Illinois Trial Lawyers Still Waiting for Confirmation That Settling Defendants Should Be Listed on the Verdict Form for Comparative Fault Purposes

Civil Litigation FlashPoints  August 2008

Illinois Trial Lawyers Still Waiting for Confirmation That Settling Defendants Should Be Listed on the Verdict Form for Comparative Fault Purposes

Soon, we may have the long-awaited answer to a question that has troubled Illinois trial lawyers and judges in negligence and product liability cases since 1994, when the Illinois Supreme Court decided Lannom v. Kosco, 158 Ill.2d 535, 634 N.E.2d 1097 (1994). The question is: Should defendants who have settled with the plaintiff prior to trial nevertheless be listed on the verdict form for the purpose of assessing comparative fault under section 2-1117 of the Code of Civil Procedure (735 ILCS 5/2-1117) (West 2002))? 

The Court now has under advisement Ready v. United/Goedecke Services, Inc., 367 Ill.App.3d 272, 854 N.E.2d 758 (1st Dist. 2006), in which the Illinois Appellate Court held that a defendant who remains in the case at trial should have his culpability assessed relative to the culpability of all defendants, including defendants who had earlier settled with the plaintiff. "Only in this manner can the intent of section 2-1117, that minimally culpable defendants be held minimally responsible, be achieved." Ready, 367 Ill.App.3d at 278, 854 N.E.2d at 763. 

Section 2-1117 provides in part that "Any defendant whose fault, as determined by the trier of fact, is less than 25% of the total fault attributable to the plaintiff, the defendants sued by the plaintiff, and any third party defendant except the plaintiff's employer, shall be severally liable" for all damages other than medical expenses (as the latter, all defendants' liability is joint and several for the full amount).

Thus, for example, a defendant found to be only 15% at fault would be severally liable to pay only 15% of such non-medical damages, while a defendant found 40% at fault would be jointly and severally liable for all such damages. For this reason, litigants naturally have a keen interest in whether jurors will have a verdict form listing all those potentially responsible for the damages. 

In Ready, the plaintiff was killed when one of the beams used for scaffolding on his jobsite fell and struck him. His estate sued the employer, the general contractor and the scaffolding subcontractor. The employer and general contractor settled, and the case went to trial against the scaffolding subcontractor alone. 367 Ill.App.3d at 274, 854 N.E.2d at 760. 

Prior to trial, the judge ruled on two key motions in limine, and each must have caused counsel for the subcontractor to reach for the Excedrin. First, the judge barred as irrelevant all evidence relating to the two other defendants who had settled. Second, the judge ruled that neither of the settling defendants would be mentioned on the verdict form, and the jury would apportion fault only between the plaintiff and the subcontractor. The appellate court opinion does not shed much light on how the trial court could have come to the conclusion that the employer and general contractor had not been "defendants sued by the plaintiff," other than to say that they were not defendants "at the time of trial" – a phrase found nowhere in section 2-1117. The trial court appears to have simply thrown up its hands, saying "we cannot apportion on a verdict form fault to settling parties," without explaining why not. After all, how else might one ascertain the defendants' relative culpability, except by listing them all on the verdict form? 

While this might seem a simple question, there has been a remarkable divergence of opinion among Illinois courts. And much of the confusion seems to originate with the Supreme Court's 1994 opinion in Lannom -- a case involving a plaintiff, defendant and third-party defendant. The third-party defendant settled with the plaintiff prior to trial and was dismissed from the case. The defendant argued on appeal that the third-party defendant should not have been dismissed because its absence from the litigation would preclude the jury from apportioning fault to that party. The Supreme Court properly held that section 2-1117 was not intended to preclude dismissal of a defendant or third-party defendant from a case.  

Note that Lannom did not involve the question of a verdict form at all, but instead the question whether dismissal of a settling party is proper. Yet, two sentences in the opinion have been relied on by both proponents and opponents of the inclusion of settling defendants on a verdict form. 

First, in the context of stating that section 2-1117 did not preclude dismissal of settling parties, the Supreme Court in Lannom said, "the defendant's rights under section 2-1117 are not abolished simply because a defendant or third part settles or is dismissed from an action." 158 Ill.2d at 542-43, 634 N.E.2d 1097. Defendants proceeding to trial point to this sentence and say, confidently, that the Supreme Court obviously meant that one of the rights not abolished under section 2-1117 is the right to have their relative culpability compared on a verdict form with all "defendants sued by the plaintiff," including those who have settled prior to trial. 

Second, however, the Supreme Court in Lannom went on to say, in the very next sentence, "The jury may still assess the remaining defendants' relative culpability, and if the degree of fault attributable to one or more defendants is less than 25%, those defendants' liability is several only." Id. Plaintiffs who want settling defendants off the verdict form confidently point to this sentence, particularly the Court's reference to the "remaining defendants' relative culpability," and say that this means only those defendants who remain in the case when it is submitted to the fact finder are defendants within the meaning of section 2-1117. 

There is much opportunity for mischief in connection with these verdict forms. As Justice Hoffman said in his concurring opinion in Ready: 

If a settling defendant may not be included under section 2-1117, a plaintiff could sue two defendants, one who is primarily at fault but indigent and one who is minimally at fault but wealthy. By settling with the indigent defendant, the plaintiff could circumvent the application of section 2-1117, leaving the wealthy defendant, even though minimally liable, jointly liable for all damages because the settling defendant's portion of the fault can no longer be considered. 

He correctly recognized that this raises the "possibility of bad faith, collusion and increased gamesmanship. 367 Ill.App.3d at 281, 854 N.E.2d at 766. However, he also recognized another side of the argument: 

For the sake of analysis, let us assume that [a hypothetical plaintiff] suffered a traumatic amputation of a foot and sued two defendants, one who was primarily at fault, 85%, but indigent and having only $300,000 in insurance coverage and one who was minimally at fault, 15%, but wealthy and having $5,000,000 in coverage. Let us assume further that this plaintiff entered into a good-faith settlement with the indigent defendant and accepted the policy limit of $300,000 in exchange for a release of liability. Thereafter, the plaintiff went to trial against the wealthy defendant resulting in a $3,000,000 verdict in favor of the plaintiff, no portion of which was assessed for medical expenses. If the indigent defendant's fault is not considered in applying section 2-1117, the wealthy defendant, who was in reality only 15% at fault for the plaintiff's injury, would … be liable for the payment of the entire judgment less a set-off for the settlement amount that the plaintiff received from the indigent defendant. Simply put, the wealthy defendant would be required to pay the plaintiff $2,700,000. If, on the other hand, the indigent defendant's fault is considered in applying section 2-1117, the wealthy defendant, being only 15% at fault for the plaintiff's injury, would be severally liable. The effect being that the wealthy defendant would pay 15% of the judgment after it was reduced by the $300,000 settlement amount (see 740 ILCS 100/2(c) (West 1998)) or $405,000. [$3,000,000 - $300,000 = $2,700,000; and $2,700,000 x 15% = $405,000] 

Under the first scenario, the plaintiff would recover his total damages of $3,000,000. However, the wealthy defendant, who in actuality was only 15% at fault for the plaintiff's injury, would be required to pay $2,700,000 or 90% of the total damage award. Hardly an equitable apportionment of damages according to relative fault. Under the second scenario, the wealthy defendant would pay $405,000, and the plaintiff would recover $705,000 in total compensation for damages assessed at $3,000,000. Not only has the wealthy defendant paid $45,000 less than his 15% pro-rata share of the plaintiff's total damages as a result of the set-off provisions of the Contribution Act (see 740 ILCS 100/2(c) (West 1998)), but the plaintiff has been under compensated by a total of $2,295,000. Hardly just compensation for the injury suffered or an equitable apportionment of damages. 

Nevertheless, Justice Hoffman recognized the obvious: 

The plain language of the statute provides that the fault of "defendants sued by the plaintiff" must be considered in resolving the issue of the joint or several liability of non-settling defendants. See 735 ILCS 5/2-1117 (West 1998). The fact that a defendant may have settled with a plaintiff during the course of litigation does not remove that defendant from the status of a defendant "sued by the plaintiff." 

Accordingly, whatever the courts may think of the policy considerations outlined by Justice Hoffman, the plain language of the statute requires that settling defendants be included on the verdict form for fault allocation purposes. Yet, just four months ago, another division of the same appellate court which had decided Ready reached the opposite conclusion, in Yoder v. Ferguson, 381 Ill.App.3d 353, 885 N.E.2d 1060 (1st Dist. 2008). (Ready was decided by the Third Division of the First District, and Yoder was decided by the Fourth Division of the First District. A petition for leave to appeal Yoder has been filed and fully briefed, but as of this writing the Supreme Court has not issued an order regarding the petition.) 

This is an issue that arises in virtually every negligence and product liability case that is tried in this state. Practitioners in the area eagerly await a decision by the Supreme Court to settle the issue once and for all.