8.22.14 FGIC Motion To Prevent Certain Information

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0007
UNITED STATES BANKRUPTCY COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

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In re : Chapter 9
:
CITY OF DETROIT, MICHIGAN, : Case No. 13-53846
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Debtor. : Hon. Steven W. Rhodes
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:
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FINANCIAL GUARANTY INSURANCE COMPANYS MOTION
IN LIMINE TO PRECLUDE THE INTRODUCTION OF EVIDENCE
OR TESTIMONY REGARDING CERTAIN MATTERS PREVIOUSLY
DEEMED IRRELEVANT BY THE COURT OR THE CITY OF DETROIT

13-53846-swr Doc 6990 Filed 08/22/14 Entered 08/22/14 17:03:01 Page 1 of 24
1CFN.(6=u
1353846140822000000000029
Docket #6990 Date Filed: 8/22/2014
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Financial Guaranty Insurance Company (FGIC) respectfully submits this Motion in
Limine (the Motion) to preclude at the hearing (the Confirmation Hearing) on the Corrected
Fifth Amended Plan for the Adjustment of Debts of the City of Detroit (J uly 29, 2014) [Dkt. No.
6379] (the Plan) the introduction of evidence or testimony relating to the following matters
previously deemed irrelevant by the Court and/or the City of Detroit (the City): (a) the validity
of the COP Claims
1
; (b) the alleged needs and hardships of the Holders of Pension Claims; and
(c) the terms and conditions of the settlement negotiations leading to the Grand Bargain.
PRELIMINARY STATEMENT
1. Despite the fact that the Court and/or the City have previously deemed
certain issues irrelevant to the confirmation of the Plan, the City now appears to be relying on
those issues in support of confirmation. Specifically, the Court previously ruled that the needs
and hardships of the Citys pensioners are irrelevant with respect to whether the Plan should be
confirmed, a ruling with which the City indicated it agreed. The Court also ruled that the terms
and conditions of the settlement negotiations leading to the Grand Bargain are irrelevant to the
confirmation of the Plan or approval of such settlement, a ruling with which the City also
indicated it agreed. Finally, the City previously represented to both the Court and the creditors
that the validity of the COP Claims is irrelevant to Plan confirmation issues. As a result of these
rulings and representations, FGIC and other creditors have either withdrawn discovery or been
denied discovery with respect to each of these issues.

1
All capitalized terms not otherwise defined herein shall have the meaning ascribed to them in
the Objection of Financial Guaranty Insurance Company to Plan for the Adjustment of Debts of
the City of Detroit, filed May 12, 2014 [Docket No. 4660] and the Supplemental Objection of
Financial Guaranty Insurance Company to Plan for the Adjustment of Debts of the City of
Detroit, filed August 12, 2014 [Docket No. 6674].
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2. In spite of the aforementioned, the City recently made clear that it has
relied on these issues in justification of its position that the Plan does not unfairly discriminate
against Class 9. The Emergency Manager for the City, Kevin Orr (the Emergency Manager),
testified as a designee for the City that the reasons the Plan discriminates against Class 9 include,
among other things: (i) the purported invalidity of the COP Claims; (ii) compassion for
individual pensioners and keeping the covenant the City made to provide them with pension
payments for the rest of their lives; and (iii) the alleged fact that third parties required their
contribution to the Grand Bargain be directed solely to the Retirement Systems. Both the City
and the Retirement Systems have also raised certain of these issues in briefs filed with the Court
in support of confirmation. As has been previously recognized, however, these factors do not
provide a relevant justification for the discrimination against Class 9. Nor are they relevant to
any other confirmation standard. Moreover, because FGIC has not had an opportunity to
develop the facts and prepare its witnesses with respect to these issues, the introduction of
evidence on these issues will result in significant, unfair surprise and prejudice. Accordingly, the
Federal Rules of Evidence compel the exclusion of this evidence for the purposes of
demonstrating that the Plan should be confirmed or that the settlements therein should be
approved.
2

JURISDICTION
3. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.
157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b). Venue is proper
before this Court pursuant to 28 U.S.C. 1408 and 1409

2
As discussed in Section IV, infra, the evidence is relevant and admissible for other narrow
purposes.
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ARGUMENT
I. Legal Standard
4. Motions in limine ensure an evenhanded and expeditious trial by
permitting the court to decide evidentiary issues in advance. Cincinnati Ins. Co. v. Becker
Ulman Const., Inc., 12013185, 2013 WL 5797614, at *1 (E.D. Mich. Oct. 28, 2013); see also
Dow Corning Corp. v. Weather Shield Mfg., Inc., 09-10429, 2011 WL 4506167, at *2 (E.D.
Mich. Sept. 29, 2011). It performs a gatekeeping function and permits the trial judge to
eliminate from further consideration evidentiary submissions that clearly ought not be presented
[] because they clearly would be inadmissable for any purpose. The prudent use of the in limine
motion sharpens the focus of later trial proceedings and permits the parties to focus their
preparation on those matters that will be considered. Jonasson v. Lutheran Child & Family
Servs., 115 F.3d 436, 440 (7th Cir. 1997).
5. In analyzing a motion in limine, the trial court considers issues of
relevance, admissibility, and prejudice. Bars Prods., Inc. v. Bars Prods. Intl, Ltd., 10-14321,
2014 WL 1922764, at *1 (E.D. Mich. May 14, 2014). Evidence is relevant if it has any
tendency to make the existence of any fact that is of consequence to the determination of the
action more or less probable than it would be without the evidence; and the fact is of
consequence in determining the action. Fed. R. Evid. 401.
3
As the Sixth Circuit has noted,
[r]elevancy is the threshold determination in any decision regarding the admissibility of
evidence; if evidence is not relevant, it is not admissible. Koloda v. Gen. Motors Parts Div.,
Gen. Motors Corp., 716 F.2d 373, 375 (6th Cir. 1983) (citing Fed. R. Evid. 402) (Irrelevant
evidence is not admissible). Relevancy depends not only on the character of the evidence

3
Federal Rule of Bankruptcy Procedure 9017 provides that [t]he Federal Rules of Evidence
apply in cases under the Code.
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itself but on the purpose for which it is offered. Thus, evidence which is not admissible for
one purpose may be relevant and admissible for another. U.S. v. Hughes, 308 F. App'x 882,
887 (6th Cir. 2009).
6. Even if the Court finds evidence to be relevant, it should still exclude the
evidence if the probative value is substantially outweighed by a danger of unfair prejudice,
confusing of the issues undue delay, wasting time, or needlessly presenting cumulative
evidence. Fed. R. Evid. 403; see also Paschal v. Flagstar Bank, 295 F.3d 565, 577 (6th Cir.
2002). Courts have broad discretion in determining potential prejudice based upon the full
array of evidence. In re Second Chance Body Armor, Inc., 421 B.R. 823, 840 (Bankr. W.D.
Mich. 2010). In connection with the underlying principle of this rule, the courts disfavor trials
by ambush. Jervis B. Webb Co. v. Kennedy Grp., No. 07-10571, 2008 U.S. Dist. Lexis 67941,
at *4 (E.D. Mich. Sept. 5, 2008). Accordingly, unfair surprise is a factor to be considered under
Rule 403. U.S. v. Price, 13 F.3d 711, 719 (3d Cir. 1994).
II. The Court Should Exclude Evidence Relating to the Validity of the COP Claims
7. On J anuary 31, 2014, the City commenced an adversary proceeding (the
Adversary Proceeding) in the Chapter 9 Case by filing a complaint alleging, among other
things, that certain service contracts related to the COPs are illegal, void and of no effect. See
Complaint for Declaratory and Injunctive Relief, City of Detroit v. Detroit General Retirement
System Service Corporation et al., Adv. Proc. No. 14-04112 (Bankr. E.D. Mich. J an. 31, 2014)
[Dkt. No. 1]. At the May 28, 2014 hearing before this Court, however, the City represented that
evidence regarding the validity or invalidity of the COP Claims would not be introduced at the
Confirmation Hearing because validity issues are irrelevant to whether the Plan should be
confirmed:
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Mr. Bennett: As to the first question, which relates to proof relating to factual
issues on COPs validity, we do not think thats part of the confirmation
hearing. With respect to the COPs proposal to effectively bring to court a
character witness for the COPs, we have said first of all, thats the kind of thing
that real time limits will eliminate because it isnt germane to anything any of
the business that we actually have to conduct at the confirmation hearing.
Hrg Tr. 94:20-23; 231:4-9, May 28, 2014. The City also articulated precisely why the validity
of the COP Claims is irrelevant for purposes of determining whether the Plan should be
confirmed:
Mr. Bennett: We view the confirmation hearing insofar as it relates to the COPs
as dealing with the adequacy of the reserves that are in the plan for the payment of
the COPs in the event that they turn out to be valid, and thats why there are no
fact issues in our statement relating to the COPs. and we have said in an effort
to be constructive, in an effort to narrow issues, that we regard the issue as the
adequacy of the claims reserve, which assumes that at the end of the day the
COPs claims are allowed in full I think that it would be also fair to instruct
the city that for purposes of confirmation the COPs are assumed to be an allowed
claim
Hrg Tr. 94:23-95:3; 231:10-13; 231:25-232:2, May 28, 2014.
8. The Court accepted these representations and, on that basis, indicated that
the only way in which evidence related to the transactions pursuant to which the COPs were
issued (the COPs Transactions) might be allowed in at the Confirmation Hearing is to the
extent the parties choose to open the door to the issue. See Hrg Tr. 175:7-177:23, May 28,
2014. Accordingly, in light of the Citys representations and the Courts admonitions, and in
part to ensure that validity issues do not arise at the Confirmation Hearing, the parties negotiated
a stipulation pursuant to which they agreed not call upon certain witnesses and to withdraw
subpoenas related to the COPs Transactions. See Stipulation By and Between the City of
Detroit, Michigan and the COPs Creditors Regarding Certain Facts and the Admission of Certain
Exhibits for the Confirmation Trial, 5-6 [Dkt. No. 5984] (COPs Stipulation). The Court
approved the COPs Stipulation on J uly 14, 2014. See Order Approving Stipulation By and
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Between the City of Detroit, Michigan and the COPs Creditors Regarding Certain Facts and the
Admission of Certain Exhibits for the Confirmation Trial [Dkt. No. 6002].
9. Despite the Citys representations, and the resulting COPs Stipulation
entered into by the parties, the Emergency Manager testified on J uly 22, 2014, that one of the
bases for the Plans discrimination against Class 9 is the alleged invalidity of the COP Claims.
Specifically, when asked why the City decided to discriminate against Class 9 in favor of the
Retirement Systems, the Emergency Manager responded that one of the reasons is the legal
arguments that have been made in the papers regarding the COPs that we believe they are void
ab initio and that we have no obligation. Orr Dep. 223:16-224:10, J uly 22, 2014 (excerpts of
which are attached hereto as Ex. 6A). Indeed, the Emergency Manager confirmed on numerous
occasions during his deposition that the purported invalidity of the COP Claims was one of the
considerations he took into account in deciding to propose a plan of adjustment that
discriminates against Class 9:
Q. And then the last issue that you identified was the invalidity of the COPs; do
you remember that?
A. Yes.
Q. And that was something that you factored into your decision in terms of
paying the COPs less than classes 10 and 11, correct?
A. Yes.
.
Q. And I just so I understand the way the judge the factor plays through your
judgment, you looked at the potential invalidity of the COPs and viewed that as
one reason to the pay the COPs on their best day 10 cents?
A. Yeah I think thats a fair statement.
Q. Okay, Im talking when you were deciding how to divide the pie, the COPs
best day recovery was impacted by this factor of the potential invalidity of the
COPs?
A. Yes.

Orr Dep. 237:5-11; 239:23-240:14.

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10. In addition to the Emergency Managers testimony, the Retirement
Systems argued in their brief in support of the Plan
4
that the Plans discrimination is justified
because the legality of the claims of the COPs holders is subject to serious challenge, as
described in the Citys pending adversary proceeding. So, to the extent that financial creditors
have argued that all unsecured creditors would have the same remedies and ability to obtain a
judgment for their claims outside of a chapter 9 proceeding, that argument is belied by the Citys
own suit Retirement Systems Brief, 23.
11. Given the aforementioned, it appears likely that the City, the Retirement
Systems, and/or other Plan supporters will seek to introduce evidence at the Confirmation
Hearing relating to the validity of the COP Claims for purposes of justifying the Plans
discrimination against Class 9. However, as the City previously represented, the terms of the
Plan are neutral with respect to the validity of the COP Claims, reserving New B Notes in a
Disputed Claims Reserve on behalf of Holders of Cop Claims until such time as it may be
determined that such Holders have Allowed Claims against the City. As such, any evidence
relating to validity of the COP Claims has no bearing on whether the Plan should be confirmed,
rendering such evidence irrelevant and inadmissible at the Confirmation Hearing. See U.S. v.
Cope, 312 F.3d 757, 775 (6th Cir. 2002) (To be relevant, evidence need have some bearing on
the probability of the existence of any fact that is of consequence to the determination of the
action.) (citation and internal quotations omitted); Search Mkt. Direct, Inc. v. Jubber (In re
Paige), 439 B.R. 786, 796-797 (D. Utah 2010) (affirming bankruptcy courts decision to exclude
evidence that was irrelevant to the issues raised in connection with the confirmation of a plan of

4
See Brief of the Detroit Retirement Systems in Support of Proposed Treatment of Pension
Claims Under Proposed Treatment of Pension Claims Under Alternative A of the Corrected
Fifth Amended Plan for the Adjustment of Debts of the City of Detroit and Statement of
Reservations [Dkt. No. 6509] (Retirement Systems Brief).
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adjustment because the evidence would not have required the court to make a finding one way or
another with respect to those issues).
12. Even if evidence relating to the validity of the COP Claims is minimally
relevant (it is not), FGIC will incur significant prejudice and unfair surprise to the extent such
evidence is introduced for the purposes of demonstrating that the Plan should be confirmed.
FGIC previously agreed to withdraw discovery and potential witness testimony in reliance on the
Citys representations that the validity of the COP Claims was not an issue relevant to Plan
confirmation. See COPs Stipulation, 5-6. As a result, FGIC is not adequately prepared to
present any evidence or testimony on the issue. As the Ninth Circuit made clear in Daly v.
FESCO Agencies NA Inc., matters disclosed for the first time shortly before trial should be
excluded based on unfair surprise and prejudice as there ha[s] been no opportunity for
discovery regarding [] those matters. 108 Fed. Appx 476, 479 (9th Cir. 2004); see also C. Van
Der Lely N.V. v. F Lli Maschi S.n.c, 1983 U.S. Dist. Lexis 16430, at *36 (S.D. Ohio J une 7,
1983) (where no discovery occurred with respect to a particular issue as a result of the
defendants representation that it was dropping any claim or defense based on [that issue,] the
introduction of evidence at trial related to that issue would greatly prejudice the plaintiff
because it would permit the defendant to ambush the plaintiff at trial). Thus, in light of the
significant prejudice that FGIC will otherwise incur, any evidence or testimony related to the
validity of the COP Claims should be excluded for purposes of demonstrating that the Plan
should be confirmed or that the settlements therein should be approved.
III. The Court Should Exclude Evidence Relating to the Needs or Hardships of
Creditors
13. Both the Court and the City have previously made clear that evidence
relating to the needs or hardships of the creditors including Holders of Pension Claims is not
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a relevant factor in determining whether the Citys Plan should be confirmed. The Court
addressed the irrelevance of this issue on several occasions:
Court: Ive never seen a case where in deciding whether to confirm a plan, whether
were talking about best interest test or talking about unfair discrimination or fair and
equitable, where the hardship or the neediness of creditors was considered. Hrg Tr.
102:3-7, J une 26, 2014.

Court: [I]n the case law Im familiar with where the issue is the business justification
for whatever discrimination is in the plan is determined based on the business needs of
the debtor, not the business or financial needs of the creditors. Id. at 104:2-6.

Court: Im going to say here as unequivocally as I can that as a matter of law,
creditors needs is not an issue when it comes to determining unfair discrimination.
Id. at 104:14-17.

Court: [T]he retirees hardships [i]s not at all relevant to issue of either unfair
discrimination or fair and equitable. [A]s the Court stated earlier, it is unaware of
any case law interpreting section 1129 that holds that it is appropriate to consider the
relative hardships of creditors in evaluating the issues under that section of the
Bankruptcy Code. Id. at 128:16-22.

Court: I do not want and dont think it relevant to consider a series of retirees or
employees, for that matter, testifying about their individual hardship. In my view,
neither fair and equitable nor unfair discrimination has ever in any bankruptcy
case considered the impact of a plan on a creditor; that is to say, the adverse impact of
a plan on a creditor. The issue always is the business justification for the treatment from
the debtors perspective. Hrg Tr. 81:9-17, August 6, 2014.

14. In accordance with the Courts ruling at the J une 26, 2014 hearing, council
for the City stated that he can affirm that the city is not going to be standing on the personal
hardship argument. Hrg Tr. 104:10-11, J une 26, 2014. Accordingly, in reliance on the
Courts holding and the Citys representations, counsel for another creditor in Class 9 agreed to
withdraw discovery requests related to this issue. Id. at 104:25-105:4. In fact, the Court
recognized that the discovery requests were withdrawn precisely because of the Courts holding
on the matter. Id. at 128:13-18 (Court: The Court did state on the record earlier that it would
find that Syncora had withdrawn this request [related to the retirees personal information] based
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on the Courts ruling that the retirees hardships was not at all relevant to the issue of either
unfair discrimination or fair and equitable.). However, despite the Courts unequivocal ruling,
the Citys representations, and the resulting withdrawal of discovery requests, the Emergency
Manager testified that the needs and hardships of the Citys pensioners was a primary factor for
the City in discriminating against Class 9:
Q. And what was your basis for the level of discrimination you proposed in the
February 21st plan?
A. We were looking, we had been admonished I believe by the court on several
occasions to be compassionate in our treatment of individuals and retirees.

Q. I want to focus on the process of deciding which creditors get which part of
the pie, and I want to understand what information you relied upon in deciding to
give pensioners a larger slice of the pie than you gave financial creditors
A in deciding what we could pay pensioners, there were, I would say several
different factors which really spurred that decision. Two was the obligation to
try to take into account the situation of these pensioners.
Orr Dep. 203:23-204:6; 209:20-210:16, J uly 22, 2014.
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15. The Emergency Manager went on to explain that in determining the
hardship to the Citys pensioners, he considered individual meetings with individual employees
and pensioners who recount their stories in detail and he met with people on the street as well
as hear[d] their accounts and press reports. Id. at 230:13-231:6.
16. The Emergency Manager also testified that he took into account what he
termed covenants to the Citys pensioners, which he described as the commitment and
reliance on that commitment behind the contractual obligation that various City employees and
retirees will come and express to me in very real terms what this means to them. Id. at 236:8-

5
This testimony is consistent with the arguments the City raised in its Reply to Certain
Objections to Confirmation of Fourth Amended Plan for the Adjustment of Debts of the City of
Detroit [Dkt. No. 5034] (Citys Reply to Confirmation Objections), wherein it asserted the
personal hardship that pensioners will endure as one of the justifications for the Plans
discrimination against Class 9. See Citys Reply to Confirmation Objections, 45.
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12. He agreed, however, that these covenants were simply another element of the situation and
needs of the pensioners. Id. at 236:23-237:4 (Q. And isnt it fair to say that this is another
element of the human dimension, which is the unfairness of cutting the pensions of people who
relied on the Citys covenant in making decisions about how to allocate their work time? A. You
could say that.).
17. Following the Emergency Managers testimony, council for the
Retirement Systems stated that, with respect to evidence of individual hardship [the] parties
sort of agreed that that wouldnt be relevant. Hrg Tr. 11:4-6, August 6, 2014. However, in an
abrupt change of position from the representations made at the J une 26, 2014 hearing, council for
the Retirement Systems argued that if there was, you know, broad impoverishment of retirees,
for example, thats something that could be considered with respect to justifying the Plans
discrimination against Class 9. Id. at 82:11-15. The Retirement Systems Brief raised these
same arguments, alleging that the Plan does not unfairly discriminate because the Citys
pensioners purportedly depend on their accrued pension benefits often exclusively for their
livelihoods and because of the alleged need to avoid[] wide-scale impoverishment of the Citys
retirees. Retirement Systems Brief, 16-17.
18. In addition, it appears as if the Retiree Committee also intends to raise
these same arguments. The Retiree Committee has disclosed their intention to rely on the expert
testimony of Stuart Wohl. See Retiree Committees Memorandum of Law in Support of
Confirmation of the Plan, [Docket No. 6508], at 27 (The Committee is prepared to support the
settlement through the testimony of fact witnesses, and expert witnesses Howard Atkinson and
Stuart Wohl of the Segal Company.). Mr. Wohls expert report is focused almost exclusively
on the risks and hardships the Plan will impose on retirees with respect to their healthcare
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benefits, as well as the fact that any further reductions would have been devastating to the
Retirees. Stuart Wohls Expert Witness Report, dated J uly 22, 2014 (excerpts of which are
attached hereto as Ex. 6B), at 5. Mr. Wohl also testified at length to this issue in his deposition,
confirming that in his opinion significant cuts in benefits are hardships for retirees. Wohl
Dep. 24:11-16, August 13, 2014 (excerpts of which are attached hereto as Ex. 6C).
19. Given the aforementioned, it appears likely that the City, the Retirement
Systems, the Retiree Committee and/or other Plan supporters will seek to introduce evidence
relating to the needs and hardships of the Citys pensioners for purposes of justifying the Plans
discrimination against Class 9. The Courts prior ruling, however, dictates that this evidence is
irrelevant and should be excluded from consideration at the Confirmation Hearing. See
Provident Life & Acc. Ins. Co. v. Adie Co., 176 F.R.D. 246, 250 (E.D. Mich. 1997 (motions in
limine can involve matters which ought to be excluded from consideration as a result of
previous rulings by the court.). Moreover, the case law confirms that this evidence is irrelevant.
See In re Arn, Ltd. Ltd. Pship, 140 B.R. 5, 12 (Bankr. D.D.C. 1992) (While the Debtors prefer
to pay local businesses in full at the expense of banks and other lenders, this treatment is not
sanctioned by the Bankruptcy Code. The focus on a particular claim should not be the
claimholder, but rather the legal nature of the claim An unsecured claim is simply that, an
unsecured claim.) (citation omitted); cf. In re Graphic Commcn, Inc., 200 B.R. 143, 149
(Bankr. E.D. Mich. 1996) (Rhodes, J .) ([a]ntipathy toward a creditor is not proper basis for
discrimination).
20. In addition, given that discovery requests related to the pensioners needs
were withdrawn in reliance on the Courts ruling and the Citys representations, FGIC has not
had an opportunity to take discovery or prepare its witnesses on the issue. As such, the
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introduction of evidence relating to this issue would cause unfair surprise and prejudice to FGIC,
further supporting the exclusion of the evidence for purposes of demonstrating that the Plan
should be confirmed or that the settlements therein should be approved. See, e.g., Daly, 108 Fed.
Appx at 479; C. Van Der Lely N.V. v. F Lli Maschi S.n.c, Schlossberg, 1983 U.S. Dist. Lexis
16430, at *36.
21. Importantly, counsel for the Retirement Systems represented at the August
6, 2014 hearing that, in their view, evidence regarding hardships to the Citys pensioners is
relevant to demonstrating the hardship on a more macroscopic level tothe community as a
whole. Hrg Tr. 11:6-11, August 6, 2014.
6
However, this position directly contradicts the
Emergency Managers testimony with respect to how the City gathered and considered
information bearing on hardships to the Citys pensioners. See supra 15. It is also an issue for
which FGIC has not had an opportunity to fully develop the facts or prepare its witnesses. As
such, even in this context, the evidence is both irrelevant and prejudicial, and should be
excluded.
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IV. The Court Should Exclude Evidence Relating to the Terms and Conditions of the
Settlement Negotiations That Led to the Grand Bargain
22. The Court has made clear to the parties that who said what to whom
during the mediation that led to the successful settlement is irrelevant. Hrg Tr. 49:11-14, J une

6
See also id. at 81:25-82:6 (I just want to make sure that it was clear or understood by all
parties that if there is information or an argument to be made as to the impact more broadly on
retirees, not just as creditors but more specifically as a part of the entity that we are trying to
rehabilitate, that that is relevant and fair game in the context of a Chapter 9.).
7
If Plan supporters are ultimately allowed to raise the issue in this context at the Confirmation
Hearing, it is critical that they be prohibited from doing so via anecdotal, episodic testimony
from individual pensioners. Rather, any such evidence must be introduced solely through
empirical data of sufficient magnitude in order to reduce the prejudicial impact of this evidence
(even so, however, the evidence will remain prejudicial).
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26, 2014. The Court has also articulated that the issue of unfair discrimination is based upon
not where money comes from but where money goes to. Id. at 40:4-5. Pursuant to these
directions, the Court denied various discovery requests by creditors in Class 9 directed to the
Foundations, including document requests and depositions relating to the terms of the DIA
Settlement, the reasons for entering into the DIA Settlement, and the negotiations with the
Foundations relating to the DIA Settlement (which is part of the Grand Bargain)
8
:
Court: The Court concludes that none of the 30(b)(6) subjects and none of the
documents that are sought from the foundations are relevant to or even arguably
relevant to the issues of whether the plan is discriminatory or whether it is
unfairly discriminatory, the best interest of creditors or even the extent to which
the so-called grand bargain settlement protects the art of the city.
Id. at 126:23-127:5. The Courts ruling is consistent with the arguments raised by the City in
support of the Foundations motion to quash the discovery, wherein the City argued that the
discovery sought is far afield from what could reasonably be considered relevant in the
upcoming confirmation hearing. See Statement in Support of Foundations Mot. to Quash [Dkt
No. 5494], at 4.
23. In addition to the Courts aforementioned ruling, the Mediation Order
entered on August 13, 2013 [Dkt. No. 322] has prevented FGIC from obtaining discovery related
to the negotiations that took place during the mediation, including details surrounding the
conditions allegedly imposed by the parties with respect to the recipients of the settlement
proceeds. See FGICs Motion in Limine to Preclude the Introduction of Evidence or Testimony
Regarding Matters Withheld from Discovery Based on the Mediation Order at 4-6 [filed

8
See, e.g., J ohn S. and J ames L. Knight Foundation Subpoena, Schedule A at 3 [Dkt No. 5224,
at p. 521]. As noted at the hearing held with respect to these discovery requests, the types of
evidence sought included whether the foundations were the ones that imposed on the city the
requirement that all monies go to the retiree classes or whether the city was the one that proposed
that to the foundations. Hrg Tr. 22:22-25, J une 26, 2014.
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concurrently herewith] (citing the deposition testimony of various witnesses who refused to
provide this information pursuant to the Mediation Order).
24. Nevertheless, the Emergency Manager testified that in discriminating
against Class 9, the City took into account the purported fact that the parties who contributed
funds to the Grand Bargain insisted that, as a condition to their contribution, the proceeds of this
transaction be directed solely to the Retirement Systems:
Q. I want to focus on the process of deciding which creditors get which part of
the pie, and I want to understand what information you relied upon in deciding to
give pensioners a larger slice of the pie than you gave financial creditors?
A. in deciding what we could pay pensioners, there were, I would say, several
different factors which really spurred that decision. Three was that at some
point, it became apparent that there was going to be additional money coming in
in the form of the Grand Bargain from third-party guarantors who were as a
condition of those grants that they be dedicated solely to pension.

Q. I am talking about, you know, your state of mind though. Im saying you
didnt go and pick winners and losers based on what peoples expectations were
when they invested?
A. We tried to do an analysis of what we could afford to pay based upon the
factors we discussed before with an understanding that $866 million was coming
in as a gift from grantors with specific condition that that money would flow to
pensioners as opposed to any creditor and that we would accept that gift with that
condition when those discussions were made.
Orr Dep. 209:20-210:20, 274:23-275:13, J uly 22, 2014.
25. Critically, the City has also relied on similar contentions in their Motion to
Strike Syncoras Second Supplemental Objection to the Plan [Dkt. No. 6845] (Mot. to Strike
Syncoras Second Supp. Obj.). Specifically, the City repeatedly alleged throughout the motion
that [t]he Grand Bargain makes use of outside funds and charitable contributions that were
available solely for the purposes of providing relief to pensioners or preserving the DIA in a
public trust, or both. Because these outside donations never would have been available for
any other purpose the Grand Bargain does not inflict any cognizable harm on Syncora or
anyone else. Mot. to Strike Syncoras Second Supp. Obj. 10-11; see also id. at 13 (Rosen was
17

US_ACTIVE:\44537574\10\45259.0007
simply acknowledging that there were outside donors who were willing to make charitable
contributions to the City, but only if the donations were specifically earmarked to provide relief
to the Citys pensioners.); id. at 23 (the outside donations received by the City were
specifically earmarked for pension relief, and they never would have been forthcoming but for
the satisfaction of that condition.); id. (even if the City wanted to, it has no ability to redirect
these donor-specified gifts).
26. Given the aforementioned, it appears likely that the City and/or other Plan
supporters will seek to introduce evidence relating to the conditions allegedly imposed by the
parties during the settlement negotiations in support of confirmation. The Courts prior ruling,
however, dictates that this evidence is irrelevant and should be excluded from consideration at
the Confirmation Hearing. See Provident Life & Acc. Ins., 176 F.R.D. at 250.
27. More importantly, the City should not be allowed to rest on the allegation
that parties would not have contributed funds to the Grand Bargain had those funds not been
directed solely to the Retirement Systems, when FGIC has not had any opportunity to take
discovery on that issue or test its truthfulness. Indeed, because FGIC has been unable to obtain
discovery related to this issue, it is impossible for it to further probe this issue to test its veracity
and determine who decided, at what point it was decided, and why it was decided that the
settlement proceeds would be directed exclusively to the Retirement Systems.
28. Notably, the City cites solely to the testimony of Rip Rapson in support of
their contention that the parties who contributed funds to the Grand Bargain would never have
provided those funds had they not been directed to the pensioners. See Mot. to Strike Syncoras
Second Supp. Obj. 11 n.4, 23 n.16. But FGIC has not had an opportunity to depose witnesses
from eleven of the twelve Foundations that contributed funds to the Grand Bargain based on the
18

US_ACTIVE:\44537574\10\45259.0007
Courts ruling at the J une 26, 2014 hearing.
9
As such, it is patently unfair for the City to make
this contention without FGIC having had an opportunity to develop the facts through discovery.
29. Moreover, even as to Mr. Rapson himself, when further probed at his
deposition with respect to the issue, Mr. Rapson was directed not to provide any additional
details surrounding the conditions on which the Kresge Foundation purportedly insisted, based
on the Mediation Order:
Q: When J udge during your first conversation with J udge Rosen, where he
proposed that the Kresge Foundation become involved in the process for the
Grand Bargain, was it J udge Rosen who brought up that the involvement of the
foundation should occur because it could soften the blow to the pensioners and
help preserve the collection at the DIA?
Mr. Shumaker: Objection. This calls for communications between J udge Rosen
and Mr. Rapson. I believe this falls within the construct of the mediation order,
and I would ask that the witness be instructed not to answer . . .
Mr. Kurzweil: Under those circumstances, Im going to instruct the witness not
to answer.
.
Q: To the extent I ask you about the back and forth with Mr. Rosen or any other
parties who were involved with mediation that took place after your initial
meeting with J udge Rosen regarding the Grand Bargain will you be able to
answer those questions here today?
Mr. Shumaker: I would be interposing an objection to all such questions, because
I believe that back and forth would be covered by the mediation order entered by
J udge Rosen.
Mr. Kurzweil: Its my intention upon request of counsel to instruct the witness
not to answer.
Q. Is it fair to say that you will follow those instructions, Mr. Rapson?
A. To a tee.
See Rapson Dep. 81:23-87:6, 86:14-87:6, J uly 31, 2014 (excerpts of which are attached hereto as
Ex. 6D).

9
See Order Regarding Foundations J oint Motion to Quash (Dkt. #5300), entered on J une 27,
2014 [Docket No. 5623] (granting motion to quash subpoenas seeking information from the
twelve Foundations that contributed funds to the Grand Bargain). FGIC was ultimately allowed
to depose Rip Raspon from the Kresge Foundation only because the City included him on their
witness list.
19

US_ACTIVE:\44537574\10\45259.0007
30. Mr. Rapson would not provide any additional testimony on this issue
despite the fact that he admittedly made public statements regarding the settlement negotiations
and how it came about that the Foundations would provide funds for the benefit of the
pensioners. See id. 83:23-85:3 (agreeing that he made statement regarding the settlement
negotiations and the purpose of the settlement funding at a public address at Wayne State). In
fact, during that address at Wayne State which has been made publicly available through a
YouTube video Mr. Rapson emphasized that the adjustment of long-term debt with all of the
complexities of pensioners and bondhonders and health benefits and everything else is
terribly important to the bankruptcy. See Detroit Bankruptcy & Beyond Rip Rapson,
YouTube, https://www.youtube.com/watch?v=z7nXphsL_QA (last visited Aug. 19, 2014). In
addition, Mr. Rapson sent numerous emails to the press describing various issues being
addressed during the settlement negotiations, including for instance: (a) whether to form a new
entity to receive DIA assets; (b) the Foundations commitment to provide support for the City;
(c) a proposed governance structure involving the Foundations and the DIA; (d) the need for a
union contribution to the settlement; and, notably (e) the motivations driving each of the
parties. See K001265-1266; 1272-1273 (attached hereto as Ex. 6E). Nevertheless, when
pressed at his deposition for further details regarding the settlement negotiations such that FGIC
could test the veracity of his assertions, Mr. Rapson was directed not to provide any testimony on
the issue.
31. Moreover, as previously noted, numerous other witnesses also refused to
provide details surrounding the conditions allegedly insisted on by the parties who contributed
funds to the Grand Bargain. See, e.g., Muchmore Dep. 56:13-57:6, August 4, 2014 (excerpts of
which are attached hereto as Ex. 6F) (Q: Does the State have a view, to your knowledge, based
20

US_ACTIVE:\44537574\10\45259.0007
on why it is that funding will be going to pensioners versus other creditors? Ms. Nelson: Im
going to object, because that invades the confidentiality of the mediation process, and I will
instruct him not to answer that question.); Orr Dep. 336:10-17 (Q. I take it if I ask you
questions about your communications with the charitable foundations in connection with their
agreement to contribute this money, you will refuse to answer on the grounds of the mediation
orders confidentiality provisions; is that correct? A. Yes, generally for most of them, I think
thats correct).
10
As a result, FGIC has been denied any and all opportunity to verify or test the
allegations made by the City with respect to this issue, including whether the parties who
contributed funds to the Grand Bargain in fact indicated that they would have refused to provide
such funding had it not been directed solely to the Retirement Systems.
32. As the court in International Tel. & Tel. Corp. v. United Tel. Co. of
Florida articulated, the failure of a party to allow pre-trial discovery of confidential matter
which that party intends to introduce at trial will preclude the introduction of that evidence. 60
F.R.D. 177, 186 (M.D. Fla. 1973); see also Baxter Travenol Labs., Inc. v. Abbott Labs., No. 84 C
5103, 1987 WL 10988 (N.D. Ill. May 12, 1987) (Abbotts failure to allow pretrial discovery of
the privileged material [] will preclude it from using that material at trial.). The court in
International Tel. & Tel. Corp. aptly noted that fundamental fairness and justice requires that if
[a party] intends to waive the privilege at trial by the introduction of evidence within that
privilege, then the [party] will be required to allow discovery with regard to matters material to
that testimony. 60 F.R.D. at 186. Because FGIC has been denied discovery time and time
again with respect to the settlement negotiations, including the conditions on which the parties

10
See also FGICs Motion in Limine to Preclude the Introduction of Evidence or Testimony
Regarding Matters Withheld from Discovery Based on the Mediation Order at 4-5 (filed
concurrently herewith).
21

US_ACTIVE:\44537574\10\45259.0007
insisted during those negotiations, fundamental fairness and justice requires that such evidence
be excluded to the extent it is introduced for purposes of demonstrating that the Plan should be
confirmed or that the settlements therein should be approved. Id.
V. The Evidence is Relevant and Admissible for Other Limited Purposes
33. It is well settled that evidence which is not admissible for one purpose
may be relevant and admissible for another. Hughes, 308 F. Appx at 887 (holding that the
district court did not err in excluding evidence for purposes of negating claims that the defendant
acted wilfully, while admitting the same evidence for purposes of impeachment). As the Sixth
Circuit recognized in Shanklin v. Norfolk, it is preferable to admit a relevant [piece of evidence]
for a limited purpose with appropriate instructions, rather than exclude admissible evidence
altogether. 369 F.3d 978, 989 n. 7 (6th Cir. 2004) (holding that certain materials could not have
been admitted for the purpose of establishing the defendants duty, but were useful and
admissible for the limited purpose of establishing notice.).
34. As discussed, evidence bearing on the validity of the COP Claims, the
potential hardships of the creditors, and the terms of the settlement negotiations is irrelevant with
respect to demonstrating that the Plan should be confirmed or that the settlements therein should
be approved, and it should be excluded for those purposes. However, the fact that the City relied
on these factors in deciding to discriminate against Class 9 is highly relevant for the purpose of
demonstrating that the Plans discrimination is unfair under 11 U.S.C. 1129(b). See In re
Graphic Commcn, Inc., 200 B.R. at 149 (where debtor relied on an improper basis for
discrimination antipathy towards the creditor there was no justification for the disparate
treatment between two classes and confirmation of debtors plan was therefore denied).
Importantly, unlike the purpose for which the City and/or other Plan supporters would seek to
introduce the evidence, simply demonstrating that the City relied on these factors does not
22

US_ACTIVE:\44537574\10\45259.0007
(pursuant to the Citys own admissions) require any additional discovery or witness preparation.
As such, the evidence should be admitted for this limited purpose.
STATEMENT OF CONCURRENCE SOUGHT
35. Pursuant to Local Rule 9014-1(g), on August 18, 2014, counsel for FGIC
sought the concurrence of counsel for the City in the relief sought in the Motion. Counsel for the
City has advised that they oppose the filing of the Motion.

23

US_ACTIVE:\44537574\10\45259.0007
WHEREFORE, FGIC respectfully requests that the Court enter an Order granting FGICs
Motion in its entirety and excluding any evidence or testimony related to the following matters
previously deemed irrelevant by the Court and/or the City: (a) the validity of the COP Claims;
(b) the alleged needs and hardships of the Holders of Pension Claims; and (c) the terms and
conditions of the settlement negotiations leading to the Grand Bargain, to the extent such
evidence is introduced for the purpose of demonstrating that the Plan meets the requirements for
confirmation under Section 1129 of the Bankruptcy Code.
DATED: August 22, 2014

/s/ Alfredo R. Prez
Alfredo R. Prez
WEIL, GOTSHAL & MANGES LLP
700 Louisiana Street, Suite 1600
Houston, TX 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511
Email: alfredo.perez@weil.com
and
Edward Soto
1395 Brickell Avenue, Suite 1200
Miami, FL 33131
Telephone: (305) 577-3177
Email: edward.soto@weil.com
-and-
Ernest J . Essad J r.
Mark R. J ames
WILLIAMS, WILLIAMS, RATTNER &
PLUNKETT, P.C.
280 North Old Woodward Avenue, Suite 300
Birmingham, MI 48009
Telephone: (248) 642-0333
Facsimile: (248) 642-0856
Email: EJ Essad@wwrplaw.com
Email: mrjames@wwrplaw.com

Attorneys for Financial Guaranty Insurance
Company.

US_ACTIVE:\44537574\10\45259.0007
ATTACHMENTS
Exhibit 1 Proposed Form of Order
Exhibit 2 Notice
Exhibit 3 None [Brief Not Required]
Exhibit 4 Certificate of Service
Exhibit 5 None [No Affidavit]
Exhibit 6A J uly 21-22, 2014, Deposition Transcript of Kevyn Orr (excerpted)
Exhibit 6B J uly 22, 2014 Expert Witness Report of Stuart Ira Wohl (excerpted)
Exhibit 6C August 13, 2014 Deposition Transcript of Stuart Ira Wohl (excerpted)
Exhibit 6D J uly 31, 2014 Deposition Transcript of Rip Rapson (excerpted)
Exhibit 6E Emails (K001265-1266; 1272-1273)
Exhibit 6F August 4, 2014 Deposition Transcripts of D. Muchmore (excerpted)


US_ACTIVE:\44537574\10\45259.0007
Exhibit 1
Proposed Order
13-53846-swr Doc 6990-1 Filed 08/22/14 Entered 08/22/14 17:03:01 Page 1 of 3

US_ACTIVE:\44537574\10\45259.0007
SOUTHERN DIVISION

--------------------------------------------------------------x
:
In re : Chapter 9
:
:
:
:
--------------------------------------------------------------x
ORDER PRECLUDING THE INTRODUCTION OF EVIDENCE
OR TESTIMONY REGARDING CERTAIN MATTERS PREVIOUSLY
DEEMED IRRELEVANT BY THE COURT OR THE CITY OF DETROIT

This matter having come before the Court on Financial Guaranty Insurance Companys
Motion In Limine for Entry of an Order Precluding the Introduction of Evidence or Testimony
Regarding Certain Matters Previously Deemed Irrelevant by the Court or the City of Detroit
Excluding (the Motion),
11
filed by Financial Guaranty Insurance Company (FGIC); and due
and proper notice of the hearing to consider the relief requested therein (the Hearing) having
been given to all parties registered to receive electronic notices in this matter; and the Court
having held the Hearing with the appearances of interested parties noted in the record of the
Hearing; and upon the entire record of all the proceedings before the Court; and the legal and
factual bases set forth in the Motion establishing just and sufficient cause to grant the relief
requested therein;

11
All capitalized terms used but not defined herein shall have the meanings attributed to them in
the Motion.

2
US_ACTIVE:\44537574\10\45259.0007
NOW, THEREFORE, IT IS HEREBY ORDERED THAT:
1. The Motion is granted.
2. All parties are precluded from introducing evidence or testimony at the
Confirmation Hearing related to the following matters previously deemed irrelevant by the Court
and/or the City: (a) the purported invalidity of the COPs; (b) the needs and hardships of the
pensioners; and (c) the terms and conditions of the settlement negotiations leading to the Grand
Bargain, to the extent such evidence is introduced for the purpose of demonstrating that the Plan
meets the requirements for confirmation under Section 1129 of the Bankruptcy Code.
It is so ordered.


US_ACTIVE:\44537574\10\45259.0007
Exhibit 2
Notice
1

US_ACTIVE:\44549466\2\45259.0007
SOUTHERN DIVISION

----------------------------------------------------------------x
In re :
: Chapter 9
:
:
:
:
----------------------------------------------------------------x

NOTICE OF FINANCIAL GUARANTY INSURANCE
COMPANYS MOTION IN LIMINE TO PRECLUDE
THE INTRODUCTION OF EVIDENCE OR TESTIMONY
REGARDING CERTAIN MATTERS PREVIOUSLY DEEMED
IRRELEVANT BY THE COURT OR THE CITY OF DETROIT

Financial Guaranty Insurance Company has filed papers with the Court seeking entry of
an order pursuant to Federal Rules of Evidence 402 and 403 to preclude the introduction of
evidence or testimony regarding certain matters previously deemed irrelevant by the Court or the
City of Detroit (the Motion).
Your rights may be affected. You should read these papers carefully and discuss
them with your attorney, if you have one in this bankruptcy case. (If you do not have an
attorney, you may wish to consult one.)

If you do not want the court to grant the relief sought in the motion, or if you want the
court to consider your views on the motion, on or before August 27, 2014, you or your attorney
must:

1. File with the court a written response or an answer, explaining your position at:
1

United States Bankruptcy Court
211 W. Fort Street, Suite 2100
Detroit, Michigan 48266

If you mail your response to the court for filing, you must mail it
early enough so the court will receive it on or before the date

1
Response or answer must comply with F. R. Civ. P. 8(b), (c) and (e).
2

US_ACTIVE:\44549466\2\45259.0007
stated above. All attorneys are required to file pleadings
electronically.

You must also mail a copy to:

Alfredo R. Prez
Houston, TX 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511

Edward Soto
Miami, FL 33131
Telephone: (305) 577-3177

Mark R. J ames
WILLIAMS, WILLIAMS, RATTNER & PLUNKETT, P.C.
Telephone: (248) 642-0333
Facsimile: (248) 642-0856

2. If a response or answer is timely filed and served, the clerk will schedule a
hearing on the motion and you will be served with a notice of the date, time and
location of the hearing.

If you or your attorney do not take these steps, the court may decide that you do not
oppose the relief sought in the motion and may enter an order granting that relief.
3

US_ACTIVE:\44549466\2\45259.0007
DATED: August 22, 2014 Respectfully submitted,

/s/ Alfredo R. Prez
Alfredo R. Prez
Houston, TX 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511

and

Edward Soto
Miami, FL 33131
Telephone: (305) 577-3177
Email: edward.soto@weil.com

-and-

Mark R. J ames
WILLIAMS, WILLIAMS, RATTNER &
PLUNKETT, P.C.
Telephone: (248) 642-0333
Facsimile: (248) 642-0856
Email: EJ Essad@wwrplaw.com
Email: mrjames@wwrplaw.com

Attorneys for Financial Guaranty Insurance
Company

US_ACTIVE:\44537574\10\45259.0007
Exhibit 3
None [Brief Not Required]


US_ACTIVE:\44537574\10\45259.0007
Exhibit 4
Certificate of Service

US_ACTIVE:\44537574\10\45259.0007

CERTIFICATE OF SERVICE

I hereby certify that on August 22, 2014 the Financial Guaranty Insurance Companys
Motion In Limine To Preclude The Introduction Of Evidence Or Testimony Regarding Certain
Matters Previously Deemed Irrelevant By The Court Or The City Of Detroit was filed and served
via the Courts electronic case filing and noticing system to all registered users that have
appeared in the main Chapter 9 proceeding.

/s/ Alfredo R. Prez
Alfredo R. Prez
Houston, TX 77002
Telephone: (713) 546-5000
Facsimile: (713) 224-9511

Dated: August 22, 2014


US_ACTIVE:\44537574\10\45259.0007
Exhibit 5
None [No Affidavit]
Exhibit 6A
July 22, 2014, Deposition Transcript of Kevyn Orr (excerpted)
950 Thi r d Avenue, New Yor k, NY 10022
El i sa Dr ei er Repor t i ng Cor p. ( 212) 557- 5558
Page 162
1 KEVYN ORR, VOLUME 2
2 I N THE UNI TED STATES BANKRUPTCY COURT
3 FOR THE EASTERN DI STRI CT OF MI CHI GAN
4
5
6
7 I n Re: ) Chapt er 9
8
9 CI TY of DETROI T, MI CHI GAN, ) Case No. 13- 53846
10
11 Debt or . ) Hon. St even Rhodes
12 ____________________________
13
14 VOLUME 2
15
16 The Vi deot aped Deposi t i on of KEVYN ORR,
17 i n hi s per sonal capaci t y and as Rul e 30( b) ( 6) wi t ness,
18 Taken at 2 Woodwar d Avenue,
19 Det r oi t , Mi chi gan,
20 Commenci ng at 9: 10 a. m. ,
21 Tuesday, J ul y 22, 2014,
22 Bef or e Lei sa M. Past or , CSR- 3500, RPR, CRR.
23
24
25
Page 201
2 want ed t o be sur e t hat we addr essed t he human
3 di mensi on.
4 Q. And you di dn' t have - - i s i t - - ar e you r ef er r i ng t o
5 t he f act t hat as of t he f i r st pl an, you di dn' t even
6 have an i mpai r ed assent i ng cl ass?
7 A. I t hi nk i t ' s f ai r t o say t hat we di d not have - - wel l ,
8 when was t he dat e?
9 Q. Feb 21, 2014.
10 A. I don' t know i f t hat ' s t r ue because I don' t r ecal l t he
11 dat es t hat we may have r eached agr eement s wi t h t he
12 f i nanci al cr edi t or s.
13 Q. And when you' r e t al ki ng about t he human di mensi on,
14 what ar e you t al ki ng about t her e?
15 A. Ver y si mpl y, and I t hi nk I ' ve sai d t hi s bef or e, t he - -
16 t he pensi oner s ar e peopl e many of whomar e i n t hei r
17 si xt i es, sevent i es, and ei ght i es and don' t have an
18 opt i on. They have wor ked f or t he Ci t y, most of t hem
19 have done not hi ng wr ong. They ar e - - t he covenant
20 t hat t he Ci t y had wi t h i t s empl oyees and r et i r ees was
21 t hat i f t hey per f or mwor k f or t he Ci t y t hat upon t hei r
22 r et i r ement t hey' d be t aken car e of f or t he r est of
23 t hei r nat ur al l i f e, t hat some of t hi s came as qui t e a
24 shock t o t hembecause t hey had pl anned t hei r af f ai r s
25 accor di ngl y. Many of t hem, l i ke my own f ami l y member s
Page 202
2 or gr andmot her , woul dn' t have opt i ons of goi ng back
3 i nt o t he j ob mar ket t o suppl ement i ncome or make up
4 f or some of t he cut s and t hat t her e wer e - - t her e was
5 a r eal - wor l d di mensi on i mpact t o t he peopl e t hat wer e
6 goi ng t o be af f ect ed by t hese cut s.
7 Q. Put t i ng asi de t he human di mensi on, i f you' d had an
8 i mpai r ed assent i ng cl ass do you bel i eve t hat you coul d
9 have cr ammed down t he f i r st pl an on t he pensi oner s?
10 MR. SHUMAKER: Obj ect t o t he f or m.
11 A. Yeah, I don' t know, I ' d have t o consul t wi t h my
12 at t or neys.
13 BY MR. HACKNEY:
14 Q. Okay, and I mean back at t he t i me. Di d you bel i eve
15 you coul d or coul d not ?
16 A. To be honest wi t h you Mr . Har t l ey ( si c) , I don' t - - I
17 don' t - - I don' t r eal l y r ecal l . I don' t r eal l y r ecal l
18 t hat bei ng t he cr ux of t he di scussi on, but i t mi ght
19 have been t r ue.
20 Q. Okay. You may have t hought you coul d cr amt hemdown,
21 you may have t hought you coul dn' t , you j ust don' t
22 know?
23 A. I j ust don' t r emember .
24 Q. Okay. You pr evi ousl y cal l ed me Har t l ey - -
25 A. Di d I cal l you Har t l ey?
Page 203
2 Q. Ther e i s somet hi ng i n your br ai n - -
3 A. No, I - -
4 Q. - - t hat says Har t l ey when you see me.
5 A. Thi s i s goi ng t o be sur pr i si ng, I have a f r i end named
6 Har t l ey, and he r emi nds me of you.
7 Q. And he' s l i ke a handsome, suave guy?
8 A. Let ' s not get car r i ed away.
9 Q. Now, you di d under st and t hat t he Febr uar y 21st pl an of
10 adj ust ment st i l l di scr i mi nat ed i n f avor of r et i r ees as
11 compar ed t o COPs hol der s i n t er ms of t hei r r espect i ve
12 r ecover i es, cor r ect ?
13 A. Yes, I under st and t hat t her e wer e - - t her e wer e a l ot
14 of r epor t s and t he f i nanci al communi t y was t aki ng t he
15 posi t i on t hat t her e was di scr i mi nat i on i n t he pl an.
16 Q. But t her e was obj ect i vel y di scr i mi nat i on i n t hat f i r st
17 pl an, cor r ect ?
18 A. Ther e was a hi gher per cent age r ecover y r el at i ve t o
19 some of t he f i nanci al cr edi t or s.
20 Q. And you wer e awar e of t hat di scr i mi nat i on at t he t i me
21 you pr oposed t hat pl an, cor r ect ?
22 A. Yes.
23 Q. And what was your basi s f or t he l evel of
24 di scr i mi nat i on you pr oposed i n t he Febr uar y 21st pl an?
25 A. Wel l , I bel i eve at t hat poi nt , we wer e l ooki ng at some
Page 204
2 cont r i but i on f r omt hi r d par t i es, meani ng t he
3 f oundat i ons, t he benef act or s and ot her s. We wer e
4 l ooki ng, we had been admoni shed I bel i eve by t he cour t
5 on sever al occasi ons t o be compassi onat e i n our
6 t r eat ment of i ndi vi dual s and r et i r ees. And unl i ke
7 f i nanci al cr edi t or s, t he GRS and PFRS unl i ke some
8 f i nanci al cr edi t or s act ual l y had asset s i n t hei r
9 pensi on f und, so t her e was an exi st i ng basi s by whi ch
10 t hose asset s woul d al l ow f or a hi gher r at e of r ecover y
11 ab i ni t i o, t hat i s, f r omt he st ar t , as opposed t o t he
12 f i nanci al cr edi t or s t o whomwe owed money but di d not
13 have a cache of money avai l abl e t o pay t hem.
14 Q. So t her e - - l et me br eak down what I hear d. You t el l
15 me i f I got i t r i ght .
16 A. Mm- hmm.
17 Q. I hear d t hat t he basi s f or t he deci si on t o
18 di scr i mi nat e i n t he f i r st pl an was i n par t t he
19 compassi on f or r et i r ees, but i t was al so i n par t t he
20 f act t hat t her e wer e asset s i n t he r et i r ement syst ems?
21 A. Yes.
22 Q. Okay, anyt hi ng ot her t han t hose t wo t hi ngs?
23 A. No, as I sai d, t her e ar e a number of ot her f act or s i n
24 t r yi ng t o i ncent i vi ze a wor kf or ce, i n t r yi ng t o keep
25 t he covenant t hat t he Ci t y made, a number of ot her
Page 205
2 f act or s, but gener al l y t hose ar e t he ones t hat seemt o
3 be dr i vi ng a sor t of t he t r eat ment of t hose cl asses.
4 Q. Okay, so I hear d compassi on, t he f act t hat asset s
5 exi st i n t he r et i r ement t r ust , t r yi ng t o i ncent i vi ze
6 Ci t y wor ker s. Anyt hi ng el se t hat j ust i f i ed t hat l evel
7 of di scr i mi nat i on?
8 A. Ther e may have been ot her t hi ngs t hat I sai d i n t er ms
9 of t he l evel of di f f er ent t r eat ment , you cal l
10 di scr i mi nat i on. That was r epor t ed out i n t he f i r st
11 pl an, but gener al l y speaki ng, t he pr i nci pal dr i vi ng
12 f or ce was t hat t he r et i r ement syst ems had asset s i n
13 t hemand we wer e t r yi ng t o br i ng l evel s down bel ow t o
14 t he pr edi ct abl e f undi ng l evel ver se - - based upon t he
15 unf unded act uar i al l i abi l i t y of t hose f unds. You
16 st ar t wi t h a cache of money i n t hose f unds t hat ar e
17 avai l abl e concei vabl y t o pay pensi ons i f you ar e abl e
18 t o adj ust t he payment l evel s, wher eas wi t h f i nanci al
19 cr edi t or s, we di dn' t have a cache of money avai l abl e
20 t o t hem. We' r e payi ng t hemout of exi st i ng Ci t y cash
21 f l ow goi ng f or war d.
22 Q. But you under st and t hat t he amount of asset s i n t he
23 pensi on syst ems, t he di f f er ence bet ween t he amount of
24 asset s and what i s needed t o f ul l y f und pensi ons i s
25 cal l ed t he UAAL?
Page 206
2 A. Yes.
3 Q. And you under st and t hat t he pensi on cl ass si zes wer e
4 f or t he UAAL, cor r ect ?
5 A. Wel l , t he pensi on cl ass si zes wer e f or t he UAAL but
6 t hey t ook i nt o account t hat t hose f unds had asset s i n
7 t hem, as wel l , so you' r e t r yi ng t o det er mi ne t he
8 unf unded act uar i al l i abi l i t y, but when you t r y t o
9 det er mi ne t he pensi on payment s you al so i ncl ude t he
10 amount of asset s i n t he f unds.
11 Q. So t he exi st ence of asset s i n t he r et i r ement syst ems
12 was somet hi ng t hat you consi der ed i n your
13 di scr i mi nat i on anal ysi s, i n your deci si on t o pr opose a
14 pl an t hat di scr i mi nat ed?
15 A. I n my deci si on t o pr opose a pl an t hat pr ovi ded
16 di f f er ent payout l evel s f or cr edi t or s, yes.
17 Q. And i t wei ghed i n f avor of i t ?
18 A. I t wei ghed i n - - not so much i n f avor , I ' m- - f avor of
19 what ?
20 Q. Wel l , i n f avor of payi ng pensi oner s mor e t han
21 f i nanci al cr edi t or s?
22 A. The f act t hat t her e ar e asset s i n t he f unds assi st ed
23 us i n payi ng t hemmor e t han f i nanci al cr edi t or s, yes.
24 Q. Okay. What i nf or mat i on di d you base t hat - - t hat
25 deci si on t o pr ovi de di f f er i ng l evel s of r ecover i es on?
Page 207
2 A. Wel l , t her e i s a number of i nf or mat i on. Gener al l y, we
3 woul d go t hr ough t he expect ed debt ser vi ce of t he
4 Ci t y, what ant i ci pat ed r evenue st r eams woul d be goi ng
5 f or war d, what t he Ci t y woul d need f or r ei nvest ment and
6 r evi t al i zat i on, what t he f undi ng l evel s of t he pensi on
7 f unds wer e, amongst ot her s, t her e was a number of
8 i nf or mat i on and - - and i t was a ver y dynami c and f l ui d
9 pr ocess as we exami ned a number of di f f er ent pot ent i al
10 out comes and scenar i os.
11 Q. I under st and t hat t her e i s an enor mous amount of
12 i nf or mat i on t hat i mpl i cat es what t he Ci t y has t o gi ve
13 t o cr edi t or s at al l , okay? And I hear d your answer t o
14 r el at e t o t hat subj ect , cor r ect ?
15 A. Ri ght .
16 Q. I ' maski ng a mor e speci f i c quest i on, whi ch i s wi t h
17 r espect t o your deci si on t o pay cl asses 10 and 11 mor e
18 t han f i nanci al cr edi t or s, what i nf or mat i on di d you
19 r el y on i n maki ng t hat deci si on? So t hi s i s mor e not
20 how much money i s t her e but who wi l l get what money i s
21 avai l abl e.
22 A. Al l of t he i nf or mat i on I j ust ment i oned. I mean,
23 t her e i s a number of di f f er ent f act or s t hat go i nt o
24 what we can pot ent i al l y pay f i nanci al cr edi t or s, and
25 we t ook al l t hat i nf or mat i on i n on a number of
Page 208
2 di f f er ent scenar i os and r educed.
3 Q. But what i nf or mat i on di d you r el y upon i n deci di ng how
4 t o al l ocat e t he money t hat coul d be pai d i n t er ms of
5 whet her i t went t o pensi oner s or whet her i t went t o
6 f i nanci al cr edi t or s?
7 A. I t hi nk we' r e di scussi ng t he same answer . We woul d
8 l ook at i nf or mat i on r egar di ng t he unf unded l i abi l i t y
9 of t he f unds, t he amount of ant i ci pat ed r evenue t he
10 Ci t y coul d t ake i n and coul d expect t o t ake i n, t he
11 obl i gat i ons t hat t he Ci t y coul d af f or d, t he pot ent i al
12 obl i gat i ons of t he Ci t y goi ng f or war d f or r et i r ee
13 heal t hcar e, f or i nst ance, as wel l as f or cur r ent
14 empl oyee, act i ve empl oyee heal t hcar e obl i gat i ons, j ust
15 a number of di f f er ent i nf or mat i on t hat we coul d
16 pr ovi de, we coul d anal yze t o t r y t o get at a
17 det er mi nat i on of what we coul d pay di f f er ent cl asses
18 of cr edi t or s.
19 Q. But t hat t el l s you what t he t ot al si ze of t he pi e i s,
20 cor r ect ?
21 A. But i t al so t el l s us what we t hi nk we can pay.
22 Q. Ri ght , t o cr edi t or s?
23 A. Ri ght , t her e' s an anal ysi s of t he t ot al debt l oad
24 whi ch we publ i shed i n t he J une 14t h pr oposal , and t hen
25 t her e i s anal ysi s of t he r evenue st r eams t hat come
Page 209
2 i nt o t he Ci t y t hat we coul d use t o ser vi ce t hose
3 obl i gat i ons, not j ust f i nanci al cr edi t or s but
4 pensi oner s, and t hen t her e' s an anal ysi s of what we
5 woul d need t o do t o t ake t he r evenue st r eamt o addr ess
6 t he unf unded act uar i al l i abi l i t y and ot her obl i gat i ons
7 t hat we woul d have wi t h f i nanci al cr edi t or s, and we
8 woul d r un di f f er ent scenar i os as t o how t hat coul d be
9 done - -
10 Q. Okay.
11 A. - - i n t hi s envi r onment .
12 Q. I ' ml ooki ng - - I don' t t hi nk - - we may not be
13 communi cat i ng wel l , I ' msur e I ' mnot aski ng my
14 quest i ons cor r ect l y, but once you' ve det er mi ned how
15 much you have i n t heor y t o di st r i but e t o cr edi t or s
16 t her e' s a separ at e deci si on t hat has t o be made as t o
17 whi ch cr edi t or s shoul d get what par t s of t hat pi e; do
18 you agr ee wi t h t hat st at ement ?
19 A. Yes, I t hi nk t hat ' s f ai r .
20 Q. And I want t o f ocus on t he pr ocess of deci di ng whi ch
21 cr edi t or s get whi ch par t of t he pi e, and I want t o
22 under st and what i nf or mat i on you r el i ed upon i n
23 deci di ng t o gi ve pensi oner s a l ar ger sl i ce of t he pi e
24 t han you gave f i nanci al cr edi t or s - -
25 A. Yeah.
Page 210
2 Q. - - i n t he f i r st pl an.
3 A. Yeah, l et ' s do i t t hi s way: Ther e ar e f act or s t hat
4 you' r e consi der i ng, and I t hi nk what you' r e t r yi ng t o
5 get at i s j udgment , whi ch i s di f f er ent t han t he
6 f act or s t hat come i n t o what you have and who you can
7 pay. And t he j udgment deci si ons about what we coul d
8 pay t ook i nt o account a number of t hese ot her f act or s
9 r egar di ng r evenue st r eams, but ul t i mat el y i n deci di ng
10 what we coul d pay pensi oner s, t her e wer e, I woul d say,
11 sever al di f f er ent f act or s whi ch r eal l y spur r ed t hat
12 deci si on.
13 One was t he amount of f unds t hat wer e i n
14 t he var i ous pensi on f unds. Two was t he obl i gat i on t o
15 t r y t o t ake i nt o account t he si t uat i on of t hese
16 pensi oner s. Thr ee was t hat at some poi nt , i t became
17 appar ent t hat t her e was goi ng t o be addi t i onal money
18 comi ng i n i n t he f or mof t he Gr and Bar gai n f r om
19 t hi r d- par t y guar ant or s who wer e - - as a condi t i on of
20 t hose gr ant s t hat t hey be dedi cat ed sol el y t o pensi on.
21 Thr ee was t hat at some poi nt , i t became
22 cl ear t hat t he pensi on f unds, t hemsel ves, wer e
23 per f or mi ng bet t er over t he year and had exper i enced
24 bet t er r at e of r et ur ns t han i n pr i or year s, and, i n
25 f act , t he asset val ues went up. Al l of t hose f act or s
Page 211
2 went i nt o t he deci si on t o deci de how much we coul d pay
3 pensi oner s.
4 Q. Any ot her f act or s t han t hat ?
5 A. Pr obabl y, but I don' t r ecal l t hemsi t t i ng her e t oday.
6 Q. And when you say t he obl i gat i on t o t ake i nt o account
7 t he pensi oner si t uat i on, t hat ' s r ef er r i ng t o t he human
8 di mensi on t hat we t al ked about ear l i er , cor r ect ?
10 Q. Now, l et ' s go f or war d i n t i me f r omt he f i r st pl an
11 of - - t hat we' ve j ust been t al ki ng about , whi ch i s
12 Febr uar y 21?
13 A. Yes, mm- hmm.
14 Q. Okay. Let ' s go f or war d i n t i me t o Apr i l 1, 2014,
15 whi ch i s about 40 days l at er , okay? Apr i l Fool s' Day.
16 A. I wasn' t goi ng t o say t hat but - -
17 Q. You know I pi cked i t . Now, l et ' s - - so put your sel f
18 back i n your st at e of mi nd as of Apr i l 1, 2014, okay?
19 A. Ri ght .
20 Q. As of t hat t i me, you st i l l di dn' t have agr eement wi t h
21 any of t he r et i r ee associ at i ons or commi t t ees or
22 r et i r ement syst ems wi t h r espect t o t he pr oposed
23 pensi on cut s, cor r ect ?
24 A. The r eason I ' mnot r ecal l i ng whet her or not t hat ' s
25 accur at e, at some poi nt i n t he spr i ng - - we di d not
Page 212
2 have publ i cl y announced agr eement s, I t hi nk t hat ' s
3 f ai r .
4 Q. You di dn' t have any publ i cl y announced agr eement s wi t h
5 anyone I don' t bel i eve unt i l Apr i l 15t h, 2014; i s t hat
6 cor r ect ?
7 A. When - - you may have i nf or mat i on r egar di ng - - when you
8 say anyone, you mean any cr edi t or s?
9 Q. I mean any of t hese r et i r ee r epr esent at i ve - -
10 A. Okay.
11 Q. - - bodi es t hat - -
12 A. Okay.
13 Q. - - or t hat I t ake t o mean r et i r ee associ at i ons,
14 pensi on syst ems of f i ci al commi t t ee.
15 A. Okay. And so you' r e t aki ng out t he swaps, f or
16 i nst ance, you' r e not i ncl udi ng - -
17 Q. Oh, absol ut el y.
18 A. Okay.
19 Q. Yeah, I ' mj ust t al ki ng about what t he pensi oner s - -
20 A. Okay, yes, I t hi nk t hat ' s f ai r .
21 Q. Okay. And j ust t o get t he r ecor d cl ear , as of - - your
22 r ecol l ect i on as you si t her e t oday i s t hat as of
23 Apr i l 1st , you di d not have agr eement s wi t h any of t he
24 r et i r ee r epr esent at i ve par t i es, cor r ect ?
25 A. Yes, I don' t t hi nk we have f or mal l y announced
Page 221
2 pl an ar e di f f er ent f r omt he pensi on cut s we' ve been
3 di scussi ng up unt i l t hi s poi nt ?
4 A. Yes.
5 Q. The pensi on cut s ar e r educed t o 4- 1/ 2 per cent f or GRS,
6 wi t h t he el i mi nat i on of COLA, and 0 per cent f or PFRS
7 wi t h t he el i mi nat i on of appr oxi mat el y 45 per cent of
8 t he COLA, cor r ect ?
9 A. I t hi nk t hat ' s accur at e.
10 Q. Ther e ar e al so addi t i onal nuances wi t h r espect t o t he
11 possi bi l i t y f or r est or at i on and ASF r ecoupment t hat
12 wer e par t s of bot h of t hose deal s, cor r ect ?
13 A. ASF i s par t of GRS but r est or at i on i s par t of GRS and
14 PFRS.
15 Q. Okay, but I j ust want t o basi cal l y get on t he same
16 page wi t h you t hat t he deal s t hat you ul t i mat el y got
17 t he r et i r ee r epr esent at i ve gr oups t o buy i nt o wer e at
18 t he 4- 1/ 2 per cent cut l evel on t he GRS pensi on and t he
19 0 per cent cut l evel on t he PFRS pensi on, cor r ect ?
20 A. Yes.
21 Q. And t hat r epr esent ed a subst ant i al i mpr ovement i n t he
22 deal f r omt he pr i or pr oposed cut s of 26 per cent and 6
23 per cent , cor r ect ?
24 A. I t hi nk t hat ' s f ai r .
25 Q. And you under st and t hat at t he cur r ent pr oposed r at es
Page 222
2 of r ecover y i n t he pl an t hat i s cur r ent l y on f i l e,
3 cl asses 10 and 11 ar e bei ng pai d mor e t han t he COP
4 hol der s; i sn' t t hat cor r ect ?
5 A. Yeah, ar e bei ng pai d mor e t han as pr oposed t o t he COP
6 hol der s, yes.
7 Q. Okay. And t hey' r e bei ng pai d subst ant i al l y mor e,
8 cor r ect ?
9 A. I t hi nk i t ' s a si gni f i cant di f f er ence.
10 Q. Okay. Now, i n f act , under t he cur r ent pl an, accor di ng
11 t o t he di scl osur e st at ement t he GRS and PFRS cl asses
12 r ecover appr oxi mat el y 59 cent s on t he dol l ar , cor r ect ?
13 A. Yeah, I t hi nk i n t he pl an, obvi ousl y, t her e' s a
14 schedul e t hat shows per cent age, but i f t hat ' s t he
15 schedul e, yes.
16 Q. I t hi nk i t ' s act ual l y t echni cal l y 60 cent s f or GRS and
17 59 cent s f or PFRS?
18 A. Yeah, t hat ' s - -
19 Q. That ' s about cor r ect , r i ght ?
20 A. That ' s about cor r ect , maybe a l i t t l e bi t l ower on t he
21 PFR - - but t hat ' s about cor r ect .
22 Q. Okay, and t he COPs r ecover at most 10 cent s on t he
23 dol l ar , cor r ect ?
24 A. Yeah, t her e' s a r ange of pot ent i al r ecover y f or t he
25 cer t i f i cat es of par t i ci pat i on but i t ' s st at ed at 10
Page 223
2 per cent .
3 Q. That ' s based, i n par t , on t he f act t hat t her e i s an
4 i nval i di t y l awsui t agai nst t he cer t i f i cat es and t he
5 pot ent i al t o set t l e t hat as par t of t he pl an, cor r ect ?
7 Q. The 10 cent s t hat ' s i n t he di scl osur e st at ement
8 r epr esent s t he best t he COPs can do i f t hey ar e
9 vi ndi cat ed i n t he i nval i di t y l awsui t , meani ng t hat t he
10 cer t i f i cat es ar e f ound t o be val i d?
11 A. Wel l , no, t hat ' s why I sai d I t hi nk t her e' s a r ange.
12 The - -
13 Q. I mean t he 10 cent s i s t he best t hey can do?
14 A. Yeah, I - - okay, 10 cent - - t he 10 cent s i s our
15 est i mat e of t he best t hey coul d do.
16 Q. Okay, so wi t h r espect t o t he pl an t hat i s on f i l e, and
17 t hat you' r e seeki ng t o conf i r m, wi t h r espect t o
18 cl asses 10 and 11 on t he one hand and t he COPs hol der
19 cl ass on t he ot her hand, why di d you deci de t o
20 di scr i mi nat e i n f avor of cl asses 10 and 11 as compar ed
21 t o t he COPs hol der s? And by di scr i mi nat e, I mean pay
22 t hemmor e r ecover y t han you' ve pai d t o t he COPs hol der
23 cl ass?
24 A. Ri ght . As we sai d ear l i er t hi s mor ni ng, i n addi t i on
25 t o, you know, t he asset s t hat t he r et i r ement f unds had
Page 224
2 i n t hem, whi ch woul d mean we' d have l ess gr ound t o
3 make up as opposed t o t he l i abi l i t y of t he
4 cer t i f i cat es whi ch i s a - - an ongoi ng l i abi l i t y, as
5 bet ween t he concer ns t hat t he obl i gat i ons, t he human
6 di mensi on, t he r esponsi bi l i t y t he Ci t y had t o t r y t o
7 keep i t s covenant wi t h i t s empl oyees and r et i r ees as
8 opposed t o l egal ar gument s t hat have been made i n t he
9 paper s r egar di ng t he COPs t hat we bel i eve t hey ar e
10 voi d ab i ni t i o and t hat we have no obl i gat i on and
11 pr obabl y a number of ot her f act or s t hat I ' mj ust not
12 r ecal l i ng as I si t her e t oday, t hat r esul t ed i n us
13 pr oposi ng i n t he pl an t hat t he GRS and PFRS
14 benef i ci ar i es r ecei ve a hi gher r ecover y t han t he COPs.
15 Q. Okay. So my quest i on i s t r yi ng t o dr i ve on t he
16 f act or s t hat you consi der ed i n exer ci si ng your
17 j udgment t o di scr i mi nat e bet ween t hese t wo cl asses.
18 A. Ri ght .
19 Q. Do you under st and t hat ?
20 A. Yes.
21 Q. And you i dent i f i ed f our , t he exi st ence of asset s hel d
22 i n t he t r ust s - -
23 A. Mm- hmm.
24 Q. - - t he human di mensi on t hat we' ve di scussed ear l i er ,
25 t he Ci t y' s covenant t o pay r et i r ees t hei r pensi ons - -
Page 225
2 A. Mm- hmm.
3 Q. - - and t he i nval i di t y of t he COPs?
4 A. Yeah, t he l egal posi t i on of t he COPs, but t her e may
5 be - - t her e may be ot her f act or s t hat go i nt o t hat
6 anal ysi s. I ' mj ust t r yi ng t o gi ve you of f t he t op of
7 my head si t t i ng her e t oday some of t he f act or s t hat we
8 consi der ed i n t er ms of pr oposi ng t he pl an.
9 Q. Wel l - -
10 A. Ther e may be - -
11 Q. Oh, sor r y.
12 A. Ther e may be f act or s havi ng t o do wi t h negot i at ed
13 posi t i ons, wi t h a number of ot her i ssues, so I don' t
14 want t o gi ve you t he i mpr essi on t hat t he onl y t hi ng
15 ar e t he f act or s you' r e wr i t i ng down, t her e may be
16 ot her consi der at i ons we t ook i nt o account .
17 Q. Wel l , I guess I ' l l say under st ood, but you ar e t he
18 deci der , r i ght ?
19 A. Yes, I am.
20 Q. Okay, and so - -
21 A. I amt he - - t he deci der has a di f f er ent connot at i on t o
22 i t , so I ' mt he emer gency manager .
23 Q. You' r e t al ki ng what , t he " W" connot at i on?
24 A. Yeah.
25 Q. Oh, okay.
Page 226
2 A. I don' t want t o - -
3 Q. How easy ( ph. ) do you t hi nk I ' mgoi ng t o get on cr oss?
4 A. Yeah, yeah, I don' t want t o r ead i n t he paper Kevyn
5 Or r - -
6 Q. Okay.
7 A. - - t hi nks he' s t he deci der .
8 Q. Kevyn Or r - -
9 A. I ' mt he emer gency manager who' s char ged under 436 wi t h
10 di schar gi ng cer t ai n obl i gat i ons i n a sol e di scr et i on
11 i ncl udi ng maki ng deci si ons r egar di ng pr oposal s t o
12 cl asses of cr edi t or s.
13 Q. You ar e t he man. No. Okay. They wer e r eady t o hang
14 up.
15 ( Wher eupon conf er ence phone makes noi se. )
16 BY MR. HACKNEY:
17 Q. I ' mout of her e, t hey sai d, okay, t hi s deposi t i on i s
18 of f t he r ai l s. Hang up and. . .
19 MR. ALBERTS: Shoul d we go of f t he r ecor d
20 f or a mi nut e?
21 BY MR. HACKNEY:
22 Q. Hol d on, l et me j ust f i ni sh t hi s. I t ' s j ust a coupl e
23 mor e quest i ons, t hen per haps we can t ake a br eak.
24 Then we can r econnect our f r i ends on t he phone and. . .
25 Okay, so you ar e t he emer gency manager t hat
Page 228
2 cor r ect ?
3 A. Yeah, I don' t want t o gi ve you t he i mpr essi on t hat ,
4 you know, I say somet hi ng, and next t hi ng I know,
5 t her e' s a di scover y r equest wel l , pr ove t hat you
6 consi der ed t hi s or any - - t her e ar e many ot her f act or s
7 t hat went i nt o t he deci si on; t hose ar e t he ones I can
8 r emember si t t i ng her e t oday.
9 Q. Okay. But i s i t f ai r t o say t hat you can r emember al l
10 of t he i mpor t ant f act or s?
11 A. Those ar e t he ones t hat I can r emember t oday, t her e
12 may be ot her ones t hat ar e i mpor t ant t hat I ' mj ust
13 si mpl y not r emember i ng.
14 Q. So t her e may be i mpor t ant f act or s t hat went i nt o your
15 deci si on t hat you can' t r ecal l as you si t her e t oday?
16 A. As I si t her e t oday.
17 Q. Okay. Thi s i s a good t i me t o t ake a br eak, so
18 especi al l y wi t h t hi s phone t hi ng.
19 A. I ' m- - do you want t o t ake? I ' mgood t o go.
20 Q. No, I know you ar e, but I got t o - -
21 A. Okay, you want t o t ake a br eak, okay.
22 MR. SHUMAKER: Let ' s t ake a br eak.
23 VI DEO TECHNI CI AN: The t i me i s 10: 16 a. m. ,
24 we ar e now of f t he r ecor d.
25 ( Recess t aken at 10: 16 a. m. )
Page 229
2 ( Back on t he r ecor d at 10: 35 a. m. )
3 VI DEO TECHNI CI AN: The t i me i s now 10: 35
4 a. m. , we ar e back on r ecor d.
5 BY MR. HACKNEY:
6 Q. Mr . Or r , di d you di scuss your t est i mony wi t h your
7 counsel at t he br eak?
8 A. No.
9 Q. Okay, I want t o t al k about wi t h r espect t o t he f our
10 gr ounds t hat you can r ecal l , t he i nf or mat i on t hat you
11 r el i ed upon wi t h r espect t o each.
12 A. Mm- hmm, yes.
13 Q. And I want ed t o st ar t wi t h t he asset s hel d i n t he
14 t r ust s.
15 A. Mm- hmm.
16 Q. That was t he f i r st gr ound you ment i oned. For t hat , I
17 t ake i t you r el i ed upon dat a f r omt he r et i r ement t r ust
18 r egar di ng t he var i ous l evel s of t hei r asset s?
19 A. We r el i ed on dat a f r omt he r et i r ement t r ust i ncl udi ng
20 r epor t s by Gabr i el Roeder , t hei r act uar y, as wel l as
21 t hei r own document s but we al so r el i ed upon dat a f r om
22 Mi l l i man, whi ch was t he act uar y hi r ed by t he Ci t y, and
23 anal yses pr epar ed by E & Y, Mi l l er Buckf i r e, and
24 Conway MacKenzi e, as wel l .
25 Q. I s i t f ai r t o say t hat t o descr i be t he body of
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2 i nf or mat i on t hat you r el i ed upon wi t h r espect t o t hi s
3 f i r st gr ound whi ch ar e asset s hel d i n t he t r ust t hat
4 you r el i ed on ei t her f i nanci al i nf or mat i on f r omt he
5 t r ust s about t hei r asset s or exper t anal ysi s r el at i ng
6 t o appr opr i at e di scount and ot her act uar i al r at es t o
7 be appl i ed t o t hose asset s and l i abi l i t i es?
8 A. Yes, I r el i ed on t hi ngs ot her t han my own anal ysi s
9 f r ompr of essi onal s who do t hi s.
10 Q. But di d I accur at el y descr i be ki nd of t he body of
11 i nf or mat i on?
12 A. Yeah, you di d. Yes, you di d.
13 Q. Okay. Now, wi t h r espect t o t he human di mensi on t hat
14 we t al ked about , wi t h r espect t o t he cl asses 10 and
15 11, what t ype of i nf or mat i on di d you r el y upon i n
16 connect i on wi t h t hat j udgment ?
17 A. Wel l , I t hi nk some of t he i nf or mat i on we j ust
18 di scussed i s capt ur ed wi t hi n t hat , as wel l as t he
19 r epr esent at i ves on t he ar t - - on t he r et i r ee
20 commi t t ee, t he pensi on boar ds, as wel l , as wel l as
21 i ndi vi dual meet i ngs wi t h i ndi vi dual empl oyees and
22 pensi oner s who r ecount t hei r st or i es i n det ai l , as
23 wel l as st at ement s made i n cour t by t he cour t i t sel f
24 as wel l as ot her s. I l i st ened t o t he Sept ember 19t h,
25 2013 t ape of t he meet i ng of cr edi t or s. I l i st ened t o
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2 t he bl og of l ast - - was i t l ast Monday or Tuesday' s
3 obj ect or s meet i ng, gener al obj ect or s meet i ng as wel l
4 as f ar as t he i mpact , and f r omt i me t o t i me obvi ousl y
5 I meet peopl e on t he st r eet as wel l as hear t hei r
6 account s and pr ess r epor t s.
7 Q. I s i t f ai r t o descr i be t hi s body of i nf or mat i on as,
8 you know, or al t est i moni es t o you about t he per sonal
9 har dshi p peopl e wi l l endur e i f t her e ar e - - i f st eeper
10 cut s ar e i mposed?
11 A. Yeah, I t hi nk i t ' s f ai r t o say or al t est i mony as wel l
12 as, as I sai d, t he act ual anal yses t hat ar e pr ovi ded
13 t hat , f or i nst ance, wi l l t el l you t hat gener al
14 r et i r ement syst emempl oyees get an aver age of 19, 400
15 appr oxi mat el y i n t hei r pensi on, wher eas PFRS may be i n
16 t he nei ghbor hood of t he mi d- t hi r t i es. So i t ' s
17 act ual l y anal yses as wel l as or al t est i mony, or al
18 st at ement s, wr i t t en st at ement s, and pr ess r epor t s.
19 Q. Okay. So you r el i ed on aggr egat e f i nanci al dat a about
20 t he appr oxi mat e aver age si ze of pensi ons as wel l as
21 or al t est i moni es t o you about how st eeper cut s woul d
22 i mpose per sonal har dshi p on t he pensi oner s?
23 A. Yeah, t he appr oxi mat e aver age si ze - - you know,
24 i ncl uded i n t hi s document at i on f or i nst ance, I ' ve
25 r evi ewed r ol l s of i nf or mat i on r egar di ng t he act ual
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2 amount of pensi ons t hat t housands of pensi oner s have,
3 whi ch have been pr ovi ded t o me by pr of essi onal s. So
4 i t ' s not j ust summar y i nf or mat i on, i t ' s act ual l y
5 somet i mes r aw dat a di scussi ons wi t h - - wi t h my
6 advi sor s, i ncl udi ng at t or neys, as wel l as di scussi ons
7 wi t h r epr esent at i ves i ncl udi ng deposi t i ons of t he - -
8 of t he - - some of whomar e her e t oday, r epr esent at i ves
9 of t he var i ous f unds.
10 Q. The f i nanci al dat a t hat you r el i ed upon, t hough, was
11 t he - - was l i mi t ed t o t he si ze of t hei r pensi ons,
12 whet her i t was aggr egat e or i ndi vi dual pensi ons,
13 r i ght ?
14 A. No.
15 Q. You di dn' t r evi ew per sonal f i nanci al i nf or mat i on of
16 any of t he r et i r ees, di d you?
17 A. No, we di dn' t r evi ew - - I di dn' t r evi ew f i nanci al
18 st at ement s of r et i r ees but I di d r evi ew r epor t s as
19 i ndexed by account number on t he pensi ons of
20 i ndi vi dual r et i r ees.
21 Q. Yes.
22 A. Yeah. I di d r evi ew t hi ngs l i ke t hat .
23 Q. I ' mt r yi ng t o say t hat when i t came t o t he f i nanci al
24 i nf or mat i on you consi der ed, i t r el at ed t o t he si ze of
25 t he pensi ons, cor r ect ?
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2 A. As opposed t o t he per sonal f i nanci al si t uat i on of each
3 i ndi vi dual pensi oner ?
4 Q. Ri ght .
5 A. No, I have seen no i nf or mat i on l i ke t hat .
6 Q. And you haven' t seen t hat i n t he aggr egat e, ei t her ,
7 cor r ect ?
8 A. Wel l , l et ' s be car ef ul wi t h aggr egat e. I mean, you
9 know, 14, 000 appr oxi mat el y pensi oner s l i ve wi t hi n t he
10 Ci t y of Det r oi t and/ or Wayne Count y, I bel i eve, so a
11 si gni f i cant per cent age l i ve her e, and when you l ook at
12 aggr egat e demogr aphi c dat a, you know, 40 per cent of
13 our r esi dent s l i ve at or bel ow t he pover t y l i ne per
14 capi t a GDP, al l of t hi s, I have r evi ewed aggr egat e
15 dat a, U. S. Census Bur eau - -
16 Q. But t hi s i s st uf f - - sor r y t o i nt er r upt you.
17 A. Yeah.
18 Q. Thi s i s st uf f t hat r el at es gener al l y t o t he
19 popul at i on?
20 A. Ri ght .
21 Q. I t ' s not speci f i c dat a t o t he r et i r ees?
22 A. No, but t her e was aggr egat e dat a t hat I di d r evi ew
23 r egar di ng r et i r ees as a gr oup but not t hei r per sonal
24 f i nanci al i nf or mat i on.
25 Q. Ri ght , t he aggr egat e dat a on t he r et i r ees was wi t h
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2 r espect t o t hei r mean pensi ons.
3 A. No, i t was al so wi t h pr obabl e - - i t wasn' t j ust
4 pensi ons, i t al so - - t her e was aggr egat e dat a
5 r egar di ng heal t hcar e, t her e' s aggr egat e dat a r egar di ng
6 an al t er nat i ve savi ngs f und r ecoupment . So I know
7 you' r e f ocusi ng pr i nci pal l y on pensi ons, but I l ooked
8 at a number of dat a as a composi t e of what t he i mpact
9 woul d be t o t hese pensi oner s f r oma human di mensi on.
10 Q. Okay, and eval uat i ng t he per sonal har dshi p t hey woul d
11 suf f er ?
12 A. Cor r ect .
13 Q. Okay. And t hat was - - was t hat one of t he most
14 i mpor t ant t hi ngs t hat dr ove you i n connect i on wi t h
15 t hi s deci si on? I t seems l i ke i t ' s moved you.
16 A. Wel l , I don' t know i f i t ' s one of t he most i mpor t ant ,
17 but i t - - al l of t hemar e i mpor t ant , t he amount of
18 money, t he Gr and Bar gai n, t he - - t he gr ant or s have
19 gi ven us $866 mi l l i on we di dn' t have seven mont hs ago,
20 so t hat ' s pr et t y i mpor t ant .
21 The human di mensi on cer t ai nl y i s somet hi ng
22 t hat you have t o t ake i nt o account . These ar e r eal
23 peopl e wi t h r eal consequences. So al l of i t ' s f ai r l y
24 i mpor t ant t o me.
25 Q. Okay. Now, you - - t he t hi r d t hi ng you t al ked about
Page 235
2 was t he Ci t y' s covenant , whi ch I under st ood you t o
3 mean t he Ci t y' s pr omi se t hat i t woul d pay t hese peopl e
4 t hei r pensi ons?
5 A. Yes.
6 Q. And I t ake i t f r omt hat t he i nf or mat i on you woul d have
7 r el i ed upon was j ust t he cont r act sayi ng t hat f ol ks
8 wer e ent i t l ed t o t hese pensi ons?
9 A. No, you know, we - - I al so had access - - you know, I
10 t al ked wi t h some Ci t y empl oyees, f or i nst ance, who
11 cur r ent l y wor k f or t he Ci t y, Gar y Br own, who i s a
12 r et i r ed Det r oi t pol i ce of f i cer but i s on a per sonal
13 ser vi ce cont r act her e i n t he Ci t y now, PSC, and I
14 t al ked t o hi mabout t he hi st or i cal commi t ment s t hat
15 t he Ci t y has made, he' s a l i f et i me r esi dent , been her e
16 a l ong t i me. Chi ef Cr ai g, who was bor n her e, f or
17 i nst ance, and hi s par ent s have been i n t he Ci t y, I
18 t al ked t o hi m. I t al ked t o i ndi vi dual s.
19 So i t ' s not j ust an anal ysi s of , say, r aw
20 dat a. I mean, I have communi cat i ons wi t h peopl e on
21 st af f her e i n t he Ci t y who wi l l ask me i f t hey can
22 come i n and t al k t o me, and I ' l l l i st en t o t hem.
23 Q. I guess what I meant her e i s one of t he f act or s you
24 i dent i f i ed as - - as i nf or mi ng your j udgment wi t h
25 r espect t o what t o pay cl asses 10 and 11 ver sus COPs
Page 236
2 hol der s, you i dent i f i ed was t he Ci t y' s covenant .
3 A. Yes.
4 Q. And I t ook t hat t o mean t he f act t hat t he Ci t y had a
5 cont r act ual obl i gat i on t o pay t hese peopl e?
6 A. Ri ght , and what I ' mt r yi ng t o r el ay t o you i s i t ' s not
7 j ust a f act t hat t he Ci t y had a cont r act ual
8 obl i gat i on; i t i s t he commi t ment and r el i ance on t hat
9 commi t ment behi nd t hat cont r act ual obl i gat i on t hat
10 var i ous Ci t y empl oyees and r et i r ees wi l l come and
11 expr ess t o me i n ver y r eal t er ms what t hi s means t o
12 t hem.
13 Q. I see.
14 A. And so t he covenant i s not j ust a t echni cal document ,
15 i t i s al so an expect at i on, a r el i ance, a commi t ment
16 t he Ci t y has made, and empl oyees and r et i r ees expr ess
17 i t t o me i n ver y - - somet i mes ver y candi d t er ms.
18 Q. I see. What you' r e sayi ng i s you r el i ed not onl y t he
19 exi st ence of t he l egal obl i gat i on t o pay but al so
20 t est i moni es you got f r ompeopl e t hat t hey had r el i ed
21 on t hat ?
22 A. Yes.
23 Q. And i sn' t i t f ai r t o say t hat t hi s i s anot her el ement
24 of t he human di mensi on, whi ch i s t he unf ai r ness of
25 cut t i ng t he pensi ons of peopl e who r el i ed on t he
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2 Ci t y' s covenant i n maki ng deci si ons about how t o
3 al l ocat e t hei r wor k t i me?
4 A. You coul d say t hat .
5 Q. And t hen t he l ast i ssue t hat you i dent i f i ed was t he
6 i nval i di t y of t he COPs; do you r emember t hat ?
7 A. Yes.
8 Q. And t hat was somet hi ng t hat you f act or ed i nt o your
9 deci si on i n t er ms of payi ng t he COPs l ess t han cl asses
10 10 and 11, cor r ect ?
11 A. Yes.
12 Q. And I t ake i t you r el i ed upon l egal anal ysi s f r omyour
13 counsel about t he pot ent i al i nval i di t y of t he COPs,
14 cor r ect ?
15 A. Yes.
16 Q. And I know t hat t her e had been a l awsui t f i l ed pr i or
17 t o t he t i me of t he cur r ent pl an bei ng f i l ed, but I
18 assume t hat i f I asked you quest i ons about what your
19 at t or neys had advi sed you wi t h r espect t o t he
20 i nval i di t y of t he COPs you' l l i nvoke t he
21 at t or ney- cl i ent pr i vi l ege and decl i ne t o answer ?
22 A. Yes.
23 Q. Okay, so I hope we can st i pul at e t hat i f I ask a bunch
24 of quest i ons about how t he COPs anal ysi s f act or ed i nt o
25 t he deci si on t hat t he at t or ney- cl i ent pr i vi l ege wi l l
Page 238
2 be i nvoked?
3 MR. SHUMAKER: Assumi ng your quest i on get s
4 t o communi cat i ons bet ween counsel and Mr . Or r , yes.
5 BY MR. HACKNEY:
6 Q. Wel l , I mean, di d you - - di d you - - i n assessi ng t he
7 i nval i di t y of t he COPs as a f act or j ust i f yi ng t he
8 l evel of di scr i mi nat i on, di d you consi der anyt hi ng
9 ot her t han l egal advi ce ar ound t he i nval i di t y of t he
10 COPs? I t seems l i ke a l egal quest i on.
11 A. I t ' s a l egal quest i on, but i n an ef f or t t o be
12 f or t hcomi ng and f ai r t o you, I ' d have t o say yes, and
13 I ' l l t r y t o t el l you, f or i nst ance, wi t hout di scussi ng
14 t he - - and goi ng af i el d of many di scussi ons, l egal
15 opi ni ons, anal yses, meet i ngs, wr i t t en opi ni ons, t hat I
16 r ecei ved f r omcounsel .
17 So f or i nst ance, i n l ooki ng at t he COPs, i n
18 addi t i on t o t hose t hi ngs, you know, I exami ned news
19 r epor t s about t hat t r ansact i on, I t hi nk I ' ve even
20 exami ned t hose - - some of t hose bef or e I got her e.
21 Repor t s, f or i nst ance, by t he audi t or gener al t hat i t
22 quest i oned t he pr opr i et y and val i di t y of t he COPs
23 r epor t s at t hat t i me when - - I t hi nk i t was Audi t or
24 Gener al Har t ( ph. ) back i n 2005, Ci t y Counci l
25 st at ement s t hat wer e made. St at ement s made by t he
Page 239
2 Ci t y t r easur er back t hen t hat i t was i nval i d and
3 i nappr opr i at e t o ent er i nt o t he COPs and t hat i t woul d
4 make t he Ci t y bankr upt and t hat t he Ci t y shoul d have
5 decl ar ed bankr upt cy i n 2005.
6 So t her e' s ot her dat a t hat I l ooked at t o
7 i nf or mmysel f , j ust not t he l egal anal yses about
8 posi t i on of t he COPs, and some of t hat dat a was
9 cont empor aneous wi t h when t hey wer e i ni t i al l y ent er ed
10 i nt o and some of t hat was subsequent t o t hat .
11 Q. And you i dent i f i ed a number of i ndi vi dual s or r epor t s
12 t hat you had r ead; I di dn' t hear any l awyer s i n any of
13 t hose t hi ngs. Wer e t her e?
14 A. None of my l awyer s wer e i n t hose t hi ngs, so t her e
15 was - - t her e' s, you know, document - - document ar y
16 evi dence t hat i s shor t of t he l egal opi ni ons I got
17 f r ommy counsel .
18 Q. Okay, so but t o t i e i t up, was t he pr i nci pal
19 i nf or mat i on t hat you r el i ed upon l egal advi ce conveyed
20 t o you by your l awyer s about t he i nval i di t y of t he
21 COPs?
22 A. Yes.
23 Q. And I - - j ust so I under st and t he way t he j udge - - t he
24 f act or pl ays t hr ough your j udgment , you l ooked at t he
25 pot ent i al i nval i di t y of t he COPs and vi ewed t hat as
Page 240
2 one r eason t o pay t he COPs on t hei r best day 10 cent s?
3 A. Yeah, I don' t know - - I don' t want t o gi ve t he
4 i mpr essi on t hat i t was t hat bi nar y, you know, a number
5 of i ssues, as I sai d bef or e, went i nt o what we coul d
6 af f or d t o pay - -
7 Q. Yes.
8 A. - - t he val i di t y of t he cl ai m, whi ch i s pr et t y t ypi cal
9 i n bankr upt ci es, al l t hat st uf f , but I t hi nk t hat ' s a
10 f ai r st at ement .
11 Q. Okay, I ' mt al ki ng when you wer e deci di ng how t o di vi de
12 t he pi e, t he COPs best day r ecover y was i mpact ed by
13 t hi s f act or of t he pot ent i al i nval i di t y of t he COPs?
14 A. Yes.
15 Q. Now, wi t h r espect t o t he i nf or mat i on i n t hese f our
16 ar eas t hat we' ve j ust t al ked about , t he i nf or mat i on
17 t hat r el at es t o each of t he f our f act or s you
18 i dent i f i ed - -
19 A. Mm- hmm.
20 Q. - - was t her e a mat er i al change i n t hi s body of
21 i nf or mat i on bet ween Apr i l 1 and Apr i l 15 of 2014?
22 A. I don' t know, you say mat er i al change, what ar e you - -
23 what do you mean?
24 Q. I s t her e anyt hi ng t hat st i cks out t o you wi t h r espect
25 t o any of your f our f act or s and t he i nf or mat i on
Page 241
2 associ at ed wi t h each t hat changed mat er i al l y bet ween
3 Apr i l 1 and Apr i l 15?
4 A. To be f r ank wi t h you, I can' t - - I can' t r ecal l i f
5 t her e was, but I don' t - - not hi ng j umps out at me.
6 Q. Okay. Now, i n st r uct ur i ng t he pl an, di d you t ake
7 advi ce f r omMi l l er Buckf i r e?
8 A. Yes.
9 Q. And i n deci di ng what l evel s of di scr i mi nat i on bet ween
10 cr edi t or s was appr opr i at e, di d you al so t ake advi ce
11 f r omMi l l er Buckf i r e?
12 A. Yes.
13 Q. And di d you speci f i cal l y t ake advi ce f r omKen
14 Buckf i r e?
15 A. I - - I woul d have r egul ar r est r uct i ons ( si c) wi t h Ken
16 and ot her member s of hi s t eam, so I t hi nk i t ' s f ai r t o
17 say yes.
18 Q. Di d Mr . Buckf i r e r ecommend t o you t hat when i t came t o
19 eval uat i ng t he r ecover y of t he r et i r ees t hat t he Ci t y
20 shoul d consi der t he pensi on r ecover i es i n combi nat i on
21 wi t h t he OPEB r ecover i es i n maki ng a det er mi nat i on as
22 t o what t he l evel of di scr i mi nat i on was?
24 BY MR. HACKNEY:
25 Q. Do you under st and my quest i on?
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2 l i st eni ng t o some of t he st at ement s t hat wer e made,
3 l ooki ng at some of t he r epr esent at i ons t hat have been
4 made by t he Ci t y over t he year s, I t hi nk i t ' s f ai r t o
5 say t her e i s a number of di f f er ent i nf or mat i on t hat
6 came i n concer ni ng t he obl i gat i ons t o r et i r ees.
7 BY MR. HACKNEY:
8 Q. Now, di d you - - di d you at t empt t o det er mi ne what
9 ot her cr edi t or s' expect at i ons wer e vi s- a- vi s t he Ci t y?
10 A. Oh, I cer t ai nl y hear d f r omot her cr edi t or s,
11 expect at i ons f r omr at i ng agenci es, f r omf i nanci al
12 publ i cat i ons, f r omst at ement s made i n t he pr ess f r om
13 t hem, as wel l , t hat t hei r expect at i on was t hat t hey
14 wer e goi ng t o be pai d.
15 Q. For exampl e, di d you t al k t o any of t he - - of t he COPs
16 hol der s t o det er mi ne what t hei r expect at i ons wer e
17 about when t hey i nvest ed?
18 A. I know I t al ked t o some of t hei r r epr esent at i ves. I
19 don' t know i f I t al ked t o any of t he pr i nci pal s or any
20 of t he i ndi vi dual hol der s.
21 Q. Okay. Fai r t o say t hat you haven' t t al ked t o any COPs
22 hol der who t ol d you t hat t hey expect ed not t o be
23 r epai d, cor r ect ?
24 A. I t hi nk t hat ' s f ai r .
25 Q. And you haven' t t al ked t o any ot her f i nanci al cr edi t or
Page 273
2 who t ol d you t hat t hei r expect at i on was t hat t hey
3 woul d not be r epai d, cor r ect ?
4 A. Ther e was a conf er ence i n New Yor k l ast f al l wher e
5 some cr edi t or s as i dent i f i ed who r epr esent ed t hat t hey
6 had i nt er est i n Det r oi t ' s debt sai d t hat t hey knew
7 t hat t he Ci t y pr obabl y woul d not be abl e t o pay t hi s
8 debt but nonet hel ess t hey expect ed t o be pai d and t hey
9 wer e goi ng t o puni sh t he Ci t y. They came up t o me at
10 t he conf er ence wi t h t hei r f i nger i n my f ace about
11 t hat . But I can' t - - I don' t know - - I di dn' t t ake
12 t hei r car d, I don' t know t hei r name, but gener al l y
13 speaki ng, I - - I was - - excl udi ng conver sat i ons we' ve
14 had i n medi at i on di scussi ons, whi ch ar e pr ot ect ed by
15 t he or der , I don' t r ecal l wi t h speci f i ci t y any
16 par t i cul ar cr edi t or pr i nci pal comi ng up t o me and
17 sayi ng t hey di d not expect t o be pai d.
18 Q. I mean, l et me t r y t o t i e i t up t hi s way. By t he way,
19 I can' t bel i eve t hat t hi ng act ual l y happened t o you,
20 onl y i n New Yor k.
21 A. No, i t ' s happened t o me many t i mes - -
22 Q. No of f ense t o New Yor ker s - -
23 A. Oh, i t was ugl y.
24 Q. We don' t do t hat i n Chi cago but . . .
25 MR. PEREZ: I t hought you wer e a Mi chi gan
Page 274
2 boy.
3 MR. HACKNEY: I am, bor n and r ai sed, but
4 I ' ve act ual l y l i ved i n Chi cago now - -
5 THE WI TNESS: Ar e you comi ng back? Ar e you
6 comi ng back?
7 MR. HACKNEY: No, no, I ' ma Chi cagoan.
8 THE WI TNESS: Okay.
9 MR. HACKNEY: You l ost me.
10 BY MR. HACKNEY:
11 Q. Let me see i f I can t i e i t up t hi s way. You di d not
12 at t empt t o under t ake a syst emat i c anal ysi s of what al l
13 t he cr edi t or s t hought t hat t hey wer e goi ng t o get when
14 t hey made t hei r r espect i ve i nvest ment deci si ons t o
15 deci de who shoul d get what ?
16 A. I di d not pol l al l of t he cr edi t or s r egar di ng what
17 t hey t hought t hey wer e goi ng t o get .
18 Q. Okay, and you di dn' t f act or t hat i nt o your concl usi on,
19 cor r ect ?
20 A. No. Not at l east t hat I can say - - I can' t say what
21 di scussi ons wer e made i n medi at i on, but I - - publ i cl y
22 t he answer woul d be no.
23 Q. I amt al ki ng about , you know, your st at e of mi nd,
24 t hough. I ' msayi ng t hat you di dn' t go and pi ck
25 wi nner s and l oser s based on what peopl e' s expect at i ons
Page 275
2 wer e when t hey i nvest ed?
3 A. No, I don' t vi ew i t as pi cki ng wi nner s and l oser s
4 because I don' t t hi nk anybody her e has sai d t o me t hat
5 t hey t hi nk of t hemsel ves as wi nner s.
6 We t r i ed t o do an anal ysi s of what we coul d
7 af f or d t o pay based upon t he f act or s we di scussed
8 bef or e wi t h an under st andi ng t hat $866 mi l l i on was
9 comi ng i n as a gi f t f r omgr ant or s wi t h speci f i c
10 condi t i on t hat t hat money woul d f l ow t o pensi oner s as
11 opposed t o any ot her cr edi t or cl ass and t hat we woul d
12 accept t hat gi f t wi t h t hat condi t i on when t hose
13 di scussi ons wer e made.
14 Q. Under st ood, I ' mj ust t r yi ng t o say - - pi cki ng wi nner s
15 and l oser s was a euphemi sm, I di dn' t mean t o be
16 casual . You di dn' t set r espect i ve r ecover y l evel s
17 based on t he f act t hat you t hought some cr edi t or s
18 shoul d be pai d l ess based on t hei r expect at i ons when
19 t hey i nvest ed as opposed t o ot her s?
20 A. No, t hat r eal l y wasn' t a f act or . I mean, di d I
21 per sonal l y bel i eve t hat t her e may have been cr edi t or s
22 who wer e mor e capabl e of doi ng under wr i t i ng about t he
23 Ci t y' s debt condi t i on has been - - as had been r epor t ed
24 i n var i ous publ i cat i ons t hat I ' d r ead, yes, I
25 under st ood t hat but I di dn' t si t down and say, you
Page 276
2 know, based upon your expect at i on of bei ng pai d, you
3 know, t hi s i s what we can pay. We gener al l y dr ove t he
4 det er mi nat i ons based upon t he r evenue st r eamand t he
5 st r engt hs and weaknesses and negot i at i ons wi t h any
6 par t i cul ar cr edi t or gr oup?
7 Q. And I t ake i t you di d not , f or exampl e, go back and
8 r evi ew t he due di l i gence mat er i al s t hat wer e pr ovi ded
9 t o t he COPs cr edi t or s i n t he 2005 and 2006
10 t r ansact i ons, cor r ect ?
11 A. I di dn' t do i t per sonal l y but some of my advi sor s di d.
12 Q. Okay. But , I mean, you don' t know what was i n t hose
13 due di l i gence mat er i al s?
14 A. No, some of t hose mat er i al s, I - - I di d see some of
15 t hose mat er i al s and I saw some of t he l egal opi ni ons
16 t hat wer e pr ovi ded back t hen.
17 Q. I n f act , t he l egal opi ni ons t hat wer e pr ovi ded back
18 t hen t ol d COPs hol der s t hat t he COPs wer e l egal ,
19 cor r ect ?
20 A. Some of t hemdi d, t her e was one l aw f i r mi n t he Ci t y
21 t hat r ef used t o do t he t r ansact i on because t hey opi ned
22 or at l east i nf or med peopl e t hat t hey t hought i t was
23 i l l egal .
24 Q. And do you r ecal l what t he COPs hol der s wer e t ol d
25 about t he nat ur e of t he r emedy t hat woul d exi st i f t he
Page 277
2 Ci t y f ai l ed t o pay t he ser vi ce cor ps?
3 A. No.
4 Q. Do you know who t he COPs hol der s wer e at t he t i me of
5 t he COPs of f er i ng?
6 A. Ther e was a l i st of who t hey wer e, but si t t i ng her e
7 of f t he t op of my head, no.
8 MR. HACKNEY: Let ' s mar k t hi s as our next
9 exhi bi t .
10 MARKED FOR I DENTI FI CATI ON:
11 DEPOSI TI ON EXHI BI T 21
12 11: 29 a. m.
13 BY MR. HACKNEY:
14 Q. Mr . Or r , i s t hi s t he of f er i ng memor andumt hat was put
15 out i n connect i on wi t h t he 2005 COPs?
16 A. Wi t hout si t t i ng her e and r eadi ng t hr ough i t , t o t he
17 best of my knowl edge, t hi s appear s l i ke a document
18 I ' ve seen bef or e as t he of f er i ng document .
19 Q. And have you r ead t hi s document bef or e?
20 A. I have not r ead t he document i n t ot al ; I have r ead
21 pi eces of i t .
22 Q. Okay. You di dn' t j ust si t down and one day say, I
23 want t o r ead t he of f er i ng memor andum?
24 A. I di d not r ead t hr ough t he whol e document .
25 Q. Now, i f you l ook at page 8, I want t o r ead you a
Page 335
2 Q. I n par t ?
3 A. I t hi nk t hat i s f ai r .
4 Q. You know, Mr . Or r , I ' ve r eached a good st oppi ng poi nt ,
5 I t hi nk.
6 MR. SHUMAKER: Sur e.
7 MR. HACKNEY: Ther e' s a l ot of peopl e i n
8 t he r oom, but I ki nd of def er t o you.
9 THE WI TNESS: No, I ' mgood, but i f you guys
10 t hi nk t hat makes sense, we have a t hi ng t hat we need
11 t o do.
12 MR. HACKNEY: What t i me?
13 MR. HERTZBERG: At 1: 15 f or 5 mi nut es.
15 MR. HACKNEY: That wi l l be per f ect t hen,
16 we' l l t ake an hour f or l unch, and t hen I ' l l see you at
17 1: 30.
19 VI DEO TECHNI CI AN: The t i me i s now 12: 31
20 p. m. , we ar e now of f t he r ecor d.
21 ( Recess t aken at 12: 31 p. m. )
22 ( Back on t he r ecor d at 1: 36 p. m. )
23 VI DEO TECHNI CI AN: The t i me i s 1: 36 p. m. ,
24 we ar e back on t he r ecor d.
25 BY MR. HACKNEY:
Page 336
2 Q. Mr . Or r , wel come back f r oml unch.
3 A. Thank you, Mr . Hackney.
4 Q. Okay. So Mr . Or r , you' r e awar e t hat cer t ai n
5 char i t abl e f oundat i ons have agr eed t o cont r i but ed
6 money t o t he Ci t y' s pensi on obl i gat i ons i n exchange
7 f or t he Ci t y conveyi ng i t s ar t col l ect i on i nt o a
8 publ i c t r ust ; i s t hat cor r ect ?
9 A. Yes.
10 Q. And I t ake i t i f I ask you quest i ons about your
11 communi cat i ons wi t h t he char i t abl e f oundat i ons i n
12 connect i on wi t h t hei r agr eement t o cont r i but e t hi s
13 money, you wi l l r ef use t o answer on t he gr ounds of t he
14 medi at i on or der ' s conf i dent i al i t y pr ovi si ons; i s t hat
15 cor r ect ?
16 A. Yes, gener al l y f or most of t hem, I t hi nk t hat ' s
17 cor r ect .
18 Q. And j ust f or t he r ecor d, you di dn' t have any such
19 conver sat i ons pr i or t o t he ent r y of t he medi at i on
20 or der whi ch was at some poi nt i n Sept ember of 2013?
21 A. Yes, t hat ' s cor r ect .
22 Q. Okay.
23 A. Wel l , l et me t hi nk. I t hi nk I had one meet i ng wi t h
24 Dar r en Wal ker at For d Foundat i on, but i t was not about
25 a cont r i but i on, i t was j ust a meet and gr eet .
Page 337
2 Q. Okay.
3 A. Okay?
4 Q. Yeah, I saw t hat i n t he document s, and t her e wer e some
5 i ssues about t he For d Foundat i on and t he bui l di ng t hat
6 t hey owned or somet hi ng t hat - -
7 A. I di dn' t even get i nt o al l t hat .
8 Q. Okay.
9 A. I t was j ust hi , how ar e you, t hey wer e hel pi ng us wi t h
10 some gr ant s, hel pi ng us st and up a gr ant s
11 admi ni st r at or .
12 Q. So I guess I want t o make a r ecor d of somet hi ng I
13 under st and f r omt he Ci t y' s posi t i on but i t i s t he
14 Ci t y' s posi t i on t hat communi cat i ons wi t h t he
15 f oundat i on ar e ei t her par t of or i nci dent al t o t he
16 medi at i on, cor r ect ?
17 MR. SHUMAKER: I bel i eve t hat ' s cor r ect .
18 Agai n, I t hi nk you coul d f i sh out si de t he cont our s of
19 t hose medi at i on t al ks but my under st andi ng i s t hat al l
20 t hose t al ks wer e wi t hi n t he cont ext of medi at i on.
21 BY MR. HACKNEY:
22 Q. Yeah, I mean, I don' t want t o ask a hundr ed quest i ons
23 t oday t o est abl i sh what I t hi nk i s r el at i vel y wel l
24 est abl i shed, whi ch i s t hat you' r e not , gener al l y
25 speaki ng, goi ng t o di scuss your conver sat i ons wi t h t he
Page 338
2 f oundat i ons, cor r ect ?
3 A. That i s cor r ect . You know, I may - - l et me say t hi s
4 gener al l y. I may have had meet i ngs wi t h f oundat i on
5 pr i nci pal s out si de of t he conf i nes of t he medi at i on,
6 j ust hai l - f el l ow- wel l - met , saw t hemat an event , how
7 ar e you. Ther e wer e no subst ant i ve conver sat i ons
8 about t he cont r i but i on t hat di d not occur out si de of
9 t he medi at i on or der .
10 Q. And t hat ' s f i ne, because t he onl y ones t hat I r eal l y
11 want t o ask you about ar e ones t hat r el at e t o t he
12 Gr and Bar gai n?
13 A. Ri ght , r i ght .
14 Q. And t hose woul d f al l under t he gambi t of t he
15 medi at i on?
16 A. Those woul d f al l under t he gambi t of medi at i on.
17 Q. Now, i f I asked you your st at e of mi nd based on what
18 you under st ood t he f oundat i ons t o be wi l l i ng t o do or
19 what you t hought t hey woul d be wi l l i ng t o do, you
20 woul d al so i nvoke t he medi at i on or der t o t he ext ent
21 hi s st at e of mi nd was cr eat ed by communi cat i ons of t he
22 f oundat i on, cor r ect ?
23 MR. SHUMAKER: I t hi nk t hat ' s r i ght because
24 I don' t see how he coul d gi ve you hi s i mpr essi ons or
25 hi s under st andi ng wi t hout goi ng i nt o what was goi ng on
Exhibit 6B
July 22, 2014 Expert Witness Report of Stuart Ira Wohl (excerpted)

1

FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

In re

City of Detroit, Michigan
Debtor

Chapter 9
Case No. 13-53846

REPORT OF
STUART I. WOHL

I, STUART I. WOHL, subject to the penalties provided by law for perjury, do hereby declare the
following to be true and correct based on my personal knowledge and upon information provided
by the City of Detroit.
1. I am currently a Senior Vice President, East Region Health Practice Leader and National
Retiree Health Practice Leader of The Segal Company. I have more than 26 years of
health consulting experience with The Segal Company. I have been Segals Retiree
Health Practice Leader for more than ten years and the East Regions Health Practice
Leader for more than six years. Prior to The Segal Company, I worked in the Actuarial
and/or Underwriting Departments at two insurance companies.
2. The Segal Company was founded in 1939 and is one of the nations leading actuarial and
employee benefit plan consulting firms. The Segal Company provides pension and
health benefit consulting services. Segal maintains a staff of approximately 1,000 and
has offices in 22 cities in the United States and Canada. Segal provides employee

2
benefits and human resource consulting to more than 2,500 clients. We consult on the
full range of health and welfare, retirement and human resources-related issues.
3. As Segals Retiree Health Practice Leader, I provide thought leadership and guidance to
our actuaries and staff regarding retiree health benefits and retiree health valuations. I
also help with developing policies, procedures, and guidelines for use in retiree health
consulting.
4. As the East Regions Health Practice Leader, I provide thought leadership, guidance, and
management of the health consulting practice within Segals East Region. I also provide
direct consulting services to certain Segal clients including a number of retiree-only
plans, some of which maintain Voluntary Employee Beneficiary Associations (VEBAs),
and a number of large Public Sector clients including the health plans for active and
retired employees for the State of Delaware, the retiree health plan offered through the
Pennsylvania School Employee Retirement System and the New Mexico Retiree Health
Care Authority.
5. During my 26 years at The Segal Company, I have provided support in many
bankruptcies, usually in Bankruptcy Code Section 1114 matters. In such instances, I was
part of the team providing support to a Section 1114 Committee or a union. I was part of
the team providing support to Section 1114 Committees in bankruptcies of: Eastern
Airlines; Pan Am Airways; United Airlines; Northwest Airlines; American Airlines;
Federated Department Stores; Lone Star Industries; Solutia; Eastman Kodak; Copperweld
Steel; LTV Steel; Bethlehem Steel; Bonwit Teller; HK Porter, and Dana Corporation.
6. I have spoken numerous times on retiree health benefits and other health topics including:
Teamster Trustees Benefits and Capital Strategies Session, November 2, 2007
Retiree Health VEBAs Are they the Solution?

3
American Bankruptcy Institutes 19
th
Annual Winter Leadership Conference,
December 2, 2007, Section 1114 Issues in Large and Middle-Market Cases.
American Bar Association, Section of Labor and Employment Law, Employee
Benefits Committee, March 1, 2008, New Developments in Funding Retiree
Medical with a VEBA.
Pensions and Capital Stewardship Project, Labor and Worklife Program, Harvard
Law School, Capital Matters: Managing Labors Capital Conference, April 18,
2008, What to Do While Waiting for Universal Health Insurance: Are VEBAs
and Other Pre-Funded Schemes Part of the Solution or Part of the Problem?
2010 CONNPELRA Annual Conference, J une 4, 2010, Health Care Reform:
First Steps for Public Sector Plans.
Graphic Communications Conference, September 23, 2011, Health Care
Reform: Issues for Multi-Employer Plans and for Collective Bargaining.
7. I was the primary author of Segals Winter 2008 Survey, Study of Retiree Health
VEBAs, as well as the author of a March 2008 article for Employee Benefit News,
Retiree Health VEBAs: A Brief Profile.
8. The Segal Company has been retained by the Official Retiree Committee in the City of
Detroit Bankruptcy and is being compensated for my time in this matter at the rate of
$535 per hour. Segals compensation in this matter is not, in any way, contingent upon
the outcome of the case.
9. I have prepared Affidavits, Declarations and/or provided Deposition testimony in the
following matters during the previous four years:
AMR Corporation, et al,, (Chapter 11 Case No. 11-15463) (United States
Bankruptcy Court Southern District of New York)

4
City of Detroit, Michigan (Chapter 9 Case No. 13-53846) (United States
Bankruptcy Court Eastern District of Michigan, Southern Division)
Michael Merrill et al. v. Briggs & Stratton Corporation (Case No. 10-C-700-LA
United States District Court, Eastern District of Wisconsin)
10. I have also prepared affidavits, declarations and/or provided deposition testimony in the
following matters more than 4 years ago:
Peter A. Raetsch, et al v. Lucent Technologies (Civil Action No. 2:05-cv-5134
(PGS) United States District Court, District of New J ersey)
Beaty et al v. Continental Automotive Systems U.S., Inc., Case 5:11-cv-00890-
CLS (N.D. Ala.)
J oseph Tourangeu, Molly Cobbol, Robert Lowell, Robert Frank on behalf of
themselves and all others similarly situated v. Uniroyal Inc. (Civ. Act. No. N-28-
208 (ANH) United States District Court, District of Connecticut)
Trull v. Dayco Prod LLC (Case No. 1:02-cv-243-LHT), United States District
Court, Western District of North Carolina
Diehl v. Twin Disc, Inc. (Case No. 3:94-cv-50031), United States District Court,
Northern District of Illinois
International Association of Machinists and Aerospace Workers and its Affiliated
District Lodges, v. The Boeing Company (Charge NOS 19-CA-24154 before the
National Labor Relations Board)
OPINION

11. The purpose of my testimony is to describe the impact of the City's Plan of Adjustment
("POA") upon the health care benefits previously received by the City's retired workers.
As I will describe, the funding available through the POA for Retiree Health Benefits is
very limited and will result in significant reductions in the subsidies that were provided

5
prior to the bankruptcy. It will also expose them to significant risks. The Official
Committee of Retirees is supporting the POA, including as to OPEB, despite these risks
and funding reductions because any further reductions would have been devastating to
Retirees.
BACKGROUND

12. Before the bankruptcy filing and post-filing until February 28, 2014, the City of Detroit
(the City) offered health insurance coverage to approximately 17,000 retirees and
surviving spouses, plus approximately 7,400 dependent spouses. Not only did the City
offer these benefits, the City paid the majority of the costs of such benefits. In many
instances, the City paid 100% of the cost of these benefits. Of the approximately 24,700
retirees and spouses, approximately 6,000 are under age 65 and I have been told that
approximately 650 are age 65 and older but are not, and will never be, eligible for
Medicare.
13. Until February 28, 2014, the City offered retirees a choice of plans. For example,
according to the 2012-2013 City of Detroit Retiree Modified Option III Plan Enrollment
Guide, retirees had as many as five plans from which to choose. Some of the contracts
with retirees required monthly contributions, with the actual amount dependent on the
Collective Bargaining Agreement and the choice of plan.
14. According to a City-provided document titled City of Detroit, Retiree Legacy Cost
Restructuring dated September 11, 2013, the City projected a net cost for retiree health
benefits of around $176 million for the Fiscal Year Ending in 2014. The City proposed
to reduce annual City spending for postretirement health care benefits by $144 million for
FYE 2014 or more than 80% -- from approximately $176 million per year (per the
September 11, 2013 document) to approximately $31.3 million (per the 6/30/2012
Actuarial Valuation prepared by Milliman).
Exhibit 6C
August 13, 2014 Deposition Transcript of Stuart Ira Wohl (excerpted)
1
1 STUART I RA WOHL
2 I N THE UNI TED STATES BANKRUPTCY COURT
3 FOR THE EASTERN DI STRI CT OF MI CHI GAN
4
5
6 I n r e: ) Chapt er 9
7 CI TY OF DETROI T, MI CHI GAN, ) Case No. 13- 53846
8 Debt or . ) Hon. St even W. Rhodes
9
10 __________________________________
11
12
13 The Vi deot aped Deposi t i on of STUART I RA WOHL,
14 Taken at 1114 Washi ngt on Boul evar d,
15 Det r oi t , Mi chi gan,
16 Commenci ng at 2: 32 p. m. ,
17 Wednesday, August 13, 2014,
18 Bef or e Kat hr yn L. J anes, CSR- 3442, RMR, RPR.
19
20
21
22
23
24
25
22
1 STUART I RA WOHL
2 t eammember s act ual l y t ook a pr i or deposi t i on and
3 copi ed i nt o f or t he backgr ound f or my i nt r oduct i on
4 about mysel f .
5 Q. I t ' s f ai r t o say t hat t he wor k done by your t eam
6 was at your di r ect i on, r i ght ?
7 A. Cor r ect .
8 Q. And di d you have an oppor t uni t y t o r evi ew t he
9 f i nal r epor t bef or e i t was ser ved on t he ot her
10 par t i es i n t hi s case?
11 A. I r evi ewed i t and t hen si gned i t .
12 Q. Got i t . And so i t ' s - - i t ' s f ai r t o say t hat you
13 had an oppor t uni t y - - you had t he l ast
14 oppor t uni t y t o make changes; i s t hat r i ght ?
15 A. Cor r ect .
16 Q. I s t her e anyt hi ng t oday af t er havi ng compl et ed
17 and - - and si gned t he r epor t , i s t her e anyt hi ng
18 t oday t hat you want t o change about t he r epor t ?
19 A. No.
20 Q. I s i t f ai r t o say you st and behi nd t he r epor t
21 compl et el y?
22 A. Yes.
23 Q. And you under st and t hat when you submi t t ed your
24 r epor t , i t was i mpor t ant f or your r epor t t o
25 cont ai n al l of your opi ni ons t hat you - - al l of
23
1 STUART I RA WOHL
2 t he opi ni ons you wer e pr ovi di ng i n connect i on
3 wi t h t hi s case?
4 A. Yes.
5 Q. Whi ch i s t o say, you ar e not pr ovi di ng opi ni ons
6 ot her t han what i s cont ai ned i n your r epor t ,
7 cor r ect ?
8 A. Cor r ect .
9 Q. And when you pr epar ed t he r epor t , you made your
10 best ef f or t s t o assur e t hat t he opi ni ons and dat a
11 cont ai ned i n t he r epor t ar e accur at e and
12 t r ut hf ul , cor r ect ?
13 A. Yes.
14 Q. I f you - - i f you can, woul d you gi ve me a br i ef
15 summar y of t he opi ni ons t hat you' r e of f er i ng i n
16 t hi s case?
17 MR. BARNOWSKI : Obj ect t o f or m.
18 A. I amof f er i ng an opi ni on t hat says t hat t he
19 pl an - - t he POA r equi r es si gni f i cant cut backs and
20 benef i t s of r et i r ees, and even wi t hi n t he POA,
21 t her e i s f ur t her r i sk t hat aspect s t hat ar e bei ng
22 r el i ed upon i n t he POA may not come t o f r ui t i on.
23 BY MR. BERNBROCK:
24 Q. Any ot her opi ni ons t hat you' r e of f er i ng l i ke
25 macr o opi ni ons?
24
1 STUART I RA WOHL
3 BY MR. BERNBROCK:
4 Q. Ot her t han t hat ?
5 A. I al so descr i be t he i mpact of some i ndi vi dual
6 cl ass member s, j ust t o show t he i mpact how - - t he
7 changes coul d i mpact t he expense, I t hi nk i t ' s f or
8 si x or seven f ol ks, whi ch ar e j ust one ver y smal l
9 subset of t he 17, 000 r et i r ees and t hei r 7, 000,
10 8, 000 dependent s.
11 Q. And you' r e not of f er i ng your opi ni ons i n t hi s
12 case t o demonst r at e t he har dshi p on r et i r ees, ar e
13 you?
15 A. I t hi nk I sai d t hat , t hat si gni f i cant cut s i n
16 benef i t s ar e har dshi ps f or r et i r ees.
18 Q. Okay. The - - we' r e goi ng t o do t hi s - - t hi s
19 l aundr y l i st agai n of t hi ngs t hat you' r e not , and
20 you' l l par don me, I hope. I want t o be cl ear
21 t hat you ar e not of f er i ng opi ni ons about t he
22 Gener al Ret i r ement Syst emor t he Pol i ce and Fi r e
23 Ret i r ement Syst emPensi ons; i s t hat cor r ect ?
24 A. Cor r ect .
25 Q. You ar e not of f er i ng an opi ni on r egar di ng t he
25
1 STUART I RA WOHL
2 cl ai ms hel d by t he pensi on syst ems; i s t hat
3 cor r ect ?
4 A. Cor r ect .
5 Q. You ar e not of f er i ng your opi ni on as t o whet her
6 t he POA cont ai ns unf ai r di scr i mi nat i on as t hat
7 t er mi s under st ood under t he bankr upt cy l aws?
9 BY MR. BERNBROCK:
10 Q. I s t hat cor r ect ?
11 A. Cor r ect .
12 Q. You' r e not of f er i ng an opi ni on t hat t he pl an - -
13 t he POA i s f ai r and equi t abl e as t hat t er mi s
14 used i n connect i on wi t h bankr upt cy l aw?
16 A. Cor r ect .
18 Q. You' r e not of f er i ng an opi ni on t hat t he pl an - -
19 t he POA - - I ' mgoi ng t o do t hat al l day.
20 A. I got mi ne r i ght bef or e.
21 Q. You di d, I know.
22 MR. BARNOWSKI : Then i t ' s def i ni t el y
23 not si mpl i f yi ng t hi ngs her e.
24 MR. BERNBROCK: Yeah, t hat ' s r i ght .
26
1 STUART I RA WOHL
2 Q. You' r e not of f er i ng any l egal opi ni on as t o
3 whet her t he pl an - - POA i s i n t he best i nt er est
4 of cr edi t or s, cor r ect ?
5 A. Cor r ect .
6 Q. You' r e not of f er i ng any l egal opi ni on r egar di ng
7 whet her t he POA has been pr oposed i n good f ai t h,
8 cor r ect ?
9 A. Cor r ect .
10 Q. And you' r e not of f er i ng an opi ni on t o demonst r at e
11 t hat t he POA has sat i sf i ed t he conf i r mat i on
12 st andar ds under Chapt er 9 or Chapt er 11 of t he
13 bankr upt cy code, cor r ect ?
15 A. Cor r ect . Cor r ect .
17 Q. So i f we coul d, si r , j ust t ur ni ng t o your r epor t
18 and how I i nt end t o pr oceed, so t hat you have an
19 i dea her e, i s I r eal l y want t o j ust wal k t hr ough
20 t he var i ous sect i ons of your r epor t , and ask
21 quest i ons al ong t he way, ask you t o expl ai n
22 var i ous t hi ngs i n your r epor t . I t hi nk t hat your
23 r epor t l ends i t sel f t o a sor t of chr onol ogi cal
24 r evi ew and so t hat ' s - - t hat ' s what I ' mgoi ng t o
25 do.
Exhibit 6D
July 31, 2014 Deposition Transcript of Rip Rapson (excerpted)
00000000-0000-0000-0000-000000000000
950 Third Avenue, New York, NY 10022
Elisa Dreier Reporting Corp. (212) 557-5558
Page 1
RI P RAPSON
I N THE UNI TED STATES BANKRUPTCY COURT
FOR THE EASTERN DI STRI CT OF MI CHI GAN
I n r e ) Chapt er 9
CI TY OF DETROI T, MI CHI GAN, ) Case No. 13- 53846
Debt or . ) Hon. St even W. Rhodes
__________________________________
The Vi deot aped Deposi t i on of RI P RAPSON,
Taken at 1114 Washi ngt on Boul evar d,
Det r oi t , Mi chi gan,
Commenci ng at 9: 02 a. m. ,
Thur sday, J ul y 31, 2014,
Bef or e Rebecca L. Russo, CSR- 2759, RMR, CRR.
00000000-0000-0000-0000-000000000000
Page 79
1 RI P RAPSON
2 Q. Let me be a l i t t l e bi t mor e speci f i c wi t h i t . Fr om
3 t he t i me t hat t he bankr upt cy f i l i ng occur r ed, Det r oi t
4 bankr upt cy occur r ed, and up unt i l t he t i me wher e you
5 bel i eve your conver sat i ons r egar di ng t he medi at i on,
6 t he medi at i on back and f or t h st ar t ed - -
7 A. Mmm- hmm.
8 Q. - - we' r e not t al ki ng about t hose, di d you have any
9 conver sat i ons wi t h t he f ol ks - - di d you have any
10 conver sat i ons wi t h anyone t hat you can r emember
11 r egar di ng whet her Kr esge woul d get i nvol ved i n t he
12 bankr upt cy - -
13 A. Oh, I see.
14 Q. - - i n or der t o, one, pr eser ve t he col l ect i on at t he
15 DI A?
16 A. No, no.
17 Q. And pr i or t o - - af t er t he f i l i ng of t he Ci t y of
18 Det r oi t ' s bankr upt cy and pr i or t o t he t i me t hat Kr esge
19 became i nvol ved i n conver sat i ons back and f or t h
20 r egar di ng t he Gr and Bar gai n medi at i on, wer e you
21 i nvol ved wi t h any di scussi ons r egar di ng Kr esge
22 becomi ng i nvol ved i n t he bankr upt cy t o sof t en t he bl ow
23 t o t he pensi oner s?
24 A. No.
25 Q. When di d, when di d you f i r st become awar e of what ' s
00000000-0000-0000-0000-000000000000
Page 80
1 RI P RAPSON
2 now become known as t he Gr and Bar gai n or t he pr ocess
3 l eadi ng t owar ds t he Gr and Bar gai n?
4 A. I t hi nk i t was at t he t i me t hat J udge Rosen asked t he
5 gr oup of f oundat i ons t oget her and hear hi mout on an
6 i dea he had.
7 Q. So I t ake i t t hat t he way you and your or gani zat i on
8 became i nvol ved wi t h t he Gr and Bar gai n was by J udge
9 Rosen r eachi ng out t o you and not t he opposi t e, you
10 act ual l y r eachi ng out t o J udge Rosen?
11 A. That ' s cor r ect .
12 Q. And when di d J udge Rosen r each out t o you di r ect l y t o
13 get i nvol ved i n t he Gr and Bar gai n?
14 A. I ' msor r y, I don' t r ecal l what t hat dat e was, but i t
15 was, i t was r i ght at t he same t i me t hat he was
16 gat her i ng - - I wasn' t abl e t o at t end t hat f i r st
17 meet i ng, but I t hi nk - - di dn' t he gat her peopl e i n hi s
18 chamber s? The f oundat i on communi t y i n hi s chamber s.
19 I t hi nk t hat was r eal l y, i t was i n t hat t i me sl ot t hat
20 I f i r st became awar e of i t .
21 Q. And di d J udge - - i s t he f i r st t i me you consi der ed
22 becomi ng i nvol ved i n t he Gr and Bar gai n, was t hat on a
23 phone cal l wher e J udge Rosen cont act ed you per sonal l y?
24 A. No.
25 Q. When was i t ?
00000000-0000-0000-0000-000000000000
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1 RI P RAPSON
2 A. I t was i n a, a di nner conver sat i on I had wi t h hi m.
3 Q. And dur i ng t hi s di nner conver sat i on, t hi s i s when
4 J udge Rosen pr oposed t hat t he Kr esge Foundat i on become
5 i nvol ved wi t h t he Gr and Bar gai n, i s t hat f ai r ?
6 A. Yes.
7 Q. And I ' ve r evi ewed on YouTube, of al l pl aces, a speech
8 t hat you gave at Wayne St at e Uni ver si t y - - maybe not a
9 speech, but i t cer t ai nl y was a f or mal t ype speech, and
10 do you r emember t hat , t hat addr ess?
11 A. I do.
12 Q. Okay. Do you r emember when t hat was?
13 A. I t was, what , I don' t know, t wo- and- a- hal f mont hs ago,
14 I t hi nk.
15 Q. And dur i ng t hat addr ess t o t he audi ence, you
16 r ef er enced your i ni t i al conver sat i ons wi t h Mr . Rosen,
17 i s t hat f ai r , wi t h J udge Rosen?
18 A. I don' t r ecal l , but i f i t ' s on YouTube, I ' l l t ake your
19 wor d f or i t .
20 Q. And we t hought about br i ngi ng i t i n and pl ayi ng i t f or
21 you.
22 A. Oh, t hat woul d have r eal l y been t or t ur e.
23 Q. Tel l me i f I ' mr i ght . When J udge - - dur i ng your f i r st
24 conver sat i on wi t h J udge Rosen, wher e he pr oposed t hat
25 t he Kr esge Foundat i on become i nvol ved i n t he pr ocess
00000000-0000-0000-0000-000000000000
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1 RI P RAPSON
2 f or t he Gr and Bar gai n, was i t J udge Rosen who br ought
3 up t hat t he i nvol vement of t he f oundat i on shoul d occur
4 because i t coul d sof t en t he bl ow t o t he pensi oner s and
5 hel p pr eser ve t he col l ect i on at t he DI A?
6 MR. SHUMAKER: Obj ect i on. Thi s cal l s f or
7 communi cat i ons bet ween J udge Rosen and Mr . Rapson. I
8 bel i eve t hi s f al l s wi t hi n t he const r uct of t he
9 medi at i on or der , and I woul d ask t hat t he wi t ness be
10 i nst r uct ed not t o answer .
11 I f you have speci f i c par t s of t he YouTube
12 vi deo or Mr . Rapson' s st at ement s you woul d want t o ask
13 hi mabout , t hat ' s a di f f er ent st or y. But I t hi nk when
14 you get t o t he back and f or t h bet ween Mr . Rapson and
15 J udge Rosen, you ar e i nt r udi ng i nt o t he ar ea pr ot ect ed
16 by t he medi at i on or der .
17 MR. KURZWEI L: Under t hose ci r cumst ances,
18 I ' mgoi ng t o i nst r uct t he wi t ness not t o answer t hat
19 speci f i c quest i on.
20 BY MR. MCCARTHY:
21 Q. And i s i t f ai r t o assume t hat you wi l l f ol l ow t hose
22 i nst r uct i ons and not answer quest i ons based on t he
23 medi at i on or der wi t h r espect t o your i ni t i al
24 back- and- f or t h conver sat i ons wi t h J udge Rosen at your
25 i ni t i al meet i ng wi t h hi m?
00000000-0000-0000-0000-000000000000
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1 RI P RAPSON
2 A. Yes.
3 Q. Let me t r y t o r ef r ame i t and see i f we can do i t t hat
4 way. I f not , I under st and.
5 At 10 mi nut es and 45 seconds i nt o t he
6 speech t hat you gave at Wayne St at e Uni ver si t y on t he
7 t opi c of t he bankr upt cy, you not ed t o t he audi ence
8 t hat J udge Rosen asked you speci f i cal l y t o get
9 i nvol ved wi t hi n t he Gr and Bar gai n i n or der t o, quot e,
10 sof t en t he bl ow t hat pensi oner s mi ght be f or ced t o
11 t ake.
12 Do you r emember t hat ?
13 MR. SHUMAKER: I ' mgoi ng t o obj ect on t he
14 same l i ne. You can ask whet her he made t hat st at ement
15 at Wayne St at e, but you cannot ask whet her i n f act
16 t hat was somet hi ng t hat J udge Rosen sai d t o hi m.
17 MR. KURZWEI L: I ' l l i nst r uct t he wi t ness
18 not t o answer t hat par t i cul ar quest i on.
19 BY MR. MCCARTHY:
20 Q. And you' l l f ol l ow t hose i nst r uct i ons based on t he
21 medi at i on or der ?
22 A. Yes.
23 Q. Okay. Di d you make t he f ol l owi ng st at ement at Wayne
24 St at e i n your addr ess r egar di ng, i n par t , t he Det r oi t
25 bankr upt cy, quot e: So he sai d, and he bei ng J udge
00000000-0000-0000-0000-000000000000
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1 RI P RAPSON
2 Rosen, what I want t o pr opose i s t hat t he f oundat i ons
3 come t o t he t abl e wi t h a sol ut i on t hat hel ps avoi d
4 havi ng t o l i t i gat e t hose t wo i ssues, and t he sol ut i on,
5 of cour se, t hat you al l have become f ami l i ar wi t h
6 si nce t hen i s sor t of t he Gr and Bar gai n, or what he
7 f or a whi l e was cal l i ng t he ar t t r ust , i n whi ch we
8 woul d t r y t o i dent i f y an amount of money t hat woul d be
9 suf f i ci ent t o hel p sof t en t he bl ow t hat t he pensi oner s
10 mi ght be f or ced t o t ake, and we woul d al so t r y t o
11 f i gur e out an amount t hat woul d be - - const i t ut e
12 suf f i ci ent consi der at i on f or t he t r ansf er of t he ar t
13 i nt o a new non- pr of i t and sor t of t ake t hose i ssues
14 of f t he t abl e.
15 MR. KURZWEI L: Counsel , wi t hout aski ng t o
16 l et me see a copy, ar e you r epr esent i ng t hat t hat ' s a
17 compl et e r eci t at i on of t he wor ds spoken by t he
18 wi t ness?
19 MR. MCCARTHY: I am, Counsel . We at t empt ed
20 t o do our best t o t r ansl at e what was sai d at t hat
21 YouTube i n t o t hi s di r ect quot e, and t he di r ect quot e
22 was wr i t t en f or me f r omt he good f ol ks at my of f i ce.
23 MR. SHUMAKER: Then I woul d suggest t hat
24 t he wi t ness can answer whet her he r ecal l s maki ng t he
25 st at ement as Mr . McCar t hy has ar t i cul at ed.
00000000-0000-0000-0000-000000000000
Page 85
1 RI P RAPSON
2 A. I don' t , I don' t r ecal l wor d- f or - wor d, but t hat
3 cer t ai nl y sounds l i ke my wor ds.
4 BY MR. MCCARTHY:
5 Q. What di d you do t o pr epar e f or your addr ess at Wayne
6 St at e, and speci f i cal l y wi t h r espect t o t he st at ement
7 t hat I j ust r ead? Di d you do anyt hi ng t o pr epar e t o
8 make t hat par t i cul ar st at ement ?
9 A. I f I r ecal l cor r ect l y, I was wor ki ng of f of a ser i es
10 of schemat i c di agr ams and I was t al ki ng t o t he
11 di agr ams. So I , I don' t bel i eve I was wor ki ng f r om
12 not es, and I know I was not wor ki ng f r oma scr i pt .
13 Q. And t hose di agr ams t hat you' r e r ef er enci ng now, ar e
14 t hose t he di agr ams you r ef er enced t hat you r evi ewed i n
15 pr epar at i on f or t oday' s t est i mony?
16 A. Yes.
17 Q. And you ment i oned you bel i eve t hose di agr ams have been
18 pr oduced i n t hi s case?
19 A. Yes.
20 Q. To t he ext ent t hey haven' t been, and I don' t know,
21 I ' ve r evi ewed t hem, we' d ask t hat t hey be pr oduced.
22 We' l l f ol l ow up wi t h your counsel .
23 MR. SHUMAKER: I can st at e t hat t hey have
24 been pr oduced by t he Ci t y.
25 MR. MCCARTHY: Okay.
00000000-0000-0000-0000-000000000000
Page 86
1 RI P RAPSON
2 MR. SHUMAKER: At l east I shoul d say t he
3 schemat i cs f r omMr . Rapson have been pr oduced.
4 Whet her t hey ar e i n f act t he exact same ones t hat he
5 had at Wayne St at e, I do not know.
6 THE WI TNESS: I t hi nk t hey ar e t he same.
7 BY MR. MCCARTHY:
8 Q. Mr . Rapson, so t hat I can maybe st r eaml i ne some of t he
9 addi t i onal quest i ons I have, as you si t her e t oday,
10 wi l l you - - and I don' t want you t o answer t hi s
11 quest i on, I want t o f i nd out whet her you bel i eve t hese
12 quest i ons, l i ne of quest i ons i s cover ed by t he
13 medi at i on pr i vi l ege.
14 So t o t he ext ent I ask you about t he back
15 and f or t h wi t h Mr . Rosen or any ot her par t i es who wer e
16 i nvol ved wi t h t he medi at i on t hat t ook pl ace af t er your
17 i ni t i al meet i ng wi t h J udge Rosen r egar di ng t he Gr and
18 Bar gai n, whi ch was at a di nner , as you r ef er enced,
19 wi l l you be abl e t o answer t hose quest i ons her e t oday?
20 MR. SHUMAKER: I woul d be i nt er posi ng an
21 obj ect i on t o al l such quest i ons, because I bel i eve
22 t hat back and f or t h woul d be cover ed by t he medi at i on
23 or der ent er ed by J udge Rosen.
24 MR. KURZWEI L: I t ' s my i nt ent i on upon
25 r equest of counsel t o i nst r uct t he wi t ness not t o
00000000-0000-0000-0000-000000000000
Page 87
1 RI P RAPSON
2 answer .
3 BY MR. MCCARTHY:
4 Q. I s i t f ai r t o say t hat you wi l l f ol l ow t hose
5 i nst r uct i ons, Mr . Rapson?
6 A. To a t ee.
7 Q. Pr i or t o your meet i ng wi t h Mr . Rosen t hat you' ve
8 t al ked about her e t oday, your i ni t i al meet i ng, di d you
9 have any opi ni on one way or t he ot her whet her
10 sof t eni ng t he bl ow t o t he pensi oner s or t r ansf er r i ng
11 t he ar t at t he DI A t o a new non- pr of i t ent i t y wer e
12 i ssues t hat coul d t i e up t he bankr upt cy?
13 A. Yes.
14 Q. And when di d, when di d you per sonal l y come t o t hat
15 r eal i zat i on?
16 A. Ther e was so much wr i t i ng i n t he, i n t he publ i c pr ess
17 about t he const i t ut i onal pr ot ect i on of t he pensi ons
18 and t he l i kel i hood t hat any di mi nut i on of t hei r val ue
19 woul d be l i t i gat ed ext ensi vel y, and t hat t her e wer e a
20 ser i es of i ssues sur r oundi ng t he Det r oi t I nst i t ut e' s
21 ar t col l ect i on, and whet her t hey wer e hel d i n t r ust or
22 whet her t hey wer e r eachabl e by cr edi t or s, t hat whol e
23 sui t e of i ssues, t hat i n t ur n appear ed f r omt he
24 popul ar account s t o suggest t hat t hese woul d be i ssues
25 t hat woul d be l i t i gat ed f or qui t e some t i me.
00000000-0000-0000-0000-000000000000
Page 88
1 RI P RAPSON
2 I t cer t ai nl y st r uck me at a ver y l ay
3 per son' s l evel of under st andi ng t hat t hose t wo i ssues
4 wer e goi ng t o be t ough i ssues t o mud wr est l e t hr ough
5 t he bankr upt cy.
6 Q. Pr i or t o your meet i ng wi t h J udge Rosen, had you had
7 any di scussi ons wi t h anybody r egar di ng how t he Kr esge
8 Foundat i on mi ght get i nvol ved i n t he bankr upt cy at al l
9 i n or der t o hel p addr ess ei t her of t hose i ssues, t hat
10 bei ng sof t eni ng t he bl ow t o t he pensi oner s or
11 pr eser vi ng t he col l ect i on at t he DI A?
12 A. Ther e wer e, t her e wer e no ser i ous conver sat i ons about
13 speci f i c i deas t o r esol ve ei t her i ssue.
14 Q. So I t ake i t , t hen, t he poi nt i n t i me wher e you di d
15 meet wi t h J udge Rosen r egar di ng pot ent i al l y get t i ng
16 i nvol ved wi t h t he Gr and Bar gai n, t hat was t he f i r st
17 t i me t hat you at t he Kr esge Foundat i on gave any
18 ser i ous consi der at i on or had a ser i ous conver sat i on
19 about how t he Kr esge Foundat i on mi ght get i nvol ved
20 wi t h t he bankr upt cy i n or der t o ei t her sof t en t he bl ow
21 t o t he pensi oner s or pr eser ve t he col l ect i on at t he
22 DI A?
24 A. Yeah, or t o expedi t e t he r esol ut i on of t he bankr upt cy,
25 yes, t hat was t he f i r st t i me.
00000000-0000-0000-0000-000000000000
Page 89
1 RI P RAPSON
2 BY MR. MCCARTHY:
3 Q. Pr i or t o t he Gr and Bar gai n, ar e you awar e of any ot her
4 at t empt s t hat t he Ci t y made or t he DI A made i n or der
5 t o t r ansf er par t or al l of t he col l ect i on at t he DI A
6 i n or der t o pr eser ve t he col l ect i on?
7 A. No.
8 Q. And pr i or t o t he Gr and Bar gai n, had anybody - - t o your
9 knowl edge, has anybody r eached out t o you or t he f ol ks
10 at Kr esge i n or der t o cont r i but e money i n or der t o
11 suppor t a t r ansf er of par t or al l of t he col l ect i on at
12 t he DI A?
13 A. No.
14 Q. I want t o t al k about - - movi ng asi de f r omt hi s and
15 t al k a l i t t l e bi t about some of t he essent i al ser vi ces
16 t hat t he Ci t y of Det r oi t speci f i cal l y pr ovi des.
17 Does t he Ci t y of Det r oi t need t o pr ovi de
18 decent housi ng t o i t s r esi dent s, i n Kr esge' s vi ew?
19 A. Yes.
20 Q. And i s t he Ci t y cur r ent l y pr ovi di ng decent housi ng?
21 A. I t i s, i t i s pr ovi di ng some decent housi ng. I t i s
22 pr ovi di ng a l ot of i ndecent housi ng, and t he l evel of
23 decent housi ng i s i nsuf f i ci ent .
24 Q. I s i t f ai r t o say t hat i mpr ovi ng t he l evel of decent
25 housi ng t hat t he Ci t y i s pr ovi di ng t o i t s r esi dent s i s
Exhibit 6E
Emails (K001265-1266; 1272-1273)

CONFIDENTIAL K001265 13-53846-swr Doc 6990-10 Filed 08/22/14 Entered 08/22/14 17:03:01 Page 2 of 5
6
Exhibit 6F
August 4, 2014 Deposition Transcript of D. Muchmore (excerpted)

00000000-0000-0000-0000-000000000000
950 Third Avenue, New York, NY 10022
Elisa Dreier Reporting Corp. (212) 557-5558
Page 1
DENNI S MUCHMORE
I N THE UNI TED STATES BANKRUPTCY COURT
FOR THE EASTERN DI STRI CT OF MI CHI GAN
I n r e ) Chapt er 9
CI TY OF DETROI T, MI CHI GAN, ) Case No. 13- 53846
Debt or . ) Hon. St even W. Rhodes
__________________________________
The Vi deot aped Deposi t i on of DENNI S MUCHMORE,
a 30( b) ( 6) wi t ness,
Taken at 215 Sout h Washi ngt on Squar e, Sui t e 200,
Lansi ng, Mi chi gan,
Commenci ng at 9: 00 a. m. ,
Monday, August 4, 2014,
Bef or e Rebecca L. Russo, CSR- 2759, RMR, CRR.
00000000-0000-0000-0000-000000000000
Page 54
1 DENNI S MUCHMORE
2 Q. Thank you. Wi t hi n your r ol e wi t hi n t he execut i ve
3 of f i ce, woul d you say t hat you t ake par t i n most
4 f or mal meet i ngs t hat r el at e t o t he Ci t y of Det r oi t and
5 i t s bankr upt cy?
6 A. Yes, I woul d.
7 Q. Ar e you t ypi cal l y made awar e of any f or mal pr ess
8 r el eases t hat come f r omt he gover nor ' s of f i ce t hat
9 r el at e t o t he Ci t y of Det r oi t ' s bankr upt cy?
10 A. Typi cal l y. I t ' s ki nd of a gener al wor d.
11 Q. I t i s, and I apol ogi ze f or t hat .
12 A. That ' s al l r i ght .
13 Q. But what i s t he pr ocess when t he gover nor ' s of f i ce i s
14 goi ng t o make a f or mal st at ement i n t he pr ess,
15 speci f i cal l y wi t h r espect t o t he Ci t y of Det r oi t ' s
16 bankr upt cy over t he l ast year ?
17 A. We woul d t al k about i t at comms. Comms, I mean, we
18 have a comms meet i ng, as I descr i bed ear l i er . We' d
19 t al k about i t at comms. We t ypi cal l y r un t he cont ent
20 of t hat pr ess r el ease past our l egal counsel s, and we
21 t ypi cal l y r un t hat cont ent of t hat past Kevyn Or r .
22 And somet i mes we may gi ve t he mayor a heads- up i f i t
23 deal s wi t h hi s, you know, t he pol i t i cal machi nat i ons
24 of t he ci t y.
25 Q. And i f - - di d t he St at e have any vi ew - - movi ng on t o
00000000-0000-0000-0000-000000000000
Page 55
1 DENNI S MUCHMORE
2 a di f f er ent t opi c.
3 A. Okay.
4 Q. Pr i or t o t he medi at i on, di d t he St at e have any vi ew,
5 t o your knowl edge, based on what t he pr i or i t y of t he
6 pensi oner s - - based on t he pr i or i t y t he pensi oner s
7 shoul d r ecei ve any f unds t hat come f r omt he St at e,
8 vi s- a- vi s ot her cr edi t or s i n t he Det r oi t bankr upt cy?
9 A. No, not t o my knowl edge.
10 MR. MORRI S: Obj ect i on, f or m.
11 THE WI TNESS: What was t hat ?
12 MS. NELSON: Somebody on t he t el ephone had
13 an obj ect i on.
14 THE WI TNESS: Oh, okay.
15 BY MR. MCCARTHY:
16 Q. That ' s what I ment i oned ear l i er , someone obj ect s and
17 we have a f ew peopl e - -
18 A. Okay.
19 Q. - - on t he phone t hat r epr esent ot her - - I bel i eve t hey
20 r epr esent ot her par t i es, not t he St at e, but you can go
21 ahead and answer t he quest i on, i f you can, wi t h t hat
22 obj ect i on, whi ch you di d. Thank you.
23 Pr i or t o t he medi at i on, di d t he St at e have
24 any vi ew, t o your knowl edge, wi t h r espect t o whet her
25 any f unds t hat woul d be comi ng f r omt he St at e shoul d
00000000-0000-0000-0000-000000000000
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1 DENNI S MUCHMORE
2 go sol el y t o t he benef i t of t he pensi oner s ver sus
3 ot her cr edi t or s i n t he bankr upt cy?
4 A. No.
5 Q. Has t hat vi ew changed si nce t he onset of medi at i on,
6 f r omt he St at e' s per spect i ve?
7 A. No, not r eal l y, no. I don' t t hi nk t he vi ew has
8 changed on t hat . I t ' s not a f ocus on one t hi ng. I t ' s
9 a f ocus on a compr ehensi ve sol ut i on of t he whol e Ci t y
10 bankr upt cy. We spend a l ot of t i me wi t h cr edi t or s.
11 We spend a l ot of t i me wi t h pensi oner s. We spend a
12 l ot of t i me wi t h j udges.
13 Q. Fundi ng f or t he St at e under t he Gr and Bar gai n, as i t ' s
14 been descr i bed, wi l l be goi ng t o pensi oner s,
15 speci f i cal l y, as opposed t o cer t ai n ot her gr oups of
16 cr edi t or s, i s t hat f ai r ?
17 A. I t hi nk t hat ' s f ai r , yes.
18 Q. Does t he St at e have a vi ew, t o your knowl edge, based
19 on why i t i s t hat t hat f undi ng wi l l be goi ng t o
20 pensi oner s ver sus ot her cr edi t or s?
21 MS. NELSON: I ' mgoi ng t o obj ect , because
22 t hat i nvades t he conf i dent i al i t y of t he medi at i on
23 pr ocess, and I wi l l i nst r uct hi mnot t o answer t hat
24 quest i on.
25 BY MR. MCCARTHY:
00000000-0000-0000-0000-000000000000
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1 DENNI S MUCHMORE
2 Q. I assume you wi l l f ol l ow t hose i nst r uct i ons, but l et
3 me ask you, j ust t o be sur e. Wi l l you f ol l ow t hose
4 i nst r uct i ons f r omyour counsel and not answer t he
5 quest i on?
6 A. I al ways do.
7 MR. GADOLA: Al ways?
8 THE WI TNESS: Gener al l y, when I agr ee wi t h
9 i t , I do.
10 MR. MCCARTHY: I ' mgoi ng t o ask anot her
11 quest i on, Mar gar et , t hat may cal l f or t he same answer ,
12 and t hat ' s absol ut el y f i ne and appr opr i at e, I ' msur e,
13 but l et me - - j ust so we can st r eaml i ne some of t he
14 ot her mat er i al .
15 BY MR. MCCARTHY:
16 Q. Si nce t he medi at i on has st ar t ed, has t he St at e - -
17 ear l i er we t al ked about t hat , t o your knowl edge, you
18 wer en' t awar e of t he St at e havi ng any vi ew as t o t he
19 pr i or i t y of pensi oner s, as t o who shoul d get pai d when
20 or what t hey shoul d get pai d wi t hi n t he St at e' s
21 bankr upt cy.
22 I want t o ask now, si nce t he medi at i on,
23 does t he St at e have a vi ew, wi t h r espect t o t he
24 pr i or i t y t hat pensi oner s shoul d be pai d, vi s- a- vi s
25 ot her cr edi t or s i n t he Det r oi t bankr upt cy?
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1 DENNI S MUCHMORE
2 MS. NELSON: I ' mgoi ng t o asser t t he same
3 obj ect i on.
5 MS. NELSON: Thank you. I was goi ng t o
6 obj ect as t o f or mand f oundat i on, as wel l , and al so
7 t hat i t i nvades t he conf i dent i al i t y of t he medi at i on
8 pr ocess, and i nst r uct hi mnot t o answer .
9 MR. MCCARTHY: And so I ' m- -
10 MS. NELSON: Al so, at t or ney- cl i ent
11 pr i vi l ege.
12 MR. MCCARTHY: And so I ' mcl ear , any
13 i nf or mat i on t hat I mi ght be abl e t o gat her f r omt hat
14 t hat i s not based on at t or ney- cl i ent , shoul d I st i l l
15 expect an obj ect i on based on t he medi at i on or der i f i t
16 get s i nt o t he subst ance of t he St at e' s vi ew wi t h
17 r espect t o pr i or i t y of t he pensi oner s or whet her - -
18 why i t i s t hat - - i f t he St at e has a vi ew as t o why
19 money shoul d go t o t he benef i t of t he pensi oner s af t er
20 t he August medi at i on began?
21 MS. NELSON: Cor r ect . I t i nvades t he
22 conf i dent i al i t y of t he medi at i on pr ocess.
23 BY MR. MCCARTHY:
24 Q. Pr i or t o t he medi at i on, t o your knowl edge, di d t he
25 St at e ever make any st at ement s wi t h r espect t o whet her
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1 DENNI S MUCHMORE
2 t he pensi oner s mi ght have t o f ace r educt i ons i n t he
3 benef i t s t hat t hey r ecei ve under t hei r pensi ons f or
4 t he Ci t y of Det r oi t ?
5 A. Yes, I bel i eve so.
6 Q. And pr i or t o t he medi at i on, di d t he - - t o your
7 knowl edge, was i t t he St at e' s vi ew t hat t hat coul d
8 happen, t hat t he pensi oner s f or t he Ci t y of Det r oi t
9 mi ght f ace r educt i ons i n t he amount t hat t hey r ecei ve
10 under t hei r pensi ons?
11 A. Yes.
12 Q. What was t he basi s f or t hat vi ew, as you under st and
13 i t , comi ng f r omt he St at e? And agai n, i f t hi s onl y
14 comes f r omi nf or mat i on f r omyour l awyer s, I ' d l i ke t o
15 t r y t o st ay away f r omt hat .
17 A. Ther e ar e onl y so many ways t o get t o an over al l
18 compr ehensi ve set t l ement of t hi s, and each par t y i n
19 t he set t l ement was goi ng t o have t o t ake a r educt i on
20 i n what t hey f el t t hey wer e bei ng owed, r egar dl ess of
21 who i t was, and t her e was j ust no way ar ound i t , f r om
22 our poi nt of vi ew.
23 BY MR. MCCARTHY:
24 Q. Has t hat - - movi ng f or war d. For what ever r eason, has
25 t hat vi ewpoi nt f r omt he St at e t hat ever y par t y,

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