## I L L I N O I S 

## O F F I C I A L 

## RE P O R T S Appellate Court

World Pain ting C

o. v. Costigan , 2012 IL App (4th) 110869

Appellate Court Caption WORL D PAI NTI NG COMPANY, L L C, Plaintiff-Appellee
, v. J OSEPH COSTI GAN, in His Capac ity as Direc tor of L abor, State of I llinois ; and L I SA MADI GAN, in Her Capac ity as I llinois Attorney General, Def endants-A

ppellants.

District & N o. Four th District Docke t No. 4-11-0869

Argued Filed Fe bruar y 7, 2012
Marc h 29, 2012

Held (Not e: Thi s syl lab us

con st it ute s no par t of the opi nio n of the cour t but has bee n pre

par ed by t h e Repo rt er of D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) The p re l i m i nary injunction enter ed by the trial court barr ing the Depa rtment of L abor from enfor cing the Emp l o y ee Classification Act
ag ainst plaintiff’s bu s i n es s based on claims that plaintiff had misclassified some worke rs as nonemploy ees was vacated and the cause

was rema nded for further proce eding s, notwithstanding plaintiff’s initial contention t hat t he Ac t v i o lated it s rig hts to due process, si nce plaintiff and the Depa

rtment ag ree d to a constit u t i o n al plan under which the De partment would investiga te plaintiff’s alleg ed violations without making any ad

judicatory finding s of liability
, and under those circ umstances, plaintiff’ s rig ht to due proce ss would not be implicated.

Dec ision Under Review Appea l from the Circuit Court of M acon County
, No. 11-CH-235; the Hon. Thomas E. Gr iffith, J r., Judge, pr esiding

.

J udg ment Vac ated a nd rema nded.Counsel on

Appea l L isa Madig an, Attorney Gene ral, of Chic ago (Michae l A. Scodro, Solicitor Gene ral, and Mary E. Welsh (ar g ued ), Assistant Attorney Gene ral, of c ounsel), for

appellants.

Christopher M. Ellis and Timothy J

. Tig he, J r. (a rgued), both of Bole n Robinson & Ellis, L L P, of Dec atur, for appellee

.

Panel J USTI CE COOK delivere d the judg ment of the c ourt, with opinion. Presiding J ustice Turner and J ustice Steigm an n concurred in the judgme nt and opinion.

OP INION

¶ 1 In this action, plaintiff, World P aint ing Company
, L L C, challeng es the validity of the Employ ee Classification Act (Act) (820 I L CS 185/1 to 999 (W es t 2010)), arguing the Act violates due proce ss. In September 2011, the trial co u rt en t ered a preliminary injunction barr ing defe ndants, Direc tor of L abor J oseph Costigan and Attorney Gene ral L isa Madig an in the ir officia l c apac ities, f rom enfor cingthe Act a g ainst plaintiff pending the outcome of plainti ff’s claims for perma nent injunctive and decla ratory relief

. The court’s judgme nt followed a hearing at which defe ndants conce ded that the Fifth District Appellate Court’s decision in Bartlow v. Shannon
, 399 I ll. App. 3d 560, 927 N.E.2d 88 (2010), was mandatory authority and supported pla intiff’s re quest for pr eliminary injunction. ¶ 2 Def

endants appea l, arguing the trial court err ed in g ranting the preliminary injunction as Bartlow was decide d wrong ly

. Specifica lly
, defe ndants cont en d that under an appropr iate

rea ding of the Act, inconsistent with the appellate court ’s i n t erpretation in Bartlow
, plaintiff’s due pr ocess c oncer ns were unfounded a

nd its request for preliminary injunction should have been denied. At oral argument, plaintiff conce ded t hat defe ndants’ proposed interpre tation of the Act is rea sonable and ensure s plaintiff will rec eive due proce ss. Plaintiff

never theless argues that defe ndants’ p ro p o sed interpre tation violates principles of the
separ ation of powe rs. ¶ 3 W e al low the parties’ ag ree d interpre tation of t he Act to control i n this case and re jec t plaintiff’s separ ation-of- power s argument. Acc ording ly
, as defe ndants ’ proposal to bind themselves to the ir rea ding of the Act resolves plaintiff’s due-pr ocess claim, we vacate the trial court’s judgme nt g ranting the preli m inary injunction and rema nd for further
proce eding s.

¶ 4 I . BA CKGROUND ¶ 5 In May 2011, plaintiff, a contra cting firm, rec eived a letter from the Depa rtment of L abor (De partment) informing plaintiff of its preliminary deter mination that plaintiff had acc rued 27 total day s’ violations of the Act by misclassify

ing six workers a s nonemploy ees on two

-2-construction projec ts betwee n October and Dec ember 2009. The letter indicated plaintiff

fac ed $40,500 in possible civil penalties and invited plaintiff to submit exculpating evidenc e in writing f

or the De partment’s c onsideration towar d rea chinga fina l determination. ¶ 6 Instead of responding to the Depa rtmen t ’s re q u es t fo r additional information, in J uly 2011, plaintif

f filed its complaint alleg ing the Act is unconstitutional on its fac e. Specifica lly
, plaintif f alleg ed the Act violates due proce ss by failing to provide contra ctors who are suspected of violating the Act adequate notice and an opportunity to be heard prior to the imposit ion of penalties, including civil fines. Plaintiff’s complaint soug ht a perma nent injunction barr i n g defe ndants’ enfor ceme nt of the statute ag ainst plaintiff and decla ratory relief

. In August 2011, plaintiff filed a motion for preliminary injunction to preve nt defe ndants from e nforc ing the Act ag ainst it during the pe ndency of the trial pr ocee dings. ¶ 7 On August 25, 2011, the trial court held a hear ing on plaintiff’s motion for preliminary injunction. Def

endants conce ded that Bartlow
, a Fi ft h District decision, was mandatory authority befor e the court and that plaintiff was entitled to a preliminary injunction under that

case . The c ourt g rante d plaintiff’s motion, finding Bartlow was c ontrolling. ¶ 8 This interlocutory appea l followed.

¶ 9 I I . ANALYSI S ¶ 10 On appea l, defe ndants ask this court to disreg ard Bartlow and to rule plaintiff’s claim for preliminary injunction should not have bee n g rante d beca use pl aintiff’s due-proc ess claim is premature under an appropr iate interpre tation o f t h e Act. At oral argument, plaintiff

conce ded defe ndants’ proposed interpre tation was rea sonable and would resolve the alleg ed due-pr ocess defic ienc i es

. We allow the parties’ ag ree d rea ding of the Act, which we find otherwise constitutional, to control our dispositi on of this case

. Be cause under their interpre tation of the Act plaintiff is not entitled to a p re l i m i n ary injunction, we vacate the trial court’ s imposit ion of preliminary injunction and rema

nd for f urther pr ocee dings. ¶ 11 A prelimi nary injunction is an “ext raor dinary” remedy t h at “s h o u l d be gra nted onl y in situations of ex treme emer g ency or wher e serious harm would result if the preliminary injunction was not issued.” Clint on Landfil l, Inc. v . Mahome t Valley W ater Authority , 406 I ll. App. 3d 374, 378, 943 N.E.2d 725, 729 (2010). A preliminary injunction is war rante d if (1) a clea rly asce rtained rig ht requ i re s p rotec tion, (2) irrepa rable injury will result in the absenc e of an injunction, (3) no adequate reme dy at l aw is available
, and (4) the moving party is likely to succe ed on the merits of the case

. Id. To obtain a preliminary injunction, the movant must raise a “ fair que stion” that eac h of these e lements is satisfied. Id. ¶ 12 In g ener al, we r eview the trial court’s g rant or denial of a pre liminary injunction for an abuse of d iscretion, which occur s only when the ruling “is arbitra ry , fanc iful, or

unrea sonable, or when no rea sonable person would adopt t h e co u rt ’s view.” (Interna l quotation marks omitted.) Id. P u rely leg al questions arising in the preliminary -injunction analy sis, howeve r, are revie wed de novo

. Id.
, 943 N.E.2d at 730. As this appea l conce rns whether the Act is unconstitutional on its fac e wh en i n t erpr eted as defe ndants propose–a question of law–we apply the de novo standard of

revie w. ¶ 13 In this case , plaintiff’s complaint alleg ed the Act violates due proce ss. Specifica lly
, in its

-3-motion for preliminary injunction, plaintiff argued the Ac t on its face provides contra ctors insufficient notice and opportunity to be h ea rd befor e the Depa rtment assesses penalties
ag ainst them. ¶ 14 Under the constitutions of the United States and I llinois
, the State may not “depr ive any person of life, l iberty
, or property , without due process of law.” U.S. Const., amend. X I V;

see also I ll. Const. 1970, art. I
, § 2. “The core of due proce ss is t h e rig ht to notice and a meaning ful opportunity

to be hea rd”; no pe rson may

be depr ived of a

protec ted intere st by an adminis trati v e adjudi cation of rig hts unless these safeguards are provided. Lachance v. Erickson , 522 U.S. 262, 266 (1998). ¶ 15 The conver se of this proposition is also g ener ally true: the constitutional g uara ntee of due
proce ss, along with its require m en t s o f n o tice and an opportunity to be hear d, is not even implicated by executive action that cannot result in an administrative adjudication of rig hts. For example, in Hannah v. Larche
, 363 U.S. 420, 439 (1960), the Supreme Court considere d whether the notice require ment o f d u e p rocess applied to proce eding s befor e a fede ral commission investigating the possible violation of civil rig hts laws. The Court considere d the commissi o n ’s s t atutory power s and responsibilities and conclude d the commission’s “func tion is purely investigative an d fa ct -f i nding. I t does not adjudicate

. I t does not hold trials or determine any one’s civil or cr i m i n al l iability

. I t does not issue order s. *** I t does
not make deter

minations depriving anyone of his life, liberty
, or proper ty .” Id. at 441. Rather, the Court found, “[t] he only purpose of its exis tence is to find fac ts which may subsequently be used as the basis for leg islative or executive action.” Id. The Court he ld due proce ss did
not require that persons whose conduct was under investigation by the commission must be apprised of the char g es being investigated. Id. at 441-42. In so doing, the Court stated, “It is probably sufficie nt mere ly to indicat e t h at t h e rig hts claimed by responde nts are normally associate d only with adjudicator y proce eding s, and that since the Commi ssion does not adjudicate , it need not be bound by adjudicator

y proce dures.” Id. at 442. ¶ 16 Subsequently
, in Securities & Exc hange Comm’n v. Jerry T. O’Brien, Inc.
, 467 U.S. 735, 742 (1984), the Court r emar ked: “The opinion of the Court in Hannah *** lea v es n o d o u bt that *** the Due Process Clause of the Fifth Amendment *** is [not ] offe nded when a fede ral administrat ive
ag ency , without notifying a person under investigation, uses its subpoena power to g ather evidenc e adver se to him. T h e Du e Process Clause is not implicated under such circ umstances beca

use an administrative investigation adjudicate s no leg al rig hts ***.”
In that case , the Court hel d due proce ss was not violated by the Securities and Ex chang e Commi ssion’s subpoena powe rs in investigating possible violations of sec urities laws. Id. ¶ 17 The following discussion of the Act and Bartlow provides fur ther ba ckground rele vant to our analy sis. “The Act seeks to ensure that worke rs in the construction industry are offe red protec tions under numerous labor laws, including minimum wag e, overtime, worke rs’
compensation, and unemploy ment insurance
, and are not misclassified as i n d ep endent
contra ctors in order to avoid tax and labor law obligations.” Bartlow
, 399 I ll. App. 3d at 563, 927 N.E.2d at 92 (citing 820 I L CS 185/3 (West 2008)). I t establishes a presumption that an individual who perf

orm s service s for a construction contra ctor is an employ ee unless

-4-specifie d criter ia are m et. 820 I L CS 185/10 (West 2008). A contractor’ s failure to classify

qualifying individuals as e mploy ees violate s the Act. 820 I L CS 185/ 20 (West 2008). ¶ 18 The Depa

rtment is c harg ed with investig ating possible violations of the Act. 820 I L CS 185/25(a) (West 2008). The Act empower s the Depa rtmen t to inspect businesses and subpoena witnesses and documents in its investigations. 820 I L CS 185/25(a) (West 2008). Among other penalties for violations, the Act provides for civil fines calc ulated by ref ere nce to eac h day eac h individual is misclassified as a nonemploy ee. 820 I L CS 185/40 (West 2008). “The civil penalties assessed by the Depa rtment as well as any other relief reque sted by the Depa

rtment shall be rec overa

ble in an action broug ht in the name of the people of the State of I llinois by the Attorney Gene ral.” 820 I L CS 185/25(b) (West 2008). Alternatively
, “a person ag g rieve d by a violation” of the Act may collect the civil penalty in a private action in the circ uit court. 820 I L CS 185/ 40 (West 2008). ¶ 19 Plaintiff’s case and the g rant o f preliminary injunction in this case wer e based on the Fifth Di s t ri ct Ap pellate Court’s interpre tation of the Act in Bartlow

. In that case , the appellate court rev erse d the trial court’s denial of the plaintiffs’ motion for a temporar y restra ining order (TRO) barr ing enfor ceme nt of the Act pending the plaintiffs’ due-pr ocess challeng e. Bartlow
, 399 I ll. App. 3d at 574, 927 N.E.2d at 100. There
, the plaintiffs rec eived a noti fi ca t i on that the Department had preliminarily deter mined the pl aintiffs had violated the Act and wer e subject as a re sult to nea rly $1.7 milli on in pote ntial c ivil pena lties. Id. at 565, 927 N.E.2d at 94. As here
, the letter indicated the plaintiffs could provide any written

m at er i als in their favor t o the Department for its consideration. Id. Be fore the Departmen t

rea ched a final deter

mination, the plaintiffs filed suit for an injunction ag ai n s t the enfor ceme n t o f t h e Act and a declara tion that the Act was unconstitut ional on its fac e and later moved for a TRO and a preliminary injunction. Id. at 566, 927 N.E.2d at 94. The trial court de nied their re quest for a TRO. Id. at 567, 927 N.E.2d at 95. ¶ 20 The Fifth District reve rsed the denial of the plaintiffs’ motion for a TRO. Id. at 574, 927 N.E.2d at 100. Under the appellate court’s interpre tation of the Act, the Depa rtment enjoy s power s to assess penalties and take other acti o n s t o remedy violations and preve nt future violations. Id. at 564, 927 N.E.2d at 93. Initially
, applying the two-par t test es t ab l i s h ed i n Abbott Laboratori es v. Gardner
, 387 U.S. 1 36 (1967), the court reje cted the defe ndants’
argument that the plaintiffs’ claim was unripe. Bartlow
, 399 I ll. App. 3d at 569, 927 N.E.2d
at 96-97. Next, the court found t h e p l ai n tiffs raised a “fa ir question” of the Act’s unconstitutionalit y “bec ause the Act and the proce dures promulg ated pursuant to the Act do
not appea r to provide an acc used with a meaning ful opportunity to be hear d.” Id. at 570, 927 N.E.2d at 97. Specifica lly
, the court conclude d that proce dures allowing for the submissi on of written evidenc e and an informal hear ing wer e insufficient to ensure due proce ss in light of the expansive adjudicative and reme dial power s the Depa rtment enjoyed under the court’s interpre tation of the Act. Id. at 571-72, 927 N.E.2d at 98-99. Toward that end, the court stated, “[I ]t appea

rs to us that the Act and its regulations may allow for th e as s es s m en t of penalties and sanctions aga inst an acc u s ed contra ctor without providing basic due proce ss protec tions.” Id. at 571, 927 N.E.2d at 98. Finally
, the appellate court conclude d the plaintiffs showed that the enfor ceme nt of the Act ag ainst them would have resulted in irrepa rable harm and that they

had no ade quate r emedy

at law. Id. at 573-74, 927 N.E.2d at 100.

-5-¶ 21 Be cause this court h ad n o t i s s u ed an y contra ry opinion, the trial court in this case
proper ly held Bartlow was controlling . See Schrame r v. Tiger Athletic Ass’n
, 351 I ll. App. 3d 1016, 1020, 815 N.E.2d 994, 996 (2004) (“Under the I llinois rule of stare decisis
, a circ uit
court must follow the prec edent of the appellate court of its district, if such prec edent exis ts; if no such prec edent exis ts, the circ uit c ourt must follow the prec edent of other districts.”). Unlike the trial court, howeve r, we are not bound t o follow Bartlow

. See id. at 1020, 815 N.E.2d at 996-97. ¶ 22 In this case , defe ndants argue that, contra ry to the Fifth District’s indications in Bartlow
, the Act does not allow the Depa rtment to adjudicate a firm’s civil or criminal liability under the Act. Rather, acc ordingto defe ndants’ interpr etation, the Depa rtment may only conduct

a no-conse quence s investigation. Def endants liken the Depa

rtment’s role to that of the police in a criminal investigation. The Depa rtment, acc ording to defe ndants, may subpoena witnesses and documents and inspect businesses toward deter mining whether to rec ommend the commence ment of an action for civil or criminal penalties in the tri al co u rt

. I f the Dep ar t ment found a violation, defe ndants’ interpre tation would allow the Depa rtment to conduct informal neg otiations with a firm toward settling on a penalty

. Howeve r, if the firm

wer e unwilling to neg otiate, the Depa rtment’s sole rec ourse would be in “ de novo ” court proce eding s in which the Department’s findings would be inadmis sible. Def endants a rgue the Depa rtment’s investigation under the Act does not require due-pr ocess protec tions such as notice a

nd an opportunity

to be hea rd bec ause the Depa

rtment itself ca

nnot adjudicate a firm’s rig hts or liabiliti es. ¶ 23 We note that plaintiff contends defe ndants’ interpre tation of the Act raises se paration-ofpower s c o n c e r

n s

. Pl a in ti f f c it e s M illi neum Maintenance Managem ent, Inc. v. County of Lake
, 384 I ll. App. 3d 638, 652, 894 N.E.2d 845, 859-60 (2008), a Second District Appellate Court opinion illust rating the principle that a statute is unconstitutional if it allows the judiciary to “wholly rec onsider[ ] an administr at i v e decision without any defe renc e to the orig inal deter mination.” Howeve r, as the Depa rtment does not adjudicate a firm’s liability under the Act as perc eived by the parties, separ ation of power s is not offe nded by the trial court’s role in adjudicating enfor ceme nt actions. That is, aside from the deter mination whether to prosec ute claims in the court, there is no “orig inal deter mination” as descr ibed in Millineum Maintenancefor the judicia ry to rec onsider. ¶ 24 The parties have ag ree d to a constitut i o nal plan for conducting their interac tion as the Depa rtment investigates plaintiff’s possible violations of the Act. Under t his plan, the Depa rtment is forbidden from m aking any adjudicator y finding s of pl ain t i ff’s liability

. As such, due proce ss is not implicated by the Depa rtment’s investigation in this case

. There fore
, plaintiff is not entitled to a preliminary injunction as its cl ai m t h at t h e Act is fac ially

u n constitutional cannot succe ed. We vacate the trial court’s order g ranting plaintif f a preliminary

injunction and rema

nd for f urther pr ocee dings c onsistent with thi s opinion.

¶ 25 I I I . CONCL USI ON ¶ 26 F o r th e f

o r eg oing rea sons, we vacate the trial court’s judgme nt g ranting plaintiff’ s mo ti o n for a preliminary

injunction and rema

nd for f urther pr ocee dings.

-6-¶ 27 Vac ated a nd rema nded.

-7-