United States District Court, E.D. Michigan, Southern Division
& ORDER GRANTING IN PART AND DENYING IN PART DETROIT
PUBLIC SCHOOLS DEFENDANTS' MOTION TO DISMISS (Dkt. 25);
GRANTING INTERVENOR DEFENDANTS' MOTION FOR SUMMARY
JUDGMENT (Dkt. 27); DENYING AS MOOT PLAINTIFFS' MOTION
FOR SUMMARY JUDGMENT (Dkt. 26); AND DENYING PLAINTIFF'S
MOTION FOR LEAVE TO FILE SUPPLEMENTAL BRIEF (Dkt.
A. GOLDSMITH United States District Judge
lawsuit has two distinct facets. First, Plaintiff Robert
Davis complains about allegedly unconstitutional treatment
that he received during a June 23, 2017 meeting of Defendant
Detroit Public Schools Community District Board of Education.
At the same time, Plaintiffs continue their efforts, which
began in a prior case, to prevent or undo taxpayer-funded
financing of the new Little Caesars sports arena in Detroit,
Michigan, as that financing scheme is currently structured.
Generally speaking, Plaintiffs claim that the funding scheme
violates their rights guaranteed by the U.S. Constitution,
because City of Detroit millage voters only consented to be
taxed for school purposes. By way of relief, Plaintiffs
request that the Board of Education put the funding scheme to
a vote of the school electors for the City of Detroit.
plaintiffs are Wayne County residents, but only Plaintiff D.
Etta Wilcoxon lives in Detroit. Am. Compl. ¶¶
23-24. The original defendants in this suit are the Detroit
Public Schools Community District, Detroit Public Schools,
and the Detroit Public Schools Community District Board of
Education, as well as its president, Dr. Iris Taylor, in her
official capacity (collectively, “DPS
Defendants”). When Plaintiffs filed their amended
complaint, they added as defendants Olympia Entertainment
Events Center LLC (“Olympia Entertainment”),
Palace Sports and Entertainment LLC (“Palace
Sports”), and the National Basketball Association
(“NBA”). Appearing as intervening defendants are
the Detroit Downtown Development Authority
(“DDA”) and the Detroit Brownfield Redevelopment
Authority (“DBRA”) (collectively,
“Intervenor Defendants”) - entities created by
local governments, pursuant to a state statute, for the
purpose of spurring economic growth and revitalization.
issues have been fully briefed, and a hearing was held on
July 19, 2017. For the reasons set forth below, DPS
Defendants' motion to dismiss is granted in part and
denied in part; Intervenor Defendants' motion for summary
judgment is granted; and Plaintiffs' motion for partial
summary judgment is denied as moot.
City of Detroit's November 2012 general election, voters
approved the renewal of the 18-mills Detroit Public Schools
operating millage. See Am. Compl. ¶ 170.
Plaintiffs argue that Intervenor Defendants intend to
unlawfully use revenue generated from the school operating
millage for a purpose other than the one that voters
approved. See id. ¶¶ 253-254, 269-270,
274. Specifically, Intervenor Defendants allegedly plan to
reimburse Defendants Olympia Entertainment and Palace Sports
approximately $56, 500, 000 collected pursuant to the millage
to fund certain aspects of the relocation of the Detroit
Pistons professional basketball team from Auburn Hills,
Michigan, to Detroit, Michigan. See id. ¶¶
266-267. The DDA intends to reimburse Olympia Entertainment
in the amount of $34, 500, 000 for improvements needed to
accommodate the Detroit Pistons at the Little Caesar's
arena, and the DBRA intends to reimburse Palace Sports in the
amount of $22, 000, 000 for constructing the Detroit
Pistons' practice facility and corporate headquarters.
statutes require that all millage proposals “fully
disclose each local unit of government to which the revenue
from that millage will be disbursed.” See Am.
Compl. ¶ 274 (quoting Mich. Comp. Laws §
211.24f(1)). Under Mich. Comp. Laws § 380.1216, revenues
levied for school operating purposes, in particular, may only
be used for that purpose without the consent of the local
electors. Id. ¶ 254. Plaintiffs argue that both
statutes have been violated, because the millage ballot
proposals did not identify that the funds would be used by
non-school entities for the non-school purpose of supporting
the relocation of the Pistons to Detroit.
purport to implicate DPS Defendants in the above-described
conduct due to DPS Defendants' alleged refusal to place a
proposal on the November 2017 general election ballot through
which electors can vote on whether to approve the non-school
use of funds. Olympia Entertainment and Palace Sports are
implicated based on their alleged intent to receive
reimbursement from Intervenor Defendants, which reimbursement
comes from school millage revenues.
STANDARD OF DECISION
considering whether to dismiss a complaint under Federal Rule
Civil Procedure 12(b)(1) due to lack of subject-matter
jurisdiction, the plaintiff bears the burden of proving the
existence of subject-matter jurisdiction. Musson
Theatrical, Inc. v. Fed. Express Corp., 89 F.3d 1244,
1248 (6th Cir. 1996). If the motion attacks the assertion of
subject matter jurisdiction set out in the complaint, the
court accepts the complaint's allegations as true and
construes them in the light most favorable to the non-moving
party. United States v. A.D. Roe Co., Inc., 186 F.3d
717, 721-722 (6th Cir. 1999). A motion that alleges lack of
standing is properly characterized as a motion to dismiss for
lack of subject-matter jurisdiction under Rule 12(b)(1).
See Stalley v. Methodist Healthcare, 517 F.3d 911,
916 (6th Cir. 2008) (“We review de novo a district
court's dismissal of a case for lack of standing - lack
of subject matter jurisdiction - under Fed.R.Civ.P.
motion to dismiss pursuant to Rule 12(b)(6), on the other
hand, “[t]he defendant has the burden of showing that
the plaintiff has failed to state a claim for relief.”
Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir.
2007) (citing Carver v. Bunch, 946 F.2d 451, 454-455
(6th Cir. 1991)). Such a motion “should not be granted
unless it appears beyond doubt that the plaintiff can prove
no set of facts in support of his claim which would entitle
him to relief.” Id. The plausibility standard
requires courts to assume that all the alleged facts are
true, even when their truth is doubtful, and to make all
reasonable inferences in favor of the plaintiff. Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555-556 (2007);
In re NM Holdings Co., LLC, 622 F.3d 613, 618 (6th
Cir. 2010). The complaint “does not need detailed
factual allegations.” Twombly, 550 U.S. at
555; see also Erickson v. Pardus, 551 U.S. 89, 93
(2007) (“specific facts are not necessary”). It
needs only enough facts to suggest that discovery may reveal
evidence of actionability, even if the likelihood of finding
such evidence is remote. Twombly, 550 U.S. at 556.
Evaluating a complaint's plausibility is a
“context-specific task that requires the reviewing
court to draw on its judicial experience and common
sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679
A. Plaintiffs Lack Standing to Challenge the Tax
Increment Finance Plan
VII, VIII, and X through XIV allege, in one way or another,
that DPS Defendants, Olympia Entertainment, and Palace Sports
are complicit in the wrongful diversion of school millage
revenue away from school use. Plaintiffs allege that the
diversion and use of this millage revenue for non-school
purposes, without notice to and approval by the school
electors, violates Mich. Comp. Laws § 380.1216 and Mich.
Comp. Laws § 211.24f, as interpreted by
Debano-Griffin v. Lake County, 782 N.W.2d 502 (Mich.
2010); City of South Haven v. Van Buren County Board of
Commissioners, 734 N.W.2d 533 (Mich. 2007); and In
re Request for Advisory Opinion on Constitutionality of 1986
PA 281, 422 N.W.2d 186');">422 N.W.2d 186 (Mich. 1988).
addition to the Article III criteria that every case before a
federal court must satisfy, state-law standing principles
must also be satisfied when a plaintiff brings a state-law
claim in a federal court. See Aarti Hosp., LLC v. City of
Grove City, Ohio, 350 F. App'x 1, 6 (6th Cir. 2009).
Accordingly, this Court will apply Michigan's standing
doctrine as set forth in Lansing Schools Education
Association v. Lansing Board of Education, 792 N.W.2d
686 (Mich. 2010).
to Lansing Schools, Michigan standing jurisprudence
tracked federal standing jurisprudence. See Lansing
Schs., 792 N.W.2d at 693 (standing doctrine in Michigan
was “essentially coterminous with the federal
doctrine”). Concluding that Michigan's constitution
lacked the U.S. Constitution's “case or
controversy” language, however, Lansing
Schools marked Michigan's return “to a
limited, prudential doctrine that is consistent with
Michigan's longstanding historical approach to
standing.” Id. at 699. Lansing
Schools articulated the test for standing as follows:
A litigant has standing whenever there is a legal cause of
action. Further, whenever a litigant meets the
requirements of MCR 2.605 [declaratory judgments],
it is sufficient to establish standing to seek a
declaratory judgment. Where a cause of action is not
provided at law, then a court should, in its discretion,
determine whether a litigant has standing. A litigant may
have standing in this context if the litigant has a special
injury or right, or substantial interest, that will be
detrimentally affected in a manner different from the
citizenry at large or if the statutory scheme implies that
the Legislature intended to confer standing on the litigant.
Id. (emphasis added).
do not attempt to argue that they have standing based on
having a cause of action at law; nor do they expressly claim
that they have suffered a special injury. Rather, Plaintiffs
assert that they have standing because they meet the
requirements of Mich. Ct. R. 2.605. See Pls. Mot.
for Summ. J. at 10 & n.1, 20-21; Pl. Resp. to Intervenor
Defs. Mot. for Summ. J. at 6-8. The court rule provides as
In a case of actual controversy within its jurisdiction, a
Michigan court of record may declare the rights and other
legal relations of an interested party seeking a declaratory
judgment, whether or not other relief is or could be sought
Mich. Ct. R. 2.605(1).
Schools was not entirely clear whether it created a
regime under which special injury or interest was required to
establish standing to seek a declaratory
judgment. Later cases, however, clarify that Mich.
Ct. R. 2.605 does incorporate the prerequisite of a special
injury different from that suffered by the general public.
See, e.g., UAW v. Cent. Mich. Univ. Trs.,
815 N.W.2d 132, 138-139 (Mich. Ct. App. 2012) (finding
standing under Mich. Ct. R. 2.605 in part because plaintiffs
alleged an interest “different from any rights or
interests of the public at large”); Duck Lake
Riparian Owners Ass'n v. Fruitland Twp., No. 312295,
2014 WL 891079, at *5-6 (Mich. Ct. App. Mar. 6, 2014) (noting
in general that, as to plaintiffs asserting standing under
Lansing Schools' “cause of action”
theory and Mich. Ct. R. 2.605, “plaintiffs'
standing would still depend on having some kind of harm
distinct from that of the general public”);
Greenstein v. Farmington Pub. Sch., No. 306268, 2012
WL 4222066, at *2 (Mich. Ct. App. Sept. 20, 2012) (rejecting
standing under Mich. Ct. Rule 2.605 because plaintiff failed
to allege “any interest that is detrimentally affected
in a manner different from the citizenry at large”).
Rule 2.605 “does not limit or expand the
subject-matter jurisdiction of the courts, but instead
incorporates the doctrine[ ] of standing . . .
.” Cent. Mich. Univ. Trs., 815 N.W.2d at 138
lack standing because they allege no injury apart from that
suffered by all school electors in Detroit. See also
Am. Compl. ¶ 136 (“[T]his fundamental right has
been denied Plaintiff Wilcoxon and other registered and
qualified electors of the City of Detroit . . . .”).
The only possible allegation that might be construed as a
claim of specialized injury is their allegation that they are
“the only electors who submitted a written
demand on DPS Defendants to place the TIF issue on the
November 2017 ballot.” Pls. Resp. to Intervenor Defs.
Mot. for Summ. J. at 8 (emphasis in original). But having
made a demand does not show any special injury. Any alleged
injury traceable to DPS Defendants would flow from the
failure to place a proposal on the ballot - an injury, if it
were one, that all Detroit voters would suffer, regardless of
who made a demand on DPS Defendants or whether any demand was
made at all.
same deficiency applies to the claims in Counts XII and XIII,
directed at Olympia Entertainment, Palace Sports, and the
NBA. See, e.g., Am. Compl. ¶¶ 16-17. In
those counts, Plaintiffs ask for a declaration that these
entities cannot be reimbursed with revenue collected pursuant
to a school millage, because to do so would violate state
law. Id. Even assuming that Plaintiffs are correct
about the alleged wrongdoing, it affects them no differently
than any other elector in the City of Detroit.
Plaintiffs' claims against DPS Defendants and Intervenor
Defendants in Counts VII, VIII, and X through XIV, and all
claims against Olympia Entertainment, Palace Sports, and the
NBA are dismissed with prejudice.
Michigan's Bigger Doctrine
this Court is in error regarding Plaintiffs' lack of
standing to bring the majority of their state-law claims, all
of Plaintiffs' state-law claims - including the mandamus
claim in Count IX - are subject to dismissal on account of
their dilatory conduct vis-à-vis the widely publicized
progress of the Little Caesars arena.
specific context of public works financing, Michigan law
recognizes what Intervenor Defendants aptly term a
“corollary” to laches, see Intervenor
Defs. Mot. for Summ. J. at 20. That doctrine arose in Bigger
v. City of Pontiac, 210 N.W.2d 1 (Mich. 1973), which
case did not mention the equitable doctrine of laches. In
fact, the doctrine is distinct from laches, because
“Bigger applies even if plaintiff's claim
is legal rather than equitable.” Bylinski v. City
of Allen Park, 8 F.Supp.2d 965, 973 (E.D. Mich. 1998)
(citing Walled Lake Consol. Sch. Dist. v. Charter Twp. of
Commerce, 437 N.W.2d 16, 17 (Mich. Ct. App. 1989)),
aff'd, 169 F.3d 1001 (6th Cir. 1999).
Bigger, the defendant publicized, on April 23, 1973,
its plans for a bond sale to publicly finance improvements to
a professional football stadium. “[T]he plaintiffs
allowed the balance of the month of April, all of the months
of May and June and half of the month of July to pass without
commencing any legal proceedings.” Id. at 3.
After a procedural misstep in mid-July 1973, the plaintiffs
properly commenced the action on August 1, 1973, after the
bonds had been sold and one month before the bonds were to be
delivered. Id. The Michigan Supreme Court dismissed
the case based upon that delay and its potential effect on
the defendants, stating:
In cases where because of the nature of the subject matter,
absolute time limits must be observed, the law requires
speedy resort to the courts by those who wish to prevent or
modify contemplated transactions or procedures. Those who
would avail themselves of our processes must do so in a
manner which facilitates an orderly process of adjudication
within the given time frame. . . . In this case had the
plaintiffs in April, rather than inexplicably waiting until
August, instituted this action, there would have been
adequate time for preparation, presentation and reflection.
voters approved the Detroit school millage in a 2012
election. See Am. Compl. ¶ 110. In a tax
increment financing (“TIF”) plan adopted by the
DDA in June 2013 and approved by the Detroit City Council in
December 2013, the DDA announced its intent to immediately
begin capturing revenue attributable to taxes collected for
school purposes. See 2013 TIF Plan, Ex. 2 to
Intervenor Defs. Mot. for Summ. J., at 43, 207 (noting intent
to use “tax increment revenues described in [Mich.
Comp. Laws] § 125.1651(cc)(vi), ” which statute
authorizes capture of, inter alia, ad valorum property taxes
levied by local and intermediate school districts) (Dkt.
27-3); see also Am. Compl. ¶ 152 (“On
June 26, 2013, the DDA Board of Directors passed a resolution
designating the new Little Caesars Arena as its
‘catalyst development project' [i.e., a project to
be funded through a TIF plan].”). The purpose of
this tax capture included the “primary component”
of “a multi-purpose sports and entertainment
center”; the TIF Plan named the Detroit Red Wings
professional hockey team as a fixture of the arena, and it
expressly contemplated “other sports and entertainment
events.” TIF Plan at 205.
capture at issue in this case is a modification to that
preexisting plan, which modification was made public late
last year and will be effectuated by refinancing the
outstanding series of bonds with a new series of bonds backed
by the same income stream - not by capturing millage proceeds
from new sources. See MOU, Ex. 1 to Intervenor Defs.
Mot. for Summ. J., at 3 (Dkt. 27-2) (“DDA has
determined that there is a public purpose to modify the
existing public-private partnership for the Arena to
incorporate the construction of [basketball facilities] . . .
.”), 6 (stating intent to refinance outstanding bonds
and leverage existing tax increment revenues to raise
additional monies); see also Bill Shea & Kirk
Pinho, Biggest Tabs for Public Arena Debt? Gilbert,
GM, Crain's Detroit Business (Dec. 11, 2016), Ex. 6
to Defs. Mot. for Summ. J., at 121 (cm/ecf page) (Dkt. 27-7)
(“extending the original maturity date three years to
2048, to generate $34.5 million . . . .”); Am. Compl.
¶¶ 131, 135 (acknowledging 2016 plan's
connections to the 2013 plan).
insist that the tax increment capture of these millage
revenues was sprung on the public just two months ago:
Wilcoxon avers that she first learned of the tax increment
finance plan at the Detroit City Council's May 25, 2017
public hearing. See Wilcoxon Aff., Ex. 1 to Pls.
Resp. to Intervenor Defs. Mot. for Summ. J., ¶ 10 (Dkt.
when Wilcoxon subjectively became aware of any particular
event is irrelevant under Bigger. What is relevant
is what information was reasonably available to the public at
large. See Bigger, 210 N.W.2d at 2-3 (critical date
was when agreement was “announced to the
public”). Here, Defendants submitted unrebutted
evidence proving that Plaintiffs were in a position to
judicially oppose the instant project and its tax increment
finance plan - not a little under three months ago (as was
deemed too slow in Bigger), but up to four
years ago. As noted above, the capture of the taxes at
issue here is a modification to a tax increment
financing plan that has been in place, and well-publicized,
It is a
feature of large development projects, like the Little
Caesar's arena, that they evolve over time. Rarely, if
ever, does a multi-year, billion-dollar construction project
debut in a form identical to the one seen in the original
blueprints or the conceptual model. This flexibility is
necessary; the size and duration of projects like these
present a particularly acute need to adapt to factors that
might not face a smaller project, such as changes to the
community, the local or national economic landscape,
political sensitivities, and the like. When, as here, the
general financing scheme has been public knowledge since the
beginning, permitting a plaintiff to upset a particular stage
of the evolution of the project is to permit a plaintiff to
upset the project itself. The core of Plaintiffs' legal
arguments concerning Mich. Comp. Laws § 380.1216 were
available to them, as against these Defendants, for an
inexcusably long period of time. This Court sees no
meaningful distinction between challenges to the original
plan and amendments to that plan that were added to the
project as it materialized.
this Court were inclined to recognize a distinction between
the project at large and the recent amendments, the December
2016 MOU - which was entered into by the DDA, the City of
Detroit, and Palace Sports - noted its intent to use
“state and local school taxes” for the instant
“catalyst development project.” See MOU
at 1. That the plan would capture school millage funds, in
particular, was well-reported by the news media. See,
e.g., Bill Shea, Council Puts Check on Arena
Financing, Wants Details First, Crain's Detroit
Business (Dec. 8, 2013), Ex. 3 to Intervenor Defs. Mot. to
Dismiss, at 84 (cm/ecf page) (“The bonds will be repaid
by . . . school taxes within the DDA district . . .
.”); JC Reindl, $24.4 Million Garage Helps Ilitch