DETROIT – Governor Rick Snyder mostly evaded questions during three hours of sworn testimony under questioning from attorneys representing unions trying to convince a judge to deny Snyder and Detroit Emergency Manager Kevyn Orr’s efforts to let Detroit resolve its financial problems through bankruptcy.
According to an unofficial transcript of the more than three-hour deposition, obtained by Gongwer News Service, Snyder said he did not know or did not recall the answer to the question asked of him 56 times. There were 16 times where Snyder or his attorney, Assistant Attorney General Margaret Nelson, invoked attorney-client privilege in Snyder’s decision not to answer a question.
A central focus of the deposition was Snyder’s attitude about the fate of some 20,000 retired city of Detroit employees with pensions that the bankruptcy could severely reduce. The Michigan Constitution bars the diminishing or impairing of public employee pensions, but a federal bankruptcy judge could override that language.
At one point, it appears Snyder does confirm something Orr apparently said at a recent deposition, that there was a conversation between the two after Orr was named emergency manager but before the bankruptcy filing about trying to get the city out from under the pension obligations it owed.
Yet that answer was so tangled in a series of objections and arguments between the attorney for several retired Detroit employees and Nelson that it is difficult to determine exactly what Snyder was answering in the affirmative.
Initially, Snyder refuses to answer the question about whether such a conversation occurred, citing attorney-client privilege because an attorney, Snyder said, was present during any such conversations between himself and Mr. Orr on the topic. Nelson supported Snyder on that front, but the retirees’ attorney, William Wertheimer Jr., notes that Orr answered that question even as he had earlier in his deposition preserved attorney-client privilege on other matters.
Eventually, Wertheimer asked Snyder: Do you recall any conversations you had with Orr with or without attorneys present between the time that he became emergency manager and the chapter nine filing relating to the pension issue that he might have construed in such a way that he would answer affirmatively a question about getting out of the pension obligations that the city owed?
Nelson objected for the record, saying Snyder could not testify about how Mr. Orr might have understood a question, and then said Snyder could answer the question.
“I just want to make sure I understand it,” Snyder said. “You’re saying whether it was potentially covered by privilege or not.”
Wertheimer said indeed. Snyder then asked if the question was whether there was a discussion of pension liabilities. Wertheimer said yes, or any other kind of discussion where Orr “might have as a result of that conversation answered a question affirmatively about getting out of pension obligations?”
Nelson reiterated her objection and then told Snyder to answer.
“Yes,” Snyder responded.
Wertheimer then asks Snyder to recount the conversation.
Nelson interjects and it appears Snyder is a bit confused about what question he is answering and whether he should answer.
“I’m just checking. I’m sorry, you guys have been objecting enough I’m trying to figure out …” he said before Wertheimer began speaking again.
But that would be the closest – maybe – Snyder would come to saying anything about discussions having taken place about the advantage of bankruptcy when it came to addressing the pension question.
Earlier, when pressed about whether Snyder recalled discussing with Orr “among other things, getting out of the pension obligations that the city owed,” Snyder did not answer directly.
“Well, I wish it was that simple,” he said. “I sort of object. I don’t believe I had discussions about getting out of pension obligations. We had discussions regarding pension obligations.”
Snyder said he rejected the characterization of conversations having occurred about getting the city out of its pension obligations.
When recalling the conversations that occurred, Snyder answered lengthily and somewhat confusingly. He said it could be positive to go through bankruptcy and have all issues before one judge instead of having multiple ongoing lawsuits.
“One of the potential advantages of bankruptcy, again viewing bankruptcy as a last resort, could be … more a finality of a resolution to this issue as opposed to having lawsuits continue for multiple years,” he said. “Again, this is where I view it as hopefully an open discussion that would (be) reviewed by a judge because this then gets into legal opinions as to the relative class of different types of creditors. And this is beyond my area of expertise.”
Time and again, union attorneys tried from different angles to ascertain whether Snyder saw having the city file for bankruptcy as a way around the Michigan Constitution’s prohibition on reducing pension payments to public employees.
In one exchange, Sharon Levine, attorney for the American Federation of State, County and Municipal Employees, asked Snyder his view of whether pension benefits should be modified in Detroit.
“I view that that’s part of the bankruptcy process that those are not my decisions to make,” Snyder said. “There’s a plan of adjustment that will be presented by the city, assuming chapter nine goes forward, and that would be adjudicated by Judge Rhodes.”
“So is it your testimony today that you do not have a view?” Levine retorted.
Snyder responded: “I would – I’m not a decision maker in that process with respect to deciding that the plan would be adopted or not, and there has not been a plan even presented at this point in time, so anything else would be speculative.”
The circuitous questioning and answering continued.
In another exchange, Snyder offered an explanation of why he placed no contingency on the Detroit bankruptcy filing requiring retiree pensions to be protected.
“I didn’t believe it was appropriate to put contingencies in it because, as I stated in my letter authorizing it, I believe that the process is required to be a legal process, which would address any legal questions through the bankruptcy process, either through the plan or the judge’s review of the plan,” he said.
To the question of whether Mr. Snyder must uphold the Michigan Constitution’s language protecting public-sector pensions, Snyder said he also takes an oath to uphold the U.S. Constitution.
“It also involves the Constitution of the United States when you’re talking chapter nine bankruptcy, and I thought it best to leave to a judge the judicial branch to make a determination of a legal question,” he said.
In another exchange, Snyder was asked about his conversations with Treasurer Andy Dillon – who along with top Snyder aide Rich Baird was deposed Thursday – and whether Dillon told Mr. Snyder he thought pension liabilities had to be cut.
“I don’t recall in terms of all the pieces,” Snyder said. “Again, in some ways yes, but also he was trying to be creative in saying are there other options or alternatives.”
This followed a lengthy back-and-forth between the two sides that led Snyder to say, “I’m not trying to be difficult here.” Attorney Peter DeChiara, representing the United Auto Workers, responded he appreciated Snyder’s efforts and was not suggesting Snyder was being difficult.
There also was a lengthy exchange on whether Snyder and Orr moved up the city’s bankruptcy filing by a day to pre-empt an Ingham Circuit Court hearing on the Detroit retirees’ lawsuit. Under federal bankruptcy law, all other cases involving the city are immediately stayed until the resolution of the bankruptcy case.
There was a long back-and-forth during which Snyder insisted no such pre-emption occurred.
DeChiara asked whether Snyder had discussed with anyone how the retiree lawsuits would have meant injunctive relief against the bankruptcy filing if a judge agreed. Snyder asserted attorney-client privilege.
“Well again without the legal conclusion, did you have any discussions about that subject outside of discussions with legal counsel?” DeChiara asked.
“They’re discussions about the lawsuits,” Snyder responded.
“Yes,” DeChiara replied.
“Yes,” Snyder said.
“We’re speaking past each other,” DeChiara said.
“Yeah,” Snyder responded.
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