Okrie vs State of Michigan
Latest Update: December 1, 2016
At present, the Application is pending in the Supreme Court for a decision whether to grant or deny it; I can’t say that the odds are great that the Court will grant it and place the case on what is called "calendar call" for full briefing and argument. I suspect that the Court will make its decision sometime early next year, so we should know rather soon whether the case comes to an end or not. And it will come to an end unless I get financial support to proceed further with this case to United States Supreme Court in which I am admitted to practice. For the simple fact of the matter is that there is no way for me, as a solo practicing appellate attorney, to continue this battle unless people are willing to support it financially. And if people do not care enough to back a cause that will benefit them or represent their interests, it will die. Simply put, we can’t expect, especially in the upcoming days of the Trump regime, to get a free ride and let other people do the work. We all have to do it and contribute to achieve fair and just results in defense of our shared democratic values, or else they will wither and die.
As I have repeatedly stated in these Updates, I would like to thank everyone — above all, Mr. Thomas Okrie — for his or her support of this cause and your financial help in sustaining the effort on appeal in the Michigan appellate courts, and if necessary, the U.S. Supreme Court. As I also have said repeatedly, financial support is necessary to enable me to carry on this work in the Michigan Supreme Court and also the U.S. Supreme Court. As always, donations in any amount are greatly appreciated and needed, especially given the magnitude of this case and forces arrayed against us. To donate through a Pay Pal account or by credit card, please press the “Pay Now” button in the box to the right. My thanks to one and all in advance.
Latest Update: August 16, 2016
Latest Update: April 29, 2016
Even though I have not posted an update for some time, I have sought to publicize the importance of this lawsuit in the interim, sending letters to the presidential campaigns and newspapers before the Michigan primary election to inform them about this lawsuit. The following is a composite version of these letters:
". . . I am also writing to bring to your attention to a governmental heist engineered by Governor Snyder that makes the takings from the “Great Train Robbery” look like spare change. It involves a $1+ billion (and counting) income transfer from the pockets of retired state and public school employees born after 1945 so that 86,000 businesses and corporations in Michigan do not have to pay any taxes at all. The heist is simple in design, yet needs to be explained:
For decades, the public pensions of retired state and public school employees in Michigan, as in a few other states, were exempt from state and local taxation. The tax exemptions promised to state and public school employees were used as economic inducements to attract and retain qualified individuals to work for the State of Michigan and its political subdivisions at lower salaries and pension benefits, and constituted an integral part of their overall retirement benefits. In effect, the tax exemptions represented deferred compensation that was earned by retired state and public school employees for their years of governmental service after vesting in one of the state's defined benefit plans, retiring and thereafter residing in Michigan and paying state taxes on their other income and assets.
That, however, changed with the entry in force of 2011 PA 38 on January 1, 2012, when the Michigan Legislature and Governor Snyder eliminated the tax exemptions as to retired state and public school employees born after 1945 (but not those born before 1946) in order to pay for a massive tax break for corporations and businesses, including 86,000 that now pay no taxes at all. Such an action perfectly illustrates how government produces income inequality in America: taking money from the pockets of ordinary people and giving it to businesses and corporations. It is a pretty simple magic legal trick that shows how governmental policy concentrates economic power in the wealthy and already powerful so that their interests are protected to the detriment of the public.
In response, I filed a class-action lawsuit in July 2013 on behalf of Mr. Thomas R. Okrie, a retired public school teacher, and similarly situated retired state and public school employees (100,000+), challenging the State of Michigan's action of taking away their deferred compensation in the form of tax exemptions without providing comparable financial benefits to them. In short, a breach of contract under state law, or an impairment of contract and “Takings” in violation of the state and federal constitutions.
The case is now pending appeal in the Michigan Court of Appeals. Okrie et al. v State of Michigan, COA No. 326607. (For information about the lawsuit, see my website, www.michigan-appeal-attorney.com under the heading “Class Action Law Suit: Okrie v State of Michigan, including the posting of my briefs and a Chronicle of the Lawsuit. For any questions about it, you can call me directly).
Notwithstanding its importance, this case has been on a media blacklist in Michigan almost from the beginning, despite my efforts and the efforts of the State Employees Retirement Association (SERA) and others to get some publicity so that the general public is at least made aware of the issues presented in the class-action lawsuit. In effect, 100,000+ people in Michigan with real grievances have been given the silent treatment, falling into a media black hole in the same way as Flint residents were brushed off in 2014 and 2015 when they complained about lead-poisoned water. For that reason,
I respectfully ask you and your representatives in Michigan to do whatever you can to bring public attention to this class-action lawsuit when you are in Michigan. It is another Exhibit A of Income Inequality in America. My thanks in advance for whatever help that you can give us.
As always, I would like to thank everyone for their support of this cause and your financial help in sustaining the effort on appeal in the Michigan appellate courts, and if necessary, the U.S. Supreme Court. It needs to be reiterated that financial support is necessary to enable me to spend the time and effort to counter the State's “false narrative” that distorts our actual claims and arguments and to make the public in Michigan and elsewhere aware that, at the bottom line, this case represents an illegal income transfer of more than $1 billion (and counting) from retired middle income people to corporations and businesses. As always, donations in any amount are greatly appreciated and needed, especially given the magnitude of this case and forces arrayed against us. My thanks in advance.
Latest Update – July 24, 2015
With the briefing done, the next step in this class-action lawsuit is the oral argument before a randomly selected panel of three judges of the Michigan Court of Appeals. Oral argument, however, could be months from now. Thus, in the coming months, I will take advantage of the lull in the proceedings to switch from mere reportage to critical commentary of the respective positions set forth in the briefs.
For starters, what is surprising in the present litigation has been the Attorney General’s steadfast repudiation or disavowal of the State’s position taken in the Davis litigation before the Michigan Court of Appeals, Michigan Supreme Court and the U.S. Supreme Court. In a nutshell, the position that the State argued and supported in the Davis litigation, relying upon an unanimous opinion of the Michigan Supreme Court in Kosa v State Treasurer, 408 Mich 356, 372 n 22, 372-373 (1980), was that tax-exempt pensions of retired state and public school employees represented deferred compensation that was earned for their years of governmental service, that it was an “integral part of the retirement benefits conferred upon state employees,” and that it was provided to attract and retain qualified employees to work for the State and its subdivisions at below market rates. In my view, the State is judicially estopped from asserting a position in the present litigation that repudiates its previous assertions made before the Michigan courts and the U.S. Supreme Court in the Davis case. For the sake of consistency and integrity, the State should be bound to its previous views expressed in a similar case, resting upon binding Michigan Supreme Court precedent, that tax-exempt pensions represent deferred compensation. Like any private attorney or litigant, the Attorney General should not be allowed to play fast and loose with the courts. Further, throughout this case, the State has simply refused to address our claim that tax-exempt pensions represent deferred compensation. Simply ignoring it is not an answer.
But what is just as bad is the Attorney General’s refusal to address in the present litigation the Attorney General’s formal opinion issued on December 18, 1991 (in the aftermath of the U.S. Supreme Court’s decision in Davis ), which concluded that “the Legislature, may, without violating Const 1963 art 9 § 24, limit or repeal the tax exemptions now found in the four retirement statutes as to current retirees and members if it provides alternative benefits in their place that are equal to or greater than the pension benefit[s] that would be limited or withdrawn . . . .” (1991 OAG No. 6697, p 6).
Throughout this case, I have effectively adopted the substance of the Attorney General’s 1991 formal opinion, arguing that tax-exemptions for public pensions may be eliminated for retired state and public school employees born after 1945, so long as the State provides comparable financial benefits, equal to or greater than those represented by tax-exempt pensions. Here, the argument in a nutshell is that Mr. Okrie and retired state and public school employees born after 1945 (“Okrieet al.”) earned deferred compensation for their years of governmental service and that it is payable in the form of a tax-exempt pension or a financial value equal to or greater than the value of the tax-exemption. However, yet again, the State refuses to engage with this argument, simply repeating over and over again the mantra that tax-exemptions for public pensions of retired state and public school employees may be eliminated but without ever addressing the rest of the position, the second prong of the disjunctive. In my view, the Attorney General in the present litigation cannot run away from the 1991 OAG No. 6697, but that he is bound to address it, if not defend it.
Keep in mind that the Attorney General, an elected state executive officer, is the chief legal officer of the State of Michigan. 1963 Mich Const art V, §§ 3, 21. Although the constitution does not specify the duties of the Attorney General, MCL 14.32 states in pertinent part:.
Further, as general counsel to the state’s departments and agencies, the Attorney General has the statutory power to issue formal opinions that bind the officials of executive agencies and departments, such as those in the Office of Retirement Services lodged within the Department of Treasury. Traverse City School Dist. v Attorney General, 384 Mich 390, 410 n 2 (1971); Queen Airmotive, Inc v Dep’t of Treasury, 105 Mich App 231, 236 (1981) However, such opinions do not have the force of law, and are therefore not binding on courts. Traverse City School Dist., supra. p 410 n 2; East Grand Rapids School Dist, supra, p 394; Frey v Dep’t of Management & Budget, 429 Mich 315, 338 (1987). Consequently, formal opinions issued by the Attorney General have been held to be binding on state agencies and officers only until the courts make a pronouncement on the issue. Traverse City School Dist., supra; People v Waterman, 137 Mich App 429 (1984);Kalamazoo Police Supervisor’s Ass’n v City of Kalamazoo, 130 Mich App 513 (1983); People v Penn, 102 Mich App 731 (1982). But even though attorney General opinions are not precedentially binding on the courts, they can be regarded as “persuasive authority” by the judiciary. Indenbaum v Michigan Bd of Medicine (After Remand), 213 Mich App 263, 274 (1995); Ludington & N R Co v Epworth Assembly, 188 Mich App 25, 40 (1991). Formal opinions issued by the Attorney General are published, and those issued since January 1, 1997 are available on the Attorney General’s website: www.ag.state.mi.us.
The focus here is the formal opinion issued by the Attorney General in 1991 in response to the question posed by Senator John J. H. Schwarz, M.D., whether the State could eliminate the tax-exemptions for public pensions of retired state employees who had vested in one of the four state pension systems. Since then, the relevant conclusion of the Attorney General’s formal opinion has never been challenged or questioned in a court action, except perhaps this case (leaving aside In re Request for Advisory Opinion regarding Constitutionality of 2011 PA 38, 490 Mich App 295 (2011), which did not address the precise issues and arguments raised in this case on behalf of retired state and public school employees born after 1945.
Thus, since 1991, the Attorney General’s opinion has been binding on all state departments, agencies and their officers, including the Department of Treasury and the Office of Retirement Services (“ORS”), particularly since the ORS repeatedly assured state and public school employees for decades that upon retirement their pensions were exempt from state and local taxation.
What is significant is that these repeated assertions, promises or assurances by the ORS were legally fortified by the Attorney General’s formal opinion that the Legislature could eliminate tax exemptions for public pensions of retired state and public school employees, so long as comparable financial benefits were provided, which were equal to or greater than the value of a tax-exempt pension. Thus, it would seem to me that Mr. Okrie and all other similarly situated retired state and public school employees born after 1945 are justifiably entitled to rely upon the Attorney General’s formal opinion assuring them the deferred compensation that they earned for their years of governmental service was something: either payable as a tax-exempt pension or a comparable financial value. It could not simply be taken away, as it was through 2011 PA 38.
An important consequence also follows from this. Because the Attorney General’s formal opinion 1991 OAG No. 6697 is binding on all the state departments, agencies and officers until a court pronounces differently, the Attorney General himself is bound as well to the views expressed by the formal opinion, at least until the courts rule otherwise.
As already indicated, the Attorney General is a single executive heading one of the principal departments in the executive branch. 1963 Const, art V, § 2, 3. Thus, the Attorney General’s formal opinions apply to the Attorney General, too. Here, the Attorney General cannot have it both ways. Having made an official pronouncement as the chief legal officer of the State binding upon all executive state agencies and departments that the Legislature may eliminate tax exemptions for the public pensions of retired state and public school employees, so long as it provides comparable financial benefits to them, the Attorney General is bound by this view in the present litigation. In short, the Attorney General necessarily should be on our side here, not against us.
In any event, I would thank everyone for their support of this cause and your financial help in sustaining the effort on appeal in the Michigan appellate courts, and if necessary, the U.S. Supreme Court. As you know, financial support is necessary to enable me to spend the time in a public campaign to counter the State’s “false narrative” that distorts our actual claims and arguments and to make the public in Michigan and elsewhere aware that, at the bottom line, this case represents an income transfer of more than $1 billion (and counting) from retired middle income people to corporations and businesses. As always, donations in any amount are greatly appreciated and needed, especially given the magnitude of this case and forces arrayed against us. My thanks in advance.
The Law Office of Gary P. Supanich
Update January 13, 2015
Supreme Court Says No To Court of Claims Suit
The Michigan Supreme Court opted today not to take up a suit challenging the constitutionality of the new Court of Claims structure.
Using its standard wording, the court ruled it was “not persuaded that the questions presented should be reviewed by this court.”
The state Court of Appeals ruled last August in Thomas Okrie v Michigan that the Legislature has the ability to pull claims against the state of Michigan from the Ingham County Circuit Court to a pool of four appellate judges (See “COA Rules New Court Of Claims Structure Is Not Unconstitutional,” 8/20/14).
At the time, Okrie went after the new structure from various angles, but Judges Jane Beckering, Joel Hoekstra and Karen Fort Hood wrote the suit does not meet the “heavy burden to show” the law is unconstitutional.
Legislative Democrats and Ingham County judges objected in 2013 when the Republican-led Legislature swiftly passed the bill moving the Court of Claims out of Ingham County to the appellate court. The new system arguably created a court more accessible to the people, since the Court of Appeals have four locations across the state.
But Democrats and Okrie, a former public school teacher who retired from the Troy School District in 2000, argued the move stunk of politics.
The new law creates a system where one Court of Appeals judge hears cases at the trial court level and then a panel of that judge's colleagues on the Court of Appeals reviews the decisions on review.
Obviously, judges who hear the initial case can not take part in the appeal and the court will “maintain the highest ethical standards” when reviewing Court of Claims cases initially decided by their colleagues.
Supreme Court Lets Stand Ruling Affirming Change In Court Of Claims
The Supreme Court in a brief order released Wednesday declined to hear the appeal of the plaintiff who had accused Governor Rick Snyder and the Legislature of violating the Constitution when they moved the Court of Claims out of the Ingham Circuit Court and into the Court of Appeals.
In the case, (Okrie v. State of Michigan, SC Docket No. 150111), Thomas Okrie sought to overturn the Court of Appeals' rejection of his lawsuit. The Supreme Court, as is usually the case when it declines to grant leave to appeal, said only that it was not persuaded the case should be heard.
Michigan SERA Council Chair Bob Kopasz and I attended the oral argument in these cases. The make-up of the court makes me think the employer will likely win.
Supreme Court Tackles State Employee RTW, Pension Cases
Gongwer 1-13-15 The Supreme Court was essentially asked to rule that unions, or at least collective bargaining, are a condition of employment, but pensions are not in two key state employment cases argued Tuesday. In deciding what is a condition of employment for state civil service workers, the court could also be determining the limits of authority for the Civil Service Commission.
Union attorneys urged the court to overturn the Court of Appeals ruling (International Union v. Green, SC docket No. 147700) that the new right-to-work law applies to state employees, but to uphold the appellate court’s finding (Michigan Coalition of State Employee Unions v. Michigan, SC docket No. 147758) that only the commission can approve the 4 percent surcharge the Legislature added to cover retirement health care costs.
Most of the questioning came from Republican members of the bench, and often they appeared unsatisfied with both sides’ definition of conditions of employment. William Wertheimer, attorney for the state employee unions in both cases, said the Court of Appeals crossed a long-established line in finding right-to-work applied to state employees. “The commission alone regulates conditions of employment for classified employees,” he said. “The Legislature’s not allowed to meddle with classified employment.” Unions, he said, are not conditions of employment. But collective bargaining is, making the agency fees the unions charge legitimate. “The issue is a fee which the parties negotiated,” Mr. Wertheimer said. “It pays for collective bargaining that the commission has decided is an appropriate way to deal with the employee-employer relationship.”
But justices questioned whether the commission had the sole authority to make that decision. Justice Stephen Markman noted that the Constitution provides the commission the authority to regulate conditions of employment. “Perhaps the term ’regulate’ should be given its ordinary meaning ... Something distinctive from legislative,” he said. “The Legislature has the distinctive authority relative to hours and conditions.”
But Chief Justice Robert Young Jr. questioned what collective bargaining is if it is, as Assistant Solicitor General Ann Sherman argued, not a condition of employment.
Ms. Sherman agreed with Justice Mary Beth Kelly that it is a process of negotiating conditions of employment. “It’s a relationship with a third party that to some extent impacts many areas of employment, but is not itself a condition of employment,” Ms. Sherman said of collective bargaining. Ms. Sherman said mandatory union dues or agency fees also run afoul of the Constitution’s plan for paying for state employment oversight: the 1 percent of payroll provided to the commission. “The
The people appear to have intended that the 1 percent wouldn’t be passed on to the (employees),” she said. “Who pays for it is important ... Because the 1 percent is in the Constitution.” She said the bargaining process is also outside the bounds of the Constitution because the commission essentially delegates that to the Office of the State Employer in the Executive Office rather than conducting those talks itself. “Collective bargaining is not consistent with the whole idea of a civil service commission,” Ms. Sherman said, adding that collective bargaining was not considered when the provisions regarding the commission were added to the Constitution. If the drafters of the Constitution had wanted to include collective bargaining, “they could have said all conditions of employment and all mechanisms leading to those conditions,” Ms. Sherman said. “And that would have been more clear?" Mr. Markman said.
John Bursch, former solicitor general in this case representing the Michigan Chamber of Commerce, said the Constitution provided a hierarchy of powers. “The Legislature has authority to enact laws,” he said. “The commission has the lesser power to regulate.” If the commission had the authority to exempt itself from the right-to-work law, Mr. Bursch said, what would stop it from ignoring other laws like the Elliott-Larsen Civil Rights Act or child labor laws. “The people drafting the Constitution knew how to exempt the Civil Service Commission from legislative authority if they wanted to,” he said.
Though the role of appellant and appellee switched, state and union attorneys made essentially the same arguments on the retiree health care charge. Pension benefits are not a condition of employment, Assistant Attorney General Pat Fitzgerald said, because they were created by the Legislature. And the commission essentially conceded it had no role. “If that were the case (that the commission has exclusive authority), then the Civil Service Commission has been missing in action for the last 70 years while the Legislature illegally acted,” Mr. Fitzgerald said. He noted that, while constitutional provisions on the commission do not mention pension benefits, provisions regarding State Police troopers do, so arguably pension benefits were not meant to be considered in the former.
Mr. Young and Mr. Markman both noted that the Constitution provides the Legislature with veto power over pay increases, but not over pension benefit changes.
Mr. Wertheimer countered that the commission, not the Legislature, came up with the idea of a pension. “Before it was enacted by the Legislature, the commission was retiring people on its own,” he said. “The commission has been involved in the pension fund from the beginning.” And he said there was some thought that the Legislature has the authority to veto pension changes. He noted the Legislature’s attempt to overturn providing health care benefits to same sex couples.
Mr. Young countered that, since the Legislature failed in that attempt, its use of that power had not been tested in the courts. Mr. Wertheimer said pension benefits are also clearly a condition of employment. “If I’m an employee, whether or not I have a pension and I have to pay for it, that’s compensation and a condition of employment,” he said. Mr. Young questioned why, then, the commission was merely an amicus to the case and not a party. “You indicated they didn’t have power more than any citizen has: to petition the Legislature for relief,” Mr. Young said.
Ms. Kelly questioned what authority the commission would have to overturn the legislative change. “Once you want the form of a pension that’s inconsistent with what the Legislature proposes and funds, the CSC doesn’t have the resources to fund their proposal,” she said.
Mr. Wertheimer said the commission would have to do what the unions have done: challenge the legislation in court.
See the briefs on International Union v Green (right to work case)
Update December 31, 2014
As the year 2014 comes to close, it would be most beneficial to review the developments and the present status of the Okrie et al. v State of Michigan class-action pension lawsuit. If you recall, I filed the class-action lawsuit on behalf of Mr. Thomas Okrie, a retired public school teacher and 100,000+ retired state and public school employees over 1-1/2 years ago on July 9, 2013challenging the State of Michigan’s taxation of their previously tax-exempt defined-benefit pensions. The class-action pension lawsuit (“the Pension case”) was filed in the Michigan Court of Claims, then "housed" in the Ingham Circuit Court in Lansing, Michigan, and the case was randomly assigned to Judge Rosemarie Aquilina. The initial class-action complaint asserted that the elimination of the statutory exemption for public-pension incomes of retired state and public school employees pursuant to 2011 PA 38 (effective January 1, 2012) was a breach of contract based upon the doctrine of promissory estoppel. In an amended complaint filed on October 9, 2013, I added claims for breach of employment contract and unjust enrichment under state law and for violations of the contract clause, the “takings” clause, and substantive and procedural due process clauses under the state and federal constitutions. The taxation of the previously tax-exempt pensions amounts to a transfer from the pockets of retired state and public school employees to the state’s coffers of roughly $300 million per year, or nearly $1 billion by now, and counting.
Subsequently, after cross-motions for summary disposition were filed in the Pension case for a scheduled hearing on December 13, 2013 before Judge Aquilina in Ingham Circuit Court, the Michigan Legislature, in an unprecedented whirlwind set of actions, enacted legislation (2013 PA 164) with immediate effect, virtually without any public discussion or debate, transferring the jurisdiction of the Michigan Court of Claims from the Ingham Circuit Court to the Michigan Court of Appeals. Under the Act, the Michigan Supreme Court was directed to appoint four Michigan Court of Appeals’ judges to act simultaneously as judges on the Michigan Court of Claims. On November 14, 2013, Governor Snyder signed it into law, and the Michigan Supreme Court immediately appointed four Court of Appeals’ judges to serve also as Court of Claims’ judges, naming Court of Appeals’ Judge Michael Talbot as Chief Judge of the Court of Claims. (By the way, Judge Talbot is now also the Chief Judge of the Michigan Court of Appeals.) On November 14, 2013, Judge Talbot, acting in his capacity as Chief Judge of the Court of Claims, issued an order staying all cases pending in the Court of Claims, including the Pension case. No actual notice of any of these actions was issued to the affected counsel.
Because no other law firm or lawyer in the State of Michigan was willing to challenge the manifest unconstitutionality of the transfer and because Mr. Thomas Okrie had legal standing as an aggrieved party to do so, I filed a Petition with the Michigan Court of Appeals on December 13, 2013, asserting that 2013 PA 164 was unconstitutional under the separation of powers clause of the 1963 Michigan Constitution and the due process clauses of the state and federal constitutions. (Okrie v. State of Michigan, Mich. Ct. of Appeals, No. 31950) (“Petition case”).
Eventually, in January 2014, the Pension case was assigned to Court of Appeals’ Judge Deborah Servitto, acting as a Court of Claims judge, who granted the State’s motion for summary disposition (without any hearing and over my jurisdictional and other objections), dismissing the case with prejudice in an opinion issued on April 21, 2014. In response, I filed a motion for reconsideration on May 7, 2014 seeking leave to amend the class-action complaint to add claims for breach of individual investment contracts involving the purchase of service credit time and the Michigan Investment Plan (MIP), fraud in the inducement and gross negligent misrepresentation on the part of the State of Michigan regarding these investment contracts. The motion for reconsideration in the Pension case is pending.
In the meantime, the Court of Appeals’ panel assigned to the Petition case granted my motion for oral argument, which was heard on July 8, 2014. Thereafter, on August 19, 2014, the Court of Appeals issued an opinion denying the Petition. Okrie v. State, 2014 Mich. App. LEXIS 1539 (2014). I then filed an Application for Leave to Appeal from the Court of Appeals’ decision with the Michigan Supreme Court on September 19, 2014. (Okrie v. State of Michigan, Mich. Sup. Ct., No. 150111). At the close of the year, the Leave Application is pending. As I stated in my last update, I will let everyone know the Supreme Court’s decision whether to grant or deny the Leave Application as soon as I find out, which should be sometime in early 2015.
Finally, I would like to express my sincere appreciation for the financial support that many of you have provided me since the inception of the Pension case, and to ask for contributions in the coming year so that I can continue with these lawsuits, whatever the outcome in the Supreme Court on the Leave Application. My heart-felt thanks in advance. HAPPY NEW YEAR!
Update August 2, 2014
When I last reported about one month ago, it was to say that the Michigan Court of Appeals held oral argument in a special session on July 8, 2014 regarding the constitutionality of 2013 PA 164 (“the Act”), which transferred the Court of Claims to the Court of Appeals. One month ago, on August 19, 2014, the Court of Appeals issued a published opinion denying the Petition and finding that the Act was constitutional. This morning I filed an Application for Leave to Appeal with the Michigan Supreme Court in Lansing, Michigan requesting that the Supreme Court reverse the Court of Appeals’ decision and declare the Act as unconstitutional. The State now has three weeks to respond. I remain hopeful that the Michigan Supreme Court will grant leave and see to it that we retain the legitimacy of the rule of law in a constitutional democracy under a republican form of government in the State of Michigan.
Update July 17, 2014
Over one week ago, on July 8, oral argument was held before a special session of the Michigan Court of Appeals (Judges Hoekstra, Beckering, Fort-Hood) on whether the Michigan Legislature’s passage of 2013 PA 164, which was signed into law by Governor Snyder on November 13, 2013, transferring the Court of Claims to the Court of Appeals, was unconstitutional in violation of the separation of powers doctrine under the Michigan Constitution and the Due Process Clauses of the state and federal constitutions. For the oral argument, I primarily confined my presentation to the separation of powers argument; on rebuttal, I addressed the due process argument. We now await a decision from the Court of Appeals.
In what follows, I have reproduced (for those who are interested) much of what I prepared to say about the separation of powers argument for the oral argument, only some of which I was able to deliver directly or in response to the Court’s questions in the limited time available. As always, I would like to make an appeal for financial contributions, in any denomination, to enable me to continue with these cases in our appellate courts, and, if necessary and possible, the United States Supreme Court. My thanks in advance for any help that you can provide and a special thanks to all those who went to the trouble and expense to attend the oral argument. It was much appreciated.
First, as the point of departure for deciding the separation of powers question, I asked the Court to begin by interpreting the text of the constitutional provisions at issue, Art 3, § 2, Article VI, § 1, § 8 and § 10 of the 1963 Michigan Constitution.
Article III, § 2, Separation of powers of government, provides:
The powers of government are divided into three branches: legislative, executive and judicial. No person exercising powers of one branch shall exercise powers belonging to another branch except as expressly provided in this constitution.
Article VI, § 1, Judicial power in court of justice; divisions, provides:
The judicial power of the state is vested exclusively in one court of justice which shall be divided into one supreme court, one court of appeals, one trial court of general jurisdiction known as the circuit court, one probate court, and courts of limited jurisdiction that the legislature may establish by a two-thirds vote of the members elected to and serving in each house.
Article VI, § 8, Court of appeals; election of judges, divisions, provides:
The court of appeals shall consist initially of nine judges who shall be nominated and elected at non-partisan elections from districts drawn on county lines and as nearly as possible of equal population, as provided by law. The supreme court may prescribe by rule that the court of appeals sit in divisions and for the terms of court and the times and places thereof. Each such division shall consist of not fewer than three judges. The number of judges comprising the court of appeals may be increased, and the districts from which they are elected may be changed by law.
Article VI, § 10, Jurisdiction, practice and procedure of court of appeals, provides:
The jurisdiction of the court of appeals shall be provided by law and the practice and procedure therein shall be prescribed by rules of the supreme court.
For interpreting the constitution, the Michigan Supreme Court, as reaffirmed in the recently decided case of Makowski v Governor, slip op, p 6; quoting Soap & Detergent Assn v Natural Resources Comm, 415 Mich 728, 745 (1982), has developed two rules of construction.
First, the interpretation should be “the sense most obvious to the common understanding; the one which reasonable minds, the great mass of the people themselves would give it, in ratifying the proposed 1963 Constitution. Thus, we look to the common understanding of the voters in the April 1, 1963 election who ratified the proposed Constitution that was presented to them after the Constitutional Convention of 1961 and 1962.
Second, we consider “the circumstances surrounding the adoption of the constitutional provisions at issue and the purpose sought to be accomplished.” To this end, this Court looks to the debates in the Constitutional Convention record and related contemporaneous documents published about the proposed Constitution. While the Constitutional Convention record and the contemporaneous documents about the proposed Constitution are not controlling or determinative, they may be considered to be “illuminating, affording a sense of direction.” Makowski, supra, quoting from House Speaker v Governor, 443 Mich 560, 581 (1993).
The sense most obvious to the common understanding of these Articles (Art. III, sec. 2 and Art. VI, secs. 1 and 10) is that what was created in the 1963 Constitution was an integrated judicial structure (“one court of justice“), which is divided into separate and distinct levels of judicial administration, with the newly-created Court of Appeals having constitutional status as an intermediate appellate court between the Supreme Court and circuit courts and other trial-level courts -- probate courts, and legislatively created courts of limited jurisdiction. Thus, the 1963 Constitution confers appellate jurisdiction upon the Court of Appeals, with the Legislature given the power to enact statutes (i.e., provide by law), which specify the scope of the Court of Appeals’ appellate jurisdiction, and with the Supreme Court conferred the power to provide the rules of practice and procedure of the Court of Appeals. What stands out prominently is that the 1963 Constitution created the Court of Appeals as an intermediate appellate court, conferring upon it appellate jurisdiction, authorizing the Legislature to implement that appellate jurisdiction and the Supreme Court to provide the rules of practice and procedure for this Court.
This common understanding of these Constitutional provisions is thoroughly supported by the circumstances surrounding the adoption of the constitutional provisions at issue and the purpose sought to be accomplished. Specifically, this common understanding was made clear to the people of Michigan by their elected delegates to the Constitutional Convention of 1961-1962 in the Address to the People, which was distributed to all the voters before the election and which recognized that one of the major points of the Convention was “a desire to strengthen, each in its proper sphere, the three co-ordinate branches of state government — executive, legislative and judicial.” Address, p 3. As to the Judicial Branch, the Address stated that one of the changes was a “unified state court system” that established a “New Court of Appeals,” an intermediate appeal court of nine elected justices immediately below the supreme court to promote the speed and administration of state justice.” Address, pp 6-7.
More specifically, the Address noted that Article VI, § 1, “creates a ’court of justice,’ incorporating the concept that the state has a single court with several divisions, each devoting its attention to a certain level of judicial administration.” The Address further noted that Article VI, § 1 “creates an intermediate appellate court between the circuit courts and the supreme court,” and that “[s]uch a court would share part of the present work of the supreme court and becomes necessary, it is believed, because of a mandate in Article 1 (§ 20) of this new document which grants an appeal as a matter of right in criminal cases. ” Address, p 55. The Address also provides that Article VI, § 10 is “a new section providing that jurisdiction of the court of appeals shall be established by the legislature. Practice and procedure are to be provided by rules of the supreme court.”
The Address to the People crystalized the efforts of the delegates in formulating the proposed Constitution. This is spelled out in the Citizens’ Advisory Committee Report on “The Judicial Department,” which was prepared for Governor John B. Swainson in September 1961. Specifically, it notes that the proposed new judicial article (Article VII) for the Judicial Department “would add an intermediate Court of Appeals to our Judicial structure” and “lay the groundwork for a unified Court system,” and that “[t]here is, under the present Constitution and statutes, a very diversified Court structure.” (CAC Report, p 1). As for the Jurisdiction of the Court of Appeals, the CAC Report stated that the proposed Article VII, § 9 would provide the following.
The Court of Appeals shall have no original jurisdiction, except that it may be authorized by rules of the Supreme Court to review directly decisions of administrative agencies of the State and it may be authorized by rules of the Supreme Court to issue prerogative writs either as original jurisdiction or as necessary and appropriate to its appellate jurisdiction. In all other cases, it shall exercise appellate jurisdiction under such terms and conditions as the Supreme Court shall by rule prescribe. Such rules prescribe authority for the Court of Appeals to review and revise sentences in criminal cases.
The Comment provides:
The proposed draft assumes that the Court of Appeals shall be the final Court of appellate jurisdiction in all cases except those which the Supreme Court chooses to review. It also assumes that the Supreme Court may grant jurisdiction to the Court of Appeals to review directly decisions of administrative agencies in the State. It also assumes that the Supreme Court can and will authorize the Court of Appeals to issue prerogative writs, either as original jurisdictions or as necessary for tis appellate jurisdiction. It leaves to the Supreme Court the power to prescribe the scope of the appellate jurisdiction. This is consistent with the earlier section which theoretically gives the Supreme Court power to indicate where appeals shall lie from each Court of original jurisdiction. (CRC Report, p 13).
The circumstances surrounding the adoption of the constitutional provisions at issue and the purpose sought to be accomplished are also addressed in many contemporaneous analyses by the Citizen Research Council of Michigan. For example, in its Memorandum No. 202, issued in October 1961, The State Constitution: Its Nature and Purpose by Mr. Paul Kauper provides in pertinent part the following about the Judiciary:
ere the important questions relate to the organization of the judicial department; the structure of the court system; . . . and the general authority of the Michigan Supreme Court in respect to such matters as rule making and the supervision of the lower courts. A primary consideration that affects a number of these questions is to assure as far as practicable by constitutional means the independence of the judiciary. An important problem requiring attention is whether the judicial system (the types of courts and their respective jurisdictions) shall be spelled out or whether the constitution shall outline the general structure and vest power in the legislature to fill in the details. (Memorandum, p 18).
In the Conclusion, the Memorandum notes:
The constitutional convention of 1961 will not be starting from scratch. The state of Michigan has an extended constitutional history and tradition that began with the adoption of the first constitution in 1835. Any revised constitution must keep faith with the adoption of the first constitution in 1835. Any revised constitution must keep faith with the past and with what has been determined by experience to be the enduring values of a government resting on the consent of the people . . . (Memorandum, p 25).
Prior the election on April 1, 1963 in which the proposed new state constitution was to be ratified or rejected by the state voters, the CRC also issued An Analysis of the Proposed Constitution (No. 2) on December 17, 1962. One of the major changes that it noted was that “a new feature guarantees an appeal as a matter of right in all criminal prosecutions.” (CRC Analysis, No. 2 , p 1). The CRC also issued An Analysis of the Proposed Constitution (No. 6) on December 28, 1962 as to The Judicial Branch. It noted:
The proposed constitution makes the following major changes with respect to the judicial article:
The Analysis specifically observed:
Under the proposed constitution, the state judicial power is “vested exclusively in one court of justice” — divided into the supreme court, the court of appeals, the circuit court (designated as a trial court of general jurisdiction), the probate court, and “courts of limited jurisdiction” which may be established by law for which a two-thirds vote of the legislature is required. . . .
The intermediate court of appeals provided for in the proposed constitution is intended to relieve the supreme court of some of its appellate load and permit the supreme court greater discretion to sift judicial cases and concentrate on those involving more important questions. This and other features intended to increase the supreme court’s judicial and administrative supervision of the other courts would emphasize the supreme court’s role as head of a unified state judicial system. (CRC Analysis, No. 6, p 2)
As to the powers of the Supreme Court, the Analysis stated in pertinent part:
The supreme court retains unchanged its “general superintending control” over all courts and under its original jurisdiction the power to issue, hear and determine prerogative and remedial writs. Various changes have been made affecting the powers of the supreme court:
1. The court’s appellate jurisdiction would be specifically under its own control — “as provided by the rules of the supreme court.” (CRC Analysis, No. 6, p 3)
As to the Court of Appeals, the Analysis stated in pertinent part:
The new intermediate court of appeals, inferior only to the supreme court, would have nine judges, but this number could be increased by law.
Finally, in its 1963 publication, A Digest of the Proposed Constitution, the CRC noted:
The Judicial Branch
Considerable contention surrounded the judicial branch proposals. . . .
Underlying the final decisions was the concept of a unified court system — one court of justice divided into a four-tier system of constitutional courts, with a fifth tier of “courts of limited jurisdiction” permitted by a two-thirds vote of the legislature. (CRC Digest, p 15).
Interpreting the Constitutional provisions at stake in accordance with these two criteria — the common understanding of the electors and the circumstances surrounding the adoption of the Constitution — leads to the ineluctable conclusion that while the Legislature has the power to specify the scope of the Court of Appeals’ appellate jurisdiction, it does not have the power under the 1963 Constitution to add to or expand to the appellate jurisdiction of the Court of Appeals by combining it with a legislatively-created court of limited jurisdiction, an inferior trial-level court whose judgments and orders are subject to appellate review by the Court of Appeals, an intermediate appellate court.
The text of Article VI, § 1 makes this abundantly clear: there is “one court of justice which shall be divided into different courts, which have different judicial functions assigned to them. As the Supreme Court noted in Buback v Governor, 380 Mich 209, 226 (1968):
For the first time, the judicial article speaks of the judiciary in terms of one court of justice. That one court of justice is the judicial branch. The courts which make up the one court of justice do not exercise identical or corresponding jurisdiction. Each has its particular level of judicial administration.
Tellingly, there is no mention whatsoever in the 1963 Constitution of combining the Court of Appeals with a lower court. But if the 1963 Constitution wanted to allow the Legislature to combine the Court of Appeals with an inferior court, it certainly knew how to do it. See Giannotta v Governor, 71 Mich App 15, 18 (1976) (noting that “the Supreme Court has approved the interpretive method of comparing related provisions of the law in order to reach an understanding of what the drafters actually intended by their use or omission of terms“), citing Viculin v Dep’t of Civil Service, 386 Mich 775, 390-392 (1971) and Evans v US Rubber Co, 379 Mich 457, 460-463 (1967).
For example, Art 6, § 15 provides in pertinent part:
In each county organized for judicial purposes there shall be a probate court. The legislature may create or alter probate court districts or more than one county if approved in each affected county by a majority of the electors voting on the question. The Legislature may provide for the combination of the office of probate judge with any judicial office of limited jurisdiction within a county with supplemental salary as provided by law. The jurisdiction, powers and duties of the probate court and of the judges thereof shall be provided by law. . .
As the Court in Buback noted:
The Constitution of 1963 does not define the entire jurisdiction of probate courts. This responsibility is left to the Legislature by article, 6, § 15:
“The jurisdiction, powers and duties of the probate court and of the judges thereof shall be provided by law.”
The committee on style and drafting of the constitutional convention of 1961 made a distinction in the use of the words “prescribed by law” and the words “provided by law.” Where “provided by law” is used, it is intended that the legislature shall do the entire job of implementation. Where only the details were left to the legislature and not the overall planning, the committee used the words “prescribed by law.” See 2 Official Record, Constitutional Convention of 1961, pp 2673-2674.
The provision of the 1963 Constitution last quoted above placed the responsibility on the legislature to draft the law but did not grant authority for departure from the requirements and proscriptions of the Constitution. It does not have the effect of permitting disregard of the separation of powers article. [380 Mich at 226-227.]
The same is true here. Unlike probate courts, the Constitution made no provision for the Legislature to combine the Court of Appeals, or the functions of its judges with another judicial office of limited jurisdiction, as the Legislature did here with the enactment of 2013 PA 164, which incidentally provided for combining judicial offices but with no supplemental salary to the judges designated by the Supreme Court to serve concurrently two-year renewable terms as Court of Claims’ judges. Moreover, while the Constitution commanded the Legislature to implement the Court of Appeals’ appellate jurisdiction, see MCL 600.308, it did not provide that the Legislature could increase or expand that appellate jurisdiction to include the jurisdiction of a legislatively-created court with limited jurisdiction. In short, there is no authority in the Michigan Constitution permitting the Legislature to combine the Court of Appeals with the Court of Claims. Therefore, the Act violates the separation of powers article of the 1963 Michigan Constitution.
Further, under the doctrine of the separation of powers, the Legislative cannot encroach on or unduly burden or interfere with, the judicial department in the exercise of judicial functions. Thus, courts cannot be hampered or limited in the discharge of their functions by the legislative branch. See Michigan Civil Rights Com v Clark, 390 Mich 717 (1973); State Bar of Michigan v Galloway, 124 Mich App 271 (1983), aff’d 422 Mich 188 (1985); Gray v Hakenjos, 366 Mich 588 (1962). By adding to or expanding the appellate jurisdiction of the Court of Appeals, the Legislature is interfering with the Court of Appeals in the exercise of its appellate decision-making functions, removing four judges designated by the Supreme Court (as ordered to do so by the Legislature pursuant to the Act — another violation of the separation of powers doctrine) from full-time work as appellate judges — which the voters elected them to do — assigning them to work as well as unelected trial court judges on the Court of Claims.
Finally, Article VI, § 8 provides that “the supreme court may prescribe by rule that the court of appeals sit in divisions,” and that “Each such division shall consist of not fewer than three judges.” See Justice O’Hara’s dissenting opinion in In re Application of Governor, Jurisdiction of Court of Appeals, 381 Mich 1, 12 (1968)(no answer given by opinions released)(“We construe this section of the judicial article as some indication that judges of the appellate Court were not intended to sit individually as one-man grand jurors.”); See also Justice Adams’ opinion for denial of jurisdiction, 381 Mich at 16)(no answer given by opinions released)(“Lacking jurisdiction as a court, for any reason, over the suspected criminal offense, the judge may not proceed as a grand juror. The point is, it is the jurisdiction of the court that controls the power of a judge to proceed under the statute.”); (“Every grant of jurisdiction to the Court of Appeals, it is to be noted, is one of appellate or supervisory jurisdiction.”) (“It is beyond question that the purpose of the creation of the Court of Appeals was to create an intermediate appellate court to provide speedy, adequate, and final review of the majority of appeals of cases from the trial courts of this State. Because of the large number of such appeals, almost from the very inception of the present 9-man Court of Appeals, the Court has found itself without the necessary manpower to execute that mission.’) (“The Court of Appeals is without jurisdiction to entertain the application or designate one of its members as a grand juror.”).
Update May 7, 2014
While the Petition case challenging the constitutionality of the transfer of the Court of Claims to the Court of Appeals was pending in the Court of Appeals, the State of Michigan filed an Answer on March 24, 2014 in opposition to my Motion to Stay the proceedings before Court of Appeals Judge Servitto acting as a judge of the Court of Claims until the constitutional challenge is resolved. Then, on April 1, 2014, the Court of Appeals submitted my motion for oral argument in the Petition case to a special motion docket for a determination of whether to allow argument on the constitutional challenge. In an order issued on April 17, 2014, the Court of Appeals granted my motion for oral argument, scheduling it for 9 am. on July 8, 2014 in the Court of Appeals’ courtroom on the 14th Floor of the Cadillac Place in Detroit. The order specified that each side would be allowed one-half hour to address the Court of Appeals in a special session. In addition, the Court of Appeals invited interested groups to file amicus briefs.
Today I filed with the Court of Claims a Motion for Reconsideration from the Opinion and Order dated April 21, 2014, granting the State’s Motion for Summary Disposition as to the claims asserted in my First Amended Complaint and denying my Motion for Summary Disposition, as well as my Motion to File a Second Amended Complaint to add claims for breach of the member investment plan contract (MIP) and breach of the contract to purchase service credit time, and my Motion for Class Certification. As a result, the case was dismissed in its entirety. Under the court rules, Court of Appeals Judge Servitto, acting as a Court of Claims judge in this matter, has the authority to consider the Motion for Reconsideration on the merits, or summarily deny it upon arrival. In any event, a denial would trigger the 21-day period for Plaintiffs to appeal as of right to the Court of Appeals.
As I expressed in the Motion for Reconsideration, Judge Servitto has an obligation to rule on whether she has the jurisdictional authority to rule on this case. Because I believe that 2013 PA 164 transferring the Court of Claims to the Court of Appeals is unconstitutional under the separation of powers doctrine under the Michigan Constitution and violates the Due Process Clauses of the state and federal constitutions, I again argued that Judge Servitto should either rule on the constitutional question or hold the Motion for Reconsideration in abeyance pending the determination of the Court of Appeals regarding the constitutionality of 2013 PA 164. In the Motion for Reconsideration, I also claimed that denying Plaintiffs a hearing on the cross-motions for summary disposition, our Motion to File a Second Amended Complaint and our Amended Motion for Class Certification violates Due Process by denying us an opportunity to be heard. This is particularly important since Judge Servitto summarily dispatched our motion to add claims for breaches of the MIP contract and purchase of service credit contract as “futile ”even though we were given no opportunity to brief or argue the merits of these claims. Given the developments leading to the dismissal of this case, it is evident that the State believes that it can take retired state and public school employees for fools. While I have resisted the easy temptation from the start to allege fraud against the State, there is no other conclusion to draw at this juncture. Thus, I have asked Judge Servitto to allow us to amend our Complaint to add fraud in the inducement and gross negligent misrepresentation against the State of Michigan.
At this point, I have crystallized the primary arguments that will be presented to the Michigan appellate courts, and, if necessary and possible, the United States Supreme Court. In particular, it has become increasingly clear that this case is headed to the United States Supreme Court unless the state appellate courts correct what the retired state and public school employees rightly consider to be monumentally unfair. In pertinent part, the State should not be allowed to do what the United States Supreme Court held that the United States government was not allowed to do in United States v Winstar Corp, 518 US 839 (1996). In that case, the Supreme Court held that the U.S. government was liable for damages when a subsequent, targeted change in the tax law was made that deprived solvent S&Ls of favorable tax treatment that the U.S. government specifically used as an inducement to get them to take over insolvent S&Ls in the aftermath of the S&L debacle of the 1980s. At stake was billions of dollars in damages. Here as well, the State subsequently changed the tax law after it had induced state and public school employees to believe for decades that their pensions (representing deferred compensation) were exempt from state and local taxation. At stake is hundreds of millions of dollars. But whether the taxation of retired state and public school employees’ pensions amounts to a breach of contract or not, it is clear as day that it represents a “Takings ”of financial benefits that they earned for the performance of governmental services for many years. Under the reasoning of Winstar, this is unlawful.
As always, I would like to make an appeal for financial contributions, in any denomination, to enable me to continue with these cases in our appellate courts, and, if necessary and possible, the United States Supreme Court. My thanks in advance for any help that you can provide.
As reported in the previous update, we received encouraging news last week when the Court of Appeals issued an order granting my motion for oral argument in the Petition case challenging the constitutionality of the transfer of the Court of Claims from Ingham Circuit Court to the Court of Appeals. Oral argument will be held in the Court of Appeals' courtroom on the 14th floor of the Cadillac Place, 3020 West Grand Boulevard, Detroit, Michigan, at 9 a.m. on Tuesday, July 8, 2014. Each side will be allowed one-half hour to address the Court of Appeals in a special session. It is our hope that the oral argument proceeding will be well attended, as it represents an opportunity, denied by the Michigan Legislature in its haste to enact 2013 PA 164, to debate the constitutional merits of the Act.
Unfortunately, as foreshadowed in my Ides of March update, the hammer did come down on the Class Action Pension lawsuit. In that Update, I said: “From all appearances, it looks like the Class Action Lawsuit is on a fast track for dismissal by March 25, 2014 at the hands of Court of Appeals Judge Servitto acting as a judge of the Court of Claims.” I was off by one month, but that came to pass in an Opinion and Order issued by Judge Servitto on April 21, 2014, granting the State's Motion for Summary Disposition as to the claims asserted in my First Amended Complaint and denying my Motion for Summary Disposition as to those claims, my Motion to File a Second Amended Complaint to add claims for breach of the member investment plan contract (MIP) and breach of the contract to purchase service credit time, and my Motion for Class Certification.
In her Opinion and Order, Judge Servitto essentially relied upon the Supreme Court's decision in In re Request for Advisory Opinion Regarding the Constitutionality of 2011 PA 38, despite the fact that advisory opinions are not binding on the courts. More surprisingly, Judge Servitto denied my Motion to File a Second Amended Complaint as “futile” on the ground that “Plaintiff's proposed claims are simply variations on the theme of the previous two complaints” based upon a “perpetual tax exemption.” In my view, it is hardly “futile,” for there is documentary proof (which I will now present) showing that the promise of a tax-exempt investment was used to attract state and public school employees to invest their own money, operating much like a promise of tax-exempt bonds made to bond investors. Indeed, if the State cannot (lawfully) renege on contractual agreements with bondholders promising them tax-exempt treatment for their investments, then surely the State cannot violate such agreements with individual investors and get away with it. Never mind that they happen to be this State's own citizens investing their own hard-earned money in this State. From the looks of it, this is fraud.
Needless to say, I will file a Motion for Reconsideration from this Opinion and Order, which is a final order for purposes of appeal, disposing of “the last pending claim and clos[ing] the case.” I have 21 days from the date of the Opinion and Order to file a Motion for Reconsideration. Once I file the Motion for Reconsideration, I will post it here for your reading pleasure, for those so inclined. In all likelihood, the Motion for Reconsideration will be quickly dispatched, making way for our appeal of the Class Action Pension case to the Court of Appeals, probably in June. So by the time the Court of Appeals holds oral argument on July 8 in the Petition case determining the constitutionality of the Court of Claims transfer, the Class Action Pension case will be in that court as well. We shall see what happens thereon.
As always, I would like to make an appeal for financial contributions, in any denomination, to enable me to continue with these cases in our appellate courts, and, if necessary and possible, the United States Supreme Court. My thanks in advance for any help that you can provide.
On the Ides of March, there is an ominous turn of events to report. As stated in my update last week, I filed in the Michigan Court of Appeals on Tuesday, March 11, a Motion to Stay the Proceedings in the Class Action Lawsuit in the Court of Claims, along with a Brief in Support, both of which I post below for those interested in such matters. In view of the constitutional importance of this case, I also filed a Motion for Immediate Consideration with the Court of Appeals. Because I believe that 2013 PA 164 (the Act) unconstitutionally transferred the Court of Claims from the Ingham Circuit Court to the Court of Appeals, it is my contention that Court of Appeals Judge Servitto, who was appointed to replace Judge Aquilina as the judge on our case, has no legal authority to act as a Court of Claims judge, and all her rulings in such a capacity are therefore legally invalid. At this point, the matter is in the hands of the Court of Appeals for a determination whether to halt the proceedings in the Court of Claims.
Perhaps because of my action in seeking a Motion to Stay with the Court of Appeals, I received a letter at my office from Court of Appeals Judge Servitto, acting as a judge of the Court of Claims, just before 5:00 p.m. on Thursday, March 13, 2014. The envelope was time-stamped March 12, 2014 and contained a letter on Court of Claims’ stationary, stating that the State of Michigan filed a second motion for summary disposition on November 6, 2013, but that there was no record of an answer filed by Plaintiffs, and that Defendants had yet to respond to Plaintiffs’ Second Amended Verified Class Action Complaint. Interestingly, the letter failed to mention that Plaintiffs also filed a second motion for summary disposition in this matter on November 1, 2013, and that these cross-motions were noticed for a hearing before Judge Aquilina on December 13, 2013, which was canceled and never rescheduled. (Nor was there any mention in the letter of Plaintiffs’ Amended Motion for Class Certification and Brief in Support). The letter, however, informed me that Plaintiffs’ Motion to file a Second Amended Verified Class Action Complaint and Defendants’ Motion for Summary Disposition will be decided by Court of Appeals Judge Servitto on March 25, 2014, without a hearing or any oral argument. This is despite the fact that the parties’ cross-motions for summary disposition were previously noticed for a hearing that was canceled. The letter further states that Plaintiffs’ answer to Defendants’ Motion for Summary Disposition must be received by Court of Appeals Judge Servitto in her office in Troy, Michigan by Tuesday, March 18, 2014.
Consequently, I immediately got to work yesterday and prepared a Brief in Opposition to the State’s Motion for Summary Dispostion and sent it by priority mail for filing by Tuesday. In response, I respectfully requested that Court of Appeals Judge Servitto recognize that she lacks constitutional authority to act as a judge of the Court of Claims in this matter, attaching as an exhibit the Motion to Stay and supporting brief that I had just filed with the Court of Appeals on Tuesday. But even if Court of Appeals Judge Servitto did have authority to act as a Court of Claims judge, the abrupt nature of her letter, ignoring that Plaintiffs have a pending Motion for Summary Disposition, directing Plaintiffs to file an answer with virtually no notice and then cancelling oral argument on Defendants’ Motion for Summary Disposition and Plaintiffs’ Motion to Amend their Verified Class Action Complaint violates due process under the state and federal constitutions. In the event that Court of Appeals Judge Servitto proceeds forward in this matter, I asked that the State’s Motion for Summary Disposition be denied, and that Plaintiffs’ Motion for Summary Disposition be granted, and that Plaintiffs be allowed to amend their complaint to add two claims for breach of investment contracts regarding the purchase of service credit and the Michigan Investment Plan (MIP) and that this Court grant their Amended Motion for Class Certification. I have posted my Brief in Opposition on my website for those who want to read more about it.
From all appearances, it looks like the Class Action Lawsuit is on a fast track for dismissal by March 25, 2014 at the hands of Court of Appeals Judge Servitto acting as a judge of the Court of Claims.
As I stated last week, I’ve made some changes to my website, specifically relating to the layout of the LATEST UPDATE section on Okrie et al v State of Michigan et al., the verified class action law suit against the State of Michigan, Governor Rick Snyder, Michigan Department of Technology, Management and Budget, Office of Retirement Services, Michigan State Employees Retirement System, Michigan Public School Employees Retirement System, and Michigan Department of Treasury. Henceforth, the LATEST UPDATE section will be treated more like a blog, providing as many updates as possible, with the most recent news placed at the front, followed by the procedural history of the law suit (if you continue reading) and the posting of my briefs and other pleadings in the case.
As already reported, Governor Snyder signed Senate Bill 652, shifting all cases against the State of Michigan in the Court of Claims to four judges on the Michigan Court of Appeals to be handpicked by the Michigan Supreme Court. SB 652 went into effect immediately, and thus retroactively applies to all pending cases in the Court of Claims, including this one that was before Judge Aquilina.
Interestingly, just today, November 18, after filing an appeal brief in an unrelated case with the Michigan Court of Appeals at the Cadillac Place in Detroit, I found out about the following Order issued on November 14, 2013 from the “State of Michigan Court of Claims” regarding “All Matters Pending in the Court of Claims as of November 13, 2013.” The Order provides:
Michael J. Talbot, Chief Judge, acting under MCL 600.6419 (as amended by 2013 PA 164 effective November 12, 2013) orders:
Proceedings in all matters pending in the Court of Claims as of the [sic] November 12, 2013, effective date of 2013 PA 164 are STAYED for a period of 30 days from the date of the clerk’s certification of this order.”
The order is signed by Michael J. Talbot, Chief Judge, and “[a] true copy [was] entered and certified by Jerome W. Zimmer Jr., Clerk, on November 14. 2013. Given this Order, it would appear that the hearing scheduled for December 13, 2013 will have to be rescheduled.
In the meantime, as I already reported, Judge Aquilina signed an Opinion and Order on November 5, 2013 denying my motion for summary disposition on the breach of contract claim based upon the doctrine of promissory estoppel but granting the State’s motion for summary disposition as to this cause of action. As I previously stated, I will be filing a Motion for Reconsideration of that Opinion and Order before November 26, 2013. In addition, the State of Michigan filed a Motion for Summary Disposition with the Court of Claims in Ingham Circuit Court on November 6, 2013, as to the claims asserted in my amended verified complaint. At some point, I will file a Brief in Opposition to the State’s Motion for Summary Disposition. In light of the November 14, 2014 Order issued by the Court of Claims, it appears that all subsequent filings are to be made with the Court of Appeals.
Finally, I reiterate what I said before that 2013 PA 64 needs to be challenged as it represents an unconstitutional move on the part of the Legislature, the Governor and the Attorney General, which threatens the integrity of the judicial system in this State and calls into question its fidelity to the principles of law and justice. Needless to say, I will challenge the legality of the State’s action in the context of this lawsuit, as it makes a mockery of the idea of an independent judiciary.
Gary P. Supanich
For the LATEST UPDATE on Class action against the State of Michigan, Governor Rick Snyder, Michigan Department of Technology, Management and Budget, Office of Retirement Services, Michigan State Employees Retirement System, Michigan Public School Employees Retirement System, and Michigan Department of Treasury, I have made some changes for the benefit of all interested parties in this lawsuit. Specifically, I am going to treat the Latest Update section more like a blog with as many updates as possible. Inititally, I conceived this section as a running commentary on the progress of the lawsuit to enable the reader to understand the events as they unfolded and to provide myself with a updated legal narrative for future reference. Moving to a blog-like format will enable me to meet both objectives more effectively. To this end, I will place new information at the beginning to make navigation of this section easier.
Unquestionably, the most important news to report is that Governor Snyder has signed Senate Bill 652, shifting all cases against the State of Michigan in the Court of Claims to four judges on the Michigan Court of Appeals to be handpicked by the Michigan Supreme Court. SB 652 is understood to go into effect immediately and apply retroactively to pending cases, including this one before Judge Aquilina. What this means at the present moment is difficult to say, so I will reserve comment at this time. However, I encourage others to challenge legally what seems to be an unconstitutional move on the part of the Legislature, the Governor and the Attorney General, threatening the integrity of the judicial system in this State and calling into question its fidelity to the principles of law and justice. Needless to say, I will challenge the legality of the State's action in the context of this lawsuit, as it makes a mockery of the idea of an independent judiciary.
The other news to report is that on November 5, 2013, election day and the same day that the House of Representatives passed SB 652, Judge Aquilina signed an Opinion and Order denying my motion for summary disposition on the breach of contract claim based upon the doctrine of promissory estoppel but granting the State's motion for summary disposition as to this cause of action. The Order and Opinion arrived at my office on Saturday, November 9, 2013. In any event, I plan to file with the Court of Claims a Motion for Reconsideration from this Opinion and Order before the 21-day period expires on November 26, 2013. At this time, it is not clear to me where my filing is supposed to be or whether Judge Aquilina has been replaced as the trial judge in this matter. Notwithstanding the uncertainty and unless told otherwise, I plan to go to Lansing and file my Motion for Reconsideration and future submissions with the Court of Claims presently located in the Ingham Circuit Court.
Gary P. Supanich
On July 9, 2013, a lawsuit was filed in the Ingham County Court of Claims against the State of Michigan for promising that our pensions would not be taxed and then breaking that promise for those born after 1945. Many in that age group relied on this promise when planning and making the irrevocable decision to retire under the state’s defined benefit pension program. In 2012, school and state employee retirees lost over 4.25 percent of their pension to the surprise cancellation of their exemption from the income tax. The total taxes collected under this broken promise were projected to exceed $300 million.
Michigan SERA Coordinating Council Chair Bob Kopasz and Legislative Representative Mary Pollock met with Gary Supanich, the attorney representing plaintiff Tom Okrie, a retired school teacher, to gather information about the lawsuit. Although the Michigan Supreme Court in In re Request for Advisory Opinion regarding Constitutionality of 2011 PA 38, 490 Mich 295 (2011) ruled that 2011 PA 38 did not impair contracts in violation of the state or federal constitutions, the Supreme Court left the door open to a cause of action based upon the non-constitutional ground of Breach of Contract, which relies upon the equitable doctrine of Promissory Estoppel. The logic of the lawsuit seems sound to us but in any lawsuit, many elements can affect the eventual outcome.
Currently, Mr. Supanich is looking for three things from affected school or state employee retirees:
If you want to know more about Mr. Supanich, a recent retiree from the Michigan Court of Appeals, and the lawsuit, please go to his Website. In the right column the first two documents relate to this lawsuit. The first is a general plain-English summary of the lawsuit and Mr. Supanich’s request for the three items above. The second is a copy of the complaint filed with the Court of Claims. The matter is in Judge Rosemarie Aquilina’s court. The State’s answer to the complaint is due August 9. Thereafter there will be other filings consistent with court rules.
Please reply to Mr. Supanich through his Website if you can assist him in any way. If you have preliminary questions after reading the materials on the Web site, you can contact Bob Kopasz, email@example.com, or Mary Pollock, pollockm@firstname.lastname@example.org.
Please inform any school or state employee retirees who you think might be interested in assisting with this lawsuit, especially those born after 1945.
Bob Kopasz, Chair