Fowler v. Guerin

• Court: District Court, W.D. Washington
• Decided: May 19, 2023
• Docket: 3:15-cv-05367
• Status: Unknown

Opinion

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4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 MICKEY FOWLER, et al., CASE NO. 3:15-cv-05367-BHS 8 Plaintiffs, ORDER 9 v. 10 TRACY GUERIN, Director of the Washington State Department of 11 Retirement Systems, 12 Defendant. 13 THIS MATTER is before the Court on the parties’ cross-motions for summary 14 judgment on the applicability of Defendant Director Tracy Guerin’s limitations period 15 affirmative defense to Plaintiff Mickey Fowler’s1 § 1983 takings claim, Dkts. 98 and 103. 16 I. SUMMARY 17 Fowler represents a class of Washington teachers who transferred from one state 18 retirement plan, Teachers Retirement System (TRS) Plan 2, to a later plan, TRS Plan 3, 19 20 21 1 The named plaintiffs are Mickey Fowler and Leisa Maurer (formerly husband and wife) as representatives of a class of some 23,000 similarly situated teachers. This order uses the 22 singular, masculine “Fowler” for clarity and ease of reference. 1 prior to January 20, 2002. Dkt. 85 at 4–5. He asserts that the Department of Retirement 2 Systems (DRS) failed to properly account for the daily interest he had earned on his Plan 3 2 retirement funds when he transferred those funds to Plan 3. He sued in June 2015,

4 asserting a single 42 U.S.C. § 1983 takings claim for violation of his Fifth Amendment 5 rights. Dkt. 1. 6 The Director argues that Fowler’s claim is time-barred as a matter of law. She 7 correctly asserts that the applicable limitations period is three years. Because the alleged 8 taking occurred, and Fowler’s § 1983 claim accrued, far more than three years before he

9 brought this suit, his claim is facially time-barred. 10 Fowler argues that the limitations period on his takings claim was equitably tolled 11 or otherwise does not apply, based on the circuitous and complicated history of his claim. 12 He emphasizes that the Director repeatedly and, until 2018, successfully argued that his 13 takings claim was not yet ripe, because the Director had not completed her rulemaking

14 process. 15 The story of Fowler’s takings claim began in 2005, and it includes litigation in 16 Thurston County Superior Court, the Washington Court of Appeals, this Court, the Ninth 17 Circuit, and the Washington Supreme Court. It has been detailed in this Court’s prior 18 orders and in various appellate opinions over time, though not in the context of the

19 Director’s limitations period affirmative defense. The Court will therefore recite much of 20 it again. 21 // 22 // 1 II. BACKGROUND 2 The dispute involves a class of Washington State teachers asserting that the DRS 3 unlawfully failed to pay them daily interest on their retirement account balances when

4 they transferred from TRS Plan 22 to TRS Plan 3, prior to January 20, 2002. Fowler 5 contends that most class members transferred in 1996–1997. Dkt. 1 at 7. 6 Fowler’s predecessor, Jeffrey Probst, sued in Thurston County Superior Court in 7 2005, asserting that the DRS violated Washington statutes and its fiduciary duties when it 8 failed to properly account for the interest accrued on balances transferred3 into the new

9 TRS Plan 3. The Superior Court dismissed the case because the DRS had authority to 10 calculate interest as it did, and did not act in an arbitrary and capricious manner. Probst v. 11 Wash. State Dep’t of Ret. Sys., 167 Wn. App. 180, 185 (2012) (“Probst I”). Fowler4 12 appealed, and Division Two of the Washington Court of Appeals reversed, holding that 13 the DRS’s rule failed to appropriately consider whether to account for daily interest, and

14 its adoption of the rule was therefore arbitrary and capricious. Id. at 193–94. It declined 15 to reach Fowler’s “constitutional takings argument,” having resolved the case on other 16 grounds. Id. at 183 n.1. 17 2 Plan 2 is a defined benefit plan, while Plan 3 is part defined benefit and part defined 18 contribution. The defined benefit portion of Plan 3 is one half of the benefit in Plan 2. 3 The DRS rule that was the subject of the state court action provided that if an account 19 had a “zero balance” at the end of a given quarter, it would receive zero interest for that entire quarter. Dkt. 18-1 at 20–21. Fowler’s Plan 2 account showed a zero balance at the end of the 20 quarter in which he transferred to Plan 3, and thus did not earn any interest in that quarter, even though he had a positive balance in his account for some portion of it. See id. at 51. 21 4 A portion of the Superior Court class action settled in 2008, and in 2009 Fowler became the named plaintiff for the subset of the class claims—those relating to transfers prior to January 22 20, 2002—which did not settle. See Probst I, 167 Wn. App. at 184. 1 The Superior Court in turn remanded the action to the DRS for additional 2 rulemaking under the Administrative Procedures Act (APA), consistent with the Court of 3 Appeals’ Probst I opinion. Fowler read Probst I as requiring the Superior Court to itself

4 determine the interest owed and asked the Court of Appeals to recall its mandate. Fowler 5 also appealed the Superior Court’s order. 6 The Court of Appeals declined to recall its mandate, and its unpublished opinion 7 addressed the “only issue properly before [it]”: whether the Superior Court had abused its 8 discretion by remanding the action to the DRS under the APA and Probst I. Probst v.

9 Wash. State Dep’t of Ret. Sys., 185 Wn. App. 1015, 2014 WL 7462567, at *1, 2 (Dec. 30, 10 2014) (“Probst II”). Division II concluded that it had not. It explained that Fowler 11 misconstrued Probst I, that the Superior Court correctly ruled that the APA applied, and 12 that it properly remanded the action to the DRS. Id. at *6. 13 It also explained that Fowler’s alternate argument5—that the “retroactive

14 application of a new rule that does not use the common law daily interest rule will result 15 in an unconstitutional taking”—was speculative, because “the DRS has not made or 16 17

18 5 It remains unclear whether Fowler’s initial state court complaint expressly asserted a takings claim under the Washington or United States constitutions, or whether he later asserted 19 that the Director’s conduct amounted to a taking. Both state Court of Appeals’ opinions describe Fowler’s taking position as an argument, not a claim. Probst I, 167 Wn. App. at 182 n.1; Probst 20 II, 2014 WL 7462567, at *6. Fowler emphasizes that, in 2009, in his very first brief in state court, he asserted that the Fifth Amendment prohibited the Director from appropriating accrued 21 interest. Dkt. 169 at 6. The Court concludes that, for purposes of this case, it does not matter whether he asserted such a claim in state court. 22 1 applied a new rule resulting in an unconstitutional taking.” Id. at *1, 6 (emphasis added). 2 It affirmed the Superior Court’s remand. 3 Six months later, on June 1, 2015, Fowler sued DRS Director Guerin in this Court,

4 expressly asserting a 42 U.S.C. § 1983 takings claim for violation of the Fifth 5 Amendment, as applied to the states through the Fourteenth Amendment. Dkt. 1 at 11. 6 His complaint recites the history above, and explains that he is suing here because he 7 disagrees with the state courts’ treatment of his takings claim: 8 For years Plaintiffs have sought relief in the Washington state court system. The Thurston County Superior Court and the Washington Court of Appeals 9 have both declined or refused to consider Plaintiffs’ Takings claim. Although the seizure of property occurred almost 20 years ago, the 10 Washington Court of Appeals said it was “premature” to resolve Plaintiffs’ Takings claim. 11 Id. at 2. 12 Director Guerin moved for summary judgment on Fowler’s claim, arguing it was 13 (1) barred by the Eleventh Amendment; (2) barred by the Rooker-Feldman doctrine; (3) 14 barred by issue or claim preclusion; (4) not ripe for review; and (5) meritless as a takings 15 claim because the teachers were not entitled to daily interest. Dkt. 14. 16 This Court agreed that the claim was not yet ripe under Williamson County 17 Regional Planning Commission v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985), 18 because the administrative remedy—the DRS rulemaking—was, at that time, ongoing. 19 Dkt. 28 at 6–7. It, like the parties, viewed the claim as a regulatory takings claim. It 20 dismissed Fowler’s claim without prejudice as prudentially unripe. Id. at 7. 21 22 1 Fowler appealed and, just before oral argument, the DRS’s new, 2018 rule went 2 into effect. See WAC 415-02-150 (2018). The new, retroactive rule6 confirmed the prior, 3 non-daily interest calculation: “Your individual account does not ‘earn’ or accrue interest

4 on a day by day basis.” WAC 415-02-150(5) (2018). 5 The Ninth Circuit reversed this Court’s order dismissing the case on ripeness 6 grounds, concluding that the “DRS’s withholding of the interest accrued on the Teachers’ 7 accounts constitutes a per se taking to which Williamson County’s prudential ripeness test 8 does not apply.” Fowler v. Guerin, 899 F.3d 1112, 1118 (9th Cir. 2018). It explained the

9 well-established common law that the right to daily interest is a property interest 10 “protected by the Takings Clause regardless of whether a state legislature purports to 11 authorize a state officer to abrogate the common law.” Id. at 1118–19. 12 Given the length of time the case had been “held up in the courts,” the Ninth 13 Circuit also addressed the Director’s other summary judgment arguments. Id. at 1118. It

14 specifically held that “the Teachers state a takings claim for daily interest withheld.” Id. 15 at 1119. It rejected the argument that Fowler’s claim was barred by issue preclusion or 16 Rooker-Feldman, because the state courts did not adjudicate any takings claim asserted 17 there. Id. It also rejected the Director’s Eleventh Amendment defense, because the money 18 at issue belonged to the teachers, not the state. Id. at 1120. The Ninth Circuit remanded

20 6 The Director issued another new rule in 2022. It does provide for daily interest on TRS Plan 2 individual accounts, but is silent on retroactivity. See WAC 415-02-150(3) (2022). Fowler 21 argues that the new rule reflects the Director’s acknowledgment that the failure to pay such interest is an unconstitutional taking. Dkt. 166 at 9. He does not discuss the new rule’s impact on 22 his claim or his damages. 1 the case to reconsider class certification, and to permit discovery, if necessary, before 2 deciding if the class should be given injunctive relief. Id. at 1120–21. 3 On remand, this Court certified the following plaintiff class:

4 All active and retired TRS members who: (1) were previously members of TRS Plan 2 and (2) transferred from TRS Plan 2 to TRS Plan 3 prior to 5 January 20, 2002. 6 Dkt. 58 at 10. On Fowler’s motion, the Court refined this definition in January 7 2021, and the class consists of “[a]ll teachers who transferred from TRS Plan 2 to 8 TRS Plan 3 prior to January 20, 2002.” Dkt. 85 at 5–6. 9 Meanwhile, the Director sought and obtained (over Fowler’s objection) leave to 10 amend her Answer to assert that, if the teachers’ per se takings claim was ripe, it was 11 barred by the applicable three-year limitations period. Dkts. 78, 80, 85. The Court 12 rejected Fowler’s claims that the Director had already litigated and lost the limitations 13 defense in state court, that the Ninth Circuit’s limited remand did not allow for a new

14 defense, and that she was judicially estopped from asserting that the takings claim was 15 untimely after asserting in state court for years that his takings claim was not yet ripe. 16 Dkts. 80, 85. His argument here is a variation on this latter point. 17 The Director moved for summary judgment on her limitations period affirmative 18 defense. Dkt. 98. Fowler also sought summary judgment on the Director’s limitations

19 period affirmative defense. Dkt. 103. He argued that the limitations period was tolled by 20 the state court filing, that the state court already ruled that the claim was timely (and that 21 ruling is the law of the case), and that the limitations period was equitably tolled in the 22 interest of justice. Id. 1 The Court concluded that Fowler had established a takings claim, but that his only 2 viable theory to avoid the conclusion that his claim was time-barred was the application 3 of equitable tolling. Dkt. 153 at 3. Because the elements of equitable tolling under

4 Washington law were not clear, the Court informed the parties of its intent to certify a 5 question to the Washington Supreme Court. Id. With the parties’ input, it certified the 6 following question to that court: 7 Under Washington law, what are the necessary and sufficient conditions— the minimum predicates—a plaintiff in a civil action (other than a personal 8 restraint or habeas corpus petition) must establish to equitably toll the limitations period otherwise applicable to their claim? 9 Dkt. 157 at 6. This Court stayed the case pending the answer. Id. 10 The Washington Supreme Court’s published opinion reaffirmed that a plaintiff 11 seeking to equitably toll a limitations period must establish four elements: 12 A plaintiff seeking equitable tolling of the statute of limitations in a civil 13 suit must demonstrate that such extraordinary relief is warranted because (1) the plaintiff has exercised diligence, (2) the defendant’s bad faith, 14 false assurances, or deception interfered with the plaintiff’s timely filing, (3) tolling is consistent with (a) the purpose of the underlying statute 15 and (b) the purpose of the statute of limitations, and (4) justice requires tolling the statute of limitations. 16 Fowler v. Guerin, 200 Wn.2d 110, 125 (2022) (en banc) (emphasis added). 17 The parties have submitted supplemental briefing on the impact of this holding on 18 the pending motions. Dkts. 164, 166, 167, 169. Both parties address each of the four 19 required elements, but the Court is primarily concerned with the second, bolded above. 20 If Fowler could establish this element—that the Director engaged in bad faith, or 21 did something deceptive, inappropriate, or otherwise unfair, which interfered with his 22 1 ability to timely file this action—the Court would have little trouble concluding that he 2 was otherwise diligent, that equitable tolling is consistent with the purposes of the Fifth 3 Amendment and of the limitations period, and that justice requires tolling. But after

4 reviewing the briefing, the record, and the prior opinions, the Court concludes that 5 Fowler cannot establish that the Director’s bad faith, false assurances, or deception 6 interfered with his timely filing this lawsuit. Equitable tolling does not apply, and 7 Fowler’s § 1983 takings claim in this Court is time-barred as a matter of law. 8 III. DISCUSSION.

9 A. Summary Judgment Standard. 10 Summary judgment is proper if the pleadings, the discovery and disclosure 11 materials on file, and any affidavits show that there is “no genuine dispute as to any 12 material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. 13 P. 56(a). In determining whether an issue of fact exists, the Court must view all evidence

14 in the light most favorable to the nonmoving party and draw all reasonable inferences in 15 that party’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248–50 (1986); 16 Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine issue of material fact 17 exists where there is sufficient evidence for a reasonable factfinder to find for the 18 nonmoving party. Anderson, 477 U.S. at 248. The inquiry is “whether the evidence

19 presents a sufficient disagreement to require submission to a jury or whether it is so one- 20 sided that one party must prevail as a matter of law.” Id. at 251–52. The moving party 21 bears the initial burden of showing that there is no evidence which supports an element 22 essential to the nonmovant’s claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 1 Once the movant has met this burden, the nonmoving party then must show that there is a 2 genuine issue for trial. Anderson, 477 U.S. at 250. If the nonmoving party fails to 3 establish the existence of a genuine issue of material fact, “the moving party is entitled to

4 judgment as a matter of law.” Celotex, 477 U.S. at 323–24. 5 The facts are not disputed. 6 B. Fowler’s § 1983 claim is subject to a three-year limitations period. 7 42 U.S.C. § 1983 does not contain a limitations period. Federal (and state) courts 8 instead “borrow” § 1983 limitations periods from analogous state law. They specifically

9 borrow the state’s “general or residual statute for personal injury actions.” Owens v. 10 Okure, 488 U.S. 235, 250 (1989). In Washington, that statute is RCW 4.16.080(2), which 11 is a three-year limitations period. Bagley v. CMC Real Est. Corp., 923 F.2d 758, 760 (9th 12 Cir. 1991). Therefore, in this District, the limitations period for a § 1983 claim is three 13 years.

14 C. The limitations period was not tolled, and it expired in 2012. 15 Fowler alleges and demonstrates that the taking at issue occurred prior to January 16 2002, and, for most class members, in 1996–1997. It is also clear that the Director raised 17 the limitations period affirmative defense in state court when, in 2009, Fowler became 18 the plaintiff for a class of teachers who transferred their retirement accounts from TRS

19 Plan 2 to TRS Plan 3 prior to January 20, 2002. The Superior Court ruled that Fowler’s 20 claims were timely, because they did not accrue until he discovered that the DRS had not 21 accounted for daily interest when he transferred. See Probst I, 167 Wn. App. at 185. The 22 Director did not appeal that ruling. 1 But even if the state court’s determination that Fowler’s 2009 state court lawsuit 2 was timely is now unassailable, that does not alter or remedy the fact that he did not 3 commence this action until June 2015. The takings claim asserted here (whether it was

4 also asserted in state court, or not) accrued some time before Fowler became the class 5 plaintiff in 2009; he necessarily knew all the facts supporting his claim at that time. This 6 conclusion is only bolstered if the Court accepts Fowler’s argument that he sufficiently 7 asserted a federal takings claim there, by articulating it in a brief filed October 23, 2009. 8 See Dkt. 108 at 51–52.

9 The Director argues that Fowler’s claim is therefore facially time-barred, and that 10 the Washington Supreme Court made clear that to equitably toll the limitations period, 11 Fowler must demonstrate that the Director engaged in bad faith, made false assurances, 12 or deceived Fowler in a way that interfered with his ability to timely commence this 13 lawsuit. Dkt. 164 at 2. She argues that he cannot do so as a matter of law.

14 Fowler’s primary argument is that the Director repeatedly, successfully, and 15 falsely assured the state courts that his takings claim was not yet ripe, because her 16 ongoing rulemaking process might result in a rule providing for daily interest on 17 transferred accounts. Dkt. 169 at 7. He asserts that these many assurances “interfered” 18 with his “ability to obtain a ruling in the timely state proceeding.” Id. at 5 (emphasis

19 added); see also Dkt. 166 at 5. Relying on Justice Yu’s concurring opinion in Fowler v. 20 Guerin, he argues that, under Washington law, equitable tolling is a flexible, fact-specific 21 inquiry, and emphasizes that the evaluation of the plaintiff’s diligence cannot be assessed 22 1 independently of the defendant’s actions. Dkt. 166 at 9–10 (citing Fowler, 200 Wn.2d at 2 126) (Yu, J., concurring)). 3 Justice Yu’s concurring opinion persuasively explained that equitable tolling is not

4 a sanction imposed on the defendant, but it acknowledged that the fact-specific inquiry 5 nevertheless includes “how the defendant’s conduct affected the plaintiff’s ability to 6 timely file their claim.” Fowler, 200 Wn.2d at 126. 7 Fowler relies on arguments that the DRS (the state court defendant) made in the 8 Superior Court and the state Court of Appeals, articulating its position that a

9 constitutional challenge to a not-yet finalized interest rule was not ripe. The Director 10 catalogues these statements in her supplemental brief, Dkt. 164 at 4–5. 11 There are at least two major problems with Fowler’s assertion that arguments 12 made to the state courts support equitable tolling of the limitations period applicable to 13 his claim here.

14 First, Fowler cites no authority for the proposition that a party’s successful 15 arguments in one litigation can amount to the sort of false assurances required for 16 equitable tolling of the limitations period otherwise applicable to a claim the plaintiff 17 later files in a different court. The Ninth Circuit held that the failure to pay daily interest 18 is a per se taking, not a regulatory one, and reversed this Court’s dismissal on that basis.

19 It also necessarily disagreed with the Washington Court of Appeals on the ripeness issue, 20 but it cannot and did not reverse that court’s opinions. 21 There was nothing “false” or deceptive about the arguments the DRS made in the 22 state courts, and Fowler points to no false assurances made to him that led him to delay 1 filing. Indeed, his argument is that the DRS’s assurances in the state courts prevented him 2 from obtaining relief in state court, not that those assurances precluded him from earlier 3 filing this action. See Dkts. 166 at 14 and 169 at 10.

4 Second, Fowler also fails to establish that the state court assurances upon which he 5 relies had any causal relationship to the date he filed this action. Even if successful 6 arguments in a different court system could amount to the sort of false assurances 7 required for equitable tolling, the Washington Court of Appeals declined to address 8 Fowler’s takings claim in 2012 not because it agreed the claim was unripe, but because

9 Fowler had prevailed on his position that the DRS rule failing to consider daily interest 10 was arbitrary and capricious. It explained: “[b]ecause we decide this case on grounds of 11 arbitrary and capricious agency action, we do not reach the Fowlers’ constitutional 12 takings argument.” See Probst I, 167 Wn. App. at 183 n.1. The earliest “assurance” upon 13 which Fowler relies was made by the DRS to the Superior Court in May 2013, a year

14 after the limitations period expired. See Dkt. 104 at 3. 15 The Washington Court of Appeals did not agree that Fowler’s takings claim was 16 unripe until Probst II in 2014, at least two years after the limitations period on Fowler’s 17 current Fifth Amendment claim had expired. The Court of Appeals held that the Superior 18 Court had not abused its discretion in remanding the matter to the Director for further

19 rulemaking under the APA and explained that the takings claim was “speculative” until 20 that rule was final. Probst II, 2014 WL 7462567, at *6. Fowler points to no false 21 assurance or deceptive conduct prior to the 2012 expiration of the three-year limitations 22 period on the takings claim he filed here in 2015. Nothing the DRS argued in state court 1 interfered with Fowler’s ability to timely file this case. Instead, as his complaint in this 2 court explains, he finally sued here because he was frustrated at the state courts’ delay in 3 addressing his takings claim. Dkt. 1 at 2. This assertion is a recognition that he was in

4 fact undeterred by any “false assurances.” 5 The Director’s arguments to the state courts were not false assurances and, even if 6 they were, they could not, and did not, dissuade or otherwise hinder Fowler from timely 7 asserting here a Fifth Amendment per se takings claim based on an event that by 8 definition occurred before January 2002. Fowler has not established that the limitations

9 period should be equitably tolled, and his claim in this Court is not timely. 10 *** 11 The Court is aware that this case has been ongoing for eight years, has been to the 12 Ninth Circuit and the Washington Supreme Court, and that the motions decided here have 13 been pending for six months. The dispute itself is now more than 20 years old, and it has

14 spent time in five different courts.7 The Court recognizes the irony of its determination 15 that the class takings claim is time-barred; such a determination is usually made at the 16 front end of litigation. The State settled with the teachers who transferred funds after 17 January 2020, to preserve its defense that claims based on earlier transfers were untimely. 18 Fowler prevailed on the timeliness of his claims in state court, but his perhaps

19 understandable effort to assert his takings claim here is time-barred. 20 // 21

22 7 The Court is unaware whether Fowler’s state court action remains open. 1 The Director’s motion for summary judgment on her limitations period defense, 2 Dkt. 98, is GRANTED, and this matter is DISMISSED with prejudice. The motion to 3 vacate the Court’s prior rulings (included in Dkt. 164) is DENIED. Fowler’s motion for

4 summary judgment on the Director’s limitations period affirmative defense, Dkt. 103, is 5 DENIED. 6 The Clerk shall enter a JUDGMENT and close the case. 7 IT IS SO ORDERED. 8 Dated this 19th day of May, 2023. A 9 10 BENJAMIN H. SETTLE 11 United States District Judge

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