Litigation

At the inception of the receivership, there were approximately thirty to forty lawsuits filed against Ecorse for various matters, including: labor disputes, slip and fall, false arrest, discrimination and other matters. Two of the more significant lawsuits involved the allegation that Ecorse had withheld property taxes collected on behalf of the Ecorse School District (including interest) and the AFSCME "Me Too" labor dispute.

Ecorse School District

The lawsuit claimed that Ecorse was not remitting the property tax collections to the Ecorse School District on a timely basis over the six years prior to the receivership. At about the same time, Grand Rapids School District had just won a similar lawsuit against a local city that resulted in defining that the cities were responsible for paying interest income earned on property tax collections to school districts.

While the condition of the accounting records prevented an accurate assessment of the potential exposure on this lawsuit, the School District had estimated that the amount of interest they were due would be between $200,000 and $400,000. The School District was also seeking a formalized arrangement or commitment to remit future property tax collections and interest derived therefrom in accordance with the State statutes.

AFSCME "Me Too" Claim

The American Federation of State, County and Municipal Employees' (AFSCME) labor agreement with Ecorse contained a provision concerning the right of AFSCME to benefit from compensation increases provided to other Ecorse bargaining groups ("me too" clause). As a result of a recent resolution of the police and fire contracts, AFSCME claimed that they were entitled to receive an increase under this "me too" clause. At the time of the Receiver's appointment AFSCME had won this arbitration, but no amounts had been quantified in order to pay employees.

By the summer of 1987, an estimate of as high as $500,000 to resolve the arbitration award was estimated.