Shikha Dalmia in Bloomberg View on Why Constitutional Protections Won't Mean Diddly for Detroit's Labor Unions in Bankruptcy


A federal judge yesterday threw out multiple union lawsuits challenging the constitutionality of Detroit's bankruptcy filing and declared his courtroom the exclusive venue for future proceedings. This is a setback for the unions' legal argument that the filing violates the state constitution in not holding their pension benefits harmless. It is also a strategic setback because they no longer have the option for shopping around for friendly judges who they have helped elect to state courts.

Writes Reason Foundation Senior Analyst Shikha Dalmia in Bloomberg View:

Any way you look at it, unions have to accept the cold reality that their city is broke. At best they can use their constitutional protections to squeeze a marginally better deal in bankruptcy court—not keep it out of that court. Furthermore, there is no way they can preserve all the promises to their retirees…

[T]he lesson from Detroit so far is that these protections are not worth a lot when a city, having systematically mismanaged its finances, is flat broke.

Go here for the whole thing.