Hiatt v. Western Plastics, Inc.
Citation2014 IL App (2d) 140178, 36 N.E.3d 852
Date Filed2014-12-29
Docket2-14-0178
Cited5 times
StatusPublished
Full Opinion (html_with_citations)
Illinois Official Reports
Appellate Court
Hiatt v. Western Plastics, Inc., 2014 IL App (2d) 140178
Appellate Court MICHAEL HIATT, Plaintiff-Appellant, v. WESTERN PLASTICS,
Caption INC., NATIONAL RUBBER STAMP COMPANY, INC.,
NATIONAL RUBBER MACHINE, TRY-R-ELECTRIC
COMPANY, CHINA NATIONAL RUBBER MACHINERY
CORPORATION, GENERAL BINDING CORPORATION,
AMERICAN C.N.C. MACHINE COMPANY, INC., and LEONARD
HOFKAMP, Defendants (Illinois Tool Works, Inc., Defendant-
Appellee).
District & No. Second District
Docket No. 2-14-0178
Filed December 29, 2014
Held In an action arising from plaintiffâs loss of his arms while cleaning an
(Note: This syllabus extruding machine wherein plaintiff sued his employer and several
constitutes no part of the other defendants related to the machine, all but one of which had been
opinion of the court but dismissed or had entered into settlement agreements with plaintiff, the
has been prepared by the trial court erred in entering summary judgment for the remaining
Reporter of Decisions defendant, which operated one of its divisions next door to plaintiffâs
for the convenience of employer and sold products produced by plaintiffâs employer based on
the reader.) the finding that it was not engaged in a joint venture with plaintiffâs
employer and owed no duty of care to plaintiff, since a genuine issue
of material fact existed as to whether plaintiffâs employer and the
remaining defendant were engaged in a joint venture; therefore, the
trial courtâs judgment was reversed and the cause was remanded for
further proceedings.
Decision Under Appeal from the Circuit Court of Du Page County, No. 11-L-306; the
Review Hon. Dorothy French Mallen, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Devon C. Bruce, of Powers, Rogers & Smith, P.C., of Chicago, for
Appeal appellant.
J. Kent Mathewson, Karen Kies DeGrand, and Timothy L. Hogan, all
of Donohue, Brown, Mathewson & Smyth LLC, of Chicago, for
appellee.
Panel JUSTICE ZENOFF delivered the judgment of the court, with opinion.
Justice Spence concurred in the judgment and opinion.
Justice Burke dissented, with opinion.
OPINION
¶1 Plaintiff, Michael Hiatt, was an employee of Western Plastics, Inc. (Western), which uses
extruding machines to produce plastic sheets. The machines heat plastic pellets into a putty
form and then push the material through metal rollers to create plastic sheets of desired
thicknesses. On October 15, 2007, while cleaning one machineâs spinning rollers, plaintiffâs
arms were crushed between the rollers and had to be amputated. Plaintiff sued Western and
other defendants, all but one of which either have been dismissed or have entered into
settlement agreements with plaintiff. The only remaining defendant, Illinois Tool Works, Inc.
(ITW), operated one of its divisions next door to Western and sold products that Western
produced. Plaintiff alleged that ITW was liable to him because it either (1) was engaged in a
joint venture with Western, (2) retained control over Western, giving rise to a duty of care, or
(3) had actual or constructive knowledge that the extruding machine was unreasonably
dangerous. The trial court entered summary judgment in ITWâs favor, finding that it was not
engaged in a joint venture with Western and owed no duty of care to plaintiff. For the
following reasons, we reverse and remand.
¶2 I. BACKGROUND
¶3 Count IV of plaintiffâs sixth amended complaint alleged as follows. ITW and Western
were engaged in a joint venture to manufacture and sell plastic products. They shared profits
and losses and exercised joint control and management of the manufacturing process, and
they both contributed money, resources, equipment, and employees to the venture. ITW
controlled the manner in which Western manufactured its products, including the pace and
speed of the extruding machines. ITW knew that the extruding machine that injured plaintiff
was unreasonably dangerous in that it lacked a proper emergency stopping mechanism and
other safety devices. ITW was negligent individually and as a joint venturer with Western, in
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that it allowed plaintiff to work on an unreasonably dangerous machine, failed to provide
adequate warnings and instructions, failed to provide adequate safety devices, and failed to
identify and correct safety hazards. ITWâs acts or omissions proximately caused plaintiffâs
injuries.
¶4 ITW moved for summary judgment on count IV, contending that there was no genuine
issue of material fact as to whether it was engaged in a joint venture with Western, retained
control over the manufacturing process, or knew that the extruding machine that injured
plaintiff was unreasonably dangerous. Rather than recite ITWâs and plaintiffâs arguments in
support of and in opposition to summary judgment, which in essence are the same arguments
they make on appeal, we summarize the deposition testimony and documentary evidence.
¶5 A. Don Edelsteinâs Deposition
¶6 Don Edelstein testified as follows. He had been part owner of Western since 1977, when
he and three other individuals started the company. Originally, Edelstein worked as a
machine operator at Western. In 1986 or 1987, his primary responsibility became machine
maintenance, which remained his responsibility at the time of plaintiffâs accident.
¶7 In 1999, Western built its third extruding machine, which was the machine that injured
plaintiff. The machine was a clone of Westernâs other extruding machines. Western
purchased the components for the machine from various entities, and Edelstein assembled the
components, hiring an electrician and a welder for some of the work. At Edelsteinâs
direction, the electrician, Leonard Hofkamp, installed an emergency stop cord on the
machine exactly as the stop cords were installed on Westernâs other machines. Edelstein
estimated that 95% of the plastic that Western produced on its third extruding machine was
for ITW. However, ITW played no role in the design or construction of the machine. Other
than plaintiffâs, no injuries had occurred on the machine.
¶8 ITW was Westernâs biggest customer. At the time of the accident, ITW accounted for
70% to 80% of Westernâs business. Although ITW was headquartered elsewhere, it had a
facility next door to Western, in the same building. ITW and Western were separated by a
wall and shared a loading dock. Edelstein believed that ITW moved into the building to
reduce shipping costs, because most of the material that it sold came from Western.
¶9 A written manufacturing agreement governed the relationship between Western and ITW.
Broadly speaking, Westernâs intent upon entering into the agreement was to sell more
products and increase profits. Western did not have written agreements with any of its other
customers.
¶ 10 ITW supplied to Western the plastic pellets used to produce ITWâs products. The pellets
used a proprietary formula that ITW owned. In addition, ITW supplied some of the pallets
used to ship its products and the labels to be placed on its products. The manufacturing
agreement contained a formula for setting the price at which Western would sell products to
ITW, based on the number of pounds of product manufactured. For customers other than
ITW, Western supplied the raw material and the pallets. The price of products for customers
other than ITW was based on the number of plastic sheets produced, not on weight.
¶ 11 Edelstein testified that ITW owned electronic monitoring devices that were installed on
two of Westernâs extruding machines. The devices measured the thickness of the plastic
sheets as they were produced. The devices were capable of controlling the speed of the
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machines. When an extruding machine was set to âmanual,â the machine operator controlled
the speed. When an extruding machine was set to âautomatic,â the monitoring device
controlled the speed. When Western manufactured material for ITW, the machines were set
to automatic. Although the monitoring devices were capable of controlling a machineâs
speed, ITW was unable to control the speed from its office. Instead, based on information
that ITW provided, Western had programmed tolerances into the monitoring devices. The
devices regulated each machineâs speed to ensure that it produced material within the
tolerances. For each roll of plastic produced, the monitoring devices also relayed the
tolerances to ITW, which received a printout of the information. A wire from the devices ran
through the wall into ITWâs office. ITW incurred the expense of purchasing, installing, and
maintaining the devices.
¶ 12 Upon further questioning, Edelstein clarified that there were two major components of
each extruding machineâthe portion âwhere the plastic is extrudedâ and the âdownstreamâ
portion, which contained the rollers that injured plaintiff. The monitoring devices were
installed on and controlled the speed of the downstream portion of the machines. The speed
of that portion affected the thickness of the plastic sheets being produced.
¶ 13 The monitoring device on the machine that injured plaintiff was not âactivatedâ at the
time of the accident, because the downstream portion of the machine had been separated
from the extruder portion and plaintiff was standing between the two sections, cleaning the
rollers on the downstream portion. When the two portions of the machine were separated, no
material could move through the machine, and the monitoring device could not control the
speed of the machine.
¶ 14 None of Westernâs other customers had monitoring devices installed on its machines like
ITW did. However, like ITW, Westernâs other customers provided specifications for the
thickness of the plastic sheets and rolls that they ordered.
¶ 15 Edelstein testified that Richard Pedersen worked as a âbrokerâ for ITW and would enter
Western on a daily basis to pick up completed orders. Pedersen did not have keys to Western.
In addition to picking up completed orders, Pedersen helped with scheduling ITWâs orders.
Pedersen would create a schedule based on the thickness of the materials to be produced. The
schedule ensured that Western did not âlose production,â as Western could produce products
with the same thickness at the same time. Other than Pedersen, ITW employees occasionally
came to Western for other reasons, for instance, if there was a quality issue that needed to be
addressed. This happened âmaybe a half a dozen times over the years,â possibly more.
¶ 16 B. Chris Bensonâs Deposition
¶ 17 Chris Benson testified as follows. He began working for ITW in 1986 in its Fastex
division, which was located in Des Plaines, Illinois. In 1996, the Formex product line became
part of the Fastex division. Formex is a flame-retardant polypropylene electrical insulation
that is used in various electrical components. In 2000 or 2001, the Formex line was split off
from the Fastex division and became a separate division of ITW. At that time, the Formex
division moved into the space next to Western in Addison, Illinois. Western manufactured
the Formex products.
¶ 18 Benson was responsible for, among other things, ordering raw material and issuing
purchase orders to Western. When Benson issued a purchase order to Western, he identified
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the products he was ordering by part number and specified a quantity. The manufacturing
agreement between ITW and Western contained the specifications for each product. The
specifications consisted of a desired thickness, the acceptable tolerances, and the acceptable
quality. Tolerances referred to the acceptable range above and below the specified thickness.
Quality was measured by counting the number of defects in a given roll of plastic sheet.
Purchase orders were issued to Western approximately twice per month.
¶ 19 Benson testified that, between 2001 and 2007, he entered Western â[m]aybe a couple
times a year.â He did not have a key to Western. He would go there if there was a question
about manufacturing or quality. For example, if Western wanted ITWâs approval for a certain
âsurface appearanceâ of a product, Benson would go to Western to view the product.
¶ 20 Benson testified that Pedersen was an independent salesperson who introduced ITW to
Western in approximately 1992. In 2000, Pedersen began working as an independent
contractor for ITW, handling shipping and quality control. In that role, Pedersen worked 40
hours per week. He had a desk and a phone in ITWâs office. His duties included delivering
ITWâs purchase orders to Western, helping Western determine a production schedule for
ITWâs orders, and picking up the finished products from Western using a forklift. He
transported the finished products to ITWâs warehouse, where they would be loaded onto
trucks and shipped to customers. When Pedersen did these tasks, he was acting on ITWâs
behalf.
¶ 21 When asked about which costs ITW was responsible for with respect to products that
Western manufactured for ITW, Benson testified that ITW purchased the raw material, the
labels, and approximately 10% of the pallets used to ship the finished products. ITW supplied
a portion of the pallets because they were of a size that Western did not have available. In
addition, on two or three occasions, ITW contributed funds toward refinishing the rollers on
the extruding machines used to produce ITWâs products. The refinished rollers ensured that
ITW products had a consistent thickness. On one occasion, ITW incurred the cost of new
rollers.
¶ 22 Benson testified that Western was not the only company manufacturing products for
ITWâs Formex division. A company called Film Tech produced a thin-gauge plastic for ITW
that Western was not capable of producing. However, between 2001 and 2007, Western
produced approximately 95% of the products that ITWâs Formex division sold.
¶ 23 Addressing the manufacturing agreement between ITW and Western, Benson testified
that it was entered into âto explain the way we would carry on our business dealings with
each other.â When asked how many times ITW had instructed Western to make changes to
the manufacturing process, as the agreement authorized it to do, Benson testified, âRarely, if
it all.â However, Benson testified that ITW âfrequentlyâ exercised its right under the
agreement to inspect the finished products at Western prior to receipt, which it did through
Pedersen. Benson explained that, if Pedersen observed a defect in a sheet of plastic coming
out of an extruding machine, Pedersen had âthe right to tell the operator something need[ed]
to be done.â It then fell within the operatorâs discretion to remediate the problem. Benson
estimated that this happened ârarely,â which meant â[m]aybe monthly.â
¶ 24 Benson testified that the monitoring devices were installed on Westernâs extruding
machines â[p]rimarily for data acquisition for quality control purposes.â Benson clarified that
there were two types of monitors. The monitors attached to the machines constantly
monitored the thickness of the plastic being manufactured. These monitors controlled the
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speed of each machine to ensure that the plastic was being produced at the proper thickness.
The monitor in ITWâs office, which was connected to the monitors on the machines, solely
acquired data. For each roll of plastic produced, the monitor in ITWâs office acquired the roll
number, the part number, the length of the roll, the thickness of the plastic, and the date and
time of production. No one monitored the data as it was received; it was stored for
record-keeping purposes. Explaining the benefit of the monitors, Benson testified that ITW
received a consistent product, which increased ITWâs sales and which, by virtue of ITWâs
agreement with Western, increased Westernâs sales.
¶ 25 C. Lawrence Lezonâs Deposition
¶ 26 Lawrence Lezon testified that he worked for ITW from 1986 to 2006 and was the general
manager of the Formex division. The Formex division moved into the space next to Western
in 1999 or 2000 because it needed an office and a warehouse. The advantage of locating next
door to Western was that ITW did not have to truck the finished products to a different
location.
¶ 27 Lezon testified that Pedersen was not an ITW employee but that he had an office in
ITWâs facility. Pedersen acted as a âone-person shipping departmentâ for ITW. He also acted
âas the go-betweenâ for ITW and Western and delivered orders to Western.
¶ 28 Lezon recalled that Pedersen introduced him to Ray Howard at Western prior to 1993.
Lezon knew Pedersen because Pedersen had worked for one of ITWâs suppliers. However,
that supplier was not producing ITWâs products to its specifications. Pedersen left that
supplier and became an independent sales representative. Pedersen told Lezon that he
thought Western was capable of manufacturing ITWâs products, and he and Lezon toured
Westernâs facility. In 1993, Lezon and Howard negotiated the manufacturing agreement,
using attorneys. Lezon would go to Western âmaybe once a month,â usually for
âsmoozing [sic]â with Howard.
¶ 29 Lezon testified that ITW requested that the monitoring devices be installed on Westernâs
machines because ITW was receiving complaints from its customers regarding thickness
variations within each roll of plastic. ITW had customers around the world, so it was
expensive for orders to be returned. The devices ensured that the products had a consistent
thickness.
¶ 30 D. Pedersenâs Deposition
¶ 31 Pedersen testified that he held a variety of positions in the plastics industry prior to 1989,
at which time he became an independent salesperson. His company was called Quest Sales
and Marketing, and Pedersen was its only employee. Through his company, Pedersen
matched up customers with plastics manufacturers. Western was the only customer Pedersen
and his company had remaining. He never had a written agreement with Western, but he did
receive a sales commission from Western based on the number of pounds of product
produced.
¶ 32 Pedersen had been familiar with ITW since 1988. In 1990 or 1991, he began looking for a
custom extruder capable of producing material for ITW. He met Howard at Western and then
introduced him to ITW. Once Western began manufacturing ITWâs products, Pedersenâs role
was âthe representative go-between between the two companies.â He would communicate
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ITWâs production needs to Western, get âthose to Western *** so that they could set up the
production,â and then transport the finished products back to ITW. He also performed quality
control by checking samples from each roll of plastic for proper thickness and for
imperfections. He shipped the finished products to customers from ITWâs facility.
¶ 33 Pedersen had acted as the âgo-betweenâ since 1991, and ITW paid him as an independent
contractor. Pedersen had an office at ITW, with a computer and a phone. He did not pay rent
or a phone bill. He was present at ITW five days per week from 7 a.m. to 3:30 p.m.
¶ 34 Pedersen was in Westernâs facility on a daily basis. He did not have a key and usually
would enter through the loading dock that ITW and Western shared. When he found
imperfections in a finished product, he would voice his concerns to someone at Western, who
would then remediate the problem. Depending on what the problem was, Western might have
to stop an extruding machine or adjust the machine. However, Western would determine
what was necessary to correct the problem. Pedersen would not direct Western to shut down
a machine. In the past, Pedersen had entered specifications into ITWâs monitoring devices.
He did so only if a Western employee âhad problemsâ with a device.
¶ 35 Pedersen had witnessed Westernâs employees cleaning the extruding machines. He knew
that they would clean the rollers with a solvent while the rollers were slowly turning.
Pedersen was not familiar enough with the machines to know what safety devices were
available to stop a machine if someone was injured during the cleaning process. He stayed
away from the machines as much as he could because they scared him. During his time
working in the plastics industry, he had âseen too many people get hurt.â
¶ 36 Pedersen testified that, on a number of occasions over the years, ITW had agreed to incur
the cost of overtime hours for Western workers when ITW had large orders that needed to be
completed. In those situations, Western would send ITW an invoice for the extra cost.
¶ 37 E. Lauren Lavalleâs Deposition
¶ 38 Lauren Lavalle testified that she had worked as a secretary at Western since 1980. Her
responsibilities included accounts receivable, accounts payable, and office duties. She saw
Pedersen on a daily basis, when he brought her ITWâs orders. When he delivered orders, he
would give her labels in the order in which he wanted the products produced. Lavelle would
then create a production sheet, which was given to the machine operators. The production
sheet allowed the operators to produce the products without having to make time-consuming
changes to the machines. Lavalle had seen Benson approximately 10 times in 20 years. Other
than ITW, which was âby farâ Westernâs largest customer, Western had approximately 8 to
10 customers.
¶ 39 F. Robert Cobbâs Deposition
¶ 40 Robert Cobb testified that he had been a machine operator at Western since 1985. He saw
Benson only â[o]nce in a great whileâ but he saw Pedersen every day. Pedersen was âthere
just like another employee.â Pedersen placed orders for ITW and gave the orders to Lavalle,
not directly to Cobb. The orders sometimes changed two or three times per day, and Cobb
would have to adjust the size or the gauge of the plastic he was producing. When he changed
the product he was producing, he would select the code for that product in ITWâs monitor
attached to the machine. No one from ITW operated the monitors.
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¶ 41 Cobb testified that the Formex product left buildup on the rollers that had to be cleaned
off on a daily basis. To clean the rollers, Cobb would use a rag to wipe them down while they
were spinning. When product was not running through the machine, Cobb would slow down
the rollers and reverse their direction before cleaning them. When product was running
through the machine, Cobb would clean them from the opposite side. Other than plaintiffâs,
Cobb was not aware of any serious workplace injuries at Western. Cobb had not received any
training when he started working for Western, because he had been fully trained at his prior
job, which required him to operate the same kind of extruding machine.
¶ 42 G. Timothy Smithâs Deposition
¶ 43 Timothy Smith testified that he had worked as a machine operator at Western since 1983.
Harold Howard, who was Smithâs cousin, trained Smith and the other employees how to
operate and clean the machines. There were no written instructions or manuals. On Monday
mornings, the machine operators had to deep clean the rollers, which took about 10 minutes.
Plaintiff was cleaning the rollers on a Monday morning when he was injured.
¶ 44 Approximately one week before the accident, Smith observed plaintiff cleaning the
rollers while they âwere running super fastâ in the direction âto pull you in.â Smith âyelled at
him,â slowed down the rollers, and put them in reverse. He told plaintiff that he would get
plaintiff fired if he cleaned the rollers that way again. On the morning of the accident, after
plaintiffâs arms had been pulled into the machine, Smith saw that the speed dial was set on
790, which was âvery fast.â The speed dial should have been set on 200 or 300, which was
âvery slow.â Smith had never observed anyone else cleaning the rollers while they were set
at such a high speed.
¶ 45 Smith testified that, each time a machine operator started a new roll of plastic, he would
push a button on the ITW monitoring device. When the roll was finished, the operator pushed
the button again, and the device would print out a report indicating the length and thickness
of the roll. Smith explained that the device controlled the speed of the rollers only when it
was turned on and when material was running through the machine. Because no material was
running through the machine when plaintiff was injured, the monitoring device could not
have controlled the speed of the rollers.
¶ 46 H. Harold Howardâs Deposition
¶ 47 Harold Howard testified that he had worked at Western since 1978 and was its production
manager, responsible for quality, scheduling, and supervising the machine operators. He
alone trained plaintiff on how to clean the rollers. He instructed plaintiff to slow the rollers
down to âtwo or three or until their [sic] barely moving.â However, he did not instruct
plaintiff to reverse the spin of the rollers prior to cleaning them. Harold trained all of the
employees in the same manner. Ray Howard, who was Haroldâs uncle, trained Harold on
how to clean the machines.
¶ 48 I. Plaintiffâs Deposition
¶ 49 Plaintiff testified that he worked at Western from 2003 or 2004 until the date of his
accident, except for being laid off for six months due to a lack of business. He described his
position as âhelperâ or âlaborer.â He would do the tasks Harold told him to do, such as filling
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the hopper with plastic pellets, cleaning the rollers, or taking finished rolls off of the
machine. Most of the training he received was from Harold, including on how to clean the
rollers. Some instruction came from Ray Howard. However, there was no written instruction
at all. Harold instructed him to stand in front of the rollers and to wipe back and forth with a
rag dipped in solvent while the rollers were spinning in a forward direction. No one
instructed him regarding the speed at which the rollers should be spinning or told him to slow
down the rollers.
¶ 50 Plaintiff testified that he was injured on machine number one, which produced
exclusively ITWâs products. The rollers on machine number one had to be cleaned four to
five times per eight-hour shift, because the Formex product would build up on the rollers.
The rollers on machine number two, which produced a different plastic, did not necessarily
have to be cleaned during each shift, because the product did not build up. When his accident
occurred, at approximately 7:45 a.m. on a Monday, plaintiff was cleaning the rollers on
machine number one before it had started producing any material. Plaintiff did not adjust the
speed dial prior to cleaning the machine. He would touch the speed dial only when someone
instructed him to do so.
¶ 51 J. Manufacturing Agreement
¶ 52 The manufacturing agreement between ITW and Western was dated March 5, 1993, and
was signed by Lezon of ITW and Ray Howard of Western. Western agreed to accept and fill
orders from ITW for flame-retardant thermoplastic sheets and to fill those orders pursuant to
ITWâs specifications and quality control standards. The products and their specifications
were listed in an exhibit attached to the agreement. Western agreed to have the capacity to
produce a maximum of 800,000 pounds of sheet products annually. Western further agreed to
sell the products to ITW at a price calculated pursuant to a formula designated in the
agreement. The agreement required ITW to provide Western with a âshipment forecastâ no
later than the fifteenth of each month, to allow Western to plan production levels.
¶ 53 The agreement prohibited Western from selling ITWâs products to anyone other than
ITW. Western also had to return to ITW any scraps generated in the manufacturing process
or dispose of them per ITWâs instructions. ITW could require Westernâs employees to sign
confidentiality agreements with respect to ITWâs products.
¶ 54 The agreement provided, âFor purposes of quality control Western agrees that changes to
the manufacturing process must receive prior approval of ITW.â It further provided that
â[s]ubstitution of parts, raw materials, process equipment, or other items must be approved
by ITW.â ITW also had the authority to inspect the finished products at Western at any
reasonable time. Western was required to âcooperate with ITWâs designated representative(s)
in performing such inspections and [to] make any improvements or changes reasonably
requested by the representative(s).â Any requested changes would be at ITWâs expense.
¶ 55 A section of the agreement entitled âCost Improvementâ provided that Western and ITW
agreed âto work together to implement cost improvements in processes (excluding the cost of
raw material) and overhead.â ITW retained the right to approve any improvement âdirectly
affecting the Product.â The parties agreed to share equally âthe benefits of cost
improvementsâ and provided a specific formula:
âWestern and ITW agree to share the benefits of cost improvements as follows:
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Western initiated:
50% to Western/50% to ITW
ITW initiated:
50% to Western/50% to ITW.â
The âTechnology, Designs, Confidentialityâ section provided that ITW would âwork with
Western to develop new designs or Productsâ and may âaccept for use *** designs which are
initiated by Western.â Western agreed that it could not use the resulting designs âfor any
purpose other than manufacture of Products for ITW.â
¶ 56 A section entitled âIndependent Contractorâ provided that neither party was âthe agent of
the other for any purpose whatsoever.â In addition, it prohibited each party from binding or
attempting to bind the other party to any contract or obligation with a third party. It provided
that â[a]ll sales under this Agreement are and shall be between a principal seller and a
principal buyer.â
¶ 57 The agreement also contained an automatic renewal provision. It provided that the
agreement would renew automatically for successive periods of one year, unless âwritten
notice to the contraryâ was received at least 60 days prior to the completion of the current
term.
¶ 58 K. Miscellaneous Correspondence
¶ 59 In opposition to ITWâs summary judgment motion, plaintiff submitted a variety of
correspondence between ITW and Western. In a letter dated September 18, 1992, Benson
wrote to Ray Howard that he was âpleasedâ that Western had agreed to âattempt a trial runâ
of ITWâs products. Benson wrote that ITW âlook[ed] forward to building a mutually
beneficial relationship with Western.â On May 23, 1994, which preceded ITWâs move into
the space next to Western, Benson wrote to Howard that he was âpleased to acknowledge
Western Plastics as a warehousing facilityâ for âstorage of various finished goods.â He wrote
that âthis type of arrangement helps enable Fastex to function with Western Plastics as a true
extension of our business.â In correspondence dated November 1, 1994, Benson wrote to
Howard about upcoming trial runs of new products. He wrote that â[w]e are sure there will
be mutual benefits for all of us from this type of activity.â On February 15, 1995, Benson
wrote to Howard regarding the tolerances for various Formex products, and stated that the
results of Westernâs efforts âpleased [ITWâs] customers assuring continued growth for both
Fastex and Western.â
¶ 60 Some of the letters pertained to sharing the cost of the rollers. In a letter dated January
26, 1995, Benson wrote to Howard to authorize Western to âhave one casting roll reworkedâ
and to charge ITW using a âsurchargeâ of $0.25 per pound on the next 12,000 pounds of
material produced. On June 18, 1997, Benson wrote to Howard that ITW agreed to pay
$18,000 for the construction of two new rollers to be used for Formex products, while
Western agreed to pay for all maintenance of the rollers. Benson acknowledged that Western
would benefit by saving âa great deal of time on set-upsâ and by âsubstantially reduc[ing] the
number of roll changes required.â He wrote that ITW would benefit through âimproved
gauge controlâ and âmore economic use of raw material.â He further wrote that â[t]hese
benefits will be applied in consideration to cost savings for both parties according to section
15 of the contract,â the âCost Improvementâ section.
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¶ 61 L. Trial Courtâs Ruling
¶ 62 On January 8, 2014, the trial court granted ITWâs motion for summary judgment. The
court found that there were no genuine issues of material fact as to at least three of the
elements required for a joint venture, meaning that ITW was entitled to judgment as a matter
of law on that issue. The court found that the âeasiest element to analyze [was] whether there
was a sharing of profit and losses.â To that end, it found that there was no evidence that ITW
and Western âgot together at the end of [the] fiscal year *** and did a joint accounting and
divided *** the profits or losses.â It further found that âcost improvementsâ impacted profits
and losses but were not profits or losses themselves. The court also found that there was no
agreement to carry on a single enterprise. The court described the manufacturing agreement
as a âtypicalâ one between a manufacturer and a buyer. It also found that ITWâs control over
production was limited to âthe specifications.â The court found that there was evidence of a
community of interest between ITW and Western, but that this was insufficient to give rise to
a joint venture.
¶ 63 Next, the court found that there was no genuine issue of material fact as to the issue of
retained control. The court found that ITW retained no control over the manner or method in
which its products were produced, as long as its specifications were met. In addition, ITW
retained no control over safety or how the machines were cleaned.
¶ 64 Addressing the issue of ITWâs knowledge that the extruding machine was unreasonably
dangerous, the court ruled that, even if it had such knowledge, it did not owe a duty of care to
plaintiff. The court found that there was no evidence that ITW had âa right or authorityâ to
instruct Western on how to train its employees or clean the machines.
¶ 65 Finally, the court found that, even if ITW were engaged in a joint venture with Western,
the exclusive-remedy provision of the Workersâ Compensation Act (820 ILCS 305/5(a)
(West 2012)) would prohibit recovery against ITW as Westernâs co-venturer.
¶ 66 II. ANALYSIS
¶ 67 On appeal, plaintiff argues that three genuine issues of material fact made summary
judgment in ITWâs favor improper: (1) whether ITW and Western were engaged in a joint
venture, (2) whether ITW retained control over Western, giving rise to a duty of care to
plaintiff, and (3) whether ITWâs actual or constructive knowledge that the extruding machine
was unreasonably dangerous gave rise to a duty to plaintiff. He also contends that the court
erred in sua sponte ruling that, if ITW were engaged in a joint venture with Western, the
exclusive remedy provision of the Workersâ Compensation Act would immunize ITW from
liability.
¶ 68 Summary judgment is appropriate where the pleadings, affidavits, depositions, and
admissions on file, when viewed in the light most favorable to the nonmoving party, show
that there is no genuine issue of material fact and that the moving party is entitled to
judgment as a matter of law. Thompson v. Gordon, 241 Ill. 2d 428, 438 (2011). âSummary
judgment is a drastic means of resolving litigation and should be allowed only when the right
of the moving party is clear and free from doubt.â (Internal quotation marks omitted.)
Sedlacek v. Belmonte Properties, LLC, 2014 IL App (2d) 130969, ¶ 12. We review de novo
an order granting summary judgment. Thompson, 241 Ill. 2d at 438.
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¶ 69 A. Joint Venture
¶ 70 Plaintiff argues that there is a genuine issue of material fact as to whether ITW and
Western were engaged in a joint venture. He argues that through the manufacturing
agreement and their conduct the parties expressed their intent to carry on an enterprise. He
contends that ITW and Western shared profits and losses, as the goal of the joint venture was
to increase the partiesâ profits, and that the parties shared the costs of the manufacturing
process. He further argues that there was a community of interest, as reflected in ITWâs
contributions of money, equipment, effort, and skill to the enterprise. Finally, plaintiff
argues, ITW and Western both enjoyed the right to control and manage the operation, as
evidenced by the agreement and their conduct.
¶ 71 ITW responds that the manufacturing agreement established the partiesâ relationship as
one of buyer and seller and that it would be improper to infer any contrary intent from their
conduct. ITW further argues that it did not share profits and losses with Western; rather, both
parties independently profited from their contractual relationship, and the sharing of costs is
not synonymous with the sharing of losses. Regarding the right to control and manage the
manufacturing operation, ITW argues that requiring that its product specifications be met is
different from controlling and managing the production process.
¶ 72 A joint venture is an association of two or more persons to carry out a single enterprise
for profit. Fitchie v. Yurko, 212 Ill. App. 3d 216, 226 (1991). Similar to partners in a
partnership, members of a joint venture are vicariously liable for fellow venturersâ negligent
acts committed during the course of the enterprise. Barton v. Evanston Hospital, 159 Ill.
App. 3d 970, 973(1987); Stone v. Guthrie,14 Ill. App. 2d 137, 147
(1957). Ordinarily, the
existence of a joint venture is a question of fact for the trier of fact. OâBrien v. Cacciatore,
227 Ill. App. 3d 836, 843 (1992).
¶ 73 No formal agreement is necessary to form a joint venture, which can be inferred from the
partiesâ conduct and the facts and circumstances of a given case. Electrical Contractors, Inc.
v. Goldberg & OâBrien Electric Co., 29 Ill. App. 3d 819, 822 (1975). A joint venture is a
creation of contract law (Public Electric Construction Co. v. Hi-Way Electric Co., 62 Ill.
App. 3d 528, 531 (1978)), and whether one exists is a question of the partiesâ intent. Fitchie,
212 Ill. App. 3d at 227. In evaluating that intent, courts look to the following elements: (1) an
express or implied agreement to carry on an enterprise; (2) a demonstration of intent to be
joint venturers; (3) a community of interest, as reflected in the contribution of property,
money, effort, skill, or knowledge; (4) a measure of joint control and management of the
enterprise; and (5) sharing of profits and losses. Fitchie, 212 Ill. App. 3d at 227. In the
absence of any one of these elements, no joint venture exists. OâBrien, 227 Ill. App. 3d at
843.
¶ 74 1. Agreement to Carry on an Enterprise and Demonstration of Intent to be Joint Venturers
¶ 75 Plaintiff contends that the manufacturing agreement between ITW and Western is an
agreement to carry on a single enterprise producing plastic sheets. He maintains that, despite
the agreementâs âIndependent Contractorâ provision, the agreement is not a simple contract
between a buyer and a seller. He argues that the agreementâs unique provisions and the
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partiesâ conduct create a genuine issue of material fact as to whether ITW and Western
agreed to carry on an enterprise and demonstrated an intent to be joint venturers.
¶ 76 ITW responds that the agreementâs âIndependent Contractorâ provision is controlling.
ITW maintains that, because a joint venture is a creature of contract law, it would be error to
interpret the partiesâ agreement in a manner contrary to one of its unambiguous provisions. In
other words, ITW argues that, because it agreed with Western that their relationship was one
between a principal buyer and a principal seller, a trier of fact could not infer that they agreed
to carry on an enterprise or demonstrated an intent to be joint venturers.
¶ 77 âCourts look to the substance and not to the form to determine whether there is a joint
venture with the most important element being the intention of the parties.â Petry v. Chicago
Title & Trust Co., 51 Ill. App. 3d 1053, 1057 (1977). âA joint venture is not a status created
or imposed by law, but is a relationship voluntarily assumed and arising wholly ex contractu;
the relationship is a matter of intent as between the parties.â Public Electric Construction
Co., 62 Ill. App. 3d at 531. Courts determine the partiesâ intent âin accordance with the
ordinary rules governing the interpretation and construction of contracts.â Carroll v.
Caldwell, 12 Ill. 2d 487, 497 (1957). âA joint venture agreement need not expressly state that
such was intended ***.â United Nuclear Corp. v. Energy Conversion Devices, Inc., 110 Ill.
App. 3d 88, 110 (1982).
¶ 78 In Public Electric Construction Co., on which ITW relies, the plaintiff and the defendant
orally agreed to perform electrical work together on a construction project. They agreed that
the plaintiff would provide labor, the defendant would provide material, and the parties
would share equally the profits or losses. After work on the project began, the parties reduced
their agreement to writing, designating the defendant as a subcontractor and the plaintiff as a
sub-subcontractor. The agreement provided: â âIt is understood and agreed by and between
the parties that this Agreement is not contemplated to form any association, partnership or
joint venture agreement between the parties hereto. The parties will continue to be
subcontractor and sub-subcontractor, respectively.â â Public Electric Construction Co., 62 Ill.
App. 3d at 530. Following a bench trial, the trial court found that no joint venture existed
between the parties. Public Electric Construction Co., 62 Ill. App. 3d at 529-31.
¶ 79 The appellate court affirmed, reasoning that the record was clear that the parties did not
intend to enter into a joint venture. The court stated that âthe contract as executed explicitly
reject[ed] the existence of any joint venture.â Public Electric Construction Co., 62 Ill. App.
3d at 531. The court further reasoned that, because the partiesâ intent could be âeasily
ascertainedâ from the contract language, no further contract construction was necessary.
Public Electric Construction Co., 62 Ill. App. 3d at 531-32.
¶ 80 Here, the partiesâ intent is not so easily ascertained from the manufacturing agreement.
The âIndependent Contractorâ provision states that ITW and Western agree that neither is the
agent of the other. According to ITW, this suggests an intent not to be joint venturers,
because, like partners in a partnership, co-venturers in a joint venture are agents of each
other. Ioerger v. Halverson Construction Co., 232 Ill. 2d 196, 202 (2008). However, unlike
the agreement in Public Electric Construction Co., the agreement here does not explicitly
state that the parties are not engaged in a joint venture. This is critical, because âthe
declaration of the parties is not controlling where the conduct of the parties demonstrates the
existence of an agency relationship.â Oliveira-Brooks v. Re/Max International, Inc., 372 Ill.
App. 3d 127, 134 (2007). In other words, even if two parties expressly disclaim an agency
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relationship, a trier of fact nevertheless may find that one exists, based on the partiesâ
conduct. Daniels v. Corrigan, 382 Ill. App. 3d 66, 75 (2008). Therefore, contrary to ITWâs
argument, the agreementâs âIndependent Contractorâ provision is not determinative of
whether a joint venture existed.
¶ 81 Additionally, the agreement contains a number of other provisions that, when viewed in
the light most favorable to plaintiff, could evince an intent to carry on an enterprise and to be
joint venturers. Significantly, the agreement provided that ITW and Western would work
together to design new products and to improve the production process. The âCost
Improvementâ section provided that Western and ITW agreed to âwork together to
implement cost improvements in processes *** and overheadâ and to share equally the
benefits of those cost improvements. Similarly, the âTechnology, Designs, Confidentialityâ
section provided that ITW would âwork with Western to develop new designs or Productsâ
and may âaccept for use *** designs which are initiated by Western.â Western agreed that it
could not use the resulting designs âfor any purpose other than manufacture of Products for
ITW.â These provisions contemplated ITW and Western working together to achieve
improvements in the manufacturing process and in product designs. Based on these
provisions, a trier of fact could conclude that the parties intended not a simple buyer-seller
arrangement, but a joint venture, the goal of which was to develop an efficient and profitable
manufacturing operation.
¶ 82 Similarly, pursuant to the âInspections and Warrantyâ section of the agreement, ITW
retained the right to approve all changes to the manufacturing process, including substitution
of parts, raw materials, process equipment, âor other items.â ITW also had the right to
inspect the finished products prior to receipt, âat any reasonable time,â and Western was
required to make âany improvements or changesâ that ITW reasonably requested as the result
of its inspections. Viewed in the light most favorable to plaintiff, these provisions at least
suggest an intent to carry on a jointly controlled manufacturing enterprise.
¶ 83 Furthermore, the relationship outlined in the manufacturing agreement was such that
neither party could benefit from the arrangement at the expense of the other. Western agreed
not to âmanufacture, process for or sell to any purchasers other than ITW items similar in
specification or designâ to the products it manufactured for ITW. In addition, the price at
which Western sold the products to ITW was fixed according to a formula outlined in the
agreement. Any cost improvements achieved in processes or overhead had to be shared
equally between the parties. Thus, Western had no ability to increase its profit at ITWâs
expense. Rather, Western had to sell all of the Formex products it produced to ITW at a
predetermined price, and it could not reduce its costs without sharing the benefits of those
cost improvements with ITW. Again, a trier of fact could conclude that ITW and Western did
not intend an ordinary buyer-seller relationship.
¶ 84 Finally, the agreement contemplated a long-term relationship that, when viewed in light
of the agreementâs other provisions, at least suggests the existence of a joint manufacturing
enterprise. The agreement provided that it would automatically renew each year, except upon
60 daysâ written notice to the contrary. It also provided that Western agreed to manufacture
and sell products to ITW in the quantities and pursuant to the schedule âset forth in a yearly
blanket purchase order from ITW.â The agreement also required that Western maintain the
capacity to produce 800,000 pounds of sheet products annually.
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¶ 85 Not only do the unique provisions of the manufacturing agreement create a genuine issue
of material fact as to the partiesâ intent to carry on an enterprise and to be joint venturers, but
also the partiesâ conduct subsequent to the execution of the agreement creates an issue of fact
on this issue. Among that conduct was (1) Bensonâs May 23, 1994, letter to Ray Howard
acknowledging Western as a âwarehousing facilityâ for ITWâs finished goods and noting that
âthis type of arrangement helps enable Fastex to function with Western Plastics as a true
extension of our businessâ; (2) ITWâs installation of the electronic monitoring devices on
Westernâs extruding machines; (3) ITWâs purchase of new rollers for one of Westernâs
extruding machines; and (4) ITWâs payment for the overtime hours of Western employees
when large orders needed to be filled and overtime work was required. Although none of this
evidence is conclusive of the partiesâ intent to carry on an enterprise or to be joint venturers,
when viewed in the light most favorable to plaintiff it creates a genuine issue of material fact
as to these issues.
¶ 86 2. Community of Interest
¶ 87 The trial court found that there was a genuine issue of material fact as to whether ITW
and Western shared a community of interest, and we agree. A community of interest is
established when the parties have both contributed property, finances, effort, skill, or
knowledge to the joint venture. Fitchie, 212 Ill. App. 3d at 227. In Fitchie, a community of
interest was found where one party purchased lottery tickets and two others expended their
time and energy scratching the tickets. Fitchie, 212 Ill. App. 3d at 227.
¶ 88 Here, there is ample evidence that both ITW and Western made contributions to the
manufacturing operation. The evidence revealed that ITW supplied the raw material plastic
pellets, 10% of the shipping pallets, and the product labels. It also contributed funds toward
the purchase and refurbishing of the rollers. Perhaps ITWâs most significant contribution was
the monitoring devices, which ITW owned and incurred the costs of purchasing, installing,
and maintaining. The devices were integral parts of Westernâs extruding machines,
controlling the speed of the rollers whenever the machines were producing ITWâs products.
Western contributed the extruding machines and the labor to operate the machines.
¶ 89 3. Joint Control and Management
¶ 90 The trial court found that the element of shared control and management was not present,
because any control that ITW exerted was related to ensuring that its product specifications
were met. Although we agree with the trial court that ITWâs focus at least in part was its
product specifications, we nevertheless believe that there is a genuine issue of material fact
as to whether ITW âdirectedâ or âgovernedâ Westernâs conduct in achieving those
specifications. See Herst v. Chark, 219 Ill. App. 3d 690, 696 (1991) (the element of shared
control requires only âsome right by the parties to direct and govern the conduct of each
other in connection with the joint ventureâ); see also Ambuul v. Swanson, 162 Ill. App. 3d
1065, 1069 (1987) (reasoning that a joint venture does not require a co-venturerâs
participation in âthe day-to-day management of the enterpriseâ). Moreover, ITWâs focus in
directing and governing Westernâs conduct was not only achieving its product specifications,
but also achieving greater efficiency and cost savings.
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¶ 91 Much of the evidence relevant to the issue of joint control revolved around Pedersen.
Although not an employee of either ITW or Western, Pedersen acted as âgo-betweenâ for the
two companies, performed a variety of tasks, and received compensation from both
companies. ITW paid Pedersen as an independent contractor, while Western paid him a sales
commission. Perhaps most significantly, Pedersen, while acting as ITWâs representative,
assisted in the scheduling of Westernâs production. This reduced the number of
time-consuming adjustments to the extruding machines, resulting in efficiency that benefited
both ITW and Western. Cobb testified that the production schedule would sometimes change
two or three times per day and that Pedersen was âthere just like another employee.â A trier
of fact could conclude that ITW, through Pedersen, exercised control over the manufacturing
operation with the aim of making it more efficient and profitable for both ITW and Western.
¶ 92 Furthermore, as discussed above, the manufacturing agreement gave ITW the right to
inspect the finished products prior to receipt, âat any reasonable time.â Benson testified that
ITW âfrequentlyâ exercised this right through Pedersen. According to Benson, Pedersen had
âthe right to tell the operator something need[ed] to be done.â Pedersen testified that he did
not direct Western on how to fix the defects he located, but he also testified that Western
would remediate any problem he brought to its attention. Indeed, the manufacturing
agreement required Western to make âany improvements or changesâ that ITW reasonably
requested as the result of its inspections. This is further evidence of the control that ITW
exercised.
¶ 93 In addition, the electronic monitoring devices constitute evidence, at least to some
degree, of ITWâs control or management of the manufacturing operation. Although the
deposition testimony indicated that Western controlled whether the monitoring devices were
turned on or off, the testimony further indicated that the devices were turned on whenever the
extruding machines were producing ITWâs products. When turned on, the devices controlled
the speed of the rollers, using preprogrammed specifications for ITWâs products. Pedersen
testified that he had at times entered specifications into the devices when Western âhad
problemsâ with them. At a minimum, that ITW owned these devices suggests that it was so
deeply involved in the manufacturing operation that Western was not free to fill ITWâs
orders in any manner it saw fit. Rather, by purchasing, installing, and maintaining the
devices, ITW made it such that Western could not produce ITWâs products completely
independently of ITW. Westernâs production became dependent upon an integral component
that ITW contributed, owned, and maintained.
¶ 94 4. Shared Profits and Losses
¶ 95 The trial court found that the element of shared profits and losses was the âeasiest
elementâ to analyze. Most significant in the trial courtâs view was that there was no evidence
that ITW and Western âgot together at the end of [the] fiscal year *** and did a joint
accounting and divided *** the profits or losses.â Although we agree with the trial court that
there was no evidence of joint accounting, we nevertheless conclude that there is a genuine
issue of material fact as to whether the parties shared profits and losses.
¶ 96 Significantly, the parties have not cited, and our research has not uncovered, any Illinois
case holding that, for the shared-profits element of a joint venture to be established, the
parties must engage in joint accounting or âpoolâ their profits and losses prior to dividing
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them. Rather, Illinois case law indicates that, as long as the parties share in the same revenue
stream, the shared-profits element may be established. See Herst, 219 Ill. App. 3d at 695-96.
¶ 97 In Herst, the plaintiff and the defendant entered into an oral agreement to engage in the
commercial debt collection business. The plaintiff was to sell the services to clients, and the
defendant was to perform the debt collection. Herst, 219 Ill. App. 3d at 694-95. When the
plaintiff sold the services to a client, the client would pay a refundable retainer deposit.
Herst, 219 Ill. App. 3d at 694. The client then received a credit equal to 20% of the deposit
toward the collection fees earned by the defendant when he fulfilled the services. Herst, 219
Ill. App. 3d at 694-95. The trial court found that the parties were engaged in a joint venture,
and the appellate court affirmed. Herst, 219 Ill. App. 3d at 692-93.
¶ 98 Addressing the shared-profits element, the appellate court reasoned that the parties agreed
to âdivide the business along two function lines, marketing and fulfillment.â Herst, 219 Ill.
App. 3d at 695. The parties also divided the revenues and expenses along those same
functional lines. Herst, 219 Ill. App. 3d at 695. Although the plaintiff did not share in the
profits and losses of the defendantâs business as a whole, âhe nevertheless shared in that part
of the profits and losses as between the parties with respect to particular clients serviced
through the refundable retainer program set up by [the plaintiff].â Herst, 219 Ill. App. 3d at
695-96. The court concluded that the evidence was sufficient to establish that the parties
were engaged in a joint venture, rather than âa principal/agent sales business.â Herst, 219 Ill.
App. 3d at 696.
¶ 99 Here, a trier of fact could conclude that, similar to the parties to the debt collection
arrangement in Herst, the parties divided the manufacturing operation along functional lines
and divided the revenues and expenses of the operation along those same lines. ITW owned
the proprietary Formex formula and provided the raw material plastic pellets, 10% of the
shipping pallets, and the product labels. Western owned the extruding machines and provided
the labor and the remainder of the shipping pallets. Westernâs function was to run ITWâs raw
material through its extruding machines, using the monitoring devices that ITW contributed.
Western then received a predetermined price for the finished products, based upon the
number of pounds of product it produced. ITWâs function was to perform quality control and
to sell the finished products to customers. If ITWâs sales volume increased or decreased,
Westernâs revenue increased or decreased in the same proportion, since the revenue it
received was based on the predetermined formula contained in the manufacturing agreement.
¶ 100 Further supporting a conclusion that the parties may have shared profits and losses is the
consideration, already discussed above, that the terms of the manufacturing agreement made
it such that neither party could profit at the expense of the other. Because Western was not
free to manufacture, process, or sell the Formex plastic sheet products to anyone other than
ITW, and because the price at which Western sold the products to ITW was calculated
pursuant to a predetermined formula, Western could not increase its profits at ITWâs
expense. Instead, Western received a predetermined price, based on the formula in the
agreement, for all of the products it manufactured for ITW. If Western sought to increase its
profits by implementing âcost improvements,â it had to share equally with ITW the benefits
of those improvements. As a result, the parties were both interested in making the
manufacturing operation more efficient, and they shared equally the financial benefits of any
improvements in efficiency.
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¶ 101 The dissent concludes that there is no genuine issue of material fact as to the
shared-profits element. According to the dissent, what we have described as the sharing of
profits and losses âwould apply to any relationship between entirely independent companies
engaged in the manufacture and distribution of a product.â Infra ¶ 127. As our discussion
shows, it is inaccurate to characterize the relationship between ITW and Western as one
between âentirely independent companies.â While it is difficult to provide a precise
definition of their relationship, at a minimum ITW and Western had a long-term, closely
intertwined relationship, in which they dealt nearly exclusively with each other, jointly
contributed equipment and raw material, and worked together to implement mutually
beneficial âcost improvements.â These considerations distinguish this case from Wells v.
Whitaker, 151 S.E.2d 422 (Va. 1966), cited by the dissent, which involved two companies
with a much less intertwined relationship than that between ITW and Western. Given the
unique facts of this caseâincluding the requirement that Western share equally all âbenefits
of cost improvementsâ with ITWâwe believe that it is for a jury to decide whether ITW and
Western shared profits and losses.
¶ 102 In sum, we conclude that there is a genuine issue of material fact as to whether ITW and
Western were engaged in a joint venture. We express no opinion on whether plaintiff will be
able at trial to meet his burden of proving the existence of a joint venture. See Yorkel v. Hite,
348 Ill. App. 3d 703, 708 (2004) (noting that the party contending that a joint venture exists
has the burden of proving such a relationship). We merely conclude that summary judgment
was improper based on the record before us. Moreover, we express no opinion regarding
whether the allegedly negligent acts that caused plaintiffâs injury were committed during the
course of the enterprise. See Barton, 159 Ill. App. 3d at 973 (noting that members of a joint
venture are vicariously liable for the negligent acts of fellow venturers committed during the
course of the enterprise). The parties have not addressed this issue, and we decline to address
it sua sponte.
¶ 103 B. Workersâ Compensation Actâs Exclusive-Remedy Provision
¶ 104 Plaintiff contends that the trial court erred in sua sponte ruling that, if ITW were engaged
in a joint venture with Western, the exclusive-remedy provision of the Workersâ
Compensation Act (820 ILCS 305/5(a) (West 2012)) would immunize ITW from liability.
He points out that the issue âhad never before been raised by defense counsel.â At oral
argument, ITW conceded that it did not raise the issue below and that it was âraised purely
by the court.â Nevertheless, ITW contends that the provision provides an alternative basis to
affirm the entry of summary judgment in its favor.
¶ 105 We agree with plaintiff that it was error for the trial court to raise this issue sua sponte.
The exclusive-remedy provision is an affirmative defense and is forfeited if not timely raised.
Doyle v. Rhodes, 101 Ill. 2d 1, 10(1984); Sobczak v. Flaska,302 Ill. App. 3d 916, 919
(1998). Whether to assert the exclusive-remedy provision as a defense can be a strategic
decision, as a defendant âmay choose not to raise it in the hope that the plaintiff will be
unable to prove negligence to a juryâs satisfaction,â thus avoiding liability. Doyle, 101 Ill. 2d
at 10. On the other hand, if a defendant raises the exclusive-remedy provision as a defense, it
might subject itself to no-fault liability under the Workersâ Compensation Act. See Sharp v.
Gallagher, 95 Ill. 2d 322, 326 (1983) (explaining that, in exchange for the imposition of
no-fault liability upon the employer, the Workersâ Compensation Act prohibits common-law
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suits against the employer). In Sobczak, the appellate court found that the defendant had not
forfeited the defense of the exclusive-remedy provision where, although it did not plead it, it
raised the defense in a summary-judgment motion and the plaintiff responded to the motion
on the merits. Sobczak, 302 Ill. App. 3d at 920. The court reasoned that any forfeiture was
âtechnical onlyâ and that the plaintiff was not prejudiced by the defendantâs failure to plead
the defense. Sobczak, 302 Ill. App. 3d at 920.
¶ 106 Here, ITW concedes that it did not plead the exclusive-remedy provision as an
affirmative defense or raise the issue in its motion for summary judgment. Instead, as
plaintiff pointed out at oral argument, the parties engaged in more than five years of motion
practice and discovery, taking more than 40 depositions, many of which focused on the issue
of whether ITW and Western were engaged in a joint venture. Clearly, ITW made a strategic
decision not to assert the exclusive-remedy provision as a defense, in the hope that it could
avoid liability altogether by defeating plaintiffâs tort claim. Nevertheless, at the hearing on
ITWâs summary-judgment motion, following the partiesâ lengthy arguments that did not
discuss the exclusive-remedy provision, the trial court sua sponte raised the issue. This was
error. See In re Marriage of Drewitch, 263 Ill. App. 3d 1088, 1093 (1994) (âA trial judge
may not be an advocate for a party, *** but must take the case as the parties have presented
it.â). If ITW were permitted to raise the exclusive-remedy provision as a defense at this late
stage, despite its earlier decision not to assert the defense, then plaintiff would be prejudiced.
¶ 107 We recognize the general rule that, âalthough a defense not raised in the trial court may
not be raised for the first time on appeal by an appellant, âthe appellee may urge any point in
support of the judgment on appeal, *** so long as the factual basis for such point was before
the trial court.â â Travelers Casualty & Surety Co. v. Bowman, 229 Ill. 2d 461, 470-71 (2008)
(quoting Shaw v. Lorenz, 42 Ill. 2d 246, 248 (1969)). However, â[w]hile an appellee is not as
limited in the scope of review as is an appellant, nevertheless, the review cannot go beyond
the issues appearing in the record.â Consoer, Townsend & Associates v. Addis, 37 Ill. App.
2d 105, 110 (1962). âThe issues are determined from the pleadings and the evidence.â
Consoer, Townsend & Associates, 37 Ill. App. 2d at 110. â[T]o permit a change of theory on
review âwould not only greatly prejudice the opposing party but would also weaken our
system of appellate jurisdiction.â â Kravis v. Smith Marine, Inc., 60 Ill. 2d 141, 148 (1975)
(quoting In re Estate of Leichtenberg, 7 Ill. 2d 545, 548-49 (1956)). Thus, an issue raised by
an appellee for the first time on appeal âmust at least be commensurate with the issuesâ
presented in the trial court. Greer v. Illinois Housing Development Authority, 122 Ill. 2d 462,
509 (1988).
¶ 108 As we have said, ITW chose to litigate this case by defending against plaintiffâs tort
claim on the merits. Having made the strategic decision not to raise the affirmative defense of
the exclusive-remedy provision, it cannot now change its theory on appeal.
¶ 109 C. Right of Control
¶ 110 Plaintiff next argues that a genuine issue of material fact exists regarding whether ITW
retained control over Western, giving rise to a duty of care. He relies on section 414 of the
Restatement (Second) of Torts, which provides for liability against a party who retains less
control over another than is necessary to give rise to a principal-agent relationship, but who
nevertheless retains some control over the manner in which work is done. See Restatement
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(Second) of Torts § 414 cmts. a, c (1965). Plaintiff contends that, even if Western was not
ITWâs agent, ITW at least retained control over the manner in which Western worked.
¶ 111 ITW responds that it retained no control over Westernâs safety practices and that any
control it did retain was related to quality-control measures. It also posits that a higher degree
of control than it exercised is legally required for a duty of care under section 414.
¶ 112 Generally, one who employs an independent contractor is not liable for the contractorâs
acts or omissions. Wilfong v. L.J. Dodd Construction, 401 Ill. App. 3d 1044, 1060 (2010). An
exception to the rule is found in section 414 of the Restatement (Second) of Torts:
âOne who entrusts work to an independent contractor, but who retains the control
of any part of the work, is subject to liability for physical harm to others for whose
safety the employer owes a duty to exercise reasonable care, which is caused by his
failure to exercise his control with reasonable care.â Restatement (Second) of Torts
§ 414 (1965).
As we noted above, liability under this section arises when a party retains less control than is
necessary to give rise to a principal-agent relationship. Restatement (Second) of Torts § 414
cmt. a (1965). For the section to apply, the party âmust have retained at least some degree of
control over the manner in which the work is done,â such that âthe contractor is not entirely
free to do the work in his own way.â Restatement (Second) of Torts § 414 cmt. c (1965).
¶ 113 Even assuming arguendo that ITW retained sufficient control over Western to invoke
section 414, this does not mean that summary judgment in ITWâs favor on this issue was
improper. ITW argues that, because any control that it retained was unrelated to safety or to
cleaning the rollers, it could not be held liable under section 414. We agree.
¶ 114 Under section 414, when an employer has retained control over the manner in which
work is done, the employer âis subject to liability if he fails to prevent the [independent
contractor] from doing even the details of the work in a way unreasonably dangerous to
others, if he knows or by the exercise of reasonable care should know that the [independent
contractorâs] work is being so done, and has the opportunity to prevent it by exercising the
power of control which he has retained in himself.â Restatement (Second) of Torts § 414
cmt. b (1965); see Schaughnessy v. Skender Construction Co., 342 Ill. App. 3d 730, 739
(2003) (declining liability under section 414 when the defendant did not see the plaintiff
âengage in the unsafe practice that led to his injury or even had notice that plaintiff intended
to engage in such conductâ).
¶ 115 Here, there was no evidence that ITW retained any control over safety at Western or over
the manner in which Westernâs employees cleaned the extruding machines. The
manufacturing agreement did not impose on ITW the obligation to monitor safety at Western
or grant it the authority to supervise Western employees while they were cleaning the
machines. According to Smith, Harold trained each new employee, and there were no written
instructions or manuals. Both Harold and plaintiff testified that Harold was the only one who
trained plaintiff on how to clean the machines. Moreover, Edelstein testified that ITW played
no role in the design or construction of the machine that injured plaintiff. The emergency
stop cord, which was the only safety device on the machine, was installed by the electrician
in accordance with Edelsteinâs instructions. Pedersen, who was present at Western far more
often than any other representative of ITW, testified that he was not familiar enough with the
machines to know what safety devices were available to stop a machine if someone were
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injured. In sum, there was no evidence that ITW retained any control over safety at Western
or over how or when the machines were cleaned.
¶ 116 Similarly, there was no evidence that ITW had any opportunity to prevent plaintiffâs
injuries or had notice that the machines were being cleaned in an unsafe manner. Smith
testified that, when plaintiffâs injuries occurred, the rollers were set at 790, which was âvery
fast,â instead of at 200 or 300, which was âvery slow.â Although Smith testified that on one
prior occasion he had observed plaintiff cleaning the rollers at that speed, there was no
evidence that anyone from ITW had witnessed any Western employees cleaning the
machines in an unsafe manner. Thus, there was no evidence that ITW either knew that the
cleaning process was unsafe or had the opportunity to prevent plaintiffâs accident.
¶ 117 Based on the foregoing, we conclude that summary judgment in ITWâs favor on this issue
was proper. There was no evidence that ITW retained control over safety at Western or over
how Westernâs employees cleaned the extruding machines. Nor was there any evidence that
ITW could have prevented plaintiffâs injuries by exercising any control it retained.
¶ 118 D. Unreasonably Dangerous Machine
¶ 119 Plaintiff finally contends that a genuine issue of material fact exists as to whether ITW
owed him a duty of care arising out of its actual or constructive knowledge that the extruding
machine was unreasonably dangerous. He relies on a single case, Adams v. Northern Illinois
Gas Co., 211 Ill. 2d 32 (2004), which involved a negligence claim against a natural-gas
supplier. Plaintiff has not cited any case applying Adams outside of the natural-gas context.
¶ 120 In Adams, the issue was whether the defendant natural-gas supplier had a duty to warn its
customers that a common brass connector was likely to corrode and cause gas leaks. Adams,
211 Ill. 2d at 44. In holding that the supplier was under such a duty, the court reasoned that
gas was a dangerous substance when not under control and that gas suppliers can be held
liable for negligence in permitting gas to escape. Adams, 211 Ill. 2d at 45. The court further
reasoned that the defendant had superior knowledge of the risks the connectors posed and
knew that the sulfur in the gas it supplied contributed to the connectorsâ corrosion. Adams,
211 Ill. 2d at 52-54. The court agreed with the following statement from a Colorado case
involving a gas supplier: â âWhen a party can reasonably foresee that its product will be used
as an integral component of a defective and unreasonably dangerous product, there is a duty
upon that party to undertake corrective action to alleviate, if possible, the hazard.â â Adams,
211 Ill. 2d at 53(quoting Halliburton v. Public Service Co. of Colorado,804 P.2d 213, 216
(Colo. App. 1990)).
¶ 121 Plaintiff has not articulated any reason why Adams should be extended to this case. ITW
is not the supplier of a dangerous substance like natural gas. Plaintiff simply asserts that,
â[a]pplying Adams to the case at hand, ample facts exist that ITW knew of the hazard and
should have taken steps to alleviate the hazard.â He cites no case, other than Adams, to
support his assertion that ITWâs knowledge of the allegedly dangerous condition of
Westernâs machines would give rise to a duty. Because plaintiff has not articulated any
reason why Adams should be extended beyond the natural-gas context, we decline to extend
it here. See Wright v. Board of Education of the City of Chicago, 335 Ill. App. 3d 948, 957
(2002) (declining to extend a case involving a gas supplier outside of that context).
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¶ 122 III. CONCLUSION
¶ 123 For the foregoing reasons, we reverse the judgment of the circuit court of Du Page
County and remand for further proceedings.
¶ 124 Reversed and remanded.
¶ 125 JUSTICE BURKE, dissenting.
¶ 126 The evidence presented at summary judgment in this case does not raise a genuine issue
of material fact as to whether Western and ITW were engaged in a joint venture. I agree with
the trial court that the âeasiest element to analyze [was] whether there was a sharing of
profits and losses.â
¶ 127 What is described by the majority as the sharing of profits and losses based on the sharing
of the same revenue streamâand the increase or decrease in revenue based on the increase or
decrease in sales volumeâwould apply to any relationship between entirely independent
companies engaged in the manufacture and distribution of a product. To characterize all such
relationships as joint ventures would lead to absurd results. Any profits accruing from the
movement of a product from the manufacturer to the processor and then to the ultimate
consumer cannot be said to be a sharing of the profits of the processor, otherwise every firm
that furnishes materials in connection with an enterprise might be termed a joint venturer
whether or not it had such intent. See Wells v. Whitaker, 151 S.E.2d 422, 431(Va. 1966). ¶ 128 The majority cites Herst v. Chark,219 Ill. App. 3d 690
(1991), as authority for the
proposition that, where parties divide a manufacturing operation along functional lines and
divide the revenues and expenses along those lines, there is an issue as to whether they are
sharing in profits and losses. Although the Herst court cited the division of the business, and
the revenues and the expenses, along functional lines, it is unclear whether the court linked
that division to a factor other than the sharing of profits and losses. Regardless, Herst is
readily distinguishable from this case on that factor.
¶ 129 In Herst, the court held that the parties shared profits and losses, relying on the partiesâ
creation and use of a jointly-owned account for handling the finances of the enterprise. There
also was evidence that the parties actually shared profits and losses related to the clients who
were serviced through the partiesâ program. Herst, 219 Ill. App. 3d at 695-96.
¶ 130 Here, there is no evidence of a joint account and no evidence of the sharing of either
companyâs profits or losses. In fact, Don Edelstein of Western specifically testified that his
company and ITW did not share profits.
¶ 131 The majority points out areas where Western and ITW agreed to share in certain costs
and in savings from cost improvements. I agree with the trial court that, although cost
improvementsâand costs, for that matterâmight impact profits and losses, such cost
improvements are not profits and losses themselves. In Coburn Supply Co. v. Kohler Co.,
194 F. Supp. 2d 580, 582 (E.D. Tex. 2002), the court held that the defendantâs agreement to
share in the costs of promoting its products sold through the plaintiff was not synonymous
with the sharing of losses. Likewise, the sharing of cost improvements is not synonymous
with the sharing of profits. See Vern Shutte & Sons v. Broadbent, 473 P.2d 885, 886 (Utah
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1970) (â â[I]t is not enough that the parties act in concert to achieve some economic
objective. The ultimate inquiry is whether the parties manifested by their conduct a desire to
commingle their profits, control, and risks in achieving the objective.â â (quoting Hayes v.
Killinger, 385 P.2d 747, 754(Or. 1963))). ¶ 132 This case is similar to Kaporovskiy v. Grecian Delight Foods, Inc.,338 Ill. App. 3d 206
(2003), where the appellate court considered whether Grecian Delight had entered into a joint
venture with Motorsport Marketing, where Motorsport would exclusively promote Grecian
Delightâs food products at various racing events. Determining that there was no sharing of
profits and losses, the court stated, â[t]here is nothing in the record that indicates that Grecian
Delight would share in any losses Motorsport suffered if the food did not sell. Nor is there
anything in the record that indicates that Motorsport shared any profits it gained in selling the
food products.â Kaporovskiy, 338 Ill. App. 3d at 213.
¶ 133 Like in Kaporovskiy, nothing in the present case shows that Western would share in
ITWâs losses if the plastic products sat in a warehouse and did not sell. Similarly, although
Western and ITW each anticipated profiting from their relationship, there is nothing to show
that ITW shared with Western any profits it realized from the sale of the products. Thus,
under the undisputed facts presented, there was no sharing of profits and losses between ITW
and Western. See Vern Schutte, 473 P.2d at 886 (for the creation of a joint venture, the profit
accruing must be joint and not several); see also Inter-City Tire & Auto Center, Inc. v.
Uniroyal, Inc., 701 F. Supp. 1120, 1126 (D.N.J. 1988) (â[t]he anticipation of separate profits
for each party does not amount to an intention to share profitsâ).
¶ 134 In the absence of sharing of profits and losses, no joint venture exists. OâBrien v.
Cacciatore, 227 Ill. App. 3d 836, 843 (1992). Therefore, the relationship between Western
and ITW was not a joint venture. Because I agree with the majorityâs analysis on plaintiffâs
contentions concerning ITWâs right to control and knowledge of the unreasonably dangerous
machine, I would affirm the trial courtâs order granting ITWâs motion for summary
judgment.
¶ 135 I am also concerned by the majorityâs treatment of the workersâ compensation issue. The
majority states, â[w]e agree with plaintiff that it was error for the trial court to raise this issue
sua sponte.â Supra ¶ 105. The majority then elaborates that the sua sponte nature of the
ruling prejudiced plaintiff and failed to hold ITW to its tactical decisions. While the legal
analysis on this point is quite sound, the problem is that plaintiff never argued this issue.
¶ 136 Plaintiff noted in his briefs that the trial court raised the workersâ compensation issue
sua sponte, but he never argued that he was prejudiced or that the ruling must be limited to
those issues raised by ITW in its pleadings. Plaintiff simply argues the merits of whether
ITW was immune under the Workersâ Compensation Act if it was engaged in a joint venture
with Western.
¶ 137 Plaintiff was certainly free to argue, both in a motion to reconsider in the trial court and
on appeal, that he was prejudiced by the trial courtâs sua sponte ruling and that the trial court
erred in considering an issue that ITW chose not to raise. Plaintiff did neither. The majority
notes that a trial judge may not be an advocate for a party, but it does exactly that by raising
an issue and making arguments that plaintiff has never articulated.
¶ 138 Since the majority has determined that there is a genuine issue of material fact regarding
whether ITW and Western were engaged in a joint venture, I believe that the majority should
address the merits of the workersâ compensation issue as framed by the parties on appeal.
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