8-25-14; Election Concerns for All Illinoisans; Do Retailers Need to Provide Security? by Matt Ignoffo; Important Ruling on Jones Act v. LHWCA by Jim Egan; Contribution Update by Matt Gorski and more
/Synopsis: Concerns for our Readers about the Coming IL State-Wide Election on November 4, 2014.
Editor’s comment: We are carefully watching and listening to see how the political battlefield is firming up. What we consider strange beyond strange is the lack of political discussion about the biggest issue facing all Illinoisans—state government pensions. This growing issue trumps every other state matter, including workers’ comp.
As you may be aware, Governor Quinn was giving a speech at the IL State Fair a couple of years ago. As Gov. Quinn was in the process of trying to reform the pension issue, a group of state government union members were in the audience at the State Fair and booed the Governor off the stage. In stark reply, Governor Quinn very quickly fired the wife of one of the union bosses—former Arbitrator Jacqueline Kinnaman. We felt bad to see Arbitrator Kinnaman so unceremoniously canned, as she was a quiet, honest and hard-working administrator.
What is wacky about former Arbitrator Kinnaman getting the boot is the same folks who rudely booed Governor Quinn off that stage are now his strongest supporters! Governor Quinn has received literally millions and millions in campaign contributions from government unions who want to keep their pensions sky-high and effectively unsustainable. Unless the State of Illinois finds oil or discovers gold, our taxes/tolls/fees are going to have to rise and no one is talking about it. If you look at the graph to the left, you will note in thirty years, the five IL government pension programs are going to cost more than the entire amount of tax/toll/fee income our government is taking in annually!
In our view, basically the government unions would prefer to have Governor Quinn in place to muck along with the current government pension cataclysm than have political neophyte Bruce Rauner in place to push true pension reform. But that all begs the question—how is either candidate going to truly reform the current pension calamity?
Governor Quinn was able to get moderate “reforms” passed for three of the five state pension programs. He also got a law passed requiring retired state workers to pay something toward their healthcare coverage. If you aren’t aware, the IL Supreme Court has already knocked out the law on the requirement retired state workers contribute to their healthcare costs. The IL Supreme Court ruling clearly signals they are also going to knock out any reforms of the three pension programs that Governor Quinn pushed for and passed. The 800lb pink gorilla in the ongoing election is what Governor Quinn might do if he is going to reform state government pensions, once the Supreme Court says he can’t follow the earlier approach. If you want our thoughts on the only paths to pension reform, see below.
What does this crisis mean for you, me and other IL government voters? Well, the state government pension programs have to be changed—they can’t stay the way they are or the state is facing dramatically higher taxes, tolls and fees. Try to contemplate state taxes and tolls doubling or even tripling. Please remember every business entity or government always has more former employees than active employees. If you are forced to pay more money to your former employees than they made while working for you, you are certain to go bankrupt quickly—that is what is happening to our state as you read this. If you look at the graph that we consider accurate, the cost of Illinois state government pensions are already at about 22% of all income received by IL state government today. During the next four years or the next governor’s term, state government pension costs are going to be about ½ of all current state gov’t income. In a decade or two, state government pensions are going to drain all the current income our state government collects.
Don’t believe us? Well, here are a couple of simple examples of where your money is going. Please note everything we are outlining is completely legal and legitimate for the participants. Please also note there are folks from both the Democrat and Republican sides who enjoy these hefty benefits—this is a bipartisan fiasco.
· Do you know an IL judge or justice can work just nine years before becoming vested and entitled to a lifetime pension and taxpayer paid healthcare? We assure you the current IL system can pay a judge/justice over a million dollars a year in their lifetimes for the nine years of service! The vast majority of the money to pay the “pension” or post-retirement income of a retired judge/justice doesn’t come from the “pension” program, it is coming from our current tax dollars. The annual statewide cost of all these former judges/justice pensions are well over $100 million dollars each year. That post-employment income cost is inexorably rising at 3% on a compounded basis each year—they will quickly make more money annually in the “pension” program than they made while working (it takes about six years for that to occur). Their raises and post-employment income boosts are protected in the Illinois constitution.
· Similarly, a former Illinois legislator like U.S. President Barack Obama or former Chicago Mayor Richard M. Daley can also receive more than $4M over their lifetimes for their required four years of part-time legislative service to become vested. Again, over 80% of the money to pay former legislators is being paid from your current IL taxes, tolls and fees. That “pension” program is costing you and I over $100M each year.
· The former New Trier H.S. superintendent is now in Ojai CA and isn’t truly “retired”—he is working as a school superintendent there. He makes about $200K working as a school superintendent in California and is also receiving about $300K from you and me as a “pension” or post-retirement income for his years at New Trier. You may quickly note he isn’t “retired”—he is still working in the same job, albeit somewhere else. He is also receiving 3% annual increases to his “pension” and if he lives long enough, you and I will owe him $400K a year and more. You may also note about $200K of his current $300K “pension” or post-employment income is being paid from our current tax dollars.
During the last several years, both IL House Speaker Mike Madigan and Senate President John Cullerton have written letters and met with state government union leaders to try to find a middle ground and agree to reform these five programs that are sure to eventually fail. To our understanding their efforts were rebuffed. After those efforts, Senate President Cullerton made it clear—IL state government can’t file for “bankruptcy” as states aren’t included in the Bankruptcy Code so the only alternative is going to be dramatically raising your taxes, tolls and fees. If you aren’t crystal-clear about it, the folks currently funding Gov. Quinn’s campaign are secretly but effectively demanding protection of their “pensions” and will press hard for the legislature to dramatically increase your taxes. We predict this is going to happen in the legislative session in the week following the gubernatorial election because doing so will give the legislators the longest possible time to calm down the voters who are certain to scream to the heavens about it. Right now, the current IL deficit for pensions and healthcare costs exceed $140 billion dollars and continues to rise every day—someone is going to pull the plug on all that borrowing some day.
How can IL government pensions be reformed? Well, as veteran lawyers who have carefully reviewed the IL Supreme Court ruling knocking out healthcare reform, we see two paths and each has issues Governor Quinn and Bruce Rauner and every IL state senator or representative should be forced to address by the voters.
1. Start all new or “non-vested” government employees in an affordable retirement program, such as a 401K or other similar approach. You would have to keep paying the vested ones at whatever cost until they have left this mortal coil.
2. Change the IL Constitution to eliminate the “pension clause” to see if that might allow a more affordable pension or post-employment approach. If you aren’t sure, the “pension clause” is a “stick-it-to-the-taxpayers” clause requiring you and I to pay whatever pension or post-employment income to participants regardless of how lucrative it might be for them and how punitive it is for us. Basically, the Supreme Court ruling on healthcare benefits confirms post-employment benefits for former state government workers can only rise; they can’t ever be cut.
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Synopsis: My Phone!!! Plaintiff’s Negligence Claim Dismissed When Cell Phone Stolen at a Fast Food Restaurant. Analysis by Matt Ignoffo, J.D., M.S.C.C.
Editor’s Comment: The facts in Lewis v. Heartland Food Corp involve Plaintiff Lewis alleging his iPhone was stolen by fellow customers while at Burger King No. 1250. 2014 IL App (1st) 132842 (July 25, 2014). He asserted Burger King, by not providing "manned security" in the restaurant, negligently, as well as willfully and wantonly, breached its duty to exercise ordinary care and caution and provide all patrons proper security. Plaintiff sought $1,000.00 in compensatory damages and $1,000,000.00 in punitive damages. Defendants filed a motion to dismiss challenging the legal sufficiency of the complaint. The motion was granted by the trial court. Plaintiff appealed.
As many of our readers will recognize, for a plaintiff to state a cause of action for negligence, his or her complaint must allege:
- Facts that establish the existence of a duty of care owed to him by Defendant;
- A breach of that duty; and
- An injury proximately caused by that breach.
In their motion to dismiss Defendants argued they had no duty to protect plaintiff from the theft of his iPhone. The Illinois Appellate Court examined the rules of law regarding landowners having a duty to protect others. In general, a landowner has no duty to protect others from criminal activities by third persons unless a "special relationship" exists between the parties. The applicable special relationship here is business invitor and invitee.
In Illinois, even when this special relationship exists, the landowner may only be held liable for physical harm caused by acts of third persons. The Court examined an out of state case with similar circumstances. The decision indicates, in general, a business landowner or occupier has no duty to protect its invitees from the criminal acts of unknown third parties absent "special facts and circumstances." Such circumstances were noted to be when the landowner knows or has reason to know there is a likelihood of conduct by third persons, which is likely to endanger the safety of visitors.
The parameters of the "special facts and circumstances" exception did not reach a duty as to damage to or loss of property, and the Appellate Court declined to extend the exception to cases of property loss or damage. The IL Appellate Court here was in agreement and held Burger King owed Plaintiff no duty to protect him from the theft of his iPhone by third persons.
Please note the Court went on to state in the absence of such a special relationship, liability may still be imposed for negligent performance of a voluntary undertaking, such as a voluntary undertaking to provide security. As there was no voluntary undertaking of Burger King to provide security in this matter Plaintiff again failed under this theory of liability.
As you can see, a minor change in the facts, such as a history of theft at the Burger King, which it was aware of, and Plaintiff having been struck during the theft, sustaining physical damage, would indicate such a claim would survive a motion to dismiss. Likewise, if a security officer were present and the theft occurred the argument could be made that by allowing the theft, Burger King was negligent in its performance of providing security.
This article was researched and written by Matthew Ignoffo, J.D., M.S.C.C. Please feel free to contact Matt at mignoffo@keefe-law.com.
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Synopsis: Important Ruling on Distinction Between Jones Act and LHWCA to Move to the U.S. Supreme Court, If They Will Accept—analysis by Jim Egan, J.D.
Editor’s comment: The U.S. Supreme Court has been asked to determine whether a ship repairman who was injured when the crane he was operating collapsed should be allowed to recover for his emotional trauma from the death of a coworker/relative in the accident under the Jones Act. The 5th Circuit Court of Appeals' determined the Jones Act applied to Plaintiff in a ruling many in the maritime industry feel vastly broadens the definition of a "seaman" under the Jones Act.
For quick reference, the Jones Act is a longstanding benefit plan for folks who work on “navigable waters” or our rivers and neighboring oceans—Jones Act claims that don’t settle are typically presented to juries. The Longshore Harbor and Workers’ Comp Act is a federally administered WC benefit program for folks that fix/repair vessels and/or load and unload cargo. LHWCA claims that don’t settle are tried before Administrative Law Judges who work for the U.S. Department of Labor. The defense team at KCB&A has experience in handling both.
In Naquin v Elevating Boats, Plaintiff Naquin worked at the Elevating Boats shipyard in Houma, Louisiana, and his primary job duties were maintenance and repair of the company's fleet of lift-boats. While Naquin was using a lift-boat the boom and crane house abruptly separated from the crane pedestal. Naquin was able to escape from the crane before it toppled onto a nearby building. However, Naquin suffered severe injuries to his feet and an abdominal hernia in making his escape. Complicating matters was the fact the husband of his cousin, who also worked for Elevated Boats, was inside the building and was crushed to death when the crane fell on him.
Naquin filed a Jones Act suit alleging Elevated Boats had been negligent in the construction and/or maintenance of the shipyard crane. After a three-day trial a jury awarded him $2,463,842 in damages, plus interest.
Elevating Boats appealed, asserting Plaintiff’s injuries should have been covered by the Longshore and Harbor Worker's Compensation Act because he was "a land-based boat repairman," who "spent less than 0.01% of his work time...on any vessel in navigable open waters." Even though he worked on repairing and inspecting boats dockside, Defendant argued "he was not on navigable vessels, and the nature of his work did not expose him to the perils of the sea," Elevating Boats contended. Thus, Elevating Boats insisted he was not the sort of worker the Jones Act was designed to protect.
The Federal 5th Circuit Court of Appeals in New Orleans disagreed, concluding Naquin was a Jones Act seaman. The panel majority also held emotional damages resulting purely from another person’s injury, and not a fear of injury to one’s self, are not compensable under the Jones Act. Further casting confusion on the claim, the dissent argued the Jones Act shouldn't have even come in to play in Naquin's case because he was a land-based worker.
In its petition for rehearing, Elevating Boats argued, unsuccessfully, the en banc federal court needed to reverse the panel's decision because it was inconsistent with the U.S. Supreme Court's decision in Chandris v Latsis, as well as rulings from the 5th, 9th and 11th Circuits following the rule ofChandris. Elevating Boats argued Naquin could not show how his connection to any vessel in navigation was "more than fleeting," and he did not face the type of maritime perils the Jones Act was intended to address.
Because of the federal circuit conflict, Elevating Boats believes this case presents a prime issue for the U.S. Supreme Court to review and is hoping the SCOTUS accepts the case in order to provide attorneys with more guidance as to the scope of the Jones Act. Elevating believes the dissent is correct and the Jones Act does not apply. Maritime defense experts are following this case closely and believe the Fifth Circuit majority was right in reversing the jury's damage award. Many experts feel even applying the Jones Act to a case of this nature blurs the line between LHWCA coverage and the Jones Act. Concerns are based upon 5th Circuit's ruling, workers who aren't really assigned to vessels and exposed to the perils of the sea qualify as Jones Act seamen, which would open the door for nearly any land-based worker who does repairs onboard a vessel to bring a Jones Act claim.
If workers can qualify as both longshoremen and seamen, vessel owners could may face significantly more exposure and costs for claims if the 5th Circuit’s decision stands. So along with the rest of the U.S. maritime industry we will continue to follow the progress of this matter and report. This article was researched and written by James F. Egan, J.D. who is our LHWCA and Jones Act guru. Jim can be reached for your questions and concerns at jegan@keefe-law.com.
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Synopsis: To Stay or Not to Stay a Contribution Action, that is the Question. Thoughts and Analysis by Matthew G. Gorski, JD.
Editor’s comment: On July 25, 2014, our IL Appellate Court issued Cholipski v. Bovis Lend Lease, Inc., 2014 IL App (1st) 132842 (July 25, 2014). Justice Randye Kogan of the First District of the Illinois Appellate Court ruled it was within the trial court's discretion to stay a third-party contribution action until after a trial of the original action. We feel this ruling is of great importance in the construction and other industries where contribution actions are commonplace.
Plaintiff and his wife brought both negligence and loss of consortium claims against Defendants for injuries resulting from metal tubing falling on him during a construction project. Defendants initially responded by denying any liability. Subsequently, three (3) years after Plaintiff brought the original claims, Defendants requested leave of the trial court to bring a third-party contribution claim against the pain management doctor alleging medical malpractice. The trial court granted Defendants leave to file their contribution claim. However, as Plaintiff did not want further delay of the already set trial, he requested relief from the trial court. Using its discretionary authority, the trial court granted a stay of the contribution claim until after the trial of the original claims was completed. Defendants' counsel requested an appeal of the stay pursuant to Illinois Supreme Court Rule 307(a)(1), which allows for the immediate appeal of an injunction. Upon hearing the matter, the Appellate Court affirmed the trial court’s rulings.
The contribution claim alleged Plaintiff’s pain management doctor misdiagnosed Plaintiff with complex regional pain syndrome (CRPS), failed to treat plaintiff for hypertension, failed to treat plaintiff for plantar and peroneal neuralgias, administered massive doses of Decadron—even though plaintiff has hypertension and other alleged acts of negligence.
Importantly, the Appellate Court analyzed the Laue rule, which states “if an action by an injured party is pending, any contribution claim must be made in that pending action.” It is essential that upon receiving defense of any type of claim that your attorney consider any available contribution claims and all third-party practice options which might relieve you of a portion of liability. In other words, if you do not use contribution claims, you lose them.
Additionally, the Appellate Court decided to affirm the stay of the contribution claim until after the original claims trial was completed because of the length of time that had passed without a trial. The Appellate Court also held Defendants waived certain claims by not presenting them before the trial court at the time of it ordering the stay of the third-party proceedings.
Overall, we recommend that you always consider any possible contribution claims at the earliest opportunity. The earlier you are able to assert them upon receiving a lawsuit, the better. Not doing so will subject you to all of the liability when another individual or entity may be responsible for a portion or possibly the entire liability. If you aren’t sure of other paths for contribution claims, feel free to send an email or contact a KCB&A attorney to discuss.
This article was researched and written by Matthew G. Gorski, JD. Matt can be reached with any of your questions regarding third-party practice, contribution claims, workers’ compensation, and all other general liability issues at mgorski@keefe-law.com.