Detroit’s default sinks police-abuse lawsuit

DETROIT — Detroit could have been on the hook for millions of dollars in a lawsuit alleging police abuse. Lawyers, however, are closing the case after eight years, acknowledging that the claims of possibly 200,000 people are practically worthless.

The reason? Detroit’s 2013 bankruptcy.

The 2010 lawsuit, which described poor conditions in holding cells and excessive detentions, was in progress when Detroit became the largest U.S. city to seek protection from creditors. The city eventually emerged with a clean balance sheet, a robust downtown and a national buzz among millennials.

But a new, flush Detroit doesn’t mean a windfall for people who won the class-action case. Instead, they would need to get in line like other creditors because the lawsuit was pending during the bankruptcy. Attorneys worked on a settlement with the city but concluded it wasn’t practical: A $1,000 recovery per person could be worth as little as $40 — and paid over many years.

“The costs involved in issuing and mailing these checks will be greater than the value of the checks themselves,” attorney Cindy Tsai said in a court filing.

A federal judge got an update on Nov. 28 and told both sides to draft an order for him to decertify the class, which is still pending.

“It has nothing to do with the merits of their case,” explained Anthony Sabino, who followed Detroit’s bankruptcy and teaches business law at St. John’s University in New York. “This is an unfortunate but unavoidable outcome when a party files for bankruptcy. They’re in this huge ocean of general creditors and there’s really nothing to be had for them. … They’re only eligible to share in the pennies left over.”

The lawsuit was filed on behalf of Johnathan Brown and thousands of people who had been arrested by police years earlier. The Detroit Police Department was accused of keeping crime suspects in cold, bare holding cells with no bedding and little food. The lawsuit said people were routinely held for more than 48 hours without review by a judge.

Brown was detained for 55 hours during a homicide investigation and eventually “succumbed to the [the department’s] detectives’ tactics and gave a coerced statement,” according to the lawsuit.