Illinois Supreme Court Holds Circuit Court Lacks Jurisdiction over Whistleblower Rate Challenge

State of Illinois ex rel. Pusateri v. The Peoples Gas Light and Coke Company presented an important question for the utilities bar: do the Circuit Courts have jurisdiction to order rate refunds on the grounds that the utility allegedly used falsified information in support of its rate case? On Thursday morning, a unanimous Illinois Supreme Court answered “No.” Our detailed summary of the underlying facts and lower court opinions in Pusateri is here. Our report on the oral argument is here.

Plaintiff filed a sealed complaint under what was then called the Whistleblower Reward and Protection Act (it’s now the Illinois False Claims Act) in 2009. The plaintiff – a former management-level employee of the defendant - alleged that the defendant was required to file a written report with the Illinois Commerce Commission whenever it took more than an hour to respond to a report of a gas leak. The plaintiff claimed that he and others had been instructed to falsify the reports to bring response times down below the threshold, and that the defendant had used this exaggerated record to support a rate case (as the Supreme Court noted, the complaint was never clear as to which rate case). The plaintiff alleged that after the rate increase was approved, the invoices sent by the defendant to the State as a gas customer were fraudulent claims for payment under the Act.

The Circuit Court dismissed, holding that the ICC apparently doesn’t consult the reports in rate making. The Appellate Court reversed with one Justice dissenting, finding that the reports could indeed have been part of the basis for a rate case.

In an opinion by Chief Justice Garman, the Supreme Court unanimously reversed. The matter was ultimately a simple one, the Court held. The ICC had exclusive jurisdiction over ratemaking, which is a legislative function, not a judicial one. Even when the courts reverse a ratemaking order, the court ordinarily doesn’t mandate a new rate, and where the new rate hasn’t been stayed pending appeal, ratepayers are often not entitled to a refund. “At its heart,” the Court found, “Pusateri’s complaint alleges [the defendant] used fraudulent means to get the State (and others) to pay too much for natural gas.” That made it a request for refunds, and only one entity in the State has original jurisdiction to order such relief – the ICC.

Moreover, the complaint amounted to a prohibited collateral attack on ICC ratemaking orders. In order to give the plaintiff any relief, the trial court would have had to determine what rates would have been absent the allegedly fraudulent safety reports, and ratemaking authority is statutorily reserved to the ICC alone. The plaintiff argued that the defendant had forfeited the jurisdictional argument by failing to raise it below, but the Court held that attacks on subject matter jurisdiction can’t be waived.

Plaintiff’s interpretation of the False Claims Act would “invite the circuit court to review a Commission rate order collaterally, in the absence of any specific grant of jurisdiction and less deferentially than the manner prescribed under the Public Utilities Act,” the Court concluded.

Image courtesy of Flickr by Steven Depolo

Much Ado About Little: Deadlocked Illinois Supreme Court Punts on Red Light Camera Ordinances

 

One of the most widely anticipated cases on the Illinois Supreme Court’s civil docket ended on Thursday morning with a surprise: the Court decided not to decide, dismissing the appeal in a per curiam order.

Keating v. City of Chicago was a constitutional challenge to the validity of Chicago’s red light camera ordinance. Our detailed report on the underlying facts and lower court orders is here. Our report on the oral argument is here.

Article VI, Section 3 of the Illinois Constitution requires that the Supreme Court must have the concurrence of four Justices in order to hand down a decision in any case. The problem in Keating was that by the time of the decision, two Justices, Justice Anne Burke and Justice Lloyd Karmeier, had recused themselves, leaving a five-Justice Court. And the remaining Justices were split on the case three to two. So the Court did the only thing it could – it tossed the appeal.

Although deadlocks are relatively rare, they’re not unheard of at the Court. The most recent one on the Court’s civil docket was Vill v. Industrial Commission in 2005. There were two more in 2004, South 51 Development Corp. v. Vega and Commerce Bank v. Youth Services of Mid-Illinois.

Nevertheless, the non-result in Keating raises the question of whether Illinois should have a mechanism available to appoint pro tem Justices when one or more Justices have recused themselves. In California, Article VI, Section 6 of the state Constitution provides such a mechanism – the Chief Justice is empowered to reassign Court of Appeal Justices to the Supreme Court as pro tems. The Court maintains a list of active Court of Appeal Justices, and pro tem appointments rotate alphabetically, each Justice sitting for one case. It’s a familiar system in California; since the Governor appoints new Justices when one retires, vacancies are not especially rare (indeed, Justice Joyce Kennard retired in April and no replacement has been nominated).

So, readers – do you think Illinois should have a similar system? Should single-case vacancies be filled in some other way? Or is the current system for the best?    

Image courtesy of Flickr by R/DV/RS.

 

The Perils of Incomplete Service: The Illinois Supreme Court Debates Bettis v. Marsaglia

During its September term, the Illinois Supreme Court heard oral argument in Bettis v. Marsaglia. Bettis presents an issue of potential significance to election lawyers: is a petition for Circuit Court review from an Electoral Board decision which isn’t served on the Board itself procedurally defective? Our detailed summary of the facts and lower court rulings in Bettis Is here.

Bettis arose from a proposed ballot proposition regarding the School District’s issuance of working cash bonds. Objections were filed, alleging that the plaintiff’s petitions were unnumbered and improperly bound. The Electoral Board agreed, and the plaintiff filed a petition for review in the Circuit Court.

The plaintiffs served every individual member of the Electoral Board, plus the two objectors. The problem was, they didn’t serve the Electoral Board as a separate entity. The defendants moved to dismiss for lack of jurisdiction, and the Circuit Court agreed.

Bettis turns on Section 10-10.1(a) of the Election Code (10 ILCS 5/10-10.1(a)). According to the statute, a party seeking judicial review of a decision of the Electoral Board must “file a petition with the clerk of the court” and “serve a copy of the petition upon the electoral board and other parties to the proceeding by registered or certified mail within 5 days after service.” The districts of the Appellate Court are split on whether the statute requires service on the Electoral Board as an entity, or if service on all the members is enough. In Bettis, the Fourth District followed the First District’s view that the statute requires service on the Board and affirmed dismissal.

Counsel for the plaintiff began the Supreme Court argument. He argued that the purpose of the statute is to let the board know that the party has filed a petition for review, since the board must prepare the record. Plaintiff served every member of the Board by registered mail – plus the School Board, the superintendent, the secretary of the board, the secretary of the school district and the objectors to boot. Chief Justice Garman asked whether the case was moot. Counsel pointed out that although the election was in 2013, the plaintiff had asked that it be reviewed as a recurring issue of great interest. Justice Thomas asked whether the plaintiff was asking for any particular relief beyond an opinion saying that the lower courts were wrong. Counsel said he wanted a declaration that service on the individuals was sufficient. Without that, the Board can probably proceed to issue the bonds. If the plaintiff wins at the Supreme Court, the case goes back to the trial court for review of the Electoral Board’s decision. If not, the Board can proceed with the bonds without the voters’ involvement. Justice Burke wondered why, if service on the Board wasn’t mandatory, the legislature wouldn’t have said service on the members of the Electoral Board. Counsel responded that in fact, the Electoral Board doesn’t have an address or phone number. Justice Burke asked counsel whether he was arguing that compliance with the statute was an impossibility. Counsel answered that he wouldn’t know where to mail it to. Moreover, he pointed out, the statute doesn’t refer to the board as a legal entity – it uses lower case initial letters, rather than a proper noun. Justice Theis asked whether the statute was ambiguous, and if so, why? Counsel answered that he believed the reference to the board means the members, and the Fifth District has agreed. Justice Theis suggested that the plain language says service on the Board, and once again, asked whether and how the statute was ambiguous. Counsel answered that whether or not the statute is ambiguous depends on what the reference to the board requires, and whether service on all members is enough. Justice Burke pointed out that the plaintiff was arguing that it was impossible to serve the board, and counsel again argued that the board has no address. Justice Theis asked whether the clerk receives filings for the board, and counsel responded that the superintendent was listed as the person to file petitions with to get on the ballot – which is what plaintiff did. Justice Theis asked counsel whether he was saying the entire statute was ambiguous because it doesn’t give an address for the board? Counsel explained that the Fifth District held that service on the members was sufficient because the board before it had no address, and the court believed it would be useless to serve the county clerk in the board’s stead. Chief Justice Garman pointed out that issues involving notice or service typically revolve around strict or substantial compliance. Was counsel arguing that that’s not the question in Bettis, or was the plaintiff arguing impossibility? Counsel explained that in Cook County, some agencies have fixed offices. In southern Illinois, that typically isn’t the case. The purpose of the statute is to ensure that the board has notice, and that was done – they actually prepared the record, their only function in the administrative review case.   Justice Thomas suggested that counsel was arguing issues from the cross-appeal even though he had not filed a brief in the cross-appeal – had counsel thereby waived the right to argue on those issues? Counsel answered that the plaintiff was precluded from presenting testimony, and therefore the plaintiff doesn’t have a complete record from the Board to fully present her arguments. Justice Thomas suggested that the plaintiff certainly had a right to file a reply brief to respond to the cross-appeal issues. Counsel answered that since the plaintiff had moved to strike those issues at the Appellate Court, and the Appellate Court ultimately didn’t reach them, he didn’t think it was appropriate to brief the issues. The only issue considered by the Appellate Court was adequate service.

Counsel for the Electoral Board members followed. He argued that the members were seeking finality. Counsel told the Court he was present at the trial court, and had he wanted to file the record, he would have had to first move for leave to intervene, since the Board wasn’t a named party either. Counsel argued that it simply isn’t true that the Electoral Board has no mailing address – the address is provided in the Election Code as being the regular meeting place of the school board. Justice Thomas noted that some courts have suggested that the statute requires service on both the Board and all individual members, and asked counsel to point to language in the statute requiring that. Counsel answered that the Administrative Review Law provides the procedure, and it’s fundamental that all members of the agency are parties to the order under review. Justice Thomas said that Section 10-10.1 requires service on the Electoral Board, and Section 10-9.5 defines what the Electoral Board is; it defines the Board as its several individual members. So why can’t that definition be read into Section 10-10.1, leading to the view that service on the members is service on the Board? Counsel answered that the Board is a separate entity from its members. Justice Thomas suggested that the Board here isn’t a permanent entity like the State Board of Elections is. These boards are formed temporarily to resolve disputes, and the statute spells out who serves. So if there are two reasonable interpretations of the statute, why shouldn’t the Court err on the side of ballot access? Counsel answered that the ballot access principle was about candidates seeking to get on the ballot – it had never been applied to referenda. Justice Kilbride asked whether the Administrative Review Law was applicable here. Counsel agreed it was, and Justice Kilbride asked whether the Administrative Review Law settled the issue – in Section 3-106 and 3-105, it says that service on the director or agency head is service on a board, and failure to serve is not a basis for dismissal. Justice Kilbride asked whether the chair of the board was served, and counsel said yes, and his home address. Justice Kilbride asked how the chair was referenced in the pleadings, and counsel answered by name, nothing more. Justice Burke asked whether counsel was elevating form over substance – all parties were served and had notice. Where did the statute require that all members be named in the caption? Counsel answered that the only requirement of the statute was to recognize the board as a separate entity. If service at a member’s home address is sufficient, it allows petitioners to ignore the Board’s separate existence.   Justice Burke asked whether counsel was saying the members didn’t know this was an Electoral Board case. Counsel responded that there’s a difference between notice that a lawsuit has been filed, and notice that that party is a defendant. Justice Theis asked whether the individual members of the Board appeared below, and counsel answered that they had not in the trial court, but had in the Appellate Court. Justice Theis asked who counsel represented, and counsel answered the Board and the individual members. Counsel said he wasn’t arguing that the caption of the case had to be a certain way. Justice Thomas said regarding the issue of the Board’s decision not being attached, and the petitions not numbered – did the Appellate Court address that issue? Counsel said no. Justice Thomas asked whether there is enough in the record for the Court to grant relief on that basis. Counsel argued that either issue – the failure to attach the decision (an argument the Appellate Court rejected) or the pagination issue – was an alternative grounds for affirmance. As for attaching the decision, counsel argued that it’s elementary that a complaint based on an instrument must attach that instrument. Justice Thomas asked whether the Court should allow opposing counsel to disagree with him on rebuttal. Counsel answered that he hadn’t researched the issue of failing to file a reply brief, but that was one way the Court could go. Ultimately, the case was delaying the issuance of needed school bonds, and the appellant made no attempt to expedite the case. Counsel argued that the Court should decline to apply the recurring issue of public concern doctrine and instead dismiss on grounds of mootness. Justice Thomas asked if the Court disagreed on the issues counsel has argued, what happens next. Counsel responded that the defendant should be permitted to move to dismiss for mootness at the trial court, and the motion should be granted. A petition for a referendum is valid for no other election, so there is no relief available here. Counsel concluded by arguing that the Election Code includes a mandatory requirement that petitions be numbered consecutively, and the plaintiff’s failure to do so invalidated her petition.

On rebuttal, counsel for the plaintiff argued that after the trial court, the only option available to the plaintiff was appeal. Plaintiff did appeal, and the election date passed. The plaintiff shouldn’t be penalized because the election date passed while she was exercising her rights – the mootness doctrine wasn’t designed to work that way. Justice Thomas asked if counsel had the option of moving to expedite the proceedings. Counsel answered that the defendant made a motion to expedite, and the plaintiff stipulated to it. Justice Thomas asked why the plaintiff failure to attach the decision of the Board shouldn’t be dispositive. Counsel answered that the Board had only one function – to prepare the record and give it to the trial court. Justice Thomas asked whether there was a written decision that could have been attached to the petition. Counsel once again argued that the Electoral Board is not a corporate entity – its only responsibility is to prepare the record, and the Board doesn’t have to appear or file an answer. With respect to numbering the pages of the petitions, there are cases from the Fourth and First District holding that the requirement is directory, not mandatory. Justice Theis asked whether there were decisions from the Supreme Court so holding, and counsel said only the Appellate Court. As for opposing counsel’s statement that the Board had an address, the plaintiff served every conceivable actor involved. Chief Justice Garman asked counsel what effect the passing of the election had on his case. Counsel answered that the trial court could open the way to issuing the bonds if the plaintiff lost, and if the plaintiff won, the court could return matters to square one.

We expect Bettis to be decided in four to five months.

Image courtesy of Flickr by Kristin_a.

Illinois Supreme Court Debates Constitutional Challenge to Rental Housing Support Program

During its September term, the Illinois Supreme Court heard oral arguments in Marks v. Vanderventer, a direct appeal from the Circuit Court after the court’s order finding the fee collection provisions of a “Rental Housing Support Program” unconstitutional.

Plaintiff sued the Recorder of Deeds in Lake County, seeking a declaratory judgment holding that the 55 ILCS 5/3-5018 was unconstitutional. The statute imposes a $10 fee on every recording of a real estate document - $9 goes to the Rental Housing Support Program, and $1 is retained by the county Recorder of Deeds. The plaintiffs argued that the statute established a “Fee Office” within the meaning of Article VII, Section 9 of the Illinois Constitution. When the Circuit Court held that the statute was unconstitutional, the case went straight to the Supreme Court.

Counsel for the Attorney General began the argument. He argued that the Housing Support Program itself predated the challenged amendments; what the plaintiffs were really arguing was that allowing the counties to retain $1 of each fee amounted to an improper skimming. Not so, he argued – skimming only arises when parties take money intended for another purpose. In fact, the statute creates two surcharges under a single name. Until the statute was amended, $9 went to the State (specifically the housing development authority), and $1 was retained at the county level for general revenue. Justice Burke asked whether there was a rational basis for imposing a charge for recording real estate documents to fund a housing program. Counsel responded that the legislature had found a lack of affordable quality rental housing in the state as a result of vacancies and turnover. Chief Justice Garman asked about the fact that the surcharge isn’t paid by all real estate owners, but only by those who record documents from a sale. Counsel answered that the legislature doesn’t have to be perfect in drawing the class. The rational link between recording documents – thereby showing that the party has benefited from increasing real estate values – and the fee. Justice Burke asked whether there was any proof the legislature relied on such evidence. Counsel answered that the legislature had made findings, even though it wasn’t required to. Justice Freeman pointed out that Supreme Court Rule 40 authorizes imposing a fee for each civil ceremony performed. Justice Freeman has twice opined in dissents that Rule 40 is unconstitutional. How did counsel distinguish this program? Counsel answered a legislative act is subjected to a different analysis. Marriage license fees implicate distinct constitutional concerns, and the Court has recognized that in its decisions.

Counsel for the Cook County Recorder of Deeds was next. Counsel agreed with the Attorney General’s arguments on constitutionality. Counsel wanted to talk about the lower court’s failure to dismiss pursuant to the Tort Immunity Act and the voluntary payment doctrine. In addition, the court had disregarded Illinois law on class certification, certifying a class action without notice. Justice Thomas asked whether the Recorder was endorsing the view that the Court should reach the constitutional issues. Counsel responded that in fact, the lower court never should have reached the constitutional issues; the procedural issues are dispositive. But if the Court does reach the constitutional issues, the statute is constitutional. Justice Thomas pointed out that the Court has the doctrine of constitutional avoidance, pursuant to which constitutional issues aren’t decided unless absolutely necessary – so what was the Recorder asking the Court to do? Counsel said that the Court should vacate class certification, since none of the Recorders outside Cook County had a meaningful opportunity to participate in the case. Justice Thomas asked whether counsel was asking the Court to vacate the Circuit Court’s finding that the statute was unconstitutional and remand for consideration of the non-constitutional arguments. Counsel answered that the Court should vacate and remand with instructions to dismiss pursuant to the voluntary payment doctrine. Justice Thomas suggested that it seemed somewhat contradictory to resolve the constitutional issues and remand for consideration of the non-constitutional ones. Counsel answered that the Court should dismiss on non-constitutional grounds, but if the Court reached the constitutional challenge, the statute easily passed muster. The class certification order ignored the requirements of the statute – for example, there was no notice or allowance for opt out, nor was there any discussion of the prerequisites for a class. The court failed to discuss venue, or whether the counties were similarly situated. Moreover, the voluntary payment doctrine, pursuant to which the only taxes or fees which can be challenged are those paid under compulsion, barred the whole claim. Finally, given that the plaintiffs chose to plead their action in tort, the Tort Immunity Act bars the claim. Justice Kilbride asked whether there was a single fee, or whether it’s itemized so that the party can see where the money is going? Counsel answered that the plaintiffs pled no facts on that issue. The deed involved in the case, which was first entered in the record when it was attached to the plaintiff’s opening brief, showed that the $10 fee was itemized, with $9 listed as going to the Illinois Rental Housing Fund.

Counsel for the plaintiff followed. He argued that 101 of the 102 counties in Illinois had intervened and participated – only Cook County’s Recorder of Deeds had remained on the sidelines. Everybody had been given notice and an opportunity to participate. Furthermore, the Recorder’s objection based on the voluntary payment doctrine could have been ironed out below if the Cook County Recorder had participated. Justice Thomas asked what the legislature’s rationale was for placing the burden only on persons recording real estate documents, as opposed to all real estate owners. Counsel responded that in the 2010 version of the statute, the legislature made no findings at all. But for the 2013 version, the lawyers passed along to the legislature the arguments they had made, and the legislature incorporated those findings. Chief Justice Garman asked whether the plaintiff was challenging the 2010 or 2013 version of the statute. Counsel answered that the 2013 amendments had only been effective going forward. The amendments just changed the nature of the surcharge, removing the statement that the $1 retained by the county was a fee for administering the program. But the question remained, what should be done about the people who paid that fee for three years? Counsel argued that the defendants were saying the Court was bound by the legislature’s findings, but such a rule, applied here, would leave the uniformity clause with no teeth. Counsel argued that there was no rational basis for taxing a limited group for the benefit of a different and larger one. There was no basis for putting this burden not on landowners in general, but on those choosing to register a real estate document in any given year.

The Attorney General’s rebuttal was next. Counsel argued that while there was no need for findings to survive the rational basis test, now that the legislature had made findings, they were entitled to deference. Counsel argued that the $1 was intended for the counties all along, but if the Court concludes that it amounts to improperly skimming, then the fee has to be forwarded to the State. Counsel argued that given that the $1 surcharge has been eliminated, that part of the case is moot. Justice Thomas asked counsel to comment on how the Court should handle the constitutional versus the nonconstitutional issues. The Attorney General answered that the State agrees with the Cook County Recorder. One way to avoid the constitutional issues entirely is to throw out the case based on the voluntary payment doctrine. Justice Thomas pointed out that the constitutional issue was actually raised by the intervenor, not any of the original parties, even though the case was accepted for resolution of the constitutional issue, and counsel agreed.

Counsel for the Cook County Recorder of Deeds concluded the argument. Counsel argued that the Court was free to review any issue or order before the final judgment of unconstitutionality. Yes, Cook County had notice of the suit, counsel argued, but it’s the timing that’s important. The Cook County Recorder first received notice of the suit after the class had been certified and the statute struck down – there was no opportunity to meaningfully participate. Further, even if the plaintiff now wants to recast the claim as one for restitution, not tort, counsel argued that the voluntary payment doctrine still applies. Counsel concluded by asking the Court to vacate both the class certification order and the finding of unconstitutionality.

We expect Marks to be decided in three to six months.

Image courtesy of Flickr by Michael D. Beckwith.

Postal Meters vs. Postmarks: Illinois Supreme Court Debates Huber v. American Accounting Association

So what’s the difference between a private postal meter, a postage label purchased at a postal service kiosk, and a postmarked stamp? The Illinois Supreme Court debated these issues with much at stake in the closing days of the September term in Huber v. American Accounting Association. The question presented in Huber is what proof of timely filing means that a notice of appeal is timely filed? Our detailed summary of the facts and underlying court decisions in Huber is here.

The plaintiff’s petition to dissolve the 1935 Association, vacate the dissolution of the 2002 Association and then judicially dissolve the 2002 Association was dismissed. The plaintiff appealed, but the defendant raised a preliminary challenge: was the plaintiff’s Notice of Appeal timely filed?

The clerk received the plaintiff’s Notice of Appeal on April 9, thirty-four days after entry of judgment. The envelope in which the Notice of Appeal arrived appeared to show a postmark date of April 3 – twenty-seven days after entry of judgment, and three days before the deadline.

Illinois Supreme Court Rule 373 is a modified mailbox rule: if received after the due date, the time of mailing is deemed to be the time of filing as long as proof of mailing is provided pursuant to Rule 12(b)(3). Rule 12(b)(3) provides that an attorney certificate or affidavit of a non-attorney is required to prove mailing.

The plaintiff’s Notice of Appeal didn’t include a Rule 12(b)(3) certificate or non-attorney affidavit. The Court of Appeal held that Rule 373 required strict compliance, and since the plaintiff hadn’t complied with Rule 12(b)(3), the Notice of Appeal was untimely.

The pro se plaintiff began the oral argument. Justice Theis pointed out that the envelope in which the Notice of Appeal had arrived was in the record. It has a bar code in the upper right hand corner and a notation of “date of sale,” with a note on the side reading “APC.” Justice Theis said that apparently, “APC” was a self-serve kiosk for customers to buy stamps. Justice Theis asked counsel how the postage strip from the kiosk could be called a postmark. Plaintiff responded that the postage had been issued by the post office on the date stamped on it; a customer goes to the post office, pays, gets a postmark label, puts it on the envelope and puts it in the mail. Justice Theis asked plaintiff whether he was saying that the APC strip was a postmark. Plaintiff answered that it was not a postal stamp, but it was a label issued by the postal service. Justice Theis asked whether the APC strip showed the date of sale, and plaintiff said yes. Justice Theis asked whether the APC strip told us anything about when the letter was mailed. Plaintiff answered that the envelope was mailed on the date of sale. Justice Theis pointed out that just because the APC strip was purchased on the third, why couldn’t it have been mailed on the fifth? Plaintiff answered that one could say that about any postal label. Justice Theis suggested that Rule 373 is about bringing clarity to the mailbox rule, so that a person can tell whether or not there is compliance with the date of filing requirement. Plaintiff had argued that the record showed a clear postmark, but Justice Theis wondered whether it really was. Before plaintiff could audibly answer, Justice Kilbride pointed out that he had never experienced anything other than the clerk taking the label and put it on the envelope and tossed it in the bin for processing. He wondered whether we knew of record what happened here. Plaintiff acknowledged that he didn’t have an affidavit from the post office. Justice Thomas responded that the question wasn’t an affidavit from the post office. He suggested it was possible that a person could put the kiosk sticker on an envelope and then wind up taking it home unmailed. But that’s not what typically happens. Plaintiff responded that he had never heard of the postal service accepting a piece of mail to which an APC strip had been affixed already. Justice Theis pointed out that the rule said a certificate of mailing, but there was none here. Plaintiff responded that the record reflected a postal service-issued postmark label. Chief Justice Garman asked whether the case turned on whether the postmark was legible or not. Plaintiff said it did; the rule was adopted to address cases with no postmark or an illegible postmark. Justice Burke asked whether the legibility of the postmark was an appropriate distinction, since legibility isn’t in the control of the party. Plaintiff responded that limiting the rule to postal service marks solved the problem; a private postal meter mark can be manipulated, but a postal mark can’t. The Chief Justice pointed out that if jurisdiction rose or fell on legibility, no one can count on having perfected his or her appeal. Counsel answered that if something in the record establishes the date of mailing, it establishes jurisdiction. Counsel argued that the rule required affidavits which by definition – since they swear to something the serving party hasn’t done yet – aren’t true. Justice Karmeier pointed out that the plaintiff had said at the outset that he left the affidavit in the printer – so he had done what was supposedly physically impossible. Plaintiff argued that because the affidavit swears to acts still in the future, it is by definition swearing to something physically impossible. Counsel argued that the defendant had merely argued that everyone files such affidavits – not that the affidavits are in fact true. Plaintiff argued that the rule invites manipulation, since anyone could sign the affidavit and then put the service copy on his or her desk for a time. What provides better objective evidence of mailing, plaintiff asked, a self-serving affidavit, or a legible postmark? Justice Thomas cited plaintiff’s alternative argument – that Rule 12(c) service is complete four days after mailing, so by definition, service is complete four days after mailing. Counsel answered that the notice was stamped received on the 9th – four days before that was the 5th, which was within the deadline. Thus, the stamp categorically proves that the notice of appeal was filed on the 5th. Justice Burke suggested that the stamp doesn’t prove mailing – what if the envelope doesn’t arrive? Plaintiff responded that that would mean it was mailed the 5th or earlier. Justice Thomas pointed out that some mail turns around in a day or two – it could have been mailed on the 8th. That wasn’t likely when the Notice was mailed from Miami, plaintiff answered. Justice Thomas responded that still, delivery doesn’t necessarily take four days – it could be two or three. Plaintiff answered that given that the rule says four days, one has to assume that’s right. Justice Theis asked whether a certificate of mailing would take care of all these issues. Plaintiff answered that signing an affidavit doesn’t make it true.

Counsel for the defendant followed up. Justice Thomas suggested that while the value of strict compliance was clear, there was something appealing about saying if a party has a valid postmark, why is that not better evidence of the date of filing than an affidavit which is subject to manipulation. Counsel answered that legibility and late affixing of a postmark were two reasons for removing the postmark from the rule in 1981. Admittedly, a government postmark is more reliable than a private meter postmark, but things do happen. Counsel argued that the mailbox rule is not a harsh standard, it’s a relaxing of the ordinary requirement. Counsel was not arguing for strict compliance, he said. There were several examples in the law of substantial compliance, but this case didn’t even reflect that much. Rule 12(b)(3) – a one page affidavit or a certificate of service – wasn’t a high bar. Counsel wondered why, if the plaintiff had left the affidavit in the copy machine, why hadn’t he filed a motion under Rule 303(d) to file late for cause? If counsel didn’t know about the mailbox rule, why didn’t he overnight the notice of appeal? Counsel suggested that like a private postal meter label, the kiosk label merely proves purchase of the postage, not date of mailing. Justice Kilbride asked what the notation under the address and to the left of the received mark in the record was. Counsel answered a zip code. Justice Karmeier asked whether the purchaser typically gets the envelope at a kiosk and takes it to a kiosk. Counsel agreed that was right. So we have no knowledge as to whether the envelope was mailed the same day, Justice Karmeier asked. That’s right, counsel answered. The Chief Justice asked counsel to respond to plaintiff’s argument that compliance with the affidavit requirement was impossible. Counsel responded that the affidavit was admittedly forward-looking, but it had been used in courts for years. Parties place themselves at serious risk by giving false affidavits. The difference between buying postage at the desk and at a self-serve kiosk is that when postage is bought at the desk, postal service rules bar employees from returning an envelope to the customer unmailed. Counsel concluded by again insisting that the mailbox rule is itself a relaxation of the ordinary rule. The plaintiff’s argument amounted to suggesting that the savings clause needed a savings clause. The Notice of Appeal here was four days late, so the mailbox rule was not triggered.

In rebuttal, the plaintiff explained that the affidavit wasn’t late-filed because he didn’t know it wasn’t included until the motion to dismiss. It was easy to lie in an affidavit, counsel argued again – providing an affidavit didn’t make it true. Nothing in the argument proved that the notice of appeal hadn’t been mailed on the day the mailing strip was issued – there was no way the date of purchase and date of mailing weren’t the same. Justice Thomas suggested that there was a way that the package wasn’t mailed the date of purchase. Counsel answered that that was just as possible as saying something in an affidavit and then not mailing it. Justice Theis suggested that the case was about the best evidence of mailing. The notice of appeal in the record didn’t have a cancellation date on it. Plaintiff responded that it had the date of issue by the postal service, and that’s sufficient to prove the date of mailing.

Image courtesy of Flickr by J.D. Thomas.

Illinois Supreme Court Debates Revenue Decoupling in Utility Ratemaking

During its September term, the Illinois Supreme Court debated an issue of considerable importance to the State’s utilities. People ex rel. Madigan v. Illinois Commerce Commission is a challenge brought by the Attorney General to volume-balancing-adjustment (“VBA”) riders to approved natural gas rate schedules. Our detailed summary of the underlying facts and opinions in Madigan is here.

Utility ratemaking is largely an exercise in forecasting the future – what loads are likely to be, what the weather will be like, population changes, energy efficiency and so on. When assumptions go astray – which they almost always do, at least to some degree – rates are off what they “should” be. Certain customers might wind up overpaying or underpaying what they theoretically should, and the utility can miss its approved revenue recovery targets.   The purpose of VBA riders is to adjust rates either up or down depending on whether the utility is on track to over-recover or under-recover its target revenue.

The Commission authorized Rider VBA as a four-year pilot program in 2008. While the Attorney General’s appeal from that decision was still pending, the Commission approved Rider VBA on a permanent basis in January 2012.

On appeal from that ruling, the Attorney General challenged the VBA on the grounds that it violated long-settled prohibitions on retroactive ratemaking and single-issue ratemaking. The Appellate Court held that the VBA was not retroactive ratemaking because it wasn’t based on the proposition that rates were too high; it controlled the utility’s revenue recovery. The Court further held that the VBA didn’t violate the prohibition on single-issue ratemaking, since it didn’t cause rates to move based on a single facet of the revenue recovery requirement. The Court of Appeal accordingly affirmed the order approving the Rider VBA.

Counsel for the Attorney General began the argument. He argued that the Rider VBA was impermissible not only as retroactive and single issue ratemaking, but under the basic ratemaking principles of the Public Utilities Act. Utility ratemaking had never been intended to guarantee utilities’ profits, counsel argued; it was supposed to approximate the effect of the free market. The Rider VBA, he argued, effectively moved risk from the utility to the residential and small business customers. Justice Thomas asked whether the country wasn’t moving towards riders like the VBA. Counsel answered some states have, others haven’t. In the ones that have permitted it, there are generally statutory amendments authorizing the practice. Justice Burke asked whether the idea was to give utilities an incentive to control costs and operate efficiently in the public interest. Counsel answered that the Act already has efficiency requirements. Justice Burke suggested that counsel was saying that utility rates are always subject to some sort of regulation and review even without the rider. Counsel answered that that was so, but rates are set prospectively; if revenue falls short, the utility should come back and open up a new rate case, not go back and charge consumers more for the gas they’ve already used. Justice Burke asked how the average consumer is affected by the Rider. Counsel answered that if the company doesn’t achieve its revenue goal from a particular type of customer, it imposes a monthly surcharge the following year. Justice Burke asked whether that eliminated the incentive to conserve, and counsel said no. Justice Thomas asked whether the Court should be influenced by the fact that utilities want the Rider, consumers seemed to be benefiting and environmental groups are in favor of it? Counsel argued that environmental groups often trade such Riders for a quid pro quo, but efficiency measures are already required in Illinois. Justice Theis asked whether the State’s arguments were aimed at the second phase of ratemaking – not determining a revenue requirement, but rather, designing a rate to get there. Counsel agreed. Justice Theis pointed out that many cases cited by the Attorney General actually related to the revenue requirement. Counsel answered that the plain language of the Public Utilities Act required prospective and published rates, and provide for a new rate case when revenues fall short of goals. The Court itself has said that refunds paid after rates are set are inconsistent with prospective ratemaking. Justice Theis said that was about the first prong of ratemaking, but counsel argued that there was no reasoned distinction between the two circumstances.   Free market companies don’t get to go back and retroactively increase prices, counsel argued, and the defendants shouldn’t be allowed to either – the legislature has made it clear that the companies must bear the risk of achieving or missing the approved rate of return. The risk of the company falling short of its revenue allowance is built into the ratemaking process, counsel insisted, but the Rider changes that. When counsel turned to the retroactive ratemaking issue, Chief Justice Garman asked whether the issue had been waived. Counsel answered that the point had been raised regarding approval of the pilot program and expressly rejected. Accordingly, it was futile to raise the point again. Moreover, there was no unfair surprise in raising the issue, counsel argued, and it was purely legal (and thus, non-forfeitable) anyway. Counsel concluded by once again insisting that the Rider VBA was both retroactive and single-issue ratemaking. The guiding principle of ratemaking was supposed to be that when one factor changed, perhaps there were offsets elsewhere. Isolating one element of the complex equation distorts the process.

Counsel for the Commerce Commission followed. He argued that many of the cases cited by the Attorney General related to the revenue requirement step of ratemaking, which is not at issue here. The second step involves teams of economists, armed with costs and service studies, allocating the revenue requirement out to the various classes of customers. Counsel argued that the primary reason for the Rider was the recovery of fixed costs, not the cost of gas. The Public Utilities Act doesn’t prohibit the guaranteed recovery of revenue targets, counsel argued. But the ICC decided not to go that way. The Attorney General argues that the Rider VBA violates the principle of published rates, but in fact, it is published, counsel argued. Justice Theis pointed out that one of the concerns of the statute is understandable rates. Under the Rider, a consumer who is frugal and wise and conserves gas will pay more. How does that factor in? Counsel argued that such a customer would still get the benefit of the volumetric rate and have a lower bill. Chief Justice Garman asked how a consumer would know that a surcharge was coming. Counsel responded that the surcharge is published immediately before the year in which it is collected. Justice Thomas asked whether the Attorney General had done enough to preserve its retroactive ratemaking argument. Counsel said no – the challenge to the pilot program was an entirely different case.

Counsel for the utility followed.   The Rider is published as a tariff, he said. Counsel characterized the Rider as triggering adjustments rather than surcharges. In fact, the utilities have returned $24.5 million to the customers since approval. Nor was it fair to say that the Rider guaranteed a certain profit level – even with the Rider, rates of return on equity have been consistently below the Commission-authorized rate. In fact, as a result of last winter in Illinois, but for the Rider, the utility would have earned in excess of the authorized rate of return – with it, the utility ultimately made below the authorized rate. Counsel argued that the Rider doesn’t change the setting of a revenue requirement, or guarantee any particular level of profitability. Counsel noted that the Attorney General had cited the principle of least cost from the Utility Act, but since the Rider is symmetrical, adjusting both to over- and under-recovery, it is consistent with the least cost principle. Justice Theis asked counsel to address the Attorney General’s argument that the Rider eliminates utility risk. Counsel answered that risk is factored into the approved rate of return. The Commission addresses any reduction in risk resulting from revenue decoupling in ratemaking – in fact, originally, there was a 10 basis point adjustment to the revenue requirement because of the change in risk. In its latest rate case order, the Commission decided not to apply that offset, since it found that many of the exemplar cases it was using to set rates also had revenue decoupling. Counsel argued that the charge that the Rider eliminates the incentive to conserve is simply untrue.

Counsel for the Attorney General argued in rebuttal that publishing the Rider doesn’t make the rate understandable – in fact, it promotes uncertainty. According to counsel, the Commission rejected the idea that reduced demand doesn’t affect fixed costs. Counsel conceded that the Rider doesn’t guarantee profits, but it does guarantee a revenue requirement that isn’t supposed to be guaranteed. The underlying assumption of traditional ratemaking is that when usage falls, a utility will make other changes to offset the loss. Justice Theis asked whether counsel for the company was correct in saying that risk is factored in at the revenue requirement stage of ratemaking. Counsel answered that it was not clear that approved profit had been lowered in response to the lowering of risk. Justice Karmeier asked whether risk to customers wouldn’t be higher without the Rider. Counsel answered that in fact, the Rider hasn’t decreased rates. Justice Karmeier referred to the claim that the utility has refunded $24.5 million because of the Rider, and asked whether that was a proper factor to consider. Counsel said no, the issue was legal. That refund was the result of an unusually bad winter; in other years, the Rider would result in surcharges. Counsel concluded by arguing that the Rider wasn’t aimed at any factor outside the utility’s control – even weather is forecast as part of a rate case.

Image courtesy of Flickr by Kool Cats Photography.

Illinois Supreme Court Debates Scope of Whistleblower Statute

During the September term, the Illinois Supreme Court debated an important question about the scope of the state Whistleblower Act: does a plaintiff state a claim under the statute by alleging that the defendant falsified information in its rate case? The Court is reviewing a decision of the Fourth Division of the First District, State of Illinois ex rel. Pusateri v. The Peoples Gas Light and Coke Company. Our detailed summary of Pusateri is here.

The Plaintiff sued under the Whistleblower Reward and Protection Act, which empowers plaintiffs, with the consent of the state, to sue on the State’s behalf. The typical case under the statute involves allegations of fraud by the government’s vendors.

Pusateri involves a rate case before the Illinois Commerce Commission. According to the plaintiff – a former management-level employee of the defendant – the defendant falsified reports filed with the ICC, falsely claiming overly short response times to gas leak reports. Plaintiff alleged that the purportedly falsified response reports were one basis for granting the requested rate increase. The plaintiff alleged that the resulting utility bills, reflecting the higher rates, were the false claim which formed the basis of the quasi-qui tam action. The court dismissed based on failure to state a claim.

The Appellate Court reversed. The Court held that although the defendant’s utility records weren’t one of the enumerated factors for the ICC to consider in its rate cases, the defendant had submitted the data, and the Commission had considered it. The defendant also argued that the plaintiff was not the “original source” of the information upon which the case was based, but the Appellate Court disagreed, holding that nothing in the ICC’s safety audit had suggested that the ICC was aware of the allegations which gave rise to the complaint.

Counsel for the defendant began the argument at the Supreme Court. Counsel argued that no report had been made to the State in terms of the Whistleblower Act. In fact, the case was a collateral attack on the base rate for gas set by the ICC. Counsel argued that the rate making process was legislative in nature, involving the expertise of the Commission. Contrary to the plaintiffs’ argument, safety reports have historically never been considered in the rate-making process – in forty years of ICC opinions, Commission reports have never referenced safety reports. Counsel argued that the Whistleblower Act should not be injected into the ratemaking process. According to counsel, the Supreme Court has repeatedly said that the Commission cannot approve different rates for different types of consumers. Counsel argued that allowing the claim would undermine the base rate concept over which the Commission has exclusive jurisdiction. Justice Freeman asked whether the issue of the plaintiff’s argument not being a “claim” within the meaning of the Act had been forfeited. Counsel answered no, the defendant has argued from day one that the plaintiff’s complaint is not a “claim.” Counsel noted that the plaintiff has insisted that the defendant is challenging the constitutionality of the Whistleblower Act – not so, argued counsel. The doctrine of constitutional avoidance – that a court should avoid interpreting a statute in a way that brings its constitutionality into question – requires that the statutes be harmonized. Chief Justice Garman asked whether, if the Court found for the defendant, it would be immunizing falsehoods in negotiating with the State. Counsel answered that fraud on the ICC in the course of ratemaking was already actionable. Willfully making false reports to the ICC is a class misdemeanor. There is a remedy, counsel argued – the plaintiff’s claim just isn’t it.

Justice Freeman asked counsel whether, if the Court finds that plaintiff’s argument is a “claim,” the defendant’s argument would be forfeited. Counsel answered no, it was not a claim for a variety of reasons. First, the public policy supporting that conclusion far exceeds any legislative intent. Second, even if the safety reports were a “claim,” to trigger a cause of action, it has to trigger a payment by the State. But the safety reports here didn’t trigger any payment by the State. Justice Thomas asked how a penalty for false reports would be imposed. Counsel answered that no utility would want to get into conflict with the ICC, so it was entirely plausible that the utility itself – if not the plaintiff – might report the allegation. Counsel argued that the False Claims Act was not needed as a remedy. If the plaintiff had stated a “claim” under the Act, a refund would be due to the State only. In that event, the defendant would be legally obligated to continue charging the same rate to everyone other than the State until a new rate case was finalized. Counsel argued that Circuit Courts simply don’t have the expertise to say that the approved rate would have been different but for one or more erroneous safety reports. Justice Kilbride asked whether he understood correctly that the defendant was allegedly trying to avoid generating a report. Correct, counsel answered. Justice Kilbride asked how the report, if it had been generated, would have impacted the ICC’s consideration. Counsel argued that the plaintiff’s complaint was internally contradictory – in one paragraph, plaintiff argued that defendant was fraudulently lowering the reported response time to avoid reporting, but in another, they alleged that reports falsely stating a lowered response time had been filed with the ICC.

Counsel for the plaintiffs followed. According to counsel, the defendant’s argument is really “we’re immune from the Whistleblowers Act.” Counsel argued that a fine or a criminal charge was not actually a remedy. The plaintiff’s allegations were a “claim” under the Act, counsel argued – rates were a claim for money. Chief Justice Garman asked whether plaintiff’s claim would require the trial courts to determine what the rate should have been – how would the trial court determine what rate should have been paid? Counsel responded that a plaintiff would have to establish that a payment had been excessive. Was there a mismatch between the scope of the Act and the exclusive jurisdiction of the ICC – perhaps, but the defendant’s argument amounted to saying that the Act was completely ineffective. Justice Thomas asked whether what the defendant was actually saying was that the ICC was really the best place to determine the proper rate. Counsel responded that the ICC doesn’t have the capacity to act as a trial court. Justice Burke asked whether damages could be calculated, if the case went back to the trial court, without retroactively reversing the approved rates of the ICC? Counsel answered that the plaintiff’s claim was one for disgorgement. The question was whether there was an effective remedy, or the utility was effectively immune from any sort of remedial measure. Justice Thomas asked if the allegedly false reports were part of the ratemaking process. Counsel answered that that’s a fact issue, and the ICC is not a trial court. Justice Theis asked whether there was a fact pleading issue here – was there anything in the complaint identifying the reports involved and how they were used by the ICC? Counsel explained that the complaint had been dismissed at the jurisdictional stage. The plaintiff had made a request for leave to flesh out the complaint. Justice Theis asked again if there was anything in the complaint suggesting that anyone had relied on the safety reports – in fact, the complaint was devoid of any kind of detail, wasn’t it? Counsel pointed to one paragraph saying that the reports had been submitted. Justice Theis pointed out that another paragraph of the complaint said that the reports hadn’t been submitted at all. Counsel argued that given that the issue has always revolved around jurisdiction, his client should have the opportunity to replead. Justice Thomas suggested that counsel hadn’t really answered the Chief Justice’s question about how a trial court should determine how the reports were used, and fashion a remedy as to what to do about it. Counsel answered that the court could hear from people who actually submitted the reports. The courts could review evidence that suggests that response reports were falsified, and expert testimony suggesting what effect those reports had had on the rate process. Justice Thomas asked whether as a practical matter it wouldn’t be easier to report misstatements to the ICC to fashion a remedy. Counsel said that wasn’t what the legislation said – the ICC doesn’t have jurisdiction to implement the Whisteblower Act. Justice Thomas suggested that defendant’s counsel would say that the Whistleblower Act was not an appropriate way to determine a proper utility rate. That view would undercut the historic basis of the Whistleblower Act, counsel argued – a small fine wasn’t the intended remedy under the Act. The Chief Justice suggested that counsel was alleging a fraud on the entire market. Counsel responded that the cause of action under the Act was limited. Perhaps the plaintiff could have fashioned a common law cause of action, but that would bypass a critical Act in place for 100 years.

Counsel for the defendant rose in rebuttal and argued that he could reconcile the Act with the ratemaking process so that both were alive and well. The Act defines a “claim” as a request for money or property made to the State. Had the defendant sent a bill to the State, that would fall within the definition of a “claim.” Counsel argued that ratemaking was a legislative process that ended with a rule in the nature of a law which applied to all customers equally. When a party alleges what would amount to a fraud on the market, the ICC is in the best position to fashion a remedy – that’s why the ICC has exclusive jurisdiction. The defendant’s central argument, counsel concluded, was that plaintiff’s point wasn’t a “claim” within the meaning of the Whistleblower Act.

Image courtesy of Flickr by Steven Depolo.

Illinois Supreme Court Agrees to Decide Whether Fire District Owed Tort Duty to 911 Caller

In the closing days of its September term, the Illinois Supreme Court agreed to decide a question of potentially great import for Illinois first responders: do public entities and their employees owe a tort duty of care to callers to 911 emergency lines? In Coleman v. East Joliet Fire Protection District, the Third District held that the answer was “no.”

On a summer evening in 2008, the decedent called 911. She reported that she couldn’t breathe and asked for an ambulance. The call was transferred, as per routine practice, from the county 911 operator to the local fire district dispatch center. The county operator didn’t communicate the emergency message to the fire dispatch operator; in fact, she allegedly didn’t speak to the fire dispatch operator at all.

The fire dispatcher tried to ask the decedent some questions, but received no answer. Ultimately, he hung up and tried to call back twice, receiving a busy signal both times. The dispatcher asked his partner to call the county dispatcher for more information. The call was assigned to an ambulance three minutes after being placed in the dispatch queue for a “priority 1” call. However, the paramedics in the ambulance were told nothing about the nature of the request for assistance.

When the dispatchers arrived at the house, no one answered. The paramedics asked the fire dispatcher to call the decedent again, but received no response back. The paramedics determined that they couldn’t make a forced entry without a police officer present. They called their supervisor, who instructed them to leave the scene and return to service. During the same time the paramedics were attempting to respond to the emergency call, the county was experiencing severe thunderstorms and several tornados; the fire dispatcher dispatched 17 units to respond to the tornado over the course of nine minutes.

Neighbors of the decedent attempted to reach the residence, and when they were unable to, they called 911 again. Ultimately, another ambulance was dispatched. The second ambulance received no answer at the house either, but while they were preparing to force entry, the decedent’s husband arrived home and let them in. The decedent was found unresponsive, and she was later pronounced dead at the hospital.

The plaintiff filed claims for wrongful death and survival, alleging that the county had been negligent by failing to communicate all relevant information to the fire district, and that the fire district was liable because the paramedics in the first ambulance had opted not to force entry into the house, and had informed the dispatcher that there was “no patient” at the residence. The defendants all moved for summary judgment, arguing that they owed no duty to the decedent pursuant to the public duty rule. Summary judgment was granted. The Appellate Court affirmed.

The public duty rule holds that government entities and employees owe no particularized duty of care to anyone in connection with governmental services like police and fire protection. On appeal, the plaintiff argued that the trial court misapplied the rule; the Illinois Trial Lawyers Association, on the other hand, argued that the rule doesn’t exist anymore in Illinois.

After carefully reviewing all the relevant authorities cited by the parties, the Appellate Court concluded that no Illinois Supreme Court decision has expressly abrogated the public duty rule. The plaintiff relied upon the one recognized exception to the rule, the “special duty” exception. The special duty exception requires proof of four factors: (1) the public entity is uniquely aware of the particular danger or risk to the plaintiff; (2) there are allegations of specific acts or omissions by the public entity; (3) the acts or omissions are affirmative or willful; and (4) the plaintiff was injured while under the direct and immediate control of the public entity or its employees and agents.

The Court held that plaintiff could not establish the fourth element. In order to establish a special duty, the public employee must initiate the circumstances which create the dangerous situation – say, for example, a police officer directs a member of the public to do something that puts her in danger. But here, the 911 call was initiated by the decedent, who was already in serious danger by that time.

In the alternative, the plaintiff argued that duties of care were created by the ETS Act, the EMS Act, and the defendants’ written policies, but the Court held that even if that were true, the duties ran to the public as a whole, not to the decedent. 

Finally, the Court refused to find that operating a 911 response service creates a duty of care to callers under the tort principle of a voluntary undertaking. First, such an application of the voluntary undertaking theory would violate the public duty rule. Second, the plaintiffs had a legal obligation to run a 911 response service, so any undertaking was not voluntary. 

We expect Coleman to be decided in six to eight months.

Image courtesy of Flickr by Dave Seven.

Illinois Supreme Court Agrees to Decide Remedy for Unserved Notices of Violation

What happens when the City doesn’t properly serve a notice of building code violations? In the closing days of its September term, the Illinois Supreme Court agreed to decide that issue in Stone Street Partners, LLC v. City of Chicago Department of Administrative Hearings, a decision from the First District of Division One.

In 1999, a City building inspector found various building code violations in one of plaintiff’s buildings. But the City didn’t mail the notice to the plaintiff’s business address or registered agent – instead, it sent the notice to the property itself – a service method that’s authorized only if notice to the business address or registered agent fails.

Nevertheless, a person appeared at the hearing on the plaintiff’s behalf. Although most of the records of the hearing had been destroyed, it appeared that the representative had filed an appearance and presented exhibits on the plaintiff’s behalf. Nevertheless, the plaintiff was found liable and fined. In 2004, the administrative judgment was filed with the Circuit Court, and five years later, the City recorded the judgment with the Recorder of Deeds.

The plaintiff maintained it knew nothing about any of this until it obtained a copy of the judgment through a FOIA request in 2011. The plaintiff filed a motion to vacate and set aside the administrative order – which was by this time twelve years old – based on lack of notice, claiming that the person who represented the plaintiff at the 1999 hearing had no authority to do so. But the administrative hearing officer found that he had no jurisdiction to vacate the order.

So the plaintiff filed a complaint in circuit court, purporting to state claims for declaratory judgment, quiet title and slander of title. The defendant filed a motion to dismiss, which the court granted.

The Chicago Municipal Code requires that notices to corporate defendants for administrative hearings must be sent to the corporation’s registered agent. The City argued that no similar requirement applies to service of the hearing order, as opposed to the original notice of hearing. But the Court pointed out that defendant’s actual knowledge that an action is pending is not the equivalent of service of summons, or sufficient to vest the court with jurisdiction.

The court next turned to the question of whether the participation of the corporation’s purported agent in the 1999 hearing had waived any objection the plaintiff might otherwise have had to the proceedings. The court held that because the plaintiff participated through a nonattorney, no waiver resulted. The City argued that nonattorneys should be allowed to represent parties at administrative hearings. But the Appellate Court found that the City’s Administrative Rule of Practice conflicted with the Supreme Court’s authority to regulate the practice of law.

The Court rejected claims by the City and the Attorney General that requiring attorney representation in administrative hearings would have negative consequences. “If anything,” the Court wrote, “our holding will protect the rights of corporations.” The City noted Illinois Supreme Court Rule 282(b), which allows corporations to defend small claims through a nonattorney, but the Appellate Court noted that Rule 281 defined a small claim as one involving $10,000 or more – far more than was involved in the case at bar. Nor does a defendant waive objections to jurisdiction by the participation of someone not authorized to represent the party, the Court found.

Nevertheless, the Court found that the City’s first cause of action to set aside the judgment failed on the grounds that Section 108 of the Municipal Code, authorizing the motion, only addresses default judgments.

However, the Appellate Court reversed dismissal of the plaintiff’s claims for quiet title and declaratory judgment. The City argued that plaintiff’s claim was barred since it had failed to seek administrative review of the administrative order. But the plaintiff couldn’t be expected to challenge an administrative order it didn’t know about, the Court found. The Court held that plaintiff was entitled to some form of equitable relief, so it reversed dismissal of plaintiff’s second claim.

The Court affirmed dismissal of the plaintiff’s claim for slander of title. The Court held that the defendant was absolutely immune from liability pursuant to the Local Governmental and Governmental Employees Tort Immunity Act.

Justice Maureen Connors dissented. She agreed that plaintiff’s administrative appeal from the City hearing judgment and the quiet title and slander of title claims couldn’t stand. However, Justice Connors concluded that the plaintiff’s declaratory judgment claim should have failed as well. She acknowledged that the plaintiff could hardly be expected to file an administrative challenge within 35 days after service of the original administrative judgment, thus exhausting administrative remedies, given that the plaintiff didn’t know about the judgment; the problem, Justice Connors said, was the plaintiff didn’t challenge the administrative order even after it learned of it. Justice Connors argued that declaratory judgment actions are not a permissible grounds for challenging administrative judgments.

Justice Connors also rejected the majority’s view that only licensed attorneys could represent corporations at administrative hearings. Justice Connors expressed particular concern that the majority’s holding seemed to invalidate all similar administrative rules used by other agencies.

We expect Stone Street Partners to be decided in four to six months.

Image courtesy of Flickr by Elliott Brown.

Illinois Supreme Court Agrees to Decide Whether Illinois Recognizes a Claim for Wrongful Death from Suicide

 

In Turcios v. The DeBruler Company, a case from the Second District, the Illinois Supreme Court agreed to decide a simply stated question: can a plaintiff state a claim for wrongful death as a result of a suicide?

Plaintiff and her husband lived in an apartment with their three children. Plaintiff is a Honduran immigrant and does not speak English fluently. In April 2011, they signed a one-year lease on an apartment. Twenty days later, they received a notice of eviction giving them 30 days to vacate the premises. Plaintiff sought out legal advice, and was told that the lease was valid and binding. The family also contacted Catholic Charities, which contacted an agent of the defendant who told them the lease was not valid, and could be revoked at any time. Ten days after receiving the eviction notice, they received a letter stating that the building would be demolished three weeks later. The letter stated that the washers and dryers would be removed in less than two weeks, and offered the plaintiff and her husband a week of free rent.

The defendant refused to accept a rent payment from plaintiff at the beginning of the next month. A week later, the plaintiff and her husband received another notice saying the building would be demolished. At a meeting with representatives of the defendant, plaintiff and her husband were allegedly offered $2,000 to move.

Three days later, defendant allegedly allowed demolition to begin around plaintiff’s unit. Five days after demolition began, plaintiff’s husband committed suicide in the apartment.

The plaintiff and her children moved in with a friend the next day, leaving most of their belongings in the apartment.  Less than a week later, defendant allegedly contacted plaintiff and told her she had to remove all her belongings from the apartment, as demolition would begin the following day. That day, the plaintiff and her children packed their belongings, even though the stairs to their 3rd floor apartment had been mostly demolished. As they were moving, an enormous rain storm ruined most of the family’s belongings.

Plaintiffs filed a five count complaint, purporting to allege claims for intentional infliction of emotional distress, wrongful eviction, breach of contract, wrongful death and survivorship. The trial court dismissed the final two counts, holding that there is no claim for wrongful death or survivorship as a result of suicide.

The Appellate Court reversed. The usual view of the applicable law, the court wrote, was that a suicide was an intervening event which the tortfeasor cannot be expected to foresee. The court reviewed law in a variety of foreign jurisdictions and concluded that many had recognized a claim for wrongful death in connection with suicide, including at least one case in a federal court purporting to apply Illinois law, Collins v. Village of WoodridgeThe court concluded that the traditional bar on causes of action arising from suicide flowed from theories of negligence and contributory negligence, which had little place in an action alleging intentional torts and seeking punitive damages. The court concluded that the weight of authority does not support a per se bar on wrongful death claims arising from suicide. Defendant argued that Illinois tort law limited liability according to proximate cause, and suicide was always an intervening cause. But the Court held that a defendant’s negligence need only cause the plaintiff’s harm – the economic distress. It is not necessary that it be tied to all resulting and compensable damages. Accordingly, the court held that a victim’s suicide does not limit the plaintiff’s damages, so long as emotional distress is a substantial factor in causing the suicide. No per se bar existed on damages arising from a suicide.

We expect Turcios to be decided in six to eight months.

Image courtesy of Flickr by Rob Deutscher.

 

Illinois Supreme Court Agrees to Decide Whether Trustee May Rescind Reverse Mortgage

 

During its September term, the Illinois Supreme Court agreed to decide an issue of importance to property and banking practitioners: is the statutory right to rescind a reverse mortgage limited to the original property owner? The Court granted leave to appeal from a decision of Division 6 of the First District, Financial Freedom Acquisition, LLC v. Standard Bank & Trust Co.

The plaintiff filed a complaint to foreclose a home mortgage following the death of the original borrower. The mortgage, which was attached to the complaint, was an adjustable rate home equity conversion mortgage – a type of reverse mortgage insured by the federal government. The mortgage was executed by the defendant as trustee, but an exculpatory clause in the mortgage provided that the defendant couldn’t have any liability for payment of the note; instead, the note would ultimately be paid by the sale of the property – either upon the death of the borrower, or should she fail to use the property as her principal residence for more than a year.

The defendant answered and counterclaimed, alleging that the plaintiff had failed to deliver disclosures required by the Truth in Lending Act, and had failed to respond to the defendant’s notice of rescission of the mortgage. The defendant sought rescission, termination of the plaintiff’s security interest, and statutory damages.

The plaintiff moved to dismiss the counterclaim. The Circuit Court granted the motion, and when the plaintiff subsequently voluntarily dismissed the foreclosure complaint, the defendant appealed.

In a split decision, the Appellate Court affirmed. The defendant sought rescission based on the Truth in Lending Act. The TILA provides that “the obligor” may rescind the transaction until midnight of the third business day following consummation of the transaction. But if the creditor doesn’t give the required disclosures – and the defendant alleged the plaintiff hadn’t – then the limitation on filing for rescission is three years. The defendant filed more than three days, but less than three years following consummation of the loan transaction.

The problem, according to the majority, was that the defendant wasn’t the “obligor,” which the Court defined as the person to whom credit is extended. Since the defendant had no possible liability on the note (pursuant to the exculpatory clause), it had no right to rescind.

Justice Robert E. Gordon dissented. Justice Gordon argued that the defendant had satisfied all three elements of the statutory test to establish a right to rescind: (1) it was acting “in the case of any consumer credit transaction”; (2) it had retained or acquired a security interest in the property; and (3) it alleged that the property was used as the principal dwelling of the person to whom credit was extended. Justice Gordon argued that since the statute referred separately to the “person to whom credit was extended” and “the obligor,” contrary to the majority’s conclusion, they must mean different things. Although the majority concluded that the consumer was the “obligor,” Justice Gordon pointed out that in a reverse mortgage, the consumer pays nothing to the bank – it is the bank that has an obligation to the consumer.

We expect Financial Freedom to be decided in six to eight months. 

Image courtesy of Flickr by Diana Parkhouse.

 

Illinois Supreme Court Debates Burdens of Proof for Wrongful Termination Cases

 

During its September term, the Illinois Supreme Court heard oral argument in a potentially important employment law case, Michael v. Precision Alliance Group, LLC. Michael poses questions about the parties’ burdens of proof in a case alleging wrongful termination. Our detailed summary of the facts and lower court opinion in Michael is here.

The defendant in Michael packages and distributes seeds for commercial agricultural use. As part of that business, the company packs soybeans into 2,000 pound bags. The company claimed that the bags were typically filled by its automated packing line with a bit more than 2,000 pounds in order to accommodate normal shrinkage. One of the plaintiffs seemed to agree, testifying that initially the packing hopper set point was between 2,007 and 2,010 pounds.

A new individual took charge of bagging in 2002. One of the plaintiffs noticed that the hopper set point had been reduced, and drivers reported that their trucks seemed lighter. The company weighed bags at random, and found several below 2,000 pounds. After the company’s spot test, the plaintiffs began secretly weighing bags themselves. A former employee reported the matter to the state Department of Agriculture. State inspectors appeared at the company’s plant, stopped production and weighed every bag in the warehouse. Roughly half were underweight. In short order, the state lifted stop-sale orders and ended the investigation without issuing any penalties, citing the company’s rapid response to the investigation.

A month after the state’s visit to the plant, one of the plaintiffs was involved in a forklift collision. The plaintiff was fired. Around the same time, management decided to eliminate four positions as a result of a drop-off in business; the two remaining plaintiffs were let go as part of that reduction in force.

The plaintiffs sued for common law retaliatory discharge. After the Appellate Court reversed an early summary judgment in the defendant’s favor, the Circuit Court conducted a bench trial. The Court ultimately entered summary judgment on behalf of the defendant, holding that while the plaintiffs had offered some evidence of unlawful motive, the defendant had shown a valid non-pretextual reason for dismissing the plaintiffs. The plaintiffs appealed a second time. The Fifth District reversed again, holding that the trial court had increased the plaintiff’s burden of proof by requiring them to prove that the defendant’s articulated reasons for dismissal were pretexts.

Counsel for the employer began by arguing that the Appellate Court’s decision conflicted with the Supreme Court’s decision in Clemons v. Mechanical Devices Company regarding the burden of proof and causation standards in a claim for retaliation. During the bench trial, the company presented substantial evidence that the company didn’t know that former coworkers were involved in the call made to the State by an ex-employee. The company showed that one plaintiff was terminated for horseplay with a forklift; as to the other two, the company presented substantial evidence that they were chosen for termination as part of a general reduction in force. Justice Burke asked whether the defendant had argued below that a finding of a legitimate reason for the termination precluded a finding of retaliatory discharge. The defendant argued that the plaintiff hadn’t challenged the finding of a legitimate reason for the terminations as against the weight of the evidence. Justice Thomas asked if the defendant was saying that the trial court had erred by reducing the plaintiff’s burden of proof, and that even if the burdens had been properly assigned, the defendant would have won at the trial court. The defendant agreed that the error was harmless. However, the Appellate Court erred in placing the burden of proof on the defendant, since under Clemons, traditional tort analysis applies in wrongful termination cases. The plaintiff must prove each element of the tort. Justice Thomas asked whether there was any need for a new determination of liability if the case were remanded. Counsel answered that the trial court’s judgment should simply be reinstated, since its finding of a legitimate motive for termination was dispositive. The trail court made it clear, according to counsel, that its finding of causal nexus between the plaintiffs’ whistle-blowing and the termination was merely part of the prima facie case; the court had not made a definitive finding that the company knew about the plaintiffs’ involvement. If the employer doesn’t know about the plaintiffs’ activities, no claim can lie for retaliatory discharge. The most troubling aspect of the Appellate Court’s judgment, counsel argued, was the finding that if there is any relationship between the protected activity and the plaintiffs’ discharge, the employer’s evidence makes no difference – the employee must prevail. In fact, counsel argued, proof of a valid business reason for the plaintiffs’ dismissal mandated judgment for the defendant.

Counsel for the plaintiff followed. She argued that the trial court had used the wrong elements in analyzing causation, and the error had changed the outcome. Once the court found a “causal nexus” between the protected activity and the plaintiffs’ termination, the case should have been over, according to the plaintiff. Justice Burke asked what authority says that causal nexus equates to causation. Counsel responded that this followed from logic and the ordinary definition of causation. Clemons used the term “causally related” and the terms are interchangeable. Chief Justice Garman asked under the plaintiffs’ theory of causal nexus being sufficient, what effect does the defense evidence of a non-retaliatory reason for termination have? Counsel answered that a finding of causal nexus precludes a finding of no proximate cause because the illegitimate cause is sufficient; it is not necessary for it to be the sole cause. The Chief Justice asked whether that was an expansion of Clemons, and counsel answered no. The issue in Clemons was whether the defendant’s alternative proof had to be something lawful. Clemons said that if an employer comes forward with a valid non-pretextual reason for discharge, and the trier of fact believes it, causation is not established. Chief Justice Garman asked whether that was what happened here. Counsel answered no, to find for the defendant, the trier of fact has to believe that the defendant’s reason motivated the discharge to the exclusion of the retaliatory reason. Justice Thomas asked whether under Clemons, the plaintiff didn’t have the burden to prove causation by demonstrating that the defendant’s suggested reasons were pretext. Counsel argued that the Court would not have abandoned traditional standards for proximate causation in that way; the standard must be that the illegitimate reason played no part in the adverse action. Justice Thomas asked how, under the plaintiff’s standard, the defendant could ever prevail? Counsel answered that the defendant prevails by demonstrating to the jury’s satisfaction that the illegitimate reason played no role at all. Justice Thomas asked how a trier of fact would ever sort out an alternative reason and an illegitimate reason with that level of precision. Counsel answered that a jury doesn’t have to believe the plaintiff’s evidence. Perhaps the report of wrongdoing was insignificant. Perhaps the defendant changed its practices and thanked the employee. But here, the court did find a causal nexus. Justice Karmeier noted that the trial court had said that the plaintiff must set out a prima facie case of retaliation. Is there a difference between proof by a preponderance and proof of a prima facie case? Counsel said not in the way the court set it out. Justice Karmeier asked if the court made a finding when it said that the employer may have known of the employees’ involvement. Counsel answered yes, given the inference that can be drawn from those circumstances. Justice Karmeier asked whether the bottom line wasn’t that the trial judge found valid non-pretextual reasons for the dismissals? Counsel said yes, but after a finding of causal nexus, such a finding doesn’t matter.

On rebuttal, counsel for the employer argued that the plaintiffs’ theory that a defendant can show a legitimate reason for an adverse employment action and still be liable is wrong. Not only has that never been the law, counsel suggested that the plaintiff hadn’t made the argument until Michael reached the Supreme Court. Counsel argued that Clemons was very clear if the trier of fact believes the employer’s tendered legitimate reason for termination, there can be no liability. The tort of wrongful termination is a narrow and limited exception to the doctrine of employment at will. Counsel concluded by arguing that the hypothetical of plaintiff’s counsel was exactly the situation here – the defendant didn’t know that the plaintiffs were involved in the report to the State agency.

We expect Michael to be decided in three to four months.

Image courtesy of Flickr by Stirling Noyes.

 

Illinois Supreme Court Agrees to Decide How Social Security Benefits Offset in Divorce Settlement

In the closing days of its September term, the Illinois Supreme Court agreed to decide an issue of potential importance to the domestic relations bar: how are Social Security benefits treated in a property settlement during a divorce? The Court allowed a petition for leave to appeal in In re Marriage of Mueller, a Rule 23 order from the Fourth District.

The husband and wife in Mueller were each employed at the time of their divorce – she in in the insurance industry, he as a police officer. The wife has Social Security tax withheld from her pay. The husband participated in the police pension fund in lieu of Social Security.

The Social Security Act imposes a broad ban on transfer or assignment, whether in law or equity, of benefits due and payable under the Act. 42 U.S.C. § 407(a). In In re Marriage of Crook, the Illinois Supreme Court held that this meant that courts were not permitted, in a property settlement, to award one party a greater share of marital pension benefits in order to offset the fact that Social Security benefits are sheltered. But in Crook, the Court specifically declined to consider how pension benefits which were in lieu of participation in Social Security should be treated.

Mueller presents the issue which was passed over in Crook. At trial, the husband presented expert testimony valuing his pension. The expert testified that she had included an offset to compensate for the fact that the wife’s Social Security benefits were sheltered. The wife objected to the testimony, citing the bar in the Social Security Act and the Crook decision. The trial court sustained the objection and excluded the testimony. The husband later submitted a revised valuation, omitting the Social Security offset, which increased the valuation of his pension by approximately 50%. After final judgment in the property case was entered, the husband appealed.

The Appellate Court affirmed. In rejecting a direct offset, the Crook court had relied primarily on Hisquierdo v. Hisquierdo, which held that retirement benefits under the Railroad Retirement Act could not be subject to an offset in state-law domestic relations property judgments. The husband in Mueller pointed out that a number of different jurisdictions had nevertheless held that courts may offset the value of pension intended to be in lieu of Social Security in order to place the participating spouse in a similar position to the spouse participating in the Social Security program. But the Appellate Court refused to follow those decisions, holding that allowing a spouse’s Social Security benefits to be taken into account in any way in the property settlement was inconsistent with Crook.

Justice Thomas Appleton dissented. The Illinois Marriage and Dissolution of Marriage Act is predicated on achieving equity between divorcing spouses, he wrote. “To completely ignore a substantial asset earned during the marriage is at cross-purposes with that mandate.” Justice Appleton wrote that he would have reversed the property division and remanded with instructions to reserve to the wife her Social Security benefits while reserving to the husband a corresponding share of his police pension benefits.

We expect Mueller to be decided in six to eight months.

Image courtesy of Flickr by LendingMemo.com.

Illinois Supreme Court Agrees to Decide Whether Party's Own Apparent Neglect Can Lose Right to Set Aside Default

In the closing days of its September term, the Illinois Supreme Court agreed to decide a question relating to the operation of Section 2-1401 of the Code of Civil Procedure: under what circumstances is the apparent lack of diligence of the party itself sufficient to justify denying the motion? In Warren County Soil & Water Conservation District v. Walters, the Third District denied a motion to set aside on the grounds that the defendant had not demonstrated adequate diligence.

The plaintiff Soil and Water Conservation District filed suit against the defendants, charging that defendants had wrongfully removed approximately 54 trees, worth just over $17,000, from plaintiff’s property. The plaintiff purported to state claims of trespass, conversation, quantum meruit, negligence, and one for violation of the Wrongful Tree Cutting Act, 740 ILCS 185/0.01, which potentially triggers treble damages.

The defendants’ retained counsel did not either file an answer or appear for the case management conference. He was ordered by the Court to file an answer a month later, but failed to do so, so the plaintiff moved for a default judgment. The defense counsel was provided with a copy of the motion for entry of default, but counsel failed to respond or appear at the next hearing. In June 2011, the trial court granted default and entered judgment against the defendants.

A month later, the defendant’s counsel filed a motion to set aside the default, but failed to notice it for hearing. The plaintiff’s counsel noticed the motion for hearing and sent defense counsel notice. Counsel failed to appear for a scheduled case management conference, or for the motion hearing the following week. Accordingly, the trial court denied the motion to set aside the judgment, entering an order with findings. Ten months later, the plaintiff’s counsel filed a citation to discovery assets, and a week after that, the trial court entered an order removing the defendants’ counsel from the case and directing the defendants to retain replacement counsel. New counsel filed a second motion to set aside the judgment, attaching an affidavit from the client testifying that the client was unaware of the default or of former counsel’s negligence.

The trial court denied the second motion to set aside. The court held that defendants had established the existence of a meritorious defense and due diligence with respect to their replacement counsel, but had not demonstrated diligence prior to the entry of default.

The Appellate Court affirmed. A party was required to show three elements in order to be entitled to an order setting aside the judgment, the Court found: (1) a meritorious defense or claim; (2) due diligence in presenting it to the trial court; and (3) due diligence in filing the motion to set aside. The Appellate Court held that the defendant was not entitled to have the judgment set aside because it had not diligently followed the progress of the case and its former counsel’s efforts in the time between the initial complaint and the first default judgment and motion to set aside. Rather, the defendant “abandoned their own interest in the lawsuit and did not fulfill their duty to monitor the quality of [counsel’s] legal representation” during a nineteen month period.

Justice William E. Holdridge dissented. Although Justice Holdridge agreed with the majority that the defendant had failed to exercise due diligence in presenting its defenses to the trial court, he argued that the trial court erroneously believed it was without discretion to relax the requirement of due diligence in the interests of justice. Because Justice Holdridge believed that the defendants’ lost defenses appeared to have merit, he concluded that the trial court should have overlooked the defendants’ lack of diligence in pursuing the case and vacated the default.

We expect Warren County Soil & Water to be decided in six to eight months.

 Image courtesy of Flickr by PlayingWithBrushes.

 

Illinois Supreme Court to Weigh Private Right of Action for Failure to Accurately Calculate Presentence Time-Served Credits

During its September term, the Illinois Supreme Court agreed to decide a novel question presented by a case arising from the Fifth District: does a prisoner have an implied right of action against the circuit clerk and county sheriff for failing to accurately calculate the credit he or she is due against a prison sentence for presentence incarceration? In Cowper v. Nyberg, the Fifth District held that the answer is yes.

The plaintiff in Cowper pled guilty to three felony counts in 2011. The court sentenced him to 27 months’ imprisonment. The judgment and sentence included a lengthy summary of the days the plaintiff had already spent in custody, for which he was to receive credit against his sentence. A month later, the plaintiff filed a motion to recalculate the credit. The State responded, saying that after investigation, it had calculated that the 275 days of credit in the original judgment was wrong. The court ordered the State to recalculate the credit, which it did, ultimately concluding that the plaintiff was entitled to an additional 191 days of credit.

But the plaintiff had already been released by the time the calculation errors were corrected.

The plaintiff filed suit against the Circuit Court clerk and the county sheriff, alleging that they had a duty under Section 5-4-1(e)(4) of the Corrections Code, 730 ILCS 5/5-4-1(e)(4), to correctly calculate the length of his credit. The plaintiff’s complaint alleged that because of the defendants’ negligence in calculating the credit, he served 137 days more than he should have. The defendants moved to dismiss, arguing that the Corrections Code doesn’t provide a private right of action, and the trial court dismissed.

The Fifth District reversed. The Code did not provide an express private right of action, the Court concluded. Therefore, it considered whether the Court should imply a cause of action in the statute. Whether or not a statute creates an implied cause of action generally depends on four factors: (1) the prospective plaintiff is a member of the class for whose benefit the legislation was enacted; (2) an implied cause of action is consistent with the underlying purpose of the legislation; (3) a plaintiff’s injury is one that the legislation was designed to prevent; and (4) an implied cause of action is necessary to provide an adequate remedy for violations of the legislation.

The defendants argued that plaintiff’s claim ran aground on the second factor. The purpose of the Corrections Code, the defendants argued, was to protect the public, not to secure inmates’ rights. The Fifth District disagreed: “The general purpose of the Code of Corrections is to rehabilitate the offender, if possible, and to restore him to useful citizenship.”

The Court next concluded that the Code placed a mandatory duty on the Sheriff and the Circuit Court Clerk to calculate and transmit the number of presentence days’ credit the inmate is entitled to. From this, the Court concluded that the plaintiff’s injury was one the legislation was designed to prevent. The defendants argued that no private right of action was needed, since the statute allows for a grievance procedure before an administrative review board, but the Court held that this was no remedy for the plaintiff, since the board could not modify a court-ordered sentence. Nor did the plaintiff’s alleged injury create the basis for a constitutional claim, since such claims are limited to a showing of deliberate indifference. The Court thus found that all four of the implied-right-of-action factors weighed in favor of recognizing such a claim for miscalculation of presentence credits.

We expect Cowper to be decided by the Supreme Court in six to eight months.

Image courtesy of Flickr by ForensicBones.