The Appellate Strategist

Insights on appellate issues, trial consultations, and evaluating appeals

Illinois Not Liable for Elected Officials’ Attorney Fees for Intentional, Willful or Wanton Misconduct

By Kirk Jenkins on Posted in Illinois

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

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

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

Here’s the operative language from the statute:

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

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

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

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

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

Argument Report: Early Retirement Incentives for Municipal Pensions

By Kirk Jenkins on Posted in Illinois

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

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

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

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

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

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

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

Prazen will likely be decided in the fall.

Illinois Supreme Court to Decide Interplay Between Dram Shop Act and Insurance Guaranty Fund Act

By Kirk Jenkins on Posted in Illinois

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

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

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

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

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

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

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

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

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

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

Liquidated Damages For Junk Faxes Are Insurable in Illinois

By Kirk Jenkins on Posted in Illinois

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

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

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

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

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

Argument Report: Illinois Supreme Court Debates Facial Challenge to Illinois’ Click-Through Act

By Kirk Jenkins on Posted in Illinois

On the final argument day of the May term, the Illinois Supreme Court appeared troubled by the limitations of the record in Performance Marketing Association, Inc. v. Hamer. PMA involves the question of whether Illinois’ "Click-Through" Tax Act — which imposes a duty to collect sales taxes under certain circumstances on out-of-state retailers — facially violates either the Commerce Clause or the Supremacy Clause of the U.S. Constitution. Our detailed preview of the facts and lower court holding in PMA is here. The video and audio of the argument is available here.

PMA arises from an amendment to the Illinois Use Tax Act in which the Illinois Legislature attempted to capture the millions in sales taxes it purportedly loses due to internet purchases by Illinois residents from out-of-state retailers.  Here’s how it works: everyone has seen third-party advertisements on high-traffic websites, inviting visitors to click on the ad to get more information about a product or special deal. Typically, the third-party advertiser pays the owner of the website based on the number of people who “click through” and buy something. And that’s the nexus that the “Click-Through” Act is based on – any website that has one or more contracts with such advertisers who are “located in Illinois” is defined as a “retailer maintaining a place a business in this State.” And that means that as long as the website realizes $10,000 a year in gross receipts from “click-through” commissions, the site has to charge users for state sales taxes. The Cook County Circuit Court struck down the Click-Through Act on two grounds, finding that it violated the commerce clause for lack of a specific nexus to Illinois, as well as being preempted by the Internet Tax Freedom Act. The Circuit Court’s summary judgment order went directly to the Supreme Court for review.

Counsel for the state began by arguing that the statute is facially constitutional. Justice Thomas asked whether, if the Court found that the Act was preempted, it would still have to reach the commerce clause holding. Counsel responded that since preemption is a constitutional holding, the doctrine of constitutional avoidance wouldn’t come into play. Justice Thomas pointed out that a bill is currently pending in Congress which is directly relevant to the issues. Counsel responded that while the pending statute might moot some of the case, it might not moot all issues. "Substantial nexus" — the constitutional standard — wasn’t a tough standard to meet, counsel argued. The presence of in-state representatives soliciting sales on a merchant’s behalf has been enough to trigger tax liability for at least half a century. Justice Theis pointed out that the statute uses the word "referral," and surely that’s what the Court should be looking at and interpreting. Counsel agreed, saying that the statute anticipates the presence of an instate agent who is actively trying to maximize sales. Justice Theis asked counsel to describe the relationship between the out-of-state retailer, the referring site and the customer. Counsel responded that an in-state website solicits sales for an out-of-state retailer, offering coupons or discounts to customers. Justice Theis asked where the coupons come from, and counsel responded that the relationship essentially amounts to the in-state referring site offering to share its commission on the sale with the in-state customer. Justice Theis asked what the stipulated facts suggested that these referring websites do: how does the Court know what the universe of websites involved are. Counsel responded that this illustrates the problem with a facial challenge; there are many types of relationships, and all must be non-taxable for a facial challenge to succeed. Justice Burke asked whether, if a customer goes to a typical in-state site, the site buys the product from the retailer on her behalf, or the customer buys it herself? Counsel responded that the customer goes directly to the out-of-state retailer’s site; if the retailer has an Illinois presence, it pays use tax, if it doesn’t, it doesn’t. Justice Theis again asked counsel to explain what the in-state referrers do so that the Court could determine whether it constitutes a nexus. Counsel pointed the Court to a newspaper article in the stipulated facts, which explains that most Illinois-based referral agents make money from commissions and advertising. Justice Thomas asked whether a finding that the Act is constitutional would eliminate the need for the use tax line on the Illinois income tax form. Counsel responded that it wouldn’t necessarily. Turning to the Internet Tax Freedom Act, Justice Thomas suggested that Congress intended to put a moratorium on state use taxes on internet purchases while it sorted out the situation. Counsel disagreed, arguing that if Congress had wanted to bar such taxes, it would have simply done so. In fact, Congress merely barred taxes which discriminate against internet purchases as compared to brick-and-mortar-merchant purchases. Justice Freeman asked counsel whether a mere link on a website constituted solicitation, if the in-state referrer takes no further action seeking to stimulate sales. Counsel responded that perhaps not; the statute assumes more than that. Chief Justice Kilbride asked what the factual activity was that created a substantial taxable nexus with Illinois. Counsel responded that it was the contract with the in-state referrer, and the passing of a customer through the link to the out-of-state retailer’s site.

Counsel for PMA began by arguing that the Court should find preemption and avoid the Commerce Clause issue entirely in order to wait for Congress to provide a uniform nationwide standard. Justice Burke asked whether it was necessary for the Circuit Court to resolve the Commerce Clause issue after finding preemption. Agreeing with counsel for the state, counsel responded that both were constitutional issues, so the doctrine of constitutional avoidance wouldn’t counsel avoiding one or the other. Counsel then explained that under the statute, only four criteria are necessary to make a taxable event: a referral contract, a web link, commissions, and receipts of $10,000 per year by the in-state entity. Whether or not some referring sites do more, the only question before the Court was whether this is enough. No court has so found, according to counsel. Justice Theis asked whether the case merely posed the narrow statutory interpretation question of what is meant by a referral. Counsel responded that the parties did not disagree about what a referral is. Justice Theis suggested an example: a customer sees a picture, clicks on it, and is taken to an out-of-state website to make a purchase. Was that all that was needed, meaning that coupons, promotional codes, sharing commissions and benefits for the consumer were irrelevant? Counsel responded that if an in-state referrer met the four criteria of the statute, nothing more was required. Some companies may do more, but such activities are irrelevant under the statute: only the four criteria matter. Justice Theis pointed out that a "referral" under the statute could mean many things under the statute for purposes of a facial challenge. Counsel responded that a "referral" was merely a click on a link – nothing else mattered. Continuing, counsel pointed out that the Internet Tax Freedom Act provides that internet transactions can’t be treated differently than physical transactions. Justice Thomas pointed out that the state was arguing that there was no discrimination against electronic transactions here. Counsel responded that he didn’t know what facts such a conclusion could be based on. Counsel concluded his argument by explaining that PMA represents intermediaries in the click-through relationship: the in-state referral agent. Its members will not be taxed if the statute is upheld; they are merely the innocent victims, thousands of which have had their referral contracts cancelled by out-of-state retailers. The issue would be better left to Congress to resolve, according to counsel.

In rebuttal, Justice Thomas asked counsel for the state how the statute qualified as non-discriminatory. Counsel argued that print-based performance marketing might create a taxable event too. If there are entities which the statute could constitutionally apply to, counsel concluded, then a facial challenge must fail. Since the referral relationships effectively created an in-state sales force for out-of-state retailers, that should be enough to trigger taxation.

Lifetime Lump Sum Workers’ Comp Settlement Fully Allocable for Child Support

By Kirk Jenkins on Posted in Illinois

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

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

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

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

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

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

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

Argument Report: Illinois Supreme Court Debates School Security Officers’ Right to Strike

By Kirk Jenkins on Posted in Illinois

On the final argument day of the May term, the Illinois Supreme heard The Board of Education of Peoria School District No. 150 v. The Peoria Federation of Support Staff, Security/Policemen’s Benevolent and Protective Association No. 114. Board of Education involves two questions: the constitutionality of a recent amendment to the Illinois Public Labor Relations Act relating to certain public employees’ right to strike, and the proper state administrative board to take jurisdiction over an unfair labor practice claim. Our detailed preview of the facts and lower court holding in Board of Education is here. The video and audio of the argument is available here.

According to the complaint, the plaintiff is the only school district in Illinois which employs its own security officers. When the latest union contract expired in mid-2010, disputes arose over the timing of the negotiations and over the state law which governed discussions.

The Public Labor Relations Act regulates labor relations between most public-sector employees and their employers. School districts and their employees are (for the most part) governed by the Educational Labor Relations Act. In 2010, the legislature amended the PLRB to bring "a school district in the employment of peace officers in its own police department in existence on the effective date of this amendatory act" back within the coverage of the Act. Because the class opened and closed on a single day, the 2010 amendment allegedly applies to one and only one school district — Peoria. This potentially makes a considerable difference, since security personnel, peace officers and firefighters subject to the PLRA are prohibited from striking. Employees subject to the ELRA are, on the other hand, generally allowed to strike.

The plaintiff school district filed a two-count complaint, seeking declarations that (1) the 2010 amendment to the PLRA was unconstitutional special legislation; and (2) its negotiations with the security officers’ union was governed by the ELRA. The Circuit Court dismissed for failure to state a claim, but the Appellate Court reversed. According to the Appellate Court, the 2010 amendment lacked a rational basis because the class of school districts subject to the amendment opened and closed on a single day. The Court further held that the plaintiff’s second claim was analogous to a challenge to the board’s jurisdiction, and therefore exempt from the requirement to exhaust administrative remedies.

Counsel for the administrative boards led off the argument. Justice Karmeier asked counsel whether the determination of whether the security officers were subject to the PLRA should be made by the Labor Relations Board, making the Appellate Court’s remand to the Circuit Court for that determination improper. Counsel agreed that it should. Justice Karmeier asked whether the Boards’ contention was that the constitutional challenge should be made before the Boards. Counsel responded that if the employees were not covered by the Act, the Appellate Court would not need to address constitutionality. Justice Karmeier asked whether the issue of constitutionality was properly before the Court, and if the 2010 amendment was unconstitutional, was the case concluded. Counsel responded that since there is no determination of what the employees at issue do, the issue of constitutionality might not be necessary for anyone to reach. The issues of what the employees do, what their job is, what their employment circumstances are, and applying those findings to the Act fall squarely within the Boards’ expertise. Justice Karmeier asked counsel whether the Boards were asking that the case be sent back for administrative determination, and once that’s done, the case could go to court for a finding of constitutionality. Counsel answered that the Circuit Court should not be determining whether the security officers were public employees. Justice Thomas pointed out that the School District seemed to be urging the Court to use its supervisory authority to decide the constitutional issue, whereas if the Court send the matter back for fact-finding, it wouldn’t be deciding anything. Counsel agreed that instead of going through an orderly procedure, the case had arrived in an unusual procedural setting. Chief Justice Kilbride pointed out that since the Appellate Court hadn’t actually reached the constitutional question, the issue wasn’t squarely before the Court, and counsel agreed.

Counsel for the union followed, and encouraged the Court to act on the question of constitutionality. Justice Karmeier asked whether the fact that the legislature had made it impossible for any other school district to ever fall within the class created by the amendment created a constitutional concern. Counsel responded that it did not pursuant to Elementary School District No. 159 v. Schiller.

Counsel for the School District argued that the main issue before the Court was whether the 2010 amendment was special legislation. Justice Freeman commented that the question of whether the potentially effected employees were peace officers seemed to be fact based, falling within the expertise of the Labor Relations Board. Counsel responded that there was no genuine dispute as to whether the employees were peace officers. Chief Justice Kilbride asked counsel whether he was arguing that the School District had no authority to hire the officers. Counsel responded that the issue wasn’t authority, but rather that the employees weren’t police officers under the Act, meaning that jurisdiction moved to the Educational Labor Relations Board. Justice Karmeier asked whether counsel was arguing that the School District lacked authority to handle police officers, and therefore the employees couldn’t be police officers by definition, making the issue not a genuine dispute of fact. Counsel agreed that the matter was a legal issue. Justice Theis asked what select group was relevant to the constitutional question. Counsel responded that the relevant group was peace officers employed by a school district on the effective date of the act. Justice Theis asked whether the relevant group was the police officers of the district, and counsel answered that the relevant group was the school district. Justice Theis asked how the legislation favored the school district. Counsel responded that it was because the security officers couldn’t strike. Justice Theis asked how that favored the district. Counsel answered that it favored the district because other districts would have to endure a strike of their security officers, creating an issue of public safety. Justice Theis suggested that there wouldn’t be a problem where the legislature found that arbitration and the right to strike were equivalent, but counsel answered that they weren’t. Justice Theis asked how one got around the problem that the legislature had said they are equivalent; counsel answered that the legislature hadn’t, the Attorney General had found they were. Justice Burke asked whether the union benefited by being subject to the Labor Relations Board rather that the Educational Labor Relations Board, and counsel responded that they did, since arbitration favors a smaller group. Justice Freeman pointed out again that the legislature had found that arbitration was comparable to the right to strike, and wondered how the Court could override that determination. Counsel responded that the legislature had made no such determination, and that the Act was special legislation. Justice Theis suggested that 5 ILCS 315/2 included such a determination. Counsel argued that the legislature had found the determinations alternatives, not equivalent.

Counsel for the Boards began rebuttal arguments. Justice Karmeier pointed out that if the Court either upheld the Act, or refused to address the issue, opposing counsel argued that the question of whether the employees were police officers was one of law. Counsel responded that there was no factual record of what the officers did.

Counsel for the union concluded the argument. Justice Thomas asked whether any case law held that a statute could be unconstitutional special legislation because it conferred a benefit that the plaintiff didn’t want. Counsel responded that there was none, so far as he was aware. Justice Garman asked what the significance was of the legislation closing the class the day it was passed – if the legislature had public interests at heart, what would justify that statute? Counsel responded that there was nothing in the statute indicating that the legislature intended to close the class on that date.

Argument Report: What Happens When The Plaintiff Sues a Defendant Who Has Died?

By Kirk Jenkins on Posted in Illinois

On the first argument day of the May term, the Justices of the Illinois Supreme Court actively questioned both sides in the first civil case on the docket, Relf v. Shateyeva. Relf involves an unusual question: is a complaint against a deceased defendant barred if the plaintiff doesn’t name the defendant’s personal representative? Our detailed preview of the facts and lower court holding in Relf is here. The video and audio of the argument is available here.

The plaintiff sued the defendant for injuries received in an automobile accident. The problem was, the defendant had died long before the complaint was filed (only three months after the accident). Relf involves a conflict between subsections (b) and (c) of 735 ILCS 5/13-209.

Subsection (b) provides that "if a person against whom an action may be brought dies before the expiration of the time limited for the commencement thereof, and the cause of action survives, and is not otherwise barred," the plaintiff may sue the defendant’s personal representative within six months after the decedent’s death, or "if no petition has been filed for letters of office for the deceased’s estate," the court may appoint a special representative following notice to the decedent’s heirs or legatees.

Subsection (c), on the other hand, provides that "if a party commences an action against a deceased person whose death is unknown to the party . . . the action may be commenced against the deceased person’s personal representative" if, among other things, the plaintiff moves with reasonable diligence to substitute and serve the personal representative. If process is served more than 6 months after the issuance of letters of office, "liability of the estate is limited as to recovery to the extent the estate is protected by liability insurance."

When the plaintiff discovered the defendant had passed away, her counsel asked that a special administrator be appointed — who turned out to be a legal assistant in plaintiff’s counsel’s office — and for leave to amend her complaint to name the special administrator as defendant. The defendant responded by moving to dismiss on the grounds that the plaintiff hadn’t named the decedent’s personal representative, making the complaint void; the Circuit Court granted the motion, holding that the complaint was barred by Section 13-209(b). The Appellate Court (First District, Second Division) reversed, holding that since the plaintiff was unaware of the defendant’s death when she filed, the action was governed by Section 13-209(c), not subsection (b).

Counsel for the defendant opened the argument. Justice Freeman asked counsel how subsections (b) and (c) of the statute should be read together. Counsel responded that subsection (b) applied when the defendant’s death was known prior to filing, and (c) applied when the plaintiff was unaware that the defendant had died. Nevertheless, counsel argued, the two subsections should not be read entirely separately. Justice Burke asked counsel what the applicable procedure was to allow a plaintiff to have a personal representative appointed. Counsel responded that the Appellate Court hadn’t addressed that issue. She contrasted the decision with the Third District’s decision in Keller v. Walker. There, the Appellate Court held that the statute should be read as a whole, and subsection (b) was instructive as to how a personal representative should be appointed in connection with subsection (c). Justice Garman asked counsel whether she thought the six month filing deadline in subsection (b) had any import for the case; counsel responded that subsection (b) was relevant only with respect to properly appointing a personal representative. Counsel pointed out that the decedent had had an open and active probate estate at the time the suit was filed, and there was no reason given in the record why the estate had not been located and the administrator appointed to defend the case. Justice Karmeier asked whether there is any import to the difference in language about personal representatives between the two subsections. Counsel responded by pointing out that the statute uses different terms: a "personal representative" is the deceased’s appointed representative, while a "special representative" is someone not associated with the defendant. The distinction in the language is purposeful, defendant argued. Justice Theis asked what the prejudice is from naming a special representative rather than a personal representative, since if the case returned to the trial court, the only asset at risk (because of the passage of time) would be the estate’s insurance policy. Counsel responded that lack of notice of the suit was the prejudice. Justice Theis asked whether the lack of notice was a jurisdictional question. Counsel again argued that the deceased’s heirs have a right to know about the suit, and pointed out that the plaintiff had never asked for leave to name the personal representative who was administering the estate. Justice Karmeier noted that under the circumstances, the case fell under subsection (c). Counsel agreed that plaintiff was not aware that the defendant was deceased when she filed suit, but subsection (b) was nevertheless relevant for identifying who the suit should be filed against. Indeed, the plaintiff seemed to agree, according to the defendant, since the plaintiff’s motion at the trial court for leave to appoint a special administrator stated (incorrectly) that there was no probate estate. Justice Theis asked counsel whether she thought there was something objectionable about the legal assistant to plaintiff’s counsel being named special administrator. Counsel conceded that some cases have allowed the practice, but suggested that there was something inherently wrong about it with an open probate estate.

Justice Karmeier began the argument of counsel for the plaintiff by asking whether there is any difference between a personal representative and a special representative. Counsel responded that Black’s Law Dictionary defines "personal representative" as including a special representative. Justice Karmeier suggested that subsection (c) covered the situation, and if so, the plaintiff would be covered by serving the personal representative of the probate estate. So why appoint a special representative? Counsel responded that plaintiff was unable to locate the estate on the Cook County computer system, so a special administrator was chosen. Justice Karmeier asked counsel whether he was suggesting that a personal representative and a special representative were the same thing; counsel said that Black’s Law Dictionary supported that view. If the legislature had wanted subsections (b) and (c) read together, it would have said so. The statute defines three categories, plaintiff argued: deceased plaintiffs in subsection (a), a defendant who plaintiff knows is dead in subsection (b), and a defendant who plaintiff does not know is dead in (c). Justice Garman asked why, if plaintiff discovers an open estate after appointing a special administrator, he or she shouldn’t be required to serve the personal representative of the estate? Counsel responded that nothing in the statute required it. The defendant could have moved to substitute the personal representative at any time, but chose instead to move to dismiss. Justice Karmeier asked at what point the defendants had the opportunity to substitute given that they didn’t know about the lawsuit until after a special representative was appointed. Counsel responded that plaintiffs served the special administrator, who tendered the complaint to the insurance company, who they appeared in the case. The insurer could have then substituted in the personal representative at any time.  Counsel argued once again that subsections (b) and (c) should be read separately, but Justice Garman pointed out that statutes were traditionally read as a whole to achieve consistency. Counsel responded that subsection (b) involved a class of litigants not present in this case. Justice Theis asked what difference it made whether the assets of the estate were at risk. Counsel responded that when the assets of the estate are at risk, notice becomes important, but the present case was well past that point.  Justice Karmeier asked whether, if the plaintiff had found the personal representative and appointed a special representative anyway, would that matter? Counsel responded that it wouldn’t have made a difference. Justice Karmeier asked whether plaintiff’s view was that she could appoint a special representative and simply bypass the personal representative. Counsel responded that a personal representative included a special representative. Subsection (c) is silent as to whether a party can have a special representative appointed when a personal representative was in place. Justice Karmeier asked how counsel explained away subsection (b)(2), which provides that a special representative may be appointed when no petition for letters of office has been filed. Counsel again argued that subsection (b) (2) applies to a different class of litigants. The legislature was specific in subsection (b) because the estate’s assets were at risk. The legislature was silent, counsel argued, in subsection (c) because the estate was not at risk.

As the rebuttal argument began, Justice Thomas asked counsel to respond to plaintiff’s comment that there would be no action absent the estate’s insurance coverage. Counsel responded that it made no difference: the family and administrator nevertheless had the right to know about the suit. Justice Thomas mentioned the comment of plaintiff’s counsel that defendant had made no attempt to substitute the personal representative; counsel asked why it should be the defendant’s duty to do so. Justice Theis noted defendant’s view that the estate’s heirs have a right to know of the suit; even if that is so, why is the failure to name the personal representative a bar to the suit? Counsel responded that under the statute, when the personal representative is not named, the claim is barred. Justice Thomas asked whether the family might not say they didn’t want to be substituted in as parties. Counsel responded that that was the family’s choice. Justice Thomas pointed out that even if plaintiff had moved to amend, that might not have ended the matter – defendants might have insisted on proceeding with the motion to dismiss. Justice Thomas suggested that the question was ultimately of little consequence whether the Supreme Court agreed with the trial court or the Appellate Court. Counsel once again cited Keller v. Walker, and commented that although the point was a technicality, that wasn’t dispositive. Justice Karmeier asked what happens if the Court agreed with the defendant – is the lawsuit over? Counsel said yes, because the plaintiff never asked to amend. Both the legislature and the Probate Act use "personal representative" and "special representative" in different senses, counsel argued. A mere lack of exposure to the estate’s assets doesn’t mean there is no prejudice to the defendant.

Illinois Supreme Court: A First Look at the Questions Log for 2013

By Kirk Jenkins on Posted in Illinois

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

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

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

Justices

Burke

Garman

Freeman

Kilbride

Thomas

Karmeier

Theis

Appellant

12 (1)

17 (2)

19 (3)

4

35 (4)

12

12 (2)

Appellee

11 (1)

14 (2)

1

7 (1)

17 (4)

2

10 (1)

Rebuttal

0

1 (1)

0

0

10

6 (2)

11 (1)

Total

23 (2)

32 (5)

20 (3)

11 (1)

62 (8)

20 (2)

33 (4)

The California Supreme Court Confirms the Power of Local Governments to Regulate Medical Marijuana

By on Posted in California

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

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

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