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5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 MICKEY FOWLER, et al., CASE NO. 15-CV-5367 8 Plaintiffs, ORDER 9 v. 10 KATHRYN LEATHERS, Director of the Washington State Department of 11 Retirement Systems, 12 Defendant. 13
THIS MATTER is before the Court on plaintiff Fowler’s motion to determine 14 formula for injunctive relief, Dkt. 184. 15 Fowler represents a class of 26,785 Washington public school teachers who 16 participate in Washington’s Teacher Retirement System (TRS), a public retirement 17 system managed by the Washington State Department of Retirement Systems. 18 In 2015, Fowler asserted a 42 U.S.C. § 1983 takings claim for the Department’s 19 failure to pay him daily interest on his retirement account balance when he transferred 20 from one state retirement plan, TRS Plan 2, to a later plan, TRS Plan 3, prior to January 21 20, 2002. Dkts. 85, 171. 22 1 The parties are no doubt well versed in the facts and long procedural history of 2 this case. The Court initially dismissed Fowler’s claims without prejudice as prudentially
3 unripe under Williamson County Regional Planning Commission v. Hamilton Bank of 4 Johnson City, 473 U.S. 172 (1985). Dkt. 28 at 6–8. The Ninth Circuit reversed and 5 remanded, concluding that the Department’s “withholding of the interest accrued on the 6 Teachers’ accounts constitutes a per se taking to which Williamson County’s prudential 7 ripeness test does not apply.” Fowler v. Guerin, 899 F.3d 1112, 1118 (9th Cir. 2018) 8 (“Fowler I”).
9 On remand, this Court certified a class consisting of “[a]ll teachers who 10 transferred from TRS Plan 2 to TRS Plan 3 prior to January 20, 2002.” Dkt. 85 at 5– 11 6. Meanwhile, the Department sought and obtained, over Fowler’s objection, leave to 12 amend its answer to assert that, if the teachers’ per se takings claim was ripe, it was 13 barred by the applicable three-year limitations period. Dkts. 78, 80, 85.
14 The parties filed cross-motions for summary judgment on the Department’s 15 limitations period affirmative defense. Dkts. 98, 103. The Court certified a question on 16 the elements of equitable tolling to the Washington Supreme Court, which clarified that a 17 plaintiff must show the defendant’s “bad faith, false assurances, or deception interfered 18 with the plaintiff’s timely filing” of the claims. Dkt. 153; Fowler v. Guerin, 200 Wn.2d
19 110, 125 (2022). This Court concluded that because Fowler had not done so, his § 1983 20 takings claim was time-barred. Dkt. 171 (Order granting Department’s summary 21 judgment motion). 22 1 The Ninth Circuit affirmed in part and reversed and remanded in part. Dkt. 177. It 2 held this Court erred in allowing the Department to amend its answer and instructed the
3 Court to decide “whether to approve the Teachers’ proposed formula to correct the 4 Teachers’ accounts” on remand. Id. at 4, 6. 5 Fowler moves for permanent injunctive relief, asking the Court to accept his 6 proposed formula. Dkt. 184. He proposes adding the following elements: (1) daily 7 interest on the teachers’ accounts omitted when they transferred to TRS Plan 3 and the 8 quarterly compounding of that omitted interest; (2) the increased transfer incentive
9 payment under RCW 41.32.8401 based on the omitted interest; and (3) the historic 10 returns the teachers’ funds earned while held in the State’s Commingled Trust Fund 11 (rather than in their own TRS plans). Id. at 11–12. 12 Fowler relies on the testimony of actuary John D. Marshall, including a 395-page 13 spreadsheet he created to explain his assumptions. Dkts. 186, 187. For element (1),
14 Marshall assumes a 5.5% annual interest rate compounded quarterly, earned on the 15 amount each teacher contributed to their TRS plan 2 in each pay period until they 16 transferred to TRS plan 3. Dkt. 186 at 12. For element (2), he explains the “omitted 17 interest” for each teacher is multiplied by the transfer incentive payment percentage in 18 the Department’s records. Id. Elements (1) and (2) together constitute the funds withheld
19 from the teachers’ TRS plans, held by the Department in the State’s Commingled Trust 20 Fund. Id. The State reports an 8.92% average rate of return on the Commingled Trust 21 Fund since 1992. Dkt. 185 at 8. Therefore, for element (3), Marshall assumes the sum of 22 1 (1) and (2) would have grown also grew at 8.92% annually. Dkt. 186 at 12–13. Marshall 2 arrives at a total damages figure of $137,616,369. Id. at 13.
3 Marshall asserts he used a computer to do the calculation for the more than 26,000 4 class members under Rule of Evidence 1006. Dkt. 186 at 12. Although Fowler refers to 5 Marshall as his “expert actuary,” Marshall did not file an expert report. Dkt. 184 at 7. 6 Instead, Marshall asserts that “[i]f a document denominated as an expert report is needed, 7 this declaration and my previous declarations submitted in this court and state court, and 8 the interrogatory answers that I assisted with in state court, collectively constitute my
9 expert report.” Dkt. 186 at 12. 10 The Department opposes the motion, arguing Fowler “does not provide any real 11 explanation, much less an actual formula to determine damages.” Dkt. 188 at 7. It argues 12 Marshall’s spreadsheet is a “proverbial black box asserting a damage figure” that is triple 13 Fowler’s prior request. Id. at 8. The Department acknowledges it “identifies the same
14 components” to the formula, agreeing that element (1) is the omitted daily interest and 15 that element (2) is the additional payment the teachers are owed under RCW 41.31.8401. 16 Id. at 14–15. It disagrees with Fowler on the underlying assumptions for each element. Id. 17 While it has shared its own formula and suggested damages figure with Fowler, it has not 18 articulated for the Court how it contends the elements should be calculated. Id. at 8.
19 As for element (3), the Department contends Fowler erroneously considers the 20 returns from the Commingled Trust Fund as a taking. Id. at 28. It argues that instead, 21 element (3) is prejudgment interest subject to a rate of return of a “‘reasonably prudent 22 1 investor who is maintaining the safety of the principal.’” Id. at 30 (quoting Schneider v. 2 Cnty. of San Diego, 285 F.3d 784, 792 (9th Cir. 2002).
3 Finally, the Department challenges Marshall’s declaration and asks for a 4 continuance to allow for expert discovery. Id. at 9, 12. 5 The Court has scheduled a hearing on October 2, 2022, at 1:30 PM to hear from 6 the parties on these issues. 7 The parties agree the formula constitutes three elements, but disagree on how to 8 define them. It is the Court’s view that the determination of each element of the formula
9 is a matter of law. The Court would like assistance from experts on the underlying 10 assumptions and calculations for each element. 11 Neither party has submitted expert reports in this case. Marshall has not met Rule 12 26’s requirements, and the Department has not identified any potential experts, or even 13 suggested an alternative calculation or formula.
14 At the October 2 hearing, the Court will discuss a scheduling order for expert 15 reports and rebuttal reports.
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5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 MICKEY FOWLER, et al., CASE NO. 15-CV-5367 8 Plaintiffs, ORDER 9 v. 10 KATHRYN LEATHERS, Director of the Washington State Department of 11 Retirement Systems, 12 Defendant. 13
THIS MATTER is before the Court on plaintiff Fowler’s motion to determine 14 formula for injunctive relief, Dkt. 184. 15 Fowler represents a class of 26,785 Washington public school teachers who 16 participate in Washington’s Teacher Retirement System (TRS), a public retirement 17 system managed by the Washington State Department of Retirement Systems. 18 In 2015, Fowler asserted a 42 U.S.C. § 1983 takings claim for the Department’s 19 failure to pay him daily interest on his retirement account balance when he transferred 20 from one state retirement plan, TRS Plan 2, to a later plan, TRS Plan 3, prior to January 21 20, 2002. Dkts. 85, 171. 22 1 The parties are no doubt well versed in the facts and long procedural history of 2 this case. The Court initially dismissed Fowler’s claims without prejudice as prudentially
3 unripe under Williamson County Regional Planning Commission v. Hamilton Bank of 4 Johnson City, 473 U.S. 172 (1985). Dkt. 28 at 6–8. The Ninth Circuit reversed and 5 remanded, concluding that the Department’s “withholding of the interest accrued on the 6 Teachers’ accounts constitutes a per se taking to which Williamson County’s prudential 7 ripeness test does not apply.” Fowler v. Guerin, 899 F.3d 1112, 1118 (9th Cir. 2018) 8 (“Fowler I”).
9 On remand, this Court certified a class consisting of “[a]ll teachers who 10 transferred from TRS Plan 2 to TRS Plan 3 prior to January 20, 2002.” Dkt. 85 at 5– 11 6. Meanwhile, the Department sought and obtained, over Fowler’s objection, leave to 12 amend its answer to assert that, if the teachers’ per se takings claim was ripe, it was 13 barred by the applicable three-year limitations period. Dkts. 78, 80, 85.
14 The parties filed cross-motions for summary judgment on the Department’s 15 limitations period affirmative defense. Dkts. 98, 103. The Court certified a question on 16 the elements of equitable tolling to the Washington Supreme Court, which clarified that a 17 plaintiff must show the defendant’s “bad faith, false assurances, or deception interfered 18 with the plaintiff’s timely filing” of the claims. Dkt. 153; Fowler v. Guerin, 200 Wn.2d
19 110, 125 (2022). This Court concluded that because Fowler had not done so, his § 1983 20 takings claim was time-barred. Dkt. 171 (Order granting Department’s summary 21 judgment motion). 22 1 The Ninth Circuit affirmed in part and reversed and remanded in part. Dkt. 177. It 2 held this Court erred in allowing the Department to amend its answer and instructed the
3 Court to decide “whether to approve the Teachers’ proposed formula to correct the 4 Teachers’ accounts” on remand. Id. at 4, 6. 5 Fowler moves for permanent injunctive relief, asking the Court to accept his 6 proposed formula. Dkt. 184. He proposes adding the following elements: (1) daily 7 interest on the teachers’ accounts omitted when they transferred to TRS Plan 3 and the 8 quarterly compounding of that omitted interest; (2) the increased transfer incentive
9 payment under RCW 41.32.8401 based on the omitted interest; and (3) the historic 10 returns the teachers’ funds earned while held in the State’s Commingled Trust Fund 11 (rather than in their own TRS plans). Id. at 11–12. 12 Fowler relies on the testimony of actuary John D. Marshall, including a 395-page 13 spreadsheet he created to explain his assumptions. Dkts. 186, 187. For element (1),
14 Marshall assumes a 5.5% annual interest rate compounded quarterly, earned on the 15 amount each teacher contributed to their TRS plan 2 in each pay period until they 16 transferred to TRS plan 3. Dkt. 186 at 12. For element (2), he explains the “omitted 17 interest” for each teacher is multiplied by the transfer incentive payment percentage in 18 the Department’s records. Id. Elements (1) and (2) together constitute the funds withheld
19 from the teachers’ TRS plans, held by the Department in the State’s Commingled Trust 20 Fund. Id. The State reports an 8.92% average rate of return on the Commingled Trust 21 Fund since 1992. Dkt. 185 at 8. Therefore, for element (3), Marshall assumes the sum of 22 1 (1) and (2) would have grown also grew at 8.92% annually. Dkt. 186 at 12–13. Marshall 2 arrives at a total damages figure of $137,616,369. Id. at 13.
3 Marshall asserts he used a computer to do the calculation for the more than 26,000 4 class members under Rule of Evidence 1006. Dkt. 186 at 12. Although Fowler refers to 5 Marshall as his “expert actuary,” Marshall did not file an expert report. Dkt. 184 at 7. 6 Instead, Marshall asserts that “[i]f a document denominated as an expert report is needed, 7 this declaration and my previous declarations submitted in this court and state court, and 8 the interrogatory answers that I assisted with in state court, collectively constitute my
9 expert report.” Dkt. 186 at 12. 10 The Department opposes the motion, arguing Fowler “does not provide any real 11 explanation, much less an actual formula to determine damages.” Dkt. 188 at 7. It argues 12 Marshall’s spreadsheet is a “proverbial black box asserting a damage figure” that is triple 13 Fowler’s prior request. Id. at 8. The Department acknowledges it “identifies the same
14 components” to the formula, agreeing that element (1) is the omitted daily interest and 15 that element (2) is the additional payment the teachers are owed under RCW 41.31.8401. 16 Id. at 14–15. It disagrees with Fowler on the underlying assumptions for each element. Id. 17 While it has shared its own formula and suggested damages figure with Fowler, it has not 18 articulated for the Court how it contends the elements should be calculated. Id. at 8.
19 As for element (3), the Department contends Fowler erroneously considers the 20 returns from the Commingled Trust Fund as a taking. Id. at 28. It argues that instead, 21 element (3) is prejudgment interest subject to a rate of return of a “‘reasonably prudent 22 1 investor who is maintaining the safety of the principal.’” Id. at 30 (quoting Schneider v. 2 Cnty. of San Diego, 285 F.3d 784, 792 (9th Cir. 2002).
3 Finally, the Department challenges Marshall’s declaration and asks for a 4 continuance to allow for expert discovery. Id. at 9, 12. 5 The Court has scheduled a hearing on October 2, 2022, at 1:30 PM to hear from 6 the parties on these issues. 7 The parties agree the formula constitutes three elements, but disagree on how to 8 define them. It is the Court’s view that the determination of each element of the formula
9 is a matter of law. The Court would like assistance from experts on the underlying 10 assumptions and calculations for each element. 11 Neither party has submitted expert reports in this case. Marshall has not met Rule 12 26’s requirements, and the Department has not identified any potential experts, or even 13 suggested an alternative calculation or formula.
14 At the October 2 hearing, the Court will discuss a scheduling order for expert 15 reports and rebuttal reports. While it is often in the jury’s purview to decide the 16 credibility of each parties’ expert methods, it is the responsibility of the Court to arrive at 17 the final mathematical formula in this case. If necessary, the Court may consider 18 appointing its own expert(s). The Court would also like to know what information and
19 underlying assumptions the parties will provide the experts. 20 At the hearing, the Court will also hear argument on element (3), specifically 21 whether the teachers are entitled to an 8.92% annual rate of return of their funds held in 22 1 the state’s Commingled Trust Fund, or, if they are entitled to prejudgment interest, what 2 that interest rate should be.
3 Finally, the parties should be prepared to discuss the source of the funds that will 4 ultimately be used to correct the teachers’ accounts. 5 Fowler’s motion to determine formula for injunctive relief, Dkt. 184, is DENIED 6 without prejudice. 7 IT IS SO ORDERED. 8 Dated this 23rd day of September, 2025. A 9 10 BENJAMIN H. SETTLE 11 United States District Judge 12
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