689 F.2d 1286 (7th Cir. 1982), 81-1150, Evans v. City of Chicago

Docket Nº:81-1150, 81-1344.
Citation:689 F.2d 1286
Party Name:Sylvia EVANS, Administrator of the Estate of Andrew Evans, Deceased, Plaintiff- Appellant, Cross-Appellee, v. CITY OF CHICAGO, Clark Burrus and William R. Quinlan, Defendants-Appellees, Cross-Appellants, and Bertha BALARK, Dana Balark, Anne Balark and Dane Balark, by themselves and for all others similarly situated, Plaintiffs-Appellants, Cross-App
Case Date:September 27, 1982
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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689 F.2d 1286 (7th Cir. 1982)

Sylvia EVANS, Administrator of the Estate of Andrew Evans,

Deceased, Plaintiff- Appellant, Cross-Appellee,


CITY OF CHICAGO, Clark Burrus and William R. Quinlan,

Defendants-Appellees, Cross-Appellants,


Bertha BALARK, Dana Balark, Anne Balark and Dane Balark, by

themselves and for all others similarly situated,

Plaintiffs-Appellants, Cross-Appellees,


CITY OF CHICAGO, a municipal corporation; and Daniel Grim,

as Comptroller of the City of Chicago,

Defendants-Appellees, Cross-Appellants.

Nos. 81-1150, 81-1344.

United States Court of Appeals, Seventh Circuit

September 27, 1982

Argued May 28, 1981.

Re-Argued Jan. 6, 1982.

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John Bernard Cashion, Chicago, Ill., for plaintiff-appellant, cross-appellee Evans.

Edward T. Stein, Chicago, Ill., for plaintiffs-appellants, cross-appellees Balark.

Maureen Kelly, Corp. Counsel, Chicago, Ill., for defendants-appellees, cross-appellants.

Before SWYGERT and FAIRCHILD, Senior Circuit Judges, and THOMAS, Senior District Judge. [*]

FAIRCHILD, Senior Circuit Judge.

After five days of trial in the Circuit Court of Cook County, Sylvia Evans settled her action against the City of Chicago (City) for the wrongful death of Andrew Evans. On January 30, 1976, the settlement resulted in the entry of a $67,500 judgment against the City.

In 1977, Bertha, Dana, Anne, and Dane Balark brought a civil rights action under 42 U.S.C. § 1983 against six City policemen. The parties settled that case. On April 10, 1979, the United States District Court, by stipulation, entered a judgment awarding $4,250 to each of the four Balarks. Ill.Rev.Stat., ch. 85, § 9-102 directs the City to pay tort judgments incurred by its employees while acting within the scope of their employment.

After learning that the City would delay paying the judgments for a considerable period, Evans and the Balarks brought separate 42 U.S.C. § 1983 class action suits, which raise constitutional challenges to: (1) the City's practices of (a) delaying payment of tort judgments and (b) paying tort judgments of $1,000 and less before paying larger judgments; and (2) certain Illinois statutes 1 which authorize or reflect the City's practices.

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I. The City's Practice

The City pays tort judgments 2 of $1,000 or less as soon as the judgment holders present proper documents. After paying those judgments, the City applies the remainder of its tort judgment fund to pay all other tort judgments in the chronological order in which the Comptroller's staff has listed them in a bound book, called the "Judgment Record." The Comptroller's staff lists a judgment in the "Judgment Record" upon notification from the Corporation Counsel that all appeals have been completed or waived. 3

In 1977, the waiting period for payment of tort judgments in excess of $1,000 was 36 months. In 1978, the period had increased to 41 months. In July 1979, the City owed $14 million in tort judgments. By September 1979, the waiting period had reached 47 months. The City pays interest at the statutory 6% rate at the time it pays the judgment. See Ill.Rev.Stat., ch. 74, § 3, repealed and recodified, 1981 Ill. Laws 82-280 §§ 19B-101 and 2-1303.

The delay in paying judgments resulted from the City's practice of: levying a.$4.5 million tax each year for payment of tort judgments (an amount far less than the amount needed to pay the judgments entered against the City each year); selling tax anticipation notes for 75% of the levy; making the funds from the notes available to pay tort judgments; paying the principal and interest on the notes from the receipts of the tax levy; using the balance of the tax levy receipts to pay tort judgments; and refusing to apply any other revenue to paying tort judgments.

Eighty percent (80%) 4 of those who win tort judgments for more than $1,000 against the City sell their judgments. The purchasers buy the judgments at a discount which reflects their forecast of the length of the delay in payment and the difference between the prevailing market interest rates and the statutory interest rates. 5 In February 1976, some assignors discounted their judgments 13%. In 1980, discounts reached 20%. The plaintiffs assert that the discount rate subsequently reached 25%.

II. The District Court's Orders

The district court certified both the Evans and the Balark cases as class actions. The district court's class certifications group original tort judgment holders according to the length of time their judgments remain outstanding. Original tort judgment holders who were not paid before the end of the fiscal year following the fiscal year in which their judgments were entered are in the Evans class. 6 Shorter-

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term original tort judgment holders comprise the Balark class. 7 Evans v. City of Chicago, 522 F.Supp. 789, 808 (N.D.Ill.1980). The classification does not distinguish between judgments stemming from state law tort claims or federal civil rights claims; nor between judgments against the City alone or against both municipal officers or employees and the City. The court foresaw class members moving to the Evans class from the Balark class if they remained unpaid upon the conclusion of the fiscal year following the fiscal year in which their tort judgments were entered. 522 F.Supp. at 808-809.

On January 28, 1981, the district court consolidated the Evans and Balark cases for all future action including appeal. In response to the plaintiffs' motions for partial summary judgment and immediate payment, the district court, on January 28, 1981: (1) directed the City to pay immediately to all unpaid Evans class members their judgments, costs, and unwaived statutory interest (Order, P 8); (2) declared that Ill.Rev.Stat., ch. 85, § 9-104(b) failed to provide adequate procedural safeguards to the plaintiffs and other tort judgment holders and, on its face, violated the Fourteenth Amendment of the United States Constitution (Order, P 4); (3) specified the minimum procedural safeguards constitutionally required before the City may decide to pay tort judgments in ten annual installments as permitted by Ill.Rev.Stat., ch. 85, § 9-104(b) (Order, P 4); (4) enjoined the defendants' practice of paying judgments of $1,000 or less before earlier-entered, larger judgments (Order, P 9); (5) declared the practice and Ill.Rev.Stat., ch. 24, § 8-1-16, to the extent the statute authorized the practice, unconstitutional for denying the plaintiffs equal protection of the laws (Order, PP 5 & 6); (6) reserved the question of attorneys' fees (Order, P 10); and (7) declared the judgment final and appealable pursuant to Fed.R.Civ.P. 54(b) (Order, P 7).

The plaintiffs appeal and the defendants cross-appeal from the January 28, 1981 order. 8

III. The Plaintiffs' Appeal

The plaintiffs argue that the district court erred (1) in not holding Ill.Rev.Stat., ch. 85, § 9-104(a) facially unconstitutional on a motion for summary judgment; and (2) in certifying an impermissibly narrow subclass for immediate payment.

A. Constitutionality of Ill.Rev.Stat., ch. 85, § 9-104(a)

The plaintiffs argue that Ill.Rev.Stat., ch. 85, § 9-104(a) is unconstitutional on its face because at the moment a judgment is entered

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Illinois law grants the judgment holder a property right in the judgments; because a taking occurs from the date a judgment is entered against the City until the judgment is satisfied; and because § 9-104(a) permits such takings without providing for a hearing at a meaningful time and in a meaningful manner. The district court, in rendering the decision which it made final under Rule 54(b), did not reach plaintiffs' challenge to the constitutionality of § 9-104(a). Therefore the issue is not before us.

B. Class Definition

The entry of a final judgment under Fed.R.Civ.P. 54(b) allows this court to review the determination of the class found entitled to relief. Wetzel v. Liberty Mutual Insurance Co., 508 F.2d 239, 245 (3d Cir.), cert. denied, 421 U.S. 1011, 95 S.Ct. 2415, 44 L.Ed.2d 679 (1975). See Bogosian v. Gulf Oil Corp., 561 F.2d 434, 443 (3d Cir. 1977), cert. denied, 434 U.S. 1086, 98 S.Ct. 1280, 55 L.Ed.2d 791 (1978). See also Monarch Asphalt Sales Co. v. Wilshire Oil Co., 511 F.2d 1073, 1077 (10th Cir. 1975) (class action reviewed on Rule 54(b) appeal by litigants denied intervention). But see West v. Capital Federal Savings and Loan Ass'n, 558 F.2d 977, 982 (10th Cir. 1977) (Rule 54(b) final judgment of dismissal against putative class members does not make denial of a class certification appealable by named plaintiffs).

The plaintiffs argue that the district court certified an impermissibly narrow subclass for immediate payment. The formula "an impermissibly narrow subclass for immediate payment" invites confusion between the district court's determination that the plaintiffs constitute two distinct appropriate classes, its determination of the relief to which its summary judgment entitled each of the distinct plaintiff classes, and its determination, pursuant to Rule 54(b), that there was no just reason to delay entry of a final judgment granting the immediate payment relief to which its summary judgment entitled one of the plaintiff classes. We review the class determination, but we reject the plaintiffs' attempt to draw within that review the constitutionality of Ill.Rev.Stat., ch. 85, § 9-104(a), an issue not reached in the decision made final under Rule 54(b).

The plaintiffs assert that the impermissible narrowness resulted because the court did not include assignees in the classes represented by the named...

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