September 29, 2008

Limited Liability Company Must Have A Lawyer To Prosecute Appeal

Wabash Environmental Technologies, a limited liability company, was convicted of violating the Clean Water Act. The company was ordered to pay restitution and was placed on probation. After Wabash failed to make payments under the original restitution order, the company agreed to another payment schedule with the government.

The case then was dismissed, and Wabash appealed. But Wabash was represented in the appeal by one of its members, who was not a lawyer. The issue was whether, like a corporation, Wabash was prohibited from proceeding without a lawyer. The Seventh Circuit Court of Appeals dismissed Wabash’s appeal and ruled that it could not appeal without a lawyer.

There are many small corporations and corporation substitutes such as limited liability companies. But the right to conduct business in a form that confers privileges, such as the limited personal liability of the owners for tort or contract claims against the business, carries with it obligations one of which is to hire a lawyer if you want to sue or defend on behalf of the entity. Pro se litigation is a burden on the judiciary … and the burden is not to be borne when the litigant has chosen to do business in entity form. He must take the burdens with the benefits … From that standpoint there is no difference between a corporation and a limited liability company, or indeed between either and a partnership, which although it does not provide its owners with limited liability confers other privileges, relating primarily to ease of formation and dissolution. That is why the privilege of pro se representation is, as we noted, denied to partnerships too.

Read the whole case, U.S. v. Hagerman, No. 08-2670 (9/26/08), by clicking here.

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September 24, 2008

Denial Of Food Company’s Federal Preemption Defense Not An Appealable Interlocutory Order

Tyson Foods moved for summary judgment in a class-action lawsuit. Tyson argued that the claims against it were preempted by federal law. The summary judgment motion was denied, and Tyson appealed.

Ordinarily, the denial of a summary judgment motion is not appealable because it is not a final judgment. But Tyson argued that the order denying its preemption defense was appealable under Illinois Supreme Court Rule 307. Rule 307 allows appeals of certain interlocutory orders, including those “granting, modifying, refusing, dissolving, or refusing to dissolve or
modify an injunction.” Tyson argued that the denial of the preemption defense “is subject to interlocutory appeal under Illinois Supreme Court Rule 307(a) … because the ‘preemption argument brings into issue the authority of the trial court to enter the order appealed from.’”

The Fifth District Illinois Appellate Court rejected Tyson’s argument and dismissed the appeal. Tyson’s position “… would be to ignore the long-standing principle that only final judgments or orders are appealable unless the particular order falls within one of the eight specified exceptions enumerated by Illinois Supreme Court Rule 307 … Although there may be compelling public policy reasons for allowing an interlocutory appeal of orders denying motions that establish a complete affirmative defense such as federal preemption, we are powerless to grant such interlocutory review.”

Get the whole opinion, Rogers v. Tyson Foods, No. 5-08-0205 (8/11/08), by clicking here.

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September 22, 2008

Remand To Bankruptcy Court Deprives Seventh Circuit Of Jurisdiction

Diana Holland, who owned real property in Florida, filed her Chapter 7 Bankruptcy in Illinois. She asserted that Florida law exempted the Florida property from the bankruptcy. The bankruptcy trustee argued that Illinois law applied, and that it did not exempt the Florida property. The bankruptcy court ruled that Illinois law applied, but did not consider whether the property was exempted. On appeal, the district court reversed, ruled that Florida law applied, and remanded the issue of exemption back to the bankruptcy court.

The trustee appealed to the Seventh Circuit Court of Appeals. But the Seventh Circuit dismissed the appeal and ruled it did not have appellate jurisdiction because the district court’s order was not final and appealable. Although the federal circuits are split on the question, for the Seventh Circuit, the district court’s remand order made the difference.

Our circuit precedent accords with the majority view: “[E]ven if the decision of the bankruptcy court is final, a decision by the district court on appeal remanding the bankruptcy court’s decision for further proceedings in the bankruptcy court is not final, and so is not appealable to this court, unless the further proceedings contemplated are of a purely ministerial character . . . .” What remains to be decided here is hardly ministerial: the bankruptcy court still has to answer the $350,000 question whether Holland is entitled to an exemption under Florida law. … Only then—after the bankruptcy court has made its final ruling, the district court has revisited the case, and a fresh notice of appeal to our court has been filed—can we exercise jurisdiction over the matter.

Read the whole case, In re Holland, No. 07-1949 (8/19/08), by clicking here.

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September 15, 2008

Court’s Application Of Erroneous Legal Criteria To Decertify Class Results In Reversal

Priscilla Rosolowski was the named plaintiff in a class-action lawsuit against Clark Refining and Marketing. The class consisted of residents who lived near Clark’s oil refinery. They claimed the refinery was a nuisance.

A first trial judge certified the class. A second trial judge denied Clark’s motion to decertify the class. Clark tried again for decertification, but a third judge, the one who tried the case, denied Clark’s motion.

A trial resulted in a $120 million verdict against Clark, $40 million of it for punitive damages. Clark then filed motions to vacate the judgment, for a new trial, and for decertification of the class. One year later, the trial court granted Clark’s motions.

Plaintiff appealed. The question of decertification of the class took center stage. The court identified the standard of review for decertification of a class – reversal “only if the trial court abused its discretion or applied erroneous legal criteria.” In this case, the First District Illinois Appellate Court found an abuse of discretion and vacated the decertification because “the trial court applied improper legal criteria by failing to consider whether there had been changed circumstances and a decision on the merits. To the extent that its decision represented an implicit finding of changed circumstances, the trial court abused its discretion. Acting without changed circumstances and after a decision on the merits, the trial court simply lacked the statutory authority to issue the order that it did. As a result, this court must vacate the decertification order.”

Read the whole opinion, Rosolowski v. Clark Refining and Marketing, No. 1-07-0048 (6/16/08), by clicking here.

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September 12, 2008

Appellate Court Can Look Beyond Record To Assess Admissibility Of Novel Scientific Evidence

Tanisha Ruffin, on behalf of her infant daughter Sonya, sued Dr. Leo Boler for malpractice during Sonya’s delivery. Ruffin claimed Boler’s negligence caused Sonya to be born with an injury to her brachial plexus nerve network located at the shoulder area.

The case was tried to a jury, which ruled in favor of Boler. Ruffin asked for a new trial because Boler’s expert, a biomedical, biomechanical engineer, was allowed to testify. The trial court (a new judge) agreed that Boler’s expert should have been barred, and granted the new trial. Boler appealed.

The admission of novel scientific evidence in Illinois courts is governed by the Frye standard. (“… admissible at trial only if the methodology or scientific principle upon which the opinion is based is ‘sufficiently established to have gained general acceptance in the particular field in which it belongs.’”)

The First District Illinois Appellate Court ruled it was proper to admit the expert’s testimony. The appellate court considered two federal district court opinions that decided whether this same expert’s evidence was admissible. The court stated it properly could look outside the appellate record for the purpose of determining the propriety of evidence under the Frye standard. “… [O]ur de novo review of Judge Morrissey's [trial court judge] Frye analysis is not limited to the evidence presented at the Frye hearing. We may also consider, ‘where appropriate, sources outside the record, including legal and scientific articles, as well as court opinions from other jurisdictions.’"

The whole opinion, Ruffin v. Boler, No. 1-06-3437 (6/25/08), is available by clicking here.

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September 9, 2008

More Good Times With Illinois Appellate Lawyers

Illinois Solicitor General Michael Scodro will be the featured speaker at The Illinois Appellate Lawyers Association’s September 2008 lunch meeting. Scodro will talk about amicus briefs.

The meeting will be on September 26, 2008 at the Chicago Bar Association, 321 S. Plymouth Court, Chicago, Illinois. Reception starts at noon. Luncheon at 12:30 p.m. Cost is $30 for members, $35 for non-members.

Call the Association, 847-885-2410, or email, for a reservation.

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September 8, 2008

Veterinarian Forfeits Moorman Defense In Illinois Supreme Court

David Loman owned a race horse that he brought to the College of Venterinary Medicine at the University of Illinois for treatment. David Freeman performed surgery on the horse. But Loman said the surgery left the horse unable to race. So Loman sued Freeman.

Loman’s claims for negligence and conversion were dismissed by the trial court. The appellate court reversed and reinstated Loman’s complaint. The Illinois Supreme Court affirmed the appellate court.

Freeman asserted that the Moorman Doctrine (economic damages — i.e., contract damages — not available in a tort action) blocked Loman’s negligence case. But first there was the question of whether Freeman forfeited the Moorman defense in the Illinois Supreme Court.

Freeman raised the Moorman Doctrine in his petition for leave to appeal, but he did not sufficiently brief the question. Here’s what the supreme court said:

Defendant's petition for leave to appeal lists "Moorman Doctrine" as one of the points relied upon for reversal. However, the doctrine is only briefly referred to in the remainder of the petition … He concludes that he "firmly believes that the Moorman Doctrine applies to this set of facts … In defendant's brief to this court, he did not provide argument in support of these conclusory remarks … Counsel for defendant made no mention of Moorman at oral argument.

In throwing out Freeman’s Moorman Doctrine defense, the court stated it was “entitled to have issues clearly defined with relevant authority cited.”

We first reported on this case after the appellate court ruled in December 2006. The whole opinion, Loman v. Freeman, No. 104289 (4/17/08), is available by clicking here. Be sure to read J. Freeman's strong and well-written dissent.

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September 3, 2008

Dispute Over Expert Testimony Not Waived On Appeal Despite Failure To Make Offer Of Proof In Trial Court

Efrain Torres injured his shoulder when he slipped on property owned by Midwest Development Company. Torres sued Midwest, claiming the company caused an unnatural accumulation of ice on the property. Michael Eiben, Torres’s roofing expert, was barred from testifying at trial, because, the trial court ruled, Eiben had “no rational basis for his opinions.”

After a jury verdict in favor of Midwest, Torres appealed. He argued that Eiben should have been allowed to tell the jury his opinions about ice damming and proper roof construction. That raised the question of whether plaintiff’s failure to make an offer of proof to the trial judge resulted in waiver of the argument that Eiben should have been permitted to testify.

The First District Illinois Appellate Court ruled there was no waiver. The court acknowledged that “when a trial court refuses evidence, no appealable issue remains unless a formal offer of proof is made.”

But this case fell into the exception that “an offer of proof is not required where it is apparent that the trial court clearly understood the nature and character of the evidence sought to introduced … A review of the record demonstrates that the trial court had before it Eiben’s written report and lengthy deposition testimony, which contained with them all of the opinions that he would have provided at trial. The trial court also heard extensive argument from both parties regarding Eiben’s qualifications, opinions and lack of a factual basis for those opinions.”

Read the whole case, Torres v. Midwest Development Co., No. 1-06-3698 (5/19/08), by clicking here.

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