Five Stories that Matter in Michigan This Week – June 24, 2022

Five Stories that Matter in Michigan This Week – June 24, 2022; Legal, Legislative, and Regulatory Insights


  1.  Michigan House Passes Bills Requiring More Stringent Work-Search Requirements

The Michigan House recently passed a pair of bills that would require those seeking unemployment benefits to report weekly about their attempts to seek work. Under the bills, individuals would have to register with the Michigan Works! agency within two weeks of applying for benefits and would have to take and report on certain work search or training steps at least three times per week.

Why it Matters: Despite the volatility in stock markets and discussions about a possible recession, the job market in the United States remains strong, with the unemployment rate at a historically low 3.6%. If these bills become laws—a big “if” since they were passed by Republicans on a party-line vote—the work-search requirements could spur more people to rejoin the workforce.

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  1. Michigan House Passes Bill That Would Change Payment Priority Scheme for Operator or Passenger of Commercial Vehicle

The Michigan House recently passed HB 5719, which would change the order of priority of payment of personal injury protection benefits to a person injured while operating or as the passenger of a commercial vehicle or transport, such as a taxi or ride-share service.

Why it Matters: If signed into law, the bill would require, in the event of an injury described above, that coverage would come from the injured person’s own insurance rather than the vehicle owner’s insurance.

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  1. Markey Submits FOIA Requests for Signatures Process

Following the Michigan Supreme Court’s decision to deny three Republican candidates for governor to be placed on the primary ballot, after state election officials ruled that their campaigns had submitted forged signatures, one former candidate, Michael Markey, recently submitted Freedom of Information Act (FOIA) requests regarding the process the Bureau of Elections took in declaring fraudulent signatures appearing on his nominating petitions.

Why it Matters: Mr. Markey’s FOIA requests broaden to the Secretary of State, Bureau of Elections, and the Department of Attorney General. In a recent statement, Mr. Markey said he wants the exact steps that were taken to be made public. This developing scenario highlights the need for experienced election law counsel.

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  1. Detroit Faces Lawsuits Over Adult-Use Recreational Licenses

Following the Detroit City Council’s vote on the revised ordinance to allow adult-use recreational cannabis sales, multiple medical marijuana companies have filed suit against the city over the licensing program. JARS Cannabis and House of Dank, two companies that own medical marijuana dispensaries licensed in Detroit, are suing the City of Detroit over the revised ordinance claiming that the new law would signal the end for existing medical marijuana facilities already in the area. The two companies pointed to a provision in the revised ordinance that prevents existing medical facilities in the area from getting a recreational license until 2027.

Why it Matters: Detroit, and many other municipalities in Michigan,  have faced lawsuits over their cannabis licensing ordinances, particularly ordinances related to adult-use recreational licenses. Many of the lawsuits stem from scoring systems designed by municipalities for awarding recreational licenses which some applicants argue are unfair. The consequence of this litigation is that a number of municipalities which opted to allow the sale of recreational marijuana still haven’t issued licenses because issues related to their approval process are being litigated.

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  1. MEDC to Make $237 Million Available To Help Michigan Small Businesses

The Michigan Economic Development Corporation recently announced that Michigan has been approved for up to $237 Million in State Small Business Credit Initiative (SSBCI) funding from the U.S. Department of Treasury.

Why it Matters: Small businesses impacted by the COVID-19 pandemic can apply for funds through private lenders and the MEDC would back the loans through the SSBCI program. Learn more about the program from this video interview with Chris Cook, Director of Capital Access at MEDC.


Related Practice Groups and Professionals

Insurance Defense | Emily Vanderlaan

Business & Tax | Ed Castellani

Election Law | Garett Koger

Cannabis | Klint Kesto

Labor, Employment & Civil Rights | Aaron Davis

City of Detroit Faces Lawsuits Over Adult-Use Recreational Licenses

Following the Detroit City Council’s vote on the revised ordinance to allow adult-use recreational cannabis sales, multiple medical marijuana companies have filed suit against the city over the licensing program.

JARS Cannabis and House of Dank, two companies that own medical marijuana dispensaries licensed in Detroit, are suing the City of Detroit over the revised ordinance claiming that the new law would signal the end for existing medical marijuana facilities already in the area. The two companies pointed to a provision in the revised ordinance that prevents existing medical facilities in the area from getting a recreational license until 2027.

In its lawsuit, JARS Cannabis argues that Detroit’s revised ordinance violates a state law providing that municipalities cannot adopt ordinances that are “unreasonably impracticable.” Rather than provide a competitive application process, the city utilizes a scoring system for choosing which companies receive a license.

Detroit has faced lawsuits over its cannabis licensing ordinances before. In 2021, a federal district judge found that the city’s first recreational marijuana ordinance, which gave licensing preference to “legacy” Detroit residents, was “likely unconstitutional.”

JARS Cannabis and House of Dank, in their respective lawsuits, both argue that the revised ordinance still shows too much preference to certain potential applicants—namely, Detroit residents and newcomers to the cannabis business.

While these lawsuits are actively pending, we are monitoring the situation and will provide updates. At Fraser Trebilcock, we have handled multiple lawsuits in the cannabis field and are able to assist you. Please contact Klint Kesto, Matthew Meyerhuber, or your Fraser Trebilcock attorney.


Fraser Trebilcock attorney and former Michigan State Legislator Klint Kesto has nearly two decades of experience working in both the public and private sectors, including serving as Co-Chair of the CARES Task Force. You can reach him at kkesto@fraserlawfirm.com or 517.377.0868.


Matthew J. Meyerhuber is an attorney at Fraser Trebilcock focusing on general litigation, cannabis law, environmental law, and real estate. Matthew can be reached at mmeyerhuber@fraserlawfirm.com or 517.377.0885. 

Five Stories that Matter in Michigan This Week – June 17, 2022

Five Stories that Matter in Michigan This Week – June 17, 2022; Legal, Legislative, and Regulatory Insights


  1.  Court of Appeals Considers Arguments in Significant No-Fault Case

An important case involving Michigan’s auto no-fault law is before the Michigan Court of Appeals. The dispute in the case of Andary, et al v. USAA Casualty Insurance Company, et al is focused on whether the no-fault reforms passed in 2019 apply retroactively for people injured before the law was passed. The plaintiffs in the case argue that retroactive application is unconstitutional.

Why it Matters: The circuit court in this case sided with insurers. To the extent that the appellate court reverses in favor of plaintiffs, it could create considerable uncertainty in the no-fault insurance marketplace in Michigan.

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  1. Michigan Supreme Court Blocks Republican Candidates for Governor from Ballot

The Michigan Supreme Court recently denied requests by three Republican candidates for governor to be placed on the primary ballot, after state election officials ruled that their campaigns had submitted forged signatures. Fraser Trebilcock election law attorney Garett Koger was quoted by The New York Times in an article discussing the Michigan Supreme Court’s decision.

Why it Matters: The Republican primary for governor has been chaotic, to say the least. Five of ten candidates have now been removed from the primary ballot. Candidate Ryan Kelley was arrested by federal agents this week and charged with four misdemeanors related to his alleged attendance at last year’s U.S. Capitol riot. And former Detroit police chief James Craig announced that he is mounting a write in campaign for the August 2 primary. These different scenarios all highlight the need for experienced election law counsel.

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  1. IRS Does Rare Mid-Year Adjustment to Mileage Rates

The Internal Revenue Service recently announced that it has increased the 2022 mileage rates for the last six months of the year in response to high gasoline prices, including rates for business travel, deductible medical or moving expenses, and deduction for charitable contributions. Learn more about the new mileage rates here.

Why it Matters: Midyear increases in mileage rates are rare. Accordingly, self-employed individuals who operate an automobile for business use, as well as employers who reimburse employees who use their own vehicles to conduct business, should take note of the changes.

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  1. New Education and Information Requirements for Michigan Schools

New legislation was recently enacted requiring schools to provide informational materials on post-secondary education options. The Michigan Department of Education must create informational packets, including information about Advanced Placement programs, all public universities and community colleges in the state, and student loans and tuition assistance, that will be distributed to all students in 8th to 12th grades each year. In addition, by overwhelming margins, the Michigan House and Senate recently passed legislation that would mandate personal finance education at the high school level.

Why it Matters: To remain economically competitive, it is important that Michigan continues to focus on having a well-educated workforce in order to attract and retain employers.

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  1. City of Detroit Faces Lawsuits Over Adult-Use Recreational Licenses

JARS Cannabis and House of Dank, two companies that own medical marijuana dispensaries licensed in Detroit, are suing the City of Detroit over the revised ordinance claiming that the new law would signal the end for existing medical marijuana facilities already in the area. The two companies pointed to a provision in the revised ordinance that prevents existing medical facilities in the area from getting a recreational license until 2027.

Why it Matters: State law mandates that municipalities cannot adopt “unreasonably impracticable” adult-use cannabis ordinances. As the City of Detroit faces multiple lawsuits over their revised ordinance, other municipalities may face the same issue.


Related Practice Groups and Professionals

Insurance Defense | Emily Vanderlaan

Election Law | Garett Koger

Business & Tax | Liz Siefker

Cannabis | Klint Kesto

IRS Announces Increase for 2022 Mileage Rates

On June 9, 2022, the Internal Revenue Service announced that it has increased the 2022 mileage rates for the last six months of the year in response to high gasoline prices. The new mileage rate for business travel will be 62.5 cents per mile, up 4 cents from the rate that has been effective since the beginning of 2022. The new rate for deductible medical or moving expenses, which is available for active-duty members of the military, will be 22 cents, also up 4 cents from the effective rate at the start of the year. The mileage rate that applies to the deduction for charitable contributions remains fixed by the Internal Revenue Service at 14 cents per mile. These new rates will become effective on July 1, 2022.


Attorney Elizabeth Siefker

Elizabeth M. Siefker is an attorney at Fraser Trebilcock in the trusts and estates practice group focusing on business planning, estate planning, and elder law. You can reach her at esiefker@fraserlawfirm.com, or at 517.377.0801.

Five Stories that Matter in Michigan This Week – June 10, 2022

Five Stories that Matter in Michigan This Week – June 10, 2022; Legal, Legislative, and Regulatory Insights


  1. Wayne County Announces $54 Million Fund for Small Businesses

A new $54 million fund to support small businesses, called the Wayne County Small Business Hub, was announced at last week’s Detroit Regional Chamber’s Mackinac Policy Conference (“Mackinac Conference”). It will provide support to new and existing businesses, with a specific focus on minority- or women-owned businesses, and micro businesses with 10 or fewer employees with a focus on technical assistance.

Why it Matters: Small businesses are often the first to be hit when the economy slows, and with credit markets tightening there are likely to be fewer sources of liquidity for small business owners to tap. This new fund, a collaboration between the Wayne County Executive’s Office and New Economy Initiative, will provide needed resources for historically disadvantaged businesses.

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  1. Ford and Pfizer to Make Significant Investments in Michigan

Also at the Mackinac Conference, Ford Motor Company and Pfizer announced significant investments in Michigan. Ford reportedly will spend $2 billion across the company’s Michigan plants, and intends to create more than 3,000 jobs. Pfizer will make a $120 million investment at its Kalamazoo facility.

Why it Matters: With a great deal of economic doom and gloom in the headlines, these announcements are bright spots showing that large companies are still making investments in their businesses—and in Michigan, in particular.

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  1. Concerns Expressed About Losing Another EV Investment in Michigan

But it’s not all good news on the economic front in Michigan. At the Mackinac Conference, John Rakolta Jr., chairman of Walbridge, pointed out that Michigan is missing out on major opportunities in the electric vehicle industry. For example, Stellantis announced last week that it was bypassing Michigan and locating its new electric vehicle battery manufacturing plant in Kokomo, Indiana.

Why it Matters: According to a study by Fortune Business Insights, the global electric vehicle market is expected to grow from approximately $287 billion in 2021, to $1.3 trillion by 2028. To take advantage of this opportunity, Michigan must make itself attractive to companies in the electric vehicle market. As Rakolta points out, this involves more than designing tax incentives. It requires a more comprehensive approach to utilities, zoning and other important business, financial,  legal and regulatory issues.

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  1. Unemployment Claimants Get to Keep Pandemic Overpayments

Michigan sought to claw back Pandemic Unemployment Assistance benefits paid to many Michigan residents who were accused of misreporting their income. Michigan argued that claimants were liable because they entered their gross pay from prior years to determine their weekly benefit amount when they should have entered their net pay. Michigan reversed course and announced that it would no longer seek to claw back the funds after media reports revealed that at least some claimants were asked during the application process to provide total pay—not net pay—which resulted in confusion and overpayments.

Why it Matters: This announcement surely came as a relief to many Michigan residents who were embroiled in disputes with the Michigan Unemployment Insurance Agency. More broadly, this situation demonstrates the importance of using precise, accurate language in contracts and other important documents. The alternative is to invite confusion, dispute and litigation.

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  1. Michigan Cannabis Company Files for Chapter 11 Bankruptcy

A Kalamazoo cannabis company, Master Equity Group,  recently filed for  Chapter 11 bankruptcy in the U.S. Bankruptcy Court in the Western District of Michigan.

Why it Matters: This case will be closely watched by the cannabis industry, as well as by corporate restructuring professionals. Bankruptcy courts have historically prevented cannabis companies from filing for protection under the United States Bankruptcy Code because, while marijuana is legal in Michigan, it remains illegal under the federal Controlled Substances Act. And because bankruptcy courts are federal courts, similar attempts by cannabis companies to file for bankruptcy protection have been disallowed.


Related Practice Groups and Professionals

Administrative & Regulatory | Michael Ashton
Business & Tax  | Mark Kellogg
Labor, Employment & Civil Rights | Aaron Davis
Cannabis | Klint Kesto

Client Alert: Updated PCORI Fees Payable in 2022

In Notice 2022-4, the Internal Revenue Service set forth the PCORI amount imposed on insured and self-funded health plans for policy and plan years that end on or after October 1, 2021 and before October 1, 2022.

Background

The Patient-Centered Outcomes Research Institute (PCORI) fee is used to partially fund the Patient-Centered Outcomes Research Institute which was implemented as part of the Patient Protection and Affordable Care Act.

The PCORI fees were originally set to expire for plan years ending before October 1, 2019. However, on December 20, 2019, the Further Consolidated Appropriations Act was enacted and extended the fee to plan years ending before October 1, 2029.

The fee is calculated by using the average number of lives covered under a plan and the applicable dollar amount for that plan year. Code section 4375 imposes the fee on issuers of specified health insurance policies. Code section 4376 imposed the fee on plan sponsors of applicable self-insured health plans. This Client Alert focuses on the latter.

Due to the fact that the US Department of Health and Human Services did not publish updated National Health Expenditures tables for 2021, this year’s fees are based on the projections set out in the 2020 tables. As such, plans should pay close attention to next year’s fee changes as the accuracy of 2020’s projections may be affected by current inflationary trends.

Adjusted Applicable Dollar Amount

Notice 2022-4 sets the adjusted applicable dollar amount used to calculate the fee at $2.79. Specifically, this fee is imposed per average number of covered lives for plan years that end on or after October 1, 2021 and before October 1, 2022. For self-funded plans, the average number of covered lives is calculated by one of three methods: (1) the actual count method; (2) the snapshot method; or (3) the Form 5500 method.

Deadline and How to Report

The PCORI fee is due by August 1, 2022 (as the typical due date, July 31, 2022, falls on a Sunday), and must be reported on Form 720.

Instructions are found here (see Part II, pages 8-9).

The Form 720 itself is found here (see Part II, page 2).

Form 720, as well as the attached Form 720-V to submit payment, must be used to report and pay the requisite PCORI fee to the IRS. While Form 720 is used for other purposes to report excise taxes on a quarterly basis, for purposes of this PCORI fee, it is only used annually and is due by July 31st of each relevant year.

As previously advised, plan sponsors of applicable self-funded health plans are liable for this fee imposed by Code section 4376. Insurers of specified health insurance policies are also responsible for this fee.

  • For plan years ending on or after October 1, 2017 and before October 1, 2018, the fee is $2.39 per covered life.
  • For plan years ending on or after October 1, 2018 and before October 1, 2019, the fee is $2.45 per covered life.
  • For plan years ending on or after October 1, 2019 and before October 1, 2020, the fee is $2.54 per covered life.
  • For plan years ending on or after October 1, 2020 and before October 1, 2021, the fee is $2.66 per covered life.
  • For plan years ending on or after October 1, 2021 and before October 1, 2022, the fee is $2.79 per covered life.

Again, the fee is generally due no later than July 31 (see above for 2022 date) of the year following the last day of the plan year.

As mentioned above, there are specific calculation methods used to configure the number of covered lives and special rules may apply depending on the type of plan being reported. While generally all covered lives are counted, that is not the case for all plans. For example, HRAs and health FSAs that are not excepted from reporting only must count the covered participants and not the spouses and dependents. The Form 720 instructions do not outline all of these rules.

More information about calculating and reporting the fees can be found here.

Questions and answers about the PCORI fee and the extension may be found here.

As you are well aware, the law and guidance are continually evolving. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.


Robert D. Burgee is an attorney at Fraser Trebilcock with over a decade of experience counseling clients in business transactions, civil matters, regulatory compliance, and employee matters. Robert also has a background in employee benefits, having been a licensed agent since 2014. You can reach him at 517.377.0848 or at bburgee@fraserlawfirm.com.


Aaron L. Davis works in employee health and welfare benefits. He is also Chair of the firm’s labor law practice and serves as Firm Secretary. He has litigation experience in a diverse range of employment matters, including Title VII, the Age Discrimination and Employment Act, the Americans with Disabilities Act, the Family Medical Leave Act, and the Fair Labor Standards Act. You can reach him at 517.377.0822, or email him at adavis@fraserlawfirm.com.

The New York Times Feature

Fraser Trebilcock election law attorney Garett Koger was quoted by The New York Times recently on an article discussing the Michigan Supreme Court’s decision to deny requests by three candidates for governor to be restored to the August primary ballot. Fraser Trebilcock’s election law team of Thad Morgan and Garett Koger, aided by attorneys Paul McCord, Robert Burgee, Elizabeth Siefker, Matthew Meyerhuber, and summer associate Joshua Robertson worked on the matters.

You can view the full article HERE.


Fraser’s ballot and election law team has successfully counseled, planned, and litigated for campaigns including high-profile cases resulting in changes to Michigan’s Constitution and case law. Fraser’s team also has extensive experience in election administration, and access to professionals in public relations and communications.

Five Stories that Matter in Michigan This Week – June 3, 2022

Five Stories that Matter in Michigan This Week – June 3, 2022; Legal, Legislative, and Regulatory Insights


Michigan Senate Votes to Suspend Gas Taxes this Summer

  1. The Michigan Senate, in a bipartisan vote, passed a series of new bills that would temporarily pause gas taxes from June 15 to September 15. The bills pause collections on the 6% sales and use taxes on gas purchases and the 27 cent per gallon excise gas tax. According to AAA, the average price for a gallon of gas in Michigan as of June 1 was over $4.70.

Why it Matters: These bills reflect the sense of urgency—within both parties in Michigan and across the country—to address surging gas prices, as well as inflationary pressures more broadly, before the upcoming elections. According to reporting by Crain’s Detroit, Governor Whitmer, at the Mackinac Policy Conference, indicated her general support for the legislation, although she raised concerns about the impact of suspending tax collections that would otherwise be allocated for road repair.

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Court of Appeals Rejects Michigan Public Body FOIA Exemption

  1. The Michigan Court of Appeals recently held that a public body in Michigan that is a plaintiff or defendant in litigation cannot deny a Freedom of Information Act request by the legal counsel to another party to the litigation based on a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties.” Learn more about this case here.

Why it Matters: MCL 15.243(1)(v) allows a public party to assert a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties.” However, as this case makes clear, the exemption will be strictly construed. If the FOIA requester does not meet the precise legal definition of a “party” in litigation, and instead is merely a friend, agent or legal counsel to a party, then the exemption will likely be denied. Accordingly, before asserting this or any other exemption, a public body should consult with legal counsel. Learn more about this case here.

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Michigan Legislature Passes Bill to Fund Security Enhancements at Schools

  1. The Michigan House and Senate passed legislation that would provide $27 million in funding for safety and security assessments at public and private schools around the state. The legislation was passed in the wake of a mass shooting at an elementary school in Uvalde, Texas. The bill would also set aside nearly $10 million for additional support to the Oxford Community School District following the November mass shooting at the district’s high school.

Why it Matters: Expect an increase in legislation, from security enhancements at schools to “red flag” laws meant to identify potential threats, being debated in Michigan and across the country.

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Full Principal Residence Tax Exemption Available Even if Portion of Home is Rented

  1. The Michigan Court of Appeals, in the case of Keith W. DeForge v. Township of Allouez, recently ruled that homeowners in Michigan can still claim 100% principal residence tax exemption even if the homeowner rents out a portion of their home.

Why it Matters: This ruling clarifies a tax question that impacts the rapidly increasing number of homeowners in Michigan who generate rental income from their homes using services such as Airbnb.

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Michigan’s Movers and Shakers Meet on Mackinac Island

  1. Michigan’s Mackinac Policy Conference wrapped up this week, and from this year’s election for governor to healthcare to housing in Michigan, a wide range of important issues were discussed and debated.

Why it Matters: The Mackinac Policy Conference has always been the place to take the pulse of politics and business in Michigan. A group of Fraser Trebilcock professionals were in attendance this year, and next week we’ll be sharing some of the key takeaways from the conference.


Related Practice Groups and Professionals

Election Law | Klint Kesto
Litigation | Thad Morgan
Administrative & Regulatory | Michael Ashton
Taxation | Paul McCord

FOIA Exemption Denied When Requesting Party is not Party to Civil Litigation

If a public body in Michigan is a plaintiff or defendant in litigation, can the public body deny a Freedom of Information Act request by the legal counsel to another party to the litigation based on a FOIA exemption for requests pertaining “to a civil action in which the requesting party and the public body are parties”? According to the Michigan Court of Appeals in an unpublished opinion in the case of Jones Day v Dep’t of Environment, Great Lakes, and Energy, and at least as it relates to the facts of this case, the answer is no.

Background of the Case

The underlying litigation involves a lawsuit brought by the State of Michigan in state court against chemical companies alleging that the companies improperly released toxic synthetic chemicals called polyfluoroalkyl substances (“PFAS”), which found their way into Michigan’s water supplies.

The state lawsuit was transferred to federal court and combined with similar cases from other jurisdictions, and a case management order was entered that precluded participation in discovery.

Jones Day, a law firm representing a defendant company, proceeded to file a state FOIA request with the Department of Environment, Great Lakes, and Energy (“EGLE”) seeking documentation related to the Michigan PFAS Action Response Team.

EGLE denied the request, citing MCL 15.243(1)(v), the exemption cited above pertaining to parties to a civil litigation. Jones Day then filed a FOIA complaint in the Court of Claims, and the Court of Claims granted summary disposition in favor of EGLE. Jones Day appealed.

The Court of Appeals Decision

The Court of Appeals reversed the lower court decision. The Court of Appeals relied upon precedent from a previous case, Taylor v Lansing Bd of Water & Light, in which a friend of the plaintiff to a lawsuit against a public body made a FOIA request after the plaintiff’s own FOIA request was denied by the public body defendant on the basis of MCL 15.243(1)(v). In the Taylor case, the Court of Appeals ruled that the exemption could not be used where, as in the Jones Day case, the party making the FOIA request was not a “party.”

In the Jones Day case, the Court of Appeals, in reaching a similar result, explained that “the Legislature did not act to obviate the Taylor decision and prevent FOIA actions from being filed by best friends, counsels of record, or associates despite this Court’s recognition that a ‘distasteful’ result occurs without such a restriction of the term ‘party.’”

Accordingly, in light of this case, and the Michigan case law it relies upon, public bodies should be aware that the MCL 15.243(1)(v) exemption will likely be strictly construed. If the FOIA requester does not meet the precise legal definition of a “party” in litigation, and instead is merely a friend, agent or legal counsel to a party, then the exemption will likely be denied.


Morgan, Thaddeus.jpgThaddeus E. Morgan is a shareholder with Fraser Trebilcock and formerly served as President of the firm. Thad is the firm’s Litigation Department Chair and serves as the firm’s State Capital Group voting representative. He can be reached at tmorgan@fraserlawfirm.com or (517) 377-0877.