Friday, March 25, 2016

Can the Unions Bargain Away Constitutionally-Guaranteed Benefits through Consideration?





Simply stated, “Consideration is when a claimant promises something in exchange for the defendant’s promise, [or] the inducement to a contract, something of value given in return for a performance or a promise of performance by another, for the purpose of forming a contract…” (Law Dictionary).

Undeniably, “the consideration doctrine is a moving target, different [understandings will] yield different [interpretations]… Courts have considerable latitude in determining whether to find consideration (or not), and hence whether to enforce a promise (or not)… [Nonetheless], it would be highly undesirable to allow public officials to extract benefits in return for the performance of their existing legal duties” (National University of Singapore Professor Mindy Chen-Wishart, Contract Law).

In Illinois, the Supreme Court “has consistently invalidated amendments to the Pension Code where the result is to diminish benefits” (McNamee v. State, 173 Ill. 2d 433, 445 (1996)). “Any alteration of the pension system amounts to a modification of an existing contract between the State (or one of its agencies) and all members of the pension system, whether employees or retirees. A member is contractually protected against a reduction in benefits” (Kuhlmann v. Board of Trustees of the Police Pension Fund of Maywood, 106 Ill. App. 3d 603, 608 (1st Dist. 1982)).

Here are three more irrefutable arguments in Illinois:

2014   Kanerva v. Weems (July 3):

The Pension Protection Clause makes it “clear that if something qualifies as a benefit of the enforceable contractual relationship resulting from membership in one of the State’s pension or retirement systems, it cannot be diminished or impaired… [The State of Illinois or anyone else] may not rewrite the Pension Protection Clause to include restrictions and limitations that the drafters did not express and the citizens of Illinois did not approve... [P]ension benefits are insulated from diminishment or impairment by the General Assembly…” (Kanerva, 2014 IL 115811, 38, 41, 48).

2015   MARY J. JONES et al., Appellees, v. MUNICIPAL EMPLOYEES’ ANNUITY AND BENEFIT FUND OF CHICAGO et al., Appellants. (March 24):

“…In this case, it is undisputed that the unions were not acting as authorized agents within a collective bargaining process. Thus, we need not resolve whether the vote taken by union representatives as expressed in the Brandon affidavit bound members of the Funds in a collective bargaining process. Rather, we agree with the trial court that ‘these negotiations were no different than legislative advocacy on behalf of any interest group supporting collective interests to a lawmaking body.’ The individual members of the Funds have done nothing that could be said to have unequivocally assented to the new terms or to have ‘bargained away’ their constitutional rights. Accordingly, nothing in the legislative process that led to the enactment of the Act constituted a waiver of the Funds members’ constitutional rights under the pension protection clause… The judgment of the circuit court declaring Public Act 98-641 to be unconstitutional and permanently enjoining its enforcement is affirmed.” 

2015   Doris Heaton, et al. v. Pat Quinn, in his capacity as Governor of the State of Illinois, et al.  (May 8):
“…The concerns of the delegates who drafted article XIII, section 5, and the citizens who ratified it have proven to be well founded. Even with the protections of that provision, the General Assembly has repeatedly attempted to find ways to circumvent its clear and unambiguous prohibition against the diminishment or impairment of the benefits of membership in public retirement systems. Public Act 98-599 is merely the latest assault in this ongoing political battle against public pension rights. As we noted earlier, through that legislation the General Assembly is attempting to do once again exactly what the people of Illinois, through article XIII, section 5, said it has no authority to do and must not do… The judgment of the circuit court declaring Public Act 98-599 to be unconstitutional and permanently enjoining its enforcement is affirmed.”

The above three cases are cited In the Supreme Court of the State of Illinois (Docket No. 118585): In re Pension Reform Litigation (Doris Heaton et al., Appellees, v. Pat Quinn, Governor, State of Illinois, et al., Appellants). The  opinion was filed May 8, 2015. Justice Karmeier delivered the judgment of the court, with opinion. Chief Justice Garman and Justices Freeman, Thomas, Kilbride, Burke, and Theis concurred in the judgment and opinion. 

Unions cannot bargain away the vested rights and constitutionally-guaranteed benefits of retirees:

“…[A] contract right becomes vested when the employee has fulfilled all of the necessary qualifications and obligations for enjoyment of the right, [as in the case of retirees]. Lawrence, 152 Ill. App. 3d at 197-98 (quoting Kulins, 121 Ill. App. 3d at 525-27); see also Navlet v. Port of Seattle, 194 P.3d 221, 237 (Wash. 2008) (en banc)… Where all of the requisite specifications for the present or future enjoyment of a right have been achieved, the right is considered to be vested…” Black’s Law Dictionary 1699 (9th ed. 2009). (qtd. in Matthews v. CTA, 2016 IL 117638).


8 comments:

  1. Interesting to note how many unions in Chicago were willing to cut pensions to help the state.

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  2. “[Consider that] in the context of the collective bargaining process for public employees, employees designate a particular union as their exclusive agent for collective bargaining negotiations. See 5 ILCS 315/6 (West 2014). The cases that defendants rely upon to support a bargained-for exchange argument involved agreements reached through the collective bargaining process. See Ballentine v. Koch, 674 N.E.2d 292, 296 (N.Y. Ct. App. 1996) (“[B]ecause plaintiffs designated the PBA as their agent for the collective bargaining negotiations at issue here and were thus bound by its actions taken on their behalf during the negotiation process [citation], the PBA’s waiver of the constitutional protections of [New York’s pension protection clause] is valid as to plaintiffs ***.”); Schacht v. City of New York, 346 N.E.2d 518, 519 (N.Y. Ct. App. 1976) (“Plaintiff, having designated the union to be her agent for collective bargaining purposes, is bound by agreements made by that union on her behalf”)…” (2015 MARY J. JONES et al., Appellees, v. MUNICIPAL EMPLOYEES’ ANNUITY AND BENEFIT FUND OF CHICAGO et al., Appellants): Thus, unions need ratification by its membership, retirees, and non-members for any consideration.

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    1. I would ask you if unions can negotiate for people that are retired and no longer members of the organization they worked for or the union they were members of?

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    2. Dear Steve,

      The answer to your question is No. Retirees are not part of the collective bargaining process, only active employees are. The Illinois Supreme Court seems to suggest that a consideration supported by collective bargaining for current employees is a possibility, nonetheless. However, a legitimate consideration means not taking away an already existing constitutionally-guaranteed benefit!

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  3. According to Eric Madiar: "…Critics claim that the Senate President’s proposal fails to follow contract principles on four main grounds and therefore violates the Pension Clause… None of these grounds are compelling and dispositive as explained below. The proposal provides legal consideration… The proposal reflects a ‘bargained­for’ exchange… The proposal has ample case law support… The proposal is not tantamount to duress…" (Eric M. Madiar, Illinois Public Pensions: Where To From Here?, 33 Ill. Pub. Employee Labor Report (Winter/Spring 2016).

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    1. In other words, Madiar believes that Cullerton's pension reform proposal for current teachers would not violate the Pension Protection Clause.

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    2. “…Despite the critics’ protests, the Senate President’s proposal does, indeed, offer employees legal consideration. As discussed previously, the State is irrevocably promising, as an employer, to never offer them future salary increases on a non­pensionable basis. The waiver of this legal right is a new benefit that employees accepting the offer would obtain and do not possess today. Illinois courts state that any ‘act or promise which is of benefit to one party or disadvantage to the other is a sufficient consideration to support a contract.’ The Senate President’s proposal is a far cry from the circumstances where Illinois courts have found the offered consideration grossly inadequate and illusory.
      “Moreover, the claim that the offered consideration is ‘not meaningful’ or ‘inadequate’ because it is not equivalent to the financial value of what employees are giving up is not compelling. As the Illinois Supreme Court recently explained, ‘principles of contract law do not require that the value [the parties] exchange be equivalent.’ Indeed, courts do not generally inquire into the adequacy of the consideration for a contract, just that it be present, which is the case with the Senate President’s proposal…” (Eric Madiar).

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  4. So what do we expect from the leaderships of the Illinois Education Association, the Illinois Federation of Teachers, the Illinois AFL-CIO, Associated Fire Fighters of Illinois, AFSCME Council 31, Illinois Police Benevolent and Protective Association, Fraternal Order of Police, Service Employees International Union, Laborers International Union of North America Midwest Region, Illinois Public Pension Fund Association, National Pension Coalition, United Transportation Union, Laborers International Union of North America - Chicago District Council, AFSCME International Union, National Education Association, Fraternal Order of Police - Lodge 7 Chicago, Fireman's Association of Chicago - Local 2, Illinois Nurses Association, Teamsters Local 700, and Teamsters Joint Council 25?

    We expect the leaderships of the labor unions to competently defend our contractual and constitutional pension benefits and rights without apologies, without concessions, and without compromise!

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