Alleged Joint Venturer Subject to Vicarious Liability After Waiving Exclusive Remedy Defense on Appeal

May 2015

In Hiatt v. Western Plastics, et al., 2014 IL App(2d) 140178, the plaintiff was employed by Western Plastics, Inc. (Western) and sustained injuries when his arms were caught in a machine used to produce plastic sheets. The plaintiff filed suit against Illinois Tool Works, Inc., (ITW), alleging that ITW and Western were engaged in a joint venture and, therefore, ITW was vicariously liable under agency principles for the negligent acts or omissions of Western. ITW and Western entered into a manufacturing agreement, under which Western agreed to manufacture plastic sheets for ITW and to work with Western to achieve improvements in the manufacturing process and in product designs. The manufacturing agreement also included a specific provision stating that Western was an independent contractor and neither Western nor ITW were "the agent of the other for any purpose whatsoever."

The trial court granted summary judgment in favor of ITW finding no joint venture relationship existed between ITW and Western. On appeal, the Illinois Appellate Court for the Second District reversed, finding a question of fact existed as to the existence of a joint venture relationship between the two companies based on ITW's contributions to the manufacturing process, exercise of control over product specifications, and agreement to share any financial gains with Western resulting from cost improvements.

ITW also asserted, for the first time on appeal, that - if a joint venture relationship existed - the plaintiff's claims would be barred by the exclusive remedy provision of the Illinois Workers' Compensation Act. The Illinois Supreme Court, in Ioerger v. Halverson Construction Co., 232 Ill.2d 196 (2009), held that a plaintiff employed by a member of a joint venture is barred from filing suit against other joint venturers by operation of the exclusive remedy provision. The appellate court refused to consider ITW's exclusive remedy defense, holding ITW waived this argument by failing to assert it in the trial court.

Hiatt serves as a reminder to assert all available arguments and defenses in the trial court. ITW certainly could have asserted the exclusive remedy defense, pleading in the alternative, without prejudicing its argument that no joint venture relationship existed. Had it done so, ITW very well could have prevailed on appeal given Ioerger and its progeny. BCM has successfully obtained summary judgments and dismissals on behalf of joint venture clients based on application of the exclusive remedy provision.