ILLINOIS OFFICIAL REPORTS

Appellate Court

World Painting Co. v. Costigan, 2012 IL App (4th) 110869

Appellate Court

Caption

WORLD PAINTING COMPANY, LLC, Plaintiff-Appellee, v. JOSEPH

COSTIGAN, in His Capacity as Director of Labor, State of Illinois; and

LISA MADIGAN, in Her Capacity as Illinois Attorney General,

Defendants-Appellants.

 District & No. Fourth District

Docket No. 4-11-0869

Argued

Filed

February 7, 2012

March 29, 2012

Held

(Note: This syllabus

constitutes no part of

the opinion of the court

but has been prepared

by the Reporter of

Decisions for the

convenience of the

reader.)

The preliminary injunction entered by the trial court barring the

Department of Labor from enforcing the Employee Classification Act

against plaintiff’s business based on claims that plaintiff had

misclassified some workers as nonemployees was vacated and the cause

was remanded for further proceedings, notwithstanding plaintiff’s initial

contention that the Act violated its rights to due process, since plaintiff

and the Department agreed to a constitutional plan under which the

Department would investigate plaintiff’s alleged violations without

making any adjudicatory findings of liability, and under those

circumstances, plaintiff’s right to due process would not be implicated.

Decision Under 

Review

Appeal from the Circuit Court of Macon County, No. 11-CH-235; the

Hon. Thomas E. Griffith, Jr., Judge, presiding.

Judgment Vacated and remanded.
Counsel on

Appeal

Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro,

Solicitor General, and Mary E. Welsh (argued), Assistant Attorney

General, of counsel), for appellants.

Christopher M. Ellis and Timothy J. Tighe, Jr. (argued), both of Bolen

Robinson & Ellis, LLP, of Decatur, for appellee.

Panel JUSTICE COOK delivered the judgment of the court, with opinion.

Presiding Justice Turner and Justice Steigmann concurred in the

judgment and opinion.

OPINION

¶ 1 In this action, plaintiff, World Painting Company, LLC, challenges the validity of the

Employee Classification Act (Act) (820 ILCS 185/1 to 999 (West 2010)), arguing the Act

violates due process. In September 2011, the trial court entered a preliminary injunction

barring defendants, Director of Labor Joseph Costigan and Attorney General Lisa Madigan

in their official capacities, from enforcing the Act against plaintiff pending the outcome of

plaintiff’s claims for permanent injunctive and declaratory relief. The court’s judgment

followed a hearing at which defendants conceded that the Fifth District Appellate Court’s

decision in Bartlow v. Shannon, 399 Ill. App. 3d 560, 927 N.E.2d 88 (2010), was mandatory

authority and supported plaintiff’s request for preliminary injunction.

¶ 2 Defendants appeal, arguing the trial court erred in granting the preliminary injunction as

Bartlow was decided wrongly. Specifically, defendants contend that under an appropriate

reading of the Act, inconsistent with the appellate court’s interpretation in Bartlow,

plaintiff’s due process concerns were unfounded and its request for preliminary injunction

should have been denied. At oral argument, plaintiff conceded that defendants’ proposed

interpretation of the Act is reasonable and ensures plaintiff will receive due process. Plaintiff

nevertheless argues that defendants’ proposed interpretation violates principles of the

separation of powers.

¶ 3 We allow the parties’ agreed interpretation of the Act to control in this case and reject

plaintiff’s separation-of-powers argument. Accordingly, as defendants’ proposal to bind

themselves to their reading of the Act resolves plaintiff’s due-process claim, we vacate the

trial court’s judgment granting the preliminary injunction and remand for further

proceedings.

¶ 4 I. BACKGROUND

¶ 5 In May 2011, plaintiff, a contracting firm, received a letter from the Department of Labor

(Department) informing plaintiff of its preliminary determination that plaintiff had accrued

27 total days’ violations of the Act by misclassifying six workers as nonemployees on two

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construction projects between October and December 2009. The letter indicated plaintiff

faced $40,500 in possible civil penalties and invited plaintiff to submit exculpating evidence

in writing for the Department’s consideration toward reaching a final determination.

¶ 6 Instead of responding to the Department’s request for additional information, in July

2011, plaintiff filed its complaint alleging the Act is unconstitutional on its face. Specifically,

plaintiff alleged the Act violates due process by failing to provide contractors who are

suspected of violating the Act adequate notice and an opportunity to be heard prior to the

imposition of penalties, including civil fines. Plaintiff’s complaint sought a permanent

injunction barring defendants’ enforcement of the statute against plaintiff and declaratory

relief. In August 2011, plaintiff filed a motion for preliminary injunction to prevent

defendants from enforcing the Act against it during the pendency of the trial proceedings.

¶ 7 On August 25, 2011, the trial court held a hearing on plaintiff’s motion for preliminary

injunction. Defendants conceded that Bartlow, a Fifth District decision, was mandatory

authority before the court and that plaintiff was entitled to a preliminaryinjunction under that

case. The court granted plaintiff’s motion, finding Bartlow was controlling.

¶ 8 This interlocutory appeal followed.

¶ 9 II. ANALYSIS

¶ 10 On appeal, defendants ask this court to disregard Bartlow and to rule plaintiff’s claim for

preliminary injunction should not have been granted because plaintiff’s due-process claim

is premature under an appropriate interpretation of the Act. At oral argument, plaintiff

conceded defendants’ proposed interpretation was reasonable and would resolve the alleged

due-process deficiencies. We allow the parties’ agreed reading of the Act, which we find

otherwise constitutional, to control our disposition of this case. Because under their

interpretation of the Act plaintiff is not entitled to a preliminary injunction, we vacate the

trial court’s imposition of preliminary injunction and remand for further proceedings.

¶ 11 A preliminary injunction is an “extraordinary” remedy that “should be granted only in

situations of extreme emergency or where serious harm would result if the preliminary

injunction was not issued.” Clinton Landfill, Inc. v. Mahomet Valley Water Authority, 406

Ill. App. 3d 374, 378, 943 N.E.2d 725, 729 (2010). A preliminary injunction is warranted if

(1) a clearly ascertained right requires protection, (2) irreparable injury will result in the

absence of an injunction, (3) no adequate remedy at law is available, and (4) the moving

party is likely to succeed on the merits of the case. Id. To obtain a preliminary injunction, the

movant must raise a “fair question” that each of these elements is satisfied. Id.

¶ 12 In general, we review the trial court’s grant or denial of a preliminary injunction for an

abuse of discretion, which occurs only when the ruling “is arbitrary, fanciful, or

unreasonable, or when no reasonable person would adopt the court’s view.” (Internal

quotation marks omitted.) Id. Purely legal questions arising in the preliminary-injunction

analysis, however, are reviewed de novo. Id., 943 N.E.2d at 730. As this appeal concerns

whether the Act is unconstitutional on its face when interpreted as defendants propose–a

question of law–we apply the de novo standard of review.

¶ 13 In this case, plaintiff’s complaint alleged the Act violates due process. Specifically, in its

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motion for preliminary injunction, plaintiff argued the Act on its face provides contractors

insufficient notice and opportunity to be heard before the Department assesses penalties

against them.

¶ 14 Under the constitutions of the United States and Illinois, the State may not “deprive any

person of life, liberty, or property, without due process of law.” U.S. Const., amend. XIV;

see also Ill. Const. 1970, art. I, § 2. “The core of due process is the right to notice and a

meaningful opportunity to be heard”; no person may be deprived of a protected interest by

an administrative adjudication of rights unless these safeguards are provided. Lachance v.

Erickson, 522 U.S. 262, 266 (1998).

¶ 15 The converse of this proposition is also generally true: the constitutional guarantee of due

process, along with its requirements of notice and an opportunity to be heard, is not even

implicated by executive action that cannot result in an administrative adjudication of rights.

For example, in Hannah v. Larche, 363 U.S. 420, 439 (1960), the Supreme Court considered

whether the notice requirement of due process applied to proceedings before a federal

commission investigating the possible violation of civil rights laws. The Court considered

the commission’s statutory powers and responsibilities and concluded the commission’s

“function is purely investigative and fact-finding. It does not adjudicate. It does not hold

trials or determine anyone’s civil or criminal liability. It does not issue orders. *** It does

not make determinations depriving anyone of his life, liberty, or property.” Id. at 441. Rather,

the Court found, “[t]he only purpose of its existence is to find facts which may subsequently

be used as the basis for legislative or executive action.” Id. The Court held due process did

not require that persons whose conduct was under investigation by the commission must be

apprised of the charges being investigated. Id. at 441-42. In so doing, the Court stated, “It is

probably sufficient merely to indicate that the rights claimed by respondents are normally

associated only with adjudicatory proceedings, and that since the Commission does not

adjudicate, it need not be bound by adjudicatory procedures.” Id. at 442.

¶ 16 Subsequently, in Securities &Exchange Comm’n v. Jerry T. O’Brien, Inc., 467 U.S. 735,

742 (1984), the Court remarked:

“The opinion of the Court in Hannah *** leaves no doubt that *** the Due Process

Clause of the Fifth Amendment *** is [not] offended when a federal administrative

agency, without notifying a person under investigation, uses its subpoena powerto gather

evidence adverse to him. The Due Process Clause is not implicated under such

circumstances because an administrative investigation adjudicates no legal rights ***.”

In that case, the Court held due process was not violated by the Securities and Exchange

Commission’s subpoena powers in investigating possible violations of securities laws. Id.

¶ 17 The following discussion of the Act and Bartlow provides further background relevant

to our analysis. “The Act seeks to ensure that workers in the construction industry are offered

protections under numerous labor laws, including minimum wage, overtime, workers’

compensation, and unemployment insurance, and are not misclassified as independent

contractors in orderto avoid tax and labor law obligations.” Bartlow, 399 Ill. App. 3d at 563,

927 N.E.2d at 92 (citing 820 ILCS 185/3 (West 2008)). It establishes a presumption that an

individual who performs services for a construction contractor is an employee unless

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specified criteria are met. 820 ILCS 185/10 (West 2008). A contractor’s failure to classify

qualifying individuals as employees violates the Act. 820 ILCS 185/20 (West 2008).

¶ 18 The Department is charged with investigating possible violations of the Act. 820 ILCS

185/25(a) (West 2008). The Act empowers the Department to inspect businesses and

subpoena witnesses and documents in its investigations. 820 ILCS 185/25(a) (West 2008).

Among other penalties for violations, the Act provides for civil fines calculated by reference

to each day each individual is misclassified as a nonemployee. 820 ILCS 185/40 (West

2008). “The civil penalties assessed by the Department as well as any other relief requested

by the Department shall be recoverable in an action brought in the name of the people of the

State of Illinois by the Attorney General.” 820 ILCS 185/25(b) (West 2008). Alternatively,

“a person aggrieved by a violation” of the Act may collect the civil penalty in a private action

in the circuit court. 820 ILCS 185/40 (West 2008).

¶ 19 Plaintiff’s case and the grant of preliminary injunction in this case were based on the

Fifth District Appellate Court’s interpretation of the Act in Bartlow. In that case, the

appellate court reversed the trial court’s denial of the plaintiffs’ motion for a temporary

restraining order (TRO) barring enforcement of the Act pending the plaintiffs’ due-process

challenge. Bartlow, 399 Ill. App. 3d at 574, 927 N.E.2d at 100. There, the plaintiffs received

a notification that the Department had preliminarily determined the plaintiffs had violated

the Act and were subject as a result to nearly $1.7 million in potential civil penalties. Id. at

565, 927 N.E.2d at 94. As here, the letter indicated the plaintiffs could provide any written

materials in their favor to the Department for its consideration. Id. Before the Department

reached a final determination, the plaintiffs filed suit for an injunction against the

enforcement of the Act and a declaration that the Act was unconstitutional on its face and

later moved for a TRO and a preliminary injunction. Id. at 566, 927 N.E.2d at 94. The trial

court denied their request for a TRO. Id. at 567, 927 N.E.2d at 95.

¶ 20 The Fifth District reversed the denial of the plaintiffs’ motion for a TRO. Id. at 574, 927

N.E.2d at 100. Under the appellate court’s interpretation of the Act, the Department enjoys

powers to assess penalties and take other actions to remedy violations and prevent future

violations. Id. at 564, 927 N.E.2d at 93. Initially, applying the two-part test established in

Abbott Laboratories v. Gardner, 387 U.S. 136 (1967), the court rejected the defendants’

argument that the plaintiffs’ claim was unripe. Bartlow, 399 Ill. App. 3d at 569, 927 N.E.2d

at 96-97. Next, the court found the plaintiffs raised a “fair question” of the Act’s

unconstitutionality “because the Act and the procedures promulgated pursuant to the Act do

not appear to provide an accused with a meaningful opportunity to be heard.” Id. at 570, 927

N.E.2d at 97. Specifically, the court concluded that procedures allowing for the submission

of written evidence and an informal hearing were insufficient to ensure due process in light

of the expansive adjudicative and remedial powers the Department enjoyed under the court’s

interpretation of the Act. Id. at 571-72, 927 N.E.2d at 98-99. Toward that end, the court

stated, “[I]t appears to us that the Act and its regulations may allow for the assessment of

penalties and sanctions against an accused contractor without providing basic due process

protections.” Id. at 571, 927 N.E.2d at 98. Finally, the appellate court concluded the plaintiffs

showed that the enforcement of the Act against them would have resulted in irreparable harm

and that they had no adequate remedy at law. Id. at 573-74, 927 N.E.2d at 100.

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¶ 21 Because this court had not issued any contrary opinion, the trial court in this case

properly held Bartlow was controlling. See Schramer v. Tiger Athletic Ass’n, 351 Ill. App.

3d 1016, 1020, 815 N.E.2d 994, 996 (2004) (“Under the Illinoisrule of stare decisis, a circuit

court must follow the precedent of the appellate court of its district, if such precedent exists;

if no such precedent exists, the circuit court must follow the precedent of other districts.”).

Unlike the trial court, however, we are not bound to follow Bartlow. See id. at 1020, 815

N.E.2d at 996-97.

¶ 22 In this case, defendants argue that, contrary to the Fifth District’s indications in Bartlow,

the Act does not allow the Department to adjudicate a firm’s civil or criminal liability under

the Act. Rather, according to defendants’ interpretation, the Department may only conduct

a no-consequences investigation. Defendants liken the Department’s role to that of the police

in a criminal investigation. The Department, according to defendants, may subpoena

witnesses and documents and inspect businesses toward determining whetherto recommend

the commencement of an action for civil or criminal penalties in the trial court. If the

Department found a violation, defendants’ interpretation would allow the Department to

conduct informal negotiations with a firm toward settling on a penalty. However, if the firm

were unwilling to negotiate, the Department’s sole recourse would be in “de novo” court

proceedings in which the Department’s findings would be inadmissible. Defendants argue

the Department’s investigation under the Act does not require due-process protections such

as notice and an opportunity to be heard because the Department itself cannot adjudicate a

firm’s rights or liabilities.

¶ 23 We note that plaintiff contends defendants’ interpretation of the Act raises separation-ofpowers concerns. Plaintiff cites Millineum Maintenance Management, Inc. v. County of Lake,

384 Ill. App. 3d 638, 652, 894 N.E.2d 845, 859-60 (2008), a Second District Appellate Court

opinion illustrating the principle that a statute is unconstitutional if it allows the judiciary to

“wholly reconsider[ ] an administrative decision without any deference to the original

determination.” However, as the Department does not adjudicate a firm’s liability under the

Act as perceived by the parties, separation of powers is not offended by the trial court’s role

in adjudicating enforcement actions. That is, aside from the determination whether to

prosecute claims in the court, there is no “original determination” as described in Millineum

Maintenance for the judiciary to reconsider.

¶ 24 The parties have agreed to a constitutional plan for conducting their interaction as the

Department investigates plaintiff’s possible violations of the Act. Under this plan, the

Department is forbidden from making any adjudicatory findings of plaintiff’s liability. As

such, due process is not implicated by the Department’s investigation in this case. Therefore,

plaintiff is not entitled to a preliminary injunction as its claim that the Act is facially

unconstitutional cannot succeed. We vacate the trial court’s order granting plaintiff a

preliminary injunction and remand for further proceedings consistent with this opinion.

¶ 25 III. CONCLUSION

¶ 26 Forthe foregoing reasons, we vacate the trial court’s judgment granting plaintiff’s motion

for a preliminary injunction and remand for further proceedings.

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¶ 27 Vacated and remanded.

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