Detroit union wins victory worth 'refund on deck of Titanic'

Fri Oct 4, 2013 11:10pm EDT

'Detroit' is seen on the top of an iron man-hole cover on a street in Detroit, Michigan July 27, 2013. REUTERS/ Rebecca Cook

'Detroit' is seen on the top of an iron man-hole cover on a street in Detroit, Michigan July 27, 2013.

Credit: Reuters/ Rebecca Cook

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(Reuters) - Detroit's largest public sector union scored a symbolic victory Friday when a Michigan administrative law judge reinstated an extra annual pension check for city workers and retirees, although the judge in the city's bankruptcy case has prohibited enforcement of the ruling.

Bankruptcy Judge Steven Rhodes earlier this week allowed Administrative Law Judge Doyle O'Connor to rule on the so-called 13th check before O'Connor's retirement on Friday. But Rhodes forbade the parties from pursuing the matter further.

Rhodes has stayed all existing litigation against the city since taking charge of the bankruptcy case, the largest municipal bankruptcy in U.S. history. Yet on Tuesday Rhodes ruled O'Connor could proceed because a ruling would not injure Detroit.

O'Connor himself granted that the limitations imposed might offer "little more solace than an assurance of a full ticket-price refund offered while still on the sharply tilting deck of the Titanic."

Earlier this year O'Connor read a verbal opinion supporting the case brought by the American Federation of State, County and Municipal Employees, claiming Detroit shortchanged its members beginning in November 2011 when the City Council stopped paying a bonus pension check.

For decades prior, the city's General Retirement System would give bonuses to retirees and active employees when it earned more than 7.9 percent on its investments.

That payment and others cost the pension fund $1.92 billion from 1985 to 2008, a 2011 report to city council said.

AFSCME argued the city violated labor laws by unilaterally ending the extra checks. O'Connor said in February that "the change directly affected an existing and fundamental condition of employment."

Detroit's state-appointed Emergency Manager Kevyn Orr has said the policy contributed to the underfunding of the city's two pension funds, which he says have $3.5 billion in unfunded liabilities. The city's unions and pension funds dispute that figure.

O'Connor on Friday estimated the bonus money in question at roughly $174 million. He urged the city and union to seek a negotiated settlement of the matter.

(Reporting by Joseph Lichterman; Editing by David Greising and Prudence Crowther)

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Comments (3)
CountryPride wrote:
Bankruptcy? It can’t be? Democrats have been running the place for quite a number of years so it should be a prosperous communist utopia by now right? Let this be a warning to any other community who keeps Democrats in office, your community is on the road to ruin and despair.

Oct 04, 2013 10:54pm EDT  --  Report as abuse
tmc wrote:
here we go again… #$%$ democrats…@#$ republicans..*&#$^..unions….

Oct 04, 2013 11:40pm EDT  --  Report as abuse
AZWarrior wrote:
They killed their own city by their corrupt greed. As the saying goes, one hundred years of socialist failure means nothing!

Oct 05, 2013 1:35am EDT  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

A tourist takes a plunge as she swims at Ngapali Beach, a popular tourist site, in the Thandwe township of the Rakhine state, October 6, 2013. Picture taken October 6, 2013. REUTERS/Soe Zeya Tun (MYANMAR - Tags: SOCIETY) - RTR3FOI0

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