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May 22 (Bloomberg) -- The Detroit financial review board isn’t required to hold open meetings under Michigan law, an appeals court ruled in a case growing out of the city’s budget crisis.

The board was appointed by Michigan Governor Rick Snyder in December to determine whether Detroit needed an emergency manager. After a union official sued, Judge William Collette of Ingham County Circuit Court found the board violated the state’s Open Meetings Act and barred it from holding closed sessions. The appeals court reversed that decision today.

“A financial review team -- and therefore the Detroit Financial Review Team -- is not a public body, because it is not a ‘governing body’ as the Open Meetings Act uses that term,” a three-judge panel of the Michigan Court of Appeals ruled.

The appeals court rejected the claims brought by Robert Davis, an official with a union that represents city employees, who sued Snyder, the treasurer and the review team, saying the group is required by state law to hold meetings open to the public.

Detroit officials last month agreed to a state plan to reduce the city’s $265 million deficit by empowering an oversight board to review spending cuts and efforts to force concessions from municipal unions.

Similar Claim

The appeals court also rejected a similar claim against a review team appointed to study the city of Flint, north of Detroit, and a separate suit brought by another union official over the Detroit panel.

The court’s ruling “supports the Department of Treasury’s long-standing position that Financial Review Teams are not public bodies and are not subject to the Open Meetings Act,” Terry Stanton, a spokesman for the Treasury Department, said in an e-mail today.

The decision is “a radical change to the Open Meetings law,” Andrew Paterson, Davis’s attorney, said in an interview. “It will muck up the law for the next 40 years.” Paterson said he was still reviewing the ruling and hadn’t determined whether to appeal.

Review Team

Michigan’s Emergency Financial Manager Act, which became effective in March 2011, allows the state treasurer to review the financial problems of a municipality under certain conditions. The governor appoints a review team if the state treasurer finds probable financial stress.

If the panel declares a financial emergency, the governor may appoint a manager with sweeping powers to fire people, sell assets, void union contracts and assume authority over city officials.

Michigan Treasurer Andy Dillon made a finding of “probable financial stress” for Detroit Dec. 21 and six days later Snyder appointed the review team for the city.

The case is Davis v. City of Detroit Financial Review Team, 309218, Michigan Court of Appeals (Lansing).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at

To contact the editor responsible for this story: Michael Hytha at

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