Black v. PayneBlack v. Payne
Appeal from the United States District Court for the Eastern District of California.
Before CHOY and SNEED, Circuit Judges, and KERR,* District Judge.
CHOY, Circuit Judge:
Hollis O. Black appeals from the district court‘s dismissal of his suit challenging the change in mandatory retirement age for certain California state employees. We affirm.
I. Statement of the Case
Appellant Black began working for the state of California on December 2, 1970. At that time, the mandatory retirement age applicable to Black was age 70. As a state worker, Black was enrolled in the state‘s pension program, the Public Employees Retirement System (PERS),
In 1971, the California legislature enacted Senate Bill 249, Stats.1971, ch. 170, § 38, p. 231. That bill amended
Black filed a class action suit against various persons connected with the operation of PERS. He claimed to represent all those persons who were members of PERS before the enactment of Senate Bill 249 and who at the time of its enactment and effective date were between the ages of 65 and 70. Black‘s complaint averred first that PERS distributed newsletters misstating the effects of the statutory changes for the purpose of inducing employees subject to the mandatory retirement provisions to apply for benefits and thereby waive all claims regarding the validity of the amendment. Black claimed that these actions violated the anti-fraud provisions of the federal securities laws. Black alleged secondly that the change in mandatory retirement age violated the fourteenth amendment of the United States Constitution. Asserting a property right in continued state employment until age 70, Black claimed that Senate Bill 249 deprived him (and the class he purported to represent) of property without affording a hearing and other incidents of due process.
Black sought reinstatement and backpay for all employees retired pursuant to the amendment and adjustment of the pension benefits of those former employees to what they would have received had they continued to work until age 70. He also prayed for a permanent injunction requiring PERS to disclose all material facts regarding the statutory amendments and prohibiting the state from requiring any employee to retire without affording a hearing.
Appellees, defendants below, filed a motion to dismiss for lack of subject matter jurisdiction. Black responded with a motion for summary judgment. The district court granted the motion to dismiss and denied appellant‘s motion for summary judgment. The district court held that Black‘s participation in PERS failed to satisfy the definition of “security” enunciated by the Supreme Court. The court also held that Black had no contract right of which Senate Bill 249 could have deprived him.1
After the district court rejected a motion for rehearing and new trial, Black filed the instant appeal.
II. Securities Law Claim
Black contends that his participation in PERS constituted an “investment contract” within the meaning of the federal securities laws and therefore he is entitled to the protection of those laws.2 We disagree.
In International Brotherhood of Teamsters v. Daniel, --- U.S. ----, 99 S.Ct. 790, 59 L.Ed.2d --- (1979), the Supreme Court determined that participation in a noncontributory, compulsory private pension plan did “not comport with the commonly held understanding of an investment contract,” and thus did not implicate the federal securities laws. Id. at ---, 99 S.Ct. at 796. The Court found that the pension plan did not meet the definition of investment contract first enunciated in SEC v. W. J. Howey Co., 328 U.S. 293, 301, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946), and reaffirmed in United Housing Foundation, Inc. v. Forman, 421 U.S. 837, 852, 95 S.Ct. 2051, 44 L.Ed.2d 621 (1975): “(T)he test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.” --- U.S. at ----, 99 S.Ct. at 796.3
Although PERS is contributory,
III. Due Process Claim
Appellant argues next that the state has deprived him of “property” without a hearing and other elements of due process of law in contravention of the fourteenth amendment. He suggests that the change in retirement age breached a contractual obligation constituting “property.”
In Bishop v. Wood, 426 U.S. 341, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976), a discharged city employee contended that his due process rights had been violated by his termination. He claimed, Inter alia, that he had a property interest in continued employment. In rejecting that claim, the Supreme Court wrote:
A property interest in employment can, of course, be created by ordinance, or by an implied contract. In either case, however, the sufficiency of the claim of entitlement must be decided by reference to state law.
Id. at 344, 96 S.Ct. at 2077 (footnotes omitted); See Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972).
The California Supreme Court has determined that under California law the change in mandatory retirement age did not implicate any property interests within the meaning of the due process clause. In Miller v. State, 18 Cal.3d 808, 135 Cal.Rptr. 386, 557 P.2d 970 (1977), a former state employee challenged the reduction in mandatory retirement age also challenged in this action. In response to the contention that the modification in age violated the due process clauses of the federal and state constitutions, the California Supreme Court held that
plaintiff had no vested contractual right to remain in public employment beyond the age of retirement established by the Legislature. Upon being required by law to retire at age 67 rather than age 70, plaintiff suffered no impairment of vested pension rights since he had no constitutionally protected right to remain in employment until he had earned a larger pension at age 70.
IV. Leave to Amend
Appellant argues lastly that the judgment below should be reversed and the cause remanded to the district court to allow him to amend his complaint to state a claim under
In Jackson v. American Bar Association, 538 F.2d 829 (9th Cir. 1976), plaintiffs filed a complaint alleging unconstitutional discrimination. Defendants filed motions to dismiss. The district court granted defendants’ motions on the ground, Inter alia, that plaintiffs had not stated a claim upon which relief could be granted. After agreeing that plaintiffs had not properly stated a claim, we wrote:
(A)ppellants complain that they were not permitted to amend their complaint and urge that such an option be tendered now. The reason urged is that since the case was decided below on a motion to dismiss, the plaintiffs should have been allowed to amend under
Fed.R.Civ.P. 15(a) . But where a motion to dismiss is supported by affidavits on both sides, it becomes a speaking motion and is treated as a motion for summary judgment. (Citations omitted.) Furthermore, the record does not disclose any effort to amend. Under the circumstances here, the request to remand with instructions to permit amendment comes too late.
In the present case as in Jackson, both parties filed papers other than the pleadings regarding defendants’ motion to dismiss; the district court did not exclude those papers in reaching its result. Additionally, here plaintiff specifically moved for summary judgment. Therefore, the judgment in the present case must properly be considered a motion granting summary judgment in favor of defendants.
AFFIRMED.
Notes
Jurisdiction, therefore, is not defeated . . . by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover. For it is well settled that the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction. . . . The previously carved out exceptions are that a suit may sometimes be dismissed for want of jurisdiction where the alleged claim under the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous.
Bell v. Hood, 327 U.S. 678, 682-83, 66 S.Ct. 773, 776, 90 L.Ed. 939 (1946). There is no claim here that Black‘s allegations were frivolous or made solely to obtain federal jurisdiction.Of course, since federal jurisdiction was premised on a federal question, the failure to state a claim meant that there was no question properly before the court, and, A fortiori, no federal question. But as this court has written:
(W)hen a statute provides the basis for both the subject matter jurisdiction of the federal court and the plaintiff‘s substantive claim for relief, a motion to dismiss for lack of subject matter jurisdiction rather than for failure to state a claim is proper only when the allegations of the complaint are frivolous.
Timberlane Lumber Co. v. Bank of America, N.T. & S.A., 549 F.2d 597, 602 (9th Cir. 1976); See Int‘l Bhd. of Teamsters v. Daniel, --- U.S. ----, 99 S.Ct. 790, 58 L.Ed.2d --- (1979); Amfac Mortgage Corp. v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 430 (9th Cir. 1978).The district court‘s judgment confirms this reading of its decision. The district court wrote:
It is Ordered and Adjudged Judgment is hereby entered for the Defendants and against the Plaintiff.
Had the district court meant only to dismiss for lack of subject matter jurisdiction, such a judgment on the merits would be inappropriate. See Jones v. Brush, 143 F.2d 733, 735 (9th Cir. 1944). We thus conclude that the district court determined that Black had failed to state a claim under Rule 12(b)(6).
After the Timberlane Lumber Co. court determined that the judgment there was for failure to state a claim and not for lack of subject matter jurisdiction, it next concluded that because the district court had papers before it beyond the pleadings, there was in fact a “speaking motion” subject to Rule 56. 549 F.2d at 602. We reach the same conclusion here. See part IV Infra.
The Court also noted that passage of a federal statute specifically designed to protect employees’ interests in pension plans “undercuts all arguments for extending the Securities Acts to noncontributory, compulsory pension plans.” Id. at ----, 99 S.Ct. at 802; See Employee Retirement Income Security Program,