Client Alert: Cook County Judge Rules Illinois Prejudgment Interest Statute Unconstitutional
By Thushan M. Sabaratnam and Morgan A. Dilbeck
Cook County Circuit Court Judge Marcia Maras has ruled that the prejudgment interest Amendment to 735 ILCS 5/2-1303 violates the Illinois Constitution. The 2021 Amendment requires a defendant to extend a settlement offer within one year of plaintiff filing a major tort claim, including personal injury and wrongful death. See Hyland et al., v. Advocate Health and Hospital Corp. et al., Case No: 2017-L-3541, Order entered May 27, 2022. In Hyland, Judge Maras recognized that a defendant served more than one year after a case is filed is arbitrarily penalized and deprived of any potential benefit of any earlier made settlement offer. As such, the Amendment penalizes a defendant regardless of whether they contributed to any delay in the litigation. Further, the Amendment allows a plaintiff to reap the benefit of prejudgment interest despite their failure to diligently prosecute their case.
Background: Illinois Prejudgment Interest Statute
On July 1, 2021, Senate Bill 0072 was passed by the Illinois General Assembly and signed into law by Governor Pritzker. This law became known as the Pre-Judgment Interest Statute under tort law, amending 735 ILCS 5/2-1303.
Understandably, the defense bar and their clients throughout the State of Illinois were alarmed by the Amendment’s potential consequences, namely the possibility of significant prejudgment interest amounts being added to high-value cases. In Hyland, a medical malpractice action filed in 2017, Defendants moved to declare the Amendment invalid, arguing it deprived them of the right to a jury trial, was “special legislation,” violated separation of powers principles, was not read three times, and failed the single-issue requirement-all violative of the Illinois Constitution. The court granted Defendants’ motion and declared the Amendment unconstitutional as discussed below.
Court Analysis & Reasoning
The court first assessed ripeness, a justiciability doctrine that pertains to whether an actual or threatened harm has matured sufficiently to warrant judicial relief. As the Illinois Supreme Court noted in Best, the requirement of ripeness is met where a challenge to the constitutionality of Illinois legislation “portends the ripening seeds of litigation,” and where “the course of future litigation will be controlled by the resolution of constitutional challenges.” Best v. Taylor Machine Works, 179 Ill. 2d 367 (1997). Here, Judge Maras found that because the prejudgment interest Amendment applies to major tort cases as of July 1, 2021, and the challenge to its constitutionality would control future litigation and trial strategy, it is ripe for decision.
Right to a Jury Trial
Next, the court addressed the right of trial by jury protected by Sections 1 and 13 of the Illinois Constitution of 1970. As stated in many prior court decisions, it is the jury’s right—not the legislature’s—to assess damages at trial upon the hearing of the evidence to compensate a plaintiff for their injury. The Amendment violates that fundamental right by imposing prejudgment damages. As noted by Defendants, juries—especially those in Cook County—are aware of the time-period between injury and trial. Relying on an earlier study, the court determined that jury awards include interest as part of their damages analysis. See Michael S. Knoll, A Primer on Prejudgment Interest, 75 Texas Law Review 293 (1996).
The court also examined the Amendment as “special legislation.” It applied the strict scrutiny test to determine whether the Amendment was enacted to permit an injured party to be made whole for their injury from the date of the occurrence until judgment is entered. The requirement that prejudgment interest be added to the jury’s award prevents the jury from considering facts as to the reasonableness of just compensation. The court determined that automatically adding prejudgment interest when the verdict exceeds a time-limited offer removed the litigant’s right to have damages decided by a jury and did not pass the strict scrutiny test. Based on this determination, the court found the Amendment violates the Illinois Constitution.
The Amendment does not satisfy the rational basis test either. Even if prejudgment interest would incentivize settlement offers and relieve docket backlogs, its manner of doing so violates the Illinois Constitution. The Amendment discriminates against other tort plaintiffs who do not have personal injury or death claims such as privacy, emotional distress, fraud, conversion, and attorney malpractice claims. Litigants in similar situations would continue to be discriminated against even with the Amendment, and a plethora of cases on the Cook County docket would remain. Thus, there would be continued congestion for all other tort actions.
The court further addressed how the Amendment’s interest penalty applied to a defendant who was served more than a year after the case was filed. The Amendment deprives such a defendant of any potential benefit afforded by extending settlement offers. With a delay in service, a defendant may not be able to adequately investigate the facts of the case to make a liability and damages assessment, which then hinders the defendant’s ability to make a fair offer. There may even be situations where a plaintiff prolongs the case to increase the interest tacked onto a putative judgment. The Amendment unfairly penalizes defendants, leading to hefty amounts in interest applied to judgments. Therefore, as not all tort parties are treated equally under the Amendment, and the Amendment is not rationally related to any State interest, the Amendment is unconstitutional.
The court did not reach the other grounds raised by Defendants, including separation of powers and the legislative requirement to have a bill read three times and relate to a single-issue.
1. Potential Appeal
The Hyland plaintiffs will likely seek an appeal to the Illinois Supreme Court. However, Judge Maras’s Order is not immediately appealable under Illinois Supreme Court Rule 302(a) because it does not constitute a final judgment. See Ill. S. Ct. R.302(a) (Cases Directly Appealable. Appeals from final judgments of circuit courts shall be taken directly to the Supreme Court (1) in cases in which a statute of the United States or of this state has been held invalid…”). Plaintiffs will instead need to seek and obtain a Rule 304(a) finding of no just reason to delay enforcement or appeal of the Order. Even with such a finding, Illinois law appears somewhat unsettled law about whether Rule 304 (a) can be used in this situation. See Trent v. Winningham, 172 Ill. 2d 420, 424 (1996):
Rule 302(a) is not expressly designed to confer interlocutory jurisdiction. And so the intended scope of review is not really one tailored to particular issues, as with Rule 304(a); jurisdiction under Rule 302(a) extends to “cases.”
However, in the later case of Lebron v. Gottlieb Mem’l Hosp., 237 Ill. 2d 217, 226 (2010), the Court noted the trial court order contained a Rule 304(a) finding in an appeal brought directly to that Court under Rule 302(a).
2. Move to Strike/Declare Unconstitutional
Every defendant in Illinois facing the prejudgment interest statute should act proactively by filing a like motion to invalidate the statute and strike any claims for prejudgment interest alleged by plaintiffs, citing Judge Maras’s Order and her analysis, as well as arguing the grounds she did not reach. Judge Maras’s Order alone has no precedential value in Cook County or anywhere else. Defendants who obtain a favorable ruling in their own cases may ignore the statute for the time being. It is also possible that the Chief Judge of the Cook County Circuit Court may enter an administrative order addressing the issue based on similar instances in the past. This would alleviate the influx of Cook County motions that will be filed and add a communal approach to the issue.
3. Absent A Favorable Ruling—Adhere To The Statute
Absent a favorable Order in each individual case or a declaration of general applicability by the Chief Judge, litigants should continue to adhere to the dictates of the statute. No one should take it for granted that their court (or the Illinois Supreme Court) will agree with Judge Maras. Judge Maras’s Order is not precedential in other cases, other trial courts, and certainly not the Appellate Court or Illinois Supreme Court. In sum, the defense bar has won the first prejudgment interest battle, but the war is not over yet.