Bloomberg News

Michigan Emergency Powers Challenge Dismissed by U.S. Judge

September 30, 2011

(Updates with excerpt from decision in fourth paragraph.)

Sept. 30 (Bloomberg) -- A federal judge dismissed a lawsuit seeking to overturn a Michigan statute giving emergency powers to state-appointed financial managers, saying the law wasn’t ready for a legal challenge.

The Detroit workers’ pension boards, which sued in April, asked the federal court in Detroit to declare the law unconstitutional and block it from taking effect. The law, which lets managers terminate employee contracts and suspend collective bargaining, was signed by Michigan Governor Rick Snyder in March.

U.S. District Judge Sean F. Cox said the issues in the case weren’t “ripe” for consideration. The emergency powers wouldn’t be triggered unless multiple events occurred, including written notice by the state treasurer to the city of Detroit, a preliminary review, and a finding that a pension fund is underfunded, Cox said.

“The action is not ripe for review because not only have the above multistep processes that could potentially lead to the use of the powers of Section 19(1)(m) not been completed, they have not even begun,” Cox said in his 20-page ruling yesterday.

‘Significant Hardship’

The pension boards argued in court papers that they would “suffer significant hardship” if the law wasn’t erased. They raised the possibility in their complaint that Detroit’s retirement systems could be seized.

“Plaintiffs have been subjected to nearly constant threats of appointment of an emergency manager and the exercise of the czar-like powers granted under the act if they do not capitulate and fully agree to all of the demands of the mayor” of Detroit, they said in a July filing.

Ronald King, attorney for the pension boards, didn’t immediately return a call for comment on ruling.

The pension boards are the General Retirement System of the City of Detroit and the Police and Fire Retirement System of Detroit.

The case is General Retirement System of the City of Detroit v. Snyder, 2:11-cv-11686, U.S. District Court, Eastern District of Michigan (Detroit).

--Editors: Fred Strasser, Mary Romano

To contact the reporter on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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