Probst ex rel. Class of Similarly Situated Individuals v. Department of Retirement Systems
167 Wash. App. 180
| Wash. Ct. App. | 2012Background
- Fowlers sued as TRS Plan 3 transferors challenging DRS interest calculation for Plan 2→Plan 3 transfers.
- DRS used a quarterly interest crediting method, tying interest to quarter-end balances; zero balances yielded no interest that quarter.
- Legislation RCW 41.50.033 (2007) authorizes the director to determine when interest is credited and the amount, with quarterly crediting; this is viewed as curative/remedial and retroactive.
- Pre-2002 TRS Plan 2→Plan 3 transfers were largely settlement-barred; Fowlers' class comprises TRS members transferred before 2002 excluded from the settlement.
- Superior Court held DRS authority to set interest but found no requirement to pay daily interest and that the DRS’s method was not arbitrary or capricious.
- Court later reversed on arbitrary and capricious grounds, remanding for further proceedings; takings issue not reached.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TRS statutes authorize determining when interest accrues | Fowler argues common-law daily accrual applies | DRS can decide earning/crediting methods under statutes | DRS may determine when interest is earned; daily accrual not required |
| Whether common-law daily interest is abrogated by RCW 41.50.033 | Daily interest rule remains in effect unless legislatively abrogated | RCW 41.50.033 expressly grants authority to determine how interest is earned | Statute abrogates daily interest rule; no daily accrual required |
| Whether DRS’s quarterly method was arbitrary and capricious | DRS acted with willful disregard of facts in selecting quarterly method | DRS had considered alternatives but chose quarterly method; no due-process failure | DRS’s decision to use quarterly calculation was arbitrary and capricious; remand for reconsideration |
Key Cases Cited
- Potter v. Washington State Patrol, 165 Wn.2d 67 (2008) (disallowing common-law abrogation without clear legislative intent; relevant to standard of review)
- Faulkenbury v. Teachers’ & State Employees’ Retirement System, 133 N.C. App. 587, 515 S.E.2d 743 (1999) (common-law daily interest rule not controlling where statute contemplates earning)
- Trustees of California State University v. Riley, 74 F.3d 960 (9th Cir. 1996) (analogy re accounting methods; not controlling for Washington APA)