Strunk v. Perb

• Decision Date: 11 October 2007
• Docket Number: (SC S50593 (Control); S50645; S50686).
• Citation: 343 Or. 226,169 P.3d 1242
• Parties: Richard STRUNK, Donald Reed, Carol Booker, Larry Blumenstein, Alan Lively, Merlene Martin, William Smee, Denise Jacobsen, and Susanna Rhodes, Petitioners, v. PUBLIC EMPLOYEES RETIREMENT BOARD, State of Oregon, State of Oregon by and Through the State Board of Higher Education, North Douglas School District, Deschutes County, Portland School District, City of Salem, South Lane School District, and Oregon Health Sciences University, Respondents. Dave Dahlin, Petitioner, v. Public Employees Retirement Board (Dawn Morgan, Janice Deringer, Mark Gardiner, Jeanne Garst, Glenn Harrison, Todd Schwartz, George Russell, Steven Bjerke), Theodore Kulongoski, Governor, State of Oregon, Respondents, and League Of Oregon Cities and Oregon School Boards Association, Intervenors. Martha Sartain, Petitioner, v. Public Employees Retirement Board, State of Oregon, and State of Oregon, by and through the Oregon Department of Transportation, Respondents, and League Of Oregon Cities and Oregon School Boards Association, Intervenors.
• Court: Oregon Supreme Court

169 P.3d 1242

343 Or. 226

Richard STRUNK, Donald Reed, Carol Booker, Larry Blumenstein, Alan Lively, Merlene Martin, William Smee, Denise Jacobsen, and Susanna Rhodes, Petitioners, v. PUBLIC EMPLOYEES RETIREMENT BOARD, State of Oregon, State of Oregon by and Through the State Board of Higher Education, North Douglas School District, Deschutes County, Portland School District, City of Salem, South Lane School District, and Oregon Health Sciences University, Respondents.

Dave Dahlin, Petitioner, v. Public Employees Retirement Board (Dawn Morgan, Janice Deringer, Mark Gardiner, Jeanne Garst, Glenn Harrison, Todd Schwartz, George Russell, Steven Bjerke), Theodore Kulongoski, Governor, State of Oregon, Respondents, and League Of Oregon Cities and Oregon School Boards Association, Intervenors.

Martha Sartain, Petitioner, v. Public Employees Retirement Board, State of Oregon, and State of Oregon, by and through the Oregon Department of Transportation, Respondents, and League Of Oregon Cities and Oregon School Boards Association, Intervenors.

(SC S50593 (Control); S50645; S50686).

Supreme Court of Oregon, En Banc.

October 11, 2007.

Gregory A. Hartman, Michael J. Morris, and Aruna A. Masih, Bennett, Hartman, Morris & Kaplan, LLP, Portland, filed the petition for attorney fees and costs for petitioners Richard Strunk, Donald Reed, Carol Booker, Larry Blumenstein, Alan Lively, Merelene Martin, William Smee, Denise Jacobsen, and Susanna Rhodes.

Richard J. Birmingham, Birmingham, Thorson & Barnett, PC, Seattle, Washington, filed the petition for attorney fees and costs for petitioner Dave Dahlin.

Scott A. Jonsson, Brian R. Talcott, and James M. Hillas, Dunn, Carney, Allen, Higgins & Tongue, LLP, Portland, filed the petition for attorney fees and costs for petitioner Martha Sartain.

Townsend Hyatt, Joseph M. Malkin, pro hac vice, and Leah Spero, pro hac vice of Orrick, Herrington & Sutcliffe, LLP, San Francisco, California, filed the objection to attorney fees for respondent Public Employees Retirement Board.

Stephen S. Walters, Special Counsel, State of Oregon, and Jeremy D. Sacks, and Amy E. Edwards of Stoel Rives, LLP, Portland, joined the objections filed by Public Employees Retirement Board to petitions for attorney fees for respondents State of Oregon, State Board of Higher Education, Marion County, Oregon Department of Justice, Oregon Department of Transportation, Oregon Judicial Department, and Theodore Kulongoski.

William F. Gary, Sharon A. Rudnick, Jerome Lidz, and Karla Alderman, Harrang Long Gary Rudnick, PC, Eugene, filed the objections to petitions for attorney fees for respondents North Douglas School District, Deschutes County, Portland School District, City of Salem, South Lane School District, Oregon Health Sciences University, League of Oregon Cities, and Oregon School Boards Association.

DE MUNIZ, C.J.

This matter is before the court on three separate petitions for attorney fee awards.¹ In Strunk v. PERB, 338 Or. 145, 108 P.3d 1058 (2005) (Strunk I), petitioners successfully challenged certain aspects of the legislature's 2003 revision of the Public Employee Retirement System (PERS). Respondents there and in the matter now before us are the State of Oregon, the Public Employees Retirement Board, and a variety of nonstate government entities that include several different school districts, the City of Salem, Deschutes County, the League of Oregon Cities, and the Oregon School Boards Association. Petitioners subsequently sought attorney fees and, in Strunk v. PERB, 341 Or. 175, 139 P.3d 956 (2006) (Strunk II), this court concluded that petitioners were entitled to fees under the common fund doctrine. As a result, we referred the matter to a special master with instructions to make findings and recommendations regarding those fees. Having reviewed the special master's findings and recommendations, as well as the parties' objections and responses, we are now prepared to determine the respective attorney fee awards that should issue here.

In Strunk II, this court summarized the history of the fee matter now before us:

"In 2003, the Oregon Legislative Assembly modified the statutes that govern the Public Employees Retirement System (PERS). As relevant to petitioners' claims for relief, the amendments (collectively, the `2003 PERS legislation') altered the PERS statutes in several ways. Specifically, the 2003 PERS legislation (1) directed all employee-member salary contributions made after January 1, 2004, to an Individual Account Program, rather than to members' regular PERS accounts; (2) altered how PERS credited earnings to the accounts of members who joined PERS before January 1, 1996 (`Tier One' members); (3) prohibited, as of December 31, 2003, members from making further contributions to a variable annuity account program; (4) temporarily suspended cost-of-living adjustments (COLAs) for certain retired Tier One members; (5) permitted erroneously paid and payable benefits to be recouped from future PERS fund earnings as an administrative expense; and (6) provided for the application of updated actuarial equivalency factors used to convert members' account balances at retirement to monthly payments.

"Petitioners, some active and some retired Tier One members, challenged the 2003 PERS legislation directly in this court pursuant to the legislature's grant of original jurisdiction to hear the matter. That grant of jurisdiction permitted this court to determine whether the 2003 PERS legislation breached any provision of the PERS statutory contract or violated the state or federal constitutions. For the most part, petitioners argued that each amendment set out above either breached or impaired an obligation of the PERS contract.

"Petitioners succeeded in two of their claims when this court identified two areas in which the 2003 PERS legislation had violated state law by depriving some PERS members of monies lawfully due them:

"`We conclude that, in two respects, petitioners have prevailed on their claims for relief. First, petitioners in each of the cases correctly have argued that the provisions of the 2003 PERS legislation that alter the manner in which earnings are credited to the regular accounts of Tier One members impair an obligation of the statutory PERS contract in violation of Article I, section 21, of the Oregon Constitution. As such, those provisions are void and of no effect. Second, Strunk and Sartain petitioners are correct in their assertion that the provision of the 2003 PERS legislation that directs PERB to not apply annual COLAs to certain retired members' `fixed' service retirement allowances breaches the contrary obligation of the PERS contract to do so; that provision also is declared void and of no effect. In all other respects, we conclude that petitioners' claims for relief are not well taken.'

"Our decision in that regard effectively restored two aspects of the PERS benefit plan that the 2003 PERS legislation had removed: (1) the guarantee of an annual eight percent earnings allocation to all Tier One PERS members; and (2) COLA adjustments for members who had retired between April 1, 2000 and March 31, 2004."

341 Or. at 179-80, 139 P.3d 956 (internal citations omitted; omitted). After holding that petitioners were entitled to attorney fees in this case, we identified certain factors that remained to be established before we could set those fee awards:

"First, given that petitioners' efforts resulted in the creation of two funds in this case, we must ascertain, in particular, whether the beneficiaries are the same for both funds or if separate communities of beneficiaries correspond to each fund. Second, we must determine the proper method for apportioning the litigation costs among all the benefitted parties. And, finally, we must determine the extent of the benefits resulting from the legal services for which reimbursement is being sought, i.e., the nexus between those services and the benefits procured, together with evidence of the services' reasonable value. Implicit in that last requirement is the understanding that (1) it is possible that some of the legal services expended in a common fund case will not have contributed directly to creating the fund from which fees are being sought; and (2) in cases with multiple parties and multiple attorneys, an overlap of labor may exist."

Id. at 185, 139 P.3d 956. As a result, we referred this matter to a special master to conduct further fact-finding proceedings and make recommendations regarding the reasonable attorney fees that should be awarded here under the common fund doctrine.²

In the proceedings that followed, petitioners presented their respective fee requests to the special master, along with the statements, affidavits, and exhibits needed to establish the reasonableness of those fees. Among other things, those documents set out the fee payment arrangements between petitioners and their respective lawyers. Petitioner Dahlin's lawyer had agreed to represent his client on a contingency basis and, consequently, had yet to bill or receive any payment from his client. Petitioner Sartain's legal fees were paid by Oregon Public Retirees, Inc. (OPRI); the Strunk petitioners' legal fees were paid by the PERS Coalition, a group of unions that represent public employees. The lawyers for those latter petitioners had, for the most part, been paid regularly for their work, but each had agreed to return money to the appropriate payor if the payments they had received, together with the final fee awards, exceeded their respective fee bills.

The documents submitted to the special master also contained exhibits showing each group of lawyers' billing history as it had developed over the course of this case. Those fee bills documented, by dated entries, the tasks that lawyers or other staff had performed, the time spent in doing so, and the hourly rate at which that time had been billed. Multiplying the hours worked by the...