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A Better Partnership
May 25, 2016

Executive Order was meant to extinguish already accrued but unpaid retiree benefit contributions

The Michigan Supreme Court ruled that Pontiac’s emergency manager intended to extinguish the City’s obligation to pay future obligations to the City of Pontiac’s police and fire retirees’ trust fund as well as already accrued but unpaid obligations.  The Court had heard argument on the application in Board of Trustees of the City of Pontiac Police & Fire Retiree Prefunded Group Health & Insurance Trust v. City of Pontiac, No. 151717.  The Court remanded the case to the Court of Appeals to determine whether the executive order was a permissible retroactive modification of the accrued right to the contribution.  The Court remanded the case to the Court of Appeals for it to consider:
1.      whether the retroactivity analysis stated in LaFontaine Saline, Inc v Chrysler Group, LLC applies to EO 225;

2.      if so, whether the extinguishment of the defendant’s accrued, but unpaid 2011-2012 fiscal year contribution by EO 225 is permissible under LaFontaine; and

3.      if LaFontaine does not apply, the appropriate method for determining whether EO 225 constitutes a permissible retroactive modification of the 2011-2012 fiscal year contribution.
To read our previous blog post about the Court of Appeals’ opinion, click here.

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