Moro v. State of Oregon

No. 52 December 10, 2015 375

IN THE SUPREME COURT OF THE

STATE OF OREGON

Everice MORO;

Terri Domenigoni; Charles Custer;

John Hawkins; Michael Arken; Eugene Ditter;

John O’Kief; Michael Smith; Lane Johnson;

Greg Clouser; Brandon Silence;

Alison Vickery; and Jin Voek,

Petitioners,

v.

STATE OF OREGON;

State of Oregon, by and through

the Department of Corrections;

Linn County; City of Portland; City of Salem;

Tualatin Valley Fire & Rescue; Estacada School District;

Oregon City School District; Ontario School District;

Beaverton School District; West Linn School District;

Bend School District; and

Public Employees Retirement Board,

Respondents,

and

LEAGUE OF OREGON CITIES;

Oregon School Boards Association;

and Association of Oregon Counties,

Intervenors,

and

CENTRAL OREGON IRRIGATION DISTRICT,

Intervenor below.

(S061452 (Control))

Wayne Stanley JONES,

Petitioner,

v.

PUBLIC EMPLOYEES RETIREMENT BOARD;

Ellen Rosenblum, Attorney General;

and Kate Brown, Governor,

Respondents.

(S061431)

376 Moro v. State of Oregon

Michael D. REYNOLDS,

Petitioner,

v.

PUBLIC EMPLOYEES RETIREMENT BOARD,

State of Oregon; and

Kate Brown, Governor,

State of Oregon,

Respondents.

(S061454)

George A. RIEMER,

Petitioner,

v.

STATE OF OREGON;

Oregon Governor Kate Brown;

Oregon Attorney General Ellen Rosenblum;

Oregon Public Employees Retirement Board;

and Oregon Public Employees Retirement System,

Respondents.

(S061475)

George A. RIEMER,

Petitioner,

v.

STATE OF OREGON,

Oregon Governor Kate Brown,

Oregon Attorney General Ellen Rosenblum,

Public Employees Retirement Board,

and Public Employees Retirement System,

Respondents.

(S061860)

On petitions for attorney fees and costs filed May 15,

June 9, and June 11, 2015; considered and under advise-

ment on August 18, 2015.

Gregory A. Hartman, Bennett, Hartman, Morris &

Kaplan, LLP, Portland, filed the petition for petitioners

Everice Moro, Terri Domenigoni, Charles Custer, John

Hawkins, Michael Arken, Eugene Ditter, John O’Kief,

Michael Smith, Lane Johnson, Greg Clouser, Brandon

Cite as 358 Or 375 (2015) 377

Silence, Alison Vickery, and Jin Voek. With him on the peti-

tion was Aruna A. Masih.

George A. Riemer, Sun City West, Arizona, filed the peti-

tion on behalf of himself.

Michael D. Reynolds, Seattle, Washington, filed the peti-

tion on behalf of himself.

Wayne Stanley Jones, North Salt Lake, Utah, filed the

petition on behalf of himself.

Keith L. Kutler, Assistant Attorney General, Salem,

filed the response to the petitions on behalf of the State of

Oregon. With him on the response were Ellen F. Rosenblum,

Attorney General, Anna M. Joyce, Solicitor General, and

Matthew J. Merritt, Assistant Attorney General.

William F. Gary, Harrang Long Gary Rudnick P.C.,

Eugene, filed the response to the petitions on behalf of

respondents Linn County, Estacada School District, Oregon

City School District, Ontario School District, West Linn

School District, Beaverton School District, and Bend School

District and intervenors Oregon School Board Association

and Association of Oregon Counties.

Robert F. Blackmore, Innova Legal Advisors PC, Lake

Oswego, filed the response to the petitions on behalf of

Tualatin Valley Fire and Rescue. With him on the response

was Heidi W. Mason.

Before Balmer, Chief Justice, Kistler, Walters, Linder,

Brewer, and Baldwin, Justices, and Haselton, Justice pro

tempore.*

BALMER, C. J.

Petitions referred to special master.

______________

* Landau, J., did not participate in the consideration or decision of this

matter.

378 Moro v. State of Oregon

Case Summary: Moro v. State of Oregon, 357 Or 167, 351 P3d 1 (2015) affirmed

in part and denied in part challenges brought by petitioners to legislative amend-

ments aimed at reducing the costs of the Public Employee Retirement System

(PERS). Claimants, who are pro se petitioners and attorneys representing other

petitioners, seek their fees and costs for their efforts achieving that result.

The petitions for fees and costs are referred to a special master for recom-

mended findings of fact and conclusions of law.

Cite as 358 Or 375 (2015) 379

BALMER, C. J.

This matter is before us on petitions for awards of

attorney fees and costs. For the reasons that follow, we refer

the petitions to Judge Stephen Bushong, sitting as a special

master, for recommended findings of fact and conclusions of

law.

In Moro v. State of Oregon, 357 Or 167, 351 P3d 1

(2015), this court considered challenges to legislative amend-

ments aimed at reducing the costs of the Public Employee

Retirement System (PERS). Those challenges were brought

by petitioners, who are active and retired members of PERS.

This court rejected petitioners’ challenge to the elimination

of income tax offset benefits for nonresident retirees but

agreed in part with petitioners’ claim that modifications

to the PERS cost-of-living adjustment (COLA) formula

impaired petitioners’ contractual rights and therefore vio-

lated the state Contract Clause, Article I, section 21, of the

Oregon Constitution. Although petitioners had argued that

the state could not change the COLA formula for any cur-

rent PERS member, we held that the COLA amendments

impaired the PERS contract only insofar as the amend-

ments applied retrospectively to benefits earned before the

effective dates of the amendments.

Claimants, who are pro se petitioners and attor-

neys representing the Moro petitioners, now seek their fees

and costs. “ ‘Generally, a party cannot recover attorney

fees unless there is a statute or a contract that authorizes

recovery of those fees.’ ” Montara Owners Assn. v. La Noue

Development, LLC, 357 Or 333, 360, 353 P3d 563 (2015)

(quoting Peace River Seed Co-Op v. Proseeds Marketing,

355 Or 44, 65, 322 P3d 531 (2014)). There is no statutory

or contractual authority for fees in this case. That general

rule, however, is subject to exceptions, including limited

circumstances where fees may be awarded based on equi-

table principles. We applied equitable principles to award

attorney fees and costs in an earlier action that success-

fully challenged amendments enacted in 2003 to the PERS

statutes. See Strunk v. PERB, 338 Or 145, 108 P3d 1058

(2005) (holding that certain PERS amendments impaired

contractual rights); Strunk v. PERB, 341 Or 175, 139 P3d

380 Moro v. State of Oregon

956 (2006) (Strunk II) (recognizing right to receive fees and

costs); Strunk v. PERB, 343 Or 226, 169 P3d 1242 (2007)

(Strunk III) (awarding fees and costs).

In Strunk II, the claimants first sought fees and

costs under Deras v. Myers, 272 Or 47, 535 P2d 541 (1975),

which allows courts to award fees to prevailing parties who

have “vindicated an important constitutional right applying

to all citizens” rather than “gain[ing] something peculiar to

themselves.” Lehman v. Bradbury, 334 Or 579, 583, 54 P3d

591 (2002); see also Swett v. Bradbury, 335 Or 378, 389, 67

P3d 391 (2003) (discussing the standards for awarding fees

under Deras). The court in Strunk II, however, declined to

award fees based on Deras. 341 Or at 181.

The claimants additionally sought fees and costs

based on the common-fund theory, under which “plaintiffs

whose legal efforts create, discover, increase or preserve

a fund of money to which others also have a claim[ ] may

recover the costs of their litigation, including their attor-

ney’s fees, from the created or preserved fund.” Id. at 181.

An award for those litigation costs is justified as restitution

to “ ‘recaptur[e] unjust enrichment’ ” that would otherwise

flow to the nonlitigant beneficiaries as a result of the judg-

ment. Id. at 181 (quotation omitted); see also Restatement

(Third) of Restitution and Unjust Enrichment § 29 (2011)

(discussing common-fund recoveries at length). This court

in Strunk II and Strunk III held that the claimants were

entitled to attorney fees and costs under the common-fund

theory. Strunk II, 341 Or at 185 (holding that the petition-

ers could recover attorney fees); Strunk III, 343 Or at 247

(awarding costs).

In this case, claimants seek in the aggregate

approximately $2.3 million in fees and $66,000 in costs. To

justify that award, they argue that their litigation efforts

preserved over $4 billion for PERS members and designated

beneficiaries. The grounds that claimants assert for their

fees and costs are not always the same. As to fees, petitioner

Reynolds and the attorneys representing the Moro peti-

tioners rely on only the common-fund theory, but petitioner

Riemer seeks fees under both Deras and the common-fund

theory. As to costs, the attorneys representing the Moro

Cite as 358 Or 375 (2015) 381

petitioners rely only on the common-fund theory, petitioner

Jones (who is not seeking fees) and petitioner Reynolds rely

only on ORAP 13.05 (governing costs and disbursements for

prevailing parties in appellate courts), and petitioner Riemer

relies on both. Respondents, who are governmental entities

involved or interested in the administration of PERS but do

not represent the nonparty PERS members and designated

beneficiaries directly, object to claimants’ requests for fees

and costs.

Claimants’ requests and respondents’ objections

raise numerous factual and legal disputes, which we do not

resolve now. Instead, we refer the petitions to Judge Stephen

Bushong, sitting as a special master, with instructions to

recommend to this court a reasonable award of fees and

costs. The special master should conduct such proceedings

as he deems appropriate and make recommended findings

of fact and conclusions of law necessary to resolve the fac-

tual and legal disputes fairly raised by the parties’ filings to

this court or otherwise necessary to determine an award of

reasonable fees and costs.

Although the special master has broad discretion

over its proceedings and recommendations, and without

prejudice to the parties’ ability to raise other issues before

the special master, we highlight two disputes relating to the

scope of our decision in Strunk III. First, respondents con-

tend that claimants should not be awarded fees and costs

for duplicated efforts on successful claims or efforts directed

at unsuccessful claims. In Strunk III, the record created by

the parties before the special master did not allow this court

to determine the extent to which those attorneys had dupli-

cated their efforts or directed their efforts toward unsuc-

cessful claims. 343 Or at 239-40. As a result, this court did

not decide whether those factors should affect a reasonable

award of fees and costs. Without deciding that issue here,

we instruct the special master to make findings of fact, if

possible, on the extent to which the attorneys duplicated

their efforts or directed their efforts toward unsuccessful

claims.

Second, the parties dispute the size of any pre-

served fund and the manner in which the award of fees

382 Moro v. State of Oregon

and costs should be allocated among the beneficiaries of

the litigation.1 In Strunk III, the parties stipulated to those

issues. Id. at 233. Although this court accepted those stip-

ulations, id. at 247, it did so without the benefit of opposing

arguments and without a developed factual record. For that

reason, the special master should rely on the court’s con-

clusions in Strunk III accepting those stipulations only to

the extent that those conclusions are otherwise supported

by the factual record in this case—including any consider-

ation of administrative burdens for allocating the fees and

costs—and the law justifying an award.

Within 14 days of the filing of the special master’s

recommendations with this court, any party may file briefs

supporting or objecting to those recommendations, including

citations to relevant authorities and portions of the record.

This court thereafter shall proceed to award reasonable

attorney fees and costs.

Petitions referred to special master.

1

They also dispute whether, and the extent to which, the size of any pre-

served fund justifies applying a multiplier to the hourly rates that claimants have

used to calculate their requested awards—that is, the parties dispute whether

the reasonable value of the claimants’ services depends on the size of the pre-

served fund.