AFT Michigan v. Michigan
303 Mich. App. 651
| Mich. Ct. App. | 2014Background
- Consolidated appeals by AFT Michigan et al. and MEA et al. challenge 2012 PA 300 amending PSERA and affecting post-December 1, 2012 pension/healthcare benefits.
- PA 300 offered election choices: maintain/freeze 1.5% multiplier with varying employee contributions, move to 401(k)-style plan, or other configurations.
- Healthcare elections under MCL 38.1343e and related provisions created voluntary participation with refund options if benefits do not vest.
- Court of Claims granted summary disposition, upholding constitutionality and rejecting contract-based challenges.
- AFT argued brochures/pamphlets formed contracts; MEA raised broader constitutional objections; trial court noted the 52-day election period was unreasonable but ultimately left the rest intact.
- Appellate court affirms, holding no breach of contract, no impairment of vested benefits, and rational relation to legitimate governmental purpose
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract formation via pamphlets or MOUs | AFT claims brochures create or imply a contract | No contract; disclosures are advisory and not binding | No contract implied; pamphlets not part of contract |
| Effect of 1980 PA 300 on contracts | Studier shows a contractual right to certain benefits | Statute does not create enforceable contract; strong presumption statutes do not create contracts | 1980 PA 300 did not create enforceable contract |
| Accrued financial benefits under Const 1963, art 9, §24 | PA 300 diminishes accrued pension benefits | PA 300 affects future benefits only; vesting intact | PA 300 does not impair accrued pension benefits; future benefits subject to change |
| Healthcare benefits and substantive due process | 2012 PA 300 violates substantive due process by impairing vested healthcare | Healthcare benefits are not accrued financial benefits; voluntary opt-in solves issue | PA 300's voluntary framework cures due process concerns; no violation |
| Takings and unjust enrichment theory for healthcare contributions | Contributions unlawfully take private property and enrich the state | Participation is voluntary; refund mechanism exists; no taking or unjust enrichment | No unlawful taking or unjust enrichment under 2012 PA 300 |
Key Cases Cited
- Studier v Michigan Pub Sch Employees’ Retirement Bd, 472 Mich 642 (2005) (no contractual right to healthcare benefits; protects only accrued rights; limits on future benefits)
- AFT Mich v Michigan, 297 Mich App 597 (2012) (precedent on contract/how healthcare benefits treated; voluntariness cures infirmities)
- Kosa v State Treasurer, 408 Mich 356 (1980) (funding of unfunded liabilities; limits on borrowing from post-1963 reserves)
- Advisory Opinion re Constitutionality of 1972 PA 258, 389 Mich 659 (1973) (concept that legislature may attach new conditions for earning financial benefits not yet accrued)
- Wells Fargo Bank, NA v Cherryland Mall Ltd Partnership, 300 Mich App 361 (2013) (defer to legislative judgments on necessity/reasonableness in public regulation)