Burns v. Delta Airlines, Inc.

2021 IL App (2d) 200313

192 N.E.3d 599

455 Ill.Dec. 770

Heather BURNS, Plaintiff-Appellee and Cross-Appellant,

v.DELTA AIRLINES, INC., Defendant-Appellant and Cross-Appellee.

No. 2-20-0313

Appellate Court of Illinois, Second District.

Opinion filed June 10, 2021

Jenna E. Milaeger and Michael K. Goldberg, of Goldberg Law Group, LLC, of Chicago, for appellant.

Arthur E. Rosenson, of Cohen Rosenson & Zuckerman, LLC, of Chicago, for appellee.

JUSTICE McLAREN delivered the judgment of the court, with opinion.

¶ 1 Defendant, Delta Airlines, Inc. (Delta), appeals from the trial court's order denying its motion for summary judgment and granting the motion for partial summary judgment of plaintiff, Heather Burns. Delta maintains that the court erred in finding that it knowingly violated the Income Withholding for Support Act (Act) ( 750 ILCS 28/1 et seq. (West 2014)), resulting in an award of penalties to Burns in the amount of $190,000. Burns cross-appeals from the court's denial of her request to double the amount of the award by imposing separate penalties under sections 35(a) and 45(j) of the Act (id. §§ 35(a), 45(j)).

¶ 2 I. BACKGROUND

¶ 3 Burns and her former husband, August Lifferth, were divorced on August 25, 2014. The trial court awarded Burns custody of their two minor children. The court further ordered a garnishment of Lifferth's wages for child support. To that end, the Illinois Department of Healthcare and Family Services (HFS) prepared and served income withholding orders (IWOs) upon Lifferth's employer, Delta. Section 35(a) of the Act imposes a $100-per-day penalty on an employer who knowingly fails to withhold income of an employee in the amount of the income withholding notice served under the Act.

¶ 4 An IWO is a court form with typed inserts. The IWO that is the subject of this appeal was issued on November 20, 2014. It was the only IWO in effect from November 30, 2014, through October 26, 2015, and it ordered Delta to withhold a total of $591.24 per biweekly pay period, which it was to send to the State Disbursement Unit (SDU) in Carol Stream. The IWO directed that Delta was to "begin withholding no later than the first pay period that occurs 14 days after the date of 11/20/2014" and to "send payment within 7 working days of the pay date."

¶ 5 Delta could not "withhold the full amount of support for any or all orders" because Lifferth had insufficient earnings to cover his child support payments; therefore, it was to "withhold up to 65% of disposable income for all orders." The IWO then set out the formula for Delta to determine the exact percentage of Lifferth's disposable income that it was to withhold:

"The Federal limit is 50% of the disposable income if the obligor is supporting another family and 60% of the disposable income if the obligor is not supporting another family. However, those limits increase 5%—to 55% and 65%—if the arrears are greater than 12 weeks."

The November 20, 2014, IWO indicated that the past-due child support was more than 12 weeks in arrears. It did not indicate whether Lifferth was supporting another family.

¶ 6 Between February 6, 2015, and October 2, 2015, Lifferth's wages were insufficient to cover the specified amount of payment. "Therefore," according to Delta, the amount of Lifferth's garnishment "was calculated using the withholding limits set by [the federal Consumer Credit Protection Act ( 15 U.S.C. § 1673(b) (2012) )] as described in the IWO and 50 percent" of Lifferth's disposable income was garnished for child support.

¶ 7 On February 13, 2015, Lifferth was due to receive a profit-sharing payment in the amount of $1714.89 from Delta. The IWO states with respect to lump sum or bonus payments: "You may be required to notify a state *** agency of upcoming lump sum payments to this employee/obligor such as bonuses, commissions or severance pay. Contact the sender to determine if you are required to report and/or withhold lump sum payments." According to Delta, Xerox Business Services (Xerox), which during the relevant time handled Delta's payroll processing, including employee wage garnishment, contacted HFS regarding the profit-sharing payment, and HFS "did not indicate that any withholding was required." Based on this representation, Delta did not withhold income from the February 13, 2015, profit-sharing payment.

¶ 8 In May 2015, Burns served a subpoena on Delta for copies of its payroll records in order to determine the amount Delta was withholding from Lifferth's paychecks. She learned that Delta was withholding 50% of his disposable income and not 65%, which she believed to be appropriate. According to Burns's affidavit, she knew that Lifferth was not married or supporting another family in 2014-15, because "[h]e told me so and I saw that he lived alone when we'd drop off and pick up the [c]hildren." In October 2015, Burns served Delta with a second subpoena to produce documents in order to determine whether it had increased the withholding amount. It had not.

¶ 9 On November 2, 2015, Burns sent Delta a certified letter demanding that it comply with the Act and remit her shorted child support. She also demanded that Delta pay 9% statutory simple interest and "pay the $100 per day penalty for each day that Delta failed to remit the amount owed beyond the 14 day notice period."

¶ 10 Delta forwarded the demand letter to Xerox. According to the affidavit of Xerox's payroll operations manager, Xerox was advised by a representative of the Illinois Department of Children and Family Services that Delta was in compliance "with the IWOs issued" for Lifferth "by withholding income and paying it to the Illinois State Disbursement Unit pursuant to the IWO."¹ On November 24, 2015, internal Xerox e-mail correspondence confirmed Burns's claims that Delta "should be deducting at the 65% of disposable earnings since the employee is not supporting another family and the case is in arrears greater than 12 weeks." The correspondence also noted that, until Delta remitted the shorted payments, penalties would accrue. These findings were reconfirmed internally by Xerox on November 30, 2015.

¶ 11 Xerox determined that it had complied with "prior IWOs"² by withholding 50% of Lifferth's income but "accepted Ms. Burns’ request to increase the amount of income deducted from Mr. Lifferth's pay prospectively." At that time, Delta's payroll system was programmed to deduct a maximum of 60% of an employee's disposable earnings, necessitating a request to have the system "updated" so that 65% could be garnished. Beginning on November 20, 2015, Xerox increased the withholding to 60%, and on December 18, 2015, to 65%.

¶ 12 Delta did not respond directly to Burns's demand letter or remit any amounts. On February 5, 2016, Burns filed suit, claiming that Delta violated section 35(a) of the Act by knowingly withholding only 50% of Lifferth's disposable income under the IWO and violated section 45(j) of the Act by not responding to the demand letter within 14 days of receiving it.

¶ 13 On April 26, 2016, after being served with Burns's complaint, Delta authorized Xerox to issue payment to the SDU in the amount of $2395.77, an amount intended to pay Burns the difference between the amount of child support she received at the 50% rate and what she would have received had Lifferth's disposable income been subject to 65% withholding. Delta did not remit interest or penalties to Burns.

¶ 14 After discovery was closed, the parties proceeded to file and brief cross-motions for summary judgment. Delta's motion for summary judgment argued that Burns failed to show that Delta's withholding 50% rather than 65% of Lifferth's disposable income was a knowing violation of section 35(a) of the Act. Delta maintained that it was "clearly cognizant" of its obligation to withhold and remit income to the SDU in response to the IWO and that its withholding 50% rather 65% was "an innocent or negligent mistake" that should not trigger penalties under section 35(a).

¶ 15 Burns moved for the entry of partial summary judgment, on the issue of liability, arguing that Delta failed to comply with the IWO by withholding 50% rather than 65% of Lifferth's disposable income from February to October 2015. According to Burns, Delta knowingly violated the Act because the form language in the IWO is unambiguous; moreover, Delta ignored her demand letter for five months despite its own agent agreeing with Burns in November 2015 that 65% was the correct withholding amount and that penalties would be due if Delta "failed to timely cure its violations."

¶ 16 The trial court conducted a hearing on the parties’ summary judgment motions and, on September 10, 2019, issued a memorandum opinion and order granting Burns's motion for partial summary judgment and denying Delta's motion for summary judgment. The court found as follows. Between February 6 and October 2, 2015, Lifferth's earnings were insufficient to cover the required support payment. At all relevant times, Lifferth was more than 12 weeks in arrears and was not supporting another family. Accordingly, under the federal upper limits for wage garnishments as summarized in the IWO, Burns was entitled to 65% of Lifferth's disposable income.

¶ 17 Further, according to the court, the parties did not dispute that Burns provided notice under the Act in November 2015 and that Delta did not provide a response under the Act until April 2016, when it remitted reimbursements. The plain and ordinary meaning of section 35's penalty provision "establishes that the legislature intended to penalize employers who knowingly fail to withhold the amount designat mistake and not a knowing violationed in an IWO. Thus, any amount that falls short of the designated amount opens the employer to liability" under the Act. (Emphasis in original.)

¶ 18 Finally, with respect to whether Delta's failure to withhold 65% of Lifferth's disposable income was "knowing" under the Act, the court stated:

"When taken together, *** the

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