STATE STAYS LAWSUITS VS. EM LAW PA 436, CITING DETROIT CHAPTER 9 BANKRUPTCY FILING

 

Protesters sit-down in Cadillac Place lobby June 28, 2012 to demand vote on PA 4, which was overwhelming rescinded. Snyder et al replaced it with PA 436 in the dark of the night..
Protesters sit-down in Cadillac Place lobby June 28, 2012 to demand vote on PA 4, which was overwhelming rescinded. Snyder et al replaced it with PA 436 in the dark of the night..

 Attorneys for plaintiffs in Phillips et al v. Snyder and Detroit NAACP et al v Snyder are studying strategy for court action in response

Police brutality cases, union arbitration proceedings are likewise stalled 

People’s forum on emergency manager Sat. Aug. 17, 9:30 am; rally against EM’s bankruptcy attack on retirees, city assets Mon. Aug 19, 11 a.m.

By Diane Bukowski 

Aug. 16, 2013

Michigan State Treasurer Andy Dillon and Gov. Rick Snyder

Michigan State Treasurer Andy Dillon and Gov. Rick Snyder

DETROIT – In federal court filings, State Attorney General Bill Schuette, on behalf of Michigan Gov. Rick Snyder and Treasurer Andy Dillon, has declared a stay on two federal lawsuits which challenge the constitutionality of Public Act 436, due to Detroit’s Chapter 9 bankruptcy filing. 

PA 436 is the current Emergency Manager Act which brought Detroit Kevyn Orr, and eventually the bankruptcy case. 

On Aug. 7, Schuette filed a “NOTICE OF PENDENCY OF BANKRUPTCY CASE AND APPLICATION OF THE AUTOMATIC STAY” on cases filed by AFSCME Council 25 Chief Negotiator Catherine Phillips and community and religious leaders, and by the Detroit Chapter of the NAACP, against Snyder and Dillon.  The cases have been pending in U.S. District Judge George Caram Steeh’s court since March, 2013. 

In his notice, Schuette refers to the “extended stay” U.S. Bankruptcy Judge Steven Rhodes granted with regard to lawsuits against Snyder, Dillon and the State Emergency Loan Board.” Phillips et al motion by state to stay pending bc 8 7 13 and NAAACP EM state motion re BC.

Atty. General Bill Schuette.

Atty. General Bill Schuette (Sieg Heil!)

“Actions taken while this Stay is in effect and/or in violation of this Stay, including proceedings in this case, are void and without effect,” Schuette writes in part. “Under these circumstances, the above-captioned proceeding may not be prosecuted, and no valid judgment or order may be entered or enforced against these ‘certain State entities.’ These certain ‘State Entities’ will not defend against, or take any other action with respect to, the above-captioned proceeding while the Stay remains in effect.” 

Numerous other actions are being stayed as well, including police brutality lawsuits and union arbitration proceedings.  

Rev. David Bullock speaks at right as Pastor Ed Rowe, Attorneys Julie Hurwitz and Butch Hollowell, and Rev. Wendell Anthony listen outside Detroit State Court Of Appeals offices June 20, 2012 after filing motions to demand placement of PA 4 referendum on ballot.

Rev. David Bullock speaks at right as Pastor Ed Rowe, Attorneys Julie Hurwitz and Butch Hollowell, and Rev. Wendell Anthony listen outside Detroit State Court Of Appeals offices June 20, 2012 after filing motions to demand placement of PA 4 referendum on ballot.

“We are living in a lawless society right now, where courts will not uphold the law or the constitution,” Attorney Julie Hurwitz, one of eight attorneys representing plaintiffs in the Phillips case, said. “As far as we’re concerned, the stay should not apply to our lawsuit, because it does not affect the bankruptcy case nor does it impact the assets of the City of Detroit. At the same time, one could argue that it does affect the case because if our lawsuit succeeds, it would invalidate the whole bankruptcy filing by the emergency manager.” 

She said she and attorneys in the case believe Rhodes’ stay was meant to apply to the three state lawsuits filed by retirees and the city’s two retirement systems in Ingham County Circuit Court Judge Rosemarie A quilina’s court. 

City consultants Bruce Bennett of Jones Day, EM Kevyn Orr, William Buckfire at creditors meeting June 14, 2013 at airport.

City consultants Bruce Bennett of Jones Day, EM Kevyn Orr, William Buckfire at creditors meeting June 14, 2013 at airport.

In what has been called a “rush to the courthouse,” Orr filed the bankruptcy petition just minutes before Aquilina was to hear motions to stop Gov. Snyder from approving the bankruptcy filing as it relates to pension benefits protected by the State Constitution. 

Hurwitz said attorneys in both cases are studying appropriate strategies, and will likely object to the applicability of the stay to their cases and ask Judge Steeh to rule on the matter.  She could not say when or whether that will actually happen. 

“He can at least say the part of the case that has nothing to do with the debtor can continue,” Hurwitz said. 

Attorney Herbert Sanders interviewed after former City Corporation Counsel Krystal Crittendon filed suit against consent agreement (financial stability agreement).

Attorney Herbert Sanders interviewed after former City Corporation Counsel Krystal Crittendon filed suit against consent agreement (financial stability agreement).

Phillips v. Snyder asks for PA 436 to be struck down not only on behalf of the City of Detroit, but on behalf of all municipalities, school districts and other local entities in the state.   

It asks for declaratory relief holding that PA 436 violates the U.S. Constitution, the Voting Rights act, and due process rights.

It also asks for injunctive relief preventing “present and future EMs  from implementing or exercising authority and powers purportedly conveyed by Public Act 436,” protecting Detroit union contracts and the powers of local elected officials, and “for liquidated, compensatory, and punitive damages.”

Click on PA 436 lawsuit Phillips et al and NAACP-EM-436-Complaint- for copies of both complaints.

Bankruptcy judge Steven Rhodes (r) with mediator Chief Judge Gerald Rosen (l), a member of the Federalist Society.

Bankruptcy judge Steven Rhodes (r) with mediator Chief Judge Gerald Rosen (l), a member of the Federalist Society.

Attorney Herbert Sanders, another attorney in Phillips v. Snyder, told Rhodes during the first bankruptcy hearing July 24, “There has already been a motion for summary judgment, and arguments have been scheduled [in our case]. It appears that the city is seeking an extension of the stay regarding finances, but pursuant to oral litigation they are seeking relief concerning any litigation that might interfere with city’s rights as a Chapter 9 debtor. Our case should not be included as part of the stay order. It is imperative the issue in our case should be determined before bankruptcy proceedings.” 

Detroit firefighters protest bankruptcy filing July 24, 2013 outside federal court. It endangers their pensions, and they are not eligible for Social Security.

Detroit firefighters protest bankruptcy filing July 24, 2013 outside federal court. It endangers their pensions, and they are not eligible for Social Security.

Also during that hearing, Attorney Barbara Paddock, representing the Detroit Firefighters Association, the Detroit Police Command Officers Association, The Detroit Police Lieutenants and Sergeants Association, and the Detroit Police Officers Association, concurred with Orr’s request for the extended stay. 

“We are not conceding the city is eligible to be a debtor,” Paddock said. “We simply believe this court is the proper forum because of the interaction of state and federal law. We want the stay to include members of public safety unions who may be subjected to lawsuits.” 

Meanwhile, firefighters and other public safety workers protested outside. They said the bankruptcy case endangers their retirement, since no federal law protects public pensions. Additionally, they said, they are not eligible for Social Security as are other city workers, because they never paid into the fund. 

AFSCME Local 207 workers on strike at Wastewater Treatment Plant Sept. 30, 2012.

AFSCME Local 207 workers on strike at Wastewater Treatment Plant Sept. 30, 2012.

Hurwitz said she represents numerous clients in lawsuits against Detroit police officers, and that so far, every judge has considered those actions stayed as well.

John Riehl of AFSCME Local 207 said Rhodes’ stay has affected grievance procedures in the unions as well. He said Labor Relations have notified union officials that they consider the stay to apply to grievance arbitration, even though not all grievances involve financial matters. 

Schuette earlier issued a much publicized statement that he would intervene in the bankruptcy proceedings to protect public retirees under provisions of the State Constitution. He has filed to intervene, but has not yet introduced any arguments to that effect.Peoples Forum v EM

Council25_EmailHeader

Stand your ground

  NEXT BANKRUPTCY HEARING Wed. Aug. 21, 2013 10 am

    Federal courthouse 231 W. Lafayette, Downtown Detroit

                  TOPICS: $1.5 BILLION POC DEBT, RELATED SWAPS,                                MOTION BY ROBERT DAVIS

          STOP THE THEFT OF OUR PENSIONS COMMITTEE 313-680-5508        

MORATORIUM NOW! WEBSITE http://moratorium-mi.org                                                                        

Documents related to Detroit bankruptcy case http://www.mieb.uscourts.gov/


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