Opinion ID: 3053286
Heading Depth: 3
Heading Rank: 2

Heading: Extrinsic Evidence of the Parties’ Intent

Text: The PERS members make two main arguments that the extrinsic evidence of the parties’ intent supports their interpretation of the consent decree. We address those arguments in turn. 6 As noted above, we did not actually interpret the consent decree; we only identified the decree as ambiguous for purposes of our ruling on contempt. EBNER v. OREGON 13131
The PERS members first argue that the consent decree embodied a “quid pro quo” exchange of their rights to retroactive relief under Title VII in return for a permanent benefits floor. In support of this argument, they point to the last sentence of paragraph three of the consent decree: Defendant shall have no obligation to recalculate “refund annuity” retirement allowances to female members already retired or retiring before July 1, 1978. The PERS members maintain that this sentence was included in the consent decree to memorialize the parties’ exchange of rights. The Board argues that no such exchange of rights was contemplated by this sentence. Instead, the sentence was merely intended to clarify the scope of relief. The Board also argues that the original Henderson litigants did not have any such rights to retroactive relief, and, even if they did, the Board would not have opted to create a permanent benefits floor to avoid paying retroactive relief. To understand these arguments, we turn to the state of Title VII case law in 1978. The parties entered into the consent decree after the Supreme Court issued its decision in Manhart. The Court held for the first time in Manhart that Title VII’s prohibitions on sex-based discrimination applied to employee benefit plans. Nevertheless, the Court reversed the district court’s award of retroactive relief to the retirees, reasoning that “retroactive liability could be devastating for a pension fund” because the “harm would fall in large part on innocent third parties.” 435 U.S. at 723. [5] When viewed from hindsight, the timing and holding of Manhart suggest that the original Henderson plaintiffs would 13132 EBNER v. OREGON not have believed that they were entitled to retroactive relief. But in 1978, Manhart was new law, and Title VII case law on retroactivity was not uniform. Moreover, it was not entirely clear that Manhart’s holding on retroactivity applied to the facts of the Henderson litigation. Thus, it is theoretically possible that the parties were concerned about retroactive relief when drafting the 1978 consent decree. However, this does not necessarily mean that any quid pro quo arrangement with respect to a permanent refund annuity allowance rate was reached. [6] Therefore, we look to the evidence in the record. The PERS members contend that the assumptions of the Board and its intent on retroactivity are revealed by the briefs filed in Henderson I, the district court’s pre-Manhart decision in Henderson I, the understandings of the parties as expressed by minutes from the Board’s 1978 meeting about the consent decree, the affidavit of the 1978 PERS Director, the affidavit of the 1978 PERS Assistant Director, and the Affidavit of PERS counsel. [7] Our review of this evidence, however, reveals that it does not support the PERS members’ contention. There is nothing in the Henderson I briefs, the district court’s preManhart decision, or the various affidavits that indicates the parties believed that the PERS members were waiving any rights they may have had to retroactive relief in exchange for a permanent floor on refund annuity rates. By contrast, the minutes from the 1978 meeting actually support the Board’s position. At that meeting, the Board discussed whether to give female PERS members the same benefits as male PERS members, or whether to adopt an average between the male and female rates. The Board’s attorney “questioned the legality of such a reduction in benefits” for male members. Then, “[t]o resolve the matter the Board directed [the attorney] to attempt a negotiated consent judgment with the plaintiffs, agree to increase the female annuity factor to that of the male rate effective July 1, 1978 and thereafter.” Later in that same EBNER v. OREGON 13133 meeting, the Board acted to top up female benefits by passing a motion that “the refund annuity benefit for females be equal to that received by the males.” This language makes it clear that the reason the Board chose to top-up female benefits was its concern over a reduction in male benefits, and not a concern about retroactive damages.7 This language also indicates that the Board’s goal was to equalize male and female rates from 1978 onward. Tellingly, the minutes say nothing about locking in the 1978 rates. Finally, as the district court recognized, “[e]ven if the settlement released retroactive liability in exchange for topping up the tables for female members, that does not mean that the newly topped-up benefit was to act as a floor in perpetuity.” The Board had two options available to desegregate its refund annuity allowance system: (1) it could create blended rates, or (2) it could “top up” the female rates. “Topping up” the female rates was the best option for the PERS members. Thus, even if PERS members did consciously abandon any rights to retroactive relief, they may have decided to do so in return for the “topping up” option, not the creation of a permanent benefits floor. [8] In short, we find that, even viewing the evidence on retroactive relief in the light most favorable to the PERS members, the parties did not intend to create a permanent floor on benefits by entering into the consent decree.
The PERS members also argue that the Board’s course of conduct after 1978 supports their interpretation of the consent decree. Again, we disagree. 7 Indeed, the only mention of retroactive damages appears in the minutes two paragraphs earlier in connection with a discussion of the possibility of fighting the appeal—not in connection with negotiation of the consent decree. 13134 EBNER v. OREGON [9] It is undisputed that, from the date of the consent decree until the Reform Legislation was enacted in 2003, the Board maintained refund annuity rates at or above those in effect for males on July 1, 1978, at least for those members who joined PERS prior to 1999. The PERS members contend that the Board’s practice of maintaining annuity rates at those levels suggests that the Board believed that lowering rates would violate the consent decree. However, as discussed above, the minutes from the Board meeting suggest that the Board’s refusal to lower annuity rates was attributed to a fear that male PERS members might have vested property rights in the 1978 rates—not to a fear that lowering the rates would violate the consent decree. Moreover, as the Oregon Supreme Court explained in Strunk, the Board adopted administrative rules in the 1990s to maintain the rates at or above the 1978 levels “in response to legal advice that it had received regarding maintaining the fund’s status as a qualified governmental retirement plan and trust under the Internal Revenue Code.” Strunk, 108 P.3d at 1106. Finally, there is no contemporaneous documentary evidence indicating that, when the Board modified the rates in the years following entry of the consent decree, it was concerned about a benefits floor deriving from the consent decree. [10] In sum, we find that the Board’s continued use of the 1978 male annuity refund rates cannot be attributed to its fear of violating the consent decree. To the contrary, the evidence suggests that the Board did not dip below the 1978 rates due to other, unrelated legal concerns.