the first case on our call is agenda number seven case number one two three zero four six fifteen fifty mpg road o o c versus teamsters local union number seven hundred extend well beyond this case if allowed to stand he appellate court's decision would permit the enforcement of contracts even where explicit statutory requirements necessary for the validity of those  but also create a new less stringent exception to the general rule in illinois and successor not liability there are two rival issues before the court this morning and i want to speak to those the damages  issue is briefed and i had rather use the time on these two but i'm glad they have to answer any questions on thirty's of course by the first of the two liability issues is whether the lease purchase agreement referred to as the l the for for the for the argument this morning a nine compliance with because absent this statute and other corporate association was without legal authority to enter into a real estate contract of any kind  the second liability issue is whether there is a basis for imposing successor liability against local seven hundred even though none of the recognized exceptions under illinois law are present here the plaintiff has to prevail on in derogation of a common law rule to allow an incorporated associates to associations to buy or lease real estate but in doing so the general assembly set forth express requirements that must be satisfied for unincorporated association to lease or own property specifically pruitt expressly provides that the membership of an unincorporated association must be given advance written notice of the kind of pla transaction and a majority of the membership of the on a corporate association must vote to approve real estate the real estate transaction neither one of those things happened here the membership of local seven twenty six was not given any advance notice of the contemplated contract the membership of low cost twenty seven twenty six never voted to approve the lease for the lease agreement these facts are conceded by the plaintiff in the court's floor have likewise fault on one side or the other it just didn't happen and if it doesn't happen you don't have you know you have an entity that can enter into it with the authority to enter into a contract the authority of the local to enter into that for not complying with boy it just didn't happen and if it doesn't happen then you do not he the exception to common law doesn't come into play it's just in the interest of fairness here a couple follow ups the members of the union may have of the union may have a grievance with the union but it seems that the plaintiff your is being punished by the unions failure to fulfill its as a tory obligation let me let me speak to punishment  statute requires the statute requires compliance with certain requirements that law cannot be ignored just because the have because of just because it wasn't followed because the time is limited but you know the bylaws absolutely track or they require exactly the same thing you notice he didn't he didn't get the byelaws it sat one of the operating documents make sure this guy i'm dealing with h if the statute is not followed we're back to common law that's statutes and duration of common law if you don't follow the statute you're back to common law you're back to come in wa they can't enter into a contract to own or or purchase real estate they don't have the authority to do that they're in they don't have the capacity to do that so and then on the a point once you disregard the statute you're back to a situation where you're headed to dealing with a you know he doesn't have the legal authority entered contracts at all this case that the union got together and decided let's just do this contract let's do it wrong so we can get out of it there's no evidence of that in fact i mean with you know national it with respect written around that concern but not an opinion that affirms this judgment because this is just clearly outside the scope of the capacity of the authority of the local about well there were some negotiations at the time that was going on to try to get to a contract that everybody could live with those negotiations never never reached fruition ok and i think it's very important that we remain conscious of the fact that when you when you're in the region a go she says to try to resolve something it can't should never be used against you you're trying to reach some kind of a settlement some kind of a middle ground maybe you can make it work contract but even if you the the it could be ratified it could only be ratified by the membership because it could only have been asked in the first place by the membership so no most of the membership no vote by the membership that's correct but unless that's done no matter whose fault it is there's no contract it's more devaney see just as it would be a common law and and that's just the outcome that we have to live with otherwise there's no reason for the statue we can just despite the fact that the express requirements of who are not satisfied the appellate court refused to void the contract that decision was in error for for several reasons first it renders the text of poor meaningless and i think we've just discussed that  changing the common law beyond what is expressed in the statute so we've got three or four major rules of statutory construction that we can just forget about if this if this judgment is firm and when i said in the beginning that there this case has ramifications beyond this case just like most cases do that are before this court that's exactly what i'm talking about there are a number of state of well stated rules that this court has laid out in  prior decisions that that will just have to be disregarded and those rules are construction are important in all kinds of cases if i could see the next briefing somebody saying back in that that  it's that the op here was extended by was executed by a party that lacked the legal capacity to enter into the contract in the first place other words the contract was never came into existence because local seven twenty six was legally incapable f for remodelling their work over a thousand dollars but unlike the situation here there was no there was nothing in common law that prevented contracts from entering into such contracts by contract had rest defined the only circumstances or an unincorporated association they own or or for lease real estate and the consequences for noncompliance with who or requirements is that the common law rule controls and we revert back to it i think i've already addressed the appellate court was also wrong we believe in holding that public policy concerns favor finding the lp enforceable the failure to comply with  who is requirements deprived individual members of local twenty seven twenty six of the very safeguards that poor is designed to provide to members of unincorporated association is it common law you could even enter into this contract who is passed says yes you can but the members can be individually liable that happens and so there has to be protection in the protection has to be that those members have to have a say and how do you give them that you give them notice in writing and if you haven't you make them take an affirmative vote and unless until that happens the members are are would be exposed if you look to liability unless they've had their personal liability unless they had something to say about   play of also claims that arguments regarding the enforceability of lp a have been waived that never happened for the reasons we set forth in our brief place reliance on the shaq and burke rule also fails he supplies to cases involving the enforcement of illegal or immoral contracts that's not what we're talking about here does not address the question here nor is there any evidence that the members of seven twenty six condoned or even were aware of the failure to satisfy poor to your question of you know that isn't the union being rewarded here if the if the members had all known that there was supposed to be notice and there was supposed to be a vote and they didn't care and you know you might have some argument along those lines of some set of facts would prove that but that's not the situation here there's no evidence that they were even aware of the existence of this before it was signed now the second liability issue is the successor liability issue if a court erred in imposing successful liability on local seven hundred local seven hundred is not libel of t a for separate and independent for the separate independent reason that it is not a successor interest to seven hundred seven twenty six no way recognizes four exceptions to the general rule of successor the if you don't meet any of the exceptions for such reliability then the liability does cannot go to seven hundred and he absence of idea of identity of ownership here is probably the most paramount reason why those exceptions don't apply at least  the first two of them thank you very much for your time and for the opportunity to there's this inherent question is a case right because it's final or is it final because it's right i submit that in this case it is demonstrably the latter and on the subject of what is right this court has the benefit as do all courts of review of affirming the decision based on anything that's in the record that supports affirms in this case while both the trial court and then the appellate court pointed to myriad reasons why this judgment was right and appropriate there are as we mentioned in our brief probably ten other reasons as to why this opinion this judgment were right this court can and should and must affirm if there's any basis in the record performance or what i find striking  always found striking about the position of the teamsters have taken in this case is that it appears that unless it benefits the teamsters no other rule that in any way takes something away from the teamsters in any way applies to them and i can point to about nine things in the record nine things in the history of this lawsuit and frankly that preceded predate the history of this dispute and this lawsuit association so the argument is it's up to mr friedman doing business with the teamsters to know of a law that relates to the teamsters but apparently it's not on them and almost a p as well i'm not blaming anybody i'm not blaming him i'm not blaming us it's their statute you do blame them and it's not just in this case because here's where we get into this beginning of a situation where nothing  at doesn't work to their benefit applies to the teams it is not just this lease where they violated the way and had one signature and the vote it is the lease immediately preceding  was evidence in the record at this trial they fully performed that lease that was down in teamster city the undisputed evidence in the case as you well know is that every police every police that this local seven twenty six entered into for as far back as the thirty year members of the executive committee could recall violated the people way they never complied with the there is no evidence in this record before this court that this unincorporated association ever gave heed to know about will comply with the very statute that governs how they as an unincorporated association were bound to act and yet they come before this court and they say that gets us out of the agreement it doesn't apply to the never and we're not talking about litigation waiver by failing to mention it in the litigation i appreciate that the law is that you can kind of never waive a statutory violation you can raise it at any time i get i'm not talking about not raising it from two thousand and ten to two thousand and fourteen i'm talking about never heeding this statute in the history of the organization that's waving a statute  if you never treat the statute as having existed and we can argue and i certainly if i have enough time i doubt i will can argue that the statute isn't for the benefit of the members and mr prendergast has just argued the fact is there nothing in this statute or in the history of the statute that talks about it being for the benefit of the members for the protection of the members that's not in the legislative history it's not in the te t they admitted they judicially admitted in a verified pleading that prior to the switchover from seven twenty six to seven hundred seven twenty six reached a modification of the agreement fifteen fifty eight admitted in an affirmative defense it was in a verified pleading it's a judicial admission so having admitted that the lease was modified the necessary the of that is that there was a valid lease to modify because if it wasn't a valid lease it can't be modified as a matter of law only an existing contract a valid contract is keep a bill of being otherwise you're just creating a contract a new they would need it judicially in their verified affirmative defense and they later tried to he did withdraw the defense but in verify pleading it doesn't matter they admitted that the contract the lease had been modified in so doing they admitted that the lease was valid in the first place another basis that the trial court and the appellate court didn't look at what they could and so could you the third thing where the teamsters say it doesn't apply to us has to do with the other section of the p u a they don't talk about section three section three after giving the power if you will of unincorporated associations to contract for leases and for real estate section three says that now that they can enter into leases they can also sue and be sued on its real estate i think that the phrase is an action concerning its real estate so they come for you saying they can't be sued because of their own violation of this statute that they've ignored for their entire history but what they haven't mentioned is in this lawsuit they filed third party actions against mr clair and all the other executive board members so they sued their executive board concerning its real estate the third party action so they seemingly under section three felt that they could sue but they just can't be sued how convenient nothing sticks to the teachers they can do what they want but they don't suffer consequences by not following the law that's the theme of this loss the equities of this case which i believe justice thomas you pointed out with your first question are so strong we have an innocent third party the teamsters job is to negotiate contracts they do it for so i don't think there was some disparity here that's that the ins hired the raise on that of the teamsters is to negotiate contracts so i don't think this is something that just happens to be a side job for this organization this is their existence so they should be held as as strictly as anybody else to the standards of how you properly exit your contracts and what your consequences  are they seem to say that because there's this new entity this new sheriff in town local seven hundred and that wasn't formally transferred this least local seven hundred can substitute for local seven twenty six the law doesn't allow it well that's exactly what local seven hundred did in the collective bargaining agreements that local seven twenty six that they never even changed the contracts on day one seven hundred stepped into the shoes of seven twenty six for every c power could you explain to us the structure of just a little bit of the structure here rather than having let's say two different or peroration to go shit in terms of how one will merge it or whatever the term is going to be here you've got the international brotherhood of teamsters and apparently it was through their actions that something some verb occurred it dissolved one and it's my first question is in the record explain exactly what the order of the i p t was in terms of was it to consolidate to merge what was the verbal use of one and two how the relationships between all these parties  to well that's the next point i was going to get to so that's at the executive general executive board level at the top in washington hoffer and his his pals they create a new local by chartering by a consent or an order which they made that a new union is going to be chartered ok that's that then we have the general secretary treasurer of the entire international who writes a letter to john cole who was the main guy here in chicago area and he wrote unsolicited that the new union is going to be structured as a consolidation of the two unions that were whose members were being moved in to create this new union and that's the other you know funny thing the the teamsters here in this case talks about how these who are members of the union are going to be subject to this potential liability and particularly these other local seven fourteen people who had nothing to do with this that again is not mr friedman's doing the international created this and the locals lived by so they're using this argument that well were the real victims here because the individual members  could be liable first of all we didn't sue the individual members so no they aren't liable we could have but we didn't want to sue five thousand he could have but we didn't so they're not subject to liability at all but to suggest that it's unfair to them they created the situation the international did this so to suggest that well because we structured it in this way that makes it unfair and inequitable to subject us to judgment no this was your doing just as it was that they're doing to not follow the p u a for thirty five years so what is this how does it work but one of the traditional exceptions to success or non liability is when there is a merger or consolidation well the teamsters third highest guy right after this happened said this will be structured what else did they say well they had tax returns that they filed in their nonprofit so therefore ninety's they're not the usual ten firms but in the ninety signed by the assistant trustee under oath under penalty of perjury they said the assets were transferred in the merger to the successor local seven hundred so if you didn't feel comfortable with the substantial continuity extension of the law  both the trial court and the appellate court ruled should happen here and i submit that you should feel comfortable with it because if you find that the traditional exceptions don't fit this unorthodox organization structurally then you still have to get back to what is the point of the concept of success or viability and the point of the concept of successful life billet is that you want to protect third parties who do business with entities you want to protect them from changes in form that are not really changes in substance i can't think of a more on the nose scenario the seven twenty six the seven hundred shift it's a change in form they were a new hat on january one but they are exactly the same entity yes this other members from another local all other government employees they pop in there but they're doing exactly the same thing all the other assets are transferred they are in our space policed space and the only thing that happens in their world that's different is that they're no longer subject when it is apparent authority apparent which i know is a different but related concept to actual card and i'm glad that you raised that question because apparent authority works in the effect of a pair of already works in precisely the same way as actual for the fact the question of actual authority is irrelevant to the question of apparent found that mr clear had apparent authority to enter into this lease and parents are certainly we go forward so how is it that he has a parent already well he was held out by both the gentlemen associated with seven twenty six diaz introduced him to mr friedman supplier himself held himself out heatedly as the guy who does these leases there was the immediately prior lease that mr clair signed solo there was every member of the executive board who visited this property multiple times fifteen to twenty times was the evidence at trial this was while the negotiations were going on while mr friedman was spending money just developing this property suit th suit this you were going to put the conference from here going to the offices there these executive board members consistently visit they consistently approved what was that they knew everything if at any point in time one of them has said why  is tom claire hear what is he doing that would be a different case when he had a parent authority he was held out by local seven twenty six as having the authority to execute this lease it was reasonable for mr friedman to rely on that because every indication was that that's exactly what claire did he was the principal officer of the union he signed the prior lease everybody else that ran the union saw him visited with him worked with mr freeh have any legal obligation laden legal obligation to determine whether there actually was no and i've seen none in this record the teamsters would like to say yeah it's on it's on the plaintiff to determine this neither the p u s s that nor any other statute or rule or case the only thing that that the apparent authority concept brings in is that the reliance on the holdout being held out as mr clare was by mr friedman be reasonable when every executive committee member visited fifteen to twenty times when mr clair signed the last lease when mr clair said i'm the guy when mr diaz says yeah he's the guy when everybody of us when everybody says he's the guy and he says he's the guy and the last lease was signed by him as a guy i submit that satisfies reasonable reliance by mister so no i don't believe they have to go beneath and go under and go past what seems clearly on its face to be reasonable so he does terms the term only in the context of may only sign a lease term only is not there the term in forcible is not there the construe the statute and the words in the statute that's how you determine the intent the legislature is to look at the words the words that the teamsters were advancing for your construction of the statute don't appear in the statu i'm at doesn't mean that the poor statute doesn't apply doesn't mean by laws don't apply just means that there was never an occasion to challenge the least of those prayer leases but it certainly doesn't establish a parent th the but the argument for parent authority in my judgment is a rather desperate one because there is no authority there to do this totally apart from that though there are a number of other issues council said it's it's the it's the union southie union statute is that the member statute is a statue of the state of illinois it applies to all unincorporated associations it doesn't just apply to unions doesn't just apply to the teamsters this business about the teamsters always one of their way that's business about the fact that they negotiate labor contracts that's fine it's what they do when they're good at it i think i magine they're well versed in it but that's not the kind of contract we have here you have a very sophisticated contract that had three different ways that that the plaintiff could recover the five year option to buy and if it didn't exercise the option to buy well you can continue to pay the rent but if you if you did but if you were going to of this business about the teamsters want this and teamsters what they have the fact is that the the board and the international look recognized that seven twenty six and seven fourteen were both in trouble local seven hundred that their members could join if they chose to join but if they they joined that then they would be under seven hundred but we haven't talked about here a successor liability because the party that's being sued here seven hundred seven twenty six does seven hundred become seven twenty six it doesn't become seven twenty six under the four exceptions to nine successor liability or successor nine liability is the rule in illinois we've we've outlined the four requirements for are the four exceptions for success or liability none of them apply here which is precisely why the appellate court chose not to follow the illinois illinois law on this and they adopted the substantial the substantial continuity test for success reliability in order to get local seven hundred libel here local seven hundred to negotiate this got back to local seven hundred was created for and by the way most of the members of the international board as i said earlier didn't even know about this contract they had nothing to do with the reason why seven hundred was set up if that had been the case they might have been able to get as the fraud exception or some one of the other three  weren't being well run and media elite took a look at this contract and realized it was so one sided that it was not something that they wanted to live with and then they recognized that it wasn't even a legal contract to begin with and so they s members if they wanted to belong to local seven hundred they joined local seven hundred that's not a merger it's not a consolidation if they wanted to do a consolidation they would have done it differently there would have been articles of merger there would have been a lot of other paperwork it would have been you  liabilities of seven twenty six they took the assets of seven twenty six in fact it netted out to be a loss it was forty six million dollars in assets the risk transferred to seven hundred there were seventy five million dollars in liabilities that were transferred but the one playability potential liability that was not transferred it was not accepted was this lease because this least didn't have a little forward to begin with so seven hundred got was created because there for by the international perfectly legitimate and members were permitted to join it and the other two local superstore decertified the members of seven fourteen sixty percent of the membership of seven hundred came from seven fourteen seven four so that means that the because the the is a trade association they all have individual liability so sixty percent of the members of the new union i don't the local are made up of people from seven twenty six or seven fourteen who never had anything to do with this contract i mean let me just the members from seven twenty six because they were never given notice of it they never voted on it but put down a side sixty percent or seven hundred his is so  to federal labor cases and it's unique to federal labor cases because you know when you have a you don't want but i knew a new company to just take over the assets of an old company and then walk away from be able to walk away from the collective bargaining agreement and you don't want a union that has been is under a consent decree not to discriminate for example to just recreate another local and  got all this record from i was going to tell you about but i know there's a time limit and i appreciate the court's patience so i will close with that i don't have a i don't have a pithy phrase or something to close this out with i just