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People ex rel. Madigan v. Burge

Supreme Court of Illinois

July 3, 2014

THE PEOPLE ex rel. LISA MADIGAN, Attorney General of Illinois, Appellee,
v.
JON BURGE, et al., Appellants

Page 15

Appeal from the Appellate Court First District.

SYLLABUS

A pension board which awarded benefits to a retired policeman in 1997 had exclusive original jurisdiction, under a 1972 statute, to terminate them for commission of an employment-related felony; but, where it did not do so, the Attorney General's circuit court action to do so by enjoining a violation of the Pension Code under a less specific 1982 statute was properly dismissed for lack of subject-matter jurisdiction.

For Jon Burge, APPELLANT: Ms. Claire Gorman Kenny, Mr. Michael H. Moirano, Nisen & Elliott, LLC, Chicago, IL.

For People ex rel. Lisa Madigan, APPELLEE: Mr. Paul Joseph Berks, Mr. Richard Scott Huszagh, Assistant Attorney General, Chicago.

Mr. David Richard Kugler, Attorney at Law, Chicago, IL.

JUSTICE BURKE delivered the judgment of the court, with opinion. Justices Thomas, Karmeier, and Theis concurred in the judgment and opinion. Chief Justice Garman dissented, with opinion, joined by Justice Kilbride. Justice Freeman dissented, with opinion.

OPINION

Page 16

BURKE, J.

[¶1] This case presents a question regarding the termination of pension benefits being received by defendant Jon Burge, a former Chicago police supervisor who was convicted of committing perjury in a civil lawsuit after he denied having any knowledge of suspects being tortured in the police unit under his command. What is at issue, however, is not whether Burge, or any similarly situated police officer, is legally entitled to continue receiving pension benefits. Rather, the narrow question we must answer here is who decides whether the pension benefits should be terminated.

[¶2] The circuit court of Cook County held that deciding whether to terminate Burge's pension benefits was a " quintessential adjudicative function" which rested exclusively within the original jurisdiction of defendant Retirement Board of the Policemen's Annuity and Benefit Fund of Chicago (the Board), subject to review under the Administrative Review Law (735 ILCS 5/3-101 et seq. (West 2012)). The appellate court reversed, holding that the circuit court had concurrent, original jurisdiction with the Board to determine whether Burge's benefits should be terminated. 2012 IL App (1st) 112842, 981 N.E.2d 1058, 367 Ill.Dec. 330. For the reasons that follow, we reverse the judgment of the appellate court and affirm the judgment of the circuit court.

[¶3] BACKGROUND

[¶4] Jon Burge was a Chicago police officer from approximately 1970 to 1993. During a portion of that time, he served as supervisor of the violent crimes unit detectives in Area Two, a geographical division of the Chicago Police Department. In 1997, Burge applied to the Board for pension benefits from the Policemen's Annuity and Benefit Fund of Chicago (the Fund). See 40 ILCS 5/5-101 (West 2012) (authorizing the creation of a policemen's annuity and benefit fund). The Board awarded the benefits.

[¶5] In 2003, a federal civil rights lawsuit was filed in which the plaintiff alleged that he was physically tortured and abused by police officers under Burge's command at Area Two. Although the plaintiff did not accuse Burge personally of abusing him, the plaintiff did allege that Burge was aware of a pattern of torture and abuse being conducted by police officers in Area Two and that Burge had participated in such practices. In response to written interrogatories in the lawsuit, Burge denied under oath having any knowledge of, or participation in, the torture or abuse of persons in the custody of the Chicago Police Department.

[¶6] In 2008, Burge was indicted by a federal grand jury on one felony count of perjury (18 U.S.C. § 1621(1) (2006)), and two felony counts of obstruction of justice (18 U.S.C. § 1512(c)(2) (2006)), for making false statements in his responses to the interrogatories. In 2010, Burge was convicted by a jury on all three counts and was sentenced to four and one-half years' imprisonment. His convictions were affirmed on appeal. United States v. Burge, 711 F.3d 803 (7th Cir. 2013). Burge's conduct

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in the civil lawsuit is the only criminal activity for which he has been convicted. Burge has not been indicted or convicted for conduct which occurred while he was still serving on the Chicago Police Department.

[¶7] In January 2011, the Board held a hearing to determine whether, under section 5-227 of the Illinois Pension Code (40 ILCS 5/5-227 (West 2010)), Burge's pension benefits should be terminated because of his federal felony convictions. Section 5-227 states, in relevant part, that " [n]one of the benefits provided for in this Article shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with his service as a policeman." At the hearing, Burge maintained that his felony convictions related solely to the giving of false testimony in a civil lawsuit filed several years after his retirement from the police force and, therefore, did not justify terminating his pension benefits.

[¶8] At the conclusion of the hearing, a motion was made by a Board member to terminate Burge's pension benefits. The Board is composed of eight trustees, four of whom are appointed by the mayor of Chicago, and four of whom are current or former police officers elected by police officer participants in the Fund. See 40 ILCS 5/5-178 (West 2012). The Board divided 4 to 4 on the question of whether Burge's felony convictions for perjury and obstruction of justice in the civil lawsuit related to, arose out of, or were connected with his employment as a Chicago police officer. The four city-appointed trustees voted in favor of the motion to terminate benefits, while the four officer-elected trustees voted against the motion. The Board concluded that because " the motion was not passed," " Burge was allowed to continue to receive his monthly pension benefits." The Board issued a written decision to that effect on January 31, 2011. No administrative review was sought from this decision.

[¶9] On February 7, 2011, one week after the Board had issued its decision, the Attorney General, on behalf of the State of Illinois, filed the complaint at issue in this case, naming as defendants Burge, the Board, and the individual trustees of the Board in their official capacities. The complaint was brought pursuant to section 1-115 of the Pension Code. That provision authorizes the Attorney General to bring a civil action to " [e]njoin any act or practice which violates any provision of this Code" or " [o]btain other appropriate equitable relief to redress any such violation or to enforce any such provision." 40 ILCS 5/1-115 (West 2012). In her complaint, the Attorney General alleged that " [b]y continuing to pay public pension benefits to Jon Burge following three felony convictions relating to, arising out of, and in connection with his service as a police officer, Defendant Board and Defendant Trustees are violating Section 227 of Article 5 of the Illinois Pension Code." The complaint did not allege any other violations of the Pension Code or wrongful conduct by the Board or its trustees. The complaint sought a preliminary and permanent injunction ordering the Board to cease all payments to Burge and an order requiring Burge to repay any benefits received since his convictions.

[¶10] Burge, and the Board and trustees, subsequently filed motions to dismiss the complaint under section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2012)). Defendants alleged in their motions that the circuit court lacked subject matter jurisdiction to consider the Attorney General's complaint. The circuit court agreed.

[¶11] In a written order, the circuit court noted that section 5-189 of the Pension

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Code (40 ILCS 5/5-189 (West 2012)), states in pertinent part that " [t]he Board shall have exclusive original jurisdiction in all matters relating to or affecting the fund, including, in addition to all other matters, all claims for annuities, pensions, benefits or refunds." The circuit court further noted that, while the statutory prohibition against providing pension benefits to a person convicted of a felony relating to, arising out of, or in connection with his service as a policeman is absolute, " in each individual case, the statutory standard will have to be applied to discrete facts and circumstances." The circuit court concluded that this was a " quintessential adjudicative function" which section 5-189 conferred exclusively on the Board.

[¶12] In addition, the circuit court observed that, under 5-228 of the Pension Code (40 ILCS 5/5-228 (West 2012)), final administrative decisions of the Board are subject to judicial review for error solely as provided by the Administrative Review Law. Such review is exclusive and alternate methods of direct review or collateral attack are not permitted. See, e.g., Emerald Casino, Inc. v. Illinois Gaming Board, 366 Ill.App.3d 622, 625, 852 N.E.2d 512, 304 Ill.Dec. 262 (2006). The circuit court concluded that the Board had rendered a final administrative decision when it ruled on the motion to terminate Burge's pension benefits. The circuit court then reasoned that the Attorney General's complaint would present to the court " the same issue that the Board decided" but would do so outside the confines of the Administrative Review Law. Thus, in the view of the circuit court, the complaint was an impermissible collateral attack on the Board's decision. The circuit court therefore dismissed the Attorney General's complaint for lack of subject matter jurisdiction.

[¶13] The Attorney General appealed the dismissal and the appellate court reversed. 2012 IL App (1st) 112842, 981 N.E.2d 1058, 367 Ill.Dec. 330. The appellate court stated:

" Viewing the statute as a whole, we find no explicit language in the statute expressing a legislative intent to divest circuit courts of the subject matter jurisdiction to hear civil actions brought by the Attorney General under section 1-115(b) of the Pension Code. As a result, we find that the circuit court erred in interpreting section 5-189 of the Pension Code as divesting it of the subject matter jurisdiction to address the Attorney General's claims. We find that section 1-115(b) gives the circuit court concurrent subject matter jurisdiction with the Pension Board to hear the disputed pension issues presented in the Attorney General's complaint." Id. ¶ 25.

[¶14] After reaching this conclusion, the appellate court then observed that when the circuit court and an administrative agency have concurrent jurisdiction, the circuit court may, under the doctrine of primary jurisdiction, stay judicial proceedings and permit the administrative agency to first address the issue and bring its expertise to bear on the matter in dispute. Id. ¶ 26 (citing Village of Itasca v. Village of Lisle, 352 Ill.App.3d 847, 853, 817 N.E.2d 160, 288 Ill.Dec. 35 (2004)). Because the Board in this case had already addressed the termination of Burge's pension benefits at the time the Attorney General's complaint was filed, the appellate court treated the Board's adjudication of the matter, in effect, as an exercise of primary jurisdiction.

[¶15] Continuing, the appellate court then pointed to section 5-182 of the Pension Code (40 ILCS 5/5-182 (West 2012)), which provides that " no pension, annuity, or benefit shall be allowed or granted and

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no money shall be paid out of the fund unless ordered by a vote of the majority of the members of the board." The court concluded that the Board violated this section when it determined that a tie vote meant that Burge was allowed to continue to receive his monthly pension benefits. Based on this violation, the appellate court reasoned that the Board's decision to continue Burge's benefits was " voidable" (2012 IL App (1st) 112842, ¶ 30, 981 N.E.2d 1058, 367 Ill.Dec. 330), and the circuit court was not required to give the Board's exercise of primary jurisdiction any deference. The appellate court therefore reinstated the Attorney General's complaint and remanded the cause to the circuit court to determine, as an original matter, whether Burge's felony convictions related to, arose out of, or were connected with his service as a police officer in violation of section 5-227.

[¶16] Burge, and the Board and its trustees, filed petitions for leave to appeal in this court. Ill. S.Ct. R. 315 (eff. Feb. 26, 2010). The petitions were granted and the cases consolidated for review.

[¶17] ANALYSIS

[¶18] At issue before us is whether the circuit court properly dismissed the Attorney General's complaint pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 2012)). A motion to dismiss under section 2-619 admits the legal sufficiency of the plaintiff's complaint, but asserts an affirmative matter which defeats the claim. In this case, the asserted affirmative matter is a lack of subject matter jurisdiction (735 ILCS 5/2-619(a)(1) (West 2012)). Our review of a dismissal under section 2-619 is de novo. King v. First Capital Financial Services Corp., 215 Ill.2d 1, 12, 828 N.E.2d 1155, 293 Ill.Dec. 657 (2005).

[¶19] Subject matter jurisdiction refers to a tribunal's " power to hear and determine cases of the general class to which the proceeding in question belongs." (Internal quotation marks omitted.) Crossroads Ford Truck Sales, Inc. v. Sterling Truck Corp., 2011 IL 111611, ¶ 27, 959 N.E.2d 1133, 355 Ill.Dec. 400. The Illinois Constitution of 1970 gives original jurisdiction to the circuit courts over all justiciable matters except where this court has exclusive and original jurisdiction relating to the redistricting of the General Assembly and the ability of the Governor to serve or resume office. Id. However, this court has held that the General Assembly may confer exclusive original jurisdiction on an administrative body when it enacts a " comprehensive statutory administrative scheme" that " explicitly" vests original jurisdiction in the administrative agency. Id. Whether the legislature has done so is a question of statutory interpretation. Id.

[¶20] Defendants contend there is an explicit statement from the General Assembly vesting exclusive, original jurisdiction with the Board when a claim is made that a police officer's pension benefits should be terminated because of a felony conviction. That statement, according to defendants, is found in section 5-189 of the Pension Code, which states that the Board shall have the power:

" To authorize payments. To authorize the payment of any annuity, pension, or benefit granted under this Article or under any other Act relating to police pensions, heretofore in effect in the city which has been superseded by this Article; to increase, reduce, or suspend any such annuity, pension, or benefit whenever any part thereof was secured or granted or the amount thereof fixed, as the result of misrepresentation, fraud, or error; provided, the annuitant, pensioner or beneficiary concerned shall be notified

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and given an opportunity to be heard concerning such proposed action.
The Board shall have exclusive original jurisdiction in all matters relating to or affecting the fund, including, in addition to all other matters, all claims for annuities, pensions, benefits or refunds." 40 ILCS 5/5-189 (West 2012).

[¶21] Defendants acknowledge, as they must, that not all legal challenges to " matters relating to or affecting the fund" fall within the exclusive jurisdiction of the Board. For example, as this court has explained, an administrative agency, such as the board of trustees of a retirement system, is a creature of statute and, as such, has only the authority that is conferred upon it by law. Alvarado v. Industrial Comm'n, 216 Ill.2d 547, 553, 837 N.E.2d 909, 297 Ill.Dec. 458 (2005); Rossler v. Morton Grove Police Pension Board, 178 Ill.App.3d 769, 773, 533 N.E.2d 927, 127 Ill.Dec. 845 (1989). Consequently, when a retirement board acts in a manner which is not merely erroneous but which exceeds the " inherent power" of the board granted to it under the Pension Code, the board is said to act without " jurisdiction." Newkirk v. Bigard, 109 Ill.2d 28, 36, 485 N.E.2d 321, 92 Ill.Dec. 510 (1985). Such actions of a board are " void" and may be attacked at any time, in any court, either directly or collaterally. Business & Professional People for the Public Interest v. Illinois Commerce Comm'n, 136 Ill.2d 192, 243-44, 555 N.E.2d 693, 144 Ill.Dec. 334 (1989); Genius v. County of Cook, 2011 IL 110239, ¶ 25, 953 N.E.2d 407, 352 Ill.Dec. 168; see also, e.g., Landfill, Inc. v. Pollution Control Board, 74 Ill.2d 541, 550, 387 N.E.2d 258, 25 Ill.Dec. 602 (1978) (an administrative rule may be challenged on its face in the circuit court on the grounds of being unauthorized by the enabling legislation). Thus, under long-standing law, a circuit court has jurisdiction to consider a complaint that the Board is exceeding its " inherent authority" under the Pension Code and its actions are void, even though the matter raised in the complaint may " relate to" or " affect" the Fund. Defendants do not dispute that an action by the Board which is beyond its " inherent authority" constitutes a " violation" of the Pension Code and may be challenged under section 1-115.

[¶22] Defendants further acknowledge, as again they must, that section 1-115, which is largely identical to parts of section 502(a) of the federal Employment Retirement Income Security Act of 1974 (ERISA), Pub. L. No. 93-406, 88 Stat. 829, 891, was enacted primarily to authorize actions in the circuit court which allege that pension fund fiduciaries, such as the trustees of a retirement board, have breached a fiduciary duty set forth in the Pension Code. A legal challenge alleging that the trustees of a retirement board have breached a fiduciary duty cannot be brought before the board itself since " no man who has a personal interest in the subject matter of [a] decision in a case may sit in judgment on that case." In re Heirich, 10 Ill.2d 357, 384, 140 N.E.2d 825 (1956); Girot v. Keith, 212 Ill.2d 372, 380, 818 N.E.2d 1232, 289 Ill.Dec. 29 (2004). Defendants therefore do not dispute that an allegation that the trustees of the Board have breached a fiduciary duty by, for example, making fraudulent investments, is properly brought in the circuit court under section 1-115 even though it may " relate to" or " affect" the Fund.

[¶23] Given these qualifications, defendants assert that what falls exclusively within the original jurisdiction of the Board under section 1-189 are ordinary adjudications related to or affecting the Fund. Or, stated otherwise, actions which come within the exclusive, original jurisdiction of the Board are those which require

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the resolution of disputed facts and the application of existing Pension Code provisions to fact-specific circumstances. See, e.g., E& E Hauling, Inc. v. Pollution Control Board, 116 Ill.App.3d 586, 598 (1983) (an adjudicative proceeding is one " 'designed to adjudicate disputed facts in particular cases'" (quoting United Wales v. Florida East Coast Ry. Co., 410 U.S. 224, 245, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973))).

[¶24] Defendants contend that deciding whether to terminate Burge's pension benefits requires the application of an existing Pension Code provision to the particular facts of his case and is, therefore, an ordinary adjudication related to the Fund. Defendants further emphasize that, under the plain language of section 5-189, the Board's jurisdiction to conduct such adjudications is " exclusive" rather than concurrent with the circuit court. Thus, according to defendants, original jurisdiction to determine whether Burge's pension benefits should be terminated is vested exclusively in the Board pursuant to section 5-189.

[¶25] Like the circuit court, defendants also note that under section 5-228 of the Pension Code (40 ILCS 5/5-228 (West 2012), final administrative decisions made by the Board are reviewed for error solely under the Administrative Review Law. In this case, the Attorney General's complaint alleged that the Board's continued payment of pension benefits to Burge, after the motion to terminate the benefits failed, was erroneous. However, that challenge was made outside the provisions of the Administrative Review Law. Therefore, according to defendants, the circuit court properly determined that the Attorney General's complaint was an impermissible collateral attack on the Board's decision and that the court lacked jurisdiction to hear the Attorney General's complaint.

[¶26] As she did in the circuit court, the Attorney General, in response, points to section 1-115 of the Pension Code, which provides:

" A civil action may be brought by the Attorney General or by a participant, beneficiary or fiduciary in order to:
(a) Obtain appropriate relief under Section 1-114 of this Code;
(b) Enjoin any act or practice which violates any provision of this Code; or
(c) Obtain other appropriate equitable relief to redress any such violation or to enforce any such provision." 40 ...

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