Puckett v. Lexington-Fayette Urban Cnty. Gov't

• Decision Date: 15 August 2016
• Docket Number: No. 15–6097,15–6097
• Citation: 833 F.3d 590
• Parties: Tommy Puckett; Roger M. Vance, Jr., Plaintiffs–Appellants, v. Lexington–Fayette Urban County Government, et al.; Commonwealth of Kentucky, Defendants–Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

833 F.3d 590

Tommy Puckett; Roger M. Vance, Jr., Plaintiffs–Appellants,

v.Lexington–Fayette Urban County Government, et al.; Commonwealth of Kentucky, Defendants–Appellees.

No. 15–6097

United States Court of Appeals, Sixth Circuit.

Argued: April 21, 2016

Decided and Filed: August 15, 2016

Rehearing En Banc Denied September 30, 2016.

ARGUED: James M. Inman, Green Chesnut & Hughes, PLLC, Lexington, Kentucky, for Appellants. Keith Moorman, Frost Brown Todd, Lexington, Kentucky, for Appellee Lexington–Fayette Urban County Government, et al. Joseph A. Newberg, II, Office of the Kentucky Attorney General, Frankfort, Kentucky, for Appellee Commonwealth of Kentucky. ON BRIEF: James M. Inman, Ronald L. Green, Green Chesnut & Hughes, PLLC, Lexington, Kentucky, for Appellants. Keith Moorman, Frost Brown Todd, Lexington, Kentucky, for Appellee Lexington–Fayette Urban County Government, et al. Benjamin Long, Office of the Kentucky Attorney General, Frankfort, Kentucky, for Appellee Commonwealth of Kentucky.

Before: DAUGHTREY, CLAY, and STRANCH, Circuit Judges.

CLAY, J., delivered the opinion of the court in which DAUGHTREY and STRANCH, JJ., joined. STRANCH, J. (pp. 611–12), delivered a separate concurring opinion in which DAUGHTREY, J., joined.

OPINION

CLAY, Circuit Judge.

Plaintiffs in this case are retired public employees who contend they have a contract with the State of Kentucky entitling them to have their base pension benefit annually adjusted by the specific cost of living adjustment (“COLA”) formula in existence at the time they retired. Plaintiffs brought suit under 42 U.S.C. § 1983 against a number of individual state officers, the Lexington–Fayette Urban County Government (the “LFUCG”), and the Commonwealth of Kentucky (the “Commonwealth”). Their complaint alleged violations of the Contract, Due Process, and Takings Clauses of the Federal Constitution, as well as state constitutional analogues and statutes, and sought declaratory and injunctive relief. Upon Defendants' motion to dismiss, the district court ruled that Plaintiffs had no such contractual right to an unchangeable COLA formula, and that therefore, they had not stated a claim under the Contract, Due Process, and Takings Clauses of the Federal Constitution, or the Kentucky Constitution. Plaintiffs now appeal the district court's judgment, and we AFFIRM.

BACKGROUND

Plaintiff Tommy Puckett retired from the LFUCG Division of Police in 2009, after thirty-six years of service with the LFUCG. Plaintiff Roger M. Vance retired from the LFUCG Division of Fire and Emergency Services in 2010, after twenty-four years of service with the LFUCG. Plaintiffs are members of the LFUCG Policemen's and Firefighters' Retirement Fund (the “Fund”), a retirement and benefit fund for members of the LFUCG police and fire departments. The Fund is governed by the Police and Firefighters' Retirement and Benefit Fund Act, KRS 67A.360 –67A.690 (the “Act”). As members of the Fund, Plaintiffs receive service retirement annuities under the Act, in addition to COLAs.

The Act has been amended several times since its enactment, most notably in 1980 and 2013. The 1980 amendments to the Act increased the COLA rate and also the rate at which members were required to contribute to the Fund. See 1980 Ky. Acts ch. 329, §§ 1–3. Under the 1980 amendments, the Act provided service retirement annuities with COLAs of 2 to 5 percent per year, with the exact amount determined by the Fund's board of trustees. See KRS 67A.690(1) (2002). When Plaintiffs retired in 2009 and 2010, that version of the Act was in place.

On March 14, 2013, the Kentucky General Assembly, at the request of the LFUCG, passed emergency legislation amending the Act again, this time to reduce the annual COLA paid to members of the Fund. Under the amended version of the Act, when the Fund's actuarial funding level exceeds 85 percent, Fund members who have participated in the Fund before the effective date of the amendment continue to receive COLAs of 2 to 5 percent per year. See KRS 67A.690(1). On the other hand, Fund members who joined the Fund after the effective date of the amendment will receive a COLA of up to 3 percent. Id.

However, when the Fund's actuarial funding level is lower than 85 percent, the amended version of the Act reduces the COLA for all Fund members, tiered to their annual pension income. See id . Under the Act's tiered approach, those Fund members making up to $39,999 get a two percent COLA; those making between $40,000 and $74,999 get a one and a half percent COLA; those making $75,000 to $99,999 get a one percent COLA; and those making more than $100,000 get a zero percent COLA until January 1, 2016, at which point they get COLAs reinstated. See id . The amended version of the Act now applies to Plaintiffs' pension plan and determines the COLA amount they receive.

On September 11, 2013, Plaintiffs filed suit against the LFUCG, the Commonwealth, and a number of individual state officers. Their complaint alleged that the 2013 amendments unconstitutionally altered the COLA increases that they are contractually entitled to receive, in violation of the Contract, Due Process, and Takings Clauses of the Federal Constitution, as well as a corresponding provision in the Kentucky Constitution. More specifically, Plaintiffs alleged that they had a contractual right to the specific COLA in effect at the time they retired, for the rest of their lives without change.

Each defendant filed separate motions to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6). In a single order, the district court granted the motions. The district court found that the existence of a claimed contractual right for purposes of a Contract Clause claim requires a clear indication that the legislature intended such a contractual right, and the Kentucky legislature never bound itself to calculating retirement benefits based upon an unchangeable COLA. Finding no such enforceable contract, the district court dismissed the Contract, Due Process, and Takings Clause claims, and also dismissed the state law claims under the supplemental jurisdiction principles of 28 U.S.C. § 1367.

Plaintiffs then moved to alter or amend the court's order dismissing their case under Fed. R. Civ. P. 59(e). They also asked for leave to amend their complaint under Fed. R. Civ. P. 15(a). The district court denied both requests and this appeal followed.

DISCUSSION

I. Jurisdiction

As a threshold matter, we must determine whether we have jurisdiction over the claims against the Commonwealth, as sovereign immunity generally shields a state from suit. Ernst v. Rising , 427 F.3d 351, 358 (6th Cir. 2005) (en banc). Even though the district court did not address this issue when it granted Defendants' motion to dismiss, we must, as in every case, consider our jurisdiction over the appeal. Arbaugh v. Y&H Corp. , 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). We review de novo the constitutional question of whether the Commonwealth is entitled to sovereign immunity. S.J. v. Hamilton County , 374 F.3d 416, 418 (6th Cir. 2004).

It is well established that states “possess[ ] certain immunities from suit in ... federal courts.” Ernst , 427 F.3d at 358 (citations omitted). The nature of a state's immunity “flows from the nature of sovereignty itself as well as the Tenth and Eleventh Amendments to the United States Constitution.” Id. (citation omitted). “The immunity also applies to actions against state officials sued in their official capacity for money damages.” Id. This is because “a suit against a state official in his or her official capacity is not a suit against the official but rather is a suit against the official's office,” i.e. , against the state itself. Will v. Mich. Dept. of State Police , 491 U.S. 58, 71, 109 S.Ct. 2304, 105 L.Ed.2d 45 (1989).

There are three exceptions to a state's sovereign immunity: (1) when the state has consented to suit; (2) when the exception set forth in Ex parte Young , 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908) applies; and (3) when Congress has clearly and expressly abrogated the state's immunity. S & M Brands, Inc. v. Cooper , 527 F.3d 500, 507 (6th Cir. 2008) (citation omitted). Because Kentucky has not expressly consented to suit in this case,¹ and there is no question that Congress has not abrogated Kentucky's immunity here, only the second exception is implicated in this case.

The Ex parte Young doctrine applies when the lawsuit involves an action against state officials, not against the state itself. Id. at 507–08. Under the doctrine, “a federal court can issue prospective injunctive and declaratory relief compelling a state official to comply with federal law, regardless of whether compliance might have an ancillary effect on the state treasury.” Id. at 507 (citation omitted). “It is beyond dispute that federal courts have jurisdiction over suits to enjoin state officials from interfering with federal rights.” Id. at 507–08. However, the Ex parte Young doctrine “does not ... extend to any retroactive relief.” Id. at 508.

In the instant case, the Ex parte Young doctrine is applicable to permit suit against the individual state officers pursuant to 42 U.S.C. § 1983 for the alleged violations of the Contract, Due Process, and Takings Clauses because the complaint alleges an ongoing violation of federal law and seeks prospective relief. See League of Women Voters v. Brunner , 548 F.3d 463, 474 (6th Cir. 2008). However, the Eleventh Amendment bars this suit against the Commonwealth itself. The Commonwealth is of course a state for purposes of sovereign immunity. Although the doctrine of sovereign immunity is subject to several exceptions, see, e.g. , Ernst , 427 F.3d at 358–59 (listing several exceptions to sovereign immunity), none of those exceptions apply here. Therefore, we are without jurisdiction to consider the claims against the Commonwealth based on Eleventh Amendment sovereign immunity principles.

II. Right to...