BSCR Firm News/Blogs Feedhttps://www.bscr-law.com/?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10en-us27 Feb 2020 00:00:00 -0800firmwisehttps://blogs.law.harvard.edu/tech/rssIllinois First District Appellate Court upholds $4.8 million asbestos verdict against John Crane.https://www.bscr-law.com/?t=40&an=104257&format=xml&p=20 Feb 2020Illinois Law Blog<p>Much to the defense bar&rsquo;s dismay, in late 2019, the First District Appellate Court affirmed and upheld a $4.6 million verdict against John Crane Inc. in <i>Daniels v. John Crane, Inc.</i>, 2019 IL App (1st) 190170.</p> <p>In that case, the decedent&rsquo;s estate filed suit, alleging that the decedent developed pleural mesothelioma due to asbestos exposure. The decedent worked as a union pipefitter from 1957 to 1985.&nbsp;Prior to his death, the decedent testified to significant asbestos exposure from valves and gaskets, including gaskets manufactured by John Crane.&nbsp;&nbsp;</p> <p>At trial, plaintiff's expert, Dr. Jerrold Abraham, testified that the decedent's asbestos exposure through his work with John Crane products was a substantial contributing factor in his development of mesothelioma.&nbsp;Dr. Abraham did not quantify the decedent's exposure through John Crane products, and he testified that exposure to all types of asbestos fibers can cause mesothelioma.&nbsp;Moreover, according to Dr. Abraham, while mesothelioma is a dose-response disease &ndash; meaning the more exposure an individual has the more likely they are to contract the disease &ndash; once someone sustains an asbestos-related disease, it does not matter whether they have had a high or low exposure to asbestos.&nbsp;Dr. Abraham conceded that all of the decedent&rsquo;s exposures, including through friable insulation, were substantial contributing factors to the development of his illness.&nbsp;Essentially, Dr. Abraham opined that if the decedent was exposed to asbestos through John Crane products, such exposure was a substantial factor to the development of his illness, regardless of the dose of the exposure or the dose of the decedent&rsquo;s exposures through other sources.</p> <p>Plaintiff also presented William Ewing, a Certified Industrial Hygienist.&nbsp;Ewing testified that the decedent was exposed to asbestos by using picks, chisels, and hammers to remove John Crane packing, and by using brushes and sanders to dislodge or reshape John Crane gaskets.&nbsp;Ewing quantified the duration of the decedent&rsquo;s exposure (1957 to 1985) and his alleged dosage amount (.05 to 1 fibers per cubic centimeter when removing and installing gaskets; .05 to 2 fibers per cubic centimeter when removing packing).&nbsp;</p> <p>At the close of evidence, during the jury instruction conference, the plaintiff presented the standard Illinois Pattern Jury Instruction for proximate causation.&nbsp;John Crane objected and presented its own instruction regarding proximate cause.&nbsp;John Crane argued that the jury instruction should have included language requiring the jury to find that John Crane&rsquo;s products were a &ldquo;substantial factor&rdquo; in the development of the decedent&rsquo;s illness in order for proximate cause to exist.&nbsp;John Crane further submitted an instruction defining substantial factor as if, absent John Crane&rsquo;s conduct, the injury would not have occurred.&nbsp;John Crane further also submitted a &ldquo;state of the art&rdquo; instruction, which would have required the plaintiff to prove that John Crane and those in the asbestos products manufacturing industry knew of the alleged dangerous nature of John Crane&rsquo;s packing and gaskets.&nbsp;John Crane argued that such knowledge was required to establish a duty to warn.&nbsp;The trial court rejected these instructions submitted by John Crane.</p> <p>Ultimately, a Cook County jury found for the plaintiff and entered a $6 million verdict.&nbsp;The trial court reduced the verdict to $4.8 million to account for pre-trial settlements.&nbsp;</p> <p>In a posttrial motion, John Crane argued that Dr. Abraham should not have been allowed to testify because he essentially testified that the decedent&rsquo;s cumulative dose (or &quot;each and every exposure&quot;) to all asbestos products caused his injuries.&nbsp;In other words, John Crane claimed that Dr. Abraham failed to differentiate the decedent&rsquo;s exposure through John Crane products from his exposure through other sources.&nbsp;In addition to arguing that the court erred in rejecting the previously discussed jury instructions, John Crane also argued that the trial court erred by failing to properly analyze settlements the plaintiff entered into with certain defendants.&nbsp;The trial court denied John Crane&rsquo;s motion.</p> <p>On appeal, the First District first determined that the trial court properly allowed Dr. Abraham to testify.&nbsp;The court determined that Dr. Abraham did not testify that even a &ldquo;de minimis&rdquo; exposure to asbestos can cause illness.&nbsp;Rather, the court characterized Dr. Abraham&rsquo;s testimony as emphasizing the importance of understanding the dose of asbestos fibers to which a person was exposed when determining causation.&nbsp;Moreover, the court believed the plaintiff established the dose of the decedent&rsquo;s exposure through William Ewing&rsquo;s testimony, who quantified the decedent&rsquo;s exposure range and opined that the dosage level exceeded the background rate of asbestos exposure one would experience from the ambient environment.&nbsp;Overall, the court concluded that Dr. Abraham&rsquo;s testimony provided the background knowledge the jury required to interpret Ewing&rsquo;s opinions regarding the dose of the decedent&rsquo;s asbestos exposure through John Crane products. &nbsp;&nbsp;</p> <p>John Crane also argued that the trial court erred in excluding proposed jury instructions that included language regarding Illinois' substantial factor causation test.&nbsp;On this point, John Crane appeared to argue that the jury should have been instructed on the Illinois frequency, regularity, and proximity causation standard used in asbestos cases.&nbsp;The court found that the Illinois pattern instructions on causation (which do not use the terms substantial factor or frequency, regularity, proximity) sufficiently instructed the jury.&nbsp;The court also determined that using these terms in instructions would have improperly suggested that the plaintiff had to prove a specific dosage amount, when, under Illinois law, a plaintiff need only prove that exposure by a defendant was legally significant.&nbsp;The appellate court seemed to take the position that the frequency, regularity, proximity test is relevant when the court is making a legal determination on whether or not the plaintiff has met her burden of proof in an asbestos case, but the jury should not be given instructions using this language because it suggests that the plaintiff must quantify her exposure levels.&nbsp;</p> <p>As to John Crane&rsquo;s proposed &ldquo;state of the art&rdquo; jury instruction, John Crane argued that the jury should have been instructed that the plaintiff was required to prove either that John Crane specifically knew of the hazards of asbestos or, if not, that members of John Crane's industry had such knowledge.&nbsp;The court rejected this argument because there was evidence in the case that John Crane itself had knowledge regarding the dangers of asbestos when the decedent used its products.&nbsp;Moreover, the court believed that John Crane&rsquo;s proposed instruction would have required the jury to find both that John Crane and those in its industry knew of the dangerous nature of John Crane&rsquo;s products.&nbsp;According to the court, industry knowledge can be used to support a failure to warn claim, but it is not necessary evidence.&nbsp;Rather, the defendant's knowledge is at issue in such a claim.</p> <p>Finally, the court rejected John Crane's argument that certain settled defendants should have appeared on the jury form and that the court should have compelled the plaintiff to disclose the amounts of certain pre-trial settlements.&nbsp;The court reasoned that it is well settled Illinois law that a party defendant cannot include former co-defendants or non-parties on the verdict form.&nbsp;As to the settlement amount issue, John Crane argued that the trial court erred in finding that the plaintiff reached good faith settlements with certain defendants without requiring the parties to disclose the settlement amounts.&nbsp;In rejecting this argument, the court determined that the trial court had sufficient evidence &ndash; including the plaintiff&rsquo;s theory of liability, that plaintiff sought in excess of $50,000, and that John Crane was asserting a sole proximate cause defense &ndash; to make its good faith findings without the need to determine the amounts of the settlements.&nbsp;</p> <p>Overall, while there have been recent positive rulings favoring defendants from the First District and the Circuit Court of Cook County in asbestos litigation, those rulings have largely been limited to the issue of personal jurisdiction.&nbsp;Unfortunately for defendants, the court&rsquo;s opinion in this case is largely consistent with the trial court&rsquo;s rulings on these issues.&nbsp;However, a possible silver lining is that defendants might be able to rely on this opinion to argue that, at trial, plaintiffs cannot simply argue that all exposures to asbestos cause or contribute to the development of mesothelioma, but rather, must present some evidence establishing the dosage level of a plaintiff&rsquo;s asbestos exposure.&nbsp;</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10City of St. Louis falls to 5th on the Judicial Hellhole list with Madison and St. Clair Counties, Illinois close behind ranking 7th.https://www.bscr-law.com/?t=40&an=104256&format=xml&p=12 Feb 2020Illinois Law Blog<p>Thanks to &ldquo;junk science,&rdquo; the &ldquo;Show-Me-Your-Lawsuit&rdquo; state remains within the top 10 of judicial hellholes throughout the country. St. Louis is home to the largest talc verdict to date thanks to a July 2018 City of St. Louis verdict awarding $550 million in actual damages and $4.14 billion in punitive damages to a group of 22 plaintiffs.&nbsp;Not only are there forum shopping concerns with regards to the talc litigation, there is concern that St. Louis City judges allow plaintiffs&rsquo; lawyers to introduce &ldquo;junk science&rdquo; as evidence.&nbsp;Specifically, plaintiffs&rsquo; experts have been allowed to tell jurors that talcum powder causes ovarian cancer, even though research is mixed and biased as to increased risk, if any, with the use of talcum powder.&nbsp;Nonetheless, the City of St. Louis continues to allow this &ldquo;junk science&rdquo; to be heard in their courtrooms, which can result in big verdicts.&nbsp;</p> <p>The Missouri legislature, however, has taken steps toward addressing the plaintiff-friendly forum, resulting in the City of St. Louis seeing a decline from 4th to 5th in the judicial hellhole rankings this year.&nbsp;But it has a long way to go, as do Madison and St. Clair Counties in Illinois.</p> <p>In Madison and St. Clair Counties, the plaintiffs&rsquo; bar continues to push pro-plaintiff agendas. For example, pro-plaintiff legislation eliminating the statute of repose for asbestos-related occupational disease has been passed, along with legislation which essentially eliminates the power of special interrogatories.&nbsp;&nbsp;The ATRF Report also puts the blame for these judicial hellholes on the Illinois Supreme Court.&nbsp;&nbsp;</p> <p>The American Tort Reform Foundation (&ldquo;ATRF&rdquo;) Report attributes &ldquo;no-injury&rdquo; lawsuits as overburdening Illinois businesses, and the Illinois Supreme Court helped open those floodgates when it issued its decision in&nbsp;<i>Rosenbach v. Six Flags Entertainment</i>, 2019 IL 123186.&nbsp;In&nbsp;<i>Rosenbach</i>, the court found that the plaintiff need not have suffered actual harm to maintain and win a lawsuit filed under the Illinois Biometric Information Privacy Act (&ldquo;BIPA&rdquo;), 740 Ill. Comp. Stat. 14 (2008).&nbsp;Since this decision, the ATRF Report indicates that more than 250 lawsuits have been filed with BIPA at the forefront of the issues in those suits, making businesses vulnerable to massive potential liability in the State of Illinois.</p> <p>Moreover, according to the ATRF Report, Madison and St. Clair Counties continue to remain the preferred jurisdiction in the United States for plaintiffs&rsquo; lawyers to file asbestos lawsuits.&nbsp;The Report further notes that the Gori Law Firm (formerly known as Gori, Julian &amp; Associates, P.C.), &ldquo;one of the top asbestos filers in the nation,&rdquo; was able to &ldquo;stack&rdquo; [sic] the deck higher when Barry Julian, co-founding partner of Gori Julian, was appointed to the Madison County bench in January 2019.&nbsp;The ATRF Report claims the &ldquo;plaintiff-friendly reputation, low evidentiary standards, and judges&rsquo; willingness to allow meritless claims to survive&rdquo; make Madison and St. Clair Counties a flocking ground for asbestos litigation.&nbsp;</p> <p>Until the legislature in both Missouri and Illinois decide to create meaningful reforms, these three counties are likely to continue to rank high on ATRF Report&rsquo;s Judicial Hellholes list.&nbsp;</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10Is a case overturned due to confusing special interrogatories still relevant under rule change?https://www.bscr-law.com/?t=40&an=104191&format=xml&p=06 Feb 2020Illinois Law Blog<p>In, <i>Doe v. Alexian Brothers Behavioral Health Hosp.</i>, 2019 IL App (1st) 180955, plaintiff filed suit for emotional injuries after a former hospital employee mailed the plaintiff a harassing letter that contained vile, personal statements related to private information in the plaintiff&rsquo;s mental health records. She alleged that &ndash; before it fired the employee &ndash; the hospital failed to properly train the employee, supervise the employee, and monitor the employee&rsquo;s use of records, which was more than the minimum necessary to complete her assigned billing tasks. The hospital denied the woman&rsquo;s allegations, saying the former employee was solely responsible for the injuries.</p> <p>At trial, the defense submitted to the jury a special interrogatory asking if the former employee was the &ldquo;sole proximate cause of the plaintiff&rsquo;s injuries&rdquo; which they answered in the affirmative. The initial jury awarded was $1 million in damages in favor of the plaintiff. After the verdict, the court determined that the verdict was inconsistent with the jury&rsquo;s answer to the special interrogatory and, therefore, entered judgment for the hospital.&nbsp;Under the new rules, the court can now direct the jury to further consider its answers and verdict if the general verdict and special interrogatory answer are inconsistent.&nbsp;If the jury cannot reconcile them, the court <b>shall</b> order a new trial.&nbsp;Further, the court could have chosen to not even allow the defense to submit a special interrogatory.</p> <p>On appeal, the plaintiff argued that the special interrogatory was improper because the case was not about sole proximate cause. The plaintiff also argued that the special interrogatory was ambiguous and confusing. The plaintiff noted that the trial court refused a jury instruction on the issue of sole proximate cause and did not specifically define the term sole proximate cause.</p> <p>The appellate court found that the general verdict was unquestionably inconsistent with the special interrogatory answer. However, the special interrogatory was confusing and ambiguous in the context of all of the jury instructions.&nbsp;The appellate court ordered a new trial.&nbsp;</p> <p>Under the new rule, 735 ILCS 5/2-1108, <i>Doe</i> may not have been appealed.&nbsp;As of January 2020, the new law amends the code of Civil Procedure and gives trial court judges the discretion to grant requests for special interrogatories. Previously, if a jury&rsquo;s answer to a special interrogatory question conflicted with its general verdict, as was the case in <i>Doe</i>, then the special finding would supersede the verdict. Although the new law does not eliminate special interrogatories entirely it gives the court the discretion to grant the request for them and it gives attorneys the right to explain to the jurors what may result if the general verdict is inconsistent with any special finding which will likely make it for jurors to understand fundamental legal questions presented in certain negligence and causation cases.&nbsp;</p> <p>Special interrogatories were an important tool that helped juries decided the facts necessary to support a verdict.&nbsp;They were especially useful in places where there are holes in the jury instructions. Where in the absence of a special interrogatory, the jury is not going to be properly instructed on the legal issues it&rsquo;s supposed to address.&nbsp;The <i>Doe</i> case is a perfect example of a hole in the jury instructions where the use of a special interrogatory could be used to assist the jury in rendering fault.&nbsp;The special interrogatory on sole proximate cause enabled the Hospital to get the jury to consider whose conduct solely caused plaintiff&rsquo;s injuries.&nbsp;Although the appellate court determined the special interrogatories confusing and ambiguous, one can see how important it was for the jury to determine who was solely at fault for the verdict rendered.&nbsp;</p> <p>It is too early to tell whether special interrogatories will become obsolete, but it is clear that the power behind them is now minimized.&nbsp;</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10What Lies Ahead: Proposed Privacy Legislation in Illinoishttps://www.bscr-law.com/?t=40&an=103063&format=xml&p=28 Jan 2020Illinois Law Blog<p>While it might not garner the attention of Halloween, Thanksgiving, or Christmas, January 28<sup>th</sup> is an international holiday; specifically, Data Privacy Day. The holiday is meant to raise awareness and promote privacy and data protection best practices.&nbsp;For more information on Data Privacy Day, please visit this <a href="https://staysafeonline.org/data-privacy-day/">link</a>.&nbsp;For this year&rsquo;s Data Privacy Day, we at Baker Sterchi Cowden &amp; Rice are looking ahead to potential data privacy laws proposed in Illinois and evaluating the potential impact of those laws.</p> <p><b>App Privacy Protection Act</b></p> <p>One such proposed law is the App Privacy Protection Act.&nbsp;This law would require an entity that owns, controls, or operates a website, online service, or software application to identify in its customer agreements or applicable terms whether third parties collection electronic information directly from the digital devices of individuals in Illinois who use or visit its website, online service, or software application.&nbsp;The law would further require the disclosure of the names of those third parties and the categories of information collected.&nbsp;Perhaps most importantly, the law would amend the Illinois Consumer Fraud and Deceptive Business Practices Act to provide that a violation of the law constitutes a violation of the Consumer Fraud Act.&nbsp;Much like the Illinois Biometric Information Privacy Act, this law would create a private right of action for violations, albeit through the Consumer Fraud Act.&nbsp;The citation for this proposed law is 815 ILCS 505/2Z.&nbsp;The last legislative action taken on this proposed law was on March 29, 2019.&nbsp;You can find information about the proposed law at this <a href="http://www.ilga.gov/legislation/BillStatus.asp?DocNum=3051&amp;GAID=15&amp;DocTypeID=HB&amp;LegId=119398&amp;SessionID=108&amp;GA=101">link</a>.&nbsp;&nbsp;&nbsp;</p> <p><b>Data Transparency and Privacy Act</b></p> <p>The Illinois House also passed HB 3358, known as the Data Transparency and Privacy Act, in 2019.&nbsp;This bill resembled the California Consumer Privacy Act, which went into effect on January 1, 2020.&nbsp;Under this bill, entities that collect through the Internet personal information about individual consumers would be required to make disclosures to the individuals regarding the collection of the information.&nbsp;The bill also allowed individuals to opt out of the sale of their information.&nbsp;A violation of the proposed law could be enforced only by the Illinois Attorney General.&nbsp;The bill exempted several entities from its scope, including hospitals, public utilities, retailers, and telecom companies.&nbsp;After its passage, the Illinois Senate proposed several amendments to the bill, largely to address the ability to seek relief for violations of the Act.&nbsp;Ultimately, the proposed law stalled, failing to pass both chambers before the General Assembly ended its legislative session.</p> <p>On January 8, 2020, however, the Illinois Senate breathed new life into the issue, with Senator Thomas Cullerton sponsoring SB 2330, an updated version of the Data Transparency Privacy Act.&nbsp;Under this version of the proposed law, businesses that process personal or deidentified information must, prior to processing, provide notice of certain information to consumers.&nbsp;The bill also grants consumers the right to obtain certain information from businesses regarding their personal information and the right to request to opt out of certain practices related to their personal information.&nbsp;The bill provides a private right of action to consumers, and allows the Illinois Attorney General to enforce the provisions of the bill through the Consumer Fraud Act.&nbsp;You can monitor the status of this legislation at this <a href="http://www.ilga.gov/legislation/BillStatus.asp?DocNum=2330&amp;GAID=15&amp;DocTypeID=SB&amp;LegID=122685&amp;SessionID=108&amp;SpecSess=&amp;Session=&amp;GA=101">link</a>.&nbsp;&nbsp;&nbsp;&nbsp;</p> <p><b>Biometric Information Privacy Act</b></p> <p>Illinois also has considered amending one of the more controversial provisions of the Biometric Information Privacy Act.&nbsp;Senate Bill 2134 would delete language in the Act creating a private right of action.&nbsp;Under this bill, any violation that results from the collection of biometric information by an employer for employment, human resources, fraud prevention, or security purposes would be subject to enforcement by the Department of Labor.&nbsp;The bill further provides that any violation of the Act would constitute a violation of the Consumer Fraud Act and would be enforceable by the Illinois Attorney General.&nbsp;If enacted, this legislation could have a significant impact by reducing the amount of legislation filed under the Biometric and Information Privacy Act.&nbsp;The last action taken on this bill was on March 28, 2019.&nbsp;You can find more information about the status of the bill at this <a href="http://www.ilga.gov/legislation/BillStatus.asp?DocNum=2134&amp;GAID=15&amp;DocTypeID=SB&amp;LegID=120309&amp;SessionID=108&amp;SpecSess=&amp;Session=&amp;GA=101">link</a>.&nbsp;&nbsp;</p> <p><b>Geolocation Privacy Protection Act</b></p> <p>The Geolocation Privacy Protection Act (House Bill 2785) was introduced by Rep. Ann M. Williams in February 2019.&nbsp;Under the proposed bill, affirmative express consent would be required before geolocation information can be collected, used, stored or disclosed from a location-based application on a user's device.&nbsp;Similar to the App Privacy Protection Act discussed above, the Geolocation Privacy Protection Act provides that a violation of the Geolocation Privacy Protection Act constitutes an&nbsp;unlawful practice under the Consumer Fraud and Deceptive Business Practices&nbsp;Act, thereby amending Section 2Z of the Illinois Consumer Fraud Act.&nbsp;In addition, a user's rights under the Act cannot be waived.&nbsp;The last action on the bill occurred on March 229, 2019, when it was re-referred to the Rule's Committee.&nbsp;More information regarding the status of the bill can be found at this <a href="http://www.ilga.gov/legislation/BillStatus.asp?DocNum=2785&amp;GAID=15&amp;DocTypeID=HB&amp;LegId=119037&amp;SessionID=108&amp;GA=101">link</a>.</p> <p><b>Right to Know Data Transparency and Privacy Act</b></p> <p>Another proposed law is the Right to Know Data Transparency and Privacy Act which would require that an operator of a commercial website or online service that collects personally identifiable information through the Internet about individual customers residing in Illinois who use or visit its commercial website or online service notify those customers of certain specified information pertaining to its personal information sharing practices.&nbsp; The Act would also require an operator to make available to customers all categories of personal information that were disclosed, as well as the names of all third parties that received the customer's personal information. Further, customers whose rights are violated under the Act have a private right of action. The Act is comprised of Senate Bill 2149, introduced by Sen. Michael E. Hastings, and House Bill 2736, introduced by Rep. Kambium Buckner, in February 2019.&nbsp;The last action taken on both bills was on March 29, 2019.&nbsp;You can find out more information about the Right to Know Act <a href="http://www.ilga.gov/legislation/BillStatus.asp?DocNum=2149&amp;GAID=15&amp;DocTypeID=SB&amp;LegID=120357&amp;SessionID=108&amp;SpecSess=&amp;Session=&amp;GA=101">here</a>.&nbsp;</p> <p><b>Genetic Information Privacy Act</b></p> <p>In addition to an increase in proposed legislation related to data privacy, the expansion of existing privacy laws in Illinois is already occurring with new amendments which went into effect on January 1, 2020.&nbsp;For example, due to the growing popularity of direct-to-consumer genetic testing kits sold by companies such as Ancestry and 23andMe, House Bill 2189 was signed into law by Governor Pritzker on July 26, 2019.&nbsp;The amendment expands the definition of &ldquo;genetic testing&rdquo; under the <a href="http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=1567&amp;ChapterID=35">Genetic Information Privacy Act</a> to include direct-to-consumer genetic testing kits.&nbsp;In addition, the amendment specifically prohibits the sharing of any testing or personally identifiable information with health insurance and life insurance companies without the written consent of the consumer.&nbsp;</p> <p><b>Artificial Intelligence Video Interview Act</b></p> <p>Further, Illinois law now provides for protections related to the use and disclosure of information gained using artificial intelligence software by prospective employers during video interviews.&nbsp;&nbsp; Additional details regarding the Artificial Intelligence Video Interview Act can be found in a prior post&nbsp;<a href="https://www.bscr-law.com/?t=39&amp;anc=2035&amp;format=xmldetail&amp;stylesheet=FirmNewsItems_blog&amp;p=5258">here</a>.</p> <p>As you can see, companies doing business in Illinois need to remain vigilant about privacy legislation in Illinois. Not only do companies need to be aware of new legislation on this issue, but they need to understand how various privacy laws interact with each other. &nbsp;Consumer privacy appears to be an important issue to the Illinois legislature, and as the legislation discussed above illustrates, one that will continue to develop in 2020. &nbsp;&nbsp;</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10New Illinois Statute Among the First to Address AI-Aided Job Recruitinghttps://www.bscr-law.com/?t=40&an=101833&format=xml&p=14 Jan 2020Illinois Law Blog<p>Effective January 1, 2020, Illinois enacted a new statute in response to the increasingly pervasive use of artificial intelligence, also known as AI, software by prospective employers. Proponents assert such software allows employers to zero in on and hire the best candidates more quickly and efficiently.&nbsp;Typically, these AI products use mobile video interviews with algorithms analyzing the prospective employee&rsquo;s facial expressions, word choice, tone, body language and gestures to determine a candidate&rsquo;s work style, ethic, cognitive ability, and interpersonal skills.&nbsp;Other AI tools might include AI review of resumes and algorithms to analyze an applicant&rsquo;s response to interview or test questions or an applicant&rsquo;s social media content. This is all done with the stated aim of finding the best candidate for the specific open position.&nbsp;</p> <p>Illinois&rsquo; new statute, 820 ILCS 42/1, <i>et seq.</i>, is among the first of its kind in the country.&nbsp;It addresses the use and disclosure of artificial intelligence video interviews, should an employee choose to utilize this still-emerging technology.&nbsp;The act, known as the Artificial Intelligence Video Interview Act, provides that an employer who asks applicants to record video interviews and uses AI analysis of the applicant-submitted videos must take certain steps.&nbsp;This includes (1) notifying each applicant before the interview that AI may be used to analyze the video and to evaluate and consider the applicant&rsquo;s fitness for the position; (2) providing each applicant with information before the interview explaining how AI works and what general characteristics it uses to evaluate applicants; and (3) obtaining consent from the applicant.&nbsp;The Act also prohibits the sharing of applicant videos except with those whose expertise is necessary to evaluate the applicant.&nbsp;Applicants may request the destruction of the video interviews, and upon such a request, employers have 30 days within which to delete all copies of the videos, including those which might be in the possession of third-parties retained to evaluate them.&nbsp;</p> <p>Interestingly, the statute does not define &ldquo;artificial intelligence&rdquo; or provide insight into what level of information is sufficient to meet the act&rsquo;s explanation requirement.&nbsp;Also, by its terms, the act protects applicants based in Illinois, but does not indicate whether it is intended to apply to out-of-state employers hiring for a position located outside of Illinois.&nbsp;Finally, the act says nothing about enforcement, whether through a private cause of action for statutory damages or otherwise.</p> <p>This new AI act is just one piece of an ever-increasing legal puzzle of already-enacted laws and pending legislation, both nationally and worldwide, seeking to address the use of AI in the hiring process and the protection of such data.&nbsp;In Illinois, another puzzle piece is the Biometric Information Privacy Act, 740 ILCS 14/1, et seq., regulating the collection and storage of biometric identifiers and providing for a broad private right of action for violations.&nbsp;The challenge for employers will be managing all such laws, at both the state and federal levels, to ensure compliance and avoid any resulting liability from a failure to comply.&nbsp;At a bare minimum, the implementation of Illinois&rsquo; AI Video Interview Act should encourage employers to exercise caution when considering or implementing hiring practices involving AI.</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10First Judicial District Appellate Court of Illinois Upholds Motion for Directed Verdict in Medical Malpractice Claimhttps://www.bscr-law.com/?t=40&an=101481&format=xml&p=26 Dec 2019Illinois Law Blog<p>In <i>Ludgarda R. Castillo and Richard Castillo v Jeremy Stevens, M.D. and The Center for Athletic Medicine, LTD., </i>1029 IL App (1<sup>st</sup>) 172958, the Court reviewed several issues, and held that a plaintiff&rsquo;s medical expert in a successful informed consent claim must testify to a breach of the applicable standard of care for the allegedly negligently obtained consent.</p> <p>Ludgarda Castillo sought treatment in 2004 after suffering from right knee pain and was diagnosed with a 17-degree valgus deformity of her right femur.&nbsp;To correct the valgus deformity, defendant Dr. Stevens performed a right distal femoral open wedge osteotomy, but during this procedure the medial cortex fractured.&nbsp;This required Dr. Stevens to intra-operatively install a condylar plate obliquely to achieve the desired degree of correction.&nbsp;The procedure properly aligned the femur to correct the valgus deformity.&nbsp;However, sometime after the procedure, plaintiff was diagnosed as having a nonunion of the femur.&nbsp;Plaintiff underwent a revision surgery in 2005.&nbsp;Although, plaintiff healed from her surgeries, she still had continuing complaints of pain and functional limitation.&nbsp;</p> <p>In 2011, plaintiff filed suit against Dr. Stevens claiming, among other things: (1) that he failed to advise her of the risks of intra-operative medial cortex fracture and subsequent nonunion; and, (2) that a reasonable person in her position would not have consented to the osteotomy had those risks been fully disclosed to her such that she could understand them. The trial court granted defendant&rsquo;s motion for directed verdict.&nbsp;It found that plaintiff failed to present any expert testimony that Dr. Stevens failed to comply with the applicable standard of care in how he advised plaintiff of the risks of the procedure.&nbsp;Plaintiff appealed.</p> <p>On appeal, plaintiff argued that expert testimony was required only to establish the applicable standard of care as to the performance of the procedure, but not for whether a physician failed to give adequate explanation of the risks. Citing to <i>Coryell v. Smith, </i>274 Ill. App. 3d 543, 545 (1995), the appellate court reviewed the four elements of an informed consent claim: (1) the physician had a duty to disclose material risks; (2) he failed to disclose or inadequately disclosed those risks; (3) as a direct and proximate result of the failure to disclose, the patient consented to treatment she otherwise would not have consented to; and, (4) plaintiff was injured by the proposed treatment. <i>Id at</i> 546.</p> <p>The appellate court found that it was clear from the record that plaintiff presented expert testimony only to establish: 1) the standard of care was that non-surgical treatment should been pursued instead of surgery; and, 2) generally as to what surgical risks Dr. Stevens had a duty to disclose.&nbsp;However, plaintiff failed to provide expert testimony that Dr. Stevens failed to comply with applicable standard of care as to the manner in which he was to advise plaintiff of the risks of the surgery.&nbsp;&nbsp; Unlike the <i>Coryell</i> case, which held that once an expert establishes the applicable standard of care, the jury is equipped to determine the third element of proximate cause, this court focused on both the second and third elements of the informed consent claim.&nbsp;</p> <p>The appellate court agreed with the trial court&rsquo;s ruling that it is a well-established principle of law that a plaintiff&rsquo;s expert was required to testify not only to the standard of care as to the medical care at issue, but also as to the details which the physician failed to fully discuss with plaintiff to show the standard of care was not met in disclosing to plaintiff the material risks of the treatment. &nbsp;The appellate court clearly rejected plaintiff&rsquo;s subjective testimony that she was not fully informed as to the risks, part of which her concession that Dr. Stevens could have told her more about the procedure than she remembered.</p> <p>This opinion should provide clarity on the issue of the necessity of expert testimony on whether a physician properly obtained informed consent, which is an objective standard, based on the consensus of medical practitioners.&nbsp;If the court had reversed the directed verdict for the physician, it would have potentially opened the floodgates for claims based solely on a lay person&rsquo;s subjective perspective on their lack of understanding of the risks.</p> <p>This intermediate appellate court opinion may be subject to further appellate review by the Illinois Supreme Court.</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10Illinois Court of Appeals Draws Careful Distinctions for Access to Mental Health Recordshttps://www.bscr-law.com/?t=40&an=100277&format=xml&p=26 Nov 2019Illinois Law Blog<p>In <i>Sparger v. Yamini</i>, plaintiff, on behalf of his minor-daughter, filed a medical malpractice lawsuit against a Chicago-area hospital and a neurosurgeon (collectively &ldquo;defendants&rdquo;). Plaintiff alleged that the surgeon&rsquo;s negligence in repairing the minor-plaintiff&rsquo;s spinal fluid leak caused her to subsequently develop meningitis. Plaintiff&rsquo;s Complaint included a claim for compensation for brain damage suffered by minor-plaintiff, including a detrimental effect on the minor plaintiff&rsquo;s &ldquo;cognitive, emotion[al], and behavioral presentation.&rdquo;</p> <p>Defendants sought minor-plaintiff&rsquo;s medical records from two hospitals predating the medical care at issue.&nbsp;Plaintiff&rsquo;s counsel declined to produce the records, asserting that they were privileged and non-discoverable under the Illinois Mental Health and Developmental Disabilities Confidentiality Act (&ldquo;MHA&rdquo;) as containing information pertaining to the minor-plaintiff&rsquo;s mental health treatment.&nbsp;In lieu of production, plaintiff&rsquo;s counsel provided a limited and redacted version of one of the records sought, while declining entirely to produce the records pertaining to a different hospitalization.</p> <p>Defendants argued that the minor-plaintiff placed her mental health at issue by claiming the alleged injury affected her cognitive, emotional, and behavioral presentation and that the records sought were relevant to her presentation before the alleged injury, thereby falling into a narrow exception to the MHA regarding mental condition.&nbsp;The circuit court granted defendants&rsquo; Motion to Compel ordered plaintiff&rsquo;s counsel to produce the entirety of the records withheld.</p> <p>Plaintiff&rsquo;s counsel refused to produce the records and was placed in &ldquo;friendly&rdquo; contempt of court for violation of the discovery order. Plaintiff&rsquo;s counsel appealed the finding of contempt (a finding of which is final and appealable under Illinois case law (<i>see</i> <i>Reda v. Advocate Health Care</i>, 199 Ill. 2d 47, 54 (2002)). On appeal, plaintiff&rsquo;s counsel argued that because plaintiff was not seeking compensation for any emotional injuries to minor-plaintiff, her mental health had not been placed at issue.</p> <p>On review, the Illinois Appellate Court for the First District reversed the trial court&rsquo;s ruling and stated that plaintiff had not placed minor-plaintiff&rsquo;s mental condition at issue by claiming brain damage and cited the prior decision of the Illinois Supreme Court in <i>Reda v. Advocate Health Care</i>, 199 Ill. 2d 47, 50 (2002).&nbsp;</p> <p>In <i>Reda</i>, plaintiff alleged medical negligence in diagnosis and treatment of an acute thrombosis in his right leg which allegedly resulted in a subsequent stroke. <i>Id. </i>at 50-51.&nbsp;Plaintiff&rsquo;s treating healthcare providers refused to provide records, citing their protection under MHA.&nbsp;<i>Id. </i>at 51.&nbsp;The trial court ordered production of the records, and the Appellate Court affirmed.&nbsp;The Supreme Court reversed both lower courts, stating &ldquo;neurological injury is not synonymous with psychological damage&hellip;[n]or does neurological injury directly implicate psychological damage.&rdquo;&nbsp;<i>Id. </i>at<i> 58.</i></p> <p>The Appellate Court further distinguished a case from the Appellate Court for the Third District, <i>Phifer v. Gingher</i>, 2017 IL App (3d) 160170. &nbsp;In <i>Phifer</i><i>, </i>plaintiffsought damages for &ldquo;psychiatric, psychological, and/or emotional injuries&rdquo; resulting from an automobile collision. &nbsp;Defendant requested medical records prior to the collision, plaintiff refused, and the trial court granted defendant&rsquo;s Motion to Compel. <i>Id</i>. at 13-19. &nbsp;The <i>Phifer</i> Court, distinguishing <i>Reda,</i> held that plaintiff placed her mental condition at issue by alleging that she was caused &ldquo;great pain and anguish both in mind and body.&rdquo; <i>Id.</i> at 28.</p> <p>The Appellate Court distinguished the facts of the current case from Phifer because plaintiff specifically stipulated that he was &ldquo;not seek[ing] damages based on psychiatric, psychological and emotional damages and did not allege [minor-plaintiff] suffered pain and anguish in mind and body, nor [that he claimed] psychiatric or psychological injuries.&rdquo;</p> <p>The Appellate Court also rejected defendants&rsquo; argument that fundamental fairness required disclosure of the records and distinguished another case cited by defendants, <i>D.C v. S.A.</i>, 178 Ill. 2d 551 (1997).&nbsp;In <i>D.C v. S.A.</i>, the Illinois Supreme Court held that an exception to the MHA privilege may exist in certain circumstances where the medical records sought have the potential to absolve defendant of all liability and fully negate plaintiff&rsquo;s claim. <i>Id</i>. at 570.&nbsp;Such an exception included those records establishing that the plaintiff suffered an injury as a result of an attempted suicide, and not an unrelated negligent act, as the plaintiff had initially contended.&nbsp;In distinguishing the present case, the Appellate Court found that the records sought here did not pertain to the absolution of defendants&rsquo; liability, but rather to minor-plaintiff&rsquo;s damages.</p> <p>The <i>Sparger </i>opinion is notable not only in its ruling regarding the narrow exceptions prescribed by the MHA, but also in the fact that none of the courts and their respective opinions referenced herein attempted to define what specific claims constitute a &ldquo;neurological injury&rdquo; versus a &ldquo;psychological injury.&rdquo;&nbsp;Instead, the Appellate Court in the instant case held that because the plaintiff&rsquo;s neuropsychology expert concluded that minor-plaintiff experienced a traumatic brain injury as a result of the alleged negligence, the claims were neurological rather than psychological.&nbsp;</p> <p>Defense counsel should expect plaintiffs&rsquo; attorneys to continue pursuing the argument that plaintiffs&rsquo; alleged injuries are neurological as opposed to psychological, even in light of alleged emotional and behavioral effects, in an effort to conform their cases to this decision and attempt to prevent access to relevant mental health records.</p> <p><i>Sparger v. Yamini</i>, 2019 IL App (1st) 180566.</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10Ninth Circuit Allows Class Action Against Facebook under Illinois' Biometric Information Privacy Act to Proceed in Californiahttps://www.bscr-law.com/?t=40&an=96893&format=xml&p=25 Sep 2019Illinois Law Blog<p>Those on Facebook know the site is quite good at recognizing others in posted photos and suggesting friends to tag. Most click on the tag suggestion and move on with little to no thought on just how this happens behind the scenes.&nbsp;A class action filed in the Northern District of California will be allowed to proceed to consider whether Facebook&rsquo;s behind-the-scenes face-recognition technology violates Illinois&rsquo; Biometric Information Privacy Act (BIPA).&nbsp;<i>Patel v. Facebook, Inc.</i>, 932 F.3d 1264 (9th Cir. 2019).&nbsp;</p> <p>Nimesh Patel, individually and on behalf of all others similarly situated, filed a purported class action against Facebook alleging Facebook subjected the named plaintiffs and the purported class to facial-recognition technology without complying with BIPA, which is intended to safeguard their privacy.&nbsp;BIPA, 740 ILCS 14/1 et seq. (2008), prohibits the collecting, using, and storing of biometric identifiers, including a &ldquo;scan&rdquo; of &ldquo;face geometry&rdquo;.&nbsp;Plaintiffs alleged Facebook used scans of their photos without obtaining a written release and without establishing a compliant retention schedule.</p> <p>For years, Facebook has allowed its users to &ldquo;tag&rdquo; their Facebook friends in photos.&nbsp;In 2010, Facebook launched a feature called &ldquo;Tag Suggestions.&rdquo;&nbsp;This feature uses facial-recognition technology to analyze whether the user&rsquo;s Facebook friends are in photos and then &ldquo;suggest&rdquo; a tag.&nbsp;It does so by scanning the photo, extracting various geometric data points that make a face unique, and creating a face signature or map.&nbsp;It then compares the face signature to other faces in Facebook&rsquo;s database and matches it to other user profiles.&nbsp;These user templates are stored on Facebook servers in nine data centers, none of which is in Illinois.&nbsp;The named Plaintiffs are all Illinois residents who uploaded photos to Facebook while in Illinois.&nbsp;Facebook created and stored face templates for each of them.</p> <p>Facebook moved to dismiss the complaint for lack of standing on the ground that the Plaintiffs had not alleged any concrete injury.&nbsp;Plaintiffs, in turn, moved to certify the class.&nbsp;The district court denied the Motion to Dismiss and certified a class of &ldquo;Facebook users located in Illinois for whom Facebook created and stored a face template after June 7, 2011.&rdquo;</p> <p>On appeal of the standing issue, the 9th Circuit noted standing is established where a plaintiff has suffered an &ldquo;injury-in-fact&rdquo; defined as an invasion of a legally protected interest which is: (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical.&nbsp;It is not enough for a plaintiff to allege that a defendant has violated a statutory right without also showing that the plaintiff suffered a concrete injury-in-fact due to the statutory violation.</p> <p>In terms of BIPA, the appellate court noted that the Illinois General Assembly found that the development and use of biometric data presents risks to Illinois&rsquo; citizens.&nbsp;Citing to the Illinois Supreme Court&rsquo;s opinion in <i>Rosenbach v. Six Flags Entm&rsquo;t Corp.</i>, 2019 IL 123186, which we previously discussed <u><a href="https://www.bscr-law.com/?t=40&amp;an=88848&amp;format=xml&amp;stylesheet=blog&amp;p=5258">here</a></u>, the court concluded that the statutory provisions at issue in BIPA were established to protect an individual&rsquo;s &ldquo;concrete interests&rdquo; in privacy, not merely his procedural rights related to how his biometric information was stored and used.</p> <p>The question then became whether the specific statutory violations alleged by the Plaintiffs in this case actually harmed or presented a material risk of harm to such privacy interests.&nbsp;The relevant conduct according to Plaintiffs was Facebook&rsquo;s collection, use and storage of biometric identifiers without a written release and a failure to maintain a retention schedule or guidelines for destroying biometric identifiers.&nbsp;Plaintiffs asserted this allows Facebook to create and use a face template and retain it indefinitely.&nbsp;The court noted that because the privacy right protected by BIPA is the right not to be subject to such collection and use, Facebook&rsquo;s alleged violation would necessarily violate the Plaintiffs&rsquo; substantive privacy interests.&nbsp;It concluded, therefore, that Plaintiffs have alleged a concrete injury-in-fact sufficient to confer standing.</p> <p>On the class certification issue, Facebook argued the district court erred in certifying the class because the Illinois legislature did not intend for BIPA to have extraterritorial effect.&nbsp;Because Facebook&rsquo;s collection, storage, and template creation took place on its serves outside Illinois, Facebook argued the district court would have to consider whether each relevant event took place inside or outside Illinois.&nbsp;The Court of Appeals disagreed.&nbsp;It is reasonable to infer that the General Assembly contemplated BIPA&rsquo;s application to individuals located in Illinois, even if some relevant events occurred outside the state.&nbsp;The court held that these are threshold questions of BIPA&rsquo;s application which can be decided on a class-wide basis.&nbsp;</p> <p>Facebook also argued that the possibility of a large class-wide statutory damages award defeats the superiority requirement for a class action.&nbsp;Again, the appellate court disagreed.&nbsp;The question of whether the potential for enormous liability can justify a denial of class certification depends on legislative intent.&nbsp;Here, there is nothing in BIPA&rsquo;s text or legislative history indicating a large statutory damages award would be contrary to the intent of the Illinois General Assembly.&nbsp;The court, therefore, affirmed the district court&rsquo;s order certifying the class.</p> <p>The law surrounding BIPA continues to develop, which is unsurprising considering the speed with which relevant technological capabilities develop.&nbsp;With this opinion, the extraterritorial reach of BIPA is established and may well lead to more litigation outside the confines of the Illinois state and federal courts.</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10Terms of "Confidential" Co-Defendant Settlement Prove Party Bad Faith and Earn Counsel a Disciplinary Referralhttps://www.bscr-law.com/?t=40&an=96452&format=xml&p=05 Sep 2019Illinois Law Blog<p>A well-established and often referred to as sacred part of American jurisprudence is the confidential nature of settlement negotiations and terms. In a recent opinion, Illinois&rsquo; First District Appellate Court reminded litigants that such confidentiality, in fact, can be lost.&nbsp;</p> <p>In <i>Chernyakova v. Puppala, et al.</i>, 2019 IL App (1st) 173066, Plaintiff Elena Chernyakova sued Northwestern Memorial Hospital, McGaw Medical Center of Northwestern University and Vinaya Puppala, M.D. alleging that while she was hospitalized at Northwestern for alcohol intoxication, Dr. Puppala, an employee of McGaw, electronically accessed Plaintiff&rsquo;s medical chart and took and posted photos of her on social media.&nbsp;Plaintiff and Dr. Puppala knew each other socially, and while she was admitted, Dr. Puppala visited Plaintiff twice just hours after admission.&nbsp;He used his credentials to view Plaintiff&rsquo;s electronic medical chart and spoke with Plaintiff&rsquo;s treating physicians regarding her progress and possible discharge.&nbsp;On his second visit, Dr. Puppala took photographs of Plaintiff in what was still an intoxicated state and posted them to Facebook and Instagram.&nbsp;Plaintiff contested that she had consented to Dr. Puppala accessing her medical records, speaking to her treating physicians, or taking and posting her photograph.</p> <p>The Cook County Circuit Court granted summary judgment to Northwestern and McGaw, and Plaintiff proceeded to trial against Dr. Puppala.&nbsp;During trial, Plaintiff settled with Dr. Pappula and the parties requested an on the record &ldquo;hearing&rdquo; wherein the attorneys outlined the terms of the &ldquo;confidential&rdquo; settlement for the trial judge.&nbsp;Separately, Plaintiff pursued an appeal of the summary judgment in Northwestern and McGaw&rsquo;s favor.</p> <p>During the pendency of the appeal, Northwestern and McGaw&rsquo;s counsel obtained information that the terms of the &ldquo;confidential&rdquo; settlement called in question the validity of the factual underpinnings of the lawsuit.&nbsp;Defense counsel moved the trial court to unseal the transcript of the settlement hearing so that it might be considered by the appellate court on a motion to dismiss the appeal even though those proceedings had no direct connection to the summary judgment proceedings.&nbsp;The trial court ultimately unsealed the transcript, and the parties agreed it would be filed in the appellate court under seal.</p> <p>While generally the appellate court&rsquo;s review of summary judgment orders is strictly limited to the materials of record before the Circuit Court at the time the summary judgment was entered, this case presented a unique situation.&nbsp;As the appellate court noted, it implicated the appellate court&rsquo;s responsibility to &ldquo;strive to enhance and maintain confidence in our legal system.&rdquo;&nbsp;The appellate court found the contents of the settlement transcript lead to the inescapable conclusion that the appeal was frivolous and being pursued in bad faith.&nbsp;The transcript disclosed that at the hearing counsel stated the amount Dr. Puppala agreed to pay and that Plaintiff agreed to write favorable letters on the doctor&rsquo;s behalf stating that her underlying allegations were &ldquo;mistaken&rdquo; and that she consented to the photos and postings.&nbsp;Significantly, the appellate court learned that after the Circuit Court ordered the settlement hearing transcript unsealed, Plaintiff&rsquo;s counsel had nevertheless instructed the court reporter to not provide a copy to Defendants.</p> <p>On appeal, Plaintiff argued there is a presumption that favors the validity of confidentiality provisions in settlement agreements such that the settlement hearing transcript could not be unsealed as a matter of law.&nbsp;The appellate court explained that Plaintiff&rsquo;s argument demonstrated a misunderstanding of the confidentiality protection afforded to settlement agreements.&nbsp;Once Plaintiff&rsquo;s counsel described the terms of the settlement to the trial judge, any confidences evaporated and sealing the confidential terms did nothing to save them.&nbsp;By informing the trial judge of the settlement terms on the record, counsel made those terms a part of the public record which could not be sealed.</p> <p>The appellate court also found Plaintiff&rsquo;s counsel was incorrect in his assertion that Illinois Supreme Court Rule 408 protected the confidential nature of the settlement terms.&nbsp;Rule 408 provides that evidence of &ldquo;furnishing or offering or promising to furnish &ndash; or accepting or offering or promising to accept &ndash; a valuable consideration in compromising or attempting to compromise the claim&rdquo; and &ldquo;conduct or statements made in compromise negotiations regarding the claim&rdquo; is inadmissible &ldquo;to prove liability&hellip; or to impeach through a prior inconsistent statement or contradiction[.]&rdquo;&nbsp;Such evidence may, however, be admissible to establish bad faith.&nbsp;Here, the inquiries into settlement negotiations was to establish wrongdoing and Rule 408 offered no protection to Plaintiff.</p> <p>The appellate court found it significant that Plaintiff did not directly question the substantive accuracy of the settlement terms, which on their fact are irreconcilable with Plaintiff&rsquo;s continued pursuit of her claim against the Defendants.&nbsp;Plaintiff, through counsel, affirmatively agreed to fully exonerate Dr. Puppala by providing a letter completely contradicting the factual bases of the lawsuit.&nbsp;She knew those letters would be sent to favorably influence regulatory or financial decisions involving Dr. Puppala, while simultaneously continuing her quest for money damages against the Defendants under theories she asserted were &ldquo;mistaken.&rdquo;</p> <p>The appellate court dismissed the appeal as frivolous and not pursued in good faith.&nbsp;Further, it found Defendants entitled to their reasonable attorney fees and costs incurred as a result of defending against the frivolous appeal.&nbsp;The court also concluded that it could not turn a blind eye to Plaintiff&rsquo;s counsel&rsquo;s instruction to the court reporter to not provide the Defendants will a copy of the hearing transcript in contravention of the trial court order.&nbsp;As a result, the court instructed the clerk of the appellate court to forward a copy of the opinion to the Attorney Registration and Disciplinary Commission.</p> <p>The decision corrects any misconceptions that settlement negotiations and terms are absolutely protected.&nbsp;One must question how far this holding might reach as there are many proceedings which are held &ldquo;on the record&rdquo; but with the transcripts later sealed.&nbsp;Perhaps more importantly, the opinion cautions counsel against showing a lack of respect for the Circuit Court and for the appellate process in a blind drive for a successful outcome.</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10Taxation of Lost Wages Awards Under the FELA: the Illinois Appellate Court Applies Loos v. BNSFhttps://www.bscr-law.com/?t=40&an=96213&format=xml&p=21 Aug 2019Illinois Law Blog<p>In <i>Munoz v. Norfolk Southern Railway Company</i>, 2018 IL App (1<sup>st</sup>) 171009 (<i>Munoz I</i>), Plaintiff Munoz sued his railroad employer under the FELA for an on-duty personal injury. A jury awarded Munoz a large sum attributed to past and future lost wages.&nbsp;After the verdict, the railroad moved for a setoff, claiming Munoz owed taxes on the lost wages award under the Railroad Retirement Tax Act (RRTA).&nbsp;Munoz argued that the award of lost wages should be treated the same as personal injury awards that are not subject to income taxes.&nbsp;</p> <p>The trial court denied the railroad&rsquo;s motion, relying on the Missouri Supreme Court&rsquo;s opinion in <i>Mickey v. BNSF Railway Co., </i>437 S.W. 2d 207 (Mo. banc 2014).&nbsp;In <i>Mickey</i>, the Missouri Supreme Court held that, like the exclusion for personal injury awards under Internal Revenue Code &sect; 104(a)(2), an FELA lost wages award does not constitute income.&nbsp;Therefore, lost wages do not qualify as taxable compensation under the RRTA.</p> <p>The railroad appealed, arguing that the plain language of the RRTA, when read in conjunction with the Railroad Retirement Act, supports a finding that an FELA lost wages award is compensation subject to withholding taxes.&nbsp;The Illinois Appellate Court disagreed and affirmed the trial court.&nbsp;The Appellate Court found that the RRTA defines &ldquo;compensation&rdquo; as money paid to an employee for &ldquo;services rendered&rdquo; and lost wages cannot be paid to an employee for &ldquo;services rendered&rdquo;.</p> <p>Shortly thereafter, the U.S. Supreme Court considered the same issue in <i>BNSF Railway Co. v. Loos</i>, 129 S. Ct. 893 (2019), and held that FELA lost wages awards are compensation subject to taxation.&nbsp;The Illinois Supreme Court then directed the Appellate Court to vacate its initial judgment in <i>Munoz I </i>and consider the effect of the <i>Loos</i> case.&nbsp;Upon reconsideration, the Appellate Court concluded that Munoz&rsquo;s lost wages award was taxable compensation under the RRTA.&nbsp;<i>Munoz v. Norfolk Southern Railway Company</i>, 2019 IL App (1<sup>st</sup>) 171009-B (<i>Munoz II</i>).</p> <p>The <i>Munoz II</i> &nbsp;Court observed that in <i>Loos</i> the Supreme Court looked to the Social Security Act (SSA) and the Federal Insurance Contributions Act (FICA) for guidance as to the meaning of &ldquo;compensation.&rdquo; &nbsp;The Supreme Court found that the RRTA&rsquo;s definition of compensation was &ldquo;materially indistinguishable&rdquo; from FICA&rsquo;s definition of &ldquo;wages&rdquo;, to include remuneration for &ldquo;any service, of whatever nature, performed . . . by an employee.&rdquo;</p> <p>Previous Supreme Court cases held that &ldquo;wages&rdquo; under the SSA and FICA included awards of backpay and severance payments. &nbsp;These cases held that such awards represented pay for active service, in addition to pay for periods of <i>absence </i>from active service. &nbsp;As a result, the Supreme Court held that &ldquo;compensation&rdquo; under the RRTA can encompass pay for periods of <i>absence </i>from active service, as long as the remuneration in question &ldquo;stems from the employer-employee relationship.&rdquo;</p> <p>The Supreme Court found that damages for lost wages awarded under the FELA &ldquo;fit comfortably&rdquo; within these parameters.&nbsp;Wage loss damages compensate an employee for time during which he or she is &ldquo;wrongfully separated&rdquo; from employment, and this is akin to an award of back pay.&nbsp;An award of back pay that compensates an employee for wrongful discharge constitutes wages under the SSA, even though the wages were awarded because of the employer&rsquo;s wrongdoing. &nbsp;Based on this reasoning, &ldquo;there should be no dispositive difference between a payment voluntarily made and one required by law.&rdquo;</p> <p>The <i>Munoz II</i> Court reiterated the distinction between personal injury damages that are not taxable under the Internal Revenue Code with FELA lost wage awards.&nbsp;Personal injury damages are excluded from &ldquo;gross income&rdquo; by the Code.&nbsp;And, &ldquo;gross income&rdquo; cannot be conflated with &ldquo;compensation&rdquo; under the RRTA, which Congress treated as discrete tax bases.</p> <p><b>CONCLUSION</b></p> <p>The Illinois Appellate Court is likely the first of many courts that will apply the <i>Loos</i> decision and find that an award of lost wages in an FELA case is subject to taxation.&nbsp;The resolution of the split on this issue will have practical ramifications in FELA litigation, including modification of jury instructions and, potentially, attempts to allocate settlement proceeds to sources other than lost wages.<br /> <br /> <br /> <em>* Kelly M. &ldquo;Koki&rdquo; Sabat&eacute;s, Summer Law Clerk, assisted in the research and drafting of this post. Sabat&eacute;s is a 3L student at the University of Missouri-Columbia.</em></p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10