12:43 PM --
Ullman moved into another uncomfortable area that lasted for roughly ten minutes where they sparred over the questions and answers: whether on June 14, 2013 [when he gave his restructuring proposal the creditors; did he have the ability to impose a reduction in pensions if the retirees did not agree to it.
Ullman: "What was your authority under [Public Act] 436? [the emergency manager law]."
Orr: "436 did not give the authority."
Judge Stephen Rhodes watched the lengthy exchange and weighed in “It’s an extremely tough question.” Part of the reason for that is that Orr explained it is a technical legal question and since he is not acting as an attorney he has not looked up nor does he know how this tricky legal issue will play out or might play out in court.
Ultimately Ullman took Orr back to a deposition he gave earlier in the case and statements made to the Detroit Free Press where Orr’s position becomes clear: Orr believes PA 436 and the state constitution can be trumped by federal law.
Ullman move on to even thornier issues: “Can you identify any case law indicated that an emergency manager could take a municipality into Chapter 9. Orr said “ There is no case law.”
Ullman: “did you try to use Chapter 9 to trump the constitution>?
Orr: “I did not want to use it… at some point I felt federal law would trump state law.”
This line of questioning went on for some time, Orr later being asked about the levels of pension underfunding and where he came up with his numbers. He said he relies on his staff of consultants including Milliman actuarial that gave him the numbers.
As the morning questioning ended Judge Stephen Rhodes had a pointed question of his own but not to Kevyn Orr, he asked attorney Ullman, "is it your position that the city cannot negotiate pension benefits based on the constitution?”
Ullman hesitates momentarily and then nodded and said yes, that is his team’s opinion.
Kevyn Orr finished his testimony for the day but it is a long way away from completion. He will be coming back tomorrow to continue his testimony. He gave way to Governor Rick Snyder who will take the stand at 1 p.m.
The governor is expected to be testifying for the rest of the afternoon. There is a sizable protest brewing outside the federal courthouse now.
1 PM -- Recess
Gov. Snyder takes the stand. He is sworn in.
He was wearing a dark suit, a white shirt and red and white striped tie.
Flowers attorney William Wortheimer is asking the judge for permission to leading questions. The city’s attorneys did not object. Motion granted.
Snyder questioning begins. Wortheimer asks when the governor was elected. He got the answer wrong saying January 1, 2013. Wortheimer asked when he took office and he corrected himself saying he was elected in November 2011 and took office in January 2012. Wortheimer asked if the governor understood the oath of office he took to uphold the governor. He said he did. Especially the part about the pension clause in the constitution and he said yes. Wortheimer asked of the governor had discussed the governor’s position regarding whether the state should not take on Detroit’s debt. Snyder said he did not.
Judge: Did you ever tell Mr. Orr your position as to whether the state has any obligation to take on any of Detroit’s Debt? He invoked attorney client privilege.
It was a legal question for the courts to decide. If I had an opinion it would be a legal question that would have to be dealt with anyway.
Wortheimer had asked many of these questions in the governor’s deposition where he invoked attorney client privilege and he spent a lot of time trying to establish whether the governor is changing his mind on that. He isn’t so he moved on.
Wortheimer: "How important is Detroit’s financial situation”
Snyder: “This has been a large issue for 60 years.”
Wortheimer want to know who Ken Buckfire was working with the City, who paid him. Snyder said he was one of a group of people who offered unsolicited advice. Wortheimer asked if he advised the state or the city.
Snyder said, “I perceived it as them trying to get hired for an engagement ... I am not going to speculate by whom.”
Wortheimer: “Weren’t you the one calling the shots on the city’s restructuring.”
Snyder: I didn’t really had anything to do with it, the city ended up hiring Jones Day.”
Wortheimer: Wants to know about the meetings the governor has had with Ken Buckfire and Jones Day: "They met with you to talk about ways to deal with the city of Detroit yes?” Snyder: "Yes”
Do you recall jones Day or Buckfire people talking to you about the constitutional protection of pensions? Snyder answered I don’t recall."
Wortheimer: Did you interview Mr. Orr? Snyder: Yes.
Wortheimer: How many other interviews did you do?
Snyder: At least one.
Wortheimer: During the interview process with Mr. Or ... did you discuss vested pension benefits could be cut in a Chapter 9 proceeding?
Snyder: “I don’t recall.”