BSCR Firm News/Blogs Feed Oct 2019 00:00:00 -0800firmwise Instructions in Railroad Employment Case Rejected Again by 8th Circuit Oct 2019Employment & Labor Law Blog<p>The U.S. Court of Appeals for the Eighth Circuit has, for the second time, reversed and remanded a railroad employment case. Both reversals were based on jury instructions the Court deemed erroneous.&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp;</p> <p>Edward Blackorby was an employee of the BNSF Railway.&nbsp;He sustained an eye injury while on duty, but the existence and severity of the injury was not immediately apparent.&nbsp;Several days after Blackorby experienced eye irritation at work, a doctor removed a small metal shard from his eye.</p> <p>Shortly after the shard was removed, Blackorby notified his supervisor of the injury.&nbsp;According to Blackorby, his supervisors discouraged him from reporting the injury by telling Blackorby that he would be investigated for not reporting the injury immediately after it occurred.&nbsp;Nevertheless, Blackorby filed a formal injury report and was later notified by BNSF that he would be investigated.&nbsp;After the investigation, BNSF assessed discipline against Blackorby for a late report of personal injury.</p> <p>Blackorby filed a complaint with OSHA based on alleged violations of the whistleblower provisions of the Federal Rail Safety Act, 49 U.S.C. &sect;20109.&nbsp;OSHA determined that BNSF violated Blackorby&rsquo;s rights under the FRSA.&nbsp;These findings were challenged before an administrative law judge, but while the challenge was pending, Blackorby filed the present lawsuit in federal court for de novo review.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>The case was tried to a jury, which was instructed that Blackorby was not required to show that BNSF had a retaliatory motive in disciplining him.&nbsp;The jury returned a verdict for Blackorby and awarded him $58,240 in damages.&nbsp;The 8th Circuit reversed and remanded, holding that the jury instruction was erroneous, because Blackorby was in fact required to show that BNSF acted with retaliatory animus.&nbsp;<i>Blackorby v. BNSF Railway Co</i>., 849 F. 3d 716 (8th Cir. 2017).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>On remand, the court held a second jury trial on liability only.&nbsp;This time, the jury returned a verdict for BNSF.&nbsp;On appeal, Blackorby challenged several of the trial court&rsquo;s instructions to the jury.&nbsp;The 8th Circuit again agreed that the trial court committed prejudicial instructional error.&nbsp;<a href=" "><i>Blackorby v. BNSF Railway Co</i>., No. 18-2372 (8th Cir. 2019)</a>.</p> <p>First, the 8th Circuit found error in an instruction stating that BNSF could not be held liable if it disciplined Blackorby based on an honestly held belief that he engaged in misconduct or committed a rules violation.&nbsp;The Court held that liability can still exist notwithstanding such a belief, (1) if the employer&rsquo;s retaliatory motive also contributed to the decision to discipline, and (2) if the employer fails to carry the burden of proving by clear and convincing evidence that it would have taken the same action in the absence of the protected activity.</p> <p>The Court also determined that the instructions were erroneous because they misallocated and misstated the burden of proof.&nbsp;The instructions erroneously described the &ldquo;honestly held belief&rdquo; issue as part of Blackorby&rsquo;s prima facie case and not a part of BNSF&rsquo;s burden under the &ldquo;clear-and-convincing-evidence standard&rdquo;.&nbsp;&nbsp; The case was remanded to the District Court where we anticipate the case will again be tried before a jury with modified instructions.</p> House Passes SAFE Banking Act Sep 2019Financial Services Law Blog<p>In August we <a href=";anc=827&amp;format=xmldetail&amp;stylesheet=FirmNewsItems_blog&amp;p=5258">reported</a> on the challenges that financial institutions face in Missouri now that medical cannabis use is permitted, and we suggested that the SAFE Banking Act of 2019, <a href="">H.R. 1595</a>, would provide a much-needed safe harbor for banks handling cannabis money.</p> <p>Although there was doubt even a month ago that the SAFE Banking Act would pass, the bill was approved by 321-103, far more than the required 2/3 majority to pass through the House.</p> <p>The SAFE Banking Act is unique in that it draws both praise and objection from each side of the legislative aisle. While some Republicans support the bill due to its benefit to commerce and the financial services industry, other more socially conservative legislators refuse to support the bill because marijuana remains illegal under federal law, and some believe marijuana to be dangerous.</p> <p>Conversely, while the bill has garnered some Democratic support due to its progress toward future decriminalization of marijuana and scaling back the war on drugs, others simply do not want to give more power or leniency to financial institutions.</p> <p>This dichotomy of perspectives even within each party makes it difficult to predict how the SAFE Banking Act will fare in the Senate. But, there is no doubt that Missouri financial institutions would benefit from its passage, and proponents of the bill continue to push hard for it to be put into law.</p> <p>As a reminder, the SAFE Banking Act would not change the status of cannabis as a Schedule I controlled substance under federal law. But it would permit financial entities to provide checking and savings accounts, credit cards, loans, and other financial products to marijuana-related businesses, and it would also prohibit the feds from seizing assets or taking punitive action against those banking institutions.</p> <p>We will continue to monitor the status of this legislation.</p> Circuit Allows Class Action Against Facebook under Illinois' Biometric Information Privacy Act to Proceed in California Sep 2019Illinois Law Blog<p>Those on Facebook know the site is quite good at recognizing others in posted photos and suggesting friends to tag. Most click on the tag suggestion and move on with little to no thought on just how this happens behind the scenes.&nbsp;A class action filed in the Northern District of California will be allowed to proceed to consider whether Facebook&rsquo;s behind-the-scenes face-recognition technology violates Illinois&rsquo; Biometric Information Privacy Act (BIPA).&nbsp;<i>Patel v. Facebook, Inc.</i>, 932 F.3d 1264 (9th Cir. 2019).&nbsp;</p> <p>Nimesh Patel, individually and on behalf of all others similarly situated, filed a purported class action against Facebook alleging Facebook subjected the named plaintiffs and the purported class to facial-recognition technology without complying with BIPA, which is intended to safeguard their privacy.&nbsp;BIPA, 740 ILCS 14/1 et seq. (2008), prohibits the collecting, using, and storing of biometric identifiers, including a &ldquo;scan&rdquo; of &ldquo;face geometry&rdquo;.&nbsp;Plaintiffs alleged Facebook used scans of their photos without obtaining a written release and without establishing a compliant retention schedule.</p> <p>For years, Facebook has allowed its users to &ldquo;tag&rdquo; their Facebook friends in photos.&nbsp;In 2010, Facebook launched a feature called &ldquo;Tag Suggestions.&rdquo;&nbsp;This feature uses facial-recognition technology to analyze whether the user&rsquo;s Facebook friends are in photos and then &ldquo;suggest&rdquo; a tag.&nbsp;It does so by scanning the photo, extracting various geometric data points that make a face unique, and creating a face signature or map.&nbsp;It then compares the face signature to other faces in Facebook&rsquo;s database and matches it to other user profiles.&nbsp;These user templates are stored on Facebook servers in nine data centers, none of which is in Illinois.&nbsp;The named Plaintiffs are all Illinois residents who uploaded photos to Facebook while in Illinois.&nbsp;Facebook created and stored face templates for each of them.</p> <p>Facebook moved to dismiss the complaint for lack of standing on the ground that the Plaintiffs had not alleged any concrete injury.&nbsp;Plaintiffs, in turn, moved to certify the class.&nbsp;The district court denied the Motion to Dismiss and certified a class of &ldquo;Facebook users located in Illinois for whom Facebook created and stored a face template after June 7, 2011.&rdquo;</p> <p>On appeal of the standing issue, the 9th Circuit noted standing is established where a plaintiff has suffered an &ldquo;injury-in-fact&rdquo; defined as an invasion of a legally protected interest which is: (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical.&nbsp;It is not enough for a plaintiff to allege that a defendant has violated a statutory right without also showing that the plaintiff suffered a concrete injury-in-fact due to the statutory violation.</p> <p>In terms of BIPA, the appellate court noted that the Illinois General Assembly found that the development and use of biometric data presents risks to Illinois&rsquo; citizens.&nbsp;Citing to the Illinois Supreme Court&rsquo;s opinion in <i>Rosenbach v. Six Flags Entm&rsquo;t Corp.</i>, 2019 IL 123186, which we previously discussed <u><a href=";an=88848&amp;format=xml&amp;stylesheet=blog&amp;p=5258">here</a></u>, the court concluded that the statutory provisions at issue in BIPA were established to protect an individual&rsquo;s &ldquo;concrete interests&rdquo; in privacy, not merely his procedural rights related to how his biometric information was stored and used.</p> <p>The question then became whether the specific statutory violations alleged by the Plaintiffs in this case actually harmed or presented a material risk of harm to such privacy interests.&nbsp;The relevant conduct according to Plaintiffs was Facebook&rsquo;s collection, use and storage of biometric identifiers without a written release and a failure to maintain a retention schedule or guidelines for destroying biometric identifiers.&nbsp;Plaintiffs asserted this allows Facebook to create and use a face template and retain it indefinitely.&nbsp;The court noted that because the privacy right protected by BIPA is the right not to be subject to such collection and use, Facebook&rsquo;s alleged violation would necessarily violate the Plaintiffs&rsquo; substantive privacy interests.&nbsp;It concluded, therefore, that Plaintiffs have alleged a concrete injury-in-fact sufficient to confer standing.</p> <p>On the class certification issue, Facebook argued the district court erred in certifying the class because the Illinois legislature did not intend for BIPA to have extraterritorial effect.&nbsp;Because Facebook&rsquo;s collection, storage, and template creation took place on its serves outside Illinois, Facebook argued the district court would have to consider whether each relevant event took place inside or outside Illinois.&nbsp;The Court of Appeals disagreed.&nbsp;It is reasonable to infer that the General Assembly contemplated BIPA&rsquo;s application to individuals located in Illinois, even if some relevant events occurred outside the state.&nbsp;The court held that these are threshold questions of BIPA&rsquo;s application which can be decided on a class-wide basis.&nbsp;</p> <p>Facebook also argued that the possibility of a large class-wide statutory damages award defeats the superiority requirement for a class action.&nbsp;Again, the appellate court disagreed.&nbsp;The question of whether the potential for enormous liability can justify a denial of class certification depends on legislative intent.&nbsp;Here, there is nothing in BIPA&rsquo;s text or legislative history indicating a large statutory damages award would be contrary to the intent of the Illinois General Assembly.&nbsp;The court, therefore, affirmed the district court&rsquo;s order certifying the class.</p> <p>The law surrounding BIPA continues to develop, which is unsurprising considering the speed with which relevant technological capabilities develop.&nbsp;With this opinion, the extraterritorial reach of BIPA is established and may well lead to more litigation outside the confines of the Illinois state and federal courts.</p> Sterchi Recognized as "Life Sciences Star" by LMG Life Sciences Sep 2019Recognition<p>Thomas Sterchi has been recognized as a 2019 &rdquo;Life Sciences Star-Product Liability (Non IP Litigation and Enforcement)&rdquo; by LMG Life Sciences.</p> <p>A guide to the leading U.S. attorneys and firms in the life sciences industry, <i>LMG Life Sciences</i> recognizes attorneys and firms in four categories: Regulatory, Intellectual Property, Finance &amp; Transactional and Non-IP Litigation &amp; Enforcement.</p> <p>The selection process for the award is based on extensive research, including interviews with lawyers and clients active in the life sciences field. Life Sciences Stars are attorneys consistently recommended in the research process as reputable and effective attorneys in the industry.</p> <p>Sterchi has been recognized as a Life Sciences Star by the publication each year since its inception and has been recognized as a top lawyer by many other international, national and local publications, including Benchmark Litigation, Best Lawyers&reg; in America, Kansas City Business Journal Best of the Bar, Martindale-Hubbell, Missouri &amp; Kansas Super Lawyers, Who&rsquo;s Who Legal: Life Sciences, and Who&rsquo;s Who of Product Liability Defense Lawyers.</p> Sterchi Cowden & Rice Welcomes Ryan O'Grady in KC Sep 2019Firm News<p>Baker Sterchi Cowden &amp; Rice welcomes Ryan O&rsquo;Grady to the firm&rsquo;s Kansas City office. O&rsquo;Grady&rsquo;s practice with the firm will be focused on civil defense litigation with an emphasis in the areas of personal injury defense, premises liability, and product liability.&nbsp;</p> <p>Prior to joining Baker Sterchi, O&rsquo;Grady handled corporate transaction and intellectual property matters with another firm in the Kansas City metropolitan area.&nbsp;He received his undergraduate degree from the University of Kansas in 2013 and his Juris Doctor from the University of Kansas School of Law in 2016, where he competed as a member of the Transactional LawMeets team.&nbsp;</p> Circuit Affirms Single Captioned Theatre Performance for Hearing Impaired not Good Enough Under ADA Sep 2019Art, Entertainment & Fashion Law Blog<p>Title III of the Americans with Disabilities Act specifically prohibits discrimination on the basis of disability in the activities of places of public accommodation. This includes restaurants, schools, movie theatres, doctor&rsquo;s offices and performing arts theatres.&nbsp;42 U.S.C. &sect;12182(a).&nbsp;</p> <p>In <i>Childress v. Fox Associates, LLC</i>, two hearing-impaired patrons of The Fabulous Fox Theatre in St. Louis (&ldquo;The Fox&rdquo;) argued the theatre failed to provide appropriate accommodations under the ADA as a result of the theatre&rsquo;s offering of only a single captioned performance (Saturday matinee).&nbsp;Plaintiffs argued the ADA requires &ldquo;equal services,&rdquo; meaning the theatre was required to offer captioning when requested for <i>any</i> performance, subject only to the ADA&rsquo;s &ldquo;undue burden&rdquo; affirmative defense.&nbsp;During discovery, the Fox objected to providing financial information to support the &ldquo;undue burden&rdquo; defense, arguing the information was irrelevant.&nbsp;Plaintiffs argued the Theatre waived the defense by failing to provide financial information. The Fox argued that on-demand captioning was not a reasonable modification to their policies and procedures.&nbsp;&nbsp;</p> <p>The district court reasoned that failing to offer captioning at any and every performance where captioning was requested &ldquo;results in deaf persons being excluded, denied services, or otherwise treated differently than other individuals merely because of the absence of [an auxiliary] aid.&rdquo;&nbsp;Because The Fox did not assert and prove an undue burden defense, it was required to provide accommodations in the form of auxiliary aids.&nbsp;The District Court awarded injunctive relief requiring The Fox to provide captioning whenever it received a request two weeks prior to the show.&nbsp;The Court also awarded plaintiff $97,920 in attorney&rsquo;s fees.</p> <p>On appeal, The Fox argued it should be permitted flexibility to consolidate multiple captioning requests into one performance due to the expense of captioning.&nbsp;It further challenged the award of attorney&rsquo;s fees, arguing the court used an inflated hourly rate, allowed plaintiff&rsquo;s counsel to bill for tasks he should not have included, and failed to reduce the fee award to account for plaintiffs&rsquo; partial success on the summary judgment motion.</p> <p>The Court of Appeals first addressed the ADA requirements regarding public accommodations.&nbsp;Under the ADA, public accommodations must provide auxiliary aids and services to individuals with disabilities if the aids are necessary to enjoy &ldquo;meaningful access&rdquo; to the public accommodation.&nbsp;In a previous opinion, <i>Argenyi v. Creighton University</i>, the Eighth Circuit explained that under the ADA, a public accommodation shall provide auxiliary aids if the aids would be necessary for an individual to enjoy &ldquo;meaningful access&rdquo; to the public accommodation.&nbsp;The definition of &ldquo;meaningful access&rdquo; is an &ldquo;equal opportunity to gain the same benefit&rdquo; as a person without a disability.&nbsp;<i>Argenyi v. Creighton University</i>, 703 F.3d 441, 449 (8<sup>th</sup> Cir. 2013).&nbsp;</p> <p>The form of auxiliary aid necessary can be determined by the public accommodation, but once it is determined an auxiliary aid is needed, it must be provided unless doing so would &ldquo;be an undue burden or would fundamentally alter the nature of the provided benefit.&rdquo;&nbsp;42 U.S.C. 12182(b)(2)(A)(iii).&nbsp;Both fundamental alteration and undue burden are affirmative defenses that must be raised at the outset or are waived.</p> <p>The Fox argued that deaf and hearing-impaired patrons received meaningful access to the Fox&rsquo;s productions because it had never denied a request for captioning and provided a captioned performance of each production.&nbsp;Appellees and the court disagreed, noting hearing impaired patrons received access to a single matinee show on a Saturday for each production while other patrons had access for evening and weekday performances.</p> <p>The Court also found The Fox had failed to raise &ldquo;undue burden&rdquo; as an affirmative defense and had explicitly stated in its summary judgment briefing that it was not asserting an undue burden defense.&nbsp;&nbsp;&nbsp; The Court further found the district court did not abuse its discretion in awarding attorney&rsquo;s fees.</p> <p>Ultimately, the Eighth Circuit Court of Appeals held The Fox&rsquo;s policy required hearing-impaired individuals to attend a single Saturday matinee performance of each production and prevented them from attending a performance during the week or in the evening, thus excluding the individuals from &ldquo;economic and social mainstream of American life.&rdquo;&nbsp;</p> Beasley to Serve as Faculty Member of 2019 IDC Deposition Academy Sep 2019Firm News<p>Baker Sterchi Member Laura Beasley joins nine other Illinois attorneys as faculty of the 2019 Illinois Defense Counsel (IDC) Deposition Academy, a program designed specifically for Illinois Defense counsel providing an immersive experience for both lawyers with limited deposition experience, and those looking to refine their deposition skills. Academy participants team up in groups with faculty members to learn effective deposition skills and techniques.&nbsp;The experience is tailored to a group&rsquo;s experience level so that each participant comes away with tips, techniques and pointers.</p> <p>Beasley, who has been practicing for nearly 20 years, has extensive experience taking and defending depositions.&nbsp;Having undertaken over 40 jury trials in both state and federal courts, she has represented clients in all phases of litigation.&nbsp;Beasley is a member of several bar associations and currently serves as First Vice President of the IDC Board of Directors. She earned her Bachelor of Science from Austin Peay University and her law degree from Southern Illinois University School.</p> <p>&ldquo;I am confident that each and every participant of this year&rsquo;s Academy will walk away with a better understanding of how to effectively take and defend depositions &ndash; a win for the participants and the clients they serve,&rdquo; said Beasley.</p> <p>The IDC Deposition Academy is being offered in Naperville on Friday, October 4 and in Collinsville on Friday, October 11. To learn more about the Academy at each location, or to register, visit <a href=";group=">here</a> for Naperville or <a href=";group=">here</a> for Collinsville.</p> Agreements 101: they require - you guessed it - agreement. Sep 2019Employment & Labor Law Blog<p>The Eighth Circuit has issued a reminder to those seeking to bind employees and consumers to arbitrate future disagreements: don&rsquo;t gloss over contract basics.</p> <p>In <i>Shockley v. PrimeLending</i>, 929 F.3d 1012, Jennifer Shockley sued her former employer under the Fair Labor Standards Act, alleging she was not paid for all earned wages and overtime pay.&nbsp;PrimeLending moved the district court to compel arbitration based on a mandatory arbitration provision contained in its employee handbook.&nbsp;The district court denied the motion because it found no agreement to arbitrate existed between Shockley and the company.&nbsp;PrimeLending appealed the denial to the Eighth Circuit, which affirmed the district court&rsquo;s denial for the same reason.</p> <p>The Court reiterated in the <i>Shockley </i>opinion that arbitration agreements are favored by federal law and are enforced as long as the agreements are valid, and the dispute at issue falls within the scope of the agreement.&nbsp;Whether parties can be compelled to arbitrate any given dispute is a matter of contract law.&nbsp;Thus, while arbitration is preferred, parties may only be compelled to arbitrate if they contractually agreed to be bound by arbitration.&nbsp;A party seeking to compel arbitration must therefore show, as a threshold matter, that a valid and enforceable agreement to arbitrate exists.&nbsp;To do so, the three elements of a contract &ndash; offer, acceptance, and consideration &ndash; must be proven.&nbsp;</p> <p>Like most large employers today, PrimeLending made its employee handbook accessible electronically, and as part of Shockley&rsquo;s required annual policy review, the click of a mouse on the handbook in PrimeLending&rsquo;s computer network automatically generated an acknowledgement of review.&nbsp;PrimeLending employed Shockley for 13 months.&nbsp;In that time, Shockley completed the policy review process twice.&nbsp;PrimeLending claimed the two e-acknowledgments and Shockley&rsquo;s continued employment with the company were sufficient to carry its burden to prove Shockley accepted the arbitration provisions contained in the handbook.&nbsp;Both the district court and the Eighth Circuit held these facts were insufficient to prove Shockley accepted any purported offer related to arbitration.&nbsp;</p> <p>The employment handbook contained two arbitration-related provisions: (1) a &ldquo;delegation provision&rdquo;, and (2) a run-of-the-mill arbitration provision.&nbsp;A delegation provision is an agreement to arbitrate threshold issues concerning the arbitration agreement, mainly placing &ldquo;gateway questions of arbitrability into the hands of an arbitrator.&rdquo;&nbsp;In other words, a delegation provision is a separate agreement within the agreement to arbitrate, which, if valid, mandates that certain issues be determined by an arbitrator rather than by a judge before the core dispute is arbitrated.&nbsp;When successful, the challenge of a delegation provision renders the remainder of an arbitration agreement open to review by the courts.&nbsp;Accordingly, the Eighth Circuit in <i>Shockley</i> first reviewed the delegation provision contained in the handbook.</p> <p>The Eighth Circuit assumed, for the sake of discussion, that the delegation provision at issue constituted an offer.&nbsp;And it then reviewed the record to determine whether Shockley accepted the purported offer.&nbsp;Under Missouri law, &ldquo;mere continuation of employment [does not] manifest the necessary assent to [the] terms of arbitration.&rdquo;&nbsp;While continued employment may in some circumstances constitute acceptance when the employer informs all employees that continued employment constitutes acceptance, no such message was relayed to PrimeLending employees.&nbsp;Thus, Shockley&rsquo;s continued employment was not evidence that she accepted the delegation offer contained in the employee handbook.&nbsp;Next, the Court entertained the e-acknowledgments as means of Shockley&rsquo;s acceptance.</p> <p>Specifically, the Court explained that acceptance is present when the offeree (here, Shockley) &ndash; the person receiving the offer &ndash; signifies assent in a &ldquo;positive and unambiguous&rdquo; manner generally by affirmative words or action to the terms of the offer.&nbsp;The Court outlined the pertinent facts: Shockley&rsquo;s initial review of the handbook was not conditioned on her offer of employment, she had no memory of reviewing the handbook, nor did the record establish she actually reviewed the handbook.&nbsp;The Court held that PrimeLending could, at best, show Shockley acknowledged the existence of the arbitration provisions and was thus aware of the terms of her then-employer&rsquo;s purported contract offer.&nbsp;The Court held that Shockley&rsquo;s review of the handbook and the subsequent system-generated acknowledgment did not create clear acceptance and therefore no contract was created.</p> <p>Following review of the delegation provision, the Court turned its attention to the arbitration provision.&nbsp;Because both the delegation and arbitration provisions are grounded in contracts law and involve the same set of facts, the Court succinctly explained that the legal analysis of the arbitration provision was the same as analysis of the delegation provision, and that both analyses suffered from the same fatal flaw.&nbsp;The fact that the Court could not find that Shockley accepted any purported offer was dispositive of both analyses.&nbsp;Thus, PrimeLending failed to meet its burden to prove a valid agreement to arbitrate existed and the Court could not compel Shockley to arbitrate her claims.</p> <p>The lesson for businesses seeking to compel arbitration of employee or consumer claims is clear: the &ldquo;offeree&rdquo; of the arbitration clause should be asked, in the first instance, to affirmatively accept the arbitration clause.</p> Sterchi Obtains Jury Verdict for Retail Client in Personal Injury Matter Sep 2019Results<p>BSCR successfully defended a retail client in a personal injury lawsuit at a three-day trial in the Western District of Missouri. Plaintiff, whose van was serviced by our retail client with an oil change and tire rotation, claimed personal injuries from an incident that occurred three days after the service, when her hood flew open, shattering the windshield and blocking her forward view. With her forward view blocked, plaintiff lost control of the vehicle, veered into oncoming traffic, and went off then back onto the road. Plaintiff&rsquo;s claimed injuries included lacerations to her arms, face, chest and head, a fractured hyoid bone with surgical repair, whiplash, and PTSD.&nbsp; She claimed permanent problems swallowing and speaking even after the surgery.</p> <p>The defense was that the hood was properly closed, that plaintiff&rsquo;s throat injury could not have occurred the way she claimed (strangled by shoulder harness during accident), and that plaintiff was an opioid drug seeker from prior injuries to her neck that were over 12 years old.&nbsp; The jury returned a defense verdict for our retail client.</p> of "Confidential" Co-Defendant Settlement Prove Party Bad Faith and Earn Counsel a Disciplinary Referral Sep 2019Illinois Law Blog<p>A well-established and often referred to as sacred part of American jurisprudence is the confidential nature of settlement negotiations and terms. In a recent opinion, Illinois&rsquo; First District Appellate Court reminded litigants that such confidentiality, in fact, can be lost.&nbsp;</p> <p>In <i>Chernyakova v. Puppala, et al.</i>, 2019 IL App (1st) 173066, Plaintiff Elena Chernyakova sued Northwestern Memorial Hospital, McGaw Medical Center of Northwestern University and Vinaya Puppala, M.D. alleging that while she was hospitalized at Northwestern for alcohol intoxication, Dr. Puppala, an employee of McGaw, electronically accessed Plaintiff&rsquo;s medical chart and took and posted photos of her on social media.&nbsp;Plaintiff and Dr. Puppala knew each other socially, and while she was admitted, Dr. Puppala visited Plaintiff twice just hours after admission.&nbsp;He used his credentials to view Plaintiff&rsquo;s electronic medical chart and spoke with Plaintiff&rsquo;s treating physicians regarding her progress and possible discharge.&nbsp;On his second visit, Dr. Puppala took photographs of Plaintiff in what was still an intoxicated state and posted them to Facebook and Instagram.&nbsp;Plaintiff contested that she had consented to Dr. Puppala accessing her medical records, speaking to her treating physicians, or taking and posting her photograph.</p> <p>The Cook County Circuit Court granted summary judgment to Northwestern and McGaw, and Plaintiff proceeded to trial against Dr. Puppala.&nbsp;During trial, Plaintiff settled with Dr. Pappula and the parties requested an on the record &ldquo;hearing&rdquo; wherein the attorneys outlined the terms of the &ldquo;confidential&rdquo; settlement for the trial judge.&nbsp;Separately, Plaintiff pursued an appeal of the summary judgment in Northwestern and McGaw&rsquo;s favor.</p> <p>During the pendency of the appeal, Northwestern and McGaw&rsquo;s counsel obtained information that the terms of the &ldquo;confidential&rdquo; settlement called in question the validity of the factual underpinnings of the lawsuit.&nbsp;Defense counsel moved the trial court to unseal the transcript of the settlement hearing so that it might be considered by the appellate court on a motion to dismiss the appeal even though those proceedings had no direct connection to the summary judgment proceedings.&nbsp;The trial court ultimately unsealed the transcript, and the parties agreed it would be filed in the appellate court under seal.</p> <p>While generally the appellate court&rsquo;s review of summary judgment orders is strictly limited to the materials of record before the Circuit Court at the time the summary judgment was entered, this case presented a unique situation.&nbsp;As the appellate court noted, it implicated the appellate court&rsquo;s responsibility to &ldquo;strive to enhance and maintain confidence in our legal system.&rdquo;&nbsp;The appellate court found the contents of the settlement transcript lead to the inescapable conclusion that the appeal was frivolous and being pursued in bad faith.&nbsp;The transcript disclosed that at the hearing counsel stated the amount Dr. Puppala agreed to pay and that Plaintiff agreed to write favorable letters on the doctor&rsquo;s behalf stating that her underlying allegations were &ldquo;mistaken&rdquo; and that she consented to the photos and postings.&nbsp;Significantly, the appellate court learned that after the Circuit Court ordered the settlement hearing transcript unsealed, Plaintiff&rsquo;s counsel had nevertheless instructed the court reporter to not provide a copy to Defendants.</p> <p>On appeal, Plaintiff argued there is a presumption that favors the validity of confidentiality provisions in settlement agreements such that the settlement hearing transcript could not be unsealed as a matter of law.&nbsp;The appellate court explained that Plaintiff&rsquo;s argument demonstrated a misunderstanding of the confidentiality protection afforded to settlement agreements.&nbsp;Once Plaintiff&rsquo;s counsel described the terms of the settlement to the trial judge, any confidences evaporated and sealing the confidential terms did nothing to save them.&nbsp;By informing the trial judge of the settlement terms on the record, counsel made those terms a part of the public record which could not be sealed.</p> <p>The appellate court also found Plaintiff&rsquo;s counsel was incorrect in his assertion that Illinois Supreme Court Rule 408 protected the confidential nature of the settlement terms.&nbsp;Rule 408 provides that evidence of &ldquo;furnishing or offering or promising to furnish &ndash; or accepting or offering or promising to accept &ndash; a valuable consideration in compromising or attempting to compromise the claim&rdquo; and &ldquo;conduct or statements made in compromise negotiations regarding the claim&rdquo; is inadmissible &ldquo;to prove liability&hellip; or to impeach through a prior inconsistent statement or contradiction[.]&rdquo;&nbsp;Such evidence may, however, be admissible to establish bad faith.&nbsp;Here, the inquiries into settlement negotiations was to establish wrongdoing and Rule 408 offered no protection to Plaintiff.</p> <p>The appellate court found it significant that Plaintiff did not directly question the substantive accuracy of the settlement terms, which on their fact are irreconcilable with Plaintiff&rsquo;s continued pursuit of her claim against the Defendants.&nbsp;Plaintiff, through counsel, affirmatively agreed to fully exonerate Dr. Puppala by providing a letter completely contradicting the factual bases of the lawsuit.&nbsp;She knew those letters would be sent to favorably influence regulatory or financial decisions involving Dr. Puppala, while simultaneously continuing her quest for money damages against the Defendants under theories she asserted were &ldquo;mistaken.&rdquo;</p> <p>The appellate court dismissed the appeal as frivolous and not pursued in good faith.&nbsp;Further, it found Defendants entitled to their reasonable attorney fees and costs incurred as a result of defending against the frivolous appeal.&nbsp;The court also concluded that it could not turn a blind eye to Plaintiff&rsquo;s counsel&rsquo;s instruction to the court reporter to not provide the Defendants will a copy of the hearing transcript in contravention of the trial court order.&nbsp;As a result, the court instructed the clerk of the appellate court to forward a copy of the opinion to the Attorney Registration and Disciplinary Commission.</p> <p>The decision corrects any misconceptions that settlement negotiations and terms are absolutely protected.&nbsp;One must question how far this holding might reach as there are many proceedings which are held &ldquo;on the record&rdquo; but with the transcripts later sealed.&nbsp;Perhaps more importantly, the opinion cautions counsel against showing a lack of respect for the Circuit Court and for the appellate process in a blind drive for a successful outcome.</p>