Kelly Services, Inc. v. Johnson, 75-2020

• Decision Date: 19 August 1976
• Docket Number: No. 75-2020,75-2020
• Citation: 542 F.2d 31
• Parties: KELLY SERVICES, INC., a Delaware Corporation, et al., Plaintiffs-Appellees, v. Donald A. JOHNSON, Director, Department of Labor, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 31

542 F.2d 31

KELLY SERVICES, INC., a Delaware Corporation, et al., Plaintiffs-Appellees, v. Donald A. JOHNSON, Director, Department of Labor, et al.,

Defendants-Appellants.

No. 75-2020.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 18, 1976.

Decided Aug. 19, 1976.

William J. Scott, Atty. Gen., Charles J. Pesek, Asst. Atty. Gen., Chicago, Ill., for defendants-appellants.

John A. McDonald, Chicago, Ill., for plaintiffs-appellees.

Before SWYGERT, TONE and BAUER, Circuit Judges.

SWYGERT, Circuit Judge.

The question presented in this appeal concerns the district court's decision not to abstain in a case in which the issue before it for consideration was whether "temporary help companies" are subject to the regulatory provisions of the Illinois Private Employment Agencies Act. Ill.Rev.Stat., ch. 48, §§ 197(a) et seq. (1973).

The case arose when the Director of the Illinois Department of Labor issued Labor Order No. 76-16 establishing an October 1975 deadline for the filing of license applications by all temporary help companies doing business in Illinois. Prior to the issuance of this order, the Department had sought an opinion on the propriety of such registration from the Attorney General of Illinois. The suit was filed by plaintiffs, Kelly Services, Inc. and Manpower, Inc., as a class action seeking to enjoin the enforcement of the order and requesting a declaratory judgment that the Act did not apply to the plaintiffs' class. Their motion for a preliminary injunction was granted after oral argument and the defendants, the Director of the Department of Labor, the Superintendent of the Division of Private Employment, and the State's Attorney General, were enjoined from requiring the members of plaintiffs' class to submit license applications pursuant to the Act, from initiating any actions against the class and/or their employees for failure to apply for a license, and from otherwise seeking to subject members of the class to the provisions of the Act. D.C., 402 F.Supp. 412.

The central argument presented by the defendants is that the district court abused its discretion in refusing to abstain from consideration of this case. They note that, on its face, the statutory language is broad enough to secure such regulation, providing that the term "employment agency" means "any person engaged for gain or profit in the business of securing or attempting to secure employment for persons seeking employment or employees for employers." When the Attorney General's opinion was sought by the Department, he noted that the provision had not been construed by an Illinois court, and thus issued a formal opinion concluding that agencies such as those operated by the plaintiffs were included within the scope of the statute.

We are persuaded that the defendants are correct and that the district court should have abstained. ^*

Both parties to this litigation have offered extensive arguments concerning the merits of their individual positions vis-a-vis the regulation of private temporary help companies. Most of these arguments center around the nature of that particular type of employment-finding service and whether or not such agencies could be easily regulated. These arguments alone demonstrate that the questions concerning regulation are rooted in the State's interest in protecting its citizens from unscrupulous agencies or employers. The issues touch matters of traditional state concern and have not been subject to scrutiny by a state court. Thus it compels federal courts to stay their hand lest they provoke needless conflict with the administration by a state of its own affairs. Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943); Alabama Public Service Commission v. Southern R.R. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951). We note that it is within the power of the state to regulate employment agencies consistent with the protections provided by the Constitution. Assuming there was proper authorization by the legislature, procedural due process was afforded to members of plaintiffs' class. The Department had scheduled hearings on proposed regulations and was following a course which provided proper procedures to protect the plaintiffs' interests and ensure that they were heard. The plaintiffs complain about the initial fact of regulation, not about the process which was set in motion to accomplish it. They argue that the statute does not authorize the institution of the regulatory process and that the defendants' action therefore...