Doyle v. City of Medford, an Or. Mun. Corp.

• Jurisdiction: Oregon
• Parties: Ronald DOYLE; and Benedict Miller, Plaintiffs–Respondents, and Robert Deuel; and Charles Steinberg, Plaintiffs–Respondents Cross–Appellants, v. CITY OF MEDFORD, an Oregon municipal corporation; and Michael Dyal, City Manager of the City of Medford, in his official capacity and as an individual, Defendants–Appellants Cross–Respondents.
• Citation: 303 P.3d 346,256 Or.App. 625
• Docket Number: A147497.,080137L7
• Court: Oregon Court of Appeals
• Decision Date: 15 May 2013

256 Or.App. 625

303 P.3d 346

Ronald DOYLE; and Benedict Miller, Plaintiffs–Respondents,andRobert Deuel; and Charles Steinberg, Plaintiffs–RespondentsCross–Appellants,

v.CITY OF MEDFORD, an Oregon municipal corporation; and Michael Dyal, City Manager of the City of Medford, in his official capacity and as an individual, Defendants–AppellantsCross–Respondents.

080137L7; A147497.

Court of Appeals of Oregon.

Argued and submitted on Jan. 11, 2013.

Decided May 15, 2013.

Robert E. Franz, Jr., Springfield, argued the cause for appellants-cross-respondents.With him on the briefs was Law Office of Robert E. Franz, Jr.

Stephen L. Brischetto, Portland, argued the cause and filed the briefs for respondents and respondents-cross-appellants.

Before SCHUMAN, Presiding Judge, and WOLLHEIM, Judge, and DUNCAN, Judge.

DUNCAN, J.

This case involves four plaintiffs, each of whom retired from employment with the City of Medford(the city) and each of whom attempted to elect to continue the health insurance coverage that the city had provided to them as employees.But the city's health insurance plan that applied to plaintiffs at the time of their retirement did not provide coverage for retirees.Although plaintiffs each had the option to enroll in a retiree health insurance plan with the Public Employee Retirement System (PERS), they believed that the city was separately obligated under state law to provide them with health insurance, and they sued the city and its manager in the Jackson County Circuit Court.¹

The legal impetus for this litigation is ORS 243.303(2).As applicable here, that statute currently provides:

“The governing body of any local government that contracts for or otherwise makes available health care insurance coverage for officers and employees of the local government shall, insofar as and to the extent possible, make that coverage available for any retired employee of the local government who elects within 60 days after the effective date of retirement to participate in that coverage and, at the option of the retired employee, for the spouse of the retired employee and any unmarried children under 18 years of age.The health care insurance coverage shall be made available for a retired employee until the retired employee becomes eligible for federal Medicare coverage, for the spouse of a retired employee until the spouse becomes eligible for federal Medicare coverage and for a child until the child arrives at majority, and may, but need not, be made available thereafter.The governing body may prescribe reasonable terms and conditions of eligibility and coverage, not inconsistent with this section, for making the health care insurance coverage available.The local government may pay none of the cost of making that coverage available or may agree, by collective bargaining agreement or otherwise, to pay part or all of that cost.”

(Emphasis added.)There have been several amendments to the statute over the years.As originally enacted in 1981, ORS 243.303(2) provided that the local government “ may, in so far as and to the extent possible,” make the same health care insurance coverage available to retired officers, employees and their spouses.Or. Laws 1981, ch. 240, § 1(emphasis added).In 1985, the legislature replaced “may” with “shall.”Or. Laws 1985, ch. 224, § 1.As originally enacted, the statute included no requirement that an employee elect coverage within 60 days of retirement, and placed no limitation on that election based on eligibility for Medicare.In 1985, the legislature amended the statute to its current form, to require an election within 60 days of retirement and to include the provision that the local government “may, but need not” make coverage available after a retired employee or that employee's spouse becomes eligible for Medicare or a retired employee's child reaches the age of majority.Id.

The city provided health insurance coverage to its employees.In response to the legislature's 1985amendment of ORS 243.303(2), the city adopted ResolutionNo. 5715, implementing the statute's provisions.Until 1990, the city offered all retirees the option of continuing their city health care insurance coverage after retirement.In 1990, however, the city began to scale back the availability of health insurance coverage after retirement, other than with respect to the 18 months allowed under the Consolidated Omnibus Budget Reconciliation Act of 1985, 29 USC §§ 1161–1168(COBRA).Beginning in 1990, the city entered into an agreement with the Oregon Teamster Employer Trust (OTET) for the provision of health insurance for its police officer employees and, under that coverage, retiring police officers could no longer elect to continue their health insurance coverage after retirement.Beginning in 2001, the city added its management employees to the OTET plan, and the city's management employees could no longer elect to continue their health insurance coverage after retirement.In 2002, the city placed the non-management employees in its Parks and Recreation Department and in its Public Works Department under the same program, and they were no longer eligible to elect to continue their health insurance coverage.

Approximately 135 city employees, those represented by AFSMCE, are still entitled to elect continued city health insurance coverage after retirement.All other retirees may choose to remain covered for 18 months after their retirement under COBRA.After that 18–month period, retired employees can seek health insurance coverage through private carriers or enroll in the Oregon Public Employees Retirement System Health Insurance Program, into which the city contributes so that its retired employees can obtain coverage.

Plaintiff Steinberg retired from his job as a city police officer effective January 1, 2003.Plaintiff Deuel retired from his job as the city engineer effective January 31, 2003.Plaintiff Doyle retired from his job as city attorney effective March 31, 2005, and plaintiff Miller retired from his job as a police officer effective May 31, 2006.Each plaintiff attempted to elect to continue health insurance coverage and, when the city rejected their attempts, plaintiffs brought this action against the city and its manager Michael Dyal.²Plaintiffs alleged in their complaint that the city's failure to allow them to enroll in health care insurance benefits as retirees (1) violated ORS 243.303(2);(2) violated the city's ResolutionNo. 5715 implementing the requirements of that statute; (3) constituted age discrimination under ORS 659A.030(1)(b); and (4) was a breach of plaintiffs' employment contracts.Plaintiffs sought injunctive relief and damages to compensate them for their additional medical and insurance expenses, as well as noneconomic damages and attorney fees.³

The trial court dismissed plaintiffs' second claim, which alleged a violation of the city's resolution, and plaintiffs did not appeal that ruling.The three remaining claims were resolved differently with respect to each plaintiff, some based on partial summary judgment, and the claims reach us on appeal in slightly different procedural postures.

Plaintiff Doyle: On the first claim for relief, alleging violation of ORS 243.303(2), the trial court ruled that, in failing to provide Doyle with health insurance upon retirement comparable to the coverage provided to current employees, the city violated the statute.The trial court granted Doyle's motion for summary judgment on the question of liability on that claim, and allowed the question of damages to be tried to the jury.On the fourth claim for relief, a breach of contract claim, the trial court granted Doyle's motion for summary judgment on the question of liability only.The court explained that, although it rejected plaintiffs' contention that ORS 243.303(2) became a part of their employment contracts or provided a basis for a breach of contract claim, a handbook distributed to plaintiffs while they were employed and describing health insurance benefits provided by ODS Health Plans did constitute a part of the employment contract.The court concluded as a matter of law that the city breached that agreement when it declined to continue to offer health care insurance to plaintiffs after they retired.Doyle's breach of contract claim went to the jury on the question of damages.After trial to the jury, the jury awarded Doyle $61,142 in economic damages on the first and fourth claims, as well as $50,000 in non-economic damages on the first claim.On the third claim for relief, age discrimination, after trial to the court, the court ruled in favor of Doyle and awarded damages to be “included within, and not in addition to, the award of damages” on the first and fourth claims.On appeal, the city asserts assignments of error relating to each claim.

Plaintiff Miller: On the claim under ORS 243.303(2), as with Doyle, the trial court granted Miller's motion for summary judgment on liability, and the issue of damages went to the jury.The jury awarded Miller damages of $29,866 on that claim.On the breach of contract claim, the trial court denied Miller's motion for summary judgment on liability and also granted the city's motion for directed verdict, and that claim never went to the jury.Nonetheless, on the form of judgment provided to the trial court by plaintiffs, the trial court erroneously entered judgment for Miller on the breach of contract claim, as well as an award of damages on that claim.On the age discrimination claim, after trial to the court, the court ruled in Miller's favor and awarded Miller damages, again to be included within the damages award on the first and fourth claims.The city's appeal challenges rulings related to each claim.

Plaintiff Deuel: The trial court granted the city's motion for summary judgment on statute of limitations grounds on both of the statutory claims.On the breach of contract claim, the court granted...