Pace v. REGIONAL TRANSP. AUTHORITY

• Decision Date: 17 July 2003
• Docket Number: No. 2-02-0651.,2-02-0651.
• Citation: 280 Ill.Dec. 783,803 N.E.2d 13,346 Ill. App.3d 125
• Parties: PACE, the SUBURBAN BUS DIVISION OF the REGIONAL TRANSPORTTION AUTHORITY, Plaintiff-Appellant, v. The REGIONAL TRANSPORTATION AUTHORITY, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

803 N.E.2d 13

346 Ill. App.3d 125

280 Ill.Dec. 783

PACE, the SUBURBAN BUS DIVISION OF the REGIONAL TRANSPORTTION AUTHORITY, Plaintiff-Appellant, v. The REGIONAL TRANSPORTATION AUTHORITY, Defendant-Appellee.

No. 2-02-0651.

Appellate Court of Illinois, Second District.

July 17, 2003.

David W. McArdle, Zukowski, Rogers, Flood & McArdle, Crystal Lake, Ellen L. Champagne, PACE, Arlington Heights, for PACE.

William I. Caldwell, Jr., Caldwell, Berner & Caldwell, Woodstock, Hugh R. McCombs, Julian C. D'Esposito, Jr., Jeffrey W. Sarles, Mayer, Brown, Rowe & Maw, Chicago, for Regional Transportation Authority.

Justice CALLUM delivered the opinion of the court:

I. INTRODUCTION

Plaintiff, Pace, the suburban bus division of the Regional Transportation Authority (Pace), sought a declaration that defendant, the Regional Transportation Authority (RTA), violated section 4.11 of the Regional Transportation Authority Act (Act) (70 ILCS 3615/4.11 (West 2000)) when it decreased Pace's operating subsidy and rejected its budget for 2002. Also, Pace sought "damages" in the form of subsidies that the RTA allegedly wrongfully denied it. The trial court granted the RTA's motion to dismiss. The court found that the decisions Pace challenges were discretionary acts not subject to judicial review. Also, the court found that Pace was a division of the RTA and therefore could not sue the RTA. We reverse and remand.

II. BACKGROUND

Before setting forth the background of the dispute in this cause, we provide an overview of the relationship between the RTA and Pace. The legislature passed the Act in 1974. The Act created the RTA, which voters in Cook, Du Page, Kane, Lake, McHenry, and Will Counties approved by referendum. See Stroger v. Regional Transportation Authority, 201 Ill.2d 508, 512, 268 Ill.Dec. 417, 778 N.E.2d 683 (2002). The purpose of the RTA is to oversee public transportation in the sixcounty region. 70 ILCS 3615/1.02(a)(v) (West 2000). The RTA is a "unit of local government, body politic, political subdivision and municipal corporation." 70 ILCS 3615/1.04 (West 2000).

In 1983, the legislature amended the Act to create the commuter rail division (Metra) (70 ILCS 3615/3B.01 (West 2000)) and Pace (70 ILCS 3615/3A.01 (West 2000)). The 1983 amendments designated as "service boards" the governing boards of Metra and Pace. See 70 ILCS 3615/1.03 (West 2000). The Act also designated as a service board the governing board of the Chicago Transit Authority (CTA), which has existed since 1945 (see 70 ILCS 3605/1 et seq. (West 2000)). The Act delegated to the three service boards the responsibility for providing and operating their respective transportation systems. 70 ILCS 3615/2.01(a) (West 2000). The RTA retained responsibility for the financial oversight of the system and for facilitating the service boards' efforts to deliver public transportation in the region. 70 ILCS 3615/1.02(c) (West 2000).

The RTA board is comprised of 13 directors, and the regions of the six-county area are represented as follows: four directors must reside in Chicago; four directors must reside in suburban Cook County; two directors must reside either in Kane, Lake, McHenry, or Will County; and one director must reside in Du, Page County. 70 ILCS 361573.01(a) through (d) (West 2000). The chairperson may, reside anywhere in the. six-county area (70 ILCS 3615/3.01(e) (West 2000)), and one director, who also is the chairperson of the CTA, must reside in the "Metropolitan area of Cook County" (70 ILCS 3605/2, 19; 361573.01(a) (West 2000)). The RTA board reviews and decides whether to .approve the service boards' budgets. Nine directors must vote to approve a service board's budget. 70 ILCS 3615/4,11(b)(4) (West 2000). Pace has a governing board consisting of 11 directors, who .must be chief executive officers of municipalities within Pace's territory, and a chairperson. 70 ILCS 3615/3A.02 (West 2000).

The RTA and the service boards are financed by a combination of fare box revenue, sales tax proceeds, and state and federal grant funds. The Act mandates that' the service boards' aggregate operating revenue equal at least 50% of their aggregate cost of providing public transportation each fiscal year. 70 ILCS 361574.01(b) (West 2000). If the 50% ratio is not met, the RTA does not receive its annual subsidy from the state and must reduce the service boards' funding accordingly. 70 ILCS 3615/4.09(g), (h) (West 2000). To accomplish the mandate, the RTA sets for each service board a recovery ratio, which represents the percentage of the service board's operating costs that must be recovered by that service board's "system generated revenues." 70 ILCS 3615/4.11(a) (West 2000).

In count I of its complaint, dated January 11, 2002, Pace alleged that, inviolation of section 4.11(a) of the Act, the RTA "disproportionately and prejudicially" increased Pace's recovery ratio. From 1985 to 2002, the RTA increased the recovery ratios for the CTA, Metra, and Pace by 2.8%, 6.14%, and 41.7%, respectively. From 1996 to 2002, the CTA's assigned recovery ratio decreased from 52.4% to 52%, Metra's recovery ratio increased from 55% to 55.3%, and Pace's recovery ratio increased from 36% to 40%.

Pace alleged further that the ratios were disproportionate when one considered the service boards' actual performance. For example, the CTA's budgeted recovery ratio for 2000 was 0.8% less than what the CTA actually recovered in 1999 and only 0.2% higher than the 1999 budgeted ratio; Metra's 2000 assigned ratio was 3.8% less than what Metra recovered in 1999 and the same as the 1999 budgeted ratio; and Pace's 2000 budgeted ratio was 7.8% more than what Pace actually recovered in 1999 and 9% more than the 1999 budgeted ratio.

In 2000, Pace did not achieve its 40% ratio. Nevertheless, the RTA again set Pace's 2001 ratio at 40%. To meet the budgeted ratio, Pace raised fares and reduced its staff, marketing expenditures, and services. As a result, Pace's ridership declined by 1,468,326 passenger trips in 2000 and another 1,652,036 passenger trips in 2001.

Pace alleged that, as a result of the RTA's violations of the Act, since 1996, Pace "has been damaged and injured in its corporate capacity through loss of funding in the amount of $99,755,000." Pace asked the court to (1) declare that, for the years 1996 through 2002, the RTA set recovery ratios for Pace that were disproportionate to the ratios set for the other service boards and prejudicial to Pace; (2) order the RTA to set Pace's 2002 recovery ratio at a level that is proportionate to the other service boards' ratios and not prejudicial to Pace; and (3) award Pace $99,755,000 in "damages."

In count II, Pace alleged that, to meet its recovery ratio without cutting services or raising fares further, it sought other funding sources, including federal grants. Each year, the RTA advises the service boards of the amount of federal funding available to them. Since 1985, the RTA consistently allocated 58% of the available funds to the CTA, 34% to Metra, and 8% to Pace. In September 2001, the RTA allocated $25.9 million in federal funds to Pace. Of this amount, $7.6 million was designated for the "capital cost of contracting." This figure represented 8% of all of the federal funds allocated to the service boards.

Pace's 2002 budget allocated $7.8 million of the federal funds to the "capital cost of contracting," which, according to Pace, was the expense of purchasing services from private carriers. Pace alleged that federal regulations allowed it to use the federal funds for this purpose. The Pace board approved the budget and forwarded it to the RTA. Pace alleged that its budget complied with the Act and, therefore, that, under section 4.11(b)(2) of the Act, the RTA was required to approve the budget.

In ordinance No. 2001-83, dated December 28, 2001, the RTA rejected Pace's 2002 budget because it used "federal capital funds" to cover operating expenses. The RTA concluded that, by doing so, the budget relied on unreasonable and imprudent assumptions and did not comply with sound financial practices. The RTA approved an amended budget which removed the grant funds line item and compensated for the removal of those funds by reducing various expenses.

Pace alleged that the RTA violated section 4.11(b)(2) by rejecting Pace's 2002 budget and arbitrarily and capriciously approving an amended budget. Pace asked the court to declare that the RTA's rejection of Pace's 2002 budget was invalid.

The RTA moved to dismiss pursuant to sections 2-615 and 2-619 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615, 2-619 (West 2000)). See 735 ILCS 5/2-619.1 (West 2000). It argued that (1) separation of powers principles precluded the court from reviewing the RTA's discretionary budget decisions; (2) as an operating division of the RTA, Pace lacked the capacity to sue the RTA; (3) the RTA was entitled to protection under the Local Governmental and Governmental Employees Tort Immunity Act (Tort Immunity Act) (745 ILCS 10/1-101 et seq. (West 2000)); (4) the Act does not provide a private right of action to parties aggrieved by violations of the Act; and (5) Pace's claims were time barred, both under the statute of limitations contained in the Tort Immunity Act (745 ILCS 10/8-101 (West 2000)) and the laches doctrine.

The trial court found that, as a division of the RTA, Pace did not have the capacity to sue the RTA. Also, the trial court found that setting recovery ratios and approving or rejecting budgets were discretionary acts not subject to judicial review. Accordingly, the court granted the motion to dismiss. Pace timely appealed.

III. ANALYSIS

A. Mootness

Before we address the merits of this appeal, we must decide whether we should dismiss the appeal as moot. Pace complains about decisions the RTA made for the 2002 budget year, which has passed. See 70 ILCS 3615/4.01(a) (West 2000) (RTA's fiscal year runs from January 1 to December 31).

Before...