfere with the right to jury trial under the Illinois Constitution.
This argument essentially collapses into a notion that “the
determination of damages has been reserved for the jury
for centuries.”42 The defendants’ response was that “[w]hile
the right to a jury trial does guarantee that the jury’s factual
findings in an individual case will not be overturned, it does
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not allow a jury to determine the legal consequences of those
facts.43
Having stricken the 1995 damages caps on other grounds,
the Best court did not consider the parties’ arguments based
upon the right to a jury trial under the Illinois Constitution.44
B. Enacted in 1975, Public Act 79-960 Limited All
Damages to $500,000 in Medical Malpractice Actions
Public Act 79-960 was approved on September 12, 1975.
One of its provisions established a limit of $500,000 on all
damages recoverable against physicians and hospitals in
medical malpractice actions. The Illinois Supreme Court
invalidated this provision pursuant to the special legislation
clause of the Illinois Constitution in Wright v. Central DuPage
Hospital Association.45
The Wright plaintiff argued that “by denying recovery for
loss and damage in excess of $500,000 the General Assembly
has arbitrarily classified, and unreasonably discriminated
against, the most seriously injured victims of medical malpractice, but has not limited the recovery of those victims
who suffer moderate or minor injuries.”46 According to the
argument, such a result places the burden of the legislative effort to reduce or maintain the level of malpractice premiums
exclusively on those who most need financial protection.
The defendants in Wright argued that unequal treatment
is necessary to deal with the “medical malpractice crisis.” In
support for the legislature’s ability to set limits on recovery,
the defendants cited Hall v. Gillins47 where the Illinois Supreme Court upheld the constitutionality of the damages cap
in wrongful death actions. The defendants also cited Cunningham v. Brown48 where the court upheld the limitation on
recovery in Dramshop actions. In Wright, the Illinois Supreme
Court distinguished Hall and Cunningham on the basis that
they involved the legislative authority to impose limits on
damages for rights created by statute. Unlike the causes of
action involved in Hall and Cunningham, the right to recover
damages for injuries arising from medical malpractice existed
at common law.49
The defendants also cited the Worker’s Compensation Act
as authority for the legislature to limit monetary recovery for
injuries in actions existing at common law. The Illinois Supreme Court distinguished this exercise of legislative power
to limit remedies available at common law on the basis that
“the Worker’s Compensation Act provided a quid pro quo.”50
Imposing the requirements that the employer give up certain
defenses and that the employee give up certain recoverable
elements of damages “is a reasonable exercise of the legislature’s police power for the promotion of the general welfare.”51
The court rejected the defendant’s position that the 1975 damages caps offered a “societal quid pro quo in that the loss of
recovery potential to some malpractice victims is offset by
‘lower insurance premiums and lower medical care costs for
all recipients of medical care.’”52 The court reasoned that such
a “quid pro quo does not extend to the seriously injured victims
and does not serve to bring the limited recovery provision
within the rationale of cases upholding the constitutionality
of the Workmen’s Compensation Act.”53 In addition, the court
noted the very seriously injured malpractice victim might be
unable to recover even all the medical expenses because of
the limit on recovery, and in such case would recover nothing
for any other loss suffered.54
The Wright opinion ultimately concluded that limiting
recovery only in medical malpractice actions to $500,000
was arbitrary and conferred a special privilege on physicians
and hospitals. For this reason, the court held that the damages
limitation constituted a special law in violation of the Illinois
Constitution.55
III. Constitutional Scrutiny of
Medical Malpractice Legislation
A. The Statute of Limitations and Statute of Repose
for Medical Malpractice Actions is Constitutional
In 1979, the Illinois Supreme Court in Anderson v. Wagner evaluated the statute of repose for medical malpractice
actions56 under the special legislation clause of the Illinois
Constitution.57 The statute of repose barred medical malpractice claims that were brought more than four years after the
date of the negligent act or omission, notwithstanding the date
of discovery of the injury. The special legislation argument
was that the statute of repose impermissibly (1) set medical
malpractice apart from all other professional malpractice and
(2) conferred a special privilege upon only two classes of
medical health providers, physicians and hospitals.58
The court in Anderson noted that a medical malpractice
crisis existed in the early 1970’s resulting from dramatic increases in premiums and dwindling availability of malpractice
insurance.59 Consequently many health-care providers curtailed or ceased to render services. The legislative response
sought to reduce the cost of malpractice insurance and to
ensure its continued availability to health care providers.60
In passing the legislation, the legislature found that the
“discovery rule” played a significant role in the medical malpractice insurance crisis, and cited numerous studies recommending an outside limit on application of the discovery rule
in malpractice actions.61 The plaintiffs argued that the statute
could have harsh and unfair consequences such as effectively
barring a cause of action before it is discovered in some instances. The Illinois Supreme Court responded that the statute
must be judged in light of the circumstances confronting the
legislature and the end which it sought to accomplish.62 While
the court acknowledged its potential harsh and unfair results,
the Statute was not unconstitutional on this basis.63
The plaintiffs also argued that the statute of repose improperly set apart medical malpractice actions from other
professional malpractice actions in violation of the special
legislation clause.64 The court found this contention without
merit.65 Numerous commissions and authors supported the
idea of curtailing the “long tail” of discovery by implementing
an outer time limit for filing medical malpractice actions.66 In
addition, many other States enacted similar limitations. For
these reasons, the court concluded that the statute of limitations/repose “was a reasonable attempt to remedy what the
legislature perceived to be a medical malpractice insurance
crisis. Whether the course was wise or the best means of
accomplishing the result desired is a matter for legislative
determination.”67
The court admitted in Anderson that the “more difficult
question” was the legislative classification differentiating
“physicians and hospitals” from other health care providers
not protected by the statute.68 Addressing this question, the
court reiterated the legislative concern over the increases in
malpractice premiums and the continued availability of malpractice insurance.69 Empirical evidence in the area of medical malpractice claims revealed that physicians and hospitals
accounted for 95% of all claims and 98% of all money paid
on those claims.70 The court also acknowledged that the legislature already classified various groups of medical personnel
and hospitals and institutions for purposes of licensing and
regulation. For these reasons, the Anderson court concluded
that the legislature had a reasonable basis to differentiate
physicians and hospitals from others in the general class of
health-care providers.71
B. Legislation Adopted to Eliminate Duplicative
Recovery under the Common Law Collateral
Source Rule in Medical Malpractice Cases is a
Valid Exercise of Legislative Power
In Bernier v. Burris,72 the plaintiff challenged the constitutionality of Section 2-1205 of the Code of Civil Procedure,73
the provision that modified the common law collateral source
rule for medical malpractice cases. Generally, Section 2-1205
allows hospital and physician defendants to reduce judgments in an amount equal to 50% of the benefits received for
lost wages, and 100% of the benefits received for medical
charges. Originally enacted in 1982,74 the legislature added
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two provisions in 1985 as part of Public Act 84-7. One provision exempted medical expenses directly attributable to
the negligence of the defendants, and another permitted the
plaintiff to add to the reduced judgment the cost of premiums
paid for two years to obtain such benefits.
In its analysis, the court in Bernier observed that the provision was rationally related to the legitimate governmental
interest in reducing the costs of malpractice actions by eliminating certain duplicative recoveries. On this basis, the court
held that the provision did not violate the equal protection or
special legislation provisions of the Illinois Constitution.75
Of note, the court recognized that the collateral source rule
has its origins in the common law but that it can be changed
by statute.76 In upholding the constitutionality of this provision, the court permitted the legislature to reduce damages
recoverable from the tortfeasor at common law.
C. Passing Legislation Providing for Periodic Payments of Future Damages is a Valid
Exercise of Legislative Authority
As part of the enactment of Public Act 84-7 in 1985, the
legislature included several provisions permitting periodic
payment of certain future damages in medical malpractice
cases. In general, the provisions allow a party to elect to make
periodic payments of future damages that exceed the amount
of $250,000; and for that portion of future economic damages
that are to be awarded in an “equivalent lump sum,” the statute
permits a reduction to present value using a 6% discount rate.
The Illinois Supreme Court in Bernier77 evaluated the constitutionality of the provisions allowing periodic payment of
certain future damages. In short, the court upheld these provisions in the face of the plaintiff’s constitutional challenge.
The court determined that the provisions did not violate
the right to trial by jury.
The only change in the jury’s function from the traditional rule is that the jury is instructed not to reduce
the amount to present value, and the statute provides
the discount factor that the trial court must use for that
purpose. But this is no greater impediment to the jurytrial right than a statute setting a predetermined interest
rate for judgments.78
In addition, even though the provisions applied only to
cases involving medical malpractice, but not to others, they did
not offend equal protection or constitute special legislation.
The problem facing the legislature was that large judgments
were becoming more frequent and were affecting the availability and affordability of liability insurance. Most impacted
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were the areas of medical malpractice and product liability.
Another issue was that “large judgments for future damages
may be spent before the damages are actually incurred.”79 The
court observed that “the legislature could have believed that
the periodic payment of future damages, the practice under
the workers’ compensation system, would be an effective
way of preserving large awards for future need.”80 That the
provisions applied “only in actions for medical malpractice
was not fatal to the scheme [because] the legislature need
not choose between legislating against all evils of the same
kind or not legislating at all. Instead it may choose to address
itself to what it perceives to be the most acute need.”81 For
these reasons, the court concluded that the provisions were
rationally related to a legitimate governmental interest.
The court in Bernier summarily dismissed the due process
challenge. Having already determined that the legislature’s
decision to set a discount rate did not interfere with the right to
a jury trial, the court did not consider “whether an unrealistic
or ‘incorrect’ discount rate may result in a denial of due process.”82 The court also noted that compared to the prevailing
interest rates at the time of the opinion, the statutory discount
rate at 6% could only benefit the plaintiffs.83
D. The Prohibition of Punitive Damages is a Valid
Exercise of Legislative Authority
Public Act 84-7 included a prohibition of punitive damages
in actions for healing art and legal malpractice.84 The trial
court held that this provision violated the Illinois constitutional
guarantees of due process and equal protection, constituted
special legislation and violated the requirement that bills be
confined to one subject.85
The Illinois Supreme Court reversed the trial court and
upheld the constitutionality of the prohibition against punitive
damages. Citing cases upholding the prohibition on punitive
damages in other types of actions,86 the court adopted the same
reasoning. The prohibition of punitive damages was rationally
related to the legitimate governmental interest of avoiding
excessive liability.87 The court was not deterred by its prior
decision invalidating limits on the recovery of compensatory
damages in medical malpractice actions, 88 and distinguished
punitive damages from compensatory damages.89
E. The Certificate of Merit Provision Survived Constitutional Scrutiny
As part of medical malpractice reform litigation enacted in 1985,90 the legislature enacted Section 2-622 of the
Code of Civil Procedure, which governs the certificate of
merit requirements in medical malpractice litigation. Section
2-622 essentially requires a plaintiff to submit the certifica-
tion of a health care professional that there is a reasonable
and meritorious cause for filing the action. In DeLuna v. St.
Elizabeth’s Hospital,91 the Illinois Supreme Court analyzed the
plaintiff’s arguments that Section 2-622 violated separation of
powers, deprived litigants of access to the courts, denied equal
protection and due process and constituted invalid special
legislation. The court held that the “provision is not unconstitutional for any of the reasons asserted by the plaintiff.”92
The plaintiff’s separation of powers argument rested on
the premise that Section 2-622 improperly grants a judicial
power to health care professionals. The court disagreed and
stated that “a health care professional . . . does not exercise
a judicial power. Rather, the health care professional simply
certifies that in his opinion the action has reasonable merit.”93
“As part of medical malpractice reform litigation enacted in 1985, the
legislature enacted Section
2-622 of the Code of Civil Procedure, which governs the certificate
of merit requirements in medical
malpractice litigation.”
The health care professional’s task is “essentially no different
from . . . expert testimony.”94 Because “such testimony at trial
does not constitute the exercise of a judicial function[, b]y the
same token, there can be no claim that requiring submission
of similar information when an action is filed operates as a
delegation of judicial authority.”95
The “access to the courts” challenge was based upon the
“certain remedy” provision of the Illinois Constitution.96 The
court held that the “certain remedy” provision in the current Illinois Constitution carries the same meaning as corresponding
provisions in previous Illinois Constitutions. Such provisions
“have been regarded as an expression of a philosophy and not
a mandate that a certain remedy be provided in any specific
form or that the nature of the proof necessary to the award
of a judgment or decree continue without modification.”97
The court upheld this provision because the “legislature may
impose reasonable limitations and conditions upon access to
the courts”98 and the provision is essentially no different from
expert testimony to establish a standard of care.
F. Medical Review Panels Have Been Held
Unconstitutional
In addition to evaluating the cap on all damages available
in medical malpractice cases, the Illinois Supreme Court in
Wright v. Central DuPage Hospital Association,99 also evaluated that part of Public Act 79-960 that established medical
review panels. Under the statute, a medical review panel was
to be comprised of one circuit judge, one practicing physician
and one practicing attorney, and the panel would make the
determination on liability and damages. Under the procedure,
any party was permitted to reject the decision of the panel. The
Illinois Supreme Court determined that this set of provisions
empowered nonjudicial members of a medical review panel
to exercise a judicial function in violation of article VI of the
Illinois Constitution.100
Because it found the “statutes providing for medical review panels [were] unconstitutional, it follows that the procedure”101 violated the constitutional right of trial by jury.102
Interestingly, the court stated that its holding does “not imply
that a valid pretrial panel procedure cannot be devised.”103
In 1985, the legislature again enacted another set of procedures for medical review panels, and those procedures also
underwent constitutional scrutiny in Bernier.104 In that case,
the defendants attempted to distinguish the new procedures
from the provisions invalidated in Wright. The defendants
argued that by enhancing the role of the judicial member of the
panel, by extending to that member sole authority over legal
issues, the legislature cured the procedures found invalid in
Wright. The court disagreed and stated that the new procedures
suffered from similar problems as the prior invalid statute.
Under the procedures, the judicial member either served in
a judicial capacity where judicial authority was shared with
nonjudicial members, or the judicial member was denied
judicial authority and had no greater authority than the other
panel members.105 The court also noted that “statutes calling
for the creation of three-member panels of circuit judges have
been held unconstitutional [because] the legislature lacks the
authority to create a new court and circuit judges do not act
jointly or in a group.”106
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IV. Constitutional Scrutiny of the
2005 Medical Malpractice Damages Caps
A. Special Legislation Analysis of 2005 Damages
Caps
1. The Rational Basis Test will Govern
Constitutional Scrutiny of Section 2-1706.5
The special legislation clause of the Illinois Constitution
spelled the demise of the 1975 and 1995 damages caps statutes. Undoubtedly this provision will again play a dominant
role in evaluating the 2005 damages caps. The special legislation clause does not prevent classification of persons and
objects. Its purpose is to prevent arbitrary legislative classifications that discriminate in favor of a select group without
a sound, reasonable basis. The Illinois Supreme Court has
held that statutes imposing limits on recoverable damages do
not affect a fundamental right or involve a suspect or quasisuspect classification.107 The appropriate standard of review,
therefore, is the rational basis test. This test analyzes whether
the statutory classification is rationally related to a legitimate
state interest.108
Under current precedent, the fact that the damages caps
legislation affects only medical malpractice litigation and
not other types of litigation does not encumber its constitutionality. The Illinois Supreme Court has repeatedly held
that the mere fact that legislation “sets medical malpractice
actions apart from other professional malpractices” does not
violate the special legislation provision.109 The court also has
“observe[d] at the outset that the distinction drawn by the provisions permitting periodic payments in cases of healing-art
malpractice, but not in others, does not offend equal protection
or constitute special legislation.”110
A review of Section 2-1706.5 also must take into account
that the legislature intended to exercise its police power. Section 101 of Public Act 94-677, includes several references
that the General Assembly enacted the legislation for the
public health, safety, and welfare of the citizens of Illinois.
Legislative enactments for “the public health, safety, and welfare” clearly establish the legislative intent to use its “police
power.”111 The Illinois Supreme Court has noted that “the
legislature has wide discretion in the exercise of its police
power.”112
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2. Due to Different Legislative Interests from the
1995 Damage Caps, the Special
Legislation Analysis in Best Has Little Precedential Value
In Best, the Illinois Supreme Court ruled that the 1995
damages caps constituted invalid special legislation because
the statutory classifications did not rationally relate to the
legitimate interests of the state. In support of limiting noneconomic damages in 1995, one legislative finding was that
difficulty in assessing non-economic damages awards led to
inconsistent awards. The court identified another legislative
goal, that remuneration was an appropriate means by which
to compensate tort victims for non-economic losses. The Best
court concluded that these two interests, eliminating difficulty
in assessing non-economic awards and compensating victims
for their non-economic loss, were not served by limiting noneconomic damages. The court determined that limiting “noneconomic damages of some, but not all, injured plaintiffs is
not justified by the difficulty of assessing such damages.”113
Similarly, the court found that establishing the same cap for
all plaintiffs, without regard to the nature or degree of their
injuries, “actually undermine[d] the stated goal of providing
consistency and rationality to the civil justice system.”114
Finally, the Best court remained unconvinced that caps
served the legislative purpose in reducing the “systemic
costs of tort liability.” First, the court was uncertain as to the
meaning and scope of the terms and observed that these costs
were undefined in the statute. Even assuming that reduction
of such costs was a legitimate state interest, the court was
“unable to discern any connection between the automatic
reduction on one type of compensatory damages awarded to
one class of plaintiffs and a savings in the systemwide costs
of litigation.”115 Even if such savings were achieved, the court
concluded that “the prohibition against special legislation does
not permit the entire burden of the anticipated cost savings to
rest on one class of injured plaintiffs.”116 In essence, its special legislation analysis concluded that a number of statutory
classifications were unrelated to the legislative purposes.
Taking a lesson from the Best analysis, Section 2-1706.5
abandoned the legislative purposes and findings that plagued
the 1995 damages caps. Instead, the 2005 legislative “findings” focus on the “increasing cost of medical liability insurance,” its relationship to access to “medical care in portions of
the State” and the resulting “health care crisis.”117 The Illinois
Supreme Court has recognized that these legislative findings
are constitutionally valid state interests.118
In Bernier v. Burris,119 the Illinois Supreme Court found that
limiting damages recoverable in medical malpractice actions
could affect the costs of medical malpractice actions. It upheld
the modified collateral source rule120 which “eliminates certain
duplicative recoveries and therefore bears a rational relationship to the legitimate governmental interest of reducing the
costs of malpractice actions.” In a similar vein, the Illinois
Supreme Court found that the periodic payments provision
was rationally related to a legitimate governmental interest
in the availability and affordability of medical malpractice
insurance.121
3. The Minimum Economic Recovery provision
in Section 2-1706.5 Changes the Precedential
Value of Wright
The General Assembly was also cognizant of the potential importance of providing a quid pro quo for displacing
a common law remedy. While Section 2-1706.5 placed an
upper limit on the recovery of non-economic damages, the
legislature also created the minimum weekly wage for the
recovery of lost income damages. Specifically, “where an
individual plaintiff earns less than the annual average weekly
wage . . . an award may include an amount equal to the wage
the individual plaintiff earns or the annual average weekly
wage.”122 Presumably the legislature intended this provision
to overcome two criticisms of prior limits on recoverable
damages. In Wright,123 the Illinois Supreme Court refused to
find support in the Worker’s Compensation Act for the 1975
damages caps that displaced a common law recovery. The
court reasoned that the Worker’s Compensation Act provided
a quid pro quo, whereas the 1975 damages caps took away
a common law right without a substitute statutory remedy.124
Thus, the Illinois Supreme Court foreclosed reliance on the
Worker’s Compensation Act in the absence of a quid pro quo.
The provision guaranteeing a minimum recovery for lost
wage claims also addresses the plaintiffs’ criticism in Best
that the 1995 damages cap discriminated against low-wage
earners. The plaintiffs cited blue collar workers, AfricanAmericans and other minorities who are overrepresented in the
riskiest and lowest-paying jobs, and women whose earnings
remain only 71% of men.125
Although the absence of a quid pro quo in the 1995 damages caps was not specifically addressed by the Best court,
it continued to rely upon the decision in Wright striking the
1975 damages cap legislation.
B. The Court May Reexamine the “Legislative Remittitur” Holding in Light of Nearly
Unanimous Rejection by Ten Other States and
Its Inconsistency with Prior Illinois Supreme
Court Precedent
The Best court found the 1995 damages cap provision
invalid under the separation of powers provision because it
functioned as a “legislative remittitur.” The court stated that
“unlike the traditional remittitur power of the judiciary, the
legislative remittitur of Section 2-1115.1 disregards the jury’s
careful deliberative process.”126 As sole authority for the notion that damages caps operate as a “legislative remittitur,”
the Best court relied extensively on the Washington Supreme
Court’s decision in Sofie v. Fibreboard Corp.127 Notably, the
Washington Supreme Court stated that although we do not
decide the case on this basis, “the limit may, indeed, violate
the separation of powers.”128 Therefore, the Illinois Supreme
Court based its holding on dicta from the Washington Supreme
Court.
Since the Best decision, ten other states have considered the
question of whether a cap on damages constitutes a “legislative
remittitur.” Each such state has rejected the notion of a “legislative remittitur” and refused to follow the Best reasoning.129
In fact, because the discussion in Sofie was dicta, Best130 is
the only opinion to have found damages caps unconstitutional
on the basis that they function as a legislative remittitur and
thereby violate separation of powers.
The principle that a “legislative remittitur” violates the
separation of powers clause is not unique to non-economic
damages. Accepting this logic, any statute that placed limits
on any damages recoverable at common law would violate
the separation of powers clause. However, several statutes
that limit damages recoverable at common law have survived
constitutional scrutiny. In Bernier v. Burris,131 the Illinois
Supreme Court upheld the legislative authority for enacting
several statutes that eliminated or modified the right to recover
damages available at common law. Specifically, the court
upheld legislative authority to prohibit duplicative recoveries otherwise permitted by the common law collateral source
rule.132 The legislative prohibition on the recovery of punitive
damages in medical malpractice and legal malpractice actions
survived constitutional scrutiny.133 Also the provision allowing
periodic payments of future damages was found to be a valid
exercise of legislative authority.134
The principle that damages caps constitute a legislative
remittitur and violate the separation of powers clause appears
to be unpopular with other jurisdictions and contrary to Illinois
precedent. Given the fact that one basis for invalidating the
1995 damages caps was the principle that “legislative remitM-11
titur” violates the separation of powers clause, the Illinois
Supreme Court certainly will have another opportunity to
revisit application of this principle to damages caps.
C. The Right to Jury Trial is Not Likely to be
a Basis to Strike Section 2-1706.5 as
Unconstitutional
The Illinois Supreme Court has not considered whether
damages caps violate the right to a jury trial. Although the
plaintiffs in Best argued for striking the 1995 damages caps
on this ground, the court ruled the statute unconstitutional
on other grounds. In the forthcoming challenge to the new
damages caps, the plaintiff is almost certain to argue this as
one of several bases for striking the legislation.
In evaluating the 1995 damages caps, Professor Redish
concluded that damages caps do not interfere with the fact
finding function of the jury because the “determination of pure
rules of law has never been considered a proper function of
a jury.”135 He cited the reasoning of the Fourth Circuit Court
of Appeals in Boyd v. Bulala, upholding Virginia’s statutory
cap on recovery of damages in medical malpractice actions
in the face of a Seventh Amendment challenge. Professor
Redish noted that the court in that case reasoned that “since
a legislature’s complete abolition of a substantive cause of
action would not violate the right to jury trial, neither would
a legislatively imposed limitation on damages recoverable for
a cause of action.”136 Professor Redish also cited Etheridge v.
Medical Center Hospital,137 where Virginia’s Supreme Court
rejected a state constitutional jury trial challenge to statutory
limits on recovery. The Virginia court reasoned that “[a]
remedy is a matter of law, not a matter of fact.”138
D. The “Certain Remedy” Provision is not
Likely a Basis to Strike Section 2-1706.5
as Unconstitutional
Given that the plaintiffs argued in Best that damages caps
violated the “certain remedy” provision, a constitutional
challenge to Section 2-1706.5 will likely include a similar
challenge. However, because of the Illinois Supreme Court’s
more recent interpretations of the “certain remedy” provision,
not much weight is expected to be given to this constitutional
argument. In DeLuna v. St. Elizabeth’s Hospital,139 the Illinois
Supreme Court stated,
Corresponding provisions in previous Illinois Constitutions have been regarded as an expression of a
philosophy and not a mandate that a certain remedy be
provided in any specific form or that the nature of the
proof necessary to the award of a judgment or decree
M-12
continue without modification. The same view continues in force and guides the interpretation of the certain
remedy provision of the current Illinois Constitution.140
Because the “certain remedy” provision is “an expression
of philosophy and not a mandate,” the court is not likely to find
this provision a basis to find damages caps unconstitutional.
V. There is Precedent for the Legislature to Limit Damages Available at Common Law
Perhaps the best example in Illinois history of the legislative authority to abrogate a common law remedy was enactment of the Worker’s Compensation Act. As reflected in the
discussion in Wright, by adopting the Worker’s Compensation
Act, the legislature required the employer to give up common
law defenses and the employee to give up certain common law
elements of recovery. The Illinois Supreme Court has held that
it was a reasonable exercise of the legislature’s police power
for the promotion of the general welfare.141
The holding in Wright does not necessarily require the
legislature to provide a quid pro quo for limiting recovery of
common law damages. One might question whether the 1975
cap on all damages was simply too extreme of a proposition
without a satisfactory quid pro quo. In Best the legislature tried
a less extreme approach in that the limitation applied only
to non-economic damages, but it was not limited to medical
malpractice cases. Again, the Illinois Supreme Court was
troubled that the statutory classifications seemed to contradict
the legislative purposes.
Illinois constitutional jurisprudence suggests that the
legislature has authority to limit non-economic damages
in response to a medical malpractice insurance crisis. In
Bernier,142 the Illinois Supreme Court addressed whether
individuals have a continuing right to a remedy. Specifically
the court stated that “a litigant does not have an indefeasible
interest in the continuation of a particular remedy or mode or
form of recovery.”143 The court in Best addressed the limits on
the authority of the legislature to change the common law but
added that the changes must be “rationally related to a legitimate government interest.”144 The court also stated that “[t]
he General Assembly’s authority to exercise its police power
by altering the common law and limiting available remedies
is also dependent upon the nature and scope of the particular
change in the law.”145 In Wright, the court rejected comparison
of the 1975 damages caps to the Worker’s Compensation Act
on the basis that, unlike the Worker’s Compensation Act, the
caps did not provide a quid pro quo.146
Although the Worker’s Compensation Act distinction rested
on the absence of a quid pro quo in the 1975 damages caps,
the court went out of its way to state that it did “not hold or
even imply that under no circumstances may the General
Assembly abolish a common law cause of action without a
concomitant quid pro quo . . . .”147 Indeed, the court in Bernier
v. Burris148 upheld medical malpractice legislation prohibiting punitive damages and eliminating duplicative recovery
permitted by the collateral source rule. These provisions did
not provide a quid pro quo. Admittedly, punitive damages are
not compensatory and eliminating duplicative recoveries is
more palatable than eliminating a portion of the recovery to
make a plaintiff “whole.”
Given the constitutional validity of the Worker’s Compensation Act, and the precedents in Best, Bernier and Wright, one
thing is certain. The General Assembly indeed has authority to
“Perhaps the best example in Illinois history of the legislative
authority to abrogate a common
law remedy was enactment of the
Worker’s Compensation Act.”
enact legislation that displaces a common law right or remedy.
What is not certain, however, are clear, guiding principles for
a finding of constitutionality.
Rather than wrestle with yet another unknown “formula”
for constitutional damages caps, the General Assembly included a quid pro quo in Section 2-1706.5. It is unclear whether
a quid pro quo is a necessary component for upholding the
limitation on non-economic damages. If it is, then one issue
is how much discretion the legislature has in determining the
appropriate quid pro quo. One might argue that in the exercise
of its police power, the legislature has “wide discretion” in
selecting the appropriate quid pro quo. On the other hand,
given the Worker’s Compensation model, one might argue
that the quid pro quo must provide at least as much balance as
the Worker’s Compensation Act provides between employers
and employees.
In the public relations arena, opponents of damages caps
have argued that damages caps disproportionately affect
society’s most vulnerable citizens such as the elderly, poor,
unemployed and uneducated. The minimum weekly wage
provision for lost income claims in Section 2-1706.5 offsets
any disproportionate impact of non-economic damages caps.
In certain situations, the minimum economic recovery
provision actually could provide more financial remuneration
than actual damages. Suppose that an unemployed individual
suffers an injury making him unemployable for the next five
years and that his non-economic injuries are such that they
would not trigger the cap on non-economic damages. The “lost
wage” component of his economic recovery could approach
$250,000,149 even though without the statute, the individual
might not be able to recover any lost income damages, because he could not prove that he was employable. Even for
individuals who earn one-half of the annual average weekly
wage, their recovery could exceed actual damages by $75,000
over three years of unemployability.
A careful study of Illinois Supreme Court precedent,
along with the details of Section 2-1706.5, demonstrate
that the Illinois General Assembly was acutely aware of the
specific constitutional problems that plagued prior damages
cap legislation. Section 2-1706.5 avoided the legislative
purposes that spelled the demise of the 1995 damages caps
and provided a quid pro quo, a notion that apparently seems
to have impressed the Wright court concerning the validity
of the Worker’s Compensation Act. Less certain is how the
Illinois Supreme Court will react to the principle enunciated
in Best that “altering the common law and limiting available
remedies is also dependent upon the nature and scope of the
particular change in the law.”150
VI. Conclusion
Illinois constitutional precedent suggests that the legislature
has power to abrogate or modify the common law rights and
remedies. Aware of the critical state of the health care crisis,
and the need to address the increasing costs of medical liability insurance, the General Assembly attempted to fashion
damages caps legislation that heeded lessons from the past.
Although the General Assembly has avoided the obvious pitfalls of prior damages caps legislation, the remaining guiding
principles for constitutional damages caps remain somewhat
imprecise. Proponents not only hope that Section 2-1706.5
survives constitutional scrutiny, but also that it will achieve
the stated goals of the legislation.
M-13
Endnotes
Press Release, Office of the Governor, Governor Rod R. Blagojevich,
“Gov. Blagojevich signs medical malpractice reform legislation designed
to improve access to physician care in Illinois” (Aug. 25, 2005).
1
2
735 ILCS 5/2-1706.5.
3
735 ILCS 5/2-1706.5.
4
P.A. 94-677, § 101.
See, Wright v. Central DuPage Hospital Association, 63 Ill. 2d 313,
347 N.E.2d 736 (1976); Best v. Taylor Machine Works, 179 Ill. 2d 367,
689 N.E.2d 1057 (1997).
5
6
735 ILCS 5/2-1706.5.
7
P.A. 89-7.
8
735 ILCS 5/2-1115.1 (West 1996).
9
735 ILCS 5/2-1115.2(a) (West 1996).
10
Best, 179 Ill. 2d 367, 689 N.E.2d 1057 (1997).
Brief of Vernon Best at 46, Best v. Taylor Machine, Nos. 81890,
81891, 81892, 81893, Consolidated (Ill. 1997).
11
12
Best, 179 Ill. 2d at 385, 689 N.E.2d at 1067.
13
Id.
14
Id. at 390, 689 N.E.2d at 1069.
15
Ill. Const. art. IV, § 13.
16
Best, 179 Ill. 2d at 391, 689 N.E.2d at 1069-70 (citations omitted).
17
Anderson v. Wagner, 79 Ill. 2d 295, 320, 402 N.E.2d 560, 572 (1979).
18
Id. at 394, 689 N.E.2d at 1071 (quoting S. Grove & R. Carlson, The
Legislature, in Con-Con: Issues for the Illinois Constitutional Convention, 106 (1970)).
19
Id. at 394, 689 N.E.2d at 1071 (citing Grasse v. Dealer’s Transport
Co., 412 Ill. 179, 103 N.E.2d 124 (1952).
20
31
Ill. Const. art. II, § 1.
32
Sofie v. Fibreboard Corp., 112 Wash.2d 636, 653, 771 P.2d 711, 720
(1989).
33
34
Id. at 654, 771 P.2d at 721.
35
36
Ill. Const. art. I, § 12.
Brief of Vernon Best at 34, Best v. Taylor Machine, Nos. 81890, 81891,
81892, 81893, Consolidated (Ill. 1997) (citing Wright v. Central DuPage
Hospital Assoc., 63 Ill. 2d 313, 327, 347 N.E.2d 736, 742 (1976) and
Trunk W. Ray, Co. v. Indus. Comm’n., 291 Ill. 167, 174-175 (1920)).
37
38
63 Ill. 2d 313, 347 N.E.2d 736 (1976).
Brief of Taylor Machine Works, Lee Helms, Inc. and Allied Industrial
Equipment Corp. at 34, Best v. Taylor Machine Works, Nos. 81890,
39
40
Id.
41
Brief of Vernon Best at 41, Best v. Taylor Machine, Nos. 81890, 81891,
81892, 81893, Consolidated (Ill. 1997) (citing Townsend v. Hughes, 86
Eng. Rep. 994, 994-95 (C.P. 1677) (“by the law the jury are judges of
the damages”)).
42
Reply Brief of Appellants at 4, Best v. Taylor Machine, Nos. 81890,
43
44
45
63 Ill. 2d 313, 329-30, 347 N.E.2d 736, 743 (1976).
Wright v. Central DuPage Hospital Association, 63 Ill. 2d 313, 325,
347 N.E.2d 736, 741 (1976).
46
47
13 Ill. 2d 26, 147 N.E.2d 352 (1958).
48
22 Ill. 2d 23, 174 N.E.2d 153 (1961).
49
Wright, 63 Ill. 2d at 326-27, 347 N.E.2d at 741-42.
21
Id. at 395, 689 N.E.2d at 1072.
50
Id. at 390, 689 N.E.2d at 1069.
Id. at 327, 347 N.E.2d at 742.
22
51
Id. at 402, 689 N.E.2d at 1075.
Id.
23
52
Id. at 328, 347 N.E.2d at 742.
53
Id.
54
Id. at 327-28, 347 N.E.2d at 742 .
55
Id. at 330, 347 N.E.2d at 743.
56
Ill. Rev. Stat., ch. 83, par. 22.1 (1977).
57
Anderson v. Wagner, 79 Ill. 2d 295, 402 N.E.2d 560 (1979).
58
Id. at 301, 402 N.E.2d at 562.
59
Id.
60
Id.
61
Id. at 307, 402 N.E.2d at 565-566.
62
Id. at 312, 402 N.E.2d at 568.
63
Id.
Id. at 407, 689 N.E.2d at 1077 (citing Wright v. Central DuPage Hospital Assoc., 63 Ill. 2d 313, 347 N.E.2d 736(1976) (invalidating provision
limiting all damages in medical malpractice actions to $500,000) and
Grace v. Howlett, 51 Ill. 2d 478, 283 N.E.2d 474 (1972) (invalidating
provision capping damages for car accident victims)).
24
Best, 179 Ill. 2d at 407, 689 N.E.2d at 1077 (citing Bernier v. Burris,
113 Ill. 2d 219, 497 N.E.2d 763 (1986) (upholding provision eliminating
punitive damages in medical malpractice cases)).
25
26
27
28
29
30
Id.
Id. at 408, 689 N.E.2d at 1077.
Id.
Id. at 409, 689 N.E.2d at 1078.
M-14
64
Id. at 316, 402 N.E.2d at 570.
65
Id.
66
Id.
67
Id.
68
Id. at 317, 402 N.E.2d at 570.
69
Id.
70
Id.
Wright v. Central DuPage Hospital Association, 63 Ill. 2d
313, 347 N.E.2d 736 (1976).
71
Id. at 318-19, 402 N.E.2d at 571.
100
72
Bernier v. Burris, 113 Ill. 2d 219, 497 N.E.2d 763 (1986).
person, privacy, property or reputation. He shall obtain justice by law,
freely, completely, and promptly.”)
DeLuna, 147 Ill. 2d at 72-73, 588 N.E.2d at 1145 (internal
quotations omitted) (citing Sullivan v. Midlothian Park District, 51 Ill.
2d 274, 277, 281 N.E.2d 659 (1972)).
97
Id. (internal quotations omitted) (citing Buzz Barton & Associates, Inc. v. Giannone, 108 Ill. 2d 373, 383, 483 N.E.2d 1271, (1985)).
98
99
Ill. Rev. Stat., ch. 110, par. 2-1205 (1985), currently 735 ILCS 5/21205 (2004).
73
74
P.A. 82-280.
75
Bernier, 113 Ill. 2d at 243, 497 N.E.2d at 775.
Id. at 244, 497 N.E.2d at 775 (quoting Restatement (Second)
Property § 920A comment d (1977).)
76
77
113 Ill. 2d 219, 497 N.E.2d 763.
78
113 Ill. 2d at 237, 497 N.E.2d at 772.
79
Id. at 238-39, 497 N.E.2d at 773.
80
Id. at 239, 497 N.E.2d at 773 (citation omitted).
Wright v. Central DuPage Hospital Association, 63 Ill. 2d at
324, 347 N.E.2d at 740.
101
Id. at 244, 497 N.E.2d at 775 (internal quotations omitted) (citations
omitted).
Id. at 239, 497 N.E.2d at 773.
83
Id. at 240, 497 N.E.2d at 773.
Ill. Rev. Stat., ch. 110, par. 2-1115 (1985), currently 735 ILCS 5/21115 (2004).
84
85
Ill. Const. art. I, § 13 (“The right of trial by jury as heretofore enjoyed
shall remain inviolate.”)
102
of
81
82
Art. VI, § 1 states, “The judicial power is vested in a Supreme
Court, an Appellate Court and Circuit Courts.” Art. IV, § 9 provides that
“Circuit Courts shall have original jurisdiction of all justiciable matters.
. . Circuit Courts shall have such power to review administrative action
as provided by law.”
Siegall v. Solomon, 19 Ill. 2d 145, 166 N.E.2d 5 (1960) (actions for
alienation of affections); Smith v. Hill, 12 Ill. 2d 588, 147 N.E.2d 321
(1958) (actions for breach of promise to marry); In re Air Crash Disaster,
644 F.2d 594 (7th Cir. 1981) (actions for wrongful death).
Wright, 63 Ill. 2d at 324, 347 N.E.2d at 741 (“[W]e do not
imply that a valid pretrial panel procedure cannot be devised.”)
103
(1986).
104
105
Id. at 233-34, 497 N.E.2d at 770.
106
Id. at 233-34, 497 N.E.2d at 770 .
Wright, 63 Ill. 2d at 329, 347 N.E.2d at 743; Best,179 Ill. 2d
at 393, 689 N.E.2d at 1071.
107
Wright, 63 Ill. 2d at 329, 347 N.E.2d at 743; Best,179 Ill. 2d
at 393, 689 N.E.2d at 1071.
108
Anderson v. Wagner,, 79 Ill. 2d 295, 317, 402 N.E.2d 560, at
570 (1976).
109
110
86
87
Wright v. Central DuPage Hospital Association, 63 Ill. 2d 313, 347
N.E.2d 736 (1976).
88
(1986).
89
90
Bernier v. Burris, 113 Ill. 2d 219, 246, 497 N.E.2d 763, 776
P.A. 84-7.
DeLuna v. St. Elizabeth’s Hospital, 147 Ill. 2d 57, 588 N.E.2d
1139 (1992).
91
92
Id. at 67, 588 N.E.2d at 1143.
93
Id. at 70, 588 N.E.2d at 1145.
94
Id.
95
Id.
Ill. Const. art. I, § 12 (“Every person shall find a certain
remedy in the laws for all injuries and wrongs which he receives to his
96
Bernier, 113 Ill. 2d at 238, 497 N.E.2d at 772-73.
Village of Chatham v. County of Sangamon, 351 Ill. App. 3d
889, 814 N.E.2d 216 (4th Dist. 2004) (“Under its police powers, the
legislature has broad discretion to enact legislation to protect the public
health, safety, morals, and general welfare or convenience of the State.”)
111
1071.
112
Best v. Taylor Mach. Works, 179 Ill. 2d at 394, 689 N.E.2d at
113
Id. at 405, 689 N.E.2d at 1076.
114
Id. at 406, 689 N.E.2d at 1076.
115
Id. at 406-07, 689 N.E.2d at 1077.
116
Id.
117
P.A. 94-677, § 101.
Anderson v. Wagner, 79 Ill. 2d 295, 316, 402 N.E.2d 560, 570
(1976) (“[T]he legislature was directly addressing itself to a medical
malpractice problem,” and the court concluded that “there was a reasonable attempt to remedy what the legislature perceived to be a medical
malpractice insurance crisis.”); see also, Bernier v. Burris, 113 Ill. 2d
219, 497 N.E.2d 763 (1986) (noting that the legislation was enacted
in response to what was perceived to be a crisis in the area of medical
malpractice).
118
M-15
119
113 Ill. 2d 219, 497 N.E.2d 763 (1986).
Ill. Rev. Stat., ch. 110, para. 2-1205 (1985), currently cited as
735 ILCS 5/2-1205 (2005).
120
Bernier v. Burris, 113 Ill. 2d 219, 238-39, 497 N.E.2d 763,
773 (1986).
121
122
735 ILCS 5/2-1706.5(b) (2005).
Wright v. Central DuPage Hospital Association, 63 Ill. 2d
313, 327, 347 N.E.2d 736, 742 (1976).
123
124
Id.
Brief of Vernon Best at 46, Best v. Taylor Machine, Nos.
81890, 81891, 81892, 81893, Consolidated (Ill. 1997).
125
126
Best, 179 Ill. 2d at 413-14, 689 N.E.2d at 1080.
(1989).
127
128
Sofie v. Fibreboard Corp., 112 Wash.2d 636, 771 P.2d 711
Id. at 654, 771 P.2d at 721.
Owens-Corning v. Walatka, 125 Md. App. 313, 725 A.2d 579,
590 (1999) (The court rejected the “theory that the cap statute is an
unconstitutional ‘legislative remittitur’.”) abrogated on other grounds
John Crane, Inc. v. Scribner, 369 Md. 369, 800 A.2d 727 (2002);
Pulliam v. Coastal Emergency Serv., 257 Va. 1, 509 S.E.2d 307, 319
(1999) (“Plaintiff’s initial premise [equating remittitur with the medical
malpractice cap] is faulty because remittitur and cap are not equivalent
and do not come into play under the same circumstances”); Guzman v.
St. Francis Hosp., Inc., 240 Wis.2d 559, 623 N.W.2d 776, 787 (2000)
(“The statute setting a cap on noneconomic damages does not interfere
with this right; a trial court retains the discretion to order a remittitur.”);
Kirkland v. Blaine County Med. Ctr., 134 Idaho 464, 4 P.3d 1115 (2000)
(“We believe [the provision on damage caps] does not impermissibly
infringe on the judiciary’s traditional power of remittitur.”); Verba v.
Ghaphery, 210 W. Va. 30, 552 S.E.2d 406 (2001) (The court found no
merit in the argument that “the cap effectively constitutes a legislative
remittitur.”); Evans v. State, 56 P.3d 1046, 1055 (Alaska 2002) (“The
damage caps cannot violate the separation of powers, because the caps
do not constitute a form of remittitur.”); Waste Disposal Center, Inc. v.
Larson, 74 S.W.2d 578, 590 (Tex.App.-Corpus Christi 2002) (Declining
to follow Best because it failed to acknowledge “the legislative power
to make, amend, alter, and abolish laws without violating the principle
of separation of powers.”);Gourley ex rel. Gourley v. Nebraska Methodist Health System, Inc., 265 Neb. 918, 663 N.W.2d 43 (2003) (“[T]he
damages cap does not act as a legislative remittitur or otherwise violate
principles of separation of powers.”); Rhyne v. K-Mart Corp., 594 S.E.2d
1 (2004) (The statute imposing a limit on awards of punitive damages
“does not operate as a legislative remittitur.”); Garhart ex rel. Tinsman
v. Columbia/Healthone, L.L.C., 95 P.3d 571 (Colo. 2004) (“We agree
[that a statutory cap is not judicial-type remittitur] and join those states
that have upheld damages caps as not infringing impermissibly on the
judicial role in the separation of powers.”)
129
M-16
Best v. Taylor Machine Works, 179 Ill. 2d 367, 413-414, 689
N.E.2d 1057, 1080 (1997).
130
131
132
Bernier v. Burris, 113 Ill. 2d 219, 497 N.E.2d 763 (1986).
Id. at 243-44, 497 N.E.2d at 775.
133
Id. at 246-47, 497 N.E.2d at 776.
134
Id. at 239, 497 N.E.2d at 773.
Martin Redish, The Constitutionality of Illinois Tort Reform,
II: Caps on Noneconomic Damages, IDC Quarterly, First Quarter, 1996,
Vol. 6, No. 2, at 4.
135
II: Caps on Noneconomic Damages, IDC Quarterly, First Quarter,
1996, Vol. 6, No. 2, at 8 (citing Boyd v. Bulala, 877 F.2d 1191, 1196
(4th Cir.)).
136
Etheridge v. Medical Center Hospital, 237 Va. 87, 376 S.E.2d
525 (1989).
137
II: Caps on Noneconomic Damages, IDC Quarterly, First Quarter,
1996, Vol. 6, No. 2, at 8 (citing Etheridge v. Medical Center Hospitals,
237 Va. 87, 96, 376 S.E.2d 525, 529 (1989)).
138
139
147 Ill. 2d 57, 588 N.E.2d 1139 (1992).
Id. at 72, 588 N.E.2d at 1146 (citations omitted) (internal
quotations omitted).
140
141
Wright, 63 Ill. 2d at 327, 347 N.E.2d at 742.
(1986).
142
143
Id.
144
145
Id.
146
Wright, 63 Ill. 2d at 327, 347 N.E.2d at 742.
147
Id. at 329, 347 N.E.2d at 743.
148
113 Ill. 2d 219, 497 N.E.2d 763 (1986).
This is based on an average annual weekly wage in 2005 of
approximately $900.00 as published by the Illinois Worker’s Compensation Commission at press time..
149
150

Number 4 and Monograph - Illinois Association of Defense Trial

Transcription

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