Oregon Catalyst Article July 25, 2012

Why PERS Judges Cannot Decide PERS Cases

by Larry Huss Wednesday, July 25. 2012

Right From the Start

Dan Re has become one of Oregon’s leading advocates for reform of the Public Employees Retirement System (PERS) recognizing that the extraordinary burden that this gold plated system places on public financing and the direct adverse impact it has on the funding of public schools and other government services. Currently he is engaged in litigation to disqualify judges who are PERS beneficiaries from deciding cases relating to the general application of PERS statutes. As in the past, I have given my column over to Dan to keep the public updated on the issues and progress. Following is Mr. Re’s lates update:

The Oregon Supreme Court has ruled that PERS judges must decide all PERS cases. That ruling was based on a law that put elected Oregon judges into PERS, effective January 1, 1984. I believe that the court’s ruling was incorrect.

It has always been part of Oregon’s law that a judge with a financial stake in the outcome of a case is disqualified from deciding the case. That general rule is based on the ancient English common law principle that no person can be the judge of the person’s own case. The purpose of that rule is to provide fairness and the appearance of fairness to court cases. Like all general rules, however, it is not absolute. It does not apply if it is impossible to find a judge who does not have a financial stake in the case. This exception, known as the rule of necessity, is often applied in cases involving income taxes.

Oregon has two categories of judges, elected judges and temporary judges. Elected judges are either elected to office or are appointed by the Governor to fill a vacant elected judge position. Temporary judges are appointed by the Oregon Supreme Court when reasonably necessary to promote the efficient administration of justice. Once appointed, a temporary judge has all of the judicial powers, duties, jurisdiction and authority of an elected judge.

By law, all elected judges are either Tier One or Tier Two PERS members and they receive many of the PERS benefits that all other Tier One and Tier Two PERS members receive. Based on prior public service, a judge can also be a non-judge PERS member. In that case, the judge will have additional PERS benefits that PERS judges do not have.

To determine if a judge has a financial stake in the outcome of a PERS case, it is necessary to identify the PERS benefits that are at risk in that case and the PERS benefits that the judge is eligible for. If the judge is eligible for any PERS benefits that are at risk, that judge has a financial stake in the outcome and is disqualified from the case unless the rule of necessity applies.

The Oregon State Police Officers’ Association v. State case (OSPOA), decided in 1996, is perhaps the most significant PERS decision every made by an Oregon court. That case invalidated Ballot Measure 8 which had eliminated three PERS benefits: (1) the pick up of employee PERS contributions; (2) the guaranteed minimum rate of return on member accounts; and (3) the use of unused sick leave as part of final average salary. Each one of the justices who decided that case was entitled to those PERS benefits, so each justice had a financial stake in the case’s outcome. The court recognized that fact but found that the rule of necessity applied. The majority of the justices then decided that Ballot Measure 8 was unconstitutional. The court gave no explanation as to why temporary judges who had no interest in PERS could not have been appointed to decide the case. Such appointments would certainly have promoted the administration of justice.

I believe Oregon law did permit temporary judges who were not entitled to PERS benefits to decide the OSPOA case and I have initiated legal action to review the matter. My case is pending in the Oregon Court of Appeals and oral argument is set for August 23, 2012.

In that case, I contend that the rule of necessity was improperly applied in OSPOA and that the OSPOA decision is void. Because each Court of Appeals judge is receiving PERS benefits that are based on the OSPOA decision, the PERS benefits of each judge is at risk. Oregon law permits attorneys who do not have a PERS conflict to be appointed as temporary judges to the Court of Appeals to decide this case and there are over 10,000 Oregon attorneys who could be appointed. If at least three of those attorneys do not have an interest in PERS, the rule of necessity cannot apply.

In preliminary actions, the Court of Appeals judges have refused to disqualify themselves and the Supreme Court has declined to require them to do so. No explanation was given for either of those decisions so it is uncertain why the courts ruled that way. But one thing is certain. Unless my case is decided by temporary judges who do not have a PERS conflict, I will not receive a fair hearing. If my argument is correct, the judges will lose money. It is fundamentally unfair for those judges to decide whether or not my argument is correct.

This is the first case to contest the authority of PERS judges to decide PERS cases. In all other PERS cases, no one objected to the use of the rule of necessity. The final decision on this issue will determine whether Oregonians still have the right to independent judges. That right has been one of our greatest safeguards against governmental abuse.

The only reason PERS judges decide all PERS cases is because PERS judges have said they are the only ones who can do so. That is not acceptable to me and it should not be acceptable to you.

Daniel C. Re


About Dan Re

I am an attorney who has lived in Bend and practiced law since 1981. In educating myself about the Oregon Public Employees Retirement System (PERS), I was shocked at how the PERS laws were changed by the legislature, once legislators were allowed to join PERS in 1971, 26 years after PERS was first created. Those changes personally benefitted the legislators who made them at the direct financial expense of the people they were elected to represent. That is wrong and I intend to change it. In 2009, I started a non-profit 501(c)(4) corporation, In RE The People, Inc., for the purpose of informing concerned citizens of what happened regarding PERS and other issues of social and civic importance. I then created this blog to further that objective.
This entry was posted in Ballot Measure 8, fundamental fairness, Oregon judges, Oregon PERS and tagged , , , , . Bookmark the permalink.

2 Responses to Oregon Catalyst Article July 25, 2012

  1. Since August 4, 1983, the Oregon Supreme Court has decided PERS cases, despite the Justices’ conflict of interest. Article VII, Section 2.a.(1) of Oregon’s Constitution, makes it is impossible to appoint non-PERS members to the Oregon Supreme Court. As a result, the court has invoked the “Rule of Necessity”. This rule has been recognized by the US Supreme Court and the courts of many other jurisdictions in addition to Oregon. It provides that when there are no judges without a conflict of interest, judges with the conflict can hear the case because there is no other way to resolve the dispute. Application of the rule eliminates the right of each party to an independent tribunal. The rule is usually applied only when the Judges’ conflict is deemed remote. Use of the Rule of Necessity in a case where the Judges have such a direct, material and substantial interest in the outcome, as they do in PERS cases, is unusual but it’s use does not appear to have been challenged in any Oregon court case.

    • Dan Re says:

      Silver, I disagree with your conclusion that Article VII (Amended), Section 2.a.(1) of Oregon’s Constitution makes it impossible to appoint non-PERS members to the Oregon Supreme Court. I beleive that section clearly makes such appointments possible. Section 2.a.(1) allows judges of inerrior courts to be temporarily appointed to the Supreme Court. The following Section 2.a.(2), allows members of the Oregon State Bar to be temporarily appointed to any inferrior court. Then Section 2.a. provides that “A judge or member of the bar so appointed or assigned shall while serving have all the judicial powers and duties of a regularly elected judge of the court to which he is assigned or appointed.”

      Once someone is temporarily appointed to an inferior court that person is a judge of that court. Section 2.a.(1), allows any judge of an inferrior court to be temporariy appointed to the Supreme Court. That provivion makes no distinction between a pro tempore judge or a regularly elected judge. When a court is determining whether it can appoint independent judges to replace judges with who are not independent, the court must do everything it can to provide the parties with fundamental fairness. It cannot interpret the law to allows biased judges to be the judge of their own case, when the law can be interpreted to allow the appointment of non-biased judges.

      It is true that the Rue of Necessity has been recognized by the US Spureme Court and many other jurisdictions but that fact does not mean that the Rule automatically applies to any situation. It is clear from the US Supreme Court decisions that the Rule only applies when it is impossible to appoint independent judges. When the US Supreme Court has invoked the Rule it has used a comprehensive anaylysis to determine if the Rule applied. The Oregon Supreme Court has never used such an analysis, or any analysis at all, when it invoked the Rule in PERS cases.

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