Judges and PERS

The Day That Fairness Died


            On July 13, 1983, the Regular Session of Oregon’s 62nd Legislative Assembly was drawing to a close.  The Session would adjourn just two days later.  As is generally the case, there were many legislative actions that needed to be accomplished prior to adjournment.  One of those actions was for the Oregon House of Representatives and the Senate to vote on HB 2366. 


            In the morning of July 13, 1983, HB 2366 was voted on by the House where it passed with 51 Ayes, 1 Nay and 8 excused absences.  The bill was then voted on by the Senate in its afternoon session where it passed by a vote of 21 Ayes, 0 Nays with 9 members excused.  HB 2366 was not law as a result its passage in the House and Senate but only formalities remained.  


            Those formalities included the signing of HB 2366 by the Speaker of the House, which occurred on July 29, 1983, the signing of the bill by the President of the Senate, that took place on August 2, 1983, and approval of the bill by Governor Atiyeh.  The Governor approved it on August 4, 1983.  HB 2366 contained an Emergency Clause and it became effective as Chapter 770, the Oregon Laws of 1983, on August 4, 1983.  Since the law went into effect less than 90 days after the end of the Legislative session, it was exempt from the People’s right of referendum under  Article IV. Section 1.(3)(a) of the Oregon Constitution. 


            HB 2366 end fairness in Oregon by making all Oregon Judges members of the  Oregon Public Employees Retirement System (PERS).  HB 2366 automatically made any person  who became an Oregon Judge after August 3, 1983, a PERS member on the day the person took office.  The only exception was for a person who became a Judge after that date and was older than 70.  The law then gave existing Judges who had contributed to the prior retirement plan for Judges the option of becoming a PERS member or staying in the prior plan.  However, those Judges were offered a substantial economic incentive to join PERS.  If the Judge joined PERS, the State would be required to pick up that Judge’s 7% employee contribution to PERS which would give the Judge an immediate 7% salary increase.  If a Judge stayed in the prior retirement plan, the Judge would have to personally pay the 7% contribution.  No other public employees had these benefits.  Non-Judge PERS members are required to make a 6% employee contribution, rather than 7%, and while the public employer may agree to pick up the employee’s contribution, the employer is not required by law to do so. 


            The conflict of interest created by HB 2366 raises serious questions regarding the qualification of a Judge who is PERS member to hear a PERS case.  Hearing the case would appear to be prohibited by JR 2-106(A)(4)(c) of the Oregon Code of Judicial Conduct and under ORS 14.210(1)(a).  A Judge’s disqualification under JR 2-106(A)(4)(c) can be waived if all parties agree in writing or on the record that the Judge’s interest in the case is immaterial or insubstantial but ORS 14.210(1)(a) does not provide for a conflict of interest to be waived. 


            HB 2366 was enacted by PERS members for the benefit of PERS members.  Of the ninety members of the 62nd Legislative Assembly, eighty-four of them were in PERS.  Seventy-three legislators actually voted on HB 2366, which passed by a cumulative vote of 72 to 1, and PERS members cast sixty-nine of the Aye votes.  


            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. 


            This is how the Rule of Necessity works.  If you were a party to a case before the Oregon Supreme Court and if one of the Justices had a conflict of interest with you, that Justice would not participate, without your consent.   The Justice’s disqualification would be required by judicial ethics, by Oregon statute and, if your life, liberty or property were at stake, by your federal constitutional right to procedural due process.  However, if all seven of the Justices had the same conflict, the Rule of Necessity negates your right to a neutral tribunal and allows the Justices’ to be decided the case.  This gives your opponent the right to a court that is 100% biased in your opponent’s favor.   The Rule seems a paradox since your opponent’s right to a 100% biased court exists only if every Judges has a conflict with your interest. 


            While the Judges actively lobbied to be included in PERS and to have their 7% employee contribution picked up by the taxpayers, the conflict was created by the Legislature.  The legislative history of HB 2366 does not indicate that the conflict of interest issue was even discussed.  After the Judges became PERS members, the Oregon Supreme Court, in divided opinions, decided two PERS cases that rewrote Oregon law regarding legislative contracts with PERS members.  Those cases were Hughes v. State of Oregon in 1992 and Oregon State Police Officers Association v. State of Oregon  in 1996.   Both cases resulted in significant financial victories for all PERS members, including Oregon’s Judges.  The Oregon State Police case, decided by a 4 to 3 vote, invalidated Ballot Measure 8 which had been passed by the People.  One of the Justices voting with the majority retired a few days after the decision was filed.  It is possible that Judges who were not in PERS would have reached the same result in each of those cases but the Court’s credibility with the People of Oregon depends as much upon the perception of fairness as it does upon the actual decision that the Court makes.  


Judges are required to protect the rights of all parties before the court and to protect the integrity of the law.  They cannot do that when they have a substantial financial interest in the outcome of the case they are deciding.   Having PERS Judges decide PERS cases is no more fair than requiring PERS cases to only be heard by anti-PERS Judges.  Oregon’s Judges need a good retirement plan but they cannot be in PERS if they are going to decide PERS cases.  The current situation is fundamentally unfair to all Oregonians.


Daniel C. Re, In RE The People, Inc., 86 SW Century Drive, #365, Bend, OR 97702

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