United States v. City of Detroit

• Citation: 712 F.3d 925
• Decision Date: 08 April 2013
• Docket Number: Nos. 11–2517,11–2569.,s. 11–2517
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. CITY OF DETROIT; Detroit Water and Sewerage Department, et al., Defendants–Appellees, Michigan AFSCME Council 25 (AFL–CIO), (11–2517); American Federation of State, County & Municipal Employees (AFSCME) Local 207 and Senior Accountants, Analysts and Appraisers Association (SAAA), (11–2569), Intervenors–Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

712 F.3d 925

UNITED STATES of America, Plaintiff–Appellee,

v. CITY OF DETROIT; Detroit Water and Sewerage Department, et al., Defendants–Appellees,Michigan AFSCME Council 25 (AFL–CIO), (11–2517); American Federation of State, County & Municipal Employees (AFSCME) Local 207 and Senior Accountants, Analysts and Appraisers Association (SAAA), (11–2569), Intervenors–Appellants.

Nos. 11–2517, 11–2569.

United States Court of Appeals, Sixth Circuit.

Argued: Oct. 9, 2012.

Decided and Filed: April 8, 2013.

ARGUED:Herbert A. Sanders, The Sanders Law Firm, Detroit, Michigan, for Appellant in 11–2517. George B. Washington, Scheff, Washington & Driver, P.C., Detroit, Michigan, for Appellants in 11–2569. Robert J. Franzinger, Dykema Gossett PLLC, Detroit, Michigan, for Appellees City of Detroit in 11–2517 and 11–2569. ON BRIEF:Herbert A. Sanders, The Sanders Law Firm, Detroit, Michigan, for Appellant in 11–2517. George B. Washington, Scheff, Washington & Driver, P.C., Detroit, Michigan, for Appellants in 11–2569. Robert J. Franzinger, Dykema Gossett PLLC, Detroit, Michigan, Jill M. Wheaton, Dykema Gossett PLLC, Ann Arbor, Michigan, for Appellee City of Detroit in 11–2517 and 11–2569, R. Craig Hupp, Bodman PLC, Detroit, Michigan, for Appellee Macomb County in 11–2569.

Before: BOGGS and CLAY, Circuit Judges; and STAFFORD, District Judge.^*

BOGGS, J., delivered the opinion of the court, in which STAFFORD, D. J., joined. CLAY, J. (pp. 934–51), delivered a separate dissenting opinion.

OPINION

BOGGS, Circuit Judge.

This case arises out of a long-standing federal environmental compliance action against the Detroit Water and Sewerage Department (“DWSD”), which for over 30 years has been unable to achieve sustained compliance with the Clean Water Act and state environmental laws. In the most recent round of violations and court orders, a federal district judge in the Eastern District of Michigan attempted to begin a final resolution of the chronic problems in the DWSD. On September 9, 2011, the judge gave a committee of local officials 60 days to come up with a final plan—or else face a more intrusive court-ordered remedy. On November 4, 2011, he adopted most of the committee's recommendations but took the additional step of directly abrogating some provisions in the collective bargaining agreements (CBAs) of approximately twenty different bargaining units. None of the DWSD unions were parties in the case. Within two weeks, the Michigan American Federation of State, County, and Municipal Employees (AFSCME) Council 25 filed a motion to intervene to challenge the order, which the district court denied as untimely. Subsequent motions by four more unions were also denied.

Although the Unions were aware of the potential significance of the proceedings and failed to intervene before the court-approved committee returned its recommendations, total denial of intervention was an abuse of discretion. The Unions have substantial interests at stake that “may as a practical matter” be impaired absent intervention. Fed.R.Civ.P. 24(a)(2). While concerns of delay and re-litigation are serious, they can be alleviated by limiting the scope of intervention instead of outright denial. Therefore, we reverse the decision of the district court, with orders to limit the scope of intervention on remand.

I

In 1977, the Environmental Protection Agency initiated this federal action against the State of Michigan, City of Detroit (the “City”), and the DWSD for exceeding effluent limitations and failing to satisfy monitoring requirements, in violation of the Clean Water Act, 33 U.S.C. § 1251 et seq. The DWSD is a City agency responsible for wastewater collection, treatment, and disposal services and water service to millions of residents in both Detroit and in various suburban communities. Employees of the DWSD currently number nearly two thousand, and are represented by twenty different City-wide bargaining units, most of which include many non-DWSD employees.

Later in 1977, District Judge Feikens entered an initial Consent Judgment, which instituted a plan to deal with various staffing, equipment, and procurement issues. Over the course of the next thirty years, the DWSD fell in and out of compliance with the Clean Water Act and its state permits, requiring multiple amended consent judgments, the commissioning of numerous investigative reports, and appointment of Special Administrators with broad powers to bypass constraints on the City government—including the ability to override the City Council and to “revisit existing union contracts and civil service rules.” The consent judgments and reports were consistent in identifying a host of problems that plagued the DWSD to the core, including technical, managerial, institutional, and organizational issues. From the start, human resources issues were prominent among the identified problems. In 1978, court-appointed monitor Dr. Jonathan Bulkley found “chronic and severe understaffing” of qualified skilled personnel at the DWSD: less than half of skilled positions were filled, but staff in entry-level positions had bloated to quadruple the budgeted amount. Even after the plant was brought into compliance by the actions of the first Special Administrator, the problems remained: a 1994 DWSD report identified several festering staffing problems, including inflexible City-wide policies, outdated job descriptions, and “no method to evaluate employees for performance or advancement potential.” After a relapse in 1997, a committee tasked by Judge Feikens issued a report in 2000, finding similar problems to those identified before, including, again, chronic understaffing, inadequate training, outdated job descriptions, and promotion policies that made competitive hiring “difficult, if not impossible.” Although the technical causes of noncompliance were subsequently resolvedin large part, a consultant hired by the City warned in 2007 that “issues that are more people and organizationally related [ ] could possibly jeopardize sustained compliance.” As anticipated, the DWSD again fell out of compliance in 2009, and the court called upon Dr. Bulkley for a second investigative report. Sounding a more urgent note, his report noted “striking similarity” to earlier problems and recommended that “[i]t may be appropriate to consider more fundamental corrective measures to address the institutional problems.”

Judge Cox was reassigned the case in late 2010 upon the retirement of Judge Feikens. On February 11, 2011, Judge Cox entered a stipulated order reorganizing the Board of Water Commissioners to ensure greater expertise and autonomy. In the order, Judge Cox invited any of the parties to file a motion to dismiss within 6 months if “substantial compliance” with state permits and prior consent judgments could be shown. In the meantime, the DWSD had been dealing with state regulators concerning its 2009 and 2010 permit violations. On August 31, 2010, the DWSD had developed a “Corrective Action Plan” at the request of state regulators. In general and aspirational terms, the DWSD set goals of re-engineering and reducing delay in the staffing process, revising and realigning its organizational structure and role definitions, and ensuring adequate skilled staff—including, “[i]n collaboration with its union constituents,” identifying tasks to be performed by subcontractors. Unable to meet the goals of the Corrective Action Plan, the DWSD entered into an Administrative Consent Order with state regulators effective July 21, 2011.

Armed with the Administrative Consent Order, the DWSD filed a motion to dismiss the federal action, arguing that the Second Amended Consent Judgment was outdated and that state supervision and the new Administrative Consent Order would be sufficient and more appropriate to bring the DWSD into compliance. Two suburban counties—Oakland and Macomb—objected, both calling for further empowerment of the Board of Water Commissioners, as the “Executive Branch of the City has failed to do what it takes” despite being “given multiple opportunities and extraordinary powers.” In the statements of facts in their responses to the City's motion to dismiss, the counties elaborated on the long-standing human resources problems facing the DWSD, noting the problem with City-wide “bumping rights,” compensation restricted by CBA and City policy, delays in hiring, and lack of effective upper-level management. Both counties called for injunctive and other relief specifically targeting union practices.

Judge Cox rejected the DWSD's arguments in a September 9, 2011, order (“September 9 Order”), finding the DWSD unable to achieve even short-term compliance with the consent order. He again emphasized the root causes “consistently” found by the numerous reports issued over the years, including lack of qualified personnel, hiring delays, insufficient training, obsolete job descriptions, required use of the City HR department, and restrictive City personnel, civil service, and union rules. Judge Cox emphasized that “human resources issues have been a chronic problem for the DWSD for the past 34 years.”

With respect to diagnosing the problem, Judge Cox's order did not break any new ground. However, in addressing remedies, he heeded the call of the 2010 Bulkley Report and the suburban counties, concluding that “in order to achieve long-term compliance with the Clean Water Act, other less intrusive measures, over many years and many attempts, having proved unsuccessful, more fundamental and intrusive corrective measures are required.” Giving local officials one last chance, Judge Cox tasked a committee of City and DWSD leadership (“Root Cause Committee”) to propose a plan for long-term compliance within 60 days. In formulating its recommendations, the Committee was to be unconstrained by “any local Charter or ordinance provisions or by the provisions of any existing contracts.” Judge Cox noted that any effective remedy to achieve...