Illinois Appellate Court First District Issues Opinion Protecting The Assets Of Deep-Pocket Defendants In Litigation By Putting Teeth Into Tort Reform Legislation
October, 2006
by Edward M. Kay and Melinda S. Kollross
On August 23, 2006, the Illinois Appellate Court sitting in Chicago, which governs cases tried in Cook County, issued an opinion putting teeth into a piece of tort reform legislation that will protect “deep-pocket” defendants during litigation. In Ready v. United/Godecki Services, Inc., 2006 WL 2434935, the Appellate Court ruled that plaintiffs can no longer settle-out with more culpable parties leaving the “deep-pocket” defendants to bear the brunt of a non-economic (non-medical) damage award. Instead, the “deep-pocket” defendants will now be entitled to have a jury allocate fault to those more culpable settling defendants, protecting the “deep-pocket” defendant from paying the entirety of the damage award.
The Statute -- Section 2-1117
Section 2-1117 was enacted as part of the Tort Reform Act of 1986, that minimally responsible defendants should not have to pay entire damage awards. The legislature set the line of minimal responsibility at less than 25 percent. A defendant found less than 25 percent at fault would only pay that portion of any non-economic damage award, although that defendant still remained liable for payment of the entirety of any award for past and future medical expenses. A defendant found 25 percent or greater at fault would pay 100 percent of all damages.
The Attempts to Limit Section 2-1117
The plaintiffs’ bar sought to limit the effect of Section 2-1117, claiming that it only applied to defendants remaining in the lawsuit at the time the jury reached a verdict. The trial tactics were simple: the most culpable defendants usually had the least amount of wealth or insurance. Plaintiffs would settle with these defendants for as much as they could pay or their minimal policy limits and then target the wealthy, deep-pocket defendants who were usually the ones least at fault. Having dismissed the more culpable defendants through settlement, plaintiffs argued that their fault could not be determined by a jury because they were not in the lawsuit at the time of verdict.
The Ready Facts: Sharp Practices Exemplified
In Ready, plaintiff sought wrongful death damages when her husband was killed assisting in a pipe-refitting project at his employer’s plant. A general contractor, BMW, was retained by decedent’s employer, Midwest Generation, to make the pipe refitting repairs. BMW retained a subcontractor, United/Godecki, to erect the scaffolding. BMW was to provide an external crane and the scaffolding had to be lifted using an internal hoist at the Midwest plant. Decedent, who was in charge of safety, directed the United/Godecki workers in lifting the trusses, and while one of the beams was being lifted, it fell killing the decedent.
Plaintiff sued United/Godecki, decedent’s employer Midwest, and BMW. After settling with both BMW and Midwest for $1.1 million, plaintiff turned her attention to United/Godecki seeking over $20 million, and successfully persuading the trial court to keep out any evidence of the fault of Midwest or BMW in causing the accident because of plaintiff’s settlement with those defendants. Had BMW provided the external crane to lift the trusses on the day of the accident, plaintiff’s decedent would never have been killed because he would not have been involved in lifting those trusses, but the jury was not allowed to hear this evidence nor allocate any fault to BMW. Also, decedent’s employer, Midwest, had an extensive safety manual which decedent and several other co-workers violated on the day of the accident; but like BMW, the jury never heard any evidence regarding that manual nor was allowed to allocate fault to Midwest. The jury returned a $14 million verdict against United/Godecki -- the sole remaining defendant plaintiff’s counsel targeted after settling with the more culpable parties.
The Ready Opinion: The Appellate Court Rebuffs Plaintiffs’ Tactics
The Appellate Court sided with United/Godecki in its view that the tort reform legislation required an apportionment of fault as to all defendants--even those defendants who settled with the plaintiff and were no longer in the suit at the time of verdict. According to the Court, “defendant who settles with the plaintiff is still a defendant sued by the plaintiff.” This interpretation of the statute is consistent with the purpose of this tort reform legislation: to protect minimally culpable defendants from paying entire damage awards.
Ramifications
Ready will change the way litigation is conducted in Illinois. Plaintiff’s attorneys will no longer be allowed to create “fictional accounts” of accidents by keeping from a jury evidence of a settling defendant’s fault, as happened in Ready. Plaintiffs attorneys will not long be able to settle on the cheap with the most culpable defendants, holding the least culpable but “deep-pocket” defendant hostage, making unreasonable settlement demands. Defendants who have only minimal liability for an accident can decide to reject unreasonable settlement demands in favor of litigation, well knowing that the jury will be apportioning fault to all those responsible for plaintiff’s accident -- and not just the last remaining defendant at the time of verdict. The Appellate decision in Ready has put teeth back into the tort reform legislation.
Ready was briefed by Edward M. Kay, Barbara I. Michaelides, Paula M. Carstensen and Paul V. Esposito, all members of the Appellate Practice Group at Clausen Miller P.C. in Chicago, Illinois. Ed Kay orally argued Ready to the Illinois Appellate Court, First District on July 12, 2006.
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