Wicker v. Oregon ex rel. Bureau of Labor

• Citation: 543 F.3d 1168
• Decision Date: 17 September 2008
• Docket Number: No. 07-35429.,07-35429.
• Parties: Anna Margaret WICKER; Sandy L. Henderson; Jane Gray; Carmelle L. Hartin, Plaintiffs, and Salem-Keizer School District, Intervenor-Appellee, v. The State of OREGON, by and through the BUREAU OF LABOR and the Board of Higher Education; Norman O. Nilsen Commissioner of Labor; Roy Lieuallen, Chancellor of the Board of Higher Education; Public Employees Retirement System; Joseph J. Adams; Hugh McKinely; Chalmers L. Jones; Roger S. Meier; Edwin H. Armstrong, in their capacity as members of the Public Employees Retirement Board; Brenda Rocklin; Thomas Grimsley; Michael Pittman; Eva Kripalani; James Dalton, Defendants-Appellees, v. Sawalak Ebner; Richard Mullins; Jantice Pitts; Jane Poe; Eileen Shaffer; Aimee Yogi, Movants-Appellants, and Jacqueline Davais; Jerry Trierweiller; Tim Woolery, Movants, v. Gina Santacroce; Richard Mullins, Third-party-defendant-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

543 F.3d 1168

Anna Margaret WICKER; Sandy L. Henderson; Jane Gray; Carmelle L. Hartin, Plaintiffs, and Salem-Keizer School District, Intervenor-Appellee, v. The State of OREGON, by and through the BUREAU OF LABOR and the Board of Higher Education; Norman O. Nilsen Commissioner of Labor; Roy Lieuallen, Chancellor of the Board of Higher Education; Public Employees Retirement System; Joseph J. Adams; Hugh McKinely; Chalmers L. Jones; Roger S. Meier; Edwin H. Armstrong, in their capacity as members of the Public Employees Retirement Board; Brenda Rocklin; Thomas Grimsley; Michael Pittman; Eva Kripalani; James Dalton, Defendants-Appellees,

v. Sawalak Ebner; Richard Mullins; Jantice Pitts; Jane Poe; Eileen Shaffer; Aimee Yogi, Movants-Appellants, and Jacqueline Davais; Jerry Trierweiller; Tim Woolery, Movants, v. Gina Santacroce; Richard Mullins, Third-party-defendant-Appellees.

No. 07-35429.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted July 7, 2008.

Filed September 17, 2008.

Henry J. Kaplan and Gregory A. Hartman, Bennett, Hartman, Morris, & Kaplan, LLP, Portland, OR, for the petitioners-appellants.

Jeremy D. Sacks and Amy Edwards, Stoel Rives LLP, Portland, OR, for defendant-appellee State of Oregon.

Joseph M. Malkin and Sarah C. Marriott, Orrick, Herrington, & Sutcliffe LLP, San Francisco, CA, for defendants-appellees Members of the Public Employees Retirement Board.

William F. Gary and Sharon A. Rudnick, Harrang Long Gary Rudnick P.C., Eugene, OR, for intervenor-appellee Salem-Keizer School District.

Appeal from the United States District Court for the District of Oregon; Garr M. King, District Judge, Presiding. D.C. No. CV-74-00538-GMK.

Before: HARRY PREGERSON and STEPHEN REINHARDT, Circuit Judges, and CONSUELO B. MARSHALL,^* District Judge.

PREGERSON, Circuit Judge:

Petitioners are Oregon public employees who are members of the state's Public Employee Retirement System ("PERS"). They appeal the district court's summary judgment order that held that the 1978 Title VII consent decree entered was not intended to permanently lock in the 1978 refund annuity rates for all PERS members. After reviewing the language of the consent decree and the evidence of the parties' intent in the context of the litigation as a whole, we conclude that the consent decree was not meant to create a perpetual floor on refund annuity benefits. Accordingly, we affirm the district court.

BACKGROUND

I. PERS and Refund Annuities

PERS is a statutory retirement plan for state and local government employees in Oregon. Many retired PERS members receive a monthly "service retirement allowance" composed of two parts: (1) a "refund annuity" and (2) a life pension.¹ The amount of the refund annuity depends upon three variables: (1) life expectancy rates for persons in the retiree's age group; (2) assumed interest rates; and (3) the size of the retiree's account balance at the time of retirement. The first two variables, life expectancy and assumed interest rates, are "actuarial equivalency factors" ("AEFs") used to convert the third variable, the retiree's account balance at the time of retirement, into the monthly refund annuity. See Or.Rev.Stat. § 238A.005(2).

PERS governing statutes mandate that the refund annuity be "the actuarial equivalent of accumulated contributions, if any, by the member and interest thereon at the time of retirement." Or.Rev.Stat. § 238.300. Thus, to convert a sum of money to a refund annuity, the PERS actuary multiplies that sum of accumulated contributions by the appropriate AEF from an annuity table adopted by Oregon's Public Employee Retirement Board ("Board"), the governing authority for PERS. For example, if a retiree had accumulated $100,000 in contributions and earnings, and the appropriate AEF for that retiree was 8.32 per $1,000, the retiree would receive a monthly refund annuity payment of $832 until death.

II. Henderson I and the 1978 Consent Decree

In 1974, four female PERS members filed a lawsuit in the United States District Court for the District of Oregon against the State of Oregon and the Board ("Henderson I"). The Henderson I plaintiffs alleged that the Board's practice of using two sets of life expectancy tables, one for men and another for women, in calculating refund annuities for retired PERS members constituted sex discrimination in violation of Title VII of the Civil Rights Act of 1964. The challenged practice resulted in lower monthly refund annuities for female PERS members, who were actuarially shown to live longer than their male counterparts.

The district court issued an order holding that the use of sex-segregated life expectancy tables violated Title VII, but staying any injunctive relief pending appeal. While the Henderson I appeal was pending, the United States Supreme Court ruled in City of Los Angeles Dep't of Water and Power v. Manhart, 435 U.S. 702, 98 S.Ct. 1370, 55 L.Ed.2d 657 (1978), that Title VII's prohibitions on sex-based discrimination applied to employee benefit plans.

Following Manhart, the parties agreed to a settlement. Thus, the district court vacated its order and judgment and entered a consent decree on September 20, 1978. The consent decree provided:

1. The judgment of this Court dated January 16, 1976 is set aside and this judgment is entered in lieu of it.

2. Title VII of the Civil Rights Act of 1964 prohibits the use of sex-segregated life expectancy tables in calculating "refund annuity" retirement allowances of employee members of the Oregon Public Employee Retirement System.

3. Defendant Public Employee Retirement System is permanently enjoined and restrained from the use of sex-segregated life expectancy tables in calculating "refund annuity" retirement allowance prospectively only for members retiring effective July 1, 1978, and thereafter, shall provide a monthly "refund annuity" retirement allowance to female members retiring after that date which is identical to the "refund annuity" retirement allowance males of the same age and amount received prior to that date. Defendant shall have no obligation to recalculate "refund annuity" retirement allowances to female members already retired or retiring before July 1, 1978.

4. Plaintiffs shall have and recover against defendants costs and counsel fees in the total amount of $7,000.00.

The Henderson I consent decree remains in effect today.

III. Legislative Reforms to PERS

The Board has used gender-neutral life expectancy tables ever since the district court entered the 1978 consent decree. Additionally, from 1978 through 2003, despite changing life expectancy and interest rate assumptions, the Board did not apply any updated AEFs that would have decreased a PERS member's projected monthly refund annuity.

The use of outdated AEFs, however, created unfunded liabilities for PERS. As a result, in 2003, Oregon Governor Kulongski signed the PERS Reform and Stabilization Act of 2003 ("Reform Legislation"). The Reform Legislation required that the Board adopt updated actuarial equivalency tables every two years. Accordingly, on June 10, 2003, the Board adopted new annuity tables based on current AEFs to calculate refund annuities for PERS members retiring after July 1, 2003.

The Reform Legislation provided that its constitutionality could be challenged directly in the Oregon Supreme Court. On March 8, 2005, the Oregon Supreme Court decided Strunk v. Public Employees Retirement Bd., 338 Or. 145, 108 P.3d 1058 (Or.2005). Strunk rejected several constitutional and contractual challenges to the Reform Legislation.² Specifically, Strunk rejected challenges to the requirement that the Board adopt and use current AEFs when calculating retirement benefits. Id. at 1109-10. Strunk further determined that the Board lacks the authority to use outdated AEFs. Id. at 1110.

IV. Henderson II and III

On October 16, 2003, six PERS members challenged the Board's use of updated life expectancy tables by filing a new action in the United States District Court for the District of Oregon ("Henderson II"). In Henderson II, the PERS members moved to reopen Henderson I and to hold the Board in civil contempt for violating the terms of the consent decree. They argued that the consent decree requires the Board "to provide all PERS members, retiring thereafter, a `refund annuity' allowance based upon the actuarial life expectancy tables in effect for males on July 1, 1978." At oral argument on June 10, 2004, the district court issued a minute order denying both the motion to reopen and the motion for civil contempt.³ The Henderson II plaintiffs appealed that minute order to this court.

On September 16, 2004, six PERS members (including two Henderson II plaintiffs) filed another action in the United States District Court for the District of Oregon ("Henderson III"). They sought to reopen Henderson I and requested a different remedy, a "declaration that the September 20, 1978 injunction requires [the Board] to adopt and use refund annuity tables which grant benefits not less than those benefits which were in effect for male members of [PERS] on July 1, 1978." On October 25, 2004, the district court issued a minute order denying the motion to reopen and denying as moot the motion for declaratory judgment. The Henderson III plaintiffs also appealed that minute order to this court.

Henderson II and III were consolidated on appeal. On October 20, 2006, we issued a disposition addressing the issues raised in Henderson II and Henderson III. Henderson v. Oregon, 203 Fed.Appx. 45, 49-50 (9th Cir.2006) (unpublished memorandum disposition).⁴ We held that the district court had not abused its discretion when it denied the motion for civil contempt filed in Henderson II because "viewing the language in the Henderson consent decree in favor of [the Board] ... the consent decree is not sufficiently specific to give notice to [the Board] that it would violate the consent decree by updating the actuarial tables." I...