S056376, Opinion — Young v. State of Oregon

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Argued and submitted May 18, decision of Court of Appeals reversed; judgment of
circuit court reversed and case remanded to circuit court for further proceedings
July 16, petition for reconsideration denied October 7, 2009
David YOUNG,
Petitioner on Review,
and

AI CHANDLER,
Mike Reinecke, Karen (Eastman) Memory, Larry D. Conn,
Leonard J. Drung, Jess Eastman, Debra E. Fery,
Bruce L. Fochtman, Lois G. Harris, Cheryl L. Ho,
Lloyd Horsley, Wilfred Hudson, Mark A. Jones,
Robert Jordan, David C. Judkins, David Kunz,
Gordan J. Larson, Margaret J. Loftis, Judy Murray,
Scott R. Proctor, Richard Reiter, Helen Satterlee,
Ernest Schmidt, Marjorie J. West, James C. Wilson,
Randal Windsor, and Michael D. Woodward,
Petitioners on Review,

v.

STATE OF OREGON,
Respondent on Review.
(CC 97C10933; CA A133123; SC S056376)
212 P3d 1258

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CJS, States § 268.

On review from the Court of Appeals .*

John E. Hoag, Eugene, argued the cause and filed the
brief for petitioners on review. With him on the petition for
review was David Snyder, Portland.

Robert M. Atkinson, Senior Assistant Attorney General,
Salem, argued the cause and filed the brief for respondent on
review. With him on the brief were John Kroger, Attorney
General, and Erika Hadlock, Acting Solicitor General.

Before De Muniz, Chief Justice, Gillette, Durham, and
Walters, Justices .**

WALTERS, J.

The decision of the Court of Appeals is reversed. The judg-
ment of the circuit court is reversed and the case is remanded
to the circuit court for further proceedings.

\* Appeal from Marion County Circuit Court, Paul J. Lipscomb, Judge. 221 Or
App 146, 188 P3d 476 (2008).

** Balmer, Kistler, and Linder, JJ., did not participate in the consideration or
decision of this case.

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509

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# WALTERS, J.

Plaintiffs, "white-collar" state employees employed
between 1995 and 1997, seek post-judgment interest on sup-
plemental judgments entered by the trial court in response to
direction from this court in Young v. State of Oregon, 340 Or
401, 133 P3d 915 (2006) (Young III), and ask that that inter-
est accrue from the date that the original judgment was
entered. In a written opinion, the Court of Appeals held that
sovereign immunity absolved the state from any obligation to
pay interest. Young v. State of Oregon, 221 Or App 146, 188
P3d 476 (2008) (Young IV). For the reasons that follow, we
reverse.

The history of this case, which the Court of Appeals
chronicled in Young IV, 221 Or App at 148-52, is extensive.
For purposes of this opinion, it is sufficient to note that plain-
tiffs brought a class action in 1997, seeking to recover unpaid
overtime compensation for state managerial and executive
employees under former ORS 279.340(1) (1995), renumbered
as ORS 653.268(1) (2003),1 attorney fees under ORS 652.200
(1995),2 and other relief. The trial court initially granted the
state's motion for summary judgment, holding that the leg-
islature did not intend that former ORS 279.340(1) apply to
state managerial and executive employees. The Court of
Appeals reversed. Young v. State of Oregon, 161 Or App 32,
983 P2d 1044, rev den, 329 Or 447 (1999) (Young I).

1 Former ORS 279.340(1) (1995) provided:

"Labor directly employed by any public employer as defined in ORS
243.650 shall be compensated, if budgeted funds for such purpose are avail-
able, for overtime worked in excess of 40 hours in any one week, at not less
than one and one-half times the regular rate of such employment. If budgeted
funds are not available for the payment of overtime, such overtime shall be
allowed in compensatory time off at not less than time and a half for employ-
ment in excess of 40 hours in any one week."

Unless otherwise noted, we refer to the 1995 version of the statute throughout this
opinion.

2 ORS 652.200 (1995), amended by Or Laws 2001, ch 279, § 1; Or Laws 2007,
ch 546, § 2, provided, in part:

"(1) In any action for the collection of any * * * acknowledgment of [employer]
indebtedness * * * the court shall, upon entering judgment for the plaintiff,
include in such judgment, in addition to the costs and disbursements otherwise
prescribed by statute, a reasonable sum for attorney fees at trial and on appeal
for prosecuting said action * * *. "

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On remand, plaintiffs added a new request that "the
court award pre-judgment interest on all unpaid overtime
compensation from the date that it should have been paid to
each [p]laintiff" to the date of the judgment. The trial court
certified the case as a class action and decided in favor of
plaintiffs on their wage claims but denied their requests for
prejudgment interest. Over a period from March 2001 to
November 2002, the court, using the "fluctuating hours"
method to tabulate the wages owed, entered a series of lim-
ited judgments in favor of plaintiffs. See ORCP 67 B (provid-
ing for limited judgments when "no just reason for delay");
Young v. State of Oregon, 195 Or App 31, 39, 396 P3d 1239
(Young II) (explaining "fluctuating hours" method of calcula-
tion). Plaintiffs appealed from those limited judgments. In
January 2003, the trial court entered a final judgment in the
case as a whole, "subject only to the possibility of supple-
menting the ORCP 67B judgments previously entered in this
case if necessary following resolution of the issues [that were
then] pending on appeal." We refer to that final judgment as
the original judgment.

In Young II, the Court of Appeals affirmed the trial
court's method of calculating overtime amounts and its
denial of prejudgment interest. 195 Or App at 51. On review,
this court held, however, that the "fluctuating hours" method
of calculation was incorrect; instead, this court ordered the
calculation of overtime wages at one and one-half times the
regular hourly rate of pay. Young III, 340 Or at 408. This
court did not discuss or disturb the conclusion of the Court of
Appeals that plaintiffs were not entitled to prejudgment
interest, and that became the law of the case.

The case returned to the trial court for recalculation
of the wages owed to plaintiffs and entry of supplemental
judgments representing the difference between the amounts
of the limited judgments and the higher amounts that were
due to plaintiffs as a result of the calculation method pre-
scribed by this court in Young III. In conjunction with entry
of those supplemental judgments, plaintiffs also sought, not
the prejudgment interest that the trial court had denied pre-
viously, but interest on the supplemental judgments. Plain-
tiffs argued that, under the rule of Lakin v. Senco Products,

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Inc., 329 Or 369, 373, 987 P2d 476 (1999) (Lakin II), that
interest should accrue from the date of the trial court's origi-
nal judgment.

The trial court denied plaintiffs' request for post-
judgment interest. Plaintiffs appealed and, as noted, the
Court of Appeals, in Young IV, affirmed that denial. Relying
on Newport Church of the Nazarene v. Hensley, 335 Or 1, 56
P3d 386 (2002) (Newport Church), the court held that the
state was immune from paying any interest, including post-
judgment interest, unless the state's obligation was
"expressly authorized by the legislature." Young IV, 221 Or
App at 153. Plaintiffs petitioned for review.

This case presents two questions. First, is the state
immune from the obligation to pay post-judgment interest?
Second, if the state is not immune, did its obligation to pay
post-judgment interest accrue when the trial court entered
the original judgment, or did it accrue when the trial court
entered the supplemental judgments?

We begin our analysis of the first question with
Newport Church, 335 Or 1, the decision upon which the Court
of Appeals based its holding. In that case, the respondent, a
youth minister that the petitioner had employed, filed a
claim for unemployment benefits that was allowed by the
Employment Appeals Board of the Oregon Employment
Department. The petitioner appealed that award, challeng-
ing its constitutionality. The respondent cross-appealed,
challenging, among other things, the board's failure to award
him interest on "each installment of unemployment benefits"
from the date that each installment should have been paid
until the date of the trial court's judgment. See Newport
Church of the Nazarene v. Hensley, 161 Or App 12, 14, 29, 983
P2d 1072 (1999) (clarifying nature of relief sought by respon-
dent in the case). Thus, the claim at issue in Newport Church
was a claim for prejudgment interest.

In considering the state's argument that it was
immune from that claim, the court cited two cases in which
the plaintiffs had asserted claims for money damages against
public bodies: Rapp v. Multnomah County, 77 Or 607, 609-10,
152 P 243 (1915), and Hunter v. City of Eugene, 309 Or 298,
303, 789 P2d 881 (1990). The court then discussed a case that

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specifically addressed the state's liability for prejudgment
interest, Seton v. Hoyt, 34 Or 266, 55 P 967, 969-71 (1899).
Newport Church, 335 Or at 17-18.

In Seton, a statute required that counties (state
instrumentalities) pay prejudgment interest on warrants
that had been returned for nonpayment. The question was
not whether the county in Seton was obligated to pay such
interest; it clearly was. Instead, the question was whether
the county was obligated to pay the statutory rate of interest
as of the date that the warrants were issued or the lower rate
of interest-enacted by a subsequent statutory amend-
ment-as of the date that the warrants were presented for
payment. In deciding that the county was required to pay the
higher rate of interest, the court explained that those who
had accepted the warrants were deemed to have agreed to
await payment until the county had accumulated the funds
necessary to fulfill its payment obligation. That, in the court's
view, gave rise to a corresponding implied agreement by the
county to pay interest during that interim period:

"Now, if there is an implied agreement on the part of the
holder of the warrant to abide the accumulation of funds in
the ordinary course with which to meet the demand, the
converse ought to be, and undoubtedly is, true, that there is
an implied, if not an express, agreement, engendered by
operation of law and the transaction of public business,
which must be in conformity with its requirements, that the
county will pay the legal rate of interest upon the indorsed
county order. So that here is, in effect, an agreement or con-
tract upon the part of the county to pay the legal rate of
interest."

Seton, 34 Or at 278. The court concluded that the county's
agreement precluded the state from reducing the rate of
interest that the county was obligated to pay:

"In the present case the county has become obligated by
positive enactment to pay the legal rate. Parties have dealt
with it upon that understanding, and when claims duly
audited, which have accrued in course of business transac-
tions with the county, are presented, and indorsed, 'Not
paid for want of funds,' the law reads into the transaction a
contract to pay interest thenceforth upon the warrant, and
the measure of recovery for delay in payment is the then

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existing rate of interest until paid, and subsequent legisla-
tion cannot affect or impair the obligation."

Id. at 281 (emphasis added).

After summarizing Seton, the court in Newport
Church then decided to treat the plaintiff's claim for prejudg-
ment interest on unemployment benefits as a claim equiva-
lent to those that had been brought by the plaintiffs in Rapp,
Hunter, and Seton, and held that, absent express legislative
authorization, the state was immune from that claim. The
court rejected the plaintiff's argument that ORS 82.010(1)(a),
the statute that provides the rate of interest for "all monies
after they become due," provided such a legislative authori-
zation and, unable to identify any other source of authority,
denied the plaintiff's claim. Newport Church, 335 Or at 17.

Understanding the basis for the court's decision in
Newport Church, we now can frame the first question before
us with more particularity: Are plaintiff's claims for post-
judgment interest similar to, or distinguishable from, the
claims of the plaintiffs in Rapp, Hunter, Seton, and Newport
Church, and has the legislature authorized those claims?

Plaintiffs' answer is that post-judgment interest is
not akin to a claim for money damages or prejudgment inter-
est. Post-judgment interest follows as a matter of law from
entry of judgment. By subjecting itself to liability for under-
lying claims for damages, the state expressly or by implica-
tion has consented to the consequences that flow from that
liability and that attend judgment against it. Defendant
responds that interest is all of a kind and that the state has
not waived expressly its immunity from claims for interest of
any sort. Defendant adds that consent to suit does not consti-
tute consent to pay post-judgment interest.

A case that informs our analysis is Griffin v. Tri-Met,
318 Or 500, 507, 870 P2d 808 (1994). There, the question was
whether attorney fees and costs awarded against a public
body should be counted toward the tort claim limit in ORS
30.270(1)(b) (1985), amended by Or Laws 1987, ch 705, § 8;
Or Laws 1987, ch 915, § 13. In answering that question in the
affirmative, this court assumed that, because the public body
had waived its immunity from tort action, it also had waived

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its immunity from a consequential award of attorney fees and
costs. The statute that granted the plaintiff a right to attor-
ney fees and costs, former ORS 659.121(2) (1993), repealed by
Or Laws 2001, ch 621, § 9, did not apply expressly to the state
or its instrumentalities, and the court determined that the
plaintiff's request for attorney fees and costs was separate
from the underlying tort. Id. at 510-11. The court neverthe-
less concluded that the plaintiff's request was a permitted
aspect of the plaintiffs' "tort claim" and therefore subject to
the statutory tort claim limit. Id. at 507 n 6.

That ruling is consistent with this court's decision in
Newport Church and the cases on which it relied. Although
the court in those cases was loath to imply consent to suit for
claims that the state had not expressly recognized, those
cases do not pose a barrier to a conclusion that, when the
state has submitted to liability for a claim, it is responsible
for attendant money awards. Attorney fees and costs are not
distinct claims for damages; rather, they flow to a prevailing
party as a result of judgment in that party's favor. ORCP 68.3

In that respect, we do not see a substantive distinc-
tion between the state's liability for attorney fees and costs
and the state's liability for post-judgment interest. Post-
judgment interest also is not a distinct claim for damages.
Although a plaintiff must plead a claim for prejudgment
interest, a plaintiff need not plead a claim for post-judgment
interest. Lithia Lumber Co. v. Lamb, 250 Or 444, 447, 443
P2d 647 (1968). Post-judgment interest is imposed on all
judgments by operation of law. ORS 82.010(2)(a).4 Although
this court in Newport Church held that ORS 82.010(1), the

3 Attorney fees and costs may be included in a general judgment or assessed in
a separate supplemental judgment. ORCP 68 C(5). The judgment document must
clearly set out in a separate section the amount of the attorney fees and costs
awarded. ORS 18.042(2)(h).

4 ORS 82.010(2)(a) provides:

"Except as provided in this subsection, the rate of interest on judgments
for the payment of money is nine percent per annum. The following apply as
described:

"(a) Interest on a judgment under this subsection accrues from the date of
the entry of the judgment unless the judgment specifies another date."

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statute that sets out the statutory rate of prejudgment inter-
est, does not establish the state's consent to pay such inter-
est, plaintiffs in this case do not rely solely on ORS
82.010(2)(a) as authority for their claims for post-judgment
interest. Instead, they stand on the state's separate agree-
ment to be subject to liability and to have judgment imposed
for the underlying claim upon which judgment was entered.
Just as the state submits to payment of statutorily required
attorney fees and costs when it submits to liability, it also
submits to payment of statutorily required post-judgment
interest when it submits to imposition of judgment.

When the legislature waived state immunity for its
torts and enacted the Oregon Tort Claims Act, it clearly
assumed that the state would be liable for interest that
accrued on unpaid judgments. That legislation provided that,
in the event that a public body with authority to levy taxes
lacks funds to pay an outstanding judgment, that body "shall
\* \* levy a tax sufficient to pay the judgment or settlement
and interest accruing thereon to the expected time of payment
\* \* *. " Or Laws 1967, ch 624, § 9 (emphasis added). That pro-
vision since has been modified. ORS 30.295 now provides, in
part:

"(2) If the public body is authorized to levy taxes that
could be used to satisfy a judgment or settlement within the
scope of [the OTCA] and it has, by resolution, declared that
[certain] conditions exist, interest shall accrue on the judg-
ment or settlement, but the same shall not be due and pay-
able until after the canvass and certification of an election
upon a special tax levy for purposes of satisfying the judg-
ment * * * [.]

*** * * *

"(7) *** [If the judgment is to be paid in install-
ments,] [t]he order permitting installment payments shall
provide for annual interest at the judgment rate."

(Emphasis added.) That statute clearly contemplates that
interest will accrue on unpaid judgments against the state.

In this case, the state submitted to legal action for
failure to pay overtime wages. Plaintiffs brought their wage
claims under former ORS 279.340(1) and ORS 652.200
(1995). The latter statute, in subsection 2, provided that "the

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court shall, upon entering judgment for the plaintiff, include
in such judgment, in addition to the costs and disbursements
otherwise prescribed by statute, a reasonable sum for attor-
ney fees at trial and on appeal * * *. " That statute did not
expressly apply to the state, but judgment for attorney fees
and costs was entered against the state in this case. And,
indeed, when the Court of Appeals entered judgment for costs
on appeal, it also assessed post-judgment interest in accor-
dance with ORS 82.010(2)(a). See Appellate Judgment of
January 27, 2000 (awarding costs of $437.10 and interest
from date of appellate judgment). The state did not assert an
immunity defense to entry of that judgment or the interest
that obtained.

The state's accession to that award of post-judgment
interest accords with our earlier conclusion. Having submit-
ted to plaintiffs' action for failure to pay overtime wages, the
state also is liable for interest on the judgment entered in
that action.

The second question to which we now turn is the
question of when that interest accrues. Plaintiffs seek inter-
est on the supplemental judgments from the date of the orig-
inal judgment. They argue that, because the supplemental
judgments merely increased the damage awards that the
trial court had entered in its original judgment of January
2003, "subject only to the possibility of supplementing [that
judgment] * * * following resolution of the issues that are
currently pending on appeal," interest on the "modified
amount" must, under Lakin v. Senco Products, Inc., 329 Or
369, 373, 987 P2d 476 (1999) (Lakin II), "accrue from the date
of the trial court's judgment."

In the case that gave rise to Lakin II, the trial court
had reduced a jury's verdict to impose a statutory cap on
noneconomic damages. This court held that cap unconstitu-
tional and reinstated the jury's full award. Lakin v. Senco
Products, Inc., 329 Or 62, 67, 987 P2d 463 (1999) (Lakin I). In
Lakin II, this court subsequently concluded that the plain-
tiffs were entitled to interest on the increased judgment from
the date of the original judgment. The court based its decision
on Pearson v. Schmitt, 260 Or 607, 609, 492 P2d 269 (1971),
in which the court stated:

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"The view as now taken by a majority of states is that where
a money award has been modified on appeal and the only
action necessary in the trial court is compliance with the
mandate of the appellate court, then the interest on the
award, as modified, should run from the date of the original
judgment * * * , as if no appeal had been taken. The only
exception to this rule appears to be that if the action of the
appellate court in reversing the opinion of the lower court
has the effect of wiping out the original judgment, then
interest should run only from the time when the amount of
the new award is fixed * * *. "

The state argues that this case falls into the excep-
tion stated in Pearson, viz., that this court's modification of
the method of calculation of the overtime awards in Young III
had the effect of "wiping out" the original judgment of the
trial court. The state points out that, in Pearson and Lakin II,
this court modified the trial court judgments only by replac-
ing the amounts of the original judgments with other already
ascertained amounts. In this case, by contrast, Young III did
not require the trial court to substitute previously ascer-
tained sums; instead, it required the trial court to recalculate
the awards entirely by using a different method of computa-
tion. Thus, argues the state, it cannot be said that "the only
action necessary in the trial court [was] compliance with the
mandate of the appellate court." Pearson, 260 Or at 609.

In crafting the exception at issue, this court in
Pearson relied on 4 ALR3d 1221, which described the pre-
vailing rule:

"Where the action of the appellate court ultimately effect-
ing a reduction of the amount awarded has been regarded
as a full reversal, wiping out the original judgment or
decree, the view has been taken that interest should be
computed only from the entry of the new judgment in the
trial court on remand."

(Emphasis added.) In that passage, the phrase "wiping out"
describes the effect of a "full reversal" of the trial court's judg-
ment. In this case, the trial court recognized in its original
judgment that plaintiffs' successful appeal of the limited
judgments could require a different method of calculating
plaintiffs' damages that would result in an increase in their

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judgments and stated that it was entering the original judg-
ment "subject to" such supplementation. We conclude that
the supplemental judgments that the trial court eventually
entered in accordance with the dictates of Young III effected
that anticipated modification of the original judgment and
did not constitute a "full reversal," "wiping out" that judg-
ment.5 Consequently, the post-judgment interest that plain-
tiffs seek must, under Lakin II, accrue from the date of the
original judgment.

In sum, we conclude that, in this case, the state is
not immune from the payment of post-judgment interest and
that post-judgment interest accrues from the date of the orig-
inal judgment.

The decision of the Court of Appeals is reversed. The
judgment of the circuit court is reversed and the case is
remanded to the circuit court for further proceedings.

5 Although Oregon courts have not addressed the issue directly, we note that
other jurisdictions have reached the same conclusion regarding appellate judg-
ments that modify the trial court's method of calculating the damages rather than
merely modify the amount of the trial court judgment. See, e.g., Lippert v. Angle,
215 Kan 626, 628, 527 P2d 1016, 1018 (1974) (order requiring trial court to recal-
culate judgment based on different market value for gas royalties modified, rather
than wiped out, trial court judgment); Sintra, Inc. v. City of Seattle, 96 Wash App
757, 763, 980 P2d 796, 800 (1999) ("Where an appellate court leaves the trial court
on remand with a mere mathematical problem mandated by the appellate court,
interest runs from the date of the original judgment."). In that case, the defendants
had been awarded interest by the trial court on a counterclaim. On review, the
appellate court noted that the defendants had failed to plead any claim of interest.
Consequently, that award was "modified to strike out interest accruing prior to
\* \* \* the date the judgment was entered. Interest after [judgment was to be] com-
puted upon the judgment rather than upon the accounts." Id.