Regional News

Judge Hands Detroit Union Small Victory

CHICAGO — U.S. Bankruptcy Judge Steven Rhodes Wednesday agreed to briefly lift the automatic stay on Detroit's Chapter 9 case to allow a state judge to issue an opinion on a related labor dispute.

It's a small victory for the city's largest union, which is trying to protect city pension systems' rights to distribute bonus payments known as "13th checks."

The state employment judge is expected to affirm an oral ruling he made earlier this year recommending to a state labor board that the Detroit General Retirement System and Police and Fire Retirement System be given the right to continue the 13th-check tradition.

The city halted the bonuses in November 2011.

Rhodes' ruling only allows the writing of the opinion, which may also include a dollar amount the city would owe the union. The bankruptcy judge's ruling does not weigh in on the tradition itself.

Rhodes gave Administrative Law Judge Doyle O'Connor until midnight Friday to issue his opinion. O'Connor is retiring Friday.

"We just want a snapshot of a piece of info that might be of value at a future point in time," Sharon Levine, attorney for Michigan Council 25 of the American Federation of State, County and Municipal Employees told Rhodes, according to local reports.

The 13th checks have sparked attention recently after an investigation showed that the city's two pension systems paid out regular bonuses over the years that may have cost the city $1.9 billion since 1985.

Detroit emergency manager Kevyn Orr cites the preliminary audit as one reason behind his push to freeze the pension systems by the end of the year.

Details in a recent court filing showed that the city's General Retirement System board gave out nearly $1 billion in bonuses — most to employees, not retirees — from 1985 to 2007. It gave another $445 million to the city.

AFSCME's request was one of three requests to lift the automatic stay that Rhodes considered Wednesday.

The judge also heard arguments from the NAACP asking for the right to pursue its challenge to the state's emergency management law outside of the bankruptcy court.

The NAACP filed a lawsuit in May, months before the city's Chapter 9 filing, arguing that Public Act 436 is unconstitutional because it violates voters' rights. NAACP attorney Melvin Hollowell said the group is not challenging Detroit's eligibility to file for Chapter 9.

City attorneys argued that an overturn of the EM law would "eviscerate" the city's bankruptcy because only an emergency manager is allowed to file for Chapter 9 protection.

Rhodes will issue a written decision on that matter, as well as whether a case involving the death of a police officer be allowed to continue outside the bankruptcy case.




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