Puckett v. Lexington-Fayette Urban County Government
60 F. Supp. 3d 772
E.D. Ky.2014Background
- Plaintiffs are retired LFUCG employees, members of the Fund governed by KRS 67A.360–690.
- KRS 67A.690 originally provided COLA of 2–5% compounded annually for Fund annuities.
- On March 14, 2013, the statute was amended to tiered COLA of 1–2% when the Fund’s actuarial level is below 85%.
- The amended COLA applies to retirees who retired before the effective date, including plaintiffs.
- Plaintiffs allege the amendment violated Contract Clause, Due Process, Takings, and Kentucky Constitution § 55.
- Court granted the LFUCG defendants’ and Kentucky’s motions to dismiss, concluding no cognizable contract or protected property right in pre‑amendment COLA exists.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did plaintiffs have a contractual right to 2–5% COLA? | Puckett and Vance claim a contractual right under prior law. | No clear legislative intent to create a private contract; no inviolable contract language. | No contract right; contract claim dismissed. |
| Did plaintiffs have a protected property interest in the pre‑amendment COLA? | COLA rate created a property interest with entitlements. | Amendment valid; discretionary legislative change can alter entitlement. | No plausible property interest; due process and takings claims dismissed. |
| Were procedural or substantive due process rights violated by the amendment? | Legislative process flawed; denial of representation via Task Force; insufficient process. | Legislature may alter statutory entitlements; process not violated under rational basis review. | No due process violation; claims dismissed. |
| Did the amendment constitute a taking under the Fifth Amendment? | Pre‑amendment COLA is property; taking without just compensation. | COLA is a statutory entitlement, not compensable property under Takings Clause. | Takings claim dismissed. |
| Do Kentucky constitutional provisions yield different result? | Analogous Kentucky clauses mirror federal protections. | Kentucky rights align with federal analysis; no plausible claims. | Analogous state claims likewise fail; dismiss. |
Key Cases Cited
- National Railroad Passenger Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S. 451 (1985) (contractual intent required to bind legislature)
- U.S. Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977) (clear intent to contract may be shown by express terms)
- Parella v. Ret. Bd. of the Rhode Island Employees’ Ret. Sys., 173 F.3d 46 (1st Cir.1999) (express bars on future amendments can show contract intent)
- Gattis v. Gravett, 806 F.2d 778 (8th Cir.1986) (legislature may eliminate a property right)
- Pittman v. Chicago Bd. of Educ., 64 F.3d 1098 (7th Cir.1995) (legislative elimination of entitlement permissible)
- Bowen v. Gilliard, 483 U.S. 587 (1987) (no property right to continued welfare benefits at same level)
- Schroeder v. City of Chicago, 927 F.2d 957 (7th Cir.1991) (statutory entitlements not protected as property for takings)
- Adams v. United States, 391 F.3d 1212 (Fed.Cir.2004) (no statutory obligation to pay money creates property interest for takings)
- Young v. Township of Green Oak, 471 F.3d 674 (6th Cir.2006) (substantive due process only for constitutionally created rights)