Lincoln Park Retiree Lawsuit

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

CHARLES N. KAMINSKI, Individually and

Representing All Others Similarly Situated Who

Are Members of The LINCOLN PARK POLICE Hon.

AND FIRE RETIREES ASSOCIATION, INC.,

And MICHAEL J. MOULIOS, Individually and Case No.

Representing All Others Similarly Situated Who Are

Members of The LINCOLN PARK MUNICIPAL

EMPLOYEES RETIREES ASSOCIATION, Inc.,

JURY DEMAND INCLUDED

Plaintiffs,

– v –

BRAD L. COULTER, Individually and In His Official

Capacity as The State-Appointed Emergency Manager

For The City Of Lincoln Park, R. KEVIN CLINTON,

Individually and In His Official Capacity as The Treasurer for

The State Of Michigan, THOMAS E. KARNES, Individually

and In His Official Capacity as The Mayor of The City of Lincoln

Park, Michigan and Commissioner of The City of the Lincoln Park,

Michigan, Police and Fire Retirement Commission, LARRY KELSEY,

Individually and in His Official Capacity as an Elected City Council

Member for the City of Lincoln Park, Michigan and Member of The

Lincoln Park, Michigan Police and Fire Retirement Commission,

PATRICK CULTER, Individually and in His Official Capacity as a

Member of The Lincoln Park, Michigan Police and Fire Retirement

Commission, MATT SADOWSKI, Individually and as a Member of The

Lincoln, Michigan Park Police and Fire Retirement Commission,

THOMAS JANKOWSKI, Individually and as a Member of The Lincoln

Park, Michigan Police and Fire Retirement Commission, THOMAS MURPHY,

Individually and as a Member of the City Council of Lincoln Park; MARK KANDES,

Individually and as a member of the City Council of Lincoln Park and the former

Municipal Employees Retirement Commission; CLIFFORD HARRIS,

Individually and as a Member of the Former Municipal Employees Retirement

Commission; FRANK VASLO, Individually and in His Official Capacity as

The Mayor and member of the former Municipal Employees Retirement

Commission; LISA GRIGGS, Individually and in Her Official Capacity as

a Member of the former Municipal Employees Retirement Commission;

JANICE HOCHBERG, Individually and in Her Official Capacity as

a Member of the former Municipal Employees Retirement Commission;

JOHN DiFRANCESCO, Individually and as a Member of the former

Municipal Employees Retirement System; ELLIOT ZELENAK,

Individually and as a Member of the City Council of Lincoln Park; MARIO

2:15-cv-12810-GAD-RSW Doc # 1 Filed 08/10/15 Pg 1 of 25 Pg ID 1

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DESANTO, Individually and as a Member of the City Council of Lincoln Park;

CHRISTOPHER DARDZINSKI, Individually and as a Member of the City

Council of Lincoln Park, THE CITY OF LINCOLN PARK, MICHIGAN, THE

POLICE AND FIRE RETIREMENT COMMISSION OF THE CITY OF

LINCOLN PARK, MICHIGAN, and the CITY OF LINCOLN PARK, MICHIGAN,

GENERAL EMPLOYEES RETIREMENT COMMISSION, JOINT AND SEVERAL,

Defendants.

Mark A. Porter (P-42280)

Attorney for Plaintiffs

Mark A. Porter & Associates PLLC

551 East 11 Mile Road – Suite 3-D

P. O. Box 71527

Madison Heights, Michigan 48071-0527

(248) 547 – 1911 / (248) 547 – 1917 FAX

[email protected]

VERIFIED CLASS ACTION COMPLAINT FOR DAMAGES

AND REQUEST FOR INJUNCTIVE RELIEF

NOW COME THE PLAINTIFFS, on behalf of themselves as well as those similarly

situated, and by and through their counsel of record, to state to the Court:

JURISDICTION AND VENUE

1. The Plaintiffs plead that they possess specific and detailed retiree health care

benefits, based upon accrual and vested retirement rights recognized in Litton Financial Printing

Div. v N.L.R.B., 501 U.S. 190, 192, 206-207, 111 S. Ct. 221 (1991); that case cited with approval

by the Supreme Court in M&G Polymers v. Tackett, U.S. , 135 S. Ct. 926

(2015) (Docket No. 13-1010). They allege that the Defendants on July 01, 2015, completely

eliminated those benefits contrary to the U.S. Constitution; and that the Court’s jurisdiction is

pursuant to 42 USC §1983 and 28 USC §1331. All actions took place within the venue of this

Court, pursuant to 28 USC §1391, and Defendants of the State, or who are or were members of

the City Council, the Police and Fire Retirement Commission, and the General Employees

Retirement Commission, conducted their business within the judicial district of this Court.


mailto:[email protected]

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2. Pursuant to Rule 23(a), Rule 23(b)(1), and (2) of the Federal Rules of Civil

Procedure, the Lead Plaintiffs attest that they are representative of a class of Plaintiffs who are

members of two non-profit corporations that limit membership to retirees of the City of Lincoln

Park, Michigan, and their surviving dependents whose specific healthcare benefits were included

in collective bargaining agreements and statutory enactments by the City of Lincoln Park,

Michigan.

3. The impairments and removal of healthcare benefits as pleaded in this Complaint

entitle Plaintiffs to injunctive and declaratory relief pursuant to 42 USC §1983.

4. The taking of Plaintiffs’ property by Defendants Brad L. Coulter and R. Kevin

Clinton without substantive and procedural due process, as well as without just compensation is

contrary to the U.S. Constitution and actionable under 42 USC §1983.

5. The named Defendants of the State of Michigan and the City of Lincoln Park, and

the City of Lincoln Park Retirement Commissions acted pursuant to official policies and customs

meant to deprive Plaintiffs of their specific vested and protected healthcare benefits.

THE PARTIES

6. Plaintiffs reincorporate by reference Paragraphs 1-5.

7. Charles N. Kaminski retired from the City of Lincoln Park [“the City”] and its

Police Department in 2004, in response to repeated offers by the City to induce its active workers

to retire in “early-out” programs with the same collective bargained retirement benefits as would

have been present at the normal retirement date. Plaintiff Kaminski’s “Other Post Employment

Benefits,” also known as “OPEBs,” included specific healthcare insurance benefits which

defined deductibles and co-pays [Attachment #2]. He was the leading advocate to form and

incorporate the Plaintiff “Lincoln Park Police and Fire Retirees Association, Inc.,” and serves


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as its elected President.

8. Michael J. Moulios also retired in 2004, from a supervisory position in the City

of Lincoln Park’s General Employees unit. His post-employment benefits included specific

health insurance policies with detailed deductibles and co-pays, through a collective bargaining

agreement at Attachment #3. He was instrumental in forming the Plaintiff Lincoln Park

Municipal Employees Retirees Association, Inc., and is its current, elected President.

9. The Plaintiff Lincoln Park Police and Fire Retirees Association, Inc. was

formed and incorporated through the State of Michigan in 2007. Its members are retirees from

the City of Lincoln Park and their dependents, who have accrued and vested retirement benefits

through collective bargaining, the City Charter and the City ordinance enactments, which the

Plaintiff Association is organized to advocate and protect.

10. The Plaintiff Lincoln Park Municipal Employees Retirees Association, Inc.,

was formed and incorporated through the State of Michigan in 2007. Its members are the retired,

municipal employees, excluding police and fire departments’ employees, from the City of

Lincoln Park and their dependents; who also have accrued and vested retirement benefits through

collective bargaining, the City Charter and the City ordinance enactments, which the Plaintiff

Association is organized to advocate and protect.

11. Defendant Brad L. Coulter is by law a State official pursuant to 2012 Public

Act 436, at M. C. L. 141.1541 et. seq., who was appointed by the Governor through an Oath of

Office on July 03, 2014 to be the State-appointed Emergency Manager for the City of Lincoln

Park. The State asserts that his powers are created by P.A. 436, including M. C. L.

141.1552(1)(j) which purports to grant him unlimited powers to “reject, modify, or terminate 1

or more terms and conditions of an existing contract.”


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12. Defendant R. Kevin Clinton is the Treasurer of the State of Michigan, a State

Department charged with oversight of State-appointed Emergency Managers. Defendant Clinton

approved Defendant Coulter’s termination of all of the health insurance contracts for all Lincoln

Park retirees in correspondence dated April 10, 2015. Attachment #4.

13. Defendant Thomas E. Karnes is the elected Mayor of the City of Lincoln Park,

Michigan, and is also a Commissioner of the City of Lincoln Park Police and Fire Retirement

Commission, who has legal and fiduciary responsibilities on behalf of the City’s retirees and

dependents.

14. Defendant Larry Kelsey is an elected member of the City Council of Lincoln

Park, as well as a member of the Lincoln Park Police and Fire Retirement Commission, who has

legal and fiduciary responsibilities on behalf of the City’s retirees and dependents.

15. Defendant Patrick Culter is an active employee of the City of Lincoln Park and

also a member of the City of Lincoln Park Police and Fire Retirement Commission, who has

legal and fiduciary responsibilities on behalf of the City’s retirees and dependents.

16. Defendant Matt Sadowski was an active employee of the City of Lincoln Park

and was also a member of the City of Lincoln Park Police and Fire Retirement Commission, who

had legal and fiduciary responsibilities on behalf of the City’s retirees and dependents.

17. Defendant Thomas Jankowski is member of the City of Lincoln Park Police and

Fire Retirement Commission, who has legal and fiduciary responsibilities on behalf of the City’s

retirees and dependents.

18. Defendant Thomas Murphy is an elected member of the Lincoln Park City

Council, and served on that body during all times relevant to the facts alleged in this Complaint.

19. Defendant Mark Kandes is an elected member of the Lincoln Park City Council,


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and served on that body during all times relevant to the facts alleged in this Complaint.

20. Defendant Elliott Zelenak is an elected member of the Lincoln Park City

Council, and served on that body during all times relevant to the facts alleged in this Complaint

regarding the City’s request to the State of Michigan to put the City into State “receivership.”

21. Defendant Mario Desanto is an elected member of the Lincoln Park City

Council, and served on that body during all times relevant to the facts alleged in this Complaint.

22. Defendant Larry Kelsey is an elected member of the Lincoln Park City Council,

and served on that body during all times relevant to the facts alleged in this Complaint regarding

the City’s request to the State of Michigan to put the City into State “receivership.”

23. Defendant Christopher Dardzinski is an elected member of the Lincoln Park

City Council, and served on that body during all times relevant to the facts alleged in this

Complaint regarding the City’s request to the State of Michigan to put the City into State

“receivership.”

24. Defendant Clifford Harris served as a member of the former City of Lincoln

Park Municipal Employees Retirement Commission, prior to its transfer to the Municipal

Employees Retirement System of Michigan [“MERS”].

25. Defendant Frank Vaslo was an elected member of the City Council and Mayor of

the City of Lincoln Park, as well as a member of the former City of Lincoln Park Municipal

Employees Retirement Commission, prior to its transfer to the Municipal Employees

Retirement System of Michigan [“MERS”].

26. Defendant Lisa Griggs is currently the Finance Director for the City of Lincoln

Park, as well as a member of the former City of Lincoln Park Municipal Employees

Retirement Commission, prior to its transfer to the Municipal Employees Retirement System of


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Michigan [“MERS”].

27. Defendant John DiFrancesco was a member of the former City of Lincoln Park

Municipal Employees Retirement Commission, prior to its transfer to the Municipal


28. Defendant Janice Hochberg was a member of the former City of Lincoln Park

Municipal Employees Retirement Commission, prior to its transfer to the Municipal


29. Defendant City of Lincoln Park Police and Fire Retirement Commission was

created by City Charter and incorporated in Chapter 296 of the City of Lincoln Park ordinances.

It is vested with the fiduciary responsibility to carry out the general administration of the City’s

retirement system for the sworn employees of those departments. It was not created pursuant to

Michigan 1937 Public Act 345, and it is not immune from civil process and judgment.

30. Defendant City of Lincoln Park [General] Employees Retirement

Commission was created by City Charter and incorporated in Chapter 294 of the City of

Lincoln Park ordinances. It was vested with the fiduciary responsibility to carry out the general

administration of the retirement system for non-sworn City employees. Its assets were

transferred to the Municipal Employees Retirement System [“MERS’] during fiscal year 2011.

31. Defendant City of Lincoln Park, Michigan is a municipal corporation by

Michigan 1963 Constitution art. 7 §21, and at law.

STATEMENT OF FACTS – THE CITY OF LINCOLN PARK AND

LINCOLN PARK POLICE AND FIRE RETIREMENT COMMISSION

32. Plaintiffs reincorporate by reference Paragraphs 1-31

33. All cited Defendants of the City of Lincoln Park, its City Council and Police and


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Fire Pension Commission are by law “Investment Fiduciaries” pursuant to M. C. L.

38.1132c(1), known as §12c(1) of the Michigan Public Employee Retirement System Investment

Act, P. A. 314 of 1965.

34. Michigan’s Uniform Budgeting and Accounting Act, M. C. L. 141.421 et. seq.,

requires a yearly, standard accounting report with fiduciary requirements from each of the State’s

municipalities. M. C. L. 141.424 mandates that each municipality shall submit an accurate

“Comprehensive Annual Financial Report,” called a “CAFR,” within 6-months of the close of

each fiscal year. The CAFR must conform to “generally accepted accounting standards,” and the

State Treasurer is mandated by law to monitor each year’s CAFR. M. C. L. 141.421(4),

141.428.

35. General accounting principles endorsed by the American Academy of Actuaries

define pension funding ratios in this manner:

90% and above funding – Strong funding ratio

80% to 89% funding – Above Average

60% to 79% funding – Below average

Below 60% funding – Weak

36. As of the date of this Complaint, the city is in Fiscal Year 2014 [“FY-2014”].

The CAFR for FY 2008-2009, submitted on December 18, 2009, showed that the funding ratio

for the retirees’ pension funds had fallen to 50.39% as overseen by the Police/Fire Retirement

Commission; and to 41.69% for the General Municipal Retirees Fund, and the responsibility of

the City.

37. The same FY 2008-2009 CAFR detailed the required, 30-year amortized funding

required for retiree health insurance, based upon mortality tables and expected costs. The CAFR

showed that the funding for retiree health insurance had fallen to a ratio 41% for Police/Fire


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retirees [approximately 132 retirees-dependents]; and 44% for General Municipal retirees [at

approximately 140 retirees-dependents].

38. FY 2008-2009 began on July 01, 2008, and prior to the financial recession that

began in the late Fall of 2008. The adjusted property values for the City of Lincoln Park were

reported in the FY 2008-2009 CAFR at their pre-recession levels. Nonetheless, no action was

taken by the City, City Council, or its Police and Fire Pension Commission to correct and shore

up the funding of the pension systems.

39. Each successive CAFR report – filed at the State Treasurer’s office and the City’s

offices, including the City’s Retirement Commissions, showed continuing and dangerous drops

in the funding ratios – all of which were completely ignored by the Defendants at the City of

Lincoln Park, its City Council and the Retirement Commissions:

CAFR FY 2009-2010 – Funding Ratios & Paid Costs

Police/Fire Pensions General Retirees Pensions

41.62% Funded 35.47% Funded

Police Fire OPEBs General Retirees OPEBs

58% Costs Paid 57% Costs Paid



39% Funded 34% Funded

Police/Fire OPEBs General Retirees OPEBs




36.7% Funded 33.8% Funded

Police/Fire OPEBs General Employees OPEBs



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< 35% Funded 28% Funded

Police/Fire OPEBs General Employees OPEBs


40. As of the close of FY-2014 [ending June 30, 2015], the City’s funding ratios for

retiree pensions are valued at less than 25% for both the Police/Fire and General Retirees

pension funds.

41. On June 18, 2012, the Lincoln Park City Council appointed Gregory Capote as

City Manager. He was fired, however, by the same City Council on January 23, 2013, after

publicly stating that the “financial challenges that this city has, have been building for a really

long time.”

42. During the fiscal year 2009-2010, the City moved the remaining assets of the

General Employees pension system to the Municipal Employees Retirement System [“MERS”],

a public nonprofit organization that was created by the Michigan Legislature in 1945. The City

and its Defendants, however, routinely ignored the audits and warnings from MERS that the

pension system for City’s General Employees was failing at a catastrophic rate, and required

increased funding.

43. The yearly CAFR audits for fiscal years 2010-2013 showed an increasing number

of “material weaknesses” in the City’s budgeting and oversight of its finances “A material

weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a

reasonable possibility that a material misstatement of the entity's financial statements will not be

prevented or detected and corrected on a timely basis.” [CAFR, FY 2012-2013 by Plante Moran,


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December 19, 2013].

44. On August 19, 2013, the City Council voted to request a State of Michigan

review, in order to put the City under some form of State “receivership” and 2012 P.A. 436,

which could be used as a vehicle to void its retiree health care obligations. P.A. 436 would also

be used to avoid the responsibilities of the Police and Fire Pension Commission members, who

are defined as “investment fiduciaries” at M. C. L. 38.113(3). Those duties include:

a. discharging the responsibilities of the City and Police Fire Pension

Commission “solely in the interest of the participants and the beneficiaries.”

b. acting with the same care, skill, prudence, and diligence under the

circumstances then prevailing that a prudent person would act;

c. use due diligence to balance liquidity and current return of the investments

of the system relative to the anticipated cash flow requirements of the system;

d. ensure that projected return of the investments of the system are relative to

the funding objectives of the system.

e. give appropriate consideration to investments that would enhance the

general welfare of this state and its citizens when those investments offer the safety and

rate of return comparable to other investments permitted under the PERSIA; and,

f. balance the funded pension systems’ ratio based upon the ratio of

valuation assets to actuarial accrued liabilities on a plan-year basis.

45. In December, 2013, the MERS annual audit showed that the City’s General

Employee’s pension system had sunk to a 22% funding ratio, and reminded the City that

employee pensions were supposed to be pre-funded, under State law.

46. In June 23, 2014, the City Council and the Police and Fire Retirement


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Commission received dire warnings in the actuarial valuation for FY 2012-2013, submitted by

Gabriel Roeder, which stated at the outset:

The System is not well funded. The assumptions have not been updated in several

years and may understate contribution requirements. There is currently no margin

for future improvement in the mortality assumptions requirement. The current 30-year

open amortization period defers contributions and increases the risk that the plan may

not accumulate adequate assets to pay benefits when due.

******

The current negative cash flows are approximately $2 million and could exhaust the

System assets in roughly 9 years in the absence of investment returns. This could be

much shorter if the City does not make the contribution requirements under the current

methods and assumptions used in this report. Receipt of contributions is mission

critical. (Emphasis in original).

The Gabriel Roeder valuation also showed that the Police-Fire pension’s funding ratio

had dropped from 100% funded in FY 2003-2004 to below 60% funded in FY 2007-2008, a

“weak fund” by the standards of the American Academy of Actuaries. It demonstrated that at

the start of FY 2008-2009 – before the recession hit the United States – the City and Police and

Fire Retirement Commission were fully apprised of the increasingly precarious fund balances.

47. The Defendants at the City Council and the Police and Fire Retirement

Commission knew that retired police officers and fire fighters who were relying on those pension

funds had not received Social Security credits, nor made payments into the Social Security

system while working for the City, given that the City had long-ago opted-out of that program.

48. The Defendants at the City Council and the Police and Fire Retirement

Commission were aware that the retirees depended upon a “financial barbell” of retirement

benefits. On one end of the financial barbell were the monthly pension payments to the retiree or

surviving dependent. On the other end were health insurance benefits, contracted through Blue

Cross and Blue Shield of Michigan [“BCBSM”].


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49. Those contracted BCBSM health insurance benefits were themselves incorporated

into contractual obligations through collective bargaining agreements, City ordinances tied-

barred to collective bargaining agreements and contracts of employment with the then-employed

City workers, now retired. The City Council had intentionally been underfunding those yearly

obligations, as pleaded in Paragraph-39, above.

50. The Defendants at the City Council and the members of the City’s Retirement

Commissions knew that if the pension funds continued their catastrophic declines in value – all

the while underfunding the health insurance contracts of the retirees and dependents – that those

deficits would directly imperil the retirees’ access to health insurance benefits. The Defendants

were counting, however, upon the State Treasurer and the State-appointed Emergency Manager

to terminate the then-existing retiree health insurance benefits for all City retirees.

51. The named Defendants of the City Council and the members of the City’s

Retirement Commissions, joint and several, created the direct and proximate breaches of

fiduciary duties and reasonable care against the City’s retirees and dependents that by their acts

and omissions impaired the health insurance contracts for the retirees and dependents. They

created the fait accompli as they awaited the State and its appointed Emergency Manager to

completely impair and destroy all contractually-created retiree health insurance benefits.

STATEMENT OF FACTS – THE STATE TREASURER

AND STATE EMERGENCY MANAGER


53. 2012 P.A. 436, the so-called “Local Financial Stability and Choice Act,” is a faux

and non-transparent imitation of a true “receivership.” By Michigan law, a receiver is a


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ministerial officer of the Court. Cohen v Bologna, 52 Mich. App. 149, 151, 216 N.W. 2d. 586

(1974). The receiver is to be the impartial administrator of the assets and debts of all parties.

54. No such objectivity exists within P.A. 436. The Legislature created a Ferris wheel

of appointments, powers, and small, illusory list of “appeals” by a city government – but not its

citizenry. The Governor and State Treasurer appoint a State Emergency Manager, who answers

only to them. M. C. L. 141.1549(1), (8). The Emergency Manager then eliminates all levels of

local democracy, by overriding the Home Rule Act, the City Charter; and all ordinances,

including criminal and non-criminal, as well as administrative. M. C. L. 141.1552(1)(dd).

55. The State’s Emergency Manager Orders are binding on the local government’s

elected officials and employees. There are no appeals to a State Administrative Law Judge.

Instead, an “appeal” from the local elected officials goes to the “Local Emergency Financial

Assistance Loan Board,” which is within the Department of Treasury. The same State Treasurer

who appointed the State Emergency Manager also presides over the Loan Board. M. C. L.

141.932(1).

56. All other appeals from a local government’s council only go to the “State

Financial Authority,” which, in reality, is also the State Treasurer. M. C. L. 141.141.1542(u)(i).

57. It is important to note that there are no avenues for any appeals of the State’s

Orders and their results by ordinary citizens, vendors, or public employees who have been

adversely affected by the State’s Orders. PA 436 eliminates all avenues for those people to

petition the government with their grievances. In truth as well as in practice, they have been

reduced to mere vassals of The State.

58. Emergency Managers are State officials at law under 1963 Constitution Article

11 §7; at M. C. L. 141.1549(3)(d), and §(9)(c). The State Emergency Managers answer only to


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the State Treasurer and the Governor. Id, at §(8). As a State official, the Attorney General must

represent an Emergency Manager, by law at M. C. L.141.1560(2).

59. There are no requirements that pending actions by the State Treasurer and

Emergency Manager be made public, prior to the issuance of an “Emergency Order.” All

transparency regarding the first, second, and final readings of pending changes to the City

Charter and ordinances are eliminated – contrary to the Constitutional requirements mandated of

the State and Federal Legislatures. In place of the democratic process is simply the issuance of

arbitrary and executive fiats which are claimed to have the force of law under P.A. 436.

60. Following the overwhelming rejection of 2011 P.A. 4 by the electorate, the State

Legislature re-enacted over 98% of PA 4 through 2012 P.A. 436. It then added language

claiming to make it an “appropriation act” under 1963 Michigan Constitution art. 2 §9 and

void any attempt by the State’s electorate to further interfere with the powers of the State’s

actors. The Michigan Governor promptly signed the enrolled Bill that became PA 436, and it

became effective on March 28, 2013.

61. P.A. 436 asserts to give broad-based powers, with no limits imposed by the

State’s citizenry, whether by referendum, petition, appeal, or transparency. All powers under

P.A. 436 are bestowed upon the named Defendants as the State Treasurer and the State-

appointed Emergency Manager, both of whom are acting under color of Michigan law.

62. Defendant Brad L. Coulter took the oath of office as the State official designated

as the State Emergency Manager for the City of Lincoln Park on July 03, 2014. His appointment

was made subsequent to the vote by the named Defendants of the Lincoln Park City Council on

May 22, 2014. The City Council’s vote ensured its surrender of all authority to the Emergency

Manager, as provided by P.A. 436.


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63. In his first report to State Treasurer on August 20, 2014, EM Coulter wrote of the

ongoing mismanagement of the Police and Fire Retirement System by the named Defendants of

the City and the Police and Fire Retirement Commission:

The Emergency Manager is also concerned about the history of using

annual contribution rates that were clearly below what is required to

keep the system funded. There is concern over the lower than required

investment returns achieved and the Emergency Manager will be bench-

marking these returns against other retirement systems as well as various

market indices. Attachment #5, at page-8.

64. On January 17, 2015, EM Coulter’s report to the Michigan Governor included a

tentative proposal to invoke P. A. 436 to completely eliminate the contractually-created health

insurance coverages for all Lincoln Park retirees and dependents:

The Plan proposes reduction in retiree health care spending from $4.2 million

per year to $1 million per year. The $1 million is assumed used for stipends and

alternative coverages. The Emergency Manager will contract with health care

experts to assist retirees transition into plans on the health care exchange and

explore options for subsidies and alternative coverages. Attachment #6.

65. On April 22, 2015, EM Coulter issued a series of ten “Emergency Orders” that by

their language terminated all health insurance contracts then in effect for Lincoln Park retirees

and dependents. The two Emergency Manager Orders that terminated the health insurance

contracts relied upon by lead Plaintiffs Charles N. Kaminski and Michael J. Moulios are

Attachments #2 and #3, respectively. The other eight Orders, which affected the balance of the

proposed class of Plaintiffs, were identical in their language.

66. As a requirement of P.A. 436, EM Coulter received the written approval of the

termination of health contracts from Defendant R. Kevin Clinton, the State Treasurer. The

approval recited certain provisions of PA 436 at M. C. L. 141.1552(k), including:

The proposed [collective bargaining agreement] modification will only

be effective while the City of Lincoln Park remains in receivership


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under PA 436 of 2012. Attachment #4.

That aleatory language is illusory, however, given that the average age of the class of retirees is

approximately 70-years as of the date of this Complaint, and most retirees will die under the

increased financial hardships and contractual impairments created and imposed by Defendants.

67. Defendants Coulter and Clinton based the termination of retiree health insurance

contracts upon the “financial barbell” analogy detailed in Paragraph-48, above. The purported

financial savings taken from the terminated health insurance contracts supposedly will be used to

re-fund the two defined benefit pension systems, with a goal of 60% funding at the end of 2035.

The deliberate contract impairments were carried out over time through the actions of the

Defendants of the City Council and the Retirement Commissions, who were by law the

fiduciaries for the retirement systems a M. C. L. 38.1132b(c)(1). They then solicited State

receivership, and the contract impairments were completed by the total termination of retiree

health care coverage by the Defendants of the State of Michigan.

68. Pursuant to P. A. 436, the City will remain under State receivership, with either an

appointed State Emergency Manager or a purported State-appointed “Transition Team” for at

least 20-years into the future. By then, most of the retirees and their dependents will have died,

without recourse or relief from the imposed contract terminations.

69. The Emergency Orders terminating retiree health care insurance created token

stipend payments for retirees and dependents under 65 years and over 65 years:

Under 65 Years Over 65 Years

Single $150.00/Month $50.00/Month

Couple $350.00/Month $50.00/Month (Each)

Family $425.00/Month N/A

In addition, however, retirees and dependents over 65 years had to begin paying into a


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Medicare “Part B” program each month individually, when the contractual reimbursement for

premiums from the City of Lincoln Park was terminated on April 22, 2015. Also terminated was

a small, yearly check of approximately $300.00 to each retiree, which was a City obligation used

to adjust yearly pension payments. The retirees’ contractually-created prescription benefits were

also terminated, resulting in monthly costs that have dramatically increased.

70. There is no available enforcement under P.A. 436 to maintain even the token

stipends cited in Paragraph-69. The notices published by EM Coulter only last until January,

2016; they can be completely revoked at any time, with no appeal process available through PA

436.

71. Plaintiffs, who are Presidents of their respective retiree associations, have

attached relevant documentation of the immediate consequences of the actions of Defendants, by

way of the affidavits of a retiree and two surviving dependents, at Attachment #8.

a. Surviving Dependent Agnes Rotz is a member in good standing of the

Lincoln Park Municipal Employees Retirees Association. Her husband was a city

employee, who died in 1968. Her total annual pension payment from the City is only

$1,134.00, with additional Social Security payments of approximately $13,000.00/yearly.

b. Surviving Dependent Helen Huff is a member in good standing of the

Lincoln Park Police and Fire Retirees Association, and receives a pension payment from

the City of approximately $11,820.00/yearly, plus yearly Social Security payments of

$7,000.00.

c. Retired Lincoln Park Police Chief Robert Duncan is a member in good

standing of the Lincoln Park Police and Fire Retirees Association, and served the City

from 1946 through 1978. The yearly pension for he and his wife is $22,620.00. In


19

addition to paying for their health insurance as of July 01, 20015, however, they also

must now pay an additional $2,250.00/yearly for Medicare Part-B. The newly imposed

health insurance costs will now consume a minimum of 42% of their total yearly income.

COUNT I – IMPAIRMENT OF CONTRACTS

72. Plaintiffs reincorporate by reference Paragraphs 1-71 of this Complaint.

73. All Defendants, at all times relevant to this Complaint, acted under color of law in

regards to all allegations and facts contained in this Complaint. The Complaint is brought

pursuant to 42 U.S.C. §1983 through the Fourteenth Amendment of the U.S. Constitution.

74. The Contract Clause of the United States Constitution provides that no State shall

pass any law impairing the obligation of contracts. U.S. Const. art 1, §10, cl. 1.

75. The collective bargaining agreements, separation and settlement agreements

between Plaintiffs and their class members are contracts within the meaning of the Contracts

Clause. City of Lincoln Park ordinances, past practices, handbooks and agreements are also

enforceable contract rights for the members of Plaintiffs’ class.

76. Defendant Brad L. Coulter, with the approval of Defendant R. Kevin Clinton,

acted under color of law through 2012 P.A. 436 override the City of Lincoln Park’s Home Rule

Charter, ordinances, budget resolutions to override and cause the removal and deprivation of the

Plaintiffs’ rights, privileges and immunities that are secured by the Contracts Clause.

77. Defendants Thomas E. Karnes, Larry Kelsey, Patrick Culter, Matt Sadowski,

Thomas Jankowski, Thomas Murphy, Mark Kandes, Elliot Zelenak, and Mario Desanto,

John DiFrancesco, Clifford Harris, Frank Vaslo, Janice Hochberg, and Lisa Griggs all acted


20

joint and several under color of City ordinances, budget resolutions, and their statutory

designations as fiduciaries to intentionally impair retiree pension and health care protections by

their continued and unilateral reductions in funding and investments , thereby being the direct

and proximate cause with Co-Defendants Coulter and Clinton of the deprivation of Plaintiffs’

rights, privileges and immunities as secured under the Contracts Clause.

78. P. A. 436 is facially invalid, and a direct legislative assault upon the Contracts

Clause, claiming to give an Executive Branch appointee of the State the unlimited power to

“reject, modify, or terminate 1 or more terms and conditions of an existing contract” without

limitation. MCL 141.1552(1)(j), (k).

COUNT II – VIOLATION OF FIRST AMENDMENT RIGHTS

TO PETITION GOVERNMENT AND PRESENT GRIEVANCES

79. Plaintiffs reincorporate by reference Paragraphs 1-78 of the Complaint.

80. 2012 P.A. 436 is facially violative of the First Amendment of the U.S.

Constitution, in that it completely strips the citizens of Lincoln Park of input, access, and self-

determination:

a. PA 436 and the appointment of a State Emergency Manager automatically

voids the statutory Home Rule Act, MCL 141. 1552(1)(dd).

b. The State Emergency Manager’s powers under color of law “are superior

and supersede” all powers of the elected bodies of the City of Lincoln Park. Id.

c. The appointment of the State Emergency Manager terminates all functions

of the City Council, including but not limited to the introduction and public readings of

proposed ordinances. Instead – beyond the view and knowledge of citizenry – the

Emergency Manager simply issues Orders without advance notice or comment. The


21

Emergency Manager also has the unlimited discretion to revoke and modify existing City

ordinances. All of the Orders, by P.A. 436, claim to have the force of legislated law.

d. The City Council has only a faux appeal of any State Emergency Manger’s

actions to the same State Treasurer that already approved the Emergency Manager’s

actions. MCL 141.1559. There is absolutely no appeal provided in P. A. 436, however,

for any citizen, employee, retiree, vendor, or other person who has been adversely

affected by an Order and/or Ordinance issued by the State Emergency Manager. The

State asserts total immunity for all actions taken by its Emergency Manager,

whether his actions are Constitutionally valid, or unconstitutional. MCL 141.1560.

e. In order to carry out the State’s Orders and whims beyond the view of

the public, PA 436 permits the Emergency Manager to eject and ban any “local elected or

appointed official or employee, agent, or contractor of the local government from access

to the local government's office facilities, electronic mail, and internal information

systems.” M. C. L. 141.1550(2).

f. While the State maintains its grip upon the City under PA 436, all City

elections for City officials become nugatory and meaningless.

81. The total ejection and elimination of citizen assembly and right to petition the

State government under PA 436 requires strict scrutiny by the Court, Nader v. Blackwell, 545

F.3d. 459, 475 (6th Circ. 2008). The trampling of First Amendment freedoms clearly

demonstrate irreparable injury to Plaintiffs. ACLU of Kentucky v. McCreary County, 354 F.3d.

438, 445 (6th Circ. 2003).


22

COUNT III – UNCONSTITUTIONAL DEPRIVATION OF

PROPERTY INTEREST WITHOUT DUE PROCESS

OR JUST COMPENSATION – 42. U.S.C. §1983


83. The Plaintiffs’ collective bargaining agreements, as well as the City of Lincoln

Park charter, ordinances, separation and other employment agreements created property rights

between the Plaintiffs and Defendants.

84. Defendants Thomas E. Karnes, Larry Kelsey, Patrick Culter, Matt Sadowski,

Thomas Jankowski, Thomas Murphy, Mark Kandes, Elliot Zelenak, and Mario Desanto,

John DiFrancesco, Clifford Harris, Frank Vaslo, Janice Hochberg, and Lisa Griggs all acted

joint and several under color of City ordinances, budget resolutions, and their statutory

designations as fiduciaries to intentionally deprive the retiree pension and health care protections

through their continued and unilateral reductions in funding and investments, without notice or

providing due process to the Plaintiffs. They were the direct and proximate cause with Co-

Defendants Coulter and Clinton of the deprivation of Plaintiffs’ property rights as secured

through the Fourteenth. Amendment and actionable under 42 U.S.C. §1983.

85. Defendants Brad L. Coulter and R. Kevin Clinton, acting under color of law

through 2012 P.A. 436, deprived Plaintiffs and the memberships of all property rights related to

health insurance, without any due process or independent appeal – because no due process or

appeal is provided by PA 436.

REQUEST FOR PRELIMINARY INJUNCTION



23

87. The continued harm inflicted upon Plaintiffs by the facial and as-applied

provisions of 2012 Public Act 436 cannot await a final disposition of this case. Without any

rights to petition their governments, much less receive advance, public notice of the State’s

“Emergency” Orders, all protections contained within the First Amendment have been destroyed

through Legislative enactment and Executive Branch fiats.

88. The language contained at M.C.L. 141.1552(j) is a direct, head-on assault on the

U.S. Const. art 1, §10, cl. 1. It goes beyond “impairment” actions against Plaintiffs, and escalates

the violations to the complete destruction of both the contractual rights of the Plaintiffs, as well

as all contractual obligations on behalf of the named Defendants.

89. The use of 2012 PA 436 by Defendants stripped elderly retirees of their only

protection against rising medical costs, and was done without any due process of right of appeal

to an independent forum, contrary to the Fourteenth Amendment of the U.S. Constitution.

90. The damages are irreparable, in that the financial inability to access medical

treatment and prescriptions forces elderly Plaintiffs to put off and delay that treatment as long as

possible. The damages are immediate and beyond computation – however, they are not merely

“economic,” in that they directly and adversely affect Plaintiffs’ access to appropriate health

care. The loss is beyond that which can be financially recovered – in contrast to active

employees of the City, who still draw paychecks, have access to overtime, etc.,. Sampson v.

Murray, 415 U.S. 61, 90; 94 S. Ct. 937 (1974); also Basicomputer Corp. v. Scott, 973 F.2d 507,

512 (6th Circ. 1992).

91. There is no adequate remedy at law. The actions and omissions of the Defendants

of the City of Lincoln Park, coupled with their active solicitation of State intervention, have

placed Defendants in a position where no appeal to any independent forum was available. “A


24

theoretical right to recover money damages will not constitute an adequate legal remedy where

difficulties in the collection of any judgment render that remedy illusory.” Winston v. General

Drivers, Warehousemen & Helpers Local Union No. 89, 879 F. Supp. 719, 725 (W.D. Ky.

1995). In the case at bar, over 200 class members will all have individual claims against

Defendants – on an ongoing basis – for medical treatments and prescriptions.

92. There is a substantial likelihood that Plaintiffs will prevail, in that 2012 PA 436 as

applied destroys protections against impairment of contracts; the due process property rights to

medical care; and the First Amendment rights to petition and participate in the Plaintiffs’

government at both the local and State levels. ACLU of Kentucky v. McCreary County 354 F.3d.

438, 445 (6th. Circ. 2003).

93. The Plaintiffs’ Complaint has demonstrated numerous, “serious questions going

to the merits and irreparable harm which decidedly outweighs any potential harm to the

defendant if an injunction is issued.” Friendship Materials, Inc., v. Michigan Brick, Inc., 679

F.2d. 100, 105 (6th Circ. 1982)

94. The issuance of a preliminary injunction supports the public interest. The Court is

requested to give notice that the average age of the Plaintiffs’ proposed class is 70-years. The

public interest question directly confronts the question of whether the City and State can strip

away health insurance contracts [individually with Blue Cross-Blue Shield of Michigan, as well

as through collective bargaining and individual contracts]. Those contracts have been in place –

and relied upon the Plaintiffs’ members for decades. The benefits were not merely reduced, but

completely eliminated under the guise of a law that facially, and as-applied, violates the U.S.

Constitution. “It is always in the public interest to prevent violation of a party's constitutional

rights.” G & V Lounge, Inc. v. Michigan Liquor Control Comm'n, 23 F.3d 1071, 1079 (6th


25

Cir.1994).

PRAYER FOR RELIEF

WHEREFORE, the Plaintiffs request that this Court:

A. Issue a Preliminary Injunction against all Defendants.

B. Certify this action as a class action, appoint Plaintiffs Charles N. Kaminski and Michael

J. Moulios as class representatives, and authorize their counsel of record for this

Complaint to serve as the attorney of record for the certified members of the class.

C. Declare the acts and omissions of all Defendants to be unconstitutional, in violation of

the Plaintiffs rights under Federal law, and void ab initio.

D. Enter an Order compelling Defendants to reinstate the level of benefits provided before

the Orders issued by the State and State Emergency Manager were released.

E. Enter an award of attorney fees pursuant to 42 U.S.C. §1988.

F. Have the Plaintiffs Otherwise Made Whole, by such other relief as required by

law and equity.

JURY DEMAND

Plaintiffs hereby demand a trial by jury on the issues set forth by this Complaint.

Respectfully Submitted,

August 08, 2015 /s/ Mark A. Porter

Mark A. Porter (P-42280)

Attorney for Plaintiffs

Mark A. Porter & Associates PLLC

551 East 11 Mile Road – Suite 3-D

P. O. Box 71527

Madison Heights, Michigan 48071-0527

(248) 547 – 1911

(248) 547 – 1917 FAX

[email protected]


mailto:[email protected]

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

CHARLES N. KAMINSKI,

LINCOLN PARK POLICE Hon.

AND FIRE RETIREES ASSOCIATION, INC.,

MICHAEL J. MOULIOS, Case No.

LINCOLN PARK MUNICIPAL

EMPLOYEES RETIREES ASSOCIATION, Inc.,

LIST OF ATTACHMENTS

Plaintiffs,

– v –

BRAD L. COULTER, R. KEVIN CLINTON,

THOMAS E. KARNES, LARRY KELSEY,

PATRICK CULTER, MATT SADOWSKI,

THOMAS JANKOWSKI, THOMAS MURPHY,

MARK KANDES, CLIFFORD HARRIS,

FRANK VASLO, LISA GRIGGS, JANICE HOCHBERG,

JOHN DiFRANCESCO, ELLIOT ZELENAK,

MARIO DESANTO, CHRISTOPHER DARDZINSKI,

THE CITY OF LINCOLN PARK, MICHIGAN, THE

POLICE AND FIRE RETIREMENT COMMISSION OF

THE CITY OF LINCOLN PARK, MICHIGAN, and the

CITY OF LINCOLN PARK, MICHIGAN, GENERAL

EMPLOYEES RETIREMENT COMMISSION,

JOINT AND SEVERAL,

INDEX OF PLAINTIFFS’ ATTACHMENTS

Attachment #1 Notarized Verifications of Plaintiffs

Attachment #2 Charles Kaminski – Collective Bargaining

Agreement at Time of Retirement

Attachment #3 Michael Moulios – Collective Bargaining

Agreement at Time of Retirement

Attachment #4 Letter of Michigan Treasurer R. Kevin

Clinton to State Emergency Manager

Brad Coulter, April 10, 2015

Attachment #5 Report of State Emergency Manager

Brad Coulter, August 20, 2014

2:15-cv-12810-GAD-RSW Doc # 1-1 Filed 08/10/15 Pg 1 of 2 Pg ID 26

2

INDEX OF PLAINTIFFS’ ATTACHMENTS – CONT’D

Attachment #6 Report of State Emergency Manager,

to the Governor on January 17, 2015,

Including Summary of August 20, 2014

Attachment #7 State Emergency Manager Orders #22

and #24, Issued April 22, 2015

Attachment #8 Affidavits of Retirees, Class Members,

and Members in Good Standing of

Plaintiffs’ Retirees Associations


Attachment #1

Notarized Verifications

Of Plaintiffs

Charles Kaminski,

Michael Moulios




Attachment #2

Charles Kaminski,

Collective Bargaining Agreement

At Time of Retirement








Attachment #3

Michael Moulios,

Collective Bargaining Agreement

At Time of Retirement






Attachment #4

Letter of State Treasurer

R. Kevin Clinton to

State Emergency Mgr.

Brad Coulter

April 10, 2015




Attachment #5

Report of


Brad Coulter

August 20, 2014


EMERGENCY FINANCIAL AND OPERATING PLAN FOR THE CITY OF LINCOLN PARK, MICHIGAN

August 20, 2014

Prepared By:

Brad Coulter

Emergency Manager

Page 1 of 17


http://www.lincolnpark.govoffice.com/

The Emergency Manager estimates the annual contribution needs to be increased by $2 million per year in order to start toward funding the system to 100%. The Emergency Manager has requested analysis from GRS to confirm this estimate and better understand options for funding the system. The Emergency Manager is also concerned about the history of using annual contribution rates that were clearly below what is required to keep the system funded. There is concern over the lower than required investment returns achieved and the Emergency Manager will be benchmarking these returns against other retirement systems as well as various market indices. The Emergency Manager will explore the possibility of exercising rights under Section 12 (m) of the Act, where in the case of plans that are not at least 80% funded, allows the Emergency Manager to remove one or more pension board trustees or allows the Treasurer to name the Emergency Manager as sole trustee for the pension system. This plan assumes the City contributes an additional $2.0 million per year toward the Police Officers & Firefighters pension. The actual amount required will be refined as the Emergency Manager works with actuarial experts to determine the true extent of the underfunding and options for pension contributions.

Total Increase in Annual Pension Funding Assumed With a goal of having both plans funded to 100% over the next 20 years, the total increase in pension contribution assumed in this plan is $4.0 million per year resulting in a total annual contribution of $9.6 million starting in fiscal year 2015-2016. The Emergency Manager will be working with MERS, GRS and an independent actuary to determine the final contribution stream that must be paid into the systems. In order to help pay for this increased pension contribution, the Plan proposes the $4.2 million per year spent on retiree health care is reduced to $1 million per year. The $1 million in retiree health care spending is proposed to be used for stipends or other replacement benefits for the retirees. The Emergency Manager plans to contract health care experts to assist retirees transition into plans on the health care exchange and explore options for subsidies and alternative coverages. The Emergency Manager acknowledges there is a risk of lawsuits being filed against the City for taking this action and legal fees defending this action could be expensive. But, the Emergency Manager sees no other viable alternative for shoring up the grossly underfunded pension system.

Section 4.01: Bankruptcy Under Section 18 of the Act, the Emergency Manager may provide written notice to the Local Emergency Financial Assistance Loan Board requesting authorization to proceed under Chapter 9 of Title II of the United States Code, Adjustment of Debts of a Municipality, by stating no feasible financial plan can be adopted that can satisfactorily resolve the financial emergency in a timely manner. Or the Emergency Manager can determine that an adopted financial plan, in effect for at least 180 days cannot be implemented as written, or as it might be amended, in a manner that can satisfactorily resolve the financial emergency in a timely manner. The Emergency Manager has determined the initiation of bankruptcy proceedings under the Act is not a viable option at this time for achieving the objectives of the City for the following reasons:

Page 8 of 17


Attachment #6

Report of


Brad Coulter

January 17, 2015


EMERGENCY FINANCIAL AND OPERATING PLAN FOR THE CITY OF LINCOLN PARK, MICHIGAN

August 20, 2014

Prepared By:

Brad Coulter

Emergency Manager

Page 1 of 17


http://www.lincolnpark.govoffice.com/

The Emergency Manager estimates the annual contribution needs to be increased by $2 million per year in order to start toward funding the system to 100%. The Emergency Manager has requested analysis from GRS to confirm this estimate and better understand options for funding the system. The Emergency Manager is also concerned about the history of using annual contribution rates that were clearly below what is required to keep the system funded. There is concern over the lower than required investment returns achieved and the Emergency Manager will be benchmarking these returns against other retirement systems as well as various market indices. The Emergency Manager will explore the possibility of exercising rights under Section 12 (m) of the Act, where in the case of plans that are not at least 80% funded, allows the Emergency Manager to remove one or more pension board trustees or allows the Treasurer to name the Emergency Manager as sole trustee for the pension system. This plan assumes the City contributes an additional $2.0 million per year toward the Police Officers & Firefighters pension. The actual amount required will be refined as the Emergency Manager works with actuarial experts to determine the true extent of the underfunding and options for pension contributions.

Total Increase in Annual Pension Funding Assumed With a goal of having both plans funded to 100% over the next 20 years, the total increase in pension contribution assumed in this plan is $4.0 million per year resulting in a total annual contribution of $9.6 million starting in fiscal year 2015-2016. The Emergency Manager will be working with MERS, GRS and an independent actuary to determine the final contribution stream that must be paid into the systems. In order to help pay for this increased pension contribution, the Plan proposes the $4.2 million per year spent on retiree health care is reduced to $1 million per year. The $1 million in retiree health care spending is proposed to be used for stipends or other replacement benefits for the retirees. The Emergency Manager plans to contract health care experts to assist retirees transition into plans on the health care exchange and explore options for subsidies and alternative coverages. The Emergency Manager acknowledges there is a risk of lawsuits being filed against the City for taking this action and legal fees defending this action could be expensive. But, the Emergency Manager sees no other viable alternative for shoring up the grossly underfunded pension system.

Section 4.01: Bankruptcy Under Section 18 of the Act, the Emergency Manager may provide written notice to the Local Emergency Financial Assistance Loan Board requesting authorization to proceed under Chapter 9 of Title II of the United States Code, Adjustment of Debts of a Municipality, by stating no feasible financial plan can be adopted that can satisfactorily resolve the financial emergency in a timely manner. Or the Emergency Manager can determine that an adopted financial plan, in effect for at least 180 days cannot be implemented as written, or as it might be amended, in a manner that can satisfactorily resolve the financial emergency in a timely manner. The Emergency Manager has determined the initiation of bankruptcy proceedings under the Act is not a viable option at this time for achieving the objectives of the City for the following reasons:

Page 41 of 50


Attachment #7

Plaintiffs’ Health Insurance

Termination:

Orders of State Emergency Mgr.

Brad Coulter, April 22, 2015


EMERGENCY MANAGER OF THE CITY OF LINCOLN PARK

ORDER NO. 22

ORDER OF THE EMERGENCY MANAGER OF THE CITY OF LINCOLN PARK

City of Lincoln Park/Action Under Sections 12(1)k and 12(2) of PA 436 of 2012 of the Local

Financial Stability and Choice Act Related to Health Care for Retirees of Government

Employees Labor Council

BY THE AUTHORITY VESTED IN THE EMERGENCY MANAGER FOR THE CITY OF LINCOLN PARK

PURSUANT TO MICHIGAN’S PUBLIC ACT 436 OF 2012

BRAD COULTER, THE EMERGENCY MANAGER, ISSUES THE FOLLOWING ORDER:

WHERAS, the Local Financial Stability and Choice Act (Act 436 of 2012/MCL

141.1541, et. seq.) in Section 10 empowers an emergency manager to issue orders to the

appropriate local elected and appointed officials and employees, agents, and contractors of the

local government a manager considers necessary to accomplish the purposes of the act and any

such orders are binding on the local elected and appointed officials and employees, agents, and

contractors of the local government to whom they are issued.

WHEREAS, Section 12(1) of the Act provides that “[a]n Emergency Manager may take

one or more of the following additional actions with respect to a local government that is in

receivership, notwithstanding any charter provision to the contrary:

(g) Make, approve, or disapprove any appropriation, contract, expenditure, or loan, the

creation of any new position, or the filling of any vacancy in a position by any appointing

authority;

(k) Subject to section 19, after meeting and conferring with the appropriate bargaining

representative and, if in the emergency manager’s sole discretion and judgment, a prompt

and satisfactory resolution is unlikely to be obtained, reject, modify or terminate one or

more terms and conditions of an existing collective bargaining agreement. The rejection,

modification or termination of one or more terms and conditions of an existing collective

bargaining agreement under this subdivision is a legitimate exercise of the state’s

sovereign powers if the emergency manager and the state treasurer determine that all of

the following conditions are satisfied …;

(l) Act as sole agent of the local government in collective bargaining with employees or

representatives and approve any contract or agreement;

(ee) Take any other action or exercise any power or authority of any officer, employee,

department, board, commission, or other similar entity of the local government, whether

elected or appointed, relating to the operation of the local government. The power of the

emergency manager shall be superior to and supersede the power of any of the foregoing

officers or entities …;


2

WHEREAS, Section 12(2) of the Act provides that “[e]xcept and otherwise provided in

this act, during the pendency of the receivership, the authority of the chief administrative officer

and governing body to exercise power for and on behalf of the local government under law,

charter, and ordinance shall be suspended and vested in the emergency manager.

WHEREAS, on April 9, 2015, I requested the State Treasurer to concur in my

determination under Section 12(1)k of the Local Fiscal Stability and Choice Act, Public Act 436

of 2012 (Act) to allow termination of those sections of the Collective Bargaining Agreements

with the unions listed above concerning health insurance.

As stated in the April 9, 2015, correspondence to the State Treasurer, in my sole

discretion and judgment, a prompt and satisfactory resolution of outstanding issues is unlikely to

be obtained. Therefore, I determined that the four conditions of Section 12(1)k of the Act had

been satisfied.

On April 10, 2015, the State Treasurer concurred with my determination and made his

separate determination (see attached) that the four conditions of Section 12(1)k of the Act had

been satisfied.

IT IS HEREBY ORDERED THAT:

I. By operation of law, as provided in Sections 12(l)k and 12(2) of the Act, pursuant to the

determinations made by both myself and the State Treasurer, the sections of all Collective

Bargaining Agreements with the City and the union listed above concerning retirees1, as

well as all past and present City Council resolutions or ordinances regarding retiree

health care and Medicare Part B reimbursement, are terminated and replaced with the

following:

Healthcare

Effective July 1, 2015, all retirees receiving City provided health care shall be provided

monthly payments to be either used toward purchasing health insurance or as a

supplement to income. All retirees must enroll in the City provided group coverage and

pay for this coverage if they would like to continue having health insurance through the

City’s group plan. Alternatively, retirees may take the monthly payment and purchase

coverage on their own, or take the money as income. These payment amounts are set

through June 30, 2016 and will be re-evaluated every budget year.

The City will pay the following monthly amounts based on the coverage being offered:

Non-Medicare Eligible Retirees

Single: $150 per month

Couple: $350 per month

Family: $425 per month

1 Unless otherwise noted, “retiree” shall only include those individuals who retired from the City of

Lincoln Park on or before April 22, 2015 and are eligible to receive City provided retiree health care. In

addition, “retiree” shall include eligible spouses of retirees as well as eligible dependents.



EMERGENCY MANAGER OF THE CITY OF LINCOLN PARK

ORDER NO. 24

ORDER OF THE EMERGENCY MANAGER OF THE CITY OF LINCOLN PARK

City of Lincoln Park/Action Under Sections 12(1)k and 12(2) of PA 436 of 2012 of the Local

Financial Stability and Choice Act Related to Health Care for Retirees of Lincoln Park

Police Command Officers Association

BY THE AUTHORITY VESTED IN THE EMERGENCY MANAGER FOR THE CITY OF LINCOLN PARK

PURSUANT TO MICHIGAN’S PUBLIC ACT 436 OF 2012

BRAD COULTER, THE EMERGENCY MANAGER, ISSUES THE FOLLOWING ORDER:

WHERAS, the Local Financial Stability and Choice Act (Act 436 of 2012/MCL

141.1541, et. seq.) in Section 10 empowers an emergency manager to issue orders to the

appropriate local elected and appointed officials and employees, agents, and contractors of the

local government a manager considers necessary to accomplish the purposes of the act and any

such orders are binding on the local elected and appointed officials and employees, agents, and

contractors of the local government to whom they are issued.

WHEREAS, Section 12(1) of the Act provides that “[a]n Emergency Manager may take

one or more of the following additional actions with respect to a local government that is in

receivership, notwithstanding any charter provision to the contrary:

(g) Make, approve, or disapprove any appropriation, contract, expenditure, or loan, the

creation of any new position, or the filling of any vacancy in a position by any appointing

authority;

(k) Subject to section 19, after meeting and conferring with the appropriate bargaining

representative and, if in the emergency manager’s sole discretion and judgment, a prompt

and satisfactory resolution is unlikely to be obtained, reject, modify or terminate one or

more terms and conditions of an existing collective bargaining agreement. The rejection,

modification or termination of one or more terms and conditions of an existing collective

bargaining agreement under this subdivision is a legitimate exercise of the state’s

sovereign powers if the emergency manager and the state treasurer determine that all of

the following conditions are satisfied …;

(l) Act as sole agent of the local government in collective bargaining with employees or

representatives and approve any contract or agreement;

(ee) Take any other action or exercise any power or authority of any officer, employee,

department, board, commission, or other similar entity of the local government, whether

elected or appointed, relating to the operation of the local government. The power of the

emergency manager shall be superior to and supersede the power of any of the foregoing

officers or entities …;


2

WHEREAS, Section 12(2) of the Act provides that “[e]xcept and otherwise provided in

this act, during the pendency of the receivership, the authority of the chief administrative officer

and governing body to exercise power for and on behalf of the local government under law,

charter, and ordinance shall be suspended and vested in the emergency manager.

WHEREAS, on April 9, 2015, I requested the State Treasurer to concur in my

determination under Section 12(1)k of the Local Fiscal Stability and Choice Act, Public Act 436

of 2012 (Act) to allow termination of those sections of the Collective Bargaining Agreements

with the unions listed above concerning health insurance.

As stated in the April 9, 2015, correspondence to the State Treasurer, in my sole

discretion and judgment, a prompt and satisfactory resolution of outstanding issues is unlikely to

be obtained. Therefore, I determined that the four conditions of Section 12(1)k of the Act had

been satisfied.

On April 10, 2015, the State Treasurer concurred with my determination and made his

separate determination (see attached) that the four conditions of Section 12(1)k of the Act had

been satisfied.

IT IS HEREBY ORDERED THAT:

I. By operation of law, as provided in Sections 12(l)k and 12(2) of the Act, pursuant to the

determinations made by both myself and the State Treasurer, the sections of all Collective

Bargaining Agreements with the City and the union listed above concerning retirees1, as

well as all past and present City Council resolutions or ordinances regarding retiree

health care and Medicare Part B reimbursement, are terminated and replaced with the

following:

Healthcare

Effective July 1, 2015, all retirees receiving City provided health care shall be provided

monthly payments to be either used toward purchasing health insurance or as a

supplement to income. All retirees must enroll in the City provided group coverage and

pay for this coverage if they would like to continue having health insurance through the

City’s group plan. Alternatively, retirees may take the monthly payment and purchase

coverage on their own, or take the money as income. These payment amounts are set

through June 30, 2016 and will be re-evaluated every budget year.

The City will pay the following monthly amounts based on the coverage being offered:

Non-Medicare Eligible Retirees

Single: $150 per month

Couple: $350 per month

Family: $425 per month

1 Unless otherwise noted, “retiree” shall only include those individuals who retired from the City of

Lincoln Park on or before April 22, 2015 and are eligible to receive City provided retiree health care. In

addition, “retiree” shall include eligible spouses of retirees as well as eligible dependents.



Attachment #8

Affidavits in Support,

Retiree Association Members

Robert Duncan,

Helen Huff,

Agnes Rotz







Documents

Lincoln Park Retiree Lawsuit