Tuesday, February 5, 2013

A Trifecta of Political Opportunists

“…The [Civic Committee of the Commercial] Club [of Chicago; Sidley Austin LLP; and Madigan, Nekritz, and Biss...] claim that the legislature could, without violating the Pension Clause, unilaterally ‘freeze’ the pension benefits that current public employees ‘earned’ through past service, and reduce the benefits those employees would ‘earn’ going forward through future service. (338)…; [that] ‘compelling arguments allow the General Assembly to unilaterally cut the pension benefits that current employees will earn in the future without violating the Pension Clause. (350) Those arguments, Sidley [et al.] contended, derived not only from its reading of the Clause and Convention debates, but also from Illinois court decisions, particularly the Supreme Court’s Peters [v. City of Springfield, 1974] decision and a 1979 Illinois Attorney General opinion. (351)

“Sidley also argued that even if the Clause prohibited such unilateral action, the legislature could nonetheless modify pension formulas going forward for existing employees in exchange for letting them keep their jobs or current salaries and in order to preserve the pension system. (352) Sidley further argued in a separate statement that if a State pension fund went bankrupt, then pension recipients would have no legal recourse against the State for continued benefit payments. (353)… [Former Illinois Appellate Court] Justice [Gino] DiVito found Sidley’s argument to be ‘deeply flawed’ and without ‘legal merit.’ (355)…

“Sidley’s View Is Not Supported by the Clause’s Plain Language…[T]here is nothing in the text to suggest that a member only has a legal interest in rights that he or she purportedly ‘earns’ on a per day basis. Also, the Clause prohibits unilateral action by the legislature to diminish or impair the ‘benefits of’ membership in a pension system. The term ‘benefits,’ per its common meaning, denotes not only the specific annuity payments a public employee is eligible to receive, but also other entitlements of membership that advantage the employee.

The plain language also indicates that an employee’s pension payments and other membership entitlements are ‘contractual’ rights that may be altered through mutual assent via contract principles. Finally, the Clause’s prohibition against diminishment and impairment is cast in absolute terms. As a consequence, the Clause on its face does not support the claim that the legislature could utilize the pension system’s present unfunded liabilities as a reason to cut the benefits of current employees participating in the system…

“Sidley’s interpretation cannot be squared with the Clause’s plain language and common meaning. Sidley’s interpretation is without support for several reasons. First, the Pension Clause nowhere addresses, as Sidley claims, who may be excluded from pension system membership. Sidley’s suggestion that the provision only gives a public employee ‘a contractual right not to be excluded’ is classic misdirection and a non sequitur.

“Second, while the Pension Clause itself does not detail specific pension rights, the plain language, as noted above, states that a public employee’s membership in a pension system is an ‘enforceable contractual relationship.’ Unless the terms of membership specify otherwise, common sense and logic dictate that a public employee has a legal interest in his or her membership rights—including any membership terms governing how benefits are calculated—upon joining a pension system. The Clause itself does not countenance a contrary result.

“Finally, the inclusion of the phrase ‘benefits of which shall not be diminished or impaired’ manifests, contrary to Sidley’s protests, clear evidence of the framers’ intent to limit the General Assembly’s power to modify pension benefit rights even in the face of a fiscal crisis. This conclusion is supported by the common dictionary definitions of the terms ‘benefits,’ ‘diminish,’ and ‘impair.’ (364) After all, the Clause’s prohibitory language contains no exceptions and is fashioned in absolute terms. Illinois courts have long-construed similar constitutional provisions as disallowing exigent circumstances to dictate the interpretation of the provision unless the provision itself permits a departure from its terms. (365)

“In sum, the Pension Clause’s plain language reveals that an employee’s contractual rights exist and are legally secured at the time of membership, and those rights cannot be unilaterally reduced or voided thereafter. Nowhere does the Pension Clause limit protection, as Sidley claims, to only ‘benefits that were previously earned.’ To reach Sidley’s conclusion, the provision would need to add the word ‘earned’ or ‘accrued’ before the word ‘benefits’ as is the case with the Hawaii and Michigan Constitutions. (366)

“Distilled to its essence, Sidley’s construction ignores the Pension Clause’s plain language, defies common sense and logic, and adds limitations where none exist. (367)  Illinois courts have long explained that the judicial branch may not add limitations or exceptions where none exist. (368)

“As a result, there is no strength to Sidley’s argument that ‘the Pension Clause protects only those benefits that an employee has already earned.’ Because Sidley cannot point to anything either in the text or the common meaning of the terms used in the Clause to support its position, Sidley has failed to meet its burden that the Clause should be read in a way contrary to its natural meaning. (369)…

“Sidley Mischaracterizes the Clause’s Convention Debates… Sidley attempts to [also] marginalize the drafters’ intent by inventing a new rule of constitutional interpretation that has no basis in Illinois law: the Pension Clause cannot be read to support the position presented in this Article ‘unless the discussion during the debates established, with unmistakable clarity, that this was the understanding of the meaning of the Clause that was widely shared by all the delegates who voted for the Clause.’ (377)

“Contrary to Sidley’s understanding, the Convention debates confirm that the drafters intended to protect those pension benefit rights contained in the Pension Code when an employee joined a pension system, and any later benefit increasesIllinois Court Decisions Categorically Reject Sidley’s Interpretation of the Pension Clause…

[T]he Illinois Supreme Court instructed, that ‘general language in a [judicial] opinion must not be ripped from its context to make a rule far broader than the factual circumstances which called forth the language.’ (427)… In 1982, the Appellate Court in Kuhlmann v. Board of Trustees of the Police Fund of Maywood, (441) again relied on Kraus [v. Board of Trustees of the Police Pension Fund of the Village of Niles, 1979] as well as Ziebell [v. Board of Trustees of the Police Pension Fund of the Village of Forest Park, 1979] to fashion the following rule regarding the Clause’s scope: [A]ny alteration of the pension system amounts to a modification of the existing contract between the State (or one of its agencies) and all members of the pension system, whether employees or retirees. A member is contractually protected against a reduction in benefits. By the same token, a member cannot take advantage of a beneficial pension change without providing consideration [something of value given in return] for the contractual modification. This consideration most often takes the form of new or continued contributions to the pension system. (442)…”

AN ANALYSISOF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION by Eric M. Madiar, Chief Legal Counsel to Illinois Senate President John J. Cullerton and Parliamentarian of the Illinois Senate, (pages 42-54).

338 Pension Task Force Report, supra note 6, at 71-72.
350 Sidley Memo, supra note 346, at 1 (“[T]he Pension Clause of the Illinois Constitution (Ill. Const., art. XII, § 5) prohibits State and local governments from reducing pension benefits that employees earned in prior years, but that there are compelling arguments that State and local governments may enact legislation that will prospectively reduce the pension benefits that current employees will earn as a result of future work performed after the prospective legislation takes effect.”) (Emphasis in original).
351 See Sidley Memo, supra note 346, at 8-15 (discussing Convention debates); Id. at 15-18 (discussing Peters and the Attorney General’s 1979 other court decisions); Id. at 17 (discussing the 1979 Illinois Attorney General opinion).
352 Id. at 2, 23-27.
353 Sidley Austin LLP, State Is Not a Guarantor of State Pension Fund Obligations to Pension Plan Members, available at http://www.illinoisisbroke.com/files/SidleyGuarantor.pdf (last visited Feb. 11, 2011). See also Memorandum from Sidley Austin LLP on The State of Illinois, and the City of Chicago and Smaller Municipalities, Are Not Guarantors of the Payment of Pension Benefits (Dec. 7, 2010) (on file with author).
355 DiVito April Memo, supra note 353, at 3.
364 See supra notes 20-22 and accompanying text. In discerning the plain meaning of a statutory or constitutional provision, Illinois generally look to dictionary definitions of undefined terms. In re Detention of Bailey, 317 Ill. App. 3d 1072, 1085 (1st Dist. 2000).
365 See supra note 23.
366 See supra notes 71, 75-78 and accompanying text.
367 Accord DiVito May Memo, supra note 354, at 6.
368 See Toys “R” Us v. Adelman, 215 Ill. App. 3d 561, 568, 574 N.E.2d 1328 (3rd Dist. 1991) (a court must construe a statute as it is, and may not supply omissions, remedy defects, or add exceptions and limitations to the statute’s applications, regardless of its opinion regarding the desirability of the results of the statute’s operation).
369 Coalition for Political Honesty v. State Bd. of Elec., 65 Ill. 2d 453, 464, 359 N.E.2d 138, 143 (1977) (“One contending that language should not be given its natural meaning understandably has the burden of showing why it should not. * * * This is a difficult burden for one who says that language should not be given its common meaning, but it is proper it should be difficult. Individuals and bodies, as a convention or a legislature, can hardly be said to intent that language they use is to be given an opposite meaning.”).
377 Sidley Memo, supra note 345 at 8.
427 Rosewood Care Center v. Caterpillar, 226 Ill. 2d 559, 572, 877 N.E.2d 1091, 1098 (2007) (“Lesson Number One in the study of law is that general language in an opinion must not be ripped from its context to make a rule far broader than the factual circumstances which called forth the language.”).
441 Kuhlmann v. Bd. of Trustees of the Police Fund of Maywood, 106 Ill. App. 3d 603, 607-608, 435 N.E.2d 1307, 1310-11 (1st Dist. 1982).
442 Id. at 608, 435 N.E.2d at 1311.  15/1.1 (2008); 40 ILCS 15/1.2 (2008). 

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