c919297.r97.cf2.rackcdn.comc919297.r97.cf2.rackcdn.com/u5lqfhby0ahpjjltlinjfg7mndiy9f... · For Your Consideration: The Current State of Post-Employment Restrictive Covenants in Illinois

For Your Consideration: The Current State ofPost-Employment Restrictive Covenants in Illinois and National Trends

Beyond Continued Employment as Adequate Consideration

The Illinois Association of Defense Trial Counsel

First Quarter 2015 l Volume 25, Number 1 l ISSN-2169-3668

MONOGRAPH

FEATURE ARTICLES

MONOGRAPH

FEATURE ARTICLESFolta v. Ferro Engineering:

A Shift in Illinois Workers’ Compensation Protectionfor Illinois Employers in Asbestos Cases

Accommodating the Accommodated?Not-For-Profits’ Challenges to the Contraception Mandate Exemptions

For Your Consideration: The Current State ofPost-Employment Restrictive Covenants in Illinois and National Trends

Beyond Continued Employment as Adequate Consideration

Folta v. Ferro Engineering:A Shift in Illinois Workers’ Compensation Protection

for Illinois Employers in Asbestos Cases

Accommodating the Accommodated?Not-For-Profits’ Challenges to the Contraception Mandate Exemptions

Beth A. Bauer — HeplerBroom LLC, Edwardsville

Brian J. Benoit — Goldberg Segalla LLP, Chicago

James K. Borcia — Tressler LLP, Chicago

Roger R. Clayton — Heyl, Royster, Voelker & Allen, P.C., Peoria

Catherine A. Cooke — Robbins, Salomon & Patt, Ltd., Chicago

Stacy E. Crabtree — Heyl, Royster, Voelker & Allen, P.C., Peoria

James L. Craney — Lewis Brisbois Bisgaard & Smith LLP, Edwardsville

Donald Patrick Eckler — Pretzel & Stouffer, Chartered, Chicago

Scott L. Howie — Pretzel & Stouffer, Chartered, Chicago

M. Elizabeth Dyer Kellett — HeplerBroom LLC, Edwardsville

Timothy R. Lessman — SmithAmundsen LLC, Chicago

David H. Levitt — Hinshaw & Culbertson LLP, Chicago

Gregory W. Odom — HeplerBroom LLC, Edwardsville

Bradford J. Peterson — Heyl, Royster, Voelker & Allen, P.C., Urbana

Brian Smith — Heyl, Royster, Voelker & Allen, P.C., Urbana

Dina L. Torrisi — HeplerBroom LLC, Chicago

COLUMNISTS

CONTRIBUTORS

PRESIDENTDAVID H. LEVITT Hinshaw & Culbertson LLP, ChicagoPRESIDENT-ELECTTROY A. BOZARTH HeplerBroom LLC, Edwardsville1ST VICE PRESIDENTR. MARK MIFFLIN Giffin,Winning,Cohen&Bodewes,P.C., Springfield2ND VICE PRESIDENTMICHAEL L. RESIS SmithAmundsen LLC, ChicagoSECRETARY/TREASURERBRADLEY C. NAHRSTADT Lipe, Lyons, Murphy, Nahrstadt & Pontikis Ltd., Chicago

DIRECTORSLAURA K. BEASLEY Joley, Nussbaumer, Oliver & Beasley, P.C., BellevilleJOSEPH A. BLEYER Bleyer and Bleyer, MarionR. MARK COSIMINI Rusin & Maciorowski, Ltd., ChampaignBRUCE DORN Bruce Farrel Dorn & Associates, ChicagoJOSEPH G. FEEHAN Heyl, Royster, Voelker & Allen, P.C., PeoriaROSSANA P. FERNANDEZ Fernandez and Associates, LLC, ChicagoTERRY A. FOX SmithAmundsen LLC, ChicagoEDWARD K. GRASSÉ Busse, Busse & Grassé, P.C., ChicagoJENNIFER GROSZEK Resolute Management, Inc., Midwest Division, ChicagoJENNIFER K. GUST Hinshaw & Culbertson LLP, ChicagoSTEPHEN G. LOVERDE LawOfficeofStevenA.Lihosit, ChicagoPAUL R. LYNCH Craig & Craig, LLC, Mt. VernonWILLIAM K. MCVISK Johnson & Bell, Ltd., ChicagoNICOLE D. MILOS Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, ChicagoDONALD J. O’MEARA, JR. Pretzel & Stouffer, Chartered, ChicagoAL J. PRANAITIS Hoagland, Fitzgerald & Pranaitis, AltonSCOTT D. STEPHENSON LitchfieldCavoLLP, ChicagoTRACY E. STEVENSON Robbins Salomon & Patt, Ltd., ChicagoPATRICK W. STUFFLEBEAM HeplerBroom LLC, Edwardsville HEATHER R. WATTERSON CNA, Chicago

EXECUTIVE DIRECTOR Sandra J. Wulf, CAE, IOMPAST PRESIDENTS:RoyceGlennRowe • JamesBaylor • JackE.Horsley• John J. Schmidt •Thomas F.Bridgman •William J.Voelker, Jr. •BertM.Thompson • John F. Skeffington • JohnG. Langhenry, Jr. • LeeW.Ensel •L. Bow Pritchett • John F.White • R. Lawrence Storms • John P. Ewart •RichardC.Valentine•RichardH.Hoffman•EllisE.Fuqua•JohnE.Guy•LeoM.Tarpey•WillisR.Tribler•AlfredB.LaBarre•PatrickE.Maloney•RobertV.Dewey,Jr.•LawrenceR.Smith•R.MichaelHenderson•PaulL.Price•StephenL.Corn •RudolfG.Schade, Jr. •LyndonC.Molzahn •DanielR.Formeller •GordonR.Broom•CliffordP.Mallon•AnthonyJ.Tunney•DouglasJ.Pomatto•JackT.Riley,Jr.•PeterW.Brandt•CharlesH.Cole•GregoryC.Ray•JenniferJeritJohnson•StephenJ.Heine•GlenE.Amundsen•StevenM.Puiszis•JeffreyS.Hebrank•GregoryL.Cochran•RickHammond•KennethF.Werts•AnneM.Oldenburg•R.HowardJump•AleenR.Tiffany

Illinois Association of Defense Trial Counsel

WWW.IADTC.ORG

Denise Baker-Seal — Brown & James, P.C., Belleville

Theresa Bresnahan-Coleman — Langhenry, Gillen, Lundquist & Johnson, LLC, Chicago

Julie K. Brown — HeplerBroom LLC, Edwardsville

Patrick P. Clyder — Swanson, Martin & Bell, LLP, Chicago

John P. Heil, Jr. — Heyl, Royster, Voelker & Allen, P.C., Peoria

Dana Hughes — Heyl, Royster, Voelker & Allen, P.C., Rockford

Zeke N. Katz — HeplerBroom LLC, Chicago

N. Drew Kemp — HeplerBroom LLC, Edwardsville

Emily J. Perkins — Heyl, Royster, Voelker & Allen, P.C., Peoria

Kimberly A. Ross — ButlerPappasWeihmullerKatzCraigLLP,Chicago

Colleen Tierney Scarola — University of Denver, Sturm College of Law, Denver CO

Patrick W. Stufflebeam — HeplerBroom LLC, Edwardsville

J. Matthew Thompson — Heyl, Royster, Voelker & Allen, P.C., Peoria

Joshua Turk — Chicago-KentCollegeofLaw,Chicago

Geoffrey M. Waguespack — ButlerPappasWeihmullerKatzCraigLLP,Chicago

Colin B. Willmott — Goldberg Segalla LLP, Chicago

http://www.iadtc.org

Monograph M-I For Your Consideration: The Current State of Post-Employment Restrictive Covenants in Illinois and National Trends Beyond Continued Employment as Adequate Consideration,byGeoffreyM.Waguespack, Denise Baker-Seal, Theresa Bresnahan-Coleman, James L. Craney, and KimberlyA.Ross

Feature Articles 4 Folta v. Ferro Engineering: A Shift in Illinois Workers’ Compensation Protection for Illinois Employers in Asbestos Cases, byPatrickW.Stufflebeam andJulieK.Brown 27 Accommodating the Accommodated? Not-For-Profits’ Challenges to the Contraception Mandate Exemptions, by Colleen Tierney Scarola and Joshua Turk

Columns 19 Appellate Practice Corner, by Scott L. Howie

56 Association News

7 Civil Practice and Procedure, by Donald Patrick Eckler

49 Civil Rights Update, by Brian Smith and John P. Heil, Jr.

18 Commercial Law, byJamesK.Borcia

3 Editor’s Note, by Beth A. Bauer

33 Employment Law, by James L. Craney

25 Health Law, by Roger R. Clayton, J. Matthew Thompson, and Emily J. Perkins

67 IDC Membership and Committee Applications

61 IDC New Members

62 IDC Notice of Election

54 IDC Quarterly Monograph and Feature Article Index — Volume 24

63 IDC 2015 Spring Symposium

39 Insurance Law Update, by Timothy R. Lessman

44 Legislative Update,byN.DrewKemp

36 Medical Malpractice Update,byDinaL.TorrisiandZekeN.Katz

2 President’s Message, by David H. Levitt

41 Product Liability, byBrianJ.BenoitandColinB.Willmott

11 Property Insurance Law, by Catherine A. Cooke

14 Recent Decisions, by Stacy E. Crabtree

45 Supreme Court Watch,byM.ElizabethDyerKellett

23 Workers’ Compensation Report, by Bradford J. Peterson and Dana Hughes

52 Young Lawyer Division, byGregoryW.OdomandPatrickP.Clyder

First Quarter 2015 | IDC QUARTERLY | 1

IDC QUARTERLYEDITORIAL BOARD

Beth A. Bauer,Editor-in-ChiefHeplerBroom LLC, Edwardsville

[email protected]

Brad A. Elward,ExecutiveEditorHeyl, Royster, Voelker & Allen, P.C., Peoria

[email protected]

Edward J. Aucoin, Jr., Associate EditorPretzel & Stouffer, Chartered, Chicago

[email protected]

John F. Watson, Assistant EditorCraig & Craig, LLC, Mattoon

[email protected]

Tara Wiebusch Kuchar, Assistant EditorHeplerBroom LLC, [email protected]

J. Matthew Thompson, Assistant EditorHeyl, Royster, Voelker & Allen, P.C., Peoria

[email protected]

The IDC Quarterly is the official publication of the Illinois Association of Defense Trial Counsel. It is published quarterly as a service to its members. Sub-scriptions for non-members are $100 per year. Single copies are $25 plus $5 for postage and handling. Requests for subscriptions or back issues should be sent to the Illinois Association of Defense Trial Counsel headquarters in Rochester, Illinois. Subscription price for members is included in membership dues.

Manuscript PolicyMembers and other readers are encouraged to submit manuscripts for possible publication in the IDC Quar-terly, particularly articles of practical use to defense trial attorneys. Manuscripts must be in article form. A copy of the IDC Quarterly Stylistic Requirements is available upon request from The Illinois Association of Defense Trial Counsel office in Rochester, Illinois. No compensation is made for articles published, and no article will be considered that has been submitted simultaneously to another publication or published by any other publication. All articles submitted will be subjected to editing and become the property of the IDC Quarterly, unless special arrangements are made.

Statements or expression of opinions in this publi-cation are those of the authors and not necessarily those of the Association or Editors. Letters to the Editor are encouraged and welcome, and should be sent to the Illinois Association of Defense Trial Counsel headquarters in Rochester, Illinois.

Editors reserve the right to publish and edit all such letters received and to reply to them. IDC Quar-terly, First Quarter 2015, Volume 25, No. 1., Copyright © 2015 The Illinois Association of Defense Trial Counsel. All rights reserved. Reproduction in whole or in part without permission is prohibited.

THE ILLINOIS ASSOCIATION OF DEFENSE TRIAL COUNSEL • P.O. Box 588 • Rochester, IL 62563-0588800-232-0169 • 217-498-2649 • FAX 866-230-4415 [email protected] • www.iadtc.org

SANDRA J. WULF, CAE, IOM, Executive Director

IN THIS ISSUE

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2 | IDC QUARTERLY | First Quarter 2015

David H. LevittHinshaw & Culbertson LLP, Chicago

President’s Message

Illinoishasnowenduredtwoofthemostexpensiveandcontentiousjudicialelections in United States history. In 2004, Illinois SupremeCourt JusticeLloydKarmeierwonahotlycontestedelection, in which, according to news re-ports,thecampaignsandtheirsupportersspentatotalofapproximately$9.3mil-lion.Tenyearslater,inthejustconcludedretentionelection,thetotal“spend”fortelevisionadsalone,wasreportedtobeapproximately$1.7million.

According to news reports, plain-tiff’slawyerswithcasespendingintheIllinoisSupremeCourtthat,ifsuccessful,couldresultinattorney’sfeesinexcessof a billion dollars (yes, that’s billionwith a “b”), contributed $2million,mostlywithintwoweeksoftheretentionelection, to “Campaign for 2016”—agroupwhich sought to defeat JusticeKarmeier’s retention. This included$600,000 each from two lawyers atone of the law firms.This is publicinformationavailableontheIllinoisStateBoardofElectionswebsite.http://www.elections.il.gov/campaigndisclosure/CommitteeDetail.aspx?id=26176

JusticeKarmeier received 60.7%ofthevoteandwasnarrowlyretained.The precariousmargin of his victoryhighlights the problem.Having spentmillionsofdollarstosupporttheirowncandidate in 2004, the plaintiff’s trialbarspentmillionsmoreintheretentionelection—to defeat a sitting justicebasedonhisvotestojoinhiscolleaguesintwohighprofile,largeclassactions.

Yet,theycomplainabouttheappearanceoffairnesswhenthatsamejusticemustraisecampaignfundsforhiselectionandlater retention.

Let’sbeclear:Wedon’tdisputetheFirstAmendmentrighttoraisefundsandtakepositionson judicialelections—orany other elections. The United States SupremeCourtdecisioninCaperton v. A.T. Massey Coal Co., Inc., 556U.S.868(2009),regardingcampaigncontributionsto judicial candidates is the lawof theland. Are we now going to descend to the levelwhereeverycasepresentsquestionsas towhetherandhowmuchopposing

civility, and professional competence.OurCoreValues include supporting afair,unbiased,and independentjudiciary.That does not mean giving a pass to every judge,regardlessoftheircapabilitiesorperformanceinoffice.Whenajudgedoesnotbelongonthebench,lawyersareinthebestpositiontoknow,andshouldbefreeto express their opinions to the electorate.

Idon’tpretendthatthereisagoodsolution, nor do I pretend to have theanswers—but, I doknow that answersto these questions must be sought.Lawyers, or anyone, spending millions ofdollarsonjudicialelectionsimpactstheperceptionof fairness in the entirejudicialsystem.

The bottom line is this: Judgesshould not have to raise the kinds ofdollars involved in these races. As a bar—not the “defense” bar and notthe “plaintiff” bar—but as a bar as a

Let’s be clear: We don’t dispute the First Amendment

right to raise funds and take positions on judicial

elections—or any other elections.

counsel contributed to or against thejudge’s campaign?Arewenowgoingtoinviteabackgroundinvestigationintoeveryappellatejudgewheneverwehaveanappeal?Judges,whotakeasolemnoathofoffice,shouldnotbeunderassaultbecauseoftheirvoteinasmallnumberofcasesinvolvinghugemonetarystakesorcontroversialissues.

Let’salsobeclearonsomethingelse:Judges, likeanyoneelseholdingpublicoffice, should be subject to legitimatecriticism.Themission of the IllinoisAssociation ofDefenseTrialCounselis to ensure civil justicewith integrity,

whole, we need to investigate solu-tions, together.Thiswill require someoutside-of-the-box thinking; so-called“merit” selection is not a panacea (itsimply moves the politics to another, less transparentandlessaccountablesetting),andputtingtheburdensolelyonjudgestoconsider withdrawal creates the potential forpartiestogamethesystem.BothsidesoftheIllinoistortbarhavelongtraditionsof professional respect for each other,andit istimethatweworktogethertofindawaytoreducetheabsurdlyhighamountofmoneywastedintheselectionandretentionofIllinoisjudges.

http://il.gov

— Continued on next page


Beth A. BauerHeplerBroom LLC, Edwardsville

Editor’s Note

As I write this column, it’s twodaysuntilChristmas.With threeyoungchildreninthehouse,theatmosphereissuper-chargedwithexcitement.Wedon’thaveachimneysoourstockingsarehungonthemantleabovethevent-freeceramicgaslogfireplace,andweareallhopefulforsomethingwonderfultofillthem.Incontrast,manyofusinthedefensebarfeellikewegottwolumpsofcoalfromtheIllinois legislatureandGovernorQuinnwiththeeliminationoftheconstructionstatute of repose for personal injuryclaimsduetoasbestosexposureandthereductionof civil juries to sixpersons.PleaseseetheLegislativeUpdatecolumn,byDrewKempofHeplerBroom LLC, formore information regarding IDC’sactivitiessurroundingthesetwonewlaws.Afollow-uparticleisalsoplannedfortheQuarterly’s nextissuethatwillanalyzetheimpactoftheselaws.

Despite the coal, my Christmas spirit is revived and warmed as I read theYoungLawyer’sReport,byPatrickClyder of Swanson, Martin & Bell, LLP andGregOdomofHeplerBroom LLC.TheYoungLawyersgroupheldawonderful fundraiser raising$1,000 fortheAutismResearchInstitute.Theyarealsoconductingawinterclothingdrive.NotonlyistheYoungLawyer’sgroupgivinggiftstothoseinneedbutalsotoaspiringlawyersthroughthefirsteverlawstudentwritingcompetition,andtotheircolleaguesthrougharefresheronthingstoconsiderbeforefilingacounterclaim.

Just as thewisemenbroughtgifts

toBethlehem,thisissueoftheQuarterly overflowswithgifts(andwisdom)forallofyou. WelcomeStacyCrabtreeofHeyl, Royster, Voelker and Allen, P.C. as the newcolumnistforRecentDecisions.Shereportsonacaseinwhichattorney’sfeeswereawardedagainstanemployeeofalo-calpublicentity.AttheheartofthecaseiswhetheracollectivebargainingagreementortheTortImmunityActcontrolswhetherthelocalpublicentitymustpaytheaward.Shealsoexplainswhyan Illinois courtdismissed law students’ fraud claimsallegingthatalawschooldefraudedthemintoenrollinginlawschoolandobtainingjuris doctor degrees.

TimLessman ofSmithAmundsen LLCwritestheInsuranceLawcolumnonCentral Mut. Ins. Co. v. Tracy’s Treasures, Inc.,2014ILApp(1st)123339.Thecaseinvolves claims that thedefendantvio-latedtheTelephoneConsumerProtectionAct,whichresultedinaconsentjudgmentbetweenaplaintiffclassandtheinsureddefendantfortheamountoftheinsured’spolicy limits. Tim explains the case and shares ideas that insurersmay use tochallengesuchconsentjudgments.

TheCivil Practice columnbyPatEcklerofPretzel & Stouffer, Chartered, providesanupdatetothepriormonographon the attorney-client privilege in the contextofalawyerseekinglegaladvicewhen a client believes the lawyer hascommitted malpractice. Pat explains that courtsinotherstatescontinuetowrestlewiththeapplicationofthefiduciary-dutyexception to the attorney-client privilege

whentheadviceissoughtfromalawyerin another jurisdictionwith differentattorney-clientprivilegelaws.Hefurtherexamines the circumstances ofwhichIllinoislawyersshouldbeawarewheninthissituationsothatthecommunicationremains privileged.

CatherineCookeofRobbins, Salo-mon, & Patt, Ltd., writes on the Illinois SupremeCourt’s decision inBruns v. City of Centralia,2014IL116998intheProperty Insurance column.Catherinereports that in Bruns,thesupremecourtanswers the question ofwhat types ofdistractions are within the “distraction exception”whenaninjuryoccursduetoanobviousdangerousconditiononacity’sproperty.

In Supreme CourtWatch, BethKellettofHeplerBroom LLC, reports on someofthecasesthattheIllinoisSupremeCourtwillbereviewing.Thecourtwillbe addressing the application of theaccountant-clientprivilegeandwhetherwrongfuldeathandsurvivalactionsmaybebroughtinacaseofdeathbysuicide.Thecourtwillalsoexaminewhenafullylitigatedcase,resultinginjudgment,maybereopenedonclaimsofnewevidence,which includes the relatedquestionofwhether a lower courtmay reinstate ajudgmentthattheIllinoisSupremeCourthaspreviouslyorderedbereversed.

This issue of IDC Quarterly also containsexcellentandinterestingfeaturearticles. Colleen Tierney Scarola writes anupdatetoSecular,For-ProfitCorpora-tions’ Ability to Challenge the Constitu-tionality of the Contraception Mandate, 24.2IDCQ.,10(2014),whichdiscussedthefive federal circuit court cases thathave received religious challenges tothe contraceptionmandate by privatecorporations and the courts’ decisions


Editor’s Note | continued Feature ArticlePatrick W. Stufflebeam*HeplerBroom LLC, Edwardsville

About the Author

extending certain constitutional rightsto corporations. Patrick StufflebeamofHeplerBroom LLC authoredapiececoncerning Folta v. Ferro Engineering, 2014ILApp(1st)123219,wheretheap-pellatecourtallowedatime-barredclaimalleging injuries arising fromexposuretoasbestostobebroughtasacivilactionbecause it is “not compensable”undertheWorkers’CompensationAct.Astheyexplain, the decisionmay have far-reachingconsequencesformanyIllinoisemployersandwillbe reviewedby theIllinoisSupremeCourt.

The biggest gift is for employersand the lawyers that advise them. The Monographgivesimportantguidanceonnon-compete agreements. Employment Law Committee members GeoffreyWaguespackandKimberlyRossofButler PappasWeihmullerKatzCraig LLP, DeniseBaker-SealofBrown & James, P.C.,TheresaBresnahan-Coleman ofLanghenry, Gillen, Lundquist & Johnson, LLC,andJamesCraneyofLewis Brisbois Bisgaard & Smith LLP,wroteaboutthecurrentviewsofIllinoiscourtsconcerningpost-employment restrictive covenants. Theyalso analyzenational trends con-cerningadequateconsiderationprovidedto employees that agree not to compete withaformeremployer.

BythetimeyoureadthisnoteandthisissueoftheQuarterly, the holidays willhavepassed,butpleaseallowmetowishyouabelatedHappyNewYear!Onthatnote, thinkaboutyourprofessionalgoalsandresolutions.Onewaytoelevateyour professional profilewith fellowlawyers,judges,legislators,andclientsistowritefortheQuarterly. Please consider contributing an article in2015. Itmayprovetobetheeasiestresolutiontokeep!

Patrick W. Stufflebeam is a partner of HeplerBroom LLC in its Edwardsville (Madison County), Illinois office. He concentrates his practice primarily in the areas of toxic tort, product liabil-ity, premises liability, and commercial litigation. He

is admitted to practice in Illinois, Missouri, and the Southern District of Illinois. He received his J.D. from Saint Louis University School of Law and his B.A. from Western Illinois University. Mr. Stufflebeam is a member of the IDC Board of Directors, DRI, and the Madison County Bar Association.

*Julie K. Brown, associate at HeplerBroom LLC, contributed to the content of this article. Mr. Stufflebeam gratefully acknowledges her contribution.

InJune2014,theIllinoisAppellateCourt,FirstDistrict,issueditsdecisioninFolta v. Ferro Engineering, 2014 IL App (1st) 123219.This holding couldhavefar-reaching repercussions on Illinoisemployers sued by current or formeremployees for alleged injuries theysufferedasaresultofasbestosexposuresdecades earlier.

According to the IllinoisWorkers’CompensationCommission’swebsite,“Workers’ compensation is a no-faultsystemofbenefitspaidbyemployerstoworkerswho experiencework-relatedinjuriesordiseases.”Welcome,IllInoIs Workers’ CompensatIon CommIssIon, http://www.iwcc.il.gov/ (last visitedDec. 12, 2014).The IllinoisWorkers’CompensationAct(theAct)wasdesignedtoprovideasystemofcompensationforemployeeswhowereinjuredinaccidents“arisingoutof”and“in thecourse”oftheiremployment.820ILCS305/1et seq.

TheAct serves a two-fold pur-pose: (1) to provide employeeswithanexpeditedsystemforrecoveryfromwork-relatedinjuries;and(2)toprovideemployerswith a predictable formulafor their potential liabilities.Folta, 2014 ILApp (1st) 123219,¶ 26; see also 820 ILCS310/1. In exchange forrelinquishingcommonlawdefenses,theemployer’sliability“becamefixedundera strict and comprehensive statutoryscheme, andwas not subjected to the

Folta v. Ferro Engineering:A Shift in Illinois Workers’

Compensation Protection for Illinois Employers in Asbestos Cases

sympathiesofthejurorswhosecompas-sion for fellowemployeesoften led tohigh recovery.” McNamee v. Federated Equip. & Supply Co., Inc., 181Ill.2d415 (1998).

The Foltacourtheldthatwhen“aninjuredemployee’spotentialclaimundertheAct is time-barred before he everlearnsof it, thusdeprivinghimof anypotentialforcompensationundertheAct,”theAct and theWorkers’OccupationalDiseasesAct(820ILCS310/1et seq.)arenottheplaintiff’sexclusiveremedyastheclaimis“notcompensable.”ThisarticlewillfirstanalyzetheFolta court’sanalysisand,second,willdiscusstheimpactoftheFolta holding on Illinois employers.

http://il.gov



Folta Facts

Folta claimedexposure to asbestosduringhisemploymentatFerroEngineer-ing.ThedecedentwaslastemployedbyFerroin1970.Folta, 2014ILApp(1st)123219,¶2.Followinghis2011diagnosiswith asbestos-relatedmesothelioma,41years after his employmentwithFerroended,hefiledacivilactionintheCircuitCourtofCookCounty,insteadofaclaimfor compensationwith theWorkers’Compensation Commission. Id. It was notdisputedthatdecedent’sinjurywasac-cidentalandarosefromandwasreceivedduring the course of his employment.Id. ¶ 28.The circuit court granted theemployer-defendant’smotiontodismissthecauseofactionbecausethedecedentdidnotfilehisclaimbeforetheprescribedtime limitations in the Act expired. Id. ¶3.TheIllinoisAppellateCourt,FirstDistrict,reversedthecircuitcourt.

The Acts

Both theWorkers’CompensationAct and theWorkers’ OccupationalDiseaseAct(togetherreferredtoastheActs)containprovisionsthatprovidetheexclusiveremedyforanemployeeseek-ing compensation for an employment-relatedinjuryordisease.See 820ILCS310/11; 820 ILCS 305/5. TheActs’exclusivityprovisionsareconstruedasanalogous. James v. Caterpillar Inc., 242 Ill.App. 3d 538 (5thDist. 1993).

Overtime,courtshavecarvedoutexcep-tionstotheexclusivityprovisions.TheexclusivityprovisionsoftheActsdonotapplywhentheinjuryordisease:(1)wasnotaccidental;(2)didnotarisefromtheemployment;(3)wasnotreceivedduringthecourseofemployment;or(4)isnotcompensable.Meerbrey v. Marshall Field & Co., Inc., 139Ill.2d455,467(1990).

TheWorkers’OccupationalDis-easesActprovidesrecoveryonlyifthedisablement “occurswithin two yearsafterthelastdayofthelastexposuretothehazardsofthedisease,exceptincasesofoccupationaldiseasescausedby...asbestosdustand,insuchcases,within3yearsafterthelastdayofthelastexpo-suretothehazardsofsuchdisease.”820ILCS310/1(f).TheActprovides,“[I]nanycaseof injurycausedbyexposureto . . . asbestos, unless application forcompensationisfiledwiththeCommis-sionwithin25years after the last daythat the employee was employed in an environmentof...asbestos,therighttofilesuchapplicationshallbebarred.”820ILCS305/6(d).While theFolta courtaddressedbothActs,itfocusedprimarilyontheWorkers’CompensationAct.

Folta Analysis

1. What is “Not Compensable”?

Under theAct, onlymedical billsand temporary or permanent, partial

or total disability are compensable.820 ILCS 305/8.Yet, theFolta courtfoundthatatime-barredclaimwas“notcompensable,”andsupporteditsfindingbased onToothman v. Hardee’s Food Sys., Inc., 304Ill.App.3d521,525(5thDist.1999)andSchusse v. Pace Subur-ban Bus Div. of the Reg’l Trans. Auth., 334Ill.App.3d960(1stDist.2002).

In Toothman, theplaintiffemployeessought damages for emotional distressbased on an incident in which theirmanagers strip-searched them in an attempt tofindmissingmoney.Tooth-man, 304 Ill.App. 3d at 523-24.Theemployees did not have any medical or hospitalbills,andtheydidnotmissanywork.Id. at533.Initsanalysis,thecourtfocusedfirst on the employer’s failureto determinewhether the plaintiff’sclaimswere compensable by utilizingmedicalexaminationspermittedbycivildiscovery. Id. It continued, “[i]n orderforinjuriestobecompensableundertheAct, theremustbe somedemonstrablemedicalevidenceofinjuryinorderforthe claimant/employee to recover.” Id. ThecourtreasonedthatiftheplaintiffswantedtorecoverfordamagesoutsideofthoseallowedforintheAct,theycouldface the “arduous task” of presentinga civil case where they were not going tobenefit fromtheAct’spresumptionsrelated to an employer’s liability andan employee’s lack of contributorynegligence. Id.at534.

In Schusse, theplaintiffbusdriverwasinjuredwhenhisdriver’sseatcol-lapsed. Schusse, 334Ill.App.3dat962.Later,theemployerreplacedthedriver’sseatatissue.Id. Theemployeethensuedhisemployerandthemanufactureroftheseat alleging, in part, negligent spoliation of the evidence. Id. at963. Inholdingtheplaintiff’sspoliationoftheevidence

This holding could have far-reaching repercussions

on Illinois employers sued by current or former

employees for alleged injuries they suffered as a

result of asbestos exposures decades earlier.


Feature Article | continued

claimstobe“notcompensable”undertheAct,theappellatecourtfocusedongivingeach of theMeerbrey factorsweight.“Ifanaccidentalinjuryiscompensablemerelybecauseitaroseoutofandinthecourseofemployment, then the fourthprongoftheMeerbreytestissuperfluous.ThiscourtwillnotinterpretMeerbrey in suchawaythatthefourthprongbecomesmeaningless.” Id. at 970. As such, itheld that the claims for spoliation arenotcompensableundertheActbecausetheyarenotthetypeofdamagesthatarerecoverableundertheAct.Id.at969.

LikeToothman and Schusse, the Folta court focused on equating com-pensability to recoverability to givethe fourthMeerbrey exception its own weight.UnlikeToothman and Schusse, however, the Folta courtwasnotdealingwithclaimeddamagesthatareunrecov-erableundertheAct.Instead,theFolta courtwaspresentedwithatime-barredclaim.BecauseToothman and Schusse holdthatthetypeofdamagessoughtinaclaimundertheActdeterminestheircompensability, one could argue thatToothman and Schusse donotsupportthepropositionthatatime-barredclaimis “not compensable” for the purposeofescapingtheAct’sexclusivityprovi-sions. Toothman and Schussefocusonthe termsof theAct and the types of damages sought to determine if theclaims are “compensable.”To extendthis analysis to hold that any claim that doesnotobtainrecoveryundertheActis “not compensable,” and thereforeoutsideof theAct’sexclusivityprovi-sions,isinconflictwiththelanguageoftheAct.820ILCS305/5(a);820ILCS305/6(d).

2. The Court is toInterpret Legislation

It is the court’s role to interpretlegislation by ascertaining and givingeffecttotheintentofthelegislature—notto legislate. Moore v. Grafton Tp. Bd. of Tr.,2011ILApp(2d)110499,¶3.“Thecardinalruleofstatutoryinterpretation,towhichallotherrulesaresubordinate,istoascertainandgiveeffecttotheintentofthelegislature.”Balmoral Racing Club, Inc. v. Topinka, 334Ill.App.3d454,458(1stDist.2002).Legislativeintentisbestdetermined by the statutory language.Balmoral Racing Club, 334 Ill.App.3d at 458-59.Further, “[a] courtmustconsidertheentirestatuteandinterpreteachofitsrelevantpartstogether.”Id. Ifthemeaningofanenactmentisunclearfrom the statutory language, the courtmaylookatthelaw’spurposeaswellasothersourcessuchaslegislativehistory.Carterv.Workers’Comp.Comm’n,2014 ILApp(5th)130151WC,¶19.

The language of theAct clearlyprovidesforaperiodoflimitation.See 820 ILCS 305/6; see also 820 ILCS310/1.Further,therearetimelimitationsandstatuteofreposespecifictoasbestos-related maladies. See 820ILCS310/1;820ILCS305/6.Inaddition,theActsetsforththetypeofdamagesthatarerecov-erable. 820 ILCS305/8.TheAct alsouseslanguagelike“bar”and“exclusive”toindicatethatitisanemployee’ssolemethodofredressagainstanemployerforinjuriesthatareaccidentalandariseoutofandinthecourseoftheemploy-ment. 820 ILCS 305/6(d); 820 ILCS305/5;820ILCS305/11.

IftheGeneralAssemblydidnotwanttohaveclaimsbasedonasbestos-relateddiseasesfiledwithin3years,orasbestos-related injury claims filedwithin 25years, itwould not have included the

clear language of sections 310/1 and305/6. Had the GeneralAssemblyintended to provide more protracted deadlinesforasbestos-relatedmaladies,wished to provide an exception to the acts’ exclusivity for asbestos-relatedinjuriesordiseases,orwishedtomakeothersortsofdamagesrecoverableundertheact,itwouldhavedoneso.

TheclearlanguageoftheActpro-videsfora25-yearstatuteofreposeforthe filing of an application for com-pensationunder theAct—which is theplaintiff’sexclusiveremedy.820ILCS305/5(a);820ILCS305/6(d).Exceptionsto theAct’s exclusivity provisions aremeant tobe limited.Rosales v. Verson Allsteel Press Co., 41Ill.App.3d787,789(1stDist.1976).

IftheActisread,astheFoltacourtsuggests, tomean that a time-barredclaimis“notcompensable”andthereforeoutside of theAct’s exclusivity provi-sions, the plain languageof theAct isignored.Limitingthe“notcompensable”exceptiontothetypesofdamagessoughtsupportstheplainmeaningoftheAct’sexclusivity provisions aswell as theprovisions related to the type of dam-ages that are compensable, even if theclaimarisesafterthelimitationsperiodprescribedintheAct.

Impact of Folta

At its core, Folta is a case involving an employee suing his employer forinjuries sustainedduring the course ofhisemployment.Hisinjurywasallegedlyaresultofhisexposuretoasbestos,andhefiledhisclaimaftertheexpirationofthe 25-year limitations period in the Act. InofferinganavenueforcompensationoutsideoftheAct,theFolta decision has placedIllinoisemployersatriskoftime-less liability andpotential juryverdicts



incivilcasesfromemployeesandformeremployees.

TheresultofFolta maybethatsomeIllinoisemployersmusteither:(1)waivethetimelinessdefenseattheCommissionanddefendunder theAct;or (2) asserttimeliness,whichresultsinafindingof“not compensable” and subsequentlycivilliability.Underthesecondscenario,Illinoisemployersmaybeprohibitedfromassertingotherdefenses theymayhavehadbeforetheCommission.Further,ifacivilsuitispermittedagainstthelastIl-linoisemployer,prioremployers(whoareaffordedprotectionfromanemployee’sclaimsundertheAct)mayfacetheirowncivilliabilities.Thepotentialformultiplerecoveries, however, goes against the clear goaloftheAct.Toothman, 304Ill.App.3dat533(stating,“Apartof[the]largerpurpose [of theAct] is also topreventdoublerecoveriesandtheproliferationoflitigation.”).Iftime-barredisconsidered“notcompensable”insteadofbarred,theemployer’s choice to “assert orwaive”places them in a positionof having tochoose betweenwaiving a limitationsdefenseandproceedingintheIndustrialCommission, or asserting a limitations defenseandfaceacivilsuit.Employerssuedinasbestoscases,willbeplacedinthepositionofpayingforworkers’com-pensationinsuranceandthenonlyhavingachoicebetweenliabilityundertheActorpossibleliabilityunderacivilsuit.

TheIllinoisSupremeCourtgrantedFerroEngineering’sPetitionforLeavetoAppealonSeptember24,2014.Thecasehasnotyetbeenheardby the supremecourt.

About the Author

Civil Practice and ProcedureDonald Patrick EcklerPretzel & Stouffer, Chartered, Chicago

Donald Patrick Eckler is a partner at Pretzel & Stouffer, Chartered. He practices in both Illinois and Indiana in the areas of commercial litigation, professional malpractice defense, tort defense, and insurance coverage. Mr. Eckler earned his under-

graduate degree from the University of Chicago and his law degree from the University of Florida. He is a member of the Illinois Association of Defense Trial Counsel, the Risk Management Association, and the Chicago Bar Association. He is the co-chair of the CBA YLS Tort Litigation Committee. The views expressed in his article are his, and do not reflect those of his firm or its clients.

TheSupremeCourtofOregonhasjoined the SupremeCourt ofGeorgiaandtheMassachusettsSupremeJudicialCourt in holding that under certaincircumstances an attorney represent-ing a current client can confidentiallycommunicatewith counsel regardingpotential liabilitytothatcurrentclient.CrimsonTraceCorp. v.DavisWrightTremaine LLP, 326 P.3d 1181 (Or.2014);St. SimonsWaterfront, LLC v.Hunter, Maclean, Exley, & Dunn, P.C., 746S.E.2d98(Ga.2013);RFF Family Partnership, LP v. Burns & Levinson, LLP, 991N.E.2d 1066 (Mass. 2013).BuildingontheMonographpreparedbythe Civil Practice Committee in the IDC Quarterly, adiscussionisrequiredofthisfurtherrefusalofanotherstatesupremecourttoapplythefiduciary-dutyexcep-tion to the attorney-client privilege. See DonaldP.Eckler,et al., The Attorney-Client Privilege in Malpractice Claims, 24.3IDCQ.,M-1(2014).

It is typical in a legal malpractice actionthattheclaimant(formerclient)isabletoobtainalldocumentsrelatedtothedefendantlawfirm’srepresentationoftheclaimantintheunderlyinglitigation.Inatrendseenacrossthecountry,defendantlaw firms have successfully refusedto produce communications betweenthe lawyers involved in representing the claimant in the underlying disputeand the defendant lawfirm’s in-housecounsel.Theprotectedcommunications,whichoccurredwhilethelawfirmwasstill representing the claimant, regarded advicefromthefirm’sin-housecounsel

The Attorney-Client Privilege’sContinued Expansion

to the attorneys who had allegedly com-mitted malpractice on how to proceed in dealingwith a potential or actualclaimofmalpractice.Thedefendantlawfirmshave invoked the attorney-clientprivilegetoshieldthesecommunicationsfrom disclosure. In seeking to obtainthesecommunications,theplaintiffshaveaskedthecourtstoapplythefiduciary-duty exception to the attorney-clientprivilege.

Prior to this recent trend, there was great support for this exception to beapplied, and for such communicationsto be produced.KoenBookDistrib. v.Powell, Trachman, Logan, Carrle, Bow-man & Lombardo, P.C.,212F.R.D.283,285-286(E.D.Pa.2002);Bank Brussels Lambert v. Credit Lyonnais, S.A., 220 F.Supp.2d283,287(S.D.N.Y.2002);


Civil Practice and Procedure | continued

SonicBlue, Inc. v. Portside Growth and Opportunity Fund.,No.07-5082,2008LEXIS 181, at *26 (Bankr.N.D.Cal.Jan. 18, 2008);Thelen Reid & Priest, LLP v. Marland,No.C06-2071VRW,2007U.S.Dist.LEXIS17482(N.D.Cal.Feb.21,2007);TattleTale Alarm Systems v. Calfee, Halter & Griswold, LLP, No. 10-cv-226,2011U.S.Dist.LEXIS10412(S.D.Ohio,Feb.3,2011).

The IllinoisAppellateCourt FirstDistrict, in Garvy v. Seyfarth Shaw LLP, 2012 ILApp (1st) 110115, ¶¶ 35, 38,and MDA City Apartments LLC v. DLA Piper LLP,2012ILApp(1st)111047,¶¶ 15-17, refused to acknowledge theexistenceofafiduciary-dutyexceptionto the attorney-client privilege underIllinois law, and thus, protected attor-neys’ communicationswith eachotherregardingadisputewithacurrentclient.As this trend to protect these type ofcommunications continues to grow,whether by refusing to acknowledgethefiduciary-dutyexception,asdidtheIllinoiscourtsandtheOregonSupremeCourt, or by recognizing the existenceoftheexceptionandfindingthatitdidnotapply,asdid thecourts inGeorgiaandMassachusetts, it is important thatattorneysand theirfirms recognize theissueandprepareaccordinglytoprotectthemselvesandtheirfirms.

The Supreme Court of Oregon Weighs In

In Crimson Trace,326P.3dat1195,theSupremeCourtofOregonreversedthe holding of the trial court.Relyingupon the language of the codifiedattorney-client privilege in that state, the supremecourt found that theprivilegeapplied to protect communicationsbe-tweentheformerlawyersoftheplaintiffandtheirin-housecounsel,andthatthe

exceptiondid not apply.DavisWrightTremaine(DWT)wasengagedbyCrim-sonTrace to prosecute certain claimsrelatedtoapatentinfringementdisputewith LaserMax. Id.at1183.ThepatentinfringementlitigationturnedpoorlyforCrimsonTrace as counterclaims chal-lengedthevalidityofthepatentclaimsthatservedasthebasisforsuit.Id.DWThad prepared the original patent applica-tion, and therefore a potential conflictof interest arose betweenDWT andCrimson Trace. Id.at1183-84.CrimsonTraceandLaserMaxultimatelyreacheda settlement of the patent litigation.Id. at 1184.That agreementwas tobeconfidential.Id.However,DWT,actingascounselforCrimsonTrace,disclosedpartofthesettlementagreementinawaythat implied that LaserMax had conceded liability.Id. LaserMax complained, and thecourtrequiredthattheentireagree-ment be disclosed. Id. Crimson Trace thenbroughtalegalmalpracticelawsuitagainstDWT.Id.

OncethedisputebetweenDWTandCrimson Trace arose, the lawyers repre-sentingCrimsonTraceconsultedwiththeQualityAssuranceCommittee(QAC)atthefirm.Id.TheQACwasasmallgroupoflawyersatDWTthathadbeenspecifi-callydesignatedbythefirmasin-housecounsel. Id.During the course of thelegal malpractice claim, Crimson Trace sought the communications betweenthe lawyers who represented Crimson Trace in the underlying litigation andtheQAC. Id. at 1184-85.Finding that

the attorney-client privilege did not apply becauseoftheconflictofinterestbytheQACinrepresentingmembersofthefirminconflictwithclientsofthefirm,andinspiteofthefactthecommunicationswerekeptconfidential,thetrialcourtorderedthatDWTproducethecommunications.Id.at1185.

Inreversingthetrialcourt’sopinion,theSupremeCourtofOregonfirst ad-dressed whether the attorney-client privi-legeappliedatalltothissituation.Id. at 1187.Oregon’sattorney-clientprivilegeis codified inOregonEvidenceCodeSection 503. Id.The court viewed itstaskasdeterminingwhatthelegislatureintendedincodifyingtheattorney-clientprivilege. Id. Similar to most states, there arethreeelementsfortheattorney-clientprivilege to apply inOregon: (1) thecommunication is between the clientandlawyer;(2)thecommunicationwasconfidential;and,(3)thecommunicationwasmadeforthepurposeofobtainingadvice. Id.Thecourt rejectedCrimsonTrace’sargument that there isa fourthrequirement:thereasonableexpectationsof the parties that an attorney-clientrelationship existed. Id.at1188.

Thecourtrejectedthisargumentontwobases.Id.First,thecourtstatedthattherewasno support in the statute forsucharequirement.Id.Second,thecourtrejectedtheattemptbyCrimsonTracetoapply lawyer discipline cases regarding disputesaboutwhetheranattorney-clientrelationship existed, holding that the rea-sonableexpectationoftheclientastothe

In reversing the trial court’s opinion, the Supreme

Court of Oregon first addressed whether the attorney-

client privilege applied at all to this situation.



existenceofarelationshiphasnothingtodowiththeissuesinthiscaseinwhichthe attorney and client agree that there was an attorney-client relationship. Id.

After rejecting the existence ofa fourth element, the supreme courtturned to the first element ofwhetherthere was an attorney and client at all in this case. Id.at1188-89.ThecourtfirststatedthatnoneofthepartiescontestedthattheprivilegewouldhaveappliediftheDWT lawyers had consultedwithoutsidecounsel.Id.at1189.Thecourtstatedthatnothinginthestatutecouldbeconstruedtoprecludeanin-houselawyerfrombeinganattorneyand the lawyerin the samefirmasbeing theclient inan attorney-client relationship. Id. The courtrejectedtheargumentthatallowingattorneyswithinafirmtobecounselforother lawyers in the samefirmwouldundermine the attorney-client relation-ship by holding that its interpretationofthestatuteprevailedoverthepolicyargument.Id.

Looking at the second element,whether the communications wereconfidential,thesupremecourtheldthatthe communicationswere confidentialdespitehavingbeenmadewithlawyersinWashington, who CrimsonTracearguedweresubjecttothemorestringentrestrictions ofWashington law. Id. at 1190.Thecourtrejectedthisargumentand relied upon the requirement thatOregon applies its own law to determine evidentiaryissues.Id.

As to the third element, while acknowledging the trialcourt’sfindingthattheattorney-clientprivilegewouldapplybutforthefiduciary-dutyexcep-tion, the supreme court found that thecommunicationswere for the purposeofobtaininglegaladviceastothefulfill-mentofprofessionalresponsibilitiestoCrimson Trace. Id.at1190-91.

Havingconcludedthattheattorney-client privilege applied, the court thenconsidered whether any exceptions to the privilege applied. Id. at 1191.After looking at the exceptions to theattorney-client privilege listed in the applicable statute, and determiningthat none of those applied, the courtturned to thefiduciary-duty exception.Id.After examining the application ofthe fiduciary-duty exception in otherjurisdictions, the supreme court ruledthatbecausethefiduciary-dutyexceptionwas not listed as an exception to the attorney-client privilege in the Oregon statute,whichwasacompleteenumera-tionoftheexceptionsrecognizedinthatstate,itwouldnotrecognizeandadoptthe exception. Id.at1192-95.

Steps to Take to Protect Communications from Disclosure

To apply these principles for anIllinois practitioner, a review of theapplicableIllinoisRulesofProfessionalConductisimportant.BothRules1.6(b)(4) and 5.1 permit communicationsby lawyers in a firmwith in-houselawyers. Specifically, Rule 1.6(b)(4)provides an exception to the general confidentialityrequirementsofRule1.6for a circumstance inwhich a lawyerseeks“tosecurelegaladviceaboutthelawyer’scompliancewiththeseRules.”Comment9toRule1.6providescolortothisexception:

A lawyer’s confidentiality ob-ligations do not preclude alawyer from securing confi-dential legal advice about thelawyer’spersonalresponsibilitytocomplywiththeseRules.Inmost situations, disclosing in-formationtosecuresuchadvice

will be impliedly authorizedforthelawyertocarryouttherepresentation. Even when the disclosure is not impliedlyauthorized, paragraph (b)(4)permitssuchdisclosurebecauseoftheimportanceofalawyer’scompliancewith theRules ofProfessionalConduct.

Ill. rules of prof’l ConduCt R. 1.6,cmt.9(2010).Rule5.1shedslightontheresponsibilitiesofmanaginglawyersandfirmsofallsizestoensurethattheRulesarefollowed.Comment3toRule5.1specificallycontemplatestheroleofin-housecounsel:

Othermeasures thatmay berequiredtofulfilltheresponsi-bility prescribed in paragraph(a) can depend on the firm’sstructure and the nature of itspractice. In a small firm ofexperienced lawyers, informalsupervisionandperiodicreviewofcompliancewiththerequiredsystemsordinarilywillsuffice.In a largefirm, or in practicesituations in which difficultethical problems frequentlyarise,moreelaboratemeasuresmaybenecessary.Somefirms,forexample,haveaprocedurewhereby junior lawyers canmake confidential referral ofethical problems directly to adesignated senior partner or special committee.

Ill. rules of prof’l ConduCt R. 5.1, cmt.3(2010).TheseRuleswerespecifi-callycitedbytheIllinoisappellatecourtin Garvyandprovidetheframeworkforestablishingprocedurestocomplywith


Civil Practice and Procedure | continued

theRules and to eliminate or at leastmitigatethedamagefromanydisputeswith a client.

In addition to looking at the ap-plicableRulesofProfessionalConductandcomments,notethatIllinoisfollowsthecontrol-grouptestpriortolookingatspecificstepstobetakentoprotectfromthedisclosureofcommunications.Con-solidation Coal Co. v. Bucyrus-Erie Co., 89Ill.2d103,118-19(1982).Whilethereisnocaseonpoint,erringonthesideofcautionpractitionersshouldassumethatthecontrol-grouptestwouldapplywithequalforcetolawfirmsasitdoestoothercorporationsandorganizations.Thus,fora lawfirm to protect communicationsregarding claims against the lawfirminIllinois,thecommunicationsmustbelimitedtothedecisionmakersofthelawfirmandthosethatdirectlyadvisethosedecisionmakers.

There are a number of practicalsuggestionstocomportwiththerequire-ments of the control-group test. First,anycommunicationsregardingtheissueshouldonlybesharedwiththeexecutivelevelofthefirm.Indeed,inidentifyingthelawyerwithinthefirmfromwhomadvice regarding a conflict is sought,the firm should attempt to identifyan individual on the firm’s executivecommittee,orothergroupchargedwithmakingdecisionsforthefirm.

Second,while it is preferable toconsultwithoutsidecounselforclaimsagainstthefirmthatmayarise(becausethereisnodisputethatcommunicationswithoutsidecounselwouldbeprotected),thefirm should also identify in-housecounsel.The identificationof in-housecounselshouldbecommunicatedtothelawyers in thefirmsothat thelawyersknow fromwhom to seek advice intheeventofapotentialoractualclaimagainstthefirmbaseduponaparticular

attorneys’ conduct.This advice couldbeparticularlyimportantinavoidingormitigatingtheextentofaclaimifsuchadviceissoughtearlyon.

Third,dependingonthesizeofthefirm,more than one in-house lawyershouldbe identified.This safeguard isimportantbecauseaneventcouldariseinwhichthedesignatedin-housecounselwasinvolvedintherepresentationoftheclientandisthereforeimplicatedintheallegedmalpractice.Ifthefirmhasonlydesignated one in-house lawyer, andthatlawyerhasaconflict,thenthefirmcouldbeleftwithoutin-housecounselinthat situation.Like all representations,an in-house lawyermust be free ofconflictbeforetakingonanassignment.Therefore, in drafting a policy to ad-dresstheseissues,backuporsecondaryin-house counsel should be identified.Further a procedure for identifying aconflict for the designated in-housecounselshouldbeprepared.Becausethedesignatedin-houselawyerislikelytobeamemberoftheexecutivelevelofthefirm,proceduresforshieldingthatlawyerfromsuchcommunicationsregardingthedefenseofthefirmshouldbeundertakenifthein-houselawyerhasaconflict.

Fourth,thein-houselawyer,oranyfeesgeneratedbyoutsidecounsel,mustnot be paid by or billed to the clientwithwhom the firm is in conflict. Iftheclientwithwhomtheconflictexistspays for the lawyers to obtain advice,orisevenbilledforthoseservices,theattorney-clientprivilegewouldlikelybewaivedandthefiduciary-dutyexceptionwould apply.United States v. Jicarilla Apache Nation,131S.Ct.2313,2326(2011).Keeping a strict demarcationbetweentherepresentationoftheclientand therepresentationof thefirmas itrelatestothepotentialoractualclaimoftheclientisthehallmarkofmaintaining

the attorney-client privilege in this very complex and ethically challenging context.

Finally,anycommunicationsregard-ing the disputewith the clientmustspecifically identify that those com-municationsareintendedforthepurposeofanalyzingitsownpotential liability,andnot for the purpose of the client’sinterests. The easiest way to do this, and to prevent billing the client for theseservices,wouldbetoopenaseparatefileforthedisputewiththeclient.

Thesesuggestionsareapplicabletopractitioners in Illinois and its limited scope of the attorney-client privilegeand the non-codified attorney-clientprivilege.As illustrated inCrimson Trace, where the Supreme Court ofOregon’s analysiswas entirely reliantonthelanguageofthestatutecodifyingtheattorney-clientprivilege,thesourceoftheprivilegeisespeciallyimportant.Firmsthathaveofficesinseveralstates,orwhicharehandlingaparticularcasein temporary or pro hac vice admission, shouldconsider thepossibilityofvari-able applicationsof the attorney-clientprivilegeinagivensituation.

Manystates,includingallofIllinois’neighbors,Wisconsin, Iowa, Indiana,Missouri, andKentucky,havecodifiedtheattorney-clientprivilegeinastatute.IADC Multinational Legal Privilege Project-Part III, IadC (June 2012),http://www.iadclaw.org/assets/1/7/DAn-gelo_-_Attorney-Client_Privilege_-_Addendum_for_States_-_June_2012.pdf.Inhandlingcasesinthosestates,oranystatewithacodifiedattorney-clientprivilege,analysisofthelanguageofthatparticular codification of the privilegecanbeuseful,andperhapsdispositive,indeterminingwhetherthefiduciary-dutyexceptionisincludedintheexceptionsto the privilege.

http://http://www.iadclaw.org



Firmsshouldalsoconsiderwhetherthe state in which they are practicing hasadoptedthecontrol-grouptestorthesubject-mattertest,asthatcanbeinstruc-tiveastohowafirmshouldprepareforprotecting internal communications insituationswhereaconflictwithaclienthas arisen.The neighboring states ofKentuckyandIowahavebothadoptedthe Upjohnsubject-mattertest.

As it relates to cross-border com-municationswithin a firm related toa conflictwith a client, a firm shouldprepare for a ruling similar to theholding in Crimson Tracethattherulesregarding privilege in the state in which themalpracticeactionisbroughtapply,notwithstandingtherulesinanotherstatethatmaybemoreorlessrestrictive.InCrimson Trace,theactionwasbroughtin Oregon and the lawyers had com-municationwithin-housecounselfromWashington.Crimson Trace, 326P.3dat 1190.The plaintiff argued that themorerestrictiveprivilegeinWashingtonshouldapply.Id.TheOregonSupremeCourt disagreed. Id.Accordingly, ifa firm has offices in other states, butdesignatedin-housecounselinIllinois,thefirmshouldbepreparedfortheotherstate’srulesregardingprivilegetoapply,andnotIllinois’rules.

Conclusion

This is an issue thatmust be ad-dressedbyfirmsofallsizesandbytheirinsurers.Riskmanagementstrategiesforlawfirms should involve taking stepsto have confidential communicationstomitigate or eliminate disputeswithclients,andtoavoidconflictsofinterestthatcouldincreasetheliability.

Catherine A. CookeRobbins, Salomon & Patt, Ltd., Chicago

Property Insurance Law

About the Author

Catherine A. Cooke is an associate at Robbins, Salomon & Patt, Ltd. and concentrates her practice in the area of commercial litigation and creditors’ rights. She earned her undergraduate degree from Indiana University–Bloomington in 2003, and

law degree from The John Marshall Law School in 2006, where she served as Administrative Editor of The John Marshall Law Review. She is licensed to practice law in both Illinois and Indiana.

Intheeraofconstantinternetcon-nectivityandmultitasking,itisdifficulttogoanhourwithoutobservingsomeonewhoisvisiblydistractedbyonethingoranother.Ifyoulookaround,itiseasytospot.Thehurriedprofessional,withherhead down while texting, who enters the crosswalkas it starts toflash“DON’TWALK.”Thedriverwhohasbeensittingatthestoplightforafullfifteensecondsafterthelightturnsgreenbecauseheisonacellphoneeither texting,figuringout the fastest route to get frompointA topointB,orperhaps justcheckingsocial media.

What types of distractions willallow a person to claim the “distraction exception”whenan injuryoccursasaresult of an obvious dangerous condi-tiononproperty?TheIllinoisSupremeCourtrecentlyaddressedthisissueinthecontext of theLocalGovernment andGovernmentalEmployeesTortImmunityAct and provided some answers.

Bruns v. City of Centralia

OnMarch 27, 2012, the plaintiff,VirginiaBruns,then79yearsold,drovetoaneyecliniclocatedinCentraliaforascheduledappointment.Bruns v. City of Centralia,2014IL116998,¶4.Ms.Bruns parked her car on the street infront of the clinic, just as she had oneachof her previous ninevisits to the

The Age of Distracted Living –Illinois Supreme Court Tackles the

“Distracted Exception” to theOpen and Obvious Rule

clinic. Bruns,2014IL116998,¶4. Whilewalking towards the clinic entrance,she stubbed her toe on a crack in thesidewalkandfell,injuringherarm,leg,andknee.Id. Atthetimeofthefall,Ms.Brunswas looking “towards the doorand the steps”of the clinic, andwhileshe had “definitely” noticed the crackinthesidewalkonpriorvisits,shewasnotsureshenoticeditonthedateofheraccident. Id.

Thedefectatissuedevelopedovera period of several years.Roots fromanearby tree had caused the sidewalkto crack and becomeuneven. Id. ¶ 5. Sometimebefore2009,aclinicemployeehadcontactedthecityaboutthesidewalkand had offered to remove the tree at


Property Insurance Law | continued

the clinic’s expense; however, the citywould not authorize removal of the100-year-oldtreebecauseofitshistoricsignificance.Id. Laterin2009,aclinicemployee had contacted the city afterlearning that someone had tripped and fallen, but the city never repaired thesidewalk.Id.

Trial Court Proceedings

The plaintiff alleged that the citynegligentlymaintainedthesidewalkandpermitted it to remain in a dangerouscondition. Id. ¶6. Thecityfiledamotionforsummaryjudgment,arguingthatthedefectwas“openandobviousasamat-teroflaw”andthatitwasnotrequiredto foresee and protect against injuriesfrom an open and obvious dangerouscondition. Id.Theplaintiff argued thatsimplylabelingthedefectas“openandobvious”didnotbar recoverybecausethecityshouldhavereasonablyforeseenthatapedestriancouldbecomedistractedand fail to protect herself against thedangerous condition. Id. The “distrac-tion”wastheplaintifflookinguptowardstheclinicdoor,anditwasareasonablethingforthecitytoexpectsomeonetodo. Id. ¶7. There were no other alleged distractions. Id.

The trial court granted the city’smotion for summary judgment andfoundthatthesidewalkdefectwasopenand obvious as amatter of law andrejectedtheplaintiff’sargumentthatthe“distraction exception” applied underthe circumstances. Id. ¶ 8. The trialcourtdeclinedtoexpandthedistractionexemption, reasoning that under theplaintiff’sargument,“themereexistenceofanentrance,and/orstepsleadinguptoit,wouldprovideauniversaldistrac-tionexceptiontotheopenandobviousdoctrine.” Id.

Appellate Court Proceedings—Was the Distraction Reasonably

Foreseeable?

On appeal, the parties disagreed about theapplicationof thedistractionexception. Id.As the appellate courtframedtheissue,“thekeyquestionwastheforeseeabilityofthelikelihoodthatanindividual’sattentionmaybedistractedfromtheopenandobviouscondition.”Bruns,2014IL116998,¶9(citingBruns v. City of Centralia, 2013ILApp(5th)130094,¶11).Theappellatecourtopinedthatitwasreasonablyforeseeablethatanelderlypatronoftheeyeclinicmayhavehisorherattentionfocusedtowardsthedoor rather than the path immediately underfoot.Bruns,2014IL116998,¶9.Theappellate court concluded that thecityhadadutytoremedythesidewalkinareasonabletimeframe,butwhetherthedutyhadbeenbreachedwasa factquestion.Id. Theappellatecourtreversedand remanded the case for furtherproceedings. Id.

The Illinois Supreme CourtWeighs In—The Common Law

“Open and Obvious Rule”

The underlying facts not being indispute,theonlyquestionfortheIllinoisSupremeCourtwaswhether the cityowed a duty to the plaintiff. Id. ¶ 13. Under Section 3-102 of the LocalGovernmentalEmployeesTortImmunity

Act,alocalpublicentityhasthedutytoexercise ordinary care and to maintain propertyinareasonablysafecondition.745 ILCS 10/3-102.TheTort Immu-nityActdidnotcreatetheduty;itonlycodifiedthegeneraldutythatexistedatcommon law. Bruns,2014IL116998,¶9;Bubbv.SpringfieldSch.Dist.186,167Ill.2d372,377-78(Ill.1995).

At common law, a party who owns land is not required to foresee andprotectagainst injury if thepotentiallydangerousconditionisopenandobvious.Rexroadv.CityofSpringfield,207Ill.2d33,44(Ill.2003).Thegeneralrationalefortheprinciplebeingthattheopenandobviousnatureoftheconditionwillwarnpersonswhoencountertheconditionstotakecaution toavoiddangeror injury.Bruns,2014IL116998,¶16; Bucheleres v. Chicago Park Dist.,171Ill.3d435,448 (Ill. 1996).Theopen andobviousrulehasbeenappliednotonlytocondi-tionssuchasfire,height,andbodiesofwater, but also to conditions includingsidewalk defects and holes in parkinglots, amongst others. Bruns, 2014 IL 116998,¶17;see e.g., Rexroad,207Ill.2dat36(holeinparkinglotnexttohighschool football field);Ward v.KMartCorp., 136 Ill. 2d132, 136 (Ill. 1990)(concretepostoutsideofretailstore).

Whenthere isnodisputeas to thephysicalnatureofthecondition,whetheritisopenandobviousisamatteroflaw.Bruns,2014IL116998,¶18.However,thefactthataconditionisopenandobvi-

As the appellate court framed the issue,

“the key question was the foreseeability of the

likelihood that an individual’s attention may be

distracted from the open and obvious condition.”



ousisnotaper sebartoafindingofduty.Acourtmust still apply the traditionaldutyanalysisbasedon thefactsof theparticularcase.Id. ¶19.

The “Distraction Exception”

TheIllinoisSupremeCourtconsid-ered whether the “distraction exception” to the open and obvious rule applied.Id. ¶ 20. The “distraction exception” applies when a landowner has reason to expectthataperson’sattentionmaybedistractedandas a result, “hewill notdiscoverwhatisobvious,orwillforgetwhathehasdiscovered,orfailtoprotecthimself against it.” Id. ¶ 20 (quotingrestatement (seCond) of torts§343A,cmt.f,at220(1965)).

When the possessor of land hasreason to expect the invitee will bedistracted, the outcome of the dutyanalysiswith respect to the first twofactors (foreseeability and likelihoodof injury) is “reversed.”Bruns, 2014 IL 116998, ¶ 20. In otherwords, theoperationoftheopenandobviousrulenegativelyimpactstheforeseeabilityandlikelihoodofinjury,whiletheapplicationof the distraction exception positivelyimpactstheforeseeabilityandlikelihoodofinjury.Id.

Thecityurgedthesupremecourttoreversetheappellatecourt’sdecisionforthesimplereasonthattheplaintiffwasnot actually distracted. Id. ¶21.Thecityarguedthatthefactthattheplaintifffixedherattentiononthedooroftheeyeclinicdidnotconstitutea“distraction.”Id. The plaintiffontheotherhand,argueditwasa “classic example” of the distractionexceptionbecausepeopledonotordinar-ilylookdownwardwhilewalkingandthecityshouldhaveanticipatedasmuch.Id.

TheIllinoisSupremeCourtagreedwiththecityand“conclude[d]thatthe

mere fact of looking elsewhere doesnot constitute a distraction.” Id. ¶ 23.While there is noprecisedefinitionofwhatwillconstituteadistraction,somecircumstancemust exist that requirestheplaintifftodiverthisorherattentionfrom the open and obviously danger-ous condition and prevent the personfrom avoiding the risk. Id. ¶¶ 23-28.The distractionswere also reasonablyforeseeablebasedonthecircumstancesandthedefendant’sconduct.Id. ¶29.

Is a “Self-Made” DistractionForeseeable?

Incontrasttothecasessummarizedbythecourt,theonly“distraction”thatMs.Bruns had identifiedwas that shewaslookingtowardsthedoorandstepsoftheclinicinsteadofthesidewalkatthetimeofherfall.Id. ¶ 30. Thecourtdis-tinguishedthattypeofdistractionfromthe other cases relied uponwhere theinjuredplaintiffwaslookingelsewheretoavoidanotherhazardorbecauseofsomeothertaskathandrequiringtheplaintiff’sattention. Id. ¶ 30.

ably amuch closer call), the plaintiffhigh school studentwhowasworkingasamanagerof the football teamwasdistractedbythefootballcoach’sinstruc-tionstoretrieveahelmetfromthelockerroom,whichcausedhimtofallinaholeinaparkinglotwhilereturningwiththehelmet. Rexroad,207Ill.2dat46.

ThecourtconcludedthatMs.Bruns’distractionwas, atmost a “self-madedistraction.” Id. ¶31.Theplaintiffordi-narilyshouldnotbeallowedtorecoverfor a self-created distraction that thedefendantcouldnotreasonablyforesee.Whittlemanv.OlinCorp.,358Ill.App.3d813,817-18(5thDist.2005).Thelawdoesnotrequireapossessoroflandtoanticipateorprotectagainstasituationthat “will only occur in the distractedmind of his invitee.”Whittleman, 358Ill.App.3dat818.

Notingthat“theconceptofforesee-ability is not boundless,” the courtdisagreedwith the plaintiff’s positionthat it isobjectivelyreasonablefor thecity to expect that a pedestrian, exercis-ing reasonablecare forhisorherownsafety,wouldlookelsewhereandfailto

The court found that to conclude as the plaintiff urged,

that simply looking elsewhere constitutes a “legal

distraction” would allow the distraction exception to

swallow the open and obvious rule.

For example, inWard v. KmartCorp,itwasforeseeablethattheplaintiffleaving the store while carrying a large purchasemay be distracted and notnoticethelargecementcolumnsoutsidethe door. Ward,136Ill.2dat153-54.Orin Rexroad v. CityofSpringfield(argu-

avoidtheriskofinjuryfromanopenandobvious sidewalk defect.Bruns, 2014 IL116998, ¶ 34.The court found thatto conclude as theplaintiff urged, thatsimply looking elsewhere constitutesa “legal distraction”would allow the


Property Insurance | continued

distraction exception to swallow the openandobviousrule.Id. The Illinois SupremeCourtdeclinedtodoso.

Nevertheless, determining how the open andobvious doctrine appliesdoesnotend the inquiry regarding thecity’sduty.Id. ¶35.Afteranalyzingthetraditional duty factors: (1) reasonableforeseeabilityoftheinjury,(2)likelihoodof injury, (3)magnitudeof theburdenofguardingagainst the injury, and (4)consequencesofplacingtheburdenonthedefendant,thecourtconcludedthatthe city did nothaveaduty toprotecttheplaintifffromtheopenandobvioussidewalkdefectunderthecircumstances.Id. Thesupremecourtthereforereversedtheappellatecourtandaffirmedthetrialcourt’sawardofsummaryjudgmentinthecity’sfavor.Id.

Lessons from Bruns v.City of Centralia

The Bruns v. City of Centralia rulinglikelyprecludes“self-madedistractions”likethoseintheopeningexamplesfromfallingwithinthe“distractionexception”to theopenandobviousrule.WhetherIllinois courts could conclude that amunicipalityshouldreasonablyforeseeapersonwouldbedistractedbyacellphone or similar handheld device still remainsanopenquestion.The IllinoisSupremeCourt’s refusal to allow thedistraction exception to swallow the open andobviousruleshouldgivesomepeaceofmindtomunicipalities.

Stacy E. CrabtreeHeyl, Royster, Voelker & Allen, P.C., Peoria

Recent Decisions

About the Author

Stacy E. Crabtree is an associate in the Peoria office of Heyl, Royster, Voelker & Allen, P.C. She represents businesses, not-for-profits, and gov-ernmental entities in com-mercial and tort litigation in state and federal court.

She also assists clients with commercial trans-actions, corporate governance, and compliance issues. Ms. Crabtree received her J.D., summa cum laude, from Florida Coastal School of Law and B.A., summa cum laude, from Bradley University.

In Winstonv.O’Brien,Nos.13-3553&14-1371,2014WL6057367(7thCir.Nov.14,2014),theplaintiffsoughtattor-ney’sfeesfromtheCityofChicagoaftersucceedinginacivilrightscaseagainstone of its employees. The plaintiffclaimedthedefendant,aCityofChicagopoliceofficer,handcuffedhimandthentasered and punched him repeatedly.Winston,2014WL6057367,at*1.Afterajurytrial,theplaintiffwasawarded$1in compensatory damages and $7,500inpunitivedamages.Id.Thereafter,theplaintiff sought $336,918 in attorney’sfees, ofwhich $187,467was awardedbecause the district court found therequestedhourlyratetoohigh.Id. The plaintiff thenfiledamotionaskingthecourttoorderthecitytopaytheawardedfeesorindemnifythedefendantforthefeesunderIllinois’sLocalGovernmentaland Governmental Employees Tort Im-munityAct,745 ILCS10/9-102 (TIA)basedonthecity’scollectivebargainingagreement(CBA)withitspoliceofficers.Id. at*1.Thedistrictcourtruledinfavoroftheplaintiff,orderingthecitytopaythe attorney’s fees. Id. at *2.The cityappealed. Id.During the pendency oftheappeal,thedistrictcourtorderedthecity to pay additional attorney’s feesin theamountof$90,777,whichwereincurred by the plaintiff after his firstrequestforfees.Id. Thecourtofappeals

Payment of Attorney’s Fees onBehalf of Employees Remains

Discretionary for Local Public Entities under the Tort Immunity Act Despite

Collective Bargaining Agreement

combineditsreviewofbothordersforattorney’sfees.

In a civil rights action, successagainst an individual government em-ployee does not necessarily entitle the plaintiff to recover fees from theemployee’s governmental employer.Kentucky v. Graham, 473U.S. 159,168 (1985).But, the plaintiffmay beentitledtosuchfeespursuanttoastateindemnification statute.Winston, 2014 WL6057367,at*2.TheTIAprovides:

A local public entity is em-powered and directed to pay anytortjudgmentorsettlementfor compensatory damages(andmay pay any associatedattorney’s fees and costs) for



which it or an employee while actingwithin the scopeof hisemployment is liable in themanner provided in this Article.

745ILCS10/9-102.Uponapplyingrulesofstatutoryconstruction,thecourtnotedthe discretionary language of theTIAwithrespecttoattorney’sfees,i.e., “may payanyassociatedattorney’sfees,”ver-sustheobligatorylanguagewithrespectto compensatory damages, i.e., “directed topayany tort judgmentorsettlementfor compensatory damages.”Winston, 2014WL6057367,at*3(quoting745ILCS10/9-102).As a result, the courtofappealsnoteditwaswithinthecity’sdiscretionwhethertopayattorney’sfeesundertheTIA.Id.at*3.

Despite thediscretionary languageoftheTIA,theplaintiffarguedthatthecity made the choice in advance to pay forattorney’sfeesforitsofficerswhoareliablefordamages.Id. at*4.Specifically,theCBAstatedthatsolongasanofficerisactingwithinhisorherscopeofem-ploymentandcooperatedwiththecity’sdefense, the city “shall be responsiblefor,holdofficersharmlessfromandpayfor damages ormonieswhichmaybeadjudged,assessed,orotherwiseleviedagainst any officer cover[ed] by [theCBA].”Id.at*1.TheplaintiffargueditwasnotaskingthecourttoenforcetheCBA,butrathertointerprettheTIAinlightoftheCBA.Id. at*4.

Thecourtofappealsnoted,however,that attorney’s fees are not expresslyincluded in the CBA. Id. at *4.TheCBAonlyrefersto“damagesormonies”which, if given the broadestmeaningpossible,could includeattorney’sfees.Id.Thebroadestinterpretation,however,couldalsoincludepunitivedamages,theindemnificationforwhichisprohibitedunder Illinois law. Id. Theplaintiff ar-

gued the city acknowledged theCBAincludedattorney’sfeesinaletterfromthe police commander, which said the citywould“payfeesincompliancewith”the TIA. Id. The city arguedhowever,thatthelettermerelyacknowledgedthatthecitywouldabidebyIllinoislaw.Id.

Inanyevent,bytheplaintiff’sownacknowledgement, he was seekingindemnificationunder theTIA,not theCBA. Id. The plaintiff failed to offersufficientbasisforthecourttofindtheCBAor thepolice commander’s lettermodifiedtheplainlanguageoftheTIA

such that a city’s decision to pay forattorney’s feeswould nowbecome anobligation. Id. The CBA did not even mention the TIA. Id. Furthermore, theCBA includes a grievance procedureand to interpret the CBA and the letter to require indemnificationwould risksidestepping the grievance procedureandarbitration,“whichhasanimportantroleinfederallaborregulations.”Id. In conclusion,thecourtofappealsheldthatthedistrictcourterredinorderingthecitytoindemnifythedefendantforattorney’sfees.Id.at*5.

Dismissal of Claims AgainstLaw School Under Consumer

Fraud Act UpheldIn Phillips v. DePaul Univ., 2014

ILApp(1st)122817,theplaintiffswerelicensedattorneyswhograduatedfromtheDePaulUniversityCollegeofLawbetween2007and2011andhaddiffi-cultyfindinglegalemploymentthatpaidasalarysufficienttoallowthemtorepaytheir student loans.Phillips, 2014 IL App(1st)122817,¶1.Inaclassactionlawsuit, the plaintiffs alleged a claimundertheConsumerFraudandDecep-tiveBusinessPracticesAct(ConsumerFraudAct), 815 ILCS505/1- 505/12,andfurtherassertedclaimsofcommonlawfraudandnegligentmisrepresenta-tion. Id.Theplaintiffsallegedthedefen-dantpublished“employmentandsalarystatistics that deceptively overstated the percentagesofrecentgraduateswhohadobtained full-time legal employmentwith salaries in excess of $70,000.”Id.The plaintiffs further alleged thatthey reliedupon those statisticswhenenrolling and remaining enrolled at DePaul.Id.

Specifically, DePaul publishedstatistics in 2006, 2008, and 2010reporting employment information fortheprecedingyear’sgraduatingclass.In2006,DePaulpublishedthat98%ofits2005graduateswere employedwithinninemonthsofgraduationinthefollow-ingareas:57%inprivatepractice;21%inbusiness;12%ingovernment;4%inpublic interest; 3% as judicial clerks;and2%inacademia.Id.¶9.DePaulalsostated the mean starting salaries were $82,890inprivatepracticeand$72,637inbusiness.Id.

The statistics published in 2008and2010weresimilarto2006,varyingnomorethanplusorminus7%inanygiven category. Id.¶¶10-11.Themeansalariespublishedin2008werethesameasthosepublishedin2006.Id. In 2010 themean salaries rose to $97,056 forthoseinprivatepracticeand$74,267forthoseinbusiness.Id.


Recent Decisions | continued

Theplaintiffsclaimedthesestatisticswere“incomplete, falseandmateriallymisleading”because thepercentageofemployment within ninemonths ofgraduation included any type of em-ployment,notjustjobsthatrequiredorpreferred a JurisDoctor (J.D.) degree,notjustfull-timepositions,andincludedjobstheuniversityprovidedtoitsowngraduateswhilestudyingforthebarorotherwiselookingfor“realjobs.”Id.¶12. With respect to calculating themeansalaries,DePaulonlyusedsalariesfromthosewithfull-timeemployment,whichaccording to the plaintiffs resulted inmean salaries that “were significantlydistorted to show higher salaries than statisticallywarranted and, therefore,were inherently misleading.” Id.¶13.

The amended complaint asserted thatasa resultof their relianceon theabovestatistics,theplaintiffspaidtensofthousandsintuition,someofwhichwaspaidforbytuitionloans,andgradu-atedwithjobprospectsstatisticallylessthan theywould have been had theygraduated from a universitywith theemployment numbersDePaul claimedto have. Id. ¶ 1.Theplaintiffs allegeddamages as follows: assumingDePaulinflated itsemploymentstatisticsbyXpercent (X to be determined) then theadvantageandvalueofthetuitionpaidbytheplaintiffstoDePaulwasreducedbyXpercent.Id.¶16.Asaresult, theplaintiffs damageswereX percent oftheamounttheypaidtoDePaulplus“astatisticallydeterminableamountofthelifetime income theywouldhavebeenexpected toearnaftergraduating fromDePaul if DePaul’s post-graduationemployment statistics had been thosethatDePaul had represented . . . less the statistically determinable amountofthelifetimeincometheywouldnowbe expected to earn, havinggraduated

fromDePaul,baseduponDePaul’struepost-graduationemploymentstatistics.”Id.¶17(emphasisinoriginal).DePaulfiled a combinedmotion to dismiss,whichthecircuitcourtgranted.Id.¶1.Theplaintiffsappealed.

Tostateaclaimunderthe[Con-sumerFraud]Act,acomplaintmust set forth specific factsshowing:(1)adeceptiveactorpractice by the defendant; (2)the defendant’s intent that theplaintiffrelyonthedeception;(3) the deception occurred inthe course of trade or com-merce; and (4) the consumerfraud proximately caused theplaintiff’sinjury.

Id.¶29(citingWhitev.DaimlerChryslerCorp., 368 Ill.App. 3d 278, 283 (1stDist. 2006)).The plaintiffmust sufferactual damages in an action under theConsumerFraudAct.Id. In this case, the courtfoundthattheplaintiffsfailedtoal-legeadeceptiveactorpractice,failedtoallegefactsshowingtheconsumerfraudproximatelycausedtheplaintiffs’injury,andfailedtoallegeactualdamages.

I. Failure to Plead aDeceptive Act or Practice

With respect to a deceptive act orpractice,thecomplaint“muststatewithparticularityandspecificitythedeceptive[unfair]manner of defendant’s acts orpractices . . . .” Phillips, 2014 IL App (1st)122817,¶32(quotingDemitro v. General Motors Acceptance Corp.,388Ill.App.3d15,20(1stDist.2009)).De-ceptiveactsorpracticesinclude,withoutlimitation, “the use or employment ofany deception, fraud, false pretense,falsepromise,misrepresentationor the

concealment, suppression or omissionof anymaterial fact,with intent thatothersrelyupontheconcealment,sup-pression or omission of suchmaterialfact***intheconductofanytradeorcommerce.” Id.¶33(quoting815ILCS505/2(1973)).

Theplaintiffs’allegedthedefendantcommitted deceptive acts or practices when failing to note the percentagesof graduates in positions not requiringa J.D. degreeor in part-timepositionsin relation to those employed within ninemonths of graduation, causingthe plaintiffs to believe that the datareported relatedonly to full-time legalemployment. Id. ¶ 39.The defendantnever stated that the statistics reported only included those in full-time legalemployment and otherwise never made anyaffirmativemisrepresentationsofthestatistics.Theappellatecourtfoundtheplaintiffs’ interpretationof the generalemployment statistics reported by thedefendant unreasonable as amatter oflaw. Id.ThecourtpointedtootherrecentcasesinNewYorkwithsimilarfindingsof unreasonableness with respect tolaw graduates’ interpretation of theirrespectivelawschools’statistics.Id.¶40 (citing,e.g., Gomez-Jimenez v. N. Y. Law Sch., 956N.Y.S.2d 54, 59 (N.Y.App.Div.2012)).

As for thepercentagesofemploy-mentwithin specific areas, only theareas of private practice and judicialclerkshipspresumablyrequireorpreferaJ.D.degree.Phillips,2014ILApp(1st)122817,¶41.Noneoftheotherareasre-ported,namelybusiness,governmental,academia,andpublicinterest,expresslyexcludedemploymentasanon-attorneyin the reporting. Id.

In further support of finding nodeceptive act or practice, the courtof appeals acknowledged that itmust


consider all of the information avail-able to the plaintiffs. Id. ¶ 43 (citingBober v. GlaxoWellcome PLC, 246F.3d 934, 938-39 (7thCir. 2001)). Inaddition to the reported employment statistics at issue, the plaintiffs hadinformationavailabletothemprovidedbytheAmericanBarAssociation(ABA)regarding the defendant’s graduates’employmentstatisticsand theOfficialGuidetoABA-ApprovedLawSchools(ABAGuides),whichexpresslyindicatethose reported employment statistics include legal,non-legal, full-timeandpart-time jobs.Phillips, 2014 IL App (1st)122817,¶43.

Concerning the plaintiffs’ allega-tionsrelatedtothedefendant’sreportingof salaries for only those in full-timepositions, the salaries were listed as averages, “meaning that some of thegraduatesearnedmorethantheaveragewhile others earned less than the aver-age.” Id.¶46.Nopromisesweremadethattheplaintiffswouldearnatorabovethe salaries reported and furthermore,theABAGuidesexpresslystated,“[t]hehighest-payingjobsweretheexceptionratherthantherule.”Id.Inconclusion,thecourtofappealsfoundtheplaintiffsdid not plead a deceptive act or practice.

Notably,becausethecourtdidnotfindthereportedemploymentstatisticsto contain any incomplete, false, ormisleading statements, the plaintiffs’claims under common law fraud andnegligentmisrepresentationalsofailed.Id.¶¶72,88.

II. Failure to PleadProximate Causation

In reaching the decision that the plaintiffs failed to allege proximatecausation, the appellate court notedthatagraduate’s success inbecoming

employed and achieving a particularsalary is dependent on a number offactors, includingwithout limitation:the economy, the availability of legaljobs,hisorheracademicperformance,practicalexperience,effortsinobtaininglegal employment, geographic area in whichemploymentissought,whetherhe or she seeks employment in thepublic sector or private practice, andso on. Id.¶52.

Proximate cause has two require-ments: (1) the cause in fact, i.e., the “butfor”cause,and(2)thelegalcause,i.e., that the injurywas a foreseeableconsequence of themisrepresentation.Id.¶50.Due to thenumberof factorsaffectingjobplacementandsalary, thecourtofappealscouldnotsay“that‘butfor’theemploymentinformationforthe2005, 2007, and 2009 classes at issueherethatplaintiffswouldhaveobtainedtheir desired jobs/salaries even upongraduationfromdifferentlawschools.”Id. ¶ 54.Becauseof the same factors,the court of appeals could not say theplaintiffs’ disappointing post-graduateemployment statuswas a foreseeableconsequenceoftheplaintiffs’decisionsto attend DePaul in reliance on thereported employment statistics. Id.¶55.Asaresult,theplaintiffsfailedtopleadproximatecausationundertheConsumerFraudAct.

III. Failure to Plead Damages

Aplaintiffmustsufferactualdam-agestobringaclaimundertheConsumerFraudAct, and the claimmust not bepredicatedonmerespeculation,hypoth-esis,conjecture,orwhim.Id.¶57.Thecourtnotedtheplaintiffsreceivedexactlywhat theypaid for, i.e., a J.D. degree.Id. ¶ 59.Additionally, the calculationmethods suggested by the plaintiffs

(Xpercentasthelossinvaluethetuitionpaid and the difference in expectedlifetime earnings)were based on thedefendant’s generalized employmentstatisticsconsistingofaveragesfrompastclasses. Id.¶¶59-63.Thestatisticsdidnotconstituteanypromisetotheplaintiffsastowhattheywouldactuallyreceive,andasaresult,thecourtdidnotseehowtheplaintiffswere actually damaged. Id. ¶¶59-60.SimilartoGomez-Jimenez, the court of appeals noted the calculationmethodswere speculative, especiallygiventhenumberoffactorsthatimpactanattorney’s lifetimeearningsand thelack of any certainty in predicting theimpact of the factors on any plaintiff.Id.¶¶60,65.

The plaintiffs’ claimswere ulti-matelydismissedwithprejudice,whichtheplaintiffsalsocontendedwaserror.Id.¶90.Notably, theclaimsthatwerethe subject of the appealwere raisedin an amended complaint, which the plaintiffsdidnotaskleaveofthecourttofile.Id.¶91.Thecourtofappealsupheldthedismissalwithprejudicenotingtheabsenceofanyabsoluterighttoamendpleadings, and citing to Matanky Realty Grp.,Inc.v.Katris,367Ill.App.3d839,844 (1stDist. 2006),which similarlyupheld the dismissal of the plaintiff’scomplaintwith prejudice, “where noexerciseofthatdiscretionwasrequestedbecause the record demonstrates thatplaintiffneversoughtleavetoamenditscomplaint.” Phillips,2014ILApp(1st)122817,¶91(quotingMatanky Realty, 367Ill.App.3dat844).


James K. BorciaTressler LLP, Chicago

Commercial Law

James K. Borcia is a part-ner with the Chicago firm of Tressler LLP, and is active in the firm’s litigation prac-tice with an emphasis on commercial and complex litigation. He was admitted to the bar in 1989 after he

received his J.D. from Chicago-Kent College of Law. Mr. Borcia is a member of the Chicago and Illinois State Bar Associations, as well as the IDC and DRI.

About the Author

The IllinoisAppellateCourt, FirstDistrict, recently dealtwith the issueofpiercingthecorporateveiland,insodoing,clarifiedamuddyissue.InJohn Buckley and Mama Grimm’s Bakery, Inc. v. Haithham Abuzir,2014ILApp(1st)130469(April10,2014),thecourtheldthatanon-shareholdercanbeliableforadebtagainstacorporation.Thecourtalsodecided that the businesswas nothingmore than a dummy corporation andalteregoofthedefendant.Id. ¶¶10-11.Illinois courts have long held that thefailure to follow corporate proceduremay lead to the individual liability ofashareholder,director,orofficer.Now,according to John Buckley, even a non-shareholder—whoisnotanofficer,director, or employee of a corporation—maybefoundindividuallyliableforajudgmentagainstacorporationwherethenon-shareholderexercisesonlyequitableownership and control over a corpora-tion, even if therewere no allegationsthat the non-shareholder engaged in any wrongdoing.

In John Buckley, abakerycorpora-tionanditsindividualownersoughttopierce the corporate veil of a pastriescorporationtocollectajudgmentdirectlyfromitsindividualfinancierandcontrol-ler.Thetrialcourtgrantedtheindividualdefendant’smotiontodismissbecausehewasnotashareholder,director,officer,or employee of the defendant bakerycorporation. Id. ¶5.Theplaintiffs ap-pealed the dismissal. Id. ¶6.

Appellate Court Upholds Piercingthe Corporate Veil Against

Non-Shareholder Employee

Onappeal,theplaintiffsarguedthatthe defendantmade all of the bakerycorporations’ business decisions andexercised such control over it that itamountedtoadummycorporationandalteregooftheindividualdefendant.Id. ¶3.Theindividualdefendantmadetwoarguments:(1)Illinoiscourtsonlypiercethecorporateveiltoimposeliabilityona corporation’s shareholders, officers,directors, or employees, and he was none ofthese;and(2)hewasnotapartytotheunderlyingactionandwasthereforedeprivedoftheabilitytodefendhimselfagainst the allegations made against the defendantpastriescorporation.Id. ¶¶8-9.

As to the second issue, the courtheld that if the plaintiffs proved thedefendantwasthealteregoofthebakerycorporation, thedecisionnot todefendtheunderlyingsuitwouldhavebeenhisown. Id. ¶9.Afteracknowledgingthatcourtsaroundthecountryweresplitonthe issueofwhether thecorporateveilmaybepiercedtoreachnon-shareholdersandindividualslackingacorporatetitleat all, the John Buckleycourtdeterminedthat themajority of jurisdictions haveheldthatthedefendant’slackofsharesorcorporatetitledoesnotprecludeveil-piercing. Id. ¶29.RelyingonFontana v. TLD Builders, 362 Ill.App. 3d 491(2ndDist.2005),theJohn BuckleycourtconcludedthatIllinoisisinlinewiththemajorityandheldthatequitableowner-shipaspleadedbyJohn Buckley may sat-isfytheunity-of-interest-and-ownership

prong for piercing the corporate veil,regardless ofwhether an individual isa non-shareholder or otherwise lacksa formal titlewithin the corporation.Id. In Fontana v. TLD Builders, Inc., 362 Ill.App. 3d 491 (2005), plaintiffproperty owners hired the defendant’sconstruction corporation to constructa single-family home. The builderabandonedtheproject,andtheplaintiffssued,seekingtopiercethecorporation’sveil andhold thedefendantpersonallyliable.Id. at494-95.Followingabenchtrial,thetrialcourtpiercedtheveilandheld thedefendantandhiscorporationjointlyand severally liable. Id. at499.Onappeal,thedefendantarguedthatthetrialcourterredinpiercingthecorporateveil,becausehewasanon-shareholderand,therefore,theunity-of-interest-and-ownershipprongcouldnotbemet.Id. at 500-01. The Fontana courtdisagreed.Id. at 501. Noting that piercing the corporate veilisanequitableremedythatlookstosubstanceoverform,thecourtheldthatstatusasanon-shareholderdoesnotpre-cludepiercingthecorporateveil,becauseequitable ownershipmay satisfy theunity-of-interest-and-ownership prong.Id. at501,503.

Illinois courts have longheld thatthefailuretofollowcorporateproceduremayleadtotheindividualliabilityofa



shareholder, director, or officer.Now,based on John Buckley, a non-share-holdermaybefoundindividuallyliablefor a judgment against the corporationwhere the non-shareholder exercises only equitable ownership and controlover a corporation.This is true, eveniftherearenoallegationsthatthenon-shareholder engaged in any wrongdoing intheunderlyingcase.

The John Buckley decision reiterates thatcloselyheldcorporationsmustmain-tainthecorporateform.Simplyformingacorporationisnotenoughforindividualclients toavoidpersonal liability,evenif the individual is not a shareholder,director, or officer of the corporation.This case stresses the importance ofquality legaladvice,not just insettingupthecorporation,butalsoinoperatingthe company as a corporation.Thus,lawyersadvisingsuchclientsmuststresstheimportanceofmaintainingcorporateformalitiesinadditiontotheimportanceof adequate capitalization, issuanceofstock, electionof aboardofdirectors,recordingofmeetingminutes,andothercorporateformalities.

Illinois courts have

long held that the

failure to follow

corporate procedure

may lead to the

individual liability of a

shareholder, director,

or officer.

Scott L. HowiePretzel & Stouffer, Chartered, Chicago

Appellate Practice Corner

About the Author

Scott L. Howie is a part-ner at Pretzel & Stouffer, Chartered, in Chicago, specializing in posttrial and appellate practice in the state and federal courts. He received his undergraduate degree from Northwestern Uni-

versity in 1989 and his law degree from Chicago-Kent College of Law in 1994. Mr. Howie is a member and past director of the Illinois Appellate Lawyers Association, where he co-chairs the Moot Court Committee.

Illinois SupremeCourt Rule 306provides ameans to seek immediateappealofavarietyofnonfinalorders.Ill.S.Ct.R.306.Fortriallawyers,themostusefulpartofRule306maybetheprovisionthatallowsforaninterlocu-toryappealofanordergrantinganewtrial. See Ill.S.Ct.R.306(a)(1).Thisprovisionembodiestheintuitivesensethatitwouldbeaconsiderablehardshiptoapartywhoprevailedinthefirsttrialtohavetoundergoasecondonebeforebeing allowed to challenge the ordergrantingtheretrial—andpotentiallyanunnecessary burden to all parties andthecourt,shoulditultimatelybefoundthattherewasnobasisfortheretrial.

WhilethiseditionoftheAppellatePracticeCorner specifically concernsinterlocutoryappealsofordersgrantingnewtrials,theprinciplesandproceduresthat govern such appeals are alsogenerallyapplicabletomostoftheothervarietiesofordersthatmaybeappealedbypetitionunderRule306.Most,butnotall:“[I]nterlocutoryordersaffectingthecareandcustodyofunemancipatedminors,”which are appealable underRule306(a)(5),aregovernedbyadif-ferentsetofproceduralrulesthataresetforthinRule306(b),includingamoreaccelerated briefing schedule and theexpress discouragement of extensionsoftime.SeeIll.S.Ct.R.306(a)(5);Ill.S.Ct.R.306(b)(1),(2),(3).Attorneyshandling appeals of this sort of ordershouldbeawareoftheseandotherdif-

Supreme Court Rule 306(a)(1):Interlocutory Review of an Order

Granting a New Trial

ferencesfromtheproceduresthatapplyto orders granting new trials.

Availability of Interlocutory Review of Orders Granting New Trials

Rule306(a)(1)permitsaninterlocu-toryappealofanyordergrantinganewtrial of any kind—including an orderthat grants a new trial on some limited portionofthecase,suchasanewtrialondamages alone. See, e.g., Stamp v. Sylvan, 391Ill.App.3d117,122(1stDist.2009).It also permits an interlocutory appealwhenamotionforanewtrialisgrantedonlyinpart,suchaswhentheplaintiffmoves foranew trialondamagesandthe trialcourtgrantsanew trialonallissues. Indeed, in that circumstanceit is procedurally proper for both theplaintiffandthedefendanttoseekleave


Appellate Practice Corner | continued

to appeal—theplaintiff in the hopeoflimiting the new trial to damages, and the defendantinthehopeofavoidinganothertrial altogether. See, e.g., Cardona v. Del Granado,377Ill.App.3d379,380(1stDist.2007).

Inconsideringwhethertoseekleavetoappealsuchanorder,apartyshouldbe aware that such an appealmightinadvertently enable the opponent toobtaingreaterreliefthanthetrialcourtgranted. Once leave to appeal is allowed, the scope of appellate review extendsto “all rulingsof the trial courton theposttrialmotions,”regardlessofwhethertherespondentfiledacross-petition.Ill.S.Ct.R.306(a).Inpracticalterms,thismeansthatamixedrulingonaposttrialmotion—suchasanordergranting theplaintiff a new trial but denying theplaintiff’srequestforanewtrialondam-agesalone—isreviewableinitsentiretyif either the plaintiff or the defendantissuccessfulinpetitioningforleavetoappeal. SeeWhite v.Garlock SealingTechs., LLC,373Ill.App.3d309,330(4thDist.2007).

Procedure for Seeking Interlocutory Review of Order Granting New Trial

A party wishing to appeal an order grantinganewtrialwithoutfirstenduringtheretrialmustfileapetitionintheappel-latecourtwithin30daysoftheentryof

theorder.Ill.S.Ct.R.306(c)(1).Therulesetsforththerequiredcontentsofapeti-tioninasinglefairlygeneralsentence:“The petition shall contain a statement of the facts of the case, supported byreferencetothesupportingrecord,andofthegroundsfortheappeal.”Id. The petitionmustbefiled“inaccordancewiththe requirements for briefs,” includingthe formatting and cover requirementsset forth in SupremeCourtRule 341.Id.;see alsoIll.S.Ct.R.341(a),(c),(d),(e),(f),(g).

The rules provide no formal pagelimitationforapetitionforleavetoap-pealunderRule306.Theruleitselfstatesnosuchlimit,andwhileitincorporatesthe general technical requirements forbriefs set forth inRule 341, that rulespecificallysetsforthpagelimitsforthe“briefofappellant,”the“briefofappel-lee,”andthe“replybrief,”withnothingobviously applicable to a petition forleave to appeal. SeeIll.S.Ct.R.341(b).Butevenwithoutanexpresspagelimit,itisalwayspreferabletobefocusedandconcise, and petitions underRule 306arenoexception.Indeed,sincethechiefpurposeofsuchapetitionistopersuadethe appellate court to grant review, aneffectivepetitionwillbestrictlylimitedtodiscussingevidenceandlawthatarerelevant to the claimed error in granting a new trial.Typically, thiswill be theevidenceand law thatwereat issue in

the posttrial motion.The petitionmust include an ap-

pendix,containing“acopyoftheorderappealed from, and of any opinion,memorandum,orfindingsoffactenteredbythetrialjudge,andatableofcontentsoftherecordonappeal[.]”Ill.S.Ct.R.306(c)(3).Thepetitionermustalsofilea separate docketing statement,whichis due at the time the petition isfiled.Ill.S.Ct.R.312(a).Adocketingfeeisordinarilyrequiredifithasnotalreadybeenpaid.

The petition alsomust be accom-paniedbyaseparatesupportingrecord,whichmust complywith the require-mentsofSupremeCourtRule328.Ill.S.Ct.R.306(c)(1);see also Ill. S. Ct. R.328.Intheinterestofbeingfocusedandconcise,asupportingrecordshouldgenerally include only thosematerialsthat are directly relevant to the posttrial motion.Suchmaterialswillincludethemotion itself, including all exhibits.Asupporting record should also includeanysubstantivefilingsinsupportoforoppositiontothemotion,againincludingexhibits,aswellasreportsofanypro-ceedingsatwhichthemotionwasargued.It is also goodpractice to include anymotionsorordersnecessarytoestablishthat thepetition is timely,especially ifthereisanyreasonanobjectiveobservermightsuspectthatitisnot.

Assumingthattheposttrialmotionand related filingswere accompaniedby exhibits and transcripts supportingtheparties’arguments,thereisgenerallynoneedforanythingelseatthisstage.Othermaterialsshouldbeincludedonlyifthereareverygoodreasonsfordoingso, and counsel should seriously con-sider whether there is any good reason to include anything thatwas not partof the briefingof the posttrialmotion.Forthesamereason,itisnotgenerally

Indeed, since the chief purpose of such a petition

is to persuade the appellate court to grant review,

an effective petition will be strictly limited to discussing

evidence and law that are relevant to the

claimed error in granting a new trial.



necessary or useful for a supportingrecordtoincludealltrialtranscripts.(Ifleavetoappealisallowed,bycontrast,alltranscriptsshouldbeincludedinanadditionalrecordatthattime.)

The30-daydeadlineforapetitionmaybe extendedon a party’smotion,whichmustbefiledintheappellatecourtonorbeforetheinitialdeadline.Ill.S.Ct.R.306(c)(4).Whensuchamotionis filed, it ordinarilywill be the firstthingthepetitionerfilesintheappellatecourt, so it should be accompaniedby anydocketing fee required by thatdistrict. The deadline is not, however, tolled by amotion in the trial courtseeking reconsideration of the ruling.Odom v. Bowman,159Ill.App.3d568,570–71(5thDist.1987)(citingBarnes v. Southern Ry. Co.,116Ill.2d236,241(1987)). Rule 306 differs from otherrules thatconferappellate jurisdiction,suchasRules303and307,because itcontains noprovision for thefiling ofmotionsthatextendthetimeforappeal.Barnes,116Ill.2dat241;see also Ill. S.Ct.R.303(a)(2),Ill.S.Ct.R.307(b).

While a respondentmay file ananswerwithin21daysof thedeadlinefor the petition, a deadline thatmayalso be extended on a party’smotion,therulediscouragesrepliesbyallowingthem onlywith the appellate court’spermission.Ill.S.Ct.R.306(c)(2),(4).Thismakesitlikelythattherespondentwill have the last word as to whether in-terlocutoryreviewiswarranted.Becauseofthis,thepetitionershouldanticipatetherespondent’sargumentsagainstleaveto appeal—which presumably werethebasisfortheposttrialmotion—andattempttorefutetheminadvance.

Thefilingof thepetitiondoesnotautomatically stay proceedings in thetrialcourt—thegrantingofthepetitionhas that effect—but it is common for

trial courts to refrain fromany furthersubstantive proceedings, including thenew trial,while apetition for leave toappeal is pending.

When the Appellate CourtGrants Review

If aRule 306 petition is granted,proceedings in the trialcourtareauto-maticallystayed.Ill.S.Ct.R.306(c)(5).Therulepermitsthecourttorequirethepetitioner—who at that point ismoreaccuratelydescribedasanappellant—tofile a bond, but this is not generally aconcern with an order granting a new trial,assuchappealsordinarilyconcernverdicts that have been vacated orotherwisemade unenforceable by theorderbeingappealed.See id.

anyfurtherlitigationatall.Thepurposeof allowing an interlocutory appeal ofanordergrantinganewtrialwouldbedefeated if the stay of such an orderwerevacatedormodifiedinsomewaythatwouldallowthenewtrialtoproceedeven as the appeal is pending.

The granting of the petition alsoenablesthepetitioner-appellanttofileanadditionalrecordonappealconsistingofmaterialsnotincludedinthesupportingrecord that accompanied the petition. The procedure for requesting andfiling anadditionalrecordisgovernedbytherulesconcerning records on appeal generally. SeeIll.S.Ct.R.306(c)(6)(citingIll.S.Ct.R.321et seq.).Dependingonwhatmaterialsweremadepartofthesupport-ing record, an additional record might not benecessary.Still,itisprudenttohave

What amounts to good cause under the amended

rule has yet to be explored, but the amendment

would seem to be applicable chiefly to other sorts

of orders appealable under Rule 306, and

not to orders granting new trials.

Rule306(c)(5)wasamended,effec-tiveJuly1,2014,toallowtheappellatecourt or a justice to vacate ormodifythestayuponashowingofgoodcause.Whatamountstogoodcauseundertheamended rule has yet to be explored,but the amendment would seem tobe applicable chiefly to other sorts ofordersappealableunderRule306,andnot to orders granting new trials. Most of those other sorts of orders concernthe location or conditions of furtherlitigation, notwhether there should be

a complete record on appeal prepared, including trial transcripts, inmuch thesamewayasinappealsfromjudgmentsontrialverdicts.Suchacomprehensiverecordwill includematerial that isnotrequired for the appeal, but it is farless likely to omit anything thatmightunexpectedlyturnouttobenecessary.

Once reviewhas been granted, anappeal underRule 306proceedsmuchlike any other appeal.The appellant’sinitialbriefisdue35daysafterthecourt


Appellate Practice Corner | continued

grantsthepetition,andfurtherbriefingrequirementsaregovernedbyRule341.Ill. S.Ct.R. 306(c)(7).Likewise, oralargumentmayberequestedasprovidedbySupremeCourtRule352,byplacingsucharequestonthecoveroftheappel-latebrief.Id.(citingIll.S.Ct.R.352(a)).

A partywhose petition has beenallowed may elect to allow that petition to stand as its brief of appellant, solongas thepartynotifies the appellatecourtclerkofitsintentiontodosoandsuppliestherequisitenumberofcopiesof the “brief”—read “petition”—thatSupremeCourtRule341 requires.See Ill. S.Ct.R. 306(c)(7). (The rule alsoallows a respondent to allow its answer tostandasitsbriefofappellee,withthesame conditions.) Butwhile the rulepermits such practices, petitions andbriefsservedifferentpurposes,makingitquestionablewhether thosepracticesshouldbeused.Apetitionfor leave toappealthathasbeenchieflydevotedtothethresholdargumentthattheappellatecourtshouldgrantreviewmightnotthor-oughlyaddressthegroundsforreversingthe new-trial order and reinstating the verdict. In any event, the petition may havebeenpartlydevotedtoarguingthattheappellatecourtshouldgrantreview.Whileitmaybepossibletoadaptsomeoftheargumentfromsuchapetitionforuseinanappellatebrief,counselshouldbereluctanttogiveupthechancetofile

abriefdevotedsolelytotheargumentsforreversal.

When the Appellate CourtDenies Review

Options remain even when the appellatecourtdeclinestograntreviewunderRule306(a)(1).Themostimmedi-ate option is to petition the appellate court for rehearing, although sincemost denial orders do not provide the grounds for the denial, there is rarelyanyevidentbasisonwhichtochallengethosegrounds.SeeIll.S.Ct.R.367(a).AmoresensibleoptionistopetitionthesupremecourtforleavetoappealunderRule 315, essentially arguing that theappellate courtwaswrong in denyingtheRule 306 petition.See Ill. S. Ct. R.315(a).While the supreme court isunlikely to grant review at this stage,it sometimes exercises its supervisoryauthoritytodirecttheappellatecourttograntreview,andthisshouldbeincludedinthereliefrequestedinapetitionunderRule315.See id.

Even if the petitioner is forced toundergothenewtrialwithoutfirstbeingallowed to appeal the order granting it, thatorderisstillaprocedurallyproperbasisforanappealifthenewtrialresultsin a judgment against that party.Theinitial denial of leave to appeal underRule306“isnotanexoticformofres ju-dicata”orlawofthecase;itmeansonlythatamajoritycouldnotbemusteredinfavor of granting the petition.Kemnerv. Monsanto Co., 112 Ill. 2d 223, 241(1986) (quotingLowev.Norfolk&W.Ry. Co.,124Ill.App.3d80,90(5thDist.1984));Koenigv.Nat’lSuperMarkets,Inc.,231Ill.App.3d665,667–68(5thDist. 1992). It has no precedential orpreclusive effect.Craigmiles v. Egan, 248Ill.App.3d911,918–19(4thDist.1993).Thefactthattheappellatecourthasnotgrantedaninterlocutoryappealisnobar to raising thenew-trialorderasanerrorafteranadversejudgmentinthe retrial.

Conclusion

Butaretrialistypicallysomethingtobeavoidedifatallpossible;nobodywants to have to win a case a second time,letalonegiveupahard-foughttrialvictoryorafavorablejudgmentduetoadisputedclaimoftrialerror.Rule306(a)(1)isausefulmechanismforchallengingsuchclaimsandregainingthefruitsofapreviouswinwithouthavingtoputaclient’sinterestsatriskasecondtime.

A more sensible option is to petition the supreme

court for leave to appeal under Rule 315,

essentially arguing that the appellate court was

wrong in denying the Rule 306 petition.

While it may be possible to adapt some of the

argument from such a petition for use in an

appellate brief, counsel should be reluctant to

give up the chance to file a brief devoted solely

to the arguments for reversal.



Bradford J. PetersonHeyl, Royster, Voelker & Allen, P.C., Urbana

Dana HughesHeyl, Royster, Voelker & Allen, P.C., Rockford

Workers’ Compensation Report

About the Authors

Bradford J. Peterson is a partner in the Urbana office of Heyl, Royster, Voelker & Allen, P.C. Brad concen-trates his practice in the defense of workers’ com-pensation, construction liti-

gation, auto liability, premises liability, and insur-ance coverage issues. In recent years, Brad has become a leader in the field on issues of Medi-care Set Aside trusts and workers’ compensation claims. He has written and spoken frequently on the issue. He was one of the first attorneys in the State of Illinois to publish an article regarding the application of the Medicare Secondary Payer Act to workers’ compensation claims, “Medicare, Workers’ Compensation and Set Aside Trusts,” Southern Illinois Law Journal (2002).

In Interstate Scaffolding, Inc. v. IllinoisWorkers’Comp.Comm’n, 236Ill.2d132(2010),theIllinoisSupremeCourt addressedwhether an employeeis entitled to temporary totaldisability(TTD) benefitswhen the employee isdischargedforcausewhileonlightduty.In Interstate Scaffolding, an employee wasdischargedasaresultofdefacingtheemployer’spropertybywritinggraffitiintheemployer’sstorageroom.Interstate Scaffolding,236Ill.2dat137-38.ThesupremecourtfoundthattherearethreeexceptionstothegeneralrulethatTTDbenefitsarepayableuntilthepetitionerreachesmaximummedicalimprovement

Dana Hughes has been an associate in the Rockford office of Heyl, Royster, Voelker & Allen, P.C. since 2006. She represents em-ployers before arbitrators and commissioners of the

Illinois Workers’ Compensation Commission and before the circuit court in third party liability claims. Ms. Hughes has also represented busi-nesses in subrogation matters, and has de-fended businesses and individuals in automobile negligence and premises liability actions. Her writing has been published in the Northern Illinois University Law Review and Kane County Bar As-sociation newsletter. She has presented before the Illinois State Bar Association’s Insurance Law Section and contributes to Heyl Royster’s annual claims handling and monthly workers’ compen-sation publications. Ms. Hughes recently served on the Winnebago County Bar Association’s Board of Directors and is the immediate past-chair of the Workers’ Compensation Section. She currently sits on the Association’s Diversity Committee and volunteers as an arbitrator in the 17th Circuit’s court-annexed arbitration system.

Appellate Court Further Restricts Employer’s Ability to Terminate

Temporary Total Disability Where Employee Was Discharged for Cause

the physical restrictions prescribed byhis physician. Id. at 146.Because theemployee in Interstate Scaffolding did notmeet any of the three exceptions,theterminationofTTDwasfoundtobeimproper. Id.at146.

In Matuszczack v. Ill. Workers’Comp. Comm’n, 214 ILApp (2d)130532WC (2014), the IllinoisAp-pellateCourt,Workers’CompensationCommission Division, addressed the issue of whetherWalmart properlyterminatedTTDbenefitswhenitslightdutyemployeewasterminatedfortheft. Id. ¶24.Theclaimantsustainedaneck,back,andrightarminjuryinMarchof

He also acknowledged that but for stealing the

cigarettes, he still would have been working for

Walmart in a light duty position.

(MMI). Id. at 135-36.The exceptionsinclude: (1) the employee refuses tosubmittomedical,surgical,orhospitaltreatmentessential tohis recovery; (2)the employee refuses to cooperate ingoodfaithwithrehabilitationefforts;and(3)theemployeerefusestoworkwithin

2010. Id. ¶4.HereturnedtoWalmartonlightdutythereafter. Id. ¶5.Whileonlightduty,theclaimantadmittedlystolecigarettesonJune3,2011,aswellasona“coupleofdays”inMayof2011.Id. ¶6.Theclaimantadmittedthatstealing


the cigarettes was a criminal act and that Walmartcouldterminatehimforsuchactions. Id.Healsoacknowledgedthatbut for stealing the cigarettes, he stillwouldhavebeenworkingforWalmartinalightdutyposition.Id.

The arbitrator found themattercompensableandawardedTTDbenefitsin reliance upon the supreme court’sholding in Interstate Scaffolding. Id.¶7. The IllinoisWorkers’ CompensationCommission (Commission) vacatedtheawardofTTDbenefitsfindingthatTTD benefitsmay be terminated orsuspendedwhereaclaimantrefusestoworkwithin his physical restrictions.Id.¶8.TheCommissionconcludedthatthe theftof cigarettesby theclaimantwith knowledge that his theft couldleadtoterminationconstitutedarefusaltoworkwithinhisrestrictions.Id.¶8.ThecircuitcourtdisagreedontheissueofTTD,findingthat theclaimantwasentitledtoTTDbenefits.Id.¶9.

TheAppellate Court,Workers’Compensation Commission Division affirmed,notingthatthesoleissuewaswhethertheemployee’sconditionhadreached MMI. Id.¶22.Thecourtstatedthat the appropriate and sole inquiryis whether the medical condition had stabilizedatthetimeofhistermination.Id.Where the undisputed facts showthat the claimant was on light dutyrestrictionsfollowinghisaccidentandheremainedunderlightdutyrestrictionsafter his termination, the claimant isentitledtoTTDbenefits.Id.

Walmartargued that theMatuszc-zack case was distinguishable fromthe Interstate Scaffolding case in that Matuszczack admitted that he knewhisactionscouldresult in terminationand that theCommissionwas free toexercise its discretion as to whether such knowledge constituted a refusal

toworkwithinhisphysicalrestrictions.Id. ¶ 24.The appellate court rejectedthisargument,effectivelydivestingtheCommissionofdiscretion.Theappellatecourtstated:

Additionally,wefindnothinginthe SupremeCourt’s decisionthat would show the resultin Interstate Scaffolding was dependentupontheclaimant’sknowledge,or lack thereof,astowhether his conduct couldresult in termination.As theSupremeCourtpointedout,inIllinois, an at-will employee may be discharged for anyreason or no reason and whether anemployee is justifiablydis-chargedisamatter‘foreigntoworkers’ compensation cases’and completely separate fromissues related to the injuredemployee’sentitlementtoTTD.

Id.¶25.TheappellatecourtinMatuszczack

also rejectedtheemployer’sargumentthatthecasewassubjecttothemanifestweightoftheevidencestandard,whichwould have given deference to theCommission’sfindingthattheclaimant

Workers’ Compensation Report | continued

“As the Supreme Court pointed out, in Illinois,

an at-will employee may be discharged for

any reason or no reason and whether an

employee is justifiably discharged is a matter

‘foreign to workers’ compensation cases’

and completely separate from issues related

to the injured employee’s entitlement to TTD.”

had voluntarily refusedworkwithinhis restrictions by stealing from hisemployerwhenheknewhecould,asaresult,beterminated. Id. ¶16.WhilethatexceptionclearlyexistsunderInterstate Scaffolding,theappellatecourtinsteadchose to apply a de novo standard, com-mentingthat“iftheCommissionreliesonalegallyerroneouspremisetofindafact,theresultingdecisioniscontrarytolawandmustbereversed.”Id.¶15.Usingthisapproach,thecourt’sinquirywas limited to whether the Commission had any discretion to look at the ter-minationwhenevaluatingwhethertheclaimantwasentitledtoTTDfollowinghis termination. The appellate courtgavetheCommissionabsolutelynolee-waytoconsiderwhethertheclaimant’sactionswere,indeed,theequivalentofavoluntaryrefusaltoacceptworkwithinhis restrictions.

It is troubling that employees inIllinois can remain eligible forTTDbenefitsnotwithstandingterminationforcausewhile on light duty.Evenmoretroublingisthefactemployeescancom-mit criminal acts against their employer, knowingfull-wellthatterminationwillresult,andyetstillbeentitledtopost-terminationTTDbenefits.



Roger R. Clayton, J. Matthew Thompson and Emily J. PerkinsHeyl, Royster, Voelker & Allen, P.C., Peoria

Health Law Update

J. Matthew Thompson is an associate in the Peoria office of Heyl, Royster, Voelker & Allen, P.C. He practices primarily in the area of general tort de-fense. He received his B.S. in Accounting from

Culver-Stockton College in 2005 and his J.D. cum laude from Southern Illinois University School of Law in 2008.

About the AuthorsRoger R. Clayton is a partner in the Peoria office of Heyl, Royster, Voelker & Allen, P.C., where he chairs the firm’s health-care practice group. He also regularly defends physicians and hospitals in medical malpractice litigation. Mr. Clayton is a

frequent national speaker on healthcare issues, medical malpractice, and risk prevention. He received his undergraduate degree from Bradley University and law degree from Southern Illinois University in 1978. He is a member of the Illinois Association of Defense Trial Counsel (IDC), the Illinois State Bar Association, past president of the Abraham Lincoln Inn of Court, president and board member of the Illinois Association of Healthcare Attorneys, and past president and board member of the Illinois Society of Healthcare Risk Management. He co-authored the Chapter on Trials in the IICLE Medical Mal-practice Handbook.

Emily J. Perkins is an associate with Heyl, Roy- ster, Voelker & Allen, P.C. in Peoria. She con-centrates her practice in the area of employment/ labor law and tort litigation, including medical malprac-tice and professional liabil-

ity. She received her J.D. from Northern Illinois University College of Law in 2014, M.B.A. from Bradley University in 2011, and B.S. from Illinois State University in 2008.

TheIllinoisAppellateCourt,SecondDistrict, recently re-emphasized theimportanceofstrictlycomplyingwiththeattorneyaffidavitandcertificateofmeritrequirements of 735 ILCS5/2-622 inmedical malpractice cases. In McDonald v. Lipov,2014ILApp(2d)130401,thecourtaddressedwhethertheplaintiffisrequiredtocomplywith§2-622whenpleadingmedical battery claims.This

Affidavit and Health-Professional’sReport Requirements

Extended to Medical Battery Claims

meritorious”causeforfilingtheaction.735ILCS5/2-622(a)(1).Thecourtmaydismisstheactionwithprejudiceiftheplaintifffailstocomplywiththestatute. See Cuthbertson v. Axelrod,282Ill.App.3d1027(1stDist.1996).Onepurposeof§2-622istoprotectthesubstantiverightsofthepartiesanddeternon-meritoriouslitigation. McDonald,2014ILApp(2d)130401,¶28.

prejudiceandthatthetrialcourterredindeterminingthatallofherclaimswerebasedonlyonmedicalmalpractice.Id. ¶2.TheSecondDistrictdisagreedwiththeplaintiff’sargumentandconcluded

One purpose of § 2-622 is to protect the

substantive rights of the parties and deter

non-meritorious litigation.

decisionwillbeusefulforattorneysde-fendingmedicalbatteryclaims,andwillbeespeciallyusefulinquicklydisposingofnon-meritorioussuits.

The Affidavit andHealth-Professional’s Report

Requirements

Section2-622oftheIllinoisCodeofCivilProcedurepermitsthedismissalofa medical malpractice complaint when a plaintiff fails to attach a supportingaffidavit ofmerit. 735 ILCS 5/2-622.Theplaintiffmustfileanaffidavitstatingthat,basedonconsultationwithahealthprofessional,thereisa“reasonableand

Factual Background and Procedure

In McDonald, the plaintiff’s com-plaint alleged medical malpractice and medical battery claims. Id. ¶ 1. Thetrial court granted thepro se plaintiffthree extensions to comply with the affidavit and report requirements of §2-622.Thedefendantsfiledmotionstodismissarguingthattheplaintiff’sfilingsdid notmeet the health-professional’sreportrequirements.Id.Thecourtagreedand dismissed the plaintiff’s amendedcomplaintwithprejudice.Id.

On the initial appeal, the plaintiffargued that her amended complaintshould not have been dismissedwith


Health Law Update | continued

that theplaintiff’smedicalmalpracticeclaims required her to comply with§ 2-622. Id. ¶ 3.The appellate court,however,heldthatthetrialcourtabusedits discretion in dismissing the medical battery allegationswith prejudice, andtheappellatecourtremandedthecasetoallowtheplaintifftheopportunitytocurethedefectivepleadings.Id.

On remand, the plaintiff filed a33-count second amended complaint,whichattemptedtoallegethefollowingclaims:(1)medicalbattery;(2)medicalnegligence;(3)fraudulentconcealment;(4) conspiracy; (5) violations of theEmergency Medical Treatment and Ac-tiveLaborAct;(6)breachofcontract;(7)vicariousliability;and(8)spoliationofevidence. Id.¶4.Thesecondamendedcomplaint restated nine claims fromthe amended complaint and contained fourteennewclaims. Id. ¶¶ 9-10.Fol-lowing a new motion to dismiss, the trialcourtdismissedthesecondamendedcomplaintwithprejudice for failing tostateacognizableclaim.Id.¶4.

Again,theplaintiffappealed,arguingthat§2-622didnotapplytohermedicalbattery claims. Id. ¶ 5. Furthermore,the plaintiff argued that she satisfiedtheaffidavit requirementof§2-622(a)(3) by verifying the second amendedcomplaintinaccordancewith§1-109oftheCodeofCivilProcedure.735ILCS5/ 1-109.Onthisappeal,theappellatecourt

affirmed.Id.¶6.

Appellate Court Analysis

The Second District heavily relied ontherecentopinionofasisterdistrictinHolzrichter v. Yorath,2013ILApp(1st)110287,¶96.InHolzrichter, the Illinois AppellateCourt,FirstDistrict,concludedthattheplainandunambiguouslanguageof§2-622didnotlimittherequirementofanaffidavitandcertifyingreportsolelyto medical malpractice claims. Id.¶23.The Holzrichtercourtaffirmedsummaryjudgment entered against the plaintiffallegingmedicalbatterywhofailedtofileahealthprofessional’sreport.Id. There, theplaintiffclaimedthatthedefendantcommittedmedicalbatterybyexceedingthe scope of his consent in severingtendons in a procedure that did notrequirethemedicalprofessionaltodoso.Thecourtexplained that theplaintiff’smedicalbatteryaction,groundedintortlaw,arosefromamedicalprocedurethat

heclaimedwentbeyondthescopeofhisconsent. Id.¶24.

The McDonald court agreedwiththe reasoning in Holzrichter, findingthat§2-622canapplytomedicalbatteryclaims. Id.¶27.Theissuewaswhetherthedefendantsexceededthesurgicalpa-rameterstowhichtheplaintiffconsented.Thesalientissuerequiredtheassessmentof the claims,whichwere outside thecomprehensionofalaypersonbecauseitrequiredknowledge,skill,ortrainingof amedical professional. Thus, thecourt held that the plaintiff required amedicalexpertandasupportingaffidavittosustainhermedicalbatteryclaims.Id.

Conclusion The affidavit and health profes-

sional’sreportrequirementsof§2-622areintendedtodeterfrivolousmedicalmalpractice suits andmedical batteryclaims at an early stage. The McDonald court ultimately dismissed the com-plaintwith prejudice, reiterating theconsequences of non-compliancewiththe requirements outlined in § 2-622.Defense counsel should advocate forthe strict compliancewith § 2-622 todeterfrivolousmedicalmalpracticeandmedicalbatteryactions.

The Holzrichter court affirmed summary judgment

entered against the plaintiff alleging medical battery

who failed to file a health professional’s report

The McDonald court agreed with the reasoning

in Holzrichter, finding that § 2-622 can apply to

medical battery claims. . . . Thus, the court held that the plaintiff required a medical expert and a supporting

affidavit to sustain her medical battery claims.



About the Author

Colleen Tierney Scarola*University of Denver, Sturm College of Law, Denver

Feature Article

In 2010, Congress passed the Patient Protection andAffordable CareAct(Affordable CareAct), 42 U.S.C. §2000bb-1,which aims to provide allAmericanswithhealthinsurancecover-age. Kortev.Sebelius, 735F.3d654,659(7thCir.2013).TheAffordableCareActincludesaprovisionrequiringemployersto provide coverage for contraceptionand sterilization procedures in theiremployee health care plans at no cost (contraception mandate). 45 C.F.R.§ 147.130.There are twoways to beexempt from themandate: (1)qualify-ing as a “religious employer,” and (2)qualifyingforthe“accommodation.”45C.F.R.§147.131.Thisarticlefocusesontheaccommodation.QualifyingfortheAffordableCareAct’s accommodationrequiresthatanorganizationbeanot-for-profit,religiousorganizationthatobjectsto providing all or partial contraceptive coverage because of its sincerely heldreligiousbeliefs.45C.F.R.§147.131(b).Additionally,theorganizationmustalsocomplete the EBSA Form 700 self-certification,statingthatithassatisfiedthe preceding three requirements. 45C.F.R.§147.131(b).

Thisarticleisafollowuptoourini-tialpiecethatdiscussedthefivefederalcircuit court cases that have receivedreligiouschallengestothecontraceptionmandate by private corporations andthe courts’ decisions extending certainconstitutional rights to corporations.

Accommodating the Accommodated? Not-For-Profits’ Challenges to the

Contraception Mandate Exemptions

Colleen Tierney Scarola with assistance from JoshuaTurk,Secular,For-ProfitCorporations’ Ability to Challenge the Constitutionality of the Contraception Mandate, 24.2IDCQ.,10(2014).Theon-going litigation surrounding theaccommodation exemptionbrought bynot-for-profitplaintiffsisanalyzed.Dueto theUnited States SupremeCourt’srecent ruling in the consolidated casesofSebelius v. Hobby Lobby Stores,134S.Ct.678(2013),Hobby Lobby Stores v. Sebelius, 723F.3d1114(10thCir.2013)and ConestogaWoodSpecialtiesCorp.v.Sec’y of U.S. Dep’t of Health & Human Servs.,134S.Ct.678(2013),Conestoga WoodSpecialtiesCorp.,v.Sec’yofU.S.Dep’t of Health & Human Servs., 724F.3d 377 (3rdCir. 2013) (collectivelyHobby Lobby),constitutionalchallengesto the mandate, challenges to the ac-commodation and its self-certificationrequirement,andproposedrevisionstotheAffordableCareAct,itisnecessarytoexaminethesepending,not-for-profitcasestodeterminehowthegoalsofthelawwill be achieved,whileprotectingthereligiousfreedomsofitschallengers.

The Hobby Lobby decision involved for-profit companies’ challenges to thecontraception mandate on religiousgrounds.Thefor-profitentities’positionreliedontheReligiousFreedomRestora-tionAct(RFRA),42U.S.C.§2000bb-1.Ultimately, the Court sidedwith thefor-profitentitiesandruledthatunderthe

RFRA,closelyheld,for-profitcorpora-tionswith religious owners cannot berequired topayfor insurancecoverageof contraception if theirownersobjecton account of sincerely held religiousbeliefs.Hobby Lobby, 134S.Ct.at2785.TheCourtalsofoundthatthemandatewasnottheleastrestrictivewaytoensureaccess to contraceptive care and noted that a less restrictive alternative, the self-certificationEBSAForm700,wasprovidedforreligiousnot-for-profitsandthatperhapscorporationsshouldfollowsuit.Id.at2782.

Numerous religious-basednot-for-profits object to the sufficiency of theaccommodationanditsself-certificationprocess, which the Supreme Courtendorsed,andhavefiledsuitchalleng-ing it. Currently, there are 42 cases

Colleen Tierney Scarola is a career consultant at the Office of Career Develop-ment & Opportunities at the University of Denver Sturm College of Law. Ms. Scarola assists students and alumni in formulating their career plans, and connects poten-

tial employers with qualified applicants. Prior to joining the Office of Career Development & Opportunities, Ms. Scarola was an associate at McVey & Parsky, LLC. Ms. Scarola represented Fortune 100 companies and self-insured busi-nesses throughout the country. In recognition of her professional achievements, Ms. Scarola was selected as a Super Lawyers Rising Star for 2011, 2013, and 2014—a designation given to only 2.5% of attorneys in Illinois each year. Ms. Scarola received her J.D. from The John Marshall Law School in 2006. She is participates in the Lawyer-to-Lawyer Mentoring Program at The John Marshall Law School where she men-tors new attorneys.

*Joshua Turk, 3L at Chicago-Kent College of Law, contributed to the content of this article. Ms. Scarola gratefully acknowledges his con-tribution.



pendingin thefederalcircuitcourtsofappeal that seek to expand upon (or“fix”)Hobby Lobby by “accommodat-ing the accommodated” organizations.Status of the Lawsuits Challenging the Affordable Care Act’s Birth Control Coverage Benefit, nat’l Women’s laW Ctr. (Sept. 03, 2014), http://www.nwlc.org/sites/default/files/pdfs/contraceptive_coverage_litigation_ status_9-3-14_vf.pdf.

The remainder of this articlewillhighlight pending or recently decided casesfromtheUnitedStatesCourtsofAppeals,allofwhicharefacingoneormore challenges from not-for-profitsregarding the accommodation. The argumentsadvancedbybothsidesaresimilarinallofthecases,yettheresultsare not always the same.The crux ofthenot-for-profits’argumentsisthattheself-certification requirement undulyburdenstheirreligiousbeliefsbyrequir-ing that they “trigger” the process ofproviding contraceptives and associate with a third party to provide the services that they find objectionable.As such,they claim that the self-certificationrequirementviolatestheRFRAandtheFirstAmendment.The government’sargument has been that theburden, ifany, is de minimus,therebyprecludingrelief.

Second Circuit

The plaintiffs includeDiocesans,who qualify as religious employers,and non-Diocesans, who qualify forthe accommodation. Both sets of theplaintiffs contend that their religiousbeliefs oppose the use and provisionofcontraceptives.The Roman Catholic Archdiocese of N.Y., et al., v. Sebelius, et al., 987F.Supp.2d232 (E.D.N.Y.2013).Together, they argued that the

contraceptionmandateobligatesthemtoviolatetheirreligiousbeliefsirrespective oftheexemptionsavailabletoreligiousemployersandentitiesthatqualifyfortheaccommodation. The Roman Catholic Archdiocese of N. Y., 987F.Supp.2dat243.TheDiocesan plaintiffs,who areexemptfromthemandate,advancedanatypicalargumentthattheirreligiousbe-liefsaresubstantiallyburdenedbecausethe mandate compels the non-Diocesan plaintiffstoeitherprovidecontraceptivecoverage or self-certify to qualify forthe accommodation. Id. at 252. The districtcourtrejectedthatargument.Id. The non-Diocesan plaintiffs objectedto self-certification “because to them,authorizing others to provide services that theplaintiffs themselvescannot istantamounttoanendorsementorfacilita-tionofsuchservices.”Id.at243.

Thegovernmentarguedself-certifi-cationisanadministrativetaskthatonlyrequires the party to restate the samereligious objection it alreadymade toitsthird-partyadministrators“toensuretheir plans do not cover contraception.” Id.at249.Thedistrictcourtrejectedthe“it’s just a form” argument as unsup-portedbycaselaw.Id.Instead,thecourtapplied the “substantial pressure test”andfoundthatthemandateandaccom-modation impose a substantial burdenon the plaintiffs’ exercise of religion.Id.at249-50.

Thoughthecourtruledinfavoroftheplaintiffsandgrantedaninjunction,itfoundthattheplaintiffswouldhavenoargument if the government, either onits own or, with a third party provided contraceptive coverage to the employees, withnoactionrequiredoftheplaintiffs.Becausethisisnotcurrentlythecase,thecourtmade clear, “[w]hat theGovern-ment cannot do—absent a compellinginterestandnarrowtailoring—iscompelplaintiffstoactinviolationoftheirreli-giousbeliefs.”Id.at251,259.Thecourtfurtherexplainedthattheinjunctiondoesnot prevent employees fromobtainingcontraception,butmerelyrequiresthemto cover the costs, as was the case prior to theAffordableCareAct. Id. at259.The government appealed the decision totheSecondCircuit,wherethecaseiscurrentlypending.

Third Circuit

TheUnitedStatesCourtofAppealsfortheThirdCircuitconsolidatedthreecases that sought its review,Geneva Coll., et al., Persico, et al., Zubik et al. v. Sec’y of the U.S. Dep’t of Health & Human Servs.,DocketNo.: 13-3536.Theunderlyingdistrictcourtresultsfromthesethreecasesarediscussedbelow.

Theplaintiffs in bothPersico and Zubik,arebishopsintheRomanCatholicChurchandthegovernmentisthedefen-

Together, they argued that the contraception mandate

obligates them to violate their religious beliefs

irrespective of the exemptions available to

religious employers and entities that qualify

for the accommodation.

http://www.nwlc.org



dant. Zubik v. Sebelius,983F.Supp.2d576(W.D.Pa.2013).Thecourtnotedthatthemandatecouldnotbeequallyappliedto the plaintiffs’ dioceses and their af-filiatednot-for-profitentitiesbecausethediocesesarereligious-employersthatareexemptfromthemandate,whilethenot-for-profitsmust seek accommodation. Id.at583.Suchunequalapplicationwasrelevant because the dioceses’ healthcare plans covered the not-for-profits’employees. Id.Theplaintiffsarguedthatthenot-for-profitswouldthenbelefttochoose between four, non-satisfactoryoptions: (1) provide health insurancethat covers contraception, in violation of their religious beliefs; (2) seek ac-commodation via self-certification,whichalsoviolatestheirreligiousbeliefsbecause it starts the process throughwhichcontraceptionisprovided;(3)notprovide health insurance to their em-ployeesandbemonetarilypenalizedfordoingso;or(4)providehealthinsurancewithoutcontraceptivecoverageandbemonetarilypenalizedfordoingso.Id. at 583-84.Ultimately,thecourtgrantedtheplaintiffspreliminaryinjunctions,whichwere later converted into permanent in-junctions.Id.at615; Persico v. Sebelius, 1:13-00303,2:13-cv-001459,2013WL6922024,at*2(W.D.Pa.Dec.20,2013).The government appealed the decision to theThirdCircuit,whereoralargumentwasscheduledforNovember21,2014.nat’l Women’s laW Ctr., supra.

In Geneva College,theplaintiffwasa not-for-profit educational institutionwith strong Christian roots. Geneva College v. Sebelius, 960 F. Supp. 2d588,591(W.D.Pa.2013).Asanot-for-profit entity, the plaintiff qualified forthe accommodation exemption fromthe mandate. Id. at 600.The plaintiffargued that the accommodation “doesnotgofarenoughtowardprotectingits

religious interests.”Geneva College, 906 F. Supp. 2d at 591.The plaintiffoperates health insurance plans for itsemployees and students.The plaintiffadvancedtheuniqueargumentthat themandate burdensnot only its religiousbeliefs, but also its recruitment efforts ofstudentsandstaffduetouncertaintyas to which contraceptives and related serviceswillbecoveredunderitshealthinsuranceplans,placingitataneconomicdisadvantage. Id.at596.Ultimately,thecourt issued the college a preliminaryinjunction,which the government ap-pealedtotheThirdCircuit.Id. at602.

Fifth Circuit

Theplaintiffs are twouniversitiesaffiliatedwith theBaptistChurch andan intervenor affiliatedwith the Pres-byterianChurch.E. Tex. Baptist Univ., et al., v. Sebelius et al., 988F. Supp.2d 743, 748-51 (S.D.Tex. 2013).Theplaintiffsarenotreligiousemployers,butqualifyfortheaccommodation.E. Tex. Baptist Univ., et al., 988F.Supp.2d.at754.Unlike other cases, the plaintiffshere only objected to the provisionofemergency contraceptives under themandate. Id. at 749-51.The plaintiffscontend that self-certifying providesaccess to emergency contraceptives in contraventionof their religious beliefsthat they protect “innocent life fromthemomentofconceptionuntildeath.”Id.at757.Inresponse,thegovernmentargued any such burden imposedwasde minimus and that the governmental interests involved, public health andgenderequality,aresufficientlycompel-ling to justify theenforceabilityof theaccommodationagainsttheplaintiffs.Id.

The district court found that asubstantial burden is imposed on theplaintiffs’ religious beliefs. Id. at 769.

Thecourtstated,“[T]heself-certificationform requires the organizations to domuchmorethansimplyprotestorobject...Thepurposeandeffectoftheformistoaccomplishwhattheorganizationfindsreligiouslyforbiddenandprotests.”Id. at 767.Inissuingtheplaintiffsapermanentinjunction,thecourtexplaineditsviewthat the accommodation falls short oftruly accommodating the plaintiffs instatingthat“[t]heefforttoaccommodatethereligiousorganizationsbyreducingtheir involvement in providing their em-ployeeswithsuchaccesstoemergencycontraceptiondidnotendtheplaintiffs’involvementsoastoavoidrequiredactsontheirpartthatoffendtheirfaith.”Id. at769.ThegovernmentappealedtotheFifthCircuitwhere the case has beenconsolidated with two others. Univ. of Dallas, and Roman Catholic Diocese ofFortWorth,etal.,andE.Tex.BaptistUniv., et al., and Catholic Diocese of Beaumont, et al., Plaintiffs-Appellees, Westminster Theological Seminary,Intervenor Plaintiff-Appellee, v. Sylvia M. Burwell, et al.,Case:14-20112 (5thCir.2014).

Sixth Circuit

The plaintiffs are five Catholic-based, not-for-profit organizations thatqualify for the accommodation.Ave Maria Found. v. Sebelius, 991F.Supp.2d957,962-63(E.D.Mich.2014).Theplaintiffs’primaryargumentinopposi-tiontotheself-certificationrequirementis that it requires them to indirectlysupportcontraception,sterilization,andabortion.Ave Maria Found., 991F.Supp.2dat964.

While the arguments the plaintiffsasserted are similar to other related cases, thecourt’sresponsetothegovernment’s



de minimus burdenargumentisparticu-larly interesting.

In explainingwhy it believes thede minimus burden argument fails asto sincerely-held religious beliefs, thecourtexplainedthatsimplycompletingaformisnotasignificantburden,astheplaintiffs also object to self-certifying,the government’s argument “amounts to a disbelief that the self-certificationhasmuchreligioussignificance.”Id. at 965(citing42U.S.C.§2000cc-5(7)(A)(emphasis added)).The court believedthat adopting the government’s argu-mentwouldrequireexaminationofthesincerity of the plaintiffs’ declaredbeliefs “—which the government does not question—or second-guessing theimportanceorrationalityoftheplaintiffs’convictions—ataskbeyondtheCourt’sabilityorcompetence.”Id.Becausetheaccommodationobligatestheplaintiffstomodifytheirbehavior,aswasconcededby thegovernment, thecourtheld thatthe newly required action cannot belabeledastrivialbythegovernment.Id. Accordingly, the district court issuedthe plaintiffs a preliminary injunction.Id. at 968.The government appealedthedecisiontotheSixthCircuit,whichlater consolidated the case with Legatus v. Sebelius,901F.Supp.2d980 (E.D.Mich.2012).

Since consolidation, the Sixth Cir-cuit has decided a related case,Mich. Catholic Conference & Catholic Family Servs. v. Burwell,755F.3d372(6thCir.2014), in favor of the government.Id.at398.Asaresult, theplaintiffs inAve Maria Foundation now face anuphill challenge against SixthCircuitprecedentbecauseinMichigan Catholic Conference,thecourtheldthatitisnotself-certificationthatinitiatestheprocessthroughwhichcontraceptivecoverageisprovided,butrathertheAffordableCare

Act. Id.at387.Thatrulingrunsdirectlycountertotheplaintiffs’contentioninAve Maria Foundation thatself-certification“indirectly support[s] contraception,sterilization,andabortion[towhichtheyobjectonreligiousgrounds].”Ave Maria Found., 991F.Supp.2dat963.

Seventh Circuit

The plaintiff,University ofNotreDame, is a not-for-profitCatholic uni-versity.A unique aspect of this caseis that the plaintiff compliedwith thecontraceptionmandateunderduressbysubmitting the self-certification formto its insurer, but still brought actionto enjoin enforcement of themandate.Univ. of Notre Dame v. Sebelius, 743F.3d547,552(7thCir.2014).InaccordwithRomanCatholic doctrine, the plaintiffhasneverpaidforitsstudentsorstaff’scontraception or permitted its carrier to provide it. Univ. of Notre Dame, 743F.3d at 549.The court noted that theplaintiffneveridentifiedwhatitwantedenjoined. Id. at551. Instead, the courtassumed that the plaintiffwanted anorder forbidding insurance companiesto provide any contraceptive coverage to theplaintiff’sstaffandstudentspendingfinaljudgmentinthedistrictcourt.Id. at 554.TheSeventhCircuitrefusedtoissuesuch an order noting that the plaintiffdoes not have the right to prevent other institutions fromengaging in acts thatmerelyoffendit.Id.

In evaluating the plaintiff’s like-lihood of success on the merits inthe district court, the SeventhCircuitrejected the plaintiff’s argument thatthe process of certifying its religiousobjection violates its religious beliefsby“triggering”theprovisionofcontra-ceptive coverage. Id. at554.Thecourtfound that the accommodation already

exempted the plaintiff from offeringcontraceptive coverage. Id. at 557.Theplaintiff’sbroaderargument—thatthe process of requesting the accom-modationitselfburdeneditsexerciseofreligion—is “paradoxical andvirtuallyunprecedented.”Id. Thecourtaffirmedthedistrictcourt’sdenialofpreliminaryinjunction.Id. NoappealhasbeenfiledintheUnitedStatesSupremeCourt.

Eighth Circuit

Theplaintiffsareemployersaffili-atedwiththeCatholicChurch.Liketheplaintiffsinothercases,theyarguedthatthemandate,includingtheself-certifica-tionpiece, requires themtoparticipatein a scheme to provide coverage that they oppose. Archdiocese of St. Louis v. Burwell, No. 4:13-CV-2300-JAR., 2014WL 2945859, at *3 (E.D.Mo.2014). TheyalsoarguedthattheRFRAprotectsanyexerciseofreligionanddoesnotlimititsprotectionsto“significant”or “substantial” acts.Archdiocese of St. Louis, 2014WL 2945859, at *6.The government did not challenge the sincerity of the plaintiffs’ beliefs andinstead argued that the regulations donotimposeasubstantialburdenontheirexerciseofreligion.Id.Thecourtgrantedtheplaintiffsapreliminaryinjunctiontoenjoinenforcementofthecontraceptionmandateuntiltheirclaimsareresolved.Id. at*12.Theuniqueaspectofthedeci-sionrestswiththecourt’sstatementthat“in lightof legaluncertaintyregardingenforceability ofmandatewith respecttononprofitorganizationswithreligiousobjections” it is in the public interestto preserve the status quo, enjoiningenforcementofthemandate.Id. at*12.

The district court also concludedthatthemandateappliessubstantialpres-sureon theplaintiff’sexerciseof their



religious beliefs by requiring them tochoosebetweenprovidingcontraceptivecoverage to their employees or paying substantial financial penalties if theyrefuse.Id. at*8.Becausetheplaintiffsdemonstrated a substantial burden ontheirexerciseoffreedomofreligion,thegovernment had to show the mandate is the“leastrestrictivemeansoffurtheringa compelling governmental interest.” Id. at*9.Thecourtdeterminedthatthemandate was not the least restrictive means to further the government’scompellinginterestsinpromotingpublichealthandgenderequality.Id. at*11.Ad-ditionally,thecourtnotedthattheUnitedStatesSupremeCourthasobservedthatthe government could achieve its goalwithout imposing substantial burdenby assuming the cost of contraceptiontoanywomanunabletoobtainitfromemployers. Id. at*10.Thecase iscur-rentlypendingbeforetheEighthCircuit.

Tenth Circuit/U.S.S.C.

The plaintiffs are self-insured,not-for-profit, Catholic organizationsand a Catholic third-party administrator for the organizations’ church plans.The plaintiffs asserted that executingtheself-certificationformburdenstheirreligiousbeliefs.Little Sisters of the Poor Home for the Aged v. Burwell, 134S.Ct.1022(2014).

They contended that taking anyaction that triggers the provision ofcontraception,sterilization,andabortifa-cientsviolatestheirreligiousbeliefs.Thegovernmentdidnotdisputethesincerityoftheplaintiffs’beliefs,butinsteadchal-lenged the plaintiff’s interpretation ofhowtheirreligiousbeliefsareimpactedby the contraceptionmandate and theFinalRules.Little Sisters of the Poor Home for the Aged,6F.Supp.3dat1239;

see also 78 Fed.Reg. 127, 870 (July2, 2013). Specifically, the governmentargued that because the plaintiffs areeligible for the accommodation, theyneed“notcontract,arrange,pay,orreferforcontraceptivecoverage.”Id. (citing77Fed.Reg.7(Jan.3,2012)).

Thedistrictcourtrejectedtheplain-tiffs’argumentsanddeniedtheirmotionforapreliminaryinjunction.Thecourtfoundthatunderthe“eligibleorganiza-tions” accommodation in the FinalRulesonceplaintiffscompletedtheself-certificationformanddeliveredittotheirthird-party administrator they satisfiedthe requirements of the contraceptionmandateandhavenofurtherobligations.Little Sisters of the Poor Home for the Aged,6F.Supp.3dat1240.Thus,thecourtconcludedthattheregulationsdonotrequiretheplaintiffstoparticipateintheprovisionofcontraceptivecoverageor provide health benefits that includecontraceptive coverage.

Further, the court also determinedthat the plaintiffs’ religious beliefswere not substantially burdenedby anauthorizedrepresentativeoftheirorga-nizationsexecutingtheself-certificationformanddeliveringittotheirthird-partyadministrator. Finally, the court foundthat the plaintiffs failed tomeet theirburdenthataninjunctionwasnecessaryto prevent an imminent harm. Id. at1246.

ThecaseiscurrentlypendingintheTenthCircuit.

Eleventh Circuit

Theplaintiffisatelevisionnetworkthat promotes the Roman Catholic Church’steachings,andassuch,opposesthe use of contraception in any form.EternalWorldTelevisionNetwork,Inc.v. Burwell, 13-0521-CG-C, 2014WL2739347,at*1(S.D.Ala.2014).Inthe

lower court, the plaintiff argued thatthe contraception mandate violates the RFRA, the FreeExerciseClause, theEstablishment Clause, and the FreeSpeechClause.EternalWorldTelevisionNetwork, Inc., 2014WL2739347,at*1. The health-care coverage the plaintiffprovides to its employees excludescoverage for artificial contraception,sterilization,andabortion.Id.

The plaintiff filed a motion forsummaryjudgmentandsoughtexpeditedconsideration tomeet the deadline forcompliance with the mandate. Id. The court stated that the question is notwhetheranythinginthemandateoffendsthe plaintiff’s religious beliefs; rather,the focus is on the particular actionsthatthemandaterequirestheplaintifftoperform.Id. at*3.Thecourtdeniedthemotion, concluding that executing theself-certificationformdoesnot imposesubstantial burden on the plaintiff’sreligiousbeliefs. Id. at*4.Theuniqueaspectofthiscaseisthecourt’sdetermi-nationthattheplaintiff’sonlyreligiousobjectiontothemandatehingesupontheeffectitwillhaveonotherpartiesaftertheplaintiffsignsthecertificationformandnotonanythinginherentintheactofsigninganddeliveringtheform.Id. at*5.

TheUnitedStatesCourtofAppealsfor the Eleventh Circuit granted theplaintiffaninjunctionpendingappealbutdidnotaddressthemeritsofitsclaims. EternalWorldTelevisionNetwork,Inc.v.Burwell, 756F.3d1339(11thCir.2014).

D.C. Circuit

TheCourtofAppealsfortheD.C.Circuit recently joined the short listof federal appellate courts to renderjudgment in a not-for-profit challengeto the accommodation.The plaintiffs



includePriestsforLife,apro-lifegroupofCatholicpriests,andotheremployers. Priests For Life v. U.S. Dep’t of Health and Human Servs., No.13-5368, 2014 WL5904732(D.C.Cir.Nov.14,2014).Thiscaseisuniquebecauseitinvolvesthethemeof“notice”asitrelatestotheaccommodation. Priests For Life, 2014 WL5904732,at*1.Theplaintiffsarguedthat,undertheRFRA,theyhavetherightnottoprovidenoticetoanyentityiftheyremove contraceptive coverage fromtheir health plans. Id.Theplaintiffsalsocontended that the government does not haveasufficientlycompellingreasonforrequiring them toprovidenotice tobegranted an accommodation. Id.Further,theplaintiffsarguedthatthegovernmentdid not demonstrate that the notice requirementwastheleastrestrictivewayto achieve any governmental interests involved. Id.at*3.

Thecourtheldthattheaccommoda-tiondoesnotviolatetheplaintiffs’freeexerciserightsassecuredunderRFRA.Id.Insoholding,thecourtstatedthattooptout,alltheplaintiffsmustdoisstatetheirbeliefsandseekwhattheywantina letter or two-page-form. Id. Overall, thecourtbelievedthatthegovernmentalinterests involved in the accommodation aresufficientlycompellingtooutweightheallegedsubstantialburdenimposedontheplaintiffs’freereligiousexerciserights. Id.Thecourtalsobelievedthattheaccommodationrequiresaslittleasitcanfromthosethatobjecttoit.Id.But,theObamaAdministration’snewproposedrulesinferthatevenlesscanberequiredofobjectors.

The Obama Administration’sNew Proposed Rules

OnAugust 22, 2014, theObamaAdministration released additional proposed rules,which it claimswouldprovide employees of religiously-affiliated organizationswith away toobtain contraceptive services as partof their health insurance coverage,whilerespectingthereligiousbeliefsoftheir employers. Administration takes steps to ensure women’s continued access to contraception coverage, while respecting religious-based objec-tions, HHs, http://www.hhs.gov/news/press/2014pres/08/20140822a.html (lastvisitedNov.2,2014).

Undertheproposedrules,religious-ly-affiliated employerswould notifythe government, not their insurers, oftheir objections to the contraceptionmandate. 79 Fed.Reg. 51118, 51124 (aug. 27, 2014).Inturn,thegovernmentwouldnotifytheinsurerstoprovidethecontraception coverage. Id. Opponents of thisproposed rulecontend that it isessentiallythesameasself-certification,asitmerelychanges“who”thereligiousemployer notifies from the insurer orthird-party administrator to the govern-ment.The objections asserted by thereligiousorganizationsseemtobemoreaboutwhattheself-certificationdoes, as opposed to whoitnotifies.

It may be beneficial if the pro-posed rule included a statement thatthe religious organizationwouldmaketo the government, in objecting toprovidingcontraceptives,suchas:“Thisreligiously-affiliated organization’sacknowledgment, as provided in thisform,thatitobjectstoprovidingallorpartialcontraceptivecoverageaspartof

its health care plan, in accordance with its sincerely held religious beliefs, inno way serves as any action or means throughwhich contraceptive coverageisultimatelyprovidedtoitsemployeesorotherqualifyingindividuals,despitethe fact that contraceptive coveragemay ultimately be provided to someofitsemployeesbythegovernmentorother authorized third-party.” Such astatement, coupledwith the enactmentof the new proposed rules,may helpaccommodate these accommodated not-for-profit organizations by givingadded voice to their sincere religiousobjections.Itwouldalsoattempttopro-videanadditionallayerofremovalfromanyresponsibilitytheyfeelisassumedby self-certifying,while still ensuringcontraceptive coverage, albeit by analternateprovider,towomenwhoseekcoverageundertheAffordableCareAct.

Fewfederalcircuitcourtsofappealhave adjudicated the not-for-profitcasespendingbeforethem.Overall,thedistrict courts havebeendivided as totheoutcomesinthesecases,withaslightadvantagetothenot-for-profits.AstheFifthCircuit stated inE. Tex. Baptist Univ.,“Becausetheissuesarelegalandthefactsareessentiallyundisputed,thisandotherdistrict courtopinionsareatmost data points, chiefly important asnecessarystepstotheappellatecourts.”E. Tex. Baptist Univ., 988F.Supp.2dat747.Itlargelyremainstobedeterminedwhether the federal circuit courts ofappealwillfollowinthepathspavedbythedistrictcourts.

http://http://www.hhs.gov



James L. Craney is a part-ner in the Madison County office of Lewis Brisbois Bisgaard & Smith LLP, where his practice focuses upon general liability liti-gation. During his career, Mr. Craney has defended numerous employment dis-

crimination, wrongful termination, and civil rights violation suits, both in federal and state court. He earned his B.S. from the University of Illinois in Champaign-Urbana, and his M.S. from Southern Illinois University in Carbondale. He earned his J.D. from St. Louis University, where he also obtained the program’s Health Law Certificate. Mr. Craney is a member of the IDC Employment Law Committee, and is a regular speaker before bar association and industry groups.

James L. CraneyLewis Brisbois Bisgaard & Smith LLP, Edwardsville

Employment Law

About the Author

Section301oftheLaborManage-ment RelationsAct (LMRA) givesfederal courts jurisdiction over suitsto enforce the terms of a collectivebargaining agreement (CBA).Nemsky v. ConocoPhillips et al.,574F.3d859,864(7thCir.2009).Specifically,§301providesthat:

Suitsforviolationofcontractsbetween an employer and alabororganizationrepresentingemployeesinanindustryaffect-ingcommerceasdefinedinthisAct,orbetweenanysuchlabororganizations,maybebroughtinanydistrictcourtoftheUnitedStates having jurisdiction ofthe parties,without respect tothe amount in controversy orwithoutregardtothecitizenshipoftheparties.

29U.S.C.S.§185(a).Asonecourthasexplained,§301

providesfederalsubject-matterjurisdic-tion “without respect to the amount incontroversy orwithout regard to thecitizenshipoftheparties,”butonly over “[s]uitsforviolationofcontractsbetweenan employer and a labor organization.Rutherford v. Judge & Dolph, LTD.,707F.3d710,714(7thCir.2013).ThestatutecontemplatesclaimsmadebyemployeesagainstanemployerforviolationsofaCBA.It,however,alsoseemstoexcludeclaimsbyemployeesagainstaunion(or

Strange Bedfellows:Employers, Unions, and the

“Hybrid § 301” Claim

betweenotherparties)thatlackanallega-tionthattheunionorotherpartyviolatedthe CBA. Rutherford,707F.3dat714.

CBAs commonly provide that the labor union has exclusive standing tochallengeemployerconduct.Ordinarily,unionmembersmust first exhaust thegrievanceprocedures inaCBA,ratherthandirectlysuetheemployer.Yeftich v. Navistar, Inc.,722F.3d911,914(7thCir.2013).Thispresentsanobstaclefortheemployee, who wishes to challenge an employer’sconduct,wheretheemployeebelievestheunionisnotactinginhisbestinterestsinpursuingtheclaim.

TheUnitedStatesSupremeCourthasacknowledgedanarrowexceptiontothisobstacle.InVaca v. Sipes, 386U.S.171(1967),theCourtrecognizedthatasapracticalmatter,employeesoftencannotgodirectlytofederalcourtwithclaimsthatanemployerbreachedaCBA.ThisisbecausemanyCBAshavemandatoryprovisions that require the employee,representedbyhisunion,topursuehisgrievances througharbitration.Ruther-ford,707F.3dat714.TheSupremeCourtexplainedthatiftheunionthendecides,forwhateverreason,nottoarbitrateonbehalfoftheemployeepursuanttothemandatoryarbitrationclause,onlythenmay the employee allege a CBA viola-tioninfederalcourt.Vaca, 386U.S.at185.Indoingso,theemployeemust suenotonlytheemployerforviolatingtheCBA,butalsotheunionforviolatingitsdutyof fair representationby refusing

to arbitrate. Id. (stating, “[A] situationwhen the employeemay seek judicialenforcement of his contractual rightsarises[]if...theunionhassolepowerunderthecontracttoinvokethehigherstagesofthegrievanceprocedure,andif...theemployee-plaintiffhasbeenpre-ventedfromexhaustinghiscontractualremediesbytheunion’swrongfulrefusaltoprocessthegrievance.”).

This causeof action is referred toas a hybrid § 301 claim.Without theavailabilityofthishybridclaim,unionswouldhaveunlimiteddiscretiontode-priveinjuredemployeesofallremediesforbreachofcontract.Id. at186.InthesituationauthorizedbyVaca,theunfairlaborpracticeclaimagainsttheunionisnecessarilyapartandparceloftheun-derlying claim against the employer. Id.

Anemployeemustovercomeseveralhurdlestomaintainahybrid§301claim.First,theemployeemustactuallybeinapositionwhereheorsheiscontractuallypreventedfrombringingaclaimdirectlyagainst the employer. Rutherford, 707F.3d at 715. InRutherford, the United

Employment Law | continued


StatesCourtofAppealsfortheSeventhCircuit considered the following facts.A trucking company entered into aCBAwith theTeamsters and one ofits local chapters. Id. at712.TheCBAprovided that any grievance regarding theinterpretationoftheagreementwassubjecttoarbitration.Id. at712.Thepar-tiesultimatelyfailedtorenegotiateand

Vaca. In Vaca,theunionheldsolepowerunder the CBA to invoke the higherstagesof thegrievanceprocedure, andthe employee-plaintiffwas preventedfromexhaustinghiscontractualremediesby the union’s wrongful refusal toprocess the grievance. Vaca, 386U.S.at185.Incontrast,theCBAinRutherford didnotrequirethatanNLRBactionbe

wererepresentedbyaunion,whichhadentered into a CBA with the employer, ConocoPhillips. Id. The employer in-stituted a new substance abuse policy,whichtheunionopposed,filingagriev-anceandattemptingtoinitiatearbitrationundertheCBA.Id at862.Theemployertook the position that the policywasnotsubjecttoarbitration.Id.TheunionthenchallengedthepolicywithanunfairlaborpracticechargebeforetheNLRBbut,ultimatelydroppeditschallenge.Id. Aunionrepresentative testifiedthathehadexpectedtheNLRBtodeferaction,pending theoutcomeofanarbitration,butwhentheNLRBmovedforwardanddismissedthecharge,heconcludedthattheNLRBagreedwith the employer’spositionthatthepolicywasnotsubjecttoarbitration.Id.

Ultimately,theunionemployeewasterminatedforanallegedviolationofthesubstance abusepolicy. Id. at 864.HebroughtsuitinU.S.districtcourtagainstboththeemployerandtheunion.Id.HeallegedtheemployerhadbreachedtheCBA,and that theunionhadbreacheditsdutyoffairrepresentation.Thedistrictcourtgrantedsummaryjudgmentforthedefendants.Id.

On review, the court of appealsfirst examined Nemsky’s allegationthat the union breached its duty offair representation. Id. at 866-67.Reviewing the facts in the record,the court concluded that there weresufficient facts to support Nemsky’sclaimsandthatsummaryjudgmentonthose allegations was inappropriate. Id. at 867.Turning to the claim thatthe employer had violated the CBA, the court of appeals concluded thatsummaryjudgmentonthoseallegationswas appropriate. Id. at868.

Without the availability of this hybrid claim, unions

would have unlimited discretion to deprive injured

employees of all remedies for breach of contract.

renew the CBA. Id. Several employees weresubsequentlyterminated. Id. They asked the union to bring unfair laborpractices charges before theNLRB.Id. Theuniondidso,anda settlementwas reached for these claimsbetweenthe union and the employer, howeverthe employeeswould not consent tothe settlement. Id. The union did notcontinuepursuingthechargeswiththeNLRB. Id.Theemployeesfiledsuit infederaldistrictcourtunder§301oftheLMRA,namingboththeemployerandthe union as the defendants. Id. They alleged the employer violated the CBA, and that theunionviolated its dutyoffair representationwhen it settled thegrievances before the NLRB for anamount thatwas unsatisfactory to theplaintiffs.Id.

OneissueattheforefrontofRuther-ford waswhetherthefactssupporteda§301hybridclaim.Thecourtofappealsheld that they did not, noting that the factsinRutherford differedfromthosein

initiatedbytheunion.Rutherford, 707F.3dat715.TheRutherford courtalsonotedthattotheextentaviolationofaCBAcanbeconsideredanunfairlaborpractice, the NLRB and the federalcourts have concurrent jurisdictionover such claims. Id. at 716 (citingCopeland v. Penske Logistics LLC,675F.3d1040,1044(7thCir.2012)).Thecourtofappealsconcluded,“theclaimagainst[theunion]simplyisnotpartofalegitimateSection301‘hybrid’claim,and so we dismiss the claim against [theunion]forlackofjurisdiction....” Id. at716.

Anotherhurdletheplaintiff,assert-ingahybrid§301claim,mustovercomeis that the claimantmust adequatelypleadthecauseofactionastothetwodefendants.Forexample, inNemsky v. ConocoPhillips Company et al., 574F.3d 859 (7thCir. 2009), the plaintiffwasanoperatingengineeratarefineryinWoodRiver, Illinois.Nemsky, 574F.3d at 861.The operating engineers

THE IDC MONOGRAPH:

For Your Consideration: The Current Stateof Post-Employment Restrictive Covenants in Illinoisand National Trends Beyond Continued Employment

as Adequate Consideration

IDC QUARTERLY | Volume 25 Number 1

Geoffrey M. WaguespackButler Pappas Weihmuller Katz Craig LLP, Chicago

Denise Baker-SealBrown & James, P.C., Belleville

Theresa Bresnahan-ColemanLanghenry, Gillen, Lundquist & Johnson, LLC, Chicago

James L. CraneyLewis Brisbois Bisgaard & Smith LLP, Edwardsville

Kimberly A. RossButler Pappas Weihmuller Katz Craig LLP, Chicago

Denise Baker-Seal joined Brown & James, P.C., in 2000 and practices in the firm’s Belleville, Illinois, office. Her practice has fo-cused on employment cas-es, as well as catastrophic injury cases. She frequently

represents employers and other businesses, including product manufacturers, truck lines, and property owners. A life-long resident of central Illinois, Ms. Baker-Seal also participates as an arbitrator in the St. Clair County (IL) and Madison County (IL) mandatory arbitration programs. She serves on the firm’s employee/personnel committee and is also the co-founder of the Fifth Friday Initiative to increase retention and promotion of women in the firm. Prior to enter-ing private practice, Ms. Baker-Seal served as the Judicial Law Clerk to the Honorable Lewis M. Blanton, U.S. Magistrate Judge for the U.S. District Court for the Eastern District of Missouri.

Theresa Bresnahan-Cole-man is an associate at Langhenry, Gillen, Lund-quist & Johnson, LLC in Chicago. Theresa concen-trates her practice in civil litigation defense, with an emphasis in employment

law, municipal civil rights, personal injury, and premises liability. She is a member of the IDC Local Government Law Committee and of the Chicago and Illinois State Bar Associations. She received her law degree in 2009 from New England School of Law, where she served as the managing editor of the New England Journal of International and Comparative Law and earned a CALI award in Employee Benefits. Theresa received her master of arts degree in English in 2006 from Loyola University Chicago and her bachelor of arts degree in English and Computer Applications in 2001 from the University of Notre Dame. Prior to attending law school, Theresa worked as an investigator for the Federal Trade Commission.

James L. Craney is a part-ner in the Madison County office of Lewis Brisbois Bisgaard & Smith LLP, where his practice focuses upon general liability liti-gation. During his career, Mr. Craney has defended

numerous employment discrimination, wrongful

Geoffrey M. Waguespack is an attorney at Butler Pappas Weihmuller Katz Craig LLP. He joined the firm in 2014 in the firm’s Employment Law group. His practice includes the handling of employment-

related litigation and litigation prevention, such as defending employers against federal and state claims of harassment, discrimination, and wage and hour violations, as well as the development of employment policy, procedures, and handbooks. Mr. Waguespack has written successful briefs before the Illinois Supreme Court and the Illinois appellate court, as well as before the U.S. District Court for the Northern District of Illinois.

Mr. Waguespack earned his law degree in 2003 from Loyola University Chicago School of Law and his undergraduate degree in government and philosophy in 1997 from The College of William & Mary in Virginia. During law school, Mr. Waguespack was a member of a moot court team and served as the Executive Editor of Publications for the Loyola Law Journal. He was the recipient of the school’s Leadership & Service Award, and he earned CALI Awards in constitutional law and legal writing.

Mr. Waguespack is active in DRI and the Il-linois Association of Defense Trial Counsel (IDC). The IDC has awarded Mr. Waguespack its Volunteer of the Year Award and awards for meritorious service. From 2006 to 2013, Mr. Waguespack both authored and contributed to the Employment Law Column, published in the IDC Quarterly. He served as the editor-in-chief of the IDC Quarterly from 2013 to 2014, and was on its editorial board from 2007 to 2013. From 2011 to 2013, Mr. Waguespack served as the chairperson of the IDC’s Employment Law Committee. He was also active in the Young Lawyers Division of the IDC.

In addition to writing the regular Employment Law Column for the IDC Quarterly, Mr. Wagues-pack has co-authored several Monographs for that publication, and has contributed to the IDC Survey of Law from 2011 to 2013.

termination, and civil rights violation suits, both in federal and state court. He earned his B.S. from the University of Illinois in Champaign-Urbana, and his M.S. from Southern Illinois University in Carbondale. He earned his J.D. from St. Louis University, where he also obtained the program’s Health Law Certificate. Mr. Craney is a member of the IDC Employment Law Committee, and is a regular speaker before bar association and industry groups.

Kimberly A. Ross is a part-ner in the Chicago office of Butler Pappas Weihmuller Katz Craig LLP. She re-ceived her J.D. from De-Paul University College of Law and her B.A. from the University of Michigan. She

practices employment law, including handling claims involving harassment and discrimination under federal and state laws, wage and hour claims, general employment practices and common law torts such as negligent hiring and retention, retaliatory discharge and defamation. In addition to her litigation practice, Ms. Ross fre-quently conducts seminars for clients in the area of employment law, including harassment and discrimination under Title VII (race, gender, sex, religion and national origin discrimination and harassment); the Age Discrimination in Employ-ment Act; the Americans with Disabilities Act and the Illinois Human Rights Act. She also counsels clients on general employment policies and practices, including reductions in force, hiring, performance evaluations, disciplining, conduct-ing investigations and terminations. In addition, Ms. Ross also drafts employee handbooks and other policies, and drafts and reviews employ-ment contracts and other agreements between employers and their employees. She counsels clients on issues such as proper classification of employees under the Fair Labor Standards Act and other matters pertaining to maintaining proper personnel files.

Ms. Ross was a past Editor in Chief of the IDC Quarterly. In addition to the IDC, she is a mem-ber of Defense Research Institute (DRI) (serving as Community Chair of the Employment and Labor Law Committee), the Decalogue Society of Lawyers and the Women’s Bar Association.

M-2 | IDC QUARTERLY | Monograph | First Quarter 2015

About the Authors

First Quarter 2015 | Monograph | IDC QUARTERLY | M-3

For Your Consideration:The Current State of Post-Employment

Restrictive Covenants in Illinois and National Trends Beyond Continued

Employment as Adequate Consideration


Post-employment restrictive cov-enants, which may include non-compete and non-solicitation agreements, are tools that many employers use to restrict the future employment of a former employee. In a non-compete agreement, the employee agrees not to perform certain actions related to his or her prior position of employment, or to engage in work that competes with his or her prior employer. Non-solicitation provisions generally restrict an employee’s ability to poach customers or other business that the employer maintains during the employee’s tenure of employment.

Increasingly, employers are utilizing restrictive covenants as a tool to protect business interests. Typically, such agree-ments can be drafted to protect an existing customer base and to protect confidential information. Employers are seeking to enforce restrictive covenants more often through litigation, as well. Over the past decade, the frequency of such suits has increased more than 60%.1 According to a research study conducted for the Wall Street Journal, published court opinions involving covenants not to compete have increased 61% since 2002.2 Of course, this increase does not take into account cases that settle outside of court.3 Therefore, the actual number of suits involving covenants not to compete is likely much higher.

This Monograph will explore national trends in the handling and enforcement of restrictive covenants among the states, with an emphasis on Illinois’ history and

recent developments regarding the law on restrictive covenants. Specifically, this Monograph explores the recent decisions of Reliable Fire Equipment Co. v. Arredondo4

and Fifield v. Premier Dealer Services, Inc.5 and how those decisions have changed the law in Illinois regarding legitimate business interests and the consideration needed to have an enforceable covenant not to compete.

Whether an employer may success-fully enforce a restrictive covenant depends upon the particular jurisdiction. In many states, employers are required to show that the restrictive covenant is reasonably limited in time and territory.6 Many states also require the employer to show that the agreement protects a legitimate business interest.7 For example, in Florida, a broad restrictive covenant generally will be enforced, so long as the provisions protect a legitimate business interest.8 In the states requiring employers to prove that a restrictive covenant protects a legitimate business interest, the courts generally will consider trade secrets, confidential business information, and customer lists as protectable interests.9

Even among these states, however, courts deal differently with such agree-ments where a particular aspect of a restrictive covenant clause is deemed unreasonable. For example, some states abide by the “blue pencil” doctrine. Under the blue pencil doctrine, the court will strike those portions of the covenant that

are deemed unreasonable but will uphold the remaining portions of the agreement.10 Other jurisdictions apply the “red pencil” doctrine. Under the red pencil doctrine, if any term of the restrictive covenant is unreasonable, then the entire contract will be deemed void.11 Between the “blue pencil” and “red pencil” states are the so-called “purple pencil”—or “reforma-tion”—states. In these states, courts will allow for reformation of the contract to make unreasonable terms reasonable.12 For example, if a contract states that the employee cannot work in county A, but he previously worked in county B, the court would edit the contract to refer to county B.

Employers in a jurisdiction that strictly interprets restrictive covenants could at-tempt to evade that jurisdiction’s laws by including a choice of law provision in the employment agreement. If the chosen state law is drastically different from the law of the employer’s home state, however, the court might refuse to enforce the choice of law provision, finding that it violates public policy.13 Employers, therefore, should never assume that restrictive covenants are iron clad. Even if a more favorable choice of law provision is added to the contract, practitioners would be remiss not to temper their clients’ expectations accordingly.

States like California and North Dakota strongly disfavor non-compete agreements.14 In these states, non-compete clauses are void, except as to equity stake-holders in a company.15 There have been pushes in other states to join California’s and North Dakota’s stance on restrictive covenants either by limiting covenants not to compete or by abolishing them altogether.16 Those who favor eliminating or limiting restrictive covenants claim that such agreements inhibit economic development because they hinder entre-preneurship.17 Proponents of restrictive


covenants argue that such covenants boost economies and foster competition because companies invest more heavily in their employees when the employers can reduce the opportunity for their employees to use employer-provided training to compete with them.18 They also argue that restrictive covenants prevent employees from leaving jobs after obtaining confidential informa-tion gleaned from their employers, which is a desirable policy goal.19

Massachusetts is an example of a state that recently attempted to abolish restrictive covenants. In April 2014, Massachusetts Governor Deval Patrick introduced legisla-tion to abolish the validity of restrictive covenants with a few exceptions, due to economic concerns regarding the enforce-ability of restrictive covenants.20 The state legislature responded with a compromise bill that passed the state senate.21 The compromise bill set out parameters meant to allow such an agreement to pass judicial muster. Under the bill, restrictive covenants are enforceable only for a duration of six months or less. In addition, such agree-ments cannot apply to hourly workers.22

The compromise bill, however, did not pass the state legislature at the end of the legislative session.23

Massachusetts is not the only state that has recently attempted to limit the impact of restrictive covenants. In 2013, legislation was introduced in Minnesota to essentially ban such provisions, with the exception that restrictive covenants would be enforceable as to equity stakeholders in a company.24 Likewise, New Jersey recently proposed limits to restrictive covenants. New Jersey’s proposed change would invalidate any restrictive covenants entered into by a worker entitled to unem-ployment benefits from his or her former employer.25 Like the Massachusetts bill, neither the Minnesota nor the New Jersey bills have passed.26

In 2012, New Hampshire succeeded in changing its laws regarding the valid-ity of non-compete clauses. Under the amendment, in order for a non-compete agreement to be valid in New Hampshire, the employer must provide a copy of the agreement to the prospective employee either before a job offer is given or at the time the job offer is made.27 If a non-compete agreement is entered into during an employee’s employment, the agree-ment will be valid only if the agreement coincided with a position change by the employee.28

States are showing more interest in limiting the effect of restrictive covenants. Given these developments, it appears that the growing trend across the United States is toward restricting the enforceability of restrictive covenants.

A Brief History of RestrictiveCovenants in Illinois:

The Law Prior to Reliable Fire Equipment and Fifield

The longstanding rule in Illinois has been that contracts in total restraint of trade contradict public policy and are therefore void.29 The Illinois Supreme Court rec-ognized very early on, however, that a contract which is only a partial restraint of trade is valid, provided it is reasonable and is supported by adequate consideration.30

A modern formulation of this frame-work was expressed in Mohanty v. St. John Heart Clinic.31 In Mohanty, the Illinois Supreme Court noted that private contracts are not void unless it is clearly shown that the contract is contrary to public policy, or that the contract is manifestly injurious to the public welfare.32 As an example, the Mohanty court acknowledged that, in Illinois, restrictive covenants in attorney employment contracts are void as a matter of public policy.33 In contrast, the Mohanty

opinion itself examined whether restrictive covenants in physician employment con-tracts violate public policy. The majority held that physician restrictive covenants are not clearly against public policy.34 As noted in the Mohanty opinion, “[the Illinois Supreme Court] has a long tradition of upholding covenants not to compete in employment contracts involving perfor-mance of professional services when the limitations as to time and territory are not unreasonable.”35

The issue of what constitutes reason-able limitations on a prior employer’s activities was specifically addressed in the Mohanty decision. The Illinois Supreme Court articulated a two-prong test to be applied when assessing the reasonableness of a restrictive covenant. The test provides:

“In determining whether a re-straint is reasonable it is necessary to consider whether enforce-ment will be injurious to the public or cause undue hardship to the promisor, and whether the restraint imposed is greater than is necessary to protect the promise.”36

Two subsequent opinions from the Illinois appellate court brought some confusion to the otherwise straightforward Mohanty analysis. The first was Sunbelt Rentals, Inc. v. Ehlers,37 a decision from the Illinois Appellate Court Fourth District. In Sunbelt Rentals, an employee was a sales representative for Sunbelt Rentals, a company that rented and sold industrial equipment. The employee, Ehlers, was responsible for developing and maintain-ing the company’s customer base. Ehlers was also responsible for other aspects of customer relations.38

Ehlers entered into a written employ-ment contract with Sunbelt Rentals. The



agreement provided that while he was employed by Sunbelt Rentals, and for one year afterward, Ehlers would not directly or indirectly provide (or solicit the provision of) products or services similar to those provided by Sunbelt Rentals.39 The contract also limited this restriction to a geographic region of a 50-mile radius from Sunbelt Rentals’s store.40

After leaving Sunbelt Rentals, Ehlers accepted a position as a sales representa-tive with Midwest Aerials & Equipment, Inc. (Midwest), which Sunbelt Rentals considered a direct competitor. Midwest sold aerial work platforms to industrial and construction companies.41 Soon after Ehlers took this position, Sunbelt Rentals sent a cease-and-desist letter to Ehlers and Midwest, demanding that Ehlers stop working for Midwest.42

The trial court granted Sunbelt Rent-als’s request for a preliminary injunction, enjoining Ehlers and Midwest from violating the restrictive covenants of Ehlers’s employment agreement.43 On appeal, the reviewing court observed that traditionally Illinois case law has evaluated the reasonableness of restrictive covenants by looking to the “limitations as to time and territory” imposed by the agreement.44 The court also noted that over the past few decades, each of the state’s five ap-pellate districts had imposed the so-called

“legitimate-business-interest” test when evaluating whether restrictive covenants were enforceable.45 The Sunbelt Rentals court believed that this test had been cre-ated “out of whole cloth” and had no basis in Illinois law.46

Under the Fourth District’s analysis, the first reference to the “legitimate-business-interest” test in Illinois occurred in 1975 in Nationwide Advertising Service, Inc. v. Kolar.47 In Kolar, the plaintiff advertising company sought to enjoin its former employee and his new employer from soliciting business from the plaintiff’s customers.48 On appeal, the Illinois Ap-pellate Court First District discussed an employer’s interests, and whether they may be protected by contract. The court made the following observation:

Our review of the cases relied on by plaintiff established that an employer’s business interest in customers is not always subject to protection through enforcement of an employee’s covenant not to compete. Such interest is deemed proprietary and protectable only if certain factors are shown. A covenant not to compete will be enforced if the employee acquired confidential information through his employment and

subsequently attempted to use it for his own benefit. [Citation omitted.] An employer’s interest in its customers also is deemed proprietary if, by the nature of the business, the customer relationship is near-permanent and but for his association with plaintiff, defendant would never have had contact with the clients in question. [Citations omitted.] Conversely, a protectable interest in customers is not recognized where the customer relationship is short-term and no specialized knowledge or trade secrets are involved. [Citation omitted.] Under these circumstances the restrictive covenant is deemed an attempt to prevent competition per se and will not be enforced.49

The Sunbelt Rentals court outlined how opinions subsequent to Kolar built from this analysis and created a “legiti-mate-business-interest” test.50 The Sunbelt Rentals opinion further observed that the Illinois Supreme Court has never embraced the legitimate-business-interest test in the context of restrictive covenants.51 Review-ing the Illinois Supreme Court’s restrictive covenant jurisprudence, the Sunbelt Rentals court concluded that application of the test is inconsistent with the Illinois Supreme Court’s jurisprudence governing restrictive covenant cases.52

The year after the Sunbelt Rentals decision, the Illinois Appellate Court Second District decided Steam Sales Corp. v. Summers.53 In that case, the employee Brian Summers worked for Steam Sales Corporation (Steam Sales), a company selling boiler room equipment to industrial and commercial companies.54 Summers’s duties included soliciting and servicing

The issue of what constitutes reasonable

limitations on a prior employer’s activities was

specifically addressed in the Mohanty decision.

The Illinois Supreme Court articulated a two-prong

test to be applied when assessing the

reasonableness of a restrictive covenant.


customer accounts.55 After one of Steam Sales’s larger clients, Johnston Boiler, did not renew its contract with Steam Sales, Summers resigned from Steam Sales.56 A few months later, he formed his own com-pany, BEC Equipment. It was announced that two of Steam Sales’s largest customers would end their relationship with Steam Sales and enter into contract with BEC Equipment to provide them exclusive representation.57

Summers’s employment contract included the following provision:

“Restrictive Covenant For a period of two (2) years following the termination of Summers’ employment with Steam Sales, Summers shall not solicit, offer to provide, provide, sell or offer to sell any service or product identi-cal to or similar to those which Steam Sales sells to any customer to whom Summers or Steam Sales has made sales during the immediately preceding two (2) year period prior to the date the employment relationship ends.”58

Steam Sales sought a temporary restraining order against Summers.59 The trial court granted the preliminary injunc-tion, finding that Steam Sales’s customer list and the established client relationships were rights in need of protection.60 The court found a likelihood of success on the merits of Steam Sales’s claims, and en-joined Summers from “soliciting, offering to provide, providing, selling or offering to sell any service or product identical to or similar to those which Steam Sales sells to any customer to whom Summers or Steam Sales made sales [for a period of two years].”61

On appeal, Summers argued that the restrictive covenant was unenforceable

because Steam Sales failed to satisfy the legitimate-business-interest test.62 Sum-mers also argued that the restrictive covenant was unreasonable in terms of time and geographic territory.63

Affirming the trial court, the appel-late court in Steam Sales held that the restrictive covenant was enforceable. That court reiterated its own formulation of the legitimate-business-interest test:

“Courts will not enforce a cov-enant not to compete unless the terms of the agreement are reasonable and necessary to protect an employer’s legitimate business interests. [Citation.] A legitimate business interest exists where: (1) because of the nature of the business, the customers’ relationships with the employer are near-permanent and the employee would not have had contact with the customers absent the employee’s employ-ment; or (2) the employee gained confidential information through his employment that he attempted to use for his own benefit.”64

One question addressed by the Steam Sales court was whether the recent Sunbelt Rentals opinion had impacted the viability of the legitimate-business-interest test.65

The Second District noted that the Sunbelt Rentals opinion rejected the legitimate-business-interest test in favor of the two-prong reasonableness test set out in Mohanty.66 At the time, Mohanty was the most recent Illinois Supreme Court case addressing restrictive covenants.67

In its analysis, the Steam Sales court observed that application of the Mohanty reasonableness test versus the legitimate-business-interest test could lead to different results. The legitimate-business-interest

test is outcome determinative in cases where the employer is unable to establish either a near-permanent relationship with the customer or the attainment of confidential information by the employee.68 Thus, the legitimate-business-interest test presents a greater hurdle for employers to overcome than the reasonableness test. The court reasoned, however, that eliminating the legitimate-business-interest test does not completely relieve an employer of the burden of demonstrating a protectable interest.69 In that sense, the Steam Sales court noted that there may be some merit to the Sunbelt Rentals analysis, rejecting the legitimate-business-interest test.70

Despite finding merit in the Sunbelt Rentals holding, the Steam Sales court ultimately declined to formally reject the legitimate-business-interest test.71 The court noted that under the facts of that case, the employer did establish a near-permanent relationship with the customers at issue.72 The Steam Sales court upheld the non-compete agreement, concluding that the geographic limitation (half of northern Illinois, four counties in northwest Indiana, a portion of southern Wisconsin, and a small area in Iowa) was reasonable. The court also found that the two-year period was reasonable.73

In the wake of Sunbelt Rentals and Steam Sales, two Illinois appellate courts had either suggested or directly held that the legitimate-business-interest test should be abandoned. Mohanty—at the time, the most recent Illinois Supreme Court deci-sion to speak on the issue—had confirmed that Illinois courts apply the two-prong reasonableness test when evaluating the limitations of a covenant not to compete. Illinois Supreme Court opinions, however, had not addressed the role, if any, of the legitimate-business-interest test, so clari-fication was needed.



Recent Developments:Reliable Fire Equipment Co. v.

Arredondo and Fifield v. Premier Dealer Services

In the years following Sunbelt Rent-als and Steam Sales, Illinois courts have shaken up the landscape of restrictive covenant law in a major way. The courts also have provided much-needed clarity with respect to the applicability of the legitimate-business-interest test. Spe-cifically, the Illinois Supreme Court has announced that the enforceability of restric-tive covenants depends upon whether the entity seeking enforcement has a legitimate business interest to be protected. The court also held that the business interest, in turn, is assessed based upon the totality of circumstances presented by a given case. In addition, the Illinois Appellate Court First District has narrowed the scope of consideration that it will find adequate to support an enforceable restrictive covenant. Although it can be argued that the reach of the First District’s opinion might be limited, both developments have long-ranging implications for Illinois employers that seek to protect their business interests from competition by former employees.

A. Reliable Fire Equipment:Assessing the Legitimate

Business Interest

In 2011, the Illinois Supreme Court reviewed the state of Illinois law regarding restrictive covenants. The court noted that, prior to that time, Illinois courts deter-mined the reasonableness of a restrictive covenant by applying a three-prong test that considered whether the covenant: (1) is no greater than required for the protection of a legitimate business interest of the employer-promisee; (2) does not impose undue hardship on the employee-

promisor; and (3) is not injurious to the public.74 Courts also considered whether the extent of an employer’s legitimate business interest could be limited by type of activity, geographical area, and time.75 The supreme court acknowledged the lower courts’ disagreement about application of the legitimate-business-interest test.76 The court reconciled these divergent ap-proaches to enforcing restrictive covenants in its 2011 opinion, Reliable Fire Equip-ment Co. v. Arredondo.77

In Reliable Fire Equipment, the plain-tiff, a fire system designer and installer, sued two former employees who had joined a start-up business supplying fire-alarm systems in the Chicago area. As employees of the plaintiff, the two defendants had signed agreements not to compete with Reliable Fire Equipment Co. (Reliable Fire) in Illinois, Indiana, or Wisconsin for one year after their employment ended.78 The circuit court ruled that Reliable Fire failed to prove the existence of a legitimate business interest that justified enforcement of the covenants.79 A divided appellate court affirmed. The Illinois Supreme Court considered whether the circuit court applied the correct legal test to the evidence presented, and held that it had not.80

The supreme court made clear that the legitimate business interest of the employer is a long-established component of the three-part reasonableness test.81 The court stated that the common law has recognized several factors and subfactors within the component of a promisee’s legitimate-business-interest test, but held that “such factors are only nonconclusive aids in determining the promisee’s legitimate business interest, which in turn is but one component in the three-prong rule of reason, grounded in the totality of the circumstances.”82 The court explained that its earlier decision in Mohanty “expressly recited the legitimate interest of the prom-

isee as a component of the three-prong rule of reason.”83 Consequently, the court overruled the two recent appellate court decisions—Sunbelt Rentals and Steam Sales—for misreading the court’s decision in Mohanty.84

The court also acknowledged, but ultimately declined to adopt, the two-factor test advanced by the Illinois Appellate Court First District in Kolar, which states that a near-permanent customer relationship and an employee’s acquisition of confidential information through his employment are determinative of whether a non-compete agreement will be enforced.85 The supreme court held that enforce-ability should turn upon the totality of the circumstances and not upon an inflexible two-prong standard.86

After conducting its analysis, the Reliable Fire Equipment court articulated the standard for assessing an employer’s legitimate business interest as follows:

[W]hether a legitimate business interest exists is based on the totality of the facts and circum-stances of the individual case. Factors to be considered in this analysis include, but are not limited to, the near-permanence of customer relationships, the employee’s acquisition of confi-dential information through his employment, and time and place restrictions. No factor carries any more weight than any other, but rather its importance will depend on the specific facts and circum-stances of the individual case.87

Under this standard, Illinois trial courts have more flexibility to enforce restrictive covenants. As a result, employ-ers considering prospective candidates


who have entered into restrictive covenants with former employers must consider this fact. Those employers must evaluate, with aid of counsel, the nature of the restrictive covenant within the context of the work to be performed by the prospective employee. Such an evaluation will assist the employer in determining how to proceed with the possible hire, as well as the defense against any possible litigation brought by the employee’s former employer for an alleged breach of the non-compete agreement.

B. Fifield v. Premier Dealer Services, Inc.: Providing Adequate Consideration

Over and above the legitimate-busi-ness-interest test, a second aspect of the enforceability of a restrictive covenant is whether it is supported by adequate consideration. Employers must be mindful of the consideration they provide their employees for entering into restrictive covenants. Before the reasonableness of a restrictive covenant may be analyzed, it must be supported by adequate consid-eration. Employers conducting business in the First District (i.e., Cook County, including Chicago) must analyze the consideration they provide for their restric-tive covenants to ensure they pass muster under the First District’s 2013 decision in Fifield v. Premier Dealer Services, Inc.88 Although the Fifield court did not provide instruction about what constitutes adequate consideration, the court held that employment of less than two years was not sufficient consideration to enforce the restrictive covenants at issue in that case.

In Fifield, the plaintiff was employed by an insurance company that was ac-quired by Premier Dealer Services, Inc. That company developed, marketed, and administered a variety of vehicle after-market products.89 As a result of the sale, the plaintiff’s prior employer informed him

that his employment would end on a certain date.90 Prior to that date, the defendant offered employment to the plaintiff.91 As a condition of employment, the defendant required the plaintiff to sign an “Employee Confidentiality and Inventions Agreement” (Agreement).92 The Agreement contained nonsolicitation and noncompetition provi-sions that prohibited the plaintiff from competing with the defendant for two years following the termination of his employ-ment.93 Before signing the agreement, the plaintiff negotiated with the defendant to add a provision in the agreement that pro-vided that the restrictive covenants would not apply if the plaintiff was terminated without cause during the first year of his employment.94 The plaintiff accepted the offer of employment, signed the agreement, and began working for the defendant, but resigned three-and-a-half months later.95 Shortly thereafter, he began working for Enterprise Financial Group (EFG).96

The plaintiff and EFG filed a com-plaint for declaratory relief in the Circuit Court of Cook County, requesting that the trial court declare that certain provi-sions of the Agreement were invalid and unenforceable.97 The plaintiff and EFG later filed a motion for declaratory relief pursuant to 735 ILCS 5/2-701(b).98 The trial court entered an order granting the motion, stating that the nonsolicitation and noncompetition provisions in the Agreement were unenforceable as a matter of law for lack of adequate consideration.99

The First District affirmed. Even though the plaintiff signed the Agreement before his employment with the defendant began, the appellate court held that the provisions in the Agreement were postem-ployment restrictive covenants because the provisions restricted the plaintiff’s ability to seek work after his employment with the defendant ended.100 The court found instructive the reasoning and analysis of

Bires v. WalTom, LLC,101 in which the U.S. District Court for the Northern District of Illinois observed that the U.S. Court of Ap-peals for the Seventh Circuit has rejected the distinction between pre- and post-hire covenants.102 The appellate court also pointed out that Illinois courts have treated restrictive covenants signed by individu-als in situations similar to the plaintiff’s situation as postemployment restrictive covenants.103 The appellate court also held that the plaintiff’s employment with the defendant, which lasted slightly longer than three months, fell far short of the two years required for adequate consideration under Illinois law.104 The court noted that Illinois courts have held repeatedly that there must be at least two years of continued employ-ment to constitute adequate consideration in support of a restrictive covenant.105 This rule applies even if the employee resigns from his position on his own.106

The defendant petitioned the Illinois Supreme Court for leave to appeal, but the court denied the petition. Consequently, as discussed below, Illinois employers do not have clear guidance for what consideration they must offer employees to ensure enforceability of restrictive covenants. Illinois state and federal courts presented with this issue in the wake of Fifield have taken different approaches.

Behind the Fifield Curtain:Does Illinois Case Law Really

Require Two Years of Continued Employment as a Bright-Line Rule?

Commentators have described the holding in Fifield as a bright-line rule that a two-year period of continued employment following execution of an employment agreement is now required for the con-sideration for an enforceable restrictive covenant to be adequate.107 That line might be a bit blurry, however, to the extent that



the Fifield holding is meant to apply to all restrictive covenants. Instead, an argument can be made that the holding is limited to those restrictive covenants where the only consideration is continued employment. The more important take-away from the Fifield decision might be that employers should ensure that the consideration for a restrictive covenant is not illusory, in addition to being adequate. The next section will deconstruct the Fifield holding and evaluate its progeny in order to explore the basis for the conclu-sions reached by the courts and to explore whether a bright-line rule really is the appropriate draw from the Fifield decision.

A. The Case Law Relied Uponby the Court in Fifield

The court in Fifield primarily relied on three cases for the proposition that Illinois courts have held repeatedly that at least two or more years of continued employment constitutes adequate consideration in sup-port of a restrictive covenant: Lawrence & Allen, Inc. v. Cambridge Human Resource Group, Inc.,108 Brown and Brown, Inc. v. Mudron,109 and Diederich Insurance Agency, LLC v. Smith.110

In Lawrence and Allen, Inc. v. Cam-bridge Human Resource Group, Inc., the Illinois Appellate Court Second District held that a nearly two-and-a-half year period of continued employment, after agreeing to a postemployment restrictive covenant, was adequate consideration for the agreement.111 In that case, John Sheets began his at-will employment with the plaintiff on January 4, 1988, and on June 27, 1989, he signed a postemployment restrictive covenant under the threat of termination. No change in job title, re-sponsibilities, or salary corresponded to the signing of the restrictive covenant, which included a covenant not to compete that precluded Sheets from competing directly

or indirectly with the plaintiff within the territorial United States for two years in the event that he quit his employment with the plaintiff. The restrictive covenant also prevented Sheets from performing directly or indirectly any similar services for the plaintiff’s clients or soliciting any of the plaintiff’s clients during the same two-year period after termination. Other than the restrictive covenant, there was no written employment contract. On November 12, 1991, Sheets ended his employment with the plaintiff and began working for the defendant, a rival of the plaintiff in the highly competitive corporate employee outplacement industry.112

The plaintiff sued the defendant for tortious interference with contract.113 At the close of discovery, the defendant moved for summary judgment, in part, on the issue of whether the covenant was supported by consideration. The trial court granted the motion.114 On appeal, the Illinois Appellate Court Second District noted that continued employment for a substantial period of time is sufficient consideration to support an employment agreement.115 The appellate court considered the nearly two-and-a-half year period during which Sheets worked to constitute a substantial period of time, thereby serving as adequate consideration to support the postemployment restrictive covenant.116 Nevertheless, the appellate court ultimately found the terms of the restrictive covenant unreasonable and affirmed the trial court’s grant of summary judgment in favor of the defendant.117

In Brown and Brown, Inc. v. Mudron, the Illinois Appellate Court Third District held that seven months of continued employment after signing a restrictive covenant was not sufficient consideration for the restriction.118 In that case, customer service representative Diane Gunderson was an at-will employee of a company that was purchased by the plaintiff. As part of the

purchase, the plaintiff required Gunderson and her co-workers from the company being acquired to sign an employment agreement with the plaintiff. One co-worker who re-fused to sign the agreement was terminated. The agreement stated that the employee could be terminated at any time, with or without cause. It contained a postemploy-ment restrictive covenant that prohibited the employee from soliciting or servicing any of the plaintiff’s customers for two years after employment with the plaintiff had ended and from disclosing any of the plaintiff’s confidential information for the same post-employment period. Gunderson signed the agreement and worked for the plaintiff after the purchase of her former employer. After approximately seven months, Gunderson quit and joined one of the plaintiff’s competitors.119

The plaintiff filed suit against Gunder-son and her new employer, alleging that Gunderson had breached the employment agreement by soliciting and servicing the plaintiff’s customers, as well as by taking and utilizing the plaintiff’s confidential information. After extensive discovery, Gunderson moved for summary judgment, which was granted.120

On the plaintiff’s appeal, the court addressed the issue of whether there was adequate consideration for the restrictive covenant. The court explicated: “Under Illinois law, continued employment for a substantial period of time beyond the threat of discharge is sufficient to support a restrictive covenant in an employment agreement.”121 The court noted that Illinois courts generally have held that two or more years of continued employment constitutes adequate consideration.122 Gunderson, however, continued to work for the plaintiff for only seven months after signing the employment agreement containing the restrictive covenant. Notably, the court


declared that the fact that Gunderson quit her job did not change the analysis.123 Fur-thermore, even though the plaintiff claimed that Gunderson received other employee benefits as consideration for the restrictive covenant, the court had no evidence before it to establish specifically what those benefits were or how they differed from the benefits Gunderson was receiving as an employee of the acquired company. Accordingly, the court held that there was not adequate consideration to support the employment agreement and that the restrictive covenant was unenforceable.124

In Diederich Insurance Agency, LLC v. Smith, the Illinois Appellate Court Fifth District held that a three-month period of continued employment after signing a pos-temployment non-solicitation agreement was not sufficient consideration for the restrictive covenant. In that case, the defen-dant, Chad Smith, signed an employment agreement when he began working for the plaintiff. The employment agreement included a non-solicitation provision that prohibited Smith from soliciting insurance business from the plaintiff’s customers for a two-year period after he stopped working for the plaintiff.125 Five-and-a-half months after he started, Smith signed an employee confidentiality agreement that reduced the term of the non-solicitation agreement from the two-year period set forth in the original agreement to a 12-month period.126

Three months after signing the employee confidentiality agreement, Smith quit his job with the plaintiff. Eleven months later, the plaintiff received notification from one of its long-standing clients that the client would no longer be using the plaintiff’s broker services. Smith had arranged the transfer of that client’s business to another broker.127 The plaintiff then sued Smith for breaching the second non-solicitation agreement with the plaintiff, and Smith moved to dismiss. The circuit court

granted Smith’s motion, finding insufficient consideration as a matter of law for the non-solicitation agreement.128

The appellate court agreed with Smith’s position. Addressing only whether the consideration was adequate for the non-solicitation agreement, which was signed during Smith’s employment,129 the appellate court held that it was not. The plaintiff argued that the reduction of the non-solicitation period from two years to 12 months was a benefit to Smith, and thus was adequate consideration for the non-solicitation agreement. Alternatively, the plaintiff argued that Smith’s continued employment for three months after signing the non-solicitation agreement provided adequate consideration.130

The court rejected the plaintiff ’s arguments, concluding that the new non-solicitation agreement was a modification of an existing contract, requiring consider-ation in order to be enforceable.131 First, the court turned around the plaintiff’s argument that the reduction in the non-solicitation period to 12 months was a benefit to Smith. The court did not view the 12-month period as a benefit to Smith in the form of a reduction of a prior, lengthier restriction on him. Instead, the court viewed the restriction as a renewed promise by Smith to not compete for 12 months. Because Smith already had agreed to a 24-month non-solicitation period when he signed the employment agreement at the time that he started working for the plaintiff, the court reasoned that he already had a pre-existing duty not to compete against the plaintiff. The court, therefore, “failed to see” how a promise not to compete for 12 months could be new, valid consideration.132

Second, the court held that Smith’s continued employment for three months after signing the non-solicitation agree-ment was not sufficient consideration for the restriction.133 The court reasoned

that continued employment for an at-will employee is an illusory benefit, because immediately after an at-will employee signs the non-solicitation agreement the employer can fire the employee, leaving the employee with nothing in exchange for a fresh promise not to compete.134 The court recognized that continued employment for “a substantial period” is sufficient consid-eration for an employment agreement and surveyed several other cases to reveal that four years had been found to qualify as a “substantial period,” but seven months had not been considered substantial.135 Citing to Lawrence & Allen, however, the court pointed to a two-year period of continued employment as adequate consideration for an employment agreement containing a restrictive covenant.136 Therefore, the court held that Smith’s three-month period of continued employment was insufficient consideration, and as a result the restrictive covenant signed by Smith was unenforce-able as a matter of law.137

B. Judicial Interpretations of theFifield Decision: Is the Jury Still

Out on the Issue of Consideration?

There is very little case law address-ing the adequacy of consideration in the wake of Fifield. In fact, before December 2014, the only cases that cited to Fifield were Illinois circuit court cases and two cases from the U.S. District Court for the Northern District of Illinois. The federal cases are split on whether to apply the Fifield decision as requiring a bright-line two-year requirement for employment after an employee signs a restrictive covenant. On December 11, 2014, the Illinois Ap-pellate Court Third District looked to the Fifield decision as providing a general rule of thumb on the issue of adequate consider-ation. Notably, that decision also suggests that the issue of adequate consideration is



a threshold issue that must be addressed before the three-pronged reasonableness test may be considered.

1. Illinois Circuit Court Cases

The first case to cite to Fifield ac-knowledged that, in general, two years or more of continued employment constitutes adequate consideration to support a restric-tive covenant, even if the employee resigns voluntarily instead of being terminated, and in taking a view similar to the reasoning of the Diederich Insurance case, found a pe-riod of employment that exceeded the two-year “requirement” of Fifield and held that such period of time constituted adequate consideration for the restrictive covenant at issue. In Novas, Dohr & Coll OB/Gyn Associates, S.C. v. Keith,138 the plaintiff and its at-will employee, Dr. Rebecca Keith, entered into an employment agreement, which contained a two-year non-compete agreement, when she began working for the plaintiff on July 18, 2005.139 Later, they entered into an “Amended and Restated Physician Agreement” effective January 1, 2010.140 The agreement provided that Dr. Keith would not enter into a practice that competed with the plaintiff for a two-year period after her employment with the plaintiff terminated.141 Dr. Keith resigned her employment with the plaintiff effective November 24, 2011, and immediately joined practices that competed with the plaintiff.142 The plaintiff sued Dr. Keith for breach of contract and moved for a preliminary injunction against her in the Chancery Division of the Circuit Court of Cook County.143 Dr. Keith moved to strike the motion for preliminary injunction and to dismiss the plaintiff’s complaint.144

Dr. Keith argued there was not ad-equate consideration to support the restric-tive covenant because she did not work for the plaintiff for two years or more after

she signed the amended agreement. The plaintiff argued that the restrictive covenant was supported by consideration in the form of increased compensation and additional benefits that were not afforded to Dr. Keith under her previous contract. Citing to Fifield, the circuit court acknowledged that, in general, two years or more of continued employment constitutes adequate consider-ation to support a restrictive covenant, even if the employee resigns voluntarily instead of being terminated.145 The circuit court, however, noted that there were portions of the original agreement signed by Dr. Keith that were not modified by the amended agreement, including the restrictive cov-enant, which was to continue in full force and effect. Citing to Diederich Insurance, the court reasoned that when the parties entered into the amended agreement, Dr. Keith already was bound by the restrictive covenant and thus did not make a “fresh promise” not to compete.146 Accordingly, the court concluded that the employment relationship between Dr. Keith and the plaintiff lasted more than six years, which was adequate consideration to support the restrictive covenant that was signed at the beginning of her employment and was not modified by the agreement signed during her employment.147

In Klein Tools, Inc. v. Stanley Black & Decker, Inc.,148 the Illinois Circuit Court of Cook County, Chancery Division, held that 11 months of continued employment after signing a restrictive covenant was not adequate consideration.149 In that case, regional sales manager Charles Smith had worked for the defendant for an unspeci-fied period before being employed by the plaintiff.150 On June 16, 2012, as part of his at-will employment with the plaintiff, Smith signed an employment agreement, which contained a provision that he would not, for a period of two years, “‘in any capacity in which any Confidential

Information of the Company that Employee acquired during Employee’s Employment would reasonably be considered useful, directly or indirectly engage in, assist in or be connected in any manner with any activity on behalf of any Company Competitor.’”151 As regional sales man-ager, Smith was responsible for all sales activities within his region, was heavily involved in efforts to solicit business, and was granted access to the plaintiff ’s confidential information, including the development of a new product line and the closely guarded strategies for its launch. On May 21, 2013, however, Smith quit his employment with the plaintiff after only 11 months and informed the plaintiff that he was going to work for the defendant—a competitor—in the same region as the one that he oversaw for the plaintiff. The plaintiff alleged that, before his separation from the plaintiff, Smith made phone calls to officers at Stanley that corresponded with the plaintiff’s key internal meetings and strategy discussions in which Smith participated, that Smith copied digital documents, and that he repeatedly accessed sensitive files on the plaintiff’s servers and on his computer, including confidential pricing information.152 The plaintiff filed suit for, among other things, breach of contract against Smith.153

Smith argued that the breach of con-tract count should be dismissed because the employment agreement was unenforceable. Citing to Fifield, the circuit court stated: “Smith was employed for only 11 months. This fact renders the restrictive covenants of the Employment Agreement unenforce-able.”154 The court summarily dismissed as irrelevant the plaintiff’s assertion that Fifield would have a harmful effect on Illinois businesses.155

The plaintiff also argued, in the alternative, that Smith negotiated for an


additional week of vacation, which should serve as sufficient consideration for the restrictive covenants. The court, however, found the additional vacation time to be as illusory as continued employment of less than two years. Smith and the plaintiff had negotiated that Smith would accrue vaca-tion time faster than other new employees and as a result would earn an extra week of vacation. The court reasoned that, because Smith was an at-will employee and could be terminated at any time, the extra week of vacation might never fully or even partially accrue and thus was not substantial consid-eration for the restrictive covenants within the employment agreement. Therefore, the court held that the restrictive covenants were not enforceable under Illinois law.156

In Vapor 4 Life, Inc. v. Nicks,157 the plaintiff filed suit against several former employees for breach of contract in the Illinois Circuit Court of Cook County, Chancery Division.158 The defendants had signed employment agreements with the plaintiff that contained restrictive covenants, the duration of which was not stated by the court. The defendants argued that the restrictive covenants were unenforceable because the defendants were not employed by the plaintiff for at least two years, and so the complaint should be dismissed. The court noted that the defen-dants were correct, because as observed by the court in Fifield: “Illinois courts have repeatedly held that there must be at least two years or more of continued employ-ment to constitute adequate consideration in support of a restrictive covenant.”159 The court, however, did not grant the defendants’ motion to dismiss because the defendants failed to establish the length of their employment.160

2. Cases from theNorthern District of Illinois

The two cases from the U.S. District Court, Northern District of Illinois, are split on the application of Fifield as implement-ing a bright-line two-year requirement for continued employment after signing a restrictive covenant. In Montel Aetnastak, Inc. v. Miessen,161 the federal court refused to apply a bright-line rule regarding the period of time during which an employee is required to work in order for there to be adequate consideration for a restrictive covenant. On November 23, 2010, Kristine Miessen signed an employment agreement with the plaintiff as a regional sales manager that included a non-compete clause that prohibited her from performing any work substantially related to the business of the plaintiff for two years after the termination of the agreement.162 During her employ-ment with the plaintiff, Miessen had direct knowledge of a unique shelving system de-signed for one of the plaintiff’s clients, the modifications for which the plaintiff took steps to keep secret from its competitors.163

Miessen informed the plaintiff on February 28, 2012, that she would be resigning from her position; she resigned two weeks later and went to work for a competitor.164 After the plaintiff failed to win a bid to install the shelving unit at one of the client’s stores, the plaintiff learned that another company had won the bid allegedly with the help of Miessen.165 The plaintiff filed suit, alleg-ing among other things that Miessen had breached the non-compete provision of her employment agreement, and Miessen moved to dismiss the complaint based on in-adequate consideration for the non-compete clause in the employment agreement.166 The plaintiff argued that Miessen’s 15-month employment was sufficient consideration, which rendered the employment agreement enforceable.167

After surveying Illinois case law, however, the federal court concluded that Illinois law does not provide a clear rule concerning how to determine whether the consideration for an employment agreement is adequate.168 The federal court recognized that the Fifield and Brown and Brown opinions held that two years of continued employment were necessary to constitute a “substantial period” of employment, but noted that other Illinois cases (though not directly addressing the issue of consideration) enforced restrictive covenants where the continued employment lasted for only a year.169 The federal court also noted that, in determining whether consideration was adequate for a restrictive covenant, other Illinois cases had suggested that factors other than the period of continued employment, including whether the employee or the employer terminated the employment relationship, should be weighed when determining whether adequate consideration was pro-vided to enforce a restrictive covenant.170

The federal court further noted that the Illinois appellate court had not previously constrained itself by applying a bright-line test with regard to what constitutes a “substantial period” of employment after signing a restrictive covenant. Citing to McRand, Inc. v. van Beelen,171 the federal court noted that, when determining whether there was adequate consideration in that case, the Illinois appellate court factored in that the employee received raises and bonuses, that the employee voluntarily resigned, and that the employee received increased responsibilities after signing the restrictive covenant, as well as the fact that the period of the employee’s continued employment was two years.172

Accordingly, the federal court refused to apply a bright-line rule regarding continued employment. Instead, the court employed a fact-specific approach to



determine whether the consideration was adequate for the restrictive covenant. The court concluded that Miessen’s 15 months of employment, coupled with her voluntary resignation, provided a “substantial period” of employment. Therefore, the court held that Miessen was provided adequate consideration and that the two-year non-compete clause within the employment agreement was enforceable.173

The U.S. District Court, Northern Dis-trict of Illinois in Instant Technology, LLC v. DeFazio174 considered the fact-specific approach applied in Montel Aetnastak with respect to what constitutes a “substantial period” of continued employment and rejected that approach in favor of follow-ing the more rigid approach that defines a “substantial period” as two years or more of continued employment.175 In Instant Tech-nology, the defendant employees signed employment agreements that contained clauses prohibiting them from soliciting business from or performing services for any of the plaintiff’s clients for a two-year period following termination.176 The defendants received nothing but their em-ployment in exchange for their agreement to be bound by the restrictive covenant.177 Less than two years after they signed their respective employment agreements, the plaintiff terminated the defendants.178 The defendants were then employed by one of the plaintiff’s competitors, and the plaintiff sued them for breach of contract.179 The parties proceeded through a bench trial.180

With respect to the issue of whether the consideration for the restrictive covenant was adequate, the federal court, citing Fifield, Diederich Insurance, and Brown and Brown, concluded that the Illinois Supreme Court would not alter the doctrine that defines a “substantial period” as two years or more of continued employment.181

The court, however, noted that there was no evidence at trial that the defendant

received any consideration other than their employment in exchange for their agreement to be bound by the restrictive covenant. Accordingly, the court held that, because the defendants’ continued employ-ment did not last at least two years, the restrictive covenant was not enforceable under Illinois law.182

3. The Third District’s Decision

In Prairie Rheumatology Associates, S.C. v. Francis,183 the Illinois Appellate Court Third District cited to the Fifield decision for the proposition that in Illinois there is a “general 2-year rule of thumb [of continued employment] that supports adequate consideration.”184 The court, how-ever, did not limit its analysis to the length of employment, recognizing the possibility that other forms of consideration could be adequate as well, despite the fact that the defendant former employee did not work for the plaintiff employer for at least two years.

In that case, the plaintiff employer sought to enforce a non-compete agreement against the defendant former employee that was found within the parties’ employment agreement.185 On January 7, 2012, the defendant, a licensed rheumatologist, signed a “Physician Agreement” with the plaintiff prior to joining the plaintiff’s medical practice, which offered rheumatol-ogy services within a limited geographical scope and within two specific hospitals.186 Although the defendant began her employ-ment with the plaintiff on April 16, 2012, the Physician Agreement was effective April 9, 2012.187

The plaintiff’s practice relied primar-ily on referrals from physicians, including those on staff at the two hospitals.188 The Physician Agreement provided the defendant with an annual salary, promised that the defendant would be considered for shareholder status after 18 months,

provided that the plaintiff would assist the defendant in getting staff privileges at the two hospitals from which the plaintiff received referrals, and provided that the plaintiff would pay the defendant’s hospital dues. Under the Physician Agreement, the plaintiff was to introduce the defendant to its patients and referral sources, including those physicians on staff at the hospitals with which the plaintiff was affiliated. The agreement also included a non-compete agreement, under which the defendant could not enter into the full-time or part-time practice of rheumatology in any capacity within a 14-mile radius of the plaintiff’s practice for a period of two years after the date of the defendant’s termina-tion, regardless whether the termination was voluntary or involuntary.189

In July 2013, the defendant notified the plaintiff that she would be volun-tarily terminating her employment with the plaintiff effective November 22, 2013, and that she would honor the non-compete agreement.190 On January 3, 2014, the defendant began serving rheumatology patients within nine miles of the plaintiff’s principal office.191

The plaintiff filed a complaint for injunctive relief, seeking to enforce the non-compete agreement within the Physician Agreement.192 The trial court granted a preliminary injunction in favor of the employer as to its current patients only. The trial court denied the request for injunctive relief as to former and future patients.193 The trial court first found that the non-compete agreement was ancillary to the Physician Agreement and was sup-ported by adequate consideration. Next, it held that the non-compete agreement was reasonable as to the plaintiff’s current patients but not as to its future patients and the public at large, based on the three-pronged reasonableness test discussed in


Reliable Fire Equipment.194 The plaintiff filed an appeal arguing that the trial court misapplied the reasonableness test as to its past and future patients, and the defendant cross-appealed arguing that the trial court’s decision should be reversed because the non-compete agreement lacked adequate consideration.195

The Third District stated that two determinations must be made before any further analysis of a restrictive covenant is warranted. First, the restrictive cov-enant must be found to be ancillary to a valid transaction or relationship. Second, adequate consideration must be found to support the covenant.196

The appellate court found that there was not adequate consideration to sup-port the restrictive covenant. The court recognized that, in Illinois, continued employment for “a substantial period of time beyond the threat of discharge” constitutes adequate consideration to support a restrictive covenant ancillary to an employment agreement.197 The court further recognized that the promise of continued at-will employment could be an illusory benefit, and (citing Fifield) that Illinois courts “have generally held that two years or more of continued employment constitutes adequate consideration,” even if the employee voluntarily resigns or is ter-minated.198 The court (again citing Fifield) acknowledged that the defendant “tendered her resignation 15 months after the start of her employment with [the plaintiff] and officially left the practice after being employed for 19 months, 5 months less than the general 2-year rule of thumb that supports adequate consideration.”199

Nevertheless, the court considered the plaintiff’s argument that additional consideration provided for in the Physi-cian’s Agreement constituted adequate consideration for the non-compete agree-ment. Specifically, the plaintiff claimed that

the defendant also received the plaintiff’s assistance in obtaining membership and staff privileges at hospitals, access to new referral sources, and an opportunity to expedite her advancement.200 The court, however, concluded that, based on the evidence presented at the hearing on the preliminary injunction, the defendant actually received little or no additional benefits from the plaintiff in exchange for the non-compete agreement. The evidence showed that the plaintiff did not assist the defendant in securing her hospital credentials, neglected to introduce her to referral sources, and did not pay the entirety of the defendant’s credential fee. Instead, the defendant conducted her own market-ing and developed her own programs to increase her visibility. The court also found the promise of expedited advance-ment and partnership opportunities to be illusory benefits at best, because although the Physician’s Agreement provided that the plaintiff would be considered for partnership after 18 months, there was no guarantee that she would be provided with that benefit.201 Accordingly, the appellate court held that there was not adequate consideration to support the non-compete agreement, which was unenforceable.202

C. What to Consider whenInterpreting Fifield: Is There Leeway

Beyond a Two-Year Requirement?

As this line of cases demonstrates, Illinois courts will not enforce a restrictive covenant for any period of time where the proffered consideration is viewed as illusory. The actions of the employee, including deliberate theft of secrets and voluntary resignation, tend not to factor into the courts’ determination. Likewise, whether the agreement is signed at the beginning of the employment relationship or at any subsequent point is irrelevant. The

courts’ position should make employers wary, as a weak employment agreement containing a restrictive covenant that is found to be unsupported by adequate consideration provides neither a sword nor a shield against an employee who steals secrets for his or her own gain or for the benefit of a rival company. As the Klein Tools case illustrates, employers cannot rely on the courts to factor in the reality of corporate espionage when determining whether or not to enforce a restrictive covenant.203 Employers also should not rely on the courts to factor in whether the employee was sophisticated enough to negotiate the employment agreement to determine whether the consideration adequately supports a restrictive covenant. Nevertheless, for employers and practitio-ners, there is an approach to consideration that they can take when trying to draft and to enforce a restrictive covenant in Illinois: provide adequate consideration that is not illusory. Absent clear directives from the courts, however, this approach is easier said than done.

Despite commentators’ and lower courts’ declarations that there is now a bright-line rule that two years of continued employment is required for an enforceable restrictive covenant, a careful review of the cases before and after the Fifield decision—as well as the Fifield decision itself—reveals that the line might not be so bright after all, at least not in every situ-ation. Certainly, it is clear that courts will find that two years or more of continued employment will constitute adequate consideration for a restrictive covenant. But is the two-year period necessarily required? Are there other forms of consid-eration besides continued employment that could be adequate to support a restrictive covenant? As with many questions in the law, the answers to both questions might be: “It depends.”



Worth noting is the fact that no Illinois appellate court prior to Fifield had actually held that there is a two-year requirement for continued employment as adequate consideration for a restrictive covenant. To the extent that the decisions relied upon by Fifield for the proposition of a requirement of continued employment lasting two years commented on two years of continued employment, the Brown and Brown and Diederich Insurance decisions did so as a general observation of the holding in Lawrence & Allen.204 In fact, the court in Fifield initially made the same general observation, citing to Brown and Brown and stating: “Generally, Illinois courts have held that continued employment for two years or more constitutes adequate consideration.”205 In the next sentence, the Fifield court stated, “The restrictive covenant will not be enforced unless there is adequate consideration given.”206

Notably, the Illinois Supreme Court in Melena v. Anheuser-Busch, Inc.207

recognized that continued employment is sufficient consideration for the enforce-ment of employment agreements. For that proposition, the supreme court in Melena cited to Lawrence & Allen and a case decided by the First District, Woodfield Group, Inc. v. DeLisle,208 both of which dealt with the enforceability of restrictive covenants.209 As discussed above, the court in Lawrence & Allen did not make any sweeping declarations concerning how many years of continued employ-ment constitutes adequate consideration to support a postemployment restrictive covenant; rather, it held that two-and-a-half years of continued employment was adequate consideration to support a two-year postemployment restriction under the facts of that case.210 The First District in Woodfield Group remanded the question of whether the defendant employee’s 17 months of continued employment was

adequate consideration for the 18-month non-solicitation period by which she agreed to be bound after she had already begun her employment.211 After surveying the decisions in Lawrence & Allen and other cases involving the adequacy of consideration for restrictive covenants, the First District stated:

We do not believe case law limits the courts’ review to a numerical formula for determining what constitutes substantial continued employment. Factors other than the time period of the continued employment, such as whether the employee or the employer termi-nated employment, may need to be considered to properly review the issue of consideration.210

Instead, the court noted the standard is “that substantial continued employment may constitute sufficient consideration to sup-port a restrictive covenant agreement.”213

Remarkably, the First District in Fifield did not cite to its earlier decision in Woodfield Group, much less comment on the Woodfield Group court’s understanding of the factors to consider regarding what constitutes substantial continued employ-ment. Instead, the court in Fifield, despite its earlier general observation that Illinois courts have held that continued employ-ment for two years or more constitutes adequate consideration, shifted its position to a more rigid one: “Illinois courts have repeatedly held that there must be at least two years or more of continued employ-ment to constitute adequate consideration in support of a restrictive covenant.”214 In support of this statement of the law, the court in Fifield cited Diederich Insur-ance, Lawrence & Allen, and Brown and Brown.215 Again, those cases spoke in general terms regarding two years of con-

tinued employment constituting adequate consideration for a postemployment restrictive covenant, and did not hold in absolute terms that two years of continued employment is necessarily required.

The elimination of the word “gener-ally” from the statement of law made by the court in Fifield and the inclusion of the word “must” are subtle but significant changes that have given rise to the rigid interpretations of Fifield as holding that there is a two-year requirement of contin-ued employment. It can be argued that the Fifield court’s statement that “there must be at least two years or more of continued employment to constitute adequate consid-eration in support of a restrictive covenant” is a misstatement of the law. Although it is true that Illinois courts have held that two years of continued employment has constituted adequate consideration in sup-port of the restrictive covenants involved in those cases, a survey of cases reveals that the proposition is not absolute.

In particular, the duration of the pos-temployment restrictions in the cases deal-ing with this issue is significant. In most cases, including Lawrence & Allen, Brown and Brown, and the cases that have cited to Fifield for this proposition, the restrictive covenants at issue were for a period of two years or more; and in those cases, where the period of employment lasted two years or more, there was adequate consideration to enforce the restrictive covenant,216 but where the period of employment lasted less than two years, there was not.217 The no-table exception to this pattern is the Montel Aetnastak case from the Northern District of Illinois, more fully discussed above.218

In that case, the federal court, rejecting the rigid approach of Fifield and applying a fact-specific approach instead, found that a 15-month period of continuous employ-ment constituted adequate consideration


for a two-year restrictive covenant.219 The Montel Aetnastak case aside, other courts, such as the court in the Woodfield Group case, have appeared willing to consider continued employment of less than two years to be adequate consideration where the period of the restrictive covenant is also less than two years, especially where the duration of employment is nearly equivalent to the length of the restrictive covenant.220 No Illinois court has addressed the issue directly, however.221

Given the facts and holdings of these cases, it is clear that, to the extent that continued employment alone is the proffered consideration for a restrictive covenant that covers a time period of two or more years, the length of continued employment must be at least two years. To the extent that the restrictive covenant covers a period of less than two years, however, there might be some leeway to argue that less than two years of employ-ment constitutes adequate consideration, even when continued employment alone is the proffered consideration. Although it appears unlikely that Illinois courts will adopt the purely fact-specific approach championed by the federal court in Montel Aetnastak, it remains to be seen whether the two-year black-line approach will be implemented for restrictive covenants with durations that are less than two years. As illustrated above, courts appear to be will-ing to find adequate consideration through continued employment of less than two years where the duration of that employ-ment is at least equal to the period of the restrictive covenant. Therefore, perhaps an employer willing to test the limits of the court’s rulings on adequate consideration could do so by drafting the terms of its restrictive covenant with language to the effect that the duration of the restrictive covenant is to be equivalent to the length of the employee’s employment after signing

the agreement, but the restrictive covenant is not to exceed two years.

A more cautious employer, however, might consider providing additional con-sideration for an employee’s agreement to be bound by a restrictive covenant. Unfor-tunately, there appears to be no guidance from Illinois courts as to what precisely constitutes adequate consideration, other than two years of continued employment. Fortunately, some courts have hinted at a willingness to consider the adequacy of other consideration. For example, in Prairie Rheumatology Associates, S.C., the court considered the employer’s argument that the employee was entitled to benefits beyond continued employment for the restrictive covenant, such as receiving the employer’s assistance in obtaining mem-bership and staff privileges at hospitals, access to new referral sources, and an opportunity to expedite her advancement, but ultimately found that those benefits never came to fruition.222 Similarly, in Brown and Brown, the court was willing to address the employer’s argument that the employee had received additional benefits as consideration for the restrictive covenant, but the court found that there was no evidence as to what those benefits were specifically or how they differed from the benefits that the employee already had been receiving prior to agreeing to the restrictive covenant.223 In Klein Tools, the court considered the employer’s argument that there was adequate consideration for the restrictive covenant because the employee negotiated for an additional week of vacation that was to accrue at a faster rate than vacation time accrued for other new employees, but the court found no evidence that the extra vacation time was to be the consideration for the restrictive covenant and, regardless, the vacation time was an illusory benefit because it might never accrue.224 Indicating a willingness

to consider other forms of consideration, the court in Instant Technology noted that the employer did not prove (or even argue) that the employees received anything other than their employment as consideration in exchange for agreeing to the restrictive covenants.225

The take away from these cases is that Illinois courts likely will consider some-thing other than two years of continued employment as adequate consideration for a restrictive covenant, so long as the proffered consideration is neither illusory nor essentially the same as a benefit that the employee is receiving already. What remains unclear in Illinois, however, is what form the proffered consideration must take and the value it must have before it can be considered to be adequate consideration for the restrictive covenant. A survey of the consideration found to be adequate by courts in other states might provide some guidance to employers in Illinois.

What Constitutes AdequateConsideration: A Survey of Other

Jurisdictions

In all cases, restrictive covenants require adequate consideration to be enforceable. Lack of consideration is an affirmative defense.226 Illinois’s definition of “consideration” is quite onerous, seemingly requiring two years of continuous employment even if the employee voluntarily leaves. Although some states have rejected continued employment altogether as consideration for restrictive covenants,227 other states’ definitions of “consideration” vary from as little as the employment itself (or continued employment if the agreement is signed while employed), to monetary payment of varying amounts, to almost everything in between. This section explores examples of the types of consideration that other


states have found adequate in support of non-compete agreements. This survey is not intended to be all-inclusive of other states, but rather is intended to illustrate other creative types of consideration aside from a specific period of employment (or beyond simply employment or continued employment in those states that allow it) that have been found adequate to support restrictive covenants.

A. Monetary Consideration

Not surprisingly, several states ac-cept a monetary amount as adequate consideration in support of a restrictive covenant. What is unclear, however, is the amount that a court will consider adequate. Examples of the variables affecting the adequacy of the amount of monetary consideration appear to include the facts of the case, the particular job at issue, the in-terests to be protected, and the value of the information that the employer seeks to keep confidential. In Pocatello Dental Group, P.C. v. Interdent Service Corp.,228 a dentist in Idaho joined a dental group and received $400,000 cash in the transaction. The U.S. District Court, District of Idaho, held that this amount was adequate consideration, although the court did not discuss other contexts or amounts constituting adequate consideration.229

Delaware courts also have found monetary consideration paid in severance agreements in exchange for a covenant-not-to-compete to be adequate.230 In Weichert Co. of Pennsylvania v. Young,231 involving an at-will management employee of a real estate sales business, there were two restrictive covenants at issue: one signed during the defendant’s employment and one signed at termination as part of a severance agreement. The terms of the restrictive covenants in both agreements were identical. The court held the covenant

signed at termination to be valid because as part of the severance agreement the employee received a total of $29,533.69, which included a $10,000 bonus, $7,341.39 in severance pay, $4,500 for a recruiting bonus, and $7,692.32 for three weeks’ sal-ary and two weeks’ vacation.232 Similarly, in Reiman Associates, Inc. v. R/A Advertis-ing, Inc.,233 a Wisconsin appellate court held that payment of $180,000 constituted adequate consideration for a covenant not to compete in the advertising business.234

B. Job Benefits

A raise in salary, a longer lunch break, time off of work, and permission to stop us-ing the time clock to record the employees’ work hours also may constitute adequate consideration.235 For example, in Stephen L. LaFrance Pharmacy, Inc. v. Tallant,236

the U.S. District Court, Northern District of Mississippi, held that a $400 increase in monthly base pay constituted adequate consideration for a restrictive covenant.237

In Central Adjustment Bureau, Inc. v. Ingram,238 the Supreme Court of Ten-nessee held that a change in the terms and conditions of employment or receipt of additional benefits (such as raises and promotions) may constitute sufficient consideration to support a non-compete agreement.239 Likewise, the Court of Appeals of Wisconsin, in its unpublished opinion of Medrehab of Wisconsin, Inc. v. Johnson,240 held that there was adequate consideration to support a non-compete agreement where the employee signed the agreement after being promised an increase in bonuses and being told that he would not have received the increased bonuses if he refused to sign the agreement.241

In Hawaii, a promotion and sal-ary increase may constitute sufficient consideration for a restrictive covenant.242 Likewise, a Delaware court has held that a

beneficial change in an employee’s status, such as a promotion, constitutes sufficient consideration to support a covenant not to compete agreed to after initiation of employment.243 In Delaware, an increase in salary also may be sufficient consid-eration to support a restrictive covenant entered into when a company acquires an employee’s employer.244

In Puritan-Bennett v. Richter,245 an employee was given consistent promo-tions, increased responsibilities, and greater importance in company operations after signing a covenant not to compete. Moreover, the employee had been advised that his continued employment was conditioned upon execution of a non-compete agreement when he signed it. The Kansas Court of Appeals found these benefits to be adequate consideration.246 In Kansas, an increase in salary may also constitute adequate consideration for the restrictive covenant.247 The Court of Appeals of North Carolina also has indicated that changes in pay structure, the rate of compensation, the reimbursement of employee expenses, and vacation and sick leave may be adequate consideration for a restrictive covenant, so long as the benefits are not illusory.248

C. Stock Options

In Ohio, the acceptance of stock options in exchange for an executed covenant not to compete has been held to constitute sufficient consideration for a restrictive covenant.249 Stock options were also found to be adequate consideration by the Texas Supreme Court in Marsh USA Inc. v. Cook.250 The court stated that Texas law requires there to be a nexus—that the non-compete agreement be “ancillary to” or “part of” the otherwise enforceable agreement—between the business interest



being protected (goodwill, in that case) and the consideration given (stock options).251

D. Miscellaneous Forms of Consideration

The Kentucky Court of Appeals in Hodges v. Todd 252 enforced a covenant not to compete where the value of a business’s goodwill was a significant portion of the sale of the business and the party bound by the restrictive covenant was the seller of the business who stayed on as an employee of the company that was sold. In that case, the employee agreed to not compete with the employer’s business for a period of five years from the date of sale of the business. In less than seven months from the date of sale, and before the termina-tion of the employment relationship, the employee opened a competing business about 100 feet from the employer’s business location.253 The court of appeals held that the trial court had the authority to enforce the non-compete agreement.254

In Calhoun v. Everman,255 the Kentucky Court of Appeals noted that an employer’s detrimental reliance on an employee’s promise not to compete at the time the employer bought out a competitor was sufficient consideration to support the restrictive covenant.256

Other states have found support for restrictive covenants in unconventional forms of consideration as well. For ex-ample, the Kansas Court of Appeals has considered forbearance from suing to recover damages to be good consideration for a covenant not to compete.257

In Wior v. Anchor Industries, Inc.,258

an Indiana court noted that an employee’s

giving up a competing business with good future prospects, along with incurring the expense of relocating to another town, could constitute adequate consideration for an employment contract that could be terminated for cause only.259 The business that the employee gave up, however, must have been one that the employee relied upon and planned to continue to rely upon for income.260

Moving Forward withRestrictive Covenants

There is little question that employers and those practitioners who advise employ-ers regarding restrictive covenants should be mindful of Fifield and the subsequent deci-sions that have interpreted Illinois law to require two years of continued employment as a bright-line rule. Creative draftsmanship, however, might allow employers to continue to use restrictive covenants to protect their legitimate business interests, customer base, and confidential information. Illinois courts seem willing to consider something other than two years of continued employ-ment as consideration, under the right circumstances. The key seems to be to craft the agreement to make clear that the proffered consideration is neither illusory nor essentially the same as a benefit that the employee is receiving already. As it appears that the burden of proof will be on the employer, employers should ensure that the proffered consideration is stated explicitly in the employment agreement, that it is a benefit that will accrue regardless of the length of employment, and that the existence of the benefit and the fact that it has accrued can be proven.

1 Ruth Simon & Angus Loten, Litigation Over Noncompete Clauses is Rising, Wall St. J., Aug. 14, 2013, http://online.wsj.com/news/articles/SB10001424127887323446404579011501388418552.2 Id.3 Id.4 Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871.5 Fifield v. Premier Dealer Servs., Inc., 2013 IL App (1st) 120327.6 See La. Rev. Stat. Ann. § 23:921 (2010); Or. Rev. Stat. § 653.295 (2008); S.D. Codified Laws § 53-9-11; Tex. Bus. & Com. Code Ann. § 15.50 (West 2009); Wis. Stat. § 103.465 (1998); Olsten Corp. v. Sommers, 534 F. Supp. 395 (D. Ore. 1982); Nobles-Hamilton v. Thompson, 883 So. 2d 1247 (Ala. Civ. App. 2003); Optical Partners, Inc. v. Dang, 381 S.W.3d 46 (Ark. 2011); Singh v. Batta Envtl. Assoc., Inc., No. Civ. A. 19627, 2003 WL 21309115 (Del. Ch. May 21, 2003) (unpublished opinion); Atlanta Bread Co. Int’l, Inc. v. Lupton-Smith, 679 S.E.2d 722 (Ga. 2009); Ackermann v. Kimball Int’l, Inc., 652 N.E.2d 507 (Ind. 1995); Varney Bus. Servs., Inc. v. Pottroff, 59 P.3d 1003 (Kan. 2002); Mendell v. Golden-Farley of Hopkinsville, Inc., 573 S.W.2d 346 (Ky. Ct. App. 1978); Ecology Servs., Inc. v. Clym Envtl. Servs., LLC, 952 A.2d 999 (Md. Ct. Spec. App. 2008); Timber Lake Foods, Inc. v. Estess, 72 So. 3d 521 (Miss. Ct. App. 2011); A.B. Chance Co. v. Schmidt, 719 S.W.2d 854 (Mo. Ct. App. 1986); Mont. Mountain Prods. v. Curl, 112 P.3d 979 (Mont. 2005); Ellis v. McDaniel, 596 P.2d 222 (Nev. 1979); B.O. Tech., L.L.C. v. Dray, 970 N.Y.S.2d 668 (Sup. Ct. 2013); Phelps Staffing LLC v. S.C. Phelps, Inc., 720 S.E.2d 785 (N.C. Ct. App. 2011); WellSpan Health v. Bayliss, 869 A.2d 990 (Pa. Super. Ct. 2005); Baugh v. Columbia Heart Clinic, P.A., 738 S.E.2d 480 (S.C. Ct. App. 2013); Columbus Med. Servs., LLC v. Thomas, 308 S.W.3d 369 (Tenn. Ct. App. 2009); Simmons v. Miller, 544 S.E.2d 666 (Va. 2001).7 See Or. Rev. Stat. § 653.295 (2008); Tex. Bus. & Com. Code Ann. § 15.50 (2009); Wis. Stat. § 103.465 (1998); Nobles-Hamilton, 883 So. 2d at 1249; Optical Partners, Inc., 381 S.W.3d at 53; Singh, 2003 WL 21309115, at *7; Atlanta Bread Co. Int’l, Inc., 679 S.E.2d at

(Endnotes)

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724; Varney Bus. Servs., Inc., 59 P.3d at 1017; A.B. Chance Co, 719 S.W.2d at 857; B.O. Tech., L.L.C., 970 N.Y.S.2d at 673; Phelps Staffing LLC, 720 S.E.2d at 792; WellSpan Health, 869 A.2d at 999; Baugh, 738 S.E.2d at 486; Columbus Med. Servs., LLC, 308 S.W.3d at 384; Simmons, 544 S.E.2d at 678.8 Fla. Stat. § 542.335 (1996).9 See Fla. Stat. § 542.335 (1996); Farm Credit Servs. of N. Cent. Wis., ACA v. Wysocki, 627 N.W.2d 444 (Wis. 2001); Clark v. Liberty Nat’l Life Ins. Co., 592 So. 2d 564 (Ala. 1992); Devnew v. Flagship Grp., Ltd., 75 Va. Cir. 436 (2006); Mercy Health Sys. of Nw. Ark., Inc. v. Bicak, 383 S.W.3d 869 (Ark. App. 2011); Beard Research, Inc. v. Kates, 8 A.3d 573 (Del. Ch. 2010); Wichita Clinic, P.A. v. Louis, 185 P.3d 946 (Kan. Ct. App. 2008); Liberty Ashes, Inc. v. Taormina, 43 Misc. 3d 1213(A) (N.Y. Sup. Ct. 2014) (unreported disposition); Market Am., Inc. v. Christman-Orth, 520 S.E.2d 570 (N.C. Ct. App. 1999); N. Pac. Lumber Co. v. Moore, 551 P.2d 431 (Or. 1976); Wolfe v. Colonial Life & Accident Ins. Co., 420 S.E.2d 217 (S.C. Ct. App. 1992).10 See Unisource Worldwide, Inc. v. Swope, 964 F. Supp. 2d 1050 (D. Ariz. 2013); Clark’s Sales & Serv., Inc. v. Smith, 4 N.E.3d 772 (Ind. Ct. App. 2014); Beverage Sys. of the Carolinas, LLC v. Ass’n Beverage Repair, LLC, No. COA14-185, 2014 WL 3823714 (N.C. Ct. App. Aug. 5, 2014).11 See CAE Vanguard, Inc. v. Newman, 518 N.W.2d 652 (Neb. 1994); see also Brainware, Inc. v. Mahan, 808 F. Supp. 2d 820, 829 n.2 (E.D. Va. 2011).12 See Sentinel Integrity Solutions, Inc. v. Mistras Grp., Inc., 414 S.W.3d 911 (Tex. Ct. App. 2013); see also Brown & Brown, Inc. v. Ali, 592 F. Supp. 2d 1009 (N.D. Ill. 2009); L & B Transp., LLC v. Beech, 568 F. Supp. 2d 689 (M.D. La. 2008).13 See Lapolla Indus., Inc. v. Hess, 750 S.E.2d 467 (Ga. Ct. App. 2013); Brown & Brown, Inc. v. Johnson, 980 N.Y.S.2d 631 (App. Div. 2014); see also Tradesman Int’l, Inc. v. Black, 724 F.3d 1004, 1007 (7th Cir. 2013).14 Cal. Bus. & Prof. Code §§ 16600–16601 (West 2008); N.D. Cent. Code § 9-08-06 (1943).15 Cal. Bus. & Prof. Code §§ 16600–16601 (West 2008); N.D. Cent. Code § 9-08-06 (1943).16 See infra text accompanying notes 20-28.

Ill. 2d 32, 37 (1967), quoted in Mohanty, 225 Ill. 2d at 65.37 Sunbelt Rentals, Inc. v. Ehlers, 394 Ill. App. 3d 421 (4th Dist. 2009), overruled by Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, ¶ 29.38 Sunbelt Rentals, Inc., 394 Ill. App. 3d at 422–23.39 Id. at 423.40 Id. at 424.41 Id.42 Id.43 Id. at 425.44 Id. at 427.45 Id.46 Id.47 Id. at 426–27 (quoting Nationwide Adver. Serv., Inc. v. Kolar, 28 Ill. App. 3d 671, 673 (1st Dist. 1975)).48 Kolar, 28 Ill. App. 3d at 672.49 Id. at 673.50 Sunbelt Rentals, Inc., 394 Ill. App. 3d at 426–28.51 Id at 428.52 Id.53 Steam Sales Corp. v. Summers, 405 Ill. App. 3d 442 (2d Dist. 2010), overruled by Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, ¶ 30.54 Steam Sales Corp., 405 Ill. App. 3d at 445.55 Id.56 Id.57 Id.58 Id. at 446.59 Id.60 Id. at 452.61 Id. at 453.62 Id. at 456.63 Id. at 459.64 Id. at 456–57 (quoting The Agency, Inc. v. Grove, 362 Ill. App. 3d 206, 214 (2d Dist. 2005)).65 Id. at 457–59.

17 Steven Greenhouse, Noncompete Clauses Increasingly Pop Up in Array of Jobs, N.Y. timeS, June 8, 2014, at B1, http://www.nytimes.com/2014/06/09/business/noncompete-clauses-increasingly-pop-up-in-array-of-jobs.html?_r=0.18 Id.19 Id.20 Id.; Gillis Bernard, Non-Competes Are Here to Stay in Mass. – At Least for Now, BoStiNNo, July 31, 2014, http://bostinno.streetwise.co/2014/07/31/noncompetes-massachusetts-non-competes-are-here-to-stay-in-mass-at-least-for-now.21 Kyle Alspach, Compromise Hinted Over Noncompete Agreements, BoStoN GloBe, July 1, 2014, http://www.bostonglobe.com/business/2014/07/01/noncompete/DJSb4Hl1kSyDzmD9sOv9NI/story.html.22 Id.23 Bernard, supra note 20.24 Minn. H.F. 506, 88th Leg. (2013).25 Gen. Assemb. 3970, 215th Leg., Reg. Sess. (N.J. 2013).26 Minn. House of Rep., HF 506 Status in the House for the 88th Legislature (2013–2014), https://www.revisor.mn.gov/bills/bill.php?view=chrono&f=HF506&y=2013&ssn=0&b=house (last visited Nov. 9, 2014); Text and Status of Gen. Assemb. 3970, 215th Leg., Reg. Sess. (N.J. 2013) published by N.J. Legis. (noting that the bill is pending before the legislature), http://www.njleg.state.nj.us/2012/Bills/A4000/3970_I1.HTM (last visited Nov. 9, 2014).27 N.H. Rev. Stat. Ann. § 275:70 (2014).28 Id.29 See Hursen v. Gavin, 162 Ill. 377, 381 (1986).30 Hursen, 162 Ill. at 381.31 Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52 (2006).32 Mohanty, 225 Ill. 2d at 65.33 Id.34 Id. at 69.35 Id. at 76.36 Bauer v. Sawyer, 8 Ill. 2d 351, 355 (1956), quoted by House of Vision, Inc. v. Hiyane, 37

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66 Id. at 457–58.67 Id. at 457.68 Id.69 Id. at 458.70 Id.71 Id.72 Id.73 Id. at 458–61.74 Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, ¶ 18.75 Reliable Fire Equip., 2011 IL 111871, ¶ 23.76 See, e.g., Steam Sales Corp., 405 Ill. App. 3d 442; Sunbelt Rentals, Inc. v. Ehlers, 394 Ill. App. 3d 421 (4th Dist. 2009).77 Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871.78 Reliable Fire Equip., 2011 IL 111871, ¶¶ 3–7.79 Id. ¶ 8.80 Id. ¶¶ 13, 45–48.81 Id. ¶¶ 17–24, 28–30 (citing Mohanty v. St. John Heart Clinic, S.C., 225 Ill. 2d 52 (2006); Cockerill v. Wilson, 51 Ill. 2d 179 (1972); House of Vision, Inc. v. Hiyane, 37 Ill. 2d 32 (1967); Bauer v. Sawyer, 8 Ill. 2d 351 (1956); and Hursen v. Gavin, 162 Ill. 377 (1896)).82 Reliable Fire Equip., 2011 IL 111871, ¶ 42.83 Id. ¶ 29 (citing Mohanty, 225 Ill. 2d at 77).84 Id. ¶¶ 28, 30 (overruling Sunbelt Rentals, Inc. v. Ehlers, 394 Ill. App. 3d 421, 430 (2009), and Steam Sales Corp. v. Summers, 405 Ill. App. 3d 442 (2010)).85 Id. (citing Nationwide Adver. Serv., Inc. v. Kolar, 28 Ill. App. 3d 671, 673 (1st Dist. 1975)).86 Id.87 Id. ¶ 43.88 Fifield v. Premier Dealer Servs., Inc., 2013 IL App (1st) 120327.89 Fifield, 2013 IL App (1st) 120327, ¶ 3.90 Id.91 Id.92 Id.93 Id.94 Id. ¶ 4.

120 Id.121 Id. at 728 (citing McRand, Inc. v. van Beelen, 138 Ill. App. 3d 1045, 1055 (1st Dist. 1985) (finding employment of two years and two weeks to be adequate consideration for a two-year non-compete agreement)).122 Id. at 729 (citing Lawrence & Allen, Inc., 292 Ill. App. 3d at 138).123 Id. (citing Mid-Town Petroleum, Inc. v. Gowen, 243 Ill. App. 3d 63, 69–71 (1st Dist. 1993)). The dissent in Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 730 (3d Dist. 2008) (Schmidt, J., dissenting), took issue with the majority’s characterization of the holding in the Mid-Town Petroleum case for the proposition that the fact that Gunderson quit was irrelevant and should not change the analysis. In Mid-Town Petroleum, the defendant employee Robert Gowen had worked for the plaintiff for 14 years before a new president and CEO demanded that employees (under the threat of termination) sign an employment agreement that included an 18-month non-solicitation agreement. Mid-Town Petroleum, Inc., 243 Ill. App. 3d at 64–65. Gowen initially refused to sign the agreement. He was then offered a sales manager position and would report directly to the CEO. Based on this arrangement and after reaching an agreement as to the description of the sales manager position, Gowen signed the employment agreement. Id. at 65. About seven months later, Gowen was informed that he would no longer be reporting to the CEO, would be reporting to a vice president, and would no longer have responsibility for salesmen. Id. at 65–66. The day after being informed of the change, Gowen quit his position with the plaintiff, and within the month began working for a competitor and soliciting business from the plaintiff’s customers. Id. at 64–66. The court in that case held that there was insufficient consideration to support the restrictive covenant in the employment agreement signed by Gowen, because the promises made by the plaintiff under which the agreement was signed were changed unilaterally by the plaintiff. Id. at 69–70. The dissent in Brown and Brown, in criticizing the majority’s decision not to consider the circumstances under which Gunderson quit as relevant to the determination, pointed to the circumstances under which Gowen quit his position in the Mid-Town Petroleum case. Brown & Brown, Inc., 243 Ill. App. 3d at 730 (Schmidt, J., dissenting).

95 Id.96 Id.97 Id. ¶ 5.98 Id. ¶ 6.99 Id.100 Id. ¶¶ 17–18.101 Bires v. WalTom, LLC, 662 F. Supp. 2d 1019 (N.D. Ill. 2009).102 Fifield, 2013 IL App (1st) 120327, ¶ 17 (citing Curtis 1000, Inc. v. Suess, 24 F.3d 941, 947 (7th Cir. 1994)).103 Id. ¶ 18 (citing Lifetec, Inc. v. Edwards, 377 Ill. App. 3d 260, 263 (4th Dist. 2007)).104 Id. ¶ 19.105 Id.106 Id.107 Chad W. Moeller and William J. Tarnow II, Non-Compete Agreements: Lessons from Illinois Courts, Nat’l l. Rev., available at http://www.natlawreview.com/print/article/non-compete-agreements-lessons-illinois-courts (last visited Oct. 31, 2014).108 Lawrence & Allen, Inc. v. Cambridge Human Res. Grp., Inc., 292 Ill. App. 3d 131 (2d Dist. 1997).109 Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724 (3d Dist. 2008).110 Diederich Ins. Agency, LLC v. Smith, 2011 IL App (5th) 100048.111 Lawrence & Allen, Inc., 292 Ill. App. 3d at 138.112 Id. at 133–34.113 Id.114 Id. at 135.115 Id. at 138 (citing McRand, Inc. v. van Beelen, 138 Ill. App. 3d 1045, 1055 (1st Dist. 1985)).116 Id. (citing Agrimerica, Inc. v. Mathes, 199 Ill. App. 3d 435, 442 (1st Dist. 1990), abrogated on other grounds by Roy v. Coyne, 259 Ill. App. 3d 269, 279–82 (1st Dist. 1994)).117 Id. at 144.118 Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 729 (3d Dist. 2008).119 Brown & Brown, Inc., 379 Ill. App. 3d at 726.

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The dissent noted that Gowen quit because the consideration for his agreement failed, while Gunderson in the Brown and Brown case merely quit. The dissent pointed out that the majority went a step further to hold that the consideration failed because Gunderson quit, and noted that those circumstances were a big difference from the circumstances under which Gowen quit. Id. at 730–31. Accordingly, the dissent concluded that Gunderson’s continued employment should have constituted adequate consideration. Id. at 730. The dissent predicted: “To hold, as the majority does here, that an employee can void the consideration for any restrictive covenant by simply quitting for any reason renders all restrictive employment covenants illusory in this state. They would all be voidable at the whim of the employee.” Id.124 Brown & Brown, Inc., 379 Ill. App. 3d at 729. Notably, the facts of the Brown and Brown case are very similar to those of Fifield. They both involved the purchase of the employee’s employer and the requirement that the employee sign a two-year restrictive covenant as a result of the sale. The employees then shortly thereafter resigned voluntarily. Interestingly, the Brown and Brown decision is the only one that the Fifield court took the time to explain the facts and holding in detail. Fifield v. Premier Dealer Servs., Inc., 2013 IL App (1st) 120327, ¶¶ 15–16. Given the similarities in the cases, it is not surprising that the Fifield court ruled the way it did, but one must consider whether the court fully developed its language that has led commentators and other courts to conclude that there is a black-line requirement of two years of continued employment for adequate consideration for a restrictive covenant.125 Diederich Ins. Agency, LLC v. Smith, 2011 IL App (5th) 100048, ¶ 3.126 Diederich Ins. Agency, LLC, 2011 IL App (5th) 100048, ¶ 4.127 Id. ¶ 5.128 Id. ¶ 6.129 Id. ¶ 10. In limiting its determination to whether the consideration was adequate for the second non-solicitation agreement, the appellate court in Diederich Insurance made a notable distinction. Because the claim was brought under the non-compete agreement signed while Smith was employed and not under the original employment agreement (which did not contain a restrictive covenant), the claim was

one to enforce a restrictive covenant. Id. This distinction is significant, because it changes the court’s analysis. Generally, courts do not inquire into the adequacy of consideration, but rather determine whether it exists. Brown & Brown, Inc., 379 Ill. App. 3d at 728. In the context of postemployment restrictive covenants, however, Illinois courts have departed from that traditional rule because the courts have recognized that a promise of continued at-will employment could be an illusory benefit. Id. Therefore, the fact that the claim in Diederich Insurance was brought under the second agreement required the court to shift its analysis from whether consideration merely existed to whether it existed and was adequate.130 Diederich Ins. Agency, LLC, 2011 IL App (5th) 100048, ¶¶ 8, 10.131 Id. ¶¶ 12–13.132 Id. ¶ 12 (citing White v. Vill. of Homewood, 256 Ill. App. 3d 354, 356–57 (1st Dist. 1993)).133 Id. ¶ 15.134 Id. ¶ 13.135 Id. ¶ 15 (citing Corroon & Black of Ill., Inc. v. Magner, 145 Ill. App. 3d 151, 163 (1st Dist. 1986) (four years sufficient); Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 729 (3d Dist. 2008) (seven month insufficient), and Mid-Town Petroleum, Inc. v. Gowen, 243 Ill. App. 3d 63, 70–71 (1st Dist. 1993) (seven months insufficient)).136 Diederich Ins. Agency, LLC, 2011 IL App (5th) 100048, ¶ 15 (citing Lawrence & Allen, Inc. v. Cambridge Human Res. Grp., Inc., 292 Ill. App. 3d 131 (2d Dist. 1997)).137 Id.138 Novas, Dohr & Coll OB/Gyn Assocs., S.C. v. Keith, No. 2013 CH 07568, 2013 WL 5409730 (Ill. Cir. Ct. Aug. 7, 2013).139 Novas, 2013 WL 5409730, at *2, *7.140 Id. at *2.141 Id.142 Id. at *3.143 Id.144 Id. at *4.145 Id. at *6 (citing Fifield v. Premier Dealer Servs., Inc., 2013 IL App (1st) 120327, ¶¶ 14, 19).

146 Id. at *7 (citing Diederich Ins. Agency, LLC v. Smith, 2011 IL App (5th) 10004, ¶ 12).147 Id.148 Klein Tools, Inc. v. Stanley Black & Decker, Inc., No. 13 CH 13975, 2013 WL 6149305 (Ill. Cir. Ct. Oct. 16, 2013).149 Klein Tools, Inc., 2013 WL 6149305, at *2.150 Id. at *1.151 Id. (quoting the plaintiff ’s Amended Verified Complaint ¶ 25).152 Id. at *1–*2.153 Id. at *2.154 Id. at *2 (quoting Fifield v. Premier Dealer Servs., 2013 IL App (1st) 120327, ¶ 19).155 Id.156 Id. at *3.157 Vapor 4 Life, Inc. v. Nicks, No. 2013 CH 14827, 2013 WL 6631082 (Ill. Cir. Ct. Dec. 3, 2013).158 Vapor 4 Life, Inc., 2013 WL 6631082, at *1.159 Id. (quoting Fifield, 2013 IL App (1st) 120327, ¶ 19).160 Id.161 Montel Aetnastak, Inc. v. Miessen, 998 F. Supp. 2d 694, 702 (N.D. Ill. 2014).162 Montel Aetnastak, Inc., 998 F. Supp. 2d at 702.163 Id.164 Id. at 703.165 Id.166 Id. at 703–04, 715.167 Id. at 715.168 Id. at 716.169 Id. The federal court in Montel Aetnastak, Inc. v. Miessen, 998 F. Supp. 2d 694, 716 (N.D. Ill. 2014), cited to Mid-Town Petroleum, Inc. v. Gowen, 243 Ill. App. 3d 63 (1st Dist. 1993), in support of the proposition that employment for a year has been considered a “substantial period” of employment. The Mid-Town Petroleum court stated: “Although not directly addressing the issue of consideration, other Illinois courts have enforced restrictive covenants entered into after employment began where the employee


continued in the job for a substantial period.” Mid-Town Petroleum, Inc., 243 Ill. App. 3d at 69 (citing Cockerill v. Wilson, 51 Ill. 2d 179, 181, 185 (1972) (enforcing an agreement with a five-year non-compete period, where the agreement was effective on January 1, 1967 and terminated at the end of January 1968, but basing its decision on whether the scope of the restrictions was reasonable); and Shorr Paper Prods., Inc. v. Frary, 74 Ill. App. 3d 498, 500–01, 508 (2d Dist. 1979) (enforcing an agreement with a one-year non-compete period, where the agreement was signed on November 16, 1977, and terminated on November 20, 1978, but basing its decision on whether the scope of the restrictions was reasonable)).170 Montel Aetnastak, Inc., 998 F. Supp. 2d at 716 (quoting Woodfield Grp., Inc. v. DeLisle, 295 Ill. App. 3d 935, 943 (1st Dist. 1998) (expressing no opinion as to the adequacy of the defendant’s 17 months of continued employment after signing an agreement that contained an 18-month non-solicitation period, but opining that the case law does not limit the court to a numerical formula to determine what constitutes continued employment and that other factors, such as whether the employee or employer terminated the agreement, might need to be considered)).171 McRand, Inc. v. van Beelen, 138 Ill. App. 3d 1045 (1st Dist. 1985).172 Montel Aetnastak, Inc., 998 F. Supp. 2d at 716 (citing McRand, Inc., 138 Ill. App. 3d at 1055–56).173 Id.174 Instant Tech., LLC v. DeFazio, No. 12 C 491, 2014 WL 1759184 (N.D. Ill. May 2, 2014).175 Instant Tech., LLC, 2014 WL 1759184, at *14.176 Id. at *4.177 Id. at *13.178 Id. The defendants started their employment on different dates—March 24, 2010, June 17, 2010, and “March of 2011.” Id. at *3. One defendant was terminated on January 3, 2012, one was terminated on January 5, 2012, and one resigned on January 5, 2012. Id. at *13.179 Id. at *1, *6.180 Id. at *1.181 Id. at *14.

182 Id.183 Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL App (3d) 140338.184 Prairie Rheumatology Assocs., S.C., 2014 IL App (3d) 140338, ¶ 16.185 Id. ¶ 1.186 Id. ¶¶ 2–3.187 Id. ¶¶ 3–4.188 Id. ¶ 2.189 Id. ¶ 3.190 Id. ¶ 5.191 Id. ¶ 6.192 Id. ¶ 7.193 Id. ¶¶ 1, 9.194 Id. ¶ 9 (citing Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, ¶ 17).195 Id. ¶¶ 1, 11.196 Id. ¶ 13 (citing Lawrence & Allen, Inc. v. Cambridge Human Res. Grp., Inc., 292 Ill. App. 3d 131, 137 (2d Dist. 1997)).197 Id. ¶ 14 (citing McRand, Inc. v. van Beelen, 138 Ill. App. 3d 1045, 1055 (1st Dist. 1985)).198 Id. ¶¶ 14–15 (citing Fifield v. Premier Dealer Servs., Inc., 2013 IL App (1st) 120327, ¶ 19).199 Id. ¶ 16 (citing Fifield, 2013 IL App (1st) 120327, ¶ 19).200 Id. ¶ 17.201 Id. ¶ 18.202 Id. ¶ 19.203 See supra text accompanying notes 148–56; see also Gallagher Bassett Servs., Inc. v. Vacala, 2012 IL App (2d) 111175-U, ¶ 23 (declining to extend Illinois law to provide that access to confidential information can constitute adequate consideration for a restrictive agreement in lieu of continued employment for a substantial period).204 The court in Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 728–29 (3d Dist. 2008), stated: “Illinois courts have generally held that two years or more of continued employment constitutes adequate consideration. See Lawrence & Allen, Inc., 292 Ill. App. 3d at 138.” The court in Diederich Insurance Agency, LLC v. Smith, 2011 IL App (5th) 100048, ¶ 15, stated: “However, in general,

there must be at least two years or more of continued employment to constitute adequate consideration. See Lawrence & Allen, Inc. v. Cambridge Human Res. Grp., Inc., 292 Ill. App. 3d [at] 138.”205 Fifield v. Premier Dealer Servs., Inc., 2013 IL App (1st) 120327, ¶ 14 (emphasis added) (citing Brown & Brown, Inc., 379 Ill. App. 3d at 728–29).206 Id.207 Melena v. Anheuser-Busch, Inc., 219 Ill. 2d 135 (2006).208 Woodfield Grp., Inc. v. DeLisle, 295 Ill. App. 3d 935 (1st Dist. 1998).209 Melena, 219 Ill. 2d at 152 (citing Woodfield Grp., Inc., 295 Ill. App. 3d at 942–43; Lawrence & Allen, Inc., 292 Ill. App. 3d at 131; and McRand, Inc. v. van Beelen, 138 Ill. App. 3d 1045, 1055 (1st Dist. 1985)).210 See supra text accompanying notes 111–17.211 Woodfield Grp., Inc., 295 Ill. App. 3d at 936–37, 942–43. The defendant-employee, Donna DeLisle, executed the restrictive covenant agreement in “February 1994,” and voluntarily resigned on July 18, 1995. Id. at 936–37.212 Id. at 943.213 Id. at 942.214 Fifield, 2013 IL App (1st) 120327, ¶ 19 (emphasis added).215 Id.216 Adequate consideration was found in the following cases: Lawrence & Allen, Inc. v. Cambridge Human Res. Grp., Inc., 292 Ill. App. 3d 131 (2d Dist. 1997) (about 2½ years of continued employment held to be adequate consideration for a two-year restrictive covenant); Agrimerica, Inc. v. Mathes, 199 Ill. App. 3d 435, 442 (1st Dist. 1990) (about two years and three months of continued employment held to be adequate consideration for a two-year restrictive covenant); Corroon & Black of Ill., Inc. v. Magner, 145 Ill. App. 3d 151, 163 (1st Dist. 1986) (four years of continued employment held to be adequate consideration for a two-year restrictive covenant); McRand, Inc. v. van Beelen, 138 Ill. App. 3d 1045, 1055 (1st Dist. 1985) (about two years and two weeks of continued employment held to be adequate consideration for a two-year restrictive covenant); Canfield v. Spear, 44 Ill.



2d 49, 50, 53 (1969) (enforcing an agreement with a three-year non-compete period, where the agreement was signed in approximately May 1965 and terminated effective July 1, 1967, but not reaching the issue of the adequacy of consideration); Novas, Dohr & Coll OB/Gyn Assocs., S.C. v. Keith, No. 2013 CH 07568, 2013 WL 5409730 (Ill. Cir. Ct. Aug. 7, 2013) (six years of continued employment (the employee’s contention that the period of continued employment was only 23 months was rejected) held to be adequate consideration for a two-year postemployment restrictive covenant).217 Adequate consideration was not found in the following cases: Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL App (3d) 140338, ¶ 16 (nineteen months of continued employment held to be inadequate consideration for a two-year restrictive covenant); Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 729 (3d Dist. 2008) (seven months of continued employment held to be inadequate consideration for a two-year restrictive covenant); Mid-Town Petroleum, Inc. v. Gowen, 243 Ill. App. 3d 63, 70–71 (1st Dist. 1993) (seven months of continued employment held to be inadequate consideration for a two-year restrictive covenant); Klein Tools, Inc. v. Stanley Black & Decker, Inc., No. 13 CH 13975, 2013 WL 6149305 (Ill. Cir. Ct. Oct. 16, 2013) (eleven months of continued employment held to be inadequate consideration for a two-year restrictive covenant); see also Instant Tech., LLC v. DeFazio, No. 12 C 491, 2014 WL 1759184 (N.D. Ill. May 2, 2014) (federal court holding that less than two years of continued employment was inadequate consideration for a two-year restrictive covenant); Vapor 4 Life, Inc. v. Nicks, No. 2013 CH 14827, 2013 WL 6631082 (Ill. Cir. Ct. Dec. 3, 2013) (Illinois circuit court holding that less than two years of continued employment was inadequate consideration, but the duration of the restrictive covenant was not stated in the opinion).218 See supra text accompanying notes 161–73. Another noteworthy case that enforced a restrictive covenant of more than two years without having at least two years of continued employment is the Illinois Supreme Court case of Cockerill v. Wilson, 51 Ill. 2d 179, 181 (1972). Although not reaching the issue of consideration, the supreme court in Cockerill enforced an employment agreement containing a five-year non-compete period on the basis that

the scope of the restrictions was reasonable, where the agreement was effective on January 1, 1967, and terminated just over a year later, at the end of January 1968, by the employee’s discharge from the employer. Cockerill, 51 Ill. 2d at 181, 185.219 Montel Aetnastak, Inc. v. Miessen, 998 F. Supp. 2d 694, 716 (N.D. Ill. 2014).220 In LKQ Corp. v. Thrasher, 785 F. Supp. 2d 737, 739, 744 (N.D. Ill. 2011), the federal court held that a period of continued employment of about 12 months was adequate consideration for a one-year restrictive covenant, while rejecting the mechanical application of a bright-line test “that, in certain situations, may have pernicious consequences.” In Shorr Paper Prods., Inc. v. Frary, 74 Ill. App. 3d 498, 500–01, 508 (2d Dist. 1979), the Illinois Appellate Court Second District enforced an agreement with a one-year non-compete period, where the agreement was signed on November 16, 1977, and terminated on November 20, 1978, but the court did not reach the issue of adequate consideration because it based its decision on whether the scope of the restrictions was reasonable. As discussed above, the court in Woodfield Grp., Inc. v. DeLisle, 295 Ill. App. 3d 935, 942–43 (1st Dist. 1998), remanded the issue to the circuit court of whether 17 months of continued employment constituted adequate consideration for an 18-month restrictive covenant. See supra text accompanying notes 211–13.221 In Diederich Insurance Agency, LLC v. Smith, 2011 IL App (5th) 100048, the appellate court held that three months of continued employment did not constitute adequate consideration for a one-year restrictive covenant. See supra text accompanying notes 125–37. Three months of continued employment, however, cannot reasonably be held to be nearly equivalent to the one-year period of the restrictive covenant at issue in that case.222 Prairie Rheumatology Assocs., S.C. v. Francis, 2014 IL App (3d) 140338, ¶¶ 17–18.223 Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 729 (3d Dist. 2008).224 Klein Tools, Inc. v. Stanley Black & Decker, Inc., No. 13 CH 13975, 2013 WL 6149305, at *3 (Ill. Cir. Ct. Oct. 16, 2013).225 Instant Tech., LLC v. DeFazio, No. 12 C 491, 2014 WL 1759184, at *14 (N.D. Ill. May 2, 2014).

226 McCandless v. Carpenter, 848 P.2d 444, 446–47 (Idaho Ct. App. 1993).227 The Supreme Court of Kentucky in Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345, 354 (Ky. 2014), has held that continued at-will employment alone is not consideration for a restrictive covenant. In that case, the employer asked its existing employee to sign a “Conflicts of Interests” agreement, which restricted the employee’s ability to work for a competing company for three years after the termination of his employment with his employer. Charles T. Creech, Inc., 422 S.W.3d at 347. The employer conceded that the only consideration it offered to the employee was his continued employment. Id. The employee signed the contract, but resigned his employment to take a job with a competitor about two years and four months later. Id. at 347–48. The employer sued the employee for compensatory and punitive damages, as well as injunctive relief. Id. at 349. Although the court held that continued at-will employment was no consideration at all, it suggested that a promotion, increased wages, and specialized training would be adequate consideration for a restrictive covenant. Id. at 354. See also Runzheimer Int’l, Ltd. v. Friedlen, No. 2013AP1392, 2014 WL 1465157 (Wis. Ct. App. Apr. 15, 2014) (certifying the following question to the Wisconsin Supreme Court: “Is consideration in addition to continued employment required to support a covenant not to compete entered into by an existing at-will employee?”), cert. granted, 848 N.W.2d 861. Idaho has legislated the issue. If the post-employment restriction is more than 18 months, the statute requires “consideration, in addition to employment or continued employment.” Idaho Code § 44-2704(1). Prior to the enactment of the statute in 2008, the Idaho Court of Appeals in Insurance Associates Corp. v. Hansen, 723 P.2d 190, 191–92 (Idaho Ct. App. 1986), held that a two-year restrictive covenant signed 20 months after employment began was supported by adequate consideration because the employee worked another eight months after signing the agreement but would have been terminated if he had not signed it.228 Pocatello Dental Grp., P.C. v. Interdent Serv. Corp., Case No. CV 03-450-3-LMB, 2005 WL 1041398 (D. Idaho Apr. 7, 2005) (unpublished decision).229 Pocatello Dental Grp., P.C., 2005 WL 1041398, at *15.


230 Delaware Express Shuttle, Inc. v. Older, No. Civ. A. 19596, 2002 WL 31458243, *11 (Del. Ch. 2002) (unpublished decision).231 Weichert Co. of Pa. v. Young, No. 2223-VCL, 2007 WL 4372823 (Del. Ch. 2007).232 Weichert Co. of Pa., 2007 WL 4372823, at *1–*3.233 Reiman Assocs., Inc. v. R/A Adver., Inc., 306 N.W.2d 292 (Wis. Ct. App. 1981).234 Reiman Assocs., Inc., 306 N.W.2d at 297.235 Columbus Med. Equip. Co. v. Watters, 468 N.E.2d 343, 345–46 (Ohio Ct. App. 1983); see also, e.g., Gillett Commc’ns of Milwaukee, Inc. v. Feldmeyer, No. 90-0724, 1990 WL 250403 (Wis. Ct. App. Nov. 6, 1990) (unpublished opinion referenced in table located at 464 N.W.2d 680) (noting that each time the defendant employee signed an employment agreement with a more stringent covenant against competition, the agreement provided the defendant with additional benefits).236 Stephen L. LaFrance Pharmacy, Inc. v. Tallant, No. 97 CV 104-B-A, 1997 WL 392736 (N.D. Miss. June 25, 1997).237 Stephen L. LaFrance Pharmacy, Inc., 1997 WL 392736, at *4. Interestingly, the court in Stephen L. LaFrance Pharmacy, Inc. v. Tallant, No. 3:97CV104-B-A, 1997 WL 392736, *4 (N.D. Miss. June 25, 1997), also held that the defendant’s continued employment alone constituted sufficient consideration, “particularly in light of the fact that she had signed a more restrictive covenant not to compete at the outset of her employment.” Notably, this holding is directly opposite of the conclusion reached in the Diederich Insurance case, where the Illinois appellate court did not consider continued employment to be sufficient consideration, despite the fact that the period during which the restriction applied was reduced by a year. Diederich Ins. Agency, LLC v. Smith, 2011 IL App (5th) 100048, ¶ 12.

238 Cent. Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28 (Tenn. 1984).239 Cent. Adjustment Bureau Inc., 678 S.W.2d at 35 (applying a fact-specific analysis to determine whether there was adequate consideration for a non-compete agreement). Incidentally, the Central Adjustment Bureau Inc. court also considered (though it was not pivotal to the outcome) the fact that the defendants left their employment voluntarily. Id.240 Medrehab of Wisconsin, Inc. v. Johnson, No. 96-2705, 1998 WL 102213 (Wis. Ct. App. Mar. 11, 1998) (unpublished opinion referenced in table located at 578 N.W.2d 208).241 Medrehab of Wisconsin, Inc., 1998 WL 102213, at *1.242 Technicolor, Inc. v. Traeger, 551 P.2d 163, 168–69 (Haw. 1976).243 Faw, Casson & Co. v. Cranston, 375 A.2d 463, 467 (Del. Ch. 1977).244 Hammermill Paper Co. v. Palese, No. 7128, 1983 WL 19786, *3 (Del. Ch. June 14, 1983).245 Puritan-Bennett Corp. v. Richter, 657 P.2d 589 (Kan. Ct. App. 1983), aff’d as modified, 679 P.2d 206 (Kan. 1984).246 Puritan-Bennett Corp., 657 P.2d at 592.247 Uarco Inc. v. Eastland, 584 F. Supp. 1259, 1262 (D. Kan. 1984).248 Young v. Mastrom, Inc., 392 S.E.2d 446, 448–49 (N.C. Ct. App. 1990) (considering benefits in the form of changes in pay structure, the rate of compensation, the reimbursement of employee expenses, and vacation and sick leave as adequate consideration for a restrictive covenant, but finding the benefits as structured in the case to be illusory, and thus declining to find the benefits to constitute consideration for the restrictive covenant).

249 Procter & Gamble Co. v. Stoneham, 747 N.E.2d 268, 276 (Ohio Ct. App. 2000).250 Marsh USA Inc. v. Cook, 354 S.W.3d 764, 775–76, 780 (Tex. 2011).251 Marsh USA Inc., 354 S.W.3d at 775. As early as 1951, the Kentucky Court of Appeals has found that the value paid for goodwill as part of the sale of a business to be sufficient consideration to support the enforcement of a non-competition provision in the bill of sale. Ceresia v. Mitchell, 242 S.W.2d 359, 361–62 (Ky. Ct. App. 1951).252 Hodges v. Todd, 698 S.W.2d 317 (Ky. Ct. App. 1985).253 Hodges, 698 S.W.2d at 318.254 Id. at 319.255 Calhoun v. Everman, 242 S.W.2d 100 (Ky. Ct. App. 1951).256 Calhoun, 242 S.W.2d at 102–03 (declining to enforce a non-compete agreement, despite acknowledging that detrimental reliance on the employee’s promise not to compete would be sufficient consideration to enforce the promise, because the employer failed to establish its detrimental reliance upon the promise). In 1915, the Supreme Court of New Mexico held that where a purchaser of a business relies on the seller’s promise not to compete as an inducement to purchase the business, the detrimental reliance of the purchaser is sufficient consideration for the seller’s agreement to not compete. Locke v. Murdoch, 151 P. 298, 302 (N.M. 1915).257 Evco v. Brandau, 626 P.2d 1192, 1196–97 (Kan. Ct. App. 1981)258 Wior v. Anchor Indus., Inc., 669 N.E.2d 172, 175 (Ind. 1996).259 Wior, 669 N.E.2d at 175–76.260 Id. at 176–77.


HavingfoundthatNemsky’sclaimsagainst the unionwould survive sum-maryjudgment,buthisclaimsagainsttheemployerwouldnot,theSeventhCircuitnonetheless affirmed the judgment toboth the defendants. Id. at 868.Thiswasbecause, in a hybrid§301 claim,the“employee’sclaimagainsttheunionand his claim against the employer are linked: ‘neither claim is viable if theotherfails.’”Id. at867,citingCrider v. Spectrulite Consortium, 130F.3d1238,1241(7thCir.1997).

Similarly, in Yeftich v. Navistar, Inc.,722F.3d911,913(7thCir.2013),agroupofemployeesfiledsuitagainsttheir employer, Navistar, alleging that they were laid off by Navistar andnot rehired aswork became availablebecausethecompanyhadsubcontractedtheirwork tononunionplants in con-traventionof the relevantCBA. Id. at 913.Theplaintiffsfiledsuitunder§301allegingbreachoftheCBA.Id. at914.Althoughtheydidnotnametheunionasthedefendant,theyallegedabreachofthedutyoffairrepresentationonthepartoftheunion.Id. Thedistrictcourtdismissed the claim, finding that theplaintiffshadfailedtopleadsufficientfactstoestablishtheunion’sbreachofduty.Id. at914-15.

On review, the Seventh Circuitupheld the dismissal.The court notedthatwhen judgedunder the applicablestandard,theplaintiffs’conclusoryandfactually-bare allegationswere insuf-ficienttostateaclaimforbreachofthedutyoffairrepresentation.Id. at916-17.“Asuccessful§301claimrequiresnotonlyabreachofcontractbytheemployerbutalsoabreachbytheplaintiffs’unionofitsdutyoffairrepresentation.”Id. at 913.BecausetheplaintiffsinYeftich did

notadvanceameritoriousclaimthattheunionhadbreacheditsduty,thedismissalofthelawsuitagainsttheemployerwasaffirmed.Id. at917.See also, Copeland v. Penske Logistics et al.,675F.3d1040,1044(7thCir.2012),(finding,“Plaintiffs’argumentthatLocal135didnotbargainhard enough to get benefits exceeding

and the employer. As in the Nemsky case above,whereaclaimmayexistagainsttheunionbutfailsastotheemployer,theentire§301claimastobothpartiesisdismissed. As in the Yeftich case, where a claim may exist against the employer, butfailsastotheunion,theentire§301claimislikewisedismissed.

A successful defense to the cause of action turns on

an understanding that the odds of early dismissal

in a hybrid § 301 situation depend, to at least some

degree, upon a certain level of coordination

between the union and employer.

those provided in the CBA is not a claim for breach of contract and thereforecan’tbepursuedunder§301....Totheextentthedistrictcourtgrantedsummaryjudgment to the defendants [includingthe employer] on the hybrid contract/DFRclaim,thejudgmentisaffirmed.”)

Theabove-referencedcasesdemon-stratetherelativedifficultyinmaintain-ing jurisdiction in federal courtswhenpursuingahybridtheoryunder§301ofthe LMRA. As an initial matter, the CBA mustpreventemployeesfrombringinga claim for relief directly against theemployer.Wherethisisnotthecase,thejurisdictionalexceptionaffordedbythedoctrine does not exist.

Moreover, even in those narrow cir-cumstanceswherethebasicrequirementsofthe§301hybridtheoryaresatisfied,to prevail the plaintiffmust plead aplausibleclaimforrelief(andultimatelyprovethatclaim)againstboth theunion

Thisuniquecauseofactionbringstogether two parties who may otherwise experienceacertainleveloftension:theunion and the employer.A successfuldefensetothecauseofactionturnsonanunderstandingthattheoddsofearlydismissal in a hybrid § 301 situationdepend,toatleastsomedegree,uponacertainlevelofcoordinationbetweentheunionandemployer.Ofcourse,itisnotnecessaryfortheunionandtheemployertojoineachother’spleadings,orabandontheir own specific defenses.Nonethe-less,acertainlevelofcooperationandtransparency during discovery couldallowbothpartiestotakeadvantageofeconomiesofscaleinthelitigation.Thiswillcertainlynotalwaysbeeasy,becausetheentireclaimmayhavearisenfromanunderlying conflict between the unionandemployerinthefirstplace.


Dina L. Torrisi and Zeke N. KatzHeplerBroom LLC, Chicago

About the Authors

Medical Malpractice Update

Dina L. Torrisi is a partner at HeplerBroom LLC. Ms. Torrisi focuses her prac-tice in the area of profes-sional liability defense and general negligence. She has extensive litigation experience in defending hospitals, physicians, and

nurses. Ms. Torrisi received her B.S. from Uni-versity of Illinois, Champaign-Urbana, and her J.D. from The John Marshall Law School. She is admitted to the bars of Illinois, the Northern District of Illinois, and the U.S. Supreme Court. Ms. Torrisi is a member of the Illinois Association of Defense Trial Counsel and Illinois Association of Healthcare Attorneys. She is also an Arbitra-tor for the Cook County Mandatory Arbitration Program.

Defensecounseloftenweartwohatsduring litigation, one as the seeker ofallthingsdiscoverable,theotherastheprotectoroftheirclientsfrompotentialclaimsofphysician-patientprivilegeorHealth Insurance Portability andAc-countabilityAct(HIPAA)violations.See 735ILCS5/8-802;45C.F.R.§160.101et seq.(2009)and45C.F.R.§164.102et seq.(2009).Thisarticleoutlinescertainexceptions that permit disclosure ofotherwise privileged non-party records and additional healthcare provider data. Itwill also identify situationswherestatutoryprotectionsareinapplicable.

Obtaining Non-Party MedicalRecords in Birth Injury Cases

The physician-patient privilege provides, “[n]o physician or surgeonshall be permitted to disclose anyinformationheorshemayhaveacquiredinattendinganypatientinaprofessionalcharacter, necessary to enable him orherprofessionally to serve thepatient. ...”735ILCS5/8-802.Asaresult,theprivilegemaybarotherwiserelevantandmaterial information from discovery.Kunzv.S.SuburbanHosp.,326Ill.App.3d 951, 954-55 (1stDist. 2001).Thisbarriertodisclosureofpertinentrecordsisafrequentchallengefacedbydefensecounselinmedicalmalpracticelawsuits.

Counselshouldbeawareofcertainexceptions to the physician-patient privilege, which may provide access to otherwise excluded records, includingtwo that are particularly relevant in a

Zeke N. Katz is an as-sociate attorney at Hep-lerBroom LLC. Mr. Katz graduated from Colgate University in 2006 with a Bachelor of Arts degree in Philosophy & Religion. He received his J.D. from Chicago-Kent College of

Law in 2014. He is admitted to practice in Il-linois. He focuses his practice in the areas of medical malpractice and insurance defense. He is a member of the American Bar Association, Illinois State Bar Association and Chicago Bar Association.

Medical Record Discovery:Some Things You May Not Know

medicalmalpractice setting. First, thephysician-patient privilege does not apply in civil actions against a physi-cianformalpractice.735ILCS5/8-802(exception number two of ten). If theplaintiffplaceshisorherownhealthatissue, thentheplaintiffhaswaivedthephysician-patient privilege with respect to his or her medical records regarding thatissue.Reagan v. Searcy,323Ill.App.3d393,397(5thDist.2001).Thiswaiverisanecessaryconcessionbytheplaintiffbecause a lawsuit could not proceedwithoutdisclosureofthemedicalrecordsatissue.Second,theprivilegedoesnotapply when it is waived with the express consentofthepatient.735ILCS5/8-802(exceptionnumberthree).

Even in instanceswhere a party’smedical records are disclosed via waiver, themedical records of non-parties tothe lawsuit generally remainprotectedby the physician-patient privilege. In re D.H., v. Chicago Housing Auth.,319Ill.App.3d771,774 (1stDist. 2001).Non-party medical records remain largelyprotectedbythephysician-patientprivilegebecausethedisclosureofthoserecords “would neither serve a publicinterestnortheprivateinterestsofthosenon-party patients.” Parkson v. Cent. DuPage Hosp.,105Ill.App.3d850,855(1stDist. 1982).Non-parties have notplacedtheirconditionatissue.

However,theprotectionaffordedtonon-parties is not absolute.Giangiulio v. Ingalls Mem’l Hosp.,365Ill.App.3d823,832(1stDist.2006).Understandingtheprivilege’sparametersmayprovide

accesstovaluablenon-partymedicalre-cords and other healthcare provider data that may otherwise appear protected.

Non-party medical records are frequentlysoughtinbirthinjurycases.In these cases, theminor plaintiff’smedical records are discoverable viathe medical malpractice exception to the physician-patient privilege, while potentially relevant prenatal records of the mother and siblings remainoutsideofthisstatutoryexception.See 735ILCS5/8-802.Yet,thephysician-patientprivilegethatwouldotherwiseprotectthenon-partymother’sprenatalrecordsmay bewaived if themother



placesherhealthduringherpregnancyor past pregnancies at issue.Kunz, 326Ill.App.3dat954-55;El-Amin v. Dempsey,329Ill.App.3d800,801-09(1stDist.2002).

In El-Amin v. Dempsey, the appellate courtemphasizedthepragmaticnatureofapplying the prenatal records exception to the physician-patient privilege. The courtfoundthat“themother’smedicalrecords pertaining to the period when the plaintiffwas in utero [were] discover-ableuponthetheoryofimpossibilityofseverance.” El-Amin, 329 Ill.App. 3dat 803 (quotingYetman v. St. Charles Hosp.,491N.Y.S.2d742,298(N.Y.App.Div.1985)).Theuniquephysicalbondbetweenamotherandchildpriortothechild’sbirthcompelsamother’smedicalrecordstobesimultaneouslyunderstoodasthemedicalrecordsofthechild.Id. Thus,oncetheplaintiff’smedicalcondi-tionwasplacedatissue,thephysician-patient privilege was waived with respect totheprenatalrecordsofthenon-partymother. Id.at809.

Dependinguponthemedicalcondi-tionatissue,defensecounselmayseekdisclosure of prenatal records of themother’s past pregnancies.Unlike theprenatal recordsof theminorplaintiff,theprenatalrecordsoftheminorplain-tiff’s siblings remain protected by thephysician-patient privilege. Kunz, 326Ill.App.3dat956.InKunz, where the lawsuitwasbroughtsolelyonbehalfof

theminorplaintiff,thecourtfoundthatthe physician-patient privilege was not automaticallywaived for the siblingsof theminor plaintiff, “evenwhen agenetic cause independent ofmedicalmalpracticemaybecomeanissue....” Id. Nevertheless, the Kunz court ulti-matelyfoundthatwhenamotherplacesthe health of her other pregnancies atissue, for example via her depositiontestimony,sheconsequentlywaivesherphysician-patient privilege with respect to those prenatal medical records. Id. at953.

The Kunz case provides strategic guidance to practitioners seekingnon-partymedical records in birth injurycases.First,thesetypesofrecordsshouldnotbesubpoenaeduntilafterthemotherhasbeendeposed.Asubpoenapriortothemother’s depositionwould likelybe quashed. Second, at themother’sdeposition,defensecounselshouldaskaboutthepregnancyatissue,aswellaspreviouspregnancies.Dependingupontheresponsegiven,thisinformationmayformthebasisforshowingwaiverofthephysician-patient privilege.

Whileprenatalrecordsoftheminorplaintiff,andeventheminorplaintiff’ssiblingsmaybeobtained,therearelimitsto this type of discovery. Specifically,the waiver does not apply to the minor plaintiff orminor plaintiff’s siblings’medicalrecordsfollowingtheirrespec-tive births. Id. at 958. InKunz, the

mother’s “deposition remark that herfirsttwochildren’scurrenthealth[was]‘excellent’[was]insufficienttowaivetheprivilegeastothechildren’ssubsequentmedical records.” Id.Thecourtdiscernedthatthemedicalrecordsofthesiblingsafter their birthwere unrelated to thebirthinjuryandwerethereforenotdis-coverable.Id.Similarly,amother’sownmedical records beyond the gestationperiodremainprivileged,evenafterherprenatalrecordshavebeenfoundtobediscoverableviawaiver.Id.at956.

Limitations to Statutory Protections of Certain Healthcare Information

Whiledefensecounselmaybenefitfromlimitationsofstatutoryprotectionsandwaiver,weareoftenonthereceivingendofmedicalinformationrequeststhattriggerourinvocationofthephysician-patientprivilege,HIPAA,andtheMedi-calStudiesAct,tonameafew.45C.F.R.§160.101et seq.(2009)and45C.F.R.§ 164.102 et seq. (2009); 735 ILCS5/8-2101.Thesestatuteslimitaccesstoprotectedmedical information, but theprotections are not all encompassing.

Records that do not concern a physi-cian’sdiagnosisortreatmentofapatientarenotprotectedbythephysician-patientprivilege,andarethereforediscoverable. Tomczak v. Ingalls Mem’l Hosp.,359Ill.App. 3d 448, 454 (1stDist. 2005). InTomczak,theplaintiffrequestedrecordsoftriagetimes,treatmenttimes,andtri-ageacuitydesignations.Tomczak,359Ill.App.3dat450.Thedefendants“refused,claimingthattheinformationsoughtwasprivilegedandwouldnotreasonablyleadtothediscoveryofrelevantinformation.”Id.at449.Thecourtheldthatthephy-sician-patient privilege “does not apply toordinaryincidentsandfactswhichcan

Counsel should be aware of certain exceptions to the

physician-patient privilege, which may provide access

to otherwise excluded records, including two that are

particularly relevant in a medical malpractice setting.


Medical Malpractice | continued

beperceivedbylaymenandwhicharenotnecessaryforaphysiciantotreathispatient.” Id.at453(quotingGourdine v. Phelps Mem’l Hosp.,336N.Y.S.2d316,319(N.Y.App.Div.1972)).Thetriageand treatment times, along with the triage acuitydesignations,wereconventionaloccurrences.Id. at 454. They were not necessarymedical information for thephysicianstoperformtheirprofessionaldutiesandwerethereforenotprotectedbytheprivilege.Id.

The defendant also invoked theprotectionsofHIPAA,arguingthatthetriageinformationwas“protectedhealthinformation” (PHI) and therefore notdiscoverable. Id. at 451. PHI is “anyinformation received by a health careprovider relating to the provision ofhealth care to an individual that eitheridentifiestheindividual,orcouldreason-ablybeusedtoidentifytheindividual.”Id. at 456 (citing45C.F.R. § 160.103(2002)).UnderHIPAA,recordsdefinedasPHImaybeshieldedfromdisclosurewith certain limitations. Id. (citing 45C.F.R.§164.512(e)(1)(ii)(2002)).

The Tomczak court found the in-formation requested did not containthepatients’namesormedicalhistoriesfromwhich those patients could beidentified. Id. at 454. Accordingly, the informationdidnotqualifyasPHIandcouldbedisclosedregardlessofHIPAAregulations.Id.at456.

In addition to looking atwhetherapatient’s identitycouldbediscerned,courts also look to the substance ofthemedical information sought.Thephysician-patient privilege only applies toinformationusedbythephysiciantotreat the patient or reach a diagnosis. Id. at 454. For example, treatmentand wait times of emergency roompatients, which do not provide insight into the patients’medical conditions,

treatments, or diagnoses, are considered nonmedical information.Id. at 454-55. Assuch, this informationisnotbarredfromdiscoverybythephysician-patientprivilege.Theinformationprotectedbytheprivilegestemsfromthephysician’sprofessional capacity or character, andthe protected information is only thatwhichisnecessaryforthephysiciantoact in that capacity or serve the patient. 735ILCS5/8-802.

An additional example where an invoked statutory protectionwas heldinapplicableisillustratedinZangara v. Advocate Christ Med. Ctr., 2011 IL App (1st)091911,¶38,asmodifiedondenialof reh’g(July22,2011).InZangara, the plaintiffcontractedmethicillin-resistantstaphylococcus aureas (MRSA)whilea patient at the defendant hospital.Zangara, 2011 ILApp (1st) 091911, ¶2.Duringlitigation,theplaintifffiledadiscoveryrequestseekingalistofallpatientswhocontractedMRSA90daysbeforetheplaintiffhadbeenadmittedtothedefendanthospital.Id.¶3.Thede-fendantsrespondedthatsuchinformationwasprotectedundertheMedicalStudiesAct. Id.¶11.TheMedicalStudiesAct,aswith the physician-patient privilege and HIPAA,maysafeguard records soughtvia discovery in a medical malpractice lawsuit.TheMedicalStudiesAct pro-videsinrelevantpartthat“[a]llinforma-tion[addressing]...ahealthcareprac-titioner’s professional competence . . . used in the course of internal qualitycontrol . . . or for improving patient

care...shallbeprivileged.”735ILCS5/8-2101.However, protections undertheMedical StudiesAct are limitedto records “generated specifically forthe use of a peer-review committee.”Zangara, 2011 ILApp (1st) 091911, ¶38(quotingWebbv.MountSinaiHosp.& Med. Ctr. of Chi., Inc.,347Ill.App.3d817,825(1stDist.2004)).

In Zangara, the court found thatdocuments thatwere “later used by acommittee in the peer-review process” werenotprivilegedunder theMedicalStudiesAct because those documentswere “created in the ordinary courseof a hospital’s business.” Zangara, 2011 ILApp (1st) 091911, ¶ 38.TheZangara courtcompared the timedataanalyzed under the physician-patientprivilege in Tomczak to thenumberofMRSA infections thatmay have beenprivilegedundertheMedicalStudiesAct.Id.¶42 (citingTomczak,359Ill.App.3d at 454-55). Similar to theTomczak time data information, the number ofMRSAinfectionswereconsideredmereincidentsoffactandwerenotprivilegedundertheMedicalStudiesAct.Id.

Familiaritywith some of the ex-ceptions that facilitate disclosure ofotherwise privileged informationwillbe beneficial for practitioners seek-ing discovery of non-party medicalrecords.Congruently, knowledge as tothe limitationsof statutoryprotectionsmaybetterpreparecounselindefendingagainst requests for certain healthcareinformation.

Records that do not concern a physician’s diagnosisor treatment of a patient are not protected by the

physician-patient privilege, and are therefore discoverable.



Timothy R. Lessman is an attorney in Smith Amundsen’s Chicago of-fice. Mr. Lessman has experience representing domestic and international insurers, and reinsurers in matters ranging from claims management to

coverage dispute resolution via litigation, arbitra-tion, and mediation. He has handled complex insurance and reinsurance coverage disputes involving both domestic and international policy forms. Additionally, he has experience with a variety of claims, including mass torts, environ-mental liability, product liability, cyber liability, employers and professional liability, government entity liability, and construction defect. Prior to his legal career, Mr. Lessman worked as a legislative aide in both the Colorado House of Representa-tives and the British House of Commons.

Timothy R. LessmanSmithAmundsen LLC, Chicago

About the Author

Insurance Law Update

In Central Mut. Ins. Co. v. Tracy’s Treasures, Inc., 2014 ILApp (1st)123339,theIllinoisAppellateCourtFirstDistrictreversedthegrantofsummaryjudgmentinfavorofaninsurerregardingcoverage for claimsbrought under theTelephoneConsumerProtectionAct,47U.S.C.§227(b)(1)(2006)(TCPA),basedonaninterveningrulingfromtheIllinoisSupremeCourtfindingdamagessoughtunderthestatutearenotpunitive.How-ever, in remanding the case, the appellate courtpointedtoseveralfactssurroundingthesettlementthatshouldbeexaminedtodetermineifitwasreasonable.

Background

CentralMutualInsuranceCompany(Central)insuredTracy’sTreasures,Inc.(Tracy’s)underprimarypolicieseffec-tivefrom1997to2005andexcesspoli-cieseffectivefrom2002to2005.Central Mut. Ins. Co., 2014ILApp(1st)123339,¶3.Thetotalvalueofthepolicieswas$14million. Id. Paul Idlas (Idlas), theunderlying plaintiff and putative classrepresentative,filedsuitagainstTracy’sinMarch2007allegingthatTracy’shadsentjunkfaxesinviolationoftheTCPAbetweenMarch 5, 2003 andMarch 5,2007(Idlas suit).Id. ¶7.IdlasallegedlyreceivedtheunsolicitedfaxonJuly22,2003.Id.

Tracy’s tendered its defense toCentralinApril2007.Id.¶8.Although

Telephone Consumer Protection Act Decision Provides Framework to

Analyze Potentially Collusive Consent Judgments

Central disclaimed coverage, it assigned an attorney to provideTracy’swith a“courtesy defense.” Id. ¶ 9. Tracy’slawyer subsequentlyfiled amotion todismiss and discovery requests. Id. In June 2007,Central filed a declaratoryjudgment action seeking an adjudica-tion that it owednoduty to defendorindemnifyTracy’swith respect to theIdlas suit.Id.InNovember2007,Tracy’sretained its own attorney, who sent a let-tertoCentralinDecember2007advisingthathewasretainedduetoaconflictofinterestcreatedbyTracy’sdisclaimerofcoverage. Id.¶10.Centralconsentedtothesubstitutionofcounselandindicatedthat itwould pay the new attorney’sreasonablefees.Id.¶11.

Correspondence in the record indi-catedthatTracy’snewcounseldiscussedsettlementwithIdlas’counselamonthbefore he contactedCentral and evenbeforehefiledanappearanceforTracy’s.Id. ¶ 12.A settlement of $14million,whichwas enforceable only againstCentral’s policies and coincidentallywas the totalvalueof itspolicies,wasultimatelyreachedwithinafewweeksofthenewcounsel’ssubstitution.Id.¶14.

Although the Idlas complaint al-legedtheputativeclassofrecipientshadreceived faxes fromMarch5, 2003 toMarch5,2007,thesettlementagreementdefinedtheclassas thosepersonswhoallegedlyreceivedunsolicitedfaxesfromSeptember1,2002toJuly22,2003.Id.

¶19.Theexpansionoftheclasstothisearlierdate(whichwasalsooutsideofthefour-yearstatuteoflimitationsIdlasclaimed applied toTCPA claims) didnot result in any additional claimants,althoughitdidhavetheeffectofimpli-catinga$5millionCentralexcesspolicythatexpiredonJanuary29,2003.Id.

The settlement agreement furtherprovidedforIdlas’attorneystobepaidone-thirdoftherecoveryfromCentral.Id. ¶ 17. Each classmemberwas toreceiveupto$500.00,andanyunclaimedfundswere to be given to charitableorganizations. Id.Tracy’scounselfiledamotionforpreliminaryapprovalofthesettlementwithout providingnotice toCentral. Id.¶15.ThemotionattachedanaffidavitthatCentralhaddeniedcover-agetoTracy’s,butitfailedtomentionthat Central was paying for Tracy’sdefense. Id. ¶20.Thecourtultimatelyapproved the settlement. Id.¶24.

Centralmoved for summary judg-ment in its declaratory action, arguing


Insurance Law Update | continued

that the settlementwas collusive andunreasonable as amatterof lawunderthe standards articulated inGuillen v. Potomac Ins. Co. of Ill.,203Ill.2d141(2003), and that it owed no duties toTracy’sduetoaprevious“buy-out”ofthe implicated coverage. Id.¶¶29,30.Thetrialcourtdeniedsummaryjudgmentas to these arguments. Id.But, it latergranted summary judgment toCentralbasedon thefinding inStandard Mut. Ins. Co. v. Lay,2012ILApp(4th)110527thatamountsawardedunder theTCPAarepunitiveinnatureandthusuninsur-able.Central Mut. Ins. Co., 2014 IL App (1st)123339,¶4.

IdlasandTracy’sappealedthisdeci-sion, and while the appeal was pending, theIllinoisSupremeCourtreversedLay. Id.(citingStandard Mut. Ins. Co. v. Lay, 2013IL114617).Centraltimelycross-appealedandarguedsummaryjudgmentinitsfavorcouldbeaffirmedonthebasisofitsearliermotions,whichitclaimedthe trialcourterroneously rejected. Id. ¶¶31,35.

Analysis

Onappeal, IdlasandTracyarguedthatCentralwas precluded fromchal-lenging the settlement terms becauseCentralhadcededthedefense to inde-pendent counsel and because the trialcourt had found the settlement to bereasonable.Id.¶41.Theappellatecourt

disagreed. Because it had preserveditsrighttocontestcoveragebyfilingadeclaratoryjudgmentactionandpayingTracy’sdefensecosts,theappellatecourtfoundthatCentralretainedtheabilitytocontest both the reasonableness of thesettlement and whether the claims were coveredunder its policy. Id. ¶¶ 51-52.The First District further found thatCentraldidnothavetheopportunitytobeheardintheunderlyingactionregardingthe settlement’s terms, and therewereno findings showing that the insuredsustained its burden of demonstratingthereasonablenessofboththedecisiontosettleandtheamountofthesettlement.Id.¶58.

The appellate court remanded thecase to the trial court to address thequestion of whether the settlementwas reasonable. It stated that the ap-plicabletestthetrialcourtshouldapplyinconsideringthequestionwaswhetherTracy’sdecisiontosettleconformedtothe standard of a “prudent uninsured”party. Id.¶56.Theappellatecourtthenraisedseveralissuesforthetrialcourt’sconsideration. For example, the courtquestionedwhetheritwasreasonabletoagreetoa$14millionsettlementwhenTracy’swasonlyabletoproducealistof approximately 10,000 recipients offaxesitsentin2002and2003.Id.¶70.The court observed that in 2007, lessthan 10% of thosewho received thefaxeswouldreceiveactualnoticeofthe

settlement and, of those, significantlyfewerwere likely to file a claim. Id. Notably,thecourtalsoreferencedseveralout-of-statedecisionswhereawardsoflessthan$500.00perfaxwereawardedas a penalty. Id.¶72.ThecourtfoundthattheTCPA“wasnotdesignedtoputthosewhoadvertisetheirproductsorservicesviafaxoutofbusiness.”Id.

Thecourtalsoraisedseveralques-tions regarding the actions ofTracy’scounsel in arriving at settlement.Thecourtreferencedthedecisionstoforegofilingamotiontodismissbasedontheunsettled issue regarding thestatuteoflimitationsforTCPAclaims,aswellasfailingtocommencethird-partyactionsseekingcontributionandindemnificationfrom fax broadcasters. Id. ¶¶ 65, 69.The court also questioned counsel’sagreementtoextendtheclassdefinitiontoincludeaperiodoutsidethefour-yearstatuteoflimitationsthatIdlasclaimedwasapplicable,aswellasthedecisiontoallowunclaimedsettlementfundstobedistributedtocharity.Id.¶¶66-67,73,77.Thecourtevenstatedthat“thehypo-theticallyprudentuninsured’sdecisiontosettleontermsthatallowedmillionsofdollarsinanticipatedresidualsettlementfunds to be donated to charity strikesusbothasextraordinarilygenerousandextremelyhelpfultoclasscounsel’squestforattorneyfees.”Id. ¶73.Takingtheseareasof inquiry together, theappellatecourt encouraged an examination ofwhetherTracy’s counsel possessed therequisite adversarial relationshipwithIdlas’ counsel, andwhether the settle-mentwastheproductofanarm’s-lengthnegotiation. Id. ¶¶75-76.

Central also argued that it wasentitled to summary judgmentbecauseithadpreviouslysettledanotherTCPAcasebroughtagainstTracy’s.Id.¶94.Inconnection with that settlement, Central

A settlement of $14 million, which was enforceable only

against Central’s policies and coincidentally was the

total value of its policies, was ultimately reached within

a few weeks of the new counsel’s substitution.



Brian J. Benoit and Colin B. WillmottGoldberg Segalla LLP, Chicago

Product Liability

About the AuthorsBrian J. Benoit is a part-ner in the Chicago office of Goldberg Segalla LLP. His nationwide practice focuses on the defense of product manufacturers, specializing in catastrophic losses involving fires and explosions. Mr. Benoit has authored articles and pre-

sented nationwide on investigating fire losses, evidentiary challenges, and deposing expert witnesses.

enteredintoanagreementwithTracy’sin2005 to eliminate coverage in its policies for “personal and advertising injury”coverage. Id. ¶¶ 26, 27, 95. Centralargued that due to this previous “buy-out,”therewasnocoverageaffordedtoTracy’sfortheIdlas suit.Id.¶95.

The court refused to grant sum-maryjudgmenttoCentralonthisissuebecauseCentral’sprioragreementwithTracy’swasnotpartoftherecord,and,evenifitwas,itcouldnotconfirm,asamatterof law, that theamountpaidbyCentralinexchangefortheeliminationofthe“personalandadvertisinginjury”coveragewasadequateconsideration.Id. ¶ 105.The court stated, however, thatif the evidence supported a findingthatTracy’s reasonably believed thatnofurtherTCPAclaimswouldbefiledagainst it whenTracy’s entered intothe agreement, adequate considerationwould exist and the agreementwouldoperatetoprecludecoverage.Id.

Conclusion

The ruling inTracy’s Treasures is significant for a number of reasons.The court favorably referenced otherdecisionsfinding thatanawardof lessthan$500perTCPAviolationispossible.Perhapsmore importantly, the rulingacknowledges that consent judgmentscanbequestionediftheinsurerhastakenappropriatemeasureswithrespecttothedefenseofitsinsuredandhasadequatelypreserveditsrightstoquestioncoverage.Insuchinstances,theTracy’s Treasures ruling provides a framework for trialcourtstouseinanalyzingwhethercon-sentjudgmentsarereasonable.

Colin B. Willmott is an associate at Golberg Se-galla LLP and focuses his practice on general liability and insurance coverage matters involving commer-cial general liability policies. Mr. Willmott is a recent graduate of the University of Illinois College of Law.

Can a product liability claim thatwould otherwise be time barred bythestatuteofreposeproceedwhentheproductwasmodifiedafterthestatutorytime limit?TheCourt ofAppeals fortheSeventhCircuit recently evaluatedtheapplicationof thestatuteof reposeafter the plaintiffwas injured using a14-year-oldmuzzleloading rifle.ThequestionpresentedinHartman v. EBSCO Indus. Inc.,758F.3d810(7thCir.2014),waswhethertheadditionofaconversionkit14yearsaftertheriflewaspurchasedcouldtriggeranexceptiontothestatuteofreposeinIndiana.

In 1994, the plaintiff,AdamHart-man,receivedaLK-93Wolverinebrandmuzzleloadingriflefromhisfather. Hart-man,758F.3dat813.Atthattime,theHartman’smuzzleloaderwas designedto use black powder, which propelsthe projectile after the black powderis struck by the gun’s hammer. Id. As technologyevolved,newermuzzleloaderrifles employed synthetic pellets as apropellant,whichrequiredamuchhighertemperatureforignition.WhenusedintheWolverine,thepelletsdidnotalwaysignitebecauseofthehighertemperaturesneededforignition.Id. at814.

ToalleviatetheissuesLK-93Wol-verine users had igniting the newersynthetic pellets,KRWarrantymanu-factured a conversion kit that wasdesigned to deliver a hotter spark toignitethepellets“morereliably.”Id. The plaintiffinstalledtheconversionkitonNovember28,2008.Id.Thefollowing

When Does the Modification of aProduct Trigger an Exception to the

Statute of Repose?day,theplaintiffandafewfriendswentto a gravel pit to “sight the rifle.” Id. Theplaintifffiredtherifletwicewithoutswabbingthebarrel.Id. Prior to his third shot,theplaintiffloadedpelletsintothebarrel and then placed patched roundballsintothebarrel.Id.Themanufacturerofthepelletswarnsagainstusingpatchedroundballswith their syntheticpelletsbecause doing so creates an increasedrisk of accidental discharge. Id.Afterplacingtheballsinthebarrel,theplaintiffattemptedtoseattheballswitharamrod,which caused the gun to unexpectedlydischarge,causingtheramrodandround


Product Liability | continued

balltopassthroughtheplaintiff’shandsand arms. Id.

The plaintiff filed suit soundingin product liability. The action wassubsequently removed and theUnitedStatesDistrictCourt granted summaryjudgment on the ground that the ap-plicablestatuteofreposeinIndiana,10years, barredMr.Hartman’s recoverybecausetheriflewas14yearsoldatthetimeoftheincident.Id.

muzzleloader’s lifespan is the barrelandbore,whichtheconversionkitdidnot alter. Id.Thecourt,indismissingtheplaintiff’sargument,likenedtheconver-sionkittoanupgradedprocessorinanoldlaptopcomputerversusinstallinganewbatteryintothecomputerwhentheoldbatterywasonitslastleg. Id. A new processorincreasesthefunctionalityofthecomputer,butdoesnotlengthenitslifespan,whereasaddinganewbattery

tiveor,(2)whenthenewcomponentisitselfdefectiveanditrenderstheentireproduct defective. Id. at 816.Hartmanproposed two defects, one soundingin a failure towarn that not swabbingthebarrelbetweenshotscouldincreasethe likelihood of accidental dischargeand two, that the conversion kitwasdefective.Id.

Despite the plaintiff ’s two-folddefect scenario, thecourt clarified thatthe only issuewaswhether the inclu-sionoftheconversionkitincreasedthelikelihoodoflatentembersorunexpecteddischarge. Id. at817.Forthisproposition,Hartmanpresentedexperttestimonytoshowthatamodifiedcleaningjag,atoolthatisscrewedtotheendoftheramrodandusedtocleanthebarreloftheriflebetweenshotstocleardebrisandlatentembers,shouldhavebeenincludedintheconversionkit. Id. at816.Hartman’sgun-smithexpertclaimedthatthebreechplugusedaspartofthemodificationrequireda specially designed jag. Id.Thecourt,however, excludedHartman’s expertbecause themodified jag proposed bytheexpertwas“incomplete,inoperable,andunlikethoseusedbyKRWarrantyorits competitors.” Id. at819.Furthermore,sinceHartmandidnotclean thebarrelbefore it discharged, the usage of thejagwas of no consequence. BecauseHartmancouldnotfindshelterineitherofthestatuteofreposeexceptions, thecourtaffirmedthedistrictcourt’sgrantofsummaryjudgment.Id.

Illinois’ Statute of Repose

While not authoritative in Illinoisstatecourts,Hartman v. EBSCO sheds lightonsomeoftheissuesthatariseincasesinvolvingtheuseandmaintenanceofolderproducts.Illinoishasanexcep-tionwhere the statute of repose resets

The plaintiff’s appeal focused on the two exceptions

to application of the statute of repose:

“(1) where a manufacturer refurbishes a product to

extend its useful life, or (2) where a defective new

component is incorporated into the old product.”

The plaintiff’s appeal focused onthetwoexceptionstoapplicationofthestatuteofrepose:“(1)whereamanufac-turerrefurbishesaproducttoextenditsusefullife,or(2)whereadefectivenewcomponent is incorporated into the old product.”Id. at815 (citing Richardson v. Gallo Equip. Co.,990F.2d330,331(7thCir.1993)).These twoexceptionsarenotapparent inIndiana’sstatuteofrepose,butinstead,derivefromcaselaw.Ind. Code ann.§34-20-3-1(LexisNexis2014); Richardson, 990F.2dat331.

Hartmanarguedthatthefirstexcep-tion applied because themodificationkit extended the useful life of themuzzleloader.Hartman, 758 F.3d at815.Hartmanpresentedanexpert,whoopinedthattheconversionkitmadetheriflemoreaccurate,gaveithigherveloc-ity,andessentiallymadeitanewrifle. Id. In response,KRWarranty’s expertstated that the onlyway tomeasure a

totheoldcomputerwouldlengthenitslifespan.Therefore,therifle’sconversionkitmadetheriflemoreaccurateandpow-erfulbutdidnotenhanceitslifespan.Id.

Additionally, according to the dis-trict court, the extended life exceptionwasnotapplicablebecausetheexceptiontypicallyapplieswhenthemanufacturerof the original product refurbishes theproducttoextenditsusefullife.Id. The allegeddefect lay in the addition of acomponent installed by the user, andwould therefore fall under the secondexception,ifanything.

The second exception that resets the statuteofreposeiswhenadefectivenewcomponent is incorporated into the old product.Thedistrictcourtexplainsthatthisexceptioncanariseintwoscenarios:(1)whenamanufacturer issuesanew,non-defective component for an oldproduct and the addition of the newcomponentrenderstheoldproductdefec-


10yearsfromthedatetheproductwasal-terediftheplaintiff’sinjuryderivesfromthe alteration. 735 IlCs 5/13-213(c)(2).ThissectionofthereposestatuteiscloselyrelatedtoIndiana’ssecondstatuteofreposeexception.

In Illinois, 735 IlCs 5/13-213statesthelimitationsinproductliabilityactions. It provides that no action may commence against themanufacturersoundinginstrictproductliabilitywithin12yearsfromthedateoffirstsaletotheinitial seller or 10years from thedateoffirstsaletotheinitialconsumer.735ILCS5/3-213(c).

Illinois courts have had severalopportunitiestointerpretthemeaningofalteration and whether certain alterations reset the statute of repose timeline. InMasters v. Hesston Corp., 291 F.3d985(7thCir.2002),theSeventhCircuitfoundthattheplaintiffdidnotsatisfythealterationexception.Theplaintiffinjuredhimselfona22-year-oldhaybalerbe-causeofaproblemwiththe“twinetube”andaproblemturningthehaybaleafterthepowerwasturnedoff. Masters,291F.3dat988.Itwasdeterminedthatthis

materials for its accomplishment” andsecond, that the alteration occurredwithin10yearsofthealteration.Id. at 990-91.

TheNorthernDistrict found thatthestatuteof reposeexceptionappliedwhereanelevatormaintenanceworkerwaskilledwhilefixinganelevatorcom-ponent thathadpreviouslybeenaddedtofixpreviousissuesintheelevator.InWilsonv.OtisElevatorCo.,454F.Supp.2d 749 (N.D. Ill. 2002) the plaintiff’sdecedentwasworking on an elevatorinitiallyinstalledin1967.Wilson,454F.Supp.2dat751.Aspartofamaintenanceagreement with the property owner, Otisinstalledanewcargateandcablesystematsometimein1995. Id. at750.Employeesofthepropertyreportedhav-ingproblemswiththealterationsmade

Illinois has an exception where the statute of repose

resets 10 years from the date the product was altered

if the plaintiff’s injury derives from the alteration.

Illinois courts have had several opportunities to

interpret the meaning of alteration and whether certain

alterations reset the statute of repose timeline.

conditionwascausedasaconsequenceofthemachinehavingbeenre-weldedatsome time. Id.at989.Thecourt,inrulingthat the exception did not apply, held thattheplaintiffhadnotmethisburdenin showingfirst, that themanufacturerof the hay baler “rewelded the tube,authorized the rewelding, or furnished

byOtis and consequently,Mr.Wilsonwasattemptingtofixtheproblemwhenheenteredtheshaftandwaskilled.Id. at751.Thecourtruledthatthealterationexceptionappliedbecausethealteration,which occurred within the statutoryperiod,couldhavebeen theproximatecauseofthedecedent’sinjuries.

Practice Tips

Proximate Cause: Whendealingwith a statute of reposedefense, thealteration itselfmusthaveproximately caused the injuries.Thecourt inWilson left that determinationforthefactfinder.Toassertthedefense,thefactsmustbeestablishedtopreventanyquestionaboutwhether absent thealteration, the incidentwouldnothaveoccurred.

Internal Recordkeeping: For national counsel or counselwithadvisoryinfluenceovercorporaterecord-keepingandriskmanagementpolicies,the maintenance practices on machinery towhichthecompanyisawareshouldbediscussedtoalertthecompanywhenastatuteofreposeexceptionmayapply.

Expert Testimony: ThecourtinHartman refusedtopermitan expert to testify aboutwhether thealterationwas defective because hisalternativedesignassertionswerebase-less.Thecredibilityofexperttestimonyshouldbesufficientlydevelopedtogivethe court an adequate basis inwhichtogrant adismissalbasedona statuteof repose defense. From a practicalstandpoint, however, this should beevaluatedwiththeclientinacasepend-inginIllinoisbecausetheplaintiffcanstillproceedonanegligencebasis.


N. Drew KempHeplerBroom LLC, Edwardsville

Legislative Update

About the AuthorN. Drew Kemp is an as-sociate attorney at Hepler- Broom LLC in Edwards-ville, Illinois. Mr. Kemp is a University of Missouri graduate and has been defending companies in toxic tort litigation for a little over a year.

Inaboldandfastmove,theGeneralAssemblymadeimportantchangestotheCodeofCivilProcedurebypassingSen-ateBill2221(SB2221)andSenateBill3075 (SB3075) during theNovember2014 veto legislative session.

SenateBill 2221was introducedin early 2013 as a bill amending theClerksofCourtsAct.Itspurposewastochangethesourceofthereimbursementspaid to the clerks of the circuit courtsfor services in connectionwith statecorrectionalfacilities.Thefinalversionof SB 2221, however, had nothingto do with reimbursements or cor-rectional facilities.HouseAmendmentNumberTwo,introducedjustbeforetheThanksgiving holiday, replaced all of

A Happy New Year for the Plaintiff’s Bar as Rushed Amendments to the Code

of Civil Procedure Become Law

periodsforbringingcivilactionsbasedonpersonalinjuriesthatariseoutofthe“design,planning,supervision,observa-tionormanagementofconstruction,orconstructionofanimprovementtorealproperty.”735ILCS5/13-214.Id.(fol-low“2201-2300”hyperlink;thenfollow“SB2221”hyperlink;thenfollow“FullText”hyperlink).Subsection(a)containsafour-yearstatuteoflimitationsandsub-section(b)establishesa10-yearreposeperiod.HouseAmendmentNumberTwochanged the latter by eliminating the10-year repose period for actions “forpersonal injury, disability, disease, ordeath resulting from” a laundry list ofhazardoussubstances.Id.

A hearing on SB 2221 was held

diagnosed with mesothelioma and at-tributesthistotheshorttimeduringthe1950sthatheworkedasaninsulator.

PastIDCPresidentJeffHebrankofHeplerBroomLLC testified on behalfof the IDC.Mr.Hebrank and others’valiant efforts helped reduce the blowtosome,butnotall, industries.SenateBill2221wasfurtheramendedtolimitthescopeof the10-yearreposeperiodexceptiontoasbestosonly;rather than“any pollutant, including anywaste,hazardous substance, irritant, or con-taminant(including,butnotlimitedto,smoke,vapor,soot,fumes,acids,alkalis,asbestos, toxicorcorrosivechemicals,radioactivewaste, ormine tailings).” Id.Thefinalversionpassedcommitteeandwasapprovedbybothhousesofthelegislature, andwas sent toGovernorQuinn,whosignedthebillonDecember19,2014.

LikeSB2221,theenrolledversionofSB3075hadno resemblance to itsoriginal version. Illinois General Assem-bly,http://www.ilga.gov/legislation/(lastvisitedDec. 15, 2014) (follow “3001-3100”hyperlink;thenfollow“SB3075”hyperlink;thenfollow“ViewAllAction”hyperlink).SB3075wasintroducedinFebruary 2014 and contained amend-mentstotheJuvenileCourtActof1987.Just before theThanksgiving holiday,HouseAmendmentNumberOnewasfiledandreplacedtheentiretextofSB

Specifically, SB 3075 removed the language in

735 ILCS 5/ 2-1105(b) that gives litigants the right to

a 12-person jury for claims over $50,000 or upon a

unilateral demand for 12 jurors.

thelanguageinSB2221withlanguageamending735 ILCS5/13-214. IllinoisGeneralAssembly,http://www.ilga.gov/legislation/(lastvisitedDec.15,2014)(follow “2201-2300” hyperlink; thenfollow“SB2221”hyperlink;thenfollow“ViewAllAction”hyperlink).

Section 13-214 lists limitation

onDecember1,2014.JohnCooneyofCooney&ConwayinChicagotestifiedinsupportoftheBillwithoneofhiscli-ents,82-year-oldJohnnyLattner.Lattneris a formerUniversity ofNotreDamehalfback,HeismanTrophywinner,andfirst-roundpickinthe1954NFLdraft.Lattner testified that hewas recently

http://http://www.ilga.gov

http://http://www.ilga.gov



3075withamendmentstotheCountiesCodeandtheCodeofCivilProcedure.Id.(follow“3001-3100”hyperlink;thenfollow“SB3075”hyperlink;thenfollow“FullText”hyperlink).

Specifically,SB3075removedthelanguagein735ILCS5/2-1105(b)thatgives litigants the right to a 12-person juryforclaimsover$50,000oruponaunilateraldemandfor12jurors.SB3075alsomandates that counties increasethe daily pay for jurors. Specifically,countiesmustpay$25forthefirstdayofattendanceand$50foreachadditionalday.Thisisasignificantincreaseoverthepriorlawthatprovidedfor$4to$10perday,dependingonpopulation.

SB3075was also set for hearingonDecember1,2014.JosephPowerofPower Rogers & Smith, P.C. in Chicago and JohnCooney testified in supportofthebill.JeffHebrankagaintestifiedon behalf of the IDC alongside otheropponents.Nevertheless, SB 3075 asamended, passed both houses of thelegislature, andwas sent toGovernorQuinn.TheGovernor signedSB3075onDecember19,2014.

With the passage ofSB2221 andSB 3075, tort reform in Illinois hastaken a step backwards.Many Illinoisjob providers who are burdened byasbestos personal injury lawsuits havelostavaluabledefense.Illinoisconstruc-tion contractorsmay also be targeted.Furthermore,allIllinoisdefendantswilllikelyfind it harder to accurately esti-matecasevaluesandreachsettlementsbecause only six jurorsmust reach aunanimousverdict.Otherissuesliketheretroactiveapplicationofthesenewlawsandtheirconstitutionalityarecertaintobelitigatedinthenearfuture.

Supreme Court WatchM. Elizabeth Dyer KellettHeplerBroom LLC, Edwardsville

M. Elizabeth Dyer Kellett is an associate at Hepler-Broom LLC. Ms. Kellett is a litigation attorney with a primary emphasis in the defense of complex, multi-party civil cases and class actions, including all aspects of product liability,

particularly pharmaceutical drugs and devices. Ms. Kellett also regularly handles appeals in Il-linois and Missouri. Prior to joining HeplerBroom, Ms. Kellett practiced law in Washington, D.C. and represented institutions of higher learning in administrative hearings and proceedings before the U.S. Department of Education. She also represented insurance and financial cor-porations and individuals in proceedings before the Securities and Exchange Commission, civil and criminal litigation, and in matters of corpo-rate governance and compliance. Ms. Kellett earned her B.A. from Georgetown University in Washington D.C. in 2002 and her J.D. from Georgetown University Law Center in 2006.

About the Author

Followingthedeathoftheplaintiff’sparents, the plaintiff challenged hermother’swill and trust, alleging thather mother had a diminished mental capacityandwasundulyinfluencedbytheplaintiff’sbrotherandsister-in-lawat the time hermother executed thedocuments.Aspart of thewill contestcase,theplaintiffissuedasubpoenatothe accounting firm that provided theplaintiff’s parentswith estate planningservices. Brunton v.Kruger, 2014 IL App (4th) 130421, ¶ 18. Invoking theaccountant-client privilege in section27oftheIllinoisPublicAccountingAct(225ILCS450/27),theaccountingfirmrefused to produce the estate planningdocuments.Brunton,2014ILApp(4th)130421, ¶15.

The circuit court found thatwhiletheaccountant-clientprivilegeapplied,theaccountingfirmwaivedthatprivilegewhentheyproducedtheestateplanningdocuments to the plaintiff’s siblings.Id. ¶ 17.The circuit court also foundthat a testamentary exception applied to the attorney-client privilege stating, “theprivilegecannotbeassertedinthistype of an actionwhere the donativeandtestamentaryintentoftheclientsareinvolved.” Id. ¶18(citingIn re October 1985GrandJuryNo.746,124Ill.2d466(1988)). Finally, the circuit court heldthattheestateplanninginformationfelloutsideoftheaccounting-clientprivilegebecausetheaccountingfirmdisclosedthe

Who Is the Holder of theAccounting Privilege and

How Is that Privilege Applied?Brunton v. Kruger, No. 117663, 4th Dist. No. 4-13-0421

documentstothepersonalrepresentativeof the estate. Id. ¶ 19.Therefore, thecircuitcourtorderedtheaccountingfirmtoproducethedocuments.Id. ¶20.Tocreateanappealableorder,theaccount-ing firm’s attorney requested that thecircuitcourtholdhimincivilcontemptfor refusal to complywith the court’sdiscovery order. Id. ¶21.

Reviewing the case under thede novo standard, the Illinois Appellate CourtFourthDistrictaffirmedthecircuit


Supreme Court Watch | continued

court’sdiscoveryorder.First,theFourthDistrict found that “information orevidence a CPA receives while assisting aclientwithestateplanning issubjecttotheprivilegeinsection27iftheCPAreceived the information or evidencein confidence.” Id. ¶ 35. Second, theFourthDistrictfoundthattheprivilegeinsection27appliesto“thedisclosureofconfidentialcommunicationsaclientmakestonon-CPAemployeesoragentsofCPAswhen the client is obtainingaccounting services.” Id. ¶ 37.Third,expressing disagreement with several federaldecisions,theFourthDistrictheldthat, while it does not explicitly mention the client, “the client, not the CPA, is theholderof theprivilege thatsection27creates.”Id.¶43.Fourth,notingthat “[u]nder the testamentary exception,informationorevidenceanattorney re-ceivedfromthedecedentwhileassistingthedecedentwithestateplanningwouldbeadmissibleinasubsequentwillcon-test,”theFourthDistrictheld,“weseenoreason to regard the exception as inap-plicableifaCPAratherthananattorneyassisted the client with estate planning.” Id.¶46.Finally,theFourthDistrictheldthatbecausethepersonalrepresentativeandotherheirstotheplaintiff’sparents’estaterequestedthat thecircuitcourt’sorder be affirmed, the attorney-clientprivilegeheldbytheplaintiff’sparentswas waived. Id.¶50-52.

The accountingfirm seeks reviewintheIllinoisSupremeCourt.First,the

accountingfirmargues that theFourthDistrict’sopinioncontradictspriorprec-edent,whichholdsthattheholderoftheaccountingprivilege is the accountant,and not the client. SeeInreOctober1985Grand JuryNo. 746, 154 Ill.App. 3d288,293(1stDist.1987)(holding,“theclient has no say in whether or not the accountantinvokesthestatutetoprohibitdisclosureofinformationobtainedfromtheclient”);Dorfman v. Rombs,218F.Supp905,907(N.D.Ill.1963)(stating,“it is clear that what the Illinois Legisla-turedidinfactcreatewasanaccountantprivilege,aprivilegewhosebenefitwas

to inure to, andwhich could only beclaimed by, an accountant”);Radiant Burners, Inc. v. American Gas Assoc., 209F.Supp.321,322 (N.D. Ill.1962)(finding, “the language of the Illinois‘accountant’statutepatentlycreatesjustwhatitstitlewouldindicate,aprivilegeforaccountants”).Second,theaccountingfirmarguesthattheestatedidnotwaiveprivilege simply by agreeingwith thecircuitcourt’sholding.Rather,becausethe estate hadpossession of the estateplanningdocumentsanddidnotdisclosethosedocumentstotheplaintiff,theestateintended that the informationwouldremainconfidential.Moreover,becausetheestateandtheaccountingfirmhaveacommoninterest,disclosuretotheestatedid not destroy the privilege. Finally,theaccountingfirmarguesthat,becausesection 27 does not explicitly includea testamentary exception, the FourthDistrictshouldnothaveincorporatedoneintothestatutoryaccountingprivilege.

Can Wrongful Death and Survival Claims Be Brought in Cases of Suicide?

Turcios v. The De Bruler Co., No. 117962, 2nd Dist. No. 2-13-0331

The circuit court found that while the accountant-

client privilege applied, the accounting firm waived

that privilege when they produced the estate planning

documents to the plaintiff’s siblings.

The plaintiffs are the wife andchildrenof the decedent and the heirsof the decedent’s estate.Theplaintiffsallege that the defendant real estatedeveloper’s wrongful acts—forcingthedecedentandhisfamilyoutoftheirvalidly-rented apartment by demolish-ing thebuildingaround themand thendemolishing the rented premises even whiledecedentwaslivingthere—causeddecedent’s suicide.Turcios v. The De Bruler Co.,2014ILApp(2d)130331, ¶12.Theplaintiffsfiledwrongfuldeathandsurvivalclaimsagainstthedefendantalleging, among other things, intentional

infliction of emotional distress. Thecircuitcourtheldthatbecausedecedent’sdeathwasaresultofsuicide,theplain-tiffscouldnotmaintainwrongfuldeathorsurvivalclaimsagainstthedefendantasamatteroflaw.Turcios, 2014 IL App (2d)130331,¶46.

Reviewing the case under thede novo standard, the Illinois Appellate Court SecondDistrict overruled thecircuitcourt’sordergrantingthedefen-dant’smotiontodismiss.Id.¶46.TheSecondDistrictfirstnotedthatbecausetheplaintiffsallegedanintentionaltortas opposed to mere negligence, the trial



court’s intervening-cause analysiswasinappropriate. Id.¶16.Second,numer-ous foreign jurisdictions and authorityrecognize a difference between negli-gence and intentional torts in cases where “thedefendant’sactionscauseemotionaldistressthatleadstoasuicide.”Id.¶¶16, 18-20 (citingClift v. Narragansett Television L.P.,688A.2d805(R.I.1996),Mayer v. Town of Hampton,127N.H.81(1985),R.D.v.W.H.,875P.2d26(Wyo.1994),Kimberlinv.DeLong,637N.E.2d121 (Ind. 1994).The SecondDistrictfoundthereasoningoftheUnitedStatesDistrictCourtfortheNorthernDistrictofIllinoisparticularlypersuasive.Turcios, No.117962at¶21. InCollins v. Vill. ofWoodridge, the Northern District held that, in intentional tort cases, “the tort victim’s suicide generally is notconsideredasuperveningcause,atleastwhere the plaintiff can demonstratethatthedefendant’sintentionalconductcausedsevereemotionaldistressthatwasasubstantialfactorinbringingaboutthesuicide.”Id.¶21(citingCindy Collins v. Vill.ofWoodridge,96F.Supp.2d744,756(N.D.Ill.2000)).

WhilenoIllinoiscourthaddirectlyruledonthisissue,theSecondDistrictfoundthatIllinoiscourts“donotengageinanintervening-causeanalysiswhenanintentionaltortisatissue.”Turcios, No. 117962at¶25.Moreover,theSecondDistrict found the cases cited by thedefendant to be easily distinguishableandwerebestreadasholding“aplaintiffmustshowthatthedefendant’sconductproximately caused the plaintiff’s emo-tional distress.” Id.¶¶33-36(emphasisinoriginal).Thedefendant’scases“donotsaythataplaintiffmustshowthatallresultingandcompensabledamageswereproximatelycausedbythedefendant.”Id. ¶35.Therefore,theSecondDistrictheld,“where a plaintiff can satisfy the ele-

mentsofthetortofintentionalinflictionofemotionaldistressandtheemotionaldistressisasubstantialfactorincausingadecedent’ssuicide,suchcausesofactionarecognizablein[Illinois].”Id.¶39.

The defendant seeks review inthe Illinois SupremeCourt. First, thedefendantarguesthattheSecondDistrictimproperlyheldthatashowingoflegalcause isnot required in thecaseofanintentionaltort.Iftheholdingisaffirmed,the defendant argues, the requirementthatatortfeasor’sconductbethe“legal

cause”oftheplaintiff’sinjurieswillberemoved.Thedefendantfurtherarguesthat theSecondDistrict conflictswithMartin v. Heinhold Commodities, Inc., 163 Ill. 2d33 (1994), andmanyother Illinois opinions, which hold that the legal principle of proximate cause ap-pliestoclaimsofnegligenceaswellastointentionaltorts.Finally,thedefendantarguesthattheSecondDistrict’sholdingcreatesanewcauseofactionforinten-tional infliction of emotional distress,whichisunworkableandunclear.

When Can Fully Litigated Judgments Be Reopened Based on Claims of

Newly Discovered Evidence?Price v. Philip Morris, Inc., No. 117687, 5th Dist. No. 5-13-0017

The Illinois Supreme Court reversed the

judgment of $10.1 billion for the plaintiffs because

“the challenged conduct was specifically authorized

by federal regulations.”

The plaintiffs are consumerswhofiled a class action lawsuit against thedefendant, a cigarettemanufacturer,allegingthatthedefendantviolatedtheIllinoisConsumerFraudandDeceptiveBusinessPracticesAct(815ILCS505/ 1-12)whenitusedtheterms“light”and“low tar” in its cigarette advertisements.

¶ 1 (citing 815 ILCS505/10b(1) (theConsumerFraudActis inapplicabletoclaimsinvolvingconductthathasbeen“specificallyauthorized”byanyfederalregulatorybody)).TheIllinoisSupremeCourtdeniedtheplaintiffs’petitionforrehearing. Id. ¶¶5-6.

Relying on the U.S. Supreme

Price v. Philip Morris, Inc., 2014 IL App (5th)130017.TheIllinoisSupremeCourtreversed the judgmentof$10.1billionfortheplaintiffsbecause“thechallengedconductwasspecificallyauthorizedbyfederalregulations.”Id.

Court’sholdinginAltria Group Inc. v. Good,555U.S.70(2008),theplaintiffsfiledapetitionforrelieffromjudgmentpursuantto735ILCS5/2-1401,arguingthat evidence that the FederalTrade


Supreme Court Watch | continued

Commission (FTC) did not authorizetheuseoftheterms“light”and“lowtar”wasunavailabletotheplaintiffsattrialand,ifthatevidencehadbeenavailable,judgmentfor theplaintiffswouldhavebeen sustained. Id. ¶ 6 (citingGood, 555U.S.at87 (holdingthatfederallawdid not preempt claims that “lights” descriptors violatedMaine’s consumerfraudstatute)).ThetrialcourtdismissedthepetitionasuntimelybuttheIllinoisAppellateCourtFifthDistrict reversedand remanded. Id. ¶ 8. The IllinoisSupremeCourtdeclinedtoaddressthetimelinessquestion.

Onremand,theplaintiffsarguedthattheFTC’s2008amicus briefinGood and itsNovember 26, 2008 statement that “[t]heCommissionhasneitherdefined[the terms ‘light’ and ‘low tar’], norprovided guidance or authorization asto the use of descriptors” constitutedpreviously unknown facts thatwouldhave altered the trial court’s decisionto dismiss the plaintiffs’ case. Id. ¶ 9.Thetrialcourtdisagreedandfoundthat,becauseitwas“equallyaslikelythattheIllinois SupremeCourtwouldfind forDefendant on the damages issue,” theplaintiffsfailedtoshowthatitwas“moreprobablytruethannot”thattheplaintiffswould have prevailed if they had thisevidencewhentheyinitiallyfiled theirpetition. Id. ¶11.Theplaintiffsappealed,arguinginpartthatthetrialcourterredbyexceedingthescopeofsection2-1401review. Id. ¶30.

The Fifth District reversed thetrialcourt’sorderdenyingtheplaintiffs’petition for relief from judgment, andreinstatedthe$10.1billionjudgment.Id. ¶13.TheFifthDistrictfoundtheholdingin Paul v. Gerald Adelman & Assocs., Ltd.,223Ill.2d85(2006),relevantandinstructive. Id. ¶ 31. InPaul, the trial courtgrantedtheplaintiff’spetitionfor

rehearing. Id. ¶46.TheFifthDistrictstated that the Illinois SupremeCourtupheldthePaul trialcourt’sorder:“Inruling on plaintiff’s section 2-1401petitions...itwasnotthetrialcourt’sresponsibility to determine themeritsoftheunderlyingcausesofaction.”Id. ¶ 47 (citingPaul, 223 Ill. 2d at 107).Moreover,theappellatecourtfoundthePaul court held that “issuesof federalpreemptionandplaintiff’sabilitytoes-tablishdamagesbothdevolve intofactquestionsmoreappropriateforresolutioninthetrialcourt.Id. ¶48(citingPaul, 223Ill.2dat108).

characterizations of previously knownfacts.TheFTC’s 2008 statements aresimplynewcharacterizationsofprevi-ously known facts.Thus, there is nonew“evidence”andtheplaintiffscannotseek relief under section 2-1401.Thedefendantfurthercontendsthatevidencecannot be newly discovered if it didnotexistbeforejudgmentwasentered.The FTC’s 2008 statements are new,post-judgmentfactsthatcannotprovideabasisforreliefunder2-1401.

The defendant asserts that theplaintiffs’petitionwasuntimelyandthatthe FifthDistrict improperly ignored

The FTC’s 2008 statements are simply new characterizations of previously known facts.

Thus, there is no new “evidence” and the plaintiffs cannot seek relief under section 2-1401.

The defendant further contends that evidencecannot be newly discovered if it did not exist

before judgment was entered.

Here, theFifthDistrict noted, thetrial court dismissed the plaintiffs’claims,“afteritwasdirectedtoso[sic]bythesupremecourtinanopinionthatdidnotreachthemeritsoftheunderly-ing claim, including the question ofdamages.” Id. ¶49.Theappellatecourtexplained, “the trial court’s discussionofwhat thesupremecourtwouldhavedecided had it addressed [damages] isinherentlyspeculative.”Id. ¶56.There-fore,theFifthDistrictheld,thetrialcourtexceeded the scope of section 2-1401review. Id. ¶57.

The defendant seeks review inthe Illinois SupremeCourt. First, thedefendantargues thatasection2-1401petition cannot be based on post-hoc

numerous appellate court decisionswhenitconcludedthatthestayofthecourt’smandatependingtheplaintiffs’petition forcertiorari, tolled the time for filing a section 2-1401 petition.Additionally, the defendant avers thatthe plaintiffs failed tomeet section2-1401’sdiligencerequirementbecausetheplaintiffsdidnothingtotrytoobtaintheallegedlynewevidenceuponwhichthey rely.

Finally, the defendant argues thattheFifthDistrictimproperlyusurpedthecourt’s authoritywhen it decidedhowthesupremecourtwouldhaveruledandstates that the supreme court is in thebestpositiontoaddressissuesthatitleftundecidedinits2005mandate.



About the Authors

Civil Rights UpdateBrian SmithHeyl, Royster, Voelker & Allen, P.C., Urbana

John P. Heil, Jr. is an of-counsel attorney with Heyl, Royster, Voelker & Allen, P.C. He joined the firm in November 2007 after serving eleven years as an Assistant State’s Attorney in Cook County, Illinois. He

received his J.D. from Chicago-Kent College of Law in 1996 and his B.S. from Bradley University in 1993. His practice includes the defense of civil rights actions, municipal liability, and general negligence matters.

TheSeventhCircuitCourt ofAp-peals has issued important decisionsaddressing whether a plaintiff maybringaSection1983actionbaseduponmalicious prosecution and in whatcircumstancesapoliceofficerisentitledtoqualifiedimmunity.Inonedecision,theplaintiffsoughttoextendthereachof Section 1983 claims to includefederalclaimsofmaliciousprosecutionand to expand the limits of FourthAmendmentclaims.TheSeventhCircuitrejectedtheseargumentsandheldfasttoitsprecedentontheseissues.Inanotherdecision, theSeventhCircuit providesguidanceregardingthecontext-specificquestionsacourtshouldasktodeterminewhetheranindividualofficerisentitledto qualified immunity.Attorneys thatdefend civil rights claims should takenoteofthesesignificantopinions.

Llovet v. City of Chicago

In Llovet v. City of Chicago, 761F.3d 759 (7thCir. 2014), the SeventhCircuit reaffirmed itsdecision inNew-some v. McCabe,256F.3d747(7thCir.2001),whichheld“thatafederalsuitformaliciousprosecutionbystateofficersispermissibleonlyifthestateinwhichtheplaintiff hadbeenprosecuteddoes notprovideanadequate remedy,which . .. Illinois does.” Lovett,671F.3dat670(internalcitationomitted).Recently,the

Brian Smith concentrates his practice in the areas of civil rights, professional liability, employment law and trucking/motor car-rier litigation. Much of his practice entails defending government officials and medical professionals in

cases alleging violations of constitutional rights. Brian also has experience defending employers before the Illinois Human Rights Commission and in federal court. He represents defendants in other tort litigation, including cases arising from automobile and trucking accidents.

Mr. Smith has extensive motion practice experi-ence in both state and federal courts and has au-thored numerous successful motions to dismiss and motions for summary judgment. In addition, he has defended the firm’s clients in depositions of plaintiffs, and fact and expert witnesses.

Mr. Smith began his career with Heyl, Royster, Voelker & Allen, P.C. by clerking in the firm’s Urbana office. Following graduation from law school in 2007, he joined the firm in the Urbana office as an associate. During law school, he was a teaching assistant at the University of Illinois College of Law and a member of the University of Illinois Law Review.

John P. Heil, Jr.Heyl, Royster, Voelker & Allen, P.C., Peoria

Seventh Circuit Issues SignificantOpinions Regarding Malicious

Prosecution and Qualified Immunity

SeventhCircuitconcludedthatIndianastatelawdoesnotprovideanadequateremedy formalicious prosecution;consequently, in Indiana, it is nowpossibletobringaSection1983claimformaliciousprosecution.See Julian v. Hanna,732F.3d842,848(7thCir.2013). InLlovet, theplaintiffdidnotchallenge the adequacy of Illinois’remedy,butratherinvitedthecourttooverruleNewsome and authorize “afederalclaimofmaliciousprosecutionregardlessofwhatalternativeremedya state provides.” Llovet,761F.3dat760.TheSeventhCircuitrejectedtheplaintiff’sinvitationandalsodeclinedtoexpandthedefinitionoftheFourthAmendment’s prohibition of seizureswithoutprobablecausetoincludethetimeafterapersonbecomesadetaineepursuanttolegalprocess,normallyanarraignment. Id. at760-62.

In Llovet,theplaintiffwasacquit-tedofaggravatedbattery,andthereaf-ter, sued twoChicagopoliceofficersandtheCityofChicagounderSection1983 formalicious prosecution. Id. at 760.The plaintiff alleged that theofficers falsified police reports andusedthosefalsereportstopersuadetheprosecutortofileanaggravatedbatterycharge against him. Id. At the time the plaintiffwaschargedwithaggravatedbattery,hewasalreadyinjail,await-ingtrialonachargeofmisdemeanor

domesticbattery.Id.at762.Theplaintiffdid not deny that therewas probablecauseforhisarrestonthemisdemeanorcharge,butwasunabletomakebail.Id. Hewasonlyreleasedfromjailafterhewas tried and acquitted of aggravatedbattery.Id.Thereafter,themisdemeanorcharge was dropped. Id. The plaintiffarguedthattheaggravatedbatterycharge


Civil Rights Update | continued

suspendedhisrighttoaspeedytrialonthemisdemeanorcharge,resultinginalongerjailtermthanhewouldhaveexpe-rienced“haditnotbeenfordefendants’maliciousactionsinframinghimfortheaggravatedbattery.”Id.

TheSeventhCircuitheldthatbecausethe initial seizure for themisdemeanorchargewassupportedbyprobablecause,the extended detention did not violate the FourthAmendment.TheFourthAmend-ment,according to thecourt,“doesnotregulate thelengthofdetentionsafterajudgeormagistratehasdeterminedthatthereisprobablecausetodetainapersonon a criminal charge.” Id.Theplaintiffargued that theSeventhCircuit shouldadopta“continuingseizure”approach,assomeothercircuitshave.The“continuingseizure”doctrineholds that an initiallylawfuldetentionmayevolveintoaFourthAmendmentviolationiftheinitialdeten-tion extends beyond its lawful limitsbecauseofanewwrong.Id.at763.TheSeventhCircuit rejected this argumentbasedonHeck v. Humphrey, 512 U.S. 477,484 (1994), and the principle that “oncedetentionbyreasonofarrestturnsintodetentionbyreasonofarraignment...theFourthAmendmentfallsoutofthepicture....”Id.

Anewchargefiledwhileadetaineeis in jail is not an arrest or a seizure. Accordingly, the SeventhCircuit rea-soned that the FourthAmendment

does not apply. Id.at764.TheSeventhCircuitoptednottoexpandthescopeoftheFourthAmendmentandmadeclearthat the FourthAmendment analysisends once legal process, arraignment or otherwise,hasbeenprovided.

TheSeventhCircuit alsoheld fastto its decision in Newsome, which held that the“plaintiff couldnotbringa federalmalicious prosecution claimbased on the due process clause of the Fourteenth Amendment, because thismalicious prosecution remedy understatelawwasadequatetogivehimallthedueprocesstowhichhewasentitled.”Id.at762(emphasisinoriginal).InthefaceofrecentSeventhCircuitdecisionsconcerningtheinadequacyofIndiana’sremedies formalicious prosecution, Llovet is important. The case reiterates thatIllinoisprovidesanadequaterem-edy. Llovet, Newsome, and other Seventh Circuitcasesleaveopenthe“possibilityof aFourthAmendment claim againstofficerswhomisrepresent evidence toprosecutors. . . .”Llovet, 761 F.3d at761(internalquotationmarksomitted)(quoting Johnson v. Saville, 575 F.3d656,663-64(7thCir.2009)).Asageneralrule,however, theplaintiffs seeking toassertaclaimofmaliciousprosecutionmust continue to do so as a state lawclaimbroughtpursuanttosupplementaljurisdiction.

Mordi v. Zeigler

In Mordi v. Zeigler, 770F.3d1161(7th Cir. 2014), the Seventh Circuitanalyzedanon-UScitizen’srightsunderArticle36oftheViennaConventiononConsular Relations (Convention).Atissuewaswhether three Illinois StatePoliceofficerswereentitledtoqualifiedimmunity for their alleged failure toprovide the proper notification undertheConvention.InMarch2009,OfficerToddZeiglerpulledoveravehicledrivenbytheplaintiff,UcheMordi.Mordi, 770F.3dat1162.Drugswerediscoveredinthecarandtheplaintiffwasarrestedandtakentoapolicestationforinterrogation.

The plaintiff argued that the aggravated battery

charge suspended his right to a speedy trial on the

misdemeanor charge, resulting in a longer jail term

than he would have experienced “had it not been

for defendants’ malicious actions in framing him

for the aggravated battery.”

The plaintiff was not

informed of his rights

under the Convention,

and did not learn about

those rights until a

year or so after

pleading guilty.

Id. The plaintiffwas interrogated byOfficersChance andHealy, and thateveninghewas transportedbyZeiglertotheEffinghamCountyJailwherehewas booked. Id. Criminal proceedings wereinitiatedinstatecourt.Id.at1163.Later,federalprosecutorstookoverthecase. Id. The plaintiff ultimately pledguiltytochargesofunlawfulpossessionofacontrolledsubstancewithintenttodistribute.Id.

TheplaintiffwasaNigeriannational,and Nigeria is a party to the Convention.


Id. at 1162.The “Convention requirestheauthoritiesofthereceivingStatetoinformtheforeignnationalofhisrightsunderArticle36tohavehisownconsularofficials alerted to his arrest or deten-tion.” Id.OfficerZeiglerwasunawareof the plaintiff’s citizenship; however,OfficersChanceandHealywereawarethat the plaintiff was Nigerian andnot aU.S. citizen. Id. at1162-63. The plaintiffwasnotinformedofhisrightsundertheConvention,anddidnotlearnaboutthoserightsuntilayearorsoafterpleading guilty. Id. at 1163.He fileda Section 1983 claim againstOfficersZeigler, Chance, Healy, and others.Zeigler,ChanceandHealyassertedtheywereentitledtoqualifiedimmunity.Id. Thedistrictcourtdeniedthedefendants’motionforsummaryjudgment,whichledtoaninterlocutoryappeal.Id.

On appeal, the Seventh Circuitobservedthat

[o]nce a public official hasraised a defense of qualifiedimmunity, the plaintiffmustestablish two things in ordertodefeatthedefense:first,thatthe facts alleged describe aviolation of a protected right;and second, that this right was clearly established at the timeofthedefendant’sallegedmis-conduct.

Id.at1163-64.(Internalcitationomitted).Astothefirstquestion,priorSeventh

Circuit precedent clearly establishedthat the plaintiff did have a protectedrightundertheConventiontohavetheNigerianconsulatenotifiedofhisstatus.Id.at1164.Astothesecondquestion,theSeventhCircuitconcludedthatthereis no clearly established rule that theofficershadadutytonotifyMordiabout

his right to consularnotificationunderthe Convention. Id.at1165-66.

TheConventionstatesthatauthori-ties“shallinformthepersonconcernedwithout delay of his rights under thissubparagraph.” Id.at1165.TheSeventhCircuit analyzedwhether informingsomeone“withoutdelay”meansat thetimeofarrest,transportation,interroga-tion,booking,oratsomeothertime.Id. at1165-66.Concludingthattheexistingopinionsdidnotoffermuchguidanceonthesequestions, thecourtanalyzed thefactsastheyrelatedtoZeigler,ChanceandHealy. Each defendant interactedwithMordishortlyafterhisarrestforalimitedtime.Noneoftheofficerswere

should all be held accountable if theyfailtodischarge‘known’dutieslikethisone.” Id.at1165.Mordiinstructsthatthisis not the correct perspective. Rather, a courtshouldaskcontext-specificques-tionstoevaluatetheparticulardutiesoftheindividualofficerassertingqualifiedimmunity.

Conclusion

The Seventh Circuit’s opinionin Llovet maintains the status quoformalicious prosecution and FourthAmendmentclaims.Assuch,inIllinois,defense counsel should seekdismissalofmaliciousprosecutionclaimsbrought

The Convention states that authorities “shall inform

the person concerned without delay of his rights

under this subparagraph.” The Seventh Circuit

analyzed whether informing someone “without

delay” means at the time of arrest, transportation,

interrogation, booking, or at some other time.

responsibleforbookingtheplaintiff.TheSeventhCircuitconcludedthat“thede-tailsofhowtoimplementtheArticle36dutytoinformthearresteeofhisrightswithoutdelayhaveyettobefixed.”Id. at 1167.Accordingly,therewasnoclearlyestablished law that the three officersviolatedand,therefore,theofficerswereentitledtoqualifiedimmunity.Id.

The Seventh Circuit noted that “[a]tahighlevelofgenerality,onemightthinkthatfederal,stateandlocalofficialsallshouldknowthelawsoftheUnitedStates, including its treaties, and thus

pursuant to Section 1983.The court’sMordi decision emphasizes thatwhenqualified immunity is asserted as adefense, contextmatters.TheSeventhCircuit will evaluate the particularduties of an individual officer.To doso,however,counselwilloftenneedtoprovidesignificantfactualdetail,suchaswhatinformationanofficerknewabouttheplaintiff,whenthatinformationwaslearned, and how long the officer hadtheplaintiffincustodybeforedeliveringhimtojail,todemonstratethatqualifiedimmunityisappropriate.


About the Authors

Gregory W. OdomHeplerBroom LLC, Edwardsville

Young Lawyer Division

Gregory W. Odom is an Associate with Hepler-Broom LLC in Edwardsville. He focuses his practice on trials involving complex business litigation mat-ters, including toxic torts, personal injury, product and premises liability, and

environmental law. Mr. Odom has represented individuals, local businesses, and Fortune 500 companies in Illinois and Missouri state and federal courts. He has successfully tried multiple cases to verdict and has successfully argued before the Illinois Court of Appeals. He received his J.D. from Southern Illinois University School of Law in 2008, and a B.A. from Southern Illinois University magna cum laude in 2005. Mr. Odom is a member of the Illinois State Bar Association, The Missouri Bar, Madison County Bar Associa-tion, St. Clair County Bar Association, and Illinois Association of Defense Trial Counsel.

Patrick P. Clyder is an as-sociate in Swanson, Martin & Bell, LLP’s Chicago of-fice. He routinely repre-sents product manufactur-ers and distributors in state, federal and international matters involving personal injury, property damage,

and business disputes. Mr. Clyder also has extensive experience representing business owners, employers, and land owners in claims for personal injury and property damage stem-ming from incidents on their premises. He has tried cases to jury verdict as both a first and sec-ond chair attorney in the Circuit Court of Cook County and he has successfully resolved cases through mediation, settlement conference, and binding arbitration. He regularly assists Cabrini Green Legal Aid as a criminal records and criminal defense client intake volunteer.

TheYoungLawyersDivision(YLD)aims toassistyoungdefenseattorneysin their professional development.Toachieve this goal, the YLD hosts events to promote networking and to educateyoungattorneys.TheYLDalsoaffordsyoungattorneysnumerousopportunitiesto contribute to their communities andtheprofession.Perhapsmostimportantly,theYLD—and the IDC as awhole— provideseducationalresourcestofurtherourmembers’ practical skills. In thisedition,YLDmemberPatrickClyder,ofSwanson, Martin & Bell, LLP, addresses severalissuesregardingcounterclaims,includingclientinvolvementandtimingissues.

Own Your Counterclaim: A Brief Overview of 735 ILCS 5/13-207

Asdefenseattorneys,weregularlyrepresentclientsincasesinvolvingmul-tipledefendants.Insuchcases,youngerattorneys are often asked to prepareclaims against other defendants inthe case.Althoughour lawprofessorslabeled such claims by one defendantagainst another as “cross-claims,” Illinoiscallsthem“counterclaims.”735ILCS5/2-608(a).

Thetaskofpreparingacounterclaimagainst a co-defendant should not bereflexive.Asyoungattorneys,weshouldask ourselveswhywe are filing thecounterclaim andwhether our clients

Patrick P. ClyderSwanson, Martin & Bell, LLP, Chicago

Practical Considerations and Tips for Young Attorneys: Counterclaims

approve thefiling.This is particularlyimportant in cases involving the tripartite relationship between attorney, insurer,and insured.An insurermightwant acounterclaim,butitmaybepoorbusinesssenseforyourplumbingcontractorclienttofileacounterclaimagainstthegeneralcontractor.Likewise,aretailstoremightnotwanttofileacounterclaimagainstalongtimesupplierforbusinessreasons.Ifyoutakeamomenttothinkoutsidethebox,youcanavoidexplainingwhyyoufiledacounterclaimthatmadepoorbusi-nesssense.Ifyouareonthereceivingendofareflexivecounterclaim,considerhavingyourclientleverageanexistingbusinessrelationshiptoforcethefilingparty’sattorneytowithdrawit.

Once you have determined thata counterclaimmakes good legal andbusiness sense, a question that oftenarisesis,“howlongdoIhavetofileacounterclaim?”TheIllinoiscounterclaimsavingsstatuteprovides:

Adefendantmaypleadaset-offor counterclaimbarredby thestatuteoflimitation,whileheldand owned by him or her, toanyaction,thecauseofwhichwasownedby the plaintiff orpersonunderwhomheor sheclaims, before such set-off orcounterclaimwas so barred,and not otherwise. This section shall not affect the right of a

bonafideassigneeofnegotiableinstrumentassignedbeforedue.

735ILCS5/13-207.Ifitwasnotapparentfromtheplainlanguageofthestatute(itwasnot to theseauthors), the statute’spurpose is to prevent a plaintiff (orco-defendant) from intentionallyfilinglateclaimstoprecludeadefendantfromfiling a timely counterclaim.Cameron


General Corp. v. Hafnia Holdings, Inc., 289 Ill.App. 3d 495, 506 (1st Dist.1997); see also Patsis v. Zion-Benton Twp.HighSch.,No.126,234Ill.App.3d232,235(2dDist.1992)(explainingthat the statute protects “partieswhohave shorter limitations periods than theiropponents”).

The savings statute operates asfollows: where the defendantA hasfileda timelycounterclaimagainst thedefendantB, thedefendantBmayfilea counterclaim against the defendantA even if thedefendantB’s limitationperiodhasrunforfilingitscounterclaim.Barragan v. Casco Design Corp., 216Ill.2d435,443-44(2005).Ontheotherhand,ifthedefendantAhadnotfiledacounterclaim against the defendantB,thesavingsstatutewouldnotapplyifthedefendantBsoughttofileatime-barredcounterclaimagainstthedefendantA.Id. at443-44(rejectingsuchcounterclaimsand labeling them “first-strike cross-claims”).

Inpractice,alwaysmakesure thatthere are sound legal and businessreasons for filing your counterclaim.Bemindful that if you file a timelycounterclaim against a co-defendant,the savings statutewill prevent youfromraisingmoststatuteoflimitationsdefenses to any counterclaim that theco-defendantmight file against yourclient.Accordingly,ifthecounterclaimisnotnecessary,youmightserveyour

client’sinterestsbetterbyallowingthetimeforfilingacounterclaimtoexpireso that you do not open the door tocounterclaims from the co-defendants.See Id.at446(explainingthatthesavingstatute“opensthedoorandexposestheinitiating party to otherwise stale claims bysacrificingtheprotectionofthestatuteoflimitations”).Lastly,restassuredthatif a co-defendant files a counterclaimagainstyourclientonthedate that thestatute of limitations runs, the savingsstatutewill likely permit you tofile acounterclaiminreturn.

Recent and Upcoming YLD Events

Since the beginning of the 2014-2015term,theYLDhasbeenextremelyproductive.We have hostedmultipleevents,conductedalawstudentwritingcompetition,organizedcharitabledrives,heldsocialevents,andrecruitednewIDCmembers.TheYLDplans to continuethismomentumintothenewyearwithmany other events.

OnNovember 10, 2014, theYLDconductedaseminar,titled“FindingandEnsuringSuccessinYourFirstPosition.”The event, held atThe JohnMarshallLaw School, provided information,tips, and resources to law students onfindingtherightjobandsucceedingasayounglawyer.ManythankstoTheJohnMarshall Law School for graciouslyhosting this event and to the speaking

panel,whichincludedAlexanderSweisofMcKenna Storer, Lindsay Donald ofLitchfieldCavoLLP,MiguelLariosof theOffice of the Illinois Attorney General, Camilla Pollock-Flynn ofLeBarge Campbell & Lyon LLC, and JosephKearneyofThe John Marshall Law School.

TheYLDalsovisitedlawstudentsatSouthernIllinoisUniversitySchoolofLawonNovember5,2014.During thevisit,wediscussedwiththestudentsthebenefitsofbecomingmembersof the IDC.ThestudentswereveryenthusedabouttheIDCandareintheprocessofformingIDC’sfirstlawschoolstudentorganization.Weplanto have an event at the law school in the Spring similar to the event hosted at The JohnMarshallLawSchool.

OnDecember 4, 2014, the IDCheld its annualHolidayParty.DuringtheHolidayParty, theYLDconducteda “Spirit of the Season” fundraiser.Membersdonatedbottlesofwine/spiritsandgift cards,whichwere raffledoff,ormadecashdonations.Thanksto thegenerosityof ourwonderfulmembers,theYLD raised $1,000.00. ProceedsfromthefundraiserweredonatedtotheAutismResearch Institute (ARI).TheARI is anon-profit research, resource,and referralorganization that conductsandfundsresearchthatmakesadiffer-enceinfindingthecausesofanddevelop-ingsafe,effectivetreatmentsforautism.

SpecialthanksgotoYLDmembersKellyHejlikandJohnEggumofForan Glennon Palandech Ponzi & Rudloff P.C. andYLDVice-Chair, ElizabethBarton,foralloftheirhelpinorganizingandconductingtheSpiritoftheSeasonfundraiser.Thefundraisercouldnothavehappenedwithoutthem.Additionally,weareextremelygratefultoeveryonewhodonatedtothiswonderfulcause.

Be mindful that if you file a timely counterclaim

against a co-defendant, the savings statute will

prevent you from raising most statute of limitations

defenses to any counterclaim that the

co-defendant might file against your client.



OnJanuary9,2015,theYLDheldaseminar,titled“SucceedingasaYoungAssociate:ManagingCases,BuildingYour Brand, andAvoiding EthicalPitfalls.”The seminarwas hosted byHeplerBroom LLC in Edwardsville, Illinois.Speakersprovidedinformation,insight, and practice tips on issueshighly relevant to a young attorney’spractice.TheYLD is very grateful toHeplerBroom LLCforhostingtheevent,andtoourincrediblepanelofspeakers,whichincludedLauraBeasleyofJoley, Nussbaumer, Oliver & Beasley, JamesDeFrancoofDeFranco & Bradley, P.C., DominiqueSeymoureofReed Armstrong Mudge & Morrissey P.C., Melissa Smart oftheIllinois Attorney Registration and Disciplinary Commission,NoelSmithofHeplerBroom LLC,andPatrickStuffle-beamofHeplerBroom LLC.Manythanksalso go to Pohlman USAforgraciouslysponsoring the seminar.

TheYLDalso conductedaWinterClothingDrivefortheBelleville,IllinoisPublicSchoolDistrictduringthemonthsofDecember and January.During theDrive, we collected coats, scarves, gloves, blankets,andotherwinterclothingitemsforstudents.Aswithourpreviousschoolsupplydrive, IDCmembersmore thanrosetotheoccasion.Wereceivednumer-ousdonations,whichweredelivered totheSchoolDistrictonJanuary9,2015.TheYLDappreciatesandthankseveryonewhodonated andhelpedkeep those inneed warmer this winter.

Finally,theYLDkickedoffitslawschoolwritingcompetitioninNovember.The competition is open to third-year law studentsattendingIllinois lawschools.StudentswereaskedtowriteonpotentialliabilitiesforInternetpostingsandpro-tectionsaffordedtoanonymousInternetposters.ThewinnerofthecompetitionwillbeannouncedinMarch2015.

YLD | continued Index of IDC Monograph andFeature Articles Volume 24

The IDC Quarterly hasarichtraditionofpresentingthought-provoking,timely,educationalarticlestothedefensebarofIllinois.Thisawardwinninglegaljournalisawell-respectedpieceofthelegallandscapeinIllinoisandthecountry.Ourreputa-tionforexcellenceisbaseduponyearsofexcellentsubmissionsfromourmembers.

FollowingisanindexoftheFeatureArticlesandMonographsthathaveappearedin the IDC Quarterly inthepastyear.Allofthesesubmissionsareavailableonourwebsite,www.iadtc.org.

Weareveryfortunatetohavehadtheopportunitytopresentthesepiecesandmanyotherstoyouovertheyears.Weofferoursincerethankstothemanyeditorsandauthorswhohavemadethisjournalwhatitistoday.

Monograph IndexA Practitioner’s Guide to the Consumer Product Safety Act and Navigating the Consumer Product Safety Commission (24.2.M1)WrittenBy:JustinK.Beyer, Seyfarth Shaw LLP, Chicago

The Attorney-Client Privilege in Malpractice Claims (24.3.M1)WrittenBy:DonaldP.EcklerandMatthewF.Tibble, Pretzel & Stouffer, Chartered, Chicago

The Implied Warranty of Habitability in Construction Defect Cases(24.4.M1)WrittenBy: AnthonyJ.LongoandMichaelD.Pisano, Cassiday Schade LLP, Chicago

Tort Immunity Act (24.1.M1)WrittenBy:HowardL.Huntington,Mahoney, Silverman & Cross, LLC, Joliet;DustinS.Fisher,Judge,James&Kujawa,LLC,ParkRidge; MatthewJ.Hammer,Donohue Brown Mathewson & Smyth, LLC, Chicago; Scott D. Spears, Robbins, Salomon & Patt, Ltd., Chicago; R.SeanHocking,Craig & Craig, LLC, Mat-toon; JohnM.O’Driscoll,Tressler LLP, Bolingbrook; DeborahA.Ostvig,Judge, James&Kujawa,LLC,ParkRidge; JamesL.Craney,Lewis Brisbois Bisgaard & Smith LLP, Edwardsville;KeithE.Fruehling,Heyl, Royster, Voelker & Allen, P.C., Urbana; andBenjaminM.Jacobi,O’HalloranKosoffGeitner&Cook,LLC,Northbrook

Feature Article IndexBeware the Whistleblower: Whether Congress’s Omission of the Term “Employer” from Section 3730(h) of the False Claims Act Was Intended to Extend Liability to a Whistleblower’s Individual Supervisors(24.1.18)WrittenBy:J.TylerRobinson,Heyl, Royster, Voelker & Allen, P.C., Springfield;and Roger R. Clayton, Heyl, Royster, Voelker & Allen, P.C., Peoria



Congress, the Supreme Court, and the Religious Rights of Corporations (24.4.27)WrittenBy:WilliamG.Beatty, Johnson & Bell, Ltd., Chicago

Illinois Courts Should Reject Medical Monitoring Claims for Uninjured Plaintiffs(24.1.41)WrittenBy:MichaelP.Murphy,HeplerBroom LLC, Springfield

Is It Better to be LinkedOut? The Potential Ethical Implications of LinkedIn Endorsements and Recommendations(24.1.5)WrittenBy:MelissaA.Smart,Illinois Attorney Registration and Disciplinary Commission, Chicago

Pre-Mediation Telephone Conference with a Mediator—an Important Tool for Counsel(24.3.10)WrittenBy:RussellM.Ware,SmithAmundsen LLC, Milwaukee;andBrianS.Ebener,SmithAmundsen, Chicago

Recent Cases Emphasize Need for Reform with Section 19(f) Appeal Bonds in Workers’ Compensation Judicial Reviews(24.2.64)WrittenBy:BradA.Elward, Heyl, Royster, Voelker & Allen, P.C., Peoria

Secular, For-Profit Corporations’ Ability to Challenge the Constitutionality of the Contraception Mandate(24.2.10)WrittenBy:ColleenTierneyScarola,McVey & Parsky, LLC, Chicago; andJoshuaTurk,Chicago-KentCollegeofLaw,Chicago

The Danger of Security Manuals: How to Prevent Liability Instead of Create It(24.4.5)WrittenBy:StacyDolanFulco,Cremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicago

To the Young Lawyer: Tips for Court Appearances(24.2.23)WrittenBy:ElizabethK.Barton,Ancel, Glink, Diamond, Bush, DiCianni & Krafthefer,P.C.,Chicago

Understanding Illinois’ New Ediscovery Rules(24.3.60)WrittenBy:StevenM.Puiszis,Hinshaw & Culbertson LLP, Chicago

When Employers Become Human Traffickers: An Overview of the Trafficking Victims Protection Act(24.3.29)WrittenBy:StacyE.Crabtree,Heyl, Royster, Voelker & Allen, P.C., Peoria


Association News

IDC Launches Public Service Announcement

@IDCLawLifeWe are excited to launch@IDC

LawLife. ThisnewIDCTwitterHandle(profile) will be used by one of ourmembers(canyouguesswhoitis??)topostobservationsonwhatadayinthelifeofadefenselawyerlookslike.Getin on the conversation!Follow@IDC LawLifetoday!

Bylaws AmendedAtaspecialmeetingofthemember-

ship onFriday,October 10, 2014, theIDCmembershipapprovedthefollowingamendmenttotheIDCBylaws:

Section 6. Action by Board of Directors By Electronic Means. The Board may take actionviaelectronicballotbymotionandsecondofanyDirectororOfficerandupontheelectroniccirculationofsaidballottoallmembers of the Board. Theelectronic ballot containingthe proposed action shall beopen for vote of all Boardmembers for a period to bestatedwithin theballot,but inno event shall that period belessthanfivedays.Aproposalshallbedeemed“passed”upontheapprovalbyamajorityvoteof all Board members whotimely respond to the electronic ballotwiththeexceptionthatnovotemaypasswithoutaballotconstitutingaminimumvotingquorumof11BoardMembers.Any proposal receiving a major-ityvoteofasimplequorumofBoardmembers voting shallbecome effective upon tally,unless by its terms it is to beeffective at an alternate dateasotherwiseauthorizedbytheBylaws.Where theseBylawsprovideforotherthanamajorityvote,actionviaelectronicballotshall require passage by thevote so stated in the Bylaws. ThisSection6shallonlyapplytoactionswhichtheBoardisau-thorizedbytheBylawstotake,except that no actionmay be

Inanefforttobroadenourexposureand inform the public of issues facedby theIllinoisdefensebar, theIDChaslaunchedthe“JuriesMatter.JudgeWisely.” PublicServiceAnnouncement(PSA).

The PSAwill bemaking itswaythrough theMetro East and then theChicagoland areas over the next several months.Currently,thebillboardcanbefound on I-55/64/70, near the city ofEastSt.Louis.Viewersareencouragedtovisit the IDCwebsite to learnmoreaboutjudgingwisely.Byfollowingthe

link on our home page, viewerswilllearnaboutissuessuchasthe50%rule,SeveralLiabilityandComparativeFault,MedicalBillsandSeatBelts(seehttp://www.iadtc.org/?page=JudgeWiselyformoreinformation).

Asdefensecounsel,weknow thatthese rules, andmanymore like them,areunjust.Wehopethatweareabletoinformandeducatethepublicabouttheserulesandtheneedforreformthroughthe“JuriesMatter.JudgeWisely.” PSA and other initiatives.

The IDC AdvanceWe recently beganpublishingThe

IDC Advance, a new e-newsletter de-signed to recognize thework of ourmembers. If you have news of recentsuccesses, firmnews, successful argu-ments, and/or personal accomplishments, we’dlovetohearfromyou!

To submi t your news , j u s tlogin to www.iadtc.org and navi-gate to https://iadtc.site-ym.com/general/?type=IDCAdvance. In ad-dition to being published inThe IDC Advance,wewillalsofeatureyournewsinourwebsiteNewsroom.



http://ym.com



Holiday Party

takenbytheBoardbyelectronicmeans to remove a Director, to effect amerger, consolidation,dissolution or sale, lease orexchange of assets, establishannual dues, levy special as-sessments, appoint officersanddirectors tofill vacancies,hire an employee or contract foranExecutiveDirector.The

ExecutiveDirector, or in theabsenceofanExecutiveDirec-tor, other authorizeddesignee,upon approval and request ofthe President, shall issue anyelectronic ballot proposal tothe Board via electronic means, tally votes, and archive all electronicballotspassed.

Thank You to Our Spirit of the Season Donors!

Brenda Baum—HeplerBroom LLCLaura Beasley—Joley, Nussbaumer, Oliver & Beasley, P.C.

Troy Bozarth—HeplerBroom LLCMark Cosimini—Rusin & Maciorowski, Ltd.

Bruce Dorn—Bruce Farrel Dorn & AssociatesJoe Feehan—Heyl, Royster, Voelker & Allen, P.C.

Terry Fox—SmithAmundsen LLCR. Howard Jump—Jump & Associates, P.C.

Drew Kemp—HeplerBroom LLCSteve Loverde—LawOfficeofStevenA.Lihosit/AllstateInsuranceCompany

Bill McVisk—Johnson & Bell, Ltd.Mark Mifflin—Giffin,Winning,Cohen&Bodewes,P.C.

Nicole Milos—Cremer, Spina, Shaughnessy, Jansen & Siegert, LLCBrad Nahrstadt—Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd.

Steve Puiszis—Hinshaw & Culbertson LLPTracy Stevenson—Robbins, Salomon & Patt, Ltd.

Patrick Stufflebeam—HeplerBroom LLCAleen Tiffany—Aleen R. Tiffany, P.C.

Urgo & Nugent, Ltd.

The IDCHolidayParty is a greatwaytokickofftheholidayseason.Wehadawonderfultimethisyearandwerefortunatetohaveraised$1,000fortheAutismResearch Institute throughourSpiritoftheSeasonfundraiser.SpecialthankstoGreg OdomofHeplerBroom

LLC, Liz BartonofAncel, Glink, Dia-mond,Bush,DiCianni&Krafthefer and John Eggum and Kelly HejlikofForan Glennon Palandech Ponzi & Rudloff, P.C.foralloftheirhardworkorganizingthefundraiser!


Holiday Party | continued

Special Thanks to Our Speakers:

James L. CraneyLewis Brisbois Bisgaard & Smith LLP

Terry FoxSmithAmundsen LLC

R. Howard JumpJump & Associates, P.C.

Mark J. McClenathanHeyl, Royster, Voelker & Allen, P.C.

Edward J. MurphyLipe, Lyons, Murphy, Nahrstadt &

Pontikis, Ltd.

John O’DriscollTressler LLP

Maura YusofHeyl, Royster, Voelker & Allen, P.C.

Susan ZumphEquity Residential

Concealed Carryin Illinois

The IDC recently hosted a Concealed Carry Seminar with Illinois Insurance Association, Illinois Retail Merchants Association, and the Illinois Manufac-turers’ Association at the University ClubofChicago.Theseminarcoveredthecurrentissuessurroundingconcealedcarry rights and responsibilities forindividuals, employers, governmentalentities,propertyownersandinsurers.


Concealed Carry Seminar | continued

We would also like to thank thefollowing members for their many hours of work in developing the

Concealed Carry Seminar:

Jeremy Burton, ChairLipe, Lyons, Murphy, Nahrstadt &

Pontikis, Ltd.Denise Baker-Seal

Brown & James, P.C.Theresa Bresnahan-ColemanLanghenry, Gillen, Lundquist &

Johnson, LLCPatrick Cloud

Heyl, Royster, Voelker & Allen, P.C.James L. Craney

Lewis Brisbois Bisgaard & Smith LLPTerry Fox

SmithAmundsen LLCR. Howard Jump

Jump & Associates, P.C.David Levitt

Hinshaw & Culbertson LLP Nicole Milos

Cremer, Spina, Shaughnessy,Jansen & Siegert, LLC

John O’DriscollTressler LLP

Bruce SchoumacherQuerrey & Harrow, Ltd.

Maura YusofHeyl, Royster, Voelker & Allen, P.C.

Heather WattersonCNA


After Hours Receptions


The IDC is proud to welcome the followingmembers to the Association:

Mark AbelleraPurcell&Wardrope,Chartered, ChicagoSponsoredby:Bradford Purcell

Jarrett Adams Loyola University Chicago, Chicagol SponsoredBy:DRI

Kwabena A. AppentengOgletree Deakins, Chicago l SponsoredBy:DRI

Thomas W. Arvanitis Meckler Bulger Tilson Marick & Pearson, Chicagol SponsoredBy:DRI

Alemayehu A. AyanawHeplerBroom LLC, Edwardsville

Alisha BiesingerSouthern Illinois University, Carbondalel SponsoredBy:DRI

Wade BlumenshineNorthern Illinois University, DeKalbl SponsoredBy:DRI

Jonathan J. BobellLivingston, Barger, Brandt & Schroeder, Bloomington

Violet H. Borowski Ogletree Deakins, Chicagol SponsoredBy:DRI

Alton Bradley University of Illinois College of Law, Urbanal SponsoredBy:DRI

Michael G. ButtsRobert T. Varney & Associates, Bloomington

Jolene M. CecichMulherin, Rehfeldt & Varchetto, P.C., Wheatonl SponsoredBy:DRI

Jeanette Conrad-Ellis The John Marshall Law School, Chicagol SponsoredBy:DRI

Ryan J. Devall Chicago-KentCollegeofLaw,Chicagol SponsoredBy:DRI

Edward DuttonPark District Risk Management Agency, Lisle

John EggumForan Glennon Palandech Ponzi & Rudloff, P.C., Chicago

Jon EleniusCNA Insurance Company, Chicago l SponsoredBy:DRI

Ashley M. FeltonGordon Rees Scully Mansukhani LLP, Chicagol SponsoredBy:DRI

Lynn M. GeerdesClausen Miller, P.C., Chicago l SponsoredBy:DRI

Keithan Hendrick University of Illinois College of Law, Urbanal SponsoredBy:DRI

Katherine A. JonesChristensen Ehret, Chicago l SponsoredBy:DRI

Corinne M. KoopmanLaBarge, Campbell & Lyon, LLC, Chicago

Marc S. LauermanGrippo & Elden, Chicago l SponsoredBy:DRI

Valerie C. LengerichSwanson, Martin & Bell, LLP, Chicago l SponsoredBy:DRI

Jeffrey MarksBusse, Busse & Grassé, P.C., Chicago

Fiona McEntee McEntee Law Group, Chicagol SponsoredBy:DRI

Lindsey T. MillmanLipe Lyons Murphy Nahrstadt & Pontikis Ltd., Chicago

Ashleigh Morpeau Northwestern University School of Law, Chicagol SponsoredBy:DRI

John P. O’BrienRobert T. Varney & Associates, Bloomington

Thomas L. O’CarrollHinshaw & Culbertson, LLP, Chicagol Sponsoredby:David H. Levitt

Michael O’ConnellPretzel & Stouffer, Chartered, Chicago

Neil R. PandeyCremer, Spina, Shaughnessy, Jansen & Siegert, LLC, Chicagol Sponsoredby:Nicole D. Milos

Nikita Patel Northwestern University School of Law, Chicagol SponsoredBy:DRI

Jennifer Ries-BuntainHall Prangle & Schoonveld LLC, Chicago l SponsoredBy:DRI

Blake RoyallNorthwestern University School of Law, Chicago l SponsoredBy:DRI

Elyse M. RyanHinshaw & Culbertson LLP, Chicago l SponsoredBy:DRI

Jacqueline M. Satherlie KopkaPinkusDolin,BuffaloGrovel SponsoredBy:DRI

Lena Shapiro University of Illinois College of Law, ArlingtonHeightsl SponsoredBy:DRI

Sadiq M. ShariffQuinn, Johnston, Henderson & Pretorius, Peoria

Jacqueline B. SharuziHall Prangle & Schoonveld, Chicago l SponsoredBy:DRI

Eva Shonuga The John Marshall Law School, Chicagol SponsoredBy:DRI

Samantha L. SingerThe John Marshall Law School, Chicago l SponsoredBy:DRI

Andrew J. TessmanGreensfelder, Hemker & Gale, P.C., Belleville

Michael TorenNorthern Illinois University, DeKalbl SponsoredBy:DRI

Leslie M. WarrenSandberg Phoenix & von Gontard, P.C., St.Louis

Emily M. WestfallSegal McCambridge, Chicago l SponsoredBy:DRI

Ryan Wheeler Swanson, Martin & Bell, LLP, Chicago l SponsoredBy:DRI


Notice of Election

In accordancewith theBylaws oftheIllinoisAssociationofDefenseTrialCounsel,anelectionmustbeheldtofillthe vacancies of the following six (6)directors whose terms expire in 2015.

ThefollowingsixDirectors’ termswill expire at theAnnualMeeting inJune2015.

Joseph A. Bleyer, Bleyer & BleyerR. Mark Cosimini, Rusin &

Maciorowski, Ltd.Terry A. Fox, SmithAmundsen, LLC

Jennifer B. Groszek, Resolute Management, Inc.

Al J. Pranaitis, Hoagland, Fitzgerald & Pranaitis

Tracy Stevenson, Robbins, Salomon & Patt, Ltd.

Recommendations fornominations of six (6) personsto be elected to the Board of

Directors are now being solicited from the general membership.

All individual members of theAssociation are eligible for election totheBoardofDirectorsunlessotherwiseexcluded by the Bylaws. Corporate,Educator, andLawStudentmembersarenoteligibletoserveontheBoardofDirectors.

Nominating Petition SampleWe,theundersigned,herebydeclarethatwearemembers

ingoodstandingoftheIllinoisAssociationofDefense

TrialCounsel.We,theundersigned,furthernominate(nameofperson)of

(firmname,address,city, state,zipcode) for thepositionof

DirectoroftheIllinoisAssociationofDefenseTrialCounsel.

John Doe (signature) Jane Doe (signature) Jack Doe (signature) Datedthis______dayof__________________,20__.

Statement of Availability and

Commitment Sample

I, ___________________________________________,

herebydeclarethatIamamemberin

goodstandingof

theIllinoisAssociationofDefenseTri

alCounselandIdo

herebywarrantandaffirmmyabilitya

ndcommitmentto

serveactivelyontheBoardofDirector

softheIllinois

AssociationofDefenseTrialCounsel.

The Board of Directors shall berepresentative of all areas of theStateofIllinois,andtothisend,twoDistrictsare declared: “CookCounty,” and forallremainingcounties,“Statewide.”Nomorethanfourofthesixdirectorselectedeachyear shall officewithin the sameDistrict, and regardless of votes cast,onlythefourpersonsreceivingthemostvotesmay be elected fromwithin theDistrict.IfallindividualmembersfilingNominatingPetitionsarefromthesameDistrict,onlyfourshallbeelectedandtheboardshallseekoutandappointtwodirectorsfromtheotherDistrict.

Nomorethantwovotingmembersof thecombinedExecutiveCommitteeandBoardofDirectorsshallbepartnersor associates or otherwise practice togetherinthesamelawfirm.

ThefilingofaNominatingPetitionforelectionasadirectorshallconsistof:

n The Nominating Petition. Each indi-vidualnominatedmustbesupportedbythesignaturesofthree(3)membersin good standing.

n A statement by thatmember of hisavailability and commitment to serve actively ontheboard.

n A head and shoulders photo (highresolutionjpgformatpreferred).

n A short biography (1-2 paragraphsmaximum).

n A statement of nomore than 200wordsonwhyyoushouldbeelectedtotheBoardofDirectors.

A sample copyof theNominatingPetition and Commitment to Serve Statementare includedbelowforyourreference.

Nominationsmust be sent elec-tronically to IDCSecretary/TreasurerBradley C. Nahrstadt, Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd. at [email protected] IDCExecutiveDirector Sandra J.Wulf, CAE, IOMat [email protected] Nominations must be accompanied with the five items listed above. All candidateswill befeaturedwiththeirbiography,statementof candidacy and picture in the IDC Quarterly,andthissamefeaturewillbesenttothemembershipifmorethansixpetitions are received.

All nominating petitionsmust bereceivedbyFriday, March 27, 2015.

All candidateswho have filed acompletenominatingpetitionareeligibletoreceiveanelectroniccopyoftheIDCmembershiplisting,uponrequest.

Datedthis_______dayof__________

__________,20__.

_______________________________________________

Signature

http://lipelyons.com

http://iadtc.org





TheIllinoisAssociationofDefenseCounselandtheIllinoisInsuranceAssociation are proud to present theAnnualSpringSymposium.TheSymposium,tobeheldFriday,April17,2015at theStandardClubofChicagowillfeaturegreatCLEprogramming,anexhibithallandavalu-ablenetworkingreceptiontheeveningofApril16.Wehopeyoucanjoinusforwhatpromisestobeoneoftheyear’sbestconferences.

Symposium Leadership

David H. LevittHinshaw & Culbertson LLP2014-2015 IDC President

Mark SchloemerWestfieldGroup

Events Committee

Jeremy Burton, ChairLipe, Lyons, Murphy, Nahrstadt

& Pontikis, Ltd.

Denise Baker-SealBrown & James, P.C.

Kimberly A. DavisMomkus McCluskey LLC

James P. DuChateauJohnson & Bell, Ltd.

Ryan M. FrierottGoldberg Segalla LLP

Matthew L. JohnsonJohnson & Bell, Ltd.

Scott D. StephensonLitchfieldCavoLLP

Heather R. WattersonCNA


Spring Symposium | continued

SCHEDULE

Thursday, April 16, 20154:30–6:30p.m. IDCAfterHoursCocktailReception–Location TBA Friday, April 17, 20158:45–9:00 OpeningRemarks

9:00–9:45 Mind the Gaps! Coverage for Cyber Liability Claims under CGL and Cyber Liability Policies

Presented by: John D. Hackett and Jamie L. Hull , Cassiday Schade LLP

9:45–10:30 Case Updates: Tort & Insurance Law TortLawUpdate:Justin K. Beyer, Seyfarth Shaw LLP InsuranceLaw:James P. DuChateau, Johnson & Bell, Ltd.

10:30–10:45 RefreshmentBreak

10:45–11:45 Ethics of Social Media Presentedby:Kelly E. Purkey and Alexander Sweis, McKenna

Storer

11:45–12:15 Lunch

12:15–1:15 Interplay Between CPT Coding and Medical Bills Presented by:Vicki Schweitzer,RN,BSN,CHCQM,CPC,

ExamWorksReviewServices

1:15–2:15 Recent Developments in Employee/Independent Contractor Law Presentedby:Rachel B. Cowen, DLA Piper

2:15–2:30 RefreshmentBreak

2:30–3:15 Panel Discussion Featuring Plaintiff & Defense Counsel on Illinois Practice Development

Presentedby:Colin H. Dunn, CliffordLawOffices and Bradley C. Nahrstadt, Lipe, Lyons, Murphy, Nahrstadt & Pontikis, Ltd.

3:15–4:15 Understanding and Navigating Illinois Ediscovery Rules Presentedby:Steven M. Puiszis, Hinshaw & Culbertson LLP

Continuing Legal Education CreditTheprogramhas been approvedby the IllinoisMCLEBoard for 6.25hours ofcontinuing legal education (CLE) credit.Wewill apply for 1.0 hours of Illinoisprofessionalismcredit.WewillapplyforthefollowingCLEcreditinotherstates:

Indiana 6.25CLE;1.0Professionalism Missouri 7.5CLE;1.2Professionalism Wisconsin 7.5CLE;1.2Professionalism

Symposium RecordingIfyouareunabletoattendtheSymposiumonApril17,pleaseconsiderpurchasingacopyoftherecordedprogram.Pleasecon-tacttheIDCofficeatidc@iadtc.org or 800-232-0169formoreinformation.

Seminar FeesPrivate Practice AttorneysIDCMembers ......................$195*Non-Members .....................$295*

Governmental Attorneys .........$145

Insurance or Corporate Professionals ..........................$75

Judges and Law School Students ..................................$25

*We are pleased to extend a specialregistrationfeeofjust$50forallclientsof Private Practice Attorneys.

RegistrationfortheSymposiumincludesSymposiummaterials,ContinuingLegalEducationCredit,lunch,arefreshmentbreakandgreatnetworkingopportunitiesatourcomplimentaryCocktailRecep-tiononThursday,April16.

Refund PolicyRefundsmust be requested inwritingandwillbemadeaccordingtothefol-lowingschedule:

100%Refund–ThroughMarch17,201550%Refund–March18-April2,2015

NoRefund–April3-18,2015

Substitutionsforyourregistrationmaybemade.However, only one copy ofseminarmaterialswill be offered perregistration.Pleasesubmitsubstitutioninformationinadvanceoftheevent.


http://iadtc.org



Payment Information❑ My check, number is enclosed for $ .

❑ Please charge $ to my: ❑ Visa ❑ MasterCard ❑ AmEx

Card Number: Exp. Date: / Security Code:

Name as it appears on credit card:

Credit Card Billing Address:

Badge Name:

Firm:

Address:

City, State, Zip Code:

Direct Line: ( ) Email:

ARDC Number: IL: MO: IN: WI:

Special Dietary/Accessibility Needs:

All Private Practice Attorneys may bring a client for a reduced registration fee of $50. Please list your client’s name and contact information below. Indicate here if you will NOT have a guest in attendance .

Client Name: Direct Line: ( )

Company:

Address:

City, State, Zip Code:Email:Special Dietary/Accessibility Needs:

s

Please complete this registration form and return it as soon as possible to:Illinois Association of Defense Trial Counsel ■POBox588■Rochester,IL62563-0588

2015 Spring SymposiumApril 17, 2015 ■ Standard Club of Chicago

LiveSeminar Fees Presentation

Private Practice Attorneys IDC Members $195* Non-Members $295*Governmental Attorneys $145 Insurance or Corporate Professionals $75Judges & Law School Students $25

4

*Wearepleasedtoextendaspecialregistrationfeeofjust$50forallclients of Private Practice Attorneys.

(Do Not Fax or Email Credit Card Information)

Questions?Phone:800-232-0169 ■ Fax:866-230-4415 ■ Email:[email protected]

REGISTRATION

http://iadtc.org



68- | IDC QUARTERLY | Third Quarter 201354

Prefix First Middle Last Suffix DesignationFirmorGovernmentAgencyAddressCity State ZipCode CountyFirmorAgencyLine DirectLine FaxLineEmail WebsiteAreaofPractice #ofAttorneysinFirmIDCSponsorNameandFirmLawSchool AdmittedtotheBarintheStateof Year ARDC#HomeAddress City,State,ZipCodeHomePhone AlternateEmailAddress

Illinois Association ofDefense Trial Counsel MEMBERSHIP APPLICATION

MembershipintheIllinoisAssociationofDefenseTrialCounselisopentoIndividuals,Corporations,Educators,andLawStudents.Foralistofqualifications,visitwww.iadtc.orgorphonetheIDCofficeat800-232-0169.ApplicantsshallbeadmittedtomembershipuponamajorityvoteoftheBoardofDirectors.

Iam(Weare)applyingformembershipasa(an)(SelectOnlyOne):

InadditiontojoiningtheIDC,youcantakeadvantageoftheDRIFreeMembershipPromotion!AsanewmemberoftheIDCandifyou’veneverbeenamemberofDRI,youqualifyfora1yearfreeDRIMembership.Ifyouareinterested,pleasemarktheboxbelowandwewillcopythisapplicationandsendittoDRI.Also,ifyouhavebeenadmittedtothebar5yearsorless,youwillalsoqualifytoreceiveaYoungLawyerCertificatewhichallowsyouonecomplimentaryadmissiontoaDRISeminarofyourchoice.m Yes,IaminterestedintheFreeDRIMembership!

Individual Applicant Information – Attorneys & Governmental Attorneys

Prefix First Middle Last Suffix DesignationLawSchool AnticipatedGraduationDateAddress City, State, Zip Code Email Address Phone

Race Gender Birth Date

IDCiscommittedtotheprincipleofdiversityinitsmembershipandleadership.Accordingly,applicantsareinvitedtoindicatewhichoneofthefollowingmaybestdescribethem:

(Application continued on next page)

IndividualAttorney,inpractice: GovernmentalAttorney,inpractice: Corporation,with:m 0-3years($100) m 0-3years($75) m 1-2Affiliates($250)m 4-5years($150) m 4-5years($100) m 3-5Affiliates($500)m 6-9years($225) m 6-9years($160) m 6-10Affiliates($750)m 10+years($250) m 10+years($190) m 11-15Affiliates($1,000) m 16-20Affiliates($1,500)mStudent($20) mEducator($75)

Corporate Applicant Information

Biographical Information

Free DRI Membership

Educator and Law Student Applicant Information

CorporationName BusinessorServiceProvidedAddress City, State, Zip CodePhone Fax WebsiteOnaseparatesheetofpaper,pleaselistallindividualswhoaretobeaffiliatedwiththisCorporateMembership.BesuretoincludeName,Address(ifdifferentthanthecorporateaddress),Phone,Fax,andEmailAddressforallaffiliates.


80 | IDC QUARTERLY | Fourth Quarter 2013 57

AllSubstantiveLawCommitteesareopentoanyIDCmember.EventandAdministrativeCommitteesaregenerallysmallcommitteesandmembersareoftenappointedbytheBoardofDirectors.SubstantiveLawCommitteesareresponsibleforwritingtheMonographfortheIDC QuarterlyandmaysubmitotherFeatureArticles.CommitteeskeepabreastofcurrentlegislationandworkwiththeIDCLegislativeCommittee,aswarranted.Committeesalsoserveasaresourcetoseminarcommitteesforspeakersandsubjectsand,ifandwhencertainissuesarisethatwouldwarrantaspecific“topical”seminar,thecommitteemayproducesuchaseminar.

Pleaseselectbelowthecommitteestowhichyouwouldliketoapplyformembership:

Substantive Law Committees m Commercial Law m Employment Law m Local Government Law m ConstructionLaw m InsuranceLaw m Tort Law

Administrative Committees mEvents mMembership mLegislative mYoungLawyers

Event Committee m Events

Membership CommitmentByprovidingafaxnumberandemailaddressyouareagreeingtoreceivefaxesandemailsfromtheassociationthatmaybeofacommercialnature.Icertifythat:

ThankyouforyourinterestinjoiningtheIllinoisAssociationofDefenseTrialCounsel.YourapplicationwillbepresentedtotheBoardofDirectorsforapprovalattheirnextregularmeeting.Untilthattime,ifyouhaveanyquestions,pleasecontacttheIDCofficeat:

Illinois Association of Defense Trial CounselPOBox588•Rochester,IL62563-0588•800-232-0169•217-498-2649•www.iadtc.org

Membership InvestmentMembershipDues .................................................................................................... $

VoluntaryPoliticalActionCommitteeDonation* .................................................. $Total Amount Due ................................................................................................... $

COMMITTEE INVOLVEMENTIllinois Association ofDefense Trial Counsel

* Recommended Amount: <3yearsinpractice ......... $15 4-5 years in practice ........ $25 6-9yearsinpractice ........ $55 10+ years in practice ....... $75

Payment Informationm Enclosedischeck#intheamountof$.m Visa m MasterCard m AmEx

m PleasechargeCreditCard# intheamountof$ Exp.Date/

NameasitappearsontheCard CardSecurityCode

Billing Address City, State, Zip Code

Signed Date

mAs an Individual Attorney,Iamactivelyengagedinthepracticeoflaw,thatatthepresenttimeasubstantialportionofmylitigationpracticeinpersonalinjuryandsimilarmattersisdevotedtothedefense.

mAs a Corporate Member,wewillsupportthepurposeandmissionoftheAssociation.

mIamcurrentlyaProfessor or Associate ProfessoroflawatanABAaccreditedlawschool.

mIamcurrentlyaStudent enrolled in an ABA accredited law school.

PleaseNote:IDCduesarenotdeductibleasacharitablecontributionforU.S.federalincometaxpurposes,butmaybedeductibleasabusinessexpense.TheIDCestimatesthat2.5%ofyourduesarenotdeductiblebecauseoftheIDC’slobbyingactivitiesonbehalfofitsmembers.

— Do Not Fax or Email Credit Card Information —


What is the IDC?We are the premier association of attorneys in Illinois representing business, corporate, profes-sionals, and other individual defendants in civil litigation. The IDC is an exceptional community of defense attorneys dedicated to improving the judicial system and the practice of law.

The IDC is a reasoned and independent voice for fairness in the legal system. We work with the business, insurance, and medical communities to ensure a fair and equal justice system for all litigants. The IDC isn An advocate for the legal professionn 1,000 members strongn Looked to for advice and support by the judiciaryn A resource for legislators

How is the IDC Making aDifference?The IDC strengthens the practice of law and improves the skills of lawyers that defend individuals and businesses in Illinois. We enhance the knowl-edge of defense attorneys through our nationally respected publication the IDC Quarterly and the new Survey of Law, by our continuing legal education programs, and committees that focus on specialty practice areas like Civil Practice; Commercial Law; Employment Law; Local Government Law; and Tort Law.

The IDC is working to protect the Illinois legal sys-tem, demanding a level playing field and resisting attempts to dismantle the jury system. The IDC is a respected resource providing:

n Fact sheets on the impact of pending litigationn Expertise to legislative committees and political leadersn Amicus briefs on legal issues pending before the

Illinois reviewing courts

IDC members are as diverse asthe clients we representFrom big firms and small and all corners of the state, attorneys join the IDC based on our common issues and a common desire to improve our legal system.

Over the past five decades, we have grown from an organization of mostly insurance defense attorneys to a broad-based association of litigators who represent an entire range of business and industry throughout Illinois and the United States. The diversity of our membership and clientele informs our independent and balanced view of Illinois’s judicial system and the litigation that affects it. What are Our Core Values?n To promote and support a fair, unbiased, and

independent judiciaryn To take positions on issues of significance to

our membership, and to advocate and publicize those positions

n To promote and support the fair, expeditious, and equitable resolution of disputes, including the preservation and improvement of the jury system

n To provide programs and opportunities for professional development to assist members in better serving their clients

n To increase its role as the voice of the defense bar of Illinois, and to make the IDC more relevant to its members and the general public

n To support diversity within our organization, the defense bar, and the legal profession

ILLINOISASSOCIATIONOFDEFENSETRIALCOUNSELLAW• EQUITY • JUSTICE

of EventsCALENDARl February 19 IDC / Illinois Judges Association Joint Seminar •Hinshaw&CulbertsonLLP• Chicago

l February 20 Executive Committee & Board Meeting • Location TBA • Chicago

l March 24 Executive Committee & Board Meeting •Hinshaw&CulbertsonLLP•Springfield

l March 24 Legislative Reception •SangamoClub•Springfield

l April 16 Executive Committee & Board Meeting •Heyl,Royster,Voelker&Allen,P.C.• Chicago

l April 17 Spring Symposium •StandardClub• Chicago

l May 15 Executive Committee & Board Meeting •HeplerBroomLLC• Chicago

l June 5 Committee Boot Camp • Location TBA • Chicago

l June 26 Executive Committee & Board Meeting • Location TBA • Chicago

PresortedStandard

U.S. PostagePAID

PermitNo.650Springfield,IL

ILLINOIS ASSOCIATIONOFDEFENSETRIALCOUNSELP.O.Box588Rochester,IL62563-0588

Documents

c919297.r97.cf2.rackcdn.comc919297.r97.cf2.rackcdn.com/u5lqfhby0ahpjjltlinjfg7mndiy9f... · For Your Consideration: The Current State of Post-Employment Restrictive Covenants in Illinois