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Phillips, et al v. Snyder, et al,

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Synopsis

On March 27, 2013 the Center for Constitutional Rights, along with The Sugar Law Center for Economic and Social Justice and several Michigan-based civil rights lawyers filed Phillips, et al. v. Snyder, et al., on behalf of a broad coalition of plaintiffs.

Phillips v. Snyder is a federal lawsuit filed in the United States District Court for the Eastern District of Michigan which, among other claims, challenges Public Act 436 under Article 4 and the First, Thirteenth and Fourteenth Amendments of the U.S. Constitution, as well as Section 2 of the Voting Rights Act of 1965.  The case is filed against Governor Richard Snyder and State Treasurer Andrew Dillon for the unprecedented practice of replacing democratically elected mayors and city and town councils with unelected, state-appointed “Emergency Managers” with the power to legislate for and govern entire municipalities deemed to be under “financial distress,” thereby creating a form of undemocratic municipal government never before seen anywhere in Michigan or the rest of the United States.

Additionally, the way that Emergency Managers have been imposed has had a severely racially discriminatory impact. As a result of the Governor’s choices regarding which municipalities and school districts should have an Emergency Manager over 50% of Black Michigan residents have been denied the fundamental right to vote, participate in, and be governed by an elected body, while at the same time only around 2% of Michigan's white residents are governed by an Emergency Manager.

Phillips v. Snyder is a direct follow up to our past case, Brown v. Snyder, which was rendered moot when the people of Michigan repealed Public Act 4 – the 2011 law under which the Michigan Emergency Managers were established – in a November 6, 2012 voter referendum.  This was a great victory for the people of Michigan, and a clear message to the Governor and state officials that Michigan residents were not satisfied with the unprecedented and unconstitutional practice which stripped so many of them of having an active voice in their local government.  Unfortunately, before the year ended the lame-duck state legislature replaced Public Act 4 by passing Public Act 436 into law.  Emergency Managers under Public Act 436 have substantially the same powers as those under Public Act 4, they are empowered to fully act “for and in the place of” the municipality's elected governmental officials.

Status

On July 25, 2013, the United States Bankruptcy Court for the Eastern District of Michigan, in the City of Detroit’s Chapter 9 Bankruptcy proceeding, ordered that all pre-bankruptcy federal civil litigation against Michigan state officials be stayed pending the outcome of the Detroit bankruptcy proceeding. Based on this order, on August 22, 2013, the District Court in Phillips v. Snyder stayed the case pending the outcome of the Detroit bankruptcy proceeding. Phillips then remained on hold for more than five months.

On November 6, 2013, the Bankruptcy Court granted the Phillips plaintiffs’ motion to lift the bankruptcy stay on the Phillips case on the condition that the plaintiffs amended their complaint to remove those claims that related to the operation of Public Act 436 in the City of Detroit. On February 6, 2014, the District Court granted the Phillips’ plaintiffs motion to reopen the Phillips case. On February12, 2014, plaintiffs filed their Amended Complaint.

Thereafter, on March 5, 2014, the State filed its motion to dismiss the complaint. That motion is now fully briefed and will be argued in the District Court in Detroit on April 30, 2014.

Meanwhile, on February 11, 2014, Governor Snyder and State Treasurer Dillon appealed the Bankruptcy Court’s November 6, 2013 order lifting the stay on the Phillips case to the United States District Court for the Eastern District of Michigan. However, that appeal is being heard by a different district court judge than one who is presiding over the Phillips case itself. On April 4, 2014, the district judge in the state’s appeal stayed that appeal pending the outcome of the appeal of the entire Detroit bankruptcy case, which is currently pending in the U.S. Court of Appeals for the Sixth Circuit.

Description

On March 16, 2011, the Republican Governor Richard Snyder signed into law Public Act No. 4, the Local Government and School District Fiscal Accountability Act.  Under this law, the Governor had the power to unilaterally (1) declare a local government or school district to be in a state of “financial emergency”, (2) determine if that local government or school district has a “satisfactory” plan to resolve the emergency, and, if they determine that no satisfactory plan exists, (3) appoint an Emergency Manager to act for, and in place of the, the local governing body (i.e., mayor, school superintendent, city council, school board).

Once appointed, an Emergency Manager, who is an unelected state executive branch official, is given unchecked power and authority over virtually all operations of local government, financial and otherwise. Under Public Act 4, the Emergency Manager could unilaterally: (1) repeal existing local laws and ordinances, (2) enact new local laws or ordinances, and (3) act in violation of City charters.  Meanwhile, the law itself provided no standards to guide an Emergency Manager’s exercise of these broad powers, and the law also required that any city or school district taken over by a state Emergency Manager pay all costs associated with the manager’s work, including the salaries of the manager and their staff.

Emergency Managers have been appointed over the cities of Allen Park, Benton Harbor, Ecorse, Flint, Pontiac and Detroit as well as over the Detroit Public Schools, Highland Park Public Schools, and Muskegon Heights Public Schools.

In the November 6, 2012 election Michigan voters succeeded in repealing Public Act 4.  This rendered our initial Emergency Manager case, Brown v. Snyder, moot.  Unfortunately, state officials swiftly enacted Public Act 436 in its place.  Public Act 436 grants essentially the same powers to the Emergency Managers, so despite the successful voter referendum all of the same unprecedented constitutional violations created by the deployment of Emergency Managers are still ongoing.

Public Acts 4 and 436 have been invoked in such a way that they have had an extremely racially discriminatory impact.  The Michigan Department of Treasury maintains a scoring system to determine the financial health of the state's cities and townships. Fiscal indicator scores between 5-7 place a municipality on a fiscal watch list and scores between 8-10 place the municipality on the watch list and the community receives consideration for review.  Six out of seven communities with a majority population of racial and ethnic minorities received EMs when they had scores of 7.  At the same time, none of the twelve communities (0%) with a majority white population received an EM despite having scores of 7 or higher. As a result, Public Acts 4 and 436 have caused over 50% of Michigan's black residents to lose their fundamental right to vote, participate in, and be governed by an elected body.  Shockingly, only 2% of Michigan's white residents are similarly situated.

Timeline

  • December 13, 2012 - Lame-duck session of Michigan State Legislature passes Public Act 436.
  • December 26, 2012 - Michigan Governor Richard Snyder signs Public Act 436 into law
  • March 27, 2013 - Original complaint filed in Phillips v. Snyder in the United States District Court for the Eastern District of Michigan
  • March 28, 2013 - Public Act 436 takes effect
  • July 18, 2013 - The City of Detroit, at the direction of its Emergency Manager Kevin Orr, files for Chapter 9 bankruptcy protection, the largest municipal bankruptcy filing in American history, in the United States Bankruptcy Court for the Eastern District of Michigan.
  • July 25, 2013 - The United States Bankruptcy Court for the Eastern District of Michigan, in the In re City of Detroit Chapter 9 bankruptcy case, orders that all pre-bankruptcy federal civil actions filed against Michigan state officials in the U.S. District Court for the Eastern District of Michigan be stayed pending the outcome of the Detroit bankruptcy proceeding.
  • August 22, 2013 - The District Court in Phillips v. Snyder issues an order staying the case pending the outcome of the Detroit Chapter 9 bankruptcy proceeding.
  • November 6, 2013 - The Bankruptcy Court issues an order relieving Phillips v. Snyder from the Bankruptcy Court’s July 25, 2013 stay order on the condition that the Phillips plaintiffs amend their complaint to remove all claims arising out of the operation of Public Act 436 in the City of Detroit.
  • February 6, 2014 - The District Court orders that Phillips v. Snyder be officially re-opened.
  • February 11, 2014 - Governor Snyder and State Treasurer Dillon file a notice of appeal in the District Court of the Bankruptcy Court’s November 6, 2013 order lifting the stay on the Phillips case. However, this appeal is before a different district judge than the judge who is presiding over the Phillips case itself.
  • February 12, 2014 - Amended Complaint filed in Phillips v. Snyder.
  • March 5, 2014 - Governor Snyder and State Treasurer Dillon move to dismiss plaintiffs’ Amended Complaint in Phillips v. Snyder.
  • April 4, 2014 - District Court stays Governor Snyder and State Treasurer Dillon’s appeal of the Bankruptcy Court’s November 6, 2013 stay-lifting order pending the outcome of the appeal of the entire Detroit bankruptcy proceeding currently before the U.S. Court of Appeals for the Sixth Circuit.
  • April 30, 2014 - Oral argument on Governor Snyder and State Treasurer Dillon’s motion to dismiss the Amended Complaint in Phillips v. Snyder to be held in the United States District Court for the Eastern District of Michigan in Detroit.