Find Legal Information

1-01-1846  

  
                                                                                                                                    FOURTH DIVISION
AUGUST 14, 2003

Plaintiff, The People of the State of Illinois, ex rel.Illinois Department of Labor (the Department), appeals from the dismissal with prejudice of its complaint seeking accrued vacationpay on behalf of a former employee of defendants, Tri State Tours,Inc., an Illinois Corporation, and J. Michael Hillard a/k/a MikeHillard, Individually and in his official capacity (collectivelyTri State Tours). The complaint, brought pursuant to the IllinoisWage Payment and Collection Act (the Act) (820 ILCS 115/1 et seq.(West 2000)), was dismissed as time barred, from which theDepartment appeals.

Pursuant to section 11(a) of the Act (820 ILCS 115/11(a) (West2000)), the Department investigated a complaint brought by BarbaraElliot that her former employer, Tri State Tours, had failed to payher for 12.5 days of accrued vacation time. On January 5, 1998,the Department issued a wage payment demand requiring Tri StateTours to pay Elliot $1,632.05. On January 9, 1998, Tri State Toursfiled an exception to the wage payment demand.

On August 1, 2000, the Department filed a complaint againstTri State Tours, seeking accrued vacation pay pursuant to section5 of the Act (820 ILCS 115/5 (West 2000)) (section 5), on behalf ofElliot and statutory penalties pursuant to section 14(b) of the Act(820 ILCS 115/14(b) (West 2000)). Tri State Tours moved to dismissthe complaint pursuant to section 2-619.1 of the Illinois Code ofCivil Procedure (the Code) (735 ILCS 5/2-619.1 (West 2000)),arguing inter alia that the action was time barred under the twoyear statute of limitations set forth in section 13-202 of the Code(735 ILCS 5/13-202 (West 2000)) (section 13-202).⁽¹⁾ Tri State Toursargued that it had paid Elliot all outstanding vacation pay. OnNovember 11, 2000, the circuit court dismissed the complaintwithout prejudice and allowed plaintiff to file an amendedcomplaint.

On November 14, 2000, plaintiff filed an amended complaintalleging that the action was brought pursuant to section 11(c) ofthe Act (820 ILCS 115/11(c) (West 2000)). As earlier noted, TriState Tours successfully moved to dismiss the amended complaintwith prejudice pursuant to section 2-619(5) of the Code (735 ILCS5/2-619(5) (West 2000)) (section 2-619), as time barred undersection 13-202. The Department appeals from that dismissal.

Section 2-619 dismissals are reviewed de novo. City ofChicago ex rel. Scachitti v. Prudential Securities, Inc., 332 Ill.App. 3d 353, 772 N.E.2d 906 (2002).

The Department contends that the circuit court erred infinding the action time barred, arguing that it is immune from anystatute of limitations when it brings an action seeking to enforcesection 5 because such an action seeks to enforce a public rightand therefore the doctrine of governmental immunity from statutesof limitations applies. Tri State Tours responds that the doctrinedoes not apply because the Department seeks to enforce a privateright.

A statute of limitations will not apply to bar a claim by agovernmental entity acting in a public capacity, under the doctrineof governmental immunity. Where the entity is acting in a privatecapacity, however, its claim may be subject to a limitationsdefense. Board of Education of City of Chicago v. A, C & S, Inc.,131 Ill. 2d 428, 546 N.E.2d 580 (1989) (Board of Education); Cityof Shelbyville v. Shelbyville Restorium, Inc., 96 Ill. 2d 457, 451N.E.2d 874 (1983) (Shelbyville). The doctrine is supported by thepolicy judgment that the public should not suffer as a result ofthe negligence of its officers and agents in failing promptly toassert causes of action which belong to the public. Board ofEducation, 131 Ill. 2d at 472; Shelbyville, 96 Ill. 2d at 461. Thetest is whether the right the governmental unit seeks to assert "isin fact a right belonging to the general public, or whether itbelongs only to the government or to some small and distinctsubsection of the public at large." Shelbyville, 96 Ill. 2d at462. Courts should consider who would benefit by the government'saction and who would lose by its inaction. Shelbyville, 96 Ill. 2dat 462. Three factors must be addressed when determining whethera governmental entity is asserting a public or private right: (1)the effect of the interest on the public; (2) the obligation of thegovernmental entity to act on behalf of the public; and (3) theextent to which public funds must be expended. Board of Education,131 Ill. 2d at 476; Shelbyville, 96 Ill. 2d at 464-65.

In support of its argument that it is seeking to enforce apublic right, the Department relies on the Third District'sdecision in People ex rel. Martin v. Lipkowitz, 225 Ill. App. 3d980, 589 N.E.2d 182 (1992) (Lipkowitz). In Lipkowitz theDepartment brought an action on behalf of five former employees ofa company to recover unpaid vacation leave benefits and statutorypenalties under the Act. Defendants successfully moved to dismissthe complaint for failure to bring suit within the five yearstatute of limitations contemplated by section 13-205 of the Code(735 ILCS 5/13-205 (West 2000)) (section 13-205). The circuitcourt found that the complaint was based on a private, rather thana public cause of action.

The Third District reversed, finding that "the public has aclear and definite interest in enforcing the [Act], and that the'right' the director seeks to vindicate in an action brought onbehalf of aggrieved employees belongs to the public" and therefore"suits brought by the Director under the [Act] are immune fromstatutory limitation periods of the Civil Practice Act." Lipkowitz, 225 Ill. App. 3d at 985. The Third District noted thatthe primary purpose of the Act "'is to ensure employees receive allearned benefits upon leaving their employer and the evil it seeksto remedy is the forfeiture of any of those benefits.'" Lipkowitz,225 Ill. App. 3d at 985, quoting Mueller Co. v. Department ofLabor, 187 Ill. App. 3d 519, 524, 543 N.E.2d 518 (1989). Enforcingthe public policy underlying the Act inures to the benefit ofIllinois workers and taxpayers. An employer's denial of earnedbenefits burdens the State financially and socially by decreasingthe tax base and potentially depleting State assistance funds. Finally, the court noted "that by authorizing the Director toprosecute civil actions for unpaid benefits and penalties *** andto expend State resources to enforce the Act the legislaturethereby expressed its intent to benefit the public generally." Lipkowitz, 225 Ill. App. 3d at 985.

Tri State Tours responds that this case is governed by Peopleex rel. Hartigan v. Agri-Chain Products, Inc., 224 Ill. App. 3d298, 586 N.E.2d 535 (1991) (Agri-Chain), where the First Districtheld that an action brought by the State to recover vacation payfor employees of a dissolved corporation under the Act was aprivate cause of action subject to the two year statute oflimitations provided for in section 13-202. In Agri-Chain, theState filed a complaint seeking vacation pay as well as statutorypenalties pursuant to section 14(b) of the Act. Defendantssuccessfully moved to dismiss the complaint as time barred. Onappeal the State argued that its complaint was not time barredbecause the action was brought in the name of the State andinvolved a public right which provided them immunity from anystatute of limitations.

In determining whether the claim was public or private theappellate court analyzed the case in light of the factorsenumerated in Board of Education and Shelbyville. As to the firstfactor, the court concluded that the interest asserted, i.e.recoupment of accrued vacation pay, was not one affecting thegeneral public; but was an interest arising from a privateemployment contract. Only the interest of the 16 former employeeswould be affected directly by the outcome of the claim. The courtfurther noted that the 16 former employees could have brought anaction against defendant even if the Department or the State hadopted not to act on the employees' behalf.

With regard to the second factor the court found that therewas no duty on the part of the Department to act. The court reliedon Stafford v. Bowling, 85 Ill. App. 3d 978, 407 N.E.2d 771 (1980)(Stafford), where the court considered whether the powers grantedthe Department under the Act were discretionary or mandatory. TheStafford court concluded that while the Act provided severaldifferent ways that the Department could assist employees in thecollection of their wages, it granted the Department discretion tochoose which, if any, of the ways it would use in any particularcase. Stafford, 85 Ill. App. 3d at 979. The Stafford courtconcluded that the Act authorized governmental assistance toemployees in the collection of their wages, but "does not requireintervention of any particular manner in any particular case." Stafford, 85 Ill. App. 3d at 982. Regarding the third factor, theAgri-Chain court rejected "plaintiffs' strained efforts to arguethat the State treasury will be burdened by the loss of taxes onthe unpaid vacation pay of 16 employees." Agri-Chain, 224 Ill.App. 3d at 303.

The Department argues that Agri-Chain has been overruledimplicitly by the First District's subsequent decision in People exrel. Department of Labor v. K. Reinke, Jr. and Co., 319 Ill. App.3d 721, 746 N.E.2d 12 (2001) (Reinke). According to theDepartment, the Reinke court's citation of Lipkowitz implicitlyoverruled Agri-Chain.

Reinke dealt with actions brought under section 12(b) of theMinimum Wage Law (820 ILCS 105/12(b) (West 2000)) (section 12(b)). The language of the Minimum Wage Law is different from that of theAct. Unlike the Act, section 12(a) of the Minimum Wage Law (820ILCS 105/12(a) (West 2000)), specifically sets forth a three yearstatute of limitations for private actions, while section 12(b) issilent as to any statute of limitations for governmental actions. In Reinke, the court held that an action brought by the State onbehalf of employees pursuant to section 12(b), asserts a publicright and therefore is immune from any statute of limitations. Inreaching this determination, the court conducted a thoroughexamination of the legislative history of section 12(b), notingthat "the history of this section is a strong indication that ourlegislature never intended to provide for a statute of limitationsfor lawsuits filed by the Director under subsection (b)." Reinke,319 Ill. App. 3d at 728.

The Reinke court further found it significant that thelegislature did not amend section 12(b) after cases were decidedthat held that no statute of limitations applied. See People exrel. Department of Labor v. Soccer Enterprises, Inc., 302 Ill. App.3d 481, 707 N.E.2d 108 (1998) (three year statute of limitations insection 12(a) does not apply to actions Department brings undersection 12(b)); People ex rel. Martin v. Smith, 205 Ill. App. 3d553, 563 N.E.2d 1170 (1990) (same); People ex rel. Martin v.Schwartz Oil Field Services, Inc., 203 Ill. App. 3d 903, 561 N.E.2d201 (1990) (same). The legislature is presumed to know how courtshave interpreted a statute and may amend the statute if it intendeda different construction. In re May 1991 Will County Grand Jury,152 Ill. 2d 381, 604 N.E.2d 929 (1992). The Reinke court neithercited nor discussed Agri-Chain, and considered the holding ofLipkowitz because Lipkowitz had analogized to the Minimum Wage Law. Reinke did not overrule Agri-Chain either explicitly or implicitly. Finding Agri-Chain to be the better reasoned opinion, wereject the Department's suggestion that Lipkowitz be followed andfind that actions brought by the Department to enforce provisionsof the Act involve private rights and therefore are not immune fromthe applicable statute of limitations.

The Department further argues that even if the doctrine ofgovernmental immunity from statutes of limitations does not apply,this action is not time barred. According to the Department, thefive year limitations period provided for in section 13-205 appliesto this case, rather than the two year limitations periodcontemplated by section 13-202.

Tri State Tours erroneously contends that the Department haswaived this argument by failing to raise it in the circuit court. The record reveals that both in a footnote in its sur-reply and inoral argument before the court, the Department discussed theapplication of the five year statute of limitations to privateactions under the Act.

Section 13-202 provides in pertinent part that "[a]ctions fordamages for an injury to the person, ***, or for a statutorypenalty, ***, shall be commenced within 2 years next after thecause of action accrued." 735 ILCS 5/13-202 (West 2000). Section13-205 provides in pertinent part that "actions on unwrittencontracts, expressed or implied, ***, and all civil actions nototherwise provided for, shall be commenced within 5 years nextafter the cause of action accrued." 735 ILCS 5/13-205 (West 2000). The determination of the applicable statute of limitations isgoverned by the type of injury at issue, irrespective of thepleader's designation of the nature of the action. Armstrong v.Guigler, 174 Ill. 2d 281, 673 N.E.2d 290 (1996). "[I]t is thenature of the plaintiff's injury rather than the nature of thefacts from which the claim arises which should determine whatlimitations period should apply." Mitchell v. White Motor Co., 58Ill. 2d 159, 162, 317 N.E.2d 505 (1974) (Mitchell). The two yearlimitations period in section 13-202 applies where plaintiff hassuffered direct physical or mental injury. Mitchell, 58 Ill. 2d at162-63; Doerr v. Villate, 74 Ill. App. 2d 332, 220 N.E.2d 767(1966). In the present case, the Department has alleged no directphysical or mental injury and therefore section 13-202 isinapplicable.

Because the Act does not provide for a statute of limitations,the five year "catch-all" limitations period found in section 13-205 is applicable to actions brought under the Act. See Seaman v.Thompson Electronics Co., 325 Ill. App. 3d 560, 758 N.E.2d 454(2001). In the case sub judice, the complaint was filed on August1, 2000, well within five years of the issuance of the wage paymentdemand (January 5, 1998). Consequently, the circuit court erred indismissing the complaint as time barred.

For the foregoing reasons, the judgment of the circuit courtof Cook County is reversed and the cause remanded for furtherproceedings.

Reversed and remanded.

THEIS, P.J. and KARNEZIS, J., concur.

1. Tri State Tours also sought to dismiss the complaintpursuant to section 2-615 of the Code (735 ILCS 5/2-615 (West2000)), for failure to state a cause of action. This part of themotion was stricken because it was filed without prior leave ofthe court and is not at issue in this appeal.