Appeal from the Circuit Court of Lake County. No. 94-MR-46. Honorable Stephen E. Walter, Judge, Presiding.
Rehearing Denied October 19, 1995.
The Honorable Justice Hutchinson delivered the opinion of the court: Geiger and Colwell, JJ., concur.
The opinion of the court was delivered by: Hutchinson
JUSTICE HUTCHINSON delivered the opinion of the court:
Plaintiff, Zurich Insurance Company (Zurich), filed this declaratory judgment action in the circuit court of Lake County, Illinois, seeking a determination of its rights and obligations under various insurance contracts it entered with defendants, Baxter International, Incorporated, and Baxter Healthcare Corporation (collectively "Baxter"). Zurich seeks a declaration it has no duty to either defend or indemnify Baxter against the claims of hemophiliacs who consumed Baxter-manufactured blood products contaminated with the human immunodeficiency virus (the underlying claimants). The trial court ruled (1) the underlying claimants were necessary parties; (2) neither the doctrine of representation nor the institution a class action would remedy the problem of the absent necessary parties; and, therefore, (3) the underlying claimants had to be joined in this action for declaratory judgment. In case No. 2-94-1307, Zurich filed for interlocutory appeal by permission. (See Official Reports Advance Sheets No. 26 (December 22, 1993), R. 308, eff. February 1, 1994.) Zurich contended the trial court erred in its rulings concerning the necessary parties, representation, and class action issues. We denied Zurich's Rule 308 appeal. Zurich appealed the denial to the supreme court. On July 7, 1995, the supreme court directed us to consider the merits of case No. 2-94-1307 and "to proceed as if the interlocutory appeal had been allowed pursuant to Rule 308." Prior to the issuance of the supreme court's mandate in case No. 2-94-1307, Zurich, in case No. 2-94-1304, filed for interlocutory appeal as of right (see Official Reports Advance Sheets No. 26 (December 22, 1993), R. 307(a)(1), eff. February 1, 1994; see also Zurich Insurance Co. v. Raymark Industries, Inc. (1991), 213 Ill. App. 3d 591, 594, 157 Ill. Dec. 655, 572 N.E.2d 1119) from the trial court's order staying this action (see 735 ILCS 5/2-619(a)(3) (West 1992)) pending the outcome of a declaratory action filed against Zurich by Baxter in California. On our own motion, we have consolidated the appeals in Nos. 2-94-1304 and 2-94-1307.
Zurich and Baxter present several issues on appeal. Zurich contends (1) the trial court erred in requiring the underlying claimants to be joined; (2) even assuming the underlying claimants were necessary parties whose interests required representation, the case could have proceeded by joining some of the underlying claimants who would then adequately represent the interests of all underlying claimants; (3) the trial court erred in finding it could not maintain aclass action where the trial court lacked in personam jurisdiction over all the underlying claimants; (4) the trial court's ruling prevents Illinois courts from deciding insurance coverage matters arising from mass-tort litigation; and (5) the trial court erred in granting the stay on the basis the California action was more comprehensive than the Illinois action. Baxter counters (1) the only issue properly before this court pursuant to Zurich's Rule 307 appeal is whether the trial court correctly stayed this proceeding in deference to the California action; and (2) Zurich waived the necessary parties, representation, and class action issues by failing to reallege them in subsequent amended complaints. We note the supreme court's directions in case No. 2-94-1307 render moot Baxter's first contention. We, therefore, decline to address the scope of the Rule 307 appeal. We reverse and remand.
Baxter manufactured blood factor concentrates to treat hemophilia. Processing took place in California. The blood factor concentrates in question were derived from the plasma of thousands of donors. Some of these donors were infected with the human immunodeficiency virus. Because of this, many hemophiliacs were infected. At the commencement of the present case, over 150 lawsuits had been filed against Baxter in various States by hemophiliacs who had used Baxter's tainted blood concentrates. Among these lawsuits is a class action filed in the Federal District Court for the Northern District of Illinois on behalf of an estimated 7,500 underlying claimants.
On January 31, 1994, Zurich filed this declaratory action in Lake County to determine its duty to Baxter in relationship to the tort actions brought by the underlying claimants. Initially all 118 of Baxter's known excess insurers were joined to this action; none of the underlying claimants were joined. Baxter's corporate headquarters including its risk management department are located in Lake County. Although Zurich alleged to be an Illinois corporation in its initial complaint, it subsequently alleged to be a Swiss corporation. Zurich, however, also later alleged its United States administrative offices are located in Schaumburg, Illinois. The insurance contracts at issue were delivered, issued, and serviced in Illinois by Illinois brokers and underwriters.
Nine days after Zurich filed the present action, Baxter filed a similar action entitled "Complaint for Declaratory Relief" in California. The California action joined 105 excess insurers; none of the underlying claimants were joined. Although the record is unclear, it appears the California court has issued a stay in its proceedings pending a decision by the Illinois trial court. The California court hasalso indicated it does not wish to hear Baxter's "Complaint for Declaratory Relief."
In the meantime, the Illinois trial court questioned its ability to adjudicate the issue of Zurich's duty to Baxter. The trial court sua sponte raised the question of whether the underlying claimants were necessary parties to Zurich's action. The trial court also asked, assuming the underlying claimants were necessary parties, whether it could decide the coverage issue given that many of the underlying claimants were not subject to the court's in personam jurisdiction. The trial court concluded the underlying claimants were necessary parties and, therefore, the court was without jurisdiction until the underlying claimants were joined.
In response, Zurich offered the trial court alternate theories under which it could proceed. Zurich argued if the court joined the underlying claimants subject to the court's jurisdiction, it would be able to proceed under the doctrine of representation. In the alternative, Zurich offered the possibility of continuing as a class action. To implement this approach Zurich filed a second amended complaint. The trial court rejected both Zurich's application of the doctrine of representation and its request to certify a defendant class action suit.
Zurich then attempted to proceed by joining the underlying claimants over whom the trial court would have jurisdiction. Zurich filed a third amended complaint joining 17 underlying claimants. Baxter then filed a motion pursuant to section 2-619(a)(3) of the Civil Practice Law (735 ILCS 5/2-619(a)(3) (West 1992)) to stay the Illinois action on the grounds it was less comprehensive than the pending California action. The trial court granted Baxter's motion to stay the proceedings, finding the Illinois action could not completely resolve Zurich's duty to Baxter in relation to the underlying claimants who were not joined. The court noted and relied on its finding that California, unlike Illinois, does not have "a necessary or indispensable party rule" requiring the joinder of all the underlying claimants. The trial court concluded the California litigation could resolve the entire coverage question between Zurich and Baxter and was, therefore, more comprehensive than the Illinois action.
We have taken several motions with the case. These include (1) Baxter's motion to strike those portions of Zurich's brief discussing issues other than the appropriateness of the stay; (2) Zurich's motion for leave to file a response to Baxter's motion to strike; and (3) Baxter's motion to notify this court of a factual error in Zurich's reply brief. We turn first to Baxter's motion to notify.
In their motion to notify, Baxter argues Zurich miscounted the number of pages Baxter incorporated by reference into their brief. Zurichcontends Baxter incorporated 66 pages of argument (concerning the necessary parties, representation, and class action issues). Under Zurich's counting, Baxter, by incorporation, would have violated the page limitations imposed by Rule 341(a). (See Official Reports Advance Sheets No. 26 (December 22, 1993), R. 341(a), eff. February 1, 1994.) We find, however, Zurich has "double-counted" the parallel citations to the common-law record and Baxter's supplemental appendix each of which contains the arguments referenced by Baxter. Baxter's motion to notify, therefore, is granted. Additionally, in light of the supreme court's order to reach the merits of Zurich's Rule 308 ...