Use Checklist Before Settling

A United Express aircraft collided with a King Air plane at the intersection of tow runways in Quincy in 1996. Fourteen people died

United and Raytheon Aircraft, manufacturer of the plane, settled with the families of the passengers.

Attorneys for the plaintiffs made the strategic decision not to sue the airport authority in Quincy and settled with them out of court for a nominal amount on the premise that the city would almost certainly be immune from liability.

Raytheon filed a third-party contributions claim against Quincy, alleging that the municipality was subject to liability in tort for the wrongful deaths. The trial judge in St. Clair County and panel of the 5th District Appellate Court rejected that argument.

Chief Justice Mary Ann McMorrow, writing on behalf of the Illinois Supreme Court, agreed. ( Johnson v. United Airlines, et al., No. 91894, decided Jan, 24, 2003.) The court found that the settlement was reached in good faith and at arm’s length. If the plaintiffs’ attorneys decided that for tactical reasons the municipal airport was not to be part of the lawsuit because, after exhaustive research, it "had little likelihood of success," the court concluded that the settlement would stand under the Illinois Joint Tortfeasor Contribution Act (740 ILCS 100, 0.01 et seq., 2002).

Section (d) of the statute provides that, " the tortfeasor who settles with a claimant pursuant to paragraph (c) is discharged from all liability for any contribution to any other tortfeasor." Paragraph (c) states that this is to be enforced when the release or covenant not to sue is " given in good faith."

That statue does not define the term "good faith" nor does it provide any procedural guidelines by which to make that determination. In Johnson, the court held that the settlement against Quincy for $1,000 per plaintiff was valid.

The Supreme Court found that consideration was received, which is prima facie evidence of validity and gives rise to a presumption that the settlement was entered into a good faith.

The burden then shifts to the defendant, who must show evident of bad faith by a preponderance of the evidence. By doing so, the court strikes a balance between two important public policy considerations: the encouragement of settlements and the equitable apportionment of damages among tortfeasors.

Ultimately, the question of whether a settlement satisfies the requirements of good faith is left o the discretion of the trial court based upon the totality of the circumstances.

A separate evidentiary hearing on the merits of the underlying tort case or the relative liability of the parties is not necessary because as the court in Johnson, no evidence had been presented at trail regarding any collusion behind the passengers’ families settling with an entity whom they legitimately chose not to sue.

In Johnson, it is apparent that Rayteon was ware of the settlements with Quincy and entered with eyes open into a multi-million dollar settlement with plaintiffs rather than proceed to trial.

It is apparent that the plaintiff’s lawyer in Johnson carefully considered their options and chose not to even sue Quincy, but too often lawyers decide to settle with a less culpable party without looking at what it may spell for the future of the case at trial. It is imperative to create a checklist of all possible issues before settling with any defendant so that the plaintiff understands what he is buying into when a potential codefendant settles.

Too often, it seems, plaintiffs’ attorneys shoot with a shotgun rather than a rifle. It is wise to carefully consider all viable defendants from the outset of the litigation. I am not suggesting that a plaintiff’s lawyer be clairvoyant, but he or she must approach every case with the foresight and legal acumen to know that facts an arguments are like a kaleidoscope, changing the picture at every turn.

Trial lawyers, though, are seeing more and more legal malpractice cases involving empty chair issues.

Often defendants found liable at trial are asking the court to include non-parties to contribute to the verdict or settlement. Many courts, however, are finding this unreasonable as well as unfair, considering the settling entities did not participate in the defense of the actions.

How can this encourage economy, efficiency and predictability in the civil justice system when a settling party would never be sure that codefendants would come after them in later contributions action?

Moreover, asking a jury to apportion fault among parties who are not before the court and who were released in good faith is difficult, if not impossible, to determine.

These issues are vital in civil proceedings and deserve close scrutiny, as the Supreme Court thoughtfully did here, inasmuch as the trend to resolve disputes outside of formal court proceedings increases.