Doyle v. City of Medford

• Decision Date: 04 May 2009
• Docket Number: No. 07-35753.,07-35753.
• Citation: 565 F.3d 536
• Parties: Ronald DOYLE; Robert Deuel; Benedict Miller; and Charles Steinberg, Plaintiffs-Appellants, v. CITY OF MEDFORD, an Oregon municipal corporation; and Michael Dyal, City Manager, City of Medford, in his official capacity and as an individual, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

565 F.3d 536

Ronald DOYLE; Robert Deuel; Benedict Miller; and Charles Steinberg, Plaintiffs-Appellants, v. CITY OF MEDFORD, an Oregon municipal corporation; and Michael Dyal, City Manager, City of Medford, in his official capacity and as an individual, Defendants-Appellees.

No. 07-35753.

United States Court of Appeals, Ninth Circuit.

May 4, 2009.

Stephen L. Brischetto, Portland, OR, for the plaintiffs-appellants.

Robert E. Franz, Jr., Law Office of Robert E. Franz, Jr., Springfield, OR, for the defendants-appellees.

D.C. No. CV-06-03058-PA, District of Oregon, Medford.

Before: SUSAN P. GRABER, RAYMOND C. FISHER, and MILAN D. SMITH, JR., Circuit Judges.

ORDER CERTIFYING A QUESTION TO THE SUPREME COURT OF OREGON

ORDER

Plaintiffs, who are former employees of Defendant City of Medford, argue that the City's policy of denying health insurance coverage to retirees violates Oregon Revised Statutes section 243.303, City Resolution No. 5715, and the Due Process Clause of the United States Constitution. Plaintiffs contend that section 243.303 and Resolution No. 5715 confer on them a vested property interest in health care benefits after retirement, of which the City deprived them without due process of law. Because the question whether the statute and Resolution confer on Plaintiffs a protected property interest raises an important and unresolved issue of Oregon law that will dispose of the only remaining federal claim on appeal, we respectfully certify a question to the Supreme Court of Oregon. We offer the following statement of relevant facts and explanation of the "nature of the controversy in which the question[ ] arose." Or.Rev.Stat. § 28.210.

BACKGROUND

A. Factual and Procedural History

In 1981, the Oregon State Legislative Assembly enacted Oregon Revised Statutes section 243.303(2), which read, in pertinent part:

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, may, in so far as and to the extent possible, make that coverage available for retired officers and employees of the local government and for spouses and unmarried children under 18 years of age of those retired officers and employees. The governing body may prescribe reasonable terms and conditions of eligibility and coverage, not inconsistent with this section, for making that coverage available. The local government may agree to pay none, part or all of the cost of making that coverage available.

1981 Or. Laws page no. 258 (emphasis added).

In 1985, the statute was amended. The most significant change was that the legislature replaced the discretionary word "may" with the mandatory word "shall." The statute currently reads:

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.

Or.Rev.Stat. § 243.303(2) (2007) (emphasis added).

In 1986, the City adopted Resolution No. 5715, which set forth the City's plan for complying with section 243.303. The Resolution interprets section 243.303 as requiring "that continuation of health insurance be offered to employees who retire from City service." The Resolution provides that a retired employee has 60 days from the date of retirement in which to elect to continue his or her participation in the City's health insurance program. The retiree also can elect to enroll his or her spouse and unmarried children under age 18 in the program, if they were covered while the retiree was employed by the City. Under the Resolution, coverage continues until one of several events (including the retiree's attainment of Medicare eligibility or termination of the retiree program by the City or its carrier) occurs.

Before 1990, the City permitted all employees to elect to continue their health insurance coverage upon retirement. In 1990, however, the City negotiated with its police officers' union for a health insurance program that did not give officers the opportunity to continue coverage after retirement. In 2001, the City placed all of its management-level employees under that same health insurance program, which does not cover retirees. In 2002, the City placed its non-management employees in both its Parks and Recreation Department and Public Works Department in the same program.

The City contracts with the Oregon Teamsters Employers Trust to provide health insurance to its employees. The Teamsters' contract with the City states: "[P]articipants are not allowed to participate in the Trust's Retiree Plan or any insured or HMO option available through it." This provision means that retirees are excluded from coverage under the Teamsters' plan. The members of the Teamsters are responsible for voting on the extent of coverage. According to the City, the Teamsters were "willing" to provide health insurance benefits to retired employees, but only "if the members of the Teamsters voted for such coverage." To date, the members of the Teamsters have not approved an extension of health insurance benefits to retirees.

Although the City does not provide health insurance coverage after retirement, retirees can choose to remain covered for 18 months after their retirement under the Consolidated Omnibus Budget Reconciliation Act of 1985. After that 18-month period expires, retired employees can enroll in the Oregon Public Employees Retirement System Health Insurance Program, into which the City has paid so that its retired employees can obtain coverage.

Plaintiffs are former City police officers or management-level employees who have retired and who have been denied benefits under the Teamsters' plan.¹ In August 2006, Plaintiffs filed suit against the City and City Manager Michael Dyal, alleging that Defendants had violated Resolution No. 5715 and Oregon Revised Statutes section 243.303; the Due Process Clause; the Age Discrimination in Employment Act of 1967 ("ADEA"); and the parallel Oregon age discrimination statute, Or.Rev.Stat. § 659A.030.² Defendants moved for summary judgment, which the district court granted.

In its order granting summary judgment, the district court held that neither section 243.303 nor Resolution No. 5715 afforded Plaintiffs a constitutionally protected property interest. Because no Oregon court had yet interpreted either the statute or the Resolution, the court examined Ninth Circuit case law and reasoned that the statute's text did not "sufficiently limit the conditions under which the City would be required to extend health insurance coverage to retirees." The court declined to exercise supplemental jurisdiction over Plaintiffs' remaining state law claims, dismissing them without prejudice and with leave to refile in state court.

Following the district court's grant of summary judgment, Plaintiffs filed their state law claims in Oregon state court. Plaintiffs alleged four claims: (1) the City violated section 243.303, which Plaintiffs argue provides a private right of action; (2) the City violated Resolution No. 5715, which Plaintiffs also argue provides a private right of action; (3) the City violated Oregon's age discrimination law; and (4) the City breached an implied contract it had made with Plaintiffs. The state trial court held in November 2008 that the claims of two of the four plaintiffs (Steinberg and Deuel) were barred on statute of limitations grounds, but that the claims of the other two plaintiffs (Doyle and Miller) could proceed.³ The court held that section 243.303 afforded Plaintiffs a private right of action, but that Resolution No. 5715 did not.

The court rejected the City's argument that it was not required to allow its retired employees to continue the same coverage offered to current employees because providing such coverage is "impossible" under the City's contract with the Teamsters. The court held that Defendants cannot escape the requirements of section 243.303 by "conspicuously contracting with an insurance provider whose coverage does not include retirees." Because Defendants did not present "the Court with undisputed evidence that no entity providing health care insurance was (and is) willing to provide [health care] coverage for both current and retired employees of the City of Medford," the court refused to say that, as a matter of law, it was impossible for the City to provide coverage to retirees. Additionally, the court decided that the phrase "to the extent possible" does not mean "to the extent financially prudent," because the Oregon legislature did not include the words "subject to the availability of funds" in section 243.303, as it has in some other statutes. That case is still pending in state court; as of the date of this Order, no final judgment has been entered and no appeal has been taken.

B. Due Process Claim

Plaintiffs argue that section...