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05/02/94 ELIZABETH C. HINOJOSA AND ANNA T. OBNISKI

May 2, 1994

ELIZABETH C. HINOJOSA AND ANNA T. OBNISKI, PLAINTIFFS-APPELLEES,
v.
JOSLYN CORPORATION, DEFENDANT. ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY AND KATHRYN SPALDING, IN HER OFFICIAL CAPACITY AS CHIEF LEGAL COUNSEL, ILLINOIS DEPARTMENT OF EMPLOYMENT SECURITY, CONTEMNORS-APPELLANTS.



Appeal from the Circuit Court of Cook County. The Honorable Stephen A. Schiller, Judge Presiding.

Manning, Campbell, O'connor, Jr.

The opinion of the court was delivered by: Manning

JUSTICE MANNING delivered the opinion of the court:

On August 1988, plaintiffs, Elizabeth C. Hinojosa and Anna T. Obniski, were discharged from their jobs as factory workers by defendant Joslyn Corporation, their employer. Plaintiffs filed a breach of contract action against Joslyn.

During the pendency of the lawsuit, plaintiffs served the Illinois Department of Employment Security (IDES), with a subpoena duces tecum, to produce documents pertaining to their unemployment benefits from Josyln Corporation. On July 30, 1990, IDES returned the subpoena unanswered explaining that section 1900 of the Act prohibited the requested disclosure and use of IDES records in any court in any pending action or proceeding.

On November 7, 1990, plaintiffs filed a motion for rule to show cause why IDES should not be held in contempt of court for failure to produce the documents requested in the subpoena. On November 20, 1990, IDES filed a motion to quash the subpoena arguing the records sought were privileged and not subject to use or disclosure pursuant to the Act.

Thereafter, plaintiffs filed a motion to compel IDES to comply with the subpoena. During the hearing on the motion held on March 13, 1991, counsel for defendant stated that the employer opposed the production of the documents since unemployment procedures are meant to be informal. On March 13, 1991, the court granted plaintiffs' motion to compel. The court found IDES was bound by the law as enunciated in Howard v. Forbes (1989), 185 Ill. App. 3d 148, 541 N.E.2d 685, 133 Ill. Dec. 474.

The court acknowledged IDES's dilemma and its representation that it would not comply with the court order because the law prohibited the release of IDES records. The court advised IDES to resolve the issue by appealing the order granting plaintiffs' motion to compel. On April 26, 1991, the court entered an order issuing the rule and setting a status hearing. On June 6, 1991, following a hearing on the rule to show cause, the court entered a final order holding IDES's chief legal counsel, Kathryn Spalding, in civil contempt and imposed a sanction of $1.00. Contemnors filed the instant appeal.

The issues on appeal are: (1) Whether the statutory privilege of confidentiality of information under the Act prohibit the disclosure of IDES records to claimant for use in unrelated litigation; and (2) Whether the finding of contempt should be vacated, where the record on appeal reveals that a public official's contempt is a purely formal one, motivated by a desire to obtain appellate review.

With respect to the propriety of releasing IDES records, laws prohibiting disclosure of unemployment compensation information are meant to further the administration of unemployment compensation laws by encouraging full and accurate reporting from claimant and their employers. ( United States v. Wilson (7th Cir. 1992) 960 F.2d 48, 50, 755 F.Supp. 815.) The cloak of the statutory privilege of confidentiality created by this statute embraces all evidence concerning whether an individual is or is not receiving unemployment benefits, including information provided by the claimant or the employing unit. ( Lowrance v. Marion Pepsi-Cola Bottling Co. (1991), 221 Ill. App. 3d 623, 627, 582 N.E.2d 725, 164 Ill. Dec. 162.) It is a primary rule of statutory construction that the intent of the legislature be given effect. People v. Ellis (1984), 128 Ill. App. 3d 180, 182, 470 N.E.2d 524, 83 Ill. Dec. 398.

Contemnors assert that the circuit court erred in not following the cases cited by IDES, in particular the decision of this appellate district, Ellis, 128 Ill. App. 3d 180, 83 Ill. Dec. 398, 470 N.E.2d 524. The Illinois rule of stare decisis requires that in the absence of a Supreme Court decision directly on point, the circuit court must follow the precedent of the Appellate Court of its district. ( Sidwell v. Griggsville Community School District 4 (1991), 208 Ill. App. 3d 296, 566 N.E.2d 838, 840, 152 Ill. Dec. 961, citing Garcia v. Hynes & Howes Real Estate, Inc. (1974), 29 Ill. App. 3d 479, 331 N.E.2d 634.) If no precedent exists in the appellate district, the circuit court may follow the precedent of another district. ( Sidwell, 208 Ill. App 3d 296, 299, 152 Ill. Dec. 961, 566 N.E.2d 838.) In the instant case, the circuit court erroneously followed the precedent in Howard, a Fourth District case, and the statutory construction of section 1900 of the Act given by that court. ( Howard, 185 Ill. App. 3d 148, 152, 133 Ill. Dec. 474, 541 N.E.2d 685.) At the time of the circuit court's decision, section 1900 of the Act provided, inter alia, as follows:

"Except as provided in this section, information obtained from any individual or employing unit during the administration of the Act shall be confidential and not be admissible in evidence in any action or proceeding other than one arising out of this Act. (Ill. Rev. Stat. 1989, ch. 48, par. 640-1900 (A).) An individual or his duly authorized agent may be supplied with information from records only to the extent necessary for the proper presentation of his claim for benefits or with his existing or prospective rights to benefits. (Ill. Rev. Stat. 1989, ch. 48, par. 640-1900 (C).) An employing unit may be furnished with information, only if deemed by the Director as necessary to enable it to fully discharge its obligations or safeguard it rights under the Act. (Ill. Rev. Stat. 1989, ch. 48, par. 640-1900 (D).) The Director may furnish any information that he may deem proper to any public officer or public agency of this or any other State or the Federal government dealing with unemployment compensation. (Ill. Rev. Stat. 1989, ch. 48, par. 640-1900 (F).) Any officer or employee of this State who, except with authority of the Director under this section, shall disclose information shall be guilty of a Class B misdemeanor and shall be disqualified from holding any appointment or employment by the State. (Ill. Rev. Stat. 1989, ch. 48, par. 640-1900 (B).)"

In Howard, plaintiff Phyllis M. Howard, filed a wrongful discharge action against her former employer, Normal Township, its supervisor, Robert D. Forbes, and its trustees, Wallis Norris, Robert L. Rhinehart, Ronald L. Pacha, and Cushman Skinner. On December 7, 1987, plaintiff served the Department of Security (IDES) with a subpoena duces tecum for production of her unemployment insurance benefit claim records. IDES resisted the subpoena duces tecum on the basis the requested records constituted confidential information privileged from production under the Act. Plaintiff filed a motion to order production of the records on January 4, 1988. Following a hearing, on March 11, 1988, the McLean County circuit court ordered IDES to produce the requested records as the plaintiff had waived the statutory privilege by serving the subpoena duces tecum for her unemployment insurance benefit claim records in connection with litigation regarding discharge from employment. On June 28, 1988, pursuant to a stipulation entered into for the purpose of appeal, the circuit court entered a citation of enforcement. IDES appealed from the order of production and the citation. The appellate court affirmed, holding that the legislature must have intended the statutory privilege of confidentiality of information to benefit the claimant.

In contrast to Howard, the appellate court in Ellis upheld the trial court's decision to prohibit disclosure of information to the grand jury regarding unemployment compensation pursuant to the Act. The appellate court reasoned that the Act may only be properly administered when interpreted so as to encourage full, free and honest reports from both employer and employee * * * and concluded that ...


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