Schultz v. Performance Lighting, Inc. ( 2013 )

ILLINOIS OFFICIAL REPORTS
Supreme Court
Schultz v. Performance Lighting, Inc., 2013 IL 115738
Caption in Supreme JENNIFER SCHULTZ, Appellant, v. PERFORMANCE LIGHTING,
Court: INC., Appellee.
Docket No. 115738
Filed November 21, 2013
Held An employer could not be assessed the $100 per day statutory penalty for
(Note: This syllabus failure to withhold child support where the notice it received in 2009 was
constitutes no part of invalid as irregular on its face for failure to include the obligor father's
the opinion of the court social security number as required by statute—2012 legislation not
but has been prepared applicable.
by the Reporter of
Decisions for the
convenience of the
reader.)
Decision Under Appeal from the Appellate Court for the Second District; heard in that
Review court on appeal from the Circuit Court of Lake County, the Hon.
Margaret J. Mullen, Judge, presiding.
Judgment Affirmed.
Counsel on Joel S. Ostrow, of Bannockburn, for appellant.
Appeal
Michael D. Furlong, of Trobe, Babowice & Associates LLC, of
Waukegan, for appellee.
Justices JUSTICE THOMAS delivered the judgment of the court, with opinion.
Chief Justice Garman and Justices Freeman, Kilbride, Karmeier, Burke,
and Theis concurred in the judgment and opinion.
OPINION
¶1 Plaintiff, Jennifer Schultz, filed a complaint in the circuit court of Lake County, seeking
to recover a $100 per day statutory penalty from defendant, Performance Lighting, Inc.,
pursuant to section 35 of the Income Withholding for Support Act (the Act) (750 ILCS 28/35
(West 2010)). Plaintiff’s claim was based on defendant’s failure to withhold sums for child
support that allegedly should have been withheld from her ex-husband’s paychecks. The
circuit court dismissed the complaint with prejudice, finding that plaintiff’s notice of
withholding was not in strict compliance with the requirements of the Act for creating a valid
notice. See 750 ILCS 28/20(c) (West 2010). The appellate court affirmed, rejecting
plaintiff’s argument that she sufficiently complied with the notice requirements so as to
trigger defendant’s obligation to withhold funds from her ex-husband’s paychecks. 2013 IL
App (2d) 120405. For the following reasons, we affirm the judgment of the appellate court.
¶2 BACKGROUND
¶3 In 2009, plaintiff filed for a dissolution of her marriage to her now ex-husband. On
November 19, 2009, the circuit court entered an order that required the ex-husband to pay
child support to plaintiff in the amount of $600 every two weeks. The order was prepared by
plaintiff’s attorney and did not include the obligor’s (the ex-husband’s) social security
number, even though section 20(a)(3) of the Act specifically requires that “every order for
support *** [i]nclude the obligor’s Social Security Number, which the obligor shall disclose
to the court.” See 750 ILCS 28/20(a)(3) (West 2010).1 On that same day, the court also
1
Compare with Supreme Court Rule 15, which provides among other things, that if the
disclosure of a social security number is required for a document to be filed with the court, only the
last four digits of the number shall be used in the document and the disclosure must be accompanied
by a confidential information notice, which includes the full social security number to which the
parties are privy. This requirement, however, did not become effective until January 1, 2012. Ill. S.
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issued a “Uniform Order for Support,” which also set forth the $600 bi-weekly child support
obligation. This order was also prepared by plaintiff’s attorney, and it too did not include the
social security number of the obligor. Additionally, it did not fill in the blank for the name
of the obligor. At the time of the entry of the orders, the ex-husband worked for defendant.
The uniform order for support stated that a notice to withhold income shall issue immediately
and shall be served on the employer listed in the order. But no employer was actually listed
in that order. The uniform order for support also stated that the employer was to make
payments to the State Disbursement Unit and was required to include the obligor’s name and
social security number with those payments.
¶4 Plaintiff sought to acquire the court-ordered support by withholding from her ex-
husband’s wages. Plaintiff served a notice to withhold income for support on defendant and
filed the notice with the circuit clerk on November 19, 2009. Plaintiff attached the notice she
served on defendant, as well as the uniform order for support, to her complaint. The notice,
however, did not include the ex-husband’s social security number or the termination date of
defendant’s income-withholding obligation, even though the Act states that these items are
required to be placed in the notice.2 See 750 ILCS 28/20(c)(9), (c)(10) (West 2010). Plaintiff
also served the ex-husband’s attorney in court with the notice but did not serve the ex-
husband himself.3
¶5 Plaintiff’s ex-husband continued to work for defendant through May 2010. It is
undisputed that defendant did not withhold any sums for support from the ex-husband’s
paycheck and did not forward any amounts to the State Disbursement Unit on plaintiff’s
behalf.
¶6 On November 10, 2011, plaintiff filed the instant complaint, alleging that defendant
knowingly failed to pay over to the State Disbursement Unit the amounts ordered to be
withheld from her ex-husband’s paychecks. Plaintiff further alleged that defendant had a
statutory duty to withhold and pay over to the State Disbursement Unit the ordered amounts
from her ex-husband’s paychecks within seven days after the pay would have been given to
her ex-husband. Plaintiff alleged that under section 35 of the Act, defendant owed a duty to
plaintiff to comply with the notice of withholding and that defendant breached this statutory
duty, thereby triggering a penalty of $100 for each day defendant failed to pay over to the
State Disbursement Unit the ordered amounts.
¶7 On January 24, 2012, defendant filed a motion to dismiss plaintiff’s complaint pursuant
to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2010)). Defendant
Ct. R. 15 (former Rule 138 (eff. Jan. 1, 2012); renumbered as Rule 15 (eff. Apr. 26, 2012)).
2
But the notice did contain sufficient information to allow defendant to infer the termination
date of the withholding obligation, as the notice included the birth dates of the couple’s children and
a definition section that stated that child support terminated upon the later-occurring of the younger
child’s eighteenth birthday or graduation from high school.
3
The Act states that the obligor is to be served notice by ordinary mail to his last known
address. See 750 ILCS 28/20(g) (West 2010).
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argued that plaintiff’s notice of withholding did not comply with the statutory requirements
of section 20(c) of the Act (750 ILCS 28/20(c) (West 2010)) and that plaintiff did not
properly effect service on the obligor under section 20(g) of the Act (750 ILCS 28/20(g)
(West 2010)). Defendant maintained that because plaintiff’s notice of withholding did not
comply with the statute, the notice was invalid and therefore defendant’s duty to withhold
and pay over a portion of her ex-husband’s paychecks was never operative.
¶8 In response to the motion to dismiss, plaintiff argued that the omissions in the notice
were minor and did not obviate defendant’s obligation to withhold under section 35(a) of the
Act. She further argued that because defendant was adequately informed of the amount to
withhold and the obligor’s name was included in the notice, defendant should have been able
to comply with the notice.
¶9 The circuit court rejected plaintiff’s response and instead agreed with defendant’s
arguments. Accordingly, it dismissed plaintiff’s complaint with prejudice. The appellate
court affirmed, holding that the omission of the required information, in particular the ex-
husband’s social security number, invalidated the notice of withholding and mandated
dismissal of the case. 2013 IL App (2d) 120405, ¶ 26. We allowed plaintiff’s petition for
leave to appeal. Ill. S. Ct. R. 315 (eff. Feb. 26, 2010).
¶ 10 ANALYSIS
¶ 11 The central issue in this case is whether a notice of withholding that is statutorily
deficient because it fails to include the required social security number of the obligor can
nonetheless be deemed sufficient to impose a duty on an employer to withhold the obligor’s
income. Plaintiff argues that including the obligor’s social security number is not mandatory
and only substantial compliance with the statutory elements of a withholding notice is
required to make a notice effective and binding. Thus, the issue before us requires that we
interpret the provisions of the Act to determine whether plaintiff’s notice of withholding was
sufficient to impose a duty to withhold in this case.
¶ 12 The fundamental rule of statutory construction is to ascertain and give effect to the
legislature’s intent. Michigan Avenue National Bank v. County of Cook, 191 Ill. 2d 493, 503-
04 (2000). The best indicator of legislative intent is the statutory language itself, given its
plain and ordinary meaning. Illinois Graphics Co. v. Nickum, 159 Ill. 2d 469, 479 (1994). We
consider the statute in its entirety, keeping in mind the subject it addresses and the apparent
intent of the legislature in enacting it. People v. Perry, 224 Ill. 2d 312, 323 (2007). Moreover,
to the extent there is any ambiguity, penal statutes and statutes that create “new liabilities”
should be strictly construed in favor of persons sought to be subjected to their operation and
will not be extended beyond their terms. See, e.g., Nowak v. City of Country Club Hills, 2011
IL 111838, ¶¶ 19, 27 (statute creating a new liability strictly construed in favor of entity that
would have been subjected to the liability); Croissant v. Joliet Park District, 141 Ill. 2d 449,
455 (1990) (penal statute to be construed strictly). Similarly, statutes in derogation of the
common law are to be strictly construed in favor of persons sought to be subjected to their
operation. Nowak, 2011 IL 111838, ¶ 19. The proper construction to be placed on a statute
is a question of law that we review de novo. Id. ¶ 11.
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¶ 13 Section 35 of the Act places a duty on the payor who has been served with notice to pay
over to the State Disbursement Unit the ordered portion of the obligor’s income. 750 ILCS
28/35(a) (West 2010). Under the Act, an “[o]bligor” is defined as the “individual who owes
a duty to make payments under an order for support.” 750 ILCS 28/15(e) (West 2010). A
“[p]ayor” is defined as “any payor of income to an obligor.” 750 ILCS 28/15(g) (West 2010).
Section 35 imposes a $100 a day penalty on a payor who knowingly fails to withhold income
of an obligor in the amount of an income withholding notice served under the Act. 750 ILCS
28/35 (West 2010).
¶ 14 The statute requires the “obligee,” the plaintiff in this case, to serve the income
withholding notice on the payor and the obligor. 750 ILCS 28/20(g) (West 2010). Section
20(c) of the Act sets forth the information that must be included in the notice of withholding.
It provides in relevant part as follows:
“The income withholding notice shall:
(1) be in the standard format prescribed by the federal Department of Health
and Human Services; and
(2) direct any payor to withhold the dollar amount required for current
support under the order for support; and
***
(9) include the Social Security number of the obligor; and
(10) include the date that withholding for current support terminates, which
shall be the date of termination of the current support obligation set forth in the
order for support; and
(11) contain the signature of the obligee *** except that the failure to contain
the signature of the obligee *** shall not affect the validity of the income
withholding notice; and
(12) direct any payor to pay over amounts withheld for payment of support
to the State Disbursement Unit.” 750 ILCS 28/20(c) (West 2010).
¶ 15 The above-quoted statute unequivocally requires that the obligor’s social security number
be included in the notice of withholding. Notably, the obligee’s signature is the only one of
the 12 requirements mentioned in the statute that is expressly excepted from affecting the
validity of the notice of withholding. It is undisputed that plaintiff, as the obligee sending the
notice, failed to include her ex-husband’s social security number in her notice. We agree with
the appellate court that the omission of the social security number is dispositive and that it
rendered the notice invalid.
¶ 16 The use of the word “shall” generally indicates that the legislature intended to impose a
mandatory obligation. People v. Boeckmann, 238 Ill. 2d 1, 15-16 (2010); Holly v. Montes,
231 Ill. 2d 153, 160 (2008). Moreover, a statute is considered mandatory, as opposed to
merely directory, if it indicates a legislative intent to dictate a particular consequence for
failure to comply with the provision. In re M.I., 2013 IL 113776, ¶ 16.
¶ 17 Here, we find that the legislature intended a particular consequence for failing to comply
with the requirements of section 20(c) of the Act other than the signature requirement. That
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consequence is that the notice be rendered invalid. We know this because the legislature
specifically singled out the lack of an obligee’s signature as an omission that would not affect
the validity of the notice. Under the maxim of expressio unius est exclusio alterius, the
enumeration of an exception in a statute is considered to be an exclusion of all other
exceptions. People ex rel. Sherman v. Cryns, 203 Ill. 2d 264, 286 (2003). This rule “ ‘is
based on logic and common sense,’ as ‘[i]t expresses the learning of common experience that
when people say one thing they do not mean something else.’ ” Id. (quoting
Bridgestone/Firestone, Inc. v. Aldridge, 179 Ill. 2d 141, 152 (1997)).
¶ 18 Accordingly, application of the rule supports the notion that “shall” is to be given a
mandatory interpretation in this case so that the information in each of the other 11
subsections is absolutely required to be present in the notice and any absence of the
information required by the other 11 subsections must affect the validity of the notice of
withholding. In sum, there can be a lack of compliance with the signature requirement, but
there must be strict compliance with all the other subsections. From our reading of the
statute, there is no contrary legislative intent which would overcome this rule of construction
in this case.
¶ 19 Plaintiff attempts to explain away the special mention in section 20(c)(11) of the
omission of the signature as not affecting the validity of the notice, by claiming this
exception was placed there to distinguish it from other statutory situations where a signature
would be required, such as the provision stating that the initial pleading in a dissolution of
marriage action be verified (see 750 ILCS 5/403(a) (West 2010)). We find plaintiff’s
contention to be without merit. There was no reason for the legislature to note in section
20(c)(11) of the Act that the signature of the obligor does not affect the validity of the notice
other than to distinguish that item from the other items mentioned, which are necessary to
constitute a valid withholding notice that is regular on its face.
¶ 20 Plaintiff’s interpretation of the statute is wrong for the additional reason that it would
lead to an absurd result. This court has repeatedly held that statutes should be construed in
a way that avoids absurd or unjust results. Township of Jubilee v. State of Illinois, 2011 IL
111447, ¶ 36; Roselle Police Pension Board v. Village of Roselle, 232 Ill. 2d 546, 558-59
(2009); Harris v. Manor Healthcare Corp., 111 Ill. 2d 350, 362-63 (1986). Under plaintiff’s
interpretation, a payor would face a catch-22 situation of having to choose between honoring
an irregular notice to avoid penalties under section 35(a) of the Act or dishonoring an
irregular notice so as to keep itself in line with the immunity from civil liability afforded
under section 35(c) of the Act. Section 35(c) provides that “[a] payor who complies with an
income withholding notice that is regular on its face shall not be subject to civil liability with
respect to any individual, any agency, or any creditor of the obligor for conduct in
compliance with the notice.” (Emphasis added.) 750 ILCS 28/35(c) (West 2010). Thus,
section 35(c) creates a safe harbor for an employer complying with a withholding notice only
to the extent that the notice is regular on its face, meaning that the notice contains the
information required by section 20(c), which includes the obligor’s social security number.
¶ 21 Plaintiff makes no argument that leaving the social security number of the obligor out of
the notice of withholding can nonetheless result in the notice being considered “regular on
its face.” But we find that any such argument would be rejected. A social security number
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is an essential piece of identifying information, especially considering that there may be more
than one employee with the same name working for the employer. It would be hard to
fathom, then, how a notice lacking this essential information could be considered regular on
its face.
¶ 22 There is also an additional reason why a notice lacking the obligor’s social security
number cannot be considered “regular on its face,” and it has to do with the interplay
between the Illinois statute and federal law. Even though the Illinois Income Withholding for
Support Act does not define the term “regular on its face,” our Act must be read in
conjunction with the federal Child Support Enforcement Act (the federal Act) (42 U.S.C.
§ 651 et seq.). Section 20(c)(1) of the Illinois Act provides that “[t]he income withholding
notice shall *** be in the standard format prescribed by the federal Department of Health and
Human Services.” 750 ILCS 28/20(c)(1) (West 2010). The federal Act in turn provides that
in order to receive federal funds in connection with a state’s enforcement of its child support
statute, a state must enact and have in effect the same procedures “to improve child support
enforcement effectiveness” which are required by section 666 of the federal Act. 42 U.S.C.
§§ 654(20)(A), 666(a), (b) (2012).
¶ 23 Section 666(b)(6)(A)(i), (ii) of the federal Act provides that the duty of the employer to
withhold is triggered only upon being given notice of withholding in the “standard format
prescribed by the Secretary,” which is deemed “necessary for the employer to comply with
the withholding order.” 42 U.S.C. § 666(b)(6)(A)(i), (ii). The federal Act, like the Illinois
Act, provides immunity from civil liability for “[a]n employer who complies with an income
withholding notice that is regular on its face.” 42 U.S.C. § 666(b)(6)(A)(i); 750 ILCS
28/35(c) (West 2010). It would be reasonable then to assume that a withholding notice is
considered “regular on its face” under both Illinois and federal law when it is a completed
document that contains the necessary information required by the form adopted by the United
States Secretary of Health and Human Services. We have reviewed that form and it
unequivocally requires that the sender of the notice must include in the notice the
“[e]mployee/obligor’s Social Security number or other taxpayer identification number.”4
¶ 24 We thus recognize the absurdity, as well as the incongruence, of plaintiff’s position of
requiring defendant’s compliance with the withholding notice in the absence of full
compliance by plaintiff with the requirements for a valid notice. As noted, plaintiff’s position
would place employers in the difficult position of deciding whether to subject themselves to
the possibility of civil liability for payment pursuant to an irregular withholding notice or
4
The Instructions to the Secretary’s income withholding for support notice state that the
notice must be regular on its face and must be rejected if it is not. Among the items that the
Instructions specifically state must be included in the notice and filled out by the sender is the
obligor’s social security number or other taxpayer identification. See
http://www.acf.hhs.gov/sites/default/files/ocse/omb_0970-0154_instructions.pdf. We also know that
the social security number itself is a necessary piece of information because the Secretary’s standard
form requires a space for it and section 666(b)(6)(A)(ii) states that the form must “contain only such
information as may be necessary for the employer to comply with the withholding order.” 42 U.S.C.
§ 666(b)(6)(A)(ii).
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instead subject themselves to stiff statutory penalties for noncompliance with an irregular
notice. We believe that if the obligee of a support order wants to take advantage of the
significant penalties that may be recovered against an employer under the Act, the obligee
must comply fully with the statutory notice requirements so that the notice is “regular on its
face.”
¶ 25 Citing In re Marriage of Gulla, 382 Ill. App. 3d 498 (2008), aff’d, 234 Ill. 2d 414 (2009),
plaintiff argues that any confusion that the employer had about the notice should have been
resolved by defendant contacting the attorney who served the notice. She maintains that as
long as the employer is served with a notice informing it of where to send the support and
how to contact the attorney serving the notice, the law demands compliance with the notice.
We find that Gulla does not support plaintiff’s position.
¶ 26 In Gulla, there was no claim that the notice did not include the obligor’s social security
number or that it omitted any of the other mandatory information required by section 20(c)
of the Act. In that case, the obligor, under an order of support that required him to pay $3,000
per month, worked for the defendant-employer in the State of Mississippi. A withholding
notice was issued in Illinois and sent to the employer in Mississippi. The notice stated that
the defendant should withhold $3,000 per month from the obligor’s pay. The notice also
specifically explained that if the amount to be withheld exceeded the amount allowed by the
law of its state, the employer should withhold only the amount allowed by its state. Gulla,
382 Ill. App. 3d at 503. Despite this clear notice, the employer argued that it did not
knowingly violate the duty to withhold under the Illinois Act because the amount of the
support payment listed was more than the obligor made in a month and Mississippi law
prohibited the employer from paying more than 50% of the obligor’s net income. Gulla, 382
Ill. App. 3d at 501.
¶ 27 The appellate court in Gulla rejected the employer’s argument. It held that “[b]ased on
the clarity of the notice and [the employer’s] failure to adhere to its terms, [the employer]
cannot rebut the presumption in the [Act] that it knowingly failed to pay over the amounts
that it was obligated to.” Gulla, 382 Ill. App. 3d at 503. Gulla basically held that the
employer should have paid, as the notice clearly explained, the amount that was allowed by
Mississippi state law, which was 50% of the obligor’s actual net income. No issue with
respect to the validity of the notice was raised in Gulla. Rather, the notice was conceded to
be valid.
¶ 28 This court affirmed the appellate court’s decision in Gulla. But in doing so, it was not
asked to address whether the employer’s violation of the Act was “knowing.” Instead, this
court was called upon to address the issue of which state’s law should apply—Illinois or
Mississippi—to govern the penalty for the employer’s knowing failure to withhold and pay
over the required amount of support. Gulla, 234 Ill. 2d at 425. This court noted that the
Illinois statute provided for a $100 per day penalty for each violation of the Act. Id. The
plaintiff in that case was seeking a judgment of $369,000 based on the Illinois statute. In
contrast, the Mississippi statute capped the payor’s liability at $500 for willfully failing to
withhold, or $1,000 where the failure to comply is the result of collusion between the
employer and employee. Id. This court found that the conflict between the states’ laws did
not invalidate the notice and that the penalty must be calculated in accord with the payor’s
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state of residence. Id. at 428. Thus, Mississippi law governed the penalty to be applied. Id.
The validity of the notice itself was also not before this court. Instead, the issue was simply
what law should control the withholding and the penalty to be imposed due to the knowing
failure to withhold. Thus, Gulla is not helpful to plaintiff’s position here.
¶ 29 We acknowledge that at the time the notice in this case was served in November 2009,
the Act was silent as to how an invalid notice such as the one in the present case was to be
handled. It is indeed a troubling aspect of this case that defendant received the notice and
seemingly ignored it without picking up the phone to inform the obligee’s attorney that the
notice was not regular on its face and was therefore invalid. However, the statute at the time
did not require the employer to contact the obligee’s attorney to inform the obligee that its
notice was invalid, and we will not read such a requirement into the statute. See Shields v.
Judges’ Retirement System of Illinois, 204 Ill. 2d 488, 497 (2003) (it is the dominion of the
legislature to enact laws and the courts to construe them, and we can neither restrict nor
enlarge the meaning of an unambiguous statute).
¶ 30 We also note that it is equally troubling that the obligee’s attorney did not follow up
when it soon became clear that the obligee was not receiving payment. Instead it appears that
the obligee’s attorney waited silently for nearly two years before filing the instant complaint,
alleging the failure to withhold and pay over to the State Disbursement Unit and seeking stiff
statutory penalties.
¶ 31 We conclude that irrespective of the parties’ failure to communicate, the statute is
unambiguous in providing that the lack of the obligee’s social security number rendered the
notice invalid and that the employer, at the time of the relevant events in this case, was not
burdened with any statutory duty to contact the obligee of the notice’s invalidity. We note
that recent amendments to the statute seem to address the problem at issue here. We further
note, however, that it is well settled that an amendment of an unambiguous statute creates
a presumption that the amendment has worked a change in the law, while the amendment of
an ambiguous statute creates no such presumption and might instead indicate that the
legislature intended a clarification of the law. Metropolitan Life Insurance Co. v. Hamer,
2013 IL 114234, ¶ 25; State of Illinois v. Mikusch, 138 Ill. 2d 242, 252 (1990).
¶ 32 The recent amendments to the Act, effective August 17, 2012, now place the duty on the
recipient of support to timely contact the employer for an explanation as to why support is
not being withheld. 750 ILCS 28/45(j) (West 2012). Specifically, a recipient of support must
notify the employer in writing if a support payment is not received. 750 ILCS 28/45(j) (West
2012). Then, within 14 days of receiving this written notice of nonreceipt of payment, the
payor must either notify the obligee of the reason for the nonreceipt of payment, or make the
payment with 9% interest. A payor who fails to comply with this provision is subject to the
$100 per day penalty in section 35 of the Act. 750 ILCS 28/45(j) (West 2012).5
5
Additionally, the penalties available under the Act are now capped and the limitations
period for bringing an action for penalties has been reduced. See 750 ILCS 28/35(a) (West 2012)
(capping the penalties for failure to withhold “on one occasion” at $10,000 and requiring an action
for failure to withhold to be brought within one year).
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¶ 33 We need not address the question of whether these amendments could be applied
retroactively to the case at bar because we find that even assuming that the amendments can
be applied prospectively only as plaintiff suggests, they would then merely indicate a
presumption that the legislature has changed the law from not requiring any action from the
employer faced with an invalid notice to now requiring the employer to respond with its
reason for noncompliance, but only provided that the obligee first gives notice of the non-
receipt of payment.
¶ 34 CONCLUSION
¶ 35 For the reasons set forth above, we hold that plaintiff’s failure to comply with the
mandatory requirement of section 20(c)(9) of the Act, requiring inclusion of the obligor’s
social security number, rendered the notice invalid. Plaintiff consequently could not maintain
her action seeking the penalties allowed by the Act in the absence of a conforming
withholding notice. Moreover, the statute in effect at the time relevant here did not place any
burden on defendant to respond to the invalid notice.
¶ 36 We therefore affirm the judgment of the appellate court.
¶ 37 Affirmed.
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