Davis v. City of Chi.

481 F.Supp.3d 757

Jerome DAVIS, Veronica Walker-Davis, Spencer Byrd, Allie Nelson, and Lewrance Gant, Plaintiffs,

v.CITY OF CHICAGO, Defendant.

Case No. 19-cv-3691

United States District Court, N.D. Illinois, Eastern Division.

Signed August 21, 2020

Diana Kaye Simpson, Kirby Thomas West, Institute For Justice, Arlington, VA, Robert James Pavich, Pavich Law Group, Chicago, IL, for Plaintiffs Jerome Davis, Veronica Walker-Davis, Spencer Byrd.

Diana Kaye Simpson, Institute For Justice, Arlington, VA, for Plaintiffs Allie Nelson, Lewrance Gant.

Andrew W. Worseck, Peter Hardt Cavanaugh, City of Chicago, Department of Law, Chicago, IL, for Defendant.

MEMORANDUM OPINION AND ORDER

MARY M. ROWLAND, United States District Judge

Plaintiffs bring this putative class action challenging the City of Chicago's impound program as it relates to car owners who have their cars impounded and are fined for offenses committed by other people. The City moves pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1) to dismiss Plaintiffs’ complaint with prejudice. For the reasons explained below, the Court grants in part and denies in part the City's motion to dismiss [33].

I. Background

In the First Amended Complaint ("FAC" or "the complaint"), Plaintiffs Jerome Davis, Veronica Walker-Davis, Spencer Byrd, Allie Nelson, and Lewrance Gant (together, "Plaintiffs") bring this civil rights action alleging that Defendant City of Chicago ("the City") impounds tens of thousands of cars each year, holding the cars until owners pay a variety of fees and fines. (Dkt. 29, FAC ¶2). Plaintiffs claim they were "innocent owners" who were wrongfully subjected to fines, towing and storage fees, and the seizure of their cars. (Id. ¶¶2-3). They allege that the offenses that led to their cars being impounded were committed by other people and without their knowledge. (Id. ¶ 2). The complaint challenges a system that (a) provides insufficient notice to Plaintiffs that their car has been impounded or disposed of, (b) requires their physical presence at multiple hearings after their car has been seized, (c) allows only three limited defenses, and (d) imposes fees and fines that accrue before a final judgment is entered. (Id. ¶¶ 37, 39, 51, 70, 188). In addition, interest accrues on the amount the City deems it is owed by the car owner. (Id. ¶ 88).

Despite trying to navigate this system, none of the Plaintiffs in this case has retrieved their car. (Id. ¶¶ 98, 114, 123, 139, 147). Even after the loss of their cars, the Plaintiffs all owed or owe thousands of dollars in fines and fees to the City. (Id. ¶¶ 11, 15, 18, 21, 87, 90, 123, 147).

The relevant ordinances in this case are Chi. Mun. Code § 9-80-240, § 7-24-225, and § 2-14-132.¹ Section 9-80-240 states in part: "The owner of record of any motor vehicle that is operated by a person with a suspended or revoked driver's license shall be liable to the city for an administrative penalty of $1,000 plus any applicable towing and storage fees. Any such vehicle shall be subject to seizure and impoundment pursuant to this section." Section 7-24-225 provides in part:

Any motor vehicle that contains any controlled substance, as defined in the Illinois Controlled Substances Act, or that is used in connection with the purchase or attempt to purchase, or sale or attempt to sell, any such controlled substance shall be subject to seizure and impoundment pursuant to this section ... The owner of record of any motor vehicle that is seized and impounded pursuant to this section shall be liable to the City for an administrative penalty of $2,000.00, plus towing and storage fees.

And § 2-14-132 addresses impoundment procedures, including that "[w]ithin ten days after a vehicle is seized and impounded the department ... shall notify by certified mail the owner of record ... of the owner's right to request a hearing before the department of administrative hearings to challenge whether a violation of this Code for which seizure and impoundment applies has occurred"; "[t]he notice shall state the penalties that may be imposed if no hearing is requested, including that a vehicle not released by payment of the penalty and fees and remaining in the city pound may be sold or disposed of by the city"; and the owner must request "a preliminary hearing in person and in writing at the department of administrative hearings, within 15 days after the vehicle is seized and impounded." § 2-14-132.

Plaintiffs seek to represent a class of all individuals who own vehicles that have been or will be impounded by the City of Chicago pursuant to Chicago Municipal Code Section 2-14-132. (FAC ¶7). The FAC contains seven counts: violation of the Proportionate Penalties Clause of the Illinois Constitution (Count I), violation of the Excessive Fines Clause of the Eighth Amendment of the U.S. Constitution (Count II), violation of the due process clauses of the Illinois Constitution and U.S. Constitution (Counts III, IV), search and seizure under the Illinois Constitution and U.S. Constitution (Counts V, VI), and an individual claim by Byrd for return of his property (Count VII).

II. Standard

A motion to dismiss tests the sufficiency of a complaint, not the merits of the case. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). "To survive a motion to dismiss under Rule 12(b)(6), the complaint must provide enough factual information to state a claim to relief that is plausible on its face and raise a right to relief above the speculative level." Haywood v. Massage Envy Franchising, LLC , 887 F.3d 329, 333 (7th Cir. 2018) (quotations and citation omitted). See also Fed. R. Civ. P. 8(a)(2) (requiring a complaint to contain a "short and plain statement of the claim showing that the pleader is entitled to relief."). A court deciding a Rule 12(b)(6) motion accepts plaintiff's well-pleaded factual allegations as true and draws all permissible inferences in plaintiff's favor. Fortres Grand Corp. v. Warner Bros. Entm't Inc., 763 F.3d 696, 700 (7th Cir. 2014). A plaintiff need not plead "detailed factual allegations", but "still must provide more than mere labels and conclusions or a formulaic recitation of the elements of a cause of action for her complaint to be considered adequate under Federal Rule of Civil Procedure 8." Bell v. City of Chi. , 835 F.3d 736, 738 (7th Cir. 2016) (citation and internal quotation marks omitted).

Dismissal for failure to state a claim is proper "when the allegations in a complaint, however true, could not raise a claim of entitlement to relief." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 558, 127 S. Ct. 1955, 1966, 167 L.Ed.2d 929 (2007). Deciding the plausibility of the claim is " ‘a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.’ " McCauley v. City of Chi. , 671 F.3d 611, 616 (7th Cir. 2011) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S. Ct. 1937, 1950, 173 L.Ed.2d 868 (2009) ).

"A motion to dismiss under Rule 12(b)(1) tests the jurisdictional sufficiency of the complaint, accepting as true all well-pleaded factual allegations and drawing reasonable inferences in favor of the plaintiffs." Bultasa Buddhist Temple of Chi. v. Nielsen , 878 F.3d 570, 573 (7th Cir. 2017). See also Silha v. ACT, Inc. , 807 F.3d 169, 174 (7th Cir. 2015) ( Twombly - Iqbal standard applies to facial challenge to subject matter jurisdiction under Rule 12(b)(1) ).

III. Analysis

In its motion, the City argues that (1) the Davises’ claims are barred in their entirety by res judicata; (2) Byrd's claims are time-barred; (3) Nelson's state law claims are time-barred; (4) Plaintiffs lack standing to challenge administrative penalties other than those particular penalties that were assessed against them; (5) it was not unconstitutionally excessive to charge these penalties to Plaintiffs; (6) Plaintiffs fail to state a due process claim; and (7) Plaintiffs fail to state an unreasonable seizure claim.

A. Res Judicata Bars the Davises’ Claims

On July 19, 2018, the Davises filed a complaint for administrative review of the impound decision in the Circuit Court of Cook County. (FAC ¶109; see also Cook County Case No. 2018-M1-450249). On January 7, 2019, that case was dismissed pursuant to an "Agreed Order of Settlement" (Agreed Settlement Order). (Id. ; Dkt. 34-1, Exh. C). Under the Agreed Settlement Order, the Davises agreed to voluntarily withdraw their complaint and the City agreed to accept $1170 in full settlement and satisfaction of the fines entered in the case. (Id. )

Res judicata bars the Davises’ claims here. In Illinois, res judicata applies if "(1) there was a final judgment on the merits rendered by a court of competent jurisdiction; (2) there was an identity of cause of action; and (3) there was an identity of parties or their privies." Rein v. David A. Noyes & Co. , 172 Ill. 2d 325, 335, 665 N.E.2d 1199, 1204, 216 Ill.Dec. 642 (1996). Plaintiffs argue that there was no final judgment in the state court and so res judicata does not apply. They contend that "agreed orders do not constitute a final judgment on the merits under Illinois law" because they do not reflect a "court's judgment on the merits." (Dkt. 39 at 14).

Under Illinois law, however, "a settlement agreement that a state court adopts and incorporates ... is the equivalent of a consent decree" and "operates to the same extent for res judicata purposes as a judgment entered after contest and is conclusive with respect to the matters which were settled by the judgment or decree." 4901 Corp. v. Town of Cicero , 220 F.3d 522, 529 (7th Cir. 2000) (citing Illinois law). In 4901 Corp. , the Seventh Circuit held that the state court order dismissing the case and incorporating the parties’ settlement agreement had preclusive effect on the subsequently filed federal lawsuit. Id. at 525, 529-32.

Plaintiffs acknowledge 4901 Corp ., but contend that Ward v. Decatur Mem'l Hosp. , 2019 IL 123937, 442 Ill.Dec. 428, 160 N.E.3d 1 (2019)...