Council 31 of the American Federation of State, County & Municipal Employees v. Quinn, 680 F.3d 875

Council 31 represents 40,000 Illinois state employees and negotiated wage agreements with the State through June 2012.
In 2010–2011, the parties deferred portions of wage increases to save costs, with additional agreements in fall 2010 targeting $100 million in savings for FY2012.
The FY2012 budget lacked sufficient appropriations to fund the scheduled wage, step, and longevity increases for 14 agencies, triggering a State pay freeze.
Governor Quinn issued Rules implementing the pay freeze; the Rules were later made permanent, affecting about 30,000 Council 31 employees and saving roughly $75 million.
Council 31 filed suit alleging Contracts Clause and Equal Protection violations and state-law claims; the district court dismissed and denied a preliminary injunction.
Arbitration in a related proceeding ordered payment of the 2% wage increase due on July 1, 2011; the State sought to vacate the award, while Council 31 sought enforcement.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Eleventh Amendment bars relief against state officials	Council 31 argues Ex parte Young allows prospective relief against officials.	Quinn/Weems contend Eleventh Amendment bars relief against state officials for monetary/contractual relief.	Yes; Eleventh Amendment bars all relief that would force treasury payments or impair contracts.
Contracts-Clause claim viability under Eleventh Amendment	Council 31 seeks injunctive relief and declaratory relief for Contracts Clause violations.	Defendants contend relief would violate Eleventh Amendment as it would affect state treasury.	Barred; Contracts-Clause relief barred by Eleventh Amendment.
Whether the Rules impaired a contractual relationship	Rules unconstitutionally impaired the collective bargaining agreements.	State asserts appropriations conditions and Section 21 of the Illinois Public Sector Relations Act explain the pay freeze.	No cognizable impairment; appropriation defense defeats Contracts-Clause claim.
Equal Protection viability under rational-basis scrutiny	Pay raises to some agencies but not 14 others could be irrationally discriminatory.	Cost-savings measures with a rational relationship to fiscal crisis is sufficient.	Rational-basis relation; claim fails.

MSA Realty Corp. v. State, 990 F.2d 293 (7th Cir. 1993) (Eleventh Amendment bars relief requiring direct state treasury payments; declaratory relief likewise improper)
Virginia Office for Prot. & Advocacy v. Stewart, 131 S. Ct. 1632 (U.S. 2011) (Ex parte Young permits only prospective relief not involving direct treasury payments)
Ex parte Young, 209 U.S. 123 (U.S. 1908) (Prospective relief against state officials for ongoing federal-law violations)
Gen. Motors Corp. v. Romein, 503 U.S. 181 (U.S. 1992) (Contracts impairment requires substantial impairment by change in law)
Energy Reserves Grp., Inc. v. Kan. Power & Light Co., 459 U.S. 400 (U.S. 1983) (Impairments require substantial rather than incidental effects)
Allied Structural Steel Co. v. Spannaus, 438 U.S. 234 (U.S. 1978) (Constitutional impairment analysis of state laws affecting contracts)
Khan v. Gallitano, 180 F.3d 829 (7th Cir. 1999) (Impairment elements under Contracts Clause clarified)
Horwitz-Matthews, Inc. v. City of Chicago, 78 F.3d 1248 (7th Cir. 1996) (Breach alone is not enough to show constitutional impairment)
Discovery House, Inc. v. Consol. City of Indianapolis, 319 F.3d 277 (7th Cir. 2003) (Rational basis scrutiny applicable where no fundamental rights or suspect class)
Edelman v. Jordan, 415 U.S. 651 (U.S. 1974) (Declaratory relief does not circumvent Eleventh Amendment limits)