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

Seventh Circuit Paves the Way for Illinois Biometric Law Suits in Federal Courts

June 24, 2020 | Lisa Larkin

In Bryant v. Compass Grp. USA, Inc., 958 F.3d 617 (7th Cir. 2020), the federal court of appeals for the Seventh Circuit answered in the affirmative the question of whether, for federal-court purposes, a person aggrieved by a violation of Illinois’ Biometric Information Privacy Act (BIPA) has suffered the kind of injury-in-fact that supports Article III standing.

Plaintiff Christine Bryant’s workplace installed “Smart Market” vending machines owned and operated by the defendant Compass Group U.S.A., Inc. Rather than accept cash, users had to establish an account using a fingerprint. During orientation, plaintiff’s employer instructed her and others to scan their fingerprints into the Smart Market system to establish a payment link to create user accounts. In violation of section 15(a) of BIPA, Compass never made publicly available a retention schedule and guidelines for permanently destroying the biometric identifiers and information it was collecting and storing. In addition, in violation of section 15(b) of BIPA, Compass (1) never informed Bryant in writing that her biometric identifier was being collected or stored, (2) never informed Bryant in writing of the specific purpose and length of time for which her fingerprint was being collected, stored, and used, and (3) never obtained Bryant’s written release to collect, store, and use her fingerprint. Plaintiff asserted that Compass’s failure to make the requisite disclosures denied her the ability to give informed written consent as required by BIPA, leading to the loss of the right to control her biometric identifiers and information. Seeking redress for this alleged invasion of her personal data, Bryant brought a putative class action against Compass pursuant to BIPA’s provision providing a private right of action in state court to persons “aggrieved” by a violation of the statue.

Compass removed the case to federal court on the basis of diversity of citizenship. Plaintiff Bryant moved to remand to state court, claiming that the federal district court did not have subject-matter jurisdiction because she lacked the concrete injury-in-fact necessary to satisfy the federal requirement for Article III standing. The district court agreed with plaintiff and remanded to the state court.

On appeal, the Seventh Circuit noted that for Bryant to have Article III standing, she must satisfy three requirements: (1) she must have suffered an actual or imminent, concrete and particularized injury-in-fact; (2) there must be a causal connection between her injury and the conduct complained of; and (3) there must be a likelihood that this injury will be redressed by a favorable decision. Only the first of these requirements was at issue in the case in that the second and third requirements were clearly satisfied.

The appellate court ultimately concluded that Bryant has Article III standing as to her action for violations of section 15(b), but not for violations of section 15(a). Compass’s failure to abide by the requirements of section 15(b) before it collected users’ fingerprints denied Bryant and others like her the opportunity to consider whether the terms of that collection and usage were acceptable given the attendant risks. Going beyond a failure to satisfy a purely procedural requirement, Compass withheld substantive information to which Bryant was entitled and thereby deprived her of the ability to give informed consent as mandated by section 15(b). The appellate court found this deprivation is a concrete injury-in-fact that is particularized to Bryant and others like her, thereby meeting the Article III requirement for standing.

In contrast, the section 15(a) claim involves a duty owed to the public generally: the duty to make publicly available a data retention schedule and guidelines for permanently destroying collected biometric identifiers and information. This provision is not part of the informed consent regime of the statute, and Bryant alleges no particularized harm to herself or others that resulted from the alleged violation of section 15(a). Thus, she lacks standing to pursue that claim in federal court.

This opinion finally answers the BIPA standing question but does so differently than many federal district courts that have remanded BIPA suits as alleging mere procedural violations without concrete, particularized harm. While this ruling is in line with the Ninth Circuit’s ruling in Patel v. Facebook, Inc., which we reported on here, it is at odds with other rulings, including one from the Second Circuit. This may open the door for U.S. Supreme Court review as it potentially affects a large number of lawsuit across the country. 

Illinois Supreme Court Ruling Emphasizes Necessity of Post-Trial Motion in the Preservation of Trial Court Error

June 18, 2020 | Lisa Larkin

In Crim v. Dietrich, 2020 IL 124318, the Illinois Supreme Court found that in a health care liability case, the lower appellate court’s mandate remanding the case for a new trial did not include a new trial on the professional negligence claim. The plaintiffs, who filed both a professional negligence claim and a claim alleging failure to obtain informed consent, failed to file a post-trial motion after a jury verdict on the professional negligence claim. While the lower appellate court issued just a general mandate for a new trial and the appellate court later clarified that it intended that mandate to allow for a retrial of both claims, the Supreme Court held the plaintiffs forfeited their right to a retrial on the professional negligence claim. In other words, the mandate could not have included a mandate for a new trial on the professional negligence claim because the right to appeal that claim had already been lost by failure to file a post-trial motion. 

The Crims, acting on behalf of their biological son, filed a medical malpractice claim against defendant Dr. Gina Dietrich alleging two claims: (1) that she failed to obtain Mrs. Crim’s informed consent to perform a natural birth despite possible risks associated with her son’s large size; and (2) that defendant negligently delivered the baby, causing him injuries. The trial court granted defendant’s motion for directed verdict on the issue of informed consent on the basis that the plaintiffs needed, but lacked, expert testimony that a reasonable patient would have pursued a different form of treatment. Thereafter, following additional evidence, the jury returned a verdict in defendant’s favor and against plaintiffs on their remaining claim of professional negligence. The plaintiffs did not file any post-trial motions, and instead filed a timely notice of appeal. 

In their brief before the Appellate Court for the 4th District, the plaintiffs framed their appeal as a review only on whether the circuit court erred in issuing a directed verdict on the informed consent claim, expressly stating that their appeal is not based upon the verdict of the jury. The 4th District ruled that the trial judge incorrectly issued the directed verdict and granted a new trial. The appellate court entered a general mandate reversing and remanding to the circuit court for such other proceedings as required by the order of the appellate court. 

Plaintiffs claimed that this general mandate of remand and retrial entitled them to a new trial on not only the informed consent claim, but also on the professional negligence claim. According to plaintiffs, they should be allowed to retry both claims because the claims were intertwined, and the trial court tainted the rest of their case when it erroneously granted defendant a directed judgment. 

The Illinois Supreme Court, however, disagreed, stating that “the trouble with [plaintiff’s] argument is the simple fact that they never filed a post-trial motion pursuant to section 2-1202.” Section 2-1202 of the state Code of Civil Procedure requires litigants to challenge a jury’s verdict with post-trial motions even when the trial court enters a partial directed verdict as to other issues in the case. “The failure by plaintiffs to file a post-trial motion challenging the jury’s verdict deprived the circuit court of an opportunity to correct any trial court errors involving the jury’s verdict and undermined any notion of fairness to defendant on appeal.” 

Notably, this Supreme Court ruling came after the appellate court answered a certified question by saying it had intended the plaintiffs’ negligence claims to be retried when it reversed and remanded the trial court’s directed judgment. 

In a dissenting opinion, Justice Thomas Kilbride wrote that the majority’s holding confuses a party’s forfeiture of an argument with a reviewing court’s power to grant relief. He also felt that the Court should not have entertained the appeal at all because it was too case-specific and not “of general importance.” 

The case emphasizes the importance of post-trial motions in preservation of error for purposes of appeal. Prudent practitioners should raise in post-trial motions all issues which might be the basis for arguments of trial court error later.

Federal District Court in Illinois Requires Plaintiffs to Arbitrate Biometric Privacy Lawsuit

June 15, 2020 | Gregory Odom

Recently, the District Court for the Northern District of Illinois again addressed an issue related to the Illinois Biometric Information Privacy Act. As previously discussed in this blog post, this court has issued other rulings on issues arising under the Act. In Miracle-Pond v. Shutterfly, Inc., the plaintiff, Vernita Miracle-Pond, registered for a Shutterfly account using the Shutterfly Android mobile app in August 2014.  In order to install the app, the plaintiff was required to accept Shutterfly’s terms of use.  In the version of the terms of use accepted by the plaintiff, Shutterfly reserved the right to revise the terms of service without notice to Shutterfly users. Shutterfly was merely required to post the new terms. In May 2015, Shutterfly revised its terms of use, adding an arbitration provision. Every version of Shutterfly’s terms of use since May 2015, including the most recent version at the time of the court’s ruling, included an arbitration provision. Each version’s arbitration clause stated:

NOTE: THIS TERMS OF USE CONTAINS AN ARBITRATION CLAUSE AND CLASS ACTION WAIVER PROVISION IN THE ‘ARBITRATION’ SECTION BELOW THAT AFFECTS YOUR RIGHTS UNDER THE TERMS OF USE AND WITH RESPECT TO ANY DISPUTE BETWEEN YOU AND US AND OUR AFFILIATES.

***

[Y]ou and Shutterfly agree that any dispute, claim or controversy arising out of or relating in any way to the Shutterfly service, these Terms of Use and this Arbitration Agreement, shall be determined by binding arbitration.

In June 2019, Ms. Miracle-Pond and another plaintiff filed suit against Shutterfly, individually and on behalf of proposed class members, alleging that Shutterfly violated the Illinois Biometric Information Privacy Act by using facial-recognition technology to extract biometric identifiers for “tagging” individuals and by selling, leasing, trading, or otherwise profiting from the plaintiffs’ and proposed class members’ biometric identifiers. 

Nearly three months after the plaintiffs filed suit, Shutterfly sent an email to all of its users nationwide, notifying its users that Shutterfly’s terms of use had been updated. The email further stated that Shutterfly had updated its terms of use to clarify users’ legal rights in the event of a dispute and how disputes would be resolved in arbitration. Finally, the email instructed users that if they did not close their accounts by October 1, 2019, or if they otherwise continued to use Shutterfly’s app and/or website, they would be deemed to have accepted Shutterfly’s terms of use.  Shutterfly’s records indicated that Ms. Miracle-Pond opened Shutterfly’s email and that her account remained open as of October 2, 2019.

In response to the lawsuit, Shutterfly filed a motion to compel arbitration. The plaintiffs filed a motion for curative measures related to Shutterfly’s September 2019 email to all users. In ruling on the motion to compel arbitration, the court first examined whether a valid arbitration agreement existed. In addition to Illinois’s general contract principles, the court examined factors specific to Internet agreements to determine if a valid arbitration agreement existed. Specifically, the court analyzed whether the: 1) web pages presented to the plaintiff adequately communicated all the terms and conditions of the agreement, and 2) circumstances supported the assumption that the plaintiff received reasonable notice of those terms.

The plaintiffs argued that Ms. Miracle-Pond merely agreed that her use of Shutterfly’s website and services would comply with Shutterfly’s terms of use, not that she would be bound by the term of use. In other words, she claimed that Shutterfly improperly used what is known as a “browsewrap” agreement, rather than a permissible “clickwrap agreement.” A browsewrap agreement is an agreement where users are bound by a website’s terms by merely navigating or using the website; the user is not required to sign an electronic document or explicitly click an accept or agree button. By contrast, a clickwrap agreement requires users to click a button or check a box that explicitly affirms that the user has accepted the terms of use. In rejecting the plaintiff’s argument, the court explained that Shutterfly presented the terms of use to the plaintiff for viewing and provided an “accept” and “decline” button. Thus, the court concluded that Shutterfly’s terms of use constituted a valid clickwrap agreement, and that Ms. Miracle-Pond agreed to be bound by the terms of use.

The plaintiffs further argued that the terms of Shutterfly’s arbitration agreement were illusory because they were subject to unilateral modification. The court rejected this argument, explaining that Illinois law allows for arbitration provisions that may be changed unilaterally. Shutterfly’s terms of use contained a valid change-in-terms provision that informed users that Shutterfly had the right to unilaterally modify its terms, that modified terms would be posted to its website, and that continued use of Shutterfly products constituted an acceptance of the modified terms. The court explained that Ms. Miracle-Pond’s continued use of Shutterfly after it introduced the arbitration agreement to its terms of use constituted an acceptance of the agreement.

The plaintiffs also claimed that Shutterfly was attempting to improperly apply the arbitration agreement on a retroactive basis, given Shutterfly’s September 2019 email to all of its users regarding arbitration of disputes. The court found that Shutterfly was not attempting retroactive application of the arbitration agreement, finding that the plaintiff accepted the agreement when she continued using Shutterfly after it introduced the arbitration agreement in 2015.

Ultimately, this case illustrates the importance of valid arbitration agreements. As discussed in prior Baker Sterchi blog posts, there has been a significant increase in litigation arising under the Illinois Biometric Information Privacy Act since 2019. This litigation is extremely risky for companies due to the manner in which courts have interpreted the Act’s standing requirement and the penalties imposed by the Act. If used properly, arbitration agreements give companies an opportunity to avoid the costs and uncertainty of litigating these claims in court. Therefore, if your company is named in a biometric lawsuit, it is imperative to determine if there are any grounds to require arbitration of the dispute. Additionally, to the extent companies that utilize biometric technology do not currently have arbitration agreements in place, they should consider implementing such an agreement.    

The complete citation for this case is Miracle-Pond v. Shutterfly, Inc., 2020 U.S. Dist. Lexis 86083 (N.D. Ill. May 15, 2020).   

COVID-19 and Possible Changes to Workers' Compensation Laws in Illinois and Missouri

June 9, 2020 | Jennifer Maloney and Laura Beasley

As employees slowly begin to return to work in “the new normal” following mandatory stay-at-home orders across the country, employers in Illinois and Missouri are busy establishing policies in compliance with opening orders and guidelines.  To mitigate the risk of potential workers’ compensation claims, employers should be aware of possible changes to workers’ compensation laws due to COVID-19 exposure in the workplace.

On April 13, 2020, the Illinois Workers Compensation Commission passed an emergency rule in response to the COVID-19 pandemic.  This rule created a rebuttable presumption of compensability in favor of employees classified as first responders and essential front-line workers during the COVID-19 state of emergency.  For those individuals, the rule imposed a rebuttable presumption that the individual’s exposure arises out of and in the course of employment and is causally connected to their employment. 

In response, the Illinois Manufacturers Association and Illinois Retail Merchants Association requested a Temporary Restraining Order, which was granted on April 24, 2020.  The emergency rule was thereafter withdrawn by the IWCC.  COVID-19 may still be considered a compensable occupational disease under the Illinois Workers’ Compensation Act, but there is no longer a rebuttable presumption of compensability following withdrawal of the rule. 

In Missouri, Governor Mike Parson directed the Department of Labor and Industrial Relations to implement an emergency rule that will provide workers compensation benefits to first responders who contract COVID-19.  On April 7, 2020, the Department of Labor and its Division of Workers’ Compensation filed an emergency rule creating a presumption that First Responders infected by or quarantined due to COVID-19 are deemed to have contracted a contagious or communicable occupational disease arising out of and in the course of the performance of their employment.  “First Responders” include law enforcement officers, firefighters or an emergency medical technicians.  

The presumption created by the rule is rebuttable in the event a subsequent medical determination establishes by clear and convincing evidence that (1) the First Responder did not actually have COVID-19, or (2) the First Responder contracted or was quarantined for COVID-19 resulting from exposure that was not related to the First Responder’s employment.

The Labor and Industrial Relations Commission voted unanimously to approve the emergency rule on April 8, 2020, with an effective date of April 21, 2020.  However, the rule is retroactive.  The full text of 8 CSR 50-5.005 can be found here.

Unlike the emergency rule attempted in Illinois, only First Responders are provided with a presumption of an occupational disease under the Missouri emergency rule.  To date,  no further amendments  have been introduced to expand the presumption created by the emergency rule to  non-First Responders, however, as more and more businesses slowly open following the lifting of the stay-at-home orders issued through Missouri, employers may find themselves receiving COVID-19-related workers’ compensation claims.  COVID-19 has been classified as a communicable disease by the State of Missouri and communicable diseases are included in the definition of “occupational disease” under Missouri Workers’ Compensation Law.

As in all states, laws and regulations related to the COVID-19 pandemic are ever-changing in Illinois and Missouri.  The area of workers’ compensation is no exception and additional changes and expansions to the current laws are possible.    Employers in both states should remain aware of those changes in order to better anticipate potential claims, mitigate risk and create workplaces that protect employees from exposure to the best of their ability.

Illinois Implements Mandatory Sexual Harassment Prevention for Employers to be Completed by December 31, 2020

April 9, 2020 | Brandy Simpson

Public Act 101-0221, the Workplace Transparency Act, amended the Illinois Human Rights Act (“IHRA”) and now requires Illinois employers to provide annual sexual harassment prevention training by December 31, 2020, followed by annual training thereafter. Sexual harassment prevention training is required by any employer with one or more employees and all employees must be trained regardless of full-time, part-time or intern status.

Minimum training standards are outlined in Section 2-109(B) and include:

  • An explanation of sexual harassment consistent with the IHRA;
  • Examples of conduct that constitutes unlawful sexual harassment;
  • A summary of relevant Federal and State statutory provisions concerning sexual harassment, including remedies available to victims of sexual harassment; and
  • A summary of responsibilities of employers in the prevention, investigation, and corrective measures of sexual harassment.

While the Illinois Department of Human Rights (“IDHR”) has developed a model sexual harassment prevention training program to be made available by April 30, 2020, employers are welcome to develop their own sexual harassment prevention training program provided it meets or exceed the minimum standards set forth by the IHRA as set forth in Section 2-109(B) above.

In addition to the training standards outlined in Section 2-109(B), restaurants and bars must also provide employees with supplemental training that meets or exceeds the minimum training standards outlined in Section 2-110 (C) of the IHRA. These minimum supplemental training standards include:

  • Specific conduct, activities, or videos related to the restaurant or bar industry;
  • An explanation of manager liability and responsibility under the law; and
  • English and Spanish language options.

Section 2-110(B) further requires every restaurant and bar to have a sexual harassment prevention policy that includes:           

  • A prohibition on sexual harassment;
  • The definition of sexual harassment under the IHRA and Title VII of the Civil Rights Act of 1964;
  • Details on how an individual can report an allegation of sexual harassment internally, including options for making a confidential report to a manager, owner, corporate headquarters, human resources department, or other internal reporting mechanism that may be available;
  • An explanation of the internal complaint process available to employees;
  • How to contact and file a charge with the Illinois Department of Human Rights (“IDHR”) and United States Equal Opportunity Commission (“EEOC”);
  • A prohibition on retaliation for reporting sexual harassment allegations; and
  • A requirement that all employee participate in sexual harassment prevention training.

Pursuant to Section 2-110(B), a written copy of the sexual harassment prevention policy must be provided to all employees within the first calendar week of the employee’s employment. The policy must also be made available in English and Spanish.

The deadline for employers to comply with the changes to IHRA is December 31, 2020. However, employers are encouraged to train employees as soon as possible as employers are liable for the sexual harassment conduct of new employees upon their hire.  

Employers are required to keep a record of all trainings which must be made available for IDHR inspection upon request. Failure to comply will result in a notice to show cause giving the employer 30 days to comply. Failure to comply within 30 days will result in IDHR petitioning the Illinois Human Rights Commission for entry of an order imposing a civil penalty against the employer, including a $500 penalty to businesses with less than 4 employees, or a $1,000 penalty to those with more than 4 employees. Subsequent violations can rise to a $5,000 penalty per violation.

Illinois employers should review their current policies to ensure compliance with the recent changes to state law and implement annual training schedules to avoid future fines. 

Additional information regarding these sexual harassment prevention training requirements is available at the Illinois Department of Human Rights website. And if you need assistance or have questions concerning your company’s training program, please get in touch with one of Baker Sterchi’s labor and employment attorneys.

Related Services: Employment & Labor

Attorneys: Brandy Simpson

Illinois District Court Addresses Standing, Pleading Requirements in Illinois Biometric Lawsuits

March 27, 2020 | Gregory Odom

Adding to the confusion businesses face over the Illinois Biometric Information Privacy Act (“BIPA”), two Illinois District Court judges recently issued orders on what is required to maintain a BIPA lawsuit in federal court. In one case, Judge Robert Gettleman remanded a BIPA lawsuit to an Illinois circuit court, concluding that the plaintiff lacked standing to pursue her claim in federal court.  In a separate case, Judge Rebecca Pallmeyer dismissed a BIPA lawsuit, finding that that plaintiff failed to allege sufficient facts to state a claim under the Act.  These opinions seem to impose more stringent requirements on plaintiffs than the Illinois Supreme Court’s take on BIPA in the Rosenbach v. Six Flags Entertainment Corp. opinion, previously addressed by BSCR here.  As discussed below, however, Judge Gettleman’s ruling suggests that an argument commonly made by defendants in BIPA lawsuits could be used against them.

In Hunter v. Automated Health Sys., 2020 U.S. Dist. Lexis 29054 (N.D. Ill. Feb. 20, 2020), the plaintiff filed suit against her former employer, alleging that it violated BIPA by requiring its employees to scan their fingerprints for timekeeping purposes without taking certain measures required by the Act.  Specifically, the plaintiff alleged that the defendant violated the Act by failing to properly inform the plaintiff in writing of the specific purpose and length of time for which her fingerprints were being collected, stored, and used; failing to provide a publicly available retention schedule and guidelines for permanently destroying the plaintiff’s fingerprints; and failing to obtain a written release from the plaintiff to collect, capture, and otherwise retain her fingerprints.  The employer removed the case to federal court and filed a motion to dismiss.

In reviewing the parties’ briefs on the motion to dismiss, Judge Gettleman found a “serious question” existed as to whether the court had subject matter jurisdiction.  Because the defendant removed the case, the court found it bore the burden of establishing jurisdiction by demonstrating that the plaintiff alleged an injury-in-fact.  Relying on the U.S. Supreme Court opinion Spokeo Inc. v. Robins, 136 S. Ct. 1540 (2016), Judge Gettleman explained that for an injury-in-fact to exist, the injury must be “concrete and particularized,” meaning it must be de facto, or actually exist.  In analyzing whether the plaintiff had alleged a concrete and particularized injury, the court relied on Crabtree v. Experian Information Solutions, Inc., 2020 U.S. App. Lexis 2698 (7th Cir. Jan. 28, 2020), a case in which the Seventh Circuit Court of Appeals determined that the mere retention of private consumer information, absent any dissemination, does not constitute a concrete injury for standing purposes.  In Hunter, the plaintiff failed to allege that the defendant disseminated her biometric information or that any data breach, identity theft, or other similar loss resulted from the collection of said information.   

The Hunter defendant argued that jurisdiction existed based upon the Illinois Supreme Court’s holding in Rosenbach.  In rejecting this argument, Judge Gettleman noted that Rosenbach established only that it is the policy of Illinois state courts to allow parties to sue under BIPA even if they cannot demonstrate that they have sustained some compensable injury beyond violation of their statutory rights for which they may seek recourse.  It is the policy of the federal courts, by contrast, that a plaintiff must allege an actual or imminent injury to establish standing in federal court.  According to Judge Gettleman, the Illinois Supreme Court expressly indicated in Rosenbach that BIPA procedural violations are not themselves actual injuries.  Consequently, Judge Gettleman concluded that the plaintiff lacked standing at the time her case was removed because she did not allege any dissemination of her biometric information.  Thus, the court remanded the case to the Circuit Court of Cook County.

In Heard v. Becton, Dickinson & Co., 2020 U.S. Dist. Lexis 31249 (N.D. Ill. Feb. 24, 2020), the plaintiff, a respiratory therapist, filed suit against Becton, alleging that he and members of a putative class were required to use fingerprint scanners to access Becton’s Pyxis MedStation system.  The plaintiff further alleged that Becton violated BIPA because it never informed the plaintiff and putative class members that it was collecting, using, or storing their biometric information; failed to state the purpose and length of time for which it was doing so; failed to obtain executed written releases from them authorizing the collection of their biometric information; never provided them with a publicly available retention schedule for the permanent destruction of their biometric information; and, “upon information and belief,” disclosed their biometric information to “unknown” third parties without obtaining consent.  Becton removed the case to the District Court for the Northern District of Illinois and moved to dismiss the complaint.

In its motion to dismiss, Becton first argued that the biometric information at issue was exempt from the scope of BIPA.  Specifically, Becton claimed that the information fell under the “healthcare exemption” contained in BIPA.  Section 14/10 of the Act states that “[b]iometric identifiers do not include information captured from a patient in a health care setting or information collected, used, or stored for health care treatment, payment, or operations under the federal Health Insurance Portability and Accountability Act of 1996.”  740 ILCS 14/10.  According to Becton, that section applied to the plaintiff’s claims because the biometric information at issue was collected from healthcare workers in order to access medication.  In addressing this argument, Judge Pallmeyer noted that she was aware of only two cases in which defendants had advanced this theory.  In Diaz v. Silver Cross Hosp. & Med Ctrs., No. 2018 CH 001327 (Cir. Ct. Will Cnty. Aug. 29, 2019), the Circuit Court of Will County, Illinois, concluded that BIPA’s healthcare exemption applied to biometric information obtained from a nurse because the information was collected, used, or stored for healthcare treatment.  By contrast, in Bruhn v. New Alberton’s, Inc., No. 2018 CH 01737 (Cir. Ct. Cook Cnty. July 2, 2019), the Circuit Court of Cook County, Illinois, determined that the exemption did not apply to biometric information collected from healthcare workers because their biometric information is not protected under HIPPA.  Judge Pallmeyer found the reasoning in Bruhn more persuasive, noting that it seemed unlikely that the Illinois legislature intended to deprive healthcare workers of a right to privacy and control over their biometric information merely because the information was being used for patient treatment.

The court next addressed what type of action by a defendant regarding the collection of biometric information is required to trigger liability under Section 15(b) of BIPA.  Becton argued that BIPA requires a defendant “actively” collect information, meaning that it did more than possess such information.  The plaintiff argued that BIPA applies when a defendant obtains biometric information, no matter the source or the manner of collection.  Judge Pallmeyer determined that BIPA requires a defendant to, at a minimum, take an “active step” to collect, capture, purchase, receive through trade, or otherwise obtain biometric information.  The judge further concluded that the plaintiff failed to allege that Becton took any such active step.  While the plaintiff alleged that Becton collected his biometric information, he failed to specify how, when, or any other factual detail regarding the collection.  The plaintiff also failed to allege how his fingerprints made their way from the fingerprint scanner on Becton’s medical device into Becton’s systems. 

Judge Pallmeyer then examined whether the plaintiff alleged sufficient facts to trigger liability under Sections 15(a) and (d) of BIPA, which apply to entities in possession of biometric information.  BIPA does not define “possession,” leading the judge to apply the popularly understood meaning of the term.  Specifically, Judge Pallmeyer adopted the definition provided by the Illinois Supreme Court, which found that possession occurs when a person has or takes control of the subject property or holds the property at his or her disposal.  People v. Ward, 215 Ill.2d 317, 325 (Ill. 2005).  The judge determined that the plaintiff failed to adequately plead possession by Becton because he did not allege that Becton exercised any dominion or control over his biometric information.  More specifically, the plaintiff did not allege that Becton could freely access his biometric information or even how Becton allegedly received the information.  Rather, the plaintiff merely alleged that he scanned his fingerprint into Becton’s device and Becton subsequently stored the plaintiff’s fingerprint in its systems.

Finally, the court dismissed the plaintiff’s claim because the plaintiff failed to allege that Becton disclosed his biometric information.  Section 15(d) of BIPA provides that entities in possession of biometric information cannot disclose the information except in limited circumstances.  The plaintiff alleged only “on information and belief” that Becton violation Section 15(d).  Judge Pallmeyer found this allegation insufficient to satisfy the federal pleading standard.  

Overall, these rulings suggest that federal court may be a much better venue than state court for defendants in a BIPA lawsuit depending upon the allegations and factual circumstances of the case.  As these case show, district court judges seem more likely to require more specific pleadings from plaintiffs to survive dismissal and an actual, concrete injury, as opposed to simply alleging a technical violation of a BIPA provision.  However, the Hunter ruling illustrates how a defendant’s argument regarding a lack of injury can be turned against the defendant, such that the case ultimately ends up back in state court.     

Illinois Appellate Court Reverses Plaintiffs' Verdict in Asbestos Lawsuit

March 16, 2020 | Gregory Odom

Recently, the Illinois Fourth District Appellate Court issued an opinion reversing the Circuit Court of McLean County in an asbestos lawsuit. In Krumwiede v. Tremco, Inc., the court determined that the plaintiffs failed to establish at trial that the decedent’s work with the defendant’s products was a substantial factor in the cause of the decedent’s illness. This is yet another instance in which the Fourth District has reversed the Circuit Court of McLean County in an asbestos lawsuit. The opinion should give defendants wary of trying an asbestos lawsuit in McLean County optimism about the potential for appellate relief.

In Krumwiede, the plaintiffs alleged that the decedent was exposed, in part, through his work with Tremco caulk and tape. The decedent worked as a window glazier from the mid-1950’s to the early 1990’s. At trial, two of the decedent’s former co-workers testified that they and the decedent used Tremco caulk and glaze in their roles as glaziers. The witnesses, however, could not recall seeing dust emanate from the Tremco products or anything on the products’ packaging indicating that they contained asbestos. 

Plaintiff’s medical expert, Dr. Arthur Frank, testified that a person’s cumulative dose to asbestos contributes to the development of mesothelioma. In elaborating on this opinion, Dr. Frank testified that there is no scientific way to determine what exposure to asbestos caused a person’s illness, but rather, a person’s total exposure is considered the cause of the illness. Dr. Michael Graham, a pathologist, testified for Tremco, opining that there were amosite asbestos fibers found in the decedent’s lung tissue, but that those fibers had nothing to do with the decedent’s work with Tremco products, as those products only contained chrysotile asbestos fibers. Dr. William Longo also testified for Tremco. He explained that he previously tested the Tremco products and found no detectable asbestos fibers, which was because the products were thermoplastic materials.  Dr. Longo admitted, however, that he could not rule out that Tremco products released respirable asbestos fibers. Ultimately, the jury returned a verdict for the plaintiffs.

But the appellate court concluded that the plaintiffs failed to establish that the decedent's work with Tremco products was a substantial factor in the cause of his mesothelioma.  According to the court, simply working around Tremco products did not establish that the decedent had frequent, regular, and proximate contact with respirable asbestos fibers from the products.  The court believed that there was an absence of evidence explaining under what circumstances Tremco's products released respirable asbestos fibers.  In other words, just because the products were capable of releasing asbestos fibers did not mean they actually did so when the decedent worked with the products.  The court also determined that the plaintiff failed to present evidence showing that Tremco's products released more than a de minimis amount of asbestos fibers when the decedent encountered the products.  And while the court found that Dr. Frank's "cumulative exposure" testimony was proper under Illinois law, the court concluded that his testimony did nothing to aid the plaintiffs in meeting the “substantial factor” test under Illinois law because he did not opine that exposure from Tremco products was a substantial factor in bringing about the decedent's illness. 

This is a positive development for Illinois defendants in asbestos litigation. Specifically, defendants should consider relying on this opinion to argue that a plaintiff cannot satisfy his or her burden of proving causation simply by establishing that a defendant’s products can release asbestos fibers.  

Illinois First District Appellate Court upholds $4.8 million asbestos verdict against John Crane.

February 20, 2020 | Gregory Odom and Meghan Kane

Much to the defense bar’s dismay, in late 2019, the First District Appellate Court affirmed and upheld a $4.6 million verdict against John Crane Inc. in Daniels v. John Crane, Inc., 2019 IL App (1st) 190170.

In that case, the decedent’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. Prior to his death, the decedent testified to significant asbestos exposure from valves and gaskets, including gaskets manufactured by John Crane.  

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. 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. Moreover, according to Dr. Abraham, while mesothelioma is a dose-response disease – meaning the more exposure an individual has the more likely they are to contract the disease – once someone sustains an asbestos-related disease, it does not matter whether they have had a high or low exposure to asbestos. Dr. Abraham conceded that all of the decedent’s exposures, including through friable insulation, were substantial contributing factors to the development of his illness. 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’s exposures through other sources.

Plaintiff also presented William Ewing, a Certified Industrial Hygienist. 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. Ewing quantified the duration of the decedent’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). 

At the close of evidence, during the jury instruction conference, the plaintiff presented the standard Illinois Pattern Jury Instruction for proximate causation. John Crane objected and presented its own instruction regarding proximate cause. John Crane argued that the jury instruction should have included language requiring the jury to find that John Crane’s products were a “substantial factor” in the development of the decedent’s illness in order for proximate cause to exist. John Crane further submitted an instruction defining substantial factor as if, absent John Crane’s conduct, the injury would not have occurred. John Crane further also submitted a “state of the art” 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’s packing and gaskets. John Crane argued that such knowledge was required to establish a duty to warn. The trial court rejected these instructions submitted by John Crane.

Ultimately, a Cook County jury found for the plaintiff and entered a $6 million verdict. The trial court reduced the verdict to $4.8 million to account for pre-trial settlements. 

In a posttrial motion, John Crane argued that Dr. Abraham should not have been allowed to testify because he essentially testified that the decedent’s cumulative dose (or "each and every exposure") to all asbestos products caused his injuries. In other words, John Crane claimed that Dr. Abraham failed to differentiate the decedent’s exposure through John Crane products from his exposure through other sources. 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. The trial court denied John Crane’s motion.

On appeal, the First District first determined that the trial court properly allowed Dr. Abraham to testify. The court determined that Dr. Abraham did not testify that even a “de minimis” exposure to asbestos can cause illness. Rather, the court characterized Dr. Abraham’s testimony as emphasizing the importance of understanding the dose of asbestos fibers to which a person was exposed when determining causation. Moreover, the court believed the plaintiff established the dose of the decedent’s exposure through William Ewing’s testimony, who quantified the decedent’s exposure range and opined that the dosage level exceeded the background rate of asbestos exposure one would experience from the ambient environment. Overall, the court concluded that Dr. Abraham’s testimony provided the background knowledge the jury required to interpret Ewing’s opinions regarding the dose of the decedent’s asbestos exposure through John Crane products.   

John Crane also argued that the trial court erred in excluding proposed jury instructions that included language regarding Illinois' substantial factor causation test. 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. 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. 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. 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. 

As to John Crane’s proposed “state of the art” 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. 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. Moreover, the court believed that John Crane’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’s products. According to the court, industry knowledge can be used to support a failure to warn claim, but it is not necessary evidence. Rather, the defendant's knowledge is at issue in such a claim.

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. 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. 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. In rejecting this argument, the court determined that the trial court had sufficient evidence – including the plaintiff’s theory of liability, that plaintiff sought in excess of $50,000, and that John Crane was asserting a sole proximate cause defense – to make its good faith findings without the need to determine the amounts of the settlements. 

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. Unfortunately for defendants, the court’s opinion in this case is largely consistent with the trial court’s rulings on these issues. 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’s asbestos exposure. 

City of St. Louis falls to 5th on the Judicial Hellhole list with Madison and St. Clair Counties, Illinois close behind ranking 7th.

February 12, 2020 | Laura Beasley and Meghan Kane

Thanks to “junk science,” the “Show-Me-Your-Lawsuit” 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. Not only are there forum shopping concerns with regards to the talc litigation, there is concern that St. Louis City judges allow plaintiffs’ lawyers to introduce “junk science” as evidence. Specifically, plaintiffs’ 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. Nonetheless, the City of St. Louis continues to allow this “junk science” to be heard in their courtrooms, which can result in big verdicts. 

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. But it has a long way to go, as do Madison and St. Clair Counties in Illinois.

In Madison and St. Clair Counties, the plaintiffs’ 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.  The ATRF Report also puts the blame for these judicial hellholes on the Illinois Supreme Court.  

The American Tort Reform Foundation (“ATRF”) Report attributes “no-injury” lawsuits as overburdening Illinois businesses, and the Illinois Supreme Court helped open those floodgates when it issued its decision in Rosenbach v. Six Flags Entertainment, 2019 IL 123186. In Rosenbach, 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 (“BIPA”), 740 Ill. Comp. Stat. 14 (2008). 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.

Moreover, according to the ATRF Report, Madison and St. Clair Counties continue to remain the preferred jurisdiction in the United States for plaintiffs’ lawyers to file asbestos lawsuits. The Report further notes that the Gori Law Firm (formerly known as Gori, Julian & Associates, P.C.), “one of the top asbestos filers in the nation,” was able to “stack” [sic] the deck higher when Barry Julian, co-founding partner of Gori Julian, was appointed to the Madison County bench in January 2019. The ATRF Report claims the “plaintiff-friendly reputation, low evidentiary standards, and judges’ willingness to allow meritless claims to survive” make Madison and St. Clair Counties a flocking ground for asbestos litigation. 

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’s Judicial Hellholes list. 

Is a case overturned due to confusing special interrogatories still relevant under rule change?

February 6, 2020 | Laura Beasley

In, Doe v. Alexian Brothers Behavioral Health Hosp., 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’s mental health records. She alleged that – before it fired the employee – the hospital failed to properly train the employee, supervise the employee, and monitor the employee’s use of records, which was more than the minimum necessary to complete her assigned billing tasks. The hospital denied the woman’s allegations, saying the former employee was solely responsible for the injuries.

At trial, the defense submitted to the jury a special interrogatory asking if the former employee was the “sole proximate cause of the plaintiff’s injuries” 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’s answer to the special interrogatory and, therefore, entered judgment for the hospital. 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. If the jury cannot reconcile them, the court shall order a new trial. Further, the court could have chosen to not even allow the defense to submit a special interrogatory.

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.

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. The appellate court ordered a new trial. 

Under the new rule, 735 ILCS 5/2-1108, Doe may not have been appealed. 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’s answer to a special interrogatory question conflicted with its general verdict, as was the case in Doe, 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. 

Special interrogatories were an important tool that helped juries decided the facts necessary to support a verdict. 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’s supposed to address. The Doe 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. The special interrogatory on sole proximate cause enabled the Hospital to get the jury to consider whose conduct solely caused plaintiff’s injuries. 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. 

It is too early to tell whether special interrogatories will become obsolete, but it is clear that the power behind them is now minimized. 

What Lies Ahead: Proposed Privacy Legislation in Illinois

January 28, 2020 | Gregory Odom and Jennifer Maloney

While it might not garner the attention of Halloween, Thanksgiving, or Christmas, January 28th is an international holiday; specifically, Data Privacy Day. The holiday is meant to raise awareness and promote privacy and data protection best practices. For more information on Data Privacy Day, please visit this link. For this year’s Data Privacy Day, we at Baker Sterchi Cowden & Rice are looking ahead to potential data privacy laws proposed in Illinois and evaluating the potential impact of those laws.

App Privacy Protection Act

One such proposed law is the App Privacy Protection Act. 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. The law would further require the disclosure of the names of those third parties and the categories of information collected. 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. 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. The citation for this proposed law is 815 ILCS 505/2Z. The last legislative action taken on this proposed law was on March 29, 2019. You can find information about the proposed law at this link.   

Data Transparency and Privacy Act

The Illinois House also passed HB 3358, known as the Data Transparency and Privacy Act, in 2019. This bill resembled the California Consumer Privacy Act, which went into effect on January 1, 2020. 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. The bill also allowed individuals to opt out of the sale of their information. A violation of the proposed law could be enforced only by the Illinois Attorney General. The bill exempted several entities from its scope, including hospitals, public utilities, retailers, and telecom companies. 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. Ultimately, the proposed law stalled, failing to pass both chambers before the General Assembly ended its legislative session.

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. 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. 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. 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. You can monitor the status of this legislation at this link.    

Biometric Information Privacy Act

Illinois also has considered amending one of the more controversial provisions of the Biometric Information Privacy Act. Senate Bill 2134 would delete language in the Act creating a private right of action. 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. 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. If enacted, this legislation could have a significant impact by reducing the amount of legislation filed under the Biometric and Information Privacy Act. The last action taken on this bill was on March 28, 2019. You can find more information about the status of the bill at this link.  

Geolocation Privacy Protection Act

The Geolocation Privacy Protection Act (House Bill 2785) was introduced by Rep. Ann M. Williams in February 2019. 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. 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 unlawful practice under the Consumer Fraud and Deceptive Business Practices Act, thereby amending Section 2Z of the Illinois Consumer Fraud Act. In addition, a user's rights under the Act cannot be waived. The last action on the bill occurred on March 229, 2019, when it was re-referred to the Rule's Committee. More information regarding the status of the bill can be found at this link.

Right to Know Data Transparency and Privacy Act

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.  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. The last action taken on both bills was on March 29, 2019. You can find out more information about the Right to Know Act here

Genetic Information Privacy Act

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. 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. The amendment expands the definition of “genetic testing” under the Genetic Information Privacy Act to include direct-to-consumer genetic testing kits. 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. 

Artificial Intelligence Video Interview Act

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.   Additional details regarding the Artificial Intelligence Video Interview Act can be found in a prior post here.

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.  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.   

New Illinois Statute Among the First to Address AI-Aided Job Recruiting

January 14, 2020 | Lisa Larkin

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. Typically, these AI products use mobile video interviews with algorithms analyzing the prospective employee’s facial expressions, word choice, tone, body language and gestures to determine a candidate’s work style, ethic, cognitive ability, and interpersonal skills. Other AI tools might include AI review of resumes and algorithms to analyze an applicant’s response to interview or test questions or an applicant’s social media content. This is all done with the stated aim of finding the best candidate for the specific open position. 

Illinois’ new statute, 820 ILCS 42/1, et seq., is among the first of its kind in the country. It addresses the use and disclosure of artificial intelligence video interviews, should an employee choose to utilize this still-emerging technology. 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. 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’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. The Act also prohibits the sharing of applicant videos except with those whose expertise is necessary to evaluate the applicant. 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. 

Interestingly, the statute does not define “artificial intelligence” or provide insight into what level of information is sufficient to meet the act’s explanation requirement. 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. Finally, the act says nothing about enforcement, whether through a private cause of action for statutory damages or otherwise.

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. 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. 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. At a bare minimum, the implementation of Illinois’ AI Video Interview Act should encourage employers to exercise caution when considering or implementing hiring practices involving AI.

First Judicial District Appellate Court of Illinois Upholds Motion for Directed Verdict in Medical Malpractice Claim

December 26, 2019 | Paul Venker and Laura Beasley

In Ludgarda R. Castillo and Richard Castillo v Jeremy Stevens, M.D. and The Center for Athletic Medicine, LTD., 1029 IL App (1st) 172958, the Court reviewed several issues, and held that a plaintiff’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.

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. To correct the valgus deformity, defendant Dr. Stevens performed a right distal femoral open wedge osteotomy, but during this procedure the medial cortex fractured. This required Dr. Stevens to intra-operatively install a condylar plate obliquely to achieve the desired degree of correction. The procedure properly aligned the femur to correct the valgus deformity. However, sometime after the procedure, plaintiff was diagnosed as having a nonunion of the femur. Plaintiff underwent a revision surgery in 2005. Although, plaintiff healed from her surgeries, she still had continuing complaints of pain and functional limitation. 

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’s motion for directed verdict. 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. Plaintiff appealed.

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 Coryell v. Smith, 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. Id at 546.

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. 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.   Unlike the Coryell 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. 

The appellate court agreed with the trial court’s ruling that it is a well-established principle of law that a plaintiff’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.  The appellate court clearly rejected plaintiff’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.

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. 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’s subjective perspective on their lack of understanding of the risks.

This intermediate appellate court opinion may be subject to further appellate review by the Illinois Supreme Court.

Illinois Court of Appeals Draws Careful Distinctions for Access to Mental Health Records

November 26, 2019 | Terrence O'Toole, Jr. and Ashtyn Kean

In Sparger v. Yamini, plaintiff, on behalf of his minor-daughter, filed a medical malpractice lawsuit against a Chicago-area hospital and a neurosurgeon (collectively “defendants”). Plaintiff alleged that the surgeon’s negligence in repairing the minor-plaintiff’s spinal fluid leak caused her to subsequently develop meningitis. Plaintiff’s Complaint included a claim for compensation for brain damage suffered by minor-plaintiff, including a detrimental effect on the minor plaintiff’s “cognitive, emotion[al], and behavioral presentation.”

Defendants sought minor-plaintiff’s medical records from two hospitals predating the medical care at issue. Plaintiff’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 (“MHA”) as containing information pertaining to the minor-plaintiff’s mental health treatment. In lieu of production, plaintiff’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.

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. The circuit court granted defendants’ Motion to Compel ordered plaintiff’s counsel to produce the entirety of the records withheld.

Plaintiff’s counsel refused to produce the records and was placed in “friendly” contempt of court for violation of the discovery order. Plaintiff’s counsel appealed the finding of contempt (a finding of which is final and appealable under Illinois case law (see Reda v. Advocate Health Care, 199 Ill. 2d 47, 54 (2002)). On appeal, plaintiff’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.

On review, the Illinois Appellate Court for the First District reversed the trial court’s ruling and stated that plaintiff had not placed minor-plaintiff’s mental condition at issue by claiming brain damage and cited the prior decision of the Illinois Supreme Court in Reda v. Advocate Health Care, 199 Ill. 2d 47, 50 (2002). 

In Reda, plaintiff alleged medical negligence in diagnosis and treatment of an acute thrombosis in his right leg which allegedly resulted in a subsequent stroke. Id. at 50-51. Plaintiff’s treating healthcare providers refused to provide records, citing their protection under MHA. Id. at 51. The trial court ordered production of the records, and the Appellate Court affirmed. The Supreme Court reversed both lower courts, stating “neurological injury is not synonymous with psychological damage…[n]or does neurological injury directly implicate psychological damage.” Id. at 58.

The Appellate Court further distinguished a case from the Appellate Court for the Third District, Phifer v. Gingher, 2017 IL App (3d) 160170.  In Phifer, plaintiffsought damages for “psychiatric, psychological, and/or emotional injuries” resulting from an automobile collision.  Defendant requested medical records prior to the collision, plaintiff refused, and the trial court granted defendant’s Motion to Compel. Id. at 13-19.  The Phifer Court, distinguishing Reda, held that plaintiff placed her mental condition at issue by alleging that she was caused “great pain and anguish both in mind and body.” Id. at 28.

The Appellate Court distinguished the facts of the current case from Phifer because plaintiff specifically stipulated that he was “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.”

The Appellate Court also rejected defendants’ argument that fundamental fairness required disclosure of the records and distinguished another case cited by defendants, D.C v. S.A., 178 Ill. 2d 551 (1997). In D.C v. S.A., 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’s claim. Id. at 570. 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. In distinguishing the present case, the Appellate Court found that the records sought here did not pertain to the absolution of defendants’ liability, but rather to minor-plaintiff’s damages.

The Sparger 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 “neurological injury” versus a “psychological injury.” Instead, the Appellate Court in the instant case held that because the plaintiff’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. 

Defense counsel should expect plaintiffs’ attorneys to continue pursuing the argument that plaintiffs’ 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.

Sparger v. Yamini, 2019 IL App (1st) 180566.

Ninth Circuit Allows Class Action Against Facebook under Illinois' Biometric Information Privacy Act to Proceed in California

September 25, 2019 | Lisa Larkin

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. A class action filed in the Northern District of California will be allowed to proceed to consider whether Facebook’s behind-the-scenes face-recognition technology violates Illinois’ Biometric Information Privacy Act (BIPA). Patel v. Facebook, Inc., 932 F.3d 1264 (9th Cir. 2019). 

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. BIPA, 740 ILCS 14/1 et seq. (2008), prohibits the collecting, using, and storing of biometric identifiers, including a “scan” of “face geometry”. Plaintiffs alleged Facebook used scans of their photos without obtaining a written release and without establishing a compliant retention schedule.

For years, Facebook has allowed its users to “tag” their Facebook friends in photos. In 2010, Facebook launched a feature called “Tag Suggestions.” This feature uses facial-recognition technology to analyze whether the user’s Facebook friends are in photos and then “suggest” a tag. It does so by scanning the photo, extracting various geometric data points that make a face unique, and creating a face signature or map. It then compares the face signature to other faces in Facebook’s database and matches it to other user profiles. These user templates are stored on Facebook servers in nine data centers, none of which is in Illinois. The named Plaintiffs are all Illinois residents who uploaded photos to Facebook while in Illinois. Facebook created and stored face templates for each of them.

Facebook moved to dismiss the complaint for lack of standing on the ground that the Plaintiffs had not alleged any concrete injury. Plaintiffs, in turn, moved to certify the class. The district court denied the Motion to Dismiss and certified a class of “Facebook users located in Illinois for whom Facebook created and stored a face template after June 7, 2011.”

On appeal of the standing issue, the 9th Circuit noted standing is established where a plaintiff has suffered an “injury-in-fact” defined as an invasion of a legally protected interest which is: (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical. 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.

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’ citizens. Citing to the Illinois Supreme Court’s opinion in Rosenbach v. Six Flags Entm’t Corp., 2019 IL 123186, which we previously discussed here, the court concluded that the statutory provisions at issue in BIPA were established to protect an individual’s “concrete interests” in privacy, not merely his procedural rights related to how his biometric information was stored and used.

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. The relevant conduct according to Plaintiffs was Facebook’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. Plaintiffs asserted this allows Facebook to create and use a face template and retain it indefinitely. The court noted that because the privacy right protected by BIPA is the right not to be subject to such collection and use, Facebook’s alleged violation would necessarily violate the Plaintiffs’ substantive privacy interests. It concluded, therefore, that Plaintiffs have alleged a concrete injury-in-fact sufficient to confer standing.

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. Because Facebook’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. The Court of Appeals disagreed. It is reasonable to infer that the General Assembly contemplated BIPA’s application to individuals located in Illinois, even if some relevant events occurred outside the state. The court held that these are threshold questions of BIPA’s application which can be decided on a class-wide basis. 

Facebook also argued that the possibility of a large class-wide statutory damages award defeats the superiority requirement for a class action. Again, the appellate court disagreed. The question of whether the potential for enormous liability can justify a denial of class certification depends on legislative intent. Here, there is nothing in BIPA’s text or legislative history indicating a large statutory damages award would be contrary to the intent of the Illinois General Assembly. The court, therefore, affirmed the district court’s order certifying the class.

The law surrounding BIPA continues to develop, which is unsurprising considering the speed with which relevant technological capabilities develop. 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.

Terms of "Confidential" Co-Defendant Settlement Prove Party Bad Faith and Earn Counsel a Disciplinary Referral

September 5, 2019 | Lisa Larkin

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’ First District Appellate Court reminded litigants that such confidentiality, in fact, can be lost. 

In Chernyakova v. Puppala, et al., 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’s medical chart and took and posted photos of her on social media. Plaintiff and Dr. Puppala knew each other socially, and while she was admitted, Dr. Puppala visited Plaintiff twice just hours after admission. He used his credentials to view Plaintiff’s electronic medical chart and spoke with Plaintiff’s treating physicians regarding her progress and possible discharge. On his second visit, Dr. Puppala took photographs of Plaintiff in what was still an intoxicated state and posted them to Facebook and Instagram. Plaintiff contested that she had consented to Dr. Puppala accessing her medical records, speaking to her treating physicians, or taking and posting her photograph.

The Cook County Circuit Court granted summary judgment to Northwestern and McGaw, and Plaintiff proceeded to trial against Dr. Puppala. During trial, Plaintiff settled with Dr. Pappula and the parties requested an on the record “hearing” wherein the attorneys outlined the terms of the “confidential” settlement for the trial judge. Separately, Plaintiff pursued an appeal of the summary judgment in Northwestern and McGaw’s favor.

During the pendency of the appeal, Northwestern and McGaw’s counsel obtained information that the terms of the “confidential” settlement called in question the validity of the factual underpinnings of the lawsuit. 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. The trial court ultimately unsealed the transcript, and the parties agreed it would be filed in the appellate court under seal.

While generally the appellate court’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. As the appellate court noted, it implicated the appellate court’s responsibility to “strive to enhance and maintain confidence in our legal system.” 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. 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’s behalf stating that her underlying allegations were “mistaken” and that she consented to the photos and postings. Significantly, the appellate court learned that after the Circuit Court ordered the settlement hearing transcript unsealed, Plaintiff’s counsel had nevertheless instructed the court reporter to not provide a copy to Defendants.

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. The appellate court explained that Plaintiff’s argument demonstrated a misunderstanding of the confidentiality protection afforded to settlement agreements. Once Plaintiff’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. 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.

The appellate court also found Plaintiff’s counsel was incorrect in his assertion that Illinois Supreme Court Rule 408 protected the confidential nature of the settlement terms. Rule 408 provides that evidence of “furnishing or offering or promising to furnish – or accepting or offering or promising to accept – a valuable consideration in compromising or attempting to compromise the claim” and “conduct or statements made in compromise negotiations regarding the claim” is inadmissible “to prove liability… or to impeach through a prior inconsistent statement or contradiction[.]” Such evidence may, however, be admissible to establish bad faith. Here, the inquiries into settlement negotiations was to establish wrongdoing and Rule 408 offered no protection to Plaintiff.

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’s continued pursuit of her claim against the Defendants. Plaintiff, through counsel, affirmatively agreed to fully exonerate Dr. Puppala by providing a letter completely contradicting the factual bases of the lawsuit. 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 “mistaken.”

The appellate court dismissed the appeal as frivolous and not pursued in good faith. Further, it found Defendants entitled to their reasonable attorney fees and costs incurred as a result of defending against the frivolous appeal. The court also concluded that it could not turn a blind eye to Plaintiff’s counsel’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. 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.

The decision corrects any misconceptions that settlement negotiations and terms are absolutely protected. One must question how far this holding might reach as there are many proceedings which are held “on the record” but with the transcripts later sealed. 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.

Taxation of Lost Wages Awards Under the FELA: the Illinois Appellate Court Applies Loos v. BNSF

August 21, 2019 | John Lord

In Munoz v. Norfolk Southern Railway Company, 2018 IL App (1st) 171009 (Munoz 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. 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). Munoz argued that the award of lost wages should be treated the same as personal injury awards that are not subject to income taxes. 

The trial court denied the railroad’s motion, relying on the Missouri Supreme Court’s opinion in Mickey v. BNSF Railway Co., 437 S.W. 2d 207 (Mo. banc 2014). In Mickey, the Missouri Supreme Court held that, like the exclusion for personal injury awards under Internal Revenue Code § 104(a)(2), an FELA lost wages award does not constitute income. Therefore, lost wages do not qualify as taxable compensation under the RRTA.

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. The Illinois Appellate Court disagreed and affirmed the trial court. The Appellate Court found that the RRTA defines “compensation” as money paid to an employee for “services rendered” and lost wages cannot be paid to an employee for “services rendered”.

Shortly thereafter, the U.S. Supreme Court considered the same issue in BNSF Railway Co. v. Loos, 129 S. Ct. 893 (2019), and held that FELA lost wages awards are compensation subject to taxation. The Illinois Supreme Court then directed the Appellate Court to vacate its initial judgment in Munoz I and consider the effect of the Loos case. Upon reconsideration, the Appellate Court concluded that Munoz’s lost wages award was taxable compensation under the RRTA. Munoz v. Norfolk Southern Railway Company, 2019 IL App (1st) 171009-B (Munoz II).

The Munoz II  Court observed that in Loos the Supreme Court looked to the Social Security Act (SSA) and the Federal Insurance Contributions Act (FICA) for guidance as to the meaning of “compensation.”  The Supreme Court found that the RRTA’s definition of compensation was “materially indistinguishable” from FICA’s definition of “wages”, to include remuneration for “any service, of whatever nature, performed . . . by an employee.”

Previous Supreme Court cases held that “wages” under the SSA and FICA included awards of backpay and severance payments.  These cases held that such awards represented pay for active service, in addition to pay for periods of absence from active service.  As a result, the Supreme Court held that “compensation” under the RRTA can encompass pay for periods of absence from active service, as long as the remuneration in question “stems from the employer-employee relationship.”

The Supreme Court found that damages for lost wages awarded under the FELA “fit comfortably” within these parameters. Wage loss damages compensate an employee for time during which he or she is “wrongfully separated” from employment, and this is akin to an award of back pay. 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’s wrongdoing.  Based on this reasoning, “there should be no dispositive difference between a payment voluntarily made and one required by law.”

The Munoz II Court reiterated the distinction between personal injury damages that are not taxable under the Internal Revenue Code with FELA lost wage awards. Personal injury damages are excluded from “gross income” by the Code. And, “gross income” cannot be conflated with “compensation” under the RRTA, which Congress treated as discrete tax bases.

CONCLUSION

The Illinois Appellate Court is likely the first of many courts that will apply the Loos decision and find that an award of lost wages in an FELA case is subject to taxation. 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.


* Kelly M. “Koki” Sabatés, Summer Law Clerk, assisted in the research and drafting of this post. Sabatés is a 3L student at the University of Missouri-Columbia.

What a Long, Strange Trip It's Been: Illinois Supreme Court Upholds Decision That Res Judicata Does Not Apply to Involuntary Dismissal of Multiple Prior Complaints Spanning Ten Years

July 23, 2019 | Terrence O'Toole, Jr. and John Beard

Plaintiff Gerald Ward originally sued Decatur Memorial Hospital in 2009 alleging medical malpractice in the treatment of his brother who developed a post-surgery bed sore that became infected. Plaintiff alleged that his brother died from complications associated with a bacterial infection approximately one month after the Hospital discharged him.

Plaintiff initially filed a nine-count complaint against the Hospital, Decatur Memorial Hospital Home Health Services, and unknown employees of the Hospital. The trial court granted the Hospital’s Motion to Dismiss the majority of the counts but gave Plaintiff permission to refile. Plaintiff then filed first and second amended complaints. The court again dismissed both but with permission to refile. After plaintiff filed a third amended complaint, the Hospital filed responsive pleadings and the parties continued with discovery towards trial. 

In 2015, nearly four years later and only twenty days before the scheduled trial, the Hospital learned that the plaintiff intended to call a rebuttal expert not previously disclosed. The Hospital moved to bar the newly disclosed rebuttal expert, arguing that plaintiff had ample time during the six-year pendency of the case to obtain and properly disclose experts. Before the trial court ruled on the motion to bar, plaintiff moved for leave to file a fourth amended complaint to “more correctly and succinctly describe the alleged negligence of defendant’s nurses as a result of facts developed throughout discovery.”

Taking the motions together, the trial court granted the Hospital’s motion to bar the proposed rebuttal expert witness and denied plaintiff’s motion for leave to file a fourth amended complaint. The court cited the age of the case and noted that the allegations in the third amended complaint were substantially different from those in the proposed fourth amended complaint.  Plaintiff then voluntarily dismissed the action.

Four months later, plaintiff refiled the action and asserted nearly identical allegations as those set forth in the disallowed fourth amended complaint in the prior action. The Hospital moved to bar plaintiff from disclosing witnesses who had been barred in the previous case and to limit other witnesses to the opinions they gave in the initial action, arguing that plaintiff violated Illinois Supreme Court Rule 219(e) by using the dismissal and refiling to avoid having to comply with the previous court’s order. The trial court partially granted the Hospital’s motion and limited the opinions of witnesses to those provided in the prior case, but denied the Hospital’s request to bar the rebuttal witnesses. 

The Hospital then moved for summary judgment on the basis of res judicata, arguing that the trial court had dismissed “numerous counts of various iterations” of plaintiff’s complaint in the prior action and that he elected not to replead the counts. The Hospital asserted those dismissals constituted final adjudications on the merits as the complaints had been dismissed because of legal impediments, such that it was entitled to summary judgment on the basis of res judicata

Plaintiff opposed the motion, asserting that medical negligence was the sole cause of action in all the iterations of the complaint and no final judgment had been entered in the first action. The trial court ultimately granted the Hospital’s motion for summary judgment based on res judicata after initially denying the motion.

On appeal, the Fourth District Appellate Court reversed the trial court’s grant of summary judgment. It concluded that “by granting the plaintiff permission to file an amended complaint, the trial court vacated any suggestion of ‘with prejudice’ in its dismissal of individual counts of the original complaint.”  The appellate court further observed that the trial court had permitted the plaintiff to amend “over and over again, all the way to the third amended complaint…which remained pending and completely unadjudicated at the time of the voluntary dismissal.”

The Illinois Supreme Court affirmed the decision of the appellate court, concluding that res judicata was inapplicable and did not prohibit plaintiff’s refiled lawsuit because there had not been a final judgment on the merits. Each previous dismissal had been dismissals without prejudice and with permission given to refile. As such, the dismissals were not final, did not terminate the litigation, and did not firmly establish the parties’ rights. 

Despite affirming the decision, the Court criticized the “tortured history of litigation” and lack of urgency on the part of the parties and the trial judge to resolve the matter in a timely or efficient manner. Additionally, while conceding that a plaintiff has the absolute right to refile a dismissed complaint, the Court cited the admission made by plaintiff’s counsel on the record that he voluntarily dismissed the initial action because of his disagreement with the trial court’s rulings. Noting that Rule 219(e) “strikes the delicate balance between preserving a plaintiff’s absolute right to refile, while discouraging noncompliance with the trial court’s orders,” the Court commented that while the Rule does not change the existing law as to a plaintiff’s right to seek a voluntary dismissal, “this paragraph does clearly dictate that when a case is refiled, the court shall consider the prior litigation in determining what discovery will be permitted, and what witnesses and evidence may be barred.”     

Thus, while the Supreme Court reaffirmed a plaintiff’s absolute right to refile a dismissed complaint, the Court’s dictum regarding the applicability of Rule 219(e) offers hope to litigants defending refiled actions regarding the potential for limiting the scope of evidence in the face of demonstrated noncompliance with prior orders.

Illinois Counties Remain Top Jurisdictions for Asbestos Litigation in 2018

July 8, 2019 | Laura Beasley

Asbestos litigation in Illinois is generally trending down.

Although 2018 data is still populating, according to the KCIC Asbestos Litigation: 2018 Year in Review, asbestos litigation, overall, is in a downward trend. Filings are down approximately 11% from 2017 and 17% from 2016. Even though many of the main venues for asbestos litigation saw major decreases, the only notable increase occurred in St. Clair County, IL. St. Clair County experienced a 30% increase with 207 cases filed in 2017 to 268 in 2018. Madison County, IL remains the epicenter for asbestos litigation making up 27% of all 2018 filings.

Mesothelioma remains the main disease type, but it did experience about a 6% decrease; however, the largest decreases were from non-malignant and other cancer filings, which are down 40% and 31%, respectively, compared to 2017. Of note, even though asbestos filings as a whole are decreasing there is a notable increase in the number of females filing suit and not only in talc cases.

Madison and St. Clair County remain popular venues for asbestos filings. 

Even with the slight decrease in filings, Illinois, specifically Madison and St. Clair Counties, remains the most popular venue.  The vast majority of those claims filed in Illinois are “tourist filings” with only 7% of the complaints filed in Illinois by Illinois residents, with the remaining 93% of filings by non-residents. According to KCIC, although “tourist filings” are still the norm they have noticed the same plaintiff filing multiple lawsuits, for the same claim, in several jurisdictions which may be the result of recent personal jurisdiction rulings.  While KCIC states that this has not become common practice, should it become more common it does have the potential to increase the number of asbestos lawsuits filed.

Bankruptcy and recent legislation regarding trust claims may be impacting the number of asbestos filings.

Bankruptcy and recent legislation addressing trust claims could be another reason we are seeing a decrease in asbestos filings. Many asbestos claims are now paid out through post-bankruptcy trusts as many of the original asbestos defendants have declared bankruptcy. This has brought attention to how the bankruptcies affect solvent defendants left in the litigation and the recovery plaintiff’s collect. Unlike the tort system, these trusts may have as many as 18,000 non-malignant claims per year. The higher volume of claims is attributed to lower evidentiary standards and transactional costs. Therefore, State legislatures have focused their attention on BTT litigation by creating a more transparent trust claim submission process. This process requires plaintiffs to share certain information in the torts system regarding their trust filing history and, sometimes, even mandating certain time restrictions for such filings. These submissions include listing all personal injury claims they have made or anticipate making against a trust and require the plaintiff to consent to discovery of trust information. In some jurisdictions, including Kansas and Michigan, failure to comply with these requirements is sanctionable conduct. Kansas, North Carolina, and Michigan are the latest states enacting legislation, bringing the total count to sixteen states nationwide. 

Talc litigation is bucking the trend.

Talc litigation is the one area of asbestos litigation that is not decreasing.  There was a 68% increase in filing of Talc claims from 2017 to 2018.  Talc use is widespread; therefore, it carries a risk of an enormous potentially exposed population. There are claims that the cosmetic use of the talc itself caused ovarian cancer; while, there are also claims that asbestos within talc caused mesothelioma or lung cancer. It has been easier for courts to focus on personal jurisdiction in these types of cases because there are fewer defendants. Therefore, suits tend to be filed where defendants do business rather than forum shopping as they do in Mesothelioma cases. Still, the top venue for Talc litigation is St. Louis, MO, with Madison and St. Clair County close behind.

The plaintiffs’ bar continues to find ways to keep asbestos litigation alive.

Original forecasting models did not consider alternative or non-traditional routes of exposure; therefore, there has not been the reported decrease that historical studies initially predicted. While overall mesothelioma incidence is decreasing, the propensity to sue, especially for females, is actually increasing which can be attributed to increase in cosmetic talc exposure and it allegedly causing ovarian cancer. KCIC reports that women make up the majority of secondary exposure claims with Madison County, IL, becoming the top jurisdiction for female claimants alleging secondary exposure only. Madison County is also the top jurisdiction for claims of non-occupational exposure filed in 2018.

While 2018 showed the usual course for asbestos litigation, there were some fluctuations. The most significant change is the potential effects of talc-related filings and state legislatures taking an active role in BTT litigation.

For more details and statistics regarding asbestos litigation in 2018, read the industry report from KCIC here.

* Kelly M. “Koki” Sabatés, Summer Law Clerk, assisted in the research and drafting of this post. Sabatés is a rising 3L student at the University of Missouri-Columbia.

Court Awards Nearly Twenty Times Damages in Illinois Wage Payment Act Case

May 28, 2019 | Robert Chandler

On December 27, 2018 the Illinois Appellate Court for the First District affirmed an award of attorney’s fees and costs to plaintiff which was nearly twenty times the damages awarded at trial for an Illinois Wage Act claim. The Court ruled that the trial court did not abuse its discretion by awarding $178,449.97 in attorneys’ fees after a trial ending in a $9,226.52 judgment against the defendant.

Facts

Plaintiff Raymond Thomas sued defendant Weatherguard Construction Company, Inc. for $47,666.00 in commissions for contracts that he had procured on Weatherguard’s behalf. A key issue at trial was whether Weatherguard employed Thomas. Plaintiff claimed violations of the Illinois Sales Representative Act and the Illinois Wage Payment Act, breach of contract and unjust enrichment. The trial court granted summary judgment to Weatherguard on one count, and, after nearly ten years of litigation, the matter proceeded to trial on the remaining claims. The trial court found that Thomas was indeed an employee of Weatherguard, but awarded Thomas only $9,226.52. The verdict was upheld on appeal but remanded to the trial court for a determination of an attorneys’ fee award to Plaintiff pursuant to the Wage Payment Act. Upon briefs submitted by the parties, the trial court awarded plaintiff $178,449.97 in attorney’s fees and $1,124.68 in costs. Weatherguard appealed the award arguing that the award by the trial court was “excessive.” The Court of Appeals affirmed the award.

The Attorney Fee Award.

On appeal, Weatherguard argued, amongst other things, that the fee award was excessive because it represented work for claims for which there was no basis for Thomas to recover attorney fees. Weatherguard contended the recovery of fees should be limited only to work done to further the Wage Payment Act claim. Additionally, Weatherguard argued that the disparity between the amount of the damages award and the amount of the fee award constituted an abuse of discretion by the trial court. The Court rejected Weatherguard’s argument that Thomas was entitled only to fees for his statutory Wage Payment Act claim. The statute allows for employees successfully recovering under the Act to “also recover costs and all reasonable attorney’s fees.” Weatherguard argued that, because attorney fees are ordinarily not recoverable without contract or statutory authority, plaintiff should only be entitled to recover for work by his attorney directly attributable to pursuing the statutory Wage Act Claim.

The Appellate Court found that Thomas could recover fees and costs for all of his claims involving a common core of facts and related legal theories, even where he was successful only on some of the claims. The Wage Payment Act calls for recovery of “all reasonable attorney’s fees” in a “civil action.” The Court noted that the only limiting language in the statute was that the attorney fees be “reasonable,” and concluded that the statute did not contain an exception to the rule allowing for attorney fees for claims stemming from the same common core of facts and related legal theories. The Court stated that an exploited worker ordinarily would not be in a position to bring a civil action against his employer without the statutory incentive of fee recovery by the prevailing attorney.

The Court also determined that legislative history of the Wage Payment Act supported the finding that Thomas was entitled to fees for all of his claims. The Illinois legislature contemplated that litigation costs associated with bringing claims under the Act would not be borne by plaintiff employees.

The Court rejected Weatherguard’s argument that the vast difference between the amount of the damages award and the amount of the fee award constituted an abuse of discretion. Noting that in a matter involving fee shifting either by contract or statute an abuse of discretion does not automatically justify rejection of the amount sought in fees, the Court considered the conduct of Weatherguard in making the choice “to aggressively litigate the case” for ten years on a suit seeking “only $47,666 in commissions.” While courts may look to whether there is a reasonable connection between the fees and the amount involved in the litigation, the Appellate Court found that the “years of attorney time expended and the amount at issue was deemed reasonable by defendant” in defending the claims, and defendant “cannot be heard to complain now.”

Weatherguard also argued that Thomas only received a fraction of the recovery that he sought and should receive only a fraction of the fees incurred. While the Appellate Court agreed that the amount of the fees in relation to the benefit is a relevant consideration, it noted that Thomas was successful on the primary issues of employment and compensation. Accordingly, the Court found no abuse of discretion.

Guidance for the Future

This case underscores that when litigating cases involving either contractual or statutory fee-shifting provisions, it is possible that fees may be awarded far exceeding the damages award. This possibility should be considered when assessing case value.

Related Services: Appellate

Attorneys: Robert Chandler

Illinois Legislature Proposes to Amend the Biometric Informational Act, Deleting Private Right of Action

May 16, 2019

Proposed amendments to Illinois’ Biometric Information Privacy Act “BIPA” are welcomed by employers who have been bombarded with class action lawsuits in Illinois since the Rosenbach decision. SB 2134 provides that any violation resulting from the collection of biometric information by an employer for employment purposes is subject to the authority of the Department of Labor and must be enforced by the Attorney General. The proposed amendments would likely eliminate the influx of class action litigation into our court system, shifting the claims for violations to the Illinois Department of Labor from the State and Federal Courts. 

This is not the only proposed amendment to BIPA, which shows the legislators’ realization of much needed clarification to the Act. HB3024 was introduced to further define biometric identifier as to include electrocardiography results from a wearable device.  

Until the proposed amendments to BIPA are passed, stripping an individual’s right of action and clarifying the definition of biometric identifiers, Illinois employers will likely face a slew of class action lawsuits.  

The proposed amendments to the BIPA are referred to committee but no hearing dates have been set at this time. We will follow the process of the proposed amendments and update this post as necessary.

Illinois Appellate Court Affirms Double Whammy Dismissal of Medical Negligence Case Based on Statute of Limitations and Statute of Repose

May 6, 2019

The Illinois First District Appellate Court recently affirmed a Cook County Circuit Court’s dismissal of a medical negligence action as time-barred by both the statute of limitations and the statute of repose. In reaching its decision, the appellate court relied upon long-standing Illinois case law as to when a medical negligence action accrues in a wrongful death action. 

In January 2017, plaintiff Joseph M. Osten (Osten), surviving husband of Gail Osten (decedent), filed a Complaint alleging medical negligence.  In the Complaint, Osten alleged that defendant physician, one of decedent’s treating doctors, ordered a screening mammogram on April 21, 2011, which was subsequently conducted by defendant radiologist technician and interpreted by defendant radiologist.

According to the Complaint, a non-party technologist noticed a slightly inverted left nipple with a brown discharge, which decedent specifically denied she had ever seen. The mammogram revealed a bilateral benign calcification with no masses or other findings suggestive of malignancy. The results of the mammogram were not transmitted to the defendant physician, the screening mammogram was not converted to diagnostic mammography, and no ultrasound tests were ordered.   Decedent was diagnosed with breast cancer in December 2011 and passed away in March 2015.

Plaintiff’s Complaint asserted five counts of professional negligence and wrongful death against defendants, alleging negligence in (1) failing to convert the screening mammogram to a diagnostic mammography, (2) failing to perform an ultrasound, and (3) failing to recognize the risk factors for breast cancer of an inverted nipple and brownish discharge.

Defendants filed motions to dismiss plaintiff’s Complaint, asserting plaintiff’s claims were time-barred by both the two-year statute of limitations and the four-year statute of repose applicable to medical negligence claims. Defendants contended the statute of limitations began to run on decedent’s medical negligence claims in April 2011, when the screening mammogram was performed or, at the latest, in December 2011, when she was diagnosed with breast cancer.  Defendants argued that, under either date, the statute of limitations expired on the medical negligence claims no later than December 2013.

Defendants also asserted the four-year repose period on any medical negligence claims began to run on the date of the alleged negligence, and therefore the repose period lapsed on April 21, 2015. Defendants further argued the plaintiff could not bring a wrongful death claim premised on defendants’ alleged medical negligence because the statute of limitations on those claims expired before decedent’s death in March 2015.

In response, the plaintiff argued his Complaint was timely because it was filed within two years of decedent’s death, the same date plaintiff contended was the date the statute of limitations and statute of repose began to run on his wrongful death claims. Plaintiff argued defendants advanced no facts to show that in December 2011, decedent knew or reasonably should have known of defendants’ alleged negligence, making the date of death the only relevant date for measuring the timeliness of his claims.

The appellate court held that:

“[i]n a wrongful death action, the cause of action is the wrongful act, neglect, or default causing death and not the death itself.” Wyness v. Armstrong World Industries, Inc., 131 Ill. 2d 403, 411 (1989). Claims under the Wrongful Death Act must be commenced within two years of the person’s death. 740 ILCS 180/2 (West 2016).  Under the Wrongful Death Act, there can be no recovery ‘where the decedent once had a cause of action, but was not entitled to maintain that action and recover damages at the time of [her] death.’ Lambert v. Village of Summit, 104 Ill. App. 3d 1034, 1037-38 (1982).

With respect to the statute of repose issue, the appellate court held that the Illinois Supreme Court:

has observed that “the statute of repose is triggered by the ‘act or omission or occurrence’ causing an injury, rather than by the patient’s discovery of the injury,” and that “the statute of repose cannot start to run until the last date of negligent treatment.” Cunningham v. Huffman, 154 Ill. 2d 398, 405-06 (1993); see also Kanne v. Bulkley, 306 Ill. App. 3d 1036, 1040 (1999) (“In failure-to-diagnose cases *** where a plaintiff blames a defendant’s omission for his injury, the omission at issue is deemed to have occurred on the date defendant rendered his final treatment.”).

Based upon the above case law, the appellate court found that both the statutes of limitations and repose began to run either in April 2011 or, based on the allegations in plaintiff’s Complaint, no later than December 2011.

The Osten court noted multiple times that its decision was based solely upon the allegations contained in plaintiff’s original Complaint and “at no point did plaintiff seek leave to amend his Complaint to allege any additional facts to defeat the motion to dismiss.”  The opinion goes so far as to point out that “[p]laintiff failed to allege a single fact that might allow an inference that defendants provided [decedent] with any treatment—negligent or otherwise—after April 21, 2011.” 

Presumably, the Court was insinuating plaintiff could have potentially defeated the motions to dismiss if he had shown an “ongoing course of continuous negligent medical treatment”, which the Illinois Supreme Court found in Cunningham v. Huffman, 154 Ill. 2d 398, 609 N.E.2d 321 (1993), could extend the start date for the statute of repose.

The Cunningham court concluded the statute of repose does not bar a plaintiff's action if s/he can demonstrate an ongoing course of continuous negligent medical treatment. To prove such, the plaintiff must demonstrate: (1) the existence of a continuous and unbroken course of negligent treatment, and (2) the treatment was so related as to constitute one continuing wrong. Thus, under Cunningham, not only does there need to be treatment, but the treatment must be negligent, a continuous and unbroken course, and so related as to constitute one continuing wrong. Whether plaintiff could have asserted facts to support such an argument is unknown.

Although the Osten decision does not plow any new ground for calculating when Illinois’ statutes of limitations and repose issues begin to run, a consistent approach and analysis by the Illinois appellate courts should be reassuring to our healthcare industry clients on what will undoubtedly continue to be a frequently litigated issue in medical negligence cases.

Osten v. Northwestern Memorial Hospital, 2018 IL App (1st) 172072

Illinois Appellate Court Holds Employer's Alleged Biometric Information Privacy Act Violation Is Not Subject to Arbitration

April 16, 2019

Not all employment-related claims are subject to an employment agreement’s mandatory arbitration clause, according to the Illinois Appellate Court for the First District.

In Liu v. Four Seasons Hotel, LTD., 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’ biometric data, namely fingerprints taken for timekeeping purposes.  Defendants filed a motion to compel arbitration, arguing that each employee signed an employment agreement requiring “wage and hour violation” claims, as well as the initial question of arbitrability, be submitted to and decided by an arbitrator. 

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.  These identifiers include things like retina or iris scans, fingerprints, voiceprints, hand scans, or face geometry scans.  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’s fees and costs. 

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.  They alleged violations of the Act in defendants’ 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.

The trial court denied the defendant’s Motion to Compel Arbitration, and the Appellate Court affirmed.  The Appellate Court held the claims did not fit within the “wage or hour violation” category of disputes subject to mandatory arbitration under the employment agreements.  The defendants argued the sole purpose for requiring employees to scan their fingerprints was to monitor the hours worked, which necessarily makes it a “wage or hour violation” claim.  The Court, however, looked to how this phrase has been used in other contexts, such as under Illinois’ Wage Payment Act or Minimum Wage Law or the federal Fair Labor Standards Act.  In all those enactments, wage and hour violation claims involve allegations of an employer wrongfully withholding compensation or failing to pay employees overtime rates.  Plaintiffs here, in contrast, alleged nothing beyond violations of the Biometric Information Privacy Act.  They made no claims of improperly withheld compensation or hours violations. 

The Court noted, citing to Rosenbach v. Six Flags Entertainment Corp., 2019 IL 123186, that the Act is a privacy rights law that applies inside and outside the workplace.  “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.” 

This opinion, as we noted in an earlier blog post addressing Rosenbach, 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.   

In a case of first impression, the Appellate Court of Illinois allows counsel to withdraw previously disclosed testifying expert

April 12, 2019

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.

In Dameron v. Mercy Hospital and Medical Center, plaintiff Alexis Dameron disclosed Dr. David Preston in her interrogatory answers as a testifying expert witness on May 30, 2017.  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.  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 “any” reports prepared by a controlled expert about the case. 

Almost two months later, on July 27, 2017, Ms. Dameron notified opposing counsel that she had “inadvertently” disclosed Dr. Preston as a testifying expert and amended her discovery answers excluding Dr. Preston as a testifying expert. 

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:

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.

The circuit court denied Ms. Dameron’s motion to redesignate Dr. Preston and ordered Plaintiff to produce Dr. Preston’s records and report regarding the testing he performed.  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.  Plaintiff then appealed the matter to the Appellate Court for the First Circuit.

The Appellate Court ultimately reversed the circuit court’s decision and held, as a matter of first impression, that where a previously disclosed testifying expert is timely 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’s privilege against disclosure, absent exceptional circumstances.

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.  Federal case law supported the contention that both the disclosure of the expert as well as the expert’s required report is necessary to fully disclose a testifying expert under Federal Rule of Civil Procedure 26.  In this case, Ms. Dameron had only disclosed Dr. Preston’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. 

Defendants made several arguments in an attempt to gain access to Dr. Preston’s examination results.  They argued that Dr. Preston was a treating physician and, consequently, Plaintiff waived any right to withhold the results.  The Appellate Court disagreed and found Dr. Preston was hired to testify, not to treat.  They also argued that Ms. Dameron’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. 

Defendants further argued that because Dr. Preston was initially disclosed as a testifying expert, Plaintiff waived any privilege to Dr. Preston’s report.  However, the court stated that the rules only required Plaintiff to turn over a report if Dr. Preston was going to testify at trial.   Defendants also argued that they were entitled to the report because it contained relevant facts, but the court disagreed and found that Dr. Preston’s report was protected by the consultant’s work product privilege only subject to discovery upon showing of exceptional circumstances.

Finally, Defendants argued that Plaintiff was attempting to subvert the legal process.  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.  One may assume that Dr. Preston’s report was unfavorable to Plaintiff and, consequently, prompted her to withdraw Dr. Preston as an expert.  Nevertheless, the court found that Defendants failed to identify any evidence to support their claim of Plaintiff’s subversion of the legal process.

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’s privilege against disclosure, absent exceptional circumstances.  The court found no exceptional circumstances in this case.

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.

Illinois Supreme Court Confirms State's Biometric Information Privacy Act Has Real Teeth

February 18, 2019

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? 

In Stacy Rosenbach, as Mother and Next Friend of Alexander Rosenbach v. Six Flags Entertainment Corporation, 2019 IL 123186, the plaintiff alleged violations under Illinois’ Biometric Information Privacy Act (740 ILCS 14/1 et seq. (2016)). 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. Under the Act, any person “aggrieved” by a violation of its provisions “shall have a right of action… against an offending party” and “may recover for such violation” the greater of liquidated or actual damages, reasonable attorney fees and costs, and any other relief, including an injunction, that the court deems appropriate. The issue in this particular case was whether a person qualifies as an “aggrieved” 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. 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.

Since at least 2014 defendant Six Flags has used a fingerprinting process when issuing season passes to its Great America theme park. Plaintiff alleged the system scans pass holders’ 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. 

Plaintiff’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. 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’s biometric data capture system. The complaint alleged that plaintiff was not informed in advance that the minor’s fingerprints were to be used as part of defendant’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. 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. 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. 

Plaintiff’s complaint sought redress for the minor child, individually and on behalf of all other similarly situated persons under the Act. 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. 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. 2017 IL App (2d) 170317. 

The Illinois Supreme Court reversed upon de novo review. Basic principles of statutory construction dictate that if the legislature had wanted to impose a requirement limiting a plaintiff’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. The Act contains no such requirement. It simply provides that any person aggrieved by a violation of the Act shall have a right of action. While the Act does not define “aggrieved”, the state Supreme Court more than a century ago held that to be aggrieved simply “means having a substantial grievance; a denial of some personal or property right.” Glos v. People, 259 Ill. 332, 340 (1913). As held in Glos, “[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.” Id. This is consistent, the court noted, with the dictionary definition of “aggrieved”, which includes definitions such as “suffering from an infringement or denial of legal rights” or “having legal rights that are adversely affected.”

The Court concluded that when a private entity fails to comply with one of the Act’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. Such person or customer is clearly “aggrieved” within the meaning of the Act and is entitled to seek recovery under that provision with no need to plead or prove additional consequences. A contrary result would misapprehend the nature of the harm the legislature is attempting to mitigate through this legislation. “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.” 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. “The injury is real and significant.”

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.    

Buyer Beware: Illinois Supreme Court Protects Subcontractors from Implied Warranty Claims by Homeowners with No Contractual Relationship

February 12, 2019

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 Milton v. Richards Group of Chicago Through Mach, 116 Ill. App. 3d 852 (1st Dist. 1983). In a victory for construction subcontractors, the court held that the homeowner’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. Specifically, a subcontractor hired by the general contractor owes no such implied warranty to the homeowner.

The case of Sienna Court Condominium Association v. Champion Aluminum Corp., et al. arose from claims of water intrusion and other construction defects at a newly constructed 111-unit condominium complex in Evanston, Illinois. Acting on behalf of the owners of the individual units, the complex’s condominium association filed a lawsuit claiming that latent construction defects rendered the complex unfit for habitation. 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.

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. 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.

On appeal, the state Supreme Court overruled the trial court and ordered it to dismiss the claims against the subcontractors, holding that “the purchaser of a newly constructed home may not pursue a claim for breach of an implied warranty of habitability against a subcontractor where there is no contractual relationship.”

The doctrine of implied warranty of habitability is a “creature of public policy” that was first recognized by the Illinois Supreme Court in 1979. See Peterson v. Hubschman Construction Co., 76 Ill. 2d 31 (1979). 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 “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.” Id. at 40.  Such a warranty, whether or not explicitly stated in a contract, exists “by virtue of the execution of the agreement” between the builder and the buyer. Id. at 41.

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. That said, one intermediate appellate decision had allowed such a claim only where the homeowner “has no recourse to the builder-vendor,” 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.

At the heart of this decision is the distinction between contract and tort law. 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. The Supreme Court disagreed. It characterized the warranty as an implied contractual term imposed by the courts as a matter of public policy. 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.

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. “A person may choose not to commence an action in tort,” the court wrote, “but he [or she] cannot waive a duty imposed by the courts” (emphasis added). The fact that the implied warranty of habitability is subject to waiver is “a conclusive indication that a cause of action for breach of the warranty must be based in contract, not in tort.”

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 “economic loss doctrine.” This somewhat complex doctrine grew out of product liability law but is now frequently applied in construction cases. In its simplest form, it provides that “an action for economic loss requires the plaintiff to be in contractual privity with the defendant,” preserving the “distinction between tort and contract” by denying remedies in tort for complaints that are based in contract. 

Under the economic loss doctrine, also known as the Moorman doctrine in Illinois, tort claims for purely economic losses—without accompanying claims of personal injury or damage to other property—are limited to cases of fraud or misrepresentation.  See Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69 (1982).  Here, the court found that the latent defects that formed the basis of the condominium owners’ claims were “the definition of pure economic loss […], i.e., when the product disappoints the purchaser’s commercial expectations and does not conform to its intended use.”

This decision provides meaningful protection to Illinois subcontractors. 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. 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. 

The ruling protects subcontractors’ 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. 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. 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. 

Illinois Supreme Court Further Defines Product Liability Seller Exception

January 28, 2019

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.  He alleged strict product liability, negligent product liability and res ispa loquitur.  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). 

Cassidy then filed an Amended Complaint adding Taihua.  Taihua filed an Answer, but its counsel then withdrew.  The court entered a default judgment after Taihau failed to retain new counsel.  After Cassidy presented evidence, the court entered judgment of over $9.1 million against Taihua. 

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).

Thereafter, Cassidy sought to discover and collect assets from Taihua, as well as third-parties.  He was unsuccessful and filed a motion to reinstate China Vitamins under 735 ILCS 5/2-621(b)(4).  China Vitamins opposed the motion.  The trial court denied Cassidy’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). 

The Illinois Appellate Court for the First District rejected its prior interpretation of 2-621(b) as set forth in Chraca vs. U.S. Battery Manufacturing Co., 214 Il App. (1st ) 132325, 24  N.E.3d 183.  The court interpreted the statutory language to require a showing that the manufacturer is “judgment proof” or “execution proof” rather than “bankrupt or no longer in existence” before a previously dismissed seller or distributor could be reinstated as a party.  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.  The Illinois Supreme Court granted China Vitamins’ petition for leave to appeal pursuant to Supreme Court Rule 315(a).

The Illinois Supreme Court addressed how subsection 2-621(b)(4), requiring the plaintiff to show that “the manufacturer is unable to satisfy any judgment as determined by the court” prior to reinstatement of a seller or distributor, is be applied. 

The majority opinion, authored by Justice Kilbride, overruled Chraca 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).  The court held that if a plaintiff asserting product liability claims can establish “other circumstances” 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).  The court remanded the case to the trial court for consideration of the sufficiency of the evidence concerning Cassidy’s efforts to collect the default judgment.

While the Supreme Court declined to detail the specific evidentiary showing necessary, instead noting that “the precise formula needed to satisfy the plaintiff’s evidentiary reinstatement burden is best adduced by the trial court,” 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.  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.  The court found that the record suggests viable avenues for Cassidy’s collection efforts may remain untapped.

In reaching its conclusion, the majority noted that if section (b)(4) was interpreted to mean bankrupt or no longer in existence as Chraca suggests, it would be duplicative of section (b)(3), which is contrary to fundamental rules of statutory construction.  The court noted the language in (b)(4) is much broader than (b)(3).  The court also noted the fundamental policies underlying Illinois strict product liability law and public policy remain the same: “[T]o provide full compensation to plaintiffs injured due to defective or unsafe products whenever possible based on differences of the parties’ degree of culpability."  The majority found that its interpretation of (b)(4) “harmonizes the plain language of Section 2-621(b), when read in its entirety, the legislature’s intent, and the public policies underlying the enactment of our strict product liability laws to create cohesive and consistent statutory scheme.”

Justice Karmier authored the dissent, taking issue with how the majority framed the question before it.  He opined that the majority erroneously focused on a plaintiff’s ability to enforce a judgment rather than a manufacturer’ ability to satisfy it.  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).  He further took issue with the majority’s emphasis on the public policy behind strict product liability law generally.  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.

There remain open questions as to how 2-621(b)(4) is to be applied by a trial court.  Ultimately, the analytical dispute between the majority and the dissent may be one of semantics. Focusing on evidence of plaintiff’s efforts to collect the judgment from the manufacturer rather the manufacturer’s ability to satisfy it may be two sides of the same analytical coin. Both analyses will focus on the identification of a manufacturer’s assets and the plaintiff’s ability to secure those assets for payment.     
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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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