Yesterday I attended the Supreme Court oral arguments in the Arken and Robinson cases. These two cases, along with the White case, which still remains docketed in the Oregon Court of Appeals, represent the last of the litigation over the 2003 Legislative reform, the City of Eugene case, and the subsequent settlement agreement.
The Arken case hinges on the impact of the Strunk's decision to strike down the COLA withholding provision of HB 2003 from the 2003 legislature. Central to this argument is the fact that with the COLA provision gone, the plaintiffs argue that this left the statute and the "window retirees" in the position they were in on July 1, 2003 - still with 20% credited to their accounts, but not receiving the COLA. The court ordered the COLA restored in Strunk (2005) while the members were receiving their "fixed" benefit. PERS argues that because the trial court judge in the City of Eugene case (Lipscomb) had already entered his judgement and order, that the 20% had been vacated and that the only rate in effect, although not formally adopted by the Board at this time, was 11.33% Thus "window retirees" had no expectation of retaining the 20% when the Legislature adopted HB 2003 in May of 2003. So far, Arken has failed at the trial court (Kantor), and the issue for the Supreme Court to decide is whether the Legislature intended that window retirees be held harmless if the COLA provision had been struck down. Much of the questioning focused on the exact status of the Lipcomb order at the time the Legislature enacted HB 2003. Justice Durham reminded both Bill Gary and Joe Malkin that there is a significant difference between final order, and final justice. Clearly the final order had been entered, but the case was under appeal at the time the Legislature acted. PERS had not been granted a stay pending appeal.
The Robinson case pertains to a slightly different portion of HB 2003 and affects a slightly larger cohort of individuals. At the end of HB 2003, the Legislature late in the process added section 14b (around revision 10 of the bill) to provide an exclusive remedy for the City of Eugene case. In it, it described two methods PERS could use to recover for the errors identified in the City of Eugene case. One method was the "COLA freeze", while the other was the use of "administrative expenses". Since the errors identified in City of Eugene had to do with improper crediting of 20% to regular accounts in 1999, failure to fund reserves, use of outdated mortality tables, and improper calculation of the Money Match benefit, PERS was ordered to correct these. Because HB 2003 saw so many drafts before it finally fell into its final form, language was entered and removed and it has been difficult to discern either the reason for dropping things from the enrolled bill, or the reason for adding them. One such word was "Exclusive remedy". These words were dropped from the final preamble to Section 14b. Jim Coon, attorney for the defendants in this case (us), argued that the Legislature intended to be done with the City of Eugene case by providing the only remedies that PERS could use to collect. He argued that the collection statute 238.715 was superseded - in this instance - by section 14b and that PERS improperly billed retirees for monies owed by the City of Eugene errors. PERS argued that the removal of key words from the final drafts of HB 2003 meant that the Legislature had no such intention to hamstring PERS, but instead offered 14b as *additional* tools that could be used to collect overpayments. Moreover, Malkin argued that the City of Eugene case involved only 8 employers, not all employers and therefore could not be viewed as the overarching collection mechanism for all PERS employees. Justice Kistler spent a fair bit of time trying to tease from Malkin why it mattered to the employers what mechanism PERS used since the employers were excluded from bearing the costs, and why also did the money issue, which related to individual retirees, matter to the employers.
The arguments were tedious in the extreme. I wanted to shout out several times to ask why the justices weren't pursuing a particular line of questioning, but of course it doesn't matter. No case that I've ever sat through was influenced by oral arguments. The oral arguments are a dog and pony show where each side gets to take its best shot at the other side while also trying to show the justices why they are so smart. Similarly, the justices try to get inside the heads of the lawyers by asking some twisted and bizarre questions. In the meantime, the case is adjudicated entirely through the legal briefs filed on both sides, along with all the pieces of evidence cited in support of the argument.
It is hard to predict when the Court will rule. I do believe that the court will NOT rule in time for the 2011 Legislature to do anything to fix any errors the Court identifies. On the other hand, I do think there will be a decision available for the 2012 Legislature to work with, and so I continue to hold that 2012 will be the year of the remedy, for better or for worse.
Only five of the justices were present for the hearings. Justice Martha Walters was absent but will participate in the ruling. Justice Jack Landau who joined the Court only earlier in the week recused himself from the case because his son is an Attorney for the firm representing the defendants in the Arken case and consults on the Robinson case.