1 1 UNCERTIFIED ROUGH DRAFT 2 VIDEO TECHNICIAN: Today's date is October 3 the 10th 2013 and we're on the record at 1:56 p.m. 4 This is the video deposition of 5 Mr. Richard Baird and we're at 211 south Washington 6 street in Lansing Michigan. 7 sworn, please. 8 Can the witness be Sworn sworn? 9 MR. DeCHIARA: Good afternoon Mr. Baird my 10 name is Peter DeChiara I'm a lawyer with the law 11 firm of Cohen, Weiss and Simon LLP. 12 the United auto workers international union in this 13 case. 14 We represent Did you prepare in any manner for this 15 deposition? 16 A. Yes. 17 Q. What did you do? 18 A. I reviewed emails, reviewed other depositions and 19 discussed with my attorneys. 20 Q. What depositions did you review? 21 A. I reviewed the depositions for Kevyn Orr and for 22 Governor Snyder and my own deposition from a case 23 brought by Robert Davis. 24 Q. Okay that was the May 24th 2013 deposition? 25 A. I don't recall the exact date. 2 1 Q. 2 Okay. It was in Davis versus local emergency financial assistance loan board? 3 A. Yes. 4 Q. And it was in the spring of this year? 5 A. Yes. 6 Q. Other than your attorneys did you speak to anyone 7 else in preparation for this deposition? 8 A. No. 9 Q. Other than the deposition that you gave in the Davis 10 case, have you given any other depositions in 2013? 11 A. No. 12 Q. What about in 2012? 13 A. No. 14 Q. Are you familiar with an organization called MI 15 partners? 16 A. Yes. 17 Q. What is MI partners. 18 A. It's actually MI partners LLC a limited liability 19 corporation which is owned by me. 20 Q. Okay. Are you an employee of MI partners LLC? 21 A. I am. 22 Q. And what's your position? 23 A. I am its president. 24 Q. Are there any other employees? 25 A. No. 3 1 Q. Are there any other owners? 2 A. No. 3 Q. What business is MI partners in? 4 A. Provides consulting services mainly organizational 5 talent strategy. 6 Q. And how many clients does MI partners have? 7 A. One. 8 Q. And who is that or what is that? 9 A. It is the new energy to reinvent and diversify. 10 Q. And what services does MI partners provide to new 11 energy to reinvest and diversify. 12 A. No, energy to reinvent and diversify. 13 Q. I'm sorry, is it reinvent or reinvest? 14 A. Reinvent. 15 Q. I'm sorry, reinvent. 16 A. The fund which covers my fees, my services are 17 provided to the Governor, his executive office and 18 his extended leadership team. 19 Q. 20 Do you receive any monies -- do you or do MI partners receive any monies directly from the state? 21 A. No. 22 Q. Does new energy to reinvent and diversify receive 23 any monies from the state? 24 A. I don't know. 25 Q. Okay. Do you know whether -- I'm just going to 4 1 refer so I don't have to keep repeating that name 2 I'm just going to refer to it as NERD, N E R D. 3 that okay? 4 about? Is Do you understand what I'm talking 5 A. I will know the fund you're referring to. 6 Q. Does NERD receive any monies from any of the 7 creditors in the Detroit bankruptcy case? 8 A. I don't know. 9 Q. Okay. 10 Do you know whether NERD receives any monies from the Jones Day law firm? 11 A. I don't know. 12 Q. Do you know whether it receives any monies from 13 Kevyn Orr? 14 A. I don't know. 15 Q. Do you know who or what finances NERD? 16 A. I don't know the donors. I've been advised that 17 they are private donors but I have no way of knowing 18 who they are. 19 Q. And for how long has this arrangement existed 20 whereby NERD pays MI partners for you to provide 21 consulting services to the Governor and his staff? 22 A. Since January of 2011. 23 Q. Apart from the arrangement I just mentioned do you 24 25 have any other paid employment? A. Employment, no. 5 1 Q. 2 Do you have any other paid consultancy work that you perform? 3 A. No. 4 Q. Are you an employee of this state of Michigan? 5 A. No. 6 Q. Okay. 7 But you have a Michigan government email address? 8 A. Yes. 9 Q. Okay. 10 11 offices out of which you work? A. 12 13 And do you have -- do you or MI partners have I have an office out of which I work at Romney and I have an office off premise in Michigan. Q. 14 Do you or MI partners pay rent for your office in the Romney building? 15 A. No. 16 Q. Have you played any -- as part of your consultancy 17 for the Governor and his staff, did you play or have 18 you played any role in connection with the 19 restructuring of the City of Detroit? 20 A. Define restructuring. 21 Q. The efforts by the City of Detroit to get its 22 economic house in order beginning before the 23 bankruptcy from whenever it began doing that up and 24 through to today? 25 A. I have not consulted with the City of Detroit on its 6 1 2 restructuring directly. Q. Okay. Have you worked in your consultancy for the 3 Governor, has part of your work for the Governor 4 been in connection with the Detroit's restructuring 5 efforts? 6 A. No. Again, I have been involved in talent 7 identification assessment but not in the direct 8 restructuring efforts for the City of Detroit. 9 Q. Okay. Other than talent identification, have you 10 performed any other work that had to do with or that 11 related in some way to Detroit? 12 A. I would -- I have been part of meetings where if it 13 asked an opinion I would provide an opinion. 14 saw an area where I had some experience or value, I 15 would render that opinion. 16 services of a restructuring nature, no. 17 Q. If I But in terms of specific Do you as a regular matter as part of your work for 18 the Governor and his staff attend official meetings 19 of the Governor and his staff? 20 A. Yes. 21 Q. Okay. 22 A. Define frequently. 23 Q. Well why don't you just tell me how often you do it? 24 A. Well every day I'm probably in some meetings with 25 And how frequently do you do that? Every day? members of his staff. 7 1 Q. 2 Would it be fair to say you work intimately with the Governor and his staff? 3 A. Sure. 4 Q. Did you attend a meeting on January 29, 2013 at 5 which various law firms were making a pitch to be 6 hired as restructuring counsel by the City of 7 Detroit? 8 A. 9 10 I don't recall the exact date but it was toward the end of January. Q. 11 Okay. I'd like to show you a document which I'll mark as Exhibit 1. 12 Exhibit 1 marked for identification 13 BY MR. DeCHIARA: 14 Q. And for the record I'll identify Exhibit 1 as 15 document that on the first page says presentation to 16 the City of Detroit, Detroit Michigan January 29, 17 2013. 18 bottom D T MI 00128731. 19 And it's Bate stamped the first page at the Mr. Baird looking at Exhibit 1 does that 20 refresh your recollection of the date of what I'll 21 call the pitch meeting? 22 A. 23 24 25 Well the document's dated January 29th, if it was delivered the same day then I was there. Q. Okay. Who else besides you on behalf of the state was at that meeting? 8 1 A. I'm not sure I recall everyone but Andy Dillon was 2 there, and Tom Saxton from treasury was there. 3 Those would be the only ones I recall from the state 4 right now. 5 Q. 6 Do you have a recollection of what was -- do you have a recollection of the meeting? 7 A. Yes. 8 Q. Okay. 9 And Jones Day was one of the law firms that made a pitch? 10 A. Correct. 11 Q. Do you have any recollection of what the people from 12 13 Jones Day said at the meeting? A. 14 I mean, that was eight, nine month ago but a directional recollection, yes. 15 Q. What's the best of your recollection? 16 A. My recollection is that Jones Day -- well first of 17 all let me say that this was not a formal pitch. 18 This meeting was set up to provide the City the 19 emergency -- I'm sorry the program management 20 director and the C F O with some parameters 21 associated with what needs to be going into an R F P 22 that had yet to be completed. 23 bringing together a number of law firms with 24 relevant experience to discuss things that the City 25 should contemplate keeping in mind for a future R F So this was simply 9 1 2 P. Q. Okay. Before I -- I have a -- I had asked you a 3 question about what was said by the Jones Day people 4 but before I ask you that let me ask you do you know 5 whether Jones Day provided any services paid or 6 unpaid or legal advice to the state prior -- at any 7 time prior to this meeting? 8 A. 9 10 I don't know. I was not aware of any such services provided. Q. Okay. All right. So what's the best of your 11 recollection of what the Jones Day people said at 12 the meeting? 13 A. Well, they went through this presentation. 14 Q. You're referring to Exhibit 1? 15 A. Exhibit 1. 16 Q. Okay. 17 A. They introduced themselves. They talked about their 18 background and their qualifications. They talked 19 about experience that they had in Detroit and in 20 Michigan. 21 solutions are absolutely preferred and they talked 22 about their experience in out of court restructuring 23 and they talked about various -- the experience that 24 they had both in out of court restructurings and in 25 court restructurings. They discussed the fact that out of court 10 1 Q. 2 3 Did they say anything about a potential bankruptcy filing by the City of Detroit? A. I don't recall specifically but certainly they 4 indicated a continuum of potential proceeding 5 depending on what transpired prior to the last 6 resort which would be a Chapter 9 filing. 7 Q. 8 9 That's what they said, they said that would be a last resort? A. I don't recall if they said that specifically but 10 members of our team made it very clear that it was 11 our intent to stay out of the courts. 12 Q. When you say our team who are you referring to? 13 A. Mainly treasury and I think that would be shared by 14 city leadership that were put in place under the 15 consent agreement. 16 director. 17 Q. 18 Okay. C F O and program management Do you recall whether Kevyn Orr spoke at the meeting? 19 A. Yes he did. 20 Q. Do you recall what he said? 21 A. He talked about his background and credentials, he 22 talked about his experience with Chrysler, he talked 23 about his broad restructuring expertise. 24 about his ties to Detroit. 25 professor at University of Michigan. He talked His mother was a He had 11 1 relatives that continued to have ties in Michigan. 2 He recalled even elements of his education where he 3 spent a fair amount of time in Detroit. 4 clear that I was impressed by the facts that he had 5 a passion for the City and I was very impressed by 6 his number both for Michigan and the City from his 7 years as an undergrad and law student. 8 Q. 9 11 At the meeting did you speak to Mr. Orr one on one. At the meeting or after the meeting. 10 It was When I say after I mean that day. A. 12 I did not speak -- if you mean one on one did the two of us have a one on one conversation. 13 Q. Right did you break off and have a one on one? 14 A. No, no I did not. 15 Q. Okay. Let me ask you also, did either Jones Day or 16 Mr. Orr at that meeting say anything about Detroit's 17 pensions or pension liability? 18 A. I don't recall. 19 Q. Let me turn your attention to page 41 of Exhibit 1? 20 A. Did I just lose my mic. 21 VIDEO TECHNICIAN: 22 THE WITNESS: 23 Q. What page was that 41. BY MR. DeCHIARA: 24 Yeah, you did. 25 Right and I'd like to draw your attention in particular to the very last line on page 41. I'll 12 1 read it for the record it says quote if needed, 2 Chapter 9 could be used as a means to further cut 3 back or compromise quote accrued financial benefits 4 end quote under other protected under the Michigan 5 constitution period end quote. 6 Do you recall any spoken statements by the 7 people from Jones Day along the lines of what's -- 8 what I just read? 9 A. I do not. 10 Q. Did you get a copy of what's been marked as 11 Exhibit 1? 12 A. I believe I did. 13 Q. And did you after the meeting did you share it with 14 anybody? 15 A. No. 16 Q. Now the day after the meeting, you called Jones Day; 17 isn't that correct? 18 A. I did. 19 Q. Okay. 20 A. Specifically I called Steven Brogan the managing And why did you call Jones Day? 21 partner for Jones Day and I asked him for permission 22 to speak with Kevyn Orr about the potential of an 23 emergency manager position if in fact Detroit were 24 found to be in emergency financial distress and the 25 Governor found it necessary to recommend to the E L 13 1 2 B and E M candidate. Q. 3 4 So you were as of January 30th interested in Mr. Orr as a potential candidate to be E M? A. I was interested in Mr. Orr after seeing him and his 5 background and experience I was very impressed and 6 that's why I made the call the next day. 7 Q. 8 Right but is it fair to say you were interested in him as a potential candidate for E M? 9 A. Yes. 10 Q. And before you made the call, did you speak to the 11 Governor about your interest in Mr. Orr? 12 A. I don't recall. 13 Q. Did you speak to Mr. Dillon? 14 A. Yes. 15 Q. And what did you and Mr. Dillon -- can you recount 16 17 I don't think so. what you said to Mr. Dillon and what he said to you? A. I spoke to Mr. Dillon at the close of the same day, 18 which according to this was January 29th, and I 19 indicated to him that I was very impressed with 20 Mr. Orr and that I was going to call Mr. Brogan the 21 next day and see if there was any potential that I 22 could talk to Mr. Orr. 23 Q. 24 25 And what did Mr. Dillon say if anything in response to that? A. My recollection is that he said I don't think you 14 1 could ever get him but he would be an extremely 2 quality candidate. 3 Q. Okay. Other than the reasons you've already 4 testified to today, are there any other reasons you 5 were interested in Mr. Orr as a potential candidate 6 for E M? 7 A. Yeah. Really two. One is that it was always our 8 intent to see if we could not solve the incredible 9 financial problems by avoiding a Chapter 9 filing 10 and to be honest, it was that meeting where it 11 became clear to me that somebody who knew their way 12 around the courts would actually stand a much better 13 chance of keeping us out of the courts in terms of 14 our negotiations with creditors and other 15 stakeholders. 16 Q. I think you said there were two. 17 A. Yeah. 18 Q. Was that? 19 A. That was one. 20 Q. What was the second? 21 A. The second one was that he was -- I didn't learn I'm sorry. 22 this then but in my first conversation with him, I 23 learned that he was the son of a teacher and he was 24 also the son of a minister and as part of the 25 conversation I had with him going forward I felt 15 1 that the man's character was exactly what we would 2 be looking for if we could convince him to do this 3 role he'd do it for the right reasons. 4 Q. 5 I'd like to show you a document I'll mark as Exhibit 2. 6 Exhibit 2 marked for identification 7 BY MR. DeCHIARA: 8 Q. 9 And I had a one-page document which is stamped at the bottom J D R D 0000113. Mr. Baird if I can 10 refer your attention to the bottom of Exhibit 2 is 11 that an email you wrote to Corinne Ball on January 12 30th, 2013? 13 A. Yes. 14 Q. And does this refresh your recollection about the 15 date on which you called Steve brogue an? 16 A. Yes it was the day after this date, yes. 17 Q. Right. So well the email is dated January 30th and 18 the email says in the second sentence was on phone 19 with Steve Brogan. 20 called Steve Brogan on January 30th. 21 A. 22 23 As I testified I called Steven Brogan on January 30th. Q. 24 25 So is it accurate that you Okay. So the meeting at which Jones Day made a presentation the day before was January 29th? A. Correct. 16 1 Q. What did Steve Brogan say when you spoke to him? 2 A. Steve said that your killing me, I just asked this 3 man to be the managing partner of our Miami office. 4 He also said we would not stand in the way of 5 anything that any of our partners wanted to do but 6 frankly I think the chances of your getting him 7 would be highly unlikely. 8 give you permission to talk to him. 9 With that said, I would And I made it -- no, I take that back. 10 It's not that I would give you permission to talk to 11 him. 12 and if there is an interest in him speaking with you 13 I will ask that he call you. 14 Steve -- and I told him that I want you to know 15 whether he talks to us or not, you will -- Jones Day 16 will neither be hurt nor helped if there's any 17 further discussions about Kevyn in this particular 18 role. I retract that. He said I will talk to him At that time I think 19 Q. Hurt or helped in what regard? 20 A. With regard to their bid -- potential bid to do work 21 22 for the City of Detroit. Q. And were you in a position to make that commitment 23 to Jones Day as to what the decisionmaking of the 24 City of Detroit would be? 25 A. Actually, on reflection no. 17 1 Q. But you made it anyway? 2 A. I did. 3 Q. Okay. Did Mr. Brogan tell you why he thought it was 4 highly unlikely that you'd be able to to get Kevyn 5 Orr? 6 A. He said he had two young children a wife who was a 7 surgeon at Johns Hopkins and the fact that he'd just 8 committed to do the Miami deal, and he thought this 9 would be too much of a deviation from those plans. 10 Q. 11 Did you speak to Mr. Orr that day, January 30th, 2013? 12 A. I don't recall. 13 Q. Let me show you a document that may help your 14 recollection. 15 I'm going to mark it as Exhibit 3. No. 3 marked for identification 16 BY MR. DeCHIARA: 17 Q. Mr. Baird, is Exhibit 3 an email -- 18 A. Well -- 19 Q. Well can you identify the top email on Exhibit 3. 20 MR. SHERWOOD: MR. DeCHIARA: 21 23 25 Yes. the end. 22 24 Is this the document 303 at I'm sorry stamped at the bottom J D R D 000303? A. Okay first of all you asked me if I spoke to Kevyn Orr on the same day as I spoke to Steven Brogan. 18 1 Q. Right? 2 A. I said I did not recall, and according to this email 3 which you've handed me it appears that I spoke to 4 Kevyn Orr the very next day, the 31st. 5 Q. 6 Okay so this refreshes your recollection that you spoke to him the next day? 7 A. Yes. 8 Q. Okay. 9 And what did you -- was it just you and Mr. Orr on the phone when you spoke to him on 10 January 31st, 2013? 11 A. I believe so. 12 Q. And to the best of your recollection tell us what 13 you said and what he said in that discussion? 14 A. I'm going to finish reading this. 15 Q. Sure. 16 A. For a moment. 17 Q. Feel free to do that. 18 A. Okay. 19 Q. So, apart from the document, although feel free to Your question? 20 look at the document, what is your recollection of 21 what you said and what he said in the telephone call 22 you had with him on January 31st? 23 A. My recollection is I told him that we were very 24 impressed with his presentation, I was very 25 impressed with his background and experience, and 19 1 that I'd asked Steve growing and for permission to 2 talk to him. 3 not Detroit would have to have an emergency manager 4 recommended and appointed but in the event that such 5 were the case would he under any circumstances be 6 willing to consider I think I called it joining the 7 Governor's irrational act club. I said that we did not know whether or 8 Q. What did he say? 9 A. He shut it down pretty summarily and he indicated 10 the reasons I'd already mentioned, that he had young 11 children, you know, his schedule -- the scheduling 12 protocol with the surgeon wife made the situation 13 already difficult. 14 job. 15 circumstances how this might work. 16 He just agreed to take the Miami And he said he really didn't see under any And I said did you talk to your wife about 17 it? He said well no not yet. And I said, well, let 18 me just tell you a little bit about other members of 19 the team, let me tell you a little bit about what 20 we've learned about Detroit, and let me ask if you 21 would at least take a night and sleep on it and talk 22 to your wife about this because frankly this is the 23 kind of a situation that, you know, a lot of people 24 would not be able to step up to, but I firmly think 25 that you are one who could. 20 1 Q. Was there any discussion in the conversation about a 2 potential filing for bankruptcy by the City of 3 Detroit? 4 A. No, I don't think so. 5 Q. Okay. 6 Let me now show you a document I'll mark as Exhibit 4. 7 No. 4 marked for identification 8 BY MR. DeCHIARA: 9 Q. And for the record, it's one-page document. Exhibit 10 4 is a one-page document stamped at the bottom J D R 11 D 0000327. 12 In the bottom portion of Exhibit 4 there's 13 an email. Mr. Baird is that an email that you wrote 14 to the various people identified in the email? 15 A. Yes, I recall -- I recall writing this. 16 Q. Okay. And it refers, does it not, to a schedule for 17 Mr. Orr to meet with various people on February 18 11th? 19 A. Correct. 20 Q. And it refers to a schedule for a 2:30 p.m. meeting 21 with the Governor and with yourself correct? 22 A. Correct. 23 Q. Did that meeting take place on February 11th? 24 A. I believe it did. 25 Q. And was anyone else present for that meeting other 21 1 than the three of you, Mr. Orr yourself and the 2 Governor? 3 A. No. 4 Q. And do you recall what was discussed in that 5 6 meeting? A. Kevyn's background was discussed, the Governor's 7 passion and commitment for Detroit was discussed. 8 fair amount of discussion around the two of them in 9 their law school experiences being a year apart was 10 discussed, and that's -- again, most of it was spent 11 talking about Kevyn and his background and 12 experience and some was reminiscing about Michigan 13 law school days. 14 Q. 15 16 A Was there any discussion of a potential bankruptcy filing by the City of Detroit? A. I don't recall; however, in the process of talking 17 with Kevyn it would have been -- we would have 18 discussed the fact that we need to do everything 19 possible to fix the problem and the courts should be 20 avoided but if they can't be avoided, then it would 21 have been -- it would have been misleading to 22 suggest that that wasn't a possibility. 23 Q. When you say -- who is the we in that sentence? 24 A. Well you asked me about a specific meeting. 25 would have been Governor Snyder and me. It 22 1 Q. So it's the two -- the Governor and yourself who 2 were saying what you just said in the prior 3 sentence? 4 A. Yes. 5 Q. In your prior answer. 6 A. Yes. 7 Q. Okay. 8 A. You have to understand, in general, it's difficult 9 to talk about the financial way forward and the 10 operating way forward for Detroit without 11 contemplating all of the avenues of rescue 12 available. 13 But in the absence of proper movement or ability to 14 negotiate, you can't have a discussion about the 15 future without looking at all of the options, and of 16 course the actual discussion with Kevyn at this 17 point was simply an option because we didn't know if 18 the review would ultimately find Detroit in a state 19 of emergency at this point. 20 this point is that there were several areas under 21 the consent agreement that were falling short of 22 what had been agreed. 23 Q. Restructuring is clearly the optimum. What we did know by In the February 11th meeting with you and the 24 Governor and Mr. Orr, did any of the three of you 25 talk about pensions or pension liability of Detroit? 23 1 A. No I don't believe so. 2 Q. Did you have meetings or discussions with Mr. Orr 3 between the -- well, actually let me back up. 4 Was the January 31 telephone call that you 5 had with Mr. Orr the first time you had a 6 conversation with him? 7 A. Except for the public back and forth on the 29th. 8 Q. Okay. 9 So between the 31st of January and this February 11th meeting did you have additional 10 discussions with Mr. Orr? 11 A. I don't recall explicitly but I'm sure that I did. 12 Q. Okay. Do you recall whether in any of those 13 discussions you talked about Detroit's pensions or 14 pension liability? 15 A. I don't believe so. 16 Q. Okay. 17 Did you talk about the prospect of or a possibility of Detroit filing for bankruptcy? 18 A. I don't recall. 19 Q. Now, Mr. Orr was appointed as E M, correct? 20 A. He was recommended by the Governor to the emergency 21 loan board and the emergency loan board appointed 22 him as E M, yes. 23 Q. 24 25 And do you know the date that that appointment became effective? A. I don't remember the exact date. It was around mid 24 1 2 March. Q. Now, is it correct that before Mr. Orr was appointed 3 as E M, emergency manager, he had earlier been 4 appointed under a prior statute, P A 72, as the E F 5 M, the emergency financial manager? 6 A. I think that is correct. 7 Q. And when did -- when did he become -- when was he 8 appointed as E F M? 9 A. I don't recall the exact date. 10 Q. Do you recall the ballpark in relation to mid March? 11 Was it -- actually let me strike that. 12 In relation to the mid March effective date 13 of Mr. Orr's appointment as E M, was his appointment 14 as E F M days before or weeks before, do you have 15 some order of magnitude? 16 A. My recollection is it was days before P A 72 was in 17 effect when he was appointed and then 436 came into 18 effect I think a matter of days thereafter. 19 Q. 20 Okay. So he was -- is it fair to say he was appointed as E F M in early to mid March? 21 A. Again, I remember mid March. 22 Q. Okay. 23 24 25 That's all I remember. I'd like to show you a document I'll mark as exhibit 5. Exhibit No. 5 marked for identification BY MR. DeCHIARA: 25 1 Q. And for the record I'll identify it as a three-page 2 document that stamped at the bottom, the stamp on 3 the first page is J D R D 0000216. 4 MR. WERTHEIMER: 5 MR. DeCHIARA: 6 Q. Yes. BY MR. DeCHIARA: 7 That's five you said. Mr. Baird, if you could look at the email at the 8 bottom half of Exhibit 5. 9 time to look at the whole document, why don't you do 10 If you want to take the that? 11 A. Well, I'll let you know if I need to. 12 Q. All right. 13 A. I recall the document. 14 Q. Okay. All right. So is it accurate that the email 15 at the bottom of Exhibit 5 is an email that you 16 wrote to Kevyn Orr on February 20th, 2013? 17 A. I believe so. 18 Q. What were you -- what was the reference in the first 19 20 sentence to the summary of partnership? A. Mayor Bing crafted a document that he described as a 21 working arrangement or working partnership or 22 something, I forget exactly -- summary of 23 partnership perhaps is what he called it, and he 24 gave that to me in a meeting. 25 told him that if in fact there was to be an We discussed it. I 26 1 emergency manager for Detroit, that this would be 2 something that he or she would have to review. 3 I also said that this would be a good 4 aspirational document but that it would be imprudent 5 to bind a future emergency manager to something that 6 he or she had not developed. 7 Q. Had the emergency manager at that point been chosen? 8 A. No. 9 Q. Let me refer you to the second -- the second 10 sentence of your email. It says quote told him that 11 there were certain things I would not think we could 12 agree to without your review, assessment and 13 determination, open parens, such as keeping the 14 executive team in its entirety, closed parens, 15 period? 16 A. Uh-huh. 17 Q. Now, the you in that -- the your in that sentence 18 refers to Mr. Orr, correct? 19 A. Correct. 20 Q. So is it -- am I reading this correctly that what 21 you're saying to Mr. Orr in this sentence is that 22 unless Mr. Orr agreed to certain things that you 23 spell out in this sentence -- or that you were 24 saying that Mr. Orr's agreement to certain things 25 that you refer to in this sentence were necessary. 27 1 A. No. 2 I don't think that would be correct. What I intended is that Kevyn Orr had not 3 yet agreed if recommended to serve in this capacity. 4 He was still doing his own due diligence determining 5 if he could separate from his firm, a number of 6 other issues. 7 were in fact to go forward it would be important to 8 him that he have a working relationship with the 9 mayor, and that's actually where this document came What he did say to me is that if he 10 from because I'd mentioned to the mayor that that 11 would be important. 12 know who Kevyn Orr was. 13 At this point, the mayor didn't So the purpose of writing this to Kevyn was 14 that so he could have an understanding of where the 15 mayor's thought process was and so that he could use 16 this information in the event that he and the mayor 17 met, which we had been discussing doing because of 18 the fact that he wanted a strong working 19 relationship with the mayor. 20 Q. Okay. In the sentence it's -- I'll quote part of 21 the sentence. 22 agree to without your review assessment and 23 determination. 24 25 A. It says I would not think we could Who is the we in that sentence? I think I used a poor choice of words. I was referring to myself, looking at this, and having 28 1 some difficulty with a few of the issues here. 2 so I think the we would be certainly me and I may 3 have been thinking at the time of what I thought the 4 chief of staff and/or the Governor might be 5 thinking. 6 than me. 7 Q. And But I don't recall who my we was other Let me read the third sentence. It says quote will 8 broker a meeting via note between you and the 9 mayor's personal assistant who is not FOIAble. 10 That's F O I A, b, l, e period end quote. 11 A. Uh-huh. 12 Q. Did you attempt to broker a meeting -- did you 13 broker a meeting between Mr. Orr and the mayor's 14 personal assistant? 15 A. I brokered a connection via note. 16 Q. And when did you do that? 17 A. I don't recall but it would have been fairly soon 18 19 after this. Q. 20 21 Okay. And can you explain what you mean by broker a meeting by a note? A. That I would introduce them to one another, provide 22 their contact information and step back and ask them 23 to work out when and where they would meet to 24 determine the kind of relationship they might seek 25 to have. 29 1 Q. 2 Were there other candidates for E M who were still being considered as of February 20th, 2013? 3 A. Yes. 4 Q. Did you broker a meeting between the mayor's 5 personal assistant and those other candidates? 6 A. No. 7 Q. Did you write an email similar to this one to the 8 other candidates where you said I would not think we 9 could agree to without your review assessment and 10 determination? 11 A. No. 12 Q. Do you know whether Mr. Bing -- I'm sorry, Mr. Orr 13 met with the mayor's personal assistant? 14 A. I don't know. 15 Q. Okay. 16 17 What did you mean by the phrase who is not FOIAble? A. The mayor and Kevyn wished to meet privately and so 18 the person who was going to set that up was someone 19 the mayor had recommended set it up because she, I 20 believe, was not a city employee. 21 Q. 22 23 employee? A. 24 25 Oh so the mayor's personal assistant was not a city I believe when I said personal it was personal assistant. Q. And why did you tell Mr. Orr in this email that the 30 1 2 personal assistant was not FOIAble? A. 3 4 Because it was my understanding she was not a city employee. Q. Why did you think that was something -- that she was 5 not FOIAble? 6 worth mentioning to Mr. Orr in this email. 7 it matter? 8 A. 9 10 Q. A. Did Mr. Orr say anything about whether he want a I don't recall. He said he wanted a meeting. I don't recall him saying he wanted a private meeting. Q. 15 16 Because the mayor wished for a private meeting not a private meeting? 13 14 What did meeting that would be publicly disclosed. 11 12 Why did you think that was something Okay. So who was it that wanted the meeting or was it both? A. The mayor or Mr. Orr? Mayor Bing wanted to meet the potential candidate 17 and Mr. Orr wanted to assess a potential working 18 relationship with Mayor Bing as one of the 19 conditions for success in the event he accepted the 20 recommendation. 21 Q. How did Mr. Bing know that Mr. Orr was a candidate? 22 A. I told him. 23 Q. Okay. 24 25 Did you tell him who the other candidates were? A. No. And I didn't tell him Mr. Orr's name until such 31 1 time as he -- the two of them expressed a desire to 2 meet. 3 Q. Okay. I'd like to mark as Exhibit 6 another 4 document which I'll have the court reporter show 5 you. 6 Exhibit 6 marked for identification 7 BY MR. DeCHIARA: 8 Q. 9 And for the record I'll identify it as a multi page document, the first page is stamped at the bottom J 10 D R D 0000459. 11 Mr. Baird let me refer your attention to 12 the email that's in the middle of the first page of 13 Exhibit 6. 14 Orr on February 22nd, 2013? Is that an email that you wrote to Kevyn 15 A. Is that the one timed 11:35 a.m. 16 Q. I'm looking at the one that says 11:41 a.m. 17 That's sort of smack in the middle. Or at 18 least the date code is sort of right in the middle 19 of -- 20 A. Yes, I believe I sent that. 21 Q. Okay. 22 A. Vaguely I recall it. 23 Q. It says quote, Kevyn, about to be in a car for And do you recall this email? 24 several hours so I thought I would send this to you 25 prior to hearing back from the G a final time end 32 1 quote the G is the Governor? 2 A. Yes. 3 Q. Okay. And then it continues quote if you agree with 4 what I have done to the doc based on everyone's 5 input, and agree that you should be the one to 6 provide it to the mayor as fully endorsed by the 7 Governor and the treasurer parens open parens and 8 you closed parens comma then I think that clearly 9 establishes that you are already behaving as an 10 agent of the state committed to getting Detroit back 11 on track end quote. 12 What was the doc -- and I assume that was 13 short for document? 14 A. Yes. 15 Q. What was the document you were referring to? 16 A. It would have been the summary of partnership that 17 18 the original draft had been provided by Mayor Bing. Q. Okay. So you were showing in this email you were 19 showing Mr. Orr certain modifications you had made 20 to the document; is that correct? 21 A. Yes. 22 Q. And were you looking for his input? 23 A. I was looking for input and/or agreement. 24 Q. From Mr. Orr? 25 A. Yes. 33 1 Q. 2 Okay. Did you -- this is two days after the document we were discussing in exhibit 5. 3 Were there still other candidates for the E 4 M position as of February 22nd, 2013? 5 A. There was one other candidate. 6 Q. Okay. Did you send that other candidate an email 7 like this looking for the other candidate's input 8 and agreement to the document you refer to in 9 Exhibit 6? 10 A. No. 11 Q. Okay. 12 Did Mr. Orr give you his input and/or agreement? 13 A. I believe he did. 14 Q. Okay. And did his giving the input or agreement 15 clearly establish to you that he was already 16 behaving as an agent of the state? 17 A. No the use of the term agent of the state was my 18 attempt at continuing the recruiting pressure on 19 Kevyn Orr because he was clearly not an agent of the 20 state. 21 Q. But nonetheless you wrote to him saying that if he 22 did what you were asking he -- that would clearly 23 establish that he was already behaving as an agent 24 of the state. 25 correctly? Am I reading what you wrote there 34 1 A. The man had not formally committed to the role and I 2 was attempting to recruit him. 3 context that I put that statement which now would 4 appear to be a little presumptuous on my part. 5 Q. 6 And it was in that Just to be clear at this point Mr. Orr was still a partner at the Jones Day law firm? 7 A. I believe so. 8 Q. Okay. 9 10 until he became E F M is that correct? A. 11 12 I never saw his withdrawal from the partnership, so you'd have to talk to them about that. Q. 13 14 Well in fact he didn't cease to be a partner Okay. Do you have a general understanding about when he severed his ties with the firm? A. 15 My understanding is he was no longer a partner when he became the E M. 16 Q. Was he partner when he became the E F M? 17 A. No. 18 19 Well I don't know but my understanding was that he was not. Q. Are you familiar with a provision of the Michigan 20 State constitution Article 9 Section 24 that refers 21 to pensions? 22 A. I am. 23 Q. What's your understanding of that provision? 24 A. Would you like to read it? 25 Q. No, I just want to know what your general 35 1 2 understanding is of the provision? A. 3 Well I'm not an attorney, so I'm not going to give a legal interpretation. 4 Q. And just for the record I'm not seeking one? 5 A. Okay. 6 Q. But you do have some idea what the provision is 7 Good. about? 8 A. I've read the provision. 9 Q. Okay what's your understanding of it? 10 A. My understanding of it is that the constitution 11 protects pensions to the extent that they are fully 12 accrued and then they can not be altered. 13 There is some degree of difference of 14 opinion about whether a fully funded pension has the 15 same protection under the constitution as one that 16 is not fully funded. 17 Q. And do you have a view on that subject? 18 A. No. 19 Q. Have you ever discussed Article 9 Section 24 with 20 anybody? 21 A. Yes. 22 Q. With whom have you discussed it? 23 A. I don't recall. 24 Q. Have you ever discussed it with Kevyn Orr? 25 A. Yes. Various people. 36 1 Q. And on one occasion or more than one occasion? 2 A. One occasion. 3 Q. What occasion was that? 4 A. It was early on in our conversation where I 5 indicated to him that I was aware of the existence 6 of the article and that he should be aware of it as 7 well. 8 discussion. 9 Q. He said he was aware of it. And that was our And was this -- can you locate this conversation in 10 time? 11 meeting that you and Mr. Orr and the Governor had? 12 A. Was it, for example, before the February 11th No, sir, I can't. During the course of a 13 recruitment you cover an awful lot of ground and you 14 answer a lot of questions and you raise lots of 15 issues. 16 individual get to the best answer as it relates to 17 an opportunity like this. 18 Q. 19 Okay. And you do the best you can to help an Was it -- the conversation before Mr. Orr became E M? 20 A. Yes. I believe it was. 21 Q. It was while you were recruiting him correct? 22 A. Yes. 23 Q. Okay. So you just so I understand, you on one 24 occasion brought up to him, Mr. Orr, the subject of 25 Article 9 Section 24? 37 1 A. I brought up to him the fact that the Michigan 2 constitution has a provision as it relates to 3 pensions. And he should be aware of it. 4 Q. And what did he respond? 5 A. He said he was aware of it. 6 Q. Did you have any further discussion about Article 9 7 Section 24? 8 A. No. 9 Q. Okay. Other than Mr. Orr -- well strike that. 10 Did you ever speak to the Governor about 11 Article 9 Section 24? 12 MR. ELLSWORTH: Object to the extent this 13 it may call for a lawyer client privileged 14 information. 15 MR. DeCHIARA: Okay I'm going to modify my 16 question to ask you to exclude occasions on which 17 you spoke to the Governor in the presence of 18 counsel? 19 A. The answer would be no. 20 BY MR. DeCHIARA: 21 Q. Did you ever speak to Mr. Dillon about Article 9 22 Section 24 with the same caveat as to not in front 23 of counsel? 24 A. I don't think so. 25 Q. Do you recall speaking to anyone at Jones Day about 38 1 article 29, -- Article 9 Section 24 of the Michigan 2 constitution? 3 MR. ELLSWORTH: 4 MR. DeCHIARA: 5 Q. Okay. BY MR. DeCHIARA: 6 Same objection. Let me modify it to say before Jones Day was 7 retained by the City. Did you speak to anyone at 8 Jones Day about Article 9 Section 24? 9 A. No I don't believe so. 10 Q. Did you ever speak to the Attorney General of the 11 12 state of Michigan about Article 9 Section 24? A. No. 13 MR. ELLSWORTH: 14 BY MR. DeCHIARA: 15 Q. Objection attorney-client. 16 Did you ever speak to Mr. Orr about what could or should be done about Detroit's pension liability? 17 A. No. 18 Q. Outside of the presence of counsel, did you ever 19 have a discussion on that subject with the Governor? 20 A. No. 21 Q. What about with Mr. Dillon? 22 A. No. 23 Q. What about with anyone else on the staff of Mr. Orr 24 or on the staff of the Governor or the staff of 25 Mr. Dillon again outside the presence of counsel? 39 1 A. I recall one conversation where I requested some 2 analytics on the distribution of pensioner income, 3 so instead of dealing with averages I could see the 4 distribution between those at the low end those at 5 the high end and where it all fell so I could at 6 least have some understanding of what any impact 7 would be in the event of pension reduction. 8 Q. Who did you have that conversation with? 9 A. I know I had it with Kevyn Orr once and I believe I 10 11 had it with Andy Dillon once. Q. 12 13 When was your conversation with Mr. Orr on the subject? A. It would have been after he was the emergency 14 manager but I don't recall how long he'd been in 15 that role. 16 Q. Okay was it before the bankruptcy filing? 17 A. I don't believe so. 18 Q. You think it was after the bankruptcy filing? 19 A. I think it was. 20 Q. Okay. 21 22 And did you say that you requested data on pensions from somebody? A. I requested data on whether the data existed on the 23 distribution by pension amount, numbers of 24 pensioners and pension amount for the current 25 roughly 20,000 pensioners. 40 1 Q. And who -- did you ask Mr. Orr for this data? 2 A. I asked Mr. Orr to see if the data could be obtained 3 4 because I thought it was relevant. Q. 5 6 And what would it be relevant to in your -- why did you think it was relevant? A. At the time I was wondering if it was possible for 7 the state to consider legislation that would provide 8 incremental safety net to those at the lower end of 9 the spectrum. 10 Q. 11 12 And you said you thought that was relevant. What did you think it was relevant to? A. 13 Well it was relevant to a question I had and I didn't know the answer so I asked to get the data. 14 Q. What was the question you had? 15 A. My question was whether or not there were other 16 avenues to provide relief to those pensioners that 17 conceivably could be impacted at the lower end of 18 the continuum. 19 discussions with anybody else. 20 question that I had because I didn't know the 21 answer. 22 Q. And that was not based on It was simply a And the question you had, when you say the person -- 23 the pensioners who would be impacted, were you 24 thinking impacted in that their accrued pension 25 benefits might be reduced? 41 1 A. Yes. 2 Q. And did Mr. Orr provide you the data you requested? 3 A. No. 4 Q. Did he -- when you asked him for it, what did he 5 6 say, if anything? A. 7 He said it was a good question and he'd get back to me. But to the best of my recollection he didn't. 8 Q. Did you ever follow up? 9 A. I honestly can't remember. 10 Q. Okay. 11 Did he say anything other than it's a good question? 12 A. Nope. 13 Q. You said you had a conversation with Andy Dillon on 14 the same subject. 15 him on this subject? 16 A. When was your conversation with It would have been about the same time. This was 17 after the bankruptcy had already been filed and 18 there was a lot of noise about whether pensions 19 would be impacted and I was trying to ascertain the 20 practical implications if they were. 21 Q. 22 And did you ask Mr. Dillon for the data on the distribution of the number of pensioners and? 23 A. No. 24 Q. The amount of pensions? 25 A. No I asked -- I actually told him that I'd ask Kevyn 42 1 2 -- that I had made that question to Kevyn. Q. 3 Did Mr. Dillon say anything in response to when you told him that? 4 A. Good question. 5 Q. Did he ever -- did he or anyone on his staff ever 6 get back to you with the data you were looking for? 7 A. Not that I recall. 8 Q. Did you speak to anyone about your idea to have 9 legislation that would provide an incremental safety 10 11 net for the people on the low end of the spectrum? A. 12 I spoke with Dennis Muchmore about it the Governor's chief of staff and he's the only one. 13 Q. And what did he say, if anything? 14 A. He didn't know. 15 16 He said I don't know what the appetite for that would be but it's a good question. Q. Now, were you when you spoke to Mr. Muchmore were 17 you proposing that Mr. -- or take steps to see if 18 such legislation could be enacted? 19 A. No I was asking a question about in the event of 20 pensions were impacted what is the practical 21 implication to those depending on the money every 22 month. 23 Q. 24 25 I wanted to know. And do you know now as you sit here today. ever seen that data? A. No I have not. Have you 43 1 Q. 2 3 legislation you described? A. 4 5 Did you speak to Mr. Muchmore about the idea of the I asked him the question what do you think the appetite would be and he had said he didn't know. Q. Okay. Do you know whether there had been any 6 discussions by the Governor and his staff about the 7 legislation you described? 8 A. No, I don't. 9 Q. Have you ever followed up? 10 A. Not on that, no. 11 Q. Do you have any sense without having seen the data 12 of what the practical impact would be on the 13 individuals at the low end of the spectrum if their 14 accrued pension benefits had been reduced. 15 A. Only anecdotal knowledge. Anecdotal knowledge are 16 that the majority of the pensioners are at the lower 17 end the spectrum so the implications of a pension 18 reduction probably couldn't be directed toward the 19 higher end of the spectrum at a sufficient level to 20 make it feasible. 21 Q. 22 23 So your understanding is that -- to make what feasible? A. Let me back up. I'm a numbers guy. I wanted to 24 know of the 20,000 pensioners that exist where do 25 they fall along a distribution continuum. What I 44 1 was looking to see is whether the distribution, the 2 standard deviation was such that if there was a 3 reduction that the number -- would the numbers be 4 material if that reduction were weighted toward the 5 larger pension earners versus the lower pension 6 earners. 7 of pension earners are at the lower end and that the 8 standard deviation is not very great. 9 Q. And anecdotally I was told that the number So in order for there to be a meaningful savings by 10 the City if it reduced pensions it would have to 11 reduce the pensions of many of those people who are 12 at the low end of the spectrum. 13 that correctly? Am I understanding 14 A. Anecdotally that's my understanding. 15 Q. Did you have any sense, anecdotally or otherwise, of 16 what the real world impact would be on those 17 individuals of the low end of the spectrum if their 18 pensions were reduced? 19 A. No, because the data never materialized for me. 20 Q. Do you have any sense whether if pensions of those 21 people at the low end the spectrum were reduced it 22 would be difficult for those individuals to make 23 ends meet? 24 25 A. I don't know. MR. ELLSWORTH: I wasn't sure he heard your 45 1 question because he was retrieving his microphone. 2 BY MR. DeCHIARA: 3 Q. Did you hear my question? 4 A. Would you repeat it. 5 Q. Do you have any sense whether if the pensions of 6 those people at the low end of the spectrum were 7 reduced would it be difficult for those individuals 8 to make ends meet? 9 A. 10 11 I would have no way of knowing in the absence of real data. Q. Your are you familiar with a letter that the 12 Governor signed on July 18th, 2013 in which he 13 purported to authorize the filing of the bankruptcy 14 of the City of Detroit? 15 A. I know that that letter existed. 16 Q. Okay. 17 Did you see the letter in any draft or nonfinal forms before the Governor signed it? 18 A. No. 19 Q. Did you participate in any way in the preparation of 20 that letter? 21 A. No. 22 Q. Did the Governor speak to you about the preparation 23 of that letter? 24 A. No. 25 Q. Did he speak to you about the contents of the letter 46 1 before he signed the letter? 2 A. No. 3 Q. Did you have anything at all to do with that letter? 4 A. No. 5 Q. Okay. You're aware are you not that a couple days 6 before the Governor signed that letter that Mr. Orr 7 had sent the Governor a letter in which Mr. Orr 8 requested permission to file for bankruptcy, right? 9 A. 10 I am aware. I don't recall having seen that letter but I am aware one was sent. 11 Q. Have you ever seen that letter? 12 A. I don't think so. 13 Q. Did Mr. Orr ever speak to you about that letter 14 before he sent it? 15 A. He spoke to me, yes. 16 Q. And was it on one or more than one occasion? 17 A. No just on one occasion. 18 Q. Let me represent to you the letter was dated July 19 16th, 2013. 20 When did you speak to Mr. Orr about the 21 22 letter? A. 23 I don't recall but it would have been very near when it was sent. 24 Q. Near before or near after? 25 A. Maybe right at the time it was sent. I recall a 47 1 conversation with Kevyn where he said I'm going to 2 do this. 3 Q. 4 5 Okay. What else if anything do you recall about that conversation? A. The reason I recall it is because he had asked me to 6 circle back to members of the consulting 7 restructuring team to talk to them about their scope 8 and service and fees because these were 9 conversations he had plan to have but hadn't had a 10 11 chance. Q. 12 And so I did that. So about the time that -- I just want to see if I'm understanding your testimony. 13 About the time that Mr. Orr sent his July 14 16th letter to the Governor requesting permission to 15 file for bankruptcy, he spoke to you about the 16 letter? 17 A. I believe he did. 18 Q. Okay. 19 A. I don't recall. 20 Q. Did he initiate the contact? 21 A. I don't recall. 22 Q. Was it a face to face meeting or a telephone call? 23 A. I believe it was telephone. 24 Q. And to the best of your recollection, can you 25 Did he call you? recount what you said and what he said in that 48 1 2 telephone call? A. I honestly don't recall other than he said I haven't 3 completed my conversations with the restructuring 4 team relative to their scope and services and fee 5 projections, and I agreed to do that on his behalf. 6 Q. Who was the restructuring team? 7 A. These would have been the principals associated with 8 Conway Mick Ken see Ernst and young Jones Day and 9 miller buck fire. 10 Q. And Mr. Orr said he wanted to complete a 11 conversation with those individuals you just 12 mentioned about their fees? 13 A. Yeah, he had been engaged with them around putting a 14 fine point on their fee estimates as opposed to a 15 broad, you know, sort of broad here's what we think 16 it might cost but he hadn't had the detailed 17 discussions. So he asked if I would do that. 18 Q. And did you do that? 19 A. I did. 20 Q. And what, if anything, did that have to do with the 21 July 16th letter that Mr. Orr sent to the Governor 22 to request permission to file for bankruptcy? 23 A. I think it was important because the fees and the 24 scope once the filing had been completed would not 25 have been subject to much in the way of reduction. 49 1 Q. 2 Did you have any other -- was that the extent of your conversation with Mr. Orr on that occasion? 3 A. Yes. 4 Q. And did you have any other discussions with Mr. Orr 5 about his July 16th letter before he sent the 6 letter? 7 A. No. 8 Q. Do you -- are you aware that in the Governor's 9 letter, the July 18th 2013 letter, the Governor said 10 that he was not going to impose contingencies on the 11 filing? 12 A. 13 14 Are you familiar with that. No I don't recall actually ever having seen the letter. Q. Okay. Are you aware that there were certain state 15 court lawsuits that were filed prior to the 16 bankruptcy filing concerning issues related to 17 article 29 Section 24 of the Michigan constitution? 18 MR. WERTHEIMER: 19 MR. DeCHIARA: 20 Article 9. Thank you Article 9 Section 24 of the Michigan constitution? 21 A. No. 22 Q. Did you ever discuss with the Governor the timing of 23 the bankruptcy filing, meaning outside of the scope 24 of counsel, did you ever discuss with the Governor 25 when it would be best to for the City of Detroit to 50 1 file for bankruptcy? 2 A. No. 3 Q. Are you aware that the state or at least the 4 Governor's office had prepared a schedule that 5 indicated that the bankruptcy filing was to occur on 6 July 19th, 2013 but it actually occurred the prior 7 day? 8 A. 9 10 Q. And are you aware that the filing actually occurred the day before? A. 13 14 I'm aware of a communications schedule that had the 19th I think as the date. 11 12 Are you aware of that? I was aware the filing when it occurred which occurred the day before. Q. Okay. Do you have any understanding or knowledge as 15 to why it occurred the day before it had been 16 planned to occur? 17 A. No. 18 Q. Did you ever outside of the presence of legal 19 counsel did you ever discuss that with the Governor? 20 A. No. 21 Q. Okay. Did you speak with the Governor outside of 22 the presence of legal counsel since he had his 23 deposition taken yesterday? 24 A. Yes. 25 Q. Did you speak about his deposition? 51 1 A. No. 2 Q. I'd like to show you a document -- well, are you 3 aware of a document that Mr. Orr presented to 4 creditors on January 14th, 2013 called? 5 MR. WERTHEIMER: 6 MR. DeCHIARA: 7 June 14th. Thank you, June 14th, 2013 can called proposal for creditors? 8 A. May I see it? 9 Q. Yes. 10 A. Yes, I am familiar with this document. 11 Q. Okay. 12 A. No. 13 Q. Did you comment on it before it was in its final 14 And did you participate in its preparation? form? 15 A. No. 16 Q. Were you asked to review it before it was made 17 final? 18 A. No. 19 Q. Not that you recall? 20 A. Yeah. 21 22 Well, not that I recall. If somebody asked me it's an email I never saw because I didn't review it. Q. Okay. Okay. Did you speak to the Governor outside 23 of the presence of legal counsel about the June 24 14th, 2013 proposal? 25 A. I don't believe so. 52 1 Q. Did you speak to Mr. Dillon? 2 A. Yes. 3 Q. Outside of the presence of legal counsel about the 4 June 14th, 2013 proposal? 5 A. No. 6 Q. You spoke to him but it was in the presence of legal 7 counsel? 8 A. Yes. 9 Q. Okay. Did you speak to anyone on the Governor's 10 staff or Mr. Dillon's staff outside of legal counsel 11 about the June 14th, 2013 proposal? 12 A. No. 13 Q. Did you speak to Mr. Orr about his proposal at any 14 time on or before June 14th, 2013? 15 A. No. 16 Q. Did you speak to him about -- did you speak it 17 Mr. Orr outside of the presence of legal counsel 18 about the proposal after June 14th, 2013? 19 A. 20 I attended that meeting and told him I thought he did a good job in its presentation. 21 Q. By that meeting you mean the June 14th 2013 meeting? 22 A. Yes. 23 Q. Okay. Do you recall Mr. Orr at the June 14th 2013 24 meeting saying words to the effect to the people who 25 were in attendance that this was not a negotiation? 53 1 A. No. 2 Q. Are you denying he said it or you just don't 3 remember if he said it or not? 4 A. I don't recall him using those words. 5 Q. Okay. Is it true that those in attendance on June 6 14th 2013 in order to be able to speak had to fill 7 out a card and have the card read by someone? 8 A. I don't know. 9 Q. I'd like to show you a document which I'll mark as 10 Exhibit 7. 11 No. 7 marked for identification 12 BY MR. DeCHIARA: 13 Q. 14 For the record it's a one-page document stamped at the bottom S O M 20003601. 15 MR. WERTHEIMER: 16 MR. DeCHIARA: 17 Q. Yes. BY MR. DeCHIARA: 18 7? 19 Do you recall receiving this email from Mr. Dillon on July 18th -- on July 8th, 2013? 20 A. Let me just finish reading it. 21 Q. Please. 22 A. I believe I've seen this before, yes. 23 Q. In the first sentence Mr. Dillon refers to the 24 Detroit consultants. 25 to? Do you know who he's referring 54 1 A. No. I mean, when he says weekly call with the 2 Detroit consultants, that generally includes Jones 3 Day, miller buck fire, earns and young, Conway Mick 4 Ken see and at times Milliman. 5 Q. In the second paragraph it says quote we met with 6 the consultants to get briefed on the pension issue 7 this afternoon period. 8 to join, period end quote. 9 I invited Baird and Tedder Did you join that briefing? 10 A. I don't believe so but I don't recall. 11 Q. Next sentence says quote, bottom line, the situation 12 is not good and the view of the consultants is that 13 current pensions have to be cut significantly, 14 period end quote. 15 Did you have any conversations with 16 Mr. Dillon about that view that current pensions 17 have to be cut significantly outside of the presence 18 of legal counsel? 19 A. I don't recall. I've had -- I have had discussions 20 with Andy relative to the funding levels of pensions 21 and have had discussions with him about the 13th 22 check but you do not recall a specific discussion 23 around the pensions have to be cut significantly. 24 25 Q. Do you have a view yourself or strike that. As of the time of this email, July 8th, 55 1 2013, at that period of time did you have a view 2 yourself as to whether current pensions had to be 3 cut significantly? 4 A. My view of what's been reported publicly is that the 5 pension funding is not sustainable for the current 6 obligations. And future obligations. 7 Q. What do you mean the pension funding? 8 A. The funding level of the pension -- the pension 9 10 funds. Q. When you say the funding do you mean the 11 contributions that are being made are not 12 sufficient. 13 A. That's correct. 14 Q. Okay. And have you -- and therefore is it your view 15 because the funding is insufficient that the 16 pensions that are being paid out of the funds need 17 to be cut significantly? 18 A. 19 20 I'm not an actuary and I don't know the answer to that question. Q. 21 But do you have a view on that question or an opinion? 22 A. I have an opinion. 23 Q. What's your opinion? 24 A. My opinion is that under funded -- significantly 25 under funded pensions are not sustainable long-term 56 1 for current workers or for workers who are more than 2 just a few years away from retirement. 3 Q. 4 5 Therefore is it your view that the Detroit pension accrued pension liabilities need to be reduced? A. No, it's my view that there's not enough money for 6 the current pension obligations and the future 7 pension obligations. 8 get reduced or not. 9 Q. 10 11 It's not my call whether they Well whether it's your call or not, I'm just asking do you have a view as to whether or not -- A. My view -- 12 MR. ELLSWORTH: 13 I object to the form and he's already answered the question. 14 BY MR. DeCHIARA: 15 Q. Can you answer the question Mr. Baird? Do you have 16 a personal view as to whether or not Detroit's 17 accrued pension liabilities need to be reduced? 18 A. My view is that if the pensions are under funded 19 that there will come a time when the obligations 20 cannot be met, and you can't create money out of 21 nothing. 22 money comes from. 23 have an opinion that the current pension funds are 24 not sustainable in the current model. 25 Q. Okay. It's not my place to ascertain where the It is my place to say to you I But you're aware are you not that whether or 57 1 not -- the question of whether or not the Detroit's 2 pension liabilities should be cut is a matter that's 3 been -- a matter of sharp debate in Detroit over the 4 course of the last few months? 5 A. 6 7 I'm aware there's been a lot of debate around this issue. Q. Okay. And have you ever spoken to the Governor 8 outside of the presence of legal counsel about this 9 issue about this debate? 10 A. Not that I recall. 11 Q. Okay. Have you ever spoken to anyone on the 12 Governor's staff outside of legal counsel on this -- 13 about this debate? 14 A. Not that I recall. 15 Q. Same question for Mr. Dillon and Mr. Dillon's staff. 16 A. Generally speaking, I know we've had discussions but 17 18 nothing explicit or a course of action forward. Q. 19 What's your best recollection of the discussions you've had with Mr. Dillon? 20 A. Very -- 21 Q. Outside of the presence of legal counsel? 22 A. Very general discussions around the sustainability 23 24 25 of the current model and whether it can survive. Q. Did Mr. Dillon ever say to you words to the effect that he believed that the pension liabilities of the 58 1 2 City of Detroit need to be reduced? A. 3 4 No, I don't recall him ever saying that. I recall him saying that the issues are significant. Q. Have you ever spoken to Mr. Orr or his -- anyone on 5 his staff outside the presence of legal counsel 6 about this subject? 7 A. No. 8 Q. I'd like to show you a document I'll mark as exhibit 9 8. 10 Exhibit 8 marked for identification 11 MR. SHERWOOD: 12 BY MR. DeCHIARA: 13 Q. What's the bates number? 14 It's a one-page document that's stamped S O M 20003657, 15 A. Okay. 16 Q. Do you recall receiving this email from Andy Dillon 17 on July 9th, 2013? 18 A. No. 19 Q. Have you ever seen this email before? 20 A. I don't recall seeing this email before. I get 21 hundreds of emails every day and I don't look at all 22 of them. 23 Q. If you look at the second paragraph of the email, 24 let me just read it. It says quote on Thursday, we 25 expect to receive financials that will help us 59 1 better understand the potential negative impact on 2 pensions and what options may be available to us to 3 avoid them period end quote? 4 A. Uh-huh. 5 Q. Did you ever speak to Mr. Dillon outside of the 6 presence of legal counsel about what options might 7 be available to avoid the potential negative impact 8 on pensions? 9 A. No. 10 Q. Let me read the last sentence of the email it says 11 quote I have some thoughts as to how you could 12 address some pointed questions if you were 13 interested in hearing them, period end quote. 14 I believe the you in there is -- well, 15 actually, I don't know who the you in there is. 16 The email was sent -- oh, I guess it's 17 addressed to the Governor. 18 that email is the Governor. 19 So I assume the you in But let me nonetheless ask you, Mr. Baird, 20 did Mr. Dillon ever share any thoughts he had with 21 you outside of the presence of legal counsel 22 regarding thoughts he had about issues related to 23 Detroit's pension liability other than what you've 24 testified to already today? 25 A. No, not outside presence of legal counsel. 60 1 Q. 2 I'd like to show you a document I'll mark as exhibit 9. 3 Exhibit 9 marked for identification 4 BY MR. DeCHIARA: 5 Q. 6 It's a two-page document that's stamped at the bottom D T MI 00113909. 7 My question on this document, Mr. Baird is 8 9 simply can you identify this document? A. I'm not sure. Some of the content appears familiar 10 but this format of the document is not familiar to 11 me. 12 Q. 13 14 Okay. So you're not -- can you testify where this document came from or what it is? A. 15 I couldn't tell you that, no. MR. DeCHIARA: 16 I have no further questions. Thank you for your time Mr. Baird. 17 THE WITNESS: 18 MR. WERTHEIMER: 19 Thank you. I've got a few questions. Want to take a break. 20 VIDEO TECHNICIAN: 21 (A brief recess was taken.) 22 VIDEO TECHNICIAN: 23 BY MR. WERTHEIMER: 25 Q. We're back on the record at 3:46 p.m. 24 Off the record 3:31 p.m. Mr. Baird my name is Bill Wertheimer. I represent 61 1 what we've been calling the Flowers plaintiffs which 2 are a group of Detroit retirees who filed one of the 3 lawsuits that preceded the bankruptcy, and I'm going 4 to ask you a few questions. 5 You testified about a conversation you had 6 with Kevyn Orr right around the time that he sent 7 the letter to the Governor seeking authorization for 8 bankruptcy. Do you recall that? 9 A. I do. 10 Q. Did he in any way indicate why he was going to make 11 the question at that time. 12 A. No. 13 Q. Do you recall asking him anything about that, you 14 Well, I don't recall that he did. know, why now Kevyn or what's happening or -- 15 A. No. 16 Q. Do you recall whether you were surprised about it, 17 that is the timing, not the act? 18 had you had any kind of a warning or anything going 19 on that would lead you to think that -- 20 A. Or put another way I had seen a communications document that had 21 Friday, the -- I don't remember the exact date, but 22 Friday. Might have been the 19th. 23 Q. Right. 24 A. Right, Friday the 19th as the date that it appeared 25 Friday was the 19th? we'd go forward. 62 1 Q. 2 Had you seen that document before the conversation with Orr? 3 A. No. 4 Q. After? 5 A. After. 6 Q. Okay. Is the document you saw what was marked at 7 the Governor's deposition as Exhibit 6 or something 8 like it? 9 A. Yes. 10 Q. Okay. And do you remember how you came to see that 11 document? Was it emailed to you were you talking to 12 somebody about it? 13 A. No, I believe it was emailed to me. 14 Q. Do you remember by who? 15 A. I don't. 16 Q. Do you remember whether you talked to anybody about 17 it between its issuance and the actual filing? 18 A. Talked about the communications plan? 19 Q. Well, broader than the communications plan but just 20 the fact that it was going to be -- the bankruptcy 21 was going to occur? 22 A. No. 23 Q. Now, you also testified that you had had 24 conversations or a conversation I think you said 25 with Orr where you asked him a question about the 63 1 distribution of the income of retirees? 2 A. Yes. 3 Q. And you also talked to the Governor's is it chief of 4 staff Mr. Muchmore? 5 A. Yes. 6 Q. About that same issue, not asking a question but 7 about -- 8 A. I related my conversation with Kevyn to Dennis. 9 Q. Can you put a time frame on these conversations? 10 11 Can you tell us approximately when they occurred? A. I believe it was after the filing because of all of 12 the public consternation around pensions and I -- as 13 I testified earlier, I wanted to know what the 14 practical impact of any action would be. 15 Q. And if I understand it right, the reason you wanted 16 to know is that was kind of the germ of an idea for 17 maybe some legislation that might be able to at 18 least in some way ameliorate the condition or the 19 problem? 20 A. 21 22 23 24 25 Correct. I was thinking unilaterally which I'm known to do. Q. I understand. Well you're anticipating my next question. At the point you had these conversations, was it your understanding that it was the Governor's 64 1 position that the state was not going to be putting 2 any money into Detroit at least as it would relate 3 to the retiree issue? 4 A. I don't recall if I would know whether that was the 5 Governor's position but I was well aware that the 6 legislative appetite for funding to Detroit was 7 highly -- was very low. 8 Q. 9 Okay. Okay. Had you had any conversations up to that point with the Governor where -- excluding 10 conversations with counsel present where you 11 discussed that fact, that is we're not going to be 12 able to get legislation through to do anything about 13 that? 14 A. No, not explicitly. 15 Q. Implicitly. 16 A. Not even implicitly. I don't recall any 17 conversations with the Governor talking about a 18 strategy where funds would be appropriated for 19 Detroit. 20 Q. Do you recall as of the point that you recall this 21 conversation with Orr and had the conversation with 22 Muchmore that the Governor publicly was taking the 23 position that although the state might be willing to 24 assist relative to services for residents of the 25 city, it would not be willing to put money in for 65 1 pensions or anything other than services for the 2 city. 3 A. I wasn't part of those conversation. 4 Q. Okay? 5 A. If they existed. 6 Q. All right. 7 You were shown -- well, it's your deposition, Exhibit No. 1. This is the Jones Day? 8 A. Uh-huh. 9 Q. Pitch from January 31st? 10 A. Yep yep. 11 Q. The pages you were shown, and I'm going to show them 12 to you again, where there's these -- one or more 13 references to pensions, is in part four of the 14 written presentation entitled components and 15 considerations for restructuring plan. 16 MR. ELLSWORTH: 17 Do you have a page number, Mr. Wertheimer. 18 MR. WERTHEIMER: 19 BY MR. WERTHEIMER: 20 Q. Yeah, that's page 34. Do you recall who from Jones Day was presenting this 21 part of the pitch? 22 actually presented to you. 23 writing that they handed out? 24 A. That's correct. 25 Q. Okay, go ahead then. And again I'm assuming it was This isn't just a 66 1 A. I believe it was Bruce Bennett. 2 Q. Did Mr. Orr make any part of the presentation? 3 A. He did. 4 Q. What part did he make? 5 A. His was predominantly a presentation around his 6 background credentials experience and his ties to 7 Michigan. 8 Q. 9 Not as to any of the specific parts unless there's some reference to Orr and his background in this 10 document? 11 A. That's correct. 12 Q. Okay. Now, I think if you take a look at page 43, I 13 think that's what counsel showed you before, you'll 14 see the bottom line literally on page 43 reads 15 Chapter 9 could be used or threatened -- I'm sorry 16 let me let you get there. 17 A. Okay. 18 Q. Take a look at the bottom line. Chapter 9 could be 19 used or threatened as a means to accomplish a 20 compromise of benefit cost rejecting or compromising 21 claims. Do you see that? 22 A. I do see it. 23 Q. Do you recall the presentation including that point? 24 A. I do not recall that specific point and I note that 25 these are speaker notes which may or may not have 67 1 been articulated. 2 Q. Well, that's one of the reasons I'm asking. 3 A. Because this is the first time I've seen -- I don't 4 have a version -- 5 Q. In this form I understand. 6 A. -- like this. 7 Q. I understand. And I think you were -- I had 8 misspoke before. 9 previous counsel. 10 You were not shown that page by You were shown I think if you turn to page 11 41 the question referenced it. 12 line, if needed, Chapter 9 could be used as a means 13 to further cut back or compromise accrued financial 14 benefits otherwise protected under the Michigan 15 constitution. 16 Again, the bottom Do you recall that point even in a general 17 way being made in the presentation? 18 A. This was back in January. 19 Q. Right. 20 A. And I don't recall the specific point but every one 21 of those firms would have discussed all of the 22 various approaches, strategies, options and whatever 23 their background and experience had them -- had 24 taught them from other municipal situations. 25 generally, it could have been made but I don't So 68 1 2 recall it. Q. All right. Do you recall that by the time all those 3 pitches were made that you were of the understanding 4 that the lawyers whether Jones Day or one of the 5 other firms were of the view that Chapter 9 could be 6 used as a means to cut back these Michigan -- these 7 benefits that are otherwise covered by this Michigan 8 constitutional provision? 9 A. No. I am not. Not explicitly. I do recall 10 discussions around Chapter 9 but not as it pertains 11 specifically to any Michigan constitution article. 12 Q. Do you recall and I think the time frame is May -- I 13 could find it somewhere -- but Kevyn Orr was already 14 emergency manager he was interviewed by the Detroit 15 Free Press and rather publicly and in a way that 16 ended up getting spread around publicity wise talked 17 about the fact that in a Chapter 9 filing the 18 pension rights of retirees could be trumped, was the 19 work he used, by federal law. 20 Do you recall generally the emergency 21 manager making that point at around that point in 22 time? 23 A. 24 25 I've made it a practice to not read the Detroit newspapers these days. Q. All right. I'll accept that. Do you recall that at 69 1 least by that point in time you knew that in fact 2 that Orr was taking that position; that is, that he 3 was using Chapter 9. 4 terms. I don't want to use pejorative 5 A. No. 6 Q. That he was using the possibility of a Chapter 9 as 7 a way to try and convince people to sit down and 8 talk with him particularly retirees? 9 A. Right. 10 Q. Go ahead. 11 MR. ELLSWORTH: Just let him get his 12 question out before you answer. 13 THE WITNESS: No I got it. You'll have to 14 ask Kevyn Orr but were I he, I would use every 15 possible means to get people to the table before 16 petitioning the court and I believe he was doing 17 exactly that. 18 BY MR. WERTHEIMER: 19 Q. Fair enough. At the point he filed bankruptcy, do 20 you have an understanding as to whether there was 21 any way that the City could deal with the problem of 22 pensions without going into bankruptcy? 23 A. Repeat the question. 24 Q. As of let's say the time the bankruptcy was filed, 25 as of that time, did you have an understanding that 70 1 bankruptcy was going to be the only way that the 2 City could deal with its pension problem without 3 asking for state assistance state assistance that 4 you knew you'd have -- the Governor would have 5 difficulty getting? 6 A. I had not contemplated it in terms of the City's 7 pension problem. I have contemplated it in terms of 8 $18 billion in liability and bondings that couldn't 9 be paid and debt service, that it was becoming clear 10 to me that in the absence of any negotiated 11 agreements with any of the major constituency that 12 bankruptcy was becoming more and more evident with 13 each passing month. 14 Q. You had mentioned that -- when I say you mentioned 15 you testified in response to earlier counsel's 16 questions that you do recall having one conversation 17 with Orr about the issue of this state 18 constitutional provision that protects pensions. 19 you recall that? Do 20 A. I do. 21 Q. Okay. 22 A. It was back during the early interaction with Kevyn. Can you put a time frame on that at all? 23 I had gotten in the habit of carrying a small 24 constitution with me because I was referring to it 25 on a regular basis across many things, and so I knew 71 1 the article was there and I said to Kevyn, are you 2 aware of this? 3 Q. He said we're aware. He didn't go beyond that at all. He didn't suggest 4 in any way, shape or form how he intended to deal 5 with it? 6 A. No, not to me. 7 Q. Okay. And do you have a memory as to what triggered 8 you to talk to him about it at that point in time 9 other than that you had the constitution in your 10 11 pocket? A. No, sir, other than -- you asked about the trigger. 12 During the recruitment process, we covered a lot of 13 ground and that ground included all the reasons you 14 should do this, and all the reasons you shouldn't do 15 it. 16 few weeks, and I don't recall any specific trigger 17 other than an old T square saying here are the pros 18 and the cons and the things you ought to be thinking 19 about it. And it was a discussion that took place over a 20 Q. All right. 21 A. Yes that's fair. 22 Q. That you are hoping will be helpful to him? 23 A. That would be a fair characterization. 24 25 It's part of you giving him information? MR. WERTHEIMER: further. Thank you. All right. I have nothing 72 1 MR. SHERWOOD: Good afternoon, Mr. Baird. 2 I'm Jack sherwood from Lowenstein Sandler and we 3 represent AFSCME in the City's bankruptcy. 4 few questions. 5 that's already been covered. 6 I have a I'll try not to go over ground Let me just go back to your engagement by 7 the Governor. In reviewing your testimony from the 8 prior case, did that start in January 2011? 9 A. It did. 10 Q. And I think you also testified that the E M 11 selection process began in October or November 2012; 12 is that right? 13 A. I would not characterize it as a selection process 14 but I would characterize it as I began thinking 15 about planning for the future in a substantive way 16 about that time. 17 Q. 18 19 And I think you said that you were looking for sources and candidates. A. Yes. Does that sound right? I would through my own network or the network 20 of people that I knew and trusted I would look for 21 individuals that had characteristics and then I 22 would talk to them about either their potential for 23 a role like this or whether they knew of 24 individuals. 25 candidates. So that's what I meant by sources or 73 1 Q. Right. So a source is someone who isn't necessarily 2 a candidate but might refer someone a candidate to 3 you, correct? 4 A. They could be both. 5 Q. Okay. 6 Was Jones Day or anyone from Jones Day a source that you contacted? 7 A. Prior to meeting Steve Brogan, no. 8 Q. And when did you meet Steve Brogan? 9 A. January 29th it appears. 10 Q. So prior to that, no sources from Jones Day. 11 How about miller buck fire source? 12 A. Yes. 13 Q. I want to talk a little bit about NERD. 14 Ken buck fire was a source. that acronym again. We'll use They pay your bills correct? 15 A. They pay my fees yes. 16 Q. And that's been the case since January of 2011? 17 A. Correct. 18 Q. Can you just give me a little more detail on how 19 20 that came about? A. 21 Do you have specific questions, because I've testified already. 22 Q. I -- yeah. 23 A. Okay. I'd like to know how it came about? My original agreement with Governor Snyder 24 was once we pulled the cabinet and his direct 25 reports together after he was elected during the 74 1 transition period that I would be returning to my 2 home at that time in Illinois on the first day after 3 his inauguration, the first working day. 4 me if I would consider staying on for a year, and I 5 said I would. 6 make for a very good bureaucrat or government 7 employee, and he said if you would make me -- if you 8 would make you know the team your exclusive client 9 how much would it cost? He asked And he said -- I said but I don't And I gave him a very cut 10 rate amount. And he said we could cover that out of 11 this fund to further good government at non-taxpayer 12 expense. 13 Q. And would you describe the fund as a lobbyist fund? 14 A. A lobbyist? 15 Q. Yeah. 16 A. What would a lobbyist fund be? 17 Q. I don't know. 18 A. If you tell me what a lobbyist fund is, I'll tell 19 20 I guess you're -- you if I think it's a lobbyist fund. Q. Well -- 21 MR. WERTHEIMER: 22 BY MR. SHERWOOD: 23 Q. It's not good. 24 25 Would you describe the new energy to reinvent and what is it diversify? A. Yes. 75 1 Q. 2 Would you describe is that as an entity that engages in lobbying? 3 A. No. 4 Q. And do you know who manages NERD? 5 A. No. 6 Q. And you don't know who is on the board? 7 You don't know who the officers, directors are? 8 A. No. 9 Q. Or trustees? 10 A. Nope. 11 Q. You just know the name of the person who signs your 12 13 check; is that right? A. I do. I know who I submit the invoice to and I know 14 who signs the check. 15 Outside of that, I don't know anything else. 16 Q. You don't know who any of their backers are? 17 A. Don't know a single donor. 18 Q. Okay. 19 The January 29th meeting -- couple more questions. Was Mr. Buck fire there? 20 A. He was. 21 Q. And what role did he play in organizing the meeting? 22 A. Ken advised Andy, Chris Andrews and Jack Martin, the 23 City's C F O at the time, on considerations and 24 capabilities of firms that specialized in 25 restructuring. And so he identified the firms that 76 1 he thought had significant expertise in the areas 2 that would be of greatest interest to the City and 3 he said these are the firms that we should bring in 4 to help you understand how to construct a request 5 for proposal to a broader variety of firms. 6 Q. 7 Did he devise some type of scoring system for the firms at that meeting? 8 A. Not that I saw, no. 9 Q. How about afterwards? 10 A. No. I'm trying to recall and I don't think I ever 11 saw any sort of a scoring mechanism for any of these 12 firms. 13 Q. 14 Did you have any role in the selection of Jones Day as the City's counsel? 15 A. I did not. 16 Q. Did you express any preference to the City as to who 17 18 should be retained as counsel? A. I believe jack Martin asked my opinion from what I 19 thought at that meeting and from my prior experience 20 with firms when I was with price water house 21 Coopers. 22 at the time and my opinion was that I didn't think 23 he would go wrong with several of the firms but that 24 I thought Jones Day by and large had more of the 25 fire power in the various areas that the firm -- And I believe that I gave him my opinion 77 1 2 that the City was looking for than the others did. Q. 3 During the Jones Day presentation -- hold it. Let me step back. 4 I think you said something like one of the 5 reasons you chose Jones Day was that they have -- 6 they do a better job of keeping Detroit out of 7 bankruptcy. 8 A. 9 10 Do you remember testifying to that? No I don't believe I testified to that. I do recall what I intended to say if that wasn't it. Q. What did you intend to say? Did you think Jones Day 11 had offered the City a better chance to stay out of 12 Chapter 9? 13 A. I don't know that Jones Day as a firm had -- I don't 14 have an opinion whether Jones Day as a firm is -- 15 would help the City stay out of Chapter 9 or not. 16 It was my contention that in the recommendation of 17 Kevyn Orr as a great candidate for the emergency 18 manager that his background and experience would 19 serve as a significant reminder to folks that they 20 should negotiate in good faith to stay out of the 21 courts because here is a man who understood exactly 22 how to navigate the courts. 23 Q. But isn't it true that Mr. Orr and Jones Day were of 24 the view at all times that it would be extremely 25 difficult to keep the City of Detroit out of 78 1 Chapter 9? 2 MR. ELLSWORTH: 3 THE WITNESS: I object to foundation. I don't know that. 4 BY MR. SHERWOOD: 5 Q. Can you look at page 13 of the presentation. 6 A. Uh-huh. 7 Q. And if you look at the end of it, basically you'd 8 agree that this slide talks about out of court 9 solutions being preferred but the conclusion at the 10 end is that they are extremely difficult to achieve 11 in practice. Do you see that? 12 A. I do see it. 13 Q. Did anyone from Jones Day convey this message to the 14 group at the meeting on January 29th? 15 A. I don't recall explicitly, no. 16 Q. And if you look at the next page, page 14, you know 17 even for the speaker notes it says an out of court 18 solution requires consensus or near consensus of 19 effected constituency, this is extremely hard to 20 achieve in practice. 21 oral presentation someone from Jones Day saying that 22 the idea that the City of Detroit is going to avoid 23 Chapter 9 is pretty farfetched? 24 25 A. Do you recall as part of the I don't recall anyone saying that the idea was farfetched. 79 1 Q. Well, do you recall them using words like that? 2 A. No, I don't. 3 Q. You don't recall words like extremely difficult as 4 5 it says on the slide? A. 6 7 Well, I don't recall those words but I wouldn't dispute them. Q. Do you recall words like do you recall Mr. Orr 8 having conversations with you wherein he suggested 9 that it would be extremely difficult to achieve an 10 out of court solution to Detroit's fiscal problems? 11 MR. ELLSWORTH: 12 13 that it would disclose lawyer client conversations. Q. 14 15 Objection to the extent Do you recall any such conversations outside the presence of counsel? A. 16 Again, which conversations? That achieving success out of court is difficulty? 17 Q. Right. 18 A. Yes, I do recall those conversations. 19 Q. Do you recall those conversations with Mr. Orr 20 outside of the presence of counsel correct? 21 A. No not with Mr. Orr. 22 Q. With who? 23 A. With the principals at McKenna long. 24 Q. Is that a law firm? 25 A. Yes. 80 1 Q. And who do they represent? 2 A. We asked them for I guess when I say we Andy Dillon 3 asked them for their best rationale on how to keep 4 us out of the courts and what the implications you 5 know of going into the courts were to educate the 6 team on our resolve to stay out of the courts. 7 MR. ELLSWORTH: 8 presenter just to clarify this. 9 Excuse me was that another BY MR. SHERWOOD: 10 Q. Was McKenna long making a presentation? 11 A. They were one in the first in presence at this 12 13 meeting. Q. Did they have that conversation with you at that 14 meeting or is that something that occurred before or 15 after that meeting? 16 A. It occurred before. 17 Q. How long before? 18 A. I don't recall. 19 Q. And at the time McKenna long wasn't retained by the 20 City as its counsel? 21 A. No they weren't retained by anyone. 22 Q. Okay. What was their view on the prospects for 23 keeping the City of Detroit out of Chapter 9 if you 24 remember? 25 A. I don't think they opined on the prospects. 81 1 Q. What did they opine on? 2 A. They opined on all of the benefits associated with 3 staying out. 4 process for why you should stay out of the courts. 5 Q. They were part of the education And but just to be clear did they opine on the -- on 6 the likelihood that Detroit would be able to stay 7 out of bankruptcy and still resolve its financial 8 issues in sort of an out of court restructuring? 9 A. No. 10 Q. They never opined on that? 11 A. No. 12 Q. Getting back to Jones Day, did you recall them 13 making a presentation at the January 28th meeting 14 where they stressed the importance of making a 15 record of a good faith negotiations? 16 A. It was the 29th now that I've been educated. 17 Q. Okay. I'm sorry. The 29th meeting. Did they -- at 18 that meeting did they stress the importance of 19 making a record of negotiations with creditors? 20 A. 21 Did Jones Day stress the importance of making a record of negotiations. 22 Q. Right. 23 A. I don't recall that explicitly. 24 Q. Now if we can look at B five -- I call it Baird 25 five. Can you get that one sir? I'm really not 82 1 asking about this document, but it's February of 2 2013 and the email from you to Kevyn Orr on February 3 20th talks about brokering a meeting between Mr. Orr 4 and the mayor. 5 Was it important from your perspective to 6 7 broker peace between the mayor and Mr. Orr? A. It was my belief that a good working relationship 8 between the two of them would be in the best 9 interest of the City. 10 Q. What about the City council? Did you have the same 11 view towards the relationship between Mr. Orr and 12 the City council for the City of Detroit? 13 A. If your question is do I believe that a good 14 relationship between Kevyn Orr and the City council 15 would be in the City's best interest the answer 16 would be yes. 17 Q. I guess the question is given that, right, did you 18 try to broker some type of meeting between Mr. Orr 19 and the City council? 20 A. No. 21 Q. Why not? 22 A. Because I did not think that it was possible. 23 Q. There were members of the City council that 24 25 supported were Orr were there not? A. I don't know. 83 1 Q. And I know that certain members of the City council 2 were very vocal against him or any other emergency 3 manager is that right? 4 A. I read the papers and there were arguments against 5 it that came from members of council that I recall, 6 yes. 7 Q. 8 Ultimately were you able to broker a working relationship between Mr. Orr and the mayor? 9 A. You'd have to ask Mr. Orr and the mayor. 10 Q. From your perspective, do you think -- 11 A. I can't opine. I testified that Kevyn Orr thought 12 it important to meet the mayor and to determine if 13 they could work together if he were to accept the 14 Governor's recommendation. 15 same about Kevyn Orr. 16 a framework under which that working relationship 17 could exist. 18 men as to how successful that arrangement turned out 19 to be. 20 Q. The mayor indicated the We did the best to articulate And you'll have to talk to those two Now, in February of 2013, I guess we'll use B five 21 just for time purposes. 22 there was one other candidate that still was sort of 23 in the running at that point in time. 24 25 A. I think you testified that There was a candidate that we had agreed we meaning the Governor and his chief of staff and treasurer 84 1 that we had agreed had the requisite capabilities 2 and had indicated a willingness to do the job but we 3 wished to continue the vetting of Kevyn to determine 4 whether he would be a better candidate. 5 Q. 6 7 Had you determined at this point that Mr. Orr was the top candidate February 2013? A. I don't -- I believe I was still doing due diligence 8 at this particular time, I think, but I was 9 cautiously optimistic that Kevyn might be the better 10 11 candidate. Q. 12 13 And at this time again February 20th, 2013, do you know whether the Governor shared that view? A. 14 I don't recall on the timetable if that were the case or not. 15 Q. What about Mr. Dillon? 16 A. I think Mr. Dillon you'd have to ask him as to 17 whether he thought Kevyn was the better of the two 18 candidates. 19 Q. 20 21 Did Mr. Dillon express to you who he thought was the better of the two candidates? A. At some point after Kevyn had indicated that he 22 could work his way clear of a withdrawal from his 23 firm and that if nominated by the Governor he would 24 be in a position to accept an appointment by the E L 25 B, yes, I think Andy indicated to me at that time 85 1 that he thought Kevyn was the better of the two 2 candidates. 3 Q. Now, was the other candidate an attorney? 4 A. No. 5 Q. Was the other candidate a man or a woman? 6 A. A man. 7 Q. Was the other candidate local? 8 A. Define local. 9 Q. A Detroit resident? 10 A. No. 11 Q. A surrounding area of Detroit resident? 12 A. I don't -- I won't dance here. I'll tell you he was 13 -- his residence was south but he had been a Detroit 14 resident. 15 Q. Did the person have restructuring experience? 16 A. He did. 17 MR. WERTHEIMER: 18 I'm sorry, did you say he was a Detroit resident. 19 THE WITNESS: He had been a Detroit 20 resident but he was not at the time that I had 21 discussed with him. 22 MR. WERTHEIMER: 23 BY MR. SHERWOOD: 25 Q. Thank you. 24 I just missed it. I'd like to ask you to look again at exhibits 7 and 86 1 8. If you could get those and look at 7 first. 2 You got this email, Exhibit 7; is that correct? 3 A. Yeah, I'm lacking at 7. 4 Q. I'm looking at the second paragraph and it appears 5 that Mr. Dillon is reporting to the Governor and 6 others including yourself when he says he met with 7 the consultants to get briefed on the pension issue 8 this afternoon, which consultant -- do you know what 9 consultants he's referring to? 10 A. No. I testified earlier that there are weekly 11 consultant meetings and I gave you the names of who 12 were on those calls but I don't recall who he 13 specifically is referring to here. 14 Q. 15 Do you know if they were the consultants for the City or some other consultants? 16 A. I don't. 17 Q. And he concluded that the situation was not good and 18 that current pensions had to be cut significantly, 19 correct? 20 A. Well, I many, I'm reading this. It says bottom line 21 the situation's not good and the view of the 22 consultants is that current pensions have to be cut 23 significantly. 24 referring to. 25 Q. Okay. I don't know which consultants he's So if you look at -- so at least at some 87 1 point as of this date certain consultants were 2 telling Mr. Dillon and Governor Snyder that the 3 pensions had to be cut significantly. 4 on that? 5 A. 6 7 Can we agree I can agree that I'm reading the same line that you're reading. Q. Okay. 8 MR. ELLSWORTH: 9 Were you finished with your answer rich. 10 THE WITNESS: Yes. 11 MR. SHERWOOD: I'm sorry. 12 the next exhibit 8. 13 with the issue of pension liability. 14 Let's look at And this exhibit also deals agree? Would you 15 A. It would appear so. 16 Q. And in this email Mr. Dillon reports that in 17 Mr. Orr's discussion with the pension he is not 18 going to translate the underfunded amount into an 19 impact on retirees or employees vested rights. 20 you see that? Do 21 A. I do. 22 Q. When you read this email on July 9th, the day after 23 you got Exhibit 7, did you ask Mr. Dillon or the 24 Governor why Mr. Orr is refusing to send a message 25 on the underfunding amount to the representatives of 88 1 the pensions? 2 A. I don't recall asking that question, no. 3 Q. Did it appear to you that Mr. Orr was not being 4 candid with the pensions by not reporting the fact 5 that they had to be cut significantly? 6 A. I'm sorry, say that again. 7 Q. Did it occur to you that Mr. Orr might not be being 8 candid with the pensions by not reporting to them 9 the fact that the pensions had to be cut 10 significantly? 11 A. That would be pure speculation on my part. 12 Q. But this situation didn't cause you to make any 13 recommendations to Mr. Dillon or the Governor or 14 Mr. Orr; is that your testimony? 15 A. Yes. I get copied on a lot of emails but I've 16 testified that pension liability, pension models are 17 frankly outside of my wheelhouse and that's not my 18 area of focus in consulting to the Governor or his 19 team. 20 Q. You testified that one of the things you did in the 21 pensions is look at the practical impact on the 22 people losing their pensions. 23 testimony? 24 25 A. Do you remember that I testified that I was -- it was desirable for me to see what that impact was, but that I never received 89 1 2 the data to actually understand the impact. Q. And but you said you talked to the Governor about 3 that and I think Mr. Orr and Mr. Dillon and they all 4 said that that was a good question. 5 that testimony? 6 A. Do you recall I don't recall talking to the Governor about that. 7 I recall talking to Mr. Orr about that. 8 recall saying to Andy that I had that conversation 9 with Mr. Orr. 10 Q. 11 12 And I And is it -- am I right -- or tell me why you thought that was important. A. I'm a curious guy. I don't know what to tell you. 13 I thought it was important because I did not 14 understand -- this would be the third time I've 15 testified to this. 16 distribution of those 20,000 pensioners was and what 17 it meant in real dollars and real lives, and that 18 was a question that I wanted to know the answer to 19 so I was looking for the data set to ascertain that. 20 Q. I did not understand what the And the pensioners whose benefits are being cut you 21 understand, do you not, that they don't have a 22 safety net like people in private industry do? 23 24 25 MR. ELLSWORTH: Objection as to the form. Go ahead and answer rich. THE WITNESS: Which pensioners are being 90 1 cut? 2 BY MR. SHERWOOD: 3 Q. 4 5 don't have a safety net like the PBGC? A. 6 7 Well, I know that they don't have a PBGC that's correct. Q. 8 9 Well, to the extent pensioners are being cut they Are you aware of any other safety net that they might have? A. 10 I'm only aware of safety nets that exist for all citizens once they get below a certain poverty line. 11 Q. But they don't relate to their pension do they? 12 A. I believe that certain benefits are contingent on 13 what your income is. 14 a pension or some other form it's your income. 15 Q. Whether that income comes from So you're suggesting that these other government 16 programs act as a safety net in lieu of the PBGC for 17 lost pension benefits? 18 A. No I think you're suggesting that. 19 Q. I'm trying to understand what you're saying. 20 I'm not trying to argue with you. 21 A. What question is it you would like me to answer. 22 Q. I'd like to know why -- whether you consider the 23 fact -- in your investigation of the practical 24 impact on people, were you doing that investigation 25 out of concern for the people who were losing or 91 1 stood to lose their pensions because they didn't 2 have a safety net? 3 A. Okay. That's what I want to know. I am not aware of what safety net does or 4 doesn't exist for them currently. 5 in what the practical implications of material 6 savings would be against the distribution of those 7 receiving pensions. 8 question that led me to ask another question which 9 is whether or not there might be an appetite for 10 legislative remedy in the absence of safety net. 11 12 I was interested And it was the answer to that Is that sufficiently clear? Q. Let me read it. And in terms of appetite for 13 legislative remedy, your prior testimony was that 14 your understanding was that that appetite was very 15 low and that's why the inquiries kind of stopped 16 there? 17 A. My understanding is that the appetite for a large 18 scale appropriation to Detroit was pretty low. 19 didn't have an opinion about whether or not there 20 was an appetite for an incremental safety net for 21 impacted pensioners were they to be impacted. 22 simply asking the question. 23 Q. I I was The June 14th meeting, you were at the meeting and I 24 think you testified something like that you 25 indicated that you thought Mr. Orr did a good job 92 1 presenting the June 14th proposal. 2 Do you remember that topic? 3 A. Yes, I do. 4 Q. Do you know whether at that meeting Mr. Orr or 5 anyone on behalf of the City of Detroit requested 6 that the parties there provide counter proposals to 7 the proposal that was being made on June 14th? 8 A. I don't recall the term counterproposal but I do 9 recall an invitation being put out to the group that 10 says once you've digested this financial information 11 and you understand the wherewithal what exists, to 12 the extent that you want to sit down and negotiate 13 in good faith now is not the time to do that but 14 there will be that time and here's the information 15 that you need in order to interact intelligibly. 16 do recall that. 17 Q. I And that meeting was approximately a month before 18 the bankruptcy filing. Were there followup -- were 19 you present at any followup meetings after the June 20 14th meeting? 21 A. With creditors? 22 Q. Right. 23 A. No. 24 Q. Did anyone report to you on the status of followup 25 meetings with creditors that occurred after the June 93 1 14th meeting? 2 A. With counsel, yes. 3 Q. What about without counsel? 4 A. Not that I recall. 5 Q. And what was said? 6 MR. ELLSWORTH: Well I -- I object to the 7 extent that would call for disclosure of 8 lawyer-client conversations. 9 that the conversations that he had were with counsel 10 present. He can clarify if I heard that wrong. 11 THE WITNESS: 12 I think Mr. Baird said No, that's correct. Counsel was present. 13 BY MR. SHERWOOD: 14 Q. But counsel was -- was counsel reporting back on how 15 the negotiations were going with the creditor 16 groups? 17 A. No. 18 Q. Who was making that report? 19 A. Kevyn Orr. 20 Q. What did he say? 21 MR. ELLSWORTH: Well, I object again. If 22 counsel was present during that discussion then 23 that's subject to the attorney-client privilege and 24 I object. 25 MR. SHERWOOD: Are you instructing him not 94 1 to answer. 2 MR. ELLSWORTH: 3 MR. SHERWOOD: Yes. A conversation between 4 Mr. Orr and him reporting on what happened at 5 negotiations with creditors. 6 MR. ELLSWORTH: 7 THE WITNESS: 8 MR. ELLSWORTH: Was counsel present? MR. ELLSWORTH: I object and I'm 9 A. 10 11 It was. This was not a one on one. Yes. instructing him not to answer. 12 BY MR. SHERWOOD: 13 Q. Were you involved in any negotiations or did anyone 14 report to you on negotiations with the bond holder 15 creditors of the City of Detroit? 16 MR. ELLSWORTH: Again, to the extent that 17 would require a disclosure of lawyer-client 18 privileged conversations, I object. 19 MR. SHERWOOD: 20 MR. ELLSWORTH: 22 THE WITNESS: I don't want the content. 21 I just want a yes or no. 23 That's fine. Updates of those discussions were provided with counsel present. 24 BY MR. SHERWOOD: 25 Q. And none of that happened outside the presence of 95 1 counsel? 2 A. No. 3 Q. During your discussions with Mr. Orr prior to his 4 appointment, did he ever say to you that the 5 appointment of an emergency manager and the filing 6 of a Chapter 9 provides political cover for the 7 Governor and/or the mayor in regard to the process 8 of making the tough decisions that face the City of 9 Detroit in the context of the restructuring? 10 A. He never said that to me. 11 Q. Did anyone ever say that in your presence? 12 A. Say it, no. 13 Q. Write it? 14 A. I saw an email where it was written, so I know that 15 16 somebody said it. Q. 17 Okay. I think I might have a copy of that email. Maybe I'll show it to you. 18 Let's look at this one. No. 10 marked for identification 19 BY MR. SHERWOOD: 20 Q. 21 22 We've marked as Baird 10. You haven't seen it yet though, huh? A. Okay. Is this one where I need to start at the 23 bottom and read it through? 24 any that I've ever seen before. 25 Q. This doesn't look like Yeah, it's really just two pages. If you start on 96 1 the second page -- actually you are referred to this 2 so why don't we take a second to go through this and 3 start with the? 4 MR. ELLSWORTH: 5 Rich do you need a chance to read it? 6 THE WITNESS: 7 MR. SHERWOOD: 8 Yeah, I need to read this. Okay. Tell me when you're done. 9 A. Okay I've completed reading it. 10 Q. Let's start with the email on page 301 which is the 11 second page. And Corinne ball is talking to Kevyn 12 and she talks about the bloom berg foundation and 13 whether we should talk to you, Mr. Baird, about 14 financial support for the project and the E M. 15 then she refers to carry Wilson from the auto task 16 force tells me about the foundation and its 17 interest. And 18 I can ask Harry for contact info. This 19 kind of support in ways nationalizes the issue and 20 the project. Do you see that? 21 A. I do. 22 Q. Do you know whether the Bloomberg foundation and 23 Harry Wilson whether they were ever brought to your 24 attention by anyone at Jones Day? 25 A. They were not. 97 1 Q. So this is the first you're hearing of this? 2 A. No. I've seen not this entire string of email, but 3 I have seen from some emails that were provided in 4 discovery to me, I've seen this, the 1-31-13, 5 8:10 a.m. and I have seen all the way up through the 6 1-31, 11:01 a.m. from Kevyn Orr to Dan Moss but I 7 have not seen this last piece which is from Dan Moss 8 to Kevyn Orr. 9 Q. 10 11 the top of the email string correct? A. 12 13 The top of the email string, right. The most recent string of this. Q. 14 15 And by this last piece you're referring to really So as of January 31st, 2013, do you know who Dan Moss is? A. I believe -- I don't know exactly who he is but I 16 know he's a colleague of Kevyn Orr's at Jones Day. 17 That's all I know. 18 Q. I've heard the name. As of January 31st, 2013, did Mr. Orr suggest to you 19 that Chapter 9 would be the best solution for the 20 City of Detroit for political reasons? 21 A. No he did not. 22 Q. Did he suggest to you that Chapter 9 would not be an 23 24 25 alternative as of January 31st, 2013? A. I don't believe he placed any priority of any sort on Chapter 9 to me in any conversation or 98 1 2 communication. Q. During the course of your discussions with Mr. Orr, 3 did he emphasize the need to have the unqualified 4 support from the Governor during the -- during his 5 tenure as emergency manager? 6 A. I'm not sure I would use the term unqualified 7 support. 8 believed that support from the Governor for the 9 undertaking at hand was going to be an important 10 But I certainly would testify that he consideration. 11 Q. Did he say why that was important? 12 A. Yes, he did. That he recognized that this was going 13 to be a thankless job, a job where he would probably 14 be vilified and called a traitor to his race and to 15 his democrat background and that it would require a 16 great deal of resolve to overcome the difficulties 17 of the past decades that have gotten Detroit to 18 where it is today. 19 Q. 20 21 advisory board? A. 22 23 Did he also seek the support of the financial At the -- well, yes. But not during the recruitment process. Q. When did he make the request that the financial 24 advisory board should provide him with support and 25 oversight? 99 1 A. You'd have to. 2 Q. If he ever did. 3 A. Well, I have heard from members of the financial 4 advisory board that he has made those overtures but 5 you'd have to ask him as to when and context. 6 Q. But he never had any discussions with you about 7 whether it would be beneficial to get support from 8 the financial advisory board and how he was going to 9 go about that? 10 A. In general, counselor, I think he -- we had a lot of 11 discussions about he was going to need all the 12 support he could get from every corner he could get 13 it from including the F A B and city council. 14 Q. All right. Can I have one second? I think I'm done 15 but I don't want to close the record until I'm sure. 16 I just need one second. 17 (A pause was had in the proceedings) 18 MR. SHERWOOD: 19 20 all. A. Okay. Thank you. All right. I appreciate it. Thank you. 21 MR. ELLSWORTH: 22 VIDEO TECHNICIAN: 23 24 25 I think that's Anybody else. Depositions concluded at 4:49 p.m. UNCERTIFIED ROUGH DRAFT