2018 IL App (1st) 170732
Ill. App. Ct.2019Background
- In 2014 the Illinois General Assembly enacted Public Act 98-641 reducing annuity increases for MEABF and LABF members; participants sued claiming the amendments violated the Illinois Constitution pension protection clause.
- The trial court declared Public Act 98-641 unconstitutional; the Illinois Supreme Court affirmed in Jones v. Municipal Employees’ Annuity & Benefit Fund.
- Krislov & Associates (representing Johnson plaintiffs) petitioned in the trial court for attorney fees: $219,041 under the Illinois Civil Rights Act (statutory lodestar) and $750,000 under a common-fund theory tied to restored 3% annuity increases.
- The trial court denied the fee petition with prejudice, refused class certification for common-fund purposes, and denied discovery of defendants’ time records; Krislov appealed.
- The appellate court reviewed statutory interpretation de novo and considered (1) whether the Civil Rights Act authorized fees for this constitutional pension challenge and (2) whether pension benefits could be tapped under a common-fund or equitable theory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fees are available under the Illinois Civil Rights Act, 740 ILCS 23/5(c) | Krislov: section 5(c)(2) (“to enforce a right arising under the Illinois Constitution”) authorizes fees for any prevailing constitutional claim, so fees are available here | Defendants: §5(c) is limited to discrimination claims against governmental bodies based on race, color, national origin, or gender; this pension challenge is not such a claim | Held: Fees under the Civil Rights Act unavailable—§5(c) applies only where plaintiff prevailed on a discrimination claim involving the identified suspect classes |
| Whether pension annuities may be garnished or reduced to pay attorney fees under the Pension Code | Krislov: even if statutory exemption exists, equity/common-fund doctrines permit fee recovery from the increased annuity payments | Defendants: Pension Code expressly exempts annuities from attachment/garnishment; no statutory exception for attorney fees; pension statutes must be construed for beneficiaries’ protection | Held: Pension Code bars garnishment or seizure of annuities for debts or fees; statutory exemption precludes taking pension payments for attorney fees |
| Whether a common fund was created by restoration of annuity increases, allowing equitable fee award | Krislov: reinstated 3% annuity increases constitute a quantifiable common fund from which fees can be paid | Defendants: Restored or future savings do not create a fund; precedent rejects diverting tax/pension distributions to pay attorneys | Held: No common fund was created; equitable common-fund relief inappropriate here |
| Whether plaintiff could recover both statutory fees and common-fund fees (double recovery) | Krislov: sought both statutory lodestar and common-fund award | Defendants: That would be impermissible double recovery; fees under fee-shifting statute should suffice | Held: Court notes double recovery would be improper and Krislov provided no basis for claiming both awards (court did not reach fee award because fees were unavailable) |
Key Cases Cited
- Jones v. Municipal Employees’ Annuity & Benefit Fund, 2016 IL 119618 (Illinois Supreme Court) (holding Public Act 98-641 unconstitutional under pension protection clause)
- Carmichael v. Laborers’ & Retirement Board Employees’ Annuity & Benefit Fund of Chicago, 2018 IL 122793 (Illinois Supreme Court) (pension statutes construed liberally in favor of pensioners; benefits cannot be diminished)
- Kanerva v. Weems, 2014 IL 115811 (Illinois Supreme Court) (rules on protection of pension rights and statutory construction in pension context)
- In re Pension Reform Litigation, 2015 IL 118585 (Illinois Supreme Court) (pension benefits cannot be diminished or impaired)
- Hamer v. Kirk, 64 Ill. 2d 434 (Ill. 1976) (future savings or refunds do not constitute a common fund for fee awards)
- Rosemont Building Supply, Inc. v. Illinois Highway Trust Authority, 51 Ill. 2d 126 (Ill. 1972) (declining to expand common-fund/class-action fee rules to declaratory-judgment constitutional challenges)
- Hoffman v. Lehnhausen, 48 Ill. 2d 323 (Ill. 1971) (rejecting diverting public tax collection/distribution to pay plaintiffs’ attorneys)
- Bishop v. Burgard, 198 Ill. 2d 495 (Ill. 2002) (ERISA lien/subrogation context where common-fund principles applied; distinguished on facts)
- Pierce v. Visteon Corp., 791 F.3d 782 (7th Cir.) (attorney not entitled to both statutory fee and common-fund award)
- Evans v. City of Evanston, 941 F.2d 473 (7th Cir.) (clients should not be ordered to pay counsel twice when counsel is compensated under fee-shifting statute)