Underwood v. City of Chicago

2020 IL App (1st) 182180

SIXTH DIVISION
June 30, 2020

IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT

Nos. 1-18-2180 & 1-19-0358 (cons.)

MICHAEL W. UNDERWOOD, JOSEPH M. VUICH, )
RAYMOND SCACCHITTI, ROBERT McNULTY, JOHN E. )
DORN, WILLIAM J. SELKE, JANIECE R. ARCHER, DENNIS )
MUSHOL, RICHARD AGUINAGA, JAMES SANDOW, ) Appeal from the
CATHERINE A. SANDOW, MARIE JOHNSTON, and 338 ) Circuit Court of
OTHER NAMED PLAINTIFFS LISTED IN EXHIBIT 23, ) Cook County.
)
Plaintiffs-Appellants, )
)
v. ) No. 13 CH 17450
)
THE CITY OF CHICAGO, a Municipal Corporation, TRUSTEES )
OF THE POLICEMEN’S ANNUITY AND BENEFIT FUND OF )
CHICAGO; TRUSTEES OF THE FIREMEN’S ANNUITY AND ) Honorable
BENEFIT FUND OF CHICAGO; TRUSTEES OF THE ) Neil H. Cohen,
MUNICIPAL EMPLOYEES’ ANNUITY AND BENEFIT FUND ) Judge Presiding.
OF CHICAGO; and TRUSTEES OF THE LABORERS’ & )
RETIREMENT BOARD EMPLOYEES’ ANNUITY & BENEFIT )
FUND OF CHICAGO; )

Defendants-Appellees.

PRESIDING JUSTICE MIKVA delivered the judgment of the court, with opinion.
Justices Cunningham and Connors concurred in the judgment and opinion.

OPINION

¶1 In this latest installment of decades-long pension litigation, plaintiffs claim that each of the

defendant funds has an obligation, set out in the 1983 and 1985 amendments to the Illinois Pension

Code (40 ILCS 5/1-101 et seq. (West 2018)) and protected by our constitution’s pension protection

clause, to select and establish a healthcare plan for its annuitants to participate in. The circuit court
Nos. 1-18-2180 and 1-19-0358 (cons.)

denied plaintiffs’ motion to compel, on the basis that the existence of such a duty was incompatible

with our decision in Underwood v. City of Chicago, 2017 IL App (1st) 162356 (Underwood II).

For the reasons that follow, we agree with plaintiffs that this issue was not decided in Underwood

II and its consideration by the circuit court is thus not barred by the law-of-the case doctrine.

¶2 We also agree with plaintiffs that, for purposes of establishing eligibility for fixed-rate

healthcare subsidies provided by the 1983 and 1985 amendments, the “execution date” of the 2003

class-action settlement agreement finally resolving related pension litigation was not the date the

agreement was signed but the date, after having been approved by the circuit court, that it became

an enforceable provision of the Pension Code.

¶3 Although plaintiffs purport to bring this interlocutory appeal pursuant to Illinois Supreme

Court Rule 304(a) (eff. March 8, 2016), which governs appeals from final orders disposing of one

or more but fewer than all of the parties or claims in a case, it is clear to us that both the parties

and the circuit court intended for the appeal to be narrowly confined to these two discreet issues.

Properly viewed, the appeal is not one challenging a partial judgment, but rather one seeking

answers to certified questions under Rule 308 (eff. July 1, 2017). Having exercised our discretion

to hear the appeal on this basis and now having answered the questions, we vacate those portions

of the circuit court’s orders to the contrary and remand for further proceedings consistent with this

opinion.

¶4 I. BACKGROUND

¶5 The lengthy history of this litigation has been summarized numerous times, most recently

in this court’s June 29, 2017, opinion affirming in part and reversing in part the circuit court’s

dismissal of most of plaintiffs’ claims. Underwood II, 2017 IL App (1st) 162356. We repeat here

only those facts necessary for consideration of the present appeal.

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¶6 A. The 1983 and 1985 Pension Code Amendments

¶7 The City of Chicago (City) has historically provided its retirees with fixed-rate healthcare

subsidies funded by city taxes. The City agreed to provide such subsidies to retired Chicago police

officers and firefighters in 1983 and the Pension Code was amended to include these subsidies (see

Pub. Act 82-1044, § 1 (eff. Jan. 12, 1983) (adding Ill. Rev. Stat. 1983, ch. 108½, ¶ 6-164.2,

codified as amended at 40 ILCS 5/6-164.2 (firemen), and Ill. Rev. Stat. 1983, ch. 108½, ¶ 5-167.5,

codified as amended at 40 ILCS 5/5-167.5 (policemen) (providing $55 per month for non-

Medicare-eligible retirees and $21 per month for Medicare-eligible retirees)) and to retired

municipal employees, laborers, and retirement board employees in 1985 (see Pub. Act 84-159, § 1

(eff. Aug. 16, 1985) (adding Ill. Rev. Stat. 1985, ch. 108½, ¶ 11-160.1, codified as amended at 40

ILCS 5/11-160.1 (providing $25 per month to retired laborers)); Pub. Act 84-23, § 1 (eff. July 18,

1985) (adding Ill. Rev. Stat. 1985, ch. 108½, ¶ 8-164.1, codified as amended at 40 ILCS 5/8-164.1

(providing $25 per month to retired municipal employees))). The legislation contemplated that

each of the funds established for these employees (the Policemen’s Annuity and Benefit Fund of

Chicago, Firemen’s Annuity and Benefit Fund of Chicago, Municipal Employees’ Annuity and

Benefit Fund of Chicago, and Laborers’ & Retirement Board Employees’ Annuity & Benefit Fund

of Chicago (collectively, the Funds)) would contract with an insurance carrier to provide a

healthcare plan for its retirees and would use the monthly subsidies provided by the City toward

the premiums for such coverage. To the extent that health insurance premiums exceeded the

monthly subsidies, the excess was to be deducted from a retiree’s monthly annuity unless that

individual elected to terminate the coverage.

¶8 B. The Korshak Litigation and Settlements

¶9 In 1987, the City announced that it would stop providing the subsidies beginning on

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January 1, 1988, and filed a lawsuit seeking a declaration that it had no legal obligation to continue

doing so (City of Chicago v. Korshak, No. 87 CH 10134 (Cir. Ct. Cook County)) (Korshak

Litigation). The Funds counterclaimed, asserting that the City was required to continue providing

the subsidies.

¶ 10 Before the merits of the case were reached, however, the City and the Funds settled. The

terms of the settlement, which were adopted by the legislature and made part of the Pension Code

(see Pub. Act 86-273, § 1 (eff. Aug. 23, 1989) (amending Ill. Rev. Stat. 1989, ch. 108½, ¶ 5-167.5,

codified as amended at 40 ILCS 5/5-167.5)), provided that the Funds would continue to subsidize

retirees’ healthcare premiums—at an increased amount—for an additional 10 years or through the

end of 1997. The City in turn agreed to pay 50% of the cost of the retirees’ healthcare coverage

during this time. The settlement was an interim measure intended to give the parties time to reach

a more permanent resolution of their dispute. They agreed to continue negotiating in good faith

and if they failed to reach such a resolution at the end of the 10-year period, the parties would be

“restored to the same legal status which existed as of October 19, 1987,” when the litigation began.

The corresponding amendments to the Pension Code also made clear that these benefits were time-

limited and would “terminate on December 31, 1997.” See Pub. Act 86-273, § 1 (eff. Aug. 23,

1989) (amending Ill. Rev. Stat. 1989, ch. 108½, ¶ 5-167.5).

¶ 11 In 1997, but before the terms of this first settlement expired, the parties reached a second

interim settlement, with similar terms, that was to last until June 30, 2003.

¶ 12 On April 4, 2003, a final settlement agreement was reached in the Korshak Litigation. The

Funds agreed to make monthly premium contributions of $85 and $55 (depending on Medicare

eligibility) from July 1, 2003, until June 30, 2008, with those contributions increasing to $95 and

$65, respectively, from July 1, 2008, to June 30, 2013. The City agreed to pay 55% of the

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healthcare costs, for life, of individuals who retired on or before June 30, 2005, and lesser

percentages for those who retired after that date. The agreement also provided that additional

healthcare benefits not provided for in the settlement would be offered and could be terminated by

the City “at its sole discretion.” In a letter dated May 15, 2013, the City made clear to plaintiffs

that it would continue to provide lifetime healthcare subsidies for those who retired before August

23, 1989, but that benefits for those retiring on or after that date would be phased out entirely by

early 2017.

¶ 13 C. Underwood II

¶ 14 Plaintiffs in the present action are past or present City employees who alleged improper

diminution of pension benefits under the Illinois Constitution, breach of contract, estoppel,

impairment of contract, and denial of equal protection. These claims were brought on behalf of

four subclasses: (1) those who retired before December 31, 1987 (the Korshak subclass), (2) those

who retired between January 1, 1988, and August 23, 1989 (the Window subclass), (3) those who

retired on or after August 23, 1989 (subclass three), and (4) those who were hired after August 23,

1989 (subclass four).

¶ 15 The City filed a motion to dismiss the claims under section 2-615 of the Code of Civil

Procedure (735 ILCS 5/2-615 (West 2012)), and the circuit court largely granted that motion. The

court concluded that plaintiffs could not state a claim for benefits based on the 1987, 1997, or 2003

amendments to the Pension Code because the settlements giving rise to those amendments were

stopgap measures providing only time-limited benefits. However, the circuit court concluded that

the Korshak and Window subclasses, as well as subclass three, could state a claim based on the

1983 and 1985 amendments to the Pension Code, which contained no such limitations. The circuit

court denied the remaining claims, denied a renewed motion for injunctive relief filed by the

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retirees, and found, pursuant to Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016), that there

was no just reason to delay an appeal of its rulings.

¶ 16 On appeal, this court affirmed the circuit court’s ruling that the settlement agreements were

temporary measures that provided only time-limited benefits and that the 1983 and 1985

amendments to the Pension Code protected the right to a fixed-rate subsidy, not a particular

quantum of buying power or level of healthcare services. We reversed the circuit court’s order in

one respect, holding that the right to such subsidies also extended to members of subclass four,

who began participating before the 2003 settlement. Underwood II, 2017 IL App (1st) 162356,

¶ 62.

¶ 17 D. Proceedings on Remand

¶ 18 On remand, plaintiffs filed a fourth amended complaint that the Funds moved to strike on

the basis that it reasserted claims we held were properly dismissed in Underwood II. Plaintiffs

simultaneously filed a motion to compel each of the Funds to provide its annuitants with a

healthcare plan. On September 12, 2018, the circuit court struck with prejudice all but count I (for

a declaration of rights protected by the pension protection clause) of the fourth amended complaint

as improperly repleaded claims barred by the law-of-the-case doctrine. It determined that, to the

extent plaintiffs argued in their motion to compel that the 1983 and 1985 amendments required the

Funds to provide retirees with more than the fixed-rate premium subsidies funded by city taxes,

that issue had also been decided in Underwood II. At plaintiffs’ request, and citing Rule 304(a),

the circuit court issued an order finding that there was no just reason to delay an appeal of that

ruling.

¶ 19 Following briefing on the issue, on January 16, 2019, the circuit court also held a hearing

to address plaintiffs’ argument that the “execution date” of the 2003 settlement—the cutoff date

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for entitlement to the fixed-rate subsidies—was not a hired-by date before April 4, 2003, when the

last party signed the 2003 settlement, but rather June 16, 2003, when the court overseeing the

Korshak Litigation approved the settlement. The circuit court rejected this argument, concluding

that the proper cutoff date was indeed April 4, 2003, and subsequently granted plaintiffs’ request

for a Rule 304(a) finding making that ruling also immediately appealable.

¶ 20 II. JURISDICTION AND SCOPE OF APPEAL

¶ 21 On September 28, 2018, and February 20, 2019, respectively, the circuit court made written

findings that there was no just reason to delay enforcement or appeal of the two interlocutory

rulings challenged in these consolidated appeals: (1) the portion of the circuit court’s September

12, 2018, order denying plaintiffs’ motion to compel the Funds to provide their annuitants with a

healthcare plan as barred by this court’s decision in Underwood II and (2) the circuit court’s

finding in its January 16, 2019, order that the eligibility cutoff for retirees entitled to receive the

fixed-rate subsidies specified in the 1983 and 1985 amendments to the Pension Code is a hired-by

date of April 4, 2003. Plaintiffs filed timely notices of appeal from those rulings on October 10,

2018, and February 22, 2019, and we granted a motion to consolidate the appeals on March 15,

2019.

¶ 22 Plaintiffs maintain—and no defendant has argued otherwise—that we have jurisdiction

over these consolidated appeals under Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016),

governing appeals from judgments as to fewer than all parties or claims. Rule 304(a), however,

“requires full resolution of an entire claim, separable from claims remaining before the trial court.”

Davis v. Loftus, 334 Ill. App. 3d 761, 769 (2002). Contrary to the requirements of 304(a), the

language the circuit court employed in its orders makes clear that it intended for us to review only

two discreet issues, the resolution of which—alone or together—would not fully resolve any one

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claim in this case.

¶ 23 In its September 28, 2018, order, for example, the court stated:

“Plaintiffs’ Motion for the Court to enter Rule 304(a) language addressing the Court’s

September 12, 2018 Memorandum and Order, specifically limited to the Court’s finding

that the Police, Fire, Municipal and Laborers’ City of Chicago Pension Funds have no

obligation to provide healthcare plans for their annuitants under the 1983 amendments to

the Fire and Police Pension Fund articles and the 1985 amendments to the Laborers’ and

Municipal Fund articles, is granted and this Court finds that there is no just reason for

delaying appeal limited solely to that holding.” (Emphases added.)

The “finding” or “holding” referred to was the circuit court’s determination that a duty on the part

of each of the Funds to provide its annuitants with a healthcare plan was inconsistent with and

barred by our holding in Underwood II.

¶ 24 The 304(a) language in the court’s February 20, 2019, order was similarly limited to a

single issue, stating:

“The court grants Rule 304(a) findings that there is no just cause for delaying either

enforcement or appeal that the ‘execution date’ of the 2003 settlement Agreement in City

of Chicago v. Korshak intended by the Appellate Court [in Underwood II] is April 4, 2003.”

¶ 25 Rule 308, and not Rule 304(a), provides the proper basis for an interlocutory appeal of

discreet issues like these. That rule provides as follows:

“When the trial court, in making an interlocutory order not otherwise appealable, finds that

the order involves a question of law as to which there is substantial ground for difference

of opinion and that an immediate appeal from the order may materially advance the

ultimate termination of the litigation, the court shall so state in writing, identifying the

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question of law involved.” Ill. S. Ct. R. 308 (eff. July 1, 2017).

¶ 26 The limited nature of this appeal did not become clear until both of these consolidated cases

were fully briefed and oral argument was heard. Where it is clear that a circuit court intended to

permit a party to take an appeal, not from a judgment disposing of one or more specific claims,

but from a ruling on a discreet issue—and where, in our discretion, we have concluded that

interlocutory appellate review of that question is proper—we have treated an appeal purportedly

brought under Rule 304(a) as one more properly brought under Rule 308. See Hutton v.

Consolidated Grain and Barge Co., 341 Ill. App. 3d 401, 404 (2003). We find it appropriate to do

so here. To do otherwise in this case would be a large waste of legal and judicial resources and

would only further prolong this overly protracted litigation.

¶ 27 Plaintiffs also sought and were denied an interlocutory appeal from a third ruling—that the

Korshak and Window subclasses, for whose members the City has committed to cover 55% of

their healthcare plan costs for life, are not additionally entitled to the fixed-rate healthcare subsidies

provided for in the 1983 and 1985 amendments to the Pension Code. Plaintiffs insist that—

pursuant to our powers under Illinois Supreme Court Rule 366(a) (eff. Feb. 1, 1994)—we may

consider this issue without a 304(a) finding or any other independent basis for appellate

jurisdiction. We disagree.

¶ 28 Rule 366(a) provides, in relevant part, that

“[i]n all appeals the reviewing court may, in its discretion, and on such terms as it deems

just,

(1) exercise all or any of the powers of amendment of the trial court;

***

(5) enter any judgment and make any order that ought to have been given or made,

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and make any other and further orders and grant any relief *** that the case may require.”

Id.

¶ 29 In support of their argument that this rule permits us to simply disregard the circuit court’s

decision not to grant their request for interlocutory review, plaintiffs cite Schrock v. Shoemaker,

159 Ill. 2d 533, 536 (1994), a case that involved a certified question under Illinois Supreme Court

Rule 308 (eff. Feb. 1, 1994). In Schrock, our supreme court invoked its powers under Illinois

Supreme Court Rule 366(a)(5) (eff. Feb. 1, 1994), “[i]n the interest of judicial economy and to

reach an equitable result,” to “go beyond the certified questions and provide a solution to all

questions raised in [the] appeal.” Schrock, 159 Ill. 2d at 537. Noting that Rule 366 also applies to

the appellate court, we have, in at least one case, extended our review beyond the strict boundaries

of a Rule 308 certified question. See Billerbeck v. Caterpillar Tractor Co., 292 Ill. App. 3d 350,

357 (1997). Nothing in these authorities, however, persuades us that we have the power, under

Rule 366 or otherwise, to disregard a circuit court’s clearly articulated decision to deny a request

for interlocutory review or to otherwise expand the scope of our appellate powers in this situation.

¶ 30 Whether because they recognize the weakness of their argument or because they hope that

this court will not scrutinize too closely the scope of its jurisdiction in these consolidated appeals,

plaintiffs make this argument not in the statement of jurisdiction required by Illinois Supreme

Court Rule 341(h)(4)(i) (eff. May 25, 2018) but in a footnote near the very end of their brief. We

could refuse to consider it on this basis alone, pursuant to our repeated admonition that

“[s]ubstantive arguments may not be made in footnotes.” Technology Solutions Co. v. Northrup

Grumman Corp., 356 Ill. App. 3d 380, 382 (2005). We instead consider but reject plaintiffs’

argument and will address only the two issues that it is clear the circuit court intended for this court

to review.

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¶ 31 III. ANALYSIS

¶ 32 A. The Funds’ Obligations Under the 1983 and 1985 Amendments

¶ 33 Plaintiffs first challenge the circuit court’s order denying their motion to compel as barred

by this court’s holding in Underwood II. In fact, part of plaintiffs’ claim is that Underwood II

actually decided this issue in their favor. Plaintiffs’ position has been, and continues to be, that the

Funds are obligated by article XIII, section 5, of the Illinois Constitution (Ill. Const. 1970, art.

XIII, § 5), known as the pension protection clause, and the plain language of the 1983 and 1985

amendments to the Pension Code to “provide” a lifetime healthcare coverage plan for retired City

employees to participate in.

¶ 34 The 1983 amendments for the firemen and policemen funds stated as follows:

“(b) The Board shall contract with one or more carriers to provide group health

insurance for all annuitants. Such group health insurance shall provide for protection

against the financial costs of healthcare expenses incurred in and out of hospital including

basic hospital-surgical-medical coverages and major medical coverage. The program may

include such supplemental coverages as out-patient diagnostic X-ray and laboratory

expenses, prescription drugs and similar group benefits.

***

(d) The Board shall pay the premiums for such health insurance for each annuitant

with funds provided as follows:

The basic monthly premium for each annuitant shall be contributed by the city from

the tax levy prescribed in [separate provisions for policemen and firemen], up to a

maximum of $55 per month if the annuitant is not qualified to receive medicare benefits,

or up to a maximum of $21 per month if the annuitant is qualified to receive medicare

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benefits.

If the basic monthly premium exceeds the maximum amount to be contributed by

the city on his behalf, such excess shall be deducted by the Board from the annuitant’s

monthly annuity, unless the annuitant elects to terminate his coverage under this Section,

which he may do at any time. The full cost of any optional coverage elected by the annuitant

shall be deducted from his monthly annuity.” (Emphasis added.) Pub. Act 82-1044, § 1

(eff. Jan. 12, 1983) (adding Ill. Rev. Stat. 1983, ch. 108½, ¶¶ 5-167.5, 6-164.2, codified as

amended at 40 ILCS 5/5-167.5 (policemen) and 40 ILCS 5/6-164.2 (firemen)).

¶ 35 And the 1985 amendments for laborers and municipal employees funds stated as follows:

“Group Health Care Plan. Each employee annuitant in receipt of an annuity on the effective

date of this Section and each employee who retires on annuity after the effective date of

this Section, may participate in a group hospital care plan and a group medical and

surgical plan approved by the Board if the employee annuitant is age 65 or over with at

least 15 years of service. The Board, in conformity with its regulations, shall pay to the

organization underwriting such plan the current monthly premiums up to the maximum

amounts authorized in the following paragraph for such coverage.

As of the effective date the Board is authorized to make payments up to $25 per

month for employee annuitants age 65 years or over with at least 15 years of service.

If the monthly premium for such coverage exceeds the $25 per month maximum

authorization, the difference between the required monthly premiums for such coverage

and such maximum may be deducted from the employee annuitant’s annuity if the

annuitant so elects; otherwise such coverage shall terminate.

Amounts contributed by the city as authorized under [separate provisions for

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laborers and municipal employees] for the benefits set forth in this Section shall be credited

to the reserve for group hospital care and group medical and surgical plan benefits and all

such premiums shall be charged to it.

The group hospital care plan and group medical and surgical plan established under

this Section are not and shall not be construed to be pension or retirement benefits for

purposes of Section 5 of Article XIII of the Illinois Constitution of 1970.” (Emphases

added.) Pub. Act 84-23, § 1 (eff. July 18, 1985) (adding Ill. Rev. Stat. 1985, ch. 108½, ¶ 8-

164.1, codified as amended at 40 ILCS 5/8-164.1 (municipal employees); Pub. Act 84-159,

§ 1 (eff. Aug. 16, 1985) (adding Ill. Rev. Stat. 1985, ch. 108½, ¶ 11-160.1, codified as

amended at 40 ILCS 5/11-160.1 (laborers)).

¶ 36 Plaintiffs remind us that “to the extent there is any question as to legislative intent and the

clarity of the language of a pension statute, it must be liberally construed in favor of the rights of

the pensioner.” (Internal quotation marks omitted.) Kanerva v. Weems, 2014 IL 115811, ¶ 36.

Plaintiffs insist that the Funds have an ongoing obligation under the pension protection clause to

provide them with a healthcare plan and that any other result would be unfair given that many of

them do not qualify for federal Medicare coverage.

¶ 37 In response, the Funds argue that this court already decided in Underwood II that the only

benefit any of the plaintiffs are entitled to under the pension protection clause is the monthly fixed-

rate healthcare subsidies owed by the City under the 1983 and 1985 amendments. They insist that

the resolution of this issue in Underwood II is law-of-the-case and may not be relitigated. The

circuit court, which did not at first share this understanding of our holdings in Underwood II, was

ultimately persuaded by the Funds that the issue had been decided by us and that plaintiffs’ motion

to compel could not be considered.

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¶ 38 The law-of-the-case doctrine provides that “where an issue has been litigated and decided,

a court’s unreversed decision on that question of law or fact settles that question for all subsequent

stages of the suit.” (Internal quotation marks omitted.) Alwin v. Village of Wheeling, 371 Ill. App.

3d 898, 911 (2007). “[Q]uestions decided and determined by [this court] on [a] first appeal” are

thus generally “not open for re-consideration on [a] second appeal.” (Internal quotation marks

omitted.) Relph v. Board of Education of DePue Unit School District No. 103 of Bureau County,

84 Ill. 2d 436, 443 (1981). The extent to which this doctrine applies here is an issue of law we

review de novo. In re Christopher K., 217 Ill. 2d 348, 364 (2005).

¶ 39 We acknowledge that there is language in Underwood II that might suggest that we

answered this question in favor of the Funds. However, when that language is examined in the

context of what was before us, it is clear to us that we in fact did not address this issue. It is also

clear to us that we did not answer this question in plaintiffs’ favor.

¶ 40 To understand the scope of this court’s holdings in Underwood II, we begin by looking at

the nature of plaintiffs’ claims and the circuit court rulings preceding the dismissal orders that were

before us in that appeal. Count I of plaintiffs’ first amended complaint sought a declaration that

any reduction in their healthcare benefits would violate the pension protection clause. That clause

provides that “[m]embership in any pension or retirement system of the State *** shall be an

enforceable contractual relationship, the benefits of which shall not be diminished or impaired.”

Ill. Const. 1970, art. XIII, § 5. Our supreme court has held that the clause protects not just core

pension annuity payments but other benefits of membership in the State’s pension systems,

including specifically subsidized healthcare. Kanerva, 2014 IL 115811, ¶ 41.

¶ 41 In count II, plaintiffs alleged that any reduction in benefits from those they were entitled

to in 1987, when the Korshak Litigation was initiated, constituted a breach of contract. And in

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count III, they asserted that defendants were estopped from terminating benefits or reducing them

to a level below the highest level of benefits attained by plaintiffs during their participation in

group healthcare benefits.

¶ 42 On December 3, 2015, the circuit court denied motions to dismiss filed by the City and the

Funds as to Count 1, dismissed Count II with leave to amend (on the basis that plaintiffs had failed

to attach copies of the contracts they purported to rely on), and dismissed Count III with prejudice.

The court determined that although the 1989, 1997, and 2003 amendments to the Pension Code

provided only temporary benefits that had expired, plaintiffs had “clearly state[d] a cause of action

for declaratory relief as to the City’s and the Funds’ obligations under the 1983 and 1985

amendments, which, under the pension protection clause, could not be diminished. The court

noted, however, that the “exact nature of those obligations [was] not properly decided on a § 2-

615 motion to dismiss.”

¶ 43 When asked by defendants to clarify this ruling, the court entered an additional order on

March 3, 2016, stating as follows:

The City is correct that it does not have any obligation under the 1983 or 1985

amendments to subsidize or provide healthcare for the Funds’ annuitants. That obligation

is placed on the Funds. However, the City does have a[n] obligation to contribute, through

the collection of the special tax levy, the monies used by the Funds to subsidize/provide

healthcare for the Funds’ annuitants. Therefore, both the Funds and the City have certain

obligations under the 1983 and 1985 amendments and both the City and the Funds are

proper parties to Count I.” (Emphases added.)

¶ 44 Plaintiffs filed a third amended complaint, but the core claims they asserted were largely

the same as the ones they had previously alleged. Defendants again moved to dismiss, and on July

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21, 2016, the circuit court granted in part and denied in part those motions, again finding that

plaintiffs had stated a claim for declaratory relief under the pension protection clause only for

benefits they were entitled to under the 1983 and 1985 amendments to the Pension Code, and only

if they were hired before August 23, 1989, when the first settlement was reached in the Korshak

Litigation. The court ruled that plaintiffs had failed to cure any of the deficiencies underlying their

breach of contract claim and rejected their substitution of a claim for promissory estoppel for the

claim of equitable estoppel it had previously dismissed with prejudice. The court dismissed with

prejudice plaintiffs’ new claims for impairment of contract and violation of their right to equal

protection under the law, as well as a claim based on their assertion that the 1989, 1997, and 2003

amendments were improper special legislation. This is the order that plaintiffs appealed in

Underwood II.

¶ 45 In the background sections of both of its dismissal orders, the court stated that (1) the 1983

amendments “require[d] the Fire and Police Funds to contract with one or more insurance carriers

to provide group health care coverage for their retirees” and (2) the 1985 amendments “also

directed the [laborer and municipal employee funds] to approve a group health plan for [their]

annuitants.” (Emphases added.) Although the court noted that, unlike the 1983 amendments, the

1985 amendments “further provided that the healthcare plans were not to be construed as pension

or retirement benefits under [the pension protection clause],” it found—following our supreme

court’s clear holding in Kanerva, 2014 IL 115811, ¶ 55, that healthcare benefits are protected by

the pension protection clause—that this language was an unenforceable attempt to “erase the

constitutional rights of the annuitants by statute.”

¶ 46 In Underwood II, this court agreed with the circuit court that plaintiffs could not state a

claim for coverage under the time-limited benefits provided for in the 1989, 1997, and 2003

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settlements. We thus affirmed that part of the court’s dismissal order. Underwood II, 2017 IL App

(1st) 162356, ¶ 29. We concluded in Underwood II that “we affirm all but the trial court’s ruling

that members of subclass four have no claim whatsoever under count I.” Id. ¶ 66.

¶ 47 Plaintiffs rely on this conclusion and the fact that the circuit court order had noted that the

Funds had an obligation to provide a plan to suggest that this issue was decided in their favor.

However, unlike the granting of a motion to dismiss, the denial of a motion to dismiss is not a

ruling that disposes of one or more parties or claims and is thus not the proper subject of an appeal

under Rule 304(a). See Jursich v. Arlington Heights Federal Savings & Loan Ass’n, 83 Ill. App.

3d 352, 353 (1980) (“Because the denial of a motion to dismiss is interlocutory in nature rather

than a final order, the only grounds for the appeal of such an order are Supreme Court Rules 307

and 308.”). In Underwood II we were not affirming any denial of a motion to dismiss because that

was not before us. We were merely affirming the circuit court’s other grants of dismissal.

¶ 48 We did go on in Underwood II, however, to consider the precise nature of the pension

protection clause claims, under the 1983 and 1985 amendments, because we had reversed the

circuit court’s dismissal of these claims as to the subclass four plaintiffs and we wanted to clarify

what kinds of lifetime coverage could be protected under the pension protection clause. In doing

so, we unambiguously rejected plaintiffs’ argument that they were entitled to “lifetime healthcare

coverage”:

“The retirees contend that the pension protection clause should be considered to protect

their abstract right to ‘healthcare coverage.’ But that is not what the Illinois Constitution

provides. The pension protection clause protects a specific tangible benefit that cannot be

diminished or impaired. [Citation.] It is the subsidy itself that is protected. Under count I,

the pension protection clause protects the benefits in the 1983 and 1985 amendments for

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Nos. 1-18-2180 and 1-19-0358 (cons.)

any retiree who began participating in the retirement system before the 2003 settlement

was executed. The 1983 and 1985 amendments represent the highest level of benefits to

which the retirees ever had an enduring right. For the reasons set forth in section A above,

the pension protection clause entitles the retirees to nothing more.” Underwood II, 2017 IL

App (1st) 162356, ¶ 40.

It is this language that the Funds now seek to rely on as law-of-the-case.

¶ 49 As noted above, our explanation for reaching this issue was that, as to subclass four, the

circuit court had also dismissed the claims under the 1983 and 1985 amendments. As to that class,

there was a full dismissal for us to consider:

“The Funds argue that we lack jurisdiction to consider the applicability of the 1983

and 1985 amendments to the Korshak [(individuals who retired on or before December 31,

1987)], Window [(individuals who retired after December 31, 1987, but before August 23,

1989)], and subclass three [(individuals who retired on or after August 23, 1989)]

subclasses. This argument is based on the fact that the trial court held that those subclasses

could state a claim based on the 1983 and 1985 amendments and, therefore, denied that

portion of the motions to dismiss. However, the claims under count I of the complaint that

relate to subclass four [(individuals hired after August 23, 1989)] were dismissed in their

entirety, and we have jurisdiction to review the dismissal under Illinois Supreme Court

Rule 304(a). The Korshak and Window subclass members’ claims are essentially moot as

the parties have settled. So, subclass three remains, but our application of the law to the

dispute between the City and subclass four necessarily touches on the rights of subclass

three.” (Emphasis in original.) Id. ¶ 46.

¶ 50 We went on to discuss the nature of plaintiffs’ rights under the 1983 and 1985 amendments

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simply to make clear that our broadening of the pool of individuals entitled to whatever enduring

benefits those amendments provided was not a broadening of the rights themselves and that the

healthcare subsidies due to participants under the 1983 and 1985 amendments were in no way

equivalent to the more generous temporary subsidies that participants were provided under the

1987, 1997, or 2003 amendments that we had found were not covered by the pension protection

clause. Given the fact that in Underwood II, this court had no need to consider whether the Funds

had any obligation under the 1983 or 1985 amendments and that our focus was on the limited

nature of the fixed subsidies, we are not inclined to find that the law-of-the case doctrine applies

to foreclose consideration of this issue. Whether the pension protection clause binds the Funds to

create or approve a healthcare plan and administer it for the retirees’ benefit is a question for which

there seems to be no clear precedent and no clear answer. It is not the sort of issue that this court

would reach unnecessarily or decide without a thorough analysis. To foreclose proper

consideration of this issue would be an improper use of the law-of-the-case doctrine. See People

v. Patterson, 154 Ill. 2d 414, 468-69 (1992) (noting that the doctrine “merely expresses the practice

of courts generally to refuse to reopen what has been decided” but “is not a limit on their power”);

Reich v. Gendreau, 308 Ill. App. 3d 825, 829 (1999) (noting that the doctrine “encompasses a

court’s explicit decisions and issues decided by necessary implication” (emphases added)). The

circuit court in this case is not barred by the law-of-the-case doctrine from considering whether

each of the Funds has an obligation to provide its annuitants with a healthcare plan or from

articulating the nature of such an obligation.

¶ 51 This is the view that the parties and the circuit court seemed to have initially shared. A

week after the decision was filed the parties were back before the circuit court. At that time no one

seemed to understand Underwood II as having held that the Funds did not have a duty to provide

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Nos. 1-18-2180 and 1-19-0358 (cons.)

their annuitants with a healthcare plan:

“MR. KRISLOV [(Plaintiffs’ Counsel)]: Thank you, [Y]our Honor.

And just so they don’t accuse me of raising things out of—I want to know based

on both your ruling and Justice Simon’s rulings [in Underwood II]: A, what the Funds are

doing to set up a plan because under both your ruling and Justice Simon’s ruling, the Funds

have primary responsibility to provide a plan and I want them to report on what they’re

doing to provide a plan for their participants.

THE COURT: Yes, But Justice Simon’s opinion sent it back to me to work with all

of you to arrange for that. ***

***

*** I charge each one of the attorneys for each of the Funds to look and see what

your obligations are under each of the several statutes and come up with the plans which

fulfills [sic] your obligations and start talking about it and how you’re going to do it. That’s

what Justice Simon said ***.

So I think there’s good reason to believe that that’s exactly, whatever happens, how

it’s going to end up one way or another. So I would suggest strongly that you start doing

that and come up with some ideas for me. They’ve charged me with being sort of like a

magistrate judge in this thing too. I have not used the word receiver on purpose when it

comes to the City. And I’m going to do it, and you know I’m going to take it seriously. So

do it. That’s not a suggestion. It’s an order. Start coming up with concrete plans.”

¶ 52 Plaintiffs argue that at some point the Funds “disingenuously commandeered” the language

of Underwood II to their own benefit, convincing the circuit court that its long-held belief that the

Funds were obligated under the 1983 and 1985 amendments to provide their annuitants with a

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Nos. 1-18-2180 and 1-19-0358 (cons.)

healthcare plan to participate in was incompatible with this court’s holdings in Underwood II.

Whatever may have happened to change the mind of the circuit court judge, we disagree that this

court intended to foreclose his consideration of this issue.

¶ 53 What, then, is the import of our decision in Underwood II? It is absolutely law-of-the-case

that the plaintiffs have no right to receive—and that neither the City nor the Funds have any

obligation to provide—any additional monetary contributions or to guarantee affordable

healthcare. The circuit court did not decide what obligation, if any, the Funds might still have—

except to say that consideration of the issue was barred by the law-of-the-case doctrine. Having

concluded that it was not, we remand for consideration of the merits of that issue. We decline to

consider plaintiffs’ merit-based arguments under various legal and equitable theories. The circuit

court is in the best position to consider those arguments in the first instance.

¶ 54 B. The Eligibility Cutoff for the Fixed-Rate Subsidies

¶ 55 In Underwood II, this court held that the pension protection clause locked in the 1983 and

1985 fixed-rate subsidies for any employees who were hired “by the time the 2003 settlement was

executed.” Underwood II, 2017 IL App (1st) 162356, ¶ 61. As we explained, when the time-limited

benefits provided for in the two previous settlement agreements expired, plaintiffs’ rights were

restored to what they had been before the 1987 litigation began. Id. ¶¶ 33-34. The 2003 settlement,

however, was different. Through it, annuitants were put on notice for the first time that when the

temporary benefits provided for in that settlement expired, “the City would have the unilateral

authority to end the program entirely.” Id. ¶ 35. We thus held that individuals who began

participating in the City’s retirement system “before the 2003 settlement was executed” (emphasis

added) are entitled to the fixed-rate subsidies provided for by the 1983 and 1985 amendments.

¶ 56 On remand, the circuit court determined that the 2003 settlement agreement was executed

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Nos. 1-18-2180 and 1-19-0358 (cons.)

on April 4, 2003, based on its view that the word “execution,” as “used in the normal, ordinary

course of business in the law *** is the date of final signature of the last party.” As even Black’s

Law Dictionary recognizes, however, “[t]he term ‘executed’ is a slippery word” that often requires

explanation. (Internal quotation marks omitted.) Black’s Law Dictionary (11th ed. 2019) (quoting

William R. Anson, Principles of the Law of Contract 26 n.* (Arthur L. Corbin ed., 3d Am. ed.

1919)). Dictionary definitions of “execute” include “to carry out fully” and “put completely into

effect.” Merriam-Webster Online Dictionary, https://merriam-webster.com/dictionary/execute

(last visited June 23, 2020) [https://perma.cc/76NE-7S5D].

¶ 57 Plaintiffs challenge the circuit court’s definition of the “execution” date. They point out

that the case that was settled was a class action and that while other agreements are enforceable

upon mere signing, a class action settlement is not truly executed—in the sense that everything

necessary to make it effective has occurred—until it receives court approval. See 735 ILCS 2-806

(West 2016) (“Any action brought as a class action under Section 2-801 of this Act shall not be

compromised or dismissed except with the approval of the court and, unless excused for good

cause shown, upon notice as the court may direct.”). In the Korshak Litigation, that did not happen

until June 16, 2003.

¶ 58 In addition, the 2003 settlement was not truly effective until there was an amendment

making it part of the Pension Code. This happened a couple of weeks later, on July 1, 2003. See

Pub. Act 93-42, § 5 (eff. July 1, 2003) (amending 40 ILCS 5/5-167.5).

¶ 59 We agree with plaintiffs that the April 4, 2003, date is not correct. Rather, the 2003

agreement was not “executed” until July 1, 2003, and the right to benefits under the 1983 and 1985

amendments thus extends to anyone hired on or before June 30, 2003. July 1, 2003, is the date that

is most consistent with our reference in Underwood II to an “execution” date and to references

22
Nos. 1-18-2180 and 1-19-0358 (cons.)

made elsewhere in that opinion to the date the 2003 settlement “went into effect” or “became

operative” See Underwood II, 2017n IL App (1st) 162356, ¶¶ 48, 62.

¶ 60 We reject plaintiffs’ alternative argument that because the 2003 settlement agreement

defines a class of “all current and former City employees who will become one of the Funds’

Future Annuitants on or before June 30, 2013,” anyone hired on or before June 30, 2013 (or even

before December 31, 2016, the date through which the settlement was ultimately extended), is

entitled to the statutory fixed-rate subsidies. As we made clear in Underwood II, the loss of any

entitlement to the subsidies was triggered by the City’s intent, made manifest in the 2003

settlement agreement, to ultimately end its obligation to provide healthcare benefits to retirees.

Plaintiffs have offered no coherent argument for why the terms of that contract require a different

result. Moreover, any date based on such an argument could not fairly be said to be the “execution

date” of the 2003 settlement agreement and it is law-of-the-case that the “execution date” of the

2003 agreement is the cutoff date for any entitlement to the statutory fixed-rate subsidies.

¶ 61 IV. CONCLUSION

¶ 62 Having treated these consolidated appeals as ones properly brought under Rule 308, we

answer the certified questions as follows: (1) plaintiffs’ motion to compel each of the Funds to

provide its annuitants with a healthcare plan was not barred by this court’s decision in Underwood

II and (2) the eligibility cutoff for City employees entitled to receive the fixed-rate subsidies is

June 30, 2003, the last day before the terms of the court-approved 2003 Settlement were

incorporated by legislative amendment into the Pension Code. We vacate those portions of the

circuit court’s September 12, 2018, and January 16, 2019, orders to the contrary and remand this

case to the circuit court for further proceedings consistent with this decision.

¶ 63 Certified questions answered. Orders vacated in part; cause remanded.

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Nos. 1-18-2180 and 1-19-0358 (cons.)

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Nos. 1-18-2180 and 1-19-0358 (cons.)

No. 1-18-2180

Cite as: Underwood v. City of Chicago, 2020 IL App (1st) 182180

Decision Under Review: Appeal from the Circuit Court of Cook County, No. 13-CH-
17450; the Hon. Neil H. Cohen, Judge, presiding.

Attorneys Clinton A. Krislov and Kenneth T. Goldstein, of Krislov &
for Associates, Ltd., of Chicago, for appellants.
Appellant:

Attorneys Mark A. Flessner, Corporation Counsel, of Chicago (Benna Ruth
for Solomon, Myriam Zreczny Kasper, and Sara K. Hornstra,
Appellee: Assistant Corporation Counsel, of counsel), for appellee City of
Chicago.

Cary E. Donham, Graham C. Grady, John F. Kennedy, and
Richard Hu, of Taft Stettinius & Hollister LLP, of Chicago, for
appellee Trustees of the Laborers’ and Retirement Board
Employees’ Annuity and Benefit Fund of Chicago.

Edward J. Burke, Mary Patricia Burns, Vincent D. Pinelli, and
Sarah A. Boeckman, of Burke Burns & Pinelli, Ltd., of Chicago,
for appellees the Trustees of the Firemen’s Annuity and Benefit
Fund of Chicago and the Trustees of the Municipal Employees’
Annuity and Benefit Fund of Chicago.

Justin B. Kugler, of Chicago, for other appellee.

25