Hardy v. Chicago Housing Authority

UNPUBLISHED ORDER
Not to be cited per Circuit Rule 53
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued June 1, 2006
Decided June 26, 2006
Before
Hon. JOEL M. FLAUM, Chief Judge
Hon. DANIEL A. MANION, Circuit Judge
Hon. ANN CLAIRE WILLIAMS, Circuit Judge
No. 05-3983
NOLAN HARDY and KENNETH Appeal from the United States
ANDERSON, individually and on District Court for the Northern
behalf of a class of person similarly District of Illinois, Eastern
situated, Division
Plaintiffs-Appellants,
No. 04 C 5751
v.
John A. Nordberg,
CHICAGO HOUSING AUTHORITY, Judge.
Defendant-Appellee.
ORDER
In 1999, the Chicago Housing Authority (“CHA”) disbanded its police force.
After negotiations between the CHA and the plaintiffs’ union, which represented
Chicago Housing Authority Police Dispatchers, the union signed an agreement
releasing the CHA from all federal claims. Nearly five years later, the plaintiffs
brought suit for compensation under the Federal Worker Adjustment and
Retraining Notification Act (“WARN Act”). 29 U.S.C. §§ 2101-2109. The district
court accepted the defendant’s affirmative defense that the settlement agreement
No. 05-3983 Page 2
barred the plaintiffs’ suit and granted summary judgment for the defendant. For
the following reasons, we now affirm the judgment of the district court.
I. Background
In 1989, the Chicago Housing Authority established a police department to serve
residents of its housing developments. After ten years of operation, on October 12,
1999, the CHA announced to all employees and their unions that effective October
29, 1999, it would cease operations and all employees would be laid off. At the time
of this announcement, the eleven police dispatchers employed by the Chicago
Housing Authority were represented by the Illinois Fraternal Order of Police Labor
Council (“FOP”).
On October 27, 1999, the FOP filed an unfair labor practice charge, alleging that
the CHA refused to bargain concerning its decision to cease police department
operations. The FOP and CHA reached a settlement agreement on May 5, 2000.
This agreement required that the dispatchers release all claims “arising under any
federal, state or local statute” and stated that the release was “intended to be
construed broadly.” In exchange, the CHA agreed to pay each dispatcher the
equivalent of two days salary each ($3,193.76 total for all dispatchers), and provide
health and dental benefits for November and December 1999. The dispatchers’
collective bargaining agreement did not require the CHA to provide either
insurance benefits or the two days’ pay. On June 9, 2000, settlement checks were
sent to the dispatchers. Nolan Hardy and Kenneth Anderson cashed these checks.
On September 1, 2004 (almost five years after their dismissal from the CHA),
the plaintiffs filed a complaint alleging CHA violated the WARN Act, 29 U.S.C. §§
2101-2109. The district court found that the plaintiffs’ WARN Act claims were
barred under the settlement agreement and granted summary judgment for the
defendant. The plaintiffs now appeal.
II. Discussion
This Court reviews a district court’s grant of summary judgment de novo,
considering all facts in the light most favorable to the non-moving party. Summary
judgment is inappropriate if there is a genuine issue of material fact. See McCoy v.
Harrison, 341 F.3d 600, 604 (7th Cir. 2003).
The settlement agreement signed by the FOP and the CHA on May 4, 2000, does
not specifically mention the WARN Act. It does, however, contain other pertinent
language:
No. 05-3983 Page 3
[T]he Union hereby forever releases, discharges and covenants not to sue the
CHA . . . [based on] any and all claims, demands, suits or grievances of
whatever kind or sort, including but not limited to, those arising out of or in
connection with its collective bargaining relationship with the CHA, any
Collective Bargaining Agreements entered between them, and arising
under any federal, state, or local statute, ordinance or common law,
including specifically, but without limitation: bargaining obligations with
respect to the October 12, 1999 decision to cease active operation of the
CHAPD and the resulting separation of all of the Union’s civilian bargaining
unit members from CHA employment on October 29, 1999[.] . . . This release
is to be construed broadly and shall be inclusive of all claims, demands and
rights of action that the Union has or may have[.]
The district court found, “The fact that the agreement did not mention the
WARN Act by name is not a barrier to enforcement.” Although we have not spoken
directly on the applicability of general releases to WARN Act claims, this Court has
found general releases applicable in similar circumstances. “It is well established a
general release is valid as to all claims of which a signing party has actual
knowledge or that he could have discovered upon reasonable inquiry.” Fair v. Int’l
Flavors & Fragrances, Inc., 905 F.2d 1114, 1116 (7th Cir. 1990) (holding that a
release of claims relating to employment barred a claim under ERISA) (quoting
Oberweis Dairy, Inc. v. Associated Milk Producers, Inc., 568 F.Supp. 1096, 1101
(N.D.Ill. 1983)) (internal quotation marks omitted).
Additionally, we find persuasive the view of our sister circuits that a general
release of federal statutory claims applies to the WARN Act. See Int’l Ass’n of
Machinists & Aerospace Workers v. Compania Mexicana de Aviacion, 199 F.3d 796,
799 (5th Cir. 2000) (“Neither the WARN Act nor the common law require that the
release expressly mention the WARN Act for the releases to be binding. The
releases encompass all claims related to union member layoffs, and any WARN Act
claim would be a claim related to union member layoffs. Thus, the affected
employees waived their WARN Act claims when they accepted valid releases in
exchange for the enhanced separation package.” (citing Williams v. Phillips
Petroleum Co., 23 F.3d 930, 935-36 (5th Cir. 1994), cert denied, 513 U.S. 1019(1994)); Joe v. First Bank Sys., Inc., 202 F.3d 1067, 1070 (8th Cir. 2000) (WARN Act
claims waived in a settlement agreement that released the defendants from liability
for any claims “arising under or based upon any federal, state, or local employment
or discrimination laws, regulations or requirements, including . . . any contract,
quasi contract, or tort claims . . . arising from or related to . . . Employee’s cessation
of employment[.]”).
No. 05-3983 Page 4
The plaintiffs claim that even if this Court finds that the settlement agreement
covers WARN Act claims, they are not bound to the terms of the agreement. The
district court found differently:
[W]e cannot say at this point whether the members personally approved of
the agreement. Despite this fact, we find that this agreement is nevertheless
enforceable. This is because, whether or not plaintiffs approved of the
agreement beforehand, they received and cashed the check as noted above.
By accepting the benefits of this agreement, plaintiffs are bound by it.
(citations omitted).
As a result of the settlement agreement, negotiated by their union, the plaintiffs
received cash payments, health coverage, and dental coverage. These benefits were
not required by the terms of the plaintiffs’ CBA and thus qualify as consideration
for the plaintiffs’ waiver of their WARN Act claims. “[E]ntering into [a settlement]
agreement and accepting the benefits of that agreement ends the inquiry as to the
validity of the settlement agreement.” Castellano v. Wal-Mart Stores, Inc., 373 F.3d
817, 820 (7th Cir. 2004) (citing Joyce v. Year Invs., Inc., 196 N.E.2d 24, 26-27 (Ill
App. Ct. 1964)). By cashing their checks, the plaintiffs ratified the settlement
agreement and thus became bound by its terms. Thus, the defendants have
successfully presented an affirmative defense to the plaintiffs’ WARN Act claims.
In their attempt to counter the defendants’ position, the plaintiffs rely heavily
upon Castro v. Chicago Housing Authority, 360 F.3d 721 (7th Cir. 2004). In Castro,
this Court affirmed a verdict against the CHA based on WARN Act claims arising
from the CHA’s decision to eliminate the police department. Although Castro does
hold that the CHA is subject to WARN Act claims, id. at 729-30, it is inapplicable
here.
In Castro, the CHA failed to raise the affirmative defense it presented in the
instant case. This Court stated:
The CHA next argues that the class members waived their WARN claims
through their unions’ settlement agreements. The CHA, however, failed to
raise this affirmative defense in its responsive pleadings, and the district
court denied the CHA’s motion for leave to file the additional defense, a
decision we review for abuse of discretion. Because we hold that the district
court did not abuse its discretion in denying the CHA’s motion, there is no
need to consider the merits of the CHA’s argument on appeal.
No. 05-3983 Page 5
Id. at 735. Castro went on to recognize that the affirmative “defense may have been
meritorious,” but could not be considered. Id. (citing FED. R. CIV. P. 8(c); Venters v.
City of Delphi, 123 F.3d 956, 969 (7th Cir. 1997)).
After considering the affirmative defense waived in Castro, we find that the
plaintiffs’ settlement agreement prohibits union members from bringing suit
against the CHA under any federal statute. As the WARN Act is a federal statute,
the plaintiffs’ suit is barred.
III. Conclusion
For the above stated reasons, we AFFIRM the district court’s grant of summary
judgment.