Appeals court upholds Mich. emergency manager law

Jonathan Oosting
Detroit News Lansing Bureau

Michigan’s controversial emergency manager law does not amount to “viewpoint discrimination” or restrict the voting rights of residents in financially distressed cities, a federal appeals court ruled Monday.

A three-judge panel for the U.S. Sixth Circuit Court of Appeals unanimously upheld Public Act 436 of 2012, approved by the Republican-led Legislature and signed by Gov. Rick Snyder a few weeks after voters rejected an earlier version of the state takeover law.

“We have always believed the law to be constitutional, so it’s good to see the court affirm the state has a legitimate purpose in intervening to improve financially stressed municipalities,” said Snyder spokeswoman Anna Heaton.

The law gives financially ailing cities or school districts four options for dealing with their financial distress, including arbitration, bankruptcy and a consent decree negotiated with state government.

It also allows the governor to appoint an emergency manager with broad authority to run the day-to-day operations of a cash-strapped city or school district, which “undoubtedly is a legitimate legislative purpose,” wrote Judge John M. Rogers, appointed to the court by former Republican President George W. Bush.

“The state’s remedy for financially endangered communities — passed by state-elected bodies for which African-Americans have a constitutionally protected equal right to vote, and facially entirely neutral with respect to race — are far removed from being a ‘badge’ of the extraordinary evil of slavery,” Rogers said.

Judges Richard Griffin and Richard Suhrheinrich, also appointed by Republican presidents, joined Rogers in upholding the law.

The 2013 lawsuit, filed on behalf of several Michigan residents and the AFSCME Council 25 union, alleged the law denied citizens in predominately black cities their constitutional right to due process, free speech and equal protection under the law while also violating the Voting Rights Act.

Attorney Herb Sanders said Monday he was “disheartened and disappointed” by the ruling, suggesting the judicial panel “took a fascist view toward the democratic rights of the citizens.”

Sanders vowed to continue the fight, possibly by requesting an “en banc” hearing before the full appeals court. He plans to meet with colleagues this week to assess options.

“This case has national implications, and I think it will ultimately end up before the U.S. Supreme Court,” Sanders said. “When it does, we’re prayerfully optimistic we’ll be victorious.”

To expedite the appeal, plaintiffs agreed to drop an equal protection claim based on discrimination against African-Americans, instead pursuing a similar claim of wealth discrimination. But Sanders said he intends to bring the racial discrimination claim back in future filings.

In his majority opinion, Rogers rejected the wealth discrimination claim, ruling it is “factually and logically incorrect” to assume that the financial condition of a local government is equivalent to the wealth of its residents.

“The solvency of a local government is the result of the management of the finances of that government,” he wrote. “Although solvency may correlate with the wealth of a locality’s residents, solvency and wealth are separate concepts.”

Monday’s opinion upheld an earlier ruling by U.S. District Judge George Caram Steeh.

Snyder has appointed emergency managers to run several Michigan cities, including Detroit, Flint, Ecorse and Pontiac. Emergency mangers are not currently overseeing any cities but are running school districts in Detroit, Muskegon Heights and Highland Park.

Michigan voters rejected an earlier emergency manager law in 2012, but legislators responded with a newer version that included several modifications including multiple options for local governments to pursue if the state finds they are in a financial emergency.

Snyder signed the new law in December 2012, saying the increased local options demonstrated that officials “clearly heard, recognized and respected the will of the voters.”

Despite similarities to the prior version overturned through referendum, signing the new law did not violate the Voting Rights Act because it did not deny anyone the right to vote, according to Monday’s ruling.

Citizens can still advocate for the removal of state-appointed managers and can vote out local officials who allowed the emergency, legislators who approved the law or the governor who made the appointment, Rogers wrote.

“The fact that a legislature passes new legislation similar in import to legislation previously vetoed by referendum does not restrict the expression of one’s viewpoint,” he said.

Senate Minority Leader Jim Ananich, a Flint Democrat who has pushed for changes to the emergency manager law in the wake of the water contamination crisis in his hometown, renewed that call after Monday’s ruling.

Emergency managers “made key decisions that contributed to the crisis,” including the April 2014 switch to Flint River water, according to a report from a task force appointed by Snyder.

“Regardless of the court’s decision, it’s clear that the current law has had disastrous results for real people and there is no doubt it needs to change. That's what this Legislature should be working on,” Ananich said in a statement.

“Try telling a parent who has stayed up at night worrying about the water they gave to their child, or a student at a school with mold and rats, that this flawed law didn't violate their rights.”