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Townsend v. Sears

November 29, 2007

JACOB TOWNSEND ET AL., APPELLEES,
v.
SEARS, ROEBUCK AND COMPANY, APPELLANT.



JUSTICE FREEMAN delivered the judgment of the court, with opinion.

Chief Justice Thomas and Justices Freeman, Fitzgerald, Garman, and Karmeier concurred in the judgment and opinion.

Justices Kilbride and Burke took no part in the decision.

OPINION

Plaintiffs, Michelle Townsend, individually and on behalf of her minor son, Jacob, brought a personal injury action in the circuit court of Cook County against defendant, Sears, Roebuck and Company (Sears). A question arose as to whether Illinois or Michigan law would govern the liability and damages issues presented in the case. The circuit court ruled that Illinois law governs these substantive issues, but certified the following question of law for interlocutory appeal pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308):

"Whether Illinois or Michigan law applies to a products liability and negligence action where the plaintiff is a resident of Michigan and the injury occurs in Michigan, the product was manufactured in South Carolina, the defendant is a New York corporation domiciled in Illinois, and the conduct complained of, including certain design decisions, investigations of prior similar occurrences, product testing and the decision to distribute nationally in its retail stores occurred in Illinois[.]"

In its answer, the appellate court reached the same conclusion as did the circuit court. 368 Ill. App. 3d 902.

We allowed Sears' petition for leave to appeal (210 Ill. 2d R. 315). We disagree with the appellate and circuit courts, and hold that Michigan law governs the liability and damages issues presented in this case.

I. BACKGROUND

Michelle and James Townsend, and their son, Jacob, reside on North Begole Road in Alma, Michigan.*fn1 Sears is a New York corporation with its principal place of business and corporate headquarters in Cook County, Illinois. In the spring of 2000, James purchased a Sears Craftsman brand riding lawn tractor from a Sears store in Michigan. The lawn tractor was manufactured by Electrolux Home Products, Inc. (EHP), in South Carolina. James bought the 20-horsepower, 42-inch-wide lawn tractor for use around his home. This particular lawn tractor developed a faulty engine. In early 2001, James received an identical riding lawn tractor as a warranty replacement. Through early May 2001, James had operated the tractor three or four times to mow the Townsends' 1.8-acre property.

On the afternoon of May 11, 2001, James returned home from work and began to mow his lawn. At this time, his four children, including 31/2 -year-old Jacob, were inside their home. As James was mowing, he encountered the 16- by 14-foot rectangular railroad-tie-edged planting plot in his front yard. He attempted to mow around the plot by positioning the left edge of the mower deck as close to the ties as possible. However, the tractor became stuck against one of the ties. James shifted the tractor into reverse, looked over his right shoulder, and released the brake. The tractor struggled to move rearward, taking approximately 20 seconds to move approximately six feet. While backing up, he heard a noise, looked to his right, and saw Jacob's sandal on the lawn. He stopped the tractor, turned around, and saw Jacob behind and under the tractor's rear wheels. James overturned the tractor, picked up Jacob, and rushed him to Gratiot Community Hospital in Alma. Jacob was subsequently treated at Sparrow Hospital in Lansing, Michigan. Jacob's right foot was amputated and his lower right leg was severely injured.

Michelle, individually and on behalf of Jacob, filed a complaint against Sears pleading strict product liability and negligence, premised on defective design and failure to warn.*fn2 Plaintiffs alleged that Sears "designed, marketed, manufactured, inspected, tested, and sold a Sears Craftsman Lawn Tractor"; that the tractor "was defectively designed, defectively marketed and unreasonably dangerous"; and that the design created such a risk of injury to small children that a reasonably prudent designer and marketer of riding lawn tractors, being fully aware of the risk, would not have put the lawn tractor on the market. Plaintiffs specifically alleged that the tractor lacked a "nomow-in-reverse" (NMIR) safety feature to prevent back-over injuries. Plaintiff further alleged that Sears had actual knowledge of this specific unreasonably dangerous condition.

Sears filed an answer and affirmative defenses. Discovery ensued. Sears filed a motion to dismiss based on forum non conveniens. The circuit court denied the motion and the appellate court denied Sears' petition for leave to appeal pursuant to Supreme Court Rule 306(a)(2) (210 Ill. 2d R. 306(a)(2)).

Plaintiffs filed a motion to apply Illinois law to the issues of liability and damages. Plaintiffs also filed a petition for leave to amend the complaint to add a prayer for relief seeking punitive damages (see 735 ILCS 5/2--604.1 (West 2002)). The circuit court identified conflicts between Illinois and Michigan law pertaining to liability and damages. The court employed the choice-of-law analysis of the Restatement (Second) of Conflict of Laws. The circuit court ruled that Illinois law should govern these substantive issues. The court also granted plaintiffs' petition for leave to plead punitive damages. The circuit court subsequently found that its choice-of-law ruling involved a question of law as to which there was substantial grounds for difference of opinion and that an immediate appeal therefrom may materially advance the ultimate termination of the litigation. Consequently, the court certified the choice-of-law question for interlocutory appeal. See 155 Ill. 2d R. 308.

The appellate court allowed Sears' application for leave to appeal. 368 Ill. App. 3d 902. After identifying the policies embraced in the relevant law of Michigan and Illinois, and examining the contacts each state has with the litigation, the appellate court concluded that Illinois has a superior interest in having its policies applied. Therefore, as did the circuit court, the appellate court concluded that Illinois law should govern the issues of liability and damages presented in the case. 368 Ill. App. 3d at 914. This court allowed Sears' petition for leave to appeal. See 210 Ill. 2d R. 315. We will refer to additional pertinent background in the context of our analysis of the issues.

II. ANALYSIS

A. Standard of Review

The parties disagree on the standard of review. An interlocutory appeal pursuant to Supreme Court Rule 308 is ordinarily limited to the question certified by the circuit court, which, because it must be a question of law, is reviewed de novo. Thompson v. Gordon, 221 Ill. 2d 414, 426 (2006); see, e.g., Vision Point of Sale, Inc. v. Haas, 226 Ill. 2d 334, 340 (2007) (declining to address issues that fall outside proper scope of review of certified question pursuant to Rule 308). However, the scope of this court's review is not limited to determining how the circuit court's question should be answered. "When this court accepts an appeal involving a question of law identified under Rule 308, interests of judicial economy and the need to reach an equitable result oblige us to go beyond the question of law presented and consider the propriety of the order that gave rise to the appeal." Bright v. Dicke, 166 Ill. 2d 204, 208 (1995) (and cases cited therein); see, e.g., Vision Point, 226 Ill. 2d at 354 (reviewing the circuit court's orders that gave rise to the appeal). The circuit court ruled that Illinois law governs the liability and damages issues presented in this case. It is generally held that a trial court's choice-of-law determination is reviewed de novo. Morris B. Chapman & Associates, Ltd. v. Kitzman, 307 Ill. App. 3d 92, 99 (1999), aff'd, 193 Ill. 2d 560 (2000); see Gramercy Mills, Inc. v. Wolens, 63 F.3d 569, 572 (7th Cir. 1995) (same); Dorman v. Emerson Electric Co., 23 F.3d 1354, 1358 (8th Cir. 1994) (holding that district court's choice-of-law determination is a legal issue subject to de novo review); Malena v. Marriott International, Inc., 264 Neb. 759, 762, 651 N.W.2d 850, 853 (2002) (same).

Plaintiffs, however, in support of the appellate court's judgment, disagree with this generally accepted holding. According to plaintiffs, cases holding that choice-of-law decisions are reviewed de novo "assume a standard of review without discussing or addressing situations where fact questions must be resolved as a predicate to choosing a state's law." Plaintiffs contend that the circuit court "made both findings of fact (what Sears did and where it did it) and findings of law (which state's law applies, based on those facts)." Plaintiffs suggest that the manifest weight of the evidence standard for fact finding is more appropriate for reviewing choice-of-law determinations.

We disagree. The circuit court did not hold an evidentiary hearing, weigh the testimony or assess the credibility of witnesses; the record consists solely of documents. Where the circuit court does not hear testimony and bases its decision on documentary evidence, the rationale underlying a deferential standard of review is inapplicable and review is de novo. Dowling v. Chicago Options Associates, Inc., 226 Ill. 2d 277, 285 (2007). In any event, while the methodology of the Second Restatement of Conflict of Laws may raise factual issues, the task of evaluating and balancing the choice-of-law principles embodied in the Second Restatement, as they apply to the facts, is a matter of law rather than fact and one that is more properly left to the judge. Amiot v. Ames, 166 Vt. 288, 295, 693 A.2d 675, 679 (1997). Because these issues "involve the selection, interpretation, and application of legal precepts," review is de novo. Dent v. Cunningham, 786 F.2d 173, 175 (3d Cir. 1986). We now turn to the merits of this appeal.

B. Identifying the Conflict

Subject to constitutional limitations, the forum court applies the choice-of-law rules of its own state. Restatement (Second) of Conflict of Laws §5, Comments a, b, at 9 (1971); accord Wells v. Simonds Abrasive Co., 345 U.S. 514, 516, 97 L.Ed. 1211, 1215, 73 S.Ct. 856, 857 (1953). In 1970, this court adopted, for tort cases, the choice-of-law methodology of what would become the Second Restatement of Conflict of Laws. See Ingersoll v. Klein, 46 Ill. 2d 42 (1970) (citing preliminary draft of Restatement (Second) of Conflict of Laws). During the subsequent 37 years, this court has had only a relatively few occasions to address choice-of-law issues arising from the Second Restatement. See Kaczmarek v. Allied Chemical Corp., 836 F.2d 1055, 1058 (7th Cir. 1987) (applying Illinois law, observing that "the Supreme Court of Illinois has not dealt with conflicts questions for many years").*fn3 In the present case, the appellate court's analysis and the arguments of counsel before this court indicate that a thorough discussion of choice-of-law principles and methodology is necessary.

For example, we take this opportunity to stress that a choice-oflaw analysis begins by isolating the issue and defining the conflict. A choice-of-law determination is required only when a difference in law will make a difference in the outcome. Morris B. Chapman, 307 Ill. App. 3d at 101; Kramer v. Weedhopper of Utah, Inc., 204 Ill. App. 3d 469, 474 (1990) (and cases cited therein); see Barron v. Ford Motor Co. of Canada, Ltd., 965 F.2d 195, 197 (7th Cir. 1992) (applying Florida law) (cautioning that "before entangling itself in messy issues of conflict of laws a court ought to satisfy itself that there actually is a difference between the relevant laws of the different states"). In the present case, the parties agree that three conflicts exist between Illinois and Michigan law. The first conflict involves liability.

Illinois has adopted a rule of strict liability in tort for product design defects. See, e.g., Lamkin v. Towner, 138 Ill. 2d 510, 528-29 (1990) (and cases cited therein). In contrast, Michigan has refused to adopt the doctrine of strict liability, instead imposing a pure negligence standard for product liability actions based on defective design. Prentis v. Yale Manufacturing Co., 421 Mich. 670, 690-91, 365 N.W.2d 176, 185-86 (1984). The difference between the two theories lies in the concept of fault. A real conflict exists because, in a strict liability action, the inability of the defendant to know or prevent the risk is not a defense. However, such a finding would preclude a finding of negligence because the standard of care is established by other manufacturers in the industry. Blue v. Environmental Engineering, Inc., 215 Ill. 2d 78, 97 (2005).

The second conflict concerns compensatory damages. Illinois currently does not have a statutory cap on compensatory damages for non-economic injuries. See Best v. Taylor Machine Works, 179 Ill. 2d 367, 384-416 (1997) (declaring statutory cap unconstitutional). In contrast, Michigan currently imposes caps on non-economic damages in product liability actions. See Mich. Comp. Laws Ann. §600.2946a (West 2000); Kenkel v. Stanley Works, 256 Mich. App. 548, 665 N.W.2d 490 (2003) (upholding constitutionality of statute). The third conflict concerns punitive damages. Illinois does not prohibit the recovery of punitive damages in product liability cases when appropriate. See Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 186 (1978) (discussing when punitive damages may be awarded). Subject to specific statutory exceptions, "it is well established that generally only compensatory damages are available in Michigan and that punitive damages may not be imposed." McAuley v. General Motors Corp., 457 Mich. 513, 519-20, 578 N.W.2d 282, 285 (1998) (collecting cases).

C. Overview The Second Restatement of Conflict of Laws

A full understanding of current choice-of-law methodology, including its development, is necessary to properly apply it to the above-identified conflicts.

"Traditionally, questions of choice of law have been solved by applying the law of the place of the wrong (lex loci delicti), resulting in the rights and liabilities of the parties being determined by the local law of the State where the injury occurred. The doctrine was relatively easy to apply, provided predictability of outcome, and discouraged forum shopping." Mitchell v. United Asbestos Corp., 100 Ill. App. 3d 485, 491 (1981).

As another court described the prior rule: "The conflict of laws rule in tort cases used to be simple. It was lex loci delicti--the law of the place where the tort occurred was the law applicable to the case." Kaczmarek, 836 F.2d at 1057. Summarizing the prior rule, the First Restatement of Conflict of Laws directed a court to apply the lex loci delicti to a choice-of-law issue in a tort case, regardless of the nature of the contacts the parties may have possessed with other states. Restatement (First) of Conflict of Laws §§377, 378 (1934); see Spinozzi v. ITT Sheraton Corp., 174 F.3d 842, 844 (7th Cir. 1999) (applying Illinois law; discussing lex loci delicti); Restatement (Second) of Conflict of Laws, ch. 7, Topic 1, Introductory Note 1, at 412-13 (1971) (discussing history of prior rule).

"This approach [lex loci delicti] was criticized, and eventually in most states abandoned, because it sometimes resulted in the application of the law of a state that had little connection with the events giving rise to the suit." Kaczmarek, 836 F.2d at 1057.

" 'The basic theme running through the attacks on the place of the injury rule is that wooden application of a few overly simple rules, based on the outmoded "vested rights theory," cannot solve the complex problems which arise in modern litigation and may often yield harsh, unnecessary and unjust results.' " Ingersoll, 46 Ill. 2d at 47, quoting Griffith v. United Air Lines, Inc., 416 Pa. 1, 13, 203 A.2d 796, 801 (1964).

By the early 1950s, increasing dissatisfaction with the vested-rights-based approach led the American Law Institute to draft a second restatement of conflict of laws. The field was evolving so rapidly that achieving consensus was difficult, and the project required 17 years, from 1953 to 1971, to complete. What began as an update, based on criticisms of the traditional rules as too broad and inflexible, transformed ...


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