Some Good News: US Court of Appeals sends Emergency Manager suit back to lower court to decide constitutionality issues


Well, this is pleasant news

Earlier this year, public employee retirees from Pontiac filed a lawsuit to reverse a decision by Emergency Financial Manager Lou Schimmel to cut some of their health care benefits, increase their deductibles, and reduce their pensions. They said it was a violation of federal law regarding the impairment of contracts. In June, a district court judge denied them a temporary restraining order and their motion for a preliminary injunction. The retirees appealed and, today, a U.S. Court of Appeals panel ruled 2-1 in their favor. Sorta.

What the Court of Appeals did was a bit unusual. The majority claimed that this suit was forcing them to make constitutional judgments that would be unnecessary for them to make if lower courts ruled on two items that the retirees, the plaintiffs in this case, didn’t even raise: the constitutionality of Republicans passing Public Act 4 — the Emergency Manager law in place at the time — with immediate effect and the constitutionality of the law that replaced Public Act 4 — Public Act 436 — after voters rejected PA 4 by referendum in 2012. When a case can be decided without them having to rule on constitutionality (compliance with the U.S. Constitution, that is), they try to avoid that.

So, they have sent the case back to the U.S. district court and ordered the judge to do more fact finding on this. They appear to believe the judge may be able to decide that the law was passed illegally and is, therefore, not enforceable, making Schimmel’s decision to cut pension benefits illegal.

What they said in their decision (pdf) is a joy to read and a sharp smack down of Michigan Republican (and, in one section, Democratic) legislators.

Here are some excerpts:

The Michigan Legislature seems to have ignored the two-thirds vote requirement when it gave Public Act 4 immediate effect. The Michigan Legislature has a Senate with thirty-eight members and a House with 110 members. Thus, the two-thirds vote requirement is twenty-six votes in the Senate and seventy-four votes in the House. But, Public Act 4 passed in the House with sixty-two votes—twelve short of the two-thirds requirement for an immediate effect motion. Yet, despite the clear absence of the necessary two-thirds vote, the House proceeded to give Public Act 4 immediate effect over the objections of the minority party.

To achieve this result, the House used a rule that allows it to conduct a “rising vote,” where the presiding officer examines the chamber to see whether the requisite two-thirds support exists. Apparently, a two-thirds vote occurs whenever the presiding officer says it occurs—irrespective of the actual vote. This authority is unchecked and often results in passing motions for immediate effect that could not receive the constitutionally required two-thirds vote. Apparently, the Michigan Legislature believes the Michigan Constitution can be ignored.

Public Act 4 exemplifies the farce. The Michigan House presiding officer refused a request for a roll call vote and made Public Act 4 immediately effective through the obvious fiction that twelve House members immediately changed their positions. This process has been the subject of considerable contention and scrutiny.

In effect, the Michigan Legislature has made their “rising vote” rule trump the Michigan

Despite the Michigan Constitution’s express limitation, the Legislature has perverted the immediate effect exception to swallow the constitutional rule. Under Republican control of the House, in 2011, the Legislature passed 319 out of 323 bills with immediate effect. In 2010, it passed 345 out of 363 bills with immediate effect. Democrats have also abused the exception. Under Democratic control of the House, in 2006, the Legislature passed 664 out of 682 bills with immediate effect. Plainly, the Legislature will not self-correct its abuse of the immediate effect exception because the majority party controls and benefits from the process.

It’s appropriate for them to call out both the Republicans and the Democrats on this because they both have abused it and this abuse needs to be addressed.

The Michigan constitutional provision seems obviously directed at restricting its Legislature’s ability to give bills immediate effect unless a real two-thirds of the elected members in each house agree. And the court of appeals’s belief that house members do not need to vote on immediate effect if they have had a chance to vote on the underlying legislation turns Michigan’s Constitution article IV, § 27 on its head.

The Michigan Legislature cannot end the Michigan Constitution’s two-thirds requirement by passing a rule saying it will ignore the requirement. To conclude otherwise would effectively allow the Michigan Legislature to unilaterally amend the Michigan Constitution.

They also note that, in PA 436, Michigan Republicans basically said, “Any things done under previous emergency manager or emergency financial manager laws are still legal, no matter what the voters said.” The majority in this decision suggested that this is something also needs to be looked into, as well. From footnote 12:

On remand, the district court should also consider whether the Michigan Legislature possesses the power to retroactively immunize its own acts that the voters rejected by referendum. Because of the voters’ rejection of Public Act 4 by referendum, and because Public Act 4 is substantially similar to Public Act 436, such a power could infringe on the voters’ referendum power under the Michigan Constitution article II, § 9.

They also pointed out how, when he weighed in on this case, Attorney General Bill Schuette literally argued both sides of the issue in the same brief:

[I]n state court filings, the Michigan Attorney General has failed to cite to any authority supporting his position that the Emergency Manager’s actions under Public Act 4 are valid after the referendum. To the contrary, in his brief to the Michigan Supreme Court in Davis v. Roberts, the Michigan Attorney General says that “the rejection of a law by referendum is more powerfull than the repeal of a law because the rejection erases the Legislature’s and Governor’s original enactment.

The Attorney General suggests that the referendum rendered prior Emergency Manager actions void. Yet, in the same brief, the Attorney General also says “[t]he voters’ rejection does not render [Public Act 4] void ab initio since it was lawfully enacted by the Legislature in the first instance. Thus the disapproval has no effect on lawful actions taken by the emergency managers during the time [Public Act 4] was effective.” Despite recognizing that a “referendum is more powerful than a repeal,” and despite saying that the referendum “erase[d]” Public Act 4, the Michigan Attorney General seems to argue the inconsistent position that the Emergency Manager’s action under Public Act 4 are valid after the referendum. The district court should consider this issue after more specific briefing. Consequently, we remand to the district court so that it can decide if the voters’ referendum rendered the Emergency Manager’s actions void.

The dissenting judge took exception to the majority sending the case back to the lower court based on issues that the plaintiffs did not even bring up. He also suggested that the law could be passed by less than a two-thirds majority but that some of the legislators would change their position and vote for immediate effect:

[T]he mere fact that the House passed PA 4 short of a two-thirds vote is not reason to doubt the validity of its immediate effect.

That’s a stretch. Why would a legislator that voted AGAINST a bill turn around and moments later vote to have it become law immediately instead of three months later the way it’s supposed to?

At any rate, the retirees get another bite at the apple which, in this case, is the federal circuit court. It’s better than a state court where Republicans have successfully stacked the deck. As I find myself saying more and more these days regarding Michigan’s Emergency Manager law: Stayed tuned. This is far from over.