Filed: August 8, 2002

IN THE SUPREME COURT OF THE STATE OF OREGON

FRANK LEON DeMENDOZA and

JAVIER MENDOZA,

Plaintiffs,

v.

BRUCE HUFFMAN, WILLIAM

HUFFMAN, and EVELENE HUFFMAN,

Defendants,

and

STATE OF OREGON,

Intervenor-Defendant.

(DV 95-3071-PA; SC S48430)

En Banc

On certified questions from the United States District Court Order dated April 18, 2001; certification accepted July 18, 2001.

Honorable Michael R. Hogan, District Judge.

Argued and submitted January 16, 2002.

Kathryn H. Clarke, Portland, argued the cause and filed the brief for plaintiffs. With her on the brief was David V. Gilstrap, of Davis, Gilstrap, Hearn, Shaw, & Saladoff, Ashland.

No appearance for defendants.

Mary H. Williams, Assistant Solicitor General, Salem, argued the cause and filed the brief for intervenor-defendant. With her on the brief were Hardy Myers, Attorney General, Michael D. Reynolds, Solicitor General, and Julie A. Smith, Assistant Attorney General.

Charles J. Merten, Beaverton, filed the brief for amicus curiae Oregon Trial Lawyers Association.

Elizabeth A. Earls, of Associated Oregon Industries, Salem, filed the brief for amicus curiae Associated Oregon Industries.

BALMER, J.

Certified questions and additional question answered.

This case is before the court on certified questions of Oregon law from the United States District Court for the District of Oregon under ORS 28.200 et seq. and ORAP 12.20. See generally Western Helicopter Services v. Rogerson Aircraft, 311 Or 361, 811 P2d 627 (1991) (discussing factors court considers in exercising discretion to accept certified questions). The certified questions ask whether ORS 18.540, (1) which allocates 60 percent of each punitive damages award in Oregon to the state's Criminal Injuries Compensation Account, violates specified provisions of the state constitution. For the reasons that follow, we conclude that it does not.

We take the facts from the District Court certification order. A jury assessed punitive damages against defendants in the amount of $550,000 for the wrongful use of civil proceedings and fraudulent transfer of real property. The Ninth Circuit affirmed the jury's decision. DeMendoza v. Huffman, 2001 WL 30084 (9th Cir Jan 8, 2001) (unpublished opinion). Defendants have abandoned further appeal, and the only issue remaining is the proper distribution of the punitive damages award.

On April 9, 2001, the District Court granted the state's motion to intervene as a judgment creditor to assert the state's claim under ORS 18.540 to a portion of the punitive damages award. Plaintiffs then challenged the constitutionality of ORS 18.540 on multiple grounds, arguing that they were entitled to the entire award. Because Oregon appellate courts have not previously decided whether, by allocating to the state a 60-percent share in punitive damage awards, ORS 18.540 violates provisions of the state constitution, the District Court certified to this court the following five questions:

"1. Does ORS 18.540 violate Article I, section 18, of the Oregon Constitution?

"2. Does ORS 18.540 violate Article IV, section 18, and Article IX, sections 1 and 3, of the Oregon Constitution?

"3. Does ORS 18.540 violate the right to jury trial protected by Article I, section 17, and Article VII (Amended), section 3, of the Oregon Constitution?

"4. Does ORS 18.540 violate the 'remedy' or 'justice' clauses of Article I, section 10, of the Oregon Constitution?

"5. Does ORS 18.540 violate the separation of powers doctrine protected by Article III, section 1, and Article VII (Amended), section 1, of the Oregon Constitution?"

We accepted certification of those questions and, because the case involved state law claims that were tried in federal court under that court's diversity jurisdiction, we added an initial question of law:

"Did the Oregon legislature contemplate the application of ORS 18.540 in federal cases arising under state law?"

See Western Helicopter Services, 311 Or at 370-71 (court has discretion to reframe questions presented). We begin with that threshold question.

I.

Since 1987, Oregon statutes have directed that a portion of any punitive damages award be paid into a state fund for victims of crime. See Or Laws 1987, ch 774,