Columns

The power of mediation in safeguarding parental rights and combating neglect and abuse in Michigan

July 18 ,2024

In the realm of family law, Michigan, like many other states, grapples with the delicate balance between protecting parental rights and ensuring the safety and well-being of children.
:  
Philip Schaedler

Introduction

In the realm of family law, Michigan, like many other states, grapples with the delicate balance between protecting parental rights and ensuring the safety and well-being of children. Cases involving allegations of parental neglect and abuse can be emotionally charged and complex, often culminating in protracted legal battles. To address these challenges and promote more effective resolution, mediation has emerged as a powerful tool in Michigan's family court system. This article explores how mediation benefits parental rights and child protection in neglect and abuse cases, delving into the advantages, principles, and practical implementation of mediation in the state of Michigan.

Understanding the Michigan Family Court System


Before diving into the role of mediation in parental rights, neglect, and abuse cases, it is crucial to comprehend the Michigan family court system. Family court is a specialized court that handles a wide array of family-related matters, including divorce, child custody, visitation, child support, and cases involving allegations of parental neglect and abuse.

In these cases, the primary objective of the court is to safeguard the best interests of the child while respecting parental rights. However, striking the right balance is no easy feat. Allegations of abuse and neglect require careful consideration of the child's safety, the rights of the parents, and the need for a fair and just resolution. Formal proceedings in this context, such as evidentiary hearings, can be extraordinarily harmful to children and the potential for continued constructive relationships between parents. Mediation offers a private and largely confidential process to address these sorts of issues.

The Benefits of Mediation


Mediation, as an alternative dispute resolution (ADR) mechanism, offers numerous advantages in parental rights, neglect, and abuse cases in Michigan:

1. Preservation of Parent-Child Relationships: One of the primary benefits of mediation is that it seeks to preserve the parent-child relationship rather than sever it. In many cases, the removal of a child from their biological family can have profound and lasting effects on the child's well-being. Mediation provides an opportunity for parents to acknowledge the issues, address them, and find a way to maintain a relationship that is conducive to the child's best interests.

2. Empowerment and Self-Determination: Mediation empowers the parties involved in the dispute to make their own decisions. Parents are more likely to comply with agreements reached in mediation because they have actively participated in creating them. This autonomy can lead to more sustainable and cooperative co-parenting arrangements, even in cases where there have been allegations of neglect or abuse.

3. Efficiency and Cost-Effectiveness: Traditional litigation can be time-consuming and expensive. Mediation offers a more cost-effective and efficient means of resolving disputes. This is particularly beneficial in parental rights cases, as it allows for faster resolution and reduced strain on the already stretched resources of child protective services and the legal system.

4. Reduced Emotional Trauma for Children: Courtroom battles can be traumatic for children, especially when they are caught in the crossfire of parental disputes. Mediation takes place in a more relaxed and private setting, making it less intimidating for children. The process encourages a child-centric approach, fostering an environment that is less adversarial and more focused on the child's well-being.

5. Customized Solutions: Every family situation is unique, and mediation allows for customized solutions that can cater to the specific needs and circumstances of the family involved. The mediator helps the parties identify their own priorities and facilitates discussions to tailor solutions accordingly.

6. Self-Determination: Solutions developed by the parties themselves guided by a carefully crafted Case Services Plan are more practical, positive, durable, and productive. This approach allows parents to address their collateral needs and interests. In essence parents are allowed to get “well” before they expected to shoulder the responsibility of parenting.

Mediation Principles in Michigan


To be effective in parental rights, neglect, and abuse cases in Michigan, mediation adheres to certain guiding principles:

1. Neutrality and Impartiality: Mediators are neutral and impartial facilitators who do not take sides in the dispute. Their role is to guide the conversation, ensure each party's voice is heard, and help them reach mutually acceptable solutions.

2. Confidentiality: Michigan law places a high value on the confidentiality of mediation. Information shared during mediation cannot be used in court, ensuring that parties can speak openly without fear of repercussions.

3. Voluntary Participation: Mediation is a voluntary process, meaning that both parties must agree to participate. This voluntary aspect empowers parents and encourages their active engagement in the resolution process.

4. Informed Decision-Making: Mediation is about informed decision-making. Mediators assist parties in understanding their rights, responsibilities, and options so that they can make choices that are informed and in the best interests of their child.

5. Child-Centered Approach: Mediation in Michigan places the best interests of the child at the forefront. Mediators are trained to prioritize the welfare of the child, ensuring that all decisions consider the child's safety and well-being.

6. Inclusivity: Mediation of parental rights, child abuse and neglect cases encourage, where appropriate and permitted, the participation of all the interested parties: parents, attorneys, investigators, case workers, social workers and extended family members or other foster care providers. The dynamics are sometimes rather complicated but the end result provides the kind of support network essential to positive and durable outcomes.

Implementation of Mediation in Michigan


The implementation of mediation in parental rights, neglect, and abuse cases in Michigan involves several steps and considerations:

1. Referral to Mediation: Cases can be referred to mediation at various stages of the child protective process. This can occur before or after a court petition has been filed. Referral sources may include Child Protective Services (CPS), the court, attorneys, or even parents themselves.

2. Mediator Selection: Mediators are usually trained professionals with expertise in family law and conflict resolution. In Michigan, they must adhere to state standards and training requirements. Selection of a mediator is typically done through a court-approved list of qualified professionals.

3. Initial Meeting: Mediation typically begins with an initial meeting in which the mediator explains the process, ground rules, and the importance of confidentiality. Each party is given the opportunity to express their concerns, objectives, and needs.

4. Information Gathering: The mediator facilitates the exchange of information between the parties. This may involve discussing allegations of neglect or abuse, exploring potential solutions, and identifying the child's best interests.

5. Negotiation and Agreement: The heart of mediation is the negotiation process. The mediator helps parties generate options, encourages dialogue, and guides them toward a mutually agreeable solution. Agreements reached in mediation can be incorporated into court orders if necessary.

6. Follow-up and Compliance: After an agreement is reached, follow-up sessions may be scheduled to ensure compliance. Mediators can also help address any new issues that may arise in the future.

7. Court Approval: In some cases, the final agreement may require court approval. The court will assess whether the agreement is in the best interests of the child and may issue a court order based on the mediated agreement.

8. Economics:  Approaching parental rights cases through the mediation process in many cases, if not most, allows the court to employ a no cost/low-cost alternatives to the resolution of these matters. Highly skilled, experienced mediators trained to identify domestic violence issues, substance abuse issues and the effects of trauma, among other things, are available through the state’s network of community dispute resolution centers. Mediation can assist the parents, the court, the extended family and responsible agencies in the development of constructive and productive plans for reunification and permanency.

Case Study: The Role of Mediation in a Neglect and Abuse Case


To illustrate how mediation can benefit parental rights and child protection in Michigan, consider the following case:

Case Background: A case is brought to the attention of Child Protective Services (CPS) regarding allegations of neglect and emotional abuse. The parents are separated and have been unable to co-parent effectively. The child, a 9-year-old girl, is displaying behavioral and emotional issues at school.

Mediation Process:


1. Referral to Mediation: CPS seeks the assistance of a mediator through the court The Court refers the case to mediation as a way to resolve the disputes between the parents and address the child's well-being.

2. Mediator Selection: A qualified mediator is appointed from a list of court-approved mediators.

3. Initial Meeting: The mediator meets separately with each parent to explain the process, assure them of confidentiality, and identify their concerns.

4. Information Gathering: In joint sessions, the mediator helps the parents express their concerns, including the alleged neglect and emotional abuse. The child's best interests are discussed, focusing on her need for emotional stability and a healthy relationship with both parents.

5. Negotiation and Agreement: With the mediator's guidance, the parents discuss their issues, concerns, and the possibility of co-parenting more effectively. They create a parenting plan or customize a Case Services Plan that includes specific provisions for communication, visitation, and decision-making. The parents and the agency work together to address collateral issues that must resolved to maximize the potential for success for the parents.

6. Follow-up and Compliance: The mediator schedules follow-up sessions to ensure that the parents are adhering to the agreed-upon plan. Over time, as the parents resolve their personal issues, learn to communicate better and provide a more stable environment for their child, the child's behavior and emotional well-being begins to improve.

7. Court Approval: With the child's well-being at the center, the court approves the mediated parenting plan, making it a legally binding order.

Benefits of Mediation in the Case:


• The child's best interests were prioritized throughout the process.

• The parents were actively engaged in creating a plan that would benefit their child and themselves.

• The child's exposure to further emotional trauma was minimized.

• The resolution was reached faster and at a lower cost than through protracted litigation.

• Compliance with the agreement was higher due to the parents' active involvement in the process.

Conclusion


Mediation has proven to be a valuable and effective tool in safeguarding parental rights while addressing allegations of neglect and abuse in Michigan. It allows for a child-centric approach, promotes the preservation of parent-child relationships, and empowers parents to actively participate in creating solutions that are in the best interests of their children.  

—————

Philip A. Schaedler, State Bar of Michigan ADR Section Diversity and Inclusion Action Team Co-Chair: His practice in Tecumseh centers on alternative dispute resolution in both general civil and domestic relations cases. He is a trained practitioner in the areas of facilitative and evaluative mediation, arbitration and collaborative law. He is one of 20 SCAO certified trainers in general civil mediation and is certified trainer in restorative conferencing, neglect and abuse mediation and circle keeping. Schaedler has been a licensed member in good standing of the State Bar of Michigan for 40 years and a member of PREMi since its inception.

Award-winner takes art of flip-flopping to new political level

July 11 ,2024

With this column we are pleased (actually sad) to announce another winner of our coveted (despised) Pence Outstanding Hypocrite Award (POHA).
:  
Berl Falbaum

With this column we are pleased (actually sad) to announce another winner of our coveted (despised) Pence Outstanding Hypocrite Award (POHA).

The honor (dishonor) goes to Nikki Haley, former governor of South Carolina, the last Republican candidate for president to suspend her campaign against Donald Trump in the GOP primaries, and former ambassador to the U.N. during the Trump administration.

Sometimes as we considered bestowing the POHA, we have been hesitant; we did not want to be unfair. But this one was easy, a doozy, a real doozy.

In case you missed it, Haley recently announced she would vote for Trump. So, what’s the big deal, you ask?

Well, we will tell you. Here are some of the things she said about her former boss and rival in the primaries, the man she now wants to be president and the leader of the free world.

Trump, she said, at one point, is “unhinged,” “unsafe to be president,” and “unqualified to be president of the United States.” He was “more diminished” than he was in 2016, she charged.

The GOP must reject Trump as its nominee because he cannot win a general election, she offered, adding, “That’s the problem. We got to go with someone who can actually win.”

If anyone failed to appreciate her opposition to Trump, she assured them that nominating Trump as the GOP candidate for president would be like committing “suicide for our country.”

When she was governor of South Carolina in 2016, she denounced Trump, stating he “was everything a governor does not want in a president.” When Trump won the nomination, she campaigned for him and joined his team as U.N. ambassador.

After January 6, she criticized Trump, saying,

“He let us down. We shouldn’t have followed him…and we should never have listened to him.”

Then she visited him at Mar-a-Lago in Florida, made nice-nice and praised him.

She also has questioned his mental fitness, after Trump confused her with former House Speaker Nancy Pelosi.

“The concern I have is – I’m not saying anything derogatory,” she said while saying something derogatory, “but when you’re dealing with the pressures of a presidency, you can’t have someone else that we question whether they’re mentally fit to do this.”

Asked whether Trump would abide by the Constitution if elected, she said, “I don’t know, I don’t…I don’t know…I mean you always want to think someone will but I don’t know.”

When Trump mocked Haley’s husband, Michael, who serves in the South Carolina Army National Guard, and was on a year-long deployment to Africa as a staff officer with the 218th Maneuver Enhancement Brigade, Haley said:

“If you don’t respect our military, how should we think you’re going to respect them when it comes to times of war, and prevent war and keep them from going?  If you don’t have respect for our military and our veterans, God help us all if that’s the case.

“He showed that with that kind of disrespect for the military, he’s not qualified to be the president of the United States, because I don’t trust him to protect them.”

With her endorsement, she apparently also doesn’t remember Trump’s racially-charged comments about her heritage.

Trump repeatedly referred to Haley, the daughter of immigrants from India, as “Nimbra” and suggested, falsely, that disqualified her to run for president.

Haley was born in Bamberg, South Carolina, as Nimarata Nikki Randhawa. She always used her middle name and took the surname “Haley” after her marriage in 1996.  In response at the time, Haley said:

“I’ll let people decide what he means by his attacks. What we know is, look, he’s clearly insecure if he goes and does these temper tantrums, if he’s spending millions of dollars on TV. He’s insecure, he knows that something’s wrong.”

But what finally put her over the top for the POHA was how she criticized Republicans who flip-flopped on Trump (before she did.)  Here is what she said:

“Many of the same politicians who now publicly embrace Trump privately dread him. They know what a disaster he’s been and will continue to be for our party. They’re just too afraid to say it out loud. Well, I’m not afraid to say the hard truths out loud. I feel no need to kiss the ring.”

If only she had left it at kissing his ring.

Trump’s reaction to all of this?  Former GOP presidential rival Haley whom he called a “birdbrain” in the campaign, will be on his team (if he wins the election) in some form --“Absolutely!”

In conclusion:  We never had a candidate -- and we have had quite a few -- who deserved the POHA more than Haley.

At the time this was written, Haley had not commented on Trump being found guilty of 34 felonies charges.

But during a presidential debate in the GOP primaries, she was one of six candidates who raised her hand when asked by the moderator if they would support Trump even if he were a convicted felon.

We will speculate (given her record described above): she will laud 17 guilty verdicts and criticize the other 17.

If flip-flopping were an Olympic sport, she would be the favorite for the gold when the Games start this month in Paris.



—————

Berl Falbaum is a long-time journalist and author of several books.

Delusion becomes fact in the political world of a modern era G.O.P. ‘dictator’

July 04 ,2024

This is the fourth commentary in a series examining Niccolo Machiavelli’s analysis of challenges facing free governments, past and present, and his admonitions regarding the steps needed to preserve critical institutions.
:  
Samuel Damren

This is the fourth commentary in a series examining Niccolo Machiavelli’s analysis of challenges facing free governments, past and present, and his admonitions regarding the steps needed to preserve critical institutions.

The previous commentary discussed the “office of dictator” in ancient Rome.

The Roman Republic actually had such an office, but it was extremely limited in scope and duration; only put in place to respond to substantial and imminent threats when traditional political institutions were unable to do so.

When the threat was removed, the dictator stepped down and returned the Republic to its prior good order.  At least that was the model, according to Machiavelli, until Julius Caesar abused the office by leading an army with allegiance to him to threaten violence in the heart of the Republic thereby ending free government in ancient Rome.

The previous commentary concluded noting Donald Trump’s statement in a Fox News town hall meeting in April that he wanted to be “dictator for a day” after his possible election as President this November.  He later “walked the comment back” in a Time Magazine interview saying the comment was a “joke.”

The subject of this commentary poses the follow-up question: If not as future dictator, what role does Trump occupy in current politics and is there any parallel to that role in political history?

Trump is certainly not a “role model” even to supporters.  On the eve of  the Iowa caucuses, a middle-age Iowa woman, interviewed by an AP reporter, laughingly said that while she supported Trump, “I wouldn’t vote for him as my pastor.”

There are likely a substantial number of responsible roles that other supporters would also not want Trump to fill in their personal lives.

Notwithstanding, supporters enthusiastically embrace his “no holds barred” and “anything goes” approach to political practice, including incitements to violence which they discount because it is not aimed at them.  

Before Trump, a person with these flaws would have been automatically disqualified from any political role in America.  Those same flaws, however, would not be in the slightest disqualifying in 16th century Italy if the role in question was that of mercenary.  

Mercenaries or “condottieri” occupied a prominent position in the political structure of the time.  The five major city states (Florence, Milan, Naples, Rome and Venice) all hired mercenaries to initiate and defend periodic, but repeated, military advances against one another.

Machiavelli railed against their role in Italian politics believing they brought ruin to the legitimate interests of the populace at large and the city states in particular.  His critique of their injurious effect was threefold.

First, by definition, mercenaries are “men without any territory.”  As a result, they owe allegiance only to themselves and view the world from that vantage.  Their leaders mistrust everyone.  They conspire against supposed friends, allies, and employers; and, believe others continually conspire against them.

If it is to their advantage, mercenaries shift allegiance or undercut alliances formed by their employers without hesitation.

Second, mercenaries are only paid in times of war.  As a result, they encourage and prolong division among employing city states and foreign interests in lieu of pursuing peace.

Their greatest source of funds is through plunder from the sacking the territories of adversaries. They can be bribed and also extort employers and the citizenry if that is to better advantage and less risky.

Third, by practicing only the “Art of War,” mercenaries have no knowledge or experience in governing except by bullying, threats, and violence.

Mercenaries are ruthless and cruel. They demand absolute loyalty from troops upon penalty of exile or a gruesome death.  When unchecked, they rule as tyrants.

Donald Trump is the portrait of the modern-day political mercenary.

He reduced the Republican Party from a democratic institution to mercenary troops who either support him, are expelled, or confront “political death.”  RNC funds have become his personal plunder.

As President and candidate, Trump extorts or connives with foreign powers to provide dirt on domestic opponents.  He continually churns division in our body politic to prevent the possibility of peaceful resolution.  

As all mercenaries do, Trump schemes.  He overlays conspiracy upon conspiracy in a form of destructive paranoia that leads him to proclaim delusion as fact.  

Five hundred years ago, Machiavelli reviewed the aftermath of a political world of free government broken by the princes and mercenaries of Italy.

It is that same world Donald Trump now offers to America.


   —————

Samuel Damren is an attorney and author in Ann Arbor.

Young voters are looking for a government that works

July 04 ,2024

With two of the oldest presidential candidates in our history sitting atop their respective tickets in the upcoming election, there is justified concern that younger voters will stay home.
:  
Calder Burgam

With two of the oldest presidential candidates in our history sitting atop their respective tickets in the upcoming election, there is justified concern that younger voters will stay home. A Harvard Youth Poll found an eight percent drop in the number of Americans between 18 and 29 years old who “definitely” plan to vote. Young voters “want evidence that democracy works and “that government can address our challenges,” according to polling director John Della Volpe. Looking at the news coming out of Congress lately, that evidence has been hard to come by.

It is not difficult to understand why younger voters are feeling less inclined to engage with our democratic institutions. The problems millions in our country face are existential and have been for years. The climate crisis did not sneak up on us. Economic inequality did not appear out of nowhere. Mass shootings are not a new phenomenon. And yet, the branch of government that is supposed to be most responsive to the needs of the public seems unable to do more than lurch from one crisis to the next.

The good news is there is a model for Congress to follow to win back the trust of younger voters. The even better news is that many in Congress already use it. I know because I’ve seen it firsthand.

Every year, Wayne Law’s Levin Center for Oversight and Democracy places law students in Congressional committees conducting legislative oversight. In 2021, I was one of those law students. I was placed with the Senator Gary Peter’s staff in the Senate Homeland Security and Governmental Affairs Committee (HSGAC). My initiation into the world of oversight was Congress’ first major investigation into the government’s security, planning, and response failures during the January 6 insurrection followed by the federal government’s response to the COVID pandemic. HSGAC’s investigation team did not shy away from hot button topics.

The experience taught me that effective oversight has four attributes: quality investigating, bipartisan buy-in, public credibility, and policy impact.

To ensure a quality inquiry, investigators made sure to be led by the facts. They sought out diverse witnesses, even if those witnesses held opposing worldviews or perspectives on the issue. They left no stone unturned, sifting through thousands of pages of documents and conducting hours of
interviews.

Every step of the way, Senator Peter’s staff worked closely with Senator Portman’s staff to schedule interviews and produce sections of our reports. Where disagreements arose, the sides stated their cases firmly, but civilly, and always reached a compromise. They recognized that the investigation would be more thorough and thoughtful because multiple perspectives were brought to bear. The quality of the investigations and the bipartisan approach had the benefit of improving the credibility of the investigations among other members of Congress and the media. No one could dismiss the findings as partisan maneuvering.

Finally, all the reports included concrete policy recommendations backed by extensive research and supported by members of both parties. At a time when Democrats and Republicans can barely agree on naming post offices, HSGAC’s joint hearings and reports produced opportunities to build consensus on important matters.

Often, it feels as though elected officials are not engaging meaningfully with the issues that matter most. Young voters want to see our elected officials take their concerns seriously. They can do that by employing the principles of good oversight. Spend more time fact-finding and less time grandstanding. Go beyond partisan echo chambers and engage in discussions with a broad array of stakeholders. Debate with others and state your case in good faith and call out your colleagues who are not doing the same. Propose policies that recognize the depth of the problems we face and will meaningfully impact our lives.

I hope young voters will stay engaged with the people’s branch of government in 2024 and beyond. We cannot overcome the obstacles we face as a country without a functioning legislative branch. But legislators need to do their part to give young voters a reason to believe they have the capacity to address the issues that matter most.

If they don’t, young voters should flex their oversight muscle and vote in candidates who will.

—————

Calder Burger is an associate attorney with Fink Bressack, Detroit.

‘Dictator for a day’ promise portends a dark time in U.S.

June 27 ,2024

This is the third commentary in a series examining Niccolo Machiavelli’s analysis of challenges facing free governments, past and present, and his admonitions regarding the steps needed to preserve critical institutions.
:  
Samuel Damren

This is the third commentary in a series examining Niccolo Machiavelli’s analysis of challenges facing free governments, past and present, and his admonitions regarding the steps needed to preserve critical institutions.

The last commentary discussed the creation and role of consuls and tribunes in ancient Rome.  One consul was selected by Senate nobles and another by the plebeian assembly.  The role of the consuls, described by Machiavelli in “Discourses on the Ten Books of Livy,” was to jointly propose laws, enforce laws supporting the integrity of public forums and other actions.

The consuls also had authority to “indict citizens when they commit any kind of offense against free government” and “to punish those who make false accusations.”

But what happened when the consuls could not agree, yet a response was required to address an imminent substantial threat to the Republic?

In those instances, Roman law provided for appointment of “dictatorial authority,” which in Machiavelli’s estimation, “did good, not harm, to the Roman Republic.”

Dictatorial authority only applied to actions taken to address a defined and substantial threat. It only existed for the duration of the threat and required the dictator to return the Republic to its previous good order.  It was crucial, according to Machiavelli, that a dictator be appointed “according to public orders, and not by his own authority.”

The duration of the appointment was generally limited from six months to one year.

Machiavelli cites the appointment of former general Lucius Cincinnatus as an exemplary example of the implementation of this law.  In 458 B.C., Cincinnatus, then retired at “his small farm, which he worked with his own hands,” was appointed dictator to protect Rome when it was “under siege.”  

Cincinnatus assembled an army and thereafter “routed and plundered the enemy” in 16 days. He then abdicated the dictatorship and returned home.  

Notably, from Machiavelli’s perspective, Cincinnatus delivered the plunder to the Republic instead of distributing it to the troops with the aim of acquiring their personal loyalty.

Machiavelli contrasts this exercise of dictatorial authority with the later actions of Julius Caesar. After being named in public orders to conduct wars in Britain and Gaul, Caesar repeatedly violated the restrictions of that authority following his victorious return.

First, he did so by crossing the Rubicon with an army whose allegiance was pledged to him and then entering Rome to confront a political rival.  Next, by manipulating obsequious supporters in the Senate who sought to bask in his recent glory, Caesar secured appointment as dictator for an unprecedented 10-year term.

Finally, after nominated to the position of consul by the Senate, Caesar named himself “dictator for life.” These actions shattered free government in ancient Rome and led to the end of the Republic.

In 16th century Italy, there was no individual comparable to Caesar for Machiavelli to similarly critique.  There is, however, one in 21st century America.

During a televised Fox News town hall meeting several months ago, Donald Trump stated that if elected President in 2024, he would act as “dictator for a day.”  Trump did not refer to a particular crisis that might allow him to declare martial law to possibly justify the exercise of dictatorial powers under the Constitution.

Nor did he indicate how quickly after assuming office, he would bestow dictatorial powers on himself.  Presumably, it would be sometime after reliable loyalists could be installed at the Department of Defense and Justice Department; and, after a media campaign could “plow the ground” to try to legitimize whatever “crisis” might become the selected pretext.

In a more recent Time Magazine interview, Trump said that his comments on the subject were just a “joke.”

Joke or not, dictator for a day or a decade or forever is not the role for which the vast majority of Americans envision a 21st century President. Nonetheless, there exists a role in the politics of Machiavelli’s 16th century Italy which perfectly matches the role Donald Trump fills in today’s politics.

That is the subject of the next commentary in this series.


   —————
Samuel Damren is an attorney and author in Ann Arbor.

Stopping Detroit’s pension heist: A look back at Estes v. Anderson

June 20 ,2024

Everyone should have a boss like Coletta Estes at least once in their career. During her many years of employment with the City of Detroit, Estes understood, on an almost intuitive level, what employees needed to succeed.
:  
J.J. Conway

Everyone should have a boss like Coletta Estes at least once in their career. During her many years of employment with the City of Detroit, Estes understood, on an almost intuitive level, what employees needed to succeed. She understood the importance of listening, offering assistance that actually helped, and providing support during challenging times. Estes knew that employees who are heard and feel that someone “has their back” always perform better. When Estes served as manager, good things followed.

Estes was good at her job because she started working as an hourly unionized employee and worked her way up through the ranks to the position of supervisor in the city’s water department, one of its largest departments. Estes understood the concerns of the city’s employees. She brought that unique understanding into her role when she joined management. The city benefited because its unionized employees trusted her, and the usual management-labor tension that undermined productivity was gone.

So, when Estes spotted problems with the management of the city’s pension funds, she knew who would be hurt financially – the average worker who was toiling away day after day in a city job with the promise of one day retiring comfortably. What Estes understood, too, is that a retirement benefit is a form of deferred compensation. An employee works today and part of the payment for that work is paid later. Estes was right. A retirement benefit is like being paid $20 per hour with $4 of each hour put into savings and paid in the future. Busy employees have jobs to do, so they must leave the management of that savings to others – the trustees of the city’s two pension funds.

Historically, Detroit’s pension funds have always been considered a little sketchy. It is not just a Detroit problem. Many public pension funds have questionable practices and they are largely unregulated. When vast sums of money are sitting around, corruption often follows. In the mid-aughts, the city’s pension funds were around $5 billion, and the trustees of those funds were afforded near total discretion as to where those funds would be invested.

There were some modest state rules but, for the most part, the trustees could deploy the pension funds as they pleased. And one area that interested them greatly was known as “Alternative Investments.” Alternative investments are unregulated private investments with little oversight. The trustees of the City of Detroit’s General Retirement System and the Police and Fire System would listen to pitches from investment marketers and then vote to deploy massive sums into these unregulated funds.

Mayor Kwame Kilpatrick knew of this massive amount of cash in the pension funds, and he also knew that he had the power to appoint several of the “ex officio” board seats on both pensions. Kilpatrick took the graft and corruption to another level by stacking the boards with his personal friends and cronies. They, along with other corrupt trustees, started pushing more and more money into schemes and deals that were marketed by their friends and family. The hard-earned pension money was being pushed into untraceable investments in the Cayman Islands, into loans with little or no collateral, and other crazy investment schemes. All the while, the mayor and others were pocketing kickbacks.

While the city’s water workers were literally working in sewers making sure residents had water and sanitation services, many of the trustees were partying it up in exotic locations and fancy restaurants signing away the retirements of these workers. It was, in a word, gross.

So, Estes sued.

Suing trustees of any government pension is tough. Most have qualified immunity as did the city’s trustees. But in this instance, the trustees conduct was so grotesque that Estes’ claims overcame governmental immunity at the trial court and the trial court’s ruling was upheld on appeal in Estes v. Anderson, 2012 WL 5857283(Mich. App. Nov. 15, 2012).

In its ruling on her case, the Court of Appeals analogized her case to the much more commonly litigated ERISA statute and held:

“Like ERISA, the PERSIA requires that fiduciaries of employee pension plans ‘act with the same care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a similar capacity and familiar with those matters would use in the conduct of a similar enterprise with similar aims.’ MCL 38.1133(3)(a); see, also, 29 USC 1104(a)(1)(B). And the PERSIA requires that fiduciaries give appropriate consideration to the facts and circumstances relevant to the particular investment or investment course of action and act accordingly. MCL 38.1133(3)(d). Estes v. Anderson, 2012 WL 5857283, at *3.”

The trial court held that Estes had pled sufficient facts to show that the trustees violated that duty and many others. Following this, the Estes case was certified as a class action along with a companion case, Foy v. Bandemer, which covered participants in the city’s Police and Fire Retirement System.

The case was a textbook example of a fiduciary’s breach of trust. There were multiple bad deals that cost the pension funds millions in losses and contributed to the underfunding crisis which, in turn, contributed to the city’s bankruptcy. (Indeed, one investment decision was so bad that that the trial court granted summary disposition to the plaintiffs finding the deal to be so risky and undercapitalized, that the investment was grossly negligent as a matter of law.)    

Eventually, the trustees settled Estes and Foy and agreed to a settlement class. The trustees of both funds agreed to pay back millions to the funds and agreed to a form of non-monetary relief that was actually greater in value – an independent outside neutral analysis of all non-public investments. As for the trustees, many went to jail ending a difficult chapter in the city’s history. Estes, for her part, cleaned up the funds and put them on a much better footing. In the end, Coletta Estes not only protected her
coworkers but the city’s future workers for years to come. Like every other aspect of her career as a manager, she had their backs.

—————

John Joseph (J.J.) Conway is an employee benefits and ERISA attorney and litigator and founder of J.J. Conway Law in Royal Oak.