Appeals panel: North Riverside can't just end CBA to privatize fire department, save big pension bucks

By Jonathan Bilyk | Oct 4, 2017

The village of North Riverside has suffered yet another loss in court in its attempt to get out from under what it has called a financial crisis, as a state appeals court has upheld a state labor board’s determination the village could not use that purported crisis as an excuse to avoid a demand by its firefighters’ union to submit to arbitration a dispute over the village’s attempt to privatize fire protection services to save $700,000 per year and offload its pension obligations.

On Sept. 29, a three-justice panel of the Illinois First District Appellate Court upheld the decision of the Illinois Labor Relations Board, which had determined the village had committed unfair labor practices when it notified the union representing its firefighters the village would unilaterally terminate its collective bargaining agreement, when the union had the right under the law to demand the matter be submitted to an arbitrator.

The case dates to 2014, when the village first opened talks with the North Riverside Firefighters and Lieutenants Union Local 2714, International Association of Firefighters ALF-CIO, of the village’s desire to hire a contractor to operate the village’s fire department.

The firefighters had a collective bargaining agreement at the time, scheduled to expire April 30, 2014. As the two sides sent negotiations over a new CBA to mediation, the village solicited a proposal from contractor Paramedic Services of Illinois to essentially take over the North Riverside fire department. The village conditioned any contract on agreement by PSI to retain the village’s current firefighters, as well as their “current base salaries, earned pension benefits and current health insurance.”

The village told its residents the move was needed to alleviate the village’s “budget deficit of $1.9 million, $1.8 (million) of which was ‘a direct result of the village’s growing public pension obligation.”

The village said the privatization would allow it save more than $700,000 per year, “allowing the village to substantially reduce the adverse impact of future pension obligations imposed by the State (of Illinois.)”

Talks with the unions began in June 2014, according to the court documents, and the union purportedly submitted various proposals it claimed could “approximate $700,000 in savings that the village would realize from privatizing services.”

The village, however, said the union’s proposals fell short, and in September 2014, the village, saying the parties were at an impasse, asked a Cook County judge to declare the village’s financial circumstances should allow it to end CBA talks and privatize the fire protection services.

The union responded with an unfair labor charge filing at the ILRB, asserting the village’s negotiations had been a sham and requesting the matter be submitted to arbitration.

About a month later, the village then sent a letter to firefighters telling them their CBA would expire Dec. 5, 2014, but “the village was ‘again offering full employment opportunity for the firefighters and lieutenants through PSI” and “’PSI will hire all members of the bargaining unit at their current base salary, provide the same health care, as well as beginning a 401k pension plan.’

“The letter added that ‘although the enclosed Notice terminates all employment of the bargaining unit members pursuant to statute and the contract,’ the firefighters would remain in their positions until the court made a determination.”

The circuit court dismissed the village’s request, and the ILRB also sided with the union.

“The ILRB stated that while it appreciated the village’s frustration at being required to go through interest arbitration, section 14 (of the Illinois Public Labor Relations Act) created no exception for a financial crisis,” the appellate justices wrote in their decision.

On appeal, the three justices presiding over the case agreed with the ILRB, saying the village’s CBA termination notice came only as a response to the union’s request for arbitration.

Further, the justices said they believed arbitrators could yet find the village’s proposed privatization of fire services is the correct path in this case, based on the village’s financial situation. Regardless, the justices said the union is entitled to arbitration, as state law forbids firefighters from going on strike.

“… The village tendered termination notice, only after the union sought arbitration,” the justices wrote. “The village essentially shifted from seeking a declaration that the village had the right to terminate the CBA to making the same declaration itself. Nothing pertinent had happened in the interim. We find substantial circumstantial evidence supports the ILRB's finding that the village was motivated to tender termination notice at least partly by the union's protected activity.”

The decision was authored by Justice Terrence J. Lavin, with justices Cynthia Y. Cobbs and James G. Fitzgerald Smith concurring.

The decision comes about nine months after the First District appeals court also turned aside North Riverside’s appeal of a decision by the Illinois Department of Insurance that the village had not properly funded its pension obligations.

The village had contended such pension obligations are too difficult to meet, as the village had suffered major economic losses during the Great Recession, weakening its tax base.

In that case, however, justices said the village simply needed to more properly prioritize its spending, away from “discretionary endeavors.”


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Illinois First District Appellate Court Illinois Labor Relations Board International Association of Fire Fighters Village of North Riverside

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