Title: Pendleton School Dist. v. State of Oregon
Citation: N/A
Docket Number: S056096
State: Oregon
Issuer: Oregon Supreme Court
Date: September 17, 2009

FILED: September 17, 2009
IN THE SUPREME COURT OF THE STATE OF OREGON
PENDLETON
SCHOOL DISTRICT 16R;
EUGENE SCHOOL DISTRICT 4J; CROW-APPLEGATE-LORANE SCHOOL
DISTRICT 66;
COOS BAY SCHOOL DISTRICT 9; CORVALLIS SCHOOL DISTRICT 509J;
JOSEPHINE COUNTY UNIT/THREE RIVERS SCHOOL DISTRICT;
ASTORIA SCHOOL DISTRICT 1C;
CRESWELL SCHOOL DISTRICT;
LINCOLN COUNTY SCHOOL DISTRICT; SIUSLAW SCHOOL
DISTRICT 97J;
CENTENNIAL SCHOOL DISTRICT; AMITY SCHOOL DISTRICT 4J;
REYNOLDS
SCHOOL DISTRICT #7; COQUILLE SCHOOL DISTRICT #8;
PARKROSE SCHOOL DISTRICT #3;
PINE EAGLE SCHOOL DISTRICT #61;
JEFFERSON SCHOOL DISTRICT; MCKENZIE SCHOOL
DISTRICT;
ALEXANDRA KIESLING and TIMOTHY KIESLING, minors,
by Amy Cuddy, their
guardian ad litem;
GRACE PEYERWOLD, a minor,
by David and Maria Peyerwold, her
guardians ad litem;
MARSHALL TAUNTON and HARRISON TAUNTON, minors,
by Tim and
Wendy Taunton, their guardians ad litem;
and BENJAMIN SHERMAN and CLAIRE
SHERMAN, minors,
by Larry Sherman and Diane Nichol, their guardians ad litem, 
Plaintiffs-Appellants,
Petitioners on Review, 
v.
STATE OF OREGON, 
Defendant-Respondent,
Respondent on Review. 
(CC 0603-02980; CA A133649; SC
S056096)
En
Banc
On
petition for attorney fees and costs filed February 13, 2009.  Respondent's
objection to petitioners' petition for attorney fees and costs filed April 2,
2009.  Opinion filed January 23, 2009.*
James
N. Westwood and Robert D. Van Brocklin, Stoel Rives LLP, Portland, filed the
petition for attorney fees and costs for petitioners on review.
Jeff
J. Payne, Assistant Attorney General, Salem, filed the objections to petition
for attorney fees and costs for respondent on review.  With him on the objections
were John R. Kroger, Attorney General, and Jerome Lidz, Solicitor General.
GILLETTE,
J.
Petitioners are
awarded their costs in the amount of $1,056.55, payable by the State of
Oregon.  Petitioners' petition for an award of attorney fees is denied.
Durham, J., concurred
in part and dissented in part and filed an opinion, in which De Muniz, C. J.,
and Walters, J., joined.
*345 Or 596, 200 P3d
133 (2009).
GILLETTE, J.
This case involves a request that
this court exercise its discretionary authority to award attorney fees to the
prevailing parties in a case involving school funding.  Petitioners were
designated as the prevailing parties in that case, Pendleton School Dist. v.
State of Oregon, 345 Or 596, 200 P3d 133 (2009).  Petitioners (several
Oregon public school districts and certain minors who would be attending public
schools in Oregon) there asserted that the legislature had failed to perform a
constitutional duty to adequately fund the state public school system. 
Petitioners sought alternative forms of relief, based on three theories: (1) a
declaratory judgment, holding that the legislature had violated Article VIII,
section 8, of the Oregon Constitution,(1)
because it had failed to appropriate sufficient funds for the 2005-07 biennium
to ensure that the state public school system would meet the quality goals established
by law; (2) a similar declaratory judgment, stating that the legislature had a
similar duty under Article VIII, section 3, of the Oregon Constitution,(2) but had
failed to perform that duty; and (3) a mandatory injunction requiring the legislature
to appropriate sufficient funds for the 2005-07 biennium to ensure that the
state public school system would meet the quality goals previously described.  Pendleton
School Dist., 345 Or at 601.  The state successfully moved for summary
judgment and, on petitioners' appeal, the Court of Appeals affirmed.  This
court then allowed petitioners' petition for review.
On review, this court reversed the trial
court's judgment in part and affirmed it in part.  The court began by observing
that Article VIII, section 8, "presents two seemingly contradictory
concepts."  Id. at 608.  That is, the constitutional provision
directs the legislature to fund the public school system at a certain level,
but it then establishes a reporting requirement that, by its terms, contemplates
that the school system may not be funded at that level.  Id. at 607-08.  This
court concluded, however, that it could give effect to both concepts by
considering whether each form of relief that petitioners had requested was
consistent with both concepts.  Id. at 609.  
Proceeding on that basis, the court
concluded that the trial court should have granted petitioners a declaratory
judgment to the effect that the legislature had failed to appropriate
sufficient funds for the 2005-07 biennium to meet the quality goals established
by law:
"Because the state admits that the legislature failed
to fund the public school system for the 2005-07 biennium at the levels
required by Article VIII, section 8, we can determine and declare that the
legislature failed to act in accordance with the constitutional mandate.  The
trial court should have entered a declaratory judgment on that limited
ground."
Id. at 610.  The court further concluded, however,
that the courts could not grant a declaratory judgment that the legislature must
appropriate in each biennium sums sufficient to ensure that the public school
system meets the quality goals established by law.  Id. at 610-11. 
Similarly, the court concluded that the courts could not grant an injunction
requiring the legislature to fund the public school system to meet those
goals.  Id.  Those rulings were based on petitioners' theory under
Article VIII, section 8, of the Oregon Constitution.  The court then went on to
reject petitioners' additional argument that the legislature's failure to meet
the quality goals established by law constituted a violation of Article VIII,
section 3.  Id. at 612-16.
The outcome of the case may be summarized
briefly as follows:  The court concluded that petitioners' contention that the
Oregon Constitution directs the legislature to fund public primary and
secondary education at certain levels is correct.  (Indeed, the state
essentially conceded the point.)  However, the court also ruled that the
provision in Article VIII, section 8, contemplating a report from the legislature
explaining its failure to fund education at the required level (when and if
that was the case) is a permissible constitutional alternative to following the
constitutional mandate.  Thus, this court declined to provide petitioners with
the affirmative relief that they requested, viz., a judicial direction
to the legislative branch to alter its budgetary choices and fund education at
the appropriate level.
At the close of its opinion, the
court stated:
"The decision of the Court of Appeals is
affirmed in part and reversed in part.  The judgment of the circuit court is
affirmed in part and reversed in part, and the case is remanded to the circuit
court for entry of a declaratory judgment consistent with this opinion and for
a declaration that Article VIII, section 8, of the Oregon Constitution does not
authorize the injunctive relief that [petitioners] sought."
345 Or at 617.  In spite of the fact that petitioners' request
for a court-ordered appropriation had eluded them, however, the court
designated them the prevailing party in the case -- a designation justified by
the fact that petitioners had succeeded in obtaining a direct statement that
Article VIII, section 8, imposed a duty on the legislature to fund primary and
secondary public education at a certain level, a result that the circuit court
and the Court of Appeals had refused to give them.
Petitioners now seek attorney fees
solely under the inherent power of this court to award fees, as that concept
has evolved since it first was announced in Deras v. Myers, 272 Or 47,
65-66, 535 P2d 541 (1975).  That power allows a court in equity to award fees
when a party to a proceeding in effect acts in a representative capacity to
protect certain rights of others, and not just the party's own rights.  This
court articulated the elements of a Deras award in Armatta v.
Kitzhaber, 327 Or 250, 287, 959 P2d 49 (1998), as follows:
"First, the proceeding must be one in equity.  Second,
the party requesting attorney fees must be the prevailing party.  Finally, in
filing the action, the party requesting attorney fees must have been seeking to
vindicate an important constitutional right applying to all citizens without
any gain peculiar to himself, as opposed to vindicating individualized and
different interests, or any pecuniary or other special interest of his own
aside from that shared with the public at large."
(Internal quotation marks, alterations, and citations
omitted.)
Petitioners contend that all three Armatta
requirements are met here.  The state does not dispute the first requirement
(that the proceeding be one in equity), and we agree that it is met.  The state
does dispute whether petitioners meet the second criterion (viz., that
they are the prevailing party), but we reject the state's argument.  First,
this court designated petitioners as the prevailing party.  Moreover, and even
assuming that such designation does not end the matter, petitioners meet the
classic requirement to be a prevailing party:  They obtained a substantial
modification of the judgment, which makes them a prevailing party.  See
ORS 20.077(3) (stating that standard).
The state makes a contrary argument,
relying on Lewis v. Dept. of Rev., 294 Or 139, 653 P2d 1265 (1982), but
that case is distinguishable.  There, the party claiming fees had sought to be
included, on equal privileges grounds, within a class of taxpayers that was
entitled to a certain tax exemption.  However, the Tax Court ultimately denied
the exemption to the group that the party had sought to join, rather than
extending the exemption to him.  Under such circumstances, this court observed,
the party claiming fees arguably was not a prevailing party under any
definition, because the only consequence of his claim was the precise opposite
of what he had sought.  Id. at 143-44.  In this case, we hold that,
consistent with this court's designation at the time, petitioners were the
"prevailing party" in the litigation and therefore eligible for a
discretionary Deras award of attorney fees.
This brings us to the third
criterion:  Petitioners must have been seeking to vindicate an important
constitutional right that applied to the broad spectrum of citizens, rather
than trying to vindicate a more narrow (often pecuniary) interest of their own. 
See Armatta, 327 Or at 287 (so noting).  Some might argue that
the "narrow interest" disqualification applies here.  As it happens,
however, we need not even consider whether that disqualification ever would
extend to public entities (like the petitioner school districts here), because
-- in our view -- petitioners' claim for an award of attorney fees fails for a
different reason.
In our view, the public interest that
petitioners were trying to vindicate -- the one that was pivotal to their
reason for entering into the litigation -- was the understandable desire to
obtain a mandatory injunction requiring the legislature to reallocate available
funds so that the amount assigned to public primary and secondary education
would be sufficient to ensure that educational goals established by law would
be met.  Petitioners did not obtain that result.  Instead, as already noted, they
received a declaration from this court that told them (and the public at large),
in effect, that the constitutional provision requires the legislature either
to fund education adequately or to explain in a public report why it had
not done so.  Petitioners' success in obtaining a judicial declaration that the
legislature had failed to fund the public school system at the appropriate
level amounted to a Pyrrhic victory, because Article VIII, section 8, effectively
allows the legislature to choose to provide less than adequate funding as long
as it reports its failure.  
Petitioners assert that they
"have vindicated the constitutional right of every Oregonian to a
Legislative Assembly that follows the law."  Perhaps.  But the path that
the legislature must follow does not necessarily take it where petitioners wish
it to go, and -- as we made clear in our opinion on the merits -- there is no
available judicial mechanism to force that body in one direction as opposed to
another.  When the nature of the declaratory judgment that this court ordered
is understood in that light, we think that it is clear that the result that petitioners
have obtained is not the kind of result for the public at large that calls for
the award of attorney fees under the rationale of Deras and the cases
that have followed it.  Petitioners' request for an award of attorney fees is
denied.
Petitioners also have sought an award
of costs against the state.  The state has objected to the award.  We overrule
the state's objection and award the requested costs.
Petitioners are awarded their costs
in the amount of $1,056.55, payable by the State of Oregon.  Petitioners'
petition for an award of attorney fees is denied.
DURHAM, J., concurring in part
and dissenting in part.
I concur in the majority's decision to award costs to petitioners.  However, for
the reasons expressed below, I dissent from the majority's decision to deny
petitioners' request for an award of attorney fees.
It is important to acknowledge at the outset the areas of agreement between the
majority and this dissent.  The majority correctly explains that petitioners
are the prevailing parties in this action, because
"petitioners
had succeeded in obtaining a direct statement that Article VIII, section 8,
imposed a duty on the legislature to fund primary and secondary public
education at a certain level, a result that the circuit court and the Court of
Appeals had refused to give them."
Pendleton
School Dist., ___ Or ___, ___, ___ P3d ___ (2009) (opinion on petition for
attorney fees and costs) (slip op at 4).  To that I would add that petitioners'
litigation also clarified that the legislature is subject to a constitutional
obligation, not a mere aspirational guideline, under Article VIII, section 8,
to appropriate sufficient funds to meet education quality goals established by
law or accept responsibility for deficient funding by reporting the reasons for
any deficiency in writing.(3)
I
also agree that petitioners' claim for declaratory relief under Article VIII,
section 8, is the kind of claim that qualifies for an award of attorney fees
under the court's inherent power.  The majority recites that a qualifying claim
must be one "in equity," citing Armatta v. Kitzhaber, 327 Or
250, 287, 959 P2d 49 (1998), and that petitioners' claim satisfies that
criterion.  ___ Or at ___ (slip op at 4).  However, this court in Swett v.
Bradbury, 335 Or 378, 389, 67 P3d 391 (2003), concluded that the
requirement in Armatta that the proceeding be one "in equity"
was "of limited utility in determining whether to award an attorney
fee."  Instead, the Swett court concluded that a plaintiff's
successful invocation of the court's authority to render a declaratory judgment
concerning the disputed legal right would qualify for an award of attorney fees
under the court's inherent power.  As noted, petitioners' claim meets that
criterion.
Finally,
the majority correctly focuses on the state's objection that "petitioners
did not meet the third Deras requirement, i.e., they did not
vindicate an important constitutional right applying to all citizens without
any gain peculiar to themselves."  The state makes two arguments in
support of that objection.  First, the state asserts that petitioners succeeded
only in obtaining reaffirmation of an undisputed proposition of law -- that the
legislature must follow the law -- but that that principle was never in issue
here.  Second, the state claims that petitioners' victory does not apply to all
of Oregon's citizens and, instead, benefits only students currently attending a
public primary or secondary school and, arguably, their parents.
The
majority does not address those objections.  Instead, the majority focuses on
the fact that petitioners sought, among other things, a mandatory injunction
requiring the legislature to appropriate additional funds for public education
and the court did not approve that requested relief.  The majority labels that
requested remedy "pivotal" to petitioners' choice to enter into this
litigation, but it cites nothing in the record to support that claim.  ___ Or
at ___ (slip op at 6).  Finally, the majority asserts that petitioners' failure
to obtain an injunction regarding additional public school funding shows that
they won only a Pyrrhic victory, implying that, in reality, they lost the war.
The
majority's response to the state's objections is seriously flawed.  The state's
argument at least concedes that the proper focus is on the success that
petitioners' action achieved, not on a form of requested relief that the court
did not grant.  That premise stems from petitioners' status as prevailing
parties who, but for the error below, should have received a favorable judgment
on their claim.
The
central value of the remedy of declaratory judgment, codified in the Uniform
Declaratory Judgments Act at ORS 28.010 to 28.160, is the elimination of
uncertainty and insecurity that result from the ambiguous description of legal
rights and responsibilities in laws, contracts, and other writings.  ORS 28.120
provides:
"This
chapter is declared to be remedial. The purpose of this chapter is to settle
and to afford relief from uncertainty and insecurity with respect to rights,
status and other legal relations, and is to be liberally construed and
administered."
Before
petitioners filed this action, the terms of Article VIII, section 8, were
nothing if not ambiguous.  That provision seemed to impose a mandatory duty on
the legislature to appropriate funds sufficient to ensure compliance with
quality goals established by law.  However, the text of the provision also
linked that funding obligation, by the conjunction "and," with a
reporting obligation concerning both sufficient and insufficient
appropriations.  No court previously had addressed and resolved the multiple
ambiguities in that provision.  At least from petitioners' standpoint, if
Article VIII, section 8, imposed a dual obligation on the legislature to both
appropriate sufficient funds and to publish a report concerning the quality of
public education in Oregon, then it was clear from the available evidence that
the legislature was violating its legal duty under that constitutional
provision.
Petitioners'
complaint, as noted, sought a declaratory judgment concerning the legislature's
duties under Article VIII, section 8, and, in addition, sought an injunction
requiring the state to provide sufficient funding for the then-current
biennium.  The majority ascribes great significance to petitioners'
unsuccessful request for a mandatory injunction requiring greater
appropriations for public education.  However, as this court pointed out in Swett,
a request for injunctive relief in addition to declaratory relief is
"pointless," 335 Or at 389, because the courts assume that "the
responsible state officials would honor the court's declaration without the
necessity of an accompanying injunction."  Id.  Thus, properly
analyzed, petitioners' claim sought a declaratory judgment regarding the legislature's
duties under Article VIII, section 8, to remove the uncertainty and insecurity
resulting from that provision's ambiguity.
Both
the trial court and the Court of Appeals determined that petitioners' complaint
should be dismissed.  As this court noted in its opinion, the Court of Appeals
had determined that the word "shall" in Article VIII, section 8, was
intended to be "permissive" and, in reality, meant "may."  Pendleton
School Dist., 345 Or at 607.  This court rejected that position and
concluded that petitioners were entitled to a declaratory judgment "that
the legislature failed to fully fund the public school system, if that is the
case."  Id. at 610.  On the basis of the state's admissions, this
court also declared that "the legislature failed to act in accordance with
the constitutional mandate."  Id.  This court also concluded that
it could not grant petitioners' further request for a declaratory judgment
requiring the legislature to fund the public school system at the levels
required by Article VIII, section 8, because that relief would conflict with
the reporting provisions in the measure.
This
court's opinion establishes that, in addressing its responsibilities under
Article VIII, section 8, the legislature is carrying out a legal duty imposed
by the constitution, not an aspirational guideline, as the Court of Appeals
viewed the matter.  The majority is wrong to discount the value of that
declaratory judgment simply because it lacks a judicial enforcement mechanism. 
Just as this court in Swett assumed that public officials will comply
with their duties as declared by the courts, we also assume that public
officials will comply with legal duties imposed by the constitution, and will
do so without the need for a court order.  We cannot make that assumption
regarding aspirational statements, even when they appear in the constitution. 
In that respect, petitioners' successful appeal has clarified what the
legislature is obligated, not merely permitted, to do, even if no further
judicial scrutiny ever occurs in the future.  That is a legally significant
result for petitioners and the public.
I
would take into consideration, however, the fact that petitioners did not
succeed in obtaining a significant part of the relief that they sought.  In
similar proceedings concerning the recovery of attorney fees pursuant to a
statute, the pertinent rule, ORAP 13.10(5)(b), directs the court to consider
relevant statutory factors, including those set out in ORS 20.075(1) and (2),
in determining the amount of any fee award.  One such factor is "the
results obtained."  ORS 20.075(2)(d).  In considering an equitable award
of prevailing party fees in this nonstatutory context, I would consider
reducing the amount of an award because the result that petitioners obtained is
less than they desired.  I would not, however, completely deny a prevailing
party attorney fee award in this case.
Finally,
I reject the state's contention that petitioners' victory does not force the
legislature to behave differently.  Petitioners' action sought to clarify the
constitutional responsibility of the state legislature in appropriating public
funds for public education throughout the state.  All citizens benefit from the
elimination of uncertainty and insecurity regarding the legislature's
compliance with its constitutional responsibilities in that regard.  It is
clear that petitioners' action protected the public interest in compliance by
the legislature with duties imposed by the constitution for the protection and
education of all public school students.  See Deras v. Myers, , 272 Or
47, 66, 535 P2d 541 (1975) (applying similar standard in awarding attorney fees;
plaintiff's action protected the "interest of the public in preservation
of the individual liberties guaranteed against governmental infringement of the
constitution[.]").  An exercise of the court's inherent authority to award
an attorney fee to the prevailing party is appropriate in that context.
In
conclusion, I would allow an award of prevailing party attorney fees in this
case.  I would also consider reducing the award to take into consideration the
result obtained by petitioners.  I dissent from the majority's decision to
refuse to award an attorney fee in any amount to the prevailing parties.
For
the reasons expressed above, I concur in part and dissent in part from the
majority's decision.
De
Muniz, C. J., and Walters, J., join in this opinion.
1. Article
VIII, section 8, of the Oregon Constitution provides, in part: 
"(1) The Legislative Assembly shall
appropriate in each biennium a sum of money sufficient to ensure that the
state's system of public education meets quality goals established by law, and
publish a report that either demonstrates the appropriation is sufficient, or
identifies the reasons for the insufficiency, its extent, and its impact on the
ability of the state's system of public education to meet those goals."
2. Article
VIII, section 3, of the Oregon Constitution provides:
"The Legislative Assembly shall provide by
law for the establishment of a uniform, and general system of Common
schools."
3. The
Court of Appeals had agreed with the state's contention that the seemingly
mandatory terms of Article VIII, section 8 ("The Legislative Assembly
shall appropriate in each biennium a sum of money sufficient to ensure * *
*."), in fact embodied only "an aspirational goal of full funding for
public education," because the constitutional provision also offered the
legislature the option of using an explanatory report to justify any funding
deficiency.  Pendleton School Dist. v. State of Oregon, 220 Or App 56,
76, 185 P3d 471 (2008), aff'd in part and rev'd in part, 345 Or 596, 200
P3d 133 (2009).  Relying on that reasoning, the Court of Appeals had affirmed
the trial court's dismissal of the petitioners' complaint for declaratory
judgment.