Hon. Sharon Johnson Coleman, of the Northern District of 

Illinois, sitting by designation.

In the

United States Court of Appeals

For the Seventh Circuit

No. 11-3111

COUNCIL 31 OF THE AMERICAN FEDERATION OF STATE,

COUNTY AND MUNICIPAL EMPLOYEES, AFL-CIO,

Plaintiff-Appellant,

v.

PAT QUINN, Governor of the State of Illinois, et al.,

Defendants-Appellees.

Appeal from the United States District Court 

for the Central District of Illinois.

No. 11-CV-03203—Sue E. Myerscough, Judge.

ARGUED FEBRUARY 24, 2012—DECIDED MAY 17, 2012

Before MANION and ROVNER, Circuit Judges, and

COLEMAN, District Judge.



MANION, Circuit Judge. The State of Illinois, facing a

“significant and unprecedented fiscal deficit,” has brokered
2 No. 11-3111

a series of compensation agreements with Council 31 of

the American Federation of State, County, and Municipal

Employees, AFL-CIO, the exclusive bargaining representative for 40,000 state employees. In the agreements,

the parties trimmed several hundred million dollars

in fiscal years 2011 and 2012 by deferring employees’

general wage increases and instituting a voluntary furlough program. Despite these cost-saving measures,

the fiscal year 2012 budget did not contain sufficient

appropriations for the deferred wage increases that

were due to employees of 14 state agencies. Accordingly,

the State instituted a pay freeze for those employees,

thereby repudiating the agreements that the parties had

previously reached. Council 31 then brought this suit

on behalf of itself and the affected employees, alleging

that the State’s actions violated the Contracts Clause

and the Equal Protection Clause of the U.S. Constitution,

and resulted in several violations of state law. Council 31

sought a preliminary injunction that would order the

State to pay the wage increases as they came due, and

the State filed a motion to dismiss all claims. The district

court denied Council 31’s motion for a preliminary injunction and granted the State’s motion to dismiss.

Council 31 has appealed and we now affirm.

I.

Council 31 is the longtime exclusive bargaining representative for more than 40,000 Illinois state employees

in approximately 51 different departments and agencies.

Council 31’s latest series of collective bargaining agree-
No. 11-3111 3

The State’s fiscal year runs from July 1 to June 30 each year. 1

Thus, the wage increases were scheduled to occur twice a

year throughout the life of the collective bargaining agreements.

ments with the State began on September 5, 2008, and runs

through June 20, 2012. The collective bargaining agreements laid out the wages for affected employees in the

form of base pay rates, annual increases, step increases,

and longevity increases. The agreements also contained

a general wage increase schedule that set a 1.5% increase

effective January 1, 2009, a 2.5% increase effective July 1,

2009, a 2% increase effective January 1, 2010, a 2% increase

effective July 1, 2010, a 2% increase effective January 1,

2011, a 4% increase effective July 1, 2011, and a 1.25%

increase effective January 1, 2012.1

Facing the prospect of serious budgetary shortfalls

for fiscal years 2011 and 2012, representatives of the State

and Council 31 met in January 2010 to discuss potential

cost-saving measures. The parties produced a mediated

resolution which, in relevant part, limited the number

of layoffs the State could make in fiscal year 2011 in

exchange for a deferral of the general wage increases

due to the employees. Specifically, the parties agreed

to defer one-half of the 2% general wage increase due to

employees on July 1, 2010 to June 1, 2011, and also onehalf of the 2% general wage increase due on January 1, 2011

to June 1, 2011. This resolution saved the State more

than $300 million in fiscal year 2011.

The parties met again in the fall of 2010 to resolve

concerns about the impending budgetary shortfalls for
4 No. 11-3111

Those agencies were the Criminal Justice Information Author- 2

ity, the Department of Corrections, the Deaf and Hard of

Hearing Commission, the Guardianship and Advocacy Commission, the Historic Preservation Commission, the Human

Rights Commission, the Department of Human Rights, the

Department of Human Services, the Department of Juvenile

Justice, the Department of Labor, the Department of Natural

Resources, the Prisoner Review Board, the Department of

Public Health, and the Department of Revenue.

fiscal year 2012. That meeting resulted in a cost-savings

agreement that specified a goal of $100 million in total

savings; the parties identified $50 million in cost-savings

measures and promised to continue to seek further compromises that would save an additional $50 million.

The biggest cost-savings measure laid out in the agreement was the deferral of half of the 4% general wage

increase due to employees on July 1, 2011 to February 1,

2012. In exchange, the State agreed not to lay off any

employees or close any facilities during fiscal year 2012.

After this agreement, Governor Pat Quinn submitted

a proposed budget for fiscal year 2012 to the State

General Assembly that “sought to fully fund all collective bargaining contracts.” The budget that passed the

General Assembly, however, was markedly different:

that version of the budget did not contain the necessary

appropriation authority to implement the annual general

wage increases, step increases, and longevity increases

due under the collective bargaining agreements to the

employees of 14 state agencies. After cutting an addi- 2

tional $376 million from the budget by line-item veto,
No. 11-3111 5

Governor Quinn approved a total budget of $33 billion

on June 30, 2011. Notably, Governor Quinn’s cuts made

via line-item veto did not affect any appropriations for

the employees’ pay increases; rather, the budget passed

by the General Assembly lacked the necessary appropriations for the pay increases. A memorandum from

the State’s Department of Central Management Services

Director Malcolm Weems that was issued on July 1, 2011,

the day after the budget became law, emphasized that

the funding shortfall was caused by the legislature, not

the Governor: “[T]he budget that was passed by the

General Assembly and sent to the Governor DOES NOT

contain appropriation authority to implement cost of

living adjustments, longevity enhancements or step

increases for employees covered by a collective bargaining agreement in the [14 affected agencies].”

In the same July 1 memorandum, Director Weems

relayed the bad news that the State was instituting a

pay freeze on the employees of the 14 agencies: “[D]ue

to the absence of sufficient appropriations by the

General Assembly, the above listed agencies cannot

implement the FY12 increases.” This directive was subsequently enacted in a set of Emergency Rules that

amended the State’s pay plan. 35 Ill. Reg. 11,657 (July 15,

2011). Those Emergency Rules were later made permanent and took effect on December 6, 2011. 35 Ill. Reg.

20,144 (Dec. 23, 2011). (Because there is no substantive

difference between the Emergency and Permanent

Rules, we will simply refer to them as the “Rules.”)

The pay freeze affected approximately 30,000 Council 31-represented employees across the 14 agencies
6 No. 11-3111

and saved the State about $75 million. Council 31 argued

that there were several viable alternatives that the State

could have pursued to make up the lack of appropriations for the 14 agencies. Those alternatives included

allocating some of the “hundreds of millions of dollars”

in unexpended appropriations from fiscal year 2011,

slowing the rate at which the State fills positions

that become vacant during fiscal year 2012 or even instituting a hiring freeze on such positions, transferring

funds from other appropriations items for the affected

agencies, seeking legislative authority to use some of

the savings from the governor’s line-item vetoes, and

seeking supplemental appropriations from the General

Assembly.

But the State did not pursue any of those alternatives.

So, on July 8, 2011, Council 31, on behalf of itself and

its affected members, filed this suit against the State,

Governor Quinn, and Director Weems. Less than two

weeks later, Council 31 filed an amended complaint

that listed five claims. Counts I and II, brought under

42 U.S.C. § 1983, alleged that Governor Quinn and

Director Weems violated the Contracts Clause and

Equal Protection Clause of the U.S. Constitution, and

Counts III, IV, and V alleged state statutory and constitutional claims.

On August 9, 2011, the defendants moved to dismiss

this suit for failure to state a claim as well as under the

Eleventh Amendment’s sovereign immunity protection. On August 19, 2011, Council 31 filed a motion for a

preliminary injunction to enforce its Contracts-Clause
No. 11-3111 7

claim by enjoining the Rules and thus requiring the State

to pay out wage increases as they came due. After supplemental briefing and an evidentiary hearing, the

district court granted the defendants’ motion to dismiss

all claims and denied Council 31’s request for preliminary injunctive relief. Specifically, the district court

noted that the Eleventh Amendment barred Council

31’s state-law claims against all defendants, and that

Council 31 could not bring its § 1983 claims against the

State; rather, such claims could be asserted only against

Governor Quinn and Director Weems in their official

capacities. The district court further held that the

Eleventh Amendment barred Council 31’s ContractsClause claim against Governor Quinn and Director

Weems and, additionally, that the amended complaint

failed to adequately state either a Contracts-Clause

claim or an Equal Protection claim.

At the same time that this suit was unfolding, the

parties engaged in arbitration. On July 19, 2011, the

arbitrator found that the pay freeze violated the terms

of the collective bargaining agreements and ordered the

State immediately to pay the 2% wage increase that was

due on July 1, 2011 (recall, the collective bargaining

agreement originally provided for a 4% increase, but

the parties had negotiated a deferral of half of that

amount to a later date). The arbitrator further ordered

the State to continue to pay the increased wages, and

to make whole those employees who did not receive

the increased wages due on July 1. The State then

filed suit in the Circuit Court of Cook County to vacate

the arbitrator’s award; Council 31 counterclaimed for
8 No. 11-3111

There are two more actions also pending in Illinois state 3

court. Those actions—one brought by the State, one by Council

31—involve the State’s planned layoffs and facility closures.

But on this appeal Council 31’s federal challenges extend only

to the pay-freeze issue, and thus neither of these state-court

actions has any bearing on our case.

enforcement of the award. State v. Am. Fed’n of State &

Mun. Emps., Council 31, No. 2011-CH-25352 (Cook Cnty.

Cir. Ct., Chancery Div. Mar. 15, 2012) (http://www.

cookcountyclerkofcourt.org). This state-court case re3

mains pending during Council 31’s present appeal taken

from the district court.

II.

The two claims at issue on appeal are Council 31’s

Contracts-Clause claim and its Equal Protection claim;

both are asserted against Governor Quinn and Director

Weems in their official capacities. Council 31 challenges

the district court’s holding that the Eleventh Amendment barred Council 31’s Contracts-Clause claim against

Governor Quinn and Director Weems and that the

amended complaint failed to state either a ContractsClause claim or an Equal Protection claim. In making

these arguments, Council 31 maintains that it is not

seeking monetary damages in this case; rather, it is

seeking injunctive relief on its Contracts-Clause claim

and declaratory judgment on both of its claims. We will

address the Eleventh Amendment issue first and then

move to whether the district court properly dismissed
No. 11-3111 9

Council 31’s claims for failure to state a claim on which

relief may be granted.

A. Eleventh Amendment Sovereign Immunity

The district court held that the Eleventh Amendment

barred Council 31 from obtaining relief under its

Contracts-Clause claim and accordingly denied Council

31’s motion for a preliminary injunction. We review de

novo a district court’s dismissal of a plaintiff’s claim

on Eleventh Amendment grounds. Nanda v. Bd. of

Trustees, 303 F.3d 817, 821 (7th Cir. 2002) (citation omitted).

The Eleventh Amendment provides, “The Judicial

power of the United States shall not be construed to

extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of

another State, or by Citizens or Subjects of any Foreign

State.” U.S. CONST. amend XI. Courts have construed this

provision broadly, holding that it confers “ ‘the sovereign

immunity that the States possessed before entering the

Union.’ ” Bd. of Regents v. Phoenix Int’l Software, Inc., 653

F.3d 448, 457 (7th Cir. 2011) (quoting College Sav. Bank v.

Fl. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666,

669 (1999)). This means that, although not explicitly

provided for in the text, “the Eleventh Amendment

guarantees that an ‘unconsenting State is immune

from suits brought in federal courts by her own citizens

as well as by citizens of another State.’ ” Id. (quoting

Edelman v. Jordan, 415 U.S. 651, 663 (1974)). As we

have noted elsewhere, “[i]f properly raised, the amendment bars actions in federal court against a state, state
10 No. 11-3111

agencies, or state officials acting in their official capacities.” Ind. Prot. & Advocacy Servs. v. Ind. Family & Soc. Servs.

Admin., 603 F.3d 365, 370 (7th Cir. 2010) (citing Edelman,

415 U.S. at 663). Here, there is no dispute that the defendants, sued as state officials acting in their

official capacities, timely raised the Eleventh Amendment defense.

 But, even when properly raised, sovereign immunity

is not absolute immunity. There are three exceptions to

this defense that may subject a state to an action in

federal court: (1) where Congress, acting under its constitutional authority conveyed by amendments passed

after the Eleventh Amendment (the most common

being the Fourteenth Amendment), abrogates a state’s

immunity from suit; (2) where the state itself consents to

being sued in federal court; and (3) under the doctrine

articulated by the Supreme Court in Ex parte Young, 209

U.S. 123 (1908). Id. at 371. Here, the first two exceptions

are not applicable so we need address only the third

exception—the Ex parte Young doctrine.

The Ex parte Young doctrine “allows private parties to

sue individual state officials for prospective relief to

enjoin ongoing violations of federal law.” MCI Telecomms.

Corp. v. Ill. Bell Tel. Co., 222 F.3d 323, 337 (7th Cir. 2000)

(citations omitted). There is a longstanding rationale

that underlies this doctrine: “[B]ecause an unconstitutional legislative enactment is ‘void,’ a state official who

enforces that law ‘comes into conflict with the superior

authority of the Constitution,’ and therefore is ‘stripped

of his official or representative character and is sub-
No. 11-3111 11

jected in his person to the consequences of his individual conduct.’ ” Va. Office for Prot. & Advocacy v. Stewart,

131 S. Ct. 1632, 1638 (2011) (quoting Ex parte Young, 209

U.S. at 159-60). To determine whether Governor Quinn

and Director Weems may be so stripped of the official

character of their positions, we “ ‘need only conduct a

straightforward inquiry into whether the complaint

alleges an ongoing violation of federal law and seeks

relief properly characterized as prospective.’ ” Ind. Prot. &

Advocacy Servs., 603 F.3d at 371 (quoting Verizon Md., Inc.

v. Pub. Serv. Comm’n of Md., 535 U.S. 635, 645 (2002)).

The first part of that inquiry—whether the complaint

alleges an ongoing violation of federal law—is readily

satisfied here: Council 31 alleges that the Rules put into

place by Governor Quinn and Director Weems violate the

Contracts Clause of the U.S. Constitution because those

Rules deny the affected employees their wage increases

due under the collective bargaining agreements (as modified by subsequent cost-savings agreements). But the

second part of the inquiry—whether the relief sought

is properly characterized as prospective—is problematic

for Council 31. To be clear, Council 31 seeks two forms

of relief under its Contracts-Clause claim: injunctive

relief from the Rules and a declaratory judgment that

the State’s actions violated the Contracts Clause. We

address both forms of relief in turn.

The Supreme Court has held that “Ex parte Young cannot

be used to obtain an injunction requiring the payment of

funds from the State’s treasury . . . or an order for specific

performance of a State’s contract.” Va. Office for Prot. &
12 No. 11-3111

Advocacy, 131 S. Ct. at 1639. True, prospective relief of

an ongoing federal violation will often require state

officials to dip into a state’s treasury to comply with a

court’s order. Edelman, 415 U.S. at 668. “Such an ancillary

effect on the state treasury is a permissible and often an

inevitable consequence of the principle announced in Ex

parte Young.” Id. Nevertheless, where a plaintiff’s request

for relief “would have an effect upon the state treasury

that is not merely ancillary but is the essence of the

relief sought,” it is barred by the Eleventh Amendment.

MSA Realty Corp. v. State, 990 F.2d 288, 293 (7th Cir. 1993).

Therefore, it is necessary to look not at the type of

relief sought, but the effect the relief would have on the

State if it were afforded to the plaintiff. In doing so,

we recount the case of MSA Realty, which bears a resemblance to our own. In that case, the plaintiff corporation

purchased all of the tax increment revenue bonds that

were issued by the Village of Buffalo Grove, Illinois. Id.

at 289. By law, the Village could only make the interest

and principal payments due on the bonds out of real

property and state and local sales tax increments—

amounts that were ultimately controlled by the State.

Id. Therefore, when the State General Assembly subsequently reduced the amount of tax increment revenues

that would be returned to municipalities, the Village

necessarily had to reduce the amount of payments that

the plaintiff corporation was owed on its bonds. See id.

at 289-90. The plaintiff sued, seeking a declaratory judgment that the State’s reduction in tax increment revenues constituted a violation of the Contracts Clause,

and also an injunction that would require the State to
No. 11-3111 13

return the full amount of tax increment revenues to the

Village of Buffalo Grove, which would in turn be able to

pay the debt service on its bonds. Id. at 290. The State

asserted an Eleventh Amendment defense to the plaintiff’s

claims. Id.

We addressed the plaintiff’s request for injunctive

relief by noting that “merely labeling the relief sought

as injunctive does not defeat the eleventh amendment

bar to suits that seek relief from the state treasury.” Id.

at 295. Rather, the inquiry must go deeper, and so we

concluded as follows:

[T]he eleventh amendment bars a claim for injunctive

relief such as [the plaintiff’s] that would require

direct payments by the state from its treasury for the

indirect benefit of a specific entity, or that seeks to

require state officials to carry out a task that only

the state can perform in its political capacity, such

as fulfilling promises made allegedly to [tax increment fund] districts such as the Village of Buffalo

Grove, or that seeks relief that cannot be considered

merely ancillary to achieving compliance with a

determination of a substantive federal constitutional

wrong. 

Id. In addition, we rejected the plaintiff’s request for

declaratory judgment because such “relief should not

be awarded where the eleventh amendment bars an

award of monetary or injunctive relief; otherwise the

[declaratory] relief would operate as a means of avoiding

the amendment’s bar.” Id. The rationale for this

holding is sound: “For the federal court to declare that

defendants have violated the impairment of contracts
14 No. 11-3111

clause in the past would give [a plaintiff] a judgment

that would have res judicata effect in state court on

the issue of liability.” Id.

In this case, like the plaintiff in MSA Realty, Council 31

seeks an injunction that would result in payments being

made out of the State’s treasury. Council 31 attempts to

distinguish its requested injunctive relief from that

sought by the plaintiff in MSA Realty by pointing to the

fact that Council 31 seeks only to enjoin the Rules that

implemented the pay freeze; conversely, the plaintiff in

MSA Realty sought relief “through an order directing

the payment of certain funds out of the state treasury to

the Buffalo Grove [tax increment fund] district for the

ultimate benefit of [the plaintiff].” Id. at 292. In other

words, Council 31’s request for injunctive relief does not

specifically require the court to direct payment of funds

out of the State’s treasury, while the plaintiff in MSA

Realty did seek direct payment. This distinction is immaterial. Council 31’s argument ignores our holding

that “the eleventh amendment bars a claim for injunctive

relief . . . that would require direct payments by the state

from its treasury for the indirect benefit of a specific

entity.” Id. at 295. It does not matter that the injunction

in this case would preclude State officials from enforcing

the Rules without explicitly directing payment from the

State’s treasury; the effect of issuing the injunctive

relief Council 31 seeks in this case is the same as the

effect of the relief sought by the plaintiff in MSA Realty—

the injunction would force the defendants, acting in

their official capacities, to extract funds from the State’s

treasury for the ultimate benefit of the plaintiffs. There
No. 11-3111 15

is thus no question that the “essence of the relief sought”

is the payment of funds out of the treasury to the employees at the 14 state agencies whose budgets did not

contain sufficient appropriations to pay wage increases.

Id. at 293; see also Va. Office for Prot. & Advocacy, 131 S. Ct.

at 1639 (“Ex parte Young cannot be used to obtain an

injunction requiring the payment of funds from the

State’s treasury . . . .”). Accordingly, the injunctive relief

sought in this case does not have a “merely ancillary”

effect on the State’s treasury, the Ex parte Young doctrine

does not apply, and the Eleventh Amendment bars

Council 31’s request for an injunction under its ContractsClause claim. MSA Realty Corp., 990 F.2d at 293.

We also observe that the defendants raised the

Eleventh Amendment defense against the entirety of

Council 31’s Contracts-Clause claim. This includes not

only Council 31’s request for a preliminary injunction

but also its request for declaratory judgment. But

neither the district court’s order nor the parties’ briefs

on appeal address the Eleventh Amendment’s application to Council 31’s request for declaratory judgment.

Nevertheless, the reasoning of MSA Realty applies with

equal force here: “[D]eclaratory relief should not be

awarded where the eleventh amendment bars an award

of monetary or injunctive relief; otherwise the [declaratory] relief would operate as a means of avoiding the

amendment’s bar.” Id. at 295. Therefore, the Eleventh

Amendment bars all relief that Council 31 seeks under

its Contracts-Clause claim.
16 No. 11-3111

B. Failure to State a Claim

Council 31 also challenges the district court’s ruling

that it failed to adequately state either a ContractsClause or an Equal Protection claim. We will address

each claim in turn.

We review de novo a district court’s dismissal of a

plaintiff’s claims for failure to state a claim on which

relief may be granted. Graczyk v. W. Publ’g Co., 660 F.3d

275, 278 (7th Cir. 2011) (citing Greenberger v. GEICO Gen.

Ins. Co., 631 F.3d 392, 399 (7th Cir. 2011)). Our focus at

this stage is on the complaint; we will construe all wellpleaded alleged facts, and draw all reasonable inferences,

in a light most favorable to the plaintiff. Id. at 279. Although “[t]he plaintiff need not . . . plead ‘detailed

factual allegations,’ ” Reynolds v. CB Sports Bar, Inc., 623

F.3d 1143, 1146 (7th Cir. 2010) (quoting Ashcroft v. Iqbal,

556 U.S. 662, 129 S. Ct. 1947, 1949 (2009)), “[t]o survive

a motion to dismiss, a complaint must contain sufficient

factual matter, accepted as true, to ‘state a claim to

relief that is plausible on its face.’ ” Iqbal, 129 S. Ct. at

1949 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)).

1. Contracts-Clause Claim

Even if the Eleventh Amendment did not bar Council

31’s Contracts-Clause claim, that claim would still fail

because Council 31 has not stated a cognizable claim. The

Contracts Clause of the U.S. Constitution provides that

“No state shall enter into any . . . Law impairing the
No. 11-3111 17

We recognize that, even if the Rules constituted a sub4

stantial impairment of the collective bargaining agreements,

the defendants may still be justified in acting as they did if

they can show that the Rules were “reasonable and necessary to

meet an important social problem.” E&E Hauling, Inc. v. Forest

Preserve Dist., 613 F.2d 675, 681 (7th Cir. 1980) (citing, inter alia,

Allied Structural Steel Co., 438 U.S. at 242-44). Here, the important social problem that the State sought to fix by decreasing

appropriations to the 14 affected agencies was Illinois’s

(continued...)

Obligation of Contracts . . . .” U.S. CONST. art. I, § 10. To

succeed on a Contracts-Clause claim, a plaintiff must

demonstrate that a “change in state law has ‘operated as

a substantial impairment of a contractual relationship.’ ”

Gen. Motors Corp. v. Romein, 503 U.S. 183, 186 (1992)

(quoting Energy Reserves Grp., Inc. v. Kan. Power & Light

Co., 459 U.S. 200, 411 (1983); Allied Structural Steel Co.

v. Spannaus, 438 U.S. 234, 244 (1978)). This inquiry

requires the plaintiff to show (1) that there is a contractual relationship, (2) that a change in law has

impaired that relationship, and (3) that the impairment

is substantial. Id.; see also Khan v. Gallitano, 180 F.3d 829,

832 (7th Cir. 1999). The parties dispute both aspects of

the second element (whether there has been a change in

law, and, if so, whether any change in law caused an

impairment of the contractual relationship) as well as

the third element (whether any impairment is substantial). We need not wade into all of these disputes,

however, because we believe that the issue of impairment settles the matter. And so we will address only 4
18 No. 11-3111

(...continued) 4

fiscal deficit. Council 31 contends that the Rules are not a

reasonable and necessary means to remedy this problem and

then offers a number of alternative courses of action. But

because “[a] state . . . reserve[s] broad power to adopt regulations to protect the public without being concerned with

upsetting contractual obligations,” id., Council 31 must demonstrate (or, at this stage of the case, plausibly allege) that at least

one of those alternatives is a more moderate course of action

than the Rules, and that the alternative would serve the

purpose of meeting the State’s fiscal needs equally well. See

U.S. Trust Co. of N.Y. v. New Jersey, 431 U.S. 1, 30-31 (1977). It

is doubtful that Council 31 has met that burden here; therefore,

we are inclined to defer to the State’s broad power to protect

its citizens.

whether there has been an impairment of the contractual relationship in this case.

Council 31 argues that “[c]ourts find impairment

where, as here, the express terms of the labor agreement

create the right or benefit in question because one can

presume that the parties to a contract have relied heavily

on the explicit benefits set forth in that contract.” This

argument describes a classic breach of contract action.

But we have rejected the notion that a breach of contract

alone is enough to constitute a constitutional impairment of a contractual obligation. Horwitz-Matthews, Inc. v.

City of Chicago, 78 F.3d 1248, 1250 (7th Cir. 1996). And

for good reason: “The essence . . . of a breach of contract

is that it triggers a duty to pay damages for the

reasonably foreseeable consequences of the breach. If
No. 11-3111 19

the duty [to pay damages] is unimpaired, the obligation

of the contract cannot be said to have been impaired.”

Id. at 1251. So our inquiry does not focus on whether

Council 31 has adequately pleaded a breach of contract

claim (it most certainly has), but rather on “whether

[the State] . . . set up a defense that prevented [Council 31]

from obtaining damages, or some equivalent remedy,

for the breach.” Id.

Here, Council 31 argues only that the Rules constitute

an unconstitutional impairment of the collective bargaining agreements. This argument can prevail only if

the Rules are a defense that the State has set up to

prevent Council 31 from obtaining damages for breach

of contract. And so we will briefly examine the State’s

defense in the aforementioned state court proceedings

to determine whether the Rules foreclose a remedy

for breach of contract.

It is clear that they do not. Indeed, Council 31 has

already prevailed at arbitration on its breach of contract

claim, and in the subsequent suit filed by the State in

state court to vacate the arbitration award, the State’s

defense is not predicated on the Rules. Rather, the

State’s defense is based on the application of Section 21 of

the Illinois Public Sector Relations Act, which states that

the negotiation of collective bargaining agreements is

“[s]ubject to the appropriation power of the employer

[which is the State].” 5 Ill. Comp. Stat. 315/21. Accordingly,

the State has argued that appropriations are a condition

precedent to the wage increases being paid. Because

plenary appropriation authority lies with the legislative
20 No. 11-3111

branch, the State asserts that the executive branch’s

hands are tied by the appropriations doled out by the

General Assembly and so the State cannot be held liable

for a breach of contract when, because of a lack of appropriations, insufficient funds exist to fulfill a contractual obligation.

This argument is consistent with the State’s rationale

for enacting the rules, as stated in Director Weems’s July 1

memorandum: “[D]ue to the absence of sufficient appropriations by the General Assembly, the above listed

agencies cannot implement the FY12 increases.” In other

words, the Rules simply implemented a payment plan

that had been dictated by legislative fiat. Ultimately,

whether the State prevails in state court will not rest

on the court’s construction of the Rules, but rather on

the court’s application of Section 21 of the Illinois

Public Sector Relations Act—specifically, whether the

court accepts the State’s argument that Section 21 establishes the notion that appropriations are a condition

precedent to the State meeting its contractual obligations.

Thus, the Rules do not foreclose a remedy for breach

of contract, and no impairment of a contractual obligation exists. Council 31 has failed to state a cognizable

Contracts-Clause claim.

2. Equal Protection Claim

Finally, Council 31 argues that the district court erred

in holding that it failed to adequately state an Equal

Protection claim. The Fourteenth Amendment’s Equal

Protection Clause requires that “ ‘all persons similarly

situated . . . be treated alike.’ ” United States v. Brucker, 646
No. 11-3111 21

F.3d 1012, 1017 (7th Cir. 2011) (quoting United States v.

Nagel, 559 F.3d 756, 760 (7th Cir. 2009)). But Equal Protection claims are subject to different degrees of scrutiny

depending on the individual rights or the class of persons

at issue. As Council 31 acknowledges, “[t]he proper

level of scrutiny in this circumstance is the rational relationship test, for our case does not involve a fundamental

right, and there is no suspect class.” Discovery House, Inc.

v. Consol. City of Indianapolis, 319 F.3d 277, 282 (7th Cir.

2003). Under that standard, the applicable government

regulation will be upheld “ ‘if there is a rational relationship between the disparity of treatment and some

legitimate governmental purpose.’ ” Brucker, 646 F.3d

at 1017 (emphasis in original) (quoting Smith v. City of

Chicago, 457 F.3d 643, 652 (7th Cir. 2006)).

Council 31 contends that, at this early stage of the

proceedings, it is improper to determine whether paying

raises to employees in some agencies but not to the

30,000 employees in the 14 affected agencies is rationally

related to a legitimate governmental purpose. Council 31

states that it is enough that it has pleaded an Equal Protection claim at this stage of the proceedings. Later on,

Council 31 argues, its claim will be tested against the

legitimate governmental purpose that the defendants

have proffered as their rationale for implementing

the Rules.

Council 31’s argument ignores the heavy burden a

plaintiff bears when asserting an Equal Protection claim

that is subject only to rational-basis scrutiny. As noted

above, the defendants must identify only “some” (in other
22 No. 11-3111

words, at least one) legitimate governmental purpose.

Stated another way, Council 31 must plausibly allege

that no reasonably conceivable set of facts supports the

pay freeze as a rational instrument of cost savings. See

Discovery House, Inc., 319 F.3d at 282. Here, the parties

agree that the State has encountered a fiscal crisis that

will cause the State to run out of money by the end

of the fiscal year. Instituting cost-savings measures is

unquestionably a legitimate governmental interest, particularly for a government in such dire fiscal straits. And

by Council 31’s own admission the State would save

approximately $75 million by implementing the pay

freeze. It is therefore evident that the Rules are a

rational method of contributing to the legitimate governmental aim of cost savings. Accordingly, the district court properly granted the defendants’ motion to

dismiss Council 31’s Equal Protection claim.

III.

The Eleventh Amendment bars Council 31’s ContractsClause claim because the essence of the relief that it

seeks is the payment of funds out of the treasury.

Council 31 also failed to state a Contracts-Clause claim

because it did not adequately allege that the Rules unconstitutionally impaired the collective bargaining agreements. Finally, Council 31 failed to state an Equal Protection claim because there is a rational relationship

between the Rules and the legitimate governmental

purpose of cost savings. Because we hold that the

district court correctly dismissed both claims at issue,
No. 11-3111 23

we necessarily hold that the district court also correctly

denied Council 31’s motion for a preliminary injunction.

For these reasons, the district court is AFFIRMED.

5-17-12