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Rhonda Bartlow and Jack Bartlow, D/B/A Jack's Roofing v. Joseph Costigan

August 21, 2012

RHONDA BARTLOW AND JACK BARTLOW, D/B/A JACK'S ROOFING,
RYAN TOWLE, D/B/A JACK'S SIDING AND WINDOWS, AND CHARLES ERIC MODGLIN, PLAINTIFFS-APPELLANTS,
v.
JOSEPH COSTIGAN, IN HIS CAPACITY AS DIRECTOR OF LABOR, STATE OF ILLINOIS,
DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Franklin County. No. 10-CH-35 Honorable Robert W. Lewis, Judge, presiding.

The opinion of the court was delivered by: Justice Stewart

NOTICE Decision filed 08/21/12. T

he text of this decision may be changed or corrected prior to the filing of a Petition for Rehearing or the disposition of the same.

JUSTICE STEWART delivered the judgment of the court, with opinion. Justices Goldenhersh and Chapman concurred in the judgment and opinion.

OPINION

¶ 1 This appeal concerns the constitutionality of the Illinois Employee Classification Act (the Act) (820 ILCS 185/1 to 999 (West 2008)). On March 12, 2010, the plaintiffs, Rhonda Bartlow and Jack Bartlow, doing business as Jack's Roofing, Ryan Towle, doing business as Jack's Siding and Windows, and Charles Eric Modglin, filed a complaint in the circuit court of Franklin County, Illinois, for a declaratory judgment and for injunctive relief against the defendant, Joseph Costigan, in his capacity as the Director of the Illinois Department of Labor*fn1 (the Department). The plaintiffs alleged in their complaint that the Department is attempting to enforce the Act against them, but the Act is facially unconstitutional and unenforceable. The circuit court granted the Department's motion for a summary judgment. We affirm.

¶ 2 BACKGROUND

¶ 3 The Act was enacted on January 1, 2008, and it establishes criteria to determine whether an individual performing services for a construction contractor is an employee of the contractor or is an independent contractor. The Act seeks to ensure that workers in the construction industry are offered protections under numerous labor laws, including minimum wage, overtime, workers' compensation, and unemployment insurance, and are not misclassified as independent contractors by the contractor in order to avoid tax and labor law obligations. 820 ILCS 185/3 (West 2010); 56 Ill. Adm. Code 240.100 (2010).

¶ 4 Rhonda and Jack Bartlow are spouses and general partners in a general partnership that has been doing business as Jack's Roofing since 1977. The Bartlows are in the business of installing siding, windows, seamless gutters, and roofs. Ryan Towle and Charles Eric Modglin perform siding, window, and roof installation services for the Bartlows. The Bartlows maintain that Towle and Modglin are not their employees, but are subcontractors who operate their own businesses as sole proprietors. At the time of the lawsuit, the Department was investigating whether the Bartlows had misclassified Towle, Modglin, and others as independent contractors when they should have been classified as employees under the Act.

¶ 5 On September 3, 2008, the Department sent the Bartlows a "notice of investigation and request for documents." The Department's request for documents sought documents concerning their relationship with Towle, Modglin, and other persons who the Department "contends are or were [Jack's Roofing] employees," not subcontractors. The investigation was identified as "File Number: 2009-CA-JD08-0017." On October 15, 2008, the Bartlows furnished the Department numerous documents it had requested. They did not have possession of documents related to the capitalization of their subcontractors, information concerning other customers of the subcontractors, or the subcontractors' income tax compliance. In April 2009, a conciliator working for the Department conducted a telephone interview with Rhonda Bartlow and with various individuals who had contracted with the Bartlows.

¶ 6 On February 16, 2010, the Department sent the Bartlows a "Notice of Preliminary Investigative Findings," stating that it had made a preliminary determination that the Bartlows "had failed properly to classify ten subcontractors in violation of the Act." The notice also stated that the Bartlows "may be assessed a fine of $1,683,000" and requested a response within 30 days of the date of the notice. The notice further stated that "upon receipt and review of the response, [the Department would] issue a written decision informing the parties of the final determination in the matter."

¶ 7 On March 1, 2010, the Department sent the Bartlows a notification of a second investigation "of a complaint regarding work done at 311 West Grand, Carterville, Illinois." In this second notification, the Department requested "production of documents within 15 calendar days of the date of the letter" and identified the second investigation as "File No. 2010-CA-RT12-0050."

¶ 8 On March 12, 2010, the Bartlows, Towle, and Modglin filed a complaint against the Department, requesting a declaratory judgment and injunctive relief. They alleged that the Department had not provided them an "opportunity for hearing," that their telephone calls to the Department requesting settlement discussions had not been returned, and that the Act and the pending investigations have created uncertainty concerning how they are to conduct their business.

¶ 9 The plaintiffs' five-count complaint maintained that the Act violates the due process clause of the United States and Illinois Constitutions, the special legislation clause of the Illinois Constitution, the equal protection clause of the United States and Illinois Constitutions, and the prohibition of bills of attainder in the United States Constitution. The plaintiffs also filed a motion for a temporary restraining order (TRO) and a preliminary injunction, requesting the court to enjoin the enforcement of the Act during the pendency of the action.

¶ 10 On March 15, 2010, the circuit court conducted a contested hearing on the plaintiffs' request for a TRO and denied the motion. The plaintiffs filed an interlocutory appeal pursuant to Illinois Supreme Court Rule 307 (eff. Feb. 26, 2010). On March 25, 2010, on the expedited timetable required by Rule 307(d), we reversed the circuit court's denial of the plaintiffs' TRO request. Bartlow v. Shannon, 399 Ill. App. 3d 560, 927 N.E.2d 88 (2010). We concluded that the plaintiffs' complaint raised a "fair question" concerning whether the Act violated procedural due process by granting the Department the power to assess fines, penalties, and sanctions without affording the plaintiffs with a meaningful hearing. Id. at 571, 927 N.E.2d at 98. We did not determine the merits of the plaintiffs' due process claim, only that it raised a "fair question." In addition, we did not address any of the plaintiffs' other constitutional claims. We remanded the case and directed the circuit court to enter a TRO until it conducted a full hearing on the plaintiffs' request for a preliminary injunction.

¶ 11 On remand, the plaintiffs did not request a hearing on their motion for a preliminary injunction. Instead, the plaintiffs and the Department each filed cross-motions for summary judgment, and the parties agreed that no evidentiary hearing was necessary to determine the plaintiffs' constitutional issues. On October 20, 2011, the circuit court entered a memorandum of decision with respect to the parties' cross-motions for a summary judgment, finding that the Act did not violate the guarantees of due process and equal protection or the prohibitions against special legislation and bills of attainder.

¶ 12 The court noted in its memorandum that the Act granted the Department the power to assess penalties and sanctions and that there is no provision in the Act for any type of administrative hearing. However, the court ruled as follows:

"The instant case presents a facial challenge only. No as applied challenge is presented in Plaintiffs' Second Amended Complaint. The Department is not precluded from giving Plaintiffs notice and a hearing if it so chooses. Therefore, *** the court finds [the Act] is not facially unconstitutional."

¶ 13 On November 14, 2011, the circuit court entered its final order based on its memorandum of decision. The court's final order found that the Act was not unconstitutional special legislation, did not violate the equal protection clauses of the Illinois or United States Constitution, does not constitute a bill of attainder, and is not facially unconstitutional under the due process clauses of the United States and Illinois Constitutions. The court entered a judgment on all counts of the plaintiffs' complaint in favor of the Department. The plaintiffs filed a timely notice of appeal.

¶ 14 DISCUSSION

¶ 15 The plaintiffs argue that the circuit court erred in granting the Department's motion for summary judgment and denying their motion for summary judgment because the Act is facially unconstitutional under both the due process and equal protection clauses of the United States and Illinois Constitutions. The plaintiffs also argue that the Act is an unconstitutional special legislation in violation of the Illinois Constitution. The plaintiffs appeal the circuit court's judgment granting a summary judgment in favor of the Department on their constitutional challenges and denying their motion for summary judgment.

¶ 16 "Summary judgment is proper when the pleadings, depositions, and affidavits demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law." Schultz v. Illinois Farmers Insurance Co., 387 Ill. App. 3d 622, 625, 901 N.E.2d 957, 960 (2009). The court must construe the evidence strictly against the movant and liberally in favor of the opponent. Gatlin v. Ruder, 137 Ill. 2d 284, 293, 560 N.E.2d 586, 589 (1990). The review of the grant of summary judgment is de novo. Ioerger v. Halverson Construction Co., 232 Ill. 2d 196, 201, 902 N.E.2d 645, 648 (2008).

¶ 17 In addition, applicable to our review in the present case, we note that the constitutionality of a statute is a question of law that we review de novo. Irwin Industrial Tool Co. v. Department of Revenue, 238 Ill. 2d 332, 340, 938 N.E.2d 459, 465 (2010). "Statutes are presumed to be constitutional, and we must construe a statute so as to uphold its constitutionality if it is reasonably possible to do so. The party challenging the validity of a statute has the burden of clearly establishing a constitutional violation." Id. ¶ 18 I.

¶ 19 The Statutory and Regulatory Framework of the Act

¶ 20 We begin our analysis of the constitutionality of the Act by first outlining the statutory and regulatory framework of the Act. As noted above, the Act is designed to address problems in the construction industry that arise when contractors improperly classify employees as independent contractors in order to avoid certain laws and regulations that are designed to protect employees. The Act grants the Department the power to conduct investigations in connection with the administration and enforcement of the Act and provides that the Department has the duty to enforce the provisions of the Act. 820 ILCS 185/25 (West 2008).

¶ 21 (A)

¶ 22 The Department's Investigatory Powers

¶ 23 An investigation under the Act begins when an interested party files a complaint with the Department against an employer if there is a reasonable belief that the employer is in violation of the Act. 820 ILCS 185/25 (West 2008). The Department itself may also file a complaint alleging a violation of the Act. 56 Ill. Adm. Code 240.200 (2010).

¶ 24 Upon the filing of a complaint, the Department reviews the complaint to determine whether there is cause for an investigation. 56 Ill. Adm. Code 240.220(a) (2010). If the Department determines that there is cause for an investigation, it is obligated to investigate to ascertain the facts relating to the alleged violation and determine whether a violation has occurred. 56 Ill. Adm. Code 240.300 (2010). The Department may investigate using "any method or combination of methods deemed suitable at the discretion of the Department." 56

Ill. Adm. Code 240.300 (2010). "The investigation shall include a written notice to the contractor of the substance of the complaint and an opportunity to present any information the contractor wishes the Department to consider in reaching its determination." 56 Ill. Adm. Code 240.300 (2010). If a contractor refuses to cooperate with an investigation, "the Department may make a finding that the Act has been violated based upon the evidence available to the Department." 56 Ill. Adm. Code 240.300(a) (2010).

ΒΆ 25 "Before making a final determination of a violation, the Department shall notify the contractors of the substance of the Department's investigation and afford the contractors an opportunity to present any written information, within 30 calendar days, for the Department to consider in reaching its determination." 56 Ill. Adm. Code 240.300(d) (2010). "As part of its investigation, the Department may convene a fact-finding conference in person or by telephone for the purpose of obtaining additional information or evidence, identifying the issues in dispute, ascertaining the positions of the parties and exploring the possibility of settlement." 56 Ill. Adm. Code 240.310 (2010). All parties are to be ...


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