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Thursday, August 16, 2007

Instant Karma

I attended this morning's status conference in Judge Kantor's courtroom on issues arising from Judge Kantor's preliminary judgement in the Arken and Robinson cases. The proceedings started late and ended much earlier than the schedule planned. There were about 30 retirees, 2 PERS Officials (Rodeman and Crosley), Jim Coon (attorney for Robinson plaintiffs), Greg Hartman and Aruna Masih (Attorneys for the PERS Coalition), 2 California wideboys (Joseph Malkin and some unknown woman), Bill Gary and Sharon Rudnick (Attorney's for the non-State defendants in Arken), and an attorney from the DOJ (representing the State of Oregon). After getting to preview the PERS cases by listening in on two pathetic hearings from women in trouble and trying to game the system, the PERS cases finally got started about 9:35. The first surprise of the morning came when Bill Gary, Sharon Rudnick and the unknown DOJ rep were permitted to join the Robinson case as intervenors. This caught me by surprise since none of those parties have any stake in the outcome of Robinson. It occurs to me that they want in because they expect to be involved in appeals of Robinson (they as much said so). At first it wasn't obvious why they cared, but then it occurred to me that the outcome they need to prevent is a ruling in which all of section 14b is invalidated, a result that would leave employers with maximum financial exposure in a statute deliberately constructed to insulate employers from any responsibility. Judge Kantor allowed them intervenor status without any objections from any other attorney.

From there, Joseph Malkin launched into this tedious, incoherent, and pedantic lecture to the Judge about why he (the Judge) should stay the order for PERS to stop collection. The Judge called Malkin up short when he asked whether the summary of what PERS was asking for was based on "convenience" without any other judicial basis. Malkin didn't directly answer the question, but they explained what PERS *was* doing in regards to Kantor's order, and what it wasn't doing. (I'll come back to that later). The short form is that Judge Kantor denied PERB's request for a stay on the grounds that there is no final order entered; therefore the motion for a stay is premature.

Malkin admitted that PERB didn't fully understand the scope of Judge Kantor's order. Therefore, until they received clarification, they intended to continue the freeze on invoicing retirees for "overpayments", continue to withhold money from retirees already invoiced, but they anticipated continuing to recalculate benefits for all retirees not yet invoiced. This means, that PERS is planning to continue to adjust benefits for the 1999 "overpayment", but will not include an invoice for amounts due PERS. Judge Kantor reminded them that he hadn't finalized his order, but that he intended to make very clear in his final ruling what he considered permissible and what he considers impermissible. So, until Judge Kantor issues his final order, PERS isn't planning to do anything differently than it is doing now. Members already invoiced will continue to receive adjusted benefits and actuarial reductions; it isn't clear what those 70% of window retirees will get or not get from PERS until the Judge issues final orders.

Hartman's motion to have the judge change his ruling on the "breach of contract" was accepted without argument from any party. After receiving the motion, Judge Kantor reviewed his notes on the cases, reread all the original motions and briefs and concluded that his original order did not accurately portray the status of the "breach of contract" claim. Now, the claim is open and Judge Kantor will issue a clear ruling (we hope) on that claim on its own merits.

There was a curious monologue by Malkin (PERB attorney) about the apparent logical contradiction between Kantor's decision to rule on the "breach of contract" claim (arising from the language in HB 2003 and the Supreme Court's Strunk ruling in the Sartain case), and his ruling on Robinson. Malkin claims that by ruling in favor of the Robinson plaintiffs, Kantor had already tipped his hand in ruling on Arken's breach (in short, how can you claim a breach of contract for benefit said to be fixed and computed without error, and then simultaneously saying that the only way PERS can collect for the error is via 14b1b) Malkin's point was that since 14b refers to recovering "erroneous payments" from the City of Eugene case, it isn't possible to have both "erroneous payments" collected from administrative expenses, while at the same time ruling that there was a "breach of contract" in which retirees are said to be receiving fixed benefits computed without error. Both Jim Coon (Robinson attorney) and Hartman (Arken attorney) and Judge Kantor all reminded Malkin that the Robinson class included more than the Arken class and so there was no necessary preconceived bias or contradiction from the Robinson ruling and a potential ruling in the Arken breach.

That was pretty much it. The schedule for the whole day was totally unnecessary; the conference was done by about 10:50 a.m. On the whole, I'm optimistic that Kantor will get his act together and write a clear and unambiguous ruling. I'm reluctant to predict the outcome, although I sense that Kantor wants to do the right thing and that he is not terribly impressed by the legal skills offered by the California hotshots. I lost count of the number of times Malkin mentioned the City of Eugene or Lipscomb decision, as though it had any legal relevance anymore. Similarly, watching the body language of the plaintiffs' attorneys (Hartman, Masih, and Coon) as well as Judge Kantor revealed a clear "oh god, are they still babbling about the vacated City of Eugene case", and "get a clue, Malkin".

One point that I hope Judge Kantor grasps -- although it isn't anything on the table -- is how PERS retirees are paying for both sides of the legal questions. The PERB people always manage to get in a dig about how we're receiving excess benefits, but they never talk about who's paying their salaries -- under duress.

I'm hoping that this time through, Judge Kantor will take less time to issue his final ruling, that he has fewer complicated cases on his docket, and that we can get this party rolling to the appelate or Supreme Court level before the start of the New Year. That would be instant karma.

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