Appeals panel: Public workers' civil rights not violated by pension reform try; lawyers can't collect $1M fees

By Scott Holland | Jan 3, 2019

Lawyers can’t collect nearly $1 million in fees from the state for representing public workers suing over state attempts to reform public worker pensions, a state appeals court has ruled.

Lawyers from the firm of Krislov & Associates, of Chicago, represented certain members of the Municipal Employees’ Annuity & Benefit Fund in one of several actions consolidated and ultimately landing before the Supreme Court of Illinois. The state high court ultimately ruled Illinois Pension Code amendments violated the state constitution’s pension protection clause, which forbids lawmakers from doing anything to “diminish or impair” worker retirement benefits.

After that ruling, the firm sought $219,041 under the Illinois Civil Rights Act and another $750,000 from the 3 percent annual annuity increase for plan members.

Cook County Circuit Court Judge Rodolfo Garcia denied that fee petition as impermissible under the Pension Code. He also rejected a motion for class certification and refused to compel production of time records. In an opinion filed Dec. 26, the Illinois First District Appellate Court agreed with Garcia’s ruling. Justice Michael Hyman wrote the opinion; justices Mary Anne Mason and Terrence Lavin concurred.


Justice Michael Hyman   Illinoiscourts.gov

Hyman explained Garcia denied the fee request because the issues in the underlying lawsuits aren't connected to the Illinois Civil Rights Act, even though they sought to enforce a right under the Illinois Constitution, specifically the guarantee that public pension benefits can’t be diminished or impaired.

“The Civil Rights Act cannot serve as a means for awarding attorney’s fees,” Hyman wrote, adding the plaintiffs “were not aggrieved parties suing under the Illinois Constitution on the subject of discrimination based on race, color, national origin or gender.”

Further, the panel explained, the Pension Code “exempts retirement annuities from attachment for the payment of any debt of an annuitant, which includes attorney’s fees.” Hyman broke down the sections applying to MEABF members as well as members of the Laborers’ and Retirement Board Employees’ Annuity and Benefit Fund, neither of which contains an exception allowing legal fees to be paid from annuities.

While courts do have the power to approve money from a common fund for the beneficiaries of litigation, Hyman explained, the lawyers in this matter “did not create a common fund or a quantifiable pool of money from which fees could be paid.”

Krislov had argued “the annuitants have received and will continue to receive actual increases in monetary payment, thus, there is a fund.” But Hyman said that arrangement is different from the formal creation of a common pool. He also pointed to three other cases in which the state supreme court “found future savings for taxpayers and refunds for paid taxes did not constitute a ‘fund’ from which attorney’s fees could be paid.”

Hyman said Krislov pointed to cases involving the Employment Retirement Income Security Act of 1974. But one such matter was only a personal injury lawsuit stemming from a car crash, and the plaintiff’s employer’s ERISA plan filed a lien against the plaintiff’s proceeds for the medical expenses it paid. Since that plaintiff’s plan spelled out rights to recover any benefit paid under a judgment or settlement, it was allowed in that case.

In this case, however, Hyman explained, there is no such agreement involved with Krislov’s request to be paid.

The panel also said Krislov cited no basis for its “brazen request” to collect in a double recovery fashion by seeking both common fund payouts, as well as statutory fees from a fee-shifting law such as the Civil Rights Act, especially since the firm didn’t say why the requested $219,041 would’ve been insufficient.

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Circuit Court of Cook County Illinois First District Appellate Court Krislov & Associates

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