Kleronomos v. Aim Transfer & Storage Inc.

WILLIAM KLERONOMOS, Plaintiff, v. AIM TRANSFER & STORAGE INC.,and WILLIAM T. SACKMASTER, Defendants.

No. 19-CV-01844

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

April 20, 2021

Judge Mary M. Rowland

MEMORANDUM OPINION & ORDER

Plaintiff William Kleronomos brings suit against Defendants Aim Transfer & Storage Inc. ("Aim") and William Sackmaster for injuries arising out of a traffic accident that took place on March 6, 2014. Plaintiff alleges negligence (Count I), vicarious liability (Count II), willful and wanton hiring (Count III), willful and wanton entrustment (Count IV), and willful and wanton retention (Count V). (Dkt. 100). Aim has asked the Court to determine whether Illinois or Wisconsin law will govern to Counts III, IV, and V. (Dkt. 123). For the reasons set forth below, the Court will apply Wisconsin law.

BACKGROUND

Plaintiff Kleronomos is an Illinois citizen.¹ Defendant Aim is a Wisconsin trucking company that regularly transports cargo from Wisconsin to the railroad depots in Chicago. Defendant Sackmaster is a Wisconsin citizen. Sackmaster was working for Aim as a truck driver on March 6, 2014 when Sackmaster and Kleronomos were involved in a traffic accident in Chicago, Illinois. Kleronomos suffered extensive injuries. Prior to that accident, Sackmaster had been involved in two other "preventable" accidents in Illinois while driving for Aim.

This personal injury lawsuit has been making its way through state and federal courts since March 2, 2016.² (Dkt. 123, Ex. A). In addition to negligence (Count I) and vicarious liability for an employee's negligence (Count II), the most recent iteration of the Complaint alleges willful and wanton hiring (Count III), willful and wanton entrustment (Count IV), and willful and wanton retention (Count V). (Dkt. 100). In those Counts, Kleronomos alleges that because of bad reviews from former employers, multiple failed drug tests, prior "at fault" accidents, and repeated instances of "loss of consciousness behind the wheel," Aim knew Sackmaster was unfit to drive a truck but employed him to do so anyway. In Counts III-V Kleronomos seeks punitive damages.

DISCUSSION

Aim agrees that the Court should apply Illinois law to Counts I and II, (Dkt. 203, fn. 1), but argues that Wisconsin law should be applied to Counts III, IV, and V. See, e.g., Smith v. I-Flow Corp., 753 F. Supp. 2d 744, 747 (N.D. Ill. 2010) (citing Townsend v. Sears, Roebuck, & Co., 227 Ill. 2d 147 (Ill. 2007)) ("Choice of law is addressed on an issue-by-issue basis, and as a result, different states' law may govern different issues in a particular case"). A federal court sitting in diversity applies the law of the state in which it sits to determine choice of law. See Malone v. Corrs. Corp. of Am., 553 F.3d 540, 543 (7th Cir. 2009) (citing Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487 (1941)). Therefore, the Court applies the same choice of law analysis that an Illinois state court would apply.³

I. Actual Conflict

An Illinois state court or a "district court [sitting in diversity] is required to engage in a choice of law analysis only 'if there is a conflict between Illinois law and the law of another state such that a difference in law will make a difference in the outcome.'" Board of Forensic Document Examiners, Inc. v. American Bar Assoc., 922 F.3d 827, 831 (7th Cir. 2019) (citing West Side Salvage, Inc. v. RSUI Indem. Co., 878 F.3d 219, 223 (7th Cir. 2017)). "[T]he party seeking a choice of law determination," has the burden of establishing "the existence of an outcome-determinative conflict." Id. Aim highlights four potentially outcome-determinative conflicts between Illinois and Wisconsin law.

A. Punitive Damages for Vicarious Liability

First, Aim notes that while Illinois allows punitive damages to be levied against an employer who is vicariously liable for the torts of their employees, Wisconsin does not. Compare Lawlor v. N. Am. Corp., 949 N.E.2d 155, 174 (Ill. App. Ct. 1st Dist. 2011) (citing restatement (Second) of Agency, § 271C (1958)) with Franz v. Brennan, 150 Wis. 2d 1, 440 N.W. 2d 562 (1989). This distinction is irrelevant, since only Count II involves vicarious liability for the torts of an employee and Aim agrees Count II is subject to Illinois law. Counts III through V concern Aim's own liability for willful and wanton hiring, entrustment, and retention, not vicarious liability for Sackmaster's actions.

B. Duty in Suits for Punitive Damages

Aim next asserts that in Illinois punitive damages may be awarded when a tort is committed with "fraud, actual malice, deliberate violence or oppression or when the defendant acts willfully or with such gross negligence as to indicate a wanton disregard for the rights of others or for conduct involving some element of outrage similar to that found in a crime." Ainsworth v. Century Supply Company, 693 N.E.2d 510, 515 (Ill. App. Ct 1998) (quoting Homewood Fishing Club vs. Archer Daniel Midland Co., 605 N.E.2d 1140 (Ill. App. Ct. 1992)). In Wisconsin, by contrast, plaintiffs "may receive punitive damages if evidence is submitted showing that the defendant acted maliciously toward the Plaintiff or in an intentional disregard of the rights of the Plaintiff." WI Stat § 895.043. While these are slightly different formulations, it is not clear that they would result in a different outcome in the instant case.

C. Standards of Proof in Suits for Punitive Damages

The fact that courts in Illinois and Wisconsin require plaintiffs to meet different standards of proof before awarding punitive damages is more likely to be outcome-determinative. In Illinois, the conduct supporting punitive damages must be proven by a preponderance of the evidence. See Brdar v. Cottrell, Inc., 867 N.E.2d 1085, 1102 (Ill. App. Ct. 2007). In Wisconsin, the standard of proof is clear and convincing evidence or a conclusion to a reasonable certainty. See Sharp v. Case Corp., 595 N.W.2d 380 (Wis. 1999). This supports Aim's argument that there is a true conflict of laws.

D. Cap on Punitive Damages

Finally, Illinois does not have a "cap" on punitive damages, Mathi v. Accor, 347 F3d 672, 676 (7th Cir. 2003), while Wisconsin caps punitive damages at $200,000.00 or twice the compensatory damages, whichever is greater. WI Stat § 895.043. When punitive damages are available in one state but not in another, a conflict of laws arises. See Townsend v. Sears, Roebuck & Co., 227 Ill. 2d 147, 156 (2007) (finding a conflict because "Illinois does not prohibit the recovery of punitive damages in product liability cases" while in Michigan "only compensatory damages are available"). This same reasoning should apply to a cap on punitive damages.

Because there are at least two outcome-determinative differences between Illinois and Wisconsin law, a true conflict of laws exists.

II. Resolving the Conflict of Laws

Illinois state courts have adopted the choice of law methodology set out in the Second Restatement of Conflict of Laws. Ingersoll v. Klein, 46 Ill.2d 42, 47-48 (1970). The "objective of that process" is to "apply the law of the state that, with regard to the particular issue, has the most significant relationship with the parties and the dispute." Townsend, 227 Ill. 2d at 159-60. After establishing that an actual conflict of law exists, the court determines whether the Second Restatement contains a presumptive rule. In personal injury action the rule is contained in § 146 which states:

[i]n an action for a personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship under the principles stated in § 6 to the occurrence and the parties, in which event the local law of the other state will be applied.

Restatement (Second) of Conflict of Laws § 146 (1971). This passage creates the presumption that, unless Wisconsin has a more significant relationship with the "occurrence and the parties," Illinois law should be applied. See Townsend, 227 Ill. 2d at 163 ("a presumption exists, which may be overcome only by showing a more or greater significant relationship to another state").

Townsend teaches that "the court must test this presumptive choice against the principles embodied in section 6 [of the Second Restatement] in light of the relevant contacts identified by the general tort principle in section 145." 227 Ill. 2d at 158. The most important principles embodied in § 6 of the Second Restatement are "the relevant policies of the forum; [. . .] the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue; and [. . .] the basic policies underlying the particular field of law."⁴ Townsend, 227 Ill. 2d at 170. The § 145(2) "factual contacts or connecting factors" that the Court evaluates in light of these principles are: (a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered. These principles and factors are "to be evaluated according to their relative importance with respect to the particular issue." Townsend, 227 Ill. 2d at 160 (citing Restatement (Second) of Conflict of Laws § 145(2) (1971)).

A. Place of Injury

Kleronomos was injured in Illinois. Aim argues that the place of injury is "fortuitous," and therefore this factor should not be given much weight. This argument relies on § 146, Comment c, of the Second Restatement, which indicates that "[t]he likelihood that some state other than that where the injury occurred is the state of most significant relationship is greater in those relatively rare situations where, with respect to the particular issue, the state of injury bears little...