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Eisenberg v. Industrial Comm'n
State: Illinois
Court: 1st District Appellate
Docket No: 1-00-2860 Rel
Case Date: 02/18/2003

SECOND DIVISION
February 18, 2003



No. 1-00-2860


SUSANNE EISENBERG, Indiv., and
MICHAEL PELFRESNE, Indiv.,

          Plaintiffs-Appellants,

          v.

THE INDUSTRIAL COMMISSION OF ILLINOIS,

         Defendant-Appellee.

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Appeal from the
Circuit Court of
Cook County


99 CH 00089

Honorable
Sidney A. Jones, III
Judge Presiding.

PRESIDING JUSTICE McBRIDE delivered the opinion of the court:

Defendant-appellee, the Industrial Commission of Illinois(Commission), issued notices of noncompliance to plaintiffs-appellants, Susanne Eisenberg and Michael Pelfresne (plaintiffs),alleging that each was individually an "employer" at six separatelocations and that plaintiffs had failed to comply with theinsurance coverage requirements of the Workers' Compensation Act(Act)(820 ILCS 305/1 et seq. (West 2000)). During the Commission'sinvestigation concerning plaintiffs' compliance with the Act,plaintiffs filed a verified complaint and verified first amendedcomplaint in the trial court which, among other things, sought adeclaration that certain sections of the Act were unconstitutional,that the actions of the Commission against them were ultra vires, and that the Commission should be enjoined from proceeding againstthem at the administrative level based on a lack of jurisdiction. The Commission ultimately dismissed its allegations againstplaintiffs. After they were dismissed, plaintiffs filed a secondamended complaint against the Commission which, in count I, soughta declaratory judgment that certain sections of the Act and theWorkers' Occupational Diseases Act (820 ILCS 310/1 et seq. (West2000)) were unconstitutional. In count II, plaintiffs claimed thatcertain actions taken by the Commission against them were ultravires. The Commission moved to dismiss count I, and the trialcourt granted the motion in favor of the Commission on the basis ofstanding. Later, plaintiffs moved for summary judgment on theultra vires cause of action (count II) and the Commission filed across-motion for summary judgment. The trial court granted theCommission's cross-motion for summary judgment and deniedplaintiff's summary judgment motion.

The issues raised on appeal are whether the trial courtcorrectly found that plaintiffs lacked standing to challenge theconstitutionality of certain sections of both acts because thecharges against them had been dismissed, and whether the trialcourt correctly entered summary judgment in favor of the Commissionon the basis that its actions were not ultra vires as a matter oflaw. We state the following background facts.

On March 23, 1998, the Commission issued notices ofnoncompliance to plaintiffs as part of an investigation in In reInsurance Compliance Matter of Attorney Michael Schiessle, Ill.Indus. Comm'n Rep. 97INC00032 (March 4, 1999). The investigationconcerned six different places of amusement, including five go-carttracks and one batting machine facility. The notices alleged thatplaintiffs were "employers" under section 3 of the Workers'Compensation Act and that, as "employers," they were required bylaw to insure liability to pay workers' compensation benefits byobtaining a workers' compensation insurance policy. 820 ILCS305/3, 4(a) (West 2000).

As we noted above, while the Commission's investigationconcerning plaintiffs' compliance with the Act was pending,plaintiffs filed a verified complaint and verified first amendedcomplaint in the trial court which sought a declaration thatcertain sections of the Act were unconstitutional, that the actionsof the Commission against them were ultra vires, and that theCommission should be enjoined from proceeding against them at theadministrative level based on lack of jurisdiction. The trial courtdenied plaintiffs' request for injunctive relief on January 6,1999.

On March 4, 1999, the Commission dismissed the charges againstthe plaintiffs on the basis that "the evidence did not show that[they] were involved in the everyday running of the businesses soas to hold them personally liable." Following the dismissal of thecharges, plaintiffs filed a second amended complaint (complaint)which sought a declaratory judgment, in count I, that certainsections of both Acts were unconstitutional and, in count II, thatcertain actions by the Commission were ultra vires. Specifically,in paragraph 26, the complaint alleged:

"The evidence at the hearing proved that eachsite has been operated by an operator licensedby the Illinois Department of Labor since atleast 1988; and that these licenses wereapplied for, evaluated for completeness[,] andthen *** issued by the Illinois Department ofLabor ***. [The] plaintiffs were not thelicensed operators nor were they identified inany way on the applications of the licensedoperators."

Count I, paragraphs 38, 39, and 40 of the complaint, allegedthat section 19(f)(2) of the Act (820 ILCS 305/19(f)(2) (West2000)) is unconstitutional because the Commission has discretion tofix the amount of the bond necessary to take an appeal from anadverse decision by the Commission.

Further, count I, paragraphs 41 and 42, alleged that the civilpenalty provision in the Act (820 ILCS 305/4(d) (West 2000)) isvague in that it "lacks sufficient standards to guide thediscretion of the Commission in determining when civil penaltiesshould be imposed." Further, paragraph 43 alleged that the statuteof limitations cannot be determined in section 4(d). Accordingly,plaintiffs alleged that this section was unconstitutional.

Count I, paragraphs 44 and 45, alleged that the plaintiffswere denied due process because they were not allowed access by theCommission to potentially exonerating information in theCommission's file.

Count I, paragraphs 46, 47, and 48, alleged that section 4(d)in each act (820 ILCS 305/4(d) (West 2000); 820 ILCS 310/4(d)(West2000)) improperly authorized the Commission to prosecute civilpenalty proceedings at the administrative level. Specifically,paragraph 48 alleged that the Commission's attorney was involved inimproper multiple roles, including (1) Commission attorney; (2) witness at the hearing; and (3) acting member of the Commission inthe chairman's absence, which resulted in an unfair hearing and animpartial tribunal.

Count I, paragraph 49, alleged that section 16 of each act(820 ILCS 305/16 (West 2000); 820 ILCS 310/16 (West 2000)) did notset proper rules for the admission of evidence.

Finally, count I, paragraphs 50 and 51, alleged that theburden of proof was not properly established in the Act because theAct provides for both a petty offense in section 26 (820 ILCS305/26 (West 2000)), and a civil penalty.

In count II of the complaint, paragraphs 54 and 55, plaintiffsalleged that the assistant Attorney General stated on the record atthe hearing that no penalties would be considered until a findingwas made as to whether plaintiffs were employers. Absent a hearingon employer status, the Commission had no jurisdiction overplaintiffs until it could establish that plaintiffs were employerswithin the meaning of the Act. As a result, the Commission'sactions were ultra vires according to plaintiffs.

In count II, paragraphs 56 through 59, plaintiffs alleged theCommission had no jurisdiction because the notices issued toplaintiffs were defective under the Illinois Administrative Code.50 Ill. Adm. Code Ch. II

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