Marcatante v. City of Chicago

• Decision Date: 18 October 2011
• Docket Number: 10–2243,10–2814,10–2921.,Nos. 10–2114,s. 10–2114
• Citation: 657 F.3d 433,191 L.R.R.M. (BNA) 2646
• Parties: John MARCATANTE, et al., Plaintiffs–Appellees,v.CITY OF CHICAGO, ILLINOIS, a municipal corporation, Defendant–Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

657 F.3d 433

191 L.R.R.M. (BNA) 2646

John MARCATANTE, et al., Plaintiffs–Appellees,

v.CITY OF CHICAGO, ILLINOIS, a municipal corporation, Defendant–Appellant.

Nos. 10–2114

10–2243

10–2814

10–2921.

United States Court of Appeals, Seventh Circuit.

Argued May 2, 2011.Decided Aug. 24, 2011.Rehearing Denied Oct. 18, 2011.

Robert R. Cohen (argued), Attorney, Frankel & Cohen, Thomas H. Geoghegan, Attorney, Despres, Schwartz & Geoghegan, Chicago, IL, for Plaintiffs–Appellees.Mara S. Georges, Attorney, Office of the Corporation Counsel, Appeals Division, Suzanne M. Loose, Attorney, City of Chicago Law Department, Chicago, IL, for Defendant–Appellant in Nos. 10–2114, 10–2921.Valerie Depies Harper, Attorney, Office of the Corporation Counsel, Appeals Division, Suzanne M. Loose (argued), Attorney, City of Chicago Law Department, Chicago, IL, for Defendant–Appellant in No. 10–2814.Suzanne M. Loose, Attorney, City of Chicago Law Department, Chicago, IL, for Defendant–Appellant in No. 10–2243.Before POSNER, KANNE, and TINDER, Circuit Judges.TINDER, Circuit Judge.

The plaintiffs are retired City of Chicago employees who were members of several trade unions. They were offered incentives to retire early under an Early Retirement Incentive Program (ERIP) and did so in early 2004 while their unions were still negotiating new Collective Bargaining Agreements (CBAs) for the 2003–2007 period. During the negotiation process, the 1999–2003 CBAs governed the parties' relationships. In 2005, after two years of negotiations, the City and unions agreed to make raises retroactive to July 2003, but only for current employees, employees laid off with recall rights, and seasonal employees eligible for rehire, not for the plaintiff retirees. The plaintiffs brought this class action claiming entitlement to retroactive wage increases between July 2003 and their retirement dates. The certified class consists of coalition union members who retired under the ERIP between July 2003 and July 2005.

The parties filed cross-motions for summary judgment. The district court granted the City's motion on the plaintiffs' federal claims (due process and equal protection) and state law breach of express contract claim. The court, however, granted summary judgment to the plaintiffs on their state law implied contract claim and awarded the class $1,773,502 in retroactive pay, plus attorney's fees. The City appeals the district court's grant of summary judgment on the plaintiffs' implied contract claim and the plaintiffs cross-appeal on their due process and breach of express contract claims; the plaintiffs do not challenge the adverse judgment on their equal protection claim. The district court's original jurisdiction derives from the federal claims, see 28 U.S.C. § 1331, and the accompanying state law claims fall within the court's supplemental jurisdiction, see 28 U.S.C. § 1367(a).

We reverse the district court's entry of summary judgment in favor of the plaintiffs on their implied contract claim and otherwise affirm. Because express contracts—the 1999–2003 CBAs—governed the plaintiffs' wages, their implied contract claim cannot succeed. Before the plaintiffs accepted the ERIP benefits, there was uncertainty as to whether they would receive retroactive wages under the 2003–2007 CBAs. The ERIP provided enhanced pension benefits, but conspicuously missing from it was any suggestion of entitlement to retroactive wage increases. No doubt the plaintiffs hoped for wage increases, but they had no right to them. A June 2003 letter agreement between the City and the unions didn't confer such a right; it merely extended the 1999–2003 CBAs (and existing wages) during contract negotiations and made agreed-upon wage increases, if any, retroactive. The City and the union negotiated and didn't agree to give the plaintiffs wage increases; this was entirely consistent with the 2003 letter agreement. Accordingly, the plaintiffs' claims for breach of implied and express contract fail as a matter of law. The plaintiffs' due process claim similarly fails because there is no evidence that the City made misrepresentations to induce them to retire early.

I. Facts

The plaintiffs, as City of Chicago employees, were members of trade unions that joined together as a coalition during collective bargaining with the City. The plaintiffs were covered under the 1999–2003 CBAs as “prevailing wage rate” employees—those employees working at jobs classified as prevailing wage jobs. “Prevailing wage rate” is a term that the City and the unions use to refer to the hourly rate paid to crafts or job classifications doing similar kinds of work in Cook County pursuant to the formula used by the United States Department of Labor (DOL) in administering the Davis–Bacon Act. Certain other employees received a negotiated wage rate.

Before the plaintiffs' 1999–2003 CBAs were set to expire on June 30, 2003, the coalition's representative provided notice that the unions would not renew the existing agreement. The unions and the City began negotiating successor agreements for 2003–2007. Because the parties were unable to reach an agreement by the 1999–2003 CBA expiration date, they agreed to extend the current CBAs while negotiations continued. The City and the unions entered into the following letter agreement on June 26, 2003:

This will confirm our conversations regarding the extension of the Coalition Unions' contracts which are due to expire at midnight June 30, 2003. It is understood and the parties agree to extend the terms of all current agreements through midnight July 30, 2003. Thereafter, the agreements shall continue on a day-to-day basis subject to termination by either party upon ten (10) days written notice.

During the extension period the terms of such agreements shall continue without change.

In consideration of the extension of the current agreements, the City agrees that wage increases, if any, agreed to by the parties shall be retroactive to July 1, 2003, unless the parties mutually agree to another date.

(A28–29) (emphasis added). The City handwrote “if any” into the agreement; the City and unions signed this modified agreement.

The City and the unions had begun discussions for new CBAs in the spring of 2003. The unions wanted wage increases, but because the City was facing a serious budget deficit, it wasn't prepared to commit to wage increases without certain work rule concessions. The City initially offered two proposals that included raises for “prevailing wage rate employees”: (1) defer raises for six months until January 2004 at which point the prevailing wage rate would be increased on a yearly basis; and (2) provide rate increases as of July 2003 on a one-time, one-year basis (but no raise guarantee after July 1, 2004). Both proposals included a number of work rule changes designed to offset the cost of the raises, such as unpaid furlough days, changes in work hours, and reductions in reporting and call-in pay. The unions rejected these proposals.

In late 2003, while negotiations for the 2003–2007 CBAs were still ongoing, the City offered employees an incentive package to retire early under the ERIP. The incentives included the ability to purchase up to five years of credited services for one-half the usual cost to increase the employee's annuity (each year of service purchased would allow the retirees' age to be deemed one year older than it actually was) and the ability to receive an annuity that was not discounted for retirement before age sixty. After attending seminars to learn about the ERIP, each named plaintiff took advantage of the program and retired in either February or March 2004.

At the time of the plaintiffs' retirements, negotiations between their unions and the City were still ongoing. During negotiations, the unions and the City discussed whether any pay raises would be given, who would receive them, and whether they would be applied retroactively. Among other proposals, the City proposed retroactive pay increases effective various dates. The unions and the City specifically discussed whether former employees, including plaintiff retirees, should be given retroactive pay raises. The unions pushed for employees who retired after June 2003 to get the increase. In July 2005, the City offered to give retroactive raises to those retirees in exchange for active employees taking two unpaid furlough days, but the unions rejected this proposal.

The parties finally reached a tentative agreement in July 2005. In the 2003–2007 CBAs, the unions agreed to various work rule concessions and the City agreed to the hourly “prevailing wage rate” of pay, as established by the DOL for similar job classifications in Cook County, effective July 1, 2003, for employees who had received that rate under prior agreements. The raise, however, was retroactive only for employees who were either on the payroll, were on layoff with recall rights, or were seasonal employees eligible for rehire as of July 18, 2005. Shortly thereafter, the parties also agreed to a wage increase for non-prevailing rate employees. The City Council ratified the successor CBAs in October 2005.

The City's chief labor negotiator, Michael Duffee, testified that with every CBA “[t]he City does something different ... as to who gets—if there is retroactivity, who gets it and how much.” The named plaintiffs attested that when they retired, they understood that their rate of pay was still being negotiated. They believed they would eventually receive the “prevailing wage rate” for the work they performed after June 30, 2003, because they had received retroactive wage increases under prior contracts and have historically received the same “prevailing wage rate” as persons in their unions who worked in identical job classifications. Also, employees who retired during contract negotiations for the 1999–2003 CBAs received retroactive pay increases for work they performed after July 1999.

II. Discussion

Before...