United States v. 2009-05-04 | 07-35753 | DOYLE V. CITY OF MEDFORD | precedential | opinion |

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 RONALD DOYLE; ROBERT DEUEL; No. 07-35753
BENEDICT MILLER; and CHARLES D.C. No.
STEINBERG, CV-06-03058-PA
Plaintiffs-Appellants, District of Oregon,
v. Medford
 CITY OF MEDFORD, an Oregon ORDER
municipal corporation; and CERTIFYING A
MICHAEL DYAL, City Manager, QUESTION TO
City of Medford, in his official THE SUPREME
capacity and as an individual, COURT OF
Defendants-Appellees. OREGON

Filed May 4, 2009
Before: Susan P. Graber, Raymond C. Fisher, and
Milan D. Smith, Jr., Circuit Judges.
COUNSEL
Stephen L. Brischetto, Portland, Oregon, for the plaintiffs-
appellants.
Robert E. Franz, Jr., Law Office of Robert E. Franz, Jr.,
Springfield, Oregon, for the defendants-appellees.
5177

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ORDER
Plaintiffs, who are former employees of Defendant City of
Medford, argue that the City’s policy of denying health insur-
ance coverage to retirees violates Oregon Revised Statutes
section 243.303, City Resolution No. 5715, and the Due Pro-
cess Clause of the United States Constitution. Plaintiffs con-
tend that section 243.303 and Resolution No. 5715 confer on
them a vested property interest in health care benefits after
retirement, of which the City deprived them without due pro-
cess of law. Because the question whether the statute and Res-
olution confer on Plaintiffs a protected property interest raises
an important and unresolved issue of Oregon law that will dis-
pose of the only remaining federal claim on appeal, we
respectfully certify a question to the Supreme Court of Ore-
gon. We offer the following statement of relevant facts and
explanation of the “nature of the controversy in which the
question[ ] arose.” Or. Rev. Stat. § 28.210.
BACKGROUND
A. Factual and Procedural History
In 1981, the Oregon State Legislative Assembly enacted
Oregon Revised Statutes section 243.303(2), which read, in
pertinent part:
The governing body of any local government that
contracts for or otherwise makes available health
care insurance coverage for officers and employees
of the local government, may, in so far as and to the
extent possible, make that coverage available for
retired officers and employees of the local govern-
ment and for spouses and unmarried children under
18 years of age of those retired officers and employ-
ees. The governing body may prescribe reasonable
terms and conditions of eligibility and coverage, not
inconsistent with this section, for making that cover-
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age available. The local government may agree to
pay none, part or all of the cost of making that cover-
age available.
1981 Or. Laws page no. 258 (emphasis added).
In 1985, the statute was amended. The most significant
change was that the legislature replaced the discretionary
word “may” with the mandatory word “shall.” The statute
currently reads:
The governing body of any local government that
contracts for or otherwise makes available health
care insurance coverage for officers and employees
of the local government shall, insofar as and to the
extent possible, make that coverage available for any
retired employee of the local government who elects
within 60 days after the effective date of retirement
to participate in that coverage and, at the option of
the retired employee, for the spouse of the retired
employee and any unmarried children under 18 years
of age. The health care insurance coverage shall be
made available for a retired employee until the
retired employee becomes eligible for federal Medi-
care coverage, for the spouse of a retired employee
until the spouse becomes eligible for federal Medi-
care coverage and for a child until the child arrives
at majority, and may, but need not, be made avail-
able thereafter. The governing body may prescribe
reasonable terms and conditions of eligibility and
coverage, not inconsistent with this section, for mak-
ing the health care insurance coverage available. The
local government may pay none of the cost of mak-
ing that coverage available or may agree, by collec-
tive bargaining agreement or otherwise, to pay part
or all of that cost.
Or. Rev. Stat. § 243.303(2) (2007) (emphasis added).
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In 1986, the City adopted Resolution No. 5715, which set
forth the City’s plan for complying with section 243.303. The
Resolution interprets section 243.303 as requiring “that con-
tinuation of health insurance be offered to employees who
retire from City service.” The Resolution provides that a
retired employee has 60 days from the date of retirement in
which to elect to continue his or her participation in the City’s
health insurance program. The retiree also can elect to enroll
his or her spouse and unmarried children under age 18 in the
program, if they were covered while the retiree was employed
by the City. Under the Resolution, coverage continues until
one of several events (including the retiree’s attainment of
Medicare eligibility or termination of the retiree program by
the City or its carrier) occurs.
Before 1990, the City permitted all employees to elect to
continue their health insurance coverage upon retirement. In
1990, however, the City negotiated with its police officers’
union for a health insurance program that did not give officers
the opportunity to continue coverage after retirement. In 2001,
the City placed all of its management-level employees under
that same health insurance program, which does not cover
retirees. In 2002, the City placed its non-management
employees in both its Parks and Recreation Department and
Public Works Department in the same program.
The City contracts with the Oregon Teamsters Employers
Trust to provide health insurance to its employees. The Team-
sters’ contract with the City states: “[P]articipants are not
allowed to participate in the Trust’s Retiree Plan or any
insured or HMO option available through it.” This provision
means that retirees are excluded from coverage under the
Teamsters’ plan. The members of the Teamsters are responsi-
ble for voting on the extent of coverage. According to the
City, the Teamsters were “willing” to provide health insur-
ance benefits to retired employees, but only “if the members
of the Teamsters voted for such coverage.” To date, the mem-
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bers of the Teamsters have not approved an extension of
health insurance benefits to retirees.
Although the City does not provide health insurance cover-
age after retirement, retirees can choose to remain covered for
18 months after their retirement under the Consolidated
Omnibus Budget Reconciliation Act of 1985. After that 18-
month period expires, retired employees can enroll in the Ore-
gon Public Employees Retirement System Health Insurance
Program, into which the City has paid so that its retired
employees can obtain coverage.
Plaintiffs are former City police officers or management-
level employees who have retired and who have been denied
benefits under the Teamsters’ plan.1 In August 2006, Plaintiffs
filed suit against the City and City Manager Michael Dyal,
alleging that Defendants had violated Resolution No. 5715
and Oregon Revised Statutes section 243.303; the Due Pro-
cess Clause; the Age Discrimination in Employment Act of
1967 (“ADEA”); and the parallel Oregon age discrimination
statute, Or. Rev. Stat. § 659A.030.2 Defendants moved for
summary judgment, which the district court granted.
1Defendants assert that Plaintiffs’ claims are barred by Oregon’s two-
year statute of limitations for actions brought under 42 U.S.C. § 1983. See
Sain v. City of Bend, 309 F.3d 1134, 1138 (9th Cir. 2002). Defendants
argue that Plaintiffs’ injuries occurred when the City decided to switch to
a plan that did not provide coverage for retirees (1999 for police officers
and 2001 for management-level employees). We think that the applicable
injury dates are 60 days after each Plaintiff’s individual retirement date
because, by then, each Plaintiff would have applied for benefits under
Resolution No. 5715 and would have been denied coverage. Under that
analysis, Plaintiffs Steinberg and Deuel would be dismissed from the
action because they did not bring suit within two years of their 60-day
windows expiring. But Plaintiffs Miller and Doyle would remain, because
the suit was filed within two years of the expiration of their 60-day win-
dows.
2The ADEA claim is the subject of a separate decision, embodied in an
unpublished memorandum disposition filed this date. The ADEA claim
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In its order granting summary judgment, the district court
held that neither section 243.303 nor Resolution No. 5715
afforded Plaintiffs a constitutionally protected property inter-
est. Because no Oregon court had yet interpreted either the
statute or the Resolution, the court examined Ninth Circuit
case law and reasoned that the statute’s text did not “suffi-
ciently limit the conditions under which the City would be
required to extend health insurance coverage to retirees.” The
court declined to exercise supplemental jurisdiction over
Plaintiffs’ remaining state law claims, dismissing them with-
out prejudice and with leave to refile in state court.
Following the district court’s grant of summary judgment,
Plaintiffs filed their state law claims in Oregon state court.
Plaintiffs alleged four claims: (1) the City violated section
243.303, which Plaintiffs argue provides a private right of
action; (2) the City violated Resolution No. 5715, which
Plaintiffs also argue provides a private right of action; (3) the
City violated Oregon’s age discrimination law; and (4) the
City breached an implied contract it had made with Plaintiffs.
The state trial court held in November 2008 that the claims of
two of the four plaintiffs (Steinberg and Deuel) were barred
on statute of limitations grounds, but that the claims of the
other two plaintiffs (Doyle and Miller) could proceed.3 The
does not affect the certified question. The Oregon age discrimination
claim, along with other state law claims, is pending in Oregon state court.
See Doyle v. City of Medford, Case No. 08-0137-L7, Circuit Court of
Jackson County (complaint filed Jan. 9, 2008). A second set of plaintiffs,
who are current employees of the City, filed an identical set of claims in
federal court. That case was dismissed from federal court for lack of ripe-
ness, see Bova v. City of Medford, No. 08-35091, slip op. at 5167 (9th Cir.
May 4, 2009), but those plaintiffs are also pursuing their state claims in
state court. See Bova v. City of Medford, Case No. 08-1663-E7, Circuit
Court of Jackson County (amended complaint filed Apr. 10, 2008).
3See Opinion and Order on Defendants’ Motion for Partial Summary
Judgment, Case No. 08-0137-L7, Circuit Court for Jackson County (Nov.
20, 2008). See also supra note 2.
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court held that section 243.303 afforded Plaintiffs a private
right of action, but that Resolution No. 5715 did not.
The court rejected the City’s argument that it was not
required to allow its retired employees to continue the same
coverage offered to current employees because providing
such coverage is “impossible” under the City’s contract with
the Teamsters. The court held that Defendants cannot escape
the requirements of section 243.303 by “conspicuously con-
tracting with an insurance provider whose coverage does not
include retirees.” Because Defendants did not present “the
Court with undisputed evidence that no entity providing
health care insurance was (and is) willing to provide [health
care] coverage for both current and retired employees of the
City of Medford,” the court refused to say that, as a matter of
law, it was impossible for the City to provide coverage to
retirees. Additionally, the court decided that the phrase “to the
extent possible” does not mean “to the extent financially pru-
dent,” because the Oregon legislature did not include the
words “subject to the availability of funds” in section
243.303, as it has in some other statutes. That case is still
pending in state court; as of the date of this Order, no final
judgment has been entered and no appeal has been taken.
B. Due Process Claim
Plaintiffs argue that section 243.303 and Resolution No.
5715 create for retired City employees a property interest in
health insurance benefits after retirement and that, by denying
Plaintiffs such benefits, the City has deprived them of prop-
erty without due process of law. Resolving that issue of fed-
eral law necessarily depends on the state courts’ construction
of section 243.303. See Bd. of Regents of State Colls. v. Roth,
408 U.S. 564, 577 (1972) (holding that property interests are
not created by the Constitution but, “[r]ather, they are created
and their dimensions are defined by existing rules or under-
standings that stem from an independent source such as state
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law[ ]rules or understandings that secure certain benefits and
that support claims of entitlement to those benefits”).
No Oregon appellate court yet has interpreted section
243.303. Despite the guidance concerning statutory interpreta-
tion provided by Portland General Electric Co. v. Bureau of
Labor & Industries, 859 P.2d 1143 (Or. 1993), we discern no
readily definitive meaning in this statute. As advised by Port-
land General Electric, we have examined the text and context
of the statute, id. at 1146, but a significant ambiguity in the
text, coupled with the absence of guidance from any Oregon
appellate court, leaves us without an answer from the applica-
tion of Oregon’s case law.
The statutory text is ambiguous. As noted, section
243.303(2) provides that “any local government that contracts
for or otherwise makes available health care insurance cover-
age for officers and employees of the local government shall,
insofar as and to the extent possible, make that coverage
available for any retired employee of the local government
who elects within 60 days after the effective date of retire-
ment to participate in that coverage.” (Emphasis added.) The
phrase “insofar as and to the extent possible”4 could impose
any one of a wide range of requirements on local govern-
ments. At one extreme, that phrase could restrain local gov-
ernments’ discretion tightly and mean that they must purchase
insurance from a carrier that will provide coverage to retirees
without regard to cost, feasibility of administration of the
plan, or public opinion, as long as any insurer anywhere, at
any cost, would cover retirees. At the other extreme, the
phrase could grant significant discretion to local governments
to reject insurance carriers who provide retiree coverage, sim-
ply because another plan exempting retirees is less expensive,
gives better benefits, or is otherwise more attractive.
4Section 243.303 appears to be the only Oregon statute that contains this
exact phrase. We have found no Oregon cases that interpret a similar stat-
utory phrase in an analogous context.
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The legislative history of the statute, to which we turn
when the legislature’s intent is not clear from the text and
context of the statute, see Portland Gen. Elec., 859 P.2d at
1146, does not shed much light on the proper interpretation of
the phrase “insofar as and to the extent possible.” When origi-
nally enacted in 1981, the statute provided that local govern-
ments “may, in so far as and to the extent possible,” provide
health insurance coverage to retired employees. 1981 Or.
Laws page no. 258. The legislative history from 1981 demon-
strates that the legislature intended to convey a significant
amount of discretion to local governments to determine, using
their own standards, whether retiree coverage was possible.
See Minutes, Senate Local Government, Urban Affairs, and
Housing Committee for Public Hearing Regarding HB 3010,
page 4, Oregon State Legislative Assembly (June 1, 1981)
(noting that several senators recognized the bill as “permis-
sive” and that one senator “said the bill only made it clear to
local governments that . . . [retiree coverage] could be negoti-
ated if so desired”); Minutes, House Committee on Intergov-
ernmental Affairs for Public Hearing Regarding HB 3010,
pages 3-4, Oregon State Legislative Assembly (Apr. 22,
1981) (noting that the Legislative Counsel chose to use the
word “may” rather than “shall” in the 1981 version “because
of availability and flexibility of insurance coverage in [the]
area”). But the discussion did not illuminate the meaning of
the phrase that carries over to the present day—“insofar as
and to the extent possible.”
In 1985, despite opposition, the legislature replaced “may”
with “shall.” That change takes away at least some of the
local government’s discretion to determine whether providing
retiree coverage is possible, but the 1985 legislative history
does not advise us about what amount of discretion, if any,
still remains in the hands of local governments. The legisla-
tive history demonstrates that some legislators were con-
cerned about the additional costs that the mandatory wording
would impose. See, e.g., Minutes, House Committee on Inter-
governmental Affairs for Public Hearing Regarding HB 2430,
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pages 3-4, Oregon State Legislative Assembly (Mar. 5, 1985)
(noting that one representative “questioned figures of esti-
mated cost increases for premiums,” another “questioned if
insuring retired persons on a city’s group plan increases the
rates of the other insurees,” and yet another “commented on
the problem of insuring retired persons at the expense of cit-
ies”). Despite those concerns, the bill passed with the phrase
“insofar as and to the extent possible” left intact. The legisla-
tive history does not inform us whether that phrase survived
untouched in order to leave some discretion in the hands of
local governments, to satisfy opponents of the bill who
believed that a strict mandatory rule would be prohibitively
expensive for cities, or just by oversight. Nor does the history
explain what the phrase “insofar as and to the extent possible”
means in this context.
Pinpointing how much discretion the operative phrase
leaves to local governments is central to deciding the federal
constitutional issue in this case because, in determining
whether a state statute confers on a party a protected property
interest, our primary inquiry is “ ‘the extent to which the stat-
ute contains mandatory language that restricts the discretion
of the [decisionmaker].’ ” Allen v. City of Beverly Hills, 911
F.2d 367, 370 (9th Cir. 1990) (alteration in original) (quoting
Jacobson v. Hannifin, 627 F.2d 177, 180 (9th Cir. 1980)).
Surely, the move from discretionary to mandatory phrasing
demonstrates a shift in local governments’ responsibility to
provide health insurance coverage for retired employees. But,
without guidance from the Oregon Supreme Court about what
the phrase “insofar as and to the extent possible” means in
this context or how dramatic a shift in the local governments’
discretion the legislature intended, we are unable to decide the
federal constitutional question accurately.
If examination of the text, context, and legislative history
does not demonstrate the legislature’s intent, a court “may
resort to general maxims of statutory construction to aid in
resolving the remaining uncertainty.” Portland Gen. Elec.,
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859 P.2d at 1146. We are hesitant, however, to speculate
about which general maxims of statutory construction the
Oregon Supreme Court would use to interpret this statute and
what result that court would reach. We do not think that it is
appropriate to substitute our judgment for the judgment of the
Oregon Supreme Court on the interpretation of Oregon’s stat-
utory scheme for providing health insurance coverage to
retired public employees.
We recognize that the court takes into account several dis-
cretionary factors when deciding whether to accept a question
for certification. W. Helicopter Servs., Inc. v. Rogerson Air-
craft Corp., 811 P.2d 627, 630 (Or. 1991).5 Several of those
factors weigh in favor of the court’s accepting this certified
question. To begin, we think that the question whether retired
public employees have a vested property right to health insur-
ance coverage after retirement under section 243.303 is one
of exceptional importance to citizens of the State of Oregon
and to local governments within the state, especially in light
of the increasing costs of health insurance and the decreasing
budgets of local governments.
We recognize that a state trial court is considering the
issues presented in this order for certification, which could
implicate the doctrine of “Pullman abstention,” one of the dis-
cretionary factors discussed in Western Helicopter. In Rail-
road Commission of Texas v. Pullman Co., 312 U.S. 496
(1941), the United States Supreme Court “held that the federal
courts should abstain from deciding a case where an unsettled
5The seven criteria for exercising discretion to accept certification are:
(1) the Oregon Supreme Court’s independent assessment of whether there
is controlling Oregon precedent; (2) whether an unsettled question of state
law may be dispositive of a claim that state action violates the United
States Constitution; (3) considerations of comity; (4) the importance of the
certified question of law; (5) whether the issue to be decided is truly con-
tested; (6) the procedural posture of the case; and (7) the extent to which
the Oregon Supreme Court would need to exercise its discretion to restate,
or reframe, the question certified. W. Helicopter, 811 P.2d at 631-34.
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question of state law may be dispositive of a claim that state
action violated the [United States Constitution], because the
answer to the state law question may obviate the need to
decide the federal constitutional question.” W. Helicopter, 811
P.2d at 632; see also Spoklie v. Montana, 411 F.3d 1051,
1055 (9th Cir. 2005).
Here, the state courts’ answer to the question of how much
discretion is afforded to local governments under the statute
could be dispositive of Plaintiffs’ claim that the City’s actions
violate the United States Constitution. For example, if the
state courts were to hold that the statute grants local govern-
ments unlimited discretion, then under federal law, we would
be obligated to hold that there is no protected property interest
and no corresponding due process violation. Or, Plaintiffs
could get all the relief that they seek from the state court pro-
ceedings and, consequently, may choose to dismiss the federal
action.
Therefore, we could simply abstain from deciding this case
under the Pullman doctrine and, accordingly, wait for the par-
allel state court action to work its way through the state court
system. However, as the Oregon Supreme Court recognized
in Western Helicopter, certification is appropriate in Pullman-
type abstention cases “because the alternative to certification
is federal court abstention and the attendant delay until resolu-
tion of the derivative state court . . . action (including trial, the
right to a direct appeal, and the right to seek discretionary
review after the direct appeal).” 811 P.2d at 632; see also Ari-
zonans for Official English v. Arizona, 520 U.S. 43, 75 (1997)
(“Certification today covers territory once dominated by a
deferral device called ‘Pullman abstention’ . . . .”). In this
case, it could take months, or perhaps even years, for the trial
court to complete its proceedings, as there are other claims,
aside from the statutory claim, that also require resolution.
Even after the trial court has rendered a decision as to its
interpretation of the statute, there is no guarantee that the par-
ties will seek review of that decision. During the significant
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delay, public employees, retired employees, and local govern-
ments will be in limbo, uncertain of their rights and obliga-
tions under section 243.303. Western Helicopter states that,
“[e]xcept in unusual circumstances (examples of which do not
readily come to mind), [the Oregon Supreme Court] will
accept certification in Pullman-type abstention cases.” Id.
Because this case does not present an unusual circumstance
but, instead, invokes classic Pullman abstention principles, we
respectfully seek certification.
If we were not to abstain and instead were to interpret the
statute based on our best understanding of Oregon law, the
existence of parallel state and federal proceedings that address
the same legal question presents the risk of inconsistent judg-
ments as to the proper interpretation of section 243.303. If the
federal and state courts adopted different readings of the stat-
ute, local governments and their employees would be uncer-
tain about what the law requires of them with regard to retiree
health insurance coverage. Such uncertainty is best resolved
by a definitive decision by the Oregon Supreme Court as to
the proper meaning of section 243.303.
We also note that both parties in this matter agree that certi-
fication is the best way to resolve the statutory interpretation
question. Plaintiffs’ sole objection to certification is that they
should be allowed to conduct discovery and develop a full
factual record before the case proceeds to the Oregon
Supreme Court. We disagree that development of a full fac-
tual record is necessary for resolution of the purely legal issue
presented in this appeal. The question as to which we seek
certification is solely one of statutory interpretation and legis-
lative intent that is completely unmoored from particular
facts. We therefore believe that the procedural posture of this
matter does not stand as a bar to certification.
CONCLUSION
We respectfully certify to the Oregon Supreme Court the
following question under Oregon law:
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What amount of discretion does Oregon Revised
Statutes section 243.303 confer on local govern-
ments to determine whether or not to provide health
insurance coverage to their employees after retire-
ment?
We respectfully ask the Oregon Supreme Court to exercise
its discretionary authority under Oregon’s Uniform Certifica-
tion of Questions of Law Act, Or. Rev. Stat. §§ 28.200 to
.255, to accept and decide this question. Our phrasing of the
question should not restrict the court’s consideration of the
issues involved. “The court may reformulate the relevant state
law questions as it perceives them to be, in light of the con-
tentions of the parties.” Toner ex rel. Toner v. Lederle Labs.,
779 F.2d 1429, 1433 (9th Cir. 1986). We agree to abide by the
decision of the Oregon Supreme Court. Lombardo v. Warner,
391 F.3d 1008, 1010 (9th Cir. 2004) (en banc) (order). If the
court decides that the question presented in this case is inap-
propriate for certification, or if it declines the certification for
any other reason, it should so state and we will resolve the
question according to our best understanding of Oregon law.
The Clerk will file a certified copy of our Order with the
Oregon Supreme Court under Oregon Revised Statutes sec-
tion 28.215. This appeal is withdrawn from submission and
will be submitted following receipt of the Oregon Supreme
Court’s Opinion on the question certified. This panel retains
jurisdiction over further proceedings in this court. The parties
will notify the Clerk within one week after the Oregon
Supreme Court accepts or rejects certification, and again
within one week after the court renders its Opinion.
IT IS SO ORDERED.
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