The Appellate Strategist

Insights on appellate issues, trial consultations, and evaluating appeals

Argument Report: Illinois Supreme Court Hears Dramshop Act Case

By Kirk Jenkins on Posted in Illinois

With the Illinois Supreme Court asking somewhat fewer questions than it generally does, it was unclear how the Court might decide Rogers v. Imeri, the Dramshop Act case the Court heard last week.  Our detailed summary of the underlying facts and lower court decisions in Rogers is here. Our preview of the argument is here.

Rogers arises from the death of the plaintiff’s son in a drunk driving accident. The plaintiffs sued the bar which allegedly served the driver, alleging claims under the Dramshop Act. The plaintiffs received $106,550 from the driver’s liability insurance policy and their own policy. While the matter was pending, the defendant’s Dramshop liability insurer was declared insolvent, and the Illinois Insurance Guaranty Fund substituted in.

The parties agreed that the Fund was entitled to a $106,550 offset for settlements. So – was the offset deducted from the Dramshop Act cap, or from the jury’s verdict, with the sum capped at the statutory maximum? The question turns on a conflict between the statutory liability cap of the Dramshop Act — $130,338.51 — and the language of the Guaranty Fund Act. The Fifth District held that the offset was taken from the jury’s verdict – the same procedure which applies when the Fund is not involved in a case.

Counsel for the Guaranty Fund began by arguing that the issue presented was the import of the following language from the Act, 215 ILCS 5/546: “The Fund’s obligation . . . shall be reduced by the amount recovered or recoverable, whichever is greater” from other insurance.  Counsel pointed out that after the Fifth District’s decision in Rogers had come down, the First District, Division Five had decided the same question the opposite way in Guzman v. 7513 West Madison Street, Inc. Counsel argued that the Fifth District’s decision is contrary to the plain language of the Guaranty Fund Act, essentially directing that the trial court take a sum the Fund doesn’t owe (because of the Dramshop Act liability cap), and reducing it by another sum the Fund doesn’t owe (the setoff), to arrive at a number which would be exactly the same as if the Fund wasn’t involved in a case at all – meaning that Section 546 was given no effect. Justice Freeman asked counsel to reconcile his position with the express purpose of the statute to protect policyholders and third parties. Counsel responded that that was doubtless an aspirational goal of the statute. However, he argued that the Fund’s theory ensured that the purpose of the Dramshop Act is satisfied – the plaintiff recovers the full statutory liability cap, for the most part from the wrongdoer, with the Fund providing the rest. The Fund is protected as well by being given the reduction mandated in Section 546. Justice Freeman’s question was the only one counsel received in his initial remarks.

Counsel for the plaintiffs began with a discussion of the underlying facts. He argued that the case had nearly been settled when the Guaranty Fund substituted in. Counsel argued that Section 546 never mentions the Dramshop Act, which provides that a jury finds a victim’s damages without reference to the statutory cap. Justice Garman asked whether the issue was one of statutory construction or public policy, and counsel responded that it was largely statutory construction. Justice Theis asked what the “Fund’s obligation” under Section 546. Counsel responded that the term is never defined, and argued once again that the Fund’s position would vitiate the victim’s right to have the jury determine damages. Justice Karmeier asked counsel to respond to the Fund’s argument that the “Fund’s obligation” was capped by the Dramshop Act limit. Counsel argued that the Fund’s position was unsupported. Justice Karmeier asked whether the issue hinged on how the Court defines the “Fund’s obligation,” and counsel responded that the Fund’s obligation is determined through trial and the jury’s verdict. Counsel concluded by arguing that the Fund’s position would make trial a virtual formality, since the plaintiff could never get the full benefit of a verdict significantly above the statutory cap.

In rebuttal, counsel for the Fund argued that it was the Dramshop Act, not the Guaranty Fund Act, which capped the plaintiff’s damages. The plaintiff’s position, counsel argued, meant that the Guaranty Fund Act has no effect. Justice Thomas asked whether the Dramshop Act cap would always be the maximum exposure for the Fund, and the Fund would get the benefit of the setoff for other insurance recoveries regardless. Counsel argued that while this was true, applying the setoffs to a jury verdict which was well above the cap denied the Fund any benefit at all from Section 546.

We expect Rogers to be decided in two to four months.

First Thoughts: Live-(Nearly)-Blogging the Oral Argument in Kanerva

By Kirk Jenkins on Posted in Illinois

This morning, a seemingly skeptical Illinois Supreme Court appeared ready to side with the State in a dispute over 2012 amendments to the State Employee Group Insurance Act. Several Justices peppered the two attorneys splitting argument time for the plaintiffs with sixteen questions during their opening, many of which echoed various points made in the Circuit Court’s opinion tossing the case out of court. In comparison, counsel for the State was treated gently, receiving only five questions in all, four of them from Justice Thomas.

Counsel for the plaintiffs began by emphasizing the fact that the Pension Protection Clause doesn’t actually use the word “pension” in describing what is protected – it says “benefits.” (See the post immediately below this one for the full text of the clause.) Counsel argued that the word “benefits” has a plain and unambiguous meaning in the context of employment, as demonstrated by the fact that one regularly sees signs and advertisements speaking of jobs “with benefits” – with no further explanation of what is meant. The ordinary understanding of the term clearly includes health insurance, counsel argued. Counsel pointed out that the voters who approved the state constitution chose to protect “benefits,” not just “pensions,” and that the title of the clause is “Pension and Retirement Rights” – if the clause is limited to pensions, then the word “retirement” means nothing. Justice Freeman asked counsel whether the case was one of first impression in that it related to something which was not clearly part of a pension, and if so, whether the Court should consider that it might be expanding the scope of the Clause. Counsel reiterated that the Clause used the broader term “benefits,” not just pensions. Justice Burke asked counsel whether there was any difference between the “pension system” and the “retirement system.” Counsel responded that as a practical matter, the answer was no. Justice Burke then asked whether health insurance premiums paid on a retiree’s behalf were income. Counsel disputed the idea that the protection of the Clause is limited to forms of income, pointing out yet again that the drafters deliberately used a broad and generally understood term – “benefits.” Justice Garman pointed out that the Clause actually protects “benefits of membership” in the system, not just “benefits,” and asked counsel whether the point had any significance? Counsel responded that all “benefits” flowed to the retiree through the system, so the distinction in language had no practical impact. Justice Karmeier asked whether, under the plaintiffs’ theory, a retiree would be locked into a particular level of benefits if benefits were increased? Counsel responded that in the current political climate, he couldn’t imagine that happening, but the answer was no. Justice Garman asked whether, on counsel’s theory, the state could reduce retirees to bare-bones health insurance so long as the premiums cost the retirees nothing. Counsel responded that a definitive answer would have to await another case, but that a substantial cut in the value of the insurance likely would violate the Clause.

Co-counsel for the plaintiffs concluded the opening argument by challenging the Circuit Court’s finding that the class members lacked standing to sue the State on their union’s collective bargaining agreement in Circuit Court. He argued that third party beneficiaries of a collective bargaining agreement were permitted to sue as “parties” to the agreement under the limited exception authorizing such suits. Counsel set out the plaintiffs’ secondary constitutional argument, which is based on the proposition that the 1998 pension bill providing that 20-year retirees would receive their health care insurance free created contractual rights which were impaired in violation of the Contracts Clause of the state constitution by the 2012 amendments. Justice Freeman pointed out that the retirees’ benefit books said that the state could change the terms at any time, and asked counsel how such an equivocal representation could amount to a contractual promise. Counsel pointed out that the benefit books didn’t say that the state reserved the right to change premiums, as opposed to adjusting the exact parameters of what was and was not covered.

Counsel for the State began by emphasizing the strong presumption in the law that legislation doesn’t create enforceable contract rights, given that a contrary view would hamper the legislature’s ability to respond to changing conditions. Counsel argued that nothing in the any of the relevant acts met the high bar necessary to create contract rights.

Justice Thomas noted that retirees’ mandatory premium contributions are quite low now, but wondered whether the State’s position, if it were successful, would allow the state to drive retirees’ contributions much higher, or even abolish the health care insurance benefit for retirees entirely. Counsel responded that there were significant political constraints to stop that from happening, but there was no constitutional barrier to such a development. Justice Thomas asked whether state employees who took early retirement in reliance on the package of promised benefits had any recourse in the State’s view. Counsel responded that nothing in the early retirement statute promised that benefits would stay at their current level forever, and repeated that retirees would have no constitutional cause of action. Justice Thomas asked whether the State believed that the Hawaii decision heavily relied on by the plaintiffs, which found health care benefits protected by a similar pension clause, was simply wrong, and counsel for the State said yes. Counsel argued that the Pension Clause had to be understood in the context of its history, and the Clause arose from a desire to make it clear that all public pension systems are in the nature of voluntary contractual relationships, not a mandatory part of employment. Counsel closed by arguing that there was no special significance to the use of the word “benefits” in the Pension Protection Clause, and disputed that the 2012 amendments rose to the level of a constitutional “impairment” of a contract.

In rebuttal, counsel for the plaintiffs challenged the State’s claim that history of the retirees’ health care system has been one of constant change. Justice Thomas’ question was important, counsel argued; if the State prevailed, there would be nothing to stop the State from shifting far more of the cost of the health care system to retirees, essentially wiping out their pensions in the process. Counsel closed by arguing that the State would contend that the 2012 statute is a complete defense to any claim for breach of contract, and surely that amounted to a constitutional “impairment.”

As I’ve observed before, Kanerva is playing out in the shadow of pension battles yet to come. If the argument this morning is any indication of the Court’s inclination, it seems unlikely that the Supreme Court is about to take the kind of hard-line view of the Pension Clause that would significantly hamper the political branches in grappling with Illinois’ public pension liabilities.

Illinois Supreme Court to Debate Whether Public Retiree Health Benefits Protected By Pension Clause

By Kirk Jenkins on Posted in Illinois

Tomorrow morning, the Illinois Supreme Court will hear oral arguments in what may prove to be a precursor of larger battles yet to come in the next few years – an all-out battle over whatever public pension reform package the legislature adopts. Tomorrow, the case at hand is Kanerva v. Weems, which presents the question of whether guaranteed premium-free health care for public retirees with twenty years or more service is protected by the guarantee of the Illinois Constitution that public pensions cannot be disturbed? Our detailed summary of the facts and Circuit Court decision in Kanerva is here.

The State Employee Group Insurance Act has been amended several times during its life. Originally, the SEIGA provided that the state paid the entire cost of the insurance. In 1991, the Act was amended to provide for limited employee contributions.  In 1995, the legislature eliminated the cap on those contributions. Two years later, the legislature provided for a graduated premium payment, topping out at 20 years, when the state took over 100% of the payments.

All that changed in 2012, when the legislature amended the SEIGA to direct the Director of the Department of Central Management Services to allocate the cost of health insurance premiums between the State and its retirees. The statute provided that the Director could base his or her calculations on the actual cost of the services, adjusted for various factors.

The plaintiffs sued, alleging that the 2012 amendments rendered the SEIGA system unconstitutional on its face. Principally at issue is the Illinois Pension Protection Clause:

Membership in any pension or retirement system of the State, and unit of local government or school district, or any agency thereof, shall be an enforceable contract relationship, the benefits of which shall not be diminished or impaired.

In addition to the Pension Protection Clause, the plaintiffs invoked the Impairment of Contracts clause and separation of powers (a void delegation of legislative authority), as well as suing for breach of contract.

Tomorrow the defendants are likely to argue that a "pension" is commonly understood as an annuity – a fixed sum paid from protected funds which is set at the time of retirement based on factors like the retiree’s final pay and years of service. The defendants will likely argue that if that much is true, the Supreme Court should follow the lower courts by holding that the health insurance premiums – which by definition change every year as costs and medical technology change – can’t be "pensions."  The plaintiffs, on the other hand, are likely to argue that the entire package of benefits guaranteed to retirees are a form of earned compensation, and accordingly, the medical benefits are, broadly speaking, a "pension." The plaintiffs will likely argue, contrary to the holding of the Circuit Court (the appeal in Kanerva went straight from the Circuit Court to the Supreme Court because of the great importance of the issues presented), that the courts have jurisdiction over the contracts claim as a violation of the state’s collective bargaining problems.

We expect an opinion in Kanerva within the next two to four months.

I’ll have more to say about Kanerva tomorrow afternoon once I’ve returned from the argument at the Bilandic Building in Chicago. I look forward to meeting readers of Appellate Strategist who attend the Court’s final session of its first Chicago term.

Illinois Supreme Court to Debate Dramshop Act Recovery Cap

By Kirk Jenkins on Posted in Illinois

Tomorrow morning, the Illinois Supreme Court will hear oral arguments in Rogers v. Imeri. Rogers poses the question when the Dramshop Act recovery cap applies and other defendants have settled, how is the maximum exposure of the Illinois Insurance Guaranty Fund calculated? Our detailed summary of the facts and lower court opinions in Rogers is here.

Rogers arose from the tragic death of the plaintiffs’ son in a drunk driving accident.   The plaintiffs settled with the driver of the vehicle as well as receiving a settlement under their own policy. The plaintiffs sued the establishment which allegedly served the driver, but the defendant’s dramshop liability insurance carrier became insolvent while the lawsuit was pending. So the Illinois Insurance Guaranty Fund stepped in.

And that’s where the dispute started. The Fund filed a motion seeking summary adjudication of the maximum exposure of the Fund. But how was the deduction calculated – subtract the settlements from the Dramshop Act cap? Or let the jury return a verdict against the defendant — which was highly likely to be well in excess of the $130,000 statutory cap — deduct the settlements from that much higher figure, and then reduce the recovery to the statutory cap? If the court picked the first alternative, the maximum exposure was likely to be relatively small, given that the recoveries to date had been $106,550 (making the Fund’s maximum exposure about $24,000). But if the court picked the second alternative, the recovery would likely be the statutory cap, or something very close to it.

The result would have been relatively straightforward is the Guaranty Fund hadn’t been involved; the routine calculation would be the second alternative – let the jury award what it wants, deduct the settlements and then cap the recovery. But the defendant in Rogers argued that a different result was required because the Fund was involved. The Circuit Court disagreed, and the Appellate Court affirmed.

Before the Supreme Court, the defendant is likely to argue that the Fund occupies a special position in Illinois law. It is not merely another insurer, but rather a recovery of last resort; such a rule is necessary, the defendant will likely argue, to protect the viability of the Fund. A claimant is required to exhaust "all coverage" before turning to the Fund for recovery, and unlike private insurers, the Fund’s obligation must be reduced by the full policy limits, regardless of whether the plaintiff settles for less or does not pursue a claim.

On the other hand, the plaintiffs are likely to argue the policy implications of the defendant’s preferred result. If the statutory cap is applied before any deductions for settlements, it is entirely possible that the establishment will be liable for little or nothing; the plaintiffs are likely to argue that this result is directly contrary to the Dramshop Act.

We expect a decision in Rogers within the next two to four months.

Illinois Supreme Court to Debate Strict vs. Substantial Compliance With Withholding Orders

By Kirk Jenkins on Posted in Illinois

Tomorrow morning, the Illinois Supreme Court will hear oral arguments in Schultz v. Performance Lighting, Inc., which poses an important question for domestic relations law: must a Withholding Notice under the Income Withholding for Support Act strictly comply with the requirements of the statute in order to be valid, or is substantial compliance enough? Our detailed summary of the facts and lower court opinions in Schultz is here.

The plaintiff in Schultz was awarded $600 every two weeks in child support upon her divorce. She served a notice to withhold income for support on the defendant, her ex-husband’s employer at the time. The defendant made no payments to the State Disbursement Unit on the ex-husband’s account. Ultimately, the plaintiff sued the defendant, alleging that the defendant had breached a statutory duty to pay, triggering a statutory $100 per day penalty. The Circuit Court found that the plaintiff’s notice didn’t include either the ex-husband’s social security number or the termination date of the obligation. The Court held that strict compliance with the statute was required and dismissed the complaint. The Appellate Court affirmed.

The argument in Schultz is likely to turn on conflicting interpretations of Section 20(c) of the Act. According to the Act, the notice “shall . . . include the Social Security number of the obligor,” it shall “include the date that withholding for current support terminates, which shall be the date of termination of the current support obligation set forth in the order for support,” and it shall “contain the signature of the obligor or the printed name and telephone number of the authorized representative of the public office.” 750 ILCS 28/20(c).

“Shall” is typically interpreted as being mandatory, but that doesn’t answer our question; there are cases holding that “shall” doesn’t necessarily require strict compliance. As the Appellate Court noted, there is a line of authority holding that where “shall” is coupled with a penalty or consequence of some kind, substantial compliance is required. The Appellate Court relied on the fact that non-compliance with a withholding notice triggers a per-day fine for the employer, but the plaintiff will likely point out that this doesn’t really help the analysis. A consequence for the receiver of the notice (i.e., “do this or the target gets penalized”) doesn’t support the same inference that a consequence for the maker of the notice (i.e., “do this or you get penalized”) does.

The defendant is likely to argue the same negative inference relied on by the Appellate Court: because the legislature found it appropriate to provide in the statute that omitting the signature of the obligor or the printed name and telephone number of the authorized representative of the public office doesn’t affect the validity of the notice, it follows that omitting other required data does affect the validity of the notice. The plaintiff is likely to respond by arguing that all the necessary information was either expressly included, could have been easily inferred, or could have been determined by contacting her attorney, whose contact information was included on the notice. It will be interesting to see what the Court ultimately does with Schultz; on the one hand, the Kilbride Court has shown a pragmatic streak in a number of cases, finding for substance over form, but on the other hand, in their most recent strict-vs.-substantial-compliance case, State Bank of Cherry v. CGB Enterprises, Inc., strict compliance won.

We expect Schultz to be decided in the next two to four months.

Illinois Supreme Court to Debate Limits on Workers’ Comp “Traveling Employee” Exception

By Kirk Jenkins on Posted in Illinois

The Illinois Supreme Court’s first term in Chicago ends tomorrow morning with a busy docket of five civil arguments: Venture-Newberg Perini Stone and Webster v. Illinois Workers’ Compensation Commission; Schultz v. Performance Lighting, Inc.; Kanerva v. Weems; Rogers v. Imeri and American Access Casualty Co. v. Reyes. In Venture-Newberg, the Court will resolve a potentially important question for workers’ compensation law: is a short-term worker hired from a far-away union hall and staying in nearby temporary housing analogous for purposes of workers’ compensation to an employee traveling on the employer’s business? Our detailed summary of the facts and lower court opinions in Venture-Newberg is here.

A contractor was hired to perform maintenance and repair work at a nuclear plant more than 200 miles from Springfield. Because the nearby union local couldn’t fill all the jobs, openings were posted elsewhere, including at a Springfield hall. The claimant was hired, but he decided it was impractical to compute 200 miles back and forth each morning and night for the few weeks the job would last. So he found lodging about thirty miles from Cordova. He was injured early on the second day of the job while traveling from his lodging to the plant.

As a general rule, commuting injuries aren’t compensable under the Workers’ Compensation Act. The arbitrator originally decided that this case fell squarely under that rule and recommended that the claim be denied.

But the Commission reversed. Two exceptions to the general rule applied, according to the Commission. First, the Commission found that the claimant hadn’t been living where he was by his own choice; his “course or method of travel” was determined by the exigencies of the job. Second, the employee was a “traveling employee” – essentially, he was engaged in business travel. The Sangamon County Circuit Court reversed the Commission, setting aside the decision awarding benefits. The majority of the Appellate Court reversed the Circuit Court, once again reinstating the award over a dissent by Justice Hudson, with Justice Turner joining.

The employer may focus during the argument tomorrow on the testimony of the claimant and a fellow employee during the hearing. The claimant acknowledged that the employer hadn’t told him to find lodging nearby, or where to live, or what route to take into the plant, and he hadn’t been called in early on the day of the accident. A fellow employee conceded that the employer had never requested that employees find lodging nearby, but pointed out that working a 12-hour shift and then driving a 200-mile one-way commute wasn’t too practical, even for a job that would only last a few weeks. The employer may also echo Justice Hudson’s dissent, arguing that treating workers in the claimant’s position in the same way as workers traveling on business might create considerable exposure and uncertainty – would every employee hired from far away at a big job like the nuclear plant be a “traveling employee” for his or her daily commute? And if so, how far away was far enough? The Commission, on the other hand, is likely to argue the facts as well, echoing the Appellate Court’s conclusion that the employer had to not only know that short-term workers from far-off union halls would be staying somewhere nearby, but to desire that outcome.

We expect a decision in Venture-Newberg within two to four months.

Illinois Supreme Court to Debate Appeals from a Pollution Control Facility Certification Order

By Kirk Jenkins on Posted in Illinois

Tomorrow morning in Chicago, the Illinois Supreme Court will hear oral argument in The Board of Education of Roxana Community Unit School District No. 1 v. The Pollution Control Board, which presents an important question of Illinois environmental law – who can appeal from a pollution control facility certification, and where is the appeal taken? Our detailed explanation of the underlying facts and lower court rulings in Roxana is here.

The respondent in Roxana submitted twenty-eight applications for certification of certain systems, methods, devices and facilities as pollution control facilities within the meaning of the Property Tax Code. The petitioner filed petitions for leave to intervene in all twenty-eight proceedings. The stakes for the petitioner were high – if certification were granted, the Illinois Department of Revenue would supplant the District as the taxing authority. The Illinois Pollution Control Board denied intervention and granted certification. The petitioner/intervenor appealed, but the Appellate Court dismissed the appeal for lack of jurisdiction.

The oral argument in Roxana is likely to turn on a conflict between two statutes. The petitioner is likely to emphasize Section 41(a) of the Environmental Protection Act:

Any party to a Board hearing, any person who filed a complaint on which a hearing was denied, any person who has been denied a variance or permit under this Act, any party adversely affected by a final order or determination of the Board, and any person who participated in the public comment process . . . may obtain judicial review, by filing a petition for review within 35 days . . . under the provisions of the Administrative Review Law . . . 415 ILCS 5/41(a).

On the other hand, the respondent is likely to emphasize Section 11-60 of the Property Tax Code:

Any applicant or holder aggrieved by the issuance, refusal to issue, denial, revocation, modification or restriction of a pollution control certificate or a low sulfur dioxide emission coal fueled device certificate may appeal the finding and order of the Pollution Control Board, under the Administrative Review Law . . . 35 ILCS 200/11-60.

The respondent will likely echo the views of the Appellate Court, arguing that Section 41(a) is limited to appeals originating in the Circuit Courts under the Administrative Review Law, not appeals originating in the Appellate Court, and that allowing a direct appeal to the Appellate Court by an intervenor would render Section 11-60 meaningless. On the other hand, the petitioner will likely argue that Section 11-60, as the narrower statute, should operate as an exception to Section 41(a), with applicants and holders being required to seek judicial review in the Circuit Courts under Section 11-60, while all others are permitted to go straight to the Appellate Court under Section 41(a). The petitioner is likely to cite the concerns of the dissenter at the Appellate Court, who argued that the statutes should not be interpreted to deny any form of review to a local governmental entity which would lose a substantial portion of its tax base through certification.

We expect Roxana to be decided in the next two to three months.

Illinois Supreme Court to Debate Controversial Condominium Decision

By Kirk Jenkins on Posted in Illinois

Tomorrow morning in Chicago, the Illinois Supreme Court will hear oral argument in a high-profile appeal from the Second District, Spanish Court Two Condominium Association v. Carlson. Our detailed summary of the underlying facts and lower court holdings in Spanish Court is here.

Spanish Court arises from a special statutory proceeding – the Forcible Entry and Detainer Act.  The plaintiff Association sued the defendant condominium owner in early 2010 under the Act, arguing that she had stopped paying both monthly and special assessments. The Association sought possession of the defendant’s unit and a monetary award. The defendant filed affirmative defenses and a counterclaim. She admitted not having paid the assessments, but denied that they were owed. Instead, she alleged that her unit had sustained water damage as a result of the Association’s breach of their duty to maintain and repair common areas of the development – specifically, the roof and certain brickwork above her unit. The defenses and counterclaim alleged first, that the Association was estopped from seeking the assessments by its breach of the duty to maintain and repair, and second, that any judgment against the defendant should be reduced by the cost of repairing the damage to the unit.

The Circuit Court granted the plaintiff’s motion to strike the defenses and counterclaim, but the Appellate Court reversed in part. Analogizing the duty to pay assessments to Illinois law on the duty to pay rent (which also falls under the Forcible Entry and Detainer Act), the Court held that the duty to pay was not absolute. Rather, it was given in exchange for the duty to maintain and repair. If the Association breaches the duty to maintain and repair, the Court held, then the resident is permitted to suspend performance with respect to paying assessments. The Court cautioned that relatively minor problems, such as “overgrown bushes and unrepaired sidewalk cracks” would “rarely” constitute material breaches, but found that the alleged failures here were arguably material.

Before the Supreme Court, the Association seems likely to argue that since assessments are the only means available to a board to carry out its duty to maintain and repair, allowing each individual resident to suspend payments will have the perverse result of making it less likely that common areas will be kept in good repair. The Association may also argue, as it did on rehearing, that allowing such a remedy invites chaos by making each individual resident his or her own judge of the adequacy of the repair of the common areas. The Association is likely to suggest a “parade of horribles,” with residents unhappy over assessments suspending payments, and boards having to spend time and legal fees in order to get possession of units and payment of past-due assessments. The Association is also likely to emphasize the special character of the Forcible Entry and Detainer Act proceeding, which is supposed to provide a quick and relatively inexpensive way to settle the question of possession. The defendant is likely to argue that the Appellate Court correctly drew an analogy to landlord-tenant law and contend that there is no basis for treating the two areas differently. The defendant may also argue the now-or-never aspect of the problem by suggesting that if the resident is not permitted to raise these types of issues before losing possession of the unit, it will be too late.

Spanish Court has attracted considerable attention nationwide, according to the Chicago Tribune, so the Court’s ultimate decision will be closely watched. We expect a decision in two to four months.

Illinois Supreme Court to Debate Constitutionality of Labor Department Fines

By Kirk Jenkins on Posted in Illinois

Tomorrow morning in Chicago, the Illinois Supreme Court will hear oral argument in Bartlow v. Costigan. Bartlow isa facial constitutional challenge to the system of administrative fines administered by the Illinois Department of Labor in connection with allegedly misclassifying workers as independent contractors rather than employees for purposes of minimum wage, overtime, workers’ compensation and unemployment insurance. Our detailed summary of the facts and underlying court decisions in Bartlow is here.

The plaintiffs in Bartlow operate a roofing business which installs siding, windows, seamless gutters and roofs. In September 2008, the Labor Department sent the plaintiffs a “notice of investigation and request for documents,” stating that the department was investigating whether several individuals working with the plaintiffs had been misclassified. Eighteen months later, the Department sent the plaintiffs a “Notice of Preliminary Investigative Findings,” stating that a preliminary determination had been made that the plaintiffs had misclassified ten subcontractors. The notice said that the plaintiffs might be assessed a fine of $1.68 million, requested a response, and promised “a written decision informing the parties of the final determination in the matter.” When the plaintiffs were notified of a second investigation less than a month later, they sued the Department, seeking a declaratory judgment and injunctive relief, arguing that the Employee Classification Act and assorted regulations promulgated under it violated a variety of state and Federal constitutional provisions – largely on the grounds that it deprived persons of property without an opportunity for hearing. The plaintiffs lost at the trial court, and the Fifth District – with some apparent reluctance – affirmed.

The Appellate Court concluded that the Department functions solely as an investigator in connection with the Act, and accepted the Department’s view that a contractor could disregard a notice of a fine without suffering any consequences. The plaintiffs are likely to challenge that conclusion tomorrow by emphasizing the breadth and gravity of the steps available to the Department: a cease and desist order, orders to pay lost wages, salary and/or benefits, possible debarment from state contracts, and an administrative fine – here, for a considerable sum. The plaintiffs will likely argue that a party suffers a tangible deprivation when it receives a notice of such a fine from the Department, whether or not consequences can immediately flow from failing to pay. The plaintiffs also seem likely to point out the wide sweep of businesses which come under the classification of “construction” under the Act, and to emphasize the uncertainty that can be created by a Department finding.

The Department, on the other hand, is likely to argue that points which succeeded at the Appellate Court. The Department will heavily emphasize that the plaintiffs are making a facial constitutional challenge, the most difficult challenge to win: if there are any circumstances in which the statute is constitutional, the Department must prevail. The Department is also likely to point out that its finding of a violation is not considered a “final administrative determination” within the meaning of the Administrative Review Law; any finding of the Department has to be enforced through a complaint in court, where the Department has the burden of proof and its administrative findings are inadmissible. The Department will likely also point out the opportunities a contractor is given to respond in the course of an investigation, including a chance to present written information and (at the option of the Department), a fact-finding conference which the contractor’s lawyer is permitted to attend.

Bartlow should be decided within the next two to four months.

It’s Official: Justice Rita B. Garman is Next Chief Justice

By Kirk Jenkins on Posted in Illinois

As expected, the Illinois Supreme Court has just announced that Justice Rita B. Garman will become Chief Justice on October 26, 2013. The incoming Chief Justice’s term will run until October 25, 2016. Justice Garman was appointed to the Supreme Court on February 1, 2001, and elected to the Court on November 5, 2002. Her official Court biography is here.

For those unfamiliar with Illinois practice, in contrast to (for example) the United States Supreme Court, our constitution provides that the Justices themselves elect one of their number to serve a single three-year term as Chief. Thus, although his tenure as Chief Justice will soon conclude, Chief Justice Thomas L. Kilbride will continue his service on the Court. Chief Justice Kilbride’s official Court biography is here.

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