Johnson v. Saif

Page 1058

132 P.3d 1058

205 Or. App. 41

John JOHNSON, individually and for all others similarly situated, Appellant, v. SAIF CORPORATION, an Oregon public corporation, and Brenda Rocklin, Respondents.

0207-07157; A123541.

Court of Appeals of Oregon.

On Respondents' Petition for Reconsideration January 18, 2006.

Appellant's Response to Petition for Reconsideration January 27, 2006.

Decided March 29, 2006.

Hardy Myers, Attorney General, Mary H. Williams, Solicitor General, and Robert M. Atkinson, Assistant Attorney General, for petition.

Meagan A. Flynn and Preston Bunnell & Stone, LLP for response.

Before LANDAU, Presiding Judge, and SCHUMAN^* and ORTEGA, Judges.

LANDAU, P.J.

Plaintiff initiated this action under 42 USC section 1983 against defendants SAIF Corporation and its president and chief executive officer, alleging that defendants deprived him of his right to due process under the Fourteenth Amendment to the United States Constitution by terminating his permanent total disability workers' compensation benefits without a pretermination hearing. Defendants sought, and the trial court granted, summary judgment on the ground that SAIF is not a "person" subject to liability under section 1983.

Plaintiff appealed, arguing that SAIF indeed is a "person" within the meaning of the federal statute on which his claim is based. Plaintiff argued that, under existing federal precedent, whether a defendant is a "person" under that statute is determined essentially by reference to Eleventh Amendment principles, that is, by determining whether a defendant is immune from suit because it is an arm of the state. Plaintiff argued that whether a defendant is an arm of the state for Eleventh Amendment purposes is, in turn, determined by reference to, among other things, how the defendant is treated by state statute and state court case law and whether the state treasury is liable for the obligations of the defendant.

For their part, defendants argued summarily that SAIF is an arm of the state, citing two federal court decisions, namely, an unpublished opinion of the Court of Appeals for the Ninth Circuit and a published opinion of the district court.

We rejected defendants' contention. We explained that the cases on which they relied failed to examine the issue in light of the analysis required by United States Supreme Court case law, which we concluded placed particular emphasis on how an entity has been characterized as a matter of state law and whether the state treasury is vulnerable to satisfy that entity's obligations. Johnson v. SAIF, 202 Or.App. 264, 122 P.3d 66 (2005). We examined in some detail the history of SAIF and the manner in which it has been characterized by the state legislature and by the state courts over its history and concluded that the state law characterization of SAIF "does not strongly weigh either for or against Eleventh Amendment immunity." Id. at 294, 122 P.3d 66. We also examined the relationship between SAIF's operations and the vulnerability of the state treasury and concluded that we were aware of no law that obligated the treasury to satisfy SAIF's fiscal obligations. Id. at 293-94, 122 P.3d 66.

Defendants now request reconsideration of both of those holdings. They acknowledge that they previously relied "perhaps imprudently" on only the two federal court decisions, but they insist that we now must reconsider our decision for two reasons.

First, defendants contend that our analysis of the manner in which the legislature and state courts have characterized SAIF is flawed because we placed "undue emphasis" on cases that predate SAIF's 1979 reorganization, because we mischaracterized one of those early Supreme Court decisions, Butterfield v. State Indus. Acc. Com., 111 Or. 149, 223 P. 941, on reh'g, 111 Or. 149, 226 P. 216 (1924), and, to the extent that we relied on later Supreme Court case law for our analysis of Butterfield, because we erred in failing to recognize that the later case law is incorrect. We reject defendants' contentions.

Defendants begin in something of a deep hole: They are making the sort of arguments that might have been helpful before we issued an opinion rather than after. We ordinarily do not entertain arguments asserted for the first time on reconsideration. See, e.g., Kinross Copper Corp. v. State of Oregon, 163 Or.App. 357, 360, 988 P.2d 400 (1999), rev. den., 330 Or. 71, 994 P.2d 133 (2000) ("If a contention was not raised in the brief, * * * it is not appropriate to assert it on reconsideration."). In this case, defendants have offered no good reason — in fact, they have offered no reason at all — for their failure to have asserted their new arguments previously.

Aside from that, the new arguments are unpersuasive. We placed no particular "emphasis" on pre-1979 cases. We recounted the history of the manner in which the legislature organized, and several times reorganized, what is now known as SAIF Corporation, as well as the variety of cases in which the courts of this state have characterized the legal implications of those organizational decisions for various purposes. Johnson, 202 Or.App. at 278-91, 122 P.3d 66. If we emphasized anything, it was that the 1979 legislation that reorganized the entity into "an independent public corporation," Or. Laws 1979, ch. 829, § 2, resulted in an "ambiguous" entity, that is expressly subject to some statutes that apply to state agencies and expressly exempted SAIF from others. Johnson, 202 Or.App. at 285-87, 122 P.3d 66.¹ As for the case law, we noted that not a single state court decision has addressed whether SAIF is an "arm of the state" for Eleventh Amendment purposes. Id. at 293, 122 P.3d 66.

We did characterize Butterfield as holding that a suit against the State Industrial Accident Commission was not a suit against the state under the law that existed at the time. Johnson, 202 Or.App. at 280-81, 122 P.3d 66. We stand by that characterization. In Butterfield, the Attorney General argued that "the State Industrial Accident Commission is an arm of the state" and that, as a result, the state is the real party interest in workers' compensation claims litigation. 111 Or. at 152. The Supreme Court rejected that argument, holding that "[t]he state is not a party" to such cases. Id. at 153. Defendants now propose a different reading of Butterfield. They contend that the court actually based its decision on "the legislature's waiver of whatever immunity from suit SIAC would have had as an arm of the state." We can find no support for that interpretation of Butterfield in the text of the court's opinion, however. Defendants' reading of the case also is at odds with the manner in which the Supreme Court itself later characterized Butterfield in Bennett v. State Ind. Acc. Com., 203 Or. 275, 280-81, 279 P.2d 655 (1955). Defendants suggest that Bennett was incorrectly decided in that respect. That defendants disagree with the Supreme Court's decision, however, is a matter that is more appropriately addressed to the Supreme Court. See Gunn v. Lane County, 173 Or. App. 97, 102 n. 3, 20 P.3d 247 (2001) (parties' contentions that Supreme Court case law is in error must be addressed to the Supreme Court, not this court).

Second, defendants argue that the state treasury is, in fact, vulnerable for at least some of SAIF's obligations. Defendants concede that the state is not likely liable for debts that SAIF is "contractually obligated to pay." Defendants argue that SAIF is, however, subject to the Oregon Tort Claims Act and that the Risk Management Division of the Department of Administrative Services is obligated to pay tort claims against SAIF, as for any state agency. Defendants seek to establish that the Risk Management Division pays tort claims against SAIF by introducing two sets of documents that were not submitted to the trial court and are not part of the record of this case. Each consists of a transmittal letter from the Risk Management Division and an accompanying claim check that we are to assume constitutes payment of a tort claim against SAIF. Those documents, in defendants' view, "demonstrate beyond any doubt that the state is responsible for paying tort judgments entered against SAIF." We reject defendants' argument for several reasons.

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