Illinois Appellate Panel Rules Prejudgment Interest Statute Constitutional

On Friday, June 9, 2023, the Illinois Appellate Court for the First Judicial District, Fifth Division, filed its opinion in Cotton v. Coccaro, et al., 2021 IL App (1st) 22078, upholding the constitutionality of the Illinois Prejudgment Interest Act, 735 ILCS 5/2-1303.

This is the first opinion of an appellate court in Illinois on the constitutionality of the Prejudgment Interest Act. Prior to this, we only had opinions of some of the circuit courts, including one from Cook County, which found the Act unconstitutional.  Similar motions filed in other in Cook County cases were stayed pending an appellate opinion. While the circuit court decisions had only limited local effect, the Cotton opinion has statewide precedential effect, and it is the law of Illinois unless or until another Illinois appellate or the Illinois Supreme Court issues a decision. 

The Court's reasoning is as follows:   

GENERAL CONSTITUTIONALITY

• There is a strong presumption that legislative enactments are constitutional;
• The tortfeasor has caused an immediate injury to the tort victim but does not make immediate recompense. To fully compensate the tort victim, most jurisdictions [46 others] in the United States provide for an award of prejudgment interest for delay in paying damages;
• Until the 2021 amendment, Illinois did not permit recovery of prejudgment interest in personal injury and wrongful death actions. But for over a century, Illinois allowed prejudgment interest where authorized by statute, contract, or equity;
• The prejudgment interest award complements the compensatory purpose of civil law by ensuring that the plaintiff is compensated not just for the actual injury but also for the delay in being made whole by placing him in the position he would have been in had he had the opportunity to use the funds retained by the defendant.
• Prejudgment interest also promotes efficiency in the processing of legal claims because it reduces a defendant's incentive to delay the resolution of a case;
• The delay burdens the court system by crowding dockets and compromises the quality of justice since evidence degrades or is lost over time.

THE RIGHT TO A JURY TRIAL

• The defendant's contention that the prejudgment interest amendment invades the jury's province as the exclusive arbiter of facts and issues is rejected. Prejudgment interest is not a component of tort damages but a statutory additur applicable when legislatively defined conditions are satisfied;
• The prejudgment interest amendment neither encroaches upon a jury's calculation of damages nor penalizes a defendant who elects a jury trial;

DUE PROCESS

• The Defendant's contention that the prejudgment interest amendment deprived defendants of the property without due process of law by permitting a double recovery for a single injury is rejected, while the defendant argued that juries in personal injury and wrongful death cases routinely account for the time value of money when weighing the nature, duration, and extent of a plaintiff's injury;
• Because the prejudgment interest amendment does not impinge upon the defendant's fundamental right to a jury trial, the amendment needs only satisfy a rational basis to pass constitutional muster; 
• Prejudgment interest is not duplicative of the jury's award. The jury is never told the prevailing interest rates. There is simply no mechanism for a jury to award the equivalent of interest as tort damages. The pattern jury instruction that tells the jury to consider the duration of a tort plaintiff's injury is not some cryptic allusion to calculating interest. Instead, it instructs the jury to consider whether the plaintiff's injury is permanent or temporary, and if temporary, for what duration;
• The defendant gets a discount to present cash value on future damages, a rationale that justifies prejudgment interest to a plaintiff;
• Even if the Act by its plain terms provides for prejudgment interest on future damages - and other jurisdictions are on both sides of the issue - what is illogical or imprudent is not unconstitutional; the Constitution does not prohibit legislatures from enacting stupid laws, and the language of the statute is clear so we have an obligation to enforce it; if the statute requires refinement, the General. Assembly can rewrite it;
• The prejudgment interest amendment does not "punish" defendants for delays in litigation and therefore does not violate due process; "The assessment of interest is neither a penalty or a bonus, but instead the preservation of the economic value of an award from diminution caused by delay."

SPECIAL LEGISLATION

• The prejudgment interest amendment is not "special legislation" conferred on personal injury and wrongful death plaintiffs to the exclusion of other tort victims; While the special legislation clause prohibits the General Assembly from conferring special benefits or privileges to a select group, personal injury, and wrongful death claims make up a significant portion of the case-types creating a backlog on the civil docket in Illinois courts. 
• The objective in enacting the prejudgment interest amendment is not only to recompense tort plaintiffs for the time value of money but to incentivize the settlement of claims and ensure a more complete recovery; promoting settlement and easing the burden on crowded court dockets are legitimate legislative goals. The legislature could quite reasonably focus its reform efforts on these cases to the exclusion of other tort cases. A legislature need not choose the most comprehensive reform and often does enact measures in a piecemeal fashion.
• Defendant's argument that the amendment discriminates against defendants joined more than one year after a plaintiff files a cause of action may be addressed separately by a reasonable trial court which could construe the prejudgment interest amendment such that the grace period is one year from the filing of the action as to those defendants.

SEPARATION OF POWERS

• The separation of powers is not violated by legislative intrusion into the judicial branch; the legislature, not the jury, decides the legal consequences of the jury's factual findings. Trial courts lack the discretion to impose prejudgment interest absent a statutory mandate.

THREE-READINGS REQUIREMENT

• The legislation does not violate the three-readings requirement because the enrolled bill doctrine "provides that once the Speaker of the Loss of Representatives and the President of the Senate certify that the procedural requirements for passing a bill have been met, a bill is conclusively presumed to have met all procedural requirements for passage" such that the certification precludes judicial review. The appellate court does not possess the authority to disregard the Illinois Supreme Court's Binding Precedent in this area. 
• The 1970 Constitutional Convention specifically contemplated the use of the enrolled bill doctrine to prevent the invalidation of legislation on technical or procedural grounds. The Convention determined that the legislature would place itself with respect to procedure. The prejudgment interest amendment's legislative history reflects that state representatives debated the bill before voting.

CLAIMED RETROACTIVE APPLICATION

• It is not unconstitutional to apply an amendment retroactively. Whether a change in law should retroactively apply depends upon legislative intent, and where the General Assembly has expressed that a change of law shall apply retroactively, the court will give effect to the law's temporal reach unless doing so would unconstitutionally interfere with vested rights. 
• Defendants have no vested right in a particular remedy or procedure, but the law is not retroactive in its application. Instead, there is a prospective application of the new interest rate from the effective date of the amendment.

FEDERAL EQUAL PROTECTION CLAUSE

• Defendant's argument invoking the equal protection clause of the federal constitution is forfeited for failure to develop the argument [apparently no citations to authorities].

The Act provides for 6% prejudgment interest per annum on all actions brought to recover damages for personal injury of wrongful death resulting from or occasioned by the conduct of any other person or entity, whether by negligence, willful and wanton misconduct, intentional conduct, or strict liability of the other person or entity, permitting the plaintiff to recover prejudgment interest on all damages, except punitive damages, sanctions, statutory attorney's fees and statutory costs outlined in the judgment. 

The judgment must be higher than the amount of the highest written settlement offer made by the defendant within 12 months of filing the action and not accepted by the plaintiff within 90 days after the date of the offer or if rejected by the plaintiff. However, prejudgment interest shall accrue for no longer than five (5) years.

As always, we recommend you discuss with counsel the effect of this opinion on your particular cases, including the issue of the effect of the decision on the Cook County cases as to which similar pending motions were stayed, and in those cases where your client was first added more than one year after the case was filed. As the court in Cotton suggested, a trial court [upon filing of a motion] may construe the statute to allow a full year [or at least a reasonable time] from the date a new party is added to make a qualifying written offer to avoid or reduce prejudgment interest.