monograph feature articles monograph feature articles


Mar 9, 2017 - ...

22 downloads 240 Views 3MB Size

The Illinois Association of Defense Trial Counsel

First Quarter 2017

l

Volume 27, Number 1

l

ISSN-1094-9542

MONOGRAPH Crossing the Line: Interference with Business and Contractual Relations

FEATURE ARTICLES Wilson v. Clark — Its Use and its Ramifications The Times They are a’Changin’: Snow and Ice Cases Following Murphy-Hylton and the Snow Removal Service Liability Limitation Act

Illinois Association of Defense Trial Counsel WWW.IADTC.ORG PRESIDENT R. MARK MIFFLIN Giffin, Winning, Cohen & Bodewes, P.C., Springfield PRESIDENT-ELECT MICHAEL L. RESIS SmithAmundsen LLC, Chicago 1ST VICE PRESIDENT BRADLEY C. NAHRSTADT Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd., Chicago 2ND VICE PRESIDENT WILLIAM K. MCVISK Johnson & Bell, Ltd., Chicago SECRETARY/TREASURER NICOLE D. MILOS Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago DIRECTORS DENISE BAKER-SEAL Brown & James, P.C., Belleville ELIZABETH K. BARTON Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., Chicago LAURA K. BEASLEY Joley, Oliver & Beasley, P.C., Belleville JOSEPH A. BLEYER Bleyer and Bleyer, Marion JEREMY T. BURTON Falkenberg Fieweger & Ives, Chicago ADAM C. CARTER Cray Huber Horstman Heil & VanAusdal LLC, Chicago R. MARK COSIMINI Rusin & Maciorowski, Ltd., Champaign BRUCE DORN Bruce Farrel Dorn & Associates, Chicago DONALD PATRICK ECKLER Pretzel & Stouffer, Chartered, Chicago TERRY A. FOX Kelley Kronenberg, Chicago EDWARD K. GRASSÉ Busse, Busse & Grassé, P.C., Chicago JOHN P. HEIL, JR. Heyl, Royster, Voelker & Allen, P.C., Peoria DAVID A. HERMAN Giffin, Winning, Cohen & Bodewes, P.C., Springfield ANTHONY G. JOSEPH HeplerBroom LLP, Chicago THOMAS L. O’CARROLL Hinshaw & Culbertson LLP, Chicago DONALD J. O’MEARA, JR. Pretzel & Stouffer, Chartered, Chicago IAN RUSSELL Lane & Waterman, LLP, Davenport BENJAMIN J. SAMUELSON Betty, Neuman & McMahon, P.L.C., Davenport TRACY E. STEVENSON Law Office of Tracy E. Stevenson, P.C., Chicago PATRICK W. STUFFLEBEAM HeplerBroom LLC, Edwardsville MICHELLE M. WAHL Swanson, Martin & Bell, LLP, 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 • David H. Levitt • Troy A. Bozarth

COLUMNISTS Lindsay Drecoll Brown — Cassiday Schade LLP, Chicago Julie A. Bruch — O’Halloran Kosoff Geitner & Cook, LLC, Northbrook Roger R. Clayton — Heyl, Royster, Voelker & Allen, P.C., Peoria Thomas G. DiCianni — Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., Chicago Donald Patrick Eckler — Pretzel & Stouffer, Chartered, Chicago John Eggum— Foran Glennon Palandech Ponzi & Rudloff P.C., Chicago Ryan M. Frierott — Goldberg Segalla LLP, Chicago Scott L. Howie — Pretzel & Stouffer, Chartered, Chicago Bradford B. Ingram — Heyl, Royster, Voelker & Allen, P.C., Peoria M. Elizabeth D. Kellett — HeplerBroom LLC, Edwardsville Edna L. McLain — HeplerBroom LLC, Chicago R. Mark Mifflin — Giffin, Winning, Cohen & Bodewes, P.C., Springfield Teresa A. Minnich — Robbins, Salomon & Patt, Ltd., Chicago Bradford J. Peterson — Heyl, Royster, Voelker & Allen, P.C., Urbana John F. Watson — Craig & Craig, LLC, Mattoon Michael L. Young — HeplerBroom LLC, St. Louis

CONTRIBUTORS Tammera E. Banasek — HeplerBroom LLC, Chicago Lindsey D’Agnolo — Heyl, Royster, Voelker & Allen, P.C., Urbana Edward K. Grassé — Busse, Busse & Grassé, P.C., Chicago Mark D. Hansen — Heyl, Royster, Voelker & Allen, P.C., Peoria Katherine E. Jacobi — HeplerBroom LLC, St. Louis Mark J. McClenathan — Heyl, Royster, Voelker & Allen, P.C., Rockford Circuit Judge Donald J. O’Brien, Jr. (Ret.) — Circuit Court of Cook County, Illinois Charles P. Rantis — Johnson & Bell, Ltd., Chicago Matthew A. Reddy — Pretzel & Stouffer, Chartered, Chicago J. Matthew Thompson — Heyl, Royster, Voelker & Allen, P.C., Peoria

IDC QUARTERLY

EDITORIAL BOARD John F. Watson, Editor-in-Chief Craig & Craig, LLC, Mattoon [email protected] Tara Wiebusch Kuchar, Executive Editor HeplerBroom LLC, Edwardsville [email protected] J. Matthew Thompson, Associate Editor Heyl, Royster, Voelker & Allen, P.C., Peoria [email protected] Catherine A. Cooke, Assistant Editor Robbins, Salomon & Patt, Ltd., Chicago [email protected] Jeremy T. Burton, Assistant Editor Falkenberg Fieweger & Ives, Chicago, Chicago [email protected] James P. DuChateau, Assistant Editor HeplerBroom LLC, Chicago [email protected]

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. 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. Editors reserve the right to publish and edit all such letters received and to reply to them. IDC Quarterly, First Quarter 2017, Volume 27, No. 1., Copyright © 2017 The Illinois Association of Defense Trial Counsel. All rights reserved. Reproduction in whole or in part without permission is prohibited.

IN THIS ISSUE Monograph M-I

Crossing the Line: Interference with Business and Contractual Relations, by Mark J. McClenathan

Feature Articles

4 Wilson v. Clark—Its Use and its Ramifications, by Circuit Judge Donald J. O’Brien, Jr. and Charles P. Rantis 21 The Times They are a’Changin’: Snow and Ice Cases Following Murphy-Hylton and the Snow Removal Service Liability Limitation Act, by Edward K. Grassé and Donald Patrick Eckler

54

In Memoriam — Remembering Willis R. Tribler



Columns 28

Appellate Practice Corner, by Scott L. Howie



Association News

60

16 Civil Practice and Procedure, by Donald Patrick Eckler and Matthew A. Reddy

47

Civil Rights Update, by Bradford B. Ingram



25

Construction Law, by Lindsay Drecoll Brown



3



35

Employment Law, by Julie A. Bruch



11

Health Law, by Roger R. Clayton, Mark D. Hansen and J. Matthew Thompson



71

IDC Membership and Committee Applications



64

IDC New Members



65

IDC Notice of Election

Editor’s Note, by John F. Watson

58 IDC Quarterly Monograph and Feature Article Index — Volume 26

69

IDC Seminar — Beginner’s Guide to Mass Toxic Tort Litigation



66

IDC Spring Symposium



49

Insurance Law Update, by Michael L. Young and Katherine E. Jacobi



19

Legislative Update, by John Eggum



32

Medical Malpractice Update, by Edna L. McLain and Tammera E. Banasek



52

Municipal Law, by Thomas G. DiCianni



2

President’s Message, by R. Mark Mifflin



15

Product Liability, by Ryan M. Frierott

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



41

Property Insurance Law, by Teresa A. Minnich



37

Supreme Court Watch, by M. Elizabeth D. Kellett

SANDRA J. WULF, CAE, IOM, Executive Director



44

Workers’ Compensation Report, by Bradford J. Peterson and Lindsey D’Agnolo

First Quarter 2017 | IDC QUARTERLY | 1

President’s Message R. Mark Mifflin Giffin, Winning, Cohen & Bodewes, P.C., Springfield

The strength of the Illinois Association of Defense Trial Counsel lies in the knowledge, expertise, and skill of its members throughout the state. Together, we not only know the principles, nuances, and application of Illinois law, but we also know the quirks of the local courts and the procedures utilized by the various courts in the handling of cases. We also know the makeup of our respective communities and the general predisposition of both judges and juries in our areas. These attributes serve each of us well in our daily practice. It is the willingness of our members to share their knowledge with other members that clearly demonstrates the dedication of the IDC and its members to ensuring that civil justice is dispensed with integrity and professional competence. I trust that by now you are all aware of the numerous ways in which the IDC reaches out to its members to empower them to enhance their ability to succeed. These efforts include continuing legal education seminars, reports on major cases and decisions, amicus briefs, timely articles and columns in the IDC Quarterly, responses to Defense Inquiries by email, the availability of groups for members to discuss various topics online, and opportunities to meet and greet one another, which leads to personal member-to-member calls to discuss pending topics among friends. Referral of cases around the state is also a major benefit of these relationships. 2 | IDC QUARTERLY | First Quarter 2017

I hope that you have all seen emails from Executive Director Sandra Wulf about another way to seek out other members and to share ideas and information. The IDC SocialLink was launched in November as an online community specifically reserved for IDC members. It brings a Facebook/LinkedIn-style feed page to our website, www.iadtc.org. The IDC

and we hope every member utilizes it to improve their practice and obtain the maximum possible benefit from IDC membership. I also want to encourage you to post to the “My Feed” section of the IDC SocialLink. You can also use the IDC SocialLink to join a group to enable you to communicate with others in a similar practice area or with similar interests. Feel free to post anything you believe is related to our defense practice and to get engaged with fellow members on a regular basis. Also, we are pleased to announce the release of the IDC App, SocialLink. SocialLink is available for native iOS and Android devices, allowing you to access our member community activity

Together, we not only know the principles, nuances, and application of Illinois law, but we also know the quirks of the local courts and the procedures utilized by the various courts in the handling of cases.

SocialLink allows members to post questions, ideas, photographs, decisions and all types of other information to our community at large. SocialLink also allows members to easily view the different IDC groups, request to join the groups they are interested in, and then directly message all members within the respective group. As an added convenience, members will be able to sign in to www.iadtc.org using their LinkedIn or Facebook profile. It is the sincere hope of the Board of Directors that the IDC SocialLink will be utilized by our members on a regular basis to find out and share information. It is off to a great start

anytime, anywhere from your mobile device. Download the App today from the Apple and Google Play stores by searching for SocialLink (please note there is no space between the two words). We hope the addition of IDC SocialLink on our website and as an App will enhance your IDC membership and your ability to communicate with your fellow members. Thank you for your continued involvement with the IDC. Our membership is truly our strength.

Editor’s Note John F. Watson Craig & Craig, LLC, Mattoon

I write this column in the midst of some of the coldest weeks of the season. After experiencing a rather long summer and spring, I find myself thinking about the ski slopes in Colorado, Wisconsin and Minnesota, but also looking forward to the warm winds of an Illinois spring and summer. I am looking forward to 2017 and all this year may hold. Last year ushered in major changes in the political landscape on a national scale, but also some subtle developments in Illinois. I think about the responsibility that attorneys across our nation and in Illinois hold to move us all forward in this new year with positive change, both socially and economically. We, as attorneys, serve the public as advocates and communicators. Over the last ten years, much has changed in communication and advocacy. This was seen very clearly in the political arena where candidates used new ways to reach voters, constituents, and supporters. Messaging has taken on new forms. Thoughts and ideas are gathered in new places, as well as old. As discussed by our IDC President, Mark Mifflin, the Illinois Associate of Defense Trial Counsel is also employing new ways to communicate, share, and develop ideas through the IDC Social Link. As attorneys and advocates, it is our responsibility to define and refine the perspectives of our clients as those points relate to the greater good of improving the law and striving toward greater equality in our civil justice system. As we work toward defining and refining those perspectives

of our clients, we also need to be able to communicate those perspectives to those that may disagree with our positions. It is my hope that the IDC Quarterly will continue to develop and effectively communicate those ideas to the greater body of attorneys in the state. In pursuit of this goal, this issue of the Quarterly contains a number of excellent articles including a very detailed IDC Monograph prepared by Mark J. McClenathan of Heyl Royster in Rockford, Illinois, that details Illinois law on causes of action relating to interference with business and contractual relations. This IDC Monograph covers a wide variety of topics, from the various causes of action and affirmative defenses, to the nuances involved in litigation. Retired Circuit Judge Donald J. O’Brien, Jr. from the Circuit Court of Cook County, and Charles P. Rantis from Johnson & Bell, have prepared an interesting Feature Article on the Illinois Supreme Court authority, Wilson v. Clark, and the bases and admissibility of expert testimony as now codified in Illinois Rules of Evidence 703 and 705. In addition, Edward K. Grasse´ from Busse, Busse & Grasse´, and Patrick Eckler from Pretzel & Stouffer, have prepared a very timely and interesting article on the Snow Removal Service Liability Limitation Act and how the body of law has been affected by the Illinois Supreme Court’s decision in Murphy-Hylton v. Lieberman Management Services, 2016 IL 120394, recently decided on December 1, 2016.

In addition to the outstanding IDC Monograph and these Feature Articles, this issue offers columns on the IDC’s legislative efforts in the Legislative Update by John Eggum, developments in municipal law by Tom G. DiCianni, property law developments by Teresa Minnich, the Medical Malpractice Update by Edna McLain and Tammera Banasek, and the Civil Rights Update by Bradford B. Ingram. We also have exceptional columns by Scott Howie in the Appellate Practice Corner, from Pat Eckler and Matthew Reddy in Civil Practice and Procedure, and the Health Law column prepared by Roger Clayton, Mark Hansen and Matt Thompson. Additionally, we have our Workers’ Compensation column prepared by Brad Peterson and Lindsey D’ Agnolo, the Insurance Law column prepared by Michael L. Young and Katie E. Jacobi, the Employment Law column prepared by Julie Bruch, and the Instruction Law column prepared by Lindsey Drecoll Brown. All of these Features and columns demonstrate dedication toward advocacy, civil justice and communication. Thank you to all of our authors for sharing their expertise and insights. I hope as we move forward in 2017 that all attorneys, in Illinois and nationwide, break down the partisanship and divisiveness that has developed over the last several decades and learn to communicate the perspectives and positions of their clients and constituents to even those on an opposing side. Even if we cannot convince our opposition that our way is the correct way, we might be able to build bridges that will allow a bipartisan consensus on certain issues so that Illinois, and this country as a whole, can make progress in the law for a positive change both socially and economically. First Quarter 2017 | IDC QUARTERLY | 3

Feature Article Circuit Judge Donald J. O’Brien, Jr. (Ret.) Circuit Court of Cook County, Illinois Charles P. Rantis Johnson & Bell, Ltd., Chicago

Wilson v. Clark— Its Use and its Ramifications Expert witness testimony often involves the use of facts and other information not in evidence. In 1981, the Illinois Supreme Court, in the seminal case of Wilson v. Clark, 84 Ill. 2d 186 (1981), expressly adopted Rule 703 and Rule 705 of the Federal Rules of Evidence. Michael H. Graham, Graham’s Handbook of Illinois Evidence §§ 703.1, 705.1. (2016 ed.). By adopting these two Federal Rules of Evidence, the Illinois Supreme Court in Wilson liberalized trial procedures controlling the admissibility of expert testimony. Federal Rule of Evidence 703, now Illinois Rule of Evidence 703, governs the permissible bases of an expert’s opinion. Federal Rule of Evidence 705, now Illinois Rule of Evidence 705, governs the disclosure of information underlying an expert’s opinion. This article addresses the issues of what may be relied upon as well as what may not be relied upon, and how such materials relied upon by expert witnesses may be used at trial. Admissibility of Expert Testimony Before Wilson Prior to the adoption of the Illinois Rules of Evidence and long before the Illinois Supreme Court’s decision in Wilson, the common law required the opinions of expert witnesses to rest on either first-hand observation or on the admitted facts of the case. Fed. R. Evid. 703, Advisory Comm. Notes. Expert 4 | IDC QUARTERLY | First Quarter 2017

opinions based on evidence not admitted at trial were generally considered inadmissible under Illinois law. Pritchett v. Steinker Trucking Co. 108 Ill. App. 2d 371 (4th Dist. 1969). In other words, the common law admitted opinions based on facts or data personally observed by the expert as well as opinions based on facts or data presented at trial. In contrast, courts refused to admit expert opinions or the bases for such opinions if they did not fit into either of these two sources serving as the bases for the expert opinions. The trial procedure to present facts relied upon by the expert, but not personally known to the expert was to have the expert answer hypothetical questions containing an assumed set of facts, data, or opinions. Graham, Handbook of Illinois Evidence, supra, §705.1. If an expert had personal knowledge of the subject matter about which he would testify, the expert would first testify as to his personal observations and then offer his opinion. If the expert’s opinion testimony involved interpreting data and drawing conclusions, the required procedure for eliciting the expert’s opinions was the hypothetical question. Sherman v. City of Springfield, 77 Ill. App. 2d 195 (4th Dist. 1966). The hypothetical question had been criticized as being time consuming, complex, and an impairment to the orderly presentation of evidence at trial. Graham, Handbook of Illinois Evidence, supra, §705.1. The problem

with hypothetical questions was that they were oftentimes confusing in that experts were asked to assume long and detailed series of facts at trial. If the hypothetical question included facts that differed from the facts of the case, judges would sustain objections and strike the expert testimony. In addition, another practical problem which impeded the orderly presentation of evidence involved the need to call multiple foundational witnesses. The Illinois Supreme Court specifically referred to this issue in Wilson where it noted that it was extremely time-consuming to call multiple witnesses who made entries in hospital records to the witness stand to lay a proper foundation for a medical expert’s opinion. Wilson, 84 Ill. 2d at 194.

About the Authors Judge Donald J. O’Brien, Jr., graduated from Northwestern University School of Law, 1963. Judge O’Brien was a principal in the firm of O’Brien, Redding and Hyde for 27 years. He has 27 years of experience as a trial lawyer, including arguing and trying cases in both the state and federal courts and the appellate level in both the state and federal courts. Appointed Cook County Circuit Court Judge, 1990; assigned in 1991 to Law Division hearing major personal injury cases and contract disputes. Elected to Cook County Circuit Court for full six-year term in November 1992. As an active trial lawyer, Judge O’Brien tried 107 cases to verdict. As a Presiding Judge, he presided over approximately 320 cases that went to verdict before a jury.

Charles P. Rantis is a shareholder at Johnson & Bell, Ltd. where he specializes in product liability, construction negligence, and other personal injury and wrongful death cases.

Wilson Changes the Use of Expert Witness Trial Procedures In Wilson v. Clark, the Illinois Supreme Court expressly adopted Federal Rule of Evidence 703 (basis of opinion testimony by experts) and Federal Rule of Evidence 705 (disclosure of facts or data underlying expert opinion), and drastically changed the use and approach of expert testimony at trial. Id. Wilson involved a medical negligence action and presented two issues to the supreme court. First, whether the trial court erred in admitting the plaintiff’s hospital records into evidence without requiring verification of the records by the testimony of the person who made the entries. Second, whether error was committed in permitting the defense expert witness to express his opinion in response to a hypothetical question based on those records. The Wilson court ruled that the hospital records were admitted into evidence without a proper foundation. Id. It further held that it was not necessary for the hospital records to be admitted in order for the defense expert to render a medical opinion. Id. at 192. The Illinois Supreme Court referred to its decision in People v. Ward, 61 Ill. 2d 559 (1975), which held that medical records may be used by an expert witness—who also happened to be a treating physician—in forming an opinion as to an accused defendant’s sanity even though the reports themselves were not admitted into evidence. Relying on Federal Rule of Evidence 703, the Wilson court reasoned that expert opinions may be based on facts not yet entered into evidence. Wilson, 84 Ill. 2d at 193. The Wilson court stated that “the key element in applying Federal Rule 703 is whether the information upon which the expert bases his opinion is of a type that is reliable.” Id.

In Wilson v. Clark, the Illinois Supreme Court expressly adopted Federal Rule of Evidence 703 (basis of opinion testimony by experts) and Federal Rule of Evidence 705 (disclosure of facts or data underlying expert opinion), and drastically changed the use and approach of expert testimony at trial.

Adoption of Federal Rule 703 The Illinois Supreme Court expressly adopted Federal Rule of Evidence 703 which permits an expert witness to give his opinion on the basis of facts which have not been admitted into evidence if they are of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject. Id. The Wilson court emphasized that Federal Rule of Evidence 703 makes no distinction between treating and non-treating experts. Id. The information upon which the expert’s opinions are based may be derived from three possible sources: (a) first hand observation; (b) presentations at trial such as hypothetical questions; and (c) presentation of data to the expert outside of the court and other than by his own perception. Id. The Wilson court held that due to the high reliability of hospital records, an expert may give his response to a hypothetical question based on these records, even if the records are not in evidence. Id. at 194. Adoption of Federal Rule 705 In Wilson, the supreme court also adopted Federal Rule of Evidence 705, which allows an expert to give his opinion without initially disclosing the facts

underlying it unless the court requires otherwise. Id. However, the expert may be required to disclose the underlying facts or data on cross-examination. Id. Under Federal Rule of Evidence 705, the burden is placed upon the adverse party during cross-examination to elicit the facts underlying the expert opinion. Id. Thus, the expert’s opinion may be based on first hand or second hand information. Id. The supreme court’s adoption of Federal Rules of Evidence 703 and 705 eliminated the time consuming process of asking expert witnesses long and complicated hypothetical questions that afford an opportunity to sum up the evidence in the middle of a case. Id. at 195.

Illinois Rules of Evidence Illinois Rule of Evidence 703 Based on the Federal Rules of Evidence model, the Illinois Supreme Court adopted the Illinois Rules of Evidence on September 27, 2010. The Illinois Rules of Evidence became effective on January 1, 2011. Like its federal counterpart, Illinois Rule of Evidence 703 states: The facts or data in the particular case upon which an expert — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 5

Feature Article | continued

bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing. If of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need not be admissible in evidence. Ill. R. Evid. 703. The rule expands the legally acceptable bases of expert opinions by allowing expert witnesses to base their opinion testimony on their regular and customary activities outside of the litigation context. The key requirement is reasonable reliance by the expert in their particular field. In other words, reasonable reliance may be established by considering the following: Do experts in this particular field regularly utilize or employ this process or methodology? Is the process by which the expert reached his opinion generally accepted in the community in which the expert practices his profession? Is the substance of the bases of the opinions reliable? Do experts in this field customarily rely on the same or similar information in reaching conclusions formulated for non-litigation purposes? Is the reliance by the subject expert in the case at bar reasonable?

6 | IDC QUARTERLY | First Quarter 2017

Illinois Rule of Evidence 705 Based on Federal Rule of Evidence 705, the Illinois rule permits an expert witness to offer his opinion without prior disclosure of the underlying facts, unless the court requires otherwise, and states in relevant part: The expert may testify in terms of opinion or inference and give reasons therefore without first testifying to the underlying facts or data, unless the court requires otherwise. The expert may in any event be required to disclose the underlying facts or data on cross-examination. Ill. R. Evid. 705. The burden is placed on the adverse party during crossexamination to elicit the facts underlying the expert opinion. Wilson, 84 Ill. 2d at 194. It should be noted that this aspect of the Wilson holding seldom becomes an issue at the trial or appellate levels because Illinois Supreme Court Rule 213(f)(3) requires that a controlled expert witness disclose the bases for the expert’s opinions. If the materials underlying the opinions are not disclosed during the discovery process, the proponent of the evidence runs the risk having the opinion or the bases for the opinion barred by the trial court. City of Chicago v. Anthony: Trial Court as Gatekeeper and the Concept of Trustworthiness Permitting the expert witness alone to determine whether his reliance is reasonable would allow any expert to control the admissibility of evidence. The Illinois Supreme Court has therefore emphasized that an expert’s statement

of reasonable reliance is only part of the analysis, and clarified the gatekeeping function of the trial court in City of Chicago v. Anthony, 136 Ill. 2d 169 (1990). In Anthony, the supreme court promulgated a two-prong test as to what an expert may use as the bases for an opinion. Specifically, the trial court is required to determine: Whether the underlying facts or data upon which an expert bases an opinion are of a type reasonably relied upon by experts in the particular field; and If the facts or data are not excluded by another rule of law applicable to the case or a competing policy interest. Anthony, 136 Ill. 2d at 184-85, 190. In other words, if the material upon which the expert bases his opinion is of the type customarily relied upon by experts and the material must be sufficiently trustworthy to make the expert’s reliance reasonable, then the information may be permitted to be presented to the jury. On the other hand, if another rule of law applicable to the case excludes the information sought to be relied on by the expert, the information may not be permitted to come before the jury under the guise of a basis for the opinion of the expert. Id. at 186. The opinion of an expert that the underlying facts or data upon which the expert seeks to base an opinion are of a type reasonably relied upon by experts in a particular field is one factor to be considered by the trial court in the exercise of its independent assessment about whether the reliance is reasonable. The Anthony ruling clarified that the trial court serves as a gatekeeper

to the trustworthiness of what experts may rely upon. Further, the trial court must determine whether there are any other restrictions as to what the expert may rely on. Id. If the expert relies on material that would not be independently admissible, the expert cannot present the material to the jury by simply saying that he reasonably relied on the material. To be clear, in Wilson, the supreme court held that it would be unnecessary for hospital records to be admitted when those records are used for the purpose of eliciting a medical opinion. Id. at 192. The Wilson court stated that under Federal Rule of Evidence 703, an expert can give opinion testimony which relies upon facts and data not admitted into evidence as long as the underlying information is of the type reasonably relied upon by experts in the particular field. Id. at 192-94. However, Federal Rule of Evidence 703, upon which the Wilson opinion was based, was subsequently amended. Illinois Rule of Evidence 703 did not adopt the third sentence of Federal Rule of Evidence 703 which was not present when the supreme court adopted Rule 703 in Wilson. The third sentence provides: Facts or data that are otherwise inadmissible shall not be disclosed to the jury by the proponent of the opinion or inference unless the court determines that their probative value in assisting the jury to evaluate the expert’s opinion substantively outweighs their prejudicial effect. Fed. R. Evid. 703. A distinction must be made between to what extent evidence is deemed admissible compared to what manner the evidence has been admitted. Wilson, 84 Ill. 2d 192-94. Facts or data

which have not been admitted can form the basis of the expert’s opinion if of a type reasonably relied upon by experts in the field. Id. at 193. If evidence is independently inadmissible, then by definition it is not reasonably reliable. For instance, in the case of Connelly v. General Motors Corp., the defendant manufacturer argued on appeal that its experts should have been allowed to testify that they relied on certain performance data to establish that the tire in question was not unreasonably dangerous. Connelly v. General Motors Corp., 184 Ill. App. 3d 378 (1st Dist. 1989). Relying on Wilson v. Clark, the defendant asserted that an expert can testify concerning the data upon which he based his opinion even though that data itself might not be admissible in evidence. Connelly, 184 Ill. App. 3d at 390. The Connelly court held that testimony concerning other automobile manufacturers was inadmissible “state of the art” evidence and was irrelevant to plaintiff’s case. Id. Hence, any reliance by defendant’s experts upon this inadmissible state of the art evidence would be deemed unreasonable. Id. The court held that the expert could not present inadmissible state of the art evidence to the jury as a basis for his opinion. Id. at 390-91. For example, statements barred by the Illinois Dead Man’s Act cannot serve as a basis for expert opinion testimony. Hanks v. Justus, 243 Ill. App. 3d 737, 740-41 (3d Dist. 1993). However, the appellate decisions in People v. Hooker, 2012 IL App (2d) 101007 and People v. Butler 2013 IL App (1st) 113606 confuse the distinction between facts or data not admitted into evidence versus inadmissible facts or data. The key distinction to keep in mind is that if evidence is not independently admissible, then it is not reasonably

reliable. The Wilson court interpreted Federal Rule of Evidence 703 to allow opinions based on facts not admitted into evidence. Wilson, 84 Ill. 2d at 193 (stating that both “Federal and State courts have interpreted Federal Rule 703 to allow opinions based on facts not in evidence.”). Similarly, in People v. Lovejoy, 235 Ill. 2d 97, 142 (2009), the court noted that it adopted Federal Rule of Evidence 703, which provided that an expert may give opinion testimony which relies upon facts and data not in evidence, as long as the underlying information is of the type reasonably relied upon by expert in the particular field. An expert cannot simply rely on inadmissible evidence as a basis for his opinion to satisfy the reasonable reliance requirement under Rule 703. The cases of People v. Hooker, 2012 IL App (2d) 101007 and People v. Butler, 2013 IL App (1st) 113606 relied on Illinois Rule of Evidence 703. These decisions add to the confusion between an expert’s reliance on inadmissible facts or data, as compared to facts or data which have not been admitted into evidence but would be deemed admissible. In fact, the second sentence of Illinois Rule of Evidence 703 is contradicted by the Illinois Supreme Court’s holding in Wilson v. Clark. Inadmissible evidence is inherently unreliable, and, therefore, cannot satisfy the reasonable reliance requirement under Wilson v. Clark and its progeny. Parameters of Wilson v. Clark When the facts or data upon which the expert relies meets the threshold requirements of Rule 703, and is not otherwise barred by Illinois Rule of Evidence 403 (exclusion of relevant — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 7

Feature Article | continued

evidence on grounds of prejudice, confusion, or waste of time), the inquiry then becomes how much, or to what extent, the expert may disclose underlying facts or data to the jury at trial. The facts or data upon which an expert relies, unless independently admitted, have no substantive value, and do not rise to the level of substantive evidence because the materials relied upon are still hearsay. Therefore, one cannot argue or use the material in any manner for the truth of the matter contained therein. Mayer v. Baisier, 147 Ill. App. 3d 150, 156-57 (4th Dist. 1986). In other words, where an expert forms an opinion based on underlying facts or data which have not been admitted into evidence, Rule 703 permits the expert to disclose (and the trial court to admit) those facts or data reasonably relied upon by the expert, but only for the limited purpose of supporting the expert’s opinion and allowing the expert to present the facts or data to assist the jury in understanding his testimony. Ill. R. Evid. 703. Allowing the expert to reveal the contents of the underlying facts or data upon which he has reasonably relied, affords the jury the opportunity to evaluate, and thus accept or reject the basis of the expert’s testimony. This distinction is critical as to how the underlying facts or data may be used during cross-examination and final argument. It is important that counsel seek a limiting instruction to restrict the evidence to its proper purpose and scope and instruct the jury accordingly. In People v. Ward, the court held that an expert may render opinions based on records compiled by others which had not been entered into evidence as long as they are of the type of records customarily relied upon by members of the medical profession. People v. Ward, 61 Ill. 2d 559, 567-68 (1975). Similarly, 8 | IDC QUARTERLY | First Quarter 2017

in People v. Anderson, the court followed the holding in Ward, and held that the expert was allowed to divulge the contents of the material the expert relied upon. People v. Anderson, 113 Ill. 2d 1, 9-12 (1986). Specifically, the Anderson court reasoned that without revealing what the expert relied upon, the jury would have no basis for evaluating the testimony and the opinion would sound like a “meaningless conclusion.” Anderson, 113 Ill. 2d at 9-12. Therefore, the basis of the opinion had to be revealed so that the jury could evaluate it, and so that the opinion would not sound like a “naked opinion” with no factual basis. The court in People v. Pasch, followed Anderson and reiterated that both the underlying facts and the conclusions reached by other physicians could be revealed to the jury. People v. Pasch, 152 Ill. 2d 133, 174-77 (1992). The obvious conclusion to be reached is that all of the material relied upon, including the opinions and conclusions reached by others, may be revealed to the jury. However, as previously stated, the trial court should give a limiting instruction. Pasch, 152 Ill. 2d at 177. Direct Examination: Materials on Which Experts Can Reasonably Rely Not all materials containing facts or data satisfy the reasonable reliance requirement of Illinois Rule of Evidence 703. Illinois courts have allowed expert witnesses to rely on a multitude of sources of information. In Wilson v. Clark, the expert was allowed to rely on hospital records. Wilson, 84 Ill. 2d at 194 (1981). Likewise, in the case of Kinsey v. Kolber, over defendant’s objection, plaintiff’s expert read aloud the findings of another doctor to whom the expert had referred the plaintiff for psychological

testing. Kinsey v. Kolber, 103 Ill. App. 3d 933, 951-52 (1st Dist. 1982). Relying on People v. Ward, the Kinsey court allowed the doctor to testify based on records or reports made by others who did not testify if such records or reports are of a type customarily utilized by the medical profession. Kinsey, 103 Ill. App. 3d at 952. Moreover, Illinois courts have allowed expert witnesses to rely on discovery depositions in support of their opinions. Thome v. Palmer, 141 Ill. App. 3d 92, 94-95 (3d Dist. 1986). Likewise, expert witnesses have been allowed to read to the jury portions of defendant’s safety manual. Colella v. JMS Trucking Co. of Ill., 403 Ill. App. 3d 82, 91 (1st Dist. 2010). In addition, hospital bylaws, policies, and procedures meet the reasonable reliance requirement in cases of institutional negligence. Darling v. Charleston Cmty. Mem. Hosp., 33 Ill. 2d 326 (1965). Materials Which do not Meet the Reasonable Reliance Requirement Illinois Courts have also determined that certain facts or data cannot be reasonably relied upon by expert witnesses. A plaintiff’s history as to the details of how an accident occurred cannot be read to a jury. Reeves v. Brno, Inc., 138 Ill. App. 3d 861, 868-69 (2d Dist. 1985); see also Bailey v. City of Chi., 116 Ill. App. 3d 862 (1st Dist. 1983). Likewise, reports prepared solely for litigation purposes do not satisfy the reasonable reliance requirement of Rule 703. Dugan v. Weber, 175 Ill. App. 3d 1088, 1098-99 (1st Dist. 1988); see also Kim v. Nazarian, 216 Ill. App. 3d 818, 826-27 (2d Dist. 1991). Further, an article published in a medical journal by plaintiff’s treating physician used solely to bolster the opinion of the doctor, by

showing that he and other doctors had previously reached the same conclusion in a case report that was accepted and published in a medical journal was not proper. Solis v. BASF Corp., 2012 IL App (1st) 110875, ¶ 83. The content of published material to be read to the jury must be reasonably relied upon as a basis for the expert’s opinion, not merely to corroborate that opinion. Solis, 2012 IL App (1st) 110875, ¶ 83. Scope of Cross-Examination under Wilson v. Clark The next issue to be addressed is whether an expert witness can avoid being cross-examined on Wilson v. Clark materials by claiming he has never reviewed the materials or has claimed that he never knew that they had existed. The unequivocal answer under Illinois case law is no. In People v. Pasch, the court found that a defense psychiatrist could be cross-examined regarding psychological reports of other psychiatrists who had not testified but who had concluded that defendant was sane even though the defense experts stated that he neither reviewed nor relied upon the reports. Pasch, 152 Ill. 2d at 178. The Pasch court held that it was proper for the trial court to allow cross-examination of the defense psychiatrist as to the material he did not review and was unaware of. Id. at 177-80. The defense psychiatrist could be cross-examined as to how the material would affect his opinions and to show the thoroughness or selectivity of his review of the materials. Id. The defense expert could be cross-examined as long as the material has been determined to be of the type reasonably relied upon by similar experts and is trustworthy. The determination is to be made by the trial court. Id. at 180. Without this type of

cross-examination, an expert can bootstrap himself out of cross-examination by doing a very selective review and ignoring items which would not support the expert’s opinions. For a discussion of this issue. Piano v. Davison, 157 Ill. App. 3d 649, 671-72 (1st Dist. 1987). There is no question that an expert may be cross-examined about records he has reviewed and relied upon. Likewise, the expert may be cross-examined on records he has reviewed, but on which he did not rely. In addition, an expert may be cross-examined about records he has neither reviewed nor relied upon if offered to affect the basis of the opinion. However, the attorney conducting the cross-examination may not use materials to introduce hearsay evidence into the record. Tsoukas v. Lapid, 351 Ill. App. 3d 372 (1st Dist. 2000). In Jager v. Libretti, the plaintiff claimed a neck injury when his car was hit from behind by another vehicle. Jager v. Libretti, 273 Ill. App. 3d 960 (1st Dist. 1995). The emergency room records made no reference of any neck injury. Id. at 962. The trial court denied defense counsel’s attempt to cross-examine the treating physician by reading passages from records the doctor neither reviewed nor relied upon. Id. On appeal the issue was whether the treating physician could be cross-examined regarding records he had neither reviewed nor relied upon. Id. The Jager court held that a treating physician could be cross-examined about records he has neither reviewed nor relied upon if the questions on cross-examination are designed to test the expert’s opinion by asking if other facts, data or opinions would affect or alter the treating physician’s opinion. Id. at 965-66. In other words, if those reports are truly used as tools of impeachment, rather than veiled attempt to slip hearsay

evidence into the trial, then the crossexamination is proper. Another case which addressed the same basic issue was Rios v. City of Chicago, 331 Ill. App. 3d 763 (1st Dist. 2002). The Rios case involved a slipand-fall on ice. The trial court allowed plaintiff’s expert to be cross-examined from a discovery deposition where the witness had testified that it was sleeting and there was ice on the streets and sidewalks. Rios, 331 Ill. App. 3d at 773. The plaintiff’s expert testified that he was not aware of the witness’s testimony, nor did he agree with the witness’s testimony on the weather conditions at the time of the plaintiff’s fall. Id. at 766. The Rios court held that it was error to allow the use of the deposition testimony to cross-examine the plaintiff’s expert. Id. at 773-74. Specifically, it found that the hearsay statements of the occurrence witness were not properly used as impeachment, but rather as a Trojan horse used to slip hearsay evidence into the trial. Id. at 773. The Rios court reasoned that where the statements were otherwise inadmissible and no foundation was laid to support a reasonable reliance by another expert at trial, it was an abuse of discretion to allow the statements to be admitted for the purpose of impeachment on cross-examination. Id. at 774. It should be noted that in Rios, not only did the court err in admitting evidence without a proper foundation, but the trial court also failed to provide the jury with an appropriate limiting instruction on the evidence. Id. Furthermore, defense counsel improperly argued the evidence substantively both in opening and closing argument. These errors resulted in a reversal and remand for a new trial. Id. An expert can be cross-examined on material he has reviewed, but did not agree with or rely upon. In HalFirst Quarter 2017 | IDC QUARTERLY | 9

Feature Article | continued

leck v. Costal Building Maintenance, Co., plaintiff’s treating physician was cross-examined with another doctor’s report that was in his file. Halleck v. Costal Bldg. Maint., Co., 269 Ill. App. 3d 887 (2d Dist. 1995). Plaintiff ’s treating physician agreed with the other doctor’s diagnosis, but disagreed with the conclusion about the plaintiff’s ability to return to regular duty. Id. at 897. The Halleck court stated that the scope of cross-examination is not defined by material actually relied upon by an expert in forming his conclusions. Id. at 898. Instead, a trial court may permit cross-examination on materials reviewed by an expert, even though the expert did not rely on those same materials. Id. In Halleck, the defendant was properly allowed to cross-examine the plaintiff’s treating physician as to which aspects of the report he accepted and which aspects he had rejected. Id. at 897-98. In summary, an expert can be crossexamined by using any material that the court has determined to be reasonably reliable, whether the expert relied on the material, did not rely on the material, read the material but did not rely on it, or was unaware of the existence of the material. Therefore, anything that is reasonably reliable for direct examination is likewise reasonably reliable for cross-examination. Use of Authoritative Texts Authoritative texts, articles and treatises can be used on direct examination to explain the basis of an expert’s opinion, and they can be used on crossexamination to impeach an opponent’s expert. Once again, it is important to emphasize that authoritative texts cannot be used substantively, i.e., for the truth of the matter asserted, because they are 10 | IDC QUARTERLY | First Quarter 2017

hearsay. Walski v. Tiesenga, 72 Ill. 2d 249, 258-59 (1978). Before authoritative texts, articles and treatises can be used, a proper foundation must be established that these materials are authoritative. Bowman v. Univ. of Chi. Hosps., 366 Ill. App. 3d 577, 587-88 (1st Dist. 2006). Under Bowman, it is sufficient for an expert to testify that the text is “standard” or “well-respected” or “very good” and a “good source.” Id. at 587-88. The issue which then arises is whether the expert can read or show the jury the relevant portions of the authoritative text, article, or treatise. Prior to People v. Anderson, the answer was no because the material was determined to be hearsay. People v. Anderson, 113 Ill. 2d 1 (1986). However, subsequent to Anderson, the case law permits the jury to hear or see the material relied upon because the material is not being offered substantively (to prove the truth of the matter asserted). People v. Lovejoy, 235 Ill. 2d 97, 142 (2009). Although the material is hearsay, it is merely being offered as the basis of an opinion. Thus, today, the witness may read or show the relevant portions of the authoritative text, article, or treatise upon which the expert has relied. Pasch, 152 Ill. 2d at 133. An expert must first opine that the text is authoritative in order to use the text for cross-examination purposes unless the expert witness being crossexamined relied on it. It should be emphasized that any opinion that the text or article is authoritative must be disclosed under Illinois Supreme Court Rule 213(f). Iser v. Copley Mem. Hosp., 288 Ill. App. 3d 408 (3d Dist. 1997). Nearly every case that has dealt with the use of texts for cross-examination purposes has required an opinion that the text is authoritative. However, there is no legal basis for this requirement when

the text or article is being relied upon as the basis for an opinion. The reason is that the text or article cannot be used substantively. Conclusion The adoption of Federal Rules of Evidence 703 and 705 by the Illinois Supreme Court in Wilson v. Clark laid the groundwork for a more practical and efficient use of expert testimony at trial. Expert testimony can be based on information not in evidence as long as the facts or data of those materials are reliable and customarily relied on by experts in the particular field. The gatekeeper function of the trial court is integral to understanding the parameters of Wilson v. Clark. Significantly, Wilson v. Clark facilitated greater consistency and conformity between the courtroom and the practices of experts outside of the courtroom. Adoption of Federal Rules of Evidence 703 and 705 sharply curtailed the need for complicated and difficult hypothetical questions at trial and helped facilitate greater judicial efficiency by eliminating the need for multiple foundational witnesses. Federal Rules of Evidence 703 and 705 can now be found in the Illinois Rules of Evidence. Prior to January 1, 2011, Illinois evidence law was found in various statutes, Illinois Supreme Court Rules, and case law. The Illinois Rules of Evidence further promote judicial efficiency and economy which began with the seminal case of Wilson v. Clark.

About the Authors

Health Law Roger R. Clayton, Mark D. Hansen and J. Matthew Thompson Heyl, Royster, Voelker & Allen, P.C., Peoria

Hospitals Beware: Apparent Agency Claims May Arise From Treatment Rendered at Offsite, Independent Clinics In this column, we often write about new decisions affecting apparent agency claims because of the significant impact those decisions can have on litigation involving hospitals and other health care institutions. The recent decision in Yarbrough v. Northwestern Memorial Hospital, 2016 IL App (1st) 141585, appeal allowed (Nov. 23, 2016), is no exception, and could significantly expand the scope of potential apparent agency claims. Before Yarbrough, almost every apparent agency case related to services rendered by a health care provider somewhere within the hospital. The only exception was Malanowski v. Jabamoni, 293 Ill. App. 3d 720 (1st Dist. 1997), where the court found the plaintiff could maintain an apparent agency claim against Loyola University for care rendered by an independent contractor at Loyola University Mulcahy Outpatient Center, an outpatient center owned and operated by Loyola. The decision in Yarbrough goes further however, finding that a plaintiff may maintain an apparent agency claim against a hospital for treatment rendered at an offsite, independent clinic by employees of that independent clinic. This potentially expands apparent agency claims well beyond the hospital itself, to clinics or other facilities not owned by the hospital. All hospitals should take note of this decision and develop strategies for protecting against similar claims.

Background Erie Family Health Center, Inc. (Erie) is a federally funded, not-for-profit clinic that is not owned nor operated by Northwestern Memorial Hospital (Northwestern). Yarbrough, 2016 IL App (1st) 141585, ¶ 5. Christina Yarbrough went to Erie after searching the internet for a clinic offering free pregnancy testing. After informing Yarbrough that she was pregnant, Erie healthcare workers asked Yarbrough where she would receive prenatal care. Id. They advised Yarbrough that if she obtained prenatal care at Erie, she would deliver at Northwestern and would receive additional testing, such as ultrasounds, at Northwestern. She was also given a pamphlet for scheduling tours and classes at Northwestern. In her complaint, Yarbrough alleged that she believed that if she received prenatal care from Erie, she would be receiving care from Northwestern-employed health care providers. Id. When she was eight weeks pregnant, Yarbrough went to the emergency department at an unrelated hospital, where an ultrasound was performed. She was diagnosed with a bicornuate uterus, and that hospital informed Erie of the diagnosis. Id. ¶ 6. Days later, Erie performed a follow-up ultrasound and Erie’s providers informed the plaintiff she had a shortened cervix, but not a

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.

— Continued on next page

First Quarter 2017 | IDC QUARTERLY | 11

Health Law | continued

bicornuate uterus. No other follow-up regarding this condition was performed and Yarbrough continued to receive prenatal care at Erie. Id. Yarbrough had her 20-week ultrasound at Northwestern and a physician employed by Northwestern Medical Faculty Foundation interpreted that ultrasound. Id. The plaintiffs also filed a claim against this interpreting physician and Northwestern Medical Faculty Foundation, which was unrelated to this appeal. Id. ¶ 8, n.1. After the baby was delivered at 26 weeks, the plaintiffs filed a complaint alleging the premature delivery was the result of a failure to diagnose the bicornuate uterus. Id. In the complaint, the plaintiffs alleged that Erie and its providers were the apparent agents of Northwestern. Id. ¶ 8. In support of this claim, the plaintiffs alleged several “close ties” between Erie and Northwestern. Id. ¶ 9. These close ties, which the court ultimately found sufficient to defeat Northwestern’s motion for summary judgment as to the apparent agency claim, are set forth in detail below. General Law Applicable to Apparent Agency Claims The Illinois Supreme Court adopted the doctrine of apparent authority or apparent agency in Gilbert v. Sycamore Municipal Hospital, 156 Ill. 2d 511, 525 (1993), holding that hospitals may be vicariously liable for negligent medical treatment rendered in the hospital by an independent contractor. The Gilbert court established a three-factor test a plaintiff must satisfy for the hospital to be liable for the acts of an independent contractor: (1) the hospital, or its agent, acted in a manner that would lead a reasonable person to 12 | IDC QUARTERLY | First Quarter 2017

conclude that the individual who was alleged to be negligent was an employee or agent of the hospital; (2) where the acts of the agent create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence. Gilbert, 156 Ill. 2d at 525.

Apparent Agency with an Offsite, Independent Clinic The Yarbrough court first rejected the idea that liability for apparent agency is limited to treatment at a hospital, or even a facility owned by a hospital. Instead, the court found that the “key determinant” is whether the hospital’s conduct caused the patient to rely upon the hospital for treatment, rather than the physician. Yarbrough, 2016 IL App (1st) 141585, ¶ 40. In doing so, the court relied almost exclusively on Malinowski, which found nothing that would bar an

The first two factors, typically grouped together by the appellate courts, are referred to jointly as the “holding out” factor, and the focus is whether the patient knew or should have known the physician was an independent contractor.

The first two factors, typically grouped together by the appellate courts, are referred to jointly as the “holding out” factor, and the focus is whether the patient knew or should have known the physician was an independent contractor. LambRosenfeldt v. Burke Med. Grp., Ltd., 2012 IL App (1st) 101558, ¶ 26. A hospital will not be liable if a patient knows or should have known that the treating physician was an independent contractor. Gilbert, 156 Ill. 2d at 522. If a patient “is in some manner put on notice of the independent status of the professionals with whom he might be expected to come into contact,” the hospital must prevail. York v. RushPresbyterian-St. Luke’s Med. Ctr., 222 Ill. 2d 147, 182 (2006).

apparent agency claim “merely because the negligent conduct of the physician did not occur in the emergency room or some other area within the four walls of the hospital.” Id. ¶ 37, 40 (citing Malinowski v. Jabamoni, 293 Ill. App. 3d 720, 727 (1st Dist. 1997)). The Yarbrough court itself noted that in Malanowski, the allegedly negligent acts occurred at “an outpatient clinic owned and operated by Loyola University of Chicago (Loyola) called the ‘Loyola University Mulcahy Outpatient Center.’” Yarbrough, 2016 IL App (1st) 141585, ¶ 38 (citing Malinowski, 293 Ill. App. 3d at 722). The Yarbrough court further acknowledged keys to the Malanowski court’s determination

included that “the outpatient center bore Loyola’s name, it held itself out as a direct provider of health care services, it had introduced the decedent to [the alleged apparent agent physician], the decedent was also treated by other physicians at the center, and payment for [the alleged apparent agent physician’s] services were made to the outpatient center.” Yarbrough, 2016 IL App (1st) 141585, ¶ 39 (citing Malinowski, 293 Ill. App. 3d at 728). Yet, the Yarbrough court rejected Northwestern’s argument that Malanowski was distinguishable, given that Erie was a separate corporate entity from Northwestern and not located in a Northwestern-owned facility. Yarbrough, 2016 IL App (1st) 141585, ¶ 40. Instead, the court found that the plaintiff could proceed with a claim that “there were such close ties between [Northwestern] and Erie, despite being separate entities located in separate facilities, that material issues of fact exist[ed] regarding the elements of apparent authority.” Id.







• •



Applying Gilbert to the Yarbrough Facts The court found that material questions of fact existed as to whether Northwestern and Erie held themselves out as having such close ties that a reasonable person would conclude that an agency relationship existed, and whether Yarbrough reasonably relied upon Northwestern or Erie. Id. ¶ 50. With regard to the first two factors, jointly referred to as the “holding out” factor, the court recited a number of unique facts revealed during discovery that supported a “holding out,” including: •

Northwestern promoted itself as a community-oriented hospital that



collaborates with neighborhood centers, including Erie, to make quality health care available to the needy; Northwestern publicized its relationship with Erie on its website and in its annual reports, community service reports, and other press releases; Northwestern promoted that 11.2% of babies delivered at Northwestern in 2006 received prenatal care at Erie and that 100% of prenatal patients at Erie delivered at Northwestern; Northwestern’s website contained a link to Erie’s website and represented that Erie was one of “Our Health Partners” and promoted a formal, longstanding affiliation with Erie; two Northwestern representatives sit on Erie’s board; Erie was founded “as a project of volunteer physicians from Northwestern Memorial and Erie Neighborhood House”; collaborative efforts between Northwestern and Erie in providing care in the areas of diabetes and women’s health and promotion of these efforts; and Northwestern continuously contributed financially to Erie, provided information technology assistance to Erie, and did not charge Erie patients for care at Northwestern.

Id. ¶¶ 52-53. The court also pointed to an affiliation agreement between Northwestern and Erie under which Northwestern was to be the primary site for acute and specialized hospital care for Erie patients. The affiliation agreement also called for a Northwestern representative to sit on Erie’s board, the creation of a

community advisory committee, appointment of Erie’s executive director to the committee, and joint marketing efforts relating to the affiliation. Id. ¶ 53. Further, the court pointed to actions by Erie that could support the holding out element. Yarbrough testified that at her initial appointment at Erie, she was told that if she received her prenatal care from Erie, she would deliver at and receive additional testing at Northwestern. She was also given pamphlets about delivering at Northwestern. The court also found it significant that Erie’s providers did not explicitly tell Yarbrough they were not employed by Northwestern. Id. ¶ 54. Finally, Erie’s website promoted Northwestern as “Our Partner,” indicated that Erie partnered with Northwestern (among other hospitals) to offer specialized medical care not available at Erie, and stated that all Erie physicians had faculty status at Northwestern University Feinberg School of Medicine. At least one Northwestern official acknowledged knowing about Erie’s website discussing the affiliation, but that Northwestern never told Erie to promote the affiliation. Id. ¶ 55. The court found it irrelevant whether Yarbrough actually observed any of these indicia of “holding out.” The court found this to be an objective, rather than subjective inquiry. Id. ¶ 56.This is peculiar, because the court immediately turned to the third Gilbert factor—whether “the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence.” Id. ¶ 58 (citing Gilbert, 156 Ill. 2d at 525). Yarbrough admitted at her discovery deposition that no one at Erie or at Northwestern told her they were part of the same entity or had a special connection. Yarbrough, 2016 IL — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 13

Health Law | cont’d

App (1st) 141585, ¶¶ 18, 21. The plaintiff even admitted that if she had gone to another physician who told her she would likely deliver at another hospital, she would have been happy with that as well. Id. ¶ 21. Yet, finding sufficient evidence to proceed to trial on this factor, the court focused on Yarbrough’s initial visit to Erie. Yarbrough testified to being told that if she received prenatal care at Erie, she would most likely deliver at and receive additional testing at Northwestern, and she was given pamphlets about delivering at Northwestern. Id. ¶ 60. Yarbrough testified that is when she chose Erie, and she was under the impression that Erie and Northwestern were the same entity, most likely because of the physician’s delivery privileges at Northwestern. Yarbrough testified that her belief was reaffirmed when she was sent to Northwestern for her 20-week ultrasound. Id. The court found there was an issue of fact because “Yarbrough indicated that her decision to utilize Erie for prenatal treatment was not based on her desire to receive treatment from a particular doctor at Erie or Erie itself, but was instead based on her expressed preference for a particular hospital, i.e., [Northwestern], which she deemed to be a ‘very good’ hospital.” Id. ¶ 61. The court distinguished these facts from a situation where the “patient went to the defendant hospital because his long-time personal physician directed him to, even though he did not like that hospital, and the patient trusted his physician completely and would have done ‘whatever he told [me] to do.’” Id. ¶ 63 (citing Butkiewicz v. Loyola Univ. Med. Ctr., 311 Ill. App. 3d 508, 512-14 (1st Dist. 2000)). Luckily, this appears to be dicta because it would be a very troubling standard for the court to espouse. 14 | IDC QUARTERLY | First Quarter 2017

Yarbrough presents a troubling extension of the apparent authority doctrine.

Whether a plaintiff thinks a hospital is a good or bad hospital has nothing to do with whether the actions of a hospital or actions of an alleged apparent agent caused a patient to believe the alleged apparent agent was a hospital employee. Conclusion Yarbrough presents a troubling extension of the apparent authority doctrine. In Gilbert, the Illinois Supreme Court was concerned about a situation where “the public is generally unaware of whether the staff in an emergency room is comprised of independent contractors or employees of the hospital, and absent a situation where a patient is somehow put on notice of a doctor’s independent status, a patient generally relies on the reputation of the hospital and reasonably assumes that the staff is comprised of hospital employees.” Yarbrough, 2016 IL App (1st) 141585, ¶ 32 (citing Gilbert, 156 Ill. 2d at 521). The same concern is not implicated when a patient presents to an independent clinic that is not located in a building owned by the hospital. Under such circumstances, there is no reason for a patient to generally rely upon the reputation of the hospital or assume the staff is comprised of hospital employees. Moreover, the hospital has much less opportunity to control what information is conveyed or not conveyed to a patient about any relationship with the hospital. Additionally, the courts should encourage institutions to assist clinics

like Erie that provide critical medical services to those in need. Exposing institutions to liability for contributions and participation in clinics like Erie will only discourage future participation, creating an even greater shortage of care for the under-served. Fortunately, the Illinois Supreme Court recently granted Northwestern’s Petition for Leave to Appeal. Yarbrough v. Northwestern Mem. Hosp., No. 121367, 65 N.E.3d 847 (Table) (Nov. 23, 2016). Hopefully, the Illinois Supreme Court will recognize the unfair burden placed on hospitals by such an expansion of the apparent authority doctrine, and reverse the appellate court’s decision. However, hospitals should understand the factors that were significant to the appellate court’s determination that this apparent agency claim could proceed to trial. If a hospital has a relationship with a clinic similar to that between Erie and Northwestern, it should take steps to protect itself from liability for the clinic’s actions. For instance, if an affiliation agreement exists, the hospital might insist that the clinic include in its consent to treatment that none of the clinic’s providers are employees of the hospital. The hospital should also consider what it and the clinic are allowed to publicize about the relationship between the two, including on their respective websites.

Product Liability Ryan M. Frierott Goldberg Segalla LLP, Chicago

First District Affirms Trial Court’s Jurisdiction Over Drug Manufacturer For Conducting Clinical Trial in Illinois Personal jurisdiction plays a vital role in every tort action. In Illinois, when a corporation purposely avails itself to the privileges and benefits of the state, minimum contacts exist making it reasonable for an Illinois court to exercise jurisdiction over the corporation. M.M. v. GlaxoSmithKline LLC, 2016 IL App (1st) 151909. In M.M., eight minors from six different states filed a products liability suit in the Circuit Court of Cook County, Illinois, alleging they suffered catastrophic birth defects as a result of their mothers’ ingestion of Paxil, a drug manufactured by the defendant. M.M., 2016 IL App (1st) 151909, ¶ 1. Two of the plaintiffs resided in Illinois, two resided in Florida, and the remaining four resided in Colorado, Virginia, Michigan, and Wisconsin. Id. ¶ 5. The defendant, a Delaware limited liability company, with its principal place of business in Delaware, maintained its corporate and administrative headquarters in Pennsylvania and North Carolina. Id. ¶ 6. The defendant moved to dismiss the out-of-state plaintiffs’ claims arguing that the court lacked personal jurisdiction. Id. ¶ 1. First, the defendant asserted that Illinois lacked specific jurisdiction because the out-of-state plaintiffs’ claims did not arise from its Illinois activities. Id. ¶ 14. Second, the defendant claimed that its actions in Illinois were not the “but for” cause of the alleged harm: plaintiffs did not serve as study subjects in Illinois, did not receive Paxil prescriptions in Illinois, did not ingest Paxil in Illinois, and did

not suffer injury from Paxil in Illinois. Id. ¶ 14. Lastly, the defendant argued that the out-of-state plaintiffs could not create personal jurisdiction by tacking their claims onto those of the two Illinois plaintiffs. Id. ¶ 14. In their response, the plaintiffs alleged their claims arose directly out of the defendant’s purposeful contacts with Illinois. Id. ¶ 18. Specifically, the plaintiffs asserted that the defendant conducted 18 to 21 Paxil clinical trials in Illinois, conducted by 17 physicians in Illinois on a continuous basis from 1985 to 2003 and collaborated on another Paxil clinical trial that occurred exclusively in Illinois between 2001 and 2003. Id. While neither party argued for a brightline test regarding the number of clinical trials that would give rise to personal jurisdiction, the defendant argued that 17 clinical trial were insufficient. Id. ¶ 23. The plaintiffs, alternatively, argued that 17 clinical trials were sufficient to establish personal jurisdiction. Id. The trial court denied the defendant’s motion to dismiss. Id. ¶ 27. In support, the court held that the defendant manufacturer purposefully availed itself of the state’s benefits. Id. The defendant appealed the court’s denial of its motion to dismiss pursuant to Illinois Supreme Court Rule 306(a)(3). Id. ¶ 29. Did The Trial Court Err? In reviewing the lower court’s ruling, the Illinois Appellate Court First District applied a two-prong test for

specific personal jurisdiction: (1) the corporate, nonresident defendant must have minimum contacts with Illinois by (a) purposely directing its activities at the state, and (b) that plaintiffs’ claims arose from, or are related to, those contacts with Illinois; and (2) it must be reasonable for Illinois to exercise jurisdiction over the defendant. Id. ¶ 44. The First District began by looking at the purposeful activities of the defendant in Illinois. Id. ¶ 49. The court determined that, because it contracted with 17 Illinois physicians, across 10 Illinois cities, in order to conduct at least 18 Paxil trials in Illinois, the defendant had continuous purposeful activities within the state. Id. ¶ 49 . Next, with respect to plaintiffs’ claims arising from the defendant’s contact with Illinois, the First District accepted the plaintiffs’ causation theory that their children were born with serious birth defects due to deficiencies with Paxil’s warning label. Id. ¶ 52. The plaintiffs’ alleged the label failed to warn mothers of the association between the drug and birth defects, and since the label was partly the result of the Illinois clinical trials, plaintiffs’ claims—at least in part—arose from the defendant’s acts and omissions in Illinois. Id. — Continued on next page

About the Author Ryan M. Frierott is a partner in Goldberg Segalla LLP’s Chicago office. He focuses his litigation practice in the fields of products liability, toxic torts, complex insurance coverage, and professional liability. He has represented clients in state and federal courts throughout the United States, and has extensive experience defending cases involving fires, product defect, expert witness challenges, and toxic tort exposure.

First Quarter 2017 | IDC QUARTERLY | 15

Product Liability | continued

Lastly, the First District held that it was reasonable to require the defendant to litigate in Illinois because the state had an interest in resolving litigation that stemmed—in part—from clinical trials that were held in Illinois and conducted by Illinois physicians on Illinois subjects. Id. ¶ 75. Moreover, even if the out-of-state plaintiffs’ claims were dismissed, the defendant would still be required to litigate the same issues in Illinois, as the defendant did not move to dismiss the Illinois plaintiffs’ claims. Id. Certainly, litigating the same issues against the same defendant in multiple different states would be an inefficient judicial resolution, run the risk of imposing inconsistent verdicts, and be costly. Id. After balancing the burden on the defendant to litigate in Illinois, the state’s interests in resolving the dispute and the interests of the plaintiffs to obtain relief, the First District affirmed the denial of the defendant’s motion to dismiss finding that the out-of-state plaintiffs made a prima facie showing that Illinois had specific jurisdiction over the defendant manufacturer. Id. ¶ 80. In affirming the district court’s denial of the defendant’s motion to dismiss, the First District did not set a bright-line rule for how many clinical trials a drug manufacturer must conduct in Illinois in order for the state to exercise personal jurisdiction over it. Given the prevalence of lawsuits involving side effects from the use of prescription drugs, this decision is significant. In light of M.M., drug manufacturers conducting clinical trials in Illinois must prepare for the possibility of litigation in the state, even where the relationship between the defendant’s conduct in the state and the harm alleged is weak.

16 | IDC QUARTERLY | First Quarter 2017

Civil Practice and Procedure Donald Patrick Eckler and Matthew A. Reddy Pretzel & Stouffer, Chartered, Chicago

An Outside Bet: Reduction in the Amount of Recovery in Medical Malpractice Cases Defense practitioners pride themselves on the ability to challenge the plaintiff’s claims. Whether on account of strategy or hubris, defense counsel often focus their energy on contesting wrongdoing and sometimes ignore damages. In a prior article, Donald Patrick Eckler & Matthew A. Reddy, Best Laid Plans: The Continued Uncertainty in the Admissibility of Medical Bills, IDC QUARTERLY, Vol. 25, No. 2, at 57-61 (2015), we discussed the mechanisms that defense attorneys can use to limit admissible damages from an evidentiary basis at trial. There is, however, a mechanism by which a defense attorney in a medical malpractice suit may demand a reduction in the amount of recovery following a trial. A statutory exception to the collateral source rule exists in the Illinois Code of Civil Procedure at 735 ILCS 5/2-1205. This section allows a medical malpractice judgment to be reduced by the medical charges associated with a claim. 735 ILCS 5/21205; Bloome v. Wiseman, Shaikewitz, McGivern, Wahl, Flavin & Hesi, P.C., 279 Ill. App. 3d 469, 481 (5th Dist. 1996). Section 2-1205 was enacted to reduce the costs of malpractice actions by eliminating duplicative recoveries. DeCastris v. Gutta, 237 Ill. App. 3d 168, 175 (2d Dist. 1992). The savvy defense attorney should be aware of the potential benefits and limitations of this statutory mechanism.

At issue is the interpretation of section 2-1205 of the Code, which states: An amount equal to the sum of (i) 50% of the benefits provided for lost wages or private or

About the Authors Donald Patrick Eckler is a partner at Pretzel & Stouffer, Chartered, handling a wide variety of civil disputes in state and federal courts across Illinois and Indiana. His practice has evolved from primarily representing insurers in coverage disputes to managing complex litigation in which he represents a wide range of professionals, businesses and tort defendants. In addition to representing doctors and lawyers, Mr. Eckler represents architects, engineers, appraisers, accountants, mortgage brokers, insurance brokers, surveyors and many other professionals in malpractice claims. Matthew A. Reddy is a trial attorney with Pretzel & Stouffer, Chartered. Prior to joining the firm, Mr. Reddy worked at the City of Chicago’s Department of Law, where he tried numerous Cook County Law Division jury trials, including cases involving claims of malicious prosecution, battery, and false imprisonment against Chicago Police Department officers. He also tried numerous cases involving premises liability and motor vehicle collisions. While at the City, Mr. Reddy additionally handled a substantial caseload of worker’s compensation and administrative review files.

governmental disability income programs, which have been paid, or which have become payable to the injured person by any other person, corporation, insurance company or fund in relation to a particular injury, and (ii) 100% of the benefits provided for medical charges, hospital charges, or nursing or caretaking charges, which have been paid, or which have become payable to the injured person by any other person, corporation, insurance company or fund in relation to a particular injury, shall be deducted from any judgment in an action to recover for that injury based on an allegation of negligence or other wrongful act, not including intentional torts, on the part of a licensed hospital or physician provided however that: Application is made within 30 days to reduce the judgment; Such reduction shall not apply to the extent that there is a right of recoupment through subrogation, trust agreement, lien, or otherwise; The reduction shall not reduce the judgment by more than 50% of the total amount of the judgment entered on the verdict;

While at first glance, the language of this statue seems clear, interpretations of it have been anything but. As discussed below, different Illinois appellate districts have reached starkly disparate decisions regarding its application. Moreover, the Illinois Supreme Court has not yet provided definitive guidance.

or death or to be paid by the plaintiff in the future for such benefits; and There shall be no reduction for charges paid for medical expenses which were directly attributable to the adjudged negligent acts or omissions of the defendants found liable. 735 ILCS 5/2-1205. While at first glance, the language of this statue seems clear, interpretations of it have been anything but. As discussed below, different Illinois appellate districts have reached starkly disparate decisions regarding its application. Moreover, the Illinois Supreme Court has not yet provided definitive guidance. Practitioners are thus left with an unreliable tool to reduce a plaintiff’s overreaching damages claim. However, with appropriate and timely discovery, judgment reduction may be achievable. Perkey v. Portes-Jarol

The damages awarded shall be increased by the amount of any insurance premiums or the direct costs paid by the plaintiff for such benefits in the 2 years prior to plaintiff’s injury

In Perkey v. Portes-Jarol, following a verdict of $600,000 in the plaintiff’s favor, with $310,000 of that amount for medical expenses, the defendant claimed that under section 2-1205 it was entitled

to a reduction of the judgment. Perkey v. Portes-Jarol, 2013 IL App (2d) 120470, ¶ 76. The defendants sought a reduction in an amount equal to 100% of the medical benefits “which have been paid, or which have become payable to the injured party by any insurance company or fund in relation to a particular injury,” subject to the limitation that the reduction was limited to 50% of the gross judgment. 735 ILCS 5/2-1205. The plaintiff argued in response that there was a right of recoupment by Blue Cross Blue Shield and therefore, under the statute, a reduction would not apply. Perkey, 2013 IL App (2d) 120470, ¶ 81. Notably, it is the right of recoupment rather than the perfection of that right that bars a setoff. York v. El-Ganzouri, 353 Ill. App. 3d 1, 22 (1st Dist. 2004). However, the defendants countered that unlike the defendant in York, they were able to show the amount of the medical expenses paid and the amount of the lien. Perkey, 2013 IL App (2d) 120470, ¶ 84. In response to the defendants’ motion, plaintiff also included an affidavit attaching a “reimbursement provision” which was part of his health insurance policy. Id. ¶ 80. The plaintiff also included a letter from his insurer stating that his health plan had a “reimbursement — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 17

Civil Practice and Procedure | continued

and/or subrogation provision” and that the total amount of benefits provided was $134,933.85. Id. ¶ 81. In their reply, and based on the plaintiff’s admission that the lien/benefits paid were limited to $134,933.85, the defendants amended their request and asked the court to reduce the judgment by $174,066.15, the difference between the $310,000 awarded by the jury as medical expenses and the amount of the lien. Id. ¶ 82. The plaintiff argued that the statute barred a reduction of the judgment because there was a right to reimbursement. Perkey, 2013 IL App (2d) 120470, ¶ 110. That argument ignores the plain language of the statute, which states: “[s]uch reduction shall not apply to the extent that there is a right of recoupment through subrogation, trust agreement, lien, or otherwise.” 735 ILCS 5/2-1205(2) (emphasis added). The plaintiff’s argument would be correct if the statute stated “if there is a right of recoupment,” instead of: “‘to the extent that’ there is a right of recoupment.” Perkey, 2013 IL App (2d) 120470, ¶ 112 (emphasis added in-part, and in original in-part) (quoting Prazen v. Shoup, 2012 IL App (4th) 120048, ¶ 35. Therefore, the appellate court found that the language limits the reduction only to the extent of, or amount of, the right of recoupment. Id. The court noted that the plaintiff’s interpretation “would disallow any reduction even if the insurer had a right to recoup one cent, [which] runs counter to section 2-1205’s purpose of reducing the costs of medical malpractice actions by eliminating duplicative recoveries.” Id. Miller v. Sarah Bush Lincoln Health Center In contrast with the Illinois Appellate Court Second District’s ruling in 18 | IDC QUARTERLY | First Quarter 2017

Perkey v. Portes-Jarol, the court in Miller v. Sarah Bush Lincoln Health Center reversed the trial court’s order reducing the verdict and directed the trial court to reinstate the jury’s verdict without any reduction. Miller v. Sarah Bush Lincoln Health Ctr., 2016 IL App (4th) 150728, ¶ 1. Following verdict, the defendants filed a motion to reduce the verdict by the medical expenses pursuant to 735 ILCS 5/2-1205. Miller, 2016 IL App (4th) 150728, ¶ 4. However, a significant portion of the medical bill damages awarded by the jury were for portions of medical bills which had been “written off” by the providers. Id. ¶ 9. The plaintiff therefore argued that this “written off” amount was not paid by anyone. Id. As such, the appellate court had to determine whether the legislature intended section 2-1205 to allow verdicts to be reduced by the amount of medical bills written off by health care providers. Id. The Illinois Appellate Court Fourth District held that it did not. Id. Under section 2-1205(2), a judgment cannot be reduced by an amount subject to recoupment. Id. ¶ 14. The trial court had to determine what the “benefit” was referenced in the statute. Id. ¶ 15. The plaintiff argued that the trial court was incorrect when it found that the benefit provided to the plaintiff was the total award for medical treatment. Id. The plaintiff further argued that the benefit is what the collateral source actually pays on behalf of the injured person, and not what the jury awards. Id. The appellate court agreed and held that “[t]he statute does not allow a verdict to be reduced by the amount of the bills which have been satisfied or the value of the benefit to the plaintiff.” Id. ¶ 16. “Instead, it only allows a verdict to be reduced by the amount paid to the medical providers or payable to the

plaintiff.” Id. An examination of the plain language of the statute led the appellate court to the conclusion that “it was only intended to apply if the benefits were paid to the medical providers or had become payable to the plaintiff—and then only if other limitations do not apply.” Id. ¶ 17. The court indicated that any other interpretation would ignore the restrictive language, “which have been paid, or which have been payable to the injured person.” Id. The court agreed with the statement made in the amicus brief filed by the Illinois Trial Lawyers Association that “[a] write-off by the medical provider entitled to payment is the antithesis of a payment by definition.” Miller, 2016 IL App (4th) 150728, ¶ 16. Contrasting the Perkey and Miller Decisions There is a conflict between the Perkey and Miller decisions. As noted in the Milller decision, the Perkey court did not analyze whether bills written off by medical providers qualify as benefits paid to medical providers or payable to the plaintiff. Miller, 2016 IL App (4th) 150728, ¶ 20. The total amount awarded by the jury for the reasonable costs of the plaintiff’s medical care and services far exceeded the amount paid by Blue Cross Blue Shield. Perkey, 2013 IL App (2d) 120470, ¶¶ 79, 81. While not explicitly stated, it seems logical that the Perkey opinion allowed a reduction for the “written off” or “adjusted” amount of the plaintiff’s bills, whereas the Miller opinion did not. We can assume this because in the Perkey case, the insurer indicated the total amount of benefits provided, which was less than the amount that was presented to the jury as evidence. Id. ¶ 81 The Fourth District chose not to follow the Second District’s opinion because

Legislative Update the arguments made in that case were different than the arguments raised in their appeal. Miller, 2016 IL App (4th) 150728, ¶ 21. The Second District dealt only with whether the right to recoupment, in-part, prevented a reduction in the judgment. Id. Conclusion While there is a lack of clarity as to whether a judgment may be reduced by the written-off amounts, defense counsel should be prepared to indicate to the court whether there is a third party that retains a right of recoupment, and to what extent. Crucially, the benefits paid by the insurers in both Perkey and Miller matched the lien. However, agreements by insurance companies with Plaintiffs to accept less than the full amount of their lien in satisfaction of that lien are common. Therefore, even under the more restrictive reasoning of the Miller opinion, the defense would be entitled to a reduction of the award to the extent that an insurance company made payments which exceed the amount retained under a lien. Effective use of this technique necessitates discovery on that issue and an insistence that such information and material be turned over by the plaintiff. Importantly, the defendant has the burden of demonstrating that the collateral source payments were not subject to a right of recoupment, in which case reduction would not be warranted to whatever extent the recoupment applied. See DeCastris, 237 Ill. App. 3d at 175. Additionally, the defendant would likely have been entitled to an additional reduction in the amount of recovery, had it provided admissible evidence of the reduction of the lien. Perkey, 2013 IL App (2d) 120470, ¶ 120.

John Eggum Foran Glennon Palandech Ponzi & Rudloff P.C., Chicago

Change in the Wind? Not in Illinois. The 2016 election has come and gone, and nationwide the results were dramatic and unexpected. It was an outcome that foreshadows possible major changes on a national level, and in several states. Disappointingly, however, the end to legislative gridlock in Illinois does not appear to be a consequence of the broader political shakeup. Last November, Republicans gained seats in both the Illinois House of Representatives and the Illinois Senate. There are 118 members in the House, and Republicans added four seats in the recent election, bringing their total to 51. In the Senate, which has 59 members, the Republicans added two seats, bringing them to 22 members. While this is no pendulum swing, the change in percentage of seats held is meaningful. Under the Illinois Constitution, a three-fifths vote in both chambers (60 percent) is required to override a gubernatorial veto. Ill. Const. of 1970, art. IV, § 9. Postelection, although Democrats still hold 62 percent of the Senate seats, they now hold only 56 percent of the House seats, and therefore have fallen below the 60 percent threshold. Thus, Democrats can no longer achieve a veto override without the crossover of House Republicans. Hopefully, this shift signals greater collaboration in the service of Illinoisans. Notwithstanding this development, there has not been an indication that a new era of cooperation is on the horizon. In the wake of the election, the Democratic Leadership—Senate President John Cullerton and Speaker of the House Michael Madigan—and

Governor Bruce Rauner have not been able to find common ground. Governor Rauner’s publicly issued request to “come together and focus on the future and improving the quality of life for every family in our state” did not receive the reception the Governor sought. Statement from Governor Rauner, Ill. Gov’t News Network (Nov. 9, 2016), available at http://www3.illinois. gov/PressReleases/ShowPressRelease. cfm?SubjectID=1&RecNum=13881. Both President Cullerton and Speaker Madigan declined to participate in a meeting of legislative leaders that was organized by Governor Rauner the week following the election. The Illinois General Assembly has gotten some things done this year, as this column has previously reported. There — Continued on next page

About the Author John Eggum is an attorney with Foran Glennon Palandech Ponzi & Rudloff P.C., where he concentrates his practice on insurance coverage matters and commercial litigation. He represents insurers, TPAs, brokers, and captive managers in professional liability disputes, and also litigates cyber/technology liability claims. Mr. Eggum’s law degree was obtained, with distinction, from The University of Iowa College of Law, and following law school, he served as the law clerk to the Hon. Bruce A. Markell in the United States Bankruptcy Court for the District of Nevada, in Las Vegas. Mr. Eggum serves as the Vice-Chair of the IDC Legislative Committee and the ViceChair for the IDC’s Young Lawyers Division.

First Quarter 2017 | IDC QUARTERLY | 19

Legislative Update | continued

The Illinois General Assembly has gotten some things done this year, as this column has previously reported. There is much work to be done, however, and a real effort to engage in bipartisan collaboration could help make a difference in the lives of Illinoisans.

is much work to be done, however, and a real effort to engage in bipartisan collaboration could help make a difference in the lives of Illinoisans. The Illinois Association of Defense Trial Counsel, through the work of the IDC Legislative Committee, remains committed to playing its part in improving Illinois by supporting the advancement of legislation that increases fairness in civil cases, and by working to ensure a level playing field for plaintiffs and defendants. Included in these efforts is the Committee’s support for changes to the Illinois Code of Civil Procedure. The Legislative Committee believes that an immediate and appropriate necessary improvement would be effected by the following amendments to the Illinois Code of Civil Procedure. First, amending section 2-1107.1 of the Code of Civil Procedure, 735 ILCS 5/2-1107.1, to provide that juries would not be advised of the consequences of a finding that the plaintiff’s fault was greater than 50% of the total fault. Second, amending section 2-1117 of the Code of Civil Procedure, 735 ILCS 5/2-1117, to provide that, in apportioning fault, the jury would be instructed to apportion fault to all parties that proximately caused the plaintiff’s injuries, including settling defendants. These changes keep the jury focused on their role—finding the facts—leaving 20 | IDC QUARTERLY | First Quarter 2017

it to the court to assess and apply the legal implications and consequences of those facts. The IDC also supports amending section 2-1115.3 of the Code of Civil Procedure, 735 ILCS 5/2-1115.3, to provide that a plaintiff may not present evidence to the jury of medical expenses that were not paid and for which the plaintiff is no longer liable. Damages should not be sought if they are not representative of actual harm incurred by a plaintiff. These changes not only make logical sense and are equitable, but they help bring Illinois in line with other Midwestern states. See Iowa Code § 668.3 (2011) (directing the jury to answer special interrogatories regarding the percentage of the total fault allocated to each claimant, defendant, third-party defendant, and person who has been released from liability); Indiana Model Civil Jury Instruction 941, Ind. Judges Ass’n (Sep. 2015), http://www.indianajudgesassociation.org/pdf/Civil%20Jury%20 Instructions%20September%202015.pdf (providing for apportionment of fault to non-parties); Wis. Stat. § 895.045 (2011) (providing for apportionment of fault to non-parties). Companies considering whether to come to Illinois, stay in Illinois, or expand in Illinois report that the legal, regulatory, and tax environment impacts

those decisions. Accordingly, Illinois cannot afford to have neighboring states present a more attractive business environment. Change is necessary to stop the flood of companies that have looked elsewhere, such as Hoist Liftruck, DESTA-CO, Bunge North America, General Mills, Mitsubishi Motors, Mondelez, and Kraft Heinz, all of which have been reported to have decreased, or limited, their Illinois footprint in recent years. Austin Berg, Manufacturer Moves Out Of Madigan’s Backyard, Cites Unfriendly Business Climate, Ill. Policy Inst. (Aug. 13, 2015), available at https:// www.illinoispolicy.org/manufacturermoves-out-of-madigans-backyard-citesunfriendly-business-climate/. These examples are representative of surveys of the larger business environment. Whereas states like Iowa, Wisconsin, and Indiana all rank in the top 50% of the “best and worst states for business,” Illinois continues to rank 48th. Best and Worst States for Business, Chief Executive (2016), available at http:// chiefexecutive.net/2016-best-and-worststates-for-business-full-list/. Only New York and California have worse business environments. Id. Disagreements between our elected officials are expected, but there must be an effort to reach common ground. Illinois has now been without a state budget since July 1, 2015 (the budget crisis last June was averted by a temporary spending bill). There is simply no justification for allowing Illinois to remain in perpetual gridlock. Rather, it is critical that Illinois moves forward. To that end, the IDC Legislative Committee will continue to work towards greater equality and fairness within the civil justice system, which are goals that all stakeholders should find themselves supporting, whatever their other differences.

Feature Article Edward K. Grassé Busse, Busse & Grassé, P.C., Chicago Donald Patrick Eckler Pretzel & Stouffer, Chartered, Chicago

The Times They are a’Changin’: Snow and Ice Cases following Murphy-Hylton and the Snow Removal Service Liability Limitation Act Before 2016, the Illinois Supreme Court consistently affirmed the viability of the “natural accumulation rule.” “Under the natural accumulation rule, a landowner or possessor of real property has no duty to remove natural accumulations of ice, snow, or water from its property.” Krywin v. Chic. Transit Auth., 238 Ill. 2d 215, 227 (2010). Landowners consistently relied upon the natural accumulation rule to shield themselves from liability. The Illinois Supreme Court’s recent decision in Murphy-Hylton v. Lieberman Management Services, 2016 IL 120394, however, may signal that the exceptions to the rule will swallow it, making any accumulation of snow and ice on which injury occurs the responsibility of the landowner. This decision comes on the heels of the passage of the Snow Removal Service Liability Limitation Act, 815 ILCS 675/1 through 67599 (the Act), which took effect on August 25, 2016. For contracts entered into after that date, the Act renders void all indemnity agreements for snow and ice removal in favor of the landowner. This article will discuss these recent changes and the steps to be taken by counsel and clients in response.

State of Snow and Ice Law Prior to 2016 Prior to 2016, the natural accumulation rule was well-established in Illinois. The reason for the natural accumulation rule was that it would be unreasonable to require a property owner to expend funds and perform the labor necessary to keep its walks reasonably free from ice and snow during the winter months. Graham v. City of Chicago, 346 Ill. 638, 643 (1931). In Graham, the Illinois Supreme Court held that the City of Chicago could not be held liable for the natural accumulation of snow and ice on its streets, but ultimately affirmed an award of damages for a fall on ice which had formed in an “artificial way.” Graham, 346 Ill. at 642-43. In noting that a plaintiff could not bring an action arising out of a natural accumulation, the court noted it did not want to impose an unreasonable duty on municipalities. Id. at 641-42. Subsequently, the natural accumulation rule was expanded to private land owners. Riccitelli v. Sternfeld, 1 Ill. 2d 133, 135 (1953). The general rule that property owners have no duty to remove natural accumulations of ice and snow from their property has been applied without regard to (1) any ongoing precipitation (Sheffer v. Springfield Airport Auth., 261 Ill. App.

3d 151, 155-56 (4th Dist. 1994)) or (2) the length of time the natural accumulation has existed (Fredrick v. Professional Truck Driver Training Sch., Inc., 328 Ill. App. 3d 472, 478 (1st Dist. 2002)). “Along with snow removal operations like shoveling and plowing, ‘[t]he mere sprinkling of salt, causing ice to melt, although it may later refreeze, does not aggravate a natural condition so as to form a basis for liability on the part of the property owner.’” Barber v. G.J. Partners, Inc., 2012 IL App (4th) 110992, ¶ 20. “Ruts and uneven surfaces created by traffic in snow and ice are not considered unnatural and cannot form the basis of liability.” Barber, 2012 IL App (4th) 110992, ¶ 20. In Barber, the — Continued on next page

About the Authors Edward K. Grassé is a partner at the law firm of Busse, Busse & Grassé, P.C. He has practiced in the area of tort litigation for over 10 years and concentrates his practice in the defense of personal injury, construction, fire and explosion, and premises liability suits. He is the former co-chair of the IDC Civil Practice Committee and is a former chair of the Civil Practice and Procedure Committee of the Chicago Bar Association. Donald Patrick Eckler is a partner at Pretzel & Stouffer, Chartered, handling a wide variety of civil disputes in state and federal courts across Illinois and Indiana. His practice has evolved from primarily representing insurers in coverage disputes to managing complex litigation in which he represents a wide range of professionals, businesses and tort defendants. In addition to representing doctors and lawyers, Mr. Eckler represents architects, engineers, appraisers, accountants, mortgage brokers, insurance brokers, surveyors and many other professionals in malpractice claims.

First Quarter 2017 | IDC QUARTERLY | 21

Feature Article | continued

plaintiff sued after falling on ice in a gas station parking lot. Id. ¶ 4. Evidence showed that the property owner had the lot plowed by a contractor and that the owner’s employees salted in the area where plaintiff fell. Id. ¶ 6. The court found that the aforementioned evidence was insufficient to establish an unnatural accumulation. Id. ¶ 26. “The application of salt to an accumulation of snow and/or ice causes a change in the composition of the wintery mix. If the melted material refreezes, the composition will again change and form a new accumulation, one that the case law does not consider unnatural. A snowplow traversing a snowy parking lot . . . may change the composition of what is below the plow, but what remains does not amount to an unnatural accumulation.” Id. ¶ 24. When a defendant causes an unnatural accumulation of ice and snow by his use or maintenance of the area, and the accumulation exists on the premises long enough to charge the defendant with knowledge, the defendant is under a duty to make the premises reasonably safe. Ordman v. Dacon Mgmt. Corp., 261 Ill. App. 3d 275, 281 (3d Dist. 1994). In an unnatural accumulation case, a “[p]laintiff must show that the property owner had actual or constructive knowledge of the condition.” Ostry v. Chateau Ltd. P’ship, 241 Ill. App. 3d 436, 444 (2d Dist. 1993). Put another way, “[i]n order to defeat a motion for summary judgment in a slip-and-fall case, the plaintiff must affirmatively show that the accumulation of ice, snow or water is due to an unnatural accumulation and that the property owner had actual or constructive knowledge of the condition.” Wells v. Great Atl. & Pac. Tea Co., 171 Ill. App. 3d 1012, 1015 (1st Dist. 1988) (emphasis 22 | IDC QUARTERLY | First Quarter 2017

added). A plaintiff must present sufficient evidence to show that the defective condition existed long enough to charge the responsible party with notice and knowledge of the dangerous condition. Wells, 171 Ill. App. 3d at 1016. If the evidence establishes that the ice was caused by an unnatural accumulation and that the defendant’s conduct caused the unnatural accumulation, the plaintiff does not need to show notice. Hornacek v. 5th Ave. Prop. Mgmt., 2011 IL App (1st) 103502, ¶ 30. If plaintiff can establish that the ice was caused by an unnatural accumulation but cannot show that the defendant’s conduct caused the condition, the plaintiff can still establish liability by showing that the defendant had actual or constructive notice of the unnatural accumulation. Hornacek, 2011 IL App (1st ) 103502, ¶¶ 29-31.

entering and exiting the bus. Serritos, 153 Ill. App. 3d at 266. The court held that, despite the fact that the CTA is a common carrier, because it would be impracticable to keep the steps clear of snow and slush no duty existed. Id. at 271-72. Likewise, in Shoemaker v. RushPresbyterian-St. Luke’s Medical Center, 187 Ill. App. 3d 1040, 1041 (1st Dist. 1989), the plaintiff was injured when she stepped off an elevator and slipped on a floor wet with rain water tracked in by patrons. The court held that summary judgment was properly entered in favor of the plaintiff based upon the finding that rain water was a natural accumulation and that the defendant did not have a duty to warn the plaintiff about the slippery condition. Shoemaker, 187 Ill. App. 3d at 1044-45.

Sample Snow and Ice Cases

Further, in Sheffer v. Springfield Airport Authority, 261 Ill. App. 3d 151, 152 (4th Dist. 1994), the plaintiff was a passenger on one of the defendant’s planes who slipped on ice located on the tarmac at the airport after disembarking from the plane. Following a trial, the jury returned verdict for the plaintiff. Sheffer, 261 Ill. App. 3d at 151-52. The court reversed finding that (1) the plaintiff did not establish it was unnatural accumulation of ice, and (2) the defendant had no duty to warn about the ice. Id. at 153-54.

In McElligott v. Ill. Cent. R.R. Co., 37 Ill. 2d 459, 461-62 (1967) the decedent was killed when his car slid into the defendant’s train. The slide was caused by snow and ice. McElligott, 37 Ill. 2d at 461-62. The evidence showed that snow and ice had accumulated near the crossing on the land owned by the defendant. Id. The court held that the defendant had no duty to remove natural accumulations of ice and snow. Id. at 469-70. Judgment was properly granted in favor of the defendant because the plaintiff could not show there was an unnatural accumulation of snow and ice. Id. Similarly, in Serritos v. Chicago Transit Authority, 153 Ill. App. 3d 265, 266 (1st Dist. 1987), the plaintiff was injured when she slipped stepping on to a CTA bus in the winter. The evidence showed that the entry way to the bus was covered with slush from passengers

The Obligation of the Snow and Ice Remover In the absence of a contractual obligation, a non-land owner generally has no duty to remove accumulations of snow and ice. McBride v. Taxman Corp., 327 Ill. App. 3d 992, 996 (1st Dist. 2002). The scope of a snow removal company’s obligations to remove snow and ice is set

forth in their contract. Flight v. Am. Cmty. Mgmt. Inc., 384 Ill. App. 3d 540, 544 (1st Dist. 2008). Illinois law does not require a snow removal contractor to inspect the property constantly and remove all traces of ice, as such an obligation is unreasonable. Crane v. Triangle Plaza, Inc., 228 Ill. App. 3d 325, 330 (2d Dist. 1992). Where a party has untaken a contractual obligation to remove snow and ice, the duty encompasses only the nonnegligent removal of snow and ice. In other words, the snow removal contractor must refrain from creating or aggravating an unnatural accumulation when removing snow or ice. McBride, 327 Ill. App. 3d at 996. In cases involving a snow removal contractor, it is the plaintiff’s obligation to establish that the contractor caused the unnatural accumulation. Id. at 997. To meet this burden, the plaintiff must establish a causal nexus between the contractor’s work and the unnatural accumulation. Tzakis v. Dominick’s Finer Foods, Inc., 356 Ill. App. 3d 740, 747 (1st Dist. 2005). Decision in Murphy-Hylton v. Lieberman Management The plaintiff, Ms. Hylton, was injured when she fell on ice that had accumulated on a sidewalk at the Klein Creek Condominium. Murphy-Hylton, 2016 IL 120394, ¶¶ 3-4. She filed suit against the Association alleging that their snow and ice removal efforts, at least in part, caused her injuries. Id. ¶ 4. In early February 2011, snow in excess of 20 inches fell at the condominium complex. Id. On February 7, 2011, a snow removal contractor cleared snow and ice from the sidewalks within the complex. Id. The plaintiff fell on February 18, 2011, on a sidewalk leading from her building to the parking lot. Id. Discovery revealed that

no snow had fallen between February 7 and February 18. Id. ¶ 5. Ms. Hylton did not see the ice before she fell. Id. Following discovery, Ms. Hylton amended her complaint to remove any allegations of snow and ice removal efforts caused her injuries. Id. ¶ 4. Instead, she alleged that the ice upon which she fell was caused by improper drainage from downspouts near the sidewalk. Id. The Association filed a summary judgment motion invoking the immunity provided by the Snow and Ice Removal Act, 745 ILCS 75/2. Id. ¶ 12. In 1979, the Illinois Legislature enacted the Snow and Ice Removal Act, which provided immunity for landowners for snow and ice removal efforts. In relevant part, the statute provides: Sec. 1.  It is declared to be the public policy of this State that owners and others residing in residential units be encouraged to clean the sidewalks abutting their residences of snow and ice. The General Assembly, therefore, determines that it is undesirable for any person to be found liable for damages due to his or her efforts in the removal of snow or ice from such sidewalks, except for acts which amount to clear wrongdoing, as described in Section 2 of this Act.

745 ILCS 75/1. Sec. 2.  Any owner, lessor, occupant or other person in charge of any residential property, or any agent of or other person engaged by any such party, who removes or attempts to remove snow or ice from sidewalks abutting the property shall not be liable for any

personal injuries allegedly caused by the snowy or icy condition of the sidewalk resulting from his or her acts or omissions unless the alleged misconduct was willful or wanton.

745 ILCS 75/2. This case was pending in the Circuit Court of Cook County. Prior to the trial court’s decision, several cases had addressed the Act and had come to different conclusions. The Illinois Appellate Court Fourth District had ruled that the plain language of the Act only provides immunity for those actions directly tied to snow and ice removal efforts. Greene v. Wood River Trust, 2013 IL App (4th) 130036, ¶ 18. The Greene court noted “that the plain language of the Act does not provide immunity for injuries if the unnatural accumulation of ice was caused by defective construction or improper or insufficient maintenance of the premises, and not snow and ice removal efforts.” Greene, 2013 IL App (4th) 130036, ¶ 19. The Illinois Appellate Court Second District read a more broad interpretation into the Act and held that the immunity provided extends to claims for negligence, even if not directly tied to snow and ice removal efforts. Ryan v. Glen Ellyn Raintree Condo. Ass’n, 2014 IL App (2d) 130682, ¶ 20. The Ryan court held that an affirmative showing of snow and ice removal efforts is sufficient to trigger the immunity under the Act and that the Act does not require that such snow removal efforts be plead by the plaintiff in order to invoke the protections of the Act. In Murphy-Hylton, the trial court reviewed the case law pertaining to the Act and granted the the Association’s motion — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 23

Feature Article | continued

for summary judgment. Murphy-Hylton. 2016 IL 120394, ¶ 12. The appellate court reversed and held that the plaintiff’s pleading controlled the issue and as the complaint did not contain any allegations of negligence relating to snow or ice removal that immunity under the Act was precluded. Id. ¶ 13. The Illinois Supreme Court upheld the appellate court’s decision. Id. ¶ 1. The court undertook an exhaustive look at the common law pertaining to natural and unnatural accumulations. The opinion notes that, under the common law, landowners had a duty of reasonable care to prevent unnatural accumulations of ice and snow, provided that they had actual or constructive knowledge of the condition. Id. ¶ 20. The Murphy-Hylton court framed the question as whether “the immunity extends to claims of liability for negligence arising from a defective condition or a failure to maintain the premises that causes an unnatural accumulation of ice on the sidewalk.” Id. ¶ 24. The court answered this question in the negative, finding that the Act would be in derogation of the common law if it were to provide immunity for unnatural accumulations of snow and ice. Id. ¶¶ 32-33. The court stated that “the immunity provided under the Act does not insulate defendants from the theory of liability in the instant case.” Id. ¶ 35. The court focused on the plaintiff’s allegations to hold that “the Act is not an affirmative defense to plaintiff’s theory of negligence.” Id. ¶ 36. The problems with the MurphyHylton decision are abundantly clear. Although a plaintiff is the master of the complaint, the immunity granted under the Act should not be so easily

24 | IDC QUARTERLY | First Quarter 2017

dismissed through the crafty pleading of the plaintiff. To hold that the immunity granted to landowners can be so easily discarded simply through the pleading of the plaintiff is an affront to the purpose of the Act. Now, any landowner that previously held immunity for snow and ice removal efforts no longer has such immunity, provided that the plaintiff can plead some defect or condition that is unrelated to snow and ice removal. As with other statutorily created immunities, the burden of proof that the immunity applies should be on the defendant. The court has, by this decision, taken that ability away from Illinois residential landowners. The Snow Removal Service Liability Limitation Act Compounding the changes to the handling of snow and ice cases is the passage of Senate Bill 2138, the Snow Removal Service Liability Limitation Act, 815 ILCS 675/1 through 675/99 (eff. Aug. 25, 2016 by passage of P.A. 990889). This statute, which was adopted on August 25, 2016, voids all contractual requirements entered into after that date for a snow and ice remover or a snow and ice receiver to defend, indemnify, or hold harmless the other for tort liability resulting from its own negligence. This statute puts snow and ice removers and receivers in the same position as those covered by the Construction Contract Indemnification for Negligence Act, 740 ILCS 35/1 through 35/3, commonly referred to as the Anti-Indemnity Act. This is the first statute of its kind in the country. It is important to note that the statute does not apply to public entities or public utilities. This statute ends the

turnkey manner in which owners have dealt with snow and ice by relying on the natural accumulation rule, and then foisting any remaining liability onto the snow and ice removers. As discussed above, the first of that protection has been severally eroded; and now the second aspect has been eliminated almost entirely. As result of these twin changes, there will be changes in the dynamic between owners and snow removers in litigation, in which owners have previously been able to turn liability over to the snow remover in a circumstance in which an injured person claims that they slipped or fell on snow or ice. The statute makes each responsible for their own negligence, which could lead to actively litigated counterclaims between the owner and snow remover, to the benefit of the plaintiff. To mitigate the likelihood and damage of this circumstance, which would allow the plaintiff to sit back and allow the defendants to fight among themselves, is the role that the owner being named as an additional insured on the snow remover’s policy of insurance may have on the control, funding, and coordination of the defense. The statute does not void those arrangements. While the statute may prevent wholesale assumption of liability under the snow remover’s policy, consideration should be made between the owner’s insurer and the snow remover’s insurer to share the cost and control of the defense as well as any indemnity obligation that may arise. The alternative is to litigate competing counterclaims between the owner and snow remover as to who was responsible for the condition that caused the plaintiff’s injury; this would only aid the plaintiff’s claim that he was an

Construction Law innocent injured person. Accordingly, defendants’ counsel, both those that represent owners and snow removers, as well as insurers for each, should prepare to change their strategy for the handling of these cases. As the statute went into effect before most of the snow and ice contracts were entered into for the 2016-17 snow and ice season, the bulk of the cases that will arise under this new act will not be filed until 2018-19. That gives more than enough time for the parties, defense counsel, and insurers to formulate how they want to deal with this landscape. Conclusion Proving once again that the only constant is change, the handling of snow and ice cases will have to change drastically based upon the decision in MurphyHylton and the passage of the Snow Removal Service Liability Limitation Act. Those that adapt to these changes will be in the best position to succeed because what it not changing is that Illinois will continue to have snow and ice and that people will continue to fall on it. Accordingly, in order to reduce the scope of liability property owners in Illinois should inspect their properties and make repairs as appropriate. Reviewing contacts to ensure that they are in conformity with the Snow Removal Service Liability Limitation Act is also essential. The Farmers’ Almanac has predicted numbing cold and snowy conditions in Illinois this winter. See 2017 Winter Outlook, Farmers’ Almanac (2017), available at http://farmersalmanac.com/ weather-outlook/2017-winter-forecast/.

Lindsay Drecoll Brown Cassiday Schade LLP, Chicago

A Modern Approach to Choice of Law Provisions in Contracts for Illinois Construction All construction projects performed within the boundaries of Illinois are subject to Illinois law pursuant to the Illinois Building and Construction Contract Act (the Act), regardless of any contrary contractual provision. 815 ILCS 665/10. In short, “if you build in Illinois, you litigate in Illinois.” Dancor Constr., Inc. v. FXR Constr., Inc., 2016 IL App (2d) 150839, ¶ 81. This prohibition on any choice of law or forum selection provision purporting to relegate construction related disputes to foreign jurisdictions has been in effect since July 16, 2002. 815 ILCS 665/10 (eff. July 16, 2002 by passage of P.A. 92-657). Nonetheless, numerous agreements pertaining to work completed on Illinois soil are crafted each year to include provisions that run afoul of state law. Careful consideration of the Act’s application and exclusions should be paid when assessing the potential value and utility of such provisions. The Building and Construction Contract Act Section 10 of the Building and Construction Contract Act provides, in pertinent part: A provision contained in or executed in connection with a building and construction contract to be performed in Illinois that makes the contract subject to the laws of another state or that requires any litigation,

arbitration, or dispute resolution to take place in another state is against public policy. 815 ILCS 665/10. Any such provision is automatically considered void and unenforceable. Id. Pursuant to the clear language of section 10, it applies only to work performed within the state of Illinois. Id. Courts have explicitly declined to extend the application of the Act to reach contracts executed in Illinois that pertain to work performed by Illinois workers outside the state. See, i.e., J.F. Elec., Inc. v. HD Supply, Inc., 2013 IL App (5th) 120279-U. In the context of the Act, a “building and construction contract” is defined as “a contract for the design, construction, alteration, improvement, repair, or maintenance of real property, highways, roads, or bridges.” 815 ILCS 665/5. The — Continued on next page

About the Author 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.

First Quarter 2017 | IDC QUARTERLY | 25

Construction Law | continued

precise breadth of projects and work that the foregoing definition may encompass has yet to be litigated. There is, of course, a wealth of legal interpretation available as to what may be construed as a construction contract in the context of the Illinois Construction Contract Indemnification for Negligence Act, which is also often referenced as the “Anti-Indemnity Act.” However, while the Anti-Indemnity Act similarly serves to render specific contractual language unenforceable, the definition language provided within that particular statute pertaining to the breadth of its application differs significantly from that used in the Act. 740 ILCS 35/1. As such, decisions interpreting the Anti-Indemnity Act are not instructive on the issue of how the Building and Construction Contract Act is, will or should be applied. Most notably, construction contracts subject to the Act include those involving construction, alteration and maintenance of “real property” whereas that term is not utilized anywhere within the AntiIndemnity Act. Compare 815 ILCS 665/5 with 740 ILCS 35/1. Through the inclusion of that particular term in the Act, the legislature opened the door for the Building and Construction Contract Act to cover a broader range of projects and work than may be addressed by the AntiIndemnity Act. The term “real property” is also not defined anywhere within the Act. 815 ILCS 665. However, the term is defined in Black’s Law Dictionary as “land and anything growing on, attached to, or erected on it, excluding anything that may be severed without injury to the land.” Black’s Law Dictionary 1337 (9th ed. 2009). Under that definition, the Act has been found to extend to a contract for wind turbine maintenance and repair services. McCoy v. Gamesa Tech. Corp., No. 11 C 592, 2012 U.S. 26 | IDC QUARTERLY | First Quarter 2017

Dist. LEXIS 9278, at *15 (N.D. Ill. Jan. 26, 2012). Like buildings, wind turbines are permanently affixed to the ground. Id. However, the wind turbines at issue in the contract were not constructed in Illinois; instead, they were manufactured in Spain. McCoy v. Iberdrola Renewables, Inc., 760 F.3d 674, 678 (7th Cir. 2014). The provisions of the Act were found applicable despite the apparent lack of in-state construction work. McCoy, 2012 U.S. Dist. LEXIS 9278, at *15. Exclusions to the Application of the Act Despite the potential for wide application of the Act that is implied by its broad definition of what may constitute a construction contract, its reach is severely curtailed in a number of ways. First, the Act only applies to contracts entered on or after July 16, 2002. 815 ILCS 665/10; Foster Wheeler Energy Corp. v. LSP Equip., LLC, 346 Ill. App. 3d 753 (2d Dist. 2004). Second, the Act cannot be applied against a party found to be “primarily engaged in the business of selling tangible personal property.” 815 ILCS 665/10. Moreoever, the Act cannot be used to avoid enforcement of an arbitration provision in the context of a project implicating interstate commerce. R.A. Bright Const., Inc. v. Weis Builders, Inc., 402 Ill. App. 3d 248, 251-55 (3d Dist. 2010). Agreements to submit to arbitration, as an alternative method of dispute resolution, are favored at both the state and federal level. Bd. of Managers of Courtyards at Woodlands Condo. Ass’n v. IKO Chi., Inc., 183 Ill. 2d 66, 71 (1998). Where a particular agreement implicates interstate commerce, the Federal Arbitration Act (FAA) (9 U.S.C. §§ 1 through 307) applies.

Drobny v. Am. Nat’l Ins. Co., No. 0112-01034-CV, 2013 Tex. App. LEXIS 11055 (Tex. App. Houston 1st Dist. Aug. 29, 2013). The FAA “establishes a national policy favoring arbitration when the parties contract for that mode of dispute resolution.” Id. Pursuant to the FAA, arbitration agreements will be enforced and arbitration compelled wherever parties have contracted for that mode of dispute resolution. Melena v. Anheuser-Busch, Inc., 219 Ill. 2d 135, 142 (2006). That holds true even where the arbitration agreement to be enforced flies in the face of the prohibitions contained within the Illinois Building and Construction Act; that is, where the agreement to be enforced mandates adjudication in a foreign state despite its inclusion within a contract pertaining to Illinois construction. R.A. Bright, 402 Ill. App. 3d at 255. In other words, the Federal Arbitration Act preempts the Illinois Building and Construction Act and further limits the application of the Act. Id. Next, the Act is not applicable to projects or work performed pursuant to any contract awarded by the federal government or any foreign state government. 815 ILCS 665/10. Further, the Act will likely be found inapplicable to any construction projects located on federal property within Illinois as the state generally lacks authority over such property. See, e.g., U.S. ex rel. J-Crew Mgmt., Inc. v. Atlantic Marine Const. Co. Inc., No. A–12–CV–228–LY, 2012 U.S. Dist. LEXIS 182375, at *8 (W.D. Tex. Aug. 6, 2012). The Impact of Atlantic Marine Despite the clear prohibitions within the Illinois Building and Construction Contract Act, an argument may be made

Where a construction contract designates a foreign forum or foreign source of law to resolve a conflict arising out of a project completed on Illinois soil, there may be circumstances where the provision may be followed despite the fact that it violates the Illinois Building and Construction Act. that new life was breathed into choice of law and forum selection clauses by the United States Supreme Court decision of Atlantic Marine Construction Co., Inc. v. United States District Court for Western District of Texas, 134 S.Ct. 568 (2013). In Atlantic Marine, a contract pertaining to construction work performed in Texas was executed. Atlantic Marine, 134 S.Ct. at 575. The agreement included a forum selection clause providing that all disputes “shall be litigated in the Circuit Court for the City of Norfolk, Virginia, or the United States District Court for the Eastern District of Virginia, Norfolk Division.” Id. A lawsuit arising out of the work was subsequently filed in the Western District of Texas. Id. at 576. A motion to dismiss or transfer the case to the District Court for the Eastern District of Virginia pursuant to the aforementioned forum selection clause was denied by the Texas District Court. Id. In reaching its ruling, the district court considered the application of a Texas statute that—similar to the Illinois Building and Construction Act—precludes enforcement of language within in-state construction contracts that mandates litigation in some other state. U.S. ex rel. J-Crew Mgmt., 2012 U.S. Dist. LEXIS 182375, at *4-9. The statutory provision was, however, found inapplicable in the context of the work at issue because the project was located on a federal enclave,

over which the state of Texas lacked authority. Id. at *8. A petition for a writ of mandamus directing the district court to dismiss or transfer the case pursuant to the forum-selection clause was denied by the Fifth District. Atlantic Marine, 134 S.Ct. 568 at 576. However, an appeal was subsequently heard by the United States Supreme Court and the decision was reversed. Id. at 584. On remand, the lower courts were instructed to assess whether any public-interest factors existed to support denial of the motion to transfer. Id. Absent the discovery of any such motivating factors, the suit was to be transferred from Texas to the agreed upon forum, Virginia. Id. In support of this decision, the Court announced, “[w] hen parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties’ settled expectations . . . . In all but the most unusual cases, therefore, ‘the interest of justice’ is served by holding parties to their bargain.” Id. at 583. The Atlantic Marine decision indicates valid forum selection clauses will be enforced absent exceptional circumstances. Of importance, the application of the Texas statute precluding enforcement of the forum selection clause in the context of a dispute arising out of construction work performed

in Texas was not addressed or at issue before the Supreme Court in Atlantic Marine. It is clear that choice of law and forum selection clauses contained within Illinois construction contracts will be enforced as to projects completed on federal property or in federal enclaves. So far, the decision has not successfully been cited as a basis to side-step the prohibitions contained within the Illinois Building and Construction Act. In other words, it has not been utilized in any foreign jurisdiction to enforce forum selection and choice of law provisions pertaining to construction work completed on private property in Illinois. As such, practitioners are forewarned that choice of law and forum selection provisions that run afoul of the Act likely remain unerforceable. Practical Implications Agreements pertaining to construction work are regularly drafted to include a choice of law or forum selection provision specifying the location, jurisdiction and law applicable to any future disputes that may arise. Where a construction contract designates a foreign forum or foreign source of law to resolve a conflict arising out of a project completed on Illinois soil, there may be circumstances where the provision may be followed despite the fact that it violates the Illinois Building and Construction Act. For example, if no party to the dispute objects to litigating in the pre-determined forum. In any event, practitioners are forewarned of the conflicts surrounding the application of the Illinois Building and Construction Act and should be prepared to disregard contract language pertaining to choice of law or forum selection, where warranted.

First Quarter 2017 | IDC QUARTERLY | 27

Appellate Practice Corner Scott L. Howie Pretzel & Stouffer, Chartered, Chicago

Putting the Standard of Review to Use Legal arguments are not all created equal. Certain arguments are more difficult than others to win on appeal when the reviewing court cares more about what the trial court decided. The difference is reflected in the concept of the standard of review, which dictates the deference that the reviewing court is to show to the decision of the lower court. The standard of review is important enough that the rules governing appellate briefs in the state courts require the appellant to identify it in the opening brief. Ill. S. Ct. R. 341(h)(3) (eff. Jan. 1, 2016). Apart from that formal requirement, an understanding of the standard of review enables counsel to better understand the strengths and weaknesses of arguments on appeal, so as to make better use of the precedents cited to support or refute those arguments. This edition of the Appellate Practice Corner describes the distinctions between the major standards of review and suggests some ways in which to use those distinctions to one’s advantage. De Novo or Abuse of Discretion? The standard of review dictates how much the trial court’s decision should matter to the reviewing court. Another way of thinking about it is as a way of measuring the significance of the lower court’s ruling itself as a factor in reviewing the correctness of that ruling. When the standard of review is de novo, the reviewing court pays no deference to the trial court’s decision. Waters v. City of Chicago, 2012 IL App 28 | IDC QUARTERLY | First Quarter 2017

(1st) 100759, ¶ 8. This standard applies to those matters that the reviewing court is equally well-suited to examine, typically issues that are purely legal in nature and can be resolved without any direct observation of how the evidence was presented or received. People v. Brener, 357 Ill. App. 3d 868, 870 (2d Dist. 2005). Questions of law are reviewed de novo because a ruling on the law, whether made by a trial court or by a reviewing court, does not depend upon the court’s appraisal of the weight or the strength of the evidence. Such rulings are objectively either right or wrong, not matters of opinion, and are not properly influenced by subjective interpretations of the evidence. Because such determinations should not be influenced by such things, de novo review can take place on a clean slate. When the standard of review is abuse of discretion, however, the ruling concerns a subject that often depends on direct observation of the events that prompted it—such as the demeanor of the witnesses and the strengths and weaknesses of the evidence the parties offered. In re Marriage of Holder, 137 Ill. App. 3d 596, 600 (3d Dist. 1985). Unlike when questions of law are in dispute, the trial court is expected to be influenced by these factors, so the reviewing court pays a great deal of deference to the trial court’s decision. This standard recognizes that sometimes, in order to understand the reason for a ruling, “You had to be there.” For an issue that is reviewed for abuse of discretion, there may be no objectively

correct or incorrect ruling, but rather a range of permissible rulings; as long as the ruling is within that range, the trial court has not abused its discretion. Such rulings include most evidentiary issues, such as motions in limine and objections at trial, as well as the instruction to the jury and the verdict forms it is given. Dillon v. Evanston Hosp., 199 Ill. 2d 483, 505 (2002); City of Naperville v. Watson, 175 Ill. 2d 399, 409 (1997). To an appellant, de novo review is preferable to review for abuse of discretion. To an appellee, the reverse is generally true. That does not mean, however, that de novo review favors the appellant over the appellee. While de novo review does not defer to the trial court or tend to favor the appellee, it gives the appellant no inherent advantage either; it is more accurate to say that de novo review does not favor either side. Appellants ordinarily prefer de novo review not because it tends to favor reversal, but because it does not tend to favor affirmance, as review for abuse of discretion does. When the standard of review is de novo, the opposing parties begin on an equal footing, with neither

About the Author Scott L. Howie is a partner at Pretzel & Stouffer, Chartered, in Chicago, specializing in post trial 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.

party receiving any advantage from the ruling of the trial court.

Appellants ordinarily prefer de novo review not

Identifying the Standard of Review in the Case at Bar

because it tends to favor reversal, but because it does

Reflecting the importance of the standard of review, the rules that govern the content of appellate briefs require it to be identified in the appellant’s initial brief. “The appellant must include a concise statement of the applicable standard of review for each issue, with citation to authority, either in the discussion of the issue in the argument or under a separate heading placed before the discussion in the argument.” Ill. S. Ct. R. 341(h)(3). Such a statement is not required of the appellee. Rule 341(h) is specific to the appellant’s opening brief, and the reference in subsection (3) to the standard of review underscores that limitation by stating that “[t]he appellant must include” a statement of the standard of review for each issue in the initial brief. Id. (emphasis added). Supreme Court Rule 341(i) expressly permits the appellee to omit certain matters that are required of the appellant, including those required by subsection (3). Ill. S. Ct. R. 341(i) (eff. Jan. 1, 2016). The rule suggests, however, that the appellee might nonetheless include those matters “to the extent that the presentation by the appellant is deemed unsatisfactory.” Id. When an appellant has represented the standard of review to be de novo and that representation is either incorrect or open to reasonable dispute, the appellee should deem the presentation unsatisfactory under Rule 341(i) and supply authority for an abuse-of-discretion standard. Not only will the reviewing court be more inclined to defer to the trial court’s ruling and thus to affirm, but a demonstrated misunderstanding or misrepresentation

discretion does. When the standard of review is

not tend to favor affirmance, as review for abuse of de novo, the opposing parties begin on an equal footing, with neither party receiving any advantage from the ruling of the trial court.

on such a fundamental aspect of appellate procedure may be revealing in itself for purposes of appellate review. An appellee who maintains that the standard of review is abuse of discretion should emphasize the high bar that the appellant must clear in order to obtain a reversal—and by extension, the relatively low bar for affirmance. In defending a favorable ruling on the admission of evidence or the instruction to the jury, for instance, the appellee need not convince the reviewing court that the trial court would have been wrong to rule in favor of the appellant’s position. The appellee need only establish that what the trial court actually did was within its discretion. In most cases, the appellee should resist the temptation to argue that the trial court did not have the discretion to do what the appellant claims it should have done; such arguments not only go much further than necessary for affirmance under an abuse-of-discretion standard, but may also be incorrect. As the appellate court once described the abuse-of-discretion standard, “Perhaps another trial judge would have proceeded in a different fashion. We must focus on what the trial court did and whether that was an abuse of discretion.” Higgens v.

House, 288 Ill. App. 3d 543, 546 (4th Dist. 1997). Especially in close cases, where the trial court could have reasonably ruled in favor of either party, the appellee may wish to avoid describing the trial court’s ruling as right, or an opposite ruling as wrong, in favor of the more measured position that the trial court’s ruling was within its discretion. Rulings that are reviewed for abuse of discretion ordinarily share two qualities that make them best suited to resolution at the trial level: they concern subjective matters on which reasonable people may differ, and they depend on the direct observation of the events that led to the ruling. In re Marriage of Sykes, 231 Ill. App. 3d 940, 946 (4th Dist. 1992). The trial court sees and hears the witnesses testify and has the opportunity to see how persuasive and effective they were before the jury. The reviewing courts, by contrast, typically must rely on written transcriptions of witness testimony. “‘The trial judge, as the trier of fact, is in a position superior to a court of review to observe the demeanor of witnesses while testifying, to judge their credibility and to determine the weight their testimony should receive.’” Flynn v. Cohn, 154 Ill. — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 29

Appellate Practice Corner | continued

In some cases there is room for argument as to what standard governs the court’s review. This may be the case, for instance, when the ruling at issue is a summary judgment that resulted from the exclusion of evidence. 2d 160, 166 (1992) (quoting In re Application of Cnty. Treasurer, 131 Ill. 2d 541, 549 (1989)) (citations omitted). The deferential standard of review embodies the reluctance of reviewing courts to question rulings that are based on factors the reviewing courts are unable to view for themselves. That is not to say, however, that rulings on discretionary matters are immune to reversal. Implicit in the abuse-ofdiscretion standard is the understanding that trial courts sometimes rule in ways that exceed or violate the broad discretion they enjoy. But this standard of review is a difficult one to satisfy, reflecting the fact that in many instances a trial judge has two or more contradictory options that are all within his or her discretion. In such circumstances, it is not sufficient to show that the trial court was permitted to rule in the way the appellant desired. “‘Although a trial court’s decision is always subject to review, a reviewing court should not overturn a trial court’s findings merely because it does not agree with the lower court or because it might have reached a different conclusion had it been the trier of fact.’” Flynn, 154 Ill. 2d at 166 (quoting County Treasurer, 131 Ill. 2d at 549). When the standard of review is abuse of discretion, the appellant must show that the trial court was not permitted to do what it actually did—that is, that the challenged ruling 30 | IDC QUARTERLY | First Quarter 2017

was outside the trial court’s authority, and therefore an abuse of its discretion. In some cases there is room for argument as to what standard governs the court’s review. This may be the case, for instance, when the ruling at issue is a summary judgment that resulted from the exclusion of evidence. There are too many cases to count in which the reviewing courts have observed that summary judgments are reviewed de novo, often an unremarkable and uncontested proposition. See, e.g., Carney v. Union Pac. R.R. Co., 2016 IL 118984, ¶ 25 (citing Bruns v. City of Centralia, 2014 IL 116998, ¶ 13). A plaintiff appealing a summary judgment might simply declare that the standard of review is de novo, citing one of the many decisions that apply that standard to summary judgments. Since that standard does not call for deference to the trial court, a plaintiff appealing a judgment for the defense might be content to suggest that the reviewing court should take up the question afresh, without regard for the trial court’s observations. But depending on the basis for the summary judgment, an appellee might take issue with the appellant’s contention that a non-deferential standard should apply—even though the ruling being appealed may be a summary judgment, something ordinarily reviewed de novo. When summary judgment is entered because a crucial plaintiff’s witness

was barred, for instance, the plaintiff’s appeal of that judgment is not necessarily reviewed de novo. If the plaintiff maintains that the expert was not essential to the prima facie case, then the issue is the sufficiency of the evidence, and thus reviewed de novo. People v. Howard, 2016 IL App (3d) 130959, ¶ 18. But if the plaintiff argues that the trial court should not have barred the witness, that argument concerns the trial court’s discretion in the admission of evidence—and that issue should be reviewed for abuse of discretion. Ford v. City of Chicago, 132 Ill. App. 3d 408, 413 (1st Dist. 1985) Conversely, an appellant should not overlook the possibility of urging a reviewing court not to defer to the trial court on an issue that might initially seem to fall under the abuse-of-discretion standard. Where a trial court’s exercise of discretion relies on an erroneous conclusion of law, for instance, the reviewing court applies a de novo standard. Beehn v. Eppard, 321 Ill. App. 3d 677, 680–81 (1st Dist. 2001) (citing People v. Williams, 188 Ill.  2d 365, 369 (1999)). Though the issue in Beehn concerned an in limine ruling, which ordinarily would be reviewed for abuse of discretion, the appellant argued that it should be reviewed de novo because it relied upon a conclusion of law. Beehn, 321 Ill. App. 3d at 680. The appellate court agreed, and went on to hold that the trial court had erred in granting the motion in limine. Id. at 681. Using the Standard of Review to Select and Distinguish Legal Authority As important as it is to appreciate the standard of review in evaluating the strengths and weaknesses of the case being litigated and the chances of success

on appeal, it can be just as important to evaluating and selecting the precedents to cite in support of one’s position. Likewise, a full understanding of the standard of review can be a powerful basis for distinguishing an opponent’s precedents on procedural grounds. For an appellant claiming error in a trial court’s discretionary ruling, there is often small precedential value in cases in which the reviewing courts have affirmed trial courts in the exercise of discretion—especially when the decision cites the deferential standard of review and emphasizes the discretion the trial court enjoys. As a rule, the decisions with the greatest precedential value to an appellant are those that reverse trial-court rulings. If the issue was one for the trial court’s discretion, there is little to be gained from a case holding that the trial court was permitted to do something else. The cases that matter are those in which

court would have abused its discretion had it ruled differently. While such a suggestion might be dismissed as dictum, it may nonetheless cast doubt on the ruling being challenged in the case at bar. Still, the precedential reversal of a trial court’s ruling as an abuse of discretion is generally the best authority for finding a similar ruling, in similar circumstances, to be an abuse of discretion as well. The appellate court applied this principle in Bangaly v. Baggiani, 2014 IL App (1st) 123760, citing the standard of review as the basis for distinguishing one of the decisions the appellant had cited in support of her argument for reversal. Claiming that the trial court had erred in permitting a defense expert to testify, the plaintiff relied upon Stehlik v. Village of Orland Park, 2012 IL App (1st) 091278, in which the appellate court had affirmed a trial court’s ruling that barred an expert. Bangaly, 2014 IL App (1st) 123760,

As important as it is to appreciate the standard of review in evaluating the strengths and weaknesses of the case being litigated and the chances of success on appeal, it

of discretion in the admission of similar expert testimony: We also note that the Stehlik court was presented the issue of expert testimony from the opposite viewpoint as in this case: there, the court was asked to determine whether the trial court abused its discretion in refusing an expert opinion while, here, we are asked to determine whether the trial court abused its discretion in permitting the expert opinion. Given the deferential standard of review, such a distinction is significant. Id. (emphasis added). That distinction is less significant to an appellee’s choice of authority in defense of a discretionary ruling. A precedent that affirms a discretionary ruling, and holds that the ruling was within a previous trial court’s discretion, is useful authority for the argument that a similar ruling in the case at bar was within that trial court’s discretion as well.

can be just as important to evaluating and selecting the

Conclusion

precedents to cite in support of one’s position.

Apart from the rule requiring a statement of the standard of review, there might seem to be little reason for it; presumably the appellate court doesn’t need to be told, for instance, that its review of a summary judgment in a contract interpretation case is de novo, or that evidentiary rulings are reviewed for abuse of discretion. The real value of citing the standard of review is to the attorney who writes the brief, focusing attention on what must be proved—how much or how little—and setting the tone for the appeal.

the reviewing courts reversed—and found that other trial courts abused their discretion doing the same thing to which the appellant objects in the case at bar. There are exceptions, of course; a decision affirming a discretionary ruling may be useful to an appellant, for instance, if it not only holds that the ruling at issue was within the trial court’s discretion but also suggests that the trial

¶ 162 (citing Stehlik, 2012 IL App (1st) 091278, ¶ 29). But the Bangaly court rejected Stehlik as authority for reversing the judgment. While its ruling was partly based on the better qualifications of the expert in Bangaly, the court also recognized that the Stehlik court’s affirmance of a discretionary evidentiary ruling had little precedential value for Bangaly, and did not suggest an abuse

First Quarter 2017 | IDC QUARTERLY | 31

Medical Malpractice Update Edna L. McLain and Tammera E. Banasek HeplerBroom LLC, Chicago

How to Be Thankful When Settling a Wrongful Death Claim T’is the season for celebration and giving thanks, and never as an attorney are you seized more by the need to celebrate and give thanks than when you resolve a difficult wrongful death lawsuit for a client. However, before you make that celebratory toast, ask yourself whether your client settled with the proper plaintiff. Now, you may be scoffing at this point, thinking that you obviously settled with the proper plaintiff. After all, you settled with the plaintiff who filed the lawsuit, but when

that you need to have answered long before any settlement in your case is even discussed. The case of Pruitt v. Jockisch, 228 Ill. App. 3d 295 (4th Dist.1992), provides a cautionary tale for defense counsel about the potential implications when a settlement is undertaken without notice to the proper beneficiaries under the Illinois Wrongful Death Act. In Pruitt, the defendant ended up paying twice when the decedent’s father was not given notice of the lawsuit. This Medical

The case of Pruitt v. Jockisch provides a cautionary tale for defense counsel about the potential implications when a settlement is undertaken without notice to the proper beneficiaries under the Illinois Wrongful Death Act.

dealing with a cause of action under the Wrongful Death Act,740 ILCS 180, relying on the case caption is not going to be enough. What is the plaintiff’s relationship to the decedent? Did you identify all of the decedent’s next of kin? Were all of the next of kin properly notified of the lawsuit? Did the next of kin know who was acting as the plaintiff on behalf of the decedent’s estate? Did a probate court appoint a representative different from the named plaintiff in your case? These are all important questions 32 | IDC QUARTERLY | First Quarter 2017

Malpractice Update serves as a review of issues to consider when determining if you have a proper plaintiff in a wrongful death suit, and it also outlines the pitfalls of what could happen if you do not properly prepare your case. Appointment and Notice under the Wrongful Death Act The Illinois Wrongful Death Act (the Act), codified at 740 ILCS 180, provides a remedy to certain limited and defined

individuals when a death occurs as a result of negligence. The Act states that a wrongful death claim,shall be brought by and in the names of the personal representatives of such deceased person, and, except as otherwise hereinafter provided, the amount recovered in every such action shall be for the exclusive benefit of the surviving spouse and next of kin of such deceased person.740 ILCS 180/2. Next of kin are defined as those definite blood relatives of the decedent in existence at the time of the decedent’s death who would take personal property if the decedent died intestate. Baez v. Rosenberg, 409 Ill. App. 3d 536 (1st Dist. 2011). Illinois courts look to the laws of intestacy to determine the next of kin under the Act. Id. Further, while the Illinois Probate Act, 755 ILCS 5,

About the Authors Edna L. McLain is an associate attorney of HeplerBroom, LLC. Ms. McLain graduated from the University of Illinois, ChampaignUrbana, in 1991, with a Bachelor of Arts degree in English, and she received her Juris Doctorate from the Saint Louis University School of Law in 2002. She is admitted to the bars of Illinois, Missouri and Wisconsin and the U.S. District Court of the Northern District of Illinois. Ms. McLain focuses her practice in the areas of medical malpractice, insurance defense and toxic torts. She is a member of the Illinois Association of Defense Trial Counsel. Tammera E. Banasek is a senior associate in the Chicago office of HeplerBroom LLC. Her practice focuses on the defense of medical / dental malpractice and other healthcare related litigation. She is a 1993 cum laude graduate of The John Marshall Law School.

provides guidance concerning intestate succession, reliance on the Probate Act is limited to determining the possible class of beneficiaries of a wrongful death claim. Johnson v. Provena St. Therese Med. Ctr., 334 Ill. App. 3d 581, 591 (2d Dist. 2002). Proceeds from a wrongful death claim are distributed according to the laws of intestacy, not the Probate Act. Id. Unlike a survival action, a wrongful death claim does not require the opening of a probate estate to prosecute the claim. Section 2.1 of the Act states: In the event that the only asset of the deceased estate is a cause of action arising under this Act, no petition for letters of office for his or her estate has been filed, the court, upon motion of any person who would be entitled to recovery under this Act, and after such notice to the party’s heirs or legatees as the court directs, and without opening of an estate, may appoint a special administrator for the deceased party for the purpose of prosecuting or defending the action. 740 ILCS 180/2.1. Therefore, a trial court has authority to appoint a special administrator when the lawsuit is the only asset of the estate and no probate estate has been opened. Cushing v. Greyhound, 2012 IL App (1st) 100768. However, if a probate court issues letters testamentary or letters of administration, a trial court has no authority to appoint another individual as the special administrator to prosecute the wrongful death claim. Estate of Redeker

v. Redeker, 210 Ill. App. 3d 769 (4th Dist. 1991). Only the individual holding the letters testamentary or letters of administration from the probate court is able to act on behalf of the estate, and only that individual may resolve the lawsuit and enter into a settlement. Further, neither a representative appointed by probate nor a special administrator appointed by a trial court must be a next of kin in order to serve. Carter v. SSC Odin Operating Co., LLC, 2012 IL 113204, ¶ 33. However, both have fiduciary duties to litigate the lawsuit to conclusion in order to distribute the proceeds of the lawsuit to the wrongful death beneficiaries. Johnson, 334 Ill. App. 3d at 590. Regardless of what title is given, the individual appointed to serve is “obligated to act in the utmost good faith to protect the beneficiaries’ interests and must exercise at least that degree of skill and diligence that a reasonably prudent person devotes to his or her personal affairs.” Id. Once an appointment is made by either the probate court or the trial court, the appointed individual has an obligation to identify and notify those individuals who are the proper eligible beneficiaries of the wrongful death award. Id. Notice under the Illinois Probate Act requires mailing a copy of the petition appointing a representative and admitting a will to probate to the address of any heir or legatee, or publishing a newspaper notice for three weeks. 755 ILCS 5/6-10. This is to provide notice to any eligible beneficiary of the wrongful death claim and appointment of a representative or administrator to allow for any objections by the beneficiaries. To understand why this is important, we need to consider the holding in Pruitt v. Jockisch.

Pruitt v. Jockisch— A Cautionary Tale In Pruitt v. Jockisch, Douglas and Penny Pruitt’s minor daughter died from drowning in a swimming pool owned by Steve and Deborah Jockisch. Pruitt, 228 Ill. App. 3d at 295. At the time of their daughter’s death, Douglas and Penny Pruitt were estranged and had not lived together for several years. Id. at 298. The Greene County Circuit Court appointed Douglas Pruitt as special administrator of his deceased minor daughter’s estate. Id. Mr. Pruitt then filed suit against Steve and Deborah Jockisch under the Act for the death of his daughter. The defendants moved to dismiss pursuant to 735 ILCS 5/2-619, arguing that the decedent’s mother, Penny Pruitt, had previously entered into a settlement with them for $10,000, and released all claims, including those arising under the Act. Id. Penny Pruitt had been appointed special administrator of her daughter’s estate by the Cass County Circuit Court prior to her husband’s appointment by the Greene County Circuit Court. Id. In his response to the motion to dismiss, Douglas Pruitt maintained that the appointment of his estranged wife Penny Pruitt, “was made without any notice to any person who might have a right to recover for the death of the decedent minor.” Id. He argued that the settlement and release was void as to him and his children from a former marriage because the Cass County Circuit Court did not have jurisdiction over them at the time of Penny Pruitt’s appointment or at any time before that estate was closed. Id. at 303. Court records revealed that Penny Pruitt filed an affidavit when she was appointed, stating that the whereabouts of Douglas Pruitt were — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 33

Medical Malpractice Law | continued

“unknown.” Douglas Pruitt maintained that his estranged wife knew where his parents lived and could have ascertained where he was living from them. Id. at 298. She never provided notice to him of her appointment as special administrator by the Cass County Circuit Court. The Greene County Circuit Court denied the defendants’ motion to dismiss, but granted their Motion to Transfer Venue based upon forum non conveniens. Id. After the transfer to Cass County, the defendants moved to reconsider the denial of their motion to dismiss. On rehearing, the Cass County Circuit Court dismissed the wrongful death count. Id. Douglas Pruitt appealed. On appeal, the Illinois Appellate Court Fourth District reversed the decision of the Cass County Circuit Court and remanded the case with directions. Id. at 305. The Fourth District reasoned the Wrongful Death Act requires the giving of “some notice” of the proceedings to appoint a special administrator to those who might be able to recover under the Act. Id. at 302. The defendants argued that third parties, in dealing with a personal representative with letters of office, needed to have a reasonable way of being assured of the representative’s power to act. Id. at 303. Because Penny Pruitt had been appointed by a trial court as a special administrator, the defendants argued they should be permitted to rely upon that appointment when entering into a settlement agreement with her. In response, the appellate court noted that a “party dealing with a special administrator under section 3 of the Act can look to the records of the court making the appointment and find out if proof is shown that those entitled to notice by the terms of the petition were shown to be given that notice.” Id. at 304. Because Douglas Pruitt was not provided notice of Penny 34 | IDC QUARTERLY | First Quarter 2017

Pruitt’s appointment, the release signed by Penny Pruitt was void as to him. Id. at 305. However, the release signed by Penny Pruitt was not void as to her, and it would bar any additional recovery sought by her. Id. In its holding, the Pruitt court relied on In re Estate of Stanford, 221 Ill. App. 3d 154 (5th Dist. 1992). In Stanford, the notice requirements of the Illinois Probate Act were not met as to certain heirs listed on the petition for probate of the will. Stanford, 221 Ill. App. 3d at 155. After the estate was closed, one of the heirs filed a petition to declare all acts of the executor void as to her. Id. at 158. On appeal, the appellate court held that any orders were void as to the heir who did not receive notice since the court lacked personal jurisdiction over the uninformed heir. Id. at 162.







Lessons Learned and Practice Tips The holding in Pruitt shifts the burden to the defendants in a wrongful death proceeding to ensure a proper special administrator appointment was made. As set forth in Pruitt, the defendant who fails to confirm the propriety of the appointment of the special administrator prior to settling claims under the Act runs the risk of additional exposure to un-notified heirs of the decedent. While the Pruitt court did not offer specific dictates on what constitutes notice to beneficiaries under the Wrongful Death Act, it did highlight the importance of checking the court file concerning the special administrator’s appointment to determine if proper notice was given to those entitled to notice by the terms of the petition. Pruitt, 228 Ill. App. 3d at 304. Additionally, the following are considered best practice when it comes to the issue of the propriety of the administrator’s appointment:



Review all probate court filings to determine if a representative has been appointed and compare that individual’s name to the one appointed as the special administrator by the trial court. The probate file will provide a wealth of information about potential beneficiaries, assets of the estate and any payments received by the estate from other sources. Scrupulous attention should be paid to the notice required and actually provided to all heirs about the probate estate being opened; Issue interrogatories requesting the identification of all potential beneficiaries and ascertain whether they have been notified of the lawsuit; Ask detailed questions at depositions concerning the identities of all potential heirs, including any potential family members outside of marriage; Ensure that all release documents include language affirming that the plaintiff-representative provided notice to all heirs and request verification of such notice. Conclusion

Due diligence in the early stages in the defense of a wrongful death case can save your client from potential exposure to multiple lawsuits and payments. Careful consideration of who the proper plaintiff is and plaintiff’s relationship with the decedent can ensure that you are dealing with the proper party. A moment of reflection at the beginning of the case to consider these issues and close monitoring throughout the pendency of your case will save both you and your client time and money.

Employment Law Julie A. Bruch O’Halloran Kosoff Geitner & Cook, LLC, Northbrook

New Changes for Employer Wellness Programs Many employers adopt wellness programs with the goal of lowering health care costs, reducing absenteeism, achieving higher employee productivity, reducing workers’ compensation and disability-related costs, reducing injuries, and improving employee morale. See Leonard L., Berry, Ann M. Mirabito & William B. Baun, What’s the Hard Return on Employee Wellness Programs?, Harv. Bus. Rev. (Dec. 2010), available at https://hbr.org/2010/12/whats-the-hardreturn-on-employee-wellness-programs. Such programs must comply with Title II of the Genetic Information Nondiscrimination Act (GINA), Title I of the

insurance issuer offering group health insurance in connection with a group health plan, must also comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) nondiscrimination provisions, as amended by the Affordable Care Act. See Regulations Under the Americans With Disabilities Act, 81 Fed. Reg. 31126-01 (May 17, 2016) (to be codified at 29 C.F.R. pt. 1630), available at http://www.appwp.org/pub/5116cd 50-0c5e-e882-410b-178527196f4f. The EEOC issued a final rule on May 17, 2016 related to employer wellness programs and permitted inducements under the law. Genetic Information

Employer-sponsored wellness programs that are part of, or provided by, a group health plan, or that are provided by a health insurance issuer offering group health insurance in connection with a group health plan, must also comply with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) nondiscrimination provisions, as amended by the

inducement to an employee for the employee’s spouse to provide information about the spouse’s manifestation of disease or disorder as part of a health risk assessment (HRA) administered in connection with an employer-sponsored wellness program.” 81 Fed. Reg. 31143. On the same day, the EEOC issued the final rule to amend regulations for the Americans with Disabilities Act (ADA) (42 U.S.C. §§ 12101-12213) at 29 C.F.R. § 1630.14(d), “Other Acceptable Examinations and Inquiries,” and the Interpretive Guidance related to employer wellness programs. These rules apply prospectively to employer-sponsored wellness programs as of the first day of the first plan year that begins on or after January 1, 2017, for the health plan used to determine the level of inducement permitted under the rules. Thus, for example, if a plan used to calculate the level of inducements begins on February 1, 2017, then February 1, 2017 is the date on which the wellness program begins. Employer Wellness Programs and GINA Title II of GINA prohibits employers from using genetic information when making employment decisions and restricts employers and other entities covered by GINA from requesting, — Continued on next page

Affordable Care Act. About the Author American with Disabilities Act (ADA), and other employment discrimination laws enforced by the Equal Employment Opportunity Commission (EEOC). Employer-sponsored wellness programs that are part of, or provided by, a group health plan, or that are provided by a health

Non-Discrimination Act, 81 Fed. Reg. 31143 (May 17, 2016) (to be codified at 29 C.F.R. pt. 1635). The final rule amended the regulations implementing Title II of GINA. The rule “addresses the extent to which an employer may offer an

Julie A. Bruch is a partner with O’Halloran Kosoff Geitner & Cook, LLC. Her practice concentrates on the defense of governmental entities in civil rights and employment discrimination claims.

First Quarter 2017 | IDC QUARTERLY | 35

Employment law | continued

requiring or purchasing genetic information, except in very limited circumstances. 81 Fed. Reg. 31143-01. One exception allows employers that offer voluntary wellness programs to request genetic information as part of the wellness program as long as certain specific requirements are met. Id. at 31144. The final rule now clarifies that an employer may, in certain circumstances, offer an employee limited inducements (in the form of a reward or penalty) for the employee’s spouse to provide information about the spouse’s manifestation of disease or disorder as part of a health risk assessment (HRA) administered in connection with an employer’ sponsored wellness program, provided that GINA’s confidentiality requirements are observed and any information obtained is not used to discriminate against an employee. Id. For example, the employer may request that an employee’s spouse complete a questionnaire or medical examination, such as a blood pressure test or blood test to detect high cholesterol or high glucose levels. Id. at 31155. Keep in mind that inducement limits and a requirement to provide a reasonable alternative standard may apply to some of these programs under HIPPA, as amended by the Affordable Care Act. Final Rule on Employer Wellness Programs and the Genetic Information Nondiscrimination Act, EEOC (May 17, 2016), at ¶ 9, available at https://www1. eeoc.gov//laws/regulations/qanda-ginawellness-final-rule.cfm. The final rule applies to all wellness programs, not just those that are part of group health plans and even employers that do not offer a group health plan may still offer limited inducements for an employees’ spouse to participate in wellness programs that

36 | IDC QUARTERLY | First Quarter 2017

The final rule covering changes to employer wellness programs under Title I of the ADA similarly provides that employers may provide limited financial and other incentives in exchange for an employee answering disability-related questions or taking medical examinations as part of a wellness program, whether or not the program is part of a health plan.

ask for current or past health information. Id. Employers may offer children the opportunity to participate in a wellness program, but employers may not offer children inducements in exchange for information about their current health status or about their genetic information. The final rule also prohibits employers from denying access to health insurance or any package of benefits to, or retaliating against, any employee whose spouse refuses to provide information about his or her current or past health status to an employer wellness program. Id. Employer Wellness Programs and the ADA The final rule covering changes to employer wellness programs under Title I of the ADA similarly provides that employers may provide limited financial and other incentives in exchange for an employee answering disability-related questions or taking medical examinations as part of a wellness program, whether or not the program is part of a health plan. 81 Fed. Reg. 31126-01. Title I of the ADA prohibits employers from discriminating against individuals on the

basis of disability and restricts employers from obtaining medical information from applicants and employees, but does allow such inquiries as part of a voluntary employee health program. Id. at 31127. The rule applies only to wellness programs that require employees to answer disability-related questions or to undergo medical examinations in order to earn a reward or avoid a penalty. Id. at 31126. The term “incentives” in the final rule includes both financial and in-kind incentives, such as reductions in insurance premiums, cash, time-off awards, prizes, and other items of value—including trinket gifts. Final Rule on Employer Wellness Programs, EEOC, supra, at ¶ 18. For those employers who offer employees wellness programs, it is essential that such employers review these new final rules and amend existing wellness programs as of January 1, 2017. Employers must also provide a notice to employees that clearly explains what medical information will be obtained, how it will be used, and that the limits on incentives apply prospectively only.

Supreme Court Watch M. Elizabeth D. Kellett HeplerBroom LLC, Edwardsville

How Far Must Teachers and School Districts Go to Prevent Injury to Students? Barr v. Cunningham, No. 120751, First District No. 1-15-0437

The plaintiff is a high school student (Student) who suffered an eye injury while playing floor hockey in physical education class. Barr v. Cunningham, 2016 IL (1st) 150437, ¶ 3. The Student’s physical education teacher (Cunningham) had certain rules related to floor hockey. She limited the number of players, required a squishy ball and plastic sticks, and prohibited and enforced the prohibition of high-sticking, fighting, checking, and lifting the ball with a stick. Barr, 2016 IL (1st) 150437, ¶ 8. Cunningham never saw a student get hit in the face with a ball. Id. ¶ 23. While there were goggles available for students’ use, and Cunningham was aware that her students would occasionally lift the ball with their hockey sticks and that the ball could hurt a student if it hit their face, Cunningham did not require students to wear goggles for floor hockey. Id. ¶¶ 9, 23. During the floor hockey that led to the lawsuit, the hockey ball bounced off of another player’s stick and hit the Student in the eye. Id. ¶ 3. The Student sued Cunningham and the School District alleging that Cunningham’s failure to require students to wear safety goggles constituted willful and wanton conduct for which the School District was also liable as Cunningham’s employer. Id. ¶ 4. Pursuant to the Local Governmental and Governmental Employees Tort Immunity Act (Act), local public entities

and their employees are immune from liability for injury caused by a failure to supervise an activity on public property unless their failure to provide supervision rises to the level of willful and wanton conduct. 745 ILCS 10/3-108. “Willful and wanton conduct involves failure to take reasonable precautions despite having notice that substantial danger was involved.” Barr, 2016 IL (1st) 150437, ¶ 23 (citation omitted). At trial, Cunningham and the School District moved for a directed verdict, arguing that Cunningham did not act willfully or wantonly and was therefore immune under the Act. Id. ¶ 12. The circuit court agreed that Cunningham and the School District were immune under section 3-108(a) because the Student failed to prove willful and wanton conduct as a matter of law. Id. Therefore, the circuit court granted Cunningham and the School District’s motion for directed verdict. Id. The Student appealed. Id. Reviewing the case de novo, the Illinois Appellate Court First District reversed the circuit court’s judgment and remanded for a new trial on the merits of the Student’s claims. Id. ¶¶ 18, 31. The First District, addressing section 3-108(a) immunity, noted “when evaluating a defendant’s conduct, courts ask whether the defendant has taken any action to mitigate danger.” Id. ¶ 19. Here, because Cunningham did not

testify that her safety measures would protect the ball from reaching a player’s eyes, a jury could find that Cunningham did nothing to mitigate that particular danger. Id. ¶ 20. Moreover, while Cunningham testified that she did not require goggles because she did not believe that serious injury would occur, she failed to testify that she believed that no eye injury would occur and failed to explain what would constitute a serious injury. Id. ¶ 21. The First District held that a jury could find that Cunningham consciously disregarded the safety of her students. Id. The First District distinguished the holding in Lynch v. Board of Education of Collinsville Community Unit Dist. No. 10, 82 Ill. 2d 415 (1980) and its progeny. Id. ¶ 22. In Lynch, a student sustained head injuries playing powderpuff football. Lynch, 82 Ill. 2d at 416. The teachers did not provide the students with helmets but did take some precautions for the students’ protection. — Continued on next page

About the Author M. Elizabeth D. Kellett is an associate at HeplerBroom LLC. Ms. Kellett is a litigation attorney with a primary emphasis in the defense of complex, multi-party civil cases and class actions, including all aspects of product liability, particularly pharmaceutical drugs and devices. Prior to joining HeplerBroom, Ms. Kellett practiced law in Washington, D.C. and represented institutions of higher learning in administrative hearings and proceedings before the U.S. Department of Education. She also represented insurance and financial corporations and individuals in proceedings before the Securities and Exchange Commission, civil and criminal litigation, and in matters of corporate governance and compliance. Ms. Kellett earned her B.A. from Georgetown University in Washington D.C. in 2002 and her J.D. from Georgetown University Law Center in 2006.

First Quarter 2017 | IDC QUARTERLY | 37

Supreme Court Watch | continued

Judge Mason faulted the majority for rejecting the significance of the fact that Cunningham was not aware of any prior floor hockey injuries. Judge Mason noted case law showing “that the absence of prior injuries is relevant to a determination of whether a defendant’s conduct was willful and wanton.”

Id. at 430-35. The Illinois Supreme Court held that “insufficient precautions” for protection of the football players “does not demonstrate an utter and conscious disregard” for their safety. Lynch, 82 Ill. 2d at 430; see also Poelker v. Warrensburg-Latham Cmty. Unit Sch. Dist. No. 11, 251 Ill. App. 3d 270 (4th Dist. 1993) (when plaintiff was injured in the head by a discus, holding that because defendants implemented several rules for the students’ safety, the failure to take the additional step of having an adult exclusively supervising the discus warm-ups was not willful and wanton misconduct). The First District reasoned that this case was distinguishable from Lynch and Poelker because Cunningham knew that goggles were available and the goggles’ sole purpose was to provide protection. Barr, 2016 IL (1st) 150437, ¶ 22. Therefore, the First District held that a jury could find that Cunningham’s “conscious decision to forego the use of already-available safety equipment” was willful and wanton and the circuit court should have allowed the case to go to the jury. Id. Presiding Judge Mason filed a dissenting opinion. Id. ¶ 33. Judge Mason found that Cunningham’s decision not to use goggles was based on her belief that the safety precautions that 38 | IDC QUARTERLY | First Quarter 2017

were already in place were sufficient to protect students from any injury. Id. ¶ 36. Because Cunningham’s decision was made with the student’s safety in mind, her conduct could not have been willful and wanton. Id. Judge Mason noted that the majority decision would find all conduct willful and wanton unless every conceivable precaution to avert every possible injury were taken. Id. ¶¶ 36, 39. Judge Mason also took issue with the majority’s attempt to distinguish Lynch and Poelker. Id. ¶ 37. In Poelker, the Fourth District held that the school district did not willfully and wantonly breach their duty to supervise even though there were 12 adults available to supervise at the track meet and there was a conscious decision not to assign one to supervise discus warm-ups. Id. Similarly, here there were goggles available and, while Cunningham consciously decided not to require students to wear them, there was no basis for a jury to find that Cunningham acted “willfully and in an ‘utter indifference to or conscious disregard of’ her students’ safety.” Id. (citing 734 ILCS 10/1-210). Finally, Judge Mason faulted the majority for rejecting the significance of the fact that Cunningham was not aware of any prior floor hockey injuries. Id. ¶

38. Judge Mason noted case law showing “that the absence of prior injuries is relevant to a determination of whether a defendant’s conduct was willful and wanton.” Id. (emphasis in original) (citing Pomrehn v. Crete-Monee High Sch. Dist., 101 Ill. App. 3d 331, 335 (3d Dist. 1981). Judge Mason warned that requiring Cunningham to anticipate an injury that had never occurred approaches a strict liability standard. Id. Cunningham and the School District appealed. They first argue that this decision is in direct conflict with Lynch and its progeny. In Lynch, a student was injured after teachers, in violation of Illinois High School Association rules, did not provide students with helmets to play powderpuff football. Lynch, 82 Ill. 2d 415. Despite this failure, the Illinois Supreme Court found that the teachers’ conduct did not “demonstrate an utter and conscious disregard for the safety of the girls, simply insufficient precautions for their protection.” Id. at 430. Similarly, Cunningham and the School District argue, Cunningham took into account the safety of her students and believed, based on experience, that the precautions she took were sufficient. The fact that these precautions failed is not enough to find conduct willful and wanton under Lynch. Cunningham and the School District also echo Judge Mason’s concern that the First District’s decision threatens to expand the liability of public entities to a strict liability standard. Finding that a school district is required to take every precaution possible to prevent all injuries no matter how remote or improbable would chill school districts’ willingness to provide physical education to students. Moreover, it would open the floodgate to litigation and undercut the Tort Immunity Act, the

purpose of which is to limit liability of public entities and public employees and prevent the diversion of public

funds from their intended payment to the payment of damage claims.

Does the Medical Malpractice Statute of Repose Bar the Application of the Relation Back Doctrine for Purposes of Adding a Claim to an Existing Case Under the Wrongful Death Act? Lawler v. University of Chicago Medical Center, No. 120745, First District No. 1-14-3189 The decedent filed a medical malpractice cause of action against Hospital defendants within the two-year statute of limitations and four-year statute of repose. Lawler v. Univ. of Chi. Med. Ctr., 2016 IL (1st) 143189, ¶ 3. The decedent died after the four year statute of repose expired and the circuit court allowed decedent’s daughter (Plaintiff) to substitute herself as party plaintiff and executor of decedent’s estate. Lawler, 2016 IL (1st) 143189, ¶ 5. Alleging the same acts of negligence and operative facts as the original complaint, the Plaintiff filed an amended complaint alleging claims under the Survival Act and claims that sounded in wrongful death. Id. ¶ 6. The Hospitals moved to dismiss the wrongful death claims, arguing that they were barred by the medical malpractice four year statute of repose (735 ILCS 5/13212(a)). Id. ¶ 7. The circuit court granted the Hospitals’ motions to dismiss because the statute of repose lapsed before the wrongful death claims were filed and there was no precedent to support using the relation back doctrine in a medical malpractice case where a claim was filed

after the statute of repose expired. Id. ¶ 8. The Plaintiff appealed. Reviewing the case de novo, the Illinois Appellate Court First District reversed the circuit court’s judgment, holding that because the relation back doctrine applied, the wrongful death claims were not barred. Id. ¶¶ 1, 14. The First District first discussed the Wrongful Death Act, highlighting that the cause of action is the “wrongful act, neglect or default causing death and not merely the death itself” and noting that the Wrongful Death Act provides the exclusive remedy available when death occurs as a result of tortious conduct. Lawler, 2016 IL (1st) 143189, ¶¶ 19-20 (citing 740 ILCS 180/1). The First District also noted that “because the plaintiff’s rights are derivative of those which the decedent himself possessed, that time may be impacted by other limitations provisions, which may supersede the wrongful death statute and recast the time in which the action may be brought.” Id. ¶ 23. The First District next discussed the limitations for filing a medical negligence claim. Id. ¶ 24. Pursuant

to 735 ILCS 5/13-212(a), medical negligence claims have a two year statute of limitations and four year statute of repose. Lawler, 2016 IL (1st) 143189, ¶ 25. The First District noted that the statute of repose was enacted as part of the legislature’s “response to a medical malpractice insurance crisis created by the increasing reluctance of insurance companies to write medical malpractice insurance policies and the dramatic rise in premiums demanded by those companies which continued to issues polices.” Id. ¶ 26 (citations omitted). In Hayes v. Mercy Hospital & Medical Center, 136 Ill. 2d 450 (1990), the Illinois Supreme Court held that “the medical malpractice statute of repose bars any action after the period of repose seeking damages against a physician or other enumerated health-care provider for injury or death arising out of patient care, whether at law or in equity.” Hayes, 136 Ill. 2d at 456. However, the First District distinguished Hayes because, in Hayes, the Supreme Court did not consider the relation back doctrine. Lawler, 2016 IL (1st) 143189, ¶ 29. Under the relation back doctrine (735 ILCS 5/2-616(b)), a cause of action is not barred by lapse of time under any statute if the time prescribed had not expired when the original pleading was filed and if the cause of action grew out of the same transaction or occurrence set up in the original pleading. The critical inquiry is whether allowing the claim would require a defendant to defend against a claim of which he had no notice of knowledge. Lawler, 2016 IL (1st) 143189, ¶¶ 33-34 (citing Zeh v. Wheeler, 111 Ill. 2d 266 (1986)). The First District next applied the relation back doctrine to the statute of repose. Id. ¶ 37. The First District — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 39

Supreme Court Watch | continued

rejected the Hospitals’ argument that relation back does not apply because the Plaintiff’s wrongful death claims constitute distinct causes of action from the survival claims. The First District found the Hospitals’ case law unpersuasive because the cases either did not involve the relation back doctrine or they involved original actions that were filed after the lapse of the statute of repose. Id. ¶¶ 39-46. Here, however, an amendment to an action was timely filed and pending when decedent died which triggered the relation back doctrine. Id. ¶ 46. The First District found the holding in Sompolski v. Miller, 239 Ill. App. 3d 1087 (1st Dist. 1992) more persuasive. Lawler, 2016 IL (1st) 143189, ¶ 47. In Sompolski, the First District applied the relation back doctrine to a wrongful death claim and found that the wrongful death claim was not barred by the statute of limitations because the claim arose from the same transaction or occurrence as that at issue in decedent’s original complaint. Sompolski, 239 Ill. App. 3d at 1094. Despite the fact that Sompolski did not involve a medical malpractice claim or the statue of repose, the First District found it persuasive because in Lawler the decedent filed her original complaint within the statutes of limitations and repose, and the wrongful death claims arose from the same transaction or occurrence described in decedent’s original complaint. Lawler, 2016 IL (1st) 143189, ¶ 52. Therefore, the “defendants were advised of the essential facts necessary to prepare their defense” and will not be prejudiced. Id. ¶ 52. The First District noted that the relation back doctrine is frequently applied in medical malpractice cases to allow amended complaints when defendants have adequate notice of the 40 | IDC QUARTERLY | First Quarter 2017

The First District rejected the Hospitals’ argument that relation back does not apply because the Plaintiff’s wrongful death claims constitute distinct causes of action from the survival claims. The First District found the Hospitals’ case law unpersuasive because the cases either did not involve the relation back doctrine or they involved original actions that were filed after the lapse of the statute of repose.

relevant facts. Id. ¶ 54 (citing Castro v. Bellucci, 338 Ill. App. 3d 386, 394-95 (1st Dist. 2003)). Finally, the First District addressed the Hospitals’ statutory construction argument that the statute of repose controls and the medical malpractice claims are barred because the statute of repose is more specific than the wrongful death and relation back statutes. Id. ¶ 55. The First District found that the relation back doctrine was clear and unambiguous in that it applies to “any statute” and therefore the court need not employ principles of statutory construction. Id. ¶ 56. Therefore, the First District held that the wrongful death claims were not barred. The Hospitals appealed. They first argue that the First District’s interpretation of the relation-back doctrine exceeds the narrow purposes set forth in its plain language. The relation back statute preserves a claim that would otherwise be time barred. However, it cannot, as here, rescue a claim that never accrued because the repose period ran out before it could accrue. While Plaintiff’s survival action is not barred because its accrual coincides with the

act of alleged negligence on which the claim is based, the wrongful death claim accrues only upon the death of the decedent. Decedent died after the statute of reposed had lapsed, therefore the wrongful death claim never accrued and cannot be saved by the relation back doctrine. Next, the Hospitals argue that the First District’s holding blurred important distinctions between the statutes of limitations and repose. The statute of repose was enacted in order to address the unpredictable liability that defined the malpractice-insurance crisis of the 1970s. Unlike the statute of limitations, the statute of repose is unrelated to whether the defendant has notice of a potential action or is prejudiced by a belated claim. The First District held that the relation back doctrine applied, in part, because defendants had adequate notice of the relevant facts. However, this consideration is only relevant to the statute of limitations and using it in the context of the statute of repose contradicts case law. In Hayes, the Supreme Court determined that the statute of repose did not apply to third-party contribution

Property Insurance Law actions brought against a doctor by the defendants in an underlying negligence action. Id. ¶ 27. The Hospitals note that the defendant in Hayes was clearly aware of the facts that gave rise to the contribution claim because they had already been timely sued for malpractice based on those same events. Yet, the Supreme Court held that the contributions actions were barred by the statute of repose. Hayes, 136 Ill. 2d at 458. Similarly, in Uldrych v. VHS of Illinois, Inc., 239 Ill. 2d 532, 542 (2011), a counterclaim for indemnification was barred because it was filed after the four year statute of repose even though the counter-defendant had been defending the original claim for years. Neither the Hayes nor the Uldrych courts considered whether allowing the claim would prejudice the defendant. The Hospitals argue that a defendant’s ability to defend itself, free of prejudice of a stale claim, is relevant only to the statute of limitations. The statute of repose, on the other hand, sets a certain date, without regard to any other fact, outside of which no action may be brought. Therefore, the wrongful death claims must be dismissed. Finally, the Hospitals argue that the First District failed to apply canons of statutory construction despite conflict between the relation back doctrine and the statute of repose. Even assuming that the relation back doctrine preserves the wrongful death claim, it is in clear conflict with the statute of repose, which provides that “in no event” shall an action be brought more than four years after the patient care at issue. Under the canons of statutory construction, the specific governs the general. Therefore, the statute of repose, which was enacted to specifically address the malpracticeinsurance crisis, would rule.

Teresa A. Minnich Robbins, Salomon & Patt, Ltd., Chicago

Duty to Defend: Illinois Appellate Court First District Applies Exception to Eight Corners Rule Earlier this year, in the declaratory judgment action Country Mutual Insurance Co. v. Dahms, 2016 IL App (1st) 141392, the Illinois Appellate Court First District weighed the importance of avoiding premature resolution of issues pertinent to underlying tort litigation (and the resulting collateral estoppel effect) against the mitigation of plaintiffs’ incentive toward artful pleading so as to trigger insurance coverage. In Dahms, the court resolved the conflict by reaching beyond the underlying complaint and considering, as evidence, Dahms’ criminal conviction for battery—ultimately identifying the date of that criminal conviction as the termination date of Country Mutual’s duty to defend Dahms in the underlying personal injury case. Dahms, 2016 IL App (1st) 141392, ¶ 4. Underlying Facts The Dahms case arose from an altercation between Dahms, who held a homeowner’s policy through Country Mutual, and a taxi cab driver, Enadeghe. In October 2011, Enadeghe pulled his taxi cab up to a crosswalk near Dahms, who was a pedestrian. Id. ¶ 8. Dahms’ briefcase made contact with the windshield of Enadeghe’s cab, causing damage to the windshield. Enadeghe left his cab and pursued Dahms, demanding payment for the damage. A scuffle ensued, during which Dahms allegedly, “physically struck [Enadeghe] with the briefcase, knocking [Enadeghe] uncon-

scious and causing him to fall to the ground.” Id. ¶ 8-10. As a result of the incident, Dahms became the defendant to both a civil and criminal action. In addition to being charged with criminal battery, Dahms faced a two-count personal injury complaint filed by Enadeghe (the Tort Case). In Count I of the Tort Case, Enadeghe alleged negligence, claiming that Dahms “made physical actions with his hands and fists toward [Enadeghe],” “swung a briefcase in close proximity to the body of the [Enadeghe],” and “[f]ailed to warn of one or more of these negligent acts or omissions.” Id. ¶¶ 10-11. The negligence count concluded that, as a result of “one or more of these negligent acts or omissions, [Enadeghe] suffered injuries—both temporary and permanent—to his personal and pecuniary interests.” Id. In Count II, however, Dahms’ alleged battery, asserting an intentional act on the part of Dahms. Id. — Continued on next page

About the Author Teresa A. Minnich is an associate in the Chicago office of Robbins, Salomon & Patt, Ltd. Ms. Minnich concentrates her practice in the areas of medical malpractice defense and business litigation. She received her B.A. degree from the College of Saint Benedict in St. Joseph, Minnesota in 2004, and earned her law degree from Chicago-Kent College of Law in 2009.

First Quarter 2017 | IDC QUARTERLY | 41

Property Insurance Law | continued

Dahms requested coverage from his Country Mutual homeowner’s insurance policy. By its terms, the policy provided coverage for liability for damages for bodily injury or property damage arising from any “occurrence,” including any “accident.” Id. ¶¶ 28. Pursuant to the Criminal Acts Exclusion, however, coverage did not apply to: ‘Bodily Injury’ or ‘property damage’ arising from any criminal act. Criminal act means any act or omission which is criminal in nature or for which a penal statue or ordinance permits or requires any term of imprisonment or sentence or public service duties. This exclusion applies regardless of whether any ‘insured’ is actually charged with or convicted of a crime and regardless of whether any ‘insured’ subjectively intended the ‘bodily injury’ or ‘property damage’ for which a claim is made. Id. ¶ 30. With both the civil and criminal cases pending, in December 2012, Country Mutual denied coverage and filed a declaratory judgment action alleging, inter alia, that coverage was barred by the policy’s Criminal Acts Exclusion. Id. ¶ 32. Country Mutual and Dahms filed cross motions for summary judgment in the declaratory matter. Id. ¶ 2. In March 2013, Dahms was convicted of battery in the criminal court. Id. ¶ 19. Meanwhile, in the Tort Case, Enadeghe filed an amended complaint, to which Dahms raised the affirmative defense of selfdefense, despite having been recently convicted of battery in the corresponding 42 | IDC QUARTERLY | First Quarter 2017

criminal proceeding. Id. ¶¶ 23-24. The trial court denied Country Mutual’s motion for summary judgment in the declaratory matter, holding that Country Mutual had a duty to defend Dahms, as of the filing of Dahms’ affirmative defense of self-defense in the Tort Case. Id. ¶ 26. Both Country Mutual and Dahms appealed. Dahms argued that the trial court identified the incorrect trigger date of Country Mutual’s duty to defend, whereas Country Mutual challenged the trial court’s ruling regarding the existence of a duty to defend, asserting that Dahms’ criminal conviction barred coverage under the policy’s Criminal Acts Exclusion. Id. ¶¶ 26, 32-33. Appellate Court Analysis and Decision Reviewing the trial court’s decision de novo, the appellate court first acknowledged that a court determining the existence of a duty to defend ordinarily compares the allegations of the underlying complaint to the relevant provisions of the insurance policy. Id. ¶ 37. If the facts alleged in the underlying complaint fall within, or potentially within, the policy’s grant of coverage, then the insurer’s duty to defend is triggered. This is known as the “Eight Corners Rule.” Id. Generally, in order to avoid deciding issues in the declaratory judgment action that would affect the liability finding in the underlying tort action, the court addressing the insurer’s duty to defend should not delve into the merits of the underlying case or determine a critical issue in that underlying lawsuit. Id. ¶ 38. Nevertheless, the appellate court also noted that those concerns must be balanced against recognition of the fact that a plaintiff in the underlying suit may have an incentive to draft his or her

pleading in a way that triggers insurance coverage. Id. ¶ 47. Thus, the court reasoned, if the underlying allegations allege what can only be classified as an intentional act, the substance of the underlying pleading will control over whatever label the plaintiff has placed on the legal claim. Id. The mere fact that Enadeghe included a negligence count in the underlying complaint against Dahms could not determine the court’s conclusion regarding Country Mutual’s duty to defend. Rather, the court was required to examine the allegations of the underlying complaint to determine whether the count titled “Negligence” alleged conduct that could only be considered intentional. Id. Ultimately, the appellate court concluded that the allegations against Dahms in the Tort Case did not fit into the “rare” case which would allow a court to confidently conclude that the acts must have been intentional. Id. ¶¶ 54-55. Quite simply, the allegations did not clearly describe how Dahms came to hit Enadeghe with the briefcase, so—as of the date of the filing of the underlying complaint—the alleged injuries could have resulted from either intentional or negligent conduct on the part of Dahms. Id. ¶ 56. Therefore, rather than simply affirming the trial court’s holding that a duty to defend existed as of the date of the filing of Dahms’ self-defense affirmative defense, the court held that Country Mutual owed Dahms a duty to defend beginning on October 9, 2012, the date of the filing of the underlying lawsuit. Id. ¶¶ 68, 72. Addressing the language of the Criminal Acts Exclusion, the appellate court asserted that, despite having worded the exclusion to apply “regardless” of whether the insured had been charged with a criminal act, Country Mutual did not have unbridled authority

Nevertheless, the appellate court also noted that those concerns must be balanced against recognition of the fact that a plaintiff in the underlying suit may have an incentive to draft his or her pleading in a way that triggers insurance coverage. Thus, the court reasoned, if the underlying allegations allege what can only be classified as an intentional act, the substance of the underlying pleading will control over whatever label the plaintiff has placed on the legal claim.

to determine what acts were “criminal in nature” under the policy. Id. ¶ 69. According to the appellate court, the applicability of the Criminal Acts Exclusion to the allegations of the underlying complaint was not “clear and free from doubt” as of the date of the filing of the underlying complaint in the Tort Case. Id. ¶ 67. Because the underlying complaint alleged facts that could support a claim for negligence, the potential for coverage remained, and Country Mutual could not avoid its duty to defend Dahms based solely on the Criminal Acts Exclusion and the underlying complaint. Id. ¶ 68. The court did not end its analysis there, however. Rather, it noted that “under certain circumstances, [a court may] look beyond the underlying complaint in order to determine an insurer’s duty to defend.” Id. ¶ 77 (quoting Pekin Ins. Co. v. Wilson, 237 Ill. 2d 446, 459 (2010)). Seeming to phrase the Eight Corners Rule as the exception rather than the general rule, the court quoted the language in Bartkowiak v. Underwriters at Lloyd’s, London, which stated: “In fact, ‘the only time such [external] evidence

should not be permitted is when it tends to determine an issue crucial to the underlying lawsuit.’” Bartkowiak, 2015 IL App (1st) 133549, ¶ 21 (emphasis added by appellate court) (citing Wilson, 237 Ill. 2d at 461 (quoting Fid. & Cas. Co. of N.Y. v. Envirodyne Eng’rs, Inc., 122 Ill. App. 3d 301, 304-05 (4th Dist. 1983))). In other words, in determining the existence and extent of Country Mutual’s duty to defend, the court could consider evidence in addition to the policy and the allegations of the underlying complaint, so long as that evidence would not determine a crucial issue of the underlying litigation. Therefore, the court could take Dahms’ March 2013 conviction for criminal battery into account. As of the date of Dahms’ conviction, a jury had determined beyond a reasonable doubt that Dahms had engaged in a criminal act. Dahms, 2016 IL App (1st) 141392, ¶ 78. Any collateral estoppel effect that would occur due to the court’s recognition of that fact already existed as a result of the jury’s decision. Id. Moreover, in light of the jury’s verdict, Country Mutual could no longer “be accused of self-serving,

unbridled discretion” in determining that Dahms’ conduct constituted a criminal act. Id. ¶ 76. Accordingly, the appellate court ruled that as of the date of Dahms’ conviction for criminal battery, the applicability of the Criminal Acts Exclusion became clear and free from doubt, and Country Mutual’s duty to defend Dahms in the Tort Case terminated. Id. ¶ 79. Concluding Remarks and Takeaways As of the drafting of this column, Illinois Appellate Courts have only cited the Dahms decision on one occasion when considering the exception to the Eight Corners Rule, in the unpublished decision Pekin Insurance Co. v. St. Paul Lutheran Church, 2016 IL App (4th) 150966-U. In that decision, the Illinois Appellate Court Fourth District determined that the extrinsic evidence would tend to determine a fact issue crucial to the underlying lawsuit. Pekin Ins. Co., 2016 IL App (4th) 150966-U, ¶¶ 65-69. It therefore refused to consider the extrinsic evidence and affirmed dismissal of the insurer’s request for declaratory judgment for failure to state a claim. Id. ¶¶ 65-69. Nevertheless, the defense bar should continue to recall the Dahms decision and the exception to the Eight Corners Rule articulated therein when considering the likely existence and extent of the duty to defend, and when determining the best strategic moment to request a declaratory judgment of those issues.

First Quarter 2017 | IDC QUARTERLY | 43

Workers’ Compensation Report Bradford J. Peterson and Lindsey D’Agnolo Heyl, Royster, Voelker & Allen, P.C., Urbana

Recent Appellate Court Decisions Provide Guidance on Analysis of Injuries Resulting from Everyday Activities The appellate court’s recent rulings provide guidance for injuries arising from everyday activities, such as bending, walking and twisting. In Noonan v. Illinois Workers’ Compensation Commission, 2016 IL App (1st) 152300WC, the Illinois Appellate Court First District, Workers’ Compensation Commission Division, affirmed a denial of benefits for an injury sustained while reaching for a pen on the floor. In Noonan, the claimant, Terry Noonan, alleged he sustained a workrelated injury to his right wrist while working for the City of Chicago as a clerk. At arbitration, the claimant testified that his job duties included filling out forms called “truck driver sheets” and answering the phone when no one else was available. Noonan, 2016 IL App (1st) 152300WC, ¶ 4. The claimant testified that on the date of accident he was sitting in his desk chair filling out truck driver sheets when he accidentally knocked his pen off the desk with his elbow. The pen fell on the ground to the right of the claimant’s chair. He testified that he put his left hand on the desk for support and reached down to his right side to pick up the pen. When he was approximately two inches from picking up the pen, the chair slipped out from under him and he stuck his right hand out to brace his fall. Id. ¶ 5. The claimant testified he struck his right hand on the floor and felt like he “jammed” 44 | IDC QUARTERLY | First Quarter 2017

his wrist. He sought medical treatment and eventually underwent surgery to his right wrist. Id. The arbitrator found that the claimant failed to prove his right wrist injury “arose out of” his employment and denied benefits. According to the arbitrator, the claimant “failed to prove that the simple act of sitting in a rolling chair and reaching for a pen exposed him to an increased risk of injury that was beyond what members of the general public are regularly exposed to.” Id. ¶ 7. The claimant appealed and the Commission ultimately affirmed. Id. ¶ 8. On appeal, the appellate court held that the Commission did not err in determining that the claimant failed to prove an injury “arising out of” his employment. Id. ¶ 36. In order for a claimant to show his injury “arose out of” his employment, he must show: (1) the risk of injury is a risk peculiar to the work; or (2) is a risk to which the employee is exposed to a greater degree than the general public. Id. ¶ 18. In this case, the claimant asserted his wrist injury arose out of his employment because the act of attempting to retrieve a pen that he was using to fill out forms was in furtherance of his duties and, thus, was incidental to his employment. Id. ¶ 20. The appellate court disagreed with the claimant and held that reaching for a dropped item while sitting in a

chair was not an act the claimant was instructed to perform or had a duty to perform. Id. The court also found that this act was not incidental to the claimant’s assigned job duties. Id. ¶ 21. In making this determination, the court distinguished the claimant’s actions from those in Young v. Illinois Workers’ Compensation Commission, 2014 IL App (4th) 130392WC (injury from reaching and stretching into a narrow box were employment-related risks because these acts were necessary for fulfillment of part inspector’s job duties), and Autumn

About the Authors Bradford J. Peterson is a partner in the Rockford office of Heyl, Royster, Voelker & Allen, P.C. Mr. Peterson concentrates his practice in the defense of workers’ compensation, construction litigation, auto liability, premises liability, and insurance coverage issues. In recent years, Mr. Peterson 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). Lindsey D’Agnolo concentrates her practice in the areas of workers’ compensation, professional liability and employment and labor law. Ms. D’Agnolo regularly handles all aspects of workers’ compensation claims and has argued multiple cases on appeal before the Workers’ Compensation Commission. She is a graduate of California Western School of Law and obtained her undergraduate degree at the University of Illinois, Urbana-Champaign.

Although the claimant was at work, the court found that the act he was performing when he was injured— reaching for a dropped pen—was not one he was instructed to perform or had a duty to perform. Accolade v. Illinois Workers’ Compensation Commission, 2013 IL App (3d) 120588WC (injury from reaching for a soap dish while assisting a patient was an employment-related risk because this act was in furtherance of caregiver’s job duties to ensure patient safety at assisted living facility). The Noonan court determined that the act of sitting in a chair and reaching to the ground was not one the employer might reasonably have expected the claimant to perform incidental to his clerk duties. Id. Although the claimant was at work, the court found that the act he was performing when he was injured—reaching for a dropped pen—was not one he was instructed to perform or had a duty to perform. The court determined the act as claimant described was not incidental to his assigned duties. Id. ¶ 27. Instead, the court determined the act of sitting in a chair and reaching to the ground to retrieve a pen is an act that presents a neutral risk. Id. ¶ 27. Injury from this act would only be compensable if claimant showed he was exposed to the risk to a greater degree than the general public. Employment related risks associated with injuries from a fall are those which the general public is not exposed, or performing some work-related task which contributes to the risk of falling. The court found there was no evidence of a defective condition on the employer’s premises which contributed to the fall and that there was no evidence that any

work-related task contributed to the claimant’s fall. Id. ¶ 29. Finally, the claimant argued that he was exposed to a risk that was greater than the general public because he had suffered a previous work-related back injury, which prevented him from bending forward and required him to bend sideways to pick up the dropped pen. Id. ¶ 31. The court again disagreed with the claimant, finding that this injury did not involve a “progression” of a work-related injury to the same body part. Id. ¶ 33. The court noted that the claimant had previously injured his back, whereas this claim related to a right wrist injury. The claimant could not show that bending to the right increased his risk of falling over while reaching in the chair. The act of turning or bending in a chair to reach to the ground, without more, was found insufficient to establish a work-related cause to his accidental injury. Id. Most recently, on November 10, 2016, the Illinois Appellate Court First District, Workers’ Compensation Commission Division, filed a decision in Mytnik v. Illinois Workers’ Compensation Commission, 2016 IL App (1st) 152116WC. There, the appellate court reversed the Commission’s finding and determined a claim was compensable where the claimant’s act of bending down to pick up a bolt was an employmentrelated risk. Mytnik, 2016 IL App (1st) 152116WC, ¶ 45.

In Mytnik, the claimant sustained a low back injury from twisting and bending. The claimant worked installing rear suspensions on vehicles as they moved along the assembly line. The claimant testified that he stood on a platform that moved in a circular fashion and was required to twist and turn to grab equipment, like bolts and brackets, and then reach behind him to grab the articulating arm on a machine. Id. ¶ 5. The claimant testified he had less than one minute to install a rear suspension on a vehicle and installed approximately 62 per hour. Id. ¶ 6. On the date of accident, claimant testified he felt a sharp pain in his back when he bent down to retrieve a bolt that had fallen to the ground. Id. ¶ 7. The arbitrator found the claimant sustained an injury that arose out of and in the course of his employment and awarded benefits. Id. ¶ 29. The Commission reversed the arbitrator’s decision and determined claimant’s injury was the result of a non-compensable neutral risk because claimant did not show he was exposed to the risk to a greater degree than the general public. Id. ¶ 30. The appellate court reversed finding the Commission’s decision was against the manifest weight of the evidence. Id. ¶ 45. The appellate court relied on the analysis utilized in the Young case and determined that the risk associated with claimant’s act of bending down to pick up a bolt was a risk distinctly associated with his employment. Id. ¶ 44. The court noted that claimant’s job required him to load bolts into the articulating arm, raise the arm up to the vehicle and press a button to secure the bolts. Witness testimony established that it was not uncommon for bolts to fall from the articulating arm to the floor and that, if a bolt was not immediately retrieved, the platform — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 45

Workers’ Compensation Report | continued

would jam and the assembly line would shut down. The court found claimant’s injuries were a result of a risk distinctly associated with his employment. Id. ¶ 45. In finding that this was a risk distinctly associated with his employment, the court determined the claimant established his low back injury arose out of his employment. Despite the fact that claimant was performing an everyday activity which presented a neutral risk— bending over to pick up a bolt—the court did not engage in a neutral risk analysis because it found the risk to be associated with claimant’s employment. Impact on Current “Arising Out of” Analysis Interestingly, these decisions did not address the court’s recent decision in Adcock v. Illinois Workers’ Compensation Commission, 2015 IL App (2d) 130884WC. In Adcock, the majority held that benefits should not be awarded for injuries caused by everyday activities like walking, bending, or turning, even if those activities were part of the employee’s job duties, unless the employee’s job required him to perform those activities more frequently than members of the general public or in a manner that increased the risk. Adcock, 2015 IL App (2d) 130884WC, ¶ 42. In Adcock, the claimant injured his left knee while turning in a chair he used continuously to perform his work duties as a welder. Id. ¶ 3. The claimant’s employer provided him with the chair as an accommodation for permanent restrictions due to a right knee condition. The Commission denied compensability finding that there was no evidence the injury was due to an increased risk connected to the claimant’s work or a risk that was incidental to his employment. 46 | IDC QUARTERLY | First Quarter 2017

Id. ¶ 20. The appellate court reversed the Commission’s decision and found that the act of turning in a chair was one of everyday life faced by all members of the general public, but found the claim compensable because the claimant was exposed to the risk to a greater degree by virtue of his employment. Id. ¶ 42. The Adcock court departed from the prior analysis it utilized in Young and Autumn Accolade, which had suggested that a neutral risk analysis is unnecessary where the employee is injured while performing his or her required work duties. In Noonan, prior to a neutral risk analysis, the court first engaged in an analysis of whether claimant’s act of sitting in a chair and reaching to the ground for a pen was an employmentrelated risk. Noonan, 2016 IL App (1st) 152300WC, ¶ 29. Only upon determining that this was not an employment-related risk, did the court proceed with a neutral risk analysis. Id. ¶ 30. The court’s analysis suggests that injuries caused by activities of everyday life which are incidental to the employment will be found to be compensable, and a neutral risk analysis will be unnecessary. The special concurrence in Noonan, authored by Justice Holdridge, concluded that injuries which stemmed from everyday activities, like the instant case, must be analyzed pursuant to neutral risk principles pursuant to Adcock, even if the risk is incidental to the claimant’s job duties. Id. ¶ 41. The special concurrence concluded Young and Autumn Accolade were wrongly decided and further stated that he would decline to follow them. Id. In addition, the dissenting opinion in Noonan, authored by Justice Stewart, argued that an employer should reasonably expect a clerical employee to bend over and pick up a dropped pen, thus, making claimant’s injury the

result of an employment-related risk. Id. ¶ 44. According to the dissent, if an employee is injured while performing an everyday activity that is incidental to his employment, the injury results from an employment-related risk and a neutral risk analysis should not be performed. Id. ¶ 45. However, the dissent agreed with the majority’s approach that an injury stemming from an everyday activity must be analyzed for an employmentrelated risk first, and then, only if the risk is not employment related, move to the neutral risk analysis as established in Young. Id. ¶ 44. However, in Mytnik, a unanimous court held that the type of risk which the claimant was exposed must be determined first in order to determine if the injury arose out of the claimant’s employment. The court stated further that the first step in analyzing risk is to determine whether a claimant’s injuries arose out of an employment-related risk. Mytnik, 2016 IL App (1st) 152116WC, ¶ 39. Relying on Young, the Mytnik court indicated it will only consider whether the injury was a result of a neutral risk if the injury is determined not to have resulted from an employment-related risk. Id. The appellate court’s recent decisions suggest that the court will continue to use the three-part risk analysis in determining whether an injury “arose out of” the claimant’s employment, even in the event that the injury resulted from an everyday activity, such as bending, twisting, or walking.

Civil Rights Update Bradford B. Ingram Heyl, Royster, Voelker & Allen, P.C., Peoria

A Rebate Ordinance Does Not Create a Protected Property Interest In Bell v. City of Country Club Hills, 841 F.3d 713 (7th Cir. 2016), the plaintiff claimed the City of Country Club Hills deprived her of her constitutional rights and violated 42 U.S.C. § 1983 when it repealed an ordinance that provided a 25 percent tax rebate to qualifying homeowners. The District Court, Northern District of Illinois, granted the defendant’s Federal Rule of Civil Procedure 12(b)(6) motion to dismiss holding that the tax rebate ordinance did not confer a vested property right upon the plaintiff.

1983, that the city’s refusal to issue rebates constituted a taking in violation of the Fifth and Fourteenth Amendments of the United States Constitution as well as article 1, section 15 of the Illinois Constitution. The court reviewed the taking clause of the Fifth Amendment that was made applicable to the states through the Fourteenth Amendment. The City prepared the rebate checks, but never distributed them. Id. at 716. The plaintiff, Leora Bell, filed her section 1983 complaint in May of 2015 alleging

The plaintiff, Leora Bell, filed her section 1983 complaint in May of 2015 alleging that the city’s refusal to disburse the tax rebates was a taking in violation of the Fifth and Fourteenth Amendments of the United States Constitution.

The City of County Club Hills City Council (City) adopted an ordinance that provided a 25 percent tax rebate of 2010 city property taxes paid in 2011 to homeowners who completed an application that the clerk approved. Bell, 841 F.3d at 715. The City had offered this program for a number of years prior to 2012. Id. The application for the rebate stated that filing the application did not guarantee that the City would approve it. The plaintiff filed her lawsuit in May of 2015 claiming, pursuant to section

that the city’s refusal to disburse the tax rebates was a taking in violation of the Fifth and Fourteenth Amendments of the United States Constitution. Id. at 716. While the Fifth Amendment prohibits the taking of private property without just compensation, the Fourteenth Amendment guarantees that property will not be taken without due process of law. Id. at 717. Plaintiff also alleged the City violated article 1, section 15 of the Illinois Constitution. The district court dismissed her complaint under

Rule 12(b)(6). Id. The Court of Appeals, Seventh Circuit’s review was de novo accepting all well-pleaded facts as true. Id. The plaintiff contended that the City’s failure to issue the rebates was a taking without due process of law. Id. The court noted that in any case where deprivation of property without due process is alleged, the first question is whether a protected property interest actually exists. Id. The Seventh Circuit further articulated the standard that for a property interest in a benefit to exist, the person has to have more than an abstract need or a desire for it, more than a unilateral expectation of it, the person must have a legitimate claim of entitlement to it. Id. Plaintiff’s principal claim was that her property interest in the rebate derived from the April 2012 ordinance and that the rebate was a vested right under Illinois law and the City could not use subsequent legislation to deny homeowners the rebates. Id. The court rejected plaintiff’s argument that she had a vested property right under the Fourteenth Amendment citing Eitel v. Lindheimer, 371 Ill. 367 (1939). Bell, 841 F.3d at 718. The principle from Lindheimer is that when a right is derived from a — Continued on next page

About the Author Bradford B. Ingram is a partner with Heyl, Royster, Voelker & Allen, P.C. His practice concentrates on the defense of civil rights and municipal entities and the defense of employers in all types of discrimination claims. He is a frequent speaker before local and national bar associations and industry groups.

First Quarter 2017 | IDC QUARTERLY | 47

Civil Rights Update | continued

In Lindheimer, the court held that a plaintiff did not have a vested right in a rebate because they could not show more than a mere expectation of based upon anticipated continuance of existing law. As such, the legislature had the right to repeal the statute because there is no vested right in public law, which is not akin to a private grant

remedial statute, the right is not vested and the legislature may repeal or amend the statute. Id. at 718-19. In Lindheimer, the court held that a plaintiff did not have a vested right in a rebate because they could not show more than a mere expectation of based upon anticipated continuance of existing law. Id. As such, the legislature had the right to repeal the statute because there is no vested right in public law, which is not akin to a private grant. Id. The court found the Lindheimer case to be very similar to that of Leora Bell. Id. In Bell, the plaintiff failed to raise any meaningful distinctions between the April 2012 ordinance and the statute in Lindheimer. Id. at 719. The April 2012 ordinance was a remedial statute and did not confer a vested right upon the plaintiff. Id. at 719. Thus, she did not have a protected property interest in the rebate. Id. The City, therefore, acted within its scope of legal authority in repealing the ordinance. Id. The ordinance itself demonstrated that the city explicitly retained, repealed or amended the statute. Id. at 720. The plaintiff argued that the rebate program was a private grant because it was directed toward a specific group of 48 | IDC QUARTERLY | First Quarter 2017

individuals “all eligible homeowners,” not the general public. Id. at 719. The court rejected this theory because it was not supported by either case law or statute. Id. The Seventh Circuit’s opinion addressed the nature of ordinances and statutes that apply to citizens. The court noted that because a citizen’s obligation to pay taxes arises from a statute, any refund offered by the legislature is of statutory origin. Id. at 718. The plaintiff did not have a vested right in the rebate because she could not establish anything more than a mere expectation based on her anticipation of continuance of the existing ordinance. Id. The court held that there is no vested right in public law, which is not in the nature of a private grant. Id. at 720. The guiding principal from Lindheimer is that the legislature had ongoing authority to repeal or amend the ordinance. Id. The Lindheimer court described the tenuous relationship between property owners and property tax rebates. That relationship is about mere expectations rather than vested rights. Id. The rebate program, as noted by the lower court, was a discretionary measure by the city that

it was free to nullify under Illinois law. Id. No state law or ordinance guaranteed plaintiff entitlement to the rebate. Id. at 720. Plaintiff had no constitutional protected property interest in the rebate and could not state a claim for unconstitutional taking. Id. This case provides an excellent review of state and federal property interest law. Bell demonstrates that a plaintiff must show more than a mere expectation of a benefit based upon anticipated continuance of the existing law. The municipal ordinance was a remedial statute incapable of conferring vested rights, and a program such as the rebate program in this case, was a discretionary measure and the municipality was free to nullify it. It was immaterial that the

Bell demonstrates that a plaintiff must show more than a mere expectation of a benefit based upon anticipated continuance of the existing law.

rebate program existed for many years. The court concluded its analysis with a finding that the rebate program is the type of “unilateral expectation” that does not rise to the level of a property interest and plaintiff had no constitutionally protected property interest in the rebate and cannot state a claim for an unconstitutional taking under 42 U.S.C. § 1983. Id. Instead, the plaintiff’s only recourse was to file a state law claim in state court. Id.

Insurance Law Update Michael L. Young and Katherine E. Jacobi HeplerBroom LLC, St. Louis

The Expansion of Discovery in Insurance Law Cases after Zagorski v. Allstate The hundreds of volumes of West’s North Eastern Reporter are replete with opinions from Illinois appellate courts detailing the state’s positions on various issues of insurance law. From the duty to defend, to selective tender, to policy interpretation; Illinois courts have provided insureds and insurers alike with a great deal of guidance on insurance law. One area of insurance law that has not received the same level of attention in these opinions as others is discovery practice in insurance cases. The Illinois Appellate Court Fifth District’s recent decision in Zagorski v. Allstate Ins. Co., 2016 IL App (5th) 140056, certainly tries to make up for it. In Zagorski, Allstate Insurance Company sought to challenge whether an insured in a fire loss claim could request written discovery about Allstate’s handling of prior unrelated claims, largely on the grounds of relevance. The Fifth District unequivocally held that the insured could seek such discovery, at least under the facts and circumstances of that fire loss claim. In so doing, the Fifth District expanded the scope of the discovery in insurance law cases by holding that, in some instances, an insurer’s conduct in unrelated claims can provide evidentiary support for a vexatious refusal to pay claim under 215 ILCS 5/155. It also put carriers on notice that any future challenges to such written discovery will need to be well supported by the record. This article will discuss the Fifth District’s holding in Zagorski

and possible approaches by carriers in response to it. Background The plaintiffs, Valentine and Christina Zagorski, purchased a homeowners policy from Allstate to cover their home in Fairview Heights, Illinois. Zagorski, 2016 IL App (5th) 140056, ¶ 3. Five days later, their home was damaged by a fire. Id. The plaintiffs made a claim with Allstate, which assigned the claim to its Special Investigation Unit. Id. Allstate took recorded statements and requested written proofs of loss from the plaintiffs. Id. ¶ 4. It later retained outside counsel to take the plaintiffs’ exams under oath. Id. After concluding its investigation, Allstate declined the plaintiffs’ claim on the grounds that the plaintiffs had intentionally set the fire. Id. The plaintiffs later sued Allstate in St. Clair County, Illinois. Id. ¶ 5. They alleged that the insurer breached the insurance policy, vexatiously refused to pay their claim under 215 ILCS 5/155, and committed common law fraud. Id. In discovery, the plaintiffs served four key written interrogatories upon Allstate. Three of the four interrogatories asked Allstate to identify the following prior claims with some detail: (1) any claim in which “any Illinois court assessed attorney’s fees, costs, penalties, or fines against Allstate pursuant to 215 ILCS 5/155”; (2) any “fire loss claim” in which any of Allstate’s insureds “made

any claim with the Illinois Department of Insurance alleging improper claims practices regarding a fire loss claim”; and (3) any “fire loss claim” in which Allstate had “been sued in Illinois by any insured alleging [the insurer] failed to pay a fire loss claim.” Id. ¶ 6. The plaintiffs limited the scope of time for these three interrogatories to the past five years. Id. For each of these interrogatories, Allstate objected on the grounds that the interrogatory was “over-broad, unduly burdensome, harassing, seeks information which is irrelevant and not calculated to lead to the discovery of — Continued on next page

About the Authors Michael L. Young is a partner with the St. Louis office of HeplerBroom LLC, with a primary emphasis in the practice of insurance law. He represents both insureds and insurers in complex insurance coverage matters at all stages of the claims process. Mr. Young’s litigation practice also includes the defense of personal injury, products liability, and white collar criminal defense matters. Mr. Young obtained his law degree from Saint Louis University, summa cum laude, in 2002, where he was the Valedictorian of his class. While in law school, Mr. Young served as a Staff Member for the Saint Louis University Law Journal in 2000–2001. He received his Bachelor of Arts degree in 1999 from Washington University in St. Louis, Missouri, summa cum laude, majoring in History. Katherine E. Jacobi is an associate at the Chicago office of HeplerBroom LLC, with an emphasis in the practice of insurance law. Ms. Jacobi received her J.D. from St. Louis University School of Law, cum laude, where she was inducted into the Order of the Coif, and her undergraduate degree from Truman State University, cum laude. She is licensed in Illinois and Missouri and is a member of the IDC, serving its Insurance Law Committee.

First Quarter 2017 | IDC QUARTERLY | 49

Insurance Law Update | continued

admissible evidence, and seeks information protected by the work-product and attorney-client privileges.” Id. ¶ 7. After a series of discovery motions, the trial court ultimately allowed the plaintiffs to discover “the number of times in the last five years that (a) Allstate has been cited by the Illinois [Department] of Insurance for vexatious delay or improper claims practices, or (b) that an Illinois court has awarded statutory penalties for vexatious refusal against Allstate.” Id. ¶ 13. The trial court sustained the remainder of the insurer’s objections. Id. Nevertheless, Allstate later asked the trial court to enter a “friendly” contempt order so that the insurer could pursue interlocutory appellate review of the discovery rulings. Id. ¶ 15. Despite expressing “some irritation” at the request, the trial court did so. Id. ¶ 16. On appeal, the Fifth District overruled all of Allstate’s objections to these interrogatories. Id. ¶ 45. It remanded the case and directed the trial court to order Allstate to answer all of these interrogatories, including subparts, within 30 days of the appellate court’s mandate. Id. The Fifth District specifically directed the trial court “to further order that no extensions will be granted.” Id. Holding Though the insurer in Zagorski objected to the plaintiffs’ interrogatories on a number of grounds, the Fifth District commented that it found “no indication that Allstate defended any of these stated grounds, except for relevance.” Id. ¶ 34. With respect to relevance, the appellate court focused on whether the requested information was “germane” to the plaintiffs’ claim under section 155 of the Illinois Insurance Code. Id. ¶ 22. The 50 | IDC QUARTERLY | First Quarter 2017

court noted that a claim under section 155 provides an extra-contractual remedy to policyholders when an insurer’s action in handling a claim is vexatious and unreasonable. Id. ¶ 25. “In considering this question,” the Fifth District held, “a court must consider the totality of the circumstances, including the insurer’s duties under the insurance contract, the insurer’s attitude and motivation for denying or delaying payment of the claim, whether the insured was forced to sue to recover, and whether the insured was deprived of the use of his or her property.” Id. Though that standard seems to focus on the insurer’s handling of the particular claim at issue, the Fifth District in Zagorski broadened that scope by looking to section 154.6 of the Illinois Insurance Code. Id. ¶ 26. ��������������������� Section 154.6 enumerates a number of acts that constitute an improper claims practice if those acts are committed “knowingly,” “without just cause” and “with such frequency to indicate a persistent tendency to engage in that type of conduct.” 215 ILCS 5/154.5-6. For example, section 154.6 prohibits an insurer from engaging in activity which results in a “disproportionate number of meritorious complaints against the insurer received by the Insurance Department,” or a “disproportionate number of lawsuits to be filed against the insurer or its insureds by claimants.” 215 ILCS 5/154.6(f), (g). Recognizing long-standing Illinois law, the Fifth District acknowledged that section 154.6 is a regulatory provision that does not provide an insured with a private remedy or cause of action for an insurer’s improper claims practice. Zagorski, 2016 IL App (5th) 140056, ¶ 26. “[A]fter careful consideration of the acts described” in that section, however, the Fifth District held the “some of the

acts are illustrative of conduct by an insurer that may give rise to a remedy for vexatious or unreasonable conduct under section 155.” Id. The court specifically cited the “disproportionate number” of lawsuits or Insurance Department complaints prohibitions mentioned above. Id. ¶ 27. The appellate court concluded that “when determining whether an insurer’s conduct in a given case is vexatious and unreasonable under the totality of the circumstances, a court may properly consider actions identified as improper claims practices under section 154.6 as relevant to, but not dispositive of, a section 155 claim.” Id. ¶ 26. With this newly minted standard, the appellate court had little trouble in holding that the plaintiffs’ interrogatories that sought information on Allstate’s prior claims practices were indeed relevant. Id. ¶¶ 29-32. Analysis By widening the “totality of the circumstances” standard for a section 155 vexatious refusal to pay a claim to include not only the insurer’s conduct on the particular claim at issue, but also its conduct on other prior unrelated claims, the Fifth District in Zagorski greatly expanded the scope of discovery that an insured can seek against his or her carrier in an insurance action. Nevertheless, it is important to note that the plaintiffs’ interrogatories in Zagorski were limited in time to the past five years. Id. ¶ 6. Moreover, two of the three interrogatories at issue were limited to “fire loss claims”: the interrogatories that asked about prior lawsuits filed by insureds against Allstate or complaints made by insureds to the Illinois Insurance Department about Allstate. Id. The only interrogatory not limited to “fire loss claims” inquired about instances in which an Illinois

court actually found Allstate to have vexatiously and unreasonably declined a claim under section 155. Id. The Fifth District did not necessarily hold that written discovery requests that go beyond these limitations in time and scope were relevant under the newly expanded “totality of the circumstances” standard for section 155 claims. Along those lines, it also appears that the Fifth District did not necessarily foreclose future challenges to discovery requests regarding prior claims on the grounds that the requests are overly broad or unduly burdensome. The appellate court made very clear that it found “no indication that Allstate defended any of these stated grounds, except for relevance.” Id. ¶ 34. Because these objections may not have been preserved in Zagorski, their future use may survive the holding of that case. For example, an overly broad or unduly burdensome objection to an interrogatory that asks a carrier to identify certain prior claims in the last twenty-five years might be well-taken. In an auto insurance case, discovery requests asking for prior bad faith complaints on unrelated fire loss claims also may be rightly objectionable on the same grounds. Even with discovery requests regarding prior claims that are limited on a seemingly reasonable basis of time and scope, an insurance company still may be able to object properly that the requests are overly broad or unduly burdensome. Contrary to the belief of many policyholders, not all insurance companies can easily search and identify particular types of claims in which certain allegations have been made against the carrier, such as allegations of vexatious or bad faith conduct. Although many insurers have transitioned to largely electronic or paperless environments, those new systems have not necessarily brought with them

By widening the “totality of the circumstances” standard for a section 155 vexatious refusal to pay a claim to include not only the insurer’s conduct on the particular claim at issue, but also its conduct on other prior unrelated claims, the Fifth District in Zagorski greatly expanded the scope of discovery that an insured can seek against his or her carrier in an insurance action.

the capability to search easily for certain types of claims. In many cases, identifying these claims requires searching for them the old-fashioned way: literally pulling and looking through each file to identify the requested claims. Depending on the case, the time and cost involved with such a search could very well justify an overly broad or unduly burdensome objection. Finally, Zagorski did not hold that an insurer waives its attorney-client privilege or work product protections whenever an insured makes a section 155 claim. Again, the Fifth District held that those objections were not properly preserved for appellate review in that case. Id. ¶ 32. If a written discovery request actually asked for privileged materials from prior, unrelated claims, then an Illinois court may very well sustain that carrier’s privilege objections. Conclusion The Fifth District’s opinion in Zagorski greatly expanded the scope of discovery available to an insured in some instances in a lawsuit against his or her carrier, but it did not leave insurance companies defenseless. It is possible that proper objections to written discovery

requests regarding prior, unrelated claims on the grounds of breadth, burden, privilege and in some limited cases, perhaps even relevance, can be made. Practitioners, however, would be wise to tread carefully. The Fifth District in Zagorski wrote it “share[d] the trial court’s initial sense of impatience and irritation with Allstate’s challenges” to the trial court’s discovery rulings. Id. ¶ 43. The appellate court provided what it described as a “remedial primer” against those attorneys who “abuse . . . the discovery process” by “assert[ing] a litany of grounds for objection to discovery without any intention or any ability to defend those grounds.” Id. ¶¶ 35-38. The appellate court expressed “hope” that its opinion in Zagorski would “serve as an admonition that asserting an objection followed by a litany of hollow grounds, without the intention or means to defend those grounds, is an abuse of the discovery process that may warrant sanctions.” Id. ¶ 39. Clearly, a carrier that chooses to raise objections to these written discovery requests would be well served to seek compromises with opposing counsel, or at the very least, to present a strong record in support of its objections before the trial and appellate courts. First Quarter 2017 | IDC QUARTERLY | 51

Municipal Law Thomas G. DiCianni Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., Chicago

Water Water Everywhere Public works officials responsible for managing the potential ravages of water know the ancient mariner’s lament too well. Whether on a macro scale managing navigable waters and coastlines (e.g., Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992)), or sewage and storm water in our own backyards (e.g., Trtanj v. City of Granite City, 379 Ill. App. 3d 795 (5th Dist. 2008)), water management and flooding are large components of assessing government liability exposure. A wide range of water management activity can produce liability: maintenance of sewer systems (e.g., Trtanj, 379 Ill. App. 3d 795); snow piled in the wrong place (e.g., Ziencina v. Cnty. of Cook, 188 Ill. 2d 7 (1999)); construction that redirects the existing flow of water (e.g., Van Meter v. Darien Park Dist., 207 Ill. 2d 359 (2003)); and so on. These claims are draped in various tort theories: negligence (e.g., Nichols v. City of Chicago Heights, 2015 IL App (1st) 122994); nuisance (e.g., Jones v. Sanitary Dist. of Chi., 252 Ill. 591 (1911)); trespass (e.g., Dial v. City of O’Fallon, 81 Ill. 2d 548 (1980)); and even strict liability (70 ILCS 2605/19). One of the more pernicious forms of liability potential from water management activities is where the constitution and public works intersect, in the concept of a “taking.” A “taking” is the government procurement of private property for a public use. The Fifth Amendment prohibits the practice unless “just compensation” is paid to the property owner for the land, be it for use or ownership of the land. U.S. Const. amend. V. The Illinois Constitution does the same. 52 | IDC QUARTERLY | First Quarter 2017

Ill. Const. art. 1, sec. 15. A taking can occur through the government’s exercise of its eminent domain powers in a condemnation action in which its right to take the property and the compensation owed is litigated. 735 ILCS 30/1-1-1. A taking can also occur through excessive regulation which deprives property of all economically beneficial or productive use. Palazzolo v. Rhode Island, 533 U.S. 606 (2001). A taking can result from some governmental facility or action which physically invades private property. Rosenthal v. City of Crystal Lake, 171 Ill. App. 3d 428 (2d Dist. 1988). Where the public entity takes property without an eminent domain proceeding through regulation or other governmental activity, the property owner has a right to file an action for inverse condemnation to require the government to pay the owner just compensation for the property. Horn v. City of Chicago, 403 Ill. 549 (1949). In Hampton v. Metropolitan Water Reclamation District of Greater Chicago, 2016 IL 119861, the Illinois Supreme Court issued an opinion which could represent a sea-change in takings law regarding government caused temporary flooding of a private owner’s property. Hampton reversed what had been widely accepted for 70 years as Illinois law on the subject. In Pratt v. Rosenfield, 399 Ill. 247 (1948), the supreme court rejected the plaintiff’s claim that a taking occurred by the removal and replacement of a highway viaduct over railroad tracks which diverted the regular drainage onto the plaintiff’s adjacent private property. The plaintiff alleged that alteration of the terrain caused surface water to run into

their building, making it unfit for its use and damaging equipment and supplies, which required an expensive reconstruction of the property to redirect the new drainage pattern. The supreme court found no taking because the flooding was only sporadic, that the “[r]unning surface waters are not constantly present but are temporary and come as a result of rain or snow.” Pratt, 399 Ill. at 251. The court required a permanent physical invasion of the property; in other words, a lake must form for a taking to occur. Pratt has been assumed to be the standard. In Luperini v. County of DuPage, 265 Ill. App. 3d 84 (2d Dist. 1994), the appellate court found that the defendant county’s installation of a storm sewer on county land that caused intermittent flooding of the plaintiff’s adjacent property did not constitute a taking because the flooding was only occasional. One chink in that assumption came in the Court of Appeals for the Seventh Circuit’s prescient decision in Rockstead vs. City of Crystal Lake, 486 F.3d 963 (7th Cir. 2007). Even though an inverse condemnation claim implicates federal constitutional rights, federal courts do not consider such claims ripe until first litigated in state court because the federal courts cannot determine if the landowner received just compensa-

About the Author Thomas G. DiCianni is a partner in the law firm of Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C. He concentrates his practice in general litigation, defense of government entities and public officials, municipal law, and the representation of governmental selfinsurance pools.

One of the more pernicious forms of liability potential from water management activities is where the constitution and public works intersect, in the concept of a “taking.”

tion for the taking until the issue of compensation is determined in state court. Williamson Cnty. Reg’l Planning Comm’n vs. Hamilton Bank of Johnson City, 473 U.S. 172, 194-95 (1985). In Rockstead, the plaintiffs went straight to federal court with their claim that the city took their property by construction of a pipeline in a ditch adjacent to the plaintiff’s farmland, which cut off drainage from their property, causing intermittent recurring flooding. The plaintiff argued the claim was ripe in federal court because, based on Pratt, Illinois did not recognize the concept of a temporary taking and litigating the case in state court was futile. The Seventh Circuit disagreed, observing that a lot had happened since the Illinois Supreme Court last weighed in on the topic in 1948. The concept of “jurisdictional wetlands” had emerged since then; the Clean Water Act, 33 U.S.C. §1251, imposed stringent legal restrictions on what a property owner could do with land that floods; and new environmental protections for wildlife had developed. Rockstead, 486 F.3d at 966-67. The Seventh Circuit found that the Illinois Supreme Court might find its decision in Pratt antiquated and change it, and, despite Pratt, federal courts could not be sure that a property owner was deprived of just compensation for a possible taking until it was fully litigated in state court. Id. at 967. A game changer came with the United States Supreme Court’s decision in Arkansas Game and Fish Commission

v. United States, 133 S.Ct. 511 (2012), in which the Court found that recurrent temporary flooding could constitute a taking under federal law. Hampton then came to our Illinois Supreme Court on a certified question asking if Arkansas Game and Fish overruled the Illinois Supreme Court’s holding in Pratt “that temporary flooding is not a taking.” Hampton, 2016 IL 119861, ¶ 9. The Illinois Supreme Court was quick to clarify that the United States Supreme Court could not determine the contours of Illinois takings law, so the certified question was erroneously stated. Id. Nevertheless, the court then aligned Illinois law with the federal position from Arkansas Game and Fish, finding that temporary flooding could constitute a taking. Id. ¶ 13. Seeking a remedy for a taking can provide a property owner wider and more comprehensive relief than tort law allows. See, e.g., Sorrells v. City of Macomb, 2015 IL App (3d) 140763. A tort judgment can produce damages for the cost of repairs to the property (IPI Civil 30.17); the permanent impact of the flooding on the fair market value of the property (IPI Civil 30.18); and damage to personal property or crops located on the land (IPI Civil 30.10-30.16, 30.19, 30.20). A taking claim allows for all that and more. Each flooding could be actionable, even when only temporary, as the waters ultimately recede or dry. Each flooding could entitle the property owner to damages in the form of just compensa-

tion, all without proof of tort-based fault. In addition, Hampton’s alignment of Illinois flooding-based temporary takings law with federal law could eliminate the two-tiered litigation scheme which had been required to obtain a takings recovery. While the Rockstead court found that a federal takings claim is not ripe until a state inverse condemnation suit is first decided, Hampton will likely eliminate the plaintiff’s need to satisfy this dual litigation process. The owner will be fully compensated in state court without having to first lose there and then seek federal court relief. Water management is a fertile area for litigation against local governments by land owners whose property is damaged by raging, or even trickling, waters. Where does Hampton leave defense attorneys in resisting this new takings concept? Many questions are left to be litigated. Is a one-time flood enough for a temporary taking, or must there be recurrent, though not permanent, flooding? What level of knowledge or intent by government officials regarding the diversion of the water is required to constitute a temporary taking? Do the protections of the Illinois Tort Immunity Act, 745 ILCS 10/1-101, apply to a takings claim? An inverse condemnation action asks for a writ of mandamus to require the government to initiate an eminent domain proceeding for its use of the property. Does statutory tort immunity apply to such a claim? It has never been decided whether a claim against a local government based on an Illinois constitutional right can be trumped by a statutory immunity. See, e.g., Teverbaugh v. Moore, 311 Ill. App. 3d 1 (1st Dist. 2000). At this point municipal defense attorneys can only stay tuned for opportunities to craft new defenses to a new cause of action. First Quarter 2017 | IDC QUARTERLY | 53

In Memoriam Willis R. Tribler, IDC Past President Passes Away It is with sadness that we report that Willis R. “Bill” Tribler, one of the patriarchs of the Illinois Association of Defense Trial Counsel (IDC), has passed away. Bill, a founding member and senior partner of the law firm of Tribler Orpett & Meyer, served as the 20th President of the IDC and was a treasured, supremely regarded leader of the defense community throughout his decades of service.

without being disagreeable, and few were immune to his self-deprecating sense of humor and storytelling talents. In addition to practicing law and assuming a leadership role within Tribler Orpett & Meyer, Bill firmly believed in “giving back” to the legal profession. He was active in a number of legal organizations. For example, Bill was a prolific writer, teacher and speaker (for over 40 years) for the Illinois Institute

Bill was very proud of being a lawyer and adhered to and championed the highest ethical standards.

An unquestionably brilliant lawyer and strategic thinker, Bill Tribler was admired as a mentor and friend to hundreds in the legal community, not only in Chicago but throughout Illinois. Bill specialized in the defense of civil litigation. He was a renowned expert in the fields of professional liability and insurance coverage. Bill was very proud of being a lawyer and adhered to and championed the highest ethical standards. In keeping with those ethical standards, Bill served on the Attorney Registration and Disciplinary Commission (ARDC) Oversight Committee from 2004-2014, and on the ARDC Inquiry Board from 2004–2013. Although Bill practiced almost exclusively on the defense side, he had many friends among the plaintiff’s bar as well. While a fierce advocate for his clients, Bill knew how to disagree 54 | IDC QUARTERLY | First Quarter 2017

for Continuing Legal Education (IICLE), publishing over 20 handbook chapters, serving as Board Chair (1992–1993) and was awarded the Addis E. Hull Award for his outstanding contributions. For the IDC, Bill initiated its scholarly publication, The IDC Quarterly, served as its first Editor, and continued writing a regular column for many years thereafter. In 1984–1985, he served as IDC President and subsequently received its highest honor (the John E. Guy and Distinguished Member Awards) for his exemplary service. Bill was also honored by the IDC in 1999 for his exceptional efforts in compiling the 35-year history of the organization. Bill served in the Illinois State Bar Association (ISBA) General Assembly, was an Editor of the Illinois Bar Journal, and also received the ISBA’s highest award (the Medal of Merit and Laureate designation) for his

Willis R. Tribler many contributions. A proud graduate of the University of Illinois College of Law, Bill was later recognized as a Distinguished Graduate of the law school in 1996. He graduated from Bradley University in 1955, and in 2001 was honored with the Most Distinguished Alumni and Centurion Awards for his service to Bradley. When we learned of Bill’s passing, we asked a few members to speak to the impact that Bill had on them. Thank you to everyone who contributed the following kind words regarding Bill. Lawrence Smith Willis “Bill” Tribler was probably as well known throughout the State of Illinois as any lawyer who practiced from Chicago to Cairo and Decatur to Dubuque. If you needed a line on a lawyer in a “foreign” county, chances were good that Bill knew the county politics and the lawyer very well. Bill was not only a member of many legal organizations, he actively participated in those groups including IDC, the Illinois State

Bar Association, IICLE and many others. Bill and I served on the IDC Board for many years and Bill took on the tough jobs, like writing Amicus briefs, when he thought a message needed to be conveyed on behalf of the defense bar. When we sojourned to Springfield as part of our efforts to convey the defense perspective on legislation either proposed or pending, there was no better speaker who could articulate both a concise and convincing position statement. As I recall it, we faced a few difficult Board issues or “situations.” Bill responded firmly and fairly as you would expect a lawyer’s lawyer and gentleman to do. As the 50 Year History of the Illinois Association of Defense Trial Counsel (http://bit.ly/1l8iQ4E) suggests, no one was more committed to the organization, and its members, than Bill Tribler. The bar has been set very high indeed.

IDC 35th Anniversary Party, Willis R. Tribler at far right.

C. William Busse, Jr Bill Tribler hired me right out of law school and gave me my first break. Bill and my father had worked together in the past at Pretzel & Stouffer. I remember the letter he sent me offering the position. The offer he said, was “conditioned on the assumption that you will not be as noisy of an office neighbor as your father was.” Bill became my mentor and pupil master for the formative years of my legal career. I could not have asked for a better mentor. Bill was a very demanding task-master. He required everything that we did to be 100% perfect—not 99%, but 100%. Bill lived his life by a series of rules (which, in his mania for organization,

Tribler receiving ISAE Award for Excellence in Communications.

Mallon congratulating Tribler for John Guy Award.

he actually wrote down and numbered). I wish I would have written them down because they were all quite pithy and for the most part, very clever. In the 1980’s, there was a popular phrase, “don’t sweat the small stuff.” One of Bill’s rules ran directly to the contrary. Bill’s rule was, “always sweat the small stuff, and the big stuff will take care of itself.” I saw this rule in operation shortly after we had moved into new office space. My office was next to Bill’s and Bill had a file cabinet built into the front wall of my office (taking two feet from my office space). The file cabinet had a lock that was engaged by pushing a small knob on the side of the cabinet. Although

we normally locked our file cabinets, we couldn’t lock them until we received sets of keys for the new cabinets. I was working in my office one morning while Bill was getting ready to pack up a five or six volume file and drive down to Will County for a trial that he was about to start. Someone outside my office was talking to his secretary and leaned up against the locking knob, locking Bill’s file in the cabinet. This was long before the days of electronic file transfers and Bill needed that file to start his trial. Bill’s secretary came flying into my office and told me what had just happened. She asked me to accompany her — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 55

In Memoriam | continued

into Bill’s office while she told him about the locked file drawer. She was afraid that Bill was going to go into orbit when he found out that he was not going to be able to get his file out of the drawer. She told him what had happened. Bill just drew a breath and said, “Well get a locksmith and have somebody run the file down to me.” And that was the end of that. Bill’s service to the IDC is legendary. He got me involved in the IDC early in my career. Ultimately, I had the pleasure of serving on the Board of Directors for 12 years and became a much better lawyer for it. One of Bill’s major works was, “The 35 Year History of the IDC.” As we were approaching the IDC’s 50th anniversary, the board thought it would be appropriate to update Bill’s work with the last 15 years of our history. Al Pranaitis, Brad Nahrstadt and I volunteered to do the project. I thought it would be a lot of fun to examine where we were and how far we had come in the last 15 years.

presidents, reviewing what was presented at past Spring, Fall and other seminars and a host of other documents. How Bill was able to single handedly write a 35-year history of the IDC is still something of a wonderment to me. I always enjoyed reading Bill’s articles. His “Defense Philosophy” column was pure Tribler. The defense community has lost a giant.

In addition to the memories of Larry Smith and Bill Busse above, many members chimed in with their remembrances of Bill: “He truly was a mainstay of the IDC for an extended period and contributed greatly to what the organization and the IDC Quarterly are today.” —R. Mark Mifflin, 2016–2017 President “Bill Tribler was a mentor to many of us, and a finer man there could not be.” —Stephen J. Heine, 2004–2005 President “He was a valued friend to all of us who were fortunate enough to know him and work with him. He was a longtime leader, prolific writer, and a past President of the IDC. He will be missed!” —Stephen Corn, 1991–1992 President

Tribler receiving Award from Pomatto for writing The 35-Year History of the IDC.

I had absolutely no idea how much work was going to be involved in this project. We literally put hundreds of hours into the project, reviewing notes of old board meetings, reviewing 15 years of IDC Journals, interviewing past 56 | IDC QUARTERLY | First Quarter 2017

“A great man and a great leader of the Illinois defense bar!” —Charles H. Cole, 2001–2002 President “There aren’t a lot of people who are as universally well thought of as Bill. He always had great stories and was a true friend and mentor to many of us.” —William K. McVisk, Second Vice President “A gentleman and a scholar.” —Paul L. Price, 1990–1991 President

“I would certainly count myself as one of Bill’s mentees, and reading his book on the History of the IDC was my first order of business before taking the helm as President.” —Rick Hammond, 2009–2010 President “I first met Bill when he interviewed me at the University of Illinois in 1979; he made quite an impression on me. I remember him and his wit at the Spring Seminar the first year I attended in 1984. He was a true leader of our organization, a historian, a humorist and an original.” —Michael L. Resis, President Elect “Bill inspired so many of us to be active in IDC, and made us proud to be part of such a fine organization defined by leaders like Bill. Along the way, he made us laugh many, many times.” —Gregory L. Cochran, 2008–2009 President “He was a mentor to all who followed him and those who knew him.” —Gordon R. Broom, 1995–1996 President “A friend to all of us who knew him. A real great guy.” —Peter W. Brandt, 2000–2001 President “Bill was a lawyer’s lawyer, and in many ways the face of IDC. Bill single handedly helped me through a very difficult situation during my year as President. His thoughtful approach to the profession, sharp wit and wise advice will be sorely missed.” —R. Michael Henderson, 1989–1990 President “Nobody ever worked harder for IDC. Great wit, great lawyer, great person. Always made people feel comfortable with him and no one had greater facial expressions. So glad we saw him at the 50th reunion. Our prayers are with you, Bill. Thanks for your friendship and so many wonderful memories.” —Patrick E. Maloney, 1986–1987 President “Bill always was, and will always be, one of my favorite people—among the best I’ve ever met.” —David H. Levitt, 2014–2015 President “A wonderful lawyer and wonderful man.” —Lyndon C. Molzahn, 1993–1994 President “A real loss to the bar and to the IDC. Bill was a dedicated lawyer who worked to improve the administration of justice and the profession as a whole. They certainly broke the mold with Bill. I don’t think we’ll see another. I think all of us feels great loss and the end of an era.” —Rudolf G. Schade, 1992–1993 President

First Quarter 2017 | IDC QUARTERLY | 57

Index of IDC Monograph and Feature Articles Volume 26 The IDC Quarterly has a rich tradition of presenting thought-provoking, timely, educational articles to the defense bar of Il­linois. This award winning legal journal is a wellrespected piece of the legal landscape in Illinois and the country. Our reputation for excellence is based upon years of excellent submissions from our members. Following is an index of the Feature Articles and Monographs that have appeared in the IDC Quarterly in the past year. All of these submissions are available on our website, www.iadtc.org. We are very fortunate to have had the opportunity to present these pieces and many others to you over the years. We offer our sincere thanks to the many editors and authors who have made this journal what it is today.

Wage Peace, Not War: What Employers Need to Know About the Fair Labor Standards Act (26.4.M1) Written by: Kimberly A. Ross, Ford & Harrison LLP, Chicago; James L. Craney, Craney Law Group LLC, Edwardsville; W. Scott Trench, Brady, Connolly & Masuda, P.C., Chicago; Karin Anderson, O’Halloran Kosoff Geitner & Cook, LLC, Northbrook

Monograph Index

Amicus Briefs from Unlikely Sources: Recent Examples (26.1.5) Written by: Michael A. Scodro, Jenner & Block LLP, Chicago

A Primer on Recent Cases Impacting Workers’ Compensation Defense (26.3.M1) Written by: Vincent M. Boyle, Heyl, Royster, Voelker & Allen, P.C., Peoria; Stacy E. Crabtree, Caterpillar, Inc., Peoria; Brad A. Elward, Heyl, Royster, Voelker & Allen, P.C., Peoria; Joseph K. Guyette, Heyl, Royster, Voelker & Allen, P.C., Urbana; Dana J. Hughes, Heyl, Royster, Voelker & Allen, P.C., Peoria; Brett E. Siegel, Heyl, Royster, Voelker & Allen, P.C., Springfield; Lynsey A. Welch, Heyl, Royster, Voelker & Allen, P.C., Rockford Beyond HIPAA: Solving the Puzzle of Properly Acquiring Mental Health Records in Litigation (26.1.M1) Written by: N. Drew Kemp, Thompson Coburn LLP, Belleville; and Howard L. Huntington, Bullaro & Carton, P.C., Chicago Just When You Thought You Knew Who You Represented: A New Decision May Upset the Law Regarding Attorney Liability to Third Parties (26.2.M1) Written by: Adam C. Carter, Cray Huber Horstman Heil & VanAusdal LLC, Chicago; Matthew F. Tibble, Pretzel & Stouffer, Chartered, Chicago; and Donald Patrick Eckler, Pretzel & Stouffer, Chartered, Chicago

58 | IDC QUARTERLY | First Quarter 2017

Feature Article Index Against the Wind: Practical and Ethical Implications of Artificial Intelligence in the Practice of Law (26.4.20) Written by: Donald Patrick Eckler and Ashley S. Koda, Pretzel & Stouffer, Chartered, Chicago

An Employer and Educator’s Guide to LGBT Rights (26.4.4) Written by: Julie A. Bruch, O’Halloran Kosoff Geitner & Cook, LLC, Northbrook Are the IPI Instructions on Construction Negligence an Accurate Statement of Illinois Law? (26.1.21) Written by: Judge Donald J. O’Brien, Jr. (ret.), Johnson & Bell, Ltd., Chicago Illinois Supreme Court Addresses Various Privilege Claims in the Case of a Negligent Credentialing Claim in Klaine v. Southern Illinois Hospital Services (26.2.20) Written by: Roger R. Clayton, Mark D. Hansen, J. Matthew Thompson, Heyl, Royster, Voelker & Allen, P.C., Peoria; and Dede K. Zupanci, HeplerBroom LLC, Edwardsville Manifestation Dates: The Moving Target of Repetitive Trauma Cases (26.3.46) Written by: R. Mark Cosimini, Rusin & Maciorowski, Ltd., Champaign

IDC Index | continued

Please Call Again: The State of TCPA Litigation After Campbell-Ewald (26.2.36) Written by: Charles N. Insler, HeplerBroom LLC, St. Louis, MO Practice Guideline—Expert Discovery: A Primer on Depositions of Liability Experts in Non-Medical Cases (26.1.42) Written by: Charles P. Rantis, Johnson & Bell, Ltd., Chicago Role of Technology Experts in Antitrust Litigation (26.4.38) Written by: Patrick F. Murphy, Ph.D., Exponent, New York; Brian D’Andrade Ph.D., Exponent, Washington, D.C.; Alex Z. Kattamis, Ph.D., Exponent, New York; and Shukri J. Souri, Ph.D., Exponent, New York Settlement Apportionment and Setoff in Illinois (26.3.24) Written by: Quinn P. Donnelly and Brian T. Henry, Pretzel & Stouffer, Chartered, Chicago Vanquishing the Reptile and Using the Reverse Reptile Strategy (26.2.11) Written by: Eric P. Hall, HeplerBroom LLC, Edwardsville Workers’ Compensation: Never Pay Judgment Interest if You are Not Facing a Section 19(g) Judgment (26.3.9) Written by: Brad A. Elward, Heyl, Royster, Voelker & Allen, P.C., Peoria

First Quarter 2017 | IDC QUARTERLY | 59

Association News IDC SocialLink We are very pleased to announce a new member engagement tool, IDC Social Link. SocialLink allows all members to easily connect with fellow IDC colleagues, share information across the IDC network and manage your membership preferences. SocialLink allows you to login using the traditional method, but now you can also login using your Facebook or LinkedIn credentials. This means that it will be easier than ever for you to login, find members only information and engage immediately with your colleagues—all in a private space. We have created a short video on IDC SocialLink (http://bit.ly/IDCSocial Link) to help you get comfortable with this new member engagement tool. Please take time this week to login to www.iadtc.org and get involved with IDC SocialLink. It promises to be a great resource for all IDC members.

Holiday Party and Spirit of the Season Fundraiser We would like to thank the following members for their generous donations to the Spirit of the Season fundraiser. Because of their generosity, and that of the many attendees at the Holiday Party, the IDC was able to donate $1,000 to the Pro Bono Network, Oak Park and the Land of Lincoln Legal Assistance Foundation, Inc., East St. Louis. Denise Baker-Seal — Brown & James, P.C. Elizabeth K. Barton — Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer Troy A. Bozarth — HeplerBroom LLC Jeremy T. Burton — Falkenberg Fieweger & Ives LLP C. William Busse — Busse, Busse & Grassé, P.C. Gregory L. Cochran — McKenna Storer Donald Patrick Eckler — Pretzel & Stouffer, Chtd. ESI (Engineering Systems, Inc.) John R. Garofalo — Jump & Associates, P.C. Edward K. Grassé — Busse, Busse & Grassé, P.C. R. Howard Jump — Jump & Associates, P.C. David H. Levitt — Hinshaw & Culbertson, LLP William K. McVisk — Johnson & Bell, Ltd. R. Mark Mifflin — Giffin, Winning, Cohen & Bodewes, P.C. Nicole D. Milos — Cremer, Spina, Shaughnessy, Jansen + Siegert, LLC Bradley C. Nahrstadt — Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. Anne M. Oldenburg — HeplerBroom LLC Michael L. Resis — SmithAmundsen LLC Tracy Stevenson — Law Offices of Tracy E. Stevenson, P.C. Patrick W. Stufflebeam — HeplerBroom LLC Aleen Tiffany — HeplerBroom LLC Jeanne Zeiger — Cray Huber Horstman Heil & VanAusdal LLC We would also like to offer our sincere thanks to our Young Lawyers Division Chair James DuChateau of HeplerBroom LLC and Vice Chair John Eggum of Foran Glennon Palandech Ponzi & Rudloff, PC for their hard work on the Spirit of the Season fundraiser. It is because of their hard work that we were able to hold another successful fundraiser.

60 | IDC QUARTERLY | First Quarter 2017

Holiday Party | continued

— Continued on next page First Quarter 2017 | IDC QUARTERLY | 61

Holiday Party | continued

62 | IDC QUARTERLY | First Quarter 2017

Association News | continued

Holiday Happy Hour and St. Louis Children’s Hospital Benefit In addition to the Holiday Party and Spirit of the Season Fundraiser, the IDC Young Lawyers Division organized a Holiday Happy Hour and Benefit for St. Louis Children’s Hospital. We would like to thank the following individuals for their generous donations: David Bays — HeplerBroom LLC Troy A. Bozarth — HeplerBroom LLC Matthew B. Champlin — HeplerBroom LLC James L. Craney — Craney Law Group LLC Michael D. Eberle — HeplerBroom LLC Sheina R. Franco — Foley & Mansfield PLLP Corrine E. Haac — HeplerBroom LLC Eric P. Hal — HeplerBroom LLC Elizabeth D. Kellett — HeplerBroom LLC Tara Kuchar — HeplerBroom LLC Daniel C. Lytle — HeplerBroom LLC Sandra J. Wulf, CAE, IOM — Illinois Association of Defense Trial Counsel Justin S. Zimmerman — Lewis Brisbois Bisgaard & Smith LLP We would also like to thank Sheina R. Franco of Foley & Mansfield PLLP and Corrine E. Haack of HeplerBroom LLC for organizing the happy hour and benefit.

First Quarter 2017 | IDC QUARTERLY | 63

Association News | continued

After Hours Reception The IDC is proud to welcome the following members to the Association: Benjamin Barnett SmithAmundsen LLC, Chicago Brian Begley Jendryk, Farmans, Hamer & Begley, LLC, Joliet Anna Covert SmithAmundsen LLC, Chicago Sponsor: Holly Whitlock Paul W. Daugherity Clausen Miller, P.C., Chicago Sponsor: Thomas Ryerson Pamela Gamble HeplerBroom LLC, Chicago Daniel G. Hasenstab Brown & James, P.C., Belleville Justyna Kruk Law Offices of Joseph A Marciniak, Chicago Sponsor: David Ganfield Kathryn Meersseman Cremer, Spina, Shaughnessy, Jansen + Siegert, LLC, Chicago Bryan H. Myers The Hunt Law Group, Chicago Sponsor: Brian Hunt Stephanie W. Weiner HeplerBroom LLC, Chicago

64 | IDC QUARTERLY | First Quarter 2017

Notice of Election In accordance with the Illinois Association of Defense Trial Counsel’s bylaws, an election must be held to fill the vacancies of the directors whose terms expire in 2017. The following directors’ terms will expire at the Annual Meeting in June 2017. Jeremy T. Burton Falkenberg Fieweger & Ives LLP John P. Heil, Jr. Heyl, Royster, Voelker & Allen, P.C. Edward K. Grassé Busse, Busse & Grassé, P.C. Benjamin J. Samuelson Betty, Neuman & McMahon, P.L.C. Ian J. Russell Lane & Waterman, LLP Patrick W. Stufflebeam HeplerBroom LLC Recommendations for nominations of six (6) persons to be elected to the Board of Directors are now being solicited from the general membership.

Individual members of the IDC are eligible for election to the Board of Directors unless otherwise excluded by the bylaws. The bylaws declare that corporate, educator, and law student members are ineligible to serve on the Board of Directors.

The bylaws declare that the IDC’s Board of Directors shall be representative of the entire State of Illinois. 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 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 and appoint two directors from the other District. In addition, 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. A nomination for election to the Board of Directors is complete and filed only if it includes the following: n The Nominating Petition. The signatures of three (3) members in good standing must support each individual nominated. 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 picture (highresolution jpg format, preferred). n A short biography (1-2 paragraphs maximum). n A statement from the member, not to exceed 200 words, stating why the member thinks he or she should be elected to the Board of Directors. Below, please find a sample Nominating Petition and Commitment to Serve Statement. Nominations must be sent electronically to IDC Secretary/Treasurer Nicole D. Milos, Cremer, Spina, Shaughnessy, Jansen + Siegert, LLC, [email protected] and IDC Executive Director Sandra J. Wulf, CAE, IOM at idc@ iadtc.org. 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. If more than six petitions are received, the feature will be sent to the membership. All nominating petitions must arrive at the IDC office no later than Friday, March 10, 2017. 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 e hereby declare (firm nam rsigned, further no efense Trial Cou itment to D of on ti ia oc minate (na m ss e , m A is co d no li an ility the Il me of pers Director o address, city, state is d affirm my ab no li an on) Il , f nt e zip code) ra th th ar e of w rs Il by to li ec n here ir o D is for the po of of A ssociation the Board on sition of ly ve o ti f ac . e D efense Tri nsel serv al Counse efense Trial Cou J D o h of n on ti D ia o l. oc e (signatu Ass re) __. 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 ____ ____________ ________ ______, 2 Signature 0__. First Quarter 2017 | IDC QUARTERLY | 65

the Spring Symposium will address topics important to any civil defense attorney, including discovery, spoliation of evidence, personal jurisdiction, evidence, proximate causation, insurance coverage, and ethical responsibilities. If you have limited experience dealing with mass toxic tort litigation or are brand new to the practice area, be sure to check out the IDC Beginner’s Guide to Mass Toxic Tort Litigation, which will be held the day before the Spring Symposium. Learn more at: http://bit. ly/BeginnersGuidetoMassToxicTorts

Events Committee Gregory W. Odom, Chair HeplerBroom LLC Kelly A. Pachis, Vice Chair Lowis & Gellen, LLP Denise Baker-Seal Brown & James, P.C.  Laura Beasley Joley, Oliver & Beasley, P.C. Jeremy T. Burton Falkenberg Fieweger & Ives LLP James P. DuChateau HeplerBroom LLC  R. Mark Mifflin Giffin, Winning, Cohen & Bodewes P.C. Mass toxic tort cases continue to be filed at a high rate, new trends regularly emerge in this litigation, and Illinois remains a jurisdictional hot spot for mass toxic tort litigation. Because of the important role this litigation plays in Illinois, the Spring Symposium will focus on defending mass toxic tort litigation. Whether you are a veteran of, new to, or interested in expanding your practice to include mass toxic tort litigation, the Spring Symposium provides an excellent opportunity to improve your skills, learn, and network. At the Spring Symposium, you will learn about recent developments and emerging trends in mass toxic tort litigation, obtain key practice tips from veteran litigators, and gain valuable insight from insurance carriers, judges, and preeminent defense attorneys. Even if your practice does not include mass toxic tort litigation, 66 | IDC QUARTERLY | First Quarter 2017

Visit www.iadtc.org to learn more about these terrific programs and REGISTER TODAY!

SCHEDULE

Thursday, March 9, 2017 12:30 – 4:30

Beginner’s Guide to Mass Toxic Tort Litigation Seminar Offices of the ISBA Mutual Insurance Company, 20 S. Clark Street, Suite 800, Chicago See page 69 for details on this seminar.

5:00 – 7:00

IDC After Hours Cocktail Reception – SPiN, Chicago

Symposium Location University of Chicago Gleacher Center, 450 N. Cityfront Plaza Drive, Chicago

Friday, March 10, 2017 8:00 – 8:30 

Registration and Networking

8:30 – 8:45

Opening Remarks

8:45 – 9:15

“I’ve Been Sued, Now What?” Preparing Your Client for Mass Toxic Tort Litigation Presented by: Edward J. McCambridge, Segal, McCambridge, Singer & Mahoney, Ltd.



Continuing Legal Education The program has been approved by the Illinois MCLE Board for 6.25 hours of continuing legal education (CLE) credit. We will apply for 1.5 hours of Illinois professionalism credit. We have applied for the following CLE  credit in other states:

9:15 – 10:15

Personal Jurisdiction in Mass Toxic Tort Litigation Presented by: Nicole C. Behnen, Polsinelli PC

10:15 – 10:30

Refreshment Break

10:30 – 11:30

A Path to Victory: Proving a Sole Proximate Cause Defense  Presented by: Raymond R. Fournie, Armstrong Teasdale LLP

Indiana — 6.25 CLE, including

11:30 – 12:15 

Luncheon 

Iowa — 6.25 CLE, including

12:15 – 1:30

Is Talc the New Asbestos? Emerging Issues in Mass Toxic Tort Litigation Presented by: Elizabeth D. Kellett and Patrick W. Stufflebeam, HeplerBroom LLC



From the Bench: A Judicial Roundtable Discussion on Mass Toxic Tort Litigation Moderator:  Tobin Taylor, Heyl, Royster, Voelker & Allen, P.C. Panelists: Hon. Clare McWilliams, Cook County Circuit Court and Hon. Steven R. Ohmer, 22nd Judicial Circuit (St. Louis City)





1:30 – 2:15

2:15 – 2:30

Refreshment Break

Panel Discussion: Insurance Issues Arising in Mass Toxic Tort Litigation Panelists:  Martin P. Cillick, Allstate Insurance Company; Jennifer K. Gust, Resolute Management; Additional Panelists TBA 2:30 – 3:15

3:15 – 4:15

Ethics and The Tripartite Relationship in Mass Toxic Tort Litigation Presented by: Seth Lamden, Neal, Gerber & Eisenberg LLP



1.5 Professionalism 1.5 Professionalism

Missouri — 7.5 CLE, including

1.8 Professionalism                    

Wisconsin — 7.5 CLE, including 1.8 Professionalism

Refund Policy Refunds must be requested in writing and will be made according to the following schedule: 50% Refund – Feb. 11 – 24 No Refund – Feb. 25 – March 10 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

First Quarter 2017 | IDC QUARTERLY | 67

Spring Symposium | continued

REGISTRATION

Seminar Fees

2017 Spring Symposium

March 10 n University of Chicago Gleacher Center, Chicago

IDC Members in Private Practice............................... $195* IDC Governmental Members...... $145* Non-Members............................. $295* Insurance or Corporate Professionals....................... $100* 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, March 9. *Please note that registration for the April 9th IDC Beginner’s Guide to Mass Toxic Tort Litigation seminar in Chicago is complimentary when you register for the Spring Symposium. Just use promo code: Spring2017 when registering for the Beginner’s Guide program. Visit iadtc.org for more information.

Badge Name: Firm: Address: City, State, Zip Code: Direct Line: (

)

Email:

ARDC Number:

IA:

IL:



MO:

WI:

IN:



Special Dietary/Accessibility Needs:

*Please note that registration for the April 9th IDC Beginner’s Guide to Mass Toxic Tort Litigation seminar in Chicago is complimentary when you register for the Spring Symposium. Just use promo code: Spring2017 when registering for the Beginner’s Guide program. Visit www.iadtc.org for more information.

4

Seminar Fees

Live Presentation

IDC Members in Private Practice

$195*

Non-Members $295* IDC Governmental Members

$145*

Insurance or Corporate Professionals

$100*

TOTAL AMOUNT

Questions? Phone: 800-232-0169

Payment Information (Do Not Fax or Email Credit Card Information) ❑ My check, number is enclosed for $ .

Fax: 866-230-4415

❑ Please charge $ to my: ❑ Visa

Email: [email protected]

Card Number:

❑ MasterCard

Exp. Date:

/

❑ AmEx Security Code:

Name as it appears on credit card: 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 68 | IDC QUARTERLY | First Quarter 2017

A Beginner’s Guide to Mass Toxic Tort Litigation is aimed at educating attorneys with limited mass toxic tort experience. The seminar will provide valuable insight into the key stages of a mass toxic tort case and explore the fundamental issues that arise in these cases. Speakers will address and offer guidance on a variety of important topics, including responsive pleadings, dispositive motions, discovery, case investigation, and expert discovery. Whether you are a young attorney new to mass toxic tort litigation, or a veteran attorney looking to expand your practice, this seminar offers an invaluable opportunity to learn from a panel of veteran mass toxic tort defense attorneys. Agenda 12:30 – 1:00 p.m. Registration & Lunch 1:00 – 1:45 p.m.

The Defense Available in Mass Toxic Tort Litigation Presenter: Donald J. O’Meara, Jr., Pretzel & Stouffer, Chartered Given the nature of mass toxic tort claims, there are numerous potential defenses that must be evaluated by the defense attorney. This program will focus on the various defenses available in this litigation, explore when to raise those defenses, and examine recent developments in the law that impact those defenses, including venue-specific developments that must be considered.

1:45 – 2:30 p.m. Deposing Witnesses in Mass Toxic Tort Litigation Presenter: Jeremy T. Burton, Falkenberg Fieweger & Ives LLP Depositions comprise one of the most important aspects of mass toxic tort litigation. In this litigation, the entire nature of a case is often shaped by the deposition testimony of plaintiffs and fact witnesses. During this program, our speaker will discuss the critical issues to explore in mass toxic tort depositions, provide tips for taking successful depositions, and offer helpful feedback for addressing unique situations that can arise in mass toxic tort depositions. 2:30 – 2:45 p.m. Refreshment Break 2:45 – 3:30 p.m. Conducting a Successful Case Investigation Presenter: Mandi Ferguson, Swanson, Martin & Bell, LLP In mass toxic tort litigation, success can often hinge on the quality of the case investigation. Because these cases typically involve numerous parties, a variety of products, and a vast time period, conducting a case investigation can seem daunting. This presentation will explore the issues that should be investigated in mass toxic tort litigation, the resources available for conducting a case investigation, and the legal mechanisms that can be utilized to complete your investigation. The presentation also will address venue-specific rules that can impact your case investigation. 3:30 – 4:30 p.m. Mass Toxic Tort Science 101 Presenter: Lisa LaConte, Heyl, Royster, Voelker & Allen, P.C. For attorneys new to mass toxic tort litigation, one of the most challenging aspects of this litigation involves mastering the science at issue. This presentation will provide an overview of the diseases typically involved in this litigation, including — Continued on next page

First Quarter 2017 | IDC QUARTERLY | 69

Beginner’s Guide to Mass Toxic Tort Litigation | continued

mesothelioma, lung cancer, and asbestosis, and will examine the scientific fields implicated by this litigation, including pathology, pulmonology, environmental science, industrial hygiene, Breading, and epidemiology. This presentation also will address the various factors to consider when determining the types of expert witnesses to retain.

IDC is shaping the future of Illinois law PASS IT ON

Seminar Fees Registration for this event is COMPLIMENTARY if you have also registered for the 2017 Spring Symposium. Just enter promo code Spring2017 when prompted to have your registration fees for this event waived. If you are unable to attend the 2017 Spring Symposium, registration for this event is $50 for IDC members ($100 non-members).

Refund Policy Refunds must be requested in writing and will be made according to the following schedule: 50% Refund – February 11 - 24, 2017 No Refund – February 25 - March 10 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.

Continuing Legal Education Credit The program has been approved by the Illinois MCLE Board for 3.25 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 3.25 CLE; 0.0 Professionalism Iowa 3.25 CLE; 0.0 Professionalism Missouri 3.9 CLE; 0.0 Professionalism Wisconsin 3.9 CLE; 0.0 Professionalism

REGISTER TODAY at www.iadtc.org Events Committee Gregory W. Odom — HeplerBroom LLC, Chair Kelly A. Pachis — Lowis & Gellen, LLP, Vice Chair Denise Baker-Seal — Brown & James, P.C. Laura Beasley — Joley, Oliver & Beasley, P.C. Jeremy T. Burton — Falkenberg Fieweger & Ives LLP James P. DuChateau — HeplerBroom LLC R. Mark Mifflin — Giffin, Winning, Cohen & Bodewes P.C.

Questions? Phone: 800-232-0169 Email: [email protected] Fax: 866-230-4415 (Do Not Fax or Email Credit Card Information)

70 | IDC QUARTERLY | First Quarter 2017

Member-GetA-Member Program Win CASH when you recruit new members! Details can be found at www.iadtc.org

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

(Application continued on next page) First Quarter 2017 | IDC QUARTERLY | 71

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

m Local Government Law m Tort Law



Administrative Committees m Events m Legislative

m Membership m Young Lawyers



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 Please charge Credit Card #

in the amount of $

Name as it appears on the Card Billing Address

m MasterCard

m AmEx

Exp. Date /

Card Security Code City, State, Zip Code

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 IDC QUARTERLY QUARTERLY || Fourth Fourth Quarter Quarter 2013 2013 80

57

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 March 9

Beginner’s Guide to Mass Toxic Tort Litigation • ISBA Mutual Insurance Company Office • Chicago

l March 9

IDC After Hours • SPiN • Chicago

l March 10

Spring Symposium • The University of Chicago Gleacher Center • Chicago

l April 5

Executive Committee Meeting, Board of Director’s Meeting • Hinshaw & Culbertson LLP • Springfield

l April 5

Legislative Reception • Sangamo Club • Springfield

l May 18

Executive Committee Meeting • Johnson & Bell, Ltd. • Chicago

l May 18

IDC After Hours • Location TBA • Chicago

l May 19

Sponsor Brunch (Invitation Only) and Board of Director’s Meeting • Johnson & Bell, Ltd. • Chicago







THE IDC MONOGRAPH:

Crossing the Line: Interference with Business and Contractual Relations

Mark J. McClenathan Heyl, Royster, Voelker & Allen, P.C., Rockford

IDC QUARTERLY | Volume 27 Number 1

Crossing the Line: Interference with Business and Contractual Relations

I. Introduction A prospective client approaches you and asks if you are willing to represent her in a real estate case that has been pending for some time. She explains that she fired her attorney and is filing an ARDC complaint against him. You immediately turn down the assignment, and, at her request, give her the names of three local attorneys who specialize in real estate law and are respected litigators. The meeting lasted 20 minutes. Several months later, the client’s discharged attorney serves you with a summons and complaint charging you and the client’s new attorney with tortious interference with business relations. What did you do to deserve this lawsuit? What did you do wrong? Did you “interfere” with another attorney’s relationship with his client? Was your act “intentional”? In today’s litigious society, common law causes of action are being stretched to the limit to give anyone a forum to seek redress for their alleged injuries, damages, failures, and disappointments, especially when something does not go their way. Losing a client or customer happens every day; there are no guarantees. But what if the competitor is not playing “fair”? There are plenty of attempts by business owners to protect what is “theirs.” For instance, employers may ask their employees to sign restrictive covenants, such as covenants not to compete and confidentiality agreements. If employees leave and either start their

own business or work for a competitor, we often see employers filing petitions for injunctions to enforce said “contracts” against former employees and their new employers to protect market share and proprietary information. This article examines lawsuits filed by business owners who assert that a third party interfered with an existing or potential business relationship which led to economic and consequential damages. Suits alleging tortious interference are not exclusively reserved to business settings, these claims are also being brought against defendants and their litigation attorneys during discovery as a tool to attempt to stop subpoenas. II. Mixing Business Law and Tort Law Interference with business relations—sometimes referred to as tortious interference with business relations—is a type of common law tort that occurs when a person intentionally interferes or damages another person’s relationship with a third person.1 There are two general categories of “tortious interference,” interference with business relations,2 and interference with contracts.3 Tortious interference with business relations is interference with a business expectancy or relationship, while tortious interference with a contract is based on the existence of a valid contract between the plaintiff and a third party. Only intentional interference is actionable in Illinois. Negligent interference with business relations is not a recognized cause of action in Illinois.

M-2 | IDC QUARTERLY | Monograph | First Quarter 2017

In some circumstances, one who is liable for intentional interference may also be liable under other legal theories, including fraudulent misrepresentations4 (e.g., defamation), negligent misrepresentations, or possibly even false advertising. a. Federal Law and “Interference” While this article focuses on Illinois law, it is noteworthy that federal laws may prohibit “interference” with contractual and business relations. Section 3 of the Clayton Act states: [I]t shall be unlawful for any person . . . to lease or make a sale or contract for sale of goods . . . or fix a price charged therefor . . . on the condition, agreement or understanding that the lessee or purchaser

About the Author Mark J. McClenathan, Heyl, Royster, Voelker & Allen, P.C. Mr. McClenathan has handled commercial and civil litigation in state courts in more than 19 counties in northern Illinois and in the Northern District of Illinois federal court. He has also represented municipalities and individual clients before various governmental bodies. Prior to joining Heyl Royster, he worked for the legal department of the Defense Logistics Agency (Defense Contract Services) of the Department of Defense in Chicago, and the legal departments of Land O’Lakes, Inc. and 3M Corporation.

thereof shall not use or deal in the goods . . . of a competitor or competitors of the lessor or seller, where the effect of such lease, sale, or contract for sale or such condition, agreement or understanding may be to substantially lessen competition or tend to create a monopoly in any line of commerce.5 Section 2 of the Sherman Act states that “[e]very contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . . . .”6 Finally, section 45 of the Federal Trade Commission Act states that “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.”7 b. Balancing Friendly Competition in a Free Market Versus Intentional Acts There is no denying that this country’s economy is based on the free market system. Consumers of goods and services are free to choose who they do business with and competition is encouraged. There are, however, legitimate social and economic interests in protecting not only the freedom of a competitor, but also the contractual and business interests of the other party. Thus, the common law tort of interference with business relations strikes caution, or even fear, into anyone playing on the free market stage, because

it allows a business person to protect an existing or prospective business or contractual relationship built on legitimate and valid business interests. While courts encourage competition, they frown upon intentionally improper means and methods—such as misrepresentation, fraud, or intimidation—to interfere with business relationships or contracts. For instance, absent an enforceable non-competition agreement, a salesman is free to compete with his or her former employer upon resignation or termination. c. Interference or Abuse— Pitfalls in the Practice of Law It is important for defense attorneys to know what is fair and what is crossing the line when competing for clients, advising clients, and representing clients in litigation. Intentional interference has been alleged not only in cases where one party alleges an unfair fight for business, but in litigation to stop an alleged abuse of process in discovery.

III. Tortious Interference Claims a. Tortious Interference with Business Relations To state a cause of action for tortious interference with a valid business relationship and expectancy (sometimes referred to as “interference with prospective business advantage”), a plaintiff must allege: (1) a reasonable expectancy of entering into a valid business relationship; (2) the defendant’s knowledge of the expectancy; (3) an intentional and unjustified interference8 by the defendant that induced or caused a breach of termination of expectancy; and (4)

damage to the plaintiff resulting from the defendant’s interference.9 This tort “recognizes that a person’s business relationships constitute a property interest and as such are entitled to protection from unjustified tampering by another.”10 It also “implies a balancing of societal values an individual has a general duty not to interfere with the business affairs of another, but he may be privileged to interfere, depending on his purpose and methods, when the interference takes a socially sanctioned form, such as lawful competition.”11 In some cases, “malice” is identified as a necessary element.12 In this context, “malice” means the intent to interfere without sufficient justification.13 Additionally, the defendant’s interference must be directed toward a third party.14 It is the interference with a business relationship that creates the actionable tort, and there is no requirement that the cause of action be based on an enforceable contract.15 The mere hope, or possibility, of a future business relationship is insufficient to show a reasonable expectancy.16 b. Tortious Interference with Contract To maintain a cause of action for tortious interference with contract (or “contractual relation”), a plaintiff must allege “(1) the existence of a valid and enforceable contract between the plaintiff and another; (2) the defendant’s awareness of this contractual relation; (3) the defendant’s intentional and unjustified inducement of a breach of the contract; (4) a subsequent breach by the other, caused by the defendant’s wrongful conduct; and (5) damages.”17 For purposes of this claim, “inducement” requires “active — Continued on next page

First Quarter 2017 | Monograph | IDC QUARTERLY | M-3

It is important for defense attorneys to know what is fair and what is crossing the line when competing for clients, advising clients, and representing clients in litigation. Intentional interference has been alleged not only in cases where one party alleges an unfair fight for business, but in litigation to stop an alleged abuse of process in discovery.

persuasion, encouragement, or incitement that goes beyond merely providing information in a passive way.”18 Pleadings a cause of action for tortious interference requires more than general, conclusory allegations setting for these five elements. For instance, Illinois courts have held that the first element of a prima facie case for tortious interference—that a plaintiff had a valid business expectancy—requires allegations of business relationships with specific third parties.19 In Du Page Aviation Corp. v. Du Page Airport Authority, the Illinois Appellate Court Second District found that, rather than alleging business relationships with specific third parties, the plaintiff alleged in general and conclusory terms that “plaintiffs were continually negotiating and entering into business relationships with others” and that such was insufficient and by itself fatal.20 As to the third element, Illinois courts require “that a tortious interference claim be supported by allegations that the defendant acted toward a third party.”21 In Du Page Aviation Corp., the court found that the plaintiffs’ complaint was insufficient where they sought to hold the defendant liable for refusing to

enter into leases or contracts with them, claiming that the refusal interfered with the plaintiffs’ ability to continue dealing with their own customers.22 It is settled law that a party cannot tortiously interfere with his or her own contract.23 Further, an employer cannot interfere with its own business relationship with its employees.24 The exception is where a corporate officer interferes with an employee’s employment with the corporation.25 A claim for tortious interference against a corporate officer must show that the officer’s conduct was malicious or without justification, and that the corporate officer acted solely for his or her own gain or solely for the purpose of harming the plaintiff.26

IV. Affirmative Defenses to Tortious Interference Claims a. Conditional Privilege and the Business Judgment Rule Illinois courts recognize a privilege in intentional interference cases where the defendant was acting to protect an interest which the law deems to be of equal or greater value than the plaintiff’s contractual rights.

M-4 | IDC QUARTERLY | Monograph | First Quarter 2017

In Koehler v. Packer Group, Inc., the individual defendants appealed a jury verdict against them for tortious interference with a contract, arguing that they were not outsiders capable of tortious interference because they signed the employment agreement (between the company and the plaintiff) on behalf of the corporate defendants, were shareholders, and comprised a majority of the board of directors and the board’s managing committee.27 At trial, the plaintiff presented evidence in support of his theory of liability that the individual defendants acted in their own self-interest, outside the scope of their duties, and to the detriment of plaintiff and the corporate defendants when he was discharged as CEO.28 In affirming the circuit court’s judgment, the appellate court refused to find that the jury instructions for tortious interference with a contract mislead the jury as to (1) actual malice, (2) the conditional privilege or business judgment rule, and (3) proximate cause.29 First, the appellate court upheld the trial court’s rejection of the defendants’ contention that the jury should have been instructed that the plaintiff was required to prove the individual defendants acted with malice.30 The appellate court agreed with the circuit court’s rejection of the defendants’ contention that the jury instruction must include the words “actual malice.” Similarly, the appellate court rejected the defendants’ claim that they were entitled to a privilege because of their responsibilities as corporate officers and directors. In doing so, the court noted that: Illinois courts “recognize a privilege in intentional interference with contract cases where the

defendant was acting to protect an interest which the law deems to be of equal or greater value than the plaintiff’s contractual rights.” Because “the duty of corporate officers and directors to their corporations’ shareholders outweighs any duty they might owe to the corporations’ contract creditors,” our supreme court has recognized that corporate officers and directors are privileged “to use their business judgment and discretion on behalf of their corporations.” A defendant who is otherwise protected by the privilege, however, “is not justified in engaging in conduct which is totally unrelated or even antagonistic to the interest which gave rise to [the] privilege.” In such cases, “it is the plaintiff’s burden to plead and prove that the defendant’s conduct was unjustified or malicious.” In this context, “[t]he term ‘malicious,’ * * * simply means that the interference must have been intentional and without justification.”31

identify no specific proposed instruction of theirs that the court erroneously refused in this regard. The instruction given required plaintiff to prove that the individual defendants acted “solely out of self-interest,” just as defendants’ proposed instruction required plaintiff to prove that they acted “solely for their own personal gain.” In both, use of the word “solely” adequately addresses the possibility that a corporate officer’s actions taken in his own self-interest might also be in the best interests of the company. We similarly reject defendants’ argument that the instructions given were confusing simply because the individual defendants were shareholders; just because they were shareholders does not mean, as defendants contend, that any action taken in their own self-interest was “necessarily” in the company’s best interest.33 b. Agency Liability

Further, the appellate court agreed with the circuit court that the individual defendants’ proposed instruction stating that corporate officers are entitled to put the company’s interests over those who contract with the company was sufficiently incorporated into the plaintiff’s proposed instruction.32 The court ruled:

Generally, agents are not responsible for interfering with a contract or business relation involving the agent’s principal. Illinois law provides an agent with a qualified privilege against claims of tortious interference with a contract where the agent acted legitimately within the scope of his or her authority as a representative of the principal, unless it was for personal gain or with improper motives.34 In Gardner Denver, Inc. v. National Indemnity Co., Gardner Denver filed a complaint against defendants National Indemnity Company and Resolute

Defendants additionally argue that plaintiff was required to prove the individual defendants acted both for their own gain and contrary to the company’s best interests, though they

Management, Inc., alleging that they tortiously interfered with its settlement agreement with another defendant, National Union, and engaged in deceptive practices.35 National Indemnity and Resolute filed a motion to dismiss for failure to state a cause of action, which the trial court granted.36 The plaintiff appealed, asserting that the trial court erred in dismissing its complaint. Specifically, Gardner Denver argued it alleged sufficient facts to overcome National Indemnity’s and Resolute’s conditional agency privilege, thus stating a cause of action supporting its complaint.37 The appellate court reversed the trial court’s judgment.38 The facts of the case are somewhat complex. Starting in 1978, National Union entered into certain indemnity agreements with Gardner Denver’s predecessors in interest in which Gardner Denver paid fees to National Union in exchange for liability coverage. 39 The indemnity agreements outlined the parties’ obligations to one another regarding products liability actions.40 In 2001, Gardner Denver initiated litigation against National Union seeking a declaration that National Union was obligated to defend and indemnify it against claims arising under the indemnity agreements.41 In 2003, the parties entered into a settlement agreement resolving National Union’s obligation to Gardner Denver and in the years following, National Union performed its obligations under the settlement agreement.42 However, in 2011, the relationship between Gardner Denver and National Union began to change and National Union entered into a “retroactive reinsurance” agreement with National Indemnity.43 Under a retroactive-reinsurance policy, an insurance company (like — Continued on next page

First Quarter 2017 | Monograph | IDC QUARTERLY | M-5

National Union), pays a significant sum to a more financially stable insurance company (like National Indemnity), to “reinsure” its debt and liabilities and the reinsurer assumes the obligations and liabilities of the reinsured company.44 Because many of the obligations and liabilities are ongoing over the course of years or decades, the reinsurer is free to invest the substantial sum paid by the reinsured company until insurance claims become due.45 Under the retroactive-reinsurance policy, Gardner Denver claimed that National Indemnity obtained total control over claims-handling decisions regarding National Union’s asbestos and other mass tort liabilities, and National Indemnity then delegated its control to Resolute Management.46 Because the interests and arguments of National Indemnity and Resolute were the same for purposes of the appeal, the court referred to them collectively as “NICO.”47 In 2012, not long after National Union entered into its agreement with NICO, National Union stopped making payments to Gardner Denver under the 2003 settlement agreement.48 In October 2013, Gardner Denver filed a complaint against National Union and NICO. Gardner Denver alleged that NICO engaged in (1) tortious interference with a contract by inducing National Union to breach the settlement agreement, and (2) deceptive business practices by, in-part, asserting a new and frivolous defense to excuse its performance under the settlement agreement.49 NICO filed a motion to dismiss pursuant to section 2-615 of the Illinois Code of Civil Procedure asserting Gardner Denver failed to state a cause of action.50 NICO argued that it had a qualified privilege against claims of tortious interference with a contract

where it acted as a representative of the principal—i.e., National Union—and, therefore, Gardner Denver could not state a claim for tortious interference with a contract.51 The trial court agreed and dismissed Gardner Denver’s complaint against NICO. 52 As to tortious interference with a contract count, the court noted the allegations in the complaint were “inconsistent with the necessary factual allegations that NICO was acting solely for its benefit and totally unrelated to the interests of [National Union]. * * * Since the complaint does not adequately allege facts that NICO was acting solely for its own benefit, or solely to harm [Gardner Denver], the court finds that it would only state a cognizable action if the allegations establish the methods or means of the interference are malicious or unjustified.”53 Though Gardner Denver claimed NICO acted with “oppression, fraud, and malice” toward Gardner Denver, the court found the complaint contained insufficient facts to support those legal conclusions.54 The court also found the complaint lacked factual allegations demonstrating NICO had committed a tort, and thus, NICO could not be liable for tortious interference with a contract.55 Because the court found the complaint failed to set forth factual allegations that NICO had committed an independent tort, it also dismissed the deceptivepractices count as being preempted by section 155 of the Insurance Code.56 On appeal, Gardner Denver asserted the trial court erred in dismissing its complaint because it had adequately stated a claim for (1) tortious interference with a contract by alleging NICO acted without justification and with malice, defeating NICO’s conditional agency privilege; and (2) by sufficiently alleging

M-6 | IDC QUARTERLY | Monograph | First Quarter 2017

a claim for tortious interference with a contract, it demonstrated facts to sustain its deceptive business practices claim.57 Because the trial court dismissed Gardner Denver’s complaint pursuant to section 2-615(a) for failure to state a cause of action, at issue was whether it was Gardner Denver’s burden to plead a lack of justification.58 The court noted that where a conditional privilege exists, the burden is on the plaintiff to demonstrate the defendant acted without justification.59 First, the court addressed whether the complaint demonstrated NICO was acting as an agent for National Union.60 In defining a conditional privilege, the court noted: Entities exercising their business judgment for the benefit of a client are similar to agents or corporate officers who exercise their discretion for the benefit of their company. Parties serving in that capacity enjoy a conditional privilege against a claim that it interfered in a third party’s contractual relationship with its client. This privilege is afforded so long as the advice given is (1) requested, (2) within the scope of the request, and (3) honest, regardless of whether the agent profits from the advice.61 On appeal, Gardner Denver abandoned the argument that NICO was not an agent of National Union and was therefore not entitled to the conditional agency privilege, and instead focused on whether NICO engaged in unjustified actions that would defeat the privilege.62 The appellate court noted that: Where an agency relationship has been established, thereby

creating a conditional privilege, the plaintiff bears the burden of pleading the defendant’s conduct lacked justification or was done with malice. “The term ‘malicious,’ in the context of interference with contractual relations cases, simply means that the interference must have been intentional and without justification.” Additionally, the agency privilege does not extend to bad-faith conduct engaged in by the defendant solely for its own benefit or for the sole purpose of harming the plaintiff.63 Gardner Denver alleged NICO acted without justification and with malice by refusing to follow the terms of the settlement agreement, thus overcoming the conditional agency privilege.64 Gardner Denver alleged that NICO’s defense for failing to pay was frivolous and was an unjustified and malicious attempt to reduce its liabilities in order to increase profits.65 In the circuit court’s written order on the motion to dismiss, it noted that neither party cited cases directly on point answering whether “the intentional interjection of alleged frivolous insurance defenses would constitute unjustified or improper methods of contract inference by a party conditionally protected to interfere.”66 The appellate court held that while no cases may directly answer the court’s question, “the ultimate issue remained the same—whether NICO’s actions, as agents of National Union, in denying or refusing to pay claims were unjustified or malicious.”67 NICO also asserted that Gardner Denver’s complaint contained insufficient facts to show that it was acting

Generally, attorneys are protected from tortious interference claims arising out of the representation of clients in and out of court. It is well-established that the purpose of imposing liability on persons who interfere with the contractual relationships of others is to protect one’s interest in such relationships against forms of interference which, on balance, the law finds repugnant.

solely for its own benefit rather than that of National Union.68 The appellate court interpreting the settlement agreement and the extent to which National Union endorsed NICO’s actions, along with subsequent facts that may be revealed in the course of discovery regarding whether NICO lacked justification or acted with malice solely to further its interests, were factual questions inappropriate for resolution on a motion to dismiss.69 In viewing the allegations of the complaint and all reasonable inferences to be drawn there from, the appellate court held that it could not conclude that no set of facts existed under which Gardner Denver could recover.70 Thus, the court ruled that count I of Gardner Denver’s complaint alleged sufficient facts to state a claim for tortious interference with a contract.71 c. Statute of Limitations There is no specific statute of limitation provision governing tortious interference actions. Rather, the five-year statute of limitations set forth in 735 ILCS 5/13-205 applies.72

d. Lawful Competition The privilege of lawful competition is an affirmative defense to the tort of intentional interference with prospective business advantage. 73 This privilege to engage in business and to compete “allows one to divert business from one’s competitors generally as well as from one’s particular competitors provided one’s intent is, at least in part, to further one’s business and is not solely motivated by spite or ill will.”74 Section 768 of the Restatement (Second) of Torts sets forth the elements of the “lawful competition” privilege: (1) One who intentionally causes a third person not to enter into a prospective contractual relation with another who is his competitor . . . does not interfere improperly with the other’s relation if (a) the relation concerns a matter involved in the competition between the actor and the other and — Continued on next page

First Quarter 2017 | Monograph | IDC QUARTERLY | M-7

(b) the actor does not employ wrongful means and (c) his action does not create or continue an unlawful restraint of trade and (d) his purpose is at least in part to advance his interest in competing with the other.75 e. Attorney’s Conditional Privilege Generally, attorneys are protected from tortious interference claims arising out of the representation of clients in and out of court. It is well-established that the purpose of imposing liability on persons who interfere with the contractual relationships of others is to protect one’s interest in such relationships against forms of interference which, on balance, the law finds repugnant.76 The question of justification therefore rests on whether protection of the contractual interest merits prohibition of the particular conduct which interferes with that interest.77 Illinois courts recognize that “under certain circumstances a third party may be privileged purposely to bring about a breach of contract between other parties.78 This privilege arises where the third party acts to protect a conflicting interest which is considered to be of equal or greater value than the contractual rights involved.79 For instance, claims against attorneys for tortious interference with contract and tortious interference with business expectancies are subject to the defense of the attorney’s conditional privilege. All out of court communications between an attorney and his or her client are protected by absolute privilege. However, the privilege accorded an attorney when advising his client is not absolute.

In Schott v. Glover, the court pointed out that “a plaintiff can only state a cause of action for tortious interference with a contract against a third party who is conditionally privileged if the plaintiff can set forth factual allegations from which actual malice may reasonably be said to exist.”80 Such allegations must include a “desire to harm, which is independent of and unrelated to the attorney’s desire to protect his client.”81 In the Schott case, the court found no such allegations were contained in the plaintiff’s count against the defendant bank’s attorney, and, in light of the attorney’s conditional privilege (based on public policy), found that plaintiff failed to allege sufficiently unjustified conduct.82 The court held: The fiduciary duty owed by an attorney to his client is such an interest and under the circumstances here alleged Glover was privileged, in his capacity as the bank’s attorney, to perform the acts and give the advice alleged in count II. We need not decide whether the advice given was correct in every aspect. Although incorrect advice as to a client’s contractual obligations might cause that client to become liable to a third party in contract, it does not follow that the attorney would also be liable to that party. To impose such liability on an attorney would have the undesirable effect of creating a duty to third parties which would take precedence over an attorney’s fiduciary duty to his client. Public policy requires that an attorney, when acting in his professional capacity, be free to advise his client without fear of personal liability

M-8 | IDC QUARTERLY | Monograph | First Quarter 2017

to third persons if the advice later proves to be incorrect.83 This privilege has also been found to exist because of an attorney’s fiduciary duties to their clients where the advice was provided in “good faith.”84 Moreover, attorneys are entitled to an absolute privilege to publish defamatory statements concerning another during the course and as a part of a judicial proceeding in which he participates as counsel.85 That privilege is also based on the “public policy of securing to attorneys as officers of the court the utmost freedom in their efforts to secure justice for their clients.”86 This absolute privilege naturally extends to anything attorneys say outside of court, including in any legal, judicial, or quasi-legal proceedings, as long as the communications pertain to the proceedings.87 It is well-established under Illinois law that a defamatory statement is protected by an absolute, qualified, or conditional privilege, and that such is a question of law for the court.88 Illinois courts have also prohibited basing a cause of action for tortious interference with business opportunity on the wrongful filing of a lawsuit because Illinois has a broad and absolute litigation privilege that protects statements made in a judicial proceeding.89 Under Illinois law, the only cause of action recognized for the wrongful filing of a lawsuit is one for malicious prosecution or abuse of process.90

V. Damages and Punitive Damages Damages recoverable when a plaintiff proves intentional interference with contractual relations include pecuniary loss of the benefits of the contract,91

Damages recoverable when a plaintiff proves intentional interference with contractual relations include pecuniary loss of the benefits of the contract, actual harm to reputation, and consequential losses for which the interference is the legal cause, less any damages separately paid by the breaching party.

actual harm to reputation, and consequential losses for which the interference is the legal cause,92 less any damages separately paid by the breaching party.93 It is well established that economic losses are recoverable where a cause of action is brought based on tortious interference with contract. In Berlant v. Goldstein, the Illinois Appellate Court Second District affirmed the trial court’s dismissal of the plaintiff’s complaint where the plaintiff could not show any damages resulting from the defendants’ conduct where the plaintiff lost a certain teaching position.94 In that case, a substitute teacher who was held in “high esteem” was removed from the calling list as a substitute teacher only at the school her grandson attended (but not other schools in the district).95 In addition to alleging a claim for defamation per se, plaintiff alleged a cause of action for tortious interference with prospective business relations. The court dismissed the case with prejudice because, among other things, she presumably could have taught at one of the other school buildings in the district.96 In Bank Financial, FSB v Brandwein, the appellate court also dismissed a tortious interference claim based on lack of damages.97 In that case, a

defendant in a mortgage foreclosure suit raised an affirmative defense of tortious interference based on the fact that the plaintiff bank had contacted tenants of the property prior to the appointment of a receiver and directed the tenants to stop paying rent to the defendant.98 The Illinois Appellate Court First District held that the trial court did not err in granting summary judgment to the plaintiff because the defendant had not shown a factual basis to support the elements of tortious interference because there was no evidence that the defendant was damaged by the alleged tortious interference by the plaintiff or even that the tenants broke their contract with the defendant by not paying rent.99 Punitive damages are also recoverable in tortious interference cases, if the plaintiff can prove that the defendant’s motivation was malicious and ill-willed. It is not presumed that a defendant’s intentional actions will justify punitive damages. The circuit court must determine whether to submit the issue of punitive damages to the jury. In Koehler v. Packer, the court ruled that the circuit court did not err by submitting the issue of whether punitive damages were recoverable in plaintiff’s intentional interference with

contractual relations to the jury where plaintiff established a prima facie case for punitive damages.100 The court held: The circuit court did not err in submitting the issue of punitive damages to the jury in this case. As the court noted in its order denying the individual defendants’ motions for summary judgment, plaintiff had “submitted evidence that the [i]ndividual [d]efendants conspired to terminate his employment as a result of his intention to reveal financial irregularities and other potentially unscrupulous business practices committed by them,” that these defendants “operated in bad faith, to protect their own interests and to harm [plaintiff],” and that “their actions were adverse to the company’s interests.”101 The court also rejected defendants’ argument that “punitive damages should not be allowed where the same conduct provides the basis for compensatory damages” and thus subjected them to “double punishment for the same conduct.”102 The court held: Where an award of punitive damages is based on misconduct going above and beyond that required to establish the underlying tort, this problem does not arise. Such is the case here, where the wrongful conduct that plaintiff must establish to recover on a claim for tortious interference with contract—the “intentional and unjustified inducement of a breach of the — Continued on next page

First Quarter 2017 | Monograph | IDC QUARTERLY | M-9

contract”—does not rise to the level of, and is not coextensive with, the outrageous conduct evincing a “high degree of moral culpability” that is required for an award of punitive damages. The award of punitive damages in this case therefore did not improperly subject the individual defendants to double punishment for the same conduct.103

VI. Tortious Interference in Non-Traditional “Commercial” Matters While not directly involving a “contract” or “business relation,” there are other “intentional interference” causes of action that are similar in purpose and thus instructive. One is “intentional interference with inheritance.” 104 A tort claim for intentional interference with inheritance is defined as “[o]ne who by fraud, duress or other tortious means intentionally prevents another from receiving from a third person an inheritance or gift that he would otherwise have received is subject to liability to the other for loss of the inheritance or gift.”105 This tort does not contest the validity of the will, but rather is a personal action directed at an individual tortfeasor.106 Discussing a claim for intentional interference with inheritance, the Illinois Supreme Court explained that: Although some of the evidence may overlap with a will contest proceeding, a plaintiff filing a tort claim must establish the following distinct elements: (1) the existence of an expectancy; (2) defendant’s

intentional interference with the expectancy; (3) conduct that is tortious in itself, such as fraud, duress, or undue influence; (4) a reasonable certainty that the expectancy would have been realized but for the interference; and (5) damages. The remedy for a tortious interference action is not the setting aside of the will, but a judgment against the individual defendant, and, where the defendant has himself received the benefit of the legacy, a constructive trust, an equitable lien, or “a simple monetary judgment to the extent of the benefits thus tortiously acquired.” Thus, a tort claim for intentional interference with an expectancy is not a “petition * * * to contest the validity of the will” under the plain statutory language of section 8-1.107 In Robinson v. First State Bank of Monticello, the Illinois Supreme Court upheld the dismissal of the plaintiffs’ claims for tortious interference with inheritance against an attorney who helped his client draft a new will. 108 In Robinson, a decedent’s heirs brought an action for tortious interference with inheritance expectancy against an attorney who they alleged induced the decedent to execute a will and codicil that had the effect of disinheriting the plaintiffs.109 Prior to bringing the action for tortious interference with inheritance expectancy, the will had been admitted to probate and the plaintiffs had engaged an attorney to determine whether they should file a will contest.110 The plaintiffs did not file the will contest, instead settling their dispute regarding the validity of the will and allowing the

M-10 | IDC QUARTERLY | Monograph | First Quarter 2017

statutorily prescribed period in which to contest the will to expire.111 The Illinois Supreme Court held that under these circumstances, it would not recognize a tort for intentional interference with inheritance expectancy.112 However, in Bjork v. O’Meara, the Illinois Supreme Court reversed the dismissal of the plaintiff’s (a friend of the decedent) claim against the defendant (another friend of the decedent) alleging intentional interference with a testamentary expectancy as time-barred under the limitation period governing will contests.113 In that case, the court allowed the claim to proceed, noting that the six-month limitation period for will contests established in 755 ILCS 5/8-1 of the Probate Act did not expressly limit a tort action for intentional interference with a testamentary expectancy.114 The court noted that under certain circumstances, however, Illinois courts have prohibited the cause of action where a plaintiff forgoes an opportunity to file a tort claim within the six-month limitation period for a will contest. In Bjork, the court concluded that the probate proceedings did not provide “meaningful relief” to plaintiff because his tort claim did not in any way seek to invalidate the will. In Phelps v. Land of Lincoln Legal Assistance Foundation, Inc., plaintiffs actually filed an action contesting the will, but they chose to settle that action short of reaching the merits of their contentions regarding the invalidity of the will.115 As a result, the will was admitted to probate, thereby establishing its validity.116 In that case, the claim for tortious interference with inheritance expectancy against the attorney was dismissed because the heirs did not avail themselves of the relief provided under the Probate Act.

In In re Estate of Ellis, the Illinois Supreme Court upheld a cause of action for tortious interference with inheritance expectancy filed against a pastor.117 In that case, a charitable organization was named as a beneficiary of the decedent’s will executed in 1964.118 In 1999, the decedent executed a new will that left her entire estate to her pastor. After the decedent died, her 1999 will was admitted to probate.119 The plaintiff charitable organization did not learn of its interest in the decedent’s 1964 will until nearly three years after the decedent’s death.120 The plaintiff then filed a claim for intentional interference with inheritance expectancy against the decedent’s pastor, alleging that but for the pastor’s intentional scheme to exercise undue influence over the decedent and abuse his position of trust, the plaintiff would be the sole beneficiary of the decedent’s estate.121 In addition, the plaintiff alleged that the pastor induced the decedent to buy him gifts during her lifetime and sought recovery of these inter vivos gifts as well.122 The plaintiff was allowed to proceed with its tort claim because a will contest proceeding under the Probate Act was not available to it and, therefore, it could not be said that the plaintiff voluntarily relinquished an opportunity to follow that required procedural course.123 In addition, the Ellis court found that a will contest would not have provided the plaintiff with complete relief, since the plaintiff sought recovery for inter vivos transfers of property.124 As explained in In re Estate of Luccio, if a proceeding under the Probate Act is “available” to a litigant, such that he is “aware” of his legacy and has an opportunity to proceed under the Probate Act and obtain complete relief, but chooses not to, instead agreeing to take no action

in probate in exchange for a settlement, then he cannot later bring a separate action for intentional interference with inheritance expectancy.125

VII. Tortious Interference Claims Involving Attorneys Generally, a client may discharge an attorney at any time, with or without cause. 126 However, attorneys should beware not to induce unjustifiable interference by third parties in business relationships between attorneys and clients. The focus is not necessarily on the conduct of the client in terminating the relationship, but on the conduct of the party inducing the breach or interfering with the expectancy. Courts have held third party inducement of breaches of contract or unjustifiable interference by

interfering with the expectancy, but ‘purposeful interference’—that the defendant has committed some impropriety in doing so.”128 An unpublished case in 2015 is one of the more interesting and illustrative cases involving a discovery battle for records and a subsequent claim for tortious interference of business relations and prospective economic advantage. The facts in Forza Techs., LLC v. Premier Research Labs, LP are typical of a breach of contract case, and the actions of the defense attorneys not surprising if not expected.129 The plaintiff contracted with the defendants to manufacture plaintiff’s nutritional supplement products and paid approximately $500,000 for an initial supply.130 The products were delivered late, had inaccurate labels, and were

Generally, a client may discharge an attorney at any time, with or without cause. However, attorneys should beware not to induce unjustifiable interference by third parties in business relationships between attorneys and clients.

third parties in attorney-client relationships actionable in numerous cases.127 As the Illinois Supreme Court has noted: “Unlike the actions involved in the cases recognizing the client’s right of discharge, the plaintiff’s claim here is directed not at the client, but at the party allegedly responsible for causing the termination of the relationship. Moreover, to prevail on the claim, a plaintiff must show not merely that the defendant has succeeded in ending the relationship or

allegedly contaminated with a banned substance. Thereafter, the plaintiff filed a lawsuit against the defendants in the federal district court for fraud and breach of contract.131 “During discovery, the defendants issued 28 subpoenas duces tecum to non-party witnesses. On April 5, 2013, the defendants served subpoenas on 14 additional third parties, requesting the production of certain documents within 21 days. On May 31, 2013, — Continued on next page

First Quarter 2017 | Monograph | IDC QUARTERLY | M-11

defendants served subpoenas on an additional nine third parties, giving them 10 days to produce documents.”132 On June 5, 2013, the plaintiff filed a motion to quash the subpoenas, which the court denied without prejudice.133 Rather than amending its motion to quash, the plaintiff brought a case in the circuit court against all defendants and their attorneys for (1) abuse of process and (2) tortious interference with business relations and prospective economic advantage. 134 The plaintiff claimed defendants improperly issued the subpoenas to damage the plaintiff’s business reputation and to force the plaintiff out of business.135 The plaintiff “alleged that as a result of the defendants’ misconduct, it suffered damages including loss of business, reputation, and opportunity, and damages to its standing and reputation” and sought compensatory and punitive damages.136 The circuit court dismissed the plaintiff’s original complaint pursuant to section 2-615, finding that it did not allege sufficient facts to support the asserted causes of action, and the plaintiff filed an amended complaint adding a few factual assertions.137 In the amended complaint, the plaintiff reasserted its claims for abuse of process and tortious interference with business relations and prospective economic advantage. 138 The plaintiff alleged that although the subpoenas “appear to be proper in form and an appropriate use of the discovery process,” the defendants issued them to drive the plaintiff out of business.139 The plaintiff’s “claims rested on the premise that the defendants issued their ‘avalanche’ of subpoenas to damage the plaintiff’s reputation and burden its ‘customers, suppliers, manufacturers, sponsors, vendors, potential investors, associates and competitors’ with produc-

Tortious interference claims are a powerful tool in business litigation, as long as the litigant can properly plead and prove, in good faith, each required element. The prosecution of a tortious inference claim is not easy. One willing to tackle a claim of interference with contracts, business relations, or prospective economic opportunities must realize that the claim is against the public policies of free market competition and the unlawful restraint of trade.

tion expenses, causing them to view their relationship with the plaintiff as costly.”140 The plaintiff highlighted the fact that the defendants did not timely serve nine of the 28 subpoenas on the plaintiff or its lawyers and may have “deliberately concealed” them, which the plaintiff claimed was sufficient to show the defendants’ malicious intent in issuing and serving the subpoenas.141 In its abuse of process claim, the plaintiff alleged the defendants abused the legal process by serving the 28 subpoenas for purposes outside the legal process, including to: “(1) destroy the plaintiff’s relationship with potential manufacturers, customers, sponsors, suppliers and investors; (2) prevent the plaintiff from obtaining management, investments, financing and sales; (3) coerce the plaintiff into abandoning its business; and (4) influence witnesses to give false testimony.”142 The plaintiff also claimed that one defendant “told litigants in other cases that ‘his ultimate goal [was] to destroy [plaintiff] * * * and its business through his superior economic resources’ . . . [and that] ‘he has more

M-12 | IDC QUARTERLY | Monograph | First Quarter 2017

money than Forza and its principals and that * * * whoever spends the most money will normally be able to eliminate competition by driving potential competitors out of business.’”143 Overall, the plaintiff alleged that the defendants’ true motive was apparent through the number of subpoenas and entities served, the truncated deadlines for responding, the untimeliness of some subpoenas, and the allegedly duplicative and irrelevant nature of the documents sought.144 In the tortious interference with business relations and prospective economic advantage count, the plaintiff alleged it had valid and established business relationships with its customers, suppliers, sponsors, and others and that the defendants knew of these relationships and knowingly interfered with and attempted to destroy them by issuing the subpoenas.145 Further, the defendants did this knowing of the plaintiff’s reasonable expectation of maintaining its business relationships. As a result, the plaintiff alleged it “lost substantial future business opportunities,” and defendants’ actions “permanently and irreparably injured

plaintiff and have effectively destroyed its business.”146 The circuit court dismissed the plaintiff’s amended complaint without prejudice pursuant to section 2-615, finding the plaintiff’s abuse of process claim did not allege sufficient facts showing defendants issued subpoenas for any purpose beyond obtaining discovery to defend against the plaintiff’s claims. 147 The circuit court found that the number of subpoenas and the time the subpoena respondents were given to respond to them did not establish an improper purpose or ulterior motive, and also found that the plaintiff insufficiently pled a cause of action for tortious interference with business relations and prospective economic advantage.148 Though the circuit court granted the plaintiff leave to file another amended complaint, instead of doing so, the plaintiff moved for a final order so it could appeal the dismissal and the circuit court granted the motion and entered a final order dismissing the amended complaint with prejudice.149 The plaintiff then filed an appeal to the Illinois Appellate Court First District. In affirming the circuit court’s ruling, the appellate court found that in its tortious interference count, the plaintiff alleged in a conclusory fashion the elements of the tort with no specific facts supporting each element.150 The appellate court found that it was unclear from the plaintiff’s amended complaint that the defendants had done anything constituting tortious interference outside of issuing the subpoenas—a process which the plaintiff admitted “appear[s] to be proper in form and an appropriate use of the discovery process.”151 Further, the appellate court held that the plaintiff’s allegations as to the remaining elements were conclusory statements unsupported

by any facts. Thus, the appellate court affirmed the circuit court’s dismissal of the plaintiff’s cause of action for tortious interference with prospective economic advantage.152

Conclusion Tortious interference claims are a powerful tool in business litigation, as long as the litigant can properly plead and prove, in good faith, each required element. The prosecution of a tortious inference claim is not easy. One willing to tackle a claim of interference with contracts, business relations, or prospective economic opportunities must realize that the claim is against the public policies of free market competition and the unlawful restraint of trade. That said, the difference between legitimate competition and unlawful interference can be clear, and a valid and well pleaded claim for tortious interference is the only weapon available to recover lost profits and stop unfair and sometimes malicious behavior.

(Endnotes) 1

This type of action dates back to 1853 in England. The historical background of this tort can be found in the Restatement (Second) of Torts § 766. Restatement (Second) of Torts: Intentional Interference with Performance of Contract by Third Person § 766 (1979). See also Restatement (Second) of Torts: Intentional Interference with Prospective Contractual Relation § 766B (1979).

2

See also Restatement (Second) of Torts, supra n. 1, § 766.

3

4

A representation is fraudulent when, to the knowledge or belief of its utterer, it is false in the sense in which it is intended to be understood by its recipient. Miller v. Lockport Realty Grp., Inc., 377 Ill. App. 3d 369, 377 (1st Dist. 2007). 5

15 U.S.C. § 14.

6

15 U.S.C. § 2.

7

15 U.S.C. §§ 41-58.



8

The Restatement (Second) of Torts, § 767, Factors in Determining Whether Interference Is Improper, provides: In determining whether an actor’s conduct in intentionally interfering with a contract or a prospective contractual relation of another is improper or not, consideration is given to the following factors: (a) the nature of the actor’s conduct, (b) the actor’s motive, (c) the interests of the other with which the actor’s conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other,

First Quarter 2017 | Monograph | IDC QUARTERLY | M-13

(f) the proximity or remoteness of the actor’s conduct to the interference and

1989); Parkway Bank & Trust Co. v. City of Darien, 43 Ill. App. 3d 400, 402-03 (2d Dist. 1976).

(g) the relations between the parties.

39

Id. ¶ 5.

40

Gardner Denver, Inc., 2015 IL App (4th) 140713-U, ¶ 5.

20

Restatement (Second) of Torts: Factors in Determining Whether Interference is Improper § 767 (1979). 9

Voyles v. Sandia Mort. Corp., 196 Ill. 2d 288 (2001); Miller, 377 Ill. App. 3d at 374; Soderlund Bros., Inc. v. Carrier Corp., 278 Ill. App. 3d 606, 615 (1st Dist. 1995).

10

Miller, 377 Ill. App. 3d at 373 (citing Belden Corp. v. Internorth, Inc., 90 Ill. App. 3d 547, 551 (1st Dist. 1980)).

11

Miller, 377 Ill. App. 3d at 373.

12

Prudential Ins. Co. of Am. v. Van Matre, 158 Ill. App. 3d 298, 305 (5th Dist. 1987).

13

Prudential Ins. Co. of America, 158 Ill. App. 3d at 305.

14

Douglas Theater Corp. v. Chi. Title & Trust Co., 288 Ill. App. 3d 880, 888-89 (1st Dist. 1997).

15

Chicago’s Pizza, Inc. v. Chicago’s Pizza Franchise Ltd. USA, 384 Ill. App. 3d 849, 862 (1st Dist. 2008).

Du Page Aviation Corp., 229 Ill. App. 3d at 803-04.

21

Id. at 804. See also Willcutts v. Galesburg Clinic Ass’n, 201 Ill. App. 3d 847, 851 (3d Dist. 1990); Galinski v. Kessler, 134 Ill. App. 3d 602, 607 (1st Dist. 1985); and Parkway Bank & Trust Co., 43 Ill. App. 3d at 402-03.

41

Id. ¶ 6.

42

Id.

43

Id. ¶ 7.

44

Id.

45

Id.

22

Du Page Aviation Corp., 229 Ill. App. 3d at 804.

46

23

47

Douglas Theater Corp., 288 Ill. App. 3d at 884; Koehler v. Packer Group, Inc., 2016 IL App (1st) 142767, ¶ 43.

24

Vickers v. Abbott Labs., 308 Ill. App. 3d. 393, 411 (1st Dist. 1999).

25

Mittelman v. Witous, 135 Ill. 2d 220, 249 (1989).

Gardner Denver, Inc., 2015 IL App (4th) 140713-U, ¶ 8. Id.

48

Id. ¶ 9.

49

Id.

50

Id.

51

Id. ¶ 10.

52 26

Mittelman, 135 Ill. 2d at 249; see also Frierson v. Univ. of Chi., 2015 IL App (1st) 151176-U, ¶ 16. 27

Koehler, 2016 IL App (1st) 142767, ¶ 43.

Gardner Denver, Inc., 2015 IL App (4th) 140713-U, ¶ 11.

53

Id. (emphasis in original).

54

Id.

55

Id.

28 16

Davidson v. Schnieder, No. 10 C 2101, 2014 WL 656780, at *6 (N.D. Ill. Feb. 20, 2014).

Id. ¶ 44. 56

Id.

29

Id. ¶ 46. 57

Id. ¶ 15.

30

Id. ¶ 48. 58

17

Koehler v. Packer Grp., Inc., 2016 IL App (1st) 142767, ¶ 42 (citing HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 131 Ill. 2d 145, 154-55 (1989)); see also Schott v. Glover, 109 Ill. App. 3d 230, 234 (1st Dist. 1982); Salaymeh v. Interqual, Inc., 155 Ill. App. 3d 1040, 1044-45 (5th Dist. 1987).

31

Id. ¶ 47 (internal citations omitted).

32

59

33

60

Id. ¶ 51.

Koehler, 2016 IL App (1st) 142767, ¶ 51 (emphasis in original).

Id. ¶ 19. Id.

61 34

Gardner Denver, Inc. v. Nat’l Indem. Co., 2015 IL App (4th) 140713-U, ¶ 21.

18

Peppercorn 1248, LLC v. Artemis DCLP LLP, 2016 IL App (1st) 143791-U, ¶ 113.

Gardner Denver, Inc., 2015 IL App (4th) 140713-U, ¶¶ 16, 19.

35

Id. ¶ 2.

Id. ¶ 21 (internal citation omitted) (citing In re Estate of Albergo, 275 Ill. App. 3d 439, 447 (2d Dist. 1995) (quoting Restatement (Second) of Torts § 772 (1965)).

62 36

Id.

Gardner Denver, Inc., 2015 IL App (4th) 140713-U, ¶ 22.

19

Du Page Aviation Corp. v. Du Page Airport Auth., 229 Ill. App. 3d 793, 803 (2d Dist. 1992); Suhadolnik v. City of Springfield, 184 Ill. App. 3d 155, 184 (4th Dist.

37

Id. ¶ 3.

38

Id.

63

Id. ¶ 25 (internal citations omitted).

64

Id. ¶ 27.

65

Id.

M-14 | IDC QUARTERLY | Monograph | First Quarter 2017

66

Id. ¶ 28.

67

Id.

84

Salaymeh v. Interqual, Inc., 155 Ill. App. 3d 1040, 1046 (5th Dist. 1987). Restatement (Second) of Torts, § 586 (1977); Golden v. Mullen, 295 Ill. App. 3d 865, 869 (1st Dist. 1997).

85 68

Gardner Denver, Inc., 2015 IL App (4th) 140713-U, ¶ 29.

69

Id. ¶ 29.

70

Id. ¶ 30.

Restatement (Second) of Torts, § 586 cmt. a (1977).

86

99

Id.

100

Koehler, 2016 IL App (1st) 142767, ¶ 90.

101

Id.

102

103

Id. ¶ 92.

Id. ¶ 93 (internal citations omitted).

87 71

Id.

Id.

104

88 72

Poulos v. Lutheran Soc. Servs. of Illinois, Inc., 312 Ill. App. 3d 731, 745 (1st Dist. 2000); Best Coin-Op, Inc. v. Paul F. Ilg Supply Co., 189 Ill. App. 3d 638, 656 (1st Dist. 1989).

73

Gen. Motors Corp. v. State Motor Vehicle Review Bd., 224 Ill. 2d 1, 15 (2007).

Golden, 295 Ill. App. 3d at 870 (citing Macie v. Clark Equip. Co., 8 Ill. App. 3d 613, 615 (1st Dist. 1972)).

89

Conditioned Ocular Enhancement, Inc. v. Bonaventura, 458 F. Supp. 2d 704, 708 (N.D. Ill. 2006) (citing Zdeb v. Baxter Int’l, Inc., 297 Ill. App. 3d 622, 629 (1st Dist. 1998)).

74

Id. (quoting Soderlund Bros. v. Carrier Corp., 278 Ill. App. 3d 606, 615 (1st Dist. 1995)).

90

Restatement (Second) of Torts § 768 (1979); see also Chi. Brick & Stone, Ltd. v. Ferenc, 2012 IL App (1st) 10326-U, ¶¶ 3446.

Havoco of Am., Ltd. v. Hollobow, 702 F.2d 643, 647 (7th Cir. 1983) (citing Lyddon v. Shaw, 56 Ill. App. 3d 815, 822 (2d Dist. 1978) (noting that Illinois law prohibits a plaintiff from basing a cause of action for tortious interference with business opportunity on the wrongful filing of a lawsuit)).

76

91

75

Schott v. Glover, 109 Ill. App. 3d 230, 234 (1st Dist. 1982); Swager v. Couri, 77 Ill. 2d 173, 190 (1979).

77

Santucci Constr. Co. v. Baxter & Woodman, Inc., 151 Ill. App. 3d 547, 553 (2d Dist. 1986); HPI Health Care Servs., Inc., 172 Ill. App. 3d at 729.

Swager, 77 Ill. 2d at 190.

DeHart v. DeHart, 2013 IL 114137, ¶ 38; Wieser v. Heinol, 2014 IL App (1st) 132859-U, ¶ 6. Restatement (Second) of Torts: Intentional Interference with Inheritance or Gift § 774B.

105

106

Id. See also Marshall v. Marshall, 547 U.S. 293, 312 (2006) (the tort claim “seeks an in personam judgment against [the defendant], not the probate or annulment of a will.”).

107

In re Estate of Ellis, 236 Ill. 2d 45, 52 (2009) (internal citations omitted).

108

Robinson v. First State Bank of Monticello, 97 Ill. 2d 174, 185-86 (1983).

109

Robinson, 97 Ill. 2d at 183.

110

Id. at 184.

111

Id.

92 78

Schott, 109 Ill. App. 3d at 234.

79

Id.

80

Id. at 235.

81

82

Id. Id.

Id. at 234-35. See also Gold v. Vasileff, 160 Ill. App. 3d 125, 128 (5th Dist. 1987) (attorney cannot be subject to liability for tortious interference with contractual relationship based on attorney’s advice to client that client need not perform contractual obligations, even if attorney’s advice is incorrect and may subject his client to liability)); but see HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 172 Ill. App. 3d 718, 729-30 (5th Dist. 1988). 83

Koehler, 2016 IL App (1st) 142767, ¶ 64 (citing Reuben H. Donnelley Corp. v. Brauer, 275 Ill. App. 3d 300, 313 (1st Dist. 1995) and Restatement (Second) of Torts § 774A(1) (1979)).

112

Id.

113

Bjork v. O’Meara, 2013 IL 114044, ¶ 35.

114

Restatement (Second) of Torts § 774A(2).

93

94

Berlant v. Goldstein, 2016 IL App (2d) 151176-U, ¶¶ 67, 69.

Bjork, 2013 IL 114044, ¶¶ 25, 33.

115

Phelps v. Land of Lincoln Legal Assistance Found. Inc., 2016 IL App (5th) 150380, ¶¶ 33-34.

116 95

Berlant, 2016 IL App (2d) 151176-U, ¶ 14.

96

Id. ¶¶ 62-63.

Phelps, 2016 IL App (5th) 150380, ¶ 4; also see In re Estate of Luccio, 2012 IL App (1st) 121153, ¶ 24 (citing Robinson, 97 Ill. 2d at 184).

117

97

Bank Fin., FSB v. Brandwein, 2015 IL App (1st) 143956, ¶ 46.

In re Estate of Ellis, 236 Ill. 2d at 48.

118

Id. at 47.

98

Bank Fin., FSB, 2015 IL App (1st) 143956, ¶ 46.

— Continued on next page

First Quarter 2017 | Monograph | IDC QUARTERLY | M-15

119

Id.

120

129

Forza Techs., LLC v. Premier Research Labs, LP, 2015 IL App (1st) 142640-U, ¶ 2.

Id. 130

121

Id. ¶ 4.

Id. at 56. 131

122

Id.

Id. at 56-57. 132

123

Id.

In re Estate of Ellis, 236 Ill. 2d at 56. 133

Id. ¶ 5.

134

Id.

124

Id. at 56.

125

In re Estate of Luccio, 2012 IL App (1st) 121153, ¶ 29; see also DeHart v. DeHart, 2013 IL 114137, ¶ 39; Bjork, 2013 IL 114044 ¶ 25.

135

Forza Techs., LLC, 2015 IL App (1st) 142640-U, ¶ 5.

136

Id. ¶¶ 5-6.

126

Balla v. Gambro, Inc., 145 Ill. 2d 492, 503 (1991); In re Estate of Callahan, 144 Ill. 2d 32, 37-38 (1991); Rhoades v. Norfolk & Western Ry. Co., 78 Ill. 2d 217, 227-28 (1979).

127

Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 484, (1998).

137

138

Id. ¶ 6. Id.

139

Id.

140

Id.

141 128

Dowd & Dowd, Ltd., 181 Ill. 2d at 48485 (citing Restatement (Second) of Torts § 766B cmt. a (1979) (“In order for the actor to be held liable, this section requires that his interference be improper.”); Mittelman, 135 Ill. 2d at 251; La Rocco v. Bakwin, 108 Ill. App. 3d 723, 730 (2d Dist. 1982).

Forza Techs., LLC, 2015 IL App (1st) 142640-U, ¶ 6. The plaintiff also alleged that many of the documents sought through the subpoenas were irrelevant to the breach of contract claim, some sought privileged documents, and that one defendant threatened actual and potential witnesses in an effort to coerce favorable testimony for defendants. Id.

M-16 | IDC QUARTERLY | Monograph | First Quarter 2017

142

Id. ¶ 7.

143

Id.

144

Id.

145

Id. ¶ 8.

146

Id.

147

Forza Techs., LLC, 2015 IL App (1st) 142640-U, ¶ 9.

148

Id.

149

Id. ¶ 10.

150

Id. ¶ 23.

151

Id. ¶ 6.

152

Id. The appellate court also held that the plaintiff failed to show how the defendants’ mere issuance of the subpoenas in defending a federal lawsuit brought by the plaintiff constituted an ulterior motive sufficient to state an abuse of process claim, especially where the plaintiff had raised, but failed to pursue, a motion to quash the subpoenas with the federal district court, which had the inherent authority to monitor and regulate the discovery in the litigation pending before it.