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John DiLorenzo, right, special counsel to Linn County and County Commissioner Roger Nyquist answer questions at a press conference in 2016 when the county announced its $1.4 billion class action lawsuit aqainst the Oregon Department of Forestry. 

File photo

A judge has withdrawn an earlier opinion that appeared to jeopardize a lawsuit filed by Linn County and other governmental units over the management of state forest trust lands.

In an opinion issued in June, Linn County Circuit Court Daniel Murphy ruled that Linn County and the 140 other counties and taxing districts included in the class action lawsuit could not sue the state for monetary damages.

Murphy cited the doctrine known as "sovereign immunity," a centuries-old legal document that prevents government from being sued with its consent. The judge found that since the plaintiffs in the suit are part of the larger entity of the state as a whole, they could not sue for damages.

That ruling potentially threw a major wrench in the lawsuit against the Oregon Department of Forestry.

The attorney for the county, John DiLorenzo of Davis Wright Tremaine in Portland, asked to meet with Murphy and the state’s attorneys to ask Murphy to reconsider his decision. A conference was held July 13.

DiLorenzo based his argument on a clause in state law, Oregon Revised Statute 30.320, which he said has been part of Oregon law since 1892 and has been upheld several times over the years, including 1929 and 1959, when the Legislative Assembly amended it to “waive sovereign immunity on contracts entered into by all state agencies.” The statute reads in part: "A suit or action may be maintained against any county and against the State of Oregon by and through and in the name of the appropriate state agency upon a contract made by the county and its corporate character, or made by such agency and within the scope of its authority.”

Murphy agreed to withdraw his June 20 decision and noted that the next step in the case would involve motions for summary judgment. Those motions are due by Sept. 11. A pretrial conference has been set for 9 a.m. Sept. 14.

The lawsuit involves state forest trust land, more than 700,000 acres of mainly logged-over or fire-damaged properties that were acquired by counties through tax foreclosures in the 1930s and 1940s and then turned over to the state for management.  A 1939 law says those lands must be managed for "the greatest permanent value to the state."

At that time, the phrase was generally interpreted to mean that the lands should be managed to maximize timber harvests. Money from those timber sales went back to the coffers of the counties and other taxing entities. 

But over the years, the state has broadened the definition of "greatest permanent value" so that it includes other management goals, such as recreation and protection of habitat. As a result, timber harvests diminished on the state land — and so did the money from those harvests. The lawsuit argues that broadening the management goals, and the resulting financial hit, amount to a breach of contract. 

Attorneys for the state did not immediately return calls from the Democrat-Herald seeking comment.

Sick-leave case

In a related legal matter, Linn County and the state have agreed to a settlement in a lawsuit filed by Linn County and other counties over the state's paid sick-leave law.

The sick leave law, passed by the 2015 Legislature, requires employers with 10 or more workers to give them at least 40 hours of paid sick leave each year. Employers with nine or fewer workers must provide 40 hours of unpaid sick time.

Linn County, along with other counties, argued that the law represented an unfunded mandate from the state and as such violated Oregon's constitution. The state constitution says that local governments aren't required to comply with state laws or administrative rules if the necessary funding isn't provided by the state and if the costs of the new program amount to more than a hundredth of 1 percent of the local government's budget.

In a ruling in the case, Murphy said that Linn, Douglas and Yamhill counties have met the financial threshold that allows them to not participate in the state’s paid sick leave law.

The state retains the right to appeal on the issue of whether paid sick leave is actually a new program or not; if a court determines that the sick-leave legislation does not legally create a "new program," the constitutional provision against an unfunded mandate would not apply.

On July 17, Morrow, Jefferson, Polk, Malheur, Sherman and Wallowa counties filed voluntary notices of dismissal and were dismissed from the proceedings.

Linn County Commissioner Roger Nyquist welcomed the recent court decisions.

“The common denominator in these separate lawsuits is that the state over the years has made decisions that were not financially prudent for counties and taxpayers as a whole,” Nyquist said. “The most recent developments show progress in working through the financial situations that the state has put taxpayers and counties in.”

Nyquist added that the lawsuits also sent a message to state legislators during their recent sessions.

“They seem to have gotten the message and when they passed the measure to record grand jury deliberations, they included financial compensation to the counties for the costs associated with that,” he said. “And, legislators pursued paid family leave, but those efforts failed because they realized they had to find a way to fund it and were not successful in those attempts.”

Contact Linn County reporter Alex Paul at 541-812-6114.

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