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Linn County v. Brown

Court of Appeals of Oregon

May 1, 2019

LINN COUNTY, Douglas County, and Yamhill County, each a local government of the State of Oregon, Plaintiffs-Respondents,
v.
Kate BROWN, in her official capacity as Governor of the State of Oregon; and Val Hoyle, in her official capacity as Commissioner of the Oregon Bureau of Labor and Industries, Defendants-Appellants. and JEFFERSON COUNTY, et al., Plaintiffs,

          Argued and submitted September 20, 2018

          Linn County Circuit Court 16CV17209; Daniel R. Murphy, Judge.

          Keith L. Kutler, Assistant Attorney General, argued the cause for appellants. Also on the briefs were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

          Sharon A. Rudnick argued the cause for respondents. Also on the brief were William F. Gary, Susan Marmaduke, and Harrang Long Gary Rudnick P.C.

          Steven C. Berman and Stoll Stoll Berne Lokting & Shlachter, PC, fled the brief amicus curiae for Family Forward Oregon.

          Before Powers, Presiding Judge, and Egan, Chief Judge, and DeVore, Judge.[*]

         [297 Or.App. 331] Case Summary: Three counties challenge their obligation to provide their employees paid sick leave as required of many Oregon employers by ORS 653.601 to ORS 653.661. The counties contend that they are excused from the obligation under Article XI, section 15, of the Oregon Constitution, which provides that a local government is not required to comply with a state law that requires a local government to "establish a new program or provide an increased level of service for an existing program" when the state fails to provide adequate funding. The trial court agreed, granted the counties' motion for summary judgment, and entered a judgment that made rulings declaring the paid sick leave law to be an unfunded program. Held: Oregon's paid sick leave law is not a government program of services to others within the meaning of Article XI, section 15. Consequently, the trial court erred in granting the counties' motion and entering a declaratory judgment for the counties.

         [297 Or.App. 332] DEVORE, J.

         In a declaratory judgment action, three counties challenge their obligation to provide their employees paid sick leave as required of many Oregon employers by ORS 653.601 to 653.661. The counties contend that they are excused from the obligation under Article XI, section 15, of the Oregon Constitution, which provides that a local government is not required to comply with a state law that requires a local government to "establish a new program or provide an increased level of service for an existing program" when the state fails to provide adequate funding. The trial court agreed, granted the counties' motion for summary judgment, and entered a judgment that made rulings declaring the paid sick leave law to be an unfunded program. The governor and labor commissioner appeal from that judgment, arguing that the trial court erred in its broad interpretation of Article XI, section 15. We agree, concluding that the paid sick leave law is not an unfunded program of services to others within the meaning of Article XI, section 15. Consequently, the trial court erred in granting the counties' motion and entering a declaratory judgment for the counties. We reverse and remand.[1]

         I. BACKGROUND

         A. Trial Court Proceedings

         Initially, plaintiffs, then nine Oregon counties, filed a complaint in which they alleged that the paid sick leave law compelled them to spend money on a new program or to spend more money for an existing program without any or enough state reimbursement, in violation of Article XI, section 15.[2] They sought a declaratory judgment to that effect and injunctive relief pursuant to ORS 28.020 and ORS 28.080.[3] Defendants, the governor and labor commissioner, [297 Or.App. 333] responded that the constitutional measure did not apply, adding that, even if the measure applied, all nine counties did not spend more than one-hundredth of one percent of a county's annual budget, which Article XI, subsection 15(3), set as a threshold of applicability.

         The parties filed cross-motions for summary judgment. In its initial ruling, the trial court granted plaintiffs' motion and denied defendants' motion. On reconsideration, the court granted plaintiffs' motion in part and denied it in part. The court held that the state's sick leave law was an unfunded program within the meaning of Article XI, section 15, but also determined that plaintiffs had not yet established that the counties met the measure's cost threshold. Thereafter, the parties stipulated that six of the nine counties failed to meet the cost threshold and that their claims should be dismissed in a limited judgment. The parties agreed, however, that Linn, Douglas, and Yamhill counties met the cost threshold. For those three counties, the trial court entered a general judgment declaring that Article XI, section 15, excused them from compliance with the paid sick leave law.

         B. The Paid Sick Leave Law

         To frame the issue, we describe the statutory and constitutional provisions at issue before recounting the parties' arguments and the trial court's opinion. Enacted by Oregon Laws 2015, chapter 537, the paid sick leave law requires employers of 10 or more employees to implement a sick time policy that allows an employee to earn and use up to 40 hours of paid sick time per year. ORS 653.6O6(1)(a); ORS 653.601(2) (defining "employer").[4] The law is equally [297 Or.App. 334] applicable to private and public employers, specifically including cities, counties, various districts, and other public entities. ORS 653.601(2). Employers may adopt policies limiting employees' accrual of sick leave to 80 hours and permitting use of no more than 40 hours per year. ORS 653.606 (3)(a), (b). Sick leave may be used for an employee's "mental or physical illness, injury or health condition, need for medical diagnosis, care or treatment of a mental or physical illness, injury or health condition or need for preventative medical care," or for care of a family member with those needs. ORS 653.616(1), (2). An employer may, but is not required to, direct an employee to provide verification from a health care provider of the need for sick time or certification of the need for family leave, when the employee uses sick leave for more than three consecutive days, ORS 653.626(1)(a), but the employer must pay reasonable costs, if any incurred for providing the verification or certification, ORS 653.626(2). The sick leave law does not affect any employer policy or standard that provides for a greater use of paid or unpaid sick time. ORS 653.636. And, the sick leave law does not apply to employees subject to collective bargaining agreements or consumer-employed home-care workers whose sick time policy is established by the Home Care Commission. ORS 653.646(1), (2). The parties agree that the legislature did not appropriate funds to local governments or private employers to implement paid sick leave.

         C. The Unfunded Programs Measure

         The unfunded programs measure, section 15 of Article XI of the Oregon Constitution, was originally adopted by Oregon voters in 1996 as Ballot Measure 30 after a legislative referral in the preceding year. House Joint Resolution (HJR) 2, para 1 (sec 15) (1995); Oregon Laws 1997, ix (Vote on Statewide Measures, Nov 5, 1996, Measure 30 (HJR 2)). Because the original measure included a sunset provision, HJR 2, para 1 (section 15a), the measure was resubmit-ted and readopted by voters in 2000 as Ballot Measure 84.[297 Or.App. 335] Oregon Laws 2001, x (Vote on Statewide Measures, Nov 7, 2001, Measure 84 (Senate Joint Resolution (SJR) 39 (2001)). Article XI, section 15, provides:

"(1) Except as provided in subsection (7) of this section, when the Legislative Assembly or any state agency requires any local government to establish a new program or provide an increased level of service for an existing program, the State of Oregon shall appropriate and allocate to the local government moneys sufficient to pay the ongoing usual and reasonable costs of performing the mandated service or activity.
"(2) As used in this section:
"(a) 'Enterprise activity' means a program under which a local government sells products or services in competition with a nongovernment entity.
"(b) 'Local government' means a city, county, municipal corporation or municipal utility operated by a board or commission.
"(c) 'Program' means a program or project imposed by enactment of the Legislative Assembly or by rule or order of a state agency under which a local government must provide administrative, financial, social, health or other specified services to persons, government agencies or to the public generally.
"(d) 'Usual and reasonable costs' means those costs incurred by the affected local governments for a specific program using generally accepted methods of service delivery and administrative practice.
"(3) A local government is not required to comply with any state law or administrative rule or order enacted or adopted after January 1, 1997, that requires the expenditure of money by the local government for a new program or increased level of service for an existing program until the state appropriates and allocates to the local government reimbursement for any costs incurred to carry out the law, rule or order and unless the Legislative Assembly provides, by appropriation, reimbursement in each succeeding year for such costs. However, a local government may refuse to comply with a state law or administrative rule or order under this subsection only if the amount appropriated and allocated to the local government by the Legislative Assembly for a program in a fiscal year:
[297 Or.App. 336] "(a) Is less than 95 percent of the usual and reasonable costs incurred by the local government in conducting the program at the same level of service in the preceding fiscal year; or
"(b) Requires the local government to spend for the program, in addition to the amount appropriated and allocated by the Legislative Assembly, an amount that exceeds one-hundredth of one percent of the annual budget adopted by the governing body of the local government for that fiscal year.
“* * * * *
"(7) This section shall not apply to:
"(a) Any law that is approved by three-fifths of the membership of each house of the Legislative Assembly.
“* * * * *
"(8) When a local government is not required under subsection (3) of this section to comply with a state law or administrative rule or order relating to an enterprise activity, if a nongovernment entity competes with the local government by selling products or services that are similar to the products and services sold under the enterprise activity, the nongovernment entity is not required to comply with the state law or administrative rule or order relating to that enterprise activity."

(Emphases added.) In light of those provisions, the question in the trial court and on appeal is whether the paid sick leave law constitutes a "program" that requires "a local government" to "provide *** services to persons, government agencies, or the public generally." Or Const, Art XI, §§ 15(1), (2)(c).

         D. Trial Court's Opinion

         In reaching its decision, the trial court expressed some ambivalence about the measure's definition of "program," which includes the word "program" as part of the definition. The court declared that it "must disregard the use of the term program in defining program since it is of no help." Although the court agreed with the counties' proffered dictionary definitions of "program" and "services," the court noted that "dictionary definitions differ and lack [297 Or.App. 337] the specificity that would resolve the question." Rather, the court deemed the other parts of the definition of "program," what it called the "criteria for [a] program," to be "clear and unambiguous," such that the term "program" should apply to the paid sick leave law.

         The trial court found support in several places. The court was persuaded that the legislative history of two competing referral resolutions in 1995 indicated that persons favoring and opposing the resolutions "clearly believed" that employee benefits could or would fall within them. Finally, the court noted an attorney general's opinion that was rendered after the voters' initial adoption of the constitutional measure in 1996 but before their re-adoption of the measure in 2000. That opinion, while recognizing room for doubt, advised that a proposal for increased benefits in the Public Employee Retirement System could be subject to the unfunded program measure. 49 Op Atty Gen 152 (1999).

         Putting it all together, the trial court concluded that the paid sick leave law is a "program" that requires the three plaintiff counties, as employers, to provide "services" to persons, agencies, or the public in general, without required funding, contrary to Article XI, section 15.

         E. Arguments

         On appeal, defendants assign as error the trial court's decisions to grant plaintiffs' motion for summary judgment and to enter a judgment with plaintiffs' requested declaratory rulings. Defendants argue that the paid sick leave law is not a "program" for providing government services to others. In defendants' view, paid sick leave is merely a component of employee compensation within local government or any public or private organization. Defendants argue that the terms "program" and "service" must be considered in the context of the unfunded program measure. When so considered, the terms "program" and "services" refer "to various kinds of services that local governments perform." Defendants add that their view is supported in the measure's referral history. They argue that the voters' pamphlets in 1996 and 2000 reveal nothing to suggest something like the paid sick leave would be considered an unfunded [297 Or.App. 338] program, while the legislature's choice to refer a narrower measure, rather than a broader measure, to the voters suggests that a "program" means a governmental program of services to individuals or to the public in general.

         Plaintiffs argue that Article XI, section 15, is not restricted to just unfunded government programs imposed on local governments. Plaintiffs argue that the constitutional measure applies not to government programs in the traditional sense, but to all "laws of general application" to everyone, including local governments. Like defendants, plaintiffs refer to the measure's history in competing referral resolutions in the legislature. Plaintiffs point to witness exhibits showing some surveyed public entities had listed employee matters such as workplace safety or arbitration in collective bargaining as "unfunded mandates." In further support of their argument, plaintiffs point to subsection 15(8), which provides that, when a local government's "enterprise activity" is relieved of a requirement by the unfunded programs measure, then any private entity that competes by selling products or services is likewise relieved of compliance with such a state requirement. Plaintiffs infer that subsection 15(8) would be unnecessary if Article XI, section 15, did not apply to all laws in general.

         II. ...


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