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No Free Lunches in Illinois – Attempted Expansion of Jurisdiction Checked by the Illinois Appellate Court and the Illinois Workers’ Compensation Commission
True Story!
A petitioner settled his case in Illinois for $100,000.00, or 30% person as a whole. The petitioner, a truck driver, was hired in New York and broke his spine in a truck rollover accident on Pacific Coast Highway while hauling barrels of wine from Napa Valley, California down the coast. After reaching maximum medical improvement, the petitioner, an Arizona resident, moved to Cicero, Illinois, and hired a Chicago attorney to file an Application for Adjustment of Claim for the California accident.
There was one problem—the petitioner had no contact with the State of Illinois, and jurisdiction was not appropriate in this state! Undaunted, the petitioner’s attorney filed the Application and secured the agreement with staff counsel for the employer’s insurance company. Despite an attorney covering during the handling attorney’s vacation warning of no jurisdiction, the contract was submitted and approved by the arbitrator.
Later, when questioned about the case and the issue regarding jurisdiction or lack of jurisdiction, the counsel for petitioner smiled like a Cheshire cat, and said “I always accept the generosity of insurance companies and other eleemosynary [i.e., charitable] organizations.”
When is Illinois the Proper Jurisdiction?
There are three ways to secure jurisdiction under the Illinois Workers’ Compensation Act:
- The accident occurred in Illinois;
- The business is principally located in Illinois; or
- Petitioner was hired in Illinois.
To secure jurisdiction under the Illinois Workers’ Compensation Act by virtue of being hired in Illinois, the “last act to form the contract of employment” must occur in Illinois. We will take a bit of a dive into what constitutes the “last act to form the contract of employment” below.
Industrial Contractors Skanska v. Illinois Workers’ Compensation Commission, 2021 IL App (4th) 210003WC-U
To drill down deeper into the formation of a contract for hire occurring in Illinois, to establish jurisdiction and “the last act necessary to form the employment contract”, the Illinois Appellate Court heard the case of Industrial Contractors Skanska. The case involved an Illinois apprentice Union electrician who was contracted by her business agent to report to work on construction of a nuclear power plant over the border in Indiana and sustained a torn rotator cuff in Indiana.
The Illinois Workers’ Compensation Commission found that jurisdiction existed. The Circuit Court confirmed the Decision. The Illinois Appellate Court reversed, concluding that no jurisdiction existed in Illinois.
Concluding that no jurisdiction existed, the Appellate Court held that “the last act necessary to form the employment contract” was the decision by the employer to hire the Illinois-referred Union member in Indiana after passing a pre-employment physical, a safety test and a drug screen. The Appellate Court found the Commission Decision to be contrary to the manifest weight of the evidence, stating that “though it is not our rule to substitute our judgment for the Commission on factual matters, we nevertheless have a duty to set aside its decision when the obvious conclusion is clearly apparent.” Bethlehem Steel Corporation vs. Industrial Commission, 41 Ill.App.2d 40, 43 (1968).
Furthermore, the court held that the Decision in Correct Construction Company vs. Industrial Commission, 307 Ill.App.3d, 636 (1999) was controlling. In Correct Construction, the claimant was a Union pipefitter from Illinois who was working in Indiana. The Union had offices in Chicago and Hammond, Indiana, and the Union members could only find work through the Union. The claimant was contacted by a Union business agent from the Hammond, Indiana Union office regarding a job with respondent at the Indiana jobsite. Petitioner appeared at the jobsite in Indiana the next day and filled out an application and tax forms. Further, the collective bargaining agreement under which the respondent and the Union were operating stated that the employer shall have the “sole and exclusive responsibility for hiring and the sole and exclusive right of accepting or rejecting applicants for work.”
Analyzing the facts of the Industrial Contractors Skanska case, the Appellate Court found that the Correct Construction case is factually similar and controlling. The Court found that the language in the labor agreement between the respondent and the Union clearly stated that the Union was the exclusive referral agent for the respondent, and the respondent retained the right to reject the referred individual (which clearly contemplated the “last act necessary for contract formation.”) Therefore, the last act necessary to form the employment contract was the employer’s decision to hire the referred Union member. The claimant was considered to be an “applicant” upon arrival at the job site and could be rejected even after undergoing the safety training and could be rejected for “any legitimate reason.”
Hunter Valles vs. Phoenix Services Harbor Works, 22 WC 007628
This concept and analysis of the “last act necessary to form a contract of employment” is crystallized in another 19(b)/8(a) case entitled Jeffrey Valles, on behalf of Hunter Valles vs. Metal Services LLC, d/b/a Phoenix Services Harbor Works (22 WC 7628).
The sole issue in dispute at arbitration was whether the employment contract between Phoenix Services Harbor Works in Indiana and the petitioner, Hunter Valles, was formed in Illinois or Indiana.
The petitioner, Hunter Valles, was 26 years old and suffered devastating and catastrophic injuries in an explosion. The explosion was caused by petitioner’s failure to pump water out of a hole in which he was going to fill with explosive sludge, which reacted like C4 when exposed to water. As a result of this explosion, the petitioner has already incurred greater than $40 million dollars in medical expenses.
The Arbitrator found that the petitioner failed to prove that an employment contract between respondent, Phoenix Service Harbor Works and Hunter Valles was formed in Illinois as the “last act necessary to form the contract for hire” occurred in Indiana. The petitioner lived in Indiana and received the referral for the job from the Hammond, Indiana satellite Union office. More importantly, the petitioner appeared at the job site for Phoenix Services Harbor Works in Indiana and completed the application process after taking a drug test and passing a physical examination.
Petitioner’s theory of Illinois jurisdiction was that the petitioner could not accept employment until he was removed or “dispatched” from the Union’s “available for work” list at its main headquarters in Countryside, Illinois.
Petitioner had both the Laborer’s Union business agent and Laborer’s Union President testify on his behalf. However, they confirmed that the Union is a referral agent in this process and not a hiring agent. On cross-examination, the Union witnesses for petitioner also confirmed that respondent had a right to reject an applicant referred by the Union.
Petitioner’s counsel argued that the issuance of a “dispatch through Countryside, Illinois District 1 Headquarters was the confirming ‘last act necessary to hire’ Hunter Valles.” However, in this particular case, the evidence showed that the petitioner started work early in the morning and was not removed from the Union “available for work” list at the Laborer’s Union Headquarters in Countryside, Illinois until the afternoon of the first day at work.
On review, the Illinois Workers’ Compensation Commission majority found that Correct Construction Company vs. Industrial Commission, 307 Ill.App.3d 636 (1999) was controlling and strikingly similar to the present matter, as the Union was the referring agent for the respondent, the petitioner’s application for employment was completed in Indiana, and his job interview occurred in Indiana, as was the physical exam and confirmation of the drug-free testing. The Commission affirmed the Arbitrator 2-1, with the dissenting Commissioner arguing that the testimony of the Laborer’s Union President was persuasive. The president testified that everything in the Hammond, Indiana Union satellite office was controlled by the office in Countryside, Illinois, including telephone lines, heat, and air-conditioning.
This case is currently pending before the Illinois Appellate Court.
If you have any questions regarding Illinois jurisdiction in an Illinois Workers’ Compensation case, please feel free to reach out to our attorneys here.