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Judge William Whitbeck

Judge William Whitbeck

$18.5 Million and Counting

November 3, 2017

At my age, I am rarely shocked; surprised frequently, chagrined on occasion, mystified now and then, but not often shocked. However, a recent article in the Detroit Free Press by Paul Egan genuinely shocked me.  In it, Egan laid out the expenditures by the Snyder administration for the legal defense of various individuals connected with Attorney General Bill Schuette’s investigation of the Flint water crisis.  According to Egan, the Snyder administration has expended, authorized, or contracted for the expenditure of:

  • Approximately $3.5 million for his own criminal defense (in addition to $1.4 million to defend him civilly);
  • An additional $187,000 for the defense of former chief of staff Dennis Muchmore, former press secretary Sara Wurfel, and top aide Richard Baird;
  • At least $8.5 million for the defense of current (albeit in some cases suspended with full pay and benefits) or former employees of the Department of Environmental Quality, including former department director Dan Wyant;
  • At least $3.3 million for the defense of current (albeit in some cases suspended with full pay and benefits) or former employees of the Department of Health and Human Services, including department director Nick Lyon;
  • At least $75,000 for the defense of current or former employees in the Department of Treasury;
  • At least $300,000 for the defense of former emergency managers Darnell Earley and Jerry Ambrose;
  • And, perhaps, defense costs related to current or former Flint employees.

All told, these costs cumulate to approximately $18.5 million dollars to date. . . and, I emphasize, they are entirely criminal defense costs.  They do not include any amounts for defending these, or other, individuals in the over 100 civil lawsuits that various plaintiffs have brought in connection with the Flint water crisis.

At the risk of revealing just how ancient I actually am, I can say that I came to Lansing in the spring of 1966, shortly after graduating from law school.  With the exception of several years spent at HUD in Washington and Detroit and a tour of duty in the U.S Army (the time at HUD was much more harrowing than the time in the Army), I have lived in the Capitol City ever since.  By my count, I have been in and out of state and federal government six times, with fairly long intermittent stints in private practice.

In all this time and with all that experience—whether good, bad, or indifferent—under my belt, I can truthfully say that I have never experienced or even heard of government expenditures of this type or magnitude.  I grant that criminal charges against state employees in any of the three branches of Michigan government have been fairly rare since the heyday of the Sigler/Carr grand juries in the mid-1940s. 

Nonetheless, it is very clear that something extraordinary is going on here.  For whatever reason, the Snyder administration has ventured into uncharted territory.  The operative question is why.

The Role Of The Attorney General

One of the most fascinating persons, now long gone, that I met in my various positions with state government was former Assistant Attorney General Hugh Anderson.  Anderson was an extraordinarily able lawyer with two characteristics.

First, he had the ability to have three martinis for lunch and then go back to the hearing room and totally eviscerate the unfortunate opposing witness who happened to be on the stand at the time, without a single slip of the tongue or a lapse in judgment. 

Second, he detested Michigan’s privately-owned utilities (confusingly, and inaccurately, referred to then and now as “public utilities” in an effort to show that they were clothed with the public interest and therefore should be regulated).

Anderson’s boss was one of the shrewdest politicians ever to hold office in Michigan, Attorney General Frank J. Kelley.  Kelley early on realized that in an era of nearly constant utility rate increases, there was considerable benefit to intervening as a party litigant on behalf of ratepayers in the required hearings before the Public Service Commission and opposing any rate increase requests.  He also realized that in Anderson he had an absolute killer litigator who despised the utilities and their incessant rate increases.  It was a perfect match.

There was, however, one little problem that never fazed either Kelley or Anderson but that ultimately caught the attention of the courts.  That problem consisted of three words:  conflict of interest.

One example of this problem remains fixed in my memory.  In the early 1970s, I served for several years as the Director of Policy at the Public Service Commission.  The three-member Commission decided that it would personally conduct a hearing on a particularly contentious rate issue, one that potentially involved millions of dollars. 

With the television cameras conspicuously present, Attorney General Kelley showed up and absolutely dominated the hearing simply by his presence, just as he knew he would.  Seated on one side of him was Hugh Anderson representing the ratepayers.  On the other side was the lawyer who represented the Commission and its staff, Arthur D’Hondt.  Both lawyers reported to the Attorney General and both took their direction from him. 

Each lawyer made his arguments.  Each argument was both well thought out and professional.  Each argument was backed up with a well-written and persuasive brief. And each argument was in total opposition to the other. Between the two lawyers sat the Attorney General, smiling benignly and enigmatically.

As a conflict of interest, it was a perfect storm.  The Department of Attorney General was representing two diametrically opposed sets of interest in the same proceeding, with the Attorney General himself squarely in the middle and, as a party litigant, clearly favoring Hugh Anderson’s position, even though he also directly supervised Art D’Hondt. 

And, despite continuing howls of complaint from the utilities and occasionally from members of the Commission, the same scene —usually absent the Attorney General’s direct presence—played out over and over again throughout the years.

Ultimately, however, one of my colleagues of the Court of Appeals forced the matter.  Jennifer Granholm, Kelley’s successor as Attorney General, defended the procedure but in the end, she lost.  The practice now is for attorneys from the Attorney General’s office to appear on both sides, but with a “Chinese Wall” separating the two sets of lawyers.  In the event that the Attorney General himself appears as a party litigant, as has sometimes been the case, then the Commission has the right to ask for separate, outside counsel.

It was with this rather extraordinary precedent (as well as the court decisions in the matter of former Circuit Court Judge Mary Waterstone) in mind that Attorney General Bill Schuette made several critical decisions when he initiated his investigation into the Flint water crisis:

  • First, he determined that he would be a party litigant.  Therefore, the regular attorneys with the Department of Attorney General could not report to him and simultaneously represent the affected state departments and their employees in the multiple civil suits that various plaintiffs were bringing while also investigating and possibly criminally prosecuting those same employees.
  • Second, and as a consequence, he determined that to proceed ethically with those investigations and possible prosecutions he would need to retain outside lawyers as Special Assistant Attorneys General and to create a separate Office of Special Counsel staffed by such outside attorneys that would report directly to him.
  • Third, he determined that he would create a “Chinese Wall” to assure that no information passed to or from the regular attorneys in the Department of Attorney General and these Special Assistant Attorneys General or to or from himself.

The obvious question, given the Attorney General’s determinations, is:  what is so extraordinary about the Snyder administration’s decision to arrange and pay for outside lawyers to defend those individuals that the Attorney General has, or may, charge criminally in connection with the Flint water crisis?  After all, in both the Public Service Commission example and in these cases, there may be outside lawyers involved and public funds will pay for these lawyers. 

Private Lawyers, Public Money

The primary distinction between the Governor’s actions and those of the Attorney General is that, to my knowledge at least, the state of Michigan has never paid for the defense costs of those of its employees that federal, state, or local prosecutors are investigating or have charged criminally.  And the Attorney General has never represented such individuals . . . as the state’s chief prosecutor, he is precluded from doing so.

But, someone on the other side of this issue is sure to ask, is there anything intrinsically wrong with such payments?  They might go on to point out that every criminal defendant is entitled to a lawyer, sometimes one that the government pays.  And, if they are truly sophisticated, they will also point out that such payments are authorized at the state level by applicable Civil Service Commission rules.

Let me be clear that I am raising a policy issue, not one involving violation of a statute or a rule.  The question, bluntly stated, is not one of right and wrong.  The question is whether it is good public policy, and good precedent, for the state to be paying the defense costs of actual or potential criminal defendants who are employees of the state.  I can see no good reason for concluding that it is.  Indeed, I think it is a travesty. 

Certainly, criminal defendants are entitled to legal representation; that is a constitutionally guaranteed right.  But only certain defendants are entitled to have their legal defense costs paid for by the government:  those defendants who are indigent.

No court has ever held that highly compensated officers and employees of large corporations are entitled to have the government pay for their legal defense costs when they are involved in crimes.  And no court has ever held that federal, state, and local government employees—perhaps not so highly compensated but certainly not indigent—are entitled to have those same costs paid for by their employers.

There is a good reason for this dichotomy.  We commonly accept the principle that a crime implicates more than its direct victim.   Society itself is harmed, both financially and morally, every time a crime is committed. Inflicting further harm, through the allocation and payment of criminal defense costs to the taxpaying public simply makes no sense.  We make an exception, for good reason, in the case of indigent defendants but there is no justification for extending the reach of that exception to the non-indigent.

The fact that Michigan Civil Service Commission rules allow, but do not require, the payment of the criminal defense costs of state employees does not make, at least in my view, a great deal of difference in this argument.  Many things are permitted in our system, but that does not mean that it is good policy to do them.   Without getting too far into the question of the moral value of a permissive society, the fact that a given action is permitted certainly does not mean such an action should be taken.

Further, what are we saying to the general public when, after state government employees are charged with a criminal offense, we continue to pay them their full salaries and benefits as well as magnanimously covering their criminal defense costs?  I doubt that the average taxpayer will view such solicitude with much favor, particularly when in many instances he or she would not receive such treatment in the private sector.

The Question Of Motive

Given these facts, the question is why the Snyder administration has determined to pay for the criminal defense costs of state and local employees.  The cynical answer, and one that I have heard repeatedly, is that once the Governor determined to use state funds to pay his own personal criminal defense costs, he simply could not refuse to pay the similar criminal defense costs of other state employees.

Perhaps this is so.  But, frankly, that is the Governor’s personal problem and not one that should be the basis for setting public policy and lasting precedent.  If the Governor is concerned about the costs of his criminal defense, then let him create a privately funded legal defense fund as have many other public officials in similar circumstances.  And let us hear no more about having the taxpayers cover the criminal defense costs of a person who is clearly not indigent. 

There is, however, a darker explanation.  Some large corporations do pay the criminal defense costs of at least their higher level, and more directly implicated, employees.  Such corporations are, by their very charters, not charitable institutions; business realities, not abstract concepts, must justify their expenditures.  And the business reality is that such payments often work to insure the cooperation—and sometimes the silence—of these employees. 

One can certainly ask if similar realities, this time in the political sphere, are at work here.  I genuinely hope that the answer is no, there is no effort afoot to buy the silence of the affected employees.  But the extraordinary nature and magnitude of the payments for criminal defense costs that the Snyder administration has authorized certainly lead to just this sort of speculation.

Again, this is not a question of right and wrong; it is a question of what the policy of the state of Michigan should be when a prosecutor launches an investigation into whether state employees have committed criminal offenses.  I have yet to hear anyone, inside or outside the Snyder administration, come forward with a cogent defense for a course of action that, on the surface at least, appears to me to be indefensible on policy grounds.  And yet the payments go on, $18.5 million to date and counting.

William C. Whitbeck is a graduate of Northwestern University’s Medill School of Journalism and the University of Michigan Law School. During his long career, he has served on the direct staff of three Michigan governors, George Romney, William Milliken, and John Engler. In 1997, Governor Engler appointed him to the Michigan Court of Appeals where he served as a judge for almost 17 years, with six years as Chief Judge. Over the past year, he served as a Special Assistant Attorney General, advising Attorney General Bill Schuette on the Flint water crisis. Whitbeck is also the author of a legal mystery entitled, “To Account for Murder,” and is currently working on a second one.

November 2, 2017 · Filed under Judge William Whitbeck



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