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Kantor Update
Multnomah County Circuit Court Judge Kantor issued an opinion and order in the Arken and Robinson cases on May 24, 2008. These cases challenge PERS’ actions to collect the overpayments that resulted from erroneously crediting 20% earnings to Tier One member regular accounts in 1999.
 
First, Judge Kantor left untouched his prior ruling in the Robinson case that PERS’ only option is to treat overpayments as administrative expenses. Thus, Judge Kantor's original ruling that requires PERS to "account for and restore any funds collected from or charged to retirees…as if they had never been collected or charged" still stands.
  
However, Judge Kantor’s new ruling addresses issues raised in the Arken case, which was brought on behalf of "window retirees" (members who retired on or after April 1, 2000, and before April 1, 2004, based on the money-match benefit calculation method). They argued that the Oregon Supreme Court ruling in the Strunk case entitled them to the benefits they were receiving on July 1, 2003, plus cost-of-living adjustments (COLAs).
 
Judge Kantor ruled against the Arken plaintiffs on all counts, except to the extent they "seek the same relief sought by the Robinson petitioners." The ruling contains the following conclusions:
  • Judge Kantor "conclude[d] as a matter of law that the legislature did not intend to create a PERS statutory contractual right for the window retirees to receive benefits based on the original determination of the 20 percent earnings rate for 1999." He found that payments made to window retirees based on the erroneous 1999 earnings rate are overpayments.
     
  • Judge Kantor also rejected the argument that window retirees are entitled to keep their excess benefits on a promissory estoppel theory because they had relied on PERS’ representations regarding 20% earnings crediting for 1999. Judge Kantor rejected this theory on the basis that the erroneous 1999 earnings crediting decision never became final and, in any event, statements by a state agency cannot bind the state to any obligation that contravenes state statutes.
     
  • Judge Kantor also rejected the claims that PERS improperly withheld COLAs without proper notice. He stated that "the court is satisfied that [PERS] has done what it can in light of the incredibly uncertain legal stage and complicated required calculations to not unreasonably delay the granting of the COLAs which have been held to be required and that there are no legal frailties contained in the various notices sent to Window Retirees in this regard."
     
  • Finally, Judge Kantor rejected the claim that PERS acted improperly in determining whether particular window retirees were overpaid.
PERS will provide more information regarding the Kantor ruling when it is available. 
 
Kantor/Strunk & Eugene Update from 8/29/07