Haake v. Board of Education for Township High School Glebard District

SUPREME COURT CASES

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State: Illinois

Court: 2nd District Appellate

Docket No: 2-09-0103 Rel

Case Date: 03/15/2010

Preview:No. 2-09-0103 Filed: 3-15-10 ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS SECOND DISTRICT ______________________________________________________________________________ HENRY HAAKE, SANDRA L. ANDERSON, WILLIAM BEGGS, BLAISE B. BLASKO, JAMES BOYER, MARY KAY BRANDIMORE, PAMELA M. BROWN, BONITA FAYE BUMA, SUZANNE BURKE, SHARON A. CASE, JOHN CEBULA, DOUGLAS A. CLARK, ALAN COPPERSMITH, JAMES CORSO, JAMES B. COVERT, KATHERINE COYNER, DENNIS P. CREED, JR., LARRY DHAMERS, NORA JEAN DICKINSON, MARTIN J. DONNELLY, PAULA R. DRENDEL, ROSEMARY EFFINGER, GAIL ELLENBAUM, DENNIS ERFORD, DALE EVANS, SUSAN J. FILIPPO, CECILLE GERBER, GEORGE GLEICH, DEBRA K. HALBERG, LOUISE HAMMOND, WILLIAM J. HEARN, RANDAL J. HENDEE, CAROL HORAN, SCOTT ILIFF, DEBRA C. JACOBS, STEVEN M. JACOBS, MARY ANNE JAGNOW, STEPHEN B. JEFFREY, DALE JANSEN, CHERYL JOHNSON, SETH PAUL JOHNSON, JOSEPH A. JORDAN, DIANE KARROW, ROSS KELLAN, STEPHEN KENNY, GAIL KESSLER, JAMES KEVIL, JULIE A. KINGSNORTH, MARY M. KITUN, RAYMOND J. KLEIN, ROBERTA KMIEC, THOMAS LOWELL KNUTSON, MARTHA KREMA, MICHAEL C. KRUEGER, RICHARD J. KRUEGER, CELIA LAZARSKI, JEFFREY A. LEVIN, SUSAN F. LEVY-CREED, PHILLIP L. LINDHORN, ELLEN JO LJUNG, DAVID R. LOHRKE, KEITH ELBERT MANNING, SUZANNE HILL McCAFFERTY, JAMES ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Appeal from the Circuit Court of Du Page County.

No. 2--09--0103 McKINNEY, GLENN R. MESSMER, ) DOROTHY MIKUSKA, MARY S. MILLER, ) ROBERT L. MILLER, KENNETH E. MILLS, ) DIANA D. MITCHELL, MARIBETH ) MOHAN, LINDA RAE MORGAN, DONNA ) MORINEC, LAWRENCE W. MROCZEK, ) THOMAS MURRAY, ELLEN O. NICK, ) DUAYNE NYCKEL, JEROME R. NYCKEL, ) SUZANNE PARISEAU, SHARON ) POPPLETON, KAREN L. RAPP, LINDA ) RESSER, NANCY ROESNER, NANCY K. ) RUHLOW, THOMAS J. SALERNO, ) ROBERT SCHREIBER, BARBARA E. ) SCHWEIG, RUTH ANN SENEY, DAWN Y. ) SERRITELLA, SANDRA SHERWIN, ) MICHAEL SLIVA, HOWARD SOKOL, ) MAUREEN SPIEGEL, RUSS SUMKA, ) CASSANDRA A. TAMBURRINO, GAIL ) TANZER, JERILYN A. TATJE, SUNNE ) THOMAS, FRANCES K. THOMPSEN, ) CHARLES TROJAN, LAWRENCE R. ) VIVERITO, WILLIAM J. VOVES, WILLIAM ) J. WADINGTON, JANE ANN WILLARD, ) FRANK R. ZABILKA, RALPH ZAFFINO, ) and JOAN P. ZAFRANI, ) ) Plaintiffs-Appellees, ) ) v. ) No. 07--L--753 ) THE BOARD OF EDUCATION FOR ) TOWNSHIP HIGH SCHOOL GLENBARD ) DISTRICT 87, ) Honorable ) Stephen J. Culliton, Defendant-Appellant. ) Judge, Presiding. ______________________________________________________________________________ JUSTICE SCHOSTOK delivered the opinion of the court: This case presents the question of whether a school board can decrease the health insurance benefits provided to retirees under certain collective bargaining agreements, after the expiration of those agreements. On January 22, 2009, the trial court entered judgment in favor of the plaintiffs -2-

No. 2--09--0103 here (all retired teachers) on that issue. The school board appeals, raising various arguments that the collective bargaining agreements did not grant retiree benefits that survived the expiration of those agreements, or else that the agreements were validly modified by later agreements, at least as to some of the plaintiffs, and that some of the plaintiffs do not qualify for the benefits in any case. We affirm. FACTUAL BACKGROUND The plaintiffs are a group of 107 retired teachers formerly employed by the defendant, the Board of Education for Glenbard Township High School District 87. All of the plaintiffs retired between the spring of 1994 and June 2007. Throughout the plaintiffs' employment, their terms of employment were governed by various collective bargaining agreements (contracts) reached between the defendant and the teachers' union, the Glenbard Education Association (GEA). The first such contract that is relevant to this action is the 1991 contract, which went into effect in August 1991 and, as extended by the 1993-95 contract, expired in August 1995. Several of the plaintiffs retired in the spring of 1994, while this contract was in force. The next contract was the 1995 contract, which ran from 1995 through 1998, but none of the plaintiffs retired while it was in force. The next relevant contract is the 1998 contract, which ran from 1998 through 2001. It was succeeded by the 2001 contract, which ran from 2001 through 2005. We refer to the 1991 contract, 1998 contract, and 2001 contract collectively herein as "the Earlier Contracts." The 1991 contract and 1998 contract both contained provisions in section 9.05, labeled "Early Retirement Plan," which included the following: "9.05 Early Retirement Plan 9.05.01 Prior to reaching age sixty (60), teachers may elect to participate in the Early Retirement Plan. To be eligible, an individual must have completed at least

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No. 2--09--0103 fifteen (15) years of full-time employment in the District preceding his/her retirement benefits under the provisions of the Illinois Teachers' Retirement Act and this section. 9.05.02 July 1 through June 30 shall be considered to be the Early Retirement Plan year. 9.05.03 Individuals desiring to participate in the Plan shall notify the Superintendent in writing of their intention to retire and desire to participate in the Plan during the following school year on or before January 1 of the year prior to retirement. All applicants who apply for early retirement shall be bound by their decision to participate in the Plan and may not unilaterally withdraw from the Plan after March 1. 9.05.04 While on the Illinois Teachers' Retirement System Early Retirement Plan, the participants may continue to participate in the group insurance programs subject to the insurance carrier's provisions. The Board shall pay the full cost of the group insurance programs for an individual prior to age sixty-five (65), approved as a participant in the Early Retirement Plan which provides the same level of benefits for single or family coverage as when the individual was last teaching and was not an early retiree. The Board will pay both the teacher's and the Board's one-time contribution to the Teachers' Retirement System for Early Retirement. ***

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No. 2--09--0103 9.05.10 Should this Early Retirement be terminated, individuals already on the Early Retirement Plan and those who, during the year, have been approved for the Plan will be allowed to continue despite the termination of the Plan with respect to all other individuals." The effect of these provisions, in particular section 9.05.04, was that the defendant would pay 100% of the premium for a retiree's "single" (or individual) health insurance plan, and 50% of the cost of a retiree's "family" plan. Section 9.05 of the 2001 contract differed in a few minor ways but provided the same level of benefits. The first change under the 2001 contract was that section 9.05.01 required only 10 years of full-time employment in the district prior to retirement (instead of 15 years). Section 9.05.03 was rewritten to require that: individuals desiring to participate must complete a particular form, the "Irrevocable Notice of Retirement," which had to be completed in the personnel office between May 1 and July 1 of the year prior to retirement; all applicants applying for early retirement were bound by their decision to participate in the plan, without reference to possible revocation (March 1 had been previously set as the cutoff date for revocation of an early retirement application); and all retirements must occur at the completion of a semester or at the completion of the school year. Section 9.05.04 was changed to provide that the defendant would pay the full cost of the group insurance programs for an individual until that individual became eligible for Medicare, rather than until age 65. Finally, the language formerly found in section 9.05.10 was moved to section 9.05.08 of the 2001 contract. All of the plaintiffs submitted their notices of intent to elect early retirement prior to June 1, 2005, while one of the Earlier Contracts was in effect.

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No. 2--09--0103 On June 4, 2005, a new contract became effective (the 2005 contract). The provisions relating to early retirement were moved to section 8.06 and were modified. Many of the changes were minor. The first three subsections, 8.06.01, 8.06.02, and 8.06.03, largely mirrored subsections 9.05.01, 9.05.02, and 9.05.03 of the 2001 contract, except that subsection 8.06.01 contained more detail regarding how part-time teaching could be applied to the 10-year requirement. A new subsection, 8.06.04, was inserted to provide a time frame for the notice of intent to retire for teachers desiring to retire at the end of the first semester. However, section 8.06.05, which contained the provisions relating to retirees' health insurance benefits, was substantially changed. It now provided that the defendant would pay for retirees' benefits until they became eligible for Medicare, at the same level as it provided for active teachers still employed by the defendant, rather than at the same level as when the retired teacher was last teaching. During the 2005-06 school year, the defendant agreed to pay 93% of the cost of a single plan for its active teachers. It agreed to pay 90% of the cost of a single plan during the 2006-07 school year. (There was no change in the payment level for family insurance coverage, which remained at 50%.) However, although the defendant charged its active teachers 7% of the premium cost for a single plan in 2005-06 and 10% of the cost in 2006-07, it continued to provide health insurance to retirees at no cost for a single plan during these years. On June 12, 2006, the defendant and the GEA signed a memorandum of understanding. The memorandum stated that the defendant and the GEA were entering into the memorandum "in order to clarify their agreement on the treatment of retiree insurance contributions currently and in the future." The memorandum stated that the defendant and the GEA agreed that for "teachers who put in their two year notice to retire on or before June 29, 2005," the defendant would pay "100% of the

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No. 2--09--0103 cost of single and 50% of the cost of family group insurance programs in which the retiree is enrolled," and such benefits would be maintained until the retiree became eligible for Medicare. Teachers who gave notice of their intent to retire after June 29, 2005, would contribute the same percentage of the premium cost as active teachers. All of the plaintiffs submitted their notices of intent to participate in the early retirement plan and were approved by the defendant for such participation prior to June 29, 2005. However, under the terms of the Earlier Contracts, a teacher could not retire immediately after submitting his or her notice of intent. Rather, the notice of intent had to be submitted between one and two years before the date on which the teacher planned to retire. Thus, although all of the plaintiffs had elected early retirement and had been approved for early retirement by June 29, 2005, some of them continued working after that date. In August 2007, the 2007 contract took effect. Section 8.06.05 of that contract was the same as the 2005 contract, except that the defendant required active teachers and retirees to pay 11% of the premium costs for a single insurance program in 2007-08, and 1% more each year through the 2011-12 school year, when teachers would be required to pay 15% of the cost. In late April and early May of 2007, the defendant sent out letters to all retirees, stating that beginning July 1, 2007, all retirees would be required to contribute towards the premium costs of their single health insurance plans at the same rate as active teachers. The defendant did not limit the shifting of premium costs to those teachers who had elected early retirement but had not yet retired but, rather, imposed it across the board on all those who had already retired, as well as those scheduled to retire. Some of the early-retirement electors who were still working filed a grievance with the GEA, but it refused to support the grievance, because the change in premium contributions had been bargained and

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No. 2--09--0103 approved by the then-members of the GEA. After the grievance was denied, the plaintiffs filed suit against the defendant. The initial complaint, brought on behalf of 91 plaintiffs, alleged breach of contract (count I), promissory estoppel (count II), and equitable estoppel (count III). The defendant moved to dismiss count I on the basis that the plaintiffs lacked standing, as they were no longer active teachers and thus were not parties to the 2007 contract. The defendant also moved to dismiss counts II and III for failure to state a claim. The trial court denied the motions with respect to counts I and II, but granted dismissal of count III. Thereafter, the plaintiffs twice amended their complaint, adding more plaintiffs for an eventual total of 107. The only claims they realleged in their second amended complaint were for breach of contract and promissory estoppel. The parties filed cross-motions for summary judgment on the breach of contract claim. On October 14, 2008, the trial court granted the plaintiffs' motion and denied the defendant's motion, but reserved the issue of damages. The parties reached a stipulation on damages, and on January 22, 2009, the trial court entered judgment in favor of the plaintiffs on count I in the amount of the stipulated damages. The trial court also found, pursuant to Supreme Court Rule 304(a) (210 Ill. 2d R. 304(a)), that there was no just reason to delay enforcement or appeal of its order while count II (the promissory estoppel claim) remained pending before it. The defendant filed a timely appeal. ANALYSIS On appeal, the defendant raises four arguments. First, it argues that the trial court erred in denying its motion to dismiss, because the plaintiffs lack standing to sue to enforce the Earlier Contracts. Second, it contends that the trial court erred in granting summary judgment in favor of the plaintiffs on their contract claim, because they had no vested right to the retiree health insurance

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No. 2--09--0103 benefits provided in the Earlier Contracts, and those benefits expired when the contracts granting the benefits expired. Third, it argues in the alternative that, even if the retiree health insurance benefits had vested and were intended to survive the expiration of the Earlier Contracts, they were validly modified by the 2005 and 2007 contracts. Finally, the defendant argues that the benefits were limited to those retirees who qualified to participate in an early retirement option (ERO) under the Teachers' Retirement System, and 23 of the plaintiffs did not qualify for the ERO and therefore could not claim benefits. We examine each argument in turn. However, before we do so, we consider whether this case is governed by Illinois law or federal common law interpreting section 301 of the Labor Management Relations Act, 1947 (federal act) (29 U.S.C.

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