Case Title: Young v. State of Oregon

Citation: 

Docket Number: S056376

State: oregon

Court: Oregon Supreme Court

Date: 2009-07-16T00:00:00Z

Document:
FILED: July 16, 2009
IN THE SUPREME COURT OF THE STATE OF OREGON
DAVID YOUNG,
Petitioner
on Review,
and
AL CHANDLER,
MIKE REINECKE, KAREN (EASTMAN) MEMORY,
LARRY D. CONN, LEONARD J. DRUNG, JESS EASTMAN,
DEBRA E. FERY, BRUCE L. FOCHTMAN, LOIS G. HARRIS,
CHERYL L. HO, LLOYD HORSLEY, WILFRED HUDSON,
MARK A. JONES, ROBERT JORDAN, DAVID C. JUDKINS,
DAVID KUNZ, GORDAN J. LARSON, MARGARET J. LOFTIS,
JUDY MURRAY, SCOTT R. PROCTOR, RICHARD REITER,
HELEN SATTERLEE, ERNEST SCHMIDT, MARJORIE J. WEST,
JAMES C. WILSON, RANDAL WINDSOR, and MICHAEL D. WOODWARD, 
Petitioners
on Review,
v.
STATE OF OREGON,
Respondent
on Review.
(CC
97C10933; CA A133123; SC S056376)
On review from the
Court of Appeals*
Argued and submitted
May 18, 2009.
John E. Hoag, Eugene,
argued the cause and filed the brief for petitioners on review. With him on the
petition for review was David Snyder, Portland.
Robert M. Atkinson, Senior
Assistant Attorney General, Salem, argued the cause and filed the brief for
respondent on review. With him on the brief were John Kroger, Attorney General,
and Erika Hadlock, Acting Solicitor General.
Before De Muniz, Chief
Justice, Gillette, Durham, and Walters, Justices.**
WALTERS, J.
The decision of the
Court of Appeals is reversed.  The judgment of the circuit court is reversed
and the case is remanded to the circuit court for further proceedings.
*Appeal from Marion
County Circuit Court, Paul J. Lipscomb,
Judge. 221 Or App 146, 188
P3d 476 (2008).
**Balmer, Kistler, and
Linder, JJ., did not participate in the consideration or decision of this case.
WALTERS, J.
Plaintiffs, "white-collar" state
employees employed between 1995 and 1997, seek post-judgment interest on supplemental
judgments entered by the trial court in response to direction from this court
in Young v. State of Oregon, 340 Or 401, 133 P3d 915 (2006) (Young
III), and ask that that interest accrue from the date that the original judgment
was entered.  In a written opinion, the Court of Appeals held that sovereign
immunity absolved the state from any obligation to pay interest.  Young v.
State of Oregon, 221 Or App 146, 188 P3d 476 (2008) (Young IV). 
For the reasons that follow, we reverse.  
The history of this case, which the
Court of Appeals chronicled in Young IV, 221 Or App at 148-52, is
extensive.  For purposes of this opinion, it is sufficient to note that plaintiffs
brought a class action in 1997, seeking to recover unpaid overtime compensation
for state managerial and executive employees under former ORS 279.340(1)
(1995), renumbered as ORS 653.268(1) (2003),(1)
attorney fees under ORS 652.200 (1995),(2)
and other relief.  The trial court initially granted the state's motion for
summary judgment, holding that the legislature did not intend that former ORS
279.340(1) apply to state managerial and executive employees.  The Court of
Appeals reversed.  Young v. State of Oregon, 161 Or App 32, 983 P2d 1044,
rev den, 329 Or 447 (1999) (Young I).  
On remand, plaintiffs added a new
request that "the court award pre-judgment interest on all unpaid overtime
compensation from the date that it should have been paid to each [p]laintiff"
to the date of the judgment.  The trial court certified the case as a class
action and decided in favor of plaintiffs on their wage claims but denied their
requests for prejudgment interest.  Over a period from March 2001 to November
2002, the court, using the "fluctuating hours" method to tabulate the
wages owed, entered a series of limited judgments in favor of plaintiffs.  See
ORCP 67 B (providing for limited judgments when "no just reason for
delay"); Young v. State of Oregon, 195 Or App 31, 39, 396 P3d 1239
(Young II) (explaining "fluctuating hours" method of
calculation).  Plaintiffs appealed from those limited judgments.  In January
2003, the trial court entered a final judgment in the case as a whole, "subject
only to the possibility of supplementing the ORCP 67B judgments previously
entered in this case if necessary following resolution of the issues [that were
then] pending on appeal."  We refer to that final judgment as the original
judgment.
In Young II, the Court of
Appeals affirmed the trial court's method of calculating overtime amounts and
its denial of prejudgment interest.  195 Or App at 51.  On review, this court
held, however, that the "fluctuating hours" method of calculation was
incorrect; instead, this court ordered the calculation of overtime wages at one
and one-half times the regular hourly rate of pay. Young III, 340 Or at
408.  This court did not discuss or disturb the conclusion of the Court of
Appeals that plaintiffs were not entitled to prejudgment interest, and that became
the law of the case.
The case returned to the trial court
for recalculation of the wages owed to plaintiffs and entry of supplemental
judgments representing the difference between the amounts of the limited judgments
and the higher amounts that were due to plaintiffs as a result of the
calculation method prescribed by this court in Young III.  In
conjunction with entry of those supplemental judgments, plaintiffs also sought,
not the prejudgment interest that the trial court had denied previously, but interest
on the supplemental judgments.  Plaintiffs argued that, under the rule of Lakin
v. Senco Products, Inc., 329 Or 369, 373, 987 P2d 476 (1999) (Lakin II),
that interest should accrue from the date of the trial court's original judgment.
The trial court denied plaintiffs'
request for post-judgment interest.   Plaintiffs appealed and, as noted, the
Court of Appeals, in Young IV, affirmed that denial. Relying on Newport
Church of the Nazarene v. Hensley, 335 Or 1, 56 P3d 386 (2002) (Newport
Church), the court held that the state was immune from paying any interest,
including post-judgment interest, unless the state's obligation was "expressly
authorized by the legislature." Young IV, 221 Or App at 153.  Plaintiffs
petitioned for review.
This case presents two questions. 
First, is the state immune from the obligation to pay post-judgment interest? 
Second, if the state is not immune, did its obligation to pay post-judgment
interest accrue when the trial court entered the original judgment, or did it
accrue when the trial court entered the supplemental judgments?  
We begin our analysis of the first
question with Newport Church, 335 Or 1, the decision upon which the Court
of Appeals based its holding.  In that case, the respondent, a youth minister that
the petitioner had employed, filed a claim for unemployment benefits that was
allowed by the Employment Appeals Board of the Oregon Employment Department.  The
petitioner appealed that award, challenging its constitutionality.  The
respondent cross-appealed, challenging, among other things, the board's failure
to award him interest on "each installment of unemployment benefits" from
the date that each installment should have been paid until the date of the
trial court's judgment.  See Newport Church of the Nazarene v. Hensley,
161 Or App 12, 14, 29, 983 P2d 1072 (1999) (clarifying nature of relief
sought by respondent in the case).  Thus, the claim at issue in Newport
Church was a claim for prejudgment interest.  
In considering the state's argument
that it was immune from that claim, the court cited two cases in which the plaintiffs
had asserted claims for money damages against public bodies: Rapp v.
Multnomah County, 77 Or 607, 609-10, 152 P 243 (1915), and Hunter v.
City of Eugene, 309 Or 298, 303, 789 P2d 881 (1990).  The court then discussed
a case that specifically addressed the state's liability for prejudgment
interest, Seton v. Hoyt, 34 Or 266, 55 P 967, 969-71 (1899).  Newport
Church, 335 Or at 17-18.
In Seton,
a statute required that counties (state instrumentalities) pay prejudgment interest
on warrants that had been returned for nonpayment.  The question was not
whether the county in Seton was obligated to pay such interest; it
clearly was.  Instead, the question was whether the county was obligated to pay
the statutory rate of interest as of the date that the warrants were issued or
the lower rate of interest-- enacted by a subsequent statutory amendment-- as
of the date that the warrants were presented for payment.  In deciding that the
county was required to pay the higher rate of interest, the court explained
that those who had accepted the warrants were deemed to have agreed to await
payment until the county had accumulated the funds necessary to fulfill its
payment obligation.  That, in the court's view, gave rise to a corresponding
implied agreement by the county to pay interest during that interim period:  
"Now, if there is an implied agreement on the part of
the holder of the warrant to abide the accumulation of funds in the ordinary
course with which to meet the demand, the converse ought to be, and undoubtedly
is, true, that there is an implied, if not an express, agreement, engendered by
operation of law and the transaction of public business, which must be in
conformity with its requirements, that the county will pay the legal rate of
interest upon the indorsed county order.  So that here is, in effect, an
agreement or contract upon the part of the county to pay the legal rate of interest." 

Seton, 34 Or at
278.  The court concluded that the county's agreement precluded the state from
reducing the rate of interest that the county was obligated to pay: 
"In the present case the county has become obligated by
positive enactment to pay the legal rate.  Parties have dealt with it upon that
understanding, and when claims duly audited, which have accrued in course of
business transactions with the county, are presented, and indorsed, 'Not paid
for want of funds,' the law reads into the transaction a contract to pay
interest thenceforth upon the warrant, and the measure of recovery for delay
in payment is the then existing rate of interest until paid, and subsequent
legislation cannot affect or impair the obligation."
Id. at 281 (emphasis added).
After summarizing Seton, the
court in Newport Church then decided to treat the plaintiff's claim for prejudgment
interest on unemployment benefits as a claim equivalent to those that had been brought
by the plaintiffs in Rapp, Hunter, and Seton, and held
that, absent express legislative authorization, the state was immune from that
claim.  The court rejected the plaintiff's argument that ORS
82.010(1)(a), the statute that provides the rate of interest for "all
monies after they become due," provided such a legislative authorization
and, unable to identify any other source of authority, denied the plaintiff's claim. 
Newport Church, 335 Or at 17. 
Understanding the basis for the court's
decision in Newport Church, we now can frame the first question before
us with more particularity:  Are plaintiff's claims for post-judgment interest similar
to, or distinguishable from, the claims of the plaintiffs in Rapp, Hunter,
Seton, and Newport Church, and has the legislature
authorized those claims?  
Plaintiffs' answer is that post-judgment
interest is not akin to a claim for money damages or prejudgment interest.  Post-judgment
interest follows as a matter of law from entry of judgment.  By subjecting
itself to liability for underlying claims for damages, the state expressly or
by implication has consented to the consequences that flow from that liability
and that attend judgment against it.  Defendant responds that interest is all
of a kind and that the state has not waived expressly its immunity from claims
for interest of any sort.  Defendant adds that consent to suit does not
constitute consent to pay post-judgment interest.  
A case that informs our analysis is Griffin
v. Tri-Met, 318 Or 500, 507, 870 P2d 808 (1994).  There, the question was
whether attorney fees and costs awarded against a public body should be counted
toward the tort claim limit in ORS 30.270(1)(b) (1985), amended by Or
Laws 1987, ch 705, § 8; Or Laws 1987, ch 915, § 13.  In answering that question
in the affirmative, this court assumed that, because the public body had waived
its immunity from tort action, it also had waived its immunity from a consequential
award of attorney fees and costs.  The statute that granted the plaintiff a
right to attorney fees and costs, former ORS 659.121(2) (1993), repealed
by  Or Laws 2001, ch 621, § 9, did not apply expressly to the state or its
instrumentalities, and the court determined that the plaintiff's request for
attorney fees and costs was separate from the underlying tort.  Id. at
510-11.  The court nevertheless concluded that the plaintiff's request was a
permitted aspect of the plaintiffs' "tort claim" and therefore subject
to the statutory tort claim limit.  Id. at 507 n 6. 
That ruling is consistent with this
court's decision in Newport Church and the cases on which it relied.  Although
the court in those cases was loath to imply consent to suit for claims that the
state had not expressly recognized, those cases do not pose a barrier to a conclusion
that, when the state has submitted to liability for a claim, it is responsible
for attendant money awards.  Attorney fees and costs are not distinct claims
for damages; rather, they flow to a prevailing party as a result of judgment in
that party's favor.  ORCP 68.(3)
In that respect, we do not see a substantive
distinction between the state's liability for attorney fees and costs and the
state's liability for post-judgment interest.  Post-judgment interest also is
not a distinct claim for damages.  Although a plaintiff must plead a claim for prejudgment
interest, a plaintiff need not plead a claim for post-judgment interest.  Lithia
Lumber Co. v. Lamb, 250 Or 444, 447, 443 P2d 647 (1968).  Post-judgment
interest is imposed on all judgments by operation of law.  ORS 82.010(2)(a).(4) 
Although this court in Newport Church held that ORS 82.010(1), the statute
that sets out the statutory rate of prejudgment interest, does not establish
the state's consent to pay such interest, plaintiffs in this case do not rely
solely on ORS 82.010(2)(a) as authority for their claims for post-judgment
interest.  Instead, they stand on the state's separate agreement to be subject
to liability and to have judgment imposed for the underlying claim upon which
judgment was entered.  Just as the state submits to payment of statutorily
required attorney fees and costs when it submits to liability, it also submits
to payment of statutorily required post-judgment interest when it submits to
imposition of judgment.
When the legislature waived state
immunity for its torts and enacted the Oregon Tort Claims Act, it clearly
assumed that the state would be liable for interest that accrued on unpaid
judgments.  That legislation provided that, in the event that a public body with
authority to levy taxes lacks funds to pay an outstanding judgment, that body "shall
* * * levy a tax sufficient to pay the judgment or settlement and interest
accruing thereon to the expected time of payment * * *."  Or Laws
1967, ch 624, § 9 (emphasis added).  That provision since has been modified. 
ORS 30.295 now provides, in part:  
"(2)  If the public body is authorized to
levy taxes that could be used to satisfy a judgment or settlement within the
scope of [the OTCA] and it has, by resolution, declared that [certain]
conditions exist, interest shall accrue on the judgment or settlement,
but the same shall not be due and payable until after the canvass and
certification of an election upon a special tax levy for purposes of satisfying
the judgment * * *[.]
"* * * * *
"(7) * * * [If the judgment is to be paid
in installments,] [t]he order permitting installment payments shall provide
for annual interest at the judgment rate."
(Emphasis added.)  That statute clearly contemplates that
interest will accrue on unpaid judgments against the state.
In this case, the state submitted to legal
action for failure to pay overtime wages.  Plaintiffs brought their wage claims
under former ORS 279.340(1) and ORS 652.200 (1995).  The latter statute,
in subsection 2, provided that "the court shall, upon entering judgment
for the plaintiff, include in such judgment, in addition to the costs and
disbursements otherwise prescribed by statute, a reasonable sum for attorney fees
at trial and on appeal * * *."  That statute did not expressly apply to the
state, but judgment for attorney fees and costs was entered against the
state in this case.  And, indeed, when the Court of Appeals entered judgment
for costs on appeal, it also assessed post-judgment interest in accordance with
ORS 82.010(2)(a).  See Appellate Judgment of January 27, 2000 (awarding
costs of $437.10 and interest from date of appellate judgment).  The state did not
assert an immunity defense to entry of that judgment or the interest that obtained.
The state's accession to that award
of post-judgment interest accords with our earlier conclusion.  Having submitted
to plaintiffs' action for failure to pay overtime wages, the state also is
liable for interest on the judgment entered in that action. 
The second question to which we now
turn is the question of when that interest accrues.  Plaintiffs seek interest
on the supplemental judgments from the date of the original judgment.  They
argue that, because the supplemental judgments merely increased the damage
awards that the trial court had entered in its original judgment of January
2003, "subject only to the possibility of supplementing [that judgment] *
* * following resolution of the issues that are currently pending on appeal,"
interest on the "modified amount" must, under Lakin v. Senco
Products, Inc., 329 Or 369, 373, 987 P2d 476 (1999) (Lakin II),
"accrue from the date of the trial court's judgment."  
In the case that gave rise to Lakin
II, the trial court had reduced a jury's verdict to impose a statutory cap
on noneconomic damages.  This court held that cap unconstitutional and
reinstated the jury's full award.  Lakin v. Senco Products, Inc., 329 Or
62, 67, 987 P2d 463 (1999) (Lakin I).  In Lakin II, this court subsequently
concluded that the plaintiffs were entitled to interest on the increased
judgment from the date of the original judgment.  The court based its decision on
Pearson v. Schmitt, 260 Or 607, 609, 492 P2d 269 (1971), in which the
court stated:
"The view as now taken by a majority of states is that
where a money award has been modified on appeal and the only action necessary
in the trial court is compliance with the mandate of the appellate court, then
the interest on the award, as modified, should run from the date of the
original judgment * * *, as if no appeal had been taken.  The only exception to
this rule appears to be that if the action of the appellate court in reversing
the opinion of the lower court has the effect of wiping out the original
judgment, then interest should run only from the time when the amount of the
new award is fixed * * *."    
The state argues that this case falls
into the exception stated in Pearson, viz., that this court's
modification of the method of calculation of the overtime awards in Young
III had the effect of "wiping out" the original judgment of the
trial court.  The state points out that, in Pearson and Lakin II,
this court modified the trial court judgments only by replacing the amounts of
the original judgments with other already ascertained amounts.  In this case, by
contrast, Young III did not require the trial court to substitute
previously ascertained sums; instead, it required the trial court to
recalculate the awards entirely by using a different method of computation.  Thus,
argues the state, it cannot be said that "the only action necessary in the
trial court [was] compliance with the mandate of the appellate court."  Pearson,
260 Or at 609.  
In crafting the exception at issue,
this court in Pearson relied on 4 ALR3d 1221, which described the
prevailing rule: 
"Where the action of the appellate court ultimately
effecting a reduction of the amount awarded has been regarded as a full
reversal, wiping out the original judgment or decree, the view has
been taken that interest should be computed only from the entry of the new
judgment in the trial court on remand."
(Emphasis added.)  In that passage, the phrase "wiping
out" describes the effect of a "full reversal" of the trial
court's judgment.  In this case, the trial court recognized in its original judgment
that plaintiffs' successful appeal of the limited judgments could require a
different method of calculating plaintiffs' damages that would result in an
increase in their judgments and stated that it was entering the original judgment
"subject to" such supplementation.  We conclude that the supplemental
judgments that the trial court eventually entered in accordance with the
dictates of Young III effected that anticipated modification of the
original judgment and did not constitute a "full reversal," "wiping
out" that judgment.(5) 
Consequently, the post-judgment interest that plaintiffs seek must, under Lakin
II, accrue from the date of the original judgment.
In sum, we conclude that, in this
case, the state is not immune from the payment of post-judgment interest and that
post-judgment interest accrues from the date of the original judgment.  
The decision of the Court of Appeals is
reversed.  The judgment of the circuit court is reversed and the case is
remanded to the circuit court for further proceedings.
1. Former
ORS 279.340(1) (1995) provided:
"Labor directly employed by any public
employer as defined in ORS 243.650 shall be compensated, if budgeted funds for
such purpose are available, for overtime worked in excess of 40 hours in any
one week, at not less than one and one-half times the regular rate of such
employment. If budgeted funds are not available for the payment of overtime,
such overtime shall be allowed in compensatory time off at not less than time
and a half for employment in excess of 40 hours in any one week."
Unless otherwise noted, we refer to the 1995 version of the
statute throughout this opinion.
2. ORS
652.200(1995), amended by Or Laws 2001, ch 279, § 1; Or Laws 2007 ch 546,
§ 2, provided, in part:
"(1)  In any action for the collection of any * * *
acknowledgment of [employer] indebtedness * * * the court shall, upon entering
judgment for the plaintiff, include in such judgment, in addition to the costs
and disbursements otherwise prescribed by statute, a reasonable sum for
attorney fees at trial and on appeal for prosecuting said action * * *."
3. Attorney
fees and costs may be included in a general judgment or assessed in a separate
supplemental judgment.  ORCP 68 C(5).  The judgment document must clearly set
out in a separate section the amount of the attorney fees and costs awarded. 
ORS 18.042(2)(h).
4. ORS
82.010(2)(a) provides:
"Except as provided in this subsection, the
rate of interest on judgments for the payment of money is nine percent per
annum. The following apply as described:
"(a) Interest on a judgment under this
subsection accrues from the date of the entry of the judgment unless the
judgment specifies another date."
5. Although
Oregon courts have not addressed the issue directly, we note that other
jurisdictions have reached the same conclusion regarding appellate judgments
that modify the trial court's method of calculating the damages rather than
merely modify the amount of the trial court judgment.  See, e.g., Lippert
v. Angle, 215 Kan 626, 628, 527 P2d 1016, 1018 (1974) (order requiring
trial court to recalculate judgment based on different market value for gas
royalties modified, rather than wiped out, trial court judgment); Sintra,
Inc. v. City of Seattle, 96 Wash App 757, 763, 980 P2d 796, 800 (1999)
("Where an appellate court leaves the trial court on remand with a mere
mathematical problem mandated by the appellate court, interest runs from the
date of the original judgment.").  In that case, the defendants had been
awarded interest by the trial court on a counterclaim.  On review, the
appellate court noted that the defendants had failed to plead any claim of
interest.  Consequently, that award was "modified to strike out interest
accruing prior to * * * the date the judgment was entered.  Interest after
[judgment was to be] computed upon the judgment rather than upon the
accounts."  Id.