Synopsis: Illinois WC Rates Jump Again and Your PPD Reserves Need Retroactive Updating. Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Editor’s comment: We remain chagrined to continue to watch the endless spiral of IL WC rates. Starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, our WC rates keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $721.66. When it was published, this rate changed retroactively from July 1, 2013 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong.If you have a claim with a date of loss after July 2013 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies. If this isn’t clear, send a reply.

The current TTD weekly maximum has risen to $1,336.91. A worker has to make over $2,005.36 per week or $104,278.98 per year to hit the new IL WC maximum TTD rate. Do such folks truly need full TTD value? Does any state in the United States have a TTD maximum that high?

The new IL WC minimum death benefit is 25 years of compensation or $501.34 per week x 52 weeks in a year x 25 years or $651,742.00! The new maximum IL WC death benefit is $1,336.91 times 52 weeks times 25 years or a lofty $1,737,983.00 plus burial benefits of $8K.

The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet. If you want it, simply reply to Shawn at sbiery@keefe-law.com and he will get a copy routed to you before they raise the rates again!

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Synopsis: KCB&A gets a big win at the IL Appellate Court, Workers’ Comp Division; with an in-depth look at the form and function of the IL Supreme Court Rule 23 Order.

Editor’s comment: You have heard us discuss what we feel is the dreaded Rule 23 Gag or “Unpublished” Appellate Court Order in the past with some harsh criticism, but most of the time, and especially in recent courtroom opinions, we feel it is used the right way. We provide a little detail over one of our most recent victories, and a bit of exposition on the status of the court’s use of the Rule 23 order.

In Glass v. YRC, this firm defended one of the nation’s largest trucking organizations. At the initial Arbitration hearing, Petitioner was awarded benefits and a prospective lumbar fusion surgery. The facts of the claim were not wholly one sided though, and on appeal at the IWCC, the Commission agreed with a multitude of arguments made by Arik Hetue in his appeal of the Arbitrator’s decision. Ultimately, the IWCC Commissioners ruled Petitioner suffered a temporary aggravation of a pre-existing condition, and confirmed the prospective surgery was not causally related to the work injury. On appeal at the Circuit and Appellate Courts, the IWCC decision was affirmed. If you would like to review a copy of the recent Appellate Court order, send a reply and we can forward you a copy. It sounds a bit like a run of the mill case, but we assure you there was a lot of medical care and a potential wage differential award hanging in the balance. What the case lets us do however is explore two very important concepts – the manifest weight of the evidence standard, and the Rule 23 Order.

In Glass the facts were up in the air and the case really could have gone either way – as evidenced by the Arbitrator awarding benefits and the Commission reversing and awarding some benefits but confirming the medical care at issue was not related. While all defense victories are a joy to a defense attorney, in this line of business, the Commission appeal level is the one you want to win. As we have discussed ad nauseum in the past, the Commission gets to look at everything with a fresh set of eyes and draw its own conclusions – it is not required to give any weight or deference to the Arbitrator’s findings. The legal term of art for this standard is “de novo”, and it allows the Commission to revisit the facts and come to a different conclusion than the Arbitrator did.

Why is this the level we are so pleased to win at? Once a case moves from the IWCC to the Circuit Court – the facts are “locked in” and any reviewing court can only come to a different factual finding if the facts are “against the manifest weight of the evidence.” That means the opposite conclusion has to be clearly apparent – it’s the kind of thing that happens rarely, or that is supposed to happen rarely. InGlass the Circuit Court judge clearly outlined his opinion that while the facts in a case can go either way, he is forbidden to substitute his view of them for the Commission’s. We agree and feel that is right in line with the appropriate legal standard. We were extremely pleased to see the IL WC Appellate Court agree and issue a simple ruling in the form of the Rule 23 Order.

A Rule 23 Order is an unpublished opinion – it’s meant to be used in cases like this one, where there is no significant controversy or groundbreaking ruling that may require publishing the opinion such that others could rely on the Court’s statements in other similar circumstances. We have complained bitterly in the past in this KCB&A Update over cases that were decided under this type or order which had what seemed like far-reaching impactive statements by the court.

Well, it appears they got the message, as we have recently performed a review of all of the Rule 23 orders from the past 6 months. Not a single such order was used in a case where there was what we feel to be a statement or ruling that should have been published. Bully for you, Appellate Court Justices! We hope they continue to keep using this order in the manner it was intended for, and continue to publish those rulings that have more far reaching statements.

This article was researched and written by Arik D. Hetue, J. D. who can be reached at ahetue@keefe-law.comfor comment.

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Synopsis: Warranty Law—What Can You Do If You Bought a Piece of Junk? Analysis by KCB&A’s top GL/Warranty defense team member Chris St. Peter, J.D.

Editor’s comment: We want our readers to know what rights are available to consumers who purchase any new products that don’t work as intended or otherwise fail to comply with an express warranty. Our readers should also be aware of these laws from a defense perspective, as these consumer protection cases can be difficult and costly to defend due to statutory fee-shifting provisions and a strong public policy favoring consumer rights.

To this end, below is an overview of breach of express warranty claims under both federal and Illinois law.Please note that while these protections can apply to vehicles, Illinois also has a separate “Lemon Law” statute, 815 ILCS 380/1 et seq., which is not analyzed here.

I. Federal Magnuson-Moss Warranty Act

A. Background

Breach of warranty claims are governed by the federal Magnuson-Moss Warranty Act (15 U.S.C. § 2301 et seq. (1994)). The Magnuson-Moss Act allows consumers to file a lawsuit to recover damages resulting from a breach of a written warranty. As an Illinois court explained, “The Act provides a private right of action by a consumer purchaser of a consumer product against a manufacturer or retailer failing to comply with the Act or the terms of a written warranty arising therefrom.” Hasek v. DaimlerChrysler Corp., 319 Ill. App. 3d 780, 793 (1st Dist. 2001). A consumer alleging a violation of the Act may file a lawsuit in any state court. 15 U.S.C. § 2310(d)(1)(A). If the amount in controversy is over $50,000 (exclusive of interest, fees, or costs), the consumer may file suit in federal court. Id. § 2310(d)(3)(B).

The Act applies to the sale of any written warranty on a consumer product (or services in connection with that product) costing more than $10. See 16 C.F.R. § 700.1(g), (h). The definition of “consumer product” includes automobile-related products. Id. § 700.1(a). The Act defines a “written warranty” as:

(A) any written affirmation of fact or written promise made in connection with the sale of a consumer product by a supplier to a buyer which relates to the nature of the material or workmanship and affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time, or

(B) any undertaking in writing in connection with the sale by a supplier of a consumer product to refund, repair, replace, or take other remedial action with respect to such product in the event that such product fails to meet the specifications set forth in the undertaking.

15 U.S.C. § 2301(6). Thus, for example, the Magnuson-Moss Act can apply to written warranties guaranteeing the consumer’s “satisfaction“ or that the product “will be free from defects in materials or workmanship” for a certain time period.

B. Elements of a Claim

To state a claim for breach of written warranty under the Magnuson-Moss Act, a plaintiff must prove: (1) there was a defect in the product; (2) the defect was covered by the warranty’s terms; (3) a demand for cure was made; and (4) the defendant either refused or was unable to cure the defect. Hasek v. DaimlerChrysler Corp., 319 Ill. App. 3d 780, 794 (1st Dist. 2001).

C. Available Damages

The measure of damages in a breach of warranty claim are calculated based upon the sum of money that would put the plaintiff in as good a position as he or she would have been in if the defendant had performed all its promises under the warranty, as well as any reasonably related incidental and consequential damages. See Ill. Pattern Jury Instructions, IPI 185.09, 185.12 (2007). These damages can include the cost of repairs, aggravation and inconvenience, and diminished value of the product. See, e.g., Razor v. Hyundai Motor Am., 222 Ill. 2d 75, 83 (2006) (awarding $5,000 in warranty damages for the diminished value of Plaintiff’s car and $3,500 in consequential damages for aggravation and inconvenience and loss of use).

In addition—and most notably—the Act permits recovery of attorney’s fees. See 15 U.S.C. § 2310(d)(2). Moreover, attorney’s fees can be awarded which are not proportionate to the amount at stake. See, e.g., Cannon v. William Chevrolet, 341 Ill. App. 3d 674, 686 (1st Dist. 2003) (“the award of attorney fees does not depend upon a plaintiff's recovery of substantial monetary damages nor does it need to be proportionate to an award of money damages”). Thus, a relatively small warranty claim can result in a large award due to the amount of attorney’s fees incurred.

II. Illinois Breach of Warranty Claim under Uniform Commercial Code

A. Background

Illinois has a separate cause of action for breach of warranty claims, which is governed by the Uniform Commercial Code (“UCC”). See 810 ILCS 5/1-101, et seq. As a threshold matter, however, the UCC only applies to the sale of goods, not the sale of services. Id. § 5/2-102. Where there is a mixed contract for goods and services, the UCC only applies if the sale is predominantly for goods and incidentally for services. Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325, 352-53 (2002). When presented with a mixed contract, the court will make a finding of whether the sale is predominately for goods or services, thus determining coverage under the UCC. See, e.g., Brandt v. Boston Scientific Corp., 204 Ill. 2d 640, 654 (2003) (transaction between hospital and patient involving surgical implantation of medical device was predominantly for services, and incidentally for purchase of goods, such that UCC did not apply).

B. Elements of a Claim

The elements of a breach of express warranty claim under the UCC are effectively the same as the elements under the federal Magnuson-Moss Act. See Hasek v. DaimlerChrysler Corp., 319 Ill. App. 3d 780, 794 (1st Dist. 2001). However, under the UCC, a plaintiff must also show the seller’s warranty formed part of the basis of the bargain. Wheeler v. Sunbelt Tool Co., 181 Ill. App. 3d 1088, 1100 (1989). Stated differently, the warranty must be a basic assumption of the parties’ agreement.

C. Available Damages

A buyer may recover all losses “resulting in the ordinary course of events from the seller’s breach as determined in any manner which is reasonable.” 810 ILCS 5/2-714(1). This includes incidental and consequential damages.Id. § 5/2-715(2)(b). Thus, the damages are the same as those available under the federal Magnuson-Moss Act, with the notable exception that attorney’s fees are not recoverable under the UCC.

In summary, the above two warranty statutes provide strong protections for consumers—and in the case of the federal Magnuson-Moss Act, a fee-shifting provision—that can make defense of such lawsuits challenging and costly. There are also a myriad of other potentially applicable consumer protection, product liability, breach of contract, and other laws that are outside the scope of this analysis. We ask our readers to contact us with any questions or concerns about how these laws might apply to them as a consumer or to their business as a manufacturer or retailer.

This article was researched and written by Chris St. Peter, J.D. and your editor. Please feel free to provide your thoughts and comments to Chris at cstpeter@keefe-law.com.

KCBA Blog

1-27-14; Update Your IL WC Rates With Shawn's Great Sheet; Big Appellate Win, Analysis by Arik Hetue; Lemon Law Analysis by Chris St. Peter and more