City of Pontiac Retired Employees v. Louis Schimmel
498 F.3d 767
6th Cir.2013Background
- Pontiac was governed by an emergency manager under Public Act 72, later amended by Public Act 4 to allow modifying CBAs and pension benefits.
- Emergency Manager Louis Schimmel issued orders in Dec. 2011 altering retirees' health benefits, deductibles, and pensions.
- Voters rejected Public Act 4 in Nov. 2012 via referendum, while the Legislature later enacted Public Act 436 reenacting PA 4 with a minor appropriation.
- Retired Employees filed a putative class action asserting federal constitutional claims and challenging the Emergency Manager’s authority.
- The district court denied injunctive relief; on appeal the Sixth Circuit vacated and remanded to consider state-law grounds for disposition.
- On remand, the district court should examine (1) whether PA 4 took immediate effect in violation of the Michigan Constitution, and (2) whether the referendum voided the EM’s actions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did PA 4’s immediate-effect mechanism violate the Michigan Constitution? | Retired Employees argue two-thirds vote requirement was not met. | Schimmel/City contend PA 4 validly took effect under constitutional rules. | Remand to develop state-law record; issue potentially dispositive. |
| Does the voters’ referendum void the EM’s actions taken under PA 4? | Referendum rejection should void emergency measures. | Referendum effects on past actions are unsettled; may be revived or remain valid. | Remand to district court to determine referendum effect under state law. |
| Are the federal contracts, due process, or bankruptcy claims ripe or controlled by state-law grounds? | Claims raise constitutional questions about impairment of contracts, due process, and preemption. | State-law grounds may resolve case without addressing federal questions. | Court declines to decide federal merits; remand for state-law analysis. |
Key Cases Cited
- Ashwander v. TVA, 297 U.S. 288 (1936) (constitutional avoidance rule; decide only if necessary)
- Muller Optical Co. v. EEOC, 743 F.2d 380 (6th Cir. 1984) (avoidance when possible)
- Independent Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439 (1993) (courts can consider issues sua sponte with ample opportunity to address)
- Buffalo Teachers Fed’n v. Tobe, 464 F.3d 362 (2d Cir. 2006) (contract impairment analysis; public purpose and reasonableness)
- United States v. Ballin, 144 U.S. 1 (1892) (legislative procedural rules; constitution must constrain)
- Hammel v. Speaker of House of Representatives, 825 N.W.2d 616 (2012) (state-immediate-effect rule; rising-vote practice; precedential state-law)
- Kirk v. Hanes Corp. of N.C., 16 F.3d 705 (1994) (state-law determinations bound absent higher authority)
- West v. AT&T Co., 311 U.S. 223 (1940) (state constitutional questions in federal review)