source: Caselaw Access Project

author: NAKAMOTO, J.

license: Public Domain

text:
    Douglas OSSANNA, an individual, Respondent on Review, v. NIKE, INC., an Oregon corporation, Petitioner on Review.
    SC S065889
    Supreme Court of Oregon.
    Argued and submitted November 5, 2018. July 18, 2019
    Brenda K. Baumgart, Stoel Rives LLP, Portland, argued the cause and filed the briefs for petitioner on review. Also on the briefs were Amy Joseph Pedersen and James N. Westwood.
    Michael J. Estok, Lindsay Hart, LLP, Portland, argued the cause and filed the brief for respondent on review. Also on the brief were Glen McClendon and Alice Newlin.
    Before Walters, Chief Justice, and Balmer, Nakamoto, Flynn, Duncan, Nelson, and Garrett, Justices.

      Kistler, J., retired December 31, 2018, and did not participate in the decision of this case.

   NAKAMOTO, J.

In this employment action involving Oregon statutory retaliation claims, we decide whether the trial court erred by refusing to give an instruction regarding the "cat's paw" theory of establishing discriminatory or retaliatory motivation. After being terminated by defendant Nike, Inc., plaintiff Douglas Ossanna sued his former employer. Plaintiff alleged, among other things, that Nike had unlawfully fired him in retaliation for his safety complaints and for whistleblowing. Based on his theory that his supervisors held a retaliatory bias against him, plaintiff requested a "cat's paw" jury instruction informing the jury that, in considering his claims, it could impute a subordinate supervisor's biased retaliatory motive to Nike's formal decision-maker, an upper manager with firing authority, if the biased subordinate supervisor influenced, affected, or was involved in the decision to fire plaintiff. The trial court declined to give the instruction, and the jury returned a verdict for Nike. The Court of Appeals reversed, concluding that the trial court's refusal to give the requested "cat's paw" instruction was an instructional error that prejudiced plaintiff. Ossanna v. Nike, Inc. , 290 Or. App. 16, 415 P.3d 55 (2018).

We allowed Nike's petition for review to address the "cat's paw" doctrine under Oregon law and whether the trial court erred in refusing to give the proffered instruction. In deciding that question, we reach the following legal conclusions. We hold that the "cat's paw" doctrine is a viable theory in Oregon. The instruction on the doctrine in this case would have permitted the jury to impute the unlawful bias of a subordinate supervisor who lacked decision-making authority to the employer's authorized manager and ostensibly independent decision-maker, if the biased supervisor influenced or was involved in the adverse employment decision or decision-making process. For an employer to be liable, however, a plaintiff relying on the imputed-bias theory also must establish a causal connection between the supervisor's bias and the adverse employment action; the causation requirement for the claim at issue controls the degree of causation required to impose liability.

We also conclude that the trial court erred in declining to give plaintiff's "cat's paw" jury instruction, because the instruction was a correct and applicable statement of the law, and that the instructional error prejudiced plaintiff. Accordingly, we affirm the decision of the Court of Appeals, reverse the judgment of the trial court as to plaintiff's retaliation claims, and remand the case to the trial court for further proceedings.

I. FACTUAL AND PROCEDURAL HISTORY

We review a trial court's failure to give a requested jury instruction for errors of law, State v. Reyes-Camarena , 330 Or. 431, 441, 7 P.3d 522 (2000), and evaluate the evidence in the light most favorable to the establishment of the facts necessary to require the instruction, Carter v. Mote , 285 Or. 275, 279, 590 P.2d 1214 (1979). We therefore recite the facts in the light most favorable to the giving of plaintiff's "cat's paw" instruction.

From 2007 until his termination in 2013, plaintiff was a licensed electrician in Nike's maintenance department. In 2009, Nike established an electrician apprenticeship program so that participating employees could obtain a Limited Maintenance Electrician license. Portland Community College's (PCC) Metro Limited Maintenance Electrician Joint Apprenticeship Training Committee (JATC) administered the program. The program required an apprentice seeking licensure to log 4,000 hours of on-the-job training under the supervision of a licensed electrician and to take classes at PCC.

Between the 2009 inception of the apprenticeship program at Nike and 2012, plaintiff repeatedly voiced his concerns about the safety of apprentices performing unsupervised electrical work and about Nike's improper administration of the program in violation of JATC requirements. Initially, plaintiff spoke about his concerns with Dan Delgado, his direct supervisor and the person in charge of the apprenticeship program at Nike. But eventually, seeing no corrective measures, plaintiff escalated his concerns up Nike's chain of command. He communicated with-in ascending order of superiority-Mark Treppens, maintenance operations manager; Nellie St. Jacques, facilities director; and Deb Hellmer-Steele, senior director of global corporate services. Plaintiff also conveyed his concerns to Stephanie Hammer, Nike's operational risk manager. Plaintiff raised concerns about the general mismanagement of the apprenticeship program and reported two specific electrocution incidents that had resulted from unsupervised apprentice work. Despite the reports, however, plaintiff did not observe any changes appropriately responsive to his concerns.

In December 2011, Nike had hired Treppens as its maintenance operations manager. Treppens supervised Delgado, plaintiff's direct supervisor. Soon after coming aboard, Treppens learned of plaintiff's safety concerns. In an email to himself, Treppens noted that an apprentice had reported overhearing plaintiff and another licensed electrician discuss filing a complaint with the Oregon Occupational Safety and Health Administration (OSHA). During a subsequent one-on-one meeting with plaintiff, Treppens informed plaintiff that he would not be considered for a supervisor opening "because of the past." Plaintiff understood Treppens to be referring to his past safety complaints. Plaintiff then shared the exchange with St. Jacques, prompting Treppens to call plaintiff into his office, where he denied having made the comment. Despite the foreshadowed outcome, plaintiff applied for the supervisor opening; he did not receive the promotion.

In February 2012, a resigning licensed electrician discussed his concerns about the apprenticeship program in an exit interview and mentioned that plaintiff shared those concerns. That prompted an employee relations manager to ask plaintiff about the safety concerns, which plaintiff confirmed. The resigning employee filed a safety complaint with JATC.

In May 2012, responding to that complaint, JATC conducted a site visit at the Nike campus to review the apprenticeship program. Shortly after, plaintiff reached out to Katrina Cloud, the JATC administrator, to express his safety concerns. That same month, plaintiff also filed a safety complaint with OSHA. Plaintiff remained in communication with Cloud as JATC investigated Nike's compliance with the apprenticeship program criteria. At one point, Delgado called plaintiff into his office, locked the door, and warned plaintiff that, if he provided any information to JATC, he would not "be allowed on this campus again."

In late December 2012, the Nike campus was in "PowerDown" mode, during which time campus-related services were scaled back or shut down for the holidays. Plaintiff was not scheduled to work during PowerDown. But two contractors needing to complete a maintenance project at Nike's "Bo Jackson" sports facility contacted plaintiff about accessing the building. Plaintiff showed up with his all-access employee badge to let the contractors into the building. After reviewing the contractors' work, plaintiff suggested that they shoot baskets in the Bo Jackson gym. The floor, they noticed, had recently been varnished, but they concluded that using the gym would not damage the floor. Plaintiff's son joined them, and the four shot baskets for 20 minutes or so.

In early January 2013, Delgado and Treppens interviewed plaintiff about using his access privilege at the Bo Jackson facility during PowerDown, implying that the gym floor had been damaged. Plaintiff acknowledged employing his access badge to allow unauthorized guests to use the gym but denied damaging the floor. Two days later, Treppens offered plaintiff the opportunity to resign in lieu of termination for abusing his access privilege. Plaintiff initially decided to resign. Later that same day, however, plaintiff rescinded his resignation, claiming that his termination was in retaliation for having raised prior safety and other concerns.

Plaintiff's claim of retaliation prompted Nike to "hit the pause button" on terminating his employment. Randi Miller, an employee relations manager, testified that she delayed issuing plaintiff's termination letter to gather more information about the retaliation allegation, including by interviewing plaintiff. Miller also testified that one of the first steps of the investigation was to exclude Treppens and Delgado-the accused retaliators-from the process. But despite that purported exclusion, at least Treppens continued to communicate with Miller about the matter. St. Jacques-to whom Nike delegated firing authority-did not interview plaintiff; she largely relied on the information provided to her by Miller. In late January 2013, St. Jacques terminated plaintiff, citing abuse of his access privilege as the reason for the decision.

Subsequently, plaintiff initiated this action, asserting, inter alia , that Nike retaliated against him for making safety complaints, ORS 654.062(5), and for whistleblowing, ORS 659A.199. Plaintiff contended that, for roughly two years, Nike subjected him to a hostile work environment in which he was treated disrespectfully and with constant suspicion, managers and supervisors frequently made disparaging remarks about him, and he was required to attend a harassment class on pretextual allegations. Additionally, plaintiff alleged, Nike denied him a promotion and, ultimately, terminated his employment.

Plaintiff's claims were tried to a jury. Six days before trial, plaintiff requested that the trial court give a special jury instruction entitled "Imputation of Subordinate Bias." Plaintiff reasoned that, considering his theory of the case-that Delgado and Treppens had harbored a retaliatory bias against him and improperly influenced St. Jacques's ultimate decision to fire him-the "cat's paw" instruction informing the jury that it could impute Delgado's and Treppens's bias to St. Jacques was warranted.

At the pretrial conference on jury instructions, Nike stated that it did not object to the giving of an instruction similar to the one that plaintiff had provided, but it proposed certain revisions because it believed that plaintiff's instruction was incomplete. Later that day, Nike's counsel provided the court and plaintiff's counsel with a revised instruction, describing the revision "as approved by the Court this morning." That version of the instruction provided:

"Nike contends that Nellie St. Jacques was Nike's principal decision-maker regarding plaintiff's termination. You may impute to Ms. St. Jacques any biased retaliatory motive against [plaintiff] held by a subordinate of Ms. St. Jacques's at Nike, if you find that her adverse employment decision was not actually independent because a subordinate had a biased retaliatory motive against [plaintiff] and that the same subordinate influenced, affected, or was involved in the adverse employment decision against [plaintiff]."

Yet despite its earlier stance, Nike objected to the instruction at the final conference on jury instructions that the court held on the day before closing arguments. The trial court, noting that Oregon appellate courts had not recognized the "cat's paw" doctrine under Oregon law, ultimately declined to give the instruction. Instead, the trial court instructed the jury on the elements of the retaliation claims-which included the requisite substantial-factor standard of causation-and on corporate agency. The trial court also told plaintiff that he could advocate for his subordinate-bias theory in closing argument. Without the requested instruction, plaintiff forewent making the argument in closing. The jury returned a defense verdict for Nike on both retaliation claims.

Plaintiff appealed from the resulting judgment, assigning error to the trial court's refusal to give the requested "cat's paw" instruction. The Court of Appeals agreed with plaintiff. In reaching its decision, the Court of Appeals first concluded that plaintiff's proposed instruction was a correct statement of the law. The court determined that the instruction was consistent with case law requiring a plaintiff asserting a statutory retaliation claim to prove that the biased motive was a "substantial factor" in causing the adverse employment action. Ossanna , 290 Or. App. at 27-28, 415 P.3d 55. Additionally, the Court of Appeals observed that it had adopted the "cat's paw" theory in two cases decided after the trial: La Manna v. City of Cornelius , 276 Or. App. 149, 366 P.3d 773 (2016), and LaCasse v. Owen , 278 Or. App. 24, 373 P.3d 1178 (2016). Those cases, the court explained, further supported its conclusion that plaintiff's "cat's paw" instruction was legally correct. Ossanna , 290 Or. App. at 29-32, 415 P.3d 55. Next, turning to the record, the Court of Appeals determined that plaintiff was entitled to the instruction because his pleadings encompassed the "cat's paw" theory and the evidence at trial supported giving the instruction. Id. at 33-36, 415 P.3d 55.

The Court of Appeals determined that the trial court's error prejudiced plaintiff because the instructions that the trial court gave on causation and corporate agency did not encompass plaintiff's "cat's paw" theory of the case and, indeed, may have precluded the jury from considering it. Id. at 37-38, 415 P.3d 55. Accordingly, the Court of Appeals reversed and remanded the case as to the safety complaint retaliation and whistleblower retaliation claims. Nike petitioned this court for review.

II. ANALYSIS

On review, Nike does not contend that the "cat's paw" doctrine is incongruous with or unavailable under Oregon law. Rather, Nike argues that the trial court committed no error in refusing to give plaintiff's requested jury instruction, because that instruction incorrectly stated the law by eliminating the applicable standard of causation or by failing to relate the alleged retaliatory motive to plaintiff's protected activity. Alternatively, Nike contends that the "cat's paw" theory was inapplicable to this case and that any instructional error by the trial court was not so prejudicial as to warrant reversal. Before considering the merits of Nike's arguments, we address the availability under Oregon law of the "cat's paw" theory of establishing discriminatory or retaliatory motivation, a matter of first impression for this court.

A. "Cat's Paw" Under Oregon Law

Although this court has not addressed the "cat's paw" doctrine with respect to Oregon statutory employment claims, with its decision in this case, the Court of Appeals has now issued three decisions accepting and applying the theory in both statutory employment discrimination and retaliation cases. See also La Manna , 276 Or. App. 149, 366 P.3d 773 ; LaCasse , 278 Or. App. 24, 373 P.3d 1178. We agree with the Court of Appeals that the "cat's paw" doctrine is a viable theory for use in proving discriminatory or retaliatory motivation in Oregon statutory employment discrimination and retaliation cases.

Our analysis begins with an examination of federal "cat's paw" cases. Although federal precedent has no binding authority on this court's interpretation of state law, this court has looked to Title VII precedent for guidance in analyzing claims brought under analogous provisions of ORS chapter 659A. PSU Association of University Professors v. PSU , 352 Or. 697, 711, 291 P.3d 658 (2012) (stating that "federal precedent interpreting the antidiscrimination provisions of Title VII can provide useful additional context to aid our analysis of the meaning of ORS 659A.030(1)(f)" (footnote omitted)); Vaughn v. Pacific Northwest Bell Telephone , 289 Or. 73, 87, 611 P.2d 281 (1980) (recognizing similarity between statutory schemes in antidiscrimination provisions under ORS chapter 659, the precursor to ORS chapter 659A, and in Title VII). And a number of other Oregon statutes prohibiting employment discrimination expressly require that they be construed in a manner that is consistent with analogous federal statutes. See ORS 659A.139(1) (requiring that state provisions prohibiting unlawful discrimination against persons with disabilities "be construed to the extent possible in a manner that is consistent with any similar provisions of the federal Americans with Disabilities Act of 1990"); ORS 659A.186(2) (similarly requiring consistent construction between Oregon Family Leave Act and the federal Family and Medical Leave Act of 1993). In this case, part of plaintiff's action pertained to Nike's alleged violation of ORS 654.062(5) in the Oregon Safe Employment Act (OSEA). That provision-which makes it an unlawful employment practice for any person to "discharge from employment or otherwise discriminate against any employee" who has "[m]ade any complaint * * * under or related to" the OSEA-has a federal counterpart in the Occupational Safety and Health Act. Under 29 USC section 660(c)(1), "[n]o person shall discharge or in any manner discriminate against any employee because such employee has filed any complaint * * * under or related to this Act." Federal courts have adopted the same mode of analysis used in a wide variety of federal employment retaliation claims, including Title VII cases, for retaliation cases brought under 29 USC section 660(c)(1). See, e.g. , Reich v. Hoy Shoe Co., Inc. , 32 F.3d 361, 365 (8th Cir. 1994). In light of the same requirement for a plaintiff to prove discriminatory or retaliatory animus in both state and federal claims, an examination of the "cat's paw" theory under federal jurisprudence concerning statutes prohibiting discriminatory or retaliatory employment actions is instructive to our consideration of that theory's viability under similar Oregon statutes prohibiting discrimination and retaliation in employment. We begin with federal precedent because the "cat's paw" theory originated in federal court.

The term "cat's paw" derives from an Aesop's fable popularized by Jean de La Fontaine about a monkey who induces an unwitting cat to pull roasting chestnuts from the fire. Staub v. Proctor Hospital , 562 U.S. 411, 415 n. 1, 131 S. Ct. 1186, 179 L. Ed. 2d 144 (2011). As the cat extracts the chestnuts, the monkey consumes them, leaving the cat with nothing but burnt paws. Id. In the general lexicon, "cat's paw" has come to refer to "one used by another to accomplish [the other's] purposes." Webster's Third New Int'l Dictionary 354 (unabridged ed. 2002). Judge Posner imported the "cat's paw" doctrine into the employment law context in 1990 when he used the term to describe a neutral decision-maker acting as the "conduit" of a non-decision-maker's prejudice in violation of the Age Discrimination in Employment Act of 1967. Shager v. Upjohn Co. , 913 F.2d 398, 405 (7th Cir. 1990).

In Shager , a supervisor who lacked decision-making authority recommended-allegedly due to age-based animus-that the committee with actual decision-making authority fire the plaintiff, and the committee acted on the tainted recommendation. Id. Writing for the Seventh Circuit Court of Appeals, Judge Posner declared that the employer could not escape liability by relying on the decision-making committee's lack of bias if the committee acted as the biased supervisor's "conduit" or "cat's paw" without conducting an independent investigation. Id. The Shager court based its reasoning on agency principles: "[A] supervisory employee who fires a subordinate is doing the kind of thing that he is authorized to do, and the wrongful intent with which he does it does not carry his behavior so far beyond the orbit of his responsibilities as to excuse the employer." Id. (citing Restatement (Second) of Agency § 228 (1958) ). The court added, however, that the concern is "with confining the employer's or principal's liability to the general class of cases in which he has the practical ability to head off the injury to his employee's, or other agent's, victim." Id.

Since Shager , all the other federal circuit courts of appeals have also adopted the "cat's paw" theory of imputed bias (although, in some instances, not the feline moniker) in employment discrimination and retaliation actions brought under a variety of federal statutes. The federal courts, however, articulated the theory in almost as many ways as cats have lives; they often invoked the theory using recurring terminology but described it without regular consistency. See, e.g. , E.E.O.C. v. BCI Coca-Cola Bottling Co. , 450 F.3d 476 (10th Cir. 2006), cert. dismissed , 549 U.S. 1334, 127 S.Ct. 1931, 167 L.Ed.2d 583 (2007) (discussing that its sister circuits have divided over a "lenient" versus "strict" approach to the "cat's paw" theory, before formulating an intermediate standard for itself).

In 2011, the United States Supreme Court finally joined the lower federal courts in adopting the "cat's paw" theory and clarified the kind of proof required for a plaintiff to present the theory to the factfinder. Staub , 562 U.S. at 411, 131 S.Ct. 1186, 179 L.Ed.2d 144. The plaintiff in Staub claimed that his immediate supervisor and second-level supervisor were hostile toward and discriminated against him because of his military service obligations, in violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). Id. at 415, 131 S. Ct. 1186. The decision to fire the plaintiff, however, was made by a human resources vice president who had firing authority, in reliance on a report from the second-level supervisor. Id. at 414-15, 131 S. Ct. 1186. In rejecting the employer's argument that an "employer is not liable unless the de facto decisionmaker * * * is motivated by discriminatory animus[,]" the Court recognized the "cat's paw" doctrine as a viable theory in employment discrimination cases. Id. at 419-20, 131 S. Ct. 1186. The Court explained that "an employer's mere conduct of an independent investigation" that does not sever the causal link between the biased motive of the supervisor and the employment decision will not "relieve[ ] the employer of 'fault.' " Id. at 421, 131 S. Ct. 1186. The Court "express[ed] no view as to whether the employer would be liable if a co-worker, rather than a supervisor, committed a discriminatory act that influenced the ultimate employment decision." Id. at 422 n. 4, 131 S. Ct. 1186.

Since the Staub decision, the intermediate federal appellate courts have developed the "cat's paw" theory by explaining that the applicable standard of causation in an employment discrimination or retaliation case involving use of the theory depends on the law governing the claims at issue. In Zamora v. City of Houston , 798 F.3d 326 (5th Cir. 2015), cert. den. , City of Houston v. Zamora , --- U.S. ----, 136 S. Ct. 2009, 195 L.Ed.2d 215 (2016), for example, the Fifth Circuit addressed as a matter of first impression how the "cat's paw" analysis in Staub (a USERRA discrimination case) applies, if at all, in the Title VII retaliation context. The Fifth Circuit held that the "cat's paw" doctrine remains a viable theory but explained that Staub 's motivating-factor standard of causation needed to be replaced with the "but-for" standard of causation that applies to a Title VII retaliation claim. Id. at 331-33. See also Lockheed Martin Corp. v. Administrative Review Bd. , 717 F.3d 1121, 1137 (10th Cir. 2013) (tailoring "cat's paw" theory to retaliation claim brought under Sarbanes-Oxley Act by requiring the less onerous contributing-factor causation); Sims v. MVM, Inc. , 704 F.3d 1327, 1335-36 (11th Cir. 2013) (modifying theory in ADEA case to require but-for causation).

As that overview reflects, the "cat's paw" doctrine is widely accepted as a viable theory in employment discrimination and retaliation cases for imputing bias to a manager with decision-making authority, and we join the above-mentioned courts in adopting it. With the "cat's paw" theory, a plaintiff is able to explain why an employer's theoretically neutral decision-maker does not insulate the employer from liability for an adverse employment decision that, in actuality, is based upon biased information or recommendations provided by biased supervisors. We hold that, in Oregon statutory employment discrimination and retaliation cases, a plaintiff may assert the "cat's paw" theory to impute the bias of a supervisor who lacks decision-making authority to the employer's manager and ultimate decision-maker, if the plaintiff can point to evidence that the non-decision-maker influenced or was involved in the adverse employment decision. Because the allegedly biased individuals in this case were plaintiff's immediate and second-level supervisors, who lacked firing authority, our holding addresses the imputation of the bias of a subordinate supervisor to an upper manager who served as the decision-maker, and we need not and do not express an opinion regarding whether the "cat's paw" theory under Oregon law extends to imputing the bias of others to the decision-maker.

The "cat's paw" theory as we adopt it does not prescribe a particular level of control that a biased employee-in this case, a subordinate supervisor-must exert over the employment decision (e.g. , that the employee must have reported the plaintiff or must have recommended the decision) before allowing the bias to be imputed to the decision-maker. We agree with the federal courts of appeals that have held that a biased supervisor's influence on or involvement in the decision or decision-making process is sufficient to allow a factfinder to impute bias. See Poland v. Chertoff , 494 F.3d 1174, 1182-83 (9th Cir. 2007) (collecting cases for proposition that a subordinate employee's retaliatory bias can be imputed to the employer if the plaintiff proves that the biased subordinate "influenced or was involved in" the decision or decision-making process). That approach is practical, considering a workplace reality: The employment setting often consists of multiple layers of networks and relationships; organizational models often do not reflect a simple vertical chain of command; and bias can enter the decision-making process through formal or less formal channels. See BCI , 450 F.3d at 486 ("It should go without saying that a company's organizational chart does not always accurately reflect its decisionmaking process.").

Thus, so long as a plaintiff can show that a biased supervisor influenced or was involved in the adverse employment decision, the plaintiff may establish the employer's unlawful bias based on the "cat's paw" theory. To require more-that, as a matter of law, a plaintiff must satisfy a preliminary causal threshold by showing that the biased supervisor influenced or was involved in the decision to a prespecified degree-would be to remove questions of fact from the jury. Requiring, as an initial matter, that there be certain acts to trigger imputation would artificially limit the circumstances to which the "cat's paw" theory might apply, based on preconceived notions of the ways in which unlawful animus manifests.

But imputation of bias works only to permit a factfinder to impute a supervisor's bias to a defendant employer. To prove the employer's liability for an unlawful employment practice, a plaintiff must also demonstrate the requisite causation-that the supervisor's unlawful bias caused the adverse employment action. As the federal courts have noted, the "cat's paw" theory does not displace the requirement that a plaintiff establish a causal nexus between the bias of the supervisor and the ultimate adverse employment action. See, e.g. , Zamora , 798 F.3d at 332 (distinguishing causation standard for proving a Title VII retaliation claim from "whether a supervisor's unlawful animus may be imputed to the decisionmaker"). The "cat's paw" theory provides only a pathway for satisfying the causation requirement of an employment discrimination or retaliation claim; it does not replace or eliminate the causation requirement itself. An employer ultimately will be held liable only if the factfinder determines that the requisite causal connection exists between the supervisor's bias and the adverse employment action. As for the requisite level of causation, we join the federal circuit courts that have recognized that the plaintiff's required showing will vary depending upon the particular causal connection that the substantive law requires. See Zamora , 798 F.3d at 331-33 ; Lockheed Martin Corp. , 717 F.3d at 1137 ; Sims , 704 F.3d at 1335-36.

Finally, we agree with the Supreme Court that an employer's independent investigation, if it "results in an adverse action for reasons unrelated to the supervisor's original biased action," could absolve the employer of liability. Staub , 562 U.S. at 421, 131 S.Ct. 1186. But a perfunctory or performative "independent" investigation will not suffice; an employer may still remain liable if the plaintiff can establish that the supervisor's bias caused the adverse action by the decision-maker. Were it otherwise, employers would be able to avoid liability on mere technicality by going through the motions of conducting an investigation.

The Court of Appeals' earlier treatment of the "cat's paw" theory, in two cases on appeal from summary judgments for the defendants, is consistent with the rule that we adopt. The issue before the Court of Appeals in each case, and the only one that it addressed, was whether the facts engaged the "cat's paw" theory such that the theory was available to the plaintiff. In La Manna , the plaintiff, a 50-year-old gay man, sued the employer city government for age and sexual-orientation discrimination under various federal and state laws after the city manager pressured him to withdraw his job application. 276 Or. App. at 151-53, 366 P.3d 773. The plaintiff contended that the city manager had acted on information traceable to an officer who had commented on the plaintiff's age during the job interview, which served as evidence of age discrimination. Id. at 152, 154, 366 P.3d 773.

The Court of Appeals agreed with the plaintiff, relying on a Ninth Circuit decision for the proposition that, "even in a case involving an 'independent decision-maker,' conduct of a biased subordinate can prove pretext if 'the biased subordinate influenced or was involved in the decision or decision-making process.' " La Manna , 276 Or. App. at 160, 366 P.3d 773 (citing Poland , 494 F.3d at 1182 ). The Court of Appeals determined that the officer's comments "contribute to an inference that the [city manager's] decision to require plaintiff to withdraw was based on his age." Id. Similarly, as to the sexual-orientation discrimination claim, the court stated that the "plaintiff is not required to show that the person who made the [adverse employment] decision had the protected characteristic in mind if that person or the decision-making process was influenced by a subordinate who was biased against the plaintiff because of the protected characteristic." Id. at 165-66, 366 P.3d 773. See also LaCasse , 278 Or. App. at 37, 373 P.3d 1178 (stating, in a sexual harassment retaliation case, that "a trier of fact could conclude that [the decision-maker's] decision was influenced by * * * an improperly motivated subordinate" (citing La Manna )).

B. Application to This Case

Having established that a plaintiff may advance the "cat's paw" theory of imputed bias under Oregon statutory retaliation claims, we turn to whether the trial court erred in refusing to give plaintiff's requested "cat's paw" instruction in this case. Nike contends that plaintiff was not entitled to the "cat's paw" instruction that he requested because the instruction misstated the law. Alternatively, Nike argues, the instruction would have been superfluous, because that theory was already subsumed within the jury instructions that the trial court did give on substantial-factor causation and corporate agency. Finally, Nike posits that, even if the court erred, the error was not so prejudicial as to warrant a reversal.

1. Whether the trial court erred in refusing to give the jury instruction

As a general matter, a party is entitled to a jury instruction on its theory of the case if the requested instruction correctly states the law, is based on the operative pleadings, and is supported by the evidence.

Hernandez v. Barbo Machinery Co. , 327 Or. 99, 106, 957 P.2d 147 (1998). "A trial court, however, is not required to give a requested instruction if another instruction adequately addresses the issue." State v. Ashkins , 357 Or. 642, 648, 357 P.3d 490 (2015) (citation omitted).

First, Nike advances two arguments in support of its contention that plaintiff's "cat's paw" instruction incorrectly stated the law. Again, that instruction provided:

"Nike contends that Nellie St. Jacques was Nike's principal decision-maker regarding plaintiff's termination. You may impute to Ms. St. Jacques any biased retaliatory motive against [plaintiff] held by a subordinate of Ms. St. Jacques's at Nike, if you find that her adverse employment decision was not actually independent because a subordinate had a biased retaliatory motive against [plaintiff] and that the same subordinate influenced, affected, or was involved in the adverse employment decision against [plaintiff]."

We conclude that the proposed "cat's paw" instruction was a correct statement of the law.

Nike initially contends that the instruction effectively eliminates the burden on plaintiff to meet the causation requirement applicable to the retaliation claims he brought. Plaintiff alleged that Nike violated the statute prohibiting retaliation against employees for making certain safety-related complaints, ORS 654.062(5), which provides:

"It is an unlawful employment practice for any person to bar or discharge from employment or otherwise discriminate against any employee * * * because the employee * * * has:
"(a) Opposed any practice forbidden by ORS 654.001 to 654.295, 654.412 to 654.423 and 654.750 to 654.780 ;
"(b) Made any complaint or instituted or caused to be instituted any proceeding under or related to ORS 654.001 to 654.295, 654.412 to 654.423 and 654.750 to 654.780, or has testified or is about to testify in any such proceeding; or
"(c) Exercised on behalf of the employee, prospective employee or others any rights afforded by ORS 654.001 to 654.295, 654.412 to 654.423 and 654.750 to 654.780."

(Emphasis added.) Plaintiff also alleged that Nike violated the statute prohibiting retaliation for whistleblowing, ORS 659A.199(1), which provides:

"It is an unlawful employment practice for an employer to discharge, demote, suspend or in any manner discriminate or retaliate against an employee with regard to promotion, compensation or other terms, conditions or privileges of employment for the reason that the employee has in good faith reported information that the employee believes is evidence of a violation of a state or federal law, rule or regulation."

(Emphasis added.) The parties agree that the emphasized statutory texts impose upon plaintiff the same causation requirement that the Court of Appeals has recognized as applying in an employment retaliation claim: the substantial-factor standard of causation. See, e.g. , Estes v. Lewis and Clark College , 152 Or. App. 372, 381, 954 P.2d 792, rev. den. , 327 Or. 583, 971 P.2d 411 (1998).

Nike argues that the "influenced, affected, or was involved" wording of plaintiff's proposed instruction would have incorrectly suggested to the jury that it could find bias in the decision-making if one of the subordinates had any role in the termination decision, irrespective of the substantial-factor standard of causation. According to Nike, plaintiff's proposed instruction, therefore, would have allowed the jury to find Nike liable by imputing Delgado's or Treppens' alleged bias to St. Jacques without also finding that bias was a "substantial factor" in St. Jacques's decision to terminate plaintiff. Reviewing a sampling of "cat's paw" instructions in other jurisdictions, Nike contends that a proper instruction would have clarified for the jury that a two-step inquiry is required and that a plaintiff in a case like this one must prove both (1) a biased intent to cause an adverse employment action and (2) the requisite causal element.

We agree that a plaintiff must prove both of those elements, but Nike misreads the proposed "cat's paw" instruction as relieving plaintiff from his burden to prove causation. The "influenced, affected, or was involved in" wording of the instruction-which Nike faults as lowering the standard of causation-does not purport to displace the applicable substantial-factor standard of causation, about which the jury was separately instructed. The proposed instruction informs the jury that it may impute a subordinate's bias to the decision-maker if the subordinate influenced, affected, or was involved in the employment decision. But if the jury had been instructed that it could impute that bias, it still had to consider whether the bias, or the act of the person with that bias, was a substantial factor in the termination pursuant to the trial court's other instructions.

In that regard, the trial court gave the jury two instructions concerning the elements of the retaliation claims that required plaintiff to prove causation to recover. The jury instruction regarding the safety-complaint retaliation claim stated, in relevant part:

"To recover on this claim, [plaintiff] must prove by a preponderance of the evidence:
"* * * * *
"(2) [Defendant] discharged, demoted, suspended, refused to promote, discriminated, or retaliated against [plaintiff] regarding any term, condition, or privilege of employment; and [plaintiff] reporting the information was a substantial factor in [defendant's] decision. A substantial factor is a factor that made a difference ."

(Emphasis added.) The jury instruction regarding the whistleblower retaliation claim stated the identical causation requirement:

"To recover on this claim, [plaintiff] must prove by a preponderance of the evidence:
"* * * * *
"(3) [Defendant] discharged, demoted, suspended, refused to promote, discriminated, or retaliated against [plaintiff] regarding any term, condition, or privilege of employment; and [plaintiff] reporting the information was a substantial factor in [defendant's] decision. A substantial factor is a factor that made a difference ."

(Emphasis added.) It would have been possible for the jury to decide that the decision-maker had an imputed retaliatory motive under the imputed-bias instruction but that the retaliatory motive was not a substantial factor in the adverse employment action under the instruction on the causation element of each retaliation claim. Thus, viewed in combination with the other jury instructions, plaintiff's proposed "cat's paw" instruction did not misstate the law by eliminating the substantial-factor causation requirement.

Second, Nike argues that plaintiff's proposed instruction was incorrect because it referred generally to a biased retaliatory motive without relating that motive in any way to protected activity engaged in by plaintiff. But the protected activity-plaintiff's safety complaints and whistleblowing-is discernible from the context of the case. Plaintiff alleged that he had reported information about workplace conduct that he believed to be in violation of the law and, consequently, was discharged, denied promotion, and subjected to a hostile work environment in retaliation for his actions. The jury also was instructed that plaintiff was required to prove those allegations by a preponderance of the evidence. Considering that context and the absence of any other alleged basis for bias in this case, the jury would have correctly understood the proposed instruction to concern retaliatory bias motivated by plaintiff's safety complaints and whistleblowing. Thus, we reject Nike's arguments that the instruction was legally incorrect.

In addition to its argument that the jury instruction was an incorrect statement of the law, Nike contends that the jury instruction was inapplicable to this case based on the record. Specifically, Nike argues that the circumstances of this case did not present a "cat's paw" scenario because (1) St. Jacques was not an unwitting decision-maker who was manipulated by her biased subordinates, Delgado or Treppens, and (2) the underlying reason for plaintiff's termination was the incident at the Bo Jackson facility, which was not triggered by Delgado or Treppens. We are unconvinced, because Nike's view of the facts developed at trial favors its theory of the case rather than plaintiff's theory of the case and the facts supporting it.

"It is well supported by authority that in presenting the law of a case to the jury the court must instruct on the law applicable to all theories of the case that are supported by any competent evidence." Carter , 285 Or. at 279, 590 P.2d 1214 (citation and quotation marks omitted). Here, plaintiff's "cat's paw" theory is adequately supported by the evidence in the record. Cloud, the JATC administrator, testified that Delgado was directed by upper management to make the JATC investigation "go away." Plaintiff testified that both Delgado and Treppens had made remarks to the effect that his employment prospects at Nike were correlated with his expressed views on safety issues related to the apprenticeship program. For example, plaintiff testified that Delgado told him, "If you or Oregon Electric were to provide any information to the PCC Committee, you will not be allowed on this campus again." Plaintiff also introduced evidence that Treppens had documented plaintiff's intention to file a safety complaint with OSHA. The evidence supported the inference that Delgado and Treppens were motivated to retaliate against plaintiff for his safety complaints.

Additionally, the evidence in the record allowed the jury to infer that St. Jacques's decision to terminate plaintiff was influenced by Treppens or Delgado. St. Jacques effectively delegated full responsibility to Miller to conduct the investigation into plaintiff's retaliation allegations. Miller, for her part, received information directly from Treppens. Based on this record, plaintiff demonstrated the requisite influence or involvement for the giving of the "cat's paw" jury instruction.

Lastly, Nike contends that the "cat's paw" instruction was superfluous, considering instructions that the trial court gave on the substantial-factor standard of causation and on corporate agency. "A trial court * * * is not required to give a requested instruction if another instruction adequately addresses the issue." Ashkins , 357 Or. at 648, 357 P.3d 490 (citation omitted). As did the Court of Appeals, we reject Nike's argument.

The substantial-factor instruction was subsumed into the instructions on the substantive elements of plaintiff's retaliation claims, which provided, in part:

"Nike discharged, demoted, suspended, refused to promote, discriminated, or retaliated against [plaintiff] regarding any term, condition, or privilege of employment; and [plaintiff] reporting the information was a substantial factor in Nike's decision. A substantial factor is a factor that made a difference."

The corporate agency instruction read:

"A corporation can act only through its officers, agents, or employees. Any action by an officer or employee of the corporation is the act of that corporation if the act was within the scope of that person's authority and/or employment."

The substantial-factor instruction explained only the applicable standard of causation; it did not inform the jury, in any respect, regarding whose retaliatory motive it might consider. And the corporate agency instruction linked Nike, the corporation, to officers or employees acting within their scope of authority or employment. Here, Nike asserted at trial that St. Jacques was the sole decision-maker-that is, she was its sole agent authorized to make the termination decision. The corporate agency instruction, therefore, suggested that Nike was liable for St. Jacques's termination decision. But nothing in the instruction informed the jury that it could impute her subordinate's bias to her. Neither instruction served the function that the "cat's paw" instruction would have-to inform the jury that it could impute Delgado's and Treppens' retaliatory motive to St. Jacques, even if St. Jacques herself did not harbor unlawful animus toward plaintiff.

To summarize, plaintiff's "cat's paw" instruction was a correct statement of the law; the evidence in the record supported the giving of a "cat's paw" instruction; and the "cat's paw" instruction was not rendered unnecessary by the trial court's delivery of jury instructions on substantial-factor causation and corporate agency. Therefore, plaintiff was entitled to his requested instruction, and the trial court erred in declining to give it.

2. Whether the error substantially affected plaintiff's rights

Because the trial court erred in declining to give the "cat's paw" instruction, we next consider whether the error is reversible. See ORS 19.415(2) ("No judgment shall be reversed or modified except for error substantially affecting the rights of a party."); see also Or. Const, Art VII (Amended), § 3. In making that determination, we must consider the instruction as a whole "in the context of the evidence at trial and the parties' theories of the case with respect to the various charges, claims, and defenses" at issue. Purdy v. Deere and Company , 355 Or. 204, 227-28, 324 P.3d 455 (2014) (citation omitted). An error in failing to give a proposed instruction is harmless if there is "little likelihood that the error affected the verdict." Ashkins , 357 Or. at 660, 357 P.3d 490 (citation and quotation marks omitted). Conversely, the error is prejudicial if the absence of the jury instruction "probably created an erroneous impression of the law" in the minds of the jury and "if that erroneous impression may have affected the outcome of the case." Hernandez , 327 Or. at 106-07, 957 P.2d 147 (citations omitted).

Nike argues that no prejudicial error exists that warrants reversal. That lack of prejudice, Nike posits, is demonstrated by the jury's rejection of plaintiff's other claims. Aside from alleging that his termination constituted an unlawful adverse employment action, plaintiff claimed that Nike had wrongfully denied him a promotion because of his safety reports and that Delgado and Treppens had subjected him to a hostile work environment by treating him disrespectfully and with constant suspicion, frequently making disparaging remarks about him, assigning him undesirable tasks and schedules, falsely accusing him of behavioral and performance issues, and requiring him to attend a harassment class on those false accusations. In essence, Nike asserts that there was "no harm, no foul," because a jury that did not find for plaintiff on his theories of direct causation (linking Treppens's or Delgado's retaliatory animus directly to an adverse employment action) would not have found for plaintiff on his indirect, "cat's paw" theory (linking Treppens's or Delgado's retaliatory animus indirectly to an adverse employment action via the decision-making of St. Jacques).

But plaintiff's inability to establish his failure-to-promote and hostile-work-environment claims does not necessarily mean that he would have been unable to succeed on his termination claim. Because the jury was not asked to specify its findings on the various allegations and could have rejected plaintiff's failure-to-promote and hostile-work-environment claims for reasons other than that it disbelieved that Delgado or Treppens intended to retaliate against plaintiff (e.g. , by concluding that the person promoted had qualifications superior to plaintiff's or that the alleged harassing conduct did not create a hostile work environment), we cannot conclude that a "cat's paw" instruction was unlikely to have affected the jury's verdict concerning the reason for Nike's termination of plaintiff's employment.

Conversely, in view of the arguments that plaintiff advanced at trial, the testimony that he elicited, and the evidence that he presented, the record supports our conclusion that the trial court's failure to give the requested "cat's paw" instruction was not harmless. Plaintiff's opening argument focused largely on highlighting the actions and retaliatory motivations of Delgado and Treppens; in contrast, St. Jacques featured limitedly, and primarily, only as the ultimate decision-maker in a process in which she was otherwise uninvolved. The witness examinations of plaintiff and St. Jacques further demonstrated plaintiff's intention to deconstruct Nike's argument that St. Jacques was an independent decision-maker; both witnesses testified that St. Jacques never interviewed plaintiff regarding the Bo Jackson incident. Plaintiff also introduced evidence of communications between Treppens and Miller during the investigation into plaintiff's retaliation allegations to demonstrate Treppens' influence on the decision-making process.

Nike's theory of the case further demonstrates the prejudicial nature of the trial court's refusal to give plaintiff's "cat's paw" instruction. In stark contrast to plaintiff's limited mention of St. Jacques in his opening argument, Nike placed emphasis on St. Jacques as the key player in the termination decision. At various points during trial, and in its briefing to this court, Nike represented that St. Jacques was the "sole" or "ultimate" decision-maker. And, taking advantage of the absence of the "cat's paw" instruction, Nike argued to the jury in closing that "[t]he only permissible question is whether or not the termination decision was improperly motivated by a desire to retaliate against [plaintiff], and there is no evidence that Nellie St. Jacques ever had that motivation ." Illustrative of Nike's overall presentation of its case, the argument posited that the only person whose motivation mattered was St. Jacques. In the absence of the "cat's paw" instruction, the jury had no way of knowing that it could impute a subordinate supervisor's bias to St. Jacques and thereby find for plaintiff on the retaliation claims.

Finally, Nike contends that plaintiff abandoned his right to claim prejudice when he declined to argue the "cat's paw" theory in closing, despite the trial court's statement that the plaintiff could do so. But arguments put forth by an interested party are not adequate surrogates for controlling jury instructions given by the court; jury instructions matter. Whereas the jury may accept or disregard any argument made by a party, the jury must abide by the instructions of the court, a neutral authority. Therefore, even if plaintiff had argued the "cat's paw" theory, there was nothing preventing the jury from rejecting it as a concept. That is not so with jury instructions. A trial court's delivery of jury instructions signifies to the jury what laws are applicable in the case. It is understandable that plaintiff did not argue a theory that was not supported by the trial court's instructions, and plaintiff did not waive or abandon the legal argument that the trial court did not accept.

III. CONCLUSION

In sum, under Oregon law, a plaintiff asserting a statutory employment discrimination or retaliation claim may advance a "cat's paw" theory and impute the bias of a supervisor non-decision-maker to the ultimate decision-maker if the non-decision-maker influenced or was involved in the adverse employment decision. However, an employer is not liable unless a causal connection exists between the subordinate's bias and the adverse employment action. In this case, the trial court erred by refusing to give plaintiff's "cat's paw" instruction, which was a correct and applicable statement of the law, and that error prejudiced plaintiff.

The decision of the Court of Appeals is affirmed. The judgment of the circuit court on plaintiff's claims for safety complaint retaliation and whistleblower retaliation is reversed, and the case is remanded to the circuit court for further proceedings.

      As further discussed below, the Court of Appeals later adopted the "cat's paw" theory in two 2016 decisions.

      The OSEA, codified in ORS 654.001 to 654.295, ORS 654.412 to 654.423, ORS 654.750 to 654.780, and ORS 654.991, provides that the Bureau of Labor and Industries shall process a complaint alleging retaliation "under the procedures, policies and remedies established by ORS chapter 659A and * * * in the same way and to the same extent that the complaint would be processed if the complaint involved allegations of unlawful employment practices under ORS 659A.030 (1)(f)." ORS 654.062(6)(a).

      See, e.g. , Vasquez v. Empress Ambulance Service, Inc. , 835 F.3d 267, 272-73 (2d Cir. 2016) ; Poland v. Chertoff , 494 F.3d 1174, 1182 (9th Cir. 2007) ; E.E.O.C. v. BCI Coca-Cola Bottling Co. , 450 F.3d 476, 487 (10th Cir. 2006), cert. dismissed , 549 U.S. 1334, 127 S.Ct. 1931, 167 L.Ed.2d 583 (2007) ; Hill v. Lockheed Martin Logistics Mgmt. , 354 F.3d 277, 290-91 (4th Cir. 2004), cert. dismissed , 543 U.S. 1132, 125 S.Ct. 1115, 160 L.Ed.2d 1090 (2005) ; Stimpson v. City of Tuscaloosa , 186 F.3d 1328, 1332 (11th Cir. 1999), cert. dismissed , 529 U.S. 1053, 120 S.Ct. 1555, 146 L.Ed.2d 460 (2000) ; Ercegovich v. Goodyear Tire & Rubber Co. , 154 F.3d 344, 354-55 (6th Cir. 1998) ; Griffin v. Washington Convention Center , 142 F.3d 1308, 1312-13 (D.C. Cir. 1998) ; Mulero-Rodríguez v. Ponte, Inc. , 98 F.3d 670, 675-76 (1st Cir. 1996) ; Long v. Eastfield College , 88 F.3d 300, 307 (5th Cir. 1996) ; Abrams v. Lightolier Inc. , 50 F.3d 1204, 1214 (3d Cir. 1995) ; Stacks v. Southwestern Bell Yellow Pages, Inc. , 27 F.3d 1316, 1323 (8th Cir. 1994).

      Since then, at least two federal courts of appeals have addressed whether the "cat's paw" theory applies if a coworker, rather than a supervisor, harbored the unlawful animus that influenced the ultimate employment decision. The First Circuit answered that question in the affirmative in a Title VII sex discrimination case, but the court added an "employer negligence" criterion. Velázquez v. Developers Diversified Realty , 753 F.3d 265, 274 (1st Cir. 2014) (An employer may be liable if "the employer acts negligently by allowing the co-worker's acts to achieve their desired effect though it knows (or reasonably should know) of the discriminatory motivation."). See also Vasquez , 835 F.3d at 276 ("[A]n employer may be held liable for an employee's animus under a 'cat's paw' theory, regardless of the employee's role within the organization, if the employer's own negligence gives effect to the employee's animus and causes the victim to suffer an adverse employment action.").

      Except to the extent that it argues that the corporate agency instruction renders the "cat's paw" instruction superfluous, Nike does not make any arguments based on agency principles.

      Plaintiff urges this court to dismiss Nike's argument on whether the instruction was legally correct, contending that Nike failed to preserve it. However, to the extent that plaintiff's understanding of Nike's arguments in the trial court is correct, under the "right for the wrong reason" doctrine, Nike could make that alternative legal argument for affirmance for the first time in the Court of Appeals. See Outdoor Media Dimensions Inc. v. State of Oregon , 331 Or. 634, 659-60, 20 P.3d 180 (2001) (discussing "right for the wrong reason" doctrine).


author: BALMER, J.

text:
    POWELL STREET I, LLC, Plaintiff-Respondent, v. MULTNOMAH COUNTY ASSESSOR, Defendant-Appellant, and Department of Revenue, Defendant-Intervenor-Appellant.
    SC S065290 (Control, S065295)
    Supreme Court of Oregon, En Banc.
    Argued and submitted May 6, 2019. July 25, 2019
    Daniel Paul, Assistant Attorney General, Salem, argued the cause and filed the briefs for appellant Department of Revenue. Also on the briefs were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.
    Carlos A. Rasch, Multnomah County Attorney's Office, Portland, filed the briefs for appellant Multnomah County Assessor. Also on the briefs was Jenny M. Madkour, County Attorney, Portland.
    Alex C. Robinson, CKR Law Group, P.C., Lake Oswego, argued the cause and filed the brief for respondent.
    Peter R. Jarvis, Holland & Knight LLP, Portland, filed the brief on behalf of amici curiae Building Owners and Managers Association of Oregon, Commercial Association of Brokers Oregon/Southwest Washington, Institute of Real Estate Management, Oregon-Columbia River Chapter #29, and NAIOP Commercial Real Estate Development Association-Oregon. Also on the brief was Nellie Q. Barnard.
   BALMER, J.

The issue before us in this direct appeal from the Oregon Tax Court involves the proper valuation, for property tax purposes, of a shopping center that did not have an anchor tenant on the assessment date. The Tax Court accepted taxpayer's valuation that significantly decreased the value of the shopping center because it was missing an anchor tenant and was more than 50 percent vacant on the relevant date. Powell Street I LLC v. Dept. of Rev. , 22 OTR 423, 2017 WL 3310655 (2017). On appeal, the Department of Revenue contends that the Tax Court erred; according to the department, the shopping center was required to be valued the same as a shopping center that did have an anchor tenant and was only 8-10 percent vacant. For the reasons that follow, we reject the department's argument and affirm the Tax Court's judgment.

OVERVIEW OF LAW

We begin with an overview of several familiar property tax concepts: the definition of real market value, the requirement that the tax be assessed on the "fee simple interest" in the property, and the valuation methods used by appraisers to determine real market value.

In general, the calculation of the property tax levied on a particular property begins with the property's real market value (RMV). See ORS 308.232 ; Dept. of Rev. v. River's Edge Investments, LLC , 359 Or. 822, 825, 377 P.3d 540 (2016) (both so providing). The real market value is the amount that a hypothetical buyer would pay to a hypothetical seller on the assessment date. See Or. Const., Art XI, § 11 (11)(a)(A) (defining real market value as "the amount in cash that could reasonably be expected to be paid by an informed buyer to an informed seller, each acting without compulsion in an arm's length transaction occurring as of the assessment date for the tax year"); see also ORS 308.205(1) (using terms "informed buyer" and "informed seller"); ORS 308.205(2)(a) (referring to "amount a typical seller would accept or the amount a typical buyer would offer that could reasonably be expected by a seller of property"). The real market value is derived from the "highest and best use" of the property-the most profitable use, for which a buyer would be expected to pay the highest price. See Hewlett-Packard Co. v. Benton County Assessor , 357 Or. 598, 602, 356 P.3d 70 (2015) (so explaining).

When the property is subject to leases (as is the case for the shopping center here), the value for property tax purposes may differ from the price that the owner actually might receive for the property. That is because the property tax is assessed on the fee simple interest in the property, which is the value of all interests in the property, including those of the owner (ordinarily the lessor) and any lessees. That rule was relied upon and explained in Swan Lake Mldg. Co. v. Dept. of Rev. , 257 Or. 622, 478 P.2d 393 (1970), reh'g den , 257 Or. 622, 480 P.2d 713 (1971). In that case, substantial portions of the property being valued were subject to leases with remaining terms as long as 30 years. The question was whether the leases should affect the valuation. The taxpayer argued that they should because any buyer of the property would take the property subject to those leases.

This court disagreed. It held that the actual terms of those leases should not be used in calculating the value because the value of all of the interests in the property-including the lessee's interest-is to be taxed against the owner:

"In fixing the true cash value of land for property tax purposes[,] the effect of existing leases on the value to the owner is disregarded. The basis for such a principle is that the tax is levied upon the land and is a tax upon all the interests into which the land might be divided. Admittedly, a lease might decrease the price which the owner might receive; however, the tax is not merely upon the owner's interest; the tax is upon all the interests in the land, including the leasehold interest. This is so because of the corollary principle that taxes are assessed only against the one having title[.]"

257 Or. at 625, 478 P.2d 393. If a property owner leased a property at below-market rates, for example, then the value of the owner's interest in the property is lower, but at the same time the lessee's leasehold interest is that much more valuable and offsets the decrease:

"If the rent reserved in the lease is less than the property is capable of producing, the lessee's interest is more valuable and it is the entire group of interests in the property, lessor's and lessee's, that is valued."

257 Or. at 629, 478 P.2d 393 (denying rehearing).

A "fee simple valuation" thus may deviate from the ordinary concept of real market value. If the property is leased at nonmarket rates, and if the lease will not terminate on sale of the property, then the price that the owner could obtain in the market could differ from the value used for property tax purposes. See Joan M. Youngman, Defining and Valuing the Base of the Property Tax , 58 Wash. L. Rev. 713, 716 (1983) (fee simple valuation allows " 'value' to exceed the amount which the holder of a restricted interest could command in an actual sale").

Turning to valuation under Oregon law more generally, and broadly speaking, an appraiser determines the real market value of a property by considering three different approaches to valuation: the cost approach, the comparable sales approach, and the income approach. OAR 150-308-0240(2)(a) ; see River's Edge , 359 Or. at 827, 377 P.3d 540 ; Hewlett-Packard , 357 Or. at 603, 356 P.3d 70 (explaining approaches). The appraiser is not required to use all three approaches, but the appraiser must consider them. OAR 150-308-0240(2)(a) ; see River's Edge , 359 Or. at 827, 377 P.3d 540 ; Hewlett-Packard , 357 Or. at 603, 356 P.3d 70 (so stating).

We have outlined the three approaches in River's Edge and other cases. The comparable sales approach estimates the value of the property by extrapolating from the prices paid for similar properties in the area. The cost approach estimates the cost to recreate an equivalent property. If valuing a factory, for example, the appraiser would estimate the cost to build a similar factory. The income approach assumes that the hypothetical buyer would pay the present value of the stream of income that the property will generate. Accordingly, the income approach calculates that stream of future income, then discounts it by an appropriate capitalization rate. Seneca Sustainable Energy, LLC v. Dept. of Rev. , 363 Or. 782, 799-800, 429 P.3d 360 (2018).

If more than one approach is used, the appraiser will then reconcile the values obtained from the various approaches to obtain a final valuation. River's Edge , 359 Or. at 827, 377 P.3d 540 ; Hewlett-Packard , 357 Or. at 603, 356 P.3d 70. The weight to be given the different approaches is a question of fact that depends on the record developed in the case. Pacific Power & Light Co. v. Dept. of Rev. , 286 Or. 529, 533, 596 P.2d 912 (1979) ; Brooks Resources Corp. v. Dept. of Revenue , 286 Or. 499, 503-04, 595 P.2d 1358 (1979).

FACTS AND PROCEEDINGS BELOW

As noted, this case involves determining the real market value of a shopping center. The shopping center has one anchor tenant space, plus some 21 other spaces of various sizes. The building's total square footage is 118,000 square feet. The anchor tenant space is 54,000 square feet of that.

The tax year at issue is 2014-15, so the assessment date-the date as of which the property is valued-is January 1, 2014. See ORS 308.007 (defining assessment date and explaining relationship to tax year). On that date, the anchor space was vacant. A discount grocer previously had occupied the anchor space for 25 years, but it vacated the space in January 2013 and ended lease payments in May 2013. Three other spaces also were vacant on the assessment date. Those additional vacancies totaled 11,000 square feet. The Tax Court found that the property had a 51 percent vacancy rate on the assessment date, Powell Street I , 22 OTR at 426, and that finding is not at issue on appeal. The Tax Court also noted testimony that tenants in the other spaces had lease clauses that modified the lease terms if the anchor space was vacant. Such contractual provisions are typical of the marketplace and can include lower rent payments or even cancellation of the lease. 22 OTR at 425.

The Multnomah County Assessor initially found a real market value of $14.7 million. Taxpayer appealed to the Multnomah County Board of Property Tax Appeals, which found the same value. Taxpayer then appealed to the Tax Court, and the Department of Revenue intervened as a defendant. The parties petitioned for the matter to be specially designated to go directly to the Regular Division of the Tax Court, under TCR 1C, and that petition was granted.

At trial before the Tax Court, both taxpayer and the department presented appraisals, and their appraisers testified in court. The appraisers agreed that the fee simple estate is the basis for the valuation, which includes, when leased property is involved, "the lessor's interest (i.e. , the leased fee) and the lessee's interest (i.e. , the leasehold)." Appraisal Institute, The Appraisal of Real Estate 441 (14th ed. 2013). The two appraisers also reached similar conclusions on a number of facts that went into their appraisals. Both concurred that the highest and best use of the property was its current use as a shopping center. Both also reached roughly similar conclusions regarding the market rents per square foot of shopping center space: The appraisers agreed on a value of $9 per square foot for the anchor space, though they differed somewhat on the other spaces. Both appraisers also reached similar conclusions regarding what would be the market vacancy rate for a similar shopping center. Taxpayer's appraiser concluded that the market vacancy rate would be 10 percent. The department's appraiser concluded that the market vacancy rate would be eight percent.

The primary dispute between the appraisers was whether this shopping center should be valued as if it did have a market vacancy rate. Both appraisers referred to that concept as whether the property should be valued as being at "stabilized" or "non-stabilized" occupancy. As we discuss in more detail below, taxpayer's appraiser concluded-and the Tax Court found-that the property at issue here was "non-stabilized" because it was missing its anchor tenant and the property's overall occupancy rate of less than 50 percent represented a major deviation from market vacancy rates. In contrast, the department's appraiser concluded that the property should be considered "stabilized."

As will be seen, that dispute affected the appraisers' different applications of both the comparable sales approach and the income approach to determining real market value. With respect to comparable sales, taxpayer's appraiser examined comparable "non-stabilized" shopping malls-those exhibiting high vacancy rates-while the department's appraiser compared the subject property to "stabilized" shopping malls, which had market vacancy rates. Similarly, in applying the income approach, taxpayer's appraiser first estimated rental income from the shopping center using market vacancy rates and market rents, and then deducted $4.71 million in "projected stabilization costs" to reflect the costs that any owner would need to incur to bring the shopping mall to "stabilized" occupancy. Although the department's appraiser also based his income approach valuation on the assumptions of market vacancy rates and market rents, consistent with his view that the property should be viewed as stabilized, he did not make any deduction for the costs that needed to be incurred to achieve a market occupancy rate.

We return to the underlying dispute over whether the property was stabilized or non-stabilized. Taxpayer's appraiser explained that, because the property lacked an anchor tenant and was non-stabilized, the only potential buyers for the property would be "value add" buyers. Those are "a somewhat narrow range of opportunistic investors" who are willing and able to incur substantial risk and effort to bring the property back up to stabilized lease rates. Because of the money, time, effort, and overall risk involved, "value add" buyers will expect a higher return on their investment, and so they will pay substantially less for the property. The department's appraiser disagreed, contending that the property was stabilized. He considered tenant turnover as normal market behavior, and he noted that (as of the assessment date) the anchor tenant spot had only been vacant for a year, a relatively short period for a large commercial space. In effect, the department's appraiser argued that the anchor tenant vacancy here should be treated as a passing fluctuation in occupancy. In his view, only if an anchor tenant spot had been vacant for a substantial period would he consider the property to be non-stabilized. The department's appraiser agreed that, if a property was non-stabilized, then the sorts of adjustments to value made by taxpayer's appraiser-those costs necessary to bring the property back up to stabilized occupancy rates-would be appropriate.

The appraisers' factual disagreement over whether the property was stabilized ultimately led the two appraisers to different conclusions regarding value. As noted, to determine real market value, taxpayer's appraiser used both the comparable sales approach and the income approach. (He also considered, and rejected, the cost approach, but that decision is not at issue here.) His comparable sales approach, which considered "non-stabilized" shopping malls around the state, led him to find a value of $10.01 million. Using the income approach, he initially calculated a real market value of $14.95 million using market rents for the shopping center at market vacancy rates. That, however, was the value for the property if it were stabilized. Because the property was not stabilized, in his view, he concluded that the initial value should be reduced by $4.71 million. Those costs consisted primarily of tenant improvements that would be necessary to fill the anchor tenant space, leasing commissions, rent concessions, and a turn-around profit incentive reflecting the risks associated with bringing the property back to stabilized occupancy. That amount did not include-because they were not known as of the valuation date-additional substantial costs that likely would be imposed by the City of Portland for parking lot landscaping, bicycle parking, ADA upgrades, and storm water waste improvements, all of which would be triggered by the necessary tenant improvements. Those expenses were not specific to this particular owner of the property-they would have been required of any owner who wanted to increase the occupancy rate towards the market level. Accordingly, using the income approach, the appraiser found a value of $10.25 million. Taxpayer's appraiser then reconciled the two values, giving equal weights to the income approach and the comparable sales approach. His final valuation was $10.13 million.

The department's appraiser used all three approaches. Regarding the income approach, he calculated the value of the property by determining a projected income stream for the property using market vacancy rates and market rents, and then discounting it to present value, which resulted in a value of $17.3 million. Because he categorized the property as stabilized, his valuation did not reflect any costs that had to be incurred to bring the property to the market occupancy level, that is, to "stabilize" the property's occupancy. In applying the comparable sales approach, the department's appraiser rejected taxpayer's use of non-stabilized property sales, and instead looked at more local sales of shopping malls-all of which were stabilized. Based on those comparables, he found a value of $18.8 million. The department's appraiser also did a cost approach, which led him to a value of $19.8 million. He then reconciled the differing values based on the three approaches. He placed primary emphasis on the income approach and secondary emphasis on the comparable sales and cost approaches. His final valuation conclusion was $17.5 million.

The Tax Court ultimately accepted the $10.13 million value found by taxpayer's appraiser. The court agreed with taxpayer that the substantial vacancy and missing anchor tenant significantly affected the market for the property. See 22 OTR at 435. The court rejected the department's argument that the property should be considered "stabilized," which was the premise for the department's valuation. See 22 OTR at 434-35, 438, 440-41. The Tax Court also rejected the department's argument that taxpayer had not valued the fee simple estate, as required by Swan Lake . The court noted that taxpayer had used market rents in the income approach, but then took a "substantiated" deduction for the costs that would be needed to stabilize the property. 22 OTR at 435. The propriety of that deduction, the court concluded, had nothing to do with valuing the fee simple estate or using market rents. Id . at 435-36. In accordance with that ruling, the Tax Court entered a judgment that lowered the real market value of the property to $10.13 million, as of January 1, 2014.

The department (and the Multnomah County Assessor) appealed to this court.

ANALYSIS

We review the Tax Court's opinion for errors of law or for lack of substantial evidence in the record to support the court's decision. ORS 305.445.

The department contends that the Tax Court erroneously valued the property based on taxpayer's individualized ownership of the property-a valuation constrained by the high vacancy rate-rather than determining the market value of the property itself. As noted, the real market value is defined by looking at what a hypothetical buyer would pay a hypothetical seller. See Or. Const., Art XI, § 11 (11)(a)(A); ORS 308.205(1). The department, focusing on the "hypothetical seller" part of the definition, contends that valuations of leased property always must use market rents and market vacancy rates, even when a property's actual rent or vacancy rates are substantially different.

Taxpayer's appraiser did use both market rents and market vacancy rates, as required by Swan Lake , 257 Or. 622, 478 P.2d 393, to calculate the stabilized value of the property, and the department does not dispute that. The department maintains, however, that deducting stabilization costs from that value functionally leads back to a value peculiar to the particular owner, rather than the value to the hypothetical owner required by statute. Specifically, the department asserts that the substantial vacancy rate and missing anchor tenant here are the peculiar characteristics of the owner-taxpayer-and not of the property itself. As the department puts it, this court should "remove[ ] any consideration of the skill and luck of a particular owner in negotiating contracts, and keep[ ] the focus rightfully on the property, not the owner." The department adds, "A typical owner would not have had the same abnormally high vacancy that Powell Street had." The use of market rents and market vacancy rates consistent with Swan Lake , the department argues, would have removed the owner's characteristics from the valuation equation.

The department is largely correct about the underlying legal principles. Both the statutory and constitutional definitions of "real market value" are based on what "an informed buyer" would pay to "an informed seller" on the assessment date.

Or. Const., Art XI, § 11 (11)(a)(A); ORS 308.205(1). It is undisputed that both "an informed buyer" and "an informed seller" refer to hypothetical buyers and sellers. See River's Edge , 359 Or. at 825, 377 P.3d 540 ; Boise Cascade Corp. v. Dept. of Rev. , 12 OTR 263, 266, 1991 WL 434542 (1991) (to estimate real market value, "the appraiser attempts to replicate the positions of a hypothetical buyer and a hypothetical seller"). The peculiarities of the actual owner of the property are not considered. Boise Cascade , 12 OTR at 266 (in determining real market value, appraiser "ignore[s] the specific circumstances or peculiarities associated with specific owners of property"). The buyer and seller must be hypothesized to be "typical." See ORS 308.205(2)(a) (department's rules for determining real market value must accord with principle that real market value will look to "[t]he amount a typical seller would accept or the amount a typical buyer would offer that could reasonably be expected by a seller of property").

But the department then takes another step that is not supported by the record in this case. Its conclusion that the vacancy rates here are a characteristic of taxpayer , rather than of the property, appears to be based on the following syllogism:

• a property's actual vacancy rate depends on the owner's skill in negotiating leases;
• the owner's skill in negotiating leases is a characteristic of the owner and not the property;
• therefore, valuing the property based on the actual vacancy rate is impermissibly valuing a characteristic of the owner.

Beyond the mention of the owner's negotiating "skill," the department does not otherwise discuss what test, factors, or criteria would separate characteristics of the property from characteristics personal to the owner.

We accept for purposes of argument the department's premise that, if an owner has an unusual skill level either above or below that of a typical owner, then that might be a personal characteristic of the owner rather than a characteristic of the property, and thus should not to be used in determining real market value, which is based on a transaction between a hypothetical seller and a hypothetical buyer. Using market rents, as this court did in Swan Lake, has the effect of eliminating from the valuation equation the owner's personal skill in leasing the property. Using market rents means that the real market value will not be affected by a property owner whose poor negotiating skills led to below-market rents or whose extraordinary negotiating skills led to above-market rents.

We also will assume that the same logic applies to vacancy rates, which is the primary issue in dispute here. If the owner of a shopping center has driven out tenants by mismanagement, then that mismanagement is a characteristic of the owner and generally should not affect the property's real market value for ad valorem tax purposes.

In this case, however, the Tax Court rejected the factual underpinning on which the department's syllogism rested: that the anchor tenant vacancy was, in fact, a characteristic of taxpayer and not of the property. The department had not presented evidence that either the departure of the prior anchor tenant, or the fact that a new anchor tenant had not filled the space by the assessment date, had anything to do with the personal characteristics of this taxpayer. Rather, the Tax Court found that:

"[N]othing in the record suggests that the approvals needed, the nonconforming upgrades required, or estimated funds and time necessary to place an interested anchor tenant into the subject property are unusual or outside market norms. They cannot accordingly be deemed to be attributable to poor property management, which would go to actions or skills of the particular owner and would accordingly not be relevant for purposes of property assessment and taxation."

22 OTR at 437.

We agree. To the extent that the department disputes the Tax Court's factual findings on this issue, we conclude that they were supported by substantial evidence that the former operator of the anchor tenant space vacated for reasons that had nothing to do with taxpayer. The record shows that the operator "was 70, he was ill, [and] he had another store that was struggling that had closed and he still had to pay on it." The department does not point to contrary evidence, nor does it argue on appeal that a typical owner would have been able to fill the anchor tenant space by the assessment date, even though the owner here did not. Indeed, while the anchor tenant space had been vacant 12 months at the assessment date, both the department's and the taxpayer's appraisers were in general agreement that that period was well within market norms (the department's appraiser testified that it could take up to 18 months to find a new anchor tenant; taxpayer's appraiser estimated 24 months). Thus, we must accept the Tax Court's finding that the property value would have been burdened by a substantial vacancy regardless of the seller's identity. The vacancy was not a characteristic of this particular owner's skill level; it was a characteristic of the property.

The department makes a separate legal argument based on First Interstate Bank v. Dept. of Rev. , 306 Or. 450, 760 P.2d 880 (1988). It contends that the value that the Tax Court ascribed to the property is the investment value for this particular taxpayer, rather than its value to a hypothetical buyer, a result that the department asserts is prohibited by First Interstate . We turn to that decision.

First Interstate involved the valuation of multiple lots in a subdivision that had a single owner. See 306 Or. at 452, 760 P.2d 880. The department had sent a memorandum to county tax assessors approving valuation using a "developer's discount." Id . at 453-54, 760 P.2d 880. The taxpayer sought to take advantage of that concept, arguing for a "valuation method [that] reduces the market price of the properties by a rate of return based on expected profit, taking into account the expected time necessary to sell the lots." Id . at 454, 760 P.2d 880 (footnote omitted). This court rejected the taxpayer's argument. Id . at 455, 760 P.2d 880.

The department reads First Interstate to prohibit a valuation methodology that takes into account the property owner's cost to sell or improve properties, on the ground that doing so would result in an investment value for that particular owner rather than the real market value of the property, which assumes a hypothetical seller of the property. The department relies on the following quote from that opinion:

"Reduction by this method results in a determination of the properties' value to the current owner or their value as an investment. This is not the market value, which is the price that each property would receive on the open market. While in certain circumstances the value to the owner might equal the market value, the value to the owner cannot be equated with the market value."

306 Or. at 454, 760 P.2d 880 (citation omitted).

First Interstate does not support the broad rule of law for which the department advocates. In First Interstate , the court held that the unit of property being assessed was not the subdivision as a whole, as the taxpayer had argued, but each individual tax lot within the subdivision. Id . at 453, 760 P.2d 880. The highest and best use for each of those lots was for "construction of a single-family residence." Id . at 454, 760 P.2d 880. The "developer's discount," then, was problematic for two reasons. First, the discount did not value the individual lots; it valued the lots as a single package. Id . at 454, 760 P.2d 880. Second, the discount "does not assess the value of the properties if put to their highest and best use, but reduces their value to arrive at the value of the properties considered as an investment. Investment is not the highest and best use of the properties." Id . at 455, 760 P.2d 880. The court added that, if each lot's highest and best use had been as "part of a group of lots," then "it would be appropriate to assess that lot based on its value as part of a group." Id . at 453 n. 2, 760 P.2d 880.

The factors on which the court relied in First Interstate , simply are not present here. In contrast to that case, the property here is being valued at its highest and best use; the appropriate unit is being valued; and the non-stabilized occupancy of this property would impair its value to any seller, not simply to this taxpayer. As we have explained, the Tax Court found that the anchor tenant vacancy was a condition of the property and not of this particular taxpayer, and that the vacancy would burden the property even if owned by a hypothetical seller.

For the reasons discussed above, we reject the department's argument that the Tax Court committed legal error by failing to correctly apply this court's decisions in Swan Lake and First Interstate.

We return to the underlying question of the real market value of the property at issue-what a hypothetical buyer would pay a hypothetical seller for the property on the assessment date. Here, that question reduces to the central dispute between the parties over whether the property should be considered stabilized or non-stabilized. With respect to appraisal methodologies or other means of determining value, this court has held that, in the absence of a statute or regulation that requires a particular valuation method, the determination of the appropriate methodology is a question of fact. Bylund v. Dep't of Revenue , 292 Or. 582, 585, 641 P.2d 577 (1982) ("methods of accounting or valuation, unless these are prescribed by law or regulation," are determined "by evidence in the record"); see also Bend Millwork v. Dept. of Revenue , 285 Or. 577, 586, 592 P.2d 986 (1979) (judicial adoption of a method of valuation in a particular case "was not the statement of a 'legal principle' or a rule of law," but "merely a finding of fact on the record before the court that the method should be applied in that case and a disposition of the factual controversy by application of that appraisal method"). The Tax Court recognized that principle here, stating that, "unless otherwise prescribed by law or regulation, methods of valuation are analyzed in light of the evidence introduced by the parties." Powell Street I , 22 OTR at 434 ; see also id. at 436.

No statute or regulation prescribes whether or when a leased property should be considered stabilized or non-stabilized for valuation purposes. The Tax Court correctly treated that valuation methodology issue as one to be resolved based on the evidence. Taxpayer presented evidence that, because the property was non-stabilized, potential buyers of the property were limited to "a somewhat narrow range of opportunistic investors" who would be able and willing to incur the time, effort, and risk to bring the property back to stability. That is the set of "informed buyer[s]" whose purchase prices will determine real market value for property tax purposes. See Or. Const., Art XI, § 11 (11)(a)(A); ORS 308.205(1). Taxpayer presented evidence that such buyers would only buy the property at a substantial discount that would allow them to recover their costs and compensate them for market risk. Those findings were supported by substantial evidence, and the department does not contend otherwise. The Tax Court resolved the factual dispute over whether it was appropriate to consider stabilization in valuing the property, and, if so, whether the property was stabilized, by agreeing with taxpayer's appraiser as to the appropriate methodology and also with that appraiser's calculations. That finding, too, and the Tax Court's ultimate conclusion on value, was supported by substantial evidence in the record. Accordingly, the Tax Court did not err in finding that the real market value of the property was $10.13 million, as of January 1, 2014.

The judgment of the Tax Court is affirmed.

      We note that the general rule requiring valuation of the fee simple interest may not include some types of property interests, such as easements appurtenant. See Bayridge Assoc. Ltd. Partnership v. Dept. of Rev. , 13 OTR 24, 28-29, 1994 WL 33368 (1994), aff'd , 321 Or. 21, 892 P.2d 1002 (1995) (stating that, for property tax purposes, easements appurtenant are generally assessed as part of dominant estate, not servient one); see also Tualatin Development v. Dept. of Rev. , 256 Or. 323, 329-30, 473 P.2d 660 (1970) (citing with approval case holding that granting "the equivalent of *** an easement" over property had the effect of "destroy[ing], and as a fact it has destroyed, the taxable value" of the servient property (internal quotation marks and citation omitted)); see generally Joan M. Youngman, Defining and Valuing the Base of the Property Tax , 58 Wash. L. Rev. 713, 717-18 (1983) (while majority of cases value property subject to long-term leases by using sum of all legal interests in given parcel, majority of cases also value property subject to easement appurtenant by looking to owner's remaining interest, not fee simple). Because those exceptions to the general rule are not at issue here, we express no opinion about them.

      Although both the Multnomah County Assessor and the department were defendants in the Tax Court and are appellants in this court, only the department has filed a substantive brief before this court. Accordingly, from this point we will use "department" to refer to actions taken either by the department or by the Multnomah County Assessor.

      The appraisers disagreed on some facts, and those differences affected the appraisers' final valuations. Except as discussed, however, those differences are not at issue on appeal.

      A property is stabilized when it has a "stabilized occupancy":
      "The occupancy of a property that would be expected at a particular point in time, considering its relative competitive strength and supply and demand conditions at the time, and presuming it is priced at market rent and has had reasonable market exposure. A property is at stabilized occupancy when it is capturing its appropriate share of market demand."
      Appraisal Institute, Dictionary of Real Estate Appraisal 219 (6th ed. 2015). Or as the department's attorney defined it for the Tax Court: "Stabilization is *** when a vacancy rate is at the market vacancy [rate]."

      The holding in Swan Lake may have that effect, but that was not the underlying reasoning. As we noted previously, Swan Lake was based on an affirmative requirement to value the fee simple interest, not a refusal to value the owner's personal characteristics. 257 Or. at 625, 478 P.2d 393. Nevertheless, the court's direction to use market rents would result in removing from the property's value a particular owner's skill in negotiating leases.

      We do not decide that point, in part because certain types of mismanagement-in particular, an owner who has allowed a property to fall into disrepair-may well affect the real market value of the property, even though it also causes tenants to leave.


author: FLYNN, J.

text:
    STATE of Oregon, Petitioner on Review, v. Yevgeniy Pavlovich SAVINSKIY, Respondent on Review.
    CC 121059 (SC S065257)
    Supreme Court of Oregon, En Banc.
    August 1, 2019
    Doug M. Petrina, Assistant Attorney General, Salem, filed the petition for reconsideration on behalf of petitioner on review. Also on the petition were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.
    No appearance contra.
   FLYNN, J.

The state has petitioned for reconsideration of our decision in State v. Savinskiy , 364 Or. 802, 819, 441 P.3d 557 (2019), in which we concluded that the "Article I, section 11, right to counsel on pending charges does not guarantee that the state will provide notice to a defendant's attorney before questioning the defendant about a new, uncharged and ongoing conspiracy to harm witnesses to a pending prosecution." (Footnote omitted.) Based on that conclusion, we reversed in part the decision of the Court of Appeals, affirming the judgment of the trial court with respect to defendant's convictions for his new crimes. However, we affirmed the conclusion of the Court of Appeals that the trial court erred in admitting the statements as evidence in defendant's prosecution for the original charges. The disposition in our original opinion states:

"Accordingly, the decision of the Court of Appeals is reversed as to defendant's convictions for conspiracy to commit murder (Counts 17-19) and otherwise affirmed. The judgment of the trial court is reversed and remanded as to defendant's convictions for crimes charged in the original indictment but is otherwise affirmed."

Id . at 820-21, 441 P.3d 557.

The state points out that that disposition creates an ambiguity regarding some of defendant's original convictions, which the Court of Appeals affirmed on harmless error grounds. We affirmed the decision of the Court of Appeals as to those convictions, as expressed in the first sentence of the disposition. But we agree with the state that the second sentence creates uncertainty regarding that conclusion. Accordingly, we allow the petition for reconsideration and modify our opinion as set out below.

The disposition found in the original opinion, quoted above, is replaced with this new disposition:

"Accordingly, the decision of the Court of Appeals is reversed as to defendant's convictions for conspiracy to commit murder and assault (Counts 17-19), but is otherwise affirmed. The judgment of the trial court is affirmed in part and reversed in part, and the case is remanded to the trial court for further proceedings."

The petition for reconsideration is allowed. The former opinion is modified and adhered to as modified.