The Appellate Strategist

Illinois Supreme Court: A First Look at the Questions Log for 2013

Kirk Jenkins — Wed, 15 May 2013 10:40:36 -0800

As I’ve written elsewhere, the Illinois Supreme Court tends to be what appellate attorneys call a “hot bench,” with questions potentially coming from any or all of the Justices in any given argument. With the May term having begun this morning with the argument in Relf v. Shatayeva, let’s take an early look at the question patterns for the first two terms of 2013.

In January and March, the Court heard argument in a total of eleven civil cases (only nine appellees made appearances however, slightly skewing the numbers). Not surprisingly, the level of questioning from the Justices varies widely from case to case – from a high of 34 questions in Mayfield v. Mayfield and 27 in VC&M v. Andrews, to lows of 8 each in DeHart v. DeHart and Russell v. SNFA. The same is true of individual Justices: each Justice has been active in some cases and less so in others. With only two of the eleven cases decided so far, it’s too early to attempt to draw even tentative conclusions about question patterns and decisions, but – again not surprisingly – the two cases already handed down are the ones that drew the fewest questions from the Court: DeHart and Russell.

Before presenting the data, one caution: as most appellate court watchers around the country know, counting questions in an oral argument is a somewhat subjective process. For example, when a Justice begins a question, counsel interposes a few words, and the Justice then continues or clarifies the point, is that one question or two? For that reason, another analyst’s numbers might vary slightly from those below, but the patterns should be the same. The chart below lists total questions to each party from each Justice in civil cases in the January and March terms. The numbers in parentheses show the number of times each Justice asked the first question of counsel.

Justices	Burke	Garman	Freeman	Kilbride	Thomas	Karmeier	Theis
Appellant	12 (1)	17 (2)	19 (3)	4	35 (4)	12	12 (2)
Appellee	11 (1)	14 (2)	1	7 (1)	17 (4)	2	10 (1)
Rebuttal	0	1 (1)	0	0	10	6 (2)	11 (1)
Total	23 (2)	32 (5)	20 (3)	11 (1)	62 (8)	20 (2)	33 (4)

The California Supreme Court Confirms the Power of Local Governments to Regulate Medical Marijuana

Michael Walsh — Mon, 13 May 2013 15:09:23 -0800

Few issues have sparked so much debate in so many local governments then how to regulate the medical marijuana industry. Proponents have filed numerous challenges to various attempts by cities and counties, but now the legal, if not the political issue, has been resolved. In the lead case – City of Riverside v. Inland Empire Patient’s Health & Wellness Center, Inc. – the unanimous Supreme Court has confirmed the power of local authorities to regulate, and even ban, facilities that distribute medical marijuana. The Court noted that the Compassionate Use Act of 1996 and the Medical Marijuana Program simply “removed certain state law obstacles from the ability of qualified patients to obtain and use marijuana for legitimate medical purposes.” This is not a mandate that such facilities must be allowed, nor an attempt by state government to dominate the field, and therefore these state laws do not preempt the constitutional right of cities and counties to exercise their police powers to regulate such facilities, or even ban them. As such, the City of Riverside ordinance which declares all marijuana dispensaries as a banned public nuisance, and which also bars any use which violates federal or state law, is valid. This limited view of these state laws as being “incremental steps” to increase access to medical marijuana, rather than signaling a more expansive reform, is wholly consistent with the Court’s previous ruling in Ross v. RagingWire Telecommunications, Inc. (2008) 42 Cal.4th 920, in which the Court held that the medical marijuana laws did not protect a medical user from being discharged after failing a drug test.

As a result of this ruling, local debates will not necessarily be limited to how to best implement medical marijuana dispensaries. Now, medical marijuana proponents may have to defend the policy of allowing such dispensaries at all, city by city, county by county. However, establishing the power of local authorities to act goes a long way to allowing some resolution to take place. For example, an attempt by Los Angeles to regulate dispensaries in 2010 drew 66 lawsuits and a court injunction, with many of the suits challenging the city’s authority to act. (See, Los Angeles Times, 5/10/13.) Los Angeles was so shell shocked by this debate that it now has three separate measures on the ballot for the upcoming election, each proposing a different set of regulation and taxation policies for dispensaries, in the hopes that the public picks one with sufficient support to at least put some policy in place. However, now that the right to act has been confirmed, perhaps even Los Angeles will be able to reach a decision.

Argument Before Illinois Supreme Court in Performance Marketing Continued to Morning of May 22nd

Kirk Jenkins — Thu, 09 May 2013 10:10:50 -0800

An update on last week’s post on Performance Marketing Association, Inc. v. Hamer: with the posting of the Court’s docket book for the May term, we learned that the oral argument in Performance Marketing has been continued from May 16 to the 9:00 a.m. sitting on Wednesday, May 22^nd.

Although it is virtually certain to go unmentioned, the oral argument in Performance Marketing will take place against the backdrop of U.S. Senate approval of the Marketplace Fairness Act of 2013, which would grant states the authority to require online and catalog retailers to collect sales taxes on sales to in-state buyers, so long as the states have simplified their sales tax laws in one of several ways, and the online merchant has gross annual receipts from nationwide online sales in excess of $1 million. According to news reports, the prospects for passage of the MFA in the House are uncertain.

Are "Click-Through" Internet Marketing Tax Laws Constitutional?

Kirk Jenkins — Wed, 01 May 2013 09:11:53 -0800

Our preview of the oral arguments at the Illinois Supreme Court during the May term concludes with Performance Marketing Association, Inc. v. Hamer. PMA will be heard by the Court during the 9:00 a.m. session on Thursday, May 16.

PMA arises from an amendment to the Illinois Use Tax Act known as the “Click-Through” Act or the “Amazon tax.” Here’s how it works: everyone has seen third-party advertisements on high-traffic websites, inviting visitors to click on the ad to get more information about a product or special deal. Typically, the third-party advertiser pays the owner of the website based on the number of people who “click through” and buy something. And that’s the nexus that the “Click-Through” Act is based on – any website that has one or more contracts with such advertisers who are “located in Illinois” is defined as a “retailer maintaining a place a business in this State.” And that means that as long as the website realizes $10,000 a year in gross receipts from “click-through” commissions, the site has to charge users for state sales taxes.

The Performance Marketing Association is a nonprofit trade association incorporated in Delaware. It’s the largest trade association in the country representing the “performance marketing” industry – businesses who use marketing methods similar to the internet “click-through” ad. Performance marketing has become relatively commonplace; according to the complaint, there are over 200,000 online publishers nationwide, and over 5,000 advertisers using or supporting performance marketing arrangements.

After the Illinois statute was passed, the PMA filed suit in Cook County Circuit Court. In the complaint, PMA alleges that many internet-based businesses have responded to the Act by simply cancelling all contracts with Illinois publishers. As a result, the plaintiff alleges that Illinois-based publishers have lost millions, and many will go out of business. According to PMA, the “Click-Through” Act violates the dormant Commerce Clause by burdening interstate commerce and attempting to regulate non-Illinois commerce, as well as violating the federal Internet Tax Freedom Act, which bans all state taxes which target electronic commerce for special burdens. The complaint sought a declaratory judgment enjoining enforcement of the Act, as well as an award of costs and fees.

On May 7, 2012, the Circuit Court granted PMA’s motion for summary judgment, finding that (1) the Act failed the “substantial nexus” requirement for permissible regulations of interstate commerce, and therefore violated the Commerce Clause; and (2) because the Act burdened electronic commerce, it was preempted by the Internet Tax Freedom Act. Because the order struck down a statute on constitutional grounds, the State’s appeal bypassed the Appellate Court and went directly to the Supreme Court.

Not surprisingly, PMA has attracted considerable notice, including an amicus brief from the Multistate Tax Commission, the administrative agency for the Multistate Tax Compact. According to the Commission’s brief, the Act cannot be facially unconstitutional because it does not, by its terms, discriminate against interstate commerce. Nor does the Act violate the Internet Tax Freedom Act, according to the Commission, since the Act’s expanded definition of retailers subject to sales tax includes vendors who use any type of in-state representatives soliciting business on a commission basis, rather than singling out electronic publishing for special burdens.

We expect PMA to be decided in the fall.

Divided Supreme Court Upholds Chicago Condo Association Ordinance

Kirk Jenkins — Fri, 26 Apr 2013 19:15:54 -0800

Yesterday, the Illinois Supreme Court filed its long-awaited opinion in Palm v. 2800 Lake Shore Drive Condominium Association. Although on its face, Palm relates only to the enforceability of a Chicago city ordinance on document requests to condominium associations, if the dissenters on the Court are correct, it may have long-lasting impact on the Court’s construction of home rule authority.

Palm began in 1999, when the plaintiff sent the then-current condo association board a demand for production of documents, claiming they were necessary for him to investigate possible wrongdoing in several different areas. When the plaintiff’s request was denied, he sued.

The problem in Palm was simple: which law governed, the Chicago ordinance, which gave residents a nearly unrestricted right to demand production of documents, or state law, which limited the scope of such requests and gave associations more time to respond?

After a string of motions (and three separate dismissals without prejudice), the Circuit Court held that the Chicago ordinance was a valid exercise of the City’s home rule authority. The court granted in part the plaintiff’s motion for summary judgment and ordered production of the documents plaintiff was seeking. The plaintiff then petitioned for an award of attorney fees. Although plaintiff acknowledged that he had paid his attorney $200 per hour, he submitted an expert affidavit stating that $300 was well within the market range. The court awarded the fees, approving the $300 rate, and certified the matter for immediate appeal. The Appellate Court affirmed.

In an opinion for the Court by Chief Justice Kilbride, the Supreme Court affirmed. “Home rule is based on the assumption that municipalities should be allowed to address problems with solutions tailored to their local needs,” the Chief Justice wrote. Although the General Assembly may preempt the exercise of home rule authority, it must do so expressly; the home rule clauses of the state constitution are intended to “eliminate or at least reduce to a bare minimum” instances of preemption by “judicial interpretation of unexpressed legislative intention.”

Home rule ordinances are evaluated according to a two-step test, the majority held. First, the court determines whether the disputed ordinance pertains to local government and affairs. If so, the court then determines whether the General Assembly has preempted local power in the area. If it has not, the home rule jurisdiction may act in the area, even if the General Assembly has also legislated on the same issue.

Both sides agreed that the state statutes (the General Not For Profit Corporation Act and the Condominium Property Act) and the city ordinance at issue in Palm were completely irreconcilable. In the defendant’s view, that was enough to doom the ordinance as a permissible exercise of home rule authority, but the Court disagreed. Even though it was impossible to comply with both the state and city statutes, since the General Assembly had not expressly preempted home rule authority as part of the statutes, the city ordinance governed, and the plaintiff had a right to the documents he sought.

The majority then turned to the lower court’s attorney fees award. According to the city ordinance, plaintiff was entitled to recover “his reasonable attorney fees.” Construing the phrase as referring to whatever the local market rate was, the Court held that the plaintiff could legitimately recover an award of $300 per hour, despite having paid his attorney only $200 per hour. The Court rejected defendant’s argument that this was an unjustified windfall, pointing to testimony that the plaintiff would receive reimbursement only for his actual payments, and the attorney would retain the rest.

Justice Thomas filed a special concurrence in order to directly respond to the dissent. He began by sharply disputing the dissent’s conclusion that the city ordinance was invalid because it didn’t relate to the City’s local government and affairs, pointing out that not only hadn’t the defendant raised the argument, it had criticized the City of Chicago (which had intervened below to defend its ordinance) for even mentioning it. Even though the issue was not properly before the Court, Justice Thomas argued that the ordinance was well within the scope of home rule power. “[T]he dissent’s arguments,” he wrote, “show that, without a doubt, the dissenting justices are simply not comfortable with the system of home rule established by the Illinois Constitution.” As for the dissent’s objections to requiring the General Assembly to recite “magic words” before the Court would find local law preempted, Justice Thomas argued that the requirement came from the constitution, the Court’s own precedents, and the General Assembly itself. “If the legislature wants this to be an area of exclusive state control,” Justice Thomas concluded, “then the legislature can make it such with a single sentence.”

Justice Charles Freeman filed a lengthy dissent, with Justice Anne Burke joining. According to the dissenters, the decision “marks an unnecessary departure from settled law in two important areas – home rule jurisprudence and condominium law.”

Even though the defendant hadn’t challenged the ordinance on the grounds that it didn’t pertain to local government and affairs, the dissenters argued that the Court must address the issue, and it was in fact dispositive. The test, they wrote, for determining “whether a particular problem is of statewide rather than local dimension” involved considering “the nature and extent of the problem, the units of government which have the most vital interest in its solution, and the role traditionally played by local and statewide authorities in dealing with it.”

The legislative debates surrounding the Condominium Property Act made it clear, the dissenters argued, that the General Assembly considered the issue of demands for documents served on condominium associations to be a statewide problem requiring a statewide, uniform solution. Since the City ordinance at issue did not pertain to local government and affairs, it exceeded the scope of permissible home rule and was unenforceable. And even if the City ordinance were enforceable, Justices Freeman and Burke disagreed with the majority’s ruling with respect to attorney fees too. Since the ordinance authorized the homeowner’s recovery of “his reasonable attorney fees,” the dissenters concluded that it merely authorized recovery of what the homeowner had paid, and no more.

The dissent closes with a call for legislative intervention: "Given the importance of balancing the rights of individual condominium owners against the right of association members as a whole, I urge the General Assembly to take action in this area."

Illinois Supreme Court to Hear Five Civil Cases In May

Kirk Jenkins — Thu, 25 Apr 2013 10:12:09 -0800

On Tuesday, the Illinois Supreme Court announced its oral argument calendar for the May term, and it includes arguments in five civil cases. The cases, with the questions presented in each, are:

Wednesday, May 15:

Relf v. Shatayeva, No. 114925 - Where a plaintiff files suit, unaware that defendant had died more than six months earlier, may the plaintiff substitute the defendant's personal representative, or is the action barred? Our detailed summary of the facts and Appellate Court opinion in Relf is here.

Thursday, May 16:

Evanston Insurance Co. v. Riseborough, No. 114271 - Does the statute of repose for actions against attorneys “arising out of an act or omission in the performance of professional services” apply only to actions for professional negligence brought by a former client of the attorney? Our detailed summary of the facts and Appellate Court opinion in Evanston Insurance is here.

Wednesday, May 22:

The Board of Education of Peoria School Dist. No. 150 v. The Peoria Federation of Support Staff, Security/Policemen’s Benevolent and Protective Association Unit No. 114, No. 114853 -- (1) Are the 2010 amendments to the Public Labor Relations Act unconstitutional special legislation? (2) Are plaintiff's negotiations with its security officers governed by the Education Labor Relations Act or the Public Labor Relations Act? Our detailed summary of the facts and Appellate Court opinion in The Board of Education is here.
Prazen v. Shoop, No. 115035 – Did the Board of Trustees of the Illinois Municipal Retirement Fund exceed its powers by ordering the plaintiff's age enhancement and creditable services pension enhancements forfeited when the company he owned entered into a services contract with his former employer? Our detailed summary of the facts and Appellate Court opinion in Prazen is here.

The final case on the Court’s civil docket for this term is Performance Marketing Association, Inc. v. Hamer, No. 114496, a direct appeal from the Cook County Circuit Court of that Court’s order granting summary judgment and striking down the state internet “click-through” tax law as a violation of the Commerce Clause. We’ll have much more to say about Performance Marketing in our preview of the argument tomorrow.

Each of the Court’s sessions will begin at 9:00 a.m.

The Kilbride Court After Two Years: A Pragmatic and Collegial Team

Kirk Jenkins — Thu, 25 Apr 2013 09:12:21 -0800

(Note: The following post was originally published on Law360.com on January 24, 2013.)

Reviewing the videotape of every civil oral argument at the Illinois Supreme Court, as I do for my firm's blog The Appellate Strategist, you can't help but be impressed by the collegiality of the Illinois Supreme Court. At many courts of last resort, counsel is never entirely sure whether some of the more pointed questions are intended for counsel him- or herself, or instead directed at one of the other justices, either as an attempt to persuade or to challenge. None of that is evident watching the Illinois Supreme Court's arguments.

To be sure, the Court is nearly always a "hot bench," as appellate lawyers say; questions can come from any, and sometimes from all directions. But the Court's questions always show a deep grasp of the record and a concern not merely for the implications of the legal rule at issue for future cases, but for doing justice in the case before the Court. And in the Court's opinions, the occasional sharply worded dissent stands out all the more for how unusual it is in the Court's jurisprudence.

The Kilbride Court began in Illinois a little more than two years ago, when Chief Justice Thomas L. Kilbride succeeded Chief Justice Thomas R. Fitzgerald, and Justice Mary Jane Theis joined the Court, taking the retiring Chief Justice's seat. In the twenty-six months since, the Court has decided eighty civil cases (disregarding attorney disciplinary and juvenile matters).

In reviewing those cases, one statistic leaps out, confirming the impression of a highly unified court: 67.5% of the Court's civil decisions have been unanimous. Significant dissent is rare: 12.5% of the Court's decisions have had one dissenter, 12.5% have had two, and only 7.5% have involved a 4-3 split. But this overall measurement masks trends in the Court's terms; for 2012, only 56.4% of the Court's decisions have been unanimous. Before the Court decided nine of its last twelve civil cases of 2012 unanimously, the Court had decided only 48.1% of its 2012 civil cases without dissent. During that same uncharacteristically contentious period, 37.0% of the Court's decisions featured two or three dissenters.

Perhaps the most frequently cited statistic among U.S. Supreme Court watchers is the reversal rates for the Federal Circuits. Indeed, those statistics have become something of a political football, with some Senators arguing that the Ninth Circuit's reversal rate suggests an ideological conflict between the Ninth Circuit and the Supreme Court. So what are the reversal rates in Illinois?

The overall numbers are not surprising. Most appellate lawyers know that appellate courts of last resort typically do not review lower courts' decisions in order to affirm. The Illinois Supreme Court is no different; over the past two years, the Court has reversed in 66.2% of its civil cases.

But trends emerge when we consider the individual districts. Nearly half of the Kilbride Court's civil docket -- 43.8% -- has come from Chicago's First District. The First hasn't fared well; five of the six Divisions have a reversal rate of 60% or more, topping out with an 85.7% reversal rate in the Division Two. The First District has had a particularly rough 2012, with a 76.5% reversal rate. The Fifth District, which includes Madison and St. Clair Counties, both sharply criticized as pro-plaintiff environments for tort cases in recent years by the American Tort Reform Foundation, has seen 80% of its civil decisions reversed by the Supreme Court. Two other Districts are similar: two thirds of the decisions reviewed from the Second and Third Districts have been reversed.

But the anomaly comes from the Fourth District, which centers on the state capital of Springfield. The Court has heard eight civil cases from the Fourth District, four involving government parties. In six of those eight cases (including three government wins) the Supreme Court has affirmed: an impressive 75% affirmance rate.

To learn more about the Justices' inclinations, we calculate the average votes gained by each Appellate Court's opinions before the Supreme Court. The First and Second Divisions of the First Districts have fared badly, with their opinions gathering an average of only 1.4 votes - including seven unanimous reversals (usually regarded as the ultimate indignity except at the Kilbride court, which has reversed unanimously in 43.8% of its civil cases). The Fifth and Sixth Divisions of the First District have done significantly better, with their opinions gaining an average of 3.5 and 2.1 votes, respectively, although the Fifth Division’s figure is skewed – its four cases have seen two unanimous affirmances and two unanimous reversals. The Fourth District, with its 75% affirmance rate, gets an average of 3.4 votes per decision.

Discerning swing votes in a Court so often in complete agreement is difficult, but interesting patterns do emerge. Justice Robert R. Thomas, for example, has voted with the majority in 94.8% of all the Kilbride Court's civil cases. Justices Rita B. Garman and Anne M. Burke are on the winning side nearly as often, voting with the majority 93.8% of the time. Justices Lloyd A. Karmeier and Mary Jane Theis are right behind, voting with the majority 93.6% and 93.3% of the time. Only Chief Justice Kilbride lags behind, voting with the majority "just" 80.0% of the time.

When we limit the sample to non-unanimous cases, our conclusions are further confirmed. Justice Thomas has voted with the majority in 83.3% of all non-unanimous civil decisions. Justices Garman, Burke and Karmeier have voted with the majority in an identical 80.8% of all cases. Close behind is Justice Theis, with 79.2% agreement with the majority. Most often finding themselves in the minority of divided Courts are Justice Charles E. Freeman, who votes with the majority in only 63.0% of all non-unanimous civil cases, and Chief Justice Kilbride, who does so only 42.3% of the time.

Justice Thomas' influence shows up again when we analyze the composition of the Court's occasional closely divided decisions. To date, the Kilbride Court has handed down sixteen decisions with two or three Justices dissenting. Justice Karmeier has voted with the majority in 12 of those 16 decisions – 75%. Justices Thomas, Garman, Burke have voted with the majority 68.8% of the time, and Justice Theis in 62.5% of the cases. On the other hand, Chief Justice Kilbride and Justice Freeman have joined the majority in only 50% of those closely divided decisions. This data suggests the outline of a voting block on the Court, with a solid core of Justices Thomas, Garman and Karmeier, with Justice Burke and Justice Theis serving as the swing votes in close cases.

Join me below the jump for more data on the Court's voting patterns.

In reviewing these sixteen cases, a few substantive patterns emerge. Chief Justice Kilbride took a more plaintiff-friendly position in four closely divided tort cases (Simpkins v. CSX Transportation, Doe-3 v. McLean Co., Kaufman v. Schroeder and Moore v. Chicago Park District), and Justice Garman did so in three, while Justices Burke, Thomas, Karmeier and Theis took the more plaintiff-friendly position in only one of the four cases. Chief Justice Kilbride and Justice Theis both adopted more employee-friendly positions in Chicago Teachers Union v. Board of Education and Speed District 802 v. Warning, and both found standing for opposition groups’ challenge to an environmental delisting petition in Sierra Club v. Illinois Pollution Control Board. The Court took a moderately relaxed attitude in two civil procedure “substance over form” cases in 2012, with Justices Burke, Freeman and Theis expressing willingness to forgive certain procedural defects under defined circumstances in both Downtown Disposal Services v. The City of Chicago and Santiago v. E.W. Bliss Co.

The Court clearly makes an effort to distribute its work evenly. To date, Justice Thomas has written fourteen opinions for the Kilbride Court, Justice Freeman 13, Justices Burke, Garman and Theis 12 each, and Justice Karmeier 11. Not surprisingly, Chief Justice Kilbride and Justice Freeman write most frequently in dissent, with the Chief Justice producing eight civil dissents and Justice Freeman seven. The other Justices write in dissent much less often, with Justice Garman penning four, Justices Karmeier and Theis three each, Justice Burke two and Justice Thomas only one.

When we turn to non-unanimous decisions, the outline of our proposed voting block once again emerges. Justice Burke, one of our swing voters, has written the majority decision in 6 of the non-unanimous civil decisions. Justices Garman and Karmeier have written five and four apiece, respectively. Justice Burke's decisions in non-unanimous cases garner fewer average votes -- 4.8 for Justice Burke to 6.4 for Justice Garman and 5.3 for Justice Karmeier – the result of Justice Burke having written the majority opinion is half of the Court’s 4-3 cases (Justices Garman and Karmeier, on the other hand, have written for the Court in six of the ten two-dissenter cases).

To further study the Kilbride Court's dynamics, we turn to the Justice-by-Justice agreement rates: in what percentage of civil cases where both Justices participated did they vote the same way? Over the past two years, Justice Thomas and Garman have agreed in 96.1% of all civil cases. Justices Thomas and Karmeier have agreed 93.3% of the time, and Justices Garman and Karmeier have voted together 91.0% of the time.

Justice Burke has agreed with Justice Thomas in 89.6% of the Court's civil decisions. She has voted with Justice Garman 87.5% of the time, and with Justice Karmeier 89.7%. Justice Theis, our other proposed "swing" voter for close civil cases, is just behind Justice Burke: 88.9% agreement with Justice Thomas, 89.3% agreement with Justice Garman and 89.0% agreement with Justice Karmeier. Justices Theis and Burke agree 86.7% of the time.

Not surprisingly given the data we considered above, Chief Justice Kilbride's agreement statistics are somewhat lower. The Chief agrees with Justices Burke, Garman, Freeman, Thomas and Karmeier around three quarters of the time (73.3%, 78.7%, 72.6%, 80.8% and 75.7%, to be precise), and with Justice Theis only slightly more often - an 84.3% agreement rate.

The Court's divisions stand out more clearly when we limit our sample to non-unanimous civil decisions. Once again, the core Justices are relatively tightly bunched. Justice Thomas agrees with Justice Garman in 87.5% of such cases, and with Justice Karmeier in 79.2%. Justices Garman and Karmeier agree in 73.1% of the Court's non-unanimous civil cases.

The agreement rates for Justice Burke and Justice Theis seem to reflect the path to a winning majority in close cases. Justice Burke agrees with Justice Thomas 66.7% of the time, and with Justice Karmeier 69.2% of the time in non-unanimous cases. Justice Theis' agreement rates with our core voters in closer cases are almost identical: Justice Thomas, 63.6%; Justice Garman 66.7%, and Justice Karmeier 66.7%. However, Justices Burke and Theis themselves often diverge, showing an agreement rate of only 58.3% in non-unanimous cases.

Once again, agreement rates for Chief Justice Kilbride and Justice Freeman are much lower. The Chief agrees with Justices Garman and Thomas in only two of every five non-unanimous cases (38.5% and 41.7%, respectively), and with three of the remaining Justices significantly less often. The lone exception is Justice Theis, who has agreed with the Chief Justice in 54.2% of non-unanimous cases. Although Justice Freeman seldom votes with the Chief Justice in such cases -- 23.1% agreement - he votes with Justices Garman, Thomas, Karmeier and Theis between forty and fifty-four percent of the time.

Our analysis of the dynamics of the Kilbride Court just past its second anniversary suggests several tentative lessons for counsel: (1) if you prevailed at the Appellate Court, the odds your decision will be reversed are roughly two in three (unless you're coming from the Fourth District); (2) the Court's ultimate decision is quite likely to be unanimous; and (3) if the decision is not unanimous, the Justices most likely to be in the majority are Justices Thomas, Garman, Karmeier and either Burke or Theis.

Genesis Healthcare v. Symczyk: Nearly as Many Questions as Answers

Kirk Jenkins — Tue, 23 Apr 2013 12:45:12 -0800

When the petition for certiorari in Genesis Healthcare Corp. v. Symczyk was granted, it appeared that the Supreme Court was poised to resolve a clear split in the Circuits about the permissibility of “pick off” moves, at minimum for actions under the Fair Labor Standards Act if not, at least by inference, under Rule 23 as well. The Court granted cert on the following question: “Whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff’s claims.”

But when the decision came down early last week, observers were left debating exactly how much the Court had decided, and what the path forward in the lower courts was likely to be.

The FLSA sets federal minimum wage, maximum hour and overtime guarantees which cannot be modified by contract. Although Congress barred traditional Rule 23 class actions under the FLSA in 1947, Congress has provided instead for an FLSA “collective action”: the plaintiff sues on behalf of “all persons similarly situated,” and interested employees must opt-in, rather than opting out.

Symczyk, a registered nurse, filed a collective action FLSA complaint alleging that her employer had deducted meal break times from her paycheck whether or not she had an uninterrupted break. Along with its answer, the defendant served the plaintiff with an offer of judgment under Federal Rule 68, offering the plaintiff all the unpaid wages she was seeking, plus “such reasonable attorneys’ fees, costs, and expenses” as the Court might set. Plaintiff never responded to the offer, and when the time limit ran out, the defendant moved to dismiss on grounds of mootness, the plaintiff having been offered full relief. The district court granted the motion, but the Third Circuit reversed. According to the Third Circuit, even if the individual plaintiff’s claim was mooted by the offer of judgment, the eventual certification of a collective action would relate back to the day the complaint was filed.

In an opinion by Justice Thomas (with the Chief Justice and Justices Scalia, Kennedy and Alito joining), the Supreme Court reversed the Third Circuit. The case was not an appropriate vehicle for resolving the mature split in the Circuits on the issue of whether a collective action plaintiff can be “picked off” by a Rule 68 offer, the majority found. Both the District Court and the Third Circuit had held that Symczyk’s own claim was mooted by the unaccepted offer, and Symczyk had failed to file a cross-petition for certiorari on the point. The plaintiff having waived the point, the majority assumed for purposes of the case – without deciding – that a Rule 68 offer of judgment, whether it’s accepted or not, moots the individual plaintiff’s claim.

Once the majority disposed of that issue, it had little difficulty disposing of the remainder of the case. As we discussed in our detailed preview of Symczyk here, the plaintiffs’ principal argument on appeal was that two 1980 Supreme Court decisions, Deposit Guar. Nat'l Bank of Jackson v. Roper and United States Parole Comm'n v. Geraghty, should be extended from Rule 23 class actions to FLSA collective actions. Roper and Geraghty had both held that under certain circumstances, the mooting of a class representative’s claim does not necessarily moot the action, but the Symczyk majority held that both were distinguishable.

The Roper-Geraghty line of cases, the majority held, turned on the independent legal status of a Rule 23 class once it has been certified. Absent employees who might – or might not – choose to opt in to an FLSA collective action, in contrast, had no such status. The representative plaintiff’s mere interest in continuing with a collective action despite the offer of judgment is not sufficient to overcome mootness. The majority acknowledged that mooting out the current plaintiff’s claim would have the effect of blocking unjoined employees from vindicating any claims they might have in the present suit, but pointed out that there was nothing keeping them from suing on their own.

Justice Kagan dissented, joined by Justices Ginsburg, Breyer and Sotomayor. The dissenters argued that the majority opinion was based on a fallacy: that the unaccepted Rule 68 offer had, in fact, mooted the individual plaintiff’s claim. Given that, in the dissenters’ view, “an unaccepted offer of judgment cannot moot a case,” the remainder of the majority’s decision answered a question that never should have arisen in the first place. Nevertheless, the dissenters made it clear that they disagreed with the majority’s resolution of that issue, arguing that the named plaintiff’s right to represent unjoined employees was just as much a cognizable stake in the action for an FLSA case as the right to represent a Rule 23 class was.

So where does all this leave the law? To be sure, Symczyk has laid to rest the notion that FLSA collective actions are merely Rule 23 class actions under a different name. Given the explosive increase in FLSA filings in recent years, this is important progress. The battle going forward seems certain to be joined on the issue which the majority declined to settle – whether a defendant can moot out an individual plaintiff’s claim by serving a Rule 68 offer of judgment. There seems to be something constitutionally dubious (to put it mildly) about the notion that litigation can or should continue without plaintiffs’ counsel having a named plaintiff with a concrete financial stake in the matter to represent. Nevertheless, whether or not a Rule 68 offer of judgment will moot a representative action will likely depend, at least in the short run, on the Circuit in which a case is pending, with each side of the Circuit split adhering to its own prior precedents until such time as the Supreme Court is ready to take up the issue again.

Illinois Supreme Court to Decide Condominium Dispute on Thursday

Kirk Jenkins — Mon, 22 Apr 2013 14:30:00 -0800

The Illinois Supreme Court just announced that on Thursday morning, it will file its opinion in Palm v. 2800 Lake Shore Drive Condominium Association, a dispute over an owner’s right to compel the production of documents by his condominium association. Read the opinion of the Appellate Court for the First Appellate District (Division Five) here. Our summary of the Appellate Court opinion is here. The question presented in Palm is:

Are the provisions of the Chicago Condominium Ordinance giving the right to compel production of documents, and authorizing interim awards of attorneys' fees, preempted by purportedly conflicting state law?

Illinois Supreme Court Intervenes in Politically Charged State Pension Battle

Kirk Jenkins — Mon, 22 Apr 2013 11:51:14 -0800

Earlier this month, the Illinois Supreme Court accepted a rare direct appeal, agreeing to wade into the politically charged battle over state employee pension rights. The Court ordered the consolidated appeals in Kanerva v. Weems transferred from the Appellate Court directly to the Supreme Court.

Kanerva is a consolidated case arising from four putative class actions originally filed in Sangamon, Madison and Randolph counties. All four class complaints challenge 2012 amendments to the State Employee Group Insurance Act, which instruct the Director of the Department of Central Management Services to allocate the cost of health insurance premiums between the State and its employee-retirees. The Director of CMS is directed to make that determination based on the actual cost of medical services adjusted for age, sex and geographic and demographic characteristics. 5 ILCS 375/10(a). The 2012 amendments to the Act were passed in response to Illinois' ongoing budget crisis.

The putative class representatives bring various challenges to the 2012 amendments. All argue that the amendments violate the Pension Protection Clause of the Illinois constitution, which provides that "Membership in any pension or retirement system of the State, and unit of local government or school district, or any agency thereof, shall be an enforceable contract relationship, the benefits of which shall not be diminished or impaired." Illinois Constitution, Article XIII, Section 5. Two plaintiffs argue that the law violates Article I, Section 16 of the state Constitution: "No . . . law impairing the obligations of contracts . . . shall be passed." One alleges that the statute is an unconstitutional delegation of legislative authority to the Director of CMS. One seeks an award of money damages, and three of the four seek to enjoin enforcement of the 2012 amendments.

The Sangamon County Circuit Court allowed defendants' motions to dismiss all four complaints. With respect to the Pension Protection Clause, the court held that since health benefits are not actuarially predictable (in contrast to pension benefits, which are akin to an annuity), they are not analogous to pension benefits, and not covered by the clause. The Court rejected the challenges under the Contracts Impairment Clause, holding that since it was foreseeable that the terms and conditions of the group insurance plans would change yearly, no enforceable contractual rights were vested in retirees.

The court rejected the separation of powers challenge, holding that the statute had a clear legislative purpose, identified the persons covered, provided the means for the agency to meet the purpose of the statute, and appropriately limited the agency's discretion. Finally, the Court dismissed the claims of one class plaintiff who sought damages, holding that such claims must be brought first in the state Court of Claims.

The Supreme Court seems likely to hear arguments in Kanerva before the end of 2013. A decision should be handed down three to six months after the oral argument.

Why Russell v. SNFA Matters

Kirk Jenkins — Sat, 20 Apr 2013 13:12:06 -0800

On Thursday morning, the Illinois Supreme Court filed its decision in Russell v. SNFA. We were watching Russell closely here at Appellate Strategist because it was the Court's first opportunity to apply the United States Supreme Court's decision in J. McIntyre Machinery, Ltd. v. Nicastro. In Nicastro, a plurality of the high court held that merely placing a product into the stream of commerce with the expectation that it would ultimately reach the forum state was not enough to trigger personal jurisdiction over the manufacturer. Our report on the Russell argument is here.

Russell arose from a helicopter crash in Illinois. The decedent's estate sued, alleging that one of the helicopter's tail rotor drive-shaft bearings had failed, fracturing the drive shaft, making the tail rotor inoperable, and leading to the crash. SNFA made the custom bearings.

The helicopter that crashed was built in Italy by Agusta, an Italian company that was unrelated to SNFA. The helicopter had been sold multiple times during its life, as aircraft often are -- first to a German company, then to Metro Aviation in Louisiana, and finally to Air Angels in Cook County Illinois. None of these companies had anything to do with SNFA either. Metro -- the Louisiana company - had replaced several of the bearings with SFNA replacement parts, but they didn't get them directly from SNFA. The replacements were sold by SNFA to Agusta in Italy, sold again to Agusta's American subsidiary, and then to Metro in Louisiana. Indeed, although SNFA did have three U.S.-based customers for its aerospace bearings, it sold no helicopter bearings in the U.S. at all.

The trial court held it had no personal jurisdiction over SNFA, noting that SNFA's only apparent contact with Illinois had been a single visit to an entirely different customer for an entirely different product. The Appellate Court reversed, holding that SNFA knew that Agusta sold its helicopters in the United States, and since SNFA's bearings were custom made, Agusta's U.S. subsidiary essentially was SNFA's American distributor. The Illinois Supreme Court tossed the case back in the Appellate Court's lap when Nicastro came down, but not long after, the Appellate Court reversed again, holding that Nicastro made the Court even more certain it was right.

On Thursday morning, a 5-1 majority of the Supreme Court affirmed in an opinion by Chief Justice Kilbride. Although the majority agreed that Illinois lacked general jurisdiction over SNFA - meaning that it could have adjudicated any claim against the company, regardless of whether it was related to Illinois or not - the state did have specific jurisdiction, the majority found. Specific jurisdiction, the majority noted, "requires a showing that the defendant purposefully directed its activities at the forum state and the cause of action arose out of or relates to the defendant's contacts with the forum state."

Much of the decision in Russell turns on the Court's construction of recent personal jurisdiction cases from the United States Supreme Court. According to the Court, the high court had held in World-Wide Volkswagen Corp. v. Woodson that a manufacturer may be subjected to liability where it delivers a product into the stream of commerce with the expectation that the product would be purchased in the forum state. On the other hand, in Asahi Metal Indus. Co., Ltd. v. Superior Court, the court had divided between Justice O'Connor's plurality, holding that jurisdiction required not only delivery into the "stream of commerce" but something more - an affirmative act seeking to reach and serve the forum market - and Justice Brennan's concurrence, arguing that merely placing a product into the stream of commerce with the expectation that it would reach the forum was enough. According to the majority in Russell, Nicastro had clarified the situation almost not at all. Although the plurality had certainly endorsed Justice O'Connor's view, Justice Breyer's concurrence, the majority insisted, had refused to adopt Justice O'Connor's Asahi opinion, resting on the stream-of-commerce theory from World Wide Volkswagen. So the majority concluded it couldn't adopt either the Brennan or the O'Connor theory of personal jurisdiction - and it didn't have to, since SNFA lost under either theory.

The sole market for the custom-made ball bearings SNFA made for Agusta, according to the majority, was Agusta's helicopters. Since SNFA had no U.S. customers for the bearings themselves, its only way of reaching the U.S. market was through Agusta's sales of helicopters containingthe bearings. This was sufficient to qualify under Justice Brennan's theory.

And there was "something more" sufficient to satisfy Justice O'Connor, according to the Court. SNFA had had an ongoing relationship since 1997 with Hamilton Sunstrand in Rockford, Illinois. SNFA had never sold Hamilton Sunstrand so much as a single one of the helicopter ball bearings it made for Agusta; it sold Hamilton an entirely different product - bearings for fixed-wing aircraft and airplanes. In fact, SNFA had sold Hamilton nearly a million dollars worth of these bearings, and the record contained "hundreds" of invoices listing Rockford, Illinois as the purchasing location (and San Diego, California as the delivery location).

SNFA argued that even if the Hamilton Sunstrand relationship "counted" for purposes of jurisdiction, since the plaintiff's claim was specific rather than general jurisdiction, the claim still had to arise out of the contacts for jurisdiction to attach - and it clearly didn't. Not so, the majority held; the standard was "lenient or flexible." There was no basis for distinguishing between varieties of bearings, and besides, all conflicts in the evidence were construed in favor of the plaintiff at this point. So bottom line, SNFA's sales through Agusta were enough to find specific jurisdiction in Illinois.

Join me below the fold for a review of Justice Garman's dissent, and some initial thoughts on what it all means.

Justice Rita Garman filed a lengthy dissent. Jurisdiction was clearly absent, Justice Garman insisted, whether measured under Asahi and Nicastro, or the Illinois Supreme Court's earlier decision in Wiles v. Morita Iron Works Co., which the majority had relied upon.

Besides, Justice Garman wrote, the majority had partially mischaracterized Justice Breyer's concurring opinion in Nicastro. There was nothing suggesting that Justice Breyer's reference to the O'Connor test was merely illustrative; it seemed to be an endorsement. And if it was, given that Justice Alito had signed on to the Breyer concurrence, there were six Justices who had endorsed the O'Connor "stream of commerce plus something more" theory from Asahi.

And there was no "something more" here, according to Justice Garman. There was no evidence that SNFA knew that Agusta helicopters were in Illinois, and without that, an assertion of jurisdiction would abandon the long-settled requirement that a defendant have some connection to the forum. "The majority's holding," Justice Garman wrote, "would subject defendant to jurisdiction in any state in which Agusta sold helicopters containing defendant's products, whether or not defendant was actually aware its products were being marketed or sold in such a state, thereby essentially causing defendant's 'amenability to suit [to] travel with the chattel.'"

Nor was Justice Garman persuaded by SNFA's business relationship with Hamilton Sunstrand. None of the approximately one million dollars in products which had been purchased by Hamilton over a span of years had been shipped into Illinois; all had been sent to San Diego.

In Justice Garman's view, the majority opinion was a major threat to manufacturers whose customers ultimately sold products into Illinois:

Under the majority holding, a foreign defendant can now be haled into court in Illinois for even the most fleeting and inconsequential business contact with this state. Indeed, defendant is now subject to Illinois jurisdiction even though it had never actually sold a single item to an Illinois consumer.

Foreign manufacturers - not only those based outside the U.S., but even manufacturers in other states - should take Justice Garman's concerns to heart for several reasons.

First, Russell takes a quite liberal view of the Nicastro approach to personal jurisdiction over foreign manufacturers. The plurality in Nicastro sought to reconcile the "stream of commerce" standard from World-Wide Volkswagen with the more general principles of jurisdiction. World-Wide Volkswagen was simply a restatement of the more general notion that a manufacturer may be subject to jurisdiction where it purposefully seeks to serve the forum market, the plurality wrote. "The principal inquiry in cases of this sort is whether the defendant's activities manifest an intention to submit to the power of a sovereign." According to the plurality, "jurisdiction is in the first instance a question of authority rather than fairness."

As Justice Garman observes in Russell, Justice Breyer does not reject Justice O'Connor's "stream of commerce plus something more" theory from Asahi; he seems to endorse it. There is no language of limitation in Justice Breyer's application of the theory. But Justice Breyer clearly views the plurality's opinion in Nicastro as tightening jurisdiction even further than the O'Connor theory, and it is this he intends to reject: "The plurality seems to state strict rules that limit jurisdiction where a defendant does not 'inten[d] to submit to the power of a sovereign' and cannot 'be said to have targeted the forum.' But what do those standards mean when a company targets the world by selling products from its Web site? . . . I do not agree with the plurality's seemingly strict no-jurisdiction rule." But after Russell, any notion that at minimum Justice O'Connor's view states the law is gone, at least in Illinois courts. Now, there is a real risk that jurisdiction might not only follow the chattel, but the end-user product manufactured from the chattel as well.

The second point is a related one. Regardless of how close the relationship between the defendant and the helicopter manufacturer in Russell was, the notion of a more-or-less customized component for an end-user product is far from unique in the economy as a whole. But that doesn't mean the component manufacturer and its customer are financially joined at the hip; if manufacturer's price rises, the customer will send its specs off to a different manufacturer (indeed, counsel conceded at oral argument in Russell that several other companies also made high-performance ball bearings). If the customer goes elsewhere (or goes under), the manufacturer will replace the customer. All this is basic economics straight out of industrial organization textbooks. But in the wake of Russell, anyone who manufactures components which are arguably built to the customer's specifications must wonder if a court will construe its customers' sales as the manufacturer's own for purposes of minimum contacts.

The third point of concern post-Russell flows from the majority's construction of the "arising out of" element of specific jurisdiction. Traditionally, the "arising out of" limitation has been thought to relate to the forum's territorial jurisdiction -- if you act in a state, the forum has the power to adjudicate the consequences flowing from your act. But the standard is "flexible," the majority in Russell found, holding that decedent's accident involving custom-made helicopter bearings "arose out of" the sale of custom-made fixed-wing aircraft bearings to an entirely different customer. This seems to be a liberal construction of the element indeed. Post-Russell, it may be that lower courts will interpret the Court's opinion to mean that future accidents "arise out of" virtually any sale of any product in a defendant's entire catalogue, so long as the sale happened in the jurisdiction.

The Illinois Supreme Court 2012: The Year in Review

Kirk Jenkins — Fri, 19 Apr 2013 12:30:06 -0800

(Note: The following post was originally published on Law360.com on January 15, 2013. On Thursday, April 18, the Court's decision in Russell v. SNFA, which is referred to in the final sentence of the post, was handed down. Join us back here this weekend for a detailed analysis of Russell and its possible implications for the future of Illinois business.)

During 2012, the Illinois Supreme Court filed seventy-one written opinions, thirty-nine in civil cases. Although the total opinion output was down somewhat from recent years, this represents the Court's highest number of civil decisions since 2009.

All in all, 2012 was a reasonably good year at the Court for the business defense bar. With a few notable exceptions we'll review below, the Court turned back attempts to expand the scope of several torts and strengthened trial courts' power to control abusive practices. The Court gave expansive interpretations to government immunities and rejected an attempt to create long-tail liabilities for dissolved corporations. The Court also gave important protection to the attorney-client privilege in the context of routine business negotiations.

Narrowly Defining Torts. Choate v. Indiana Harbor Belt Railroad Co. arose from an injury to a twelve-year old boy who tried to jump aboard a slow-moving freight train. Illinois landowners have long been subject to a limited duty to minor trespassers. In determining whether a duty exists, the courts have applied a four-factor test, including whether children are incapable of appreciating the risk involved.

The Supreme Court's opinion finding no duty in Choate is important for several reasons. First, the Court brought Illinois in line with a number of jurisdictions around the country, holding that a moving train is an open and obvious danger to children. Second, the Court held that the test was an objective one for the court, not for the jury, thereby making similar cases subject to summary disposition. Third, the Court recognized that the burden to defendants of avoiding such accidents is often tremendous.

Illinois courts have narrowly defined any duty to preserve evidence, usually insisting on two things: special circumstances and foreseeability. In Martin v. Keeley & Sons, the Court rejected an attempt to turn that limited duty into a significant burden on business. Martin involved personal injuries which occurred when an I-beam collapsed at a construction site. The day after the accident - long before the plaintiffs sued the manufacturer - the plaintiff's employer ordered the beam destroyed. One by one, the Court rejected propositions which would have created satellite litigation in a host of personal injury cases. Mere possession does not mandate preservation. Nor did defendant's status as plaintiff's employer create a duty. Nor did the likelihood of plaintiffs' injuries ending in litigation against someone mandate a duty.

Bonhomme v. St. James arose from a fraudulent Internet-based relationship which the defendant allegedly maintained with the plaintiff for nearly two years while posing as a man. The complaint alleged a single claim for fraudulent misrepresentation. As the Court pointed out, the tort of fraudulent misrepresentation has its roots in common law deceit, a narrow tort limited to business and financial transactions. The Court properly refused to expand the tort to the parties' "purely personal" relationship, thus avoiding a potential avalanche of lawsuits arising from the normal rough-and-tumble of daily life.

Nevertheless, there were missteps this year. The Court's most troubling decision was Doe-3 v. McLean Co. Unit Dist. No. 5. Doe-3 arises from a teacher's sexual abuse of two children. The claims at issue were not against the plaintiff children’s school, but rather against the teacher's previous employer - principally that the defendants had negligently completed a verification of employment form, failing to disclose the teacher's disciplinary suspensions during the school year. The majority held that these allegations adequately stated a duty of care.

Justice Lloyd Karmeier filed a compelling dissent, joined by Justice Mary Jane Theis. The dissenters criticized the weakest point of the majority's opinion, questioning how it could be reasonably foreseeable that anyone would rely on a routine verification of employment form as the sole indicator of a potential teacher's character and conduct. The dissenters pointed out that the amorphous duty conjured up by the majority all but moots a long-standing line of authority holding that there is no private right of action for failure to report under the state's Abused and Neglected Child Reporting Act. The Court characterized the majority's theory as a duty to report misconduct by inference - a duty to report facts which might (or might not) lead the defendant to uncover misconduct.

The potential for mischief in Simpkins v. CSX Transportation depends on further litigation. The plaintiff alleged that she had contracted mesothelioma from inhaling asbestos brought home on her former husband's person and work clothes. As Justice Charles Freeman pointed out in dissent, the first medical studies of bystander asbestos exposure were published in 1965. Given that plaintiff's former husband left the defendant's employ in 1964, that should have been the end of the matter, with no foreseeability found as a matter of law - the conclusion courts in several other jurisdictions have reached. Unfortunately, a majority of the Court remanded the case to allow the plaintiff to attempt to plead sufficient facts to support the complaint's conclusory allegation that harm to plaintiff was somehow foreseeable.

Strengthening Tools for Fighting Abuse. The Court also strengthened two important tools for trial courts to control procedural abuse in 2012. Fennell v. Illinois Central Railroad Co. involved allegations that the plaintiff had been exposed to asbestos during nearly four decades of employment. The case had virtually no connection to Illinois at all; the plaintiff was from Mississippi, he worked in Mississippi and nearby states, and the plaintiff's treating physicians and family lived in and near Mississippi too.

The Supreme Court would have created significant problems for defense counsel if it had affirmed the trial and Appellate Courts and declined to dismiss. But not only did the Court reverse, the majority made several important points. "Decent judicial administration cannot tolerate forum shopping" as a legitimate reason for keeping litigation where it clearly doesn't belong, the Court wrote. Indeed, combating forum shopping is one of the concerns animating forum non conveniens law. The majority also insisted that trial courts should evaluate all of the public and private factors found in the caselaw in every case - including the often overlooked issue of the practicality of a possible jury view of the premises (whether one seems likely or not).

Mashal v. City of Chicago posed another important question: when does the trial court lose the power to decertify a class? Under Illinois law, the answer is once the court has made a decision on the merits. Mashal was a good example of why the phrase "decision on the merits" should be narrowly defined -- the only common question in the case had been litigated and decided relatively early on, obviating any need to proceed as a class.

Mashal could have easily resulted in a circular ruling: the plaintiffs argued that the order adjudicating the common question was itself a "decision on the merits," ending the power to decertify. Had the Court accepted that argument, courts might have been stuck with class adjudication in some cases long after the justification had ended. But the Court unanimously affirmed the Appellate Court, holding that a "decision on the merits" occurred quite late in the litigation process, when a "complete determination of liability" is made.

Narrowing Government Liability. In three cases, the Court set narrow standards for holding the government and its employees liable in tort. Moore v. Chicago Park District was a survival and wrongful death action arising from a decedent’s fall in the snow-and-ice covered parking lot of a city-owned recreational facility. The state Tort Immunity Act bars liability “based on the existence of a condition of any public property” available for recreational use, but the decedent had actually fallen over a pile of snow moved by a city plow. So was the decedent injured by a “condition” of the property at all, as opposed to allegedly negligent plowing? The Court answered “no,” finding that the Act immunized the government from liability for falls on snow and ice, even when government employees had plowed the property.

Patrick Engineering v. The City of Naperville arose from cost overruns on a stormwater management system. The plaintiff alleged that it undertook additional work outside the contract based on the city’s representations; various city employees supposedly knew about the additional work, but never directed the plaintiff to stop. The Supreme Court unanimously held that a municipality could not be equitably estopped based only on the apparent authority of its officials; express authority (and reasonable reliance on words or conduct) were necessary for liability.

Harris v. Thompson arose from a collision between the plaintiffs’ vehicle and an ambulance owned by a public hospital district. Harris involved a perceived conflict between the Tort Immunity Act, which states that absent willful and wanton conduct, neither local public entities nor their employees are “liable for an injury caused by the negligent operation” of an emergency vehicle responding to an emergency call, and the Vehicle Code, which imposes on the drivers of emergency vehicles a “duty of driving with due regard” for the safety of others. The Supreme Court held that in fact, the statutes were not in conflict. While the Vehicle Code extended certain privileges to drivers of emergency vehicles, the Tort Immunity Act bestowed immunity from liability on government employees and entities whether or not a duty of care was present.

Promoting Predictability for Illinois Business. Late in the year, the Court handed Illinois business two important victories, turning back arguments which would have substantially hamstrung ordinary business operations.

Pielet v. Pielet involved claims under a breached consultancy contract. By the time of the suit, the corporation which had signed the contract had been dissolved for several years; a successor had declared bankruptcy and stopped paying on the contract.

Whether or not the dissolved corporation could be liable turned on the meaning of the Business Corporation Act, which permits suits against dissolved corporations for five years “for any right or claim existing, or any liability incurred” before they were dissolved. Had the Court agreed with the plaintiff that mere contract rights without a breach were a “right or claim existing,” it would have become substantially more difficult to fully and finally wind up any corporation in Illinois. Under such a standard, winding up a corporation would have required not merely worrying about accrued claims, but accounting for potential long-tail liabilities from every active contract the corporation has which might be breached by a successor sometime after dissolution. Ultimately all seven Justices agreed that a “right or claim existing” was limited to a claim which accrued before the dissolution of the corporation.

The Court took an equally pragmatic approach in Center Partners, Ltd. v. Growth Head, GP, a case arising from the purchase of a large company by a group of corporations, partnerships and trusts. During the negotiations, the buyers had disclosed to each other some of their attorneys’ advice on the deal, shared certain documents and permitted their attorneys to confer about potential legal issues. The buyers were sued by limited partners in one of the target company’s assets, and the plaintiffs successfully argued that the buyers’ disclosure of privileged materials to each other triggered a general subject matter waiver of documents relating to the sale.

Declining to follow a number of Federal decisions in other parts of the country broadly applying waiver, the Supreme Court unanimously reversed, holding that unless the information is later abused to gain a tactical advantage in litigation, non-judicial disclosures should not result in a general subject matter waiver. The Court’s recognition of the policy interests at stake is particularly to be applauded; the Court pointed out that a broad waiver would have made negotiations for the sale of business and products with intellectual property aspects far more difficult, impeding communication between buyers and sellers, and likely leading to more litigation.

2013 promises to be another active year for high-stakes business litigation at the Court. The year begins in two weeks with Russell v. SNFA, the Court's first opportunity to apply the United States Supreme Court's Nicastro decision limiting U.S. courts’ jurisdiction over foreign-based companies.

How Is an Appeal from the Certification of a Pollution Control Facility Brought?

Kirk Jenkins — Sun, 07 Apr 2013 21:37:32 -0800

In the final days of the March term of the Illinois Supreme Court, the Court allowed a petition for leave to appeal in The Board of Education of Roxana Community Unit School District No. 1. v. The Pollution Control Board, et al. Board of Education poses the question: can the challenger to a petition for certification of a system as a pollution control facility appeal directly to the Appellate Court after losing at the Illinois Pollution Control Board?

In October 2010, the respondent submitted 28 separate applications to the Illinois Environmental Protection Agency, seeking certification of various systems, methods, devices and facilities as "pollution control facilities" as defined by the Property Tax Code. If the applications were granted, the Department of Revenue would supplant Madison County as the taxing authority. In August 2011, the Illinois Environmental Protection Agency recommended approval of two of the requests. The following month, the Pollution Control Board accepted the recommendations and certified the two systems. The petitioner School Board moved for reconsideration, and a few weeks later, the Agency recommended approval of the remaining requests for certification. The Pollution Control Board denied the motion for reconsideration, and denied the petitioner's motions to intervene in the remaining 26 requests for certification. The petitioner appealed the Pollution Control Board's decisions directly to the Appellate Court.

On appeal, the petitioner contended that the Appellate Court had jurisdiction over the appeal pursuant to the Environmental Protection Act, 415 ILCS 5/41(a). The Board contended that appellate review was possible only under the Property Tax Code, 35 ILCS 200/11-60, which limited appeal rights to applicants, not challengers.

The Appellate Court dismissed the appeal for lack of jurisdiction. Reaffirming Citizen Against the Randolph Landfill (CARL) v. The Pollution Control Board, the Court held that review must begin at the Circuit Court, rather than reaching the Appellate Court in the first instance. Allowing a party adversely affected by a final order of the Board to directly appeal the matter to the Appellate Court would render Section 11-60 of the Property Tax Code - providing only limited appeal rights -- meaningless, the Court held.

Justice Thomas R. Appleton dissented, arguing that the Environmental Protection Act, 415 ILCS 5/41(a) gave the right to appeal to anyone "who filed a complaint on which a hearing was denied." The Appellate Court should "avoid attributing to the legislature an intent to deny judicial review to a local governmental entity when the Board's allegedly unjustified certification of a facility as a pollution-control facility deprives the local governmental entity of a substantial portion of its tax base," Justice Appleton argued.

Is an Emergency Room Physician Protected From Liability By the Good Samaritan Act?

Kirk Jenkins — Sun, 07 Apr 2013 21:32:54 -0800

In the final days of the March term, the Illinois Supreme Court granted review in Home Star Bank & Financial Services v. Emergency Care & Health Organization, Ltd., which poses the question of whether physicians qualify for immunity under the Good Samaritan Act when they were paid by their physician groups to provide emergency care in a hospital.

The defendant physician was employed in the emergency department of the hospital. He responded to a "Code Blue" for the patient, who was being cared for on another floor. The defendant attempted to intubate the patient, but complications ensued, and the patient suffered permanent brain injury.

The guardians of the patient filed suit against the physician and his group, alleging negligence. The defendant moved for summary judgment, arguing that the physician and his employer were immune from liability under the Good Samaritan Act, 745 ILCS 49/25, which provides that any physician "who, in good faith, provides emergency care without fee to a person, shall not, as a result of his or her acts or omissions, except willful or wanton misconduct on the part of the person, in providing the care, be liable for civil damages." In response, plaintiffs argued that the defendant was not a volunteer since he was compensated on an hourly basis for his services. The Circuit Court granted summary judgment, finding that the defendant's employer had never billed either the patient or his insurer for the defendant's services.

The Appellate Court reversed. The court declined to follow Estate of Heanue, where the Appellate Court held that a physician who had not billed specifically for emergency care services hadn't charged a fee within the meaning of the Good Samaritan Act, even if the physician had received some economic benefit from providing services. A physician could not be a volunteer if he or she was paid by anyone for the services provided, the Court held. The defendant was not voluntarily present at the hospital; he was paid by his physician group. "The Good Samaritan Act was meant to protect volunteers," the Court wrote. "It was never meant to be a shelter for practicing physicians who, acting in the scope of their employment, receive payment for their emergency services."

We expect Home Star Bank to be decided in the winter or spring of 2013-2014.

How Late Can a Default on a Foreclosure Suit Be Vacated?

Kirk Jenkins — Sun, 07 Apr 2013 21:28:23 -0800

In the closing days of the March term, the Illinois Supreme Court allowed a petition for leave to appeal in Wells Fargo Bank, N.A. v. McCluskey, a decision from the Second District reversing an order refusing to vacate a default judgment in a foreclosure suit. McCluskey presents the issue of whether a Section 2-1301(e) motion seeking to set aside the default can be granted after the sheriff's sale has occurred.

After the defendant failed to make several monthly payments on her mortgage, the plaintiff filed an action of foreclosure. The defendant defaulted. On the day set for the sale, the defendant filed a motion for an emergency stay, seeking to vacate the default and halt the sheriff's sale. The parties ultimately settled on an agreed order pursuant to which the defendant withdrew her motion, and the plaintiff agreed to postpone the sale for 75 days in order to allow the parties time to renegotiate the loan.

On the new date, the property sold to the plaintiff, who moved to confirm the sale. The defendant moved again to vacate the default, arguing that the plaintiff's supporting affidavit was insufficient, and that plaintiff lacked standing to sue. The trial court confirmed the sale, holding that the defendant had withdrawn her earlier motion to stay in return for postponement of the sale, implicitly agreeing that the sale could go forward on the postponed date absent an agreement, and she could not now rescind her agreement. The defendant appealed the order denying the motion to vacate.

The plaintiff argued before the Appellate Court that her renewed motion was timely. She denied that she had waived the right to seek a further delay. Citing Mortgage Electronic Registration Systems, Inc. v. Barnes, the defendant responded that any motion to vacate brought after the sheriff's sale was irreconcilable with Section 15-1508(b) of the Foreclosure Law regulating orders confirming foreclosure sales.

The Appellate Court rejected defendant's argument and reversed the order denying plaintiff's motion to vacate. Reaffirming its earlier decision in Merchants Bank v. Roberts, the Court held that in the "rare case" in which the defendant could present both a compelling excuse for his or her lack of diligence and a meritorious defense to the foreclosure action after the judicial sale has occurred, the trial court may vacate a default under Section 2-1301(e).

Having found that the defendant's motion was timely made, the Court then turned to the merits. The Court held that the parties' agreed order made no reference to the defendant giving up any right to bring a section Section 2-1301(e) motion. Nor did the Court find any basis for an implied waiver of the right to bring a second motion. Although a Section 2-1301(e) order is reviewed for abuse of discretion, the Court found that denying the motion based on waiver was a refusal to exercise discretion, and therefore by definition an abuse of discretion.

McCluskey should be decided by the Supreme Court in the winter or spring of 2013-2014.

Illinois Supreme Court Declines to Decide the Question Presented in Boyar

Kirk Jenkins — Sun, 07 Apr 2013 21:22:19 -0800

The Illinois Supreme Court granted leave to appeal in In re Estate of Boyar to decide whether the doctrine of election applies to trusts, and, if it does, to delineate any exceptions to the doctrine. But when the Court's opinion was filed on Thursday morning, Boyar turned out to be something of a letdown: in a 6-1 opinion by Justice Lloyd A. Karmeier, the Court declined to decide either issue. Our detailed summary of the facts and lower court rulings in Boyar is here. Our report on the oral argument is here.

The decedent set up a trust to distribute his property after his death. Although the trust was amended several times, until 2010, the beneficiaries retained the right to remove the trustee. But then, in the sixth and final amendment, the power to fire the trustee was withdrawn and a new trustee - the defendant in Boyar -- was appointed.

Following the decedent's death, petitioner - one of the decedent's children - filed a challenge to the sixth amendment, arguing lack of capacity. A few weeks later, the trustee was granted a citation to recover assets belonging to the trust - at least some of which the plaintiff acknowledged that he had received. On the trustee's motion, the Circuit Court dismissed, citing the doctrine of election, and the Appellate Court affirmed.

The Supreme Court reversed. The problem was that the answer to the questions presented didn't matter:

Properly understood, the doctrine of election is triggered in the context of wills only when there are two different benefits to which a person is entitled, the testator did not intend the beneficiary to take both benefits, and allowing the beneficiary to claim both would be inequitable to others having claims upon the same property or fund.

Merely accepting property under the instrument you were challenging had never triggered the doctrine of election, the majority held. Since there weren't two alternative bequests involved, the doctrine of election couldn't apply, and there was no basis for blocking the petitioner's challenge. Interestingly, the problems with the record - what appellate judges call a case not being "a good vehicle" for deciding an issue -- had not been noticed at the Circuit Court, the Appellate Court, or even in oral argument before the Supreme Court.

Justice Anne M. Burke dissented, objecting to the Court's refusal to decide the questions presented. "[M]y concern," Justice Burke wrote, is that "this court, on occasion, loses sight of its role in the judicial system and, in issuing opinions that avoid addressing the legal question at issue, functions more like an appellate court." Declining to decide the issue presented, and "trying to limit our decision to the narrowest factual grounds, is both illogical and undermines the role this court plays in the judicial system," Justice Burke wrote.

A Tale of Three Cases: California's Split Over Concepcion Continues

Kirk Jenkins — Thu, 04 Apr 2013 18:46:31 -0800

In state and Federal courts throughout the country, the defense and plaintiffs’ bars are debating the application of the United States Supreme Court’s landmark 2011 decision in AT&T Mobility v. Concepcion, in which the Court made it significantly easier to enforce waivers of class arbitration in most consumer contracts. My post about Parisi, a new decision from the Second Circuit, is below.

Perhaps nowhere has this battle been more active than in California, the home of the Discover Bank rule overturned by the Supreme Court in Concepcion. As my colleague Michael Walsh reported here, the California Supreme Court heard argument in a case involving an arbitration clause yesterday. Today, I address three cases which illustrate the ongoing debate in California. All three were decided in the final two weeks of March, two in the Second District and one in San Francisco’s First District. The Second District twice refused to enforce arbitration clauses while the First found the clause before it fully enforceable.

Compton v. Superior Court (American Management Services LLC) was the first of the trio, decided by Division Eight of the Second District on March 19. Compton is a putative class action for alleged Labor Code violations in connection with wages.

The plaintiff had signed an arbitration agreement with the defendant when she began work as a property manager. The agreement contained a waiver of class arbitration. After she left her job, she filed her putative class complaint, alleging violations regarding the payment of minimum and overtime wages, rest and meal breaks and reimbursement of expenses. Although the defendant litigated the matter for a time, it immediately filed a petition to compel arbitration after Concepcion was handed down, pointing out that Concepcion had directly overturned Discover Bank and implicitly overruled Gentry v. Superior Court, the two decisions which would have made any earlier petition futile. The trial court granted the petition, finding the agreement neither procedurally nor substantively unconscionable. The court labeled the plaintiff’s arguments about the purported one-sidedness of the agreement “largely hypothetical.”

The Court of Appeal reversed. According to the two-Justice majority, the agreement was substantively unconscionable because, in several respects, it was one-sided: the agreement required arbitration of the claims the employee was most likely to bring, but not those the employer would bring; it significantly shortened the time limit for the employee to seek arbitration in comparison to the relevant statutory limitations, but imposed no similar limits on the employer; and it suggested that the arbitrator could decline to award attorneys fees in situations where statutes made such an award mandatory. The majority rejected the employer’s argument that cases providing that one-sidedness amounted to substantive unconscionability had not survived Concepcion, writing that “the judicial forum affords plaintiffs” certain advantages which cannot fairly be retained for only one side’s claims. The agreement was also procedurally unconscionable, in the majority’s view, because it failed to disclose the “disadvantages” of arbitration as provided for by the contract over litigation. Presiding Justice Tricia A. Bigelow filed a compelling dissent, arguing that California’s law of unconscionability must be viewed through the lens of Concepcion. She pointed out that the agreement was bilateral with respect to arbitration of wage-and-hour claims, and that the parties hadn’t even raised the issues of attorneys fees and time limitations which the majority had relied upon. “I am compelled to follow the law which incorporates a strong public policy in favor of arbitration,” Presiding Justice Bigelow wrote.

A week after Compton, Division One of the Second District decided Fowler v. Carmax. Fowler was another wage-and-hour case involving an employment agreement expressly waiving class arbitration. After Concepcion, the employer moved to compel arbitration. The trial court granted the petition, finding that Gentry had not survived Concepcion and that plaintiff’s claim under the Private Attorneys General Act was arbitrable on an individual basis. (This PAGA argument is central to Iskanian v. CLS Transportation Los Angeles, an arbitration case from Division Two of the Second District currently before the Supreme Court).

Division One reversed. The Court found “only some evidence” of procedural unconscionability, noting that although the contract had been presented on a take-it-or-leave-it basis, plaintiff made no claim of surprise. Nor did the employer’s reserved right to terminate or modify the agreement on thirty days notice render it substantively unconscionable, according to the Court. The problem was, according to the Court, Gentry was still good law after Concepcion. Therefore, any class action waiver in an arbitration clause of an employment agreement was per se unconscionable if it interfered with employees’ ability to vindicate “unwaivable rights and to enforce the overtime laws.” The Court accordingly remanded the case back to the trial court to determine whether the Gentry rule required that the class action waiver be thrown out.

The day after Fowler was decided, Division One of the First District decided Vasquez v. Greene Motors, and this time, the arbitration clause fared better. Vasquez involved an installment sales contract for a used car. The plaintiff sued under various state statutes, alleging that the financing terms in the contract were inaccurate. The defendant filed a petition to compel arbitration, but the trial court denied the petition, finding the clause unconscionable by reason of “adhesion, oppression and surprise.”

The Court of Appeal unanimously reversed. The mere fact that the arbitration clause was presented in a preprinted form on a take-it-or-leave-it basis made it procedurally unconscionable, the Court conceded, but the degree of unconscionability was relatively minor. Such non-negotiable forms are ubiquitous, and given how highly regulated such transactions are, they may well be the only way for merchants to ensure compliance with the law. Although the plaintiff complained about the densely printed double-sided single sheet contract, the Court pointed out that the use of a single sheet was arguably required by state law, and a multiple-sheet contract would have made it easier to bury the arbitration clause.

The Court’s discussion of substantive unconscionability makes an interesting contrast to the majority in Compton. The Court found that mere one-sidedness was not enough to make an arbitration clause substantively unconscionable. After the Supreme Court’s decision in Pinnacle Museum Tower Ass’n v. Pinnacle Market Development, the agreement must be so seriously one-sided as to shock the conscience in order to be unconscionable. Unconscionability turned not only on one-sidedness, the Court found, but on the absence of any justification for it. The Court carefully reviewed the few grounds raised by plaintiff for finding the arbitration clause one-sided, and concluded that none shocked the conscience, and all were arguably justified. Because the agreement was only minimally procedurally unconscionable, and not substantively unconscionable at all, it was necessarily enforceable.

It seems likely that only clear guidance from the California Supreme Court will bring to a close the distinctions among the Court of Appeal districts in the enforceability of arbitration clauses. With several arbitration clauses on the high court’s docket, that guidance may well come soon.

Illinois Supreme Court to File Opinion in Boyar on Thursday Morning

Kirk Jenkins — Mon, 01 Apr 2013 20:05:28 -0800

The Illinois Supreme Court has announced that on Thursday morning, it will file its opinion in In re Estate of Boyar. Boyar presents the issue of whether the doctrine of election - which teaches that a party may not accept benefits under an instrument and later challenge that instrument's validity - applies to trusts. Our detailed summary of the facts and lower court holdings in Boyar is here. Our report on the oral argument is here.

Comcast Corp. v. Behrend: Even More Than Meets the Eye?

Kirk Jenkins — Mon, 01 Apr 2013 19:25:09 -0800

On Wednesday, the United States Supreme Court handed down its opinion in another of this term’s major class action cases. Following on the heels of Standard Fire Insurance Co. v. Knowles, where the Court closed a loophole which had allowed plaintiffs to attempt to stipulate around the threat of removal to Federal court pursuant to the Class Action Fairness Act, the Court overturned class certification in Comcast Corp. v. Behrend, holding that plaintiffs had failed to establish that damages could be proven on a class-wide basis. There’s no doubt that Behrend was a big win for the defense bar, but the question which has divided attorneys in the days since it came down is – how big? Our initial post on Behrend, discussing the facts and lower court rulings in depth, is here.

Behrend involved a certified class of more than two million former and current subscribers to Comcast’s cable services in the Philadelphia metropolitan area. The plaintiffs alleged that Comcast had violated Sections 1 and 2 of the Sherman Act by deliberately buying up cable systems in areas where Comcast had a significant market presence, often in return for giving up systems in areas where Comcast was less concentrated. The plaintiffs argued four different theories of antitrust injury, but ultimately only one was certified – the proposition that Comcast’s alleged behavior deterred entry by “overbuilders” – companies who deliberately entered a market where another cable provider was already established.

Comcast’s cert petition presented the case as a slam-dunk violation of Wal-Mart Stores, Inc. v. Dukes, going so far as to seek summary reversal. Comcast argued that the Third Circuit had simply ignored the Supreme Court’s Dukes instruction to conduct a “rigorous analysis” in certification proceedings, whether or not the issues overlapped the merits. After a number of relists, the Supreme Court ultimately granted cert on a somewhat different question: whether a district court could certify a class without deciding whether the plaintiffs had introduced admissible evidence, including expert testimony, to show that damages could be awarded on a class-wide basis. In other words: are Daubert challenges appropriate at the certification stage?

When the opinion came down last week, at first glance it seemed that prospects for a major Daubert/class certification decision had struck an iceberg: the defendants had never raised a Daubert challenge to the plaintiff’s expert. Noting the arguable waiver, the majority reformulated the question presented slightly, announcing that the issue was whether “certification was improper because respondents had failed to establish that damages could be measured on a classwide basis.” But reading the majority opinion as a whole, it appears that the majority arguably answered the question they planned to answer all along.

The district court in Behrend had held that to be entitled to certification under Federal Rule 23(b)(3), the plaintiffs were required to show that “the damages resulting from [the injury] were measurable ‘on a class-wide basis’ through use of a ‘common methodology.’” The sole basis for the court to make that finding was the multiple regression model of cable pricing built by the plaintiffs’ experts. But there was a problem with the model: the expert’s regression didn’t separate out damages flowing from overbuilder deterrence from damages flowing from other issues, including the other three possible theories of antitrust injury proposed by plaintiffs and rejected by the district court (at least for classwide treatment). Instead, the model merely predicted what prices would have purportedly prevailed in a “but-for” world absent the defendant’s alleged anticompetitive activities. The defendants had pointed this out before the Third Circuit, but the court had refused to even consider the issue, labeling it a merits question.

In fact, Justice Scalia’s opinion for a five-Justice majority found, the Court’s recent precedents on Rule 23 not only permitted, but flatly required such an analysis. “The first step in a damages study is the translation of the legal theory of the harmful event into an analysis of the economic impact of that event,” the Court noted, quoting the Federal Judicial Center’s Reference Manual on Scientific Evidence. Since the plaintiffs had presented no classwide theory of damages flowing from their one certified theory of injury, Rule 23 was not satisfied and certification was improper. Justices Ginsburg and Breyer filed an unusual joint dissent, joined by Justices Sotomayor and Kagan. The dissenters argued that once the Court discovered the procedural problems with the Daubert issue, the Court should have dismissed certiorari as improvidently granted (what the Court calls a “DIG”).

As I noted above, the bar has been somewhat split in the days since Behrend about just how important a win it is. For example, some attorneys interviewed by Law 360 argued that the decision was a powerful new tool for defense counsel, while others suggested that given the expectations for a full-blown analysis applying Daubert to certification, Behrend had turned out to be much ado about relatively little. Global Regulatory Enforcement Law Blog comments that Behrend is “sure to give class action defendants ammunition to attack expert evidence of classwide damages.” Class Action Countermeasures calls the opinion “limited,” but agreed that it “provides some help” to defendants.

Several conclusions seem clear from the opinion. First, as the employment bar has already noted, cases such as wage and hour class actions, where damages tend to be inherently individualized, may prove significantly harder for plaintiffs to get certified. Second, as Insurance Class Actions Insiderhas correctly pointed out, Behrend will make it far more difficult for the plaintiffs’ bar to persuade lower courts that individual issues in damages calculations are irrelevant to the certification issue, since all of the statements found in Behrend trying to limit the breadth of the majority opinion on this issue are found in the dissent.

But there’s more here than that. The Supreme Court originally granted certiorari on the question of whether a Daubert challenge – the proposition that the plaintiffs had no admissible model of class-wide damages – could block class certification. Although the majority seems to gently turn aside that issue, the majority then holds that the regression model built by plaintiffs’ expert is insufficient because it fails to distinguish between various sources of possible higher-than-competitive pricing. But this is simply another way of saying that had the defendants brought a Daubert challenge, the expert’s model would have been excluded; it answers the wrong question and is therefore irrelevant testimony. Specifying the appropriate number of variables to separately quantify every plausible influence on price is hardly an unusual issue in properly constructing a multiple regression model – it can fairly be said that that is what such models are for. The statistical biases created by using too few variables are well understood in the literature. At the very least, defense counsel should raise every appropriate Daubert challenge at the certification stage post-Behrend in order to give the Court to opportunity to formally and expressly decide the issue they wanted to address here. But closely examining the opinion with an understanding of multiple regression theory suggests that in fact, a majority of the Court has already made up its mind about the Daubert issue.

California Supreme Court To Tackle Arbitration, Foreclosures and Peer Review in Upcoming Oral Arguments

Michael Walsh — Mon, 01 Apr 2013 12:48:40 -0800

In addition to the more typical criminal issues, the oral arguments scheduled for April 3 and 4 in L.A. will also address when to compel arbitration, foreclosure sales and hospital peer review.

On the April 3, the court has two arbitration cases scheduled. The Supreme Court will take a second look at Sonic-Calabasas A, Inc., having previously held that contractual arbitration of a wage claim could not be compelled until after the preliminary non-binding hearing and decision by the Labor Commissioner addressing the same claim. However, the U.S. Supreme Court has since vacated that judgment and ordered further consideration in light of AT&T Mobility LLC v. Concepcion (2011) 563 U.S.__, which upheld contractual arbitration under the FAA even when the arbitration provision was found unconscionable by state law because it barred class arbitration.

Also in an employment context, the court will address in City of Los Angeles whether grievances over imposed furloughs are subject to contractual arbitration, or whether that would be an improper transfer of the city’s discretionary salary-setting and budget-making powers.

On the next day, the court addresses two other issues, foreclosure sales and peer review. The trustee in Biancalana made an error in processing the beneficiary’s “credit bid” during foreclosure proceedings, and thereby announced a required opening bid only a tenth of the intended value. Since it had not yet issued the deed of trust to the highest bidder at the foreclosure sale when the error was discovered, can the trustee set aside the foreclosure sale?

In El-Attar, the Court will address whether the executive committee of the hospital medical staff can delegate to the hospital governing board its authority to designate a peer review panel, and if the review process needs to be restarted if it has already done so.

Look for opinions in each of these cases by July 2013, as the court typically issued opinions within 90 days of the case being submitted.