People v. Lewis

No. 2--96--0703

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

THE PEOPLE OF THE STATE ) Appeal from the Circuit Court
OF ILLINOIS, ) of Kane County.
)
Plaintiff-Appellee, )
)
v. ) No. 92--CF--1496
)
GREGORY P. LEWIS, ) Honorable
) James T. Doyle,
Defendant-Appellant. ) Judge, Presiding.


JUSTICE McLAREN delivered the opinion of the court:
Defendant, Gregory P. Lewis, was charged by indictment with two
counts of theft (720 ILCS 5/16--1(a)(1), 16--1(a)(2) (West 1996))
for filing a fraudulent unemployment benefits claim with the United
States Railroad Retirement Board. Defendant moved to dismiss the
charges, arguing that section 359(a) of the Railroad Unemployment
Insurance Act (45 U.S.C.A. 359(a) (West 1986)), which imposes a
penalty for fraudulently obtaining benefits, preempts state criminal
prosecutions for the same conduct. The trial court denied
defendant s motion. After a jury trial, defendant was convicted of
both counts and was sentenced to 24 months probation. On appeal,
defendant argues only that the trial court erred in denying his
motion to dismiss. We affirm.
When faced with a preemption question, we begin by reminding
ourselves of the basic structure of our federal system, in which the
states and the federal government are separate political
communities. United States v. Wheeler, 435 U.S. 313, 320, 55 L. Ed. 2d 303, 310, 98 S. Ct. 1079, 1084 (1978). State and federal
governments derive their power from different sources, each from the
organic law that established it. Wheeler, 435 U.S. at 320, 55 L. Ed. 2d at 310, 98 S. Ct. at 1084. Each has the power, inherent in
any sovereign, to determine independently what shall be an offense
against its authority and to punish such offenses, and in doing so
each is exercising its own sovereignty, not that of the other.
Wheeler, 435 U.S. at 320, 55 L. Ed. 2d at 310, 98 S. Ct. at 1084.
Of course, the supremacy clause of the United States
Constitution gives Congress the power to limit the states exercise
of their sovereignty. The supremacy clause provides that the Laws
of the United States *** shall be the supreme Law of the Land ***
any Thing in the Constitution or Laws of any State to the Contrary
notwithstanding. U.S. Const., art. VI, 2. The extent to which
federal legislation preempts state law is a question of
congressional intent. Gade v. National Solid Wastes Management
Ass n, 505 U.S. 88, 96, 120 L. Ed. 2d 73, 83, 112 S. Ct. 2374, 2381
(1992). If Congress, when acting within constitutional limits,
explicitly mandates the preemption of state law within a stated
situation, we need not proceed beyond the statutory language to
determine that state law is preempted. Gade, 505 U.S. at 98, 120 L. Ed. 2d at 84, 112 S. Ct. at 2383. In the absence of an explicit
preemption, we may infer an intent to preempt state law, and that
inference may take one of two forms: (1) field preemption, where
the scheme of the federal regulation is ' so pervasive as to make
reasonable the inference that Congress left no room for the States
to supplement it ' [citation] (Gade, 505 U.S. at 98, 120 L. Ed 2d
at 84, 112 S. Ct. at 2383); or (2) conflict preemption, where either
compliance with both federal and state law is a physical
impossibility or state law stands as an impediment to the
accomplishment and execution of the full purposes and objectives of
Congress. Gade, 505 U.S. at 98, 120 L. Ed. 2d at 84, 112 S. Ct. at
2383.
Where the field that Congress is said to have preempted
traditionally has been occupied by the states, we start with the
assumption that the historic police powers of the states were not
to be superseded by the federal act unless that was Congress s clear
and manifest purpose. Jones v. Rath Packing Co., 430 U.S. 519, 525,
51 L. Ed. 2d 604, 614, 97 S. Ct. 1305, 1309 (1977); People v.
Chicago Magnet Wire Corp., 126 Ill. 2d 356, 366-67 (1989).
Certainly, the power to prosecute criminal conduct traditionally has
been regarded as properly within the scope of state superintendence.
Chicago Magnet, 126 Ill. 2d at 367. Thus, absent a clear and
manifest intent by Congress, we will not find that a federal act
preempts a state s power to enforce a generally applicable criminal
statute. See Chicago Magnet, 126 Ill. 2d at 367.
With these principles in mind, we turn to the issue at hand,
namely, whether defendant s theft prosecution was preempted by the
penalty provision contained in section 359(a) of the Railroad
Unemployment Insurance Act. Because the prohibition of theft is a
generally applicable criminal law, we will not find preemption
unless that was Congress s clear and manifest purpose. See Jones,
430 U.S. at 525, 51 L. Ed. 2d at 614, 97 S. Ct. at 1309; Chicago
Magnet, 126 Ill. 2d at 367.
Found in section 359(a), the Railroad Unemployment Insurance
Act s penalty provision states, in relevant part:
[A]ny employee *** who shall knowingly make or aid in
making or cause to be made any false or fraudulent statement
or claim for the purpose of causing benefits or other payment
to be made or not to be made under this chapter, shall be
punished by a fine of not more than $10,000 or by imprisonment
not exceeding one year, or both. 45 U.S.C.A. 359(a) (West
1986).
Defendant argues that, by enacting section 359(a), Congress created
the exclusive remedy for benefits fraud and thereby expressed a
manifest intent to preempt the enforcement of generally applicable
state laws against the same conduct. We disagree.
First, although the Railroad Unemployment Insurance Act
contains an explicit preemption clause (see 45 U.S.C.A. 363(b)
(West 1986)), we are convinced that defendant s theft prosecution
does not fall within it. In relevant part, section 363(b) states:
By enactment of this chapter the Congress makes
exclusive provision for the payment of unemployment benefits
*** and for the payment of sickness benefits *** based upon
employment (as defined in this chapter). No employee shall
have or assert any right to unemployment benefits under an
unemployment compensation law of any State *** or to sickness
benefits under a sickness law of any State *** based upon
employment (as defined in this chapter). The Congress finds
and declares that by virtue of the enactment of this chapter,
the application of State unemployment compensation laws *** or
of State sickness laws *** would constitute an undue burden
upon, and an undue interference with the effective regulation
of, interstate commerce. (Emphasis added.) 45 U.S.C.A.
363(b) (West 1986).
By its own terms, section 363(b) precludes the states only from
providing unemployment insurance benefits to employees covered by
the Railroad Unemployment Insurance Act. Here, the State has
attempted no such thing. Rather, the State indicted defendant under
its generally applicable theft statute for conduct that, while
prohibited by and punishable under section 359(a), also is a crime
in the State of Illinois. Nothing in section 363(b) explicitly
precludes the State from pursuing that prosecution. Thus, we
conclude that defendant s theft prosecution does not fall within
section 363(b)'s express preemption.
Having concluded that defendant s theft prosecution is not
explicitly preempted by section 363(b), our next task is to
determine whether it is implicitly preempted by the Railroad
Unemployment Insurance Act as a whole. We conclude that it is not.
First, we are not persuaded that the Railroad Unemployment
Insurance Act regulates benefits fraud so pervasively as to make
reasonable the inference that Congress left no room for the States
to supplement it (Gade, 505 U.S. at 98, 120 L. Ed. 2d at 84, 112
S. Ct. at 2383). It is well established that, in general, an act
denounced by both federal and state law is an offense against the
peace and dignity of both and may be punished by both. See Wheeler,
435 U.S. at 316-18, 55 L. Ed. 2d at 308-10, 98 S. Ct. at 1082-83
(1978). In numerous cases, courts have recognized that states may
prosecute criminal conduct even though that same conduct also is
punishable under federal law. For example, even though the
applicable federal statute prohibits and makes punishable the very
same conduct, states are not preempted from prosecuting the
following: the maintenance of a hazardous workplace (Chicago Magnet,
126 Ill. 2d at 366-76); the filing of a fraudulent application for
a student loan (People v. Brom, 185 Ill. App. 3d 411, 413-14
(1989)); the filing of a fraudulent claim for federal Social
Security benefits (Commonwealth v. Morris, 575 A.2d 582, 584-86 (Pa.
Super. 1990)); the forging of federal income tax documents (State
v. Radzvilowicz, 703 A.2d 767, 784-89 (Conn. App. 1997)); the
counterfeiting of United States currency (State v. McMurry, 909 P.2d 1084, 1086-87 (Ariz. App. Div. 1 1995)); the unauthorized
reception of cable television (Carter v. Commonwealth, 492 S.E.2d 480, 481-82 (Va. App. 1997)); or the submission of false medicaid
claims (State v. Quinn, 719 P.2d 936, 939-40 (Wash. App. 1986)).
As these cases make clear, the mere fact that the same conduct
constitutes a crime under both state and federal law is insufficient
reason to presume that Congress intended to preclude the states from
enforcing their generally applicable criminal laws against that
conduct. Here, although section 359(a) makes punishable the filing
of a fraudulent benefits claim, nothing in the Railroad Unemployment
Insurance Act in any way suggests that Congress intended that
punishment to be the only punishment. We therefore conclude that
the Railroad Unemployment Insurance Act does not so pervasively
regulate the field of benefits fraud as to preempt defendant s theft
prosecution.
We likewise conclude that conflict preemption is not present
in this case. Again, conflict preemption arises where either
compliance with both federal and state law is a physical
impossibility or state law stands as an impediment to the
accomplishment and execution of the full purposes and objectives of
Congress. Gade, 505 U.S. at 98, 120 L. Ed. 2d at 84, 112 S. Ct. at
2383. Thus, in this case, for conflict preemption to be present,
either (1) compliance with both section 359(a) and the Illinois
theft statute must be a physical impossibility, or (2) the State s
prosecution of defendant for theft must stand as an impediment to
the accomplishment and execution of Congress s full purposes and
objectives in enacting the Railroad Unemployment Insurance Act.
Neither of these conditions is present here.
First, section 359(a) prohibits and punishes the filing of
fraudulent benefits claims. The Illinois theft statute (720 ILCS
5/16--1(a)(1), (a)(2) (West 1996)) prohibits and punishes the
obtaining of property with the intent to deprive its owner
permanently of its use or benefit. Compliance with both of these
statutes is not a physical impossibility. On the contrary, millions
of people comply with both of these statutes every day, either by
not filing a claim for benefits to which they are not entitled or
by telling the truth when they do file a claim.
Second, we are confident that the State s prosecution of
defendant for theft of federal unemployment benefits does not
operate as an impediment to Congress s purposes and objectives in
prohibiting benefits fraud. On the contrary, we strongly suspect
it furthers those purposes and objectives. Every time a defendant
is convicted of theft, the number of persons defrauding the federal
government is decreased by one. Moreover, as a Class 3 felony,
theft carries a stronger punishment (two to five years in prison and
a $10,000 fine (730 ILCS 5/5--8--1(a)(6), 9--1.3 (West 1996))) than
does a violation of section 359(a) (one year in prison and a $10,000
fine (45 U.S.C.A. 359(a) (West 1986))). Arguably, the prospect of
a theft prosecution is a greater deterrent to potential perpetrators
of benefits fraud than is the prospect of a federal prosecution for
violating section 359(a). Finally, because the federal government
and the State of Illinois are separate jurisdictions, defendant s
theft prosecution in no way precludes the federal government from
prosecuting defendant for violating section 359(a). See Wheeler,
435 U.S. at 316-18, 55 L. Ed. 2d at 308-10, 98 S. Ct. at 1082-83.
Given that the State s enforcement of its theft statute in no way
limits the range of remedies available to the federal government in
its effort to combat unemployment benefits fraud, we simply cannot
conclude that defendant s prosecution constitutes an impediment to
that effort.
In sum, the Railroad Unemployment Insurance Act neither
expressly nor implicitly preempts the enforcement of the State of
Illinois generally applicable theft statute. Accordingly, the
trial court had jurisdiction over this cause and properly denied
defendant s motion to dismiss.
Before concluding, we wish to address one final argument.
Defendant contends that, even if the Railroad Unemployment Insurance
Act does not preempt defendant s theft prosecution per se, the trial
court nevertheless lacked subject matter jurisdiction over that
prosecution because it required the trial court to interpret federal
law. Contrary to defendant s assumption that the state courts are
powerless to interpret federal law, the United States Supreme Court
consistently has held that state courts have inherent authority, and
thus are presumed competent, to adjudicate claims arising under the
laws of the United States. See Tafflin v. Levitt, 493 U.S. 455,
458-59, 107 L. Ed. 2d 887, 894, 110 S. Ct. 792, 795 (1990).
According to the Supreme Court, nothing in the concept of our
federal system prevents the state courts from enforcing rights
created under federal law, and exclusive federal jurisdiction over
cases arising under federal law is the exception rather than the
rule. Tafflin, 493 U.S. at 459, 107 L. Ed. 2d at 894, 110 S. Ct.
at 795. The presumption in favor of concurrent jurisdiction may be
rebutted only by an explicit congressional provision or a clear
incompatibility between state court jurisdiction and federal
interests. Tafflin, 493 U.S. at 459, 107 L. Ed. 2d at 894-95, 110 S. Ct. at 795.
As we have discussed at length above, nothing in the Railroad
Unemployment Insurance Act manifests either an explicit or implicit
congressional intent to divest state courts of the authority to
adjudicate criminal prosecutions arising out of fraudulent benefits
claims. Nor has defendant pointed us to a single authority standing
for that proposition. Accordingly, even if defendant s prosecution
imposed upon the trial court the task of construing the Railroad
Unemployment Insurance Act, the trial court nevertheless retained
subject matter jurisdiction over that prosecution.
For the foregoing reasons, the judgment of the circuit court
of Kane County is affirmed.
Affirmed.
INGLIS and HUTCHINSON, JJ., concur.