BSCR Firm News/Blogs Feedhttps://www.bscr-law.com/?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10en-us23 Apr 2019 00:00:00 -0800firmwisehttps://blogs.law.harvard.edu/tech/rssIllinois Appellate Court Holds Employer's Alleged Biometric Information Privacy Act Violation Is Not Subject to Arbitrationhttps://www.bscr-law.com/?t=40&an=90584&format=xml&p=16 Apr 2019Illinois Law Blog<p>Not all employment-related claims are subject to an employment agreement&rsquo;s mandatory arbitration clause, according to the Illinois Appellate Court for the First District.</p> <p>In <i>Liu v. Four Seasons Hotel, LTD.</i>, 2019 IL App (1st) 182645 (April 9, 2019), the plaintiffs, all employees of the defendant hotels, filed a class action alleging their employer violated the Biometric Information Privacy Act (740 ILCS 14/1 et seq. (West 2016)) in their method of collecting, using, storing, and disclosing employees&rsquo; biometric data, namely fingerprints taken for timekeeping purposes.&nbsp; Defendants filed a motion to compel arbitration, arguing that each employee signed an employment agreement requiring &ldquo;wage and hour violation&rdquo; claims, as well as the initial question of arbitrability, be submitted to and decided by an arbitrator.&nbsp;</p> <p>Illinois enacted the Biometric Information Privacy Act in 2008 to help regulate the collection, use, safeguarding, handling, storage, retention, and destruction of biometric identifiers and information.&nbsp; These identifiers include things like retina or iris scans, fingerprints, voiceprints, hand scans, or face geometry scans.&nbsp; The Act provides a private right of action that permits a prevailing party to recover damages of $1000 or actual damages (if greater) for negligent violation of the Act and $5000 or actual damages (if greater) for intentional or reckless violations, in addition to attorney&rsquo;s fees and costs.&nbsp;</p> <p>The plaintiffs, on behalf of themselves and all those similarly situated, claimed defendants scanned their fingerprints, placed and maintained that biometric data in a database, and then used it for timekeeping purposes.&nbsp; They alleged violations of the Act in defendants&rsquo; failure (1) to inform employees that it discloses fingerprint data to an out-of-state third party vendor; (2) to inform employees in writing of the specific purpose and length of time for which their fingerprints were being collected, stored, and used; (3) to provide a retention schedule and guidelines for permanent deletion of biometric information; and (4) to acquire written releases from employees to collect biometric information.</p> <p>The trial court denied the defendant&rsquo;s Motion to Compel Arbitration, and the Appellate Court affirmed.&nbsp; The Appellate Court held the claims did not fit within the &ldquo;wage or hour violation&rdquo; category of disputes subject to mandatory arbitration under the employment agreements.&nbsp; The defendants argued the sole purpose for requiring employees to scan their fingerprints was to monitor the hours worked, which necessarily makes it a &ldquo;wage or hour violation&rdquo; claim.&nbsp; The Court, however, looked to how this phrase has been used in other contexts, such as under Illinois&rsquo; Wage Payment Act or Minimum Wage Law or the federal Fair Labor Standards Act.&nbsp; In all those enactments, wage and hour violation claims involve allegations of an employer wrongfully withholding compensation or failing to pay employees overtime rates.&nbsp; Plaintiffs here, in contrast, alleged nothing beyond violations of the Biometric Information Privacy Act.&nbsp; They made no claims of improperly withheld compensation or hours violations.&nbsp;</p> <p>The Court noted, citing to <i>Rosenbach v. Six Flags Entertainment Corp.</i>, 2019 IL 123186, that the Act is a privacy rights law that applies inside <i>and</i> outside the workplace.&nbsp; &ldquo;Simply because an employer opts to use biometric data, like fingerprints, for timekeeping purposes does not transform a complaint into a wages or hours claim.&rdquo;&nbsp;</p> <p>This opinion, as we noted in an <a href="https://www.bscr-law.com/?t=40&amp;an=88848&amp;format=xml&amp;stylesheet=blog&amp;p=5258">earlier blog post</a> addressing <i>Rosenbach</i>, creates a strong incentive for employers to conform to the Act to prevent problems before they occur and subject them to potential civil litigation, as mandatory arbitration clauses may not cover the claims.&nbsp; &nbsp;</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10In a case of first impression, the Appellate Court of Illinois allows counsel to withdraw previously disclosed testifying experthttps://www.bscr-law.com/?t=40&an=90527&format=xml&p=12 Apr 2019Illinois Law Blog<p>In a case of first impression, the Illinois Appellate Court, First District, applying federal law principles, held that a party who discloses a testifying expert may later redesignate that witness as a consultant whose opinions and work product are privileged and protected from discovery absent a showing of exceptional circumstances.</p> <p>In <i>Dameron v. Mercy Hospital and Medical Center,</i> plaintiff Alexis Dameron disclosed Dr. David Preston in her interrogatory answers as a testifying expert witness on May 30, 2017.&nbsp; She further disclosed, pursuant to the applicable rules, that Dr. Preston would provide testimony regarding the results of testing he was to perform on Ms. Dameron on June 1, 2017.&nbsp; Dr. Preston did perform tests of the Plaintiff and later prepared a report in which he discussed his findings and opinions, but the report was never disclosed, despite Illinois Supreme Court Rule 213(f)(3) requiring disclosure of &ldquo;any&rdquo; reports prepared by a controlled expert about the case.&nbsp;</p> <p>Almost two months later, on July 27, 2017, Ms. Dameron notified opposing counsel that she had &ldquo;inadvertently&rdquo; disclosed Dr. Preston as a testifying expert and amended her discovery answers excluding Dr. Preston as a testifying expert.&nbsp;</p> <p>On August 3, 2017, shortly after notifying opposing counsel of the inadvertent disclosure, Ms. Dameron filed a motion to designate Dr. Preston as a non-testifying expert consultant pursuant to Illinois Supreme Court Rule 201(b)(3), which states as follows:</p> <p style="margin-left: 40px;">A consultant is a person who has been retained or specially employed in anticipation of litigation or preparation for trial but who is not to be called at trial. The identity, opinions, and work product of a consultant are discoverable only upon a showing of exceptional circumstances under which it is impracticable for the party seeking discovery to obtain facts or opinions on the same subject matter by other means.</p> <p>The circuit court denied Ms. Dameron&rsquo;s motion to redesignate Dr. Preston and ordered Plaintiff to produce Dr. Preston&rsquo;s records and report regarding the testing he performed.&nbsp; Plaintiff refused, and the trial court found her in contempt, imposing a $100 fine. Plaintiff filed a motion to reconsider, which was likewise denied by the trial court, but reduced the fine to $1.&nbsp; Plaintiff then appealed the matter to the Appellate Court for the First Circuit.</p> <p>The Appellate Court ultimately reversed the circuit court&rsquo;s decision and held, as a matter of first impression, that where a previously disclosed testifying expert is <b>timely</b> withdrawn prior to disclosing his or her report in discovery, the expert may be redesignated as a Rule 201(b)(3) consultant and entitled to the consultant&rsquo;s privilege against disclosure, absent exceptional circumstances.</p> <p>Given it was a matter of first impression, the Appellate Court found sufficient similarities between Illinois and federal discovery rules and rendered federal case law on this issue persuasive.&nbsp; Federal case law supported the contention that both the disclosure of the expert as well as the expert&rsquo;s required report is necessary to fully disclose a testifying expert under Federal Rule of Civil Procedure 26.&nbsp; In this case, Ms. Dameron had only disclosed Dr. Preston&rsquo;s identity, but had not disclosed or identified his report because at the time she filed her answers to interrogatories, Dr. Preston had not yet conducted his testing.&nbsp;</p> <p>Defendants made several arguments in an attempt to gain access to Dr. Preston&rsquo;s examination results.&nbsp; They argued that Dr. Preston was a treating physician and, consequently, Plaintiff waived any right to withhold the results.&nbsp; The Appellate Court disagreed and found Dr. Preston was hired to testify, not to treat.&nbsp; They also argued that Ms. Dameron&rsquo;s disclosure of Dr. Preston was a judicial admission, but the court disagreed arguing Plaintiff was permitted to withdraw Dr. Preston as a witness and/or supplement her discovery answers.&nbsp;</p> <p>Defendants further argued that because Dr. Preston was initially disclosed as a testifying expert, Plaintiff waived any privilege to Dr. Preston&rsquo;s report.&nbsp; However, the court stated that the rules only required Plaintiff to turn over a report <i>if</i> Dr. Preston was going to testify at trial. &nbsp;&nbsp;Defendants also argued that they were entitled to the report because it contained relevant facts, but the court disagreed and found that Dr. Preston&rsquo;s report was protected by the consultant&rsquo;s work product privilege only subject to discovery upon showing of exceptional circumstances.</p> <p>Finally, Defendants argued that Plaintiff was attempting to subvert the legal process.&nbsp; The timeline of these events does appear to be highly suspicious in that the motion to redesignate Dr. Preston was filed after he presumably drafted his report and almost two months after disclosure.&nbsp; One may assume that Dr. Preston&rsquo;s report was unfavorable to Plaintiff and, consequently, prompted her to withdraw Dr. Preston as an expert.&nbsp; Nevertheless, the court found that Defendants failed to identify any evidence to support their claim of Plaintiff&rsquo;s subversion of the legal process.</p> <p>The Appellate Court ultimately held that where a previously disclosed testifying expert witness has been timely withdrawn prior to disclosing his or her report in discovery, the expert may be redesignated a Rule 201(b)(3) consultant and entitled to the consultant&rsquo;s privilege against disclosure, absent exceptional circumstances.&nbsp; The court found no exceptional circumstances in this case.</p> <p>The implications of this case are significant, and this is probably not the end of the story, as this issue will likely be relitigated in the future should parties employ this as a tactical litigation strategy.</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10Illinois Supreme Court Confirms State's Biometric Information Privacy Act Has Real Teethhttps://www.bscr-law.com/?t=40&an=88848&format=xml&p=18 Feb 2019Illinois Law Blog<p>In this age of face recognition, digital fingerprints, and iris scans, what allegations and proof of damages is sufficient to state a claim for the mishandling of biometric identifiers? Must the aggrieved party have suffered any actual damages beyond the improper collection, retention or disclosure of his biometric identifiers themselves?&nbsp;</p> <p>In <i>Stacy Rosenbach, as Mother and Next Friend of Alexander Rosenbach v. Six Flags Entertainment Corporation</i>, 2019 IL 123186, the plaintiff alleged violations under Illinois&rsquo; Biometric Information Privacy Act (740 ILCS 14/1 <i>et seq</i>. (2016)).&nbsp;The Act imposes restrictions on how private entities collect, retain, disclose, and destroy biometric identifiers, such as retina or iris scans, fingerprints, voiceprints, scans of hand or face geometry, or other biometric information.&nbsp;Under the Act, any person &ldquo;aggrieved&rdquo; by a violation of its provisions &ldquo;shall have a right of action&hellip; against an offending party&rdquo; and &ldquo;may recover for such violation&rdquo; the greater of liquidated or actual damages, reasonable attorney fees and costs, and any other relief, including an injunction, that the court deems appropriate.&nbsp;The issue in this particular case was whether a person qualifies as an &ldquo;aggrieved&rdquo; person and may seek liquidated damages and injunctive relief pursuant to the Act if he has not alleged some actual injury or adverse effect, beyond violation of his rights under the statute.&nbsp;The First District Court of Appeals answered this question in the negative, holding a plaintiff who alleges only a technical violation of the statute without alleging some injury or adverse effect is not an aggrieved person under the Act.</p> <p>Since at least 2014 defendant Six Flags has used a fingerprinting process when issuing season passes to its Great America theme park.&nbsp;Plaintiff alleged the system scans pass holders&rsquo; fingerprints; collects, records and stores biometric identifiers and information gleaned from the fingerprints; and then stores that data in order to quickly verify customer identities upon subsequent visits to the park.&nbsp;</p> <p>Plaintiff&rsquo;s 14 year old son was to visit the park on a school field trip in May or June 2014, and plaintiff purchased a season pass for him online.&nbsp;When he arrived at the park with his class, he had to complete the season pass sign-up process, which included scanning his thumb into defendant&rsquo;s biometric data capture system.&nbsp;The complaint alleged that plaintiff was not informed in advance that the minor&rsquo;s fingerprints were to be used as part of defendant&rsquo;s season pass system and that neither the minor son nor his mother were informed in writing of the purpose or length of term for which his fingerprint had been collected.&nbsp;Neither of them signed any release or written consent for the collection, storage, use, dissemination, disclosure, or trade of the fingerprint or the associated biometric information.&nbsp;The complaint also alleged that, although the minor child has not visited the park since that school field trip, defendant has retained his biometric identifiers and information and has not disclosed what was done with the information or how long it will be kept.&nbsp;</p> <p>Plaintiff&rsquo;s complaint sought redress for the minor child, individually and on behalf of all other similarly situated persons under the Act.&nbsp;The defendant moved to dismiss on the basis that the plaintiff had suffered no actual or threatened injury and something more than just a violation of the Act must be alleged to state a claim.&nbsp;The Appellate Court for the First District agreed with defendant and held that while the injury or adverse effect alleged need not be pecuniary, it must be something more than a technical violation of the Act.&nbsp;2017 IL App (2d) 170317.&nbsp;</p> <p>The Illinois Supreme Court reversed upon <i>de novo</i> review.&nbsp;Basic principles of statutory construction dictate that if the legislature had wanted to impose a requirement limiting a plaintiff&rsquo;s right to bring a cause of action to circumstances where he or she had sustained some actual damages, beyond violation of the rights conferred by the statute, it could have made its intention clear.&nbsp;The Act contains no such requirement.&nbsp;It simply provides that any person aggrieved by a violation of the Act shall have a right of action.&nbsp;While the Act does not define &ldquo;aggrieved&rdquo;, the state Supreme Court more than a century ago held that to be aggrieved simply &ldquo;means having a substantial grievance; a denial of some personal or property right.&rdquo;&nbsp;<i>Glos v. People</i>, 259 Ill. 332, 340 (1913).&nbsp;As held in <i>Glos</i>, &ldquo;[a] person is prejudiced or aggrieved, in the legal sense, when a legal right is invaded by the act complained of or his pecuniary interest is directly affected by the decree or judgment.&rdquo;&nbsp;<i>Id</i>.&nbsp;This is consistent, the court noted, with the dictionary definition of &ldquo;aggrieved&rdquo;, which includes definitions such as &ldquo;suffering from an infringement or denial of legal rights&rdquo; or &ldquo;having legal rights that are adversely affected.&rdquo;</p> <p>The Court concluded that when a private entity fails to comply with one of the Act&rsquo;s requirements, that violation alone constitutes an invasion, impairment, or denial of the statutory rights of any person or customer whose biometric identifier or biometric information is subject to the breach.&nbsp;Such person or customer is clearly &ldquo;aggrieved&rdquo; within the meaning of the Act and is entitled to seek recovery under that provision with no need to plead or prove additional consequences.&nbsp;A contrary result would misapprehend the nature of the harm the legislature is attempting to mitigate through this legislation.&nbsp;&ldquo;The Act vests in individuals and customers the right to control their biometric information by requiring notice before collection and giving them the power to say no by withholding consent.&rdquo;&nbsp;When an entity violates the statutory procedures, such as what the defendant is alleged to have done here, the individual loses his right to maintain his biometric privacy, which is the precise harm the legislature sought to prevent by passing the Act in the first instance.&nbsp;&ldquo;The injury is real and significant.&rdquo;</p> <p>This opinion creates a strong incentive for private entities, which might include not only theme parks but financial institutions, recreational facilities or health clubs, employers, etc., to conform to the law and prevent problems before they occur and cannot be undone.&nbsp; &nbsp;&nbsp;</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10Buyer Beware: Illinois Supreme Court Protects Subcontractors from Implied Warranty Claims by Homeowners with No Contractual Relationshiphttps://www.bscr-law.com/?t=40&an=88756&format=xml&p=12 Feb 2019Illinois Law Blog<p>The Illinois Supreme Court recently overturned 35 years of precedent in holding that a purchaser of a newly constructed home cannot pursue a cause of action for breach of an implied warranty of habitability against a subcontractor where there is no contractual relationship between the two, explicitly overruling <i>Milton v. Richards Group of Chicago Through Mach, </i>116 Ill. App. 3d 852 (1st Dist. 1983). In a victory for construction subcontractors, the court held that the homeowner&rsquo;s claim for breach of the implied warranty of habitability is limited to those parties with whom the homeowner has a direct contractual relationship, typically the general contractor.&nbsp;Specifically, a subcontractor hired by the general contractor owes no such implied warranty to the homeowner.</p> <p>The case of <i><a href="http://www.illinoiscourts.gov/Opinions/SupremeCourt/2018/122022.pdf">Sienna Court Condominium Association v. Champion Aluminum Corp., et al.</a></i> arose from claims of water intrusion and other construction defects at a newly constructed 111-unit condominium complex in Evanston, Illinois.&nbsp;Acting on behalf of the owners of the individual units, the complex&rsquo;s condominium association filed a lawsuit claiming that latent construction defects rendered the complex unfit for habitation.&nbsp;The pleadings alleged a contractual warranty claim against the developer, as well as claims for breach of an implied warranty of habitability against the general contractor, the architects, the engineers, and numerous materials suppliers and subcontractors.</p> <p>The subcontractors and material suppliers filed a motion to dismiss arguing that they owed no implied warranty of habitability, in part because they had no direct contractual relationships with the individual homeowners or the association.&nbsp;Although the trial court denied the motion, it promptly certified the ruling for interlocutory appeal under a state rule allowing appellate courts to examine certain preliminary issues.</p> <p>On appeal, the state Supreme Court overruled the trial court and ordered it to dismiss the claims against the subcontractors, holding that &ldquo;the purchaser of a newly constructed home may <b><i>not</i></b> pursue a claim for breach of an implied warranty of habitability against a subcontractor where there is no contractual relationship.&rdquo;</p> <p>The doctrine of implied warranty of habitability is a &ldquo;creature of public policy&rdquo; that was first recognized by the Illinois Supreme Court in 1979.&nbsp;<i>See Peterson v. Hubschman Construction Co.</i>, 76 Ill. 2d 31 (1979).&nbsp;It protects the first purchaser of a new home against latent defects that may render the house not reasonably fit for habitation, under the reasoning that a buyer &ldquo;has a right to expect to receive that for which he [or she] has bargained and that which the builder-vendor has agreed to construct and convey to him, that is, a house that is reasonably fit for use as a residence.&rdquo;&nbsp;<i>Id.</i> at 40. &nbsp;Such a warranty, whether or not explicitly stated in a contract, exists &ldquo;by virtue of the execution of the agreement&rdquo; between the builder and the buyer.&nbsp;<i>Id.</i> at 41.</p> <p>While the doctrine has expanded and been developed through case law over the years, the Illinois Supreme Court has never held that a homeowner may pursue a claim for breach of an implied warranty of habitability against a subcontractor with whom it has not contracted.&nbsp;That said, one intermediate appellate decision had allowed such a claim <b><i>only</i></b> where the homeowner &ldquo;has no recourse to the builder-vendor,&rdquo; this newly decided Supreme Court opinion overrules that decision and limits the applicability of the implied warranty of habitability to only those parties who have a direct contractual relationship with the plaintiff.</p> <p>At the heart of this decision is the distinction between contract and tort law.&nbsp;Here, the plaintiff had contended that privity of contract should not be a factor because the implied warranty of habitability was a tort claim developed by the courts.&nbsp;The Supreme Court disagreed.&nbsp;It characterized the warranty as an implied contractual term imposed by the courts as a matter of public policy.&nbsp;Because the cause of action was based on an implied contractual term, if no contract exists between parties, neither does an implied warranty of habitability.</p> <p>The court found support for its reasoning in prior cases holding that parties were free to include in their contracts a waiver of the implied warranty of habitability.&nbsp;&ldquo;A person may choose not to commence an action in tort,&rdquo; the court wrote, &ldquo;but he [or she] cannot <b><i>waive</i></b> a duty imposed by the courts&rdquo; (emphasis added).&nbsp;The fact that the implied warranty of habitability is subject to waiver is &ldquo;a conclusive indication that a cause of action for breach of the warranty must be based in contract, not in tort.&rdquo;</p> <p>The court also noted that if a claim for breach of an implied warranty of habitability was based in tort, as the plaintiffs had argued, it would be precluded by the &ldquo;economic loss doctrine.&rdquo;&nbsp;This somewhat complex doctrine grew out of product liability law but is now frequently applied in construction cases.&nbsp;In its simplest form, it provides that &ldquo;an action for economic loss requires the plaintiff to be in contractual privity with the defendant,&rdquo; preserving the &ldquo;distinction between tort and contract&rdquo; by denying remedies in tort for complaints that are based in contract.&nbsp;</p> <p>Under the economic loss doctrine, also known as the <i>Moorman</i> doctrine in Illinois, tort claims for purely economic losses&mdash;without accompanying claims of personal injury or damage to other property&mdash;are limited to cases of fraud or misrepresentation. &nbsp;<i>See Moorman Manufacturing Co. v. National Tank Co.</i>, 91 Ill. 2d 69 (1982). &nbsp;Here, the court found that the latent defects that formed the basis of the condominium owners&rsquo; claims were &ldquo;the definition of pure economic loss [&hellip;], i.e., when the product disappoints the purchaser&rsquo;s commercial expectations and does not conform to its intended use.&rdquo;</p> <p>This decision provides meaningful protection to Illinois subcontractors.&nbsp;It insulates them from tort claims asserted by dissatisfied homeowners whose complaints should be addressed with the general contractor whom they hired and with whom they have a contractual relationship.&nbsp;It is then left to the general contractor to seek defense, indemnity, and/or contribution from the various trades responsible for the claimed defects, all according to the terms of their respective contracts.&nbsp;</p> <p>The ruling protects subcontractors&rsquo; freedom to negotiate the allocation of risks and liabilities directly with the general contractor without fear that they will face some additional and unforeseen exposure in tort if the homeowner ends up unhappy with the finished product delivered by the general contractor.&nbsp;This security is especially important to subcontractors that did not agree to guarantee the quality of the entire home and often only worked on a small portion of the overall project.&nbsp;By not allowing homeowners to bring direct actions for breach of an implied warranty of habitability against a subcontractor with whom they have no contractual relationship, the Illinois Supreme Court has in one decision strengthened contract law in Illinois, reined in attempts to unnecessarily broaden tort law, and reaffirmed the legal distinction between the two.&nbsp;</p>https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10Illinois Supreme Court Further Defines Product Liability Seller Exceptionhttps://www.bscr-law.com/?t=40&an=87421&format=xml&p=28 Jan 2019Illinois Law Blog<p>Plaintiff Mark Cassidy was injured while at work in Mendota, Illinois. He filed a Complaint in Cook County against U.S.-based China Vitamins, a distributor of an imported flexible bulk container of vitamins that allegedly broke and injured him.&nbsp; He alleged strict product liability, negligent product liability and res ispa loquitur.&nbsp; China Vitamins denied that it manufactured the container, and it identified the manufacturer of the containers as Chinese-headquartered Taihua Shanghai Taiwei Trading Company Limited (Taihua).&nbsp;</p> <p>Cassidy then filed an Amended Complaint adding Taihua.&nbsp; Taihua filed an Answer, but its counsel then withdrew.&nbsp; The court entered a default judgment after Taihau failed to retain new counsel.&nbsp; After Cassidy presented evidence, the court entered judgment of over $9.1 million against Taihua.&nbsp;</p> <p>In the interim, China Vitamins sought and obtained summary judgment on the basis that it was a mere distributor pursuant to 735 ILCS 5/2-621(b).</p> <p>Thereafter, Cassidy sought to discover and collect assets from Taihua, as well as third-parties.&nbsp; He was unsuccessful and filed a motion to reinstate China Vitamins under 735 ILCS 5/2-621(b)(4).&nbsp; China Vitamins opposed the motion. &nbsp;The trial court denied Cassidy&rsquo;s motion, finding that he had not met the statutory reinstatement requirements. The trial court made the order final and appealable under Illinois Supreme Court Rule 304(a).&nbsp;</p> <p>The Illinois Appellate Court for the First District rejected its prior interpretation of 2-621(b) as set forth in <i>Chraca vs. U.S. Battery Manufacturing Co.,</i> 214 Il App. (1<sup>st </sup>) 132325, 24 &nbsp;N.E.3d 183.&nbsp; The court interpreted the statutory language to require a showing that the manufacturer is &ldquo;judgment proof&rdquo; or &ldquo;execution proof&rdquo; rather than &ldquo;bankrupt or no longer in existence&rdquo; before a previously dismissed seller or distributor could be reinstated as a party.&nbsp; It remanded the case to the trial court for an initial determination of whether Taihua group was unable to satisfy the default judgment entered against it under this new standard. &nbsp;The Illinois Supreme Court granted China Vitamins&rsquo; petition for leave to appeal pursuant to Supreme Court Rule 315(a).</p> <p>The Illinois Supreme Court addressed how subsection 2-621(b)(4), requiring the plaintiff to show that &ldquo;the manufacturer is unable to satisfy any judgment as determined by the court&rdquo; prior to reinstatement of a seller or distributor, is be applied.&nbsp;</p> <p>The majority opinion, authored by Justice Kilbride, overruled <i>Chraca</i> to the extent it held that the plaintiff must show the manufacturer is either bankrupt or no longer in existence under 2-621(b)(4).&nbsp; The court held that if a plaintiff asserting product liability claims can establish &ldquo;other circumstances&rdquo; that effectively bar recovery of the full damages awarded against a manufacturer, a non-manufacturer in the chain of distribution may be reinstated as a defendant under section 2-621(b)(4).&nbsp; The court remanded the case to the trial court for consideration of the sufficiency of the evidence concerning Cassidy&rsquo;s efforts to collect the default judgment.</p> <p>While the Supreme Court declined to detail the specific evidentiary showing necessary, instead noting that &ldquo;the precise formula needed to satisfy the plaintiff&rsquo;s evidentiary reinstatement burden is best adduced by the trial court,&rdquo; it appears to have impliedly provided some direction. For example, the Court noted there was evidence Taihua group had a functioning website which strongly suggested it has close continuing business ties with Europe and North America.&nbsp; The website also mentioned a domestic sales office in the state of Georgia, foreign sales offices in France and Germany and a central warehouse in Germany.&nbsp; The court found that the record suggests viable avenues for Cassidy&rsquo;s collection efforts may remain untapped.</p> <p>In reaching its conclusion, the majority noted that if section (b)(4) was interpreted to mean bankrupt or no longer in existence as <i>Chraca</i> suggests, it would be duplicative of section (b)(3), which is contrary to fundamental rules of statutory construction.&nbsp; The court noted the language in (b)(4) is much broader than (b)(3).&nbsp; The court also noted the fundamental policies underlying Illinois strict product liability law and public policy remain the same: &ldquo;[T]o provide full compensation to plaintiffs injured due to defective or unsafe products whenever possible based on differences of the parties&rsquo; degree of culpability.&quot; &nbsp;The majority found that its interpretation of (b)(4) &ldquo;harmonizes the plain language of Section 2-621(b), when read in its entirety, the legislature&rsquo;s intent, and the public policies underlying the enactment of our strict product liability laws to create cohesive and consistent statutory scheme.&rdquo;</p> <p>Justice Karmier authored the dissent, taking issue with how the majority framed the question before it. &nbsp;He opined that the majority erroneously focused on a plaintiff&rsquo;s ability to enforce a judgment rather than a manufacturer&rsquo; ability to satisfy it.&nbsp; He opined a plaintiff must provide evidence that a manufacturer has no ability to meet its obligation, as opposed to evidence of his or her efforts to enforce it, in order to seek reinstatement a non-manufacturer defendant pursuant to 2-621(b)(4).&nbsp; He further took issue with the majority&rsquo;s emphasis on the public policy behind strict product liability law generally.&nbsp; He argued that to the extent policy purposes are to be considered it should be those behind 2-621, which is to limit financial exposure of sellers, not to ensure full recovery for plaintiffs.</p> There remain open questions as to how 2-621(b)(4) is to be applied by a trial court.&nbsp; Ultimately, the analytical dispute between the majority and the dissent may be one of semantics. Focusing on evidence of plaintiff&rsquo;s efforts to collect the judgment from the manufacturer rather the manufacturer&rsquo;s ability to satisfy it may be two sides of the same analytical coin. Both analyses will focus on the identification of a manufacturer&rsquo;s assets and the plaintiff&rsquo;s ability to secure those assets for payment.&nbsp; &nbsp; &nbsp;https://www.bscr-law.com?t=39&anc=2035&format=xml&directive=0&stylesheet=rss&records=10