Second Quarter 2008 l Volume 18, Number 2 l ISSN-1094-9542
MONOGRAPH The Struggle Over Selective Waiver and the Production of Confidential Information to the Government
FEATURE ARTICLE
Continuing Developments in Construction Negligence: A Further Update of Complexities in Construction Negligence Litigation — Page 4 Illinois Association of IDC QUARTERLY EDITORIAL BOARD Kimberly A. Ross, Editor-In-Chief Defense Trial Counsel Cremer, Kopon, Shaughnessy & Spina, LLC, Chicago WWW.IADTC.ORG [email protected] PRESIDENT Al J. Pranaitis, Executive Editor JEFFREY S. HEBRANK Hoagland, Fitzgerald, Smith & Pranaitis, Alton Hepler, Broom, MacDonald, Hebrank, True & Noce, LLC, Edwardsville [email protected] PRESIDENT-ELECT William K. McVisk, Associate Editor GREGORY L. COCHRAN Johnson & Bell, Ltd., Chicago McKenna Storer, LLC, Chicago [email protected] 1ST VICE PRESIDENT Adnan A. Arain, Assistant Editor RICK L. HAMMOND Johnson & Bell, Ltd., Chicago Aon, Chicago 2ND VICE PRESIDENT [email protected] KENNETH F. WERTS Sarah J. Condon, Assistant Editor Craig & Craig, Mt. Vernon CNA Insurance, Chicago SECRETARY/TREASURER [email protected] ANNE M. OLDENBURG Alholm, Monahan, Klauke, Hay & Donald J. O’Meara, Jr., Assistant Editor Oldenburg, LLC, Chicago Pretzel & Stouffer, Chartered, Chicago DIRECTORS [email protected] DAVID M. BENNETT Pretzel & Stouffer, Chartered, Chicago DURGA M. BHARAM COLUMNISTS Tressler, Soderstrom, Maloney & Edward J. Aucoin, Jr. Stephen R. Kaufmann Priess, LLP, Chicago TROY A. BOZARTH Pretzel & Stouffer, Chartered, Chicago Hepler, Broom, MacDonald, Hebrank, Hepler, Broom, MacDonald, Hebrank, Beth A. Bauer True & Noce, LLC, Edwardsville True & Noce, LLC, Edwardsville C. WM. BUSSE, JR. Hepler, Broom, MacDonald, Hebrank, Seth Lamden Busse, Busse & Grassé, P.C., Chicago True & Noce, LLC, Edwardsville Howrey LLP, Chicago PATRICK C. DOWD James K. Borcia Kevin J. Luther Dowd & Dowd, Ltd., Chicago MARGARET M. FOSTER Tressler, Soderstrom, Maloney Heyl, Royster, Voelker & Allen, Rockford McKenna Storer, LLC, Chicago & Priess, LLP, Chicago Yvonne M. O’Connor BARBARA FRITSCHE Michael C. Bruck Merlo, Kanofsky, Brinkmeier and Gregg, Chicago Rammelkamp Bradney, Jacksonville LINDA HAY Crisham & Kubes, Ltd., Chicago Martin J. O’Hara Alholm, Monahan, Klauke, Hay & Roger R. Clayton Quinlan & Carroll, Ltd., Chicago Oldenburg, LLC, Chicago R. HOWARD JUMP Heyl, Royster, Voelker & Allen, Peoria David A. Perkins Jump & Associates, P.C., Chicago Brad A. Elward Heyl, Royster, Voelker & Allen, Peoria DAVID H. LEVITT Heyl, Royster, Voelker & Allen, Peoria Jesse A. Placher Hinshaw & Culbertson LLP, Chicago KEVIN J. LUTHER Joseph G. Feehan Heyl, Royster, Voelker & Allen, Peoria Heyl, Royster, Voelker & Allen, Rockford Heyl, Royster, Voelker & Allen, Peoria Michael J. Progar JOHN P. LYNCH, JR. Stacy Dolan Fulco Doherty & Progar LLC, Chicago Cremer, Kopon, Shaughnessy & Spina, LLC Chicago Cremer, Kopon, Shaughnessy Michael L. Resis PAUL R. LYNCH & Spina, LLC, Chicago SmithAmundsen LLC, Chicago Craig & Craig, Mt. Vernon R. MARK MIFFLIN Edward K. Grassé Kimberly A. Ross Giffin, Winning, Cohen & Bodewes, P.C., Busse, Busse & Grassé, P.C., Chicago Cremer, Kopon, Shaughnessy Springfield Jennifer B. Groszek & Spina, LLC, Chicago FRED B. MOORE Lawrence, Moore, Ogar & Jacobs, Gunty & McCarthy, Chicago Tracy E. Stevenson Bloomington Jeffrey S. Hebrank Robbins, Salomon & Patt, Ltd., Chicago MICHAEL L. RESIS Hepler, Broom, MacDonald, Hebrank, Willis R. Tribler SmithAmundsen LLC, Chicago JOHN W. ROBERTSON True & Noce, LLC, Edwardsville Tribler Orpett & Meyer, P.C., Chicago Stoerzbach, Robertson, Wilcox & Alcorn, P.C., John Heil, Jr. Geoffrey M. Waguespack Galesburg ALEEN R. TIFFANY Heyl, Royster, Voelker & Allen, Peoria Cremer, Kopon, Shaughnessy Aleen R. Tiffany, P.C., Crystal Lake & Spina, LLC, Chicago EXECUTIVE DIRECTOR Sandra J. Wulf, CAE, IOM CONTRIBUTORS Katherine K. Haussermann Charmagne Topacio PAST PRESIDENTS: Royce Glenn Rowe • James Baylor • Jack E. Horsley • Cremer, Kopon, Shaughnessy Tressler, Soderstrom, Maloney John J. Schmidt •Thomas F. Bridgman • William J. Voelker, Jr. • Bert M. Thompson • John F. Skeffington • John G. Langhenry, Jr. • Lee W. Ensel • & Spina, LLC, Chicago & Priess, LLP, Chicago L. Bow Pritchett • John F. White • R. Lawrence Storms • John P. Ewart • Richard C. Valentine • Richard H. Hoffman • Ellis E. Fuqua • John E. Guy • David B. Mueller Jennifer L. Wolfe Leo M. Tarpey • Willis R. Tribler • Alfred B. LaBarre • Patrick E. Maloney • Robert V. Dewey, Jr. • Lawrence R. Smith • R. Michael Henderson • Paul L. Cassidy & Mueller, Peoria Cassidy & Mueller, Peoria Price • Stephen L. Corn • Rudolf G. Schade, Jr. • Lyndon C. Molzahn • Daniel John M. O’Driscoll R. Formeller • Gordon R. Broom • Clifford P. Mallon • Anthony J. Tunney • Douglas J. Pomatto • Jack T. Riley, Jr. • Peter W. Brandt • Charles H. Cole • Tressler, Soderstrom, Maloney Gregory C. Ray • Jennifer Jerit Johnson • Stephen J. Heine • Glen E. Amundsen • Steven M. Puiszis & Priess, LLP, Chicago
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. THE ILLINOIS ASSOCIATION OF DEFENSE TRIAL COUNSEL Subscriptions for non-members are $75 per year. Single copies are $20 plus $2 for postage and handling. Requests for subscriptions or back issues should be P.O. Box 3144 • Springfield, IL 62708-3144 sent to the Illinois Association of Defense Trial Counsel headquarters in Spring- field, Illinois. Subscription price for members is included in membership dues. 800-232-0169 • 217-585-0991 • FAX 217-585-0886 • [email protected] SANDRA J. WULF, CAE, IOM, Executive Director In This Issue Lead Article Monograph M-I The Struggle Over Selective Waiver and the Production of Confidential Information to the Government, by John M.O’Driscoll and Charmagne Topacio
Feature Articles 4 Continuing Developments in Construction Litigation by David B. Mueller and Jennifer L. Wolfe
Regular Columns 49 Amicus Committee Report, by Michael L. Resis 35 Appellate Practice Corner, by Brad A. Elward 56 Association News 13 Civil Rights Update, by David A. Perkins and John Heil, Jr. 40 Civil Practice and Procedure, by Edward K. Grassé and Stephen R. Kaufmann 23 Commercial Law, by James K. Borcia 54 The Defense Philosophy, by Willis R. Tribler 18 Diversity, by Yvonne M. O’Connor 3 Editor’s Note, by Kimberly A. Ross 26 Employment Law, by Geoffrey M. Waguespack 19 Evidence and Practice Tips, by Joseph G. Feehan 21 Health Law, by Roger R. Clayton and Jesse A. Placher 58 IDC Annual Meeting and Awards Banquet 60 IDC Ethics and the Legal Profession Seminar 62 IDC Membership and Committee Applications 55 IDC New Members 30 Insurance Law, by Seth Lamden 11 Legal Ethics, by Michael J. Progar 32 Medical Malpractice, by Edward J. Aucoin, Jr. 2 President’s Message, by Jeffrey S. Hebrank 38 Professional Liability, by Martin J. O’Hara 42 Property Insurance, by Tracy E. Stevenson 9 Recent Decisions, by Stacy Dolan Fulco and Katherine K. Haussermann 15 Supreme Court Watch, by Beth A. Bauer 45 Technology Law, by Michael C. Bruck 25 Workers’ Compensation, by Kevin J. Luther 52 Young Lawyers Report, by Jennifer B. Groszek
Manuscript Policy Members and other readers are encouraged to submit manuscripts for possible publication in the IDC Quarterly, particularly articles of practical use to defense trial attorneys. Manuscripts must be in article form. A copy of the IDC Quarterly Manuscript Guidelines is available upon request from The Illinois Association of Defense Trial Counsel office in Springfield, Illinois. No compensation is made for articles published, and no article will be considered that has been submitted simultaneously to another publication or published by any other publication. All articles submitted may be subjected to editing and become the property of the IDC Quarterly, unless special arrangements are made. Statements or expression of opinions in this publication are those of the authors and not necessarily those of the Association or Editors. A copy of the IDC Quarterly Editorial Policy is available upon request. Letters to the Editor are encouraged and welcome, and should be sent to the Illinois Association of Defense Trial Counsel headquarters in Springfield. Editors reserve the right to publish and edit all such letters received and to reply to them. IDC Quarterly, Second Quarter, 2008, Volume 18, No. 2. Copyright © 2008 The Illinois Association of Defense Trial Counsel. All rights reserved. Reproduction in whole or in part without permission is prohibited. POSTMASTER: Send change of address notices to IDC Quarterly, The Illinois Association of Defense Trial Counsel, PO Box 3144, Springfield, IL 62708-3144. Second-Class postage paid at Springfield, IL and additional mailing offices. This publication was printed by Gooch & Associates, Springfield, Illinois. IDC Quarterly
As we wind down the year, I am preparing to attend our Spring Conference. I will also testify in Springfield for and President’s Message against various civil practice bills, while waiting for the Illi- nois Supreme Court to decide Nolan v. Weil-McLain, 365 Ill. App. 3d 272, 854 N.E.2d 758 (4th Dist. 2006) (asbestos proxi- mate cause claim), and Ready v. United/Goedecke Services, By: Jeffrey S. Hebrank Inc., 367 Ill. App. 3d 272, 854 N.E.2d 758 (1st Dist. 2006) Hepler, Broom, MacDonald, Hebrank, (case dealing with section 2-1117 of the Code of Civil Pro- True & Noce, LLC cedure). I am looking forward to upcoming seminars includ- Edwardsville ing those on “What Women Lawyers Want (and Need) to Know” and “Professionalism and Ethics for the Defense At- torney,” and of course, our Annual Meeting in June. This is my last President’s col- umn. My, how the time has flown by. I certainly hope that the IDC is at least a little bit stronger than it was a year The IDC hears that the prospects for ago. By the time that this edition is a constitutional convention are not published, we will be in the middle of the largest Board of Directors elec- high and that for the time being, tion in recent memory. We had 10 elected judges and our jury system nominations for the Board positions that will come up in June. It is a perfect blend of downstate are most likely safe. and Cook County nominees, which further evidences the statewide interest defense lawyers have in our organization. At the time of this writing, we will not know whether our efforts in providing expertise on civil practice legisla- tion have had an impact. We submitted SB 2559, a bill to We are particularly proud of the push that the organiza- eliminate the minefield of trying to extract a defendant from tion has made regarding diversity, without putting “political litigation where they have a personal jurisdiction defense. correctness” over substance. We have been very successful No one can think of a greater travesty than a defendant that in seeking out and gaining the participation of a number of did not commit a tort here and claims not to have done any diverse members and Board members, although there is a lot business here, being held up from asserting a personal juris- more to be done. We are also particularly proud of our ef- diction defense and being concerned about waiving that de- forts regarding ethics and professionalism, as we press for- fense while the case proceeds against other defendants. While ward closely aligned with Cheryl Niro’s Illinois Supreme the climate in Springfield does not bode well for even get- Court Commission on Professionalism. Both Illinois and ting that proposed legislation out of the Rules Committee Missouri require continuing legal education on ethics, and and into a substantive committee for consideration, we will our June 27th program will provide opportunities to fulfill continue to press for field-leveling legislation. this obligation. Also on the legislative front, the State will face the issue I would like to thank all of the officers, board members, of a possible constitutional convention this year. The IDC conference chairs, committee chairs, members and of course, hears that the prospects for a constitutional convention are Sandra Wulf, for her tireless efforts in making this such a not high and that for the time being, elected judges and our strong year for the IDC. We are quickly becoming the group jury system are most likely safe. There has been some dis- that legislators, judges and even the public turn to when they cussion of a need for a constitutional amendment prohibiting want to know what is fair in the courtroom. It is quite an lawyers, law firms and their families from donating to judi- honor when you are called upon as we have been this past cial campaigns. What a difference a change like that might year. make.
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trial. Stacy Fulco’s column includes a case where a plaintiff filed a suit alleging negligence and wilful and wanton mis- Editor’s Note conduct; the defendant’s motion to dismiss the negligence count was granted with prejudice; the plaintiff then volun- tarily dismissed the negligence claim and later refiled that claim, which the circuit court dismissed under the doctrine By: Kimberly A. Ross of res judicata. The supreme court held that the doctrine of Cremer, Kopon, Shaughnessy & Spina, LLC res judicata did apply and upheld the dismissal of the refiled Chicago claim. In the past year, we have overhauled the IDC Quarterly Guidelines to assist in providing consistency from article to article. We have also begun to heed the request of many mem- It is hard to believe that with this bers to focus more on practical advice for the defense litiga- issue, my tenure as Editor in Chief of tor. In addition to the authors of several existing columns the IDC Quarterly has come to an providing practical advice in their articles (such as Brad end. Before talking about what you Elward outlining the analysis one should go through to de- will read on the following pages, I termine whether an appeal is warranted), we are pleased to must first thank the other editors for introduce a new column called “Civil Practice and Proce- all of their hard work and dedication dure,” which we expect to be coordinated by that committee. to making the Quarterly one of the Steve Kaufmann and Ed Grasse authored the inaugural top defense publications in the coun- column, which covers issues of civility within the legal pro- try: Al Pranaitis (soon to be the new fession. Future columns will cover a wide variety of practi- Editor in Chief); Bill McVisk, Adnan Arain, Sarah Condon cal tips and advice. and Don O’Meara. Thank you also goes out to Sandra Wulf It is important to remember that the IDC Quarterly is for her coordination efforts in getting the Quarterly published. read not only by over 1000 IDC members, but also by our I also thank all of the authors who have submitted ar- state legislators and judges, who receive complimentary ticles, whether regular columns, the Monographs, or feature copies. Recently, during a pretrial conference with a judge, I articles. Obviously, our publication could not be what it is had the opportunity to ask her if she was familiar with the without its authors. I have no doubt that the original editors IDC Quarterly and she immediately pulled two articles off and contributors to the Quarterly would be thrilled to know her desk that she had clipped from the prior issue. She that we have arrived at the point of actually having to occa- mentioned that she clips articles from publications like ours sionally postpone publishing articles and to set page limits to help her stay on top of the most recent developments in for articles due a lack of space. What a great problem to have! the law and that after she is finished reading the articles, she This issue’s Monograph, written by John M. O’Driscoll files them away for future reference. I was quite pleased to and Charmagne Topacio, provides a thoughtful and infor- be reminded that not only are our judges receiving the IDC mative article on the concept of selective waiver of the attor- Quarterly, but they are also reading it and relying on it. You ney-client and attorney work-product privileges in govern- should all be proud of your contributions. mental investigations. Michael Resis’ Amicus column dis- Thank you again to all of the editors and authors for your cusses the Illinois Supreme Court’s recent decision in Karas hard work and commitment. It has been a pleasure and an v. Strevell, in which the court held that a participant in a con- honor to have served the Illinois defense community in the tact sport breaches the duty of care to a fellow participant capacity of Editor in Chief of this outstanding publication. I only if the participant intentionally injures the fellow par- wish Al the best of luck as he takes the helm, and I will look ticipant or engages in conduct “totally outside the range of forward to reading and to learning from all of the future edi- the ordinary activity involved in the sport.” In this Quarterly’s tions of the IDC Quarterly. I am likely to clip and save a few feature article, David B. Mueller and Jennifer L. Wolfe articles myself! provide the fourth installment in a detailed analysis of the current state of construction negligence law in Illinois. Joe Feehan’s Evidence column discusses a recent case on the issue of the admissibility of blood alcohol levels at
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Feature Article is done. It is not enough that he has merely a general right to order the work stopped or resumed, to in- By: David B. Mueller and Jennifer L. Wolfe spect its progress or to receive reports, to make sug- Cassidy & Mueller gestions or recommendations which need not nec- Peoria essarily be followed, or to prescribe alterations and deviations. Such a general right is usually reserved to employers, but it does not mean that the contrac- tor is controlled as to his methods of work, or as to Continuing Developments operative detail. There must be such a retention of a right of supervision that the contractor is not entirely in Construction Negligence free to do the work in his own way.
A Further Update of Complexities Since 1995, the appellate courts of each district have at- in Construction Negligence Litigation tempted to identify the elements of “control” under Section 414 that are sufficient to obligate one party in a contractual This series started with COMPLEXITIES IN CON- chain for injuries suffered by an employee of an independent STRUCTION NEGLIGENCE LITIGATION (IDC Quar- contractor. In COMPLEXITIES IN CONSTRUCTION NEG- terly, Vol. 13, No. 3, p. 8). That survey was followed by RE- LIGENCE LITIGATION, we saw inter alia a conceptual CENT DEVELOPMENTS IN CONSTRUCTION NEGLI- difference of opinion between the cases which define “con- GENCE (IDC Quarterly, Vol. 14, No. 2) and PREMISES trol” under Section 414 in the context of the manner, means LIABILITY EXPOSURE IN CONSTRUCTION INJURY and methods used by the independent contractor in the per- CASES (IDC Quarterly, Vol. 15, No. 1). These articles dis- formance of its work (Fris v. Personal Products Co., 255 Ill. cussed how the intermediate appellate courts have treated App. 3d 916, 923-25, 627 N.E.2d 1265 (3rd Dist. 1994), and construction negligence and emphasized that the Illinois Su- Bieruta v. Klein Creek Corp., 331 Ill. App. 3d 269, 274-79, preme Court has yet to tackle the issue. That is still the case. 770 N.E.2d 1175 (2nd Dist. 2002), and those which target The following discussion continues the analysis to the present time by focusing upon significant intervening decisions of the Illinois Appellate Courts, First, Second and Third Dis- tricts, as well as the Seventh Circuit Court of Appeals. Un- About the Authors fortunately, as before, it is practically impossible to synthe- size opinions and reasoning, which are both diverse and di- David B. Mueller is a partner in the Peoria firm of Cassidy vergent. & Mueller. His practice is concentrated in the area of prod- As discussed in the preceding articles, construction neg- ucts liability, construction injury litigation, and insurance coverage. He received his undergraduate degree from the ligence, while it coexisted with the Structural Work Act University of Oklahoma and graduated from the Univer- (Larson v. Commonwealth Edison Co., 33 Ill. 2d 316, 325, sity of Michigan Law School in 1966. He is a past co-chair of the Supreme Court Committee to revise the rules of dis- 211 N.E.2d 247 (1965)), has come into its own following covery, 1983-1993 and presently serves as an advisory repeal of that statute in 1995 (PA 89-2). The Structural Work member of the Discovery Rules Committee of the Illinois Judicial Conference. He was member of the Illinois Supreme Court Commit- Act created a duty, and therefore directed potential liability, tee on jury instructions in civil cases and participated in drafting the products to “persons having charge of the [work].” 740 ILCS 150/9 liability portions of the 1995 Tort Reform Act. He is the author of a number of articles regarding procedural and substantive aspects of civil litigation and (West 1994) (repealed by Pub. Act 89-2, § 5, eff. Feb. 14, lectures frequently on those subjects. 1995). The common law doctrine of construction negligence arises under Section 414 of the Restatement (Second) of Torts. Jennifer L. Wolfe focuses her practice in civil defense in federal and state court and workers compensation. Prior to The concept of duty under that section focuses upon a party joining Cassidy & Mueller as an associate in February 2005, who has “control” of a relevant “part of the work.” Com- Ms. Wolfe was a staff attorney for a non-profit legal aid ment c to section 414 provides in that respect: clinic. She also had prior experience summarizing a high volume of case law for a major legal research provider. She graduated with Department Distinction from the Uni- In order for the rule stated in this Section to apply, versity of Illinois in 1996, and Magna Cum Laude from the employer must have retained at least some de- Northern Illinois University College of Law in 1999. gree of control over the manner in which the work
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liability upon the retention of general supervisory powers. that neither the construction manager nor the steel fabrica- Bokodi v. Foster Wheeler Robbins, Inc., 312 Ill. App. 3d 1051, tion contractor had reason to anticipate that the plaintiff would 1061-63, 728 N.E.2d 726 (1st Dist. 2000). RECENT DE- fall from a steel beam while engaged in the process of land- VELOPMENTS IN CONSTRUCTION NEGLIGENCE ing, positioning and connecting steel bar joists to the beams emphasized the trend away from overall control and toward without “tying off.” an “operative details” analysis, particularly in the Illinois The following update considers pertinent construction Appellate Court First District. Shaughnessy v. Skender Constr. negligence authorities that have been decided after Co., 342 Ill. App. 3d 730, 794 N.E.2d 937 (1st Dist. 2003), Shaughnessy, Moss and Martens. These cases show a solidi- and Martens v. MCL Constr. Corp., 347 Ill. App. 3d 303, 807 fying evolution toward defining “control” in the context of a N.E.2d 480 (1st Dist. 2004). defendant’s actual exertion of authority over the manner, That article also focused upon the different treatment means and methods by which an independent contractor per- accorded by the First District in Shaughnessy and Martens, forms its work. However, they are by no means uniform in supra, and the Fourth District in Moss v. Rowe Constr., 344 that respect. Nor should the influence of the prime contract Ill. App. 3d 772, 801 N.E.2d 612 (4th Dist. 2003), on the between the owner and the defendant/general contractor or issue of defining “control” by the terms of the general con- the impact of the subcontract between the general contractor tract between the owner and the defendant. In Moss, the and the independent subcontractor be overlooked. Fourth District favored an analysis that started and ended with the contractual obligations that were imposed upon the Conceptual Considerations defendant/general contractor. There, the court preferred to Vicarious Liability vs. Negligence define “control” in terms of the safety obligations that were assumed by the general contractor in contradistinction to the Two recent cases discuss Section 414 in the context of actual exercise of authority over the “means and methods” direct liability, as opposed to vicarious liability. Both con- by which the subcontractor performed its work. In Moss, the sider the term “operative detail” as it is used in comments a Fourth District criticized the multi-factoral approach used and c of that section. As discussed above, and in the preced- by the First District in Shaughnessy. Thereafter the First Dis- ing three articles, “control” has generally been defined in the trict reciprocated in Martens, stating at 347 Ill. App. 3d 316: context of the authority of the defendant over the indepen- dent contractor’s “methods of work” or the “operative de- In Shaughnessy v. Skender Constr. Co., 342 Ill. App. tail” of that work. In the context of construction negligence, 3d 730, 794 N.E.2d 937 (1st Dist. 2003), the court those terms are customarily used interchangeably and refer reviewed similar contract language and determined to the general contractor’s: (1) contractual right to tell a sub- such a general statement of control between the contractor how to do its work or (2) the exercise of that au- owner and the general contractor did not mean that thority on the job. Shaughnessy, supra and Martens, supra. the independent contractor was controlled as to his Cochran v. Sollitt Constr. Co., 358 Ill. App. 3d 865, 832 methods of work or as to operative detail. We agree N.E.2d 355 (1st Dist. 2005) and Aguirre v. Turner Constr. with the Shaughnessy court; if such general contract Co., 501 F.3d 825 (7th Cir. 2007), both hold that Section 414 language alone was sufficient to subject a general has alternative implications, both of which are triggered by contractor to liability under section 414, then the the term “operative detail.” In Cochran, the plaintiff, an em- distinction in comment c to section 414 between re- ployee of an HVAC subcontractor, was working on overhead tained control versus a general right of control would ductwork when he fell from a ladder, which was positioned be rendered meaningless. on a plywood board resting on two milk crates. He sued the Shaughnessy and Martens also recognized that Section general contractor on premises liability and construction neg- 414 measures the exposure of a defendant in the setting of ligence theories. Regarding the latter, he claimed that the what the contractor knew or “by the exercise of reasonable general contractor had “control” over the work by virtue of care should have known” about the hazardous condition the prime contract with the owner, which made the general which actually caused the plaintiff’s injury. In Shaughnessy contractor solely responsible for safety on the job, including the court held that even assuming there was sufficient con- compliance with all applicable state and federal laws and trol to impose a duty, the defendant neither knew nor had regulations. Using that language, the plaintiff relied upon the reason to know of the transient condition that caused the in- Moss case, supra, to contend that the general had “control,” jury. The same was true in Martens where the court found
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Construction (Continued) contractor to act where he has actual or implied knowledge of the hazard. Thus, the court held: “According to comment even though it was never exercised and even though the sub- b to section 414, the general contractor’s knowledge, actual contract delegated that responsibility to the plaintiff’s em- or constructive, of the unsafe work methods or a dangerous ployer. condition is a pre-condition to direct liability.”Cochran, 358 As it did in Martens, the court held that the concept of Ill. App. 3d at 879-80. “retained control” involved numerous factors, only one of As in Shaughnessy and Martens, summary judgment was which was the contract between the owner and the general affirmed in Cochran because the general contractor neither contractor. In discussing the proper analysis, it held that Sec- knew nor had reason to know of the transient risk which was tion 414 poses two possible theories for liability. The first is created by the plaintiff. In other words, while control may mentioned in comment a when the “operative detail” that is load the gun, the application of standard negligence prin- retained by the defendant is so extensive that the law of agency ciples is required to pull the trigger. applies and the independent contractor is therefore viewed The Court of Appeals, Seventh Circuit, in Aguirre, 501 as the agent of the general contractor. Alternatively, Section F.3d at 829-30, likewise recognized the dichotomy in Sec- 414 deals with “direct liability” in which the level of control tion 414 between vicarious and direct liability. In doing so, it is not so comprehensive as to establish vicarious liability but held that comment (a) specifically indicates that the duty that is sufficiently extensive to give rise to the duty on the part of section contemplates starts where the law of agency ends. the general contractor to exercise reasonable care for the Thus, Section 414 applies to instances where retained con- safety of the independent contractor’s employees. trol exists but is less than that which makes the general con- tractor derivatively liable for the subcontractor’s negligence. In reversing summary judgment in favor of the general con- tractor, the court focused upon the extensive on-site safety The decision in Cochran is also program that the general contractor imposed upon the plaintiff’s employer. The court further held that the enforce- significant for its recognition that the ment by the general contractor of its safety standards at the worksite overrode the subcontractor’s contractual acceptance existence of a duty only obligates the of responsibility. In that regard it found: general contractor to act where he has The contractual assignment of oversight of employee actual or implied knowledge of the safety to [the subcontractor/employer] does not con- trol here for the same reason it did not in Bokodi, hazard. i.e., because [the general contractor/employer’s] extensive safety oversight and requirements affected the means and methods by which [the subcontrac- tor/employer] sought to ensure the safety of its own The Cochran court then recognized that the following employees. Aguirre, 501 F.3d at 831. factors are significant in determining whether the degree of retaining control is sufficient to require reasonable care in its Aguirre is also significant for its recognition that the exercise: (1) the language of the prime contract, particularly plaintiff could skirt the “reasonable care” requirement by as it relates to safety on the job; and (2) the general relying upon res ipsa loquitur. This is a unique approach in contractor’s active implementation and enforcement of safety construction negligence cases where the dominant issue is procedures on the job, including: (a) the presence of a full- “control” of the work. Despite remanding for consideration time safety manager; (b) conducting safety meetings; (c) in- of that issue, the Aguirre court held that the retention of “some spection for safety violations, and (d) enforcement of safety control over both the design and construction of A.L.L.’s measures. All of these indicia of control go to the require- scaffolding” permitted the presumption that the general con- ment in comment c that “the contractor is not entirely free to tractor failed to exercise reasonable care, even though sub- do the work in his own way.” stantial control was also vested in and exercised by the inde- The decision in Cochran is also significant for its recog- pendent contractor/employer. nition that the existence of a duty only obligates the general
6 Second Quarter 2008
Use of Construction Contracts is the party’s contract, if one exists. The interpretation of a Consideration of Both Prime and Subcontracts contract is a question of law and therefore may be decided on a motion for summary judgment.” Downs, 358 Ill. App. In Moss, supra, the issue of control turned on the gen- 3d at 205. eral contractor’s acceptance of responsibility under its prime In Downs, the plaintiff, an employee of P&M Water & contract with the Illinois Department of Transportation. The Sewer, Inc. (P&M) was injured when a trench in which he Illinois Appellate Court First District in Martens, repudiated was working collapsed. He sued Steel and Craft Builders, that approach. Thereafter, in Cochran, the appellate court the general contractor, on a negligence theory under Section attempted to reconcile the two. In so doing, it held that the 414 of the Restatement. The contract between Steel and Craft language of the prime contract is one of the factors to con- and P&M specifically obligated the subcontractor to comply sider in a multi-factoral analysis of the retention of control with OSHA and the Construction Safety Act of 1960, and for the purposes of applying Section 414. held the general contractor harmless against any injuries aris- In Moorehead v. Mustang Constr. Co., 354 Ill. App. 3d ing out of the work of P&M. The plaintiff contended that in 456, 821 N.E.2d 458 (3rd Dist. 2004), the court considered accordance with an interpretation of the New Jersey Court both the prime contract by which the general contractor agreed of Appeals, “OSHA regulations impose a nondelegable duty to “be fully and solely responsible for the job site safety” on general contractors to maintain safe job sites.” Kane v. and the subcontract, pursuant to which the plaintiff’s em- Hartz Mountain Indus., Inc., 278 N.J.Super. 129, 142-43, 650 ployer expressly assumed those obligations. In reversing sum- A.2d 808, 814 (N.J. Super. Ct. App. Div. 1994). mary judgment in favor of the general contractor, the Moorehead court also found that the defendant’s project manager and safety director were present on the site every day and had observed the hazardous condition of the exten- sion ladder upon which the plaintiff was working at the time The court also emphasized the that he fell. corollary proposition that for liability In Moiseyev v. Rot’s Bldg. & Dev., Inc., 369 Ill. App. 3d 338, 860 N.E.2d 1128 (3rd Dist. 2006) the plaintiff, an em- to attach, even assuming sufficient ployee of a subcontractor, OSI Construction, fell from a scaf- fold on a residential construction site. He sued the general control to give rise to a duty, the contractor, Rot’s Building & Development (RBD), and Rot, defendant must have actual or individually, on a construction negligence theory under Sec- tion 414. There was no formal written contract between RBD constructive knowledge of the and OSI. Further, contrary to the circumstances in Moorehead, the defendant did not exert any supervision or authority over hazardous condition. the incidental aspects of the work by the subcontractor. In its analysis, the Moiseyev court clearly adopted the “operative detail” approach of Fris in preference to the general ability to stop the work rationale of its subsequent decision in Brooks v. Midwest Grain Products Co., 311 Ill. App. 3d 871, 874- The Downs court declined to follow that reasoning. In- 85, 726 N.E.2d 153 (3rd Dist. 2000). The court also empha- stead, it affirmed summary judgment in favor of Steel and sized the corollary proposition that for liability to attach, even Craft Builders based upon: (1) the provisions of the subcon- assuming sufficient control to give rise to a duty, the defen- tract; (2) the absence of any control by the general contrac- dant must have actual or constructive knowledge of the haz- tor over the “means, methods and techniques of the excava- ardous condition. tion,” and (3) the absence of any evidence that the defendant In Downs v. Steel and Craft Builders, Inc., 358 Ill. App. knew or had notice of the hazardous condition. Downs, su- 3d 201, 831 N.E.2d 92 (2nd Dist. 2005) the Illinois Appel- pra. late Court Second District prioritized the subcontract between The Second District subsequently took its reasoning in the general contractor and the subcontractor in its multi- Downs one step further. In Joyce v. Mastri, 371 Ill. App. 3d factoral analysis stating: “[t]he best indicator of whether a 64, 861 N.E.2d 1102 (2nd Dist. 2007), the plaintiff fell from contractor has retained control over the subcontractor’s work (Continued on next page)
7 IDC Quarterly
Construction (Continued) Second, the court found no reason why the safety provi- a ladder on a construction site at the United States Army sion could not be delegated to the subcontractor. In that re- Reserve Base in Arlington Heights, Illinois. Madison Ser- gard it held: vices was the general contractor and the plaintiff was em- ployed by Elk Grove Mechanical, Inc. (EGM), a demolition Contrary to plaintiff’s assertion, nothing in these subcontractor. The prime contract between Madison Services provisions prohibited Madison Services from del- and the United States Government obligated the general con- egating its duty to maintain safety at the work site to tractor to comply with applicable safety standards, including its subcontractor, EGM. Plaintiff cites no authority OSHA and its accompanying regulations. The subcontract for its argument that Madison Services was prohib- between Madison and EGM obligated the subcontractor to: ited from delegating its safety responsibilities be- (1) be mutually bound to the provisions of the prime con- cause the project was federally funded and on fed- tractor and (2) comply with all applicable laws, ordinances, eral property. As previously discussed, Madison rules and regulations. In addition the subcontract obligated Services, through its contract with EGM, contractu- EGM to indemnify and hold Madison harmless against any ally and actually removed itself from the incidental loss or expense which was attributable to “bodily injury” as aspects of the construction and safety work per- a consequence of EGM’s negligence. formed by EGM. Accordingly, we conclude that The plaintiff argued that the general contract between summary judgment was appropriate on plaintiff’s Madison and the United States Government imposed a non- section 414 claim. Joyce, 371 Ill. App. 3d at 78-79. delegable duty upon the general contractor to comply with OSHA and its regulations. As a consequence, Joyce contended As in Downs and the other authorities supra, the court that Madison owed a direct duty of care under Section 414. also found that summary judgment for a general contractor As in Downs, the Second District rejected that contention. It is appropriate where the defendant neither maintains nor ex- did so on two grounds. First, it adopted its reasoning in ercises control over the incidental aspects of the Downs, stating: subcontractor’s work.
Conclusion In that case, the court determined that the defendant general contractor could not be held liable under The thicket of decisions following Shaughnessy and plaintiff’s section 414 claim, as governed by Illinois Martens indicates that the intermediate appellate courts are law. Therefore, liability would have resulted only consistently applying a multi-factoral approach that focuses from affecting the defendant’s right to contract away upon the general contractor’s control over “the operative private liability for injuries, or from enlarging details” of the subcontractor’s work. The safety of that per- defendant’s liabilities to plaintiff under section 414 formance is increasingly emphasized. However, the general by declaring that, via OSHA, defendant retained contractor’s adoption and enforcement of its own safety pro- control of the independent contractor’s work. This gram is generally subordinated to the subcontractor’s con- court explained that “[d]oing so would create an tractual agreement to be responsible for the safety of its em- exception that would swallow the rule, because no ployees. Even in cases where the “factors” otherwise favor matter what steps defendant would take to shield it- control on the part of the general contractor, courts will not self from liability, the OSHA inevitably would pierce impose liability absent actual or constructive knowledge of defendant’s armor, striking a fatal blow that other- the hazardous condition wise would be blocked under the theories advanced by plaintiff.” Downs, 358 Ill. App. 3d at 209, 294 Ill.Dec. 569, 831 N.E.2d 92. We find no reason to depart from our previous determination that a non- delegable duty does not arise under OSHA, because OSHA creates only a governmental program to en- force compliance and does not deal with the assign- ment of liability among contractors. Joyce, 371 Ill. App. 3d at 76-77.
8 Second Quarter 2008
gued that pursuant to the Illinois Supreme Court decision in Rein v. David A. Noyes & Co., 172 Ill. 2d 325, 665 N.E.2d Recent Decisions 1199 (1996), res judicata barred the plaintiff’s willful and wanton misconduct claim in the refiled action. Id. The Illinois Supreme Court first discussed Rein and its analysis of the doctrine of res judicata, explaining that when By: Stacy Dolan Fulco* a final judgment on the merits is rendered by a court, it serves Cremer, Kopon, Shaughnessy & Spina, LLC to bar any subsequent actions between the same parties on Chicago the same cause of action. Hudson, 2008 WL 217175 at *4. The doctrine of res judicata bars not only what was decided in the first cause of action, but also what could have been RES JUDICATA decided. Id. Res judicata applies only if three requirements are met. First, there must be a final judgment on the merits. Doctrine of Res Judicata Bars Plaintiff’s Second, an identity of the cause of action must exist. Third, Refiling Previously Voluntarily Dismissed Claims the parties must be identical in both actions. Id. at *2. By prohibiting a plaintiff from seeking relief “on the basis of In Hudson v. City of Chicago, 2008 WL 217175 (Jan. issues that could have been resolved in a previous action,” 25, 2008), the administrator of a minor child’s estate sued res judicata functions to prevent parties from “splitting their the City of Chicago, the former Fire Commissioner and un- claims into multiple actions.” Id. at *5, citing Rein, 172 Ill. known Chicago Fire Department personnel, alleging both 2d at 339-42. negligence and willful and wanton misconduct in the provi- In Rein, the plaintiffs filed an eight count complaint al- sion of emergency services to the decedent. The administra- leging both statutory and common law claims. The statutory tor, the mother of the decedent, had called 911 requesting counts were dismissed and the plaintiffs subsequently vol- emergency services for her son who was having trouble untarily dismissed the common law counts. Upon refiling, breathing. Hudson, 2008 WL 217175 at *1. The plaintiff al- the circuit court, appellate court and Illinois Supreme Court leged that the minor died due to the delay in the arrival of found the refiled counts were barred on res judicata grounds. advanced life support services. Id. Hudson, 2008 WL 217175 at *4. Applying Rein to the in- The defendants filed a motion to dismiss the negligence stant case, the Hudson court found that the refiling of the count of the plaintiff’s complaint, arguing that they were willful and wanton count by the plaintiff was a new action, immune pursuant to section 3.150 of the EMS Act, 210 ILCS not a continuation of the first case. Id. at *3-4. 50/3.150 (West 2000). The motion was granted with preju- The court noted that pursuant to Illinois Supreme Court dice. The plaintiff then moved to voluntarily dismiss the will- Rule 273, “an involuntary dismissal of an action, other than ful and wanton misconduct count. Id. at *2. The plaintiff a dismissal for lack of jurisdiction, for improper venue, or refiled the complaint in a timely manner, alleging willful and for failure to join an indispensable party, operates as an adju- wanton misconduct. Id. dication upon the merits.” Id. at *3, 134 Ill.2d R. 273. Pursu- The defendants filed a motion to dismiss the refiled com- ant to Rule 273, the court noted, the dismissal with prejudice plaint, arguing that the doctrine of res judicata barred the plaintiff’s refiled claim. The circuit court granted defendants’ (Continued on next page) motion, finding that the dismissal of the first action with preju- dice was an adjudication on the merits, and that res judicata therefore barred matters that were determined, as well as About the Author matters that could have been determined in the original ac- tion. Id. The appellate court affirmed. Id. Stacy Dolan Fulco is a partner at the Chicago law firm of On appeal to the Illinois Supreme Court, the plaintiff Cremer, Kopon, Shaughnessy & Spina, LLC. She practices primarily in the areas of premises liability, products liabil- argued that the appellate court erred when it concluded that ity and wrongful death defense. She received her under- the willful and wanton misconduct claim was barred by res graduate degree at Illinois State University and her J.D./ M.B.A. degree from DePaul University. She is a member judicata because the involuntary dismissal was not a final of the IDC. adjudication on the merits. Defendants again argued that the * The author acknowledges the assistance of Katherine K. Haussermann in dismissal of the negligence count in the initial case was a the preparation of this article. final adjudication on the merits. Further, the defendants ar-
9 IDC Quarterly
Recent Decisions (Continued) lacked in personam jurisdiction because Planned Parenthood granted by the judge on the negligence count was an adjudi- of Indiana does not provide any services in Illinois and lacked cation on the merits for the purposes of the res judicata analy- the minimum contacts within Illinois necessary to support sis. Id. an Illinois court exercising jurisdiction over it in the matter. Thus, once the willful and wanton count was voluntarily Id. dismissed, the entire case was terminated and the final or- Limited discovery was allowed for the purposes of the ders became immediately appealable. As such, the refiled motion to dismiss based upon the lack of personal jurisdic- count was an entirely new action, not a continuation of the tion, and the discovery revealed that the defendant owned no initial action as asserted by the plaintiffs. Id. at *3-4, 735 property in Illinois and was not registered to conduct busi- ILCS 5/13-217. The court noted that by voluntarily dismiss- ness in Illinois. However, over a four year period, the defen- ing and refiling part of an action after a final judgment had dant treated 1,500 Illinois residents, or 1.5% of the total num- been entered on another part of the case, the plaintiff sub- ber of patients seen. Further, some Illinois residents were jected herself to a res judicata defense. Hudson, 2008 WL listed in a fundraising database maintained by the defendant. 217175 at *6. Finally, the defendant advertised its services in Illinois phone The supreme court also rejected the argument of the plain- books and employed eight Illinois residents over a five year tiff and the amicus brief of the Illinois Trial Lawyers Asso- period. Id. at *1-2. ciation that the legislature intended to give plaintiffs an ab- The appellate court first noted that 735 ILCS 5/2-209, solute right to split their claims through sections 735 ILCS referred to as the long arm statute, allows an Illinois court to 5/2-1009 and 735 ILCS 5/13-217. Id. at *11. The court, again exercise jurisdiction over an out of state defendant when ex- referencing Rein, found that the statutes cited by the plaintiff ercising such jurisdiction is consistent with the due process did not provide automatic immunization against res judicata rights of the defendant under the United States and Illinois or any other legitimate defenses that a defendant might put Constitutions. Id. at *2. forth, and denied the plaintiff’s claims that these statutes pro- In order to comply with the due process requirements of vided plaintiffs an automatic right to split claims. Id. at *5, the United States and Illinois Constitutions, the defendant *11. Although the Rein court outlined six situations in which must have enough minimum contacts within the state seek- claim splitting would be allowed, the court found none of ing to exercise personal jurisdiction, and the action must “arise the six situations applied to the instant plaintiff’s case. Id. at out of the defendant’s contacts” with that state. Id. at *3. *6, see Rein, 172 Ill.2d at 341. As such, the Illinois Supreme Exercising jurisdiction when such contacts exist must be fair, Court upheld the dismissal of the plaintiff’s willful and wan- just and reasonable and must not “offend the ‘traditional no- ton count, finding it was barred by the doctrine of res judi- tions of fair play and substantial justice.’” Id., citing Inter- cata. Id. at *11. national Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). A petition for rehearing was filed on February 15, 2008 A defendant’s minimum contacts can be established when and, as of press time, has not been ruled upon. the evidence shows that the defendant “purposefully availed” itself “of the privilege of conducting activities” in the state JURISDICTION seeking to exercise jurisdiction. Sabados, 2007 WL 4571125 at *3. A court can exercise specific jurisdiction over a defen- Defendant Lacked Sufficient Contacts in Illinois dant corporation in a particular matter if the litigation arises for Court to Exercise Jurisdiction out of or is connected to the defendant’s allegedly wrongful acts within the state seeking to exercise jurisdiction. Id. In Sabados v. Planned Parenthood, 2007 WL 4571125 General jurisdiction over a defendant is proper “when (1st Dist. Dec. 28, 2007), the plaintiff filed a medical negli- the defendant has continuous and systematic business con- gence action against defendant Planned Parenthood of Greater tacts within the forum state.” Id. For instance, general juris- Indiana with regard to allegedly negligent services provided diction would be proper if a defendant carried out business at its Hammond, Indiana clinic. Id. at *1. Defendant filed a within the state on a basis that showed permanence and con- motion to dismiss for lack of jurisdiction pursuant to the Illi- tinuity. Id. at *5. The standard for general jurisdiction is higher nois Code of Civil Procedure Section 2-209. 735 ILCS 5/2- because subjecting oneself to general jurisdiction allows a 209 (West 1994). The trial court ruled in favor of the plain- defendant to be sued on matters both related and unrelated to tiff. Id. the defendant’s activities in the state seeking to exercise ju- On appeal, the defendant argued that the Illinois court risdiction. Id.
10 Second Quarter 2008
The plaintiff argued that specific jurisdiction was estab- lished because the tort committed by defendant was commit- ted in Illinois. Specifically, the plaintiff argued that although Legal Ethics her treatment was received only in Indiana, her injury devel- oped and was sustained in Illinois. Further, the plaintiff ar- gued that defendant was doing business in Illinois. Id. By: Michael J. Progar In analyzing the plaintiff’s argument, the court looked Doherty & Progar LLC to cases involving professional malpractice claims against Chicago out of state doctors. In such cases involving personal ser- vices, the appellate court noted that courts must focus their analysis on the place where the services are provided. Id. Applying that consideration to the instant matter, the appel- Retained Defense Counsel’s late court noted that the plaintiff sought out services in Indi- ana and that even though her injury was discovered in Illi- Obligations to an Insured nois, that fact alone was insufficient to establish that the de- Who Refuses Representation fendant had minimum contacts in Illinois. Specifically, the services provided by the defendant doctor in Indiana were The American Bar Association’s Standing Committee on not directed at a particular place, but were intended to affect Ethics and Professional Responsibility recently issued For- the individual who sought out the treatment. Id. at *4. As mal Opinion 07-448, in which it considered what happens such, the court explained, the individual who crosses state when a competent person refuses legal representation ap- lines to seek assistance and then travels back to a different pointed or directed by a tribunal. Most commonly, the indi- state, should expect to return to the state where he or she vidual would be a criminal defendant, and that was the ap- sought treatment in order to file a complaint. Id. proach taken by the Committee. However, it is not hard to The appellate court found no evidence that her injuries imagine other circumstances that would involve similar con- were the result of activities that the defendant purposefully siderations. directed to residents of Illinois. The advertisements in the Practicing law in the field of insurance defense can oc- Illinois phone book were not enough to create sufficient mini- casionally require an attorney to balance the interests of both mum contacts. As such, the appellate court determined that it the liability insurer and its insured. By virtue of the insur- was unreasonable to force the defendant to litigate in Illi- ance contract, the insurer commonly retains the right to ap- nois. Id. point defense counsel on behalf of its insured and to control The appellate court similarly disagreed with the plaintiff’s the defense of the litigation. The attorney-client relationship argument that the defendant had subjected itself to general arises solely between the attorney and the insured. Absent an jurisdiction in Illinois because it was doing business within actual or potential conflict of interest, however, the insured Illinois. Id. at *5. In order to determine whether general ju- generally does not have the right to choose defense counsel. risdiction exists, the court considered whether there was suf- (Continued on next page) ficient evidence that the defendant was carrying out busi- ness in Illinois that was permanent and continuous. Id. The court noted that the defendant maintained no offices in Illi- About the Author nois and conducted no sales in Illinois. Id. Further, the evi- dence demonstrated that the placement of the telephone book Michael J. Progar is a partner with the firm of Doherty & Progar, LLC. He listings was the decision of the telephone book publishers, practices in both the Indiana and Illinois offices. A trial attorney with more not the defendant. Id. at *2. As there was no evidence that than 20 years of civil jury trial experience, Mr. Progar has tried over 50 jury trials to verdict in both state and federal courts. Areas of special concentration the defendant systematically and continually transacted busi- include complex product liability and toxic tort litigation, insurance coverage, ness in Illinois, it therefore did not subject itself to general fraud and bad faith litigation, construction litigation, premises liability and employers’ liability. He received his J.D. from DePaul University College of jurisdiction and the lower court’s decision was reversed. Id. Law in 1981 and his B.A. in American Studies from the University of Notre at *5-6. Dame. Mr. Progar is a member of DRI, IDC, Defense Trial Counsel of Indi- ana, Indiana State Bar Association, State Bar of Wisconsin and the Lake County, Indiana Bar Association. He has served on various bar association committees in the areas of tort and insurance litigation and alternative dispute resolution.
11 IDC Quarterly
Legal Ethics (Continued) on a conflict of interest, since to do so deprives the client of Setting aside, for a moment, issues concerning insurance his or her choice of attorney. Similarly, a cause of action for coverage that might arise, what happens if an insured refuses legal malpractice presupposes the existence of an attorney- representation by an attorney appointed by the liability in- client relationship, out of which the attorney’s duty to the surer? Perhaps the insured prefers to retain defense counsel client arises. For that reason, Illinois and the majority of states of its choice, at its own cost. In unusual circumstances, the do not permit the assignment of a legal malpractice claim. insured might refuse defense counsel altogether, preferring Rule 1.5(f) prohibits an attorney from dividing a fee for to defend a case pro se. legal services with an attorney who is not a member of the Formal Opinion 07-448 suggests that the ethical quan- same firm, without the consent of the client in writing. Gen- dary of appointed defense counsel under such circumstances erally, the attorney-client relationship terminates upon the begins with the determination of whether the attorney has a death of the client. The client may also discharge his or her client to whom he or she owes any duties or obligations. Rule attorney at any time, with or without cause. 1.2(a) of the Illinois Rules of Professional Conduct, which In People v. Simms, 192 Ill. 2d 348, 736 N.E.2d 1092 addresses the scope of representation of a client, states that (2000), the Supreme Court stated that the attorney-client re- “a lawyer shall abide by a client’s decisions concerning the lationship “requires the consent of both the attorney and the objectives of representation . . . and shall consult with the client.” Simms, 192 Ill. 2d at 382. The attorney-client rela- client as to the means by which they are to be pursued.” tionship cannot be created by the attorney alone, or by an Under Rule 1.2, the attorney must abide by the client’s attorney and a third party who has no authority to act. Id. decisions concerning settlement of a civil case. In criminal Given these principles, it is apparent that the client’s cases, the attorney must abide by the client’s decisions re- choice of an attorney is considered to be of paramount im- garding the plea that the client will enter, whether to waive portance. Underlying the Rules of Professional Conduct is the right to a trial by jury, and whether the client will testify the basic premise that the attorney’s role in the attorney-cli- at the trial. However, Rule 1.2(c) provides that the attorney ent relationship is to further and to protect the interests and may limit the objectives of the representation only if the cli- objectives of the client. While an insurance contract may ent consents after disclosure. Other rules that define the imply the insured’s consent to an attorney-client relationship attorney’s obligations to the client presume the existence of with defense counsel chosen by the insurer, it is also appar- an attorney-client relationship. However, these provisions of ent that if the insured specifically declines or refuses such the rules imply that it is solely the client’s choice whether an representation, no attorney-client relationship is created. Any attorney-client relationship is created, although the attorney duties imposed on the retained attorney would arise solely can terminate the relationship under some circumstances. from any obligations of the attorney to the liability insurer. The Rules of Professional Conduct do not themselves Under those circumstances, it is doubtful whether the directly address the issue of what constitutes an attorney- attorney could take any steps to protect the insured’s inter- client relationship or when it arises. The rules suggest that, ests, or even counsel the insured regarding the possible con- at a minimum, an agreement as to the scope of representa- sequences of the insured’s actions. It would seem that the tion and a fee would be required to create an attorney-client attorney’s duties under the Rules of Professional Conduct relationship. In addition to Rule 1.2, which discusses the scope would be limited to those obligations owed to persons other of representation, Rule 1.5 considers the issue of fees. How- than the attorney’s client. ever, in the context of insurance defense, the liability insurer Whether any communications between the attorney and in accordance with the terms of the insurance contract is pay- the respective client would fall within the scope of the attor- ing most or all of the attorney’s fee. Without the insured’s ney-client privilege appears questionable. Although the in- consent to the representation, and in the absence of previous sured never sought legal services from the attorney, and in regular representation by the attorney, it would appear that fact specifically refused them, any communications from the no attorney-client relationship arises where the insured re- attorney would likely have been directed toward protecting fuses representation by an attorney appointed by the insured’s the insured’s interests in accordance with the insurer’s duty liability insurer. to defend. Under those circumstances, a reasonable argument In their decisions, the Illinois Supreme Court and Illi- may be made that any such communications are privileged, nois appellate courts have consistently maintained a policy until the insured has specifically refused representation by of deferring to a client’s choice of attorney. For example, the attorney. there is a general reluctance to disqualify an attorney based
12 Second Quarter 2008
tions supports application of law enforcement investigatory privilege to both documents and testimony). Civil Rights Update Federal Law In its Dellwood Farms decision, the United States Court By David A. Perkins and John Heil, Jr. of Appeals for the Seventh Circuit considered the federal Heyl, Royster, Voelker & Allen government’s appeal of an order compelling production of Peoria materials collected during its investigation into agricultural price fixing. Dellwood Farms, 128 F.3d at 1124. At the time the trial court ordered production of the materials, the De- Do Not Forget About the partment of Justice was actively engaged in its investigation, and several of the defendants in the civil suit were either Law Enforcement indicted or soon-to-be-indicted criminal defendants. Id. The plaintiffs sought the materials, which consisted of both vid- Investigatory Privilege eotapes and audiotapes, in the hope that it would contain evidence of an illegal conspiracy. Id. On appeal, the Seventh Civil rights cases are routinely filed against police offic- Circuit acknowledged the applicability of the law enforce- ers, their departments, and the municipalities they serve. On ment investigatory privilege. In recognizing that it is not ab- occasion, written discovery requests or deposition questions solute, the court nevertheless cautioned that “there ought to directed at the defendants may tread into a category of infor- be a pretty strong presumption against lifting the privilege.” mation that needs to be aggressively protected: ongoing crimi- Id. at 1125. nal investigations. Information of concern may include logs, The Seventh Circuit also found that the federal Freedom preliminary reports, or even notes that could potentially com- of Information Act (FOIA) contains an instructive statutory promise ongoing operations, lead to discovery of particular example of the privilege. Id. Although FOIA provides per- investigative techniques, or jeopardize the safety or effec- sons with the legal right to certain information in the tiveness of confidential informants. Therefore, in addition to government’s possession, it also contains an exception for any other common law or statutory privileges, it is important information collected and utilized for law enforcement pur- to consider asserting the law enforcement investigatory privi- poses. Id.; 5 U.S.C. § 552(b)(7). The exception applies in a lege when faced with a discovery request. number of situations, including when production “could The law enforcement investigatory privilege is “a judge-fashioned evidentiary privilege,” Dellwood Farms, Inc. (Continued on next page) v. Cargill, Inc., 128 F.3d 1122, 1124 (7th Cir. 1997), the pur- pose of which is to protect law enforcement efforts from pos- sible harm arising from public disclosure of investigatory About the Authors files. Doe v. Hudgins, 175 F.R.D. 511 (N.D. Ill. 1997); see David A. Perkins is a partner in the Peoria firm of Heyl, also In re United States Dept. of Homeland Security, 459 Royster, Voelker & Allen. He concentrates his practice in F.3d 565, 569 n.2 (5th Cir. 2006). Its scope extends beyond the areas of civil rights, municipal liability, insurance fraud, the mere protection of the identities of confidential infor- and first party property claims. Mr. Perkins received his B.A. in 1985 from the University of Illinois at Springfield mants. Dept. of Homeland Security, 459 F.3d at 569. It also and his J.D. from the University of Iowa in 1987. He is a protects from dissemination the information contained in files member of the Peoria County, Illinois State, and American Bar Associations. related to both civil and criminal law enforcement investiga- tions. See, e.g., Friedman v. Bache Halsey Stuart Shields, Inc., 738 F.2d 1336, 1341 (D.C. Cir. 1984); Black v. Sheraton John Heil Jr. is an of-counsel attorney with Heyl, Royster, Corp. of America, 564 F.2d 531, 542 (D.C. Cir. 1977). This Voelker & Allen. He joined the firm in November 2007 af- ter serving eleven years an Assistant State’s Attorney in privilege prohibits the release of governmental information Cook County, Illinois. He received his J.D. from Chicago- – whether through documentary evidence or oral testimony Kent College of Law in 1996 and his B.S. from Bradley University in 1993. His practice includes the defense of civil – that would harm an agency’s investigative or enforcement rights actions, municipal liability, and general negligence efforts. See In re Sealed Case, 856 F.2d 268, 272 (D.C. Cir. matters. 1988) (public interest in safeguarding integrity of investiga-
13 IDC Quarterly
Civil Rights Update (Continued) 59 F.R.D. at 344. Although courts are given leeway in the reasonably be expected to interfere with enforcement pro- manner in which they balance the Frankenhauser factors, ceedings,” “could reasonably be expected to disclose the iden- the failure to balance them at all requires remand for consid- tity of a confidential source,” “would disclose techniques and eration of the parties’ respective interests. In re Sealed Case, procedures for law enforcement investigations or prosecu- 856 F.2d at 272. tions,” or “could reasonably be expected to endanger the life or physical safety of any individual.” 5 U.S.C. § 552(b)(7). Illinois Law The court in Dellwood Farms stated that it is inappro- The law enforcement investigatory privilege was first priate for courts to “mediate [the plaintiffs’] desire to expe- formally acknowledged in Illinois in the Illinois Appellate dite their civil litigation and the government’s conduct of its Court First District’s opinion in In re Marriage of Daniels, criminal investigation.” Dellwood Farms, 128 F.3d at 1125. 240 Ill. App. 3d 314, 331, 607 N.E.2d 1255 (1st Dist. 1992). Important separation of powers considerations weigh heavily The Daniels court looked far and wide for evidence that Illi- against the courts’ control over government investigations, nois recognized the exception. As the Seventh Circuit did in which are strictly within the control of the executive branch. Dellwood Farms, the court noticed an analogous exception Id. Judicial intervention, the court reasoned, should only oc- cur “as may be necessary to secure constitutional and other under the state and federal FOIAs. Daniels, 240 Ill. App. 3d recognized legal rights of suspects and defendants.” Id. at 325; 5 U.S.C. § 552(b)(7); 5 ILCS 140/7(1)(c)(i). Illinois The plaintiffs in Dellwood Farms were neither suspects common law support under FOIA was found in the Illinois in the governments’ investigation nor defendants in the civil Supreme Court’s opinion in Marshall v. Elward, 78 Ill. 2d suit. In the view of the Seventh Circuit, this meant the plain- 366, 399 N.E.2d 1329 (1980) (the qualified law enforcement tiffs had “no definite legal right to force the government to investigatory privilege codified in the federal FOIA statute tip its hand to criminal suspects and defendants by disclos- originated under the common law). The court further found ing the fruits of the . . . surveillance.” Id. Accordingly, the support in § 7 of the Criminal Identification Act, 20 ILCS court disallowed production of the materials. Id. at 1128. 2630/7, which outlaws the release of files and records of the As it applies specifically to civil rights cases, applica- Illinois State Police except as provided therein. Daniels, 240 tion of the law enforcement investigatory privilege is gov- Ill. App. 3d at 328. erned by the factors laid out in Frankenhauser v. Rizzo, 59 Since Daniels, Illinois courts have routinely recognized F.R.D. 339 (E.D. Pa. 1973): the law enforcement investigatory privilege as a qualified privilege available under Illinois common law. See, e.g., In (1) the extent to which disclosure will thwart gov- re Consensual Overhear, 323 Ill. App. 3d 236, 753 N.E.2d ernmental processes by discouraging citizens from 389 (2nd Dist. 2001) (petition by newspaper seeking access giving the government information; (2) the impact to sealed court records of information gained from an elec- upon persons who have given information of hav- tronic eavesdropping device in a criminal investigation de- ing their identities disclosed; (3) the degree to which nied based on the enforcement investigatory privilege); governmental self-evaluation and consequent pro- Castro v. Brown’s Chicken and Pasta, Inc., 314 Ill. App. 3d gram improvement will be chilled by disclosure; (4) 542, 732 N.E.2d 37 (1st Dist. 2000) (law enforcement inves- whether the information sought is factual data or tigatory privilege barred discovery of police files of ongoing evaluative summary; (5) whether the party seeking investigation into mass murder because disclosure could the discovery is an actual or potential defendant in thwart the goal of apprehending the perpetrators). any criminal proceeding either pending or reason- ably likely to follow from the incident in question; Conclusion (6) whether the police investigation has been com- The law enforcement investigatory privilege may not be pleted; (7) whether any intradepartmental disciplin- the first privilege one thinks of in one’s day-to-day practice of ary proceedings have arisen or may arise from the civil rights law, but it is available in the event it is needed. Pro- investigation; (8) whether the plaintiff’s suit is non- tection of ongoing investigations, techniques and the identities frivolous and brought in good faith; (9) whether the of confidential sources weigh heavily on any police officer or information sought is available through other dis- department burdened with civil litigation. Protect them by as- covery or from other sources; and (10) the impor- serting their common law privilege to conduct their investiga- tance of the information sought to the plaintiff’s case. tions without unnecessary intrusion by curious plaintiffs.
14 Second Quarter 2008
for determining the effective date and time of filings. The People argued that in 2000, the Commission estab- Supreme Court Watch lished an electronic filing system called “e-Docket,” which has replaced to a great extent the filing of paper copies at the Commission. The establishment of that system largely effec- tuates the purposes of the Electronic Commerce Security Act, By: Beth A. Bauer 5 ILCS 175/1-101 et seq. (2006), which is intended, in part, Hepler, Broom, MacDonald, Hebrank, to facilitate and promote electronic commerce by eliminat- True & Noce, LLC ing barriers resulting from uncertainties over writing and sig- Edwardsville nature requirements and to facilitate electronic filing of docu- ments with state agencies. The People state that the purposes of the Electronic Commerce Security Act and of e-Docket In November 2007 and January 2008, the Illinois Supreme represent modern policies and practices and should not be Court allowed the following Petitions for Leave to Appeal in frustrated by decisions, like that of the Fourth District, that the following civil cases of general interest: disadvantage electronic filings compared to paper filings sent through first class mail. Is an Electronic Filing Untimely if Made After the Close of Business?
People of the State of Illinois v. Illinois Commerce The People contend that due to the Commission, Gen. No. 105131, Fourth District 4-06-1063. growing use of electronic filing On August 31, 2006, the Illinois Commerce Commis- systems at both the agency and judicial sion served a final order, but served a “corrected” order on September 7, 2006. Both orders were dated August 30, 2006. levels, the court needs to establish Within 30 days from issuance of the “corrected” order, on October 2, 2006, the People and the City of Chicago jointly predictable and consistent rules for filed an application for rehearing, which is a prerequisite for determining the effective date and appellate review under Section 10-113 of the Public Utilities Act, 220 ILCS 5/10-113 (2006). The petition for rehearing time of filings. was filed via the Commission’s electronic filing system, which generated a receipt showing the time and date of filing: Oc- tober 2, 2006 at 5:34 p.m. Eventually, the Commission denied rehearing, without Additionally, the People argue that the opinion of the explanation. Thereafter, the Illinois Appellate Court Fourth Fourth District is inconsistent with the “mailbox rule,” which District dismissed the People’s petition for review because the Supreme Court has recognized as a proper method for the People’s application for rehearing before the Commis- calculating filing dates for agencies and the appellate court. sion filed on October 2, 2006 was untimely. The appellate (Continued on next page) court explained that the application for rehearing was un- timely because it was not filed electronically with the Com- mission until after the close of business. Therefore, review was barred because the application for rehearing was filed About the Author one day later. Beth A. Bauer concentrates her practice in the area of ap- The People petitioned the Illinois Supreme Court for pellate practice at Hepler, Broom, MacDonald, Hebrank, guidance regarding whether pleadings are deemed filed on True & Noce, LLP in Edwardsville. She graduated cum laude from St. Louis University School of Law in 2000 and re- the date that they are submitted to the electronic filing sys- ceived her B.A. with honors from Washington University tem. The People contend that due to the growing use of elec- in 1997. Ms. Bauer is a member of the Illinois and Mis- souri State Bar Associations and National Christian Legal tronic filing systems at both the agency and judicial levels, Society. the court needs to establish predictable and consistent rules
15 IDC Quarterly
Supreme Court Watch (Continued) the insurer to cover the 25% attorney’s fee. The circuit court The People also request that the Illinois Supreme Court granted the insurer’s motion to dismiss. find that a corrected order resets the time for seeking rehear- The employee filed an appeal in the Illinois Appellate ing or review. Court Fifth District, which reversed the order of dismissal. The Fifth District found that Section 5(b) of the Act applies not only in cases in which the recovery is from a third party May an Insurer Set-Off the Entire Amount tortfeasor, but also in this instance where recovery was from of Workers’ Compensation Benefits and the first party uninsured motorists claim. Thus, the Fifth Dis- Attorney’s Fee from Settlement of an trict found that the employee was entitled to the additional Uninsured Motorist Claim? sum, reflecting the 25% paid to his attorney in the workers’ compensation case. Taylor v. Pekin Insurance Co., No. 105158, Fifth District 5-05-0605. The insured further argues that the An insurer issued two policies of insurance to its insured: (1) a policy of workers’ compensation insurance; and (2) a Fifth District misinterpreted Section policy providing coverage for the insured’s business. The vehicle policy contained an uninsured motorists insurance 5(b) of the Act to the set-off provision clause, which stated: of the policy at issue, creating a sharp
Any amounts otherwise payable for damages under split between the Fifth and Second this coverage shall be reduced by all sums paid or payable for the bodily injury any workers’ or Districts. workmen’s compensation law, disability benefits law, or any similar law. Any payment under this cov- erage to or for a covered person will reduce any The insured seeks the Illinois Supreme Court’s interven- amount that person is entitled to recover under the tion, arguing that the Fifth District’s decision directly con- Liability Coverage of this policy. flicts with earlier holdings from both the Illinois Supreme Court and the Illinois Appellate Court Second District, re- An employee of the insured was involved in a car acci- garding whether an insurer may set off the full amount of an dent in the course of his employment. The other driver in the insured’s workers’ compensation benefits. See Sulser v. Coun- accident was uninsured. The employee received $162,588.33 try Mut. Ins. Co., 147 Ill. 2d 548, 591 N.E.2d 427 (1992); pursuant to his employer’s workers’ compensation policy. The Ullman v. Wolverine Ins. Co., 48 Ill. 2d 1, 269 N.E.2d 295 employee also made a claim for benefits under the uninsured (1970); Terry v. State Farm Mut. Auto. Ins. Co., 287 Ill. App. motorists’ provision of the vehicle policy. After arbitration, 3d 8, 677 N.E.2d 1019 (2nd Dist. 1997); and Parker v. Ameri- the employee was awarded $250,000.00. The insurer sub- can States Ins. Co., 193 Ill. App. 3d 671, 550 N.E.2d 40 (2nd tracted from this award the workers’ compensation benefits Dist. 1990). The insured contends that in these cases, the and issued a check to the employee and his attorneys for courts have upheld the validity and enforceability of similar $87,412.00. set-off provisions in full without authorizing or allowing for The employee complained that his check from the in- any reduction in the amount of the contractual set-off. surer should include the additional sum of $40,467.00 to cover The insured further argues that the Fifth District misin- his attorneys’ fees, despite acknowledging that the insured’s terpreted Section 5(b) of the Act to the set-off provision of insurance contract provided for a set-off for workers’ com- the policy at issue, creating a sharp split between the Fifth pensation benefits. The insurer denied owing the employee and Second Districts. According to the insured, this section any additional sums. of the Act applies only where there is a third-party tortfeasor, Therefore, the employee filed a complaint for declara- a lien created in favor of the employer, and a reimbursement tory judgment and labeled the contractual set-off a “lien” to procured for the employer. As such, the Fifth District misap- support his suggestion that Section 304/5(b) of the Workers’ plied Section 5(b) to the facts of this case. See Terry, 677 Compensation Act (the Act) should be construed to require N.E.2d at 1019.
16 Second Quarter 2008
Is a Release of Claims Between an able as to the workers’ compensation claim. The Second Dis- Employee and Employer, Including a trict based its finding on Section 23 of the Workers’ Com- Workers’ Compensation Claim, Valid pensation Act. It reasoned that Section 23 rendered the Without the Approval of the Commission? employee’s release and settlement of the workers’ compen- sation claim ineffective in absence of the approval of the Maxit, Inc. v. Van Cleve, No. 105532, Commission. Further the appellate court concluded that there Second District 2-06-1025. is “potential ambiguity” in the language of the release re- garding whether it actually released the workers’ compensa- The defendant employee was injured in an automobile tion claim. It concluded that the parties did not intend to re- collision during the course and scope of his employment with lease the workers’ compensation claim because that inten- the plaintiff employer. The employee asserted claims before tion would be unlawful, unenforceable and void as against both the Illinois Industrial Commission and under his public policy. employer’s uninsured motorists policy. At the time of the collision, the employer’s workers’ compensation insurance policy had inadvertently lapsed. The employee agreed to settle and resolve all of his claims [The appellate court] concluded that against the employer including the then pending workers’ compensation claim, in exchange for $800,000. In consider- the parties did not intend to release the ation of such payment, the employee executed a release, workers’ compensation claim because which specifically named the employer as a “Releasee,” en- titling the employer to be released, indemnified, and held that intention would be unlawful, harmless forever, unenforceable and void as against from and against any and all claims, rights, duties, obligations, debts, liabilities, liens or causes of ac- public policy. tion of any kind and nature whether foreseen, un- foreseen, contingent or actual, liquidated or unliqui- dated that have been or may hereafter and any time be made or brought against said releasees for the The employer petitions the Illinois Supreme Court for purpose of enforcing a further claim for damage on review, arguing that the opinion of the Second District pro- account of the alleged damages or injuries sustained vides the employee with a double recovery contrary to Illi- in consequence of the aforesaid accident. nois law. Further, the employer asks the Illinois Supreme Court to determine whether the release in question is clear After receiving the agreed-upon payment, the employee and unambiguous since both lower courts took the opposite obtained new counsel and pursued the workers’ compensa- position on that issue. tion claim by demanding that additional payment be made in The employer also contends that the Second District erred the amount of roughly $246,000. The employer paid the ad- in its finding that the Commission had to approve the settle- ditional sum of $200,000 solely in recognition of its duty to ment. The employer argues that the Act is not implicated; mitigate damages. rather, the case is a matter of breach of contract, governed The employer filed a one-count complaint for breach of under the law of contracts. Finally, the employer urges re- the release-contract. The employee moved to dismiss the view because this case affects whether employers and em- complaint, which the circuit court denied. The parties filed ployees may rely on the contracts signed between them. cross motions for summary judgment, and the employee ad- ditionally filed a motion for judgment on the pleadings. The circuit court found that the release was clear and unambigu- ous on its face and granted summary judgment and judgment on the pleadings in favor of the employer. The employee appealed to the Illinois Appellate Court Second District, which held that the release was unenforce-
17 IDC Quarterly
“diversity” can thus be achieved by including women asso- ciates and partners, while minority representation suffers. Diversity Women should be part of the overall picture, but not the en- tire picture. To implement a successful and effective diversification program in a firm, the following issues must be considered: By: Yvonne M. O’Connor Merlo, Kanofsky, Brinkmeier and Gregg • Consider how firm policies (billable hours, face time, Chicago etc.) impact all employees and whether these policies raise “diversity issues.” • Do current marketing efforts include diverse members on an equal basis, or are the same people getting these opportunities each time? Implementing a True • Does the formal or informal mentoring program in the Diversity Program firm encourage the diverse members? For example, are the top members of the firm interacting with the newer diverse members? Once a law firm has decided to work towards diversifi- • Is the firm unable to market to certain companies or cation, the question then becomes how to do so. Some firms groups because of a lack of diversity? Perhaps the firm will decide, after internal evaluation, that diversity is a goal. already has this diversity, but its public image does Others will face clients demanding better or broader diversi- not reflect it? fication to maintain client relationships. The best approach • If the firm is having trouble attracting minority candi- is always to address an issue on the terms of the firm, before dates, consider what it has to offer a minority candi- clients raise the issue as a “problem” to solve for continued date and publicize it. business. Whether a firm decides to hire a consultant to make the goal a reality, or proceed on its own, a written plan is Be prepared to make changes even to the oldest policies, essential to implementing an effective diversity plan. if they have a disparate effect on the diverse members of the Consider the following facts, gathered by Lawyers for firm. Question all members of the firm regarding their One America in a report to the President of the United States thoughts on obtaining diversity. Ask clients what kinds of from 1998 through 2002. diversity they value and how they would like their files as- • In 1998, Hispanic and African American lawyers made signed. One-size fits all is not the wave of the future, and up only 7% of the profession. those firms that refuse to accept this, or deny that diversity is • That same number, two years later, had only increased of paramount importance to their success will fall behind. to 10%, but this number was artificially inflated by Those that accept the challenge, and work with firm mem- the inclusion of Asian-Americans in the calculation, a bers to achieve diversity, will see more and more doors open group that had not been included in the original study. to them, and loyal employees working towards building a • In stark contrast, the proportion of law students of color lasting relationship with these clients. doubled between 1986 and 2000. • Less than 3% of all partners across American law firms are racial minorities and this number drops to 2% when only the largest firms are examined. • In the 40 largest law firm in Chicago, African Ameri- About the Author cans only compromise 1.5% of partners. Yvonne O’Connor is an associate attorney with Merlo, Kanofsky, Brinkmeier Lawyers for One America, “The Numbers,” www.lfoa.org/ and Gregg, focusing her practice on insurance coverage and defense litiga- tion. She is a 1995 graduate of the University of Chicago and a 1998 graduate barnone/barnone_the_numbers.html. of the Chicago-Kent College of Law. Ms. O’Connor is an active member of numerous bar associations, also serving as a member of the Tort Law Section Many firms consider women in their diversity portfolio, Counsel and Law Related Education for the Public Committee with the Illi- nois State Bar Association. She has presented CLE seminars on various top- which is important, but this does not present a complete pic- ics, and has served as co-chair of the IDC’s Diversity Committee since 2006. ture of true diversity. Artificial numbers purporting to show
18 Second Quarter 2008
mony was based on a blood test administered to the plaintiff at the hospital, approximately one and a half hours after the Evidence and Practice Tips accident. O’Donnell utilized retrograde extrapolation to es- timate the plaintiff’s blood-alcohol level at the time of the accident. O’Donnell conceded at his discovery deposition that he did not know when the plaintiff started or stopped By: Joseph G. Feehan drinking, what she drank or ate, or how much she drank. Heyl, Royster, Voelker & Allen O’Donnell also admitted that a number of factors could in- Peoria fluence the plaintiff’s actual blood-alcohol level at the time of the accident and that he did not know if the plaintiff’s body was in the alcohol absorption phase or the elimination Illinois Appellate Court First District phase at the time of the accident. O’Donnell also conceded Vacates $25 Million Jury Verdict that he was unable to render an opinion as to whether the Because Trial Court Improperly Barred plaintiff’s blood-alcohol level caused or contributed to the Expert Testimony Regarding accident. However, O’Donnell testified that a blood-alcohol Plaintiff’s Blood-Alcohol Level level of .08 or more would affect a driver’s depth perception, peripheral vision, and ability to judge speeds. In Petraski v. Thedos, No. 1-06-2914, 2008 WL 588544 After considering the defendants’ offer of proof, the trial (1st Dist. March 3, 2008), the Illinois Appellate Court First court barred O’Donnell from testifying, finding that the tes- District held that the trial court abused its discretion when it timony was too speculative to be admissible. The trial court prohibited defendants from introducing evidence of plaintiff’s also found that the prejudicial effect of O’Donnell’s testi- alcohol consumption. In Petraski, the plaintiff Margaret mony outweighed its probative value. The trial court granted Petraski was seriously injured when she made a left turn into the plaintiff’s motion in limine and barred any evidence that the path of a high-speeding Cook County Sheriff’s police suggested the plaintiff consumed alcohol or was intoxicated. car driven by the defendant, Officer Deborah Thedos. Of- At the conclusion of the trial, the jury found in favor of ficer Thedos was in the process of responding to a domestic the plaintiff and returned a verdict in the amount of quarrel at the time of the accident. $35,835,684. The jury’s award was reduced by 25% to At trial, Officer Thedos testified that she responded to $26,876,763, due to the plaintiff’s contributory negligence. the call as if it were an emergency. About two blocks before The defendant’s appealed the verdict. On appeal, the each intersection, Thedos manually operated her siren, which plaintiff argued that the trial court’s decision to exclude the emitted a “whoop-whoop” sound. Thedos testified that her blood-alcohol evidence was appropriate because Dr. emergency lights were on at all times. She testified that: she O’Donnell could not say that the plaintiff was impaired at was traveling eastbound as she approached the intersection the time of the accident. The plaintiff argued that O’Donnell where the accident occurred; her light was red; and she slowed could not quantify the nature and extent of any impairment, and checked both sides of the intersection to make sure that and more importantly, could not render an opinion as to the other drivers saw and heard her. Thedos saw the plaintiff’s whether alcohol caused or contributed to cause the accident. car facing west in the left turn lane before Thedos drove through the red light. The plaintiff then made a left turn di- rectly in front of Thedos’ vehicle and the collision occurred. The plaintiff’s expert witness, Arnold Siegel, testified About the Author that Officer Thedos’ car was going 70 to 75 miles per hour at the time of impact. Siegel also testified that The plaintiff’s Joseph G. Feehan is a partner in the Peoria office of Heyl, car was going 15 to 20 miles per hour as she turned left. Royster, Voelker & Allen, where he concentrates his prac- tice in commercial litigation, products liability and personal The defendants sought to introduce the testimony of a injury defense. He received his B.S. from Illinois State board-certified pharmacologist, Dr. James O’Donnell, who University and his J.D. (Cum Laude) from the Northern Illinois University College of Law. Mr. Feehan is a mem- would have testified that a test of the plaintiff’s blood fol- ber of the ISBA Tort Law Section Council and is also a lowing the accident revealed that her blood-alcohol level was member of the Peoria County, Illinois State and American above .08 at the time of the accident. The defendants made Bar Associations. He can be contacted at [email protected] an offer of proof, which established that O’Donnell’s testi-
19 IDC Quarterly
Evidence and Practice Tips (Continued) Some courts have disallowed expert testimony us- The appellate court rejected the plaintiff’s argument and stated ing retrograde extrapolation to opine that a driver as follows: was under the influence at the time of the accident when there was no other evidence of intoxication. The cases plaintiff cites in support of this conten- (Citations omitted.) In those cases, however, the tion hold that evidence of alcohol consumption alone expert testified the driver’s blood-alcohol level at is inadmissible absent other supporting evidence of the time of the accident would have been less than intoxication. (Citations omitted.) In those cases, how- .08. (Citations omitted.) A blood-alcohol level be- ever, the only evidence of intoxication was evidence tween .05 to .08 does not give rise to a presumption of the parties’ consumption of alcohol. Here, there that the person is under the influence of alcohol ab- was evidence that Petraski’s blood-alcohol level was sent other evidence of intoxication. 625 ILCS 5/11- more than .08 at the time of the accident, supporting 501.2(b)(2). Here, the expert would have testified a presumption that she was under the influence. Petraski’s blood-alcohol level was over .08 at the time of the accident. We find the alcohol consumption evidence is rel- evant to the issue of Petraski’s contributory negli- We believe expert testimony that Petraski’s blood- gence. The plaintiff’s expert, Siegel, told the jury alcohol level created a presumption of intoxication Petraski accelerated as she turned, that there would was extremely probative of whether she was par- have been no accident if she had braked in the first tially at fault for the accident. This is particularly two seconds. The jury could have used O’Donnell’s true where the jury found her 25% negligent with- testimony as an explanation for Petraski’s conduct. out hearing any evidence of alcohol consumption or It would have provided the jury with a reason why intoxication. Id. at *8. Petraski turned left in front of an on-coming emer- gency vehicle, green arrow or not. Instead, plaintiff’s lawyer was left free to argue the defendants did not The Petraski court held that the trial “give any reason” why Petraski would have turned in front of Thedos’ car unless she had the green ar- court’s refusal to allow O’Donnell’s row. The defendants were not permitted to give a testimony regarding plaintiff’s blood- reason. Petraski, 2008 WL 588544 at *4. alcohol level at the time of the accident The plaintiff also argued that O’Donnell’s testimony lacked the necessary foundation to establish reliability. She was an abuse of discretion which argued that retrograde extrapolation was unreliable under these circumstances because O’Donnell admitted that he did necessitated a new trial. not know when, what, or how much the plaintiff drank, and he assumed that she was in the alcohol elimination phase The Petraski court held that the trial court’s refusal to (rather than the absorption phase) during the entire period allow O’Donnell’s testimony regarding plaintiff’s blood-al- after the accident. The Petraski court conducted a thorough cohol level at the time of the accident was an abuse of dis- examination of Illinois law regarding the reliability of retro- cretion which necessitated a new trial. grade extrapolation to estimate blood-alcohol level and found The Petraski decision is significant because it establishes that O’Donnell’s analysis was reliable, stating: that retrograde extrapolation is a generally reliable method of estimating a driver’s blood-alcohol level at the time of an We do not believe O’Donnell’s assumption that accident. The Petraski court also made it clear that evidence Petraski’s blood-alcohol level was in the elimina- of a blood-alcohol level of less than .08 is probably inadmis- tion phase when her blood was drawn is unwar- sible unless there is other evidence of intoxication such as ranted. The blood draw took place at least one and erratic driving, slurred speech, etc. Conversely, a blood-al- one-half hours after the collision, most probably cohol level of more than .08 is probably admissible, assum- longer than that. Id.at *7. ing that such evidence is accompanied by appropriate expert *** testimony.
20 Second Quarter 2008
a new standard of care, a method of attacking defense ex- perts, and a means of attaining admissions of liability by fact Health Law witnesses. Ultimately, never events might even provide an argument similar to the doctrine of res ipsa loquitur.
Res Ipsa? By: Roger R. Clayton and Jesse A. Placher Heyl, Royster, Voelker & Allen Under traditional standards, defendants can respond to Peoria allegations of negligence via expert testimony regarding the standard of care. However, consider a situation where a pa- tient falls and injuries result. Here, the healthcare facility might have directed the patient to stay in bed, provided a call What Every Litigator Needs to button within the patient’s reach, set the bed to the lowest position, and activated a bed alarm. No matter the level of Know About “Never Events” prudence, if the patient decides to get out of bed, thereby falling and suffering injuries, the facility will not receive History of Never Events payment for any resulting bills. Furthermore, the jury will hear that CMS, upon examination of falls in healthcare fa- The National Quality Forum (NQF), an advocacy group cilities, determined they are always preventable. If the fall focused on developing a national strategy for healthcare qual- was preventable, yet occurred, this answers the question of ity measurement, identified 28 adverse events now commonly liability for the jury. Consequently, never events will signifi- referred to as “never events.” This list of events was meant cantly impact the standard of care, essentially imposing the to bring order to adverse event reporting, which Illinois re- doctrine of res ipsa loquitur. quires. 410 ILCS 522/10-1 et seq. Such events are deemed (Continued on next page) preventable and are events that should never occur in the healthcare setting. The Leapfrog Group, a healthcare purchasing coalition, endorsed this list by providing public recognition to healthcare facilities that take responsibility when such an event occurs. About the Authors In order to receive such recognition, the facility must apolo- gize to those affected by the event, report the event to a re- Roger R. Clayton is a partner in the Peoria office of Heyl, porting agency, perform a root cause analysis, and waive all Royster, Voelker and Allen where he chairs the firm’s healthcare practice group. He also regularly defends phy- costs directly related to the event. sicians and hospitals in medical malpractice litigation. Mr. In an effort to decrease Medicare and Medicaid spend- Clayton is a frequent national speaker on healthcare issues, medical malpractice and risk prevention. He received his ing, the Centers for Medicare and Medicaid Services (CMS) undergraduate degree from Bradley University and law have since adopted a modified list of never events, includ- degree from Southern Illinois University in 1978. He is a member of the Illinois Association of Defense Trial Counsel (IDC), the Illi- ing: (1) object left in patient after surgery; (2) air embolism; nois State Bar Association, past president of the Abraham Lincoln Inn of Court, (3) blood incompatibility; (4) catheter-associated urinary tract President and board member of the Illinois Association of Healthcare Attor- neys, and past president and board member of the Illinois Society of Healthcare infection; (5) pressure ulcers; (6) vascular catheter-associ- Risk Management and co-authored the Chapter on Trials in the IICLE Medi- ated infection; (7) surgical site infection; and (8) hospital- cal Malpractice Handbook. acquired injuries, including those associated with falls. If just one of these conditions is present and did not exist upon ad- mission of the patient, no subsequent Medicare or Medicaid Jesse A. Placher is a 2007 Fall Associate in the Peoria payments will be paid to the hospital for any resulting bills. office of Heyl, Royster, Voelker & Allen. He received his undergraduate degree from the University of Virginia in NQF, Leapfrog, and CMS are seeking to improve 2004 and law degree from Southern Illinois University in healthcare quality and patient safety while decreasing Medi- 2007. During law school, he was a member of the SIU Trial Team and was awarded the Order of the Barristers in 2007. care and Medicaid spending. However, in doing so, they have Following graduation, he joined the firm’s Peoria office in provided plaintiffs’ attorneys with a new weapon against August 2007. healthcare facilities. Plaintiffs will likely use never events as
21 IDC Quarterly
Health Law (Continued) Also, as mentioned, a healthcare facility must apologize to those impacted by a never event in order to attain recogni- Impact on Expert Testimony tion from Leapfrog. While seemingly simple, an apology At some point during trial, the jury is likely to hear testi- could potentially impact a case in two very distinct ways. mony regarding never events and CMS standard of care with On one hand, the apology may serve to prevent lawsuits. regard to such events. Presumably, a plaintiff’s expert could Patients and their families might view such actions as an ap- be allowed to opine that CMS sets the standard of care, at propriate response to the incident, rather than a healthcare least with regard to its listed never events. However, even if facility that closes off all communications upon its occur- the defendant prevents the jury from hearing such testimony, rence. Furthermore, it may afford the opportunity to explain the defendant’s own experts will be subject to questions re- what happened so as to clear up any questions and minimize garding CMS standards of care on cross-examination. As an the desire to bring suit only to exact revenge upon or get expert on the standard of care, the expert will be forced to answers from the facility. address the conflicting standards. Thus, not only will the jury hear testimony regarding such standards, but it might impact the credibility of the defense expert in the eyes of the jury.
Admissions of Liability Emphasis should be placed on the fact
Presumably, healthcare facility administration will be that never events simply deal with made aware of never events and CMS standards regarding reimbursement, i.e., payment issues, such events. As such, during the deposition of an administra- tor, a plaintiff might simply ask whether the witness agrees not the standard of care. with the government’s determination that such acts are pre- ventable, or should never happen. If the witness responds affirmatively, such testimony could potentially result in an admission of liability. Regardless, the defense will find great difficulty convincing a jury otherwise. On the other hand, an apology may be viewed as an ad- mission of guilt. The patient and family, or even the jury, Solutions might view an apology as an indication that the facility or its staff did something wrong thereby necessitating an apology. Evidence of state hospital regulations, national hospital Illinois, however, is working to prevent an apology from be- accreditation standards, and hospital bylaws, although rel- ing viewed as an admission of guilt by implementing the Sorry evant, do not conclusively determine the standard of care. Works! Pilot Program Act. 710 ILCS 45/401. Darling v. Charleston Community Memorial Hospital, 33 Ill. Finally, in cases involving never events, a greater em- 2d 326, 332, 211 N.E.2d 253 (1965). Consequently, CMS phasis will be placed on admission records. Such records must policies are not the standard of care. Furthermore, although not be overlooked by defense counsel and witnesses must be it might be argued CMS standards will confuse the jury on prepared to address them and respond appropriately. the applicable standard of care and should thus be excluded entirely, CMS standards are likely to be deemed relevant. Conclusion Counsel should also consider obtaining an instruction from the court or utilizing IPI 60.01. We might continue to see quality of care as a method of Additionally, defendants must prepare witnesses for ex- regulating Medicare and Medicaid expenses. Consequently, amination regarding CMS standards. Witnesses should ac- the CMS list of never events might continue to grow and knowledge never events and CMS standards in order to ap- adopt more events listed by NQF. Such cases will become pear knowledgeable and maintain credibility. However, it increasingly difficult to defend. In preparation, significant must be asserted that CMS does not set the standard of care, emphasis must be placed on witness preparation regarding nor is there any law establishing such. Emphasis should be CMS standards associated with never events and the distinc- placed on the fact that never events simply deal with reim- tion between the standard of care and payment issues must bursement, i.e., payment issues, not the standard of care. be emphasized.
22 Second Quarter 2008
the broker to refer business to a paying insurer even if the policy and rates quoted by that insurer were not the most Commercial Law advantageous for the customer. The plaintiff alleged that these “kickbacks” inflated the cost of the insurance to consumers and created a conflict preventing the broker from acting in the customers’ best interest. By: James K. Borcia The trial court dismissed the count for breach of fidu- Tressler, Soderstrom, Maloney & Priess, LLP ciary duty on the basis that Section 2-2201 of the Illinois Chicago Code of Civil Procedure precludes claims for breach of fidu- ciary duty. The trial court dismissed the fraud claims on the basis that there was no allegation of actual damages in reli- ance on the alleged concealment. First District Revives As to the fiduciary duty count, the appellate court re- Contingent Commission jected the trial court’s finding that there was no fiduciary duty between the customer and the broker. The court accepted Class Action the plaintiff’s argument that its complaint fell within the Sec- tion 2-2201 for causes of action involving “the wrongful re- DOD Technologies v. Mesirow Insurance Services, Inc., tention or misappropriation” of money received as premi- et al., No. 1-06-3300, 2008 WL 423444 ums. The broker argued that the wrongful retention or mis- (1st Dist. February 14, 2007). appropriation “plainly means diverting funds intended to pay premiums for another wrongful purpose, such as placing In this case, the Illinois Appellate Court First District money received as premiums into a broker’s operating ac- recently reversed a trial court’s dismissal of a case involving count rather than into a premium trust account, or failing to contingent commissions paid to an insurance broker. The pay money received as a premium to the insurer.” DOD Tech- plaintiff brought a five count putative class action against its nologies, 2008 WL 423444 at *4. insurance broker, alleging that the broker received contin- The court noted that since the enactment of Section 2- gent commissions from insurers without informing the plain- 2201, the relationship between an insured and its broker con- tiff. The plaintiff’s complaint alleged claims for breach of tinues to be a fiduciary one. The appellate court relied on the fiduciary duty, consumer fraud, fraudulent concealment, un- fact that the plaintiff alleged that it provided the broker with just enrichment and an accounting. The broker moved to dis- confidential and proprietary information with the expecta- miss for failure to state a claim under Section 2-615 of the tion that the broker would seek the desired insurance at the Illinois Code of Civil Procedure. The trial court granted the lowest possible price. The plaintiff further alleged that the motion to dismiss the complaint in its entirety. The appellate undisclosed incentives caused the broker to refer business to court reversed in part, reinstating the claims for breach of a paying insurer even if policy and rates quoted by that in- fiduciary duty and unjust enrichment. surer were not the most advantageous for the customer. The The plaintiff alleged that it expected that its broker would court held that in interpreting a statute, it will assume that seek the desired insurance at the lowest possible price. Stan- the legislature did not intend an unjust result and that the dard industry practice is for consumers of insurance to make (Continued on next page) a single payment to the broker that includes both the insurer’s premium and the broker’s commission. The producer deducts the commission and forwards the premium to the insurer. The defendant in DOD Technologies allegedly received “contin- About the Author gent commissions” for its replacement of insurance for the James K. Borcia is a partner with the Chicago firm of plaintiff based on three factors: (1) the aggregate amount of Tressler, Soderstrom, Maloney & Priess, LLP, and is active business referred to the insurer paying the kickbacks, (2) the in the firm’s litigation practice with an emphasis on com- mercial and complex litigation. He was admitted to the bar “loss ratio” performance of the book of business referred to in 1989 after he received his J.D. from Chicago-Kent Col- that insurer, and (3) renewals. The plaintiff alleged that the lege of Law. Mr. Borcia is a member of the Chicago and broker did not disclose its receipt of the contingent commis- Illinois State Bar Associations, as well as the IDC and DRI. sions and that the undisclosed financial incentives caused
23 IDC Quarterly
Commercial Law (Continued) The court affirmed the dismissal of the fraud counts. With placement of policies that are not the most advantageous for respect to the consumer fraud claim, the court held that the the customer “is most certainly unjust”. Id. at *5. plaintiff failed to allege that it would have refused to use the The court further held that the placement of policies with defendant’s services if it had known of the contingent com- companies that were not the most advantageous for the con- missions or that it would have bargained for better insurance sumer constitutes “the wrongful misappropriation” of money prices while still using the defendant as a broker. The court received as premiums. Id. The court reasoned that the undis- accepted the defendant’s argument that the plaintiff failed to closed incentives were not what constituted the misappro- allege the omission of a material fact. The court found that it priation. Rather, as alleged in the complaint, the undisclosed was difficult to believe that a consumer would not rely on a incentives were what led the broker to place certain policies broker’s acceptance of contingent commissions in deciding without regard for the customer’s needs and in breach of its which broker to patronize or what insurance coverage to pur- fiduciary duty. The court held that a broker misappropriates chase. While the plaintiff alleged that it would have scruti- premiums within the terms of Section 2-2201 when it directs nized the broker’s bills had it known of the contingent com- a premium to an insurer, the price for coverage is not in the missions, it did not allege that the types or the amount of customer’s best interest, and the placement earns the pro- commissions paid to the defendant were material to the ducer undisclosed contingent incentives. The court held that plaintiff’s decision to purchase insurance coverage. There- Section 2-2201 of the Code did not preclude the plaintiff’s fore, while the plaintiff may have acted differently, the dif- claim for breach of fiduciary duty because the plaintiff came ference was of little consequence. within the exception in Section 2-2201(b) by alleging in its With respect to the fraudulent concealment count, the complaint that the defendant misappropriated certain premi- court found that the plaintiff did not allege that it actually ums by placing them with an insurer when the placement relied on anything. While the plaintiff had alleged that its was not in the best interest of the consumer. premiums were inflated, it did not allege that it would not have purchased its chosen insurance had it known of the con- tingent commissions.
The court found that it was difficult to believe that a consumer would not rely on a broker’s acceptance of contingent commissions in deciding which broker to patronize or what insurance coverage to purchase.
With respect to the unjust enrichment count, the court rejected the broker’s argument that the count should be dis- missed because a contract governed the relationship between the parties. The court noted that the complaint only alleged that the plaintiff retained the defendant and that the contract attached to the complaint was between the plaintiff and Hart- ford Insurance. The court held that under these circumstances, whether the specific contract concerned the same subject matter could not be determined.
24 Second Quarter 2008
The petitioner testified that when making deliveries to this location prior to the injury, he had seen individuals crawl- Workers’ Compensation Report ing out of dumpsters and rummaging through garbage in the alley behind the Jewel store where he was attacked. In the ten years prior to this occurrence, he stated that he had seen a victim of a stabbing, witnessed a theft from a truck, and By: Kevin J. Luther observed significant “police activity” in the area. He testi- Heyl, Royster, Voelker & Allen fied that he had no specific recollection of ever making a Rockford complaint about lack of security in this area to his employer prior to the incident. The employer presented the property manager of the condominium building that borders the alley, as well as em- Street Risk Found ployees of the employer, all of who testified that they were Compensable Under not aware of violence, criminal activity, or security problems in the area where the petitioner was attacked. One witness of Workers’ Compensation Act the employer testified that she was not personally aware of any other incidents involving an altercation or attack in the In Potenzo v. Illinois Workers’ Compensation Commis- alleyway. sion, 378 Ill. App. 3d 113, 881 N.E.2d 523 (1st Dist. 2007), At trial, the arbitrator found that the petitioner failed to the Workers’ Compensation Division of the Appellate Court establish that the injuries he sustained arose out of his em- considered a claim involving a traveling employee whose ployment with the employer, and therefore, benefits were duties required him to travel streets and unload trucks in ar- denied. The reviewing Workers’ Compensation Commission eas accessible to the public. The Illinois Appellate Court First affirmed the arbitrator’s decision, which was then affirmed District reversed a Workers’ Compensation Commission find- by the Circuit Court of Cook County. The appellate court ing that the claim was not compensable within the meaning reversed the finding of no compensability. of the Workers’ Compensation Act. An employee’s injury is compensable under the Work- The petitioner had been employed by Jewel Food Stores ers’ Compensation Act only if it arises out of and in the course as a truck driver since 1991. On the day of the incident, he of the employment. 820 ILCS 305/2 (West 1994). The peti- was making a delivery to a Jewel store located in Chicago. tioner sustained injuries while in the course of his employ- The loading dock for that store is located at the rear and ad- ment, so the appellate court focused on the “arising out of” jacent to an alleyway between the store building and a con- issue. For an injury to “arise out of” the employment, the dominium structure. origin of the injury must be in some risk connected with, or After waiting for another Jewel driver to unload a truck, incidental to, employment so as to create a causal connec- the petitioner backed his truck up to one of the hydraulic lifts tion between the employment and the accidental injury. See on the loading dock and began unloading. The petitioner tes- Caterpillar Tractor Co. v. Industrial Comm’n, 129 Ill. 2d. tified that he placed two pallets of items on the hydraulic lift (Continued on next page) platform and began to lower the device with a hand control when he felt someone grab his ankle. As he turned, he was hit in the back of the head and he immediately lost conscious- ness. The next thing the petitioner remembers is waking up About the Author in a hospital two days later. The petitioner testified that he did not know who attacked Kevin J. Luther is a partner in the Rockford office of Heyl, him or why he was attacked. Nothing was found missing Royster, Voelker & Allen where he concentrates his prac- tice in areas of workers’ compensation, employer liability, from the trailer that the petitioner was unloading. There was professional liability and general civil litigation. He also no damage to the truck or the trailer. The petitioner did tes- supervises the workers’ compensation practice group in the tify that after the occurrence, he was unable to locate his Rockford office. Mr. Luther received his J.D. from Wash- ington University School of Law in 1984. He is a member wedding ring or his watch, but admitted on cross-examina- of the Winnebago County, Illinois State and American Bar tion that he did not know if these items were taken by the Associations, as well as the IDC. unknown assailant.
25 IDC Quarterly
Workers’ Compensation Report (Continued) 52, 57, 451 N.E.2d 665 (1989). The appellate court confirmed that there are three types of risks that an employee might be Employment Law exposed to: (1) risks distinctly associated with the employ- ment; (2) risks that are personal to the employee; and (3) neutral risks that have no particular employment or personal By: Geoffrey M. Waguespack characteristics. See Illinois Institute of Technology Research Cremer, Kopon, Shaughnessy & Spina, LLC Institute v. Industrial Comm’n, 314 Ill. App. 3d 149, 731 Chicago N.E.2d 795 (1st Dist. 2000). All parties agreed that the petitioner was a “traveling employee” at the time of the occurrence. The petitioner ar- gued that as a traveling employee, his duties exposed him to Age Discrimination in “hazardous street injuries” and therefore he was not required Employment Act to establish that the risk of being attacked was peculiar to his employment, only that his employment exposed him to the U.S. Supreme Court Leaves the Door Open same risk as the general public. In support of the denial of for Admission into Evidence Complaints by benefits, the employer argued that injuries suffered by em- Non-Parties of Discriminatory Actions by ployees resulting from assaults are not compensable under Other Supervisors in an ADEA Case the Act if the petitioner cannot demonstrate a reason for the assault. See Schultheis v. Industrial Comm’n, 96 Ill. 2d 340, In Sprint/United Management Co. v. Mendelsohn, No. 449 N.E.2d 1341 (1983). However, the appellate court noted 06-1221, 2008 WL 495370 (U.S. Feb. 26, 2008), the plain- that Schultheis was inapplicable because it did not concern tiff, Ellen Mendelsohn, sued her former employer, Sprint/ an employee who was a “traveling employee” at the time of United Management Company (Sprint), alleging age discrimi- the incident. nation, in violation of the Age Discrimination in Employ- The appellate court determined that the undisputed evi- ment Act of 1967 (ADEA), 29 U.S.C. § 621 et seq. During dence in the case established that the petitioner was a travel- pre-trial motions, the trial court granted Sprint’s motion to ing employee whose duties required him to travel the streets exclude from evidence the testimony of other former Sprint and unload a truck in areas accessible to the public. The court employees who claimed that their supervisors had discrimi- concluded that the risk of being assaulted, although one to nated against them because of age. The appellate court re- which the general public is exposed, was a risk to which the versed and remanded with instructions to admit the testimony. claimant, by virtue of his employment, was exposed to a The United States Supreme Court granted certiorari on the greater degree than the general public. The appellate court issue of whether the Federal Rules of Evidence required the stated that there was no evidence in the case that would sup- admission of the testimony. Concluding that such evidence port an inference that the attack upon the claimant was based is neither per se admissible nor per se inadmissible, the Court on a purely personal motive. Finally, it noted that when the petitioner was assaulted, he was in the process of unloading his truck, which was an activity that was “reasonably fore- seeable” by the employer. About the Author Because the injury was caused by a neutral risk, the ap- pellate court determined that the Workers’ Compensation Geoffrey M. Waguespack is an associate with the law firm Commission finding was against the manifest weight of the of Cremer, Kopon, Shaughnessy & Spina, LLC, where he concentrates his practice in employment law and general evidence and therefore the claim should have been found tort litigation. Prior to joining that firm, Mr. Waguespack compensable. This decision by the appellate court will be served as the judicial law clerk to the Honorable Morton Denlow, Presiding Magistrate Judge for the United States used by the plaintiff’s bar as evidence that workers’ compen- District Court, Northern District of Illinois, and as a research sation liability for injuries involving traveling employees is staff attorney for the Appellate Court of Illinois, Second District. He earned his B.A. from the College of William & expanding. Mary in Virginia and his J.D. from Loyola University Chicago School of Law, where he was a member of a moot court team and the Executive Editor of Publications for the Loyola University Chicago Law Journal.
26 Second Quarter 2008
vacated the appellate court’s decision, and remanded the Mendelsohn and that their testimony was irrelevant to whether matter to the trial court to conduct the relevant inquiry in to Mendelsohn’s supervisor had terminated her because of her the admissibility of the evidence. age. The district court excluded the testimony, concluding Mendelsohn was employed in the Business Development that Mendelsohn could offer evidence from only those wit- Strategy Group of Sprint for approximately 13 years, until nesses who suffered adverse employment action based on a Sprint terminated her employment as part of an ongoing com- decision made by her supervisor and who had temporal prox- pany-wide reduction in force. She sued Sprint, alleging dis- imity to her. The appellate court, determining the district parate treatment based on her age. In support of her claim, court’s decision to be an application of a per se rule that evi- she sought to admit testimony of five other former Sprint dence from employees with other supervisors is irrelevant to employees who claimed that they had been discriminated proving discrimination under the ADEA, found the evidence against because of age. None of the five former employees relevant and not unduly prejudicial. The appellate court re- had worked in the same group as Mendelsohn, none had versed and remanded for new trial. worked under the supervisors in her chain of command, and The Supreme Court held that the appellate court erred in none had heard any discriminatory remarks made by those concluding that the district court applied a per se rule, and supervisors. that the proper procedure would have been to remand the case to the district court for clarification. Whether witness testimony regarding discrimination by other supervisors is relevant in a particular ADEA case is fact based and is de- pendent upon many factors, including how closely the evi- Whether witness testimony regarding dence is related to the plaintiff’s situation and theory of the discrimination by other supervisors is case. Therefore, such evidence is neither per se admissible nor per se inadmissible to support a claim of discrimination relevant in a particular ADEA case is under the ADEA.
fact based and is dependent upon U.S. Supreme Court Holds that Under the ADEA, many factors, including how closely Informal Filings that Request Action by the EEOC Are Sufficient to Constitute the “Charge” Required the evidence is related to the plaintiff’s Before Commencing a Lawsuit
situation and theory of the case. In Federal Express Corporation v. Holowecki, No. 06- 1322, 2008 WL 508018 (U.S. Feb. 27, 2008), 14 current and former FedEx couriers over the age of 40 sued the company, seeking to represent a class of all couriers over 40 years old who were subject to alleged acts of age discrimination by Instead, three of the witnesses claimed to have heard other FedEx. The allegations arose as a result of two programs that Sprint supervisors or managers make remarks denigrating the company implemented in order to increase productivity. older employees. One alleged that Sprint’s intern program The district court dismissed one plaintiff, finding that the facilitated age discrimination, and that she had seen a spread- documents that she had filed with the EEOC did not consti- sheet suggesting the consideration of age in layoff decisions. tute the prerequisite “charge” to filing a federal lawsuit. The Another claimed that he had received an unwarranted nega- appellate court reversed, and the United States Supreme Court tive evaluation, had been “banned” from working at Sprint affirmed, holding that any filing that requests the EEOC to because of his age, and had seen another Sprint employee take remedial action to protect an employee’s rights or to being harassed because of her age. The final witness claimed otherwise settle a dispute between the employer and the em- that Sprint had required him to obtain permission before hir- ployee constitutes a “charge” for the purposes of the Age ing anyone over 40 years old, that he was terminated and Discrimination in Employment Act of 1967 (ADEA), 29 replaced by a younger employee, and that Sprint had rejected U.S.C. § 621 et seq. his subsequent employment applications. In 1994 and 1995, FedEx, which provided mail pickup Sprint moved in limine to exclude the witnesses, argu- and delivery services to worldwide customers, initiated two ing that the witnesses were not “similarly situated” to (Continued on next page)
27 IDC Quarterly
Employment Law (Continued) 905 (1997), the EEOC was entitled to deference not only programs that it claimed were designed to make its 45,000- with respect to its reasonable interpretations of a statute when strong courier force more productive. The two programs tied it issues regulations, but also when it adopts a reasonable the couriers’ compensation and employment to certain per- interpretation of its own regulations. An agency’s position is formance-based benchmarks, including the number of stops accepted unless it is plainly erroneous or inconsistent with a courier makes per day. The plaintiff couriers alleged that the regulation. Therefore, the Court accepted the EEOC’s the two programs were veiled attempts to force older work- position that the regulations do not identify all necessary ers out of the company before they would be eligible to re- components of a charge. Consequently, a permissible read- ceive retirement benefits. ing was that the regulations identify the procedures for filing Patricia Kennedy, the plaintiff whose suit was the sub- a charge but do not identify the full contents that a charge ject of the Supreme Court’s decision, had filed an “Intake document must contain. The regulations, however, are silent Questionnaire” with the EEOC, known as Form 283, to which on the question of what additional elements are required for she attached a signed affidavit describing the alleged dis- a charge. criminatory employment practices in greater detail. The The Court held that the proper test for determining EEOC did not treat the filing as a “charge,” and never in- whether a filing with the EEOC constitutes a “charge” is formed FedEx of the allegations. Without filing anything else whether the filing, taken as a whole, should be construed as with the EEOC, Kennedy later filed suit against FedEx. FedEx a request by the complainant for the EEOC to take whatever moved to dismiss her case, because she had failed to file a action is necessary to vindicate the employee’s rights. Al- charge of discrimination with the EEOC at least 60 days be- though the EEOC put forth this test in its amicus brief and fore filing suit, as required by 29 U.S.C. § 626(d). The dis- had propounded the test in various internal directives that trict court agreed, and dismissed the case. On appeal, the had been issued over the years, the Court found deferring to appellate court reversed. the EEOC on this point under the Auer principles unneces- The Supreme Court granted certiorari to determine sary. Instead, the Court relied on the less deferential stan- whether Kennedy’s filing at the EEOC constituted the requi- dard set forth in Skidmore v. Swift & Co., 65 S.Ct. 161 (1944), site “charge.” The Court initially explored the question of whereby the EEOC is entitled to a “measure of respect,” given what a charge is, as the ADEA uses the term. The Court found the agency’s body of experience and informed judgment to that the ADEA does not define the term “charge,” and the which courts and litigants may properly resort for guidance. EEOC regulations fall short of a comprehensive definition Under that standard, the Court considers whether the EEOC of the term. has consistently applied its position. One regulation states that a “charge shall mean a state- Although the Court found some inconsistencies in the ment filed with the [EEOC] by or on behalf of an aggrieved EEOC’s application of its policies, the Court stated that some person which alleges that the named prospective defendant deficiencies are unavoidable when the agency processes over has engaged in or is about to engage in actions in violation of 175,000 inquiries per year. More importantly, the Court was the [ADEA].” 29 CFR § 1626.3. Another regulation identi- drawn to the need to define “charge” in a way that would fies five pieces of information that should be included in a allow the EEOC to fulfill its distinct statutory functions of charge: (1) and (2) the names, addresses, and telephone num- enforcement and education under the antidiscrimination laws. bers of the employee and the charged entity; (3) a statement Thus, the Court concluded that a “charge” that requires noth- of facts that describes the alleged discriminatory act; (4) the ing more than identifying information and a statement of the number of employees of the charged entity; and (5) a state- action taken against the employee would hamper the EEOC’s ment as to whether the employee has initiated state proceed- educational function by deterring employees who merely wish ings. Id. § 1626.8(a). But the next subsection seemingly quali- to seek information about their rights from filing such in- fies these requirements by stating that a charge is “sufficient” quiries, a function the Court found was the EEOC’s primary if it merely is “in writing and***name[s] the prospective re- task. spondent and***generally allege[s] the discriminatory Therefore, under the Skidmore principles, the Court con- act(s),” thereby satisfying the minimum requirements of § cluded as follows: “In addition to the information required 1626.6. Id. § 1626.8(b). The EEOC, however, in an amicus by the regulations, i.e., an allegation and the name of the brief to the court, argued that not all documents that satisfy § charged party, if a filing is to be deemed a charge it must be 1626.6 are “charges.” reasonably construed as a request for the agency to take re- The Court stated that, under Auer v. Robbins, 117 S. Ct. medial action to protect the employee’s rights or otherwise
28 Second Quarter 2008
settle a dispute between the employer and the employee.” Holowecki, 2008 WL 508018, at *9. Notably, the Court men- tioned the fact that some courts of appeals have referred to a “manifest intent” test, under which a filing to be deemed a charge must demonstrate the complainant’s intent to have the EEOC initiate its investigatory and conciliatory processes. The Court accepted that formulation, so long as it means that the filing must be examined from the standpoint of an objec- tive observer to determine whether, by a reasonable construc- tion of its terms, the complainant has requested the EEOC to activate its machinery and remedial processes. The Court noted that its ruling could lead to an expan- sion of the range of documents that might be classified as “charges,” but that the result was consistent with the design and purpose of the ADEA, noting that pro se filings now might be the rule and not the exception. The Court, however, did encourage the EEOC to clarify its regulations on this point. On a precautionary note, the Court warned employees and their counsel to be careful not to apply rules under any one particular anti-discrimination statute to a different stat- ute without careful and critical examination, given the pro- cedural differences among the various acts. Finally, the Court addressed the specific filings by Kennedy. The Court concluded that the Intake Form alone would not have been insufficient to constitute the requisite “charge.” That form, however, coupled with the attached six- page affidavit, which asked the EEOC to “[p]lease force Fed- eral Express to end their age discrimination plan so we can finish out our careers absent the unfairness and hostile work environment created within their application of [the two pro- grams],” was sufficient to constitute a request for the EEOC to act, and thus to make the entire filing a “charge.” Holowecki, 2008 WL 508018, at *12. Justice Thomas, joined by Justice Scalia, dissented. They argued that the Court’s definition of “charge” was broader than the ordinary meaning of the term, and its malleability effectively absolved the EEOC of its obligation to adminis- ter the ADEA according to discernible standards. Moreover, they averred, the conclusion that Kennedy’s filings consti- tuted a “charge” was counterintuitive, given the fact that the EEOC did not assign a charge number, notify the employer of the allegations, or commence enforcement proceedings.
29 IDC Quarterly
seeking excess coverage is known as “horizontal exhaustion.” Id. Absent horizontal exhaustion, there is nothing in the tar- Insurance Law geted tender case law that explicitly limits a targeted tender to primary coverage. Prior to the recent decision in Kajima, the Illinois Su- preme Court had not ruled on whether targeted tender trumps By: Seth Lamden horizontal exhaustion (i.e. an insured can target an excess Howrey LLP policy even if primary coverage remains available) or hori- Chicago zontal exhaustion trumps targeted tenders (i.e. an insured must exhaust all primary coverage prior to obtaining coverage under any excess policy). The Kajima court found the latter to be true and held that the targeted tender doctrine does not Kajima v. St. Paul: supersede the Illinois horizontal exhaustion doctrine. Illinois Supreme Court Clarifies Interplay Between Targeted Tender Horizontal Exhaustion and Under Illinois law, an insured that is entitled to coverage under more than one insurance policy may select which in- Targeted Tender surer must provide coverage and may instruct the other in- surer not to provide coverage. In the construction context, Introduction for example, property owners often find themselves entitled to a defense and indemnification as a named insured on their For more than 15 years, an Illinois insured has had the own primary CGL policy and also as an additional insured right to seek coverage under any triggered primary insur- on their contractor’s primary CGL policy. Illinois courts have ance policy, even where other coverage remains available. held that an insured in this situation is entitled to select or The “selective tender” or “targeted tender” doctrine is a rule “target” which primary insurer must provide coverage. See recognized by Illinois courts whereby an insured that is cov- Institute of London Underwriters, 234 Ill. App. 3d at 73 (prop- ered by multiple concurrent polices has the right to choose erty owner was entitled to select whether its own insurer or which insurer will defend and indemnify it with regard to a contractor’s insurer was obligated to provide a defense and specific claim. See John Burns Constr. Co. v. Indiana Ins. indemnity). Co., 189 Ill. 2d 570, 574, 727 N.E.2d 211 (2000); Institute of From the perspective of a primary insurer, the signifi- London Underwriters v. Hartford Fire Ins. Co., 234 Ill. App. cance of the Illinois targeted tender rule set forth in London 3d 70, 73, 599 N.E.2d 1311 (1st Dist. 1992). Targeted tender Underwriters and its progeny is that when an insured selects has been applied in the context of concurrent primary poli- which insurer is not obligated to provide a defense, the de- cies as well as consecutive triggered policies. See Marker fending insurer is barred from seeking equitable contribu- Associates v. Pekin Insurance Co., 318 Ill. App. 3d 1137, tion from the non-defending insurer. Id. From the perspec- 743 N.E.2d 1078 (1st Dist. 2001). Prior to Kajima Construc- tive of the insured, the significance of the rule is that an in- tion Services, Inc. v. St. Paul Fire and Marine Inc. Co., 227 Ill.2d 102, 879 N.E.2d 305 (2007), Illinois courts had not directly addressed whether an insured could target an excess policy without first exhausting all available primary cover- About the Author age. Seth Lamden is a partner with Howrey LLP. Mr. Lamden Complicating the issue of whether an insured can target focuses his practice on representing and counseling poli- an excess policy when primary coverage remains is the tenet cyholders in connection with a wide range of insurance coverage disputes, including those involving professional of Illinois law that an insured must exhaust all primary cov- liability, products liability, intellectual property, construc- erage prior to obtaining coverage under an excess policy. See tion defects, class actions, environmental liability, asbes- tos and first-party property claims. In addition to litiga- United States Gypsum Co. v. Admiral Ins. Co., 268 Ill. App. tion, he regularly consults with corporate policyholders 3d 598, 652-53, 643 N.E.2d 1226 (1st Dist. 1994). The rule on risk management issues. that an insured must exhaust all primary coverage prior to
30 Second Quarter 2008
sured may wish to forgo coverage under its own CGL policy of any obligation to Kajima with respect to the underlying to avoid an increase in premiums or risk policy cancellation. action, thereby making Kajima’s insurance policy no longer See Cincinnati Cos. v. West American Ins. Co., 183 Ill. 2d “available.” Id. Because Kajima’s insurance policy was no 317, 326, 701 N.E.2d 499 (1998). longer available, Kajima contended that the subcontractor’s primary and excess insurers were solely responsible for the Horizontal Exhaustion defense and indemnification of Kajima in the underlying ac- tion and that Kajima’s own insurance policy would not be With few exceptions, outside of the targeted tender con- implicated until both the primary and excess policies issued text, Illinois courts have held that an insured must exhaust by St. Paul were exhausted (i.e., vertical, as opposed to hori- all available primary coverage before it is entitled to any ex- zontal, exhaustion). cess coverage. See, e.g., Outboard Marine Corp. v. Liberty Mut. Ins. Co., 283 Ill. App. 3d 630, 670 N.E.2d 740, 219 (2nd Dist. 1996); Missouri Pacific R. Co. v. Inter’l. Ins. Co., 288 Ill. App. 3d 69, 679 N.E.2d 801, (2nd Dist. 1997). In these decisions involving long-tail losses, the court held that The court noted that prior Illinois the insured was not entitled to any excess coverage until all primary insurance policies (including any applicable self-in- targeted tender decisions were not on sured retention) were exhausted. point because they did not involve the Illinois law was unclear as to whether an insured could target an excess policy without first exhausting all primary situation where an insured sought to coverage if it deselected its other primary insurers, as tar- geted tender does not require exhaustion of all primary cov- target an excess policy prior to erage and, to the contrary, allows an insured to select which exhausting primary coverage. primary policies would provide coverage.
Kajima v. St. Paul
In Kajima Construction Services, Inc., the court consid- The Illinois Supreme Court rejected Kajima’s argument ered whether the appellate court “correctly held that targeted and held that that the concept of horizontal exhaustion ap- tender does not supersede horizontal exhaustion in the con- plied to targeted tender situations. The court based its hold- text of primary and excess insurance.” Kajima, 879 N.E.2d ing, in part, on the premise that horizontal exhaustion is not at 312. The court noted that prior Illinois targeted tender de- limited to long-tail claims spanning multiple policy periods cisions were not on point because they did not involve the and that excess coverage, by its nature, is excess to all pri- situation where an insured sought to target an excess policy mary policies. Id. at 313 (citing United States Gypsum Co., prior to exhausting primary coverage. Id. at 313. 268 Ill. App. 3d at 653 [an excess policy is excess “to all The insured in Kajima entered into a subcontract by triggered policies, regardless of whether they extend over which the subcontractor named Kajima, the general contrac- multiple periods or only one”] (emphasis in original)). Cit- tor, as an additional insured on its primary and excess CGL ing earlier Illinois decisions requiring horizontal exhaustion policies. Id. at 308. When Kajima was sued in an action in- in the context of long-tail exposures, the court made clear volving the subcontractor’s work, it attempted to target the that horizontal exhaustion is based on the difference between subcontractor’s primary and excess CGL policies and forgo primary and excess insurance and that given the clear dis- its own CGL coverage. Id. tinctions between primary and excess insurance coverage, In a subsequent insurance coverage action, Kajima ar- the court was unwilling to extend the targeted tender doc- gued that pursuant to the targeted tender rule, it had the right trine to require vertical exhaustion of both primary and ex- to tender its defense and indemnification in the underlying cess coverage limits before all primary insurance available case to its subcontractor’s primary and excess insurers with- to the insured, including any deselected insurance, has been out any participation by its own primary insurer. Id. at 245. exhausted. Id. at 313 -314. As the Kajima court noted, “to Kajima took the position that its own insurance policy was require one insurer to vertically exhaust its primary and ex- “deselected” and its primary insurer therefore was relieved (Continued on next page)
31 IDC Quarterly
Insurance Law (Continued) cess coverage limits before all primary insurance available to the insured has been exhausted” would “eviscerate the dis- Medical Malpractice tinction between primary and excess coverage.” Id. at 314. Relying heavily on the distinction between primary and excess coverage, the court held that the “better rule” is that By: Edward J. Aucoin, Jr. targeted tender applies where concurrent primary insurance Pretzel & Stouffer, Chartered coverage exists for additional insureds, but when the defense Chicago and indemnity costs exceed the primary limits of the targeted insurer, the deselected insurer or insurers’ primary policy also must provide coverage before the insured can seek coverage Illinois Supreme Court under any excess policy. Expands the “Relation Back” Practical Implications Doctrine in Medical Kajima makes clear that when more than one primary Malpractice Causes policy applies to a loss, the insured must exhaust all avail- able primary insurance before it is entitled to any excess cov- The Illinois Supreme Court recently handed down a de- erage. Excess insurers therefore only may be “targeted” by cision in a case where the primary issue was whether allega- an insured after such exhaustion occurs. North River Ins. Co. tions of medical negligence in a new count of an amended v. Grinnell Mut. Reinsurance Co., 369 Ill. App. 3d 563, 860 complaint, filed after the applicable statute of limitations N.E.2d 460 (1st Dist. 2006). As such, additional insureds no expired, related back to the timely filed previous complaints longer can expect vertical exhaustion of the named insured’s under Section 2-616(b) of the Code of Civil Procedure. 735 primary and excess coverage without first exhausting their ILCS 5/2-616(b). While it may seem like a routine issue, the own primary policies. An additional insured that does not court’s decision expanded the reach of the relation back doc- want to implicate its own insurance coverage is limited to trine in medical malpractice actions and clarified the docu- the policy limit of the named insured’s primary policy be- ments and evidence that may be used to demonstrate notice cause the named insured’s excess coverage will be unavail- by the defendant. able prior to the exhaustion of all available primary cover- In Porter v. Decatur Memorial Hospital, No. 104441, age. For losses likely to exceed the policy limit of another 2008 WL 217204 (Ill.S.Ct. Jan. 25, 2008), the plaintiff was insured’s primary CGL coverage, the additional insured involved in an automobile accident on January 12, 2001, in should notify its primary insurer of the loss to avoid poten- which he suffered a spinal cord injury and was brought to tially losing the right to excess coverage. the emergency room of Decatur Memorial Hospital (the Hos- If an additional insured deselects its primary insurer or pital). His neurological functions were monitored for the first declines to provide notice of a suit, under Kajima, it will be 37 hours and Dr. Marie Long operated upon him on January limited to the named insured’s primary limits. There is noth- 13, 2001. ing in Kajima that suggests that an additional insured cannot target the named insured’s excess insurer after all primary About the Author coverage is exhausted. The First District has ruled, in a case decided after the appellate court’s decision in Kajima but Edward J. Aucoin, Jr. is an associate in the Chicago firm of Pretzel & Stouffer, Chartered. He has over nine years of before the Illinois Supreme Court’s decision, that the named experience in medical malpractice defense, commercial liti- insured’s excess insurer can be targeted after all primary cov- gation, and contract litigation practice. Mr. Aucoin’s sub- stantial client base includes private hospitals and medical erage is exhausted. Id. practice groups, physicians and other medical profession- als, and national commercial corporations. He has exten- sive experience in preparing complex litigation for trial, and has second-chaired medical malpractice trials in Cook County and DuPage County. Mr. Aucoin received his B.A. from Loyola University of New Or- leans and his J.D. from Loyola University of New Orleans School of Law. He is also a member of the IDC.
32 Second Quarter 2008
The plaintiff filed his original complaint on March 25, believed that the allegations against the Hospital in the pre- 2002, naming Dr. Oliver Dold as a defendant and the Hospi- vious complaints were centered exclusively on the nurses’ tal as a respondent in discovery. The complaint alleged that failure to conduct neurological checks and not the Dr. Dold improperly ordered that the plaintiff’s cervical col- radiologist’s negligent interpretation of the CT scan. Id. lar and spine board be discontinued, failed to obtain a timely MRI scan on January 12, 2001, and failed to appreciate de- creasing blood pressure and leg function as signs and symp- toms of further spinal injury. According to the appellate court, the During her deposition on September 9, 2002, Dr. Long stated that when looking at the plaintiff’s January 12, 2001 plaintiff’s attempt to define “same CT scan on January 13, 2001, she noticed that there was “a fracture to C5,” but she did not think that it was significant transaction or occurrence” as the and the fracture did not explain the neurological deficits in the patient that day. Porter, 2008 WL 217204, at *2. Dr. Long entire course of events from the time also testified that the proper procedure to diagnose a disc he was admitted into the hospital was injury is an MRI. Id. On January 6, 2003, the plaintiff filed his first amended too broad. complaint, adding the Hospital as a defendant, and alleging that hospital personnel failed to perform thorough neurologi- cal checks of the plaintiff every hour as ordered by Dr. Dold and adequately record and report those checks to the neuro- The plaintiff appealed the trial court ruling and the ap- surgeon. On June 21, 2004, the plaintiff filed a motion for pellate court affirmed. Porter v. Decatur Memorial Hospi- leave to file a second amended complaint, which was granted tal, 372 Ill. App. 3d 310, 867 N.E.2d 1049 (4th Dist. 2007). over objection on August 10, 2004. In support of the motion, According to the appellate court, the plaintiff’s attempt to the plaintiff attached a radiology report of the CT Scan and define “same transaction or occurrence” as the entire course the discovery deposition of Dr. Leon Sykes, Jr., an associate of events from the time he was admitted into the hospital professor of surgery, taken on January 21, 2004, who stated was too broad. Porter, 372 Ill. App. 3d at 319. that two fractures shown on the CT Scan are “very evident.” The plaintiff’s argument before the supreme court was Id. at *3. Dr. Sykes further testified that the misreading of the same as in the trial and appellate courts, namely that the the CT Scan affected the entire management of the plaintiff, phrase “same transaction or occurrence” in Section 2-616(b) that the C-collar should not have been removed and that an meant “the treatment he received for his back injury in the MRI should have been done early on to see where the spinal Hospital from the time of his admission on the morning of cord injury was occurring. Id. January 12, 2001, until the surgery performed by Dr. Long The second amended complaint added a new allegation on the evening of January 13, 2001. Porter, 2008 WL 217204, against Dr. Dold, alleging that he failed to recognize a frac- at *5. In response, the Hospital argued that Count III sought ture of the cervical spine on the CT Scan, and added a new to add a new party with new claims against that party, and count against the Hospital, alleging that the Hospital was li- that there was nothing in the prior pleadings that would indi- able as an apparent principal for the radiologist, Dr. Gordon cate that the Hospital should have been on notice that the Cross, who failed to properly interpret the CT scan and dis- plaintiff might eventually seek to amend his complaint to cover the cervical fractures. assert a claim against the Hospital based on Dr. Cross’ read- The Hospital filed a motion to dismiss the apparent ing of the CT Scan. Id. at *6. The Hospital further argued agency count of the second amended complaint pursuant to that the plaintiff was simply selecting an arbitrary time inter- Section 619, arguing, as it had in opposition to the motion val of a hospital stay and claiming that this is a transaction or for leave to file, that it was barred by the statute of limita- occurrence. Id. tions and that it did not relate back under Section 2-616(b). The supreme court stated that the purpose of the rela- The trial court agreed and found that the Hospital had not tion-back doctrine of Section 2-616(b) is to preserve causes been apprised of facts concerning the alleged medical mal- of action against loss by reason of technical default unre- practice of Dr. Cross before the running of the statute of limi- lated to the merits. Id., citing Bryson v. News America Publi- tations, either by the allegations of the previous complaints or by the depositions and exhibits. Id. at *3. The trial court (Continued on next page)
33 IDC Quarterly
Medical Malpractice (Continued) ral proximity and in the general character of the sets of fac- cations, Inc., 174 Ill. 2d 77, 106-07, 672 N.E.2d 1207 (1996). tual allegations and where the facts are all part of the events Courts should therefore liberally construe the requirements leading up to the originally alleged injury. Id. at *9. of Section 2-616(b) to allow resolution of litigation on the Applying this test to the facts in Porter, the court found that language used by the plaintiff in the timely filed first merits and to avoid elevating questions of form over sub- amended complaint, which identified the Hospital personnel stance. Bryson, 174 Ill. 2d at 106. The court in Porter ex- treating plaintiff “as including nurses, aides, attendants and plained that the rationale behind the “same transaction or others,” put the Hospital on notice that the plaintiff was as- occurrence” rule is that a defendant is not prejudiced if his serting negligent treatment by the employees and agents of attention was directed, within the time prescribed or limited, the Hospital in failing to appreciate and report diminishing to the facts that form the basis of the claim asserted against neurological status. Id. The court then concluded that allega- him, and that a court should consider the entire record, in- tions in the new count of the second amended complaint that cluding depositions and exhibits, to determine whether the Dr. Cross misread and misinterpreted the CT Scan and as a defendant had such notice. Porter, 2008 WL 217204, at *6, result, the plaintiff’s diminishing neurological function went citing Boatmen’s National Bank of Belleville v. Direct Lines, undiagnosed and untreated, have a “sufficiently close rela- Inc., 167 Ill. 2d 88, 102, 656 N.E.2d 1101 (1995) and Wolf v. tionship” to show that the later allegation grew out of the Meister-Neiberg, Inc., 143 Ill. 2d 44, 46, 570 N.E.2d 327 same transaction or occurrence set up in the earlier one. Id. (1991). While acknowledging that its prior decisions construing Section 2-616(b) are not “particularly close factually to the case” at issue, the court found that Zeh v. Wheeler, 111 Ill. 2d According to the court, the two 266, 489 N.E.2d 1342 (1986), contained the most compre- allegations were part of the same hensive discussion of the “same transaction and occurrence” language and that its analysis was instructive. Porter, 2008 events leading up to the same ultimate WL 217204, at *7. The court in Zeh noted the Illinois courts’ injury for which damages are sought historical shift in focus from the identity of the cause of ac- tion to the identity in the occurrence or transaction, and noted and were closely connected in both that the current practice act is “bottomed on the belief that if the defendant has been made aware of the occurrence or trans- time and location. action which is the basis for the claim, he can prepare to meet plaintiff’s claim, whatever theory it may be based on.” According to the court, the two allegations were part of Zeh, 111 Ill. 2d at 279. the same events leading up to the same ultimate injury for The court in Porter also found it significant that Zeh which damages are sought and were closely connected in looked to federal law for guidance. The court stated that: both time and location. They were also similar in character Under both Illinois and federal law, there is no ques- and general subject matter, as they involved allegations of tion that relation back is appropriate where a party medical malpractice that resulted in failure to appreciate the seeks to add a new legal theory to a set of previ- plaintiff’s diminishing neurological status. The court ex- ously alleged facts. . . It is also clear that an amend- plained, “the Hospital should have been aware that this would ment which states an entirely new and distinct claim include any procedure or test — including a CT scan — per- for relief based on completely different facts will formed by agents or employees of the Hospital that might not relate back. Porter, 2008 WL 217204, *8. have impacted their ability to appreciate and report on the plaintiff’s diminishing neurological status in the critical hours Most importantly, the court found, “[b]etween these two of January 12, 2001, leading up to the plaintiff’s surgery the clear principles, however, is a grey area where courts have next day.” Id. allowed relation back when amendments have added new The court rejected the Hospital’s argument that it had no factual allegations that can be characterized as falling within notice from the original or first amended complaint that the the general ‘transaction’alleged in the original complaint.” plaintiff intended to rely on the CT Scan, stating such an ar- Id. The court ruled that new factual additions will be consid- gument takes too narrow a view of the “same transaction or ered to relate back where there is a “sufficiently close rela- occurrence” language and ignores the “grew out of” language tionship” between the original and new claims, both in tempo- of Section 2-616(b), as well as the additional proviso that
34 Second Quarter 2008
relation back may be appropriate “even though the original pleading . . . failed to allege the performance of some act or the existence of some fact.” Id. at *10. Appellate Practice Corner The court then cited Huntoon v. Pritchard, 371 Ill. 36, 20 N.E.2d 53 (1939) as support for its reasoning. In Huntoon, the court, in finding that new allegations related back, stated that “[t]he facts alleged in the amended declaration were sim- By: Brad A. Elward ply a more particular statement of the facts alleged in the Heyl, Royster, Voelker & Allen original declaration, and it is quite apparent that they arose Peoria out of the same occurrence, although as first alleged they may have been too general.” Huntoon, 371 Ill. at 43. The Porter court found that, like the allegations in Huntoon, Count III of the plaintiff’s second amended com- Evaluating Your Case plaint, which alleged for the first time Dr. Cross’ improper for Appeal reading of the CT scan, “was an amplification that grew out of the earlier allegation about failing to report diminishing neurological function, both of which arose out of the same So, the circuit court denied your fabulously written and transaction or occurrence” and thus, “the Hospital had suffi- well-documented summary judgment, the case has proceeded cient notice of the new allegations and was not prejudiced to trial, and the jury entered a large verdict for your oppo- thereby.” Porter, 2008 WL 217204, at *10. With that find- nent. Your client is now obligated to pay $2 million in dam- ing, the court reversed the decisions of the appellate and trial ages. You have 30 days to determine whether your client courts, and remanded the case to the trial court. should pay the award or contest it on appeal. On another file, The Illinois Supreme Court’s decision in Porter v. this one a breach of contract claim, the court dismissed your Decatur Memorial Hospital leads to some intriguing ques- case on your opponent’s motion to dismiss and denied your tions for medical malpractice defense counsel. Does the request for leave to amend the already twice amended com- court’s adoption of the sufficiently-close-relationship test for plaint. Each of these scenarios presents a different set of con- relation back of pleadings in medical malpractice cases have siderations as far as how to approach the appeal. Hopefully any limits? Clearly, a change in the status of the party against this overview will provide a better understanding of what whom the new allegations were made from actual principal should be done before recommending an appeal for the case. to apparent principal did not affect the court’s adoption of In the perfect scenario, analysis of the potential appeal- the sufficiently-close-relationship test. Since a hospital can ability of the case should start early in the litigation, or at a now be faced with potential liability for the acts of indepen- minimum, as soon as a ruling surfaces that has significant dent physicians after the expiration of the statute of limita- appellate potential. However, in most cases, evaluation of tions, can hospital attorneys speak ex parte with any physi- appeal options does not begin until judgment is rendered or cian whose involvement meets the sufficiently-close-relation- entered, whether via a dispositive order or a jury verdict. For ship test pursuant to Morgan v. County of Cook, 252 Ill. App. those situations, the following matters should be considered 3d 947, 625 N.E.2d 136 (1st Dist. 1993)? Or should counsel in the overall appellate evaluation. move courts for bills of particulars under 735 ILCS 5/2-607, (Continued on next page) as an attempt to verify at the pleading stage exactly what claims are being made, which Hospital personnel are being referred to by the use of others, and limit any future relation back? Should depositions be approached differently since the About the Author testimony can form the basis for notice to defendants under Brad A. Elward is a partner in the Peoria office of Heyl, the relation back doctrine, even though the deposition oc- Royster, Voelker & Allen. He practices in the area of appel- curs after the expiration of the statute of limitations (Dr. Sykes late law, with a sub-concentration in workers’ compensa- tion appeals and asbestos-related appeals. He received his testimony occurred one year after the statute of limitations)? undergraduate degree from the University of Illinois, Perhaps the court’s decision in Porter v. Decatur Memo- Champaign-Urbana, in 1986 and his law degree from South- rial Hospital will not have a substantial practical effect on ern Illinois University School of Law in 1989. Mr. Elward is a member of the Illinois Appellate Lawyers Association, the relation back doctrine in medical malpractice cases. But the Illinois State, Peoria County, and American Bar Associations, and a mem- its holding surely does not discourage plaintiffs’ counsel from ber of the ISBA Workers’ Compensation Section Counsel. trying to push the boundaries of the doctrine farther.
35 IDC Quarterly
Appellate Practice Corner (Continued) there is some evidence in the record to support it. An abuse of discretion occurs when no reasonable per- Import of the Post Trial Motion son would adopt the view taken by the lower tribunal. Check v. Clifford Chrysler-Plymouth of Buffalo Grove, Inc., 342 Ill. A post trial/post judgment motion is a critical part of the App. 3d 150, 794 N.E.2d 829 (1st Dist. 2003). A trial court appeal evaluation process. See 735 ILCS 5/2-1202, 2-1203. abuses its discretion when it acts arbitrarily, acts without A post judgment motion may be filed in a non-jury case, but conscientious judgment or, in view of all of the circumstances, is not necessary. The post trial/post judgment motion serves exceeds the bounds of reason and ignores recognized prin- two important purposes: first, it provides an opportunity for ciples of law, resulting in substantial injustice. In re Mar- the trial judge to correct any errors made during the trial; riage of Marsh, 343 Ill. App. 3d 1235, 799 N.E.2d 1037 (4th second, it assists in fleshing out which issues should be raised Dist. 2003). The reviewing court may not substitute its judg- on the subsequent appeal. As a third benefit, the motion tolls ment for that of the trial court, or even determine whether the enforcement and execution of the judgment. Post trial the trial court exercised its discretion wisely. Simmons v. motions are required in jury cases and must be filed in order Garces, 198 Ill. 2d 541, 568, 763 N.E.2d 720 (2002). The to preserve error. 735 ILCS 5/2-1202. To be safe, one should abuse of discretion standard applies to discretionary matters liberally cite potential errors in the post trial motion because addressed by the trial judge, such as whether leave to amend a failure to include an issue or raise an argument in a post after dismissal should have been granted, or rulings on evi- trial motion waives that issue or argument for review. Coun- dentiary matters or jury instructions. This standard is diffi- sel should consider keeping an appellate folder in each file cult to meet and rarely results in reversal. within which to keep copies of orders he or she may want to The final standard, de novo, applies to questions of law, pursue on appeal and of notes concerning immediate impres- People v. Perry, 224 Ill. 2d 312, 324, 864 N.E.2d 196 (2007), sions and authorities. This folder is essential when review- and is the most desirable of all of the standards for the appel- ing issues for the post trial motion lant. Under the de novo standard, the appellate court is free to decide the issue anew and there is no deference afforded The Standard of Review to the circuit court. Such issues might include interpretation of a particular statutory section or an order of summary judg- One of the most critical steps in analyzing a case for ment as whether a particular defense applies. appeal is identifying the proper standard of review and as- The standard of review should be the ultimate guide to sessing the issues raised in light of that standard. There are whether a given case, or issue, should be appealed. Making three standards of review used by reviewing courts: mani- appeal decisions based on application of the standard of re- fest weight of the evidence, abuse of discretion, and de novo. view will result in more informed decisions and hopefully The most common standard is manifest weight of the evi- help better manage appeal decisions. All lawyers have likely dence, which asks whether an opposite result is clearly ap- had a case where the decision baffles them, or where they parent. People v. Ewing, 377 Ill. App. 3d 585, 880 N.E.2d know, but just cannot prove, that the plaintiff’s injury was 587 (4th Dist. 2007). The appellate court, when applying this not caused by the accident or that the plaintiff is exaggerat- standard, is prohibited from substituting its own judgment ing the extent of his or her injuries. Naturally, such situa- and is not to draw different inferences from the evidence. tions can frustrate the lawyer. However, focusing one’s ef- The manifest weight standard applies to fact issues and ques- forts on the issues presented and the controlling standard of tions of credibility, and substantial deference is given to the review will help ensure the best decision concerning whether trier of fact’s conclusions and findings. The chance of over- to appeal. turning a fact-finding is very small and limited to circum- stances where it can legitimately be said that an opposite re- Know the Appellate Court District or Justices sult is clearly apparent. Cases that usually do not meet this criteria include those Although it is difficult to know in advance who will be with conflicting medical opinions between the treating and sitting on an appellate panel, a thorough appellate evaluation examining physicians and those where testimony via cross- also includes an understanding of the potential audience. In examination counters the plaintiff’s or other witnesses pri- other words, consider the appellate court district the case mary testimony. Typically, once the jury makes a finding of would go before and what that court’s history is with similar fact, the appellate court will sustain that finding so long as issues. For cases before the Illinois Supreme Court, look at
36 Second Quarter 2008
what prior similar cases have been decided and which cur- appeal, notice of filing the notice of appeal, and the docket- rent justices were on those panels. ing statement, as well as obtaining transcripts. This, of course, is in addition to the obvious work associated with identify- The Availability and Cost of an Appeal Bond ing and researching the issues and drafting the argument. In addition, counsel must also factor in the time associated with Although appeal bonds are not necessary to perfect the reporting to the client and corresponding with the court and right to appeal, some consideration should be given to the opposing counsel. availability and cost of a surety bond. With some exceptions, A typical, no frills two-issue appeal, might run between money judgments require some type of bond to protect the $12,000 and $15,000 through oral argument, plus additional plaintiff’s financial interests on appeal. See Supreme Court fees and costs for a petition for leave to appeal to the Su- Rule 305. Moreover, Illinois law permits a plaintiff to imme- preme Court, and even more expenses if that petition is diately begin enforcement proceedings. There are no auto- granted. More complex appeals can run considerably more. matic stay provisions. Given this, if the appeal is to move All of these considerations should be set forth succinctly forward, a surety bond might be necessary to protect the in a letter of recommendations to the client. A useful tem- client’s assets from enforcement. plate might include a short summary of the procedural pos- While alternatives are available, such as posting an in- surance policy in lieu of a bond, there are occasions where a ture of the case and general facts, followed by an identifica- policy is insufficient or where there is simply no insurance. tion of the probable issues. Ancillary to those issues should For those situations, the cost of a bond must be factored in. also be a section setting forth the standard of review for each Surety bonds typically run $20.00 per $1,000.00 of bond per issue and an analysis of the issue in light of that standard. year, and the rule of thumb calls for a bond of one and a half Based on this information, one should have some perspec- times the judgment to cover the award, plus interest and costs. tive on the potential for success of the appeal and what might For example, a surety bond to cover a $500,000 judgment be gained, such as reduced damages, excluded critical liabil- could run in excess of $15,000 annually. Likewise, a $2 mil- ity testimony on retrial, or a complete defense verdict. lion dollar judgment could require a bond in excess of Once the issues and likely appellate disposition are de- $60,000. Thus, there must be a substantial benefit from the termined, the estimated cost of the appeal should be presented, appeal to justify the cost of the surety bond. including the attorneys’ fees and court costs as well as inter- est and any amounts needed to cover a surety bond. For ex- Interest on the Judgment ample, if one have determined that there is a more than prob- able chance of reversal and entry of judgment in the client’s A judgment for the plaintiff not only obligates the de- favor, a projected $30,000 in legal fees and costs plus an- fendant to pay that judgment if the award is affirmed, there is other $75,000 in bonds and interest might not be an unrea- also the issue of interest. For most defendants, a civil dam- sonable decision. However, those same costs in a case where ages award earns nine percent per annum statutory interest the sole issue is manifest weight of the evidence might per- as provided by section 2-1303 of the Code of Civil Proce- suade counsel to recommend that no appeal be taken. dure. 735 ILCS 5/2-1303. Thus, looking at our $2 million verdict example, a nine percent interest rate earns $180,000 Conclusion per year, or approximately $493 per day. Given that most appeals take 12 to 18 months to conclude, this can grow to a An appeal should be more than a knee-jerk reaction to substantial figure very quickly. defeat. An appeal should be the culmination of a thorough review of the facts of the case as well as a full analysis of the Probable Appellate Costs legal issues and the governing standard of review. The ap- pellate court expects appellate counsel to appreciate that each A further consideration in the appeal equation concerns issue on appeal has its own standard of review and the likeli- the potential costs of the appeal. As appellant, whose respon- hood of success on that issue depends upon how the stan- sibility it is to perfect the appeal and obtain the record on dard meshes with the issue and facts. Considering these ar- appeal, there are several items beyond the actual briefs often eas when evaluating your next appeal will help ensure you overlooked when providing an estimate of costs. For example, and your client can make an informed decision as to whether counsel must include the time for preparing the notice of appeal is right for your case.
37 IDC Quarterly
Loftominium Litigation”). The lawsuit alleged that the de- fendants turned over unrepaired common elements and inad- Professional Liability equate capital reserves. Ambelos Corporation indirectly owned 100% of Wabash Loftominium, L.L.C. Attorney David Sugar filed the lawsuit while he was affiliated with the law firm Michael Best & Friedrich L.L.P. By: Martin J. O’Hara Separately, attorney Sugar filed a lawsuit on behalf of Quinlan & Carroll, Ltd. Board of Directors of the Gold Coast Galleria Condominium Chicago Association against Galleria Residential, L.L.C. and certain members of the Gouletas Group (“Galleria Residential Liti- gation”). Ambelos Corporation indirectly owned Galleria Residential, L.L.C. Like the Wabash Loftominium Litigation, Do You Know Who the suit against Galleria Residential and the individual de- Your Client Is? fendants alleged that the defendants turned over unrepaired common elements and inadequate capital reserves. Answering That Question In 2005, attorney Sugar left Michael Best & Friedrich Just Became More Difficult and joined Arnstein. Thereafter, Arnstein was granted leave to substitute as counsel in the Wabash Loftominium Litiga- tion and the Galleria Residential Litigation. However, the The Illinois Appellate Court First District recently is- defendants in both cases moved to disqualify Arnstein, con- sued a decision that should be of concern to all attorneys in tending that Arnstein already represented corporations that Illinois, and particularly to attorneys who defend legal mal- were managed by the individual defendants. The defendants practice actions. In Board of Managers of Eleventh Street asserted that the common representation created a conflict of Loftominium Association v. Wabash Loftominium, L.L.C., 376 interest for Arnstein prohibited by Rule 1.7 of the Rules of Ill. App. 3d 185, 876 N.E.2d 65 (1st Dist. 2007), the court Professional Conduct. Arnstein contested the motions to dis- held that an attorney who represents an entity has an attor- qualify, arguing that the firm did not represent the individu- ney-client relationship not only with that entity, but also with als or corporate defendants. every other entity that has the same management group. Stated The trial court in the Wabash Loftominium Litigation simply, this holding is unprecedented in Illinois case law (al- granted the motion to disqualify Arnstein as counsel for the though there is precedence in ethical opinions from the ABA defendants. The trial court found that Arnstein had “a long- and the ISBA as discussed below), and is contrary to the plain term, significant relationship with the Ambelos corporations language of Illinois Rule of Professional Conduct 1.13. None- and was actively representing some of those corporations theless, all attorneys and law firms in Illinois must take no- concurrently or after Arnstein substituted as counsel in the tice of this decision, and must modify their client databases Loftominium action.” Wabash Loftominium, 376 Ill. App. 3d accordingly in order to properly perform conflict checks in at 191-92. Although recognizing that Arnstein did not repre- the future. sent the individual or corporate defendants in the suit, the Wabash Loftominium involved a complicated fact pat- trial court found that disqualification was required because tern, but one that can be simplified as follows: Steven “the management group for the existing clients, the manage- Gouletas, Anthony DiBenedetto, James Schwark, Nicholas V. Gouletas and Nicholas S. Gouletas (collectively the “Gouletas Group”) were the owners and officers of various entities, including Ambelos Corporation. From 1999 through About the Author 2005, the law firm of Arnstein & Lehr L.L.P. (Arnstein) pro- vided legal services to the entities that were owned by the Martin J. O’Hara is a partner with the Chicago firm of Quinlan & Carroll, Ltd. His practice is devoted to litiga- Gouletas Group. tion, including commercial cases, and the defense of pro- In 2004, Board of Mangers of Eleventh Street fessionals in malpractice actions. Mr. O’Hara received his B.A. from Illinois State University and J.D. with honors Loftominium Association filed suit against Wabash from John Marshall Law School, in addition to being a Loftominium, L.L.C. and the Gouletas Group relating to a member of the Association and the Chicago Bar Associa- property located at 111 West Maple Street (“Wabash tion.
38 Second Quarter 2008
ment group for the current corporate defendant, and the cur- provided that there could be circumstances that would re- rent individual defendants were substantially the same.” Id. quire the lawyer to consider a subsidiary of a corporate cli- Thus, the trial court found that Arnstein was required to ob- ent to be a client of the lawyer as well, such as when the tain the defendants’ permission before it could represent the corporate client and subsidiary have the same management plaintiff in the Wabash Loftominium litigation. The trial court group. Id. The court held that because the evidence estab- found that by failing to do so, Arnstein violated Rule 1.7 and lished that Arnstein represented corporate clients that shared was disqualified from representing the plaintiff in the litiga- the same management group as the corporate defendants in tion. the two suits, Rule 1.7 prohibited Arnstein from represent- ing parties adverse to the corporate defendants. The Wabash Loftominium court also cited with approval an American Bar Association ethics opinion on the issue. Wabash Loftominium, 376 Ill. App. 3d at 195. In discussing whether an attorney-client relationship exists between a cor- The court held that because the porate attorney and a subsidiary of the corporation, the ABA evidence established that Arnstein opinion stated that an attorney-client relationship might ex- ist if “the lawyer’s relationship with the corporate affiliate represented corporate clients that may lead the affiliate reasonably to believe that it is a client of the lawyer. ABA Formal Op. 95-390 (January 25, 1995). shared the same management group In applying the ABA ethics opinion, the court found that “[t]he particular circumstances of this case would lead the manage- as the corporate defendants in the two ment group and the Ambelos corporations to reasonably be- suits, Rule 1.7 prohibited Arnstein lieve they were Arnstein’s existing clients.” Id. at 195. Ac- cordingly, the Wabash Loftominium court affirmed the dis- from representing parties adverse qualification of Arnstein in both cases, and the Illinois Su- preme Court recently denied Arnstein’s petition for leave to to the corporate defendants. appeal. Bd. of Managers of Eleventh St. Loftominium Ass’n v. Wabash Loftominium, L.L.C., 226 Ill. 2d 580, 879 N.E.2d 929 (2007). Unquestionably, the Wabash Loftominium decision has no precedent in Illinois law. No court has ever interpreted The trial court in the Galleria Residential Litigation Rule 1.7 in the broad manner interpreted by the Wabash agreed with the “shared management” analysis applied by Loftominium court. Moreover, Rule 1.13 of the Rules of Pro- the trial court in the Wabash Loftominium Litigation. There- fessional Conduct, which was not discussed by either the trial fore, the trial court in the Galleria Residential litigation like- court or the appellate court, states unequivocally and suc- wise disqualified Arnstein from representing the plaintiff in cinctly that an attorney “employed or retained by an organi- that action. Arnstein thereafter appealed the disqualification zation represents the organization.” 134 Ill. 2d R. 1.13 (em- orders in both cases. The appeals were consolidated as they phasis added). Courts applying Illinois law have thus held involved the same legal issues. that “an attorney employed by an organization represents an On appeal, Arnstein again argued that the disqualifica- organization, not its individual members, and he is obligated tion orders were erroneous because corporations are distinct to proceed in the best interest of the organization.” Arifin v. entities for purposes of conflict of interest analysis, and Matuszewich, 2000 WL 796146, *4 (N.D. Ill. June 20, 2000); Arnstein never represented any of the corporate or individual see also In re Conticommodity Servs., Inc. Sec. Litig., 1988 defendants. Arnstein relied in part upon an Illinois State Bar WL 96179, *1 (N.D. Ill. Sept. 9, 1988) (denying motion to Association advisory opinion stating that a lawyer generally disqualify and rejecting argument that attorney for corpora- may take representation adverse to a subsidiary or affiliate tion represents the corporation’s employee as well); U.S. v. of an existing corporate client. ISBA Op. No. 95-15 (May Keplinger, 776 F.2d 678, 701 (7th Cir. 1985) (a corporate 17, 1996). employee’s subjective belief that he is individually repre- The Wabash Loftominium court rejected Arnstein’s ar- sented is not sufficient to create such representation). gument. The court noted that the advisory opinion further (Continued on next page)
39 IDC Quarterly
Professional Liability (Continued) By holding that an attorney who represents a corporate client also represents the corporate client’s subsidiaries where Civil Practice and Procedure there is “shared management” eviscerates the meaning of Rule 1.13. The appellate court has thus re-written Rule 1.13 to effectively state that an attorney employed or retained by an By: Edward K. Grassé organization represents the organization and any subsidiar- Busse, Busse & Grassé, P.C. ies that have the same management group. Such an impor- Chicago tant change to the ethical rules should probably come from Stephen R. Kaufmann the Illinois Supreme Court, not the appellate court. Hepler, Broom, MacDonald, Hebrank, Nonetheless, based upon the decision in Wabash True & Noce, LLC Loftominium, law firms in Illinois must change the manner Edwardsville in which they enter client information into their conflicts system. It is no longer sufficient that the law firm include in its conflicts system only the name of the corporate client for The IDC Quarterly is pleased to present this new col- whom the law firm is performing services. Instead, law firms umn introduced by Civil Practice Committee co-chairs Steve must have their corporate clients identify all subsidiaries or Kaufmann and Ed Grassé. In future columns, the authors will affiliates. Firms should then input the names of each of the discuss wide-ranging issues in civil practice and procedure. subsidiaries and affiliates in their database of clients along The purpose of this column will be to provide practical tips with the name of the corporate client, such that a future con- and advice for the reader. These tips will focus on the de- flict check would reveal the identity of the subsidiaries and fense bar but will also serve the interest of other practitio- affiliates. ners. This first installment, however, addresses civility among Of course, merely because subsidiaries and affiliates of members of the bar, a topic of importance to all lawyers, civil a corporate client are identified in the conflict database does and criminal, plaintiff and defense. not necessarily mean that a particular subsidiary or affiliate Many of us can call to mind unfortunate experiences with will be considered a client of the firm. Rather, including the uncivil and perhaps even contemptuous attorneys. Consider subsidiaries and affiliates in the database allows the attorney the distinction between “zealous advocacy” and “absolute or law firm to perform the necessary analysis when consid- advocacy.” A zealous advocate is an advocate for his client’s ering a possible representation adverse to the subsidiary or affiliate. At that time, the law firm must determine whether an attorney-client relationship actually existed between the law firm and the particular subsidiary or affiliate. Based upon About the Authors Wabash Loftominium, the law firm needs to consider it is reasonable for the subsidiary or affiliate to believe that it has Edward K. Grassé is a partner at the law firm of Busse, Busse & Grassé, P.C. He has practiced in the area of tort an attorney-client relationship with the law firm as a result litigation for over 10 years and concentrates his practice in of the law firm’s representation of the corporate client. the defense of personal injury, construction, fire and ex- plosion and premises liability suits. He is presently the co- There is no question that these will not always be easy chair of the IDC Civil Practice Committee and is a former determinations to make. In part, that is why Rule 1.13 was chair of the Civil Practice and Procedure Committee of the effective. Rule 1.13 made clear that the only attorney-client Chicago Bar Association. relationship that existed was that between the lawyer and its organizational client. However, the Wabash Loftominium Stephen R. Kaufmann is a partner with Hepler, Broom, decision erodes this formerly straightforward rule, and law MacDonald, Hebrank, True & Noce, LLC. He is a trial at- firms must act accordingly when performing conflict checks torney with a primary emphasis on the defense of pharma- ceutical, products liability, medical malpractice, toxic tort, relating to the potential representation of a party that is ad- class action, labor and employment and insurance lawsuits. verse to an entity that is affiliated with an existing corporate Mr. Kaufmann is a member of the Illinois Association of Defense Trial Counsel (IDC) and currently serves as Co- client. Chairman of the Civil Practice & Procedure Committee. He is also a member of the Defense Research Institute (DRI) and is on the Product Liability, Toxic Torts and Environmental Law and Drug and Medical Device Committees.
40 Second Quarter 2008
rights and interests who will apply his skills to achieve a Rules are based, has been criticized for not including a greater successful result for the client, but who will do so only in emphasis on civility. Christopher Piazzola, Comment, Ethi- accordance with ethics and rules. An “absolute advocate” is cal versus Procedural Approached to Civility: Why Ethics one who seeks a successful result but without complete re- 2000 Should Have Adopted a Civility Rule, 74 U. Colo. L. gard for ethics and rules, and who, in doing so, works a det- Rev. 1197 (Summer, 2003). riment to his client and himself. This article invites the reader The RPCs simply state the minimum level of conduct to consider the harm that may result from careless actions of below which no lawyer can fall without being subject to dis- the absolute advocate that are taken ostensibly to advance a ciplinary action. The Illinois RPCs begin by pointing out in client’s interests but which actually diminish or prevent suc- the Preamble that an attorney is required to zealously pursue cess and which certainly diminish the advocate’s standing at the client’s interests within the bounds of the law. However, the bar. the Preamble further notes that “‘zealously’ does not mean Many lawyers believe that incivility is increasingly com- mindlessly or unfairly or oppressively.” mon and that professionalism among members of the legal Multiple RPCs also relate indirectly to incivility and limit community is declining. For example, in a recent study of the permissible scope of a lawyer’s personal behavior to other Illinois lawyers, the Commission on Professionalism of the lawyers and members of the public. For instance, Rule Illinois Supreme Court found that over half of the lawyers 1.2(f)(1) prohibits a lawyer from taking certain actions such experienced incivility in the past month. Moreover, 75% of as filing a lawsuit, taking a position, conducting a defense or attorneys experienced “strategic incivility” such as 1) delib- (Continued on next page) erate misrepresentation of facts; 2) playing hardball (not agreeing to reasonable requests); 3) indiscriminate or frivo- lous use of pleadings; 4) inflammatory writing in briefs or motions; and 5) inappropriate language or comments in let- ters and e-mail. Commission of Professionalism of the Illi- nois Supreme Court, Survey on Professionalism – A Study of Illinois Lawyers (November 2007) (http://ilsccp.org/files/ survey). Incivility among attorneys is not a new phenomenon, as concerns about it go back to the beginning of the profession. Charles Northrup, Ethics Seminar (2007) citing Carol A. Andrews, Standards of Conduct for Lawyers: An 800-Year Evolution, 57 SMU L. Rev. 1385, 1394 (2004) (by 1295 in ecclesiastical courts lawyers were cautioned by code to deter from talking too much or exhibiting a lack of courtesy). In 1992, the Seventh Circuit Court of Appeals investigated and ultimately adopted a civility code. Raymond Riple, Student Article, Learn- ing Outside the Fire: The Need for Civility Instruction in Law School, 5 ND J. L. Ethics & Pub Pol’y, 359, 369-70 (2001). Then in 2005, the Illinois Supreme Court established the Com- mission on Professionalism “in order to promote among the lawyers and judges of Illinois principles of integrity, profes- sionalism and civility***.” Ill. S.Ct. Rule 799(a). The Rules of Professional Conduct (RPC), as originally created, were designed to set out certain ethical standards rather than to specifically address civility. While professional standards often contain rules that prohibit certain uncivil conduct, such as Rule 3.3 (Conduct before a Tribunal) and 4.4 (Respect for the Rights of Third Person), Illinois has not gone so far as to adopt a civility code like the Seventh Cir- For more information on the Annual Meeting and cuit. In fact, the ABA Model Rules, upon which the Illinois Awards Banquet, see page 58.
41 IDC Quarterly
Civil Practice and Procedure (Continued) delaying a trial that the lawyer knows or reasonably should know is being taken merely to harass or maliciously injure Property Insurance another person. The ISBA/CBA Ethics 2000 proposed revi- sions eliminate subparagraph (f)(1). The rule is very broad in scope as it applies to any person and essentially any activ- By: Tracy E. Stevenson ity during the representation of a client. Robbins, Salomon & Patt, Ltd. Rule 3.1 prohibits a lawyer from bringing or defending Chicago a proceeding unless there is a basis for doing so that is not frivolous. Rule 3.3(a)(9) prohibits a lawyer appearing before a tribunal from intentionally degrading a witness or other person by stating or alluding to personal facts concerning They Transferred Their that person which are not relevant to the case, while sub- Assets – Now What? paragraph (a)(11) prohibits a lawyer from refusing to accede to reasonable requests of opposing counsel that do not preju- Defense counsel has won a big judgment for his or her dice the rights of the client. The ISBA/CBA 2000 proposed client. Counsel learned that the judgment debtor has always revisions eliminate subparagraph (11), however, it is renum- driven fancy cars, lives in a big house and even has a collec- bered in Rule 3.4(d). tion of art as well as money in the bank. That is the great Rule 4.4 places restrictions on the means and methods a news. The bad news is that the judgment debtor does not lawyer may employ on behalf of a client. It specifically pro- plan on paying. Issuing citations to discover assets pursuant vides that when representing a client, a lawyer: (1) may not to state statute is easy. But what if the money and the real take actions with no other substantial purpose than to embar- and personal property no longer belongs to the judgment rass, delay or burden a third person; or (2) use methods of debtor? Then the lawyer must seek relief from the state obtaining evidence that violate the rights of such a person. fraudulent conveyance statutes. This article will discuss these Finally, Rule 8.4 is a catch-all rule that prohibits a lawyer statutes, and when to use them. from engaging in conduct involving dishonesty, fraud, de- ceit or misrepresentation and from engaging in conduct that The Transfer Statutes is prejudicial to the administration of justice. One of the consequences of uncivil behavior is the be- The Uniform Fraudulent Transfer Act, 740 ILCS 160/1, lief that it “tends to delay and often to deny justice.” Stan- et seq. provides, in relevant part: dards for Professional Conduct within the Seventh Federal Judicial Circuit, Preamble (7th Cir. 1992). There is also the A transfer made or obligation incurred by a debtor concern that the public will view incivility between lawyers is fraudulent as to a creditor, whether the creditor’s as an invitation to disrespect courts and the administration of claim arose before or after the transfer was made or justice. Moreover, an overwhelming majority of Illinois law- the obligation was incurred, if the debtor made the yers acknowledge the consequences of incivility, and: 1) 98% transfer or incurred the obligation: believe that it makes it more difficult to resolve a matters; 2) 1. with actual intent to hinder, delay, or defraud 96% believe that it increases the costs to clients; 3) 95% be- any creditor of the debtor; or lieve that it makes the practice of law less satisfying; and 4) 92% believe that it harms the public confidence in the justice system. Commission of Professionalism of the Illinois Su- About the Author preme Court, Survey on Professionalism – A Study of Illi- Tracy E. Stevenson is a partner in the Chicago firm of nois Lawyers (November 2007) (http://ilsccp.org/files/sur- Robbins, Salomon & Patt, Ltd., where she concentrates her vey). practice in medical malpractice defense and insurance de- fense. She has defended cases on behalf of physicians and The concept of ethics, civility and professionalism are hospitals and represented various major insurance compa- not mutually exclusive. One can be a tough and fair advocate nies in claims involving fraud. Ms. Stevenson also repre- sents corporations in litigation matters including TRO’s and and still be a respected member of the legal profession. Attor- shareholder actions. She is licensed in Michigan as well as neys can treat fellow members of the bar with respect, dig- Illinois and speaks at various seminars around the country. nity and civility and still advance the cause of their clients.
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2. without receiving a reasonably equivalent value 1. An injunction against further conversion by in exchange for the transfer or obligation, and the debtor of the asset or of other property. the debtor: 2. Any other relief the circumstances may re- * * * * quire. B. intended to incur, or believed or reasonably (4) If a creditor has obtained a judgment on a claim should have believed that he would incur, debts against the debtor, the creditor, if the court so beyond his ability to pay as they became due. orders, may levy execution on the asset con- See 740 ILCS 160/5(a). verted or its proceeds. (5) A cause of action with respect to a fraudulent The Uniform Fraudulent Transfer Act also provides that: asset conversion is extinguished unless an ac- tion is brought within 4 years after the fraudu- [a] transfer made or obligation incurred by a debtor lent asset conversion was made. is fraudulent as to a creditor whose claim arose be- (6) If an asset is converted and the converted asset fore the transfer was made or the obligation was in- is subsequently transferred to a third party, the curred if the debtor made the transfer or incurred provisions of chapter 740 apply to the transfer the obligation without receiving a reasonably equiva- to the third party. 740 ILCS 160/8. lent value in exchange for the transfer or obligation and the debtor was insolvent at that time or the debtor Those factors which are to be considered to establish became insolvent as a result of the transfer or obli- conversion are: gation. See 740 ILCS 160/6. (1) A transfer made or obligation incurred by a debtor Most states have adopted the Uniform Fraudulent Trans- is fraudulent as to a creditor, whether the creditor’s fer Act verbatim so use of the statute in states where prop- claim before or after the transfer * * * if the debtor erty has been transferred is fairly well regulated. The statute made the transfer or incurred the obligation: (a) with on its face permits recovery for conversion of assets. Trans- actual intent to hinder, delay or defraud any creditor fer is defined as: of the debtor, or (b) without receiving any equiva- lent value in exchange for the transfer. 740 ILCS [E]very mode, direct or indirect absolute or condi- 160/6. tional of changing or disposing of an asset such that the product or proceeds of the asset become immune Offers of Proof or exempt by law form claims of the creditors of the debtor and the products or the proceeds of the asset The proofs offered at trial are fairly straightforward. remain the property of the debtor . . . 740 ILCS 160/ Proper use of the previously issued citations should have led 2(l). to the proofs before defense counsel files suit for fraudulent conversion. Defense counsel will have already learned where Once a party has proven conversion, the statute further the personal property is now located and who “owns” it now. delineates the relief that may be obtained. Specifically, it Counsel will have also learned through the citation process states: the relationship between the judgment debtor and the “new (3) In an action for relief against a fraudulent asset owner,” the value received by the judgment debtor for the conversion, a creditor may obtain: transferred property and when the transfer occurred. In order (a) Avoidance of the fraudulent asset conver- to prevail, the transfer must have been made when the debtor sion to the extent necessary to satisfy the knew a claim or judgment was pending. (For estate planners, creditor’s claim. even personal property placed in a trust may be deemed a (b) An attachment or other provisional remedy “transfer;” thus one should inquire as to whether any claims against the asset converted in accordance or suits are pending against the client prior to placing the with applicable law. property in a trust.) A conversion of property into cash can (c) Subject to applicable principles of equity also be deemed fraudulent if the cash is then transferred to a and in accordance with applicable rules of third party. civil procedure: (Continued on next page)
43 IDC Quarterly
Property Insurance (Continued) 852 P.2d 1165, 1169-70 (Alaska 1993). The Transfers California courts adopted a less stringent standard, hold- ing that conspiracy is a legal doctrine that imposes liability Following the transfer, did the judgment debtor retain on persons who, although not actually committing a tort them- control of the asset such that he or she had use of the trans- selves, share with the immediate tortfeasor a common plan ferred property? Even a transfer to a spouse can be deemed or design in its perpetration, and that through the conspiracy, fraudulent under the statue if it can be proven that the prop- each co-conspirator adopts as her own the torts of the con- erty, once held jointly now is titled only in name of the inno- spiracy. Quest Comm. Corp. v. Weisz, 278 F.Supp.2d 1188, cent spouse. Use of this remedy to foreclose upon a family 1192 (S.D. Cal. 2003). Furthermore, the main requirement home held in the name of the innocent spouse may seem harsh, of the conspiracy claim is that the co-conspirator must be but the statute permits for avoidance if each element is met, legally capable of committing the tort, i.e., that he or she and a permitted exemption is not claimed. owes a duty to the plaintiff recognized by law and is poten- tially subject to liability for breach of that duty. Arizona courts recognize that where a civil wrong oc- curs as a result of concerted actions, the participants in the common plan are equally liable. McElhanon v. Hing, 728 P.2d 256, 262 (Ariz. Ct. App. 1985), vacated in part on other Even a transfer to a spouse can be grounds, 728 P.2d 273. The court further recognized that a general or judgment creditor suffers a legal wrong from a deemed fraudulent under the statue if fraudulent conveyance. Id. (citing Celano v. Frederick, 54 it can be proven that the property, once Ill. App. 2d 393 (1st Dist.1964); Dalton v. Meister, 239 N.W.2d 9 (1976)). The McElhanon court held that where held jointly now is titled only in name evidence establishes that two or more persons, by some con- certed action, accomplish some unlawful purpose, or by un- of the innocent spouse. lawful means accomplish a lawful purpose, a cause of action has been created. It further emphasized that a fraudulent con- veyance against a judgment creditor is a legal wrong which may be the subject of a complaint for damages arising out of a conspiracy to commit a fraudulent conveyance. Several jurisdictions recognize the liability of a conspira- The amount of damages to which a judgment creditor is tor in the tort of fraudulent transfer. Both federal and state entitled is the amount of debt that was made uncollectible courts recognize that liability can be imposed on a co-con- plus incidental expenses. McElhanon, 728 P.2d at 272-73. A spirator for the fraudulent transfer of assets. See, e.g., Seiwak money judgment against a transferee is permissible where v. South Bank, 2007 WL 2154234 (M.D. Fla. July 24, 2007); the transferee has disposed or dealt with the property in such Broxmeyer v. Elie, 647 So.2d 893 (Fla. Dist. Ct. App. 1994). fashion that a return of the property is impossible or where Under such cases, a court may impose direct liability on con- the property has been diminished in value. U.S. v. Verduchi, spirator and permit recovery against that conspirator for ac- 434 F.3d 17, 22-23 (1st Cir. 2006). For example, in In re B.L. cepting the fraudulent transfer. Because Illinois case law is Jennings, Inc., 2007 WL 2193917 (Bankr. M.D. Fla. June scant related to these issues, and because the non-paying judg- 12, 2007), a husband debtor conveyed property to his ex- ment debtor may hide assets in another jurisdiction, cases wife to hinder and delay collection by the judgment creditor. from other jurisdictions may be used as persuasive authority. The court held that because the ex-wife participated in the Several standards have been articulated for establishing conspiracy, she is liable to the judgment creditor for the value a civil conspiracy to fraudulently transfer assets. The Supreme of the property transferred. That court also noted that a di- Court of Alaska held that a plaintiff must establish (1) an rect proof of an agreement to defraud is not necessary. unlawful agreement, (2) the specific intent of each partici- An alternative method of recovery would be to secure a pant in the scheme to hinder, delay and defraud a creditor of constructive trust over the property transferred. The doctrine one who participated in the scheme, (3) an act in accordance of constructive trusts is an equitable tool designed to right a with the scheme, and (4) damages caused by the acts com- wrong committed and to prevent unjust enrichment of one mitted pursuant to the illegal agreement. Summers v. Hagen, person at the expense of another either as a result of fraud,
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undue influence, abuse of confidence or a mistake. In re Fi- nancial Federated Title & Trust, Inc., 347 F.3d 880, 891 (11th Cir. 2003). The Eleventh Circuit has held that: Technology Law if the original res no longer remains, but is trans- formed into a different form, it is the burden of the party seeking to impress a constructive trust to trace By: Michael C. Bruck the property to specific funds before it can prevail. Crisham & Kubes, Ltd. Traceable proceeds from prior fraudulent transfers, Chicago which are used to acquire a homestead, may also be subject to a constructive trust. Id. Seagate May Bring Sea of Change to Patent Cases
While it is always frustrating to realize On August 20, 2007, the Court of Appeals for the Fed- eral Circuit issued an en banc decision in In re Seagate Tech- that there is no payment forthcoming nology, LLC, 497 F.3d 1360 (Fed. Cir. 2007). The Seagate decision overturned 24 years of precedent in favor of a new following the successful conclusion of heightened standard, ruling that proof of willful infringement trial, the Uniform Fraudulent Transfer permitting enhanced damages requires at least a showing of “objective recklessness.” The Seagate decision also held that, Act may provide a remedy even if the in most circumstances, trial counsel’s attorney-client com- munications and work product are not waived when a defen- assets are transferred so as to appear dant chooses to rely on an opinion of counsel to defend against “uncollectible.” a willfulness claim. In general, the Seagate decision is fa- vorable for accused infringers. Yet the court also left several questions unanswered, which may prove problematic for defendants in patent cases. On July 13, 2000, Convolve, Inc. and the Massachusetts Another alternative is an equitable lien against the prop- Institute of Technology (collectively “Convolve”) sued de- erty. In Babbit Electronics, Inc. v. Dynascan Corp., 915 F. fendants, Compaq Computer Corp. and Seagate Technology, Supp. 335 (S.D. Fla. 1995), the judgment debtor fraudulently LLC, alleging infringement of U.S. Patent Nos. 4,916,635 transferred funds to his daughter and son-in-law who then (“the ‘635 patent”) and 5,638,267 (“the ‘267 patent”). There- took the money and applied it toward the satisfaction of the after, U.S. Patent No. 6,314,473 (“the ‘473 patent”) issued, mortgage on their house. The court held that an equitable and Convolve amended its complaint to assert infringement lien on the house was appropriate. These remedies are equi- of the ‘473 patent. Convolve alleged that Seagate willfully table and consistent with the intent of the Uniform Fraudu- infringed the patents and sought treble damages. Seagate lent Transfer Act, which means they are only available for (Continued on next page) property traceable to the assets transferred. On the other hand, the conspiracy theory of liability should be available to ex- tend beyond those assets, specifically to those held by the About the Author transferee or other third parties. While it is always frustrating to realize that there is no Michael C. Bruck is a partner in the Chicago law firm of payment forthcoming following the successful conclusion of Crisham & Kubes, Ltd. He is a trial lawyer focusing on the defense of professionals in malpractice actions, commercial trial, the Uniform Fraudulent Transfer Act may provide a rem- cases and intellectual property litigation. Mr. Bruck received edy even if the assets are transferred so as to appear “uncol- his B.S. from Purdue University in 1984 and his J.D. from DePaul College of Law in 1988. He is a member of the DRI, lectible.” IDC, ISBA, CBA and The Illinois Society of Trial Lawyers.
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Technology Law (Continued) ion counsel’s opinions would warrant disclosure. The court opposed Convolve’s claims partly on the basis that it acted also determined that protection of work product communi- in good faith because it was relying on the advice of its opin- cated to Seagate was waived. ion counsel that its conduct did not constitute infringement. Based on these rulings, Convolve sought production of Shortly before Convolve filed suit, Seagate retained an trial counsel opinions relating to infringement, invalidity, and attorney, Gerald Sekimura, to provide an opinion concern- enforceability of the patents, and also noticed depositions of ing Convolve’s patents. Sekimura ultimately prepared three Seagate’s trial counsel. Seagate moved for a stay and certifi- written opinions, which concluded that the patents were in- cation of an interlocutory appeal, which the trial court de- valid, unenforceable or not infringed. Seagate received the nied. Seagate then petitioned the appellate court for a writ of first opinion on July 24, 2000, shortly after the complaint mandamus. The appellate court stayed the discovery orders was filed. This opinion analyzed the ‘635 and ‘267 patents and sua sponte ordered en banc review of the petition. and concluded that many claims were invalid and that The appellate court’s en banc order set out the following Seagate’s products did not infringe. The opinion also con- questions to resolve. (1) Should a party’s assertion of the sidered Convolve’s pending International Application WO advice of counsel defense to willful infringement extend 99/45535 (“the ‘535 application”), which recited technology waiver of the attorney-client privilege to communications similar to that disclosed in the yet-to-be-issued ‘ 473 patent. with that party’s trial counsel? See In re EchoStar Commc’ns On December 29, 2000, Sekimura provided an updated opin- Corp., 448 F.3d 1294 (Fed. Cir. 2006). (2) What is the effect ion to Seagate. In addition to his previous conclusions, this of any such waiver on work-product immunity? (3) Given opinion concluded that the ‘267 patent was possibly unen- the impact of the statutory duty of care standard announced forceable. Both opinions noted that not all of the patent claims in Underwater Devices, Inc. v. Morrison-Knudsen Co., 717 had been reviewed, and that the ‘535 application required F.2d 1380 (Fed. Cir. 1983), on the issue of waiver of attor- further analysis, which Sekimura recommended postponing ney-client privilege, should this court reconsider the deci- until a U.S. patent issued. On February 21, 2003, Seagate sion in Underwater Devices and the duty of care standard received a third opinion concerning the validity and infringe- itself? ment of the by-then-issued ‘473 patent. The parties did not dispute that Seagate’s opinion counsel operated separately Affirmative Duty of Due Care and independently of trial counsel at all times. Seagate notified Convolve of its intent to rely on its opin- Around the time of its inception, the Federal Circuit had ion counsel’s three opinion letters in defending against the established a standard for evaluating claims of willful in- willful infringement allegations. During the course of dis- fringement in patent cases. For potential or alleged infring- covery, Convolve sought information relating to Seagate’s ers with actual notice of the patent at issue, the court im- advice of counsel defense. Seagate disclosed all its opinion posed “an affirmative duty to exercise due care” that effec- counsel’s work product and made him available for deposi- tively required an accused infringer to obtain competent le- tion. Convolve then moved to compel discovery of Seagate’s gal advice from opinion counsel that the patent in question communications with and work product of Seagate’s coun- was invalid, unenforceable or not infringed. Underwater sel, including its trial counsel. Devices, 717 F.2d at 1389-90. Since the Underwater Devices On May 28, 2004, the trial court concluded that Seagate decision, willful infringement determinations have been gov- waived the attorney-client privilege for all communications erned by the “affirmative duty of due care” standard under between it and any counsel, including its trial attorneys and which courts have focused on the alleged infringer’s state of in-house counsel, concerning the subject matter of opinion mind. counsel’s conclusions regarding infringement, invalidity, and The Underwater Devices case and the duty of care stan- enforceability. It further ruled that the waiver began when dard propelled accused willful infringers to traditionally and Seagate first gained knowledge of the patents and would last regularly assert that they acted in good faith by relying on until the alleged infringement ceased. Accordingly, the court advice of counsel. Seagate, 497 F.3d at 1369. Typically, ordered production of any requested documents and testi- counsel’s opinion concludes that the patent is invalid, unen- mony concerning the subject matter of opinion counsel’s judg- forceable, and/or not infringed. Id. Under the advice of coun- ments. It provided for in camera review of documents relat- sel defense, an accused infringer attempts to establish that it ing to trial strategy, but said that any advice from trial coun- reasonably relied on advice from opinion counsel and that sel that undermined the reasonableness of relying on opin- its accused activities were done in good faith. Id. Although
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an infringer’s reliance on favorable advice of counsel, or that relying on in-house counsel’s advice to refute a charge conversely the infringer’s failure to proffer any favorable of willfulness triggers waiver of the attorney-client privilege. advice, was not dispositive of the willfulness inquiry, it has EchoStar, 448 F.3d at 1299. In EchoStar, the court held that long been crucial to the analysis. Id. (citing Electro Med. asserting the advice of counsel defense waives work product Sys., S.A. v. Cooper Life Scis., Inc., 34 F.3d 1048, 1056 (Fed. protection and the attorney-client privilege for all communi- Cir. 1994). cations on the same subject matter, as well as any documents Over the years, the Federal Circuit has recognized that memorializing attorney-client communications. Id. at 1302- the duty of care standard and the common assertion of the 03. However, the court also held that waiver did not extend advice of counsel defense have had negative implications on to work product that was not communicated to the alleged the assertion of attorney-client privilege and the work prod- infringer (it should be noted, however, that EchoStar did not uct doctrine. For instance, an accused infringer may be forced consider waiver of the advice of counsel defense as it relates to disclose sensitive communications with trial counsel or to trial counsel). Id. at 1303-04. risk a finding of willful infringement and resulting enhanced In Seagate, the Federal Circuit addressed the willfulness damages (as Trial courts have the discretion to increase dam- scheme and its relationship to the attorney-client privilege ages for patent infringement by a factor of three. 35 U.S.C. § and work product protection. The court revisited its willful- 284 (2000)). See Quantum Corp. v. Tandon Corp., 940 F.2d ness doctrine and addressed whether waiver resulting from 642, 643-44 (Fed. Cir. 1991). advice of counsel and work product defenses extend to trial counsel.
New Standard Regarding Willful Infringement In overturning the 24 year standing In Seagate, the Federal Circuit expressly overruled Un- precedent established by Underwater derwater Devices. The court examined interpretations of the term “willful.” Seagate, 497 F.3d at 1370-71. The court con- Devices, the court abandoned the cluded that the general understanding of the term “willful,” affirmative duty of due care and as interpreted by the U.S. Supreme Court and sister circuits, includes recklessness, but that its Underwater Devices stan- proceeded to establish a new test for dard had lowered the threshold for willful infringement to a degree more akin to negligence. Id. In overturning the 24 willful infringement. year standing precedent established by Underwater Devices, the court abandoned the affirmative duty of due care and pro- ceeded to establish a new test for willful infringement. The new test for willful infringement is comprised of a In addition, another practical problem stemming from two-step inquiry for determining whether the infringer’s con- the duty of care standard is that an accused infringer’s fail- duct has been objectively reckless. Id. at 1371. In explaining ure to produce an opinion letter from opinion counsel “would the new standard, the Federal Circuit instructs that: warrant the conclusion that it either obtained no advice of “[T]o establish willful infringement, a patentee must counsel or did so and was advised that its [activities] would show by clear and convincing evidence that the infringer acted be an infringement of valid U.S. Patents.” Knorr-Bremse despite an objectively high likelihood that its actions consti- Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d tuted infringement of a valid patent. The state of mind of the 1337, 1343 (Fed. Cir. 2004), quoting Kloster Speedsteel AB accused infringer is not relevant to this objective inquiry. If v. Crucible Inc., 793 F.2d 1565, 1580 (Fed. Cir. 1986). How- this threshold objective standard is satisfied, the patentee must ever, the Federal Circuit recognized that this inference im- also demonstrate that this objectively-defined risk (deter- posed “inappropriate burdens on the attorney-client relation- mined by the record developed in the infringement proceed- ship” and held that invoking the attorney-client privilege or ing) was either known or so obvious that it should have been work product protection does not give rise to an adverse in- known to the accused infringer. Id. ference. Knorr-Bremse, 383 F.3d at 1344-45. The court noted that because it abandoned the affirma- With respect to the scope of waiver resulting from the tive duty of due care, it emphasized that there is no affirma- advice of counsel defense, the Federal Circuit has concluded (Continued on next page)
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Technology Law (Continued) addition, the court found that the opinions of opinion coun- tive obligation to obtain opinion of counsel. Id. The court sel, received after suit was commenced, would be of mar- did not further elaborate on or provide guidance to assess the ginal value particularly because willful infringement is based new standard. Instead, the court left further development of upon pre-litigation conduct. Id. the application of the standard to future cases. Work Product Doctrine Waiver of Attorney-Client Privilege The Seagate court began its discussion of the work prod- In Seagate, the court also held that an alleged infringer uct doctrine by noting that the advice of counsel defense as- can assert an advice of counsel defense to refute a charge of serted in response to a charge of willful infringement may willful infringement and disclose opinions of opinion coun- also implicate waiver of work product protection. Id. at 1375. sel without waiving the attorney-client privilege for commu- The court reasoned that the rationale generally limiting waiver nications with trial counsel. The court recognized the sig- of the attorney-client privilege with trial counsel applies with nificantly different functions served by opinion counsel even greater force to so limiting work product waiver be- and trial counsel. Id. at 1373. These functional differences, cause of the nature of the work product doctrine. Id. In short, coupled with the basic notion of fairness, led the court to the court held that relying on opinion counsel’s work prod- determine that the classical “sword and shield” concern (a uct does not waive work product immunity with respect to party disclosing favorable communications while asserting trial counsel. Id. The court left open the possibility that situ- the privilege as to less favorable ones) that typically justifies ations may arise in which waiver may be extended to trial broad waiver is not present. Id. counsel, “such as if a party or his counsel engages in chica- nery.” Id. In addition, the court acknowledged that the gen- eral principles of work product protection remain in force, so that a party may obtain discovery of work product even absent waiver upon a sufficient showing of need and hard- The court’s decision in Seagate has ship under Fed. R. Civ. Pro. 26(b)(3) and Hickman v. Taylor, 329 U.S. 495, 510-11, 67 S.Ct. 385 (1947). Id. at 1376. radically changed the law with regard to willful infringement and generally Conclusion has positive implications for accused The Seagate decision affects almost every patent infringe- ment case, but its implications are not yet known. The court’s patent infringement defendants. decision in Seagate has radically changed the law with re- gard to willful infringement and generally has positive im- plications for accused patent infringement defendants. The new standard for proving willful infringement in a patent In refusing to extend waiver to trial counsel, the court infringement case is “objective recklessness,” which is a also considered the interest of allowing defense counsel to heightened standard from the old negligence standard in properly prepare a client’s case as well as the notion that Underwater Devices. Yet, the two-part test for objective reck- willful infringement normally finds its basis in prelitigation lessness leaves open several potentially troublesome issues conduct. Id. at 1373-74. An additional consideration made for defendants. For example, it is clear that the burden of by the court is that if an accused infringer’s post-filing con- proof for the first part of the test is “clear and convincing” duct is reckless, a patentee can move for a preliminary in- standard. However, it is unclear if the second part of the test junction, which generally provides an adequate remedy for employs the same “clear and convincing” standard. On a re- combating post-filing willful infringement. Id. at 1374, ref- lated point, it is possible that this two-part test could strain erencing 35 U.S.C. § 283 and referencing Amazon.com, Inc. judicial resources by extending the time required to litigate. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. For instance, the two-part nature of the test may lead to regu- 2001). Therefore, the court found that Seagate could assert lar bifurcation of discovery or trial. the advice of counsel defense without waiving the attorney- The Seagate opinion lacks guidance regarding the re- client privilege with respect to trial counsel. Id. at 1374. In quired precautionary steps that the defendant, an alleged in-
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fringer with knowledge of the allegedly infringed patent, must take to avoid being found reckless. For example, opinions of counsel are likely to continue to have value to alleged in- Amicus Committee Report fringers, but it is unclear how much value opinion letters will have. Although the court explicitly states that opinion letters are no longer a requirement, opinion letters could still be a By: Michael L. Resis factor in determining whether an alleged infringer was reck- SmithAmundsen LLC less. Similarly, an opinion letter could now provide a basis Chicago for an alleged infringer to establish that it was not reckless because the content of the opinion letter states that there was not a high likelihood of infringement. “Football is not a contact sport. It’s a collision sport. Dancing is a contact sport.” —Duffy Daugherty, [T]he court’s virtual elimination of Michigan State Football Coach – 1954-1972
waivers for trial counsel eases the Since the last amicus committee report, the Illinois Su- defense’s ability to rely on the advice preme Court in Karas v. Strevell 2008 Ill. LEXIS 284 (Doc. Nos. 104123 & 104133, Feb. 22, 2008), has clarified the con- of other counsel. tact sport exception. There, the father of a junior varsity hockey player had filed suit alleging that his son was injured while playing an organized high school hockey game. The father alleged that the injury occurred when two players on With respect to asserting the advice of counsel defense the opposing team bodychecked his son from behind near and waiver of the attorney-client privilege and/or the work the boards, in violation of league rules. The plaintiff named product doctrine, Seagate significantly restricted the scope the two players, the hockey league, a hockey officials’ orga- of the waiver only with respect to trial counsel. The court did nization and a hockey association as defendants. The appel- not narrow the scope of waiver regarding the alleged late court held that the plaintiff stated a cause of action against infringer’s communications with opinion counsel or opinion the players under the willful and wanton exception to rule of counsel’s work product. In other words, the court’s virtual non-liability for negligence in contact sports. Karas v. Strevell, elimination of waivers for trial counsel eases the defense’s 369 Ill. App. 3d 884, 860 N.E.2d 1163 (2nd Dist. 2006). With ability to rely on the advice of other counsel. For the time one justice dissenting, the appellate court further held that being, the decision makes it easier for alleged infringers to the contact sports exception did not insulate the organizers defend against willful infringement accusations because al- from claims that their negligence caused the two players to leged infringers will not have to pit asserting the advice of (Continued on next page) counsel defense against the possibility that a court could find a waiver. Regarding a situation in which “counsel engages in chi- canery,” the court in Seagate did not elaborate or explain About the Author what is meant by the chicanery-waiver. Instead, trial courts now have discretion under Seagate to find a waiver of attor- Michael L. Resis is a founding partner and chairman of ney-client privilege or work product protection as to trial SmithAmundsen’s appellate department. He concentrates his practice in the areas of appeals, insurance coverage and counsel where the facts and circumstances warrant a finding toxic, environmental and mass torts. He has practiced law such a waiver. Further, the court did not address how the in Chicago for 20 years and handled more than 400 ap- peals. Mr. Resis has represented government, business and assertion of the advice of counsel defense might affect waiver professional organizations as amicus curiae before the Illi- of the attorney-client privilege and work product protection nois Supreme Court and the Illinois Appellate Court. He with regard to in-house counsel, or with respect to when opin- received his B.A. degree, magna cum laude, from the University of Illinois at Champaign-Urbana in 1978, and a J.D. degree from the University of Illinois ion counsel and trial counsel are the same or belong to the at Champaign-Urbana in 1981. Mr. Resis currently serves on the Board of same firm. Directors for the IDC.
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Amicus Committee Report (Continued) The court determined that the complaint, as pled, did commit the willful and wanton bodycheck from behind that not allege that the bodycheck was totally outside the range led to the injury. of the ordinary activity associated with the sport. The plain- The Illinois Supreme Court began its analysis by review- tiff had not alleged that the minor plaintiff was targeted for ing the contact sport exception and the public policy that led retaliation by the opposing players, that they intended to in- to its judicial creation. In Pfister v. Shustra, 167 Ill. 2d 417, jure him, that he was in an area along the boards where 657 N.E.2d 1013 (1995), the court had adopted the rule that bodychecking was prohibited, or that bodychecking was out a participant in a contact sport owes a duty only to refrain of the normal range of play. Merely alleging that a player’s from willful and wanton or intentional conduct that injures a violation of the rule against checking from behind was done fellow participant. Pfister defined actionable conduct as “a in conscious disregard of the plaintiff’s safety was not suffi- course of action which shows actual or deliberate intent to cient to state a cause of action. According to the court, a plain- harm or which, if the course of action is not intentional, shows tiff cannot plead a cause of action for conduct that is outside an utter indifference to or disregard for a person’s safety.” the range of ordinary activity involved in the sport without Karas v. Strevell, 2008 Ill. LEXIS 284 at *22. The rule strikes including facts that describe the play that occurred at the time a balance between competing public policies of protecting of the injury. However, the court suggested that a cause of participants and the voluntary nature of participation in games action might be stated if the plaintiff could allege that the where physical contact is inherent and inevitable. The court check from behind took place away from the puck and the in Karas held that ice hockey is a full contact sport, and that action of the game. Because the court was announcing a stan- dard not explicit in Pfister, in fairness to the plaintiff, the court remanded the case to the circuit court with instructions to allow the plaintiff to attempt to replead, if he is able to do so. According to the court, a plaintiff The court similarly held that the organization defendants were not liable for ordinary negligence, consistent with Pfister cannot plead a cause of action for and the rule that it was adopting for the player defendants. Instead, the organization defendants could be liable only if conduct that is outside the range of they acted with the intent to injure or engaged in conduct ordinary activity involved in the sport “totally outside the range of the ordinary activity” involved with coaching or officiating the sport. Id. at *38. The court without including facts that describe also held that the plaintiff did not plead a civil conspiracy cause of action between the hockey association and the the play that occurred at the time of hockey officials association based on a negligent failure to the injury. enforce the rules. The court affirmed the circuit court’s judgment, affirmed the appellate court in part, reversed the appellate court in part, and remanded the case to the circuit court with instruc- tions to allow the plaintiff to attempt to replead. bodychecking an opponent who is standing on two thin metal Karen L. Kendall and Brad A. Elward of Heyl, Royster, blades atop a sheet of ice is inherently dangerous so that even Voelker & Allen are to be commended for filing the IDC a cleanly executed check, performed according to the rules amicus brief in support of the defendants. of the game, shows a conscious disregard for the safety of the player being checked. The court deemed Pfister’s con- In LaSalle Bank, N.A. v. C/HCA Development Corp. scious disregard standard both unworkable and contrary to (Docket No. 1-06-1859), the Illinois Appellate Court, First the policies behind Pfister. For these reasons, the court in Judicial District, will address whether the 2005 or the 2006 Karas announced a new standard: a participant breaches a IPI 105.01 (Professional Negligence) accurately states the duty of care to a fellow participant only if the participant requisite standard of care for professional negligence. In re- intentionally injures the fellow participant or engages in con- sponse to the plaintiff’s opening brief and a supporting am- duct “totally outside the range of the ordinary activity in- icus brief filed by ITLA, the IDC was granted leave to file an volved in the sport.” Id. at *29-30. amicus brief in support of the defendants. The IDC amicus
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brief argues, inter alia, that by replacing the words, “reason- Fifth Judicial District ably well qualified” practitioner, with the words, “reason- Stephen C. Mudge ably careful” practitioner, the 2006 changes have blended Reed, Armstrong, Gorman, Coffey, professional standards with institutional negligence standards Thompson, Gilbert & Mudge and confused professional standards with the ordinary care 101 N. Main Street, P.O. Box 368 standards from IPI 10.01. Edwardsville, Illinois 62025-0368 Robert Marc Chemers and David S. Osborne of Pret- (618) 656-0257 zel & Stouffer Chartered are to be commended for filing the IDC amicus brief in support of the defendants. While our committee cannot prepare an amicus brief in every case in which we are asked, we encourage your par- As a reminder for future submissions, the Amicus Com- ticipation in making the views of our members known to the mittee members are: reviewing courts on the legal issues that affect us. We need your input and your support. If you are interested in writing Committee Chairman an amicus brief or submitting a case for review by the com- Michael L. Resis mittee, please contact any of us. SmithAmundsen, LLC (312) 894-3249 [email protected]
First Judicial District John J. Piegore Sanchez & Daniels 333 W. Wacker Drive, Suite 500 Chicago, Illinois 60606 (312) 641-1555
Second Judicial District James L. DeAno DeAno & Scarry 2100 Manchester Road, Suite 101A Wheaton, Illinois 60187 (312) 690-2800
Third Judicial District Karen L. Kendall Heyl, Royster, Voelker & Allen 124 SW Adams Street, Suite 600 Peoria, Illinois 61602 (309) 676-0400 Fourth Judicial District Robert W. Neirynck Costigan & Wolrab, P.C. 308 E. Washington Street, P.O. Box 3127 Bloomington, Illinois 61701 (309) 828-4310
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Young Lawyers Report
By: Jennifer B. Groszek Gunty & McCarthy Chicago
Getting involved and giving back. There are many rea- sons to get involved in a bar organization and those reasons are often different for everyone. However, one thing that rings true for most is that the more involved you become, the more reasons you find to stay! At least this seems to be the case for the IDC Young Lawyers Division. While the YLD offers networking opportunities with other young lawyers and IDC Board members, substantive monthly meetings with CLE credit and the opportunity to write articles for the IDC Quar- terly and YLD Newsletter, it also offers a chance to make a difference in the community. Most recently, the YLD Committee celebrated Dr. Seuss’ birthday by reading to local first and second grade classrooms. Committee members read to students at schools in Chicago, Champaign and the Edwardsville areas. For Nicole Milos, an attorney with Cremer Kopon Shaughnessy & Spina, “par- ticipating in the Seusssentennial provided a great opportu-
About the Author
Jennifer Groszek is an attorney with the Law offices of Gunty & McCarthy in Chicago. She is the Chair of the IDC- Young Lawyers Division and is a member of the CBA, ISBA, NAWL, Bar Association of Metropolitan St. Louis Photos: In January, 2008 the YLD Committee celebrated Dr. and DRI. Jennifer received her B.A. in 1999 from the Uni- versity of Wisconsin-Stevens Point and J.D. in Dec. of 2001 Seuss’ birthday by reading to local first and second grade from Valparaiso University School of Law. Jennifer is li- classrooms. Committee members read to students at schools censed in Illinois & Missouri. in Chicago, Champaign and the Edwardsville areas.
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nity for the young lawyers to show the students the benefits of reading and doing well in school. I really enjoyed reading to the children and encouraging them to read.” Matt Ander- son, an attorney with Craig & Craig, who read to students in Champaign added, “Reading day was a blast and the chil- dren were so attentive. I just hope they have a big kid chair for me next year.” Smiling faces, excitement and hugs from the little ones topped the list of reasons why the YLD read- ing day is such a success. On Sunday, May 4, 2008, the IDC-YLD will be partici- pating in the MS Walk for the Greater Illinois Chapter of the National MS Society! Last year the MS Walk raised over $3 million to support research and programs for more than 20,000 people who live with Multiple Sclerosis in Illinois. The walk will take place on at 13 locations across Illinois. Anyone interested in walking or making a donation should contact Nicole Milos at [email protected]. Thank you for your support! In conjunction with the IDC Diversity Committee, the YLD will be participating in the Women Everywhere: Part- ners in Service Project Agency Day on June 13, 2008. The theme is “Women Leading Women.” Volunteers will spend the day at a selected social service agency that provides as- sistance to women and children in need. If you would like to participate in this project with the YLD Committee, please contact Jennifer Groszek at jennifer.groszek@gunty mccarthy.com. What: IDC Fall Conference Substantively, the committee continues to offer monthly When: September 12, 2008 meetings with CLE credit. In January, members of the YLD Where: The University Club, Committee convened in Edwardsville for their meeting and 76 E. Monroe St., Chicago, IL 60603 a presentation by Jeff Hebrank, IDC President and Partner at Hepler Broom. Mr. Hebrank spoke to the committee about relationship building and how it can help your career. In Feb- The Illinois Association of Defense Trial ruary and March, the committee was back in Chicago. Jim Counsel is hosting its 2008 Fall Conference in DeNardo, a partner at McKenna Storer addressed the com- Chicago, Illinois. The event will be a one-day mittee on appellate practice and Phillip Mohr, Deputy Direc- Continuing Legal Education program focusing on tor at the Chicago Volunteer Legal Services (CVLS) gave a trial tactics and legal issues relevant to all presentation on CVLS, volunteering, benefits of pro bono defense counsel. Lunch will be provided and a work and how one can get involved in pro bono work. cocktail reception will follow. If you are interested in joining the YLD Committee, host- ing a meeting or would like to volunteer to speak at one of Additional information, including the seminar the YLD Committee meetings, please contact Jennifer registration form, format, and schedule, will be Groszek. posted on IDC’s web page in the coming months. Until then, mark your calendars and make plans to attend this program!
www.iadtc.org
53 IDC Quarterly
Lincoln’s advice, each and every lawyer must combat this negative image by being honest in his or her daily dealings. The Defense Philosophy This includes refusing to tell a lie or presenting an untrue position on behalf of a client. One added factor since Lincoln’s time is the Attorney Registration and Disciplinary Commission. While any lie can By: Willis R. Tribler come back to haunt you, some lies can land you before the Tribler Orpett & Meyer, P.C. ARDC. One thing that will almost certainly cause charges to Chicago be brought against you is lying to a judge. There is a good recent example of a suburban Chicago lawyer who was being upbraided by a judge for missing court appearances. When asked about a specific failure to appear, The Benefits of Honesty the lawyer said that he was in “University Hospital in Peo- ria.” Peoria does indeed have a university and several hospi- tals, but no “University Hospital.” When the judge learned “A liar needs a good memory.” Quintilian this, he reported the lawyer to the ARDC, which conducted a hearing and issued a censure. That is one notch short of a In an interview in the February 4, 2008, issue of Time, suspension. No lie is worth that. John Grisham, the author of crime and legal fiction, made There also is the risk that the lawyer or client will be the following reply when questioned if most lawyers are charged with perjury. The world of baseball provides two slimy: current examples. One player is under indictment for sup- posedly lying to a grand jury. Another is being investigated Not a lot. But there are enough slimy ones to juice for alleged false statements to a committee of the House of up the profession and create a lot of good stories. Representatives. While this has made perjury a more com- Nobody wants to read about the honest lawyer down mon topic than it has been at times in the past, conviction the street who does real estate loans and wills. If still requires a false statement as to a material fact, which the you want to sell books, you have to write about the person making the statement does not believe to be true. This interesting lawyers—the guys who steal all the high requirement of proof is why “he said, she said” testi- money and take off. That’s the fun stuff. mony in civil cases almost never results in perjury charges. I have never resented lawyer jokes but I hate it when Nevertheless, you must not risk being charged with perjury. people say that lawyers are “crooks.” The great majority of For all these reasons, it is foolish to lie. Consistent with lawyers are honest. In this era, the dishonest ones do not last Quintilian, if you always tell the truth, you never have to very long. (I have also concluded that most people who do worry about keeping your lies straight. not like lawyers change their minds once they need one.) This negative image of lawyers has been around for many years. Consider this passage from David Herbert Donald’s book, Lincoln (Simon & Schuster, New York, 1995): In notes for a lecture on the law, written about 1850, [Abraham Lincoln] referred to the “vague popular belief that lawyers are necessarily dishonest” and warned: Let no young man, choosing the law for a calling, for a moment yield to this popular belief. About the Author Resolve to be honest at all events; and if, in your own judgment, you cannot be an honest lawyer, re- Willis R. Tribler is a director of the firm of Tribler Orpett & Meyer, P.C. in Chicago. He is a graduate of Bradley solve to be honest without being a lawyer. Choose University and the University of Illinois College of Law, some other occupation. and served as President of the IDC in 1984-1985. Obviously, you cannot control whether other people are honest. You can, however, control yourself. Consistent with
54 Second Quarter 2008
New Members
The IDC is proud to welcome the following members to the association:
Daniel S. Alcorn Nicole Davis Allison Hill McJunkin Robertson, Wilcox, Alcorn, Karlin & SmithAmundsen LLC, Chicago Rusin Maciorowski & Friedman, Ltd., Statham, P.C., Galesburg ■ Sponsored By: Heather Kingery Chicago
Sarah M. Abrams Michael J. Denning Natalie M. Mesplou Rusin Maciorowski & Friedman, Heyl, Royster, Voelker & Allen, Rockford Lindsay & Rappaport, LLC, Chicago Chicago ■ Sponsored By: Scott Salemi ■ Sponsored By: Greg Vacala Kathryn Stalmack David R. Donnersberger Polsinelli, Shalton, Flanigan and Sara K. Barnes Chicago Park District, Chicago Sueltahus, P.C., Chicago Alholm, Monahan, Klauke, Hay & ■ Sponsored By: Steve Puiszis ■ Sponsored By: Nicole Behnen Oldenburg, LLC, Chicago ■ Sponsored By: Anne Oldenburg Donald Patrick Eckler Joan Rae Stohl Pretzel & Stouffer, Chartered, Chicago Querrey & Harrow, Chicago William G. Beatty ■ Sponsored By: April Walkup Johnson & Bell, Ltd., Chicago Katherine Haussermann ■ Sponsored By: Rick Hammond Cremer, Kopon, Shaughnessy & Spina, LLC, Kelly Stulginskas Chicago SmithAmundsen LLC, Woodstock Lucy B. Bednarek ■ Sponsored By: Stacy Fulco ■ Sponsored By: Glen Amundsen Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer, P.C., Chicago Marcie Hefler Jill Robyn Sundberg ■ Sponsored By: Thomas DiCianni Pretzel & Stouffer, Chartered, Chicago Hepler, Broom, MacDonald, Hebrank, True & Noce, LLC, Edwardsville Jennifer S. Burke John P. Heil, Jr. ■ Sponsored By: Steve Kaufmann Cassiday Schade LLP, Chicago Heyl, Royster, Voelker & Allen, Peoria ■ Sponsored By: James A Foster Charmagne Topacio James M. Hoffman Tressler, Soderstrom, Maloney & Priess, Andrew N. Coleman American Family Insurance Company, LLP, Chicago Alholm, Monahan, Klauke, Hay & Schaumburg Oldenburg, LLC, Chicago ■ Sponsored By: James Keane Sladjana Vockovic, JD ■ Sponsored By: Anne Oldenburg Garretson Santora Urgo & Nugent, Ltd., William Seth Howard Chicago Michael G. Cortina SmithAmundsen LLC, Chicago SmithAmundsen LLC, Woodstock ■ Sponsored By: Glen Amundsen Ronald L. Wisniewski ■ Sponsored By: Glen Amundsen Cray Huber Horstman Heil & VanAusdal, Matthew Carl Koch LLC, Chicago Renato M. Cosimini Marwedel, Minichello & Reeb, P.C., ■ Sponsored By: Dan Cray Rusin Maciorowski & Friedman, Ltd., Chicago Champaign ■ Sponsored By: Jennifer Groszek Jennifer L. Wolfe ■ Sponsored By: Ken Werts Cassidy & Mueller, Peoria Deborah La Dolce ■ Sponsored By: David Mueller Francis P. Cuisinier Law Offices of Robert L. Martier, Chicago Hartigan & Cuisnier, P.C., Chicago Sumi Yang Scott McCain McKenna Storer, Chicago Cremer, Kopon, Shaughnessy & Spina, LLC, ■ Sponsored By: Greg Cochran Chicago ■ Sponsored By: Nicole Milos 55 IDC Quarterly
duce such a successful program without the hard Association News work and dedication of these individuals. The 2009 Trial Acad- emy will be held January E-mail Address Change 23-24, 2009 at the Oak Brook Hills Resort in Oak 2008 Trial Academy Faculty Brook, Illinois. Please The e-mail address for the IDC has changed to mark your calendars today! [email protected]. Please update your address book accordingly.
Spring Defense Tactics Seminar North Central Region Trial Academy
The January 25-26, 2008 North Central Region Trial Academy was a huge success. Here’s what some of our at- tendees had to say:
“I was very impressed with the work and prepara- tion that went into the Academy - both faculty and ‘witnesses.’ It was a good experience, which I will recommend to others.”
“It was 100% unbelievable. I have already recom- mended it to friends and colleagues. I am only a second year attorney, but I still cannot believe how much I learned. I cannot say enough to express how much I enjoyed the time.”
“Overall very nice event with useful sessions and tips. It is a good, relaxed environment with the right blend of instruction and activity.”
Special thanks to our program Chair Aleen Tiffany, our faculty members Jim Ahern, Francis “Pat” Cuisinier, Kevin Ferguson, Brian Henry, Tho- mas Jones, Lisa 2008 Trial Academy Students LaConte, Rebecca Maas, J. Dennis Marek, David Mueller, Mike Reda, Francis “Chip” Spina and to the many IDC members who answered our call for volunteer “witnesses.” A tremendous amount of work goes into this event and we could not pro-
56 Second Quarter 2008
S p r i n g D e f e n s e T a c t i c s S e m i n a r Special Thanks... We would like to thank the following individuals and companies for participating in our Spring Defense Tactics Seminar on March 14: Planning Committee: Scott Stephenson, Committee Chairman — Litchfield Cavo, LLP Matt Booker — Heyl, Royster, Voelker & Allen Rossana Fernandez — Sanchez, Daniles & Hoffman, LLP Richard Lenkov — Bryce Downey LLC John O’Driscoll — Tressler, Soderstrom, Maloney & Priess, LLP Mark Sheaffer — Garretson, Santora, Urgo & Nugent, Ltd. Patrick Stufflebeam — Hepler, Broom, MacDonald, Hebrank, True & Noce, LLC Bob Varney — Robert T. Varney & Assoc.
Speakers: Mary Andreoni — Attorney Registration & Disciplinary Commission Hon. Donald M. Devlin (Ret.) — ADR Systems of America, LLC Thomas G. Drennan — Tressler, Soderstrom, Maloney & Pries, LLP Daniel A. Fittanto, P.E. — Exponent Matthew S. Hefflefinger — Heyl, Royster, Voelker & Allen Judge Barbara McDonald — Circuit Court of Cook County Richard E. Nugent — Garretson Santora Urgo & Nugent, Ltd. Catherine Coyne Reiter — Hepler, Broom, MacDonald, Hebrank, True & Noce, LLC John Stalmack — Bollinger, Ruberry & Garvey Matthew D. Walker — Litchfield Cavo, LLP Brian T. Weaver, P.E. — Exponent Daniel G. Wills — Swanson, Martin & Bell, LLP
Lunch Sponsor: ADR Systems, Inc.
Exhibitors: Amicus Court Reporters/Legal Visual Services ISBA Mutual Insurance Company ARCCA, Inc. Loop Legal Copy & Imaging / American Data Services Courtroom Sciences, Inc. Packer Engineering, Inc. Edward R. Kirby & Associates Records Imaging Service Exponent Rimkus Consulting Group Fischer & Associates Consulting Ruhl Forensic, Inc. IDEX SEA Limited
57 IDC Quarterly
Association News (Continued) IDC Annual Meeting & What Women Lawyers Want (and Need) Awards Banquet Friday, April 4, 2008 • University Club, Chicago The IDC is very fortunate to have a large corps of tal- ented, committed volunteers. We are very proud of the work they do for the defense bar and the Association and we invite you to join Special Guest Bruce DuMont of Beyond the Beltway as we gather at the IDC Annual Meeting & Awards Banquet to recognize our volunteer’s service. As host of Beyond the Beltway, Bruce DuMont is heard from coast to coast every Sunday night on more than 60 of America’s major radio stations, including WLS-AM/Chicago. The program began as Inside Politics on WBEZ-FM/Chi- cago in 1980 and offers a fresh, spirited and balanced analy- sis of national affairs. Following Mr. DuMont’s presentation will be the pre- sentation of IDC’s Awards of Excellence. The following awards will be presented: ❖ Distinguished Member Award – This award is given in recognition of outstanding leadership and involve- ment in the association ❖ Rising Star - The IDC Rising Star award is presented to a member of IDC who has been in practice for 10 years or less and who has demonstrated involvement and com- mitment to the defense bar and the association. ❖ President’s Award - The President’s Award is given in recognition of exceptional service, dedication and significant contributions to the IDC and its President. ❖ Meritorious Service – This award is given to recog- nize those who have served with distinction on the IDC Board of Directors, as IDC Quarterly Editor in Chief or as Committee Chairs. ❖ President’s Commendation - This commendation is given to our Event Committee Chairs in recognition and gratitude for service to the association. ❖ Volunteer of the Year – This award is given to recognize exceptional service and dedication to the association. From the passing of the gavel to our new president to Mr. DuMont’s presentation on the presidential race to the Award Recognition Ceremony, the IDC 2008 Annual Meet- ing and Awards Banquet will be a great time for all who at- tend. Please register today!
Schedule of Events 12:15 - 5:00 Ethics Seminar (See Flier on Page 60) 5:00 – 5:30 Annual Meeting 5:30 – 6:30 Cocktail Reception 6:30 – 8:30 Awards Banquet – featuring Bruce DuMont of Beyond the Beltway
58 Second Quarter 2008
Registration Form IDC’s Awards of Excellence recognize the outstanding accomplishments of Annual Meeting and Awards Banquet our members. Join with us as we present Friday, June 27, 2008 the IDC Awards of Excellence at our June 27, 2008 Awards Banquet, to be held at the Union League Club of Chicago. Attendee Member # Badge Name
Registration Firm Through June 7 – June 6 June 27 Address IDC Members $115 $165 City State Zip Non-Members $250 $300 Judge $25 $25 Direct Line
Registration for this event includes the Annual Firm Line Meeting, Awards Reception, an Exceptional Dinner and a presentation from Bruce DuMont from Fax Line Beyond the Beltline. Firms registering 8 attendees will receive a reserved table with their firm name Email and/or logo displayed. Special Dietary/Accessibility Needs Refund Policy Refunds will be made according to the following schedule: 100% Refund Through June 6 50% Refund June 7 – June 13 Registration No Refund June 14 – June 27 IDC Members ($115 through June 6; $165 June 7 – June 27) ...... $ Substitutions for your registration may be made. However, only one copy of seminar materials will Non-Members ($250 through June 6; $300 June 7 – June 27) ...... $ be offered per registration. Please submit substitution information in advance of the Judge ($25) ...... $ seminar. Total Amount Due $ Please complete this registration form and return it as soon as possible to: Payment Information My check, number is enclosed for $
Please charge $ to my:
❑ Visa ❑ MasterCard ❑ AmEx ❑ Discover
Card #: PO Box 3144 Springfield, IL 62708-3144 Exp: / Card Security Code:
Name as it appears on card: Questions? Phone: 800-232-0169 Credit Card Billing Address: Fax: 217-585-0886 Email: [email protected]
59 IDC Quarterly
Illinois Association of Seminar Agenda Defense Trial Counsel 11:45 – 12:10 Registration Presents 12:15 – 1:00 p.m. Ethics of Lawyers in Transition Featured Speakers: Hon. Warren Wolfson, Ethics Illinois Appellate Court, First District, and the and Robert P. Cummins 1:00 – 1:30 p.m. Ethics in the Representation of Mul- Legal tiple Clients Featured Speaker: Jeffrey Hebrank, Profession Hepler, Broom, MacDonald, Hebrank, True & Noce, LLC Friday, June 27, 2008 Union League Club 1:30 – 3:00 p.m. Ethics and Conflicts of Interest 65 W. Jackson Boulevard, Chicago I. Conflicts in the Tripartite Relationship Featured Speakers: Jill Berkeley, Howrey, 2007-2008 IDC President – Jeffrey A. Hebrank LLP and Daniel Wills, Swanson, Martin Hepler, Broom, MacDonald, Hebrank, True & Noce, LLC & Bell
Program Chair – Lori A. Iwan, The Iwan Law Firm, LLC II. The Extent of a Proper Conflicts Check Co-Chair – Paul Lynch, Craig & Craig Featured Speaker: Anne E. Thar, Winston & Strawn
On June 27, 2008, the Illinois Association of Defense 3:15 – 4:15 p.m. Ethics and Avoiding Malpractice and Trial Counsel will present Ethics and the Legal Profession Malfeasance at the Union League Club of Chicago. This conference is Featured Speakers: Robert Coleman, The being presented to fulfill the requirement that all Illinois at- Coleman Law Firm, Wendy J. Muchman, torneys earn four hours of professionalism/ethics credit dur- Illinois Attorney Registration and Disci- ing their reporting period. plinary Commission, and Mari Leigh, Professionalism is a wide umbrella of values encompass- Meckler Bulger & Tilson LLP ing competence, civility, legal ethics, integrity, commitment to the rule of law, to justice and to the public good. The goal 4:15 – 5:00 p.m. Lawyers on the edge and how to restore of this Conference is to fulfill the requirement while making civility and competence to the proceed- our attendees better attorneys. ings Panel Moderator: Paul Lynch, Craig & “… the essence of professionalism is a commitment Craig to develop one’s skills to the fullest and to apply that responsibly to the problems at hand. Professional- ism requires adherence to the highest ethical stan- Continuing Legal Education Credit dards of conduct and a willingness to subordinate narrow self-interest in pursuit of the more funda- The IDC will apply for the following credit for this mental goal of public service. Because of the tre- event: mendous power they wield in our system, lawyers Ethics Credit must never forget that their duty to serve their cli- Illinois 4.0 ents fairly and skillfully takes priority over the per- Indiana 4.0 sonal accumulation of wealth. At the same time, law- Missouri 4.8 yers must temper bold advocacy for their clients with Wisconsin 4.8 a sense of responsibility to the larger legal system which strives, however imperfectly, to provide jus- tice for all.” —Justice Sandra Day O’Connor
60 Second Quarter 2008 Registration Registration Form Through June 7 – June 6 June 27 Ethics and the Legal Profession Seminar IDC Members $150 $200 Non-Members $285 $335 Friday, June 27, 2008
Registration for this event includes seminar materials, refreshment breaks, lunch, and four professionalism credit hours. Space is Attendee Member # limited . . . reserve your spot today! Badge Name
Refund Policy Firm Refunds will be made according to the Address following schedule: 100% Refund Through June 6 City State Zip 50% Refund June 7 – June 13 No Refund June 14 – June 27 Direct Line
Substitutions for your registration may be Firm Line made. However, only one copy of seminar materials will be offered per registration. Fax Line Please submit substitution information in advance of the seminar. Email Bar Number: IL: MO: Please complete this registration form and return it as soon as possible to: IN: WI:
Special Dietary/Accessibility Needs
Payment Information My check, number is enclosed for $
Please charge $ ______to my:
❑ Visa ❑ MasterCard ❑ AmEx ❑ Discover
Card #: PO Box 3144 Springfield, IL 62708-3144 Exp: / Card Security Code:
Name as it appears on card: Questions? Phone: 800-232-0169 Credit Card Billing Address: Fax: 217-585-0886 Email: [email protected]
61 IDC Quarterly Illinois Association of Defense Trial Counsel MEMBERSHIP APPLICATION
Individuals seeking membership in the Illinois Association of Defense Trial Counsel must meet the following qualifications: Any person (A) who is a member in good standing of the Bar of the State of Illinois, and; (B) who is engaged actively in the practice of law, either privately or on behalf of his/her corporate or governmental employer, and; (C) who is of high professional standing; (D) who devotes a substantial portion of his or her professional practice to the representation of business, corporate, governmental, insurance, professional or individual civil litigants involving tort, contract, insurance, employment, municipal or business matters, and does not, for the most part, represent plaintiffs in personal injury litigation, or; (E) any person who is currently enrolled in an ABA accredited law school; who will support the purpose of the organization, and; who desires to receive the benefits of law student membership shall be eligible to apply for membership in this association.
MEMBERSHIP DUES <3 Years 3-5 Years 5-10 Years 10+ Years In Practice In Practice In Practice In Practice Attorneys $100 $135 $195 $225 Governmental Attorneys $75 $100 $160 $190 Law Students $20 APPLICANT INFORMATION – ATTORNEYS & GOVERNMENT ATTORNEYS
First Middle Last Suffix Designation Firm or Government Agency Address City State Zip County Firm or Agency Line Direct Line Fax Line Email Website Principal Area of Practice # of Attorneys in Firm Admitted to the Bar in the State of Year Bar # IDC Sponsor Name and Firm
APPLICANT INFORMATION – LAW STUDENTS First Middle Last Suffix Designation Law School Address City State Zip Anticipated Graduation Date
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 Home Address City State Zip In addition to joining the IDC, you can take advantage of the DRI Free SLDPO Membership Promotion! As a new member of IDC and if you’ve never been a member of DRI, you qualify for a 1 year free DRI Membership. If you are interested please mark the box below and we will copy this application and send it to DRI. Also, if you have been admitted to the bar 5 years or less, you will also qualify to receive a Young Lawyer Certificate which allows you one complimentary admission to a DRI Seminar of your choice. ❍ Yes, I am interested in the DRI Free SLDO Membership! (Application continued on next page)
62 Second Quarter 2008 Illinois Association of Defense Trial Counsel COMMITTEE INVOLVEMENT
All Substantive Law Committees are open to any IDC member, and the IDC Board of Directors strongly believes that all members should participate in at least one of these committees. Event and Administrative Committees are generally small committees and usually are appointed by the Board of Directors. If you are particularly interested in one of these smaller committees, please indicate such on this form. Your name will be sent to the committee chair and your interest will be noted on your membership file. The IDC Quarterly is always interested in new authors for columns or articles. Please contact the IDC office or the Editor in Chief if you are interested in working with this group.
SUBSTANTIVE LAW COMMITTEES Committees are to meet regularly, and at the Spring Defense Tactics Seminar; Each committee is responsible for writing one Monograph for the IDC Quarterly, and to submit other articles, as warranted; Committees are to keep abreast of current legislation and to work with the IDC Legislative Committee; To be a resource for seminar committees for speakers and subjects; To conduct, as a committee project, a break-out session at the Fall Conference, and; If and when certain issues arise that would warrant a specific “topical” seminar, the committee should with board concurrence, produce such a seminar. Please select below the committees to which you would like to apply for membership: ❍ Civil Practice & Procedure ❍ Insurance Law ❍ Products Liability ❍ Commercial Litigation ❍ Medical Liability ❍ Professional Liability ❍ Employment Law ❍ Municipal Law ❍ Workers’ Compensation
EVENT COMMITTEES ❍ Spring Defense Tactics Seminar ❍ Trial Academy ❍ Fall Conference
ADMINISTRATIVE COMMITTEES ❍ Amicus / Appellate Law ❍ Committee on Judicial Independence ❍ Membership ❍ Diversity ❍ Legislative ❍ Young Lawyers ❍ IDC Quarterly
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 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 or that I am currently enrolled in an ABA accredited law school.
Signed By: Date
❍ Enclosed is my check for $ ❍ Please charge my credit card in the amount of $
Credit Card # Exp. Date / Card Security Code
Name as it appears on the Card:
Billing Address
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, you have any questions, please contact the IDC office at: Illinois Association of Defense Trial Counsel PO Box 3144 • Springfield, IL 62708-3144 P: 800-232-0169 • F: 217-585-0886 • E: [email protected] • W: www.iadtc.org IDC Quarterly
2008CALENDAR of Events
● June 27, 2008 Ethics and the Legal Profession Seminar Union League Club of Chicago • Chicago, IL
● June 27, 2008 Annual Meeting and Awards Banquet Union League Club of Chicago • Chicago, IL
● September 12, 2008 Fall Conference University Club • Chicago, IL
ILLINOIS ASSOCIATION OF DEFENSE TRIAL COUNSEL LAW • EQUITY • JUSTICE
Illinois Association of Defense Trial Counsel Presorted P.O. Box 3144 Standard Springfield, IL 62708-3144 U.S. Postage PAID Permit No. 650 Springfield, IL