Must Read Ruling on General Liability by Illinois Supreme Court

Tuesday, December 9, 2008 | 0

By Eugene F. Keefe

Synopsis: Vitally important ruling for all Illinois risk managers handling major litigation in our courts.

Editor’s comment: This is one of those, “That’s Illinois” rulings. It doesn’t have to make sense or follow what we call the “plain English language” meaning of legislation. The current legal system, including our Legislature, Supreme Court and Governor’s mansion are run by the Plaintiff trial bar and such laws/rulings will continue until we are able to get reform or some sense of balance for Illinois business. Let us hope this concept and concern doesn’t start to bleed over to federal court, now seeing the current White House and Congress may be beholden to the same folks. We applaud the Illinois State Chamber of Commerce for filing an amicus brief in this case and trying to staunch the bleeding in such matters.

What the Plaintiff trial bar wants to happen in major claims is global settlements. The best way to get all defendants to settle and contribute in a major claim is to have the judiciary leave them holding the whole bag if they force their specific and possibly marginal interests to trial while other defendants bail and close with partial settlements. In a November 25, 2008, 4-2 ruling in Ready v. United/Goedecke Services, the Illinois Supreme Court held settled defendants cannot be taken into account when allocating fault under Section 2-1117 of the Illinois Code of Civil Procedure. Section 2-1117 provides, except for medical expenses and certain toxic tort claims falling under section 2-1118, a defendant is only jointly and severally liable if its share of fault is 25 percent or greater of the total fault "attributable to the plaintiff, the defendants sued by the plaintiff, and any third party defendants except the plaintiff's employer." By excluding settled defendants from this calculation, the Illinois Supreme Court has made it dramatically difficult for any defendant remaining at trial to avoid joint and several liability, even where such defendant may have played only a minor role in causing plaintiff's injury.

The decedent in Ready was a mechanic at a power plant in Joliet, Illinois. He was killed when a truss slipped and fell from the eighth floor during a pipe-refitting project. Plaintiffs sued United/Goedecke, the subcontractor that dropped the truss, as well as the power plant and the general contractor for the project. They settled with the power plant and the general contractor and went to trial against United/Goedecke. At trial, the judge excluded evidence of negligence by the power plant and general contractor and declined to include them on the verdict form. The jury found United/Goedecke 65 percent at fault and decedent 35 percent at fault. After offsets for decedent's negligence and prior settlements, the jury found United/Goedecke solely liable for $8.1 million. The appellate court reversed in pertinent part, holding under section 2-1117 fault should be assessed relative to all defendants, including defendants that settled before trial.

The Supreme Court’s plurality opinion, drafted by Justice Freeman concluded the phrase "defendants sued by the plaintiff" is somehow ambiguous with respect to settled defendants. With respect to our highest court, we consider that stretching the English language like a piece of Laffy Taffy. The Court rejected United/Goedecke's plain English language argument noting "sued" is in the past tense and settled defendants are or were "defendants sued by the plaintiff." Instead, because "sued" is not defined in the statute, the plurality turned to standard dictionary definitions to support its finding of ambiguity. The plurality noted that "sued" could mean, consistent with United/Goedecke's view, "to seek justice or right from (a person) by legal process: bring an action against: prosecute judicially." It could also mean, consistent with plaintiff's view, "to proceed with (a legal action) and follow up to proper termination: gain by legal process."

Thus, the Supreme Court’s plurality concluded, the "definitions provide no help in determining which of these contradictory views might have been intended" and "[w]e find no clear indication of a legislative preference for either of the parties' asserted meanings over the other." The Supreme Court’s plurality opinion bolstered its finding of ambiguity by noting the conflicting interpretations of the statute by the appellate courts. The plurality sought to determine legislative intent using two principles of statutory construction. The first principle stated that "where the legislature chooses not to amend a statute after a judicial construction, it is presumed that the legislature has acquiesced in the court's statement of the legislative intent." The appellate court had ruled in Blake settled defendants are excluded when apportioning fault. The 2003 amendment to section 2-1117 did not react to the prior holding. Thus, the plurality concluded, the "legislature's failure to address Blake's holding at that time is an indication of the legislature's acceptance, as of 2003, of this judicial interpretation of section 2-1117."

The second principle holds that "an amendment to a statute creates a presumption that the amendment was intended to change the law." Here, the plurality relied on the Tort Reform Act of 1995, which was later held unconstitutional in Best v. Taylor Machine Works, 179 Ill. 2d 367 (1997). The Act specified that a party is a "tortfeasor" "regardless of whether that person may have settled with the plaintiff." The plurality found that "the 1995 amendments are a compelling indication that settling defendants were not meant to be included in the apportionment of fault under the 1986 statute." After applying these principles, the plurality also cited statements by Illinois Senator John Cullerton during the floor debate on Senate Bill 1296. The bill was passed by the Senate in March 2007 but remains pending in the House. Senator Cullerton stated Senate Bill 1296 was intended to clarify "what the intent of the 1986 law was. It just makes it clear, if you settle with somebody, their names don't go on the verdict form." These statements, according to the plurality, confirm the conclusion settled defendants are not "defendants sued by the plaintiff" within the meaning of section 2-1117.

Justice Garman wrote the dissent, which Justice Karmeier joined. They concluded the phrase "defendants sued by the plaintiff" "unambiguously refers to those individuals or entities against whom the plaintiff filed suit." The dissent noted Black's Law Dictionary defines the word "sue" as "[t]o institute a lawsuit against (another party)," and suggested the conflicting general usage definitions cited by the plurality do not make sense in the context of the statute. The statute, as the dissent pointed out, used the word "sued" in the past tense, which "renders only one of the two usages reasonable." Thus, the dissent concluded, settled defendants were plainly "sued by the plaintiff." The dissent was also highly critical of the plurality's tools of statutory construction. With respect to the amendment in the Tort Reform Act of 1995, the dissent noted if a statute is ambiguous (as the plurality had found), "a subsequent amendment will clarify the statute rather than change the law." Indeed, the Illinois Supreme Court had previously confirmed an "amendment of an unambiguous statute indicates a purpose to change the law, while no such purpose is indicated by the mere fact of an amendment of an ambiguous provision." Thus, according to the dissent, the plurality's principle of construction is "entirely misplaced" in this case.

The dissent also explained that the 2003 amendment had nothing to do with Blake. Instead, the legislature was acting for a specific purpose involving a different portion of the statute. The dissent was skeptical the legislature was even aware of Blake, an appellate court ruling, when it made this change. Thus, the 2003 amendment is not an indication of legislative acquiescence. Finally, Justice Garman's dissent pointed out the fallacy of relying on Senator Cullerton's statements in 2007 to determine the legislative intent behind the 1986 statute. As the dissent explained, a "member of a subsequent legislature who favors amending the existing statute is not an appropriate source of information as to the intent of the enacting legislature. I strongly object to the suggestion to the circuit and appellate courts that they should look to the content of floor debates in the current legislative session to determine the meaning of statutory language that has been on the books for decades."

The Illinois Supreme Court's opinion in Ready will have significant implications going forward. As an initial matter, lower courts will likely face the question of whether evidence concerning settled defendants is ever admissible at trial. In Ready, the trial judge excluded such evidence as irrelevant under section 2-1117, which the Illinois Supreme Court ultimately affirmed. Plaintiffs will likely use Ready to oppose the admission of any evidence concerning settled defendants.

We and most defense observers assert this evidence should still be admissible for other purposes, such as showing that a settled defendant was the sole proximate cause of the plaintiff's injury. This issue was not addressed in Ready. However, in a tort action, if defendant elects to rebut plaintiff's case, he is entitled to do so by any available means, including "show[ing]" any "evidence that negates causation." Leonardi v. Loyola Univ. of Chicago. In Leonardi, the Illinois Supreme Court held that where there is evidence of other causes of a plaintiff's injury, the defendant is "always" permitted to introduce that evidence so the jury can resolve whether some other cause was the sole proximate cause of the injury. Following two appellate court decisions that held that this evidentiary rule does not apply in asbestos cases, the Supreme Court is currently considering the proper role of a sole proximate cause defense in asbestos cases in Nolan v. Weil-McClain (Case No. 103137).

The rule announced in Ready will also have important practical implications. Plaintiffs can settle with defendants who are predominantly at fault for an injury but have minimal assets and/or insurance to pay any damages. Plaintiffs can then go to trial with deep-pocket defendants, even if their relation to the injury is much more tenuous. With the settled defendants out of the picture, the odds are greatly increased the judge or jury will allocate more than 25 percent of the fault to the remaining trial defendants, rendering them jointly and severally liable for major damages. This scheme naturally increases the pressure on major defendant to settle, even if defendant has strong defenses and/or the settlement is out of proportion to its specific culpability. The exclusion of settled defendants from the joint and several liability calculation under section 2-1117 makes it very dangerous to be the last defendant standing at trial.

We also caution, provided plaintiff's settlement with another defendant is in good faith, the trial defendant(s) may be unable to sue the settling defendant for contribution. Accordingly, the value of proportionate fault and limited joint and several liability appears to be greatly diminished. The legislature originally enacted section 2-1117 with the intent that minimally responsible parties should not have to pay entire damage awards. But the Supreme Court’s ruling and interpretation of the Code of Civil Procedure will inexorably lead to this result.

The decision is on the web at: http://www.state.il.us/court/OPINIONS/SupremeCourt/2008/November/103474.pdf.

<i>Eugene F. Keefe is a partner in the Chicago law firm of Keefe, Campbell & Associates.</i>