Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-07-35753/USCOURTS-ca9-07-35753-0/pdf.json

Parties Involved:
City of Medford
Appellee
Robert Deuel
Appellant
Ronald Doyle
Appellant
Michael Dyal
Appellee
Charles Steinberg
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

RONALD DOYLE; ROBERT DEUEL; 

BENEDICT MILLER; and CHARLES

STEINBERG,

Plaintiffs-Appellants, No. 07-35753

v. D.C. No.

CITY OF MEDFORD, an Oregon  CV-06-03058-PA

municipal corporation; and OPINION MICHAEL DYAL, City Manager of

the City of Medford, in his official

capacity and as an individual,

Defendants-Appellees. 

Appeal from the United States District Court

for the District of Oregon

Owen M. Panner, District Judge, Presiding

Argued March 3, 2009;

Resubmitted April 16, 2010

Portland, Oregon

Filed May 26, 2010

Before: Susan P. Graber, Raymond C. Fisher, and

Milan D. Smith, Jr., Circuit Judges.

Opinion by Judge Graber

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COUNSEL

Stephen L. Brischetto, Portland, Oregon, for the plaintiffsappellants.

Robert E. Franz, Jr., Law Office of Robert E. Franz, Jr.,

Springfield, Oregon, for the defendants-appellees.

OPINION

GRABER, Circuit Judge:

Plaintiffs, who are former employees of Defendant City of

Medford (“City”), allege that the City’s policy of denying

health insurance coverage to retirees violates their due process

rights. Specifically, Plaintiffs contend that Oregon Revised

Statutes section 243.303 and City Resolution No. 5715 confer

on them a property interest in post-retirement health insurance

coverage that is protected by the Due Process Clause of the

Fourteenth Amendment. Section 243.303 provides that a local

government that offers health insurance coverage to its officers and employees “shall, insofar as and to the extent possible, make that coverage available for any retired employee”

who elects it. We certified a question as to the interpretation

of this provision to the Oregon Supreme Court and received

that court’s answer. We now conclude that, under the Oregon

Supreme Court’s interpretation of section 243.303, neither

that statute nor Resolution No. 5715 creates a protected property interest. Accordingly, we affirm the district court’s entry

of summary judgment to Defendants on Plaintiffs’ due process claim. 

In 1981, the Oregon Legislative Assembly enacted Oregon

Revised Statutes section 243.303(2), which read:

The governing body of any local government that

contracts for or otherwise makes available health

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care insurance coverage for officers and employe[e]s

of the local government may, in so far as [sic] and

to the extent possible, make that coverage available

for retired officers and employe[e]s of the local government and for spouses and unmarried children

under 18 years of age of those retired officers and

employe[e]s. The governing body may prescribe reasonable terms and conditions of eligibility and coverage, not inconsistent with this section, for making

that coverage available. The local government may

agree to pay none, part or all of the cost of making

that coverage available.

1981 Or. Laws ch. 240, § 1 (emphasis added).

In 1985, the Oregon legislature amended the statute. 1985

Or. Laws ch. 224, § 1. The legislature replaced the discretionary word “may” with the mandatory word “shall.” The legislature also inserted a provision stating that the local

government “may, but need not” make coverage available

after a retired employee or that employee’s spouse becomes

eligible for Medicare or a retired employee’s child reaches the

age of majority. The statute currently reads:

The governing body of any local government that

contracts for or otherwise makes available health

care insurance coverage for officers and employees

of the local government shall, insofar as and to the

extent possible, make that coverage available for any

retired employee of the local government who elects

within 60 days after the effective date of retirement

to participate in that coverage and, at the option of

the retired employee, for the spouse of the retired

employee and any unmarried children under 18 years

of age. The health care insurance coverage shall be

made available for a retired employee until the

retired employee becomes eligible for federal Medicare coverage, for the spouse of a retired employee

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until the spouse becomes eligible for federal Medicare coverage and for a child until the child arrives

at majority, and may, but need not, be made available thereafter. The governing body may prescribe

reasonable terms and conditions of eligibility and

coverage, not inconsistent with this section, for making the health care insurance coverage available. The

local government may pay none of the cost of making that coverage available or may agree, by collective bargaining agreement or otherwise, to pay part

or all of that cost.

Or. Rev. Stat. § 243.303(2) (emphases added).

In 1986, the City adopted Resolution No. 5715, which set

forth the City’s plan for complying with section 243.303. The

Resolution interprets section 243.303 as requiring “that continuation of health insurance be offered to employees who

retire from City service.” The Resolution provides that “[a]

retiree shall have a sixty (60) day period from the date of

retirement in which to elect coverage.” Under the Resolution,

“[a]n otherwise qualified retiree may continue on the program

until the earliest of” several events, including the retiree’s

attainment of Medicare eligibility, termination of insurance

coverage by the City or its carrier, or termination of the retiree

program by the City.

Before 1990, the City permitted all employees to elect to

continue their health insurance coverage upon retirement. In

1990, however, the City negotiated with its police officers’

union for a health insurance program that did not give officers

the opportunity to continue coverage after retirement. In 2001,

the City placed management-level employees under that same

health insurance program, which does not cover retirees. In

2002, the City placed non-management employees of its

Parks and Recreation Department and its Public Works

Department in the same program.

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The City contracts with the Oregon Teamsters Employers

Trust to provide health insurance to its employees. The Teamsters’ contract with the City states: “[P]articipants are not

allowed to participate in the Trust’s Retiree Plan or any

insured or HMO option available through it.” This provision

means that retirees are excluded from coverage under the

Teamsters’ plan. The members of the Teamsters are responsible for voting on the extent of coverage. According to the

City, the Teamsters were willing to provide health insurance

benefits to retired employees, but only “if the members of the

Teamsters voted for such coverage.” To date, the members

have not approved an extension of health insurance benefits

to retirees.

Although the City does not provide health insurance coverage after retirement, retirees can choose to remain covered for

18 months after their retirement under the Consolidated

Omnibus Budget Reconciliation Act of 1985, 29 U.S.C.

§§ 1161-1168. After that 18-month period expires, retired

employees can enroll in the Oregon Public Employees Retirement System Health Insurance Program, into which the City

has paid so that its retired employees can obtain coverage.

In August 2006, Plaintiffs filed suit against the City and

City Manager Michael Dyal. Plaintiffs are former City police

officers or management-level employees who have retired and

who have been denied benefits under the Teamsters’ plan.

Plaintiffs alleged that Defendants had violated Resolution No.

5715 and Oregon Revised Statutes section 243.303; the Due

Process Clause of the Fourteenth Amendment; the Age Discrimination in Employment Act of 1967 (“ADEA”), 29

U.S.C. §§ 621-634; and the parallel Oregon age discrimination statute, Or. Rev. Stat. § 659A.030. The district court

granted summary judgment on the due process and the ADEA

claims.1

1The district court declined to exercise supplemental jurisdiction over

Plaintiffs’ state-law claims, and Plaintiffs refiled them in state court. See

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In its order granting summary judgment, the district court

held that neither section 243.303 nor Resolution No. 5715

afforded Plaintiffs a constitutionally protected property interest. The court reasoned that the statute’s text did not “sufficiently limit the conditions under which the City would be

required to extend health insurance coverage to retirees.”

Because a protected property interest is a prerequisite to a due

process claim, the district court concluded that Plaintiffs’

claim failed as a matter of law. Plaintiffs appealed.2

In a decision filed last year, we determined that section

243.303 was ambiguous as to how much discretion it conferred on local governments. Doyle v. City of Medford, 565

F.3d 536, 541-42 (9th Cir. 2009) (order). Whether the statute

significantly constrains the discretion of local governments is

central to our analysis of the alleged property interest.

Because no Oregon appellate court had construed the statelaw provision at issue, we certified a question to the Oregon

Supreme Court. We asked the Oregon Supreme Court:

What amount of discretion does Oregon Revised

Statutes section 243.303 confer on local governDoyle v. City of Medford, Case No. 08-0137-L7, Circuit Court of Jackson

County (complaint filed Jan. 9, 2008). The disposition of those claims

does not affect our analysis of Plaintiffs’ federal due process claim. The

Oregon circuit court granted summary judgment in favor of Plaintiffs Ronald Doyle and Benedict Miller on their claim that Defendants violated

Oregon Revised Statutes section 243.303 by failing to offer health insurance coverage to retirees. But the circuit court entered judgment before the

Oregon Supreme Court interpreted that statute in response to our certified

question. The circuit court also ruled that the statute of limitations barred

Plaintiffs Robert Deuel and Charles Steinberg’s claims under Oregon

Revised Statutes section 243.303. In addition, the court granted summary

judgment in favor of Plaintiffs Doyle and Deuel on their breach of contract

claims. Trial is set for June 2010 on all remaining claims. 

2Plaintiffs also appealed their ADEA claim. Last year, in an unpublished disposition, we reversed the district court’s grant of summary judgment on the ADEA claim. Doyle v. City of Medford, 327 F. App’x 702

(9th Cir. 2009) (unpublished decision). 

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ments to determine whether or not to provide health

insurance coverage to their employees after retirement?

Id. at 544. The Oregon Supreme Court accepted the certified

question. Doyle v. City of Medford, 210 P.3d 907 (Or. 2009)

(table).

The Oregon Supreme Court “reject[ed] the city’s position

that the statute delegates to the city discretion to make health

insurance coverage available to retired employees.” Doyle v.

City of Medford, 227 P.3d 683, 692 (Or. 2010). Rather, the

Court held that “local governments have an obligation to

make health insurance coverage available to retirees, but that

there may be factual circumstances that excuse that obligation.” Id. at 690. What constitutes compliance with this standard “will depend on the circumstances of each case and

cannot be determined in the abstract.” Id. at 687. It is the government’s burden to show circumstances sufficient to excuse

the obligation. Id. at 692. The mere fact that, as here, a government’s chosen insurance provider does not offer coverage

for retirees is insufficient to excuse the obligation. Id.

However, the Oregon Supreme Court also rejected the

argument that the obligation may be excused only by “actual

impossibility.” Id. The statute “was not intended to be unduly

burdensome,” and what is possible (in the words of the statute) may depend on a government’s other undertakings to

provide services and to fulfill statutory and contractual duties.

Id. Furthermore, “the phrase ‘insofar as and to the extent possible’ was intended to create flexibility within the statute as

a whole.” Id. at 691. Thus, even if it is not “possible” for a

local government to make available to retirees health insurance coverage identical to that offered to current employees,

the statute requires the government “to make some coverage

available” insofar as and to the extent possible. Id. at 690. 

With the Oregon Supreme Court’s construction of section

243.303 to assist us, we now consider whether the statute or

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Resolution No. 5715 creates a property right under the federal

Due Process Clause to health insurance coverage for retired

employees. We review de novo a district court’s grant of summary judgment. Shanks v. Dressel, 540 F.3d 1082, 1086 (9th

Cir. 2008). 

[1] The Due Process Clause of the Fourteenth Amendment

protects persons against the deprivation of property without

due process of law. U.S. Const. amend. XIV, § 1. But the

United States Constitution does not itself create property

interests. Bd. of Regents of State Colls. v. Roth, 408 U.S. 564,

577 (1972). “Rather they are created and their dimensions are

defined by existing rules or understandings that stem from an

independent source such as state law—rules or understandings that secure certain benefits and that support claims of

entitlement to those benefits.” Id. Here, Plaintiffs contend that

section 243.303 and City Resolution No. 5715 support “a

legitimate claim of entitlement,” id., to health insurance coverage for retired employees. Of course, not every statute

authorizing a benefit creates a property interest. It is our task

to determine whether section 243.303 or Resolution No. 5715

does. 

Section 243.303 does not fit neatly among the statutes and

ordinances that case law informs us create, or fail to create,

protected property interests. Section 243.303 is unusual: It

mandates a benefit the contours of which cannot be fixed in

advance and which may be withdrawn entirely under circumstances that cannot be determined in the abstract—all without

granting any discretion to the government responsible for providing the benefit. Nevertheless, we conclude from the principles derived from Supreme Court and our precedents that

neither the statute nor the resolution here creates a property

interest. We reach this conclusion because section 243.303

does not contain a particularized standard, because the nature

and extent of the entitlement that it allegedly creates are too

indeterminate, and because it allows local governments extensive functional discretion regarding whether and to what

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extent it will be possible to offer health insurance coverage to

retirees.

[2] A regulation granting broad discretion to a decisionmaker does not create a property interest. Jacobson v. Hannifin, 627 F.2d 177, 180 (9th Cir. 1980). “Whether an

expectation of entitlement is sufficient to create a property

interest will depend largely upon the extent to which the statute contains mandatory language that restricts the discretion

of the decisionmaker.” Allen v. City of Beverly Hills, 911 F.2d

367, 370 (9th Cir. 1990) (internal quotation marks and brackets omitted). 

[3] The Oregon Supreme Court informs us that section

243.303 does not “delegate[ ] to the city discretion to make

health insurance coverage available to retired employees.”

Doyle, 227 P.3d at 692. Instead, “local governments have an

obligation to make health insurance coverage available.” Id.

at 690. The statute’s use of the word “shall,” then, constitutes

“mandatory language that restricts the discretion of the decisionmaker.” Allen, 911 F.2d at 370 (internal quotation marks

and brackets omitted). But our analysis does not end with the

absence of discretion.3

[4] Under section 243.303, “there may be factual circumstances that excuse th[e] obligation” to make insurance coverage available to retirees. Doyle, 227 P.3d at 690. As the

Oregon Supreme Court noted, “[l]ocal governments exist to

provide government services, and they have statutory and

contractual obligations to employees, retirees, and the citizens

3

It is, however, this absence of discretion that makes inapt a simplistic

reliance on cases in which courts have held that the phrase “in so far as

possible” barred a property right. E.g., Wallace v. Robinson, 940 F.2d 243,

246 (7th Cir. 1991) (en banc); Newsome v. McElhinney, No. 85-318, 1990

WL 6813, at *3 (N.D. Ill. Jan. 10, 1990) (unpublished). Wallace and Newsome interpreted that phrase as conferring discretion, but the Oregon

Supreme Court interpreted similar text in section 243.303 as not conferring discretion. 

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within their jurisdictions.” Id. at 692. The impossibility

excuse creates “flexibility” in the statute, id. at 691, although

that flexibility depends on the state of the world—the facts

giving rise to impossibility—rather than on an explicit grant

of discretion. 

A factual contingency does not necessarily preclude the

creation of a protected property interest. Our precedents

instruct us that a statute may create a property interest if it

mandates a benefit when specific non-discretionary factual

criteria are met. See, e.g., Wedges/Ledges of Cal., Inc. v. City

of Phoenix, 24 F.3d 56, 63-64 (9th Cir. 1994) (holding that a

property interest is created by an ordinance requiring the city

to issue an operating license if a coin-operated machine satisfies the regulatory definition of a “game of skill”); Parks v.

Watson, 716 F.2d 646, 657 (9th Cir. 1983) (per curiam) (holding that a property interest is created by a statute requiring

that a city, when considering a petition to vacate a street,

determine if notice has been given, if the affected property

owners have consented, and if the vacation will prejudice the

public interest). 

[5] However, we have also explained that a statute must

contain “ ‘particularized standards or criteria’ ” to create a

property interest. Allen, 911 F.2d at 370 (quoting Fid. Fin.

Corp. v. Fed. Home Loan Bank of S.F., 792 F.2d 1432, 1436

(9th Cir. 1986)). In Allen, we held that an ordinance providing

that a city “may abolish any position” when “in the judgment

of the Council it becomes necessary in the interests of economy or because the necessity for a position no longer exists,”

gave the government “broad discretion,” rather than imposing

“particularized standards or criteria that significantly constrain.” Id. at 370-71 (emphasis added) (internal quotation

marks and alteration omitted). Thus, it did not create a protected property interest. Id. at 372. Similarly, in Shanks, we

held that a statute containing several open-ended criteria, as

well as one that looked to “other factors of public interest,”

did not contain “particularized standards” that significantly

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constrained discretion. 540 F.3d at 1091 (internal quotation

marks omitted). 

In some cases, even an unparticularized criterion may still

contribute to the creation of a property interest if it is accompanied by other, more particularized criteria. For instance, in

Parks, 716 F.2d at 657, “an articulable standard” involving

whether the public interest would be prejudiced, “while obviously giving a certain amount of play in the decisional process,” sufficed, in combination with two specific factual

criteria—notice and consent—to create a property interest.

But we have never held that an unparticularized standard

alone may create a protected property interest. 

[6] Here, the “insofar as and to the extent possible” standard in section 243.303 is similar to—if not even less particularized than—the “necessity” standard that failed to create a

property interest in Allen. Moreover, section 243.303 does not

contain any additional and more particularized criteria for a

local government’s decision to offer health insurance coverage to retirees.

Section 243.303 does contain a condition precedent: A

local government must make health insurance coverage available to retirees only if the government offers such coverage

to current officers and employees. But that condition is not a

criterion limiting the government’s assessment of the realworld circumstances that would excuse its obligation to cover

retirees. Rather, the condition simply triggers application of

the “insofar as and to the extent possible” standard. Thus, the

condition sets the decision in motion, but does not guide it.

This fact distinguishes the present statute from those, such as

the one examined in Parks, in which several criteria (both

specific and general) directly affect the government’s decision

whether to confer the benefit. Nor does the statute’s requirement that an employee make a timely election, if the local

government offers benefits to him or her, affect the local government’s decision whether to offer a benefit in the first place.

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In short, section 243.303 contains no criteria to guide the local

government, apart from the “insofar as and to the extent possible” standard. Hence, Allen suggests that section 243.303

fails to create a property interest.4

[7] Our conclusion that the standard of section 243.303 is

insufficient to create a property interest is also bolstered by

the fact that the entitlement allegedly created by it is indeterminate. “[I]ndeterminacy is not the hallmark of a duty that is

mandatory. Nor can someone be safely deemed ‘entitled’ to

something when the identity of the alleged entitlement is

vague.” Town of Castle Rock v. Gonzales, 545 U.S. 748, 763

(2005). In Castle Rock, a Colorado statute provided that an

officer “shall use every reasonable means to enforce a

restraining order” and “shall arrest, or, if an arrest would be

impractical under the circumstances, seek a warrant for the

arrest of a restrained person” under certain circumstances. Id.

at 759 (emphasis omitted). The Supreme Court held that the

statute did not create a property right because it did not specify whether it mandated that police arrest the plaintiff’s husband, that they seek a warrant for his arrest, or that they use

every reasonable means to enforce the restraining order. Id. at

763. 

[8] Here, as in Castle Rock, the nature and extent of the

alleged entitlement are vague. Qualifying retirees in Oregon

are not assured of coverage by health insurance identical to

that provided to a local government’s current employees. The

statute 

recognizes that it may not be possible for a local

government to make the same coverage available to

4Allen does not decide this case, because it is not directly on point. The

ordinance in Allen “[gave] the City broad discretion.” 911 F.2d at 371.

Here, by contrast, the Oregon Supreme Court interprets section 243.303

as imposing an obligation tempered by conditions for excusing its fulfillment, not as granting discretion. 

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retirees that it makes available to current employees,

but that, in that event, “insofar as and to the extent”

that it is possible to make some coverage available

to retirees, in light of all the circumstances, it is obligated to do so. 

Doyle, 347 Or. at 575. Because section 243.303 does not

make health insurance an all-or-nothing proposition, and

because whether or how much insurance will be “possible”

cannot be determined in advance, Castle Rock counsels that

section 243.303 does not create a protected property interest.

We acknowledge that the indeterminacy of section 243.303

is distinguishable in one sense from that of the Colorado statute in Castle Rock. The Colorado statute was irreducibly indeterminate; there would never be any way to pin down which

action it required of police. Here, the statute requires precisely

whatever is possible, up to coverage identical to that available

to current employees. But what this requirement will yield is

unpredictable in the abstract and scarcely provides “an expectation of entitlement.” Jacobson, 627 F.2d at 180.

Finally, we note that section 243.303, although not conferring any discretion over the decision to offer health insurance

coverage to retirees, does effectively allow local governments

a form of functional discretion. Those governments have

functional discretion—especially in the long run—over

whether it will be “possible” to offer health insurance to retirees because they have wide discretion about what services

they offer, what contractual obligations they undertake, and

what taxes they levy on their citizens. “Only if the governing

statute compels a result upon compliance with certain criteria,

none of which involve[s] the exercise of discretion by the

reviewing body, does it create a constitutionally protected

property interest.” Shanks, 540 F.3d at 1091 (internal quotation marks omitted) (emphasis added). Thus, a statute does

not create a property right if it allows the decision-making

body discretion to add an additional criterion, Thornton v.

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City of St. Helens, 425 F.3d 1158, 1165-66 (9th Cir. 2005), or

to define its own criteria, Shanks, 540 F.3d at 1091. Although

the functional discretion afforded by section 243.303 is much

more attenuated than the discretion simply to add or define

the criteria for a benefit, it is still to some degree inconsistent

with the mandatory nature of a property right.

Ultimately, these considerations combine to demonstrate

that section 243.303 cannot sustain a due process claim. We

hold that section 243.303 does not create a protected property

interest because “insofar as and to the extent possible” is not

a particularized standard, because the nature and extent of the

entitlement that section 243.303 allegedly creates are too

indeterminate, and because the statute allows local governments extensive functional discretion.

[9] We turn, then, to a consideration of Resolution No.

5715. The Resolution’s purpose is to set the terms and conditions for provision of health insurance coverage “in compliance with ORS 243.303.” To the extent that the Resolution

merely duplicates the obligation of section 243.303, it too

must fail in creating a property interest. 

[10] And if we consider the Resolution on its own terms,

Plaintiffs’ claim similarly fails. The Resolution provides that

health insurance coverage will cease upon “[t]ermination of

the insurance coverage by the City or its carrier” or upon

“[t]ermination of the retiree program by the City.” No criteria

are given for those decisions. The Resolution might require

implicitly that a decision to terminate the retiree program or

insurance coverage be “reasonable,” Jacobsen, 627 F.2d at

180, or that it be made only when “it becomes necessary in

the interests of economy,” Allen, 911 F.2d at 371 (internal

quotation marks omitted). As we have seen, though, those

types of constraints are insufficient to create a property interest. Because the Resolution includes this discretionary loophole for any obligation that it might impose, it cannot by its

own terms create a protected property interest. 

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[11] In conclusion, the district court properly determined

that neither Oregon Revised Statutes section 243.303 nor Resolution No. 5715 creates a property interest protected by the

Due Process Clause of the Fourteenth Amendment. We affirm

the district court’s grant of summary judgment on Plaintiffs’

due process claim. 

AFFIRMED in part.5 The parties shall bear their own costs

on appeal.

5We previously reversed the district court’s grant of summary judgment

on Plaintiffs’ ADEA claim. See supra note 2. 

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