The Illinois Supreme Court’s November Term begins today, November 9, 2015, with oral arguments scheduled for Tuesday and Thursday, November 10 and 12, and next Tuesday, November 17. A total of eight cases will be heard – two civil and six criminal. Here are the civil cases with the dates of oral argument:

Jones v. Municipal Employees’ Annuity and Benefit Fund of Chicago, Nos. 119618, 119620, 119638, 119639, 119644 (cons.)—November 17

Stone Street Partners, LLC v. City of Chicago Department of Administrative Hearings, No. 117720—November 17

Below are abbreviated summaries for these two cases. Summaries for all other cases currently pending in the Illinois Supreme Court can be found in our Cases Pending publication, accessible to ALA members on our website.

CONSTITUTIONAL LAW – PENSION REFORM LITIGATION

Nos. 119618, 119620, 119638, 119639, 119644 (cons.)

Jones v. Municipal Employees’ Annuity and Benefit Fund of Chicago

This appeal concerns the constitutionality of Public Act 98-641 (Public Act), which amended the Illinois Pension Code (40 ILCS 5/8-101 et seq.) (Code) as it pertains to the Municipal Employees’ Annuity and Benefit Fund of Chicago (MEABF) and the Laborers' Annuity and Benefit Fund of Chicago (LABF), which are both public employee pension funds.

The pension funds are funded through contributions made by the employer and the employee as specified in the Code. The Code also provided that upon retirement, the pension funds must make certain benefit payments to the employees based on their salary, age at retirement, and years of service. The Code also provided for an automatic 3% increase in benefit payments each year. The Public Act amended the Code by increasing the contributions required of employers and employees, reducing benefit payments, and eliminating the automatic annual increase entirely for certain years.

Plaintiffs are participants in the pension funds. They filed a lawsuit challenging the constitutionality of the Public Act on the ground that it violates the pension protection clause of the Illinois Constitution (Ill. Const. 1970, art. XIII, § 5), which guarantees that public pension benefits shall not be diminished or impaired. Defendants, including the City of Chicago and the pension funds, argued that because the Public Act imposed new payment obligations on the City that eliminated the potential for insolvency and contained enforcement mechanisms, Plaintiffs actually received a net benefit rather than an unconstitutional diminishment of their benefits. Defendants also argued that because the City and the labor unions negotiated these new terms, the Public Act was a bargained-for exchange rather than a unilateral diminishment of benefits.

The circuit court found that the Illinois Supreme Court’s holding in In re Pension Reform Litigation, 2015 IL 118585, controlled the analysis. As in that case, the circuit court found that the changes to the funding and payment calculations contained in the Public Act were an unconstitutional diminishment of public pension benefits. The circuit court rejected Defendants’ argument that the City’s new payment obligations resulted in a net benefit to Plaintiffs because the funding sources are not constitutionally protected, while pension benefits are. The court also concluded that under the circumstances, the unions did not have the authority to bargain away their members’ individual constitutional rights. Because the Public Act expressly provided for nonseverability, the court held the entire Public Act unconstitutional.

Direct Appeal – Supreme Court Rule 302(a): 7/30/15

ADMINISTRATIVE LAW

No. 117720

Stone Street Partners, LLC v. City of Chicago Department of Administrative Hearings

The main issue in this case is whether a corporation is required to be represented by an attorney in administrative hearings.

In 1999, a City building inspector found several building code violations in a building owned by Plaintiff Stone Street Partners, LLC. Rather than mailing a notice of violation and a summons for an administrative hearing to Stone Street’s registered agent or its business address, as required by a City ordinance, the City sent the notice to the property itself. At the hearing, a person named Keith Johnson, a non-attorney, appeared on Stone Street’s behalf. Stone Street claimed that the violations had been cured and submitted a photograph and work order for repairs. The hearing officer found Stone Street liable for various violations and assessed penalties and costs of $1,050. In 2009, the City recorded the court’s judgment with the Cook County Recorder of Deeds. In October 2011, Stone Street moved the Department of Administrative Hearings to vacate the 1999 order, arguing that it never received notice of the 1999 violations. Stone Street also claimed that Johnson was never authorized to represent Stone Street. The Department struck the motion, finding that it lacked jurisdiction to reach the merits because it could only consider vacating default judgments and Johnson’s participation meant that Stone Street had not defaulted, but lost on the merits. Stone Street then filed suit in the circuit court, seeking administrative review of the Department’s 2011 order and a declaratory judgment that the 1999 judgment was invalid. The circuit court dismissed the complaint upon the City’s motion.

The Illinois Appellate Court, First District, affirmed in part, reserved in part and remanded the case for further proceedings. The appellate court found that, ordinarily, vacating judgment after the passage of years was virtually impossible due to the presumptions of validity that apply to the judicial process, but the City had made two critical errors which invalidated the judgment. First, the City served the defendant corporation, not through its registered agent as is required by the City Ordinance, but at its property address. Second, the City’s administrative hearing officer allowed a non-attorney to appear and litigate the case on behalf of the corporation. The appellate court held that the City’s administrative hearings were similar to judicial proceedings as they involved the admission of evidence and the examination and cross-examination of sworn witnesses, and that those actions constituted the practice of law. The appellate court was not persuaded by the City’s argument that these hearings were so inconsequential that corporations need not be represented by licensed attorneys. Representation of corporations at administrative hearings ‑ particularly those which involve testimony from sworn witnesses, interpretation of laws and ordinances, and can result in the imposition of punitive fines ‑ must be made by a licensed attorney at law. The Department correctly determined that it had no jurisdiction to consider Stone Street’s motion to vacate because its jurisdiction was limited to default orders, and the circuit court correctly confirmed that administrative decision on review. The court also held that the complaint and affidavits set forth sufficient facts to support a valid claim based on voidness of the 1999 order, reversed the circuit court’s order dismissing this claim, and remanded the case.

Appellate Court Decision: 2014 IL App (1st) 123654, 12 N.E.3d 691.

PLA Allowed: 09/24/14