Argued and Submitted: March 6, 2013.
Jackson County Circuit Court. 081663E7. Mark S. Schiveley, Judge.
Robert E. Franz, Jr., argued the cause for appellants. With him on the briefs was Law Office of Robert E. Franz, Jr.
Stephen L. Brischetto argued the cause and filed the brief for respondent.
Before Ortega, Presiding Judge, and Sercombe, Judge, and Hadlock, Judge.
[262 Or.App. 31] SERCOMBE, J.
This consolidated appeal involves a series of judgments entered in favor of plaintiff, a now-retired employee of the City of Medford, in his class action suit for declaratory and injunctive relief against the city and its city manager. The factual premise of plaintiff's suit is simple and undisputed: The city made health care insurance coverage available to plaintiff and other city employees who were members of the class, but it did not offer that same coverage to the class members when they retired. The trial court concluded that, in failing to offer that coverage, the city violated ORS 243.303(2), which requires that a " 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 * * *." The trial court ordered the city to provide plaintiff and the class members with health insurance coverage that included the option to purchase that same health insurance at the time they retired. The trial court later awarded plaintiff attorney fees on that claim and found the city in contempt of the court's orders to comply with ORS 243.303(2). Separately, following a trial to the court, the court concluded that, by not making the same health insurance coverage available to plaintiff upon his retirement, the city had discriminated against him on the basis of age under ORS 659A.030(1)(b). The city now appeals the limited judgments, general judgment, and supplemental judgment encompassing those rulings.
As explained herein, we conclude that the trial court erred in granting summary judgment to plaintiff on his claim for declaratory and injunctive relief under ORS 243.303(2), because the legal standard that the trial court applied conflicts with the standard articulated by the Supreme Court in Doyle v. City of Medford, 347 Ore. 564, [262 Or.App. 32]
227 P.3d 683 (2010), a decision that issued after the trial court's summary judgment ruling. We reverse and remand the limited judgment on the ORS 243.303(2) claim for declaratory and injunctive relief for further proceedings. As to plaintiff's age discrimination claim under ORS 659A.030(1)(b), we conclude that the trial court erred in allowing plaintiff to try that claim, over the city's objection, on a theory of disparate impact, because that theory had not been pleaded and depended on proof different from the disparate treatment theory that plaintiff had pleaded. We therefore reverse the trial court's judgment in favor of plaintiff on his age discrimination claim. Because the supplemental judgment for attorney fees is not appealable, we dismiss the city's appeal of that judgment. Otherwise, we affirm.
We begin with a review of related litigation that provides helpful background to this appeal. Plaintiff here, an employee of the city who was eligible for retirement but had not yet retired, first filed suit against the city for declaratory and injunctive relief in federal court. In a separate suit, four retired Medford employees (" the Doyle plaintiffs" ) filed suit against the city, seeking damages and injunctive relief. In those suits, the plaintiffs alleged that, by failing to make health insurance coverage available to them, the city had violated various state and federal laws: ORS 243.303(2); the city's ordinance implementing ORS 243.303(2), Resolution No. 5715; Oregon's age discrimination statute, ORS 659A.030; the Age Discrimination in Employment Act of 1967 (ADEA), 29 USC § § 621-634; and the Due Process Clause of the Fourteenth Amendment to the United States Constitution. The federal district court declined to take jurisdiction over the
state law claims in both suits, but gave the plaintiffs leave to refile their suits in state court.
The federal claims in both suits continued in federal court. As to the Doyle plaintiffs' federal due process claim, the district court granted summary judgment to the city, and the plaintiffs appealed to the Ninth Circuit Court of Appeals. The Ninth Circuit determined that a resolution of the due process claim depended on an interpretation of ORS 243.303, a statute that had not previously been construed and that was ambiguous, and, accordingly, certified [262 Or.App. 33] the following question to the Oregon Supreme Court: " What amount of discretion does [ORS] 243.303 confer on local governments to determine whether or not to provide health insurance coverage to their employees after retirement?" Doyle v. City of Medford, 565 F.3d 536, 541-42, 544 (9th Cir 2009) ( Doyle I ).
The Oregon Supreme Court accepted the certified question and answered it in Doyle v. City of Medford, 347 Ore. 564, 227 P.3d 683 (2010) ( Doyle II ). The Supreme Court determined that the certified question focused on the meaning of the phrase " shall, insofar as and to the extent possible" in ORS 243.303(2):
" 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 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."
ORS 243.303(2) (emphasis added). The Doyle plaintiffs argued that the statute imposed a mandatory duty on local governments to provide retiree health insurance coverage. 347 Ore. at 570. In their view, local governments could " escape that duty only in the case of actual impossibility," but, " if there are providers available who are willing to provide [health insurance] coverage that includes retirees, the city must provide that coverage, regardless of cost or other [262 Or.App. 34] circumstances." Id. (internal quotation marks omitted; brackets in original). The city viewed the statute as imposing " no duty at all," meaning that a local government had " total discretion" to make health insurance coverage available to retirees. Id. (internal quotation marks omitted).
The Supreme Court " reject[ed] both of those interpretations of ORS 243.303(2)." Id. The court reasoned that, by using the word " shall" in ORS 243.303(2), the legislature intended " to impose an obligation on local governments" to make the health insurance coverage that they provide to active employees available to retired employees. Id. at 573. The court further explained, however, that by including the phrase " insofar as and to the extent possible," the legislature intended to provide some " flexibility" to local governments so that performance of the obligation under the statute was not " unduly burdensome." Id. at 579. The court summarized its understanding of the statute:
" [W]e interpret ORS 243.303(2) to create an obligation on local governments to make the health insurance coverage that they provide to active employees available to retired employees. It does not, as the city argues, leave the city with 'total discretion' to decline to make coverage available to retirees or to choose health insurance coverage for its current employees without
regard to whether the insurer is willing to offer coverage to retirees. Neither, however, do we interpret the statute as imposing an absolute mandate, subject only to an exception for actual impossibility. Local governments exist to provide government services, and they have statutory and contractual obligations to employees, retirees, and the citizens within their jurisdictions. Whether a local government has complied with ORS 243.303(2) will depend on whether it has made health insurance coverage available to retirees 'insofar as and to the extent possible,' in light of all the facts. The responsibility to demonstrate that it was not possible, under the statutory standard, to make coverage available to retirees rests with the local government, and we emphasize that the local government cannot make that showing, as the city attempts to here, by pointing solely to the fact that its chosen provider does not offer retiree health insurance coverage. Although ...