RECENT INAPPROPRIATE LIMITATIONS ON SEVERAL LIABILITY
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- Bartholomew Lambert
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1 RECENT INAPPROPRIATE LIMITATIONS ON SEVERAL LIABILITY By: David H. Levitt * Hinshaw & Culbertson Chicago In 1986, the Illinois legislature enacted 735 ILCS 5/ That statute provided that defendants found to be less than 25% at fault would be severally liable only, except as to medical expenses, for which all defendants found liable would remain jointly and severally liable. In deciding the percentages of fault, the statute allowed the trier of fact to consider fault attributable to the plaintiff, the defendants sued by the plaintiff, and any third party defendant who could have been sued by the plaintiff. In 1995, the Illinois legislature amended Section , adopting pure several liability. The amended version was declared unconstitutional in Best v. Taylor Machine Works, 179 Ill. 2d 367, 689 N.E.2d 1057 (1997). The effect of that ruling was to leave the law in force as it was before the adoption of the amendment, meaning that the 1986 version was reinstated. Unzicker v. Kraft Food Ingredients Corp., 203 Ill. 2d 64, 71, 783 N.E.2d 1024 (2002), footnote 1. In Unzicker, the Illinois Supreme Court upheld the constitutionality of the 1986 version of the statute, and interpreted it to include the fault of the plaintiff s employer in the percentage calculation. The employer, the Supreme Court ruled, was a third party defendant who could have been sued by the plaintiff. Since the November 2002 decision in Unzicker, two events have occurred to blunt its impact. First, the Illinois legislature amended Section , effective June 4, 2003, to overrule Unzicker and remove the employer s fault from consideration in the percentage calculation. Second, a recent Illinois appellate opinion has held that the fault of a settling party is not to be included in the percentage calculation. Ozik v. Gramins, 2003 WL , 2003 Ill. App. LEXIS 846 (1st Dist. 2003). Ozik was decided on June 30, The defendants in that case are considering a Petition for Leave to Appeal to the Illinois Supreme Court. Both of these developments are inappropriate. They remove the protections that Section was designed to provide to minimally culpable, but deep pocket, defendants. They give the plaintiff the ability to manipulate the parties to emasculate this legislative purpose. Defense counsel should vigorously argue against these attempts. I. The New Amendment is Unconstitutional Best invalidated the new 1995 version of Section by finding that it was special legislation because it exempted medical malpractice claims from its scope. The Supreme Court found that there is no discernable rational basis for treating medical malpractice plaintiffs differently from other plaintiffs in death, bodily injury and property damage cases. Best, 179 Ill. 2d at The court looked at the question from the perspective of special benefits being conferred on certain plaintiffs medical malpractice claimants. Also, the court found that the exemption for medical malpractice cases was diametrically opposed to the stated purposes of the main Act to avoid unfairly permitting the plaintiff to recover more damages than is justified from the individual defendant. Page 1 of 5
2 In Unzicker, the Supreme Court found that the 1986 version of Section did not have the same infirmities, because its exception for medical malpractice cases was rationally based on the fact that the legislature had just, the year before, provided a remedy for medical malpractice cases and wanted to see how it worked. Also, the Unzicker court noted that exempting medical malpractice cases was not diametrically opposed to the purposes and reasons for the statute, in light of the actions taken by the legislature in the previous year. Unzicker, 203 Ill. 2d at 92. Under the rationale of Unzicker and Best, the new amendment to Section , removing consideration of the employer s fault, is unconstitutional special legislation. The clear legislative intent behind Section is that minimally responsible defendants should not have to pay entire damage awards. The legislature set the line of minimal responsibility at less than 25%. Unzicker, 203 Ill. 2d at 78. Yet the new amendment is diametrically opposed to this purpose, as it leaves a minimally responsible defendant jointly and severally liable if the major at-fault party happens to be the plaintiff s employer. Further, the new amendment runs afoul of the exact type of improper classification found unconstitutional by the Best court. It creates a classification of plaintiffs entitled to special benefits not available to other plaintiffs plaintiffs who are injured at work. These plaintiffs already receive workers compensation benefits, something other classes of injured persons do not receive. Then, they are allowed to hold all defendants jointly and severally liable, where those injured by the same conduct, but not at work, would only be able to obtain several liability. There is no rational basis for allowing greater recovery by plaintiffs injured at work than those injured when not at work. If two people are standing next to each other at the time of an incident, caused by the substantial negligence of the same entity, but one of those two people is employed by that entity, the two injured persons will be entitled to different recoveries. This is precisely the flaw that Best found rendered the 1995 version of Section unconstitutional. II. In Any Event, the New Amendment Does Not Apply Retroactively There are strong arguments that the legislation changing is prospective only and applies only to cases filed after its effective date. First, the legislature did not specifically state that the amendment is to be applied retroactively. Therefore, the courts must determine whether the statute would have retroactive effect, whether it would impair rights a party possessed when he acted, increase a party s liability for past conduct, or impose new duties with respect to transactions already completed. If a statute would operate retroactively, the presumption is that it is prospective only. Commonwealth Edison Company v. Will County Collector, 196 Ill. 2d 27, 749 N.E.2d 964 (2001); Landgraf v. USI Film Products, 511 U.S. 244 (1994). Clearly, the amendment would have a retroactive effect, as it would increase a defendant s liability for past conduct by taking the employer s percentage of fault out of the equation. The plaintiffs will likely argue that this amendment is procedural or that it does not involve vested rights. The amendment, however, clearly affects more than mere procedure. It fundamentally changes the way joint and several liability is determined in Illinois. Additionally, the U.S. Supreme Court in Landgraf stated the mere fact that a new rule is procedural does not mean that it applies to every pending case. Landgraf, 511 U.S. at 275, footnote 29. The introduction of a right to compensatory damages affects the liabilities of defendants and would have an impact on private parties planning as would a change in the formula for assessing joint and several liability under so that it must be applied prospectively only. The extent of a party s liability, in the civil as well as in the criminal context, is an important legal consequence that cannot be ignored. As the Supreme Court noted, it has never read a statute Page 2 of 5
3 substantially increasing the monetary liability of a private party to apply to conduct occurring before a statute s enactment absent clear language from Congress. Also, the Illinois Supreme Court rejected the vested rights approach to analyzing the retroactivity of a new statute in Commonwealth Edison Co. v. Will County Collector, 196 Ill. 2d 27, 749 N.E.2d 964 (2001). 1 III. The Fault of Settling Parties Must be Considered In Ozik v. Gramins, 2003 WL , 2003 Ill. App. LEXIS 846 (1st Dist. 2003), the court held that a settling defendant s fault would not be considered in calculating the percentage of fault of the remaining defendants. In doing so, it misinterpreted both prior case law and the purpose of the statute. Defense counsel should argue against Ozik s application, and Illinois courts and the Illinois legislature should consider rejecting it. Ozik involved a claim arising out of an automobile accident. The plaintiff s decedent was a passenger in a vehicle driven by Goldberg, which was involved in a one-car accident. The plaintiff sued Goldberg, and also sued the Village of Skokie and its police officers for allowing Goldberg to drive his vehicle after they had stopped him and determined that he was intoxicated. Goldberg was covered by an automobile liability policy with limits of $20,000. The plaintiff settled with Goldberg for those policy limits, and proceeded to trial against the other defendants. Among other defenses, the defendants asserted that they were only severally liable pursuant to Section , and that the plaintiff and Goldberg were at fault. The trial court, however, refused to instruct the jury to include Goldberg s fault in its consideration of the relative percentages of fault. The jury found that the plaintiff was 35% at fault, and entered a joint and several liability finding against the defendants for $1.14 Million. On appeal, among other things, the defendants argued that the trial court had erred in not including Goldberg s fault, which may have resulted in a finding that they were less than 25% at fault, and therefore only severally liable. The appellate court rejected this position, interpreting the statute to require that the fault of settling defendants not be included in the calculation. In Lannom v. Kosco, 158 Ill. 2d 535, 634 N.E.2d 1097 (1994), the plaintiff sued one defendant, Mr. Kosco, for injuries arising from an automobile accident. Kosco brought a third party action for contribution against the plaintiff s employer. The employer agreed to waive its workers compensation lien, and sought dismissal pursuant to Kotecki v. Cyclops Welding Corp., 146 Ill. 2d 155, 585 N.E.2d 1023 (1991). Kosco opposed this dismissal on several grounds, including prejudice to his right to the protection afforded by Section The Supreme Court allowed the dismissal, but in doing so, stated: Moreover, the defendant s rights under Section are not abolished simply because a defendant or third party settles or is dismissed from an action. The jury may still assess the remaining defendants relative culpability, and if the degree of fault attributable to one or more of the defendants is less than 25%, those defendants liability is several only. Lannom, 158 Ill. 2d at 543. When faced with this language, the Ozik court said: We think it is apparent, however, that the supreme court was anticipating that the jury would assess the remaining defendants liability, relative to the parties who remained in the case. It further cited the Fifth District s opinion in Blake v. Hy Ho Restaurant, 273 Ill. App. 3d 372, 376, 652 N.E.2d 807 (5th Dist. 1995) that requiring fault to be apportioned to dismissed parties would be a gross contortion of the legislative intent. Page 3 of 5
4 It appears, however, that it is the courts in Ozik and Blake that have engaged in such gross contortion. It is perhaps notable that the Ozik court did not mention the Supreme Court s decision in Unzicker, which had made it clear that the legislative intent was to prevent minimally responsible parties from being required to pay the entire damage award. Further, it is impossible to read Lannom as referring to having the statute apply only to remaining defendants, in the plural. As the Supreme Court well knew, there was only one defendant remaining in that case. The Ozik interpretation means that Mr. Kosco did indeed have the protections of Section abolished by the dismissal, yet the Supreme Court said just the opposite. Similarly, the Ozik court abolished the rights of the police officers and Village to assert Section several liability, as they were the only remaining defendants after the clearly most culpable party, Mr. Goldberg, had been dismissed. The Ozik court engaged in similar skewed logic in distinguishing Alvarez v. Fred Hintze Construction, 247 Ill. App. 3d 811, 617 N.E.2d 821 (3d Dist. 1993). The Alvarez court had stated that the fault of settling parties should be included, citing an Illinois Bar Journal article that has suggested this explicitly, with approval. Ozik argues that two defendants remained in Alvarez, yet ignores the fact that Alvarez relied on an article stating that dismissed parties should be included; it further ignored the fact that only one defendant remained (indeed, only one defendant had ever been sued by the plaintiff) in Lannom. It defies logic to suggest that the legislature did not intend to include settling and dismissed parties in the percentage calculation. The entire purpose of the statute, as recognized by the Supreme Court in Unzicker, was to protect minimally responsible but deep-pocketed defendants from having to pay for the percentage of fault of substantially responsible but shallow-pocketed defendants. The statute would be rendered meaningless if it could be avoided by so simple a means as settling with the shallow-pocketed defendant for the amount in his shallow pockets. It would be rendered meaningless by allowing a substantially at fault employer to simply waive its Kotecki lien and thereby render the direct defendant jointly and severally liable. It is a gross contortion of the legislative intent to suggest that the legislature intended to allow the plaintiff to manipulate the application of the statute by entering into a settlement with the shallow-pocketed defendant. Moreover, the argument that the legislature was ambiguous in its intent when it used the word defendant, but did not specify whether a settling party ceased to be a defendant once it was dismissed, is belied by the logic applied by the Supreme Court in Unzicker. The Supreme Court rejected the Fifth District s suggestion in Lilly v. Marcal Rope & Rigging, Inc., 289 Ill. App. 3d 1105, 682 N.E.2d 481 (5th Dist. 1997), that the legislature could have included employers specifically if that was what it intended. Instead, the court noted that it would have been just as easy for the legislature to exclude employers if that is what it intended. Similarly, if the legislature had intended that parties remain as defendants through trial to be included in the percentage of fault calculation, it could easily have said so. If it had intended to allow plaintiff s to manipulate the several liability rule, it could have so provided. A dismissed defendant is no less a defendant sued by the plaintiff just because it was dismissed. Excluding dismissed defendants from the calculation would be diametrically opposed to the purpose of the statute. Since Unzicker has upheld its constitutionality, the only logical interpretation is that the fault of dismissed parties must be included. IV. Conclusion Section was enacted to ensure that those whose fault is sufficiently minimal are protected from joint and several liability. Recent incursions on that principal are inappropriate and ought to be rejected. Page 4 of 5
5 Endnote 1 See also 5 ILCS 70/4, People v. Glisson, 202 Ill. 2d 499, 782 N.E.2d 251 (2002), and Caveney v. Bower, 2003 WL (Ill. May 8, 2003), regarding limits on applying new statutes to claims which arose before their effective dates. ABOUT THE AUTHOR: David H. Levitt is a partner in the Chicago office of Hinshaw and Culbertson, where he has been since 1979 and is co-chair of one of its litigation departments. One of the editors of the IDC Quarterly, he focuses his practice in the defense of product liability, trucking, and construction matters, as well as insurance coverage and intellectual property. * Section II of this article, regarding prospective application of the new amendment, was written by Joseph Spitzerri of Johnson & Bell. Page 5 of 5
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