Case Title: City of Eugene v. PERB

Citation: 

Docket Number: 

State: oregon

Court: Oregon Supreme Court

Date: 2005-08-11T00:00:00Z

Document:
FILED:  August 11, 2005
IN THE SUPREME COURT OF THE STATE OF OREGON
CITY OF EUGENE,
a municipal corporation,
Petitioner-Respondent,
v.
STATE OF OREGON,
PUBLIC EMPLOYEES RETIREMENT BOARD,
Respondent-Respondent,
and
KAREN JENKINS,
DIANE DAVIDSON, ARLYN STEPPER,
GARY GILLESPIE, ANN MONTAGUE,
JUDITH ANN SUGNET, GARY NAUTA,
and ROGER GARVER,
Intervenors-Appellants.
(CC 99C-12794)
LANE COUNTY,
CITY OF EUGENE, MULTNOMAH COUNTY,
CITY OF PORTLAND, CITY OF ROSEBURG,
CITY OF HUNTINGTON, and CANBY UTILITY BOARD,
municipal corporations,
Petitioners-Respondents,
v.
STATE OF OREGON,
Respondent-Respondent,
and
STATE OF OREGON,
by and through Public Employees Retirement Board,
Respondent-Respondent,
and
KAREN JENKINS,
DIANE DAVIDSON, ARLYN STEPPER,
GARY GILLESPIE, ANN MONTAGUE,
JUDITH ANN SUGNET, GARY NAUTA,
and ROGER GARVER,
Intervenors-Appellants,
(CC 99C-12838)
CITY OF EUGENE,
a municipal corporation,
by and through Eugene Water & Electric Board,
Petitioner-Respondent,
v.
STATE OF OREGON,
PUBLIC EMPLOYEES RETIREMENT BOARD,
Respondent-Respondent,
and
KAREN JENKINS,
DIANE DAVIDSON, ARLYN STEPPER,
GARY GILLESPIE, ANN MONTAGUE,
JUDITH ANN SUGNET, GARY NAUTA,
and ROGER GARVER,
Intervenors-Appellants,
(CC 99C-20235)
ROGUE RIVER VALLEY IRRIGATION DISTRICT,
a municipal corporation,
Petitioner-Respondent,
v.
STATE OF OREGON,
PUBLIC EMPLOYEES RETIREMENT BOARD,
Respondent-Respondent,
(CC 00C-16173)
(CA A121400; SC S50617)
En Banc
On transfer from the Court of Appeals pursuant to Oregon
Laws 2003, chapter 537, section 1.
Argued and submitted November 3, 2004.
Gregory A. Hartman, of Bennett, Hartman, Morris & Kaplan,
LLP, Portland, argued the cause for intervenors-appellants Karen
Jenkins, Diane Davidson, Arlyn Stepper, Gary Gillespie, Ann
Montague, Judith Ann Sugnet, Gary Nauta, and Roger Garver.  With
him on the briefs was Michael J. Morris.
William F. Gary, of Harrang Long Gary Rudnick P.C., Eugene,
argued the cause for petitioners-respondents Lane County, City of
Eugene, Multnomah County, City of Portland, City of Roseburg,
City of Hunnington, Canby Utility Board, and Rogue River Valley
Irrigation District.  With him on the brief were Sharon A.
Rudnick, Jerome Lidz, and Karla Alderman.
Eric S. DeFreest, of Calkins & Calkins, Eugene, filed the
brief for petitioner-respondent Eugene Water & Electric Board.
Jeffrey M. Batchelor, of Markowitz, Herbold, Glade &
Mehlhaf, P.C., Portland, filed the brief for respondent-respondent State of Oregon.  With him on the brief was Jennifer
H. Holcomb.
James P. Baker, pro hac vice, of Orrick, Herrington &
Sutcliffe LLP, San Francisco, argued the cause and filed the
brief for respondent-respondent State of Oregon, Public Employees
Retirement Board.  With him on the brief was Townsend Hyatt,
Portland.
Daryl S. Garrettson, of Garrettson, Goldberg, Fenrich and
Makler, McMinnville, filed a brief on behalf of amici curiae
Oregon Council of Police Associations and Oregon State Police
Officers' Association.  With him on the brief was John Hoag,
Eugene.
Scott A. Jonsson, Brian R. Talcott, and James A. Hillas of
Dunn Carney Allen Higgins & Tongue LLP, Portland, filed a brief
on behalf of amici curiae Sartain Strunk et al, Evans, et al, and
Burt et al.
DE MUNIZ, J.
The appeals are dismissed as moot.
Durham, J., dissented and filed an opinion in which Riggs,
J., joined.
DE MUNIZ, J.
These consolidated appeals, over which we have
exclusive jurisdiction, (1) require us to determine whether a
circuit court properly vacated and remanded certain orders that
the Public Employees Retirement Board (PERB) issued in 1998 and
2000. (2)  PERB issued two orders establishing, for the years
1998 and 2000, the amounts that public employers were required to
contribute into the Public Employees Retirement Fund (the fund),
and one order allocating the fund's 1999 earnings among various
accounts within the fund.  The parties present several arguments
pertaining to the trial court's judgment vacating and remanding
the orders.  For the reasons that follow, however, we conclude
that these appeals are moot, and we therefore dismiss them.
Because this case involves PERB's administration of the
Public Employees Retirement System (PERS), we explain briefly how
PERS has operated and the events leading up to this litigation.  
Oregon has provided its public employees with a
retirement plan since 1945.  Funding for the plan comes from
three sources:  employee (member) contributions, employer
contributions, and investment earnings on those contributions. 
PERB administers PERS and acts as trustee for the fund.  Among
other things, PERB sets employer contribution rates and allocates
annual earnings to employer and member accounts and to reserves.  
Several employers, including the City of Eugene, timely
challenged PERB orders issued in 1998 and 2000 that increased
employer contribution rates, and a PERB order issued in March
2000 that credited 1999 earnings to certain member accounts.  The
trial court consolidated the various challenges.  The City of
Eugene Water and Electric Board (EWEB) nonetheless sought
independently to raise its own legal challenges to the orders. 
PERB moved, inter alia, for the trial court to dismiss EWEB's
petition for judicial review pursuant to ORCP 21 A(3). (3)  The
trial court granted that motion.  Several PERS members also
intervened in the litigation both to raise their own challenge to
the PERB order issued in March 2000 that credited 1999 earnings
and to defend PERB's 1998 and 2000 employer contribution rate
orders.
As relevant here, employers argued that PERB (1)
unlawfully had failed to fund a contingency reserve account,
which caused employer contribution rates to increase; (2)
unlawfully had required employers to match the earnings in
members' variable annuity accounts; (3) unlawfully had failed to
adopt and implement updated actuarial factors when calculating
member retirement benefits; and (4) had abused its discretion by
crediting Tier One members' (4) regular accounts in excess of
the assumed earnings rate while failing to fund adequately the
contingency reserve account, the Benefits-in-Force reserve
account, and the gain-loss reserve account. 
With respect to those claims, the trial court concluded
that (1) PERB unlawfully had failed to maintain a contingency
reserve account; (2) PERB unlawfully had required employers to
match the earnings in members' variable annuity accounts; (5)
(3) PERB unlawfully had failed to adopt and implement updated
actuarial factors when calculating member retirement benefits;
and (4) PERB had abused its discretion by crediting Tier One
members' regular accounts with 20 percent earnings for 1999. 
Intervenors' only challenge respecting the PERB orders
at issue was to PERB's March 2000 order crediting 1999 earnings. 
However, their answer to employers' complaint set out a series of
affirmative defenses in support of PERB's 1998 and 2000 employer
contribution rate orders.  With respect to intervenors' challenge
to the 2000 earnings allocation order, intervenors argued that
PERB had credited to employer accounts some of the earnings
generated by members' variable accounts in violation of PERB's
fiduciary duties to members. (6)  The trial court agreed.  In
its ORCP 67 B judgment, the trial court concluded that, because
ORS 238.250 (1999) (7) required all earnings, not otherwise
statutorily required to be allocated for a specific purpose, to
be credited to member accounts, PERB had breached the statutory
contract, and thus its fiduciary duty, when it allocated earnings
on members' variable accounts to employer accounts. 
The trial court therefore vacated each of the
challenged orders and remanded them to PERB with instructions
that PERB issue new orders consistently with the court's
judgment.  PERB, intervenors, and EWEB appealed.  Additionally,
PERB sought from both the trial court and, later, the Court of
Appeals, a stay of the trial court's judgment.  Both courts
denied that request.  
After the trial court entered its judgment and the
parties had taken their appeals, the legislature passed several
amendments to the statutes governing PERS that altered
significantly the structure of PERS and the manner in which PERB
would administer the fund in the future.  As noted, the
legislation provided, in part, that this court would have
exclusive jurisdiction to decide these cases, and it directed the
Court of Appeals to transfer them to this court.  
After the Court of Appeals transferred the cases to
this court, and while the cases still were pending before this
court, PERB and the various employers entered into a settlement
agreement in which PERB agreed to issue, by July 1, 2004, new
orders that would comply with both the trial court's judgment and
the terms of the legislative amendments.  More specifically, the
agreement provided, in part:
"1.PERB will implement the judgment entered in City
of Eugene v. State of Oregon, Public Employees
Retirement Board ('the judgment') as follows,
except in the event of a supervening change in law
(such as by a legislative enactment or further
court order):
"1.1. No later than July 1, 2004, PERB will
adopt a rule governing the calculation of
money match benefits for members
participating in the variable account
program that conforms to [the] July 2001
Court order in the City of Eugene.  * * * 
PERB will apply its money match
calculation rule to retirements occurring
on or after the earlier of the date that
the rule is adopted or July 1, 2004.
"1.2 PERB will implement the judgment upholding
Intervenors' challenge to the 'employer-in-variable' rule by transferring from
employer accounts to the contingency
reserve established by ORS 238.670(1) the
amount determined by the PERS actuary to
have been improperly credited to employer
accounts according to the judgment.  * * * 
"1.3 The new 1999 earnings allocation order
described in paragraph 1.2 above will
provide that the appropriate earnings
allocation to Tier [One] regular member
accounts is 11.33 [percent], that [seven
and one half percent] of the 1999 earnings
should have been allocated to the
contingency reserve established by ORS
238.670(1), and that the gain-loss reserve
created by ORS 238.670(3) should have been
funded to the full extent of the former
PERB's policy to maintain a gain-loss
reserve sufficient to credit the assumed
interest rate to Tier [One] regular member
accounts during a period of 30 months of
[zero percent] earnings.
"1.4 PERB will henceforth comply with existing
statutory directives concerning reserving
practices and mortality tables as
interpreted in the City of Eugene judgment
and as amended by the reform legislation,
except to the extent that such legislation
is subsequently modified or repealed, or
except to the extent that PERB is ordered
to do otherwise by a court of competent
jurisdiction.
"1.5 PERB will direct its actuary to
recalculate employer contribution rates
for Petitioners * * *.  The actuary will
be directed to calculate those
contribution rates as if PERB's practices
and actuarial assumptions with respect to
employer match of variable accounts,
actuarial equivalency factors, reserving
practices and the 'employer-in-variable'
rule had been consistent with the law as
interpreted in the judgment and as if PERB
had, for 1999, originally allocated
earnings of 11.33 [percent] to Tier [One]
regular member accounts, allocated [seven
and one half percent] of earnings to the
contingency reserve and had fully funded
the gain-loss reserve pursuant to its
policy described above in paragraph 1.3 
PERB will issue new contribution rate
orders for the City of Eugene (including
EWEB) and Lane County for 1998, 2000, and
2003, and for all other Petitioners for
2000 and 2003, consistent with the
actuary's recalculations.  * * * 
"1.6 PERB will issue new employer contribution
rate orders for all participating
employers for 2003, no later than July 1,
2004, calculated to implement paragraphs
1.1, 1.2, 1.3 and 1.4 above." 
That agreement reflects PERB's implementation of the trial
court's judgment, which was final until an appellate judgment
issued. (8)  Pursuant to that agreement, PERB has issued new
employer contribution rate orders for 1998 and 2000, and a new
order crediting 1999 earnings. (9)  PERB's actions in entering
the new orders are now the subject of other litigation that is
not before this court.  
After entering into that agreement, employers moved to
dismiss the appeals, arguing that the settlement agreement had
rendered the underlying controversy moot.  PERB later joined that
motion. 
Intervenors and EWEB raise various challenges to the
manner in which the trial court resolved several issues. 
Intervenors raise 11 assignments of error, all of which relate to
their defense of PERB's 1998 and 2000 employer contribution rate
orders:
(1) "The trial court erred in granting petitioners'
motion for summary judgment on Count Two of the First
Claim for Relief and in ruling that PERB violated ORS
238.260(12) (10) and ORS 238.300(2)(a) by requiring
employers to match all earnings allocated to members'
variable annuity accounts."
(2) "The trial court exceeded its limited jurisdiction
under the Administrative Procedures Act when it
declared invalid OAR 459-005-0055."
(3) "The trial court erred in ruling that PERB applied
an invalid administrative rule when it failed to update
mortality tables to maintain 'actuarial equivalency.'"
(4) "The trial court erred in denying intervenors'
motion to compel production of legal opinions advising
PERB on PERS administration relating to actuarial
factors."
(5) "The trial court erred in granting summary judgment
on the fourth claim for relief, ordering PERB to fund a
contingency reserve."
(6) "The trial court erred when it ruled that PERB
abused its discretion in failing to allocate out of the
1999 earnings an amount sufficient to meet a 30-month
funding goal for the gain/loss reserve account."
(7) "The trial court erred in ruling that PERB abused
its discretion by its allocation of 1999 earnings to
employee accounts."
(8) "The trial court erred in admitting evidence of
conditions which occurred after the 1998 and 2000 rate
orders."
(9) "The trial court erred in granting petitioners
leave to file a third amended petition."
(10) "The trial court erred in refusing to allow
additional evidence in response to the third amended
petition."
(11) "The trial court erred in denying intervenors'
motion for new trial."
In addition, EWEB raises the following three assignments of
error, all of which are premised on whether EWEB may proceed in
this litigation separately from the other employers:
(1) "The trial court erred in allowing the PERB motion
to dismiss EWEB as a party pursuant to ORCP 21 A(3)."
(2) "The trial court erred in denying EWEB's motion for
partial summary judgment that the PERB had violated ORS
238.300(2)(b)(A) by distributing money match pensions
to members not entitled to a pension under the original
Retirement Act before its revision in 1967 and in
concluding the PERB did not misinterpret the
requirements of ORS 238.300(2)(b)(A) when PERB required
Petitioners to match earnings on members' regular
accounts."  
(3) "The trial court erred in denying EWEB's motion for
partial summary judgment that PERB’s distribution of
income in excess of the assumed interest rate violated
the statutory mandates of ORS 238.670(2) and by
interpreting ORS 238.670(2) to allow the PERB to
exercise discretion in the distribution of earnings."
Employers and PERB maintain their argument that,
because PERB has issued new orders pursuant to the settlement
agreement, and because those new orders replace the old, vacated
orders, the appeals are moot.  Intervenors respond that the
appeals are not moot because this court could conclude that the
trial court did not correctly interpret the relevant statutes,
reverse the trial court's judgment, and "revive" the 1998 and
2000 employer contribution rate orders.  We initially denied
employers' and PERB's motions to dismiss without prejudice. 
After further consideration, and based on intervening events and
proceedings, we agree with employers and PERB. (11)
We begin by noting the procedural posture of this case. 
The following events have occurred since the actions were filed: 
(1) the trial court vacated and remanded to PERB all the
challenged orders, with intervenors prevailing in their challenge
to the 2000 earnings allocation order; (2) PERB, intervenors, and
EWEB filed appeals of the trial court's judgment in the Court of
Appeals; (3) the legislature amended, significantly, the statutes
governing PERS; and (4) while the appeals were pending in this
court, PERB and employers settled, agreeing to comply with the
trial court's judgment and the legislative amendments.  The only
"controversy" that remains, therefore, is intervenors' continued
defense of the vacated, and replaced, 1998 and 2000 employer
contribution rate orders. 
The end result that intervenors seek is a return to the
status quo ante, with this court reversing the trial court's
judgment and, effectively, reviving the 1998 and 2000 employer
contribution rate orders.  However, as discussed earlier, PERB
and employers' decision to follow the terms of the settlement
agreement has resulted in PERB's issuance of new orders that have
superseded the orders at issue in these appeals.  Thus, even if
this court concluded that the trial court erred and issued a
judgment granting intervenors the relief that they seek, that
judgment would not affect the new orders that PERB has issued
pursuant to the settlement agreement. 
Further, the 2003 legislative amendments combined with 
this court's decision in Strunk v. PERB, 338 Or 145, 108 P3d 1058
(2005), resolved all but one of the substantive issues in these
appeals.  In Strunk, this court concluded that PERB exceeded its
statutory authority when it adopted an administrative rule
providing that, with respect to certain members, it would not
implement updated actuarial factors.  338 Or 235-36.  That
conclusion disposes of intervenors' challenges to the trial
court's conclusions respecting that rule.  The court also
concluded that certain petitioners in Strunk were not entitled to
the production of documents containing legal advice that the
Attorney General had given to PERB concerning actuarial factors. 
Id. at 156.  In this court's view, those documents were not
"relevant to any claim at issue[.]"  Id.  The court's disposition
of that issue in Strunk applies here, and the trial court
correctly denied intervenors' motion to compel production of
those documents.    
In addition, in Strunk, this court observed that ORS
238.670(1) requires PERB to fund a contingency reserve:
"In years in which the earnings on the fund equal or
exceed the guaranteed earnings rate, PERB statutorily
is required to 'set aside * * * such part of the income
as [PERB] may deem advisable, not exceeding seven and
one-half percent of the combined total of such income,
which moneys so segregated shall remain in the fund and
constitute therein a reserve account.'"  
Id. at 159 n 16.  Based on that observation, we conclude that
intervenors' challenge to that aspect of the trial court's
judgment effectively was resolved in Strunk.
Finally, with respect to the gain-loss reserve account,
the trial court concluded specifically that "PERB abused its
discretion in allocating 1999 earnings of 20 [percent] to Tier
One regular employee accounts."  The court directed that, on
remand, PERB was to recalculate its crediting decision to reflect
an amount consistent with its 30-month funding goal (12) for
the gain-loss reserve account.  As this court observed in Strunk
regarding that judgment:
"Pursuant to the trial court's judgment, the
Fiscal Services Division (FSD) of PERS recalculated the
credits to Tier One members' regular accounts for 1999
and concluded that, if PERB properly had funded the
contingency and gain-loss reserves in 1999, the
appropriate credit to members' regular accounts for
that year would have been 11.33 percent. Before FSD
presented that figure to PERB for final approval,
however, the legislature requested that information
directly from FSD. The legislature subsequently enacted
the 2003 PERS legislation. Oregon Laws 2003, chapter
67, sections 9 and 10, as amended by Oregon Laws 2003,
chapter 625, section 13, effectively codifying the
11.33 percent figure as the correct 1999 crediting
decision."
338 Or at 216.  The legislature also enacted Oregon Laws 2003,
chapter 3, section 1, as amended by Oregon Laws 2003, chapter 67,
section 5, which requires the gain-loss reserve account "to be
fully funded with amounts determined by the board, after
consultation with the actuary employed by the board, to be
necessary to ensure a zero balance in the account when all [Tier
One members] have retired[.]"  That provision reflects a
codification of PERB's 30-month funding goal for the gain-loss
reserve account. 
It follows that the only substantive issue presented in
these appeals that has not been resolved by the intervening
legislative amendments to PERS or by this court's decision in
Strunk is whether the trial court erred when it agreed with
employers that PERB unlawfully had required employers to match
the earnings on members' variable accounts. (13)  However, PERB
and employers resolved that issue in the settlement agreement
discussed earlier.  Specifically, they agreed that PERB would
make statutorily required adjustments to all service retirement
allowances that would not cause employers to match earnings on
variable accounts.  As noted, PERB also has issued new employer
contribution rate orders pursuant to that agreement.  Because
PERB and employers have resolved the issue and PERB has issued
new orders, we no longer are required to resolve that issue in
these appeals.
Based on the foregoing, we conclude that these appeals
are moot.  The settlement agreement and the new orders that PERB
has issued have removed any practical effect that a decision on
the merits from this court could have on the rights of the
parties.  See, e.g., Edmunson v. Dept. of Ins. and Finance, 314
Or 291, 838 P2d 589 (1992) (concluding that challenge to
superseded rules was moot, because new rule reflected present
law).  It follows that the case should be dismissed.  See Yancy
v. Shatzer, 337 Or 345, 97 P3d 1161 (2004) (moot case not
justiciable); Hamel v. Johnson, 330 Or 180, 184, 998 P2d 661
(2000) (case is moot and must be dismissed if impossible for
court to grant "effectual relief"); Brumnett v. Psychiatric Sec.
Review Bd., 315 Or 402, 405, 848 P2d 1194 (1993) (cases in which
court's decision no longer will have practical effect on rights
of parties will be dismissed as moot). 
The appeals are dismissed as moot. 
DURHAM, J., dissenting.
The law of Oregon regarding mootness that the majority
cites is settled and not in dispute.  This court will dismiss
pending litigation as moot if a decision by the court "no longer
will have a practical effect on or concerning the rights of the
parties * * *."  Brumnett v. PSRB, 315 Or 402, 406, 848 P2d 1194
(1993).  The party that seeks dismissal -- here, the State of
Oregon and several local government entities (public employers)
-- must carry the burden to establish that the case is moot.  Id.
at 407. (14)  Because, in my view, the record in this case does
not establish that a decision by this court on intervenors'
petition for judicial review would have no practical effect on
the parties, this dispute is not moot.  I respectfully dissent
from the majority's contrary conclusion.
As the majority correctly reports, two sets of
administrative orders issued by the Public Employee Retirement
Board (PERB) lie at the heart of this case.  The first set
consists of PERB orders, issued in 1998 and 2000, that
established the rates of contribution that PERB required public
employers to pay into the Public Employee Retirement System
(PERS) for specified periods of time.  The second was a single
order that PERB issued in March 2000 that credited the system's
1999 earnings to member accounts.  All the orders at issue are
orders in other than a contested case that are subject to
judicial review under ORS 183.484.  Each order is a final order,
within the meaning of ORS 183.310, which provides, in part:
"As used in this chapter:
"* * * * *
"(6)(a) 'Order' means any agency action expressed
orally or in writing directed to a named person or
named persons, other than employees, officers or
members of an agency.  'Order' includes any agency
determination or decision issued in connection with a
contested case proceeding.  'Order' includes:
"* * * * *
"(b) 'Final order' means final agency action
expressed in writing.  'Final order' does not include
any tentative or preliminary agency declaration or
statement that:
"(A) Precedes final agency action; or
"(B) Does not preclude further agency
consideration of the subject matter of the statement or
declaration."
Public employers petitioned for judicial review of the
orders, arguing that PERB had misconstrued a number of statutes
in issuing them.  PERB disagreed and defended its orders.  A
number of public employees intervened and argued that public
employers' assertions about PERB's construction of the pertinent
statutes were erroneous. (15) 
The trial court determined that each of the challenged
orders was erroneous in that they reflected a misinterpretation
of law or an abuse of discretion by PERB. (16)  Accordingly,
the trial court vacated each order and remanded them to PERB with
instructions to issue new orders "consistent with this judgment."
PERB and intervenors appealed the trial court judgment
to the Court of Appeals. (17)  While the appeals were pending,
the legislature in 2003 revised several of the statutes that
regulated PERS.  This court's opinion in Strunk v. PERB, 338 Or
145, 108 P3d 1058 (2005), summarizes the operation of PERS both
before and after those statutory amendments.  The new legislation
also transferred to this court jurisdiction over the appeal of
the judgment in this case.
In February 2004, public employers (except EWEB) and
PERS entered into an agreement that purported to settle the
obligations of PERB under the terms of the trial court's
judgment.  (I use the term "purported" advisedly because, as I
discuss below, intervenors challenge the authority of PERB to
withdraw its final orders pursuant to the settlement agreement.) 
For example, the agreement required PERS to "implement the
judgment" in this case by adopting new administrative rules and
directives governing the calculation of member benefits, the
allocation of earnings, and the calculation of employer
contribution rates, all in accordance with the judgment of the
trial court.  The agreement also required PERB to issue new
orders that allocated earnings to member accounts and established
employer contribution rates for the pertinent public employers
for the years 1998, 2000, and 2003, again in accordance with the
trial court's judgment.
Intervenors are not a party to the settlement
agreement.  They assert that the trial court erroneously
construed a number of statutes in the course of requiring PERB to
vacate its orders.  Intervenors also assert that PERB lacks
authority to vacate its final orders pursuant to the settlement
agreement described above.
Public employers advance several arguments to establish
that this dispute is now moot.  First, they contend that
intervenors do not expressly request the reinstatement of the
1998 and 2000 orders.  On the contrary, intervenors assert that
the trial court erred in determining that PERB had violated
Oregon law and had abused its discretion in issuing the
challenged orders.  The logical consequence of those arguments,
if accepted, is a rejection of the public employers' challenges
to the orders and a reversal of the trial court's judgment that
required PERB to vacate the orders in response to those
challenges.
Public employers also contend that intervenors have no
interest in the challenged orders because they are not parties to
those orders and because the trial court's judgment did not
require PERB to reduce or affect PERS member benefits.  It is
true that intervenors were not parties to the orders.  However,
intervenors contend that they are affected by the trial court's
decision remanding the orders to PERB.  I agree.  The trial
court's judgment requires PERB on remand to reallocate
significant retirement fund earnings, for example, to fund
contingency and gain-loss reserve accounts.  But for that
reallocation, the earnings that PERB's order addressed would be
claimed by PERS members as part of the earnings on their
contributions.  Because intervenors have a legally cognizable
stake in the consequences of the trial court's judgment, they
have a cognizable claim that the trial court erred in reversing
and remanding PERB's orders.
Public employers further argue that
"the challenged orders never became final orders. 
Instead, they were timely challenged under ORS 183.484,
and ultimately vacated by the circuit court before ever
taking effect."
That contention reflects a misunderstanding of the concepts of
administrative finality, judicial review, and appellate review.
Without question, PERB's first orders were final
orders.  They constituted final agency action expressed in
writing.  Indeed, only a final order is subject to judicial
review under ORS 183.484.  The fact that a party petitions the
court for judicial review of an agency's final order under ORS
183.484 does not deprive the order of finality in any sense. 
Instead, the Administrative Procedures Act, ORS 183.310 to
183.750, states the procedures and standards that determine
whether, on judicial review, the agency or the court has
authority to take some action with respect to a final order.
Three of those statutes are pertinent to this
discussion.  First, ORS 183.484(4) provides, in part:
"At any time subsequent to the filing of the
petition for review and prior to the date set for
hearing, the agency may withdraw its order for purposes
of reconsideration.  If an agency withdraws an order
for purposes of reconsideration, it shall, within such
time as the court may allow, affirm, modify or reverse
its order."
That statute authorizes an agency to withdraw its final order for
purposes of reconsideration, but only if it does so prior to the
date set for hearing by the circuit court.  Second, ORS
183.484(5) (18) sets out the standards for judicial review of a
final order and authorizes or requires specific forms of relief
to remedy specific types of errors identified in a final order. 
Third, ORS 183.500 provides:
"Any party to the proceedings before the circuit
court may appeal from the judgment of that court to the
Court of Appeals.  Such appeal shall be taken in the
manner provided by law for appeals from the circuit
court in suits in equity."
In contending that the challenged orders never became
final, public employers attempt to establish PERB's authority to
withdraw and nullify its final orders under its settlement
agreement with the public employers.  But PERB had no authority
under ORS 183.484(4) to withdraw its final orders after the
circuit court hearing.  Moreover, the circuit court's judgment
that vacated PERB's orders was subject to intervenors' right to
appellate review of the circuit court judgment.  ORS 183.500. 
Public employers have identified no source of authority that
would permit PERB to vacate its final orders, either by its
agreement with certain parties to do so or pursuant to the
appealed judgment of the circuit court.  The findings,
conclusions, and remedies ordered by the circuit court in its
judgment were subject to the appellate review that intervenors
timely initiated.  Thus, PERB and public employers were not
entitled to treat the judgment as if it were legally operative.
The majority addresses intervenors' lack-of-authority
claim only in a one-sentence footnote, which states:
"By virtue of that settlement, intervenors'
quarrel with the trial court's ruling has become
abstract -- no opinion by an appellate court respecting
that topic could affect the viability of PERB's new
orders."
City of Eugene, ___ Or at ___ n 9 (slip op at 9 n 9).  That
statement evades rather than answers intervenors' argument.
Intervenors' challenge to the trial court's decision
here concerns the orders that PERB issued in 1998 and 2000.  As
noted, the record establishes that those orders are final and
that intervenors have timely pursued their statutory right to
seek appellate review of the trial court's judgment regarding
those orders.  The mootness controversy presented here turns
solely on the viability of those orders and whether PERB has
legal authority to nullify them, not whether the appellate court
ruling could address "the viability of PERB's new order[,]" as
the majority's footnote asserts.  (Slip op at 9 n 9;
emphasis added.)  The majority's approach conveniently airbrushes
away intervenors' challenge to PERB's authority to cancel its
first orders without responding to that challenge on the merits. 
It is telling that the majority's one-sentence response cites no
statute or case from this or any other court to support its
refusal to decide whether PERB's post-settlement cancellation of
its final orders was unauthorized and, thus, without legal
effect.  If intervenors are correct in their assertion that PERB
lacked authority to vacate its final orders, then this dispute
clearly is not moot.
Finally, the majority posits that it is unnecessary to
resolve intervenors' claims on review because intervening
legislative amendments to PERS and this court's opinion in
Strunk, 338 Or 145, have resolved "all but one" of the issues
that intervenors raise.  City of Eugene, ___ Or at ___ (slip op
at 13).  It is true, as the majority acknowledges, that the 2003
PERS reform legislation and this court's decision in Strunk
address and resolve less than all the legal questions that
intervenors raise here.  Consistently with that view, the
settlement agreement that public employers and PERB entered into
recited that "[t]he reform legislation addresses some of the
issues addressed in the City of Eugene case."  (Emphasis added.)  
I assume arguendo that the majority is correct in
contending that the PERS reform legislation effectively has
resolved some of the claims that intervenors raise, including the
dispute over updated actuarial factors, the need for further
discovery of documents, and the gain-loss reserve account. (19) 
However, and even under the majority's theory, neither the 2003
PERS reform legislation nor Strunk resolve the dispute presented
here respecting the trial court's conclusion that PERB had erred
in requiring public employers to match the earnings allocated to
members' variable annuity accounts.  Intervenors continue to
assert that PERB correctly interpreted the pertinent statutes on
that subject and that the trial court's contrary interpretation
of those statutes was erroneous.
The majority regards that dispute as moot because PERB
and public employers incorporated into their settlement agreement
a different formula for matching earnings on variable accounts
and, after vacating the orders in dispute here, PERB issued new
contribution rate orders.  But that response on the majority's
part simply fails to answer intervenors' challenge to PERB's
authority to nullify the orders that are the basis for this
appeal.  If the final orders continue to have legal efficacy
because, as intervenors argue, PERB had no authority to vacate
them, then intervenors' challenge to the trial court's
interpretation of the requirements for matching earnings on
variable accounts presents a live controversy that this court
should resolve.  Consequently, I do not agree that this court
should dismiss this proceeding at this time.
For the foregoing reasons, I respectfully dissent.
Riggs, J., joins in this dissenting opinion. 
1. Pursuant to Oregon Laws 2003, chapter 537, section 1,
the Court of Appeals transferred these cases to this court.
2. The PERB orders at issue here are orders in other than
contested cases.  ORS 183.484 provides, in part:
"Jurisdiction for judicial review of orders
other than contested cases is conferred upon the
Circuit Court for Marion County and upon the circuit
court for the county in which the petitioner resides or
has a principal business office.  Proceedings for
review under this section shall be instituted by filing
a petition in the Circuit Court for Marion County or
the circuit court for the county in which the
petitioner resides or has a principal business office."
3. ORCP 21 A provides, in part:
"Every defense, in law or fact, to a claim
for relief in any pleading, whether a complaint,
counterclaim, cross-claim or third party claim, shall
be asserted in the responsive pleading thereto, except
that the following defenses may at the option of the
pleader be made by motion to dismiss:  * * * (3) that
there is another action pending between the same
parties for the same cause[.]" 
4. A Tier One member is a PERS member who joined
PERS before January 1, 1996.
5. The trial court's ORCP 67 B Judgment
explained:
"2.   ORS 238.260(12) and ORS 238.300(2)(a)
require that the PERB initially calculate the Variable
Annuity Account earnings on the same basis as the
regular annuity account earnings, and both the regular
account and Variable Account annuities must then be
compiled together to determine the regular service
retirement allowance under all retirement alternatives
before that retirement allowance is subjected to ORS
238.260(12)'s adjustment for participation in the
variable.  The PERB has misinterpreted and violated the
requirements of ORS 238.260(12) and ORS 238.300(2)(a)
by requiring Petitioners to match the amount of
earnings allocated to members' Variable Annuity
Accounts."
6. The trial court's Opinion and Order on Cross
Motions For Summary Judgment explains:
"In 1999 PERB began a rule making process to
respond to employer concerns that they did not have
access to participate in the Variable account, while
they had responsibility, under PERB's construction of
the applicable statutes, to match the employee's
Variable earnings.  At the Board meeting in November,
1999 PERB adopted the Employer-in-Variable rule with an
effective date of December 31, 2000 in order 'to allow
the Oregon Investment Council sufficient time to move
additional assets into the Oregon Equity Fund in
anticipation of greater earnings distribution from that
fund due to the employer match, to provide additional
earnings sufficient to avoid a reduction in earnings
distribution to members.'"  
7. ORS 238.250 (1999) provided:
"The board shall provide for an individual
account for each active and inactive member of the
system.  The account shall show the amount of the
member's contributions to the fund and the interest
which they have earned.  The board shall furnish a
written statement thereof upon request by any member or
beneficiary of the system."
8. ORS 18.082 provides:
"(1) Upon entry of a judgment,
the judgment:
"(a) Becomes the exclusive
statement of the court's decision
in the case and governs the rights
and obligations of the parties that
are subject to the judgment;
"(b) May be enforced in the
manner provided by law;
"(c) May be appealed in the
manner provided by law;
"(d) Acts as official notice
of the court's decision; and
"(e) May be set aside or
modified only by the court
rendering the judgment or by
another court of tribunal with the
same or greater authority than the
court rendering the judgment."
(Emphasis added.)  Although ORS 19.270 confers
jurisdiction over "the cause" to the appellate courts
once a notice of appeal is filed, that statute explains
that the trial court "retains jurisdiction in the
matter" for purposes of "[e]nforcing the judgment,
subject to any stay of the judgment[,]" ORS
19.270(1)(b).  More importantly, ORS 19.330 provides:
"The filing of a notice of
appeal does not automatically stay
the judgment that is the subject of
the appeal.  A party may seek to
stay a judgment in the manner
provided by [law]."
In this case, PERB sought a stay of the trial court's
judgment from both the trial court and the Court of
Appeals.  Both courts denied that motion.
It is at least arguable that, in the absence
of a statute like ORS 19.270(1), on judicial review of
an agency order, the administrative agency retains
plenary authority to issue a new order affecting the
subject matter of the judicial review.  However, we
need not resolve that question for, as ORS
18.082(1)(b), ORS 19.330, and ORS 19.270(1)(b) make
clear, a circuit court having entered a judgment, in
the absence of a stay of that judgment, a party would
be entitled to invoke the circuit court's jurisdiction
to enforce the judgment.  The dissent does not explain
why, if a court of law could force the agency to comply
with the judgment during the pendency of an appeal, the
agency is powerless to do so voluntarily.
9. By virtue of that settlement, intervenors'
quarrel with the trial court's ruling has become
abstract -- no opinion by an appellate court respecting
that topic could affect the viability of PERB's new
orders. 
10. For purposes of this opinion, the statutory
provisions referred to in both intervenors' and EWEB's
assignments of error are not relevant, and we therefore
do not set them out in their entirety.
11. Here, all employers challenged the same
orders, and those challenges were based on the same
theory, viz., that PERB had administered the fund in a
manner contrary to its statutory authority.  EWEB's
challenge is not distinct from that of the other
employers and our conclusion that intervenors'
challenge to the employer contribution rate orders is
moot necessarily also disposes of EWEB's claims.
12. The significance of the 30-month funding goal
was set out in the PERS Litigation Special Master's
Written Report.  There, the Special Master explained:
"In 1998, the OIC commissioned the Frank
Russell Company to study its investment
policies.  The resulting reports (the Russell
reports) were provided to PERB in late 1999.
The Russell reports showed that market
volatility likely would have a detrimental
effect on the stability of the PERS system. 
Based on the Russell reports, PERS staff and
the actuary recommended that PERB increase
its goal for the gain-loss reserve from 18
months to 30 months' earnings at the assumed
earnings rate--a reserve of 20 percent of
current assets--as a means of stabilizing
employer contribution rates.  In February
2000, PERB adopted the 30-month goal."
13. Specifically, employers had challenged PERB's
calculation of members' service retirement allowances
on the basis that, with respect to application of the
"money match" calculation, see Strunk, 338 Or at 161
(explaining that calculation), PERB unlawfully had
required employers to match earnings on members'
variable accounts.  In agreeing with employers, the
trial court concluded that PERB must make certain
adjustments, intended to reflect the performance of
members' variable accounts, to all service retirement
allowances regardless of the type of calculation used
to compute those allowances.
14. As an analytical tool, the notion of a
"burden" to establish mootness, as employed in
Brumnett, may be less than helpful.  The court must
address and resolve the dispute before it only if the
dispute is not moot.  The court may examine all facts
that pertain to that issue whether brought to the
court's attention by any of the parties or some other
source.  If the facts demonstrate mootness, it matters
little whether the moving party's evidentiary showing,
viewed in isolation, is sufficient to support that
conclusion.
15. Intervenors also contended that PERB had
erred in construing and applying Oregon law in
connection with the issuance of the March 2000 order
that credited 1999 earnings.
16. The majority summarizes the employers'
challenges and the trial court's conclusions, as
follows:
"As relevant here, employers argued that
PERB: (1) unlawfully had failed to fund a
contingency reserve account, which caused
employer contribution rates to increase; (2)
unlawfully had required employers to match
the earnings in members' variable annuity
accounts; (3) unlawfully had failed to adopt
and implement updated actuarial factors when
calculating member retirement benefits; and
(4) had abused its discretion by crediting
Tier One members' regular accounts in excess
of the assumed earnings rate while failing to
fund adequately the contingency reserve
account, the Benefits-in-Force reserve
account, and the gain-loss reserve account.
"With respect to those claims, the trial
court concluded that (1) PERB unlawfully had
failed to maintain a contingency reserve
account; (2) PERB unlawfully had required
employers to match the earnings in members'
variable annuity accounts; (3) PERB
unlawfully had failed to adopt and implement
updated actuarial factors when calculating
member retirement benefits; and (4) PERB had
abused its discretion by crediting Tier One
members' regular accounts with 20 percent
earnings for 1999."
City of Eugene v. PERB, 339 Or ___, ___ P3d
___ (2005) (slip op at 3-4) (footnotes omitted).
17. One public employer, Eugene Water and
Electric Board (EWEB), also appealed, but that appeal
has no bearing on the mootness issue in this case.
18. ORS 183.484(5) provides:
"(a) The court may affirm, reverse or
remand the order. If the court finds that the
agency has erroneously interpreted a
provision of law and that a correct
interpretation compels a particular action,
it shall:
"(A) Set aside or modify the order; or
"(B) Remand the case to the agency for
further action under a correct interpretation
of the provision of law.
"(b) The court shall remand the order to
the agency if it finds the agency's exercise
of discretion to be:
"(A) Outside the range of discretion
delegated to the agency by law;
"(B) Inconsistent with an agency rule,
an officially stated agency position, or a
prior agency practice, if the inconsistency
is not explained by the agency; or
"(C) Otherwise in violation of a
constitutional or statutory provision.
"(c) The court shall set aside or remand
the order if it finds that the order is not
supported by substantial evidence in the
record. Substantial evidence exists to
support a finding of fact when the record,
viewed as a whole, would permit a reasonable
person to make that finding."
19. The majority opines that Strunk effectively
resolved the question whether PERB had a statutory duty
under ORS 238.670(1) to fund a contingency reserve
account.  City of Eugene, ___ Or at ___ (slip op at
14).  In that respect, the parties disagreed about
whether PERB violated the requirement in that statute
to "set aside * * * such part of the income as [PERB]
may deem advisable, not exceeding seven and one-half
percent of the combined total of such income * * *" by
choosing for several years to not direct any funds to
the contingency reserve account.  Contrary to the
majority's assertion, Strunk did not address or decide
that question and the disputed wording, quoted above,
remains in the statute.