Matthews v. Chi. Transit Auth.

• Citation: 9 N.E.3d 1163,381 Ill.Dec. 44,2014 IL App (1st) 123348
• Decision Date: 25 April 2014
• Docket Number: No. 1–12–3348.,1–12–3348.
• Parties: Jerry MATTHEWS; Jerry Williams; Tommy Sams; Cynthia Boyne; and Charles Brown, Individually and on Behalf of All Others Similarly Situated, Plaintiffs–Appellants, v. CHICAGO TRANSIT AUTHORITY; Retirement Plan for Chicago Transit Authority Employees; The Board of Trustees of the Retirement Plan for Chicago Transit Authority Employees; Retiree Health Care Trust; and the Board of Trustees of the Retiree Health Care Trust, Defendants–Appellees.
• Court: United States Appellate Court of Illinois

2014 IL App (1st) 123348

9 N.E.3d 1163

381 Ill.Dec. 44

Jerry MATTHEWS; Jerry Williams; Tommy Sams; Cynthia Boyne; and Charles Brown, Individually and on Behalf of All Others Similarly Situated, Plaintiffs–Appellants,

v.CHICAGO TRANSIT AUTHORITY; Retirement Plan for Chicago Transit Authority Employees; The Board of Trustees of the Retirement Plan for Chicago Transit Authority Employees; Retiree Health Care Trust; and the Board of Trustees of the Retiree Health Care Trust, Defendants–Appellees.

No. 1–12–3348.

Appellate Court of Illinois, First District, Fifth Division.

Modified opinion filed April 25, 2014.

J. Peter Dowd, Justin J. Lannoye, George A. Luscombe III, Dowd, Bloch & Bennett, Chicago, for appellants.

Karen Seimetz, Stephen L. Wood, Michele D. Morris, Chicago Transit Authority, Chicago, for appellee Chicago Transit Authority.

Richard W. Burke, Aaron H. Stanton, Burke, Warren, Mackay & Serritella, P.C., Chicago, for other appellees.

OPINION

Presiding Justice GORDON delivered the judgment of the court, with opinion.

¶ 1 The instant appeal arises from the dismissal of plaintiffs' class action suit pursuant to sections 2–615 and 2–619 of the Code of Civil Procedure (the Code) (735 ILCS 5/2–615, 2–619 (West 2010)). Plaintiffs' complaint alleges that defendants substantially diminished and impaired the vested retirement health care benefits of plaintiffs, current and retired employees of defendant Chicago Transit Authority (the CTA). The trial court dismissed the case, finding: (1) that the plaintiffs who were current CTA employees lacked standing; (2) that none of the plaintiffs could state a claim against the CTA because it had no responsibility for retiree health care benefits; and (3) that none of the plaintiffs could state a claim against any of the defendants because plaintiffs did not have a vested right to retiree health care benefits. Plaintiffs appeal, and we affirm in part and reverse in part.

¶ 2 BACKGROUND ¹

¶ 3 I. Parties

¶ 4 A. Plaintiffs

¶ 5 The individual plaintiffs are current and former employees of the CTA, all of whom began working for the CTA prior to 2001 and all of whom participated in the Retirement Plan for Chicago Transit Authority Employees. Named plaintiffs Jerry Williams, Cynthia Boyne, and Charles Brown are retired, while plaintiffs Jerry Matthews and Tommy Sams were currently employed by the CTA as of April 20, 2011, the filing date of the class action complaint. Both Matthews and Sams are union members: Matthews is a member of Amalgamated Transit Union Local 308 (Local 308) and Sams is a member of Amalgamated Transit Union Local 241 (Local 241).

¶ 6 The class action complaint also sets forth two classes of plaintiffs. Class I consists of CTA employees hired prior to September 5, 2001, who retired before January 1, 2007. Class II consists of CTA employees hired prior to September 5, 2001, who either retired after January 1, 2007, or remain active employees. Each class consists of more than 7,000 people.

¶ 7 B. Defendants

¶ 8 1. The CTA

¶ 9 Defendant CTA is a “political subdivision, body politic and municipal corporation” created in 1945 by the Metropolitan Transit Authority Act (70 ILCS 3605/3 (West 2010)).

¶ 10 2. Retirement Plan Defendants

¶ 11 Defendant Retirement Plan for Chicago Transit Authority Employees is the entity responsible under section 22–101 of the Pension Code (40 ILCS 5/22–101 (West 2010)) for providing specified retirement benefits to retired CTA employees, which are set forth in an agreement entitled “ Retirement Plan for Chicago Transit Authority Employees.” The terminology is confusing because both the written agreement and the entity have the same name; however, the parties use various labels to attempt to minimize confusion. We will adopt the terminology used by plaintiffs and will refer to the entity as the “Retirement Plan” and the written agreement as the “ retirement plan agreement.”

¶ 12 Defendant Board of Trustees of the Retirement Plan for Chicago Transit Authority Employees (Retirement Plan Board) was established on January 18, 2008, by section 22–101(b) of the Pension Code (40 ILCS 5/22–101(b) (West 2010)) to administer the Retirement Plan. The Retirement Plan Board is the successor to the Retirement Allowance Committee that administered the Retirement Plan prior to January 18, 2008. While the Retirement Plan is the entity that is responsible for providing the benefits, as a practical matter, the Retirement Plan Board is the group of individuals that administers those benefits.

¶ 13 3. Health Trust Defendants

¶ 14 Defendant Retiree Health Care Trust (Health Trust) was established on January 18, 2008, by section 22–101B(b) of the Pension Code (40 ILCS 5/22–101B(b) (West 2010)) to provide health care benefits to CTA retirees.

¶ 15 Defendant Board of Trustees of the Retiree Health Care Trust (Health Trust Board) was established on January 18, 2008, by section 22–101B(b)(1) of the Pension Code (40 ILCS 5/22–101B(b)(1) (West 2010)) to administer the Health Trust. As with the Retirement Plan, while the Health Trust is the entity that is responsible for providing the benefits, as a practical matter, the Health Trust Board is the group of individuals that administers those benefits.

¶ 16 II. Complaint

¶ 17 On April 20, 2011, the named plaintiffs filed a nine-count class action complaint against defendants. The focus of the complaint was the fact that, after years of fully paid health care benefits for retired CTA employees, plaintiffs are now being asked to pay for a portion of their health care benefits and are no longer entitled to the same level of health care coverage as active CTA employees. The complaint alleges that these changes occurred as a result of amendments to the Pension Code made by Public Act 95–0708 (effective January 18, 2008) (the 2008 Act). The complaint alleges that, in charging class members for their retiree health care benefits, defendants diminished those benefits, which plaintiffs claimed (1) was a breach of defendants' contracts with class members, (2) constituted a violation of the Illinois Constitution, and (3) was a breach of defendants' fiduciary duties to class members.

¶ 18 Counts I and V of the complaint, against all defendants, allege a violation of article XIII, section 5, of the Illinois Constitution based on the claim that the retiree health care benefits constitute an “ ‘enforceable contractual relation, the benefits of which shall not be diminished or impaired’ ” (quoting Ill. Const. 1970, art. III, § 5).

¶ 19 Counts II and VI of the complaint, against the CTA and the Retirement Plan, are for breach of contract, based on the collective bargaining agreements (CBAs) entered into between the CTA and the unions representing plaintiffs that included the retirees' health care benefits. The complaint alleges that each CBA is a contract and that, by completing their service requirements and fulfilling their employment obligations, the class members performed their obligations under each CBA. The complaint further alleges that the CTA and the Retirement Plan breached the CBAs by (1) requiring class members to pay for a portion of their health care coverage, (2) reducing the level of benefits available, and (3) changing the benefits of already-retired CTA employees in a manner unauthorized by the CBAs.

¶ 20 Counts III and VII of the complaint, against the CTA and the Retirement Plan, allege promissory estoppel. The complaint alleges that the CTA and the Retirement Plan made a number of promises to class members, including: (1) that class members would receive fully-paid retiree health care benefits, (2) that those benefits would be identical to those of active CTA employees, (3) that those benefits would be changed only in a manner prescribed in a CBA, and (4) that those benefits would not be changed without consideration. The complaint alleges that the class members relied on these promises to their detriment by accepting employment at the CTA, working at the CTA, and retiring from the CTA, and further alleges that their reliance was expected and foreseeable.

¶ 21 Counts IV and VIII of the complaint, against the Retirement Plan Board and the Health Trust Board, allege breach of fiduciary duty. The complaint alleges that both defendants owed the class members fiduciary duties, which were breached, causing injury to the class members.

¶ 22 Count IX of the complaint, against all defendants, seeks a declaratory judgment concerning (1) plaintiffs' right to collective bargaining for wage and benefits levels, including potential payroll-based contributions from the CTA for retiree health care benefits and the right to have equal representation on the Retirement Plan Board and the Health Trust Board; and (2) the Health Trust Board's right to tax active CTA employees and dictate the levels of coverage available for the retiree health care benefit without considering CBAs.

¶ 23 In their prayer for relief, plaintiffs request: (1) a certification of Classes I and II; (2) a declaration that certain parts of the 2008 Act are void and unenforceable because they violate article XIII, section 5 of the Illinois Constitution and the Regional Transportation Authority Act (the RTA Act) (70 ILCS 3615/1.01 et seq. (West 2010)); (3) a declaration that a 2007 arbitration award is “null and void” as to plaintiffs because the terms of the arbitration award were not adopted in the 2008 Act; (4) a preliminary and permanent injunction against enforcement of certain parts of the 2008 Act and a requirement that defendants reinstate the rights of the class members as they existed prior to the enactment of the 2008 Act, including the right of retired CTA employees to fully paid health care benefits at the same level as those enjoyed by active CTA employees; and (5) an award of compensatory damages to the class members for breach of contract and breach of fiduciary duty, as well as court costs and attorney fees.

¶ 24 III. Collective Bargaining...