To Prevent Further Action You
Must Respond Within Fifteen Days

Did you ever wonder who invented the parking meter? It may be that this person's name has been forever lost to history, however, his legacy continues to grow and prosper to this day. Certainly, this person could not have contemplated all of the things that would arise in the make of this seemingly innocent invention. The parking meter begat the parking ticket. The parking ticket begat the parking fine. The parking fine begat the unpaid parking fine. The unpaid parking fine begat the cases of Horn v. City of Chicago and Datacom Systems Corporation, Stelzik v. City of Chicago, and Daley v. Datacom Systems Corp., all of which are the subjects of this month's article.

Datacom Systems Corporation is a private collection agency that was hired by the City of Chicago to collect unpaid parking fines. From May of 1985 to July of 1986, Datacom assisted in the collection of almost $26,000,000 in unpaid parking fines. However, this immensely successful effort in collecting delinquent fines resulted in the initiation of the three lawsuits mentioned in the previous paragraph one of which, Horn v. City of Chicago and Datacom Systems Corp. has been decided by the United States Court of Appeals for the Seventh Circuit. The League filed an amicus curiae brief in support of the City in this case.

All three of the lawsuits have a similar factual background. After Datacom was hired by the City of Chicago, Datacom mailed demand notices to the holders of unpaid parking tickets. The notice indicated that the records of the Department of Revenue of the City of Chicago indicated that parking tickets listed on the notice had not been paid. In addition, the receiver of the notice was advised that absent full payment as listed on the notice, the City of Chicago would take further legal action which could result in a "default judgment" in an amount of $35 plus court costs for each unpaid parking ticket. Finally, the notice indicated that an individual could avoid such action by making payment in full to the Clerk of the Circuit Court and provided instructions on how to tender such payment. The notice concluded with the statement "TO PREVENT FURTHER ACTION YOU MUST RESPOND WITHIN 15 DAYS." Plaintiffs Horn and Stelzik paid their fines and then filed lawsuits to recover the amount paid plus interest from the City of Chicago; Stelzik in state court and Horn in federal court. It is the action filed by Horn that resulted in the decision by the Court of Appeals.

Horn asserted in his complaint that the City of Chicago and Datacom had violated the civil rights of himself and all persons who had received the notice by "misrepresenting that plaintiffs (Horn and others) owed fines, penalties, and court costs when no judgment had ever been entered against them in the traffic division of the circuit court." Horn sought a preliminary injunction prohibiting Chicago and Datacom from sending further notices, collecting any fines, and, ultimately, an accounting of all fines collected followed by a refund, including interest, to all violators who had paid pursuant to the demand notices.

After a series of procedural moves, including a conversion of a motion to dismiss to a motion for summary judgment criticized by the appellate court, the district court found in favor of the plaintiff. The lower court found that the demand notices produced by Datacom violated "plaintiffs' due process rights, by 'demanding money ... in excess of the amounts stated on the tickets, without adequate notice of the hearing to which they were entitled'." According to the district court, the provision of a telephone number at which a receiver of the notice could obtain additional information regarding the demand was an insufficient substitute for the notice of a hearing and the demand notice did not indicate that the matters which were the subject of the

October 1988 / Illinois Municipal Review / Page 19

notice were still pending. According to the district court "The demand notices strongly imply that a default judgment has been entered ... by the traffic court [in the amount listed on the notice] even though the defendants had not amended the complaint nor sought a default judgment of [that] amount." Although the district court found for the plaintiff, it did not order a refund or an accounting of the funds that had been collected. Rather, it ordered the city to provide a hearing to any plaintiff that desired to have one to determine the issue of whether or not he or she was guilty of the parking violation alleged by the parking ticket. In addition, the city was ordered to amend the parking ticket complaints and notify each of the plaintiffs of the amendment if the City of Chicago intended to seek a fine higher than the one shown on the initial parking ticket.

On appeal to the Seventh Circuit Court of Appeals, the appellate panel in an opinion authored by Judge Flaum reversed the action of the district court. The principal finding contained in the opinion was that the notice did not violate due process. In addition, the court strongly suggests that it is possible that the district court should have abstained from acting in the matter because similar actions were pending in state courts.

The bulk of the appellate opinion is dedicated to an analysis of the due process issue. Citing Mullane v. Central Hanover Bank and Trust Company, 339 U.S. 306 (1950), the court states that "[t]he notice provided to plaintiffs must have been 'reasonably calculated, under all the circumstances, to apprise [them] of the pendency of the action and afford them an opportunity to present their objections'." In interpreting this standard, the court refers to another United States Supreme Court case, Memphis Light, Gas and Water Div. v. Craft, 436 U.S. 1 (1978), in which the United States Supreme Court held that a public utility had violated its customers' due process rights by not providing them with sufficient notice of administrative procedures available to contest a termination of service. However, as noted by the appellate court, in the Craft case the United States Supreme Court added that the factual background of an action could be determinative of the level of due process that was required suggesting that "[i]n a different context a person threatened with the deprivation of a protected interest need not be told 'how to complain'." The appellate court in Horn distinguishes between the disconnection of utility services in Craft and the collection of parking fines in Horn by stating:

"Plaintiffs in this case were not involuntarily deprived of an essential service. Rather, they chose to pay the amounts demanded as fines for illegal conduct. All had received the parking ticket complaint setting one court date, and a 'white card' giving notice of a second court date. The first demand notice informed them that if they did not pay the amount demanded the city would 'take further legal action,' which 'may include . . . requesting that a DEFAULT JUDGMENT' be entered. ... All of the notices listed 'outstanding parking tickets' and a telephone and address where recipients could receive further information. (Emphasis by the court.)"

The federal appellate court also relies upon state court judgments in the Stelzik and Daley cases which both found that sufficient notice had been given to the receiver of the notice. In Stelzik, the Cook County circuit court found that the listing of a telephone number and the language indicating that the city would take "further legal action," if necessary, adequately apprised the recipient of the right to a hearing and indicated that there were actions pending in the circuit court at the time the demand notices were received. In Daley, Judge Wosik of the Cook County circuit court held that the "notices fully and adequately apprise the recipients of their right to seek further information in regard to the notices." In so holding, he dismissed, with prejudice, the complaint in that action.

After a review of the actions in Stelzik and Daley, the appellate court states:

"We agree with these courts that the demand notices were 'reasonably certain to inform those affected,' (citation omitted) that they could contest the amounts demanded. We do not think that the notices implied that judgment had already been entered against plaintiffs, and that they therefore had no opportunity for 'some kind of hearing.' (cita-

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tion omitted) The language of the notices specifically referred to future actions the city might take, including seeking the entry of a default judgment. Any doubts could have been resolved by contacting the Department of Revenue at the number or address listed . . .we hold that the notice of opportunity for hearing was constitutionally sufficient. (Emphasis by the court.)"

Although the decision in Horn probably signals the end of this action with respect to the notices distributed by Datacom and the City of Chicago, appeals are pending from the decisions in the Stelzik and Daley cases. Certainly, it is possible that a state appellate court will interpret the language of the notice differently than the federal court. However, on a constitutional issue pertaining to due process, it is likely that a state appellate court would follow the rationale of the federal court.

This case once again illustrates the need for consideration of the due process rights of any person against whom the municipality is considering taking action. In this particular case, the notice has been found to be adequate to inform the receiver of the action to be taken. However, a failure of the City of Chicago to comply with the due process could have compounded its difficulties in this case and ultimately resulted in either a hearing for all persons who received such a notice and/or a refund of all of the fines collected through the efforts of Datacom.

The application of Mullane and Craft is appropriate as a starting point for considering the level of notice required by the Due Process clause of the United States Constitution. First, the notice must be "reasonably calculated" to inform the recipient of the action proposed to be taken. The language should be clear, concise and understandable. Second, the specificity of the notice is governed by the type of interest to be affected. As illustrated by Craft and Horn, much more notice and detail is required prior to taking action with respect to an essential matter (utility services in Craft) than payment of a fine or other penalty (Horn). Certainly, these two aspects are not the end of the Due Process inquiry that a court will employ in judging a governmental action, but it certainly tells one where the inquiry begins. •

Page 22 / Illinois Municipal Review / October 1988