SUPREME COURT
Media Release
COPIES:
Copies of the slip opinions may be obtained from the Appellate Records Section, (503) 986-5555
The full text of these opinions can be found at http://www.publications.ojd.state.or.us/
Contact:
Stephen P. Armitage
Staff Attorney
(503) 986-7023
Cases decided October 2, 2014
Frank Gearhart et al. v. Public Utility Commission of Oregon, et al., (PUC 08487; 09093)
(CA A140317) (SC S061517; S061518)
On review from the Court of Appeals in a judicial review from an order of
the Public Utility Commission of Oregon. 255 Or App 58, 299 P3d 533 (2013). The
decision of the Court of Appeals and the order of the Public Utility Commission are
affirmed. Opinion of the Court by Chief Justice Thomas A. Balmer.
Today, the Oregon Supreme Court unanimously upheld an order of the
Public Utility Commission (PUC) that had responded to previous court remands regarding
Portland General Electric's (PGE) Trojan nuclear generating facility. Specifically, the
Court held that the PUC had the authority on remand to reexamine rates, order a refund,
and allow PGE to recover interest.
At the time Trojan began commercial operation, in 1976, the PUC allowed
PGE to recover its investment in the facility by including that amount in rates over a
35-year period. However, Trojan was retired before the end of that 35-year period. The
PUC concluded that PGE could recover both a return on and a return of their investment in
Trojan, and the PUC set rates including accordingly. On judicial review, the Court of
Appeals in Citizens' Utility Board v. PUC, 154 Or App 702, 962 P2d 744 (1998) (Trojan I),
reversed and held that PGE could not recover a return on investment. Following remand
from the Court of Appeals, the parties reached a settlement, and the PUC set revised rates
implementing the settlement in 2000.
The Utility Reform Project (URP) was not a party to the settlement, however,
and it filed a complaint with the PUC challenging the order setting post-2000 rates. URP
argued that the new rates did not compensate ratepayers for the amounts collected between
1995 and 2000 that were attributable to the unlawful return on investment. The PUC
responded, in an order, that it had no authority to order refunds. The Court of Appeals
determined that the PUC had not interpreted the statutes regarding its refund authority
correctly. It vacated and remanded the PUC order, directing the PUC to reconsider its
authority to issue refunds based on the correct interpretation of the statute.
On remand, the PUC issued the disputed order in this case. In that order, the
1
PUC examined what rates it would have set for the 1995-2000 period if it had known that it
could not authorize PGE to recover a return on its investment. The PUC concluded that the
remaining balance of the Trojan investment at the time of the 2000 settlement would have
been $15.4 million less than the balance it had actually used to set the post-2000 rates.
Because the PUC concluded that it had authority to order a utility to issue refunds, the PUC
determined that it could compensate the post-2000 ratepayers for the difference between
the rates approved following settlement and the rates that it would have been approved if
the remaining balance had been $15.4 million lower. The PUC ordered PGE to issue a
refund to the post-2000 ratepayers to compensate for the amount of that difference, plus
interest, for a total refund amount of $33.1 million. The Court of Appeals affirmed.
In a unanimous opinion by Chief Justice Thomas A. Balmer, the Court
affirmed the decision of the Court of Appeals and the order of the PUC. The Court held
that the PUC had the authority to take the actions in the order, namely (1) reexamining
previously authorized rates; (2) ordering PGE to refund a portion of rates that had been
collected as a result of the PUC's legal error of allowing PGE to recover a return on its
investment in Trojan; and (3) concluding that it would have allowed PGE to recover
interest on the balance of its investment in Trojan to account for the time value of money
and that such a recovery did not constitute a return on the Trojan investment.
First, the Court explained, the PUC had authority to reexamine previous
rates. Its authority on remand was not limited by the remand instructions from the Court of
Appeals. Neither did the "rule against retroactive ratemaking" (generally prohibiting a
public utility commission from setting future rates to provide relief from past rates that
were too high or too low) or the "filed rate doctrine" (that a rate approved by the
ratemaking agency is conclusively lawful until a new rate is approved) preclude the action
that the PUC took on remand. Second, the court held that the PUC had authority to order
refunds to the post-2000 ratepayers. This authority came from two sources: the legislative
directives to regulate utilities and protect ratepayers, and the binding final remand order
from the Court of Appeals. Third, the court concluded that the PUC had authority to allow
PGE to recover interest on the Trojan investment. The Court of Appeals earlier had held
that PGE could not recover a return on the Trojan investment. In the public utility context
the return on investment -- essentially, profit -- is distinguishable from interest, which
accounts only for the time value of money. The PUC was careful to use a lower interest
rate that only accounted for the time value of money. Additionally, the PUC's authority to
conclude it would have allowed PGE to recover interest can be implied from the PUC's
discretionary ratemaking authority delegated to the PUC by the legislature.
Antonio Cortez v. Nacco Material Handling Group, Inc.et al (TC 0503-02632) (CA
A144045) (SC S060604)
On review from the Court of Appeals in an appeal from the Multnomah
County Circuit Court, Michael H. Marcus, Judge. 248 Or App 435, 274 P3d 202 (2012).
2
The decision of the Court of Appeals is reversed. The judgment of the circuit court is
affirmed in part and reversed in part, and the case is remanded to the circuit court for
further proceedings. Opinion of the Court by Justice Rives Kistler.
Today, the Oregon Supreme Court concluded that neither the limited liability
provision in the statutes governing limited liability companies (LCCs) nor the
exclusive-remedy clause in the workers' compensation statutes barred plaintiff's claims for
negligence and violations of the Employer Liability Law (ELL) against the
member-manager of the LLC where he worked. The Court also ruled that, although
plaintiff had not presented sufficient evidence to show that the member-manager could be
held liable for negligence, he had presented enough evidence from which a reasonable
juror could find that the member-manager was liable under the ELL.
Plaintiff worked for a lumber mill, Sun Studs, LLC. One evening while he
was walking from one area of the mill to another, a forklift hit and severely injured him.
After receiving workers' compensation benefits, plaintiff brought an action against
Swanson Group, Inc., which owned Sun Studs. Plaintiff alleged that Swanson was liable
for negligently failing to provide a safe workplace and for failing to provide competent
safety personnel. Plaintiff also alleged that Swanson was liable under the ELL, which
imposes a heightened standard of care on employers and other entities concerning certain
safety issues. The trial court granted Swanson's motion for summary judgment on the
ground that the workers' compensation statutes provided the exclusive remedy for
plaintiff's injuries.
The Court of Appeals affirmed the trial court's judgment regarding the ELL
claim but reversed its judgment on the negligence claim, reasoning that neither the
workers' compensation statutes nor a statute immunizing limited liability company
members and managers barred that claim against Swanson.
In an opinion written by Justice Rives Kistler, the Supreme Court reversed
the Court of Appeals decision and affirmed in part and reversed in part the judgment of the
circuit court. Considering the text, context, and legislative history of ORS 63.165, the
Court concluded that that statute immunized members and managers of an LLC from
vicarious liability for the LLC's debts, obligations, and liabilities. LLC members and
managers, however, remain personally liable for their acts and omissions to the extent
those acts or omissions would be actionable against the member or manager if that person
were acting in an individual capacity. Even though ORS 63.165 did not shield Swanson
from liability for its own negligence in managing Sun Studs, the Court concluded that,
under Oregon common-law negligence principles, Swanson was not liable because no
reasonable juror could find from the evidence on summary judgment that Swanson had
actual knowledge of the conditions that resulted in plaintiff's injury or that it had actively
participated in creating those conditions.
However, the Court concluded that, even though Swanson was not plaintiff's
employer for the purposes of the Employer's Liability Law (ELL), a jury reasonably could
3
find that Swanson was liable under the ELL for plaintiff's injuries because, as Sun Studs'
member-manager, Swanson retained the right to control the manner or method in which the
risk-producing activity was performed. Finally, the Court held that the 2011 version of the
exclusive-remedy provision of the workers' compensation statutes did not shield LLC
members and managers from liability for workplace injury claims that LLC employees
suffered.
Comcast Corporation v. Department of Revenue (TC-RD 4909) (SC S059764)
On appeal from the Oregon Tax Court, Henry C. Breithaupt, Judge. 20 OTR
319 (2011). The decision of the Tax Court is reversed, and the case is remanded to that
court for further proceedings. Opinion of the Court by Justice Virginia Linder.
Today, the Oregon Supreme Court held that Comcast's cable television and
internet access services are "data transmission services" that fall within the definition of
"communication" for purposes of ORS 308.515(1)(h), and therefore the property that
Comcast uses to provide those services is subject to central assessment by the Oregon
Department of Revenue.
According to the central assessment statutes, property in this state that is
used by a company to perform a "communication" business or service is subject to central
assessment. One type of "communication" business or service is a "data transmission
service." In this case, whether Comcast's cable television or internet access services
qualifies as "communication" business or service subject to central assessment depends on
whether either of those services is a "data transmission service." The Tax Court concluded
that Comcast's internet access service, but not its cable television service, is a "data
transmission service." Because property that is used in both a centrally assessed business
and a non-centrally assessed business is subject to central assessment only if the property's
primary use is for the centrally assessed business, the Tax Court's next task was to
determine if Comcast's primary use of the property was for cable television or internet
access service. The Tax Court determined that the primary use of Comcast's property was
for cable television service, and thus, the property was not subject to central assessment at
all.
In a unanimous opinion by Justice Virginia Linder, the Supreme Court
reversed and remanded. The Court concluded that the text, context, and legislative history
of ORS 308.505(2) showed that the legislature intended "data transmission service" to be a
technical term drawn from the telecommunications field. After examining the meaning of
that phrase within the telecommunications field, the Court held that "data transmission
service" includes "services that provide the means to send data from one computer or
computer-like device to another across a transmission network." With that definition in
place, the Court examined the characteristics of both Comcast's cable television and
internet access services and concluded that both are "data transmission services." Thus, the
property that Comcast uses to provide those services is property used for a
4
"communication" business or service and is subject to central assessment by the
department. The Court therefore reversed the decision of the Tax Court and remanded the
case to that court for further proceedings.
Ronald Doyle et al. v. City of Medford et al., (TC 0801317) (CA A147497) (SC S061463)
On review from the Court of Appeals in an appeal from the Jackson County
Circuit Court, Mark S. Schiveley, Judge. 256 Or App 625, 303 P3d 346 (2013). The
decision of the Court of Appeals is reversed. The case is remanded to that court for further
proceedings. Opinion of the Court by Justice David V. Brewer. Justice Martha L. Walters
concurred and filed an opinion, in which Justice Richard C. Baldwin joined.
Today, the Oregon Supreme Court held that, in enacting ORS 243.303(2),
which requires local governments to make available to retired employees, "insofar as and
to the extent possible," the health care insurance coverage available to current officers and
employees of the local government, the legislature did not expressly or impliedly intend to
create a private right of action for the enforcement of that duty. The Court also declined to
exercise its common-law authority to provide such a right of action sounding in tort.
Plaintiffs retired from employment with the City of Medford and attempted
to elect to continue the health insurance coverage that the city had provided to them as
employees. The city declined to make that coverage available to plaintiffs because, among
other reasons, the city's health insurance plan that had applied to plaintiffs at the time of
their retirements did not include coverage for retirees, and the city took the position that the
cost of providing such coverage was prohibitive. Plaintiffs brought this action against the
city and its manager, asserting, among other claims for relief, a tort-based claim that the
city was required by ORS 243.303(2) to make such coverage available to them. The circuit
court concluded that the city had violated ORS 243.303(2), and that creation of a
common-law right of action was necessary to effectuate the intent of the legislature in
enacting that statute. Accordingly, the circuit court submitted plaintiffs' tort claim to a jury
for a determination of damages. The jury awarded plaintiffs both economic and
noneconomic damages for the city's violation of the statute. On the city's appeal, the Court
of Appeals reversed, relying in part on the Supreme Court's decision in Scovill v. City of
Astoria, 324 Or 159, 921 P2d 1312 (1996); the Court of Appeals concluded that the circuit
court had erred in granting plaintiffs' motion for partial summary judgment because the
legislature did not expressly or impliedly intend to create a right of action to enforce the
city's statutory duty under ORS 243.303(2). The Court of Appeals did not address whether
the court should create such a right of action under its common law authority.
In an opinion written by Justice David V. Brewer, the Supreme Court held
that where a statute imposes a legal duty, but there is no indication that the legislature
intended to create (or not to create) a private right of action for its enforcement, courts must
(if such relief is sought) determine whether the judicial creation of a common-law right of
5
action would be consistent with the legislative provision, appropriate for promoting its
policy, and needed to ensure its effectiveness, following Restatement (Second) of Torts,
section 874A. The Supreme Court concluded that the legislature did not expressly or
impliedly intend to create a right of action to enforce the statutory duty imposed by ORS
243.303(2). The Court further held that creation of a common-law right of action was
neither necessary nor appropriate to effectuate the legislature's purpose, because (1) the
plaintiffs failed to identify a cognizable common-law claim for relief whose creation is
appropriate and necessary to effectuate the legislature's purpose, (2) a declaratory
judgment and supplemental relief are adequate to enforce the city's statutory duty, and (3) a
significant change in existing law would result from judicial creation of a tort claim
permitting the recovery of noneconomic damages in the circumstances of this case. The
Court further held that a declaratory judgment and supplemental relief would fully redress
plaintiffs' compensable injuries, if any, and that plaintiffs have a claim for a determination
of the parties' rights and duties under ORS 243.303(2) based on the Declaratory Judgments
Act. Because plaintiffs did have a claim under the Declaratory Judgments Act, and
because the Court of Appeals did not reach certain other issues in its holding, the Supreme
Court reversed the decision of the Court of Appeals and remanded the case to that court for
further proceedings.
Justice Martha L. Walters concurred and filed an opinion in which Justice
Richard C. Baldwin joined. Justice Walters would have recognized a tort claim allowing
plaintiffs to bring a claim for damages against defendant for defendant's alleged failure to
comply with ORS 243.303(2). Although the Court allows plaintiffs to bring a claim for
damages against defendant for defendant's alleged failure to comply with ORS 243.303(2),
the Court does not recognize that claim as a tort claim and instead requires plaintiffs to seek
relief through the Declaratory Judgments Act. In Justice Walters' view, recognizing
plaintiffs' claim as a tort claim provides courts with better tools to decide the elements of
the claim, the applicable defenses, and the cognizable damages. Further, recognizing
plaintiffs' claim as a tort claim better comports with Restatement (Second) of Torts, section
874A, and the Supreme Court's prior case law. In this case, recognizing plaintiffs' claim as
a tort is "consistent with the statute, appropriate for promoting its policy and needed to
ensure its effectiveness." Restatement (Second) of Torts, section 874A, comment h.
6