Does Allowing Employees to Work From Home Put Corporations at Risk of Expanding Where They Can Be Properly Sued Under Illinois’ Venue Statute? The Illinois Supreme Court Weighs In
Can an employee’s home office establish residency of their corporate employer for determining proper venue? That is one of the questions the Illinois Supreme Court faced in its October 2020 decision in Tabirta v. Cummings. 2020 IL 124798. In Tabirta, the Illinois high court wrestled with whether an employee’s Cook County home office qualified as an “other office” under the venue statute. The court had to alternatively assess whether the corporation was “doing business” in Cook County sufficient to create residency through that home office work. While the facts of Tabirta were unrelated to the current COVID-19 pandemic, given the current “work from home” phenomenon, the court’s decision could have wide-ranging impact on venue fights.
Sergiu Tabirta filed his personal injury action in Cook County, Illinois after a December 2016 tractor-trailer accident in Ohio caused multiple severe injuries, including the loss of both of his legs. He sued two defendants, Gilster-Mary Lee Corporation (GML) and James Cummings, the respective owner and driver of the tractor-trailer. While neither defendant was a Cook County resident, plaintiff still argued that venue was proper in Cook County because a GML employee – who had no connection to the accident – maintained an office in his home in Cook County. That home office, plaintiff argued, constituted an “other office” to make venue proper under the statute (735 ILCS 5/2-102(a)). Plaintiff’s alternative venue hook was that GML was “doing business” in Cook County adequate enough to establish residency for venue purposes. The circuit court denied the defendants motion to transfer venue. The appellate court, in turn, affirmed on the home office issue, mooting plaintiff’s alternate venue theory.
The Illinois Supreme Court took the case and examined both the “doing business” and “other office” arguments. While firmly rooted in the factual nuances presented in Tibirta, the Court’s ruling sheds light on how future venue assessments in a “work from home” economy might be evaluated.
The Circuit Court and Appellate Court Rulings
Cummings was not an Illinois resident, and GML was a Missouri corporation with its principal place of business and registered agent in Randolph County, Illinois. Not surprisingly, the defendants moved to transfer venue arguing that Cook County was an improper venue, since the accident did not occur in Cook County and neither defendant was a resident of Cook County as defined by statute. Limited venue-related discovery revealed that in 2011 GML hired a retired 50-year veteran of the food industry, who had lived in Cook County since 1956, to serve as a part-time customer service and account representative while working out of his home. The employee handled three accounts with locations in DuPage, Kane, Kendall, Will, and Cook Counties. Only 5% of his time was devoted to the sole Cook County customer. No customers visited the employee’s Cook County home office, and GML had no ownership interest in the employees’ home, did not pay any portion of the employee’s mortgage, real estate taxes, utilities, cell phone bills, Internet charges, office supplies, or any other expenses associated with his home office. Tibirta, 2020 IL 124798, at ¶¶ 6-8.
Discovery also revealed that GML did not advertise that it had an office in Cook County and that the county of residence of the part-time employee had no significance to his hiring or continued employment. Nor did GML design, manufacture, advertise, finance, or sell its products from within Cook County. Additionally, GML’s Cook County sales were only 0.19% of its 2016 total sales, and less than 0.5% of total sales in any year during the five-year period before plaintiff’s accident. Id. at ¶10.
Plaintiff opposed the defendants’ motions arguing that venue was proper in Cook County because the GML employee had maintained a home office to conduct business for GML in Cook County thus constituting an “other office” under the venue statute. See 735 ILCS 5/2-102(a)(West 2020)(stating in relevant part “Any private corporation or railroad or bridge company, organized under the laws of this State, and any foreign corporation authorized to transact business in this State is a resident of any county in which it has its registered office or other office or is doing business.”).
The circuit court denied the defendants’ motion to transfer finding that the part-time employee’s home office was an “other office” because he serviced clients on behalf of his employer from his Cook County residence. The trial court rejected the plaintiff’s alternative “doing business” argument based on the proportionally low sales to Cook County customers. The defendants requested leave to appeal under Rule 306(a)(4), which the appellate court denied. The defendants then asked the Illinois Supreme Court to hear their appeal. The Illinois Supreme Court denied the direct appeal, but exercised its supervisory authority directing the appellate court to vacate its prior order and allow the petition for leave to appeal. Tibirta, 2020 IL 124798, at ¶12. The appellate court ultimately affirmed the circuit court holding that the home office was enough to qualify as an “other office” under the venue statute.
The Illinois Supreme Court then allowed the defendants petition for leave to appeal pursuant to Rule 315(a) and also permitted the Illinois Association of Defense Trial Counsel and the Illinois Trial Lawyers Association to file amicus curiae briefs in support of the defendants and plaintiff, respectively.
The Illinois Supreme Court’s Analysis
The Illinois Supreme Court began with a reminder that proper venue is a valuable privilege belonging to the defendant, and the Illinois venue statute “’reflect[s] the legislature’s view that a party should not be put to the burden of defending an action in a county where the party does not maintain an office or do business and where no part of the transaction complained of occurred.’” Id. at ¶16 (internal citations omitted). Even so, the defendant challenging the plaintiff’s chosen venue bears the burden of establishing, with specific facts, that venue is improper. Id. at¶17. In deciding a defendant’s challenge to venue, a trial court “should construe the statute liberally in favor of effecting a change of venue,” based on factual findings that will be disturbed only if they are against the manifest weight of the evidence upon de novo review. Id.
Unlike the equitable doctrine of forum non conveniens where courts look beyond the statutory criteria for venue and balance relevant public and private interest factors to determine if one proper venue is more convenient than another, venue is purely statutory in Illinois. Id. at ¶19; see also 735 ILCS 5/2-101 and 102(a). As a result, based on the facts established, venue could only be proper if GML was a resident of Cook County through an “other office” or “doing business” under the statute.
Is incidental work “doing business” under the statute?
The Tabirta Court made clear that work merely incidental to the usual and customary business of a corporation is not “doing business” under the venue statute. Tibirta, 2020 IL 124798, at ¶¶ 34-35. Establishing corporate residency under the “doing business” part of the statute requires more than the minimum contacts that may subject a defendant to jurisdiction of the Illinois courts. Soliciting business or selling goods/services within a county does not automatically qualify as the venue-triggering level of “doing business” required. While the quantity or volume of business conducted by the defendant in the county is a relevant factor, the defendant will only cross the threshold of a venue-creating level of business where its activities are “‘of such a nature so as to localize the business and make it an operation within the district.’” Id. (internal citations omitted). In Tabirta, because the work of the GML employee with the home office was merely incidental to GML’s usual and customary business of food product manufacturing, and because GML had no other office, or facility in Cook County, and did not otherwise manufacture, design, finance, or sell its products from within the county, the court held that GML was not “doing business” in Cook County under the venue statute. Id. at ¶34.
Questioning an “office” – not whether, but whose.
The Illinois Supreme Court found no dispute existed whether the part-time employee’s home office was an “office,” or that it was used to further GML’s corporate business interests. But that, the court held, is not enough. The venue statute requires that the corporation have an office in the county, not merely that one of its employees has one. So, the court sought to determine whether the employee’s Cook County home office was an “office” of the corporation. The court found it was not. To make that finding, the court considered several facts that had been clearly developed in the record below.
First, while GML knew that the employee would be working out of his home, there was no evidence that GML had hired him because he lived in Cook County. Testimony established that the employee’s county of residence was not a factor in his hiring, or his continued employment. Second, there was no evidence that the corporation intended on opening an office in Cook County. Third, the record made clear that the employee was hired because of his skills and experience, not because GML sought to purposely select a fixed location within Cook County to carry on its business – the company hired a person, it didn’t select a location from which to conduct its business activities. Id. at ¶¶28-29.
That the company did not own, lease, or pay residence-related expenses weighed even more against characterizing the employee’s home office as an office of the corporation. So too did the fact that GML had not held out to the public that the home office was an office of the company, and that GML had not paid any part of the mortgage, real estate taxes, or utilities for the employee’s home. Merely conducting work from a home office, standing alone, was insufficient for plaintiff to establish that the home office was a corporation’s “other office” under the venue statute. Id. at ¶32.
Justice Kilbride’s Special Concurrence
Justice Kilbride wrote separately to emphasize that the court’s holding “should not be read to imply, or even to suggest, that we would reach the same conclusion in all cases involving an employee’s use of a home office.” Id. at ¶43. Justice Kilbride’s concurrence strove to draw attention to the point that examining whether an employee’s home office meets the definition of an “other office” under the venue statute is a fact-specific analysis for which a one-sized solution does not fit. Id. at ¶44. The “sole goal” of the special concurrence was “to expressly recognize the necessarily narrow holding represented” by the court’s decision. Id. at ¶45. A court’s ultimate conclusion about whether a home office qualifies as an “other office” under the statute, Justice Kilbride underscored, hinges on its review of specific facts adduced in each case. Id. at ¶¶43-45.
So where does Tabirta leave Illinois practitioners, employers, courts, and litigants on the question of whether a home office may put corporations at risk of expanding where they may be properly sued? The answer, after Tabirta, is a solid “it depends.” Why? Simply put, the venue statute codifies some ambiguity and the circumstances under which the issue may arise are far too varied, thus defying broad brushstrokes. Because the Tabirta record was well developed through targeted discovery and affidavits, the court had ample fact-specific evidence to evaluate. And it did just that. Justice Kilbride’s special concurrence drove the point home with the admittedly singular goal of stressing how narrowly and fact-dependent the court’s holding should be read.
The Tabirta opinion does, however, paint some contours. To begin with, the court full-throatedly reminds everyone that proper venue is a privilege belonging to the defendant, it is the defendant’s burden to establish the plaintiff’s chosen venue is inappropriate, and that courts should liberally construe the venue statute in favor of effecting a change venue. The Tibirta Court also clearly rejected incidental work as satisfying the “doing business” part of the statute. Similarly rebuffed was the argument that having “an” office that furthers the company’s business will satisfy the “other office” component. The Tabirta Court made clear that a venue analysis is purely statutory, and no balancing of interests is appropriate. Finally, the court’s analysis amplified the view that parties litigating venue questions, without a solid factual record, do so at their peril.