The opinion of the court was delivered by: Grady, District Judge.
Plaintiffs have brought these § 1983 actions against the City
of Chicago challenging the City's practice of delaying the
payment of judgments obtained against it.*fn1 Plaintiffs in Evans
and Balark are original judgment*fn2 holders — that is, they have
not assigned their judgments or obtained them by assignment —
whereas plaintiff in Collum is an assignor — that is, he assigned
his judgment at a discount. On May 1, 1979, we held that the
complaint in the Evans case stated a cause of action under § 1983
and on January 2, 1980, certified a class. Defendants have filed
motions to dismiss in Collum and Balark. We will deny those
motions and certify separate classes in both cases.
On January 23, 1976, plaintiff Collum and the City of Chicago
and four police officers entered into a Stipulation as to
Judgment for $17,500.00 in plaintiff's § 1983 action for an
alleged beating by the police. Collum Complaint ¶ 6, 7. This
court (Austin, J.) thereafter entered a judgment order in
accordance with the settlement and on February 6, 1976, the
defendants signed a waiver of appeal. Plaintiff alleges that the
judgment was then placed on a "waiting list" and that, at the
time his judgment was entered, it was the practice and custom of
the City to withhold payment of tort judgments*fn3 up to two years.
The current waiting period is allegedly four years. Complaint at
The applicable statute for the payment by the City of tort
judgments against it is Chapter 85, §§ 9-102, 9-104, Ill.Rev.Stat.
Section 9 102 provides:
(a) If a local public entity does not pay a tort
judgment or settlement during the fiscal year in
which it becomes final and if, in the opinion of its
governing body, the unpaid amount of the tort
judgment is not too great to be paid out of revenues
for the ensuing fiscal year, the governing body shall
pay the balance of the judgment during the ensuing
(b) If the local public entity does not pay the
tort judgment or settlement during the fiscal year
when it becomes final and its governing body is of
the opinion that the unpaid amount of the judgment or
settlement is so great that undue hardship will arise
if the entire amount is paid out of the revenues for
the ensuing fiscal year, the governing body shall pay
the judgment or settlement, with interest thereon, in
not more than 10 annual installments. Each payment
shall be of an equal portion of the principal of the
tort judgment or settlement. The governing body, in
its discretion, may prepay any one or more
installments or any part of an installment.
Plaintiff in Collum alleges that in reliance upon the City's
policy and practice of delaying payment of judgments, he assigned
his judgment on February 16, 1976, (Complaint, Exhibit B) at a
discount of 13 per cent. The judgment was paid to the assignee at
the face amount of $17,000.00 plus interest thereon. The City's
practice of delaying payment of judgments has allegedly created
a "discounting business which in essence preys most heavily upon
the poor, the injured and minorities." Complaint, ¶ 19.
Presently, assignors are discounting their judgments at a rate of
20 per cent.
Plaintiff's theory of recovery is based upon due process and
equal protection arguments. He also seeks certification of a
class of assignors under Rule 23, which we will discuss later. In
Count I of the two-count complaint, plaintiff alleges that he had
a right of entitlement to prompt payment of the judgment and that
the City's policy and practice of delay is a deprivation of that
interest without due process of law. But for this
unconstitutional policy and practice of delay, plaintiff would
not have assigned his judgment and suffered the discount amount.
The complaint seeks a declaratory judgment that § 9-104 is
unconstitutional as applied and on its face in violation of the
due process clause and also seeks compensatory damages plus
attorneys fees and costs.
In Count II of the Collum complaint, plaintiff alleges that the
City pays non-tort judgments (e.g., contract, eminent domain)
promptly while it delays payment of tort judgments. It is alleged
that this practice violates the equal protection clause.
In 1977, plaintiffs in Balark brought a § 1983 action against
Chicago police officers. The parties settled that case, each of
the four plaintiffs receiving $4,250.00. By stipulation, this
court (Perry, J.) entered a judgment order in the action on April
On May 14, 1979, the Balarks filed the § 1983 action presently
before us. In Count I of the two-count complaint, plaintiffs
allege a "practice, custom and policy of [defendants] to
arbitrarily and capriciously, in violation of plaintiffs' rights
to substantive and procedural due process, withhold payment of
tort `judgments' for up to four years." Balark Complaint, ¶ 10.
Further, plaintiffs claim a "right of entitlement" to prompt
payment of their judgment (¶ 13) and allege that the practice,
policy and custom of withholding payment of judgments and paying
only 6 (if judgment is against City only) or 8 per cent simple
during this delay is a taking of plaintiffs' property without due
process of law. ¶ 16. It is also alleged that the policy of delay
has, in effect, created a discount business where judgment
holders sell their judgments at upwards of a 20 per cent discount
in order to receive present payment. ¶¶ 14, 15.
Whereas the Collum complaint challenges the constitutionality
of § 9-104 on its face and as applied, the Balark complaint does
not challenge the facial constitutionality of the statute. The
due process attack in Balark is that the City's policy and
practice of delay simply ignores the statute.
In Count II, plaintiffs allege that tort judgment creditors are
placed on a four year "waiting list" whereas "other" judgment
creditors (i.e. contract, eminent domain) are paid promptly. ¶¶
19, 20. Plaintiffs challenge that practice as violating the equal
protection clause of the Fourteenth Amendment.
The following relief is requested in Balark: (1) a declaratory
judgment that defendants' denial of payment violates the due
process and equal protection clauses; (2) an injunction
compelling defendants to pay the judgments; (3) certification of
a class under Fed.R.Civ.P. 23(a) and (b)(1) and (3); and (4)
compensatory damages and attorneys fees and costs.
Preliminary Arguments in Motions to Dismiss Collum and Balark
Defendants raise a variety of arguments in support of their
motions to dismiss: (1) lack of standing; (2) waiver of right to
prompt payment; (3) abstention; (4) Comptroller Burris is an
improper party defendant; and (5) constitutionality of § 9-104
and defendants' payment policies or practices. We will consider
the constitutional questions later. The questions of waiver,
abstention and propriety of the Comptroller as a defendant are
common to the Collum and Balark motions to dismiss, and thus our
rulings on these questions will be dispositive of both cases. The
standing issue is unique to Collum.
Standing of Plaintiff in Collum. Defendants argue that
plaintiff Collum lacks standing to bring this action because he
has assigned his judgment and "received satisfaction of his
claim." Motion to Dismiss at 2. Since the claim has been
satisfied, so the argument goes, plaintiff has no standing to
complain of delay in payment of judgment.
The relevant inquiry to determine standing is whether
plaintiffs have alleged an actual or threatened injury to
themselves that is likely to be redressed by a favorable
decision. Simon v. Eastern Ky. Welfare Rights Organization,
426 U.S. 26, 37-39, 96 S.Ct. 1917, 1923-1924, 48 L.Ed.2d 450 (1976);
American Medical Ass'n v. Matthews, 429 F. Supp. 1179, 1189
(N.D.Ill. 1977). They need not show that that decision will be in
their favor. Id. The Collum complaint clearly alleges an actual
injury to assignors who, because of the City's policy and
practice of delay, discounted their judgments and thereby
received less than they would have absent the practice of delay.
Defendants' argument that the assignors' claims have been
"satisfied" ignores the fact of the substantial discount
suffered. We hold, therefore, that plaintiff has standing to
bring this action.
Waiver. In further support of its motion to dismiss in Collum
and Balark, defendants argue that in the settlement agreements
with the City, plaintiffs waived any right to prompt payment of
the judgments.*fn4 The focus of this argument is on Paragraph 9 of
the Stipulation which Collum signed on January 23, 1976. A
clause was in the agreement signed by the Balarks.*fn5
9. Plaintiff, upon advice of his counsel, is aware
of the manner, method and means of the payment of the
judgment herein (including the delay in time of such
payment of approximately two years), is satisfied
with the same; and is further satisfied with the sum
of money indicated in the Stipulation and Judgment.
Further, plaintiff understands that such sum of money
is a total settlement of any and all claims he has,
or may have in the future, arising out of the
incidents which were the subject matter and/or basis
of the litigation, against the City of Chicago, its
officers, officials, agents, servants and employees.
"While the Supreme Court has recognized that one may
voluntarily relinquish constitutional rights, it has also
required that such relinquishments be entered into voluntarily
under all of the circumstances presented." Boyd v. Adams,
513 F.2d 83, 87 (7th Cir. 1975); Schneckloth v. Bustamonte,
412 U.S. 218, 93 S.Ct. 2041, 36 L.Ed.2d 854 (1973); D.H. Overmyer Co. v.
Frick Co., 405 U.S. 174, 92 S.Ct. 775, 31 L.Ed.2d 124 (1971). A
waiver must be "voluntary, knowing, and intelligently made" — "an
intentional relinquishment or abandonment of a known right or
privilege." Overmyer, supra, at 185-186, 92 S.Ct. at 782-783. The
Supreme Court has also indicated that inequality of bargaining
power is a factor for consideration in determining the validity
of a waiver. Id. at 186, 92 S.Ct. at 782-783. We must "indulge
every reasonable presumption against waiver." Aetna Insurance Co.
v. Kennedy, 301 U.S. 389, 393, 57 S.Ct. 809, 811, 81 L.Ed. 1177
We believe that plaintiffs may be able to show that they did
not, under all the circumstances, voluntarily relinquish their
right to bring a § 1983 action challenging the constitutionality
of § 9-104 and defendants' payment practices. Plaintiffs might
demonstrate that the circumstances surrounding paragraph 9
involved an inherently coercive situation. Had plaintiffs chosen
not to sign the settlement agreement, they would have been faced
with the delay and expense of litigation in addition to the delay
in payment following judgment. The settlement would at least
expedite the procurement of the judgment — an alternative which
might seem especially compelling in light of post-judgment delays
of at least two years under § 9-104(a), 10 more years if the
installment plan of subsection (b) is used, or an indefinite
period of delay if the City unlawfully ignores the statute. Since
plaintiffs may show that paragraph 9 put them to the choice of
either (1) not settling and thus incurring additional substantial
delay or (2) waiving their right to sue the City to obtain full
satisfaction of their judgments, we cannot conclude at this stage
of the proceeding that the element of voluntariness necessary for
a relinquishment of constitutional rights is present here.
Plaintiffs may also be able to show an inequality of bargaining
power between plaintiffs and the City. The alleged marginal
economic circumstances of many successful plaintiffs against the
City (see Collum Complaint ¶ 19) may increase the incentive to
bargain away money as well as rights for the sake of quick
payment. That incentive is alleged to account for the high
numbers of plaintiffs who have settled, or sold their judgments
at a discount, or both.
The City has, without citing any authority, argued that
Comptroller Burrus is not a proper party defendant. We will deny
the motion to dismiss as to Burrus.
Due Process and Equal Protection Issues
We should note at the outset that the questions concerning the
constitutionality of § 9-104 and the City's payment practices are
before us on a motion to dismiss for failure to state a claim
upon which relief can be granted, Fed.R.Civ.P. 12(b)(6). We do
not, therefore, at this stage in the proceedings, rule upon the
constitutionality of § 9-104 and the payment practices but
consider only whether plaintiff has stated a claim. See e.g.,
Kalodimos v. City of Chicago, 78 C 5012, Memorandum Opinion,
Grady, J. (July 11, 1979) (denying motion to dismiss § 1983
action challenging constitutionality under due process clause of
City's policy and practice of withholding towed cars until towing
The procedural aspect of due process requires a two-step
analysis: (1) whether due process applies — that is, whether
plaintiffs have been deprived of a protectable property interest;
and (2) what process is due. Board of Regents v. Roth,
408 U.S. 564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). We will address these
questions in turn.
To have a property interest protectable by due process, a
person must have "a legitimate claim of entitlement to it." Roth,
supra, at 577, 92 S.Ct. at 2709. Property interests "are created
and their dimensions are defined by existing rules or
understandings that stem from an independent source such as state
law — rules or understandings that secure certain benefits and
that support claims of entitlement to those benefits." Id. at
577, 92 S.Ct. at 2709; Bishop v. Wood, 426 U.S. 341, 344, n. 7,
96 S.Ct. 2074, 2077, n. 7, 48 L.Ed.2d 684 (1976).
Rights acquired by a judgment are property rights which cannot
be taken without due process of law. Louisiana ex rel. Folsom v.
Mayor and Administrators of New Orleans, 109 U.S. 285, 3 S.Ct.
211, 27 L.Ed. 936 (1883); Collins v. Welsh, 75 F.2d 894 (9th Cir.
1935); Arnold & Murdock Co. v. Industrial Commission, 314 Ill. 251,
145 N.E. 342 (1924); Martinez v. Fox Valley Bus Lines,
17 F. Supp. 576, 577 (N.D.Ill. 1936) (applying Illinois law); Gilman
v. Tucker, 128 N.Y. 190, 28 N.E. 1040 (1891); Livingston v.
Livingston, 173 N.Y. 377, 66 N.E. 123 (1903); 16A Am.Jur.2d § 598
at 535. Indeed, it has been stated in Illinois that "A city and
its officers can have no higher duty than the payment of an
honest debt reduced to judgment against the City. . . ." People
ex rel. Farwell v. Kelly, 367 Ill. 616, 12 N.E.2d 612 (1938); 26
Ill.L.P., Mandamus, § 82 at 71.
Having established that plaintiffs have a property interest in
the payment of their judgments against the City, the question
becomes whether the City's delay in paying the judgments
constitutes a taking or a deprivation within the meaning of the
Fourteenth Amendment. "[A]s long as a property deprivation is not
de minimis, its gravity is irrelevant to the question whether
account must be taken of the Due Process Clause." Goss v. Lopez,
419 U.S. 565, 576, 95 S.Ct. 729, 737, 42 L.Ed.2d 725 (1975). "Any
significant taking of property by the State is within the purview
of the Due Process Clause." Fuentes v. Shevin, 407 U.S. 67, 86,
92 S.Ct. 1983, 1997, 32 L.Ed.2d 556 (1972); North Georgia
Finishing, Inc. v. Di-Chem, 419 U.S. 601, 606, 95 S.Ct. 719, 722,
42 L.Ed.2d 751 (1975). "Although the length or severity of a
deprivation of use or possession would be another factor to weigh
in determining the appropriate form of hearing, it [is] not
deemed to be determinative of the right to a hearing of some
sort." Id. A temporary, nonfinal deprivation of property is
nonetheless a "deprivation" in terms of the Fourteenth
Amendment." Fuentes v. Shevin, supra, 407 U.S. at 84-85, 92 S.Ct.
In ordinary, quotidian business transactions, there are, of
course, unavoidable delays which take place in the payment of
money. The processing of checks, for example, takes time.
Although the creditor does not have the present use of his money
in the interim, the conclusion for due process purposes might be
that such an unavoidable, temporary deprivation is de minimis
(Goss v. Lopez, supra) — certainly not significant enough for a
hearing to be required. The same cannot be said about delays in
payment of judgments for two, four or even ten years. While there
is a degree of arbitrariness in determining just when the taking
occurs, we are aware that "[t]he Fourteenth Amendment draws no
bright lines around three-day, 10-day, or 50-day deprivations of
property." Fuentes, supra, at 86, 92 S.Ct. at 1997. We believe
that in a case such as this involving the payment of tort
judgments by a municipality, a taking occurs from the date of
judgment until satisfied.*fn6 This determination is separate from
the issue of what process is due — when a hearing is required —
which we discuss below.
While we have clarified the source of the property interest
here, finding that it arises from the judgment itself rather than
the statute, we reaffirm our earlier opinion in Evans holding
that the original judgment holders have a protectable property
interest which has been taken by the City. We now reach the same
conclusion with respect to the assignors in Collum and the
original judgment holders in Balark.
"[D]ue process is flexible and calls for such procedural
protections as the particular situation demands." Morrissey v.
Brewster, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484
(1972). Accordingly, resolution of the issue of whether the
procedures provided by § 9-104 are constitutionally sufficient
requires analysis of the governmental and private interests that
are affected. Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25
L.Ed.2d 287 (1970). In Matthews w. Eldridge, 424 U.S. 319, 335,
96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976), the Supreme Court said
that "identification of the specific dictates of due process
generally requires consideration of three distinct factors:"
First, the private interest that will be affected
by the official action; second, the risk of an
erroneous deprivation of such interest through the
procedures used, and the probable value, if any, of
additional or substitute procedural safeguards; and
finally, the Government's interest, including the
function involved and the fiscal and ...