Unions React To Detroit Bankruptcy Ruling: "This Is A Very Scary Day"

DETROIT (WWJ) - While Detroit has been declared eligible for bankruptcy, the case is far from closed.

Federal Judge Steven Rhodes' ruling on Tuesday, among other things, opens the door to pension cuts for Detroit retirees.

AFSCME attorney Sharon Levine said a notice of appeal has already been filed.

"We think this is a very scary day for the citizens of Detroit, and particularly the retirees," Levine told WWJ Newsradio 950's Pat Sweeting.

"We do think it is clear now that the judge has determined that, even though there is a constitutional protection against diminishing pensions, the judge has said it's OK to do that," she said, "and some of the numbers we've heard have been as much as 50 percent."

Levine said AFSCME retirees, who now receive an average of $19,000 annually in pension benefits, could be looking at going down to $9,000 a year.

In his opinion filed Tuesday, Rhodes ruled that, under the Michigan Constitution, municipal pension rights are contract rights. Therefore, because the state did authorize the bankruptcy, municipal pension rights in Michigan can be impaired in this bankruptcy case, just like any other contract rights.

[Read A Summary Of Rhodes' Decision]

"We're very scared that some of these rulings could have a bad impact nationwide, which is why we're appealing," Levine said. "We don't like the idea that the judge found that the city negotiated in bad faith— but that they don't have to because it's impractical when they only gave it a month. That says to other municipalities you don't even have to talk before you file."

Protesters, who gathered outside the courthouse, said Detroit's bankruptcy case is about busting unions, privatizing workers, and killing pensions.

Gail Turner, president of the Detroit Police Members Association, says she's prepared to take the battle to the nation's highest court if necessary.

"After 30 years with the city I've been in many situations: I've been in fights, I've been shot at ... I handle myself on the street like any Detroit police officer would — with pride and honor in the job that I did with the city, " Turner said. "And ... if we have to take it to the Supreme Court we'll just have to take that fight up."

Attorney Ryan Plecha, who represents the Detroit Retired City Employees Association and Retired Detroit Police and Fire, said his clients were disappointed by the ruling, but not surprised.

"The fact that they're being equated to bond holders, to me, is offensive to the retirees and the employees that gave their lives and their livelihoods to work for the city of Detroit," Plecha said.

University of Detroit Mercy Law Professor Larry Dubin called Rhodes' ruling historic.

"This case will become the precedent for a long of cities throughout the United States to basically follow in terms of how to proceed in the bankruptcy of a major city," Dubin said.

Dubin believes that because of the precedent-setting nature of the case, the ruling will most likely not be thrown out on appeal.

There's no word on when the appeal is likely to be heard.

State-appointed Detroit Emergency Manager Kevyn Orr filed for bankruptcy on behalf of the city in July, estimating the city's debt at at least $18 million.

MORE: Judge Rules Detroit Eligible For Bankruptcy, Says Pensions Can Be Cut

 "This Is War — Outright War" : Detroiters Protest Bankruptcy