Illinois Supreme Court Adopts Broad Construction of Gaming Board’s Jurisdiction

9151166801_b2be467ee7_zIs a contract purporting to assign rights to place video gaming terminals in certain establishments from one unlicensed operator to another within the exclusive jurisdiction of the Illinois Gaming Board where the terminals had not yet been placed and began operation? In late September, a unanimous Illinois Supreme Court held that the answer was “yes,” affirming the Appellate Court in J&J Ventures Gaming, LLC v. Wild, Inc.

The General Assembly enacted the Video Gaming Act in 2009, legalizing the use of video gaming terminals within certain licensed establishments. The Act gave the Illinois Gaming Board jurisdiction to supervise all video gaming operations in the state. After a three-year start-up, video gaming actually began in Illinois in 2012. Shortly after the Act became effective, an unlicensed entity executed “Exclusive Location and Video Gaming Terminal Agreements” with the defendant establishments. In October 2010, it assigned its rights under the agreements to another unlicensed terminal operator. In July 2012, the Board denied the license application of the second unlicensed terminal operator (the entity which was then holding the contract rights). While the entity’s request for a hearing on the denial was pending, it assigned its rights under the agreements to the plaintiff in J&J Gaming. Not long after the assignments, the defendant establishments signed separate terminal agreements with a licensed terminal operator. The plaintiff responded by filing declaratory judgment actions.

Based upon the holding in Triple 7 Illinois, LLC v. Gaming & Entertainment Management-Illinois, LLC, the Circuit Court held that the assignments were not “use agreements” within the exclusive jurisdiction of the Gaming Board, and were therefore valid, binding and enforceable contracts. The Circuit Court therefore enjoined the licensed operator from operating terminals in the defendant establishments. The Appellate Court reversed, holding that the validity of the contracts was within the Gaming Board’s exclusive jurisdiction.

In an opinion by Justice Freeman, the Supreme Court affirmed the Appellate Court. The Court began by pointing out that there is no common law right under Illinois law to engage in or profit from gambling. The Video Gaming Act is therefore a limited exception to the general prohibition of gambling, and any contracts which fail to comply with the Act’s regulatory requirements are void.

The plaintiffs argued that the Act does not establish exclusive jurisdiction in the Gaming Board because it doesn’t expressly divest the Circuit Court of its jurisdiction. The Court disagreed. The Act constituted a comprehensive statutory scheme creating rights and duties with no counterpart in the common law or equity.   Taken as a whole, that scheme demonstrates the legislature’s intent that that Gaming Board have exclusive jurisdiction over the video gaming industry, and use agreements are a necessary prerequisite of engaging in that industry. The Act therefore confers exclusive jurisdiction on the Gaming Board to determine the validity and enforceability of any contracts which purport to control the location and operation of video gaming terminals.

The plaintiffs argued that their contracts were “precursor” contracts, not actual use agreements. But the Court held that the argument was defeated by the language of the contracts, which require the parties to obtain licenses and specifically provides that they take effect when the first video gaming termination operates in the licensed establishment – “a circumstance that cannot occur unless and until the parties are licensed and the Board has approved the agreements.” There was nothing preliminary about the agreements, so they fell within the Board’s exclusive jurisdiction.

Image courtesy of Flickr by Bob Shrader (no changes).

Illinois Supreme Court Holds Employer Liable for Part of Employee’s Legal Fees in Workers Compensation Dispute

9325937053_1172fd0af0_zWhen attorneys for a worker covered by the Workers Compensation Act successfully sue a third party for injuries sustained by the worker in the course of his or her employment, the employer can get reimbursed for some or all of the workers compensation benefits it paid to the employee. In recognition of the benefit the employer is getting from the employee’s lawsuit, the Act also requires that the employer pay 25% of its gross reimbursement as attorneys’ fees. So are future medical benefits which the employer avoids having to pay as a result of the employee lawsuit subject to that same rule? In the closing days of the September term, the Illinois Supreme Court held that the answer was “yes” in a unanimous opinion by Justice Lloyd Karmeier in Bayer v. Panduit Corporation. Our summary of the underlying facts and lower court rulings is here. Our report on the oral argument in Bayer is here.

The plaintiff’s employer was hired by an iron works contractor to help build warehouse facilities for the defendant corporation. While working on the project, the plaintiff fell, sustaining permanent injuries. The plaintiff filed a claim for workers compensation benefits, and began receiving substantial payments for total disability and medical expenses. At the same time, the plaintiff filed suit against the defendant. The plaintiff later added the general contractor and a structural engineering company as additional defendants, and the general contractor sued the plaintiff’s employer for contribution and breach of contract. The plaintiff settled with his employer, and they filed a joint motion for good faith settlement, which was granted, thereby discharging the employer from liability for contribution to the other parties. Subsequently, the plaintiff went to trial against the owner-defendant, receiving a judgment for $64 million. Following the judgment, the plaintiff’s employer successfully moved the Court for an order recognizing its right to recover reimbursement for past and future workers compensation payments.

The plaintiff’s attorneys then moved for an award of 25% of the workers compensation benefits which the employer avoided by virtue of the suit. The employer agreed that it was liable with respect to the suspended wage payments, but insisted that it was not liable for fees based upon avoided future medical expenses. The Circuit Court disagreed and awarded the fees to the plaintiffs’ lawyers. The Appellate Court reversed in part, holding that the employer was not liable for fees based upon future medical expenses.

The Supreme Court reversed the Appellate Court. The Court found that the only possible basis for excluding the future medical expenses from the fee obligation is if the expenses are not part of the “gross amount of such reimbursement” within the meaning of the Act. The Court held that there was no basis in the Act for excluding future medical expenses. The employer argued that it would not actually be “reimbursed” for future medical expenses, but the Court pointed out that the same was true of future workers compensation payments. Nevertheless, the Act specifically required future benefits and past benefits to be treated the same for purposes of the reimbursement obligation. There was no reason why future medical expenses should be treated any differently for purposes of determining the benefit the employer received from the employee’s tort suit.

Finally, the employer argued that requiring them to pay the statutory attorney fees on the future medical expenses would result in an impermissible double recovery to the plaintiffs’ attorneys (given that their fee had already been paid in full by the plaintiff). The Court rejected the employer’s argument, noting that the plaintiffs’ attorneys had made it clear that they understood that any amount received from the employer would need to be forwarded to the plaintiff.

Image courtesy of Flickr by John Loo (no changes).

Illinois Supreme Court Agrees to Decide Dispute Over Alleged Predatory Real Estate Practices

3185860301_966ef0aeaf_zIn the closing days of its September term, the Illinois Supreme Court allowed a petition for leave to appeal in People ex rel. Madigan v. Wildermuth.  Wildermuth, a decision from Division Five of the First District, poses the following question: “Whether the State may claim a violation under the Illinois Human Rights Act pursuant to a reverse redlining theory where it did not allege that the defendant acted as a mortgage lender.”

Wildermuth began in late 2011 when the Attorney General filed suit, alleging that the defendants had engaged in acts and practices amounting to a pattern and practice of discrimination when they partnered to offer loan modification services to Illinois consumers. The Attorney General alleged that the defendants advertised on radio that they would help consumers save their homes and obtain significant reductions on their monthly mortgage payments within a short time frame. According to the Attorney General, the defendants’ services actually consisted primarily of filling out and submitting the paperwork to apply for a traditional affordable home loan modification program. The Attorney General alleged that the defendants failed to provide any of the disclosures required by the Illinois Mortgage Rescue Fraud Act or the federal Mortgage Assistance Relief Services Rule, as well as charging consumers nonrefundable fees ranging from $3000 to $5000, and that at times the defendants accepted such payments from consumers who defendants knew were not eligible for the affordable home loan modification program. The Attorney General also claimed that the defendants intentionally discriminated in the furnishing of facilities or services in connection with real estate transactions on the basis of race and national origin.

Defendants moved to dismiss the relevant count of the Attorney General’s complaint, arguing that the Act didn’t apply because the defendants were rendering legal services, not engaging in real estate transactions. The Attorney General responded that the defendants qualified as “real estate broker[s] or salesm[e]n” under Section 3-101(D) of the Act because they negotiated loan modifications and short sales on behalf of consumers. The Attorney General further argued that it was unnecessary to show disparate treatment because the Attorney General purportedly offered direct evidence of intentional targeting of minorities. The trial court denied the motion to dismiss, but agreed to certify the question set forth above.

The Appellate Court answered the certified question in the affirmative. The Court emphasized the broad definition of a “real estate transaction” under the Act, which includes “the sale, exchange, rental or lease of real property . . . also includes the brokering or appraising of residential real property and the making or purchasing of loans or providing other financial assistance for purchasing, constructing, improving, repairing or maintaining a dwelling.” Thus, it was unnecessary for a defendant to be a “mortgage lender” so long as the defendant allegedly provided “other financial assistance . . . for maintaining a dwelling.” The Court concluded that defendants allegedly “interfered with consumers’ ability to obtain a particular type of financial assistance – residential loan modifications – for maintaining their homes,” and that that conduct “may be construed as providing other financial assistance for maintaining a dwelling.” The court cited precedent relating to the comparable provisions of the federal Fair Housing Act in support of its broad construction of the state Act, including Eva v. Midwest National Mortgage Banc, Inc.

The Court then turned to the question of whether a theory of reverse redlining was viable without an allegation that the defendants acted as mortgage brokers. The Attorney General alleged reverse redlining – the intentional targeting of African Americans and Latinos – instead of pleading facts to show unlawful discrimination based on practices having a disparate impact. Defendants argued that the reverse redlining theory was unavailable where no new credit was being extended.

The Court rejected the defendants’ argument, concluding that reverse redlining encompassed all “predatory practices with respect to services related to real estate transactions . . . and directing those predatory practices against members of minority groups.”

We expect Wildermuth to be decided in six months.

Image courtesy of Flickr by Chris Griffith (no changes).

Illinois Supreme Court Agrees to Clarify Conduct Sufficient to Overcome Schools’ Immunity

4400220464_0c06a448ae_zSection 3-108 of the Illinois Local Governmental and Governmental Employees Tort Immunity Act provides that local public entities and their employees are immune from tort liability caused by a failure to supervise an activity on public property except where their failure to supervise rises to a level of willful and wanton conduct. 745 ILCS 10/3-108(a). So does that exception include a school employee’s failure to require use of safety equipment which was available during a students’ floor hockey game? That’s the question which the Illinois Supreme Court agreed to answer in the closing days of their September term, allowing a petition for leave to appeal in Barr v. Laurel Cunningham and Township High School District 211, a case from Division Three of the First District.

Barr arose from an injury during a physical education class at a high school. At the time of the injury, the plaintiff had played floor hockey during the class approximately eight to ten times. The teacher prohibited high sticking, fighting and checking. Violations were punishable by immediate removal from the game. She had observed the hockey ball (used as a safer alternative to a hockey puck) flying above students’ waists during play, but had never seen a student hit in the face with a ball or a stick. The teacher was aware that safety goggles were available in the equipment closet where the hockey balls were kept, but the goggles were not required, and she was uncertain whether there were enough to go around for all the students. Both the teacher and her supervisors testified that the teacher had discretion to make and enforce the rules for any sport played during class. At trial, the Circuit Court granted the defendants’ motion for directed verdict on the grounds that plaintiff had failed as a matter of law to prove willful and wanton conduct.

The Appellate Court reversed. The Court noted that the Act defined willful and wanton conduct as a course of action which demonstrates “an utter indifference to or conscious disregard for the safety of others or their property.” 745 ILCS 10/1-210. On appeal, the plaintiff argued that the teacher’s mere failure to use the safety goggles – an available safety precaution – was enough to create a triable issue of fact on willful or wanton conduct. The teacher testified that she did not believe that serious injury could occur as a result of a student being struck in the eye, but the Appellate Court pointed out that the teacher did not suggest that no injury whatsoever could occur, nor did she define what a “serious” injury was. “This decision making process involves the sort of conduct that a jury could find amounts to a conscious disregard for the safety of her students,” the Court found. The defendants argued that no finding for willful or wanton conduct was possible absent proof of a previous similar accident, but the Appellate Court disagreed.

In the alternative, the defendants argued that they were immune under Section 2-201 of the Act, which bars liability for a “public employee serving in a position involving the determination of policy or the exercise of discretion.” Section 2-201 immunizes even willful and wanton conduct. The Appellate Court disagreed, finding that the teacher had not decided not to require the safety goggles as a policy decision within the meaning of the statute, nor had she balanced competing interests and made a judgment call in reaching that decision.

Presiding Justice Mason dissented, writing that a mere failure to take sufficient precautions was not, as a matter of law, willful and wanton conduct.

We expect Barr to be decided within eight to ten months.

Image courtesy of Flickr by Tyler (no changes).

Illinois Supreme Court Holds Railroad Not Liable for Construction Accident

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In the closing days of October, the Illinois Supreme Court held that the defendants were not liable to the plaintiff for serious personal injuries to the plaintiff in Carney v. Union Pacific Railroad Company.

In Carney, the defendant agreed with a contractor to demolish and remove certain unused bridges. The agreement provided that all work to be performed by the contractor was to be completed to the railroad’s satisfaction. The railroad retained the right to stop or make changes in the work, and to terminate the contract immediately if the contractor’s services were unsatisfactory.  The contractor enlisted the assistance of a bridge demolition company as sub-contractor for the removal. The contractor had allegedly never removed a similar plate girder bridge. While the bridge was being removed, a beam snapped, and the western girder fell towards the east, severely injuring the plaintiff. The plaintiff resolved his claims against the subcontractor and contractor, but proceeded against the railroad. The railroad moved for summary judgment; the trial court initially denied the motion, but then allowed reconsideration and granted summary judgment.  The plaintiff then sought reconsideration, and the trial court reversed itself yet again, denying summary judgment.  The railroad sought a supervisory order from the Supreme Court, and the Supreme Court directed the court to vacate its most recent order and reinstate summary judgment for the railroad. The Court of Appeal reversed. The Court held that whether or not the defendant owed a duty to plaintiff depended on to what degree it controlled the work. The Court noted that the defendant retained the right to terminate the agreement, remove any employee or equipment, or makes changes in the dimensions of the job. Under the circumstances, there was a material issue of fact as to whether the defendant had sufficient control to create a duty.

In an opinion by Justice Theis, the Supreme Court reversed.  The plaintiff in Carney argued three theories for which the railroad was liable for the accident: Restatement Section 414, which governs negligence in exercising control over a project retained by the employer; Section 411, which addresses negligent selection of the contractor, and Section 343, which governs dangerous conditions known to or discoverable by the owner/occupier of land.

The majority agreed that the plaintiff had not stated a claim under Section 414.  The plaintiff pointed to provisions allowing the railroad to terminate the contractor’s services if it deemed them unsatisfactory, requiring the contractor to perform in a workmanlike manner, and allowing the defendant to stop work or make changes.  The majority held that these clauses were nothing more than the general rights reserved to anyone employing a contractor.  The plaintiff cited clauses allowing the railroad to remove equipment used by the contractor which the railroad deemed unsafe for its right-of-way, but “[a] general right to enforce safety . . . does not amount to retained control.”

Nor did the railroad’s conduct prior to or following the accident suggest retained control.  None of the employees at the scene testified to having received any instructions from the railroad’s employees before the girder fell.  Railroad employees discussed next steps with employees of the contractor following the accident, but the railroad argued that the employees’ comments were merely “suggestions” which the contractor was free to disregard, and the railroad’s involvement was merely in the interests of promoting worker safety.  This conduct, the majority found, was insufficient as a matter of law to establish a duty under Section 414.

The majority then turned to the claim of liability under Section 411 for negligent selection of the contractor.  The plaintiff’s problem with Section 411, the majority found, was that the Section established a duty in relations to injuries “to third persons.”  Although there was a triable dispute of fact as to whether the railroad had been negligent in its selection of the contractor, the majority held that the plaintiff was not a “third person” within the meaning of Section 411.  Section 411 liability is intended to protect members of the general public who might be unaware of the risk to their safety.  The plaintiff, on the other hand, was in a position to protect himself against the risks involved in the removal of the bridge.

Finally, the majority turned to Section 343, “dangerous conditions on the land.”  The condition at issue was the steel plate extending several feet into the roadbed on which the plaintiff was standing at the time of the accident.  But the steel plate was not a condition “on the land”; it was part of the bridge.  Even assuming that the steel plate was “on the land,” there was no basis for concluding that the defendant had actual or constructive knowledge of how far it extended.  Therefore, there was no basis for a finding of liability under Section 343.

Justice Kilbride dissented, arguing that the Appellate Court correctly found triable issues of fact with respect to all three theories of liability.

Image courtesy of Flickr by Mark Spearman (no changes).

Illinois Supreme Court Holds Six-Person Limit on Jury Size Unconstitutional

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Late in its September term, the Illinois Supreme Court handed down its unanimous opinion in Kakos v. Butler, holding that Public Act 98-1132, a 2015 statute in which the Illinois legislature limited civil juries to six persons, was facially unconstitutional.  Here’s our report on the oral argument, predicting that the Court would strike down the statute.

Before Public Act 98-1132 went into effect, 735 ILCS 5/2-1105(b) stated that claims involving $50,000 or less could be tried to a six-person jury unless either party demanded a 12-person jury.  The Act amended the statute to abolish the opt-out by which parties could insist on a full 12-person jury.  At the same time, daily juror fees were significantly increased in hopes in boosting participation.

In Kakos, the defendants moved for leave to file a 12-person jury demand, and in the alternative for an order holding that Section 2-1105(b) was facially unconstitutional.  In a 27-page opinion, the Circuit Court held that twelve jurors was a substantive part of the jury trial right, beyond the Legislature’s authority to change.  The appeal went directly to the Supreme Court as a matter of right.

In an opinion by Chief Justice Garman, the Supreme Court affirmed.  The Court began by pointing out that the United States Supreme Court has already held that neither the Seventh nor the Sixth Amendment specifically protected a right to twelve jurors, as opposed to some other number.  Proponents of the statute argued that the Illinois constitutional guarantee was coextensive with the Federal amendments.  But that argument couldn’t be squared with the plain language of the clause, the Court noted.  The Seventh Amendment to the Federal Constitution merely protects the right to “trial by jury.”  But the Illinois Constitution says that:

The right of trial by jury as heretofore enjoyed shall remain inviolate.

The Court has historically interpreted the words “as heretofore enjoyed” to mean that the clause was broader in scope than just protecting any jury – certain additional incidents of the right to trial by jury were protected too.  So the question was what were fundamental aspects of the right to trial by jury, and which incidents were not.  In 1897, the Supreme Court commented that “any less number” than twelve “would not be a common-law jury.”  In 1938, the Court upheld the predecessor to Public Act 98-1132 requiring litigants to pay an extra fee for a twelve-person jury, but the Court relied upon precedent validating court fees, not on any conclusions about the size of the jury.  The Court cited a host of cases in which it had referred to the right of trial by jury as by definition – both in the civil and criminal context – requiring twelve jurors.

Both parties in Kakos argued about whether the reduction from twelve to six jurors affects the performance of the jury, but the Court said that it doesn’t matter: the only question was whether twelve jurors was part of the right “as heretofore enjoyed.”  There was substantial evidence from the Constitutional Convention, the Court held, that it was.  The Court noted that Delegate Wilson proposed an amendment to permit reductions in the size of the jury, noting that “As the constitutional provision is now, it is quite inflexible.”  But Delegate Lennon moved to amend the text further, deleting Delegate Wilson’s amendment and stripping the legislature of the power to change the size of juries.

The Court held that because the size of the jury – 12 people – was an essential element of the jury trial right at the time the 1970 constitution was adopted, jury size was necessarily an element of the jury trial right as protected by the constitution.  Therefore, the provision of Public Act 98-1132 making six-person juries mandatory was facially unconstitutional.

That left the question of severability.  The legislature had substantially increased the pay for jurors – and therefore the cost of jury trials – at the same time as it cut the size of juries in half.  The Court noted that if it held that the six-person requirement was severable, the cost of jury trials across the state would substantially increase, without any offset in the form of smaller juries.  The Court concluded that the legislature would not have adopted the change in juror pay if it had known that the limitation in jury size was unconstitutional.  Therefore, the entire statute was invalid.

Image courtesy of Flickr by Douglas Muth (no changes).

Divided California Court Finds Specific Jurisdiction over Claims of Nonresidents against an Out-of-State Corporation

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In a 4-3 decision, the California Supreme Court has found specific jurisdiction over the product liability claims of nonresidents against Bristol-Myers Squibb Company (BMS), a Delaware company headquartered in New York with substantial operations in New Jersey. Bristol-Myers Squibb Co. v.  Superior Court (Anderson), S221038.  It was undisputed that California plaintiffs had specific jurisdiction for their claims.  However, on the pivotal issue of whether each nonresident claim “arises from or is related to” BMS’s California activities, the majority concluded that “the nonresident plaintiffs’ claims bear a substantial connection to BMS’s contacts in California” in light of the asserted nationwide marketing, promotion and distribution of the product.

General Jurisdiction

California courts are authorized to exercise jurisdiction to the limits of constitutional authority. C.C.P. § 410.10.  However, following the U.S. Supreme Court ruling in Daimler AG v. Bauman (2014) 571 U.S. ___, the California Supreme Court unanimously agreed that there was no general jurisdiction over BMS.  While it characterized BMS’s activities in California as substantial in themselves (164 employees in research, 250 sales representatives, and an advocacy presence in Sacramento), the evidence showed this was only a small fraction of BMS’s national operations, which were primarily focused in New York and New Jersey.  Citing Daimler, the Court concluded, “we find nothing to warrant a conclusion that BMS is at home in California.”

Specific Jurisdiction

All agreed that the 86 California plaintiffs had specific jurisdiction to pursue their claims, leaving the question of whether the other 592 nonresident plaintiffs could do likewise.  As established by the U.S. Supreme Court, there are three prongs to satisfy for specific jurisdiction over a nonresident defendant: (1) whether the defendant has “purposefully directed” its activities at the forum state; (2) whether the plaintiff’s claims arise out of or are related to these forum-directed activities; and, (3) whether the exercise of jurisdiction is reasonable and does not offend “traditional notions of fair play and substantial justice.”  The plaintiff has the burden of proof on the first two prongs, and defendant on the third.  BMS did not contest the first and third prongs of this test, although the majority still evaluated them to reach its conclusion that they were each satisfied.

Regarding the second prong, the evidence established that BMS did not research, develop or manufacture the product in California. Similarly, none of the work related to regulatory approval, labeling, packaging, or marketing was conducted by employees in California.  The nonresident plaintiffs did not obtain the product in or through California, and did not allege they were injured or treated in California.  However, the majority stated that BMS did not dispute that it conducted a nationwide marketing, promotion and distribution program which did not vary in substance from state to state, and which the majority characterized as “a single, coordinated, nationwide course of conduct.”  In contrast, the dissent stated that BMS merely conceded “that some degree of commonality existed” but that the record was otherwise void on this issue.

The majority cited extensively from Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, for the proposition that the claim did not need to arise directly from the defendant’s contacts in order to be related, so long as it “bears a substantial connection to the nonresident‘s forum contacts.”  In applying this idea to BMS’s nationwide program, the majority found that the claims of both resident and nonresident plaintiffs were based on the same allegedly defective product and that both arose from the same alleged defects in the national marketing program, creating “a substantial nexus between the nonresident plaintiffs’ claims” and BMS’s California contacts.  The majority also concluded that BMS’s unrelated California research provided an additional connection regarding plaintiffs’ claims that BMS negligently researched the subject product, as well as increasing BMS’s overall contact with California.   Finally, the majority cited the sliding scale in Vons, which reduced the connection required for “arising out of or related to” in proportion to the level of defendant’s state contacts.

The dissent found no specific jurisdiction when defendant’s state contacts have no legal relevance to the nonresident plaintiffs’ claims, noting that the cross-defendants in Vons had specific relationships with California residents that were part of the factual basis for the claims alleged.  Thus, the dissent focused on the complete lack of contact between the nonresident plaintiffs, including the product and representations they received, and any BMS contacts with California.  The dissent rejected the argument that the existence of similar representations in other states established a connection with California which could support jurisdiction, and noted that plaintiffs failed to produce any evidence regarding such a national program to meet their burden of proof.  The dissent also expressed concern that the majority opinion undermined Daimler AG by substantially expanding the scope of specific jurisdiction.

Image courtesy of Flicker by Charles Nadeau

Sharply Divided Illinois Supreme Court Keeps Redistricting Reform Off November Ballot

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Last night, in a case that produced four opinions from the seven-member Court, a sharply divided Illinois Supreme Court affirmed the trial court’s judgment in Hooker v. Illinois State Board of Elections holding that a ballot initiative which would have fundamentally rewritten the legislative redistricting procedures in Illinois was not constitutionally eligible for the ballot.

Given Illinois’ highly unusual constitutional structure, let’s begin with a quick review of the relevant provisions. Article III, Section 3 provides that “all elections shall be free and equal.” We’ll get to what that means in a moment.

Article IV contains fifteen sections pertaining to the structure, procedures and powers of the legislature. The sections are entitled: (1) Legislature – Power and Structure; (2) Legislative Composition; (3) Legislative Redistricting; (4) Election; (5) Sessions; (6) Organization; (7) Transaction of Business; (8) Passage of Bills; (9) Veto Procedure; (10) Effective Date of Laws; (11) Compensation and Allowances; (12) Legislative Immunity; (13) Special Legislation; (14) Impeachment; and (15) Adjournment. The Redistricting Section imposes duties on a number of different officials, including the Speaker and Minority Leader of the House, the President and Minority Leader of the Senate, the Supreme Court, the Secretary of State and the Attorney General. Section (3) provides that the General Assembly should try to agree on a redistricting plan, but if the General Assembly doesn’t get it done, a Legislative Redistricting Commission, evenly divided between the two parties (and with an even number of members) shall be appointed to settle the matter.

Article XIV is called “Constitutional Revision.” In Section 1, it provides for the possibility of a new Constitutional Convention. The question of calling a Constitutional Convention is automatically put on the ballot every twenty years, but in between those recurring elections, may be put on the ballot only if three-fifths of both houses of the General Assembly approve. In Section 3 of Article XIV, the constitution adds a limited power of amendment by voter initiative. Although Section 3 regulates various aspects of such initiatives (such as the number of signatures necessary, and the number of votes needed to approve), one sentence of Section 3 is at issue in Hooker:

Amendments shall be limited to structural and procedural subjects contained in Article IV.

Of course, the language of the Constitution doesn’t specify exactly what parts of the fifteen sections in Article IV are “structural and procedural subjects” as opposed to anything else.

Redistricting has had a rocky history in Illinois since the 1970 constitution was approved. The General Assembly has managed to agree to a redistricting plan itself only once, in 2011. In three of the other four cases, the Redistricting Commission has deadlocked, forcing the appointment of a ninth member through the drawing of lots.

A redistricting reform plan was submitted for inclusion on the November 2016 ballot as a voter initiative constitutional amendment. The plan completely rewrites Section 3, removing the General Assembly from the process and creating a new 11-member Independent Redistricting Commission. Members of the Commission were to be selected in a multi-step process: the Auditor General first accepts applications to act as one of three “Reviewers.” Reviewers must be registered voters, have “demonstrated understanding of and adherence to standards of ethical conduct,” and be unaffiliated with any political party for the three years preceding amendment. The Auditor General winnows down the pool of applicants to persons who meet these criteria, and then chooses three Reviewers by lot.

The panel of three Reviewers then selects a pool of 100 potential Commissioners. The legislative leadership of both parties may remove up to five potential Commissioners each; the Reviewers select seven Commissioners from the remaining applicants to serve on the Redistricting Commission; and the legislative leaders then appoint one additional Commissioner each from the remaining members of the pool.

If the Commission is unable to agree to a plan, then the backup kicks in – the Chief Justice of the Supreme Court and the senior Justice who is of the opposite political party to the Chief jointly appoint a “Special Commissioner for Redistricting.” He or she must conduct at least one public hearing, but then the lone Commissioner writes a redistricting map and files it with the Secretary of State. The Supreme Court retains original jurisdiction over challenges to the map finally adopted (a change from the current section, which vests “original and exclusive” jurisdiction in the Court).

A few days after the plan was filed as a proposed initiative, the Hooker action was filed. The eleven count complaint challenged the initiative on three basic grounds: (1) it didn’t relate to “structural and procedural subjects contained in Article IV” at all; (2) even if it did, it wasn’t limited to such subjects; and (3) it violated the “free and equal elections” clause. The “free and equal” clause serves a similar function to what in other states is called the “single subject” rule – the clause is violated if entirely different subjects are linked together in a single initiative, since that would present voters with a “I’m for that, but against that” conundrum.

The parties filed cross-motions for judgment on the pleadings. The Circuit Court held that the initiative violated the constitutional limitations on the initiative power. The initiative proponent than appealed, filed a motion to transfer the case straight to the Supreme Court and a motion to expedite the appeal, both of which were granted.

The majority opinion by Justice Kilbride found a single issue – the proposed role of the Auditor General – dispositive in dooming the initiative.

The Auditor General of Illinois is a constitutional office established in Article VIII, which requires the Auditor General to audit the public accounts, make investigations and reports required by the General Assembly, and report his or her findings to the General Assembly and the Governor. The initiative would, for the first time, add the Auditor General to the redistricting process, requiring him or her to manage selection of the panel of reviewers and to play a role in final selection of Commissioners.

Given that the proposed amendment requires that applicants for “Reviewer” be evaluated for their “ethical conduct” and partisan leanings, the majority concluded that the duties imposed on the Auditor General were “likely to be . . . time-consuming and resource-intensive . . . requir[ing] considerable effort, time, and expense.” Since the Auditor General’s diversion into that role would take time and resources away from his or her other work, the majority viewed that single point as taking the initiative beyond the boundaries of a permissible initiative relating only to “structural and procedural subjects” in Article IV.

The proponents of the initiative argued that the duties assigned to the Auditor General did not violate the limits on the initiative power because they weren’t a subterfuge intended to impede the Auditor General from carrying out his or her other duties, but the majority held that that was irrelevant. Although the possibility that ballot initiatives would be misused as a backdoor means of altering other provisions of the Constitution was discussed at the 1970 Constitutional Convention, according to the majority, it wasn’t the only reason for limiting the power of initiative.

The majority concluded by briefly addressing the proponents’ complaint that if the initiative was unconstitutional, redistricting reform was essentially impossible. “The Auditor General is not the only potential nonlegislative actor capable of filling the duties outlined in its proposal,” the majority wrote. “[W]e trust that the constitutional confines of article XIV, section 3, are sufficiently broad to encompass more than one potential redistricting scheme.”

The three Republican members of the Court each filed separate dissents. Chief Justice Garman (joined by Justices Thomas and Karmeier) noted that the citizen initiative procedure was an “especially important” check “against the legislature’s self-interest,” and that the majority’s opinion “deals another serious blow to our fundamental principles.” Justice Thomas (joined by the Chief Justice and Justice Karmeier) filed a sharply worded dissent, suggesting that “four members of our court have delivered, as a fait accompli, nothing less than the nullification of a critical component of the Illinois Constitution of 1970.”

Justice Karmeier (joined by the Chief Justice and Justice Thomas) filed the principal, thirty-nine page dissent. Justice Karmeier began by addressing the argument that the initiative violated the “free and equal” clause. That clause could not possibly mean, he wrote, that any initiative was improper when it was possible for someone to favor parts and oppose other parts; “[n]early every proposition, after all, could be broken into simpler questions.” The test, rather, was whether an initiative combined completely unrelated subjects. The initiative passed that test easily, according to the dissenters – the initiative related to redistricting reform, and nothing in it dealt with anything else.

The dissent therefore turns to the principal challenge to the initiative, the “structural and procedural” challenge. Justice Karmeier quotes two members of the 1970 Constitution Convention commenting that the structure and prerogatives of the legislature pose special problems for the cause of constitutional change. Since it was unlikely that the members of the legislature would propose changes lessening their own powers – and the delegates to a constitutional convention were likely to have ties to the legislature – a third method for amending Article IV was provided. The dissenters quote Delegate Garrison’s comment during the debate: “For example, we could hardly expect the legislature ever to propose a Constitutional amendment to reduce the size of its membership, to establish a reapportionment commission comprised entirely of nonlegislative members, or perhaps even to establish single-member districts.” The Convention’s Committee on the Legislature described the initiative process as “a method to circumvent a legislature which might be dominated by interests opposing legislative changes.”

The dissenters emphasized that the initiative provisions should be construed in such a way as to “provide a workable initiative scheme unfettered by restraints which unnecessarily inhibit the rights which article XIV confers,” while still remaining respectful of the limits on the initiative power. The Justices cite authorities from a number of other states construing their own citizen initiative clauses along similar lines (although Illinois’ limitation of the initiative power to “structural and procedural subjects” in Article IV is apparently unique nationally).

According to the dissenters, the plaintiffs’ complaint was premised in part on the idea that the “structural and procedural subjects” limitation in Article IV actually limits the initiative power to “changes to section 1 of Article IV,” which vests the legislative power in a two-house General Assembly consisting of 59 Senatorial districts and 118 Representative districts. Even though Section 1 is the only part of Article IV using the word “structure,” that didn’t mean that the initiative power was limited to Section 1; Section 9 was the only part of Article IV which used the word “procedure,” but nobody had suggested that the initiative power was limited to making changes in the mechanics of the veto procedure.

Since the language was in their view ambiguous, the dissenters turned to the constitutional debates. The Committee on the Legislature commented that the initiative power was intended to address “the basic qualities of the legislative branch – namely, structure, size, organization, procedures, etc.” One delegate commented that enumerating specific sections of Article IV in the initiative power would unnecessarily limit its scope. Another delegate asked whether the power was intended to extend to “apportionment” – the term then used to refer to redistricting – and the response was “[t]hose are the critical areas, actually.” “[T]here can be no serious question,” the dissenters wrote, that the framers of the 1970 Constitution regarded redistricting as “an altogether proper subject of change through the ballot initiative process.”

The dissenters rejected as well the argument that by involving the two senior members of the Supreme Court in the redistricting process, the initiative impermissibly strays from the legislative article to making changes in the judicial article. Not so, they concluded; the Supreme Court was already assigned a role in redistricting by the legislative article. Nothing in the judicial article was impacted at all. Nor was there anything constitutionally suspect about the initiative’s removal of the current language conferring on the Attorney General the right to initiate court actions relating to jurisdiction, since that change didn’t impact the Attorney General’s core duties in Article V, Section 15.

Finally, the dissenters turned to the issue which the majority had found dispositive, the role of the Auditor General. Even though the Auditor General is not currently involved in the redistricting process, the dissenters concluded that the new duties were not problematic; assigning an official additional duties wasn’t the same thing as changing the duties already assigned, and nothing in constitutional law provides that all of a particular official’s duties must be contained in the same article. Given the basic rule that the initiative clause of the constitution must be construed “to provide a workable initiative scheme unfettered by restraints which unnecessarily inhibit the rights which article XIV confers,” the dissenters concluded that the role of the Auditor General was not fatal to the initiative. The principal dissent closes by suggesting that the test set forth by the majority is so restrictive that no redistricting reform could ever possibly pass judicial muster and be submitted to the voters.

Hooker is an unusual case in several respects. Such close division is rare on the Court – since 2000, only 5.9% of the Court’s 673 civil decisions have had three dissenters. Only twenty-eight of those cases have drawn multiple dissents, and in only two have there been three separate dissents (Price v. Philip Morris in 2005 and Berg v. Allied Security in 2000). They’re only slightly more common on the criminal side, where 48 of 814 cases decided between 2000 and 2015 have produced multiple dissents (nine of those producing more than two each).

Despite the dissenters’ pessimism, don’t expect this to be the end of redistricting reform in Illinois. Ultimately, the initiative was rejected based upon a single issue: the role of the Auditor General. The role of the Supreme Court and the Attorney General and the “free and equal” challenge aren’t even addressed at any length in the majority opinion. The majority all but invites proponents to try again. It’s far from clear that a new plan, drafted with the Court’s previous jurisprudence and the language and convention debates on the constitution firmly in mind, could not pass muster in a sequel to yesterday’s decision.

Image courtesy of Flickr by Jeff Sharp (no changes).

Divided Illinois Supreme Court Holds No Property Disputes Between Ex-Domestic Partners

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In Blumenthal v. Brewer, the Illinois Supreme Court was asked to overrule its thirty-seven year old decision in Hewitt v. Hewitt and hold that Illinois would join the vast majority of states in recognizing a cause of action for equitable division of property between unmarried domestic partners. Last Thursday, a divided court declined that invitation, holding that recognizing such quasi-contract claims would be inconsistent with Illinois’ ban on common-law marriages. Our detailed summary of the underlying facts and lower court rulings in Blumenthal is here.

Blumenthal began in 2010 when the plaintiff filed her complaint seeking partition of the residence she had shared with her long-time domestic partner, the defendant. The defendant filed a counterclaim, expressly alleging that the parties’ relationship had been “identical in every essential way to that of a married couple.” The counterclaim sought (1) imposition of a constructive trust on the residence; (2) division of the residence; (3) a constructive trust over the annual net earnings from the plaintiff’s medical practice, or in the alternative, restitution of funds used from the defendant’s account in connection with the purchase of the practice; and (4) apportionment of the residence’s value taking into account amounts spent by defendant to maintain it. The Circuit Court dismissed the counterclaim as barred by Hewitt. The Appellate Court reversed, holding that Hewitt was obsolete, given the enormous changes in Illinois’ legal attitude towards nonmarital cohabitation since 1979.

In an opinion by Justice Karmeier, the Supreme Court reversed. The Court began by pointing out that most of the defendant’s counterclaim arguments suffered from two fatal procedural flaws. The ruling dismissing the counterclaim had been appealed pursuant to Rule 304, following the trial court’s certification (for anyone who isn’t an Illinois lawyer – Illinois Supreme Court Rule 304 is more or less analogous to a Federal 1292(b) interlocutory appeal by permission). The problem was, the majority pointed out, that a Rule 304 certification doesn’t make the order appealable if it wasn’t a severable part of the overall controversy. But here, the Court found, the counterclaim was just a different approach to the same thing the main case was about – partition of the couple’s property.  As such, certification or no, there was no way to make the counterclaim order appealable. And procedural problem number two, according to the majority – the Appellate Court had no authority to, in essence, overrule Hewitt. Ordinarily, the majority wrote, it would merely vacate the Appellate Court and remand. But here, the proceedings on the principal claim had gone all the way to their finish, and the judgment was now final (neither party having appealed). So most of the counterclaim was moot anyway.

Count 3 of the counterclaim, which sought a constructive trust or restitution in connection with the medical practice, was separate from the underlying property dispute, however. Nevertheless, the constructive trust claim had to fail, according to the majority. The defendant couldn’t be the beneficiary of a constructive trust over the medical practice, since the Medical Corporation Act and the Medical Practice Act of 1987 barred non-doctors from having any “ownership, management, or control” of a medical corporation.

But that left the restitution remedy, and at last, the majority squarely faced Hewitt. After reviewing the legal background to Hewitt, the majority declined to overrule the decision. The Court noted that the General Assembly has enacted, repealed and amended a great many family-related statutes in the years since Hewitt – the same legal developments which had persuaded the Appellate Court that Hewitt was obsolete – but had left the foundation of that decision (the ban on common-law marriage) in place. Based on that, the majority found no evidence that the public policy which Hewitt was based upon had changed at all. On the contrary, according to the majority, the “current legislative and judicial trend is to uphold the institution of marriage,” citing the U.S. Supreme Court’s decision in Obergefell v. Hodges striking down bans on same-sex marriages. So until the legislature intervened and changed the public policy barring common-law marriages, the majority found Hewitt was still good law and the restitution claim, since it rested on the parties’ relationship, had to fail.

Justice Theis wrote a separate opinion concurring in part and dissenting in part, joined by Justice Burke. The dissenters had no quarrel with the decision holding that most of the underlying judgment was not appealable, or with the holding that the medical corporation statutes barred the constructive trust claim. But the dissenters would have overruled Hewitt. According to the dissenters, the majority had characterized Hewitt as being a straightforward affirmation of the public policy against common law marriage, but “[i]n fact, Hewitt did much more.” Hewitt “etched into the Illinois Reports the arcane view that domestic partners who choose to cohabit, but not marry, are engaged in ‘illicit’ or ‘meretricious’ behavior at odds with foundational values of ‘our family-based society'” – a statement which the dissenters labelled “sweeping and near-defamatory.”

According to the dissenters, virtually all of the legal support for Hewitt has disappeared. Illinois’ criminal prohibition against cohabitation was repealed in 1990. The Hewitt court had cited to Illinois’ rejection of no-fault divorce, but Illinois adopted no-fault divorce only a few years later, in 1984. The section of the First Restatement of Contracts quoted in Hewitt which defined contracts between people in intimate relationships as illegal was deleted by the Second Restatement, published in 1981. Forty of fifty states have bans on common-law marriage similar to Illinois’ statute, but courts in the “vast majority” of those states nevertheless recognize property claims between former domestic partners – without “reviv[ing] the doctrine of common-law marriage in jurisdictions that have abolished it. . . Illinois is a clear outlier on this issue.” The dissenters declared that “Hewitt must be overruled because it is outmoded and out of touch with contemporary experience and opinions on cohabitation.”

Although the majority had interpreted the legislature’s action in making a host of changes to domestic relations law while leaving the ban on common-law marriage untouched as supporting retention of Hewitt, the dissenters disagreed. After all, while the legislature was “well equipped to declare public policy on domestic relations,” the courts had been making equitable divisions of joint assets between family members for more than a century and a half. And even leaving all that aside, the dissenters concluded, the defendant wasn’t seeking “marriage-like benefits” or “rights” in the counterclaim – she was simply seeking to pursue a common-law property claim that any other party would have routinely been permitted.

Image courtesy of Flickr by Marc Hatot (no changes).

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