Court Opinion

ID: 9011715
Source: CourtListenerOpinion
Date Created: 2022-11-27 13:58:40.567939+00
Date Added: 2024-06-11T17:11:23.839759
License: Public Domain

EASTERBROOK, Circuit Judge,
dissenting.
In 1982 we held that the sequence in which Chicago paid tort judgments against it violated the equal protection clause of the fourteenth amendment. On remand in 1983 the parties agreed on the prospective relief required by that decision but not on damages. On appeal from the damages judgment in 1989, we overruled our 1982 opinion. Chicago asked to be relieved of the prospective relief as well, now that its foundation is gone. A majority of this third panel holds that Chicago is forever bound to carry out relief designed to implement our overruled decision. This carries respect for the dead hand of the past altogether too far. Having admitted in 1989 our mistake of 1982, we should relieve the parties of the consequences.
I
During the late 1970s and early 1980s, the rate of interest Chicago paid on judgments (6% per annum for municipal governments, Ill.Rev.Stat. ch. 110 ¶ 2-1303) was substantially less than the cost of voluntary credit. Judgment debtors had every reason to postpone payment as long as this imbalance persisted. Instead of borrowing in the market at 15%, or raising taxes, Chicago borrowed from its judgment creditors. It paid tort judgments of $1,000 or less, and all contract judgments, quickly. Any plaintiff “lucky” enough to recover more in tort litigation could whistle for his money. By 1979 plaintiffs without the political clout to jump the queue had to wait on average 47 months for payment. An active secondary market in judgments against Chicago developed. About 80% of judgment holders sold in this market, accepting a discount of approximately 25% off the face value of their awards. Evans v. Chicago, 689 F.2d 1286, 1290 (7th Cir.1982) {Evans I).
The district court held that Chicago’s practice of paying small judgments quickly while deferring payment of larger tort judgments violated the due process and equal protection clauses of the fourteenth amendment: due process because it deprived judgment holders of a “property” interest in immediate payment created by state law, and equal protection because there was no rational basis for distinguishing large from small awards. A panel of this court affirmed the portion of the judgment that rested on the equal protection clause, id. at 1299-1300, while vacating the due process aspect as' premature, id. at 1296-99. Dicta in the opinion strongly imply that the City deprived the plaintiffs of due process of law, id. at 1297-98.
On remand the parties proposed, and the district court approved, a consent decree eliminating the distinction between large and small judgments, requiring all judgments to be paid in order of their entry, and providing that the Mayor must ask the City Council to appropriate enough money to pay all judgments promptly. The litigants could not agree whether the plaintiffs were entitled to damages for delay in payment. The district court concluded that they were, under the equal protection clause — both the plaintiffs and the district court deeming the due process theory surplusage in light of the equal protection holding.' Another panel of this court reversed, overruling Evans I. 873 F.2d 1007 (7th Cir.1989) (Evans II). The second panel (with the acquiescence of the full court, see id. at 1008 n. *) concluded that the City had a rational basis, if only administrative convenience and the placation of the more numerous holders of small awards, to pay little judgments before big ones. Id. at 1015-18. The second panel wrapped up: “The district judge advanced some worthy ideas, but they are for the City’s self-determination, and will not be imposed by this court. It is regrettable that this, matter *1404which has lingered so long now takes a new and possibly unexpected turn, but what we now view as error must be arrested even at so late a date. Improvements in this situation are better left to the state and municipal governments.” Id. at 1017-18.
Delay in paying judgments is no different in principle and in consequence from a low interest rate on judgments. If the statutory interest rate matches the market rate, judgment holders receive full compensation for delay and can sell judgments in the secondary market for their face value, just as people buy and sell 30-year municipal bonds. A court that would not dream of declaring, on constitutional grounds, that a 6% post-judgment interest rate is “too low” has no greater business declaring that the judgment debtor is taking “too long” to pay; the interest rate and the delay in payment are two facets of the same thing.
Chicago’s practice has its legal problems, to be sure. Illinois law appears to forbid a city to put off its creditors as Chicago did. Ill.Rev.Stat. ch. 85 ¶ 9-104. Chicago’s payment of contract before tort judgments may disfavor holders of federal judgments (most federal judgments against municipalities rest on 42 U.S.C. § 1983 and other civil rights statutes), which may offend the supremacy clause of the Constitution. And if Chicago pays interest on federal judgments at the local rate rather than the federal coupon issue yield equivalent rate, see 28 U.S.C. § 1961(a), then Chicago is in hot water under federal statutory law. Cf. Evans II, 873 F.2d at 1011 n. 7. But none of this has anything to do with the due process and equal protection clauses, notwithstanding the intimations in Evans I that by violating state law Chicago violated the due process clause. See Snowden v. Hughes, 321 U.S. 1, 11, 64 S.Ct. 397, 402, 88 L.Ed. 497 (1944); Archie v. Racine, 847 F.2d 1211, 1215-18 (7th Cir.1988) (in banc).
Taking us up on the proposition in Evans II that “[improvements in this situation are better left to the state and municipal governments”, Chicago asked the district judge to vacate the injunction requiring sequential payment of judgments and compelling the Mayor’s budget to include the funds for their prompt satisfaction.' Rule 60(b)(5) of the Rules of Civil Procedure speaks directly to the situation, permitting relief from1 judgment when “a prior judgment upon which it is based has been reversed or otherwise vacated”. The injunction was based on Evans I, which has been overruled. Interest rates too have changed; today the legal rate approximates the market rate, so Chicago pays promptly. Still, it wants to redeem its governmental powers, now in hock in a district court.
Judge Grady, who has presided over this case since its inception, refused to vacate the decree. He conceded that Evans II pulled the rug out from under the equal protection theory. But, the judge observed, Evans II did not address the due process theory, deeming it abandoned, 873 F.2d at 1012 n. II, 1018 n. 15. The consent decree did not specify a legal foundation and therefore did not rule out the possibility that Chicago was compromising the due process claim rather than yielding to the equal protection holding of Evans I. So after making a trivial change in the decree the judge reiterated that the City remains obliged to pay all judgments in order, and quickly. (The change the judge made, knocking out the portion of the decree forbidding Chicago to distinguish judgments according to size, is nugatory because of the separate provision in the injunction compelling the City to pay judgments strictly in order of their entry.)
II
Chicago has prevailed on the merits of this case, and still it loses. An injunction intrudes into the- internal operations of the City, telling the Mayor what items must be in the annual budget. Evans II said bluntly that, although changes may be beneficent, the political rather than the judicial process is responsible for the subject. The district court nonetheless held, and a majority of this third panel agrees, that the judicial compulsion may continue. How can this be? Recently the Supreme Court told district judges that they must reexamine consent decrees when changes in the legal landscape erode their footings. Rufo v. Inmates of Suffolk County Jail, — U.S. -, 112 S.Ct. 748, 116 L.Ed.2d 867 (1992). Here we have not a change in legal doctrine with uncertain effects on the case at hand, but the overruling of the decision in this very case. The decree was founded on a blunder committed by this court. Evans I has been overruled, yet through the injunction Evans I lives on.
If the plaintiffs’ due process claim really were independent of their equal protection *1405claim, and if the parties really settled the case rather than settling their disagreement about the injunctive relief to which Evans I entitled the plaintiffs, then there would be reason to think the consent decree Rufo-proof. The majority never discusses the first of these conditions, and it addresses the second only in a footnote. Footnote 3 asks whether the injunction was based on a consent decree; answering “yes,” my colleagues think the inquiry over. Yet the question is not whether there was a “consent decree.” Surely there was. The question is what aspects of the decree rest on the parties’ consent rather than Evans I. No one believes that the decree settled “the case.” Plaintiffs wanted damages. The City refused to pay, and after issuing an injunction the district judge held a trial on damages. Chicago appealed from an adverse decision, leading to Evans II. No, there was no global settlement. What issues, then, did the parties compromise? All the decree addresses is prospective relief. And this is all the parties settled — the relief, not the merits. Chicago “agreed” to do what Evans I implied that it must do. ' “ ‘Consent’ that is no more than knuckling under to the inevitable is more like an adjudication than a contract.” People Who Care v. Rockford Board of Education, 961 F.2d 1335, 1338 (7th Cir.1992), quoted in United States v. Chicago, 978 F.2d 325, 333 (7th Cir.1992). Once again consider the significance of Evans II. If the parties indeed compromised the merits, what was the City doing asking us to overrule Evans I? • Plaintiffs did not contend that through the consent decree Chicago bargained away its right to challenge the legal foundations of their position. If, as Evans II demonstrates, there has been no settlement of the merits, then nothing inhibits the court .from erasing all vestiges of Evans I.
All that remains is the possibility that the due process theory is independent of the equal protection theory, so that Evans II does not undermine one sufficient theory for relief — a theory on which- the parties may have reached a compromise. It makes sense to understand the decree as a settlement of a due process claim only if that claim supported additional relief, for otherwise it was superfluous.. If Evans I sufficed to condemn the City’s approach to paying judgments, the parties had no need to settle the due process claim. They could ignore it — because the judge was legally bound to ignore it! Once a decision on one claim resolves the case, a judge has no business under Article III of the Constitution issuing advisory opinions about additional legal theories. If the judge would not, could not, adjudicate a claim, and would award identical relief with or without that claim, it is foolish to treat a consent decree as resolving or resting on, let alone settling, that claim.
Judge Grady told the parties in no uncertain terms that Evans I resolved the merits, and that nothing remained but to select the appropriate relief. When Chicago bridled, the judge announced from the bench on October 26, 1983:
Now, I have got to have an order from the City and the plaintiffs. I have got to have an agreed, order that will bind the City to pass a budget sufficient to pay tort judgments.
♦ % # # sfr #
If by November 25th, approximately a month from now, I do not have in my hands an agreed order that calls upon the City and requires the City to budget annually an amount sufficient to pay tort judgments along the lines which we have been discussing in great detail at our recent and not so recent conferences in chambers, then I am going to go ahead and enter my own order.
I see no need for any further conferences • with counsel that go to basic philosophy or go to what I have been saying this afternoon. If there is some mechanical thing you want to talk about that I can help you with, I will be happy to sit down, but just to rehash this question about whether we are going to do something in this case that the Court of Appeals ordered done a long time ago, the time for discussion has passed.
Judge Grady unequivocally told the parties that Evans I compelled Chicago to appropriate the money to pay all judgments promptly — that Evans I dictated what to do, but not how. Only mechanical details remained for decision. And the details of prospective relief are all the parties compromised. The merits were not settled. They were litigated, twice. The City lost in Evans I and won the rematch in Evans II.
*1406Plaintiffs themselves saw things that way until recently. During the trial on damages, plaintiffs jettisoned their due process theory. When Chicago appealed from the award of damages, plaintiffs did not urge the due process theory in defense of their judgment. That is why we remarked in Evans II that the “due process claim has not survived to this stage of the litigation.” 873 F.2d at 1018 n. 15. At oral argument before this third panel, counsel for the plaintiffs said that he let the due process theory drop because it was redundant.
If neither plaintiffs nor the district court attached any independent significance to the due process theory, if both believed that Evans I compelled Chicago to pay all tort judgments promptly, then it is unwarranted for us to proclaim that Chicago, unbeknownst to its own officials, “settled” this fugitive claim in 1983, putting the injunction beyond recall.
Lightning bolts of this kind disserve principles of federalism and in the long run work against the interests of the judicial system itself. In the future, prudent' counsel will insist on litigating stray issues, lest ah appellate court a decade later declare that in recognizing that a claim no longer mattered counsel sabotaged his client’s rights. Or perhaps counsel will lard consent decrees with reservations and provisos, “clarifying” what is being settled and what is not, even though nothing then is in need of clarification. Worst of all, we might induce counsel to refuse to compromise on relief, lest such compromises be deemed to include the merits. Can you imagine Judge Grady’s reaction if on November 25, 1983, Chicago’s lawyers had told him that the City was refusing to accept relief of any kind, because it feared that this step would keep the Mayor and City Council in shackles if the law should change in the future?
Counsel seeking to maximize the City’s ability to capitalize on legal developments might have done one of these things. Whatever the penalty for counsel’s drafting choices should be, it is not a perpetual transfer of budgetary powers from state and local government to federal court. In treating this consent decree the same way they would treat the compromise of a private dispute over a contract to deliver two tons of rhubarb, the majority not only perpetuates the error of Evans I but also offends principles separating political from judicial roles in government.
Before: BAUER, Chief Judge, CUMMINGS, CUDAHY, POSNER, COFFEY, FLAUM, EASTERBROOK, RIPPLE, MANION, KANNE, ILANA DIAMOND ROVNER, Circuit Judges, WILLIAM C. LEE, District Judge.*
ORDER
Aug. 19, 1993.
On consideration of the petition for rehearing with suggestion for rehearing en bane filed in the above-entitled cause by the defendant-appellant on June 24, 1993 and the response thereto, a vote of the active members of the court was requested and a majority of the judges in active service voted to grant a rehearing en banc. Accordingly,
IT IS ORDERED that the aforesaid petition for rehearing with suggestion for rehearing en banc be, and the same is hereby, GRANTED.
IT IS-FURTHER ORDERED that the judgment and opinion entered in this case on June 3,1993 be, and are hereby, VACATED. This case will be reheard en banc at the convenience of the court.