United States District Court, N.D. Illinois
April 29, 2004.
ILLINOIS CLEAN ENERGY COMMUNITY FOUNDATION, an Illinois not-for profit corporation, Plaintiff
John B. FILAN, in his official capacity as Director of the Illinois Governor's Office of Management and Budget, Defendant
The opinion of the court was delivered by: AMY J. ST. EVE, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Illinois Clean Energy Community Foundation ("ICECF") sued
the state of Illinois in a five-count complaint for claims arising under
the Illinois and United States constitutions in connection with a statute
enacted by the Illinois legislature allowing the state to demand payment
of $125 million from ICECF. Both parties filed for summary judgment. As
discussed in detail below, the Court grants summary judgment in favor of
Defendant on Plaintiff's state-court claims because the Eleventh
Amendment of the United States Constitution bars federal courts from
hearing state-law claims against the state. With respect to Counts I and
IV, the Court grants Plaintiff's motion for summary judgment. The state
legislature's enactment of 220 ILCS 5/6-111.1(d) violates Plaintiff's
constitutional rights of due process and protection from takings. LEGAL STANDARDS
Summary judgment is proper when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c). A genuine issue of triable fact exists only if "the
evidence is such that a reasonable jury could return a verdict for the
nonmoving party." Pugh v. City of Attica, 259 F.3d 619, 625 (7th Cir.
2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,
106 S.Ct. 2505, 2510 (1986)). The party seeking summary judgment has the
burden of establishing the lack of any genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552
(1986). A party will successfully oppose summary judgment only if it
presents "definite, competent evidence to rebut the motion." Equal
Employment Opportunity Comm'n v. Roebuck & Co., 233 F.3d 432, 437 (7th
Cir. 2000). The Court "considers the evidentiary record in the light most
favorable to the non-moving party, and draws all reasonable inferences in
his favor." Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir.
In 1999, the Illinois legislature enacted 220 ILCS 5/16-111.1 ("Section
111.1") as part of the Illinois Public Utilities Act (the "Act"). The Act
authorizes the creation of an "Illinois clean energy community trust or
foundation" for the purpose of providing financial support to public and
private entities with the goal of improving energy efficiency and
supporting environmental projects.*fn1 The underlying history of the Act is somewhat unclear.*fn2
Both parties agree that the Act resulted from a "compromise" between
Commonwealth Edison Company ("ComEd") and the state of Illinois in
connection with the sale of certain power plants. The parties disagree,
however, as to the nature of the compromise. Plaintiff maintains that the
Act merely vested ComEd with the discretion to create a charitable
not-for-profit foundation. (R. 16-1, Pl.'s Resp. to Def.'s Mot. for
Summ. J. p. 4.) Defendant takes a more structured approach, arguing that
the compromise was a "quid-pro-quo" wherein ComEd agreed to fund such a
foundation "as part of the consideration for the State's permission to
reap a far larger profit by selling its coal-powered electricity plants."
(R. 18-1, Def.'s Reply in Supp. of Summ. J. p. 8.) Both parties quote
Illinois Representative Novak's description of the Act's predicate:
You know, Commonwealth-Edison . . . [is] going to
realize a substantial profit [from the sale of the
power plants]. They understand that. Probably beyond
their comprehension So what has occurred is that
Commonwealth-Edison decided well, we need to give some
back. We asked them, you give some back. We're going
to allow you . . . to realize a substantial profit. We
want you to give something back. . . . They're giving
things back by forming a $250,000,000 trust fund So, it is give and take.
Transcript of Proceedings of 91st General Assembly at 46 (Ill. May 27,
Section 111.1 of the Act sets forth certain minimum requirements for
trusts and foundations established under it. Under Section 111.1,
governing documents of such trusts and foundations must conform to
statutory standards regarding the: (1) number of voting and non-voting
trustees, and the appointment of a majority thereof by various state
officials; (2) maximum compensation of trustees; (3) term of trustee
appointments; (4) filling of trustee vacancies; (5) term of the trust or
foundation (until no assets remain); (6) minimum amount of funding ($250
million, unless certain other contributions occur); (7) hiring of
employees, entering into contracts, and maximum allowable expenses; (8)
creation of advisory boards or committees; and (9) required periodic
contributions to the Citizens Utility Board. 220 ILCS 5/6-111.1.
On December 21, 1999, ICECF filed its articles of incorporation with
the Illinois Secretary of State.*fn4 The following day, ComEd
transferred $225 million to ICECF's bank account. Since its inception,
ICECF has "awarded more than 550 grants totaling more than $38 million to
public and charitable entities to improve energy efficiency, develop
renewable energy resources, and preserve and enhance wildlife habitat .
. . across Illinois." (R. 8-1, Aff. of James Mann ¶ 9.) A. The Amendment to the Act
In June 2003, the Illinois legislature amended the Act to impose an
additional requirement on foundations created under the Act. The
legislature added Section 111.1(d), which requires the trustees of a
foundation created under the Act to contribute up to $125 million to the
Illinois state treasury and state environmental agencies upon written
demand by the Director of the Bureau of the Budget. 220 ILCS 5/6-11
1.1(d). According to the Act, the purpose of these diverted funds is to
(1) assist with the repayment of general obligation bonds, and (2) assist
in funding the state's environmental programs. Id.
In July 2003, Defendant*fn5 requested that ICECF transfer $9 million
to the General Obligation Bond Repayment and Interest Fund, and $116
million into the General Revenue Fund, which includes funds administered
by environmental agencies. (R. 6-2, Def.'s Statement of Facts ¶ 20.)
ICECF has not transferred these funds. (Id. ¶ 21.)
B. ICECF's Complaint
ICECF filed a five-count complaint against the state. Count I alleges a
violation of the takings clause of the Fifth Amendment of the United
States Constitution; Count II alleges a violation of the takings clause
of the Illinois Constitution; Count III alleges a violation of the
special legislation clause of the Illinois Constitution; Count IV alleges
a violation of the due process clause of the Fourteenth Amendment of the
United States Constitution; and Count V alleges a violation of the due
process clause of the Illinois Constitution. Defendant now moves for
summary judgment on all counts of Plaintiff's complaint. Plaintiff moves
for partial summary judgment on Counts I and IV.
I. Eleventh Amendment Bars State Claims
Counts II, III, and V allege violations of the Illinois Constitution.
Defendant moves for summary judgment on these claims, arguing that the
Eleventh Amendment of the United States Constitution prohibits private
parties from pursuing state-law claims against the state itself in
federal court. The Court agrees.
The Eleventh Amendment provides that "[t]he Judicial power of the
United States shall not be construed to extend to any suit in law or
equity, commenced or prosecuted against one of the United States by
Citizens of another State, or by Citizens or Subjects of any Foreign
State." U.S. Const. Am. XL Despite its narrow language, "the amendment
has been construed to forbid suits prosecuted against a state by its own
citizens as well." Benning v. Board of Regents of Regency Univ.,
928 F.2d 775, 777 n. 1 (7th Cir. 1991) (citing Hans v. Louisiana,
134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890)).
A claim that a state official in his official capacity violated state
law is a claim against the state, which is protected by the Eleventh
Amendment. Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89,
121, 104 S.Ct. 900, 919, 79 L.Ed.2d 67 (1984); Radaszewski v. Garner, No.
01 C 9551, 2002 WL 31430325, at *5 (N.D. Ill. Oct. 21, 2002). The Supreme
Court has held that Eleventh Amendment protection applies even though a
plaintiff's state claims are subject to pendent jurisdiction: "[w]e
concluded above that a claim that state officials violated state law in
carrying out their official responsibilities is a claim against the State
that is protected by the Eleventh Amendment. . . . We now hold that this
principle applies as well to state-law claims brought into federal court under pendent jurisdiction."
Pennhurst, 465 U.S. at 121, 104 S.Ct. at 919.
Plaintiff argues that, under Benning, the Court must apply state rules
of immunity when considering state law claims. Plaintiff further argues
that Illinois has abolished sovereign immunity. Benning, however,
squarely comports with Pennhurst, noting that the Eleventh Amendment
"forbids a federal court from ordering state officials to conform their
conduct to state law, reasoning that such relief is unnecessary to
vindicate the supreme authority of federal law and contravenes the
principles of federalism. . . ." Benning, 928 F.2d at 778. The Supreme
Court and the Seventh Circuit have spoken decisively on the application
of the United States Constitution, thus state law is inapplicable here.
Plaintiff's state-law claims are before the Court by virtue of
supplemental jurisdiction under 28 U.S.C. § 1367.*fn6 As the Pennhurst
and Benning opinions made clear, however, Plaintiff may not make an end
run around the Eleventh Amendment using supplemental jurisdiction.
ICECF's state-law claims are barred by the Eleventh Amendment of the
United States Constitution. Accordingly, the Court grants Defendant's
motion for summary judgment with respect to Counts II, III, and V.
II. Claims under the United States Constitution
Plaintiff characterizes itself as a non-profit charitable foundation.
Because ComEd not the state contributed the funds used to create
ICECF, Plaintiff argues that its funds are private property, and not
public assets of the state. As such, Plaintiff contends that the state is attempting to seize private property without providing the compensation
required by the takings clause of the Fifth Amendment. Further, Plaintiff
claims that the state has not provided the procedural or substantive due
process required by the Fourteenth Amendment in amending Section 111.1 to
allow seizure of ICECF's assets.
A. Eleventh Amendment
The Eleventh Amendment also prohibits federal courts from entertaining
federal claims against a state. The Supreme Court established an
exception to this rule in Ex parte Young, 209 U.S. 123, 159-60,
28 S.Ct. 441, 52 L.Ed. 714 (1908). The Court's exception exempts from the
Eleventh Amendment a plaintiff seeking injunction or declaratory judgment
to prevent a state official from a prospective or ongoing violation of
federal law. See Williams v. Wisconsin, 336 F.3d 576, 581 (7th Cir. 2003)
("Official-capacity suits against state officials seeking prospective
relief are permitted by § 1983"). The Young court theorized that the
state official's violation of federal law stripped him of his official
authority and justified suit against the official despite the Eleventh
Amendment bar. Id.; see also Benning, 928 F.2d at 778. Here, ICECF seeks
a declaration that Section 111.1(d) violates the takings clause of the
Fifth Amendment and the due process clause of the Fourteenth Amendment of
the United States Constitution. Plaintiff's federal claims, therefore,
survive the Eleventh Amendment.
B. The State's Right to Amend Section 111.1
Defendant argues that the legislature is free to amend its statutes,
altering corresponding rights, without subjecting itself to
unconstitutional takings*fn7 or due process claims, In support of this claim, the state cites Pittman v. Chicago Board of Educ., 64 F.3d 1098
(7th Cir. 1995). In that case, public school principals argued that the
Illinois legislature's elimination of tenure for principals amounted to
an unconstitutional taking. The Seventh Circuit upheld the statute,
holding that the principals' tenure "is not a term in a contract. It is a
term in a statute, and a statute is presumed not to create contractual
rights." Id. at 1104. Further, "[a] statute is not a commitment by the
legislature never to repeal the statute." Id.
Similarly, the state relies on Bowen v. Public Service Agencies Opposed
to Social Security Entrapment, 477 U.S. 41, 106 S.Ct. 2390, 91 L.Ed.2d 35
(1986), for the proposition that rights granted by statute are not immune
to statutory amendment. In that case, Congress amended the Social
Security Act to prevent states and public agencies from withdrawing from
participation in benefits programs. Id. at 48. This statute effectively
invalidated the termination provisions of California's agreement with the
Secretary of Health and Human Services. Id. at 49. Public agencies of
California sued the United States, alleging that the amended statute
deprived them of their contract rights without just compensation in
violation of the Fifth Amendment. Id. Noting that "Congress had the
authority to provide by amendment whatever rules it might have prescribed
in the original charter[,]" the Supreme Court held that the amendment of
the Social Security Act did not constitute a taking under the Fifth
Amendment. Id. at 52-56. Interestingly, the Court pointed out that
"Congress' exercise of the reserved power has a limit in that Congress
could not rely on that power to take away property already acquired under
the operation of the charter, or to deprive the corporation of the fruits
actually reduced to possession of contracts lawfully made."*fn8 Id. at 55 (citing the Sinking Fund Cases, 99 U.S. 700,
25 L.Ed. 496 (1878)) (quotations omitted).
In this case, ICECF was indeed established in connection with an
Illinois statute. The property right that ICECF seeks to retain,
however, is fundamentally different from the rights asserted by the
Bowen and Pittman plaintiffs. In neither of those cases did the plaintiff
seek to prevent the government from taking money from the plaintiff's
bank account. In this case, ICECF is trying to avoid writing a check to
the state of Illinois for $125 million. This money would come from a fund
originally provided to ICECF by ComEd pursuant to Section 111.1. This
situation is similar to that forecast in the Sinking Fund Cases. These
funds are "property already acquired under the operation of the charter."
Sinking Fund Cases, 99 U.S. at 720. Accordingly, Defendant may not force
ICECF to turn over half of its original endowment based solely on the
truism that the state of Illinois is able to amend its own statutes.
Because ICECF's bylaws explicitly subordinate themselves to Section
111.1, Defendant argues that any funds contributed to ICECF are therefore
public funds. As the discussion of the Sinking Fund Cases illustrates,
however, the state's right to amend a statute is limited. The fact that
ICECF's bylaws are subordinate to an Illinois statute does not extend
C. ICECF's Funds Are Not Public Property
The Fifth Amendment provides that "private property [shall not] be
taken for public use, without just compensation." Defendant argues that
because ICECF is a state-created and state-controlled public foundation, its funds are not private property. If ICECF's funds
are not private property, the state argues, then there can be no claim
of an unconstitutional taking.
1. Great Lakes Holding
Great Lakes Higher Education Corp. v. Cavazos, 911 F.2d 10 (7th Cir.
1990), addressed a situation similar to ICECF's in connection with the
characterization of funds as public or private. hi that case, the federal
government subsidized student loans through the Guaranteed Student Loan
Program ("GSLP"). The government required state guarantee agencies to
establish reserve funds to serve GSLP purposes. When some agencies
amassed excess funds and used them for non-GSLP purposes, Congress
established reserve fund limits. Great Lakes, a student loan guarantee
agency, sued the United States when the government directed it to
transfer its excess reserves to federal coffers. The Seventh Circuit made
the following findings in determining that Great Lakes' excess reserves
were public funds: (1) "[f]ederal law regulates the reserve fund
extensively and it exists because of a federal mandate;" (2) "its sources
are substantially from the federal government;" and (3) "the uses to
which it may be put are restricted" to certain specific GSLP purposes.
Id. at 14.
a. ComEd Created and Funded ICECF
An application of the first two Great Lakes factors to ICECF highlights
a central disagreement between the parties: who created and funded ICECF
and why. In late 1999, ComEd contributed $225 million to ICECF pursuant
to the Act. As stated above, the parties disagree about whether ComEd's
contribution represented consideration for a deal with the state or
simply a discretionary gift from the electric utility. This is a critical
determination. If a state contract required ComEd to make the
contribution, then the first two Great Lakes factors would weigh in favor of deeming the funds public because the state would
have created ICECF via contract with ComEd. On the other hand, if ComEd
exercised its own discretion in contributing the funds and establishing
the foundation, such facts would weigh in favor of the funds being
The Act is unambiguous. There is no requirement of action or payment by
ComEd. Instead, the Act simply "authorized" ComEd to establish a
foundation with certain attributes.
Regardless of the unambiguous statutory language, Defendant urges the
Court to consider the statements of a state legislator on the floor of
the Illinois General Assembly. Representative Novak commented:
"Commonwealth-Edison decided well, we need to give some back. We asked
them, you give some back. We're going to allow you . . . to realize a
substantial profit. We want you to give something back. . . ." Transcript
of Proceedings of 91st General Assembly at 46 (Ill. May 27, 1999). He
describes the electric utility as both deciding to contribute on its own
and being asked to contribute as part of a quid pro quo with the state.
Even if Representative Novak's statements were unequivocal, the Court
does not rely on legislative history when the statutory language itself
is unambiguous. United Air Lines, Inc. v. McMann, 434 U.S. 192, 199,
98 S.Ct. 444, 448, 54 L.Ed.2d 402 (1977) ("Legislative history is
irrelevant to the interpretation of an unambiguous statute."); Davis v.
Mich. Dept. of Treasury, 489 U.S. 803, 808, 109 S.Ct. 1500, 1504,
103 L.Ed. 29 891 (1989). The unambiguous express language of Section
111.1 does not require ComEd to contribute any funds to ICECF.
Defendant's contention to the contrary is not supported by the plain
language of its own statute. Accordingly, the Court finds that ComEd
not the state established and funded ICECF. That it was "authorized" to
do so by statute does not alter this finding. Following the reasoning in
Great Lakes, therefore, ComEd's creation and funding of ICECF weigh in favor of
deeming the funds at issue private.
b. State Regulation
The Great Lakes court also noted that the state extensively regulated
the reserve fund, and that the agencies could only use the funds for
certain narrowly defined purposes.*fn9 While there are considerable
limitations on the use of ICECF's funds.*fn10 such uses are not
restricted to specific payments as in Great Lakes. Instead, ICECF has
operated since 1999 with a considerable amount of leeway in determining
how to spend its funds, distributing $38 million without government
interference. See 220 ILCS 5/16-111.1(a) (authorizing ICECF to provide
financial support to public and private entities "including, but not
limited to" specified types of recipients); 16-111.1(b)(8) (allowing the
trustees to appoint advisory boards to assist with administration and
make recommendations regarding fund disbursement). Given this amount of
self-governance, the restrictions placed on ICECF by Section 111.1 do not
transform ICECF's funds into public funds.
Finally, although the Great Lakes court found that the extensive
federal regulation of the agency "suggests its highly public nature," the
court proceeded to analyze whether the plaintiff agency could precisely
identify the alleged "`private' property at issue as well as a `taking'
distinguishable from public regulation consistent with the purpose of the
instrumentality." Great Lakes, 911 F.2d at 15. Finding "no indication that Congress meant for the
reserve fund to be irrevocably committed to the guarantee agencies," the
Seventh Circuit held that the excess reserves were not "private property"
subject to a Fifth Amendment claim. Id.
In this case, ComEd established ICECF pursuant to a statute that did
not provide for the assimilation of the contributed funds into the
treasury of the state of Illinois. The private property at issue is
easily identified as the funds contributed to ICECF by ComEd. The
"purpose of the instrumentality" of ICECF is to fund environmental
projects as directed by its board. Turning over half of its original
endowment is inconsistent with that purpose. Accordingly, the funds
requested by the state of Illinois from ICECF are private funds.
2. Analogous Cases
This result comports with South Carolina State Education Assistance
Authority v. Cavazos, 897 F.2d 1272, 1276 (4th Cir. 1990). That case
addressed the excess reserve funds of another student loan guarantee
agency. Holding that the excess reserves were not private property, the
court noted that "if property comes within the control of the United
States to such an extent that its use is ultimately under the direction
of the United States, then it loses its character as `private' property
and becomes public," foreclosing a claim under the Fifth Amendment. Id.
The court further noted that government regulations completely controlled
the use of such excess reserves. Id. In this case, as discussed above,
Section 111.1 does not grant the state of Illinois complete control over
ICECF's funds. Accordingly, ICECF's funds are not "ultimately under the
direction" of the state and they are not public funds.
Defendant points to Dayton-Goose Creek Ry. v. United States, 263 U.S. 456
(1924), as an analogous case supporting its "public property" argument.
In that case, the United States required railroads to deposit profits earned in excess of a statutory
fair return into a fund that fostered interstate commerce by benefitting
other railroads. Id. The Dayton-Creek court, however, described the type
of overarching control over the railroad system that is absent in ICECF's
case: "[the Transportation Act] puts the railroad systems of the country
more completely than ever under the fostering guardianship and control of
the Commission," which supervised various specific operations of the
private railroads. Id. at 477. Further, the Court placed its decision
squarely within the realm of railroad law, pointing out Congress's
specific power to regulate interstate commerce and noting that the
railroad held the excess funds as a trustee for the United States. Id. at
477-79. ICECF is not a railroad, and does not hold its funds in trust for
the state of Illinois. This Court declines to extend the holding of the
eighty-year old railroad case to the question of state control over a
privately funded charitable foundation.
D. ICECF Has Standing to Assert Federal Constitutional Claims
In a closely related argument, Defendant contends that ICECF is a
public entity and therefore has no standing to pursue a takings or due
process claim against the state. Defendant relies on Lebron v. Nat'l R.R.
Passenger Corp., 513 U.S. 374, 115 S.Ct. 961, 130 L.Ed.2d 902 (1995). In
that case, the Court considered whether Amtrak is a government entity for
the purposes of a First Amendment suit by a political advertiser.
Defendant asserts, with no supporting language from the case, that
"[w]hile Lebron involved a constitutional claim brought against Amtrak,
not by it, the decision does set out the framework for considering the
governmental status of a corporation in the context of constitutional
claims." (R. 18-1, Def.'s Reply in Supp. of Summ. J., p. 9.) The actual
text of the Lebron case, however, expressly limits the Court's holding to
the First Amendment. Lebron, 513 U.S. at 394, 399. Defendant does not discuss whether Lebron's holding might apply differently to a case where
(1) takings and due process claims are at issue instead of First
Amendment claims; and (2) the constitutional claim is brought by the
putative governmental entity instead of against it.*fn11
The other federal cases cited by Defendant to support its contention
that ICECF is a public entity are not helpful. See Trenton v. New
Jersey, 262 U.S. 182, 43 S.Ct. 534, 67 L.Ed. 937 (1923) ("[Constitutional
restraints] do not apply as against the state in favor of its own
municipalities."); Comm'rs of Highways v. United States, 653 F.2d 292
(7th Cir. 1981) (assuming that highway commissions are "legislatively
created municipal corporations" and "creatures of the State. . . .").
These cases involve municipal corporations and do not address the
question of whether or not an entity is public or private.
Plaintiff urges the Court to consider the Third Circuit's treatment of
the Red Cross in a case examining that organization's immunity from jury
trial. Marcella v. Brandywine Hosp., 47 F.3d 618 (3rd Cir. 1995). Holding
that "the federal government does not manage the day-to-day activities of
the organization, does not provide the funds to support its activities,
and does not employ or grant civil service benefits to its workers," the
court decided that the Red Cross did not share sovereign immunity with
the United States such that exposing it to jury trials would be inconsistent with its charter.*fn12 Id. at 624.
Neither party has provided, and the Court has not found, case law
directly addressing the issue of the standing of a privately funded,
statutorily chartered entity to bring constitutional claims against the
government. Facing this dearth of case law, the Court finds the factors
considered by Lebron and Marcella relevant to its determination. In
Lebron, the Supreme Court held that "where, as here, the Government
creates a corporation by special law, for the furtherance of governmental
objectives, and retains for itself permanent authority to appoint a
majority of the directors of that corporation, the corporation is part of
the Government for purposes of the First Amendment." Id. at 400 (emphasis
added). ICECF does not meet this description. As discussed above, Section
111.1 did not create ICECF. ComEd created ICECF, as it was authorized
but not required to do under Section 111.1. Cf. N. Ohio Chapter of
Assoc. Builders & Contractors, Inc. v. Gateway Econ. Dev, Corp. of
Greater Cleveland, No. 1:92 CV 0649, 1992 WL 119375, *11 (N.D. Ohio May
12, 1992) ("Only if an entity is allowed to be formed by a private actor
is the entity a non-governmental actor").
Turning to the Marcella factors, the state of Illinois does not "manage
the day-to-day activities of the [ICECF], does not provide the funds to
support its activities, and does not employ or grant civil service
benefits to its workers." State officials' ability to appoint board
members does not amount to control of the foundation.*fn13 Based on all
of these factors, and considering that the Court has determined ICECF's funds to be private,
ICECF has standing to bring a constitutional claim against the state of
E. Takings Clause
While the Fifth Amendment confirms the state's right to confiscate
private property, it requires that such taking must be (1) for public
use, and (2) justly compensated.*fn15 U.S. Const. Am. V. There is no
question that the state intends to use the disputed funds for public
purposes, namely repaying bond obligations and funding state agencies
with environmental responsibilities. Likewise, there is no disagreement
that Section 111.1(d) does not require any compensation for funds taken
from ICECF. In its motion and opposition to Plaintiff's motion, Defendant
has not provided any defenses specific to Plaintiff's takings claim.
Rather, the state has relied solely on its arguments that ICECF is a
state-created, state-controlled public entity and that ICECF's funds are
public funds. The Court has rejected those arguments, and finds that
Section 111.1(d) performs an unconstitutional taking on the private
property of ICECF.
Section 111.1(d) performs a per se taking akin to the physical invasion
of real property. Brown v. Legal Found, of Wash., 123 S.Ct. 1406, 1416, 155 L.Ed.2d 376,
393 (2003). If allowed, this taking would result in a loss to ICECF of
$125 million. Rather than allowing the transfer and then requiring
compensation for Plaintiff's loss, the Court finds that Section 111.1(d)
is invalid as an unconstitutional taking. Plaintiff need not give the
state $125 million of its private funds. With respect to Count I,
Plaintiff's motion for summary judgment is granted.
F. Due Process
1. Procedural Due Process
Plaintiff also argues that the state has violated its right to
procedural due process through the enactment of Section 111.1(d). "The
standard elements of a due process claim include whether the plaintiff
suffered a deprivation of a cognizable property or liberty interest, and
whether any such deprivation occurred without due process." Omosegbon
v. Wells, 335 F.3d 668, 674 (7th Cir. 2003) (citing Morrissey v.
Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972).
The state argues that ICECF received constitutional due process simply
because the Illinois legislature enacted Section 111.1(d) through a
public process that afforded ICECF the opportunity to be heard.
Defendant's reliance on United States v. Locke, 471 U.S. 84,
105 S.Ct. 1785, 85 L.Ed.2d 64 (1985), in support of this argument is
misplaced. In Locke, the Federal Land Policy and Management Act required
mining claim holders to register their claims by a certain date or lose
them. Claimants who lost their claims then sued the government for an
unconstitutional taking and denial of due process. Refusing the miners'
claim, the court noted, "a legislature generally provides
constitutionally adequate process simply by enacting the statute,
publishing it, and to the extent the statute regulates private conduct,
affording those within the statute's reach a reasonable opportunity . . . to comply with those
requirements." Id. at 108.
In this case, the state's amendment to Section 111.1 does not contain
any procedural hoops that ICECF may attempt to jump through in order to
retain its funds. Rather, the amendment simply allows the state to dip
into the private account of the foundation. Locke does not authorize such
state action. If merely enacting a statute satisfied all requirements of
procedural due process, there would be little that states could not take
away from their citizens simply by providing the "procedural due process"
afforded by a vote of the state legislature.
Two Seventh Circuit liquor license cases are helpful in determining
whether Section 111.1 violates procedural due process. See Club Misty,
Inc. v. Laski, 208 F.3d 615 (7th Cir. 2000); Philly's v. Byrne, 732 F.2d 87
(7th Cir. 1984). In Club Misty, the Illinois legislature enacted a
statute that allowed voters to revoke the liquor license assigned to a
specific street address upon referendum, Citing its own dicta in
Philly's, the Seventh Circuit struck down this law, reasoning that "it
authorizes them to evict a particular seller, as if they were the judges
of a housing court or a judge asked to abate a nuisance." Club Misty, 208
F.3d at 622. Such adjudicative action on the part of the legislature is
not proper under the constitution. In this case, the amendment to Section
111.1 choosing a single private foundation from which to extract $125
million is similarly adjudicative in nature and is unconstitutional.
Defendant disputes the application of Club Misty with several
arguments. First, Defendant objects that it did not execute its action
through public referendum. This argument fails, as the Club Misty opinion
places the blame for the due process violation on the state, not on the
voters: "[w]hen the Illinois legislature stepped from allowing a
precinct's voters to vote the precinct dry to allowing the voters to expel
a particular disfavored licensee, it crossed the line that protects property holders from being deprived of their property
without due process of law." Id. at 621. Second, the state argues that
ICECF had ample opportunity to participate in the legislative process,
satisfying procedural due process. This assertion fails in the face of an
adjudicative action such as that attempted against ICECF.*fn16 Third,
Defendant argues that "unlike Club Misty, here there is no punishment or
finding of guilt against ICECF in the amendment [to] Section 16-111.1."
This objection refers to the Club Misty court's analysis of the law in
issue as a bill of attainder. That court analyzed the two issues
separately, and did not consider "punishment" or "guilt" in the due
process analysis. Id. at 618-25. Fourth, Defendant points out that in Club
Misty it was undisputed that liquor licenses constituted due process
property interests, whereas there is some question as to ICECF's funds. As
the Court addressed the issue of the private nature of ICECF's funds
above, this objection fails. Finally, Defendant argues that ICECF was not
"singled out" by Section 111.1, which is a "statute with general import."
The Court agrees that Section 111.1 does not mention ICECF by name, but
finds the state's argument inconsistent with its vigorous contention that
Section 111.1 and ICECF are the products of a specific contract between
the state and ComEd. Indeed, the footnote attached to Defendant's
argument reveals it to be a rehash of the public-private entity issue
already addressed in this opinion.
As it allows the state to perform an adjudicative role in acting
against the interests of a particular individual entity, the amendment to Section 111.1 is a
violation of ICECF's right to protection from deprivation of property
without due process of law. Accordingly, Plaintiff's motion for summary
judgment is granted with respect to Count IV.
2. Substantive Due Process
Plaintiff also claims that its right to substantive due process is
violated by the state's action. Such a claim requires an inquiry separate
from the procedures of the legislature. "[The Supreme Court's] prior
cases have held the provision that `[n]o State shall . . . deprive any
person of life, liberty, or property, without due process of law,' to
`guarante[e] more than fair process,' and to cover a substantive sphere
as well, `barring certain government actions regardless of the fairness
of the procedures used to implement them.'" County of Sacramento v.
Lewis, 523 U.S. 833, 840, 118 S. Ct 1708, 1713 (1998) (citing Washington
v. Glucksberg, 521 U.S. 702, 719, 117 S.Ct. 2258, 2267, 138 L.Ed.2d 772
(1997); U.S. Const, Am. 14, § 1).
Because of its ruling on the issue of procedural due process, the Court
need not consider whether Defendant also violated Plaintiff's right to
substantive due process. Nevertheless, even if Defendant had not violated
ICECF's right to procedural due process, the state's actions violate
substantive due process as well. Substantive due process requires only
that the accused state action be rationally related to a legitimate
government interest.*fn17 Lee v. City of Chicago, 330 F.3d 456,
467 (7th Cir. 2003). The state argues that its amendment of Section 111.1
is related to the interest of repaying general bond obligations and
funding environmental agencies. This argument would allow siphoning from
any private entity upon a showing by the state that the funds would go to a legitimate cause. Accordingly, Defendant's argument
proves too much, and cannot justify its legislative demand upon ICECF.
Although a finding of a substantive due process violation is unnecessary
given the Court's holding with respect to procedural due process, the
state's amendment of Section 111.1 also violates Plaintiffs right to
substantive due process. CONCLUSION
Defendant's motion for summary judgment is granted with respect to
Counts II, III, and V. Plaintiff's state-court claims are barred by the
Eleventh Amendment of the United States Constitution. Plaintiff's motion
for summary judgment is granted with respect to Counts I and IV.