SOURCE: Maduff & Maduff, LLC

Maduff & Maduff, LLC

November 24, 2014 11:59 ET

Maduff & Maduff Wins: Illinois Pension Reform Act Found Unconstitutional

CHICAGO, IL--(Marketwired - Nov 24, 2014) - An Illinois court November 21, 2014, declared the "Pension Reform Act" (the "Act") unconstitutional. The law firm of Maduff & Maduff and John D. Carr successfully represented the State Universities Annuitants' Association and ten individuals in challenging the Act. There were additional plaintiffs in other, consolidated lawsuits, represented by other attorneys. 

The Act, known as PA 98-599, became law on December 5, 2013, to be effective on July 1, 2014. In June 2014 Maduff and others asked that the court for an injunction preventing the State from implementing the Act until the legal challenges had been resolved. The court granted that injunction and the Act was never enforced.

For decades the State of Illinois has failed to accumulate adequate cash reserves to meet its pension obligations. The result has become a $100-Billion financial crisis. The Act sought to solve the problem by reducing pension benefits for all public employees.

According to attorney Aaron Maduff, "if the Act had been permitted to stand, hundreds of thousands of public employees, retirees and their beneficiaries would have lost thousands of dollars in retirement benefits each. This would have been terribly unjust on a human and moral basis. People who had worked for decades expecting retirement benefits as part of their compensation would lose that which they had earned."

In 1970 the State of Illinois passed a new constitution, including the "Pension Protection Clause" (Article XIII, §5) which made this moral obligation into a Constitutionally protected "enforceable contractual relationship, the benefits of which shall not be diminished or impaired."

Illinois Attorney General Lisa Madigan defended the lawsuit arguing that the State's Sovereign Powers allowed the legislature to pass any law it deemed in the best interest of the State, even if that law were contrary to the Illinois Constitution. The plaintiffs argued that the State Constitution places hard limits on the general assembly and the court agreed.

"When the constitutionality of a statute is at issue, the losing party has the right to appeal directly to the Illinois Supreme Court, and the Attorney General has vowed to do so," said attorney John D. Carr. "However," Carr continued, "we believe the judge's decision was well reasoned and correct, and we believe it will be upheld by the Supreme Court."

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