Proctor v. McNeil, Case No. 13 C 7519

• Citation: 14 F.Supp.3d 1108
• Decision Date: 03 February 2014
• Docket Number: Case No. 13 C 7519
• Parties: Theresa Proctor, et. al, Plaintiffs, v. Siimone McNeil, Acting Director of Central Management Services of the State of Illinois, et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

14 F.Supp.3d 1108

Theresa Proctor, et. al, Plaintiffs

v.Siimone McNeil, Acting Director of Central Management Services of the State of Illinois, et al., Defendants.

Case No. 13 C 7519

United States District Court, N.D. Illinois, Eastern Division.

Filed February 3, 2014

John Daniel Carr, IGAM, Western Springs, IL, Matthew Robison, Barrido & Robison, LLC, Michael Lee Maduff, Walker R. Lawrence, Aaron Benjamin Maduff, Maduff & Maduff LLC, Chicago, IL, for Plaintiffs, Theresa Proctor, Robert Brown, Sandra Little, Kathleen Hahn, Charles McKinney, John Andrews, Dennis McManus, Cheryl Sigsbee, Zarel Lambert, Shiela Howard, Max Pierson, Janet Forgy, Roslyn Wylie, Oliver Dorsch, Mary Vitt, Marilyn Byers, Robert Heldman, Oliver Clark, Charles M. Evans, Celia Evans, Gregory Otten, Shirley Lodes, William Schowalter, Jeanine Benetier, Marcus Ahmed.

Long Xuan Truong, Richard Scott Huszagh, Office of the Illinois Attorney General, Chicago, IL, for Illinois Department of Central Management Services, State Universities Retirement System of Illinois.

MEMORANDUM, OPINION, AND ORDER

AMY J. ST. EVE, District Court Judge:

On December 5, 2013, Plaintiffs, who are retired employees of the Illinois State University System, filed the present one-count Amended Class Action Complaint alleging a Fourteenth Amendment due process claim in relation to their monthly retirement annuities and health insurance premiums. See 42 U.S.C. § 1983. Before the Court is Defendants' motion to dismiss Plaintiffs' Amended Class Action Complaint as a matter of law pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the Court grants Defendants' motion and dismisses this lawsuit in its entirety.

LEGAL STANDARD

“A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir.2012). Under Rule 8(a)(2), a complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must “give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citation omitted). Under the federal notice pleading standards, a plaintiff's “factual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Put differently, a “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). “In reviewing the sufficiency of a complaint under the plausibility standard, [courts] accept the well-pleaded facts in the complaint as true.” Alam v. Miller Brewing Co., 709 F.3d 662, 665–66 (7th Cir.2013). A plaintiff “can plead himself out of court by pleading facts that show that he has no legal claim.” Atkins v. City of Chicago, 631 F.3d 823, 832 (7th Cir.2011).

BACKGROUND

In their Amended Class Action Complaint, Plaintiffs allege that they are retired employees of the Illinois State University System. (R. 14, Am. Compl. ¶ 1). In 1998, the Illinois State Universities Retirement System (“SURS”) began offering retirees the option to accept a reduction in their monthly pension annuities in exchange for premium-free health insurance. (Id. ) Plaintiffs further allege that they signed an irrevocable election to accept a reduction in their monthly retirement annuities in exchange for premium-free health insurance from the State of Illinois pursuant to the Illinois Pension Code, 40 ILCS 5/15–135.1. (Id. ¶¶ 1, 2.) Defendants then reduced the retirees' annuities for individuals who elected to received premium-free health insurance and, thereafter, Plaintiffs received free health insurance. (Id. ¶1.) Plaintiffs contend that in July 2013, Defendants unilaterally began charging Plaintiffs health insurance premiums calculated as a percentage of their now-reduced retirement annuity. (Id. )

The parties do not dispute that Defendants deducted the health insurance premiums at issue under Section 2200.520 of Title 80 of the Illinois Administrative Code allowed by the Illinois Administrative Procedure Act, 5 ILCS 100, which gives Illinois' administrative agencies—such as the State of Illinois Central Management Services (“CMS”)—the power to adopt rules and regulations as defined and limited by the enabling statute. See Hartney Fuel Oil Co. v. Hamer, 998 N.E.2d 1227, 1238, 376 Ill.Dec. 294, 305 (Ill.2013) ; Julie Q. v. DCFS, 963 N.E.2d 401, 410, 357 Ill.Dec. 448, 457(2d Dist.2011). The authority for implementing administrative regulation 80 Ill. Adm. Code 2200.520 is pursuant to the State Employees Group Insurance Act of 1971, 5 ILCS 375/1. See 80 Ill. Adm. Code 2200.110.

Based on these facts, Plaintiffs allege that Defendants violated their federal due process rights and seek injunctive relief.

ANALYSIS

As the United States Supreme Court teaches, “to determine whether due process requirements apply in the first place” courts “must look to see if the interest is within the Fourteenth Amendment's protection of liberty and property.” Board of Regents of State Colleges v. Roth, 408 U.S. 564, 570–71, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). In short, “the threshold question in any due process challenge is whether a protected property or liberty interest actually exists.” Citizens Health Corp. v. Sebelius, 725 F.3d 687, 694 (7th Cir.2013). Fundamental liberty interests include bodily integrity, the right to marry, marital privacy, and the right to have children, to name a few.See Washington v. Glucksberg, 521 U.S. 702, 720, 117 S.Ct. 2258, 138 L.Ed.2d 772 (1997). A protected property interest is a legitimate claim of entitlement—not defined by the Constitution—but “by existing rules or understandings that stem from an independent source such as state law.” Roth, 408 U.S. at 577, 92 S.Ct. 2701 ; see also Town of Castle Rock, Colo. v. Gonzales, 545 U.S. 748, 756, 125 S.Ct. 2796, 162 L.Ed.2d 658 (2005).

I. Property Interest—Procedural Due Process

Plaintiffs allege that they had a contract with the State of Illinois for premium-free health insurance pursuant to 40 ILCS 5/15–135.1, and, in their legal memoranda, Plaintiffs argue that this contract is a property interest for purposes of their due process claim. Under Illinois law, there is a presumption “that laws do not create private contractual or vested rights, but merely declare a policy to be pursued until the legislature ordains otherwise.” Sklodowski v. State, 182 Ill.2d 220, 231–232, 695 N.E.2d 374, 230 Ill.Dec. 884, 889 (Ill.1998) ; see also National R.R. Passenger Corp. v. Atchison Topeka & Santa Fe Ry. Co., 470 U.S. 451, 466, 105 S.Ct. 1441, 84 L.Ed.2d 432 (1985) ; A.B.A.T.E. of Illi nois, Inc. v. Quinn, 957 N.E.2d 876, 884, 354 Ill.Dec. 282, 290 (Ill.2011). The purpose of this presumption “is to recognize that the function of a legislative body is to make laws that declare the policy of a governmental body, which laws are subject to repeal when a subsequent legislature decides to alter that policy,” therefore, “it stands to reason that unless the legislature has clearly evidenced that any of its laws were intended to create a contractual relationship, no such relationship exists.” Dopkeen v. Whitaker, 399 Ill.App.3d 682, 685–86, 926 N.E.2d 794, 339 Ill.Dec. 319, 323 (1st Dist.2010) (citation omitted).

“In determining whether a statute was intended to create a contractual relationship between the State and the affected party, the court must examine the language of the statute.” Fumarolo v. Chicago Bd. of Educ., 142 Ill.2d 54, 104, 566 N.E.2d 1283, 1305, 153 Ill.Dec. 177, 199 (Ill.1990). In looking to the language of the statute, the Court must discern whether there is a clear legislative intent to contract, namely, whether the language contains the essential requirements for creating a contract. See id., 142 Ill.2d at 104–05, 566 N.E.2d 1283, 153 Ill.Dec. 177 ; Unterschuetz v. City of Chicago, 346 Ill.App.3d 65, 73, 803 N.E.2d 988, 994, 281 Ill.Dec. 367, 373 (1st Dist.2004). Section 15–135.1(a) states in relevant part:

A participant who was an employee on July 7, 1997 and retires on or after the effective date of this amendatory Act of the 91st General Assembly may elect in writing at the time of retirement to have the retirement annuity calculated in accordance with the provisions of Sections 15–135 and 15–136¹ as they existed immediately prior to amendment by Public Act 90–65. This election, once made, is irrevocable.

40 ILCS 5/15–135.1(a).

Although the statute's language makes the election of the retirement annuity calculation irrevocable, there is no other language in the statute that even suggests a contractual right, such as asking for an acceptance of an offer or the word “contract.” See Unterschuetz, 346 Ill.App.3d at 73, 803 N.E.2d 988, 281 Ill.Dec. 367 . Indeed, Illinois courts have repeatedly held that “statutes governing wages, working conditions and benefits of public employees do not create any vested rights in their continued existence.” Gaiser v. Village of Skokie, 271 Ill.App.3d 85, 92, 648 N.E.2d 205, 211, 207 Ill.Dec. 749, 755 (1st Dist.1995). This is because the Illinois “legislature must be free to exercise its constitutional authority without concern that each time a public policy is expressed contractual rights may thereby be created.” Fumarolo, 142 Ill.2d at 106, 566 N.E.2d 1283, 153 Ill.Dec. 177 ; see also Pittman v. Chicago Bd. of Educ., 64 F.3d 1098, 1104 (7th Cir.1995) (“To treat statutes as contracts would enormously curtail the operation of democratic government. Statutes would be ratchets, creating rights that could never be retracted or even modified without buying off the groups upon which the rights had been conferred”). Based on Illinois...