In re City of Detroit
| Docket Number | 13-53846 |
| Decision Date | 18 September 2023 |
| Parties | In re: CITY OF DETROIT, MICHIGAN, Debtor. |
| Court | United States Bankruptcy Courts. Tenth Circuit. U.S. Bankruptcy Court — Eastern District of Michigan |
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In re: CITY OF DETROIT, MICHIGAN, Debtor.
No. 13-53846
United States Bankruptcy Court, E.D. Michigan, Southern Division
September 18, 2023
Chapter 9
OPINION REGARDING THE MOTION BY DETROIT FIRE FIGHTERS ASSOCIATION FOR AN ORDER ENFORCING THE PLAN OF ADJUSTMENT
THOMAS J. TUCKER UNITED STATES BANKRUPTCY JUDGE
I. Introduction
This case is before the Court on a civil contempt matter. Now before the Court is the motion filed by the Detroit Fire Fighters Association, Local 344 (the "DFFA"), entitled "Motion of Detroit Fire Fighters Association (DFFA) For the Entry Of An Order Enforcing The Plan Of Adjustment Against: Christopher McGhee, Norman Brown, Craig Brown, James Washington, Shannon Ferguson, Junius Perry, and Orlando Potts" (Docket # 13430, the "Motion").
The seven respondents named in the Motion (the "Respondents")[1] are current or former fire fighters employed by the City of Detroit (the "City"). The Respondents are the plaintiffs in a lawsuit pending in the Wayne County, Michigan Circuit Court, entitled Christoher McGhee, et al. v. City of Detroit, et al., Case No. 20-006272-CD (the "State Court Lawsuit"). The Respondents filed the State Court Lawsuit on May 12, 2020, and filed their currently-operative complaint (their "First Amended Complaint") in that case on July 8, 2020.[2] The defendants in the State Court Lawsuit are the City, five City employees, the DFFA, and five current or former
officers of the DFFA.
The DFFA's Motion alleges that in filing their First Amended Complaint and in prosecuting the State Court Lawsuit, the Respondents have been seeking relief that is inconsistent with certain terms in a collective bargaining agreement ("CBA") dated November 6, 2014 between the DFFA and the City (the "2014 CBA"). The DFFA further alleges that the 2014 CBA was incorporated into the City's confirmed plan of adjustment. Based on that, the DFFA alleges that the Respondents' State Court Lawsuit violates the confirmed plan, including certain injunctions in the plan and the order confirming the plan. The DFFA seeks an order holding the Respondents in civil contempt of court, and granting injunctive and monetary relief.
Two parties in interest - namely, the City and the Police and Fire Retirement System of the City of Detroit (the "PFRS") - filed responses purporting to join the DFFA's Motion, and concurring in the relief sought by the Motion.[3] The seven Respondents jointly filed a response, objecting to the Motion.[4] The DFFA and the City then filed replies in support of the Motion.[5]
The Court held a telephonic hearing on the Motion. Confirming action taken during the hearing, the Court entered an order requiring the DFFA to file a supplement in support of the Motion, containing several specified things.[6] The DFFA timely filed the required supplement.[7]
The Court has reviewed all of the written and oral arguments of the parties, and all of the
papers filed by the parties, including all exhibits and including the DFFA's post-hearing supplement. Based on the following findings and conclusions, and for the following reasons, the Court will grant the Motion in part and deny it in part.
II. Facts
The following facts are undisputed.
A. The City's confirmed plan of adjustment
The plan of adjustment in this Chapter 9 bankruptcy case was confirmed on November 12, 2014. It consists of the plan, entitled "Eighth Amended Plan for the Adjustment of Debts for the City of Detroit," filed October 22, 2014 (the "Plan"), and all of its many exhibits,[8] and the confirmation order, entitled "Order Confirming Eighth Amended Plan for the Adjustment of Debts for the City of Detroit," filed November 12, 2014 (the "Confirmation Order").[9] (The Plan, its exhibits, and the Confirmation Order are collectively referred to as the "POA."). The POA became effective on December 10, 2014.[10]
B. The 2014 CBA
Shortly before confirmation of the Plan, and in contemplation of that confirmation, the City and the DFFA negotiated and agreed to a new collective bargaining agreement, the 2014 CBA. That agreement, executed and dated November 6, 2014, was for a term from November 6, 2014 through June 30, 2019.[11] It was later extended.[12]
C. The relevant provisions in the 2014 CBA
The provisions of the 2014 CBA that are relevant to this dispute concern the seniority status of fire fighters who take what is known as a duty disability retirement. Such fire fighters are those who become totally disabled for duty by reason of injury, illness, or disease resulting from the performance of duty. While disabled, such fire fighters receive a retirement benefit, but they can later return to active duty if they become able to do so. For such returning fire fighters, the question becomes what is their seniority level when they return to active duty? Do they return with zero seniority? Or do they return with the seniority level they had when they left on the duty disability retirement? Or, even better for the returning fire fighters, do they return with the seniority they had when they left, plus seniority for the time they spent on duty disability retirement? The question is important to the returning fire fighters, and also to other active duty fire fighters, because of the effect seniority can have on rank, promotions, salary, and ultimately pension benefits.
The seniority provisions of the 2014 CBA are less generous to the fire fighters who return to active duty from duty disability retirement, compared to the seniority provisions in prior collective bargaining agreements. The meaning of the 2014 CBA's seniority provisions was the subject of an arbitration decision. In a grievance arbitration decided on May 12, 2021 (the "2021
Arbitration"),[13] the City took the position that under the 2014 CBA, a fire fighter on duty disability retirement who later returned to active duty lost all prior seniority, and returned with no seniority, regardless of how long they were on duty disability retirement.[14] The DFFA took the position that if a fire fighter on duty disability retirement returned to active duty within two years, they would return with all of their "previous accumulated seniority including the time they were off on duty disability retirement."[15]
In taking these competing positions, the City relied on Article 12.D.2 of the 2014 CBA, and the DFFA relied on Article 12.D.7. These provisions state:
D. Loss of Seniority. An Employee shall lose his/her seniority for the following reasons only: ...
2. Retirement. ...
7. Absence from work for any reason (including lay-off) in excess of two (2) years ....[16]
The arbitrator ruled that Article 12.D.2 did not apply, and that Article 12.D.7 did apply.[17]The arbitrator therefore agreed with the DFFA's position, and ruled that:
[A]n employee who went on a duty disability pension who then
returns to full duty within two years of going on duty disability retirement is entitled to full seniority to be reinstated without loss of any seniority, including the time the employee was on duty disability retirement ....[18]
And the arbitrator ruled that a fire fighter on a duty disability pension who does not return to active duty within two years loses all seniority, and starts with zero seniority when they return to active duty.[19]
Previous collective bargaining agreements were more generous to the returning fire fighters than the 2014 CBA. The 2021 Arbitration Decision described some of the early prior history:
. . . [B]eginning in 1981 the parties' CBA, based upon a one-page document signed between the then President of the Association and the Mayor of the City of Detroit, anyone that went off on duty disability who returned to work even after 19 and 20 years would return to work based upon seniority accumulated while they were off work. This agreement was continued in the July 1, 1998 - June 30, 2001 Agreement between the parties.
It was explained that this benefit could mean that an employee who had worked for three years, gone on duty disability for 20 years, and then returned, based upon 23 years of seniority, as a Fire Officer as if the employee had never left, resulting in the benefits of higher rank, higher pay and increased pension upon retirement.[20]
Beginning in 2001, the collective bargaining agreement became less generous to the returning fire fighters. As the arbitrator described it, under the 2001-2008 agreement, "an
employee on duty disability could continue to accrue seniority for three years at which point the employee's seniority is frozen until return to active duty."[21] As quoted by the arbitrator, Article 9 of the 2001-2008 CBA provided:
9. SENIORITY
C. Forfeitures: An employee shall forfeit his seniority only for the following reasons:
6. he/she retires on a regular service retirement or a reduced disability retirement, or if on a duty disability, reaches what would have been his twenty-fifth (25th) anniversary.
8. (a) Seniority credit for promotions to any position in the Department shall be frozen and cease to accumulate for any member on a disability retirement for three (3) years or more. In the event such person is returned to active service, he/she shall be reinstated with his/her frozen seniority.[22]
According to the Respondents, the 2001-2008 CBA "was mutually extended through 2013."[23]
D. All of the Respondents were adversely affected by the new seniority provisions in the 2014 CBA. All seven of the Respondents are fire fighters who went on a duty disability retirement before the City filed its bankruptcy case, and before the adoption of the 2014 CBA. And all of them were on a duty disability retirement for more than three years, and in some cases for much
more than three years. Upon a return to active duty after adoption of the 2014 CBA, each of the Respondents could only return...
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