Our panel of leading appellate attorneys reviews the Illinois Supreme Court opinions handed down Monday, November 28. 

Walworth Investments-LG v. Mu Sigma, Inc., 2022 IL 12717

By Michael T. Reagan, Law Offices of Michael T. Reagan

This plaintiff investment company, acting on behalf of a prominent Chicago family, purchased $1.5 million of preferred stock in the defendant privately held data analytics company, Mu Sigma, Inc.  Plaintiff alleges that after Mu Sigma and its founder, CEO and chair of its board of directors, Dhiraj Rajaram, reaped the benefits of plaintiff’s “reputational capital,” including acquiring prominent tech companies as customers, he made two approaches to plaintiff, seeking to repurchase plaintiff’s shares. The first such attempt was to repurchase at 67 cents per share, which implied a valuation for the corporation 61 percent less than a then-recent stock transaction. Plaintiff declined to sell. A second approach was made about six months later. The opinion relates that Rajaram told plaintiff that Mu Sigma would no longer experience explosive growth, would have to rely on acquisitions to replace organic growth, that a large customer would be lost and that it was “time for plaintiff to sell,” warning that there was “no upside left” for the company. This offer was made at $1.20 per share.

After two months of negotiations, plaintiff entered into a stock repurchase agreement (SRA). The SRA contained provisions in which plaintiff agreed that it had received the information it deemed necessary to decide whether to sell the stock; defendants had not made any representations outside the SRA; the SRA contained the complete agreement between the parties; and plaintiff was to release and discharge defendants from known and unknown claims.

Plaintiff alleged that shortly before the SRA was entered into, but unknown to plaintiff, Rajaram emailed his staff stating that the company was “poised for explosive growth” and also predicted that the value of the company would more than double within three years. It is further alleged that a few months after the parties executed the SRA, plaintiff learned that Rajaram had been interviewed by the Chicago Sun-Times, and that Rajaram had there predicted “huge growth,” estimating that it would “double its revenues” in the next three years.

It cannot be undertaken in this summary to catalog the detailed allegations of plaintiff as to why its various fraud and reliance-related claims are meritorious. In the circuit court, there were varying treatments of the issues, in part because two judges were on the case in sequence. Ultimately, the circuit court either dismissed or entered summary judgment on all of plaintiff’s claims, based upon the non-reliance and release provisions of the SRA.

The appellate court reversed, in favor of plaintiff.

The supreme court reversed the appellate court and reinstated the terminating dispositions entered by the circuit court, with Justice Overstreet writing for a unanimous court.

The court decided most of this controversy based upon Delaware law, both because the SRA provided for that and because Mu Sigma’s incorporation in Delaware required that Delaware law governed Rajaram’s fiduciary obligations to Mu Sigma’s stockholders. (The appellate court observed that there was little difference between Illinois law and Delaware law.)

The court observed that “Delaware law attempts to strike the appropriate balance between holding sophisticated parties to the terms of their contract and simultaneously protecting against the abuses of fraud.” To that end, a contract must reveal that the aggrieved party unambiguously disclaimed reliance on representations outside the contract’s four corners. The court found that that standard was met here. The court pointed to statements by plaintiff in the agreement that plaintiff had received all necessary information and that defendants had not made any representations, except as set forth in the SRA. The opinion relates that “if plaintiff had relied on statements made outside of the SRA, it should not have signed an agreement expressly stating that no such representations had been made to it.”

In taking up policy discussions, the court relied upon a Delaware case which held that to fail to enforce non-reliance clauses is not to promote a public policy against lying. Rather, it is to excuse a lie made by one contracting party in writing – the lie that it was relying only on contractual representations and that no other representations had been made.

Turning to fiduciary duties which are owed by corporate directors, the court developed that under Delaware law corporate directors stand in a fiduciary relationship to the stockholders and to the corporation. In particular, with respect to stockholders, the duty is owed to “the stockholders in the aggregate in their capacity as residual claimants, which means the undifferentiated equity as a collective.” In other words, generally stated, in most situations the directors do not owe fiduciary duties to individual stockholders but rather to the corporate entity and to the stockholders as a whole.

Defendants additionally asserted in the supreme court that the appellate court erred in declining to enforce the general release language. Plaintiff countered that the issue had not been preserved because it was not included in the “argument” in their petition for leave to appeal. The court stated however that it may exercise its discretion to decide unpreserved issues that are inextricably intertwined with preserved issues. 

People v. Pingelton, 2022 IL 127680 

By Kerry J. Bryson, Office of the State Appellate Defender

Several years after being convicted of criminal sexual assault, John Pingelton filed a pro se post-conviction petition alleging ineffective assistance of trial and appellate counsel. Those claims were predicated on trial counsel’s failure to object to what Pingelton deemed improper expert testimony, and appellate counsel’s failure to raise the issue on direct appeal. The trial court advanced Pingelton’s petition to the second stage of proceedings and appointed counsel to represent him.

In 2016, the State filed a motion to dismiss Pingelton’s petition, on both substantive and procedural grounds. Nearly two years later, and while the State’s motion to dismiss remained pending, Pingelton’s appointed counsel filed a motion to withdraw as counsel, asserting the expert testimony offered at defendant’s trial was not improper and thus there was no ineffective assistance of counsel. Pingelton responded, arguing that his petition had merit and also that appointed post-conviction counsel failed to provide reasonable assistance.

On May 8, 2018, the court set the case for a status hearing the next day. At that “status” hearing, the court heard argument on the State’s motion to dismiss and counsel’s motion to withdraw. The State and post-conviction counsel appeared and person, and Pingelton appeared via telephone. Pingelton argued against counsel’s motion to withdraw, and the court took the matter under advisement. Subsequently, the court granted both motions. In a motion to reconsider, Pingelton argued that it was unfair to grant the State’s motion to dismiss without providing him with notice and an opportunity to respond. That motion was denied, and Pingelton appealed.

On appeal, Pingelton argued that he was denied procedural due process by the circuit court’s granting of the State’s motion to dismiss without notice and an opportunity to respond. The appellate court affirmed, concluding that while Pingelton had not been afforded sufficient notice and an opportunity to respond to the State’s motion, any error was harmless because his post-conviction petition lacked merit.

In the Supreme Court, Pingelton again argued that he was denied procedural due process where he was not given sufficient notice and an opportunity to respond to the State’s motion to dismiss and where none of the parties had notice that the dispositive motion would be addressed at the date set for a status hearing. The Supreme Court agreed with the appellate court’s conclusion that Pingelton was denied notice that the motion to dismiss would be addressed at the status date, thereby violating his right to procedural due process. Further, the record showed that the motion to dismiss had only ever been served on his counsel and Pingelton had no opportunity to respond directly to that motion. This was especially problematic given that counsel’s request to withdraw essentially conceded that the dismissal was proper.

Ultimately, though, the Court concluded that the error was harmless, rejecting Pingelton’s argument that harmless error review was precluded in this context. Specifically, the Court disagreed that its prior precedents stood for the proposition that harmless error analysis could not be applied to second-stage post-conviction proceedings. Two of those cases, People v. Kitchen, 189 Ill. 2d 424 (1999) and People v. Bounds, 182 Ill. 2d 1 (1998) did not even mention harmless error, and the third, People v. Suarez, 224 Ill. 2d 37 (2007), was distinguishable in that it involved unreasonable assistance of post-conviction counsel, not a procedural due process violation, which the court found to be “fundamentally different.” And, because the Court found that Pingelton’s post-conviction claim was clearly without merit, the underlying procedural error was harmless.

People v. McKown, 2022 IL 127683

By Jay Wiegman, Office of the State Appellate Defender

The criminal statute defining the offense of child pornography states, in part, that a person violates section 11-20.1 of the Criminal Code if he knowingly possesses a photograph or other similar visual reproduction of any child whom the person knows or reasonably should know to be under the age of 18, where such child is actually or by simulation engaged in sexual conduct involving the mouth of the child and the sex organs of another person. 720 ILCS 5/11-20.1(a)(1)(ii), (6) (West 2016). In People v. McKown, 2022 IL 127683, the Illinois Supreme Court considered whether images of young girls altered by the defendant to depict sexual conduct are child pornography within the meaning of the statute and quickly determined that they are.

Writing for the Court, Chief Justice Theis then addressed whether the first amendment to the United States Constitution permits this prohibition, and determined that it did. The Illinois Supreme Court first considered New York v. Ferber, 458 U.S. 747, 756 (1982), in which the United States Supreme Court resolved that states “are entitled to greater leeway in the regulation of pornographic depictions of children.” The statute at issue in Ferber prohibited the distribution of material depicting children engaged in sexual conduct, and the Supreme Court found it “evident beyond the need for elaboration that a state’s interest in safeguarding the physical and psychological well-being of a minor is compelling.” The United States Supreme Court concluded that the “distribution of photographs and films depicting sexual activity by juveniles is intrinsically related to the sexual abuse of children.”

However, in 2002, the United States Supreme Court held that a state may not prohibit child pornography that does not depict an actual child. Ashcroft v. Free Speech Coalition, 535 U.S. 234, 240 (2002). In Free Speech Coalition, the Supreme Court found that such speech “record[ed] no crime and create[d] no victims by its production.” And, because virtual child pornography was produced without using real children, it was not “intrinsically related” to the sexual abuse of children, as were the materials in Ferber. Those sections of the Child Pornography Protection Act of 1996 were held to be unconstitutional because they suppressed a substantial amount of lawful speech. Another section of the 1996 Act related to “computer morphing,” was not considered because it was not challenged by the respondents in Free Speech Coalition, but that Court acknowledged that innocent pictures of real children that were altered to make it appear as if they engaged in sexual activity implicated the interests of real children and might fall under the rubric of Ferber. Today, in McKown, the Illinois Supreme Court “join[ed] many state and federal courts in holding that morphed child pornography is not protected by the first amendment.”

The McKown Court also addressed the defendant’s argument that his inculpatory statements to the police required independent corroborating proof because there were certain inconsistencies between his recounting of acts of sexual abuse and the complainant’s description of the abuse. The Court noted that the corpus delicti – the commission of a crime – generally cannot be proven by a defendant’s admission, confession, or out-of-court statement alone, and discussed the historical mistrust of extrajudicial confessions, given that coercion renders confessions unreliable, and in recognition of the fact that for various psychological reasons, people confess to crimes that either never occurred or for which they are not legally responsible. While recognizing the need for corroboration, however, the Court stated that its has not demanded an exact match between the independent evidence and the details in the defendant’s confession. Rather, what is required is “some consistency tending to confirm and strengthen the confession.” Finding that present in the instant case, the Illinois Supreme Court affirmed the judgment of the Appellate Court.

People v. Sauls, 2022 IL 127732

By Jay Wiegman, Office of the State Appellate Defender

In People v. Sauls, 2022 IL 127732, the defendant was charged with two counts of predatory criminal sexual assault. Before trial, the defendant filed a discovery request in which he asked that the State turn over documents pertaining to a Department of Children and Family Services (DCFS) investigation (ultimately determined to be unfounded) against the complainant’s mother and the mother’s “live-in girlfriend.” DCFS filed a motion to quash the subpoena issued by the trial court on the basis that the report was “confidential and inadmissible” under 325 ILCS 5/7.14 (West 2018). In the alternative, DCFS offered to turn the report over for an in camera review. After a hearing, the trial court, which recognized that the defendant sought the reports so as to determine if there was “potential impeachment of a witness that testifies at trial,” granted the motion and quashed the subpoena without requiring production or an in camera review of the requested documents. Following a jury trial, the defendant was acquitted of one count, convicted of the other and sentenced to 20 years in the Department of Corrections.

On direct appeal, the Fourth District Appellate Court affirmed the defendant’s conviction. After first finding that the evidence was sufficient to sustain the defendant’s conviction beyond a reasonable doubt, the Appellate Court rejected his argument that the trial court deprived him of his constitutional right to material evidence by quashing his subpoena duces tecum without first reviewing the documents in camera. Citing Pennsylvania v. Ritchie, 480 U.S. 39 (1987), the Appellate Court held that the defendant “failed to establish a basis for his claim that the unfounded report by DCFS contained material evidence.”

In a 5-2 decision, the Illinois Supreme Court reversed the Appellate Court and remanded to the circuit court with directions to conduct an in camera review of the DCFS records. Writing for the majority, Justice Anne M. Burke first cited United States v. Nixon, 418 U.S. 683, 699-700 (1974) to establish the general rule that to justify the issuance of a subpoena duces tecum, the moving party must show: (1) that the documents are evidentiary and relevant; (2) that they are not otherwise procurable reasonably in advance of trial by exercise of due diligence; (3) that the party cannot properly prepare for trial without such production and inspection in advance of trial and that the failure to obtain such inspection may tend unreasonably to delay the trial; and (4) that the application is made in good faith and is not intended as a general “fishing expedition.” The majority then observed that in the instant case DCFS did not object to the subpoena duces tecum on any of those grounds; rather, the sole basis for the motion to quash was that the documents were confidential and inadmissible under the Reporting Act. 325 ILCS 5/7.14 (West 2018) As a result, the instant case was found to fall “squarely within the framework set forth in Ritchie.” 

Ritchie had sought records from Pennsylvania’s Children and Youth Services agency (CYS) related to his charges and to a separate report of child abuse relating to his children. He asserted that he was entitled to the information because the file “might contain the names of favorable witnesses, as well as other, unspecified exculpatory evidence.” The trial court denied the motion, but the appellate court reversed and remanded for further proceedings. The Supreme Court of Pennsylvania affirmed, as did the United States Supreme Court, ultimately. The U.S. Supreme Court held that the Pennsylvania statute did not provide an absolute privilege against disclosure of CYS documents but, rather, allowed disclosure under certain circumstances. The Ritchie Court further held that the privacy interests inherent in the CYS files could be balanced with Ritchie’s right to Brady evidence through the same in camera review procedure requested by defendant in this case. The majority then noted that both Illinois Appellate Courts and the Supreme Court have adopted Ritchie’s framework for balancing a defendant’s constitutional right to Brady evidence against the interests in protecting confidential records.

The majority then stated that the proper remedy is remand for the trial court to perform an in camera review of the documents described in the subpoena to determine whether they contain information that probably would have changed the outcome of the defendant’s trial. If the trial court determines that the documents contain information that probably would have changed the outcome of the trial if disclosed to the defense, Sauls must be given a new trial, but if the documents contain no such information, or if the nondisclosure was harmless beyond a reasonable doubt, the trial court will be free to reinstate the prior conviction. In the event that the trial court determines Sauls is not entitled to a new trial, the majority considered and then determined that, viewing the evidence in the light most favorable to the State, a rational trier of fact could have found the required elements of the crime beyond a reasonable doubt.

In dissent, Justice Michael J. Burke, joined by Chief Justice Theis, agreed with the conclusion that the evidence presented was sufficient to prove the defendant guilty beyond a reasonable doubt but disagreed with the majority’s conclusion that application of the framework set forth in Ritchie requires that the cause be remanded for an in camera review of the unfounded DCFS report because, in the dissent’s view, the majority erroneously creates an automatic right to have a trial judge conduct in camera review of unfounded DCFS investigation “whenever a defendant simply alleges that the documents are material, regardless of whether defendant can make ‘some plausible showing’ that there is a basis for the claim that the documents contain material evidence. While recognizing that before disclosure a defendant will not likely know the content of an undisclosed item, the dissent stated that a defendant should be required to make a plausible showing that information contained in the requested discovery would be both material and favorable to his defense. The dissent stated that because the instant defendant did not explain how the DCFS reports might contain information exposing bias of the complainant’s mother or her friend, he never connected the unfounded investigation to the current charges and thus the trial court was within its discretion to determine that the DCFS report was immaterial to the defendant’s case.

People v. Libricz, 2022 IL 127757

By Kerry J. Bryson, Office of the State Appellate Defender

In 2018, Robert Libricz was convicted of various sex offenses against his minor daughter. On appeal, he argued that Counts VI and VIII of the indictment, each charging predatory criminal sexual assault of a child, were fatally defective because they alleged criminal conduct occurring between March 1995 and March 1997, but the statute creating the offense did not take effect until May 29, 1996. Prior to trial, Libricz sought a bill of particulars, arguing that he was unable to prepare his defense, in part due to changes in the law during the times specified in the indictment. The State objected, and the court denied the motion.

Libricz first challenged Counts VI and VIII of the indictment as fatally defective in the appellate court. The court agreed that those charges were defective because the offense of predatory criminal sexual assault of a child di dnot exist during a significant portion of the charged time frame. But, the court went on to conclude that Libricz was aware of the changes in the law and had enough information to prepare a defense, and that the indictment was adequate to allow Libricz to plead his convictions as a bar to any future prosecutions arising out of the same conduct.

Libricz brought his challenge to the Supreme Court. The Supreme Court’s analysis began by noting that where a charging instrument is challenged for the first time on appeal, it will be found sufficient if it apprised the accused of the offense charged with enough specificity to prepare a defense and to allow pleading a resulting conviction as a bar to future prosecution. The Court agreed with the appellate court’s conclusion that both of those standards had been satisfied.

The charges notified Libricz of the alleged acts of sexual penetration, identified the time frame in which those acts were alleged to have occurred, and specified the ages of Libricz and his daughter at the time the offenses were committed. While part of the time period charged was prior to the effective date of the offense of predatory criminal sexual assault, the same conduct was criminalized as aggravated criminal sexual assault during the prior time period. So, while the predatory criminal sexual assault counts were defective, the indictment put Libricz on notice that his conduct was criminal and allowed him to prepare a defense. And, Libricz’s defense was that the acts did not occur, not that they did not occur during a specific time period.

The Court rejected Libricz’s argument that defective charges are per se prejudicial when the allege conduct that occurs prior to the effective date of a statute. Libricz had ample opportunity to raise the issue of the statute’s effective date prior to trial. The fact that he sought a bill of particulars was evidence that counsel knew of the changes in the law and could have challenged the indictment as defective at that time. Because he did not, it was proper to hold Libricz to the standard for challenges raised for the first time on appeal.        

People v. Epstein, 2022 IL 127824   

By Jay Wiegman, Office of the State Appellate Defender

In general, evidence is relevant and admissible if it has “any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence.” Ill. R. Evid. 401 (eff. Jan. 1, 2011). However, even relevant evidence “may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence.” Ill. R. Evid. 403 (eff. Jan. 1, 2011). In People v. Epstein, 2022 IL 127824, the Illinois Supreme Court considered whether a circuit court properly exercised its discretion when it excluded a blood-alcohol concentration (BAC) test in a driving under the influence (DUI) case, where the trial court found the results of defendant’s BAC test, drawn four hours after the traffic stop, were inadmissible under Illinois Rules of Evidence 403 because, the court concluded, its probative value was outweighed by the risk of unfair prejudice.

After Epstein was arrested for suspicion of DUI, police obtained a search warrant for a blood draw, which occurred four hours after the traffic stop. Her BAC was 0.0107, and she was charged with, among other things, having a BAC over .08 and driving under the influence of alcohol. At the hearing on her motion to exclude her BAC test result, an expert testified on her behalf that a retrograde extrapolation calculation – a method by which a known BAC can be used to determine the person’s BAC level at an earlier time – could not be performed to determine Epstein’s BAC at the time of driving because the time when her alcohol absorption peaked, and elimination began, could not be determined. Based on defendant’s report as to her last consumption of alcohol and how her speech and balance worsened in the half-hour between the stop and the defendant’s arrest, the expert opined that defendant was still absorbing alcohol following the traffic stop and that her peak absorption occurred more than 20 minutes after the stop. Based on the expert’s testimony, the trial court found that retrograde extrapolation would be inherently unreliable in this case and that its probative value was substantially outweighed by its prejudicial effect.

The trial court granted defendant’s motion to exclude, and the State appealed. With one justice dissenting, the Appellate Court, though troubled by the four-hour delay between the stop and the blood draw, relied upon case law that demonstrates  that the passage of time goes to the weight to be given to the result  rather than to its admissibility.

A unanimous Illinois Supreme Court affirmed the Appellate Court. Rejecting the defendant’s argument that the jury would be misled to believe that the BAC test result conclusively proves that the defendant was driving with a BAC over .08 when her expert testified that the result is inherently unreliable, the Court first noted the State may use extrapolation evidence but is not required to. The Court also stated that the admission of the BAC test result does not create a mandatory presumption.

Writing for the Court, Justice Carter observed that a jury may reasonably infer that a defendant’s BAC at the time of driving was similar to, if not greater than the level when it was subsequently tested, and that expert testimony challenging the reliability of the testing goes to the weight of the evidence, not its admissibility. The Court further observed that the jury should be allowed to consider the same evidence the expert observed, such as the defendant’s speech and balance, and determine the credibility of her claim as to when she stopped consuming alcohol, just as the expert had. If the jury is allowed to hear the evidence and make its own determinations of the underlying facts used by the expert to formulate his opinion, the BAC test result will not pose a substantial risk of misleading the jury. The Court thus held that the trial court abused its discretion when it excluded the BAC test result.

People v. Castillo, 2022 IL 127894   

By Kerry J. Bryson, Office of the State Appellate Defender

Jose Castillo was convicted of two counts of aggravated battery arising out of an incident which occurred while he was an inmate at Pontiac Correctional Center. Specifically, it was alleged that Castillo knowingly made physical contact of an insulting or provoking nature with a guard and a fellow inmate when he struck each with an unknown liquid substance. The count against the guard was aggravated by virtue of his status as a correctional institution employee, and the count against the other inmate was aggravated because it was committed on “public property.”

Both at trial and on appeal, Castillo challenged whether the cell block where the incident occurred was “public property” within the meaning of the aggravated battery statute. Alternatively, Castillo argued that the State failed to prove ownership of Pontiac Correctional Center sufficient to satisfy the “public property” element.

The appellate court affirmed Castillo’s conviction, rejecting his argument that for something to be “public property” it had to be accessible to the public. Instead, the court held that “public property” includes all government-owned property. And, the court found that while the State offered no evidence concerning the ownership of Pontiac Correctional Center, ownership had not been disputed at trial. The appellate court then took judicial notice of the generally known fact that the prison was owned by the State.

Castillo raised the same issues in the Illinois Supreme Court. The Court began by noting that while Castillo had framed the issue as whether the specific cellblock where the battery occurred was public property, the actual question was whether Pontiac Correctional Center was public property as that is how the offense was charged in the indictment. And, the Court went on to find that the plain and ordinary meaning of “public property” is property owned by the government, with no additional requirements. In reaching this decision, the Court overruled the prior appellate court decision in People v. Ojeda, 397 Ill. App. 3d 285 (2009), which had defined public property as that which is owned by the government and accessible to the public.

As to the ownership question, the Court agreed with Castillo that the State had presented no evidence on the issue, which is an essential element of aggravated battery as it was charged here. But, the Court also concluded that the appellate court’s decision to take judicial notice of the State’s ownership of Pontiac Correctional Center was appropriate. Illinois Rule of Evidence 201 allows a court to take judicial notice at any stage of the proceedings, which includes for the first time on appeal. There ownership of Pontiac was capable of easy verification. And, even where a fact is an element of an offense, a court may take judicial notice where it is not subject to reasonable dispute. Thus, the Supreme Court affirmed the appellate court and upheld Castillo’s conviction.

Ivey v. Transunion Rental Screening Solutions Inc., 2022 IL 127903   

By Joanne R. Driscoll, Forde & O’Meara LLP

The sole issue in this case is whether the business for which plaintiffs were seeking lost profits as an element of their breach of contract action was a new business for which damages were speculative and not recoverable.

Plaintiff Ivey and his company, Helix, a Colorado document and information services company, entered into an agreement with Transunion Rental Screening Solutions, Inc. (TURSS) that required TURSS to provide the platform and Helix to sell customizable, electronic lease forms to property management professionals and landlords. After several years, TURSS failed to complete the platform. Ivey and Helix sued TURSS alleging several theories of liability. With respect to their breach of contract count, the only theory to survive dismissal, TURSS was granted summary judgment based on application of the new business rule and plaintiffs’ inability to establish damages. The appellate court in a 2-1 split, affirmed dismissal, holding that Helix did not base its alleged lost profits on actual sales of another entity operating a comparable business. 

The supreme court, in an opinion authored by Chief Justice Theis, with a dissent authored by Justice Overstreet, applied a fact-intensive inquiry to determine whether the evidence presented by plaintiffs showed that Helix was not a new business, but, rather, a competitor of an existing company that marketed a different lease product. Relying on plaintiff Ivey’s deposition, the court found that Helix’s lease system was a unique, different, and high-quality product designed for integration into a new electronic software operating platform and, thus, had no comparables.

In reaching its conclusion, the court discussed Milex Products, Inc. v. Alra Laboratories, Inc., 237 Ill. App. 3d 177 (1992), a case cited by both parties and distinguished by the appellate court majority. The supreme court agreed that damages could be proved by the new company in that case, a generic drug manufacturer, based on the profits of the existing brand drug manufacturer, because the generic drug was a copy of the existing brand. Here, unlike in Milex and other cases allowed to proceed to a jury, Helix did not present evidence of revenues of a similar product or a similar business in a similar market.  

In his dissent, Justice Overstreet, proposed adoption section 352 of the Restatement (Second) of Contracts (1979), which suggests a trend toward taking into account all the circumstances of the breach, including willfulness, and requiring a lesser degree of mathematical certainty of damages as to the new business. According to section 352, damages may be established with reasonable certainty with the aid of expert testimony, economic and financial data, market surveys and analyses, business records of similar enterprises, and the like. Justice Overstreet opined that such an approach strikes the appropriate balance between the twin goals of certainty in damages and discouraging breaches of contract. Applying this section, the evidence put forward by Helix should have been subject to adversarial testing by the fact finder.

People v. Kidd, 2022 IL 127904   

By Kerry J. Bryson, Office of the State Appellate Defender

Antonio Kidd was charged with two counts of predatory criminal sexual assault of a child, each count alleging, in relevant part, that he had committed an act of sexual contact with T.F. by placing his penis in contact with T.F.’s mouth on two separate dates.

Kidd represented himself during a portion of pretrial proceedings, and during that time, he filed a pro se motion to dismiss the indictment on the basis that it did not include all essential elements of the offense charged. Specifically, Kidd noted that where predatory criminal sexual assault is charged based on sexual contact, rather than penetration, the charge must include that the contact was “for purpose of sexual gratification or arousal of the victim or accused.” The prosecutor argued that the charge was proper, and the court denied the motion to dismiss. Counsel was later reappointed for Kidd.

Just before trial, the prosecutor moved to amend the indictment to add the “sexual gratification” language. Defense counsel objected and again moved to dismiss, and the court denied both motions, concluding that Kidd had suffered no prejudice because the indictment sufficiently informed him that the State would prove that the contact was for the purpose of sexual gratification and thus there was no “surprise.” At the close of evidence, the jury was instructed on the offenses, including the sexual gratification language, and Kidd was convicted.

On appeal, Kidd argued that the trial court erred in refusing to dismiss the indictment because it did not set forth all of the elements of the offense as required by 725 ILCS 5/111-3. The appellate court found no deficiency in the charge, however, concluding that by alleging an act of sexual contact, it necessarily meant that the contact was for the purpose of sexual gratification.

In the Supreme Court, Kidd again challenged the indictment as defective. Kidd noted that because he had challenged the indictment prior to trial, the question was whether the charges strictly complied with the requirement that it set forth the nature and elements of the offense and required no showing of prejudice. The Court reaffirmed its adherence to this principle today.

The Supreme Court concluded that the indictment was defective. Where a predatory criminal sexual assault charge is predicated on an allegation of “sexual contact,” it must include as a necessary element that the act was committed for the purpose of “sexual gratification.” That additional element is not necessary where the offense is predicated on an act of sexual penetration. And, while the conduct alleged (penis-to-mouth contact) can also satisfy a charge predicated on sexual penetration, the Court declined the State’s attempt to switch it’s theory of prosecution on appeal. Thus, the Supreme Court reversed and remanded to the trial court with directions to dismiss the indictment.

Justice Overstreet dissented on the basis that the indictment sufficiently charged predatory criminal sexual assault based on sexual penetration where it alleged penis-to-mouth contact which is, by definition in Illinois, an act of sexual penetration. Because the indictment informed Kidd of the specific act he was alleged to have committed, and because that act fell squarely within the definition of “sexual penetration,” the indictment sufficiently informed Kidd of the nature and elements of the offense charged. It was not necessary to include the word “penetration” in the indictment in order to strictly comply with the pleading requirements of 725 ILCS 5/111-3.

People v. Smith, 2022 IL 127946   

By Jay Wiegman, Office of the State Appellate Defender

Given the ubiquity of cell phones, it is surprising that this issue has not been determined  previously: is cell phone video footage of a video-recording admissible pursuant to Illinois Rules of Evidence 1003 or 1004, or barred by the best evidence rule? In People v. Smith, 2022 IL 127946, a unanimous Court held that video-clips of surveillance footage that are re-recorded on a cell phone are generally admissible unless they are altered, inauthentic, or otherwise unfaithfully depict included content. Further, the Court held that because the Illinois Rules of Evidence codified – and thereby abrogated – the common law rules of evidence, the State was not required to show due diligence in seeking the original surveillance footage.

After having been away from his apartment for roughly six hours, the complainant in Smith returned home to find that his doorknob was bent, which made it difficult to open the door. The complainant, Michael Whittington, immediately noticed that 40-50 prescription hydrocodone pills were missing, as was some loose change. Whittington notified his landlord and the police, but was not interested in pressing charges until the next day when he noticed some missing jewelry and that a window was “pushed in” and “off the tracks,” and the window’s screen was bent. A Carbondale police officer, Michael McCrary, who responded to Whittington’s initial call, returned and watched cell phone videos of the apartment building’s security camera footage that the landlords had taken when they had difficulty copying the video directly to a flash drive. The landlords recorded the video with their cellphone because the footage was on a 48-hour loop and it was automatically deleted at the end of each cycle. The landlords did not record all of the footage taken when Whittington was away from his apartment, but instead captured only a couple of 20-second segments, which showed the defendant – another resident of the building – walking up to the door of Whittington’s apartment and then walking away, only to be seen later walking out of the apartment. McCrary recognized the defendant and arrested him. A search incident to arrest revealed $3,000 in cash and approximately 20 hydrocodone pills on Smith’s person.

Over defendant’s objection, the cellphone footage was played at his jury trial. Smith was found guilty and sentenced to six and one-half years’ imprisonment. The Appellate Court, Fifth Judicial District, affirmed in a split decision, finding the cell phone videos were properly admitted into evidence. The Supreme Court allowed defendant’s petition for leave to appeal

Writing for the Court, Justice Holder White first discussed Rules of Evidence 1001, 1003 and 1004. Cell phone video qualifies as a “writing or recording” under Evidence Rules 1001(1) and 1001(2). As set forth in Rule 1001(3), an “original” of a writing or recording is the writing or recording itself. In contrast, a duplicate is defined in Rule 1001(4) as a counterpart produced by the same impression as the original or, as here, by means of electronic re-recording. Thus, a cell phone video could qualify as a duplicate of any original footage it recorded so long as it accurately reproduced the original. Rule 1003 renders a duplicate admissible to the same extent as the original unless a genuine question is raised as to the authenticity of the original or in circumstances where it would be unfair to admit the duplicate in lieu of the original.

After setting forth the terminology and definitions, the Court considered the defendant’s challenge to the admission of the cell phone video. Justice Holder White noted that Smith did not argue that the video clips were altered or inauthentic or did not faithfully depict the content it showed, but rather claimed that the short duration of the then-existing surveillance video failed to provide enough context to accurately relay the entirety of the original surveillance footage. After considering the plain language of Rules 1001(4) and 1003, the Court determined that the rules do not require any duplicate to contain the entirety of the original, though a trial court must analyze whether a clip that contains only a portion of original surveillance footage affects its fairness, and could certainly consider whether portions of the original were excluded as a matter of “gamesmanship.” In this case, the Court could not say that the trial court’s determination that the video was admissible was “arbitrary, fanciful, or unreasonable to the degree that no reasonable person would agree with it,” and observed that defense counsel was able to cross-examine the landlord at length and argue strongly to the jury to accept counsel’s view of the significance of the missing footage.

Because the Court found that the footage was admissible under Rule of Evidence 1003, it found it unnecessary to address the parties’ alternative arguments under Rule 1004. As noted above, the Court readily determined that the best evidence rule as it existed in the common law no longer controls. Finally, the Court determined that, in the appellate court, the defendant had forfeited the foundational challenge he raised in the trial court. The Supreme Court affirmed the judgment of the appellate court, which had affirmed defendant’s conviction and sentence.

People v. Walls, 2022 IL 127965   

By Kerry J. Bryson, Office of the State Appellate Defender

Itasha Walls pled guilty to two counts of second degree murder and one count of aggravated battery with a firearm in 2005 and was sentenced to three consecutive 15-year terms of imprisonment. He filed a timely motion to reconsider sentence which was denied. Within 30 days of the denial of that motion, Walls then filed a “motion for rehearing” on the motion to reconsider arguing that his post-plea counsel had failed to comply with the requirement of Supreme Court Rule 604(d) because counsel had not reviewed the plea transcript and had not filed a Rule 604(d) certificate. The motion for rehearing was not addressed for several years, during which time Walls filed additional pro se pleadings.

In 2019, the judge found that Walls’ original motion to reconsider sentence remained pending and unresolved because post-plea counsel had not complied with Rule 604(d), and the court ordered that Walls’ current counsel comply with the requirements of the rule. Finally, in 2020, counsel filed a Rule 604(d) certificate, and an amended motion to reconsider sentence was heard and denied. Walls appealed, and the appellate court concluded that it lacked jurisdiction to consider the appeal because a notice of appeal was not filed within 30 days of the original ruling on the motion to reconsider sentence in 2005.

In the Supreme Court, Walls argued that the motion for rehearing tolled the time for filing an appeal. More specifically, he argued that Rules 604(d) and 606(b), read together, provide that notice of appeal must be filed either within 30 days of the ruling on the post-plea motion or within 30 days of the denial of a motion to reconsider the ruling on the post-plea motion, if a motion to reconsider is filed.

Rule 604(d) provides that, in order to appeal a guilty plea, the defendant must first file a timely post-plea motion. And, it goes on to state that if the motion is denied, notice of appeal shall be filed within the time allowed by Rule 606. Rule 606(b) provides that, “except as provided in Rule 604(d),” notice of appeal must be filed within 30 days of either the final judgment or the order denying any timely-filed motion directed at that judgment.

The Court rejected Walls’ argument that the motion for rehearing served as a timely-filed motion directed at the judgment sufficient to toll the time for filing a notice of appeal. The Court noted the longstanding principle that the final judgment in a criminal case is the sentence, regardless of whether that sentence is imposed after a trial or a plea. Thus, the post-plea motion required by Rule 604(d) is a motion directed at the judgment for purposes of Rule 606(b), as well. Rule 606(b) does not contemplate an additional post-judgment motion in the guilty plea context.

Accordingly, Walls’ notice of appeal was due within 30 days of the ruling on his original motion to reconsider sentence. Because it was not filed within that time, the Court lacked jurisdiction to consider Walls’ guilty plea appeal. The Supreme Court remanded the matter to the circuit court to reinstate collateral filings that had been dismissed by the trial court when addressing Walls’ motion for rehearing, as those collateral pleadings had not been properly addressed.

Kloeppel v. Champaign County Board, 2022 IL 127997   

By Karen Kies DeGrand, Donohue Brown Mathewson & Smyth LLC

The Illinois Supreme Court here addressed whether the plaintiff, Champaign County Executive Darlene Kloeppel, or the chair of defendant, the Champaign County Board, holds the executive power to fill a vacancy in an elected county office. The supreme court concluded that state law places the power within the chair of the Champaign County Board.

A recent change in the county’s form of government provides the backdrop for this dispute. In 2016, Champaign County voters approved a referendum to change from the township form of government to the county executive form, both of which are permissible under article 2 of the Counties Code, 55 ILCS 5/art. 2 (West 2016). Before that change, the County Board chair was tasked by statute to perform many executive functions, including the appointment of individuals to vacancies in both elected and nonelected positions, subject to County Board approval. The county executive form of government created the position of county executive, to which Kloeppel was elected in 2018. According to the Counties Code, the county executive holds specified responsibilities, including the power to appoint “persons to serve on the various boards and commissions to which appointments are provided to be made by the board,” id., section 2-5009, and acts separately from the county board, which acts as the county’s “legislative body.” Id., section 2-5003.

Following Kloeppel’s election, she filled vacancies in nonelected county positions; however, as when the county was organized under a township form of government, the County Board chair selected individuals to file elected position vacancies. Kloeppel filed a lawsuit challenging the County Board’s power in this respect. She won a declaratory judgment in the circuit court, but on appeal, the county board prevailed.

The supreme court determined that the Election Code answered the question Kloeppel posed in her lawsuit and supported the appellate court’s ruling for the County Board. A provision in the Election Code requires that any elective county office vacancies “shall be filled within 60 days by appointment of the chairman of the county board … with the approval of the county board….” 10 ILCS 5/25-11 (West 2016). The supreme court rejected Kloeppel’s statutory arguments, including that the section of the Counties Code creating the county executive form of government did not create the office of county board chair and thus negated the reference in section 25-11 to a county board chair’s power to fill vacancies in elected positions. The supreme court found creation of the office in another section of the Counties Code applicable to counties organized under the executive form of government. Noting that Kloeppel did not assert a constitutional challenge to the provision, the court also declined to disregard the language of section 25-11 based on Kloeppel’s claim that making appointments is “traditionally” an executive power, not a legislative power.

Sheckler v. Auto-Owners Insurance Co., 2022 IL 128012   

By Joanne R. Driscoll, Forde & O’Meara LLP

This case answered the question of whether an insurer’s duty to defend or indemnify extends to tenants of an insured property who are not identified in the policy as insured persons when a third-party contribution claim is brought against them.

The appellate court in a 2-1 decision found such a duty based on an equitable extension of Dix Mutual Insurance Co. v. LaFramboise, 149 Ill. 2d 314 (1992). One justice in the majority disagreed with Dix but found it controlling. The third justice (Justice McDade) dissented, opining that Dix did not apply and was expressly limited to the equitable right of subrogation, not whether a duty to defend or indemnify existed. In a unanimous decision, authored by Justice Holder-White, the supreme court agreed with Justice McDade and held that the policy language did not provide a duty to defend or indemnify the tenant in a contribution action.

Robert McIntosh entered into a lease agreement with the Shecklers and obtained insurance from Auto-Owners that provided third-party landlord liability coverage for claims brought by third parties that the insured “becomes legally obligated to pay as damages because of or arising out of bodily injury or property damage.” It excluded “property damage to property occupied or used by an insured or rented to or in the care of, any insured” and listed McIntosh and his wife as the only named insureds.

The underlying property damage occurred when a gas stove in the Shecklers’ apartment malfunctioned. McIntosh placed a service call, and Wayne Workman, an appliance service technician, responded. After Workman left to obtain a part, one of the Shecklers sprayed a deodorizer that ignited, causing substantial damage to the apartment. McIntosh obtained coverage from Auto-Owners for the damage, and Auto-Owners filed a subrogation action in McIntosh’s name against Workman who then filed a third-party action against the Shecklers for contribution. The Shecklers tendered that lawsuit to Auto-Owners who declined to defend. The Shecklers then filed a declaratory judgment action against Auto-Owners, McIntosh and Workman. Workman filed an answer and counterclaim against Auto-Owners seeking coverage for the Shecklers.

On cross-motions for summary judgment, the Shecklers and Workman cited Dix, 149 Ill. 2d 314, to argue that the Shecklers were co-insured under the Auto-Owners policy as a matter of law under the lease provisions and their payment of rent which contributed toward the payment of the insurance premium. Auto-Owners argued the Shecklers were not co-insured. The circuit court ruled in favor of Auto-Owners. The appellate court reversed.

The supreme court began its analysis by reviewing Dix. Agreeing with Justice McDade’s dissent in the appellate court opinion, it held that Dix did not apply because the contribution claim against the Shecklers was brought by Workman, not Auto-Owners, the insurer. The duty to defend or indemnify the Shecklers depended on the policy language. Neither the policy declarations page nor the definitions of insured found in the policy nor the two coverage provisions in the policy included the Shecklers. The dwelling coverage related entirely to the premises and did not include a duty to defend or indemnify an insured against a third-party liability claim. The landlord liability provision included a duty to defend or indemnify as to claims brought by third parties but only to insureds.

Channon v. Westward Management, Inc., 2022 IL 128040   

By Michael T. Reagan, Law Offices of Michael T. Reagan

This Rule 308 certified question appeal documents the existence of a fair amount of litigation on documentary costs involved in the sale of condominium property. The single question on appeal was “whether section 22.1 of the Condominium Property Act provides an implied cause of action in favor of a condominium unit seller against a property manager, as agent of a condominium association or board of directors, based on allegations that the property manager charged excessive fees for the production of information required to be disclosed through a prospective buyer under that statute.” The appellate court answered the question in the affirmative. The supreme court, with Justice Carter writing for a unanimous court, reversed, concluding that the Act does not create an implied private right of action by condominium unit sellers. Justice Michael Burke agreed with the court’s analysis and result, but wrote separately in concurrence to express the view that a court will not find an implied private right of action unless all four parts of the relevant test are met, seeking to ameliorate what he regarded to be confusing statements in precedent.

The single certified question had two components: a) whether there was an implied right of action created on behalf of a unit seller, and, if so, b) whether that action could be prosecuted against the management agent acting for the condominium association or its board of directors. Although the appellate and supreme courts reached contrary conclusions in this case, they nonetheless appear to agree that the test for determining whether an implied right of action was created by the statute is to be found in Metzger v. DaRosa, 209 Ill.2d 30 (2004). After a very detailed analysis of the first Metzger factor of whether the plaintiffs are members of the class the statute was intended to benefit, the court held that “the legislative intent of (section 22.1) is primarily to benefit potential unit buyers.” The court found that a single benefit was arguably bestowed upon sellers but found that that benefit was merely incidental to the underlying purpose of section 22.1.

Because the first factor was not satisfied, the court did not take up the remaining factors of the applicable test.

Justice Burke’s concurrence dealt with what he termed to be the perpetuation of “confusing language that this court used” in Abassi v. Paraskevoulakos, 187 Ill.2d 386 (1999),” which implies a “clear need” consideration as to whether the court is to consider all the factors. Justice Burke wished that this opinion had said that all four factors must be met before the court will find an implied private right of action.

Nyhammer v. Basta, 2022 IL 128354   

By Karen Kies DeGrand, Donohue Brown Mathewson & Smyth LLC

In a case involving the interpretation of administrative law, the Illinois Supreme Court analyzed whether two discretionary decisions of an Illinois administrative agency required hearings under the Illinois Administrative Procedure Act. The opinion explores when an agency is obligated to adopted certain procedural safeguards, including an evidentiary hearing, in exercising a judicial or quasi-judicial function. The Act refers to such a proceeding as a “contested case.” 5 ILCS 100/10-5 (West 2018). Here, the supreme court agreed with the circuit court that two decisions of the State’s Department on Aging did not require an evidentiary hearing, and the Department should not be ordered, pursuant to a complaint for mandamus, to hold one.

Plaintiff Grant Nyhammer, executive director and general counsel of the Northwestern Illinois Area Agency on Aging (NIAAA), filed a complaint for mandamus in the circuit court against Paula Basta, Director of the Department on Aging. The NIAAA, funded by federal and state grants, provides services to older Illinois adults. Its complaint arose from Nyhammer’s unsuccessful petitions seeking Department hearings based on claims that the Department wrongfully discontinued funding of the NIAAA and terminated it as a regional administrative agency for adult protective service programs for a number of counties in northern Illinois. Nyhammer charged that the decisions constituted retaliation for his advocacy regarding a Department Adult Protective Services Standards and Procedures Manual. Nyhammer also filed a second petition for hearing in which he alleged the Department had arbitrarily rejected NIAAA’s designation of providers under the Adult Protective Services Act. The Department denied both petitions—the first of which requested the Department adopt administrative rules for “contested case” hearings and compensation for the lost funding, and the second which requested the adoption of procedural rules for “contested case” hearings—on the basis that the petitions failed to establish a right to an adjudicatory hearing. In the Department’s view, the two petitions did not present “contested cases” under the Act.

The circuit court denied Nyhammer’s mandamus claims, which sought to compel the Department to adopt the administrative rules for “contested case” hearings, provide NIAAA a hearing on its two petitions and pay damages and litigation expenses and attorney fees. The appellate court reversed. Its decision prompted the supreme court to provide guidance for appellate review of the dismissal of a complaint for mandamus. Noting that the circuit court had dismissed the mandamus complaint on the face of the pleadings, under section 2-615 of the Code of Civil Procedure, the supreme court viewed the appellate decision as prematurely giving relief to NIAAA by vacating the Department’s decision without providing the Department and the circuit court an opportunity to consider the mandamus complaint on the merits.

The supreme court provided additional correction of the appellate decision by detailing the elements of a mandamus action and examining the parameters of a writ of mandamus, an extraordinary remedy to enforce the performance of official duties by a public officer where no exercise of discretion is involved. The court assessed whether NIAAA demonstrated a clear right to the relief it sought. With respect to Count I, seeking to compel the Department to adopt rules for administrative hearings under the Act, the court concluded the claim was moot based on the Department’s adoption of regulations during the pendency of the appeal.

Analysis of the viability of Counts II and III required the court to determine whether NIAAA had alleged a “clear right” to administrative hearings on the matters presented in the petitions. This aspect of the opinion involved  interpretation of the phrase “contested case” within section 1-30 of the Act. To be entitled to a hearing before an administrative agency, and for an agency decision to fall within section 10 of the Act, some legal authority—a statute, a constitutional right, or an administrative regulation—must require the agency to conduct a hearing in the course of deciding the matter at issue. A thorough and detailed analysis led to the conclusion that no authority required the Department to conduct an adjudicatory hearing regarding the funding and approval of service provider decisions.

The court concluded by observing that the NIAAA complaint sought review only of the Department’s denial of hearing, not judicial review of the Department’s decisions. Given that pleading election, the supreme court found that whether the decisions were subject to judicial review was outside the scope of the court’s review in this particular case. The supreme court affirmed the dismissal of the mandamus complaint, with prejudice.