Wednesday, April 27, 2016

US Supreme Court: City Cannot Demote Officer for Perceived Political Activities

The U.S. Supreme Court recently issued an opinion in a case involving a claim filed by an employee against a city claiming he had been unlawfully demoted by the city as punishment for engaging in political activities. The Supreme Court found in favor of the officer, holding that he had the right to challenge his demotion, even when the demotion was not based on his actual behavior, but a perception by the city that he was engaging in political speech. Heffernan v. City of Paterson (April 26, 2016)

Police detective Heffernan was seen by co-workers picking up a campaign sign for the current mayor's opponent in the upcoming municipal elections. His co-workers reported what they saw to their supervisor, and the next day, Heffernan was demoted from detective to patrol officer as punishment for his "overt involvement" in the mayor's opponent's campaign. He filed suit against the city, claiming that he was demoted for engaging in constitutionally protected speech. The city argued that because he wasn't actually engaging in any speech since he was picking up the sign for his mother, the demotion was not unlawful. The lower courts agreed with the city, but the U.S. Supreme Court reversed.

According to the opinion, where an employer demotes or takes some other adverse action against an employee out of a desire to prevent the employee from engaging in protected political activities, the employee has a right to challenge that action under the First Amendment. The law is clear that the First Amendment prohibits a government employer from discharging or demoting an employee because the employee supports a particular political candidate (with very limited exceptions). The Court held that this prohibition also applies where the employer bases its actions on a mistaken belief about the employee's activities because it is the government's reason for demoting an employee that matters, not the employee's motive. Here, the city supervisors demoted Heffernan because they thought he engaged in political speech, acting on an unconstitutionally harmful policy.

The case was remanded back to the lower court to determine whether the city's actions were pursuant to a neutral policy prohibiting officers from involvement in political campaigns and, if it exists, whether such a policy would be constitutional.

The lesson for governments?  Be careful in taking any adverse action against an employee for engaging in political or other protected speech (whether real or perceived). 

Post Authored by Julie Tappendorf

Tuesday, April 26, 2016

Successor Developer is Primarily Obligated Under Annexation Agreement

The housing decline began almost 10 years ago, but municipalities are still dealing with its impacts today, in the form of vacant properties and buildings and failed developments. In Illinois, a number of prominent developers and builders went bankrupt, leaving behind stalled developments and partially completed public improvements. Some of these developments were secured by letters of credit, which municipalities could draw on to complete or at least secure the public improvements. Others were secured by surety bonds, which proved much more difficult to utilize, leading some municipalities to have to file suit against the surety companies. 

That's what happened in the Village of Montgomery when Kimball Hill, Inc. went bankrupt and the Village sued Fidelity, the surety company that provided the surety bond that secured the public improvements for Kimball Hill's development. Fidelity defended the lawsuit by claiming that Kimball Hill's successor developer, TRG Venture Two, LLC, was primarily liable to the Village for construction of the public improvements. The trial court ruled against Fidelity, and dismissed its third party complaint against TRG. 

On appeal, the appellate court reversed, finding that TRG was primarily obligated to construct the improvements in Village of Montgomery v. Fidelity and Deposit Company of Maryland, 2016 IL App (2d) 150571-U.  First, the court held that the annexation agreement clearly stated that Kimball HIll's successors and assigns were responsible for construction of the required public improvements. Second, the court found a surety relationship between Fidelity and TRG that had arisen "by operation of law" under the analysis of a recent case City of Elgin v. Arch Insurance Co., 2015 IL App (23) 150013.  Under that surety relationship, Fidelity became secondarily liable to TRG, as the successor owner, and had an obligation to construct the public improvements and hold Fidelity harmless for its failure to do so. The fact that TRG didn't sign the surety bond was irrelevant to the court. Finally, the court remanded the case back to the trial court to determine the scope of TRG's indemnity obligations to Fidelity for previous settlement payments it made to the Village.

Post authored by Julie Tappendorf


Monday, April 25, 2016

Be Careful in Seeking Private Facebook Information in Litigation

We've reported before about the many legal and ethical issues that arise with government social media use, including employee's "behaving badly" and the special rules that apply to government use of social media (FOIA, First Amendment, etc). Today's post deals with the ethical limitations placed on government lawyers.

Two lawyers were defending a governmental body in a personal injury case brought by a plaintiff who had been struck by a police car. The lawyers asked their paralegal to obtain information about the plaintiff on his social media sites. Because the plaintiff's Facebook page was "private," the paralegal sent a friend request to the plaintiff, but did not disclose that she worked for the law firm defending against the plaintiff's case. When the plaintiff learned his private Facebook information had been accessed, he filed a grievance with the state ethics commission. According to the ABA Journal, the New Jersey Supreme Court ruled that the ethics office could investigate the grievance to determine whether the lawyers engaged in unethical conduct.

There are a couple of lessons here. First, there doesn't seem to be any issue with using information that is publicly accessible (i.e., if the plaintiff had not set certain privacy settings on his Facebook page). However, lawyers should avoid seeking private information in any manner that could be seen as misleading. Second, lawyers should also make sure their employees understand and abide by the same ethical rules, because ultimately it will be the two government lawyers in this case that could be subject to discipline for their paralegal's actions.

You can read more about this case on the ABA Journal's website here.


Friday, April 22, 2016

Upcoming Webinar on Regulation of Marijuana

The Center for Professional Development and Section of State and Local Government of the American Bar Association are co-hosting a webinar next Tuesday on state and local government regulation of marijuana. Information about the webinar is below, and you can learn more about the webinar and register here.

Getting into the Weeds of Marijuana Regulations
Tuesday, April 26, 2016
1:00 PM - 2:30 PM ET
Webinar

The legalization and regulation of marijuana in states presents unique challenges that a growing number of states may be facing. Take this program to learn:
  • What regulatory frameworks are working and what lessons can be learned
  • The legal challenges for state and local governments where marijuana has been legalized
  • Practice tips for practitioners representing clients in this industry
  • Ethical questions that arise given that marijuana is illegal under federal law
  • The hot legal topics that are emerging in this field and how they might be addressed in the future

Thursday, April 21, 2016

Proposed Legislation Cracks Down on Public Official Expense Reimbursement


Last week, the Illinois House passed House Bill 4379, creating the Local Government Travel Expense Control Act. The bill has since moved to the Illinois Senate for consideration. This proposed legislation seeks to prevent public officials from abusing expense reimbursement policies funded by tax dollars.  The bill would require non-home rule units of local government to adopt a regulation or ordinance regulating travel, meal and lodging expenses of officers and employees, including (1) the types of official business for which travel, meal and lodging expenses are allowable; (2) maximum allowable reimbursement for travel, meal and lodging expenses; and (3) a standardized form for submission of travel, meal, and lodging expenses. It would also prohibit reimbursing entertainment expenses and expenses that exceed a maximum allowable for expenses. 

As you may know, there are several watchdog groups actively watching expense reimbursement issues and all documentation they seek is readily available through the Freedom of Information Act. This legislation seeks to make the expense reimbursement process even more transparent.  If you have not done so recently, perhaps it is time to review and update your public body’s expense reimbursement policy. Because the Illinois Constitution prohibits the expenditure of public funds for personal purposes, it is important to have a strong expense reimbursement policy even in the absence of this new, proposed legislation. 

In drafting an expense policy, you might consider the following provisions, at a minimum:

1. A limitation that any funds reimbursed will only be for events that the public official or employee has attended in his/her official capacity and in which the official or employee is actively participating;

2.  A definition and limitation on what necessary and reasonable expenses might include: 
  • Travel (coach);
  • Lodging;
  • Standard cost of a basic room for the nights before, of, and immediately following the event;
  • No special charges to room;
  • Any hotel expense in excess of the conference rate will be paid with personal funds;
  • Meals and beverages, excluding a prohibition about paying for alcohol;
  • Prohibition of payment for entertainment costs (tickets to sporting events, golf outings, night clubs, etc.);
  • No reimbursement for expenses of family members or other guests.

There are certainly many flexible variables that can be customized for your public body, such as whether expenses are advanced or reimbursed, the time line within which expenses must be submitted, caps on meal expenditures, etc.  With the transparency light now shining on public expense reimbursement issues due to a few bad apples, it is certainly much better to have a policy in place before a problem occurs. Public officials who have had their conference expenditures published in the headlines can tell you that the publicity is generally not favorable.  

Post Authored by Keri-Lyn Krafthefer, Ancel Glink

Wednesday, April 20, 2016

Report of Employee Grievance Not Exempt From FOIA


In a recent decision, an Illinois appellate court ruled against the City of Peoria, finding that an employee disciplinary report that was created prior to an adjudication did not fall within the FOIA exemptions. Peoria Journal Star v. Cty of Peoria, 2016IL App (3d) 140838 (April 18, 2016).

A newspaper and a crime reporter filed a FOIA request with the City of Peoria, seeking all special reports written by a Peoria Police Sergeant in 2013. The City produced a copy of one report, but withheld another report  written by the Sergeant, asserting that it was exempt under Section 7(1)(n) of FOIA.  Section 7(1)(n) provides an exemption for “records relating to a public body’s adjudication of employee grievances or disciplinary cases.” 

The reporter initially asked the Public Access Counselor of the Attorney General's Office to review the City’s denial. After review of the reporter's appeal, the PAC ruled against the City, finding that FOIA did not exempt the report from disclosure.  However, the City continued to refuse to produce the report.

The reporter next filed a complaint for declaratory and injunctive relief to compel the City to release the withheld report.  The trial court found that the City failed to establish that the report fell within the FOIA exemptions and ruled in favor of the reporter. 

On appeal to the appellate court, the City argued that the report fell within the 7(1)(n) exemption because it is “a report of an employee grievance and serves the factual basis which initiated two disciplinary cases against two officers of the Peoria Police Department.”  The City further asserted that formal disciplinary adjudication were taken based on the report.  

However, the appellate court disagreed with the City, noting that the term "adjudication" in Section 7(1)(n) is understood to involve a formal legal process, resulting in a final decision.  The court held that a complaint or grievance about an employee is part of an investigatory process that is separate and distinct from a disciplinary adjudication, even though it is used to initiate the adjudication process. Since the report (which consisted of an employee grievance that later lead to disciplinary action) was created before any adjudication or final decision, the court found that it did not fall within the Section 7(1)(n) and ordered the City to release the report.   

This opinion appears to substantially narrow a public body's use of this exemption even where an employee disciplinary adjudication process is ongoing.

Post Authored by Erin Baker, Ancel Glink

Tuesday, April 19, 2016

Two Upcoming Events in April

Ancel Glink attorneys will be speaking at the following conferences in April:

Illinois Municipal League Attorneys Seminar, Bloomington

Ancel Glink attorney Erin Baker will be speaking on PSEBA and its interaction with Workers’ Compensation and PEDA at the Illinois Municipal League’s 2016 Municipal Attorneys Seminar in Bloomington on April 22. You can find out more by visiting Ancel Glink’s Recent News webpage.  

APA-IL Spring Conference, Champaign

The 2016 American Planning Association’s Illinois State Section Spring Conference will be held at the Hyatt Place Hotel in Champaign, Illinois on April 21-22. Ancel Glink attorneys David Silverman and Greg Jones will present “Fun with Ethics” on Thursday, April 21. For more information, visit the Illinois State Section website

Friday, April 15, 2016

Strip Clubs Entitled to Damages Due to Unconstitutional Licensing Ordinance

Happy Friday!  Today's case involves a strip club suing the City of Milwaukee for damages it claims it is entitled to for lost profits because of the City's now repealed licensing ordinance. Six Star Holdings, LLC v. City of Milwaukee (7th Cir., April 13, 2016).

In 2012, Milwaukee had a licensing program in place for adult businesses, including strip clubs. Two companies challenged the constitutionality of the licensing ordinance, seeking injunctive relief and damages. The City subsequently repealed the ordinances, but the damages claims in the case continued. The lower court ruled in favor of the two companies and awarded damages. The City appealed to the Seventh Circuit Court of Appeals, which upheld the ruling against the City. The court rejected the City's argument that one of the companies did not have standing to challenge the ordinance because it had not applied for or been rejected a license to operate an adult business. The court found standing where the company suffered an injury because the company refrained from protected speech in response to the City's unconstitutional ordinances. 

Post Authored by Julie Tappendorf


Thursday, April 14, 2016

Insurance Company Had Duty to Defend City in Anti-Poaching Lawsuit

In a case involving a challenge to the legality of a City's sales tax rebate agreement with a retailer, an Illinois appellate court held that the Illinois Municipal League Risk Management Association (IMLRMA) must provide insurance defense coverage to the City.  IMLRMA v. City of Genoa, 2016 IL App (4th) 150550.

The case involved a sales tax rebate agreement between the City and Boncosky Oil Company. The City agreed to rebate to the Company a portion of the sales tax revenue the City generated by the Company in exchange for the Company moving its sales office to the City. The Regional Transportation Authority (RTA) sued the City, claiming that because of the Company's relocation, sales would no longer occur within RTA territory, meaning the RTA would lose tax revenues. 

Shortly after the suit was filed, the IMLRMA (the insurance pool that covered City claims) filed its own complaint seeking a declaration that it had no duty to defend or indemnify the City against RTA's claims. The IMLRMA argued that the RTA was suing the City for a "wrongful act" (violation of the anti-poaching law that applies to sales tax rebate agreements) and restitution for "stolen" revenues, neither of which fell under the policy's definition of a "loss." The City countered that the RTA asked for compensation for lost revenues and not restitution for stolen revenues, which would fall under the definition of damages within the City's insurance coverage. 

The appellate court agreed with the City that the IMLRMA had a duty to defend the City in this case. The court did not address the substance of the RTA's arguments against the City, which were remanded back to the circuit court for further proceedings.

Post Authored by Julie Tappendorf

Tuesday, April 12, 2016

Once Again, Court Upholds Chicago's Weed Ordinance

Mr. Shachter really likes his weeds (the lawn type).  The City of Chicago, on the other hand, does not. For more than 5 years the two have battled each other over the "natural plantings" a/k/a weeds in Mr. Schacter's yard.  

We previously reported on Mr. Shachter's initial challenge to the City's weed ordinance based on constitutional grounds. He had filed a constitutional challenge to that ordinance after he was cited, and found to have violated, the ordinance. In 2011, the appellate court upheld both the weed ordinance and the City’s administrative proceedings in Shachter v. City of Chicago (part 1).  He tried again in 2014, and again the appellate court upheld the City's citations against him.  Shachter v. City of Chicago (part 2)

That wasn't the end of his fight against the City.  After being cited again for violations of the City's weed ordinance, he again appealed to the court. This time, he argued that the City did not have the authority to impose fines greater than $750. He also argued that his plantings were "natural plantings" and not weeds under the definition in the City's weed ordinance. Once again, the appellate court upheld the City's decision finding Mr. Shachter in violation of the City's weed ordinance. Shachter v. City of Chicago (part 2).

First, the appellate court rejected Shachter's argument that the City's administrative adjudication proceeding violated his due process rights. The court held that the formal rules of evidence do not apply in administrative proceedings to enforce ordinance violations, and that Shachter had adequate opportunity to defend against the citation.

Second, the appellate court rejected Shachter's claim that the City was preempted from imposing fines greater than $750 by the Illinois Municipal Code. The court held that the City, as a home rule municipality, was not limited by the fine provisions of state statute.

You can't blame a guy for trying, but after three unsuccessful challenges to the City's weed ordinance, Mr. Shachter may just have to mow his lawn.

Post Authored by Julie Tappendorf

Monday, April 11, 2016

Website "Transparency" Bill Moves Forward

There have been a number of bills introduced in this session that would establish new obligations for local governments with respect to website posting. One of those, HB 5522, just passed first reading in the House, so may be one of the bills that has some traction.  

This bill not only requires local governments and school districts to post certain information on existing websites, it also requires all local governments and school districts with a budget of more than $1 million to establish a website. That could be financially devastating to some units of government who are already operating on bare-bones budgets because of the potential threat from the state of a loss of LGDF funds.

Some of the posting requirements are already duplicative of other state law requirements. For example, the law requires posting of contact information for elected officials (already required). It also requires posting of agendas and minutes for board meetings (already required). The bill, if passed, would require the posting of information regarding compliance with FOIA (already required). 

In addition to these duplicate posting requirements, the bill would require that the following documents be posted on websites:

1.  Agenda packets for board meetings
2.  Annual budget/appropriation
3.  All ordinances under which the unit of government operates
4.  Procedures for applying for building permits and zoning variances (oddly, the bill doesn't discuss all of the other types of permits or zoning relief)
5.  Financial reports and audits.
6.  Salary and compensation information for all employees
7. Lobbying contracts
8. Taxes and fees imposed by the unit of government (which presumably would already be included in #3)
9. Rules governing the award of contracts
10.  Bids and contracts worth $25,000 or more
11.  A debt disclosure report
12.  Public notices

With respect to #12, the bill would allow a unit of government to publish, in lieu of publishing any required notice in the newspaper (1) a citation to the statute that requires the publication notice and (2) the website where the notice can be accessed.

The enforcement provisions allow any citizen or taxpayer to file a lawsuit seeking a court order for the unit of government to comply with the law. The bill would also allow the court to impose penalties and award attorneys fees to the prevailing citizen or taxpayer.

The posting obligations are staggering for most local governments, both from a financial and manning perspective as these obligations will require ongoing updates and maintenance.

Post Authored by Julie Tappendorf

Wednesday, April 6, 2016

Planning Organization Opposes School Zoning Bill

This week, the legislative committee of the American Planning Association, Illinois Chapter (IL-APA) issued a "Legislative E-Blast" expressing its opposition to HB 6421 and asking municipalities to contact their state legislators to oppose the bill. If passed, HB 6421 would "water down" municipal zoning authority over schools. The bill appears to be an attempt by school lobbies to counter the Illinois Supreme Court's decision in Gurba v. Crystal Lake South High School District involving the school district's construction of bleachers in violation of municipal zoning regulations.  

IL-APA's E-Blast is reprinted below: 

Legislative E-Blast
Legislative Committee
American Planning Association – Illinois Chapter

House Bill 6421, Amends Municipal Code to give Schools Preferential Zoning Treatment

Sponsor: Representative Carol Sente (D – 59th District, Lake and Cook Counties)

Summary: Representative Sente has introduced legislation, designated HB 6421, that would amend the Illinois Municipal Code and School Code to alter local zoning authority over school property.  The bill would prohibit municipalities from imposing “unreasonable conditions” on zoning permits sought by schools, cede municipal authority over site and design considerations to schools, and impose new limitations on the municipal zoning review process.

Status: HB 6421 was filed on March 11.  The bill has yet to be introduced or referred to committee.  No sponsors other than Rep. Sente have signed on to the bill.

Analysis: HB 6421 appears to respond to the costly and protracted litigation involving Crystal Lake South High School.  Last year, the Illinois Supreme Court ruled that the high school was subject to local zoning and stormwater authority.  Millions of taxpayer dollars were spent arguing this issue before Illinois’ trial, appellate, and supreme courts.  Instead of working to restore intergovernmental cooperation, though, this bill appears poised to create more conflict between schools and municipalities.  The bill’s failure to define what constitutes an “unreasonable condition” to a zoning permit will almost certainly encourage more court fights, and giving schools a pass on local design standards and review procedures raises significant concerns about the welfare of neighborhoods bordering school property.  The bill also appears to subject legislative decisions made by elected municipal officials to administrative review, a concept foreign and contrary to Illinois law.


Recommendation: Contact your state legislators to oppose HB 6421 as introduced.