Phillips v. Snyder
| Citation | 836 F.3d 707 |
| Decision Date | 12 September 2016 |
| Docket Number | No. 15-2394,15-2394 |
| Parties | Catherine Phillips, et al., Plaintiffs, Russell Bellant; Tawanna Simpson; Lamar Lemmons; Elena Herrada; Donald Watkins ; Kermit Williams; Juanita Henry; Mary Alice Adams; William Kincaid; Paul Jordan; Bernadel Jefferson; Dennis Knowles; Jim Holley ; Charles E Williams; Michael A Owens; Lawrence Glass ; Deedee Coleman; Allyson Abrams, Plaintiffs-Appellants, v. Richard D. Snyder; Andrew Dillon, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
ARGUED: Herbert A. Sanders, The Sanders Law Firm, P.C., Detroit, Michigan, John C. Philo, Sugar Law Center for Economic & Social Justice, Detroit, Michigan, Julie H. Hurwitz, Goodman and Hurwitz, P.C., Detroit, Michigan, for Appellants. Ann M. Sherman, Office of the Michigan Attorney General, Lansing, Michigan, for Appellees. ON BRIEF: Herbert A. Sanders, The Sanders Law Firm, P.C., Detroit, Michigan, John C. Philo, Sugar Law Center For Economic & Social Justice, Detroit, Michigan, Julie H. Hurwitz, William H. Goodman, Goodman and Hurwitz, P.C., Detroit, Michigan, Mark P. Fancher, ACLU Fund of Michigan, Detroit, Michigan, Cynthia Heenan, Constitutional Litigation Associates, P.C., Detroit, Michigan, for Appellants. Ann M. Sherman, Office of the Michigan Attorney General, Lansing, Michigan, for Appellees.
Before: SUHRHEINRICH, ROGERS, and GRIFFIN, Circuit Judges.
When the finances of a Michigan municipality or public school system are in jeopardy, a state law allows for the temporary appointment of an emergency manager to right the ship. An emergency manager's powers in pursuing this end are extensive and arguably displace all of those of the local governmental officials. Plaintiffs, voters in areas with emergency managers and local elected officials in those areas, filed suit and argue that, by vesting elected officials' powers in appointed individuals, the law violates their substantive due process right to elect local legislative officials. Using similar reasoning, they argue that the law violates the Constitution's guarantee, in Article IV, § 4, of a republican form of government. They assert additional claims under the First and Thirteenth amendments as well as a claim under the Voting Rights Act. Plaintiffs appeal the district court's dismissal of their claims. Because the relevant constitutional and statutory provisions do not support relief for plaintiffs, the district court's dismissal of the claims was proper.
Michigan has a long history of municipal financial crises following national and global economic depressions and recessions. According to plaintiffs' amended complaint, Michigan had the fourth-highest number of defaulting municipalities among all states during the Great Depression.
In 1988, Michigan developed its own statutory scheme to deal with municipal insolvency. Public Act 101 of 1988 allowed the state to appoint emergency financial managers (EFMs) over cities experiencing a financial emergency. Two years later, the Local Government Fiscal Responsibility Act, Public Act 72 (PA 72), replaced Public Act 101. PA 72 provided for a local financial emergency review board that would appoint an EFM for a local government only after the governor declared a financial emergency there.
Under PA 72, the local financial emergency review board appointed several EFMs throughout the state. The board appointed EFMs in the municipalities of Hamtramck, Highland Park, Flint, Pontiac, Ecorse, Benton Harbor, and Village of Three Oaks. The board also appointed an EFM for the Detroit Public Schools. Furthermore, under a provision in PA 72 allowing for consent agreements rather than the appointment of an EFM, the city of River Rouge entered into an agreement with the board.
Michigan repealed PA 72 in 2011 when it passed the Local Government and School District Fiscal Accountability Act, Public Act 4 (PA 4). PA 4 changed the title of EFMs to “emergency managers” and expanded the scope of their powers to cover all the conduct of local government. An emergency manager under PA 4 was allowed to act “for and on behalf of” the municipality's elected governing body. See PA 4 § 19(2). After the passage of PA 4, what were PA 72 EFMs in Benton Harbor, Ecorse, Pontiac, and the Detroit Public Schools were converted to emergency managers under PA 4 and vested with broad power under that statute. There were also new emergency managers appointed under PA 4 in Flint, the Highland Park Public Schools, and the Muskegon Heights Public Schools.
Michigan citizens disapproved of PA 4. Over 200,000 citizens signed petitions to place a referendum on the ballot in 2012 that would reject the law. After an initial challenge to the form of the petitions, the referendum was placed on the ballot. Pursuant to Michigan law, PA 4 was suspended as soon as the petitions were certified and placed on the ballot. PA 72 thus sprang back into effect on August 8, 2012, the day the Michigan Board of Canvassers certified the petitions. State officials then reappointed all PA 4 emergency managers as PA 72 EFMs. At the general election in November of 2012, Michigan citizens rejected PA 4.
After the referendum on PA 4, Michigan passed a new law, the Local Financial Stability and Choice Act, Public Act 436 (PA 436). PA 436, like PA 4, authorizes the appointment of emergency managers. Mich. Comp. Laws § 141.1549. EFMs under PA 72 and emergency managers under PA 4 were automatically converted to emergency managers under PA 436 when that law took effect. § 141.1549(10). Emergency managers under PA 436 exercise the power of the local government. § 141.1549(2). PA 436 also allows the state treasurer to oversee the activities of emergency managers when the governor so chooses. § 141.1549(8).
There are eighteen scenarios contained in PA 436 that act as triggers for the statute. § 141.1544(1)(a)–(r). If one of those scenarios occurs, the (the state treasurer for a municipality, or the superintendent of public education for a school district, § 141.1542(u)(i)–(ii)) conducts a preliminary review to determine whether a given entity is under “probable financial stress.” § 141.1544(3). The financial authority then turns its final report over to a local emergency financial assistance loan board, which is a statutory entity established by § 141.932. This board reviews the authority's report and makes an official finding of either probable financial stress or no financial stress. § 141.1544(3). If the board reaches a conclusion of probable financial stress for an entity, the governor appoints a “review team.” § 141.1544(4), (5). Within sixty days of a review team's appointment, it must turn in a report to the governor that reaches a conclusion on whether a financial emergency exists within the reviewed local government. § 141.1545(3), (4). Within ten days after receiving the review team's report, the governor determines whether a financial emergency exists or not. § 141.1546(1). A local government is provided an opportunity to appeal this determination to the Michigan court of claims. § 141.1546(3).
A local government has four options when confronted with a finding of a financial emergency: the local government can (1) enter into a consent agreement with the state treasurer; (2) accept the appointment of an emergency manager; (3) undergo a neutral evaluation process, which is akin to arbitration, with its creditors; or (4) enter into Chapter 9 bankruptcy. § 141.1547(1)(a)–(d). Giving local governments these options is one difference between PA 436 and PA 4.
There are other differences between the laws. PA 436 contains provisions for removing an emergency manager after eighteen months of service, and if a local government wishes to have an emergency manager removed before that emergency manager has served eighteen months, the law provides the local government with a mechanism for petitioning the governor to do so. § 141.1549(11). Another new provision in PA 436 allows the governor to appoint a receivership transition advisory board (TAB) once the financial emergency in a given locality has been rectified. § 141.1563. TABs generally monitor the operations of the local government and ensure that it is operating in a financially conscious and sound way. Id.
When PA 436 took effect, emergency managers were in place in Allen Park, Benton Harbor, Ecorse, Flint, Pontiac, Detroit, the Detroit Public Schools, Highland Public Schools, and Muskegon Heights Public Schools. The city of Hamtramck has since had an emergency manager placed in control of it, and the emergency managers in Ecorse and Pontiac have been replaced by TABs. A TAB replaced Benton Harbor's emergency manager and subsequently voted to return the city to local control.
Plaintiffs, voters and elected officials from Detroit, Pontiac, Benton Harbor, Flint, and Redford, filed suit. They alleged that PA 436 violates their right to elect local legislative officials under (1) the Due Process Clause of the Fourteenth Amendment to the United States Constitution; (2) the Guarantee Clause of Article IV, § 4 of the United States Constitution ; (3) the Fourteenth Amendment's Equal Protection Clause by burdening their right to vote and by discriminating against African Americans, the poor, and those entities that had emergency managers under the previous laws; (4) § 2 of the Voting Rights Act (VRA); (5) the First Amendment by engaging in viewpoint discrimination and infringing on plaintiffs' freedom of speech, freedom of association, and right to petition their government; and (6) the Thirteenth Amendment.
The district court held that plaintiffs had Article III standing, reasoning as follows:
Plaintiffs are residents of cities with [emergency managers], elected officials of cities or school districts who have actually been displaced by [emergency managers], voters who intend to vote again in the future, and people...
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