The Illinois Association of Defense Trial Counsel
Fourth Quarter 2014 l Volume 24, Number 4 l ISSN-2169-3668
MONOGRAPH The Implied Warranty of Habitability in Construction Defect Cases
FEATURE ARTICLES The Danger of Security Manuals: How to Prevent Liability Instead of Create It Congress, the Supreme Court, and the Religious Rights of Corporations
Illinois Association of Defense Trial Counsel WWW.IADTC.ORG
PRESIDENT DAVID H. LEVITT Hinshaw & Culbertson LLP, Chicago PRESIDENT-ELECT TROY A. BOZARTH HeplerBroom LLC, Edwardsville 1ST VICE PRESIDENT R. MARK MIFFLIN Giffin, Winning, Cohen & Bodewes, P.C., Springfield 2ND VICE PRESIDENT MICHAEL L. RESIS SmithAmundsen LLC, Chicago SECRETARY/TREASURER BRADLEY C. NAHRSTADT Lipe, Lyons, Murphy, Nahrstadt & Pontikis Ltd., Chicago DIRECTORS LAURA K. BEASLEY Joley, Nussbaumer, Oliver, Dickerson & Beasley, P.C., Belleville JOSEPH A. BLEYER Bleyer and Bleyer, Marion R. MARK COSIMINI Rusin Maciorowski & Friedman, Ltd., Champaign BRUCE DORN Bruce Farrel Dorn & Associates, Chicago JOSEPH G. FEEHAN Heyl, Royster, Voelker & Allen, P.C., Peoria ROSSANA P. FERNANDEZ Fernandez and Associates, LLC, Chicago TERRY A. FOX SmithAmundsen LLC, Chicago EDWARD K. GRASSÉ Busse, Busse & Grassé, P.C., Chicago JENNIFER GROSZEK Resolute Management, Inc., Midwest Division, Chicago JENNIFER K. GUST Hinshaw & Culbertson LLP, Chicago STEPHEN G. LOVERDE Law Office of Steven A. Lihosit, Chicago PAUL R. LYNCH Craig & Craig, LLC, Mt. Vernon WILLIAM K. MCVISK Johnson & Bell, Ltd., Chicago NICOLE D. MILOS Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago DONALD J. O’MEARA, JR. Pretzel & Stouffer, Chartered, Chicago AL J. PRANAITIS Hoagland, Fitzgerald, Smith & Pranaitis, Alton SCOTT D. STEPHENSON Litchfield Cavo LLP, Chicago TRACY E. STEVENSON Robbins Salomon & Patt, Ltd., Chicago PATRICK W. STUFFLEBEAM HeplerBroom LLC, Edwardsville HEATHER R. WATTERSON CNA, Chicago EXECUTIVE DIRECTOR Sandra J. Wulf, CAE, IOM 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 • Glen E. Amundsen • Steven M. Puiszis • Jeffrey S. Hebrank • Gregory L. Cochran • Rick Hammond • Kenneth F. Werts • Anne M. Oldenburg • R. Howard Jump • Aleen R. Tiffany
COLUMNISTS Beth A. Bauer — HeplerBroom LLC, Edwardsville Brian J. Benoit — Goldgerg Segalla LLP, Chicago James K. Borcia — Tressler LLP, Chicago Lindsay Drecoll Brown — Cassiday Schade LLP, Chicago Roger R. Clayton — Heyl, Royster, Voelker & Allen, P.C., Peoria James L. Craney — Lewis Brisbois Bisgaard & Smith LLP, Edwardsville Joseph G. Feehan — Heyl, Royster, Voelker & Allen, P.C., Peoria Terry A. Fox — SmithAmundsen LLC, Chicago Donald Patrick Eckler — Pretzel & Stouffer, Chartered, Chicago Stacy Dolan Fulco — Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago John P. Heil, Jr. — Heyl, Royster, Voelker & Allen, P.C., Peoria Scott L. Howie — Pretzel & Stouffer, Chartered, Chicago David H. Levitt — Hinshaw & Culbertson LLP, Chicago Gregory W. Odom — HeplerBroom LLC, Edwardsville Bradford J. Peterson — Heyl, Royster, Voelker & Allen, P.C., Urbana Craig L. Unrath — Heyl, Royster, Voelker & Allen, P.C., Peoria Dede K. Zupanci — HeplerBroom LLC, Edwardsville
CONTRIBUTORS William G. Beatty — Johnson & Bell, Ltd., Chicago Drew L. Block — Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago Mark D. Hansen — Heyl, Royster, Voelker & Allen, P.C., Peoria Brad W. Keller — Heyl, Royster, Voelker & Allen, P.C., Peoria Davis J. Kim — Goldgerg Segalla LLP, Chicago Anthony J. Longo — Cassiday Schade LLP, Chicago Michael D. Pisano — Cassiday Schade LLP, Chicago Matthew S. Sims — Cassiday Schade LLP, Chicago J. Matthew Thompson — Heyl, Royster, Voelker & Allen, P.C., Peoria
IDC QUARTERLY
EDITORIAL BOARD
IN THIS ISSUE
Beth A. Bauer, Editor-in-Chief HeplerBroom LLC, Edwardsville
[email protected] Brad A. Elward, Executive Editor Heyl, Royster, Voelker & Allen, P.C., Peoria
[email protected] Edward J. Aucoin, Jr., Associate Editor Pretzel & Stouffer, Chartered, Chicago
[email protected] John F. Watson, Assistant Editor Craig & Craig, LLC, Mattoon
[email protected] Tara Wiebusch Kuchar, Assistant Editor HeplerBroom LLC, Edwardsville
[email protected] J. Matthew Thompson, Assistant Editor Heyl, Royster, Voelker & Allen, P.C., Peoria
[email protected]
Monograph M-I
The Implied Warranty of Habitability in Construction Defect Cases, by Anthony J. Longo and Michael D. Pisano
Feature Articles 5
The Danger of Security Manuals: How to Prevent Liability Instead of Create It, by Stacy Dolan Fulco
27 Congress, the Supreme Court, and the Religious Rights of Corporations, by William G. Beatty
Columns
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Association News
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Civil Practice and Procedure, by Donald Patrick Eckler
24
Civil Rights Update, by John P. Heil, Jr.
35
Commercial Law, by James K. Borcia
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Construction Law, by Lindsay Drecoll Brown and Matthew S. Sims
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Employment Law, by James L. Craney
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Evidence and Practice Tips, by Joseph G. Feehan and Brad W. Keller
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Health Law, by Roger R. Clayton, Mark D. Hansen, and J. Matthew Thompson
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IDC Membership and Committee Applications
61
IDC New Members
Statements or expression of opinions in this publication are those of the authors and not necessarily those of the Association or Editors. Letters to the Editor are encouraged and welcome, and should be sent to the Illinois Association of Defense Trial Counsel headquarters in Rochester, Illinois.
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IDC Notice of Election
59
IDC 2015 Spring Symposium
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Insurance Law Update, by Terry A. Fox
Editors reserve the right to publish and edit all such letters received and to reply to them. IDC Quarterly, Fourth Quarter 2014, Volume 24, No. 4., Copyright © 2014 The Illinois Association of Defense Trial Counsel. All rights reserved. Reproduction in whole or in part without permission is prohibited.
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Medical Malpractice Update, by Dede K. Zupanci
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Product Liability, by Brian J. Benoit and Davis J. Kim
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Recent Decisions, by Stacy Dolan Fulco and Drew L. Block
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Workers’ Compensation Report, by Bradford J. Peterson
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Young Lawyer Division, by Gregory W. Odom
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 $100 per year. Single copies are $25 plus $5 for postage and handling. Requests for subscriptions or back issues should be sent to the Illinois Association of Defense Trial Counsel headquarters in Rochester, Illinois. Subscription price for members is included in membership dues.
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 Stylistic Requirements is available upon request from The Illinois Association of Defense Trial Counsel office in Rochester, 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 will be subjected to editing and become the property of the IDC Quarterly, unless special arrangements are made.
THE ILLINOIS ASSOCIATION OF DEFENSE TRIAL COUNSEL • P.O. Box 588 • Rochester, IL 62563-0588 800-232-0169 • 217-498-2649 • FAX 866-230-4415
[email protected] • www.iadtc.org SANDRA J. WULF, CAE, IOM, Executive Director
Amicus Committee Update, by Craig L. Unrath Appellate Practice Corner, by Scott L. Howie
Editor’s Note, by Beth A. Bauer
President’s Message, by David H. Levitt
Fourth Quarter 2014 | IDC QUARTERLY | 1
President’s Message David H. Levitt Hinshaw & Culbertson LLP, Chicago
E-discovery has come to Illinois state courts. We—the bench and bar— need to be wary lest it subsume resolution of cases on the merits. It is hard to believe that the Federal Rules of Civil Procedure (FRCP) were amended to include rules on e-discovery only eight years ago, effective December 1, 2006. It seems like much longer. Those of us who regularly practice in federal court have seen substantial changes in the way that federal courts handle the issues: an initial burst of madness in which sanctions seemed to be awarded left and right, followed by a real narrowing and recognition that e-discovery, despite its challenges, should follow the same rules as other forms of discovery, that the expense and difficulty of e-discovery quite often did not justify the effort and risk to adjudication on the merits, and that sanctions should be ordered rarely. While Illinois lawyers were dealing with this evolution of e-discovery in federal courts, there is a dearth of authority and experience by both the bench and bar on e-discovery in state court proceedings. Members of my firm and of IDC, as well as lawyers in other firms with whom I have spoken, have rarely had an e-discovery issue arise in state court litigation. I recently ran a Westlaw search on “e-discovery” and “electronic discovery” and found only three reported Illinois state court opinions dealing with the issue, none of which dealt with the issue in any detailed way. That same
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search, but including Illinois federal cases, returned 91 cases. Clearly, the issue has not popped up on the radar screens of state court litigants and their attorneys in the same way that it has for those appearing before federal courts. That is about to change. For years, I’ve been saying that e-discovery “was coming to a state court near you,” and then have been surprised that it did not. But now it has. Effective July 1, 2014, Illinois has adopted new rules governing e-discovery. They are modeled on the federal rules, but are not entirely identical. It behooves all Illinois lawyers to
Steve has been a leader on e-discovery issues, and his article outlined them in a way that is very helpful for those who have only experienced e-discovery at its outer edges. Among other things, Steve explained how and why e-discovery is different from paper discovery, and why practitioners and judges need to take those differences and attendant nuances into account. This Message will not seek to duplicate Steve’s article other than to commend it to your attention. Rather, the purpose of this Message is to sound the warning bell. Opposing counsel in a pending federal court case has argued that because all of the defendants’ records were kept on a computer, all the defendants had to do was to push a button or two, and the relevant documents would pop out, ready for production. In the early days of federal e-discovery, arguments like this were
But over time, federal courts became more sophisticated in their own uses of technology. Judges heard more and more evidence that e-discovery—and electronic evidence preservation— requires far more effort than just pushing a few buttons or performing a few searches.
become familiar with them, including where they differ from the more familiar federal rules. In the last volume of the IDC Quarterly, my long-time friend and colleague, former IDC President and current DRI Officer Steven Puiszis, explained the new rules in some detail—and I highly recommend that you read his feature article if you have not already done so.
often made and occasionally heeded. But over time, federal courts became more sophisticated in their own uses of technology. Judges heard more and more evidence that e-discovery—and electronic evidence preservation—requires far more effort than just pushing a few buttons or performing a few searches. Expert consultants abound. Some firms have created e-discovery departments,
managed by lawyers. Predictive coding and its promise of greater efficiency and accuracy is the latest hot trend. E-discovery is far from simple, and it behooves the bench and bar to move slowly and carefully, avoiding the mistakes and excesses of early federal court decisions. In 2008, I was invited to speak at a seminar in New York on e-discovery on the then still-growing issue, following the decisions in the Southern District of New York in the Zubulake cases, culminating in Zubulake v. UBS Warburg LLC, 229 F.R.D. 422 (S.D. N.Y. 2004) (Zubulake V). Zubulake V is one of the first and most oft-cited (and now rejected) e-discovery rulings. My first question to the 400 people in attendance was: “Who likes e-discovery?” No one raised a hand—and with good reason. The Zubulake decisions (I through V) preceded the 2006 amendments to the FRCP, which would have had no effect because Zubulake involved preservation of evidence, a subject not mentioned in the then-new Rules—nor mentioned in the new Illinois e-discovery rules. In Zubulake, the defendant’s inside and outside counsel communicated with every witness on at least five separate occasions about the need to preserve evidence. But that did not save them from sanctions. The defendant was ordered to spend nearly $250,000 in evidence preservation expense, ordered to pay for re-deposing of its witnesses, and was sanctioned with an adverse jury instruction—all before being found liable for anything. Moreover, the obligations that the court placed on counsel were entirely unprecedented and unsupportable. See David H. Levitt, Counsel’s Obligations For E-Discovery: Is Zubulake Right?, 3 Bloomberg Corporate L. J. 141 (2008).
Therefore, the burdens of electronic discovery will likely fall disproportionately on the defendants. Defense counsel, and the judges before whom they appear, must be alert to this concern and of the risk that the cost of discovery alone will reduce the ability of the defendants to obtain a resolution of their defense on the merits.
These concerns especially impact IDC members and our clients. Frequently, the plaintiffs in tort cases have few records (other than, possibly, on social media) and do not have to be concerned with their own evidence preservation and production of electronically stored information. By contrast, the defendants in trucking, product liability, medical malpractice, and construction litigation are more likely to possess databases for documents and information stored by electronic means. Therefore, the burdens of electronic discovery will likely fall disproportionately on the defendants. Defense counsel, and the judges before whom they appear, must be alert to this concern and of the risk that the cost of discovery alone will reduce the ability of the defendants to obtain a resolution of their defense on the merits. Federal courts have taken heed of Rule 1, which requires that the Rules be construed “to secure the just, speedy, and inexpensive determination of every action and proceeding.” Fed. R. Civ. P. 1. There is no exact equivalent to Rule 1 in the Illinois Code of Civil Procedure or the Illinois Supreme Court Rules. But the same sentiment and directive is captured by 735 ILCS 5/1-105, which
provides for rules “for the orderly and expeditious” administration of the Act and of the rules, along with 735 ILCS 5/1-106, providing for controversies to be “speedily” determined. Additionally, the federal rules provide for a mandatory Rule 26(f) conference, at which e-discovery must be discussed by the parties. The closest Illinois equivalent is the case management conference, which does not have the same force. Illinois should seriously consider adopting the Rule 26(f) conference procedure that federal courts use to limit the scope of discovery, including e-discovery. As Illinois state courts work their way through interpreting and applying the new Illinois e-discovery rules, they must guard against the temptation to allow these rules to be used to create subsidiary discovery litigation, which can swallow resolution on the merits. Care must be taken to follow the experience and example of the federal courts to prevent e-discovery from being used to turn the resolution of civil litigation into a side game of “gotcha.”
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Editor’s Note Beth A. Bauer HeplerBroom LLC, Edwardsville
My daughters recently participated in a talent show that featured a variety of acts that included a 90-plus-year-old lady reciting poetry learned long ago in her one-room schoolhouse to magic tricks to a three-year-old singing her own rendition of “Jesus Loves Me.” The lineup included people from every stage of life, with varied talents and gifts to share. As such, the show appealed to nearly everyone in attendance. Similarly, IDC is a successful organization because it pools the talents of lawyers from the very seasoned to the fresh out of school and includes gifted lawyers with broad talents, experiences, and interests that they share with the membership. IDC Quarterly also reflects the depth of talent in IDC with contributions from experienced attorneys and representatives of the Young Lawyers’ Division. We regularly publish a variety of columns and articles covering the broad subjects of civil practice and procedure and evidence to the more narrowly focused practice areas, such as medical malpractice, employment law, and civil rights to name a few. In this issue, many among our membership display their talent for legal analysis while also providing practice tips. Here are a few highlights from the thoughtful submissions from IDC Quarterly’s columnists. In the Appellate Practice column, Scott Howie of Pretzel & Stouffer, Chartered focuses our atten-
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tion on how to preserve trial error for appeal in a number of situations—the admission or exclusion of evidence, the instructions for the jury, and the denial of motions for directed verdicts. This column is a must-read and one you will want to keep for future reference and share with young lawyers who aspire to try cases. The Evidence and Practice Tips column informs readers about the admissibility of offers of compromise and statements made within compromise negotiations under Illinois Rule of Evidence 408. Columnists Joseph G. Feehan and Brad W. Keller of Heyl, Royster, Voelker, and Allen, P.C., provide an overview of the rule and examine Control Solutions, LLC v. Elecsys, 2014 IL App (2d) 120251, which according to the authors, is one of the few cases that has analyzed Rule 408. They point out the need to communicate with care when negotiating a compromise. Insurers and coverage counsel take note. In the Insurance Law column, Terry A. Fox of Smith Amundsen LLC writes about Pekin Ins. Co. v. Rada Development LLC, 2014 IL App (1st) 133947, which brings into question the finality and certainty of declaratory judgments. The column recounts the circumstances in Pekin Ins. and explores the potential ramifications of the decision for insurers and coverage counsel. In addition to the regular columns,
this issue also contains an interesting and comprehensive feature article on whether a publicly held corporation may claim protection under the First Amendment’s free exercise of religion clause. William G. Beatty of Johnson & Bell, Ltd. penned an article on the United States Supreme Court’s decision in Hobby Lobby Stores, Inc. v. Burwell, 134 S. Ct. 2751 (2014), which “illustrates the conflict between the free exercise of religion under the First Amendment . . . and the governmental mandate of employer-provided health insurance under the Patient Protection and Affordable Care Act.” The piece also explores whether the Hobby Lobby decision applies beyond privately held corporations and provides a balanced look at both sides of this debate. This issue’s monograph examines the implied warranty of habitability in construction defect cases. Anthony J. Longo and Michael D. Pisano of Cassiday Schade LLP provide an extensive discussion of the history behind the implied warranty of habitability compared to Illinois courts’ expansion of the warranty, and they explore the consequences of such expansion. Further, the authors provide a helpful outline for practitioners in this area of law, concerning every aspect of an implied warranty case, from who has standing to sue to the defenses that the various classes of defendants may assert. On page after page of this issue of IDC Quarterly, the talents and gifts of IDC members are evident. The legal community benefits from their willingness to share their knowledge, experiences, and wisdom, and to give the time it takes to contribute to this publication. As such, just like my daughters’ talent show, there is something for everyone.
Feature Article Stacy Dolan Fulco Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago
The Danger of Security Manuals: How to Prevent Liability Instead of Create It One weekend three people are shot in a restaurant parking lot. One person is dead and the others are severely injured. Within days, a lawsuit is filed and the restaurant is made a respondent in discovery. The first thing that the plaintiffs want is the security manual. Will the manual prevent liability or create it? A written policy or procedure may be open to broad interpretation during civil litigation. A security manual, however, can be risky because opposing counsel will try to use it to create a duty of care against a company defendant. The plaintiff’s attorney will argue that if every word of the security manual is not followed, the defendant’s employees breached a duty. In other words, a poorly drafted manual may create a duty of care on a company that did not previously exist. Even when a court refuses
manuals can be used against a company rather than as a tool to keep the company safe. It also provides practical tips for drafting security manuals that will provide optimal protection for employees, customers, and the company. Finally, the article discusses how security manuals can be used in civil litigation. Liability Created by Security Manuals The two scenarios below explain some ways that a security manual can be used against a company. Scenario #1 A drugstore chain develops a “crisis handbook” and gives one to each store for use in emergencies like fire, rob-
showing that they received training. The form is kept in each employee’s personnel file. A few years after the handbook goes into effect, a gang shooting takes place in one of the store’s parking lot. The store manager never refers to the crisis handbook because there was no emergency inside the store. By the time the store employees learn of the shooting, the incident is over. Just minutes before the shooting, however, the victim and the shooter were store customers. A few months later, the victim sues the store alleging that its security was insufficient and that the criminal attack was reasonably foreseeable based on previous crime in the area. During discovery, the plaintiff requests all of the store’s security manuals. Once the handbook is produced, the plaintiff’s attorney studies every word of it. Not only does the handbook address what to do in case of certain emergencies, it also includes sections about looking for signs of potential violence. It also lists preventive measures the store should take when there are signs of gang activity. These sections require that the store managers be aware of loitering and other activity in the area and to notify — Continued on next page
A security manual, however, can be risky because opposing counsel will try to use it to create a duty of care against a company defendant. to allow such manuals to create a duty of care, compliance with such manuals and polices may be admissible to assist the trier of fact in determining whether a legal duty has been breached. This article illustrates how security
bery, or power outages, among others. Company policy requires that every manager be trained on the procedures in the handbook and know how and when to use them. Company policy also directs that these trained employees sign a form
About the Author Stacy Dolan Fulco is a partner at the Chicago law firm of Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC. She practices primarily in the areas of premises liability, products liability, and wrongful death defense. She received her undergraduate degree at Illinois State University and her J.D./M.B.A. degree from DePaul University. She is a member of the IDC.
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Feature Article | continued
the corporate security department if any signs of gangs or violence are noticed in or near the store. During his deposition, the store manager testifies that he was aware of the handbook, but, that he had no knowledge of the sections that addressed preventive measures and potential signs of gangs or violence. He also testifies that he was not trained on the specifics of the handbook. He thought the handbook was only meant for emergency situations and would never look at it unless there was an emergency in progress. The company cannot produce the form proving that the manager was properly trained, when he was trained, and by whom. In this scenario, the store’s handbook created its own crisis. The plaintiff argues that the preventive measures in the handbook could have prevented the incident but those measures were not instituted by the store and the store manager was not aware the recommendations existed in the handbook. Such testimony supports the plaintiff’s negligent undertaking of security claim. Scenario #2 A corporation with hundreds of franchised gas station locations around the country has a corporate security department and manual aimed at protecting employees. The manual establishes mandatory security procedures. The corporation’s security department monitors and enforces compliance with the security procedures by performing inspections at each location several times a year. Warnings and fines are imposed on the franchised locations when they do not comply with the procedures. A year after the manual and com-
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For decades, Illinois courts have rejected the plaintiffs’ attempts to create legal duties from the defendants’ internal policies or guidelines by holding that such policies do not have the force of law.
pliance program are implemented, an employee arrives to work late one night and is robbed and killed before he can get inside. The employee’s estate sues the franchisor corporation, alleging negligence. The corporation argues that it did not own, operate, or control the gas station. It also argues that it did not hire, fire, or train the employees. The plaintiff’s attorney obtains a copy of the security manual and procedures during discovery and learns about the franchisor corporation’s involvement in security at the gas station. The plaintiff contends that a corporate representative visits the gas station several times a year and speaks with management about the manual and safety compliance. Therefore, counsel argues that the franchisor corporation voluntarily assumes a duty of protection over the employees as a result of the security department and the manual. The court agrees with the plaintiff’s position and determines that because the franchisor corporation provides such detailed and thorough security procedures for the employees, the duty is assumed by the corporation. The court also determines that the corporation had the duty to ensure that the manual was followed and complied with by the employees. As such, the franchisor corporation could be held liable for the employees’ failure to comply with the strict security policies in the manual.
In this scenario, the franchisor corporation set out to protect its franchisees and their employees, but because of the way the policies were drafted and the amount of control retained by the corporation, it failed to protect itself from liability. Legal Implications: Security Manuals as Evidence If the plaintiff’s attorney believes that a security manual can be used against the defendant at trial, the plaintiff’s counsel will go to great lengths to put it in front of a jury. The most powerful argument is that the manual created a duty of care, an employee did not comply with the manual, and therefore, the defendant breached its duty and was negligent. This argument is the primary reason that companies must ensure that their manuals are properly written. For decades, Illinois courts have rejected the plaintiffs’ attempts to create legal duties from the defendants’ internal policies or guidelines by holding that such policies do not have the force of law. Fichtel v. Bd. of Directors of the River Shore of Naperville Condo. Assoc., 389 Ill. App. 3d 951, 959-960 (2nd Dist. 2009); Shank v. Fields, 373 Ill. App. 3d 290, 296 (4th Dist. 2007); Bulger v. Chicago Transit Auth., 345 Ill. App. 3d 103, 119-120 (1st Dist. 2003); Rhodes v. Illinois Central
Gulf R.R., 172 Ill. 2d 213, 238-39 (1996); Blankenship v. Peoria Park Dist., 269 Ill. App. 3d 416, 422 (3rd Dist. 1994); Fillpot v. Midway Airlines, Inc., 261 Ill. App. 3d 237, 244 (4th Dist. 1994)). In Rhodes, the decedent was found asleep and intoxicated in the warming house of a commuter train system by train employees but did not receive assistance for several hours and later died. Rhodes, 172 Ill. 2d 213. The plaintiff argued that the railroad’s internal policy to provide immediate assistance to anyone found injured in a warming house created a legal duty of care. Id. at 238. The Illinois Supreme Court rejected this argument holding that “whether a legal duty exists is a question of law and is determined by reference to whether the parties stood in such a relationship to each other that the law imposes an obligation on one to act for the protection of the other.” Id. at 237-238. The court went on to note that “where the law does not impose a duty, one will not generally be created by a defendant’s
Despite these rulings there is no guarantee that an internal manual will be barred completely.
rules or internal guidelines. Rather, it is the law which, in the end, must say what is legally required.” Id. In Fillpot, a passenger sued for injuries suffered after slipping and falling on ice and snow while exiting a plane and walking on the tarmac to the terminal. Fillpot, 261 Ill. App. 3d at 237.
The airline’s policy manual indicated that salt should be kept near the gate to keep walkways clear. Id. at 244. The plaintiff alleged that the manual created a legal duty to have salt at the gate. The court refused to impose such a duty and noted that the plaintiff had no knowledge of the manual before her accident and did not rely on its contents. Id. at 244. Despite these rulings there is no guarantee that an internal manual will be barred completely. In Martin v. McDonald’s Corp., 213 Ill. App. 3d 487 (1st Dist. 1991), an employee’s representative sued the franchisor after the employee was killed at work. The primary evidence used against the defendant to determine the existence of a duty of care was the company security manual. In Adams v. Family Planning Associates Medical Group, Inc., 315 Ill. App. 3d 533 (1st Dist. 2000), a wrongful death action was brought against a medical clinic. The court held that “when considering the standard of care to which a clinic should be held, the clinic’s internal policies and procedures are an appropriate source of evidence, and the failure of a clinic to follow its policies can be evidence of a breach of the clinic’s duty to a patient.” Adams, 315 Ill. App. 3d at 548. Even when the plaintiff is barred from using a manual against the defendant to prove negligence directly, the plaintiff’s attorneys will look for another avenue to introduce the manual to the jury. Unfortunately for the defense, this is often allowed. Judges often allow experts and witnesses to discuss manuals and specific policies. The judge generally will not allow the specific claims related to the manual to be placed in the jury instructions. From the defense perspective, this distinction is irrelevant.
As many defense attorneys know, some manuals are so detrimental to the defense that the jury’s mere viewing of the manual causes great concern, and may result in a quick settlement. Even if the jury is instructed that a manual does not have the force of law, the jury viewing that manual and determining that an employee did not comply with it, can harm a defense. Practical Tips for Security Manual Content These examples demonstrate how security manuals can create problems and liability. It is up to retailers, restaurants, hotels, and businesses open to the public, and their attorneys, to ensure this does not happen and that their security manual is not used against them. There are a number of practical tips that can help ensure that a security manual does not become a liability. First, before writing or revising a manual, a business should determine the manual’s intent and purpose. Keep the focus narrow and only include information that is directly related to the manual’s specific intent and purpose. As in Scenario #1, if the intent is to have a crisis handbook, keep the focus on proper responses when faced with a crisis. Do not include information about how to prevent the crisis because that alters the handbook’s intent. Second, keep it simple. If there are too many procedures, too many requirements, or too many details, it is less likely that employees will follow the policies. This increases the chances of a manual becoming a liability. — Continued on next page
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Feature Article | continued
Keep the focus narrow and only include information that is directly related to the manual’s specific intent and purpose.
Third, pay attention to who contributes to drafting the security manual. Several people from all departments within the organization should be involved in the drafting. This includes people in the corporate office who decide policy, managers who will train others on the manual, and those working on site and in the field who must follow the policy requirements. People from all of these departments within a company can provide invaluable information to make a manual more useful and user friendly. Finally, it is crucial to involve both in-house counsel and outside defense litigation counsel in the preparation of a manual. Not only is it important to ensure that the wording is correct, but also that the procedures are not stricter than what is required by law. Frequently, authors get carried away with guidelines in an attempt to create a safer environment. If a manual requires more than what the law requires and the manual is shown to a jury, the jury may hold that business to the heightened standard that the manual created and not the legal standard. This may be disastrous to the defense. In addition, a security manual should not be finalized until defense litigation counsel has reviewed it. Defense litigation counsel must defend the manual in times of trouble and is often best at identifying problematic sections. It is always better to have those conversations before a manual is
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finalized than later, when the company faces a lawsuit. Once the manual is drafted, the final step is training. Not only must training be completed, but it must be documented. As with the proverbial falling tree in the forest, if you cannot prove that the training happened, did it really happen? On the flip side, if no one is properly trained on a new manual, what is the point in drafting it? Ensuring that training takes place and that participation is documented is especially useful when a disgruntled former employee is the star witness for the plaintiff. During the deposition, when
and promotions. As long as a manual is in existence, there will always be new employees; so training must be ongoing. Whenever possible, defense litigation counsel should be involved in the training process as well, even if only to help develop the training protocol. This will ensure that the proper information is given and can minimize the chance that training materials can be used against the company in court. Conclusion Security is an important issue that every retailer, restaurant, hotel, and business open to the public must address. For most companies, having a manual that solely addresses security issues is a must. As such, every company needs to ensure that its manual is an asset and not a liability. Defense litigation counsel plays a major part in that analysis and must help their clients create manuals
Ensuring that training takes place and that participation is documented is especially useful when a disgruntled former employee is the star witness for the plaintiff.
he or she claims never to have heard of or seen the manual, a document with his or her signature, a date, the type of training received, and the name of the trainer is crucial. Once the employees are trained and the manual is released, the process is not over. As a manual is used, it is important that training continue for all future hires
that do not cause more harm than good. Security manuals should be well written and well executed. Indeed, the ability to defend one wrongful death lawsuit with a well-written and well-executed security manual makes the hard work that goes into drafting the manual and training the employees worth the time and the expense.
Appellate Practice Corner Scott L. Howie Pretzel & Stouffer, Chartered, Chicago
For the Record: Preserving Issues for Appeal Long before trial, attorneys spend substantial time and effort preparing to persuade a jury to find in favor of their clients. Despite that effort, of course, sometimes the jury is unconvinced. Responsibly trying a case includes preparing for the possibility of an adverse verdict. If the verdict can be blamed on erroneous rulings that unfairly prejudiced one’s client, then an appeal is the natural next step. But if an attorney starts thinking about the appeal only after the jury returns its verdict, then it may be too late. There are many things that must be done during the trial to preserve the record for a potential appeal. Though the chief motivation for doing those things might be to ensure that the arguments will be available on appeal, that effect is largely collateral to the main purpose: prevailing at trial. Thinking about preserving the record for an appeal makes an attorney try the case better in the first place. This column discusses the most common areas in which trial error occurs, as well as the actions that are necessary to preserve such errors for appeal. In addition, it suggests ways in which one can put those actions to use toward winning the trial in the first place—so as not to have an appeal at all. Errors in the Admission of Evidence It is imperative to object to the admission of evidence you believe the
court should exclude—and to do so at the time of its introduction. Uhrhan v. Union Pac. R.R. Co., 155 Ill. 2d 537, 546 (1993); York v. El-Ganzouri, 353 Ill. App. 3d 1, 17-18 (1st Dist. 2004). This requirement reflects the primary purpose of the waiver rule: to ensure that the trial court has the opportunity to correct the error. See York, 353 Ill. App. 3d at 10. “A trial court cannot correct the error and prevent prejudice when the objection is not made as the error occurs.” Moller v. Lipov, 368 Ill. App. 3d 333, 342 (1st Dist. 2006) (citing York, 353 Ill. App. 3d at 10). It is particularly important to object even if the trial judge has already denied a motion in limine to bar the evidence in question. If the objection is not renewed when the objectionable evidence is introduced, it is forfeited. Fleming v. Moswin, 2012 IL App (1st) 103475-B, ¶ 96; Guski v. Raja, 409 Ill. App. 3d 686, 696 (1st Dist. 2011) (citing Simmons v. Garces, 198 Ill. 2d 541, 569 (2002)). It is also important to be specific about the basis for the objection. An objecting party must identify the same basis for the objection in the trial court that will be argued on appeal; “grounds not stated are waived on review.” In re Estate of Mercier, 2011 IL App (4th) 110205, ¶ 16 (quoting Gausselin v. Commonwealth Edison Co., 260 Ill. App. 3d 1068, 1079 (1st Dist. 1994)). It is not always necessary to object every time the challenged matter arises; counsel may object once, outside the
presence of the jury, and ask for a continuing objection. Romanek-Golub & Co. v. Anvan Hotel Corp., 168 Ill. App. 3d 1031, 1040 (1st Dist. 1988). But, a continuing objection should be used with caution. “Ordinarily, continuing objections are not recognized unless the trial court indicates its recognition of the continuing objection.” Fleming, 2012 IL App (1st) 103475-B, ¶ 96 (quoting LaSalle Bank, N.A. v. C/HCA Dev. Corp., 384 Ill. App. 3d 806, 820 n.6 (1st Dist. 2008)). Even if the trial court has acknowledged a continuing objection, the objection might be deemed to expire when the corresponding line of testimony ends—a point that can be difficult to determine and may be open to interpretation. It may also be unclear what becomes of a continuing objection if the examination later returns to the same or a similar line of testimony, including on redirect or recross. Where there is any room for doubt, counsel should restate the objection. While a contemporaneous objection is a procedural requirement for the preservation of error, it is also a potential — Continued on next page
About the Author Scott L. Howie is a partner at Pretzel & Stouffer, Chartered, in Chicago, specializing in posttrial and appellate practice in the state and federal courts. He received his undergraduate degree from Northwestern University in 1989 and his law degree from ChicagoKent College of Law in 1994. Mr. Howie is a member and past director of the Illinois Appellate Lawyers Association, where he co-chairs the Moot Court Committee.
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While a contemporaneous objection is a procedural requirement for the preservation of error, it is also a potential opportunity. Rulings on the admission of evidence are generally interlocutory, and therefore may be subject to reconsideration at any time until final judgment.
opportunity. Rulings on the admission of evidence are generally interlocutory, and therefore may be subject to reconsideration at any time until final judgment. Cundiff v. Patel, 2012 IL App (4th) 120031, ¶ 20. In limited circumstances, the requirement of a contemporaneous objection provides an excuse to reargue a significant point; a trial attorney might reasonably argue that despite the original ruling, the trial has unfolded in a way that calls for reconsideration. This approach should be reserved for instances in which the issue is significant, and counsel believes that the trial judge might have a change of heart about a particular ruling. A judge will justifiably lose patience with an attorney who treats every objection as an excuse to reargue an unsuccessful motion in limine, and there is no sense in being a pest about minor issues. But, because appellate procedure calls for the objection anyway, there are times when it is reasonable to use such an objection as something more than just a technical prerequisite for appellate review. Errors in the Exclusion of Evidence The concerns are different when the alleged error is the exclusion of evidence, and so is the procedure for preserving
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such errors. While the proper time to object to the admission of evidence is when it is introduced, there is no such precise moment to preserve an objection to the exclusion of evidence. Indeed, since the evidence is not coming in at trial, the objection is to the ruling, not to the evidence itself. Most importantly, if the evidence is not admitted, then it might not be in the record at all—and if it is not in the record, then the reviewing court may be unable to determine whether the trial court should have admitted it. These concerns are properly addressed by making an offer of proof. In an offer of proof, counsel presents the excluded evidence on the record but outside the presence of the jury. If circumstances permit, counsel may make a formal offer of proof by presenting a live witness on the stand and eliciting the testimony that has been barred. Cundiff, 2012 IL App (4th) 120031, ¶ 20. In the alternative, an informal offer of proof may be sufficient if the attorney informs the court, “with particularity,” of the substance of the testimony the witness would have given. Id.; see also Hall v. Northwestern Univ. Med. Clinics, 152 Ill. App. 3d 716, 722 (1st Dist. 1987). In either case, the purpose of the offer of proof is “to disclose to the trial judge
and opposing counsel the nature of the offered evidence and to enable a reviewing court to determine whether exclusion of the evidence was proper.” John J. Moroney & Co. v. Ill. Prop. Tax Appeal Bd., 2013 IL App (1st) 120493, ¶ 54 n.3 (quoting People v. Andrews, 146 Ill. 2d 413, 421 (1992)). Just as it is crucial to object to arguably inadmissible evidence, appellate review of the exclusion of evidence depends upon an offer of proof. See Dillon v. Evanston Hosp., 199 Ill. 2d 483, 495 (2002). An offer of proof must be “specific in nature and not based merely on speculation or conjecture.” Abbinante v. O’Connell, 277 Ill. App. 3d 1046, 1050 (3d Dist. 1996). An informal offer of proof may be inadequate if it is “neither clear nor obvious from the record what [the witness] would have answered, what the basis for his answer would have been or what purpose his answer would have served.” Kim v. Mercedes-Benz, U.S.A., Inc., 353 Ill. App. 3d 444, 452 (1st Dist. 2004). It is not enough, for instance, to tell the court that the witness would have testified to what color the traffic light was; counsel must tell the court that she would have testified that the light was red, or yellow, or green. If the offer of proof is too sparse for the reviewing court to determine if the excluded evidence had any relevance to the proceeding, the offer will be deemed inadequate and the alleged error will be forfeited. See Snelson v. Kamm, 204 Ill. 2d 1, 23-24 (2003). Likewise, an offer of proof must demonstrate that the evidence was admissible. Turgeon v. Commonwealth Edison Co., 258 Ill. App. 3d 234, 241 (2d Dist. 1994). At a minimum, it must show that counsel would have laid a proper foundation. See Cundiff, 2012
IL App (4th) 120031, ¶ 23. In the context of expert testimony, for instance, counsel may need to establish that the witness was properly qualified as an expert and that the witness’s opinion testimony was properly disclosed before trial. See Ill. S. Ct. R. 213 (eff. Jan. 1, 2007). Like a contemporaneous objection to evidence, an offer of proof can be an opportunity to suggest reconsideration of an adverse order in limine. This can be especially powerful if it is possible to put the actual witness on the stand and elicit the testimony the judge has barred; perhaps the judge will view the evidence differently after seeing and hearing the witness. Again, counsel should use this strategy sparingly and judiciously, and only when the evidence is especially important or the judge seems inclined to reconsider the original ruling. Errors in Jury Instructions Jury instructions are another common source of arguments for reversal on appeal. As with the admission of evidence, a party must make an objection to any jury instruction alleged to be improper or unsupported by evidence at the time an opponent offers the instruction. Otherwise, counsel forfeits the alleged error. Barrick v. Grimes, 308 Ill. App. 3d 306, 309 (4th Dist. 1999). At the same time, counsel must tender an alternate instruction and ask that it be given instead of the one the court intends to give. Vojas v. K-Mart Corp., 312 Ill. App. 3d 544, 549 (5th Dist. 2000). This is a requirement even if counsel maintains that no version of an opponent’s instruction is appropriate. Compton v. Ubilluz, 353 Ill. App. 3d 863, 869 (2d Dist. 2004). Providing an
alternate instruction in that circumstance can be a daunting task. Counsel should resist the urge to appear cooperative by withdrawing an instruction the trial court has declined to give. An attorney who withdraws a jury instruction effectively forfeits the argument that the court should have given the instruction. See Heavey v. Ehret, 166 Ill. App. 3d 347, 359 (1st Dist. 1988). Errors in Denying Motions for Directed Verdicts Defendants in civil cases should be particularly concerned with the procedural rules concerning directed verdicts. For appellate purposes, it is crucial to understand the differences between the rules for jury trials and those that govern bench trials. In a jury trial, if the court denies a motion for directed verdict at the close of the plaintiff’s case, the defendant forfeits the issue for review by putting on evidence—unless the defendant renews the request in a post-trial motion. Ellig v. Delnor Cmty. Hosp., 237 Ill. App. 3d 396, 403-04 (2d Dist. 1992). The Code of Civil Procedure sets forth this rule in the section governing post-trial motions in jury cases: Reserved ruling on motion for directed verdict—Post-trial motions in jury cases. (a) If at the close of the evidence, and before the case is submitted to the jury, any party moves for a directed verdict the court may (1) grant the motion or (2) deny the motion or reserve its ruling thereon and submit the case to the jury. If the court denies the
motion or reserves its ruling thereon, the motion is waived unless the request is renewed in the post-trial motion. 735 ILCS 5/2-1202(a) (emphasis added); see also Ellig, 237 Ill. App. 3d at 404. While section 2-1202 refers to motions for directed verdict “at the close of the evidence,” the Ellig court applied the same principle to a motion that the defendant had made at the close of the plaintiff’s case. Ellig, 237 Ill. App. 3d at 403. While the defendant waived the argument by omitting it from the post-trial motion, the court’s reasoning suggested that it would have been preserved for appeal had it been included in the post-trial motion. Id. at 404. But, in a bench trial, a different waiver rule would have applied. In a bench trial, presenting defense evidence forfeits appellate review of the denial of the directed verdict—and counsel cannot revive the argument in a post-trial motion. Motion in non-jury case to find for defendant at close of plaintiff’s evidence. In all cases tried without a jury, defendant may, at the close of plaintiff’s case, move for a finding or judgment in his or her favor. In ruling on the motion the court shall weigh the evidence, considering the credibility of the witnesses and the weight and quality of the evidence. If the ruling on the motion is favorable to the defendant, a judgment dismissing the action shall be entered. If the ruling — Continued on next page
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on the motion is adverse to the defendant, the defendant may proceed to adduce evidence in support of his or her defense, in which event the motion is waived. 735 ILCS 5/2-1110 (emphasis added); see also Pancoe v. Singh, 376 Ill. App. 3d 900, 909 (1st Dist. 2007). As one court has described it, this statutory requirement is “clear, unambiguous, and contains no exceptions.” Fear v. Smith, 184 Ill. App. 3d 51, 55 (5th Dist. 1989). As such, a defense attorney in a bench trial must realistically assess the merit of the directed-verdict motion, as well as the potential hazard of putting on a case in which a witness might unexpectedly supply the evidence claimed to be missing from the plaintiff’s case-in-chief. Conclusion Being mindful of potential errors during trial makes an attorney more thorough, underscoring rulings that might not otherwise seem significant, and prompting a responsible attorney to treat those events as significant enough to call for a new trial. Addressing such things during trial is far more responsible than treating them merely as insurance for an appeal—hoping for them, even—in the event of an adverse verdict. While an appealable issue is a nice thing to have, it is far better to avoid the adverse verdict in the first place. In some cases, a heightened sensitivity to potential trial errors can help to achieve that outcome.
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Employment Law James L. Craney Lewis Brisbois Bisgaard & Smith, LLP, Edwardsville
Illinois Employers May Not Pre-Screen a Job Applicant’s Criminal History On July 21, 2014, Illinois Governor Pat Quinn signed the Job Opportunities for Qualified Applicants Act (the Act). Pub. Act 98-774 (eff. Jan. 1, 2015). By enacting this law, Illinois has joined a growing number of states that have enacted so-called “Ban the Box” laws for employers. These laws are so-named because they prohibit employers from requiring applicants to check a box on a job application indicating whether they have been convicted of a crime. To date, similar laws have been passed in at least 11 other states: California, Colorado, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Minnesota, Nebraska, New Mexico and Rhode Island. (See, California Assembly Bill 218; Colorado House Bill 1263; Connecticut House Bill 5207; Delaware House Bill 167; Hawaii House Bill 3528 (creating HRS § 378-2.5); Maryland Senate Bill 4 (creating Article 2-203, Chapter 160); Massachusetts Senate Bill 2583 (creating Chapter 256 of the Acts of 2010); Minnesota Senate Bill 523 (2013) (amending Minn. Stat. § 364 et seq.); Nebraska Legislative Bill 907 (West 2014); New Mexico Senate Bill 254 (adding N.M. Stat § 28-2-3); Rhode Island House Bill 5507.) The Act goes into effect on January 1, 2015, and applies to any person or private entity that has 15 or more employees. Pub. Act 98-774 (§§ 10, 15). It also applies to employment agencies, defined as “any person or entity regularly undertaking
By enacting this law, Illinois has joined a growing number of states that have enacted so-called “Ban the Box” laws for employers. with or without compensation to procure employees for an employer or to procure for employees opportunities to work for” an employer. Id. Under the Act, an employer or employment agency may not inquire about, consider, or require disclosure of the criminal record or criminal history of an applicant for employment,
About the Author James L. Craney is a partner in the Madison County office of Lewis Brisbois Bisgaard & Smith LLP, where his practice focuses upon general liability litigation. During his career, Mr. Craney has defended numerous employment discrimination, wrongful termination, and civil rights violation suits, both in federal and state court. He earned his B.S. from the University of Illinois in Champaign-Urbana, and his M.S. from Southern Illinois University in Carbondale. He earned his J.D. from St. Louis University, where he also obtained the program’s Health Law Certificate. Mr. Craney is a member of the IDC Employment Law Committee, and is a regular speaker before bar association and industry groups.
until the applicant has been determined qualified for the position and notified that the applicant has been selected for an interview by the employer or employment agency. Pub. Act 98-774 (§ 15(a)). If there is not an interview process, the employer or employment agency may not inquire into an applicant’s criminal record or criminal history until after a conditional offer of employment is made to the applicant by the employer or employment agency. Id. Pre-Screening Exceptions There are three exceptions to the prohibition against pre-screening for an applicant’s criminal history. First, that prohibition does not apply to employers who are required to exclude applicants with certain criminal convictions from employment due to federal or state law. Pub. Act 98-774 (§ 15(b)(1)). Second, the prohibition does not apply to positions that require a standard fidelity bond, or an equivalent bond, and the applicant’s conviction of one or more specified criminal offenses would disqualify the applicant from obtaining such a bond. In this case, the employer may include a question or otherwise inquire whether the applicant has ever been convicted of any of those offenses. Pub. Act 98-774 (§ 15(b)(2)). Third, the prohibition does not apply to employers of individuals licensed under the Emergency Medical Services (EMS) Systems Act. Pub. Act 98-774 (§ 15(b)(3)). Nothing in the Act prohibits an employer from notifying applicants in writing of the specific offenses that will disqualify an applicant from employment in a particular position due to federal or state law, or the employer’s policy. Pub. Act 98-774 (§ 15(c)).
The Act prohibits pre-screening a job applicant’s criminal history. But, it does not prohibit an employer from basing employment decisions in part on an applicant’s criminal history.
Under the Act, it is the Illinois Department of Labor’s (IDOL) responsibility, and not the Illinois Department of Human Rights, to investigate alleged violations of its provisions. Pub. Act 98-774 (§ 20). If the IDOL determines the Act has been violated, it may bring a civil action to recover penalties. For the first violation, an employer may receive a written warning, and the employer shall have 30 days to remedy the violation. Pub. Act 98-774 (§ 20(a)(1)). For a second violation, or if the first violation is not remedied within 30 days, an employer may be assessed a civil penalty of up to $500. Pub. Act 98-774 (§ 20(a) (2)). For the third violation, or if the first violation is not remedied within 60 days, an employer may be assessed an additional civil penalty of up to $1,500. Pub. Act 98-774 (§ 20(a)(3)). For subsequent violations, or if the first violation is not remedied within 90 days, an employer may be assessed an additional penalty of up to $1,500 for each 30-day period that passes without compliance. Pub. Act 98-774 (§ 20(a)(4)). All funds recovered as civil penalties shall be deposited into the Job Opportunities for Qualified Applicants Enforcement Fund, and may be used only to enforce the provisions of the Act. Pub. Act 98-774 (§ 20(c)) (creating 30 ILCS 105/5.855). Unlike the Illinois Human Rights
Act and the various federal laws governing employment and discrimination, the Act does not create a private cause of action. The law, however, provides that the IDOL may adopt rules necessary to administer the Act. Pub. Act 98-774 (§20(d)). The IDOL may also establish an administrative procedure to adjudicate claims. Id. Finally, the IDOL may issue final and binding decisions subject to the Administrative Review Law. Id. Whether the IDOL will institute procedures allowing an applicant to file an administrative charge and pursue an administrative action against an employer directly remains an open issue. The Act prohibits pre-screening a job applicant’s criminal history. But, it does not prohibit an employer from basing employment decisions in part on an applicant’s criminal history. Nonetheless, employers should be aware that the Equal Employment Opportunity Commission (EEOC) has issued specific guidance on this issue. U.S. Equal Employment Opportunity Commission, Number 915.002, Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.§ 2000e et seq. (April 25, 2012) (the Guidance).
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In the Guidance, the EEOC explains that federal law does not prohibit employers from asking a potential candidate for employment about prior criminal history. Id. at 4-6. The EEOC, however, building on existing case law, suggests that an employers’ use of criminal history in hiring decisions may under certain circumstances violate Title VII of the Civil Rights Act of 1964, as amended (Title VII). Id. at 8-18. Title VII prohibits employers from using policies or practices that screen individuals based upon criminal history information if those policies have a disparate impact upon employees based upon race, color, religion, sex or national origin, and if they do not help the employer accurately decide if the person is likely to be a responsible, reliable, or safe employee. Id. Conclusion In light of the Act’s passage, Illinois employers should take the opportunity to review their recruitment and hiring procedures, including job application forms, and ensure that they are in compliance with the Act and other applicable laws. If an employer feels that applicants’ criminal convictions are relevant to hiring decisions, the basis for that policy should be clearly articulated in a written guideline, including the particular types of convictions that are relevant, and how they are related to performance of the particular position. All supervisory and human resource personnel should be made aware that these inquiries are prohibited early in the interview process. Finally, every step should be taken to ensure that the information collected is kept confidential.
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Medical Malpractice Update Dede K. Zupanci HeplerBroom LLC, Edwardsville
The Lost Chance Doctrine is Still Alive in Medical Malpractice Actions: Hemminger v. LeMay In Hemminger v. LeMay, 2014 IL App (3d) 120392, modified upon denial of reh’g, a female patient presented to her physician, an obstetrician/gynecologist, with complaints of abdominal pain and spotting. A physical examination found an enlarged cervix, but the doctor did not perform a biopsy. Hemminger, 2014 IL App (3d) 120392, ¶ 8. Six months later, the patient was diagnosed with Stage IIIB cervical cancer. According to national guidelines, this condition carries a five-year survival rate of 32%. Id. ¶ 8. Nearly 18 months later, the patient died from the disease. Id. ¶ 3. Her surviving spouse filed a medical malpractice lawsuit against the defendant physician and claimed damages under the lost chance doctrine. Id. ¶ 4. The plaintiff argued that the defendant’s failure to diagnose cancer decreased his wife’s chances for survival, even though there was no evidence that a better outcome would have occurred with an earlier diagnosis. Id. ¶ 4. In fact, at trial, the plaintiff’s only expert opined that it is impossible to know whether earlier treatment would have saved the patient. Id. ¶ 11. Hemminger is the most recent appellate case to address the lost chance doctrine, and as outlined below, follows the Illinois Supreme Court’s holding in Holton v. Mem’l Hosp., 176 Ill. 2d 95 (1997), which resolved a previous conflict among the lower courts on the burden of proof requirement. The plaintiffs involved in medical malpractice actions must prove that the
defendant health-care provider breached the applicable standard of care and that the breach was a proximate cause of the plaintiff’s injuries. Purtill v. Hess, 111 Ill. 2d 229, 241-42 (1986). The lost chance doctrine is a factor in the proximate cause analysis, and not a separate cause of action, when the plaintiff alleges that the defendant health-care provider’s delay in diagnosis or treatment decreased the overall effectiveness of potential recovery. Holton, 176 Ill. 2d at 119 (1997). Illinois courts have been divided on the burden of proof required for claims pursuant to the lost chance doctrine. Id. at 105. Some courts have dismissed the theory after finding that it decreases the plaintiff’s burden for proving proximate cause. Id. The Illinois Supreme Court, however, has stated that the doctrine is a viable theory, and that the plaintiff who claims injuries for a lost chance must prove that that the alleged malpractice proximately caused an increased risk of harm, or a lost chance of recovery, to a reasonable degree of medical certainty.
About the Author Dede K. Zupanci is a partner in the Edwardsville office of HeplerBroom LLC. Her practice focuses on the defense of medical malpractice actions, as well as other healthcare litigation. She is a 2002 graduate of Saint Louis University School of Law.
Id. at 120. The plaintiff need not show survival or that a better outcome would have resulted, only the negligence of the defendant. Id. at 119. The Illinois Supreme Court put any question of the definition, or the applicability of the lost chance doctrine, to rest in its decision in Holton. In that case, the patient presented to the defendant hospital with numbness and tingling below the waist. Id. at 100. During her admission she gradually lost the ability to move her legs, but this progression was not reported to the physicians. Id. at 101. The patient eventually lost all motor control from the waist down. Id. The nurse called the primary-care physician and neurosurgeon, but did not report that the condition had been progressively declining. Id. The patient was transferred to another hospital where she was diagnosed with osteomyelitis, which resulted in paraplegia. Id. at 103. The treating neurosurgeon testified that had he been told that the patient’s condition had been gradually declining he would have initiated a different course of treatment, and the patient would have had a very strong chance for a positive outcome. Id. at 102. The jury found in favor of the plaintiff, and the hospital appealed. Id. at 103. The appellate court affirmed. Id. The defendant then argued to the Illinois Supreme Court, inter alia, that the appellate court’s opinion improperly decreased the plaintiff’s proximate cause burden of proof. Id. at 104. Specifically, the defendant asserted that the plaintiff failed to put into evidence any expert testimony that established that her paralysis would have been avoided had the nurses alerted the physicians earlier of the patient’s declining condition. Id. at 107. The court disagreed. Id. (citing Borowski v. Von Solbrig, 60 Ill. 2d 418,
[T]he plaintiff who claims injuries for a lost chance must prove that that the alleged malpractice proximately caused an increased risk of harm, or a lost chance of recovery, to a reasonable degree of medical certainty. The plaintiff need not show survival or that a better outcome would have resulted, only the negligence of the defendant. 424 (1975)). The supreme court found that the plaintiff does not need to prove that a better outcome would have resulted absent the alleged negligent care. Holton, 176 Ill. 2d at 107. The Holton court held that evidence that shows “‘to a reasonable certainty that negligent delay in diagnosis or treatment . . . lessened the effectiveness of treatment is sufficient to establish proximate cause.’ (Emphasis added.)” Id. at 115 (quoting Northern Trust Co. v. Louis A. Weiss Mem’l Hosp., 143 Ill. App. 3d 479 (1986)). The court reasoned that the nurse’s failure to notify the physicians of the patient’s change in condition diminished any possibility of receiving the proper treatment. Holton, 176 Ill. 2d at 108. The plaintiff presented evidence that a different course of treatment would have been rendered had the nurses properly communicated the patient’s change in condition. Id. Any question as to the legitimacy of the lost chance doctrine was answered by the court as it stated, “[t]o the extent a plaintiff’s chance of recovery or survival is lessened by the malpractice, he or she should be able to present evidence to a jury that defendant’s malpractice, to a reasonable degree of medical certainty, proximately caused the increased risk of harm or lost chance of recovery.” Id. at 119. The court expressly rejected the notion that the plaintiffs cannot recover
for medical malpractice injuries if they cannot prove that they would have had a greater than 50% chance of survival or recovery absent the negligent care by the defendant. Id. Any evidence of a shortened lifespan goes to the issue of damages, not liability. Id. at 120 n.2 (citing McKellips v. Saint Francis Hosp., Inc., 741 P.2d 467, 476-77 (Okla. 1987) and Martin J. McMahon, Annotation, Medical Malpractice: Measure and Elements of Damages in Actions Based on Loss of Chance, 81 A.L.R.4th 485 (1990)). Holton is still the law in Illinois, and appellate courts have both followed and distinguished its holding. In Aguilera v. Mt. Sinai Med. Ctr., the plaintiff’s experts testified that a negligent delay in administering a CT scan lessened the effectiveness of treatment. Aguilera v. Mount Sinai Med. Ctr., 293 Ill. App. 3d 967, 968-70 (1st Dist. 1997), appeal denied, 178 Ill. 2d 573 (1998). However, the court found that the plaintiff failed to prove causation because the evidence revealed that no medical treatment was available for the decedent’s fatal illness, even if the proper treatment had been rendered timely, and that there was no evidence to support the opinions that the negligence lessened the effectiveness of — Continued on next page
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treatment. Aguilera, 293 Ill. App. 3d at 974-76. In Perkey v. Portes-Jarol, the plaintiff’s expert testified that the decedent’s pancreatic cancer most likely was incurable, regardless of any treatment, at the time she was seen by the defendant physician. Perkey v. Portes-Jarol, 2013 IL App (2d) 120470, ¶ 62. The defendant argued that the plaintiff failed to prove the decedent had a chance to survive, and that this was required to show proximate cause. Perkey, 2013 IL App (2d) 120470, ¶ 62. The expert also testified that even though the patient would most likely have eventually succumbed to the disease, her chance for being cured would have doubled had there been no delay in diagnosis by the defendant. Id. ¶ 64. Based upon this testimony, the appellate court found that the plaintiff presented at least “some evidence” that the defendant’s negligence decreased her chances for survival, and left the question of whether this was enough to establish proximate cause to the jury. Id. In Seef v. Ingalls Mem’l Hosp., the court distinguished Holton, finding in favor of the hospital defendant in a lost chance claim when the plaintiff produced no medical expert to establish what treatment would have been rendered had the nurse notified the physician of changes in fetal heart rate. Seef v. Ingalls Mem’l Hosp., 311 Ill. App. 3d 7, 21, 24 (1st Dist. 1999), appeal denied, 188 Ill. 2d 584 (2000). Unlike Holton, where testimony established that had the physicians known about the patient’s change in condition the physician would have provided different treatment, in Seef, the defendant physician asserted that he would not have done anything differently even if he had been properly notified of the patient’s changes. Id at 20. See also Reed v. Jackson Park Hosp. Found.,
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325 Ill. App. 3d 835, 840-47 (1st Dist. 2001) (holding that when there is medical evidence that establishes the patient’s outcome would have been the same regardless of the treatment rendered, the plaintiff’s claim of lost chance must fail). In Hemminger, the appellate court found the plaintiff presented sufficient evidence to establish that the defendant deprived the plaintiff of an opportunity to undergo treatment that could have been effective if administered earlier. Hemminger, 2014 IL App (3d) 120392, ¶ 24. The patient’s surviving husband brought suit against the treating physician for failure to diagnose his wife’s cervical cancer. Id. ¶ 4. The defendants moved for a directed verdict at the end of the trial, arguing that the plaintiff failed to meet his burden of proving proximate causation because there was no evidence presented that established the defendant’s negligence lessened the patient’s chance of survival. Id. ¶ 12. The defendant asserted that the plaintiff’s expert, who testified that within a reasonable degree of medical certainty the delay in diagnosis caused a decrease in chance for survival, “‘was unable to opine that the outcome in [the patient’s] specific case would have been different with earlier treatment.” Id. ¶ 23. The trial court granted the defendant’s motion for directed verdict, finding that the plaintiff’s expert offered only generalized evidence based upon cancer survival rates and a general opinion that an earlier diagnosis leads to better results. Id. ¶¶ 12-13. The appellate court reversed, finding that the plaintiff’s expert expressly connected the survival rate statistics to the case by opining that the failure to diagnose the patient’s cancer decreased her chances for survival. Id. ¶ 28. The
court found it significant that the expert did not merely refer to generalized statistics, but instead relied upon her training and education to form an opinion on the patient’s cancer staging and rate of survival. Id. The court stated that the type of evidence presented by the plaintiff’s expert was sufficient to establish a prima facie case for proximate causation and to survive a motion for directed verdict, and the plaintiff presented enough evidence to create a triable issue of fact on the issue of proximate cause. Id. ¶ 25. The court reached this decision even though the plaintiff’s expert testified that there was no way to know how the patient would have responded to treatment had the diagnosis been made earlier. Id. ¶ 11. Unlike Holton, the Hemminger opinion makes no mention of any testimony from the patient’s treating oncologist as to what treatment would have been rendered had there been an earlier diagnosis, and appears to have based its holding on the plaintiff’s presentation of enough evidence on causation to submit to a jury. See Holton, 176 Ill. 2d at 106. For the plaintiff to prevail on a claim for lost chance of survival or recovery, the evidence must show that within a reasonable degree of medical certainty the alleged negligent delay in diagnosis or treatment lessened the effectiveness of treatment. Holton, 176 Ill. 2d at 119. When defending such a claim, it may be beneficial to elicit medical testimony that the outcome would have been identical, or that the subsequent treating physicians would have administered the same treatment, even if the alleged negligent acts did not occur. The determination of proximate cause is an issue of fact and will therefore be a question for the jury.
Amicus Committee Update Craig L. Unrath Heyl, Royster, Voelker & Allen, P.C., Peoria
Harris v. One Hope United, Inc. The Illinois Association of Defense Trial Counsel (IDC) filed an amicus brief in the Illinois Supreme Court in Harris v. One Hope United, Inc., 2013 IL App (1st) 131152, appeal allowed, 117200 (Mar. 26, 2014). One Hope United (One Hope) contracts with the Illinois Department of Children and Family Services (DCFS) to provide services related to keeping troubled families together. DCFS assigned a case to One Hope that involved an abused child who died while in the care of her mother. The Cook County public guardian, as administrator of the estate, sued One Hope alleging it failed to protect the child from abuse. Harris, 2013 IL App (1st) 131152, ¶¶ 3-4.
On appeal, One Hope argued that its priority review process should remain confidential “so that its staff will ‘freely and candidly’ investigate problem cases, and informants will similarly share information with investigators, without fear that their remarks will be revealed outside of One Hope.” Id. ¶ 17. For the self-critical analysis privilege to apply, a party must show: “(1) the information sought resulted from a self-critical analysis undertaken by the party seeking protection, (2) the public has a strong interest in preserving the free flow of the information sought, (3) the information is of the type whose flow would be curtailed if discovery were allowed, and (4) the document was prepared with
On appeal, One Hope argued that its priority review process should remain confidential “so that its staff will ‘freely and candidly’ investigate problem cases, and informants will similarly share information with investigators . . ..”
During litigation, One Hope’s executive director revealed that a “priority review” report regarding the child’s case existed. One Hope refused to produce the report claiming it was protected from disclosure by the self-critical analysis privilege. Although some federal courts have recognized this privilege, no Illinois state court has. The trial court found that the privilege did not apply and, to facilitate One Hope’s request for review, found One Hope’s attorneys in “friendly” contempt. Id. ¶ 6.
the expectation that it would be kept confidential and has in fact been kept confidential.” Id. ¶ 10, quoting Ludwig v. Pilkington North America, Inc., 2004 WL 1898238, at *2 (N.D. Ill. Aug. 13, 2004). The appellate court refused to adopt the privilege, finding “the overriding need to determine the truth with respect to the cause of death of an infant overrides the desire of One Hope to keep its self-evaluations confidential.” Id. ¶ 17. The appellate court also noted the Illinois Supreme Court’s admonition that
recognition of common law privileges is a matter best left to the legislature. Id. ¶ 15. John F. Watson of Craig & Craig, LLC and Craig L. Unrath of Heyl, Royster, Voelker & Allen, P.C. prepared the amicus brief on IDC’s behalf in support of the defendant. John is commended for taking the laboring oar on this project.
Michael v. Precision Alliance Group, LLC The IDC also filed an amicus brief in support of the defendant in Michael v. Precision Alliance Group, LLC, 2014 IL App (5th) 120517-U, appeal allowed, 117376 (May 28, 2014).The Michael case involves a claim for common law retaliatory discharge. The plaintiff employees alleged that the defendant discharged them in retaliation for reporting to the Illinois Department of Agriculture that Precision knowingly shipped underweight bags of soybeans. Precision presented evidence that it — Continued on next page
About the Author Craig L. Unrath is partner at Heyl, Royster, Voelker & Allen, P.C., and Chair of the firm’s Appellate practice group. He is also Vice Chair of the Professional Regulation/Licensure practice group. He began his career with Heyl Royster in 1994 after serving for two years as law clerk to Justice Carl A. Lund of the Illinois Appellate Court, Fourth District. Mr. Unrath has extensive experience in the Illinois Appellate Courts, Illinois Supreme Court, and the Seventh Circuit Court of Appeals. He has also argued cases in the United States Courts of Appeals for the Eighth Circuit, and the Federal Circuit. He served as President of the Illinois Appellate Lawyers Association from 2007 to 2008, and currently serves as Chair of the Amicus Committee for the Illinois Association of Defense Trial Counsel (IDC).
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| continued
terminated one of the plaintiffs because he was involved in a forklift accident. As for the other plaintiffs, Precision claimed they were discharged as part of a reduction in workforce necessitated by a slowdown in business. Id. ¶ 10. The trial court granted Precision’s motion for summary judgment, but the appellate court reversed finding that the question of whether an employee was discharged for a valid, nonpretextual reason was “usually not ripe for summary judgment.” Michael v. Precision Alliance Group, LLC, 2011 IL App (5th) 100089, ¶ 34. Afterwards, the case proceeded to a bench trial where the trial court found that Precision’s reasons for discharging the plaintiffs were valid and nonpretextual. Id. ¶ 11. The trial court arrived at its decision by applying the McDonnell Douglas burden shifting analysis, which Illinois courts properly apply in actions under the Illinois Human Rights Act Id. ¶ 13, citing Maye v. Human Rights Commission, 224 Ill. App. 3d 353 (1st Dist. 1991). The appellate court reversed. It held that the trial court’s burden shifting analysis erroneously increased the plaintiffs’ burden by requiring them to prove causation, and that the reasons Precision gave for the plaintiffs’ discharge were pretextual. Michael, 2014 IL App (5th) 120517-U, ¶ 13. The appellate court concluded that because the trial court acknowledged that the plaintiffs had presented evidence of a causal nexus between their discharge and their protected activities, judgment should be entered for the plaintiffs. Id. ¶ 13. The court remanded the case for further proceedings on the issue of damages only. Id. Craig L. Unrath prepared the amicus brief on behalf of the IDC in support of the defendant. 18 | IDC QUARTERLY | Fourth Quarter 2014
Civil Practice and Procedure Donald Patrick Eckler Pretzel & Stouffer, Chartered, Chicago
A New Potential Minefield for Defense Counsel in Settling Wrongful Death Cases In the recent decision of Estate of Powell v. Wunsch, the Illinois Supreme Court affirmed the ruling of the Illinois Appellate Court First District that the plaintiff’s attorney owed a duty not only to the special representative of the estate of the deceased, but also to the beneficiaries of the estate. Estate of Powell v. Wunsch, 2014 IL 115997, ¶ 1. As a result, a legal malpractice claim may lie against the plaintiff’s attorney for failing to adequately protect the beneficiary’s interests in a settlement. Powell, 2014 IL 115997, ¶ 1. This decision has obvious implications for the plaintiff’s counsel and those who defend attorneys in malpractice claims. Less clear, and perhaps no less important to defense practitioners, are the issues that defense counsel must now contend with in settling cases and in ensuring adequate protections for clients who settle wrongful death actions and other cases in which the beneficiaries of a settlement are under a legal disability. Powell was a legal malpractice dispute arising out of a medical malpractice lawsuit brought by Powell’s mother, Leona, on behalf of her deceased husband and Powell’s father, Perry. Id. ¶ 3. Leona was appointed as special administrator of Perry’s estate. In addition to his wife, Perry was survived by two children, Emma and Powell. Id. Perry died intestate and his only asset was the wrongful death action alleging medical malpractice. Id. Leona engaged John
Wunsch to represent the estate of her husband in bringing the action. Id. Prior to his father’s death, Powell had been adjudicated disabled, and his parents were appointed co-guardians of his person but not his estate. Id. With Perry’s death, Leona was the only remaining guardian of Powell. With the defendant’s assistance, Leona settled the medical malpractice claim between Perry’s estate and some of the defendants for $15,000. Id. ¶ 4. The court entered a distribution order, allowing each next of kin, Leona, Emma, and Powell, to receive $5,000. Id. Pursuant to the order of distribution, Powell’s share of the settlement proceeds was paid to Leona on his behalf and was placed in a joint account. Id. Because Wunsch was unable to take the underlying matter to trial against
About the Author Donald Patrick Eckler is an associate at Pretzel & Stouffer, Chartered. He practices in both Illinois and Indiana in the areas of commercial litigation, professional malpractice defense, tort defense, and insurance coverage. He earned his undergraduate degree from the University of Chicago and his law degree from the University of Florida. He is a member of the Illinois Association Defense Trial Counsel, the Risk Management Association, and the Chicago Bar Association. He is the co-chair of the CBA YLS Tort Litigation Committee.
Less clear, and perhaps no less important to defense practitioners, are the issues that defense counsel must now contend with in settling cases and in ensuring adequate protections for clients who settle wrongful death actions and other cases in which the beneficiaries of a settlement are under a legal disability.
the remaining defendants, new counsel, Jill Webb, appeared to represent Perry’s estate. Id. ¶ 5. Prior to trial, the parties settled the claims against the remaining defendants, which provided $118,000 to Leona and Powell each. Id. Emma waived her claim to the proceeds of the second settlement. Id. As before, Leona took possession of the settlement proceeds intended for Powell and placed them in a joint account. Id. Wunsch, who assisted in completing the second settlement, purportedly told Leona and Emma that it would be too difficult to have the probate court administer the proceeds for Powell and so Leona did not undertake the probate court procedure for approval and administration. Id. After the settlements were completed, Leona remained Powell’s guardian. Id. ¶ 6. Emma visited Powell at Leona’s home and found Powell was neglected despite the $118,000 available for his care. Id. Emma further discovered that Leona was not using the settlement proceeds that were supposed to be distributed to Powell for his care. Id. Evidence revealed that of the $236,000 that had been deposited, only $26,000 remained in the joint account, and Leona had no accounting for the use of the money. Id. Consequently, Emma filed a mo-
tion seeking a modification to Powell’s guardianship. Id. Ultimately, the public guardian became Powell’s guardian, which precipitated a legal malpractice action against Wunsch and Webb for failing to properly protect Powell’s interests in the settlement proceeds of his father’s medical malpractice action. Id. ¶ 7. In the legal malpractice action, the defendant attorneys successfully moved to dismiss the complaint pursuant to 735 ILCS 5/2-615. Powell, 2014 IL 115997, ¶ 8. The trial court found that the plaintiff’s complaint did not plead allegations sufficient to establish the existence of a duty to Powell, with whom the attorneys did not have an attorney-client relationship. Id. The trial court also found that the plaintiff failed to allege that “but for” the defendant attorneys’ conduct, the plaintiff would have received more money from the settlements. Id. The appellate court reversed the trial court’s dismissal and found that the attorneys retained to represent the estate owed a fiduciary duty to the beneficiaries of the estate. Id. ¶ 9. The court found that a direct attorney-client relationship was not needed to support the existence of the duty, citing the recent Illinois Supreme Court decisions of DeLuna v. Burciarga, 223 Ill. 2d 49 (2006) and Carter v. SSC Odin Operating
Co., 2012 IL 113204. Powell, 2014 IL 115997, ¶ 9. The court also found that while there was no proximate cause as to the first settlement in Powell’s favor of $5,000, for which no court supervision was required of the estate under Illinois law, the second settlement, which was intended to benefit Powell in the amount of $118,000, exceeded the amount required for supervision and that there was proximate cause for the claimed damages. Id. The Illinois Supreme Court Ruling The Illinois Supreme Court affirmed the appellate court’s ruling. The supreme court acknowledged that generally an attorney only owes a duty to the client. But, if a non-client is an intended third-party beneficiary of the attorney’s services, the attorney has a duty to the intended third-party beneficiary and can be held liable for damage suffered by that individual non-client. Id. ¶ 14. The court applied the “intent to directly benefit” test to determine if a duty existed between Wunsch and Webb and Powell. Id. Under this test, the key in determining if a relationship exists is whether the attorney is “acting at the direction of, or on behalf of the client to benefit or influence a third party.” Id. The supreme court held that the Illinois Wrongful Death Act provides that the decedent’s spouse and next of kin are the true parties in interest and that the amount recovered is for their “exclusive benefit.” Id. ¶ 15. The supreme court further held that the duty owed cannot be only to the personal representative of the estate, who is a mere nominal party, because that limitation would defeat the purpose of the Illinois Wrongful Death Act. Id. In opposing this view, Wunsch and — Continued on next page
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Webb argued that there could be conflicts in representing the interests of the various beneficiaries and that no duty could arise in such a circumstance. Id. ¶ 21. The supreme court, however, declined to address this contention because no actual conflict was alleged to have existed in this case. Id. Further, the supreme court held that because a wrongful death action is brought for the exclusive benefit of the beneficiaries of the estate, no conflict could arise between the estate and the beneficiaries. Id. ¶ 22.
court agreed that the failure to obtain approval of the probate court with respect to the second settlement caused injury to Powell and could form the basis of an action for legal malpractice. Id. Conclusion Powell shows the ever expanding potential for duties lawyers may have to third parties even absent a direct attorney-client relationship. In the context of wrongful death cases, Powell requires
[T]he supreme court found that the attorneys failed to adequately protect all of the beneficiaries and to ensure that they each receive their share of the proceeds from the settlement. The supreme court also faulted the attorneys for not obtaining administration of the settlement proceeds from the probate court.
Applying these principles to the case, the supreme court found that the attorneys failed to adequately protect all of the beneficiaries and to ensure that they each receive their share of the proceeds from the settlement. Id. ¶ 23. The supreme court also faulted the attorneys for not obtaining administration of the settlement proceeds from the probate court. Id. ¶ 23. In failing to do so, the court found that the plaintiff had sufficiently alleged a cause of action against the defendant attorneys. Id. Turning to the proximate cause issue, the supreme court agreed with the holding of the appellate court that there was no causal relationship between any claimed damage and the first settlement of $5,000. Id. ¶ 24. But, the supreme 20 | IDC QUARTERLY | Fourth Quarter 2014
plaintiffs’ lawyers to be cognizant of the parties whose real interests they are to protect. While they are described as being fiduciary in nature, the scope of the duty owed by the plaintiff’s counsel to the beneficiaries of the estate are not well established in this decision, and it is likely that additional litigation will define those duties. Until that law is developed, the plaintiff’s counsel will have to be assiduous in settling wrongful death cases or risk potential liability to beneficiaries. This decision may also portend duties for defense lawyers in wrongful death cases to ensure that the settlement is completed correctly and that the plaintiff’s counsel seeks the necessary approvals to settle. A person under a legal disability, such as a minor or a
disabled adult like Powell, on whose behalf a settlement is made, could later claim that the settlement was invalid and seek additional recovery from the defendants if the procedures required by the law are not followed. It has always been important for the defense counsel of a wrongful death case to ensure that all potential next of kin are identified, but now that good practice may be acute as it relates to concerns regarding settlement of the case as well. While defense lawyers obviously owe no duties to the beneficiaries of the estate of the deceased, circumstances requiring further litigation in a case that was believed settled could be problematic. In cases in which there are questions regarding whether all of the next of kin have been identified, a defense lawyer should consider including language in the release that the special representative warrants that all of the next of kin have been included in the distribution and identifying the distribution in the release. Defense counsel may also monitor the probate proceedings to ensure the process is completed as agreed and to coordinate the completion of the settlement in conjunction with the probate procedures. One aid in this process comes from an unlikely place, the settlement statute, 735 ILCS 5/2-2301. In Section (b) the statute requires that the plaintiff provide to the defendant the order approving the settlement, and in Section (d) no payment of settlement proceeds is required until 30 days after such approval, and all of the other required documents, including the release, are received. Id. These measures should mitigate potential liability of defendants and their counsel, but as the law regarding duties to third-parties expands, we can expect further issues to arise.
Evidence and Practice Tips Joseph G. Feehan and Brad W. Keller Heyl, Royster, Voelker & Allen, P.C., Peoria
Admissibility of Statements under Illinois Rule of Evidence 408: Control Solutions, LLC v. Elecsys The evidentiary rule excluding offers of compromise and statements made within compromise negotiations was developed through the common law in Illinois for years. The rule was finally codified at Illinois Rule of Evidence 408. Ill. R. of Evid. 408 (eff. Jan. 1, 2011). Few Illinois cases have analyzed Illinois Rule of Evidence 408 in detail, although courts have relied on cases that analyze the Federal Rule of Evidence 408, which mirrors its Illinois counterpart. Illinois Rule of Evidence 408 provides: (a) Prohibited Uses. Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction: (1) furnishing or offering or promising to furnish—or accepting or offering or promising to accept—a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or statements made in compromise negotiations regarding the claim. (b) Permitted Uses. This rule does not require the exclusion of any evidence otherwise discoverable
merely because it is presented in the course of settlement negotiations. This rule also does not require exclusion if the evidence is offered for purposes not prohibited by subdivision (a). Examples of permissible purposes include proving a witness’ bias or prejudice; negating an assertion of undue delay; establishing bad faith; and proving an effort to obstruct a criminal investigation or prosecution. Ill. R. of Evid. 408. In Control Solutions, LLC v. Elecsys, 2014 IL App (2d) 120251, the Illinois Appellate Court Second District analyzed whether statements made in communications between parties to a breach of contract claim were admissible under Illinois Rule of Evidence 408. The focus of the Second District’s discussion ultimately became whether the dispute that was the subject of the litigation predated the statements. Background/Statements at Issue Control Solutions involved a breach of contract claim brought by the plaintiff, Control Solutions, LLC (Control Solutions), against the defendant, Elecsys. The underlying dispute involved a contract for the purchase of controllers used in military equipment to assist in opening doors of damaged vehicles. The
defendant bid on and received a contract with the United States Army (Army) to provide these controllers. Control Solutions, 2014 IL App (2d) 120251, ¶¶ 4-6. Under the Army’s agreement, controllers were to be obtained from the plaintiff, the sole supplier. As a result, the defendant was required to enter into a contract with the plaintiff and ultimately placed an order with the plaintiff for 4,211 controllers. The Army later cancelled the contract with the defendant after the plaintiff shipped only 200 of the 4,211 controllers. Id. ¶ 16. Following the defendant’s cancellation, the parties exchanged numerous e-mails over the next year regarding the terms of the contract and the damages involved. Some of these e-mails became the subject of the appeal in this case. Id. ¶¶ 3-25. — Continued on next page
About the Authors Joseph G. Feehan is a partner in the Peoria office of Heyl, Royster, Voelker & Allen, P.C., where he concentrates his practice in commercial litigation, products liability, and personal injury defense. He received his B.S. from Illinois State University and his J.D. cum laude from the Northern Illinois University College of Law. Mr. Feehan is a member of the ISBA Tort Law Section Council and is also a member of the Peoria County, Illinois State, and American Bar Associations. Brad W. Keller is an associate in the Peoria office of Heyl, Royster, Voelker & Allen, P.C. He practices primarily in the areas of business and commercial litigation and tort litigation. He received his B.A. in Political Science from the University of Illinois in 2007 and his J.D. magna cum laude from University of Illinois College of Law in 2010.
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Evidence and Practice Tips | continued
Given the facts of the case, it is important to set out the exact statements at issue: •
•
•
On June 5, 2008, a week after the Army cancelled its contract with the defendant, the defendant’s agent informed the plaintiff’s agent that the Army had cancelled its contract, the plaintiff should stop work, and advise as to the status of production and any cancellation costs. The plaintiff later responded that the contract was non-cancellable and that a balance of 4,011 controllers remained for a cancellation liability of $3,730,230. Id. ¶¶ 16, 17. On August 26, 2008, the defendant’s agent contacted the plaintiff’s agent and asked for information regarding how many controllers were built and ready for shipment, what the component inventory was for the order, and requesting a cost break down. The plaintiff responded on September 5, 2008, stating that there was a commonality with other products and that only the finished product was unique, meaning that parts in the non-finished controllers could be reused. The plaintiff thus submitted that it had costs of 100 finished controllers for a total of $93,000 and 15% of lost profit on the remaining controllers for a total of $545,584.50. The plaintiff indicated in this e-mail that its “offer” was “predicated on the expectation that a speedy resolution of this matter will occur.” Id. ¶¶ 19, 20. On December 29, 2008, the plaintiff generated an invoice that billed the defendant in the amount of $638,584.50, consisting of $93,000
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for the 100 finished but unshipped controllers and $545,584.50 for a 15% lost profit charge on the balance of the unfinished controllers. Id. ¶ 21. •
On March 30, 2009, the plaintiff’s agent sent the defendant’s agent an email inquiring about the status of the overdue invoice. The next day, the defendant’s agent wrote the plaintiff’s agent, stating she had spoken with the plaintiff ’s agent recently and had explained that the cost amount on the invoice for the 15% lost profit charge needed to be removed because it was a flow-down contract on which the government would not have allowed for lost profit to be reimbursed. The defendant’s agent further stated that if a letter stating the final settlement amount was $93,000.00 and was sent, payment could be processed in that amount the following day. Id. ¶ 23.
a much lower amount. The trial court denied the motion, finding that the dispute over damages did not predate the communications. The dispute ultimately went to trial, with the jury returning a verdict in favor of the plaintiff in the amount of $106,950, much less than the $2.7 million the plaintiff had asked the jury to award. Id. ¶¶ 26-28. The plaintiff also raised this issue in its post-trial motions, with the court again denying the motion. At the hearing, the trial court judge indicated that he wanted to clarify his prior ruling for any resulting appeal and stated that he felt the communications, based on his review, did not fall within the category of settlement documents that should be excluded from the jury for public policy reasons. Id. ¶ 31. He emphasized that his decision was not solely based upon the fact that the communications occurred before suit was filed. Id. The plaintiff then appealed. Id. ¶ 31. Second District Ruling
No payment was made following these discussions. The plaintiff ultimately filed suit in September 2009. Id. ¶ 25. Prior to trial, the plaintiff filed a motion in limine, asking the trial court to exclude the September 5, 2008 offer from the plaintiff to the defendant and related communications on the basis that the communications consisted of settlement negotiations and statements made in support of settlement negotiations. The plaintiff claimed that it had engaged in settlement discussions by conveying a settlement offer and later sending an invoice to the defendant for that amount. The plaintiff also argued that the defendant recognized that this was an offer when it responded on March 31, 2009, with an offer to pay $93,000,
On appeal, the plaintiff argued that the trial court erred in admitting the September 5, 2008 offer and related communications because doing so contravened well-established Illinois law that protected the disclosure of such offers of compromise to the jury. Id. ¶ 35. The defendants argued that the communications were not regarding settlement and that even if they should not have been admitted, the admission was harmless. Id. ¶ 35. The court first explained that prior to Rule 408 going into effect, Illinois courts routinely found settlement offers and negotiations inadmissible for two reasons: (1) because settlement offers and negotiations do not constitute admissions
THE IDC MONOGRAPH: The Implied Warranty of Habitability in Construction Defect Cases Anthony J. Longo Cassiday Schade LLP, Chicago Michael D. Pisano Cassiday Schade LLP, Chicago
IDC QUARTERLY | Volume 24 Number 4
The Implied Warranty of Habitability in Construction Defect Cases Attorneys representing general contractors and subcontractors should be concerned about the current state of construction defect law.1 A few panels of the Illinois Appellate Court have expanded the scope of the implied warranty of habitability (IWH) in the sale of new homes, while also curtailing the available defenses to such claims. The implied warranty arises from a contract between the seller and buyer of a new residential property where the seller impliedly warrants that the home is suitable as a residence. Under certain circumstances, the Illinois Appellate Court has applied this warranty to general contractors and subcontractors even though these entities did not sell the home to the purchaser and were not a party to the contract in which the warranty is implied. These expansions have occurred despite the Illinois Supreme Court’s instruction that the appellate court may not expand the supreme court’s decisions or create new causes of action.2 Overview Over the last three decades, the IWH has evolved from a limited and challenging cause of action to prove, into its current status as a preferred method of establishing liability. Today, the IWH is almost guaranteed to ensnare any type of construction professionals. This monograph explains the history of the IWH and will define the contours of the IWH as conceived by the Illinois Supreme Court. This monograph will also evaluate the IWH by class of plaintiff, by type of structure, and by class
of defendant, as well as popular defenses to the IWH. This will be interspersed with an explanation of the various appellate expansions of its scope, and how available defenses have been severely curtailed. In addition, it will catalog many of the open issues that currently puzzle defense counsel. This monograph concludes by encouraging defense counsel to be skeptical of appellate expansions and limitations that have not been confirmed by the Illinois Supreme Court, to be aggressive with motion practice, and to seek appeals when possible.
rule obsolete. To follow the old rule of no implied warranty of habitability in leases would, in our opinion, be inconsistent with the current legislative policy concerning housing standards. The need and social desirability of adequate housing for people in this era of rapid population increases is too important to be rebuffed by that obnoxious legal cliché, caveat emptor. Permitting landlords to rent ‘tumble-down’ houses is at least a contributing cause of such problems as urban blight, juvenile delinquency, and high property taxes for conscientious landowners.6
History of the Implied Warranty of Habitability A. Origins The IWH has a rich history in America, and most lawyers would find it difficult not to cheer its advent. As early as 1931, the Minnesota Supreme Court held that there was an IWH for apartment leases.3 As Professor Cunningham explained, the Minnesota decision did not gain immediate traction, thus delaying the “revolution in tenant’s rights” until the 1960’s and 70’s.4 In 1961, the Wisconsin Supreme Court kick-started the revolution in Pines v. Perssion, formally rejecting caveat emptor and finding that a warranty of habitability should be implied in every lease,5 stating: . . . it is socially (and politically) desirable to impose these duties on a property owner—which has rendered the old common-law
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About the Authors Anthony J. Longo is a partner in the Chicago office of Cassiday Schade LLP. Mr. Longo has defended construction defect claims in both state and federal court in Illinois, having obtained multiple dismissals for his clients. He is an adjunct professor at The John Marshall Law School and writes the monthly “Procedural Thicket” column for the Chicago Daily Law Bulletin. Michael D. Pisano is an associate in the Chicago office of Cassiday Schade LLP. Mr. Pisano is a 2011 magna cum laude graduate of The John Marshall Law School, and he was recently honored by SuperLawyers as a Rising Star in Illinois law. He has defended a wide array of construction professionals in both state and federal court in Illinois. He maintains a special research interest in the scope of the implied warranty of habitability.
B. Illinois Origins Illinois joined the revolution in 1972 when the Illinois Supreme Court held in Jack Spring Inc. v. Little “that included in the contracts, both oral and written, governing the tenancies of the defendants in the multiple unit dwellings occupied by them, is an implied warranty of habitability . . .”7 Both before and after Jack Spring, the plaintiffs repeatedly raised the issue of whether the IWH applied to cases involving the sale of new homes by a builder-vendor. Appellate panels considered the issue with mixed results.8 Because of split authority concerning the scope of the IWH, the Supreme Court of Illinois agreed to hear Petersen v. Hubschman Constr. Co.9 In Petersen the supreme court resolved the split and defined the scope of the IWH as it applies to cases involving the sale of new homes by a builder-vendor: Because of the vast change that has taken place in the method of constructing and marketing new houses, we feel that it is appropriate to hold that in the sale of a new house by a builder-vendor, there is an implied warranty of habitability which will support an action against the builder-vendor by the vendee for latent defects and which will avoid the unjust results of caveat emptor and the doctrine of merger.10 The Illinois Supreme Court voiced the policy reason for recognizing this new cause of action: The vendee is making a major investment, in many instances the largest single investment of his
life. He is usually not knowledgeable in construction practices and, to a substantial degree, must rely upon the integrity and the skill of the builder-vendor, who is in the business of building and selling houses.11 The IWH does not spring from judicial pronouncement, but instead, is found implied in the sales contract, and nowhere else; “[I]t arises by virtue of the execution of the agreement between the vendor and the vendee.”12 It is limited to those who vend or sell a new home. “It is implied as a separate covenant between the builder-vendor and the vendee because of the unusual dependent relationship of the vendee to the vendor.”13 An “express warranty covering the same defects as the implied warranty of habitability [will] not displace or render that implied warranty nonactionable.”14 But, the Illinois Supreme Court did not intend the builder-vendor to be defenseless from a contractual perspective, and so made the IWH disclaimable. “[W]e do not consider a knowing disclaimer of the implied warranty to be against the public policy of this State.”15 Stating a Cause of Action A. Who can Sue? Initial and subsequent purchasers may file an IWH claim. When the Illinois Supreme Court first recognized the IWH in Petersen, it spoke of the warranty as an implied term within the contract between the builder-vendor and the vendee for the sale of the newly constructed home.16 Thus, standard contract principles would apply and for the plaintiff to allege that the builder-vendor breached the IWH, the
plaintiff must be the original purchaser in contractual privity with the builder-vendor by virtue of the sales contract.17 Later, in Redarowicz v. Ohlendorf, the Illinois Supreme Court expanded the class of plaintiffs able to file suit.18 The court held that “subsequent purchasers” may assert an IWH claim against a builder-vendor for “latent defects which manifest themselves within a reasonable time after the purchase of the house.” 19 Subsequent appellate decisions disagree on the impact of Redarowicz, some holding that Redarowicz simply expanded the class of plaintiffs.20 Other appellate decisions are utilized by plaintiff’s attorneys to argue Redarowicz may have eliminated privity altogether from the IWH analysis.21 A condominium association, through its board of managers, also has standing to assert IWH claims. To do so, the latent defect must involve the common elements or more than one unit, and interfere with the unit owners’ use of the units as a residence.22 Remember that the IWH “is implied as a separate covenant between the builder-vendor and the vendee...[i]t arises by virtue of the execution of the agreement between the vendor and the vendee.”23 Thus, the IWH is a contract claim premised on the individual contract rights of the unit owners. A condominium association is not party to the agreement between the builder-vendor and the purchaser, and as such, would generally not have the right to assert other’s contract claims. But, the Illinois Condominium Property Act (Act) provides standing to the condominium association through its board of managers.24 The Act states that “[t]he board of managers shall have standing and capacity to act in a representative capacity in relation to matters involving the common — Continued on next page
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elements or more than one unit, on behalf of the unit owners, as their interests may appear.”25 The Act further allows the unit owners and/or the board of managers to create a separate not-for-profit legal entity (the condominium association) “for the purpose of facilitating the administration and operation of the property.”26 Under these circumstances, “all of the rights, titles, powers, privileges and obligations vested in or imposed upon the board of managers in this Act and in the declaration may be held or performed by such corporation. . . .”27 Therefore, a condominium association and/or the board of managers obtain their standing to assert an IWH claim pursuant to the Act. B. What Structures can be Targeted? A prerequisite for asserting an IWH claim is that the latent defect relate to a newly constructed residential dwelling.28 Since Petersen, many courts have interpreted whether an alleged defect was sufficiently related to a residential dwelling to permit an IWH claim. In addition to newly constructed homes, Illinois courts have applied the IWH to claims relating to latent defects in construction of a substantial addition to a residence29 and latent defects associated with a prefabricated home.30 Illinois courts have found the IWH did not apply to latent defects relating to an apartment converted to condominiums where no construction or substantial refurbishment occurred31 and the sale of unimproved land.32 Therefore, only those latent construction defects that relate to newly constructed residential dwellings, or a substantial part thereof, will be subject to the IWH. With respect to condominiums, the
In addition to newly constructed homes, Illinois courts have applied the IWH to claims relating to latent defects in construction of a substantial addition to a residence and latent defects associated with a prefabricated home.
individual living units will be subject to the IWH.33 The common elements of a condominium building or development will be subject to the IWH so long as the defect interferes with the unit owners’ habitability of the units.34 For instance, a freestanding clubhouse within a condominium development will not be subject to the IWH because the dwelling units are not within the clubhouse building and thus the defects would not interfere with the habitability of the residence.35
1. Builder/Developer-Vendor
nature, rather than a casual personal one.37 Petersen noted that the primary reason for the IWH is “because of the unusual dependent relationship of the vendee to the vendor.”38 “In many cases, the purchase of a home is the most important investment of a lifetime and it would be unjust to apply the rule of caveat emptor to an inexperienced home buyer in favor of a builder who is in the business of building and selling homes.”39 Due to this sales aspect, the builder-vendor is always at risk for an IWH claim. “[T]he implied warranty does not arise as a result of the execution of the deed, but arises by virtue of the execution of the agreement between the vendor and the vendee.”40 One year after Petersen, the Illinois Appellate Court for the First District confronted a new home sale by a developer. In Tassan v. United Dev. Co., the court held the IWH applicable to the developervendor because, like the builder-vendor, it had control of the building process and made a sale:
Petersen created an IWH enforceable against an entity that built and sold the home, commonly referred to as the buildervendor. 36 In Park v. Sohn, the Illinois Supreme Court defined a builder-vendor as one who is engaged in the business of building, so that the sale is of a commercial
Purchasers from a builder-seller depend on his ability to construct and sell a home of sound structure. Purchasers from a developer-seller depend on his ability to hire a contractor capable of building a home of sound
C. Class of Defendants It is useful to conceptualize the IWH as applicable (or not) to certain classes of defendants when it comes to the sale of new homes. A hierarchy of defendants is apparent in the decisions, which generally include (1) the builder/developer-vendor, (2) the downstream contractors, and (3) design professionals.
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structure. The buyers here had no control over United’s choice of a builder. United stood in the best position to know which contractor could perform the work adequately. The dependent relationship here between the buyers and United is the same as if United was a builder-seller. Necessarily, we hold that United could be deemed to have made an implied warranty of habitability in this case.41 That the Illinois Supreme Court in Petersen and the First District in Tassan would limit the IWH to sellers who control the building process is not surprising since the judicial motivation for the IWH was to dull caveat emptor—a doctrine that unfairly benefitted sellers. Whether the sale is made by a builder or a developer, both are subject to the IWH. 2. Downstream Contractors Downstream from the modern builder/ developer-vendor, it is common to find a general contractor and then various subcontractors. Almost universally, the builder/developer-vendor has a contract with a general contractor to complete the construction project, while the general contractor contracts with various subcontractors to perform the individualized work. None of these downstream contractors have a contract with the homeowner—only the builder/developer-vendor is a party to a contract. After Petersen, the issue of whether downstream entities could be targeted for violating the IWH was presented in Waterford Condo. Ass’n v. Dunbar Corp.42 There, the First District held the IWH
does not apply to the subcontractor of a builder-vendor.43 “[T]he warranty exists between builder (developer)-vendors and their vendees and does not apply where, as here, the defendants are not builder (developer)-vendors but merely are employed by the builder. Plaintiffs remedy for breach of warranty of habitability is against the developers and sellers.”44 Downstream contractors did not remain safe for long. In Minton v. The Richards Grp., the First District ruled contrary to Waterford.45 In Minton, the court held the IWH applicable against a downstream contractor (in that case a subcontractor) because “the builder-vendor has been dissolved as an entity and is insolvent.” 46 It further held, “where the innocent purchaser has no recourse to the buildervendor and has sustained loss due to the faulty and latent defect in their new home caused by the subcontractor, the warranty of habitability applies to such subcontractor.”47 Put another way, the Minton decision departed from Petersen, Tassan, and Waterford to expand the scope of the IWH to include downstream contractors who never made a sale, when the home purchaser had no recourse against the builder/developer-vendor. The Minton expansion, however, did not spread to all of Illinois. In Lehmann v. Arnold, the Illinois Appellate Court for the Fourth District directly disagreed with Minton and declined to follow it.48 “If a subcontractor impliedly warrants his work to the purchaser, however, then his liability should be independent of the builder’s solvency.”49 Thereafter, the Illinois Appellate Court for the Second District agreed with Lehmann and registered its disagreement with Minton.50 In Bernot v. Primus Corp., the Second District explained that “Lehmann properly questioned whether, under
Redarowicz, the builder’s later solvency was relevant to whether the subcontractor originally made an implied warranty to the purchaser.”51 In the Second and Fourth Districts, the IWH is applied in the strict Petersen, Tassan and Waterford sense against only builder/developer-vendors. As such, downstream contractors named as defendants in those districts would have a very strong motion to dismiss. Despite the criticisms voiced by other appellate districts, Minton’s vitality in the First District has not abated. Recently, the First District issued two decisions on the scope of a Minton claim utilizing the IWH. In 1324 W. Pratt Condo Ass’n v. Platt Constr. Grp. (Pratt II), the First District held that a Minton claim does not reach all downstream entities at once.52 Instead, when the plaintiff is confronted with an insolvent builder/developer-vendor, he can pursue the next solvent downstream contractor, i.e. the general contractor, but not the subcontractors further down the line. The court explained: In the present case, the seller, Wayne, is insolvent, but the general contractor-builder, Platt, is not. Accordingly, applying the rationale of Minton and Washington Courte to the facts of this case, we are compelled to conclude that the condominium association cannot proceed against the subcontractor, EZ Masonry, while it still has recourse against Platt.53 Then, in Pratt III, the First District changed the standard to bring Minton claims against the next solvent downstream contractor.54 Rather than requiring the plaintiff to prove a “lack of recourse” — Continued on next page
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against the builder/developer-vendor as Minton suggested, the First District instead declared the plaintiff must only demonstrate that the builder/developer-vendor meets the fluid definition of “insolvency”: . . . we hold and clarify that for purposes of determining whether a purchaser may proceed against a subcontractor on a breach of implied warranty of habitability claim, the court must look to whether the general contractor is solvent. Insolvency simply means that a party’s liabilities exceed the value of its assets, and that it has stopped paying debts in the ordinary course of business. See Black’s Law Dictionary 799 (7th ed. 2007); see also 740 ILCS 160/3 (West 2010) (“(a) A debtor is insolvent if the sum of the debtor’s debts is greater than all of the debtor’s assets at a fair valuation. (b) A debtor who is generally not paying his debts as they become due is presumed to be insolvent.”).55 3. Design Professionals Design professionals, such as architects and engineers, do not meet the definition of builder/developer-vendor described in Petersen or Tassan.56 In Paukovitz v. Imperial Homes, the Illinois Appellate Court for the Third District explained: It is undisputed that Imperial did no construction work on Paukovitz’ home. It only supplied the shell materials and the plans which Vignali then used to construct the residence. The parties
do not cite, and we are unable to find, any reported cases in which a court held that the supplier of plans and shell materials was a builder-vendor for the purposes of the implied warranty of habitability. Moreover, in every case cited by Paukovitz to support his contention that Imperial was the builder-vendor, the defendant had conducted some kind of construction work on the home in question. Inasmuch as Imperial did not contribute to the actual construction of Paukovitz’ home, we find that it was not a builder-vendor which could be held liable for the breach of the implied warranty of habitability.57 Whether design professionals are reachable as downstream entities through a Minton claim has never been decided by the Illinois Appellate Court in a published decision. D. Habitability/Latent Defects The IWH applies only to “latent” defects.58 Latent defects include: defects that were not discoverable through reasonable and diligent inspection,59 “could not have been discovered by the exercise of ordinary and reasonable care,”60 and are hidden or concealed.61 Whether a defect is latent or patent is generally a question of fact, but will be a question of law when reasonable minds could not differ as to whether the defects are latent or patent.62 By way of example, the defects in Petersen included: “a basement floor pitched in the wrong direction away from a drain; improperly installed siding; a defective and ill-fitting bay window; a seriously
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defective front door and door frame; and deterioration and ‘nail-popping’ in the drywall on the interior.”63 Interestingly, the Illinois Supreme Court later explained in Park v. Sohn that defining latent defects as those “that cannot be discovered in an ordinarily careful inspection” would mean that the defects in Petersen are not latent.64 The court in Park then clarified that latent defects include “defects that were not apparent to the purchaser on viewing the property.”65 The court reasoned that this view is consistent with the policy behind the warranty—“that the purchaser typically is unskilled in the building trade and must rely on the training, knowledge and skill of the builder-vendor.”66 Based on the title of the warranty, one would expect that in order for a latent defect to be actionable, it must interfere with the “habitability” of the dwelling. But, when the Illinois Supreme Court announced the extension of the IWH to the sale of new homes in Petersen, the court rejected the idea that only defects that render the home uninhabitable are actionable.67 “The use of the term ‘habitability’ is perhaps unfortunate. Because of its imprecise meaning it is susceptible of misconstruction.”68 Relying on the language of the Uniform Commercial Code (UCC) warranties, the court in Petersen ultimately concluded that an IWH claim is actionable if the latent defects interfere with the buyer’s legitimate expectation that the home be “reasonably suited for its intended use.”69 The application of this definition has been confusing. In VonHoldt, the Illinois Supreme Court stated that an implied warranty of habitability claim may be brought so long as the alleged construction defect is sufficiently serious to interfere with the habitability of the home.70
It appears that the only relevance of the term “habitability” is to limit the warranty to residential dwellings. In Bd. of Dirs. of Bloomfield Club Recreation Ass’n, the supreme court found that the plaintiff could not state an IWH claim where the claimed defect was located in a commonly held amenity in a residential development (i.e. clubhouse) and which did not affect the habitability of the dwelling area. 71 Recently, the Second District stated that “a house that is reasonably fit for habitation must, at a minimum, offer reasonable safety and reasonable protection from the elements.”72 Thus, it appears that these cases have set forth a rather loose standard for alleging a latent defect interfering with the habitability of the residential dwellings. Based on current case law, the plaintiff need only allege that the defect was not apparent upon the plaintiff viewing of the property and that this defect is connected in some fashion to a residential dwelling that could interfere with the use of the dwelling as a residence.73 E. Damages In Park v. Sohn, the Illinois Supreme Court set forth the measure of damages for breach of the implied warranty of habitability.74 The measure of damages should be the cost of correcting the defective conditions. If, however, the defects could be corrected only at a cost unreasonably disproportionate to the benefit to the purchaser, or if correcting them would entail unreasonable destruction of the builder’s work, the amount by which the defects have reduced the value of the
At the same time that the Illinois Supreme Court announced the IWH cause of action, the court also held that a “knowing disclaimer of the implied warranty of habitability is not against the public policy of this state” and will be enforced.
property should be the measure of damages.75 In Nisbet v. Yelnick, the First District further explained that the plaintiff may recover for loss of use of the portion of the dwelling rendered uninhabitable.76 The Nisbet court reasoned that similar to UCC damages, the plaintiff may recover consequential damages resulting from the seller’s breach. 77 “The measure of damages in such instance is the reasonable rental value of similar property for the period of deprivation.”78 Later, in Hills of Palos Condo. Ass’n v. I-Del, Inc., the First District clarified that consequential damages for breach of the IWH was limited to loss of use damages and only applicable where the “defects in the home were so extensive that the entire home was, in fact, uninhabitable.”79 In Auburn v. Amoco Oil Co., the Fourth District held that the plaintiff could not recover for personal injury or property damages premised on a breach of the IWH.80 Common Defenses A. Disclaimer At the same time that the Illinois Supreme Court announced the IWH cause of action, the court also held that a “knowing disclaimer of the implied warranty of
habitability is not against the public policy of this state” and will be enforced.81 A valid disclaimer “(1) is a conspicuous provision (2) which fully discloses the consequences of its inclusion (3) that was, in fact, the agreement of the parties.” 82 The court in Pratt II suggested that the following disclaimer was valid: (b) IMPLIED WARRANTY OF HABITABILITY Illinois law provides that every contract for construction of a new home, as here, carries with it a warranty that when completed, the new home will be free of defects and will be fit for its intended use as a home. This law further provides that this Implied Warranty does not have to be in writing to be a part of the contract and it covers not only structural and mechanical defects such as may be found in the foundation, roof, masonry, heating, electrical and plumbing, but it also covers any defect in workmanship which may not easily be seen by the Purchaser. However, the law also provides that Seller and Purchaser may agree in writing, as here, that — Continued on next page
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this Implied Warranty is not included as part of their particular contract. (c) WAIVER-DISCLAIMER. THE SELLER HEREBY DISCLAIMS AND THE PURCHASER HEREBY WAIVES THE IMPLIED WARRANTY OF HABITABILITY DESCRIBED IN PARAGRAPH 10(B) ABOVE AND THEY ACKNOWLEDGE, UNDERSTAND AND AGREE THAT IT IS NOT PART OF THE CONTRACT.
contractor was not a party to the agreement that contained the disclaimer, the court held that the general contractor could not rely on the disclaimer.86 There is no case law addressing the applicability of the disclaimers to a “subsequent purchaser;” however, based on the standard set forth above, a builder/developer-vendor would likely not be able to rely on the disclaimer in response to an IWH claim brought by a subsequent purchaser because that subsequent purchaser was not a party to the original sales contract containing the disclaimer. B. Statute of Limitations
(d) Effective [sic] and Consequences of this Waiver-Disclaimer. Purchaser acknowledges and understands that if a dispute arises with Seller and the dispute results in a lawsuit, Purchaser will not be able to rely on the Implied Warranty of Habitability described above, as a basis for suing the Seller or as a basis of a defense if Seller sues the Purchaser.82 These disclaimers are typically included in the contract documents for the sale of the residences prepared by the builder/developer-vendor and signed by the original purchaser. Thus, general contractors and subcontractors are not parties to this disclaimer, and as a result, will not be able to satisfy the third requirement of the defense: that the disclaimer “was, in fact, the agreement of the parties.”84 In Pratt II, the builder/developer-vendor was insolvent and no longer a party to the case.85 The plaintiff relied on Minton to state a claim against the general contractor, and in turn, the general contractor sought to enforce the disclaimer.86 But, because the general
A construction defect claim premised on the IWH is subject to the four-year limitation period set forth in section 13-214 of the Illinois Code of Civil Procedure.88 This limitation applies where liability rests on construction-related activity, which is usually the case when builder/developervendors, general contractors and/or subcontractors are alleged to have breached the IWH based on a latent defect in the construction of the dwelling.89 A cause of action premised on an act or omission in the “construction of an improvement to real property . . . shall be commenced within 4 years from the time the person bringing an action, or his or her privity, knew or should reasonably have known of such act or omission.”90 This statute, however, will not begin to run as to a condominium association “until the unit owners have elected a majority of the members of the board of managers” despite the condominium association having knowledge of the claim prior to the election of the board.91 While the statute of limitations defense seems rather straightforward when applied to the builder/developer-vendor,
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this defense becomes complicated when raised in defense to a Minton claim against downstream entities. Recall that the First District under Minton and Pratt II applied the IWH against downstream entities other than the builder/developer-vendor when the immediate upstream entity was insolvent.92 The First District in Dearlove Cove Condos. v. Kin Constr. Co. held that the limitation period in section 13-214 does not begin to run until the plaintiff knew or reasonably should have known of the immediately upstream parties’ insolvency, so long as the plaintiff sued that upstream party within the applicable statute of limitations.93 The court in Pratt III recently stated: Where the plaintiff timely filed his action against a general contractor for construction defects, and the general contractor subsequently became insolvent, under Minton, the plaintiff could proceed against the subcontractor even if he failed to file the complaint within the applicable statute of limitations so long as the action was timely filed against the general contractor.94 Thus, despite the fact that a purchaser knew or should have known of the subcontractor’s acts or omissions, the claim against it does not accrue until the plaintiff is aware of the general contractor’s insolvency. C. Statute of Repose While First District decisions have subjected downstream entities to claims beyond the conventional statute of limitations, defendants may have the protection of the 10-year statute of repose set forth in
section 13-214.95 This section provides that no cause of action premised on an act or omission in the construction of an improvement to real property may be commenced “after 10 years have elapsed from the time of such act or omission.”96 The First District has held that the construction statute of repose begins to run upon completion of construction,97 while the Second District has held that it begins to run on the date that the home was conveyed.98 Note that the construction statute of repose is not absolute, like most of its repose counterparts. Rather, the construction statue of repose is unique because the language allows for a “grace period,” which permits the plaintiff to file suit beyond the 10-year repose period so long as the plaintiff learned of the act or omission of the defendant within the 10-year repose period, and filed suit within four years after learning of the act or omission.99 It is unclear the effect that Dearlove Cove Condos. and Pratt III would have on a situation where the plaintiff learns of the builder-vendor’s insolvency beyond the statute of repose and whether the plaintiff would be able to assert a claim against the next solvent downstream entity. Based on a literal reading of the statute of repose, we would anticipate that the claim is timebarred. However, in accordance with the courts’ demonstrated policy of protecting homeowners, it is not unforeseeable that a court would find the claim timely in light of First District authority stating that the claim against the next solvent downstream entity does not accrue until there is knowledge of the upstream entity’s insolvency. D. Available Recourse and Solvency Downstream entities can defeat a Minton claim by effectively arguing that
the upstream entity is indeed solvent or that there are other forms of recourse available to the purchaser against the builder/ developer-vendor. As discussed briefly above, the correct standard for asserting a Minton claim against the next downstream entity is a bit elusive. In Minton, the court referred to a purchaser having “no recourse against the builder-vendor,”100 while the court in Pratt III interpreted the standard to be one of “insolvency” of the builder/ developer-vendor.101 These decisions are from the First District, and thus, it cannot be said that Pratt III overruled Minton.102 Thus, a downstream entity could defend itself by arguing that the immediate upstream entity is solvent or that other forms of recourse are available to the purchaser against the builder/developer-vendor.103
The Consequences of Expansion There are definite consequences to expanding the IWH, and those consequences have been felt most acutely by general contractors and subcontractors downstream from the builder/developer-vendor. The discussion up to this point suggests that liability in Illinois is no longer defined by its supreme court’s jurisprudence that consistently articulated a limited and defensible IWH. Rather, IWH liability is currently driven by the appellate decisions expanding the scope of the IWH and curtailing the defenses. Defense counsel should not accept the appellate expansions of the IWH and their accompanying limitations on defenses as necessarily good law. Until confirmed by
Downstream entities can defeat a Minton claim by effectively arguing that the upstream entity is indeed solvent or that there are other forms of recourse available to the purchaser against the builder/developer-vendor.
Such recourse could be had under the Illinois Uniform Fraudulent Transfer Act,104 the trust fund doctrine, 105 the Limited Liability Company Act,106 or if applicable, the avoidance provisions of the Bankruptcy Code.107 Furthermore, should the builder/ developer-vendor have liability insurance, downstream entities may argue for dismissal because the insurance proceeds act as either a source of recourse under Minton or create solvency under Pratt III.
the Illinois Supreme Court, these various decisions are subject to challenge. Defense counsel should be suspicious of these expansions and limitations. Care should be taken in motion practice108 to object to any liability tethered to an appellate expansion, because that argument must be preserved in anticipation of the day the Illinois Supreme Court overrules the expansion. Care should also be taken to pursue interlocutory appeals109 from trial court orders that follow the expansions. When pursuing this motion — Continued on next page
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practice and/or these appeals, defense counsel have multiple arguments that the appellate court’s expansions of IWH liability downstream from the builder/ developer-vendor are wrong and should be overruled. A. Minton’s Potential Flaws The trend in expanding liability to downstream contractors began with the First District’s Minton decision.110 Minton created a new cause of action against downstream entities contingent upon the builder/developer-vendor’s poverty— ordinarily an insignificant inquiry in the law. Numerous potential errors seem
is not error for the appellate court to decide an appeal without one party’s brief,112 but that this watershed and influential decision was rendered without input from the defense bar may help us obtain further review of the issue. Beyond this, the Illinois Supreme Court should be made aware of one critical flaw in Minton’s reasoning. The court in Minton was aware its ruling was contrary to Waterford, but it reasoned that Waterford was less persuasive having been decided prior to Redarowicz: In this case we agree with the reasoning in Redarowicz that the purpose of the implied warranty
Minton created a new cause of action against downstream entities contingent upon the builder/developer-vendor’s poverty—ordinarily an insignificant inquiry in the law.
apparent in the Minton decision, and they should be voiced on the record for eventual Illinois Supreme Court review. In the first instance, the Minton decision perhaps resulted from an unfair fight. The defendant subcontractor prevailed in the trial court, but never filed an appellate brief,111 leaving the First District to consider only the plaintiff’s brief. The plaintiff invited the appellate court to extend the IWH to downstream entities if there was no recourse against the builder/developervendor and the court obliged. In so doing, the Minton court became the first panel to expand the class of defendants originally narrowly drawn by Petersen and Tassan. It
is to protect innocent purchasers. For that reason, we hold that in this case where the innocent purchaser has no recourse to the builder-vendor and has sustained loss due to the faulty and latent defect in their new home caused by the subcontractor, the warranty of habitability applies to such subcontractor. We recognize that our opinion is contrary to Waterford Condominium Association v. Dunbar Corp. (1982), 104 Ill. App. 3d 371, 432 N.E.2d 1009, but that opinion was rendered prior to Redarowicz v. Ohlendorf.113
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But Minton’s view of Redarowicz’s impact has since been withdrawn by the First District in Washington Courte Condo. Ass’n-Four v. Washington-Golf Corp.: Regarding plaintiffs’ contention that Redarowicz expanded the scope of potential defendants in a breach-of-warranty-of-habitability action, we disagree with plaintiffs’ interpretation. As previously discussed, the Redarowicz court’s holding, predicated on its finding that privity was not required in a warranty-of-habitability action, was specifically limited to extending the cause of action to subsequent purchasers. The Redarowicz court emphasized that its decision was to further the purpose of the warranty of habitability, which is to hold builder/ vendors accountable for their performance. The court made no reference to subcontractors. We find plaintiffs’ interpretation, which results from taking the lack of privity finding out of context, to be unpersuasive.114 Accordingly, it is difficult to understand how Minton can remain standing. Minton departed from Waterford based upon an interpretation of Redarowicz that has since been declared faulty by Washington Courte. Furthermore, Minton may violate the prohibition against the appellate court creating new causes of action. “Appellate courts should not create new causes of action. Our supreme court and legislature are capable of and primarily responsible for deciding the need for new causes of action.”115 Had the Illinois Su-
preme Court in Petersen wished to visit liability upon contractors downstream from the initial vendor, it could have done so. Instead, it limited the IWH to the initial vendor. 116 Accordingly, any appellate decision that expands the class of IWH defendants, like Minton, may have been in excess of the appellate court’s authority.117 Arguably, another such appellate decision is Pratt I. There, the developervendor was insolvent, and as such Minton provided an IWH claim against the general contractor.118 Though there was no need to justify the general contractor’s IWH liability beyond Minton, the court held that the general contractor could also be held liable for the IWH without utilizing the Minton privity bridge. “Our review of the supreme court’s cases on this subject and our consideration of the public policy behind the implied warranty of habitability confirm that the warranty applies to builders of residential homes regardless of whether they are involved in the sale of the home.”119 The Pratt I court cited Redarowicz for the notion that privity is no longer required in the IWH context,120 but this is the same justification for expansion utilized by Minton and later characterized as faulty in Washington Courte. Though the Pratt I ruling can be considered dicta because it was not necessary to a finding of IWH liability against the general contractor, 121 it can be questioned as beyond the appellate court’s authority to expand the class of IWH defendants to anyone who builds. Juxtaposed against Minton and Pratt I are appellate panels that believe they are structurally powerless to expand a right of action created by the Illinois Supreme Court. Consider VonHoldt v. Barba & Barba Constr.,122 where one such panel refused to expand the IWH:
In order to grant the relief sought by the plaintiff, we would be required to eliminate the condition that the defendant occupy the position of a vendor and hold that a warranty of habitability is implied into the contract of a builder that undertakes to construct a structural addition to an existing home. We view such a holding as a substantial modification of a right of action created by the Supreme Court. Acknowledging that the appellate court lacks the authority to modify decisions of the Supreme Court we decline to extend the cause of action for breach of an implied warranty of habitability in a construction setting beyond a right of action against a builder-vendor of a new residence.123 If VonHoldt was correct in refusing to create expansions of Petersen, then Minton and Pratt I were wrong to do so. Finally, Minton has been rejected by the Second and Fourth Districts and at least one court outside of Illinois. Iowa considered whether to adopt the Minton position: Outside authority is obviously not binding on this court. And while Minton did apply Illinois’ version of the implied warranty to a subcontractor where the general contractor was insolvent, another Illinois case issued two years later directly disagreed with the decision. See Lehmann v. Arnold *** There is currently a split in the Illinois appellate courts, and White Birch is unable to cite any
other jurisdiction extending the implied warranty to subcontractors. The Minton case represents an isolated extension rather than the general consensus.124 A close read of recent Illinois case law even suggests that the First District would welcome a reexamination of Minton. In one of the most recent appellate court decisions to build on Minton’s foundation, the court did so with an ominous caveat: “More importantly, aside from the aforementioned brief and singular citation to Minton, we never discussed the holding, rationale, or viability of that decision. As such, our intent was not to expand or overrule Minton, which to this day remains good law in this state.”125 The time might be ripe to challenge Minton. B. Unfair Application of Disclaimer of the IWH The expansion of the IWH to entities downstream from the builder/developervendor has resulted in a seemingly unfair reduction in available defenses, particularly with respect to a knowing disclaimer. When the Illinois Supreme Court originally adopted the IWH in Petersen, it emphasized that the IWH “is implied as a separate covenant between the builder-vendor and the vendee . . . [i]t arises by virtue of the execution of the agreement between the vendor and the vendee.”126 The court further explained that it is the public policy of this State to allow a buildervendor to disclaim the implied warranty of habitability in its agreement with the purchaser.127 When the First District in Minton and Pratt II expanded the IWH to include downstream entities, these courts — Continued on next page
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did not contemplate the inability of these entities to disclaim the IWH. In fact, when the First District was presented with the issue whether a downstream entity subject to an IWH claim could rely on the builder/ developer-vendor’s disclaimer, the court answered in the negative.128 The inability of general contractors and subcontractors to disclaim a disclaimable warranty raises an issue of whether the court’s efforts to provide innocent home purchasers with recourse has resulted in injustice to downstream entities. Removing the privity requirement for IWH claims has placed those defendants that do not contract with the purchasers at a severe disadvantage—they are responsible for the builder/ developer-vendor’s implied warranty, but cannot avail themselves of the builder/ developer-vendor’s preexisting disclaimer. In fact, White & Summers, well-respected commentators on the UCC, have expressed similar concerns with allowing recovery by non-privity plaintiffs for direct economic loss under the UCC.129 These commentators have stated, “unresolved issue involves the extent to which a remote seller may employ warranty disclaimers and remedy limitations.”130 Because the IWH in Illinois is based on the UCC implied warranties,131 White & Summers’ concern is equally applicable to the IWH. C. Unprecedented Discovery of the Defendants’ Pecuniary Position Permitting expansion of the IWH to downstream entities when the upstream entity or entities is/are insolvent has created the need for discovery of these parties’ financial status. As discussed above, claims against downstream entities such as general contractors and subcontractors will accrue at the time the plaintiff knows
Expanding the IWH to downstream entities and pegging the accrual of these claims to the date the plaintiff knows or should know of the upstream entity’s insolvency may expose general contractors and subcontractors to a claim that may be otherwise time-barred.
or should have known of the immediate upstream entities’ insolvency. In Pratt III, the court followed Minton and determined that the plaintiff could proceed against a subcontractor for an IWH claim based on the general contractor’s insolvency.132 In determining the solvency of an entity, the court stated, “[i]nsolvency simply means that a party’s liabilities exceed the value of its assets, and that it has stopped paying debts in the ordinary course of business.”133 It is the burden of the plaintiff to establish the insolvency of the upstream entity prior to asserting an IWH claim against the next entity in line.134 In this case, the court held that because the general contractor was insolvent, the plaintiff may assert an IWH claim against the subcontractor.135 In concluding that the general contractor was insolvent, the appellate court relied on discovery responses of the general contractor that provided the specific form and value of the general contractor’s assets and liabilities.136 Consequently, it would appear that Pratt III may have opened the door to discovery relating to the defendant’s pecuniary position. It is important for construction defect defendants to recognize and guard against the potential compulsory disclosure of sensitive information in these types of construction defect cases. If faced with this
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type of discovery, the defendant has a variety of options to consider. The defendant could insist on a strict protective order relating to the financial information,137 object to the scope of such discovery requests, or in lieu of the actual financial information, provide an affidavit factually averring that the defendant’s assets exceed its liabilities and that the defendant continues to pay its debts in the ordinary course of business. A final option would be to request a “friendly contempt” order to test the disclosure order on appeal.138 D. Construction Defendants Subject to Time-Barred Claims Expanding the IWH to downstream entities and pegging the accrual of these claims to the date the plaintiff knows or should know of the upstream entity’s insolvency139 may expose general contractors and subcontractors to a claim that may be otherwise time-barred. For example, if the plaintiff files suit against the builder/ developer-vendor within the four-year period, and three years into the litigation, the builder/developer-vendor becomes insolvent, then that plaintiff may have four years to file suit against the next downstream entity—the general contractor. In the event that the general contractor
itself later becomes insolvent, the plaintiff potentially could have four years to file suit against the subcontractor. All of these claims may be considered timely by a court pursuant to Dearlove Cove Condos. and Pratt III, despite the fact that the plaintiff would likely have known of the general contractor’s/subcontractor’s acts or omissions more than four years prior to filing suit against them.140 Dearlove Cove Condos. and Pratt III have rewritten the statute of limitations passed by the General Assembly, lengthening the four-year statute of limitations to serve the public policy of protecting homeowners.141 This is likely contrary to the Illinois Supreme Court’s admonition that “[s]tatutes should be interpreted and applied in the manner written, and should not be rewritten by a court to make them consistent with the court’s idea of orderliness and public policy.”142 Need for Clarity from the Illinois Supreme Court Counsel for general contractors and subcontractors have reason to be concerned with the appellate court’s expansions in scope of the IWH. All trial courts are bound to follow binding appellate decisions. Therefore, unless the Illinois Supreme Court overrules the expansive decisions, they remain controlling precedent, at least in trial courts within the First District.143 This is precisely the predicament construction defect defense lawyers find themselves in, and particularly so with respect to decisions like Minton, Dearlove Cove Condos., and the Pratt trilogy of cases. These decisions are binding on trial judges, but they represent expansions in liability and limitations on defenses that have never been confirmed by the Illinois Supreme Court.
Today feels a lot like 1979. Then, the state of IWH law in Illinois was in severe flux. Nobody could be certain whether the IWH existed in construction defect cases, under what circumstances it did exist, or against whom it existed. Today, the same state of confusion exists. There is considerable disagreement regarding the scope of the IWH as applied to any entity downstream from the builder/developervendor. There is considerable disagreement regarding the nature of the defenses available to those downstream entities now stuck defending another party’s warranty. To get the Illinois Supreme Court’s attention today, as in 1979, we must put our shoulder to the wheel and stubbornly question the correctness of these appellate decisions. (Endnotes)
Jack Spring Inc. v. Little, 50 Ill. 2d 351, 366 (1972). 7
Compare Coutrakon v. Adams, 39 Ill. App. 2d 290, 300 (3d Dist. 1963) (stating “. . . in the sale of a new dwelling or one in the process of construction there is no implied warranty on the part of the vendor of fitness, condition or quality”) with Hanavan v. Dye, 4. Ill. App. 3d 576 (3d Dist. 1972) (finding “. . . an implied warranty of habitability should be recognized in cases where the contractor-builder sells directly to a lay purchaser . . .). 8
Petersen v. Hubschman Constr. Co., 76 Ill. 2d 31 (1979). 9
Petersen, 76 Ill. 2d at 39-40.
10
Id. at 40.
11
Id. at 41.
12
Id.
13
See Price & Pinkston, The Implied Warranty of Habitability in Illinois: A Critical Review, 98 Ill. Bar. J. 92 (2010) (discussing numerous concerning aspects of the implied warranty of habitability and suggesting a legislative intervention). 1
Beagley v. Andel, 58 Ill. App. 3d 588, 591 (1st Dist. 1978); Clark Oil & Refining Corp. v. Johnson, 154 Ill. App. 3d 733, 780 (1st Dist. 1987). 2
Cunningham, The New Implied and Statutory Warranties of Habitability in Residential Leases: From Contract to Status, 16 J. of Urban & Contemp. Law 3, 74 (1979), citing Delamater v. Foreman, 184 Minn. 428 (1931). 3
Tassan v. United Dev. Co., 88 Ill. App. 3d 581, 590 (1st Dist. 1980). 14
Petersen, 76 Ill. 2d at 42.
15
Id. at 41.
16
Id.
17
Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 185 (1982). 18
Redarowicz, 92 Ill. 2d at 185.
19
Washington Courte Condo. Ass’n-Four v. Washington-Golf Corp., 150 Ill. App. 3d 681, 689 (1st Dist. 1986). 20
Minton v. Richards Grp. of Chicago, 116 Ill. App. 3d 852, 855 (1st Dist. 1983). 21
Cunningham, supra note 3, at 75.
4
5
Pines v. Perssion, 14 Wis. 2d 590 (1961).
6
Pines, 14 Wis. 2d at 595.
765 ILCS 605/9.1(b); 765 ILCS 605/18.1(d).
22
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23
Petersen, 76 Ill. 2d at 41.
24
765 ILCS 605/9.1(b); 765 ILCS 605/18.1(d).
Waterford Condo. Ass’n, 104 Ill. App. 3d at 375. 43
44 25
26
27
28
VonHoldt v. Barba & Barba Constr., Inc., 175 Ill. 2d 426, 433 (1997).
Id.
66
Id.
67
Petersen, 76 Ill. 2d at 42.
68
Id.
69
Id.
Lehmann, 137 Ill. App. 3d at 418.
29
49
65
Id. at 855.
Petersen, 76 Ill. 2d at 39-40. 48
Park, 89 Ill. 2d at 464.
Id. at 854.
765 ILCS 605/18.1(d). 47
64
Minton, 116 Ill. App. 3d at 854-55.
765 ILCS 605/18.1(a). 46
Petersen, 76 Ill. 2d at 36.
Id (citations omitted).
765 ILCS 605/9.1(b). 45
63
Id. VonHoldt, 175 Ill. 2d at 432-33, citing Aronsohn v. Mandara, 98 N.J. 92 (1984). 70
30
Hefler v. Wright, 121 Ill. App. 3d 739, 742 (5th Dist. 1984).
50
Bernot v. Primus Corp., 278 Ill. App. 3d 751 (2d Dist. 1996).
Kelley v. Astor Investors, Inc.,106 Ill. 2d 505, 512-13 (1985).
51
Bd. of Dirs. of Bloomfield Club Recreation Ass’n, 186 Ill. 2d at 432. 71
31
Id. at 754-55.
1324 W. Pratt Condo. Ass’n v. Platt Constr. Grp., (“Pratt II”), 2012 IL App (1st) 111474, ¶ 39. 52
Lehmann v. Arnold, 137 Ill. App. 3d 412, 417-18 (4th Dist. 1985). 32
Herlihy v. Dunbar Builders Corp., 92 Ill. App. 3d 310, 315 (1st Dist. 1980). 33
53
Fins v. Krpan (In re Estate of Krpan), 2013 IL App 2d 121424, ¶ 23. 72
73
See supra, notes 70 and 71.
74
Park, 89 Ill. 2d at 464-465.
75
Id.
Pratt II, 2012 IL App (1st) 111474, ¶ 39.
1324 W. Pratt Condo. Ass’n v. Platt Constr. Grp., Inc., (“Pratt III”), 2013 IL App (1st) 130744, ¶ 25. 54
34
Id.
Bd. of Dirs. of Bloomfield Club Recreation Ass’n v. The Hoffman Grp., 186 Ill. 2d 419, 431-32 (1999). 36
55
2013 IL App (1st) 130744, ¶ 25.
56
See supra section C.1.
Petersen, 76 Ill. 2d at 41 (1979). Paukovitz v. Imperial Homes, Inc., 271 Ill. App. 3d 1037, 1039 (3d Dist. 1995). 57
37
Park v. Sohn, 89 Ill. 2d 453, 461 (1982).
38
Petersen, 76 Ill. 2d at 41.
Nisbet v. Yelnick, 124 Ill. App. 3d 466, 470-72 (1st Dist. 1985). 76
35
58
Id. (stating, “our supreme court, in recognizing this cause of action in Petersen v. Hubschman Constr. Co. likened it to an action for breach of warranty under the Uniform Commercial Code”) (internal citation omitted). 77
Petersen, 76 Ill. 2d at 42. Id. at 471.
78
Hoke v. Beck, 224 Ill. App. 3d 674, 678 (3d Dist. 1992).
59
Hefler v. Wright, 121 Ill. App. 3d 739, 741 (5th Dist. 1984).
60
39
40
Mitchell v. Skubiak, 248 Ill. App. 3d 1000, 1008 (1st Dist. 1993). Tassan, 88 Ill. App. 3d at 590.
Tassan, 88 Ill. App. 3d at 587.
Auburn v. Amoco Oil Co., 106 Ill. App. 3d 60, 64-65 (4th Dist. 1982). 80
Heider v. Leewards Creative Crafts, Inc., 245 Ill. App. 3d 258, 268 (2d Dist. 1993). 61
41
Hills of Palos Condo. Ass’n v. I-Del, Inc., 255 Ill. App. 3d 448, 475 (1st Dist. 1993). 79
Petersen, 76 Ill. 2d at 43.
81
Waterford Condo. Ass’n v. Dunbar Corp., 104 Ill. App. 3d 371 (1st Dist 1982). 42
62
Tassan, 88 Ill. App. 3d at 590-591.
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Pratt II, 2012 IL App (1st)111474, ¶ 29, quoting Bd. of Managers of Chestnut Hills Condo. Ass’n v. Pasquinelli, Inc., 354 Ill. App. 3d 749, 758 (1st Dist. 2004). 82
Pratt II, 2012 IL App (1st) 111474, ¶ 4 (emphasis in original).
735 ILCS 5/13-214(b); VonHoldt, 175 Ill. 2d at 433-34 (holding that a subsequent purchaser who purchased the dwelling 11 years after construction was time-barred by the statute of repose from recovering under an IWH claim). 95
83
Id. ¶ 29.
84
Id. ¶¶ 33-34.
85
Because the developer was insolvent and not a party to the case, it seems obvious that the general contractor was liable as the next solvent downstream entity under Minton. But, what is puzzling, is that in an earlier appeal in the case, known as “Pratt I,” the court’s language can be interpreted differently. 1324 W. Pratt Condo. Ass’n v. Platt Constr. Group, 404 Ill. App. 3d 611 (1st Dist. 2010). In Pratt I, the court spoke of the general contractor defendant as a proper target of the Petersen IWH even though it was not a vendor of any sort. Id. at 618. In our years of practice since Pratt I was published, we have not seen a plaintiff successfully argue that Pratt I legitimately removed the vendor requirement from the IWH. 86
Id.
87
735 ILCS 5/13-214(a); Fins, 2013 IL App (2d) 121424, ¶ 7. 88
735 ILCS 5/13-214(a)
89
96
735 ILCS 5/13-214(b).
Eickmeyer v. Blietz Org., 284 Ill. App. 3d 134, 139 (1st Dist. 1996) (stating “[a]ccording to the statute of repose, a plaintiff who brings an action against a defendant-builder seeking damages for the faulty construction of a house must file suit within 10 years from the time the house was built pursuant to section 13-214(b)”).
See Swaw v. Ortell, 137 Ill. App. 3d 60, (1st Dist. 1984) (affirming the dismissal of the subcontractor because the purchaser had recourse against the next upstream entity, the builder-vendor). 103
97
Andreoli v. John Henry Homes, Inc., 297 Ill. App. 3d 151, 155 (2d Dist. 1998) (“We hold, therefore, that the time of accrual under section 13–214(b) governing a purchaser’s suit against a builder to recover for latent defects in the purchaser’s new house begins from the date when the house is conveyed. Because plaintiffs’ cause of action arose within 10 years from the date the house was conveyed.”). 98
See 735 ILCS 5/13-214(b) (stating “[h]owever, any person who discovers such act or omission prior to expiration of 10 years from the time of such act or omission shall in no event have less than 4 years to bring an action as provided in subsection (a) of this Section”); Andreoli, 297 Ill. App. 3d at 154-55; See Price & Pinkston, supra note 1, at 95 (discussing Andreoli).
740 ILCS 160/8(a)(1). See also Spartech Corp. v. Opper, 890 F.2d 949, 953 (7th Cir. 1989) (stating that a distribution to a shareholder that leaves the corporation cashless and insolvent could be a basis for a fraudulent transfer claim). 104
See Blankenship v. Demmler Mfg. Co, 89 Ill. App. 3d 569, 572 (1st Dist. 1980) (stating the “trust fund doctrine was promulgated by the equity courts to protect creditors when dissolution occurs. Pursuant to this doctrine, the property of a corporation is considered a trust fund for the payment of corporate debts. Thus, the property which is distributed to shareholders is held by them subject to the claims of the corporation’s creditors.”). 105
99
See 805 ILCS 180/25-50 (d)(2) (providing that a claim against a dissolved limited liability company may be enforced against the members of the dissolved company to the extent of the company’s assets distributed to that member in liquidation). 106
11 U.S.C. § 548(a)(1); 11 U.S.C. § 101(31) (b). 107
Minton, 116 Ill. App. 3d at 855.
735 ILCS 5/13-214(a).
100
765 ILCS 605/18.2(f).
101
90
the appellate court has no authority to overrule another panel, division, or district”).
Available motions are authorized by 735 ILCS 5/2-615, 735 ILCS 5/2-619, and 735 ILCS 5/2-1005. 108
91
Pratt II, 2012 IL App (1st)111474, ¶ 39.
92
Pratt III, 2013 IL App (1st) 130744, ¶ 29, citing Dearlove Cove Condos. v. Kin Constr. Co., 180 Ill. App. 3d 437, 441 (1st Dist. 1989). 93
Pratt III, 2014 IL App (1st) 130744, ¶ 25 (stating “we hold and clarify that for purposes of determining whether a purchaser may proceed against a subcontractor on a breach of implied warranty of habitability claim, the court must look to whether the general contractor is solvent”).
The most widely used vehicle for interlocutory appeal in this area is Supreme Court Rule 308. 109
Minton, 116 Ill. App. 3d at 853.
110
Pratt III, 2013 IL App (1st) 130744, ¶ 29; Dearlove Cove Condos.,180 Ill. App. 3d at 441. 94
See In re Gutman, 232 Ill. 2d 145, 149 (2008) (stating “[a] panel, division, or district of 102
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Id. (“This defendant did not file a brief, but we find that this does not prevent resolution of this appeal”). 111
First Capitol Mortg. Corp. v. Talandis Constr. Corp., 63 Ill. 2d 128 (1976). 112
Minton, 116 Ill. App. 3d at 855.
113
Washington Courte Condo. Ass’n-Four, 150 Ill. App. 3d at 689.
See Geer v. Kadera, 173 Ill. 2d 398 (1996) (“The fact that the appellate court may have suggested in dicta that an alternative remedy might exist did not ipso facto create an appealable interest. Dicta is not binding authority under the rule of stare decisis. As a result, the appellate court’s comments . . . can have no effect upon the action pending in the circuit court”). 121
114
Harrel v. Dillards Dep’t Stores, 268 Ill. App. 3d 537, 548 (5th Dist. 1994). 115
276 Ill. App. 3d 325 (1st Dist. 1995).
122
Petersen, 76 Ill. 2d at 42.
It would not be unprecedented for the Illinois Supreme Court to overrule a line of First District cases that deviated from established supreme court precedent. See e.g. Nationwide Financial LP v. Pobuda, 2014 IL 116717, ¶¶ 21, 41 (stating that despite the trial court’s ruling that it is “bound and it must follow the cases in the first district,” the supreme court held “that the relevant legal principles that govern the issues presented here are clear and have been settled for many years, at least as far as this court’s precedent is concerned”).
Vill. at White Birch Town Homeowners Ass’n v. Goodman, 824 N.W.2d 561 (Ct. App. Iowa 2012). 1324 W. Pratt Condo. Ass’n v. Platt Constr. Group, 2012 IL App (1st) 111474, ¶ 40.
Rounds v. Jackson Park Hosp. & Medical Ctr., 319 Ill. App. 3d 280, 289 (1st Dist. 2001). Pratt III, 2013 IL App (1st) 130744, ¶ 29; Dearlove Cove Condos., 180 Ill. App. 3d at 441. 139
Pratt III, 2013 IL App (1st) 130744, ¶ 29; Dearlove Cove Condos., 180 Ill. App. 3d at 441. 140
Petersen, 76 Ill. 2d at 41 (emphasis added).
126
735 ILCS 5/13-214.
141
Id. at 43.
127
Kozak v Ret. Bd. of Firemen’s Annuity and Benefit Fund of Chicago, 95 Ill. 2d 211, 220 (1983). See also AXIA, Inc. v. I. C. Harbour Constr. Co., 150 Ill. App. 3d 645, 651 (2d Dist. 1986) (“The statute itself does not provide for any exception which would toll, or delay, the running of the statute, as it is an established rule regarding the statute of limitations that no exceptions which toll the statute or enlarge the scope will be implied”). 142
Pratt II, 2012 IL App (1st)111474, ¶¶ 33-34.
128
James J. White & Robert S. Summers, Uniform Commercial Code, § 12-6, 551 (6th ed. 2010). 129
White & Summers, supra note 128 (emphasis original). 130
Id. at 617.
May Ctrs., Inc. v. S.G. Adams Printing & Stationery Co., 153 Ill. App. 3d 1018 (5th Dist. 1987 ), appeal denied, 116 Ill. 2d 561 (1987), cert. dismissed, 485 U.S. 944 (1988). 137
125
Minton, 116 Ill. App. 3d at 855.
120
Id.
136
138
118
Pratt I, 404 Ill. App. 3d at 618.
Id. ¶ 26.
135
Id. at 329.
117
119
Id.
134
123
124 116
Id. ¶ 25.
133
Petersen, 76 Ill. 2d at 42.
131
State Farm Fire & Cas. Co. v. Yapejian, 152 Ill. 2d 533, 539-40 (1992). 143
Pratt III, 2013 IL App (1st) 130744, ¶ 25.
132
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of liability and are therefore irrelevant; and (2) because admitting such evidence would discourage settlement. Id. ¶ 36. Further, it explained that for Rule 408 to apply, the communications must relate to and concern a claim actually in dispute as to validity or amount at the time of the negotiations. Id. Moreover, it is the party who is asking for statements to be excluded that must make a substantial showing that the communications were part of an attempt to settle a disputed claim. Id. ¶ 38. The Second District explained that courts reviewing such communications are to consider the totality of the circumstances, and the party’s act of labeling something as a “settlement offer” is not dispositive. It further emphasized that the standard of review on such rulings was an abuse of discretion. Id. The plaintiff first argued that the trial court had erred because it had drawn an arbitrary line between pre- and postlitigation offers of compromise, holding that only post-litigation communications were inadmissible under Rule 408. Id. ¶ 39. The Second District agreed that the application of Rule 408 does not depend on when the actual lawsuit is filed, but felt that the plaintiff had misunderstood the rationale for the trial court’s ruling. Id. The court noted that the trial court’s initial ruling on the motion in limine had provided that the communications were admissible because they predated the dispute at issue (not the litigation, as the plaintiff had argued). Id. Moreover, the court felt the trial court reinforced that point when ruling on the post-trial motion by specifically clarifying the prior ruling and stating that the communications at issue had not fallen within the category of settlement documents. Id. ¶ 40. The plaintiff next argued that a bona fide dispute over damages had in
fact existed when the plaintiff sent the September 5, 2008 email regarding its “offer.” Id. ¶ 41. The plaintiff claimed that from the time it originally demanded $3,730,230, the remaining contract value, the defendant had refused to pay that amount and disputed owing anything other than the cost of completed controllers. Id. The plaintiff thus felt the parties had conflicting opinions concerning the amount owed and that an actual dispute existed for purposes of Rule 408. Id. The Second District reviewed the timeline of communications and determined that the trial court did not abuse its discretion in admitting the communications. Id. ¶¶ 42-43. The appellate court explained that the trial court could have reasonably concluded that the communications at issue constituted an effort by the defendant and the plaintiff to identify and submit cancellation costs to the Army for reimbursement as a result of the Army’s termination of its contract with the defendant. Id. ¶ 44. It also found it significant that the communications were not adversarial. Id. The Second District next rejected the plaintiff’s argument that the invoice generated constituted an offer of compromise to be protected by Rule 408. Id. ¶ 45. The court explained that in advising the defendant of the invoice, the plaintiff indicated that it knew the defendant was still settling terms with the Army over the cancelled contract, but was generating the invoice to get its books in order. Id. Thus, the court found that the evidence suggested that the invoice was generated merely for bookkeeping purposes rather than as an offer of settlement. Id. The court also rejected the plaintiff’s reliance on another case, Davis v. Rowe, No. 91C2254, 1993 WL 34867 (N.D. Ill. Feb. 10, 1993), finding the case
distinguishable for several reasons, including that the parties in Davis had both retained outside counsel when the communications took place and had engaged in settlement discussions around the time of the communications. Control Solutions, 2014 IL App (2d) 120251, ¶ 46. The Second District explained that in this case, the parties had not retained counsel until 2009 and had not engaged in any meetings to discuss a potential settlement. Id. ¶ 48. Finally, the Second District agreed with the defendant that even if the communications at issue should have been excluded under Rule 408, any error in admitting them was harmless. Id. ¶ 49. The court noted that the evidence the plaintiff claimed was harmful was found in other places within the record. Id. Moreover, certain evidence that was found only in those communications was actually found to have benefitted the plaintiff. Id. Conclusion It is easy for attorneys and unrepresented parties to consider any communication regarding a compromise inadmissible under evidentiary rules regarding offers of compromise and settlement negotiations. Control Solutions raises some concern regarding when such communications may be admissible at trial. It is important for an attorney to warn his clients, especially businesses, as to when Rule 408 and the rules regarding the admissibility of settlement discussions actually applies. It is crucial that the attorney and/or party be aware that such discussions are generally only excluded when there is an actual bona fide dispute about the validity or amount of a claim. Fourth Quarter 2014 | IDC QUARTERLY | 23
Civil Rights Update John P. Heil, Jr. Heyl, Royster, Voelker & Allen, P.C., Peoria
The Seventh Circuit’s Footnotes Question the Failure to Raise Available Immunities Experienced civil rights practitioners frequently defend their cases based upon the strongest possible argument: that no constitutional or state law tort occurred in the first place. If applicable, this is always an argument that should be made. Even if counsel believe they possess a “slam dunk” argument, however, the failure to raise and support the immunities afforded to state actors may have dire consequences. The United States Court of Appeals for the Seventh Circuit’s recent holding in Hawkins v. Mitchell, 756 F.3d 983 (7th Cir. 2014), should serve as a lesson for all of us. The opinion opens on an ominous note, stating: “We review summaryjudgment and trial rulings on several causes of action against police who did not claim immunity under federal or state law.” Hawkins, 756 F.3d at 987. After telegraphing the lesson ahead, the court reviews the facts of the underlying incident in detail. Facts and Procedural History The case involves a domestic dispute that erupted late on a Saturday night in May 2008. Sarah Bumgarner called 9-1-1 from outside William Hawkins’ house in Champaign, Illinois. Id. The police dispatcher characterized the incident as a heated argument fueled by alcohol. Two police officers—Rodney Mitchell and James Bowersock—responded to the call. Officer Mitchell arrived at the 24 | IDC QUARTERLY | Fourth Quarter 2014
scene first, at which time he encountered Bumgarner outside, shouting at Hawkins about her keys. Id. at 988. Clothing was scattered around the yard. According to Officer Mitchell, Hawkins screamed back at Bumgarner from his back porch, stepped into the house, and slammed the door. Hawkins remembered the scene quite differently, stating that he was in bed asleep when the officer arrived. Id. In any event, Bumgarner apologized to Officer Mitchell for calling the police, but reiterated to him that she needed her keys. Consistent with Officer Mitchell’s observations, she admitted that she was uninjured. She also related that she and Hawkins did not have a physical altercation. Although she made no allegation that Hawkins was violent or threatening that evening, she told Officer Mitchell that Hawkins “gets violent sometimes.” Id. Officer Mitchell decided to help Bumgarner retrieve her keys. He knocked on Hawkins’ door. Hawkins answered it, yelled “I don’t need to talk to you!” and tried to close it. Officer Mitchell blocked the door with his foot, entered the residence, and began questioning Hawkins. Id. Hawkins promptly called his attorney. With his attorney coaching him by phone, Hawkins confirmed that Officer Mitchell did not have a warrant and that he was not then placing Hawkins under arrest. Id. Per his attorney’s advice, Hawkins repeatedly told Officer Mitchell to get out of his house. Id. Officer Mitchell remained, however, and motioned for
the newly-arrived Officer Bowersock to join him inside the residence. Officer Bowersock told Hawkins that the officers were investigating a domestic call and that he had to put down the phone. Id. Hawkins did not obey, at which time Officer Bowersock commanded him to get off the phone or “be arrested.” Id. When Hawkins again refused to comply, Bowersock and Mitchell grabbed Hawkins’ wrists to effectuate his arrest. Hawkins resisted, and in the resulting struggle the three fell to the floor. Id. Hawkins was allegedly injured in the scuffle. Id. at 989. Hawkins sued the officers pursuant to § 1983 and state law. Id. The district court reviewed cross-motions for summary judgment and held in the officers’ favor on Hawkins’ claims of illegal seizure under the Fourth Amendment, arrest in retaliation for speech under the First Amendment, and “false imprisonment/ locomotion” under Illinois common law. Id. The remaining claims—for excessive force under the Fourth Amendment and a common law claim of “wilful and wanton battery”—proceeded to trial. Id. During trial, the court instructed the jury that “[t]he lawfulness of Defendants’ entry into Plaintiff’s home or his arrest [was] not an issue.” Id. at 990. The jury returned a verdict in favor of the officers. Id.
About the Author John P. Heil, Jr. is an ofcounsel attorney with Heyl, Royster, Voelker & Allen, P.C. He joined the firm in November 2007 after serving eleven years as an Assistant State’s Attorney in Cook County, Illinois. He received his J.D. from Chicago-Kent College of Law in 1996 and his B.S. from Bradley University in 1993. His practice includes the defense of civil rights actions, municipal liability, and general negligence matters.
The Court’s Pre-Discussion Footnote Before beginning its analysis, the Seventh Circuit panel unusually placed a footnote right after its heading for “Discussion.” It states, in full: When, as here, police officers are sued under 42 U.S.C. § 1983 for allegedly violating constitutional rights, qualified immunity often proves to be the decisive rule of law. Cf. Pearson v. Callahan, 555 U.S. 223, 236, 129 S.Ct. 808, 172 L.Ed.2d 565 (2009) (allowing courts to dispose of claims against public officials for violating constitutional rights without considering whether a right was violated, by determining that it was in any event not “clearly established”). This opinion does not address qualified immunity in substance, however, because Mitchell and Bowersock did not discuss it on appeal. And, while “[w]e can ‘affirm on any ground supported in the record, so long as that ground was adequately addressed in the district court and the nonmoving party had an opportunity to contest the issue,’” Thayer v. Chiczewski, 705 F.3d 237, 247 (7th Cir. 2012) (quoting Peretz v. Sims, 662 F.3d 478, 480 (7th Cir. 2011)), the officers’ briefing in the district court did not ensure the fulfillment of those criteria with respect to qualified immunity. Hawkins, 756 F.3d at 990 n.3. Is the purpose of the footnote merely to explain to the reader that the court’s opinion will not follow the ordinary pattern for these
types of cases? Or is it intended as an admonishment? Given the additional footnotes that follow, it is clear that the court was sending a message. The Court’s Substantive Analysis (and More Footnotes) The court first analyzed the plaintiff’s Fourth Amendment “illegal seizure” claim, and in so doing, it reviewed the well-worn principles announced in Silverman v. United States, 365 U.S. 505, 511 (1961) (“At the very core [of the Fourth Amendment] stands the right of a man to retreat into his own home and there be free from unreasonable governmental intrusion.”) and Payton v. New York, 445 U.S. 573, 586 (1980) (“searches and seizures inside a home without a warrant are presumptively unreasonable.”). Id. at 991-92. The court explained that, regardless of this high level of constitutional protection, the Fourth Amendment will give way when there exist “exigent circumstances,” such as when officers must enter “to render emergency assistance,” “to protect an occupant from imminent injury,” or “to prevent the imminent destruction of evidence.” Id. at 992 (collecting cases). Officers Mitchell and Bowersock argued that their entry into the home was justified due to the presence of two exigencies: the need to prevent imminent serious injury and the need to question Hawkins about the situation. Id. at 993. The second basis was immediately brushed aside by the court as a nonstarter. The officers’ wish to question Hawkins was simply not an exigency (a compelling need for official action with no time to secure a warrant); it amounted to nothing more than an “ordinary investigation of possible crime.” Id. (quoting United States v. Venters, 539 F.3d 801, 807 (7th Cir. 2008)). With
respect to the officers’ supposed need to render “emergency assistance,” the court found no such emergency. Officer Mitchell knew better; after all, while outside and safely away from Hawkins, Bumgarner assured Mitchell that no physical attack had taken place, and his own observations confirmed her assurances that she was not injured. Hawkins, 756 F.3d at 993. She even apologized for calling 9-1-1 in the first place, since all she really wanted was her keys. With these facts before it, the court ruled that Officer Mitchell’s nonconsensual and warrantless entry into the home was objectively unreasonable. Id. Thus, his seizure of Hawkins constituted a violation of the Fourth Amendment. Id. Given Officer Mitchell’s presence inside the house at the time of his arrival, Officer Bowersock initially possessed “a reasonable basis to act as though he had consent or exigency,” in the court’s view. Id. at 994. This, however, soon wore off as the circumstances (no weapons, threats, or physical aggression from Hawkins) should have reasonably caused Officer Bowersock “to ask Mitchell why they were inside and to recognize the absence of any possible justification for staying.” Id. According to the court, Officer Bowersock’s continued presence inside the home and his seizure of Hawkins was unconstitutional as a matter of law. Id. As the court reached this conclusion, it added another footnote declaring, “It is significant to this discussion that Bowersock has not sought qualified immunity.” Id. at 994 n.6. Although it does not seem likely for Officer Mitchell, would qualified immunity have saved Officer Bowersock from this claim? It seems quite possible, particularly in light of the court’s footnote. The court would have had to consider — Continued on next page
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whether, on this night of the incident, the contours of Hawkins’ right to be free from an illegal seizure were sufficiently clear such that every reasonable officer in Officer Bowersock’s position would have understood that remaining within a residence initially entered by a fellow officer in those circumstances, and effecting the occupant’s arrest, violated that right. See White v. Stanley, 745 F.3d 237, 241-42 (7th Cir. 2014) (quoting Ashcroft v. al-Kidd, 131 S. Ct. 2074, 2083 (2011)). Although future officers faced with the same situation are now “on notice” for qualified immunity purposes through the opinion in this case, it seems evident that Bowersock possessed a fair chance of surviving the “clearly established” prong of the qualified immunity analysis, had he pursued it as a defense. See Pearson v. Callahan, 555 U.S. 223, 236 (2009). Having completed its Fourth Amendment analysis, the court turned its attention to Hawkins’ state law false imprisonment claim. Hawkins, 756 F.3d at 994. The officers argued that they possessed probable cause to arrest Hawkins for theft of Bumgarner’s keys or for disorderly conduct. Id. Probable cause operates as an absolute bar to a claim of false imprisonment. Id. (quoting Poris v. Lake Holiday Prop. Owners’ Ass’n, 2013 IL 113907, ¶ 63). The court again commented on the officers’ defensive strategy in footnotes. Two of the footnotes addressing the pending state law claims remind the reader that “Illinois’ Local Governmental and Governmental Employees Tort Immunity Act would typically be under consideration” in a case like this, had the officers raised it as a defense. Id. at 991 n.4; 994 n.8. Probable cause to arrest Hawkins for theft did not exist, according to the
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court, because “[w]ithout any accusation of theft, an intoxicated 9-1-1 caller’s request for assistance in retrieving her keys from someone else’s house, coupled with an allegation of unrelated past abuse by that someone, does not amount to probable cause to arrest for stealing the keys.” Id. at 995. As for probable cause for disorderly conduct, the court found that the diametrically opposite accounts of Hawkins’ behavior at the time of Officer Mitchell’s arrival (whether he was screaming from his back porch or in bed asleep) foreclosed the possibility of summary judgment in the officers’ favor. With no consideration warranted for possible application of the Tort Immunity Act, the district court’s ruling on this claim was reversed and remanded for a new trial. Id. at 999. The court next considered whether the district court correctly entered summary judgment for the officers with respect to Hawkins’ allegation that they arrested him in retaliation for “calling an attorney and for his assertion of his Fourth Amendment right to privacy of his home, in violation of the . . . First Amendment.” Id. at 996. To establish a prima facie case for such a claim, a plaintiff must show that: “(1) he engaged in activity protected by the First Amendment; (2) he suffered a deprivation likely to deter such activity; and (3) the First Amendment activity was at least a motivating factor in the decision to impose the deprivation.” Id. (citing Thayer v. Chiczewski, 705 F.3d 237, 251 (7th Cir. 2012)). The officers argued, both at the district court level and on appeal, that “the right to contact counsel would severely hamper the ability of police officers to enforce the law.” Id. Having summarized the officers’
argument, the court directs the reader to another footnote. Id. Within it, the court states: qualified immunity is not available to the officers as a defense, here or on remand. . . . Mitchell and Bowersock neglected to raise qualified immunity from any cause of action, not only here but also in the district court. . . . Finally, because Mitchell and Bowersock left qualified immunity out of their answer to the amended complaint, there is no reason to let them assert it upon remand. Id. at 996 n.11 (emphasis in original). After this harsh warning, the court went on to reject the officers’ argument as “contrary to precedent.” Id. at 997. On a basic level, according to the court, Hawkins had a clear First Amendment right to consult with his attorney. Id. In addition, Hawkins’ phone call was not “an act of physical resistance” required for criminal obstruction of the officers’ duties. Id. (quoting People v. Stoudt, 198 Ill. App. 3d 124, 127 (2d Dist. 1990)). The court could not infer that the attorney phone call was the factor that motivated the officers to arrest Hawkins, so that specific question was returned to the district court for submission to the jury on remand. Id. at 997, 999. The court’s last area of analysis was the jury’s verdicts on the state law “excessive force” and “wilful and wanton battery” claims. Id. at 997-98. Hawkins argued, inter alia, that the district court improperly instructed the jury that “[t]he lawfulness of Defendants’ entry into [his] home or his arrest [was] not at issue” and
Feature Article that the erroneous summary judgment order enabled improper arguments by defense counsel during closing argument. Id. at 998. The court found that, given the district court’s rulings on the cross-motions for summary judgment, its instructions to the jury “did fairly and accurately summarize the law.” Id. Defense counsel’s closing argument was a different story, however. According to the court, it “overwhelmingly misled” the jury, even though most of the false impressions contained within it were “consistent with the law of the case at the time.” That, according to the court, “is precisely what made it futile for Hawkins to object.” Id. at 999. The court ordered retrial of the excessive force and wilful and wanton battery claims. Conclusion The Seventh Circuit’s Hawkins v. Mitchell opinion is interesting because it is really two opinions in one. While finding violations of the plaintiff’s constitutional rights and possible substantiation of his state law tort claims in the body of the opinion, the court repeatedly drops footnotes chastising the officers for failing to defend themselves through the doctrine of qualified immunity and Illinois’ Tort Immunity Act. The footnotes certainly make no promises but, as defense practitioners, we should heed their warnings carefully any time those defenses are available for our clients.
William G. Beatty* Johnson & Bell, Ltd., Chicago
Congress, the Supreme Court, and the Religious Rights of Corporations On November 16, 1993, a relatively obscure law entitled the Religious Freedom Restoration Act (42 U.S.C. §§ 2000bb, et seq.) (RFRA) went into effect. The findings of Congress, and the declaration of purpose, state that the First Amendment’s guaranty of the free exercise of religion had been compromised by a decision of the Supreme Court of the United States three years earlier in a case entitled Emp’t Div., Dept. of Human Resources of Oregon v. Smith, 494 U.S. 872 (1990). In Smith, two members of the Native American Church who, ironically, had been fired by the state from their jobs as drug rehabilitation counselors, ingested peyote, a hallucinogenic substance prohibited by Oregon drug laws. Id. at 872. The Supreme Court determined that the state need not demonstrate a compelling governmental interest to justify the imposition and enforcement of an otherwise religion-neutral law that had the effect of burdening or prohibiting a particular religious practice. Id. at 888. The Smith decision overturned two prior United States Supreme Court cases, Sherbert v. Verner, 374 U.S. 398 (1963) and Wisconsin v. Yoder, 406 U.S. 205 (1972), both of which held that a compelling state interest must exist for any law that substantially burdens the free exercise of religion to pass the First Amendment’s constitutional muster. The RFRA restored the compelling interest test as a means of “striking
sensible balances between religious liberty and competing prior governmental interests.” 42 U.S.C. § 2000bb(a)(5). Thereafter, any federal legislation that substantially burdened a person’s free exercise of religion had to pass a twoprong test to be deemed constitutionally valid: (1) the legislation had to be “in furtherance of a compelling governmental interest;” and (2) the legislation must be “the least restrictive means of furthering that compelling governmental interest.” 42 U.S.C. 2000bb-1(b)(1-2). With varying results, the RFRA came into play in cases having diverse fact patterns, such as the use of hallucinogenic tea in worship services (see Gonzales v. O Centro Espirita Beneficente Uniao Do Vegetal, 546 U.S. 418 (2006)); the possession of bald eagle — Continued on next page
About the Author William G. Beatty is an equity shareholder at the Chicago law firm of Johnson & Bell, Ltd. where he has practiced for the past 36 years. He is a member of the State Bars of Illinois, Arizona and Colorado, as well as the bars of numerous federal courts. Mr. Beatty received his J.D., with honors, from the Chicago-Kent College of Law and is presently pursuing an LL.M. degree in Medical Law and Ethics from the University of London. *The author gratefully acknowledges the research assistance of second-year law student Amber Lukowicz.
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feathers (see United States v. VasquezRamos, 531 F.3d 987 (9th Cir. 2008)); a prohibition against the wearing of beards by Muslim firefighters (see Potter v. District of Columbia, 382 F. Supp. 2d 35 (D.C. Cir. 2005)); and to the wearing of a Sikh ceremonial sword in the workplace by a federal employee (see Tagore v. United States, 735 F.3d 324 (5th Cir. 2013)).While these cases all dealt with the religious rights of individuals, as have the vast majority of cases under the RFRA, the most recent application came in the corporate context, raising such questions as whether corporations have “personhood” under the RFRA and, if so, whether corporations can be deemed capable of holding religious beliefs, or can claim entitlement to the free exercise of religion. The Hobby Lobby Decision The consolidated cases of Burwell v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Burwell, 134 S. Ct. 2751 (2014) (Hobby Lobby), decided by the United States Supreme Court on June 30, 2014, illustrates the conflict between the free exercise of religion under the First Amendment, as implemented through the RFRA, and the governmental mandate of employer-provided health insurance coverage for various methods of contraception under the Patient Protection and Affordable Care Act (ACA), 42 U.S.C. § 300gg-13(a)(4). The gravamen of the RFRA is found at subsection 1 of the ACA, entitled “Free exercise of religion protected,” which provides: Government shall not substantially burden a person’s exercise of religion . . . except . . . if it demonstrates that application of 28 | IDC QUARTERLY | Fourth Quarter 2014
the burden to the person—(1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest. 42 U.S.C. § 2000bb-1(a) and (b) (emphasis added). The ACA’s mandate for contraception coverage requires specified employers’ group health plans to provide “preventive care and screenings” for women without any cost sharing on the part of the enrolled employees. 42 U.S.C. § 300gg-13(a)(4). Congress authorized a division of the Department of Health and Human Services (HHS) to determine what type of preventive care employers’ group health plans must cover. The Health Resources and Services Administration, a component of HHS, compiled a list of 20 contraceptive methods ranging from birth control pills to sterilization procedures to patient counseling that are to be included within the federal contraception coverage mandate. Id. at 2754. Four of the 20 methods have the effect of aborting a pregnancy by preventing a fertilized egg from attaching to the uterus. Id. at 2762. Such methods of contraception offended the sincerely-held religious beliefs of the owners of the companies involved in the Hobby Lobby case, who petitioned for a faith-based exemption from the federal mandate regarding coverage for such procedures under their companies’ group health plans. Id. at 2755. The Hobby Lobby case presented the Supreme Court with a number of fundamental issues ranging from corporate “personhood” for purposes of RFRA protection; the extent to which a closely held corporation can be used as a reflection of the religious beliefs of its owners
while still observing the corporate form; and what distinctions should be drawn, if any, between for-profit and not-for-profit corporations, or between closely held and publicly traded corporations for purposes of exemptions from ACA mandates based upon faith-based objections. Id. at 2759. These questions presented mixed issues of law and philosophy against a background of one of the most contested and controversial items of social legislation of the generation. As discussed below in Section IV, some of the issues presented in Hobby Lobby received more of the Court’s consideration than others, while some will have to await further development in the federal district and appellate courts. The majority’s holding in Hobby Lobby tells us the following: (1) that corporations are entitled to invoke the protection of the RFRA to the same extent as individuals, i.e. corporations are “persons” under the statute; (2) that closely held corporations can serve as alter-egos of their owners in seeking faith-based exemptions from religiously objectionable aspects of the ACA, such as the contraception coverage mandate; and (3) that for-profit corporations stand with equal footing to religious not-for-profits in their ability to invoke First Amendment free exercise rights and to challenge the impact of overly intrusive governmental regulations on such free exercise rights where the government action is not the least intrusive means of furthering a compelling governmental interest. In such instances, governmental regulation that substantially impacts the free exercise of religion—which is apparently a right not only of natural persons but artificial ones as well—will be deemed unconstitutional if less intrusive means exist to further the legitimate intent of the government in enacting the subject legislation or enforc-
A vigorous dissent challenged the majority’s assumption that “artificial legal entities,” such as corporations, are capable of the exercise of religion, as “artificial being[s], invisible, intangible and existing only in contemplation of law” [with] “no consciences, no beliefs, no feelings, no thoughts, no desires.”
ing the subject regulations. Id. at 2759. A vigorous dissent challenged the majority’s assumption that “artificial legal entities,” such as corporations, are capable of the exercise of religion, as “artificial being[s], invisible, intangible and existing only in contemplation of law” [with] “no consciences, no beliefs, no feelings, no thoughts, no desires.” Hobby Lobby, 134 S. Ct. at 2794, (quoting Trustees of Dartmouth College v. Woodward, 17 U.S. 518, 636 (1819) and Citizens United v. Federal Election Comm’n, 558 U.S. 310, 466 (2010)). The dissent likewise challenged the majority’s assumption that the plaintiffcorporations’ free exercise of religion was “substantially burdened” by the contraceptive mandate, stating that the connection between the families’ religious objections and the contraception coverage requirement is too attenuated to rank as substantial.” Hobby Lobby, 134 S. Ct. at 2799. The dissent concluded with the argument that even if the burden upon the free exercise of religion by the petitioning corporations was shown to be substantial, “the Government has shown that the contraceptive coverage for which the ACA provides furthers compelling interests in public health and women’s well being,” thereby satisfying the two-prong test under the RFRA. Id.
Does the Holding in Hobby Lobby Extend Beyond Closely Held Corporations? Some might argue that the penultimate paragraph of the majority’s opinion in Hobby Lobby signals an intent to limit the application of the Court’s holding in the case to closely held corporations. Id. at 2785 (stating, “[t]he contraceptive mandate, as applied to closely held corporations, violates RFRA”) (emphasis added). Such a limitation runs contrary to the rationale employed earlier in the majority opinion to justify its finding of corporate “personhood” under the RFRA. The Court found RFRA personhood on the part of for-profit corporations by means of reference to the Dictionary Act, under which the word “person” includes “corporations, companies, associations, firms, partnerships, societies, and jointstock companies, as well as individuals.” Id. at 2768, quoting 1 U.S.C. § 1. In using the Dictionary Act to dispel any distinction between individuals and the closely held corporations involved in the case, the Court may have also laid the groundwork for eliminating any future limitation of the majority’s holding to closely held corporations (as opposed to publicly traded companies) when it stated: “No known understanding of the term ‘person’ includes some but not all
corporations.” Id. at 2769 (emphasis in the original). The Court’s majority deemed it “unlikely” that corporate claims for religious freedom under the RFRA would originate from “corporate giants” such as IBM or General Electric (see Id. at 2774). Technically there is no more of a basis to draw a distinction under the RFRA between closely held and publicly traded corporations than there is between non-profit and for-profit corporations, all of whom, according to the majority opinion’s application of the Dictionary Act, are included in the ambit of “persons” entitled to RFRA protection. While it is conceptually simpler to envision a closely held corporation as an extension of its owners’ religious beliefs, there is nothing legally to prevent the expansion of the Hobby Lobby holding to publicly traded corporations, just as the majority opinion applied the RFRA’s free exercise mandate to for-profit secular corporations as readily as it was earlier applied to non-profit religious organizations. Id. at 2772-2773. Picking up on the cautionary tale about the possible proliferation of accommodation-seeking lawsuits brought by shareholders, officers, or directors of a publicly traded corporation claiming a religious motivation, a Harvard Law School professor opined that “[r]eligious liberty lawsuits are about to become a major growth industry.” Noah Feldman, Analysis: Religious Liberty Lawsuits are about to Become a Growth Industry, Crain’s Chicago Business (June 30, 2014). Another law school instructor responded to the comment made by Chief Justice Roberts during oral argument that the Supreme Court will have to “await another case when a large publicly traded corporation comes in and says, ‘We — Continued on next page
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have religious principles,’” by opining that such cases are “inevitable,” and are “sure to vex the courts” regarding the nature and scope of “a corporate right of religious belief and exercise.” David Cay Johnston, Do Corporations Have Religious Beliefs?, Al Jazeera America (March 28, 2014). Non-profits and the Form 700 Debate Initially, an exception from the mandatory coverage for contraceptives under the ACA extended only to any group health plan established and maintained by a “religious employer” as that term is referenced in the provisions of the United States Tax Code governing churches. See 45 C.F.R. § 147.131(a). As certain faith-based non-profit organizations joined in the churches’ objections to the mandatory coverage of contraception methods for their employees, the exemption was broadened to include religious non-profits that did not qualify for the categorical exemption previously granted to churches. See 45 C.F.R. § 147.131(b). To claim such an exemption, and to avoid any civil penalties for noncompliance with the ACA’s mandate for contraception coverage, non-profit corporations were required to complete a self-certification form, known as EBSA Form 700. EBSA Form 700—Certification, Dep’t of Labor, http://www.dol.gov/ ebsa/preventiveserviceseligibleorganizationcertificationform.doc (all Internet materials as visited October 3, 2014). Form 700 identifies the objecting organization and provides the name and title of the individual asserting the objection on behalf of the non-profit organization, as well as the mailing address, e‑mail address and telephone number for that 30 | IDC QUARTERLY | Fourth Quarter 2014
As certain faith-based non-profit organizations joined in the churches’ objections to the mandatory coverage of contraception methods for their employees, the exemption was broadened to include religious non-profits that did not qualify for the categorical exemption previously granted to churches.
individual. Id. The person certifying the objection has to attest that: (1) on account of religious objections, the organization claiming the exemption opposes providing coverage for its employees for any and all of the contraceptive services that would otherwise be required to be covered under the ACA; (2) that the organization asserting the objection is organized and operates as a non-profit entity; and (3) that the objecting organization holds itself out as a religious organization. See 45 C.F.R. § 147.131(a). The objecting organization is then to provide its group insurer or its third-party administrator for a self-insured group health plan with a copy of the form. See 45 C.F.R. § 147.131(c). This, in turn, triggers an obligation on the part of the insurer or third-party administrator to provide contraceptive coverage to the employees of the objecting organization without charging the organization any premiums or other fees for the provision of contraception coverage. Id. The insurer or third-party administrator would then be reimbursed for the costs of providing or administering the provision of contraceptive services by means of a plan set forth elsewhere in the regulations promulgated under the ACA. Id. A number of religious non-profit organizations objected to the Form 700 requirements, claiming completion and
submission of the form to their insurers or claims administrators makes the objecting organization “complicit” in providing contraceptive coverage in violation of their religious beliefs. Univ. of Notre Dame v. Sebelius, 743 F.3d 547 (7th Cir. 2014). A significant number of religious organizations sought relief from the requirement relating to the completion and submission of Form 700 on that basis, asking for injunctive relief from the exemption’s requirements as well as to preclude the possible imposition of civil penalties for noncompliance with the administrative and regulatory requirements associated with their exemption requests. See Michigan Catholic Conference v. Burwell, 755 F.3d 372 (6th Cir. 2014); see also Sebelius, 743 F.3d 547; Eternal Word Television Network, Inc. v. Secretary, U.S. Dept. of Health and Human Services, 756 F.3d 1339 (11th Cir. 2014). As of the date of the Hobby Lobby decision, at least three federal appellate circuits (the United States Court of Appeals for the Sixth, Seventh, and Eleventh Circuits) had weighed in on the Form 700 debate, with varying results. See Michigan Catholic, 755 F.3d 372; see also Sebelius, 743 F.3d 547; Eternal Word Television Network, 756 F.3d 1339. Several more circuits are expected to follow in taking up the issue once the
federal trial courts decide hundreds of pending cases seeking injunctive relief from the Form 700 requirement. Among the first of the Form 700 cases to reach the federal appellate stage was Univ. of Notre Dame v. Sebelius, 743 F.3d 547 (7th Cir. 2014) where the university, which had never paid for contraceptives for its employees, nor ever permitted its group insurer to reimburse its students for the cost of contraceptives, moved for a preliminary injunction against the HHS, seeking exemption from the ACA’s contraceptive coverage mandate. See Univ. of Notre Dame, 743 F.3d at 549. Notre Dame signed the Form 700 on the last day prior to being subject to penalties for violating HHS regulations, and sent copies of the form to its insurer and its claims administrator, but sought injunctive relief for the contraceptive coverage mandate regulations. See id. at 551. With the university having complied with the requirements of Form 700, the United States Court of Appeals for the Seventh Circuit confessed confusion about what the university wanted the court to do: “Tell it that it can tear up the form without incurring a penalty for doing so . . . ?” Id. at 552. Questions about the nature of the relief sought by Notre Dame, coupled with other procedural irregularities, appear to have prompted the Seventh Circuit to affirm the district court’s denial of preliminary injunctive relief. See id. at 562. This left the university to seek a reversal before the Supreme Court, based upon a claimed entitlement to preliminary protection against the contraceptive mandate until its exemption case has been fully heard on the merits. Id. at 554. A similar decision affirming a district court’s denial of a motion for preliminary injunctive relief from the contraceptive coverage mandate came
less than four months later in the United States Court of Appeals for the Sixth Circuit. Michigan Catholic Conference v. Burwell, 755 F.3d 372 (6th Cir. 2014). However, the opposite approach was taken by the United States Court of Appeals for the Eleventh Circuit, which affirmed a district court’s order granting a request to enjoin the government from enforcing the contraceptive mandate provisions of 42 U.S.C. § 300gg-13(a)(4) or assessing fines or other enforcement actions against the petitioning plaintiff for compliance with HHS regulations. Eternal Word Television Network, Inc. v. Secretary, U.S. Dept. of Health and Human Services, 756 F.3d 1339, 1340 (11th Cir. 2014). The first two Form 700 cases that have reached the Supreme Court: Little Sisters of the Poor Home for the Aged v. Sebelius, 134 S. Ct. 1022 (2014) and Wheaton College v. Burwell, 134 S. Ct. 2806 (2014), both came to the Court on applications for injunction by the religious not-for-profits seeking exemption from the filing of Form 700, while also asking for protection against the government’s enforcement of the challenged provisions of the ACA. In both instances the requested relief was granted, subject to the non-profits informing the Secretary of HHS, in writing, that they are non-profit religious organizations that have religious objections to providing coverage for contraceptive services. Sebelius, 134 S. Ct. 1022; Wheaton College, 134 S. Ct. 2806. In both instances, the applicants for injunctive relief were specifically excused from filling out Form 700, and likewise excused from sending copies of the form to their insurers or third-party administrators. Sebelius, 134 S. Ct. 1022; Wheaton College, 134 S. Ct. 2806 In Wheaton College, the Court added: “Nothing in
this interim order affects the ability of the applicant’s employees or students to obtain, without cost, the full range of FDA-approved contraceptives.” Id. The Concept of Corporate “Ensoulment:” Is a Corporation Capable of, or Entitled to, the Right of the Free Exercise of Religion? Justice Alito recognized early in the majority opinion in Hobby Lobby that the crux of the argument advanced by HHS in opposition to the corporations’ petition for an exemption from the ACA’s contraception mandate was not whether the companies were “persons” under the RFRA (a point deemed conceded by HHS, at least as to non-profit corporations), but instead was whether corporations could engage in the “free exercise of religion.” Hobby Lobby, 134 S. Ct. at 2769. This question poses issues of both capacity and entitlement, the former being necessary to even reach consideration of the latter. The majority opinion draws upon a series of “straw-man” arguments derived from the HHS briefs and then proceeds to knock them down, while not fully addressing more fundamental issues regarding the unique nature of the corporate form. The corporate form argument, instead, is dealt with in a single paragraph and a sole footnote. In disposing of the question of free exercise of religion by corporations, the Court focuses upon the government’s concession that non-profit corporations are entitled to RFRA protection. Id. at 2755. The furtherance of an individual’s religious freedom that results from the autonomy afforded to non-profit religious organizations applies with equal force to their for-profit counterparts, — Continued on next page
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i.e. allowing the petitioning companies to assert RFRA claims also protects the religious liberties of their closely held owners and directors. Id. at 2759. The Court then handily, and somewhat summarily, disposes of the second HHS “straw-man” argument, i.e. whether the for-profit nature of the corporations in question precludes their rights under the RFRA. Id. at 2767. The Court’s majority cites a 1961 plurality opinion in Braunfeld v. Brown, 366 U.S. 599 (1961), which authorized a for-profit sole proprietorship to assert a free exercise claim under the First Amendment. The Court then rhetorically asks why the petitioning corporations couldn’t do the same under the RFRA, giving little attention to the distinction between the business platforms of a sole proprietorship and that of a corporation. Id. at 2767. The litigants in the Hobby Lobby and Wheaton College cases, as well as virtually all of the cases involving for-profit and not-for-profit corporations seeking exemption from the ACA contraception mandate, are the corporate entities themselves rather than their owners, directors, or managers. Hobby Lobby, 134 S. Ct. 2751; Wheaton College, 134 S. Ct. 2806. This simple but fundamental fact gives rise to the issue of whether a corporation, as an artificial being and creature of law, is entitled to the First Amendment guaranty of “free exercise” of religion, as well as the protection of such free exercise “as an unalienable right” under the RFRA. The Supreme Court’s majority appears to have based its opinion on the assumption that corporations, or at least the closely held variety, have the same religious rights as their owners, directors, and managers individually, who can utilize the corporate format as an alter-ego reflection of their religious beliefs. Hobby Lobby, 134 S. Ct. at 2759. 32 | IDC QUARTERLY | Fourth Quarter 2014
This ready insinuation of religious rights from natural persons to the corporate bodies that they own or control has not gone unchallenged by commentators on the issue, who appeal to the preservation of the distinction between the natural persons who own or run a company and the artificial “persons” under which they conduct their business. In the vast majority of both pre- and post-RFRA cases, the subjects of the free exercise claims were individuals, not corporations, and the jurisprudence of religious rights centered around invocation of free exercise by natural persons claiming that governmental action violated their First Amendment rights. See City of Boerne v. Flores, 521 U.S. 507 (1997); Emp’t. Div., Dept. of Human Resources of Oregon v. Smith, 494 U.S. 872 (1990); Wisconsin v. Yoder, 406 U.S. 205 (1972); and Sherbert v. Verner, 374 U.S. 398 (1963). Before Hobby Lobby, the Supreme Court had not been called upon to determine whether the same rights to free exercise of religion guaranteed to natural persons could also be invoked by secular, for-profit corporations, which objected to governmental actions on religious grounds. One would think that such a fundamental threshold issue, as the application of free exercise rights under the First Amendment and the RFRA to artificial beings such as secular for-profit corporations, would have occupied considerable space in the majority’s opinion in Hobby Lobby, but it did not. This absence of a more extensive discussion of the source and scope of the free exercise rights of corporations is especially puzzling in light of the United States Court of Appeals for the Third Circuit’s opinion in Conestoga Wood Specialties Corp. v. Secy. of the U.S. Dept. of HHS, 724 F.3d 377 (3rd Cir. 2013), which was consolidated with
Hobby Lobby. It expressly held that “for-profit, secular corporations cannot engage in religious exercise” within the meaning of the RFRA or the First Amendment. Conestoga Wood Specialties, 724 F.3d at 381. As previously mentioned, the Supreme Court did not address this issue head-on, but instead rejected the position taken by HHS. The position argued that by incorporating their businesses, rather than running them as sole proprietorships or general partnerships, the religious objectors in Hobby Lobby simply forfeited the ability of the corporations they formed to claim any protection to free exercise of religion under the First Amendment or the RFRA. Hobby Lobby, 134 S. Ct. at 2775. The Third Circuit’s observation in Conestoga Wood Specialties that “general business corporations . . . do not pray, worship, observe sacraments or take other religious-motivated actions separate and apart from the intentions and direction of their individual actors” (Conestoga Wood Specialties, 724 F.3d at 385) was simply swept away in the Hobby Lobby majority opinion as “true—but quite beside the point [since] [c]orporations, ‘separate and apart from’ the human beings who own, run, and are employed by them, cannot do anything at all.” Hobby Lobby, 134 S. Ct. at 2768. In giving short shrift to the fundamental questions surrounding corporate entitlement to free exercise protection, the Supreme Court invoked the Dictionary Act, 1 U.S.C. § 1, to interpret the word “person” in the RFRA’s statement of those entitled to the statute’s protection, to include not only some corporations, such as religious not-forprofits, but also for-profit corporations. Hobby Lobby, 134 S. Ct. at 2769-71. The mere rejection of the HHS argument of “forfeiture of rights by incorporation,”
and the broad interpretation of the statutory term “person” under the RFRA and the Dictionary Act, does not appear to be a sufficient basis to expand decades of precedent regarding those who are entitled to constitutional or statutory protection of their religious rights. Simply furthering the religious rights of forprofit corporations in order to further the free exercise of their owners, directors, and managers is not a sufficient goal to overthrow the longstanding distinctions drawn in the law of corporations between the individual owners, directors, and managers of the corporation and the artificial entity under which the law allows them to conduct their business. Nevertheless, the Supreme Court majority’s summary treatment of the for-profit corporate religious rights issue has its support among the commentators. The advocates of religious rights for corporations say: “In the real world, shareholders impose religiously motivated policies on corporations all the time.” Alan J. Meese and Nathan B. Oman, Hobby Lobby, Corporate Law and the Theory of the Firm, 127 Harv. L. Rev. F. 273, 274 (2014). As examples, the authors cite a Kosher supermarket that closed on Saturdays instead of Sundays, in violation of the Massachusetts Sunday closing laws; a supermarket chain that closed on Sundays while declining to sell alcohol and encouraging its employees to worship weekly; a fast food chain that prints Bible verses on its packaging and cups; and a Brooklyn coffee shop that serves only Kosher food. Id. at 278-79. While these are certainly examples of ways owners of corporations can use the businesses they own and operate to reflect their own religious beliefs, none of these instances instill religious rights upon the corporation itself; they only
The Supreme Court’s prior recognition that “individuals may come together in groups, associations, and even corporations to advance First Amendment rights” makes it only logical that conduct entitled to First Amendment protection, be it related to speech, assembly, or free exercise of religion, be extended to non-profit or for-profit corporations.
demonstrate the right of free exercise on the part of those that run the corporations to establish company policies as they see fit. Id. at 288. The authors argue that “corporations are instrumentalities by which people act in the world. When individuals act religiously using corporations they are engaged in religious exercise.” Id. at 294-95. Such an argument ignores the fact that using a corporation as an instrument through which its shareholders can express and exercise their religion is fundamentally different than bestowing actual free exercise guarantees on the corporation itself. Other commentators, in support of the religious rights of corporations, point out that corporations have already been accorded other First Amendment rights, specifically freedom of speech. In Citizens United v. Fed. Election Comm’n, 558 U.S. 310 (2010), the Supreme Court recognized that the First Amendment’s protection of free speech (here, political speech) not only extends to corporations, but that corporations and other associations have the same free speech rights under the First Amendment as individuals do, and that corporations should not be treated differently under the First Amendment simply because they are not “natural persons.” Citizens United, 558 U.S. at 343, (quoting First
Nat’l Bank of Boston v. Bellotti, 435 U.S. 765, 776 (1978)). Extending First Amendment protection from one constitutional guaranty (free speech) to another (free exercise) is a logical progression. See Scott W. Gaylord, For-Profit Corporations, Free Exercise, and the HHS Mandate, 91 Wash. U. L. Rev. 589 (2014). Advocates of this position argue that in considering the religious rights of corporations, “courts must focus on the nature of the constitutional right, not the ‘person’—whether an individual, nonprofit, for-profit or sole-proprietor—who is invoking the right.” Id. at 595. Such commentators contend that the Third Circuit, in Conestoga Wood Specialties, erroneously considered only whether a for-profit corporation has free exercise rights commensurate with an individual, rather than focusing on the real question they contend was presented in the case, i.e. “whether the Free Exercise Clause covers religious objections to the contraception coverage mandate,” regardless of who (or what) asserts such objections. Id. According to this commentator, reliance on precedent that free exercise of religion is an individual right, of a “purely personal” nature, that does not apply to artificial beings such as corporations, is misplaced, because — Continued on next page
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free exercise of religion, like freedom of speech, is not merely a “purely personal” right but instead impacts the whole of a free society. Id. at 596-97. They argue that the free exercise of religion, as it pertains to individuals, is not confined to conduct that occurs within the walls of a church, synagogue, or mosque. Id. at 618. Many individuals’ faith permeates their lives and is reflected in the groups and associations that they join and the businesses that they run, often to the point that the practice of moral principles through the acts of a corporation is indistinguishable from the practice of such principles by the companies’ owners as individuals. Id. at 617. The Supreme Court’s prior recognition that “individuals may come together in groups, associations, and even corporations to advance First Amendment rights” makes it only logical that conduct entitled to First Amendment protection, be it related to speech, assembly, or free exercise of religion, be extended to non-profit or for-profit corporations. Id. at 618. The recognition of such rights furthers not only the so-called “purely personal” rights of individual owners, directors, or managers of the corporation, but likewise serves significant societal interests when applied to the corporation itself. Id. at 618, 620-21. Opponents of the extension of religious rights to corporations point out that, traditionally, the claimed constitutional right of free exercise of religion has been a right of “natural” persons, i.e. individuals. Id. at 594. Given the “nature, history and purpose” of the free exercise clause, there is no justification in extending free exercise rights to corporations or other artificial beings. See Hobby Lobby Stores, Inc. v. Sebelius, 870 F. Supp. 2d 1278, 1288 (W.D. Okla. 2012); Bellotti, 435 U.S. at 778-79, n.14. 34 | IDC QUARTERLY | Fourth Quarter 2014
Opponents of the extension of constitutional and statutory free exercise rights to corporations also contend that a corporation is fundamentally incapable of possessing religious beliefs, and is therefore unentitled to legal protection of the free exercise thereof. Zachary J. Phillipps, Non-Prophets: Why For-Profit, Secular Corporations Cannot Exercise Religion Within the Meaning of the First Amendment, 46 Conn. L. Rev. Online 39 (2014). A corporation, as a “distinct legal entity, with legal rights, obligations, powers, and privileges different from those of the natural individuals who created it, who own it, or whom it employs” cannot properly serve as the moral alter-ego of such natural persons. See Zachary J. Phillipps, Non-Prophets: Why For-Profit, Secular Corporations Cannot Exercise Religion Within the Meaning of the First Amendment, 46 Conn. L. Rev. 39, 59 (2014), (quoting Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158, 163 (2001)). Thus, such commentators argue, the separation of rights and obligations between the corporation and its owners means that “to have free exercise rights of its own, a corporation must possess such rights independently from its owners.” Id. at 59. “Religious beliefs forms within the human mind” and corporations, “have no mental capacity [to form a] religious belief.” Id. at 60-61. For a store owner to elect to close on Sundays does not mean that the corporation that he or she owns is exercising religion. Id. Other opponents of the extension of free exercise guarantees to corporations take a practical approach to the issue: a corporation cannot join a church, synagogue, or mosque as a member and “[i]f the religion would not accept a corporation as a member, then it follows that the corporation has no Free Exercise
protected rights within that faith.” See Thomas E. Rutledge, A Corporation Has No Soul – The Business Entity Law Response to Challenges to the PPACA Contraceptive Mandate, 5 Wm. & Mary Bus. L. Rev. 1 (2014). This commentator goes on to point out: “Corporations do not take part in religious services, offer prayers or receive sacraments. A corporation cannot be baptized [and] cannot be confirmed . . . . A priest will administer last rights to and counsel a prisoner in anticipation of execution; similar rituals are not performed upon the dissolution of a corporation.” Id. at 31. The RFRA’s burden-allocation scheme “does nothing to create a right protected by the Free Exercise Clause [and] lacking Free Exercise rights that could be protected by the RFRA, the RFRA has no application to business entities.” Id. at 35. Conclusion The debate concerning corporate ensoulment was not laid to rest with the Supreme Court’s majority opinion in Hobby Lobby. Dozens of cases, most of them at the injunction stage in the federal appellate courts, await the Supreme Court’s consideration in the terms to come, while literally hundreds of other cases seeking relief from the ACA’s contraception mandate wind their way through the district courts throughout the country. The philosophical and legal issues to which these cases give rise deserve a more thorough and thoughtful analysis than previously afforded to them.
Commercial Law James K. Borcia Tressler LLP, Chicago
Seventh Circuit Tosses Consumer Fraud Claim Over Advertisements of “Sales” In Camasta v. Jos. A. Bank Clothier, Inc, No. 13-2831 (7th Cir. Aug. 1, 2014), the United States Court of Appeals for the Seventh Circuit affirmed the district court’s dismissal of a lawsuit that challenged a clothing store’s practices of advertising clothing sales. Jos. A. Bank Clothier, Inc. (JAB) is a company that designs, manufactures, and sells men’s tailored and casual clothing and accessories. JAB has thirty-one retail locations in Illinois. Camasta, No. 13-2831, slip op. at 2. On July 27, 2012, Camasta went to a JAB retail location in Deer Park, Illinois. Id. at 2. Prior to making his purchases, Camasta contends that he saw an advertisement about “sale prices” for certain items. Id.
Camasta claimed that he learned the JAB sale was not actually a reduced price, but instead that it was the JAB pattern and practice to advertise normal retail prices as a temporary price reduction. Id. On behalf of himself and a putative class, Camasta filed his first complaint against JAB on August 29, 2012. Id. at 3. Camasta’s two-count complaint accused JAB of violating both the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) and the Uniform Deceptive Trade Practices Act (UDTPA) based on the company’s “sales practice of advertising the normal retail price as a temporary price reduction.” Id. JAB moved to dismiss the complaint. The district court identified five
The Camasta decision is a helpful decision for those defending consumer fraud claims based on claims arising from sales of merchandise. Especially helpful is the court’s analysis on the requirements for pleading fraud in consumer fraud cases.
how that knowledge was brought to his attention; (3) he provided insufficient evidence to show that the claimed sales technique employed by JAB was part of a general sales practice utilized by JAB; (4) the claim that he suffered “actual damage” was speculative and conclusory because he did not allege that he paid more for the shirts than their actual value; and (5) his request for injunctive relief failed to allege future harm from JAB’s conduct. Id. at 4. The Seventh Circuit affirmed the dismissal, finding that Camasta’s allegations failed to satisfy the particularity requirement of Rule 9(b). Id. at 13. Camasta’s admittedly non-exhaustive list illustrates that JAB offered a number of sales promotions to its customers over a two-year period, but it did not show a constant or perpetual sale of any particular merchandise. Id. at 9. Camasta argued that his claim was supported by the New York Attorney General’s investigation of JAB’s sales practices that occurred in 2003 and 2004. Id. The court rejected that argument, finding that simply stating that the sales practices are the same in two different states during two different periods without any factual support was insufficient to satisfy the pleading requirement. Id. — Continued on next page
About the Author When Camasta visited JAB, customers were offered a promotion: “buy one shirt, get two shirts free.” Id. Camasta chose to take advantage of the offer and purchased six shirts for $167 without tax. Id. Specifically, Camasta paid $79.50 for one shirt getting two similar shirts for free, and bought another shirt for $87.50 allowing him to receive an additional two similar shirts for free. After this purchase,
reasons for the deficiency of Camasta’s claim: (1) Camasta did not provide any additional details about the content of the advertisement he saw the day he purchased shirts from JAB beyond the claim that merchandise was being offered at “sale prices” and was “on sale;” (2) he vaguely asserted learning that the sale was not a temporary price reduction, but failed to give any particulars as to
James K. Borcia is a partner with the Chicago firm of Tressler LLP, 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.
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The court also affirmed the dismissal on grounds that Camasta failed to plead adequately actual damages. Camasta failed to provide any evidence that he paid more than the actual value of the merchandise he received. Id. at 11. Without factual support or justification, Camasta asserts that he could have shopped around and found the same shirts for a lower price. Id. He, however, failed to assert that he did, in fact, shop around and find the same shirts for a lower price. Id. at 12. The court found Camasta’s statement to be “speculative and conclusory” and insufficient to prove actual damages. Id. at 13. The prices Camasta contended were the true values of the shirts were mere guesses void of any substantial analysis. Id. Without any facts to support his conclusory assertions of actual damage, Camasta failed to sufficiently plead that he paid more than the actual value of the merchandise he received. Id. The Camasta decision is a helpful decision for those defending consumer fraud claims based on claims arising from sales of merchandise. Especially helpful is the court’s analysis on the requirements for pleading fraud in consumer fraud cases. The decision allows these types of claims to be attacked on two fronts. First, a plaintiff will need to allege specific sales practices of a constant or perpetual sale of any particular merchandise, and a plaintiff will not be able to rely solely on government investigations to support their claims. Second, these types of claims can be attacked for failure to allege specifically facts to support claims of actual damages. Finally, because this case was dismissed on pleadings grounds, those facing these types of claims may be able to avoid going through discovery to ultimately defeat these claims. 36 | IDC QUARTERLY | Fourth Quarter 2014
Recent Decisions Stacy Dolan Fulco and Drew L. Block Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago
Trial Court Abused its Discretion by Admitting a Line-of-Sight Video Showing Conditions that were not “Substantially Similar” to the Conditions of the Auto Accident In Lorenz v. Pledge, 2014 IL App (3d) 130137, the plaintiffs sued a county sheriff’s deputy and the McDonough County Sheriff’s Department for injuries arising from an auto accident between the plaintiff’s minivan and the deputy’s squad car. Lorenz, 2014 IL App (3d) 130137, ¶ 1. Following trial, the trial court entered a judgment on the jury’s verdict in favor of the defendants, and the plaintiffs appealed. Id. The appellate court reversed and remanded for a new trial, finding, in part, that the trial court abused its discretion in admitting a lineof-sight video proffered by the defense to support its contention that the plaintiffs had a clear view of the deputy’s squad car prior to the accident. Id. ¶¶ 21, 23. The facts surrounding the accident at issue were mostly undisputed. Deputy Pledge responded to a call regarding an erratically driven Sport Utility Vehicle (SUV). Id. ¶ 3. Pledge located the SUV, observed the reported erratic driving, and attempted to stop the vehicle. Id. As he approached the SUV, it sped away, which prompted Pledge to begin a high-speed chase. Id. During the chase, Pledge’s squad car reached speeds as high as 110 miles per hour. Id. Meanwhile, the plaintiffs, including driver Amanda Dayton, were traveling in a minivan northbound on Route 67 with the intent to turn left at the intersection of Route 67 and University Drive. Id. ¶ 4. The SUV, which was traveling with its headlights off, went through the Route
67/University Drive intersection. Id. Amanda then began to turn left, at which point Pledge entered the intersection
About the Authors Stacy Dolan Fulco is a partner at the Chicago law firm of Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC. She practices primarily in the areas of premises liability, products liability, and wrongful death defense. She received her undergraduate degree at Illinois State University and her J.D./M.B.A. degree from DePaul University. She is a member of the IDC. Drew L. Block is a partner with Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, in Chicago. His practice focuses on Insurance Coverage Litigation, the defense of Construction and General Tort cases, Commercial Litigation and Civil Appeals. His Insurance Coverage practice includes representing both insureds and carriers in state and federal court throughout the Midwest. Mr. Block’s Construction and General Tort practice involves the representation of owners, general contractors and subcontractors in catastrophic injury cases, including through trial and appeal. A graduate of the Loyola University Chicago School of Law (J.D. 2003) and The Ohio State University (B.A. 2000; magna cum laude; Phi Beta Kappa), Mr. Block is admitted to the Illinois bar and is also admitted to practice in the State of Ohio. He is also admitted to practice in the U.S. District Court for the Northern District of Illinois, the U.S. District Court for the Western District of Michigan and the U.S. District Court for the Eastern District of Wisconsin. He is a member of the Illinois Association of Defense Trial Counsel and the Defense Research Institute.
traveling at between 70 and 74 miles per hour and crashed into the passenger side of the minivan. Id. ¶¶ 4, 9. As a result of the accident, Amanda and her two passengers were injured, with one passenger injured fatally. Id. ¶ 4. The plaintiffs subsequently brought suit against Pledge and the sheriff’s department for wrongful death and bodily injuries. Id. ¶ 5. In anticipation of trial, the plaintiffs filed a motion in limine seeking to preclude a videotape prepared by the defendants’ expert portraying a line-of-sight study for the purpose of demonstrating the view Amanda would have had of Pledge’s squad car as she turned left through the Route 67/University Drive intersection. Id. ¶ 6. The court denied the motion, and the video was shown to the jury. Id. ¶¶ 6-7. During the trial, the defendants’ expert repeatedly testified that the video was not a reconstruction of the accident and that its purpose was limited to demonstrating Amanda’s line-of-sight. Id. ¶ 7. Following trial, the jury returned a verdict in favor of the defendants and the plaintiffs appealed. While the appellate court addressed several errors on appeal, it found whether the trial court erred in allowing the line-of-sight video into evidence was dispositive. Id. ¶ 23. In addressing the admissibility of the video, the court noted that there is a different standard for the admissibility of experiments, such as the line-of-sight video, which are considered substantive evidence, and demonstrative or explanatory evidence, such as accident reconstructions. Id. ¶ 17 (citing People v. Hayes, 353 Ill. App. 3d 355, 360 (4th Dist. 2004)). For accident reconstructions, the party seeking admission of the evidence “must establish the test was performed under conditions closely duplicating the accident.” Id. ¶ 18 (citing Brennan v. Wisconsin Cent.
In addressing the admissibility of the video, the court noted that there is a different standard for the admissibility of experiments, such as the line-of-sight video, which are considered substantive evidence, and demonstrative or explanatory evidence, such as accident reconstructions.
Ltd., 227 Ill. App. 3d 1070, 1087 (2d Dist. 1992)). On the other hand, for experiments, admissibility rests on “whether the ‘essential conditions’ or ‘essential elements’ of the experiment are substantially similar” to those conditions existing at the time of the accident. Id. ¶ 18 (quoting Brennan, 227 Ill. App. 3d at 1087)). Further, “when the experiment is designed to test only one aspect” of the accident, “the exact conditions of the accident do not need to be replicated but only that aspect or principal must be substantially similar.” Id. ¶ 18 (citing Galindo v. Riddell, Inc., 107 Ill. App. 3d 139, 144 (3d Dist. 1982)). In considering whether the admission of the line-of-sight video entitled the plaintiffs to a new trial, the appellate court reviewed the admission of the evidence using an abuse of discretion standard. Id. ¶ 18. Noting that the trial court abuses its discretion when it admits demonstrative evidence that may confuse a jury or prejudice a party, the court recognized that even when admission of the evidence constitutes an abuse of discretion, a new trial is only warranted where “‘the error was substantially prejudicial and affected the outcome of the case.’” Id. (quoting Taluzek v. Illinois Cent. Gulf R.R. Co., 225 Ill. App. 3d 72, 83 (1st Dist. 1993)). The court noted that admission of
evidence demonstrating visibility at the time of an accident has been found to be improper where: (1) the type of vehicle, lighting conditions, and road conditions were not substantially the same as during the accident, Id. ¶ 19 (citing Kent v. Knox Motor Serv., Inc., 95 Ill. App. 3d 223, 226 (3d Dist. 1981)); (2) where the vantage point of the video was different from that of the driver during the accident, Id. (citing Amstar Corp. v. Aurora Fast Freight, 141 Ill. App. 3d 705, 709 (3d Dist. 1986)); (3) where the video showed where the accident occurred, thereby preconditioning the jury to accept the plaintiff’s theory of the case, Id. (citing French v. City of Springfield, 65 Ill. 2d 74, 81-82 (1976)); and (4) where photographs did not accurately depict the location of the involved vehicles at the time of the accident, Id. (citing Johnson v. Bailey, 2012 IL App (3d) 110016)). Based on these cases, the court found that the line-of-sight video did not meet the test for admissibility of experimental evidence. Id. ¶ 20. It was undisputed that the conditions shown in the line-of-sight video were not substantially the same as those at the time of the accident. Id. In particular, while Pledge was traveling in excess of 100 miles per hour prior to the incident, the video showed vehicles driving at approximately 40 miles per — Continued on next page
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hour. Id. Further, the vehicles shown in the video were in different lanes than the vehicles involved in the accident, and the video showed standing traffic that was not present at the time of the accident. Id. The SUV in the video was driving with its lights on, while the SUV involved in the accident traveled through the intersection with its lights off. Id. Finally, the video, which was taken from the point of view of Amanda, was taken from a static position, while Amanda was continuously turning at the time of the accident. Id. On appeal, the defendants admitted the differences contained in the video, but argued that these differences should affect the weight the jury gives the evidence, not its admissibility. Id. ¶ 21. The defendants further argued that the jury was repeatedly advised that the video was a line-of-sight experiment and not an accident reconstruction. Id. While the court agreed that the jury was told that the video was not an accident reconstruction, the court held that the defendants still needed to demonstrate that the “essential conditions” of the lineof-sight video were substantially similar to the conditions existing at the time of the accident. Id. The court found that the conditions were not substantially similar and that the trial court abused its discretion in admitting the video. Id. The court further found that the plaintiffs were prejudiced by the admission of the video, which preconditioned the jury to “accept the defense’s theory of the accident.” Id. ¶ 22. Accordingly, the court found that the plaintiffs were entitled to a new trial. Id.
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Workers’ Compensation Report Bradford J. Peterson Heyl, Royster, Voelker & Allen, P.C., Urbana
The Illinois Appellate Court Departs from the Increased Risk Doctrine In Brady v. Louis Ruffolo & Sons Constr. Co., 143 Ill. 2d 542 (1991), the Illinois Supreme Court specifically rejected the neutral risk doctrine for evaluating whether an accident “arises out of” the employment. Under the neutral risk doctrine, an injury may be said to “arise out of” the employment if the injury would not have occurred but for the fact that the conditions or obligations of the employment placed the claimant in a position where he was injured by a neutral force. Brady, 143 Ill. 2d at 552. A neutral force is neither personal to the claimant nor distinctly associated with the employment. Id. According to the Illinois Supreme Court, under the Illinois Workers’ Compensation Act, the claimant must demonstrate that his risk of the injury sustained is peculiar to his employment or that it is increased as a consequence of the work. Id. at 550. The supreme court noted that adoption of the neutral risk doctrine “would not be consistent with the requirements expressed by the legislature in the Act.” Id. at 552. Generally, an injury “arises out of” the employment if its origin is a risk connected with or incidental to the employment so that there is a causal connection between the employment and the accidental injury. Technical Tape Corp. v. Indus. Comm’n, 58 Ill. 2d 226, 230 (1974). Traditionally, there are four risk tests to determine whether the “arising out of” element is met. The first is risk peculiar to the employment,
which requires the claimant to show that the source of the harm was in its nature peculiar to the occupation. A. Larson, The Law of Worker’s Compensation §6.20 (1953). Under the peculiar risk doctrine, the “arising out of” element is not met even though there is an increased quantity of risk if there is not qualitatively a risk peculiar to the employment. Id. The second test is the increased risk test, and under that test, the “arising out of” element can be satisfied not only with a qualitatively peculiar risk of the employment, but also an increased quantity at risk. Id. The third is the actual risk doctrine. Under that doctrine, courts state “we do not care whether the risk was also common to the public, if in fact it was a risk of this employment.” Id.
About the Author Bradford J. Peterson is a partner in the Urbana office of Heyl, Royster, Voelker & Allen, P.C. Brad concentrates his practice in the defense of workers’ compensation, construction litigation, auto liability, premises liability, and insurance coverage issues. In recent years, Brad has become a leader in the field on issues of Medicare Set Aside trusts and workers’ compensation claims. He has written and spoken frequently on the issue. He was one of the first attorneys in the State of Illinois to publish an article regarding the application of the Medicare Secondary Payer Act to workers’ compensation claims, “Medicare, Workers’ Compensation and Set Aside Trusts,” Southern Illinois Law Journal (2002).
Recent decisions by the Illinois Appellate Court, Workers’ Compensation Commission Division, suggest that the appellate court has departed from the increased risk analysis set forth by the Illinois Supreme Court in Brady, and instead has focused on whether the claimant is performing an activity that they might reasonably be expected to perform incident to their assigned duties.
Actual risk does not require that the risk be peculiar to the employment so long as the employment subjected the claimant to the actual risk that injured him. Id. Finally, the positional risk doctrine allows the “arising out of” standard to be satisfied even though the risk causing injury was a neutral risk that did not have a particularly personal or employment characteristic. Id. Recent decisions by the Illinois Appellate Court, Workers’ Compensation Commission Division, suggest that the appellate court has departed from the increased risk analysis set forth by the Illinois Supreme Court in Brady, and instead has focused on whether the claimant is performing an activity that they might reasonably be expected to perform incident to their assigned duties. See Autumn Accolade v. Illinois Workers’ Comp. Comm’n, 2013 IL App (3d) 120588WC; and Young v. Illinois Workers’ Comp. Comm’n, 2014 IL App (4th) 130392WC. These decisions by the appellate court suggest that the court is applying an “actual risk” standard as opposed to a true increased risk standard. In Autumn Accolade, the claimant was hired as a caregiver in an Alzheimer’s facility. Autumn Accolade, 2013 IL
App (3d) 120588WC, ¶ 3. On March 15, 2009, the claimant assisted a female resident with showering. The claimant testified at trial that while she had her right hand on the resident, she turned to the left and extended her left arm to reach for a soap dish. Id. ¶ 4. At that time she felt a pop in her neck and pain in her right arm. Id. ¶ 4. The appellate court affirmed the Commission’s finding of compensability. Id. ¶ 18. The court further rejected the employer’s argument that the claimant was merely engaged in a personal action of reaching at the time of the accident. Id. ¶ 19. The court stated that the respondent’s argument “ignores the fact that, at the time of the occurrence, claimant was engaged in an activity she might reasonably be expected to perform incident to her assigned duties, i.e., insuring the safety of a resident of the assisted living facility” Id. ¶ 19. The appellate court used a similar analysis in Young v. Illinois Workers’ Comp. Comm’n, 2014 IL App (4th) 130392WC. There, the claimant, an inspector, was inspecting parts that came through his area when he claimed injury. Young, 2014 IL App (4th) 130392WC, ¶ 4. In the process of inspecting parts, the claimant reached for the last spring
clip in the bottom of a box and in doing so felt a snap or pop in his left shoulder. Id. ¶ 5. The claimant testified that he felt “a little bit of burning” in his left shoulder, but continued inspecting parts. Id. ¶ 6. The claimant described the box he reached into as about 36 inches deep and approximately 16 inches wide. Id. ¶ 5. Further, claimant testified that he had to bend over into the box and reach down deep to retrieve the part for the inspection. Id. ¶ 5. The claimant noted that the box was not big enough to fit both hands and shoulders into it at the same time. Id. ¶ 5. The arbitrator denied benefits, finding that the act of reaching for an item did not constitute an increased risk of injury peculiar to the claimant’s employment. Id. ¶ 13. The arbitrator noted that the movement of reaching for the part was a normal daily activity. Id. On review, the Commission struck the portion of the arbitrator’s decision that found that the condition was consistent with a degenerative rather than acute event, but otherwise affirmed and adopted the arbitrator’s decision. Id. ¶ 14. The circuit court confirmed. Id. The appellate court reversed, finding that the claimant’s injury did arise out of an employment-related risk and was, therefore, compensable. Id. ¶ 22. Similar to the analysis in Autumn Accolade, the Young court again stated that the evidence “unequivocally shows claimant was performing acts that the employer might reasonably have expected him to perform so that he could fulfill his assigned duties on the day in question. As a result, the manifest weight of the evidence supports a finding that claimant’s injury ‘arose out of’ his employment.” Id. Again, the appellate court refused to apply an increased risk analysis. The — Continued on next page
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Workers’ Compensation Update | continued
court stated “when a claimant is injured due to an employment-related risk – a risk distinctly associated with his or her employment – it is unnecessary to perform a neutral-risk analysis to determine whether the claimant was exposed to a risk of injury to a greater degree than the general public.” Id. ¶ 23. Particularly troubling is that the court specifically noted that the act of reaching was an act generally performed by the public. Id. ¶ 28. Notwithstanding, they found the claimant’s act of reaching into the box to retrieve a part for inspection was distinctly associated with his employment and therefore “arose out of” the employment. Id. In Brady, the Illinois Supreme Court specifically rejected the neutral risk doctrine. Brady, 143 Ill. 2d at 552. The supreme court noted that injuries associated with a neutral risk do not “arise out of” the employment and to find otherwise would not be consistent with the requirements of the Act. Id. In rejecting the neutral risk doctrine, the court noted that a neutral risk is one that is neither personal to the claimant nor distinctly associated with the employment. Id. The appellate court decisions in Young and Autumn Accolade draw a fine line between the neutral risk analysis and increased risk analysis. Indeed, the appellate court’s decisions in Young and Autumn Accolade point out that even a neutral risk will be compensable so long as the employee is performing an act the employer might reasonably have expected them to perform in fulfillment of their assigned duties. The increased risk analysis becomes immaterial. Young and Autumn Accolade further depart from the increased risk
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doctrine because in both cases, whether the employee is injured performing a common act equally performed by the general public is immaterial. Rather, in determining whether the “arising out of” element is met, the appellate court seems to have focused on whether the employee is performing some aspect of the employment he might reasonably be expected to perform in furtherance of his job duties, i.e., applying the actual risk doctrine as opposed to the increased risk doctrine. Essentially, the court is finding that the injury “arises out of” a risk peculiar or distinctly associated with the employment in such a broad, liberal manner that they have effectively departed from the increased risk doctrine and adopted the actual/neutral risk doctrine.
normally deem peculiar or distinctly associated with the employment. Particularly troubling is the result in Autumn Accolade where the claimant was merely reaching with her hand at the time of the alleged injury. Under the actual risk doctrine, such an act “arises out of” the employment as it was a risk of that employment, although it was also a risk common to the public. By focusing on whether the employee is performing an act the employer might reasonably have expected them to perform at the time of injury, the appellate court is effectively applying the actual risk doctrine and no longer follows the increased risk doctrine. Hopefully this issue will make its way to the Illinois Supreme Court soon,
Under the actual risk doctrine, an injury arises out of the employment so long as the employment subjected the claimant to the actual risk that injured him regardless of whether they were subjected to a peculiar or increased risk.
Under the actual risk doctrine, an injury arises out of the employment so long as the employment subjected the claimant to the actual risk that injured him regardless of whether they were subjected to a peculiar or increased risk. See A. Larson, The Law of Workers’ Compensation Section, § 6.40 (1953). In applying the actual risk doctrine, Larson notes, “we do not care whether the risk was also common to the public, if in fact it was a risk of this employment.” Id. at § 6.20. The Young and Autumn Accolade decisions did not involve risks one would
and can be evaluated by the highest court of the state. The General Assembly established the causation element in the Act, and the case law has long since interpreted the “arising out of” standard to be one of increased risk. The appellate court’s recent decisions have abandoned that doctrine and have moved Illinois into an actual risk doctrine state.
Product Liability Brian J. Benoit and Davis J. Kim Goldberg Segalla LLP, Chicago
No Defect? No Problem. Proving a Product Liability Claim Through Circumstantial Evidence: Differentiating the Restatement (Third) of Torts § 3 from Res Ipsa Loquitor When and how can a plaintiff be divorced of the burden to show a specific product defect? Illinois and a majority of jurisdictions have long held that evidence of a defective product may be proven through circumstantial evidence. Doyle v. White Metal Rolling & Stamping Corp., 249 Ill. App. 3d 370 (1st Dist. 1993). Consistent with Illinois law, the Restatement (Third) of Torts: Products Liability § 3, “Circumstantial Evidence Supporting Inference of Product Defect” (1998) (Restatement Third), states:
antecedents to the law of negligence” and cite specifically to Restatement (Second) of Torts, § 328D (1965), which pertains to res ipsa loquitor. There are fundamental differences between product liability proven through circumstantial evidence and the theory of res ipsa loquitor. Understanding the differences between the two will help the practitioner investigate and defend a case where the plaintiff is relying on circumstantial evidence to prove a defect in a product liability case. Illinois law provides that:
It may be inferred that the harm sustained by the plaintiff was caused by a product defect existing at the time of sale or distribution, without proof of a specific defect, when the incident that harmed the plaintiff:
[A] plaintiff may create an inference that a product was defective by direct or circumstantial evidence that: (1) there was no abnormal use of the product; (2) that there was no reasonable secondary cause of the injury; and (3) that the product failed to perform in the manner reasonably to be expected in light of its nature and intended function.
(a) was of a kind that ordinarily occurs as a result of product defect; and (b) was not, in the particular case, solely the result of causes other than product defect existing at the time of sale or distribution. Notably, the comments to Restatement Third § 3 trace the “historical
Doyle, 249 Ill. App. 3d at 377. This language tracks the language of the Restatement Third § 3. By contrast, the United States Court of Appeals Seventh Circuit, interpreting Illinois law, specifically rejected the notion that res ipsa loquitor is applicable in products cases.
Welge v. Planters Lifesavers Co., 17 F.3d 209 (7th Cir. 1994). Res ipsa loquitor is grounded on the presumption that because the instrumentality that created the incident was in the defendant’s control at the time of the incident, the incident would not have occurred but for some fault on the part of the defendant. Restatement (Second) of Torts, § 328D (1965). Product liability cases differ in that the focus is not on the fault of the manufacturer, but on the condition of the product itself at the time the product leaves the manufacturer. — Continued on next page
About the Authors Brian J. Benoit is a partner in the Chicago office of Goldberg Segalla LLP. His nationwide practice focuses on the defense of product manufacturers, specializing in catastrophic losses involving fires and explosions. Mr. Benoit has authored articles and presented nationwide on investigating fire losses, evidentiary challenges, and deposing expert witnesses. Davis J. Kim, associate, is a member of Goldberg Segalla’s Products Liability and Global Insurance Services Practice Groups. He defends manufacturers, commercial property owners, property managers, general contractors, subcontractors, motor carriers, and real estate professionals in personal injury and property damage actions. In addition, he handles insurance coverage matters and business and commercial litigation, and has significant appellate experience. While receiving his J.D. at the University of Maryland School of Law, Mr. Davis served as President of the International Law Society and participated in the Philip C. Jessup International Law Moot Court Competition. Mr. Davis was a National Dean’s List honoree at Georgetown University, where he received the MacDonald Prize in Korean Studies.
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Product Liability | continued
There are fundamental differences between product liability proven through circumstantial evidence and the theory of
noted that these two elements could be established through “various forms of circumstantial evidence,” which include:
res ipsa loquitor. Understanding the differences between the
(1) the history and use of the particular product, (2) the manner in which the product malfunctioned, (3) similar malfunctions in similar products that may negate the possibility of other causes, (4) the age of the product in relation to its life expectancy, and (5) the most likely causes of the malfunction.
two will help the practitioner investigate and defend a case where the plaintiff is relying on circumstantial evidence to prove a defect in a product liability case.
While there have not been any Illinois cases demonstrating the specific elements required to prove a strict liability claim absent a specific defect, the recent Connecticut case of White v. Mazda Motor of Am., 139 Conn. App. 39 (2012) provides unique insight into some of the issues to be addressed when defending a strict product liability case based on circumstantial evidence. In White, the plaintiff filed a product liability action against a vehicle manufacturer and dealership, alleging that he was injured when his vehicle caught fire one month after he purchased it. The plaintiff specifically alleged that his injuries were caused by a defective and unreasonably dangerous condition with the vehicle. In support of its claim, the plaintiff cited a laundry list of various alleged defects within the vehicle that may have caused the fire. White, 139 Conn. App. at 43. Under cross examination, the plaintiff’s expert admitted that “he was ‘not offering an opinion that the [vehicle] was defective . . . .’” Id. at 42. The defendants filed a motion for summary judgment arguing that the plaintiff failed to produce any evidence to establish that the vehicle was defectively designed or manufactured. The trial court agreed and granted the defendant’s motion. On appeal, the plaintiff focused on the sufficiency of its expert’s opinions and argued that he could prove his case 42 | IDC QUARTERLY | Fourth Quarter 2014
through circumstantial evidence, i.e., the malfunction theory. The Appellate Court of Connecticut affirmed, citing the need for expert testimony in product liability cases despite the existence of the malfunction theory. The appellate court did not consider the malfunction theory in their ruling, which upheld the trial court’s decision. Id. at 50-51. Justice West authored a dissenting opinion, stating that the plaintiff had asserted the malfunction theory in the trial court and that he could have defeated summary judgment based on the existence of circumstantial evidence. Id. at 510. Justice West pointed out that the plaintiff may prove a product liability case in the absence of direct evidence of a defect when it is shown that: (1) the incident that caused the plaintiff’s harm was of a kind that ordinarily does not occur in the absence of a product defect, and (2) any defect most likely existed at the time the product left the manufacturer’s or seller’s control and was not the result of other reasonably possible causes not attributable to the manufacturer or seller. White, 139 Conn. App. at 57 (West, J. dissenting). The dissenting opinion further
Id. White subsequently appealed to the Connecticut Supreme Court, which has heard oral argument. Connecticut Network (Oct. 29, 2013), http://ct-n. com/ctnplayer.asp?odID=9559. During oral argument, there was substantial discussion on whether the plaintiff’s expert ruled out all potential alternative causes. Id. These potential causes, as discussed by the justices, could have ranged from a rock puncturing the fuel tank to a bird taking refuge in the engine compartment. Id. The plaintiff’s counsel argued that there was no testimony regarding alternative causes and, as a result, the “lack of alternative causes” factor had been met by the plaintiff. Id. The justices, however, took the lack of testimony by the plaintiff’s experts regarding alternative causes to suggest that potential alternative causes were not eliminated by the plaintiff’s expert. Id. Similar to res ipsa loquitor cases, the justices’ questions appeared to place the burden of eliminating potential alternative causes on the plaintiff. Id. It is clear that the impending decision in White will have a significant impact on product liability cases in Connecticut and perhaps throughout the country. Thus,
Construction Law the relevant inquiry becomes to what extent must an expert conclusively rule out alternative causes in order to raise the malfunction theory of liability? A logical follow-up question is whether expert testimony is necessary to rule out alternative causes. A few cases stand for the proposition that no expert testimony is required in a malfunction theory case. Those cases are uncommon and typically involve an incident in which there were direct witnesses to the accident. For example, in Potter v. Chicago Pneumatic Tool Co., 241 Conn. 199, 217–218 (1997), the court held that the plaintiffs, who alleged that they sustained injuries as a result of excessive vibration from power tools used during their employment, did not need expert testimony to prove a design defect because “a jury may, under appropriate circumstances, infer a defect from the evidence . . . .” Potter, 241 Conn. at 218. The defense must take an active role in evaluating potential alternative causes. The defense can establish its own alternative causation scenarios with which to confront the plaintiffs’ experts or cast doubt on the elimination of alternative causes. To do so may require expert consultation by the defense at the outset, but will preserve the defense’s ability to evaluate any evidence of alternative theories while it still exists. Evidence in product liability cases can be fluid and should be preserved as soon as possible. At first glance, the malfunction theory seems to provide the plaintiffs with an “out” when a specific defect cannot be identified. The recent case law suggests that the malfunction theory carries with it the additional burden on the plaintiff to rule out other potential explanations for the incident. Therefore, it is the defense attorney’s job to ensure that the plaintiff’s analysis in excluding all other causes is grounded in fact.
Lindsay Drecoll Brown and Matthew S. Sims Cassiday Schade LLP, Chicago
Post-Ramirez: A Close Focus on the Current State of the 55-Series Illinois Pattern Instructions Ideally all jurors will strictly apply the law as it is described to them in the jury instructions. Many trial attorneys view the jury instruction process as the single most important part of a trial. For defense counsel handling construction negligence cases, prevailing caselaw regarding the 55-Series Illinois Pattern Instructions (IPI) may throw a wrench into the instruction conference and application of the law to the facts. In Ramirez v. FCL Builders, Inc., the Illinois Appellate Court First District found that the IPI for Construction Negligence, 55.01 “did not accurately state the law” as it relates to the Restatement (Second) of Torts, § 414. Ramirez v. FCL Builders, Inc., 2014 IL App (1st) 123663, ¶ 165. Specifically, the court found that the term “some control” as utilized within IPI 55.01 renders the instruction inaccurate because a defendant must have more than “some control” over a subcontractor’s work before liability may attach under Section 414 of the Restatement. Ramirez, 2014 IL App (1st) 123663, ¶ 168. Although Ramirez appears to be a watershed moment in construction negligence instructions, one may consider that neither the Illinois Supreme Court, nor the Rules Committee has recently weighed in on the propriety of the 55-Series Illinois Pattern Jury Instructions. Prior Illinois Appellate Court decisions have approved those instructions. Practitioners should take an indepth look at the current state of the 55-Series IPIs before submitting jury in-
structions in the context of a construction negligence case. This article highlights relevant issues to be considered and provides some guidance regarding the potential tendering of modified instructions post-Ramirez. Pattern Versus Non-Pattern Instructions Trial counsel must make a strategic decision whether to submit standard or — Continued on next page
About the Authors Lindsay Drecoll Brown is a senior associate in the Chicago office of Cassiday Schade LLP. She concentrates her practice in civil litigation defense, with an emphasis on construction law, professional liability and product liability. Ms. Brown received her J.D., cum laude, from Loyola University Chicago School of Law, and her undergraduate degree from Michigan State University, with high honors. She is a member of the Illinois Association of Defense Trial Counsel’s Construction Law Committee. Matthew S. Sims is a senior associate attorney in Cassiday Schade’s Chicago Office. He has a broad practice in civil litigation, including areas such as the defense of construction contractors in injury cases, medical liability defense, product liability defense, and commercial litigation. He has extensive experience in risk transfer and indemnification.
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Construction Law | continued
modified jury instructions for the judge to instruct the jurors prior to their deliberations. In many cases, this is a non-issue because Illinois Supreme Court Rule 239(a) provides that an Illinois Pattern Jury Instruction must be given, unless the trial court determines that the instruction does not accurately state the law. Ill. S. Ct. R. 239 (West 2014). Although trial judges pay consideration to prevailing caselaw, as well as to the facts presented, “[a] trial court is required to use an Illinois Pattern Jury Instruction when it is applicable in a civil case . . . unless the court determines that the instruction does not accurately state the law.” Schultz v. N.E. Ill. Reg’l Commuter R.R. Corp., 201 Ill. 2d 260, 274 (2002). That general rule is well-reasoned as the Illinois Supreme Court has found IPI instructions to be “of inestimable importance and value[.]” Powers v. Illinois Cent. Gulf R.R.Co., 91 Ill. 2d 375, 385 (1982). These instructions save a considerable amount of time and energy for both judges and attorneys alike. Providing the jury with an instruction that is inaccurate is considered an error that warrants reversal if the error resulted in “serious prejudice” to a litigant’s right to a fair trial. Studt v. Sherman Health Sys., 2011 IL 108182, ¶ 28. Therefore, if the trial court determines that a particular IPI does not accurately state the law, then a non-pattern jury instruction may be given. After all, “[e]ach party has the right to have the jury clearly and fully instructed.” Mikolajczyk v. Ford Motor Co., 231 Ill. 2d 516, 561 (2008). IPI 55.01 IPI 55.01 provides as follows: A[n] [owner] [contractor] [other] who entrusts work to 44 | IDC QUARTERLY | Fourth Quarter 2014
a [subcontractor] [contractor] [other] can be liable for injuries resulting from the work if the [owner] [contractor][other] retained some control over the safety of the work and the injuries were proximately caused by the [owner’s] [contractor’s] [other’s] failure to exercise that control with ordinary care. IPI Civil (West 2014) No. 55.01. In light of the Illinois Appellate Court’s decision in Ramirez, practitioners may argue that the entire 55-Series IPIs may no longer accurately state the law. Ramirez, 2014 IL App (1st) 123663, ¶ 165. According to the Ramirez Court, the “some control” language included within IPI 55.01 renders the entire instruction inaccurate as a party must have more than “some control” over a subcontractor’s work before liability may attach under Section 414 of the Restatement. Id. ¶ 168. The remainder of the 55-Series instructions utilizes or builds upon that language, such that the remainder of the series, including 55.02, 55.03, and 55.04, may be called into question. However, the Illinois Supreme Court Committee on Jury Instructions in Civil Cases has not yet spoken as to the effect of Ramirez on the 55-Series IPIs. Currently, it remains unknown whether the Rules Committee will ever address the propriety of the 55-Series. After all, language contained within the 55-Series was successfully challenged at the appellate level years prior to the Ramirez decision (albeit in an unpublished opinion), yet the instructions were not subsequently amended. See Shelden v. Kimball Hill, Inc., No. 1-02-3693 (Ill. App. Ct. 1st Dist., June 29, 2004). Tendering a modified construction negligence instruction, however, is not
necessarily a foregone conclusion. Practitioners must carefully weigh whether to tender modified 55-Series instructions to the court. On one hand, failing to tender alternative jury instructions typically waives the issue for review before the appellate court. Auton v. Logan Landfill, Inc., 105 Ill. 2d 537, 549 (1984). On the other hand, submitting an inaccurate instruction to the jury may be reversible error if it caused “serious prejudice” to a party’s right to a fair trial. Studt, 2011 IL 108182, ¶ 28. Depending on the circumstances, the most prudent course of action may be to submit modified 55-Series instructions to preserve the issue for appeal. A trial court may erroneously give an instruction without committing reversible error, but an attorney that fails to submit a modified instruction for consideration by the court may forever forfeit the issue. Did Ramirez Actually Change the Efficacy of the 55-Series IPIs? A trial court can only give a nonpattern jury instruction when the IPIs do not accurately state the law. The first question should be whether the 55-Series IPIs are accurate. See Ill. S. Ct. R. 239(a). While Ramirez found the 55-Series to be an inaccurate statement of the law, other panels of the Illinois Appellate Court First District previously found that these pattern instructions were an accurate statement of the law. See Diaz v. Legat Architects, Inc., 397 Ill. App. 3d 13, 50 (1st Dist. 2009); see also Jones v. DHR Cambridge Homes, Inc., 381 Ill. App. 3d 18, 38 (1st Dist. 2008). While it is well-settled that the opinion of one district, division, or panel of the appellate court is not binding on other districts, divisions, or panels, recent Section 414 decisions present a dilemma for the trial
judge who is bound by the appellate court. See O’Casek v. Children’s Home & Aid Soc’y, 229 Ill. 2d 431, 440 (2008). With regard to the 55-Series IPIs, trial courts are subject to several appellate court decisions with what appear to be irreconcilable views of the 55-Series IPIs. Practitioners are left to anticipate which case or cases will be followed. A close reading of two of the most recent Section 414 cases suggests that Ramirez provides the most accurate interpretation of the 55-Series IPIs. First, the opinion from Justice Gordon in Ramirez suggests an implicit overruling of Jones and Diaz with regard to the 55-Series IPIs. Ramirez, 2014 IL App (1st), ¶ 172. The Ramirez opinion went to great lengths to distinguish both Jones and Diaz, noting that the parties and the court in Jones may have gotten it wrong because they proceeded with a faulty assumption that the 55-Series IPI was accurate. Id. Second, the First District recently confirmed that the IPI discussion contained within the Ramirez decision was “consistent with the evolution in our case law [on Section 414].” Lee v. Six Flags Theme Parks, Inc., 2014 IL App (1st) 130771, ¶ 86. It is worth noting that the First District division that authored Lee is the same division that submitted the diametrically opposite Diaz opinion five years earlier, alluding to a shift in the winds of interpretation of Section 414. Finally, other recent appellate court decisions affirmed summary judgment for the defendants by following a narrower approach to liability under Section 414, consistent with the Ramirez approach. See Cain v. Contarino, 2014 IL App (2d) 130482; see also Fonseca v. Clark Const. Grp., LLC, 2014 IL App (1st) 130308. It may be reasonable to presume that a trial court will likely give deference to Ramirez, and follow its holding that
the 55-Series IPIs are not an accurate statement of the law. Crafting a Non-Pattern Instruction Operating under the presumption that the trial court will be inclined to follow Ramirez the issue then becomes how to craft and submit a non-pattern instruction. The authors of this article leave it to the practitioner to interpret the holding of Ramirez in crafting the substance of their non-pattern construction negligence instruction. First, the trial judge should be provided with a comprehensive legal memorandum on the state of Section 414 law in Illinois. This is no easy task, as there are dozens of decisions interpreting Section 414—many simply irreconcilable. Given the multitude of factual scenarios addressed in the various Section 414 cases decided since 1965, one may be best served by crafting arguments around factually similar cases rather than trying to draw out any sweeping legal propositions. A detailed legal memorandum should aim to make the trial judge’s job more manageable in terms of assessing the applicability of each relevant decision. Second, the proposed non-pattern instruction should be properly worded. Guidelines from the original IPI foreword noted that non-pattern instructions must be simple, brief, impartial, and free from argument. See Illinois Pattern Jury Instructions, Civil, 2000 Ed. (Foreword to 1st Ed., 1961). While commonly used words need not be defined (Simmons v. Garces, 319 Ill. App. 3d 308, 319 (1st Dist. 2001)), the specific words “retain” and “control” found in IPI 55.01 are worthy of further explanation. That is particularly important in light of the Ramirez court’s discussion of that
aspect of 55.01 IPI. Those words are at the core of any liability assessment in a construction negligence case. Moreover, potentially argumentative words and phrases that may be found in IPI 55.01, such as “can be liable” and “some control” should be avoided or modified if possible. Finally, instructions should be crafted with lay jurors as the intended audience, not attorneys or jurists. Lifting legal terminology from an opinion has been discouraged by the Illinois Supreme Court. Kingson v. Turner, 115 Ill. 3d 445, 460 (1987) (stating, the “practice of lifting sentences from court opinions and converting them into instructions . . . is not a good one, as it often leads to serious error.”) Elusive terms that are difficult for lawyers to define, such as “means and methods” and “operative details,” are not likely to be helpful to most lay jurors. Essentially, “legalese” should be avoided at all costs when drafting a non-pattern instruction. Conclusion The instruction of the jury by the trial judge is one of the most pivotal points of a trial. Experienced trial attorneys carefully craft the theme of their case around the instructions that will be given. They know that proper jury instructions that reflect the specific evidence presented can carry the day. Instructions that do not accurately state the law can unnecessarily expose a party to the risk of an adverse jury verdict that may fall outside the bounds of liability as defined by the caselaw. Practitioners are forewarned of the conflicts surrounding the 55-Series IPIs and should be prepared to tender modified IPIs if warranted by their trial strategy.
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Insurance Law Update Terry A. Fox SmithAmundsen LLC, Chicago
Void Judgments, Target Tender, and Uncertainty All Around: Pekin Insurance v. Rada Development Creates an Unworkable Scenario for Insurers Searching for Certainty and Finality The recent decision in Pekin Insurance Company v. Rada Development LLC, 2014 IL App (1st) 133947, is likely to make both insurers and coverage counsel nervous about declaratory judgment actions they had considered to be final. This decision allows putative co-insurers to re-open declaratory judgments because they were not named in the action. Further, no statute of limitations is applicable on re-opening such a judgment. Background Facts Rada Development took over the general contracting of its real estate project, and was subsequently sued for injuries of a construction worker, Sutton, arising from the project. When Rada Development became the general contractor, pursuant to a “reassignment agreement” with the original general contractor, the original general contractor assigned to Rada Development all contractual interests in subcontracts on the project. This included the requirements that the general contractor be named an “additional insured” on subcontractors’ commercial general liability policies. Rada Development, 2014 IL App (1st) 133947, ¶ 2. 46 | IDC QUARTERLY | Fourth Quarter 2014
Rada Development was the named insured on a policy issued through Lloyd’s of London (Lloyds). Id. ¶ 5. Chicago Masonry was a subcontractor on the project, and was insured by Pekin Insurance Company (Pekin). Id. ¶ 3. The Pekin policy contained the following Additional Insured endorsement: any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability incurred solely as a result of some act or omission of the named insured and not for its own independent negligence or statutory violation. That person’s or organization’s status as an insured under this endorsement ends when your operations for that insured are completed or at the end of the policy period stated in the declarations of this policy, whichever is earlier.
It is further understood that the designation of an entity as an additional insured does not increase or alter the scope of coverage of this policy. Id. When the injured construction worker, Sutton, filed a personal injury suit, Rada Development tendered suit to Lloyd’s. Id. ¶ 5. Chicago Masonry tendered suit to Pekin. Id. Lloyd’s agreed to defend Rada Development pursuant to a reservation of rights. Id. ¶ 5. Lloyd’s then “attempted to tender Rada’s defense in the Sutton suit to Chicago Masonry and Pekin[.]” Id. ¶ 6. Pekin responded to Lloyd’s, denying the tender, and the two insurers corresponded, disputing whether Pekin owed a defense to Rada Development. Id. ¶¶ 8-11. At approximately the same time, Pekin filed a declaratory judgment action (Pekin action) in the Circuit Court of Cook County, but only named the injured worker Sutton and Rada Development.
About the Author Terry A. Fox, is a Partner at SmithAmundsen’s Chicago and St. Charles offices concentrating his practice in tort and employmentrelated litigation, and related insurance coverage matters. In the area of coverage, Terry is involved in providing coverage analysis, policy drafting, and other risk-transfer strategies. He is admitted to practice before all Illinois state courts and administrative agencies, the United States District Court for the Northern District of Illinois (Chicago and Rockford), the Northern District of Indiana, the Seventh Circuit Court of Appeals, and is a member of the trial bar. He obtained his B.A. with honors and distinction from Iowa State University, and his J.D. with distinction from the University of Iowa.
Id. ¶ 7. Pekin did not name Lloyd’s, but the latter was clearly aware of the suit. Id. ¶ 11. Lloyds sent a letter advising it was not going to respond to Pekin because it was not named in Pekin’s declaratory judgment suit, but that Lloyds was commencing an action of its own. Id. ¶ 11. Rada Development did not appear in the Pekin action, resulting in a default judgment being entered in Pekin’s favor. Id. ¶ 13. Shortly thereafter, Lloyd’s commenced its separate declaratory judgment action (Lloyd’s action) in Cook County, naming Pekin along with Chicago Masonry and Rada Development. Id. ¶ 11. Pekin moved to dismiss that action initially because Lloyd’s did not name the injured worker Sutton. Id. ¶ 12. After Pekin filed its appearance in the Lloyd’s action, it proved up the default judgment against Rada Development in its separate declaratory action, the Pekin action. Id. ¶ 13. After obtaining the judgment order of default in the Pekin action, Pekin then moved to dismiss the Lloyd’s action on the basis of collateral estoppel premised on the judgment against Rada Development in the Pekin action. Id. ¶ 14. The trial court granted Pekin’s motion, and dismissed the Lloyd’s action. Id. ¶ 15. Thereafter, Lloyd’s filed a petition pursuant to 735 ILCS 5/2-1401 (2-1401 petition) to vacate the default judgment and a motion to intervene in the Pekin action. Id. ¶ 16. The trial court granted Lloyd’s petition to vacate the judgment on the basis that Lloyd’s was a necessary party to the Pekin action, and the judgment entered in its absence was void. Id. ¶ 17. The trial court then granted Lloyd’s petition to intervene. Id. Pekin filed a notice of appeal pursuant to Illinois Supreme Court Rule 304(b)(3). Id.¶ 18.
Rada Development presents potential problems with finality and certainty of declaratory judgment actions. Because the issue of necessary parties is jurisdictional, holding a potential co-insurer is a “necessary party” impacts numerous decisions without an apparent statute of limitations.
Appellate Court’s Determination In affirming the trial court, the appellate court noted that an attack on a void order may be brought at any time. The allegation in the 2-1401 petition of a void judgment alleviated any need for Lloyd’s to establish either a meritorious defense or due diligence in bringing the petition, which is normally required. Id. ¶ 16, (quoting Sarkissian v. Chicago Bd. of Educ., 201 Ill. 2d 95, 101 (2002)). Because Lloyd’s continued defense of Rada Development in the injured worker’s personal injury case hinged on the determination of Pekin coverage, Lloyd’s was a necessary party to the Pekin action, and its absence deprived the trial court of jurisdiction to enter an order that impacted Lloyd’s rights. Id. ¶ 21. As to the petition to intervene, usually allowed only before judgment is entered, the appellate court noted that there were insufficient facts to conclude the trial court had abused its discretion, particularly where Lloyd’s separate declaratory judgment action was dismissed on collateral estoppel grounds. Id. ¶ 24. Potential Impact of Decision Rada Development presents potential problems with finality and certainty of declaratory judgment actions. Because
the issue of necessary parties is jurisdictional, holding a potential co-insurer is a “necessary party” impacts numerous decisions without an apparent statute of limitations. Lloyd’s filed the petition to vacate the judgment in the Pekin action within seven months after entry of the default judgment. Id. ¶¶ 13, 16. But, no language in the decision suggests any time limit. As the appellate court observed, a void judgment can be attacked at any time. Id. ¶ 19. Both insurers were aware of the pendency of both declaratory judgment actions. Perhaps, if a motion to vacate a declaratory judgment by one insurer under section 2-1401 were to be filed well after the judgment, the trial court would be more inclined to deny the attempt to intervene. But, the omitted party will presumably be able to mount a defense. Interestingly, even though procedural maneuverings of the insurers suggested each tried to gain an advantage at the expense of the other the appellate court found “the parties’ odd procedural choices do not change the nature or effect of a void order.” Id. ¶ 21. Coverage counsel may need to take a fresh look at which potentially interested insurers are necessary parties to a declaratory judgment action. Who is and is not a potentially interested insurer will — Continued on next page
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not be an easy determination, particularly with the changing rules of target tender and excess clauses post-Kajima, in which trial and appellate courts are finding renewed validity of the excess by coincidence type of policy condition held to be ineffective to nullify a targeted tender in John Burns Construction Company v. Indiana Insurance Company, 189 Ill. 2d 570, 578 (2000). See River Village I, LLC v. Cent. Ins. Cos., 396 Ill. App. 3d 480, 491-92 (1st Dist. 2009) (applying other insurance clause to find subcontractor’s commercial general liability policy excess over additional insured’s own liability policy); Certain Underwriters at Lloyd’s, London v. Cent. Mut. Ins. Co., 2014 IL App (1st) 133145. Conflict issues will likely increase, as will motions to disqualify, because more insurers are likely to be named in each declaratory judgment action to assure all necessary parties. The Rada decision suggests that all potential insurers of the tendering contractor be named in each declaratory judgment complaint. By way of illustration, in a large construction project with thirty subcontractors, the owner and general contractor may have potential insurance on thirty separate policies, in addition to their own. Where the general contractor tenders defense to the plumber’s insurer, that insurer may consider if it has to name other subcontractors’ insurers in the declaratory complaint to guard against any other insurer found to have coverage from coming back years later, claiming that it was a necessary party, because it had to defend the general contractor based on a tender.
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Health Law Update Roger R. Clayton, Mark D. Hansen, and J. Matthew Thompson Heyl, Royster, Voelker & Allen, P.C., Peoria
The Fifth District Provides Guidance on Claims of Privilege In its recent opinion, Klaine v. Southern Illinois Hosp. Servs., 2014 IL App (5th) 130356, the Illinois Appellate Court Fifth District addressed a number of issues surrounding the discoverability of credentialing data. Specifically, the court addressed whether applications for staff privileges, or portions of those applications, are privileged under the Illinois Health Care Professional Credentials Data Collection Act (Data Collection Act), the Medical Studies Act, the federal Health Care Quality Improvement Act, the federal Health Insurance Portability and Accountability Act (HIPAA), or the physician-patient privilege. Background In Klaine, the plaintiff filed a medical malpractice claim including a claim against the defendant hospital alleging negligent credentialing. Klaine, 2014 IL App (5th) 130356, ¶ 5. In discovery, the plaintiff filed a motion to compel documents, which the defendant claimed were privileged and, therefore, not subject to discovery. Id. One exhibit, “Group Exhibit F,” contained three applications for staff privileges that were submitted by the physician in question. Id. ¶ 13. The other exhibit, “Group Exhibit J,” contained procedure summaries of the physician in question. Id. ¶ 33. Each aspect of the court’s ruling is examined below in relation to the particular statute or privilege in question.
The Data Collection Act As part of the credentialing process, the Data Collection Act establishes a uniform hospital credentials form containing certain credentialing information. 410 ILCS 517/15. Although much of this information will be irrelevant, the plaintiff’s counsel may be eager to obtain some of the information. As such, the Data Collection Act explicitly provides: Any credentials data collected or obtained by the health care entity, health care plan, or hospital shall be confidential, as provided by law, and otherwise may not be redisclosed without written consent of the health care professional, except that in any proceeding to challenge credentialing or recredentialing, or in any judicial review, the claim of confidentiality shall not be invoked to deny a health care professional, health care entity, health care plan, or hospital access to or use of credentials data. Nothing in this Section prevents a health care entity, health care plan, or hospital from disclosing any credentials data to its officers, directors, employees, agents, subcontractors, medical staff members, any committee of the health care entity, health care plan, or hospital involved in the credentialing
process, or accreditation bodies or licensing agencies. However, any redisclosure of credentials data contrary to this Section is prohibited. 410 ILCS 517/15. In Klaine, the appellate court considered whether this language creates a privilege against discovery. Klaine, 2014 IL App (5th) 130356, ¶ 16. Surprisingly, the court held that no such privilege exists. Id. ¶ 17. The court reasoned that privileges against discovery are ordinarily explicitly set forth in a statute, for example that of the Medical Studies Act, and therefore, the legislature only intends a privilege to exist when set forth in plain language. Id. ¶ 18.
App (5th) 130356, ¶ 20. Therefore, this is an issue that may be resolved by the Illinois Supreme Court in the near future. Until that time, defense counsel should advocate for trial and appellate courts to follow the reasoning of the First District. The Medical Studies Act The defendant also argued that even if the entire application for staff privileges was not exempt from discovery under the Data Collection Act, that specific portions of the application should be redacted under the Medical Studies Act. Klaine, 2014 IL App (5th) 130356, ¶ 22. In Klaine, the physician in question was referred to the oversight committee for a practice evaluation. Id.
The court reasoned that privileges against discovery are ordinarily explicitly set forth in a statute, for example that of the Medical Studies Act, and therefore, the legislature only intends a privilege to exist when set forth in plain language.
Klaine runs contrary to a prior Illinois Appellate Court First District case, TTX Co. v. Whitley, 295 Ill. App. 3d 548 (1st Dist. 1998), where the appellate court held that the confidentiality provision in section 917(a) of the Illinois Income Tax Act (Tax Act) (35 ILCS 5/917(a)) prohibited discovery of information contained in tax returns because that section did not contain an exception for disclosure in judicial proceedings. TTX Co., 295 Ill. App. 3d at 556. In Klaine, however, the Fifth District explicitly declined to follow the rationale of the First District’s holding in TTX Co. Klaine, 2014 IL
¶ 23. The committee issued a report, which the circuit court reviewed in camera. Id. ¶ 23. The defendant claimed that references to the peer review committee reports and findings in the applications for staff privileges were privileged. Id. ¶¶ 22-23. The circuit court found that the report was privileged under the Medical Studies Act. Id. But, on appeal, the Fifth District found that “only the reference to the [report] and its finding should be redacted. The other information . . . which relates to the status, revocation, modification, or restriction of [the physi-
About the Authors Roger R. Clayton is a partner in the Peoria office of Heyl, Royster, Voelker & Allen, P.C., 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 the Illinois Association of Defense Trial Counsel (IDC), the Illinois State Bar Association, past president of the Abraham Lincoln Inn of Court, president and board member of the Illinois Association of Healthcare Attorneys, and past president and board member of the Illinois Society of Healthcare Risk Management. He co-authored the Chapter on Trials in the IICLE Medical Malpractice Handbook. Mark D. Hansen is a partner in the Peoria office of Heyl, Royster, Voelker & Allen, P.C. He has been involved in the defense of cases involving catastrophic injury, including the defense of complex cases in the areas of medical malpractice, products liability, and professional liability. Mark has defended doctors, nurses, hospitals, clinics, dentists, and nursing homes in healthcare malpractice cases. He received his undergraduate degree from Northern Illinois University and law degree from University of Illinois College of Law. Mark is a member of the Illinois Association of Defense Trial Counsel and is a former co-chair of the Young Lawyers Committee, former ex officio member of the Board of Directors, and has served as chair for various seminars hosted by the IDC. He is also a member of the Illinois Society of Healthcare Risk Management, the Abraham Lincoln American Inn of Court, and the Defense Research Institute. J. Matthew Thompson is an associate in the Peoria office of Heyl, Royster, Voelker & Allen, P.C. He practices primarily in the area of general tort defense. He received his B.S. in Accounting from Culver-Stockton College in 2005 and his J.D. cum laude from Southern Illinois University School of Law in 2008.
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cian’s] privileges, and [the physician’s] characterization of the reasons therefore, aside from the findings of the [report] are not privileged and are not to be redacted.” Id. ¶ 24. The appellate court reasoned that results taking the form of ultimate decisions made, or actions taken by a committee, are not privileged. Id. The Healthcare Quality Improvement Act Another issue arises when an application for privileges refers to information that is reported to the National Practitioner Data Bank (NPDB). The Healthcare Quality Improvement Act created the NPDB and requires that a hospital request information from the NPDB for each health-care practitioner who applies for privileges or staffing. 42 U.S.C. §§ 11131-11135. Furthermore, section 11137 of the Health Care Quality Improvement Act provides that information reported under that Act is confidential and shall not be disclosed, except in certain situations. Klaine, 2014 IL App (5th) 130356, ¶ 27. In Klaine, the defendants claimed that information reported to the NPDB should be redacted. Id. ¶ 26. The Fifth District rejected this and found that the information was not privileged from discovery. Id. ¶ 27. In reaching this conclusion, the appellate court cited § 11137 which states, in part, that “[n] othing in this subsection shall prevent the disclosure of such information by a party which is otherwise authorized, under applicable State law, to make such disclosure.” Id. (citing 42 U.S.C. § 11137). The court found that “under Illinois discovery rules, the defendant is authorized, and is, in fact, required, to produce this information with respect to the plaintiffs’ negligent credentialing 50 | IDC QUARTERLY | Fourth Quarter 2014
An obvious issue arises when an application for staff privileges includes information regarding a physician’s care and treatment of other patients.
claim.” Id. Because the defendant was “otherwise authorized” to disclose the information, the court held no privilege existed. Id. The Health Insurance Portability and Accountability Act An obvious issue arises when an application for staff privileges includes information regarding a physician’s care and treatment of other patients. This issue was raised in Klaine, with the defendant claiming that information regarding treatment of other patients was privileged from discovery. Id. ¶ 29. The appellate court rejected this claim because most of the information did not contain “individually identifiable health information” and therefore did not fall under HIPAA. Id. Furthermore, the court noted that any information otherwise protected by HIPAA could be properly disclosed “either by a court order expressly authorizing the disclosure of the information or with a qualified protective order as defined by [HIPAA].” Id. In such circumstances, the defendant should seek to redact any information identifying other patients. Physician-Patient Privilege Finally, a not-so-obvious issue arises when an application for staff privileges contains information regarding a physician’s own medical condition. The physician-patient privilege provides
that “[n]o physician or surgeon shall be permitted to disclose any information he or she may have acquired in attending any patient in a professional character, necessary to enable him or her professionally to serve the patient.” 735 ILCS 5/8–802. In Klaine, the defendant sought to redact “[the physician’s] own responses to questions in his applications regarding whether he has a medical condition, physical defect, emotional impairment, or substance abuse issue which in any way impairs or limits his ability to practice medicine with reasonable skill and safety.” Klaine, 2014 IL App (5th) 130356, ¶ 31. The court rejected this argument, reasoning that the physician’s own physical and mental condition “in no way relates to information acquired by a physician in a professional capacity for the purposes of diagnosing or treating [the physician] as a patient.” Id. Conclusion Defense counsel, especially those representing hospitals, should familiarize themselves with Klaine to advise clients regarding the privileged nature of similar documents. In particular, defense counsel should be aware of the split this decision creates between the First District and the Fifth District regarding the interpretation of the Data Collection Act. Counsel should advocate for future courts to follow the First District until the issue is resolved by the Illinois Supreme Court.
Young Lawyer Division Gregory W. Odom HeplerBroom LLC, Edwardsville
Young Lawyers Division Begins Another Successful Year Recently, the IDC selected me as Chair of the Young Lawyers Division (YLD) for the 2014-2015 term. I am extremely honored to work with the outstanding attorneys that comprise the YLD and the IDC as a whole. During this term, Elizabeth Barton of Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., will serve as Vice Chair of the YLD. I am incredibly excited to serve with Ms. Barton, as she has proven to be an extremely dedicated, hardworking member of the YLD. Last year, the YLD achieved considerable success under the excellent leadership of Michelle Wahl. For example, the YLD presented to students at The John Marshall Law School and Southern Illinois University School of Law on life as a young lawyer. The YLD conducted these events as part of an ongoing effort to educate law students, attract law students to the IDC, and form IDC chapters at Illinois law schools. The YLD also conducted blood drives, social events, Law Day presentations, and multiple charitable activities. In March 2014, the YLD achieved perhaps its greatest success of 2013-2014. In conjunction with the Illinois Supreme Court Commission on Professionalism, the YLD launched its Lawyer-to-Lawyer Mentoring Program. Numerous participants throughout Illinois volunteered to participate, making the program more successful than we could have imagined.
This year, thanks to superb prior leadership and excellent current membership, the YLD is poised for continued success. For the 2014-2015 term, the YLD’s goals include increasing young lawyer participation in the IDC; educating non-lawyers about the legal profession; providing charitable services to the community; and offering our YLD members educational, professional, and networking opportunities. As chair, I welcome the opportunity to assist the YLD in achieving these goals and to work with such an amazing group of lawyers. Wasting no time starting the 20142015 term, the YLD successfully conducted several events in August, with many other events on the horizon. As the year progresses, be on the lookout for further details on YLD events. Recent YLD Events On August 15, 2014, the YLD and the American Red Cross held a blood drive at HeplerBroom LLC in Edwardsville, Illinois. At the drive, the YLD raffled off St. Louis Cardinals tickets and a $50.00 gift card. Special thanks go to YLD member Matthew Champlin for all of his hard work in planning and executing this drive. The YLD is planning another blood drive to be held in Chicago. Stay tuned for more details. In August, the YLD also conducted
school supply drives for the Chicago and Edwardsville Public School Districts. During these drives, the YLD collected much needed supplies for elementary and high school students. I am extremely proud of all IDC members who graciously donated to these drives. Yet again, IDC members proved to be exceptional ambassadors of the legal profession. On September 24, 2014, the YLD, in conjunction with Swanson, Martin & Bell, conducted a presentation on maintaining work-life balance. This event educated young lawyers on managing their professional responsibilities while maintaining a healthy personal life. Topics of discussion included balancing career and personal lives, keeping daily stress in perspective, reconciling job expectations with actual experience, and maximizing career satisfaction. Speakers — Continued on next page
About the Author Gregory W. Odom is an Associate with HeplerBroom LLC in Edwardsville. He focuses his practice on trials involving complex business litigation matters, including toxic torts, personal injury, product and premises liability, and environmental law. Mr. Odom has represented individuals, local businesses, and Fortune 500 companies in Illinois and Missouri state and federal courts. He has successfully tried multiple cases to verdict and has successfully argued before the Illinois Court of Appeals. He received his J.D. from Southern Illinois University School of Law in 2008, and a B.A. from Southern Illinois University magna cum laude in 2005. Mr. Odom is a member of the Illinois State Bar Association, The Missouri Bar, Madison County Bar Association, St. Clair County Bar Association, and Illinois Association of Defense Trial Counsel.
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included Rick Shea, a partner with Swanson, Martin & Bell; Erica Longfield, an associate with Swanson, Martin & Bell; and Tony Pacione, Clinical Director for the Illinois Lawyers’ Assistance Program. Many thanks go to Michelle Wahl for spearheading this event, and to Swanson, Martin & Bell for hosting. Throughout the fall, YLD members participated in an ambitious membership recruitment drive. Specifically, YLD members visited the largest law firms in Chicago and St. Louis to educate younger attorneys on the benefits of the IDC and YLD. The YLD will continue its efforts to increase YLD membership by visiting law firms and in-house counsel for large companies located in central Illinois. Through informational presentations and social meet-andgreets, we are increasing awareness of and membership in the YLD. Upcoming YLD Events During the holiday season, the YLD plans to host a gift drive for the Chicago and St. Louis areas. Based upon IDC members’ participation in past charitable events, I have no doubt that this gift drive will be an enormous success. Also during the holiday season, the YLD will assist with the IDC Holiday Party, which takes place on December 4, 2014, at Lloyd’s in Chicago. Please mark your calendar and plan to join us for this wonderful celebration! As part of the YLD’s outreach program to Illinois law schools, we will work with current law student members to host
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events at Southern Illinois University and The John Marshall Law School. Additionally, we hope to recruit law student members from and host educational events at other Illinois law schools. In the spring, we plan to culminate our efforts with a law student writing competition. Through our law student outreach efforts, we hope to attract the future leaders of the IDC. We also will continue to develop the Lawyer-to-Lawyer Mentoring Program. As discussed, in March 2014, the YLD launched the mentorship program to enormous success. In fact, the number of participants in the program doubled the expected number of participants. Please spread the word to anyone you know that might be interested in participating. For more information on the mentorship program, please visit http://lawyermen tor.ilsccp.org/iadtc/. In addition to recruiting new members, providing educational opportunities, and engaging in charitable activities, the YLD also allows young lawyers to form friendships, discuss issues affecting young lawyers, and have fun. To that end, the YLD will host happy hours and social events throughout the year. We hope to have at least one social event per month during the 2014-2015 term. As you can see, the YLD has considerable work ahead. I am, however, extremely confident that our members will rise to the occasion and make this another incredibly successful year. I want to thank the YLD members for all of their dedication and efforts, and I look forward to working with them.
Notice of Election In accordance with the Bylaws of the Illinois Association of Defense Trial Counsel, an election must be held to fill the vacancies of the following six (6) directors whose terms expire in 2015. The following six Directors’ terms will expire at the Annual Meeting in June 2015. Joseph A. Bleyer, Bleyer & Bleyer R. Mark Cosimini, Rusin, Maciorowski & Friedman, Ltd. Terry A. Fox, SmithAmundsen, LLC Jennifer B. Groszek, Resolute Management, Inc. Al J. Pranaitis, Hoagland, Fitzgerald & Pranaitis Tracy Stevenson, Robbins, Salomon & Patt, Ltd. Recommendations for nominations of six (6) persons to be elected to the Board of Directors are now being solicited from the general membership.
All individual members of the Association are eligible for election to the Board of Directors unless otherwise excluded by the Bylaws. Corporate, Educator, and Law Student members are not eligible to serve on the Board of Directors.
The Board of Directors shall be representative of all areas of the State of Illinois, and to this end, two Districts are declared: “Cook County,” and for all remaining counties, “Statewide.” No more than four of the six directors elected each year shall office within the same District, and regardless of votes cast, only the four persons receiving the most votes may be elected from within the District. If all individual members filing Nominating Petitions are from the same District, only four shall be elected and the board shall seek out and appoint two directors from the other District. No more than two voting members of the combined Executive Committee and Board of Directors shall be partners or associates or otherwise practice together in the same law firm. The filing of a Nominating Petition for election as a director shall consist of: n The Nominating Petition. Each individual nominated must be supported by the signatures of three (3) members in good standing. n A statement by that member of his availability and commitment to serve actively on the board.
nd Availability a Statement of ent Sample Commitm
n A head and shoulders photo (high resolution jpg format preferred). n A short biography (1-2 paragraphs maximum). n A statement of no more than 200 words on why you should be elected to the Board of Directors. A sample copy of the Nominating Petition and Commitment to Serve Statement are included below for your reference. Nominations must be sent electronically to IDC Secretary/Treasurer Bradley C. Nahrstadt, Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. at
[email protected] and IDC Executive Director Sandra J. Wulf, CAE, IOM at
[email protected] Nominations must be accompanied with the five items listed above. All candidates will be featured with their biography, statement of candidacy and picture in the IDC Quarterly, and this same feature will be sent to the membership if more than six petitions are received. All nominating petitions must be received by Friday, March 27, 2015. All candidates who have filed a complete nominating petition are eligible to receive an electronic copy of the IDC membership listing, upon request.
Nominat
in
g Petitio We, the un n Sample dersigned , hereby de in good sta cla n _, Trial Coun ding of the Illinois A re that we are mem ____________ __ __ __ be s ssociation __ e l. __ __________ of Defens rs od standing of go in r I, __________ e be em W m e, the und that I am a nsel and I do ersign hereby declare ense Trial Cou (fi ef D rm of to t on name, add ed, further nominate ti en ia m it oc m ss m A is co d no li an ress, c (nam the Il ability Director o and affirm my f the Illino ity, state, zip code e of person) of of the Illinois rs to ec hereby warrant ir ) for the p D is of A ssociation osition of on the Board of Defens . el ns serve actively ou C al e ri T T ri se a en l ef J C D ohn Doe ounsel. Association of (signature __. ) 20 , J __ a n __ e __ D __ oe (sign ________ ature) ___ day of ____ Jack Doe _ Dated this ____ __ __ (s __ ig __ n __ a ture) Dated this ____________ ______ da ____________ __ __ __ __ __ y __ of ______ ________ ____, 20_ Signature _. Fourth Quarter 2014 | IDC QUARTERLY | 53
Association News Illinois & Missouri Comparative Law Seminar Thank you to everyone who came out to the ballpark for the Illinois & Missouri Comparative Law Seminar. It was wonderful to return to Busch Stadium for another joint program with the Missouri Organization of Defense Lawyers. Special thanks to our Planning Committee:
Jennifer Baumann — Thompson Coburn LLP Kenneth W. Bean — Sandberg Phoenix & von Gontard, P.C. Laura K. Beasley — Joley, Nussbaumer, Oliver & Beasley, P.C. Nicole Behnen — Polsinelli LLP Stephen M. Buckley — Buckley & Buckley, LLP Justin Chapell — Brown & James, P.C. David J. Deterding — HeplerBroom LLC John S. Farmer — Thompson Coburn LLP Kurt A. Hentz — HeplerBroom LLC Donald O’Keefe — Pitzer Snodgrass, P.C. Mary Reitz — Greensfelder, Hemker & Gale, P.C. Scott Stephenson — Litchfield Cavo LLP Patrick W. Stufflebeam — HeplerBroom LLC Richard C. Wuestling — Wuestling & James
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IL/MO Comparative Law Seminar | continued
Come join with your friends and colleagues as we ring in the holiday season!
We would like to thank the following companies for their generous sponsorship of this event!
Thursday, December 4, 2014 Lloyd’s Restaurant, Chicago 5:30 – 7:30 p.m.
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North Central Region Trial Academy We would like to thank our amazing faculty members for so generously sharing their time and expertise with our Trial Academy students. Tracy Stevenson, Chair — Robbins, Salomon & Patt, Ltd. James D. Ahern — Cassiday Schade LLP Dr. Martin Dauber — University of Chicago Brian T. Henry — Pretzel & Stouffer, Chartered Lonnie Johnson — Clendening Johnson & Bohrer, P.C. Christopher D. Lee — Kahn, Dees, Donovan & Kahn, LLP J. Dennis Marek — Ackman, Marek, Meyer, Tebo and Coghlan, Ltd. David Mueller — Cassidy & Mueller P.C. Mark Broderick — SmithAmundsen LLC
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Thank you to the following companies for participating in the 2014 North Central Region Trial Academy. We sincerely appreciate your support and participation!
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After Hours Reception
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Symposium Leadership David H. Levitt Hinshaw & Culbertson LLP 2014-2015 IDC President Mark Schloemer Westfield Group
Events Committee Jeremy Burton, Chair Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. Denise Baker-Seal Brown & James, P.C. Kimberly Davis Momkus McCluskey, LLC James P. DuChateau Johnson & Bell, Ltd. Ryan Frierott Goldberg Segalla LLP Matthew L. Johnson Johnson & Bell, Ltd. Scott D. Stephenson Litchfield Cavo LLP
The Illinois Association of Defense Counsel and the Illinois Insurance Association are proud to present the Annual Spring Symposium. The Symposium, to be held Friday, April 17, 2015 at the Standard Club of Chicago will feature great CLE programming, an exhibit hall and a valuable networking reception the evening of April 16. We hope you can join us for what promises to be one of the year’s best conferences.
Heather R. Watterson CNA
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SCHEDULE
Symposium Recording
Thursday, April 16, 2015
4:30 – 6:30 p.m. IDC After Hours Cocktail Reception – Location TBA
Friday, April 17, 2015 8:45 – 9:00
Opening Remarks
9:00 – 9:45
Cyber Liability & Coverage Presented by: John D. Hackett, Cassiday Schade LLP
9:45 – 10:30
Case Updates: Tort & Insurance Law Presented by: Speaker TBA Tort Law: Speaker TBA Insurance Law: James P. DuChateau, Johnson & Bell, Ltd.
10:30 – 10:45
Refreshment Break
10:45 – 11:45
Ethics of Social Media Presented by: Kelly E. Purkey and Alexander Sweis, McKenna Storer
11:45 – 12:15
Lunch
12:15 – 1:00
Reviewing Reasonableness of Medical Bills Presented by: Vicki Schweitzer, ExamWorks Review Services
1:00 – 2:00
Recent Developments in Employee/Independent Contractor Law Presented by: Speaker TBA
2:00 – 2:15
Refreshment Break
2:15 – 3:00
Panel Discussion Featuring Plaintiff & Defense Counsel on Illinois Practice Development Presented by: Colin H. Dunn, Clifford Law Offices and Bradley C. Nahrstadt, Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd.
3:00 – 4:00
E-Discovery Presented by: Steven M. Puiszis, Hinshaw & Culbertson LLP
Continuing Legal Education Credit
The program has been approved by the Illinois MCLE Board for 6.0 hours of continuing legal education (CLE) credit. We will apply for 1.0 hours of Illinois professionalism credit. We will apply for the following CLE credit in other states:
Indiana Missouri Wisconsin
6.0 CLE; 1.0 Professionalism 7.2 CLE; 1.2 Professionalism 7.2 CLE; 1.2 Professionalism
60 | IDC QUARTERLY | Fourth Quarter 2014
If you are unable to attend the Symposium on April 17, please consider purchasing a copy of the recorded program. Please contact the IDC office at
[email protected] or 800-232-0169 for more information.
Seminar Fees
Private Practice Attorneys IDC Members.......................$195* Non-Members......................$295* Governmental Attorneys..........$145 Insurance or Corporate Professionals................................$75 Judges and Law School Students........................................$25 * We are pleased to extend a special registration fee of just $50 for all clients of Private Practice Attorneys. Registration for the Symposium includes Symposium materials, Continuing Legal Education Credit, lunch, a refreshment break and great networking opportunities at our complimentary Cocktail Reception on Thursday, April 16.
Refund Policy
Refunds must be requested in writing and will be made according to the following schedule: 100% Refund – Through March 17, 2015 50% Refund – March 18 - April 2, 2015 No Refund – April 3 - 18, 2015 Substitutions for your registration may be made. However, only one copy of seminar materials will be offered per registration. Please submit substitution information in advance of the event. — Continued on next page
REGISTRATION 2015 Spring Symposium
April 17, 2015 n Standard Club of Chicago
4
Seminar Fees
Live Presentation
Private Practice Attorneys
IDC Members
$195*
Non-Members
$295*
Governmental Attorneys
$145
Insurance or Corporate Professionals
$75
Judges & Law School Students
$25
The IDC is proud to welcome the following members to the Association: Amanda M. Buishas Johnson & Bell, Ltd., Chicago
* We are pleased to extend a special registration fee of just $50 for all clients of Private Practice Attorneys.
Kathleen M. Carter Quinn, Johnston, Henderson, Pretorius & Cerulo, Peoria
Badge Name: Firm:
Claudia B. Diaz Litchfield Cavo LLP, Chicago n Sponsored by: Scott Stephenson
Address: City, State, Zip Code: Direct Line: (
)
ARDC Number: IL:
Email: MO:
IN:
WI:
Special Dietary/Accessibility Needs:
s
All Private Practice Attorneys may bring a client for a reduced registration fee of $50. Please list your client’s name and contact information below. Indicate here if you will NOT have a guest in attendance .
Cole G. Dunnick Litchfield Cavo LLP, Chicago n Sponsored by: Scott Stephenson
Client Name:
Direct Line: (
Matthew J. Gardner Litchfield Cavo LLP, Chicago n Sponsored by: Scott Stephenson
)
Company: Address: City, State, Zip Code: Email: Special Dietary/Accessibility Needs:
Payment Information
(Do Not Fax or Email Credit Card Information)
❑ My check, number ❑ Please charge $
is enclosed for $ to my:
Card Number:
❑ Visa Exp. Date:
. ❑ MasterCard /
Emily E. Schnidt Purcell & Wardrope, Chartered, Chicago n Sponsored by: Brad Purcell
❑ AmEx Security Code:
Name as it appears on credit card:
Douglas Spale John Marshall Law School, Chicago
Credit Card Billing Address:
Please complete this registration form and return it as soon as possible to: Illinois Association of Defense Trial Counsel ■ PO Box 588 ■ Rochester, IL 62563-0588
Questions?
Mauri Thomas Querrey & Harrow, Chicago n Sponsored by: R. Howard Jump
Phone: 800-232-0169 ■ Fax: 866-230-4415 ■ Email:
[email protected] Fourth Quarter 2014 | IDC QUARTERLY | 61
62 | IDC QUARTERLY | Fourth Quarter 2014
Illinois Association of Defense Trial Counsel
MEMBERSHIP APPLICATION
Membership in the Illinois Association of Defense Trial Counsel is open to Individuals, Corporations, Educators, and Law Students. For a list of qualifications, visit www.iadtc.org or phone the IDC office at 800-232-0169. Applicants shall be admitted to membership upon a majority vote of the Board of Directors. I am (We are) applying for membership as a(an) (Select Only One):
Individual Attorney, in practice: Governmental Attorney, in practice: m 0-3 years ($100) m 0-3 years ($75) m 4-5 years ($150) m 4-5 years ($100) m 6-9 years ($225) m 6-9 years ($160) m 10+ years ($250) m 10+ years ($190) m Student ($20) m Educator ($75)
Corporation, with: m 1-2 Affiliates ($250) m 3-5 Affiliates ($500) m 6-10 Affiliates ($750) m 11-15 Affiliates ($1,000) m 16-20 Affiliates ($1,500)
Individual Applicant Information – Attorneys & Governmental Attorneys Prefix
First
Middle
Last
Suffix
Designation
Firm or Government Agency Address City
State
Firm or Agency Line
Zip Code
County
Direct Line
Email
Fax Line Website
Area of Practice
# of Attorneys in Firm
IDC Sponsor Name and Firm Law School
Admitted to the Bar in the State of
Home Address
City, State, Zip Code
Home Phone
Year
ARDC #
Alternate Email Address
Corporate Applicant Information Corporation Name
Business or Service Provided
Address
City, State, Zip Code
Phone Fax Website On a separate sheet of paper, please list all individuals who are to be affiliated with this Corporate Membership. Be sure to include Name, Address (if different than the corporate address), Phone, Fax, and Email Address for all affiliates.
Educator and Law Student Applicant Information Prefix
First
Middle
Last
Suffix
Law School Address Email Address
Designation
Anticipated Graduation Date City, State, Zip Code Phone
Biographical Information IDC is committed to the principle of diversity in its membership and leadership. Accordingly, applicants are invited to indicate which one of the following may best describe them: Race
Gender
Birth Date
Free DRI Membership In addition to joining the IDC, you can take advantage of the DRI Free Membership Promotion! As a new member of the IDC and if you’ve never been a member of DRI, you qualify for a 1 year free DRI Membership. If you are interested, please mark the box below and we will copy this application and send it to DRI. Also, if you have been admitted to the bar 5 years or less, you will also qualify to receive a Young Lawyer Certificate which allows you one complimentary admission to a DRI Seminar of your choice.
m Yes, I am interested in the Free DRI Membership! 54
68- | IDC QUARTERLY | Third Quarter 2013
(Application continued on next page)
Illinois Association of Defense Trial Counsel
COMMITTEE INVOLVEMENT
All Substantive Law Committees are open to any IDC member. Event and Administrative Committees are generally small committees and members are often appointed by the Board of Directors. Substantive Law Committees are responsible for writing the Monograph for the IDC Quarterly and may submit other Feature Articles. Committees keep abreast of current legislation and work with the IDC Legislative Committee, as warranted. Committees also serve as a resource to seminar committees for speakers and subjects and, if and when certain issues arise that would warrant a specific “topical” seminar, the committee may produce such a seminar.
Please select below the committees to which you would like to apply for membership:
Substantive Law Committees m Commercial Law m Construction Law
m Employment Law m Insurance Law
Administrative Committees m Events m Legislative
m Membership m Young Lawyers
m Local Government Law m Tort Law
Event Committee m Events
Membership Commitment By providing a fax number and email address you are agreeing to receive faxes and emails from the association that may be of a commercial nature. I certify that: m As an Individual Attorney, I am actively engaged in the practice of law, that at the present time a substantial portion of my litigation practice in personal injury and similar matters is devoted to the defense. m As a Corporate Member, we will support the purpose and mission of the Association. m I am currently a Professor or Associate Professor of law at an ABA accredited law school. m I am currently a Student enrolled in an ABA accredited law school. Signed
Date
Membership Investment
*
Recommended Amount: <3 years in practice.......... $15 4-5 years in practice......... $25 Voluntary Political Action Committee Donation * ................................................... $ 6-9 years in practice......... $55 Total Amount Due .................................................................................................... $ 10+ years in practice........ $75 Please Note: IDC dues are not deductible as a charitable contribution for U.S. federal income tax purposes, but may be deductible as a business expense. The IDC estimates that 2.5% of your dues are not deductible because of the IDC’s lobbying activities on behalf of its members. Membership Dues ..................................................................................................... $
Payment Information
— Do Not Fax or Email Credit Card Information —
m Enclosed is check # in the amount of $ . m Visa
m MasterCard
m Please charge Credit Card #
in the amount of $
Name as it appears on the Card
Card Security Code
Billing Address
City, State, Zip Code
m AmEx
Exp. Date /
Thank you for your interest in joining the Illinois Association of Defense Trial Counsel. Your application will be presented to the Board of Directors for approval at their next regular meeting. Until that time, if you have any questions, please contact the IDC office at:
Illinois Association of Defense Trial Counsel PO Box 588 • Rochester, IL 62563-0588 • 800-232-0169 • 217-498-2649 • www.iadtc.org
80 | IDC QUARTERLY | Fourth Quarter 2013
57
What is the IDC? We are the premier association of attorneys in Illinois representing business, corporate, professionals, and other individual defendants in civil litigation. The IDC is an exceptional community of defense attorneys dedicated to improving the judicial system and the practice of law. The IDC is a reasoned and independent voice for fairness in the legal system. We work with the business, insurance, and medical communities to ensure a fair and equal justice system for all litigants.
The IDC is
n An advocate for the legal profession n 1,000 members strong n Looked to for advice and support by the judiciary n A resource for legislators
How is the IDC Making a Difference? The IDC strengthens the practice of law and improves the skills of lawyers that defend individuals and businesses in Illinois. We enhance the knowledge of defense attorneys through our nationally respected publication the IDC Quarterly and the new Survey of Law, by our continuing legal education programs, and committees that focus on specialty practice areas like Civil Practice; Commercial Law; Employment Law; Local Government Law; and Tort Law. The IDC is working to protect the Illinois legal system, demanding a level playing field and resisting attempts to dismantle the jury system. The IDC is a respected resource providing:
n Fact sheets on the impact of pending litigation n Expertise to legislative committees and political leaders n Amicus briefs on legal issues pending before the Illinois reviewing courts
IDC members are as diverse as the clients we represent From big firms and small and all corners of the state, attorneys join the IDC based on our common issues and a common desire to improve our legal system. Over the past five decades, we have grown from an organization of mostly insurance defense attorneys to a broad-based association of litigators who represent an entire range of business and industry throughout Illinois and the United States. The diversity of our membership and clientele informs our independent and balanced view of Illinois’s judicial system and the litigation that affects it.
What are Our Core Values? n To promote and support a fair, unbiased, and independent judiciary n To take positions on issues of significance to our membership, and to advocate and publicize those positions n To promote and support the fair, expeditious, and equitable resolution of disputes, including the preservation and improvement of the jury system n To provide programs and opportunities for professional development to assist members in better serving their clients n To increase its role as the voice of the defense bar of Illinois, and to make the IDC more relevant to its members and the general public n To support diversity within our organization, the defense bar, and the legal profession
Presorted Standard U.S. Postage PAID Permit No. 650 Springfield, IL
ILLINOIS ASSOCIATION OF DEFENSE TRIAL COUNSEL P.O. Box 588 Rochester, IL 62563-0588
ILLINOIS ASSOCIATION OF DEFENSE TRIAL COUNSEL LAW • EQUITY • JUSTICE
CALENDAR of Events
l November 13
Engineering Systems Incorporated (ESI) Seminar • ESI Headquarters • Aurora
l December 4
Executive Committee Meeting • Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. • Chicago
l December 4
Holiday Party • Lloyd’s • Chicago
l December 5
Board of Directors Meeting • Hinshaw & Culbertson LLP • Chicago
l January 23
Executive Committee & Board Meeting • HeplerBroom LLC • Chicago
l February 19
IDC / Illinois Judges Association Joint Seminar • Hinshaw & Culbertson LLP • Chicago
l February 20
Executive Committee & Board Meeting • Location TBA • Chicago
l March 18 or 24
Executive Committee & Board Meeting • Hinshaw & Culbertson LLP • Springfield
l April 16
Executive Committee & Board Meeting • Location TBA • Chicago
l April 17
Spring Symposium • Standard Club • Chicago
l May 15
Executive Committee & Board Meeting • HeplerBroom LLC • Chicago
l June 5
Committee Boot Camp • Location TBA • Chicago
