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.