A federal appeals panel has joined the ranks of judicial bodies to reject electricity users’ efforts to sue Commonwealth Edison over allegations it bribed political figures, including indicted former House Speaker Michael Madigan, in a successful effort to boost legislation that allowed the utility to boost profits through increased rates.
The U.S. Seventh Circuit Court of Appeals issued an opinion Aug. 22 affirming a lower court’s dismissal of a lawsuit from nine customers who sued ComEd and its parent company, Exelon, alleging violations of the federal Racketeer Influenced and Corrupt Organizations Act.
Seventh Circuit Judge Diane Sykes wrote the opinion, and Circuit Judge Thomas Kirsch concurred. Circuit Judge Candace Jackson-Akiwumi filed a special concurrence.
U.S. District Judge Jorge Alonso dismissed the complaint in September, saying allegations of bribing Madigan and his associates, while perhaps typical of legislative influence peddling, did not necessarily rise to the level of a federal RICO violation. In that decision, Judge Alonso pointed to prior U.S. Supreme Court precedent holding that laws cannot be invalidated solely because they were passed as a result of bribes to lawmakers.
At issue here are three state laws, Sykes explained: The 2011 Energy Infrastructure and Modernization Act, 2013 amendments to that law and the 2016 Future Energy Jobs Act. Those laws were enacted by Illinois' Democrat-dominated state legislature, led by former Speaker and chairman of the Illinois Democratic Party Michael J. Madigan. Madigan was reelected by Democrats to lead their party in Illinois' capitol for four decades, a chain of unyielding support that ended only after members of the inner circles of Madigan's political organization were indicted in connection with the ComEd bribery scandal, and the former Speaker himself was implicated.
The appellate ruling comes five days after the Illinois Commerce Commission voted to approve ComEd’s proposal to refund more than $31 million to ratepayers based on the formula rate system implemented in 2011 and tweaked in 2013. Federal regulators are considering approval of another refund worth at least $5 million.
The Citizens Utility Board, which opposed those efforts and has been party to several related lawsuits, joined the city of Chicago and Illinois Attorney General Kwame Raoul in arguing for a $45 million refund. CUB has praised September 2021 passage of the Climate & Equitable Jobs Act, which will replace the formula rate approach.
The appeals panel based its ruling on a ComEd argument Alonso “passed over,” Sykes wrote: That a court couldn’t issue damages because of the “filed rate doctrine.”
In a February 2021 motion for dismissal, ComEd argued “the Illinois Commerce Commission reviewed and authorized every charge ComEd billed to customers. Calculating damages would require the court to determine what rates should have been — in other words, to engage in rate-setting — something this court cannot do.”
The appellate opinion detailed the process utilities must follow to increase rates in Illinois and explained the doctrine that “state courts cannot adjust rates that have been filed with the appropriate regulator for any reason,” a concept Sykes said has been “long applied” in federal courts.
Taking the plaintiffs’ side, Sykes continued, would essentially require the panel to determine “the filed rate doctrine has been displaced by RICO,” a decision it did not reach. Sykes said RICO allows civil damages, but only after determination of a legal injury to business or property. She explained RICO lawsuits can be foreclosed by the existence of a statutory rate approval process under several U.S. Supreme Court opinions, spanning decades.
In her special concurrence, Judge Jackson-Akiwumi said her affirmative vote rested only on one of Judge Alonso’s reasons for dismissal: the 1810 U.S. Supreme Court opinion in Fletcher v. Peck, which limited a court’s ability to invalidate a law or contract. Allowing the suit to proceed, she said, would require discovery for facts supporting plaintiffs’ allegation “that ComEd’s bribery of Madigan directly caused the three pieces of legislation to pass.”
Resolving those claims, she continued, would mean a court investigating the individual motives of lawmakers who voted to pass each bill, a process Fletcher prohibits.
“Accordingly,” she wrote, “I would have resolved the matter on this basis alone and not reached the filed-rate affirmative defense.”
The individual and business plaintiffs in the action have been represented by attorneys Jonathan D. Selbin, of the firm of Lieff Cabraser Heimann & Bernstein, of New York; Derek W. Loeser, of Keller Rohrback, of Seattle; Matthew J. Piers, of Hughes Socol Piers Resnick & Dym, of Chicago; Laurel G. Bellows, of The Bellows Law Group, of Chicago; Gary M. Klinger, of Mason, Lietz & Klinger, of Chicago; and Michael I. Leonard, of the firm of LeonardMeyer, of Chicago.
CUB has been represented by attorneys Jay Edelson, Ari J. Scharg, J. Eli Wade-Scott and Michael Ovca, of Edelson P.C., of Chicago.
ComEd and related defendants have been represented by attorneys Matthew E. Price, Terrence J. Truax, Nicole A. Allen, E. Glenn Rippie, and Ali I. Alsarraf, of Jenner & Block, of Chicago and New York.
Jonathan Bilyk contributed to this report.