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Welch v. Brown

United States Court of Appeals for the Sixth Circuit

January 3, 2014, Filed

File Name: 14a0001n.06

No. 13-1476

Opinion

 [*805]  COLE, Circuit Judge. The limited purpose of this appeal is to determine whether the district court abused its discretion by granting Plaintiffs-Appellees preliminary injunctive relief. The City of Flint is in financial distress. Declining property taxes, high unemployment rates, and a decrease in revenue-sharing from the State of Michigan have contributed to the City's chronic budgetary woes. To stave off municipal insolvency and balance the City's budget, the Governor of Michigan appointed an Emergency Manager to address the financial  [**2] crisis. In this appeal, Plaintiffs challenge several orders the Emergency Manager issued, which modified existing contracts and collective bargaining agreements with respect to health-care benefits of municipal retirees. While the modifications stand to save the City 3.5 million dollars, the changes also shift out-of-pocket medical expenses to retirees, many of whom live on fixed incomes.

Plaintiffs and the class they represent are individual retired municipal workers, their eligible spouses, dependents, and the United Retired Governmental Employees ("URGE"), an organization that represents the interests of municipal retirees. Seeking injunctive relief and damages under 42 U.S.C. § 1983, Plaintiffs filed a Class Action Complaint against the City of Flint, its current and former Emergency Managers, its Retirement Officer Manager, and its Finance Director (collectively, "Defendants"). According to Plaintiffs, Defendants violated the Contract and Bankruptcy Clauses of the United States Constitution  [*806]  and deprived them of a property interest without due process or just compensation. Plaintiffs requested a preliminary injunction to enjoin Defendants from modifying the contracts and ordinances  [**3] governing their health-care benefits and to restore any already modified agreements to the status quo ante. Although Defendants argue that reducing retiree benefits is a "necessary change" to avoid bankruptcy, the district court was not persuaded based on the evidence and argument presented. Finding no abuse of discretion, we affirm the district court's order granting preliminary injunctive relief.

I. BACKGROUND

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551 Fed. Appx. 804 *; 2014 U.S. App. LEXIS 131 **; 198 L.R.R.M. 2071; 58 Employee Benefits Cas. (BNA) 1777; 2014 FED App. 0001N (6th Cir.); 2014 WL 25641

JOHN WELCH; KENNETH SPARKS, JR.; JUDITH WELCH; CAROL SPARKS; SHERRY MURPHY; MARK A. FULKS; URGE, Plaintiffs-Appellees, v. MICHAEL BROWN; EDWARD KURTZ; ROBERT ERLENBECK; GERALD AMBROSE; CITY OF FLINT, Defendants-Appellants.

Notice: NOT RECOMMENDED FOR FULL-TEXT PUBLICATION. SIXTH CIRCUIT RULE 28 LIMITS CITATION TO SPECIFIC SITUATIONS. PLEASE SEE RULE 28 BEFORE CITING IN A PROCEEDING IN A COURT IN THE SIXTH CIRCUIT. IF CITED, A COPY MUST BE SERVED ON OTHER PARTIES AND THE COURT. THIS NOTICE IS TO BE PROMINENTLY DISPLAYED IF THIS DECISION IS REPRODUCED.

Prior History:  [**1] ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN.

Welch v. Brown, 935 F. Supp. 2d 875, 2013 U.S. Dist. LEXIS 45681 ( E.D. Mich., 2013)

CORE TERMS

Emergency, district court, retirees, health-care, contracts, modifications, benefits, preliminary injunction, modifying, orders, collective bargaining agreement, budget, impairment, municipal, coverage, merits, irreparable harm, injunction, Retired, public safety, changes, courts, spouse, plans, legitimate public purpose, substantial impairment, injunctive relief, medical care, Public Act, contractual

Civil Procedure, Appeals, Standards of Review, Clearly Erroneous Review, Remedies, Injunctions, Preliminary & Temporary Injunctions, De Novo Review, Abuse of Discretion, Grounds for Injunctions, General Overview, Constitutional Law, Congressional Duties & Powers, Contracts Clause, Application & Interpretation, Governments, Local Governments, Duties & Powers, Employees & Officials, Likelihood of Success, Irreparable Harm