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Prof'l Towing & Recovery Operators of Illinois v. Box

United States District Court, N.D. Illinois

August 16, 2013

CHARLES E. BOX, in his official capacity as Chairman of the Illinois Commerce Commission & Transportation Division, Defendant

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[Copyrighted Material Omitted]

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For Professional Towing & Recovery Operators of Illinois, an Illinois non-profit association, Plaintiff: Donald S. Rothschild, LEAD ATTORNEY, Goldstine, Skrodzki, Russian, Nemec & Hoff, Ltd., Burr Ridge, IL; Brian Michael Dougherty, Golstine, Skrodzki, Russian, Nemec and Hoff, Burr Ridge, IL; Michael P. McGovern, The McGovern Law Firm, Knoxville, TN.

For Wes's Service, Inc., North Shore Towing, Inc., Plaintiffs: Donald S. Rothschild, LEAD ATTORNEY, Goldstine, Skrodzki, Russian, Nemec & Hoff, Ltd., Burr Ridge, IL; Brian Michael Dougherty, Golstine, Skrodzki, Russian, Nemec and Hoff, Burr Ridge, IL.

For Charles E Box, in his official capacity as Chairman of the Illinois Commerce Commission & Transportation Division, as head of Illinois Commerce Commission & Transporation Division, Defendant: Thomas A. Ioppolo, LEAD ATTORNEY, Michael T. Dierkes, Illinois Attorney General's Office (100 W), Chicago, IL; Alice Elizabeth Keane, Illinois Attorney General's Office, Chicago, IL.


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Robert M. Dow, Jr., United States District Judge.

The parties' cross-motions for summary judgment ask the Court to decide whether Illinois' Commercial Safety Towing Law (Towing Law), 625 ILCS 5/18d-101, et seq. is preempted in whole or in part by the Federal Aviation Administration Act of 1994 (FAAAA), as amended by the Interstate Commerce Commission Termination Act, 49 U.S.C. § 14501(c), because the it has " the force and effect of law related to a price, route, or service of any motor carrier * * * with respect to the transportation of property," but is not part of " the safety regulatory authority of a State with respect to motor vehicles," or whether a dispute over material facts precludes summary judgment. For the reasons stated below, the Court concludes that Towing Law sections 18d-120(a), 18d-125, 18d-150, 18d-160 and 18d-165 are preempted

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by federal law. The remainder of the Towing Law " is complete in and of itself, and is capable of being executed wholly independently of the severed portion," People v. Sanders, 182 Ill.2d 524, 696 N.E.2d 1144, 1149, 231 Ill.Dec. 573 (Ill. 1998), and so the Towing Law is not preempted in its entirety. Accordingly, the parties' cross-motions for summary judgment [100, 101] are granted in part and denied in part.

I. Background

This case concerns a sometimes-dangerous towing scam known as " wreck chasing," Illinois' attempt to combat wreck chasing with towing regulations, and whether those regulations can remain in force despite a federal law that preempts state laws " related to a price, route, or service of any motor carrier * * * with respect to the transportation of property." 49 U.S.C. § 14501(c); City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 430, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002) (" Tow trucks * * * are 'motor carrier[s] of property' falling within § 14501's compass." ).

The concept of a " wreck chaser" applies to towers and towing companies that do a variety of bad things, including: (1) monitoring police scanners to find accidents, (2) speeding to accident sites to solicit business; (3) using strong-arm tactics with owners and operators; (4) brawling with competing towers who get in their way; (5) towing damaged cars to undisclosed locations; (6) providing car owners and operators with phone numbers that go directly to an answering service and not their tow lots; (7) holding cars longer than necessary; (8) summoning owners and operators to desolate areas to recover vehicles; and (8) charging exorbitant fees, often more than $1,000, and (9) requiring payment in cash. The Court has no information about how many wreck chasers hit all those points, but even entities that hit some of them may be worthy of the name. A tower that solicits a tow at the scene of an accident, tows the car without honestly disclosing how much the tow will cost or where the vehicle will be towed, and charges an exorbitant fee to recover the car probably has done enough to earn the designation. The parties have documented that towers of this sort cause economic harms ( e.g., exorbitant fees) and makes the roads less safe ( e.g., speeding to accident scenes, creating disorder at the roadside).

The Commercial Safety Towing Law, 625 ILCS 5/18d-101, et seq. is part of Illinois' response to wreck chasing. [1] It

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regulates " commercial vehicle safety relocators," which it defines as persons or entities " engaged in the business of removing damaged or disabled vehicles from public or private property by means of towing or otherwise, and thereafter relocating and storing such vehicles." 625 ILCS 5/18d-105. The law applies in counties with a population of more than one million and in counties with a population under one million that have adopted the Commercial Relocation of Trespassing Vehicles Law, 625 ILCS 5/18a; 625 ILCS 5/18d-180. Under that rule, the Towing Law applies in 5 of Illinois' 102 counties: Cook, Will, Kane, DuPage, and Winnebago. Its substantive provisions can be summarized as follows:

o Sections 18d-115 and 145 require towing companies engaged in consensual towing [2] to obtain a safety relocator's registration certificate from the Illinois Commerce Commission, for which the companies must pay both an annual and a per-vehicle fee, and require the certificate to be carried in each tow truck;
o Section 18d-120(a) requires towing companies to request specific authorization after the disclosures set forth in 18b-120(b) but prior to towing a damaged or disable vehicle;
o Section 18d-120(b) and (d) require towing companies to provide specific and detailed written disclosures to vehicle owners or operators before towing a damaged or disabled vehicle, and if the owner cannot receive the disclosures then they must be given to local law enforcement and, if known, the owner or operator's insurance company;
o Section 18d-120(c) requires towing companies to maintain copies of completed disclosures for a minimum of five years;
o Section 18d-120(e) prohibits towing companies from seeking any compensation from the vehicle owner or operator and voiding any contracts between the vehicle owner or operator and the tower if the tower fails to comply with section 18d-120(a)-(d);
o Section 18d-125 requires towing companies to issue an itemized final invoice to vehicle operators or owners upon demand and to retain copies of such invoices for a period of five years;
o Section 18d-130 requires towing companies to post signs at their storage facilities advising customers of their rights;
o Section 18d-135 imposes penalties for violations of the recordkeeping requirements in sections 18d-120(b) and 18d-125
o Section 18d-150 prohibits towing companies from including in their contracts with owners or operators

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of damaged or disabled vehicles clauses that waive or limit the towing companies' liability;
o Section 18d-155 imposes penalties and fines for failure to comply with the State Towing Law;
o Section 18d-160 makes noncompliance with the Towing Law an " unlawful practice" within the meaning of Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. ; and
o Section 18d-165 requires that charges accrued by vehicle owners or operators for consensual tows to be payable by cash or major credit card.

The law is prefaced by a statement of " [p]ublic interest and public welfare" :

The General Assembly finds and declares that commercial vehicle towing service in the State of Illinois fundamentally affects the public interest and public welfare. It is the intent of the General Assembly, in this amendatory Act of the 95th General Assembly, to promote the public interest and the public welfare by requiring similar basic consumer protections and fraud prevention measures that are required of other marketplace participants, including the disclosure of material terms and conditions of the service to consumers before consumers accept the terms and conditions. The General Assembly also intends that the provisions in this amendatory Act of the 95th General Assembly promote safety for all persons and vehicles that travel or otherwise use the public highways of this State. The General Assembly finds that it is in the public interest that persons whose vehicles are towed from the public highways know important basic information, such as where they can retrieve their vehicles and the cost to retrieve their vehicles, so that they can avoid vehicle deterioration and arrange for a prompt repair of the vehicles.

625 ILCS 5/18d-110 (emphasis added). Thus, on its face, the Towing Law has a mixed purpose: it aims to protect consumers and promote safety. The law's purpose matters for the Court's preemption analysis because even if a provision of the Towing Law is " related to a price, route, or service" of a tower, and so falls within the general scope of 49 U.S.C. § 14501(c), it will be saved from federal preemption if it is " genuinely responsive to safety concerns" and not by virtue of its reasonableness or effectiveness as a measure combating consumer confusion or fraud, see Ours Garage, 536 U.S. at 442 (emphasis added); 49 U.S.C. § 14501(c)(2).

The mixed purpose set out in the Towing Law's statement of public interest and public welfare is mostly absent from the law's (rather sparse) legislative history, which is focused primarily on consumer protection. When the bill that would eventually become the Towing Law was introduced to the General Assembly on February 8, 2007 as Senate Bill 435 (SB435), it was titled " Truth in Towing" and contained a variety of consumer-disclosure requirements intended to address unfair towing practices. On February 23, 2007, the first Senate amendment to SB435 proposed, among other things, requiring the Illinois Commerce Commission to set rates for towing damaged or disabled vehicles and changing section 2Z of the Consumer Fraud and Deceptive Business Practices Act (" ICFA" ), 815 ILCS 505/2Z to make violations of certain sections of Chapter 18a (which would include the " Truth in Towing Law" ) a violation of ICFA. On March 29, 2007, Senator Maloney, one of SB435's sponsors, told the Senate that the bill " was precipitated by the fact that there are many unscrupulous towing companies out there who take advantage of people

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who are in car accidents." He also mentioned that such towers use " police scanners to get to the accident site" and " they don't specify the location that the car is going or the fee."

After reviewing SB435, the Illinois Attorney General was concerned that the rate-setting provisions were preempted by federal law. The Illinois Commerce Commission agreed, and on May 24, 2007, House Amendment number 3 was filed, removing the rate-setting provisions and adding Chapter 18d to the Vehicle Code and titling it " The Illinois Commercial Safety Towing Law." On May 29, 2007, House Amendment number 4 was filed. It replaced the phrase " collision repair facility" with " commercial safety relocator." During the floor debates, another sponsor, Representative McCarthy, explained that

Senate Bill 435 Creates the Illinois Commercial Safety Towing Law by adding Chapter 18d to the Illinois Vehicle Code. This is basically a disclosure bill to address the problem in some of the counties up in the northeast part of the state where some towers were taking advantage of a lot of the local residents because of the fact that the Bill as it came out of the Senate would have been bothered by a federal preemption about setting rates for towers. We've made this into a complete disclosure Bill. * * * So, I think it's a nice move for the citizens of our state that they can get some protection when they are in a position where they need to have their car towed and they won't be abused by some towers who don't do it the right way.

Representative Black asked about the fee-setting provision in a previous version of the bill. He noted the Attorney General's objections and asked who would be setting the rates. Representative McCarthy answered:

[T]he safety relocators will not be under a fee structure imposed by the Commerce Commission. * * * But I wanted to get these protections in there for our consumers and I said we'll go forward with it as a disclosure Bill this year.

On August 31, 2007, the day he signed the law, Governor Blagojevich's Office issued a press release titled " Gov. Blagojevich signs 'Truth in Towing" law for Illinois Motorists" with the subtitle " SB 435 will strengthen motorists' rights and protect them from fraudulent 'safety relocators.'" The press release quoted Governor Blagojevich: " The last thing anybody should have to worry about after a car accident is whether person towing their vehicle is going to rip them off and add to their trouble. * * * This bill will help protect thousands of drivers from unlicensed towers who prey on accident scenes." [3]

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Defendant argues that the Towing Law's consumer-protection focused legislative history does not mean that it is preempted by federal law, because, when it comes to wreck chasing at least, consumer protection and safety are two sides of the same coin. To drive that point, Defendant highlights a behind-the-scenes concern for safety. For instance, Defendant's opening brief notes that Lori Reimers, a lobbyist for State Farm Insurance who was instrumental in the development and passage of the Towing Law, " agreed that 'the legislators intended that [SB 435] could impact public safety.'" [84 at 14]. And Defendant's expert, Craig Baner, the Operations Commander for the Illinois Commerce Commission Police Department, testified that police agencies in Illinois had " made their local legislators aware of the public safety hazards involved in these wreck chaser tow situations taking place on Illinois roadways." [84 at 14]. [4]

Although consumer protection and safety are not logically incompatible, Plaintiffs, Professional Towing & Recovery Operators of Illinois (" PTROI" ), Wes's Service, Inc., and North Shore Towing, Inc., nevertheless believe that the Towing Law's stated (and alleged behind-the-scenes) concern with safety is a pretext, and that the Towing Law is therefore preempted as a state law " related to a price, route, or service" of a motor carrier that is not genuinely responsive to the state's interest motor carrier safety. See 49 U.S.C. § 14501(c); Ours Garage, 536 U.S. at 442. Plaintiffs have sued Charles Box in his official capacity as Chairman of the Illinois Commerce Commission and Transportation Division. Box is the state official charged with enforcing the Towing Law and so is a proper defendant in a suit seeking prospective relief. See Ex Parte Young, 209 U.S. 123, 156, 28 S.Ct. 441, 52 L.Ed. 714 (1908); Bruggeman ex rel. Bruggeman v. Blagojevich, 324 F.3d 906, 912 (7th Cir. 2003) ( " Ex Parte Young * * * authorizes, notwithstanding the Eleventh Amendment, suits for prospective injunctive relief against state officials who as in this case are sued in their official capacity" ); Illinois Ass'n of Mortg. Brokers v. Office of Banks and Real Estate, 308 F.3d 762, 764-65 (7th Cir. 2002).

Plaintiffs previously moved for a preliminary injunction [14]. On the limited record then before the Court and with the overlay of the preliminary injunction standard, the Court's conclusion was mixed [29]. Several provisions of Illinois' Towing Law appeared to have only a " tenuous, remote, or peripheral" impact on a tower's rates, routes, or services and so were outside the scope of § 14501(c)(1), Morales v. Trans World Airlines, Inc., 504 U.S. 374, 390, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992), while other sections appeared to have a significant connection to towers' services or rates and could not be saved by the safety exception in § 14501(c)(2). See Ours Garage, 536 U.S. at 442. The parties have now filed cross-motions for summary judgment [100, 101], and so present the preemption issue again, but this time on a fuller record.

II. Summary Judgment Standard

Summary judgment is proper if " the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56 (a). On cross-motions for summary judgment, the Court construes all facts and inferences " in favor of the party against whom the motion under consideration is made." In re. United Air Lines, Inc., 453 F.3d 463, 468 (7th Cir. 2006) (quoting Kort v. Diversified Collection Servs., Inc., 394 F.3d 530, 536 (7th

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Cir. 2005)); see also Gross v. PPG Industries, Inc., 636 F.3d 884, 888 (7th Cir. 2011); Foley v. City of Lafayette, Ind., 359 F.3d 925, 928 (7th Cir. 2004). To avoid summary judgment, the opposing party must go beyond the pleadings and " set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (internal quotation marks and citation omitted).

A genuine issue of material fact exists if " the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248. The party seeking summary judgment has the burden of establishing the lack of any genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Summary judgment is proper against " a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322. The party opposing summary judgment " must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). " The mere existence of a scintilla of ...

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