Why PERS Judges Cannot Decide PERS Cases

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 principal 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