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Wieck v. Board of Trustees of Kentucky Teachers' Retirement System

United States District Court, W.D. Kentucky, Louisville

December 16, 2016

RANDOLPH WIECK, et al., PLAINTIFFS
v.
BOARD OF TRUSTEES OF THE KENTUCKY TEACHERS' RETIREMENT SYSTEM, et al., DEFENDANTS

          MEMORANDUM OPINION

          Charles R. Simpson III, Senior Judge United States District Court

         I. Introduction

         The pro se plaintiffs, current and retired teachers Randolph Wieck, Betsey Bell, and Jane Norman (collectively, “Plaintiffs”), filed this putative class action on behalf of similarly situated members of the Kentucky Teachers' Retirement System (“KTRS”). Compl. 1, ECF No. 1. The complaint asserts many causes of action, including violations of the Contract Clause, Takings Clause, and Due Process Clause of the Fifth Amendment of the United States Constitution, the Fair Labor Standards Act (“FLSA”), the Securities Act, the Investment Advisers Act of 1940, various state statutes, and common law breach of fiduciary duty. Id. at 2-3, 5-8. Plaintiffs' claims rest on alleged mismanagement of KTRS, resulting in an underfunding of the system. Id. ¶ 5. The defendants included the Board of Trustees of KTRS, the Attorney General, the Auditor of Public Accounts, the Kentucky Education Association (“KEA”), [1] and multiple investment companies, including The Carlyle Group L.P. (“Carlyle”).[2] Id. at 1. This Court previously dismissed all the defendants except KEA and Carlyle. Order, ECF No. 47.

         Carlyle moves to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted, ECF No. 48. KEA moves for judgment on the pleadings for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(h)(3), or, in the alternative, failure to state a claim upon which relief can be granted under Rule 12(h)(2), ECF No. 51. Plaintiffs did not respond. Because these motions involve the same facts and issues, the Court will address them in a single memorandum opinion and order.

         For the reasons below, the Court will grant KEA's motion for judgment on the pleadings for lack of subject matter jurisdiction. Because the Court lacks subject matter jurisdiction over these remaining claims, the Court will deny Carlyle's motion to dismiss as moot. The Court will dismiss all claims against KEA and Carlyle without prejudice.

         II. Background

         Plaintiffs allege that the Board of Trustees of KTRS mismanaged the pension fund, allowing underfunding that resulted in a nearly 4% additional taking from teachers. Compl. ¶¶ 18-22, ECF No. 1. The vast majority of Plaintiffs' allegations are aimed at the Board of Trustees of KTRS and assert violations of the Fair Labor Standards Act, Investment Advisers Act, and Securities Act, various constitutional violations, various violations of Kentucky state law, and breach of fiduciary duty. Id. ¶¶ 7, 11, 14-18, 22, 26, 29, 30. Plaintiffs do not appear to assert any particular causes of action against Carlyle. Plaintiffs appear to assert only one cause of action against KEA, which is based on Kentucky state law. Id. ¶ 38.

         Plaintiffs filed this action, seeking as damages a refund of any amounts collected in excess of the original contribution rate. Id. ¶ 46. In the alternative, they seek injunctive relief, by which they seek to prevent future additional amounts from being deducted from their pay, above the original contribution rate. Id. Plaintiffs also seek injunctive relief by which they demand that the Court order the Board to (1) communicate honestly the underfunding to its members, (2) demand full contributions from the legislature, (3) bring civil suit against the legislature within one year of inaction, and (4) amend its investment guidelines. Id. ¶¶ 44-52. In addition, Plaintiffs ask the Court to order the federal government to direct federal education funds solely to education, rather than to pensions. Id. ¶ 50. Finally, Plaintiffs are asking for attorney fees and costs under 42 U.S.C. § 1983. Id. ¶ 52. Plaintiffs do not appear to seek any particular damages or injunctive relief from Carlyle or KEA.

         III. Legal Standard

         KEA moves for judgment on the pleadings under Federal Rule of Civil Procedure 12(c), 12(h)(2), and 12(h)(3). KEA's Mot. J. Pleadings, ECF No. 51. KEA asks this Court for judgment either because of lack of subject matter jurisdiction or for failure to state a claim upon which relief may be granted. KEA's Mem. Supp. J. Pleadings 1, ECF No. 51-1.

         KEA asks this Court for judgment on the pleadings and argues that the Court lacks subject matter jurisdiction under Federal Rule of Civil Procedure 12(h)(3). Id. at 2. Federal courts are courts of limited jurisdiction. The Court must dismiss an action if it determines that it lacks subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3). A federal court has original federal question jurisdiction over “civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. A federal court has original diversity jurisdiction where the suit is between “citizens of different states” and “where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs.” 28 U.S.C. § 1332(a). Finally, “in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy.” 28 U.S.C. § 1367(a).

         Courts typically do not look into the validity of federal causes of action in determining whether there is subject matter jurisdiction. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89 (1998). Subject matter jurisdiction is not defeated simply because the federal claims asserted fail to state a claim. See Id. “Dismissal for lack of subject-matter jurisdiction because of the inadequacy of the federal claim is proper only when the claim is ‘so insubstantial, implausible, foreclosed by prior decisions of this Court, or otherwise completely devoid of merit as not to involve a federal controversy.'” Id. (citing Oneida Indian Nation of N.Y. v. Cty. of Oneida, 414 U.S. 661, 666 (1974)).

         IV. Analysis

         Plaintiffs' complaint did not assert a basis for subject matter jurisdiction in this Court, but Plaintiffs did assert violations of the Constitution and federal statutes in their complaint. In this Court's last order, it dismissed all claims against all defendants in this action except for KEA and Carlyle. Order, ECF No. 47. Upon review, dismissal of these claims eliminated all federal questions from this case. There are no longer any valid, live causes of action based ...


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