Moro v. State
| Decision Date | 30 April 2015 |
| Docket Number | S061431,Nos. S061452 Control,S061475,S061454.,S061860,s. S061452 Control |
| Citation | 351 P.3d 1,357 Or. 167 |
| Parties | Everice MORO; Terri Domenigoni; Charles Custer ; John Hawkins ; Michael Arken; Eugene Ditter; John O'Kief; Michael Smith; Lane Johnson; Greg Clouser; Brandon Silence; Alison Vickery; and Jin Voek, Petitioners, v. STATE of Oregon; State of Oregon, by and through the Department of Corrections ; Linn County; City of Portland; City of Salem; Tualatin Valley Fire & Rescue; Estacada School District ; Oregon City School District; Ontario School District; Beaverton School District ; West Linn School District; Bend School District; and Public Employees Retirement Board, Respondents, and League of Oregon Cities; Oregon School Boards Association ; and Association of Oregon Counties, Intervenors, and Central Oregon Irrigation District, Intervenor below. Wayne Stanley Jones, Petitioner, v. Public Employees Retirement Board ; Ellen Rosenblum, Attorney General; and Kate Brown, Governor, Respondents. Michael D. Reynolds, Petitioner, v. Public Employees Retirement Board, State of Oregon; and Kate Brown, Governor, State of Oregon, Respondents. George A. Riemer, Petitioner, v. State of Oregon; Oregon Governor Kate Brown; Oregon Attorney General Ellen Rosenblum; Oregon Public Employees Retirement Board; and Oregon Public Employees Retirement System, Respondents. George A. Riemer, Petitioner, v. State of Oregon; Oregon Governor Kate Brown; Oregon Attorney General Ellen Rosenblum; Public Employees Retirement Board ; and Public Employees Retirement System, Respondents. |
| Court | Oregon Supreme Court |
Gregory A. Hartman, Bennett, Hartman, Morris & Kaplan, LLP, Portland, filed the briefs and argued the cause for petitioners Everice Moro, Terri Domenigoni, Charles Custer, John Hawkins, Michael Arken, Eugene Ditter, John O'Kief, Michael Smith, Lane Johnson, Greg Clouser, Brandon Silence, Alison Vickery, and Jin Voek. With him on the briefs was Aruna A. Masih.
George A. Riemer, Sun City West, Arizona, argued the cause and filed the briefs on behalf of himself.
Michael D. Reynolds, Seattle, Washington, argued the cause and filed the briefs on behalf of himself.
Wayne Stanley Jones, North Salt Lake City, Utah, filed the briefs on behalf of himself.
William F. Gary, Harrang Long Gary Rudnick P.C., Portland, argued the cause and filed the briefs for respondents Linn County, Estacada School District, Oregon City School District, Ontario School District, West Linn School District, Beaverton School District, Bend School District and intervenors Oregon School Boards Association and Association of Oregon Counties. With him on the brief was Sharon A. Rudnick.
Keith L. Kutler, Assistant Attorney General, Salem, argued the cause and filed the brief for State respondents. With him on the brief were Ellen F. Rosenblum, Attorney General, Anna M. Joyce, Solicitor General, and Matthew J. Merritt, Assistant Attorney General.
Harry Auerbach, Chief Deputy City Attorney, Portland, filed the brief for respondent City of Portland.
Edward H. Trompke, Jordan Ramis PC, Lake Oswego, filed the brief for respondent Tualatin Valley Fire and Rescue.
W. Michael Gillette, Schwabe, Williamson & Wyatt, PC, Portland, argued the cause and filed the brief for intervenor League of Oregon Cities. With him on the brief were William B. Crow, Sara Kobak, and Leora Coleman–Fire.
Craig A. Crispin, Crispin Employment Lawyers, Portland, filed the brief for amicus curiae AARP.
Sarah K. Drescher, Tedesco Law Group, Portland, filed the brief for amicus curiae International Association of Fire Fighters.
Before BALMER, Chief Justice, and KISTLER, WALTERS, LINDER, BREWER, and BALDWIN, Justices, and HASELTON, Chief Judge of the Oregon Court of Appeals, Justice pro tempore.**
Petitioners are active and retired members of the Public Employee Retirement System (PERS) challenging two legislative amendments aimed at reducing the cost of retirement benefits—Senate Bill (SB) 822 (2013), which eliminated income tax offset benefits for nonresident retirees and modified the cost-of-living adjustment (COLA) applied to PERS benefits, and SB 861 (2013), which further modified the PERS COLA. Or. Laws 2013, ch. 53 (SB 822); Or. Laws 2013, ch. 2 (Spec Sess) (SB 861). Petitioners raise numerous challenges to the amendments but argue primarily that the amendments impair their contractual rights and therefore violate the state Contract Clause, Article I, section 21, of the Oregon Constitution, and the federal Contract Clause, Article I, section 10, clause 1, of the United States Constitution.
On that issue, respondents and intervenors, which include the State of Oregon and other public employers participating in PERS (collectively, respondents), contend that the amendments in SB 822 and SB 861 modify noncontractual and insubstantial PERS benefits and that, even if the amendments impair constitutionally protected contractual rights, the impairment is justified on public purpose grounds. Specifically, respondents argue that the amendments were a reasonable and necessary response to increases in employer contribution rates required by the Public Employee Retirement Board (the board), which administers PERS. Those rate increases stem from the recession that caused the PERS fund to lose 27% of its value in 2008. To make up for those losses and to restore the funding needed to pay future benefits, the board increased the contribution rates imposed on respondents and other participating employers. Respondents insist that those rate increases are sufficiently burdensome to justify the benefit reductions and excuse any contractual impairment that might result.
We have considered the parties' arguments and conclude that nonresident petitioners have no contractual right to the income tax offset payments and, therefore, that the legislature did not violate the state or federal Contract Clauses by eliminating those payments to nonresident retirees in SB 822. We also reject petitioners' other challenges to the elimination of the income tax offset payments for nonresident retirees.
Our assessment of the COLA amendments is more complicated. Before the amendments at issue in this case, the COLA provisions had been in place and unchanged for 40 years. Indeed, a substantial number of PERS retirees worked their entire careers while the pre-amendment COLA provisions were in effect and then retired. We conclude that petitioners have a contractual right to receive the pre-amendment COLA for benefits that they earned before the effective dates of the amendments—that is, benefits that are generally attributable to work performed before the amendments went into effect. Thus, insofar as they apply retrospectively to benefits earned before the effective dates, the COLA amendments impair the PERS contract and violate the state Contract Clause. Petitioners, however, have no contractual right to receive the pre-amendment COLA for benefits that they earned on or after the effective dates of the amendments—that is, benefits that are generally attributable to work performed after the amendments went into effect. In the absence of specific contract rights outside the PERS statutes, the COLA amendments do not violate the state or federal Contract Clauses when applied to benefits earned on or after the effective dates.
Further, we reject respondents' substantiality and public purpose arguments attempting to justify that impairment. Because the COLA is compounded annually, the COLA grows over time to become a significant part of the PERS retirement benefits. Even seemingly small changes to the COLA rate, like those at issue in this case, can have a substantial impact on the value of the benefits. Although there is no doubt that the legislature passed SB 822 and SB 861 to address legitimate public policy concerns and with an appropriate sensitivity to the impact that the amendments would have on retirees, those concerns do not establish a defense to the contractual impairment that the amendments effect. The public purpose defense that respondents ask this court to recognize imposes a high bar to justify the state's impairment of a state contract, like PERS, and the record in this case does not meet that standard.
We therefore hold that respondents constitutionally may cease the income tax offset payments to nonresidents as set out in SB 822 and that respondents also constitutionally may apply the COLA amendments as set out in SB 822 and SB 861 prospectively to benefits earned on or after the effective dates of those laws, but not retrospectively to benefits earned before those effective dates.1 Subject to applicable vesting requirements, PERS members who have worked for participating employers both before and after the relevant effective dates are entitled to a COLA rate that is blended to reflect the different COLA provisions applicable to benefits earned at different times.
The legislature conferred original jurisdiction on this court to determine whether SB 822 and SB 861 are invalid, unconstitutional, or a breach of the contracts between PERS members and their employers. See SB 822, § 19(1) (); SB 861, § 11(1) (same). In furtherance of that jurisdiction, we appointed Multnomah County Circuit Court Judge Stephen K. Bushong to act as special master. See SB 822, § 19(6) (); SB 861, § 11(6) (same). As special master, Judge Bushong presided over an evidentiary hearing and prepared a thorough report containing his recommended findings of fact. See Special Master's Preliminary Report and Recommended Findings of Fact (Apr. 30, 2014) (Special Master's Report). The parties have not materially challenged the special master's recommended findings, which we have adopted unless otherwise noted.2
PERS has been “a contractual benefit of public employment[ ] since 1945.” Strunk v. PERB, ...
To continue reading
Request your trial
-
Cal Fire Local 2881 v. Cal. Pub. Employees' Ret. Sys.
... ... CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM, Defendant and Respondent; State of California, Intervener and Respondent. S239958 Supreme Court of California. March 4, 2019 Carroll, Burdick & McDonough, Messing Adam & Jasmine, ... 851852, 855, 179 P.2d 799 ; see McGrath v. Rhode Island Retirement Bd., etc. (1st Cir. 1996) 88 F.3d 12, 1617 ; Moro v. State (2015) 357 Or. 167, 351 P.3d 1, 2022.) 1 244 Cal.Rptr.3d 175 6 Cal.5th 996 Of course, not every statute or ordinance providing an ... ...
-
Health Net, Inc. v. Dep't of Revenue
... ... Per A. Ramfjord, Stoel Rives LLP, Portland, filed the brief for amicus curiae Council on State Taxation. Also on the brief was Nikki E. Dobay, Council on State Taxation, Portland. Thomas M. Christ, Cosgrave Vergeer Kester LLP, Portland, filed ... we "treat a statute as a contractual promise only if the legislature has clearly and unmistakably expressed its intent to create a contract." Moro v. State of Oregon , 357 Or. 167, 195, 351 P.3d 1 (2015) (internal quotation marks omitted). In applying that standard, we have not required a ... ...
-
S.C. Elec. v. Randall
... ... 8 6. The PSC is "vested with power and jurisdiction to supervise and regulate the rates and service of every public utility in this State and to fix just and reasonable standards, classifications, regulations, practices, and measurements of service to be furnished, imposed, or observed, ... Garner, Garner's Dictionary of Legal Usage 82 (3d ed. 2011). See also Moro v. State , 357 Or. 167, 351 P.3d 1, 32 (2015) ("[T]he phrase as long as 22 means provided that, Webster's Third New Int'l Dictionary 129 ... ...
-
Health Net, Inc. v. Dep't of Revenue
... HEALTH NET, INC. and SUBSIDIARIES, Plaintiffs, v. DEPARTMENT OF REVENUE, State of Oregon, Defendant. TC 5127 OREGON TAX COURT REGULAR DIVISION Corporation Excise Tax September 9, 2015 ORDER DENYING PLAINTIFFS' MOTION FOR SUMMARY ... ?; (2) if so, what are its terms?; (3) what obligations do those terms require?; and (4) has the state impaired an obligation of that contract?" Moro v ... State of Oregon , 357 Or 167, 194, 351 P3d 1 (2015) (citing Strunk v ... PERB , 338 Or 145, 170, 108 P3d 1058 (2005)). Recent Oregon cases ... ...