General Retirement System v. Snyder

822 F. Supp. 2d 686, 2011 U.S. Dist. LEXIS 111658, 2011 WL 4506357
CourtDistrict Court, E.D. Michigan
DecidedSeptember 29, 2011
DocketCase No. 11-11686
StatusPublished
Cited by5 cases

This text of 822 F. Supp. 2d 686 (General Retirement System 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
General Retirement System v. Snyder, 822 F. Supp. 2d 686, 2011 U.S. Dist. LEXIS 111658, 2011 WL 4506357 (E.D. Mich. 2011).

Opinion

OPINION & ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS AND DENYING DEFENDANTS’ MOTION FOR RULE 11 SANCTIONS

SEAN F. COX, District Judge.

In this action, Plaintiffs ask this Court to declare one section of the Local Government and School District Fiscal Accountability Act, Public Act 4 of 2011, M.C.L. § 151.1501 et seq. unconstitutional and enjoin its implementation. Specifically, Plaintiffs “challenge one particular provision of the Act that applies solely to the pension funds and retirement systems of municipal governments — Section 19(l)(m) of the Act.” (Pis.’ Resp. Br. at 1). The matter is currently before the Court on Defendants’ Motion to Dismiss and Defendants’ Motion for Rule 11 Sanctions. The parties have briefed the issues and the Court heard oral argument on September 22, 2011. For the reasons set forth below, the Court shall GRANT Defendants’ Motion to Dismiss because Plaintiffs’ claims are not ripe for review. In addition, the Court shall DENY Defendants’ Motion for Rule 11 Sanctions.

BACKGROUND

A. Procedural History

“[T]he present action represents a focused and targeted challenge to one particular provision of the Act that applies solely to the pension funds and retirement systems of municipal governments — Section 19(l)(m) of the Act.” (Pis.’ Resp. Br. at 1; see also Compl. at ¶ 72, stating that Section 19(l)(m) of the Act is “the gravamen of this action.”). Plaintiffs’ Complaint for declaratory and injunctive relief asks this Court to declare Section 19(m)(l) of the Act unconstitutional and enjoin its implementation.

This action was filed by the following Plaintiffs on April 18, 2011: 1) the General Retirement System of the City of Detroit (the “GRS”); 2) the Police and Fire Retirement System of the City of Detroit (the “PFRS”); 3) Susan Glaser, the Chairperson of the Board of Trustees of the GRS; 4) Alvin Brooks, a member of the Board of Trustees of the GRS; 5) James E. Moore, the Chairperson of the Board of Trustees of the PFRS; and 6) Laura Isom, a former member of the Board of Trustees of the PFRS. The named Defendants are: 1) Richard Snyder, Michigan’s current Governor; and 2) Andrew Dillon, the current Treasurer of the State of Michigan.

Plaintiffs’ legal contention is that the Court should enjoin Section 19(l)(m) of the Act because, if it were to be implemented by an emergency manager appointed for the City of Detroit, that would violate Plaintiffs’ rights under both the United States Constitution and the State of Michigan’s Constitution. Plaintiffs allege that implementation of Section 19(m)(l) would violate: “the Contracts Clause of the United States Constitution” (Count I); “the Contracts Clause of the State of Michigan Constitution” (Count II) ; “the Home Rule Provision of the State of Michigan Constitution” (Count III) ; “the Takings Clause of the United States Constitution” (Count IV); the “Takings Clause of the State of Michigan Constitution” (Count V); “the Due Process Clause of the United States Constitution” (Count VI); “the Due Process Clause of the State of Michigan Constitution” (Count VII); “the Equal Protection Clause of the United States Constitution” (Count VIII) ; “the Equal Protection Clause of the State of Michigan Constitution” (Count IX) ; and “the Accrued Financial Benefits [691]*691Provision of the State of Michigan Constitution” (Count X).

On May 23, 2011, Defendants filed a Motion to Dismiss, pursuant to Fed. R. Civ. P. 12(b)(1), (2) and (6). (Docket Entry No. 12). On June 17, 2011, Defendants filed a Motion for Rule 11 Sanctions. (Docket Entry No. 15). Both motions have been fully briefed by the parties and the Court held a hearing on September 22, 2011.

B. Relevant Provisions Of The Act

The Local Government and School District Fiscal Accountability Act, Public Act 4 of 2011, M.C.L. § 141.1501 et seq. (“the Act”), was enacted on March 16, 2011, and took effect on that same date.

Under the Act, the “state financial authority of a local government1 may conduct a preliminary review to determine the existence of a local government financial problem” if 1 or more of several delineated events occur. M.C.L. § 141.1512(1). Before commencing such a preliminary review, however, the “state financial authority shall give the local government specific written notification of the review.” M.C.L. § 141.1512(2).

If a preliminary review is conducted, and a “finding of probable financial stress is made for a municipal government under subsection (2), the governor shall appoint a review team for that municipal government consisting of the state treasurer or his or her designee, the director of the department of technology, management, and budget or his or her designee, a nominee of the senate majority leader, and a nominee of the speaker of the house of representatives.” M.C.L. § 141.1512(3). That review team must report its finding to the governor, generally within 60 days following the appointment of the review team. M.C.L. § 141.1513(3).

The review team “shall have full power in its review to perform” all of the following functions: a) examine the books and records of the local government; b) utilize the services of other state agencies and employees; and c) negotiate and sign a consent agreement with the chief administrative officer of the local government.” M.C.L. § 141.1513(1). Such a consent agreement may provide for remedial measures considered necessary to address the local financial problem and provide for the financial stability of the local government and may include either a continuing operations plan or recovery plan. Id. In order for a “consent agreement to go into effect, it shall be approved, by resolution, by the governing body of the local government and shall be approved and executed by the state financial authority.” M.C.L. § 141.1513(l)(c).

The Act further provides that a “consent agreement as provided in section 13(1)(C) may require a continuing operations plan or a recovery plan if required by the state financial authority.” M.C.L. § 141.1514a(l). Section 14a of the Act further provides that a “consent agreement may include a grant to the chief administrative officer, the chief financial officer, the governing body, or other officers of the local government by the state treasurer” of one or more of the powers prescribed for emergency managers in section 19.” M.C.L. § 141.1514a(9).

After a review team provides a report to the governor under Section 13, the governor has to make one of the following determinations within 10 days after receipt of the report:

[692]*692(a) The local government is not in a condition of severe financial stress.
(b) The local government is in a condition of severe financial stress as provided in section 14, but a consent agreement containing a plan to resolve the financial stress has been adopted under this act.
(c) A local government financial emergency exists as provided in section 14 and no satisfactory plan exists to resolve the emergency.
(d) The local government entered into a consent agreement containing a continuing operations plan or recovery plan to resolve a financial problem, but materially breached that consent agreement.

M.C.L. § 141.1515(1).

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Bluebook (online)
822 F. Supp. 2d 686, 2011 U.S. Dist. LEXIS 111658, 2011 WL 4506357, Counsel Stack Legal Research, https://law.counselstack.com/opinion/general-retirement-system-v-snyder-mied-2011.