No. 68 October 27, 2016 467
IN THE SUPREME COURT OF THE
STATE OF OREGON
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,
and
LEAGUE OF OREGON CITIES;
Oregon School Boards Association;
and Association of Oregon Counties,
Intervenors,
and
CENTRAL OREGON IRRIGATION DISTRICT,
Intervenor below.
(S061452 (Control))
Wayne Stanley JONES,
Petitioner,
v.
PUBLIC EMPLOYEES RETIREMENT BOARD;
Ellen Rosenblum, Attorney General;
and Kate Brown, Governor,
Respondents.
(S061431)
468 Moro v. State of Oregon
Michael D. REYNOLDS,
Petitioner,
v.
PUBLIC EMPLOYEES RETIREMENT BOARD,
State of Oregon; and
Kate Brown, Governor,
State of Oregon,
Respondents.
(S061454)
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.
(S061475)
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.
(S061860)
On petitions for attorney fees and costs.
Petitions submitted on or before June 11, 2016.
Gregory A. Hartman, Bennett, Hartman, Morris &
Kaplan, LLP, Portland, filed the petition for attorney fees
and costs on behalf of Everice Moro, Terri Domenigoni,
Charles Custer, John Hawkins, Michael Arken, Eugene
Ditter, John O’Kief, Michael Smith, Lane Johnson, Greg
Cite as 360 Or 467 (2016) 469
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 peti-
tion for attorney fees and costs on behalf of himself.
Michael D. Reynolds, Seattle, Washington, filed the peti-
tion 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.
Keith L. Kutler, Assistant Attorney General, Salem,
filed the objections to petitions for attorney fees and costs
on behalf of the State of Oregon, Kate Brown, Public
Employees Retirement Board, Public Employees Retirement
System, and Ellen Rosenblum. Also on the objections were
Anna M. Joyce, Solicitor General, and Michael A. Casper
and Matthew J. Merritt, Assistant Attorneys General.
William F. Gary, Harrang Long Gary Rudnick P.C.,
Portland, filed the objections to petitions for attorney fees
and costs on behalf of 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.
Robert F. Blackmore, Innova Legal Advisors PC, Lake
Oswego, filed the objections to petitions for attorney fees and
costs on behalf of Tualatin Valley Fire and Rescue. Also on
the objections was Heidi W. Mason.
Before Balmer, Chief Justice, and Kistler, Walters,
Brewer, Baldwin, and Nakamoto Justices.*
BALMER, C. J.
Attorney fees and costs awarded.
______________
* Landau, J., did not participate in the consideration or decision of this case.
470 Moro v. State of Oregon
Case Summary: Moro v. State of Oregon, 357 Or 167, 351 P3d 1 (2015) affirmed
in part and denied in part challenges brought by petitioners to legislative amend-
ments aimed at reducing the costs of the Public Employee Retirement System
(PERS). Claimants, who are pro se petitioners and attorneys representing other
petitioners, seek their fees and costs for their efforts achieving that result. The
petitions for fees and costs were previously referred to a special master for recom-
mended findings of fact and conclusions of law. After the special master reported
those recommendations, the parties raised numerous issues. Held: (1) fees should
be awarded based on the common-fund and substantial-benefit doctrines and not
Deras v. Myers, 272 Or 47, 535 P2d 541 (1975); (2) self-represented attorneys are
eligible to receive a fee award under the common-fund and substantial-benefit
doctrines; (3) 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 (4) 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.
Attorney fees and costs awarded.
Cite as 360 Or 467 (2016) 471
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 P3d 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’ sim-
ilar 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 peti-
tioned 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 of
Oregon, 358 Or 375, 381, 364 P3d 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 eli-
gible 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.
1
“State respondents” are the State of Oregon, Governor Kate Brown,
Attorney General Ellen Rosenblum, the Public Employees Retirement Board, and
the Public Employees Retirement System. “County/school district respondents”
are Linn County, Estacada School District, Oregon City School District, Ontario
School District, West Linn School District, Beaverton School District, and Bend
School District as well as intervenors Oregon School Boards Association and
Association of Oregon Counties. Further, respondent Tualatin Valley Fire and
Rescue joined in the objections filed by state respondents and county/school dis-
trict respondents.
472 Moro v. State of Oregon
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 doc-
trines; 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 man-
ner that is consistent with its statutory authority and fidu-
ciary obligations.
Four claimants seek compensation here. One claim-
ant 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 reason-
able hourly rate and, when appropriate, enhancing the lode-
star amount with a fee multiplier. See Strawn v. Farmers
Ins. Co., 353 Or 210, 217, 297 P3d 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 peti-
tioners in the underlying litigation.
Cite as 360 Or 467 (2016) 473
State respondents and county/school district respon-
dents filed objections with this court asserting various rea-
sons to deny or reduce the fees claimed. As an initial matter,
respondents dispute what legal grounds are available to jus-
tify 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 P2d 541 (1975). Although respon-
dents 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 con-
tend 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. Respon-
dents 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 unsuccess-
ful 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 beneficia-
ries 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
474 Moro v. State of Oregon
applied, but that Deras fees should not be allowed. The spe-
cial 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 attor-
ney 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 Reynolds and Riemer were entitled to attor-
ney fees despite their status as pro se litigants, any fee
award should be adjusted based on his determination that
only 20 percent of their work contributed to the success of
the litigation. According to the special master, 80 percent
of their work either went to the losing tax-offset claim or
was duplicative of that performed by Bennett Hartman. The
special master did not recommend that any multiplier be
applied to fees awarded to Reynolds and Riemer.
Separate from attorney fees, Reynolds and Jones
seek their costs under ORAP 13.05; Bennett Hartman seeks
its litigation expenses as costs that should be awarded under
the common-fund doctrine; and Riemer seeks his costs
under both. The special master recommended an award of
costs to Bennett Hartman under the common-fund doctrine
in the amount of $62,066.13, to be paid in the same manner
as the fee award—that is, out of PERS funds held on behalf
of the PERS members who had benefitted from the litiga-
tion. And, based on ORAP 13.05, the special master recom-
mended granting the costs sought by Reynolds and recom-
mended small downward adjustments to the costs sought by
Riemer and Jones—leading to a total cost award of $548.05
for Riemer and $1,379.24 for Jones. With the exception of the
deduction applied to Riemer, we accept the special master’s
recommendations on costs.2
2
Riemer is the only party disputing the special master’s recommenda-
tion with regard to costs. He argues that he is entitled to costs under the com-
mon-fund doctrine, rather than the more limited costs available under ORAP
13.05, as applied by the special master. For the reasons explained below, 360
Or at 478-83, we agree that Riemer is entitled to costs under the common-fund
and substantial-benefit doctrines and, therefore, award him the costs that he
requested: $1,159.15.
Cite as 360 Or 467 (2016) 475
The parties dispute numerous issues regarding
the special master’s recommended attorney-fee awards. We
address each of those issues below.
A. Grounds for Attorney-Fee Recovery
The parties assert three grounds for attorney-fee
recovery: the common-fund doctrine, the substantial-bene-
fit doctrine, and this court’s decision in Deras. We address
that issue first because the rationales underlying different
grounds for recovering fees may influence how we resolve
other issues related to the determination of fee amounts.
Riemer is the only claimant seeking fees based on
Deras. Under Deras, a court has the discretion to award fees
if “the parties who request attorney fees prevailed [and]
those prevailing parties vindicated an important constitu-
tional right applying to all citizens” rather than “gain[ing]
something peculiar to themselves.” Lehman v. Bradbury,
334 Or 579, 583, 54 P3d 591 (2002).
In previous PERS litigation, we denied a claimant’s
request for Deras fees. Strunk v. PERB, 341 Or 175, 181,
139 P3d 956 (2006) (Strunk II). The special master in this
case recommends following that precedent. We agree. The
litigants in this case, including Riemer, were attempting
to gain something peculiar to themselves and other PERS
members. Although the number of people affected is large, it
is, nevertheless, a discrete group of people and a group that
is easily distinguished from the public as a whole. For that
reason, we deny Riemer’s request to award attorney fees
under Deras.
The remaining grounds offered by the parties are
the common-fund and substantial-benefit doctrines. Both
doctrines rest on the same equitable and restitutionary
grounds: to avoid unjust enrichment by spreading the liti-
gation costs among those who benefited from a legal action
brought by a plaintiff. Crandon Capital Partners v. Shelk,
342 Or 555, 566, 157 P3d 176 (2007). The common-fund
doctrine applies when a plaintiff’s “legal efforts create, dis-
cover, increase, or preserve a fund of money to which others
also have a claim.” Strunk II, 341 Or at 181. A party who liti-
gates such a case may recover the costs of those legal efforts,
476 Moro v. State of Oregon
including attorney fees, from the created or preserved fund.
Id. The substantial-benefit doctrine, on the other hand, ordi-
narily applies when a party’s legal efforts create nonliqui-
dated benefits—whether or not pecuniary—that are held in
common with others, such as when a union member’s lawsuit
benefits other union members, Gilbert v. Hoisting & Port.
Engrs., 237 Or 130, 137, 384 P2d 136 (1963), or a shareholder’s
lawsuit benefits the corporation and thus other share-
holders, Crandon Capital Partners, 342 Or at 562-63.
In common-fund and substantial-benefit cases, a
party pursuing its litigation objectives necessarily confers
benefits on nonparties, because the litigation implicates inter-
ests that they share. See Restatement (Third) of Restitution
and Unjust Enrichment § 29 comment a (2011) (“The under-
lying premise of all such claims in restitution is that—by
reason of the parties’ interconnected interests—the claimant
cannot pursue justifiable, self-interested objectives without
benefiting the [nonparties] as well.”). In Strunk II, this court
observed that the common-fund doctrine is “used to spread
litigation expenses among all beneficiaries of a preserved
fund so that litigant-beneficiaries are not required to bear
the entire financial burden of the litigation while [nonparty-]
beneficiaries receive the benefits at no cost.” 341 Or at 181.
Similarly, in Crandon Capital, we linked the common-fund
and the substantial-benefit doctrines, noting that, for both,
“fees are awarded not, as in a ‘prevailing party’ case, to make
the plaintiff whole by shifting all costs to the wrongdoer, but
instead to spread the costs among those on whose behalf
the case was brought and who benefitted from the plaintiff’s
efforts.” 342 Or at 566.
Thus, under both doctrines, nonparty beneficiaries
of the litigation may be required to contribute to the legal
expenses of the litigation that secured the benefits. A claim
for a contribution to those legal expenses may be brought
by the party who incurred the expenses or by the attorney
who provided the legal work. Strunk II, 341 Or at 183-84.3
3
In this case, as in the Strunk litigation, the Bennett Hartman firm’s con-
tract with the union that paid its fees provided that the firm would, on its own
behalf, seek an award of attorney fees if the petitioners prevailed. Thus, the
award that the firm seeks here is on its own behalf, not on behalf of the individual
clients or the union that paid its bills. Under the contract, the firm is obligated
Cite as 360 Or 467 (2016) 477
Requiring nonparties to pay the fee award is in contrast to
fee-shifting provisions, which generally require an adverse
party to pay the legal expenses of the prevailing party.
See Restatement § 29 comment c (“[T]here can be no com-
mon-fund recovery against an adverse party.”).
We agree with the special master that both the sub-
stantial-benefit and common-fund doctrines provide a basis
for attorney fees here. It is beyond dispute that the litigation
undertaken by petitioners conferred very substantial ben-
efits on other PERS members. Some of those members are
retirees who, following enactment of the 2013 amendments,
received smaller COLAs than they were entitled to and, as
a result of that litigation, are now recovering that shortfall.
Other PERS members, including retired and active mem-
bers, will benefit substantially over many years from our
decision that PERB cannot reduce the COLA rights applied
to PERS benefits earned before the legislature modified
those COLA rights in 2013. See Moro I, 357 Or at 184-87
(describing pre-amendment and post-amendment COLA
benefits).
According to the special master, the present com-
bined value of benefits of the COLA holding to all nonparty
beneficiaries is about $4.5 billion, and no party seriously dis-
putes that figure. As to the application of the common-fund
theory, there is disagreement over the size of the common
fund established by the litigation. Claimants assert that
the litigation created a “fund” in the amount of the bene-
fit that the nonparty beneficiaries will receive over time—
essentially, the entire $4.5 billion of benefits identified by
the special master. County/school district respondents, how-
ever, argue that the only common fund created by the liti-
gation is the $66 million in restored COLA adjustments for
retired PERS members who had received lesser amounts
between the effective date of the 2013 COLA amendment
and this court’s decision invalidating those changes. The
remainder of the $4.5 billion, they argue, relates to amounts
that PERS members will receive over time, but is not a liqui-
dated “fund” of money subject to the common-fund doctrine.
to repay from any fee award the amount that it was paid by the union, but it is
entitled to retain any additional fees that are awarded.
478 Moro v. State of Oregon
We need not resolve that dispute over the size of
the common fund in order to determine attorney fees in this
case, however. As discussed, both the substantial-benefit
and common-fund doctrines provide a basis for an award of
fees here, and the difference between them is primarily in
the nature of the benefits created by the litigation. Under
both theories, the amount of the fee award is based on the
same equitable and restitutionary considerations. Indeed,
the Restatement treats the substantial-benefit doctrine as
an application of the common-fund doctrine, where the com-
mon fund is an entity in which the party and other benefi-
ciaries have interconnected interests. See id. at § 29 com-
ment f (“The standard example of a fund of this second type
involves corporate stock: in the terminology of Section 29,
the corporation itself is then the ‘fund’ and its shareholders
the beneficiaries.”). Accordingly, we turn to a consideration
of the appropriate fee awards in this case, based on the com-
mon-fund and substantial-benefit doctrines.
B. Fees for Self-Represented Attorneys
The next question is whether self-represented
attorneys may receive an attorney-fee award under the
common-fund and substantial-benefit doctrines. Claimants
Reynolds and Riemer contend that they are each entitled
to an attorney-fee award because they are both attor-
neys licensed to practice law in other states—Reynolds in
Washington and Riemer in Arizona—and they performed
legal work in this litigation. Respondents object, arguing
that neither has the authority to practice law in Oregon and
that the equitable and restitutionary grounds for an award
under the common-fund and substantial-benefit doctrines
do not justify an award for self-represented attorneys. The
special master agreed with respondents and recommended
awarding Reynolds and Riemer no attorney fees.
The special master reached that conclusion based
on both narrow technical grounds and broad policy grounds.
The narrow technical grounds are statutes and rules set-
ting out requirements for out-of-state attorneys to practice
law in Oregon courts, such as being admitted pro hac vice.4
4
See ORS 9.160(1) (providing that, with exceptions, only active members of
the Oregon bar may “practice law” in Oregon); ORS 9.241(1) (allowing out-of-state
Cite as 360 Or 467 (2016) 479
Neither Reynolds nor Riemer complied with those require-
ments. The special master therefore reasoned that neither
Reynolds nor Riemer was “practicing law” when they partic-
ipated in the litigation. Instead, both were allowed to partic-
ipate only because a statute, ORS 9.320, allows all parties to
a lawsuit, whether or not they are attorneys, to “prosecute[ ]
and defend[ ]” an action without violating the prohibition on
unauthorized practice of law. See also ORS 9.160(2) (estab-
lishing that self-represented parties do not violate ban on
the unauthorized practice of law).
For support, the special master contrasted the facts
presented by Reynolds and Riemer with the facts of Colby
v. Gunson, 349 Or 1, 238 P3d 374 (2010), a case in which
this court held that a self-represented attorney could obtain
fees under a statutory fee-shifting provision. In Colby, this
court noted that the self-represented attorney in that case
“is an attorney, in the ordinary sense of the word. He grad-
uated from law school, is a member of the Oregon State Bar,
and is authorized to practice law in this state. Throughout
the proceedings below, he was subject to the Oregon Rules
of Professional Conduct, along with other statutory provi-
sions that govern the conduct of attorneys.” Id. at 8. Because
Reynolds and Riemer were pro se litigants who had not com-
plied with the rules on pro hac vice admission, the special
master concluded that they were not authorized to practice
law in Oregon and, therefore, were not eligible for a fee
award.
The problem with relying on those narrow technical
grounds is that they do not correspond to the equitable goal
served by a restitutionary attorney-fee award under the com-
mon-fund and substantial-benefit doctrines—namely, avoid-
ing the unjust enrichment that would result from allowing
nonparties to enjoy the benefits of the litigation without
contributing to the costs of the litigation. A restitutionary
award for the services of another is generally limited to pro-
fessional services. See Matter of Cont’l Illinois Sec. Litig.,
attorney to practice in Oregon courts only if “the attorney is associated with an
active member of the Oregon State Bar”); ORAP 8.10(4) (allowing out-of-state
attorney to “appear by brief and argue the cause in a proceeding before an appel-
late court” if the attorney complies with UTCR 3.170); UTCR 3.170 (requiring
out-of-state attorney to be admitted pro hac vice).
480 Moro v. State of Oregon
962 F2d 566, 571 (7th Cir 1992), as amended on denial of
reh’g (May 22, 1992) (Posner, J.) (“The basis for an award
of fees in a common-fund case is, as we said, restitutionary,
and the law of restitution (excepting salvage in admiralty)
generally confines the right to restitution to professionals,
such as doctors and lawyers.”) (citing 2 George E. Palmer,
The Law of Restitution, ch 10 (1978)). Therefore, the under-
lying question in deciding on a restitutionary fee award is
whether Reynolds and Riemer were lawyers who performed
work normally performed by a lawyer.
The rules on pro hac vice admission and the unau-
thorized practice of law do not answer that question and are
not directed at unjust enrichment. Instead, those rules are
directed at consumer protection and prohibit a nonlawyer, or
an out-of-state lawyer who has not complied with the appli-
cable rules, from representing or advising another person as
a lawyer in Oregon. See Johnson v. Premo, 355 Or 866, 872,
333 P3d 288 (2014) (“The prohibition against nonlawyer
legal practice serves the dual purpose of protecting the pub-
lic interest and the rights of individual litigants.”). Those
rules do not apply to individuals representing themselves,
because, as noted above, parties to a lawsuit may generally
prosecute or defend themselves under ORS 9.320, regard-
less of whether they are lawyers.
Reynolds and Riemer failed to comply with the rules
of pro hac vice admission not because they could not satisfy
those standards, but because, as self-represented parties,
they were not required to comply with those rules. Their
failure to comply with those rules means only that they did
not represent or advise others as lawyers; it does not answer
the question of whether they are lawyers and whether the
work that they performed was legal work, such that they
may be entitled to attorney fees under the substantial-bene-
fit and common-fund doctrines.
Further, our statement in Colby noting that the
attorney in that case was authorized to practice law in
Oregon, 349 Or at 8, should not be read as creating a stan-
dard for determining whether someone is a lawyer who per-
formed legal work. Instead, we stated only that someone
who is authorized to practice law in Oregon is an attorney,
Cite as 360 Or 467 (2016) 481
not that an attorney is only someone who is authorized to
practice law in Oregon.
Rather, like the attorney in Colby, Reynolds and
Riemer are lawyers. They went to law school and are active
members of bars in other states. And the work that they
performed in this case was legal work—namely, researching
the law, developing legal arguments, and presenting those
arguments in briefs to this court. Therefore, Reynolds and
Riemer were lawyers who performed legal work in this case.
The special master also denied Reynolds and Riemer
attorney fees based on broad policy grounds, which would
preclude fee awards even to self-represented attorneys who
were authorized to represent or advise others as a lawyer,
either as active members of the Oregon bar or as attorneys
admitted pro hac vice. The policy grounds that the special
master relied on are set out in Zucker v. Westinghouse Elec.,
374 F3d 221 (3d Cir 2004), where the court refused to award
fees under the common-fund doctrine to a self-represented
attorney who successfully raised objections to a proposed
class-action settlement. The court reasoned that “awarding
[a self-represented attorney] attorney’s fees potentially could
‘tempt’ other lawyer-shareholders to ‘advance garden vari-
ety objections because of the prospect of an award of attor-
ney fees for their personal service.’ ” Id. at 226. According to
the court,
“We note that [the self-represented attorney] did not incur
any financial liabilities for his work on this case. Failure
to award [the self-represented attorney] fees should not
discourage other shareholders from raising meritorious
objections in the future; it will only ensure that they pur-
sue objections with the assistance of third-party counsel.”
Id.5
There are two difficulties with applying those grounds
in this case. First, as to the concern that allowing fees would
5
Those broad policy grounds have been applied in other federal cases to
deny fees to self-represented attorneys. See, e.g., In re Currency Conversion Fee
Antitrust Litig., 263 FRD 110, 132 (SDNY 2009), aff’d sub nom Priceline.com,
Inc. v. Silberman, 405 Fed Appx 532 (2d Cir 2010); In re Texaco Inc. S’holder
Derivative Litig., 123 F Supp 2d 169, 173 (SDNY 2000), aff’d, 28 Fed Appx 83 (2d
Cir 2002).
482 Moro v. State of Oregon
tempt self-represented attorneys to bring specious claims,
this court rejected a similar concern raised in Colby:
“Although not necessary to our decision here, we note that
the legislature has addressed that concern by permitting
attorney fees only to parties who ‘prevail[ ] in the suit’ and
by requiring that the attorney fee award be ‘reasonable.’
ORS 192.490(3). Further, the legislature has provided a
list of factors that a court must consider in determining the
amount of any attorney fee award, several of which protect
against the abusive fee generation potential that the Court
of Appeals feared. See ORS 20.075(1), (2) (listing factors to
be considered in determining amount of any attorney fee
award).”
349 Or at 8-9. Like the statutory fees at issue in Colby, com-
mon-fund and substantial-benefit fees are allowed only to
prevailing parties and must be reasonable. Further, com-
mon-fund and substantial-benefit fees include additional
protections, because the fees cannot exceed the value of the
benefit conferred by the litigation. See Restatement § 29(3)(b)
(permitting an attorney-fee award from a common fund only
if “the measurable value added to the beneficiary’s interest
in the common fund by the claimant’s intervention exceeds
the beneficiary’s liability to the claimant”).
Second, as noted above, the purpose of a fee award
under the common-fund and substantial-benefit doctrines is
to avoid unjust enrichment. Whether the nonparty beneficia-
ries are enriched by the litigation, and whether that enrich-
ment is unjust, does not turn on whether that litigation was
brought by an attorney in a representative capacity or a
nonrepresentative capacity. The California Supreme Court
has allowed fees to self-represented attorneys in common-
fund cases on that rationale:
“It would be inconsistent with the common fund theory to
deny [the self-represented attorney] compensation for his
services in these circumstances. The rationale of that the-
ory is that fees should be awarded to the person who cre-
ates such a fund because all who will benefit from it should
bear equally the burdens of its creation or preservation,
and this result is best achieved by taxing the fund itself.”
Consumers Lobby Against Monopolies v. Pub. Utilities Com.,
25 Cal 3d 891, 914-15, 603 P2d 41 (1979), overruled on other
Cite as 360 Or 467 (2016) 483
grounds by Kowis v. Howard, 3 Cal 4th 888, 838 P2d 250
(1992).
In this case, the litigation benefited nonparty PERS
members by invalidating COLA reductions, and both
Reynolds and Riemer participated in the litigation by per-
forming legal work as lawyers. That remains true even
though Reynolds and Riemer performed that work in a
self-represented capacity. As a result, Reynolds and Riemer
are entitled to an attorney-fee award necessary to avoid
unjust enrichment.
C. Reasonableness of the Fees Requested
Determining the amount needed to avoid unjust
enrichment requires assessing the reasonableness of the
fees that claimants have requested. Under the common-fund
and substantial-benefit doctrines, an attorney-fee award is
limited to a reasonable fee. Claimants have the burden of
establishing the reasonableness of the fees that they are
requesting. Strawn, 353 Or at 225. There are three issues in
this case related to the reasonableness of the fees requested:
the hourly rates; the extent to which the legal work bene-
fitted the nonparty PERS members, including whether the
fees requested are duplicative of work by other claimants or
related to unsuccessful claims; and the fee multiplier, if any.
The special master found that the hourly rates
sought by Bennett Hartman were appropriate and that
all of Bennett Hartman’s work benefitted nonparty PERS
members. But the special master determined that Bennett
Hartman was entitled to a fee multiplier of 1.5, rather than
the 2.0 fee multiplier that Bennett Hartman sought. The
special master also recommended reasonable attorney fees
for Reynolds and Riemer—if this court determines, as we
have, that their status as pro se litigants does not prevent
them from receiving a fee award. In those alternative rec-
ommendations, the special master calculated the fee award
using the hourly rates sought by Reynolds and Riemer, but
he excluded work that went to the losing tax-offset claim and
work that was duplicative of that performed by Bennett and
Hartman. He concluded that only 20 percent of the work that
Reynolds and Riemer performed benefitted the nonparty
484 Moro v. State of Oregon
PERS members. Further, the special master recommended
that Reynolds and Riemer receive no fee multiplier.
1. Hourly rates
Bennett Hartman seeks different hourly rates for
different attorneys, with the maximum rate of $500 per
hour for its lead counsel, Greg Hartman. Reynolds and
Riemer also seek fees based on an hourly rate of $500 per
hour. The special master concluded that Bennett Hartman’s
rates were reasonable. He did not address the reasonable-
ness of those rates for Reynolds and Riemer, but his alterna-
tive recommendations were based on the $500-per-hour rate
sought by Reynolds and Riemer.
The $500-per-hour rate exceeds Hartman’s normal
labor/employment rate of $315 per hour for work that is not
contracted to unions, which receive a lower rate because
they are long-standing clients. But the market for PERS-
related work is not the same as the market for normal labor/
employment work. Reynolds and Riemer offer no evidence
of their normal market rate. Reynolds appears to be retired
without an active legal practice. And Riemer is the staff
director of the Arizona Judicial Ethics Advisory Committee
without an active private practice.
A court should not rubberstamp hourly rates, par-
ticularly when an attorney seeks rates beyond what he or
she ordinarily would receive from paying clients and when
the rates sought are at the very top of the market, such as
those in this case. For context, in the 2012 Oregon State Bar
Economic Survey, which is the last one available, the hourly
billing rate for the 95th percentile of private practice attor-
neys in Portland was $450, and the 95th percentile for the
entire state was $405.
Nevertheless, the rates charged by Hartman and
Reynolds are justified, because they have substantial expe-
rience in appellate matters and both played a substantial
role in earlier PERS litigation.6 Hartman has represented
petitioners in each of the major PERS cases discussed in the
Moro I opinion. And Reynolds, while working as Assistant
6
The rates attributed to other attorneys at Bennett Hartman were all within
normal ranges for their experience levels.
Cite as 360 Or 467 (2016) 485
Attorney General, briefed and argued one of those cases,
Oregon State Police Officers’ Assn. v. State of Oregon, 323 Or
356, 918 P2d 765 (1996), and participated in other PERS-
related litigation. As a result, they are uniquely knowledge-
able about the mechanics of PERS benefits and the relevant
legal arguments. And PERS cases are generally high stakes
and are both factually and legally complicated. So a rate at
the top of the market is not unreasonable for those skills.
We therefore conclude that the hourly rates requested by
Bennett Hartman and Reynolds are reasonable.
It is difficult, however, to justify Riemer’s work at
that same rate. Although he has appellate experience brief-
ing and arguing attorney disciplinary cases before this
court in his previous role as General Counsel of the Oregon
State Bar, he has no particular expertise in PERS litiga-
tion. Based on his appellate experience but his lack of PERS
experience, we conclude that a reasonable hourly rate for
Riemer’s work is at the 75th percentile from the 2012 report,
which was $350 for Portland.
2. Extent of the benefit provided by the work
“The cases are unanimous that simply doing work
on behalf of the class does not create a right to compensa-
tion; the focus is on whether that work provided a benefit to
the class.” In re Cendant Corp. Sec. Litig., 404 F3d 173, 191
(3d Cir 2005) (emphasis in original). For example, this court
has previously refused to award substantial-benefit fees to
parties that “gave no attention in their briefing and argu-
ment to the statute and rule on which the court’s ultimate
disposition turned.” Leo v. Keisling, 329 Or 273, 280, 986
P2d 562 (1999) (refusing equitable fees where the parties
made constitutional arguments but the court relied on stat-
utory grounds to reach its result).
The principle that compensable legal work must
benefit the nonparty beneficiaries has been applied by other
courts to deny or reduce fees to account for work on unsuc-
cessful claims. See, e.g., In re Enron Corp. Sec., Derivative &
ERISA Litig., 586 F Supp 2d 732, 822 (SD Tex 2008) (consid-
ering work on unsuccessful claims). It has also been applied
to account for duplication of effort. See, e.g., Reynolds v.
Beneficial Nat. Bank, 288 F3d 277, 288-89 (7th Cir 2002)
486 Moro v. State of Oregon
(denying fees to settlement objectors who “added nothing”
because lead counsel made same objections). The parties
dispute the extent to which the requested fees should be
reduced to account for work on unsuccessful claims or for
duplicative work. We address those issues separately.
In this case, petitioners presented numerous argu-
ments related to two broad categories of PERS benefits: the
COLA and the income-tax offsets for out-of-state retirees.
Petitioners prevailed on the COLA claim but not on the
tax-offset claim. To determine any reasonable amount of
fees, we must consider whether a fee award should include
fees for work advancing the unsuccessful claim for tax off-
sets. The special master did not reduce Bennett Hartman’s
fees to account for unsuccessful claims, but, in his alterna-
tive fee award for Reynolds and Riemer, the special mas-
ter reduced the award to account for work on unsuccessful
claims. Reynolds and Riemer object to that reduction. And
state respondents object to the special master’s failure to
similarly reduce Bennett Hartman’s fees to account for work
on the tax-offset claim.
In Strunk v. PERB, 343 Or 226, 169 P3d 1242 (2007)
(Strunk III), this court did not reduce attorney-fee awards to
account for work on unsuccessful claims, but it is unclear
to what extent that issue was considered by the court or
previously presented to the special master in that case.
Nevertheless, while considering other proposed reductions,
the court announced the applicable standard for determin-
ing whether work contributed to the benefits in that case:
“[A]fter examining respondents’ other billing-related objec-
tions and carefully scrutinizing petitioners’ billing records,
we conclude that the requisite nexus between the benefits
provided in this case and the fees sought as a result is miss-
ing for some items that petitioners’ seek compensation for.”
Id. at 240. As a result, the court applied a standard requir-
ing a “nexus between the benefits provided * * * and the fees
sought.” Id.
That standard is similar to a frequently used stan-
dard in other courts: “whether the successful and unsuccess-
ful claims are based upon the same facts and legal theories,
i.e., whether the claims are related.” In re Enron Corp. Sec.,
Cite as 360 Or 467 (2016) 487
Derivative & ERISA Litig., 586 F Supp 2d at 822 (quotations
omitted). Under that standard, “[w]hen the successful and
unsuccessful claims involve a ‘common core of facts’ or ‘are
based on related legal theories,’ then attorney fees incurred
in the presentation of unsuccessful claims are recoverable
on the theory that they contributed to the plaintiff’s ulti-
mate success.” Id.
In this case, claimants argue that there was a
sufficient nexus between the successful COLA claim and
the unsuccessful tax-offset claim because the two claims
overlapped—that is, both were premised on constitutional
rights against the impairment of contracts, and the fac-
tual record largely addressed the respondent’s public policy
defenses related to economic necessity.
That overlap fails to establish a sufficient nexus,
however. To the extent that there is overlapping work, that
work would be treated as if it went solely to the fee-gener-
ating COLA claim, because fees for that work would have
been incurred regardless of the non-fee-generating claim.
See Estate of Smith v. Ware, 307 Or 478, 481-82, 769 P2d
773 (1989) (holding, in a statutory fee case, that overlapping
work is treated as going to the fee-generating claim). So the
question is the extent to which nonoverlapping work on the
tax-offset claim contributed to the benefits.
On that question, claimants—including Bennett
Hartman—fail to present grounds for concluding that non-
overlapping work on the tax-offset claim benefitted the non-
party PERS members. The lack of such grounds is acute in
this case, because the COLA claim and the tax-offset claim,
if successful, would have benefitted two different classes
of potential nonparty beneficiaries. The COLA claim ben-
efits all PERS members who earned PERS benefits before
the 2013 legislative modifications. And the tax-offset claim
would have benefitted only those PERS members who
earned PERS benefits before October 1991—and only those
who now or in the future will reside outside of Oregon. It
is inconsistent with the restitutionary rationale justifying
the common-fund and substantial-benefit awards to require
PERS members who did not earn benefits before October
1991 to pay for legal work on the tax-offset claim, because
488 Moro v. State of Oregon
that work was never going to benefit them in the first place.
As a result, all fees awarded to Reynolds, Riemer, and
Bennett Hartman must be reduced to exclude work on the
tax-offset claim.
Respondents further argue that claimants’ fees
should be reduced to account for duplication of effort. When
two attorneys duplicate their efforts, they are generally
not both benefiting the nonparty beneficiaries of the liti-
gation, because the same benefit would result even if one
of the attorneys had not performed the duplicative work.
The special master recommended finding that, in this case,
Reynolds, Riemer, and Bennett Hartman duplicated their
efforts because each presented substantially similar legal
arguments with regards to the prevailing claim—namely,
that the COLA adjustments violated the right against
impairment of contract. The special master recommended
accounting for that duplication by reducing the fees awarded
to Reynolds and Riemer, but not the fees awarded to Bennett
Hartman.
Reynolds and Riemer object to the reductions rec-
ommended by the special master. They argue that there
are no grounds in this case to determine that their work
duplicated Bennett Hartman instead of determining that
Bennett Hartman duplicated their work. In Strunk III, for
example, the court stated that “the fact that petitioners’ law-
yers briefed some of the same issues in the course of bring-
ing their cases to this court * * * without more, is insufficient
to support” reducing the awards for duplication of effort.
343 Or at 239. The court went on to say that the record in
that case did not allow the court to determine which attor-
neys duplicated the efforts of which other attorneys. Id.
(“[T]hat argument assumes that the efforts of the Strunk
petitioners’ and their lawyers was the sine qua non of the
fund preserved here, while the work product of the other
parties named as petitioners in this case derived solely from
that effort.”).
This case, however, is distinguishable from Strunk
III. In that case, the special master made no findings rel-
evant to the issue of duplication. Moro II, 358 Or at 381
(“In Strunk III, the record created by the parties before the
Cite as 360 Or 467 (2016) 489
special master did not allow this court to determine the
extent to which those attorneys had duplicated their efforts
or directed their efforts toward unsuccessful claims.”).
In this case, however, by recommending that we reduce
Reynolds’ and Riemer’s fees to account for duplication of
Bennett Hartman, the special master found, in effect, that
Bennett Hartman acted as the lead counsel. That conclu-
sion is in accord with the apparent role of the attorneys in
the case, with Bennett Hartman taking the lead role in lit-
igating each stage of the case, from the factfinding proceed-
ings before the special master to oral arguments before this
court.
Because Bennett Hartman clearly acted as lead
counsel, Reynolds and Riemer had the burden to demon-
strate that the contributions of their work went beyond that
performed by Bennett Hartman. See, e.g., In re Cendant
Corp. Sec. Litig., 404 F3d at 191 (“In the ordinary case,
most work that lead counsel does will typically advance
the class’s interests, but the inquiry into non-lead counsel’s
work must be more detailed. Non-lead counsel will have to
demonstrate that their work conferred a benefit on the class
beyond that conferred by lead counsel.” (Emphasis in origi-
nal.)). Reynolds and Riemer have not satisfied that burden
beyond the fact that their duplicative work likely added some
marginal persuasive force to the argument. As a result, we
conclude that Reynolds’ and Riemer’s fee awards should be
reduced to account for their duplication of effort.
Having established that claimants should not receive
fees for work on the unsuccessful tax-offset claim and that
Reynolds and Riemer should not receive fees for work that
duplicated Bennett Hartman’s work on the COLA claim, we
must determine how much that work amounts to. The diffi-
culty with making that determination is that claimants pro-
vided this court with billing records that largely omit any
reference to which claim they were working on. That omis-
sion weighs against claimants, because it is their burden to
establish the reasonableness of the fees they are requesting.
Strawn, 353 Or at 225. Claimants chose not to update their
billing records even after this court instructed the special
master to make findings of fact on those issues and even
after the special master allowed claimants the opportunity
490 Moro v. State of Oregon
to do so. See Moro II, 358 Or at 381 (“[W]e instruct the spe-
cial master to make findings of fact, if possible, on the extent
to which the attorneys duplicated their efforts or directed
their efforts toward unsuccessful claims.”).
Without updated billing records, the special mas-
ter determined that Reynolds and Riemer should receive
20 percent of their requested fees and made no findings
with regard to Bennett Hartman’s work on the tax-offset
claim. As noted, Reynolds and Riemer object to the special
master’s reduction, and state respondents again argue that
those individuals should receive no fees and that Bennett
Hartman’s award should be reduced to account for duplica-
tion, as well as for work on the tax-offset claim.
We agree with some of respondents’ arguments
regarding the special master’s determinations. Moreover,
because claimants have the burden of establishing their
entitlement to fees and the reasonableness of their request,
the lack of more specific billing records weighs against
them. Although we have some, often nonspecific, time-keep-
ing records, as well as the transcript of the special master’s
hearing on the merits and the briefing before the special
master and in this court, adjustments to the fee requests to
account for duplication and work on the unsuccessful claims
are admittedly rough. Nevertheless, we agree with the spe-
cial master that adjustments are appropriate for time spent
on the unsuccessful tax-offset claim and for duplication of
work. We also agree with the special master’s implicit find-
ing that Bennett Hartman acted as lead counsel throughout
the proceeding.
Our review of the record and the proceedings in
the litigation suggests substantial duplication by Reynolds
and Riemer of the arguments of lead counsel concerning
the COLA and substantial time spent on the tax-offset
issue. The latter, of course, is not surprising, as Reynolds
and Riemer, PERS retirees now living outside the state, are
directly affected by that change in PERS benefits. As to the
duplication of effort on the COLA, Reynolds’ and Riemer’s
submissions do not identify any specific value that their
work added to petitioners’ case or any novel legal or factual
argument that Bennett Hartman did not make and that
Cite as 360 Or 467 (2016) 491
this court relied on in its decision. Respondents assert that
Reynolds and Riemer should receive no fee award because all
their work essentially duplicated Bennett Hartman’s work.
In our view, as noted, their work likely added some marginal
persuasive force to petitioners’ arguments. In these circum-
stances, we conclude that probably 90 percent of the time
incurred by Reynolds and Riemer essentially duplicated
Bennett Hartman’s work on the COLA issue or was spent
on the tax-offset issue. Therefore, Reynolds and Riemer are
entitled to 10 percent of their requested time. That entitles
Reynolds to compensation for 56.2 hours, which, at $500 per
hour, results in a lodestar amount of $28,100. Riemer is enti-
tled to compensation for 26.5 hours, which, at $350 per hour,
results in a lodestar of $9,275.
As noted, the special master made no adjustment
to the Bennett Hartman request for work on the tax-offset
claim. Based on our review of the record, and again con-
sidering the burden on the claimants to prove their claim
for fees, we find that 20 percent of the time submitted by
Bennett Hartman went to work on the tax-offset claim that
did not overlap with the COLA claim. Therefore, Bennett
Hartman is entitled to 80 percent of its requested time. That
entitles Bennett Hartman to compensation for 1,355 hours,
which results in a lodestar of $560,399.46.
3. Fee multiplier
The final component in determining a reasonable
fee award is the multiplier. The special master recom-
mended awarding Bennett Hartman a 1.5 fee multiplier for
the exceptional success of the litigation and, in his alter-
native recommendations, recommended no fee multiplier for
Reynolds and Riemer. Bennett Hartman does not object to
the recommended fee multiplier of 1.5. Reynolds and Riemer
argue that they are entitled to the same fee multiplier as
Bennett Hartman because they shared in the same excep-
tional success of the litigation.
The grounds for a fee multiplier have been stated
differently in different cases. In Strawn, this court noted
that a fee multiplier may be justified to account for the risk
of nonpayment in a contingency fee case. 353 Or at 226. In
492 Moro v. State of Oregon
Strunk III, the court justified a fee multiplier based on the
“exceptional success” of the litigation, securing over $1 bil-
lion in benefits for PERS members. 343 Or at 246. The court
then stated that “factors such as the difficulty and complex-
ity of the issues involved in this case, the value of the inter-
ests at stake, as well as the skill and professional standing
of lawyers involved also support an enhancement of fees.” Id.
In this case, we place greater weight on the risk
of nonpayment, because the additional factors discussed in
Strunk III were already considered when determining rea-
sonable hourly rates for claimants’ work. As noted, none of
the claimants rely on a market rate that reflects a negoti-
ated rate with a client. So the hourly rates are a construc-
tion based on the same type of factors noted in Strunk III to
calculate a fee multiplier. That is particularly true because,
as noted above, the stakes of the litigation are a factor in
determining the attorneys’ hourly rates. Although the mon-
etary impact of this case will, over time, be larger than
the monetary impact of the Strunk litigation, that impact
reflects the higher dollar value of the COLA change that the
court invalidated, rather than a more exceptional success
by the attorneys as compared to the attorneys in the Strunk
litigation.7 The justification for a higher hourly rate is that
we would have expected another attorney who could also
command that rate to reach a similar result in this case.
Nevertheless, a fee multiplier may be justified
when the attorney’s payment is based on a contingency-fee
arrangement or there is otherwise a delay in getting paid.
Bennett Hartman was on a quasi-contingency-fee arrange-
ment, because, although it was paid its normal union rates,
it retained the right to seek to recover and keep market
rates in a fee request, if it prevailed. We therefore find that
Bennett Hartman is entitled to the fee multiplier of 1.5 rec-
ommended by the special master.
Reynolds and Riemer, however, were not working
based on a contingency-fee or even quasi-contingency-fee
arrangement. Instead, as self-represented parties, they did
7
In Strunk III, the court awarded the fee multipliers sought by the claim-
ants. 343 Or at 246. For some, that was a 2.0 fee multiplier; and for others (includ-
ing Bennett Hartman), that was a 1.5 fee multiplier. Id. at 233.
Cite as 360 Or 467 (2016) 493
not have a fee arrangement at all. Therefore, the grounds
that entitle Bennett Hartman to a 1.5 fee multiplier do not
apply to Reynolds and Riemer. And the other factors justify-
ing a fee multiplier in Strunk were already used to calculate
their reasonable hourly rates. Therefore, consistent with the
special master’s recommendation, we find that Reynolds
and Riemer are not entitled to a fee multiplier.
Based on those findings, and our findings above
establishing the reasonable rates and reasonable time for
claimants, we conclude that Bennett Hartman is entitled
to $840,599.19 in attorney fees, Reynolds is entitled to
$28,100 in attorney fees, and Riemer is entitled to $9,275 in
attorney fees. When combined with the cost awards noted
above, we conclude that each claimant is entitled to the fol-
lowing awards: Bennett Hartman, $902,665.32; Reynolds,
$29,314.48; Riemer, $10,434.15; Jones, $1,379.24.
C. Funding the Fee Award
Having calculated the amounts to which claimants
are entitled, we turn to the issue of the appropriate source
of payment. The restitutionary principles underlying an
award of fees from a common fund suggest that the award
be paid from the PERF in a manner that affects only the
PERS members who benefit from the litigation—and not
PERS members who do not benefit from the litigation or
PERS employers. And, ideally, PERS members would con-
tribute to the fee award in proportion to the benefits that
they receive. See Restatement § 29(2) (beneficiaries may be
required to pay from the “common fund for their benefit, in
proportion to their respective interests therein”).
But there are administrative obstacles to reaching
those ideals—namely, there is no segregated fund consist-
ing of the increased COLAs that PERS members who will
benefit from the litigation will receive over time. (Indeed,
because of the different terms of service and retirement
status of those members, there could not be such a fund.)
Instead, the PERF is made up of numerous accounts that
are designated for different purposes. According to a decla-
ration submitted by PERS Assistant Chief Administrative
Officer Mary Dunn, there are three accounts (or categories
of accounts) containing money belonging to PERS members.
494 Moro v. State of Oregon
Retired members have money in the “benefits-in-force”
reserve. Nonretired Tier One and Tier Two members have
money in their “member accounts.” And all PERS members
who earned benefits after the 2001 creation of the Oregon
Public Service Retirement Plan (OPSRP), which includes
Tier One, Tier Two, and OPSRP members, have money in
the Individual Account Program.
Money in those accounts is invested, and the invest-
ment income is credited back into the accounts. According to
Dunn, PERB can take money out of the investment income
before it is credited back into the specific accounts and use
that money to pay for the award of fees and costs. And,
because the credits are made proportional to each member’s
interest, withdrawing money from the investment income
is automatically ratable (in the same way that requiring a
corporation to pay a fee award in a common-fund or substan-
tial-benefit case is automatically ratable to each sharehold-
er’s interest in ownership).
The problem with that approach is that the fee
award must be paid now, while the actual value of the COLA
benefits to specific PERS members will depend on which tier
the member is in, as well as on future events. Tier One and
Tier Two members, but not OPSRP members, are entitled to
their COLA “bank” established prior to the amendments at
issue, which increases the value of the benefits. Moro I, 357
Or at 186-87 (describing COLA bank). Further, the earlier
a member retires and begins to receive benefits, the more
years he or she will receive COLA adjustments. As a result,
the COLA benefits will comprise a larger portion of those
members’ expected PERS benefits.
As an alternative, Bennett Hartman suggests
that at least some of the money for the fee award could be
drawn from the PERS contingency reserve. The contingency
reserve is funded through money that PERB sets aside from
investment income in certain years. ORS 238.670(1)(a).
One of the statutory purposes for the contingency reserve is
“[t]o pay any legal expenses or judgments that do not arise
in the ordinary course of adjudicating an individual mem-
ber’s benefits or an individual employer’s liabilities.” ORS
238.670(1)(b). This fee award fits that statutory description.
Cite as 360 Or 467 (2016) 495
Respondents object, however, noting that the contingency
reserve is funded through investment income from the
entire PERF, which includes funds containing employer con-
tributions that have not yet been allocated to other accounts.
If the fee award is paid from the contingency reserve, they
point out, then PERB may have to make larger future pay-
ments into the contingency reserve, which will be taken in
part from employer contributions. The effect of that would
be to marginally increase the amount that employers will
need to contribute in the future.
The special master did not make any finding as to
which PERF accounts would be appropriate to use and how
much money should be used from each account. Instead,
he recommended ordering PERB to pay the award and to
resolve later disputes that arise, if any, about the manner in
which it had paid for the award.
We agree that the better course is to allow PERB
to determine, consistent with its statutory authority and
fiduciary obligations, how best to allocate the burdens of the
fee award among the accounts, including the contingency
reserve, held within the PERF. Our cases recognize that trust
law principles and applicable statutes give PERB discretion
to make reasonable decisions in operating PERS. See White
v. Public Employees Retirement Board, 351 Or 426, 440-41,
268 P3d 600 (2011) (discussing PERB’s duties and author-
ity). That authority to operate the system includes making
decisions related to litigation, and, as long as PERB acts
reasonably and consistently with statutory requirements
and its fiduciary duty to members, such decisions ordinarily
will be upheld, unless PERB has abused its discretion. Id. at
442-45 (discussing PERB’s authority to conduct and settle
litigation). We direct PERB to pay the amounts ordered from
such PERF accounts as it deems appropriate, in the exercise
of its discretion and subject to its statutory and fiduciary
obligations and the principles discussed in this opinion.
To summarize: We conclude that Bennett Hartman
is entitled to $902,665.32 in costs and attorney fees;
Reynolds is entitled to $29,314.48 in costs and attorney
fees; Riemer is entitled to $10,434.15 in costs and attorney
fees; and Jones is entitled to $1,379.24 in costs. PERB shall
496 Moro v. State of Oregon
determine, consistently with this opinion, how to pay the
award from the accounts held in PERF and shall pay the
amounts awarded.
Attorney fees and costs awarded.