Over four years and $300,000 later, lawsuit between city of Crystal Lake, firefighters union continues

More than four years later, a legal battle between the city of Crystal Lake and its firefighters union and Foreign Fire Insurance Board that cost the city thousands in legal bills could be approaching an end as both parties now are trying to reach a settlement agreement.

Legal bills obtained by the Northwest Herald in a Freedom of Information Act request show the city has paid more than $300,000 since Aug. 31, 2017, when the union representing Crystal Lake firefighters sued Crystal Lake officials for zeroing out the foreign fire insurance tax imposed on out-of-state insurance companies.

In Illinois, insurance companies based in another state are subject to what is called the foreign fire insurance tax. A Foreign Fire Insurance Board, composed of firefighters union members and the fire chief, decides on how these dollars are spent, as long as they are for the “maintenance, use and benefit” of the department.

But, in 2015, the board began approving expenditures that Crystal Lake city officials considered to be for personal use, such as health club memberships, child care expenses, Fitbit devices and coffee beans, said Victor Filippini, who is representing the city of Crystal Lake in the lawsuit.

As a result, in 2017, Crystal Lake City Council decided to use the $150,000 remaining in the tax fund until it was depleted and reduced the foreign fire insurance tax rate.

The Foreign Fire Insurance Tax Board and firefighters’ union argued that this move violated the law and the revenue at issue were state funds derived from the imposition of a state tax levy, not city funds.

“By and through its unlawful conduct, defendants have acted outside the scope of their authority,” the firefighters union said in its initial complaint.

However, the city argued that these funds were not being used for appropriate purposes laid out in state statute and zeroing the fund out was in Crystal Lake residents’ best interest.

The union also alleged that city officials retaliated against Brian Marino, a union member who sat on the tax board, by reducing his performance score and removing language reflecting positively on his work on the Foreign Fire Insurance Board from a performance review. Marino alerted the McHenry County State’s Attorney’s Office and Crystal Lake Police Department about the city’s decision to zero out the fund, which he thought violated state law.

These retaliation allegations are disputed by the city of Crystal Lake, saying the firefighter involved has not suffered in his employment.

“We think they’re meritless, but even if they have merit, there’s not been any consequence, which is necessary to establish a whistleblower claim,” Filippini said.

This past January, the city presented a written settlement proposal to the union, parts of which it objected to, Filippini, said.

He declined to share further details regarding the settlement discussions, which he said are customarily privileged and confidential, but said generally speaking, the settlement was trying to cover a range of issues to make sure the two sides can operate effectively and amicably.

“At some point, I suspect we will get either a settlement or get a conclusion on all of the issues in the case,” Filippini said.

Ryan Hagerty, the attorney for the firefighters’ union, confirmed during a Tuesday status hearing that both parties have been engaged in settlement discussions.

Hagerty and Filippini agreed to having another status hearing on Oct. 18.

Multiple attempts to reach Hagerty were unsuccessful. Marino declined to comment until the matter is settled, and others firefighters named in the lawsuit could not be reached for comment.

“The city has aggressively defended the city code amendments at issue in the lawsuit, which provisions were adopted to ensure integrity in the use of public funds,” Crystal Lake Mayor Haig Haleblian said in a written statement provided by Filippini. “So far, the city has prevailed on every substantive issue, but the lawsuit continues to wend its way through the courts.”

Filippini pointed to Judge Thomas Meyer’s decision that the Foreign Fire Insurance Tax Board was part of the city, which prevents them from suing, as evidence of Crystal Lake prevailing.

After the city filed a counterclaim saying the board lacked the authority to hire an attorney to sue, the firefighters’ union sought to have the lawsuit dismissed. That motion was denied in June.

An effort by the firefighters union to have the appellate court look at the case also was unsuccessful.