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American Federation of State, County, and Municipal Employees, Council 31 v. The Illinois Labor Relations Board

Court of Appeals of Illinois, Fifth District

November 6, 2017

AMERICAN FEDERATION OF STATE, COUNTY, AND MUNICIPAL EMPLOYEES, COUNCIL 31, Petitioner,
v.
THE ILLINOIS LABOR RELATIONS BOARD and THE STATE OF ILLINOIS DEPARTMENT OF CENTRAL MANAGEMENT SERVICES, Respondents.

         Petition for Review of an Order of the Illinois Labor Relations Board, State Panel. No. S-CA-16-006

          Attorneys for Appellant Stephen A. Yokich, Josiah A. Groff, Dowd, Bloch, Bennett, Cervone, Auerbach & Yokich

          Attorneys for Appellees Thomas S. Bradley, Jeffrey S. Fowler, Lawrence Jay Weiner, Special Assistant Attorneys General, Laner Muchin, Ltd., (attorneys for Illinois Department of Central Management Services); Lisa Madigan, Attorney General, State of Illinois, David L. Franklin, Solicitor General, Frank H. Bieszczat, Assistant Attorney General, (attorneys for Illinois Labor Relations Board)

          CHAPMAN JUSTICE delivered the judgment of the court, with opinion. Justices Goldenhersh and Cates concurred in the judgment and opinion.

          OPINION

          CHAPMAN JUSTICE.

         ¶ 1 The American Federation of State, County, and Municipal Employees, Council 31 (AFSCME), and the State of Illinois Department of Central Management Services (CMS) have a lengthy collective bargaining relationship. Their most recent collective bargaining agreement (CBA), like all their previous agreements, contained provisions for employees to receive various types of increases in salary, including "step increases." Shortly before the CBA was set to expire, CMS announced that it would stop paying step increases after the CBA expired, and in fact did so. AFSCME filed an unfair labor charge, alleging that CMS's refusal to continue paying the increases constituted an unfair labor practice because it altered a term of employment and therefore failed to preserve the status quo between the parties during contract negotiations. The Illinois Labor Relations Board (ILRB or Board) dismissed the charge, finding that the status quo between the parties included payment of step increases only upon agreement of the parties. AFSCME filed a petition for review with this court, arguing that this finding was clearly erroneous. Both CMS and the ILRB argue that the decision was not clearly erroneous. CMS also argues that we may affirm the Board's decision for two additional reasons. It argues that the CBA was void under section 21.5 of the Illinois Public Labor Relations Act (Labor Relations Act) (5 ILCS 315/21.5 (West 2014)) and, as such, the statute negates any obligation to pay step increases. CMS also argues that any obligation to pay salary increases absent a legislative appropriation of funds to pay them is void under the Illinois Supreme Court's recent decision in State v. American Federation of State, County & Municipal Employees, Council 31, 2016 IL 118422 (State/CMS).

         ¶ 2 While this matter was pending, CMS filed motions asking this court to take judicial notice of unrelated proceedings involving the same parties. In those matters, all of which involved a single decision of the ILRB, AFSCME argued that the decision was not final and reviewable because the procedures followed by the ILRB did not comport with the Open Meetings Act (or Act) (5 ILCS 120/1 et seq. (West 2014)), a position CMS contends is inconsistent with AFSCME's invocation of our jurisdiction in this case. CMS filed an additional motion asking us to remand this matter to the ILRB to allow the ILRB to conduct additional proceedings that would eliminate any Open Meetings Act problem. Although none of the parties challenge our jurisdiction, the question of jurisdiction is implicated by these motions, and we must therefore address it. We find that we have jurisdiction, we grant CMS's motions to take judicial notice, we deny CMS's motion to remand, and we reverse the decision of the ILRB.

         ¶ 3 AFSCME and CMS have a lengthy history of collective bargaining dating back to the 1970s. Their most recent CBA was in effect from July 1, 2012, to June 30, 2015. The agreement includes provisions for various types of salary increases. Article 19, section 9, of the CBA provides for semiautomatic in-series promotions to fill vacancies. Article 32, section 4, provides that each employee must receive an increase to the next step within his or her pay grade "upon satisfactory completion of twelve months creditable service." Article 32, section 6(c), provides for "longevity pay increases" for employees who reach the top step and have 10 or more years of creditable service.

         ¶ 4 The parties began negotiating a successor agreement in February 2015 but did not come to an agreement before the CBA expired. On June 16, two weeks before the agreement was set to expire, CMS announced that it was proposing freezing or eliminating step increases, longevity increases, and the semiautomatic promotions in the new CBA and that it would not pay these increases during negotiations.

         ¶ 5 The parties entered into the first of three tolling agreements on June 27, 2015. In pertinent part, the tolling agreement provided that "The Parties disagree with respect to the Employer's obligation to continue step increases and semi-automatic promotion increases. The Agreement does not prejudice either Party's position on that issue." The agreement further provided that neither party waived any of its legal or contractual rights unless explicitly provided in the tolling agreement. The parties entered into two subsequent tolling agreements on July 29 and September 9, 2015, each of which contained language identical to the pertinent language in the first tolling agreement. (We note that CMS eventually withdrew its proposals to freeze or eliminate both longevity increases and semiautomatic promotions. Thus, only the step increases are at issue in this appeal.)

         ¶ 6 On July 1, 2015, CMS stopped paying step increases. On July 27, AFSCME filed an unfair labor charge, alleging that this constituted an unfair labor practice because it did not preserve the status quo between the parties during negotiations. On October 16, the Board issued a complaint for hearing. On November 6, it issued an amended complaint, which alleged as follows: On July 1, 2015, CMS stopped granting and paying step increases during contract negotiations without an agreement from the union. The parties had not reached an impasse. The complaint alleged that this violated section 10(a)(4) of the Labor Relations Act (5 ILCS 315/10(a)(4) (West 2014)) because it was a unilateral change that did not maintain the status quo.

         ¶ 7 The matter was assigned to administrative law judge (ALJ) Sarah R. Kerley. She held a hearing in December 2015 and issued her recommended decision and order on February 3, 2016. Kerley's recommended decision contained detailed findings of fact. She found that AFSCME began representing two of the eight bargaining units involved in this dispute in 1974 and eventually expanded its representation to include all eight. She found that the parties agreed to step increases in every CBA they entered into, although the specific parameters of those increases changed over the years. The step increases and longevity increases go into effect on the anniversary dates of the individual employees receiving them.

         ¶ 8 Kerley found that the parties were nearly always able to complete negotiations for a new CBA before the expiration of their previous agreement. Prior to the negotiations at issue in this case, negotiations continued past the expiration date of their CBA only three times. The first time was in 1983. That year, the parties signed a tolling agreement in which they agreed that the step increases would be frozen temporarily. The CBA they ultimately signed required that step increases be paid retroactively to the employees who did not receive them during the freeze.[1]

         ¶ 9 The second time the parties did not agree to a new contract before their old contract expired was in 2008. That time, they executed a tolling agreement which provided that all terms of the previous CBA would remain in effect, including the step increases.

         ¶ 10 The third time negotiations ran past the expiration date of the previous CBA was in 2012. Kerley found that during this period, the parties could not agree concerning the interim handling of the step increases and longevity increases. They signed two tolling agreements, each of which expressly noted the parties' disagreement over the increases. CMS refused to sign a third tolling agreement, but notified the union that it would continue to honor all terms of the expired CBA except payment of the step increases and longevity increases. Kerley found that CMS continued to pay the salary increases associated with semiautomatic promotions throughout the hiatus between CBAs, but it did not pay the step increases or longevity increases. She noted that AFSCME filed two grievances and an unfair labor charge challenging this practice. However, the parties settled the grievances, and AFSCME withdrew the unfair labor charge in August 2013 while it was still in the investigatory stage. The parties' 2012-15 agreement provided for retroactive payment of the step increases and longevity increases. The parties also stipulated that CMS paid the step increases throughout the first six months of 2015.

¶ 11 Kerley next considered the current negotiations. She found that CMS began processing and paying the longevity increases and semiautomatic promotions after withdrawing its proposals to eliminate them. She found, however, that CMS had not paid the step increases since July 1, 2015. The parties stipulated that they had not reached an impasse.

         ¶ 12 In her analysis, Kerley first considered the applicability of section 21.5 of the Labor Relations Act. That statute provides that (1) a CBA between a public employer and a labor organization may not expire after June 30 of the year in which the terms of the Governor and other executive branch officers begin (5 ILCS 315/21.5(a) (West 2014)) and (2) a CBA may not require any salary increases in the period between the date on which the Governor and other executive branch officers take office and the date on which the contract terminates (5 ILCS 315/21.5(b) (West 2014)). Kerley noted that the parties' most recent CBA violated the second prohibition because it required longevity and step increases to go into effect on the anniversary dates of employees with anniversary dates between January 12, 2015, the day the new Governor took office, and June 30, 2015. She therefore found that the CBA was rendered null and void pursuant to subsection (c). 5 ILCS 315/21.5(c) (West 2014). However, Kerley also found that the obligation to maintain the status quo exists independent of the CBA. She thus rejected CMS's argument that section 21.5 relieved it of any obligation it might have to pay the step increases in order to maintain the status quo.

         ¶ 13 Kerley concluded, however, that the status quo between the parties did not include payment of the step increases during hiatuses between contracts. She first noted that the status quo is not determined by the provisions in the most recent CBA in all cases. Kerley then examined all four hiatuses between contracts-including the period at issue after expiration of the 2012-15 contract. She pointed out that CMS did not pay the step increases during three of the four periods. She acknowledged that the step increases were paid after the parties' CBA expired in 2008; however, she emphasized that the parties agreed that they would be paid. Thus, she reasoned, the step increases had never been paid without an agreement that they would be paid.

         ¶ 14 Kerley further found that the hiatus between the expiration of the 2008-12 agreement and the eventual signing of their 2012-15 agreement was the "most factually similar" time period to the instant case. Emphasizing that the step increases were not paid during that period, she further found that nothing had changed since 2012 "that would cause employees to reasonably expect anything different to happen in 2015 than what occurred in 2012." Kerley concluded that the status quo did not include payment of the step increases "absent an agreement to do so." She thus recommended dismissal of the unfair labor charge.

         ¶ 15 On March 16, 2016, AFSCME filed exceptions to the ALJ's decision with the ILRB. AFSCME argued that the ALJ erred in failing to consider or give any weight to various factors, including the following: (1) the fact that the 2008 tolling agreement included step increases, (2) the fact that the nonpayment of step increases after the 2008-12 CBA expired was the subject of two grievances, which were settled, and (3) the parties' 40-year history of including step increases in their agreements. AFSCME also argued that she erred in failing to find that employees in the bargaining units were paid step increases pursuant to the state's pay plan even before unionization. On March 31, CMS filed cross-exceptions challenging Kerley's interpretation of section 21.5.

¶ 16 On May 10, 2016, the State Panel of the ILRB voted to affirm the recommended decision of the ALJ. The vote took place at a public meeting. On May 26, the Board issued its written decision. The decision sets forth the procedural history of the case. It then states, "After reviewing the record, exceptions, cross-exceptions[, ] and responses, we hereby affirm the Recommended Decision and Order, as written, for the reasons set forth by the Administrative Law Judge." AFSCME filed a petition for review with this court on June 3, 2016. See 5 ILCS 315/11(e) (West 2014).

         ¶ 17 On December 6, 2016, CMS filed a motion asking us to take judicial notice of an appeal pending in the Fourth District involving the same parties. Two days later, CMS filed another motion asking us to take judicial notice of two additional proceedings involving the same parties-an appeal in the First District and a civil action filed by AFSCME in the Cook County circuit court. In those matters, all of which involved a single decision of the ILRB, AFSCME asserted that the decision was not a valid final administrative decision because the ILRB's procedures violated the Open Meetings Act. CMS argued in the motions it filed in this case that because the ILRB followed the same procedures in this case that it followed there, AFSCME's position in those proceedings is inconsistent with its invocation of our jurisdiction in this case.

         ¶ 18 On December 21, 2016, CMS filed a motion asking us to remand this matter to the ILRB without considering the merits. CMS took no position on the Open Meetings Act argument raised by AFSCME in the other proceedings, but it argued that, in light of the unsettled Open Meetings Act question, the interest of judicial economy would be best served by remanding the matter to the ILRB to allow it to hold additional proceedings that would eliminate any Open Meetings Act problem. Both AFSCME and the ILRB opposed the motion to remand.

         ¶ 19 We heard oral argument in this case in April 2017. At that time, we asked all three parties to provide us with supplemental arguments on the questions of jurisdiction and CMS's motion for remand. We note that none of the parties have argued that we lack jurisdiction. Nevertheless, we have an obligation to independently consider our jurisdiction, even if it is not challenged by the parties. See Fligelman v. City of Chicago, 264 ...


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