Moro v. State

360 Or. 467

384 P.3d 504

Everice Moro; Terri Domenigoni; Charles Custer ; John Hawkins; Michael Arken; Eugene Ditter; John O'Kief; Michael Smith; Lane Johnson; Greg Clouser; Brandon Silence; Alison Vickery; and Jin Voek, Petitioners,

v.State of Oregon; State of Oregon, by and through the Department of Corrections ; Linn County; City of Portland; City of Salem; Tualatin Valley Fire & Rescue; Estacada School District; Oregon City School District; Ontario School District; Beaverton School District; West Linn School District; Bend School District; and Public Employees Retirement Board, Respondents,andLeague of Oregon Cities; Oregon School Boards Association ; and Association of Oregon Counties, Intervenors,

and

Central Oregon Irrigation District, Intervenor below.

Wayne Stanley Jones, Petitioner,

v.Public Employees Retirement Board ; Ellen Rosenblum, Attorney General; and Kate Brown, Governor, Respondents.

Michael D. Reynolds, Petitioner,

v.Public Employees Retirement Board, State of Oregon; and Kate Brown, Governor, State of Oregon, Respondents.

George A. Riemer, Petitioner,

v.State of Oregon; Oregon Governor Kate Brown; Oregon Attorney General Ellen Rosenblum; Oregon Public Employees Retirement Board; and Oregon Public Employees Retirement System, Respondents.

George A. Riemer, Petitioner,

v.State of Oregon, Oregon Governor Kate Brown, Oregon Attorney General Ellen Rosenblum, Public Employees Retirement Board, and Public Employees Retirement System, Respondents.

S061452 (Control)

S061431

S061454

S061475

S061860

Supreme Court of Oregon.

Petitions submitted on or before June 11, 2016.

October 27, 2016

Gregory A. Hartman, Bennett, Harman, Morris & Kaplan, LLP, Portland, filed the petition for attorney fees and costs for petitioners Everice Moro, Terri Domenigoni, Charles Custer, John Hawkins, Michael Arken, Eugene Ditter, John O'Kief, Michael Smith, Lane Johnson, Greg Clouser, Brandon Silence, Alison Vickery, and Jin Voek. Also on the petition was Aruna A. Masih.

George A. Riemer, Sun City West, Arizona, filed the petition for attorney fees and costs on behalf of himself.

Michael D. Reynolds, Seattle, Washington, filed the petition for attorney fees and costs on behalf of himself.

Wayne Stanley Jones, North Salt Lake City, Utah, filed the petition for costs on behalf of himself.

William F. Gary, Harrang Long Gary Rudnick P.C., Portland, filed the objections to petitions for attorney fees and costs for respondents Linn County, Estacada School District, Oregon City School District, Ontario School District, West Linn School District, Beaverton School District, and Bend School District and intervenors Oregon School Boards Association and Association of Oregon Counties. Also on the objections was Sharon A. Rudnick.

Keith L. Kutler, Assistant Attorney General, Salem, filed the objections to petitions for attorney fees and costs for state respondents. Also on the objections were Anna M. Joyce, Solicitor General, and Michael A. Casper and Matthew J. Merritt, Assistant Attorneys General.

Robert F. Blackmore, Innova Legal Advisors PC, Lake Oswego, filed the objections to petitions for attorney fees and costs for respondent Tualatin Valley Fire and Rescue. With him on the objections was Heidi W. Mason.

Before Balmer, Chief Justice, and Kistler, Walters, Brewer, Baldwin, and Nakamoto Justices.^*

BALMER, C.J.

This matter is before us on petitions for attorney fees and costs brought by a law firm and three individuals (claimants) who participated in the underlying litigation. In that litigation, claimants were petitioners or represented petitioners who challenged legislation passed in 2013 that changed the pension benefits paid to certain members of the Public Employee Retirement System (PERS) by limiting the statutory cost-of-living adjustment (COLA) and eliminating a PERS income-tax offset for out-of-state retirees. In Moro v. State of Oregon , 357 Or. 167, 351 P.3d 1 (2015) (Moro I ), this court largely agreed with petitioners' argument that modifications to the COLA formula impaired petitioners' contractual rights, thus violating Article I, section 21, of the Oregon Constitution. But the court rejected petitioners' similar challenge to the elimination of the income-tax offset. Petitioners, who were active and retired members of PERS, were the prevailing parties.

Following the decision in Moro I, claimants petitioned for attorney fees and costs. State respondents and county/school district respondents filed objections.¹ We referred those petitions to a special master for recommended findings of fact and conclusions of law. Moro v. State , 358 Or. 375, 381, 364 P.3d 325 (2015) (Moro II ). The special master reported his recommendations to this court, and the parties subsequently filed objections and responses to those recommendations. The issues raised in those filings include which legal doctrines justify an award of attorney fees in this case; whether self-represented attorneys are eligible to receive an award of attorney fees; whether the fees sought by claimants are reasonable; and how to pay for an award of fees and costs.

After reviewing those filings, and for the reasons described below, we conclude that fees should be awarded based on the common-fund and substantial-benefit doctrines; that the self-represented attorneys are eligible to receive a fee award under those doctrines; that a reasonable fee award under the lodestar approach must be based on reasonable hourly rates and reflect reductions to account for duplicative work and work on unsuccessful claims; and that an award in this case should be paid for as determined by the Public Employees Retirement Board (PERB) in a manner that is consistent with its statutory authority and fiduciary obligations.

Four claimants seek compensation here. One claimant is the law firm Bennett, Hartman, Morris & Kaplan, LLP (“Bennett Hartman”), which represented the Moro group of petitioners. The three additional claimants—Reynolds, Riemer, and Jones—are PERS members who acted as pro se petitioners in the underlying litigation. Reynolds and Riemer, although pro se petitioners, also are attorneys and seek both attorney fees and costs. Jones seeks only his costs.

Claimants who seek attorney fees have calculated their fees using the lodestar method. Under the lodestar method, a court determines a reasonable attorney fee award by multiplying the reasonable hours expended by a reasonable hourly rate and, when appropriate, enhancing the lodestar amount with a fee multiplier. See Strawn v. Farmers Ins. Co. , 353 Or. 210, 217, 297 P.3d 439 (2013) (describing the lodestar method). Bennett Hartman seeks $ 1,401,040 in fees, based on 1,693.8 hours of attorney time at between $ 150 and $ 500 per hour and a fee multiplier of 2.0. Reynolds seeks $ 562,000 in fees, based on 562 hours of attorney time at $ 500 per hour and a fee multiplier of 2.0. And Riemer seeks $ 397,500 in fees, based on 265 hours of attorney time at $ 500 per hour and a fee multiplier of 3.0.

As it relates to costs, Bennett Hartman seeks $ 62,066.13; Reynolds seeks $ 1,214.48; Riemer seeks $ 1,159.15; and Jones seeks $ 1,479.24. Bennett Hartman's cost request is substantially higher because it includes the costs of an expert witness who testified in support of petitioners in the underlying litigation.

State respondents and county/school district respondents filed objections with this court asserting various reasons to deny or reduce the fees claimed. As an initial matter, respondents dispute what legal grounds are available to justify attorney fees. Bennett Hartman and Reynolds rely on the common-fund doctrine, while Riemer relies on both the common-fund doctrine and on this court's decision in Deras v. Myers , 272 Or. 47, 535 P.2d 541 (1975). Although respondents agree that a fee award may be justified under the common-fund doctrine, they dispute the applicability of Deras, and county/school district respondents additionally argue that a portion of the fee award should be justified under the substantial-benefit doctrine. Respondents also contend that, regardless of which doctrine justifies a fee award, no fees should be awarded to Reynolds and Riemer because of their status as pro se petitioners, rather than attorneys serving in a representative capacity.

If fees are awarded, the parties agree that any fee award allowed in this case must be reasonable. Respondents object to the reasonableness of the fees sought—specifically, whether claimants are using appropriate hourly rates and fee multipliers and whether fees should be reduced to account for duplicative work and work on the unsuccessful tax-offset claim.

Finally, the parties dispute how to pay for any award of costs and fees, namely, how to collect the money from the beneficiaries of the litigation. Those beneficiaries consist of active, inactive, and retired PERS members falling within different tiers of membership. The assets of those beneficiaries are therefore spread out among different accounts held within the Public Employees Retirement Fund (PERF). That raises the question of whether the money for any awards should come from, for example, payments being made to retirees, PERS's contingency reserve account, or individual PERS accounts.

All those disputes were presented to the special master, whose report contained recommended findings of fact and conclusions of law. The special master concluded that the common-fund and substantial-benefit doctrines applied, but that Deras fees should not be allowed. The special master further concluded that the common-fund and substantial-benefit doctrines largely justified the fees sought by Bennett Hartman, although he recommended using a 1.5 fee multiplier rather than the 2.0 fee multiplier that Bennett Hartman requested.

The special master recommended no award of attorney fees to Reynolds and Riemer, because they were acting as pro se litigants rather than as attorneys. He also made the alternative recommendation that, if this court were to determine that...