Local 4's Rod Meloni is inside federal court for day 4 of Detroit's bankruptcy trial.
9:20 AM --
No protestors outside the federal courthouse today, security line was moderately populated and the proceedings have begun on time. Judge Rhodes is hearing a motion right now filed by the United Auto Workers. They are seeking to strike a portion of the testimony of Conway MacKenzie turnaround expert Chuck Moore from last Thursday where he testified about where he, and in turn Detroit emergency manager Kevyn Orr, came up with the $3.5 billion pension liability number. The UAW says that number overshoots the mark by a lot, Moore is not an actuary and therefore not an expert and so his testimony regarding the pension numbers and the work of the pension taskforce should be stricken. This is a very similar motion to one Judge Rhodes turned away last week. City Attorney Geoff Stewart from Jones Day is now up pleading the case that Chuck Moore answered every substantive question and there was no reason to throw out the testimony.
After about 10 minutes of deliberating Judge Steven Rhodes denied the motion to strike Chuck Moore’s testimony.
9:46 AM --
Kevyn Orr is now back on the stand being questioned by Anthony Ulman regarding the pension liabilities the city faces.
Orr's turnaround plan from June 14th, 2013 states the city had a $3.5 billion in pension liabilities.
Orr: I think I have been aware of the amount of pension liability from the beginning.
Ulman: Had you come up with a viable option to reduce pension benefits without filing Chapter 9.
Orr: We looked at options but by July, it became clear there were no other options.
Ulman: Was it your position that there had to be cuts in pensions for active and retired employees.
Orr: I don’t know about actives, but yes they would have to be cut.
Ulman: The City has in fact agreed and admitted it intends to cut pension benefits for active and retired employees.
Ulman: It is my understanding you filed for Chapter 9 under PA 436.
Ulman: You are aware that PA 4 was removed by referendum and replaced by PA 436.
Orr: Yes I was aware that an appropriation was tacked onto PA 436 to prevent a referendum.
10:09 AM --
The testimony of Kevyn Orr is getting a little more interesting. Ulman showed some emails of Kevyn Orr’s from January 2013 within a day or two after he was approached to become emergency manager. Orr stated after doing some reading into PA 4 and its transition to PA 436 [emergency manager law] “Michigan’s new law is an end-around PA 4.” Later another of Orr’s emails said “there is a veneer of a revision, a redo of a rejected law.” Ulman asked Orr if he remembered these emails. Orr said yes. Ulman continues going through more of Orr’s early emails that said Jones Day and its attorneys were discussing how to approach a Chapter 9 filing with PA 4 in effect.
Orr testified "He did not know in March 2012 that Jones Day was involved in advice to the city and “I had never heard it from anyone at Jones day." About this situation.
Ulman asked a long question regarding whether Kevyn Orr was aware of any chapter 9 cases where the federal authority trumped state authority.
Orr: I cannot answer yes or no. I will give you an explanation. I have handled cases with federal preemption over state law… I was unaware of a specific case where an emergency manager used a chapter 9 to trump state law. I was unaware of other cases.
Ulman: Were you aware of any instances where federal law trumps state constitutional law?
Orr said: Here broadly, federal law overtakes state law. I am aware of cases
Ulman is now showing a communications roll out by Kevyn Orr’s media relations advisor Bill Nowling. It has filing day as July 19, 2013 and shows a schedule of events and when they were supposed to happen.