NATIONAL AMERICAN INSURANCE COMPANY, as Subrogee of West Side Salvage, Inc. and for Adam Nanez, Individually, Plaintiff,
CONAGRA FOODS, INC., Defendant/Third-Party Plaintiff,
A&J BIN CLEANING, LLC, and WEST SIDE SALVAGE, INC., Third-Party Defendants.
MEMORANDUM AND ORDER
J. PHIL GILBERT, District Judge.
This matter comes before the Court on the Court's April 24, 2013, order to show cause (Doc. 61) and the motion for summary judgment filed by third-party defendant West Side Salvage, Inc. ("West Side") (Doc. 50). Defendant/third-party plaintiff ConAgra Foods, Inc. ("ConAgra") has responded to the motion (Doc. 51). Each side has also responded to the order to show cause (Docs. 62 & 63) and has replied to the opposing party's response (Docs. 64 & 65).
As noted in the show cause order, this case arose after Adam Nanez, an employee of West Side, was seriously injured in an April 27, 2010, explosion in the course of his employment cleaning a "hot" ConAgra grain bin elevator in Chester, Illinois. NAICO, West Side's workers' compensation insurer, brings this suit in its capacity as subrogee of West Side and for Nanez. It believes ConAgra was negligent in a variety of ways. ConAgra has, in turn, filed a third party complaint seeking indemnity from West Side (Third-Party Count I) and contribution from A&J Bin Cleaning, LLC ("A&J") and West Side (Third-Party Count II) based on their alleged wrongful conduct in cleaning the "hot" bin.
There are two questions at issue in the pending motion for summary judgment on Third-Party Count II: whether Iowa or Illinois law applies to the contribution claim against West Side and whether, if Illinois law applies, there is a cap on West Side's liability to ConAgra. In its show cause order, the Court noted that these very issues between these very parties were litigated and resolved in a related case involving Justin Becker, a West Side coworker of Nanez, who was injured by the very same grain bin explosion, Jentz v. ConAgra Foods, Inc., No. 10-cv-474-MJR-PMF. In Jentz, Judge Reagan decided that Illinois law governed workers' compensation issues relating to the issue of contribution by West Side, see Jentz v. ConAgra Foods, Inc., No. 10-cv-474-MJR-PMF, 2012 WL 3230447, at *3-*4 (S.D. Aug. 6, 2012), and that West Side was entitled to the liability cap provided under Illinois law as set forth in Kotecki v. Cyclops Welding Corp., 585 N.E.2d 1023 (Ill. 1991), id. at *4-6. This Court then ordered the parties to show cause why Judge Reagan's decisions should not collaterally estop the parties from relitigating the same issues in this case.
Before turning to the issues presented in the pending motion, a recap of the relevant Jentz events is helpful. Midway through the litigation, ConAgra raised the issue of whether West Side had waived the protection of the Kotecki liability cap with respect to ConAgra's contribution claim for Becker's injuries by agreeing to an indemnification clause in its contract with ConAgra (Case No. 10-cv-474-MJR-PMF; Doc. 186). West Side's response assumed that Illinois law - of which Kotecki is a part - applied to the matter (Case No. 10-cv-474-MJR-PMF; Doc. 236). The case was tried by a jury, which decided, among many other things, that there was a valid contract between ConAgra and West Side at the time of the explosion (Case No. 10-cv-474-MJR-PMF; Doc. 478). Following the jury verdict, Judge Reagan gave the parties an opportunity to comment on the form of his proposed judgment prior to entry (Case No. 10-cv-474-MJR-PMF; Doc. 486). In the briefing that followed, West Side raised for the first time the argument that Iowa law applied to ConAgra's contribution claim against West Side and foreclosed contribution liability for West Side (Case No. 10-cv-474-MJR-PMF; Docs. 495, 502). ConAgra, for its part, argued that West Side had waived the Iowa law issue, that West Side's argument has no merit because Illinois law was the appropriate choice of law, and that West Side had waived the Kotecki liability cap in its contract with ConAgra (Case No. 10-cv-474-MJR-PMF; Doc. 501).
Judge Reagan settled the parties' dispute by ruling, among other things, that West Side waived its right to raise a choice of law defense based on Iowa law and that West Side did not waive the protection of the Kotecki cap by agreeing to the indemnification clause (Case No. 10-cv-474-MJR-PMF, Doc. 503). Jentz, 2012 WL 3230447, at *3-*6. The Court now examines the preclusive effect of these rulings.
II. Collateral Estoppel
"Collateral estoppel... has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation." Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979). A court may raise the issue sua sponte even if a party fails to. Kratville v. Runyon, 90 F.3d 195, 198 (7th Cir. 1996).
For the doctrine to apply, four factors must be present:
(1) the issue sought to be precluded must be the same as that involved in the prior litigation, (2) the issue must have been actually litigated, (3) the determination of the issue must have been essential to the final judgment, and (4) the party against whom estoppel is invoked must be fully represented in the prior action.
Matrix IV, Inc. v. Am. Nat'l Bank & Trust Co. of Chi., 649 F.3d 539, 547 (7th Cir. 2011) (internal quotations omitted); see Parklane Hosiery, 439 U.S. at 326 n.5. Due process prohibits the application of collateral estoppel against a party who did not have a full and fair opportunity to be heard in the first litigation. Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 329 (1971).
III. Choice of Law
West Side has an interest in the application of Iowa law, which it argues provides that it cannot be liable in contribution for an injury to one of its employees as long as it provided workers' compensation benefits. See Mermigis v. Servicemaster Indus., Inc., 437 N.W.2d 242 (Iowa 1989) (citing Iowa Code § 85.20). Of course, West Side does not want Judge Reagan's ruling that Illinois law applies to govern, so it argues that collateral estoppel does not apply to this issue because the choice of law was not decided in Jentz. It believes Judge Reagan did not actually decide the choice of law issue because he did not conduct a choice of law analysis, instead finding West Side had waived its argument by not raising the choice of law issue earlier in the case. West Side argues that it has not waived the issue in the case at bar because it has pled as an affirmative defense that ConAgra failed to state a ...