                            In the

United States Court of Appeals
              For the Seventh Circuit

Nos. 06-1652, 06-1782, 06-1783, 06-1793,
     06-1794, 06-1795 & 06-1796

M ILLARD B ALTZELL and R UTH A NN B ALTZELL,

                                              Plaintiffs-Appellees,
                                                  Cross-Appellees,
                                v.


R&R T RUCKING C O ., F REIGHTLINER C ORP., and
L UFKIN INDUSTRIES, INC.,

                  Defendants-Third Party Plaintiffs-Appellees,
                                           Cross-Appellants,

                                v.


T HE E NSIGN-B ICKFORD C O .,

                              Third Party Defendant-Appellant,
                                               Cross-Appellee.


           Appeals from the United States District Court
               for the Southern District of Illinois.
            No. 02 C 4058—G. Patrick Murphy, Judge.



   A RGUED S EPTEMBER 14, 2007—D ECIDED F EBRUARY 4, 2009
2               Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.

    Before B AUER, E VANS, and W ILLIAMS, Circuit Judges.
  W ILLIAMS, Circuit Judge. Millard “Skeeter” Baltzell was
critically injured when he was crushed by a tractor-trailer
while working for The Ensign-Bickford Company. Skeeter
sought workers’ compensation from Ensign, and along
with his wife Ruth Ann, brought strict liability claims
against three companies—R&R Trucking Company, the
owner of the tractor-trailer; Freightliner Corporation, the
tractor manufacturer; and Lufkin Industries, Inc., the
trailer manufacturer. These defendants then sought
contribution by filing third-party claims against Ensign.
   The Baltzells prevailed before a jury, which found the
defendants and Ensign collectively liable for $13,980,120.
Ensign then moved to dismiss the contribution claims
against it in exchange for waiving a statutory lien that it
had on the Baltzells’ recovery from the defendants. The
district court denied Ensign’s motion and entered judg-
ment against the defendants and Ensign. We conclude
that the Illinois Workers’ Compensation Act and the
Illinois Supreme Court’s decision in LaFever v. Kemlite
Co., 706 N.E.2d 441, 452 (Ill. 1998) require us to vacate
the court’s judgment and remand for further pro-
ceedings consistent with this opinion.




                     I. BACKGROUND
    A. Workers’ compensation in Illinois
  Before delving into the facts of this case, we first provide
some background on the somewhat complicated
Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.          3

statutory scheme at issue here. Like other states, Illinois
has a workers’ compensation system in which employers
compensate their employees for job-related injuries or
illnesses, regardless of fault. See Illinois Workers’ Com-
pensation Act (“IWCA”), 820 Ill. Comp. Stat. 305/1 et seq.
In return for not having to prove fault, employees
receive only workers’ compensation benefits from their
employers and cannot sue their employers to receive
more damages. See id. at 305/5(a). This rule also bars loss
of consortium claims that employees’ spouses might
otherwise bring against employers. Id. (extending bar
to “any one otherwise entitled to recover damages for
such injury”); Vickery v. Westinghouse-Haztech, Inc., 956
F.2d 161, 162 (7th Cir. 1992) (“[T]he [Illinois] Workers’
Compensation Act has been consistently interpreted to
bar suits for loss of consortium by a covered worker’s
spouse . . . .” (citing Dobrydnia v. Ind. Group, Inc., 568
N.E.2d 1002 (Ill. App. Ct. 1991))).
  Sometimes, however, parties other than an employer
might cause an employee to be injured at work. An em-
ployee in this situation can sue these third parties for
damages. See 820 Ill. Comp. Stat. 305/5(b) (“Where the
injury or death for which compensation is payable
under this Act was caused under circumstances creating
a legal liability for damages on the part of some person
other than his employer to pay damages, then legal
proceedings may be taken against such other person to
recover damages notwithstanding such employer’s pay-
ment of or liability to pay compensation under this Act.”).
These third parties can in turn seek contribution from
4             Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.

the employer, thereby pulling the employer into the suit.
Id. Alternatively, an employer may choose to exercise
its right to intervene in the suit before satisfaction of
judgment. See Ins. Co. of N. Am. v. Andrew, 564 N.E.2d 939,
941 (Ill. App. Ct. 1990).
  Now suppose an employee ends up recovering money
from a third party for a work-related injury. That would
imply the employer was not solely responsible for the
accident. So Illinois law gives the employer a lien on
any recovery that an employee obtains from a third
party for a work-related injury. 820 Ill. Comp. Stat.
305/5(b). An employer who exercises this lien gets first
crack at any recovery the employee gets from the third
party. Id. (“[F]rom the amount received by such em-
ployee or personal representative [from a third party]
there shall be paid to the employer the amount of com-
pensation paid or to be paid by him to such employee
or personal representative . . . .”).
  To calculate the amount of the employer’s lien, one
begins with the recovery that the employee receives
from the lawsuit and then reduces this value “by an
amount equal to the amount found by the trier of fact to
be the employer’s pro rata share of the common liability
in the action.” Id. The amount of the employer’s lien
cannot exceed its total workers’ compensation obligation.
Here are some examples to help illustrate how this cal-
culation works:
Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.                 5


    Workers’   Total      % fault   Employer’s     Employer’s
    comp.      recovery   of em-    pro rata       lien 1
    obliga-    from       ployer    liability
    tion       suit

    $2 M       $5 M       0%        $0             $2 M

    $2 M       $5 M       8%        $400 K         $2 M

    $2 M       $2 M       25%       $500 K         $1.5 M

    $2 M       $1 M       40%       $400 K         $600 K

    $2 M       $1 M       60%       $600 K         $400 K

    $2 M       $5 M       60%       $3 M           $2 M

   As the last entry in the chart shows, sometimes an
employer’s pro rata liability might exceed its workers’
compensation obligation. This is problematic because
Illinois law seeks to protect employers from paying more
than what workers’ compensation requires.



1
  Although not raised by the parties in this appeal, the IWCA
also provides that any reimbursement that an employer receives
when exercising its lien is reduced by: (1) the employer’s
pro rata share of the employee’s costs and reasonably necessary
expenses in bringing the suit, and (2) 25% of the employee’s
attorney fees. See 820 Ill. Comp. Stat. 305/5(b). These cost- and
fee-sharing provisions make sense—because the employer
has cashed in on the employee’s suit (by exercising the lien and
effectively reducing its workers’ compensation obligation), the
statute requires the employer to chip in for the expense of the
suit.
6             Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.

   To avoid this difficulty, the Illinois Supreme Court has
provided employers with two different ways to curtail
their contribution liability. First, Illinois law caps an
employer’s contribution liability at “an amount not
greater than the [employer’s] workers’ compensation
liability.” Kotecki v. Cyclops Welding Corp., 585 N.E.2d 1023,
1028 (Ill. 1991). This value, which is generally referred to
as the “Kotecki cap,” represents the maximum amount
that an employer has to pay in contribution.
  Despite the protection that Kotecki provides, however,
some employers might still prefer to pay workers’ com-
pensation rather than contribution. For example, a contri-
bution judgment would probably require an employer
to make a lump sum payment up front; workers’ compen-
sation, on the other hand, often includes a component
that is paid out over many years. Even if the lump sum
payment is discounted to account for lost investment
opportunities, it might not be properly indexed for infla-
tion, which implicitly decreases the cost of future pay-
ments. Moreover, because the total cost of workers’
compensation often depends on how long the injured
employee survives, an employer might prefer workers’
compensation if it believes the employee will die sooner
than expected. (The flip side is that an employer may
end up paying more in workers’ compensation than in
contribution if the employee lives longer than expected.)
  So Illinois law provides employers with a second
option—an employer can escape contribution liability
altogether by waiving its lien on an employee’s recovery
from third parties. See LaFever, 706 N.E.2d at 454. An
Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.            7

employer who takes this option can no longer share in
damages that the employee recovers from a third party.
However, the employer can then be certain that its
only payment obligation will arise under workers’ com-
pensation.


  B. Factual background
  Skeeter Baltzell worked for Ensign, a manufacturer of
caps and boosters for explosives, at a facility in Union
County, Illinois. He helped load specialized tractor-trailers
that hauled explosives away from the Ensign facility. R&R
Trucking had a contract with Ensign to provide these
tractor-trailers along with the drivers, helpers, and equip-
ment necessary to load and unload the trailers.
  On May 22, 2000, an Ensign employee backed an R&R
tractor-trailer into Skeeter, crushing him between the
trailer and a loading dock. The Freightliner tractor and
Lufkin trailer that were involved in the accident were
not equipped with a back-up alarm.
  Skeeter was terribly injured. His pelvis was severely
fractured and his bladder and lower intestinal tract were
crushed. Because of his injuries, Skeeter suffered deep
vein thrombosis, a heart attack, respiratory failure, and a
stroke that left him brain damaged and partially paralyzed.
Skeeter still needs constant care and attention from his
wife, Ruth Ann, as he has a permanent colostomy, must
be catheterized to urinate, and has cognitive difficulties.
  Skeeter filed a claim before the Illinois Workers’ Com-
pensation Commission (IWCC) seeking workers’ compen-
8               Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.

sation benefits from Ensign. Skeeter and Ruth Ann also
filed this suit in federal court, alleging strict liability claims
under Illinois law for personal injury and loss of consor-
tium, respectively, against R&R, Freightliner, and Lufkin
(collectively, the “defendants”). The defendants then
filed third-party contribution claims against Ensign.2
  On April 21, 2005, a jury returned a verdict in favor
of Skeeter for $11,980,120, and in favor of Ruth Ann
for $2,000,000, which resulted in a total judgment of
$13,980,120. The jury apportioned fault as follows:
Skeeter Baltzell, 0%; Freightliner, 20%; Lufkin, 10%; R&R,
40%; and Ensign, 30%. Accordingly, Ensign was liable to
Skeeter and Ruth Ann for $13,980,120 * .30 = $4,194,036.
  Illinois law limited Ensign’s contribution liability to
the present cash value of its total workers’ compensation
obligation (i.e., its Kotecki cap). But the IWCC hadn’t
yet finally determined what Ensign’s total workers’
compensation liability would be, so the district court
required Ensign to submit an estimate of this amount.
Ensign submitted documentation that its Kotecki cap was


2
  The district court properly exercised diversity jurisdiction
over Skeeter and Ruth Ann’s claims. See 28 U.S.C. § 1332(a).
Skeeter and Ruth Ann were citizens and residents of Illinois,
whereas R&R, Freightliner, and Lufkin were incorporated in
Missouri, Delaware, and Texas, respectively, and had their
principal places of business in Missouri, Oregon, and Texas,
respectively. The amount in controversy exceeded $75,000.
Similarly, the court had supplemental jurisdiction over the
contribution claims against Ensign, a Connecticut corporation
with its principal place of business in Connecticut. See id. § 1367.
Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.                   9

$4,085,571.21, and that it had already paid $873,953.31
in workers’ compensation to the Baltzells. Neither the
defendants nor the Baltzells disputed these values, which
the district court proceeded to adopt.
   Ensign then moved to waive its lien on the Baltzells’
recovery and to dismiss the defendants’ third-party
contribution claims. On October 4, 2005, the district court
denied this motion, reasoning that “[a]llowing Ensign-
Bickford to waive its lien now would more than partially
frustrate the purpose of the Contribution Act, and it
would do nothing to promote the purposes of the workers’
compensation statute.” The court then reduced the total
judgment of $13,980,120 by the amount that Ensign
would pay (the Kotecki cap amount of $4,085,571.21), which
left the remaining $9,894,548 in damages to be split
among the three defendants based on their respective
share of the liability.3 For example, R&R was liable for
40% of the total damages, and the three defendants were
liable for 70% of the total damages, so R&R’s share was
40%/70% = 57.142857% of the cumulative liability for
the three defendants, thereby making R&R liable for
$9,894,548 * .57142857 = $5,654,027. Similarly, the court
found Freightliner liable for $2,827,013, and Lufkin liable



3
   As required by Illinois law, this calculation implicitly reappor-
tioned to the defendants the difference between the liability
assessed by the jury against Ensign ($4,194,036) and the
Kotecki cap amount ($4,085,571.21). See Ill. Tool Works, Inc. v.
Indep. Mach. Corp., 802 N.E.2d 1228, 1232 (Ill. App. Ct. 2003).
10            Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.

for $1,413,506. The court entered judgment in favor of
the Baltzells in these amounts.
  Ensign then filed various post-judgment motions,
including another motion to waive its workers’ compensa-
tion lien and dismiss the third-party contribution claims
against it. Meanwhile, the Baltzells and the defendants
entered a settlement agreement in which the defendants
agreed to pay their respective pro rata shares of the
judgment but reserved their right to litigate contribution
and setoff issues.
  On February 13, 2006, the district court denied Ensign’s
post-judgment motions, setting the stage for Ensign’s
current appeal. The defendants also filed related
cross/contingent appeals regarding setoff and contribution
issues in the event that we vacated the judgment entered
against Ensign.




                      II. ANALYSIS
  A. Ensign was entitled to waive its workers’ compen-
     sation lien and the contribution claims against it
     should have been dismissed.
  Because this is a diversity case governed by Illinois law,
we must resolve this matter how we think the Illinois
Supreme Court would. See Allstate Ins. Co. v. Menards, Inc.,
285 F.3d 630, 637 (7th Cir. 2002). If there is no prevailing
authority from that court, we give great weight to the
holdings of the Illinois appellate courts. Id.
Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.               11

   The primary precedent at issue here is the Illinois
Supreme Court’s decision in LaFever v. Kemlite Co, 706
N.E.2d 441 (Ill. 1998). Similar to this case, the employee
in LaFever suffered a workplace injury and sued a third
party, who in turn sued the employer for contribution.
After a jury found that both the third party and the em-
ployer were liable, the trial court permitted the employer
to waive its workers’ compensation lien and have the
contribution claim against it dismissed. Id. at 444-46. The
Illinois Supreme Court approved of the trial court’s
decision and held that an employer can wait and see how
a jury verdict goes before deciding whether to waive
its lien. Id. at 453 (noting that nothing in 820 Ill. Comp. Stat.
305/5(b) “required [the employer] to waive the lien by a
date certain”).
   Here, the district court did not allow Ensign to waive
its lien because it felt that allowing a post-verdict waiver
would “more than partially frustrate the purpose of the
Contribution Act.” We understand the court’s apparent
belief that it would be unfair to allow a post-verdict
waiver, given that Ensign decided to waive the lien only
after the jury found it to be significantly liable for the
accident. (Presumably Ensign would not have waived
the lien if the jury had instead found it minimally liable
or not liable at all.) But LaFever required the district
court to grant Ensign’s late waiver. Indeed, LaFever ex-
pressly indicated that an employer can engage in this
kind of strategic decisionmaking. Id. (noting there was
nothing unfair in the employer’s strategy of waiting
until after trial to waive its lien and stating that the
court was “reluctant to dictate trial strategy to any
12            Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.

litigant when that strategy is entirely consistent with
controlling statutes and prior decisions of this court”).
  Still, the Baltzells and the defendants contend that
LaFever is distinguishable from this case. In LaFever, the
employer had already paid out the workers’ compensation
benefits that it owed the employee and it was not
required to make any future payments. By contrast, Ensign
estimates that it still owes about $3 million in future
workers’ compensation payments to the Baltzells.
   Illinois courts, however, have never suggested that
we should distinguish between paid and future benefits
when deciding whether an employer can waive its work-
ers’ compensation lien. Indeed, Illinois law is clear that
an employer’s lien encompasses both paid and future
workers’ compensation benefits. For example, the IWCA
states that from the money the employee receives from
a third-party suit, “there shall be paid to the employer
the amount of compensation paid or to be paid by him to
such employee.” 820 Ill. Comp. Stat. 305/5(b) (emphasis
added). And the LaFever court itself noted that an “em-
ployer may claim a lien on the worker’s recovery, in
an amount equal to the amount of workers’ compensation
due the worker.” LaFever, 706 N.E.2d at 451 (emphasis
added); see also Ramsey v. Morrison, 676 N.E.2d 1304, 1313
(Ill. 1997) (noting that the workers’ compensation lien
is “equal to the amount of the workers’ compensation
benefits paid or owed.” (emphasis added)); cf. Zuber v. Ill.
Power Co., 553 N.E.2d 385, 386 (Ill. 1990) (noting that
“reimbursement” to an employer “may take the form of a
lien, on past payments of compensation, or a credit, on
future payments”).
Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.             13

   Moreover, Illinois courts have allowed employers to
waive their liens even when they owed future payments.
See generally Branum v. Slezak Constr. Co., Inc., 682 N.E.2d
1165 (Ill. App. Ct. 1997) (not questioning a trial court’s
decision to permit an employer to waive its lien even
though the employer still owed workers’ compensation).
For example, in Kim v. Alvey, Inc., 749 N.E.2d 368, 372,
377 (Ill. App. Ct. 2001), an Illinois appellate court indicated
that a trial court properly allowed an employer to waive
its lien in a post-trial motion, even though the amount of
its workers’ compensation obligation (and hence, the
value of the lien) had not yet been determined.
  Similarly, we conclude that the district court should
have allowed Ensign to waive its lien on the Baltzells’
recovery in their lawsuit against the defendants. Thereaf-
ter, the court should have dismissed the contribution
claims against Ensign.


  B. The defendants are entitled to a setoff for the
     workers’ compensation benefits that Ensign has
     already paid.
   Given that Ensign is not liable for contribution (but still
owes workers’ compensation), we next determine
whether the defendants are entitled to a setoff that
reduces their liability. Once an employer waives its lien,
an employee who has received workers’ compensation
benefits will never have to repay the employer for those
benefits, even if the employee recovers damages from
third parties for the same injury. In such a situation,
Illinois courts award a setoff that reduces the liability of
14             Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.

third parties by whatever amount of workers’ compensa-
tion benefits the employee has already received. See, e.g.,
Branum, 682 N.E.2d at 1178-79. The rationale behind this
rule is simple—a plaintiff who has already received work-
ers’ compensation from an employer should not get a
double recovery from a third party for the same injury.
See Wilson v. Hoffman Group, Inc., 546 N.E.2d 524, 530-31
(Ill. 1989). So the defendants here are entitled to a setoff
for any workers’ compensation benefits that the Baltzells
have already received from Ensign.
  This does not mean, however, that a setoff is proper
for future workers’ compensation benefits whose value
has yet to be determined. As far as we know, the IWCC,
which is in charge of determining workers’ compensation
awards, has yet to issue a final determination on the
award that the Baltzells will receive for the accident. And
an Illinois appellate court has indicated that we should
not try to divine what that award will be. See Branum,
682 N.E.2d at 1178-79. We follow that court’s lead and
conclude that it would be too speculative to award a
setoff for future workers’ compensation benefits when
we do not know how the IWCC will resolve the matter
and the parties have not stipulated to a setoff amount.4


4
   While the plaintiffs and defendants both tacitly agreed to the
Kotecki cap amount that Ensign submitted (which was Ensign’s
estimate of its workers’ compensation obligation), the parties
never agreed to a setoff value. See R&R Br. at 31 n.6; R. 457, Ex.
A; see also Branum, 682 N.E.2d at 1177 (“No workers’ compensa-
tion adjudication is made within a contribution case . . . when a
                                                   (continued...)
Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.              15

See id. (“[A]bsent an agreement between all parties, a
setoff of workers’ compensation benefits cannot be
made until the amount of workers’ compensation
benefits to which plaintiff is entitled is fully determined.”);
see also Ocampo v. Paper Converting Mach. Co., No. 02 C
4054, 2005 WL 2007144, at *17-18 (N.D. Ill. Aug. 12, 2005)
(following Branum).
  On remand, the district court should require the
parties to submit an update on the workers’ compensation
payments that have been made and on the status of the
proceedings before the IWCC. The court should also
impose a setoff equal to the paid benefits that the
Baltzells have already received from Ensign.
   Regarding future benefits, we also note that the most
efficient solution might be for all the parties to agree
that any future workers’ compensation payments that
the Baltzells receive from Ensign will be held in trust and
distributed to the defendants according to their pro rata
liability. See Pekin Ins. Co. v. Hiera, 840 N.E.2d 1236, 1239
(Ill. App. Ct. 2005) (approving of an insurance contract
that set forth this sort of procedure). The defendants
suggested that we could mandate this outcome, but it
is not clear whether we have the authority to do this and
at any rate, we decline to take this step given our uncer-
tainty as to the final status of the matter before the IWCC.




(...continued)
trial court determines the present cash value of future workers’
compensation benefits under Kotecki.” (citation omitted)).
16           Nos. 06-1652, 06-1782, 06-1783, 06-1793, et al.

                  III. CONCLUSION
  The judgment of the district court is V ACATED and the
case is R EMANDED for further proceedings consistent with
this opinion.




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