Benefit lawsuit

By CHRISTOPHER DIEM, Journal Staff Writer
MARQUETTE — A judge has ruled in favor of two former city employees suing to get their health care coverage back, but ruled against former City Manager Gerald Peterson’s request for the same.


In March 2007, Peterson, his former executive assistant Michelle Doucette and former Arts and Culture Director Reatha Tweedie jointly filed the lawsuit against the city over termination of their retirement health care benefits.


Last Wednesday, Circuit Court Judge Thomas Solka ruled that health care benefits should be reinstated for Doucette and Tweedie but dismissed Peterson’s complaint.


Roger Zappa, who represented all three former employees, said Doucette and Tweedie would be entitled to have the same retirement health care that current retirees have with the city.


Any monetary damages incurred by Doucette and Tweedie will be decided in a jury trial, Solka wrote in his decision.


“Damages would essentially be the cost of the health insurance premiums that Doucette and Tweedie paid out of their own pockets since July 2006 when their health insurance was wrongfully terminated until they’re reinstated. There might be some other incidental things as well,” Zappa said.


Zappa said he is pleased with the ruling for Doucette and Tweedie but disappointed in the ruling for Peterson, who is evaluating whether to appeal the decision.


“While we’re disappointed with the result we follow and understand the judge’s rationale and that’s what we’re continuing to evaluate in terms of whether an appeal will be made or not,” Zappa said.


City Manager Judy Akkala said the city will abide by the judge’s ruling.


“It’s a decision the judge made and we’ll abide by whatever the court decided,” Akkala said.


She said she hasn’t yet discussed the possibility of appealing the decision with Robert Rosemurgy, the Escanaba-based attorney appointed by the Michigan Municipal League to represent the city.


The city commission voted to cease payments to all non-represented, retired middle managers and department heads in July 2006. The decision came following the revelation that some retirees could collect fully paid retirement health care benefits for life after only two years of service, regardless of their age.


Peterson worked for the city for 9¢ years, Doucette for eight years and Tweedie 10 years, nine months.


According to deposition testimony from retired City Clerk Norm Gruber, the retiree health insurance plan followed since at least 1984 was never adopted by the city commission.


Prior to the mid 1980s, the city manager would negotiate with non-represented employees, department heads and middle managers on an individual basis, Gruber said.


In 1983 or 1984, then-City Manager David Svanda tried to formalize the benefits for all non-represented employees and one of the changes was the addition of health care in retirement, Gruber said. However, those changes were never approved by the city commission.


Rosemurgy argued that the benefit packages shared by Peterson, Doucette and Tweedie were invalid because they were never authorized by the city commission.


In his decision, Solka agreed with Rosemurgy’s position.


However, Solka wrote that the city could not deny Doucette and Tweedie’s health care benefits because of “promissory estoppel.” In other words, the city could not deny the benefits after the promise of those benefits allowed the former employees to feel they could retire with security.


“Promissory estoppel cannot bar the city from denying something that would otherwise be illegal but if that which the city is seeking to deny, the city has the authority to do, promissory estoppel can be used against the city to enforce the promise,” Solka wrote.


The city had authority to enact a retiree health insurance plan under the charter and the benefits extended to Doucette and Tweedie, although not enacted by the city commission, nonetheless were within the power of the city to provide, Solka wrote.


In his decision, Solka said additions, changes and deletions to the former employee’s benefits are permitted, but not total denial of them.





Solka wrote that unlike Doucette and Tweedie — who relied on the city manager’s description of their retiree health insurance benefits and the formality with which those promises were made in their decision to retire — Peterson knew better.





“While Peterson reasonably could rely on those representations in his decision to accept employment, after he achieved that employment he learned the retiree health insurance practice had not been approved by the city commission,” Solka wrote





Peterson’s position as city manager, Solka wrote, combined with the knowledge of the history of the practices put Peterson in a different position than Doucette and Tweedie.





“By the time of plaintiff Gerald Peterson’s separation from employment, he knew, or reasonably should have known, that the city could not be expected to extend retiree health insurance benefits under a practice not adopted by (the) city commission, leading to a potential lifetime of retiree health insurance benefits,” Solka wrote.