Jerry Duncan v. Leonard Muzyn
833 F.3d 567
| 6th Cir. | 2016Background
- TVA established the TVA Retirement System (TVARS) via Rules to manage employee pensions; TVARS governed by seven-member board (three elected by employees, three appointed by TVA, one selected by others).
- For decades TVARS provided cost-of-living adjustments (COLAs) tied to CPI; COLAs were funded and discussed in Rules but not explicitly defined as "vested" in the Rule 11.B.1 vesting provision.
- In 2009, amid a $3 billion shortfall, TVARS amended the Rules (4–3 board vote) to eliminate or cap COLAs for 2010–2013, raise COLA-eligibility age, and lower fixed-fund interest; TVA did not veto within 30 days.
- Plaintiffs (class of current/former TVA employees) sued, alleging violations of TVARS Rules (including Rule 13 anti-cutback) and a Takings Clause claim; district court granted summary judgment to TVA/TVARS on reviewability and Takings.
- On appeal, both agencies conceded reviewability of Rules-violation claims; TVARS later agreed the 2009 amendments were erroneous and suggested COLAs were vested, but TVA contested vesting and argued Takings claim failed.
- Sixth Circuit held: agency action is judicially reviewable here; COLAs are not vested (nonforfeitable) under the plain language of the Rules; summary judgment for agencies affirmed on vesting and Takings grounds; remanded remaining Rules-violation claims for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the TVARS Rules (board actions) judicially reviewable? | Plaintiffs: Yes—board must follow its own Rules and court review is available. | TVA/TVARS: APA may not apply but did not contest reviewability below; TVARS later conceded reviewability. | Reviewable: strong presumption of judicial review applies; non-APA review survives (affirmed). |
| Are COLAs "vested" (nonforfeitable) benefits protected by Rule 13’s anti-cutback? | Plaintiffs: COLAs are part of adjusted benefits and thus vested; board’s 2009 cuts violated Rule 13. | TVA/TVARS: COLAs are not vested; Rules grant the board discretion to set COLA rates and Rule 11 treats COLAs differently than vested benefits. | Not vested: plain language (Rules 6.I/7.L and Rule 11) shows COLAs are forfeitable; agency summary judgment affirmed on this issue. |
| Is Auer deference owed to TVARS’s interpretation that COLAs are vested? | Plaintiffs: Defer to TVARS’s long-standing interpretation and practice. | Defendants: Text is clear; TVARS position is inconsistent and subordinate to TVA—Auer not applicable. | No Auer deference: text unambiguous and TVARS’s inconsistent/ranked position undermines deference. |
| Did the 2009 amendments constitute a compensable taking under the Fifth Amendment? | Plaintiffs: Reduction/elimination of COLAs deprived them of property rights. | TVA/TVARS: No protected property interest because COLAs are not vested; thus no taking. | No taking: because COLAs are forfeitable, plaintiffs lack the requisite property interest. |
Key Cases Cited
- Auer v. Robbins, 519 U.S. 452 (deference to agency interpretation of its own regulations) (court declines Auer deference here)
- Abbott Labs. v. Gardner, 387 U.S. 136 (presumption of judicial review of agency action) (supports reviewability)
- Mach Mining, LLC v. EEOC, 135 S. Ct. 1645 (strong presumption of reviewability) (cited for standard)
- Tenn. Valley Auth. v. Kinzer, 142 F.2d 833 (6th Cir. 1944) (TVA authorized to promulgate Rules; Rules have force of law)
- Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (judicial review standard and limits where no law to apply) (discussed in reviewability context)
- Heckler v. Chaney, 470 U.S. 821 (areas committed to agency discretion) (distinguished)
- Talk America, Inc. v. Michigan Bell Telephone Co., 564 U.S. 50 (agency positions in briefs can sometimes receive deference) (distinguished)
- Thomas Jefferson Univ. v. Shalala, 512 U.S. 504 (inconsistent agency positions reduce deference) (relied on to deny Auer deference)