Case No. 124107 - Appellant's Brief · The Hon. Peter Flynn, Presiding ; OPENING BRIEF OF...

No. 124107 IN THE SUPREME COURT OF ILLINOIS

MARY LEWIS and TASHWAN BANKS, Individually and on behalf of others similarly situated,

Plaintiffs-Appellees,

v.

LEAD INDUSTRIES ASSOCIATION, INC., ATLANTIC RICHFIELD COMPANY, CONAGRA GROCERY PRODUCTS COMPANY, NL INDUSTRIES, INC., and THE SHERWIN-WILLIAMS COMPANY,

Defendants-Appellants

On Appeal from the Illinois Appellate Court, First District No. 1-17-2894

There Heard on Appeal From the Circuit Court of Cook County

No. 00-Ch-9800

The Hon. Peter Flynn, Presiding

OPENING BRIEF OF APPELLANTS ATLANTIC RICHFIELD COMPANY, CONAGRA GROCERY PRODUCTS COMPANY, NL INDUSTRIES, INC., AND

THE SHERWIN-WILLIAMS COMPANY

Dan K. Webb Matthew R. Carter Scott M. Ahmad Winston & Strawn, LLP 35 West Wacker Drive Chicago, IL 60601 (312) 558-5600 [email protected] [email protected] [email protected]

Philip H. Curtis William H. Voth Bruce R. Kelly Arnold & Porter Kaye Scholer, LLP 250 West 55th Street New York, NY 10019 (212) 836-8000 [email protected] [email protected] [email protected]

Attorneys for Defendant-Appellant Atlantic Richfield Company [additional counsel listed on first inside page]

E-FILED4/11/2019 4:04 PMCarolyn Taft GrosbollSUPREME COURT CLERK

SUBMITTED - 4660770 - Dan Webb - 4/11/2019 4:04 PM

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Arthur F. Radke Manatt, Phelps & Phillips, LLP 20 N. Clark Street, Suite 3300 Chicago, IL 60602 (312) 529-6305 [email protected]

Attorney for Defendant-Appellant ConAgra Grocery Products Company

Andre M. Pauka Barlit BeckHerman Palenchar & Scott, LLP 54 W. Hubbard Street, Suite 300 Chicago, IL 60654 (312) 494-4422 [email protected]

Attorney for Defendant-Appellant NL Industries, Inc.

Carol A. Hogan Nicole C. Henning Jones Day 77 West Wacker Drive, Suite 3500 Chicago, IL 6061 (312) 782-3939 [email protected] [email protected]

Attorneys for Defendant-Appellant The Sherwin-Williams Company


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i

POINTS AND AUTHORITIES

Page(s)

NATURE OF THE CASE .................................................................................................1

ISSUE PRESENTED FOR REVIEW ..............................................................................2

STANDARD OF REVIEW ...............................................................................................2

Friends of the Parks v. Chicago Park Dist., 203 Ill. 2d 312 (2003) ....................................2

STATEMENT OF JURISDICTION ................................................................................3

Ill. S. Ct. R. 315 ...................................................................................................................3

Ill. S. Ct. R. 304 .......................................................................................................3, 10, 11

PRINCIPAL STATUTES AND REGULATIONS INVOLVED ...................................3

750 ILCS 65/15 .......................................................................................................... passim

89 Ill. Adm. Code 140.12...........................................................................................4, 7, 17

STATEMENT OF FACTS AND PROCEEDINGS IN THE CIRCUIT COURT

AND FIRST DISTRICT ....................................................................................................5

A. Proceedings Prior to Defendants’ Summary Judgment Motion ...............5

Lewis v. NL Indus., 2013 IL App. (1st) 122080 ...................................................................5

Lewis v. American Cyanamid Co., 2006 WL 701981 (Ill. App. Ct. Feb. 1, 2006) ..............5

Lewis v. Lead Indus. Ass’n, 342 Ill. App. 3d 95 (App. Ct. 1st Dist. 2003)..........................5

B. Defendants’ Summary Judgment Motion ...................................................7

42 U.S.C. § 1396d ................................................................................................................8

42 C.F.R. § 441.56 ...............................................................................................................8

42 C.F.R. §§ 447.50 et seq. ..................................................................................................8

C. The Circuit Court’s Decision Granting Summary Judgment ...................9

D. The First District’s Decision Reversing the Grant of Summary

Judgment ......................................................................................................11

ARGUMENT ....................................................................................................................13

I. Proof of Actual Economic Loss Is an Essential Element of

Plaintiffs’ Claim ..................................................................................................13


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ii

Turcious v. DeBruler Co., 392 Ill. Dec. 541 (2015) ....................................................13, 23

Martin v. Heinold Commodities, 163 Ill. 2d 33 (1994) .....................................................13

Fanning v. LeMay, 38 Ill. 2d 209 (1967) ...........................................................................13

State Sec. Ins. Co. v. Frank B. Hall & Co., 258 Ill. App. 3d 588 (1994) ..............14, 15, 24

Cenco Inc. v. Seidman & Seidman, 686 F.2d 449 (7th Cir. 1982) .....................................14

Restatement (Second) of Torts.........................................................................14, 20, 25, 26

Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d 69 (1982) ...............................................14

2314 Lincoln Park West Condominium Ass’n v. Mann, Gin, Ebel & Frazier, Ltd.,

136 Ill. 2d 302 (1990) ............................................................................................14, 15

Santucci Const. Co. v. Baxter & Woodman, Inc., 151 Ill. App. 3d 547 (2d Dist. 1986) ...14

Werblood v. Columbia College of Chicago, 180 Ill. App. 3d 967 (1989) .........................15

Congregation of the Passion v. Touche Ross & Co., 159 Ill. 2d 137 (1994) ....................15

850 ILCS 505/2 ..................................................................................................................15

Tolve v. Ogden Chrysler Plymouth, Inc., 324 Ill. App. 3d 485 (2001) ........................15, 24

Rubin v. Marshall Field & Co., 232 Ill. App. 3d 522, 532-33 (1992) ...............................15

II. The First District’s Erred in Concluding That Plaintiffs Suffered

Compensable Economic Loss.............................................................................16

A. The Family Expense Act Did Not Obligate Plaintiffs to Pay the

Medical Providers ........................................................................................16

Walradt v. Brown, 1 Gilman 397 (Ill. 1844) ......................................................................17

Healthcare and Family Services Handbook for Providers of Medical Services

Chapter 100: General Policies and Procedures ..........................................................19

Barragan v. Casco Design Corp., 216 Ill. 2d 435 (2005) .................................................19

Midwest Emergency Associates-Elgin Ltd. v. Harmony Health Plan of Illinois, Inc.,

382 Ill. App. 3d 973 (1st Dist. 2008) ...........................................................................20

Graul v. Adrian, 32 Ill. 2d 345 (1965) .........................................................................20, 22

Cullotta v. Cullotta, 287 Ill. App. 3d 967 (1st Dist. 1997) ................................................20

Estate of Hammond v. Aetna Casualty, 141 Ill. App. 3d 963 (1st Dist. 1986) ..................21


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iii

Manago ex rel. Pritchett v. County of Cook,2017 IL 121078 (2017) ................................22

Wills v. Foster, 229 Ill. 2d 393 (2008) ....................................................................... passim

B. The Collateral Source Rule Cannot Create an Injury Where

None Exists ...................................................................................................23

Hayes v. Mercy Hosp. and Medical Ctr., 136 Ill. 2d 450 (1990) ......................................25

Arthur v. Catour, 216 Ill. 2d 72 (2005)..............................................................................26

Peterson v. Lou Bachrodt Chevrolet Co., 76 Ill.2d 353 (1979) .........................................27

Stanley v. Walker, 906 N.E.2d 852 (Ind. 2009) .................................................................28

Leitinger v. DBart, Inc.,736 N.W.2d 1 (Wis. 2007) ..........................................................28

Krahwinkel v. Commonwealth Aluminum Corp., 183 S.W.3d 154 (Ky. 2005) .................28

Midland Mut. Life Ins. Co. v. Mercy Clinics, Inc., 579 N.W.2d 823 (Iowa 1998) ............28

Washington by Washington v. Barnes Hosp., 897 S.W.2d 611 (Mo. 1995) ......................28

Roberts v. BJC Health, No. 391 S.W.3d 433 (Mo. 2013) .................................................29

Roberts v. BJC Health, No. 4:04-cv-1556-JCH, slip. op. (E.D. Mo. Mar. 11, 2005) ........29

Bechara v. Bayer Corp., 2010 U.S. Dist. LEXIS 145646 (S.D. Fla. Mar. 16, 2010) ........29

Gillespie v. Travelscape LLC, 2014 WL 4243706 (D. Wash. 2014) .................................29

III. Plaintiffs Lack Standing to Sue .........................................................................30

Greer v. Ill. Hous. Dev. Auth., 122 Ill. 2d 462 (1988) .......................................................30

Warth v. Seldin, 422 U.S. 490 (1975) ................................................................................30

Maglio v. Advocate Health & Hospitals Corp., 396 Ill. Dec. 861 (2015) ........................ 30

Chicago Area Council of Boy Scouts of America v. City of Chicago Com’n on Human

Relations,

322 Ill. App. 3d 17 (2001) ...........................................................................................30

Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) .................................................................30

Wexler v. Wirtz Corp., 211 Ill. 2d 18 (2004) .....................................................................30

I.C.S. Illinois, Inc. v. Waste Mgmt. of Ill., Inc., 403 Ill. App. 3d 211 (2010) ....................31

Hein v. Freedom from Religion Foundation, 551 U.S. 587, 559 (2007) ...........................31


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iv

Gladstone Realtors v. Village of Bellwood, 441 U.S. 91 (1979) .......................................31

Vermont Agency of Nat. Resources v. United States, 529 U.S. 765 (2000) .......................32

Clinton v. New York, 524 U.S. 417 (1998) ........................................................................32

In re Adoption of Walgreen, 186 Ill. 2d 362 (1999) ..........................................................32

CONCLUSION ................................................................................................................32


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NATURE OF THE CASE

This is a tort suit against product manufacturers. Plaintiffs Mary Lewis and

Tashswan Banks seek to recover costs that the Medicaid program paid for blood lead

screening tests their children received as toddlers. They do not assert a product liability

claim and do not allege physical injury to the children. They claim only intangible

economic loss to themselves.

Plaintiffs’ claim should fail because they have sustained no injury. Undisputed

facts establish that: (i) Plaintiffs were Medicaid recipients when their children were

screened; (ii) Medicaid paid for the screenings; (iii) the medical providers who performed

the screenings never billed Plaintiffs for them; and (iv) neither the medical providers nor

Medicaid have ever sought payment from Plaintiffs for the screenings. And the law

governing Medicaid establishes that the medical providers and Medicaid have never had

any right to seek payment from Plaintiffs. The Circuit Court correctly granted summary

judgment.

The First District nonetheless held that Plaintiffs’ claim could survive summary

judgment because, in its view, Plaintiffs were obligated to pay the providers for the

children’s tests under the Illinois Family Expense Act. The court further held that the

collateral source rule requires that Medicaid’s payment to the providers must be

disregarded in determining whether Plaintiffs have any economic injury, even though that

payment discharged any obligation Plaintiffs could have had to pay the providers.

Both of the First District’s holdings are dangerous and wrong, and this Court

should reverse. As the Circuit Court held, Plaintiffs who bring economic loss claims but

have no economic loss lack any injury, an essential prerequisite for a tort suit. They also


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lack standing. And the collateral source rule is wholly irrelevant for purposes of

determining whether a plaintiff has suffered an injury. As interpreted by this Court and

countless others, the collateral source rule may only be invoked by an “injured party” to

prevent reduction of the amount of damages due to compensation received from a

collateral source. The rule is not a substitute for proving injury in the first instance.

The settled rule precluding economic loss claims by those who have suffered no

injury has worked well and should not be disturbed. Affirming the First District’s

decision threatens to flood the courts with more claims by no-injury plaintiffs, seeking to

receive a windfall and class action counsel fees for their lawyers. But courts should not

be in the business of adjudicating the claims of plaintiffs who suffered no injury at all.

The Court should reverse the judgment of the First District court, affirm the judgment of

the Circuit court, and remand for further proceedings.

ISSUE PRESENTED FOR REVIEW

May Medicaid recipients, who did not pay and never were obligated to pay for the

cost of their children’s blood lead screening tests, nonetheless be permitted to seek

recovery of those costs in a common-law tort action against former manufacturers of

white lead pigments? The First District answered this question “Yes,” and reversed the

Circuit Court’s decision answering the question “No” and granting summary judgment.

STANDARD OF REVIEW

The decision to grant or deny a motion for summary judgment is reviewed de

novo, as is the First District’s reversal of such a decision. E.g., Friends of the Parks v.

Chi. Park Dist., 203 Ill. 2d 312, 319–20 (2003).


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STATEMENT OF JURISDICTION

The Court has jurisdiction under Ill. S. Ct. R. 315. The First District issued its

decision on September 7, 2018, reversing the Circuit Court’s grant of summary judgment

in favor of Defendants. A58. Defendants filed a timely petition for leave to appeal on

October 11, 2018, which this Court granted on January 31, 2019. (A64.) The First

District had appellate jurisdiction because the Circuit Court had entered a Rule 304(a)

order certifying its decision granting summary judgment for immediate appeal. See infra

p.10.

PRINCIPAL STATUTES AND REGULATIONS INVOLVED

Family Expense Act, 750 ILCS 65/15

(a)(1) The expenses of the family and of the education of the children shall be

chargeable upon the property of both husband and wife, or of either of them, in

favor of creditors therefor, and in relation thereto they may be sued jointly or

separately.

(2) No creditor, who has a claim against a spouse or former spouse for an expense

incurred by that spouse or former spouse which is not a family expense, shall

maintain an action against the other spouse or former spouse for that expense

except:

(A) an expense for which the other spouse or former spouse agreed, in

writing, to be liable; or

(B) an expense for goods or merchandise purchased by or in the

possession of the other spouse or former spouse, or for services ordered by

the other spouse or former spouse.

(3) Any creditor who maintains an action in violation of this subsection (a) for an

expense other than a family expense against a spouse or former spouse other than

the spouse or former spouse who incurred the expense, shall be liable to the other

spouse or former spouse for his or her costs, expenses and attorney's fees incurred

in defending the action.


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(4) No creditor shall, with respect to any claim against a spouse or former spouse

for which the creditor is prohibited under this subsection (a) from maintaining an

action against the other spouse or former spouse, engage in any collection efforts

against the other spouse or former spouse, including, but not limited to, informal

or formal collection attempts, referral of the claim to a collector or collection

agency for collection from the other spouse or former spouse, or making any

representation to a credit reporting agency that the other spouse or former spouse

is any way liable for payment of the claim . . . .

Participation Requirements for Medical Providers, 89 Ill. Adm. Code 140.12

The provider shall agree to:

* * *

i) Accept as payment in full the amounts established by the Department.

1) If a provider accepts an individual eligible for medical assistance from the

Department as a Medicaid recipient, such provider shall not bill, demand or

otherwise seek reimbursement from that individual or from a financially

responsible relative or representative of the individual for any service for which

reimbursement would have been available from the Department if the provider

had timely and properly billed the Department. For purposes of this subsection,

“accepts” shall be deemed to include:

A) an affirmative representation to an individual that payment for services

will be sought from the Department;

B) an individual presents the provider with his or her medical card and the

provider does not indicate that other payment arrangements will be

necessary; or

C) billing the Department for the covered medical service provided an

eligible individual.


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5

STATEMENT OF FACTS AND PROCEEDINGS

IN THE CIRCUIT COURT AND FIRST DISTRICT

A. Proceedings Prior to Defendants’ Summary Judgment Motion

This lawsuit was filed in 2000, but this appeal concerns discrete legal issues

presented by a summary judgment motion that Defendants filed in October 2016. By that

time this case had a lengthy record, including prior decisions by the First District.1 Little

of that record is relevant to the limited issue this appeal presents. The following points

from the history of the case through October 2016 provide sufficient background for

analysis of Defendants’ summary judgment motion and related decisions:

As of October 2016, there were three named Plaintiffs: Ms. Lewis and

Ms. Banks, the Appellees here, and a third Plaintiff, Kathleen O’Sullivan, who is

not a party to this appeal. Unlike Ms. Lewis and Ms. Banks, Ms. O’Sullivan was

not a Medicaid recipient.2

There are four Defendants. Each is a former manufacturer of white lead

pigments or the alleged corporate successor to such a manufacturer.

1 Lewis v. NL Indus., 2013 IL App (1st) 122080 (“Lewis III”) (answering certified

question under Rule 308 concerning Plaintiffs’ theory of causation); Lewis v. Am.

Cyanamid Co., 2006 WL 701981 (Ill. App. Ct. Feb. 1, 2006) (“Lewis II”) (reversing

summary judgment for Defendants on conspiracy count on the ground that evidence of

existence of other white lead pigment manufacturers was inadequate); Lewis v. Lead

Indus. Ass’n, 342 Ill. App. 3d 95 (1st Dist. 2003) (“Lewis I”) (affirming dismissal of

Plaintiffs’ first five causes of action but reversing dismissal of conspiracy count).

2 When the case began, there was another Plaintiff, Jacqueline Nye, who like Ms.

O’Sullivan was not a Medicaid recipient. Ms. Nye dropped out of the lawsuit long before

the summary judgment motion at issue here was filed. Ms. O’Sullivan was substituted

for her.


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The operative pleading, the Third Amended Complaint, contains six

counts. The first five were dismissed, and the First District affirmed that

dismissal in the Lewis I decision cited in footnote 1. The surviving count, the

sixth cause of action, alleges a conspiracy among white lead pigment

manufacturers, beginning in the 1920s, to conceal from the public facts showing

that use of such pigments in residential paints could cause harm to children.

Residential use of paints containing such pigments was banned in the 1970s; some

Defendants left the white lead pigment business long before then.

Plaintiffs seek to represent a class of Illinois parents whose children

received blood lead screening tests. In April 2015, the Circuit Court certified a

class, defined as follows:

The parents or legal guardians of children who, between

August 18, 1995 and February 19, 2008, were between six

months and six years of age and during that age bracket

lived in zip codes identified by the Illinois Department of

Health as “high risk” areas pursuant to 410 ILCS 45/6.2(a)

and had a venous or capillary blood test for lead toxicity,

excluding such parents and legal guardians who incurred no

expense, obligation or liability for the lead toxicity

screening of their children.

See Order, Lewis v. Lead Indus. Assoc., Inc., No. 00-CH-9800 (Ill. Cir. Ct., Apr.

23, 2015). The Circuit Court had previously certified, and then decertified, a

substantially similar class. No appellate review of the decision to certify a class

has occurred. See infra p.11.


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Notice and an opportunity to opt out has not yet been provided to

members of the class.

The Illinois Department of Public Health has classified the entire city of

Chicago, and many other zip codes throughout the state, as “high risk” under the

regulation cited in the class definition. Thus, while the precise number of parents

who are potential class members has not been determined, it is obvious that

(i) there were many thousands of such parents, and (ii) some of them were

Medicaid recipients when their children were tested.

The complaint excludes from the case, both as to the named Plaintiffs and

the class members, any claim for personal injury on behalf of the children,

limiting the case to a claim of economic injury to the parents. It said, “The

plaintiffs are not seeking to recover for any personal injuries their children, or the

children of the other members of the class, may have sustained as a result of

exposure to white lead.” (A4.)

B. Defendants’ Summary Judgment Motion

Defendants’ summary judgment motion asserted that each of the three Plaintiffs

could not prove the economic injury that is an essential element of their claims, and that

the Circuit Court thus should dismiss those claims. (C107.)

As to Ms. Lewis and Ms. Banks, the motion presented the following undisputed

facts:


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Ms. Lewis and Ms. Banks each had a child who received a routine blood lead

screening test as a toddler while living in Chicago. Ms. Lewis’s child, Lee

Rucker, was tested in 1999; Ms. Banks’s child, Bernard Meeks, was tested in

1997. (A24.)

Ms. Lewis and Ms. Banks were enrolled in Medicaid when their children were

screened. A25, A60. The Medicaid program covers, and indeed encourages,

blood lead screening for small children. See 42 U.S.C. § 1396d(r)(1)(B)(iv); 42

C.F.R. § 441.56(b)(1). As a result, Medicaid paid the full costs of the screenings

that Plaintiffs claim injured them economically; neither Plaintiff incurred any out-

of-pocket expense for that screening. (A60.)

Ms. Lewis and Ms. Banks received no demands for payment either from the

medical providers who screened the children or the Illinois Department of Public

Aid, which then administered the Medicaid program (a responsibility later shifted

to the Department of Healthcare and Family Services). (A60.)

Because state and federal law prohibit the medical providers or Medicaid itself

from seeking reimbursement from the Plaintiffs, there is no possibility that

Plaintiffs will incur any cost as a consequence of their children’s screenings. See

42 C.F.R. §§ 447.50, 447.52-.56; 89 Ill. Admin. Code 140.12(i)(1); (A61).

The third Plaintiff, Ms. O’Sullivan, had private health insurance, not Medicaid.

Ms. O’Sullivan had no evidence to show that she had paid anything for her children’s

screenings or that her plan would have required any payment.


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In response, Plaintiffs conceded that Ms. Lewis and Ms. Banks did not pay for the

tests. But they argued that “the recipient of medical services or treatment (and in the case

of a child, the recipient’s parent) incurs the expense of the services or treatment, even

where the actual cost of the expense is paid by a third-party payor.” (C156.) Plaintiffs

argued that, if they recovered the cost of the testing, the State, which had paid the

providers for the tests, could seek reimbursement from that recovery.3 Plaintiffs also

argued that, under the collateral source rule, Medicaid’s payment for the tests does not

“negat[e] Plaintiffs’ economic injury.” (C158.)

C. The Circuit Court’s Decision Granting Summary Judgment

The Circuit Court granted Defendants’ motion in a comprehensive opinion. (See

A39.) As to Ms. Lewis and Ms. Banks, the Circuit Court held that Plaintiffs have no

injury. They did not pay for the tests themselves and incurred no obligation or liability

for the costs, because state and federal law bar both Medicaid and the service providers

from seeking reimbursement from them. (See A43-A44.)

The decision explained that “the imposition of the screening cost” was “the basis

and linchpin” of Plaintiffs’ cause of action, and that, “[w]ithout it, the plaintiffs here have

suffered no actionable injury.” (A41.) The court further concluded that if a Medicaid

recipient recovered the costs of medical care in tort, the State might conceivably have a

claim to a portion of that tort recovery. (A44.) But such a claim could not constitute an

3 Defendants do not concede that the State could assert a claim for the cost of screening

Plaintiffs’ children. The Court need not consider the issue in deciding this appeal. The

State has never asserted such a claim. The Attorney General’s office knows of this

lawsuit and the claims asserted in it, because it has appeared in the case on behalf of the

Illinois Department of Public Health in connection with motions to compel third-party

discovery from that Department.


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injury to the plaintiffs, the court held. Federal law prohibits Medicaid providers from

“seek[ing] payment from recipients themselves.” (A45 (citing 42 U.S.C. 1396p(b)(1)).)

At most, any “recoupment [the state could obtain] comes from the judgment against the

wrongdoer before the net judgment is paid to the recipient, not from the recipient

herself.” (A45 (emphasis in original) (citing 305 ILCS 5/11022b(e)(10)).) The court

thus held that Plaintiffs had no “present, or even a prospective, obligation or liability”

vis-à-vis the State with respect to the medical screening. (A45.)

The court separately rejected Plaintiffs’ argument that the collateral source rule

allowed them to recover in the absence of any actual injury. The court held that the

collateral source rule applies only to the measurement of damages in bodily injury cases,

and could not be used to overcome Plaintiffs’ lack of a present expense, obligation, or

liability arising from their children’s blood lead screening tests. (A48.)

The Circuit Court dismissed Ms. O’Sullivan’s claim on different grounds. She

had private health insurance rather than Medicaid, but was unable to present evidence

that either she or her insurer had paid anything for her children’s blood lead screening

tests. (A43, A49.)

The Circuit Court further ruled that all three named Plaintiffs “are not members of

the class certified herein, and thus cannot participate herein in behalf of the class.”

(A49.) The Circuit Court noted that the class was defined to exclude persons who had

not incurred “expense, obligation, or liability” for the cost of their children’s blood lead

screening tests. The summary judgment ruling meant that each of the three was not a

member of the defined class.


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The Circuit Court gave Plaintiffs’ counsel until June 26, 2017, to name one or

more new class representatives. (A49.) Plaintiffs’ counsel waived that opportunity and

did not name a new representative.

Plaintiffs moved in the Circuit Court for a Rule 304(a) certification permitting

immediate appeal of the decision granting summary judgment. The Circuit Court granted

this motion only as to its rulings concerning Ms. Banks and Ms. Lewis. It reasoned that

the ruling concerning them rested on legal analysis applicable to all Medicaid recipients,

so that immediate appellate review of the order dismissing their claims would expedite

disposition of the entire case without risking piecemeal appellate review. It declined to

certify the order dismissing Ms. O’Sullivan’s claim, which rested on fact-based

determinations specific to her that would not necessarily be presented by all potential

class members who had private health insurance. (A55.) Ms. Lewis and Ms. Banks filed

a timely notice of appeal.

D. The First District’s Decision Reversing the Grant of Summary

Judgment

1. The First District’s Limitation of the Scope of the Appeal

Before briefing on the merits, Plaintiffs filed two motions seeking to limit the

scope of their appeal. The First District granted both.

First, Plaintiffs moved to dismiss a cross-appeal noticed by Defendant Atlantic

Richfield Company that protectively sought review of the Circuit Court’s orders

concerning certification of a class. The notice of cross-appeal made clear that the cross-

appeal was intended to avoid any possible waiver of review of such orders. It said,

“Atlantic Richfield files this cross-appeal solely to preserve its right to seek review of the

orders listed above [concerning class certification] in the event that the Appellate Court,


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in ruling on Plaintiffs’ appeal, considers or rules upon any aspect of the certification of a

class in this case, the correctness of the class definition, or the membership of any person

in the certified class.” (C208-C209.) Plaintiffs’ motion to dismiss argued that the First

District lacked jurisdiction to decide the cross-appeal because the orders it asked the First

District to review were beyond the scope of the Circuit Court’s Rule 304(a) certification.

Second, Plaintiffs moved for an order sharply limiting the scope of the record on

appeal to the papers relevant to the summary judgment motion, rather than the full

common law record, which is voluminous. Plaintiffs had previously sought the same

relief from the Circuit Court, but withdrew that motion after the Circuit Court observed

that the First District should decide the scope of the record that it would address. The

limited record for which the Plaintiffs advocated did not include the papers relevant to the

class certification issues raised by the cross-appeal. (A56.)

In orders entered on January 23 and March 14, 2018, the First District granted

Plaintiffs’ motions. (A56, A57.) In light of these rulings, the parties’ briefs on the merits

did not address the class certification orders, and the First District did not review them.

2. The First District’s Decision On the Merits

Following oral argument on the merits, the First District issued its decision on

September 7, 2018, reversing the summary judgment ruling as to Ms. Lewis and Ms.

Banks. (A59.)

The First District acknowledged that neither Plaintiff paid any portion of the cost

of her child’s blood lead screening test and that “the cost of the testing was entirely paid

by Medicaid.” (A61.) It also “agree[d] that neither Lewis nor Banks is obligated to


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reimburse the State for all, or any portion, of the payment made for the testing of their

children.” (A61.)

But the court nonetheless held that Plaintiffs had a legally sufficient claim of

injury, because they “incurred an obligation” for the cost of testing. (See A60-61.) The

court held that Illinois’s Family Expense Act obligates parents to pay for the “expenses of

the family,” which includes the medical expenses of their minor children. (A62 (quoting

750 ILCS 65/15(a)(1)).) According to the court, because that Act imposes on parents a

theoretical “obligation to pay the medical expenses for a minor child,” a parent who, as a

Medicaid beneficiary, never paid those expenses nonetheless incurred an “obligation” to

pay the medical service provider sufficient to satisfy the injury requirement for a

common-law tort claim. (A62.) The court also held that the collateral source rule

applied to a case “involving a purely economic injury,” and so allowed Plaintiffs’ claims

to go forward. (A62-A63.)

The court did not address Defendants’ alternative argument that Plaintiffs lack

standing.

ARGUMENT

I. Proof of Actual Economic Loss Is an Essential Element of Plaintiffs’ Claim

Proof of injury to the plaintiff is a fundamental requirement of a common-law tort

claim. This Court has stated that “a fundamental principle applicable alike to breaches of

contract and to torts [is] that a right of action requires loss from that act.” Turcious v.

DeBruler Co., 2015 IL 117962, ¶ 27 (internal quotation marks omitted) (quoting Town of

Thornton v. Winterhoff, 406 Ill. 113, 119 (1950)); Martin v. Heinold Commodities, Inc.,

163 Ill. 2d 33, 58 (1994); Fanning v. LeMay, 38 Ill. 2d 209, 212 (1967). The Appellate


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Court has likewise stressed the necessity of proving injury in tort suits. See State Sec.

Ins. Co. v. Frank B. Hall & Co., 258 Ill. App. 3d 588, 593 (1st Dist. 1994); see also

Cenco Inc. v. Seidman & Seidman, 686 F.2d 449, 453 (7th Cir. 1982) (applying Illinois

law and stating that “for wrongdoing to be actionable as a tort there must be an injury”).

An injury is what entitles a plaintiff to “maintain an action of tort” in the first place. See

Restatement (Second) of Torts § 7. A “right of action” in tort “requires a wrongful act by

the defendant and a loss resulting from that act.” Turcious, 2015 IL 117962, ¶ 27.

In many of the most familiar types of common-law tort cases, the injury to the

plaintiff consists of either a personal injury (e.g., the broken bones or torn ligaments in a

trip-and-fall negligence case) or injury to the plaintiff’s tangible personal property (e.g.,

the damage to an automobile in a fender-bender). In some tort claims, the injury consists

of an intangible economic loss. The common law of torts generally does not afford

recovery where the alleged injury is merely a failed economic expectation; claims of that

sort are left to the law of contracts. See Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d

69, 84 (1982). In certain types of tort cases, such as common-law fraud cases, a plaintiff

may recover for an intangible economic loss, but such a claim requires proof that the

plaintiff sustained, or is reasonably certain to sustain, an actual out-of-pocket loss.

Prior decisions of this Court have identified examples of cognizable tort claims

premised on purely economic injuries. See 2314 Lincoln Park West Condominium Ass’n

v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill. 2d 302, 315 (1990) (citing cases). All

permitted a tort claim to go forward only where the plaintiff either had lost money or was

reasonably certain to lose it. See id. Two decisions illustrate the point. In Santucci

Const. Co. v. Baxter & Woodman, Inc., 151 Ill. App. 3d 547 (2d Dist. 1986), the plaintiff


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alleged actual out-of-pocket losses resulting from alleged tortious interference with a

contract. See id. at 552. That claim was found to be cognizable. In Werblood v.

Columbia College of Chicago, 180 Ill. App. 3d 967, 974 (1st Dist. 1989), by contrast, the

plaintiff claimed that her employer had fired her in a “stigmatizing” manner that, by

impairing her ability to find new employment, tortiously interfered with her “prospective

economic advantage.” See id. That claim failed, because the plaintiff had not plausibly

alleged actual potential contractual relationships with future employers. There was at

best a speculative possibility of future loss. See id. at 975–76.

The law has not changed since this Court’s decision in 2314 Lincoln Park West.

Illinois courts continue to require tort plaintiffs claiming intangible economic injury to

show that an actual out-of-pocket loss either has occurred or is reasonably certain to

occur.4 Compare, e.g., Congregation of the Passion v. Touche Ross & Co., 159 Ill. 2d

137 (1994) (plaintiff could recover where accountant’s malpractice had caused actual

out-of-pocket losses) with State Sec. Ins. Co., 258 Ill. App. 3d at 593–95 (claim failed

where there was no showing of an actual or threatened loss of money to which plaintiff

was legally entitled).

4 The requirement of an actual economic loss also applies to statutory claims under the

Consumer Fraud and Deceptive Business Practices Act (“Consumer Fraud Act”), 850

ILCS 505/2. Only a person who suffers actual damages as a result of a violation may sue

for damages under that Act. See Tolve v. Ogden Chrysler Plymouth, Inc., 324 Ill. App.

3d 485, 491–92 (2d Dist. 2001).

Plaintiffs’ claims in this case rest exclusively on the common law. The Consumer Fraud

Act cannot apply here because it does not apply retroactively to allegedly wrongful

conduct that occurred prior to the Act’s 1961 effective date. Cf. Rubin v. Marshall Field

& Co., 232 Ill. App. 3d 522, 532–33 (1st Dist. 1992).


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II. The First District Erred in Concluding That Plaintiffs Suffered Compensable

Economic Loss

The First District did not question the Circuit Court’s conclusion that Lewis and

Banks have not suffered, and will not suffer, an out-of-pocket loss as a result of their

childrens’ blood lead screenings. It nevertheless held that their claims satisfy the injury

requirement necessary for a common-law tort claim. It reached that result in two steps.

It first held that Lewis and Banks became obligated under the Illinois Family Expense

Act to pay the medical providers for the cost of their children’s blood lead tests,

notwithstanding the Medicaid regulations that eliminate any liability to medical

providers. (A62.) Second, it held that the collateral source rule allows Plaintiffs to

recover damages arising from that “obligation” notwithstanding that Medicaid satisfied

their supposed obligation by paying the providers. Both holdings are erroneous. (A62–

63.)

A. The Family Expense Act Did Not Obligate Plaintiffs to Pay the

Medical Providers

The First District acknowledged that Lewis and Banks had not actually paid for

the cost of their children’s blood lead screenings. This meant that their injury, if there

was one, had to arise from some obligation or liability to pay those costs. The First

District correctly stated that Plaintiffs have no such obligation or liability to Medicaid.

(A61 (“[W]e agree that neither Lewis nor Banks is obligated to reimburse the State for

all, or any portion, of the payment made for the testing of their children.”).) It instead

found that the obligation or liability ran from Lewis and Banks to the medical providers

who tested their children. (A61–A62.)


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The First District created the theory that the Illinois Family Expense Act imposed

on Lewis and Banks an “obligation” to pay the providers for the screenings. (A61.) The

Court reasoned that, under the Act, “[t]he obligation to pay the medical expenses for a

minor child is that of the parent, and therefore, the cause of action to recover for medical

expenses lies in the parent.” (A62 (citing Estate of Hammond v. Aetna Casualty, 141 Ill.

App. 3d 963, 965 (1st Dist. 1986)).) The Court held that “[t]he parent’s right of action is

not affected by the fact that a third party paid those expenses.” (A62.)

This reasoning is wrong. Plaintiffs have not sued under the Family Expense Act,

and that Act does not create a cause of action for parents where none would otherwise

exist. See 750 ILCS 65/15. Nor does the Act say that parents’ hypothetical liability for

their children’s expenses inflicts an economic injury on them when both the parent and

the children have neither paid the providers nor incurred a legal obligation to pay them.

The Act simply provides: “The expenses of the family and of the education of the

children shall be chargeable upon the property of both husband and wife, or of either of

them, in favor of creditors therefor, and in relation thereto they may be sued jointly or

separately.” Id. (emphasis added). The Act confers rights upon “creditors,” which this

Court has interpreted to mean “all parties who have demands, accounts, interests, or

causes of action for which they might recover any debt, damages, penalty or forfeiture.”

Walradt v. Brown, 1 Gilman 397, 399 (Ill. 1844) (interpreting “creditor” as used in the

statute of frauds).

When medical providers gave blood lead tests to the children of Lewis and Banks,

they did not become “creditors” of Lewis and Banks. Neither Lewis nor Banks incurred

any liability or obligation to pay the providers for their children’s tests. The Medicaid


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program is designed to prevent the providers from becoming creditors of Medicaid

recipients and to protect the Medicaid recipients (including parents where the patient

receiving service is a child) from incurring any obligation to the provider. Illinois

regulations require providers to agree, as a condition of participation in Medicaid, to

accept the payment it receives from the Department of Healthcare and Family Services as

“payment in full” and not to “bill, demand or otherwise seek reimbursement” from a

Medicaid recipient or financially responsible relative or representative. These

“Participation Requirements for Medical Providers” regulations state in relevant part:

The provider shall agree to:

* * *

i) Accept as payment in full the amounts established by the

Department.

1) If a provider accepts an individual eligible for medical

assistance from the Department [of Healthcare and Family

Services] as a Medicaid recipient, such provider shall not

bill, demand or otherwise seek reimbursement from that

individual or from a financially responsible relative or

representative of the individual for any service for which

reimbursement would have been available from the

Department if the provider had timely and properly billed

the Department. For purposes of this subsection, “accepts”

shall be deemed to include:

A) an affirmative representation to an

individual that payment for services will be

sought from the Department;

B) an individual presents the provider with

his or her medical card and the provider

does not indicate that other payment

arrangements will be necessary; or


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C) billing the Department for the covered

medical service provided an eligible

individual.

89 Ill. Admin. Code §140.12(i)(1). These requirements, “to which all enrolled providers

must adhere,” are repeated in the Illinois Department of Healthcare and Family Services

Handbook for Providers of Medical Services Chapter 100: General Policies and

Procedures 101.3 , available at

https://www.illinois.gov/hfs/SiteCollectionDocuments/9517Chapter100PolicyFinal.pdf.5

This plain, unambiguous regulatory language disproves the First District’s

conclusion that Medicaid recipients whose children received screening from Medicaid-

participant providers (as Lewis and Banks did) incurred some “obligation” to those

providers under the Family Expense Act. Courts have strictly enforced Medicaid’s

regulatory limitation and rejected attempts by providers to circumvent them. For

example, in another action, the First District affirmed dismissal of a putative class action

by a provider seeking full reimbursement for emergency medical services to Medicaid

5 Where statutes are in direct conflict, the more specific should take precedence over the

more general and the more recent should apply over the earlier. See Barragan v. Casco

Design Corp., 216 Ill. 2d 435, 451 (2005). Since the Medicaid regulations are more

specific and recent than the Family Expense Act, they would control.

But the Court invokes those rules only where two statutes conflict directly and cannot be

read harmoniously to give effect to both. Id. Here, there is no conflict. The Family

Expense Act makes parents liable to persons having the status of “creditors” for the

family’s expenses. Other laws determine who has that status. The Medicaid regulations,

as demonstrated in the text, prevent the creation of a debtor-creditor relationship between

the provider and either the child or the parent, all as part of a statutory scheme that

assures the provider will receive an agreed-upon payment from the State. The

Legislature of 1874 had never heard of Medicaid. It likely assumed that a physician who

provided service to a patient became a “creditor” of the patient and wanted to assure that

if the patient was a minor the parents would satisfy the debt.


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https://www.illinois.gov/hfs/SitecollectionDocuments/9517Chapter100PolicyFinal.pdf

https://www.illinois.gov/hfs/SitecollectionDocuments/9517Chapter100PolicyFinal.pdf

20

beneficiaries. Midwest Emergency Associates-Elgin Ltd. v. Harmony Health Plan of

Illinois, Inc., 382 Ill. App. 3d 973 (1st Dist. 2008). The Court held that the provider was

limited to reimbursement at the established fee-for-service rate. Id.

The Family Expense Act is irrelevant for the further reason that Lewis and Banks

disclaim any allegation that their children have suffered a personal injury. When a child

is physically injured by a tortfeasor’s wrongful act, two causes of action arise: one in

favor of the child’s parents for the child’s medical expenses (and funeral expenses, if

applicable) and another in favor of the child (or the child’s estate) for all other categories

of damages flowing from the injury. See Restatement (Second) of Torts §703(b) (action

by parent to recover medical expenses from tortfeasor for “bodily harm” to minor child).

Graul v. Adrian held that a father could sue for the medical and funeral expenses of his

son “incurred by the father as the result of the alleged wrongful act causing the death of

his son.” 32 Ill. 2d 345, 346 (1965). The father’s claim was “based upon an out-of-

pocket payment for which there was a legal liability” under the Family Expense Act. Id.

at 347–48. Where a parent asserts a claim such as that authorized by Graul against a

tortfeasor who has injured a child, the parent’s claim is “derivative in nature, as [it]

arise[s] out of the injury to another.” Cullotta v. Cullotta, 287 Ill. App. 3d 967, 975 (1st

Dist. 1997) (quoting Dewey v. Zack, 272 Ill. App. 3d 742, 749 (2d Dist. 1995)). The

injury that gives both the child and the parent standing to sue in such a case is the

physical injury to the child.

Here, the First District stated, following a citation to this Court’s opinion in

Graul, that “[t]he obligation to pay the medical expenses is that of the parent, and,

therefore, the cause of action to recover for medical expenses lies in the parent.” (A62.)


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But that statement assumes a “cause of action” exists, and a cause of action for tort

cannot arise without injury. In a case like Graul, the cause of action arises when the

child incurs physical injury. Here, Lewis and Banks do not allege a cause of action based

on physical injury to their children. They instead claim that Defendants caused purely

economic injury personal to Lewis and Banks arising from the cost of their child’s blood

tests. No such economic injury ever occurred.

The First District cited no authority holding that the Family Expense Act permits

Lewis and Banks to claim economic injury merely because their children received blood

lead screening tests, when they claim no personal injury and Lewis and Banks never paid

and never will pay for the tests. There is no such authority. Until this case, the Family

Expense Act has never been extended to create an obligation that never arose or to permit

a parent to sue an alleged tortfeasor for a child’s expenses where there was no underlying

personal injury claim on behalf of the child.

None of the decisions cited by the First District supports the proposition that

parents suffer an economic injury by virtue of their children’s medical expenses that they

themselves have not paid, have never been under a legal obligation to pay, and will not

pay. The appellate court cited Estate of Hammond v. Aetna Cas. (Aetna Life & Cas. Co.)

for the proposition that “[t]he obligation to pay the medical expenses for a minor child is

that of the parent, and, therefore, the cause of action to recover medical expenses lies in

the parent.” 141 Ill. App. 3d 963, 965 (1st Dist. 1986). But that decision did not hold

that the Family Expense Act creates a cause of action to recover medical expenses that

does not already exist because of personal injury to the child. Nor did it hold that a

parent is economically injured when her uninjured child receives a routine screening test


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for which neither the child nor the parent ever will be obligated to pay. Estate of

Hammond simply held that the parents’ insurer, which had paid a child’s medical bills

arising out of an auto accident, was not entitled to a subrogation lien against the

settlement between the tortfeasor and the child’s estate. Id. The court reasoned that,

because the Act makes parents liable for their children’s medical expenses, and any cause

of action to recover those expenses lies with the parents, the insurer could only claim a

subrogation lien on a settlement between the tortfeasor and the parents. Id.

The First District also cited this Court’s decisions in Graul; Manago ex rel.

Pritchett v. County of Cook, 2017 IL 121078; and Wills v. Foster, 229 Ill. 2d 393 (2008).

Those decisions similarly do not support the First District’s judgment.

The “sole question” in Graul was “whether a parent may recover, in a separate

action, medical and funeral expense incurred by him for a child whose death

occurs as the result of a wrongful act of a third party.” 32 Ill. 2d at 346. The

Court said “yes,” reasoning that the parent’s claim was “based upon an out-of-

pocket payment for which there was a legal liability” under the Family Expense

Act. Id. at 347–48. The decision says nothing about whether a parent suffers an

economic injury when her child receives a medical service for which neither the

child nor the parent must pay.

Manago held that a hospital that paid an injured minor’s medical expenses could

obtain a lien under the Lien Act against a successful recovery in tort by the

injured party—who had suffered physical injuries, 2017 IL 121078, ¶ 35.

Manago confirmed that the Family Expense Act creates rights that “inure to the

benefit of creditors,” id. at ¶ 12; it does not create additional rights for parents.


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And as explained infra at p. 25, Wills v. Foster concerns the collateral source rule

and thus has no bearing on whether a plaintiff was injured.

In sum, no precedent or statute puts even a theoretical legal obligation on a

Medicaid recipient to pay a provider for her child’s medical test for which Medicaid paid

and neither the medical provider nor Medicaid may seek reimbursement from the parent.

Such a parent has no injury and, therefore, no valid tort claim. For that reason alone, the

Court should reverse the judgment of the appellate court, affirm the judgment of the

Circuit Court, and remand for further proceedings.

B. The Collateral Source Rule Cannot Create an Injury Where None

Exists

If the Court agrees with the above analysis showing that the Family Expense Act

did not create an obligation or liability for Lewis and Banks to pay the service providers,

that decides this appeal. Lewis and Banks had no injury and, hence, no tort claim.

Even if the Court agreed with the First District that the Family Expense Act

created an obligation or liability for Lewis and Banks to pay the service providers, that

still would not be enough to create an economic injury that now would entitle Plaintiffs to

sue. The obligation, if it once existed, represented only a potential economic loss to

Plaintiffs and now can never mature into an actual loss. An actual loss would have

occurred only if the providers demanded payment from the Plaintiffs (in violation of the

Medicaid regulations prohibiting such demands) and the Plaintiffs paid in satisfaction of

that demand. That never happened and cannot happen in the future. Medicaid paid the

providers, extinguishing any obligation.


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An extinguished “obligation” does not constitute the actual out-of-pocket loss

required to establish economic injury. Turcious, 2015 IL 117962, ¶ 27; see State Sec.,

258 Ill. App. 3d at 594–95 (requiring “actual” loss); Tolve v. Ogden Chrysler Plymouth,

Inc., 324 Ill. App. 3d 485, 489–91 (2d Dist. 2001) (holding that an individual who was

“obligated as a signatory on the contract of sale” of an automobile lacked economic

injury in suit alleging fraud with respect to the availability of a rebate, because she did

not herself pay for the car).

In order to hold that Plaintiffs have an actionable economic injury, the First

District had to find some rationale for disregarding the reality that Medicaid has paid the

providers, so that Lewis and Banks need never pay anyone. It did so by invoking the

collateral source rule. It said that Lewis and Banks were “statutorily liable” for the cost

of their children’s blood lead screening tests, so that “they have a cause of action for the

reasonable value of the testing services, without regard to the fact that Medicaid paid the

entire cost.” (A63.)

The First District’s reliance on the collateral source rule to reach this conclusion

was error. The collateral source rule preserves an award of damages to an injured party.

It provides that “benefits received by the injured party from a source wholly independent

of, and collateral to, the tortfeasor will not diminish damages otherwise recoverable from

the tortfeasor.” Wills v. Foster, 229 Ill. 2d 393, 399 (2008). The rule has evidentiary and

substantive components. Id. at 400. “As a rule of evidence, the rule prevents the jury

from learning anything about collateral income.” Id. And “[a]s a substantive rule of

damages, the rule bars a defendant from reducing the plaintiff’s compensatory award by

the amount the plaintiff received from the collateral source.” Id. (quotations omitted).


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It is black-letter law that the collateral source rule concerns “damages.” See id. at

399-400; Restatement (Second) of Torts § 920(A). It has nothing to do with whether a

plaintiff actually has an actionable injury in the first place. An injury is an “invasion of

any legally protected interest of another.” Restatement (Second) of Torts § 7. Damages

are “a sum of money awarded to a person injured by the tort of another.” Id. § 12A

(emphasis added); see also Hayes v. Mercy Hosp. and Medical Ctr., 136 Ill. 2d 450, 476–

477 (1990) (adopting the Restatement’s definition of “damages”). The two concepts are

distinct, because “[d]amages flow from an injury.” Restatement (Second) of Torts § 902

cmt. a. Thus, as a “substantive rule of damages,” the collateral source rule is only

relevant once the plaintiff’s injury is established. See Wills, 229 Ill. 2d at 399.

This Court most recently addressed the collateral source rule in Wills, 229 Ill. 2d

393, another personal injury case involving the proper amount of damages stemming

from an automobile accident. Wills clarified that an “injured plaintiff” is entitled to

recover in damages the reasonable value of medical services rendered, even if Medicaid

paid for those services. See id. at 412–15. The Court did not abandon the principle that

the rule is a substantive and evidentiary rule of damages, applicable at the remedy stage

after a plaintiff has established injury. Indeed, the Wills opinion Court repeated the

phrases “injured party,” “injured plaintiff,” or “injured person” thirty separate times in

describing who could invoke the collateral source rule. See id. at 397–414.

The Restatement (Second) of Torts—which takes the approach to the collateral

source rule that this Court adopted in Wills—confirms the point. Section 920A of the

Restatement, which outlines the rule, is entitled “Effect of Payments Made to Injured

Party.” Restatement (Second) of Torts 920A (emphasis added). The Restatement


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explains that, under the collateral source rule, “[a] payment made by a tortfeasor or by a

person acting for him to a person whom he has injured is credited against his tort

liability,” while “[p]ayments made to or benefits conferred on the injured party from

other sources are not credited against the tortfeasor's liability.” Id. (emphasis added). In

other words, the rule presumes that injury is established. A plaintiff who is not injured

cannot invoke it.

None of the underlying rationales for the collateral source rule applies when a

plaintiff has suffered no injury. This Court explained in Wills that the rule stems from the

policy that “the wrongdoer should not benefit from the expenditures made by the injured

party or take advantage of contracts or other relations that may exist between the injured

party and third persons.” 229 Ill. 2d at 413. “A benefit that is directed to the injured

party should not be shifted so as to become a windfall for the tortfeasor.” Id. (quoting

Restatement (Second) of Torts § 920A, cmt.b). But neither of those rationales applies

when there is no injured party. Preventing a plaintiff who has not been injured from

recovering money she did not pay does not confer a “windfall” on the defendant. Nor

does a defendant who caused no actual injury to the plaintiff improperly “benefit” from

avoiding compensating the plaintiff for a non-injury.

This Court’s prior decisions addressing the collateral source rule are consistent

with Wills on this point, and confirm that the rule governs the measure of damages for a

plaintiff whose injury has already been established. In Arthur v. Catour, 216 Ill. 2d 72

(2005), the plaintiff suffered a personal injury when she fractured her leg. Although she

claimed special damages for medical services valued at more than $19,000, her medical

insurers settled the bill for less than $14,000. At issue was which amount plaintiff could


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recover from the defendant. Id. at 76. The Court held that the plaintiff could recover the

higher amount, notwithstanding that “there may be a double compensation for a part of

the plaintiff’s injury.” Id. at 78–79. Arthur did not question the principle that the

purpose of the collateral source rule was to measure the damages necessary to

compensate for an injury that had already been established. Indeed, Arthur answered a

certified question under Rule 308 that had that principle embedded in it, stating in

pertinent part that the question was “[w]hether the Plaintiff who was charged $19,355.25

in medical bills for medical services related to her injuries can present that amount of

bills as medical expenses in the case.” Arthur at 74 (emphasis added).

In Peterson v. Lou Bachrodt Chevrolet Co., 76 Ill. 2d 353 (1979), a plaintiff sued

the seller of a defective automobile after an accident killed one of his children and injured

three others. The relevant question in Peterson was whether the plaintiff could recover in

damages the costs of medical services provided gratuitously to one of his injured sons.

This Court ruled that the collateral source rule did not apply to the costs of those services,

because “[i]n a situation in which the injured party incurs no expense, obligation, or

liability, [there was] no justification for applying the rule.” Id. at 363 (emphasis added).

The Court then added that a windfall to the plaintiff should be avoided given that “[t]he

purpose of compensatory tort damages is to compensate . . . not to punish.” Id. Wills

later overruled Peterson on other grounds, but without criticizing Peterson’s

characterization of the collateral source rule as one affecting the measure of damages

awarded to an injured plaintiff.

This Court’s approach to the collateral source rule is mainstream. Every state

high court to have considered the issue has also stated that the rule governs the amount of


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damages, not the existence of economic injury. See, e.g., Stanley v. Walker, 906 N.E.2d

852, 854 (Ind. 2009) (“At common law, the collateral source rule prohibited defendants

from introducing evidence of compensation received by plaintiffs from collateral sources

. . . to reduce damage awards.”) (emphasis added); Leitinger v. DBart, Inc., 736 N.W.2d

1, 7–8 (Wis. 2007) (observing that the collateral source rule is “a rule of damages” under

which “[the] benefits an injured person receives from sources that have nothing to do

with the tortfeasor may not be used to reduce the torfeasor’s liability to the injured

person”) (emphasis added); Krahwinkel v. Commonw. Aluminum Corp., 183 S.W.3d 154,

162 (Ky. 2005) (collateral source rule “allows an injured plaintiff to seek sufficient

damages to make him whole without regard to payments made to the injured party by

someone other than the tortfeasor.”) (emphasis added); Midland Mut. Life Ins. Co. v.

Mercy Clinics, Inc., 579 N.W.2d 823, 828 (Iowa 1998) (collateral source rule is a rule of

damages); Washington by Washington v. Barnes Hosp., 897 S.W.2d 611, 619 (Mo. 1995)

(similar).

The First District identified the issue before it as whether “the collateral source

rule does not apply in a case involving a purely economic injury.” (A62.) But that

framing put the cart before the horse. The first—and dispositive—question was whether

Plaintiffs could establish an injury. As shown, the collateral source rule has no relevance

to that question and applies only in the event Plaintiffs could establish injury. The First

District cited no decision in which a court invoked the collateral source rule to excuse a

plaintiff asserting an economic tort claim from establishing injury. There is no such

decision under Illinois law, and this Court should not adopt such an improvident rule.


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Not only have Illinois decisions applied the collateral source rule only where the

plaintiff had established an actionable injury, but decisions in other states have rejected

the notion that the collateral source rule may be applied to establish injury in the first

instance. For example, in Roberts v. BJC Health Sys., which involved a group of patients

suing medical providers for fraudulently overbilling them even though the insurers footed

the bill, the Missouri Supreme Court held that the collateral source rule was irrelevant in

the absence of injury at all. 391 S.W.3d 433, 439 (Mo. 2013). A federal court addressing

the same question agreed, stating that it found “no authority for the proposition that the

[collateral source] rule may operate to confer standing on parties who have suffered no

injury in fact.” Roberts v. BJC Health, No. 4:04-cv-1556-JCH, slip. op. at 9 n.11 (E.D.

Mo. Mar. 11, 2005). Similarly, in Bechara v. Bayer Corp., a patient and his wife sued a

drug manufacturer for, inter alia, unfair and deceptive trade practices—a claim that

required a showing of financial loss. 2010 U.S. Dist. LEXIS 145646 (S.D. Fla. Mar. 16,

2010), *194. The manufacturer moved for summary judgment, arguing that because the

plaintiff’s health insurance covered the cost of the drug, plaintiff could not prove an

essential element of his claim and lacked standing. Id. The court agreed, holding that the

collateral source rule was inapplicable and granting summary judgment for the

manufacturer. See id. Finally, in Gillespie v. Travelscape LLC, 2014 WL 4243706 (D.

Wash. 2014), the court dismissed a putative class action brought by a plaintiff who

alleged that a travel company overcharged her for rooms. The court held that the plaintiff

lacked standing because her employer reimbursed her for the overcharges. Id. at *3. The

court rejected the notion that the collateral source rule saved the plaintiff’s claims,


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explaining that it is “inapplicable” where the plaintiff has not suffered any economic or

other damages, and thus has no standing. Id. at *2.

Like these other courts, this Court should reject any expansion of the collateral

source rule that would permit no-injury plaintiffs to prosecute lawsuits in the courts of

Illinois.

III. Plaintiffs Lack Standing to Sue

Because they cannot establish any injury, Plaintiffs Lewis and Banks also lack

standing, and that is another independent reason to grant summary judgment in favor of

Defendants. “Standing in Illinois requires . . . some injury in fact to a legally cognizable

interest.” Greer v. Ill. Hous. Dev. Auth., 122 Ill. 2d 462, 493 (1988). This injury may be

either “actual or threatened,” but must be “distinct and palpable.” Id. (citing Havens

Realty Corp. v. Coleman, 455 U.S. 363, 375 (1982), and Warth v. Seldin, 422 U.S. 490

(1975)); see also Maglio v. Advocate Health & Hospitals Corp., 2015 IL App (2d)

140782, ¶ 25 (noting that Illinois standing principles are similar to those in federal

courts). An injury will not confer standing if it is “conjectural or hypothetical.” Chicago

Area Council of Boy Scouts of Am. v. City of Chicago Com’n on Human Relations, 322

Ill. App. 3d 17, 30 (2001); see Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1542 (2016)

(same).

This Court has made clear that, “[w]here a plaintiff has no standing, the

proceedings must be dismissed.” Wexler v. Wirtz Corp., 211 Ill. 2d 18, 22 (2004). “That

is so because lack of standing negates a plaintiff’s cause of action.” Id. (citing Wood

River Township v. Wood River Township Hosp., 331 Ill. App. 3d 599, 604 (2002)).


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Illinois courts have consistently required a showing of economic loss as part of

any claimed economic injury for standing purposes. In Greer, neighborhood residents

brought suit against the Illinois Housing Development Authority challenging a proposed

neighborhood development project as violating various zoning laws and city ordinances.

122 Ill. 2d at 470. This Court held that plaintiffs’ claimed “diminution in the value of

[their] property” as a result of the project was a legally cognizable economic injury that

could support standing. Id. In contrast, a minority business enterprise lacked standing

under Illinois law where it could not show any concrete financial loss. See I.C.S. Illinois,

Inc. v. Waste Mgmt. of Ill., Inc., 403 Ill. App. 3d 211, 231–32 (2010). The plaintiff

alleged that a contractor fraudulently certified other subcontractors as minority-owned

businesses during a bidding process. Id. The plaintiff lacked standing because it could

not show that it was “deprived of lost profits” when it was not awarded the subcontract

and thus could not show a “distinct and palpable economic injury.” Id. at 226, 231–32.

United States Supreme Court cases on economic standing, which this Court has

cited with approval, see Greer, 122 Ill. 2d at 492–93, are also unanimous in requiring

plaintiffs to show that a real loss to the plaintiff is at stake. For example, the U.S.

Supreme Court explained that taxpayers have standing to challenge the collection of a

specific tax assessment because “being forced to pay such a tax causes a real and

immediate economic injury to the individual taxpayer.” Hein v. Freedom from Religion

Foundation, Inc., 551 U.S. 587, 559 (2007) (emphasis added) (citing Follet v. Town of

McCormick, 321 U.S. 573 (1944)). In Gladstone Realtors v. Village of Bellwood, 441

U.S. 91, 115 (1979), the U.S. Supreme Court held that “convincing evidence that the

economic value of one’s home has declined as a result of the conduct of another is


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certainly sufficient under [Article] III to allow standing to contest the legality of that

conduct.” In Vermont Agency of Nat. Resources v. United States, 529 U.S. 765 (2000),

the Court held that a relator in a qui tam action has standing to challenge an injury

suffered by the government because Congress assigned the relator an entitlement to a

percentage of any monetary recovery. And in Clinton v. New York, 524 U.S. 417 (1998),

the Court held that the state of New York had economic standing to challenge the Line

Item Veto Act after the President used it to invalidate legislation that would have saved

the state billions of dollars. In contrast, the U.S. Supreme Court rejected plaintiffs’ claim

of economic standing in Warth v. Seldin, 422 U.S. 490 (1975). City residents challenged

a zoning ordinance in a neighboring town, arguing that it would ultimately cause them to

“assume an increased tax burden.” Id. at 508–09. The Court held that plaintiffs’ claim of

economic loss was too attenuated and speculative, deriding it as an “academic exercise in

the conceivable.” See id. at 509. Taken together, these cases show that economic

standing requires an actual economic loss.

These principles apply no differently here. Plaintiffs Lewis and Banks have no

standing because they suffered no economic injury. A decision finding standing in this

case would be unprecedented and contrary to black-letter standing principles.

The First District failed to consider the question of standing entirely. But, as the

Circuit Court observed, the rule that a plaintiff who lacks injury must be dismissed for

lack of standing is “no mere technicality.” (A42 (quoting In re Adoption of Walgreen,

186 Ill. 2d 362, 365 (1999)).) “The existence of a real controversy is a prerequisite to the

exercise of [this Court’s] jurisdiction” and the jurisdiction of any Illinois court.


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Walgreen, 186 Ill. 2d at 365. Plaintiffs lack standing, and the Court should reverse the

First District for that reason alone.

CONCLUSION

The Court should reverse the judgment of the First District, affirm the judgment

of the Circuit court, and remand for further proceedings.

April 11, 2018

Respectfully submitted,

/s/ Dan K. Webb

Dan K. Webb Philip H. Curtis

Matthew R. Carter William H. Voth

Scott M. Ahmad Bruce R. Kelly

Winston & Strawn LLP Arnold & Porter Kaye Scholer LLP

35 West Wacker Drive 250 West 55th Street

Chicago, IL 60601 New York, NY 10019

(312) 558-5600 (212) 836-8000

[email protected] [email protected]



Attorneys for Defendant-Appellant Atlantic Richfield Company

Arthur F. Radke Andre M. Pauka

Manatt, Phelps & Phillips, LLP Bartlit Beck Herman Palenchar & Scott LLP

20 N. Clark Street, Suite 3300 54 W. Hubbard Street, Suite 300

Chicago, IL 60602 Chicago, IL 60654

(312) 529-6305 (312) 494-4422



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mailto:[email protected]

34

Attorney for Defendant-Appellant Attorney for Defendant-Appellant

ConAgra Grocery Products Company NL Industries, Inc.

Carol A. Hogan (Ill. Reg. No. 6202430)

Nicole C. Henning (Ill. Reg. No. 6286386)

Jones Day

77 West Wacker Drive, Suite 3500

Chicago, IL 6061

(312) 782-3939

[email protected]

[email protected]

Attorneys for Defendant-Appellant

The Sherwin-Williams Company


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CERTIFICATE OF COMPLIANCE

I certify that this brief conforms to the requirements of Rules 341(a) and (b). The

length of this brief, excluding the pages or words contained in the Rule 341(d) cover, the

Rule 341(h)(1) statement of points and authorities, the Rule 341(c) certificate of

compliance, the certificate of service, and those matters to be appended to the brief under

Rule 342(a), is 33 pages.

Dated: April 11, 2019

/s/ Dan K. Webb


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CERTIFICATE OF SERVICE

Under penalties as provided by law pursuant to Section 1-109 of the Code of Civil

Procedure, the undersigned certifies that the statements set forth in this instrument are

true and correct.

The undersigned attorney further hereby certifies under oath, in accordance with

735 ILCS 5/1-109, that on April 11, 2019, he filed the foregoing Brief of Defendants-

Appellants with the Clerk of the Illinois Supreme Court using the court’s electronic filing

system, and copies were served by mail upon William Harte and by email to the

following addresses on the attached Service List.

Dated: April 11, 2019

/s/ Dan K. Webb


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SERVICE LIST

Counsel for Defendants-Appellants

Dan K. Webb

Matthew R. Carter

Scott M. Ahmed

WINSTON & STRAWN, LLP

35 West Wacker Drive

Chicago, Illinois 60601

(312) 558-5600

[email protected]

[email protected]

[email protected]

Arther F. Radke

MANATT, PHELPS & PHILLIPS, LLP

20 North Clark Street

Suite 3300


(312) 529-6305

[email protected]

Counsel for Defendant-Appellant

Con Agra Grocery Product Company

Philip H. Curtis

William H. Voth

Bruce R. Kelly

ARNOLD & PORTER KAY SCHOLER LLP

250 West 55th Street

New York, NY 10019

(212) 836-8000

[email protected]

[email protected]

[email protected]


Atlantic Richfield Company

Carol A. Hogan

Nicole C. Henning

JONES DAY

77 West Wacker Drive

Suite 3500


(312) 782-3939

[email protected]

[email protected]


The Sherwin-Williams Company

Andre M. Pauka

BARTLIT BECK HERMAN PALENCHAR &

SCOTT

54 West Hubbard Street

Suite 300


(312) 494-4422

[email protected]


NL Industries, Inc.


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Counsel for Plaintiffs-Appellees

Edward T. Joyce

Rowena T. Parma

EDWARD T. JOYCE & ASSOC., P.C.

135 South LaSalle Street

Suite 2200


(312) 641-2600

[email protected]

[email protected]

Michael H. Moirano

Clair Gorman Kenny

MOIRANO GORMAN KENNY, LLC


Suite 2200


(312) 614-1260

[email protected]

[email protected]

William J. Harte


Suite 2200


(312) 726-5015

Laurence M. Landsman

LANDSMAN LAW FIRM

33 North LaSalle Street

Suite 1400


(312) 251-1165

[email protected]


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APPENDIX


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Table of Contents to the Appendix

Plaintiffs’ Third Amended Complaint (Jan. 26, 2007) ................................................................. A1

Circuit Court Summary Judgment Order (Apr. 20, 2017) .......................................................... A39

Circuit Court Memorandum Order on Plaintiffs’ Rule 304(a) Motion (Oct. 19, 2017) ............. A50

Appellate Court Order Limiting the Scope of the Record (Jan. 23, 2018) ................................. A56

Appellate Court Order Dismissing Cross-Appeal (Mar. 14, 2018) ............................................ A57

Lewis v. Lead Industries Assoc., Inc., 2018 IL App (1st) 172894 (Sept. 7, 2018) ..................... A58

Supreme Court Order Granting Petition for Leave to Appeal (Jan. 31, 2019) ........................... A64

Table of Contents to the Record on Appeal ................................................................................ A65

Table of Contents to the Supplement to the Record on Appeal .................................................. A66


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IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, CHANCERY DIVISION

MARY LEWIS, et aL,

Plaintiffs,

v. No. 00 CH 9800

LEAD INDUSTRIES ASSOCIATION, INC., et al.,

Defendants.

MEMORANDUM ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT

Seventeen years ago, plaintiffs filed this class action suit. Fourteen years ago, the Appellate Court held that plaintiffs had stated a viable claim for relief. Lewis v. Lead Industries Ass 'n, 342 Ill.App.3d 95 (1st Dist. 2003). That remains true despite two further trips to the Appellate Court.' Nine years ago, this Court certified a class. Order, April 18, 2008. Despite attacks from both sides, the class definition has remained essentially intact. See Order, April 23, 2015 (as corrected, October 5, 2015), Re Amended Motion for Class Certification and Related Issues.

Still, not much progress has been made. As the record amply shows, that is largely due to defendants' steely determination, reminiscent of the defense of Stalingrad, never to permit the merits of plaintiffs' claim to enter the courtroom. Defendants' current Motion for Partial Summary Judgment advances that goal by focusing on an issue which has arguably been latent in the case since the class was first certified. Briefly, defendants argue that the named plaintiffs lack standing to go forward because none of them has suffered, nor (as to two of them) can suffer, any cognizable "expense, obligation or liability" for the sole element of damage sought by plaintiffs: the cost of lead toxicity screening for their children. As will become clear, defendants have a solid point.

Background

The present issue is shaped by the nature of plaintiffs' claim, the relief plaintiffs seek, and the "expense, obligation or liability" element of the class definition.

The Appellate Court in Lewis v. American Cyanamid Co., 2006 Ill. App. LEXIS 8576, *18, described the underlying wrong to which plaintiffs point:

I See Lewis v. American Cyanamid Co., 362 Ill.App.3d 1229 (1st Dist. 2006) (table), substituted opinion at 2006 Ill. App. LEXIS 8576 (1st Dist. 2006), appeal denied, 216 Ill.2d 567 (2006); Lewis v. NL Industries, Inc., 20.13 IL App (1st) 122080.

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[O]nce the ... defendants ... became aware of the hazards of lead-based paints in "the 1920s" they implemented and carried out a plan "to conceal and mislead the public regarding the hazards of lead paint by, among other things, agreeing to form, fund and support [the Lead Industries Association, Inc., or 'LEAD']." Through LEAD, the plaintiffs claimed that the defendants marketed and promoted the use of lead pigments in lead-based paints; suppressed, discouraged, and retarded research, regulation, and public dissemination of information concerning the dangerous properties of lead-based paints; and concealed and misled the public about medical and scientific data indicating that lead-based paints were dangerous to children."

As a result of the concealment, the use of lead-based paint, particularly in housing, continued well after it would otherwise have ended. The resulting substantial public health risk led to the enactment of the Illinois Lead Poisoning Prevention Act, 410 ILCS 45/1 et seq. (the "ILPPA"). See 410 ILCS 45/11.05(a)(1)-(7).

Many cases have sought to recover for personal injuries to children resulting from lead-based paint ingestion and poisoning. See, e.g., Abbasi v. Paraskevoulakos, 187 I11.2d 386, 393 (1999), acknowledging plaintiff's pending "common law negligence action" based on injuries caused by "ingesting lead-based paint" (and concluding that given the availability of such an action, an explicit parallel private right of action under the Illinois Lead Poisoning Prevention Act, 410 ILCS 45/1 et seq., was not needed). But such one-by-one suits do not seem to have had significant impact. They usually aim at landlords (as in Abbasi), rather than paint manufacturers, and they are extremely difficult to aggregate, either as "mass torts" (see generally Smith v. Illinois Central R.R. Co., 223 I11.2d 441 (2006), or under a "public nuisance" umbrella (see generally City of Chicago v. Beretta USA Corp., 213 Il1.2d 351 (2004), and see, specifically as to lead-based paint, City of Chicago v. American Cyanamid Co., 355 Ill.App.3d 209 (1st Dist. 2005), and State v. Lead Industries Ass'n, 951 A.2d 428, 435-37, 452-58 (2008)).

The plaintiffs here took a quite different route. Instead of suing for personal injuries (unavoidably individualized, as emphasized in Smith, supra, 223 I11.2d at 449-54), they sued to recover only the cost of children's lead paint screening. They argued that the defendants' underlying wrong was a proximate cause of that screening cost. The ILPPA, itself allegedly a result of that underlying wrong (see 410 ILCS 45/11.05(a)(1)-(7)), may also be "a legally sufficient proximate cause of the costs of ... lead toxicity screening," Lewis v. NL Industries, Inc., 2013 IL App (1st) 122080, TT 9, 10; but the causation that matters is defendants' alleged wrongful conduct, and the damage caused thereby is the imposition of the screening cost. See Corrected Order Re Amended Motion for Class Certification and Related Issues, Oct. 5, 2015, at 4-5.2

2 Thus, as the Court concluded in that Order, if plaintiffs can prove that the cost of testing was occasioned by defendants' conduct — i.e., that reasonable parents in a high-risk area would screen their children for lead exposure as a result of conditions created or perpetuated by defendants' alleged conspiracy — then liability ensues. The ILPPA can be a convenient causal link ("I screened my child because the General Assembly determined that I should, due to the hazards of lead paint", or "I screened my child because the school, or my doctor, said I should do so" [see 410 ILCS 45/6.2, 7.1]), but it is not an essential causal link. A parent who had never heard of the ILPPA, but screened her child because she was aware of the dangers of lead paint exposure, could also recover.

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Thus the imposition of the screening cost becomes central to the plaintiffs' claim. It is the basis and linchpin of their cause of action. Without it, the plaintiffs here have suffered no actionable injury. (Their only other pertinent link to defendants' conduct is that their children were screened for lead toxicity; but ILPPA shows that as a matter of Illinois public policy, having one's child screened for lead toxicity is not a detriment, but a positive good.) To be sure, a plaintiff need not have actually paid the screening cost out of pocket. But he or she must at least have some present or contingent obligation or liability, whether primary or secondary — e.g., reimbursement or subrogation — with respect to the cost. Otherwise the cost is beside the point.

Accordingly, the screening cost played a significant role in framing the class definition. When this Court first certified the class, it excluded persons "who incurred no expense, obligation, or liability for the lead toxicity screening of their children." That was based on, among other things, the holding in Peterson v. Lou Bachrodt Chevrolet Co., 76 I11.2d 353, 362-63 (1979), that the collateral source rule should not apply to "a situation in which the injured party incurs no expense, obligation, or liability," because to do otherwise would "bestow a windfall upon plaintiffs." After Wills v. Foster, 229 Il1.2d 393, 415 (2008), explicitly overruled Peterson regarding the collateral source rule, this Court revisited the class definition. But the Court left intact the exclusion quoted above. See Order Regarding Class Definition (Dec. 16, 2008), at 1.

The Court did so because Wills and Peterson, like nearly all Illinois collateral source rule cases, concern medical expenses in bodily injury actions. See Koehler v. Packer Group, Inc., 2016 IL App (1st) 142767, ¶ 126, pointing out that "{t]he collateral source rule is typically asserted by personal injury plaintiffs whose insurance has paid some or all of the medical services necessitated by a defendant's tort." Those situations are different in nature from the claim asserted here. In bodily injury cases, the gravamen of the claim — the actionable "injury" — is the bodily harm. The dollars (including "special damages," such as medical bills) are just a part of damages. They are not the claim itself. Applying the collateral source rule to "special damages" only affects a component of damages. Indeed, given the ability of medical providers and payors to seek reimbursement from injured persons who recover from a tortfeasor, not to apply the collateral source rule would tend to compel injured persons to reimburse medical costs ("special damages") out of non-medical "general damage" awards, leaving them undercompensated. That would be contrary to the Illinois policy, evidenced in, e.g., 735 ILCS 5/2-1117, to separate medical and non-medical damages in order to ensure that injured persons are fully compensated for medical costs.

Here, however, plaintiffs' claim is for an "economic tort," not a bodily injury. In economic tort cases, dollars are not just damages; they are the claim itself. If plaintiff cannot prove economic injury — that is, if plaintiff has incurred no actual economic loss due to defendants' conduct — he has no claim at all. And economic injury means dollars. Damages "must be pecuniary." Cangemi v. Advocate South Suburban Hospital, • 364 Il1.App.3d 446, 469-70 (1st Dist. 2006). Non-economic harms (e.g., "humiliation, embarrassment," or "emotional harm") will not suffice. Weidner v. Karlin, 402 Ill.App.3d 1084, 1088 (3d Dist. 2010); Giammanco v. Giammanco, 253 I11.App.3d 750, 761-62 (2d Dist. 1994); see also Mulligan v. OVC, Inc., 382 Ill.App.3d 620, 628-29 (2008). Even in an intentional fraud case, plaintiff cannot prevail unless he can prove

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actual economic harm. See Martin v. Heinold Commodities, Inc., 163 I11.2d 33, 59 (1994), quoting Jones v. Foster, 175 Ill. 459, 469 (1898): "fraud without damage is neither sufficient to support an action at law, nor a ground for relief in equity." Thus, applying the collateral source rule to "economic tort" cases, such as plaintiffs assert here, would obscure the very nature of the cause of action in such cases. It would allow a plaintiff who herself has suffered no actual economic loss — who is, then, "without damage" — to sue anyway, which is hard to square with our basic principles of standing ("no mere technicality," see In re Adoption of Walgreen, 186 I11.2d 362, 365 (1999)) and risks undercutting our "real party in interest" rules (see, e.g., Walker v. Ridgeview Construction Co., 316 Ill.App.3d 592, 595-96 (1st Dist. 2000)). In an economic tort context, where, as here, the wrongful payment is the claim, who actually paid it matters.

We will return to this topic shortly.

The Present Motion

Against this backdrop, defendants' Motion for Partial Summary Judgment asserts that the named plaintiffs, Ms. Lewis, Ms. Banks, and Ms. O'Sullivan, (i) did not themselves pay for the lead toxicity screening their children received, and (ii) are not —indeed, cannot be — liable to any third party who did pay that cost. Accordingly, defendants maintain that the named plaintiffs have no cognizable cause of action, and lack standing to pursue this litigation for themselves or on behalf of a class.

Discussion

The first of defendants' key points is factual. Based on depositions and document discovery, defendants assert the following. Plaintiff Mary Lewis was on Medicaid when both of her children received blood lead tests. She did not pay for the tests. Similarly, plaintiff Tashswan Banks was on Medicaid when her son received blood lead screening, and she did not pay anything for his lead tests. Plaintiff Kathleen O' Sullivan's family has been insured by Blue Cross Blue Shield, and she did not recall any payments for blood tests for any of her children. Ms. O'Sullivan has not produced any doctor bills or similar evidence that she owed any money as a result of the lead testing. Her insurer also has no record of paying for lead tests.

In response, plaintiffs concede that they did not pay "out of pocket" for their children's lead screening. P. Resp. at 3, 7.

Defendants' second key point is in essence a legal argument. As to Ms. Lewis and Ms. Banks (who were covered by Medicaid when the testing was done), defendants assert that "by law," neither of them has any "current obligation or liability" to pay for their children's lead screening. As to Ms. O'Sullivan (who was covered by private insurance), defendants argue that her insurer — Blue Cross Blue Shield, or BCBS — "has no records" of paying for the tests, and that Ms. O'Sullivan "has no evidence that she would have an obligation or liability to reimburse BCBS" even if BCBS had paid.

In response, plaintiffs argue that Ms. Lewis and Ms. Banks might have some obligation, because "the. State can seek reimbursement from any recovery obtained for [sic; should be ``from"?] a third party for medical expenses born[e] by the State," and "the

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State retains a statutory right to proceed against a Medicaid recipient who recovers for expenses paid by the State for which a third party is liable." P. Resp. at 10. As to Ms. O'Sullivan, plaintiffs argue that "Ms. O'Sullivan is not required to 'prove' anything at this juncture." Id. at 10. Plaintiffs then go on to argue that in any event, the collateral source rule should apply to all three plaintiffs' claims. Asserting that "[d]efendants provide no legal authority for the proposition that when an insured party experiences an economic injury for which insurance applies, he has no cognizable legal injury," plaintiffs argue that the collateral source rule "has been applied in contract cases wherein the sole injury alleged was 'economic' in nature," citing GNP Commodities, Inc. v. Walsh Heffernan Co., 95 I1l.App.3d 966, 977 (1st Dist. 1981). P. Resp. at 11.

---Ms. O'Sullivan

As to Ms. O'Sullivan, it is true that one who opposes a summary judgment motion is not typically required to "prove" anything. But as to her, defendants have in essence brought a Celotex motion, arguing that summary judgment is appropriate because she has not shown and cannot prove an essential element of her claim. Such a motion essentially says that a trial is unnecessary. To defeat such a motion, she must at least show that a trial would not be a waste of time, by "present[ing] some factual basis that would arguably entitle her to a judgment" if a trial were held. Hutchcraft v. Independent Mechanical Industries, Inc., 312 Ill.App.3d 351, 355 (4th Dist. 2000). Plaintiffs concede that Ms. O'Sullivan herself did not pay for any lead toxicity screening. See P. Resp. at 3, 7. Since neither Ms. O'Sullivan nor her insurer can show any such payment by the insurer, her claim to recover such a cost seems tenuous at best.3

---Ms. Banks and Ms. Lewis

As to Ms. Banks and Ms. Lewis, plaintiffs argue that the Appellate Court has already held that the cost of lead toxicity testing is a "cognizable injury." See P. Resp. at 2-3, quoting Lewis v. Lead Industries Ass'n, 342 Ill.App.3d 95, 101-02 (1st Dist. 2003). So it did. But that opinion tacitly assumed that plaintiffs had paid the cost. It did not address whether the "injury" exists if a plaintiff did not, in fact, pay the cost.

We know that Ms. Banks and Ms. Lewis themselves did not pay the cost. Can it be said that they might be liable for it? Plaintiffs say Yes, arguing that "one incurs expenses when one becomes liable for them" (and that "incur" means only "become liable or subject to"), whether or not the liability is ever translated into actual payment. P. Resp. at 8-9. This is so, plaintiffs argue, "even where the actual cost of the expense is paid by a third-party payor," because if the person incurring a medical expense "recover[s] from a tortfeasor for the expenses, a third-party payor may pursue reimbursement" from the person who incurred the expense. Id. at 9.

Defendants, on the other hand, argue that as to Medicaid (which paid the lead toxicity test costs for Ms. Banks' and Ms. Lewis' children), the State cannot seek reimbursement from Medicaid recipients. Defendants state (D. Mem. at 5) that:

3 She has not argued that she has had inadequate time for discovery, nor that she needs further discovery. See Jiotis v. Burr Ridge Park District, 2014 IL App (2d) 121293, ¶¶ 26-27, 29-30.

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Providers must render medical services to Medicaid recipients free of any charge to them, and there can be no co-pays. 42 C.F.R. §§ 447.50, 447.52-.56; 42 U.S.C. § 1395cc(a)(1)(A)(i); 42 U.S.C. § 1396p(b); 89 Ill. Admin. Code § 140.12(i)(1). As a matter of law, providers cannot seek payment from Medicaid recipients or place liens on their property to secure any demand for payment. 42 U.S.C. § 1396p(b)(1). Accordingly, by law, Plaintiffs Banks and Lewis have no current obligation or liability to pay any provider or the State for the cost of diagnostic tests.

What is intriguing about this disagreement is that the parties may not actually disagree. Defendants say plaintiffs have no "current" obligation or liability to pay "any provider or the State." Plaintiffs, bypassing that point, argue instead that there might be a future obligation or liability if a third party becomes involved: if plaintiffs "recover from a tortfeasor" for the expense, then a provider or the State might "pursue reimbursement" from plaintiffs. Defendants use Boone v. Evanston Hospital, 225 Ill.App.3d 195, 198 (1st Dist. 1992), to gloss over this distinction, arguing that Boone does not allow a recipient of State-funded medical services to file suit against a third party wrongdoer "on behalf of the State provider. That is true. But Boone also recognizes plaintiffs' argument: it holds, 225 I1l.App.3d at 198, that if the recipient files "an appropriate cause of action or claim" against a wrongdoer, 305 ILCS 5/11-22 gives the State provider (hereafter, for simplicity, "the State") an enforceable "lien on any recovery obtained by the public aid recipient."

Thus Boone does not hold that either the recipient or the State has no claim. It does not even hold that either the recipient or the State has no present claim. Rather, Boone holds only that a recipient wishing to sue the underlying tortfeasor "must bring a cause of action in its own right" rather than on behalf of the State. Id., 225 I1l.App.3d at 199. What is more, it is clear from both Boone4 and the statutory scheme that the State's broad right of recoupment (see 305 ILCS 5/11-22, which specifically applies to, inter alia, Medicaid claims) is enforceable both by subrogation (see 305 ILCS 5/11-22a) and by a lien on any recovery from the underlying tortfeasor (see 305 ILCS 5/11-22b(b)(1), (e)), whether suit against the tortfeasor is brought by the recipient, the State, or both.

As just noted, Boone does not address whether the State's right to reimbursement (or the recipient's correlative "obligation" to reimburse) from a third-party recovery is present, future, or contingent. (It is not even mandatory: the State can choose to "compromise, settle or even waive any claim for benefits." Boone, supra, 225 Ill.App.3d at 198.) The parties' dispute focuses on that issue. Defendants say the plaintiffs have no present cause of action because they paid nothing and, at this juncture, owe nothing to the State. Plaintiffs counter that the statutes just cited nevertheless impose on plaintiffs a future or contingent obligation to reimburse the State from any recovery they might obtain from a third-party recovery — and plaintiffs seem to argue that it is now a present obligation because they are, in fact, presently suing defendants for just such a recovery.

4 "In the event that the beneficiary brings an appropriate cause of action or asserts an appropriate claim against the third person, the Department may join or intervene in the action or claim brought by the beneficiary or bring its own action." Boone, supra, 225 Ill.App.3d at 199. The language just quoted, like Boone's citation of what is now 305 ILCS 5/11-22b(c)(3), refers specifically to wrongful death claims. But the basic principle applies quite broadly, as 305 ILCS 5/11-22, 11-22a, and 11-22b make plain.

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Though plaintiffs' position gains at least rhetorical support from Boone, plaintiffs miss an important distinction. On careful analysis, the State's right of recoupment is a claim (whether direct or by way of subrogation) against the wrongdoer, not the recipient. This complies with the Federal mandate (see 42 U.S.C. § 1396p(b)(1)) not to seek repayment from recipients themselves. It also underpins Boone's careful separation of the State's and the recipient's rights against the wrongdoer. No matter how the State pursues its recoupment rights, the pertinent statutes — 305 ILCS 5/11-22, 11-22a, and 11-22b — only apply to, and are only exercisable against, a judgment against the wrongdoer. Either the State or the recipient can obtain such a judgment. If the State itself does so, as an intervenor or through its own suit (see 305 ILCS 5/11-22a), obviously the judgment is not against the recipient. Even if the recipient obtains the judgment (see, e.g., 305 ILCS 5/11-22b(e)(1)), the State's recoupment comes from the judgment against the wrongdoer before the net judgment is paid to the recipient, not from the recipient herself See 305 ILCS 5/11022b(e)(1) (State's recoupment is a "first lien against the ... judgment"); 305 ILCS 5/11-22b(h) (State can obtain "a writ of execution as lien claimant to enforce payment of said lien against such third party" [emphasis added]).'

Accordingly, the Court cannot agree with Ms. Banks' and Ms. Lewis' argument that their "economic tort" claim here — limited as it is to the cost of testing, which they themselves admittedly have not paid — gives them a present, or even a prospective, "obligation or liability" vis-a-vis the State. (As to Ms. O'Sullivan, no such obligation has been shown, since (i) her benefits, if any, did not come from the State, and (ii) on the present record neither she nor her private insurer has any record of payment of lead toxicity testing costs to begin with.)

---The Class Action Problem for Ms. Banks and Ms. Lewis

In fact, for Ms. Banks and Ms. Lewis it appears that this suit represents their only possible exposure to testing cost "obligation or liability." Ironically, they might have such an "obligation or liability" if they win this suit — but not otherwise. With equal irony, if they do win this suit, their damages (solely testing costs) arguably would never reach them, being intercepted along the way by the State's lien for its cost recoupment. And, compounding the irony, it is possible (see 305 ILCS 5/11-22b(e)(1)), though not certain (see 305 ILCS 5/11-22b(c)(4), which unlike § 11-22b(e)(1) limits the State's obligation to a "pro rata share," and even then only if "the beneficiary incurs a personal liability to pay attorneys' fees and costs of litigation"), that the State might be required to defray their attorneys' fees even though they themselves would not benefit from a recovery. It is by now axiomatic, that class actions which in the end benefit only class counsel are not favored. This concern needs to be forthrightly addressed, though it is not dispositive of defendants' present Motion.

It is true that as a last-resort fallback, if the judgment "has been paid to the beneficiary [i.e., recipient]," the State can enforce its lien "against the beneficiary." 305 ILCS 5/11-22b(h). But that is not the usual case; in fact, it can arise only through error. In view of the statutory provisions already noted, any payment to the recipient without first honoring the State's recoupment right would be manifestly erroneous. To the extent of the State's lien, such a payment would not represent the recipient's own funds. In any event, no such situation presently exists as to any of the plaintiffs here, and it would be improper to speculate that such a situation — resulting, by hypothesis, from a judicial error — might occur at some time in the future.

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---The Collateral Source Rule

The named plaintiffs' only other basis for surmounting defendants' Motion is their argument that the collateral source rule ought to apply here. Even that cannot help Ms. O'Sullivan, as to whom the present record does not show a testing cost payment by anyone, "collateral" or otherwise. But as to Ms. Lewis and Ms. Banks, applying the collateral source rule might overcome the defendants' argument that they themselves have no present damage claim. Accordingly, the Court has revisited its prior analysis, summarized at pages 2-4 supra. The Court has focused on plaintiffs' argument, P. Resp. at 11, that the collateral source rule "is not limited to personal injury [cases] and has been applied in contract cases wherein the sole injury alleged was 'economic' in nature."

It remains true that "[t]ypically," Illinois cases have invoked the collateral source rule with regard to medical expenses in personal injury cases. Koehler v. Packer Group, Inc., 2016 IL App (1st) 142767, ¶ 126. That was the focus (and limit) of the Supreme Court's analysis in Peterson v. Lou Bachrodt Chevrolet Co., 76 Ill.2d 353 (1979), Arthur v. Catour, 216 I11.2d 72 (2005), and Wills v. Foster, 229 I11.2d 393 (2008). But it is also true that a handful of Illinois cases have asked whether the rule might apply more broadly. At least three have expressly declined to do so. Koehler, supra, was "unconvinced" that the rule should be applied in a non-personal-injury, non-medical-expense, wrongful termination case. 2016 IL App (1st) 142767, 11128.6 A divided panel in Sterling Radio Stations, Inc. v. Weinstine, 328 I1l.App.3d 58, 64-65 (1st Dist. 2002), similarly declined to apply the rule in a legal malpractice case, because (Id. at 64) "[t]he injuries resulting from legal malpractice are not personal injuries, but are pecuniary injuries to intangible property interests."7 And files v. Spratt, 195 Il1.App.3d 354, 358-59 (4th Dist. 1990), declined to apply the rule in a paternity suit, both because the defendant was "neither a tortfeasor nor wrongdoer" and because the Parentage Act of 1984 (see, now, 750 ILCS 46/101 et seq.) "makes no reference to the collateral-source rule."

The few remaining Illinois cases are not very helpful. As plaintiffs correctly argue, in GNP Commodities, Inc. v. Walsh Heffernan Co., 95 Ill.App.3d 966, 977 (1st Dist. 1981), which was a UCC Article 2 action for damages in the sale of nonconforming frozen pork bellies, the panel did say:

"Even if plaintiff made a profit on future contracts for pork bellies, we see no reason why the collateral source rule should not apply to bar defendants

6 In Koehler, plaintiff wanted to use the rule to prevent his own post-termination earnings from being set off as mitigation of damages. Id., ¶11 123, 125-26. Applying the rule as plaintiff wished would have undercut settled law about mitigation. See Id, ¶ 126.

All but one of the collateral source cases cited in Sterling Radio were bodily injury cases. Both the majority and the dissent cited Muranyi v. Turn Verein. Frisch-Auf, 308 III.App.3d 213 (2d Dist. 1999), a Dramshop Act case arising from plaintiff's husband's bodily injury, and First Midwest Trust Co. v. Rogers, 296 III.App.3d 416 (4th Dist. 1998), a bodily injury case involving workers' compensation payments. Wilson v. Hoffman Group, Inc., 131 I11.2d 308, 320-21 (1989), found the collateral source rule "irrelevant" to the issue there presented. Bernier v. Burris, 113 Ill.2d 219, 242 (1986), was a constitutional dispute stating only that the common-law collateral source rule could be changed by statute.

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from reducing damages by proof that plaintiff has been compensated from a source to which they have not contributed."

But that language (framed in terms of "even if') seems to be dictum, since earlier in the same paragraph the panel had rejected defendants' contrary argument on two other grounds. In addition, the only two cases cited by the panel in support of the quoted language — Cereal Byproducts Co. v. Hall, 16 Il1.App.2d 79, 81-82 (1st Dist.), aff'd without discussion of the point, 15 Ill.2d 313 (1958), an accounting malpractice suit, and Hanover Shoe, Inc. v. United Shoe Machinery Corp., 245 F. Supp. 258, 292 (M.D. Pa. 1965), aff'd, 392 U.S. 481, 502-03 (1968), an antitrust case — are inapposite. Both cases merely held that a tax benefit received by a plaintiff as a result of defendant's misconduct (e.g., a deduction for embezzled funds) cannot be set off against the defendant's liability. Neither case mentioned the collateral source rule.

As a further point, though the quoted GNP Commodities language has an intuitive appeal, the reason seems better explained in terms of causation than by stretching the collateral source rule into a new context. The GNP Commodities transaction involved both actual purchases and futures contracts. Plaintiff lost on the former, due to defendants' fraud, but profited on the latter due to its own efforts. This brings to mind the Supreme Court's "loss causation" analysis of a two-part transaction (buying London futures contracts, and paying excess fees) in Martin v. Heinold Commodities, Inc., 163 I11.2d 33, 52-53, 61-62 (1994). The defendant in Heinold was responsible for its fee overcharges. But it was not responsible for the plaintiffs' loss on London futures contracts, because the defendant had not actually caused that loss. Similarly (though conversely), in GNP Commodities, the defendants caused plaintiff's loss on actual pork belly purchases. But they did not cause the separate profits plaintiff made on pork belly futures. Why, then, should they benefit from those profits?

This leaves American Fidelity Fire Ins. Co. v. General Railway Signal Co., 184 Il1.App.3d 601, 617-18 (1st Dist. 1989), cited in „lilac v. Spratt, supra. The relevant part of the facts in American Fidelity involved the trial court's order of a remittitur from the damages awarded to plaintiff American Fidelity ("AFFI") of amounts AFFI had already collected from other parties under letters of credit issued by AFFI. The Appellate Court declined to apply the collateral source doctrine to those facts. ("We conclude that AFFI was not legally entitled to invoke the collateral source rule," and that the remittitur was proper. 184 Ill.App.3d at 618.)8 The Appellate Court — citing GNP Commodities, supra — did state, however, that "[i]n Illinois, the collateral source rule applies in contract cases only where there is an element of fraud, tort, or wilfulness."

That may be dictum. The court actually declined to apply the collateral source rule. Treated as true, it puts Illinois in a small minority. An "overwhelming majority of jurisdictions" hold that the collateral source rule does not apply in breach of contract actions. See Nizenson v. Morgan Stanley DW, Inc., 546 F.Supp.2d 213, 234-35 (E.D. Pa. 2008), citing Midland Mutual Life Ins. Co. v. Mercy Clinics, Inc., 579 N.W.2d 823, 829-

8 The Court did not specifically explain this conclusion. But it had previously rejected AFFI's underlying premise, that the remittitur was wrong because AFFI might have to reimburse the amounts it had collected from other parties under the letters of credit: "[W]e conclude that AFFI is mistaken when it states, 'it will be obligated to reimburse those who posted the Letters of Credit.'" See 184 III.App.3d at 617.

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30 (Iowa 1998) (though Midland Mutual left open the possibility of applying the rule in "contract actions which involve tortious or willful conduct by the defendant," Id. at 830). As the New York Court of Appeals held in Inchaustegui v. 666 5th Avenue Limited Partnership, 96 N.Y.2d 111, 116, 749 N.E.2d 196, 200 (2001), "the common-law collateral source rule is inherently a tort concept. It has a punitive dimension [citation omitted] that does not comport with contract law. Contract damages, unlike tort damages, are limited to the economic injury caused by the breach."

Even viewed strictly through an Illinois lens, moreover, applying the collateral source rule in contract cases on the basis of "fraud, tort or wilfulness," as suggested in American Fidelity, seems dubious. For one thing, it comes perilously close to allowing punitive damages in contract cases, contrary to the rule of Morrow v. L.A. Goldschmidt Associates, Inc., 112 Ill.2d 87, 94 (1986), that "[t]he sole purpose of contract damages is to compensate the nonbreaching party, and punitive damages are not available even for a `wilful' breach of contract."9 Also, as Morrow implies, by its nature the collateral source rule goes beyond the direct, purely compensatory role of contract damages, thus running contrary to Illinois' reluctance to countenance indirect or consequential damages in contract cases. See Moorman Mfg. Co. v. National Tank Co., 91 Il1.2d 89 (1982), cited for this point in Morrow, supra, 112 I11.2d at 96.

Where does this leave us? GNP Commodities, American Fidelity, and the other Illinois cases discussed above make clear that plaintiffs' desire to apply the collateral source rule in this case rests on shaky ground at best. None of the Illinois cases undercuts the important distinction, addressed at pages 2-4 supra, between bodily injury cases (the usual field for the collateral source rule) and this case, a pure economic tort claim in which the plaintiffs wish to apply the collateral source rule not to an aspect of damages, but to the very claim at issue itself. With the possible exception of GNP Commodities (which itself is perhaps better explainable on other grounds, see page 9 supra), none of the Illinois cases shows a trend toward expanding the collateral source rule; to the contrary, most of the cases decline to apply that rule outside its bodily injury "home turf."

Accordingly, the Court must decline Ms. Banks' and Ms. Lewis' invitation to overcome their lack of a present "expense, obligation or liability" by invoking the collateral source rule. Though the State might be able to assert a direct claim, see 305 ILCS 5/11-22a, 11-22b(b)(1), it does not seem that Ms. Banks and Ms. Lewis can do so.10

For these reasons, the Court concludes that defendants' Motion for Partial Summary Judgment must be granted. As to Ms. Banks and Ms. Lewis, the Court must

9 True, Morrow recognizes an exception for cases where the breach of contract is itself an "independent tort." Even there, however, Morrow permits punitive damages only if the tort is actually "alleged" as such, and that requires more than just a wilful breach: "We cannot agree that a breach of contract becomes a tort just because the breach was wilful and wanton." Morrow, supra, 112 Ill.2d at 95, 98.

10 As to Ms. Banks and Ms. Lewis, moreover, even if the Court arrived at the opposite conclusion, we would still confront the class-action difficulty of (in effect) involuntarily pulling similarly situated class members into this litigation under circumstances where their only possible liability for the claims in issue would exist because they have been brought into this suit — and, to make matters worse, where any benefit to them from being brought into this suit may be illusory. See page 7 supra. It seems an insufficient response to say that a class member, thus dragooned, could go to the trouble of opting out. The idea of class actions is to benefit class members, not to leave them worse off.

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find that under the applicable statutory law, neither is a member of the class previously certified by the Court because neither incurred an "expense, obligation, or liability" for the cost of lead toxicity testing. As to Ms. O'Sullivan, the Court must find that she has not shown herself to be a member of the class because, in response to defendants' Motion, she has not presented facts tending to show that she has incurred such an expense, obligation, or liability.

Because the Court had previously certified a class herein, the grant of defendants' Motion as to the present named plaintiffs does not warrant dismissal of the action. Rather, plaintiffs' counsel — who are counsel for the class — should be given an opportunity to identify other class members who may wish to serve as replacement named plaintiffs. See Barber v. American Airlines, 241 I11.2d 450, 456-57, 459 (2011); Wheatley v. Board of Education, 95 Il1.2d 481, 486-87 (1984).

Conclusion

For the foregoing reasons, IT IS HEREBY ORDERED as follows:

1. Defendants' Motion for Partial Summary Judgment is GRANTED. The Court finds that Mary Lewis, Tashswan Banks, and Kathleen O'Sullivan are not members of the class certified herein, and thus cannot participate herein on behalf of the class.

2. Plaintiffs' counsel shall have until June 26, 2017 to identify one or more other class members desiring to serve as replacement named plaintiffs herein.

3. In light of the foregoing, defendants' Motion to Adjourn Deadlines (filed April 12, 2017) is GRANTED. The November 15, 2017 discovery completion deadline set by the current Case Management Order, and all ensuing deadlines therein, are VACATED.

4. This matter is set for a status hearing on July 10, 2017 at 9:30 a.m. At that time the Court will consider revising the discovery completion and other deadlines vacated by paragraph 3 of this Memorandum Order.

DATED: April 20, 2017 ENTER:

Circuit Judge

ENTERS JUDGE PETER FLYNN-1784

APR 20 2017 DOROTHY BROWN

OF THE CIRCUIT COURT , COOK COUNTY, IL

LHLUTY CLERK

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(4, 6 c-7 •••• 1-k-07

IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, CHANCERY DIVISION

MARY LEWIS, et al.,

Plaintiffs, No. 00 CH 9800

V.

LEAD INDUSTRIES ASSOCIATION, INC., et aL,

Defendants.

MEMORANDUM ORDER ON PENDING CROSS-MOTIONS

Plaintiffs have moved for a Rule 304(a) finding with respect to the Court's April 20, 2017 Memorandum Order (the "Rule 304(a) Motion"). Defendants have cross-moved to decertify the class and enter final judgment (the "Decertify Motion"). As we will see, both motions are flawed. But as to two of the three named plaintiffs affected by the Court's April 20, 2017 ruling, plaintiffs' approach is procedurally proper, and meets the relevant case-law tests for Rule 304(a) certification.

Background

On April 20, 2017, the Court granted defendants' Motion for partial summary judgment, dismissing the claims of the three named plaintiffs in this class action.

As to plaintiff Kathleen O'Sullivan, the Court held that her claim could not go forward because she admittedly could not present any evidence that either she or her insurer had paid for her children's lead toxicity screening. That doomed her claim. She needed to respond to defendants' summary judgment motion with some "factual basis that would arguably entitle her to a judgment." Hutchcraft v. Independent Mechanical Industries, Inc., 312 111.App.3d 351, 355 (4th Dist. 2000). She could not do so.

As to plaintiffs Tashswan Banks and Mary Lewis, the Court held that their claims could not go forward because as Medicaid participants, they had not incurred any "expense, obligation, or liability" for the cost of their children's lead toxicity screening. Indeed, as a matter of law, the only way they could do so would be — ironically — through this suit itself. See Mem. Order, April 20, 2017, at 5-7, 10 n.10.

The grant of defendants' partial summary judgment motion did not in itself dispose of the case. A class had already been certified. In such a situation, plaintiffs'

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counsel — who represent the class, not just the named plaintiff(s) then serving as its representatives — should be given an opportunity to identify other persons able and willing to serve as named plaintiffs. See Barber v. American Airlines, 241 I11.2d 450, 459 (2011) (even in Barber, the "class action could have survived if one of the remaining class members had substituted himself as the named representative"). Thus, this Court's April 20, 2017 Order gave plaintiffs' counsel time "to identify one or more other class members desiring to serve as replacement named plaintiffs herein."

Instead, plaintiffs' counsel moved for a Rule 304(a) finding, precipitating defendants' cross-motion to decertify the class and dismiss this action.

Discussion

At the outset, three key points emerge from the foregoing.

First, the Court's April 20th Order did not in any way affect the class definition in this case. To the contrary, the Court reaffirmed and relied upon that definition in holding that the then named plaintiffs simply were not members of the defined class.

Second, from the standpoint of Ms. Lewis, Ms. Banks, and Ms. O'Sullivan, the Court's April 20th Order was indeed a final ruling dismissing their claims in this case. As to Ms. O'Sullivan, that ruling was purely personal and factual. It was based entirely on her individual inability to present sufficient evidence in response to defendants' summary judgment motion. Another person in her position (i.e., whose lead toxicity test costs were paid by a private insurer) might have just such evidence. As to Ms. Lewis and Ms. Banks, however, the Court's ruling was based on the law — the statutes and regulations governing Medicaid. As a matter of law, the Court's ruling applies not just to them, but also to any other person whose lead toxicity test costs were borne by Medicaid.

Third, though the Court's April 20th Order was a final ruling as to Ms. Banks, Ms. Lewis, and Ms. O'Sullivan, it was not a final ruling in the case. The claims of the class — including the cause of action recognized by the Appellate Court in Lewis v. Lead Industries Ass'n, 342 III.App.3d 95 (1st Dist. 2003) — remain unadjudicated. This should be obvious. Holding that a person is not a member of a defined class says nothing about the rights of those who are members of the class.

These points illumine our way forward. The first and third points explain why defendants' requests to decertify the class and dismiss the action are not appropriate: The Court's April 20th Order did not identify anything wrong with the class definition, and this action is far from over. The second and third points indicate that a Rule 304(a) certification of the summary judgment ruling which is the subject of plaintiffs' Rule 304(a) request would seem technically proper, because the ruling "dispose[d] of the rights of the parties" on some "separate and definite part" of the controversy, and was "an ultimate disposition of ... individual claim[s] entered in the course of a multiple claims action." Geier v. Hamer Enterprises, Inc., 226 111.App.3d 372, 379-80 (1st Dist. 1992).

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To be sure, technical propriety matters. A Rule 304(a) certification cannot "make an order otherwise nonfinal an appealable one," because "fflust like a jackass, it does not become a zebra by painting stripes on it." U.S. Air, Inc. v. Prestige Tours, Inc., 159 III.App.3d 150, 154 (1st Dist. 1987). As Geier, supra — perhaps the first Illinois case to examine Rule 304(a) in thoughtful detail — makes clear, however, technical propriety is only the start of a Rule 304(a) inquiry. Even if certification is possible, is it advisable?

Before Geier, Rule 304(a) Illinois authority was "sparse," especially regarding third-party actions (Geier's focus). So Geier sought guidance from Federal cases involving the "substantially similar" provisions of F.R.Civ.P. 54(b). Geier, supra, 226 III.App.3d at 375, 378, 379-88. Geier determined that the Federal courts "consider various factors in determining whether the certification for appeal of a portion of a case is an abuse of discretion," Id. at 382-83, and summarized those factors by quoting from Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360, 362 (3d Cir. 1975):

"(1) the relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in set-off against the judgment sought to be made final; (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like. Depending upon the facts of the particular case, all or some of the above factors may bear upon the propriety of the trial court's discretion in certifying a judgment as final under Rule 54(b)."

Geier, supra, 226 III.App.3d at 383, then added (citing Campbell v. Westmoreland Farm, Inc., 403 F.2d 939, 942-43 (2d Cir. 1968)) some "[Wier factors," including "whether an appeal would eliminate unnecessary evidence, confine the issues, shorten the trial, save much expense to the litigants in connection with the preparation for trial and contribute to expediting the trial court's work."

At first blush, this compendium seems daunting. But the list can be divided into two groups. The first group — items (1) through (4) in Geier — concern the separation between the subject matter of the proposed certification and the remaining issues in the litigation. Broadly, the question is whether the appeal issues are separate enough from the rest of the case to (i) allow a clear appellate resolution (ii) without the risk of having to "consider the same issue a second time."' The second group — item (5) in Geier, plus

I Geier's item (4) (setoff or counterclaim) really seems just a subtopic of (1) —(3). But F.R.Civ.P. 54(b) explicitly references setoff and counterclaim, and Geier itself was focused on a third-party claim. If an unresolved counterclaim or third-party claim involves the same issue as the proposed Rule 304(a) judgment, the appellate court might have to revisit that issue on appeal from the other, still-pending claim.

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the "other factors" noted in Campbell — consist of disparate, individualized case-by-case factors which may affect the pragmatic desirability of allowing a present partial appea1.2

Geier itself, 226 111.App.3d at 385, emphasized "separability," concluding that "the existence of separability favors appealability." "Where the [Rule 304(a)] claims 'can be decided independently of each other,' that is, they are not `so inherently inseparable from, or closely related to' the remaining claims, then the trial court does not abuse its discretion in certifying that there exists no just reason for delay of the appeal." Geier also made the same point by focusing on element (3) instead of element (1): "If the claims still pending are 'severable from the claims which [have] been determined in terms of both the factual and the legal issues involved,' such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals, an immediate appeal of the adjudicated claims is proper." Geier, loc. cit. That makes sense both at the appellate level (where duplicative work is avoided), and at the trial level (where the rest of the litigation can proceed without needing to await the result of the Rule 304(a) appeal).

Clearly Geier's separability factors are key. See AT&T v. Lyons & Pinner Electric Co., 2014 IL App (2d) 130577, 11 23 (noting that Geier followed the United States Supreme Court's "emphas[is]" on "a pragmatic approach by using a severability analysis"). Though severability is the primary test, however, it "begin[s], rather than end[s]," the Rule 304(a) analysis. Geier, supra, 226 111.App.3d at 386. Even if the separability analysis supports an immediate appeal, the trial court must still examine the other Geier factors, with the "paramount consideration" being "efficient judicial administration." State Farm Fire & Cas. Co. v. John I Rickhoff Sheet Metal Co., 394 111.App.3d 548, 557 (1st Dist. 2009). As stated in Krause v. USA DocuFinish, 2015 IL App (3d) 130585, 11 19, quoting Schal Bovis, Inc. v. Casualty Ins. Co., 314 III.App.3d 562, 570 (1st Dist. 1999), "the trial court ... must determine whether ... allowing an immediate appeal would have the effect of expediting the resolution of the controversy, be fair to the parties and conserve judicial resources."

In this case, the dismissal of the claims of plaintiffs Ms. Mary Lewis and Ms. Tashswan Banks squarely meets the severability test. The dismissal of those claims is final, as to them and any other claimant for whom Medicaid bore the cost of lead toxicity testing. That dismissal rests on a legal determination which is common to all Medicaid claimants, though separate from the claims of others involved in lead toxicity testing. For the reasons explained in the Court's April 20, 2017 Order, as a matter of law all Medicaid claimants inevitably fall outside the requirement that class members be subject to some "expense, obligation or liability" for the cost of the lead toxicity screening at issue.

2 Some caution is warranted here. The second group's focus on efficiency and cost-saving at the trial court level may slide into the realm more properly occupied by Rule 308. Though "appellate guidance on thorny legal issues" is a proper factor in Rule 308 practice, AT&T v. Lyons & Pinner Electric CO., 2014 IL App (2d) 130577, ¶ 26, warns that obtaining such guidance "is not a legitimate basis for entering a Rule 304(a) finding" if the Rule 304(a) criteria are otherwise not met.

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That is not necessarily true, however, of any non-Medicaid claimant's position.3 Thus, despite a Rule 304(a) certification as to Ms. Banks and Ms. Lewis, the rest of this litigation can proceed with respect to other claimants: (i) without any likelihood that the Appellate Court will have to decide the Banks/Lewis issue (call it the "Medicaid issue") more than once, and (ii) without any need to await how the Medicaid issue is resolved on appeal. New, non-Medicaid, class representatives can be named to replace Ms. Banks and Ms. Lewis and the case can go forward. That meets the Geier severability criteria.

In this case, the other Geier criteria are also met. There are no "competing claims," nor any counterclaims. The factors Geier derived from Campbell — "eliminate unnecessary evidence, confine the issues, save ... expense to the litigants ..., expedit[e] the trial court's work" — would be benefited by a Rule 304(a) appeal at this point. That is so because, this being a class action, things which bear on the size and management of the class should if possible be addressed sooner rather than later. (Both the text of 735 ILCS 5/8-802(a), calling for class determination "as soon as practicable," and the adoption of Ill. Sup. Ct. Rule 306(a)(8), making possible early appellate review of class determinations, bear that out.4) The goal of "efficient judicial administration," emphasized in both Geier, 226 Ill.App.3d at 383, and Riekhoff supra, 394 111.App.3d at 557, would be promoted by resolving now, once and for all, whether Medicaid claimants are (as a matter of law) in or out of the class.

In this case, moreover, that is different from an abstract, and rightly disfavored, "inclination to solicit [interim] appellate guidance on thorny legal issues," as in Lyons & Pinner, supra, 2014 IL App (2d) 130577, ¶ 26. Here, unlike in Lyons & Pinner, the Rule 304(a) separability and finality criteria are squarely met. And here, resolving the Medicaid issue now will greatly facilitate efficient and cost-effective management of the rest of this class action litigation.

Conversely, though it is possible to defer an appeal from the dismissal of Ms. Banks' and Ms. Lewis' claims — i.e., an appeal involving the Medicaid issue — until the end of the case, that course actually: (i) disserves the litigants (who will then not know for sure whether a large number of claimants are "in" or "out," a matter of substantial economic impact), (ii) disserves efficient judicial administration (because the Court may have to go through a full-blown class-notice and class-claim procedure twice, if ultimately it is determined that the Medicaid claimants should be "in"), and (iii) undercuts the expeditious resolution of the controversy (for the same reason). The end result would be, pragmatically, unfair, because it would force the parties to engage in repeated high-stakes guesswork in the prosecution and defense of this class action until —

3 It is not true, for example, as to Ms. O'Sullivan's position — though her claim is fatally flawed factually for other reasons (and, so far as we presently know, in a way specific to her alone). See page 2 supra, and see Order, April 20, 2017, at 5. To borrow from the somewhat analogous discussion of the public-interest moonless exception in In re Beverly B., 2017 IL App (2d) 160327, ¶ 21, certifying Ms. O'Sullivan's dismissal under Rule 304(a) "would not resolve any particular legal question, but would simply apply largely undisputed principles to one ... idiosyncratic interaction."

'Rule 306(a)(8) itself is inapplicable here due to a vagary of timing this case was filed in 2000, and Rule 306(a)(8) only applies to cases filed after its adoption in 2003.

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DATED: October 19,2017 ENTER:

Circuit Judge

after everything else is done, ending in a final and appealable Rule 301 judgment — the Medicaid issue is ultimately resolved. It is hard to be enthusiastic about such a scenario.

For all of these reasons, this Court concludes that a Rule 304(a) certification of the dismissal of Ms. Banks' and Ms. Lewis' Medicaid-based claims is both proper and appropriate. The dismissal of Ms. O'Sullivan's claim is a different matter. Appealing her dismissal now rather than later would achieve little (see page 5 n.3 supra), and it is possible that as this case proceeds, some version of the fact-based problems with her claim may arise again with other individual claims.

Accordingly, IT IS IIEREBY ORDERED as follows:

1. For the reasons stated above, pursuant to Ill. Sup. Ct. Rule 304(a), this Court FINDS and CONCLUDES that there is no just reason to delay enforcement of, or appeal from, the Court's April 20, 2017 Order granting defendants' Motion for Partial Summary Judgment and dismissing the claims of Mary Lewis and Tashswan Banks. To that extent, plaintiffs' Motion for Supreme Court Rule 304(a) Finding is GRANTED.

2. The Court has considered defendants' Cross-Motion for Class Decertification and Entry of Final Judgment. For the reasons stated above, the Cross-Motion is DENIED.

EN TE RED JUDGE PETER FLYNN-1784

OCT 19 2017 Dc c aROWN RK OF THE CIRCUIT COURT CO COUNTY. IL DEPUTYOF CLE OK C

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No. 17-2894

IN THE APPELLATE COURT OF ILLINOIS

FIRST illDICIAL DISTRICT

MARY LEWIS, TASHSWANBANKS,and ) KATIILEEN O'SULLNAN, on behalf of ) themselves and allothers similarly situated, )

) Pl · ...:cc. A u:Jt~ 1

) amuus- ppe , )

v. ) )

LEAD INDUSTRIES ASSOCIATION, INC., ) ~~ )

Defendants- Appellees. )

Michael H. Moirano Claire Gorman Kenny MOIRANO GORMAN KENNY, LLC 135 S. LaSalle Street, Suite 3025 Chicago, IL 60603

On Appeal from the Circuit Court of Cook County, County Department, Chancery Division

No. 00 CH 9800

Honorable Peter Flynn, Judge Presiding

ORDER ENTERED

MAR 1 4 2018

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Table of Contents to the Record on Appeal

Docket ........................................................................................................................................... C3

Third Amended Complaint ......................................................................................................... C73

Motion for Summary Judgment ................................................................................................ C103

Memorandum in Support of Defendants’ Motion for Summary Judgment (Oct. 6, 2016) ...... C107

Notice of Filing: Memorandum in Support of Defendants’ Motion for Summary Judgment (Oct. 6, 2016) ..................................................................................................................................... C144

Plaintiffs’ Response to Defendants’ Motion for Summary Judgment (Nov. 15, 2016) ........... C148

Defendants’ Reply in Support of Their Motion for Summary Judgment (Nov. 30, 2016) ....... C177

Memorandum Order on Motion for Partial Summary Judgment (Apr. 20, 2017) .................... C188

Order for Status Hearing (Oct. 19, 2017) ................................................................................. C199

Memorandum Order on Pending Cross-Motions (Oct. 29, 2017) ............................................ C200

Notice of Appeal (Nov. 1, 2017) .............................................................................................. C206

Notice of Cross Appeal (Nov. 16, 2017) .................................................................................. C208

Request for Preparation of Limited Record on Appeal (Feb. 2, 2018) ..................................... C213

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Table of Contents to the Supplement to the Record on Appeal

Supplement to the Common Law Record Section ........................................................... Sup C3

Order Adding Documents to the Record on Appeal (Jun. 4, 2010) .................................. Sup C 4

Stipulation & Agreed Order Regarding Record on Appeal (Jun. 6, 2010) ...................... Sup C 6

Second Amended Class Action Complaint (Sept. 26, 2001) ............................................ Sup C 9

Plaintiffs’ Amended Memorandum of Law in Support of Class Certification(Feb. 23, 2007) ................................................................................................................ Sup C 44

Plaintiffs’ Response to Defendants’ Memorandum Concerning Class Action Discovery (Mar. 2, 2007) .................................................................................................................. Sup C 65

Order re Collateral Source Question (Mar. 16, 2015) ..................................................... Sup C 86

Supplement to the Report of Proceedings Section ......................................................... Sup R 87

Hearing of Plaintiffs’ Motion for Summary Judgment (Jan. 10, 2017) .......................... Sup R 88

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Case No. 124107 - Appellant's Brief · The Hon. Peter Flynn, Presiding ; OPENING BRIEF OF...

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Transcript of Case No. 124107 - Appellant's Brief · The Hon. Peter Flynn, Presiding ; OPENING BRIEF OF...