Bellant v. Snyder

338 F. Supp. 3d 651
CourtDistrict Court, E.D. Michigan
DecidedSeptember 5, 2018
DocketCase No. 2:17-CV-13887
StatusPublished

This text of 338 F. Supp. 3d 651 (Bellant v. Snyder) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bellant v. Snyder, 338 F. Supp. 3d 651 (E.D. Mich. 2018).

Opinion

GEORGE CARAM STEEH, UNITED STATES DISTRICT JUDGE

This action challenging the constitutionality of Michigan's Emergency Manager Law, the Local Financial Stability and Choice Act , Act No. 436, Public Acts of 2012, Mich. Comp. Laws Ann. §§ 141.1451 et seq. (West 2013) ("PA 436"), was commenced by plaintiffs who include local elected officials, unelected citizens, and members of the governing boards of various religious and civil rights organizations. Defendants, the Governor and former and current Treasurers of the State of Michigan, move to dismiss the single count alleged by plaintiffs in their Complaint for Declaratory Relief. For the reasons stated below, defendants' motion to dismiss is GRANTED IN PART AND DENIED IN PART.

FACTS

I. Procedural Posture

Plaintiffs bring this action under 42 U.S.C. § 1983, challenging the constitutionality of PA 436. The claim under the Fourteenth Amendment's Equal Protection Clause was originally asserted in an earlier action, Phillips v. Snyder , No. 13-cv-11370. The parties stipulated to the dismissal of that claim without prejudice to allow plaintiffs' appeal of this court's dismissal of their other claims. See Phillips v. Snyder , 836 F.3d 707, 713 (6th Cir. 2017). The Sixth Circuit affirmed the dismissal and the Supreme Court denied plaintiffs' certiorari petition. Bellant v. Snyder , --- U.S. ----, 138 S.Ct. 66, 199 L.Ed.2d 21 (2017).

In their complaint, plaintiffs argue that on its face, as applied, and in practice, PA 436 violates the Equal Protection Clause by disparately impacting and intentionally discriminating against municipalities and school districts comprised of majority black populations. Plaintiffs allege that PA 436 is facially discriminatory because it was adopted with knowing intent that the measures resulting in the total loss of local governing power would be disproportionately imposed on black communities given the sensitivity of their revenue streams and human services to economic downturns, while majority white communities would escape PA 436's application. As applied, PA 436 allegedly discriminates against black communities while it is not applied to white communities suffering equal or greater financial distress.

II. Background of PA 436

Prior to 1988, municipalities in Michigan that were experiencing financial difficulties could be placed into receivership by the courts. Court-appointed receivers were compensated from the property that the courts placed within the care of the receiver. In 1988, the State of Michigan enacted PA 101, which allowed the State to appoint an emergency financial manager ("EFM")

*655over cities experiencing a financial emergency. In 1990, the legislature replaced PA 101 with the Local Government Fiscal Responsibility Act , PA 72, which authorized Michigan's local financial emergency review board to appoint an EFM only after the Governor declared the local government to be in a financial emergency. The EFM's powers extended to matters of finances, including the authority to renegotiate contracts, while local elected officials remained in control of administrative and policy matters. Under PA 72, the State's local financial emergency review board appointed EFMs in the cities of Benton Harbor, Ecorse, Flint, Hamtramck, Highland Park and Pontiac, as well as over the Detroit Public Schools.

In 2011, Michigan repealed PA 72 when it passed the Local Government and School District Fiscal Accountability Act , PA 4. PA 4 converted all EFMs into Emergency Managers ("EM") and expanded the scope of their powers. EMs could act "for and in the place of" the municipality's elected governing body, including a general grant of legislative power.

Citizens gathered signatures to place a referendum on the ballot to reject PA 4. The petitions were certified on August 8, 2012, and by operation of law PA 4 was suspended and PA 72 went back into effect. All PA 4 EMs were reappointed as PA 72 EFMs. At the general election on November 6, 2012, Michigan voters voted to reject PA 4.

During the lame-duck session that followed the repeal of PA 4, the state legislature passed, and the Governor signed, the Local Financial Stability and Choice Act , PA 436. PA 436 changed the title of EFMs to EMs and expanded the scope of their powers to cover all the conduct of local government - both finance and governance. PA 436 contains some new provisions for local government not present in previous laws, including expanded local government options to address the financial emergency1 and a procedure to remove the EM after he or she has served 18 months.2 The EMs appointed under PA 4 and EFMs appointed under PA 72 all became EMs under PA 436.

Since PA 436 took effect on March 28, 2013, thirteen local units of government and five school districts have been under emergency management. But currently, no local governments in Michigan are subject to emergency management. Two school districts, Benton Harbor Area Schools, and Pontiac Public Schools, are subject to consent agreements. Muskegon Heights School District is under a receivership transition advisory board ("TAB")3 , but it is not represented by any of the plaintiffs in this case for purposes of bringing an as-applied challenge.

The City of Detroit, which proceeded through bankruptcy under an EM, is no *656longer subject to PA 436. Rather, the City is subject to both the confirmed bankruptcy plan and a legislatively created financial review commission created as part of what was referred to as the "Grand Bargain." §§ 1631-1638; In re City of Detroit, 524 B.R. 147, 244 (2014). The Detroit Public Schools (DPS) and its School Board are no longer subject to PA 436. They have been replaced by the new Community Schools District and exist only for the limited purpose of paying off DPS debt. Mich. Comp. Laws § 380.12b (1) - (15) ; 380.383; 380.384. Neither the DPS nor the new Community District is currently subject to PA 436.

III. Impact of PA 436

Ten of Michigan's thirteen majority black communities had a solution under PA 436 imposed upon them by the State.

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Bluebook (online)
338 F. Supp. 3d 651, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bellant-v-snyder-mied-2018.