The opinion of the court was delivered by: ZAGEL
Eighteen civil service employee unions (the unions) have sued Governor Jim Edgar, the Illinois Educational Labor Relations Board, and the Chicago School Reform Board. The unions seek a declaration that particular sections of House Bill 206, 89th General Assembly (1995) (H.B. 206) unconstitutional under the United States and Illinois State Constitutions and they seek a preliminary and permanent injunction enjoining defendants from enforcing or acting under the Bill. Defendants have moved to dismiss this action pursuant to Rule 12(b)(6).
On September 1, 1993, plaintiff unions entered into a two-year collective bargaining agreement with the Chicago School Board. The unions functioned as the exclusive bargaining representatives of those non-teacher employees of the Chicago public school system. The agreements contained various provisions concerning the rights and responsibilities of both parties. Some of these established the Board's recognition of the unions as the sole and exclusive bargaining representative concerning wages, hours, benefits and conditions of employment, decisions to contract services from employees represented by unions, and decisions to discipline and discharge employees.
The two sides also agreed to begin renegotiation of the collective bargaining agreements no later than June 1, 1995. These negotiations proved fruitless, however, and all collective bargaining agreements terminated on August 31, 1995.
On May 30, 1995, the Illinois General Assembly, passed several legislative amendments that altered the structure and powers of the Chicago public school system. The General Assembly found that an educational crisis existed in the Chicago public school system, and thus created the Chicago School Reform Board of Trustees (Board) to bring both financial and educational stability to the system. The General Assembly granted the Board the power to increase the quality of educational services in Chicago, to develop a long-term financial plan that best used the available resources, to implement cost-saving measures in an effort to reduce excess spending, and to create an efficient and effective management system in the Chicago public school system. Along with these new powers, the new state law removed the unions' exclusive bargaining power with the school district.
The legislation changed the roles and powers of the principals and administrators in the system, and reorganized the individual school units with an increased emphasis on granting each local school the power to make appropriate changes on its own. The change in law affected the rights of teachers and non-teacher employees in the Chicago public school system. Principals were given the power to hire, fire, and discipline non-teacher employees without regard to civil service status. The law also eliminated the requirement of union consent before employees could waive certain provisions of their contract.
On a motion to dismiss under Rule 12(b)(6) for failure to state a claim, the Court accepts as true all well-pleaded factual allegations in the complaint and draws all reasonable inferences in favor of the plaintiff. Prince v. Rescorp Realty, 940 F.2d 1104, 1106 (7th Cir. 1991). A complaint should not be dismissed under Rule 12(b)(6) unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Leahy v. Board of Trustees of Community College Dist. No. 508, 912 F.2d 917, 921 (7th Cir. 1990), quoting Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).
The unions here contend that H.B. 206 impairs three different "contractual" relationships in violation of the Contract Clause of the United States Constitution. These include the existing and future collective bargaining agreements between the plaintiff unions and the Board, the union constitutions and bylaws and the implied civil service contracts between the Board and plaintiff unions.
The Contract Clause limits the power of the States to modify post hoc their own contracts as well as to change those between private parties. Yet the Contract Clause does not prohibit the States from repealing or amending statutes generally, or from enacting legislation with retroactive effects. United States Trust Co. of New York v. New Jersey, 431 U.S. 1, 17, 52 L. Ed. 2d 92, 97 S. Ct. 1505 (1977). Where it is relevant, the Clause applies only to laws with retrospective, not prospective, effect. Local Div. 589, Amalgamated Transit Union, AFL-CIO, CLC v. Commonwealth of Massachusetts, 666 F.2d 618, 637 (1st Cir. 1981).
There is a four-part inquiry under the Contract Clause. First, the new legislation must involve a contractual obligation. Second, the legislation must impair the obligation. Third, the impairment must be substantial. Fourth, in order to be valid, the impairment must be "reasonable and necessary to serve an important public purpose." Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411, 74 L. Ed. 2d 569, 103 S. Ct. 697 (1983). However, if there is no contract or the impairment is not substantial, the inquiry ends and there is no Contract Clause violation.
A. The unions say H.B. 206 impairs existing and future collective bargaining agreements. The Contract Clause is only implicated when an existing contract is substantially impaired. Trust Co., 431 U.S. at 17. All collective bargaining agreements that plaintiffs claim exist expired on August 31, 1995. Because the Contract Clause applies only to existing contracts, plaintiffs' claims regarding contracts which are no longer in effect are apparently moot. Id. The claims regarding future contracts do not state a claim since the Contract Clause does not apply to laws with prospective effect. Local Div. 589, 666 F.2d at 637.
But the unions counter that the expiration dates in the collective bargaining agreements do not by themselves render the dispute moot since an employer is required to maintain the status quo until new agreements are reached, thus the contracts did not expire on their expiration dates. To maintain the status quo is not to renew existing contracts after the expiration dates have passed. The duty to maintain the status quo, otherwise known as the unilateral change doctrine, is "derived from the statutory command to bargain in good faith." Litton Financial Printing Div., a Div. of Litton Business Systems, Inc. v. N.L.R.B., 501 U.S. 190, 203, 115 L. Ed. 2d 177, 111 S. Ct. 2215 (1991). Assuming this doctrine applies here, it is no help to plaintiffs. Under the unilateral change doctrine, most terms and conditions of employment are not subject to unilateral change by the employer after expiration of the contract in order to preserve the right to bargain. However, not all terms are subject to this doctrine, and those terms that are do not have force by virtue of the contract. Litton, 501 U.S. at 206. "An expired [collective bargaining agreement] . . . is no longer a legally enforceable document' . . . Section 301 of the LMRA, 29 U.S.C. § 185, does ...