Thomas Ostrowski v. Lake County, Indiana ( 2022 )


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  •                                In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________________
    Nos. 21-1674 & 21-2580
    THOMAS OSTROWSKI,
    Plaintiff-Appellant,
    v.
    LAKE COUNTY, et al.,
    Defendants-Appellees.
    ____________________
    Appeals from the United States District Court for the
    Northern District of Indiana, Hammond Division.
    No. 2:18-cv-0423-RLM — Robert L. Miller, Jr. Judge.
    ____________________
    ARGUED JANUARY 19 & APRIL 8, 2022 — DECIDED MAY 11, 2022
    ____________________
    Before WOOD, HAMILTON, and JACKSON-AKIWUMI, Circuit
    Judges.
    WOOD, Circuit Judge. Thomas Ostrowski worked for the
    Lake County (Indiana) Sheriff’s Department before a work-
    place injury left him permanently disabled. He now receives
    a monthly pension payment from the County. But here’s the
    rub: Lake County’s disability pension plan does not provide
    cost-of-living increases, while the County’s pension plan for
    non-disabled retirees does. Ostrowski brought this action
    2                                      Nos. 21-1674 & 21-2580
    under both federal and state law, arguing that the difference
    between the two plans amounts to illegal disability discrimi-
    nation.
    The district court never reached the merits, holding in-
    stead that Ostrowski’s suit was barred by a waiver that he
    signed while settling earlier litigation that he had brought
    against Lake County. Ostrowski appealed from that judg-
    ment; later, he also appealed the district court’s award of fees
    and costs for the defendants. We have consolidated both ap-
    peals for disposition.
    We hold that Ostrowski’s claims were not barred by the
    claim waiver, but that the defendants are entitled to prevail
    on other grounds. We reverse the award of fees and costs.
    I
    Because the case was resolved on summary judgment, we
    view the facts in the light most favorable to Ostrowski, the
    non-moving party. See Dixon v. County of Cook, 
    819 F.3d 343
    ,
    346 (7th Cir. 2016). In any case, the material facts in the ac-
    count that follows are undisputed.
    A
    Ostrowski worked for about eight years as a police officer
    for the Lake County Sheriff’s Department (“the Depart-
    ment”). In 1996, he suffered a serious spinal injury during a
    training exercise. Although initially he returned to work, his
    condition worsened over time and forced him to undergo a
    double fusion surgery on his spine in 2003. Upon learning that
    the spinal surgery had failed, the Lake County Sheriff’s Merit
    Board concluded that Ostrowski was permanently disabled.
    He retired and now receives a monthly disability pension.
    Nos. 21-1674 & 21-2580                                        3
    The Department provides monthly benefits to three
    groups: retirees, disabled former employees, and some sur-
    viving spouses of law enforcement officers. It uses two formu-
    las, each of which incorporates the beneficiary’s final salary
    and years on the job, to calculate monthly benefits for disa-
    bled former employees and non-disabled retirees. For non-
    disabled retirees, the Department calculates benefits based on
    the number of years the beneficiary spent on the job. For those
    who retire early because of disability, Lake County calculates
    benefits as though the person spent 32 years working for the
    Department. (Surviving spouses’ benefits vary depending on
    when their spouses passed away.)
    Former employees and surviving spouses receiving retire-
    ment benefits are eligible for an annual cost-of-living increase
    to their benefits once they turn 55 years old. Those receiving
    disability pension benefits are not. Although Ostrowski
    turned 55 in 2016, he has never received a cost-of-living ad-
    justment. Believing that this system unlawfully discriminates
    against employees who became disabled on the job, Os-
    trowski sued Lake County, the Department, the Lake County
    Treasurer, and the Pension Committee of the Pension Plan of
    the Lake County Sheriff, arguing that the county’s policy vio-
    lates the Equal Protection Clause of the Fourteenth Amend-
    ment, Title I of the Americans with Disabilities Act, 
    42 U.S.C. § 12112
    , Section 504 of the Rehabilitation Act, 
    29 U.S.C. § 794
    ,
    and state law.
    B
    This lawsuit was not Ostrowski’s first against Lake
    County. From 2014 to 2015, he worked for the County as a 911
    dispatcher. In 2016, he brought a lawsuit alleging that he was
    forced to leave the job because his employer denied him
    4                                       Nos. 21-1674 & 21-2580
    reasonable accommodations. Ostrowski named the Lake
    County Board of Commissioners, the Lake County E-911
    Commission, the Lake County Council, and two individual
    supervisors as defendants in his 2016 complaint. This separate
    litigation ended in February 2017 with a settlement agreement
    between Ostrowski and Lake County. Ostrowski’s counsel
    drafted the 2017 settlement agreement, but the document pro-
    vides that the common rule of construction resolving ambigu-
    ities “against the drafting party shall not be employed in” in-
    terpreting it.
    At the end of paragraph 1 of the 2017 settlement agree-
    ment, the following language appears: “Nothing in … this
    Agreement shall change, modify, terminate, or affect in any
    way Ostrowski’s pension, health benefits, or any other retire-
    ment benefits to which Ostrowski has a right, now or in the
    future.”
    Paragraph 2 of the agreement is entitled “release”; it reads
    as follows in pertinent part:
    Ostrowski … hereby forever releases and dis-
    charges Defendants, their affiliates, subsidiar-
    ies, related entities, and each of their respective
    successors, … agents, employees, attorneys, and
    representatives ... from any and all claims, de-
    mands, damages, causes of actions, rights,…
    and liabilities, of whatsoever kind or nature,
    known and unknown, matured or contingent,
    asserted or unasserted, foreseen or unforeseen,
    arising prior to this Agreement, including, but not
    limited to those resulting in any way from or in
    any way growing out of or arising from Os-
    trowski's employment with Defendants and
    Nos. 21-1674 & 21-2580                                         5
    termination of such employment which could
    have been discovered, including, but not lim-
    ited to, claims arising under the Americans with
    Disabilities Act[.] … Ostrowski understands
    and agrees that any claims he may have under
    the aforementioned statute, or any other fed-
    eral, state, or local law, ordinance, rule or regu-
    lation are effectively waived under this Agree-
    ment. No rights or claims arising after the execution
    of this agreement are waived hereby.
    (Emphasis added). The agreement also provides that Os-
    trowski released Lake County from any “damages or claims
    that are unknown to him at present” that “may arise, develop
    or be discovered in the future.”
    C
    When Ostrowski brought the present action, the defend-
    ants raised the release in the 2017 settlement agreement as a
    defense. The district court found that the release applied and
    granted summary judgment to the defendants on that basis.
    It reasoned that Ostrowski knew that his pension did not in-
    clude cost-of-living increases before he signed the 2017 agree-
    ment. It also concluded that Ostrowski had waived any claims
    against the Sheriff, Treasurer, and Pension Committee be-
    cause they were “affiliates” or “related entities” of Lake
    County. Ostrowski’s first appeal, No. 21-1674, challenges that
    judgment.
    D
    Shortly after the district court entered its judgment, the de-
    fendants moved for an award of fees and costs. The sole basis
    6                                      Nos. 21-1674 & 21-2580
    for their motion was paragraph 15 of the 2017 settlement
    agreement, which provides that:
    In the event Ostrowski or Defendants bring a
    lawsuit relating to a breach of, or the enforce-
    ment of, this Agreement, or any of the Released
    Parties assert this Agreement as a defense to an
    action brought by or on behalf of Ostrowski, the
    prevailing party shall be entitled to seek attor-
    neys’ fees from the other party. This provision
    does not apply to any action or claim Ostrowski
    may assert under any federal or state statute or
    law that prohibits the recovery of such fees,
    costs and expenses by the Released Parties.
    The district court granted the motion and awarded the de-
    fendants $221,577.25 in attorneys’ fees and $4,487.08 in costs.
    Ostrowski’s second appeal, No. 21-2580, challenges this deci-
    sion.
    II
    We take a fresh look at a district court’s grant of summary
    judgment. Dixon, 819 F.3d at 346. Summary judgment is war-
    ranted when there are no genuine disputes of material fact
    between the parties and no reasonable factfinder could find
    for the non-movant on an essential element on which it bears
    the burden of proof at trial. Celotex Corp. v. Catrett, 
    477 U.S. 317
    , 322 (1986).
    Paragraph 6 of the 2017 settlement agreement states that
    the applicable law is that of Indiana (excluding its choice-of-
    law rules). That state’s courts interpret settlement agree-
    ments, like other contracts, “with the intention of the parties
    regarding the purpose of the document governing” and by
    Nos. 21-1674 & 21-2580                                          7
    giving unambiguous contract terms “their clear and ordinary
    meaning.” Haire v. Parker, 
    957 N.E.2d 190
    , 195–96 (Ind. Ct.
    App. 2011).
    Paragraph 1 expressly addresses the topic of Ostrowski’s
    retirement benefits. It states that “[n]othing in … this Agree-
    ment shall change, modify, terminate, or affect in any way Os-
    trowski’s pension, health benefits, or any other retirement
    benefits to which Ostrowski has a right, now or in the future.”
    In other words, the settlement agreement in its entirety has no
    effect on Ostrowski’s disability pension. The release appears
    in paragraph 2 of the agreement, and thus is one of those
    things that does not “change, modify, terminate, or affect in
    any way” Ostrowski’s disability pension.
    That is enough to dispose of the threshold issue on which
    the district court relied. In the interest of completeness, how-
    ever, we add a word about Ostrowski’s alternative argument.
    It is based on the preservation of “rights or claims arising after
    the execution” of the settlement agreement. If each of Os-
    trowski’s payments after the effective date of the settlement
    generates a fresh legal claim, then this would be an alternative
    path for him.
    The Supreme Court held in Bay Area Laundry and Dry
    Cleaning Pension Trust Fund v. Frebar Corp. of California, that,
    for the purposes of a Multiemployer Pension Plan Amend-
    ments Act claim, “each missed [pension] payment creates a
    separate cause of action.” 
    522 U.S. 192
    , 195 (1997). The general
    rule is that a new claim accrues with each payment of an in-
    stallment obligation, because a plaintiff typically must wait
    until a defendant “misses a particular payment before suing
    to collect that payment.” See 
    id. at 208
     (emphasis in the origi-
    nal); see also Kuhn v. Kuhn, 
    273 Ind. 67
    , 70 (1980). The pension
    8                                       Nos. 21-1674 & 21-2580
    obligation at issue in Bay Area Laundry, like the one in Os-
    trowski’s case, was paid in installments; therefore, the Court
    said, each new pension payment (or non-payment) generates
    a unique claim. Applying that reasoning to Ostrowski’s case,
    each payment after he signed the settlement agreement in
    February 2017 has generated a distinct claim that falls outside
    the scope of the release.
    Lake County relies on Fair v. International Flavors & Fra-
    grances, Inc., 
    905 F.2d 1114
     (7th Cir. 1990), but the two cases
    differ in important ways. As we explained in Fair, under Illi-
    nois law a general release of claims applied to “all claims of
    which a signing party has actual knowledge or that he could
    have discovered upon reasonable inquiry.” 
    Id. at 1116
     (inter-
    nal quotation marks omitted). But this is a default rule, which
    applies only if there is no contractual language to the con-
    trary. There is such language in the 2017 agreement. Moreo-
    ver, to the extent that Fair is in tension with Bay Area Laundry,
    it is the latter case that controls.
    Ostrowski also argues that the 2017 settlement agreement
    does not affect his claims against the Sheriff, Treasurer, and
    the Pension Committee because these entities were not parties
    to the agreement. Accepting the defendants’ argument, the
    district court found that these additional entities were cov-
    ered because the waiver in the agreement covered not only
    the County, but also its “affiliates,” “officers,” and “agents.”
    This raises an issue of state law. We see no reason to delve into
    it, because nothing turns on it. The general exclusion in para-
    graph 1 of the agreement for matters affecting Ostrowski’s
    pension resolves this part of the case. We thus move on to the
    merits.
    Nos. 21-1674 & 21-2580                                         9
    III
    A
    Ostrowski argues that the defendants, by providing a cost-
    of-living increase for retirement benefits while denying one
    for disability pension benefits, violated Title I of the ADA, 
    42 U.S.C. §§ 12111
    –17. But as Ostrowski recognizes, this claim is
    going nowhere, because we already have decided that “re-
    tired and other former workers are not protected” by Title I of
    the ADA. See Morgan v. Joint Admin. Bd., 
    268 F.3d 456
    , 457–58
    (7th Cir. 2001); see also EEOC v. CAN Ins. Cos., 
    96 F.3d 1039
    ,
    1043–44 (7th Cir. 1996). In Morgan, we held that a retirement
    plan did not violate the employment provisions of the ADA
    by extending a cost-of-living increase to non-disabled retirees
    but not those who retire early because of disability. See 
    268 F.3d at
    457–58. That resolves Ostrowski’s case.
    Ostrowski’s only response is to urge us to reconsider Mor-
    gan. We are not inclined to do so. That said, we confirm that
    he has preserved this issue for further review, should the en
    banc court or the Supreme Court wish to take it up.
    Ostrowski’s complaint also invoked section 504 of the Re-
    habilitation Act, 
    29 U.S.C. § 794
    . But on appeal, Ostrowski’s
    brief barely touched on this theory. This argument is thus for-
    feited. See Guzman v. City of Chicago, 
    689 F.3d 740
    , 744 n.3 (7th
    Cir. 2012) (“Perfunctory and undeveloped arguments” are
    forfeited. (cleaned up)).
    B
    The Equal Protection Clause of the Fourteenth Amend-
    ment prohibits the states from denying any person “the equal
    protection of the laws.” U.S. Const. amend. XIV. When state
    action discriminates against a suspect class or denies a
    10                                       Nos. 21-1674 & 21-2580
    fundamental right, courts apply strict scrutiny. See Srail v. Vil-
    lage of Lisle, 
    588 F.3d 940
    , 943 (7th Cir. 2009). Otherwise, it is
    enough for the state actor to show a rational basis for the clas-
    sification. 
    Id.
    Ostrowski’s claim, as he concedes, qualifies only for ra-
    tional basis review. See City of Cleburne v. Cleburne Living Ctr.,
    
    473 U.S. 432
    , 446 (1985) (holding that mental disability is not
    a suspect classification subject to heightened scrutiny under
    the Equal Protection Clause); United States v. Harris, 
    197 F.3d 870
    , 876 (7th Cir. 1999) (holding that people with disabilities
    “are not a suspect or quasi-suspect class.”). A local policy that
    treats two groups of people differently will pass muster so
    long as there is some “rational relationship between the dis-
    parity of treatment and some legitimate governmental pur-
    pose.” Srail, 
    588 F.3d at 946
    . Local decisions can survive ra-
    tional basis review even if they only imperfectly achieve the
    legitimate government interest they aim to advance. 
    Id.
     Gov-
    ernment actors may rely on disability, like other classifica-
    tions reviewed under the rational basis standard, as a proxy
    for other qualities or characteristics, even if it “proves to be an
    inaccurate proxy in any individual case[.]” Stevens v. Ill. Dep’t
    of Transp., 
    210 F.3d 732
    , 738 (7th Cir. 2000) (quoting Kimel v.
    Fla. Bd. of Regents, 
    528 U.S. 62
    , 84 (2000)).
    Lake County has a legitimate interest in providing pen-
    sion plans that meet the differing needs of distinct groups.
    Moreover, the cost-of-living adjustment is only one of several
    relevant differences in the plans before us. Non-disabled re-
    tirees must contribute a portion of their salary to the plan
    every year until they are eligible for retirement, and they be-
    come eligible only after 20 years on the job or at age 60. Em-
    ployees who retire on account of disability begin receiving
    Nos. 21-1674 & 21-2580                                      11
    payments as soon as they stop working, no matter how long
    they have paid into the pension system. Non-disabled retirees
    receive benefits based on the number of years they worked
    for the Sheriff’s Department. By contrast, Ostrowski’s disabil-
    ity pension is calculated as though he had spent 32 years
    working for the Department, though he in fact was on the job
    for only about eight years. And while disabled retirees do not
    receive cost-of-living adjustments, they do receive a lump
    sum refund of all contributions they previously made to the
    retirement plan, with interest. Non-disabled retirees do not
    have that option.
    Viewed as a whole, the different plans provided to disa-
    bled and non-disabled former employees are rationally re-
    lated to Lake County’s legitimate interest in providing bene-
    fits that meet the needs of its employees, present and past.
    Lake County rationally could believe that disabled former
    employees will benefit more from an up-front lump sum pay-
    ment returning their retirement contributions than from a
    cost-of-living adjustment provided years in the future. Lake
    County also has an interest in retention, the promotion of
    long-term careers in the Sheriff’s Department, and the provi-
    sion of more generous benefits to the employees who worked
    for it the longest. There is nothing irrational about providing
    more generous benefits for former employees who worked
    longer for the Sheriff’s Department or who made more annual
    contribution payments. Similarly, Lake County could permis-
    sibly believe that it is appropriate to provide more generous
    benefits to surviving spouses of employees who died on the
    job than to disabled employees, in light of the sacrifice those
    families made.
    12                                      Nos. 21-1674 & 21-2580
    Lake County’s system need not be perfectly designed to
    achieve its goals. Rational basis review “is not a license for
    courts to judge the wisdom, fairness, or logic” of government
    agencies’ choices. Heller v. Doe, 
    509 U.S. 312
    , 319 (1993) (cita-
    tions omitted); see also Johnson v. Daly, 
    339 F.3d 582
    , 587 (7th
    Cir. 2003) (collecting cases). As long as a policy has some ra-
    tional connection to a legitimate state interest, improving it is
    a task for the democratic branches of government, rather than
    the courts. Lake County easily meets that test.
    C
    Ostrowski also asserts a novel state-law claim under an In-
    diana statute providing that Sheriff’s Departments’ disability
    pension payments “as a result of line of duty activities ... must
    be in reasonable amounts.” IND. CODE § 36-8-10-15(b). We as-
    sume, without deciding, that this state statute supports a pri-
    vate right of action.
    Ostrowski argues that a disability pension scheme that
    does not provide a cost-of-living increase is per se unreasona-
    ble. But Indiana courts have not gone that far. They have not
    even explained what constitutes a “reasonable” disability
    pension payment, much less held that a “reasonable” amount
    necessarily includes a cost-of-living increase. Federal courts
    must exercise caution before recognizing novel legal theories
    brought under uncharted state laws. See Pisciotta v. Old Nat’l
    Bancorp, 
    499 F.3d 629
    , 635–36 (7th Cir. 2007). Because Os-
    trowski cannot point to some state law supporting his theory,
    we decline to hold that Indiana Code § 36-8-10-15 requires a
    cost-of-living increase for all disability pensions.
    Nos. 21-1674 & 21-2580                                                  13
    IV
    Although Lake County has prevailed on the merits, we
    conclude that it is not entitled to costs and fees. This court
    generally reviews fee awards for abuse of discretion, but we
    evaluate de novo the legal analysis underlying a fee award.
    EEOC v. CVS Pharmacy, Inc., 
    907 F.3d 968
    , 971 (7th Cir. 2018).
    The district court held that the defendants, as the prevail-
    ing parties, were entitled to fees and costs pursuant to the
    terms of the 2017 settlement agreement. 1 In so holding, the
    district court repeated the same mistake it made on the merits.
    Nothing in the settlement agreement affects any claims re-
    lated to Ostrowski’s pension benefits in any way. That means
    that the fees provision of the settlement agreement has no ef-
    fect on Ostrowski’s lawsuit about his pension benefits. If the
    contract does not apply, the defendants must bear the cost of
    their own litigation. See Osler Inst., Inc. v. Forde, 
    386 F.3d 816
    ,
    818 (7th Cir. 2004) (“Indiana adheres to the American rule,
    under which, in the absence of a statutory provision or an
    agreement providing for fees, each party is required to pay its
    own attorney fees.”). Therefore, the fee award must be set
    aside.
    V
    Ostrowski’s present lawsuit is not barred by his unrelated
    settlement agreement with Lake County, but his claims fail on
    1Ostrowski filed for bankruptcy while this case was working its way
    through the courts. When someone declares bankruptcy, there is an auto-
    matic stay of most ongoing proceedings against her. See 
    11 U.S.C. § 362
    (a).
    The responsible bankruptcy court may modify the automatic stay upon
    request. Here, the bankruptcy court granted Ostrowski’s request to lift the
    automatic stay for his fee appeal, and so we are free to resolve it now.
    14                                      Nos. 21-1674 & 21-2580
    other grounds. We therefore AFFIRM the judgment of the dis-
    trict court granting summary judgment to the defendants. We
    REVERSE the district court’s order granting fees and costs to the
    defendants.