Illinois Legislature Passes Bill Setting Prejudgment Interest Rate at Nine Percent in Tort Cases
Fundamental changes to the law governing prejudgment interest could soon take effect. HB 3360 passed both houses of the Illinois legislature on January 13, 2021, and now awaits Governor Pritzker’s signature. If enacted, HB 3360 would have serious ramifications for defendants, defense attorneys, and insurance carriers. Specifically, it would nullify Illinois’ longstanding common law rule barring recovery of prejudgment interest in personal injury and wrongful death suits. As a result, case values could rise to account for prejudgment interest awards, giving plaintiffs’ attorneys additional leverage during settlement negotiations and ultimately increasing the cost of coverage. Another concerning aspect of HB 3360 is that the legislature seemingly ignored the foundational differences between economic and non-economic damages. Unlike economic damages, which are tangible and subject to precise calculation, non-economic damages are speculative, discretionary, and cannot be objectively quantified, especially where the plaintiff’s pain and suffering levels fluctuate throughout the litigation. The degree of pain and suffering is even more speculative post-judgment because future non-economic damages, by their very nature, cannot be objectively determined. Further, because HB 3360 allows plaintiffs to recover prejudgment interest on all damages, defendants would have to pay for the interest assessed on expenses paid by third parties, such as health insurers.
Perhaps more problematic for defendants, defense counsel, and insurance carriers is that prejudgment interest under HB 3360 would start accruing on the date defendants receive notice of the injury. Consequently, plaintiffs may begin to immediately notify defendants of their injury, then wait to commence their cause of action until the applicable statute of limitations is almost expired. Plaintiffs could theoretically stall long enough to collect prejudgment interest for two years (i.e. the time limit for filing personal injury claims in Illinois), during which time defense attorneys must sit on their hands, unable to engage in meaningful discovery while paying interest on potentially mitigable damages. While defendants needlessly await service of process, defense attorneys may also find it more difficult to estimate the value of cases and determine their client’s scope of liability. Given the likelihood that case values will go up if HB 3360 is enacted, insurance carriers could begin pressuring defendants to hurriedly settle cases, even at the beginning of discovery. In turn, defense attorneys would have insufficient time to ascertain a fair settlement amount or learn facts justifying a dismissal. Although added settlement pressure and, ipso facto, earlier settlements, could negate at least some of the prejudgment interest costs, they could also create tension between insurance carriers, policyholders, and defense counsel. On top of that, insurance carriers could soon begin urging defense attorneys to settle cases more quickly due to protracted COVID-related case delays. If HB 3360 becomes law, insurance carriers might start applying settlement pressure even sooner – if they haven’t already begun.
Finally, HB 3360 would fix the prejudgment interest rate at nine percent each year following a settlement or court-awarded judgment. This exorbitant rate would allow personal injury plaintiffs to receive more post-judgment compensation from interest assessed on damages than money they would have earned but for their injury. With the exception of Colorado (See Colo. Rev. Stat. § 13-21-101; Rodriguez v. Schutt, 914 P.2d 921, 925 (Colo. 1996)), HB 3360 would also make Illinois’ nine percent rate in personal injury and wrongful death suits higher than the rate in every other jurisdiction. Further, state statutes generally set forth maximum interest rates and authorize courts to determine the appropriate interest percentage. Illinois courts currently have discretion to assess interest when justified by equitable considerations but would lose it entirely if HB 3360 becomes law. See In re Estate of Wernick, 127 Ill. 2d 61, 87-88 (1989). Evidence suggests that disallowing courts from exercising discretion when determining interest rates would heighten the risk that plaintiffs receive excess compensation. According to the Illinois Insurance Association, assessing a nine percent interest rate on Illinois’ top ten largest verdicts in 2019 would have increased total interest payments in these cases from $51,000,000 to nearly $96,000,000.
As if the substantive aspects were not troubling enough, the process by which the General Assembly passed HB 3360 was anything but ordinary. Introduced on February 15, 2019, as a bill to amend the Mortgage Foreclosure Article of the Code of Civil Procedure, HB 3360 passed the House and was referred to the Assignments Committee in the Senate on April 4, 2019. After lying idle for nearly two years in the Senate, the bill suddenly appeared on the Senate calendar for a second reading on January 10, 2021. The following day, Senate President Don Harmon introduced a floor amendment to remove the mortgage foreclosure provisions and add subsections (c) through (f) to section 2-1303 of the Illinois Code of Civil Procedure. After a third reading that same day, the Senate passed the revised version of HB 3360 and sent Senator Harmon’s amendment to the House for a vote. Within hours, the House duly approved the amendment before the General Assembly sent HB 3360 as amended to Governor Pritzker.
Illinois lawmakers are not supposed to pass legislation in this fashion. Pursuant to General Assembly procedural rules, when one of the chambers passes an amended bill that was previously passed by its counterpart chamber, the amended version must return to the committee of origin for consideration. If approved, the full chamber must scrutinize and conduct open floor hearings on the amended bill. Interested parties, such as lobbyists, public interest groups, and individual citizens, must be also given an opportunity to express support or opposition under the Open Meeting Act. Only after this deliberative process concludes can the amended bill pass both chambers.
HB 3360 followed a different trajectory. The version of HB 3360 passed by the House on April 4, 2019, was completely different from the amended version that passed the Senate on January 11, 2021. Therefore, HB 3360 (with Senator Harmon’s amendment) should have been presented to the committee of origin (the House Civil Judiciary Committee) for consideration. This never happened, according to the General Assembly website. Further, the House passed Senator Harmon’s amendment to HB 3360 the same day he filed it even though the amendment fundamentally changed the original bill’s text and subject matter. If House lawmakers had mulled over the changes to HB 3360 in accordance with procedural rules, and if the General Assembly had given the public enough time to opine on the proposed changes in accordance with the Open Meeting Act, the bill may not have passed both chambers in such a short time, especially given the profound impact of the proposed law.
Perhaps lawmakers were trying to slip legislation through the cracks because of the lame-duck session. Perhaps lawmakers were swayed by plaintiffs’ firms and the Illinois Trial Lawyers Association, which have collectively donated more than $370,000, alone, to the campaign finance committee of Senator Harmon. Although we may never know the exact reason for the legislature’s precipitancy in passing HB 3360, we do know one thing: If enacted, it will have far-reaching consequences for defendants, insurance carriers, and defense attorneys. So too will HB 3360 hurt small businesses and safety net hospitals, many of which have closed permanently and are finding it more difficult to obtain insurance coverage because of COVID’s economic fallout.
Summary Judgment Obtained in Case Seeking $2M from Oral Surgeon
On November 7, 2019, a team led by SST's Jaclyn Kostich secured summary judgment in favor of a surgeon in a civil rights (U.S.C. 42 U.S.C. § 1983) lawsuit.
The plaintiff-inmate alleged that the defendant-surgeon violated his Fourteenth Amendment rights and was deliberately indifferent to the plaintiff’s serious medical needs when the surgeon treated him for a hemangioma (benign growth) and failed to diagnose his invasive squamous cell carcinoma, which resulted in the plaintiff undergoing a total maxillectomy (surgical resection of the entire upper jaw, nose and eye socket). More specifically, the plaintiff alleged that the surgeon was deliberately indifferent to the plaintiff’s medical needs by failing to provide him with an interpreter.
The defendant-surgeon moved for summary judgment, arguing that the undisputed facts established that he properly treated the plaintiff for the hemangioma, the only condition from which the plaintiff suffered at the time the surgeon treated him. Moreover, the plaintiff’s invasive squamous cell carcinoma was entirely unrelated to the hemangioma and did not develop until several months after he last saw the surgeon. The defendant also argued that he was able to effectively communicate with and treat plaintiff and that failure to provide plaintiff with an interpreter did not amount to deliberate indifference.
Magistrate Judge Mark A. Beatty for the U.S. District Court of the Southern District of Illinois issued an opinion, granting summary judgment in favor of the defendant-surgeon, finding the plaintiff’s “language barrier” argument “unavailing” and determining that “[i]t is unclear how a translator could have helped Plaintiff anymore because Defendant properly diagnosed Plaintiff’s condition based on the physical findings.” The Court further held that “no reasonable jury could find Defendant ignored Plaintiff’s symptoms in such a manner that it demonstrated a departure from accepted medical professional standards[.]”
On October 1, 2019, Sinars Slowikowski Tomaska obtained an order granting summary judgment on a newer Iowa statute that may have significant impact on any claim filed in, or arising from, a site in Iowa.
In 2017, the Iowa General Assembly adopted and the Governor signed into law Iowa Code Chapters 686A and 686B. The relevant section states, “A defendant in an asbestos action or silica action shall not be liable for exposures from a product or component part made or sold by a third party.”
District 7 (Davenport) Judge Patrick McElyea issued the opinion on the insulation contractor defendant’s Motion for Summary Judgment in the Estate of Charles Beverage case. Senior Associate Kevin Horan argued on behalf of the insulation contractor.
The Court observed that no Iowa appellate court has interpreted Iowa Code Section 686B.7(5). Furthermore, no valuable legislative history is available. Indeed, only one other district court has interpreted the statute. The opinion in that case, Fankhauser et al. v. Borg-Warner Morse Tec, Inc. et al., No LACL140972 (Polk County, Aug. 14, 2019), was persuasive to Judge McElyea. The Court looked at the plain meaning of the statute and broke down the separate terms “product or component part” and “made or sold by a third party.” He noted “the products at issue in this case involve asbestos insulation used at the [premise owner's] plant” and stated that there was no factual dispute that the Beverage case alleged exposures from these products or component parts that were supplied and/or installed by this insulation contractor.
More specifically, the central issue for the Court was whether the asbestos-containing insulation used at the premise and any component parts were “made or sold by a third party.” The court noted that the premise defendant never manufactured or produced an asbestos-containing product or component part, and certainly never sold any component part or product. In this case, the evidence showed that the premise defendant was a consumer of asbestos insulation provided by a third party (the insulation contractor). As to the insulation contractor, the Court found that the record was clear that it sold products containing asbestos. However, the record was also clear that the insulation contractor purchased these asbestos products from other sources, specifically, Johns Manville and Eagle-Picher. Assuming all facts in favor of Plaintiffs’, the Court found that any asbestos containing products the insulation contractor installed at the premise or sold to the premise were products or component parts made or sold by third parties such as Johns Manville and Eagle-Picher.
Despite stated sympathy for Plaintiffs’ interpretation of the statute, the Court ultimately found that the legislature may have intended asbestos litigation to focus on the actual producers of products containing asbestos rather than entities who purchase it or install it.
On February 4, 2019, Judge Rebecca Foley of the Circuit Court of McLean County, Illinois granted summary judgment in favor of a defendant-manufacturer of laundry equipment in Est. of Gerald Kessinger v. Honeywell International, et al. based on lack of causation under the Illinois Supreme Court's decision in Thacker v. UNR Indus., Inc. The plaintiff had alleged that the decedent, a 78-year-old laborer, was exposed to asbestos and developed mesothelioma while servicing Defendant’s laundry equipment. In support, the plaintiff pointed to testimony by the decedent’s sons, who testified that from 1970-78, the decedent had performed routine maintenance on washers and dryers at various laundromats in the McLean County area.
Defendant argued that even if the decedent could show that the component parts had contained encapsulated asbestos (and there was no such evidence in the record), there was no evidence that the decedent’s purported manipulation of those component parts had resulted in a release of respirable asbestos sufficient to satisfy the “frequency, regularity, and proximity” causation standard set forth by the Illinois Supreme Court in Thacker v. UNR Indus., Inc., and, more recently, McKinney v. Hobart Brothers Co. Specifically, the Court found that the plaintiff had failed to present evidence that the decedent had experienced any quantifiable exposure to asbestos from his work on the subject laundry equipment. Given this lack of causation, the court granted summary judgment in favor of the defendant-manufacturer.
For additional information about this decision, please contact James Tomaska or Kate Ofenloch of Sinars Slowikowski Tomaska, who represented the defendant-manufacturer.
Ohio Supreme Court Rejects Cumulative Exposure Theory of Causation
In a landmark opinion, the Ohio Supreme Court held that plaintiffs may no longer rely on the “cumulative exposure theory” to establish causation in cases alleging asbestos-related injuries. Specifically, the Court held that a theory of causation based only upon the cumulative exposure to various asbestos-containing products does not meet Ohio’s “substantial factor” test. Instead, plaintiffs must prove that the conduct of each particular defendant was a substantial factor in causing the disease based on specific evidence of the manner, proximity, frequency, and length of exposure. See Schwartz v. Honeywell International., Inc., Slip Opinion No. 2018-Ohio-474 (opinion will open in a new window).
In Schwartz, the plaintiff alleged that the decedent, Kathleen Schwartz, was exposed to asbestos through her father’s 33-year career as an electrician and through her father's personal automotive work. The evidence showed that, as an electrician, her father worked with asbestos products almost every day, was regularly exposed to clouds of asbestos dust, drove home from work in the family car, and played with Kathleen without first changing his clothes. The evidence also showed that, during his automotive work, her father used Bendix brake products approximately 5 to 10 times while Kathleen lived in the family home.
At trial, the plaintiff’s expert testified that asbestos from both the Bendix brakes and her father’s career as an electrician were contributing factors to Kathleen’s “total cumulative dose” of exposure. According to the plaintiff’s expert, Kathleen’s cumulative exposure―which included her exposure to asbestos from the Bendix brakes―was the cause of her mesothelioma. The jury found for the plaintiff and found Honeywell (as successor-in-interest to Bendix) to be 5% at fault. Honeywell appealed, and the appellate court upheld the decision. The Ohio Supreme Court granted a discretionary appeal.
The Ohio Supreme Court first clarified Ohio’s standard for causation. To establish causation under Ohio law the plaintiff must prove that: (1) the injured person was exposed to asbestos “manufactured, supplied, installed, or used by the defendant;” and (2) the “exposure to the defendant’s asbestos was a substantial factor in causing the plaintiff’s injury or loss.” Ohio Rev. Code 2307.96(A)-(B) (emphasis added). When determining whether exposure to asbestos is a “substantial factor,” the trier of fact must consider the manner, proximity, frequency, and length of the alleged exposure to asbestos. Ohio Rev. Code 2307.96(B). In contrast to section 2307.96 of the Ohio Revised Code, the cumulative exposure theory does not rely on any particular dose or exposure to asbestos. Rather, it argues that all exposures contribute to a causative dose. As such, the cumulative exposure theory considers all non-minimal exposures as causative because they contribute to the cumulative exposure to asbestos. In sum, the cumulative exposure theory examines all defendants in the aggregate by viewing any defendant that contributed to the exposure as a substantial cause. The Court held that the total cumulative exposure theory is inherently incompatible with the plain language of Ohio Rev. Code 2307.96
In categorically rejecting the cumulative exposure test, the Court noted that section 2307.96(B) of the Ohio Revised Code requires an individualized determination for each defendant with respect to the alleged exposure. Thus, there must be a determination whether the conduct of each particular defendant was a substantial factor in causing the plaintiff’s injury based on specific evidence of the manner, proximity, frequency, and length of exposure. Moreover “[w]here specific evidence of frequency of exposure, proximity and length of exposure to a particular defendant’s asbestos is lacking, summary judgment is appropriate . . . because such a plaintiff lacks any evidence of an essential element necessary to prevail.” The Court reasoned that the cumulative exposure theory, which requires only that the plaintiff demonstrate that the exposure to asbestos from the defendant’s product was non-minimal and contributed to the plaintiff’s total cumulative exposure is inconsistent with the statute’s clear and mandatory manner, proximity, frequency, and length of exposure requirements.
When applying the manner, proximity, frequency, and length factors to the case at issue, the Court found that the plaintiff had failed to establish causation. The plaintiff failed to introduce specific evidence of the manner of exposure, and had only presented limited evidence of proximity, frequency, and length of exposure. The Court also specifically stated that the alleged exposure to Bendix brakes was limited and irregular when compared to the regular exposures that Kathleen received through her father’s 33-year career as an electrician.
The Court’s ruling now seems to require Ohio plaintiffs to introduce defendant-specific expert evidence establishing that the exposure dose from a particular defendant’s product to satisfy substantial factor causation under Ohio law. It also highlights the importance of having a legal team that knows the facts of each case so that it can aggressively pursue all available options, such as motions to apply Ohio law.
For additional information, please contact Simon Baker at firstname.lastname@example.org. A full copy of the decision is available here.
Illinois Supreme Court Rejects Exercise of General Jurisdiction
n an opinion filed earlier today, the Illinois Supreme Court unanimously reaffirmed the standard for personal jurisdiction established in the United States Supreme Court case of Daimler AG v. Bauman, 571 U.S. ___, 134 S. Ct. 746 (2014). See Aspen American Insurance Company v. Interstate Warehousing, Inc., 2017 IL 121281, ¶ 3. This case arose following an ammonia leak at the defendant’s storage facility in Michigan. Aspen American Insurance Company v. Interstate Warehousing, Inc., 2017 IL 121281, ¶ 3. The plaintiff—who had insured the goods stored within the facility—had previously paid a claim for the loss and in doing so obtained subrogation rights. Id. The plaintiff subsequently brought suit against the defendant, Interstate Warehousing, Inc., in Cook County, Illinois alleging, inter alia, breach of contract and negligence. Id., ¶ 4.
The defendant is an Indiana corporation with its corporate office and principle place of business in Fort Wayne, Indiana. Id., ¶¶ 5, 7. The defendant conceded that it has one warehouse in Joliet, Illinois, and has been registered to do business within Illinois since 1988. Id., ¶ 7. However, the defendant also noted that it has other warehouses in Indiana, Colorado, Ohio, Tennessee, and Virginia. Id., ¶ 5. The defendant moved to dismiss the plaintiff’s cause of action for lack of personal jurisdiction. Id., ¶ 6. Writing for the court, Justice Burke held that Illinois courts could not constitutionally exercise jurisdiction over the defendant, and remanded the case to the circuit court to enter judgment dismissing the plaintiff’s complaint.
Operating a warehouse in Illinois did not subject the defendant to general jurisdiction.
The court began by affirming the general principle that the plaintiff bears the burden of establishing a prima facie basis for the exercise of personal jurisdiction over a non-resident defendant. Id., 2017 IL 121281, ¶ 12. In setting out the standard for establishing general jurisdiction, the Court expressly recognized that the United States Supreme Court has now firmly rejected the notion that the due process analysis rests simply on whether a foreign corporation is “doing business” within the state, or whether its contacts within the state are in some general sense continuous and systematic. Id. ¶ 16, citingDaimler, 571 U.S. at ___ n.20. Rather, the Court affirmed that a court may only assert general jurisdiction over a foreign corporation in those “exceptional cases” when its affiliations are so “continuous and systematic” to render it “essentially at home” within the state. Id., ¶¶ 16–17 (emphasis added).
In this case, the plaintiff failed to meet that burden. First, all parties agreed that the defendant was neither incorporated in Illinois nor has its principle place of business in Illinois. Id., ¶¶ 5, 7. Second, the court held that although the defendant conducted some business within Illinois, its act of maintaining one warehouse within the state fell “far short of showing that Illinois was a surrogate home” for the defendant. The court reasoned that “if the operation of the warehouse was sufficient, in itself, to establish general jurisdiction, then [the] defendant would also be at home in all the other states where its warehouses are located.” Id., ¶ 19. The Court stated that the United States Court had already expressly rejected that reasoning. Id., ¶ 19, citing Daimler, 571 U.S. at ___ n.20 (“[a] corporation that operates in many places can scarcely be deemed at home in all of them”).
Finally the court held that section (b)(4) of the Illinois long-arm statute—which purports to authorize a court to exercise jurisdiction over a defendant “doing business within this State”— cannot constitutionally be applied to establish jurisdiction over a non-resident defendant unless it is also “essentially as home’ within the state (as required by Daimler). 735 ILCS 5/2-209(b)(4); Aspen American Insurance Company, 2017 IL 121281, ¶ 21.
Compliance with the Business Corporation Act of 1983 did not subject the defendant to jurisdiction.
The plaintiff also argued that the defendant was subject to jurisdiction in Illinois because: (1) it had registered to do business within the state pursuant to the Business Corporation Act; and (2) pursuant to that Act had a registered agent for service of process within the state. Id., ¶ 21–22. The court rejected those arguments, holding that neither action subjected the defendant to jurisdiction. Id., ¶ 24. Relying on the plaint language of the Act, the court noted that:
None of [the Act’s] provisions require foreign corporations to consent to general jurisdiction as a condition of doing business in Illinois, nor do they indicate that, by registering in Illinois or appointing a registered agent, a corporation waives any due process limitations on this state’s exercise of general jurisdiction.
Id. In fact, the court continued, the “Act makes no mention of personal jurisdiction at all.” Id., ¶ 24.
Finally, the court rejected the plaintiff’s argument that section 5.25(A) of the Act—which states that a foreign corporation “shall be subject to the same duties . . . now or hereafter imposed upon a domestic corporation of like character”—subjected the defendant to jurisdiction. The court simply noted that jurisdiction is not a duty, and as such the section was inapplicable.
Illinois Appellate Court Grants Defendants’ Intrastate Rule 187(b) Motion to Dismiss for Re-Filing in Winnebago County Court
In a Rule 23(e) opinion, a First District appellate court reversed the trial court and granted the defendants’ rule 187(b) motion to dismiss pursuant to the doctrine of forum non conveniens. See Rohl v. Borg Warner Corporation, 2017 IL App (1st) 162398-U.
The decedent, Irvin Rohl, worked as a laborer, heavy equipment operator, and mechanic. During his deposition, Mr. Rohl testified that he attended an automotive and diesel trade school in Cook County for about 6 months. He also stated that he worked in Evansville, Indiana; Freeport, Illinois; and Rockford, Illinois (in Winnebago County). He worked in Winnebago County for approximately 46 years. When asked whether he was exposed to asbestos during his time at the Cook County trade school, he stated: “No. Not sure.” The record also showed that: (1) the plaintiffs had lived in Winnebago County for their entire adult lives; (2) all relevant co-workers lived in Winnebago County; (3) all of the plaintiffs’ surviving children resided in Winnebago County; and (4) the majority of the decedent’s medical providers were located in Winnebago County. The only medical provider located outside of Winnebago County was the Mayo Clinic in Scottsdale, Arizona. There was no evidence that the decedent had ever received medical treatment in Cook County. At the trial level, the circuit court denied the defendants’ motion to dismiss. The court specifically stated that Irvin Rohl had attended trade school in Cook County in the late 1940s, where he had allegedly been exposed to asbestos. On appeal, the court reversed.
First, the appellate court noted that there was insufficient evidence that the decedent had ever been exposed to asbestos in Cook County. Specifically, the court stated that: "[t]he evidence reveals that during Irvin’s six months in trade school in Chicago, he denied any exposure to asbestos, or was at best unsure whether exposure occurred. These equivocal statements are insufficient to establish that Irvin’s injury occurred in Cook County."
Second, the court noted that the majority of the private- and public-interest factors also favored dismissal for re-filing in Winnebago County. Of note, the court held that the defendants were not required to obtain affidavits from the decedent’s co-workers explicitly stating that it would be more convenient for them to testify in Winnebago County than in Cook County. Rather, the court noted that fact to be “obvious.” The court also stated that while the ease of access to documentary evidence is a less significant factor given the rise of computer technology and Internet access, many of Irvin’s employment records predated computer technology. As such, this factor may well remain important in asbestos cases alleging exposure asbestos, which typically predate computerization. The court also re-affirmed the importance of the possibility of viewing the site of the alleged injury.
Finally, the court specifically stated that Cook County did not have a particular interest in seeing the case tried within its borders, and that accordingly it would be unfair to impose the burdens of jury duty upon its citizens. Although the plaintiffs had argued that “hundreds, perhaps thousands” of Cook County residents had likely come into contact with defendants’ asbestos-containing products, the court held that such a contention was mere speculation that was insufficient to establish a “significant factual connection” to Cook County. Thus, there was no evidence that rendered this case a local controversy.
Although this case was published pursuant to Illinois Supreme Court Rule 23, it nonetheless provides defense attorneys with a firm basis to challenge the plaintiff's choice of forum when it bears little or no connection to the fact of the case at issue, and should be an effective tool to help combat forum shopping.
SSTSuccessfully Asserts Corporate Dissolution Defense in Madison County
Sinars Slowikowski Tomaska partner Megan Slowikowski was successful in arguing that Special Electric Company, Inc., a fiber supplier defendant, was a dissolved corporation that no longer has the capacity to be sued.
Special Electric Company, Inc., a Wisconsin corporation, dissolved in 2012 and published notice of its dissolution on May 8, 2014. Under Wisconsin law—the law of the state of incorporation—a claim against a dissolved corporation is barred unless the claimant brings a proceeding to enforce the claim within 2 years after the publication of dissolution. In the case at issue, the plaintiff did not file his initial complaint until June 10, 2016. Sinars Slowikowski Tomaska moved to dismiss the plaintiff’s claim against Special Electric arguing that: (1) Special Electric Company, as a dissolved corporation, no longer has capacity to be sued; (2) the court lacked jurisdiction over the case because the plaintiff could not and did not effect proper service on a dissolved corporation; and (3) in the alternative, the court should apply Wisconsin law to find that the plaintiff’s claims were not timely filed.
The court agreed, and on July 14, 2017, Judge Stobbs entered an order dismissing Special Electric Company, Inc. with prejudice. In so ruling, the court held that Special Electric has properly followed all administrative requirements with respect to both dissolving the corporation and publishing subsequent notice of that dissolution. As such, the court agreed that Special Electric ceased to exist as of May 9, 2016, and therefore lacked capacity to be sued as of that date. This ruling follows similar rulings on behalf of Special Electric in New York and California.
US Supreme Court Rejects Exercise of Specific Jurisdiction
In a June 19, 2017 opinion, the United States Supreme Court held that a California court did not have specific jurisdiction over nonresidents’ claims against a foreign corporation when their alleged injury did not occur within the state. In doing so, Justice Alito, writing for the majority, rejected the California Supreme Court’s “sliding scale” approach to jurisdiction and affirmed that “[i]n order for a court to exercise specific jurisdiction over a claim, there must be an “affiliation between the forum and the underlying controversy.”
In this case, a group of plaintiffs — consisting of 86 California residents and 592 residents from 32 other states — filed a civil action in a California state court against Bristol-Myers Squibb Company (“BMS”) for injuries allegedly caused by a BMS drug called Plavix. Bristol-Meyers Squibb Company is incorporated in Delaware and headquartered in New York, and it maintains substantial operations in both New York and New Jersey. Under the law established in Daimler, all parties agreed that BMS was not subject to general personal jurisdiction in California. Rather, the Court was asked to determine whether BMS was subject to specific jurisdiction in California with respect to the nonresident claims.
Bristol-Meyers Squibb Company conceded that it was subject to jurisdiction with respect to the resident Californians’ claims, but moved to dismiss the nonresidents’ claims. Bristol-Meyers Squibb Company argued that California lacked specific jurisdiction because it did not develop Plavix in California, did not create a marketing strategy for Plavix in California, did not manufacture, label, package, or work on the regulatory approval of the product in California,” and because “[t]he nonresident plaintiffs did not allege that they obtained Plavix through California physicians or from any other California source and did not claim that they were injured by Plavix or were treated for their injuries in California.” The plaintiffs argued that BMS was subject to specific personal jurisdiction because BMS sold and marketed Plavix in California (making almost $900,000 from Plavix in California from 2006 to 2012, or a little over 1% of its nationwide sales revenue), and performed substantial research within the state.
In a majority opinion, the California Supreme Court found that it had specific personal jurisdiction over BMS. The court applied a “sliding scale approach to specific jurisdiction,” such that “the more wide ranging the defendant’s forum contacts, the more readily is shown a connection between the forum contacts and the claim.” Applying its “sliding scale” test, the majority concluded that “BMS’ extensive contacts with California” permitted the exercise of specific jurisdiction “based on a less direct connection between BMS’ forum activities and plaintiffs’ claims than might otherwise be required.” The majority found the attenuated requirement was met because the claims of the nonresidents were similar in several ways to the claims of the California residents, as to whom specific jurisdiction was uncontested.
In yesterday’s opinion, the United States Supreme Court reversed the California Supreme Court. In doing so, it specifically rejected the California Court’s sliding scale approach, specifically stating that it was “difficult to square with [United States Supreme Court] precedents.” The Supreme Court affirmed its settled principles that “[i]n order for a court to exercise specific jurisdiction over a claim, there must be an “affiliation between the forum and the underlying controversy, principally, [an] activity or an occurrence that takes place in the forum State.” It further stated that absent such connection, specific jurisdiction is lacking regardless of the extent of a defendant’s unconnected activities in the State, even if the defendant has extensive forum contacts that are unrelated to those claims. In doing so, the Court has reaffirmed the clear separation between specific and general jurisdiction. Moreover, the Court clarified that “a defendant’s relationship with a... third party, standing alone, is an insufficient basis for jurisdiction.” Applying that test to this case, the court held that there was no connection between the nonresidents’ claims and California: the nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California. Thus, the mere fact that the resident plaintiffs obtained and ingested Plavix in California — and allegedly sustained the same injuries as did the nonresident plaintiffs — did not allow California to assert specific jurisdiction over the nonresidents’ claims, even though their claims may be “materially identical” to the nonresidents’ claims.
This decision continues the United States Supreme Court’s trend of limiting the exercise of general jurisdiction in state courts (following its decisions in Daimler v. AG Bauman, 134 S. Ct. 746 (2014), BNSF Railway Company v. Tyrell, Case No. 16-405, and Walden v. Fiore, Case No. 12-574). Eight Justices — including the newest appointee, Justice Gorsuch — formed an 8-1 majority, suggesting that this area of law will remain settled for the foreseeable future. The decision affirms that restrictions on personal jurisdiction “are more than a guarantee of immunity from inconvenient or distant litigation,” that “they are a consequence of territorial limitations on the power of the respective States,” and that the Fourteenth Amendment “may act to divest a state of its power to render a valid judgment if it has little legitimate interested in the claims in question.”
Defense counsel should take note that this ruling will allow defense firms to aggressively pursue motions to dismiss for lack of personal jurisdiction in cases of mass action against multiple defendants who are “at home” in multiple states. Indeed, as the lone dissenter, Justice Sotomayor wrote:
“The majority’s rule will make it difficult to aggregate the claims of plaintiffs across the country whose claims may be worth little alone. It will make it impossible to bring a nationwide mass action in state court against defendants who are ‘at home’ in different states. it is difficult to imagine where it might be possible to bring a nationwide mass action against two or more defendants headquartered and incorporated in different States. And it will result in piecemeal litigation and the bifurcation of claims."
For additional information, please contact Simon Baker at email@example.com.A full copy of the decision is available here.
Missouri Supreme Court Decision on Personal Jurisdiction
The plaintiff, Russell Parker, sued his former employer, Norfolk Southern Railway Company (“Norfolk”), in the state of Missouri, seeking damages for cumulative trauma sustained during his years of employment in the state of in Indiana. Norfolk initially filed a motion to dismiss for lack of personal jurisdiction, which the trial court overruled. Norfolk then filed a petition for a writ of prohibition or, in the alternative, a writ of mandamus with the Missouri Court of Appeals. When the Court of Appeal upheld the trial court’s ruling, Norfolk sought the same relief in Supreme Court. The Supreme Court, sitting en banc, reversed, and held that the trial court lacked personal jurisdiction over Norfolk. The oral argument can be heard here. The full decision can be found by clicking here.
General Jurisdiction: The court first rejected Parker’s contention that Norfolk was subject to general jurisdiction in Missouri. The plaintiff claimed that Missouri courts could exercise general jurisdiction over Norfolk because it “conducts substantial business and owns property in Missouri.” However, the Court held that Norfolk’s contacts with the state were insufficient to establish general jurisdiction. The court acknowledged that Norfolk owns track in Missouri, but also recognized that the portion of track within Missouri accounts for only two percent of Norfolk’s nationwide business activity. The court further noted that Norfolk is a Virginia corporation with its principal place of business in Virginia, and that Norfolk owns track in twenty-one other states. The court, relying on Daimler, concluded that this was not an “exceptional case,” and that the minimal amount of track in Missouri, did not render Norfolk “essentially at home in the state” so as to confer general jurisdiction upon Missouri courts.
Specific Jurisdiction: The court also rejected Parker’s argument that Norfolk was subject to specific jurisdiction in Missouri. It was undisputed that the plaintiff sustained his injuries in Indiana as Parker never worked for Norfolk in Missouri. As such, traditional specific personal jurisdiction was lacking. However, the plaintiff argued that specific jurisdiction was appropriate because Norfolk because his injuries in Indiana were injuries that arose from and were relating to the same type of activities that Norfolk performed in Missouri. The court rejected that argument as a misstatement of law. Likewise, the court dismissed the plaintiff’s argument that FELA specifically conferred jurisdiction.
Consent to Jurisdiction/Registration in the State: Finally, the court rejected the plaintiff’s argument that Norfolk had consented to personal jurisdiction in Missouri by complying with Missouri’s foreign business registration statutes, i.e. registering with the state and designating an agent to receive service of process. The court cited to the Restatement (Second) of Conflict of Laws for the proposition that the extent of any consent inferred from a registration statute “is a question of interpretation of the instrument in which the consent is expressed and of the statute, if any, in pursuance of which the consent is given.” It then looked to the plain language of Missouri’s registration statute and found that the Act does not mention consent to personal jurisdiction for claims unrelated to activities within the State. Rather, the registration statute provides only that registration is consent to service of process that Missouri requires or permits to be served on foreign corporations. As such, the court held that complying with the Act’s requirements does not provide an independent basis for jurisdiction foreign corporations registered in the state.
In reaching its decision, the court reasoned that a contrary ruling would render Daimler “virtually pointless.” The Court was persuaded by the reasoning espoused in a recent Delaware case, which found that as “as every state requires a foreign corporation doing substantial business in a state to register under the foreign corporation statutes and appoint an agent for service of process, a broad inference of consent based on registration would allow national corporations to be sued in every state...”
Illinois Supreme Court Upholds Constitutional Right to Jury of Twelve
In a 5-0 opinion, the Illinois Supreme Court held that the right to a trial by jury includes the right to demand a 12-member jury. Kakos v. Butler, 2016 L 120377. The Court held that Public Act 98-1132, which sought to limit the size of a civil jury to 6 persons, was facially unconstitutional. The court further held that because the provision regarding jury size could not be severed from the remainder of the Act, the statute was entirely invalid.
To achieve its twin goals of decreasing jury size and increasing juror pay, Public Act 98-1132 amended two statutes. First, it amended section 2-1105(b) of the Illinois Code of Civil Procedure by eliminating the ability of either party to request a jury of twelve. 735 ILCS 5/2-1105(b) (West 2012) (amended by Pub. Act 98-1132 (eff. June 1, 2015)) (“All jury cases shall be tried by a jury of 6.”). Second, the Act amended section 4-11001 of the Counties Code to provide a uniform and increased rate of pay for jurors. 55 ILCS 5/4-11001 (West 2012).
At the trial level, the plaintiffs filed a complaint at law alleging multiple counts of medical negligence and loss of consortium. The defendants requested a 12-person jury, and sought a declaration that Public Act 98-1132 was unconstitutional insofar as it required a jury of six. The Circuit Court agreed, and held that Public Act 98-1132 was facially unconstitutional, and that section 2-1105(b), as amended, was void. The plaintiffs filed a notice of appeal as of right pursuant to Illinois Supreme Court Rule 302.
After acknowledging that the United States Constitution does not guarantee a right to trial by a jury of 12, the Court turned its attention to Article I, section 13 of the Illinois Constitution, which states that:
“The right of trial by jury as heretofore enjoyed shall remain inviolate.”
Ill. Const. 1970, art. I, § 13 (emphasis added). The Court recognized that it has long interpreted the phrase “as heretofore enjoyed” as preserving “the right of a trial by jury as it existed under the common law and as enjoyed at the time of the adoption of the respective Illinois Constitutions.” Kakos, 2016 L 120377, ¶ 14. Although the Court acknowledged that section 13 does not preserve all features of a common-law jury trial, it nonetheless concluded that the size of the jury “was an essential element of the right of trial by jury at the time the 1970 Constitution was drafted,” and as such that right was “preserved and protected in the Constitution.” Id., ¶ 28. In support of its conclusion, the Court noted that “transcripts from the constitutional convention debates disclose that the delegates did not believe that the legislature had the authority to reduce the size of a civil jury.” Id., ¶ 23. The Court considered these transcripts as “ample evidence that the drafters at the 1970 Constitutional Convention believed that they were specifically preserving the right to a 12-person jury when they adopted the current Constitution.” Id., ¶ 22. Consequently, the Court held that Public Act 98-1132, as it amended section 2-1105(b), is unconstitutional and void ab initio.
Finally, the court considered whether it could sever the unconstitutional provision from the remainder of the Act. However, it concluded that the two provisions — a decrease in jury size and an increase in jury pay — were designed to act “in tandem.” Id., ¶ 33. In reviewing the transcripts of the legislative debates regarding Public Act 98-1132, the court found it evident that the legislature would not have passed the provision increasing pay independently. Accordingly, the Court concluded “that the provision reducing the size of the jury cannot be severed from the remainder of Public Act 98-1132 and that the entirely [sic] of the Act is invalid.” Id., ¶ 34.
Unanimous Illinois Supreme Court Applies the Discovery Rule to Wrongful Death and Survival Actions Alleging Medical Malpractice
On September 22, 2016, the Illinois Supreme Court held that the discovery rule found in section 13-212(a) of the Illinois Code of Civil Procedure applies to medical malpractice actions brought under both the Illinois Wrongful Death Act (740 ILCS 180/1, et seq. (West 2012)) and the Survival Act (755 ILCS 5/27-6 (West 2012)). See Moon v. Rhode, 2015 IL App (3d) 130613.
On May 18, 2009, the plaintiff’s 90-year-old mother, Kathryn Moon, was admitted to Proctor Hospital for a rectal prolapse. After undergoing subsequent surgery, Ms. Moon experienced numerous complications that eventually led to her death 11 days later. On February 26, 2010, the plaintiff requested his mother’s complete medical file from Proctor Hospital, which he received on March 10, 2010, and later sent to a medical consulting firm for review. On April 21, 2011, the plaintiff received an oral opinion that several of the doctors at Proctor Hospital were negligent in treating his mother. He received an additional written report with specific conclusions on May 2, 2011. Also two years later, on March 4, 2013, the plaintiff received a final report concluding that a further doctor, the defendant, Dr. Clarissa Rhode, had also been negligent in her treatment of Ms. Moon. On March 18, 2013 — almost four years since his mother’s death, but less than 2 years after receiving the initial oral report from the medical consulting firm — the plaintiff filed a complaint against Dr. Rhode.
Dr. Rhode moved to dismiss the plaintiff’s cause of action asserting that the claim was time-barred. The trial court granted the motion, holding that the complaint was untimely because it was not filed within 2 years of Ms. Moon’s death. A divided appellate court affirmed, holding that the discovery rule has no application to a wrongful death or survival action. See Moon v. Rhode, 2015 IL App (3d) 130613. The appellate court reasoned that the two-year statute of limitations for filing a complaint for wrongful death begins to run at the time of the decedent’s death and not after the plaintiff discovers the alleged medical negligence. The Supreme Court granted the plaintiff’s petition for leave to appeal. Moon v. Rhode, 39 N.E.3d 1004 (2015).
The Illinois Supreme Court recognized the issue as one of statutory construction, and focused on the language of section 13-212(a) of the Illinois Code of Civil Procedure, which states, in pertinent part, that:
[N]o action for damages for injury or death against any physician... arising out of patient care shall be brought more than 2 years after the date on which the claimant knew, or through the use of reasonable diligence should have known... the existence of the injury or death for which damages are sought in the action...
735 ILCS 5/13-212(a) (West 2012) (emphasis added).
In defining the term “injury,” the court quoted its earlier decision in Witherell, in which it held that knowledge of an ‘injury’ requires not only knowledge of the physical injury but also knowledge of its wrongful causation. The Court then has to decide whether the term ‘death’ in the phrase ‘injury or death’ should receive the same construction as its interpretation of the term “injury.” Relying on both Witherall and the majority of recent appellate authority, the court concluded that it should. The Court stated:
We agree with plaintiff that no cognizable reason exists for us to interpret “death” in a different manner than we have already interpreted “injury” in that sentence. We therefore conclude, consistent with our statutory interpretation in Witherell, that the statute of limitations in a wrongful death action alleging medical malpractice begins to run when a plaintiff knows or reasonably should know of the death and also knows or reasonably should know that it was wrongfully caused.
Moon v. Rhode, 2015 IL App (3d) 130613, ¶ 27. The court further stated that because the plaintiff’s action was premised upon medical malpractice, the statute of limitations specific to that claim (i.e. 735 ILCS 5/13-212(a)) trumped the two-year limit established in section 2(c) of the Wrongful Death Act.
Using similar reasoning, the Court also applied the discovery rule to medical malpractice suits brought pursuant to the Survival Act. Thus, the statute of limitations in a Survival Act claim is triggered on the date that the plaintiff discovers, or should reasonably have discovered that the injury or death was wrongfully caused. The court acknowledged that in a survival action, the representative steps into the shoes of the decedent, and as such it is the date that the decedent learns of her injury that is controlling. In this case, the Court recognized that Kathyrn Moon was unresponsive at the time of her death, and was therefore unable to discover any alleged negligence. The court stated that it saw:
no reason... to impose the statute of limitations constraints that the decedent would have faced had she lived on plaintiff[,] as [her] representative[,] without also allowing the benefits of the discovery rule that she would have been entitled to if her alleged injuries had not been so serious as to lead to her death. After concluding that the discovery rule applied to the plaintiff’s causes of action, the Court remanded for further findings of fact as to when the plaintiff knew, or should reasonably have known that Kathryn’s death was wrongfully caused.
On August 31, 2016, Sinars Slowikowski Tomaska partner Doug Sinars secured a directed verdict after a thirteen-day jury trial in the City of St. Louis on behalf of a local industrial supply company. In this “take home” exposure case based on negligence and strict liability, Donna and Jerry Harrison alleged our client sold asbestos-containing automotive brakes and gaskets to a nearby car dealership where Jerry worked as a mechanic. They further alleged that Jerry transported asbestos fibers to his home causing Donna Harrison’s mesothelioma.
The judge granted our client’s motion for directed verdict citing plaintiffs’ lack of sufficient evidence of exposure. Over a week later, the jury reached a defense verdict for the three remaining defendants. Jessica Dean of Dean, Omar and Branham represented the plaintiffs.
Illinois Appellate Court Holds that Plaintiff with Asymptomatic Asbestosis Cannot Maintain a Products Liability Claim
June 20, 2016, a divided panel of the appellate court held that physical changes to the lungs, such as asbestosis and pleural plaques, do not afford a cause of action for product liability unless accompanied by clinical symptoms. See Sondag v. Pneumo Abex Corp., 2016 IL App (4th) 140918. This brings Illinois law into line with a number of other jurisdictions.
In 2007, the plaintiff, Joseph Sondag, went to his doctor complaining of dizziness, sweating, and a disturbance of the inner ear. A chest x-ray and CT scan of Sondag’s chest revealed pleural plaques and interstitial fibrosis (scarring) in his lungs, and his doctor subsequently diagnosed him with asbestosis. His doctor further opined that those injuries had been caused by the plaintiff’s used of Tremoc, Inc.’s asbestos-containing tape. Notably, Joseph Sondag did not complain of respiratory symptoms such as chest pain, shortness of breath, or wheezing. In fact, various tests showed that Sondag’s pulmonary function was well within normal limits.
Relying on that diagnosis, Joseph Sondag and his spouse, Phyllis Sondag, sued Tremco Inc. in the Circuit Court of McClean County. After a jury returned a verdict in plaintiffs’ favor the defendant appealed. On appeal, the Appellate Court returned a directed verdict in favor of the defendant. The court held that the plaintiffs had failed to present any evidence of “physical harm,” an essential element of any action for products liability.
In reaching its decision, the court distinguished between “injury” and “harm.” Relying on the Restatement (Second) of Torts, the court defined “injury” as the invasion of any legally protected interest of another. In contrast, the court defined “harm” as the existence of loss or detriment in fact. Quoting the Restatement (Second) of Torts, § 7, the court noted that "‘[h]arm’ implies a loss or detriment to a person, and not a mere change or alteration in some physical person, object[,] or thing. Physical changes or alterations may be either beneficial, detrimental, or of no consequence to a person. In so far as physical changes have a detrimental effect on a person, that person suffers harm." Thus, an injury that does not manifest any symptoms does not constitute compensable “harm” for purposes of a products liability action.
The court agreed with the plaintiffs that Joseph Sondag had suffered an injury. The court accepted that Sondag had experienced an alteration to the structure of his body insomuch as the pleural plaques and interstitial fibrosis that had physically altered the structure of his lungs. However, the court concluded that Sondag had not suffered harm. The court reasoned that the injuries to Sondag’s lungs had not presented any clinical symptoms, and had therefore not caused any physically impairing loss or detriment to Joseph Sondag in any practical or functional way. The court further noted that even on the day of trial Sondag still had no pulmonary symptoms, respiratory distress, or limitation, and opined that had he not undergone the x-ray and CT scan he “would have remained blissfully unaware of any condition in his lungs.” Thus, the plaintiffs had not introduced any evidence of “physical harm,” an essential element of their case, and the verdict returned in their favor at the trial level could not possibly stand.
Illinois Supreme Court Issues Supervisory Order On Personal Jurisdiction Appeal
On May 25, 2016, the Illinois Supreme Court issued a supervisory order requiring the Fifth District Appellate Court to take an appeal from Judge Stephen Stobbs’ recent denial of Ford Motor Company’s personal jurisdiction motion in Est. of Dale E. Jeffs (15 L 533), an asbestos case brought by Florida plaintiffs. Dale Jeffs worked as an insulator at various locations from 1968 to 1995, including at Ford’s plant in Michigan. Ford is incorporated in Delaware and its principal place of business is in Michigan.
Under Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014), the appropriate analysis to determine whether or not a court has general personal jurisdiction over a corporate defendant rests on where that defendant has its primary place of business and in which state the defendant is incorporated. For an Illinois court to exercise general jurisdiction, due process requires that a defendant’s affiliations with Illinois be so constant and regular as to render [it] essentially at home in Illinois. Despite Daimler, Judge Stobbs denied Ford’s motion to dismiss and ruled that Ford’s contacts with Illinois are so substantial that it “has availed itself of the protection of the Illinois Courts and the benefits of Illinois law and by its own admission conducts substantial, not de minimus, business in Illinois.”
SSTWins Summary Judgement in McLean County, Illinois
Sinars Slowikowski Tomaska partner Owen Blood recently prevailed on a motion for summary judgment on behalf of J.P. Bushnell Packing Supply Company, a supplier of gaskets and packing, in a products liability case in McLean County, Illinois. The motion and oral argument before Judge Rebecca Foley focused on lack of causation evidence under Thacker v. UNR Industries, Inc. 151 Ill. 2d. 343 (1992).
A former co-worker of the decedent testified that the decedent worked with and around our client’s gaskets and packing on boiler room pipes, valves and pumps. Owen successfully argued that Thacker’s “frequency, regularity and proximity” test to establish causation had not been met and that there was insufficient evidence that the gaskets and packing at issue contained asbestos.
After taking the matter under advisement following oral arguments, Judge Foley released a written opinion on May 31, 2016 granting the motion. Schaab Order. The case had been set for trial on June 13, 2016.
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