Dep't of Cent. Mgmt. Servs. v. Ill. Labor Relations Bd.

• Decision Date: 23 October 2018
• Docket Number: 4-17-0127 cons.,NOS. 4-16-0827,S. 4-16-0827
• Citation: 116 N.E.3d 388,2018 IL App (4th) 160827,426 Ill.Dec. 539
• Parties: The DEPARTMENT OF CENTRAL MANAGEMENT SERVICES, Petitioner, v. The ILLINOIS LABOR RELATIONS BOARD, State Panel; and The American Federation of State, County and Municipal Employees, Council 31, Respondents. The American Federation of State, County and Municipal Employees, Council 31, Petitioner, v. The Illinois Labor Relations Board, State Panel; and The Department of Central Management Services Respondents.
• Court: United States Appellate Court of Illinois

2018 IL App (4th) 160827

116 N.E.3d 388

426 Ill.Dec. 539

The DEPARTMENT OF CENTRAL MANAGEMENT SERVICES, Petitioner,

v.The ILLINOIS LABOR RELATIONS BOARD, State Panel; and The American Federation of State, County and Municipal Employees, Council 31, Respondents.

The American Federation of State, County and Municipal Employees, Council 31, Petitioner,

v.The Illinois Labor Relations Board, State Panel; and The Department of Central Management Services Respondents.

NOS. 4-16-0827

4-17-0127 cons.

Appellate Court of Illinois, Fourth District.

FILED October 23, 2018

Thomas S. Bradley, Mark W. Bennett, and David A. Moore, Special Assistant Attorneys General, of Laner Muchin, Ltd., of Chicago, for petitioner/respondent Department of Central Management Services.

Melissa J. Auerbach and Stephen A. Yokich, of Dowd, Bloch, Bennett, Cervone, Auerbach & Yokich, of Chicago, for petitioner/respondent American Federation of State, County & Municipal Employees, Council 31.

Joel A. D’Alba, of Asher, Gittler & D’Alba, Ltd., of Chicago, for amicus curiae Illinois AFL-CIO.

Tamara L. Cummings and John R. Roche Jr., of Western Springs, for amicus curiae Illinois Fraternal Order of Police Labor Council.

Gilbert A. Cornfield and Elisa Redish, of Cornfield & Feldman LLP, and Nick Christen, both of Chicago, for amici curiae Illinois Federation of Teachers et al.

JUSTICE DeARMOND delivered the judgment of the court, with opinion.

¶ 1 In December 2015, the State of Illinois Department of Central Management Services (CMS or the State) and the American Federation of State, County and Municipal Employees, Council 31 (AFSCME or Union) began negotiations for a new 2015-19 collective bargaining agreement (CBA). On January 8, 2016, CMS declared an overall impasse and submitted its last, best, and final offer. Both parties filed complaints with the state panel of the Illinois Labor Relations Board (ILRB), alleging unfair labor practices under the Illinois Public Labor Relations Act ( 5 ILCS 315/1 et seq. (West 2014) ). The charges were investigated in accordance with section 11 of the Illinois Public Labor Relations Act, and the executive director of the ILRB issued complaints for the hearing on the charges. 5 ILCS 315/11 (West 2014). After consolidation, an administrative law judge (ALJ) conducted an exhaustive 25-day hearing on the matter. The ALJ issued a 250-page "Recommended Decision and Order," which recommended partial implementation by CMS of their last, best, and final offer on certain issues and sending the parties back to the bargaining table on other issues. The ILRB adopted the ALJ's ruling, in part, dismissed certain portions of the amended complaint against CMS, and rejected what it characterized as "the ALJ's package-by-package analysis of the question of impasse." They reversed the ALJ's finding that the parties were not at overall impasse; adopted, for the first time, the National Labor Relations Board's (NLRB) "single critical issue" impasse test; and permitted CMS to implement its last, best, and final offer. The ILRB further ordered CMS to provide information previously requested by the Union and required them to continue bargaining on unresolved issues.

¶ 2 On appeal, CMS argues the ILRB erred in finding CMS committed unfair labor practices by (1) disregarding or failing to comply with information requests both before and after impasse, (2) finding certain CMS proposals resulted in the waiver of certain statutory rights, and (3) holding AFSCME did not repudiate the "Tolling Agreement" in violation of their duty to bargain in good faith. Conversely, AFSCME contends the ILRB erred by (1) allowing CMS to substitute affidavits for live direct-examination testimony at the hearing; (2) applying, for the first time, the "single critical issue" impasse test rather than the long-used, five-factor Taft test ( Taft Broadcasting Co. , 163 N.L.R.B. 475 (1967) ) to conclude impasse had, in fact, been reached; (3) failing to find CMS engaged in unlawful direct dealing with bargaining unit employees; and (4) failing to find CMS bargained in bad faith.

¶ 3 I. BACKGROUND

¶ 4 The parties in this case have successfully negotiated CBAs for over 40 years. CMS is the largest public sector employer and AFSCME is the largest combined bargaining unit in the state. Over the course of their history of collective bargaining, AFSCME has negotiated more than two dozen CBAs with the administrations of six different governors. During that time, they have negotiated successor CBAs before the expiration of the existing CBA on all but three previous occasions. This was the fourth.

¶ 5 Beginning with the traditional joint labor/management meeting in December 2014, the parties engaged in collective bargaining from February 2015 until January 8, 2016, having agreed to await the inauguration of a new governor before starting. Over a period of 67 days, they conducted 24 bargaining sessions, with a federal mediator present most of the time after June 2015. The ALJ noted these negotiations were different from the previous practice of the parties for a number of reasons, not the least of which was the financial circumstances of the state.

¶ 6 At the December meeting, the State's prelude to bargaining included reminding the Union there was an approximate $6.4 billion backlog in unpaid bills, a budget deficit of approximately $1.6 billion, and a projected fiscal year 2016 budget deficit of $5 billion. In addition, there was an amount of $111 billion in unfunded pensions. Pension payments and financing accounted for approximately 25% of the State's general revenue fund expenditures at the start of negotiations. The Governor's Office of Management and Budget (GOMB) and the Department of Revenue in their three-year projection calculated a budget deficit for fiscal year 2016 of approximately $6.2 billion, $5.9 billion for fiscal year 2017, and $5.6 billion for fiscal year 2018. The ALJ noted there was, as of yet, no legislative solution to the $1.6 billion deficit in the budget, and the GOMB had projected the bill backlog to increase to $10.6 billion by the end of fiscal year 2016. As a result, the State had experienced rating downgrades by Moody's Investor Service and Fitch Ratings, two bond credit rating agencies, which resulted in greater costs for the State in its attempt to raise revenue through bond sales.

¶ 7 At that same meeting, the State's spokesperson said healthcare and pensions were two of the most fundamental financial issues affecting the budget. The Union's response was to encourage the State to reinstate the temporary tax increase passed by the Illinois General Assembly in 2011, which was due to end automatically on January 1, 2015; tax the wealthy; and support a tax structure placing greater responsibility for taxes on those who had higher incomes. Unlike previous negotiations, the Union did not come forward with any proposals at that time. They said this was due to the fact that a new administration would be taking over and there was no reason to provide proposals to the outgoing governor's staff.

¶ 8 As a result of the upcoming inauguration in the middle of January 2015, the State cancelled any meetings for negotiations until February, thereby starting later than usual. In addition, unlike previous negotiations, it took the parties four bargaining days and seven proposals just to iron out ground rules. The rules proposed by CMS were identical to those used in previous negotiations; however, the Union wanted to add three more provisions: (1) the parties would bargain in good faith toward a successor CBA, (2) CMS would recognize AFSCME as the exclusive bargaining representative, and (3) all proposed modifications to the CBA would be made exclusively to the Union and not made to any other party. The State objected, contending these provisions were unnecessary and eventually saying they were willing to proceed without ground rules, if need be. On February 26, 2015, the parties agreed to the ground rules, incorporating the Union's first proposal only.

¶ 9 The ALJ's written recommendation identified other aspects of the negotiations that were atypical to the bargaining history of the parties: (1) the fact that the first substantive proposals were not presented until February 27, 2015; (2) the proposals were by the State and not the Union; (3) the Union did not present initial noneconomic proposals until March 18, 2015; and (4) the State was the first to submit economic proposals, doing so on May 13, 2015, while the Union waited to submit their initial comprehensive economic package on June 17, 2015.

¶ 10 As a result of these delays, the parties were within 13 days of the June 30, 2015, termination date for the previous CBA before trading economic packages. The parties negotiated the first of three "Tolling Agreements" on June 25, 2015, to address the inordinate delay in substantive negotiations. Per the first "Tolling Agreement," the parties agreed to negotiate in good faith to reach a successor CBA and abide by all legal obligations while doing so. Additional conditions of the two subsequent "Tolling Agreements," negotiated in July 29 and September 9, 2015, established the procedure of allowing for either a mutual acknowledgement of an impasse or agreeing to submit the matter to the ILRB. The last "Tolling Agreement" included language by the parties acknowledging their willingness to "continue meeting and negotiating in good faith" for a successor agreement and agreeing to allow the "Tolling Agreement" to continue until "impasse is reached" by mutual agreement of the parties or resolution of the impasse issue by the ILRB.

¶ 11 The first substantive proposal presented by the Union on February 27, 2015, after signing the ground rules, related to subcontracting/privatization. Unlike their other proposals, this one did not identify the contract provisions to which it related, was intended to replace, or amend but was, in the words of CMS's chief negotiator, more of a "policy...