Young v. State of Oregon

• Decision Date: 16 July 2009
• Docket Number: CA A133123.,CC 97C10933.,SC S056376.
• Citation: 212 P.3d 1258,346 Or. 507
• Parties: David YOUNG, Petitioner on Review, and Al Chandler, Mike Reinecke, Karen (Eastman) Memory, Larry D. Conn, Leonard J. Drung, Jess Eastman, Debra E. Fery, Bruce L. Fochtman, Lois G. Harris, Cheryl L. Ho, Lloyd Horsley, Wilfred Hudson, Mark A. Jones, Robert Jordan, David C. Judkins, David Kunz, Gordan J. Larson, Margaret J. Loftis, Judy Murray, Scott R. Proctor, Richard Reiter, Helen Satterlee, Ernest Schmidt, Marjorie J. West, James C. Wilson, Randal Windsor, And Michael D. Woodward, Petitioners on Review, v. STATE of Oregon, Respondent on Review.
• Court: Oregon Supreme Court

212 P.3d 1258

346 Or. 507

David YOUNG, Petitioner on Review, and Al Chandler, Mike Reinecke, Karen (Eastman) Memory, Larry D. Conn, Leonard J. Drung, Jess Eastman, Debra E. Fery, Bruce L. Fochtman, Lois G. Harris, Cheryl L. Ho, Lloyd Horsley, Wilfred Hudson, Mark A. Jones, Robert Jordan, David C. Judkins, David Kunz, Gordan J. Larson, Margaret J. Loftis, Judy Murray, Scott R. Proctor, Richard Reiter, Helen Satterlee, Ernest Schmidt, Marjorie J. West, James C. Wilson, Randal Windsor, And Michael D. Woodward, Petitioners on Review, v. STATE of Oregon, Respondent on Review.

CC 97C10933.

CA A133123.

SC S056376.

Supreme Court of Oregon.

Argued and Submitted May 18, 2009.

Decided July 16, 2009.

On review from the Court of Appeals.^*

John E. Hoag, Eugene, argued the cause and filed the brief for petitioners on review. With him on the petition for review was David Snyder, Portland.

Robert M. Atkinson, Senior Assistant Attorney General, Salem, argued the cause and filed the brief for respondent on review. With him on the brief were John Kroger, Attorney General, and Erika Hadlock, Acting Solicitor General.

Before DE MUNIZ, Chief Justice, GILLETTE, DURHAM, and WALTERS, Justices.^**

WALTERS, J.

Plaintiffs, "white-collar" state employees employed between 1995 and 1997, seek post-judgment interest on supplemental judgments entered by the trial court in response to direction from this court in Young v. State of Oregon, 340 Or. 401, 133 P.3d 915 (2006) (Young III), and ask that that interest accrue from the date that the original judgment was entered. In a written opinion, the Court of Appeals held that sovereign immunity absolved the state from any obligation to pay interest. Young v. State of Oregon, 221 Or.App. 146, 188 P.3d 476 (2008) (Young IV). For the reasons that follow, we reverse.

The history of this case, which the Court of Appeals chronicled in Young IV, 221 Or.App. at 148-52, 188 P.3d 476, is extensive. For purposes of this opinion, it is sufficient to note that plaintiffs brought a class action in 1997, seeking to recover unpaid overtime compensation for state managerial and executive employees under former ORS 279.340(1) (1995), renumbered as ORS 653.268(1) (2003),¹ attorney fees under ORS 652.200 (1995),² and other relief. The trial court initially granted the state's motion for summary judgment, holding that the legislature did not intend that former ORS 279.340(1) apply to state managerial and executive employees. The Court of Appeals reversed. Young v. State of Oregon, 161 Or.App. 32, 983 P.2d 1044, rev. den., 329 Or. 447, 994 P.2d 126 (1999) (Young I).

On remand, plaintiffs added a new request that "the court award pre-judgment interest on all unpaid overtime compensation from the date that it should have been paid to each [p]laintiff" to the date of the judgment. The trial court certified the case as a class action and decided in favor of plaintiffs on their wage claims but denied their requests for prejudgment interest. Over a period from March 2001 to November 2002, the court, using the "fluctuating hours" method to tabulate the wages owed, entered a series of limited judgments in favor of plaintiffs. See ORCP 67 B (providing for limited judgments when "no just reason for delay"); Young v. State of Oregon, 195 Or.App. 31, 39, 96 P.3d 1239 (Young II) (explaining "fluctuating hours" method of calculation). Plaintiffs appealed from those limited judgments. In January 2003, the trial court entered a final judgment in the case as a whole, "subject only to the possibility of supplementing the ORCP 67 B judgments previously entered in this case if necessary following resolution of the issues [that were then] pending on appeal." We refer to that final judgment as the original judgment.

In Young II, the Court of Appeals affirmed the trial court's method of calculating overtime amounts and its denial of prejudgment interest. 195 Or.App. at 51, 96 P.3d 1239. On review, this court held, however, that the "fluctuating hours" method of calculation was incorrect; instead, this court ordered the calculation of overtime wages at one and one-half times the regular hourly rate of pay. Young III, 340 Or. at 408, 133 P.3d 915. This court did not discuss or disturb the conclusion of the Court of Appeals that plaintiffs were not entitled to prejudgment interest, and that became the law of the case.

The case returned to the trial court for recalculation of the wages owed to plaintiffs and entry of supplemental judgments representing the difference between the amounts of the limited judgments and the higher amounts that were due to plaintiffs as a result of the calculation method prescribed by this court in Young III. In conjunction with entry of those supplemental judgments, plaintiffs also sought, not the prejudgment interest that the trial court had denied previously, but interest on the supplemental judgments. Plaintiffs argued that, under the rule of Lakin v. Senco Products Inc., 329 Or. 369, 373, 987 P.2d 476 (1999) (Lakin II), that interest should accrue from the date of the trial court's original judgment.

The trial court denied plaintiffs' request for post-judgment interest. Plaintiffs appealed and, as noted, the Court of Appeals, in Young IV, affirmed that denial. Relying on Newport Church of the Nazarene v. Hensley, 335 Or. 1, 56 P.3d 386 (2002) (Newport Church), the court held that the state was immune from paying any interest, including post-judgment interest, unless the state's obligation was "expressly authorized by the legislature." Young IV, 221 Or.App. at 153, 188 P.3d 476. Plaintiffs petitioned for review.

This case presents two questions. First, is the state immune from the obligation to pay post-judgment interest? Second, if the state is not immune, did its obligation to pay post-judgment interest accrue when the trial court entered the original judgment, or did it accrue when the trial court entered the supplemental judgments?

We begin our analysis of the first question with Newport Church, 335 Or. 1, 56 P.3d 386, the decision upon which the Court of Appeals based its holding. In that case, the respondent, a youth minister that the petitioner had employed, filed a claim for unemployment benefits that was allowed by the Employment Appeals Board of the Oregon Employment Department. The petitioner appealed that award, challenging its constitutionality. The respondent cross-appealed, challenging, among other things, the board's failure to award him interest on "each installment of unemployment benefits" from the date that each installment should have been paid until the date of the trial court's judgment. See Newport Church of the Nazarene v. Hensley, 161 Or.App. 12, 14, 29, 983 P.2d 1072 (1999) (clarifying nature of relief sought by respondent in the case). Thus, the claim at issue in Newport Church was a claim for prejudgment interest.

In considering the state's argument that it was immune from that claim, the court cited two cases in which the plaintiffs had asserted claims for money damages against public bodies: Rapp v. Multnomah County, 77 Or. 607, 609-10, 152 P. 243 (1915), and Hunter v. City of Eugene, 309 Or. 298, 303, 787 P.2d 881 (1990). The court then discussed a case that specifically addressed the state's liability for prejudgment interest, Seton v. Hoyt, 34 Or. 266, 55 P. 967, 969-71 (1899). Newport Church, 335 Or. at 17-18, 56 P.3d 386.

In Seton, a statute required that counties (state instrumentalities) pay prejudgment interest on warrants that had been returned for nonpayment. The question was not whether the county in Seton was obligated to pay such interest; it clearly was. Instead, the question was whether the county was obligated to pay the statutory rate of interest as of the date that the warrants were issued or the lower rate of interest — enacted by a subsequent statutory amendment — as of the date that the warrants were presented for payment. In deciding that the county was required to pay the higher rate of interest, the court explained that those who had accepted the warrants were deemed to have agreed to await payment until the county had accumulated the funds necessary to fulfill its payment obligation. That, in the court's view, gave rise to a corresponding implied agreement by the county to pay interest during that interim period:

"Now, if there is an implied agreement on the part of the holder of the warrant to abide the accumulation of funds in the ordinary course with which to meet the demand, the converse ought to be, and undoubtedly is, true, that there is an implied, if not an express, agreement, engendered by operation of law and the transaction of public business, which must be in conformity with its requirements, that the county will pay the legal rate of interest upon the indorsed county order. So that here is, in effect, an agreement or contract upon the part of the county to pay the legal rate of interest."

Seton, 34 Or. at 278, 55 P. 967. The court concluded that the county's agreement precluded the state from reducing the rate of interest that the county was obligated to pay:

"In the present case the county has become obligated by positive enactment to pay the legal rate. Parties have dealt with it upon that understanding, and when claims duly audited, which have accrued in course of business transactions with the county, are presented, and indorsed, `Not paid for want of funds,' the law reads into the transaction a contract to pay interest thenceforth upon the warrant, and the measure of recovery for delay in payment is the then existing rate of interest until paid, and subsequent legislation cannot affect or impair the obligation."

Id. at 281, 55 P. 967 (emphasis added).

After summarizing Seton, the court in Newport Church then decided to treat the plaintiff's claim for prejudgment interest on unemployment benefits as a claim equivalent to those that had been brought by the plaintiffs in Rapp, Hunter, and Seton, and held that, absent...