Indiana Law Review


Recent Developments In Tort Law*

GeRI J. YONOVER**

I. Introduction

During the survey period, late spring 1989 through late summer
1990, there have been a number of significant developments in tort law.

The judiciary has been responsible for most of them. The Indiana

Supreme Court examined the scope of liability of a children's center

for a sexual attack upon one of its patients,' crafted the boundaries of

premises liability^ and incurred risk,^ and refused to recognize a child's

cause of action for loss of consortium when the child's parent is injured
due to the negligence of a third party."* In several cases, the Indiana

appellate court and Seventh Circuit further refined the public policy

exception to at-will employment discharge articulated by earlier decisions

of the Indiana Supreme Court. ^ The Indiana Court of Appeals also

addressed the reach of the Indiana Medical Malpractice Act,^ adopted

the tort of wrongful life,^ and rejected efforts to make **enjoyment of
Hfe" a separate element of damages.^

The Indiana General Assembly enacted several provisions relating to

tort law. The legislature enhanced civil penalties for unfair claim set-
tlement practices by insurers^ and required the insurance commissioner

to publish figures showing the ratio of valid consumer complaints lodged

against companies weighed by direct premiums earned in Indiana. '° The

legislature also enacted provisions that permit persons ** adversely af-

* Copyright © 1990 Geri J. Yonover.
** Associate Professor, Valparaiso University School of Law. B.A., University of

Chicago, 1964; J.D., IIT Chicago-Kent College of Law, 1983. The author appreciates the

diligent and enthusiastic research assistance of Lynn Malkowski, Class of 1992, and thanks

Terry Little for her secretarial support.

1. Stropes V. Heritage House Children's Center, 547 N.E.2d 244 (Ind. 1989).

2. Douglas V. Irvin, 549 N.E.2d 368 (Ind. 1990).

3. Get-N-Go, Inc. v. Markins, 544 N.E.2d 484 (Ind. 1989), reh'g on other grounds,

550 N.E.2d 748 (Ind. 1990).

4. Dearborn Fabricating & Eng'g Corp. v. Wickham, 551 N.E.2d 1135 (Ind. 1990).
5. See infra notes 73-121 and accompanying text.

6. Ind. Code Ann. § 16-9.5-9-2 (West Supp. 1990). See infra notes 122-43 and
accompanying text.

7. Cowe V. Forum Group, Inc., 541 N.E.2d 962 (Ind. Ct. App. 1989).
8. See infra notes 156-70 and accompanying text.

9. Pub. L. No. 149-1990 (codified at Ind. Code Ann. § 27-4-1 -6(a)(1) (West
Supp. 1990)).

10. Id. § 27-4-1-19.



1246 INDIANA LAW REVIEW [Vol. 24:1245

fected'* by an unfair claim settlement practice to file a complaint with

the insurance commissioner and that require the commission to respond

promptly to the complainant and deliver it to the insurer if he or she

believes the unfair practice has occurred. *'

The Indiana General Assembly also provided that the attorney general

defend a pubUc school teacher if the attorney general determines that

the suit arises from "an act that the teacher in good faith believed was

within the scope of the teacher's duties in enforcing discipline policies

. . .
."'2 Additionally, the legislature enacted a '*guest statute'' for own-

ers/occupiers of agricultural land, which provides that if the owner/

occupier allows gratuituous use of the land to glean agricultural products,

then an injured person can recover only when the injury results directly
from gross negligence or willful, wanton misconduct. '^ Lastly, the As-

sembly immunized from civil liability certain persons who provide in-
formation during investigations of judicial candidates to the judicial

nominating commission if that information is relevant, is an expression

of opinion, or is a statement of fact made without knowledge of the
statement's falsity or reckless disregard of the truth. •"*

This Article will focus on the decisions of the Indiana Supreme

Court and appellate courts in the areas indicated above. Also included

is an analysis of the remarkable non-development of Indiana Civil RICO.
This is somewhat surprising because RICO frequently is correlative to
commercial tort claims.

II. Loss OF Parental Consortium

When a tortfeasor negligently kills a parent, and the child sues for
wrongful death, many states, including Indiana, recognize the child's
recovery for loss of affection and society.'^ However, when a tortfeasor
negligently injures a parent, only eight states (since 1980) permit a minor

child to recover for loss of parental consortium.'^ In Dearborn Fabricating

11. Id. ^ 27-4-1-5.5.

12. Pub. L. No. 16-1990 (codified at Ind. Code Ann. § 4-6-2-1.5 (West Supp.
1990)).

13. Pub. L. No. 217-1989 (codified at Ind. Code Ann. § 34-4-12.9 (West Supp.
1990)).

14. H.E.A. No. 1027 (codified at Ind. Code Ann. § 33-2.1-4-16 (West Supp.

1990)).

15. See, e.g., Andis v. Hawkins, 489 N.E.2d 78, 82 (Ind. Ct. App. 1986).

16. Hibpshman v. Prudhoe Bay Supply, 734 P.2d 991 (Alaska 1987); Villareal v.

State Dep't of Transp., 160 Ariz. 474, 774 P.2d 213 (1989); Weitl v. Moes, 311 N.W.2d
259 (Iowa 1981), overruled by Audubon-Exira v. Illinois Cent. Gulf R.R., 335 N.W.2d

148 (Iowa 1983); Ferriter v. Daniel O'Connell's Sons, Inc., 381 Mass. 507, 413 N.E.2d

690 (1980); Berger v. Weber, 411 Mich. 1, 303 N.W.2d 424 (1981); Hay v. Medical Center



1991] TORT LAW 1247

& Engineering Corp. v. Wickham,^'^ the Indiana Supreme Court joined
the majority of jurisdictions that refuse to recognize a child's loss of

parental consortium claim. In Dearborn, William Wickham's children

sought relief based on the loss of the **services, society, and compan-

ionship of their father.
''^^ The court of appeals refused to dismiss this

claim. The appellate court reasoned that damages for loss of parental

consortium are neither more speculative nor more difficult to assess than

awards for lost spousal consortium or for pain and suffering in general,

which are customarily recoverable in Indiana. '^ The court also concluded

that the other arguments advanced in support of denial of a child's

parental consortium claims — (1) multiplicity of and protracted litigation;
(2) rise in insurance premiums; (3) deference to the legislature; and (4)
possible double recovery — were similarily unpersuasive.^^

Subsequent to the appellate court decision in Dearborn, two judges

on a different panel of the Third District Court of Appeals reached a

contrary conclusion. In Barton-Malow Co. v. Wilburn,^^ Judges Hoffman
and Shields declined to follow Dearborn,^ stating that it is within the

province of the legislature to weigh the benefits of a child's parental

consortium cause of action against other societal concerns.^^ In particular,

the judges noted that although the legislature had recognized a child's

loss of parental consortium in a wrongful death action,^"^ it had not

enacted a companion action for the same loss when the parent is injured. ^^

Although the judges conceded that the omission could have been an

oversight, they believed that the legislature made a deliberate choice.
Based upon their interpretation of legislative intent and the fact that

Hosp., 145 Vt. 533, 496 A.2d 939 (1985); Ueland v. Reynolds Metals Co., 103 Wash.

2d 131, 691 P.2d 190 (1984); Theama v. City of Kenosha, 117 Wis. 2d 508, 344 N.W.2d
513 (1984). See generally Gerse, Compensating the Child's Loss of Parental Love, Care,

and Affection, 1983 U. 111. L. Rev. 293; Note, Recovery for Lost Parental Consortium:

Nightmare or Breakthrough, 9 Nova L.J. 183 (1984); Note, Loss of Parental Society, 17
Suffolk U.L. Rev. 777 (1983); Annotation, Child's Right of Action for Loss of Support,

Training, Parental Attention, or the Like, Against a Third Person Negligently Injuring

Parent, 11 A.L.R.4th 549 (1982).

17. 551 N.E.2d 1135 (Ind. 1990).

18. Dearborn, 532 N.E.2d 16 (Ind. Ct. App. 1988), rev'd, 551 N.E.2d 1135 (Ind.

1990).

19. Id. at 17.

20. Id. at 17-18. For a discussion of the appellate court decision, see Talley, Survey

of Recent Developments in Tort Law, 23 Ind. L. Rev. 583, 610-12 (1990).

21. 547 N.E.2d 1123 (Ind. Ct. App. 1989), vacated in part, aff'd in part, 556

N.E.2d 324 (Ind. 1990).

22. Judge Staton dissented. See id. at 1128 (Staton, J., dissenting).

23. Id. at 1126-27.

24. Ind. Code Ann. § 34-1-1-2 (West Supp. 1990).
25. Barton-Malow, 547 N.E.2d at 1127.



1248 INDIANA LAW REVIEW [Vol. 24:1245

the vast majority of courts that have considered the issue have denied

a child's parental consortium claim, the judges concluded that the ju-

diciary should not create a cause of action for loss of parental consortium

due to tortious injury by a third party. ^^

Unlike the Barton-Malow view that would leave the question to

legislative resolution, the Indiana Supreme Court in Dearborn believed

the consortium issue *'to be entirely appropriate for judicial determi-

nation, "^'^ and proceeded to address the arguments urging recognition

of such damages. One of the strongest arguments favoring the adoption
of a parental consortium cause of action based on negligent injury,,

ultimately rejected by the court, is that similar damages are usually

allowed for analogous claims. Such claims, already recognized in Indiana,

include those brought by a parent to recover damages for loss of a

child's services, society, and companionship;^^ those brought by a wife^^

or husband^^ for loss of consortium (whether as a result of death or

injury); and those brought by a child for the wrongful death of a

parent.^' It seems logical that relationship losses suffered by a child

when a parent is negligently injured should be afforded comparable
treatment. As has been stated: **A child has a moral and should have

a legal right to receive parental love and affection, discipline, and

guidance, and how to grow to maturity in a home environment which
enables . . . develop[ment] into a mature and responsible adult. "^^ Con-

tinuity of relationships, surroundings, and environmental influence are

essential to a child's normal development."

The Indiana Supreme Court was not persuaded by Dearborn's attempt

to distinguish spousal and parental consortium claims by emphasizing

the childbearing and sexual relations aspects of spousal consortium not

present in the parent/child relationship. It observed, appropriately, that

other relational elements — *'love, companionship, affection, society,
comfort, services and solace" — are present both in spousal and parent/
child relationships.^'* Nor was the court entirely swayed by Dearborn's
emphasis on the dangers of multiplicity of actions and substantial increase

of liability, although it did note that the remedy of joinder of the child's

26. Id. at 1129.

27. Dearborn, 551 N.E.2d at 1136.

28. School City of Gary v. Claudio, 413 N.E.2d 628 (Ind. Ct. App. 1980), re\>'d,

448 N.E.2d 1212 (Ind. 1983).

29. Troue v. Marker, 253 Ind. 284, 252 N.E.2d 800 (1969).

30. Burk V. Anderson, 232 Ind. 77, 109 N.E.2d 407 (1952).

31. iND. Code Ann. § 34-1-1-2 (West Supp. 1990).
32. Foster & Freed, A Bill of Rights for Children, 6 Fam. L.Q. 343, 347 (1972).
33. J. Goldstein, A. Freud, & A. Solnit, Beyond the Best Interest of the

Child 30-32 (2d ed. 1979). Cf Fla. Stat. Ann. § 23.131 (West 1983).
34. Dearborn, 551 N.E.2d at 1137.



1991] TORT LAW 1249

claims with the injured parent's claim might be affected by the Indiana

provision tolling the statute of limitations during minority. ^^ Additionally,

the court recognized that a child's recovery for psychological or medical

expenses (which are not consortium damages) incurred as a proximate

result of tortious injury to a parent is not precluded by its opinion, ^^

thus admitting that there is already present a ** multiplicity of litigation

and increased liability" phenomenon. ^^

The Indiana Supreme Court based its rejection of a child's loss of
consortium claim primarily upon **the potential harm to the family which
may be generated in children's actions for loss of consortium. "^^ The
court expressed concern that defendants, faced with such claims, would

seek to undermine and devalue the parent/child relationship in order to

escape or to reduce Hability, and these efforts would cause significant

emotional harm to loving children. ^^ The court recognized that this,
indeed, might also occur when a parent seeks loss of society caused by
tortious injury to a child, but noted that such attacks were directed

primarily at the parent, rather than at the child."^^ However, this may
be an empty distinction. In either situation, whether it is a parent seeking

damages for loss of a child's consortium (customarily allowable), or a

child seeking damages for loss of parental consortium, it is the rela-

tionship that will be the focus of a defendant's attack."^' It would seem,

therefore, that the potential emotional distress that a child may suffer
is the same in either situation. In fact, the court acknowledged that its

attempted distinction has not been applied to preclude a child's claim

for loss of consortium under Indiana's Wrongful Death Act.'*^

35. Id. (citing Ind. Code Ann. § 34-1-2-5 (West 1983)). Of course, the roadblock
to joinder could be removed by enactment of a uniform limitations period both for the

parent's personal injury action and for the minor's action for loss of consortium. See

Salin V. Kloempken, 322 N.W.2d 736, 740 (Minn. 1982).
36. Dearborn, 551 N.E.2d at 1139 n.2.

37. Id.

38. Id. at 1137.

39. Id.

40. Id. at 1137-38.

41. In fact, even in spousal loss of consortium claims, the quality of the relationship

is examined. See, e.g.. Planned Parenthood of Northwest Ind. v. Vines, 543 N.E.2d 654,

657 (Ind. Ct. App. 1989) (that married couple was temporarily separated goes to the issue

of damages).

42. Dearborn, 551 N.E.2d at 1138 (citing Ind. Code Ann. § 34-1-1-2 (West Supp.
1990)). As stated by the Arizona Supreme Court in Villareal v. State Dep't of Transp.,

160 Ariz. 474. 479, 774 P.2d 213, 218 (1989): "[0]ften death is separated from severe

injury by mere fortuity . . . both may cause a deleterious impact on the quality of
consortium. It would be inconsistent to allow recovery for loss of consortium resulting

from death but to deny recovery when the loss results from severe injury."



1250 INDIANA LAW REVIEW [Vol. 24:1245

Nevertheless, the court attempted to distinguish the two causes of

action. The first distinction is based upon the rationale of wrongful

death statutes. At common law, the heirs of a decedent did not have
a cause of action against the tortfeasor.'*^ Wrongful death statutes rem-

edied the perceived injustice of permitting a tortfeasor who negligently
killed someone to escape liability entirely, thus providing an incentive

to **finish off the injured victim. Yet, the court noted that when a
parent is injured, the tortfeasor does not entirely escape liability because

the injured victim has a cause of action for his or her injuries. The

child's claim is not essential to closing the escape-of-all-liability loophole."^

The second distinction drawn by the Indiana Supreme Court between

a claim based on a parent's death and one based on the parent's injury

relates again to the function of wrongful death actions. Wrongful death

suits, stated the court, are **the only means by which a family unit can

recover compensation for the loss of parental care and services when a
parent is tortiously killed."'*^ When the parent is negligently injured, but
lives, **the child's loss can be compensated in the parent's own cause
of action.'"^ But this may not necessarily be so. It is at least conceivable
that a relatively minor injury to the parent may occasion a far greater
consortium loss to a child of tender years. The child's recovery for loss

of parental consortium is distinct from the parent's recovery of, for

example, lost wages, which provides for the child's economic, but not

emotional, deprivation.'*^

Nonetheless, Dearborn precludes a child's recovery for loss of pa-

rental consortium based upon injury, but not upon death of the parent.

Indiana thus remains in the majority of states that have denied recovery

to a child's parental consortium claim.'^^

III. Liability of Child-Care Centers

The prevalence of child abuse in this country is staggering. "^^ When
it occurs within the family home setting and is reported, social agencies

43. The first inroad was Lord Campbell's Act, 9 & 10 Vict., c. 93 (1846), which
allowed recovery to the famiHes of persons killed by tortious conduct. All states now
have wrongful death statutes. See S. Speiser, Recovery for Wrongful Death (2d ed.
1975).

44. Dearborn, 551 N.E.2d at 1138.

45. Id.

46. Id. (emphasis supplied) (citing Borer v. American Airlines, 19 Cal. 3d 441,

452, 563 P.2d 858, 866, 138 Cal. Rptr. 302, 310 (1977)).

47. See, e.g., Ferriter v. Daniel O'Connell's Sons, Inc., 381 Mass. 507, 413 N.E.2d

690 (1980); Berger v. Weber, 411 Mich. 1, 303 N.W.2d 424 (1981).
48. See supra note 16.

49. See generally National Legal Resource Center for Child Advocacy and
Protection, Child Sexual Abuse: Legal Issues and Approaches (rev. ed. 1981).



1991] TORT LAW 1251

and the criminal justice system become involved. Somewhat more in-
frequently and with varying success, victims of child abuse sue their

parent-victimizers in tort.^^ When child abuse occurs in an institutional
setting, questions arise concerning the liability of the institution based

on the conduct of one of its employees.

In its recent opinion, Stropes v. Heritage House Childrens Center,^^
the Indiana Supreme Court held that victims of child abuse may proceed
under two theories: respondeat superior and non-delegable duty. Stropes

involved a sexual attack upon a fourteen-year-old by a male nurse's

aide employed by the center. Plaintiff had cerebral palsy, severe mental

retardation, and he had the mental capacity of a five-month-old infant

with insufficient verbal and motor skills to assist in his own sustenance
or hygiene. He was placed into the custodial care of the center as a
ward of the county welfare department. While performing the usual

tasks of feeding, bathing, and changing the plaintiff's clothing, the

nurse's aide got into bed with him and performed both oral and anal

sex on him. In the complaint filed against the aide and the center,

Stropes claimed that the center was responsible for these sexual acts

committed by the aide while on duty.

The appellate court agreed with the trial court that judgment in

favor of the center was appropriate." The Indiana Supreme Court

reversed the dismissal of the claims and remanded the case for trial.

The court concluded that respondeat superior may apply even when the
complained-of conduct is engaged in to satisfy the perpetrator's personal

desires." A per se determination that sexual assaults are outside the
scope of employment

would draw an unprincipled distinction between such assaults

and other types of crimes which employees may commit in
response to other personal motivations, such as anger or financial

pressures. Rather, the nature of the wrongful act should be a

consideration in the assessment of whether and to what extent

[the aide's] acts fell within the scope of his employment such

that [the center] should be held accountable.
^"^

50. See, e.g., Hildebrand v. Hildebrand, 736 F. Supp. 1512 (S.D. Ind. 1990)

(predicting that Indiana would not apply the discovery rule to toll the statute of limitations

when injury stems from alleged physical and sexual abuse of minor by a parent). But

cf. Barnes v. Barnes, 566 N.E.2d 1042 (Ind. Ct. App. 1991) (parental immunity precludes

recovery by daughter who alleged rape and assault by her father when she was 15 years
old).

51. 547 N.E.2d 244 (Ind. 1989).

52. Stropes v. Heritage House Childrens Center, 531 N.E.2d 250 (Ind. Ct. App.

1988) (unpublished opinion).

53. Stropes, 547 N.E.2d at 249.

54. Id.



1252 INDIANA LAW REVIEW [Vol. 24:1245

The court held that the jury should determine whether the facts suggest

that the aide acted to further the employer's business. ^^ Of particular
note in this case is that the aide engaged in fully authorized conduct

(undressing and redressing the victim) immediately prior to and after

the sexual attack. This was but one factor for a jury to consider in

ascertaining the scope of employment issue. ^^

The court found plaintiffs second theory of recovery based on non-

delegable duty similarly viable. The court noted that the non-delegable

duty inquiry differs from the respondeat superior analysis in that the

focus of the respondeat superior determination is on the significant

relationship between employer and employee. The court further stated

that the *' imposition of [vicarious] liability is premised on the control

that the one may exercise over the other.''" In contrast, the court
observed that the non-delegable duty determination focuses upon the

significant relationship between carrier (custodial center) and passenger

(patient-resident) and stated that the * imposition of liability is premised

on the control that is surrendered to the one by the other. "^^

The effect of Stropes can only be beneficial. It will encourage those
who assume the care of individuals most in need of care to provide
close supervision of employee/care-givers. The willfulness of the servant
will not automatically bar imposition of liability under either respondeat

superior or non-delegable duty theories.

IV. Landowner's Liability

The Indiana Supreme Court delineated the boundaries of premises
liability and incurred risk in two recent cases during the survey period.

In Get-N-Go, Inc. v. Markins,^^ the court considered whether a general

awareness of potential harm amounts to incurred risk when 1) there is
no reasonable opportunity to extricate oneself or 2) there is a real

inducement to continue despite the danger. In both instances, the court

found no incurred risk.^

55. Id. at 249-50.

56. Id.

57. Id. at 254.

58. Id.

59. 544 N.E.2d 484 (Ind. 1989), reh'g on other grounds, 550 N.E.2d 748 (Ind.

1990).

As this Article went to press, the Indiana Supreme Court handed down a case which
held that social guests are invitees, rather than licensees, and therefore are entitled to a

duty of reasonable care from landowners. Burrell v. Meads, 59 U.S.L.W. 2642 (Ind. Apr.

10, 1991) (No. 92503-9104-CV-287). This significant case will be discussed more thoroughly

in the 1991 survey.

60. Get-N-Go, 544 N.E.2d at 487-88.



1991] TORT LAW 1253

Get-N-Go involved a slip and fall accident in defendant's parking

lot. On a wintry, icy day Markins, an elderly diabetic, walked to the
convenience store where she normally shopped. She fell, injuring her

knee. At trial, conflicting evidence was presented concerning the extent

and timing of plaintiffs awareness of the icy conditions outside defen-

dant's store. The jury found for the plaintiff, but the court of appeals

reversed, holding that Markins had incurred the risk of her injuries.^'

The Indiana Supreme Court vacated this decision and affirmed the

judgment of the trial court. The court noted that plaintiff's actions were

not entirely voluntary: she did not become aware of the specific risk

until exposure to it and chose to continue because she was so close to

the store and needed the food to avoid an adverse insulin reaction."

The supreme court held that these facts, determined by the jury to be

in Markins's favor, do not amount to incurred risk such that the store

is relieved of liability."

In Douglas v. IrviUy^ the court weighed the comparative knowledge

of invitee and landowner in assessing whether the landowner breached

its duty of care. The court overruled language in prior cases suggesting

an independent **equal or superior knowledge" rule as a limitation on

the initial existence of the landowner's duty of care.^^ Douglas v. Irvin^^

involved a man who had been contacted by police when the police were
investigating a burglar alarm at the man's neighbor's house. While at

the neighbor's residence, and in darkness because of a power failure,

the man stumbled over a plant and fell into a floor-level hot tub.
Sometime prior, the defendant homeowner had shown the man the new
hot tub room. Defendant claimed that the **equal or superior knowledge"

rule requires a plaintiff to provide proof of a landowner's superior

knowledge before a duty of care even arises.^^ The court disagreed.

Relying on section 343 of the Restatement of Torts,^^ the court noted

that the comparative knowledge of landowner and invitee is not a factor

in the duty analysis; rather, it is properly considered only in the second

step of a negligence inquiry — breach of duty.^^ Thus, if *'a landowner
knows of a condition involving a risk of harm to an invitee, but could
reasonably expect the invitee to discover, realize, and avoid such risk,"^°

61. Id. at 486.

62. Id. at 487.

63. Id. at 487-88.

64. 549 N.E.2d 368 (Ind. 1990).

65. Id. at 371.

66. 549 N.E.2d 368.

67. Id. at 369.

68. Restatement (Second) of Torts §§ 343, 343A(1) (1965)
69. Douglas, 549 N.E.2d at 370.

70. Id.



1254 INDIANA LAW REVIEW [Vol. 24:1245

then plaintiff may well fail to prove breach of the duty. Further, the
court distinguished the objective standard used to evaluate the land-

owner's knowledge for purposes of breach of duty from the subjective

analysis used in evaluating the invitee's actual knowledge.^' These separate

inquiries conceivably could result in finding a breach of duty on the

part of the landowners, yet imposing no liability because plaintiffs actual

knowledge and appreciation of the specific risks would establish a defense

of incurred risk.''^

After Get-N-Go and Douglas, a successful premises liability case

looks like this: Plaintiff must plead and prove that (1) the landowner

owes a duty to the invitee to keep the premises reasonably safe; and

(2) defendant breached that duty and caused injury by not possessing

knowledge of the harm that a reasonably prudent person would have
(objective standard). If, however, defendant can show that plaintiff's

knowledge of the specific risks actually were equal or superior to that

of defendant (subjective standard), then defendant would not be liable.

V. Employment Torts

Indiana remains an **employment at-will" state. As a general prop-
osition, an employee at-will may be discharged at any time for any
reason or for no cause at all without triggering employer liability.''^ But

*'*generally' ... is not always. "^"^

Between 1959 and 1978, Indiana was one of a few vanguard states^^

to carve out exceptions to the employment at-will doctrine.^^ In Frampton

V. Central Indiana Gas Co.,'''' the Indiana Supreme Court crafted a

public policy exception to the employment at-will doctrine: an employer

could not discharge an employee solely because of the employee's exercise

of a statutory right. ^* In McClanahan v. Remington Freight Lines, the
court further defined the limits of the public policy exception by holding

71. Id.

72. Id.

73. See Ryan v. J.C. Penney Co., 627 F.2d 836 (7th Cir. 1980) (applying Indiana

law); Mead Johnson & Co. v. Oppenheimer, 458 N.E.2d 668 (Ind. Ct. App. 1984).
74. Hamann v. Gates Chevrolet, 910 F.2d 1417, 1418 (7th Cir. 1990).
75. See, e.g., Petermann v. Local 396, Int'l Bhd. of Teamsters, 174 Cal. App.

2d 184, 344 P.2d 25 (1959); Kelsay v. Motorola, 74 111. 2d 172, 384 N.E.2d 353 (1978);

Monge V. Beebe Rubber Co., 114 N.H. 130, 316 A.2d 549 (1974).
76. Today, a clear majority of states articulate some form of contract or tort

theory as a basis for rejecting the strict at-will rule. See generally H. Perritt, Jr.,

Employee Dismissal Law & Practice (2d ed. 1987). For a 1989 overview, see Employment-
At-Will: A 1989 State-By-State Survey (Nat'l Employment Law Institute).

77. 260 Ind. 249, 297 N.E.2d 425 (1973).

78. Id. (discharge of employee for filing workers compensation claim violates public

policy).



1991] TORT LAW 1255

that public policy prohibits an employer from discharging an at-will

employee in retaliation for the employee's refusal to commit an illegal

act for which the employee would be personally liable. ^^ In a series of

cases, discussed below, decided during the survey period, both Indiana

and federal courts examined the boundaries of these decisions. The cases

involved plaintiffs who urged an extension or a broad reading of Framp-
ton and McClanahan, and defendants who urged the courts to narrowly
confine Frampton's articulation of the public policy statutory exception

and McClanahan*s **refusal to act illegally"^° retaliatory discharge ex-

ception. On balance, it appears that defendants have been more suc-
cessful.

Smith V. Electrical System Division of Bristol Corp,^^ involved dis-

charge of an employee, allegedly in retaliation for pursuing workers'

compensation benefits. Smith had been an employee of Bristol for

approximately eight months. After her on-the-job injury, she applied

for and received workers' compensation benefits. Bristol allowed a med-

ical leave of absence for almost two years. Bristol then terminated Smith's

employment pursuant to its absence control policy contained in its

employees' manual.*^ Subsequently, Smith sued Bristol for wrongful

discharge.

In affirming the grant of summary judgment to the employer, the
Indiana appellate court stressed that Frampton*s prohibition against

retaliatory discharge was really quite narrow: it applies only when the
discharge is ''solely because of the employee's exercise of a statutory

right. "^^ The court noted that Smith claimed that her employer indirectly

penalized her exercise of workers' compensation rights because the ab-

sence control policy discouraged application for fear of discharge. In

reply, Bristol argued that its absence policy was non-discriminatorily

applied: whether due to illness, employment-related injury, or non-em-

ployment-related injury, excessive absence of an employee results in

termination of employment.

The court concluded that no penalty was directed at Smith's workers'

compensation claim. In the court's view, Bristol penalized Smith for

excessive absence.^"^ The discharge would have occurred even if she had
chosen to take an unpaid leave, instead of availing herself of workers*

compensation benefits.^^ Thus, reasoned the court, the discharge did not

79. 517 N.E.2d 390 (Ind. 1988).

80. Hamann v. Gates Chevrolet, 910 F.2d 1417 (7th Cir. 1990).
81. 557 N.E.2d 711 (Ind. Ct. App. 1990).

82. Id. at 712.

83. Id. (emphasis added).

84. Id. at 713.

85. Id.



1256 INDIANA LAW REVIEW [Vol. 24:1245

result '* solely'' from her exercise of a statutory right. *^ Frampton should

not be extended to prohibit what is, in essence, **a neutral policy effecting

an incidental detriment ... to receiving work[ers'] compensation."^^

Defendant was successful in reining in the appHcability of Frampton

in another case. In Lawson v. Haven Hubbard Homes, Inc.,^^ an em-
ployee alleged that, in violation of Frampton, she was terminated in

retaliation for filing unemployment compensation benefits.^^ Lawson
claimed that she had a right to file for unemployment benefits when
her employer refused to permit her to return to work following a medical

leave. Upon refusal of re-employment, Lawson applied for these benefits
and contended that the employer then fired her. She argued that the

employer did exactly what Frampton *s public policy exception forbids:

induced her to forego statutory benefits by firing her when she applied
for them.

The Indiana Court of Appeals did not find Lawson' s reliance on

Frampton persuasive. The court noted that Frampton' s underlying ra-
tionale — *'fear of discharge hav[ing] a deleterious effect on the exercise
of a statutory right"^ — simply was inapplicable to the Lawson facts
because an employee does not file an unemployment compensation claim

unless he or she is unemployed or unless, as here, the employer refuses

to allow the employee to return to work. In either situation, so long

as the employee comports with the statutory requirements,^' the employee

obtains unemployment benefits. Thus, the court reasoned, the employer's

actions did not induce Lawson to forgo statutory benefits. The court
stated.

If Lawson files for unemployment benefits because her Employer
unjustifiably refuses to allow her to return to work, she has

not voluntarily left her employment without good cause and she

will receive benefits. If she files a claim for unemployment

benefits and her Employer fires her in retaliation, she has not

been discharged for **just cause" and again, she will receive

benefits.^2

86. Id. Cf. Peru Daily Tribune v. Shuler, 544 N.E.2d 560, 563-64 (Ind. Ct. App.

1989) (when no records indicating substandard performance and discharge followed filing

of workers compensation claim, the jury could reasonably find a wrongful discharge).

87. Smith, 557 N.E.2d at 713.

88. 551 N.E.2d 855 (Ind. Ct. App. 1990).
89. Id.

90. Id. at 860 (quoting Frampton, 260 Ind. 249, 251, 297 N.E.2d 425, 427 (1973)).

91. Ind. Code Ann. § 22-4-15-1 (West Supp. 1990) requires, for eligibility, that
a claimant have voluntarily left employment with good cause or have been discharged

without just cause.

92. Lawson,, 551 N.E.2d at 860 (affirming grant of summary judgment to defen-

dant, but denying defendant's request for attorney's fees pursuant to Ind. App. R. 15(G)).



1991] TORT LAW 1257

However, Judge Chezem did not agree.^^ Although Judge Chezem
agreed with the majority that as a general proposition an unemployed

person cannot be fired, she observed **that is exactly what happened in

this case; Lawson was still an employee of [defendant], but was eligible
for unemployment benefits as a result of her employer's unwillingness

to, at that time, allow her to return to worJc."^"^ As such, the interference
with the employee's attempt to recover statutory benefits is exactly that

behavior proscribed by Frampton. Therefore, even though damages might

be difficult to measure. Judge Chezem would have reversed the grant
of summary judgment to the employer.^^

Hamann v. Gates Chevrolet, Inc.,^^ a diversity case, presented an
even closer question of retaliatory discharge than did Lawson or Smith.
Yet, once again, an appellate court upheld summary judgment for de-
fendant. In Hamanriy a car dealership company hired plaintiff in 1982
as a title clerk. She was reassigned to the accounting department, but

occasionally processed titles as well. Part of her responsibilities involved

several illegal activities: altering titles, forging signatures, and notarizing

false documents. From 1983 until 1985, she refused on numerous oc-
casions to alter car titles illegally. Although she complained frequently

to her supervisors and refused to participate in the illegal activities.

Gates did not fire her. In September 1985, a co-worker sought Hamann's
advice concerning some illegal machinations of a title and Hamann
advised the co-worker that it was wrong to do so. Hamann also tele-
phoned an employee of a separate, but related, business entity and told

her about Gates's illegal methods of title alteration. About a month
later. Gates fired Hamann.^''

In response, Hamann sued Gates. Relying on McClananhan v. Re-
mington Freight Lines,^^ she alleged that Gates fired her in retaliation

for refusing to commit illegal acts for which she would be personally

liable. The Seventh Circuit concluded that Hamann did not have a
successful retaliatory discharge claim because McClanahan requires the
plaintiff to prove more than that she was fired; she must allege and
prove that her termination was caused by a prohibited retaliatory motive.^

According to the Seventh Circuit, Hamann failed to do this. The court
rejected Hamann's argument that it was reasonable to infer from the
timing of her termination that it was done in retaliation for her refusal

93. Id. at 861 (Chezem, J., dissenting).

94. Id. at 862.

95. Id.

96. 910 F.2d 1417 (7th Cir. 1990).

97. Id. at 1419.

98. 517 N.E.2d 390 (Ind. 1988).

99. Hamann, 910 F.2d at 1420.



1258 INDIANA LAW REVIEW [Vol. 24:1245

to alter documents illegally. Instead, Judge Eschbach, writing for the

majority, stressed that the causation element, common in both title VII
and Indiana retaliatory discharge claims,'*^ was deficient. The fact that

Hamann refused, with apparent impunity, to participate in the illegal
scheme for some two years prior to termination destroyed the requisite

nexus between her conduct and the alleged retaUatory discharge. Further,

Gates's proffered reasons for firing Hamann (**bad attitude" and **lack
of productivity") did not evidence retahation, but were explgiinable from

a **management perspective. "^°* Hamann was fired for ** spread[ing]
discomfort" among co-workers and **spread[ing] news that Gates was
altering titles among persons outside of Gates. "'°^ This, reasoned the
court, may be a poor reason to fire an employee, but one that Mc-
Clanahan does not proscribe. •'^^

McClanahan allows a claim of retaliatory discharge if there is a
causal nexus between the employee's refusal to commit an illegal act

for which he or she would be personally liable and termination.'^

Although McClanahan seemed to broaden the narrow exception to the
general at-will rule based on exercise of statutory rights that Frampton

articulated, it did not expressly reach all **whistleblowing" conduct. '^^

Yet Hamann's claim is clearly encompassed by McClanahan. Given the
conflicting inferences to be drawn from the timing of Gates's discharge

of Hamann, there is, at least for purposes of disposition on summary
judgment, a material fact in dispute. As Judge Wood noted in dissent,
"the evidence as a whole" suggested it is not **unreasonable to view

Hamann's discharge as sufficiently related to her refusal to advance the
allegedly illegal activities of her employer,"'^ thereby rendering summary
judgment inapposite. Interestingly, in a diversity case decided just a few

years prior to McClanahan, the district court held that an employee

discharged for refusing to participate in an illegal scheme to set back

odometers stated a retaliatory discharge claim under Indiana law.'°^ The

Seventh Circuit did not refer to this case in Hamann.
During the survey period, at least one plaintiff succeeded in stating

a retaliatory discharge claim. Call v. Scott Brass, Inc.^^ addressed the

100. Id.

101. Id. at 1422.

102. Id.

103. Id. Judge Wood dissented: "This situation is too much for summary judgment."
Id.

104. McClanahan, 517 N.E.2d 390.

105. Id.

106. Hamann, 910 F.2d at 1422 (Wood, J., dissenting).
107. Sarratore v. Longview Van Corp., 666 F. Supp. 1257 (N.D. Ind. 1987).
108. 553 N.E.2d 1225 (Ind. Ct. App. 1990).



1991] TORT LAW 1259

interplay between a Frampton cause of action and a statute that contains

a civil remedy for the proscribed conduct.

Indiana law provides, in part, that it is a Class B misdemeanor to
intentionally dismiss an employee because that employee has received or

responded to a jury summons.'^ Further, an employee may, within

ninety days of dismissal, sue for lost wages and reinstatement, and also

may recover reasonable attorney's fees if successful.' •^ The Call plaintiff
appeared for jury service on November 3, 1986. On that date, after
threats of discharge if she complied with the jury summons, Brass

discharged her. Call filed a complaint on March 9, 1987, to which Brass
responded by a motion to dismiss, claiming that since its enactment in

1977, the Indiana Code provided the exclusive remedy for interference
with jury service and that, therefore, Call's claim was time-barred under

the Code. The trial court agreed and granted summary judgment for
defendant on this basis."' The Indiana appellate court reversed.

The question before the court was whether the Indiana statute sup-

plemented or excluded common law remedies. Under Indiana law, when
the legislature enacts a statute that creates a new right and prescribes

a remedy, the statutory remedy is exclusive.''^ Therefore, resolution of

Call's claim depended upon timing: did the judicially created Frampton/

McClanahan public policy exception precede the statutory remedy? The

Indiana Supreme Court decided Frampton in 1973 and McClanahan in
1988. The legislature enacted the civil remedies for interference with jury

service in 1977. If Frampton created the cause of action stated by Call,

then the statutory remedies were not exclusive and Call's claim not time-

barred. If, however, Frampton is viewed as limited to its facts until

1988, when the Indiana Supreme Court expanded the Frampton at-will
exception in McClanahan, then the statute provides the exclusive remedy

and Call's claim would fail.''^

After an extensive examination of relevant case law since 1973, Judge

Chezem, writing for the majority, concluded that McClanahan did not
create a new cause of action as defendant urged, but ** merely adopted
and applied the Court of Appeals' interpretation of Frampton. ''^^* Ap-

pellate decisions since Frampton, as well as the 1988 Indiana Supreme

Court decision in McClanahan, **did not gradually develop the tort of

retaliatory discharge; rather, the[se] courts . . . interpreted Frampton

109. IND. Code Ann. § 35-44-3-10 (West 1986).
110. iND. Code Ann. § 34-4-29-1 (West 1983).
111. Call, 553 N.E.2cl at 1226.

112. Id. zi 1227 (citations omitted).

113. Id.

114. Id. at 1229.



1260 INDIANA LAW REVIEW [Vol. 24:1245

itself.'**'^ Therefore, the retaliatory discharge tort created by the judiciary

preceded by four years the statutory remedy crafted by the legislature,

which, then, is not exclusive."^

It should be noted, however, that the court might well reach the

same conclusion even if the timing varied — that is, even if the statute
predated the Frampton cause of action. Other statutes containing exclusive

remedies expressly state their exclusivity, as in the Worker's Compensation

Act,'''' Worker's Occupational Diseases Act,''^ and Medical Malpractice

Act."^ The jury dismissal statute makes no mention of exclusivity.

Therefore, the court would not be inclined to read it into the statute. '^^

Despite the plaintiffs success in Cally the conclusion to be drawn

from the retaliatory discharge cases during the survey period is that

Indiana is still very much an "at-will" state. Courts have been hesitant
to extend Frampton and McClanahan much beyond their facts. At least
in the employment area, Indiana courts seem unwilling to define public

policy broadly, believing it to be a job best left to the legislature. '^^

VI. The Scope of the Medical Malpractice Act

Indiana's Medical Malpractice Act'^^ represents the nation's most

strict and most lasting effort to curtail the cost of medical malpractice

insurance. Its cap on the amounts awarded, raised from $500,000 to

$750,000 this year,'^^ and its precondition to suit, presentation to a

115. Id.

116. Id. Cf. Holtz V. Board of Comm'rs of Elkhart County, 548 N.E.2d 1220 (Ind.
Ct. App. 1990) (county's termination of plaintiff's employment for "whistle blowing" is

not within the purview of the Indiana Tort Claims Act, Ind. Code Ann. § 34-4-16-5-1

(West 1983), because a retaliatory discharge claim does not involve personal injury, death,

or "property" loss).

117. Ind. Code Ann. § 22-3-2-6 (West Supp. 1990).
118. Id. § 22-3-7-6.

119. Id. § 16-9.5-9-2.

120. Call, 553 N.E.2d at 1229. The court also rejected defendant's argument that

its conduct did not fall within Frampton/McClanahan prohibitions because plaintiff here

would not be without a remedy. Id. at 1229-30.

121. See, e.g., id. at 1229 (citations omitted).

122. Ind. Code Ann. § 16-9.5-9-2 (West Supp. 1990).
123. Pub. L. No. 189-1989, § 2(a) (codified at Ind. Code Ann. § 16-9.5-2-2 (West

Supp. 1990) (for acts of malpractice occurring on or after Jan. 1 1990)). Only three other

states, Nebraska, South Dakota, and Virginia, have absolute limits on all damages and

these states cap the amount at $1 million. See, e.g., S.D. Codified Laws Ann. § 21-3-

11 (1988). See also Wilkerson, Indiana Law at Center of Malpractice Debate, N.Y. Times,
Aug. 20, 1990, at A13, col. 1. Most states restrict only pain and suffering damages. See,

e.g., Cal. Civ. Code § 3333.2 (West Supp. 1989); Ohio Rev. Code Ann. § 2307.43
(Baldwin 1989).



1991] TORT LAW 1261

medical review panel, ^^"^ arguably have achieved the desired result. Indiana

malpractice insurance premiums are among the lowest in the nation and
the number of Indiana doctors has risen by fifty percent since 1975.'^^

A recurrent problem, however, is defining the reach of the Act; for
which of the injuries allegedly caused by health providers must a plaintiff

comply with the Act? The question is, then, whether the tort claim

arises as a consequence of the physician-patient relationship such that

a plaintiff must submit all proposed malpractice claims to a medical

review panel before filing suit against the health care provider. In several

cases during the survey period, the Indiana appellate court addressed

this question.

Midtown Community Mental Health Center v. Estate of Gahl^^^
involved a wrongful death claim against a health care provider brought

after a former patient of the mental health center shot and killed Gahl,

a non-patient. The plaintiff alleged that defendant was negligent in the

care of the patient and failed to warn Gahl of the patient's dangerous

propensities. Defendant filed a motion to dismiss for failure to fulfill

the pre-suit administrative medical review as required by the Indiana

Medical Malpractice Act. The appellate court affirmed the denial of

defendant's motion to dismiss. It concluded that the clear focus of the

Act was the physician-patient relationship. ^^'^ Because Gahl was not a

patient, the defendant's conduct did not come within the purview of
the Act. Rather, the Act's purpose was

*

'unrelated to the sort of Uability

a health care provider risks when a patient commits a criminal act against
a third party. "^^^ Even though the claim was based on conduct that

could constitute malpractice relative to the third party, it did not con-

stitute malpractice relative to Gahl.*^^ Alhough * 'related" to the alleged

malpractice, the claim was "not so intertwined" as to come within the
Act's procedural requirements. ^^^

The court reached a similar conclusion in Collins v. Thakkar,^^^

Harts V. Caylor-Nickel Hospital, Inc.,^^^ and Methodist Hospital of

124. IND. Code Ann. § 16-9.5-9-2 (West 1988).
125. Wilkerson, supra note 123.

126. 540 N.E.2d 1259 (Ind. Ct. App. 1989).

127. Id. at 1262 (citing Ind. Code Ann. § 16-9.5-l-l(h) (West Supp. 1990)). The
Act defines malpractice as "any tort or breach of contract based on health care or

professional services rendered, or which should have been rendered, by a health care

provider, to a patient.'' Id. (emphasis in original).

128. Id.

129. Id.

130. Id. It should be noted that Gahl's failure-to-warn claim may very well succeed.
Cf. Webb. V, Jarvis, 553 N.E.2d 151 (Ind. Ct. App. 1990) (shooting victim's negligence

claim against assailant's physician states a claim because defendant owed a duty to this
foreseeable plaintiff).

131. 552 N.E.2d 507 (Ind. Ct. App. 1990).

132. 553 N.E.2d 874 (Ind. Ct. App. 1990).



1262 INDIANA LAW REVIEW [Vol. 24:1245

Indiana, Inc. v. Ray.^^^ In all three cases, unlike Gahl, the plaintiff was

a patient of the defendant health care provider. In Harts and Ray,

plaintiffs suffered injury during hospitalization. Harts broke his hip as

a result of a bedrail giving way and Ray contracted Legionnaire's disease.
Defendants in both cases argued that the court had no subject matter

jurisdiction because plaintiffs failed to comply with the medical review

procedures of the Indiana Medical Malpractice Act. The courts disagreed,

noting that not every patient-provider claim is subject to the Act's

coverage. Rather, both Harts and Ray alleged ordinary negligence, un-
related to the rendering of medical treatment that would be subject to

the Act's requirements. The issue in these cases, the courts stated, revolved

around premises liability, deriving from common law.'^"* The purpose of
the medical review panel is to engage the expertise of those "actually

quahfied" in evaluating malpractice claims. '^^ The services of these people

are simply not needed in dealing with matters of ordinary negligence. '^^

On very different facts, the Collins v. Thakkar^^^ court reached the
same conclusion. Sometime after Collins became Thakkar's patient, their

relationship became sexually intimate. CoUins subsequently consulted

Thakkar about the possibility that she was pregnant with his child.

Thakkar examined Collins, assured her that she was not pregnant, but

then without her consent employed a metal instrument that caused her

great pain and resulted in a miscarriage.*^^ The court rejected defendant's

contention that the Act governed Collins 's claim.

Instead, the court read the Act as applying only to medical services

** undertaken in the interest of or for the benefit of the patient's health,"

and involving *'the exercise of professional judgment. "'^^ Here, in con-

trast, the physician's actions were ** purposeful," **wanton and gratui-

tious," and '*not designed to promote the patient's health."''*^ Therefore,

in the court's view, Collins's allegations were determinable by a jury,

without need of such prior medical review as the Act requires.'"*'

Taken together, these four cases seem to narrow the potentially

broad applicability of Indiana's Medical Malpractice Act. Apparently,

patient status is required before the Act's procedural review requirements

133. 551 N.E.2d 463 (Ind. Ct. App. 1990).

134. Harts, 553 N.E.2d at 878; Ray, 551 N.E.2d at 469.

135. Ray, 551 N.E.2d at 468.

136. Harts, 553 N.E.2d at 878-79; Ray, 551 N.E.2d at 468.

137. 552 N.E.2d 507 (Ind. Ct. App. 1990).

138. Id. at 509.

139. Id. at 510-11.

140. Id. at 511.

141. Id.



1991] TORT LAW 1263

apply; ''^^ however, Collins, Harts, and Ray indicate that patient status
alone does not suffice. Instead, the courts will carefully inquire into the

nature of the complained-of conduct, loathe to consign plaintiffs "or-

dinary*' tort claims to the procedural restrictions of the Act. The effect,

of course, is to free these plaintiffs from the necessity of referring their

claims initially to a board of medical experts as a condition precedent

to suit. An even more significant impact of these decisions is to provide
successful plaintiffs with an uncapped damage remedy. The Act's cap
of $750,000 would also not apply in claims of ordinary negligence against

health care providers."*^

VII. Wrongful Life

In Cowe V. Forum Group, Inc.,^"^ the Indiana Court of Appeals
upheld claims of wrongful life and prenatal tort based on preconception

negligence. To sustain its conclusion, the court had to read quite narrowly
the proscription of the Indiana statute that states that **no person shall

maintain a cause of action or receive an award of damages on his behalf

based on the claim that but for the negligent conduct of another he

would have been aborted. "•''^

Only a few states have allowed a wrongful life action. '"^^ A wrongful
life claim is brought on behalf of an impaired child and alleges that

negligent advice, diagnoses, or treatment given to the child's parents

allowed the child to be conceived and born. In contrast, wrongful birth

claims are brought by parents. The crux of a wrongful birth claim is

that negligent advice or treatment deprived the parents of the choice of

terminating the pregnancy by abortion, thereby preventing birth of a

defective child.
•'^^

142. Midtown Community Mental Health Center v. Estate of Gahl, 540 N.E.2d
1259 (Ind. Ct. App. 1989).

143. Cf. Collins, 552 N.E.2d at 510 ("acts or omissions of a health care provider

unrelated or outside the provider's role as a health care professional are not the Act's

aim").

144. 541 N.E.2d 962 (Ind. Ct. App. 1989). For a good discussion of Cowe, see

Note, Pay Me Now or Pay me Later?: The Question of Prospective Damage Claims for
Genetic Injury in Wrongful Life Cases, 23 Ind. L. Rev. 753 (1990).

145. Ind. Code Ann. § 34-1-1-11 (West Supp. 1990).
146. See, e.g., Turpin v. Sortini, 31 Cal. 3d 220, 643 P.2d 954, 182 Cal. Rptr.

337 (1982); Procanik v. Cillo, 97 N.J. 339, 478 A.2d 755 (1984); Harbeson v. Parke-

Davis, Inc., 98 Wash. 2d 460, 656 P.2d 483 (1983).
147. See, e.g.. Berman v. Allan, 80 N.J. 421, 404 A.2d 8 (1979); Azzolino v.

Dingfelder, 315 N.C. 103, 337 S.E.2d 528 (1985); Jacobs v. Theimer, 519 S.W.2d 846

(Tex. 1975). Courts have also permitted parents to recover for "wrongful pregnancy."

See, e.g., Coleman v. Garrison, 327 A.2d 757 (Del. Super. 1974); Garrison v. Foye, 486

N.E.2d 5 (Ind. Ct. App. 1985). For a discussion of these and related claims, see generally



1264 INDIANA LAW REVIEW [Vol. 24:1245

In Cowe, the Indiana Court of Appeals took the *'road less traveled/'

and recognized a wrongful life claim. '*^ The impact of its holding,

however, may be lessened due to the special circumstances of Cowe.
Cowe's mother is an extremely retarded adult, is unable to speak, and

has no muscle control. While residing in a nursing home, she was raped

by another resident and conceived a child, Jacob. ^'^^ Jacob sued the

owner of the nursing home for wrongful life, negligence, and prenatal
tort.'^o

According to the court, Jacob's wrongful life claim was not precluded

by the Indiana statute which bars claims that "but for the negligent

conduct of another [the child] would have been aborted. "^^' The court

interpreted Jacob's claim as contending that '*but for [defendant's]

negligence he would not have been conceived," rather than as asserting

'*he would have or should have been aborted."*" Based on this con-

strained interpretation of the complaint and the "unusual situation"

presented by the severe mental or physical impairments of both parents,

the court permitted Jacob's wrongful life action, for which he could

recover damages from the date of his birth until his adoption. *^^

Due to the special circumstances of Cowe and the procedural posture
of the case (appeal of summary judgment for defendant), it is difficult
to assess whether Cowe*s wrongful life decision will be applied broadly.

Given the strong dissent of Judge RatHff,'^^ the somewhat cursory treat-

Bopp, Bostrom & McKinney, The "Rights" and "Wrongs" of Wrongful Birth and
Wrongful Life: A Jurisprudential Analysis of Birth Related Torts, 27 Dug. L. Rev. 461
(1969); Special Project: Legal Rights and Issues Surrounding Conception, Pregnancy and

Birth, 39 Vand. L. Rev. 597 (1986).

148. Cowe, 541 N.E.2d at 965.

149. Id. at 964.

150. Id. at 965.

151. IND. Code Ann. § 34-1-1-11 (West Supp. 1990).
152. Cowe, 541 N.E.2d at 965.

153. Id. ai 966. But see id. at 970-974 (Ratliff, J. dissenting). The court also allowed

recovery for failing to provide prenatal care that might result in fetal hydantoin syndrome.

Id. at 967-68.

154. Judge Ratliff would deny the wrongful Ufe claim on two bases. First, he notes

that the majority's effort to distinguish the language of Ind. Code § 34-1-1-11 from
Jacob's complaint fails. One count of the complaint states that Jacob **is owed a duty
of support by [Foruml because negligence proximately caused his birth into a world in

which there was no natural parent capable of caring for and supporting him." Cowe,

541 N.E.2d at 971 (Ratliff, J. dissenting). This seems to conflict with the policy expressed

in § 34-1-1-11 that life, even if impaired or burdened, is preferable to non-life. Secondly,

Judge Ratliff emphasized the impossibility of measuring appropriate damages: "the relative

benefits of an impaired life as opposed to no hfe at all. . . ." (quoting Simienic v. Lutheran

Gen. Hosp., 117 111. 2d 230, 512 N.E.2d 691 (1987) (rejecting wrongful Hfe claim)).

Further, Judge Ratliff noted that, unlike those few prior cases in which a specific birth

defect was involved, Jacob could show no medical evidence indicating that he actually

suffers a disability or defect. Id. at 973.



1991] TORT LAW 1265

ment of the wrongful life issues, and the arguably limited window of
damages (birth to adoption),'" Cowe may not prove to be the landmark
decision it otherwise might be.

VIII. Hedonic Damages

[T]o enjoy the companionship of loved ones, ... to see the

glorious dawn and sunset, to feel the caress of gentle breezes
or the invigorating sting of winter winds, to hear the murmur
of the idling brook and the music of warbling birds, to smell

the sweet fragrance of nature's flowers, and to taste the diet of

life itself.
'56

This is the enjoyment, the pleasure of living, the **hedonic**'" value

of life. In three cases decided on the same day,'^* the Indiana Court

of Appeals for the Third District decided that loss of enjoyment of life

is not recoverable as a separate element of damages, but may be a
factor in determining damages for physical injury. '^^ Further, the court

held that any claims based on reduction of the enjoyment of life must

be coupled, in jury instructions, for damages either with pain and

suffering claims or permanency of injury allegations.'^ The Indiana

Supreme Court, in vacating the court of appeals decision in Canfield,

agreed that a plaintiff is not entitled to a jury instruction treating loss

of enjoyment of life as a separate element of damages.'^' Rather, that

aspect of damages is to be included in the assessment of the permanency

of the damages. '^2

There is a slowly growing body of case law that recognizes hedonic

(loss of enjoyment of life) damages as a separate element in wrongful

155. Judge Conover, concurring, would broaden the damages available to Jacob to

include "mental pain, suffering and anguish based on any diminished quality of life he

may suffer from being the genetic off-spring of mentally deficient parents." Cowe, 541
N.E.2d at 968.

156. Downie v. United States Lines, Inc., 359 F.2d 344, 350 (3d Cir. 1966) (Kalodner,

C.J. dissenting).

157. From the Greek hedonikos — pleasure of living.
158. The claims in each case arose from automobile accidents.

159. Canfield v. Sandock, 546 N.E.2d 1237 (Ind. Ct. App. 1989), vacated, 563

N.E.2d 1279 (Ind. 1990); Marks v. Gaskill, 546 N.E.2d 1245 (Ind. Ct. App. 1989); Seifert

V. Bland, 546 N.E.2d 1242 (Ind. Ct. App. 1989).

160. Canfield, 546 N.E.2d at 1242; Marks, 546 N.E.2d at 1249; Seifert, 546 N.E.2d

at 1244.

161. Canfield v. Sandock, 563 N.E.2d 1279, 1282 (Ind. 1990).

162. Id.



1266 INDIANA LAW REVIEW [Vol. 24:1245

death actions based on 42 U.S.C. § 1983. •" Additionally, a few courts

have treated loss of enjoyment of life as a separate element of damages

for injury'^ or death. '^^ Nonetheless, Indiana's rejection of this view

clearly is in the mainstream. Courts in nearly every state have declined

to permit separate recovery of hedonic damages.'^

The primary reason courts, including the Indiana Court of Appeals

and the Indiana Supreme Court, refuse to permit recovery for hedonic

damages is the danger of double recovery if loss of enjoyment is treated

as a separate element of damages. '^^ Arguably, a plaintiff can recover

for his or her injuries all damages proximately caused by the defendant,

including pain and suffering and reduction of the ability to live life

normally. If hedonic damages were recoverable, the same ** damages'*

that are a factor (such as in pain and suffering) also would be recoverable,

thereby permitting duplicate awards for what is essentially the same

injury. ^^^

Not mentioned by the Indiana Court of Appeals as a basis for its

decision, but often advanced as another reason to deny separate hedonic

damages, is the difficulty of assessing the monetary value of the pleasure

of life. The valuation of hedonic loss is potentially fraught with great

uncertainty and jury whim. One economist has noted that the hedonic
value of life could range from under $100,000 to more than $2 billion. '^^

Given the current **tort reform" caps on pain and suffering, '^° attempted

restrictions of punitive damages'^* and medical malpractice awards, '^^

163. Guyton v. Phillips, 532 F. Supp. 1154 (N.D. Cal. 1981), was the first case to

allow a decedent's estate to recover for loss of life's pleasures. See also Sherrod v. Berry,

629 F. Supp. 159 (N.D. 111. 1985), aff'd, 827 F.2d 195 (7th Cir. 1987), rev'd on other

grounds on reh'g, 856 F.2d 802 (7th Cir. 1988). See generally Blodgett, Hedonic Damages,

71 A.B.A. J. 25 (Feb. 1985); Note, Loss of Enjoyment of Life as a Separate Element

of Damages, 12 Pac. L.J. 965 (1981); Blum, More Suing Over Lost Joy of Life: Defense
- Plaintiffs' Bars Split on Hedonic Damages, Nat'l L.J., Apr. 17, 1989, at 1, col. 3.

164. See, e.g., Culley v. Pennsylvania R.R., 244 F. Supp. 710 (D. Del. 1965)

(applying Maryland law); Powell v. Hegney, 239 So. 2d 599 (Fla. App. 1970).

165. See e.g., Katsetos v. Nolan, 170 Conn. 637, 368 A.2d 172 (1976).

166. See Note, Hedonic Damages in Section 1983 Actions: A Remedy for the
Unconstitutional Deprivation of Life, 44 Wash. & Lee L. Rev. 321, 328 (1987).

167. See Canfield, 546 N.E.2d at 1237; Marks, 546 N.E.2d at 1245; Seifert, 546

N.E.2d at 1242.

168. See. e.g., Seifert, 546 N.E.2d at 1244.

169. Smith, Hedonic Damages in Wrongful Death Cases, 74 A.B.A. J. 70 (Sept.

1, 1988) (Smith testified for plaintiff in Sherrod v. Berry, 629 F. Supp. 159 (N.D. 111.

1985) and argued in favor of hedonic damage awards.).

170. See generally Martin, Limiting Damages for Pain and Suffering: Arguments

Pro and Con, 10 Am. J. Trial Advoc. 317 (1986).
171. See, e.g., Browning-Ferris Indus, v. Kelco Disposal, Inc., 109 S. Ct. 2909

(1989) (punitive damages in a civil case far exceeding actual damages do not violate the



1991] TORT LAW 1267

and the problematic nature of hedonic damages, the Indiana courts*

rejection of "enjoyment of life*' as a separate element of damages will

likely remain the prevalent view.

IX. Indiana Civil Rico

Inclusion of a review of developments (or remarkable lack thereof)

in Indiana civil RICO litigation is appropriate in the context of tort
discourse. This is so because the subject matter of both federal'"'^ and

state'^"* RICO proscriptions often involves conduct that comes within the
ambit of what is described as "commercial" or "business" torts.

'"'^

eighth amendment prohibition of ''excessive fines"). This term the Court considered and

rejected a fourteenth amendment due process challenge to allegedly excessive punitive

damages. Pacific Mut. Life Ins. Co. v. Haslip, 59 U.S.L.W. 4157 (1991).

Some states have abolished punitive damages entirely. See, e.g., N.H. Rev. Stat.
Ann. § 507:16 (1986). Other states have enacted caps on punitive damages awards. See,

e.g.. Conn. Gen. Stat. Ann. § 52-240b (West 1989) (two times compensatory damages).

172. See, e.g., Ind. Code Ann. § 16-9.5-2-2(a) (West Supp. 1990).
173. 18 U.S.C. §§ 1961-1968 (1982 & Supp. 1989).
174. As of 1989, 28 states, including Indiana, have enacted versions of federal

RICO. See Ariz. Rev. State Ann. §§ 13-2301 to -2316 (1978 & Supp. 1988); Cal. Penal
Code §§ 186-186.8 (West 1988); Colo. Rev. Stat. §§ 18-17-101 to -109 (1986 & Supp.
1988); Conn. Gen. Stat. Ann. §§ 53-393 to -403 (West 1985 & Supp. 1989); Del. Code
Ann. tit. 11, §§ 1501-11 (1987); Fla. Stat. Ann. §§ 895.01 to .09 (West Supp. 1989);
Ga. Code Ann. §§ 26-3401 to -3414 (Harrison 1988 & Supp. 1988); Haw. Rev. Stat.
§§ 842-1 to -12 (1985 & Supp. 1988); Idaho Code §§ 18-7801 to -7805 (1987 & Supp.
1989); III. Ann. Stat. ch. 56-1/2, paras. 1651-60 (Smith-Hurd 1985) (limited to narcotics);

Ind. Code Ann. §§ 34-4-30.5-1 to -6 (West 1983 & Supp. 1990); id. §§ 35-45-6-1 to -2
(West Supp. 1990); La. Rev. Stat. Ann. §§ 15:1351-56 (West Supp. 1989) (limited to

narcotics); Miss. Code Ann. §§ 97-43-1 to -11 (Supp. 1988); Nev. Rev. Stat. Ann. §§
207.350-.520 (Michie 1986); N.J. Stat. Ann. §§ 2C:41-1 to -6.2 (West 1982 & Supp.
1989); N.M. Stat. Ann. §§ 30-42-1 to -6 (1978 & Supp. 1988); N.Y. Penal Law §§
460.00 to .80 (McKinney Supp. 1988); N.C. Gen. Stat. §§ 75D-1 to -14 (1987 & Supp.
1988); N.D. Cent. Code §§ 12.1-06 to -08 (1985 & Supp. 1989); Ohio Rev. Code Ann.
§§ 2923.31 to .36 (Anderson 1987 & Supp. 1988); Okla. Stat. Ann. tit. 22, §§ 1401-
1419 (West Supp. 1989); Or. Rev. Stat. §§ 166.715-735 (1985 & Supp. 1988); 18 Pa.
Cons. Stat. Ann. § 911 (Purdon 1983 & Supp. 1989); R.l. Gen. Laws §§ 7-15-1 to -
11 (1985); Tenn. Code Ann. §§ 39-1-1001 to -1010 (Supp. 1988); Utah Code Ann. §§
76-10-1601 to -1609 (Supp. 1989); Wash. Rev. Code Ann. §§ 9A.82.001 to .904 (1988
& Supp. 1989); Wis. Stat. Ann §§ 946.80 to .87 (West Supp. 1987). Puerto Rico has
also adopted a RICO statute. P.R. Laws Ann. tit. 25, §§ 971-971(p) (1979 & Supp.
1988).

175. Legal literature has taken cognizance of this development. See, e.g., RICO:

The Ultimate Weapon in Business and Commercial Litigation, ABA Section on Litig.
Nat'l Instit. (Nov. 1983). See also 3 Business Torts 24.01 to .52 (Mathew Bender); G.

Alexander, Commerclal Torts 9, at 251 (2d ed. 1988). See generally RICO Business
Disputes Guide (CCH); Civil RICO Report (BNA).



1268 INDIANA LAW REVIEW [Vol. 24:1245

In 1970, Congress enacted RICO'^^ as part of the Organized Crime

Control Act.*^^ RICO's target is ^^racketeering activity. *'^^^ Racketeering

activity entails five categories of prohibited conduct: (1) any act charge-

able under any state's criminal law and punishable by imprisonment for

more than one year;'^^ (2) any act indictable under many specific federal
statutes, '^° including mail'*' and wire fraud ;'*^ (3) any act indictable under

29 U.S.C. sections 186 (restrictions on payments and loans to labor

organizations) or 501(c) (embezzlement from union funds);'" (4) any

offense involving securities fraud or drug-related activity punishable under

federal law;'*'* and (5) any act indictable under the Currency and Foreign

Transactions Reporting Act.'*^ Section 1962(a) of RICO prohibits using
income derived from a pattern of racketeering activity (at least two acts

within ten years'*^) in an operation affecting interstate or foreign com-

merce.'*'' Section 1962(b) prohibits control of an enterprise through a

pattern of racketeering activity, while section 1962(c) proscribes use of

an enterprise for racketeering activity.'** Section 1962 also makes unlawful

conspiracy to violate any of the first three provisions of section 1962.'*^

Congress put sharp teeth into RICO's prohibitions. It provided
criminal penalties of imprisonment, fines, and forfeiture for RICO viol-
ations.'^ Additionally, for private civil suits, RICO affords far-reaching
remedies including treble damages, costs, and reasonable attorney's fees.'^'

176. Organized Crime Control Act, Pub. L. No. 91-452, tit. IX, 84 Stat. 941

(codified as amended at 18 U.S.C. §§ 1961-1968 (1970)). One federal judge suspects that
the statute's awkward title and convenient acronym reflect a movie buff's legislative sense

of humor and Hollywood expertise. In "Little Caesar," the first Hollywood gangster

movie of the early 1930s, Edward G. Robinson played the barely-disguised Al Capone

role. The character's name was "Rico." See Fames v. Heinold Commodities, Inc., 548
F. Supp. 20 n.l (N.D. 111. 1982).

177. Pub. L. No. 91-452, 84 Stat. 922.

178. 18 U.S.C. § 1961(1) (1970).

179. Id. at (A).

180. Id. at (B).

181. Id. § 1341.

182. Id. § 1343.

183. Id. § 1961(1)(C).

184. Id. at (D).

185. Id. at (E). All told, "racketeering activity" means any act or threat involving

one of thirty-two predicate offenses.

186. Id. § 1961(5).

187. Id. § 1962(a).

188. Id. at (e).

189. Id. at (d).

190. Id. § 1963.

191. Id. § 1964(c). The award of treble damages is mandatory, not discretionary.

The statute provides that an injured plaintiff '*shall recover threefold the damage . . .



1991] TORT LAW 1269

To obtain damages under federal civil RICO, a plaintiff must allege
and prove by a preponderance of the evidence'^^ that:

(1) the defendant (2) through the commission of two or more

acts (3) constituting a
*

'pattern" (4) of ** racketeering activity"

(5) directly or indirectly invest(ed) in, or maintain(ed) an interest

in, or participat[ed] in (6) an
*

'enterprise" (7) the activities of

which affect(ed) interstate or foreign commerce. '^^

Civil RICO plaintiffs must also allege and prove that they suffered injury
in their business or property ''by reason of a violation of section 1962."'^'*

Federal civil RICO cases have increased eight-fold since 1984 to
nearly 1,000 cases during 1988,'^^ many of them involving a business
or commercial "tort." Diverse claims have furnished the bases for federal

civil RICO suits, such as competitive hiring practices; '^^ sexual harass-
ment; '^"^ accountant, ^^^ attorney^^^ and bank misconduct;^ misrepresen-

tation;^^' wrongful discharge;^^^ misappropriation of trade secrets;^^^ injury

sustain(ed)." Id. (emphasis added). In addition, some courts have permitted injunctive

rehef in private suits. See, e.g., F.D.I.C. v. Antonio, 843 F.2d 1311, 1313 (10th Cir.

1988) (private injunctive rehef available under Colorado's state RICO statute); Chambers
Dev. Co. V. Browning-Ferris Indus., 590 F. Supp. 1528, 1540-41 (W.D. Pa. 1984) (federal

RICO affords private equitable relief). But see In re Fredeman Litig., 843 F.2d 821 (5th
Cir. 1988) (private equitable relief is not available under federal civil RICO). Cf. Blakey

& Gettings, Racketeer Influenced and Corrupt Organizations (RICO): Basic Concepts —
Criminal and Civil Remedies, 53 Temp. L.Q. 1009, 1047 (1980) (private equitable relief

should be available).

192. Parnes v. Heinold Commodities, 487 F. Supp. 645, 647 (N.D. 111. 1980). One
commentator has observed that "a more exacting standard, such as 'clear and convincing

evidence', may be more appropriate. ..." Matz, Determining the Standard of Proof in
Lawsuits Brought Under RICO, Nat'l L.J., Oct. 10, 1983, at 21. In Sedima, S.P.R.L.
V. Imrex Co., 473 U.S. 479, 491 (1985), the United States Supreme Court expressly chose

not to decide the standard of proof issue. See also Rubin & Zwirb, The Economics of
Civil RICO, 20 U.C. Davis L. Rev. 883, 884 (1987).

193. Moss V. Morgan Stanley, Inc., 719 F.2d 5, 17 (2d Cir. 1983), cert, denied,

104 S. Ct. 1280 (1984).

194. Id. See 18 U.S.C. § 1964(c) (1982).

195. Rehnquist, Diversity Jurisdiction and Civil RICO, 21 St. Mary's L.J. 5, 9

(1989).

196. Systems Research, Inc. v. Random, Inc., 614 F. Supp. 494 (N.D. 111. 1985).
197. Hunt V. Weatherbee, 626 F. Supp. 1097 (D. Mass. 1986).

198. Cenco Inc. v. Seidman & Seidman, 686 F.2d 449 (7th Cir. 1982), cert, denied,
459 U.S. 880 (1982).

199. Beth Israel Medical Center v. Smith, 576 F. Supp. 1061 (S.D.N.Y. 1983).

200. Haroco, Inc. v. American Nat'l Bank & Trust Co. of Chicago, 747 F.2d 384
(7th Cir. 1984), aff'd. Am U.S. 606 (1985).

201. California Architectural Bldg. Prods, v. Franciscan Ceramics, 818 F.2d 1466

(9th Cir. 1987), cert, denied, 108 S. Ct. 698 (1988).

202. Callan v. State Chemical Mfg., 584 F. Supp. 619 (E.D. Pa. 1984).

203. Rockwell Graphic Sys. v. DEV Indus., RICO Business Disputes Guide (CCH)
6581 (N.D. 111. 1987) (1987 WESTLAW 6862).



1270 INDIANA LAW REVIEW [Vol. 24:1245

to goodwill and business reputation;^^ and anti-abortion activism. ^^^

The federal RICO '*explosion''^^ continues practically unabated —
despite the professed distaste of federal judges,^^^ as expressed by Rule

IP^^ sanctions^^ and strict imposition of Rule 9{hy^^ pleading require-

ments to civil RICO allegations of fraud.^'* Not surprisingly, RICO issues
have reached the Supreme Court. It has addressed the parameters of

civil RICO in five cases. ^'^ Yet the net effect of these decisions is that
federal civil RICO remains a live, well, and available cause of action
for a wide variety of civil complaints. Most RICO observers agree that
the impact of one of the more recent Supreme Court RICO cases, H,
J., Inc. V. Northwestern Bell Telephone Co.,^^^ will be an increase in

204. Ford Motor Co. v. B & H Supply, 646 F. Supp. 975 (D. Minn. 1986).
205. Northeast Women's Center v. McMonagle, 868 F.2d 1342 (3d Cir. 1989), cert,

denied, 110 S. Ct. 261 (1989); Feminist Women's Health Center v. Roberts, No. C86-
1612 (W.D. Wash. 1989) (1989 WESTLAW 56017); Roe v. Operation Rescue, 710 F.
Supp. 577 (E.D. Pa. 1989). See generally Yonover, Fighting Fire with Fire: Civil RICO
and Anti-Abortion Activists, 12 Women's Rights L. Rep. 153 (1990).

206. Yonover, supra note 205, at 157 nn.43-44.

207. See, e.g.. Fields v. National Republic Bank of Chicago, 546 F. Supp. 123,
124 (N.D. 111. 1982) ("[L]ike the myth of the lemming drawn to the sea, [plaintiff] follows

the unfortunately all-too-prevalent trend of seeking to reshape the [state law] claim into

one that can be wrapped into the RICO mantle."). See also Sedima, S.P.R.L. v. Imrex
Co.. 741 F.2d 482 (2d Cir. 1984), rev'd, 473 U.S. 479 (1985); P. Batista, Civil RICO
Practice Manual 4 (1987) (discussing federal judges' distaste for civil RICO); Fielkow
and Eisenberg, Civil RICO: The Insurers Fight Back, 21 Tort & Ins. L.J. 1, 3 & nn.
18-21 (1985).

208. Fed. R. Civ. P. 11.

209. See, e.g., O'Malley v. New York City Transit Auth., 896 F.2d 704 (2d Cir.
1990); Chapman & Cole v. Itel Container Int'l B.V., 865 F.2d 676 (5th Cir. 1989); Reynolds
V. East Dyer Dev. Co., 882 F.2d 1249 (7th Cir. 1989).

210. Fed. R. Civ. P. 9(b).

211. See, e.g.. Cayman Exploration Corp. v. United Gas Pipeline Co., 873 F.2d
1357 (10th Cir. 1989); Blount Fin. Serv., Inc. v. Walter Heller & Co., 819 F.2d 151 (6th
Cir. 1987); Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393 (9th Cir.

1986).

212. The cases are: Tafflin v. Levitt, 110 S. Ct. 792 (1990) (civil RICO jurisdiction
is concurrent, rather than exclusive); H.J. Inc. v. Northwestern Bell Telephone Co., 109

S. Ct. 2893, 2905, 2906 (1989) (rejecting a "pinched" construction; RICO's pattern

requirement involves "long term criminal conduct" or the threat of same); Shearson/

American Express, Inc. v. McMahon, 482 U.S. 220 (1987) (civil RICO actions are "ar-
bitrable" under the Federal Arbitration Act, 9 U.S.C. § 1 (1988)); Agency Holding Corp.

V. Malley-Duff & Assocs., Inc., 483 U.S. 143 (1987) (a four-year limitations period applies
to all civil RICO actions); Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 n.l4 (1985)
(civil RICO requires neither a prior criminal conviction of the predicate acts nor a special
"racketeering"-type injury, but focuses upon proscribed activity indicative of "continuity

plus relationship").

213. 109 S. Ct. 2893 (1989).



1991] TORT LAW 1271

RICO claims and concomitant pressure on Congress to amend the statute. ^•'*

Indiana is one of several states that has enacted RICO legislation^'^
modeled on the federal statute and that, like federal RICO,^'^ permit a

civil action to be brought by a private party. ^'^ Under Indiana civil

RICO, one has standing to sue as an "aggrieved person"^'^ if it can
be alleged that plaintiff has an interest in real property or in an enterprise

that either is the object of corrupt business influence or has suffered

damages or harm as a result of corrupt business influence.^'^ If plaintiff

can prove by a preponderance of the evidence^^^ that defendant engaged

in a "pattern of racketering activity "^^' (at least two predicate acts

occurring within a five-year period^^^), then plaintiff can recover, as in

federal RICO,^^^ treble damages, costs, and reasonable attorney's fees.^^"*

214. See 5 Civ. RICO Rep. (BNA) 3 (July 4, 1989). Congress has in the past year
considered several RICO reform bills. To date, none has passed. See Outlook for 1990:
Future of Reform is Cloudy; House, Senate Divided on Bill, 5 Civ. RICO Rep. (BNA)
2 (Jan. 30, 1990). See also 5 Civ. RICO Rep. (BNA) 1 (June 26, 1990); 5 Civ. RICO
Rep. 1 (BNA) (July 3, 1990).

215. See supra note 174.

216. 18 U.S.C. § 1964 (1982).

217. IND. Code Ann. § 34-4-30.5-5 (Burns 1985 & Supp. 1989). Other states allowing
private-party civil suits include Arizona (Ariz. Rev. Stat. Ann. § 13-23 14A (1978 &
Supp. 1989)); Colorado (Colo. Rev. Stat. § 18-17-106(6) (1986 & Supp. 1989)); Delaware
(Del. Code Ann. tit. 11, § 1505(c) (1989)); Florida (Fla. Stat. Ann. § 895.05(6) (West

Supp. 1989)); Georgia (Ga. Code Ann. 26-3406 (Harrison 1988 & Supp. 1989)); Hawaii
(Haw. Rev. Stat. § 842-8(c) (1985 & Supp. 1989)); Idaho (Idaho Code § 18-7805(a)
(1987)); Louisiana (La. Rev. Stat. Ann. § 15: 1356(E) (West & Supp. 1989)); Mississippi
(Miss. Code Ann. § 97-43-9(5) (Supp. 1989)); Nevada (Nev. Rev. Stat. Ann. §
207.470(l)(Michie 1986)); New Jersey (N.J. Stat. Ann. § 2C:41-4(c) (West 1982 & Supp.
1989)); New Mexico (N.M. Stat. Ann. § 30-42-6(A) (1978 & Supp. 1989)); Ohio (Ohio
Rev. Code Ann. § 2923.34(B) (Anderson 1987 «fe Supp. 1989)); Oregon (Or. Rev. Stat.

§ 166.725(6) (1985 & Supp. 1989)); Rhode Island (R.I. Gen. Laws § 7-15-4(c) (1985));
Utah (Utah Code Ann. § 76-10-1605(1) (Supp. 1989)); Washington (Wash. Rev. Code
Ann. § 9A.82.100(l)(a) (1988 & Supp. 1989)); Wisconsin (Wis. Stat. Ann. § 946.86(4)
(West Supp. 1989)). See generally Annotation, C/v/7 Action for Damages Under State

Racketeer Influenced and Corrupt Organizations Acts (RICO) for Losses from Racketeering

Activity, 62 A.L.R.4th 654 (1988).

218. Ind. Code Ann. §§ 34-4-30.5-1 (West Supp. 1989). See generally Scanlon,
Elements of a RICO Violation § II-37-8 (ICLEF RICO Litig. 1989).

219. Ind. Code Ann. § 34-4-30.5-1 (West Supp. 1990).
220. Id. § 34-4-30.5-5.

221. Id. § 35-45-6-1.

222. Id. The predicate acts include: securities violations, Ind. Code Ann. § 23-2-

1 (West Supp. 1990); statutory fraud, Ind. Code Ann. § 35-43-5-4 (West Supp. 1990);
and various crimes involving obscenity, violence, guns, or narcotics, Ind. Code Ann. §
35-45-6-1 (West Supp. 1990).

223. 18 U.S.C. § 1964 (1982).

224. Ind. Code Ann. 34-4-30.5-5(b)(l)-(3) (West Supp. 1990). An "aggrieved person"
also has a claim, superior to the state, to forfeited property or proceeds therefrom. Id.

§ 34-4-30.5-5(d).



1272 INDIANA LAW REVIEW [Vol. 24:1245

In addition, and unlike federal RICO, an Indiana RICO claimant may
also seek punitive damages **allowable under law"^^^ and injunctive

relief.
^^^

Despite the broad thrust of Indiana RICO's proscriptions and the

wide range of civil remedies afforded by the statute, only one reported

case is founded, at least in part, upon a state civil RICO claim: Blakley
Corp. V. Klain,^^^ decided in late spring, 1989. In Blakley, plaintiff-

subcontractor sued the owner of a corporation that built residential

housing. The subcontractor supplied labor and materials for several

houses for which the corporation did not pay. Subsequently at the

closings, the corporation, which had built the houses under contract

with lot owners, executed vendor's affidavits representing that "[t]here

are no unpaid claims for labor done upon or materials furnished for

the Real Estate in respect of which liens have been or may be filed. "^^^

The subcontractor claimed that these repeated acts of perjury in the

vendor's closing affidavits constituted a pattern of activity proscribed

by Indiana RICO,^^^ and sought civil remedies as an "aggrieved per-

son. "^'° Blakely asserted that the vendor's affidavits extinquished its

rights to liens on the properties.

The Indiana Court of Appeals reversed, in part, the grant of summary
judgment to defendant. The court noted that concerning two houses, a

genuine dispute existed about defendant's knowledge of the alleged false-

hood in the vendor's affidavits. ^^* Thus, on remand, plaintiff still had

225. Id. § 34-4-30.5-5(b)(4).

226. Id. § 34-4-30. 5-5(a). To date, federal courts are split with respect to the
availability of private injunctive relief in federal civil RICO actions. Compare In re
Fredeman Litig., 843 F.2d 821 (5th Cir. 1988); Religious Technology Center v. Wollersheim,

796 F.2d 1076 (9th Cir. 1986), cert, denied, 107 S. Ct. 1336 (1987) (private equitable

relief is not available) with USACO Coal Co. v. Carbomin Energy, Inc., 689 F.2d 94,
97-98 (6th Cir. 1982) (RICO affords private injunctive relieO- The Supreme Court has
not addressed the issue but has opined that private equitable relief may not be available.
See Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 153 (1987); Sedima,
S.P.R.L. V. Imrex Co., 473 U.S. 479, 489 (1985).

227. 538 N.E.2d 304 (Ind. Ct. App. 1989). One commentator suggests that the
paucity of state RICO cases may be due to the relative ease of pleading federal RICO
claims. He suggests that if Congress curtails the use of federal RICO in business cases,
state RICO claims may experience an upswing. Shell, Substituting Ethical Standards for
Common Law Rules in Commercial Cases: An Emerging Statutory Trend, 82 Nw. U.L.
Rev. 1198, 1212 n.79 (1988). This year Congress has indeed indicated a willingness to

narrow the reach of civil RICO. See 5 Civ. RICO Rep. (BNA) 2 (Jan. 30, 1990); 5 Civ.
RICO Rep. (BNA) 1 (June 26, 1990); 5 Civ. RICO Rep. (BNA) 1 (July 3, 1990).

228. Blakley, 538 N.E.2d at 305.

229. Id. at n.2 (citing Ind. Code Ann. § 35-45-6-2(a)(l) (West 1986)).
230. Id. (citing Ind. Code Ann. § 34-4-30.5-5(b) (West Supp. 1990)).
231. Id. at 307.



1991] TORT LAW 1273

a potentially viable RICO claim based on two predicate acts of rack-
eteering activity.

Surprisingly, since the enactment of Indiana RICO in 1980 there
has been only one reported private civil case. Allegations of business

fraud, similar to the Blakley complaint, have often furnished the bases

for federal RICO claims. ^^^ It is even more surprising when the panopoly
of state remedies is considered. ^^^ Whether this lack is due to the avail-

ability of federal RICO^^"* (and the concomitant access to federal courtsP^

or unfamiliarity with a relatively new statute is unclear. Several private
suits in other jurisdictions have been based on state RICO statutes."^
Nevertheless, Blakley stands alone in Indiana. It indicates, however, that

given the appropriate facts, a viable private civil RICO suit can be
brought based on "racketeering activity," which in Blakley allegedly

amounted to tortious business fraud.

232. See, e.g., Reynolds v. East Dyer Dev. Co., 882 F.2d 1249 (7th Cir. 1989)

(affirming Judge Moody's grant of summary judgment for defendant-developers on RICO
claim). See also supra notes 225-28.

233. See supra notes 225-26.

234. See supra notes 195-205.

235. Note, however, that state courts have concurrent jurisdiction over federal RICO
claims. See Tafflin v. Levitt, 110 S. Ct. 792 (1990).

236. See, e.g., Sattell v. Continental Casualty Co., (Wis. App. 1990) (1990 WES-
TLAW 130820); Banco Indus, de Venezuela, C.A. v. Suarez, 541 So. 2d 1324 (Fla. App.
1989); Computer Concepts, Inc. Profit Sharing Plan v. Brandt, 98 Or. App. 618, 780

P.2d 249 (1989); Hale v. Burkhardt, 764 P. 2d 866 (Nev. 1988); James v. Wolfe, 512 So.

2d 954 (Fla. App. 1987); Daggett v. Jackie Fine Arts, Inc., 152 Ariz. 559, 733 P.2d 1142

(1986); Waldschmidt v. Crosa, 177 Ga. App. 707, 340 S.E.2d 664 (1986); Banderas v.

Banco Cent, del Ecuador, 463 So. 2d 523 (Fla. App. 1985).