De Young v. Brown

64

Argued and submitted January 16, 2020; decision of Court of Appeals affirmed,

and case remanded to circuit court for further proceedings May 6, 2021

James B. De YOUNG,

a resident of Damascus,

Respondent on Review,

v.

Kate BROWN,

in her official capacity

as Governor of Oregon;

and State of Oregon,

Petitioners on Review,

and

CLACKAMAS COUNTY,

a political subdivision of

the State of Oregon,

Defendant-Respondent,

and

DAMASCUS,

a municipal corporation,

Defendant.

(CC 16CV12583) (CA A162584) (SC S067385)

486 P3d 740

Court of Appeals awarded plaintiff attorney fees based on his success in

obtaining a Court of Appeals ruling in De Young v. Brown, 297 Or App 355, 443

P3d 642 (2019), that the 2016 vote to disincorporate the City of Damascus was

invalid. State defendants petitioned the Supreme Court for review, arguing that

the Court of Appeals erred in allowing plaintiff’s request for fees under the sub-

stantial benefits theory for equitable fee awards. Held: Plaintiff acted in a rep-

resentative capacity to the benefit of others and the benefit to all residents of the

state when he obtained the Court of Appeals’ decision clarifying how the legis-

lature may make referrals to voters on matters of local government structure;

that benefit was sufficiently substantial to support an award of fees under the

substantial benefit theory. Thus, the Court of Appeals did not err in awarding

plaintiff fees under the substantial benefit theory.

The decision of the Court of Appeals is affirmed, and the case is remanded to

the circuit court for further proceedings.

En Banc

Cite as 368 Or 64 (2021) 65

On review from the Court of Appeals.*

Philip Michael Thoennes, Assistant Attorney General,

Salem, argued the cause and filed the briefs for petitioner on

review Kate Brown. Also on the briefs were Ellen Rosenblum,

Attorney General, and Benjamin Gutman, Solicitor General.

Tyler Smith, Tyler Smith & Associates PC, Canby, argued

the cause and filed the brief for respondent on review.

Kristian Spencer Roggendorf, The Zalkin Law Firm,

Evergreen, Colorado, filed the brief for amicus curiae Oregon

Trial Lawyers Association.

BALMER, J.

The decision of the Court of Appeals is affirmed, and the

case is remanded to the circuit court for further proceedings.

______________

* 300 Or App 530, 451 P3d 651 (2019).

66 De Young v. Brown

BALMER, J.

This case concerns attorney fees awarded by the

Court of Appeals following its decision in De Young v. Brown,

297 Or App 355, 443 P3d 642 (2019) (De Young I). The ques-

tion before this court is a narrow one—namely, whether the

Court of Appeals erred in allowing plaintiff’s petition for

attorney fees under the “substantial benefit” theory. For the

reasons explained below, we hold that the Court of Appeals

did not err, and, thus, we affirm.

Plaintiff De Young was a city councilor and resident

of the City of Damascus. Defendants are Kate Brown, in her

official capacity as Governor, and the State of Oregon. We

refer to defendants, collectively, as “the state.” In De Young I,

the Court of Appeals considered the validity of an effort to

disincorporate the City of Damascus. In a 2013 election, the

residents of the city had voted on a referral from the city

council to disincorporate the city. Although a majority of

those participating in the election voted in favor of disin-

corporating, the number fell short of the absolute majority

for disincorporation required by law. See ORS 221.610 (2013)

(requiring affirmative vote of a “majority of the electors of

the city” to disincorporate). Subsequently, in 2015, the leg-

islature passed House Bill (HB) 3085, which referred to the

voters of Damascus the decision whether to disincorporate

and specifically provided that a majority of those voting,

rather than an absolute majority of the city’s electors, would

be sufficient to disincorporate. That legislative referral

appeared on the ballots of residents of the city as Measure

93 in the May 2016 election.

Prior to the 2016 election, plaintiff sought declar-

atory and injunctive relief, seeking to enjoin the scheduled

disincorporation vote. He alleged that HB 3085 violated the

city charter, state statutes, and the Oregon Constitution. The

trial court denied plaintiff’s request to enjoin the election,

and the city residents subsequently voted to disincorporate.

Following the election, the city paid its debts, transferred its

assets to Clackamas County, surrendered its charter, termi-

nated or transferred its employees, and, essentially, ceased to

exist. Plaintiff continued his lawsuit, seeking a declaration

that the vote had violated various statutory and constitutional

Cite as 368 Or 64 (2021) 67

requirements and, therefore, the city had not been validly

disincorporated. The trial court granted summary judgment

in favor of the state, declaring Measure 93 valid.

Plaintiff appealed, renewing his arguments that

Measure 93 violated state statutory and constitutional pro-

visions. The Court of Appeals ultimately agreed with plain-

tiff on his statutory argument, holding that ORS 221.610

and ORS 221.621 (2013) provided the only means by which a

city could disincorporate and that, because Measure 93 had

not complied with those statutes, it was invalid. De Young I,

297 Or App at 370-71. Because it disposed of the case on

statutory grounds, the Court of Appeals did not reach plain-

tiff’s constitutional argument. Id. at 355. Shortly after the

Court of Appeals decision was issued, the legislature passed

Senate Bill (SB) 226 (2019) “to cure any defect in the proce-

dures, and to ratify the results” of the 2016 disincorporation

vote. Or Laws 2019, ch 545, § 4(1). The legislature gave this

court original jurisdiction to determine the validity of the

substantive provisions of that law, id. § 4(2), which we did

in City of Damascus v. State of Oregon, 367 Or 41, 472 P3d

741 (2020). In that case, we concluded that “SB 226 is valid

and that it accomplishes what the legislature intended, i.e.,

it gives effect to the 2016 vote by the city’s residents to dis-

incorporate.” Id. at 43.

Following the Court of Appeals’ decision in

De Young I but prior to the issuance of this court’s decision

in City of Damascus, plaintiff petitioned that court for an

award of attorney fees and costs in the De Young I litigation,

amounting to a little over $40,000. Plaintiff argued that he

was entitled to fees because he was the prevailing party and

because he sought “to vindicate important constitutional

rights, and was not seeking a pecuniary gain for himself

other than to protect the statutory and constitutional rights

of those in Damascus who wanted the law to be followed.”

The state objected to the award of attorney fees, arguing

that, “because [plaintiff] prevailed on statutory and not con-

stitutional grounds, [Court of Appeals case law] forecloses

any attorney fee award.” Plaintiff filed a reply asserting

that, contrary to the state’s argument, the court’s inherent

equitable power to award attorney fees does not require a

finding of a constitutional violation.

68 De Young v. Brown

The Court of Appeals framed the threshold issue as

“whether a plaintiff must prevail on a constitutional issue in

order for us to exercise our inherent equitable power to award

attorney fees.” De Young v. Brown, 300 Or App 530, 532, 451

P3d 651 (2019) (De Young II). The Court of Appeals explained

that “[t]he inherent equitable power to award attorney fees

was first recognized in Oregon in Gilbert [v. Hoisting & Port.

Engrs., 237 Or 130, 384 P2d 136 (1963), aff’d as modified, 237

Or 140, 390 P2d 320, cert den, 376 US 963 (1964),]” and that

recovery of fees was “limited to cases * * * in which equitable

relief would in effect be denied or severely inhibited unless

the plaintiff who prevails in the suit is awarded attorneys’

fees.” De Young II, 300 Or App at 533 (internal citations and

quotation marks omitted).

The Court of Appeals held ultimately that “the vindi-

cation of a constitutional right has never been required by the

Supreme Court in awarding attorney fees under a court’s equi-

table powers,” and that “[t]he ‘substantial benefit’ theory * * *

is a form of the equitable attorney fee doctrine that does not

require the vindication of a constitutional right.” Id. at 539. The

Court of Appeals described the “substantial benefit” theory as:

“allow[ing] equitable attorney fees where there is a rep-

resentative or derivative suit brought for the benefit of

the entire organization or where there are other circum-

stances in which equitable relief would in effect be denied

or severely inhibited unless the plaintiff who prevails in

the suit is awarded attorneys’ fees. The action must confer

a ‘substantial benefit’ on others.”

Id. at 539-40 (internal citations and quotation marks omit-

ted). The Court of Appeals agreed with plaintiff that his lit-

igation had directly benefitted the residents of Damascus

by holding that the legislative referral and the resulting

disincorporation election failed to comply with state stat-

utes and that it also had “potentially” conferred an indirect

benefit on other residents of the state “in regard to how the

legislature makes referrals to voters.” Id. at 540.1 Applying

1

We recognize, of course, that the Court of Appeals’ decision in De Young I

was superseded by the legislature’s enactment of SB 226 (2019), which this court

held to be valid in City of Damascus, 367 Or at 73-74, and that the disincorpo-

ration of the city was not undone. But De Young I itself was never reversed and

stands as a valid appellate court interpretation of the statutes at issue there.

Cite as 368 Or 64 (2021) 69

the substantial benefit theory, the Court of Appeals allowed

plaintiff’s petition for attorney fees and costs in the amount

of about $16,000 and remanded for a determination of fees

and costs incurred in the circuit court. Id. at 532.

The state petitioned this court for review. In its

petition, the state did not renew its argument that fees could

be recovered only for a successful constitutional challenge,

and not for a statutory one. The state instead responded to

the Court of Appeals’ substantial benefit theory, asserting

that the “beneficiaries” of the litigation were the residents of

Damascus, but a fee award against the state would be paid

by residents of the whole state—state taxpayers. The state

contended that the fee award would “spread the cost of liti-

gation not just among those who benefitted from it, but also

to those who would not benefit from it,” contrary to the pur-

pose of the substantial benefit theory. The state also argued

that any potential benefit from the litigation was uncer-

tain, because of the pending City of Damascus case before

this court. In the state’s view, the substantial benefit the-

ory does not permit an award of fees here because, “[e]ven

assuming that reincorporating Damascus would confer a

substantial benefit on those residents who opposed Measure

93, the Court of Appeals’ ruling did not confer that benefit

* * * [b]ecause there is still substantial uncertainty whether

Damascus will ever again exist as a city[.]”

Plaintiff filed a response to the state’s petition for

review, arguing that the state’s articulation of the Court

of Appeals’ decision was misleading because the Court of

Appeals did not conclude, contrary to the state’s assertion,

that only the residents of Damascus benefitted from that

court’s ruling in De Young I. Rather, plaintiff noted that

the Court of Appeals considered the benefits to be “both in

regard to the direct litigation and potentially in regard to

how the legislature makes referrals to voters.” De Young II,

300 Or App at 540. Therefore, plaintiff argued, the Court of

Appeals correctly understood that its opinion in De Young I

clarified the permissible scope of legislative referrals and of

the statutes regarding disincorporation and that that clarifi-

cation inured to the benefit of all Oregon residents—not just

those directly impacted by the 2015 referral. Thus, plain-

tiff contended, the court’s attorney fee opinion correctly held

70 De Young v. Brown

that the substantial benefit theory permits the costs of the

litigation to be shared by those beneficiaries—all Oregon

residents. This court allowed review.

Before this court, as noted, the state largely aban-

dons the argument that it made before the Court of Appeals—

that, because plaintiff vindicated a statutory right rather

than a constitutional right, he is not entitled to fees. It also

retreats from the argument made in its petition for review

that the only beneficiaries of the litigation are the residents

of Damascus. Instead, the state argues primarily that the

Court of Appeals improperly awarded plaintiff fees under

the substantial benefit theory because any “benefit” from

the litigation is actually held in common by all residents of

the state and that such a diffuse, indirect benefit is not suf-

ficiently substantial to justify an award of fees.2

We agree with the state that Oregon generally

adheres to the so-called “American rule”—that the pre-

vailing party in a civil action ordinarily is not entitled to

recover attorney fees from the losing party unless some stat-

ute or contractual provision authorizes the recovery of fees.

See Swett v. Bradbury, 335 Or 378, 381, 67 P3d 391 (2003)

(“Ordinarily, a court awards attorney fees to a litigant only

if a statute or contract authorizes such an award.”); Alyeska

Pipeline Service Co. v. Wilderness Society, 421 US 240, 247, 95

S Ct 1612, 44 L Ed 2d 141 (1975) (describing the “American

rule”). That rule, however, is not absolute: “This court for

many years has recognized an equitable exception to the

American rule,” Crandon Capital Partners v. Shelk, 342 Or

555, 565, 157 P3d 176 (2007), and it is well established that

an Oregon court may use its inherent equitable power to

award attorney fees, even in the absence of a contract or

statutory scheme authorizing fees, Gilbert, 237 Or at 137.

Our case law on the equitable award of attorney

fees makes clear that an award is permissible in a variety

2

One of plaintiff’s arguments is that the state did not preserve its substan-

tial benefit argument regarding attorney fees. It is true that the state’s argu-

ment has evolved over the course of the attorney fee dispute, but the state has

consistently taken the position that the litigation did not confer a sufficiently

significant benefit on any group to justify an equitable award of attorney fees. We

conclude that the issue is sufficiently preserved for our review.

Cite as 368 Or 64 (2021) 71

of circumstances but that an award of fees does not auto-

matically follow from a favorable outcome. Crandon, 342

Or at 565 (noting that, in certain “circumstances, the court

may spread the cost of litigation to avoid unjust enrichment”

(emphasis added)). This court has identified three prerequi-

sites for a fee award under that inherent equitable author-

ity: (1) the proceeding must be one in equity, (2) the party

requesting fees must have been the prevailing party, and

(3) the party requesting fees must have been seeking to vin-

dicate a right that applies to others as well as the party

itself, without an overriding personal pecuniary interest.

Armatta v. Kitzhaber, 327 Or 250, 287, 959 P2d 49 (1998);

Gilbert, 237 Or at 137-38. Where a party has met those pre-

requisites, this court has permitted the award of equita-

ble attorney fees in three different circumstances: where a

party vindicates an important constitutional right applying

to all residents of the state, without personal gain to the

party, Deras v. Myers, 272 Or 47, 66, 535 P2d 541 (1975);

where a party creates, discovers, increases, or preserves a

common fund of money to which others also have a claim,

Strunk v. PERB, 341 Or 175, 181, 139 P3d 956 (2006); and

where a party’s litigation confers “substantial benefit” on

others, even if neither constitutional nor financial, Krause v.

Mason, 272 Or 351, 358-59, 537 P2d 105 (1975).

In reviewing whether a lower court has properly

awarded fees under its inherent equitable authority, we

assess for legal error whether the fee award meets the three

prerequisites described above and comes within a quali-

fying circumstance. See Swett, 335 Or at 384 (considering

first whether plaintiffs were “disqualified from receiving an

award of attorney fees” for failing to meet one of the prereq-

uisites (emphasis added)). See also Dennehy v. Dept. of Rev.,

308 Or 423, 427-28, 781 P2d 346 (1989) (concluding that the

Tax Court erred in awarding fees because the plaintiff did

not meet several of the prerequisites). In this case, the state

argues that the Court of Appeals misapplied the “substan-

tial benefit” test and committed legal error in awarding

plaintiff attorney fees. It asserts that the Court of Appeals

erred in holding that “the benefit conferred in this case—

both in regard to the direct litigation and potentially in

regard to how the legislature makes referrals to voters—is

72 De Young v. Brown

substantial enough to warrant an award of attorney fees.”

De Young II, 300 Or App at 540.

Unlike statutory or contractual attorney fees

awards, the purpose of awarding equitable attorney fees

is not to punish a wrongdoer or to make a plaintiff whole.

Crandon, 342 Or at 566. Cf. Mattiza v. Foster, 311 Or 1, 4,

803 P2d 723 (1990) (describing the legislative history of ORS

20.105(1) “allowing for the award of attorney fees based on

the misconduct of the opposing party or attorney”). Rather,

the purpose of equitable fees is to recognize that, when a

plaintiff has vindicated the rights of others in a significant

way, equity may require that the costs of that litigation be

borne not just by the plaintiff, but also by others who have

benefitted. See Crandon, 342 Or at 565 (holding that the court

may award attorney fees “when it would be inequitable for

that party to bear all the costs of the litigation”). The three

circumstances that we have identified—vindication of a con-

stitutional right, common fund, and substantial benefit—

rely on this basic premise: that fees awarded under the

court’s equitable authority “are awarded not * * * to make

the plaintiff whole by shifting all costs to the wrongdoer,

but instead to spread the costs among those on whose behalf

the case was brought and who benefitted from the plaintiff’s

efforts.” Id. at 566.

Although our focus here is on whether plaintiff’s

success in De Young I conferred a “substantial benefit”

on others, the “vindication of a constitutional right” basis

for an attorney fee award is not irrelevant to our inquiry.

Despite the fact that we have not always awarded fees to

plaintiffs who have brought successful constitutional chal-

lenges, see Pendleton School Dist. v. State of Oregon, 347 Or

28, 35, 217 P3d 175 (2009) (declining to award fees following

successful constitutional challenge), we often have done so

when a plaintiff has vindicated an important constitutional

right that applies to all Oregonians. See Armatta, 327 Or

at 289 (awarding fees where plaintiffs sought declaratory

and injunctive relief, arguing that a measure submitted to

and adopted by the voters was unconstitutional); Swett, 335

Or at 378 (same). In part, this is because we have assumed,

often without extended discussion, that the vindication of a

constitutional right likely confers a benefit on individuals

Cite as 368 Or 64 (2021) 73

other than the plaintiff and that such a benefit—since, after

all, it is constitutional—may well qualify as “substantial.”

We have recognized, in the constitutional context, that “[i]t

is beyond dispute that the interest of the public in preser-

vation of the individual liberties guaranteed against gov-

ernmental infringement of the constitution is even stronger”

than the interest in fair voting in union elections, which

permitted a fee award in Gilbert. Deras, 272 Or at 66. If a

plaintiff can demonstrate that the constitutional right was

sufficiently “important” and that the litigation clarified the

scope of that right, we have been more likely to conclude

that the plaintiff conferred a “substantial” benefit on other

Oregonians and that an equitable attorney fee award was

justified. Although some statutory rights may be of similar

importance to fundamental constitutional rights, when a

nonconstitutional right has been vindicated, the nature of

the benefit may be less apparent, and the beneficiaries may

need to be identified more precisely. In both instances, how-

ever, the central issue for the court is whether the nature of

the benefit conferred on those beyond the plaintiff is suffi-

ciently substantial that it would be inequitable for the plain-

tiff to bear the costs alone.

Here, the Court of Appeals’ decision in De Young I

was based on its holding that Measure 93 was invalid

because it was inconsistent with statutes regarding disin-

corporation elections, rather than any constitutional provi-

sion. It is clear, however, that election laws hold a special

place in the spectrum of constitutional and statutory rights.

For that reason, this court has long held that

“[e]lection laws should be liberally construed to the

end that the people may have the opportunity of express-

ing opinion concerning matters of vital interest to their

welfare. Expression, not suppression, tends towards good

government. The great constitutional privilege of a citizen

to exercise his sovereign right to vote should not be taken

away by narrow or technical construction.”

State ex rel. v. Hoss, 143 Or 383, 389, 22 P2d 883 (1933).

Although not included in the constitution itself, Oregon’s

election laws implement the constitutional right to vote in

all elections. See Or Const, Art II, § 2 (subject to age, res-

idency, and registration requirements, “[e]very citizen of

74 De Young v. Brown

the United States is entitled to vote in all elections * * *”);

id. § 8(1) (“The Legislative Assembly shall enact laws to sup-

port the privilege of free suffrage [and] prescribing the man-

ner of regulating, and conducting elections * * *.”). Moreover,

the issues in the underlying litigation here involved not just

laws governing elections generally, but also the concept of

home rule embodied in Article XI, section 2, and Article IV,

section 1(5), of the Oregon Constitution, which grant the

“authority of local governments to establish and modify

their political structures as they see fit.” City of Damascus,

367 Or at 54. In City of Damascus, this court recounted the

history of the enactment of those constitutional provisions

in 1906, describing that “the primary concern of those who

advocated for the measures was that the voters of munici-

palities be permitted to determine the structure and orga-

nization of their own municipal governments[.]” Id. at 55.

To that end, in plaintiff’s fee petition, he asserted gener-

ally that “[a]ll of the claims made in [the complaint] related

to voting rights, constitutional rights, or statutory election

and process rights that he asserted were violated by” the

legislature. Ultimately, however, as described above, the

Court of Appeals disposed of the case not on constitutional

grounds, but on relatively narrow statutory grounds, despite

the myriad of constitutional arguments raised by plaintiff.

De Young II, 300 Or App at 535.

The question before us, then, is whether the Court

of Appeals erred in determining that the benefits conferred

here were sufficiently substantial that it would be inequita-

ble for the plaintiff to bear those costs alone. The Court of

Appeals did not identify and analyze a specific benefit to per-

sons other than the plaintiff that resulted from the under-

lying litigation; rather, the court stated generally that “the

benefit conferred in this case—both in regard to the direct

litigation and potentially in regard to how the legislature

makes referrals to voters—is substantial enough to warrant

an award of attorney fees.” Id. at 540. For the reasons that

follow, we agree with the Court of Appeals that the litigation

provided a sufficiently significant benefit to the people of the

state as a whole; therefore, we do not address whether the

litigation provided any additional or different benefit to the

people of Damascus.

Cite as 368 Or 64 (2021) 75

To determine whether the benefits that result from

litigation are sufficiently substantial to justify an equitable

attorney fee award, it is essential to identify, as precisely as

possible, the benefits and the beneficiaries. Krause, 272 Or

at 358-59 (affirming an award of fees based on the benefits

that the plaintiff shareholders’ litigation conferred specif-

ically on the corporation and other shareholders). It is not

enough to say that, of several benefits, surely one of them

was sufficiently substantial to justify an award of fees.

Likewise, as described above, the central principle behind

both the constitutional and substantial benefit theories is

that the costs are shared among those who benefitted from

the litigation, Crandon, 342 Or at 566, whether those who

“benefit” are shareholders of a corporation, voters of a par-

ticular city, or the residents of the state as a whole. If the

benefit or beneficiaries have not been identified precisely,

the court cannot analyze whether the benefits were suffi-

ciently substantial to justify a fee award.

We do not intend to say that litigation cannot have

multiple benefits or benefit various groups differently. See,

e.g., Moro v. State of Oregon, 360 Or 467, 493-94, 384 P3d

504 (2016) (discussing the various groups of beneficiaries

of PERS litigation). With any litigation, there are ripples of

consequences for the parties and often for nonparties. Some

consequences may be beneficial, and some may not, and

it is not always possible to assess the significance of any

benefits at the close of the litigation. In the common fund

cases, the question is relatively straightforward—the litiga-

tion produces a fund from which the plaintiff’s fees may be

paid, and the costs are shared by everyone entitled to a por-

tion of the common fund. However, in the substantial bene-

fit cases, the litigation does not produce a fund from which

those fees can be drawn. Gilbert, 337 Or at 138 (“[T]he fact

that no money or property is involved does not detract from

the importance of the litigation.”). When litigation produces

a common fund, then those who benefit from the litigation

are those who benefit from the fund. But, without a common

fund and without a determination of the identity of benefi-

ciaries, it is impossible to say whether an award of fees will

distribute the costs of the litigation among those who benefit

from the litigation. See Moro, 360 Or at 477 (considering how

76 De Young v. Brown

to fund a fee award where the underlying litigation benefit-

ted different groups of PERS members differently).

In this case, plaintiff contends that the litigation

resulted in substantial direct benefits to him and to the res-

idents of Damascus (among others) and indirect benefits to

all residents of the state, because of the Court of Appeals’

clarification in De Young I of local home rule authority,

including statutes regarding disincorporation and legisla-

tive referrals to local voters. The state agrees that plaintiff

succeeded in obtaining judicial “clarification of the way that

the legislature must refer election measures when it seeks

to exempt a vote from existing statutory requirements.”

However, the state disputes that this was a “direct” benefit

to plaintiff or the residents of Damascus, arguing that it

does not accrue solely to them, “but applies with equal force

to every person in the state.” More significantly, the state

asserts that “such an abstract, widely held interest cannot be

considered substantial enough to warrant an equitable fee.”

We disagree.

Our case law does not require that each individual

who benefits from litigation receive a “substantial” benefit.

Rather, the benefit provided to the beneficiaries as a whole

must be a substantial one. Oregon courts have never held

that the size of the group benefitted determines the signifi-

cance of the benefit bestowed. See Tanner v. OHSU, 161 Or

App 129, 133, 980 P2d 186, rev den, 329 Or 528 (1999) (“The

fact that * * * our decision on the merits of [the] claims will

directly benefit only a relatively small class of persons is not

controlling. How small or large the directly benefitted class

may be is not the point * * *. What controls is the extent to

which the constitutional issue resolved is a matter of pri-

mary concern to the public at large.” (Internal quotation

marks omitted.)). Like class actions or actions under the

Unfair Trade Practices Act, ORS 646.605 to 646.656, per-

mitting an award of attorney fees in some substantial ben-

efit cases may encourage individuals to bring legal actions

to vindicate not only their own rights but also the rights of

others. See, e.g., Honeywell v. Sterling Furniture Co., 310 Or

206, 213, 797 P2d 1019 (1990) (describing that, in the unlaw-

ful trade practices context, the “availability [of attorney

fees] assures that wronged consumers can obtain counsel

Cite as 368 Or 64 (2021) 77

to prosecute claims that otherwise might be impractical to

pursue because such claims would require an expenditure

of attorney time the value of which greatly exceeded the

value of the goods or services in question”). When successful

actions confer important, but individually small and widely

shared benefits, an equitable fee award can ensure that the

costs of litigation also can be shared.

In our view, the unique relationship between the

election statutes at issue in this case and the foundational

constitutional rights of citizens to vote and of local govern-

ments to establish and modify their political structures

demonstrates that important legal rights were at stake.

Plaintiff’s success in obtaining a favorable statutory ruling

from the Court of Appeals conferred a substantial benefit

on persons other than plaintiff. As the Court of Appeals

observed, plaintiff

“acted in a representative capacity on behalf of the City of

Damascus and its residents to ensure that a special elec-

tion to determine whether to disincorporate the City of

Damascus complied with ORS 221.610 and ORS 221.621,

the statutes that govern municipal disincorporation. We

conclude that the benefit conferred in this case—both in

regard to the direct litigation and potentially in regard to

how the legislature makes referrals to voters—is substan-

tial enough to warrant an award of attorney fees.”

De Young II, 300 Or App at 540.

We agree with the Court of Appeals that plaintiff

acted in a representative capacity to the benefit of others

and that that benefit was sufficiently substantial to sup-

port an award of fees under the substantial benefit the-

ory. We conclude that the substantial benefit is the ben-

efit to all residents of the state of the Court of Appeals’

decision clarifying how the legislature may make refer-

rals to voters on matters of local government structure.3

Accordingly, we conclude that the Court of Appeals did not

3

Because we conclude that plaintiff’s litigation conferred a “substantial ben-

efit” on all residents of the state, including the residents of Damascus, we need

not decide whether the “direct” effect of the litigation on Damascus residents

would, standing alone, constitute a substantial benefit for purposes of an equita-

ble award of attorney fees.

78 De Young v. Brown

err in awarding plaintiff fees under the substantial benefit

theory.

The decision of the Court of Appeals is affirmed,

and the case is remanded to the circuit court for further

proceedings.