Tangled Up in Blue

The wedding is over. The bride and groom looked spectacular (dad and mom didn't look so bad either); the wedding was a roaring success and the bride and groom are busy making final preparations for their honeymoon. Thanks to all who offered words of congratulations and encouragement.

Prior to the weekend's festivities, I had the opportunity to attend the first of two hearings on PERS retiree cases. These cases were heard before Judge Henry Kantor of the Multnomah County Circuit. I was able to attend the Arken case but had to miss the arguments in the Robinson case. My comments apply primarily to Arken.

From the moment the Arken hearing started, it was clear we were in a different courtroom at a different time. The reporters were gone but 30+ intretrepid PERS retirees plus assorted PERS staff attended to watch Greg Hartman and Aruna Masih square off against Joseph Malkin and Bill Gary representing the PERS Board and the non-state employers, respectively.

The Arken case appears to be deceptively simple. It relies on the language of ORS 238.715 (the collection statute), ORS 238.360 (the COLA statute) and the wording of the Supreme Court in the Strunk decision. All parties agree that its outcome will be based on a straightforward legal principle and nothing else. Basically, Hartman is arguing that the Legislature, by drawing a distinction between a "fixed" benefit to which no COLA was attached and a "revised" benefit that received a COLA, left itself no way out when the Supreme Court struck down the COLA freeze language of section 10 of HB 2003. By doing so, the court left the "fixed" account and the "revised" account intact, associated the "fixed" account with a class of retirees called "window retirees" and left PERS with no alternative but to pay COLA on the benefit the member was receiving on July 1, 2003 or the actual date of retirement - the "fixed" benefit.

Neither the state nor the non-State employers agree with Mr. Hartman's representation of the case. They've called his position preposterous, outrageous and a host of other things.

From the beginning of the hearing, the Judge focused on "big picture" issues, leaving the smaller issues to the briefs themselves. The Judge was concerned how the "class" of retirees in Arken differed from the "class" of retirees covered by Robinson. Both "classes" cover the "window" retirees, but Robinson includes a group of retirees outside the "window". The Judge posed hypotheticals to all the principal attorneys asking what their clients might do in the event that he (the judge) ruled for plaintiffs in one case and for defendants in the other. The importance of this cannot be overstated. A plaintiff victory in either case would have the effect -- at least for the time being -- of stopping PERS from implementing its current recovery plan. What is different about the cases is who would pay for the costs of implementing the Court's decision. It is clear that if the court decides for the Plaintiffs in Robinson -- using the language of Section 14b of HB 2003 -- the employers could *not* be held liable for the restoration of the COLA; section 14b expressly forbids PERS from collecting these costs from employers. On the other hand, if the plaintiffs win in Arken but not Robinson, it is anyone's guess who will pay since the PERS Coalition expressly sued the employers as a class.

I was heartened to hear Judge Kantor announce that he regarded the cases as legally separable, that he will issue separate decisions in Arken and Robinson, but he plans to issue them relatively quickly and simultaneously. The hope is that these decisions will come down before the end of the year. It is clear that the Judge is mindful of the upcoming legislative session and asked all the attorneys several times whether problems arising from these cases could be "fixed" by a subsequent legislature. All the attorneys felt that the legislature could propose a fix, although Mr. Gary claimed that Hartman would be back in court the next day if the Legislature ever did anything to "fix" the system. It was good theatre, but not much else.

My informants who stayed for the Robinson hearings said the theme didn't change, although the defendant in Robinson is PERB, not the other employers. Again, Judge Kantor's efforts focused on defining how the Robinson class differs from the Arken class and on how each party might respond to a split decision on the two cases.

I'm not prone to be a legal optimist, especially knowing that these cases won't be decided until the Supreme Court finally acts in a couple of years. That said, I was more comfortable with Judge Kantor's line of questioning than I was with Lipscomb, Judge Brewer, or any of the SC justices. Only time will tell whether my comfort with Judge Kantor was merited.