King Koil Licensing Company v. Harris
2017 IL App (1st) 161019
| Ill. App. Ct. | 2017Background
- King Koil licensed mattress designs and collected royalties/marketing fees based on licensees’ sales; long‑term licensees historically paid lower rates and most paid on private‑label sales. Roberts (King Koil president) negotiated terms and relied on outside counsel Roger Harris to draft contracts.
- Blue Bell, King Koil’s largest U.S. licensee, had old 1991/1992 agreements that required royalties (including on private‑label sales) at low rates; renewal negotiations began in 2008 and culminated in a new agreement signed November 3, 2009 (effective Jan. 1, 2010).
- A key drafting change in an April 2009 draft redefined “Total Annual Sales” to mean sales of “King Koil Proprietary Sleep Products,” excluding private‑label sales, which reduced royalties owed by Blue Bell. Harris drafted the change after working on a contemporaneous White Dove agreement; Roberts later claimed he would not have approved the change if he had noticed it.
- After discovering the definition in 2010, Harris repeatedly called it a “mistake” and offered to pursue litigation against Blue Bell (and at times to represent King Koil at no charge); King Koil retained other counsel and negotiated a 2010 amendment restoring only a portion of private‑label royalties.
- King Koil sued Harris and his firm for legal malpractice. At trial both sides presented experts on standard of care; the jury returned a general verdict for defendants. King Koil appealed, challenging evidentiary rulings (Rule 408 exclusion and privilege withholding), special interrogatories, and the manifest‑weight outcome.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether verdict was against manifest weight (malpractice elements; breach and proximate cause) | Harris admitted the definition change was a “mistake,” so breach and proximate cause are established; jury should have found for King Koil | Even if a mistake occurred, Harris met the standard of care (sent clean and red‑lined drafts); Roberts had multiple opportunities to catch/change the term and there was no proof Blue Bell would have accepted higher royalties/marketing fees — proximate cause lacking | Affirmed: jury could credit defense expert; failure to prove proximate cause or intervening fault (Roberts) supports verdict |
| Admissibility of Harris’s offers to represent King Koil free of charge (evidence of liability) | Offers show Harris’s admissions of liability and mitigation evidence; should be admissible | Offers were settlement/compromise attempts and thus inadmissible under Ill. R. Evid. 408 | Affirmed: trial court did not abuse discretion excluding the offers under Rule 408; public policy favors protecting settlement communications |
| Withholding documents in privilege log (emails, handwritten notes) | Court erred in sustaining privilege; King Koil entitled to documents | Documents reflect defense counsel’s internal litigation planning and are protected work product | Affirmed: documents were properly withheld as work product; even if error, nondisclosure was harmless given cumulative evidence |
| Use of special interrogatories testing causation | Interrogatories misstated proximate cause and were prejudicial | Plaintiff drafted the redrafted interrogatories accepted by the court; jury never reached them because it found for defendants | Affirmed: King Koil waived objection by accepting submitted wording; no prejudice because interrogatories went unanswered |
Key Cases Cited
- Snelson v. Kamm, 204 Ill. 2d 1 (Ill. 2003) (standard for reversing jury verdict as against manifest weight)
- Gambino v. Boulevard Mortgage Corp., 398 Ill. App. 3d 21 (Ill. App. Ct. 2009) (review deference where any evidence supports judgment)
- Dep’t of Transp. ex rel. People v. 151 Interstate Road Corp., 209 Ill. 2d 471 (Ill. 2004) (affirming that judgment stands if record contains any supporting evidence)
- Wolfe v. Wolf, 375 Ill. App. 3d 702 (Ill. App. Ct. 2007) (elements required for legal malpractice claim)
- Liberty Mut. Ins. Co. v. Am. Home Assur. Co., 368 Ill. App. 3d 948 (Ill. App. Ct. 2006) (public policy rationale for excluding settlement negotiations under Rule 408)
- Knauerhaze v. Nelson, 361 Ill. App. 3d 538 (Ill. App. Ct. 2005) (withdrawn or amended pleadings ordinarily admissible as admissions but subject to evidentiary rules)
- Maple v. Gustafson, 151 Ill. 2d 445 (Ill. 1992) (general verdicts do not disclose jury’s factual basis for decision)
- People v. Sifuentes, 248 Ill. App. 3d 248 (Ill. App. Ct. 1993) (inadmissible statements used by experts do not make those statements admissible)