If the state attempts to take a person’s life, liberty or property the due process clause of the 14th Amendment to the US Constitution gives that person the right to have the matter decided by an independent tribunal. It is clear that a judge with a financial interest in the outcome of a case is not independent and, with only one exception, that judge is prohibited by the due process clause from deciding the case. The basis for this rule is fairness, including the appearances of fairness, which is critical for the people’s confidence in the judicial system.
The exception to the rule prohibiting a judge with a financial interest in the outcome of a case from deciding the case is known as the rule of necessity. That rule allows a judge who has a conflict of interest to hear a case if it is impossible to find another a judge to hear the case who does not have a conflict of interest. For example, the rule of necessity has been applied in income tax cases, where all judges are subject to paying income tax.
Prior to 1984, Oregon judges had their own retirement plan, the Judges Retirement Fund. Since the judges were not PERS members they did not have a financial interest in the outcome of any PERS case they might be called upon to decide. But that changed effective January 1, 1984 under a new law passed by the legislature. That new law automatically made all persons becoming judges after 1983 PERS members and it gave a seven percent salary increase to persons who were judges before 1984 if they joined join PERS.
It is not a coincidence that the legislators made the judges join PERS after the legislators allowed themselves to retroactively join PERS and after they had passed the PERS pick up law. With the judges in PERS it became much harder for the people of Oregon to change the PERS laws by initiative
That new law created a conflict of interest for every Oregon judge in PERS cases and, thereafter, the judges have used the rule of necessity to decide those cases. The decision of the judges to use the rule of necessity in PERS cases, however, has never been challenged and it has never been explained by the court. The PERS cases decide by the Oregon courts after 1983 have imposed substantial financial obligations on the people of Oregon which have directly benefitted the judges who decided those cases.
If the rule of necessity was correctly applied in PERS cases, that would mean the Oregon legislature has successfully eliminated the federal constitutional right to due process in PERS cases but can Oregon do that? I do not think so and in the next report on this subject I will explain why.