Johnson v. Saif

• Citation: 202 Or. App. 264,122 P.3d 66
• Decision Date: 19 October 2005
• Docket Number: 0207-07157; A123541.
• Parties: John JOHNSON, individually and for all others similarly situated, Appellant, v. SAIF CORPORATION, an Oregon public corporation, and Brenda Rocklin, Respondents.
• Court: Oregon Supreme Court

Page 66

122 P.3d 66

202 Or. App. 264

John JOHNSON, individually and for all others similarly situated, Appellant, v. SAIF CORPORATION, an Oregon public corporation, and Brenda Rocklin, Respondents.

0207-07157; A123541.

COURT OF APPEALS OF OREGON.

Argued and Submitted June 20, 2005.

Decided October 19, 2005.

Meagan A. Flynn argued the cause for appellant. With her on the briefs was Preston Bunnell & Stone, LLP.

Jas. Jeffrey Adams, Assistant Attorney General, argued the cause for respondents. With him on the brief were Hardy Myers, Attorney General, and Mary H. Williams, Solicitor General.

Before LANDAU, Presiding Judge, and SCHUMAN^* and ORTEGA, Judges.

LANDAU, P.J.

Plaintiff initiated this action under 42 U.S.C. section 1983 against SAIF Corporation (SAIF) and its president and chief executive officer, Rocklin¹ (collectively, defendants). He alleges that defendants deprived him of his right to due process under the Fourteenth Amendment to the United States Constitution by terminating his permanent total disability (PTD) benefits without a pretermination hearing. He seeks both damages and an injunction compelling defendants to provide him with a pretermination hearing. Defendants moved for summary judgment on the ground that, among other things, defendants are not "persons" who are subject to suit under 42 U.S.C. section 1983. Plaintiff filed a cross-motion for summary judgment on the merits of his claims. The trial court granted summary judgment in favor of defendants, denied plaintiff's cross-motion, and entered judgment dismissing plaintiff's claims. Plaintiff now appeals, arguing that the trial court erred in entering summary judgment dismissing his claims and in denying his cross-motion for summary judgment on the merits.

We conclude that, except as to plaintiff's claim for prospective injunctive relief, the trial court erred in granting defendants' motion for summary judgment. We do not, however, address whether the court erred in denying plaintiff's cross-motion, because the court did not address that motion on the merits. We therefore affirm as to the dismissal of the claim for injunctive relief, but otherwise reverse and remand.

I. BACKGROUND

We begin with a brief description of the state-law context for plaintiff's federal law claims and the facts on which they are based. We then follow with a summary of the relevant facts, to which the parties have stipulated.

A. Review of PTD benefits

Oregon workers' compensation law provides for the payment of PTD benefits if, as a consequence of a work-related injury, a worker is adjudged permanently and totally "incapacitated from regularly performing work at a gainful and suitable occupation." ORS 656.206(5). The law further provides that the insurer paying PTD benefits to a worker must review that award at least every two years to determine whether the worker continues to be incapable of gainful and suitable employment. Id. If the worker becomes capable of gainful and suitable employment, the insurer may end the payment of benefits or substitute partial disability benefit payments, as appropriate.

The statutes do not provide for a hearing before any termination of PTD benefits. Administrative rules, however, do impose certain procedures that must be followed before the termination may occur. The insurer must notify the worker of its decision to terminate PTD benefits and provide the worker full access to the information that the insurer relied on in making its decision. OAR 436-030-0065(1). The worker then has the opportunity to request an evidentiary hearing before the Hearings Division of the Workers' Compensation Board. OAR 436-030-0065(6). Either party may appeal the decision of the administrative law judge (ALJ) to the Workers' Compensation Board (board). ORS 656.289(3); ORS 656.295. Decisions of the board, in turn, are subject to judicial review by this court. ORS 656.298.

B. Stipulated facts

The parties stipulated to the following facts. SAIF is an Oregon independent public corporation that provides workers' compensation insurance to Oregon employers. Rocklin is the president and chief executive officer of SAIF. At all relevant times, she and her predecessors acted in their official capacities.

In 1981, plaintiff was employed by a company that purchased workers' compensation insurance from SAIF for the benefit of its employees. That year, he was injured on the job. Plaintiff ultimately was adjudicated to be permanently and totally disabled as a result of his occupational injury. SAIF began paying monthly PTD benefits.

In 2001, SAIF conducted its biennial review of plaintiff's PTD benefits, as required by law. SAIF notified plaintiff that it was in the process of reevaluating his entitlement to the benefits. Plaintiff was evaluated by several physicians and a rehabilitation counselor at SAIF's expense. As a result of those evaluations, SAIF determined that plaintiff was no longer entitled to permanent total disability, but that he was instead entitled to permanent partial disability. SAIF sent plaintiff the required notification of its determination.

Plaintiff requested, and obtained, an evidentiary hearing at which he was permitted to testify, to present evidence — including his own expert medical and vocational testimony — to cross-examine SAIF witnesses, and to otherwise contest SAIF's determination that he was no longer entitled to PTD benefits. The ALJ upheld SAIF's determination that plaintiff was capable of suitable and gainful employment and, as a result, no longer entitled to PTD benefits. The Workers' Compensation Board affirmed the ALJ's decision. This court ultimately affirmed the board without opinion. Johnson v. SAIF, 200 Or.App. 414, 115 P.3d 988 (2005).

In the meantime, plaintiff initiated this action under 42 U.S.C. section 1983 — commonly referred to as "section 1983" — contending that SAIF and Rocklin, acting in her official capacity, both acted under color of state law in depriving him of due process of law by failing to afford him a hearing before terminating his PTD benefits.² Plaintiff stipulated that defendants did not violate Oregon law. His sole claim is that, by following the procedures set out in state statutes and administrative rules, defendants violated his federal right to due process of law. He requested both monetary and injunctive relief, including damages beyond the mere restoration of his PTD benefits.

Defendants moved for summary judgment, relying on four grounds for disposing of plaintiff's claims as a matter of law.

First, defendants argued that they are not "persons" who are subject to liability under section 1983. According to defendants, under Will v. Michigan Dept. of State Police, 491 U.S. 58, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989), the statutory reference to "persons" who are subject to suit does not include a state, its agencies, or its officials who are sued in their official capacities for damages. Defendants argued that SAIF is an agency of the state, created by the state for a public purpose. Moreover, they argued, at least with respect to the claim for damages, Rocklin is not a "person" within the meaning of the statute, because she is being sued for actions taken in her official capacity.

Second, defendants argued that, even if they are "persons" within the meaning of section 1983, their actions still do not subject them to liability under that statute because those actions were not taken "under color of state law," as the statute requires.

Third, defendants argued that the claim for prospective injunctive relief against Rocklin is moot in light of the fact that plaintiff eventually received the full-blown evidentiary hearing that he requested.

Fourth, defendants argued that, at all events, plaintiff's due process claim is barred by claim preclusion. According to defendants, plaintiff could have raised his due process claim when he challenged the termination of his PTD benefits before the ALJ and the Workers' Compensation Board.

Plaintiff filed a cross-motion for summary judgment on the merits of his due process claim. He also responded to each of defendants' four arguments in support of their motion as follows.

First, he contended that SAIF is indeed a "person" within the meaning of section 1983. He argued that, although SAIF is a public corporation with many of the attributes of a state agency, it is also statutorily exempted from being treated like a state agency in a number of important respects.

Second, he argued that defendants did act "under the color of state law." He argued that, under controlling federal case law, an entity that is not an arm of the state nevertheless can act under color of state law for section 1983 purposes.

Third, plaintiff argued that, even if it is true that he already obtained the hearing that he requested, the fact remains that his claim for injunctive relief is not moot because it is subject to the federal exception to the doctrine of mootness that applies to cases that are "capable of repetition, yet evading review."

Finally, plaintiff argued that his due process claim is not subject to preclusion because neither the ALJ nor the Workers' Compensation Board could have provided him with the relief that he requested on that claim.

The trial court granted defendants' motion. The court explained that the primary ground of its decision was the fact that defendants are not "persons" within the meaning of section 1983 and that the claim for injunctive relief is moot. The court went on to say that, if it were wrong about either of those conclusions, it would have granted the motion on the other grounds advanced by defendants. The court explained that, because it granted defendants' motion on those grounds, it necessarily denied plaintiff's cross-motion as well, although without reaching the merits of the constitutional issue.

II. ANALYSIS

On appeal, plaintiff assigns error both to the entry of summary judgment in favor of defendants and to...