Friday, December 6, 2013

Considering Consideration: and other legal implications SB1

Considering Consideration: and other legal implications

Preparing for a court battle means anticipating just where your opponent will argue the case they present before a judge as well as putting forth your own best case.  Of course, all that time, you must remember they are working to blunt the reasoning you think best.  A good legal team knows early on that it’s always 99.9% perspiration and .1% inspiration.  So it will likely be with the pension court case in Illinois.

Remember also, ambiguity is the lifeblood of these suits.  The sentence “Starving lions can be dangerous” comes to mind when pondering the implications of an upcoming suit over the recently enacted “pension reform-theft” in Illinois.  Does the previous sentence mean possibly injurious to the poor lions?  Or certainly fatal to anyone starving them?

Article XIII, Section 5. Illinois Pension Clause:  Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

Even Article XIII, Section 5, which appears transparently clear to a retired pensioner like myself, will be broken like shards into a kaleidoscope of intended meanings by the various lawyers trying to present their unique perspectives/interpretations….and of course win.  Parsing the meanings of the clause will be an integral part of the arguments against and for the bill Governor Quinn signed on Thursday. 

Does “membership” mean active workers or only those who have already retired?  Does an “enforceable contractual relationship” allow for adjustments to be made given an argument of statewide fiscal crisis?  Or a case that changes are necessary to keep the system from imploding?  Does “diminish or impair” prevent any perceived negative alteration to a benefit expectation after employment, retirement, by collective bargaining unit or by individual? 

This litigation may take far more time than anyone might suppose.  But, we can expect the court and its competing lawyers to debate carefully the concept of consideration in contractual law when it comes to SB1 and its numerous provisions for current and future workers as well as retirees.  (For a review of those changes, please see Glen Brown’s blogs(teacher/poet/musician glen brown).

Consideration:  (n)  in law, something of value given by both parties to a contract that induces them to enter into the agreement to exchange mutual performances (West’s Encyclopedia of American Law).

According to the Tribune, Speaker Madigan ticked off several reasons why he feels the bill (now law) meets the question of consideration: “Workers would contribute 1 percentage point less toward their retirement, the state would kick in more money to better fund pensions, the retirement system could go to the Illinois Supreme Court if the lawmakers failed to make required payments, and some workers could choose a 401(k)-style option” (5 December 2013).  In other words, the Speaker feels that any offer of improvement (on his part and from his perspective) is enough to satisfy consideration.

Senate Leader Cullerton and his legal counsel Eric Madiar may not be so sure.  And their concern may be justified.

In the Speaker’s analysis, he proposes the court accept what should be deemed a unilateral contract, one lacking the necessary intent between both parties necessary to reach what most courts deem a suitable level of consideration.  In simple (English teacher) language, the Speaker’s law acts impossibly for both sides at once – both the General Assembly and the unions – by delivering and exchanging some increased benefits and some impairments as trade offs, but none of it with any agreement or promise by the other party in exchange.

For example, instead of exchanging gifts valued at $5 during the office party this year, as we have all agreed to every year, Boss Mike informs you he doesn’t want your present worth $5, but instead is going to give you a picture of himself (he paid nearly $10 for it) and he’s going to take ten minutes out of your lunch break.  That’s a unilateral offer of contract.  Once you perform your part of the agreement(?), placing his picture on your wall and skipping your dessert, you’ve have achieved consideration under the law. 

Are you starting to comprehend the bristling response of the IRTA and WeAreOne?

On the other hand, a bi-lateral contract, like those historically binding benefits and contributions for Illinois public sector workers, are agreements binding both parties the minute the parties exchanged promises, as each promise was deemed sufficient or of valuable consideration in itself. 

For decades after the drafting and adopting of Article XIII, Section 5 in the 1970 Illinois Constitution, consideration has been considered “valuable.”  That is, a thing of value parted with, or a new obligation assumed, at the time of obtaining the thing, which is substantial compensation for that which is obtained thereby.  It is also simply called ‘value’” (Black’s Law Dictionary).

Exchanges were agreed to and settled on for the Early Retirement Option, death benefits, and even the COLA; but those were all bilateral contracts consisting of mutual consent in the establishment of a valuable consideration(s). 

It appears to me, SB1 does not meet the acceptable requirements for consideration.

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