The Appellate Strategist

Insights on appellate issues, trial consultations, and evaluating appeals

Illinois Supreme Court Holds Temporarily Relocated Union Pipefitter Not Entitled to Workers’ Comp

By Kirk Jenkins on Posted in Illinois

This morning, a six-justice majority of the Illinois Supreme Court has reversed the Fourth District of the Appellate Court, holding in The Venture-Newberg-Perini, Stone & Webster v. The Illinois Workers’ Compensation Commission that temporarily relocating for a distant job did not transform an employee’s commute into part of his or her employment for purposes of eligibility for workers’ compensation.

The claimant in Venture-Newberg was a pipefitter residing in Springfield. Over the two years preceding the accident, the claimant had worked short-term jobs for the plaintiff on four different occasions at three different plants. In March 2006, the plaintiff found itself unable to fill the available positions at a plant in Cordova, Illinois from locally based union workers, and posted the job at other union halls, including the claimant’s hall in Springfield. Claimant bid for and was awarded the position, which involved working 12 hours a day, seven days a week in Cordova – 200 miles from Springfield.

As a result, the claimant arranged for short-term lodging within an hour’s drive of the plant. On the second day of work, the claimant was seriously injured commuting to work when the pickup truck in which he was riding skidded on a patch of ice.

The general rule in workers’ compensation law is that injuries occurring while the employee is commuting to or from work do not arise out of and in the course of employment and are therefore not compensable. While there are limited exceptions, the arbitrator decided that none of them applied, and denied the claimant’s application for workers’ compensation benefits. The Workers’ Compensation Commission reversed, finding that the claimant’s course or method of travel was determined by the demands and exigencies of his job. The Circuit Court reversed the Commission on administrative review. The Appellate Court then reversed the Circuit Court, holding that the claimant qualified as a “traveling employee,” and his injuries were sustained in the course of his employment.

In an opinion by Chief Justice Rita B. Garman, the Court reversed the Appellate Court. A “traveling employee,” the Court wrote, was one “whose duties require[d] them to travel away from their employer’s premises.” Injuries arising from three types of acts by a traveling employee were compensable: (1) acts the employer instructs the employee to perform; (2) acts which the employee has a common law or statutory duty to perform; and (3) acts which the employee might be reasonably expected to perform incident to his or her assigned duties. The claimant argued that the third category applied to his commute from his temporary housing.

The majority disagreed. The claimant was neither a permanent employee of the plaintiff, nor even working for the company on a long-term exclusive basis. Nothing required him to travel out of his union’s territory to accept the job. The claimant was hired to work at the Cordova location, not directed by the employer to travel away from his ordinary work site to another location. The employer didn’t assist the claimant with his housing plans, nor did it reimburse him for travel expenses. For all these reasons, the majority concluded that the claimant was not a “traveling employee.” The majority also pointed to what it perceived as an anomalous result of the claimant’s argument – that employees hired from more distant union halls would be covered by workers’ compensation for their commutes, while employees living nearby would not.

The majority rejected the Appellate Court’s conclusion that the claimant’s lodging was decided by the demands and exigencies of his job as well. His decision to stay close to the work site was a personal one, the majority found. He had not been required to take the job, and was not required by the company to relocate. Nor was there any evidence in the record that the company had required him to be within an hour of the plant at all times, or even suggested it.

Justice Thomas L. Kilbride dissented. The record was conflicting on whether or not the company expected or required the claimant to stay nearby, Justice Kilbride wrote. Therefore, under the manifest weight of the evidence standard, the Commission’s decision should have been upheld. Justice Kilbride pointed out that the plaintiff employer was not located in Cordova – it was based in Wilmington, Illinois. Therefore, “[t]here can be no question” that the claimant “had to travel away from his employer’s premises.” Further, the plaintiff and the plant owner had agreed to hire from outside the local area – union tradesmen who would necessarily be required to temporarily relocate for the job. “By definition” that made the claimant a traveling employee, Justice Kilbride wrote. Since the claimant’s conduct in commuting from his temporary housing to the plant was entirely reasonable, his injuries arose during the course of his employment, making them compensable.

Illinois Supreme Court Sides With Pension Fund in Firefighters’ Dispute

By Kirk Jenkins on Posted in Illinois

In the final announced opinion day of 2013, the Supreme Court has filed its opinion in Hooker v. The Retirement Board of the Firemen’s Annuity and Benefit Fund of Chicago, holding that the plaintiffs – widows of two deceased firefighters – are not entitled to the inclusion of “duty availability pay” in their survivors’ annuities. Our detailed summary of the facts and underlying opinions in Hooker is here. Our report on the oral argument is here.

Following the deaths of their husbands, plaintiffs were granted widow’s pensions by the defendant. Plaintiffs filed a complaint in Cook County Circuit Court, arguing that they were entitled to the annuity awarded to the widow of a firefighter who died in the line of duty. Relying upon intervening new authority from the Appellate Court, the Circuit Court entered an agreed order upholding the plaintiffs’ position. The Board awarded the annuities retroactive to the date of the new authority – 2004. Plaintiffs then amended their complaint to raise three claims: (1) they were entitled to the annuity retroactive to the date of their husbands’ deaths, (2) class certification of all widows similarly situated, and (3) when their annuities were calculated, “duty availability pay” – DAP – should have been included, even though the decedents never received it.

The Circuit Court permitted the amendment, but stayed proceedings while the dispute over the starting date for the annuities was resolved. In 2007, the court directed the Board to pay the annuities retroactive to the date of the decedents’ deaths. The Board appealed and the appellate court affirmed. Following that, the Circuit Court dismissed Count I of the plaintiffs’ amended complaint as moot. Since plaintiffs no longer had an individual claim, the Court dismissed Count II, the putative class claim, as well. As for Count III, the Circuit Court denied the plaintiffs’ motion for summary judgment and granted the Board’s cross-motion, holding that the plaintiffs were not entitled to have DAP included in calculating their annuities. The Appellate Court reversed.

In an opinion by Justice Anne M. Burke, the Supreme Court reversed the Appellate Court. Hooker turns on harmonizing two sections of the Pension Code. First, we have Section 6-140, which describes the annuities plaintiffs were entitled to receive:

The annuity for the widow of a fireman whose death results from the performance of an act or acts of duty shall be an amount equal to 50% of the current annual salary attached to the classified position to which the fireman was certified at the time of his death and 75% thereof after December 31, 1972.

Note the words “current annual salary.” What this means is that the survivors’ annuity is not necessarily tied to the salary the firefighter was actually receiving at any time during his or her career.

Next, we have Section 6-111(i) of the Code, a 2004 amendment by the legislature defining the term “salary” to include DAP (which had been created in the early 1990s as part of a collective bargaining agreement):

[T]he salary of a fireman, as calculated for any purpose under this Article, shall include any duty availability pay received by the fireman . . . and references in this Article to the salary attached to or appropriated for the permanent assigned position or classified career service rank, grade, or position of the fireman shall be deemed to include that duty availability pay.

The plaintiffs argued that by virtue of the term “deemed” in the final clause of Section 6-111(i), DAP must be included in salary calculations regardless of whether or not the firefighter ever received it. But according to the majority, the correct interpretation of the clause was that the final reference to “that duty availability pay” was a reference back to “any duty availability pay received by the fireman.” Therefore, if the firefighter never received DAP, it was excluded from “salary” for purposes of the annuity. By concluding that the final clause clarified that “salary” should always include DAP, the majority concluded that the Appellate Court had improperly added the words “even if it was not received by the fireman” to the statute. (As for the italics I’ve added to Section 6-111(i) – we’ll get to that in a minute in discussing the dissent).

The majority concluded that any other result would lead to anomalous results.  “Salary” would always be paid “so long as there are firefighters,” the majority wrote. But at least in theory, DAP could be eliminated whenever the parties negotiated a new collective bargaining agreement. Therefore, if DAP was included in the calculation, the possibility existed that survivors would be receiving annuities based on DAP, even though their partners never received it, while current firefighters would not be receiving DAP at all.

Justice Mary Jane Theis dissented, joined by Justice Thomas L. Kilbride. Justice Theis concluded that the “current annual salary” under Section 6-140 for calculating annuities “was flexible, increasing with the changes in [firefighters’] salaries as provided for under the applicable budget appropriations.” Justice Theis then turned to Section 6-111(i), the Pension Code’s definition of “salary.” Justice Theis argued that the words “as calculated for any purpose under this Article” were the crucial passage of Section 6-111(i), noting that the majority “inexplicably omits this critical language” from its quotation of the statute. According to the dissent, the majority’s conclusion that the plaintiffs’ annuity was based only on categories of pay actually received by their decedents effectively read this clause out of Section 6-111(i), as well as rendering the reference to “current annual salary” in Section 6-140 meaningless.

Three New Civil Decisions Coming From Illinois Supreme Court Tomorrow Morning

By Kirk Jenkins on Posted in Illinois

The Illinois Supreme Court has announced that it expects to file opinions tomorrow morning at 10:00 a.m. Central time in three civil cases. They are:

Hooker v. Retirement Board of the Firemen’s Annuity and Benefit Fund of Chicago, No. 114811 – Do survivors’ pensions under the state Pension Act increase when the salary for decedent’s position increases, regardless of whether the decedent ever actually received that salary? Our detailed summary of the facts and underlying opinions in Hooker is here. Our report on the oral argument is here.

American Access Casualty Co. v. Reyes, No. 115601 – Is a clause of an automobile insurance policy excluding all liability coverage for the sole named insured and titleholder on the insured vehicle void as against public policy? See also here.

The Venture-Newberg Perini Stone and Webster v. Illinois Workers’ Compensation Commission, No. 115728 – When is a union pipefitter who accepts a short-term job too far from home to commute a “traveling employee” entitled to workers’ compensation benefits for injuries received while traveling to work? Our detailed summary of the facts and underlying opinions in Venture-Newberg is here. Our report on the oral argument is here.

The marquee case on tomorrow’s list is Hooker. As the first government pension case to be handed down since the Illinois General Assembly enacted pension reform, court watchers will be reading the opinion closely for any hints about the Court’s views on that future battle.

Tomorrow will be 99 days since the oral argument in Hooker, and 92 since the arguments in American Access Casualty and Venture-Newberg. This year to date, the mean time between argument and decision in cases decided unanimously is 119.62 days. The mean time between argument and decision for non-unanimous cases is 210.73 days.

Illinois Supreme Court to Decide Whether Courts Can Award Child Support From Custodial to Non-Custodial Parents

By Kirk Jenkins on Posted in Illinois

Our previews of the newly allowed petitions for leave to appeal from the closing days of the November term continue with In re Marriage of Turk, which poses a potentially ground-breaking question of domestic relations law: can a court order a custodial parent to pay child support to the non-custodial parent?

The mother in Turk filed for divorce in 2004. Not long after, she filed petitions for maintenance and child support, together with financial data and estimated “children’s expenses.” In mid-2005, the trial court entered judgment of dissolution, incorporating the parties’ settlement and joint parenting agreement. Pursuant to the agreement, the father agreed to pay maintenance and support for 42 months. At the end of that period, any further child support would be calculated pursuant to the Illinois Marriage and Dissolution of Marriage Act. The court further ordered that the father would be responsible for providing medical insurance for the children, with the parents jointly sharing any non-covered medical expenses.

Beginning a few months before the end of the 42-month period, the parties made a series of motions and petitions, including emergency petitions to terminate or restrict visitation. An independent custody evaluator was appointed pursuant to the Act, 750 ILCS 5/604(b). Finally in 2011, the father petitioned to have his child support obligations terminated and sought child support from the mother on the grounds that he was now custodial parent for both children. The mother opposed the petitions.

The trial court entered an order granting in part and denying in part the father’s motion to terminate child support. The court found that the parties shared approximately equal parenting time with respect to the younger child, and that while the father earned a significant salary, the mother’s income and assets were minimal. Based on these findings, the court ordered the father to pay child support to the mother, as well as making the father solely responsible for any medical and dental expenses not covered by insurance.

Division Five of the First District of the Appellate Court reversed, albeit on limited grounds. The Appellate Court began by considering whether the Marriage and Dissolution of Marriage Act, 750 ILCS 5/505, gave a trial court discretion to award child support from a custodial to the non-custodial parent. Pointing to varying terms in the statute for the party ordered to pay support, as well as language referring to support orders directed at "either or both parents," the Court held that the language of the statute was not conclusive either way. The Court found that earlier Illinois precedent fell on both sides of the question, with Shoff v. Shoff holding that a custodial parent could not be ordered to pay support, and In re Marriage of Cesaretti holding that the custodial parent could be ordered to pay. The Court found that other jurisdictions had taken a range of approaches to the problem too. The Court concluded that the best interests of the children favored a flexible approach to child support orders. In view of each of these conclusions, the Court held that the trial court had discretion to order payments of child support by the custodial parent given the particular circumstances in the case at hand — nearly equal parenting time, and a large disparity in resources between the parents.

The father also argued that the trial court abused its discretion in ordering him to pay child support and non-covered medical expenses. The Appellate Court found that under the circumstances, the trial court had not abused its discretion by ordering the father to pay support, but the court nevertheless reversed the award for recalculation. The court held that the trial court had assessed the parties’ liability without up-to-date information regarding the parties’ child care expenses after the switch in custody. The Appellate Court directed the trial court to consider updated expense data, as well as to "clearly explain the basis for any support awarded."

We expect Turk to be decided in the fall or winter of 2014.

Illinois Supreme Court to Review Timing of Government Appeal From Administrative Orders

By Kirk Jenkins on Posted in Illinois

In the closing days of the recently concluded November term, the Illinois Supreme Court allowed petitions for leave to appeal from three new civil cases. Our first-look previews of those cases begin today with People ex rel. Madigan v. Illinois Commerce Commission. Madigan is an interesting grant for the Court. On the face of the Appellate Court’s order, it would appear to be a relatively simple question of filing deadlines and appellate jurisdiction. Whether or not the Court will travel beyond those issues to the utility rate-making question below remains to be seen.

Madigan arises from a decision of the Illinois Commerce Commission, the administrative entity which supervises utilities in Illinois, 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 attempted to appeal both aspects of the Commission’s decision.

And that is where the Attorney General ran into problems. Illinois Supreme Court Rule 335 provides that an appellant must file a petition for review from a final administrative decision within thirty days of an appealable final order in order to vest the Appellate Court with jurisdiction. The Public Utilities Act – 220 ILCS 5/10-201(a) — provides for a thirty-five day filing deadline for petitions for review, but the Fifth District Appellate Court struck down section 10-201 twenty-seven years ago in Consumers Gas Co. v. Illinois Commerce Commission.

The Commission issued its order in Madigan on July 31, 2012, and denied the Attorney General’s petition for rehearing on September 11, 2012. The Attorney General didn’t file a notice of appeal and petition for review until October 16, 2012 – thirty-five days after the order had become final and appealable. So the Appellate Court held that the petition was untimely and dismissed the appeal for lack of jurisdiction.

Before closing, the Appellate Court issued a stern warning for careless practitioners. Like most appellate rules, the Illinois Supreme Court Rules, which govern appellate practice throughout the state, require a number of different elements in an Opening Brief, including an explanation of the reviewing court’s jurisdiction. According to the Appellate Court in Madigan, none of the three parties before it had complied with that requirement: “the parties’ failure to identify or even address the threshold issue of jurisdiction has resulted in the unnecessary expenditure of a significant amount of judicial resources while resolving this case, which could have been easily avoided had the parties complied with the clear mandate of Rule 341(h)(4)(ii).”

We expect Madigan to be decided in the late spring or early fall of 2014.

Illinois Supreme Court Debates Limitations and Repose for Architects and Contractors

By Kirk Jenkins on Posted in Illinois

November was a relatively light month for the Illinois Supreme Court on the civil docket, with only one civil case on for argument. Today, we report on the oral argument in Gillespie Community Unit School Dist. No. 7 v. Wight & Co. In Gillespie, most of the Justices seemed somewhat skeptical of plaintiff’s claim that no statute of limitations governed its fraud-based claims against an architecture firm arising from a school construction project.

Gillespie begins in 1998, when the school district decided it needed a new elementary school. The problem was that the district encompassed an area of Macoupin County that was coal mined more or less continuously from the early 1900s into the 1950s. So everyone was concerned about the possibility of ground subsidence resulting from the underground mines.

The plaintiff entered into an agreement with the defendant to perform various services in connection with the building project. One was to determine just how much mining had been done in the area – and more importantly, where – and assess the likelihood that subsidence might wind up seriously damaging the school if it was built. The defendant hired an engineering firm to take on the mining and subsidence issues.

The building was completed in the fall of 2002. In the spring of 2009, a coal mine subsided beneath the building, causing extensive damage; the building was subsequently condemned, a total loss. When the plaintiff school district sued the defendant architects, the defendant moved for summary judgment on grounds that the action was time barred. The Circuit Court agreed, and the Fourth District affirmed.

Gillespie turns on the intersection of two statutes. First, we have 735 ILCS 5/13-214, a comprehensive statute of limitations and repose for actions arising from the “design, planning, supervision, observation or management of construction, or construction of an improvement to real property.” Section 13-214 provides that any such action must be brought within 4 years of “the time the person bringing an action . . . knew or should reasonably have known of such act or omission,” as well as providing a 10 year statute of repose. But, the statute provides in subsection (e) that the “limitations of this Section shall not apply to causes of action arising out of fraudulent misrepresentations or to fraudulent concealment of causes of action.”

And from there, we turn to 735 ILCS 5/13-205, which provides that “actions or unwritten contracts . . . or to recover damages for an injury done to property . . . and all civil actions not otherwise provided for, shall be commenced within 5 years next after the cause of action accrued.”

By the time Gillespie reached the Supreme Court, the only issue left revolved around the plaintiff’s claim for fraudulent misrepresentation of concealed facts. The fraud claim arose from an engineer’s report which the defendant might – or might not – have received from the subcontractor predicting a “relatively high risk of subsidence” in the construction area, and then failed to pass along to the school. It seems the fraud-based claim wouldn’t fall under 735 ILCS 5/13-214; it would be excluded by Section 214(e). So does that mean it falls under Section 205 as a “civil action[ ] not otherwise provided for”? The appellant school district said no, since the five year statute would have been fatal to its claim. The defendant said yes.

The plaintiff school district began the arguments, insisting that the case presented a “clear and narrow” question of statutory construction. After counsel described the initial engineer’s report which the defendant might or might not have received from the engineers (it was actually produced by the subcontractor, not by the defendant), counsel referred to a second, subsequent report. Justice Theis asked what the second report said, and counsel explained that the second report disclosed that the proposed site had been mined, but concluded that it was difficult to estimate what the chances of subsidence were. Justice Thomas asked counsel whether the plaintiff’s position was that although section 214(e) exempted fraud claims from the general statute of limitation and repose for construction, section 205 was not triggered, meaning that there was no statute of limitations at all for such claims? Counsel agreed that it was. Justice Thomas asked whether counsel was aware of any causes of action, with the exception of a limited number of criminal charges, that carried no limitations? Counsel argued that the legislature had made the determination that there should be no statute of limitation with respect to fraud-based claims arising from construction. Justice Thomas asked whether the words in subsection 214(e) “of this section” have any meaning. Counsel responded that the language showed that such claims were not subject to section 205 as actions “not otherwise provided for.” They were provided for by the statute, and then exempted. Chief Justice Garman asked counsel why the legislature would give special treatment to construction-based fraud claims over other types of fraud claims? Counsel argued that the legislature was aware of cases providing that contract provisions accelerating statutes of limitations were enforceable, and the statutory scheme was its response. Justice Thomas suggested that fraud actions are “not otherwise provided for” once they are carved out of subsection 214(e). Counsel responded that although section 205 might have applied before section 214 was adopted in 1979, but that changed when the legislature adopted a comprehensive scheme for managing actions arising from construction projects. Counsel argued that his construction – the view that the legislature’s scheme “provided for” fraud claims, making section 205 inapplicable – was logical, while the alternative was not. Justice Thomas asked why it was illogical that the legislature would provide for an extra year for claims sounding in fraud, and counsel responded that there was no reason for the extra year. Counsel claimed that the defendant’s construction would also lead to unfair results by letting wrongdoers enter into construction contracts, intending fraud, knowing that they will be absolved from liability in five years. Justice Freeman asked counsel to address his argument that defendants would have laches available, even in the absence of a statute of limitations. Counsel responded that where a hypothetical plaintiff sat on its rights and triggered real prejudice to the defendant’s ability to defend itself, laches would be a viable defense, but that the defense had not raised the defense here. Counsel concluded by pointing out that under the construction of the statute adopted by the Circuit Court and affirmed by the Appellate Court, the plaintiff’s action had been barred before it was discovered, even though it had been filed five months after the incident.

Counsel for the defendant began by addressing the second report. Counsel argued that its only obligation was to share information with the Capital Development Board, and there was no allegation that the defendant had failed to do that. The second report had concluded that the risk of subsidence was unquantifiable due to multiple unknown variables. Counsel argued that the court was being asked to hold that in 1979, when the legislature provided a comprehensive system of limitations and repose for construction-related claims, it intended to remove the pre-existing statute of limitations for claims sounding in fraud. Counsel claimed that there were two reasons for applying section 205 and its five-year statute to fraud-based actions: first, actions sounding in fraud were not subject to any statute of repose, and second, as the Supreme Court held in Rozny v. Marnul in 1969, “civil actions not otherwise provided for” encompassed actions for fraud and deceit. Justice Burke pointed out that Rozny predated Section 214 by ten years, but counsel responded that Rozny had set the stage for the new statute. Chief Justice Garman concluded by asking whether the case included any public policy considerations, and counsel argued that there were not, beyond the general principle that the heavily negotiated contract between the parties – which specifically provided when causes of action arising out of the project accrued – should be enforced.

In rebuttal, counsel for the plaintiff argued that it was undisputed at the trial court that if the school district had had the first engineering report, it would have proceeded differently. Counsel insisted that the interpretation of the statute suggested by the defendant was inconsistent with its language.

We expect Gillespie to be decided in approximately three to four months.

U.S. Supreme Court Resolves Enforcement of Forum Selection Provisions

By on Posted in Commercial Law

The federal courts have been divided regarding how to handle motions to enforce contractual forum selection provisions. Some courts have held that the plaintiff’s choice of a forum other than the one provided by contract makes venue improper in the chosen district, and thus the defendant should move to dismiss or transfer the action pursuant to 28 U.S.C. § 1406(a) and Federal Rule of Civil Procedure 12(b)(3). Other courts have held that the appropriate mechanism to enforce a forum selection provision is the discretionary transfer procedure under 28 U.S.C. § 1404(a). If the discretionary transfer statute is used, a further question arises: Is the forum selection provision entitled to determinative weight, or is it just one of the numerous public and private factors the court may consider in making a discretionary transfer decision?

The Supreme Court went a long way toward resolving these questions in Atlantic Marine Construction Co. Inc. v. U.S. District Court for the Western District of Texas.(PDF) The court held that the choice of a district other than that selected in the parties’ contract does not make venue “wrong” or “improper” under the federal venue statutes. Accordingly, if the forum chosen by the parties’ contract is another federal court, the appropriate enforcement mechanism is a discretionary transfer motion under 28 U.S.C. § 1404(a). Since that statute governs only transfers among federal courts, a defendant seeking to enforce the selection of a state or foreign forum must move to dismiss the case on grounds of forum non conveniens.

The Supreme Court made it clear that in determining whether to transfer the case, the district court must ordinarily enforce a valid forum selection provision. The court need not weigh the private convenience factors that usually govern the determination of a transfer motion because the parties presumably addressed these issues in negotiating the forum provision.  Moreover, the plaintiff’s choice of forum, normally a heavy factor in transfer motions, is not entitled to special weight when the plaintiff has defied the forum selection provision. Finally, the Supreme Court clarified that, unlike the case of the usual discretionary transfer, the transferor court’s choice-of-law rules do not control the case after it is transferred to the contractually selected forum.

The unanimous opinion of the Supreme Court goes far in dispelling confusion, protecting freedom of contract and discouraging forum shopping. It brings welcome clarity into what had been a needlessly murky field.

Florida High Court To Examine Exculpatory Clauses That Do Not Specifically Reference Negligence

By Erin E. Dardis on Posted in Florida

On November 5, 2013, the Florida Supreme Court heard oral argument in a case examining whether a release clearly and unambiguously releases the defendant from liability for a plaintiff’s physical injuries when the release does not expressly reference the defendant’s negligence.  See Sanislo v. Give Kids The World, Inc., 98 So. 3d 759 (Fla. 5th DCA 2012) (No. SC12-2409).

Give Kids The World, Inc. (“GKTW”) provides free vacations to sick children and their families at its resort.  Stacy and Eric Sanislo are the parents of a young girl with a serious illness who wished to participate in GKTW’s program.  The Sanislos executed a liability release in connection with a “wish request” that benefitted their daughter.  The release stated:

I/we hereby release Give Kids the World, Inc. . . . from any liability whatsoever in connection with the preparation, execution, and fulfillment of said wish . . . .  The scope of the release shall include, but not be limited to, damages or losses or injuries encountered in connection with . . . physical injury of any kind . . . .

I/we further agree to hold harmless and to release Give Kids the World, Inc. from any and all claims and causes of action of every kind arising from any and all physical or emotional injuries and/or damages which may happen to me/us . . . .

During the family’s stay at the resort, Mrs. Sanislo was injured.  The Sanislos sued GKTW, alleging that Mrs. Sanislo’s injuries were caused by GKTW’s negligence.  GKTW moved for summary judgment based on the release.  The trial court denied the motion and, following a jury verdict, entered judgment in favor of the Sanislos.  GKTW appealed, arguing that it was entitled to summary judgment because of the release.

While exculpatory clauses are disfavored under the law, unambiguous exculpatory contracts are enforceable unless they contravene public policy.  The Sanislos argued that the release was not clear and unambiguous because it applied to liability arising “in connection with the preparation, execution, and fulfillment of said wish” and that the nature and scope of the wish was not clear or defined.  The Fifth District stated that it has expressly “rejected the need for express language referring to release of the defendant for negligence or negligent acts in order to render a release effective to bar a negligence action.”  The Fifth District therefore held that the wish, which was requested by the Sanislos, clearly encompassed events at the resort related to their stay and that the Sanislos’ interpretation of the clause was not likely the interpretation that an “ordinary and knowledgeable person” would give it.  Thus, the release was sufficiently clear to make the Sanislos aware of the breadth of the scope of the release and what rights they were contracting away.  The court stated that the ability to predict each and every potential injury is not required to uphold an exculpatory provision within a release.

The Fifth District also considered the parties’ relative bargaining power in determining the enforceability of the release.  Florida courts have refused to find an inequality of bargaining power in recreational settings.  GKTW also argued that the bargaining power of the parties was not unequal, because the Sanislos voluntarily participated in the program.  The Sanislos disagreed and argued that they were given a contract and GKTW gave them no choice but to sign the release in order to participate in the program.  The Fifth District held that the bargaining power of the parties was not unequal; the Sanislos were provided with the release and they made a decision to waive certain rights in order to participate in the program.  The Fifth District reversed the trial court and certified conflict with the First, Second, Third, and Fourth District Courts of Appeal.

The author will update this article after the Florida Supreme Court has ruled.

 

 

 

 

Illinois Supreme Court Narrowly Construes Exemption from Prevailing Wage Act

By Kirk Jenkins on Posted in Illinois

In its sixth and final unanimous civil decision of the morning, the Illinois Supreme Court adopted a narrow construction of the exemption for public utilities provided under the Prevailing Wage Act. Reversing a decision of the Fourth District in The People of the State of Illinois ex rel. Illinois Department of Labor v. E.R.H. Enterprises, Inc., the Court held that a contractor who is largely responsible for the water facility and infrastructure in the Village of Bement (and various other towns around Illinois) is not an exempt “public utility” under the Act. Our detailed summary of the facts and lower court rulings in E.R.H. Enterprises is here. Our report on the oral argument is here.

The defendant has a five-year contract with the Village to perform certain duties in connection with the Village water system. Although the contract recognizes that the Village is responsible for the maintenance and operation of the facility and infrastructure, it states that the defendant “has agreed to fulfill all requirements set forth under the applicable laws and regulations for the operation of such facility.” For example, the defendant maintains the storm and sanitary sewer system, as well as repairing smaller water main breaks. The Village is responsible for “repairs of a greater magnitude” to the system, as well as the “maintenance, repair, upkeep and expense” of its water tower. The Village purchases parts and materials for water taps, but the defendant installs them. The defendant maintains fire hydrants, but the Village is responsible for replacing them when necessary.

In 2008, the Department of Labor sent a subpoena to the defendant’s attorney, seeking certain employment records related to the defendant’s repair of water main leaks on the Village’s behalf. The subpoena stated that the Department was attempting to determine whether the defendant was in compliance with the Prevailing Wage Act. Several months later, the Department filed its complaint seeking an order enforcing the subpoena. The defendant answered the complaint, taking the position that it was a “public utility company” under the Act, and therefore exempt from the requirement to pay prevailing wages. The circuit court entered an order in August 2010 holding that the defendant was not a public utility and the subpoena was therefore enforceable. In response to the defendant’s motion for reconsideration, the court entered an amended order in February 2011. The defendant moved once again for reconsideration, and the circuit court responded with a lengthy memorandum, addressing the defendant’s objections and further explaining its conclusions. The Appellate Court reversed, finding that the defendant was indeed a public utility and therefore exempt from the Act.

In an opinion by Justice Lloyd A. Karmeier, the Supreme Court reversed the Appellate Court. The Court began by noting a curious point: that there was no good evidence as to exactly why “public utilities” had been exempted from the Prevailing Wage Act in the first place. The Court noted that since the Act offers no definition of a public utility, the Appellate Court had imported the definition found in the Utilities Act. But the broad definition in that statute had a very specific purpose – to designate “a wide range of persons and entities” that would be subject to the regulatory jurisdiction of the Illinois Commerce Commission. Since it wasn’t clear why the exemption from the Prevailing Wage Act had been enacted, it was equally unclear whether it was appropriate to borrow the definition in the Utilities Act in construing its breadth.

Instead, the Court turned to Black’s Law Dictionary. The Court found Black’s definition of a “public utility” significant for two reasons: first, it specified that “most” utilities are subject to government regulation, and second, the Dictionary states that typically, the “utility” owns the facilities providing the public service. Neither of these conditions applied to the defendant, the Court found.

The Court noted that whatever the reason, public utilities had been exempt from the Prevailing Wage Act ever since it was enacted. In the original version of the Act, the exemption applied to work “done directly by any public utility company pursuant to order of the commerce commission or other public authority.” The italicized language had been removed in 1961, and the Court speculated that perhaps the legislature had concluded that any work done by a public utility, whether pursuant to a direct order by the commerce commission, would eventually be scrutinized by regulators as a result of a rate case.

The Court adopted the totality of the factors listed by the circuit court to conclude that the defendant is a contractor, not a public utility: (1) the Village retained ownership of the water facility and infrastructure; (2) the Village had been recognized by the Illinois Environmental Protection Agency for its compliance with the Fluoridation Act; (3) the Village has not contracted all of its responsibilities to the defendant; (4) the defendant does not directly charge the public for its services; and (5) the defendant is not directly regulated by any government agency. Since the public utility exemption did not apply, the Court held that the circuit court had properly enforced the subpoena.

Illinois Supreme Court: Withholding Notice Invalid Without Strict Compliance With Statute

By Kirk Jenkins on Posted in Illinois

This morning, a unanimous Illinois Supreme Court handed down its opinion in Schultz v. Performance Lighting, Inc. Schultz presented a question relating to domestic relations and child support cases: is a notice to withhold salary under the Income Withholding for Support Act invalid if it substantially – but not strictly – complies with the requirements of the Act? In an opinion by Justice Robert R. Thomas, the Court held that strict compliance was required for the notice to be effective.

The plaintiff and her former husband divorced in 2009. An order was entered requiring the ex-husband to pay $600 every two weeks in child support. The plaintiff served a notice to withhold income on the former husband’s employer as well as the ex-husband’s attorney, but the notice failed to comply with the Act in two respects: it included neither the ex-husband’s Social Security number nor the date on which the obligation terminated (plaintiff’s service only on the ex-husband’s attorney was insufficient as well).

The ex-husband left the defendant’s employ seven months after the notice to withhold was filed. Nevertheless, the plaintiff waited another eighteen months – almost exactly two years after the notice to withhold was filed – to sue the defendant. Plaintiff alleged that defendant had knowingly failed to pay the State Disbursement Unit the support due and sought an award of the statutory penalty of $100 per day for each day the payments were delinquent. The defendant moved to dismiss, arguing that the omissions from the plaintiff’s notice to withhold rendered the notice ineffective. The circuit court agreed and granted the motion, and the Appellate Court affirmed.

The Supreme Court affirmed as well. A requirement of strict compliance was clear on the face of the statute, the Court found. The Act provided that the “income withholding notice shall: . . . (9) include the Social Security number of the obligor; and (10) include the date that withholding for current support terminates . . . and (11) contain the signature of the obligee . . . except that the failure to contain the signature of the obligee . . . shall not affect the validity of the income withholding notice.” The Court drew two conclusions from this language. First, the use of the word “shall” generally indicates a mandatory duty. Second, the legislature’s provision that omitting the obligee’s signature is not a fatal defect necessarily implied that omitting the other requirements was fatal.

The immunity clause of the Act further supported the Court’s view, the Court found. Section 35(c) of the Act provides that a payor who complies with a withholding notice “that is regular on its face” is immune from liability for its conduct. Since a notice which is missing some of the required information was not, in the Court’s view, “regular on its face,” what is the recipient of such a notice to do, if errors don’t render the notice invalid? If a faulty notice is binding, then the employer must choose between disregarding it and incurring the statutory penalty, or complying with it and risking liability to the ex-spouse (or any other aggrieved party). Such a patently unjust result was to be avoided, the Court concluded.

Although the proper interpretation of the Act was clear, the Court commented that it found the conduct of both sides in the dispute troubling. The defendant had apparently received the notice to withhold and never bothered to simply telephone the plaintiff’s attorney and make it clear that it regarded the notice as invalid (although the Court conceded that the statute as it existed at the time imposed no duty to do so). Nor did the plaintiff follow up on the matter when it became clear that the defendant wasn’t paying, instead “wait[ing] silently for nearly two years before filing the instant complaint.”

The Court concluded by noting that the statute has been significantly reformed since the events at issue. Effective in 2012, an obligee is required to notify the employer in writing when a payment is not received. The employer is then required to either explain its non-payment or make the payment with interest within a limited time. If the employer fails to do that, the statutory penalties – which are now capped – begin to accrue. The Court found that it was unnecessary to determine whether the 2012 amendments applied retroactively since the plaintiff had never given the employer written notice of its non-receipt of the payments, the essential prerequisite to triggering penalties.

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