Update for Pension Lawsuit September 4th: Possible Resolution by End of Year?

CHICAGO (Reuters) - An Illinois circuit court judge on Thursday indicated that consolidated lawsuits challenging the constitutionality of a new pension reform law could be resolved by the end of the year given a State Supreme Court ruling on pension benefits in July. At a status hearing on Thursday, Sangamon County Circuit Court Judge John Belz gave the state until Oct. 3 to respond to plaintiff motions for summary judgment and two other motions and scheduled a status hearing for Oct. 8, according to a court filing.

The public labor union coalition We Are One Illinois and other parties are seeking an expedited ruling in their consolidated lawsuits arguing that the pension reform law passed in December is unconstitutional. They cited an Illinois Supreme Court decision on July 3 in the case Kanerva v. Weems, in which the court ruled that health care for retired state workers is a pension benefit protected by the state constitution.

The same provision is the focus of the lawsuits filed by We Are One Illinois. The new pension reform law reduces and suspends cost-of-living increases for pensions, raises retirement ages and limits the salaries on which pensions are based. 

"In his comments today, Judge Belz indicated that he had read Kanerva and that he believes that he can get this case resolved this year," said John Shapiro, an attorney for the union coalition. "The coalition plaintiffs and the other plaintiffs are encouraged by those words that a judgment in their favor will be entered before long." Judge Belz on Thursday also struck all other discovery dates in the case from the court calendar. 

The state has contended that its sovereign powers allow it to act in a fiscal emergency. Illinois has a $100 billion unfunded pension liability and the country's worst-funded state retirement system. Illinois's credit ratings are also the lowest among U.S. states. A spokeswoman for Illinois Attorney General Lisa Madigan did not immediately respond to a request for comment.

from Illinois pension reform lawsuit may be resolved this year by Karl Plume

Since Lisa Madigan did not respond, this is from a previous commentary I wrote on June 12, 2014:

Lisa Madigan maintains that “In light of the magnitude of the pension problem and all of the other efforts the State has made to date [which apparently does not include an effort to re-amortize the flawed 1995 “Pension Ramp” to pay the debt service legislators have incurred; reform the state’s defective revenue structure; ensure corporations pay their fair share of taxes; reduce wasteful spending; and eliminate tax giveaways for the wealthy elite, corporate CEOs, and millionaire shareholders of Motorola, Navistar, Mitsubishi, and Sears, to name just a few…, Senate Bill 1] represents a valid exercise of the State’s reserved sovereign powers to modify contractual rights and obligations, including contractual obligations of the State established under Article 1, Section 16 and Article XII [sic], Section 5 of the Illinois Constitution.”

In other words, the State of Illinois is declaring a financial emergency and; thus, the State’s preferred scapegoats—its vulnerable public employees and retirees—must acquiesce to a coerced, diminished and impaired retirement contract to solve the state's fiscal problems. This is assumed to be a “relief afforded by the 'Act' [and] commensurate with the [so-called declared] emergency,” though it is without “a rational compromise between individual rights and public welfare” (Fliter and Hoff).

Illinois legislators are not dealing with a threat to the “public’s safety, health, and morals as well as peace, well-being and order of the state”; nor are they dealing with an economic emergency of such magnitude that they are compelled to invoke powers to protect the state's citizens and, thus, serve a reasonable public purpose or need. 

However, hundreds of thousands of citizens of Illinois are dealing with a calculated legislative thievery and despite Madigan’s possible responses, public employees and retirees are dealing with a violation to the Pension and Contract Clauses, the taking of property without due process of law and a violation of the Fourteenth Amendment and the equal protection of the laws. 

There is a history of court cases that have prohibited state legislatures from repealing laws that establish contractual obligations in this nation. Historically, it is in the interests of the “public good,” to protect property rights and respect the Contract Clause, no matter what some Illinois politicians conveniently presume otherwise. 

What Illinois citizens can accurately predict about future contracts with state legislators who believe they have the “power to interfere with the obligations of contracts [that are] specifically denied to the states [in Article 1, Section 10 of the U.S. Constitution]” (Fliter and Hoff) is that if Illinois legislators “can declare an emergency to exist and abrogate one provision of [both State and U.S. Constitutions]…, ‘this decision serves notice upon [every citizen of Illinois], who heretofore had trusted in the constitutions for protection and believed in the sanctity of a contract, that the constitutions are no longer a guarantee nor security against the abrogation of a proper and legal contract’” (qtd. in Fliter and Hoff). Read this paragraph again!

“It is difficult for [laypersons] to understand how even 'rational' interference can be assumed to be among the reserved powers of the Tenth Amendment [of the U.S. Constitution]” (Fliter and Hoff); it is also difficult to comprehend that Illinois legislators can continue to choose which contracts to honor and which ones to violate now and in the future.

Eighty years ago, Supreme Court Justice George Sutherland stated: “The framers wrote the Contract Clause for the very reason that they feared emergencies unwisely tempt legislatures to loosen contract rights… [The] meaning of constitutional provisions [at both state and federal levels] is changeless; it is only their application which is extensible… [W]hatever tends to postpone or retard the enforcement of a contract, to that extent weakens the obligation” (Fliter and Hoff). 

Indeed, it has been said that a state’s “sovereign powers” refer to a general authority of a government to regulate for health, safety, morals, and welfare of its citizens. Nevertheless, past precedents show that “state legislatures exercise police power by passing laws in such areas as crime, land use, infrastructure, lotteries, discrimination, licensing of professionals, nuisances, schools, and sanitation… State and local governments… can use police power to enact laws promoting the general welfare only if the laws do not violate provisions in the U.S. Constitution, including the Contract Clause” (Fliter and Hoff).

Nearly two hundred years ago, Chief Justice Marshall stated unequivocally: "The power of changing the relative situation of debtor and creditor, of interfering with contracts, a power which comes home to every man, touches the interest of all, and controls the conduct of every individual in those things which he supposes to be proper for his own exclusive management, had been used to such an excess by the state legislatures, as to break in upon the ordinary intercourse of society, and destroy all confidence between man and man. 

“This mischief had become so great, so alarming, as not only to impair commercial intercourse and threaten the existence of credit, but to sap the morals of the people and destroy the sanctity of private faith. To guard against the continuance of the evil was an object of deep interest with all the truly wise, as well as the virtuous, of this great community, and was one of the important benefits expected from a reform of the government” (Fliter and Hoff). 

It is time for citizens of Illinois to openly resist the way in which the state's politicians (without moral conscience) have chosen to “regulate public morals and welfare.” It is time to protest against the liars and thieves who have manufactured a financial crisis; to remonstrate against liars and thieves who have perpetuated a financial predicament through irresponsibility, mismanagement and corruption; and to oppose liars and thieves who have ignored moral responsibility and refused lawful remedy for the financial problems they have created. They have stolen part of the pension you have earned. They will continue to steal more of your pension in the future.

Fliter, John A. and Derek S. Hoff. Fighting Foreclosure: The Blaisdell Case, the Contract Clause, and the Great Depression. Kansas: the University Press of Kansas, 2012.

from The Contract Clause and the State of Illinois’ “reserved sovereign powers” in Senate Bill 1