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Eisenberg v. Industrial Commission of Illinois

February 18, 2003

SUSANNE EISENBERG, INDIV., AND MICHAEL PELFRESNE, INDIV., PLAINTIFFS-APPELLANTS,
v.
THE INDUSTRIAL COMMISSION OF ILLINOIS, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County 99 CH 00089 Honorable Sidney A. Jones,III, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice McBRIDE

Unpublished

Defendant-appellee, the Industrial Commission of Illinois (Commission), issued notices of noncompliance to plaintiffs-appellants, Susanne Eisenberg and Michael Pelfresne (plaintiffs), alleging that each was individually an "employer" at six separate locations and that plaintiffs had failed to comply with the insurance coverage requirements of the Workers' Compensation Act (Act)(820 ILCS 305/1 et seq. (West 2000)). During the Commission's investigation concerning plaintiffs' compliance with the Act, plaintiffs filed a verified complaint and verified first amended complaint in the trial court which, among other things, sought a declaration that certain sections of the Act were unconstitutional, that the actions of the Commission against them were ultra vires, and that the Commission should be enjoined from proceeding against them at the administrative level based on a lack of jurisdiction. The Commission ultimately dismissed its allegations against plaintiffs. After they were dismissed, plaintiffs filed a second amended complaint against the Commission which, in count I, sought a declaratory judgment that certain sections of the Act and the Workers' Occupational Diseases Act (820 ILCS 310/1 et seq. (West 2000)) were unconstitutional. In count II, plaintiffs claimed that certain actions taken by the Commission against them were ultra vires. The Commission moved to dismiss count I, and the trial court granted the motion in favor of the Commission on the basis of standing. Later, plaintiffs moved for summary judgment on the ultra vires cause of action (count II) and the Commission filed a cross-motion for summary judgment. The trial court granted the Commission's cross-motion for summary judgment and denied plaintiff's summary judgment motion.

The issues raised on appeal are whether the trial court correctly found that plaintiffs lacked standing to challenge the constitutionality of certain sections of both acts because the charges against them had been dismissed, and whether the trial court correctly entered summary judgment in favor of the Commission on the basis that its actions were not ultra vires as a matter of law. We state the following background facts.

On March 23, 1998, the Commission issued notices of noncompliance to plaintiffs as part of an investigation in In re Insurance Compliance Matter of Attorney Michael Schiessle, Ill. Indus. Comm'n Rep. 97INC00032 (March 4, 1999). The investigation concerned six different places of amusement, including five go-cart tracks and one batting machine facility. The notices alleged that plaintiffs were "employers" under section 3 of the Workers' Compensation Act and that, as "employers," they were required by law to insure liability to pay workers' compensation benefits by obtaining a workers' compensation insurance policy. 820 ILCS 305/3, 4(a) (West 2000).

As we noted above, while the Commission's investigation concerning plaintiffs' compliance with the Act was pending, plaintiffs filed a verified complaint and verified first amended complaint in the trial court which sought a declaration that certain sections of the Act were unconstitutional, that the actions of the Commission against them were ultra vires, and that the Commission should be enjoined from proceeding against them at the administrative level based on lack of jurisdiction. The trial court denied plaintiffs' request for injunctive relief on January 6, 1999.

On March 4, 1999, the Commission dismissed the charges against the plaintiffs on the basis that "the evidence did not show that [they] were involved in the everyday running of the businesses so as to hold them personally liable." Following the dismissal of the charges, plaintiffs filed a second amended complaint (complaint) which sought a declaratory judgment, in count I, that certain sections of both Acts were unconstitutional and, in count II, that certain actions by the Commission were ultra vires. Specifically, in paragraph 26, the complaint alleged:

"The evidence at the hearing proved that each site has been operated by an operator licensed by the Illinois Department of Labor since at least 1988; and that these licenses were applied for, evaluated for completeness[,] and then *** issued by the Illinois Department of Labor ***. [The] plaintiffs were not the licensed operators nor were they identified in any way on the applications of the licensed operators."

Count I, paragraphs 38, 39, and 40 of the complaint, alleged that section 19(f)(2) of the Act (820 ILCS 305/19(f)(2) (West 2000)) is unconstitutional because the Commission has discretion to fix the amount of the bond necessary to take an appeal from an adverse decision by the Commission.

Further, count I, paragraphs 41 and 42, alleged that the civil penalty provision in the Act (820 ILCS 305/4(d) (West 2000)) is vague in that it "lacks sufficient standards to guide the discretion of the Commission in determining when civil penalties should be imposed." Further, paragraph 43 alleged that the statute of limitations cannot be determined in section 4(d). Accordingly, plaintiffs alleged that this section was unconstitutional.

Count I, paragraphs 44 and 45, alleged that the plaintiffs were denied due process because they were not allowed access by the Commission to potentially exonerating information in the Commission's file.

Count I, paragraphs 46, 47, and 48, alleged that section 4(d) in each act (820 ILCS 305/4(d) (West 2000); 820 ILCS 310/4(d)(West 2000)) improperly authorized the Commission to prosecute civil penalty proceedings at the administrative level. Specifically, paragraph 48 alleged that the Commission's attorney was involved in improper multiple roles, including (1) Commission attorney; (2) witness at the hearing; and (3) acting member of the Commission in the chairman's absence, which resulted in an unfair hearing and an impartial tribunal.

Count I, paragraph 49, alleged that section 16 of each act (820 ILCS 305/16 (West 2000); 820 ILCS 310/16 (West 2000)) did not set proper rules for the admission of evidence.

Finally, count I, paragraphs 50 and 51, alleged that the burden of proof was not properly established in the Act because the Act provides for both a petty offense in section 26 (820 ILCS 305/26 (West 2000)), and a civil penalty.

In count II of the complaint, paragraphs 54 and 55, plaintiffs alleged that the assistant Attorney General stated on the record at the hearing that no penalties would be considered until a finding was made as to whether plaintiffs were employers. Absent a hearing on employer status, the Commission had no jurisdiction over plaintiffs until it could establish that plaintiffs were employers within the meaning of the Act. As a result, the Commission's actions were ultra vires according to plaintiffs.

In count II, paragraphs 56 through 59, plaintiffs alleged the Commission had no jurisdiction because the notices issued to plaintiffs were defective under the Illinois Administrative Code. 50 Ill. Adm. Code Ch. II ยง7100.100(c) (1996). Specifically, plaintiffs alleged that the Code was violated because ...


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