Strunk v. PERB

• Decision Date: 08 March 2005
• Court: Oregon Supreme Court
• Parties: Richard STRUNK, Donald Reed, Carol Booker, Larry Blumenstein, Alan Lively, Merlene Martin, William Smee, Denise Jacobsen, and Susanna Rhodes, Petitioners, v. PUBLIC EMPLOYEES RETIREMENT BOARD, State of Oregon, State of Oregon by and through the State Board of Higher Education, North Douglas School District, Deschutes County, Portland School District, City of Salem, South Lane School District, and Oregon Health Sciences University, Respondents. Pamela Burt, Nori J. McCann-Cross, Gerald Frost, Nancy B. Miller, Bradd A Swank, Linda Zuckerman, Vicky J. Johnson, Stephen D. Krohn, and Claudia L. Howells, Petitioners, v. Public Employees Retirement Board, Marion County, Oregon Department of Justice, Oregon Department of Transportation, Oregon Judicial Department, and State of Oregon, Respondents. Dave Dahlin, Petitioner, v. Public Employees Retirement Board (Dawn Morgan, Janice Deringer, Mark Gardiner, Jeanne Garst, Glenn Harrison, Todd Schwartz, George Russell, Steven Bjerke), Theodore Kulongoski, Governor, State of Oregon, Respondents, and League of Oregon Cities and Oregon School Boards Association, Intervenors. Daniel Evans, Wayne Dykes, Charles French, Jim Botwinis, Gary Harkins, and James Michaud, Petitioners, v. City of Grants Pass, Josephine County, Multnomah County, The City of Eugene, and The State of Oregon, Respondents. Martha Sartain, v. Public Employees Retirement Board, State of Oregon, and State of Oregon, by and through the Oregon Department of Transportation, Respondents, and League of Oregon Cities and Oregon School Boards Association, Intervenors. Michael O. Whitty, Dennis Ulsted, and H. Thomas Andersen, Petitioners, v. Public Employees Retirement Board and Saif Corporation, Respondents, and League of Oregon Cities and Oregon School Boards Association, Intervenors.

108 P.3d 1058

338 Or. 145

Richard STRUNK, Donald Reed, Carol Booker, Larry Blumenstein, Alan Lively, Merlene Martin, William Smee, Denise Jacobsen, and Susanna Rhodes, Petitioners, v. PUBLIC EMPLOYEES RETIREMENT BOARD, State of Oregon, State of Oregon by and through the State Board of Higher Education, North Douglas School District, Deschutes County, Portland School District, City of Salem, South Lane School District, and Oregon Health Sciences University, Respondents.

Pamela Burt, Nori J. McCann-Cross, Gerald Frost, Nancy B. Miller, Bradd A Swank, Linda Zuckerman, Vicky J. Johnson, Stephen D. Krohn, and Claudia L. Howells, Petitioners, v. Public Employees Retirement Board, Marion County, Oregon Department of Justice, Oregon Department of Transportation, Oregon Judicial Department, and State of Oregon, Respondents.

Dave Dahlin, Petitioner, v. Public Employees Retirement Board (Dawn Morgan, Janice Deringer, Mark Gardiner, Jeanne Garst, Glenn Harrison, Todd Schwartz, George Russell, Steven Bjerke), Theodore Kulongoski, Governor, State of Oregon, Respondents, and League of Oregon Cities and Oregon School Boards Association, Intervenors.

Daniel Evans, Wayne Dykes, Charles French, Jim Botwinis, Gary Harkins, and James Michaud, Petitioners, v. City of Grants Pass, Josephine County, Multnomah County, The City of Eugene, and The State of Oregon, Respondents.

Martha Sartain, v. Public Employees Retirement Board, State of Oregon, and State of Oregon, by and through the Oregon Department of Transportation, Respondents, and League of Oregon Cities and Oregon School Boards Association, Intervenors.

Michael O. Whitty, Dennis Ulsted, and H. Thomas Andersen, Petitioners, v. Public Employees Retirement Board and Saif Corporation, Respondents, and League of Oregon Cities and Oregon School Boards Association, Intervenors.

(SC S50593 (Control); S50647; S50645; S50532; S50686; S50685).

Supreme Court of Oregon, En Banc.

Argued and Submitted July 30, 2004.

Decided March 8, 2005.

Gregory A. Hartman, Bennett, Hartman, Morris & Kaplan, LLP, Portland, argued the cause for petitioners Richard Strunk, Donald Reed, Carol Booker, Larry Blumenstein, Alan Lively, Merlene Martin, William Smee, Denise Jacobsen, and Susanna Rhodes. With him on the briefs were Michael J. Morris and Aruna A. Masih, Bennett, Hartman, Morris & Kaplan, LLP, Portland.

J. Michael Alexander, Swanson, Lathen, Alexander & McCann, PC, Salem, argued the cause and filed the briefs for petitioners Pamela Burt, Nori J. McCann-Cross, Gerald Frost, Nancy B. Miller, Bradd A Swank, Linda Zuckerman, Vicky J. Johnson, Stephen D. Krohn, and Claudia L. Howells.

Richard J. Birmingham, Birmingham, Thorson & Barnett, PC, Seattle, Washington, argued the cause and filed the briefs for petitioner Dave Dahlin.

John E. Hoag, Eugene, argued the cause for petitioners Daniel Evans, Wayne Dykes, Charles French, Jim Botwinis, Gary Harkins, and James Michaud. With him on the briefs was Daryl Garrettson, McMinnville.

Brian R. Talcott, Dunn, Carney, Allen, Higgins & Tongue, LLP, Portland, argued the cause for petitioner Martha Sartain. With him on the briefs were Scott A. Jonsson and James M. Hillas, Dunn Carney, Allen, Higgins & Tongue, LLP, Portland.

Michael O. Whitty, Eugene, argued the cause and filed the briefs for himself and for petitioners Dennis Ulsted and H. Thomas Andersen.

James P. Baker, Orrick, Herrington & Sutcliffe, LLP, San Francisco, California, argued the cause and filed the briefs for respondent Public Employees Retirement Board.

Stephen S. Walters, Stoel Rives, LLP, Portland, argued the cause and filed the briefs for respondents State of Oregon, State Board of Higher Education, Marion County, Oregon Department of Justice, Oregon Department of Transportation, Oregon Judicial Department, Theodore Kulongoski, Public Utilities Commission Office, and SAIF Corporation. With him on the briefs were Charles F. Hinkle, Jeremy D. Sacks, Andrew M. Altschul, and Amy Edwards, Stoel Rives, LLP, Portland.

William F. Gary, Harrang Long Gary Rudnick, PC, Eugene, argued the cause and filed the briefs for respondents North Douglas School District, Deschutes County, Portland School District, City of Salem, South Lane School District, Oregon Health Sciences University, League of Oregon Cities, Oregon School Boards Association, City of Grants Pass, Josephine County, Multnomah County, City of Eugene, and Salem-Keizer School District. With him on the briefs were Sharon A. Rudnick, Jerome Lidz, and Karla Alderman, Harrang Long Gary Rudnick, PC, Eugene.

Edward J. Brunet, Portland, filed the brief for amici curiae Associated Oregon Industries, Oregon Business Association, Oregon Business Council, and Portland Business Alliance.

Ron Ledbury, Portland, filed the brief for himself amicus curiae.

De MUNIZ, J.

These six original jurisdiction petitions, which we have consolidated for review, raise contractual and constitutional challenges to certain amendments that the 2003 Legislative Assembly made to the Public Employees Retirement System (PERS). The amendments at issue derive primarily from two separate, but related, enactments. The first, House Bill (HB) 2003 (2003), Oregon Laws 2003, chapter 67, is known as the PERS Reform and Stabilization Act of 2003 and alters PERS in a variety of respects. The second, HB 2004 (2003), Oregon Laws 2003, chapter 68, affects the actuarial equivalency factors used to compute retired PERS members' service retirement allowances.¹

We have considered both the factual and legal aspects of the challenges that the petitions present. Having done so, and for the reasons set out below, we conclude that the provisions of Oregon Laws 2003, chapter 67, as amended by Oregon Laws 2003, chapter 625, that eliminate the annual assumed earnings rate credit² to PERS Tier One members'³ regular accounts impair a contractual obligation of the PERS contract in violation of Article I, section 21, of the Oregon Constitution.⁴ We further conclude that the provision of Oregon Laws 2003, chapter 67, section 10(3), that, in effect, temporarily suspends annual cost-of-living adjustments to the service retirement allowances of certain retired Tier One members breaches an obligation of the PERS contract. In all other respects, we conclude that petitioners' challenges to the 2003 PERS legislation are not well taken.

I. PRELIMINARY CONSIDERATIONS

A. Jurisdiction

Oregon Laws 2003, chapter 625, section 17(1), provides:

"Jurisdiction is conferred on the Supreme Court to determine in the manner provided by this section whether the implementation of actuarial equivalency factor tables under section 2 or 4, chapter 68, Oregon Laws 2003 (Enrolled House Bill 2004), breaches any contract between members of the Public Employees Retirement System and their employers, or violates any constitutional provision, including but not limited to impairment of contract rights of members of the Public Employees Retirement System under section 21, Article I, of the Oregon Constitution, or clause 1, section 10, Article I, of the United States Constitution."⁵

Oregon Laws 2003, chapter 625, section 17a, contains essentially identical operative wording, except that the grant of jurisdiction pertains to determinations "whether the provisions of chapter 67, Oregon Laws 2003 (Enrolled House Bill 2003)" breach any PERS contract or violate any constitutional provision.

The 2003 PERS legislation contains other jurisdictional and quasi-jurisdictional provisions as well. We have considered every statutory jurisdictional prerequisite and, with the three exceptions explained below, have determined that each of the petitioners in each of these consolidated cases is properly before this court and that each petition presents a justiciable controversy.⁶

The first of the three claims that fall short of the jurisdictional or justiciability requirements is petitioner Dahlin's claim for relief under 42 USC section 1983.⁷ With respect to that claim for relief, petitioner Dahlin states that he "is advancing no new impairment arguments under Section 1983, but rather, [is] utilizing that section as a procedural vehicle to raise his United States Constitutional claims * * * [and] as one method by which he may recover his costs and attorney fees in this action." Respondents assert, correctly we conclude, that petitioner Dahlin's section 1983 claim falls outside the legislature's limited grant of original jurisdiction to this court, quoted above. Contrary to petitioner Dahlin's implicit assertion that the legislation allows multiple avenues for presenting challenges, the only "procedural vehicle[s]" that the legislature has authorized for review of the 2003 PERS legislation in this court as original matters are the petitions to which that legislation refers. Those petitions do not include the federal statutory claim that section 1983 provides. We therefore dismiss petitioner Dahlin's section 1983 claim.

The second problematic claim is petitioner Dahlin's challenge to an aspect of the 2003 PERS legislation that, effectively, temporarily suspends annual cost-of-living adjustments (COLAs) as to certain retired Tier One members. See Or. Laws 2003, ch. 67, § 10(3), as amended by Or. Laws 2003, ch. 625, § 13 (so providing). Section 10 applies to only members who:

"(a) Established membership in [PERS] before January 1, 1996, * * *;

"(b) Receive a service retirement allowance calculated under ORS 238.300(2)(b)(A); and

"(c) Have an effective date of retirement that is on or after April 1, 2000, and before April 1, 2004."

Or. Laws 2003, ch. 67, § 10(5).⁸ Petitioner Dahlin, however, is not a retired PERS member, and, as an active Tier One member, the provisions that he seeks to challenge respecting the COLA suspension do not apply to him. On that basis, respondents jointly assert that he lacks standing to pursue that particular challenge. We agree. See, e.g., Brumnett v. PSRB, 315 Or. 402, 405, 848 P.2d 1194 (1993)

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