Detroit unions file new suit; hearing set

Labor unions trying to stop Detroit from cutting pensions filed a new challenge to the city in bankruptcy court, and the federal judge overseeing the case said he would hear arguments Wednesday.

U.S. Bankruptcy Court Judge Steven Rhodes agreed Monday to a request by Detroit Emergency Manager Kevyn Orr to fast track a hearing on whether other courts can hear lawsuits against Detroit, while it seeks federal bankruptcy court protection.

Concerned that retirement benefits will be slashed, Detroit retirees, workers and pension funds have filed three lawsuits, including one backed by the United Auto Workers union, in state court in an effort to derail the biggest Chapter 9 municipal bankruptcy in U.S. history. A Michigan court judge, for instance, has ordered Orr to withdraw the bankruptcy filing.

The American Federation of State, County and Municipal Employees Council 25, which represents about 70 percent of Detroit’s civilian workforce, on Monday argued that if the other lawsuits were stopped, Orr, Michigan Gov. Rick Snyder (R) and others would be able to continue to operate beyond state constitutional authority.

However, many legal experts said they expect Rhodes to put the other cases on hold. “Federal bankruptcy law generally trumps state law,” said Stuart Gold, a
Detroit-based bankruptcy lawyer at Gold Lange & Majoros.

To remain in bankruptcy court, Detroit must prove that it is insolvent and that it made a good faith effort to negotiate with its creditors, including its employee pension funds.
AFSCME leaders said Monday that Orr had rebuffed efforts by unions to discuss the issues. “Not once, did [Orr’s] representatives sit down and seek to negotiate a solution with our union,” said Steven Kreisberg, AFSCME’s national director for collective bargaining.

— Reuters

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