A sidelight to the Seven Counties bankruptcy case continues to play itself out in U.S. District Court in Louisville. Seven Counties is the regional mental health organization that provides services to the state and that has for years participated in Kentucky Retirement Systems. Last spring, Seven Counties filed for bankruptcy protection seeking to walk away from its pension obligations.

The case took an odd twist when Seven Counties sought to have Senators Damon Thayer and Christian McDaniel testify about the participation of non-government entities in KRS. Attorneys for the Senate sought to have the depositions quashed, saying the two senators lacked any specific expertise in the arcane legal question about what constituted a governmental unit in bankruptcy law. Moreover, the two enjoy legislative immunity.

U.S. Bankruptcy Joan Lloyd upheld Seven Counties’ motion, and Senate attorneys appealed the order to the U.S. District Court.

Seven Counties asserted that the senators don’t have the right to an appeal. In a response filed today, the Senate attorneys said Seven Counties continuously referred to “legislative privilege” rather than “legislative immunity” in its court documents. The Senate counsel responded: “…legislative immunity protections..are not mere evidentiary privileges…but are constitutional and common law immunities that are qualitatively superior to evidentiary privileges.”

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