Case Title: Allen v. County of Jackson County

Citation: 

Docket Number: S51180

State: oregon

Court: Oregon Supreme Court

Date: 2006-02-24T00:00:00Z

Document:
FILED:  February 24, 2006
IN THE SUPREME COURT OF THE STATE OF OREGON
RICHARD ALLEN,
JAMES ANDERSON, JOHN J. ATKINS, DAVID A. BALERIA,
JEANNE BURROWS, KENNETH R. CURTIS, STEVEN E. DANIELS,
SANDRA DEPIERO, SANDRA L. ECCKER, MILTONA L. HENDRIX,
MICHEL HOLLORAN-MARSHALL, BRAD L. HOPE,
RICHARD C. KENNEDY, ROBERT O. KENNEDY, SUSAN M. LUTTES,
ED MAYER, RONALD D. PARKER, DEWEY P. PATTEN,
DANNY LEE PENLAND, DAVID ROUGHTON, JEANNETTE M. SIEG,
TENLEY TANHOFF, EDWARD C. EMPLE, SHIRLEY A. TOLBERT,
JAMES L. VANSANT, JAMES N. WARREN,
Petitioners on Review,
v.
COUNTY OF JACKSON COUNTY,
Respondent on Review.
COUNTY OF JACKSON COUNTY,
Third-Party Plaintiff,
v.
STATE OF OREGON,
Third-Party Defendant.
(97-0009-LI(8); CA A115689; SC S51180)
On review from the Court of Appeals.*
Argued and submitted November 4, 2004.
Michael J. Morris, of Bennett, Hartman, Morris & Kaplan,
LLP, Portland, argued the cause and filed the brief for
petitioners on review.  With him on the brief was Gregory A.
Hartman, Portland.
Timothy J. Sercombe, of Preston Gates & Ellis LLP, Portland,
argued the cause and filed the brief for respondent on review.  
Before Carson, Chief Justice,** and Gillette, Durham, Riggs,
De Muniz,*** and Balmer, Justices.****
RIGGS, J.
The decision of the Court of Appeals and the judgment of the
circuit court are affirmed.
*Appeal from Jackson County Circuit Court, Roxanne Osborne, Judge. 191 Or App 185, 82 P3d 628 (2003)
**Chief Justice when case was argued.
***Chief Justice when this decision was rendered.
****Kistler, J., did not participate in the consideration or
decision of this case.
RIGGS, J.
This case involves the proper measure of damages for
certain statutory wage claims.  The underlying litigation
resulted from a change in state law regarding who must pay
employee pension contributions amounting to 6 percent of
salary ;-- a change later held unconstitutional.  Before that
change was declared unconstitutional, defendant Jackson County
responded to it with a payroll scheme that deducted 6 ;percent
from certain employees' pay, but also simultaneously paid the
same employees a 5.7 percent pay increase.  Because the law
requiring the 6 percent deduction was held unconstitutional, the
previously authorized 6 percent deductions became unlawful
retrospectively.  Plaintiffs, Jackson County employees whose
paychecks were affected, argue that they are entitled to the 6
percent of their salary that Jackson County unlawfully deducted
from their paychecks.  Jackson County contends that it is
entitled to a credit for the 5.7 percent pay increase that it
gave plaintiffs to offset the deduction.  The trial court awarded
plaintiffs 0.3 percent damages, and the Court of Appeals
affirmed.  On review, we affirm the decision of the Court of
Appeals and the judgment of the trial court.
Because plaintiffs challenge (in part) the trial
court's denial of a motion for directed verdict, we set out all
disputed facts in the light most favorable to Jackson County. 
See Bolt v. Influence, Inc., 333 Or 572, 578, 43 P3d 425 (2002)
("the court must consider all the evidence, including reasonable
inferences drawn therefrom, in the light most favorable to the
party opposing the motion [for directed verdict]").
On November 8, 1994, the voters passed Ballot Measure
8, an initiative measure that amended the Oregon
Constitution. (1)
  In summary, Ballot Measure 8 required those
public employees eligible for retirement benefits to contribute 6
percent of their salary toward those benefits.  Ballot Measure 8
also prohibited the state and its political subdivisions from
either agreeing to pay the 6 percent contribution for their
employees or increasing employee pay to compensate for the 6
percent deduction.  The measure became effective December 8,
1994.  See Or Const, Art IV, § 1(4)(d) (initiative measure
becomes effective 30 days after enacted).
On December 7, 1994 ;-- after Ballot Measure 8 had
passed, but before it became effective ;-- the Jackson County
Board of Commissioners approved Order No. 488-94.  That order
simultaneously (1) increased the pay of nonunion employees by 5.7
percent; and (2) directed the deduction, from the increased
paychecks, of the 6 percent retirement contribution mandated by
Ballot Measure 8.  Jackson County made the changes retroactive to
November 28, 1994.
In 1996, this court held Ballot Measure 8
unconstitutional because it violated the United States
Constitution's prohibition against impairing the obligation of
contracts.  Oregon State Police Officers' Assn. v. State of
Oregon, 323 Or 356, 361, 918 P2d 765 (1996).  After that
decision, Jackson County stopped deducting the 6 percent
retirement contribution from nonunion employee paychecks and
resumed its practice of paying retirement contributions on behalf
of those employees.  Jackson County continued paying those
employees the 5.7 ;percent pay raise.
Plaintiffs are the Sheriff of Jackson County and 25 of
his nonunion employees.  After this court held Ballot Measure 8
invalid, they sued Jackson County for damages, pleading (among
other things) a breach of contract claim and an ORS chapter 652
statutory wage claim.  Plaintiffs asserted that they were
entitled to be repaid the 6 percent deducted from their paychecks
for retirement contributions.
Plaintiffs later clarified that they asserted two
different statutory wage claims under ORS chapter 652.  First,
plaintiffs asserted that Jackson County had violated ORS 652.120,
which provides in part:
"(1) Every employer shall establish and maintain a
regular payday, at which date all employees shall be
paid the wages due and owing to them."
Plaintiffs claimed that the 6 percent deducted from their wages
in reliance on the unconstitutional Ballot Measure 8 were "wages
due and owing."
Second, plaintiffs asserted that Jackson County had
violated ORS 652.610(3), which prohibits an employer from
"withhold[ing], deduct[ing] or divert[ing] any portion of an
employee's wages" unless certain conditions (none relevant here)
apply.  The remedy for violating ORS 652.610(3) is set out in ORS
652.615, which entitles the employee to "actual damages or $200,
whichever is greater." (2)

In its answer, Jackson County raised a number of
affirmative defenses.  One affirmative defense was that it had
intended the 5.7 percent pay increase to mitigate the effect of
Ballot Measure 8 on county employees, so that increase should be
deducted from any award of damages.  Jackson County also denied
that five of the plaintiffs were entitled to any recovery at all.
Both parties moved for summary judgment.  The trial
court granted the motions in part, and both parties appealed. 
The Court of Appeals reversed and remanded the matter to the
trial court.  Allen v. County of Jackson, 169 Or App 116, 7 P3d
739 (2000) (Allen I).  Among other things, the Allen I court
concluded that a genuine issue of material fact remained
regarding the 5.7 percent pay increase:  Plaintiffs had presented
evidence that it was a genuine pay increase, while Jackson County
had presented evidence that it was intended to compensate
plaintiffs partially for the 6 percent retirement deduction from
their pay.  Id. at 125-27.
On remand, the case proceeded to trial.  By the time of
trial, the only remaining issue relevant to this case was
damages; Jackson County had conceded liability on both the breach
of contract claim and the statutory wage claims.  The parties
presented only the breach of contract damages issue to the jury. 
As to the statutory wage claims, the parties agreed that, unless
the trial court determined damages as a matter of law, the jury
verdict on contract damages would control. 
At trial, Jackson County presented evidence supporting
its claim that the 5.7 percent pay increase was compensation for
the 6 percent retirement deduction required by Ballot Measure 8. 
As already noted, Jackson County ordered the pay increase after
Ballot Measure 8 passed, but before Ballot Measure 8 became
effective and prohibited any raises to compensate for the
retirement deduction.  Jackson County used a single order to
authorize both the pay increase and the retirement deductions,
and it directed the pay increase and retirement deductions to
begin on the same date.  Jackson County presented testimony that
it intended the pay increase to compensate its nonunion employees
for the 6 percent retirement deductions that Ballot Measure 8
would have required.  Jackson County also introduced evidence
that, prior to Ballot Measure 8, the county had itself paid a 6
percent retirement contribution for its employees; once Ballot
Measure 8 prohibited those contributions, Jackson County used the
budgeted retirement contributions to fund the 5.7 percent pay
increase.
On the breach of contract claim, the jury returned a
verdict for 21 of the plaintiffs in the amount of 0.3 percent of
plaintiffs' wages. (3)
  The jury also determined that five
plaintiffs were not entitled to damages.  The trial court awarded
the same amount of damages on the statutory wage claims and
entered judgment accordingly.
Plaintiffs appealed, contending that the trial court
had erred in denying their motions for judgment on the pleadings
and for a directed verdict on the statutory wage claims.  Those
motions were essentially identical:  Plaintiffs claimed that they
were entitled to the full amount deducted from their wages as a
matter of law, regardless of what Jackson County pleaded or
proved about the 5.7 percent pay increase.  The Court of Appeals
disagreed, however, and affirmed the trial court.  Allen v.
County of Jackson County, 191 Or App 185, 82 P3d 628 (2003)
(Allen II).
The only issue presented on review involves the measure
of damages for the statutory wage claims.  Plaintiffs do not
challenge the jury verdict on the claim for breach of contract,
and they make no separate argument regarding the five plaintiffs
who recovered nothing.
As an initial matter, plaintiffs argue that the law of
the case requires that they be awarded the full 6 percent.  In
Allen I, plaintiffs claim, the Court of Appeals held that damages
for violating ORS 652.610(3) are, as a matter of law, in the
amount of the unlawful deduction.  That holding became the law of
the case, plaintiffs assert, and so entitles them to 6 percent
damages.  But even if the Court of Appeals did so hold in
Allen ;I ;-- the Court of Appeals concluded that it had not so
held, Allen II, 191 Or App at 203 ;-- it would be the law of the
case only as to the trial court and the Court of Appeals.  It is
not the law of the case as to this court, and we are not bound by
the Court of Appeals' conclusions in Allen I.  See Thompson v.
Coughlin, 329 Or 630, 635 n ;5, 997 P2d 191 (2000) ("[T]he [first]
Court of Appeals' ruling operated as 'law of the case' as to the
trial court and the Court of Appeals.  However, as this court
never has addressed this issue, this court is not bound by the
Court of Appeals' ruling as law of the case." (citation
omitted)).
Plaintiffs do not here dispute the evidence that
Jackson County presented at trial.  Neither do they dispute the
validity of the jury verdict on the breach of contract claim or
the adequacy of the facts to support that verdict.  They claim
only that the facts are not legally significant to the damages
that they should be awarded on their statutory wage claims.
Plaintiffs thus effectively concede these facts:  That
Jackson County proved that its 5.7 percent pay increase was
partial reimbursement for the 6 percent retirement contribution
required by Ballot Measure 8; that Ballot Measure 8 required
Jackson County to deduct 6 percent from its employees' paychecks,
but Jackson County simultaneously returned 5.7 percent to them in
the form of a pay increase; and finally, that the pay increase
was not a raise, but a bookkeeping device to limit the harm of
Ballot Measure 8 to its employees.
With that factual background, we turn to the statutes. 
We use the now-familiar methodology for statutory construction
set out in PGE v. Bureau of Labor and Industries, 317 Or 606, 859
P2d 1143 (1993).  We seek the intent of the legislature by
examining the statutory text in context.  Id. at 610.  If that
examination makes the statutory meaning clear, then we will
inquire no further.  Id. at 611.
First, the measure of damages for plaintiff's ORS
652.610(3) claim for unlawful deductions is "actual damages." 
ORS 652.615 provides, in part:
"There is hereby created a private cause of action
for a violation of ORS 652.610(3) for actual damages or
$200, whichever is greater."
The term "actual damages" needs no elaboration; it is a legal
term with a familiar legal meaning.  See, e.g., Bolt, 333 Or at
577 (in statutory construction, words with well-defined legal
meaning are given that meaning).  "In our use of the term 'actual
damages' we mean the sum which is recoverable under the common
rules governing the award of damages."  Kinzua Lbr. Co. v.
Daggett et al., 203 Or 585, 591, 281 P2d 221 (1955)
(distinguishing actual damages from punitive damages).  See also
Black's Law Dictionary 390 (6th ed 1990) ("actual damages" means
"[r]eal, substantial and just damages, or the amount awarded to a
complainant in compensation for his actual and real loss or
injury").  Plaintiffs identify nothing to suggest that the
legislature intended any different meaning.  Here, "actual
damages" refers to the difference between the amount that each
worker received beginning the day that Jackson County began to
deduct an amount from each worker's pay, and the amount that each
worker had received before that date.  As noted, that difference
was 0.3 ;percent, not 6 percent.
Of the 6 percent deducted for retirement contributions,
Jackson County returned 5.7 percent simultaneously, in every
paycheck, so only the net amount ;-- 0.3 percent ;-- ever was
"deducted."  We reject plaintiffs' claim that a net 0.3 percent
deduction actually damaged them by 6 ;percent.  Only the
0.3 ;percent deduction implicates the remedial scheme in ORS
652.610(3). (4)

Plaintiffs' second statutory wage claim is for "wages
due and owing" under ORS 652.120.  For the reasons just
discussed, however, plaintiffs have not shown that 6 percent of
their wages are due and owing.  They showed only that 0.3 percent
of their wages were due and owing, and the trial court gave them
judgment for that amount.  Plaintiffs are not entitled to any
additional relief under ORS 652.120.
We therefore conclude that plaintiffs were not entitled
to 6 percent damages on their statutory wage claims as a matter
of law.
The decision of the Court of Appeals and the judgment
of the circuit court are affirmed.
1. The text of Ballot Measure 8 read, in part:
"Paragraph 1.  The Oregon Constitution
is amended by creating new sections to be
added and made a part of Article IX, such
sections to read:
"Section 10. (1) Notwithstanding any
existing State or Federal laws, an employee
of the State of Oregon or any political
subdivision of the state who is a member of a
retirement system or plan established by law,
charter or ordinance, or who will receive a
retirement benefit from a system or plan
offered by the state or a political
subdivision of the state, must contribute to
the system or plan an amount equal to six
percent of their salary or gross wage.  
"2. On and after January 1, 1995, the
state and political subdivisions of the state
shall not thereafter contract or otherwise
agree to make any payment or contribution to
a retirement system or plan that would have
the effect of relieving an employee,
regardless of when that employee was
employed, of the obligation imposed by
subsection (1) of this section.  
"3. On and after January 1, 1995, the
state and political subdivisions of the state
shall not thereafter contract or otherwise
agree to increase any salary, benefit or
other compensation payable to an employee for
the purpose of offsetting or compensating an
employee for the obligation imposed by
subsection (1) of this section."
2. ORS 652.615 provides:
"There is hereby created a private cause
of action for a violation of ORS 652.610(3)
for actual damages or $200, whichever is
greater.  In any such action the court may
award to the prevailing party, in addition to
costs and disbursements, reasonable attorney
fees."
The judgment below awarded each recovering plaintiff more than
$200 in damages, so the statutory minimum recovery did not come
into play.
3. The parties offered the jury a special verdict form.  As to
the 21 plaintiffs, the jury could choose between a verdict for
plaintiffs in the amount of 6 percent of their wages, or a
verdict for plaintiffs in the amount of 0.3 percent of their
wages.
Our recitation of the evidence offered and the
issues submitted to the jury is just that -– a recitation. 
Neither party to this litigation challenged the propriety of
trying the issues that were tried -– including Jackson County's
"motivation" -- to a jury, and we express no opinion on that
question.
4. Plaintiffs claim to find additional support in ORS
652.610(4).  While ORS 652.610(3) prohibits employers from
"withhold[ing], deduct[ing] or divert[ing] any portion of an
employee's wages" except in certain circumstances, ORS 652.610(4)
provides that
"[n]othing in this section shall ;* ;* ;* diminish or
enlarge the right of any person to assert and enforce a
lawful setoff or counterclaim or to attach, take, reach
or apply an employee's compensation on due legal
process."
Plaintiffs argue that "[Jackson County] did not have any offsets
or counterclaims and therefore did not assert any," and,
"[w]ithout a legal basis for an offset or a counterclaim[,
Jackson County] owes plaintiffs the full amount of their unpaid
wages."
Plaintiffs do not explain their logic.  Subsection (4)
gives additional guidance as to when a deduction is unlawful
under subsection (3), but Jackson County already conceded that
these deductions were unlawful.  Plaintiffs do not identify, and
we cannot determine, how subsection (4) would cause "actual
damages" to mean something beyond its plain, accepted meaning.