Judge: EM lawsuit can proceed on racial grounds

Chad Livengood and Christine Ferretti
The Detroit News

Lansing — A federal judge on Wednesday ruled a lawsuit challenging the constitutionality of Michigan’s emergency manager law can proceed on grounds that the law disproportionately affects African-Americans.

U.S. District Judge George Caram Steeh said Michigan’s system for assigning cities and school districts emergency managers provides “enormous discretion to state decision makers and creates a significant potential for discriminatory decisions.”

“This court is satisfied that at this juncture plaintiffs have pleaded a plausible equal protection claim based on the racial impact of PA 436’s implementation,” Steeh wrote in an opinion released Wednesday.

The judge threw out eight other counts in a lawsuit filled in March 2013 against Gov. Rick Snyder and then-Treasurer Andy Dillon that made multiple constitutional challenges to the new emergency manager law prior to it taking effect that month.

Herbert Sanders, attorney for the group of plaintiffs, which includes ministers and AFSCME Council 25, said Wednesday there’s a strong case that the emergency manager law disenfranchises voters in cities under state control, denying them equal protection rights under the U.S. Constitution.

The plaintiffs argued in court filings that 52 percent of African-Americans and 2 percent of white citizens were at one point last year living in cities under control by an emergency manager.

“The law has had a disproportionate effect and its application on African-Americans,” Sanders told The Detroit News.

In response to the ruling, Snyder spokesman Dave Murray said Wednesday that “race has not and does not play a role in determining financial status.”

“We’re still reviewing the judge’s ruling, but we are pleased he dismissed the vast majority of the complaints,” Murray said in an email to The News.

“PA 436 is designed to be an objective measure of the financial health of a municipality or school district.”

U.S. Bankruptcy Judge Steven Rhodes allowed the lawsuit to go forward in U.S. District Court under a condition that it be amended so that the plaintiffs could not have Emergency Manager Kevyn Orr removed during Detroit’s bankruptcy.

Sanders said it’s unclear whether the plaintiffs will be able to get remaining emergency managers removed from towns such as Flint if they ultimately prevail in the lawsuit.

“That’s an issue we will discern in the courts,” he said.

John Philo, who is also representing the plaintiffs, stressed that the focus of the court challenge is on the legality of the law.

“This lawsuit isn’t about undoing any particular emergency manager, it isn’t about the emergency manager in any particular city,” said Philo, legal director for the Sugar Law Center. “It’s about the legality of the law as a whole throughout the state of Michigan.”

Philo added the plaintiffs expect to appeal the dismissed counts to the 6th Circuit Court of Appeals.

In December 2012, the Legislature passed and Snyder signed Public Act 436, which replaced the previous emergency manager law, Public Act 4, that voters repealed at the ballot box the previous month.

Public Act 4 gave emergency managers sweeping powers to cancel or modify union contracts without input from elected officials and bypassing the collective bargaining process with labor unions.

As part of Snyder’s efforts to tackle financial crises in cities and school districts, lawmakers passed Public Act 4 in early 2011, replacing a less powerful 1990 law that did not allow state-appointed emergency financial managers to alter contracts.

Public Act 436 contains four different options for elected officials in cities and school districts where a financial emergency exists: an emergency manager, state monitoring through a financial consent agreement, mediation and Chapter 9 bankruptcy.

The next hearing date has not yet been set.

“We expect the case to move forward fairly quickly within the confines of the court,” Philo said.

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