FEDERAL RULINGS SPLIT OVER SPLITTING LIABILITY IN VERDICT FORMS

June 3, 2004

Steven P. Garmisa
Hoey & Farina Attorney
garmisa@hoeyfarina.com
1-888-425-1212

Declining to blindly obey a 1996 ruling from the 7th U.S. Circuit Court of Appeals on section 2-1117 of the Illinois Code of Civil Procedure, U.S. District Judge Matthew F. Kennelly predicted the Illinois Supreme Court would rule that settling defendants should be included on a verdict form for apportioning fault. Dowe v. National Railroad Passenger Corp., 2004 WL 887410 (N.D. Ill., April 26).

Kennelly was ruling on motions in limine before an exemplar trial on one of the 60 lawsuits involving the 1999 catastrophe where an Amtrak passenger train collided with a truck at a railroad crossing in downstate Bourbonnais.

Several defendants settled, and Amtrak asked for a verdict form that -- when allocating fault -- listed all the defendants, settling and non-settling. The plaintiffs, in turn, moved for a verdict form listing only the remaining defendants.

Here are some highlights of Kennelly's ruling on these cross-motions (with various omissions not noted in the quoted text):

"Under Illinois law, a defendant is only severally (not jointly) liable for damages other than the plaintiff's medical expenses if its level of fault 'is less than 25 percent of the total fault attributable to the plaintiff, the defendants sued by the plaintiff and any third-party defendant who could have been sued by the plaintiff.' 735 ILCS 2-1117.

"Third-party defendants Melco and Stokes have filed a motion seeking a finding that they have settled in good faith with the plaintiffs and thus are not liable for contribution. See 740 ILCS 100/2(d).

"If the court makes the requested finding, Amtrak's liability, if any, will be reduced by the amount of the settlement payment those parties have made to the plaintiffs. Amtrak seeks, however, a ruling that any parties that have settled nonetheless will be included on the verdict form so that the jury can determine their relative fault. It argues that inclusion of all persons potentially responsible for the plaintiff's injury, whether or not they are defendants at the time of trial, is the only way to effectuate the Illinois legislature's intent in adopting section 2-1117.

"The 7th Circuit, interpreting Illinois law, has rejected this argument as to the pre-1995 version of section 2-1117 (which is does not differ significantly from the current version). See Freislinger v. Emro Propane Co., 99 F.3d 1412, 1419 (7th Cir. 1996). The court held that the terms 'defendants' and 'third-party defendants' in section 2-1117 'means only those defendants who remain in the case when it is submitted to the fact finder.' Id. (citing Lannom v. Kosco, 158 Ill.2d 535, 543 (1994), and Blake v. Hy Ho Restaurant, Inc., 273 Ill.App.3d 372, 376 (1995)).

"Amtrak, noting that the 7th Circuit does not have the final word on what Illinois law provides, argues that Freislinger was wrongly decided. Indeed, another judge in this district so held and chose not to follow Freislinger. See Costello v. U.S., No. 96 C 187, 1998 WL 341615, at *2-3 (N.D. Ill., June 23, 1998).

"Even though an appeal in this case will go to the same court that decided Freislinger, it is conceivable that by the time an appeal is determined, the Illinois Supreme Court will have spoken directly on the issue. And as Amtrak points out, the 7th Circuit is not necessarily infallible in predicting the development of Illinois tort law. Compare Unzicker v. Kraft Food Ingredients Corp. ., 203 Ill.2d 64, 77-78 (2002) with Jansen v. Aaron Process Equipment Co., 149 F.3d 603, 606-09 (7th Cir. 1998) (a pre-Unzicker decision holding, contrary to the later Unzicker decision, that the plaintiff's employer, a third-party defendant in a personal-injury case, was not a third-party defendant who 'could have been sued by the plaintiff' and thus could not be considered under section 2-1117 in determining the defendant's relative fault).

"Freislinger relied on two Illinois decisions, the Supreme Court's Lannom decision and the decision by the 5th District of the Illinois Appellate Court in Blake.

"Blake squarely holds that settling defendants are not to be included in the assessment of relative responsibility under section 2-1117, but the real question is what the Illinois Supreme Court would determine, not what an intermediate appellate court has held. Cf. Allstate Insurance Co. v. Menards Inc., 285 F.3d 630, 637 (7th Cir. 2002) (holding that in an action that is in federal court by virtue of diversity jurisdiction, the federal court must determine how the state supreme court would interpret state law and is not bound by the rulings of intermediate appellate courts).

"On the other hand, federal courts 'ought to give great weight to the holdings of the state's intermediate appellate courts and ought to deviate from those holdings only when there are persuasive indications that the highest court of the state would decide the case differently from the decision of the intermediate appellate court.' Id.
"There is in fact reason to believe that the Illinois Supreme Court would decide the matter differently from Blake and that the 7th Circuit misread Lannom when it decided Freislinger.

"Lannom was a suit by a county employee who was working alongside a highway when he was struck by a car. He sued the car's driver, and the driver filed a contribution claim against the county, alleging that it engaged in willful and wanton misconduct in parking a county vehicle on the wrong side of the road without warning devices.

"After an Illinois Supreme Court decision holding that an employer's liability in contribution is limited to the amount of its workers' compensation liability, the trial court dismissed the driver's contribution claim against the employer. The driver argued that dismissal of the claim was improper because it would 'obstruct the purpose of section 2-1117' by precluding the jury from apportioning any fault to the county and denying the driver the ability to obtain an apportionment of 25 percent or less.

"The Illinois Supreme Court declined to overturn the dismissal of the claim, stating as follows: 'We note, however, that this dilemma arises whenever a defendant or third party settles with the plaintiff or is dismissed from an action for any reason. Section 2-1117 was not intended to prohibit the dismissal of a defendant or third party from an action, where such dismissal is otherwise warranted. Moreover, the defendant's rights under section 2-1117 are not abolished simply because a defendant or third party settles or it 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 defendants is less than 25 percent, those defendants' liability is several only. See Alvarez v. Fred Hintze Construction (1993), 247 Ill.App.3d 811; Walsh & Doherty, "Section 2-1117, Several Liability's Effect on Settlement and Contribution," 79 Ill. B.J. 122, 125 (1991).' Lannom, 158 Ill.2d at 542-43.

"As indicated earlier, Freislinger cited this passage for the proposition that the term 'defendants sued by the plaintiff' in section 2- 1117 'means only those defendants who remain in the case when it is submitted to the fact finder.' But no such statement appears in Lannom.

"Judge [Charles P.] Kocoras disagreed with Freislinger in Costello, looking at the authorities on which Lannom relied and concluding that the Supreme Court had intended to indicate that the culpability of the 'remaining defendants' is to be assessed against that of the settling defendants. And that is indeed what Alvarez, the case cited by the Supreme Court as authority in Lannom, seems to say.

"Alvarez involved essentially the same legal issue as Lannom. Presaging the Supreme Court's decision in Lannom, the 3d District of the Illinois Appellate Court upheld the dismissal of an alleged tortfeasor's contribution claim against the plaintiff's employer following approval of the plaintiff's settlement of his worker's compensation claim against his employer.

"In rejecting the defendant's argument that dismissal of the contribution claim would effectively abrogate its rights under section 2-1117, the court stated that dismissal 'does not necessarily deny a non-settling defendant the potential benefit by section 2-1117,' quoting the Walsh & Doherty article's comment that even after one tortfeasor's settlement, '[t]he jury should still be able to assess the defendant's relative culpability, and if the defendant's level of fault falls below the 25 percent threshold, its liability is several only and is not affected by the plaintiff's settlement with the other tortfeasor.'

"We note that Supreme Court's language in Lannom that we quoted above is virtually a verbatim quote of this same language from the Walsh & Doherty article.

"From this analysis the court concludes that Lannom, far from determining that settling defendants and third-party defendants are to be eliminated from the section 2-1117 calculus, indicates that they may be included despite their settlement. This result is consistent with the language of the statute.

"Settling defendants and third-party defendants are among the 'defendants sued by the plaintiff' and, in this case at least, are among the 'third-party defendant[s] who could have been sued by the plaintiff.' The real question is the time at which whether a party is or was a 'defendant' is to be determined.

"Freislinger and Blake says that the determination depends on who remains in the case when it is submitted to the fact finder; Lannom and Alvarez indicate that the answer depends only on whether a party was a defendant or third party defendant at some point during the case.

"Though both approaches give meaning to the statute's language, the latter approach is more faithful to the Illinois Supreme Court's statement that '[t]he clear legislative intent behind section 2-1117 is that minimally responsible defendants should not have to pay entire damage awards.' Unzicker, 203 Ill.2d at 77-78.

"Though this court does not lightly contradict a superior court's construction of Illinois law, we conclude that Freislinger does not correctly interpret section 2-1117 and hold that settling defendants and third-party defendants who could have been sued by the plaintiffs will be included in the jury's assessment of percentage fault.

"Plaintiffs' motion in limine to keep settling parties off the verdict form is therefore denied."

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