Filed Washington State Court of Appeals Division Two
September 30, 2025
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION II JEFFREY PROBST and a class of No. 59097-2-II similarly situated individuals,
Plaintiffs,
MICKEY FOWLER and LEISA MAURER, and a class of TRS Plan 3 members,
Respondents/Cross-Appellants,
v.
DEPARTMENT OF RETIREMENT UNPUBLISHED OPINION SYSTEMS,
Appellant/Cross-Respondent.
MAXA, J. – This case involves a consolidated lawsuit prosecuted by Mickey Fowler and
Leisa Maurer, as representatives of a class of individuals with retirement plans in the Teacher
Retirement System (TRS) (collectively, Fowler), against the Department of Retirement Systems
(DRS). DRS appeals the trial court’s order denying its summary judgment motion based on a
lack of jurisdiction. Fowler cross-appeals the trial court’s order denying their summary
judgment motion on their takings claim.
Fowler challenges DRS’s method of calculating interest on TRS plans. When this
lawsuit was filed, DRS compounded interest on retirement contributions quarterly, using the
quarter’s ending balance to calculate interest. If a participant withdrew their retirement account No. 59097-2-II
or transferred between retirement plans during a quarter, the ending balance at the end of the
quarter for the original plan was zero and DRS paid no interest during that quarter. In this over
20-year-old action, Fowler alleges that DRS’s method of calculating interest unlawfully withheld
daily interest from members who transferred from TRS Plan 2 to TRS Plan 3 before January
2002.
This case has a long history. In 2005, Jeffrey Probst, the original party to the lawsuit,
filed a class action lawsuit against DRS regarding DRS’s calculation of interest. The class action
complaint requested declaratory and monetary relief. Probst later filed a separate petition for
review under the Administrative Procedure Act (APA), chapter 34.05 RCW, challenging DRS’s
denial of claims for interest accrued on retirement accounts. The trial court consolidated the
class action lawsuit and the petition for review.
A supplemental complaint filed in 2008 added Fowler as a class representative. The
supplemental complaint alleged that DRS’s actions were contrary to the prohibition on the taking
of property in the Washington Constitution and again sought declaratory and monetary relief.
In 2010, the trial court dismissed Fowler’s petition for review under the APA. This court
reversed, holding that DRS’s rulemaking regarding retirement account interest accrual was
arbitrary and capricious. Fowler also argued that DRS’s failure to pay daily interest was an
unconstitutional taking, but the court declined to address that argument. In 2013, the trial court
subsequently remanded the case to DRS for further rulemaking. This court affirmed the remand
to DRS. Fowler again argued that DRS’s failure to pay daily interest was an unconstitutional
taking, but the court declined to address that argument as premature.
DRS did not engage in further rulemaking on remand. So in 2015, Fowler filed a lawsuit
in federal court against the director of DRS, alleging that not crediting daily interest violated the
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takings clause of the Fifth Amendment to the United States Constitution. The federal district
court initially dismissed the case on ripeness grounds. In 2018, the Ninth Circuit Court of
Appeals reversed, holding that Fowler had established an unconstitutional taking of daily interest
from the teachers’ retirement accounts. On remand, in 2021 the district court ruled that Fowler
had proven a federal takings claim and granted summary judgment in favor of Fowler on that
issue. But in 2023, the district court dismissed the case on statute of limitations grounds. Fowler
appealed to the Ninth Circuit.
While the statute of limitations issue was pending in federal district court, Fowler filed a
summary judgment motion in state court, seeking damages for the unlawful taking of daily
interest. They argued that res judicata and collateral estoppel based on the federal court rulings
prevented DRS from arguing that an unconstitutional taking did not occur. DRS filed its own
summary judgment motion, arguing that the trial court lost jurisdiction when this court affirmed
the trial court’s 2013 remand back to DRS, Fowler never pleaded a Fifth Amendment takings
claim in state court, and the district court’s dismissal of Fowler’s federal claim on statute of
limitations grounds precluded Fowler from asserting a takings claim in state court. The trial
court denied both parties’ motions for summary judgment without prejudice. The court ruled
that it lacked jurisdiction over the merits of the lawsuit because the APA claim had been
remanded to DRS and that jurisdiction of the takings claim remained in federal court. But the
court declined DRS’s request to dismiss the lawsuit with prejudice.
A commissioner of this court granted discretionary review of the trial court’s order. But
in November 2024, the Ninth Circuit reversed the district court again. The court held that its
prior mandate precluded the district court from addressing the statute of limitations and
confirmed that Fowler had proved that DRS unlawfully withheld daily interest in violation of the
3 No. 59097-2-II
takings clause. The court remanded the case to the district court to formulate a remedy for
prospective injunctive relief.
Following the Ninth Circuit’s ruling, both Fowler and DRS raised procedural arguments
in supplemental briefing to this court. Fowler argued that there is no controlling question of law
for this court to resolve under RAP 2.3(b)(4) and this court should dismiss the grant of
discretionary review. DRS argued that the priority of action rule prevents the trial court from
addressing the merits of Fowler’s lawsuit until the federal litigation concludes. We reject both
arguments and address the merits of the appeal.
On the merits, DRS argues that the trial court correctly ruled that it lacked jurisdiction
after it remanded the case to DRS, but erred when it did not dismiss the case under CR 12(h)(3).
In their cross-appeal, Fowler argues that the trial court erred in (1) ruling that it did not have
jurisdiction over the class action lawsuit, (2) denying their summary judgment motion on their
takings claim because collateral estoppel precludes DRS from arguing that there was no takings
clause violation, and (3) not striking DRS’s actuarial expert testimony.
We hold that the trial court did not err in ruling that it lacked jurisdiction over the APA
claim but erred in ruling that it lacked jurisdiction over Fowler’s takings claim. We decline to
address Fowler’s summary judgment motion on DRS’s takings liability because the trial court
did not address this issue on the merits. For the same reason, we decline to address Fowler’s
evidentiary arguments.
Accordingly, we affirm the trial court’s ruling that it lacked jurisdiction over the APA
claim, reverse the trial court’s ruling that it lacked jurisdiction over Fowler’s takings claim, and
remand for further proceedings consistent with this opinion.
4 No. 59097-2-II
FACTS
In January 2005, Probst filed a class action lawsuit against DRS. Probst alleged that DRS
unlawfully withheld accrued interest from retirement accounts in the Public Employee
Retirement System (PERS) and TRS when members would withdraw their retirement account or
transfer between retirement plans. The complaint requested declaratory and equitable relief,
including an “order requiring DRS to calculate interest from the date of receipt of each member’s
contribution to the date of a member’s withdrawal and/or transfer.” Clerk’s Papers (CP) at 5.
The complaint also requested monetary relief. The complaint did not expressly allege a violation
of the takings clauses of either the United States Constitution or the Washington Constitution.
In October 2005, Probst filed a petition for review under the APA of DRS’s denial of
claims for interest accrued on retirement accounts. Among other claims, Probst alleged that
DRS’s decision to not pay accrued interest up to the date members withdrew their funds from
their retirement accounts was arbitrary and capricious. The trial court subsequently consolidated
the two cases.
In 2007, a portion of the class – those people who transferred from TRS Plan 2 to Plan 3
after January 20, 2002, including Probst – settled their claims with DRS.1
In 2008, a supplemental complaint was filed adding Fowler as class representatives.
Fowler was excluded from the class subject to the settlement agreement. The new class
consisted of TRS beneficiaries who transferred their retirement plans from TRS Plan 2 to TRS
Plan 3 before January 20, 2002.
1 DRS settled with certain members of the class because DRS determined that those members’ claims were not time barred by the statute of limitations.
5 No. 59097-2-II
The supplemental complaint alleged that when the class members transferred their
retirement funds from TRS Plan 2 to TRS Plan 3, DRS unlawfully withheld interest on their
accounts because DRS did not calculate interest on a daily basis. The complaint alleged that
“DRS had a duty under the common law and retirement statutes to provide daily interest on
members’ accounts,” and that “DRS’s assertion that it had no duty . . . is contrary to the
Washington Constitution, including . . . its prohibition on taking of property.” CP at 9-10. The
complaint again requested declaratory and equitable relief, including an “order requiring DRS to
calculate interest from the date of receipt of each member’s contribution to the date of a
member’s withdrawal and/or transfer,” as well as monetary relief. CP at 10. An amended
supplemental complaint made the same allegations.
In 2009, the parties filed cross-motions for summary judgment on various issues. Fowler
argued that former RCW 41.50.033(1) (2007)2 should not be interpreted as allowing DRS’s
interest calculation method because that method would constitute an unconstitutional taking.
Fowler stated:
Here, under the common law “interest earned belongs to the owner of the funds that generated the interest” and “interest earned by deposit of money . . . is an increment that accrues to that money and its owners.” [Phillips v. Washington Legal Foundation, 524 U.S. 156, 165-66 & n.5, 118 S. Ct. 1925, 141 L. Ed. 2d 174 (1998)] (IOLTA case) (emphasis added). The “rule that ‘interest follows principal’ has been established under English common law since the mid-1700’s.” Id. at 165. “[A]ny interest that does accrue” on deposited funds is therefore “a property right incident to the ownership of the underlying principal.” Id. at 168 (italics by Court). Accordingly, the Takings Clause of the Fifth Amendment prohibits the government from appropriating accrued interest from the owners of the underlying funds. Id. at 165-71; accord, Brown v. Legal Foundation of Washington, 538 U.S. 216, 233- 35 (2002); Schneider v. Cal. Dep’t of Corrections, 151 F.3d 1194, 1201 (9th Cir.
2 RCW 41.50.033(1) states, “The director shall determine when interest, if provided by a plan, shall be credited to accounts in the . . . the teachers’ retirement system . . . . The amounts to be credited and the methods of doing so shall be at the director’s discretion, except that if interest is credited, it shall be done at least quarterly.”
6 No. 59097-2-II
1998) (“interest income . . . is sufficiently fundamental that States may not appropriate it without implicating the Takings Clause”).
CP at 817 (emphasis in original).
In response, DRS argued that its interest calculation method “does not effect an
unconstitutional taking of property.” CP at 1904. DRS distinguished the Phillips case and
emphasized that it was exercising its authority to determine the benefits of TRS members, not
taking property from them.
The trial court addressed these motions in 2010. The court ruled on summary judgment
that Fowler’s claims were not time barred. However, the court ruled that DRS had authority to
calculate interest for people transferring retirement plans, and that the relevant statutes did not
require daily interest. Therefore, the court affirmed DRS’s administrative order under the APA.
The court dismissed Fowler’s complaint with prejudice. The court did not address the non-APA
claims, including any takings claim, asserted in the class action supplemental complaint.
First State Appeal: Probst I
Fowler appealed the trial court’s dismissal of their claims. Probst v. Dep’t of Ret. Sys.,
167 Wn. App. 180, 182-83, 271 P.3d 966 (2012) (Probst I). In their opening brief, Fowler made
the exact same argument about the Fifth Amendment takings clause as in its 2009 trial court brief
quoted above. Fowler again argued that that former RCW 41.50.033(1) should not be interpreted
as allowing DRS’s interest calculation method because that method would constitute an
unconstitutional taking under the Fifth Amendment. Fowler concluded, “The 2007 statute
should be interpreted to be constitutional. Under the trial court’s interpretation, it is not.” CP at
1333 (citation omitted).
This court noted that relevant statutes permitting transfers from PERS Plan 2 to PERS
Plan 3 delegated to DRS the authority to determine “amounts to be credited,” which included
7 No. 59097-2-II
determining how interest is earned. Id. at 186-89 (quoting RCW 41.50.033(1)). The court held
that former RCW 41.50.033 abrogated the common law rule that interest accrues daily and did
not “require the DRS to pay daily interest on balances transferred from Plan 2 to Plan 3.” Id. at
191.
However, the court held that DRS acted arbitrarily and capriciously in its decision to use
a quarterly interest calculation. Id. The court stated that “DRS consistently recognized the
advantages that would be realized by moving to a more frequent interest calculation but rejected
such a move without identifying any reasons for doing so.” Id. at 193-94. Accordingly, the
court reversed the trial court’s dismissal and remanded for further proceedings. Id. at 194.
The court acknowledged that Fowler had argued that “DRS’s failure to pay daily interest
effected an unconstitutional taking.” Id. at 183. But the court specifically declined to address
Fowler’s constitutional takings argument because it decided the case based on arbitrary and
capricious agency action. Id. at 183 n.1.
Second State Appeal: Probst II
Following the decision in Probst I, the trial court in June 2013 remanded DRS’s
administrative decision to DRS for further proceedings consistent with Probst I. But the trial
court did not address the class action complaint.
Fowler appealed the remand order. Probst v. Dep’t of Ret. Sys., No. 45128-0-II, slip op.
at 1 (Wash. Ct. App. Dec. 13, 2014) (unpublished) (Probst II),
https://www.courts.wa.gov/opinions/pdf/D2%2045128-0-II%20Unpublished%20Opinion.pdf.
They argued that the trial court erred in remanding the case to DRS instead of ordering DRS to
pay Fowler’s interest based on the common law daily interest rule, that any new rule DRS
8 No. 59097-2-II
promulgated would improperly apply retroactively, and that any application of a new rule that
does not use daily interest would be an unconstitutional taking. Id. at 1-2.
In December 2014, this court held that the trial court properly remanded the case to DRS.
Id. at 10. The court reasoned that the holding in Probst I determined that DRS had authority to
determine how interest is calculated for retirement plan transferees. Id. at 8. Because the APA
governed the Fowlers’ initial appeal in Probst I, the court determined that remand was
appropriate. Id. at 10. The court also rejected Fowler’s argument that the class’s claim for
money damages exempted them from review under the APA. Id. Accordingly, the court
affirmed the trial court’s remand of the case to DRS. Id. at 13.
Regarding Fowler’s takings argument, the court stated as follows:
The Fowlers also argue that if the DRS is allowed under RCW 41.50.033 to make and apply a new rule that does not use the common law daily interest rule to calculate interest, the potential failure to pay interest based on that rule will result in an unconstitutional taking. Pursuant to the takings clause of the Fifth Amendment and applied to the states through the Fourteenth Amendment, the government cannot take private property for public use without just compensation. U.S. Const., amend. V. This argument is also speculative because the DRS has not made or applied a new rule resulting in an unconstitutional taking; therefore, this argument is premature.
Id. at 11.
After this court’s decision in Probst II, it appears that DRS did not adopt a new rule until
2018. See former WAC 415-02-150 (2018). The rule confirmed DRS’s prior position that
interest was not calculated on a daily basis. Former WAC 415-02-150 (2018).
Federal Court Litigation
In 2015, Fowler filed a class action lawsuit against the director of DRS in federal district
court. Suing under 42 U.S.C. § 1983, Fowler alleged that DRS failed to provide daily interest to
individuals who transferred from TRS Plan 2 and Plan 3 between 1996 and January 20, 2002.
9 No. 59097-2-II
Fowler’s only legal claim was that DRS violated the takings clause of the Fifth Amendment as
applied to the states through the Fourteenth Amendment by failing to pay the requisite interest on
transferred retirement accounts. Fowler requested a declaration that DRS had violated the Fifth
Amendment takings clause. Fowler also requested the following relief:
The Court should order Defendant to: (1) calculate the interest wrongly withheld from the Plaintiffs from the dates the Plaintiffs made the contributions to the dates they were withdrawn, (2) re-calculate the separate “transfer payment” paid into the TRS Plan 3 individual accounts to include the interest wrongly withheld, (3) calculate the earnings or interest on the funds that were not transferred from the dates the Plaintiffs transferred to TRS Plan 3, and from the dates of the transfer incentive payment, respectively, to the date the money is finally deposited into their Plan 3 accounts, and (4) transfer the funds calculated as remaining in the TRS Plan 2/3 account (and the remaining transfer payments) to the Plaintiffs’ TRS Plan 3 accounts.
CP at 904-05. Fowler did not request monetary relief or damages.3
The district court initially dismissed the Fowlers’ claims as prudentially unripe. Fowler
v. Frost, No. C15-5367, 2015 WL 9303486, at *3-4 (W.D. Wash. Dec. 22, 2015) (court order).
The Ninth Circuit Court of Appeals reversed the district court. Fowler v. Guerin, 899 F.3d 1112
(9th Cir. 2018) (Fowler I). The court held that Fowler asserted a takings clause claim for a per
se taking because the “withholding of interest earned on funds in interest-bearing accounts is a
direct appropriation of private property” to which prudential ripeness does not apply. Id. at
1117.
3 Under the Eleventh Amendment to the United States Constitution, states are immune from suits by citizens for money damages in federal court. Fed. Maritime Com’n v. S.C. State Ports Auth., 535 U.S. 743, 752-53, 122 S. Ct. 1864, 152 L. Ed. 2d 962 (2002). But under the Ex Parte Young doctrine, citizens can sue state officials in their personal capacities in federal court for prospective injunctive relief. 209 U.S. 123, 167-68, 28 S. Ct. 441, 52 L. Ed. 714 (1908). Accordingly, in federal court Fowler specifically sued the director of DRS for prospective injunctive relief due to DRS’s allegedly unconstitutional withholding of interest.
10 No. 59097-2-II
The Ninth Circuit also rejected DRS’s position that no taking occurred because state law
did not create a property right in daily interest. Id. at 1118. The court stated that “income earned
on an interest bearing account falls within [the] class of fundamental property rights.” Id. That
core property right “covers interest earned daily, even if payable less frequently.” Id. The court
concluded that “[b]ecause the right to daily interest is deeply ingrained in our common law
tradition, this property interest is protected by the Takings Clause regardless of whether a state
legislature purports to authorize a state officer to abrogate the common law.” Id. at 1118-19.
Therefore, the court held that the plaintiffs “state a takings claim for daily interest withheld by
DRS.” Id. at 1119.
The Ninth Circuit also addressed Eleventh Amendment immunity. Id. at 1119-20. The
court emphasized that Fowler did not seek monetary damages, but instead sought “an injunction
ordering [DRS] to return savings taken from them.” Id. at 1120. The court stated, “[p]rospective
injunctive relief of this sort is readily distinguishable from a compensatory damages award.” Id.
The court concluded, “Washington’s sovereign immunity shields the State’s general fund, not
investment funds held for the benefit of its employees. . . . The Eleventh Amendment does not
stand in the way of a citizen suing a state official in federal court to return money skimmed from
a state-managed account.” Id.
Accordingly, the Ninth Circuit reversed the district court. Id. at 1121. The court’s
remand order specifically ordered the district court to “reconsider class certification and, if
necessary, to permit further discovery before deciding if the class shall be given the requested
injunctive relief.” Id. at 1120-21. The court described the appropriate prospective injunctive
relief as a formula to move interest from state-held employee retirement funds to the teacher’s
accounts. Id. at 1120.
11 No. 59097-2-II
In January 2021, the district court allowed DRS to amend its answer to include an
affirmative defense that the statute of limitations barred Fowler’s claim. Fowler v. Guerin, No.
C15-5367, 2021 WL 228900, at *4-6 (W.D. Wash. Jan. 22, 2021) (court order).
In July 2021, the district court granted summary judgment in favor of Fowler on the
takings claim, ruling that Fowler had established a per se takings claim as a matter of law.
Fowler v. Guerin, No. C15-5367, 2021 WL 3129626, at *2-3 (W.D. Wash. July 23, 2021) (court
order). As part of its analysis, the court rejected DRS’s argument that the plaintiffs experienced
no monetary loss because certain “transfer payments” made to induce members to switch from
TRS Plan 2 to Plan 3 were greater than any lost interest. Id.
However, the district court reserved ruling on DRS’s statute of limitations defense
pending a response from the Washington Supreme Court on a certified question regarding
equitable tolling of the statute of limitations. Id. at *3-8. The court certified the question
regarding equitable tolling to the Washington Supreme Court. Fowler v. Guerin, No. C15-5367,
2021 WL 4972737, at *3 (W.D. Wash. Aug. 5, 2021) (court order).
In 2022, our Supreme Court answered the certified question, holding that equitable
tolling in a civil lawsuit requires some sort of bad faith on the part of the defendant that
“interfered with the plaintiff’s timely filing.” Fowler v. Guerin, 200 Wn.2d 110, 125, 515 P.3d
502 (2022).
In the meantime, in July 2022 DRS implemented a new rule stating that interest accrues
daily on Plan 1 and Plan 2 retirement accounts. WAC 415-02-150(3). The new rule entirely
repealed the previous rule.
After our Supreme Court answered the certified question, both parties moved for
summary judgment in the district court. See Fowler v. Guerin, No. 3:15-cv-05367-BHS, 2023
12 No. 59097-2-II
WL 3568054, at *1 (W.D. Wash. May 19, 2023) (court order). DRS argued that Fowler’s claim
was time barred. Id. Fowler argued that the statute of limitations did not apply, equitable tolling
applied if the statute of limitations did apply, and that the court already had found that a per se
taking had occurred. Id.
In May 2023, the district court held that Fowler’s claim was time barred by the statute of
limitations and that equitable tolling did not apply. Id. at *5. The court held that DRS did not
engage in bad faith or deception that would have prevented Fowler from timely filing their
federal complaint. Id. at *5-7. The court granted DRS’s motion for summary judgment and
dismissed Fowler’s complaint with prejudice. Id. at *7.
Fowler appealed the district court’s dismissal to the Ninth Circuit. Fowler v. Guerin, No.
23-35414, 2024 WL 4891016 (mem.) (9th Cir. 2024).
Back to State Court
Meanwhile, after the Ninth Circuit’s decision in Fowler I, Fowler in 2019 filed a motion
for summary judgment in state court. It appears that Fowler attempted to raise an argument that
collateral estoppel prevented DRS from contesting that a taking had occurred, entitling Fowler to
relief in state court. The trial court denied the summary judgment motion without prejudice
because there was no final judgment in federal court that could provide preclusive effect. The
court stated that once there was a final judgment in district court, another motion could be filed.
In May 2023, as the federal district court was deciding the statute of limitations issue,
Fowler again moved for summary judgment in state court. And in July, Fowler filed a motion
for partial summary judgment as to DRS’s liability. It does not appear that the trial court ruled
on these motions.
13 No. 59097-2-II
In September, DRS filed a motion for summary judgment based on lack of jurisdiction
and res judicata. DRS argued that the trial court lost jurisdiction in 2013 when it remanded the
case to DRS for further rulemaking and that the court could not have jurisdiction over a takings
clause claim that Fowler never alleged in his complaint. DRS also argued that the federal district
court’s dismissal with prejudice on statute of limitations grounds had res judicata effect that
precluded Fowler’s state court claim.
In October, Fowler filed another summary judgment motion regarding liability issues.
Fowler argued that (1) DRS violated the takings clause by failing to credit daily interest, (2)
collateral estoppel precluded DRS from contesting its liability under the takings clause as found
by the federal courts, and (3) the statute of limitations ruling in federal court was not binding in
state court.
Fowler also filed a motion to exclude the testimony of DRS’s actuaries. DRS had filed
declarations of state actuary Matthew Smith and another actuary, Scott Miller, attaching the
declarations they had filed in federal court. Fowler argued that because actuaries predict future
events and no data exists about how much withheld interest would have accrued if DRS had not
taken it from Fowler, Smith and Miller could not make actuarial assumptions based on data that
did not exist. Fowler also argued that because the statute authorizing transfer payments is
unambiguous, there was no need for expert testimony as to the value because it was post-
enactment legislative history.
Trial Court Ruling
In November 2023, the trial court held a hearing on the parties’ motions for summary
judgment. The court concluded, “This court does not have jurisdiction to rule on the merits
14 No. 59097-2-II
issues presented by the parties’ summary judgment motions.” CP at 1818. As a result, the court
denied both parties’ motions for summary judgment without prejudice.
In its oral ruling, the court stated,
This court concludes that as affirmed by the Court of Appeals in December 2014, this court’s June 2013 remand order placed jurisdiction over the merits in the state case with the DRS at the administrative level.
In 2015, plaintiffs chose to file a 42 U.S.C. Section 1983 claim in federal district court, alleging the DRS had violated the takings clause of the Fifth Amendment. Through this action plaintiffs elected to pursue their remedy for their constitutional takings clause claim in the federal forum. . . .
Plaintiffs by their decision took their takings claim to federal court, and this court concludes that jurisdiction over that claim remains there in federal court while the federal case is pending.
In sum, jurisdiction over the merits of the state action was transferred to the administrative level when this case was remanded in 2013 to the DRS for further proceedings, and plaintiffs by choosing to commence litigation in federal court put jurisdiction over their constitutional takings claim in the federal court where it remains while that litigation is pending. Consequently, at this time, this court does not have jurisdiction over the merits in this matter, including the three merits issues raised by plaintiffs and the merits issue raised by defendant.
Rep. of Proc. (RP) at 42-43. However, the court declined to dismiss the case for lack of
jurisdiction. The court incorporated its oral ruling into its written order. The court did not reach
Fowler’s motion to exclude the testimony of DRS’s actuaries.
The trial court certified its order under RAP 2.3(b)(4), stating that its ruling involved a
controlling question of law and that immediate appellate review may materially advance the
ultimate termination of the litigation.
DRS appealed the trial court’s order regarding the parties’ cross-motions for summary
judgment. Fowler cross-appealed the trial court’s denial of partial summary judgment on
liability and its evidentiary motion.
15 No. 59097-2-II
In April 2024, a commissioner of this court granted discretionary review of the entirety of
trial court’s order. The commissioner’s order did not limit the scope of this court’s review.
Events Since Filing Current Appeal
In November 2024, the Ninth Circuit affirmed in part and reversed in part the federal
district court’s grant of summary judgment to DRS based on the statute of limitations. Fowler v.
Guerin, No. 23-35414, 2024 WL 4891016 (9th Cir. 2024) (mem.) (Fowler II). The court held
that the district court violated the “rule of mandate” doctrine by permitting DRS to amend its
answer to add a statute of limitations affirmative defense. Id. at *1. The court stated that it
“specifically remanded the case only for reconsideration of class certification and for
determination of whether the Teachers should receive prospective injunctive relief, which meant
additional issues were ‘not open for review.’ ” Id. at *2 (quoting Planned Parenthood of
Columbia/Willamette Inc. v. Am. Coal. of Life Activists, 422 F.3d 949, 967 (9th Cir. 2005)). The
court held that its mandate in Fowler I foreclosed any new legal theories. Fowler II, 2024 WL
4891016, at *2. Accordingly, the court reversed the grant of summary judgment in favor of DRS
based on the statute of limitations. Id. at *3.
The Ninth Circuit also rejected DRS’s argument that there was no net loss with respect to
Fowler’s takings claim. See id. at *2. Specifically, the court held because DRS is not
responsible for the cost of administering TRS,4 there were no fees or administrative costs to
offset. Id. Accordingly, the court affirmed the district court’s holding “that the Teachers ‘have
established a pecuniary loss and a complete per se takings claim, as a matter of law.’ ” Id.
(quoting Fowler, 2021 WL 3129626, at *3).
4 RCW 41.50.110 requires individual employers – not DRS – to pay for the fees and costs of individual retirement plans.
16 No. 59097-2-II
The Ninth Circuit ordered a limited remand to the district court:
As in Fowler I, we remand to the district court to specifically address the remaining issue of prospective injunctive relief. See 899 F.3d at 1120-21. Because the district court has already held that the Teachers have proven a takings claim for daily interest, the only remaining issue for the district court to resolve is whether to approve the Teachers’ proposed formula to correct the Teachers’ accounts. If approved, the district court should then order the DRS to correct the Teachers’ accounts.
Fowler II, 2024 WL 4891016, at *3 (footnote omitted).
A commissioner of this court ordered the parties to submit supplemental briefing on the
effect of the Ninth Circuit’s ruling in Fowler II.
ANALYSIS
A. DISMISSAL OF DISCRETIONARY REVIEW
Fowler argues in their supplemental brief that this court should dismiss discretionary
review because there no longer are controlling issues of law warranting discretionary review
under RAP 2.3(b)(4) after the Ninth Circuit’s opinion in Fowler II. We disagree.
RAP 2.3(b)(4) permits this court to accept discretionary review when,
The superior court has certified, or that all parties to the litigation have stipulated, that the order involves a controlling question of law as to which there is substantial ground for a difference of opinion and that immediate review of the order may materially advance the ultimate termination of the litigation.
Here, the controlling question of law is whether the trial court had subject matter
jurisdiction over Fowler’s claims. Without subject matter jurisdiction over the merits of the
lawsuit, the trial court has no ability to act. ZDI Gaming, Inc. v. Wash. State Gambling Com’n,
173 Wn.2d 608, 616, 268 P.3d 929 (2012). Therefore, the trial court’s jurisdiction controls the
issues that remain in the case.
In addition, determining whether the trial court correctly decided it had no jurisdiction
over Fowler’s claims will “materially advance the ultimate termination of the litigation.” RAP
17 No. 59097-2-II
2.3(b)(4). If we decide that the trial court had jurisdiction over the merits of Fowler’s claim, then
the trial court can proceed to decide the case.
Fowler argues that there is no controlling issue of law for discretionary review because
the Ninth Circuit decided Fowler’s takings clause claim in his favor. But this argument conflates
the merits of the motions the parties brought before the trial court with the issue of law in the
order that warrants discretionary review before this court. Under RAP 2.3(b)(4), we look to the
trial court’s order to determine if there is a controlling issue of law that meets the relevant
criteria. Here, the trial court’s order states that it lacked jurisdiction to decide the merits of the
parties’ summary judgment motions.
Accordingly, we decline to dismiss the grant of discretionary of review.
B. PRIORITY OF ACTION RULE
DRS argues in its supplemental brief that under the priority of action rule, the federal
courts have exclusive jurisdiction over Fowler’s takings claim until the federal case is resolved.
We disagree.
1. Legal Principles
Under the priority of action rule, “ ‘the first court to obtain jurisdiction over a case
possesses exclusive jurisdiction to the exclusion of other coordinate courts’ until the controversy
is resolved.” Pac. Lutheran Univ. v. Certain Underwriters at Lloyd’s, 2 Wn.3d 628, 642, 541
P.3d 358 (2024) (quoting Am. Mobile Homes of Wash., Inc. v. Seattle-First Nat’l Bank, 115
Wn.2d 307, 317, 796 P.2d 1276 (1990)). The rule embodies the common law principle that
“ ‘when a court of competent jurisdiction has become possessed of a case, its authority
continues, subject only to the appellate authority, until the matter is finally and completely
disposed of, and no court of coordinate authority is at liberty to interfere with its action.’ ” Pac.
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Lutheran Univ., 2 Wn.3d at 642 (quoting Am. Mobile, 115 Wn.2d at 316). The priority of action
rule potentially applies to similar or parallel actions filed in a Washington federal district court
and Washington state court. Pac. Lutheran Univ., 2 Wn.3d at 643; see Bunch v. Nationwide
Mut. Ins. Co., 180 Wn. App. 37, 39, 321 P.3d 266 (2014).
The priority of action rule does not always apply when parties file similar actions in
different jurisdictions. King County v. Frank Coluccio Constr. Co., 3 Wn. App. 2d 504, 518,
416 P.3d 756 (2018). “Washington’s priority of action rule is applicable where the competing
cases are identical as to subject matter, relief, and parties, i.e., are parallel actions. If the
competing actions are parallel, as a general rule, the later-filed action must abate to allow the
action that was file first to continue until it reaches a resolution.” Pac. Lutheran Univ., 2 Wn.3d
at 642.
If the actions are not parallel, we will decide whether to apply the priority of action rule
based on equitable considerations. Id. at 643. These include the “convenience of witnesses and
the interests of justice, the parties’ possible motivations for their filing decisions as determined
from the surrounding circumstances, and the presence of venue agreements between some but
not all of the various parties.” Am. Mobile, 115 Wn.2d at 323. We also consider the purpose of
the priority of action rule, “which is that it ‘tends to prevent unseemly, expensive, and dangerous
conflicts of jurisdiction and process.’ ” Pac. Lutheran Univ., 2 Wn.3d at 643 (quoting Am.
Mobile, 115 Wn.2d at 317 (second internal quotation marks omitted)).
If the priority of action rule applies to a case first filed in federal court and later filed in
state court, the proper remedy is to stay the state court action pending resolution of the federal
court action. See Bunch, 180 Wn. App. at 50-51 (“We remand with instructions for the court to
stay these proceedings until such time as the federal district court determines” the defendant’s
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liability.); see also Pac. Lutheran Univ., 2 Wn.3d at 642 (“We have acknowledged that a court
may enforce this rule by enjoining parties from further action in the second-filed case.”).5
Whether the priority of action rule applies is a legal determination that we review de
novo. Frank Coluccio Constr., 3 Wn. App. 2d at 518.
2. Analysis
We conclude that the priority of action rule does not apply here for four reasons. First,
DRS did not make a priority of action argument in the trial court. We generally decline to
consider arguments raised for the first time on appeal. RAP 2.5(a); Samra v. Singh, 15 Wn. App.
2d 823, 838, 479 P.3d 713 (2020). In fact, DRS did not even raise the priority of action
argument in its opening brief or in its reply brief, asserting the argument only in a supplemental
brief.
Second, DRS’s argument is based on its contention that Fowler did not make a Fifth
Amendment takings claim in state court until 2023. As discussed in more detail below, this
contention is incorrect. In 2008, Fowler alleged in their supplemental complaint that DRS’s
position was contrary to the prohibition against taking property in the Washington Constitution.
The takings clause of article I, section 16 of the Washington Constitution generally provides
similar protections as that of the Fifth Amendment. See Wash. Food Indus. Ass’n v. City of
Seattle, 1 Wn.3d 1, 30, 524 P.3d 181 (2023) (addressing regulatory takings). And in 2009,
during arguments on cross-motions for summary judgment before the trial court, Fowler
expressly argued that “the Takings Clause of the Fifth Amendment prohibits the government from
5 On the other hand, when two Washington state court actions are involved, it appears that the remedy is to dismiss the second-filed action. E.g., Frank Coluccio Constr., 3 Wn. App. 2d at 519; Atlantic Cas. Ins. Co. v. Oregon Mut. Ins. Co., 137 Wn. App. 296, 302, 153 P.3d 211 (2007).
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appropriating accrued interest from the owners of the underlying funds.” CP at 817. This court
twice acknowledged but declined to consider Fowler’s takings claim. Therefore, it is not entirely
clear that the federal court was the first court to obtain jurisdiction over the takings claim.
Third, if DRS had raised the issue, the priority of action rule may have provided a basis
for the trial court to stay Fowler’s takings claim pending resolution of DRS’s liability under the
takings clause in federal court. See Bunch, 180 Wn. App. at 50-51. The federal district court
was the first court to address the merits of DRS’s takings clause liability – this court had
declined to address Fowler’s takings argument. However, the liability portion of Fowler’s
takings claim now has been resolved. The district court ruled on summary judgment that Fowler
had established a takings claim against DRS, and the Ninth Circuit affirmed that ruling. So there
no longer is a reason to stay the liability phase of Fowler’s takings claim.
What remains in federal court is the remedy phase of Fowler’s takings claim. But
Fowler’s state court and federal court lawsuits are not parallel actions regarding the remedy that
can be ordered by the respective courts. Although the two lawsuits have the same subject matter
and parties, the relief sought in each court is different. In their state court complaint, Fowler
sought monetary relief, i.e., damages. In state court, if Fowler establishes takings liability
through collateral estoppel or otherwise, the class members will be entitled to recover damages
for the value of the property DRS took from them. Maslonka v. Pub. Util. Dist. No. 1 of Pend
Oreille County, 1 Wn.3d 815, 825-26, 533 P.3d 400 (2023). But in federal court, the Eleventh
Amendment prevents Fowler from seeking monetary damages, and their relief is limited to
“[p]rospective injunctive relief.” Fowler I, 899 F.3d at 1120. The Ninth Circuit described
prospective injunctive relief in Fowler I as a formula to determine the amount of interest that
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should move to the teacher’s accounts. Id. Therefore, the federal court’s decision on prospective
injunctive relief will not necessarily resolve Fowler’s claim for damages in state court.
Fourth, there are no equitable considerations that would compel application of the
priority of action rule here. Fowler’s apparent motivation in pursuing the state court claim even
though it had prevailed on the takings claim in federal court was to ensure that they could
recover full taking damages without the Eleventh Amendment limitation in federal court. The
interests of justice do not require that Fowler be prevented from pursuing those damages in state
court despite the fact that the district court may order a remedy that partially duplicates Fowler’s
damages claim. And as Fowler acknowledges, they will not be entitled to double recovery.
Accordingly, we hold that the priority of action rule does not apply to the current state
court and federal court actions.
C. SUBJECT MATTER JURISDICTION
DRS argues that the trial court correctly ruled that it lacked subject matter jurisdiction
over this case, but erred by not dismissing the case under CR 12(h)(3). Fowler argues that the
trial court erred when it ruled that it lacked subject matter jurisdiction over the merits of Fowler’s
class action complaint, including their takings claim. We agree that the trial court lacked subject
matter jurisdiction over Fowler’s APA claim, but we disagree that the trial court lacked subject
matter jurisdiction over Fowler’s takings claim.
Subject matter jurisdiction involves the superior court’s authority to adjudicate a
particular type of case. Colasurdo v. Esterline Techs. Corp., 25 Wn. App. 2d 154, 159, 525 P.3d
610 (2023). Article IV, section 6 of the Washington Constitution states that superior courts shall
have original jurisdiction “in all cases and of all proceedings in which jurisdiction shall not have
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been by law vested exclusively in some other court.” Under this provision, “[t]here are very few
limitations on the subject matter jurisdiction of superior courts in Washington.” Outsource
Servs. Mgmt., LLC v. Nooksack Bus. Corp., 181 Wn.2d 272, 276, 333 P.3d 380 (2014).
If the superior court lacks subject matter jurisdiction, it must dismiss the action under CR
12(h)(3). However, “ ‘[i]f the type of controversy is within the subject matter jurisdiction [of the
superior court], then all other defects or errors go to something other than subject matter
jurisdiction.’ ” Colasurdo, 25 Wn. App. 2d at 159 (quoting Dougherty v. Dep’t of Lab. & Indus.,
150 Wn.2d 310, 317, 76 P.3d 1183 (2003)).
Under the APA, individuals may challenge the rules that an agency promulgates or the
orders an agency issues through a petition for review in the trial courts or court of appeals. RCW
34.05.570(2)-(3); 34.05.514-.526. A court may remand the matter back to the agency for further
proceedings. RCW 34.05.574(1). When a trial court remands an action back to an agency, “a
superior court reviewing action of an administrative agency loses jurisdiction upon remand to the
agency.” Pierce County Sheriff v. Civil Serv. Comm’n of Pierce County, 98 Wn.2d 690, 695,
658 P.2d 648 (1983).
We review de novo a trial court’s ruling on subject matter jurisdiction. Colasurdo, 25
Wn. App. 2d at 158.
2. Two Separate Lawsuits
There were two different lawsuits filed in the trial court: a class action lawsuit requesting
declaratory, equitable and monetary relief, and a petition for review under the APA challenging
DRS’s denial of claims for interest accrued on retirement accounts. Those two lawsuits were
consolidated into a single action. But despite the consolidation, two separate claims remained: a
class action claim that included monetary relief and an APA claim.
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The trial court dismissed the consolidated lawsuit in 2010, but the court addressed only
the APA claim and not the class action complaint. Following this court’s decision in Probst I,
the trial court remanded the APA claim to DRS. Again, there was no reference to the class
action complaint. This court affirmed that remand in Probst II. No. 45128-0-II, slip op. at 13.
But this court in both Probst I and Probst II expressly declined to address Fowler’s takings claim
asserted in the class action complaint. Probst I, 167 Wn. App. at 183 n.1; Probst II, No. 45128-
0-II, slip op. at 11. The trial court has never addressed the merits of Fowler’s class action claim.
In 2023, the trial court ruled that it lacked subject matter jurisdiction over the APA claim.
The court recognized that the case also involved a separate constitutional takings claim, but
stated that jurisdiction over that claim remained in federal court while that action was pending.
3. Jurisdiction Over APA Claim
There is no question that the trial court lost subject matter jurisdiction over the APA
claim when it remanded that claim to DRS after Probst II under Pierce County Sheriff, 98 Wn.2d
at 694. Therefore, we affirm the trial court’s ruling regarding that claim. And DRS is correct
that the trial court should have dismissed the APA claim under CR 12(h)(3).
4. Jurisdiction Over Takings Claim
The trial court ruled that it had no subject matter jurisdiction over Fowler’s takings claim
because “jurisdiction over that claim remains there in federal court while the federal case is
pending.” RP at 42. However, DRS cites no authority for the proposition that a trial court
automatically loses subject matter jurisdiction over a claim when the plaintiff files the same
claim in federal court.
As discussed above, a state court may lose the authority to act under the priority of action
rule if the plaintiff also files suit in federal court. But the trial court here did not apply that rule,
24 No. 59097-2-II
nor did DRS argue the rule. DRS argues that the trial court essentially applied priority of action
principles when it ruled that it had no jurisdiction over the takings claim. But even if the trial
court did apply that rule, it would not lose subject matter jurisdiction. The remedy would be to
stay the state court action. See Bunch, 180 Wn. App. at 50-51.
Constitutional claims plainly are within the scope of the trial court’s subject matter
jurisdiction under article IV, section 6 of the Washington Constitution. Because the trial court
never addressed Fowler’s takings claim, it retained jurisdiction over that portion of the
consolidated lawsuit.
DRS focuses only on the law involving remand of the APA claim, and ignores the fact
that there was a separate class action complaint for monetary relief. But it is undisputed that the
trial court never addressed and therefore never dismissed the takings claim. Even though the
trial court remanded the APA claim, the takings claim never was resolved.
In its reply brief, DRS argues that the only remaining claim after Probst I was the APA
claim, and the Fifth Amendment takings claim simply was not part of the case. DRS argues at
length that Fowler never asserted a Fifth Amendment takings claim in any state court case.
There are two problems with this argument. First, whether Fowler asserted a Fifth
Amendment claim does not appear to be relevant when Fowler asserted a takings claim under the
Washington Constitution in their supplemental complaint. The Washington and United States
Constitution’s takings clauses generally are interpreted the same. See Wash. Food Indus. Ass’n,
1 Wn.3d at 30. Therefore, Fowler could recover takings damages under the Washington
Constitution even if it never pleaded a Fifth Amendment claim. See Maslonka, 1 Wn.3d at 825.
Second, DRS’s argument appears to relate to whether Fowler properly pleaded a Fifth
Amendment takings claim under CR 8(a), not whether the trial court had jurisdiction. Whether
25 No. 59097-2-II
Fowler properly pleaded a particular claim has nothing to do with jurisdiction. The trial court
had jurisdiction over Fowler’s case regardless of any pleading deficiencies.
Accordingly, we hold that the trial court erred when it ruled that it lacked subject matter
jurisdiction over Fowler’s takings clause claim.
D. FOWLER’S SUMMARY JUDGMENT MOTION
Fowler argues that the trial court erred on the merits by denying their summary judgment
motion on their takings claim. We decline to address this issue.
The trial court denied Fowler’s summary judgment motion based on lack of jurisdiction,
not on the merits. As discussed above, we reverse in part the trial court’s jurisdiction ruling. But
the trial court has not had the opportunity to address the merits of Fowler’s takings claim,
including the parties’ collateral estoppel arguments. And the Ninth Circuit’s decision in Fowler
II had not been issued when the trial court denied the summary judgment motion. Therefore, we
remand for the trial court to consider Fowler’s summary judgment motion in light of recent
developments.
E. EVIDENTIARY ISSUES
Fowler argues that the trial court should have struck the testimony of DRS’s actuarial
experts. But the trial court did not rule on this issue at summary judgment because it denied both
parties’ motions. Accordingly, we decline to address this issue. The trial court on remand can
address the admissibility of DRS’s expert testimony.
F. ATTORNEY FEES ON APPEAL
Fowler requests attorney fees under RAP 18.1(a) and the common fund doctrine. We
decline to award attorney fees.
26 No. 59097-2-II
RAP 18.1(a) permits this court to grant attorney fees to a party “[i]f applicable law grants
to a party the right to recover.” The common fund (or common benefit) theory is an equitable
basis for granting attorney fees. Bowles v. Dep’t of Ret. Sys., 121 Wn.2d 52, 70, 847 P.2d 440
(1993). The common fund doctrine “authorizes attorney fees only when the litigants preserve or
create a common fund for the benefit of others as well as themselves.” Id. at 70-71. In common
fund cases, courts generally apply a percentage of recovery approach. Id. at 73.
In Bowles, the trial court awarded attorney fees to the attorneys representing class action
plaintiffs against DRS. Id. at 61. The Supreme Court held that a lawsuit securing additional
benefits under the PERS I plan was eligible for attorney fees under the common fund doctrine
because the lawsuit “secured additional pension benefits for many other PERS I members.” Id.
at 71. But the court declined to award attorney fees on appeal because “[u]nder the percentage of
recovery approach, the attorneys are to be compensated according to the size of the judgment
recovered, not the actual hours expended.” Id. at 75. Because the appeal did not increase the
size of recovery, appellate attorney fees were not appropriate under the common fund doctrine.
Id.
Here, the trial court has not ruled on attorney fees because it has not entered a judgment
on liability. The common fund doctrine may apply if Fowler secures benefits for the entire class,
but it is premature for us to rule on any common fund doctrine issue. And similar to Bowles, an
award of attorney fees to Fowler is inappropriate on appeal because the common fund doctrine
permits attorney fees as a percentage of the recovered amount. Fowler has not yet recovered any
amount.
Accordingly, we decline to address the common fund doctrine issue and deny appellate
attorney fees.
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CONCLUSION
We affirm the trial court’s ruling that it lacked subject matter jurisdiction over the APA
claim, reverse the trial court’s ruling that it lacked subject matter jurisdiction over Fowler’s
takings claim, and remand for further proceedings consistent with this opinion.
A majority of the panel having determined that this opinion will not be printed in the
Washington Appellate Reports, but will be filed for public record in accordance with RCW 2.06.040,
it is so ordered.
MAXA, J.
We concur:
VELJACIC, A.C.J.
LEE, J.