The Appellate Strategist : Appellate Lawyers & Attorneys for Updates on Trial Consultations, Amicus Briefs & Punitive Damage Awards

Does the State of Illinois have to pay elected officials' attorney fees when the underlying complaint alleges that the official committed "intentional, willful or wanton misconduct"? Earlier this month, a unanimous Illinois Supreme Court held in McFatridge v. Madigan that the answer was "no." Our detailed report on the facts and underlying court opinions in McFatridge is here. Our report on the oral argument in McFatridge is here.

The plaintiff in McFatridge is the former State's Attorney in Edgar County. In 1987, he successfully prosecuted two individuals for murder. Many years later, the defendants' habeas petitions were granted; they were not retried. So they sued a number of people involved in the prosecution, including the plaintiff.

In 2005, 2009 and again in 2010, the plaintiff asked the Attorney General for representation in the civil case pursuant to the terms of the Illinois State Employee Indemnification Act. Each time, his request was denied.

Here's the operative language from the statute:

(a) In the event that any civil proceeding is commenced against any State employee arising out of any act or omission occurring within the scope of the employee's State employment, the Attorney General shall, upon timely and appropriate notice to him by such employee, appear on behalf of such employee and defend the action . . .

(b) In the event that the Attorney General determines that so appearing and defending an employee an employee either (1) involves an actual or potential conflict of interest, or (2) that the act or omission which gave rise to the claim . . . was intentional, willful or wanton misconduct, the Attorney General shall decline in writing to appear or defend . . .

In the event that the defendant in the proceeding is an elected State official . . . the elected State official may retain his or her attorney, provided that said attorney shall be reasonably acceptable to the Attorney General. In such case the State shall pay the elected State official's court's costs, litigation expenses, and attorneys' fees . . .

So does the statute create two separate classes -- unelected officials, who can be turned down for intentional, willful or wanton misconduct, and elected officials, for whom the duty to pay fees is mandatory? Or does the final paragraph mean something different? That's the question the Court was confronting. The lower courts disagreed: the Circuit Court dismissed, but the Appellate Court (Fourth District) reversed.

In a unanimous opinion by Justice Anne Burke, the Supreme Court reversed the Fourth District. The Appellate Court had applied a canon of construction to hold that since the second paragraph of the statute described a more specific subgroup - elected officials - the intent must have been to carve out an exception from the earlier, larger group - employees who can be turned down under certain circumstances. The problem with that analysis, the Supreme Court held, was that the paragraphs didn't relate to the same subject - the first paragraph related to the circumstances in which the Attorney General would defend employees, and the second conferred on elected officials the right to hire their own attorneys. Therefore, the rule of construction didn't apply. The language in the first paragraph referring to "employees" clearly included elected officials, the Court found, so the "intentional, willful or wanton" exception applied to elected officials. Besides, the Court pointed out, subsection 2(c) of the statute, immediately following the language about elected officials, imposed a duty to represent and indemnify with respect to judges "without regard to the theory of recovery employed by the plaintiff," demonstrating that the legislature knew how to carve individuals out if they chose to do so. But there was simply no general exemption in the statute for elected officials. Therefore, the Attorney General correctly exercised her discretion to refuse to represent the plaintiff.

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On the final argument day of the May term, the Illinois Supreme Court heard argument in Prazen v. Shoop, one of a brace of public employee pension cases currently on the Court's docket. Our detailed preview of the facts and lower court holdings in Prazen is here. The video and audio of the argument is available here.

Prazen relates to an Early Retirement Incentive (ERI) plan adopted by a city pursuant to section 7-141.1 of the Pension Code. The plaintiff took early retirement from his position as superintendant of the city electric department, purchasing five years "age-enhancement credit" pursuant to the ERI to do so. Less than two weeks before his retirement became effective, the plaintiff incorporated a business which he has run as an unincorporated entity for some time - Electrical Consultants, Ltd. Three days after it was incorporated, ECL entered into a management and supervision agreement for the operation of the city's electric department, effective the day after his retirement. ECL continued to manage and supervise the city's electric department for an additional ten years.

But here’s the problem: under Section 7-141(g) of the Pension Code, any pensioner who receives age enhancement credit and later "accepts employment with or enters into a personal services contract" with an employer subject to the Code forfeits the increase in his or her pension. In 2010, the Illinois Municipal Retirement Fund (“IMRF”) concluded that the plaintiff had violated Section 7-141(g), not because he had "accept[ed] employment with" or "enter[ed] into a personal services contract" with his former employer, but because his corporation was a "guise" to evade the statute. The Fourth District of the Appellate Court reversed, holding that the Board of Trustees of the IMRF had the power to find one of the two factual determinations under the statute -- "employment with" or "personal services contract" and that's it.

Prazen was an active argument, with both sides facing relatively heavy questioning. It was evident that the Justices were troubled by both sides’ positions – both by the Board’s invocation of a power which was not exactly self-evident on the face of the Pension Code, and by the implications of approving what seemed to be an arguably dubious method for avoiding the language of the statute on the part of the pensioner. As a result, it’s quite difficult to predict how the Court is likely to rule; few if any Justices suggested a definite leaning.

Justice Freeman began the argument by asking counsel for the IMRF which provision of the statute was violated - "employment with" or "personal services contract." When counsel argued that the statute was vague, and that the Board had found plaintiff's arrangement was a "guise" to end-run the statute, Justice Freeman asked counsel whether the Board had the power to make such a determination. Counsel responded that the Board believed it did. Justice Thomas asked whether the Court would have to find the statute ambiguous in order to adopt the IMRF's position, and counsel argued that the statute was ambiguous: "personal services contract" is not defined in the Pension Code, and although "employee" is, "employment with" is not a defined term either. Justice Garman repeated Justice Freeman's earlier question, asking where in the statute the Board gets the authority to find violation-by-"guise." Counsel responded that the power flowed from the Board's general authority to make determinations on participation and coverage in order to carry out the intention of the Fund. The Board had looked to the legislative intent behind the statute, and concluded that if the legislature's desire that local governments be able to bring in younger, less expensive employees (or eliminate positions entirely) and reduce payroll was to be possible, the plaintiff's incorporation device could not satisfy the statute. Justice Burke asked counsel whether the Board’s finding of a “guise” rendered Section 141(g) of the Pension Code superfluous. Counsel agreed that the Appellate Court had found that, but counsel disagreed, arguing that the section has to be construed as a whole. Looking at the facts, it seemed clear, counsel argued, that the corporation had been created to evade the return to work provisions of the statute. Justice Thomas asked counsel to comment on the fact that the pensioner’s attorney had contacted the IMRF for guidance three times. Counsel pointed out that the final letter from the Board had suggested that the corporation could not simply be a guise for evading the regulations.   Justice Thomas asked counsel to respond to the argument that the statute’s plain language says what it says, and if personal corporations are to be barred, it should be amended. Counsel responded that the statute is vague and ambiguous, allowing room for the Board’s interpretation. Justice Garman asked whether there was specific legislative intent supporting the Board’s position, and counsel responded that it seemed clear from the preamble of the statute that the legislature wanted local governmental employers to have the flexibility to shed payroll through the incentive. Justice Karmeier asked whether the Board’s finding could be reversed simply because it had failed to make either of the mandated statutory findings, and counsel again responded that the Board had authority to make its findings under its general authority to administer the pension statutes.

Counsel for the pensioner began by emphasizing that the Section 141(g) permits two findings as a basis for forfeiture of the enhancement – either “employed with” or a personal services contract – and the Board had made neither. The first issue, counsel argued, was whether the IMRF had the equitable power to disregard the pensioner’s corporation. In response to a question from Justice Freeman, counsel argued that Section 17-200, the general grant of power relied upon by the Board, was just that – a general grant of power – which was trumped by the specifics in the rest of the Pension Code. Justice Freeman asked whether the crux of the case was the intent of the legislature. Counsel said no, the crux of the case was whether the Board had any power to disregard its limited authority under the statute to instead make a more general finding to justify a major forfeiture. Justice Thomas asked whether an opinion of the Court affirming the Appellate Court’s finding in favor of the pensioner would stand for the proposition that the statute could be evaded simply be self-incorporating and returning to work. Counsel responded by emphasizing that the pensioner’s corporation was not a sham; he had met every conceivable corporate formality. Justice Burke asked whether counsel would concede that the pensioner himself was the only person associated with the corporation who could perform the services called for by the contract, and counsel responded that there was nothing keeping him from hiring contractors. Justice Thomas repeated his question of whether an opinion affirming the Appellate Court would amount to an endorsement of the incorporate-and-go-back-to-work approach. Counsel responded that perhaps the statute, as written, created a political or factual absurdity, but that the flaw in the statute couldn’t be summarily remedied through judicial fiat on the back of a single pensioner. Where, counsel wondered, does one draw the line with the IMRF creating powers not expressly given? Chief Justice Kilbride pointed out that the case came before the Court under the Illinois Administrative Review Act, and asked what counsel’s argument was for the proposition that the facts the Board relied on were against the manifest weight of the evidence. Counsel responded that there was no evidence that his client had returned to the same job; in fact, he had not. If the goal was to eliminate the superintendant’s position, mission accomplished, counsel argued. He also pointed out that under the personal services contract, the city could now terminate his client with three days’ notice. In response to a question from Justice Thomas, counsel reviewed the factual circumstances of the three letters from the pensioner’s attorney to the Board. He argued that the Board’s action amounted to piercing the corporate veil, something that no court could possibly do on the record in the case. Counsel finished by again insisting that any problem with the statute had to be solved legislatively.

In a brief rebuttal, counsel for the Board argued that if the intent of the legislature is obvious from the words used, the Board had ample power to effectuate that intent. Counsel argued that the claim that the Board was piercing the corporate veil was a red herring; the Board was holding the pensioner responsible for his own acts, not for the acts of his corporation.

Prazen will likely be decided in the fall.

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In the final days of the Illinois Supreme Court's recently concluded May term, the Court allowed petitions for leave to appeal in five new civil cases. Today, we begin our detailed previews of those cases, discussing the underlying facts and lower court holdings.

First up is Rogers v. Imeri from the Fifth District. The plaintiffs' son was killed in a drunk driving accident. The plaintiffs sued the bar which allegedly served the drunk driver, alleging claims under the Dramshop Act, 235 ILCS 5/6-21. The plaintiffs received $26,550 from the driver's liability insurance policy and an additional $80,000 from their own policy.

While the matter was pending, the defendant's dramshop liability insurer was declared insolvent and liquidated; as a result, the Illinois Insurance Guaranty Fund took over the defense of the litigation.

The defendant filed a motion for summary adjudication of liability arguing the following theory: maximum liability under the Dramshop Act was $130,338.51. The plaintiffs had already received $106,550. Therefore, since the Insurance Guaranty Fund was entitled to a setoff for insurance payments from other sources, the plaintiffs' maximum possible recovery was the difference between those two sums.

The Circuit Court denied the motion, but agreed to certify a question: in a case involving the Insurance Guaranty Fund, if the jury returns a verdict in excess of the statutory maximum, is the setoff for other recoveries made from the verdict, or from the statutory maximum recovery under the Dramshop Act?

The answer depends on construing two different statutes simultaneously. The Dramshop Act provides that a jury should determine damages without worrying about the statutory limit.

On the other hand, under the Insurance Guaranty Fund Act, a claimant must "exhaust all coverage provided by any other insurance policy . . . if the claim under such policy arises from the same facts, injury, or loss that gave rise to the covered claim against the Fund." 215 ILCS 5/546(a). "[T]he Fund's obligation" is reduced by the amount recovered.

As the Fifth District observed, the answer to the certified question was likely to make a significant difference when the case was ultimately tried. Given that the deceased son of the plaintiffs was only eighteen when he was killed, it seemed likely that a verdict would be in excess of the statutory cap.

The defendant's problem, according to the Fifth Defendant, was that nothing in the Insurance Guaranty Fund Act altered the way that damages are calculated in the routine case where the Fund is not involved. Therefore, the Court held, the reduction for "other insurance" recoveries in the Insurance Guaranty Fund Act should be applied to the jury's verdict, and then reduced to the statutory maximum.

Rogers will likely be decided sometime in the first half of 2014.

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The Federal Telephone Consumer Protection Act provides that it's unlawful to send unsolicited advertisements to a fax machine. 47 USC 227(b)(1)(C). The statute creates a private right of action, with damages equal to actual losses or $500 per fax, whichever is greater. If the violation is willful and knowing, then it's $1,500 per fax.

So are TCPA statutory penalties insurable under Illinois law? Earlier this month, the Illinois Supreme Court handed down its unanimous decision in Standard Mutual Insurance Co. v. Lay. The answer, the Court held in an opinion by Justice Charles E. Freeman, was "yes." Our detailed summary of the facts and lower court decisions in Lay is here. Our report on the oral argument is here.

The defendant in Lay hired a "fax broadcaster" who sent a "blast fax" advertisement to 3,478 fax machines. The problem was, allegedly few if any of the targets had given permission to receive advertisements by fax. So the defendant got hit with a TCPA lawsuit seeking $1,500 for each of the faxes sent. The defendant tendered the complaint to its insurer, who agreed to defend under a reservation of rights; but the defendant then filed a declaratory judgment action, seeking a finding of no coverage on the grounds that the statutory penalty was akin to punitive damages, and therefore uninsurable. The Circuit Court granted the insurer's motion for summary judgment and the Appellate Court affirmed.

The Court quickly disposed of a preliminary issue, rejecting the insured's claim that the insurer was estopped from raising any policy defenses. The insured's reservation of rights letter specifically referred to coverage defenses, including an "extensive list" of the possible candidates, and described a possible conflict of interest. The insured wasn't prejudiced by the representation of the attorney chosen by the insurer. Therefore, there could be no estoppel.

Turning to the coverage question, the Court described the problem of junk faxes which the Congress intended to address in passing the TCPA. The statute is "clearly within the class of remedial statutes which are designed to grant remedies for the protection of rights, introduce regulation conducive to the public good, or cure public evils," the Court found. In other words, the penalty wasn't intended to punish senders of junk faxes; it was intended to stop the practice entirely. The penalty had the additional purpose of giving private plaintiffs an incentive to sue under the statute, the Court noted. The Court specifically acknowledged that in finding that the TCPA penalty was remedial and thus insurable, it was widening the split in the lower courts on the question. So don't be surprised if this issue winds up before the U.S. Supreme Court in the next three to five years.

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How is a worker's lump-sum settlement for a disabling injury -- a payment meant to compensate for lost income for the remainder of the worker's expected working life -- treated for purposes of calculating the non-custodial parent's child support obligation?  On Thursday, the Illinois Supreme Court unanimously held in In re Marriage of Mayfield that such payments are presumptively treated like any other form of income; the non-custodial parent's guideline support obligation is 20% of the total settlement. Our detailed summary of the facts and lower court rulings in Mayfield is here.  Our report on the oral argument is here.

The parties married in 1995. After having two children, they divorced in 2003. At the time, the father was ordered to pay weekly child support. One year later, he sought a modification in his obligation, alleging that he'd been laid off. The mother responded with a petition for a rule to show cause, arguing that the father was in arrears. The mother's petition was granted, and the father's obligation was increased. Two additional motions to modify were filed in 2009 and 2011 -- the first by the father, the second by the mother. During a hearing on the 2011 petition, the father admitted he had received a lump sum workers compensation settlement four years earlier, following a disabling injury. The settlement had come to nearly $240,000 after deducting fees and expenses, but between 2007 and 2011, the father had spent most of the money.

Section 505(a) of the Illinois Marriage and Dissolution of Marriage Act provides that the benchmark calculation for support of one child is 20% of the supporting party's net income. The guidelines apply unless the Court finds that a deviation is appropriate in the best interests of the child, determined in light of several enumerated statutory factors, such as the resources and needs of the noncustodial parent, and the standard of living the child would have had if the marriage had continued. If the court varies from the guidelines, it must state the guidelines amount and provide a reason for the variance.

Before the Circuit and Appellate Courts, the father argued that applying the guidelines would be patently unfair under the circumstances in Mayfield. The settlement was intended to represent lost income for the remainder of his expected working life, he pointed out, but the minor child had only a few years left before attaining her majority. Both courts disagreed, holding that the guidelines calculation should apply to the full amount.

In a unanimous opinion by Justice Mary Jane Theis, the Supreme Court affirmed. The father relied primarily upon In re Marriage of Wolfe. In Wolfe, the court had held that directing payment of 20% of a lump-sum settlement constituted a deviation from the guidelines where the settlement represented far more years of lost wages than the minor daughter had until attaining her majority. Since the Circuit Court didn't explain the deviation, such an order was by definition an abuse of discretion. But the Supreme Court held that Wolfe turned the Dissolution Act on its head, treating the Circuit Court's refusal to deviate as itself being a deviation. Wolfe was wrongly decided, the Court held, and it was overruled.

In the end, the Court found, the case was determined by a simple application of the statute. The father was seeking a deviation from the guidelines. He hadn't presented evidence supporting any of the statutory factors supporting a deviation. Therefore, none was permitted.

Ultimately, the Mayfield opinion doesn't mean that a lifetime lump-sum settlement can never lead to a deviation from the guidelines. Rather, it means that such a settlement doesn't by definition trigger a deviation. Such settlements are treated like any other form of income -- the trial court's discretion to deviation from the statutory 20% guideline is governed by the statutory factors.

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As I’ve written elsewhere, the Illinois Supreme Court tends to be what appellate attorneys call a “hot bench,” with questions potentially coming from any or all of the Justices in any given argument. With the May term having begun this morning with the argument in Relf v. Shatayeva, let’s take an early look at the question patterns for the first two terms of 2013.

In January and March, the Court heard argument in a total of eleven civil cases (only nine appellees made appearances however, slightly skewing the numbers). Not surprisingly, the level of questioning from the Justices varies widely from case to case – from a high of 34 questions in Mayfield v. Mayfield and 27 in VC&M v. Andrews, to lows of 8 each in DeHart v. DeHart and Russell v. SNFA. The same is true of individual Justices: each Justice has been active in some cases and less so in others. With only two of the eleven cases decided so far, it’s too early to attempt to draw even tentative conclusions about question patterns and decisions, but – again not surprisingly – the two cases already handed down are the ones that drew the fewest questions from the Court: DeHart and Russell.

Before presenting the data, one caution: as most appellate court watchers around the country know, counting questions in an oral argument is a somewhat subjective process. For example, when a Justice begins a question, counsel interposes a few words, and the Justice then continues or clarifies the point, is that one question or two? For that reason, another analyst’s numbers might vary slightly from those below, but the patterns should be the same. The chart below lists total questions to each party from each Justice in civil cases in the January and March terms. The numbers in parentheses show the number of times each Justice asked the first question of counsel.

Justices	Burke	Garman	Freeman	Kilbride	Thomas	Karmeier	Theis
Appellant	12 (1)	17 (2)	19 (3)	4	35 (4)	12	12 (2)
Appellee	11 (1)	14 (2)	1	7 (1)	17 (4)	2	10 (1)
Rebuttal	0	1 (1)	0	0	10	6 (2)	11 (1)
Total	23 (2)	32 (5)	20 (3)	11 (1)	62 (8)	20 (2)	33 (4)

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Few issues have sparked so much debate in so many local governments then how to regulate the medical marijuana industry. Proponents have filed numerous challenges to various attempts by cities and counties, but now the legal, if not the political issue, has been resolved. In the lead case – City of Riverside v. Inland Empire Patient’s Health & Wellness Center, Inc. – the unanimous Supreme Court has confirmed the power of local authorities to regulate, and even ban, facilities that distribute medical marijuana. The Court noted that the Compassionate Use Act of 1996 and the Medical Marijuana Program simply “removed certain state law obstacles from the ability of qualified patients to obtain and use marijuana for legitimate medical purposes.” This is not a mandate that such facilities must be allowed, nor an attempt by state government to dominate the field, and therefore these state laws do not preempt the constitutional right of cities and counties to exercise their police powers to regulate such facilities, or even ban them. As such, the City of Riverside ordinance which declares all marijuana dispensaries as a banned public nuisance, and which also bars any use which violates federal or state law, is valid. This limited view of these state laws as being “incremental steps” to increase access to medical marijuana, rather than signaling a more expansive reform, is wholly consistent with the Court’s previous ruling in Ross v. RagingWire Telecommunications, Inc. (2008) 42 Cal.4th 920, in which the Court held that the medical marijuana laws did not protect a medical user from being discharged after failing a drug test.

As a result of this ruling, local debates will not necessarily be limited to how to best implement medical marijuana dispensaries. Now, medical marijuana proponents may have to defend the policy of allowing such dispensaries at all, city by city, county by county. However, establishing the power of local authorities to act goes a long way to allowing some resolution to take place. For example, an attempt by Los Angeles to regulate dispensaries in 2010 drew 66 lawsuits and a court injunction, with many of the suits challenging the city’s authority to act. (See, Los Angeles Times, 5/10/13.) Los Angeles was so shell shocked by this debate that it now has three separate measures on the ballot for the upcoming election, each proposing a different set of regulation and taxation policies for dispensaries, in the hopes that the public picks one with sufficient support to at least put some policy in place. However, now that the right to act has been confirmed, perhaps even Los Angeles will be able to reach a decision.
 

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An update on last week’s post on Performance Marketing Association, Inc. v. Hamer: with the posting of the Court’s docket book for the May term, we learned that the oral argument in Performance Marketing has been continued from May 16 to the 9:00 a.m. sitting on Wednesday, May 22^nd.

Although it is virtually certain to go unmentioned, the oral argument in Performance Marketing will take place against the backdrop of U.S. Senate approval of the Marketplace Fairness Act of 2013, which would grant states the authority to require online and catalog retailers to collect sales taxes on sales to in-state buyers, so long as the states have simplified their sales tax laws in one of several ways, and the online merchant has gross annual receipts from nationwide online sales in excess of $1 million. According to news reports, the prospects for passage of the MFA in the House are uncertain.

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Our preview of the oral arguments at the Illinois Supreme Court during the May term concludes with Performance Marketing Association, Inc. v. Hamer. PMA will be heard by the Court during the 9:00 a.m. session on Thursday, May 16.

PMA arises from an amendment to the Illinois Use Tax Act known as the “Click-Through” Act or the “Amazon tax.” Here’s how it works: everyone has seen third-party advertisements on high-traffic websites, inviting visitors to click on the ad to get more information about a product or special deal. Typically, the third-party advertiser pays the owner of the website based on the number of people who “click through” and buy something. And that’s the nexus that the “Click-Through” Act is based on – any website that has one or more contracts with such advertisers who are “located in Illinois” is defined as a “retailer maintaining a place a business in this State.” And that means that as long as the website realizes $10,000 a year in gross receipts from “click-through” commissions, the site has to charge users for state sales taxes.

The Performance Marketing Association is a nonprofit trade association incorporated in Delaware. It’s the largest trade association in the country representing the “performance marketing” industry – businesses who use marketing methods similar to the internet “click-through” ad. Performance marketing has become relatively commonplace; according to the complaint, there are over 200,000 online publishers nationwide, and over 5,000 advertisers using or supporting performance marketing arrangements.

After the Illinois statute was passed, the PMA filed suit in Cook County Circuit Court.  In the complaint, PMA alleges that many internet-based businesses have responded to the Act by simply cancelling all contracts with Illinois publishers. As a result, the plaintiff alleges that Illinois-based publishers have lost millions, and many will go out of business. According to PMA, the “Click-Through” Act violates the dormant Commerce Clause by burdening interstate commerce and attempting to regulate non-Illinois commerce, as well as violating the federal Internet Tax Freedom Act, which bans all state taxes which target electronic commerce for special burdens. The complaint sought a declaratory judgment enjoining enforcement of the Act, as well as an award of costs and fees.

On May 7, 2012, the Circuit Court granted PMA’s motion for summary judgment, finding that (1) the Act failed the “substantial nexus” requirement for permissible regulations of interstate commerce, and therefore violated the Commerce Clause; and (2) because the Act burdened electronic commerce, it was preempted by the Internet Tax Freedom Act. Because the order struck down a statute on constitutional grounds, the State’s appeal bypassed the Appellate Court and went directly to the Supreme Court.

Not surprisingly, PMA has attracted considerable notice, including an amicus brief from the Multistate Tax Commission, the administrative agency for the Multistate Tax Compact. According to the Commission’s brief, the Act cannot be facially unconstitutional because it does not, by its terms, discriminate against interstate commerce. Nor does the Act violate the Internet Tax Freedom Act, according to the Commission, since the Act’s expanded definition of retailers subject to sales tax includes vendors who use any type of in-state representatives soliciting business on a commission basis, rather than singling out electronic publishing for special burdens.

We expect PMA to be decided in the fall.

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Yesterday, the Illinois Supreme Court filed its long-awaited opinion in Palm v. 2800 Lake Shore Drive Condominium Association. Although on its face, Palm relates only to the enforceability of a Chicago city ordinance on document requests to condominium associations, if the dissenters on the Court are correct, it may have long-lasting impact on the Court’s construction of home rule authority.

Palm began in 1999, when the plaintiff sent the then-current condo association board a demand for production of documents, claiming they were necessary for him to investigate possible wrongdoing in several different areas. When the plaintiff’s request was denied, he sued.

The problem in Palm was simple: which law governed, the Chicago ordinance, which gave residents a nearly unrestricted right to demand production of documents, or state law, which limited the scope of such requests and gave associations more time to respond?

After a string of motions (and three separate dismissals without prejudice), the Circuit Court held that the Chicago ordinance was a valid exercise of the City’s home rule authority. The court granted in part the plaintiff’s motion for summary judgment and ordered production of the documents plaintiff was seeking. The plaintiff then petitioned for an award of attorney fees. Although plaintiff acknowledged that he had paid his attorney $200 per hour, he submitted an expert affidavit stating that $300 was well within the market range. The court awarded the fees, approving the $300 rate, and certified the matter for immediate appeal. The Appellate Court affirmed.

In an opinion for the Court by Chief Justice Kilbride, the Supreme Court affirmed. “Home rule is based on the assumption that municipalities should be allowed to address problems with solutions tailored to their local needs,” the Chief Justice wrote. Although the General Assembly may preempt the exercise of home rule authority, it must do so expressly; the home rule clauses of the state constitution are intended to “eliminate or at least reduce to a bare minimum” instances of preemption by “judicial interpretation of unexpressed legislative intention.”

Home rule ordinances are evaluated according to a two-step test, the majority held. First, the court determines whether the disputed ordinance pertains to local government and affairs.   If so, the court then determines whether the General Assembly has preempted local power in the area. If it has not, the home rule jurisdiction may act in the area, even if the General Assembly has also legislated on the same issue.

Both sides agreed that the state statutes (the General Not For Profit Corporation Act and the Condominium Property Act) and the city ordinance at issue in Palm were completely irreconcilable. In the defendant’s view, that was enough to doom the ordinance as a permissible exercise of home rule authority, but the Court disagreed. Even though it was impossible to comply with both the state and city statutes, since the General Assembly had not expressly preempted home rule authority as part of the statutes, the city ordinance governed, and the plaintiff had a right to the documents he sought.

The majority then turned to the lower court’s attorney fees award. According to the city ordinance, plaintiff was entitled to recover “his reasonable attorney fees.” Construing the phrase as referring to whatever the local market rate was, the Court held that the plaintiff could legitimately recover an award of $300 per hour, despite having paid his attorney only $200 per hour. The Court rejected defendant’s argument that this was an unjustified windfall, pointing to testimony that the plaintiff would receive reimbursement only for his actual payments, and the attorney would retain the rest.

Justice Thomas filed a special concurrence in order to directly respond to the dissent. He began by sharply disputing the dissent’s conclusion that the city ordinance was invalid because it didn’t relate to the City’s local government and affairs, pointing out that not only hadn’t the defendant raised the argument, it had criticized the City of Chicago (which had intervened below to defend its ordinance) for even mentioning it. Even though the issue was not properly before the Court, Justice Thomas argued that the ordinance was well within the scope of home rule power. “[T]he dissent’s arguments,” he wrote, “show that, without a doubt, the dissenting justices are simply not comfortable with the system of home rule established by the Illinois Constitution.” As for the dissent’s objections to requiring the General Assembly to recite “magic words” before the Court would find local law preempted, Justice Thomas argued that the requirement came from the constitution, the Court’s own precedents, and the General Assembly itself. “If the legislature wants this to be an area of exclusive state control,” Justice Thomas concluded, “then the legislature can make it such with a single sentence.”

Justice Charles Freeman filed a lengthy dissent, with Justice Anne Burke joining. According to the dissenters, the decision “marks an unnecessary departure from settled law in two important areas – home rule jurisprudence and condominium law.”

Even though the defendant hadn’t challenged the ordinance on the grounds that it didn’t pertain to local government and affairs, the dissenters argued that the Court must address the issue, and it was in fact dispositive. The test, they wrote, for determining “whether a particular problem is of statewide rather than local dimension” involved considering “the nature and extent of the problem, the units of government which have the most vital interest in its solution, and the role traditionally played by local and statewide authorities in dealing with it.”

The legislative debates surrounding the Condominium Property Act made it clear, the dissenters argued, that the General Assembly considered the issue of demands for documents served on condominium associations to be a statewide problem requiring a statewide, uniform solution.  Since the City ordinance at issue did not pertain to local government and affairs, it exceeded the scope of permissible home rule and was unenforceable. And even if the City ordinance were enforceable, Justices Freeman and Burke disagreed with the majority’s ruling with respect to attorney fees too. Since the ordinance authorized the homeowner’s recovery of “his reasonable attorney fees,” the dissenters concluded that it merely authorized recovery of what the homeowner had paid, and no more.

The dissent closes with a call for legislative intervention: "Given the importance of balancing the rights of individual condominium owners against the right of association members as a whole, I urge the General Assembly to take action in this area."

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On Tuesday, the Illinois Supreme Court announced its oral argument calendar for the May term, and it includes arguments in five civil cases. The cases, with the questions presented in each, are:

Wednesday, May 15:

• Relf v. Shatayeva, No. 114925 - Where a plaintiff files suit, unaware that defendant had died more than six months earlier, may the plaintiff substitute the defendant's personal representative, or is the action barred? Our detailed summary of the facts and Appellate Court opinion in Relf is here.

Thursday, May 16:

• Evanston Insurance Co. v. Riseborough, No. 114271 - Does the statute of repose for actions against attorneys “arising out of an act or omission in the performance of professional services” apply only to actions for professional negligence brought by a former client of the attorney? Our detailed summary of the facts and Appellate Court opinion in Evanston Insurance is here.

Wednesday, May 22:

• The Board of Education of Peoria School Dist. No. 150 v. The Peoria Federation of Support Staff, Security/Policemen’s Benevolent and Protective Association Unit No. 114, No. 114853 -- (1) Are the 2010 amendments to the Public Labor Relations Act unconstitutional special legislation? (2) Are plaintiff's negotiations with its security officers governed by the Education Labor Relations Act or the Public Labor Relations Act? Our detailed summary of the facts and Appellate Court opinion in The Board of Education is here.
   
• Prazen v. Shoop, No. 115035 – Did the Board of Trustees of the Illinois Municipal Retirement Fund exceed its powers by ordering the plaintiff's age enhancement and creditable services pension enhancements forfeited when the company he owned entered into a services contract with his former employer? Our detailed summary of the facts and Appellate Court opinion in Prazen is here.

The final case on the Court’s civil docket for this term is Performance Marketing Association, Inc. v. Hamer, No. 114496, a direct appeal from the Cook County Circuit Court of that Court’s order granting summary judgment and striking down the state internet “click-through” tax law as a violation of the Commerce Clause. We’ll have much more to say about Performance Marketing in our preview of the argument tomorrow.

Each of the Court’s sessions will begin at 9:00 a.m.

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(Note: The following post was originally published on Law360.com on January 24, 2013.)

Reviewing the videotape of every civil oral argument at the Illinois Supreme Court, as I do for my firm's blog The Appellate Strategist, you can't help but be impressed by the collegiality of the Illinois Supreme Court. At many courts of last resort, counsel is never entirely sure whether some of the more pointed questions are intended for counsel him- or herself, or instead directed at one of the other justices, either as an attempt to persuade or to challenge. None of that is evident watching the Illinois Supreme Court's arguments.

To be sure, the Court is nearly always a "hot bench," as appellate lawyers say; questions can come from any, and sometimes from all directions. But the Court's questions always show a deep grasp of the record and a concern not merely for the implications of the legal rule at issue for future cases, but for doing justice in the case before the Court. And in the Court's opinions, the occasional sharply worded dissent stands out all the more for how unusual it is in the Court's jurisprudence.

The Kilbride Court began in Illinois a little more than two years ago, when Chief Justice Thomas L. Kilbride succeeded Chief Justice Thomas R. Fitzgerald, and Justice Mary Jane Theis joined the Court, taking the retiring Chief Justice's seat. In the twenty-six months since, the Court has decided eighty civil cases (disregarding attorney disciplinary and juvenile matters).

In reviewing those cases, one statistic leaps out, confirming the impression of a highly unified court: 67.5% of the Court's civil decisions have been unanimous. Significant dissent is rare: 12.5% of the Court's decisions have had one dissenter, 12.5% have had two, and only 7.5% have involved a 4-3 split. But this overall measurement masks trends in the Court's terms; for 2012, only 56.4% of the Court's decisions have been unanimous. Before the Court decided nine of its last twelve civil cases of 2012 unanimously, the Court had decided only 48.1% of its 2012 civil cases without dissent. During that same uncharacteristically contentious period, 37.0% of the Court's decisions featured two or three dissenters.

Perhaps the most frequently cited statistic among U.S. Supreme Court watchers is the reversal rates for the Federal Circuits. Indeed, those statistics have become something of a political football, with some Senators arguing that the Ninth Circuit's reversal rate suggests an ideological conflict between the Ninth Circuit and the Supreme Court. So what are the reversal rates in Illinois?

The overall numbers are not surprising. Most appellate lawyers know that appellate courts of last resort typically do not review lower courts' decisions in order to affirm. The Illinois Supreme Court is no different; over the past two years, the Court has reversed in 66.2% of its civil cases.

But trends emerge when we consider the individual districts. Nearly half of the Kilbride Court's civil docket -- 43.8% -- has come from Chicago's First District. The First hasn't fared well; five of the six Divisions have a reversal rate of 60% or more, topping out with an 85.7% reversal rate in the Division Two. The First District has had a particularly rough 2012, with a 76.5% reversal rate. The Fifth District, which includes Madison and St. Clair Counties, both sharply criticized as pro-plaintiff environments for tort cases in recent years by the American Tort Reform Foundation, has seen 80% of its civil decisions reversed by the Supreme Court. Two other Districts are similar: two thirds of the decisions reviewed from the Second and Third Districts have been reversed.

But the anomaly comes from the Fourth District, which centers on the state capital of Springfield. The Court has heard eight civil cases from the Fourth District, four involving government parties. In six of those eight cases (including three government wins) the Supreme Court has affirmed: an impressive 75% affirmance rate.

To learn more about the Justices' inclinations, we calculate the average votes gained by each Appellate Court's opinions before the Supreme Court. The First and Second Divisions of the First Districts have fared badly, with their opinions gathering an average of only 1.4 votes - including seven unanimous reversals (usually regarded as the ultimate indignity except at the Kilbride court, which has reversed unanimously in 43.8% of its civil cases). The Fifth and Sixth Divisions of the First District have done significantly better, with their opinions gaining an average of 3.5 and 2.1 votes, respectively, although the Fifth Division’s figure is skewed – its four cases have seen two unanimous affirmances and two unanimous reversals. The Fourth District, with its 75% affirmance rate, gets an average of 3.4 votes per decision.

Discerning swing votes in a Court so often in complete agreement is difficult, but interesting patterns do emerge. Justice Robert R. Thomas, for example, has voted with the majority in 94.8% of all the Kilbride Court's civil cases. Justices Rita B. Garman and Anne M. Burke are on the winning side nearly as often, voting with the majority 93.8% of the time. Justices Lloyd A. Karmeier and Mary Jane Theis are right behind, voting with the majority 93.6% and 93.3% of the time. Only Chief Justice Kilbride lags behind, voting with the majority "just" 80.0% of the time.

When we limit the sample to non-unanimous cases, our conclusions are further confirmed. Justice Thomas has voted with the majority in 83.3% of all non-unanimous civil decisions. Justices Garman, Burke and Karmeier have voted with the majority in an identical 80.8% of all cases. Close behind is Justice Theis, with 79.2% agreement with the majority. Most often finding themselves in the minority of divided Courts are Justice Charles E. Freeman, who votes with the majority in only 63.0% of all non-unanimous civil cases, and Chief Justice Kilbride, who does so only 42.3% of the time.

Justice Thomas' influence shows up again when we analyze the composition of the Court's occasional closely divided decisions. To date, the Kilbride Court has handed down sixteen decisions with two or three Justices dissenting. Justice Karmeier has voted with the majority in 12 of those 16 decisions – 75%. Justices Thomas, Garman, Burke have voted with the majority 68.8% of the time, and Justice Theis in 62.5% of the cases. On the other hand, Chief Justice Kilbride and Justice Freeman have joined the majority in only 50% of those closely divided decisions. This data suggests the outline of a voting block on the Court, with a solid core of Justices Thomas, Garman and Karmeier, with Justice Burke and Justice Theis serving as the swing votes in close cases.

Join me below the jump for more data on the Court's voting patterns. 

Continue Reading...

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When the petition for certiorari in Genesis Healthcare Corp. v. Symczyk was granted, it appeared that the Supreme Court was poised to resolve a clear split in the Circuits about the permissibility of “pick off” moves, at minimum for actions under the Fair Labor Standards Act if not, at least by inference, under Rule 23 as well. The Court granted cert on the following question: “Whether a case becomes moot, and thus beyond the judicial power of Article III, when the lone plaintiff receives an offer from the defendants to satisfy all of the plaintiff’s claims.”

But when the decision came down early last week, observers were left debating exactly how much the Court had decided, and what the path forward in the lower courts was likely to be.

The FLSA sets federal minimum wage, maximum hour and overtime guarantees which cannot be modified by contract. Although Congress barred traditional Rule 23 class actions under the FLSA in 1947, Congress has provided instead for an FLSA “collective action”: the plaintiff sues on behalf of “all persons similarly situated,” and interested employees must opt-in, rather than opting out.

Symczyk, a registered nurse, filed a collective action FLSA complaint alleging that her employer had deducted meal break times from her paycheck whether or not she had an uninterrupted break. Along with its answer, the defendant served the plaintiff with an offer of judgment under Federal Rule 68, offering the plaintiff all the unpaid wages she was seeking, plus “such reasonable attorneys’ fees, costs, and expenses” as the Court might set. Plaintiff never responded to the offer, and when the time limit ran out, the defendant moved to dismiss on grounds of mootness, the plaintiff having been offered full relief. The district court granted the motion, but the Third Circuit reversed. According to the Third Circuit, even if the individual plaintiff’s claim was mooted by the offer of judgment, the eventual certification of a collective action would relate back to the day the complaint was filed.

In an opinion by Justice Thomas (with the Chief Justice and Justices Scalia, Kennedy and Alito joining), the Supreme Court reversed the Third Circuit. The case was not an appropriate vehicle for resolving the mature split in the Circuits on the issue of whether a collective action plaintiff can be “picked off” by a Rule 68 offer, the majority found. Both the District Court and the Third Circuit had held that Symczyk’s own claim was mooted by the unaccepted offer, and Symczyk had failed to file a cross-petition for certiorari on the point. The plaintiff having waived the point, the majority assumed for purposes of the case – without deciding – that a Rule 68 offer of judgment, whether it’s accepted or not, moots the individual plaintiff’s claim.

Once the majority disposed of that issue, it had little difficulty disposing of the remainder of the case. As we discussed in our detailed preview of Symczyk here, the plaintiffs’ principal argument on appeal was that two 1980 Supreme Court decisions, Deposit Guar. Nat'l Bank of Jackson v. Roper and United States Parole Comm'n v. Geraghty, should be extended from Rule 23 class actions to FLSA collective actions. Roper and Geraghty had both held that under certain circumstances, the mooting of a class representative’s claim does not necessarily moot the action, but the Symczyk majority held that both were distinguishable.

The Roper-Geraghty line of cases, the majority held, turned on the independent legal status of a Rule 23 class once it has been certified. Absent employees who might – or might not – choose to opt in to an FLSA collective action, in contrast, had no such status. The representative plaintiff’s mere interest in continuing with a collective action despite the offer of judgment is not sufficient to overcome mootness. The majority acknowledged that mooting out the current plaintiff’s claim would have the effect of blocking unjoined employees from vindicating any claims they might have in the present suit, but pointed out that there was nothing keeping them from suing on their own.

Justice Kagan dissented, joined by Justices Ginsburg, Breyer and Sotomayor. The dissenters argued that the majority opinion was based on a fallacy: that the unaccepted Rule 68 offer had, in fact, mooted the individual plaintiff’s claim. Given that, in the dissenters’ view, “an unaccepted offer of judgment cannot moot a case,” the remainder of the majority’s decision answered a question that never should have arisen in the first place. Nevertheless, the dissenters made it clear that they disagreed with the majority’s resolution of that issue, arguing that the named plaintiff’s right to represent unjoined employees was just as much a cognizable stake in the action for an FLSA case as the right to represent a Rule 23 class was.

So where does all this leave the law? To be sure, Symczyk has laid to rest the notion that FLSA collective actions are merely Rule 23 class actions under a different name. Given the explosive increase in FLSA filings in recent years, this is important progress. The battle going forward seems certain to be joined on the issue which the majority declined to settle – whether a defendant can moot out an individual plaintiff’s claim by serving a Rule 68 offer of judgment. There seems to be something constitutionally dubious (to put it mildly) about the notion that litigation can or should continue without plaintiffs’ counsel having a named plaintiff with a concrete financial stake in the matter to represent. Nevertheless, whether or not a Rule 68 offer of judgment will moot a representative action will likely depend, at least in the short run, on the Circuit in which a case is pending, with each side of the Circuit split adhering to its own prior precedents until such time as the Supreme Court is ready to take up the issue again.

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The Illinois Supreme Court just announced that on Thursday morning, it will file its opinion in Palm v. 2800 Lake Shore Drive Condominium Association, a dispute over an owner’s right to compel the production of documents by his condominium association. Read the opinion of the Appellate Court for the First Appellate District (Division Five) here. Our summary of the Appellate Court opinion is here. The question presented in Palm is:

• Are the provisions of the Chicago Condominium Ordinance giving the right to compel production of documents, and authorizing interim awards of attorneys' fees, preempted by purportedly conflicting state law?

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