AFSCME v. City of Detroit

• Decision Date: 17 June 2003
• Docket Number: Docket No. 122053,Docket No. Calendar No. 9.,Docket No. 122091
• Citation: 662 N.W.2d 695,468 Mich. 388
• Parties: AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, also known as AFSCME, doing business as AFSCME Local 23 and AFSCME Local 2394, Plaintiffs-Appellants, and Detroit City Council, Intervening Plaintiff-Appellant, v. CITY OF DETROIT and Detroit Housing Commission, Defendants-Appellees.
• Court: Michigan Supreme Court

662 N.W.2d 695

468 Mich. 388

AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, also known as AFSCME, doing business as AFSCME Local , Plaintiffs-Appellants, and Detroit City Council, Intervening Plaintiff-Appellant, v. CITY OF DETROIT and Detroit Housing Commission, Defendants-Appellees.

Docket Nos. 122053, 122091, Calendar No. 9.

Supreme Court of Michigan.

Argued April 9, 2003.

Decided June 17, 2003.

Martens, Ice, Geary, Klass, Legghio, Israel & Gorchow, P.C. (by Renate Klass), Southfield, for plaintiffs-appellants.

Pitt, Dowty, McGehee, Mirer & Palmer, P.C. (by Robert W. Palmer), Royal Oak, and F. Philip Colista, Detroit, for Detroit City Council.

Miller, Canfield, Paddock & Stone, P.L.C. (by John H. Willems and Leonard D. Givens), Detroit, for city of Detroit and the Detroit Housing Commission.

OPINION

MICHAEL F. CAVANAGH, J.

We granted leave to appeal in this case to determine whether the 1996 amendments of the Michigan housing facilities act, M.C.L. § 125.651 et seq., sever the employment relationship between a municipality and its housing commission by operation of law. We hold that the 1996 amendments, specifically M.C.L. § 125.655(3), do sever a coemployment relationship by operation of law, thus we affirm the decision of the Court of Appeals.

I. BACKGROUND AND PROCEDURAL HISTORY

In 1933, the city of Detroit established the Detroit Housing Commission (DHC) under the authority of the housing facilities act, 1933 P.A. 18 (Ex. Sess.), M.C.L. § 125.651 et seq. Section 2 of the act provided that any city or incorporated village with a population of over 500,000 was authorized "to purchase, acquire, construct, maintain, operate, improve, extend, and/or repair housing facilities and to eliminate housing conditions which are detrimental to the public peace, health, safety, morals, and/or welfare."¹ Section 3 of the act authorized any city with a population of over 500,000 to create by ordinance a commission with the power to accomplish the purposes set forth in § 2.² Under the 1933 version of the housing facilities act, the DHC was under the control of the city, and DHC employees were city employees.

The United States Department of Housing and Urban Development (HUD) funds, monitors, and regulates public-housing authorities, including the DHC. From 1979 through 1990, the HUD Public Housing Management Assessment Program rated the DHC a poor performer. The DHC was consistently on HUD's list of severely troubled public-housing authorities because it was failing its essential purpose because of an unreasonable number of vacant and dilapidating properties, untimely rent collections, and a general failure to meet HUD standards. In an attempt to cure these problems, the city entered a series of agreements with HUD that would permit the DHC to make substantial improvements in its performance, effectiveness, and efficiency. In July 1995, HUD and the city entered into a memorandum of agreement, followed by a partnership agreement in December 1995. One of the primary objectives of the partnership was a complete separation of the DHC from the city's governmental systems.³

HUD and the city entered into a revised memorandum of agreement (revised MOA) approved by the city council in September 1996 and executed in October 1996. The revised MOA, by its terms, expired on June 30, 1997, and also focused on a complete separation from the city's governmental systems.

In June 1996, the Legislature passed 1996 PA 338, effective June 27, 1996, which substantially amended the housing facilities act. The 1996 amendments designated housing commissions, such as the DHC, as distinct "public bodies corporate" with enumerated independent powers and authorities. See M.C.L. § 125.654(5). In addition, housing commissions such as the DHC were authorized to employ and fix the compensation of their directors, officers, and other employees and to prescribe the duties of those persons. M.C.L. § 125.655(3).

The DHC was removed from HUD's troubled list in 1997. In 1998, the mayor prepared a memorandum of understanding and related ordinances, seeking to establish the DHC as a separate entity, which the city council rejected. Thus, all DHC employees were treated as city employees from 1998 through 2001 under the city's compensation and classification plan and the city housing ordinance, which expressly subjected DHC employees to the provision of the city charter related to civil service. See Detroit Code, subsection 14-5-3(7).

On July 17, 2001, relying on the 1996 amendments of the housing facilities act, the mayor notified the city council that the DHC would begin functioning as a "public body corporate" on September 21, 2001. The mayor asked the city council to approve a proposed intergovernmental agreement between the city and the DHC to allow current city employees who elected to be employed by the DHC to continue to participate in the city's health and retirement plans. The mayor also submitted a proposed amendment of the executive organization plan recognizing the DHC as a separate "statutory agency" and a proposed ordinance to implement the minimum statutory requirements of the housing act.

The city council rejected the mayor's proposals and adopted a series of ordinances and resolutions, which effectively avowed DHC employees as city employees and prevented the separation of the DHC from the city. Specifically, on September 17, 2001, the city council adopted a resolution opposing separation of the DHC from the city and retaining all DHC employees as city employees. On September 26, 2001, the city council enacted the following ordinance:

All housing commission employees shall be members of either the classified service or the unclassified service as is provided under Section 6-517 of the Charter of the City of Detroit, and shall be entitled to all rights of all employees of the City of Detroit, including but not limited to pensions and benefits. [Detroit Code, subsection 14-5-3(7).]

Subsequently, the city council formally rejected the mayor's proposed amendments to the city housing ordinance and the executive organizational plan. The council also overrode the mayor's vetoes of the city council's resolutions and ordinances.

The American Federation of State, County and Municipal Employees (AFSCME) filed suit on September 19, 2001, in the Wayne Circuit Court against the city of Detroit and the DHC, seeking an injunction to maintain the status quo while it pursued an unfair-labor-practice charge against the city and the DHC with the Michigan Employment Relations Commission (MERC). On September 20, 2001, the parties stipulated the court's entry of a temporary restraining order indicating that all AFSCME DHC employees remained city employees. On September 21, 2001, the city council intervened as a plaintiff and sought a declaratory judgment to clarify the validity of the ordinances pertaining to the operation, procedures, and employees of the DHC. AFSCME amended its complaint on October 18, 2001, to add a request for declaratory relief concerning whether the housing facilities act gave the city the power to divest itself of the DHC and to sever its relationship with DHC employees. On October 19, 2001, the city council amended its complaint, seeking to extend the temporary restraining order, relative only to AFSCME employees, to all DHC employees. The city council further sought a declaratory judgment to clarify the validity of the ordinances and the resolution, which provide that all DHC employees are and will remain city employees. The council also sought a permanent injunction restraining defendants from acting in a manner inconsistent with the declaratory judgment. The trial court issued a declaratory ruling on November 19, 2001, holding that severance of the city's employment relationship with DHC employees is permissive under the 1996 amendment of the housing facilities act and that the housing facilities act did not sever the DHC from the city by operation of law. The court also found that, as recently as April 2001, the mayor had taken affirmative action to continue to treat DHC employees as city employees by proposing the budget for the fiscal year of July 2001 through June 30, 2002, which included funds for those employees. On January 25, 2002, the court entered an order declaring that the city had appropriately exercised its authority under the housing facilities act to establish employee compensation ranges and classifications to be used by the DHC, and that all DHC employees are city employees "at least until June 30, 2002."

With respect to AFSCME's request for declaratory relief, defendants filed a motion for summary disposition on February 15, 2002, on the basis that the 1996 amendments of the housing facilities act made housing commissions separate independent employers by operation of law. With respect to the city council's request for declaratory relief, defendants moved for summary disposition on the basis that certain ordinances and resolutions adopted by the city council violate state law and are preempted. Afscme filed a cross-motion for summary disposition, essentially arguing that the court had already determined that the 1996 amendments of the housing facilities act did not sever the city's relationship by operation of law and that the city had continued to exercise the power to reserve employment through its continued inclusion of DHC employees in the city's compensation plan, the inclusion of the DHC in the city budget through June 30, 2002, and the continuation of the housing ordinance until September 2001. AFSCME also argued that any changes in the status of DHC employees can only be effectuated in accordance with the city charter.

On May 21, 2002, the trial court entered an order of declaratory judgment that certain ordinances pertaining to the employment status of DHC employees were valid and enforceable. The trial court also entered a preliminary injunction barring the city from...