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Illinois Law Blog Legal updates, news, and commentary from the attorneys of Baker Sterchi Cowden & Rice LLC

Illinois Supreme Court Find a Duty to Defend for Alleged Biometric Information Privacy Act Violations

July 15, 2021 | Lisa Larkin

A tanning company customer filed a class action lawsuit against West Bend Mutual Insurance Company’s insured, Krishna Schaumberg Tan, Inc. The customer alleged Krishna violated Illinois’ Biometric Information Privacy Act, 740 ILCS 14/1, et seq., (BIPA) by scanning customers’ fingerprints and disclosing biometric information containing those fingerprints to an out-of-state third-party vendor. Krisha tendered the lawsuit to West Bend and requested a defense. West Bend had issued two businessowners’ liability policies to Krishna.

West Bend filed a declaratory judgment action contending that it did not owe a duty to defend Krishna against the class action lawsuit. First, West Bend argued that the class action compliant did not allege a publication of material that violates a person right of privacy. West Bend argued the Illinois Supreme Court has defined publication as communication to the public at large, not to a single party, as had occurred here. Second, it alternatively argued that the policies’ violation of statutes exclusion applied and barred West Bend from having to provide coverage to Krishna for the BIPA violations. Krisha argued that sharing biometric identifiers and biometric information with a single party is a publication covered by the policies. Further, Krishna argued that regardless of whether the violation of statutes exception applied, the policies also provided coverage for a violation of BIPA under the Illinois data compromise coverage endorsement of the policies.

The trial court entered summary judgment in Krisna’s favor on its counterclaim, finding that “publication” simply means the dissemination of information and that the sharing of biometric identifiers constitutes a publication within the purview of the policies. The trial court also found that the exclusion for violation of statutes does not apply because the exclusion only applies to statutes that regulate methods of sending information and not the collection, retention, disclosure, and destruction of biometric identifiers and information. West Bend appealed, and the appellate court (1st Dist.) affirmed. The Illinois Supreme Court then allowed West Bend’s petition for leave to appeal and affirmed the entry of summary judgment for Krishna.

The West Bend policies defined “personal injury” as an injury “other than a bodily injury” that arises out of an “oral or written publication of material that violates a person’s right of privacy.” The Supreme Court found the complaint alleged a “personal injury,” other than a “bodily injury” in that it alleged emotional upset, mental anguish, and mental injury when Krishna disclosed biometric identifiers and biometric information in violation of the right to privacy under BIPA.

The Court then looked to whether Krishna’s sharing of biometric identifiers and biometric information with the out-of-state third-party vendor was a “publication” that violated the customers’ right to privacy. The West Bend policies did not define “publication.” The Supreme Court, after considering dictionaries, treatises, and the Restatement, concluded that the term “publication” has at least two definitions and means both the communication of information to a single party and the communication of information to the public at large. When a term has multiple reasonable definitions or is subject to more than one reasonable interpretation within the context in which it appears, it is ambiguous. The Court, therefore, strictly construed the term against West Bend, as the insurer who drafted the policies. Accordingly, the Court adopted the construction used by Krishna as the insured and construed the terms publication to include a communication with a single party, like the out-of-state vendor.

The West Bend policy also failed to define the term “privacy.” BIPA codifies (1) an individual’s right to privacy in their biometric identifiers (such as fingerprints, retina or iris scans, voiceprints, or scans of hand or face geometry), and (2) an individual’s right to privacy in their biometric information. The Supreme Court found that BIPA protects a secrecy interest – the right of an individual to keep his or her personal identifying information like fingerprints secret. Disclosing a person’s biometric identifiers or information without their consent or knowledge, therefore, necessarily violates that person’s right to privacy in biometric information. Accordingly, the allegation that Krisha shared biometric identifiers and information with the third-party vendor alleged a potential violation of the right to privacy within the purview of West Bend’s policies.

Having made all these findings, the Court concluded that West Bend had a duty to defend. This did not, however, end the Court’s inquiry in that West Bend asserted the policies’ violation of statutes exclusion barred coverage because the exclusion applies to statutes that prohibit the communicating of information and BIPA limits the communication of information. The exclusion, however, specifically listed certain statutes to which the West Bend policies do not apply – the TCPA (which regulates the use of certain methods of communication), CAN-SPAM (which regulates electronic mail) and statutes “other than” the TCPA or CAN-SPAM that prohibit or limit the communication of information. The Court construed the violation of statues exclusion to apply only to statutes like the TCPA and the CAN-SPAM act, i.e., those which regulate methods of communication. BIPA, however, does not regulate methods of communication but rather the collection, use, safeguarding, handling, storage, retention, and destruction of information, which is fundamentally different from the two statutes mentioned in the policies’ exclusion. The exclusion, therefore, is inapplicable.

The opinion underscores the unique features of the protections offered by BIPA in the context of the already broad duty to defend. It remains to be seen whether more and more policies will include BIPA-specific exclusions.

West Bend Mut. Ins. Co. v. Krishna Schaumburg Tan, Inc., 2021 IL 125978 (May 20, 2021).

Prejudgment Interest Has Hit Illinois

June 3, 2021 | Laura Beasley

Governor Pritzker has signed into law SB72 (PA102-0006), which imposes a 6% prejudgment interest on personal injury and wrongful death actions effective July 1, 2021.

The prejudgment interest has been a threat since HB3360 was first proposed on January 13, 2021. The first proposal, a 9% per annum interest with unlimited scope and running from the date of the accident, was vetoed on March 25, 2021.  After the veto, the General Assembly made amendments to SB72 and those modifications became PA102-0006 on May 28, 2021.

The effects of this new law will be vast.  The law applies a 6% per annum interest to personal injury or wrongful death actions arising out of any theory of tort liability. The prejudgment interest applies to most categories of damages, including non-economic and future damages, and is effective July 1, 2021. For current claims, the interest begins to accrue from the time of the accident or the enactment of the statute, whichever is later. Otherwise, the interest starts accumulating at the time the cause is filed. 

The law does have some limitations for the prejudgment interest, such as limiting the total years for it to run to five. Settlement offers will also play a part in limiting the amount of prejudgment interest.  The interest can be cut off by the highest written settlement offer made within 12 months of the suit being filed and not accepted within 90 days or rejected by the plaintiff.  If the judgment is greater than the highest offer, then the plaintiff only gets prejudgment interest on the difference between the highest offer and the judgment.  If the judgment is less than or equal to the highest offer, then the plaintiff gets no prejudgment interest. 

There are many issues with the statute that cannot be answered.  Such as what happens to defendants who are added after the suit is filed, at what point does their time start running to make a qualified offer or how do you deal with third-party plaintiffs. Who gets taxed with discovery deadlines and compliance delays?  It will also bring up coverage interest and could expose insurers to pay covered damages in excess of the limits. 

Defendants need to be mindful of the prejudgment interest and its ramifications to the case as well as the vast number of unanswered questions regarding the full effect of the new law.   If you have questions about how this new law will impact you or your organization, please contact the author or Baker Sterchi.

Illinois Courts Begin Weighing in on COVID-19 Exposure Claims

April 19, 2021 | Gregory Odom

As discussed in a prior blog post, one consequence of the COVID-19 pandemic may be a wave of lawsuits arising from exposure to the virus. Now that we have passed the one-year anniversary of the pandemic outbreak, perhaps not surprisingly, court opinions in COVID-related litigation are increasingly being issued. Below, we discuss several opinions recently issued in this litigation, including in some cases discussed in the firm’s prior blog post on this issue.

Direct Exposure Claims

Since the pandemic outbreak, multiple lawsuits against nursing homes have been filed in Illinois related to residents contracting COVID-19. As previously discussed, one such case was filed against a Bloomington, Illinois nursing home. In that case, the plaintiff alleged that the defendant failed to properly monitor residents’ medical conditions and, consequently, her mother contracted and died from COVID-19. On December 29, 2020, the defendant removed the case to the District Court for the Central District of Illinois. The defendant also moved to dismiss the complaint, arguing that it is immune from liability under the Public Readiness and Emergency Preparedness Act for Medical Countermeasures Against COVID-19 (“the PREP Act”). Recall, the PREP Act makes “covered persons” immune from suits under federal and state law for all claims, except for willful misconduct claims, caused by, arising out of, relating to, or resulting from the administration or use of a “covered countermeasure” to diseases, threats, and conditions, including COVID-19. In response, the plaintiff argues that she is not alleging liability based upon the administration or use of a countermeasure, but rather, based upon the nursing home’s alleged failure to act to prevent the spread of COVID-19. At this point, the court has yet to rule on the motion to remand or motion to dismiss. Any ruling on the motion to dismiss could be consequential because there is currently limited guidance on how courts will interpret the scope of the PREP Act’s immunity provision.      

In addition to the PREP Act, courts also face questions over the extent to which Governor Pritzker’s Executive Order No. 17 shields nursing homes from liability against COVID-19 litigation. According to Section 3 of that Order, during the pendency of Governor Pritzker’s disaster proclamation related to COVID-19, health care facilities shall be immune from civil liability for any injury or death alleged to have been caused by any act or omission by the health care facility, if the injury or death occurred at a time when the health care facility was engaged in the course of rendering assistance to the State by providing health care services in responsive to the COVID-19 outbreak, unless the injury or death was caused by gross negligence or willful misconduct. On April 1, 2021, the District Court for the Northern District of Illinois declined to dismiss a lawsuit based upon Executive Order No. 17 immunity. In Claybon v. SSC Westchester Operating Co., 20-cv-04507, 2021 U.S. Dist. LEXIS 64067 (N.D. Ill. Apr. 1, 2021), the plaintiff alleged that while the decedent resided at the defendant’s nursing home, members of the home’s nursing staff began to show symptoms of COVID-19, one member tested positive, and one member was hospitalized for the virus. According to the plaintiff, despite these developments, the defendant instructed its employees to report to work. Eventually, the decedent passed away after developing a dry cough, fever, and shortness of breath. In the lawsuit, the plaintiff alleged that the defendant was responsible for the decedent’s death, claiming that the defendant required symptomatic employees to report to work, failing to provide PPE, and failing to implement pandemic-related guidelines issued by the Center for Medicare & Medicaid Services. 

The defendant argued it was immune from liability pursuant to Section 3 of Executive Order No. 17. The court explained that the “problem” with the defendant’s argument was that whether it was assisting the State in response to the pandemic when it committed the allegedly tortious conduct was a question of fact that could not be resolved at the pleadings stage. Moreover, the plaintiff died on March 30, 2020, but the Executive Order was not filed until April 1, 2020. The court noted that it was unclear whether the Order applied retroactively and declined to make that determination at the pleadings stage.

In a related case, the District Court for the Northern District of Illinois again declined to dismiss a complaint against Westchester based upon immunity under Executive Order No. 17. In Brady v. SSC Westchester Operating Co., 20CV4505, 2021 U.S. Dist. LEXIS 68920 (N.D. Ill. Apr. 9, 2021), the court explained that Section 3 immunity applies when a healthcare facility is engaged in the course of rendering assistance to the State; thus, immunity applies where a facility spreads COVID-19 while affirmatively treating or trying to prevent its spread, but does not apply where a facility allows the virus to spread through inaction. The court determined that it was unclear from the face of the plaintiffs’ complaint, which alleged that Westchester failed to protect its residents from infected nursing staff spreading the virus, whether plaintiffs’ claim triggered the immunity provision.

The court also found that the plaintiffs’ claim survived because they sufficiently alleged a willful and wanton misconduct claim. The Executive Order expressly notes that its immunity provision does not apply to claims arising from death or injuries caused by a facility’s willful misconduct. The court found the plaintiffs sufficiently alleged willful misconduct through their claims that the defendant knew about the risks of exposing its residents to infected nursing staff by mid-March 2020 and, despite that knowledge, required employees who had tested positive for, or were displaying symptoms of, COVID-19 to report to work. The plaintiffs further alleged that Westchester failed to provide PPE to its staff in March 2020. Finally, the court rejected Westchester’s argument that it could not have known the symptoms of COVID-19 so early in the pandemic. According to the court, by March 2020, at least two of the defendant’s employees had tested positive for the virus, so it had objective knowledge that members of its staff were carrying the virus. The court also relied on the plaintiffs’ allegations that official guidance issued by mid-March 2020 listed symptoms of a respiratory infection (e.g., fever, cough, shortness of breath, or sore throat) as signs of the virus, that members of Westchester’s staff reported those symptoms to management, and Westchester still required its staff to report to work.

Recently, the District Court for the Southern District of Illinois allowed a COVID-related lawsuit to proceed beyond an initial review. In Brown v. Watson, 21-cv-00138-JPG, 2021 U.S. Dist. LEXIS 65560 (S.D. Ill. Apr. 5, 2021), the plaintiff alleged he had been subjected to unconstitutional conditions while confined in the St. Clair County Jail. Among other things, the plaintiff claimed he developed COVID-19 due to conditions at the jail, including being forced to sleep in proximity to COVID-positive inmates. According to the complaint, jail staff were provided with masks and gloves to prevent infection, but inmates were not. Additionally, incoming inmates were not tested for COVID-19, separated from one another, or allowed to use protective gear. The plaintiff alleged that a COVID-19 outbreak occurred due to conditions at the jail, resulting in 300 inmates testing positive for the virus. Finally, the plaintiff claimed that he was denied adequate testing and medical care for COVID-19. The plaintiff asserted claims against the St. Clair County Sheriff and the jail’s doctor.

Under federal law, the court was required to conduct what is known as a preliminary review to filter out non-meritorious claims. See, 28 U.S.C.§ 1915A. The court determined that the plaintiff satisfied the conditions necessary to survive a preliminary review by setting forth allegations suggesting that each defendant acted objectively unreasonable or deliberately indifferent to the conditions of his confinement and/or medical condition. 

Outside of the healthcare realm, as discussed in our prior post, several McDonald’s employees and their relatives filed suit against McDonald’s, alleging negligence and public nuisance arising from its decision to remain open during the pandemic without taking implementing certain health and safety standards. The plaintiffs sought injunctive relief in the lawsuit, including that McDonald’s provide its employees with certain protective equipment and implement various workplace safety measures. McDonald’s subsequently filed suit against its insurer Austin Mutual, arguing that it owed a duty to defend McDonald’s in the underlying lawsuit. On February 22, 2021, the District Court for the Northern District of Illinois denied Austin Mutual’s motion to dismiss, finding that the complaint in the underlying lawsuit potentially gave rise to coverage. McDonald’s Corp. v. Austin Mut. Ins. Co., No. 20C5057 (N.D. Ill. Feb. 22, 2021). The primary issue in that case was whether the underlying lawsuit sought “damages because of bodily injury.” Austin Mutual argued that the underlying case did not trigger coverage because the plaintiffs sought injunctive, not monetary relief. In response, McDonald’s argued that if it was forced to expend money to comply with injunctive relief granted in the underlying case, such damages would constitute “damages” that would only arise because the plaintiffs in the underlying case contracted COVID-19, a “bodily injury.” Noting that the case was a “very close call,” the District Court concluded that if the plaintiffs in the underlying lawsuit succeeded in obtaining injunctive relief, it would be only because they contracted a bodily injury. The court found that an alternative avenue for coverage existed; namely, that exposure to COVID-19 is itself a bodily injury that McDonald’s would be forced to expend “damages” to remedy.

Secondary Exposure Claims

Following our prior blog post, there have been significant developments in two cases discussed in that post. Specifically, in the two secondary exposure cases, the courts have ruled on the defendants’ motions to dismiss. In Erika Iniguez v. Aurora Packing Co., 20-L-372, the Circuit Court of Kane County dismissed the plaintiff’s complaint with prejudice. In that case, the plaintiff alleged that the decedent’s husband worked for the defendant, contracted COVID-19 at work, and passed the disease on to the decedent, resulting in her death. The court found that the defendant did not owe a duty of care to the decedent. In reaching that conclusion, the court explained that the decedent and the defendant did not stand in a “special relationship” that would give rise to a duty of care. According to the court, the decedent’s relationship to the defendant was no different from the relationship of any other citizen of the world who might encounter an employee of the defendant who had contracted COVID-19 while at work. 

The court also found it important that the Illinois legislature and Illinois Appellate Court have refused to extend the duty owed by employers and physicians to third parties that are not part of the employer-employee and physician-patient relationships. As to employers, the court explained that in its most basic sense, the plaintiff’s claim was based on the defendant’s alleged failure to protect its employees from contracting COVID-19 at work. According to the court, Illinois policy regarding employee exposure to dangerous workplace conditions is reflected by the Illinois Workers’ Compensation Act, which provides that the statutory remedies afforded by the Act serve as an employee’s exclusive remedy for compensable injuries. Thus, the court questioned whether Illinois policy would be served by imposing upon employers a common law duty owed to an unlimited pool of potential claimants, “mediated only by the travels and uncontrolled contacts of employees outside the workplace[.]” As to physicians, the court relied upon prior court opinions in which plaintiffs filed suit against physicians, alleging that they developed communicable diseases due to the physicians’ failure to diagnose third-party patients. In those cases, the Illinois appellate court refused to extend the physicians’ duty beyond their patients. See, Britton v. Soltes, 205 Ill. App. 3d 943 (1st Dist. 1990); Heigert v. Riedel, 206 Ill. App. 3d 556 (5th Dist. 1990).

Finally, the court distinguished the plaintiff’s claim from “take home asbestos” cases (i.e., where plaintiffs allege that they developed cancer due to asbestos exposure they experienced through the work clothes of a spouse or relative). The court reasoned that in those cases, the alleged injuries resulted from contact with a byproduct of the defendant’s very business, the use or manufacturing of asbestos or asbestos-containing products, whereas the plaintiff in this case based her claim on the relationship between the defendant and its employee. 

By contrast, the Circuit Court of Will County recently allowed a plaintiff’s secondary exposure case to proceed beyond the pleadings stage. In Miriam Reynoso v. Byrne Schaefer Electrical, No. 20-L-620, the plaintiff alleged that she developed COVID-19 from her husband after he contracted the virus through his employment with the defendant. In ruling on the defendant’s motion to dismiss, the court denied the motion as to Count I of the plaintiff’s complaint, while granting the motion as to Count II. The court, however, granted the plaintiff leave to amend Count II of her complaint.

Baker Sterchi will continue tracking developments in this litigation. Please monitor our blog for updates on this and many other legal issues. 

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About Illinois Law Blog

The BSCR Illinois Law Blog examines significant developments, trends and changes in Illinois law on a broad range of topics that are of interest to Illinois practitioners and to businesses evaluating risks under Illinois law or managing litigation subject to Illinois law. Learn more about the editor, Lisa Larkin.

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