Florida High Court Clarifies Harmless Error Standard in Civil Appeals

 

photo

This post updates the article posted on July 23, 2014. To view the earlier post, click here.

On November 13, 2014, the Florida Supreme Court answered the following certified question of great public importance in the negative: “In a civil appeal, shall error be held harmless where it is more likely than not that the error did not contribute to the judgment?”  See Special v. West Boca West Med. Ctr., No. SC11-2511.  To view the supreme court’s opinion click here. 

The Estate of the Susan Special sued Dr. Ivo Baux, his related corporations, and West Boca Medical Center, Inc., alleging negligence in administering her anesthesia and in responding to her cardiopulmonary arrests during her cesarean delivery.  The defendants denied the allegations, claiming that her death was a result of amniotic fluid embolus, an allergic reaction caused by a mother’s blood mixing with amniotic fluid. Sitting en banc, the Fourth District held that the trial judge had abused his discretion by disallowing the estate’s cross-examination of a defense expert who testified as to the cause of death.  The main issue, therefore, was whether the denial of the cross-examination was harmless error.

The district court receded from the more stringent, outcome-determinative “but-for” test for harmless error.  Instead, the district court adopted a new standard, holding that error is harmless when the error more likely than not did not contribute to the judgment.  Applying this newly-adopted standard, the Fourth District affirmed the judgment below, concluding that it was more likely than not that disallowing the cross-examination of the defendant’s expert did not contribute to the jury’s verdict.  To view the Fourth District’s opinion, click here (reported at 79 So. 3d 755 (Fla. 4th DCA 2011)).

The supreme court disagreed with the district court and answered the certified question in the negative.  The supreme court adopted the harmless standard used in criminal cases stated in State v. DiGuilio, 491 So. 2d 1129 (Fla. 1986).  Adapted to the civil context, this harmless error test requires the beneficiary of the error to prove that the error complained of did not contribute to the verdict. Alternatively stated, the beneficiary of the error must prove that there is no reasonable possibility that the error complained of contributed to the verdict.  This standard focuses on the effect of the error on both the trier-of-fact and the result, rather than being result-oriented and focusing on the accuracy of the result or the weight of the evidence. 

Applying this standard to the case, the Court concluded that “there is a reasonable possibility that certain errors by the trial court contributed to the verdict.”   It therefore reversed the judgment of the district court and remanded for a new trial.

Tags:

Illinois Supreme Court to Tackle Election Law and Sovereign Immunity on Thursday

The Illinois Supreme Court just announced that on Thursday morning, it will hand down decisions in two civil cases:

  • Bettis v. Marsaglia, No. 117050 – “Does a plaintiff’s failure to name the Electoral Board as a party defendant and separately serve the Board with her petition for review in the Circuit Court deprive the Circuit Court of jurisdiction over her administrative challenge?”
     
  • Leetaru v. The Board of Trustees of the University of Illinois, No. 117485 – “Does the Court of Claims have exclusive jurisdiction over a suit against the University of Illinois seeking an injunction requiring them to comply with their internal guidelines in connection with an academic investigation?”

Our detailed summary of the facts and lower court opinions in Bettis is here. Our report on the oral argument is here. Our preview of Leetaru is here. Our report on the oral argument in Leetaru is here.

As of Thursday morning, Bettis will have been on the advisement docket for 92 days, and Leetaru for 91 days. Year to date, the mean time from oral argument to decision for the Court’s unanimous civil decisions has been 97.1 days. The mean time from oral argument to decision for the Court’s non-unanimous civil decisions has been 214.2 days.

Image courtesy of Flickr by Anne Swoboda.

 

Illinois Supreme Court Agrees to Decide Whether Pension Board's Disability Finding is Preclusive in Employee Benefits Act Proceedings

In the closing days of its November term, the Illinois Supreme Court agreed to decide whether a pension board’s finding that an officer is disabled for pension purposes is preclusive of the employer’s liability for health insurance premiums under the Public Safety Employees Act. In The Village of Vernon Hills v. Heelan, the Second District held that the answer was yes.

The defendant officer was injured in the line of duty in December 2009. During the year following the incident, the officer was paid his full salary by the village pursuant to the Public Employee Disability Act. He underwent one hip replacement in April 2010. His condition worsened, and the other hip was replaced in September 2010. He did not return to work after the second surgery. In August 2011, the Board of Trustees of the Police Pension Fund held that the officer qualified for a line-of-duty disability pension.

A month after the Board’s ruling, the village filed a complaint seeking a declaratory judgment that the officer was not entitled to health insurance benefits under the Public Safety Employees Act. In its complaint, the village alleged that the officer had not suffered a catastrophic injury in response to what he reasonably believed to be an emergency, as required by the Act. (820 ILCS 320/10.)

The village acknowledged the Supreme Court’s holding in Krohe v. City of Bloomington that a catastrophic injury under the Act was the same thing as in injury sufficient to result in a line-of-duty pension. The village argued that Krohe was factually distinguishable and wrongly decided. The officer counterclaimed seeking a declaratory judgment holding that the village was obligated to provide the health care premium benefits.

The officer filed a motion in limine to bar any testimony on the issue of whether he had suffered a catastrophic injury under the Act. The court granted the motion. Subsequently, the case proceeded to a bench trial. The village conceded Section 10(b) of the Act was satisfied. In light of the Court’s in limine order, the village made an offer of proof on the issue of catastrophic injury and emergency. The officer then moved for a directed finding on the village’s claim, which the court granted. The court subsequently found for the officer on his counterclaim as well.

After entry of judgment, the officer filed a motion for sanctions against the village under Supreme Court Rule 137, arguing that the village had brought its suit solely for purposes of harassment. The court denied the motion, finding that the village had brought its suit in good faith, arguing from the outset that it was seeking to change the law.

The Appellate Court affirmed, finding that Krohe controlled. Accordingly, the Board’s finding that the officer was injured in the line of duty and therefore entitled to a line-of-duty pension necessarily amounted to a finding that he sustained a catastrophic injury in responding to an emergency within the meaning of the Act.

The village argued that the issue was actually a matter of collateral estoppel, and since it wasn’t involved in the pension proceeding, the Board’s ruling was not preclusive. The Court rejected the village’s argument, concluding that the village was making a precluded collateral attack on the Board’s decision.

The officer cross-appealed from the trial court’s denial of his Rule 137 motion. The Appellate Court affirmed the trial court, noting that the village had made it clear from the outset that it was bringing a frontal challenge to Krohe in hopes of changing the law.

Justice McLaren dissented, arguing that the “findings of an administrative agency” could not be binding “on a trial court in a separate proceeding with different parties regarding matters that the administrative agency has no statutory authority to decide.”

We expect Village of Vernon Hills to be decided within eight to ten months.

Image courtesy of Flickr by Cyro A. Silva.

Illinois Supreme Court Agrees to Decide FutureGen Clean Coal Dispute

In the closing days of its November term, the Illinois Supreme Court agreed to decide an issue of potentially enormous consequence to a major Illinois utility, agreeing to review an order of the Illinois Commerce Commission requiring a major utility to enter into sourcing agreements with FutureGen 2.0, a non-profit corporation organized to create a coal-fueled near-zero emissions electric power plant. In Commonwealth Edison Co. v. Illinois Commerce Commission, Division 2 of the First District Appellate Court affirmed an order of the Commerce Commission.

In 1997, the Illinois legislature sought to restructure the electric industry in order to promote competition and customer choice in the supply of electricity by separating the sectors of electric generation and electricity delivery. Before an Alternative Retail Electric Supplier (“ARES”) can get a certificate of service authority from the Illinois Commerce Commission, it must demonstrate that it sources some of its electricity from clean coal facility. The petitioner utility is required to supply electricity to residential and small commercial customers within its service territory who have not chosen an ARES.

The Illinois Power Agency Act provides that the Illinois Power Agency Act is tasked with procuring electricity for the petitioner utilities. The Act further provides that by 2025, one quarter of the electricity used in the State shall be generated by cost-effective clean coal facilities. In late 2013, the Agency filed a proposed procurement plan with the Commission requiring the petitioner utilities to source electricity from FutureGen. The Commission concluded that requiring all seventy ARES to enter into sourcing agreements with FutureGen would represent an unwarranted administrative burden. Accordingly, the Commission ultimately entered an order requiring only the petitioner utilities to enter into the sourcing agreements in an amount sufficient to serve both their own eligible retail customers and the retail customers of the ARES.  The utilities would recover the additional costs through a competitively neutral charge added to ARES’ customers’ bills. The utilities sought administrative appeal of the Commission’s order.

On appeal, the petitioner utilities agreed that the Act permits the Illinois Power Agency to develop a procurement plan requiring the utilities to enter into sourcing agreements with a retrofitted clean coal facility. However, they argued that the Agency’s authority was limited to the utilities’ own customers; the Agency, they insisted, had no authority to compel them to acquire electricity for the ARES customers. The Court of Appeal disagreed, holding that since the Commission had the authority to compel both the utilities and ARES separately to enter into such agreements, it followed that the Commission had the power to compel the utilities to enter into such agreements on behalf of the ARES customers.

Next, two of the petitioners argued that the Commission’s order violated the dormant commerce clause, arguing that by requiring the utilities to enter into a sourcing agreement with FutureGen, the Commission had effectively excluded from consideration out-of-state clean electric sources. The petitioners also argued that seventy percent of the utility’s rate cap for clean coal electricity was devoted to FutureGen’s output, effectively excluding others from competing in the Illinois market. The Appellate Court disagreed, holding that because neither of the petitioners expressed any interest in producing clean coal electricity or were otherwise adversely impacted by the Commission’s order, they lacked standing to make their constitutional challenge.

Justice Pucinski dissented, finding that the order exceeded the Commission’s authority.

We expect Commonwealth Edison to be decided in eight to ten months.

Image courtesy of Flickr by epsos.

Illinois Supreme Court to Consider Discovery Privileges Applicable in Medical Malpractice

In the closing days of its November term, the Illinois Supreme Court agreed to decide an issue of potential importance to the medical malpractice bar: what kinds of documents are privileged from disclosure in a negligent credentialing claim in a medical malpractice case? The question arises in a decision from the Fifth District, Klaine v. Southern Illinois Hospital Services.

The plaintiffs sued the defendant doctor for medical malpractice. They added a claim against the defendant hospital, alleging that it was negligent in agreeing to give the doctor hospital credentials. The plaintiff demanded that the hospital produce various applications for staff privileges and attached documents in discovery. When the defendants refused, the plaintiffs filed a motion to compel. The Circuit Court subsequently examined the documents in camera. The court subsequently ruled that all of the documents were privileged aside from three specific groups, designed Group Exhibits B, F and J. In order to facilitate an immediate appeal under Supreme Court Rule 304(b), the defendants declined to comply with the court’s order and requested entry of a “friendly contempt.” The circuit court agreed and entered the contempt, fining the defendant $1.

The Fifth District affirmed the Circuit Court’s order in most respects. Group Exhibit F was a set of three applications for staff privileges, dated in 2009, 2010 and 2011. The Appellate Court rejected defendant’s claim that the 2011 application was irrelevant, since it dated after the allegedly negligent treatment of the plaintiff. The defendant argued that all three applications were privileged pursuant to the Data Collection Act, 410 ILCS 517/15(h), which prohibits “[a]ny redisclosure of credentials data contrary to this Section.” Citing the Medical Studies Act, the court held that when the legislature wishes to establish a new discovery privilege, it does not explicitly. The court declined to follow the First District’s decision in TTX Co. v. Whitley, where the Court held that a similar bar on production in the Illinois Income Tax Act privileged certain documents from discovery because it didn’t contain an exception for disclosure in judicial proceedings.

In the alternative, the defendant argued that even if Group Exhibit F wasn’t fully privileged, all references to findings in a report prepared about the defendant doctor by a medical consulting company must be redacted pursuant to the Medical Studies Act, 735 ILCS 5/8-2102. The consultants were retained by the hospital to conduct external peer reviews of its physicians. The court agreed that the data was privileged as being directly related to the hospital’s internal quality control process.

Next, the defendant argued that certain data contained in the defendant doctor’s applications for staff privileges was privileged pursuant to the Health Care Quality Improvement Act, 42 USC § 1137. The Act creates the NPDB, to which medical malpractice insurance carriers, boards of medical examiners and health care entities are required to report information regarding claims, disciplinary actions and other adverse information regarding a healthcare professional. The Act includes a sweeping confidentiality provision, but also provides that nothing in the Act should be construed as preventing disclosure by any person authorized under State law to do so (42 USC § 1137(b).] The Court held that this language eliminated any privilege, and the defendant was required to produce the information.

Next, the defendant argued that various pieces of information in the files relating to the treatment of other patients was non-discoverable pursuant to HIPAA, the Health Insurance Portability and Accountability Act (42 USC § 1320(d).) The Court disagreed on two grounds: first, much of the information did not involve individually identifiable health information, and second, the Act contained explicit provisions regarding disclosure in judicial proceedings. The Court also rejected the defendant’s argument that the defendant doctor’s assessment of his own physical condition was subject to the physician-patient privilege, holding that no independent physician’s assessment was involved.

Finally, the defendant argued that documents in Group Exhibit F containing a list of procedures performed by the defendant doctor over a four year period were privileged pursuant to the Medical Studies Act, 735 ILCS 5/8-2102. The Court acknowledged that any information generated by a hospital committee involved in internal quality control during the process of peer review would be privileged under the Act. However, the Court held that the defendant hospital had not provided sufficient information in its supporting affidavits to mandate a finding of privilege. According to the Court, the record did not enable it to rule out the possibility that the histories of procedures performed by the doctor weren’t kept in the ordinary course of the defendant hospital’s business.

Although the Court affirmed the lower court’s findings in nearly all respects, the Court nevertheless held that the defendant hospital’s refusal to produce was made in good faith, and not in contempt of the lower court’s authority. Accordingly, the Court vacated the finding of contempt.

We expect Klaine to be decided in eight to ten months.

Image courtesy of Flickr by Jasleen_Kaur.

Illinois Supreme Court Agrees to Decide Limits on Self-Insured Car Rental Company's Liability for Customers' Accidents

In the closing days of its November term, the Illinois Supreme Court agreed to decide an issue of considerable importance for Illinois’ car rental industry: can a self-insured car rental company be held liable without limitation for its customers’ accidents if the customer defaults?  In Nelson v. Artley, Division Two of the First District Appellate Court held that the answer is yes.

Nelson arises from an automobile accident involving a customer of the defendant. The circuit court entered a default judgment for $600,000 against the renter-driver of one car and in favor of the plaintiff. The plaintiff then began “citation” proceedings against the rental company, attempting to collect the entire judgment.

The rental company answered that its maximum liability for any accident of one of its renters was $100,000 pursuant to the rental agreement, case law and the Illinois Vehicle Code. Since it had already paid the other two injured parties $75,000 in connection with the accident, the rental company said its maximum liability was $25,000. The defendant attached a certificate of self-insurance and a copy of its rental agreement to the answer.

The plaintiff filed a petition for a turnover order against the rental company, seeking the full $600,000 plus interest and costs. The petition alleged that the rental company had represented in its certificate of self-insurance that it retained a risk of loss for third-party liability claims of up to $2 million per occurrence. The rental company responded by once again arguing that Illinois law limited its maximum per-accident exposure to $100,000, and in any case, to the extent that the Code permitted unlimited liability, it would be preempted by Federal law. The circuit court granted plaintiff’s petition, but limited the total amount to $25,000. The Appellate Court reversed.

The Vehicle Code provides that any car rental company operating in the state must provide proof of its financial responsibility. There are three ways to do so: file a bond, an insurance policy or a certificate of self-insurance issued by the Director of the Department of Insurance. A bond must be in the amount of $100,000, and conditioned on the rental company’s payment of any judgment against it arising from its renters’ accidents. A compliant insurance company must provide that the carrier will cover any accident involving one of the company’s cars, up to $50,000 for accidents involving one person, and $100,000 for accidents involving more than one.

Although Chapter 9 doesn’t specify the requirements for proof of financial responsibility for companies choosing to self-insure, there are relevant provisions in Chapter 7 of the Code. Chapter 7 provides that the Director may issue a certificate of self-insurance if the company demonstrates the ability to pay any judgment against it arising out of an accident involving a renter, and may cancel the certificate if it fails to pay such a judgment within 30 days. The court conceded that since no judgment had been entered against the rental company as a defendant for damages, the plain language of the Code didn’t appear to make the company liable for any part of the default judgment. But that was absurd, the Court found – that would mean that a self-insurer would have no potential liability, while other rental companies would be required to bear the burden of maintaining a bond or insurance policy.

The court turned to the mandatory insurance statutes covering vehicles in general for further guidance about the meaning of the Vehicle Code. The court noted that those statutes exempt certain vehicle owners from the requirement of mandatory coverage on each vehicle – owners carrying a certificate of self-insurance. Such entities are required to pay all judgments against it. The court then concluded that if a self-insurer under the mandatory vehicle insurance statutes must pay all judgments against it, self-insuring rental companies should bear a similar risk in conjunction with their customers.   If a rental company wishes to limit its liability under the Code, the Court wrote, it could carry an insurance policy or bond instead of self-insuring. By interpreting the Code to provide that a self-insuring rental company is potentially liable for its renters’ accidents without limitation, the Court concluded that it was also vindicating the legislative purpose of protecting the public from financially irresponsible drivers of rental cars. The Court acknowledged that companies choosing to post bonds or insurance policies potentially had significantly less exposure, but argued that this was intentional on the Legislature’s part – that the Legislature’s view was that bonds and insurance policies would provide a minimum level of protection, while those companies who were financially able would provide more through self-insurance.

The Court finally turned to the rental company’s argument that if the Vehicle Code provided for unlimited liability, it was preempted by federal law. The federal Graves Amendment (49 U.S.C. § 30106(a)) provides that a rental car company cannot be liable for harm to persons or property arising from the use, operation or possession of one of its vehicle if there is no negligence or criminal wrongdoing by the rental company. The court found no conflict between its holding and the Graves Amendment, holding that the only reason that the rental company was liable for its customers’ default judgments without limitation was that it had voluntarily chosen to be self-insured, rather than proving financial responsibility through posting an insurance policy or a bond.

We expect Nelson to be decided in eight to ten months.

Image courtesy of Flickr by Order_242.

Illinois Supreme Court Reaffirms Narrow Scope of Retaliatory Discharge Cause of Action

 

Last week, the Illinois Supreme Court reaffirmed the principle that retaliatory discharge is a narrow exception to the general doctrine of at-will employment under Illinois law. Unanimously reversing the Fifth District of the Appellate Court in Michael v. Precision Alliance Group, LLC, the Court held that where an employer chooses to give a valid, nonpretextual reason for an employee’s dismissal and the trier of fact believes it, the plaintiff has failed to prove causation and the plaintiff’s claim fails. Our detailed report on the underlying facts and lower court opinions in Michael is here. Our report on the oral argument is here.

The defendant in Michael grows, conditions, packages and distributes soybean seeds for commercial use. In late 2002, the defendant began experiencing a problem with underweight seed bags. After finding that an outgoing load was underweight, the defendant began randomly checking bags in the warehouse. In January 2003, the plaintiffs began weighing bags on their own, without the defendant’s knowledge, and reporting the results to a recently terminated employee. The recently terminated employee allegedly turned the data over to the Illinois Department of Agriculture.

Inspectors for the Department appeared at the plan in February 2003, resulting in five stop sale orders.   After the inspectors left, production was halted for 10 days while employees weighed every bag in the warehouse. Certain bags shipped prior to the Department’s inspection were returned to the warehouse, weighed and brought up to proper weight as well. During the Department’s inspection, an assistant plan manager began investigating the source of reports to the Department.

The following month, one of the three plaintiffs was terminated. The defendant testified that the terminated plaintiff had been engaged in horseplay with a forklift, although the plaintiff denied it. Not long after, the defendant’s corporate office decided to eliminate 22 positions across 8 holding companies. The remaining two plaintiffs were among the four employees at defendant’s plant selected for termination.

Based on evidence at trial that management staff was unaware that any of the plaintiffs were involved in the reports to the Department at the time of their terminations, the trial court entered judgment for the defendant. The trial court held that although a “causal nexus” existed between the plaintiffs’ protected activity and their termination, the presumption of retaliation was overcome by the defendants’ proof of a legitimate, non-pretextual reason for the terminations. The Fifth District reversed, holding that once the trial court found a “causal nexus” between the plaintiffs’ reports and their termination, causation was proven. Requiring the plaintiffs to prove that defendants’ articulated reasons for the termination were mere pretext amounted to asking the plaintiffs to disprove the defendants’ defenses.

In an opinion by Justice Burke, the Supreme Court reversed. The claim of retaliatory discharge had three elements, the Court wrote: (1) termination; (2) in retaliation for the plaintiff’s protected activities; and (3) the discharge violates a clear mandate of public policy. The employer is not required to give an alternative reason for the employee’s discharge, and merely articulating such a reason doesn’t defeat the claim. But if the employer suggests an alternative reason and the trier of fact believes it, then by definition causation can’t be proven, and the plaintiff’s claim fails.

The Appellate Court’s error actually stemmed from the trial court’s analysis, according to the Supreme Court. The trial court had applied a multi-factor analysis very similar to the test in Federal retaliatory discharge cases, where a finding of “causal nexus” is necessary to establish a prima facie case of discrimination. But the three-part Federal test didn’t apply under Illinois state law, the Court noted – therefore, “causal nexus” wasn’t the same as causation.

The plaintiff argued in the alternative that even if the trier of fact believed the defendants’ legitimate reasons for the discharge, plaintiff could still prevail for retaliatory discharge because there can be more than one proximate cause for the adverse employment action. The Court disagreed: once the trier of fact believes the defendant’s showing of an alternative reason, plaintiff’s case fails.

Image courtesy of Flickr by Starr Environmental.

 

Illinois Supreme Court Agrees to Decide Whether a Zoo is a "Local Public Entity"

The basic Illinois statute of limitations for personal injury actions is two years. But the Local Governmental and Governmental Employees Tort Immunity Act (745 ILCS 10/1-101) provides that for actions against a “local public entity,” the limitations period is one year.

In the closing days of its November term, the Illinois Supreme Court agreed to decide O’Toole v. The Chicago Zoological Society, which poses the question: is a zoo a “local public entity”?

O’Toole arises from a slip-and-fall at the zoo, in which the plaintiff sustained severe personal injuries. The defendant moved to dismiss on the grounds that the complaint was time-barred: it was filed nearly two years after the accident, long after the one-year statute under the Tort Immunity Act would have run, if it applied. The Circuit Court granted the motion to dismiss.

The First District, Division 4 unanimously reversed. The court notes that the term “local public entity” is broadly defined by the Tort Immunity Act to include “any not-for-profit corporation organized for the purpose of conducting public business.” Cases interpreting this phrase have required that “public business” be limited to activity that benefits the whole community, without restriction. The Supreme Court has held that a corporation does not conduct public business absent proof of local government control.

The court concluded that the Zoological Society was not engaged in conducting public business.  Although the Cook County Forest Preserve District owns the land on which the defendant’s zoo sits, it does not own the zoo itself or all of the property involved in operating it. More than 90% of the defendant zoo’s trustees and governing members were not employed by the District. Less than half the defendant’s funding was derived from District funds, and the District had no right to approve the defendant’s expenditures of that half of the budget. Furthermore, the defendant’s employees were neither entitled to a State pension or workers compensation; instead, the defendant was subject to OSHA guidelines. For all these reasons, although it conceded that a successful zoo was in the public interest, the court found that the defendant was not “conducting public business” sufficiently to be governed by the one-year statute of limitations.

We expect O’Toole to be decided in eight to ten months.

Image courtesy of Flickr by Tambako the Jaguar.

Illinois Supreme Court Agrees to Decide Whether Fees Must be Deducted From Health Care Settlements Before Applying Liens

In the final days of its November term, the Illinois Supreme Court allowed a petition for leave to appeal in McVey v. M.L.K. Enterprises, LLC. McVey, a case from the Fifth District, presents the following question: must attorneys’ fees and costs be deducted from a tort settlement before a lien under the Health Care Services Lien Act is paid?

McVey arose from an accident in a bar. The plaintiff settled her lawsuit with the employer of the tortfeasor. A petition to adjudicate liens was filed pursuant to the Illinois Health Care Services Lien Act by the hospital which treated the plaintiff. The trial court awarded the hospital $2,500, declining to deduct the plaintiff’s attorneys’ fees from the settlement before calculating the lien. In doing so, the trial court found that the Fifth District’s decision in Stanton v. Rea was in conflict with the Supreme Court’s decision one year before Stanton in Wendling v. Southern Illinois Hospital Services.

The Appellate Court reversed. The only distinction between Stanton and McVey, the Court wrote, was that Stanton involved a judgment entered after a jury verdict. But the Lien Act treated jury verdicts and settlements the same way, so that wasn’t a difference that made a difference.

According to the Stanton court, lienholders are limited to 40% of a judgment, and if lienholders receive 40%, then attorneys liens are limited to 30% of the judgment. Therefore, the court concluded, the legislature intended that tort plaintiffs receive at least 30% of the judgment. For that to be possible, attorneys’ fees had to be deducted from the judgment before applying the health care liens. The Court found that Stanton required reversal in McVey.

As for the trial court’s view that Stanton was in conflict with McVey, the court pointed out that it had addressed that argument in Stanton itself, concluding that Wendling was about the common fund doctrine rather than the Act. The Court found that its original rationale was still valid. The hospital also pointed to a new section of the Act, effective January 1, 2013, which allegedly found that fees are not to be deducted from subrogation claims. The Court held that given that no subrogation was involved in McVey, the new section didn’t apply.

We expect McVey to be decided in eight to ten months.

Image courtesy of Flickr by Lydia

Illinois Supreme Court Agrees to Decide Whether Failing to Give Reasons in Order on Sanctions Motion is Reversible Error

In the closing days of its November term, the Illinois Supreme Court agreed to decide a simple issue with potential implications across a wide variety of civil litigation: is a trial court’s order granting or denying sanctions under Supreme Court Rule 137 per se reversible error when it fails to include reasons for the trial court’s action? The case is Lake Environmental, Inc. v. Arnold, and the Fifth District’s answer to the question presented was “yes.”

Lake Environmental arises from an administrative order revoking the plaintiff’s license as an asbestos contractor. During that proceeding, the Illinois Department of Public Health filed a complaint seeking civil penalties and injunctive relief. The plaintiff filed a petition for administrative review in Circuit Court of the administrative ruling of revocation. The trial court reversed the license revocation and remanded for consideration of whether the plaintiff’s license should be suspended or revoked. Subsequently, the plaintiff filed a motion for sanctions under Supreme Court Rule 137, which is (more or less) Illinois’ state-law version of Federal Rule 11. The trial court denied the motion in a one-sentence order which included no explanation.

The Appellate Court reversed. The Court chose to follow a line of decisions from the Second District holding that a trial court “must provide specific reasons for his or her ruling, regardless of whether sanctions are granted or denied.” The Court held that without an explanation for why the trial court ruled as it did, it would be unable to evaluate the court’s action, and the Court declined to infer the basis for the trial court’s order. The Court rejected scattered decisions from other Districts which the defendant argued stood for the proposition that an explanation of reasons is merely preferred practice, as opposed to being a requirement.

We expect Lake Environmental to be decided in eight to ten months.

Image courtesy of Flickr by Liz West.

Illinois Supreme Court Finds All Postal Marks are Not Created Equal

On Thursday morning, a unanimous Illinois Supreme Court affirmed in Huber v. American Accounting AssociationAs briefed, Huber presented the question of whether a postmark was sufficient proof of timely mailing to trigger Illinois’ limited mailbox rule. But in the end, in an opinion by Justice Mary Jane Theis, the Court held that the plaintiff didn’t have the prerequisite to present that question: a postmark. Our detailed summary of the facts and underlying court decisions in Huber is here Our report on the oral argument is here.

The clerk received the plaintiff’s Notice of Appeal on April 9, thirty-four days after entry of judgment. The envelope in which the Notice of Appeal arrived appeared to show a postmark date of April 3 – twenty-seven days after entry of judgment. According to Rule 373, if received after the due date, the time of mailing is deemed to be the time of filing as long as proof of mailing is made pursuant to Rule 12(b)(3). Rule 12(b)(3) provides that an attorney certificate or affidavit of a non-attorney is required to prove mailing. The Appellate Court held that because the plaintiff failed to provide proof of mailing pursuant to Rule 12(b)(3), the mailbox rule didn’t apply and the plaintiff’s Notice of Appeal was untimely.

The Supreme Court affirmed. The Court noted that as originally adopted in 1967, Rule 373 has allowed proof of mailing by a postal service postmark. As a result of illegible postmarks and delays in affixing postmarks, the reference to postmarks was deleted from the Rule in 1981, substituting the requirement of an attorney certificate or non-attorney affidavit.

The problem, the Court held, was plaintiff’s mailing envelope didn’t contain a postmark. The Court defined a postmark as an official Postal Service imprint reflecting the location and date the Postal Service assumed control of the piece, and cancelling the affixed postage. What the plaintiff called a postmark was in fact a postage label from an Automated Postal Center (APC). An APC is a self-service kiosk, generally located in post office lobbies, which enables customers to mail letter and packages, buy postage, look up zip codes and access assorted other services. But the APC label is not a “postmark,” the Court found – on its face it shows a “date of sale,” not the date on which the piece was turned over to the postal service and the postage cancelled. Thus, it doesn’t matter if Rules 373 and 12(b)(3) might permit proof of mailing by a legible postmark, since plaintiff didn’t have one – the APC label indicated that the plaintiff might have mailed his envelope on April 3, but nothing more. Since plaintiff neither provided the certificate or affidavit required by Rule 12(b)(3) or even a valid postmark, the mailbox rule didn’t apply, and his notice of appeal was untimely. Therefore, the judgment was affirmed.   

Image courtesy of Flickr by Wystan.

Illinois Supreme Court Reinstates Attorney General's Appeal from Illinois Commerce Commission Order

On Thursday morning, the Illinois Supreme Court resolved a confused issue in utilities law, holding unanimously in The People of the State of Illinois ex rel. Madigan v. Illinois Commerce Commission that the 35-day period provided by the Public Utilities Act (220 ILCS 5/10-201(a)) to appeal from orders of the Illinois Commerce Commission trumped the thirty-day period provided by Supreme Court Rule 335(i)(1) for administrative appeals. Our detailed summary of the underlying facts and lower court opinions is here. Our report on the oral argument is here.

Madigan arises from a decision of the Illinois Commerce Commission to allow the respondent water company to impose a 1.25% reconciliation surcharge on its customers. The Commission also declined to require the utility to adopt a unit sewer rate for low-volume customers. The Attorney General appealed both aspects of the Commission’s decision.

The Attorney General filed the State’s notice of appeal thirty-five days after the Commission issued its order. As such, it was timely pursuant to Section 10-201(a) of the Public Utilities Act, but untimely if Supreme Court Rule 335 applied. The Appellate Court dismissed.

In a unanimous opinion by Justice Lloyd Karmeier, the Supreme Court reversed. The Court said that review of ICC decisions is pursuant to “special statutory jurisdiction.” An appellate court has no power with respect to an administrative decision aside from the provisions of the governing statute - strict compliance is required. Accordingly, the Attorney General’s appeal was governed by the Act, not the Court’s own rules. While it was true that the Court has concurrent constitutional authority with the General Assembly to decide on rules for administrative review, the Court’s rules govern judicial review only in the absence of express contrary directions from the legislature. That conclusion necessarily followed from the principles (and limitations) inherent in special statutory jurisdiction.

Image courtesy of Flickr by H. Michael Karshis.

Illinois Supreme Court Holds Circuit Court Lacks Jurisdiction over Whistleblower Rate Challenge

State of Illinois ex rel. Pusateri v. The Peoples Gas Light and Coke Company presented an important question for the utilities bar: do the Circuit Courts have jurisdiction to order rate refunds on the grounds that the utility allegedly used falsified information in support of its rate case? On Thursday morning, a unanimous Illinois Supreme Court answered “No.” Our detailed summary of the underlying facts and lower court opinions in Pusateri is here. Our report on the oral argument is here.

Plaintiff filed a sealed complaint under what was then called the Whistleblower Reward and Protection Act (it’s now the Illinois False Claims Act) in 2009. The plaintiff – a former management-level employee of the defendant - alleged that the defendant was required to file a written report with the Illinois Commerce Commission whenever it took more than an hour to respond to a report of a gas leak. The plaintiff claimed that he and others had been instructed to falsify the reports to bring response times down below the threshold, and that the defendant had used this exaggerated record to support a rate case (as the Supreme Court noted, the complaint was never clear as to which rate case). The plaintiff alleged that after the rate increase was approved, the invoices sent by the defendant to the State as a gas customer were fraudulent claims for payment under the Act.

The Circuit Court dismissed, holding that the ICC apparently doesn’t consult the reports in rate making. The Appellate Court reversed with one Justice dissenting, finding that the reports could indeed have been part of the basis for a rate case.

In an opinion by Chief Justice Garman, the Supreme Court unanimously reversed. The matter was ultimately a simple one, the Court held. The ICC had exclusive jurisdiction over ratemaking, which is a legislative function, not a judicial one. Even when the courts reverse a ratemaking order, the court ordinarily doesn’t mandate a new rate, and where the new rate hasn’t been stayed pending appeal, ratepayers are often not entitled to a refund. “At its heart,” the Court found, “Pusateri’s complaint alleges [the defendant] used fraudulent means to get the State (and others) to pay too much for natural gas.” That made it a request for refunds, and only one entity in the State has original jurisdiction to order such relief – the ICC.

Moreover, the complaint amounted to a prohibited collateral attack on ICC ratemaking orders. In order to give the plaintiff any relief, the trial court would have had to determine what rates would have been absent the allegedly fraudulent safety reports, and ratemaking authority is statutorily reserved to the ICC alone. The plaintiff argued that the defendant had forfeited the jurisdictional argument by failing to raise it below, but the Court held that attacks on subject matter jurisdiction can’t be waived.

Plaintiff’s interpretation of the False Claims Act would “invite the circuit court to review a Commission rate order collaterally, in the absence of any specific grant of jurisdiction and less deferentially than the manner prescribed under the Public Utilities Act,” the Court concluded.

Image courtesy of Flickr by Steven Depolo

Much Ado About Little: Deadlocked Illinois Supreme Court Punts on Red Light Camera Ordinances

 

One of the most widely anticipated cases on the Illinois Supreme Court’s civil docket ended on Thursday morning with a surprise: the Court decided not to decide, dismissing the appeal in a per curiam order.

Keating v. City of Chicago was a constitutional challenge to the validity of Chicago’s red light camera ordinance. Our detailed report on the underlying facts and lower court orders is here. Our report on the oral argument is here.

Article VI, Section 3 of the Illinois Constitution requires that the Supreme Court must have the concurrence of four Justices in order to hand down a decision in any case. The problem in Keating was that by the time of the decision, two Justices, Justice Anne Burke and Justice Lloyd Karmeier, had recused themselves, leaving a five-Justice Court. And the remaining Justices were split on the case three to two. So the Court did the only thing it could – it tossed the appeal.

Although deadlocks are relatively rare, they’re not unheard of at the Court. The most recent one on the Court’s civil docket was Vill v. Industrial Commission in 2005. There were two more in 2004, South 51 Development Corp. v. Vega and Commerce Bank v. Youth Services of Mid-Illinois.

Nevertheless, the non-result in Keating raises the question of whether Illinois should have a mechanism available to appoint pro tem Justices when one or more Justices have recused themselves. In California, Article VI, Section 6 of the state Constitution provides such a mechanism – the Chief Justice is empowered to reassign Court of Appeal Justices to the Supreme Court as pro tems. The Court maintains a list of active Court of Appeal Justices, and pro tem appointments rotate alphabetically, each Justice sitting for one case. It’s a familiar system in California; since the Governor appoints new Justices when one retires, vacancies are not especially rare (indeed, Justice Joyce Kennard retired in April and no replacement has been nominated).

So, readers – do you think Illinois should have a similar system? Should single-case vacancies be filled in some other way? Or is the current system for the best?    

Image courtesy of Flickr by R/DV/RS.

 

The Perils of Incomplete Service: The Illinois Supreme Court Debates Bettis v. Marsaglia

During its September term, the Illinois Supreme Court heard oral argument in Bettis v. Marsaglia. Bettis presents an issue of potential significance to election lawyers: is a petition for Circuit Court review from an Electoral Board decision which isn’t served on the Board itself procedurally defective? Our detailed summary of the facts and lower court rulings in Bettis Is here.

Bettis arose from a proposed ballot proposition regarding the School District’s issuance of working cash bonds. Objections were filed, alleging that the plaintiff’s petitions were unnumbered and improperly bound. The Electoral Board agreed, and the plaintiff filed a petition for review in the Circuit Court.

The plaintiffs served every individual member of the Electoral Board, plus the two objectors. The problem was, they didn’t serve the Electoral Board as a separate entity. The defendants moved to dismiss for lack of jurisdiction, and the Circuit Court agreed.

Bettis turns on Section 10-10.1(a) of the Election Code (10 ILCS 5/10-10.1(a)). According to the statute, a party seeking judicial review of a decision of the Electoral Board must “file a petition with the clerk of the court” and “serve a copy of the petition upon the electoral board and other parties to the proceeding by registered or certified mail within 5 days after service.” The districts of the Appellate Court are split on whether the statute requires service on the Electoral Board as an entity, or if service on all the members is enough. In Bettis, the Fourth District followed the First District’s view that the statute requires service on the Board and affirmed dismissal.

Counsel for the plaintiff began the Supreme Court argument. He argued that the purpose of the statute is to let the board know that the party has filed a petition for review, since the board must prepare the record. Plaintiff served every member of the Board by registered mail – plus the School Board, the superintendent, the secretary of the board, the secretary of the school district and the objectors to boot. Chief Justice Garman asked whether the case was moot. Counsel pointed out that although the election was in 2013, the plaintiff had asked that it be reviewed as a recurring issue of great interest. Justice Thomas asked whether the plaintiff was asking for any particular relief beyond an opinion saying that the lower courts were wrong. Counsel said he wanted a declaration that service on the individuals was sufficient. Without that, the Board can probably proceed to issue the bonds. If the plaintiff wins at the Supreme Court, the case goes back to the trial court for review of the Electoral Board’s decision. If not, the Board can proceed with the bonds without the voters’ involvement. Justice Burke wondered why, if service on the Board wasn’t mandatory, the legislature wouldn’t have said service on the members of the Electoral Board. Counsel responded that in fact, the Electoral Board doesn’t have an address or phone number. Justice Burke asked counsel whether he was arguing that compliance with the statute was an impossibility. Counsel answered that he wouldn’t know where to mail it to. Moreover, he pointed out, the statute doesn’t refer to the board as a legal entity – it uses lower case initial letters, rather than a proper noun. Justice Theis asked whether the statute was ambiguous, and if so, why? Counsel answered that he believed the reference to the board means the members, and the Fifth District has agreed. Justice Theis suggested that the plain language says service on the Board, and once again, asked whether and how the statute was ambiguous. Counsel answered that whether or not the statute is ambiguous depends on what the reference to the board requires, and whether service on all members is enough. Justice Burke pointed out that the plaintiff was arguing that it was impossible to serve the board, and counsel again argued that the board has no address. Justice Theis asked whether the clerk receives filings for the board, and counsel responded that the superintendent was listed as the person to file petitions with to get on the ballot – which is what plaintiff did. Justice Theis asked counsel whether he was saying the entire statute was ambiguous because it doesn’t give an address for the board? Counsel explained that the Fifth District held that service on the members was sufficient because the board before it had no address, and the court believed it would be useless to serve the county clerk in the board’s stead. Chief Justice Garman pointed out that issues involving notice or service typically revolve around strict or substantial compliance. Was counsel arguing that that’s not the question in Bettis, or was the plaintiff arguing impossibility? Counsel explained that in Cook County, some agencies have fixed offices. In southern Illinois, that typically isn’t the case. The purpose of the statute is to ensure that the board has notice, and that was done – they actually prepared the record, their only function in the administrative review case.   Justice Thomas suggested that counsel was arguing issues from the cross-appeal even though he had not filed a brief in the cross-appeal – had counsel thereby waived the right to argue on those issues? Counsel answered that the plaintiff was precluded from presenting testimony, and therefore the plaintiff doesn’t have a complete record from the Board to fully present her arguments. Justice Thomas suggested that the plaintiff certainly had a right to file a reply brief to respond to the cross-appeal issues. Counsel answered that since the plaintiff had moved to strike those issues at the Appellate Court, and the Appellate Court ultimately didn’t reach them, he didn’t think it was appropriate to brief the issues. The only issue considered by the Appellate Court was adequate service.

Counsel for the Electoral Board members followed. He argued that the members were seeking finality. Counsel told the Court he was present at the trial court, and had he wanted to file the record, he would have had to first move for leave to intervene, since the Board wasn’t a named party either. Counsel argued that it simply isn’t true that the Electoral Board has no mailing address – the address is provided in the Election Code as being the regular meeting place of the school board. Justice Thomas noted that some courts have suggested that the statute requires service on both the Board and all individual members, and asked counsel to point to language in the statute requiring that. Counsel answered that the Administrative Review Law provides the procedure, and it’s fundamental that all members of the agency are parties to the order under review. Justice Thomas said that Section 10-10.1 requires service on the Electoral Board, and Section 10-9.5 defines what the Electoral Board is; it defines the Board as its several individual members. So why can’t that definition be read into Section 10-10.1, leading to the view that service on the members is service on the Board? Counsel answered that the Board is a separate entity from its members. Justice Thomas suggested that the Board here isn’t a permanent entity like the State Board of Elections is. These boards are formed temporarily to resolve disputes, and the statute spells out who serves. So if there are two reasonable interpretations of the statute, why shouldn’t the Court err on the side of ballot access? Counsel answered that the ballot access principle was about candidates seeking to get on the ballot – it had never been applied to referenda. Justice Kilbride asked whether the Administrative Review Law was applicable here. Counsel agreed it was, and Justice Kilbride asked whether the Administrative Review Law settled the issue – in Section 3-106 and 3-105, it says that service on the director or agency head is service on a board, and failure to serve is not a basis for dismissal. Justice Kilbride asked whether the chair of the board was served, and counsel said yes, and his home address. Justice Kilbride asked how the chair was referenced in the pleadings, and counsel answered by name, nothing more. Justice Burke asked whether counsel was elevating form over substance – all parties were served and had notice. Where did the statute require that all members be named in the caption? Counsel answered that the only requirement of the statute was to recognize the board as a separate entity. If service at a member’s home address is sufficient, it allows petitioners to ignore the Board’s separate existence.   Justice Burke asked whether counsel was saying the members didn’t know this was an Electoral Board case. Counsel responded that there’s a difference between notice that a lawsuit has been filed, and notice that that party is a defendant. Justice Theis asked whether the individual members of the Board appeared below, and counsel answered that they had not in the trial court, but had in the Appellate Court. Justice Theis asked who counsel represented, and counsel answered the Board and the individual members. Counsel said he wasn’t arguing that the caption of the case had to be a certain way. Justice Thomas said regarding the issue of the Board’s decision not being attached, and the petitions not numbered – did the Appellate Court address that issue? Counsel said no. Justice Thomas asked whether there is enough in the record for the Court to grant relief on that basis. Counsel argued that either issue – the failure to attach the decision (an argument the Appellate Court rejected) or the pagination issue – was an alternative grounds for affirmance. As for attaching the decision, counsel argued that it’s elementary that a complaint based on an instrument must attach that instrument. Justice Thomas asked whether the Court should allow opposing counsel to disagree with him on rebuttal. Counsel answered that he hadn’t researched the issue of failing to file a reply brief, but that was one way the Court could go. Ultimately, the case was delaying the issuance of needed school bonds, and the appellant made no attempt to expedite the case. Counsel argued that the Court should decline to apply the recurring issue of public concern doctrine and instead dismiss on grounds of mootness. Justice Thomas asked if the Court disagreed on the issues counsel has argued, what happens next. Counsel responded that the defendant should be permitted to move to dismiss for mootness at the trial court, and the motion should be granted. A petition for a referendum is valid for no other election, so there is no relief available here. Counsel concluded by arguing that the Election Code includes a mandatory requirement that petitions be numbered consecutively, and the plaintiff’s failure to do so invalidated her petition.

On rebuttal, counsel for the plaintiff argued that after the trial court, the only option available to the plaintiff was appeal. Plaintiff did appeal, and the election date passed. The plaintiff shouldn’t be penalized because the election date passed while she was exercising her rights – the mootness doctrine wasn’t designed to work that way. Justice Thomas asked if counsel had the option of moving to expedite the proceedings. Counsel answered that the defendant made a motion to expedite, and the plaintiff stipulated to it. Justice Thomas asked why the plaintiff failure to attach the decision of the Board shouldn’t be dispositive. Counsel answered that the Board had only one function – to prepare the record and give it to the trial court. Justice Thomas asked whether there was a written decision that could have been attached to the petition. Counsel once again argued that the Electoral Board is not a corporate entity – its only responsibility is to prepare the record, and the Board doesn’t have to appear or file an answer. With respect to numbering the pages of the petitions, there are cases from the Fourth and First District holding that the requirement is directory, not mandatory. Justice Theis asked whether there were decisions from the Supreme Court so holding, and counsel said only the Appellate Court. As for opposing counsel’s statement that the Board had an address, the plaintiff served every conceivable actor involved. Chief Justice Garman asked counsel what effect the passing of the election had on his case. Counsel answered that the trial court could open the way to issuing the bonds if the plaintiff lost, and if the plaintiff won, the court could return matters to square one.

We expect Bettis to be decided in four to five months.

Image courtesy of Flickr by Kristin_a.