Judicial Rulings

Lawyers must blow whistle

"All attorneys know or should know that at certain times in their professional career, they will have to forego economic gains in order to protect the integrity of the legal profession," said the Illinois Supreme Court on December 19. At issue was an in-house attorney's suit against his employer for retaliatory discharge stemming from his unwillingness to permit the sale of defective medical equipment to go unchallenged.

The attorney had advised the company that a component of its kidney dialysis equipment did not meet specifications of the U.S. Food and Drug Administration. When he said that he would do whatever was necessary to stop the sale, he was fired. He then sued the company for retaliatory discharge.

Retaliatory discharge is a narrow exception to the principle that an at-will employee may be discharged for any reason or for no reason. Its purpose is to protect public policy, and in general the precedent is Palmateer v International Harvester Co. (85 Ill. 2d 124 (1981)). The court recognized that protecting the life and health of the public from defective medical equipment is clearly a public policy but noted a special case for attorneys. Under the Rules of Professional Conduct, "A lawyer shall reveal information about a client to the extent it appears necessary to prevent the client from committing an act that would result in death or serious bodily injury" (134 Ill. 2d R. 1.6(b)). The court believed that this is sufficient protection of public policy since lawyers have no choice but to follow the rule, even if it means losing their jobs. The court added a number of reasons for not extending retaliatory discharge to in-house attorneys, most deriving from perceived damage to the attorney-client relationship if it were made a possibility.

Justice William G. Clark wrote the opinion in Balla v Gambro. Inc. (Docket No. 70942). Justice Charles E. Freeman disssented, disagreeing with almost every point of the majority. He based most of his argument on the perception that "attorneys are no less human than non-attorneys and, thus, no less given to the temptation to either ignore or rationalize away their ethical obligations when complying therewith may render them unable to feed and support their families." He believed that "to allow a corporate employer to discharge its in-house counsel under such circumstances, without fear of any sanction, is truly to give the assistance and protection of the courts to scoundrels." He concluded that the decision "does nothing to encourage respect for the law by corporate employers nor to encourage respect by attorneys for their ethical obligations."

ComEd rate case: Act II, scene 3

In a 58-page opinion filed December 16 the Illinois Supreme Court told the Illinois Commerce Commission, "You're going to do it till you get it right." The subject was the incredible mess surrounding Commonwealth Edison's application for a rate increase to cover costs of three nuclear power plants.

The whole thing began in August 1987 when the utility applied for a rate increase. By December 1988 the commission finally issued what is known as the Sixth Interim Order, granting a two-step rate increase. Following court action by several consumer groups, the Illinois Supreme Court overturned the order (Business & Professional People for the Public Interest v Illinois Commerce Commission, 136 Ill. 2d 192 (1989); referred to subsequently as Business & Professional People I — see Illinois Issues, February 1990, page 22).

In April 1990 ComEd filed a new rate request with the commission, thereby kicking off a whole new process overlapping the old one, for in May 1990, in denying a rehearing of Business & Professional People I, the Supreme Court ordered ComEd to comply with its differential refund offer contained in the Sixth Interim Order. This led to issuance of orders by the commission for refunds to ratepayers and rollback of the utility's rates. In March 1991 the commission simultaneously issued a Remand Order and a Rate Order, apparently in an effort to combine the Supreme Court's orders on the first case with action on ComEd's second round of requests. The effect was to give ComEd a rate increase of $750 million to be phased in over three years. The consumer groups (termed "intervenors") — joined by the Citizens Utility Board, Atty. Gen. Roland W. Burris, the city of Chicago and Cook County — manned the barricades once again.

Obviously the issues are much too complicated even for a brief outline. It appears that some progress has been made since the court has agreed with the commission and ComEd on some issues and with the intervenors on others. Nevertheless, nothing is settled. On some issues the court chided the commission with statements such as "the Commission's findings of fact are insufficient to allow informed judicial review" (the conclusion of a mind-numbing analysis of "Quantification Methodology" applied to analysis of ComEd's time-related indirect costs) and "the Commission has failed to articulate the standard that it applied." In addition, the commission did not even address whether the larger projects, the cost of which approach $300 million, should be considered "significant additions."

More disturbing are statements such as: "We find that the Commission violated its own rules to the detriment of the intervenors and, thereby, committed reversible error" concerning the calculation of allowance for depreciation. Or, concerning deferred charges: "Thus the Commission based its decision on financial projections made in 1987, rather than on the actual historical data available. We find this decision was arbitrary."

Further muddying the waters was a February 1991 Appellate Court decision (Illinois Power Co. v Illinois Commerce Commission 208 Ill. App. 3d 779 (1991)), which the commission used in determining the complicated "Used and Useful" status of the power plants in question and the allied matter of excess capacity. In the present case the Supreme Court disagreed with the appellate level rulings.

As far as the utility and its customers are concerned, nothing is settled. ComEd's customers must be confused; in February 1991 the Supreme Court allowed the utility to begin charging a higher rate but warned that refunds might be in order if it later struck down the increase. The resolution promises to be a drawn out affair. On one issue the court's remark was almost wistful: "We trust that the Commission will be able to formulate some standard for recovery which will protect both the interests of Edison and the ratepayers."

Justice William G. Clark wrote the opinion in Business and Professional People v Illinois Commerce Commission (Docket Nos. 71602, 71629, 71669, 71681, 71719 cons.). Justice James D. Heiple did not participate.

F. Mark Siebert

February 1992/Illinois lssues/27