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Thursday, June 26, 2014 05:19 pm

No quick resolution for pension lawsuit

State’s weak defense will get full hearing

Despite a weak defense by lawyers for the state, it will likely be several months before Illinois’ pension reform lawsuit is settled.
On June 26, Sangamon County judge John Belz declined to act on a motion which could have pushed the case to the next stage: the Illinois Supreme Court. While Belz is being careful to prevent the case coming back to him on a technicality, lawyers for the plaintiffs say it could be resolved quickly and cheaply right now.
“What we’re saying to his honor is we don’t think you need to get into the state budget and what stupid laws were passed 20 years ago that underfunded these (pensions),”  said John Myers, a Springfield attorney representing the Retired State Employees Assocation. “The only issue is are the pensions being impaired or not.”
The lawsuit is over whether a state law passed in December to lower Illinois’ public pension debt is constitutional. The Illinois constitution prohibits diminishing the retirement benefits of public employees, which the law almost certainly does. However, lawyers for the state are defending the reform law with a risky legal strategy that essentially admits the law is unconstitutional but claims the state’s sovereign “police powers” allow it to act beyond the constitution because of Illinois’ massive pension debt.
In legal documents filed with the court, lawyers from the office of Illinois Attorney General Lisa Madigan wrote that “underfunding in the state-funded retirement systems contributed significantly to a severe financial crisis for the state that adversely affected the long-term financial soundness of those retirement systems, the cost of financing the state’s operations and outstanding debt, and the State’s ability to provide critical services to Illinois residents and businesses.”
The day before the June 26 hearing, the plaintiffs filed a “motion for summary judgment,” which asked Belz to reject the state’s defense outright. The motion said the “police powers” defense is “breathtaking in its scope and alarming for its potential mischief.” Additionally, the plaintiffs claim they are not being treated equally under the law because judges – who also have state pensions – were not included in the reforms.
The plaintiffs – a coalition of state employees, retirees and associated groups – point out in filings that the Supreme Court has already limited the state’s “police powers” several times and even struck down far less sweeping changes to pension benefits. That means the plaintiffs have a clear upper hand in their lawsuit, especially because the state’s “police powers” argument is an admission that the changes probably aren’t constitutional. 
Although Belz didn’t officially deny the plaintiffs’ motion, he declined to act on it at the hearing, instead setting the case on a schedule which won’t likely see substantive arguments until December, a full year after the law in question was passed. Belz could technically grant the motion at any time, but that seems unlikely because he told a gaggle of attorneys on both sides of the lawsuit that he wanted a “full and accurate record” in the case so it doesn’t get sent back to him from the Supreme Court on a legal technicality.
For example, if Belz were to grant the motion for summary judgment and the state appealed on the grounds that he skipped a required step before rendering a decision, the Supreme Court could remand the case to Belz, adding months or even years before the case is finally resolved.
The plaintiffs also last week withdrew their request to have the case certified as a class action lawsuit because of the difficulties of forming a class of “similarly situated” people. Some retirees live outside Illinois, while some of the plaintiffs are still working for the state. Benefits vary widely, and some people even have multiple state pensions. 
The differences would have made it difficult to group the plaintiffs according to their situations. Instead, the lawsuit will proceed without class action status, but that won’t likely change much because the benefits of state employees and retirees who aren’t part of the lawsuit will be affected the same as those of the plaintiffs, regardless of whether the law is struck down or upheld.
The case is scheduled for a July 22 status hearing, with several deadlines through December set for filing documents. 
Contact Patrick Yeagle at pyeagle@illinoistimes.com.

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