Appeals from the United States District Court for the Southern District of Illinois. No. 02 C 4058-G. Patrick Murphy, Judge.
The opinion of the court was delivered by: Williams, Circuit Judge
ARGUED SEPTEMBER 14, 2007
Before BAUER, EVANS, and WILLIAMS, Circuit Judges.
Millard "Skeeter" Baltzell was critically injured when he was crushed by a tractor-trailer while working for The Ensign-Bickford Company. Skeeter sought workers' compensation from Ensign, and along with his wife Ruth Ann, brought strict liability claims against three companies-R&R Trucking Company, the owner of the tractor-trailer; Freightliner Corporation, the tractor manufacturer; and Lufkin Industries, Inc., the trailer manufacturer. These defendants then sought contribution by filing third-party claims against Ensign.
The Baltzells prevailed before a jury, which found the defendants and Ensign collectively liable for $13,980,120. Ensign then moved to dismiss the contribution claims against it in exchange for waiving a statutory lien that it had on the Baltzells' recovery from the defendants. The district court denied Ensign's motion and entered judgment against the defendants and Ensign. We conclude that the Illinois Workers' Compensation Act and the Illinois Supreme Court's decision in LaFever v. Kemlite Co., 706 N.E.2d 441, 452 (Ill. 1998) require us to vacate the court's judgment and remand for further proceedings consistent with this opinion.
A. Workers' compensation in Illinois
Before delving into the facts of this case, we first provide some background on the somewhat complicated statutory scheme at issue here. Like other states, Illinois has a workers' compensation system in which employers compensate their employees for job-related injuries or illnesses, regardless of fault. See Illinois Workers' Compensation Act ("IWCA"), 820 Ill. Comp. Stat. 305/1 et seq. In return for not having to prove fault, employees receive only workers' compensation benefits from their employers and cannot sue their employers to receive more damages. See id. at 305/5(a). This rule also bars loss of consortium claims that employees' spouses might otherwise bring against employers. Id. (extending bar to "any one otherwise entitled to recover damages for such injury"); Vickery v. Westinghouse-Haztech, Inc., 956 F.2d 161, 162 (7th Cir. 1992) ("[T]he [Illinois] Workers' Compensation Act has been consistently interpreted to bar suits for loss of consortium by a covered worker's spouse . . . ." (citing Dobrydnia v. Ind. Group, Inc., 568 N.E.2d 1002 (Ill. App. Ct. 1991))).
Sometimes, however, parties other than an employer might cause an employee to be injured at work. An employee in this situation can sue these third parties for damages. See 820 Ill. Comp. Stat. 305/5(b) ("Where the injury or death for which compensation is payable under this Act was caused under circumstances creating a legal liability for damages on the part of some person other than his employer to pay damages, then legal proceedings may be taken against such other person to recover damages notwithstanding such employer's payment of or liability to pay compensation under this Act."). These third parties can in turn seek contribution from the employer, thereby pulling the employer into the suit. Id. Alternatively, an employer may choose to exercise its right to intervene in the suit before satisfaction of judgment. See Ins. Co. of N. Am. v. Andrew, 564 N.E.2d 939, 941 (Ill. App. Ct. 1990).
Now suppose an employee ends up recovering money from a third party for a work-related injury. That would imply the employer was not solely responsible for the accident. So Illinois law gives the employer a lien on any recovery that an employee obtains from a third party for a work-related injury. 820 Ill. Comp. Stat. 305/5(b). An employer who exercises this lien gets first crack at any recovery the employee gets from the third party. Id. ("[F]rom the amount received by such employee or personal representative [from a third party] there shall be paid to the employer the amount of compensation paid or to be paid by him to such employee or personal representative . . . .").
To calculate the amount of the employer's lien, one begins with the recovery that the employee receives from the lawsuit and then reduces this value "by an amount equal to the amount found by the trier of fact to be the employer's pro rata share of the common liability in the action." Id. The amount of the employer's lien cannot exceed its total workers' compensation obligation. Here are some examples to help illustrate how this calculation works:
Workers' comp. obligationTotal recovery from suit% fault of employerEmployer's pro rata liabilityEmployer's lien*fn1
$2 M$5 M0%$0$2 M
$2 M$5 M8%$400K $2 M
$2 M$2 M25%$500K $1.5 M
$2 M$1 M40%$400K $600 K
$2 M$1 M60%$600K $400 K
$2 M$5 M60%$3 M$2 M
As the last entry in the chart shows, sometimes an employer's pro rata liability might exceed its workers' compensation obligation. This is problematic because Illinois law seeks to protect employers from paying more than what workers' compensation requires.
To avoid this difficulty, the Illinois Supreme Court has provided employers with two different ways to curtail their contribution liability. First, Illinois law caps an employer's contribution liability at "an amount not greater than the [employer's] workers' compensation liability." Kotecki v. Cyclops Welding Corp., 585 N.E.2d 1023, 1028 (Ill. 1991). This value, which is generally referred ...