White v. Public Employees Retirement Board
268 P.3d 600
Or.2011Background
- PERS trusteeship and fiduciary duties are at issue as PERB settled City of Eugene v. Oregon litigation and implemented related orders in 2004.
- The 1999 earnings crediting, 1998/2000 employer contribution orders, and funding of contingency and gain-loss reserves were central to the City of Eugene disputes.
- Legislative changes in 2003 restructured PERB and codified an 11.33% 1999 Tier One crediting framework, affecting subsequent PERB actions.
- PERB paired a settlement with the City of Eugene plaintiffs to issue new orders and implement 2003 reforms while dismissing its appellate challenge.
- Plaintiffs alleged PERB breached fiduciary duties by settling and by various 2004 actions that affected fund stability and member benefits.
- The trial court granted summary judgment for PERB on most claims, but the Supreme Court remanded on disputed issues related to the $61 million contingency reserve transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was PERB's settlement of City of Eugene a breach of fiduciary duty? | White allegedly that settlement unfairly sacrificed beneficiaries for certainty. | PERB acted reasonably to protect long-term viability and benefits of all members. | Settlement reasonable; no fiduciary breach. |
| Did PERB breach fiduciary duties by transferring $61 million from the contingency reserve to employer accounts? | Transfer was unauthorized and shifted costs to all PERS members. | Transfer was a reasonable remedy to remedy shortfall and align with settlement. | Remanded; factual disputes preclude summary judgment on reasonableness. |
| Was PERB's transfer of earnings from the variable account to the contingency reserve to correct 1999 overcrediting proper? | Remedy favored employers over employees and violated fiduciary duties. | Transfer to contingency reserve is permissible to protect fund stability. | Not a breach; remedy deemed reasonable within statutory framework. |
| Did PERB's adoption of the money-match calculation rule for the variable account breach fiduciary duties? | Rule was convoluted and inconsistent with statutes. | Rule aligned with the City of Eugene judgment and statutory direction. | Not a breach; adoption reasonable and compliant. |
| Did PERB's payment of attorney fees to City of Eugene plaintiffs breach fiduciary duties? | Fees were excessive and improperly allocated. | Settlement-era discretion; fees were within reasonable settlement terms. | Not a breach. |
Key Cases Cited
- Rowe v. Rowe, 219 Or 599 (Or. 1959) (trustee's duty judged by reasonable discretion)
- Strunk v. PERB, 338 Or 145 (Or. 2005) (legislative codification of 1999 crediting and related issues)
- City of Eugene v. PERB, 339 Or 113 (Or. 2005) (settlement and statutory directives regarding PERB duties)
- Arken v. City of Portland, 351 Or 113 (Or. 2011) (fiduciary duties and treatment of overpayments; administrative expenses)