Marconi v. City of Joliet, an Ill. Mun. Corp.

• Decision Date: 02 May 2013
• Docket Number: Docket No. 3–11–0865.
• Citation: 989 N.E.2d 722,2013 IL App (3d) 110865,371 Ill.Dec. 132
• Parties: Michael MARCONI, James Lukancic, James Vancina and David Conner, Plaintiffs–Appellees, v. The CITY OF JOLIET, an Illinois Municipal Corporation, Defendant–Appellant.
• Court: United States Appellate Court of Illinois

2013 IL App (3d) 110865

989 N.E.2d 722

371 Ill.Dec. 132

Michael MARCONI, James Lukancic, James Vancina and David Conner, Plaintiffs–Appellees,

v.The CITY OF JOLIET, an Illinois Municipal Corporation, Defendant–Appellant.

Docket No. 3–11–0865.

Appellate Court of Illinois, Third District.

May 2, 2013.

Jeffrey Plyman (argued), Assistant Corporation Counsel, of Joliet, for appellant.

Theodore J. Jarz (argued), of Lucas & Jarz, LLC, of Joliet, and Timothy J. Witczak, of Law Offices of Beau B. Brindley, of Chicago, for appellees.

James J. Powers and Melissa A. Schilling, both of Clark Baird Smith LLP, of Rosemont, and Brian Day, Ashley Niebur, and Roger Huebner, all of Illinois Municipal League, of Springfield, amici curiae.

OPINION

Justice HOLDRIDGE delivered the judgment of the court, with opinion. Justices Lytton and O'Brien concurred in the judgment and opinion.

[371 Ill.Dec. 133]¶ 1 The plaintiffs, Michael Marconi, James Vancina, and David Conner, retired Joliet firefighters, and James Lukancic, a retired Joliet police officer, sued their former employer, the City of Joliet (the City), seeking declaratory and injunctive relief and monetary damages in response to the City's decision to reduce some of the retirement health benefits it promised each of the plaintiffs at the time of his retirement. The plaintiffs and the City filed opposing motions for summary judgment. The circuit court ruled that the changes imposed by the City violated article XII, section 5, of the Constitution of the State of Illinois of 1970 (Ill. Const. 1970, art. XIII, § 5) (the pension protection clause). Accordingly, the court granted the plaintiffs' motion for summary judgment and denied the City's motion for summary judgment. The court ordered the City to reinstate the health benefits promised to each plaintiff at the time of his retirement, enjoined the City from unilaterally implementing any future changes to the plaintiffs' health benefits, and ordered the City to pay money damages. The City appealed.

¶ 2 FACTS

¶ 3 The plaintiffs are former employees of the City's police or fire department. Each plaintiff retired on or before July 3, 2008.¹ During their employment, the plaintiffs were members of unions that had negotiated collective bargaining agreements with the City.² These agreements established the terms and conditions of employment for active employees, including health insurance and other employment benefits that the City agreed to pay to active employees.

¶ 4 The agreements also provided for certain retirement benefits that the City agreed to pay to eligible retired employees, including health insurance benefits. For example, each agreement provided that an eligible retiree and his or her eligible dependents would receive “Hospitalization and Major Medical Benefits.” Each agreement provided that the City “shall bear the costs” of these benefits for the retirees, but that the retirees “shall bear the costs of these benefits, i.e. pay the monthly premium charges, for eligible dependents.” It is undisputed that, at the time of his retirement, each of the plaintiffs was eligible and entitled to receive these health care benefits from the City under the terms of his collective bargaining agreement.

¶ 5 Each agreement provided that payment of any and all retiree health benefits “shall be made solely in accordance with and subject to the terms, conditions, and provisions of the Plan Documents (Employees Benefit Plan No. 15083 and Group Policy No. 47942) which are on file in the Office of the City Clerk.” Each agreement also provided that “[e]ach covered employee shall receive a booklet describing the coverages provided under the Group Life and Hospitalization, Dental and Long Term Disability plans.”

¶ 6 None of the agreements required retirees to pay any deductible amounts for health care expenses paid to “in-plan” providers. However, retirees were required to make modest copayments for prescriptiondrugs. ³ Specifically, the employee benefits booklets provided to the plaintiffs indicate that: (1) Marconi, Vancina, and Conner were required to pay $3 per prescription drug (unless such drugs were ordered by mail, in which case there was no copayment); and (2) Lukancic was required to pay $5 per prescription for generic drugs, $10 per prescription for brand name drugs for which there was no generic available, and $35 for brand name drugs for which there was a generic available.

¶ 7 Each of the agreements had a limited term as specified in an express durational provision.

¶ 8 In 2009, after each of the plaintiffs had retired and was receiving health care benefits from the City, the City entered into negotiations with each of its employees' unions to negotiate changes in its self-insured group health insurance plan. Because the claimants were retired at that time, they were no longer members of any of the unions negotiating with the City. The negotiations resulted in a new 2010 agreement covering all of the City's employees. Although the new agreement was negotiated by the City and the employee unions—which represented only active employees—the City unilaterally applied the new agreement to all current City retirees and their dependents.⁴

¶ 9 The new 2010 agreement purported to make certain changes to the health care benefits of both active employees and retirees. For example, the new agreement imposed a $250–per–year individual deductible and a $500–per–year family deductible. In addition, the new agreement increased the generic prescription drug copay to $8 and the brand name prescription drug copay to $15 for active employees and retirees.

¶ 10 However, not all of the changes made to the health care benefits of active employees were applied to retirees. For example, although the new agreement imposed a new $50–per–paycheck premium deduction for active employees, it did not do so for retirees. Instead, it exempted retirees from paying health insurance premiums, thereby continuing the City's current practice, for a period of seven years. Moreover, the new agreement froze the monthly premium payments for the dependents of retirees at their current levels for the next seven years. Specifically, the new agreement capped monthly premiums at $118.20 per month for the spouses of retirees, and $59.10 for other dependents of retirees.

¶ 11 Three of the four collective bargaining agreements at issue in this case (Marconi's, Vancina's, and Lukancic's) expired before the City began negotiating the new 2010 agreement. The durational clause in Conner's agreement provided that the agreement remained in effect until December 31, 2011 “and shall be automatically renewed from year to year thereafter unless either party shall notify the other party in writing sixty (60) days prior to December 31, 2011 that it desires to modify th[e] Agreement.” In addition, article XXI of Conner's agreement, addressing the “Group Insurance Program” (which includesthe sections addressing retirement health care benefits), contained a “Reopener” provision which stated: “[f]rom time to time during the term of this Agreement, upon ten (10) days written notice to the Union the City may reopen this Agreement for negotiations with the Union with respect to any benefit provided pursuant to this Article for calendar year 2008, 2009, 2010 and/or 2011.”

¶ 12 The plaintiffs sought an injunction to stop the City from imposing the new deductibles and increases in prescription drug copays on them. The plaintiffs argued that these proposed changes to their contractual retirement benefits violated the pension protection clause of the Illinois Constitution. That clause provides:

“Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.” Ill. Const. 1970, art. XIII, § 5.

The plaintiffs argued that the new deductibles and copayments imposed by the City violated this provision because they “diminished or impaired” the health care benefits to which the plaintiffs were contractually entitled at the time of their retirement.

¶ 13 The parties filed cross-motions for summary judgment. The circuit court granted the plaintiffs' motion for summary judgment and denied the City's motion. As a matter of first impression, the circuit court held that the health care benefits at issue in this case are “benefits of [a] pension and retirement system,” and therefore protected under the pension protection clause. In a subsequent order, the court held that the City's actions in imposing new deductibles and increasing prescription drug copayments “diminish [ed] or impair[ed]” these benefits in violation of the pension protection clause. The City appealed.

¶ 14 The parties' initial briefs on appeal addressed only the constitutional issue decided by the circuit court. After oral argument, we directed the parties to file supplemental briefs addressing the following additional questions: (1) whether the City had a contractual obligation to continue to provide the retirement health insurance benefits that it promised each plaintiff at the time of his retirement; and (2) if so, whether the City breached that obligation. The parties timely filed supplemental issues addressing these questions.

¶ 15 ANALYSIS

¶ 16 As noted above, the circuit court decided this case on constitutional grounds, and the parties' initial appellate briefs addressed only the constitutional question of whether the City's changes to the plaintiffs' retirement health benefits violated the pension protection clause of the Illinois Constitution. However, we must avoid the adjudication of constitutional questions when a case can be decided on other grounds. See, e.g., Innovative Modular Solutions v. Hazel Crest School District 152.5, 2012 IL 112052, ¶ 38, 358 Ill.Dec. 343, 965 N.E.2d 414;People v. Vesey, 2011 IL App (3d) 090570, 354...