Detroit bankruptcy leaves claimants of police abuse unpaid
DETROIT – Detroit could have been on the hook for millions of dollars in a lawsuit alleging police abuse. Lawyers, however, are closing the case after eight years, acknowledging that the claims of possibly 200,000 people are practically worthless.
The reason? Detroit’s 2013 bankruptcy.
The 2010 lawsuit, which described poor conditions in holding cells and excessive detentions, was in progress when Detroit became the largest U.S. city to seek protection from creditors. The city eventually emerged with a clean balance sheet, a robust downtown and a national buzz among millennials .
But a new, flush Detroit doesn’t mean a windfall for people who won the class-action case.
Instead, they would need to get in line like other creditors because the lawsuit was pending during the bankruptcy. Attorneys worked on a settlement with the city but concluded it wasn’t practical: A $1,000 recovery per person could be worth as little as $40 — and paid over many years.
“The costs involved in issuing and mailing these checks will be greater than the value of the checks themselves,” attorney Cindy Tsai said in a court filing.
A federal judge got an update on Nov. 28 and told both sides to draft an order for him to decertify the class, which is still pending.
“It has nothing to do with the merits of their case,” explained Anthony Sabino, who followed Detroit’s bankruptcy and teaches business law at St. John’s University in New York. “This is an unfortunate but unavoidable outcome when a party files for bankruptcy. They’re in this huge ocean of general creditors and there’s really nothing to be had for them. … They’re only eligible to share in the pennies left over.”
The lawsuit was filed on behalf of Johnathan Brown and thousands of people who had been arrested by police years earlier. The Detroit Police Department was accused of keeping crime suspects in cold, bare holding cells with no bedding and little food. The lawsuit said people were routinely held for more than 48 hours without review by a judge.
Brown was detained for 55 hours during a homicide investigation and eventually “succumbed to the DPD detectives’ tactics and gave a coerced statement,” according to the lawsuit.
The city did a poor job defending itself against the allegations. Indeed, U.S. District Judge Thomas Ludington entered a default on the question of whether Detroit was liable. He said there was “neglect and inattention” by city attorneys who repeatedly missed deadlines to produce documents about the holding cells. He turned the case into a class-action in 2012, potentially affecting 200,000 people.
But then Detroit filed for bankruptcy in 2013, freezing any litigation and drastically affecting efforts to collect money when the bankruptcy was over.
As part of a deal to close the case, the city has agreed to pay $100,000 to attorneys who represented Brown and the potential class. Tsai also told the judge that Detroit has fixed problems that led to the lawsuit.
Tsai, a lawyer at Loevy & Loevy in Chicago, didn’t respond to phone calls and emails from The Associated Press seeking comment. Brown, who is in prison for second-degree murder, declined to comment. He will get $5,000 as the lead plaintiff.
“What the attorneys are getting is a drop in the bucket,” said Sabino, referring to the $100,000. “It’s basically expenses. The attorneys are taking a bath. They’re sharing the pain.”
A lawyer for Detroit, Chuck Raimi, said the lawsuit was caught in “two very difficult areas of law” — bankruptcy and class-action lawsuits. He acknowledged the case could have cost millions of dollars without the protection of bankruptcy. But he also noted that the city might have pursued appeals, too.
“As painful as it is, what folks have to recognize is this is why Detroit’s on the mend, by resolving past claims that ended the financial catastrophe the city had labored under for years,” Sabino said.