The Appellate Strategist

Insights on appellate issues, trial consultations, and evaluating appeals

Illinois Supreme Court to Decide Whether FOIA Covers State’s Attorney’s Office

By Kirk Jenkins on Posted in Illinois

Our previews of the latest additions to the Illinois Supreme Court’s civil docket continue this morning with Nelson v. The Office of the Kendall County State’s Attorney, a case from the Second District Appellate Court. Nelson is the second case on last term’s civil grants list relating to the state Freedom of Information Act. The case presents the issue of whether the office of the State’s Attorney is a “public body” subject to FOIA.

The plaintiff filed separate actions against Kendall County and the office of the Kendall County State’s Attorney, seeking injunctions requiring the defendants to turn over emails that he contended were responsive to records requests he had submitted to both entities. Both actions were dismissed, with the Circuit Court holding that the County could not be compelled to turn over the State’s Attorney’s records, and the State’s Attorney wasn’t a “public body” within the meaning of FOIA. The plaintiff only challenged the second of those holdings on appeal.

The Illinois FOIA requires every “public body” to make public records available for inspection on request (subject to many exceptions). A requestor who gets turned down has a choice of either putting the matter before the Attorney General’s public access counselor or filing an action in circuit court. A decision from the public access counselor may be reviewed by the appellate courts in the same way as a final administrative decision. The circuit court, on the other hand, considers the applicability of FOIA de novo and may order the public body to turn over the records.

A “public body” is defined as “all legislative, executive, administrative or advisory bodies” of the state. You’ll note what’s missing from that definition: any mention of “judicial” bodies. In Copley Press, Inc. v. Administrative Office of the Courts, the Appellate Court held that FOIA meant what it said – and didn’t say – and that accordingly, judicial entities were not subject to the Act.

The Second District was very careful to circumscribe the issue before it. It was not deciding whether or not the State’s Attorney was in fact a member of the judicial branch of government, the court insisted. Rather, the court was deciding the narrower question of whether or not the State’s Attorney was subject to FOIA. The decisive factor in answering that question, the court held, was the structure of the state constitution. Every constitution in the state’s history that has provided for State’s Attorneys at all has created the office in the judicial article of the constitution, the court pointed out. The court also noted that in another context, the legislature has described the State’s Attorneys Appellate Prosecutor as “a judicial agency of state government.” 725 ILCS 210/3. From this, the court concluded that the term “judicial” is broader than the term “judicial power,” which is limited to the courts themselves. Under the circumstances, the court declined to infer that the legislature intended to extend FOIA to State’s Attorneys’ offices and affirmed the judgments of dismissal.

Before the Appellate Court, the plaintiff attempted without success to broaden the scope of the debate by arguing that the issue presented turns not on a mere issue of statutory construction, but on the more fundamental question of the nature of the State’s Attorney’s office. In support of that argument, the plaintiff pointed to several separation-of-powers cases and even to the Separation of Powers clause of the state constitution. Now that the plaintiff’s petition for leave to appeal has been allowed by the Supreme Court, it will be interesting to see whether the case is ultimately decided on this broader grounds, or the Court sticks with the narrower question framed by the Appellate Court.

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

Illinois Supreme Court to Decide If Municipal Red Light Camera Ordinances are Constitutional

By Kirk Jenkins on Posted in Illinois

Our previews of the latest additions to the civil docket of the Illinois Supreme Court continue today with Keating v. City of Chicago. Keating presents an issue bound to catch the attention of motorists in Illinois’ larger cities: are municipal red-light ordinances constitutional?

Chicago has had a red light ordinance since July 2003. The ordinances work on a simple idea. Rather than relying on patrol officers happening to catch red light violators in the act, automated cameras are set up at busy intersections, fitted with sensors to detect vehicles in the intersection. When the cameras detect a violation, the registered owner of the vehicle is sent copies of the photos and instructions as to how to contest liability or pay the fine.

By 2006, questions had arisen as to whether red light ordinances were legal. As a result, the state legislature passed an enabling act, specifically authorizing red light camera programs in Cook, DuPage, Kane, Lake, Madison, McHenry, St. Clair and Will County.

Most of the plaintiffs in Keating are registered vehicle owners who received red light violation citations from the City of Chicago. Plaintiffs paid their fines, although at least some of them contested liability. They then filed suit alleging that (1) the City lacked home rule authority to enact the red light ordinance; and (2) the 2006 enabling act was unconstitutional special legislation. The plaintiffs sought a declaratory judgment striking down the ordinance, an injunction stopping the City’s collection of fines and an order requiring restitution to all past violators. The Circuit Court granted the City’s motion to dismiss, holding that two plaintiffs lacked standing, that the enabling act was not special legislation, and that the voluntary payment doctrine barred all claims anyway since the plaintiffs had paid their fines.

On appeal, the plaintiffs raised four related arguments: (1) the enabling act is unconstitutional; (2) the City’s red light camera ordinance was void from its inception and the enabling act did not and could not legalize it; (3) the ordinance remained void since the City never reenacted it following the enabling act; and (4) the voluntary payment doctrine did not apply to bar their claims.

The First District began by affirming dismissal for lack of standing with respect to two plaintiffs. One had received citations in other jurisdictions, and alleged that she reasonably feared receiving more in Chicago. The other had not received a citation, but alleged that she had paid half the fine assessed against her husband.

Plaintiffs’ challenge to the ordinance itself was based on the proposition that the ordinance exceeded the home rule authority of the City of Chicago. Prior to 1970, the balance of power in Illinois was weighted heavily towards the state and away from local governments. The constitution adopted that year significantly changed that relationship, shifting considerable powers to so-called “home rule units.” Now, such local governments may do anything that the legislature has not expressly barred.

Local governments are permitted to adopt ordinances relating to traffic issues generally, so long as nothing in the ordinances is inconsistent with the state Vehicle Code. One of the few exceptions to this general idea is that home rule authorities may not enact anything governing “the movement of vehicles.” The Code provides that automated devices “for the purpose of recording [a vehicle’s] speed” are the exclusive province of the State. 625 ILCS 5/11-208.6(c). On the other hand, Section 11-208.2 of the Code permits local authorities to adopt ordinances “regulating traffic by means of police officers or traffic control signals.” (625 ILCS 5/11-208.) Because red light ordinances have been previously construed as not relating to “the movement of vehicles,” the court held that adoption of the ordinance was within the City’s home rule authority, and the enabling act was therefore unnecessary.

The court then turned to the plaintiffs’ claim that the 2006 enabling act was unconstitutional special legislation. The court pointed out that a legislative act applicable only to particular parts of the state could survive a special legislation challenge only where it was based upon a rational distinction between the affected areas and the rest of the state. Here, although the statute doesn’t specifically explain why only eight counties were authorized to enact red light ordinances, the legislative history of the 2006 act does: because red light cameras cost between ninety and one hundred thousand dollars apiece, the authority was granted only to the most populous counties with the most traffic. Given that rational basis, the statute was not unconstitutional special legislation.

Finally, the court turned to the voluntary payment doctrine. The doctrine has deep roots in the common law: anyone who voluntarily pays a debt claimed by another as a matter of right, with knowledge of the facts which allegedly negate that claim of right, cannot later challenge the creditor’s claim to payment. The doctrine does not ordinarily apply when payment is made under duress. After reviewing the law on duress in detail, the court concluded that because accused violators were subject to significant penalties for non-payment, including collection proceedings with possible liability for attorneys’ fees and immobilization of their vehicles, the plaintiffs had paid under duress and the voluntary payment doctrine did not bar their claims. However, because the plaintiffs’ complaints failed to state a claim on the merits, the Appellate Court affirmed the judgments.

We expect Keating to be decided in the next six to eight months.

Illinois Supreme Court to Decide Constitutional Challenge to Medical Licensing Law

By Kirk Jenkins on Posted in Illinois

Our previews of the newest additions to the civil docket of the Illinois Supreme Court continues this morning with Consiglio v. Department of Financial and Professional Regulation. Consiglio involves a lengthy list of constitutional challenges to amendments the legislature enacted in 2011 to the Department of Professional Regulation Act (20 ILCS 2105/2105-165). According to the new statute, a health care worker’s license is automatically revoked without a hearing when the individual: (1) is convicted of a criminal act automatically requiring registration as a sex offender; (2) is convicted of a criminal battery against any patient committed in the course of care or treatment; (3) has been convicted of a forcible felony; or (4) is required as part of a criminal sentence to register  as a sex offender.

The plaintiffs are three general physicians and one chiropractic physician. Subsequent to being licensed, each was convicted of a battery or abuse against a patient in the course of care or treatment. They filed separate actions in Cook County, seeking a judicial declaration that the Act applied only prospectively to convictions after its effective date and injunctive relief barring revocation of their licenses for convictions occurring before the effective date.   All four complaints were dismissed for failure to state a claim.

On appeal, the plaintiffs argued that the statute: (1) offended substantive and procedural due process; (2) constituted double jeopardy; (3) violated the ex post facto clause; (4) offended the separation of powers clause by abridging the Department’s discretion and the judiciary’s power of review; (5) violated the contracts clause; (6) violated the proportionate penalties clause; (7) was barred by res judicata flowing from previous orders of the Department; and (8) unfairly deprived them of vested limitations and repose defenses.

One by one, Division One of the First District rejected the plaintiffs’ challenges. First, the court found that the plaintiffs conflated two separate issues – whether the Act applied to convictions predating its enactment (which it clearly did) and whether the Act applied retroactively in the constitutional sense (which the court concluded it did not).

The court rejected the plaintiffs’ due process claims. Although the plaintiffs’ licenses were obviously a property interest, since the Act’s remedies only applied upon conviction, the risk of erroneous deprivation was low. On the other hand, the governmental interest at stake was quite high. The court pointed out that the plaintiffs had a post-deprivation challenge available to them – a written appeal disputing the existence of the triggering conviction. Additional procedures would merely add burden without giving much offsetting benefit, the court found.

The court rejected plaintiffs’ double jeopardy argument, finding that the Act did not impose punishment in the constitutional sense. The revocation of a privilege was not generally considered punishment, the court pointed out. The court commented that if the immediate threat to patients were the only purpose, it might agree that the statutory remedy was excessive, but the Act served a further important purpose of protecting public health and maintaining the honesty and integrity of the medical profession. As such, the Act constituted a civil penalty without punitive effect.  The plaintiffs’ ex post facto and proportionate penalties challenges failed as well because the Act was not punitive.

The Appellate Court dismissed the plaintiffs’ separation of powers arguments too. The plaintiffs argued that because the Act provided that no hearing was necessary, the statute interfered with judicial review. The court disagreed, pointing out that no hearing was required for due process. Nor did the statute constitute an attempt to legislatively overturn the Department’s previous decisions regarding plaintiffs’ licenses, since the legislature always retains the right to change the law. The court found that the statute passed muster under the contracts clause because the remedies set forth in the Act were reasonable and necessary to serve an important public purpose. The court rejected the plaintiffs’ res judicata challenge, holding that even assuming that Department orders qualified for res judicata effect, the legislature was free to alter the underlying statute at any time.

Finally, the court rejected the plaintiffs’ argument that they had been unfairly deprived of vested statute of limitations defenses pursuant to 225 ILCS 60/22(A) of the Act. The court found as a matter of statutory construction that the statute of limitations applied only to violations of the Medical Practice Act. The legislature intended that no statute of limitations should apply to actions for automatic revocation.

We expect Consiglio to be decided in six to eight months.

Illinois Supreme Court to Decide If Wrongful Death Plaintiff’s Lawyer Owes Duty to Next of Kin

By Kirk Jenkins on Posted in Illinois

Our previews of the newest additions to the Illinois Supreme Court’s civil docket continue with Estate of Powell v. John C. Wunsch, P.C., a case from the Third Division of the First District which poses this question: does the lawyer who brings a wrongful death action owe a duty of care to the next of kin, or only to the estate?

The plaintiff in Estate of Powell was adjudicated disabled by the circuit court in 1997. His parents were appointed to serve as co-guardians of his person, but not as guardians of his estate. The plaintiff’s father died two years later, and his mother retained the defendants to bring a wrongful death action. Nearly two years later, the mother successfully petitioned to have herself appointed as special administratrix of the father’s estate. The petition named the mother, the plaintiff and his sister as the father’s next of kin.

In January 2005, the mother petitioned for approval of an initial settlement for $15,000 with certain defendants. The circuit court approved the settlement, with each of the three next of kin receiving $5,000. The remainder of the defendants settled in November of that year for $350,000. The second settlement was approved, with the mother and the plaintiff splitting the funds (the sister had waived her rights to any of the second settlement proceeds).

Three years later, the plaintiff’s sister became concerned about the plaintiff’s well-being. Believing that their mother was no longer capable of caring for the plaintiff, she petitioned to have the mother removed as guardian, or in the alternative, for an order appointing the sister as co-guardian. The petition also claimed that the plaintiff’s half of the settlement funds were deposited in a joint bank account, and were not being expended towards his care. In the summer of 2009, the probate court entered orders removing the mother, making the sister plenary guardian of the plaintiff’s person, and appointing the public guardian as guardian of the plaintiff’s estate.

The public guardian filed Estate of Powell, a malpractice claim against the lawyers who handled the wrongful death claim. The theory was that the lawyers had breached a duty to the plaintiff by failing to ensure that his share of the two settlements was distributed through the probate court pursuant to section 2.1 of the Wrongful Death Act (740 ILCS 180/2.1), and accordingly plaintiff had lost access to those funds. The defendants successfully moved to dismiss on the grounds that they owed the plaintiff no duty, since he was not their client.

The Appellate Court reversed in part. A duty of care, the Court wrote, could arise in two situations: (1) the plaintiff had an attorney-client relationship with the defendants; or (2) he was an intended beneficiary of such a relationship. The Court concluded that the Wrongful Death Act established that all next of kin are the intended beneficiaries of a wrongful death action, which is brought "for the exclusive benefit of the surviving spouse and next of kin of such a deceased person." 740 ILCS 180/2. The Act requires that the action be brought in the name of the decedent’s personal representative, but the courts have recognized for many years that the claims are in fact those of the individual beneficiaries – here, the plaintiff, his sister and mother. Accordingly, the defendants owed the plaintiff a duty of care.

The Court turned next to the proximate cause element of the cause of action. The court noted that the Probate Act requires that a guardian be appointed, and funds be distributed under the Court’s supervision, for any settlement in excess of $5,000. The first settlement did not exceed $5,000, so the Probate Act didn’t apply, and the plaintiff’s cause of action failed. But the second settlement did exceed the statutory threshold. Therefore, the Court held, that complaint sufficiently pled three negligent omissions with respect to the second of the two wrongful death settlements: (1) failing to petition the probate court to appoint a guardian of the plaintiff’s estate to receive his share; (2) failing to notify the court that the plaintiff’s mother was receiving control of his share without probate authority; and (3) failing to protect the plaintiff’s interest when they knew he would be unable to do so himself.

We expect Estate of Powell to be decided in the next six to eight months.

Illinois Supreme Court Agrees to Consider Flexible Utility Rate-Making Technique

By Kirk Jenkins on Posted in Illinois

Our previews of the newest additions to the Illinois Supreme Court’s civil docket continue with People ex rel. Madigan v. Illinois Commerce Commission. Madigan poses a question involving the jurisdiction of the Illinois Commerce Commission, which is responsible for regulating public utilities operating in the state: are volume-balancing-adjustment ("VBA") riders to approved rate schedules for natural gas permissible?

Here’s why the issue is important to public utilities and their customers. Utility rate-making relies to a considerable degree on forecasting the future: what are loads likely to be, what the weather should be like, population changes as people move in and out of the service area, energy efficiency, the effect of rising (or falling) gas prices on demand; all kinds of factors go into the mix. Inevitably, those forecasts are going to turn out to be incorrect. But the Commerce Commission approves a certain level of reasonable revenue for the utility, and when the assumptions that go into that calculus turn out to be off, things start to go wrong. At the micro level, for one example, it’s possible that customers might wind up "overpaying" when weather is colder than normal, and "underpaying" when weather is warmer than normal. At the macro level, utilities can miss their approved revenue recovery targets and wind up having to pursue more rate cases. VBA riders make both of those effects less likely by adjusting rates either up or down depending on whether the utility would otherwise overrecover or underrecover its target revenue. It does this by giving customers a credit when revenues are higher than expected, and applying a surcharge when revenues are lower than expected.

Nationwide, we have quite a bit of experience with various kinds of revenue decoupling; more than half the states either have some form of it or are considering it, and California first adopted it thirty-five years ago. Revenue decoupling offers a number of benefits, as recognized by the ICC, including reduced volatility in utility revenues and customers’ bills, greater equity because decoupling is based on actual revenues rather than estimates, and encouraging conservation measures by removing the direct link between increased sales and increased revenues.

A group of utilities asked the Commission to approve VBAs in 2007. After an evidentiary hearing, the Commission authorized Rider VBA as a four-year pilot program in 2008. The Attorney General appealed the Commission’s decision, but while that appeal was still pending, the Commission approved Rider VBA on a permanent basis in January 2012 (over the Attorney General’s objections).

Madigan is the appeal by the Attorney General and the Citizens’ Utility Board from that ruling. Before the Second District Appellate Court, the parties’ disputes began with the most fundamental issue of all: the standard of review. In Illinois (as in most states), the actions of the Commission are in almost every case given deferential review by the courts. The AG and the CUB argued that the deferential standard shouldn’t apply since the Commission had "departed from past practice" and made an error of law. The court disagreed, holding that the Commission’s findings of fact were presumptively true and its orders presumed reasonable on appeal.

The appellants challenged the Rider VBA on two grounds: (1) it was impermissible retroactive ratemaking; and (2) it violated the prohibition against single-issue ratemaking. Retroactive ratemaking is what it sounds like: providing refunds to customers when rates are too high and imposing surcharges when they’re too low. Single-issue ratemaking occurs when a rate is set based on a change to only one component of costs without considering whether changes to other costs might have offset the increase.

The Appellate Court held that the Rider VBA was not retroactive ratemaking. The VBA was not a modification enacted to correct an "error" — a determination that rates were too high or too low. VBA is a ratemaking methodology designed to ensure that the utilities maintain the approved level of revenue taking into account actual experience (as opposed to forecasts) with demand. As such, the VBA is not retroactive ratemaking, the Court found.

Nor did the Rider VBA amount to single-issue ratemaking, the Court concluded. In so holding, the Court distinguished its earlier decision in Commonwealth Edison Co. v. Illinois Commerce Commission, where the Court had held that riders are permissible only based on a showing of exceptional circumstances. ComEd had arisen in the context of traditional ratemaking, the Court found; revenue decoupling was a different approach. The Rider VBA didn’t provide for recovery of any specific cost, nor did it isolate any particular cost. Far from causing rates to fluctuate based on a single strand of the revenue requirement, as the appellants argued, revenue decoupling eliminated the link between sales and revenue, according to the Court. "We conclude that the revenue decoupling mechanism known as Rider VBA was approved by the Commission to guarantee that the Utilities recoup the costs for the infrastructure in which they prudently invested," the Court wrote, "not to ensure profits but to satisfy the distribution needs of their customers." For that reason, the Court affirmed the Commission’s order approving the Rider VBA.

We expect Madigan to be decided in the next six to eight months.

Illinois Supreme Court to Decide If FOIA Requires Equal Treatment of Citizens and Media

By Kirk Jenkins on Posted in Illinois

Our previews of the newest additions to the Illinois Supreme Court’s docket continue with Garlick v. Madigan, a unpublished decision from Division One of the First District which poses this interesting question: is a government entity required to treat a private citizen and a media outlet the same for purposes of requests under the state Freedom of Information Act?

More than two years ago, the plaintiff in Garlick sent the defendant a FOIA request, asking for data relating to the operations of the Attorney General’s Public Access Coordinator (PAC) – an official tasked with overseeing the rest of the state government’s compliance with FOIA. The plaintiff’s request said he wasn’t interested in the names of the requesting parties, but did say that he wanted the information in a specific electronic format. The AG declined to generate the information in the requested format, but agreed to turn over an existing report.

A month later, the Chicago Tribune asked for data on the AG’s PAC. In the Tribune’s online story, the data was available for direct download. The data included the identities of the requesting parties – the information the plaintiff had said he wasn’t interested in.

The plaintiff contacted the AG, asking for an explanation of the redactions. The Attorney General responded that in the case of the Trib, the office had concluded that the public interest outweighed the value of keeping the requestors’ identities private.   The plaintiff then wrote the PAC, demanding the information again, with no redactions. The AG wrote back, stating that its earlier response hadn’t violated the Act. The plaintiff filed another FOIA request, demanding all the AG’s correspondence with the Trib. The information was turned over, and disclosed that the AG had worked with the Trib to provide the information in the paper’s preferred format. So the plaintiff sued, seeking the unredacted information, civil penalties and costs. The trial court dismissed.

On appeal, the plaintiff raised four arguments. The Appellate Court rejected each one.

First, the plaintiff argued that the AG’s failure to provide the information in the preferred format was itself a FOIA violation. The Appellate Court disagreed, holding that a public entity is entitled to provide information in the form in which it exists in the office’s records. Next, the plaintiff argued that treating the Tribune differently violated FOIA, and that permitting less disclosure to a private actor harmed the public policy interests that animated FOIA. The Appellate Court disagreed, holding that the parties were not similarly situated for equal protection purposes, and that the treatment of the Trib was entirely irrelevant to the issue of whether or not the AG had violated FOIA in its interaction with the plaintiff. Finally, the Court rejected the plaintiff’s argument that the AG’s redactions from the record had violated FOIA, pointing out that the plaintiff had expressly stated in the request that he didn’t care about redactions.

We expect Garlick to be decided in six to eight months.

Illinois Supreme Court to Decide Who Pays When the General Contractor Goes Bust

By Kirk Jenkins on Posted in Illinois

Today, as we await the start of the Court’s November term, we begin our first look previews at the most recent additions to the Court’s civil docket. First up is Lake County Grading Company, LLC v. The Village of Antioch, a case out of the Second District which poses a potentially important question for cash-strapped local governments: when the general contractor on a public improvement goes bankrupt, who pays the subcontractors?

The general contractor in Lake County signed two agreements to make public improvements in two residential subdivisions. The GC hired the plaintiff as a subcontractor to perform grading work. There’s no dispute that the subcontractor performed all the work in compliance with the contract, but was never paid in full.

The contract (not to mention the Public Construction Bond Act) required that the GC provide surety bonds based on the cost of the improvements, which the GC did. The problem was that the bonds which the GC obtained and the defendant accepted were performance bonds only. They didn’t guarantee payment to the subs, even though the Public Construction Bond Act specifically requires it. Before the job was completed, the GC stopped work and ultimately declared bankruptcy.

The sub delayed sending out lien notices because it wanted to protect its working relationship with the GC. Ultimately – more than 180 days after last performing work (I’ll explain why that’s important momentarily) – it filed notices of lien claims on the work. Plaintiff then filed a five-count complaint against the defendant village. Three of the counts were dismissed – two for lien claims for public funds and one for unjust enrichment. Lake County turns on the remaining two claims, for third party beneficiary breach of contract, based on the defendant’s failure to require a bond from the GC guaranteeing payment, not just performance. The trial court granted summary judgment for the plaintiff.

On appeal, the defendant argued that the sub wasn’t entitled to payment from anybody. The argument went like this: the Bond Act incorporated a payment guarantee into the performance bond provided by the GC, which the sub should have sued on, but since the sub had waited more than 180 days from its last work to begin proceedings, it was out of luck.

The Second District affirmed judgment for the subcontractor. The fatal flaw in the defendant’s argument, the Court held, was that it implicitly assumed that the sub’s only remedy was via the Bond Act. Not so, the Court noted – section 2 of the Bond Act expressly states that the remedies under the Act are cumulative of any other remedies available in statutory, regulatory or common law. The sub’s argument was that it was a third-party beneficiary of the construction contract between the bankrupt GC and the defendant.

Third party beneficiary status in Illinois turns on whether the language of the contract reflects an intent to directly benefit the individual. The language must expressly identify the third party by name, or at least describe the class to which it belongs. The Court held that the provision in the general contract empowering the GC to hire subcontractors was sufficient to qualify. Given that the payment bond requirement of Section 1 of the Bond Act is automatically read into the construction contract as a matter of law, the Court held that the defendant had breached the contract when it failed to require a payment bond from the general contractor. Since the sub wasn’t suing on the bond, the statute of limitations contained in the Bond Act didn’t apply.   Any other ruling, the Court found, would essentially shift the burden of ensuring that the GC obtained a payment bond from the government entity itself to the insurer who wrote the bond. The Court declined to follow Shaw Industries, Inc. v. Community College District No. 515, a 2000 case from the Second Division of the First District which had refused to allow a subcontractor to sue as a third-party beneficiary under a construction contract in order to get around the statute of limitations in the Bond Act.

We expect Lake County to be decided by the Court within six to eight months.

Florida High Court to Examine Retroactive Application of Noneconomic Damages Cap in Med Mal Cases

By on Posted in Florida

            

            On October 15, 2013, the Florida Supreme Court accepted review of a case to decide whether the retroactive application of the cap on noneconomic damages for certain medical malpractice cases found in section 766.118, Florida Statutes is constitutional.  See Weingrad v Miles, 29 So. 3d 406 (Fla. 3d DCA 2010).

            In the trial court, the jury found in favor of the plaintiffs and awarded them $1.5 million in noneconomic damages:  $1.45 million for the patient’s pain and suffering and $50,000 for her husband’s consortium claim.  The trial court denied the defendant-doctor’s motion to limit the judgment pursuant to the statutory cap.  The applicable statutory cap would have limited the plaintiffs’ total recovery to $500,000.  See § 766.118(2)(a), Fla. Stat.

            On appeal, the Third District reached the opposite conclusion.  It first found that the statute at issue was substantive in nature and that the legislature expressed clear legislative intent for retroactive application.  On the third prong of the analysis—whether plaintiffs had vested rights that were impaired—the district court found that they “had at most a ‘mere expectation’ or a prospect that they might recover damages of an indeterminate amount at an unspecified date in the future.”  The court based this conclusion on the fact that plaintiffs did not file their notice of intent, file their complaint, or obtain a judgment before the enactment of the statute.

            The parties are presently briefing the issues in the supreme court.  The author will update this article once the supreme court decides the case.  To check on the status of this case, please click here. 

            The supreme court is also reviewing in a different case whether the statutory cap on noneconomic damages is unconstitutional on other grounds.  See Estate of McCall v. United States, No. SC11-1148 (review granted June 14, 2011). That case is awaiting a decision. 

Florida High Court to Examine Proximate Cause in Negligent Security Case

By Erin E. Dardis on Posted in Florida

 

On August 2, 2013, the Florida Supreme Court accepted review of a case to examine the issue of proximate cause in a negligent security case. See Sanders v. ERP Operating Ltd. Partnership, 96 So. 3d 929 (Fla. 4th DCA 2012) (No.SC12-2416).Two young adults moved into an apartment complex marketed as a “gated community.” Water surrounded approximately 70% of the complex and a fence surrounded the remainder. The complex had a policy of providing reasonable lighting, locks, and peepholes. The apartments contained alarm systems, which the residents could activate.  

A year after they moved in, the victims were shot to death by unknown assailants inside their apartment.  While there was no sign of forced entry, cash and other valuables were stolen from the apartment.

The plaintiff, as personal representative of the decedents’ estates, filed a complaint alleging that the complex owner’s negligence was a proximate cause of the deaths. The complaint alleged that the complex owner did not maintain the premises in a reasonably safe condition by failing to: (1) maintain the front gate; (2) have adequate security; (3) prevent dangerous persons from gaining access to the premises; and (4) protect and warn residents of dangerous condition and criminal acts. The complex owner had a manual recommending notice to residents when a “significant crime” occurred on the property, especially a violent crime or forced-entry burglary.  The owner did not notify the residents of 20 criminal incidents that occurred in the 3 years before the decedents’ murders.  Three years before the murders, there was an armed robbery and assault on the property after the perpetrators broke the entrance gate and followed residents onto the property. The gate was broken for about 2 months before the murders.

The owner’s expert, a security consultant, testified that the murders were not foreseeable because the 20 prior crimes were not violent crimes or predictive of future homicides.  The expert opined that the existing security measures were more than reasonable and that there was no sign of forced entry and that he believed that the door was opened to the person that committed the murders.

The plaintiff’s expert, a criminology expert, testified that most of the prior crimes at the complex were opportunistic and that the murders also occurred in the course of an opportunistic crime (i.e., a home invasion).  The expert conceded, however, that there had not been a murder, shooting, or rape at the complex previously and that there was no way of knowing precisely how the murders took place.

The defendant moved for a directed verdict arguing that the plaintiff had not established proximate cause.  The trial court denied the motion.  The jury found the defendant 40% comparatively negligent and awarded damages of $4.5 million.  The defendant moved for a new trial and a judgment notwithstanding the verdict, which the trial court denied.

In negligence actions, Florida courts follow the “more likely than not” standard of causation and require proof that the negligence “probably” caused the plaintiff’s injuries. In this case, although there was evidence to support a breach of duty to provide adequate security, the plaintiff could not establish that the breach was the proximate cause of the murders.  The victims were murdered inside their apartment, there was no sign of a forced entry, and the plaintiff’s expert acknowledged that it was unknown what happened on the night of the murders.  Without proof of how the assailants gained entry into the apartment, the appellate court concluded that the plaintiff could not prove causation.  As such, the appellate court reversed and remanded the matter to the trial court.

The parties concluded their briefing on October 7, 2013.  Because the Florida Supreme Court dispensed with oral argument, it should release its decision in the next 3 to 6 months. I will update this article after the Florida Supreme Court has ruled.

 

 

California Confirms Preemption by FAA Over State Rule Barring Employee Waiver – Mostly

By on Posted in California, Federal

In Sonic-Calabasas A, Inc. v. Moreno (Sonic II), the California Supreme Court addressed an employee’s waiver of access to an administrative hearing, in this case a Berman hearing, in an arbitration agreement imposed as a condition of employment. The unanimous court concluded that a categorical rule prohibiting such waivers is preempted by the Federal Arbitration Act (FAA) in light of the U.S. Supreme Court’s ruling in AT&T Mobility LLC v. Concepcion (Concepcion). A divided court (5-2) further held that state courts can still invalidate such an arbitration agreement on a case-by-case basis by finding that is unconscionable, so long as waiver of the Berman hearing is not the sole basis and the finding does not “interfere with the fundamental attributes of arbitration.” Such a finding could be based on the benefits received by the employee under the arbitration agreement in comparison to those which were waived, in light of the totality of circumstances.

Sonic I. As a former employee of Sonic-Calabasas A, Inc., Moreno filed a claim with the Labor Commissioner for unpaid vacation time totaling nearly $28,000. Under California law, Labor Code §§ 98, et seq., this triggers an administrative process referred to as a Berman hearing procedure. This provides an expedited process for employee wage claims and provides additional protections to employees, such as potential access to representation by the Labor Commissioner in pursuing the claim. Any party can appeal the result, but the employer must post a bond to cover any adverse judgment, which otherwise becomes enforceable. Also, if the employer’s appeal is unsuccessful, the employee can recover all costs and fees, but the employer can only recover costs and fees if it obtains a judgment of zero on appeal.

In Sonic I, a bare majority of the California Supreme Court (4-3) held categorically that waiver of the Berman hearing procedure as a condition of employment was a violation of public policy. In addition, the court held that such a waiver was unconscionable and therefore unenforceable in any case. In doing so, the court did not invalidate the arbitration agreement, only the waiver of the statutory right to a Berman hearing. Should either party appeal the administrative ruling, that appeal could be submitted to arbitration. In that way, the employee would still have the significant protections provided by the Berman hearing procedure, and the employer could still compel arbitration for an ultimate resolution. The court explained that the FAA did not preempt this approach because any waiver of the Berman hearing was invalidated, whether or not it was part of an arbitration agreement.

Concepcion and Sonic II. Shortly after Sonic I, the U.S. Supreme Court issued its decision in Concepcion, which addressed Discover Bank, an earlier decision by the California Supreme Court. Discover Bank had invalidated a waiver of class actions and the corresponding arbitration agreement as unconscionable in a consumer protection context. Concepcion abrogated Discover Bank, holding that the FAA preempted any state law rule or holding which was aimed at destroying arbitration or which demanded procedures incompatible with arbitration. This includes any rule which is generally applicable to contracts, such as unconscionability, but which is applied in a fashion which disfavors arbitration. Conception held that requiring the availability of class actions, whether judicial or some sort of class arbitration, would sacrifice the principle advantages of arbitration – lower costs, informality which results in greater efficiency and speed, and the ability to choose the adjudicator.

The U.S. Supreme Court granted certiorari, vacated Sonic I, and remanded for further consideration in light of Concepcion. Following Concepcion, a unanimous California Supreme Court reversed its decision in Sonic I, holding that any general rule against waiving a Berman hearing, whether based on public policy or unconscionability, was preempted by the FAA since it would categorically favor Berman hearings over arbitration and add a significant delay to the arbitration process, thus infringing on one of its fundamental attributes.

Sonic II’s Unconscionability Doctrine. A divided court (5-2) noted that Concepcion only bars the application of unconscionability if it interferes with the “fundamental attributes of arbitration,” leaving open any other application of the doctrine. While acknowledging that states cannot categorically prefer one form of dispute resolution (e.g. Berman hearings) over arbitration, the court concluded this does not prevent a case specific evaluation from finding that an arbitration agreement which includes such a waiver is unconscionable. Sonic II discusses several previous California holdings finding unconscionability on grounds not preempted by the FAA, such as an arbitration process in which a full recovery is not even theoretically possible, up-front costs that deter employees, or unfairly one-sided provisions. As such, while the waiver of an administrative process, in itself, cannot support unconscionability, that waiver could be part of a larger evaluation to determine whether the arbitration agreement was unconscionable.
Such an evaluation should address the adequacy of the arbitration process provided, both as described in the contract and as implemented, in comparison to the Berman protections that were waived. The Berman hearing procedures provide a speedy, informal and affordable means of resolving a wage claim. Thus, the waiver of such protections in favor of an arbitration process which does not provide the same type of protections may be unconscionable and unreasonably one-sided, as well as contrary to the goals of the FAA. Importantly, the court acknowledged that there are many different means to reach these goals, and that the arbitration procedures need not mirror the Berman procedures. Of course, such an evaluation should consider the totality of circumstances (e.g., contract of adhesion?). Since the record did not address these issues, the court remanded to the trial court for further proceedings.

Concur and Dissent. Justice Corrigan concurred, but wrote separately to complain that the majority failed to articulate a clear standard for assessing the unconscionability of an arbitration agreement, and instead seemed to provide multiple formulations. She agreed with Justice Chin on the standard – terms which are so one sided that they shock the conscience.
Justices Chin and Baxter dissented from the new unconscionability doctrine primary on grounds that Moreno forfeited the argument by failing to raise it below, and that he could not show unconscionability in any case. The dissent also disagreed with the majority‘s “advisory opinion” regarding the unconscionability doctrine, which it argued was contrary to state law and preempted by the FAA.

The Next Step.  Sonic II is hardly the last word from the California Supreme court on the issue of FAA preemption. The court has two such cases already fully briefed. In Sanchez, the issue is whether the FAA, a’ la Concepcion, preempts state law rules which invalidate as unconscionable mandatory arbitration provisions in a consumer contract. In Iskanian, the court granted review to address whether Concepcion implicitly overruled Gentry, with respect to contractual class action waivers in the context of non-waivable labor law rights and whether Concepcion permits arbitration agreements to override the statutory right to bring representative claims under state law. Between them, Sanchez and Iskanian have twelve grant and holds cases waiting for a decision, indicating the broad interest in these rulings. For more details on ADR cases pending before the California Supreme Court, see our summary here.
 

LexBlog