American Fed. Teachers v. Oregon Taxpayers

• Decision Date: 06 December 2006
• Docket Number: 0012-12632.,A122158 (Control).,0108-08942.,A122168.
• Citation: 209 Or. App. 518,149 P.3d 159
• Parties: AMERICAN FEDERATION OF TEACHERS-OREGON, AFT, AFL-CIO, an Oregon unincorporated association, Respondent, and State of Oregon, Intervenor-Respondent, v. OREGON TAXPAYERS UNITED PAC, an Oregon political committee; Oregon Taxpayers United Education Foundation, an Oregon nonprofit corporation, Appellants, and John Does 1 through 10, Defendants. Oregon Education Association, an Oregon nonprofit corporation, Respondent, and State of Oregon, Intervenor-Respondent, v. Oregon Taxpayers United PAC, an Oregon political committee; Oregon Taxpayers United Education Foundation, an Oregon nonprofit corporation, Appellants, and John Does 2 through 10, Defendants.
• Court: Oregon Court of Appeals

149 P.3d 159

209 Or. App. 518

AMERICAN FEDERATION OF TEACHERS-OREGON, AFT, AFL-CIO, an Oregon unincorporated association, Respondent, and State of Oregon, Intervenor-Respondent, v. OREGON TAXPAYERS UNITED PAC, an Oregon political committee; Oregon Taxpayers United Education Foundation, an Oregon nonprofit corporation, Appellants, and John Does 1 through 10, Defendants.

Oregon Education Association, an Oregon nonprofit corporation, Respondent, and State of Oregon, Intervenor-Respondent, v. Oregon Taxpayers United PAC, an Oregon political committee; Oregon Taxpayers United Education Foundation, an Oregon nonprofit corporation, Appellants, and John Does 2 through 10, Defendants.

0108-08942.

0012-12632.

A122158 (Control).

A122168.

Court of Appeals of Oregon.

On plaintiffs-respondents' joint petition for reconsideration October 17, 2006.

Defendants-appellants' response to plaintiffs-respondents' petition for reconsideration filed October 24, 2006.

Decided December 6, 2006.

Gregory A. Hartman, Michael J. Morris, Aruna A. Masih, Portland, and Bennett, Hartman, Morris & Kaplan LLP, and Gene Mechanic, Giles Gibson, Portland, and Goldberg, Mechanic, Stuart & Gibson, LLP for petition.

Gregory W. Byrne, Portland, for response.

Before HASELTON, Presiding Judge, and BREWER, Chief Judge, and EDMONDS, Judge.

HASELTON, P.J.

Plaintiffs American Federation of Teachers (AFT) and Oregon Education Association (OEA) petition for reconsideration of our decision in American Fed. Teachers v. Oregon Taxpayers United, 208 Or.App. 350, 145 P.3d 1111 (2006). For the reasons that follow, we allow reconsideration and adhere to our former opinion.

In American Fed. Teachers, we held, in pertinent part, that (1) the trial court erred in denying defendant Oregon Taxpayers United Political Action Committee's (OTU-PAC) motion to dismiss Count 3, as it related to OTU-PAC's falsification of certain reports (C & E reports), but (2) the court correctly denied Oregon Taxpayers United Education Foundation's (OTU-EF) motion to dismiss Count 3 as it related to the falsification of other reports (CT-12 reports). Id. at 360-65, 145 P.3d 1111. On reconsideration, plaintiffs do not challenge our conclusion that OTU-PAC's submission of false C & E reports did not constitute a predicate offense for purposes of the Oregon Racketeer Influenced and Corrupt Organizations Act (ORICO), ORS 166.715 to 166.735. Rather, plaintiffs assert that, because they alleged that OTU-PAC acted in concert with OTU-EF and that OTU-PAC and OTU-EF should be held jointly and severally liable for damages caused to plaintiffs, OTU-PAC should, under a theory of "enterprise liability," be held vicariously liable for all of the damages the jury awarded for Count 3 based on OTU-EF's ORICO liability for falsification of its CT-12 reports. Thus, plaintiffs assert, this court erred both in reversing the money judgment under Count 3 as to OTU-PAC and in vacating certain provisions of the court's injunction that pertained to OTU-PAC.¹

As explained below, we adhere to our decision because, even assuming without deciding that plaintiffs' theory of vicarious "enterprise liability" is a viable one, plaintiffs did not adequately plead, develop, or brief that theory of liability that they advance for the first time on reconsideration.

The theory of liability that plaintiffs advance for the first time on reconsideration is that, under ORICO, all conspirators are liable for the acts of their coconspirators. Plaintiffs point to ORS 166.720(4), which provides that "[i]t is unlawful for any person to conspire or endeavor to violate any of" the substantive ORICO provisions found in ORS 166.720(1) through (3). Plaintiffs further note that "persons acting in concert may be liable jointly for one another's torts" under various theories of liability. Granewich v. Harding, 329 Or. 47, 55, 985 P.2d 788 (1999). Thus, plaintiffs reason, because they alleged that both OTU-PAC and OTU-EF acted in concert with each other, it does not matter that OTU-PAC was entitled to dismissal of Count 3 with regard to its own falsification of reports-it remained liable because it acted in concert with OTU-EF, which was liable under Count 3 for falsification of other reports.

We express no opinion as to whether plaintiffs' theory, in the abstract, is viable in connection with ORICO claims.² Rather, as explained below, we decline to address it because plaintiffs did not advance it at trial or on appeal until this point.

Plaintiffs' position on reconsideration is that they adequately pleaded and proved (and implicitly that the judgment in their favor embodied) that defendants were jointly and severally liable for plaintiffs' damages because each defendant was vicariously liable for the racketeering crimes of the other. In particular, plaintiffs point to the following portions of their pleadings on Count 3:

"4. At all times mentioned herein, there existed an enterprise as defined by ORS 166.715(2). The enterprise consisted of defendants OTU[-PAC] and OTU-EF acting in concert with * * * Bill Sizemore and Becky Miller and [various other named entities].

"* * * * *

"26. In connection with its application for the benefit of being able to operate as an Oregon PAC and thereby receive and spend money to solicit signatures to place Measures 92 and 98 on the ballot and to campaign for passage of Measures 92 and 98, defendant OTU-PAC and its subsidiary PACs were required by Oregon law, ORS 260, et seq., to file periodic reports (`C & E reports') with the Oregon Secretary of State detailing contributions received and expenditures made in support of those initiative measures. From the years 1998 through 2000, William Sizemore and Becky Miller, acting as agents of OTU-PAC, signed and filed false C & E reports with the Oregon Secretary of State, knowing such reports to contain false written statements including misstatements of the amount of funds received from OTU-EF and other contributors for use by OTU-PAC.

"* * * * *

"28. In connection with its application to maintain the benefit of tax-exempt status and thereby the ability to solicit tax-deductible contributions in Oregon, OTU-EF is required to submit annual written reports to the Charitable Activities Section of the Oregon Department of Justice (`DOJ') known as CT-12 forms. As an agent of OTU-EF, William Sizemore signed and submitted CT-12 forms to DOJ for the years 1998 through 2000, during the campaign to place Measures 92 and 98 on the ballot and have them enacted into law. * * * Sizemore knew that these CT 12 forms * * * contained false statements about the use of OTU-EF funds.

"29. At the time that Sizemore and Miller signed and submitted the above-mentioned C & E reports to the Oregon Secretary of State and Sizemore signed and submitted the CT-12 forms to the DOJ * * * they knew that OTU-EF was being used as a conduit to raise money and to secretly use it to pay OTU-EF employees to perform work for OTU-PAC, and to pay the above-described circulators to gather signatures to qualify Measures 92 and 98 on the 2000 general election ballot. The C & E and CT-12 forms were intentionally false, concealing the actual use of funds raised by OTU-EF to support OTU-PAC activity related to Measures 92 and 98, concealing the source of contributions to Measures 92 and 98, and enabling more funds to be raised to support Measures 92 and 98 through the tax exempt OTU-EF.

"* * * * *

"32. Defendants * * * benefitted from the racketeering activities of OTU-EF's agents.

"WHEREFORE, plaintiff[s] pray[] for judgment against defendants, jointly and severally[.]"

Plaintiffs further point out that the jury answered "yes" to the following questions on the verdict form:

"COUNT 3

"13. Was OTU-PAC associated with an enterprise through a pattern of racketeering with regard to the filing of CT-12 reports or with regard to the filing of C & E reports?

"14. Was OTU-EF associated with an enterprise through a pattern of racketeering with regard to the filing of CT-12 reports or with regard to the filing of C & E reports?"

Finally, plaintiffs note that the judgment specifically made the defendants jointly and severally liable for their damages.

Plaintiffs posit on reconsideration that,

"[i]n issuing its ruling reversing the money judgment under Count 3 as to OTU-PAC this court overlooked that the pleadings could be fairly read to create `enterprise liability' because OTU-EF and OTU-PAC were each members of the ORICO enterprise, because OTU-PAC conspired to violate ORICO, and because OTU-PAC can then be held jointly and severally liable for OTU-EF's racketeering activities."

Defendants respond that, although plaintiffs pleaded that defendants were part of an enterprise, they did not plead in conjunction with Count 3 that OTU-PAC was liable under a conspiracy theory for OTU-EF's filing of false CT-12 reports. They further note that, under ORICO, the terms "enterprise" and "conspiracy" are not used interchangeably, and assert that plaintiffs neither pleaded nor proved a conspiracy with regard to the filing of the CT-12 reports.³

The primary problem with plaintiffs' argument that we "overlooked" what they are now asserting is that plaintiffs appear to be confusing the common law of joint and several liability with the common law of vicarious liability. The two concepts are distinct; the terms are not interchangeable. In Murray v. Helfrich, 146 Or. 602, 605-06, 30 P.2d 1053 (1934), the court described joint and several liability as follows:

"`[W]here the negligence of two or more persons concur in producing a single, indivisible injury, then such persons are jointly and severally liable, although there was no common duty, common design or concerted action.' 1...